TIOL-DDT 2058
05.03.2013
Tuesday

WE are informed that Justice Goda Raghuram who just retired yesterday as Judge of the Andhra Pradesh High Court has been appointed as President of CESTAT. Justice Raghuram was heading the Tax Bench of the AP High Court for quite some time. A No-Nonsense Judge, Justice Raghuram had been a judge of the High Court for the last 14 years. His command over tax matters is commendable and he is recognised as an expert in Constitutional Law. A strict but kind judge, who would give a patient hearing to the Lawyers appearing before him, but would not budge an inch as far as the Law or procedure is concerned, Justice Raghuram brings to the CESTAT experience of a tax expert and sagacity of a Solomon.

CESTAT is not really in good shape and badly needs a respectable leader, which we hope Justice Raghuram would eminently provide. With the appointment of Justice Raghuram as President of CESTAT, assessees and advocates of Andhra Pradesh are hopeful of a CESTAT Bench at Hyderabad, which it seems is already sanctioned, but for which the former President Justice Ajit Bharihoke was not very keen.

TIOL wishes Justice Raghuram all the best in his new illustrious job.

Exemption from Bank Guarantee in respect of Advance Authorization (AA) / Duty Free Import Authorization (DFIA) / Export Promotion Capital Goods (EPCG)Schemes

PARA 3.2(c) of the Circular No. 58/2004-Cus.dated 21.10.2004 inter alia stipulated that exemption from Bank Guarantee contemplated therein will not be available in case the licence holder has been penalized under the provisions of Customs Act,1962, the Central Excise Act,1944, the Foreign Exchange Management Act (FEMA),1999 or the Foreign Trade (Development and Regulation) Act, 1992 during the previous three Financial years.

After noting that the Board had relaxed the criteria for accreditation of importers under the Accredited Clients Programme (ACP) vide Circular No.29/2010-Cus. dt.20.8.2010 which stipulated that the importer for availing the facility under ACP should not have any cases of Customs, Central Excise or Service Tax, booked against them in the previous three financial years, the Board vide Circular 6/2011-Cus dated 18.01.2011 sought to adopt the same and modified paragraph 3.2(c) of the earlier Circular 58/2004 to the said extent.

The cases referred were -

(a) Cases of duty evasion involving mis-declaration / mis-statement/collusion / willful suppression / fraudulent intent whether or not extended period for issue of Show Cause Notice (SCN) has been invoked.

(b) Cases of mis-declaration and/or clandestine/unauthorized removal of excisable / import / export goods warranting confiscation of said goods.

(c) Cases of mis-declaration / mis-statement / collusion / willful suppression / fraudulent intent aimed at availing CENVAT credit, rebate, refund, drawback, benefits under export promotion/reward schemes.

(d) Cases wherein Customs/Excise duties and Service Tax has been collected but not deposited with the exchequer.

(e) Cases of non-registration with the Department with intent to evade payment of duty / tax.

Inasmuch as it was decided by the Board that offences, other than those stipulated above, would not result in denial of the benefit of Circular No.58/2004-Cus.

The Circular 6/2011-Cus also requisitioned taking an affidavit from the license holder stating whether any case(s) for certain offences, regarded as other than technical offences, had been booked during the previous three financial years and it was prescribed that, in case such violation(s) were revealed, the benefit of exemption from bank guarantee should not be extended.

It has been brought to the notice of the Board by exporters, trade associations and the field formations that with this amendment the benefit of availing of exemption from bank guarantee will be denied even before the show cause notice proposing imposition of penalty has been adjudicated.

So, the Board has reviewed the matter and is of the view that the position of not having been penalized should be restored.

Accordingly, thepara3.2 (c) of Circular 58/2004-Cus is now again modified to read as follows:

¶(c) The License holder should not have been penalized during the previous three financial years in cases booked against him related to Customs, Central Excise or Service Tax under the provisions of the Customs Act, 1962, the Central Excise Act, 1944,the Finance Act, 1994 (for Service Tax), as detailed below:

(a) Cases of duty evasion involvingmis-declaration /mis-statement/collusion / willful suppression / fraudulent intent whether or not extended period for issue of show cause notice has been invoked.

(b) Cases ofmis-declaration and/or clandestine/unauthorized removal of excisable / import / export goods warranting confiscation of said goods.

(c) Cases ofmis-declaration /mis-statement / collusion / willful suppression / fraudulent intent aimed at availing CENVAT credit, rebate, refund, drawback, benefits under export promotion/reward schemes.

(d) Cases wherein Customs/Excise duties and Service Tax has been collected but not deposited with the exchequer.

(e)Cases of non-registration with the Department with intent to evade payment of duty / tax.

or in cases booked against him under the Foreign Exchange Management Act (FEMA), 1999 or the Foreign Trade (Development and Regulation) Act, 1992.In order to ascertain/verify whether the License/Authorization holder meets this criterion he may be asked to furnish an affidavit. The Commissioners shall ensure that some of the affidavits furnished are cross checked randomly with the field formations for their veracity.¶

Now the condition in para 3.2(c) is a blend of what was originally existing in Circular 58/2004 and the modification that was made by Circular 6/2011.

With so many conditions, only God knows who will be getting this exemption from Bank Guarantee!

CBEC CircularNo.08/2013-Cus Dated: March 04, 2013

A bald explanation that there was heavy work pressure is not acceptable for condonation of delay: CESTAT

SECTION 129A(5) of the Customs Act, 1962 reads thus -

¶(5)The Appellate Tribunal may admit an appeal or permit the filing of a memorandum of cross-objections after the expiry of the relevant period referred to in sub-section (3) or sub-section (4), if it is satisfied that there was sufficient cause for not presenting it within that period.¶

As per sub-section (4), the relevant period for filing of cross-objections is 45 days.

In the matter of an appeal filed by one Mohammad Hussain Gauri against an O-in-A, the Commissioner of Customs (Export), Nhava Sheva failed to file the Cross-objections within the mandatory period.

So, the Revenue has filed an application for Condonation of this Delay.

The bench after going through the application observed thus –

¶2. The application does not state the period of delay involved in the matter nor does it give reasons for the delay. A bald explanation as ¶heavy pressure of work like investigation, issue of show cause notices, etc.¶are stated for the delay. The Section which deals with the appeals is the Appeal Section and the said section is not concerned with the investigations or issue of show cause notices. We are not satisfied with the explanation given...¶

Saying so, the Bench dismissed the application.

See 2013-TIOL-385-CESTAT-MUM

COD application dismissed earlier cannot be restored as Tribunal cannot review its own order

IN the matter of a Service Tax appeal filed by the appellant against the order passed by the Commissioner(A), the CESTAT had passed the following order –

¶In these circumstances, we do not find any merit in the application for condonation of delay as the reasons stated in the application are not satisfactory in the absence of any supporting evidence . Accordingly, the same is dismissed. Consequently, the appeal as well as stay application are also dismissed¶.

The appellant is now before the Tribunal with a restoration application and some supporting evidence namely, photo copy of the FIR for the bullet injury suffered by the appellant and also an affidavit stating that he was suffering from paralysis and did not recover from the ailment for a long period. Inasmuch as on account of the said reasons, the appeal could not be filed on time, submitted the appellant.

The Revenue representative submitted that once the COD is dismissed on merits by the Bench, the Tribunal cannot review its own order.

The CESTAT observed -

¶5. Earlier the COD, stay application and appeal were dismissed by this Tribunal after hearing the appellant and on going through the records of the case. The reasons as to why the application is not maintainable were also discussed.

6. In these circumstances, we cannot review our own order, which was passed after hearing the appellant on merits. Accordingly, we hold that the restoration of application is not maintainable and the same is dismissed.¶

See 2013-TIOL-384-CESTAT-MUM

Sun Micro Ordered to Pay Pre-Deposit of Rs. 75 Crores

IT is raining Pre-deposits for the Revenue. The CESTAT yesterday directed Sun Microsystems India to pre-deposit an amount of Rs. 75 Crores in addition to the Rs. 15 Crores already paid in a Customs case of under valuation for imports of computer spare parts from Sun Microsystems, Singapore.

Jurisprudentiol – Wednesday's Cases

Central Excise

Credit taken on capital goods cannot be denied on ground that same was used for processing of input/semi process goods on job work basis (under Rule 57F(4) of CER, 1944) which are exempted under notification No.214/86-CE – Revenue appeal dismissed: High Court

THE Respondent manufactured parts and accessories of motor vehicles and they had been availing MODVAT facilities under Rule 57Q of the CER, 1944. They had filed a declaration under Rule 57T(1) declaring that the said capital goods shall not be used for manufacture of excisable goods which is either exempted from payment of duty by notification or chargeable to nil rate of duty. The credit on capital goods was availed in the month of July, 1997.

It is the case of the department that records maintained by the respondent indicated that they were not receiving raw material for production of any dutiable excisable goods, but the capital goods were being used exclusively for processing of input/semi process goods on job work basis under Rule 57F(4) of the said Rules which are exempted under notification No.214/86-CE.

Income Tax

Whether an authority which has been established to promote development of all or, any of areas comprised in 'urban area' and vested with all powers to hold, acquire, dispose of property or frame schemes, can be considered as 'Municipality' within Section 2(14) of Act - YES: High Court

THE issues before the Bench are - Whether an urban area developed by Haryana Urban Development Authority forms part of the Municipality - Whether land acquired by notification issued under the Land Acquisition Act, which falls within 5 kms of Haryana Urban Development Authority, can be considered as capital asset; Whether an authority which has been established to promote and secure the development of all or, any of the areas comprised in an ‘urban area' and vested with all powers to hold, acquire, dispose of property or frame schemes, can be considered as 'Municipality' within Section 2(14) of the Act; Whether the expression 'Municipality' in Section 2(14) of the Income Tax Act is restricted to a Municipality constituted under the relevant Municipal Laws and cannot include any other area known by any other name; Whether local authority in terms of Section 3 (31) of the General Clauses Act means a 'Municipality' - Whether the nature of land whether it is agriculture or not is not relevant, if the land is within municipal limits and Whether the expression 'by any other name' appearing in Item (a) of clause (iii) of Section 2 (14) has to be read ejusdem generis with the earlier expressions i.e. municipal corporation, notified area committee, town area committee, town committee. And the verdict goes in favour the Revenue.

Service Tax

Appellant is not merely acting as a Commission Agent but does something much more than that i.e., designing, managing and operating a showroom, receiving goods on stock on transfer basis, undertaking sales promotion activities and collecting sale proceeds on behalf of the principal – such activities do not come within the purview of ¶Commission agent' as defined in notification no. 13/2003-ST hence benefit of exemption correctly denied – Order upheld and appeal dismissed: CESTAT

THE appellant owns a premium showroom and have been discharging service tax liability since November 2005 under the category of ¶Business Auxiliary Service¶. Scrutiny of the records of the appellant revealed that the appellant has entered into a Management Agent agreement dated 23/09/2005 with M/s. Titan Industries Ltd. (TANISHQ). As per the agreement, it has been made a Principal to Agent basis where the appellant shall display, stock and sell jewellery products to customers through the showroom managed and operated by the agent on a stock transfer basis. The appellant agent is required to ensure that the showrooms are best designed, maintained and operated and shall be responsible for the upkeep and maintenance of the showrooms. The appellant agent is also required to insure the premises, furniture and fittings and allied services to the satisfaction of the principal. The agent is further required to stock, display and sell the products in the showroom in the name of Titan Industries Ltd. and the cash memos issued for sale shall also carry the name of Titan Industries Ltd.

See our Columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a Nice Day

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