F M says Customised software is a service & packaged software is a product but both attract 12% tax rate;

Customs duty on skimmed milk reduced from 40% to 30% for TRQ of 10,000 MT;

TDS relief - Disallowance to expenditure u/s 40(a)(ai) : Some relief for expenditure incurred in month of March 2004 provided tax paid within due date;

All changes related to import to be effective from today & exports duty to be effective after enactment of Finance Bill;

Govt extends 80IB benefits to three oil refiners by amending budget proposal;

Exemption to charitable bodies : Exemption to continue for Coir board and Agri Produce Marketing bodies; Business Chambers not to be hit by amendment;

FM moves many amendments in Finance Bill, 2008; Income tax-base goes up to 3.25 Cr and tax and GDP ratio likely to be 13% by current fiscal-end;

FM says India has lowest cost of revenue collection : 53 paise per Rs 100 for Income Tax & 65 paise per Rs 100 for Indirect Taxes;

Fiscal steps to contain inflation : Customs duty on pig iron, CR & HR coils, sheets and bars reduced to NIL; TMT bars exempted from 14% CVD; Basic Customs duty on inputs for steel industry like zinc, ferro alloys and coke reduced to NIL;

Export duty levied on exports of steel : 15% on primary and semi-finished & HR Coils + 10% on CR, Pipes and Tubes + 5% on galvanised steel;

RBI Governor unfolds monetary policy but keeps bank rate, Report rate & Reverse Repo Rate unchanged;

Lok Sabha lost 9 hours & 9 minutes due to interruptions last week : Speaker;

FM to reply to questions related to Budget 2008 today; Lok Sabha to pass Finance Bill; Many amendments in income tax, central excise & Customs proposals likely; Farm loan waiver scheme to be expanded;

EU keen to wrap up FTA with India; looking forward to pruned list of items;

Bharti Airtel cuts STD rates to Rs 1.5;

cbdtorder61_2008.pdf

CBDT posts 44 probationers;

CASE LAWS

2008-TIOL-79-SC-IT.pdf

DCIT, Ahmedabad Vs N K Industries (Dated : April 22, 2008)

Income Tax - Sec 32 - Actual connotation of the word ''used'' in Sec 32 - Tribunal sets aside the Revenue's case - High Court also dismisses the appeal as it found no substantial question of law - Leaving the question of law related to the actual meaning of the word ''used'' open, the Revenue's appeal dismissed while agreeing with the Tribunal' order based on facts that there was no evidence as to the idle nature of the assessee's machinery : SUPREME COURT;

2008-TIOL-251-HC-ALL-IT.pdf + transfer story.pdf

Dr Vinod Kumar Rai Vs ITAT, Allahabad (Dated : March 14, 2008)

Income Tax - Assessees object to filing of appeal by revenue against the order of CIT(A) being barred by limitation u/s 253(3) and in any case order having been given effect to by the assessing authority by sending a revised demand which was accepted by assessees, it cannot be subsequently appealed against and also that the order of CIT(A) cannot be set aside merely on the ground that he is transferred as this will not deprive him of the power to decide pending appeals under the doctrine of de facto - Period of limitation as per Sec.253 starts from the day of communication of order to the Commissioner and not assessing authority and computation from that date does not make the appeal time barred and as regards compliance with the said order, right to appeal and compliance with the order appealed against are two separate things and such compliance of order by lower authorities cannot take away the statutory right to appeal granted to commissioner against the said order who was not even communicated the order at the time of issue of revised demand - Doctrine of de facto has no applicability in the instant case as the said doctrine comes into play in situations where there is a defect in the appointment of a person holding office under lawful authority whereas in the instant case CIT(A) was unlawfully holding on to the office after his transfer and rejection of representation against transfer and it wasn't a case of defect in appointment thus judgemnent passed by him was without jurisdiction - CBDT directed to prevent officers under posting of transfer from discharging quasi-judicial functions until issue is sorted out - Assessee's appeal dismissed. : ALLAHABAD HIGH COURT;

2008-TIOL-250-HC-P&H-IT.pdf

CIT, Chandigarh Vs M/s Himachal Agro Foods Ltd (Dated : April 3, 2008)

Income Tax - Assessee wrongly calculates and claims 100% Sec 80IB benefits in place of 30% - AO levies penalty u/s 271(i)(c) for concealing particulars of income - Tribunal sets aside the order - In view of the Tribuna's finding that the Revenue failed to pinpoint the specific defect in the CIT(A) order and the fact that it was a bona fide mistake in calculating the first assessment year, not penalty is imposable - Revenue's appeal dismissed : P & H HIGH COURT;

2008-TIOL-249-HC-MAD-IT.pdf

M/s Dynavision Ltd Vs ITAT & CIT, Chennai (Dated : April 9, 2008)

Income Tax - Sec 255(4) - Difference of opinion between the two Members of the Tribunal - Matter referred to the Third Member by the President - Question referred to the Third Member was re-framed and held in favour of the Revenue - Writ - The Third Member can no power or the right to go beyond the scope of the reference made to him - Order set aside and the case remanded for fresh consideration only on the point or points of differences by a new Third Member as the concerned Member retires : MADRAS HIGH COURT;

CENTRAL EXCISE SECTION

2008-TIOL-81-SC-CX.pdf + prachi sc story.pdf

M/s Prachi industries Vs CCE, Chandigarh (Dated : March 28, 2008)

Swagging amounts to manufacture: Swaging is a general term which is applied to a number of Metal Forming Operations. Production Swaging Operations are commonly performed on rotary swaging machines. Swaging has proved to be an economical production method for forming shapes confined to a portion of the total length of a given pipe or tube, by tapering, pointing, reducing or sizing. Swaging process is also used for joining and fastening operations. It is also used in assembling two or more components by joining a bushing to a shaft, swaging of rings onto wire for use as electrical connectors, and for attaching fittings to tubes.

MS plane pipe/tube can carry water to the overhead tank whereas the workpiece produced in the present case is useful as a decorative item or as an item which provides a strong grip in the case of auto-rickshaw. Therefore, a distinguishable identity is acquired of a lasting character imparted to a plane MS pipe/tube by use of dies and presses.

Manufacture - process: The definition of "manufacture" includes "any process incidental or ancillary to the completion of a manufactured product". Therefore, on analyzing Section 2(f), it becomes clear that the word "process" must be in relation to manufacture. By this definition, it is made clear that the process must be incidental to the completion of the manufactured product. In other words, incidental process must be an integral part of manufacture resulting in a finished product which has to be of a different physical shape, size and use. The said process must impart a change of lasting character to the original product or raw material. After the process, a new finished product must come into existence. It comes into existence only when it acquires a distinguishable identity. For example, in the case of blending of ore what emerges after the process of blending is an ore but of different type. Once the process amounts to manufacture, the fact that the goods belong to the same entry would not be relevant. : SUPREME COURT;

2008-TIOL-80-SC-CX.pdf

CCE, Meerut Vs Motherson Sumi Systems ltd (Dated : April 24, 2008)

Central Excise - Job work - Value of free supply of inputs not includible in the assessable value - Revenue's appeal dismissed : SUPREME COURT;

2008-TIOL-650-CESTAT-MAD.pdf + kiosk story.pdf

M/s HCL Peripherals Vs CCE, Chennai (Dated : April 2, 2008)

Inappropriate application of common parlance test: It is common knowledge that information technology is a fast-developing phenomenon and the commoners in our country are yet to keep pace with it. Common parlance is, therefore, likely to lag behind technological parlance. Those associated with the technology, manufacture and marketing of the kiosks- like the appellants and the ELCOT functionary – will identify these machines today as computers customized for special purposes, but the laymen may take some more time to do so. Therefore, in our considered view, the Commissioner applied the common parlance test inappropriately to the kiosks in question. He ought to have gone by the Explanation to the Notification, which explained the term ‘computer', rather than by common parlance.”

Cost does not decide computer: “Would the commissioner treat laptops, palmtops etc. [which are much more expensive than desktops] not to be computers?  The dictionary produced by learned SDR, itself, says that computers range widely in performance, costs etc. Learned Commissioner has also reasoned that, as the appellants called their machine ‘kiosk' and not computer, it cannot be treated as computer. In this regard also, it would suffice to say that, if an ADP machine commonly called ‘laptop' or ‘notebook' can be accepted as a computer in generic sense, a kiosk can also be so accepted.

Kiosk is a computer: “We have found the kiosk in question to be a computer of Heading 84.71 of the CETA Schedule attracting concessional ‘nil' rate of duty under Sl.No. 261 of the Table annexed to Notification No. 6/2002-CE (as amended) for the relevant period. Hence there can be no demand of duty, nor any penalty, on the appellants. The impugned order is set aside and this appeal is allowed.” : CHENNAI CESTAT;

2008-TIOL-647-CESTAT-BANG.pdf

M/s Jindal Aluminium Ltd Vs CCE, Bangalore III (Dated : February 18, 2008)

Central Excise – Refund – Unjust enrichment -  The appellant had not established that the duty burden had not been passed on to the buyers. There is a statutory presumption that duty burden has been passed on to the buyer. The burden is on the appellant to prove the contrary. Appeal dismissed : BANGALORE CESTAT;

2008-TIOL-646-CESTAT-BANG.pdf

M/s Alstom Projects India Ltd Vs CCE, Belgaum (Dated : February 7, 2008)

Central Excise – Shortages – Principles of Natural Justice -   Evidence on record not considered by authorities. Matter remanded to reconsider the evidence on record. : BANGALORE CESTAT;

2008-TIOL-645-CESTAT-BANG.pdf

CCE, Belgaum Vs M/s Bellary Steel & Alloys Ltd (Dated : January 1, 2008)

Credit on cost of PVC Pipes [Capital Goods] is allowed – PVC pipes form a pipeline from the water source outside to the factory premises, though the pipeline from water source is outside the factory premises : BANGALORE CESTAT;

2008-TIOL-644-CESTAT-KOL.pdf

M/s Calcutta Chemicals Co Ltd Vs CCE, Kolkata V (Dated : March 4, 2008)

Combination package – Neem Toothpaste given free with two Margo Soaps – No cause for adding the value of free toothpaste to retail price of Margo soap u/s 4A of CEA'44 – appeal allowed.

Sub Section (2) of Section 4A being an over riding provision to section 4 in respect of valuation of packaged goods, MRP declared on the package is the only value for excisability of the contents in the package – SC decision in Jayanti Food Processing (P) Ltd. ( 2007-TIOL-150-SC-CX ) relied upon. : KOLKATA CESTAT;

SERVICE TAX SECTION

2008-TIOL-649-CESTAT-BANG.pdf

M/s Colours of The World Vs CCE, Cochin (Dated : February 5, 2008)

Service Tax – Advertising Agency -  Appellant has challenged the computation of tax liability on various grounds. Matter remanded to re-compute the tax liability. : BANGALORE CESTAT;

2008-TIOL-648-CESTAT-MUM.pdf

Cozy Interiors Pvt Ltd Vs CST, Mumbai (Dated : February 26, 2008)

ST - Execution of civil work, false ceiling work, carpentry work, painting and plumbing work, electrical and any other interior related work as per the plan and design provided by architects or consultants of the customers - Prima facie   services not covered under category of “Interior decorator” as they are not rendering any advice, services related to planning, design of spaces – Pre-deposit of Service Tax of Rs.91.43 lakhs & penalties waived. : MUMBAI CESTAT;

CUSTOMS SECTION

2008-TIOL-651-CESTAT-BANG.pdf

M/s Honeywell Technology Solution Lab Pvt Ltd Vs CC, Bangalore (Dated : February 26, 2008)

Customs – Import – 100% EOU – Exemption – Notification allows benefit of exemption to security equipment. Safety is a part of security. Hence the benefit of the exemption is also available to safety equipment. : BANGALORE CESTAT;

ddt 29 apr.pdf

Exemption from Additional Customs Duty for goods imported for subsequent sale – Board further complicates the procedure;

fb2008.pdf

FINANCE BILL, 2008;

rbi policy story.pdf

Monetary Policy proposes to introduce currency futures at bourses and exporters allowed capitalisation of exports proceeds;

RBI Annual Policy 2008-09.pdf

Annual Policy Statement for the Year 2008-09;

RBI Notifi For Export Credit Interest Rates.pdf

Rupee Export Credit Interest Rates;

rbi07cir039.pdf

Relief for exporters; RBI extends validity of interest subvention on export credit upto March 31, 2009;

mbuzz563.pdf

PM urges trade & industry to pass on duty-cut benefits to consumers;

mbuzz562.pdf

RBI projects 8.1% growth rate but warns of further hardening of inflationary trend;