News Update

Duty on Jute twine? Fire ignited and Jute Industry likely to be engulfed soon : Fire extinguished – exemption notified - DDT salutes a responsive government


TIOL-DDT 621 25.05.2007, mentioned about an inadvertent omission which made jute twine dutiable all of a sudden. Extracts from the DDT

This is a classic example of how unintended actions can be disastrous to the trade and industry. Jute goods have been enjoying exemption for quite some time and twine is no exception. To eliminate the hassles of even exemptions, the Tariff rate itself is made NIL in the Central Excise Tariff. But in the maze of amendments to the Central Excise Tariff from 6 digit to 8 digit and consequential amendments to the related exemption Notifications, a small error is now snowballing into huge demands and going to be another gold mine for the consultants.

Jute twine is classified under the Chapter sub heading 5607.10 of the erstwhile Central Excise Tariff attracting NIL rate in the Tariff itself.

With effect from 28.2.2006 the eight digit tariff has replaced the six digit tariff and jute twine was classifiable under Chapter sub heading 5607.1010 with NIL rate of duty.

The tariff heading have undergone another change in 2007 and from 1.1.2007, when the sub headings 5607.1010 and 5607.1090 were omitted from the tariff. But no mention was made about jute twine etc., Since there is a residuary entry in the Chapter, jute twine stand shifted to Chapter sub heading 56079090 under “others”.

But, unfortunately chapter sub heading 56079090 does not attract NIL rate in the Tariff and the rate of duty is 8%.

It cannot be construed as a conscious levy as all other jute products continue to attract NIL rate.

The error is more glaring since no duty is levied on jute yarn and fabrics and it is highly improbable that government wanted to levy tax only on twine. 

DDT has learnt that demand notices are already flying in West Bengal where majority of jute mills are located and the fire is fast spreading. Unless the Government attempts to stop it in the beginning, it is bound to be a big forest fire. 

We are very happy to report that the Government has very graciously understood the problem and has stopped the big forest fire. Now they have issued a notification whereby Twine of jute or other textile bastfibres of heading 5303, is exempted from the whole of the duty.

This brings a lot of cheer to the harassed jute manufacturers of Kolkotta and other places. Reports have reached us that after seeing our flash yesterday, dancing assessees have gone to Central Excise offices and distributed sweets.

The CBEC deserves all praise for correcting this inadvertent lapse, but there is another problem.

It is now exempted; but what about the last five and a half months when there was no exemption? The Government has to give a Section 11C notification and they will ultimately give it. May be after hundreds of Show Cause Notices are issued and many consultants have made enough money! Why can’t they do it now and save this country some paper and a lot of time of the department and the rest of us.  Already a Central Excise officer called us up and informed us that this exemption only proves that duty had to be paid till now and he is going to issue Show Cause Notice immediately even alleging suppression and intent to evade duty!

We will be happy to report as soon as possible that the exemption is with retrospective effect from 1.1.2007.

NOTIFICATION NO. 28/2007-Cex., Dated: June 15, 2007

Flavoured Milk of animal origin exempted – what other milk is dutiable?

Government has exempted flavoured milk of animal origin. Is there any other milk which is flavoured and sold? Milk has to be animal, human or plant. Nobody seems to be selling flavoured human milk or plant milk. Where do they sell flavoured rubber milk? Ah but there is soya milk and may be other nuts milk. Soya milk attracts a nil rate of duty in the tariff. Pray what could be this milk of origin other than animal? With all the milk of compassion from the government, I have no clue.

Incidentally the following goods falling under heading 8523 51 00 are also exempted:-  a) Microprocessor for computer, other than motherboards; (b) Floppy disc drive; (c) Hard disc drive; (d) CD-ROM drive (e) DVD Drive/DVD Writers; (f) Flash memory (g) Combo drive

NOTIFICATION NO. 28/2007-Cex., Dated: June 15, 2007

Two advocates trade charges against each other before Tribunal – matter referred to Bar Council of Delhi

Here is an interesting story.

In an order passed on 26.2.2007, the CESTAT ordered pre deposit and noted in the order that the learned counsel appearing for the applicant, had stated that, a sum of Rs. 30 lacs (in addition to already deposited Rs. 20 lacs) could be deposited, if waiver of rest of the duty and penalty was ordered against them. Considering the facts and circumstances of the case, Tribunal directed that the applicant will deposit Rs. 30 lacs over and above Rs. 20 lacs within six weeks.

 Now an application is filed for rectifying the order dated 26.02.2007 on the ground that, the learned counsel, who had appeared in the matter, was not authorized to give an undertaking to make the deposit of Rs. 30 lacs. That he had in utter disregard of the instructions given to him and without any proper authorization given an undertaking to deposit Rs. 30 lacs. This ROM was filed by another advocate.

Since serious allegations were made, against the first counsel, a notice was issued to him to meet the allegations. He appeared before the Tribunal, filed an affidavit and stated that

1.he had made the statement for depositing Rs. 30 lacs over and above Rs. 20 lacs on proper instructions.

2. the statement to agree to deposit Rs. 30 lacs as against earlier order of deposit of Rs. 80 lacs had been made under the instructions of his client only for which discussions had already been held with him in his office before the hearing.

3. the present application was moved without his consent and without his knowledge through some other Advocate who had not taken his 'No Objection'.

4. It is further stated in the affidavit that, stringent and deterrent measures were required to be taken against the counsel who moved this application without taking his consent and also against the appellant for moving such application stating totally wrong facts.

5. Mr. ManojRatnakar Jain, Director of the Appellant, had told him that he had not drafted the present application and that he had not filed the same under his instructions. (He also filed an affidavit of Mr. ManojRatnakar Jain)

The Tribunal rejected the ROM application without prejudice to any action that may be initiated against the applicant for making a wrong statement.


Forwarded a copy of the order to the President of the Bar Council of Delhi for necessary action as may deem fit, in view of the serious allegations made by the learned counsel against the other counsel.

Why are the advocates always referred to as learned? 

 You can get the full text of the case in 2007-TIOL-807-CESTAT-DEL 

Healthy India – Do visit the site

 It is a wonderful site designed with pleasing pictures and colours – with your health as the main concern. The site recently launched by Public Health Foundation of India and the Union Ministry of Health and Family Welfare to provide useful information about the growing burden of life style disease in India. Through this website they target the major causes of majority of the diseases in India and scientifically prevent them. Additionally, the section on hygiene will help prevent many of the communicable disease/infectious diseases that plague the everyday lives of people today.

An officer of the Health Ministry requested us to publicize the site. We are happy to do so.

Please spend some time with and after sometime if you are in better health, don’t forget to thank DDT.

From our Legal Corner – tomorrow’s casesLegal


The requirement of law is that it is the Assessing Officer who has to be satisfied in the course of any proceedings under the I.T. Act that the assessee has concealed its income or furnished inaccurate particulars of the income.; The satisfaction is thus of the Assessing Officer and not that of the Tribunal; This is the jurisdictional defect going to the root of the matter which cannot be cured subsequently; Therefore even in a case where the assessment has been confirmed by the Tribunal it is the satisfaction of the Assessing Officer that the assessee has concealed his income or furnished inaccurate particulars thereof that is relevant or material.


Televisions supplied for exclusive use in hotel industry – assessment under Section 4A of the CEA'44 is right.

Central Excise officer charged with abetting smuggling - He was not in charge of the Range and was working in a place 110 kms away - charge not proved - penalty set aside

See our columns tomorrow for the judgements

Until Tomorrow with more DDT

Have a nice day.

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