TIOL-DDT 2390
07.07.2014
Monday

IF you are happy with the report we carried in DDT on Friday about the Bangalore Bench of the CESTAT laying down guidelines regarding applications for extension of stay, forget it now - the happiness is short-lived.

The Revenue must be celebrating - In a diametrically opposite decision, the Delhi Bench of the CESTAT presided over by the President held that no extension of stay could be granted by the CESTAT in the light of the provisions of Section 35C(2A) of the Central Excise Act, 1944, even if the delay in disposal of an appeal, beyond the sunset period prescribed, is not attributable to an appellant .

The Bangalore decision was delivered on 29.05.2014 and the Delhi decision on 16.06.2014. The Delhi Bench gave another decision also on similar lines.

Now there is a conflict between the decisions of Delhi and Bangalore Benches. According to the Bangalore Bench, CESTAT can grant extension of stay beyond 365 days and according to Delhi Bench, it cannot.

Which decision would prevail?

In the Department, there is a strong feeling that the Bangalore decision is per incuriam and so does not have a binding precedent. An AR for the Department told me that the Bangalore decision is superseded by the Delhi decision. When I asked him whether one bench of the Tribunal can supersede the decision of another Bench, he told me that the latter judgement will prevail and a higher order is a better precedence. Is the date of the decision that important, especially when the gap between the two decisions is less than a month? What happens if both the conflicting decisions are delivered on the same date? Do we see the time of the judgement? And has the President's Bench any higher status than that of another Bench?

Now these two applicants before the Delhi Bench will have to rush to their respective High Courts before Revenue starts its dreaded recovery proceedings. There are thousands of assessees all over the country who have got stay orders from the Tribunal and those cases are pending since 2005 - for absolutely no fault of the assessee - now they are all at the mercy of the Department.

Please see 2014-TIOL-1217-CESTAT-DEL and 2014-TIOL-1218-CESTAT-DEL .

There is hope - Matter referred to Larger Bench

THE last evil that came out of the Pandora's Box was HOPE - Yes, hope is also an evil, perhaps the worst of all evils - it didn't even have the energy or will to fly out like the other evils when the box was opened.

It is understood that the Delhi Bench again headed by the President has referred the matter to a Larger Bench, not because of conflict with Bangalore Bench, but because certain issues were not considered by the Delhi Bench in the two recent decisions dismissing extension of stay applications.

It is learnt that Revenue has serious objections to the issue being referred to the Larger Bench and it is considering all options including approaching the High Court against the reference and it is sure to put up a strong fight if the Larger Bench is constituted. Revenue may even bring in the Additional Solicitor General to argue its case.

Now that the issue is referred to a Larger Bench, till the decision of the Larger Bench comes, will extension of stay be continued? Well, this the question that would be haunting the assessees for some time.

Traders, if you have tears shed them now

IT is hell let loose - traders in the country are in for a major attack from the Revenue Departments. If your stay from the Tribunal is more than one year old, you are in trouble. The stay is automatically vacated - the Tribunal cannot extend the stay and the Department can recover the demand by attachment of property, bank accounts, dues from customers etc. The law says that if the Tribunal could not decide your case within one year and even if you are in no way responsible for the delay, the stay is vacated and that means recovery proceedings are initiated.

No civilised country would perhaps have such draconian laws. Draconian laws survive not because of the tyranny of the rulers, but because of the meek acceptance of the victim subjects. This dangerous provision has been in the Statute for more than a decade - nobody took it seriously, as Tribunal Benches were fair and just in giving stay and now if it is held that the Tribunal had no business or rather the power to give stay beyond 365 days, the Indian Business is doomed. Unfortunately all our economics pundits do not know such minor details and even the trade and industry associations never bother to highlight such trivial issues. Even though we are warned, usually we don't bother until the tiger is at our doorstep. NOW IT IS!

Now, the trade and industry should forget all other issues and concentrate on this single issue. Get this draconian, illogical and lethal provision removed from the statute. Mr. Arun Jaitley is a learned lawyer and he would certainly understand this issue, if explained to him properly. The Revenue Department which brought in this provision will certainly try to convince him about its justification - the trade should be able to convince him better. If you do not act at least now, this provision would get legal and judicial approval and then it will be impossible to do business in India.

What is the logic of a one year stay ? Why should a stay be given only for 365 days and not beyond. It is known that Departmental officers routinely, with hardly any respect for Law, Courts or even their Boards confirm huge demands which will not survive judicial scrutiny. Even in such cases, after one year, the assessee has to pay up the entire demand which is sure to be set aside later. Where will the businessmen get such huge amounts of money to deposit such demands?

And why are the cases not decided? The Government does not create enough Benches of the Tribunal and in the existing Benches they don't post Members. If the Government is serious about disposing of cases, let them establish a Tribunal Bench in every district and let the case be decided within a week. More than one lakh cases are pending in the CESTAT and the Government wants to punish the assessees for that. Even a child would know that this is unjust, unfair and outrageous, but for the Revenue babu, this is perfectly legal. If you can appoint a few Revenue officers in our Missions abroad to publicise these laws, they can ensure that no foreign investor would ever step into India.

Don't depend on hope - hop into North Block and convince the FM that such draconian provisions do not deserve to find a place in the Statutes of a civilised country.

Please see DDT 72, 1399, 2325, 2326, 2389 .

FTP - Export Policy of Sugar

GOVERNMENT has made amendments in Chapter 17 of Schedule 2 of ITC(HS) Classification of Export and Import Items.

(i) The quantity ceiling for export of organic sugar has been removed till the time export of sugar is permitted "Freely".

(ii) Export of organic sugar would be permitted subject to registration of quantity with DGFT and certification by APEDA as sugar being organic sugar.

DGFT Notification No.88 (RE - 2013)/2009-2014, Dated: July 04 2014

FTP - Removal from list of Inspection and Certification Agencies (Appendix 5)

DGFT has amended Appendix-5 (List of Inspection and Certification Agencies) of Handbook of Procedures Vol. I (Appendices and Aayaat Niryaat Forms) 2009-2014. Alex Stewart International (Aust) Pty. Ltd stands deleted from the list with immediate effect and made ineligible to issue Pre-Shipment Inspection Certificate.

DGFT Public Notice No.64 /(RE:2013)/2009-2014, Dated: July 04 2014

FTP - Export of 8,100 MTs of raw sugar to USA under Tariff Rate Quota

DGFT has allocated a total quantity of 8,100 MTs of raw sugar (at 98 degree Pol), out of non-levy(free sale) quota for export under tariff rate quota(TRQ) to USA for the US fiscal year 2014 (October 1, 2013 to September 30, 2014). This export will be through M/s. Indian Sugar Exim Corporation Ltd, New Delhi.

DGFT Public Notice No.65/(RE:2013)/2009-2014, Dated: July 04 2014

Correspondence with Board - Instructions

CBEC in a letter to the Chief Commissioners informs them that the Board has been receiving a large number of references from individual officers working in different Commissionerate/Directorates regarding miscellaneous issues related to their service matters/grievances. Individual representations/ grievances are also being received through PMO's/President's Secretariat. Usually, such representations/references received in the Board are being forwarded to the concerned Chief Commissioner/ Director General for their examination and sending factual report to the Board.

Board had already issued instructions in 2012 that before sending the communications to the Board, the same may first be thoroughly examined in the Commissionerate and if found that the issue requires clarification from the Board then only pointed reference be made to the Board along with their comments/suggestions/recommendations, supported by facts and rules.

Board reiterates the above instructions for strict compliance.

What will the Board do if these instructions are defied? It will reiterate them after two years!

CBEC Letter in F. No.A- 26017 /57 /2014-Ad.II A, Dated: June 24 2014

Jurisprudentiol – Tuesday's cases

Customs

Conditional Exemption Violation of conditions Show Cause Notice is required to be issued even in cases where bond is executed High Court

THE issue involves demand of customs duty (Rs.5,75,65,331/-) along with interest under Section 28AB of the Customs Act, 1962 and Central Excise duty (Rs.1,28,26,974/-) along with interest under Section 11AB of the Central Excise Act, 1944 in terms of the bond executed before the Assistant Commissioner of Customs and Central Excise, in fulfillment of the conditions laid down for duty free import under an exemption notification.

Show cause notice is a must before adjudication of the quantity of the duty sought to be levied followed by demand -Clause (a) of sub-section (1) of Section 28 is a mandatory in character and it is well settled that in the regime of interpretation of statute the mandate of fiscal law has to be strictly construed. The entire adjudication and consequent demand notice are absurd and in breach of principles of natural justice Matter remitted to Adjudicating Authority.

Income Tax

Whether if an expenditure is held to be capital in nature, it automatically invites application of provisions of Sec 35AB in such a case - YES: High Court

THE assessee company had claimed technical know how fees of Rs.24,04,000/- in the Profit & Loss Account. The AO held this to be capital in nature and also held that the assessee's request for applying Section-37 was also incorrect. The expenses of technical know-how was covered by the provision of Section-35AB and there would not arise question of applicability of provision of Section-37 and accordingly, such technical know-how was added to the total income of assessee.

The issue before the Bench is - Whether if an expenditure is held to be capital in nature, it automatically invites the application of provisions of Sec 35AB in such a case. And the answer goes against the Revenue.

Central Excise

CENVAT Credit on inputs alleged to be not received - In view of clear evidence in respect of non-crossing of Sale Tax check post barrier, a clear conclusion emerges of non-receipt of goods - Demand upheld: CESTAT

THE issue involved is denial of CENVAT Credit on the inputs on the ground that the goods were not received by the assessee. According to the investigations, the assessee's unit is located in Himachal Pradesh and as per the provisions of Himachal Pradesh General Sales Tax Act, 1968, the owner or person in charge of goods, carriage or vessels entering the limits of H.P. State or leaving the H.P. state limits has to give, in triplicate, a declaration containing such particulars as may be prescribed of the goods carried in such vehicle or vessel as the case may be, before the officer in charge of the check post or barriers and ST-XXVI-A form is required to be generated/submitted at the barriers/check-posts for the goods entering into/leaving the State of H.P. It is the case of the department that the subject case was booked primarily on the basis of Sales Tax records pertaining to the supplier, M/s Karan & Co. Parwanoo. As per evidence gathered and confirmed by the Sales Tax Authorities, the goods have not even crossed the State border on the appointed dates, yet Cenvat Credit has been availed by the party.

See our Columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a nice day.

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