TIOL-DDT 556
21.02.2007
Wednesday

It has been noticed that there is a practice in certain industries, especially those manufacturing motor vehicle parts, that many a time vendors raise supplementary invoices on account of revision of prices. The differential duty is paid by the vendor on the value of such supplementary invoices but interest is not paid on said differential duty.

This is the issue and Board says it had examined the issue and by letter F.No.574/CE/5/Misc.2003, dated 28.07.2003 clarified that interest under section 11AB of the Central Excise Act, 1944 is payable on such differential duty.

The fact is Board had never issued such a letter. DDT is well aware that a couple of years ago there was an effort to trace this mysterious letter and they could not find it. Strangely, Board now relies on this non existent letter to advise the field on how to recover interest.

There is no equity in taxation. If for any reason, the assessee has to refund some money to his customer, he will not get a refund from the department, but if his customer pays him some money after some time, he has to pay duty as well as interest.

Now how is this interest recovered? We had carried an article three years ago, SECTION 11AB : WHETHER RECOVERY PROVISIONS NEEDED

So now Board clarifies

(i) It has been decided that where differential duty is paid without interest, in such cases, Show Cause Notices demanding interest and levy of penalty should be issued.

(ii) In the Show Cause Notice, the reference of duty already paid should also be given.

(iii) These cases should be decided by the proper officer based on the monetary limits fixed for the duty amount involved and not on the basis of the amount of interest.

(iv) The amount of duty on which interest has been paid, should be the monetary criterion for deciding the authority to decide such cases.

These are contained in Board’s instructions in F.No. 208/27/2003-CX-6 dated 18 December 2006.

I.V. Cannula not eligible for exemption – Dr. CBEC to issue circular

As per Notification No. 6/2006 CE  “Disposable and non-disposable cannula for aorta, vena cavae and similar veins and blood vessels and cannula for intra-corporal spaces” are exempted. Incidentally if you search for this in the Notification No. 6/2006, you may not find it there. Sl. No. 61 of the table in the notification directs you to List 37 in the Customs Notification No. 21/2002.

Board is faced with a problem. Is this exemption available to I.V. cannulas? That is whether IV cannulas are covered under the description "Disposable and non-disposable cannula for aorta, vena cavae and similar veins and blood vessels and cannula for intra corporal spaces.

Board observes,

(i) IV cannulas are primarily used in the peripheral veins and arteries for purpose of blood sampling, blood transfusion, single and multiple drug infusion, arterial pressure monitoring etc.

(ii) Aorta and venaecavae are not similar to peripheral veins and arteries as there are various anatomical and physiological differentials which distinguish between (a) aorta and venae cava and (b) peripheral veins and arteries.

(iii) In exigencies, where specific catheter is not available, IV cannulas are rarely used in abdominal /pleural cavities but this does not justify their use and they are not recommended by standard medical text-books for use as cannula for intra-corporal spaces.

Board proposes to issue a circular that

IV cannula, which is primarily used in the peripheral veins and arteries, is not covered by the description "Disposable and non-disposable cannula for aorta, vena cavae and similar veins and blood vessels and cannula for intra-corporal spaces" and exemption under notification No. 6/2006-CE dated 1.3.2006 [earlier notification No. 6/2002-CE dated 1.3.2002 ] would not be available to such IV cannulas.

If you don’t like the circular, you can tell the Board at dscx4cbec@yahoo.com by 28.02.2007.

Now as usual all the questions will crop up. From which date is the clarification applicable? Will Show Cause Notices be issued for the past five years alleging suppression and collusion? The Tribunal had in many cases held that such I.V. cannulas are eligible for the exemption. Can Board over-rule the Tribunal by a circular?

And then what happens in the Customs side? Will this clarification apply to Customs also?

Hopefully Board will clarify the issues before the circular is finally issued.

Board’s Draft circular.

Tobacco fund – PC likely to provide grants in the budget

The Anti tobacco front is hopeful that the Finance Minister would provide a handsome grant to the Tobacco fund, so that the evils of tobacco are better attacked. Now will smokers pay for the fund?

Abolish DDT – Gujarat Chamber tells FM

The Gujarat Chamber of Commerce and Industry (GCCI), has demanded a complete abolition of DDT. Last week CII had suggested that It is desirable to do away with DDT. Thankfully they are not referring to this DDT but Dividend Distribution Tax (DDT)

Until  tomorrow with more DDT

Have a nice day.

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