TIOL-DDT 1077
24.03.2009
Tuesday

IN DDT-1073 dated-March-18,2009 we reported that CBEC had notified Handling of Cargo in Customs Areas Regulations 2009 vide Notification No.26 /2009-Customs (N.T.) dated 17.3.2009. These Regulations are issued in supersession of instructions issued vide Board's Circular No.128 /95-Customs dated 14.12.1995 and Circular No.34 /2002-Customs dated 26.6.2002 as amended. Now the Board has issued a Circular explaining in detail the scope and extent of these Regulations.

The regulations provide for the manner in which the imported goods/ export goods shall be received, stored, delivered or otherwise handled in a customs area. The regulations also prescribe the responsibilities of persons engaged in the aforesaid activities. It may be recalled that the Public Accounts Committee (2005-06) in its twenty-seventh report had recommended for formulating appropriate legal provisions and guidelines to control the activities of custodians.  In pursuance of the recommendations made by the Public Accounts Committee (PAC), the Government had inserted a new sub - section (2) to section 141 of the Customs Act, 1962.  These Regulations have been framed by the Department in pursuance of the recommendations of the PAC and consequent to the amendment of the Customs Act, 1962 as aforesaid. The salient features of this Circular are as follows:

(i) The regulations shall be applicable to all persons operating in a customs area and engaged in handling of import/export goods who are referred to as ‘Customs cargo service providers' (CCSPs).

(ii) These regulations shall apply to handling of import/export goods in customs area. This would cover all customs facilities such as ports, airports, Inland Container Depots (ICDs), Container Freight Stations (CFSs) and Land Customs Stations (LCSs).

(iii) The existing appointments of custodians under s. 45 of the Customs Act, 1962 shall continue and there would be no disruption in their operations.

(iv) Only such CCSPs who wish to be appointed as custodian of imported/ export goods need to take approval as specified in Regulation 10.

(v) Major ports and airports will continue to be authorized to function as custodians under their respective Acts and these regulations shall not impact their approval as a custodian.

(vi) The normal time within which the existing custodians are required to comply with the conditions of these regulations is stipulated as three months from the date of coming into force of these regulations.

(vii) Exemption from applicability of any conditions required to be fulfilled by CCSP is required to be exercised by the Commissioner of Customs carefully.

(viii) The Commissioner of Customs has sufficient discretion to decide on the nature of infrastructure and equipments required to be installed at the premises of CCSP.

(ix) As regards the requirement of the Customs EDI Systems the infrastructure required to be provided by the custodian shall include the Civil and electrical infrastructure including properly air-conditioned office space, cabins with proper furniture, power backup facilities, hardware, networking and secure connectivity to customs data centres for customs officers and service centres specified by Customs.

(x) The charges in respect of the Customs officers deployed at the customs clearance facility (ICD/CFS/port/airport etc.) are required to be paid by the Custodian, unless these have been exempted for an individual custodian by an order issued by the Ministry of Finance or by a circular or instructions issued by the Ministry of Finance.

(xi) As regards ICDs/CFSs, the Government had taken a decision to waive the requirement of cost recovery charges to be paid by ICD/CFS, if they fulfill the laid down norms and are in existence for a consecutive period of two financial years.

(xii) The procedure for approval of appointment, renewal, suspension or revocation of CCSP has been given in detail under Regulations 10 to 13, so as to provide for transparent and objective procedure in the appointment and cancellation.

Board wants Commissioners to issue Public Notice and also write individual letters to the Custodians.

CBEC Circular No. 13/2009-Customs Dated: March 23, 2009

Notification extending concessional rates to least developed countries amended

As per Notification No. 96/2008- Cus Dated August 13, 2008, goods imported from the following countries attract a concessional rate of duty.

Please note that sl. No.6 and sl.No . 13 are same – Malawi.

Now they have corrected the mistake by replacing Malawi at sl. No.13 with ‘Burkina Faso' and adding sl. No. 15- ‘Republic of Gambia'

13 being a jinxed number, they should have been a little more careful.

Notification No. 24/2009- Cus , Dated: March 20, 2009

Relevance of relevant date for refund under Rule 5 for export of services

In terms of Rule 5 of the CENVAT Credit Rules, 2004 if any input or input service is used in the manufacture of final product and cleared for export or used in providing output service which is exported, the manufacturer/service provider shall utilize the CENVAT credit in r/o the inputs or input services so used for payment of excise duty on any final products cleared for home consumption or for export or service tax on output service as the case may be.

In case if such utilization (adjustment as per the Rule) is not possible the manufacturer or service provider shall be allowed refund of such unutilized CENVAT credit if any lying in the books subject to the conditions/safeguards prescribed in terms of Notification No. 5/2006 CE (NT) dated March 14, 2006 as amended. One of the essential conditions prescribed is the applicability of time limit as per s. 11B of the Central Excise Act, 1944 for filing of such refund claims. The relevant date for the purpose of reckoning the time limit of one year is defined in terms of clause B to Explanation under s. 11B of the Act.

According to this clause the ‘Relevant date' means

(a) In the case of goods exported out of India where a refund of excise duty paid is available in respect of the goods themselves or, as the case may be, the excisable materials used in the manufacture of such goods,—

(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India, or

(ii) if the goods are exported by land, the date on which such goods pass the frontier, or

(iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India …………

This definition of ‘Relevant date' under s. 11B does not mention anything with regard to export of services. So, in the absence of a specific definition what could be regarded as the ‘relevant date'?

Is it the date of rendering the service or the date of invoice or the date of realization of export proceeds or the date of receipt of advance (which is also deemed as taxable – but exempted by virtue of it being export) that could be regarded as the ‘relevant date'?

As it is, the refund claims under Rule 5 are hard to come by for the service providers in spite of the repeated clarifications and directions issued by the CBEC for speedy sanction/disposal of refund claims. But in the absence of any clarity in the provisions with regard to relevant date for export of services the assessees are hard put to satisfy the authorities on this aspect.

It is learnt that nearly six hundred Crores of rupees of refund under Rule 5 on export services is pending and the responsive Board has asked daily reports from the field on refund status. Instead of merely asking for the reports, the Board could try process a sample claim to learn the complexities involved and iron out the creases and come up with a specific clarification in this regard to dispel any doubts in the minds of the refund sanctioning authorities, in the interim and bring in suitable amendments to s. 11B at the appropriate time (next budget).

IPL venues move out of India – Services to be provided from outside India

In 2008, while IPL players were going under hammer for huge sums to play for the respective teams, the Board also wanted its share in the form of Service Tax. So, on 8th February 2008, the Board issued a letter asking the field formations to examine the contracts and get full facts about the nature of contracts, the quantum and types of monetary arrangements and other aspects of these events. They were asked to examine whether such monetary transactions are for providing taxable services (i.e. sponsorship service, broadcasting service, event management service, business auxiliary service, etc.).

Now that IPL has shifted its venue to outside India, it will be interesting to see as to how these services will be treated. Are they provided from outside India and received in India or received outside India ? How about a new set of “Taxation of services provided by IPL from Outside India Rules 2009”?

Jurisprudentiol–Tomorrow's cases

Customs

Speculating in metals is risky business; once party has won bid in e-auction, no going back; no refund of earnest deposit; an unflattering assessment of judicial process or more fashionable psyche of making a matter sub-judice to ward off an undeniable claim: Calcutta HC

THE exhilaration of money pouring in following a good call made on a given day is chillingly dampened in the chagrin of the payout that may have to be made on the next. As much as there may be profit in the speculation business in the market, speculation on a bad cause is depressingly expensive.

Central Excise

CENVAT Credit is a substantial right and SCN or Order does not allege that essential conditions under the CCR, 2004 were not satisfied by assessee – Tribunal stays recovery of Rs 64 lakhs demand

THE benefit of CENVAT credit on inputs used in the manufacture of excisable final product offers a method of payment of duty on the final product, which is a substantive right for the manufacturer of the final product.

Income Tax

There is no requirement that there has to be a registered Deed of conveyance for a person to be treated as an owner of property for the purpose of Section 22: Bombay High Court

THE question before the High Court was, "Whether the Appellate Tribunal erred in law in holding that the property would stand transferred only with effect from the date of registration of the Deeds of Conveyance of flats?"

See our columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a nice day.

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