TIOL-DDT 2029
22.01.2013
Tuesday

ADVOCATES dealing with Central Excise matters are terribly busy in the High Courts, with the New Year Gift given to them by the CBEC in the form of the draconian Circular No. 967/2013 dated 01.01.2013 (DDT 2015 - 02.01.2013). On threatening letters received from the Department, the assessees are rushing to the High Courts (Of course through their lawyers).

Staying the recovery, the Madras High Court on Friday noted that the Petitioner had suffered two ‘orders in original' passed by the Commissioner of Central Excise and have filed appeals against these orders before the CESTAT. During the pendency of these appeals and stay petitions, the department had demanded duty and penalty in terms of the ‘orders in original' based on Board Circular dated 01.01.2013, which provides for recovery of duty after 30 day of filing of appeal if no stay is granted.

Petitioner submitted that the stay petition was listed on various dates but there was no Bench. As there were no regular sitting of the Bench in the Tribunal at Chennai, the petitioner submitted that it is causing great hardship to the petitioner and several other assessees who have filed appeals and stay petitions.

The Court noticed that two members have been appointed to the Tribunal and that they are hearing the appeals and stay petitions. In view of the above, the Court passed an Order requesting the Tribunal to dispose of the Stay petitions filed by the petitioner before February 1, 2013. The Court also directed the department not to take coercive steps till the stay petitions are disposed off by the Tribunal.

See 2013-TIOL-54-HC-MAD-CX

Who has benefitted from this Draconian Circular?

IN the Andhra Pradesh High Court alone, about 50 writ petitions have been filed against this Circular and the threatened recovery, and many more writs are on their way. A consultant who is not even a lawyer told me, “the Board has given a new year gift; I am hiring lawyers to file writs on behalf of my clients and making some good money - unexpected windfall!” Some lawyers have already earned a few lakhs of rupees without even opening their mouths in the Courts.

Even the Standing Counsels of the CBEC are doing fine. They have all become rich suddenly. A rough estimate shows that the CBEC must be spending about Rs. 60 Crores to defend these writs and the assessees must be spending around Rs. 300 Crores. This Circular has generated 360 Crores of business - and with the Government not getting a single paisa!

The Board should seriously consider withdrawing this Circular immediately to end this farce gracefully before it is struck down by a Court.

Gold - Customs Duty Enhanced

GOVERNMENT has amended Notification No. 12/2012-Cus dated 17.03.2012 to enhance the rate of duty of imported gold.

1. The Additional Duty on Gold Ores and Concentrates for use in the manufacture of Gold is increased from 2% to 4%.

2. The Additional Duty on Gold dore bar, having gold content not exceeding 95% is increased from 2% to 4%.

3. The Standard Rate of duty for Gold bars, other than tola bars, bearing manufacturer's or refiner's engraved serial number and weight expressed in metric units, and gold coins having gold content not below 99.5%, imported by the eligible passenger, is increased from 4% to 6%.

4. The Standard Rate of duty for Gold bars, other than tola bars, bearing manufacturer's or refiner's engraved serial number and weight expressed in metric units, and gold coins having gold content not below 99.5%, and gold findings, other than imports of such goods through post, courier or baggage, is increased from 4% to 6%.

5. The Standard Rate of duty for platinum, is increased from 4% to 6%.

Notification No. 01/2013 -Cus, Dated: January 21, 2013

Gold - Excise Duty Enhanced

LIKE in Customs, there is a 2-percentage points increase in excise duty. Notification No. 12/2012- CE dated 17.3.2012 is amended to increase the excise duty rate in respect of

Gold bars, other than tola bars, bearing manufacturer's engraved serial number and weight expressed in metric units manufactured in a factory starting from the stage of-

(a) Gold ore or concentrate;

(b) Gold dore bar; or

from 3% to 5%.

These notifications have come into force from 00.00 hrs of 21.01.2013, but they were not available, for love or money till 10 pm. One wonders how they have made the new rates applicable in our airports yesterday. And how would they collect the differential duty from the passengers who are already cleared?

Notification No. 01/2013 -CX, Dated: January 21, 2013

CBEC Presidential Awards - CESTAT ARs Again Ignored!

CBEC has announced its Presidential Appreciation Certificate Awards for 2013 for a record number of 37 officers for outstanding record of service. (As we reported in DDT 2024 - 15.01.2013, there are more than 35 awardees) It is surprising that not even a single Authorised Representative in the CESTAT figures in the list of 37 awardees. The ARs in the CESTAT do so much of thankless work for the Department - always unheard (except in the court) and unsung. It is unfortunate that their work goes unrecognized. While officers routinely posted to NACEN get a 30 percent allowance, even if they cannot take a single class, the ARs in CESTAT who have to face brilliant lawyers and more brilliant judges with the badly drafted notices and pathetically written orders, are not given any incentive. Hard work, sincerity, passion, loyalty, erudition and frustration - all are discerningly visible when you see an AR arguing a case - often a bad one. Officers from the investigating agencies like DRI and CEI often corner many of the awards - but their cases are cases only when effectively defended by the ARs in the Tribunal Benches. Almost all the ARs richly deserve the Presidential award, but hardly anyone ever gets it.

The Chief Commissioner (AR) should prevail upon the Board to grant a few awards to the ARs every year. Even the DRI and CEI chiefs should recommend some ARs for the award. This is the least you can do to your most dedicated officers slogging it out in the Tribunal.

In this year's awards to 37 officers, more than 22 are from the Investigating Agencies and many more might be former officers of DRI, DGCEI and the like. Even a Private Secretary in the DRI is a proud awardee - I have no doubts that she might be the BEST Private Secretary in the world, but certainly the Department's representatives arguing tough cases in the Tribunal Benches richly deserve a major share of the awards.

MoF DoR Notification No. 07/2013 : January 21, 2013

Original authorization granted by wrong Committee - substitution of authorization allowed as it is curable defect: CESTAT

IN the case of Commissioner of Customs (Import), Mumbai vs. Gudel India Pvt. Ltd. the issue was whether an appeal filed on the strength of Review order passed by a ¶wrong¶ Committee of Commissioners could be considered proper and legal. The CESTAT had thrown out the Revenue appeal as non-maintainable (2011-TIOL-101-CESTAT-MUM).

Under the impression that the CESTAT wanted the Revenue to file a fresh appeal based on an order passed by the ¶correct¶ Committee, another appeal was prepared & filed pursuant to issue of an order by the ¶correct¶ Committee. However, since there was a delay of 697 days, an application for condoning the delay was also filed as is ¶statutorily¶ required. The Bench threw all of them into the nearest waste paper basket. See 2012-TIOL-810-CESTAT-MUM.

But there is another story to tell. In the case of CCE, Raigad vs. Preeti Logistics (2012-TIOL-983-CESTAT-MUM) the Bench held that such an error is rectifiable since technical in nature.

Recently, a similar issue came before a Single Member Bench who was one of the Members who constituted the Division Bench in the preceding two citations mentioned.

In the present case, a miscellaneous application was filed by the revenue for substitution of authorization issued by the authorities in Appeal no. ST/233/11.

An authorization for filing the appeal was granted by the Committee consisting of Commissioner of Central Excise, Raigad and Commissioner of Central Excise, Belapur. However, as the matter pertained to the Service Tax, the appropriate Committee for grant of authorization is the Commissioner of Service Tax II, Mumbai and Commissioner of Central Excise, Raigad.

Therefore, the Revenue filed a revised authorization and prayed that the revised authorization be taken in place of the original authorization.

The Bench observed -

“...Inasmuch as the defect in the original appeal is a curable defect, I allow the miscellaneous application filed by the Revenue for substitution of authorization by the competent authority in the place of the original authorization filed with the appeal.”

The miscellaneous application was thus allowed. Interestingly, this time too, the respondent was not represented.

See 2013-TIOL-137-CESTAT-MUM

Jurisprudentiol – Wednesday's cases

Central Excise

Notice of defect memo sent to appellant by registered post is deemed to be served in terms of S. 37C(1)(a) of CEA, 1944 read with S. 27 of General Clauses Act, 1897: HC

NOTING that the appellant had taken more than six years to remove the defects in the appeal, the High Court held that order of the Tribunal did not raise any substantial question of law. In fine, it was held that the conduct of the appellant during the last 8 years did not make out any case for any indulgence in law or equity and accordingly the appeal was dismissed.

Income Tax

Whether when assessee claims Sec 54F benefits, settlement cost paid towards purchase of property from official liquidator of the High Court is allowable deduction - NO: ITAT

THE two issues before the Bench are - Whether the purchase of textile mill and treating the same as residential property is eligible for exemption u/s 54F and Whether when assessee claims Sec 54F benefits, the settlement cost paid towards purchase of property from official liquidator of the High Court is allowable deduction. The answer to the first question is a remand and NO for the second question.

Customs

Although the Bank Guarantee executed by appellant was valid upto year 2015, Revenue had encashed same - since Stay granted by CESTAT in year 2006 has been extended vide order dated 01.08.2012, Revenue directed to refund amount of Rs.50 lakhs within seven days and appellant to keep alive BG till disposal of appeal: CESTAT

IN this Customs case, the CESTAT had granted the applicant a Stay in the matter in December, 2006. The Bench had directed the applicant to furnish a Bank Guarantee of Rs.50 lakhs.

Incidentally, the appeal is still pending before the CESTAT. In the meantime, in the year 2009, the Revenue was scared that the applicant would do the vanishing trick. So, they filed a Miscellaneous application before the CESTAT praying that the stay of recovery already granted by the Bench be vacated.

The bank guarantee executed by the applicant has been encashed on 19.07.2012.

See our Columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a Nice Day

Mail your comments to vijaywrite@taxindiaonline.com