TIOL-DDT 1855
11.05.2012
Friday

DDT 1318 - 15.03.2010 observed, "FOR setting up an EOU in India, you need two things. One is LOP from the Development Commissioner and the other is a Master's in Mathematics from a reputed University. The former is required for carrying the operations as EOU and the latter for computing the duties payable on DTA clearances and the CENVAT Credit against such clearances"

In the Sarla Polyesters case 2008-TIOL-985-CESTAT-AHM, the CESTAT held that the third time cess is payable.

The High Court (2008-TIOL-516-HC-MUM-CX) set aside the CESTAT order and remanded the matter to the Tribunal.

On remand, as per the directions of the Bombay High Court, Tribunal served notice to the general public so that all the parties who are interested may also apply as interveners. After hearing the appellants, the interveners and the departmental representative, the CESTAT held, "What is required for the purpose of proviso to Section 3 of Central Excise Act, 1944 is to arrive at aggregate of customs duties and once we take a view that education cess is part of the customs duty and is an enhancement, the question of adding it again does not arise". (Sarla Performance Fibres Ltd v CCE, Vapi - 2010-TIOL-408-CESTAT-AHM)

In spite of this, Show Cause Notices and Adjudication Orders are being issued in almost all Commissionerates.

In the RAC meeting held on 16.09.2011, the Commissioner of Central Excise, Noida clarified, "As regard to issue of Show Cause Notice to EOU for the recovery of Education Cess and Secondary Higher Education Cess for third time, it is intimated that CESTAT order in case of M/s Sarla Performance Fibre Ltd has not been accepted by the department and an appeal against aforesaid order has been filed by the department". This is what many of the Adjudicating and Appellate Authorities are writing in their orders without even mentioning the Appeal Number and the Court where it is appealed.

The Gujarat High Court has dismissed the appeals filed against the CESTAT Order. The High Court dismissed the Department's appeals on the ground that the appeals were not maintainable before the High Court as it was a question of rate of duty and the appeal had to be made to the Supreme Court.

Let us hope the Department accepts the High Court order without going to the Supreme Court.

Please see 2012-TIOL-359-HC-AMH-CX

FTP – DGFT Notifies SION For Tubular Bags

DGFT has notified a SION, bearing number J-375 in respect of the export product “Tubular Bags (Gauntlet)”. This new entry would be as:

So far, there was no SION for this export product.

DGFT Public Notice No. 111/(RE:2011)/2009-2014, Dated: May 10, 2012

FTP - Additional conditions for obtaining cotton RCs

TRADE Notice No. 1 dated 8th May 2012 (please see DDT 1853 – 09.05.2012) was issued stipulating the procedure that would be adopted for issue of cotton RCs in addition to that provided in Notification No.113 of 4th May 2012. The following additional points are being stipulated to further streamline the registration process:

1. Maximum quantity for which an application for obtaining a RC can be made was indicated as 10000 bales (1 standard bale is equal to 170 Kg) in Notification No. 113 of 4th May 2012. Thus, any application/e-mail for more than this quantity will be summarily rejected.

2. Each e-mail sent to cottonexport-dgft@nic.in has to mention details of the letter of credit/FIRC (giving evidence of advance payment). Number of the instrument and date of such instrument (LC/FIRC) has to be mandatorily mentioned in the message body of e-mail.

3. Once the e-mail has been sent to DGFT, hard copy of the application along with printout of the e-mail sent must be submitted to RA within 2 working days. For example, if the e-mail is sent on Thursday 10th May 2012 then the hard copy has to be submitted on or before Monday 14th May (two working days i.e. 11th May and 14th May).

DGFT Trade Notice No. 2/2012 Dated: May 10 2012

FEMA - Exchange Earner's Foreign Currency (EEFC) Account

AS of now, all foreign exchange earners are permitted to retain 100% of their forex earnings in EEFC account with any AD in India.

On a review of the Scheme, RBI has decided-

a) 50% of the balances in the EEFC accounts should be converted forthwith into rupee balances and credited to the rupee accounts as per the directions of the account holder. This process may be completed within a fortnight from the date of the circular and compliance reported.

b) In respect of all future forex earnings, an exchange earner is eligible to retain 50% (as against the previous limit of 100%) in non-interest bearing EEFC accounts. The balance 50% shall be surrendered for conversion to rupee balances.

c) The facility of EEFC scheme is intended to enable exchange earners to save on conversion/transaction costs while undertaking forex transactions in future. This facility is not intended to enable exchange earners to maintain assets in foreign currency, as India is still not fully convertible on Capital Account. Accordingly, EEFC account holders henceforth will be permitted to access the forex market for purchasing foreign exchange only after utilising fully the available balances in the EEFC accounts. ADs may, accordingly, obtain a declaration while selling foreign exchange to their constituents.

RBI AP (DIR Series) Circular No. 124, Dated: May 10, 2012

Christian Lady with a Purdah - Another Way to Smuggle

A MAN, his wife and two children were happily walking towards the exit gate through the Green Channel, yesterday at the Cochin International Airport. The Customs Officer at the gate found a jarring note. The man had a Christian name and on verification of the passport, the Customs officer found that the wife also had a Christian name. Why was this Christian lady wearing a purdah? A lady officer was called in to search this Muslim looking Christian lady and it was found that this lady was concealing 426 grams of gold jewellery worth Rs. 12.23 Lakhs under the long sleeves of purdah and scarf.

In her voluntary statement before the Customs, she admitted that she wore the purdah and scarf to conceal the gold ornaments, which she had worn to avoid detection and payment of duty. Customs Deputy Commissioner Nasser Khan informs that the gold was seized and a case registered.

Shantigosthi by Central Excise Superintendents

SUPERINTENDENTS of Central Excise held a Shantigosthi at Jantar-Mantar yesterday. They wanted to protest at the residence of the Finance Minister, but Police did not allow that and so they shifted the venue to Jantar Mantar.

In a Memorandum to the Finance Minister, Ravi Malik, Secretary General of the All India Association of Central Excise Gazetted Executive Officers, demanded-

Customs

Prosecution - DRI takes 15 years to produce pre-charge evidence - Charge framed in 2006; evidence yet to be completed - DRI is taking its action at its own will, without realizing importance of time - every accused has a right to have an expeditious disposal of his trial - Cost imposed on DRI not to be given to accused: HC

THERE is no dispute about the fact that every accused has a right to have an expeditious disposal of his trial. This is now a Fundamental Right guaranteed to an accused person under Article 21 of the Constitution of India. In the instant case, the Prosecution was initiated by the petitioner in the year 1991 and more than two decades have gone by and still the Prosecution has not been able to conclude its evidence. If these things are permitted to be done at the pace at which the Prosecuting Agency wants to do, then it will take at least another decade for the accused to face the trial. This is totally unacceptable. Even if seen from the angle that the charge was framed against the respondents way back in 2006, and since then more than five years have elapsed, still the evidence of the petitioner has not been completed. DRI has filed the present petition after a delay of almost eight months, which clearly shows that the petitioner is taking its action at its own will, without realizing the importance of time.

Income Tax

Whether merely because panchnama mentions name of assessee also, it proves that warrant of authorisation was issued, and block assessment is valid - YES, rules Delhi HC

A SEARCH u/s 132 of the Act was conducted on 21.11.1996, pursuant to the warrant of authorization. Thereafter, the block assessment order dated 28.11.1997 u/s 158BC of the Act for the period ending 21.11.1996 was passed in the case of the assessee. One of the grounds raised by the assessee before the Tribunal was that the warrant of authorization did not include and mention the name of the assessee and therefore, the block assessment proceedings u/s 158BC were invalid and illegal for the want of jurisdiction as only the assessee who had been searched could be subjected to the said procedure. For other persons, the procedure u/s 158BD had to be adopted and the said procedure was not followed in the present case.

Central Excise

Manufacture - blending of MS with MFA does not result into manufacture of new product, even if emerged product is branded as 'speed' and marketed after some value addition: CESTAT

THE Commissioner of Central Excise, confirmed the duty including cess of Rs. 15,26,92,645.00 and imposed equivalent penalty, observing that the process of blending of MS with MFA results into a product called as 'speed' having different physical and chemical characteristics, nomenclatures and uses. The said new product is not only costlier to the normal MS but is more efficient in its utility also. He has reasoned that addition of MFA increases the adequacy of fuel system, cleanliness and performance of engines. Finally, he has concluded that 'speed' is a distinct manufactured product in terms of Section 2(f)(i) of the Central Excise Act, 1944 and accordingly liable to duty.

See our columns Monday for the judgements

Until Monday with more DDT

Have a Nice Weekend

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