If you have friends or relatives abroad, advise them that clearing unaccompanied baggage is going to be more difficult.

Board understands that a single passenger arriving into India brings goods said to be belonging to several other persons as his unaccompanied baggage and that clearance of all such goods was being permitted at some of the airports/Customs station without invoking any penal provisions. This issue was clarified at a meeting of the Chief Commissioners held in Bangalore in December, 2006 that only ‘bonafide baggage' of that passenger is allowed for import either along with the passenger or as his unaccompanied baggage. It was decided that the filed formations would be alerted about this misuse.

So, Board now informs,

1. That all the provisions of Customs Act, 1962 and Baggage Rules, 1998 are applicable to unaccompanied baggage as they are applicable to baggage (accompanied), except the free allowance which is not available for unaccompanied baggage.

2. It may be ensured by the officers attending to the clearance of the unaccompanied baggage at all customs stations that “bonafide” nature of the baggage is established before allowing clearance.(this is the catch! How do you establish bonafide to the satisfaction of the customs officer?)

3. The exceptions relating to various restrictions as provided in Rule 3 (i) of Foreign Trade (Exemption from application of Rules in certain cases) Order, 1993 in respect of baggage, specified goods including consumer electronic items etc., are part of the facilitation measures available to passenger in respect of his personal effects and hence, the same cannot be allowed to be used as means to circumvent the legal provisions applicable to normal imports.

4. All cases of import of unaccompanied baggage other than in the nature of “bonafide” baggage have to be adjudicated for levy of fines / penalties for violation of the Foreign Trade Policy.

UB (unaccompanied baggage) sections of Customs offices are going to be terribly busy!

But one moot question. The learned Chief Commissioners decided the issue in December 2006. Why did it take the Board ten months' time to inform the field about this indirect smuggling and who is responsible for all the loss of Revenue for the past ten months?

CBEC CIRCULAR NO. 35/2007-Cus., Dated: September 28, 2007

import of Soyabean oil obtained from Round-up- Ready Soyabean - One time approval

The Genetic Engineering Approval Committee (GEAC) set up by Ministry of Environment and Forests has accorded ‘one time approval' for import of GM Soybean oil (crude de-gummed/ refined form) derived from Round-up-Ready Soyabean for the purpose of consumption after refining. As per Condition No. 18 of Chapter 1A (General Notes Regarding Import Policy) of the ITC(HS) Classifications of Export and Import Items, 2004-2009

The import of any Food, Feed, raw or processed or any ingredient of food, food additives or any food product that contains GM material and is being used either for Industrial production, Environmental release, or field application will be allowed only with the approval of the Genetic Engineering Approval Committee (GEAC).

DGFT POLICY CIRCULAR NO. 11 (RE-2007)/2004-2009 Dated: September 28, 2007

Appreciating Rupee and alarmed exporters

President, Federation of Indian Export Organisations (FIEO), feels that as a consequence of Rupee Appreciation on exports and manufacturing, the profitability of the exporters have been wiped out and constant appreciation is threatening the competitiveness of our products.

He emphasised that

1. If we lose the market, the aggressive competitors are just setting on the fence to occupy the market.

2. The downfall in exports is also affecting the industrial production which has slipped from 13.2% in July 2006 to 7.1% in July this year.

3. The package announced by the Government in June 2006 by and large remains only on paper with marginal benefits to exporters.

4. No effect of Rupee Appreciation has been taken in drawback rates.

5. The service tax benefit has been confined to only few services leaving a host of services outside the ambit of refund.

6. No decision has been taken in making EEFC account an interest bearing account as announced earlier.

7. US Dollar may touch Rs. 38/- by December 2008.

His demands

1. Immediate reduction in PLR by 100-125 basis points to reduce the interest burden and add to competitiveness of industry.

2. Reduction in transaction cost through exemption option rather than refund route for service tax, VAT etc., which adds to transaction time and cost as well as avoidable paper work.

3. An institutional mechanism through a high level committee headed by Prime Minister with C&IM, FM, Textiles Minister, Governor, RBI, Deputy Chairman, Planning Commission, Chairman, PM's Economic Advisory Committee and Apex Export Organisations to take on the spot decision may be constituted.

His suggestion to the Industry

1. Explore the possibility of invoicing in other currencies or in Rupee and use hedging option to safeguard against the losses.

2. Explore new markets and upgrade the products by value addition.

Onion export banned

Rupee is not alone in bringing tears – the original tear creator, onions are in news. Onions are now selling at Rs. 30/- a kg and people are standing in queue for hours together to buy a kg of subsidised onions. Export of onions is allowed only through NAFED and certain other State trading organisations as per the ITC HS classification of the Foreign trade Policy. Now NAFED has decided not to issue NOC till 15^th October, for export of onions. Now that Rupee is very strong, maybe it will be cheaper to import onions from the US of A. The worst victim of India's ban is Bangla Desh, which imports half its need of onions from India.

Hey Ram

A retired judge sent the following to DDT

The Lord surveyed the Ram Setu and aid "Hanuman, how diligently and strenuously you and your vanara sena had built this bridge several centuries back. It is remarkable that it has withstood the ravages of the climatic and geographical changes over centuries. It is indeed an amazing feat especially considering the fact that a bridge at Hyderabad built by Gammon using latest technology collapsed the other day even before they could stick the posters on its pillars."

Hanuman with all humility spoke "Jai Sri Ram, it is all because of your grace. We just scribbled your name on the bricks and threw them in the sea and they held. No steel from TISCO or cement from Ambuja or ACC was ever used. But Lord, why rake up the old issue now?"

Ram spoke "Well, Hanuman, some people down there want to demolish the bridge and construct a canal. The contract involves lot of money and lot of money will be made. They will make money on demolition and make more money on construction."

Hanuman humbly bowed down and said "Why not we go down and present our case"

Ram said "Times have changed since we were down there. They will ask us to submit age proof and we don't have either a birth certificate or school leaving certificate. We travelled mainly on foot and sometimes in bullock carts and so we don't have a driving license either. As far as the address proof is concerned, the fact that I was born at Ayodhya is itself under litigation for over half a century, If I go in a traditional attire with bow and arrow, the ordinary folks may recognize me but Arjun Singh may take me to be some tribal and, at the most, offer a seat at IIT under the reserved category. Also, a God cannot walk in dressed in a three-piece suit and announce his arrival. It would make even the devotees suspicious. So it is a dilemma in a manner of speaking !!"

"I can vouch for you by saying that I personally built the bridge."

"My dear, Anjani putra, it will not work. They will ask you to produce the lay-out plan, the project details, including financial outlay and how the project cost was met and the completion certificate. Nothing is accepted without documentary evidence in India. You may cough but unless a doctor certifies it, you have no cough. A pensioner may present himself personally but the authorities do not take it as proof. He has to produce a life-certificate to prove that he is alive. It is that complicated."

"Lord can't understand these historians. Over the years you have given darshan once every hundred years to saints like Surdas, Tulsidas, Saint Thyagaraja, Jayadeva, Bhadrachala Ramdas and even Sant Tukaram and still they disbelieve your existence and say Ramayana is a myth. The only option, I see, is to re-enact Ramayana on earth and set the government records straight once for all."

Lord smiled "It isn't that easy today. Ravan is apprehensive that he may look like a saint in front of Karunanidhi. I also spoke to his mama Mareecha, who appeared as a golden deer to tempt Sita maiyya when I was in the forest and he said that he won't take a chance of stepping on earth as long as Salman Khan is around."

From our Legal Corner – tomorrow's cases

Central Excise

Statements made under Sec 14 of Central Excise Act are admissible in evidence to sustain penalty under Excise Rules : High Court

Be careful when you give those voluntary statements to the Central Excise/Customs officers. For some strange reason, the Courts in India believe that these officers don't use the third degree methods that the policemen of this country are notorious for. Getting down to basics, why on Earth would a hard core smuggler or evader voluntarily admit before the angelic customs officer that he had broken every rule in the statute to defraud this country and as a first step of penance, he is ready to voluntarily deposit a few lakhs of rupees even before the statement is signed? Why would any sane individual implicate himself in all sorts of criminal activities? Does a massive correction take place the moment a person is summoned and he is excited to reach the excise/customs office as soon as possible to admit his guilt?

The fact is 99% of the statements are recorded under duress, threat and coercion, but the law recognises statements before Customs to be good evidence! The Courts believe that the statement giver has the option of silence, retraction etc, which are not really available. An assessee who was threatened not to retract his statement was too afraid to retract and so he wanted to give an affidavit before a priest or lawyer that the statement he gave was obtained by physical force!

The Department is run by highly talented officers who will certainly do a better job of investigation if they do not have the power to record statements. Now most often they go for the easy method of recording statements instead of the hard work of gathering evidence.

The pristine question before the High Court in this case, was whether statements made under Section 14 of the Central Excise Act, 1944 are admissible in evidence to sustain penalty under the Central Excise Rules, 1944. The High Court observed, “It is well settled that a statement made by a witness or a party under Section 14 is ex facie admissible in evidence.”

Income Tax

Mobilisation charges relatable to voyage of vessel outside territorial waters of India are not taxable in India - As per Board Circular only 1% of total charges can be assessed u/s 44BB : ITAT

The assessee is a Non-resident company. The business of the company was providing services and facilities and or supplying plant and machinery on hire for use in the prospecting for or extraction or production of mineral oils. U/s 44 BB of the Income Tax Act, in the case of a Non-resident assessee, engaged in the business of providing services or facilities in connection with or supplying plant and machinery on hire, used in the prospecting for or extraction or production of mineral oils a sum equal to 10% of the amount paid and payable to such assessee on account of provision of services and facilities in connection with or supply of plant and machinery on hire used or to be used, in prospecting for or extraction or production of mineral oils in India, shall be deemed to profits and gains of business chargeable to tax.

Depreciation u/s 32 - Deduction to be allowed even on 'passive' use of assets : ITAT Third Member

SECTION 32 of the Income Tax Act provides for deduction on account of depreciation from the total income of assessee, and the two basic requirements to be fulfilled for claiming depreciation are ownership of asset and 'use of asset for the purpose of business'. What amounts to 'use' of an asset for the purpose of business has been a moot point in numerous cases as was in the instant case which had to be eventually decided by the Third Member of the Tribunal as even amongst the judicial and accountant members of the Tribunal, there was a difference of opinion. Basic issues to be decided was whether asset to be kept in ready to use condition was enough or its actual use and payments of hire charges were essential for entitlement of claim of depreciation. It was clearly held that the word 'use' for purpose of claiming depreciation u/s 32 embraces both active and passive user, thus it is not essential that an asset is actually used for purpose of business for claiming depreciation.

Antidumping

Indian tile manufacturers successfully contest new shipper review and amendment to Notification 73/2003-Cus - Tribunal rules new shipper review illegal

IT is good news for Indian tile manufacturers. Earlier they have lost the challenge to the amendment to the same notification 73/2003 Cus in CESTAT 2007-TIOL-368-CESTAT-DEL-LB (Also see analysis of the Order), But this time the CESTAT has categorically ruled that the new shipper review initiated by the Designated authority under Rule 22 of the of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 as illegal and contrary to the provisions of the said rule.

See our columns tomorrow for the judgements

Until day after tomorrow with more DDT

Have a nice day.

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