TIOL-DDT 2107
17.05.2013
Friday
BOARD informs that representations have been received from the trade and the field formations regarding difficulties faced in the matter of Sl. Nos. 356, 358 and 359 of notification No.12/2012-Customs, dated 17-03-2012 concerning the Oil Exploration Sector.
The Board has issued the following clarifications in a Q & A form -
2.1 Whether the goods imported for petroleum operations can be diverted from one eligible project to another without payment of duty on the basis of EC issued by DG, Hydrocarbons.
2.1.1 Field formations are not allowing transfer of imported goods from one eligible project to another in the absence of a specific provision to this effect in the notification. As a result, the contractors/sub-contractors are first re-exporting the goods and then re-importing the same for use in another eligible project by the same or another contractor(s)/sub-contractor(s).
2.1.2 As a measure of trade facilitation, it has been decided to allow the imported goods to be transferred from one eligible project to another project, subject to certain safeguards to prevent any misuse of this facility. In this regard, notification No.28/2013-Customs, dated the 16th May, 2013 amending the Condition Nos.41, 43 and 44 of notification No.12/2012-Customs, dated 17-03-2012, may be referred to for details.
2.2 Whether it is necessary to furnish a re-export bond for goods imported under this exemption.
2.2.1 Notification No.12/2012-Customs, dated 17.03.2012 does not stipulate any condition for execution of re-export bond. The requirement under the notification is that of an undertaking only. Once the goods are used for the eligible project, the requirement of re-export is optional. In case of any un-authorised diversion, action could be initiated in terms of the conditions of the exemption notification.
2.2.2 It is, therefore, clarified that execution of re-export bond shall not be insisted upon at the time of clearance of goods under the said notification.
2.3 Whether individual member companies constituting a Consortium are eligible to import goods under the aforesaid exemption even though the contract has been signed by the Consortium.
2.3.1 "Consortium" unlike a "Joint Venture" is not a distinct legal entity capable of importing the goods by themselves. Hence, the duty-free import facility extended to a Consortium under the said notification can be made use of only if the individual constituents of the Consortium are allowed to import. Therefore, it appears that the option to import by individual constituents was always available implicitly under the impugned condition.
2.3.2 It is, therefore, clarified that an individual constituent of a Consortium with its name as importer on the Essentiality Certificate (EC) is allowed to import and avail of the exemption.
2.4 Whether each sub-contractor (of a contractor) is required to enter into a contract with the GOI or his name should figure in the contract agreement signed between the contractor and GOI for availing the benefit of this exemption.
2.4.1 Field formations are not allowing the benefit of exemption to imports made by the sub-contractor if his name does not figure in the contract signed between the GOI and the Contractor on the ground that as per the condition of the exemption, the importer is required to produce a certificate from DG, Hydrocarbons, that the imported goods have been imported under a contract signed under the New Exploration Licensing Policy, and containing the name of such sub-contractor.
2.4.2 The condition (c)(i) in all the Sl. Nos. of the said notification requires that the importer should produce an EC, which should indicate that the goods have been imported under a contract entered between the Government and the contractor; and it should also contain the name of the sub-contractor. The requirement of containing "the name of the sub-contractor" is in the EC issued by the DG Hydrocarbons and not in the original contract entered into by the contractor with the GOI. If the sub-contractor is required to enter into a contract with the GOI, then the condition viz. an affidavit to the effect that such sub-contractor is a bona-fide sub-contractor of the contractor would be superfluous. Moreover, at the time of entering into contract, the contractor normally does not know the name of his sub-contractor. Hence, it is not possible to include his name in the original contract.
2.4.3 It is, therefore, clarified that non-mention of the name of sub-contractor in the agreement signed between the contractor and GOI cannot be a ground for denying the benefit of the exemption and that the exemption should be allowed based on the EC issued by the DG, Hydrocarbons."
DDT hopes that since notification 12/2012-Cus dated 17th March, 2012 superseded the decade old notification 21/2002-Cus dated 1st March, 2002, similar difficulties faced during the currency of the said notification should be attended to by the jurisdictional authorities by adopting the same approach as clarified in the present Circular 21/2013. If need be, the Board can make a mention that pending disputes that arose during the lifetime of notification 21/2002-Cus can be finalized accordingly. A Board sympathetic to the wants of the assessee would always be appreciated. We had reported cases involving interpretation of notification 21/2002-Cus, cited as 2013-TIOL-637-CESTAT-MUM and 2009-TIOL-1160-CESTAT-MUM, to mention a few.
By the way, we are waiting for the notification 28/2013-Cus dated 16th May, 2013 which has been presumably issued since the Circular refers to the same.
Circular 21/2013 - Cus., Dated: May 16, 2013
IT - Foreclosure charges paid to bank on housing loan - Eligible for deduction
IF you take a bank loan for buying a house and if you want to repay the bank before the agreed period, you will have to pay a foreclosure charge. For the loan you have to pay interest and for repaying the loan, you have to pay some other charges. While the Income Tax Department allows a deduction of the interest paid on the housing loan, they don't allow a deduction on the foreclosure charges.
The Mumbai Bench of the ITAT, recently held that the foreclosure charges are also like interest and are deductible.
The Tribunal observed, "It is obvious that these prepayment charges have live and direct link with the obtaining of loan which was availed for acquisition of property. It is beyond our comprehension as to how the amount paid as interest for the loan taken is allowable as deduction but the amount paid as prepayment charges of the very same loan is not deductible. In our considered opinion the payment of such ‘prepayment charges' cannot be considered as de hors the loan obtained for acquisition or construction or repair etc. of the property on which interest is deductible u/s 24(b) of the Act. Both the direct interest and prepayment charges are species of the term ‘interest'. We, therefore, set aside the impugned order on this issue and order for the grant of deduction."
We bring you this decision today. Please Breaking News
New Exchange Rates
GOVERNMENT has notified new exchange rates effective from 17.05.2013 for export and imported goods. The earlier rates were effective for two weeks.
Notification No. 54/2013 - Cus.,(N.T.), Dated: May 16, 2013
Common order passed by Commr(A) - Five separate appeals to be filed before CESTAT
THE appellants filed "five" appeals before the Commissioner(A), Mumbai.
The Commissioner (A) passed "a" common order [shown in the preamble as numbered YDB/253/TH.I/2011 dated 03/11/2011].
Before the CESTAT, the appellant assessee filed "one" composite appeal.
The Registry objected and asked the appellant to file "five" separate appeals.
The appellant filed a miscellaneous application against this "objection" raised by the Registry.
It is their submission that as the impugned order is common for "5" appeals filed before the Commissioner (A), one composite appeal can be filed before the CESTAT against such order in view of the decisions in Alliance Mills (Lessees) Ltd. vs. CCE, Calcutta (2002-TIOL-511-CESTAT-KOL) and in case of Eicher Motors Ltd. vs. CCE, Indore (2002-TIOL-326-CESTAT-DEL-LB). Inasmuch as the objection raised by the Registry needs to be set aside, the appellant submitted.
The Bench observed -
"2. Heard the ld. Counsel and perused the decisions relied upon. In the case of Alliance Mills (supra) we find that the impugned order number is 3/Cal.II/94 dated 27.01.1994. In that case the impugned order was only one and one number was given to that impugned order. We further find that in the case of Eicher Motors Ltd. (supra), the decision of the Alliance Mills decision has been relied on and in the case of Eicher Motors Ltd. the impugned order-in-original wherein 32 show-cause notices were disposed of by the adjudicating authority by a single order. We have perused the impugned order before us wherein 5 separate numbers have been given by the first appellate authority. In the circumstances, both the decisions are not relevant in this case. Accordingly, we do not find any merit in the Misc. application before us. The same is dismissed. The applicants are directed to file remaining appeals within 15 days."
In fine, the Miscellaneous Application was dismissed.
See 2013-TIOL-749-CESTAT-MUM
Also see DDT 2040 & 2013-TIOL-239-CESTAT-MUM
DDT Cartoon
Jurisprudentiol – Monday's cases
Central Excise/Customs
Whether interlocutory orders passed by CESTAT are appealable to HC - Matter referred to Larger Bench.
RECENTLY, Madras High Court was disposing a number of Writ Petitions filed against the Interlocutory orders of the Tribunal directing the appellants to pre-deposit certain amount as pre-condition for hearing the main appeals under Section 35-F of the Central Excise Act, 1944 or Section 129-E of the Customs Act, 1962. During the course of proceedings, the Bench noted that there is lot of confusion on the issue of whether such orders are appealable under respective Acts or should be challenged by way of a Writ Petition under Article 226 of the Constitution.
The High Court directed the Registry to place the matter before the Chief Justice for referring the matter to an appropriate Bench for deciding the issue as to whether the order passed by the CESTAT in terms of Section 35-F or the Excise Act or Section 129-E of the Customs Act is appealable in terms of Section 35-G of the Excise Act or Section 130 of the Customs Act.
Income Tax
Whether additional reasons recorded after date of issuance of notice u/s 148 can be looked into for purposes of determining validity of proceedings initiated u/s 14 & - NO: Delhi HC
THE issues before the Bench are - Whether additional reasons recorded after the date of issuance of notice u/s 148 can be looked into for the purposes of determining the validity of the proceedings initiated u/s 147; Whether until and unless, there was an addition on the basis of the original reasons, no other additions could be made in view of the expression "and also" used in Explanation 3 to Section 147; Whether the validity of the proceedings initiated upon a notice u/s 148 have to be judged from the stand point of the reasons which existed at the point of time, when the Section 148 notice was issued; Whether it is permissible for the AO to conjure up a different set of reasons by combining the original reasons and the additional reasons, recorded sometime later after the issuance of notice u/s 148 and Whether the AO is supposed to be fair to the Department as also to the assessee and to be honest to the record. And the verdict goes in favour of the assessee.
Service Tax
IPO financing fees, Processing fees and Recovery of common expenses from co-user of premises are not leviable to Service Tax under BAS or BSS category - Appeal allowed: CESTAT
COMMISSIONER of Service Tax, Mumbai has confirmed a Service Tax demand of more than rupees Five crores and the accompanying penalties and interest. Inasmuch as it is held that the services rendered by the applicant are leviable to Service Tax under the category of "Business Auxiliary Services" and "Business Support Services". The Department demanded Service Tax on:- IPO Financing Fees, Processing fee, Recovery of Common expenses.
See our Columns Monday for the judgements
Until Monday with more DDT
Have a nice weekend.
Mail your comments to vijaywrite@taxindiaonline.com
