TIOL-DDT 2078
04.04.2013
Thursday

WE have now received the complete text of the Bangalore CESTAT order passed under Rule 41 of the CESTAT (Procedure) Rules, 1982 (Please see DDT 2077). The CESTAT directed all the Chief Commissioners not to take coercive steps to recover the disputed amounts when the Stay applications are pending before the CESTAT:

(a) unless the case is one where Service Tax/Central Excise duty has been collected but not paid;

(b) unless the case is one of admitted duty/service tax liability [before adjudicating authority/Commissioner (Appeals)] yet to be discharged with interest;

(c) If the case is one where the assessee has deposited the entire duty/service tax liability determined at any stage;

(d) unless the case is one where Commissioner (Appeals) has rejected the appeal on the ground that the appeal was filed beyond the time limit.

Where the Commissioner of Central Excise/Customs/Service Tax thinks that the assessee does not have a prima facie case and pre-deposit is to be ordered and where the Duty/Service Tax/CENVAT credit demanded is more than Rs. 1 crore, it will be open to the Commissioner concerned to file an application for out-of-turn hearing of the stay application filed by the assessee, certifying both the aspects. Such applications shall be listed to be considered within 30 days of filing.

The order is to be sent to all the Chief Commissioners in Andhra Pradesh, Karnataka and Kerala for immediate circulation and compliance.

It is to be seen as to how the Chief Commissioners react.

We bring you today the Order dated 02.04.2013 - yet another record by your TIOL.

Please see 2013-TIOL-553-CESTAT-BANG

And the complete text of Karnataka HC order on additional CESTAT Benches

RECENTLY, Karnataka High Court has directed the Union of India to constitute additional Benches of CESTAT for early disposal of the Stay applications. The High Court was disposing of the Writ Petitions filed against the CBEC Circular dated 01.01.2013. The High Court observed that for three Southern States, there is only one Bench and a large number of matters are pending consideration. If that is so, then Union Government must wake up to the clarion call and constitute any number of Benches as may be required for speedy disposal of the appeals. The High Court has also directed that a compliance report should be filed before the Registrar General before 03.06.2013, failing which, the matter would be taken seriously.

Please see 2013-TIOL-264-HC-KAR-CX

In case Tribunal gives a contrary decision, Commissioner has fullest respect for same and shall abide by same in letter and spirit

WE reported the final order passed in this case as 2013-TIOL-433-CESTAT-MUM and the issue involved was import of a “Hummer Car”. The Bench had inter alia held that the appellant was entitled for the benefit of notification 21/2002-Cus and while allowing the appeals also held - “In Customs Act nowhere is it mentioned that arranging for loan or giving amount on lease for payment of duty of imported goods constitutes offence for imposition of penalty under Section 112(a)/(b)”.

Although the appeals were allowed with consequential relief, no such consequential relief came their way. So, the applicant has filed a miscellaneous application seeking release of the bank guarantees of Rs.20 lakhs executed by them while seeking provisional release of the “Hummer”.

The Bench noted that the final order was passed on 30.10.2012 in the Open court and as per the Board's Circular no. 802/35/2004-CX dated 8.12.2004, when an issue is decided by the Tribunal in favour of the assessee, Revenue is bound to release the Bank guarantee within 90 days of the said order.

A report was, therefore, called from the Commissioner of Customs(Import), Nhava Sheva and this is the reply addressed to the Commissioner (AR) -

“…As submitted earlier, DRI, Mumbai has requested this office to file an Appeal before the Hon'ble Supreme Court against the judgement of Hon'ble Tribunal. Accordingly, this office is in the process of sending a proposal to the Legal Cell, CBEC for filing an appeal along with the stay application on the said order.

You are, therefore, requested to plead before Hon'ble Tribunal craving their indulgence to allow us to hold the Bank Guarantee for a period of six months, pending filing of an Appeal before the Hon'ble Apex Court and finalization of Stay application.

You are also requested to kindly impress upon the Hon'ble Tribunal that Bank Guarantee is the only security towards realizable and legal revenue. Without any collateral security, like Bank Guarantee, the interest of the Revenue would be in jeopardy.

This Commissionerate would be highly obliged if the Hon'ble Tribunal grants us a six months time period for the return of Bank Guarantee. However, if Hon'ble Tribunal gives a contrary decision, we would have the fullest respect for the same and shall abide by the same, in letter and spirit.

Yours faithfully,

Xxx”

The Bench observed -

“3. As per the Board's Circular, the Revenue is bound to release the bank guarantees unless and until it is stayed by the higher forum. No stay is obtained by the Revenue as per the report filed by them. Therefore, in the interest of justice, Revenue is granted 10 days time to comply with the Tribunal's order dated 30.12.2012 (sic), failing which the concerned official shall face the consequences. The matter to come up on 08/04/2012 (sic).

2. Copy of this order be given Dasti.”

A department that is prompt to abide by the Board Circular 967/01/2013-CX while effecting recovery should also be sportive enough to follow the Board Circular 802/35/2004.

DDT will keep you posted on the case.

(See 2013-TIOL-552-CESTAT-MUM)

Tough Targets - CBEC meets; CBDT lags behind

IT is understood that the CBEC has surpassed its revised Revenue Target for 2012-13 by over 4000 crores rupees while the CBDT which was expected to be in celebration mode found itself falling short of the revised target by about 18000 crores. The CBEC could have got a little more had they not issued the draconian New Year Circular. Anyway now the agitating employees of the CBEC can demand their cadre review as a reward for surpassing the target.

We can get back to 8 per cent growth - PM

THE Prime Minister was addressing The CII National Conference and Annual General Meeting, in New Delhi yesterday. Some excerpts:

In my last address I chose to strike a contrarian note. At a time when everything seemed to be going exceptionally well, I struck a note of caution. I said that while we have achieved much, we also have a great deal more to do to create a growth process that is truly inclusive. I also said that while the visible growth and prosperity of Indian big business, including especially its presence abroad, was in many ways a projection of India's success, there was also need to reflect on the social responsibilities of business. I specifically mentioned the need for restraint in the matter of paying salaries and conspicuous consumption.

In 2007, I often heard it said that government had become irrelevant because India will grow at 9 percent whatever the government does. The consensus today is that unless the Government acts swiftly, our growth, which has already decelerated, will be perennially stuck at 5 percent.

If we go back to 15 years the average was also 7.5 per cent. This kind of dynamism doesn't disappear suddenly, and we must prove the prophets of gloom as wrong. We are seeing, I believe, a temporary downturn, which does happen. After all, business cycles have been a recurrent theme of all textbooks in economics in the past. I believe, we have seen a temporary downturn, which does happen from time to time. We must recognise it as such and take corrective action.

We cannot do much about the global slowdown. We can only wait for the world to get back to more normal conditions. In the meantime, we have to accept that our exports will be weak and our current account deficit in the Balance of Payments, higher than it should be. We have to learn to cope with these problems.

We can in my view get back to 8 per cent growth even as we try to make the longer-term changes in our system to deal with these problems. And what is more, we can achieve growth of an inclusive kind.

Central Government appoints Sh. G.S. Sarna as Director General (Safeguard) and Director General (Specific Safeguard)

THE Central Government has issued Notifications to appoint Shri G.S.Sarna as the Director General (Safeguard) and Director General (Specific Safeguard) under respective Rules.

Notification Nos 33 and 34 Cus (N.T.) dated April, 02, 2013.

Jurisprudentiol – Friday's cases

Customs

Sodium Saccharin is a 'corrosion inhibitor' as clarified by Norms Committee of Commerce Ministry - any product which is a ‘corrosion inhibitor' imported under DFIA licence is eligible for benefit of Notfn. 40/2006-Cus - Revenue appeal is devoid of merits, hence dismissed: CESTAT

THE appellant purchased a transferable Duty Free Import Authorization (DFIA) transferred in their favour by the original licence holder M/s Tata Chemicals Ltd. and imported Sodium Saccharin BP-8-16 Mesh and claimed the benefit of Notification No. 40/2006-Cus dated 1.5.2006. The benefit was denied to the respondent on the ground that whereas the licence specifies “Corrosion Inhibitor” the goods imported are “Sodium Saccharin' and, therefore, the goods under import does not satisfy the description given in the licence.

Income Tax

Whether tax exemption granted by State Govt for promoting capital investments in multiplex units, can be considered as revenue in nature, merely because assessee has received funds after commencement of operations - NO: HC

THE assessee, is engaged in the business of operating multiplexes and theaters in Pune and Baroda had, received an amount by way of exemption from payment of entertainment tax relatable to its Baroda multiplex unit. Such exemption was granted by the State Government under a scheme formulated as “New Package Scheme of Incentive for Tourism Projects 1995 to 2000”. The issues before the Bench are - Whether tax exemption granted by the State Governments under a specified scheme for promoting capital investments in the multiplex units, can be considered as revenue in nature, merely because the assessee has received the funds after commencement of its operations and Whether provision of gratuity liability of a company is required to added back to its book profit u/s 115JB, although the provision for gratuity is made on the basis of actuarial calculations. And the answers go in favour of the assessee.

Service Tax

Commissioner of Service Tax, Mumbai and officers subordinate to him are Central Excise Officers duly empowered to assess and collect service tax within their jurisdiction - s.83A envisages adjudication of not only penalty but also determination of ST liability and interest thereon - Chief Commissioner of CE can assign adjudication of ST cases to any CE officer within his jurisdiction: CESTAT

IN one of the biggest challenges to the very foundation of the superintending authority, the CESTAT, WZB was witness to a total of 41 miscellaneous applications in 40 appeals filed before it and the parties involved were a virtual who's who of the Service Industry. Suffice to say that bankers, financial advisories, Life Insurance Companies, Telecom companies, Property Developers, the Cricket Board and an acting school were the applicants and the CESTAT took all the applications together as a common issue had been raised in all these applications.

The two issues raised were -

+ Whether the Commissioner of Service Tax, Mumbai has jurisdiction to issue show-cause notice to the assessees/applicants under Section 73 of the Finance Act, 1994 and can adjudicate the said notice.

+ Whether the Chief Commissioner of Central Excise Mumbai has the powers under Section 83A of the said Finance Act to nominate any other Commissioner within his jurisdiction to adjudicate the case pertaining to Commissioner of Service Tax, Mumbai.

See our Columns Tomorrow for the judgements

Until Tomorrow with more DDT

HAVE A NICE DAY.

Mail your comments to vijaywrite@taxindiaonline.com