TIOL-DDT 1033
16.01.2009
Friday
CBEC has received a representation from the Council for Leather Exports (CLE) that exporters are facing problems in classification of footwear having uppers made of a combination of leather and non-leather materials such as synthetic, textile material, etc. It has been stated that footwear in which less than 60% of the outer visible surface area of the upper is of leather and the remaining portion is of non- leather or a combination of leather-cum-synthetic materials, the same are being classified as "other footwear" under heading 6405 of the Drawback Schedule for which the rate of drawback is 1%.
Board has clarified that,
1. If the predominant constituent in the upper of footwear is of leather, the upper should be considered to be of leather and the footwear should be classified under the Drawback Schedule tariff item 6403 provided the outer soles of the footwear are of rubber, plastics, leather or composition leather.
2. Further sub-classification under the heading 6403 may be determined in accordance with the description of the goods and the scope of various sub-tariff items under the tariff item 6403.
3. Similar predominance criteria will hold for goods falling under heading 6404 also. Only such footwear which cannot be classified under tariff items 6401, 6402, 6403 and 6404 of the Drawback Schedule are to be classified under the tariff item 6405.
Board wants a suitable Public Notice and Standing Order to be issued for the guidance of the trade and staff.
Difficulties faced, if any, in implementation of the Circular to be brought to the notice of the Board.
CBEC Circular No. 2/2009- Cus ., Dated: January 15, 2009
Tax free bonds by India Infrastructure Finance Company Limited – Notified under Section 10 of IT Act
As per Section 10 of the Income Tax Act, in computing the total income of a previous year of any person, any income falling within any of the clauses under that section shall not be included;
As per item (h) of sub-clause (iv) of clause (15) of section 10, interest payable by
by any public sector company in respect of such bonds or debentures and subject to such conditions, including the condition that the holder of such bonds or debentures registers his name and the holding with that company, as the Central Government may, by notification in the Official Gazette, specify in this behalf;
is also not included in the income.
Now the Government has notified the issue of tax free bonds by India Infrastructure Finance Company Limited, carrying an interest rate of up to maximum 8 per cent annum, aggregating to an amount of ten thousand Crore rupees only, to be issued by India Infrastructure Finance Company Limited, New Delhi during the financial year 2008-09, for the purpose under the section.
CBDT Notification NO. 9/2009 : Dated January 7, 2009
Certificate Course on Forensic Accounting and Fraud Detection using IT and CAATs – ICAI's Initiative
The Institute of Chartered Accountants of India, recognizing the need for Forensic Accounting and Fraud Detection, in the emerging economic scenario, has decided to launch this Certificate Course on Forensic Accounting and Fraud Detection using IT and CAATs.
CAAT stands for Computer Accounting and Auditing Techniques
Forensic Accounting and Fraud Detection specialisation is in increasing demand considering increasing incidents of cyber crimes and frauds detection. It is the practice of utilizing accounting, auditing, CAATs/Data Mining Tools, and investigative skills to detect fraud/ mistakes.
The Course includes lessons on:-
1. Assessment of the damages
2. Fact finding to see whether fraud/ embezzlement has taken place
3. Collection of evidences
4. Investigating and analyzing financial evidences
This, of course, has nothing to do with the Satyam Scam but that will be a live example in all the discussions.
CBI arrests NCB Officials taking bribe of Rs. 1.5 Lakhs
The Central Bureau of Investigation yesterday arrested an Inspector and a Sub Inspector of Central Bureau of Narcotics (CBN), working in the office of Dy. Narcotics Commissioner, Lucknow, for demanding and accepting a bribe of Rs. 1.5 lakhs.
A complaint was lodged with CBI to the effect that the accused officials demanded a bribe of Rs. 2 lakhs for ensuring the bail of complainant's elder brother in a case under investigation at CBN, Lucknow and also not to falsely implicate his elder brother's son in the case.
The accused persons asked the complainant to come to Mahanagar Crossing in Lucknow and made him sit in the vehicle being driven by one of the accused officers and the bribe was transacted with precaution to dodge the CBI team. CBI laid a trap and both the accused were caught red handed while accepting the bribe of Rs. 1.5 lakhs.
These Drug officers can ruin somebody's life by just planting some drugs and so naturally the rates of bribe are quite high.
Jurisprudentiol– Monday's cases
Central Excise
Availment of exemption in respect of goods covered by SSI Notf 8/98-CE and availment of MODVAT benefit in respect of goods lying outside the purview of the exemption notification is not simultaneous availment of MODVAT and SSI exemption – Tribunal distinguishes Apex Court decision of Ramesh Foods
AS rightly mentioned by a leading author of books on Indirect Taxation, the SSI exemption notification 175/86-CE although meant to cater to the ‘small scale units' proved to be one of the most complicated pieces of legislation of all times. Be it the interpretation regarding what constitutes ‘brand name' or for that matter the manner of computing the ‘aggregate value of clearances', the issues always snaked its way to the Apex Court for a final say only to be “re-interpreted” by the Revenue so as to suit its stand.
Long ago, in our DDT-493 dated 17.11.2006, we had provided the following dope –
“Whether benefit of SSI exemption is available if Cenvat Credit is taken - Board wants opinion
Commissioner ought to have examined the merits of the case rather than deciding the case on limitation – Tribunal remands matter on Revenue appeal.
THE respondents were engaged in the manufacture of pig iron. The process of manufacture involved reduction of iron ore by coke in a blast furnace, which required feeding of iron ore particles of specific size. As substantial quantity of iron ore fines were left behind in the process, the respondents wanted to set up a sinter plant for conversion of iron ore fines to agglomerated iron ore which could be used in the blast furnace for the production of the final product (pig iron). For the purpose of setting up this plant, they imported machinery and other capital goods, which were received in their factory during the period from December 1996 to January 1997. They did not initially take CENVAT credit on the capital goods, as the relevant rule, which was then in force, did not permit them to do so, as the capital goods were yet to be installed.
Income Tax
Indo-German DTAA - assessee provides consultancy through PE in India - claims deduction of expenses u/s 44DA - Application of Sec 44DA is not retrospective; Even under DTAA profit of PE is subject to domestic laws and deduction of expenses u/s 44D, a non-obstante provision, is not allowed: ITAT
AS TIOL reported last week that retrospective v prospective is a constant bone of contention between the Revenue and the taxpayers whenever a new Section is inserted or an Explanation is added vide the Finance Act. Exactly the same issue is involved in this case in which the assessee is a tax resident of Germany and provides engineering consultancy service through its PE in India. For the income generated by its PE, it wanted to claim deduction of expenses incurred and took shelter under the amended Sec 44DA vide Finance Act, 2004 which made income from royalty or fees for technical service chargeable to tax on 'net basis' after allowing expenses and not on gross basis. In other words, the assessee took the plea that the amended Section was clarificatory in nature and therefore retrospective in effect.
See our columns Monday for the judgements
Until Monday with more DDT
Have a nice Weekend.
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