Notification 108/95 CE – No exemption if the goods are supplied for temporary use – Board clarifies (See 'DDT')

Export to SEZ - Commerce Ministry's clarification - It's still not export! (See 'Editorial')

Import of aircraft by NSOs: Customs to seize many more planes in coming days;

FM is confident economy will bounce back;

Govt gives nod to 100% hike in pension of sports persons;

Import of aircraft by NSOs: Customs to seize many more planes in coming days;

ddt 10 july.pdf + letter.pdf + sez.pdf

Export Duty and SEZ – Commerce Concedes;

cobweb.pdf

Bribery of foreign public officials by Indian corporate: India needs to develop effective machinery;

editorial.pdf

Export to SEZ - Commerce Ministry's clarification - It's still not export!

mbuzz787.pdf

Govt gives nod for 100% hike in pension of sports persons ;

mbuzz786.pdf

DGCA norms on FDTL: SC stays Bombay HC order ;

mbuzz785.pdf

UK youth with low skill faces joblessness: OECD ;

2008-TIOL-309-ITAT-HYD.pdf + agent story.pdf

DCIT, Hyderabad Vs Hyderabad Industries Ltd (Dated : May 30, 2008)

Commission paid to foreign agents – TDS not liable: no part of the remittances constituted income or profit chargeable to tax so far as the assessee was concerned and there was no doubt in the mind of the assessee that a portion of such remittances could represent income chargeable to tax requiring a proper apportionment for application of sec.195 : HYDERABAD ITAT;

2008-TIOL-308-ITAT-HYD.pdf

ADIT, Hyderabad Vs Rajastani Siksha Samithi, Nizamabad (Dated : March 28, 2008)

Income derived by a trust running an educational institution or by an educational institution per se is deemed to be the income derived by such trust or institution from property held under trust and will be exempt from income subject to the exceptions provided in sec.13(3) of the Act - Merely because Sec.10 (23C) provides for exemption of the income of an educational institution, it does not follow that such institution cannot avail exemption u/s 11/12 subject to conditions being fulfilled – Appeal of the Department dismissed by the Tribunal by following the Supreme Court's decision in CIT Vs Bar Council of Maharashtra (130 ITR 28)

There is no gainsaying that the Division Bench of the Tribunal has held that there where an institution is eligible for exemption u/s 10(23C), it cannot claim exemption u/s 11 of the Act. And how can the Tribunal hold so when the judgment of the Supreme Court in the case of CIT v. Bar Council of Maharashtra (130 ITR 28) stares in its face. The Supreme Court has categorically made the following observations in para 5 of its judgment, which is reproduced below:

“We may point out that there are other allied provisions like, for instance, sub-section (23C) in sec. 10 which clearly indicate that the legislature did not intend to rule out sec.11 when exemption was claimable under such specific provisions of sec.10.”

There cannot be a more eloquent expression of law and hence it is absolutely futile to argue that institutions falling u/s 10(23C) cannot claim exemption u/s 11. The above is the law of the land. (Para 6)

It is the Commissioner who grants registration u/s 12AA of the Act. Once when registration is granted by the Commissioner, it implies that the trust or the institution is established for charitable purpose. Then it is for the Assessing Officer to examine every year whether the income has been applied for charitable purpose or not. If the income is not so applied, it means that though the trust or institution is established for charitable purpose, it has carried out activities other than charitable and in that case it will be the duty of the Assessing Officer to tax such income. The role of the Assessing Officer in such cases stops here. But he cannot go further overruling a superior authority to hold that the trust or institution is not established for charitable purpose. (Para 7) : HYDERABAD ITAT;

2008-TIOL-307-ITAT-HYD.pdf

Gemini Distilleries (Hyd) Pvt Ltd Vs DCIT, Hyderabad ( Dated : April 11, 2008)

Transactions which are entered in the regular books of account and against which there is no incriminating material, such transactions cannot form the basis of “undisclosed income” – Appeal of the assessee partly allowed and that of the Department dismissed - Tribunal

It is true that the Assessing Officer has not doubted the quantitative records of empty bottles. However, it cannot be denied that the breakage shown by the assessee is phenomenally on the higher side. If not fully, the Assessing Officer is somewhat justified in disbelieving the breakage claimed by the assessee. However, the job well begun by him was allowed to be withered away by not conducting full and necessary enquiries and hence the addition made by him does not seem to be fully justifiable. Purchasing the bottles through sister concerns may raise a doubt about the intentions of the assessee. However, without bringing full and proper facts on record, the conclusion drawn by the Assessing Officer is reduced to an inference only. Moreover, the connected concerns are not held to be either fictitious or benami concerns of the assessee. Thus, when the sales of these concerns are not doubted, there hardly remains any room to doubt the purchases of the assessee. (Para 16)

There is no concrete finding about the quality of bottles supplied by the various supplier, no material to ascertain whether the bottles supplied by outside parties was inclusive of freight and other charged or otherwise and so on. The averment of the Assessing Officer that the liquor produced by the assessee is of low quality meant for lower income group of consumers does not throw any light on the fragility of the bottles. Therefore, in our view, the rate of Rs.1.50 adopted by the Assessing Officer for 180 ml bottles is not justified. Earlier, we did make a mention that there may be some justification for the department to make some addition, both in view of the definition of “undisclosed income” and also for the reason that the assessee did not provide proper explanation for paying higher prices in some cases to the connected concerns. This lapse, if it can be so called, has to be weighed against the fact that books of account have not been rejected, book results are not rejected and purchase vouchers are not faulted with. (Para 22)

Firstly, though the Assessing Officer has pointed out a difference in purchases in respect of one party, there is no indication in his order as to whether he further probed into the matter or not, which he is supposed to do. Merely seeing the difference he has drawn an adverse inference against the assessee. Secondly, it may not be proper to say that the CIT (A) has deleted the addition on technical ground. The CIT (A) has deleted the addition on a legal ground i.e. in accordance with the statutory provisions. Transactions which are entered in the regular books of account and against which there is no incriminating material, such transactions cannot form the basis of “undisclosed income”. (Para 26) : HYDERABAD ITAT;

2008-TIOL-306-ITAT-HYD.pdf

Andhra Bank Vs DCIT, Hyderabad ( Dated : April 11, 2008)

Voluntary Retirement Scheme – Section 35DDA of the IT Act provides for amortization of payments which is not a regular terminal benefit – Amortization follows the nature of payment – the provision does not apply to additional amounts which are paid in r/o regular terminal benefits – CIT (A) order set aside by the Tribunal

The facts have to be understood and digested in the right perspective. It is not in dispute that pension and gratuity are normal terminal benefits. Before the introduction of VRS, the assessee was making provision for pension and gratuity on actuarial basis. However, with the introduction of VRS, the payment in respect of pension and gratuity underwent a change as a result of which the assessee had to pay additional amounts of Rs.30.38 crores and Rs.28.90 crores for gratuity and pension respectively. Now, sec. 35DDA provides for the amortization of the payment which is not a regular terminal benefit. In other words, the amortization follows the nature of payment and the provision does not apply to the additional amounts which the assessee may have to pay in respect of regular terminal benefits. (Para 6) : HYDERABAD ITAT;

CENTRAL EXCISE SECTION

2008-TIOL-1082-CESTAT-MUM.pdf + industrial adhesive story.pdf

CCE, Mumbai - V Vs Industrial Adhesive Enterprise (Dated : January 11, 2008)

Recovery of interest in case of duty evaded by fraud, suppression etc. prior to 11.05.2001 – Since old section 11AB(1) has been substituted without a saving clause, no interest payable – section 6A of the General Clauses Act, 1897 inapplicable – ROM dismissed :MUMBAI CESTAT;

2008-TIOL-1081-CESTAT-BANG.pdf

Garnier Solutions Vs CCE, Bangalore–III (Dated : February 25, 2008)

Central Excise – SSI Exemption Notification No. 1/93 C.E. – Registration of brand name yet to be considered by the Trademarks Registry – Full waiver of pre-deposit and penalty – Tribunal : BANGALORE CESTAT;

2008-TIOL-1080-CESTAT-MAD.pdf

CCE, ChennaiVs Zeneca Ici Agro Chemicals Ltd (Dated : February 28, 2008)

Repacking and re-labeling of duty paid goods returned by the buyer as defective and sold to third party is not ‘manufacture' – Revenue appeal dismissed – CESTAT. :CHENNAI CESTAT;

2008-TIOL-1079-CESTAT-MAD.pdf

M/s ACC Ltd Vs CCE, Coimbatore (Dated : February 22, 2008)

'Floatation reject' is not found to be an article and does not pass the twin tests of excisability, i.e. manufacture and marketability – Pre-deposit waived and recovery stayed :CHENNAI CESTAT;

SERVICE TAX SECTION

2008-TIOL-1078-CESTAT-BANG.pdf

M/s The Professional Couriers Kakinada Vs CCE & CC, Visakhapatnam-II (Dated : February 26, 2008)

Courier service includes door to door transportation of ‘goods' – Evidence of passing of back dated orders – Matter remanded to Commissioner (Appeals) – Appeal allowed by way of remand : BANGALORE CESTAT;

2008-TIOL-1077-CESTAT-BANG.pdf

M/s Rolex Logistics Pvt Limited Vs CST, Bangalore (Dated : February 8, 2008)

Assessee is not required to pay Service Tax on reimbursements towards incentives and salary of employees – Appellants have filed returns and their records scrutinized from time to time – No suppression - Pre-deposit waived and stay granted – In view of huge revenue involvement early hearing granted

In the cited judgments on merits, a view has been expressed that the appellants are not required to pay Service Tax on these ingredients like rent, salary of employees, etc. on which service tax is being claimed. The appellants have been filing their returns and the records have been checked and scrutinized from time to time. Therefore, to allege suppression, prima facie, it does not appear to be correct in the light of the judgments of the Supreme Court cited by the appellants (Para 4) : BANGALORE CESTAT;

CUSTOMS SECTION

NOTIFICATION

ctariff08_083.pdf

Govt further extends concessions to import of textile items under SAFTA;

dgft08pn049.pdf

Appendix 31A and ANF 2C-1 are notified;

dgft08pn048.pdf

amendments are made in para 5.9.1 and 5.3.4;

dgft08pn047.pdf

DGFT amends rule for change in port of registration;

dgft08pn046.pdf

VKGUY: entry No 9.25 corrected;

dgft08pn045.pdf

DGFT notifies late cut fee for submission of applications after due date;

CASE LAWS

2008-TIOL-1083-CESTAT-DEL.pdf + seagram story.pdf

Seagram India Pvt Ltd Vs CC, ICD, Tughlakabad, New Delhi (Dated : June 25, 2008)

Comparable price: the decision of the Commissioner holding the CAB meant for the four brands as similar to the CAB of contemporaneous imports for comparable brands deserves to be upheld :- retail price of the final product has been taken only as an additional factor and that is not the only determining factor for comparing the different categories of CABs imported by the appellant with those of competitors. Reliance placed on the retail prices of the final product has been used to correlate and identify similar goods at the next level. The parameters adopted cannot be considered irrelevant. The price was taken as an indicator/additional factor. On the above basis only 100 Pipers were treated as similar goods to Vat 69 and later to Findlaters in terms of Tribunal order; Passport was treated as similar goods to Black and White; Something Special was treated as similar to Black Dog, and so on.

The submission that no two different branded goods can be held to be similar goods is not acceptable. Rules 2(1 )( e) of the Valuation Rules envisages that "the existence of trade mark should also be taken into account". Such stipulation does not lead to a conclusion that two branded goods of two different brands can never be compared. It only means that it would not be proper to compare non-branded goods with the branded goods. Similarity of goods should not be considered on same rigid parameters as applicable in the case of identical goods. The Valuation Rules and the Interpretative notes make a clear distinction between identical goods and similar goods. The comparison is for the purpose of valuation to determine the custom duty. For this purpose, no extensive market research into finer aspects of valuation of trade mark, brand names etc. is expected to be made by the Department. For determining similarity, no studies on consumer preferences, differing tastes based on cask used for the aging, the temperature during the heating process, water used for making the scotch etc. and ingredients used and details of blending formulae are expected to be made - as painstakingly argued by the Advocate. It is not only impossible but it is also not necessary. The observation in the Commentaries and the view expressed by Sh. Saul L. Sherwan that "similarity is likely to be found mainly with highly standardized goods" is not legally binding and may not have relevance in the present case. Such an approach would make the provisions Rule 5 unworkable. The submissions on behalf of the appellant in this regard therefore cannot be accepted.

Related? It is admitted that the appellant is related to the supplier and the presumption, therefore, is that the price declared for imports is not acceptable on the face of it. In a transaction involving 'related persons', the value may not be arrived at on the basis of market forces, as in addition to sale transactions, there are other areas of co-operation and mutuality of interests. There are no strict norms whether certain expenses are to be incurred by the supplier or by the importer, and payments of dividends for the shares of one held by others amounts to sharing of profits. In other words, between related parties, there is a tendency to not really care for finer aspects of market conditions and determine the value of goods accordingly as there are sharing of expenditure, income and profits. Therefore the question before the Tribunal is not whether the relationship has or has not influenced the price, but the question is as to the extent to which it has been influenced.

Adjustment requires to be made on account of difference between the retail price of any brand of the appellant with the corresponding brand of similar goods being compared.: Adjustment in respect of difference in retail sale price has to be extended; the retail prices of the bottled whiskies of different brands has been taken as one of the factors to choose similar goods; A submission was made that the retail prices are bound to be different in different markets/ places especially in view of differences in rates of state excise duties; While this may be true, the differing rates apply not only to the brands of the appellant but also to the brands of competitors; Method adopted cannot be considered unreasonable. Therefore, comparison of retail prices prevailing in Delhi to determine similar goods cannot be assailed. No all- India survey on retail prices, as suggested by the advocate is warranted.

Appeal cannot bring more calamities: In both the earlier rounds, the appellant alone came in appeal; the Department neither filed an appeal nor filed any cross objection.

In the proceedings before the Tribunal, the appellant cannot be put in a position worse than they were before filing it. Therefore, the adoption of prices in the impugned order of the Commissioner which are higher than those adopted by the Commissioner in his second order dated 28.09.2003 is not sustainable.

Decision:

1. the decision of the Commissioner in determining value under Rule 6 is upheld.

2. they are eligible for adjustments from the value of the similar goods as they have imported substantially higher volume.

3. they are eligible for adjustments from the value of the similar goods where their retail prices of bottled whisky are substantially lower than those of the comparable brands.

4. once the assessable value was determined for any brand by following the above method, the assessable value shall not be enhanced till a higher import price of the similar goods was noticed.

5. adjustment requires to be given considering high volume of imports. This adjustment need not be treated on par with discount, as we are dealing with transactions between related persons. :DELHI CESTAT;