TIOL-DDT 2134
25.06.2013
Tuesday

REGARDING the amendment proposed by the Finance Bill, 2013 in the context of Customs House Agent, this is what the JS (TRU) mentioned in his DO letter dated 28/02/2013 -

(xiv) Section 146 is being substituted to change the nomenclature of "customs house agents" to "customs brokers" considering the global practice and internationally accepted nomenclature.

We had in the post Budget DDT-2056 mentioned this -

Customs Broker to replace Customs House Agent. The age-old institution of Custom House Agent (CHA) is to die giving place to the Customs Broker. The Bombay CHA association was started in 1937. Custom House Agent found a place even in the Old Customs Act, 1878. It is not known whether all the existing CHAs would be licenced as Customs Brokers or they have to go all the way to the Supreme Court. Section 146 of the Customs Act is substituted. A STABLE TAX REGIME!

By the Finance Act, 2013 enacted on 10th May, 2013 for section 146 of the Customs Act, the following section was substituted:-

Licence for customs brokers.

"146. (1) No person shall carry on business as a customs broker relating to the entry or departure of a conveyance or the import or export of goods at any customs station unless such person holds a licence granted in this behalf in accordance with the regulations.

(2) The Board may make regulations for the purpose of carrying out the provisions of this section and, in particular, such regulations may provide for-

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After more than a month of enactment of the Finance Bill, 2013, the Board has come out with the Regulations and they are called Customs Brokers Licensing Regulations, 2013 effective since last Friday i.e 21 st June, 2013. And the whole world came to know about it only yesterday. So much for transparency!

Comparison between the CBLR, 2013 & CHALR, 2004

THE total regulation count remains the same.

However, some of the notable features of the new Regulations are as below -

+ Regulation 5. Conditions to be fulfilled by applicant - The conditions are to be fulfilled before writing the exam. More eligibility conditions added - importantly of the applicant being a person of sound mind, that he is not adjudicated as insolvent, that he has not been convicted by a competent court for an offence nor any criminal proceeding is pending against him in any court of law and that he has not been penalised for any offence under the Customs Act, the Central Excise Act and the Service Tax law. For the Group A officer the earlier condition of having a minimum of 10 years service in Group A has been reduced to five.

+ Regulation 8 - Execution of bond & furnishing of security - Before granting the licence under regulation 7, the Commissioner of Customs shall require the successful applicant to enter into the bond in Form D and where specified a surety bond in Form E for due observance of these regulations and furnish a bank guarantee, a postal security or National Saving Certificate in the name of Commissioner of Customs for an amount of five lakhs rupees for carrying out the business as Customs Broker. Earlier this amount stood at Rs.75,000/-.

+ 12. Change in directors of company, etc. - In case a company holding a licence under regulation 7 undergoes any change in the directors, or managing director, such change shall forthwith be communicated by such licensee to the Commissioner of Customs within one month of such change. Earlier the period was sixty days.

+ 17. Employment of persons - (1) A Customs Broker may, having regard to the volume of business transacted by him, employ any number of persons to assist him after verifying their antecedent and identity at the declared address by using reliable, independent, authentic documents, data or information: Verification of antecedents etc. of employees before appointment was not mandated earlier.

+ Regulations 19 & 20 of CHBR, 2013 - Suspension of licence and Revocation of licence dealt with separately unlike earlier Regulation 22 of CHALR, 2004. Procedure for imposition of penalty also introduced.

+ 21. Appeal by a Customs broker - Provisions for appealing before the CESTAT against any order passed by Commissioner under these regulations is introduced. Earlier, the appeal to the CESTAT could be made only against the decision/order passed under regulation 20 or sub-regulation (7) of regulation 22 and which pertained to Suspension or revocation of a licence.

+ 22. Penalty - A Customs Broker, who contravenes any provisions of these regulations or who fails to comply with any provision of these regulations shall be liable to a penalty which may extend to fifty thousand rupees. Penalty provision introduced separately. This was not there earlier.

+ No Regulation akin to earlier Regulation 23 of CHALR, 2004 - This Regulation in CHALR, 2004 laid down that grant of a licence under these regulations does not confer any right to accommodation in a Customs Station. This Regulation does not figure in the new scheme of things. Does it mean they will get accommodation?

Notification 65/2013-Cus (NT) dated June, 21, 2013

Do we have Customs House Agents or Brokers or None Now?

AS per the Finance Act 2013, after 10th May 2013, there are no Customs House Agents - there will be only Customs Brokers. The Customs Brokers Licensing Regulations, 2013 have just been notified and there is no Customs Broker licenced yet under the new Regulations. It is not clarified as to what would happen to the old Custom House Agents. Do they automatically become Customs Brokers or should they get new licences? But as of now, we have neither Custom House Agents nor Customs Brokers. The transactions by CHAs from 21.6.2013 seem to be illegal!

They could have simply amended the Customs Act and the CHALR instead of creating all this confusion and possible litigation.

Standardizing process of filing application u/s 10(46) of I-T Act - CBDT Instructions

UNDER Section 10(46) of the Income-tax Act, specified income arising to a body or authority or Board or Trust or Commission, established or constituted by or under a Central or State Act or by a Central or State Government with the object of regulating or administering any activity for the benefit of general public, would be exempt from tax subject to the condition that the said entity is not engaged in any commercial activity. The entity eligible to claim tax exemption u/ s 10(46) is required to be notified by the Central Government in the official Gazette.

Since, at present, there is no uniformity in the manner in which applications under Sec. 10(46) are being filed by applicant, the entities seeking notification under Section 10(46) have been advised to file an application in the standardized format to the Commissioner of Income-tax/Director of Income tax under whose jurisdiction the case of the entity falls. A copy of this application has also to be endorsed to CBDT along with the acknowledgement receipt as evidence of having furnished the same in the office of jurisdictional CIT /DIT.

As the Central Government is the approving authority, the jurisdictional CIT /DIT are required to furnish his/her Comments on each and every point of the standardized tabular format within a reasonable time so as to facilitate CBDT in processing the matter appropriately.

The Board wants that the concerned CCIT would ensure that the report of jurisdictional CIT /DIT as per the eformat must reach the Board within 45 days of the receipt of the application.

Board also wants the field officers to be informed for strict compliance.

CBDT F. No. 196/6/2013-ITA.I, dated: June 24 2013

Tariff Values for Gold decreased

THE Central Government has decreased the Tariff Value (USD) of Gold. All other Tariff values remain unchanged. Gold would continue to hog the limelight - its tariff value may either increase or decrease but remaining unchanged is for the time being ruled out.

The rates as on 14.06.2013 and with effect from 24.06.2013 are as under:

Table 1

Table 2

Notification No. 66/2013-Cus (NT), Dated: June 24, 2013

Risk Management Systems (RMS) introduced in Exports

THE Board had vide Circular No. 43/2005-Cus dated 24.11.2005 introduced Risk Management System (RMS) in Imports as a trade facilitation measure and for selective interdiction of high risk consignments for Customs control.

After a positive feedback gathered over almost an eight year period, the Board has now decided to introduce RMS in exports in Customs locations where the Indian Customs EDI Systems (ICES) is operational. It is mentioned that the RMS in exports will enable low risk consignments to be cleared based on self assessment of the declarations by exporters and this would lead to an enhancement in the level of facilitation and speed up the process of cargo clearance. This would result in reduction in dwell time and achieve the desired objective of reducing the transaction cost in order to make the business internationally competitive. Many other modalities to be followed are also spelt out.

The RMS in Exports is scheduled for implementation from 15.07.2013 onwards at ICD Mulund and ICD Patparganj.

Circular No. 23/2013 - Cus., Dated: June 24, 2013

Judge walks out of Court Room

IT is reported that a High Court judge who had to defer 12 cases one after the other walked out of the court in frustration.

The reason - advocates from the Advocate General's office repeatedly seemed unprepared to present the government's cases and sought adjournment. After adjourning 11 cases, when the government pleader in the 12th case also sought an adjournment on the ground that he had not received files from the AG's office, the Justice felt that enough was enough.

The Justice said that the conduct of the Advocates was hampering the justice system and delaying justice to those who had approached the Court. Terming it a criminal waste of the Court's time, the judge walked out of the court hall in frustration.

The Justice later summoned the Advocate General and the President of the Advocates' Association. After expressing his displeasure at having to defer cases repeatedly,he said lawyers should cooperate to ensure that the courts worked smoothly.

This incident happened in the Kerala High Court

Jurisprudentiol – Wednesday's cases

Customs/Central Excise

Petitioner had procured inputs under Rule 19(2) of CER, 2002 without payment of excise duty and used same in manufacture of goods exported - argument of revenue that since petitioner paid excise duty subsequently after issuance of show cause notice, hence, the petitioner is not eligible for drawback benefit is not acceptable because there is no such condition mentioned in proviso to Rule 3 (1) of the Drawback Rules, 1995: HC

THE petitioner is engaged in manufacture and export of skimmed milk powder, full cream milk powder, butter oil etc. The petitioner was sanctioned drawback and the amount was also paid to the petitioner. Later on, notices were issued to the petitioner for recovery of the amount on the ground that the petitioner was not eligible to receive drawback under Rule 16 of Customs & Central Excise Duties Drawback Rules, 1995. Consequently, the petitioner was ordered to deposit the amount with interest.

Income Tax

Whether fact that TDS was not deducted on certain payments made by assessee, was declared so in return filed, even then AO can resort to re-assessment on ground of failure to make full and true disclosure of facts - NO: HC

THE issues before the Bench are - Whether reopening of assessment is warranted after the expiry of four years, although the assessee has, in pursuant to queries raised by the AO, disclosed all details of the dealers, who have received payments in excess of Rs 50 lakhs; Whether further assessment can be reopened on the alternate ground that the assessee has not provided details of payments below Rs 50 lakhs, when there is no distinction with respect to TDS liability due to the size of payments; Whether assessment can be reopened beyond the expiry of four years, although the AO has failed to raise the issue of non-deduction of TDS, at the time, when all details of payments and dealers were provided by the assessee; Whether it is the responsibility of the assessee to raise the contention that such tax at source is not required to be deducted and justify the same by pointing out legal provisions and judgements, if any; Whether the fact that tax at source was not deducted on such payments made by the assessee was part of the returns filed, does not mean that there was no failure on part of the assessee to disclose true and full material facts; Whether prior to conferring jurisdiction on the AO, for issuing notice for reopening assessment beyond a period of four years, twin conditions of section 147 must be simultaneously satisfied; Whether once primary facts are before the AO, he requires no further assistance by way of disclosure from the assessee and Whether the assessee is duty bound to tell the assessing authority what inferences, whether of facts or law, should be drawn. And the assessee's writ is allowed.

Service Tax

BAS - show cause notice should not be read with hyper technicality - What that is intended by subject, language and object of show cause notice shall be understood in such manner that said notice seeks to achieve - appellant advanced the object of its client service provider giving source of information to ultimate user through code number - Pre-deposit ordered: CESTAT

THE first count of service tax demand of Rs. 2,95,63,317/- is under the category of "Business Auxiliary Service". Second count of demand is under category of "Management, Maintenance or Repair Service". The appellant submitted that a reading of Para 2.5 of show cause notice does not indicate nature of service provided to be "Business Auxiliary Service" for the reason that access code number was provided by the appellant to reach to the source of information to serve their purpose. According to the appellant, there was no service provided by appellant to be taxable because real service was provided by other service provider on use of contact code by service seeker. On the second count of demand it was submitted that when software were not goods prior to 1.6.2007, management, maintenance or repair thereof shall not be liable to service tax for the period up to 31.5.2007.

See our Columns tomorrow for the judgements

Until tomorrow with more DDT

Have a nice day.

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