News Update

FM reviews CAPEX of CPSEsGovt writes to over 2800 corporates to clear MSME duesGovt carrying out reforms in every sector of economy to prop up growth: PMIgnoring limitation proves costlyInverted duty structure - A Case study (See 'TOG Insight' in Taxongo.com)CBIC promotes four officers as Pr Commissioner of Customs & Central Excise + posts Sameer Pandey as DS in GST Council SecretariatSC cannot be a place for Govts to walk in when they choose, ignoring period of limitation prescribed - Petition dismissed as time barred; costs imposed on State for wasting judicial time - amount to be recovered from officers responsible: SCIs penalty compulsorily attracted on late payment of GST?No mutation of COVID-19 detected in India: Health MinisterCus - Goods re-imported for repair and re-exported - Merely because Assessee could claim duty drawback later on and it may give rise to a revenue neutral situation, it cannot be said that period of one year prescribed in 158/95-Cus is without any meaning: HCST - Payment of mobilization advance is a separate financial transaction within contract for providing of service & so is not to be included in gross taxable value as per Section 67 of Finance Act 1994 - duty demand cannot be raised thereon when there is no allegation of any part of contracted value having evaded taxation: CESTATBSVI introduction a revolutionary step: JavadekarCX - It is settled position in law that an assessee is entitled to interest on delayed disbursal of refund after three months from date of filing of refund claim till date of its realisation: CESTATCus - Drawback - After turning down request for taking test samples, Revenue cannot brush aside report given by an expert Committee simply for the reason that sample was not drawn and referred by Department: CESTATPayment made to a trust formed for the benefit of employees of the company, of which the assessee was a shareholder & whose shares the assessee had sold, does not qualify as expenditure incurred wholly in connection with transfer of asset: HCBogus purchases - only the profit element embedded therein is to be disallowed, rather than the entire quantum of purchases made: ITATSearch assessment is invalid where it is completed even before search operations are conducted or where any material incriminating the assessee has not yet been found: ITATWhere assessee did not claim exemption in respect of one residential property, the assessee can avail such benefit in respect of a second house or plot of land: ITATIndia successfully test-fires cruise missile from Indian Navy’s destroyer INS ChennaiCOVID-19: Global tally goes past FOUR Crore with 11.15 lakh deaths; America has close to 27 lakh active cases against 8 lakh in IndiaCOVID-19 - Almost 80% new cases coming from 10 StatesCountrywide S&T infrastructure facilities to be accessible to industry & startups: GovtPM calls for speedy access to vaccines once readyNew Zealand PM earns second term for managing COVID-19 wellDigital Media - Govt to extend all benefits available to othersGovt not considering any DA for Govt employees: GangwarCBDT issues transfer order of 395 Addl / JCITs on All India basisSBI given nod for sale of electoral bonds for 10 daysEducation CESS - the spoilt fruit
 
TIOL sensitises Govt about circular trading in precious metals; DGFT prescribes higher value addition norms and calls for a match for forex outgo

By TIOL News Service

NEW DELHI, FEB 12, 2005 : TAKING note of the TIOL report on circular trading by some SEZ units in some precious commodities like gold and platinum for taking benefits of differential interest rate between Libor and FD rate in India at the cost of abnormal exposure of our banking system the Government has finally worked out an effective way out. Instead of using the RBI instrument the Govt asked the DGFT to prescribe a higher value addition formula for exports of studded jewellery.

It may be recalled that the TIOL had first highlighted circular trading in gold and the RBI had come out with a detailed guidelines in its response. Then we came out with another report headlined ''RBI once again caught napping; After gold, SEZ trading units latch on to platinum exports for circular trading!''.

It was reported with reference to RBI Circular No 2 (RBI/2004-05/30 ) that “units have switched over to other precious metals like platinum and palladium and the same circular trading continues between India and Dubai. Since our policy makers underestimated the market wisdom of such exporters and did not mention trading in other precious metals in that circular a large number of gold exporters saw an escape route in that circular and coolly shifted to exports of platinum group of metals.

It all started with a handful of exporters making a beginning in this trade. Soon, copycats joined them. And then, Development Commissioner got flooded with applications to amend the LOC to include these precious metals in the list of commodities in which these trading units intend to transact.”

It has been emphasised by DGFT that the CIF value of gold will be equivalent to the total outflow of foreign exchange on account of gold content in the export product plus the admissible wastage and this will include imported gold and gold procured from other sources used in the export product.

Handbook of Procedures Volume I (2004-09) prescribes the following provisions on Minimum Value Addition:

“The studded jewellery falls under Para 4.56.1(a) of Handbook of Procedures Volume I (2004-09), and accordingly the minimum value addition required for studded gold/ silver/ platinum jewellery of all types is 15%.”

Further, Para 4.68 of the Handbook of Procedures Volume I (2004-09) prescribes the formula for calculation of value addition as under:

“Value Addition -Under the scheme for export of jewellery, the value addition shall be calculated with reference to the CIF value of gold/ silver/ platinum which shall be equivalent to the total outflow of foreign exchange on account of gold/ silver/platinum content in the export product plus the admissible wastage. Wherever gold on loan basis has been given, the CIF value shall also include interest paid in free foreign exchange to the foreign supplier.”

As stressed by DGFT the abovesaid Para does not talk about CIF value of the imported gold only, rather it talks about total outgo of foreign exchange with reference to the gold content in the export product plus the admissible wastage.

(See full text of DGFT Cir No.18/2004-09 under DGFT category) 


POST YOUR COMMENTS