CBEC clarifies if goods are manufactured on jobwork basis, value for payment of excise duty to be determined as per Rule 10A + denies benefits of Notification No 30/2004 to quilts & quilted bedspreads;

Chennai Airport Customs seizes IC worth Rs 18.5 lakh, mostly in Rs 500 denomination, from pax heading for Colombo;

CBDT issues transfer of 33 Addl / JCITs;

Mr Atul Chaturvedi, IAS (UP:74) is new Steel Secretary; Mr S Krishnan, IAS (UK: 75) is new Fertiliser Secretary;

Singapore amends I-T Act to comply with OECD standards of tax transparency;

CST compensation issue: FM agrees to States' demand;

Law Minister says Govt keeping close watch on PF Scam;

TIOL COMMENTARY

ddt 20 oct.pdf

Is Electricity Excisable?

guest column.pdf

Exemption under Target Plus Scheme;

vacancy_CEIB.pdf

CEIB is looking for DDG on deputation;

MIXED BUZZ

mbuzz0946.pdf

Huge broadband deficit in poor nations threatens trade;

mbuzz0945.pdf

Indo-China Joint Workshop on National Action Plan on Climate Change to begin tomorrow;

cbdtorder150_2009.pdf

CBDT issues transfer order of 33 Addl / JCITs;

CASE LAWS

2009-TIOL-641-ITAT-DEL-SB.pdf + satellite story.pdf

New Skies Satellites Vs ADIT, New Delhi (Dated: October 16, 2009)

Income tax - Sec 9(1)(vi) - DTAAs with Netherlands, Thailand - Assessees are non-resident companies from the Netherlands, Thailand and Hong Kong, engaged in the business of providing satellite transponders to telecasting and telecom companies in the Asian region - Telecasting companies uplink and downlink TV programmes through the transponders - Telecom comapnies use transponders for data transmission - Is there any 'secret process' involved in this activity? - will the term ‘secret' appearing in the phrase ‘secret formula or process' in Explanation 2 to Section 9(1)(vi) and in the relevant article of the Treaties, qualify the word ‘process' also? If so, whether the services rendered through secret process only will be covered within the meaning of royalty - Whether the payment received by the assessees from their customers on account of use of their satellites for telecommunication and broadcasting, amounts to ‘royalty' and if so, whether the same is liable to tax under section 9(1)(vi) of the Income Tax Act, 1961 read with relevant provisions of DTAA.:DELHI ITAT (SPECIAL BENCH);

2009-TIOL-640-ITAT-BANG.pdf

Hasan Hajee & Co Vs ACIT, Mangalore (Dated: April 30, 2009)

Income Tax - Assesse firm, a Clearing and Forwarding Agent and Transport Contractor, claims labour charges in respect of clearing and forwarding charges - AO partially disallows the claim holding that assessee could not prove that the payment is made with reference to a service rendered - CIT(A) upholds the disallowance - Held, an assessee rendering stevedore services has to pay speed money to get the work done - held, CIT(A) has not made any effort to bring on record any evidence that such payments were not for speed money - Assessee's appeal partly allowed.:BANGALORE ITAT;

2009-TIOL-639-ITAT-DEL.pdf

DCIT, New Delhi Vs M/s Vertex Customer Services (India) Pvt Ltd (Dated: September 25, 2009)

Income tax - Sec 92CA - Assessee is in the business of running a call centre - enters into international transactions with Associated Enterprises (AEs) - Since cross-border transactions are in excess of Rs five crore, a reference is made to the TPO to determine ALP under Sec 92CA(3) - TPO makes adjustments - Whether AO is justified to initiate penalty u/s 271(1)(c) under such circumstances.

The TPO notes assessee incurs financial losses due to i) excess capacity; ii) start-up expenses, and iii) provision for doubtful debts - TPO accepts the first two factors responsible for the losses but not the third one realting to bad debts - AO makes adjustments in taxable income and initiates penalty proceedings on the ground that the assessee has not disclosed the real operating costs and comparable profit margin as required under Sec 92C and it has resulted in suppression of income and also higher claim of loss - CIT(A) treats it as difference of opinion between the assessee and the AO and holds it is not a fit case for levy of penalty - held,

++ for determining the ALP the assessee had applied the TNMM as the most appropriate method. The TPO has not disturbed the method applied by the assessee.

++ the assessee has identified comparable cases that are comparable to the assessee's call centre activities. The operating profit to operate cost has been calculated by the assessee at the average of 10.12%. This aspect also not being disturbed by the TPO or Assessing Officer.

++ as against the sum owed to the assessee, the parent company had incurred larger amount in the formation of the assessee company which was to be cross charged to the assessee. This sum was also cancelled alongwith the debt. If this sum was not cancelled against sums owed by the parent company, the assessee's cost would have been further loaded by a larger amount by the cross charge for formation expenses. In these circumstances, coupled with the fact that there was a full disclosure by the assessee of all the relevant facts, assessee's computation cannot be said to have been done, not in good faith and not with due diligence.

++ Hence, no levy of penalty under section 271(1)(c) is called for. What makes it further unjustified is the fact that the assessee's conduct is not malafide or contumacious.:DELHI ITAT;

2009-TIOL-638-ITAT-MUM.pdf

M/s Guljag Properties & Leasing Co Ltd Vs ITO, Mumbai (Dated: April 23, 2009)

Income tax - Sec 139(9), 244A - Assessee files return - Explanation (e) of Sec 139(9) - AO calls for P&L Account, Balance Sheet and Auditor's report - Assessee files but auditor's report was not certified - AO holds it defective and issues notice - Assessee takes time to cure the defect - AO passes order and grants refund - Period of interest on refund reduced as the onus for delay in curing defect was put on the assessee - held, interest u/s 244A(1)(a) cannot be denied on a technical ground like auditor's report was not signed which is actually not required u/s 139(9). For reducing the period of interest, the case should have been referred to the CIT or CCIT as per provisions of Sec 244A(2). But instead of referring the issue to senior officials, the AO decides the issue himself which is not valid - Assessee's appeal allowed:MUMBAI ITAT;

2009-TIOL-637-ITAT-MUM.pdf

Galaxy Aviation Pvt Ltd Vs JCIT, Mumbai (Dated: August 12, 2009)

Income Tax - Penalty u/s 271(1)(c) - AO completes the assessment by disallowing assets written off as an expenditure and levies penalty – CIT(A) confirms it - Held, a look at the reasons for reopening the assessment and the letter clearly demonstrates that the assessee has come forward voluntarily and corrected the mistakes that have crept into the return filed by him. The fact that the mistakes were not intentional is clear as the assessee's auditor has wrongly rounded off the gross total income. Similarly, the tax payable has been rounded off. Such mistakes are clearly an oversight and the explanation given by the assessee, are a bonafide explanation and the levy of penalty under such circumstances,  is not warranted - Assessee's appeal allowed:MUMBAI ITAT;

SERVICE TAX SECTION

2009-TIOL-1671-CESTAT-DEL.pdf

CCE, Ludhiana Vs M/s Tej Telecom (Dated: July 29, 2009)

Service tax – Whether penalties can be levied simultaneously under Sections 76 & 78 of Finance Act, 1994 – Matter remanded to Appellate Commissioner to consider issue in light of Krishna Poduval case 2006-TIOL-77-HC-KERALA-ST:DELHI CESTAT;

2009-TIOL-1670-CESTAT-BANG.pdf

CCE, Tirupathi Vs M/s Precot Meridian Ltd (Dated: May 13, 2009)

Service tax – Tax liable to be paid by recipients of services from non residents only from 19.04.2006 – It is well settled law that rules are subservient to sections and if section do not provide for discharge of tax by recipient of services from non-resident having no office, then it would be a futile exercise to rely upon rules to collect tax – Impugned order upheld as no merit in revenue appeal :BANGALORE CESTAT;

2009-TIOL-1669-CESTAT-MAD.pdf

M/s Madras Stock Exchange Financial Services Ltd Vs CCE, Chennai (Dated: June 1, 2009)

Service Tax – Stock Broker service – the appellants are not involved in sale and purchase of securities and do not undertake any dealings in securities in their own account – They do not fall within the definition of stock-broker – demand of service tax set aside.:CHENNAI CESTAT;

2009-TIOL-1667-CESTAT-DEL.pdf

M/s M G Motors Vs CCE, Jaipur-I (Dated: July 13, 2009)

ST - Assessee is an authorised automobile dealer - also arranges auto loans for customers - gets commission - fails to pay tax - On being pointed out by the Revenue, assessee deposits tax with interest - penalty - held, it is now settled law that since there was confusion prevailing among the service providers about the tax liability and the Board had issued several clarifications in this regard and penalty is not called for under such circumstances - Assessee's appeal allowed:DELHI CESTAT;

CENTRAL EXCISE SECTION

CIRCULARS

excircular903.pdf

Classification of Textile quilted products like Quilts, Quilted bed spreads, etc;

excircular902.pdf

Assessable value in respect of goods manufactured on Job-work- Scope of Rule 10A of the Central Excise Valuation (Determination of price of Excisable goods) Rules, 2000;

CASE LAWS

2009-TIOL-1674-CESTAT-MUM.pdf + atra story.pdf

CCE & CC, Aurangabad Vs M/s Atra Pharmaceuticals Ltd (Dated: September 3, 2009)

Valuation of Physician Samples – Asssessee paying duty on basis of Board Circular dated 01.07.2002 in spite of the said Circular having been amended on 25.04.2005 – No mens rea established so as to call for imposition of penalty u/s 11AC – Revenue appeal dismissed by CESTAT:MUMBAI CESTAT;

2009-TIOL-1673-CESTAT-MAD.pdf

CCE, Chennai Vs M/s Maral Labs (Dated: July 8, 2009)

Central Excise – Cenvat Credit – quantum of credit eligible on goods received from 100% EOU – the lower appellate authority has to apply the method laid down by the Larger Bench in Vikram Ispat case – matter remanded.:CHENNAI CESTAT;

2009-TIOL-1672-CESTAT-BANG.pdf

CCE, Mysore Vs M/s Nestle India Ltd (Dated: May 4, 2009)

Central Excise – Clearance of instant soluble coffee in bulk without affixing RSP to Indo Tibetan Border Police Organization not assessable under Section 4A – No infirmity in impugned order :BANGALORE CESTAT;

2009-TIOL-1668-CESTAT-BANG.pdf

M/s Madras Cements Limited Vs CCE, Bangalore-II (Dated: May 1, 2009)

Central Excise – Manufacture and clearance of cement by affixing words ‘RAMCO PRODUCT' and ‘KARTHIC' – Revenue has not adduced proper evidences to suggest ‘RAMCO PRODUCT' does not belong to assessee – Assessee produced evidences to show brand name belongs to them – Eligible for exemption under Notification 6/2002-CE – Impugned order liable to be set aside:BANGALORE CESTAT;

CUSTOMS SECTION

2009-TIOL-564-HC-MAD-CUS.pdf + demurrage story.pdf

M/s Austin Engineering Co Ltd Vs CC (Exports), Chennai (Dated: September 18, 2009)

Customs – Demurrage charges – as per the detention certificate issued by the Customs, the detention was not due to any fault or negligence on the part of the importer – In such cases, the customs alone has to pay the demurrage charges for the period covered in the certificate – for rest of the period, the importer is liable to pay the demurrage charges.:MADRAS HIGH COURT;

PPN Power Generating Company Vs CC, Chennai (Dated: May 29, 2009)

Customs – rejection of refund claim in spite of the order from the Tribunal – revenue is bound to follow an order of the appellate authority unless operation thereof is suspended by a competent court – lower authorities directed to implement the order and sanction refund. :CHENNAI CESTAT;

2009-TIOL-1665-CESTAT-MAD.pdf

M/s K G Denim Ltd Vs CCE, Salem (Dated: July 6, 2009)

EOU – removal of computers without payment of duty – The computers were not put to use and were kept idle – no depreciation is allowed – demand of duty upheld – Penalty set aside. :CHENNAI CESTAT;