TIOL-DDT 1542
03.02.2011
Thursday AS per Rule 8(1) of the Central Excise Rules, the duty on the goods cleared in a month has to be paid before the 6 th day of the following month. As per Rule 8(3), if the duty is not paid by the due date, the outstanding amount has to be paid with interest. As per Rule 8(3A), if the assessee defaults payment beyond thirty days, then:- 1. He has to pay excise duty on each consignment 2. He cannot utilize the CENVAT Credit for payment of duty. These restrictions continue till the outstanding amount is paid with interest. Now what is default ? Is a short payment default ? Suppose you are required to pay a duty of Rs. 1,00,001 and by mistake you pay only Rs. 1,00,000 and after six months the Audit party finds out that you have not discharged the full duty during that month. What are the consequences? You were an offender in the sense that during the last four months or so, you were not entitled to utilize any CENVAT Credit and you were required to pay the duty consignment wise. So you will be asked to reverse the entire CENVAT Credit utilized and pay the amount in cash - you will also be penalized for non-payment of duty, irregular Availment of CENVAT Credit and evading duty. The penalty maybe a few Crores - all for that one rupee short paid! The Tribunal in 2011-TIOL-65-CESTAT-DEL held that ‘default' is not defined in the Act or the Rules and any omission or failure to comply with the obligation relating to payment of duty in the manner prescribed and within the period specified under Rule 8(1) of the said Rules would amount to default in payment of duty. It may be a short payment of duty or it may be total failure to pay the duty . The Pandora's box is open! Assessees who are paying a few lakhs of excise duty are now stuck with demands of Crores of rupees with mind boggling amounts of penalty, because they short paid duty some months ago. Certainly they cannot pay such huge sums of money and the only option for the Department would be to attach the properties, resulting in closure of factories and loss of jobs to many workers. The Government will be slowly killing the geese that were laying the golden eggs. Should the law be so harsh on a defaulter? Of course there is also another side to the issue. If you say short payment is not default, an assessee who has to pay Rs. 1,00,001/- can pay one rupee and claim that he has not defaulted but only short paid an amount of one lakh rupees! There must be some equitable solution – something like an equal amount of penalty of the short paid amount. And why does the Department keep quiet for months and years and then pounce upon the unsuspecting assessees with huge demands?. When the monthly returns are received they know that there was a default; why can't they enforce consignment wise payment immediately after one month? The Board should consider this issue seriously – and what better time than budget time? Who is the Finance Secretary of India? ARE we going to Budget 2011 without a Finance Secretary? The Finance Secretary Ashok Chawla retired on 31 st January and his successor is yet to be named. Sushama Nath, the current Expenditure Secretary is almost appointed. In fact some newspapers have carried stories that she has already taken over as Finance Secretary but the all important ACC clearance is yet to come or at least yet to be announced.  Should a Finance Secretary who is closely associated with budget making be retired just 28 days before the budget? It happened exactly like this last year, when Revenue Secretary Bhide retired on 31 st January 2010. We had then questioned in our CobWeb - Dear FM, do you really think Revenue Secretary, privy to budget making, should retire on Jan 31st?
Though we were highly critical of the style of functioning of Bhide , we had suggested that he should be given a month's extension. But Pranab Babu is a seasoned administrator and he knows his babus . There is an unconfirmed story doing the rounds about the extension to bureaucrats. It seems in his earlier tenure as Finance minister, a Chairman of the Board was to retire just before the budget. The Revenue Secretary took a proposal the FM to grant him an extension as he was closely associated with the budget and it would be difficult to bring out the budget without him. “Is he absolutely indispensable?”, asked the FM. “yes, sir”, replied the Secretary. “What will you do if he dies tomorrow?”, asked the FM. The Secretary got the message and continued his work with the budget. Coming back to the present, though the fact is that a new Finance Secretary is yet to be announced officially, it is almost universally known that the FM has recommended Sushama Nath for the post and in the present scenario, the FM's recommendation is as good as appointment. Sushama Nath will be the first Lady Finance Secretary of the country, but she also has only two months to go before her retirement in March 2011. We understand that she is being given a two month extension. Sixth Global Congress on Combating Counterfeiting and Piracy Opens in Paris OVER 800 delegates from intergovernmental organizations, national governments, enforcement agencies and business from more than 100 countries convened yesterday in Paris to address the serious global impact of the growing trade in counterfeit and pirated goods and the need to build respect for intellectual property in a balanced and sustainable way. The Congress is hosted by France's Industrial Property Office (INPI) and chaired by the World Intellectual Property Organization (WIPO). It is co-organized by INPI , WIPO , INTERPOL and the World Customs Organization (WCO). Secretary General of the World Customs Organization (WCO), Kunio Mikuriya , welcomed the growing interest being shown in the WCO's new tool to combat counterfeiting and piracy. The new tool, known as Interface Public-Members (IPM), was launched by the WCO after signing the Cotonou Declaration (a Chirac Foundation initiative to ensure access to safe medicine in Africa) in June 2010 as a symbolic gesture of the Customs community's commitment to stopping the trade in fake medicines as part of a united front. IPM consists of an online database enabling Rights Holders to provide Customs field officers with real-time data on their products as well as information making it possible to distinguish between “genuine” and “fake” goods. Customs field officers can access this information and training tool, free of charge, anywhere in the world via simple and secure user interfaces in their own language. ¶This new tool is another example of the WCO's commitment to working closely with its partners in business to share information, knowledge and know-how,¶ said Secretary General Mikuriya . ¶This is even more significant as the WCO honoured this partnership throughout 2010 and now begins celebrating its Year of Knowledge in 2011,¶ Mikuriya added. Jurisprudentiol – Friday's cases  Service Tax
Penalty under Section 76 may not be justified if penalty had already been imposed under Section 78 : High Court SECTION 76 provides for penalty for failure to pay the amount while Section 78 provides for penalty for suppressing the taxable value. Section 78 is, thus, more comprehensive and provides for higher amount. Even if technically, the scope of sections 76 and 78 is different, penalty under Section 76 may not be justified if penalty had already been imposed under Section 78; the appellate authority was within its jurisdiction not to levy penalty under section 76 of the Act having regard to the fact that penalty equal to service tax had already been imposed under section 78 of the Act Income Tax Whether when roof of factory premises is damaged in hailstorm, expenditure incurred on repair and labour charges resulting in enduring benefits to assessee can be claimed as revenue expenditure - Yes, rules ITAT THE issue before the Tribunal is - Whether when the roof of the factory premises is damaged in hailstorm, the expenditure incurred on repair and labour charges resulting in enduring benefits to the assessee can be claimed as revenue expenditure. And the Tribunal's answer is YES. Central Excise Appellant receiving the goods from supplier and after carrying tests on the same found it to be in order as per the description shown in the invoice - CENVAT Credit rightly availed : CESTAT AN allegation was made against the appellant that they have procured central excise duty paid invoices but have not received the goods mentioned in the invoice physically as the dealers who have supplied the goods have never received the goods auctioned by M/s Ispat Industries Ltd. but the same were diverted to units which were availing SSI exemption and did not require the duty paid invoices. See our columns Tomorrow for the Judgements Until Tomorrow with more DDT Have a Nice Time. Mail your comments to vijaywrite@taxindiaonline.com |
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