 TIOL-DDT 1823
26.03.2012
MondayTHE Budget 2012 had created quite a stir in the Gold market and the Gold Merchants are out on the streets, after closing down their shops. In this turbulent turmoil, there is some glitter – Government has reduced the tariff value for imported gold from 573 to 530 USD per 10 grams. Notification No. 24/2012- Cus.,(NT.), Dated: March 22, 2012 Exemption to Imported Iron ore CONCENTRATE - CVD – Confounded Board? DOUBTS have been raised whether on imports of Ore Concentrate classifiable under Chapter 26 of the First Schedule to the Customs Tariff Act, 1975, the benefit that is admissible to “Ore” under Serial Number 4 of the Notification No. 4/2006 – CE dated 1.3.2006 can be granted to the “Concentrate” of that Ore. The issue was taken up for discussion during the Conference of Chief Commissioners of Customs on Tariff and allied matters held in May 2011. The matter related to: 1. Whether the term ‘Ore' includes Concentrate, and 2. Whether insertion of Chapter Note 4 in the Chapter 26 will have any impact on the admissibility of notification benefit to Concentrates was examined.
The Conference noted the HS definitions of Ore and Concentrate are as follows: ¶The term ‘ore' applies to metalliferous minerals associated with the substances in which they occur and with which they are extracted from the mine; it also applies to native metals in their gangue (e.g. metalliferous sands¶). ¶The term ‘concentrates' applies to ores which have had part or all of the foreign matter removed by special treatments, either because such foreign matter might hamper subsequent metallurgical operations or with a view to economical transport¶. In view of Chapter Note 4 to Chapter 26 of CETA, 1985 inserted vide Finance Act 2011, Ores and Concentrates are two distinct products. Thus, Concentrates suffer Central Excise duty being a manufactured product. The implication for imported Concentrates is that the benefit of exemption of additional duty of Customs leviable under Section 3 of Customs Tariff Act, 1975 in terms of a notification that applies only to Ores is no longer available to Concentrates, even if Concentrates and Ores fall under the same tariff heading. Thus, it is concluded in the Conference that the benefit of exemption notification under Sr. No. 4 of the Notification 4/2006-CE dated 1.3.2006 will be available only to imported Ores and not to imported Concentrates. So, the Board wants suitable instructions to be given to the field formation and all pending assessments, if any, may be finalized accordingly. All fine!, but … Notification No. 4/2006-CE dated 1/3/2006 has been superseded by Notification No. 12/2012 dated 17.03.2012. The above clarification was given by the Board on 23.03.2012, exactly a week after the Budget and obviously this Section of the Board is not aware of what happened in the budget!!!. The Chief Commissioners' Conference decided the issue in May 2011 and it took the Board, about a year to communicate that decision. And does the Board really clarify anything? Everybody knows that the exemption is not applicable for concentrates and it is only for ores. The point here is when ores such as manganese ore or chrome ores are mined, they are subjected to certain processes, which may be just washing, grinding, sizing for the purpose of removing the certain impurities. By removing these impurities, the concentration is also increased. In view of the chapter note 4 of the Chapter 26 of excise tariff, this small usual process of concentration amounts to manufacture. Once it amounts to manufacture, the item is to be called as ¶concentrate¶ and not ¶ore¶. Thus, when such item is imported, no benefit of CVD as ORE is to be given to that item and the exemption under sl.no. 4 of Notification No/ 4/2006 –C.E (Now Sl. No. 56 of 12/2012-C.E) is not applicable. But the importers who are importing these goods say that the processes they undertake before loading the cargo into vessels from the country of origin are common and the product still has to be called as ORE as the same is being sold to them by the seller as ORE and not concentrate. Customs in India, have a dilemma now whether to give exemption to the product by taking it as ORE or to consider it as concentrate since the product after mining, is subjected to certain processes. Importers and Customs Officers DDT spoke to, were unanimous that the present Board Circular is totally useless, as it does not provide any clarification. What is needed is, under the Customs Act or Customs Tariff Act or Excise Tariff Act, when can we exactly call an item as ORE and when it is a Concentrate. As if this confusion on what is ore and what is concentrate are not enough, several notifications and circulars of the Board apart from judgements of the Courts and Tribunal use the phrase “ore Concentrate”. Now do we have ‘ore', ‘concentrate' and ‘ore concentrate'? And is excise duty being collected on concentrates in any mines? CBEC Circular No. 9/2012-Cus., Dated: March 23, 2012, Dated: February 27, 2012 Ore Confusion - What about Board's Earlier Clarification? JUST a month before the above clarification was given, the Board's BRAIN, the TRU had issued another clarification on Dutiability of ¶iron ore¶ and ¶iron Ore concentrates¶ The Clarifications reads as, In Budget 2011, a Note was inserted in Chapter 26 of the First schedule to the Central Excise Tariff to deem the process of converting ¶Ores'' into ¶Concentrates¶ as a process amounting to manufacture. Both ores and concentrates are classifiable under chapter 26 and while the term 'Ore' is defined in Note 2 of the said chapter, the term 'concentrate' is not. HSN Explanatory Note, spell out the scope of the term ¶Concentrate¶ as under: ¶For the purposes of headings 2601- 2617, the term 'concentrates' applies to ores which have had part or all of the foreign matter removed by special treatments either because such foreign matter may hamper subsequent metallurgical operations or with a view to economical transport. From the above definition, it is clear that removal of part or all of foreign material is envisaged for conversion of ores into concentrates. Ministry of Mines have ¶clarified that no special treatment is involved in the crushing and screening of ore and the end product can be termed as a concentrate only when the grade of ore is sufficiently improved through beneficiation. Federation of Indian Mineral Industries have also pointed out that several processes (in addition to crushing and screening) such as milling, hydraulic separation, magnetic separation, floatation & Concentrate thickening have to be undertaken for ores to be converted into concentrate. Hence, it is clarified that the levy of excise duty is attracted only in cases where the product meets the definition of concentrate as per HSN notes, 'that is, 'ores which have had part or all of the foreign matter removed by special treatments either because such foreign matter may hamper subsequent metallurgical operations or with a view to economical transport'. TRU loves its notifications and clarifications so much that they do not like to part with them. The above clarification was not made public, but was sent in a letter to the Chief Commissioners. The Circular No. 9/2012 referred to in the previous item, was issued by the OSD in the Tariff Unit of the Board. Obviously, TRU had not sent him a copy of its clarification and he issued his own clarification. What should the poor importer or the Customs officer do now? If ore is sent through a sieve to remove minute particles for economy of transport, does it become concentrate? And in how many mines excise duty is being collected on concentrates? CBEC F. No. No. 332/1 /2012-TRU, Dated: February 17, 2012 FTP - Pre-shipment Inspection Agencies - Eligibility Criteria Modified DGFT has amended Para 2.32.2 A of the HBP, Vol.I to stipulate that: 1. Application for recognition in respect of Pre-shipment Inspection Agencies (PSIAs) has to be made in proforma prescribed in Appendix 5-A. 2. For applicants based in India application fee will be Rs. 7500/- and for applicants based abroad the application fee will be USD 200. The fees may be amended from time to time by DGFT. 3. The application s will be considered by an Inter - Ministerial Committee. 4. The PSIAs will be issued a recognition certificate valid for three years. However, DGFT has the right to suspend/cancel such a certificate at any time during the 3 year term. At the end of 3 years PSIA has to make a fresh application for further recognition.
The recognition of existing agencies currently listed will continue to be valid for six months from the date of this Notification. Responsibility and Liability: 1. In case of any mis-declaration in Pre-Shipment Inspection Certificate PSIC, PSIA would be liable to pay a penalty upto Rs. 10 Lakhs (if the agency is based in India ) or up to USD 20,000/- (if the agency is based in foreign country), in addition to suspension/cancellation of recognition. 2. The importer would also be responsible for import of any material in contravention of the declaration as required under Para 2.32.2 of HBP Vol.I and would be liable to pay penalty upto Rs. 10 Lakhs .
DGFT Public Notice No. 104/2009-2014 (RE2010), Dated: March 23, 2012 CBEC Post Budget Interactive Session 
ON Friday, CBEC held a Post Budget Interactive session with the Trade at the National Museum in New Delhi. Picture above shows CBEC Chairman Goel and Member Thakur flanked by TRU Bosses Vivek Johri and VK Garg with three unimpressed Inspectors/Superintendents in the background. What are those Inspectors/Superintendents doing behind the top brass? Are they to provide security or are they part of the decoration – the flowers look far more impressive! A superintendent is paid about 50 - 60 thousands per month. Do you need such highly paid officers to be mannequins at public functions? As for the proceedings, my reporter could not give me anything worth reporting – maybe my failure! Jurisprudentiol – Tuesday's casess  Central Excise
Non-availability of files in Board is no reason to condone delay - A vigilant only gets leniency while an indolent fails to get so - Appeal dismissed as time barred: CESTAT BEFORE the CESTAT, revenue submitted that review was done before 31.12.02 and unsigned review order was communicated on 17.3.2003. Upon receipt of such order, appeal was filed before Tribunal on 31.3.2003. Due to shifting of review cell of the Board from Jeevan Deep Building, Connaught Place to Hudco Vishala Building, R. K. Puram in New Delhi, review file was not traceable at present for placing before the Bench. Entire contention of Revenue based on Board's unsworn affidavit averring non-availability of review record does not grant immunity from bar of limitation. Review in different cases was done at the eleventh hour without being conscious of remedial measure. The very communication of the unsigned review order by a Superintendent nearly after 3 months of 31.12.2002 establishes casual approach of Revenue. Accordingly, in absence of any cogent evidence establishing date of review was on 31.12.02, Revenue's appeal is not maintainable. Income Tax Whether when assessee enhances capacity of existing unit by going for substantial expansion, assessee cannot be allowed Sec 80I benefits merely because new unit depends on existing unit for completing processes of production - NO, benefits are available: HC THE assessee is a public limited company engaged in the business of manufacturing caustic soda primarily and other chemicals. The assessee acquired a new industrial license and a new letter of intent for substantial expansion of the production capacity of caustic soda. Twelve new cells were installed for this purpose. The assessee incurred expenditure towards new machinery and plant added to the existing plant. The assessee claimed relief in respect of the profit attributable to the same as provided u/s 80-I. This claim came to be rejected by the ITO holding that this was a case of substantial expansion and hence the benefit was not available. The CIT(A) concurred with the ITO. The Tribunal held that since it was expansion of the same manufacturing unit, the assessee will not be entitled to the benefits of Section 80-I. Customs Prosecution - Acquittal - adjudication proceedings as well as criminal proceedings can be initiated simultaneously - Customs Department permitted to appeal against acquittal: HC AN appeal against an order of acquittal is extraordinary remedy and the power to appeal is to be exercised by the government sparingly. Adjudication proceedings as well as criminal proceedings can be initiated simultaneously and that the findings of the departmental or adjudication proceedings would not amount to res judicata and that initiation of criminal proceedings would not be treated as double jeopardy. The findings of adjudication proceedings would have no bearing on the criminal case and that the criminal proceedings are to be determined in its own merits in accordance with law, uninhibited by the findings of the Tribunal or the adjudicating authority. See our columns Tomorrow for the judgements Until Tomorrow with more DDT Mail your comments to vijaywrite@taxindiaonline.com |
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