TIOL-DDT 854
29.04.2008
Tuesday The Government had by Notification No. 102/2007-Customs dated 14.9.2007 exempted goods imported for subsequent sale in India, the whole of Additional Customs Duty under section 3(5) of the Customs Tariff Act, to counter balance the sales tax, VAT etc., The exemption works in a roundabout way of first paying the duty and then claiming refund. And the refund is subject to conditions like the Additional Duty is not claimed as a credit and the importer paying the appropriate sales tax/VAT when the goods are sold. Now the Board has further complicated matters by issuing a clarification yesterday. As per the Board Circular, All refund applications under the aforesaid notification shall be received by the concerned field formations in their Centralized Refund Section, and the applicants would be given proper acknowledgement. Time – Limit: Though no time limit is fixed in the notification: Taking into account various factors, it has been decided to permit importers to file claims under the above exemption upto a period of one year from the date of payment of duty. Necessary change in the notification is being made so as to incorporate a specific provision prescribing maximum time limit of one year from the date of payment of duty, within which the refund could be filed by any person. Unsold stocks would not be eligible for refunds. It is also clarified that only a single claim against a particular Bill of Entry should be permitted to be filed within the maximum time period of one year. Filing of refund claim for a part quantity in a bill of entry shall not be allowed except when this is necessary at the end of the one year period. Documents to be enclosed with refund claim : Notification No.102 /2007-Customs dated 14.9.2007 prescribes the documents that shall be enclosed along with the refund claim. In order to ensure sanction of refund properly, it is clarified that the document evidencing payment of ST/VAT (in original) duly issued by or acknowledged by the concerned ST/VAT authorities shall be submitted by the importer. A certificate from a Chartered Accountant or any other independent authority certifying payment of ST/VAT would not be acceptable in lieu of the original documents. However, a certificate from the statutory auditor / Chartered Accountant, who certifies the importer's annual financial accounts under the Companies Act or any statute, correlating the payment of ST/VAT on the imported goods (in respect of which refund is claimed) with the invoices of sale, would be required along with the original tax / duty payment documents as proof of payment of appropriate ST/VAT for the purpose of para 2(d) & (e) of the said notification. Unjust enrichment: The principle of unjust enrichment needs to be examined in each case before sanction of refund under this notification. However, considering the voluminous transactions and the documents involved in the cycle, from import to sale, it was felt that it would be expedient to allow the importer to submit a certificate from the statutory auditor / Chartered Accountant who certifies the annual accounts of the importer, that the burden of 4% CVD has not been passed on by the importer to the buyer and to fulfill the requirement of unjust enrichment. 4% paid through DEPB : It is clarified that instead of refunding the duty in cash, the amount eligible for refund should be re-credited on the relevant DEPB Scrip. The whole idea seems to be to somehow ensure that the refund is not given. If that be so, why all this farce? CBEC Circular No. 6/2008- Cus ., Dated: April 28, 2008 Can a Circular override an exemption notification? A concerned Netizen sent us a mail, “Whether an administrative circular of CBEC can override an exemption notification. If yes, following is the point. Notification No.102 /2007- Cus dated 14.09.2007 stipulates that the importer shall, inter- alia, provide copies of the following documents along with the refund claim: (i) document evidencing payment of the said additional duty; (ii) invoices of sale of the imported goods in respect of which refund of the said additional duty is claimed; (iii) documents evidencing payment of appropriate sales tax or value added tax, as the case may be, by the importer, on sale of such imported goods. Now, the circular No. 6/2008- Cus dated 28.04.2008 stipulates to submit original tax payment document for purpose of refund. Our query: Whether a circular can override the condition given in notification. Please give your comment. Certainly the Circular cannot over ride the notification, but you know the circulars are binding on the Department and that means the Law is on your side but what you want is the refund and that is with them! In fact tomorrow we are carrying a Supreme Court order wherein it was observed, If the revenue is allowed to undertake such an exercise, the requirement of publication in official gazette and laying a notification before each House of the Parliament would become nugatory and such a course of action is not envisaged by the Act. It would give licence to the executive to bypass/override the legislature and cannot be countenanced. 5% Entitlement Rate under VKGUY Scheme, for shipments under Duty Drawback Scheme The DGFT has clarified that where export is under DEPB Scheme, for claim of DEPB only for Packing Material, exporters are entitled to VKGUY Scheme benefits @ 5% of Fob Value of Exports. It has been similarly decided that wherever Duty Drawback Rate is up to 1% only (including both Customs & Excise components), such exports under Duty Drawback Scheme are entitled to VKGUY Scheme benefits @ 5% of Fob Value of Exports. It is also clarified that since the above provision (as in 2 above) was introduced in FTP ( RE2006 ), this provision applies for VKGUY Scheme benefits on exports made on or after 1.4.2006. DGFT Policy Circular No. 03 (RE-2008)/2004-2009, Dated: April 24, 2008 Export of Milk Products – FMS not applicable As per Public Notice No 5( RE2008 )/2004-09 dated 17.4.2008, after Sub Para 3.9.2.2 (m), sub para 3.9.2.2 (n) of the Foreign Trade Policy, is added: “For exports w.e.f 17.4.2008, Export of Milk and Milk Products, covered under ITC HS Codes 0401 to 0406, 19011001, 19011010, 2105, & 3501” . This shall apply for exports w.e.f 17.4.2008. Consequently, for exports w.e.f 17.4.2008, export of Milk and their value added Products (covered under ITC HS codes 0401 to 0406, 19011001, 19011010, 2105, & 3501), shall not be entitled to Focus Market Scheme benefits. DGFT Notification No. 6 (RE-2008)/2004-2009, Dated: April 24, 2008 Bids in foreign currency for projects to be executed in India – RBI relaxes Person resident in India had been permitted to incur liability in foreign exchange and to make or receive payments in foreign exchange in respect of global bids where the Central Government has authorized such projects to be executed in India and the approval of the concerned Administrative Ministry has been obtained. In such cases, authorized dealers are permitted to sell foreign exchange to the resident Indian company which has been awarded the contract. As a measure for procedural simplification, RBI has decided, in consultation with Government of India, that the prior permission of Administrative Ministry / Authorization from Central Government may not be necessary for International Competitive Bidding ( ICB ). Accordingly, persons resident in India are now permitted to incur liability in foreign exchange and to make or receive payments in foreign exchange in respect of global bids for projects to be executed in India without insisting on prior approval of the concerned Administrative Ministry for the International Competitive Bidding. RBI Circular No. 39/ RBI ., Dated: April 28, 2008 Rupee Export Credit Interest Rates RBI has clarified that interest subvention on export credit has been extended by one more year from April 1, 2008 till March 31, 2009 on the terms and conditions as they existed on March 31, 2008. Accordingly, banks would continue to charge interest rates not exceeding BPLR minus 4.5 and 6.5 percentage points on pre-shipment credit up to 180 days and post-shipment credit up to 90 days on the outstanding amount for a further period starting from April 1, 2008 to March 31, 2009. RBI DBOD.Dir . ( Exp). BC.No . 77/04.02.01/2007- 08 Dated: April 28, 2008 Interesting Discussion on the Finance Bill. The Budget evoked some interesting discussion in the Lok Sabha as the following observations would show. Please note, these are not extracts from Official records of Parliament, but compiled by our Budget Team and the actual words may be slightly different. RUPCHAND PAL : I asked a question long back. I repeatedly tried, maybe four times, to know as to how many people in our country mention in their annual returns that they have an annual income of more than Rs.10 lakh . FM : That number is small, I agree, but do you agree that after this Government came that number has sharply increased and we are collecting more taxes and more people are disclosing an income of more than Rs.10 lakh ? That number is still small but I have made efforts in the last four years and the number has dramatically increased. I will give you the correct number when I will reply to the discussion. RUPCHAND PAL : I know that repetition by people like us has at least yielded some result. I can say that at least it has yielded some result. But if you look at the expenses being made, in single night in some hotel lakhs and lakhs of Rupees are being spent for marriages. The Government says that it has no wherewithal, commercial intelligence, of course. FM : Since it is available now, let me give you the number. Sir, when this Government took over the number of individuals declaring an income of more than Rs.10 lakh was 97,412 and I had said that it was less than one lakh . Numbers for the year 2007-08 are not available but 2006-07 assessment year, that is 2005-06 financial year the number is now 1 ,77,051 . By 2007-08, assessment year 2008-09, I have no doubt this number will be even larger. Therefore, I agree it has nothing to do with the efforts we have made but it is because of Shri Rupchand Pal and his team. RUPCHAND PAL : I do not say like that. Let it be taken as the success of the hon. Finance Minister and his team but at least discredit may be given… KHARABELA SWAIN : You are lucky. The income was less. FM: Income was less because growth was also less in your Government. That was the reason. The growth was averaging 5.3 per cent for five years. For six years growth was 5.8 per cent and income was less. In our Government the average growth is 8.8 per cent, more income and, therefore, more tax. KHARABELA SWAIN : You yourself have admitted that it is because you have inherited a very good economy. You may see what your successor will do. FM: My successor will also be from the Congress Party RUPCHAND PAL : I also compliment the hon. Finance Minister on another issue that is the direct tax today is more than the indirect tax. This is a great achievement and I fully agree with it. . Indirect tax actually hurts the poor, the common people. He had been making every endeavour with all his limitations. First limitation is the mindset and obsession. Second limitation is his team. I shall come to that. FM : Second limitation is mindset and the first limitation is Shri Rupchand Pal. RUPCHAND PAL : I shall come to that later on. This Government has been trying to improve the tax administration. I can refer to one observation made by this year's Standing Committee that this Government has miserably failed to complete the computerization programme. It was estimated at Rs.251 crore and was to be completed by June 2006, as far as I remember. It is 2008 now and computerization has not been completed. There has been inordinate delay in this regard. Complete computerization could have helped. There are inadequacies in PAN also. I had repeatedly asked about the software because there has been some inadequacy in the software itself. Huge expenses have been incurred already. There are more than 13 lakh double PAN cards. Many of them are being misused for several purposes. Now the Government says that we should make them biometric. It is a good thing. But even before that, the computerisation programme needs to be completed. In certain levels, there are continuing vacancies and the Government has not addressed some small and minor problems. Take for example recruitment rules for customs. For the lack of recruitment of Inspectors and Superintendents, they are stagnating. I am not going into all the details but I am giving you some of the details. For example, the Sepoys in customs are trained with guns at par with Constables in CISF and CRPF . But they are not considered as Constables. It is wastage of human resource. Our trained people in the customs are repeatedly saying that. I had also written some letters but I do not know whether you have received them or not. I have made some positive suggestions about vacancies in the Income Tax Department, for having promotion policy, etc. The situation has improved but it is not adequate. So, there is a grievance. If you reduce the number of people, then only with machine, you cannot earn revenue. The Department of Revenue should be given a more sympathetic consideration because they are contributing to your kitty. Jurispruden tiol – Tomorrow 's cases  Customs
Department could not, by issuing a circular subsequent to the notification, add a new condition to notification thereby either restricting the scope of exemption notification or whittle it down: SC In relation to entry at Sr.No.29 no condition is prescribed. Similarly no condition is prescribed in relation to entry at Sr.No.34 or even in entry No.28 . If the Notification No.17 has not provided for any condition, in our opinion, subsequent circular cannot impose such a condition as the same would tantamount to rewriting Notification No.17 or in other words legislating by circular, which is not permissible in law. As can be seen from the relevant provisions with special reference to Section 25 read with Section 159 of the Act, a notification under Section 25 of the Act requires publication in the official gazette as well as requires tabling before both the Houses of Parliament and if that exercise has been carried out without any condition being imposed in the Notification No.17 it would not be permissible to permit revenue to impose such condition by way of circular. If the revenue is allowed to undertake such an exercise, the requirement of publication in official gazette and laying a notification before each House of the Parliament would become nugatory and such a course of action is not envisaged by the Act. It would give licence to the executive to bypass/override the legislature and cannot be countenanced Income Tax Does Sec 127 of Income Tax Act, related to transfer of a case from one AO to another, apply to block assessment as well? Supreme Court says Yes , it does; Sec 158BH leaves no room for doubt THE question before the Apex Court was the applicability of Sec 127 of the Income Tax Act to the block assessment case? Sec 127 is related to the transfer of a case from one jurisdiction to another by the Revenue for more effective and coordinated investigation. And the Apex Court has held that the provisions of Sec 158BH categorically states that all other provisions of the Act shall apply to assessment made under this Chapter, and Section 127, which falls under Chapter XIII would therefore mutatis mutandis apply to Chapter XIV-B particularly when the jurisdiction of the Income Tax Authorities relates to passing an order of assessment. Service Tax Consignment stockist for GAIL – CF Agent? – Matter remanded by Supreme Court What is necessary for determining the question is as to whether the purported job of the appellant as a clearing and forwarding agent was incidental to its main activity, namely, getting orders from the clients and selling the products to various customers of the company or not. See our columns tomorrow for the judgements Until tomorrow with more DDT Have a nice day. Mail your comments to vijaywrite@taxindiaonline.com |
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