TIOL-DDT 1399
12.07.2010
Monday A great amount of time and money in litigation is wasted on ‘STAY' matters. In 2002, the government brought in a most impractical amendment to Section 35C of the Central Excise Act to stipulate that where stay is granted, the CESTAT should dispose of the appeal within 180 days and if it is not done so, the stay is automatically vacated. Nobody in the Board questioned as to why the assessee should be punished if the CESTAT is not able to decide his case within 180 days. But the CESTAT and Supreme Court were kind and held that CESTAT can extend the stay. So the procedure was like this. 1. Appeal to the CESTAT with an application for stay. 2. Once Stay is granted, don't relax – remember to file an application for extension of stay, which means fee for lawyers and wasting the time of the Tribunal.
To avoid this farce, Tribunal has adopted a system of granting stay in the first instance itself, till the appeal is decided. Now the Board wants the second stage litigation – not exactly; they even propose a series of litigation – maybe the Board's gift to the Consultants. Board states loftily; 1. Nothing prevents Tribunal from granting stay beyond six months. However, the extension of stay has to be applied for by the party. 2. When the Stay period (180 days) is over, the Department may by a simple letter ask the party to pay and the party would be at liberty to go back to the Tribunal for seeking extension of stay. 3. Coercive measures, without giving an opportunity to the party to seek further extension of stay should be avoided. 4. Where the Commissionerate feels aggrieved by an order of the Tribunal granting stay indefinitely till disposal of appeal, the said Tribunal order could be challenged before the jurisdictional High Court, citing the amended provisions.
So, now the Board wants to take this stay litigation to the High Court and flood the High Courts with useless litigation. This missive was actually issued on May 26, but for some good reason, was not available for more than a month. Can there be a law that if A does not do something, B will be punished? In the IPCL case [2004-TIOL-556-CESTAT-MUM-LB], the Tribunal had observed, “Unless the Tribunal has the power to extend stay beyond 180 days, the assessee's interest will be in jeopardy for no fault of his. Even the order granting exemption from pre-deposit will be rendered nugatory as the assessee will be compelled to satisfy the demand during the pendency of the appeal. It has been always the judicial view that no party should be prejudiced due to action or inaction on the part of the court” Immediately after this provision was brought into the statute, in our Seminar in Delhi, the Chairman, CBEC was asked why such draconian measures were brought in. He pointed out to the CBDT Chairman and said, “He did it last year and nobody questioned him; So I did it this year!” CBEC Circular No. 925/15/2010/ CX , Dated : May 26, 2010 Broken Bottles – Revenue wants its pound BOARD has come to know that some assessees are claiming the benefit of duty exemption in respect of breakage of PET bottles up to 0.5% citing the Board's Instruction letter No. ID/3/70- CX8 . Now Board clarifies that these instructions issued in 1975 are no more valid because at the time of issue of this Circular, there was no MODVAT/CENVAT facility. And so all judicial pronouncements are per incuriam and for the record, the offending circular is rescinded. So the Board wants field formations to safeguard Revenue. What are they safeguarding? If Rs. Ten lakhs credit is taken, the maximum loss allowed for breakage of bottles is Rs. 5000.-. Should the wise Board be so bothered about such peanuts? Even the assesses should not be litigating about such small amounts of money. CBEC Circular No. 930/20/2010- CX ., Dated: July 9, 2010 CENVAT credit on inputs used in the manufacture of capital goods – Board Clarifies BOARD refers to the landmark judgement of the CESTAT in Vandana Global Ltd. V/s CCE , Raipur 2010-TIOL-624-CESTAT-DEL-LB holding that ‘capital goods' defined in the CENVAT Credit Rules, in the context of providing credit of duty paid, have to be excisable goods. Board also draws attention to the Tribunal's judgement in the case of Vikram Cement V/s CCE , Indore (2009-TIOL-1959-CESTAT-DEL), where the Tribunal held that credit on welding electrodes used for repair and maintenance, is not available as input. It may also be noted that in the case of Vikram Cements V/s CCE , Indore - (2005-TIOL-112-SC-CX), it has been conclusively held by the Apex Court that the definition of capital goods is not inclusive and only the items covered under the definition and used in the factory of the manufacturer can be treated as capital goods. So Board Clarifies:- 1. Credit on capital goods is available only on items, which are excisable goods covered under the definition of ‘capital goods' under CENVAT Credit Rules, 2004 and used in the factory of the manufacturer. 2. As regards ‘inputs', they have to be covered under the definition of ‘input' under the CENVAT Credit Rules, 2004 and used in or integrally connected with the process of actual manufacture of the final product for admissibility of CENVAT credit. 3. The credit on inputs used in the manufacture of capital goods, which are further used in the factory of the manufacturer is also available, except for items like cement, angles, channels, CTD or TMT bars and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods. 4. Further, credit shall also not be admissible on inputs used for repair and maintenance of capital goods.
These important clarifications are contained in a letter to the Chief Commissioners and Commissioners – fortunately they have made it public. Will the Board consider orders against it also as landmark orders? CBEC F.No.267/11/2010-CX-8 Dated: July 08, 2010 Other Articles of Iron or Steel – Import - Free GOVERNMENT has amended the Import Policy for Other Articles of iron or steel, Forged or stamped, but not further worked, other under heading 7326 90 99 as free instead of restricted. DGFT NOTIFICATION NO. 52/2009-2014, Dated: July 8, 2010 Income Tax – Liquidated Damages for delay in Supply of plant is Capital receipt – Supreme Court – Our Case Today IN a judgement delivered on Friday, the Supreme Court held that Compensation paid for the delay in procurement of capital asset amounted to sterilization of the capital asset of the assessee as supplier had failed to supply the plant within time as stipulated in the agreement. The amount received by the assessee towards compensation for sterilization of the profit earning source, not in the ordinary course of their business, was a capital receipt in the hands of the assessee. We bring you this judgement today. Please See Breaking News Jurisprudentiol –Tuesday's cases  Central Excise
Preventive officers fall in Molasses Pit – Furious Tribunal marks a copy of the order to the FM, Rev Secretary, CBEC Chairman for appropriate action against the officers. IT is normal tendency of the revenue officers to issue show cause notice at the drop of the hat. The popular belief is that by doing so, they have nothing to lose. It is the headache of the assessee to contest the demand however ridiculous it may be. But, every story does not end on the expected lines. In a strange turn of events, in a recent case, the CESTAT upheld the demand on merits, but was unhappy with the inaction on the part of the preventive officers and suggested appropriated action against them. Income Tax Sec 80I - Is assessee entitled to Ss 80HH and 80I benefits even if it only modernises existing unit - NO, says HC THE issue before the High Court is - Whether the assessee established a new industrial unit in the present assessment year (AY), and even if new Industrial Unit was not established and the assessee only modernized the existing unit and erected new plant and machineries whether the assessee was entitled to claim deduction u/s 80HH and 80I . And the answer is NO. Service Tax Passing of revision order by the jurisdictional Commissioner after passage of Order-in-Appeal by Commissioner(Appeals) – embarrassing to declare exercise of jurisdiction by one Commissioner as good and another bad – Revisionary order bad in law: CESTAT IN a Service Tax matter, the first appellate authority passed an order on 16.04.2009 and since it was favourable to the assessee, they did not file any appeal before the CESTAT. Incidentally, the department was not happy with the order-in-original passed by the lower adjudicating authority and this they sought to rectify by invoking the provisions of section 84 of the Finance Act, 1994. So, in furtherance of the revisionary proceedings, the Commissioner on 16.06.2009 issued a show cause notice proposing to impose a penalty on the appellant invoking provisions of sections 76 and 78 of the Finance Act, 1994. This resulted in passing of a revisionary order. See our columns Tomorrow for the judgements Until Tomorrow with more DDT Have a nice day. Mail your comments to vijaywrite@taxindiaonline.com |
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