TIOL-DDT 2508
01 01 2015
Thursday

IN his Budget Speech on 10th June 2014, Finance Minister Arun Jaitley said,

I propose to set up a High Level Committee to interact with trade and industry on a regular basis and ascertain areas where clarity in tax laws is required. Based on the recommendations of the Committee, the Central Board of Direct Taxes and the Central Board of Excise and Customs shall issue appropriate clarifications, wherever considered necessary, on the tax issues within a period of two months.

Accordingly, six months later, on 3rd December 2014, the Government appointed the High Level Committee headed by Ashok Lahiri, Former Chief Economic Advisor with Sidhartha Pradhan, Retired Member, Income Tax Settlement Commission and Gautam Ray, Retired DG(Audit) Customs and Central Excise as Members.

The Committee will give recommendations to the CBDT/CBEC for issuance of appropriate clarifications by way of circulars, instructions etc. on tax issues. The CBDT/CBEC will issue the required clarifications, circulars, instructions etc., within a period of 2 months from the date of receipt of recommendations of the HLC.

The Committee is likely to meet TIOL next week and we invite our esteemed Netizens to suggest changes in both Direct and Indirect Taxes that would iron out the creases of Tax procedures. You can suggest issues, which can be sorted out by circulars and instructions by CBEC/CBDT. This is your best opportunity to effectively tell the tax administration at the highest level where clarity is required.

Please send in your suggestions by email only at editor@tiol.in with the subject - Tax Clarity CBDT/CBEC. Please make your points brief and clear and also mention the suggested circular/instruction that the Boards should give.

Please send in your mails latest by 7th January 2015.

24X7 Customs Clearance - CBEC Instructions

CBEC has decided that with effect from 31.12.2014 the facility of 24x7 Customs clearance for specified imports viz. goods covered by ‘facilitated' Bills of Entry and specified exports viz. factory stuffed containers and goods exported under free Shipping Bills will be made available, at the following 18 sea ports: Chennai, Cochin, Ennore, Gopalpur, JNPT, Kakinada, Kandla, Kolkata, Mumbai, New Mangalore, Marmagoa, Mundra, Okha, Paradeep, Pipavav, Sikka, Tuticorin and Vishakapatnam.

Board has also decided that with effect from 31.12.2014 the facility of 24x7 Customs clearance for specified imports viz. goods covered by facilitated Bills of Entry and all exports viz. goods covered by all Shipping Bills will be made available, at the following 17 air cargo complexes:

Ahmedabad, Amritsar, Bangalore, Chennai, Coimbatore, Cochin, Calicut, Delhi, Goa, Hyderabad, Indore, Jaipur, Kolkata, Mumbai, Nashik, Thiruvanantapuram and Vishakhapatnam.

Board has directed the Chief Commissioners of Customs to deploy sufficient number of officers on 24x7 basis at the specified locations and give wide publicity to this trade facilitation measure. Their active and effective involvement in making the 24x7 Customs clearance facility a success will be closely monitored by the Board. They are also directed to issue suitable Public Notice/Standing Order or the benefit of all stakeholders and Departmental officers.

Board issued this Circular on 31 st December 2014 and wants it to be implemented with effect from 31st December 2014. When will the Chief Commissioners see this circular and when will they implement it?

CBEC Circular No. 19/2014-Customs., Dated: December 31 2014

Customs - Chickpeas exempted till April 2015 - Just in Time

AS per Sl. No. 21A of the Table in Notification 12/2012-Cus., ‘Chickpeas (garbanzos)' falling under Tariff Item 0713 20 00 attracts Nil rate of duty. This exemption was to expire today, 1st January 2015. Fortunately, the Board remembered about it yesterday and has continued the exemption till 1st April 2015.

Notification No. 39/2014-Cus., Dated: December 31, 2014

Anti-dumping duty on Pentaerythritol- continues

BY notification 74/2011-Cus dated 12th August, 2011, imposition of Anti-dumping duty on "Pentaerythritol?, falling under heading 2905 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), originating in, or exported from, Chinese Taipei was continued for a period up to 27th April, 2013.

Now, the Central government has realized that that date has come and gone but the damage caused to the domestic industry by dumping of ‘Pentaerythritol' continued.

And so, to set things right, a new notification was issued to extend the validity till 27th day of April, 2014. Again 27th April 2014 went unnoticed - but dumping continued.

So, they have now imposed fresh anti dumping on this product for a period of five years with effect from 31.12.2014.

Notification No.49/2014-Customs (ADD), Dated:December 31, 2014

Safeguard Duty on Sodium Citrate

GOVERNMENT had imposed Safeguard Duty on Sodium Citrate falling under tariff item 2918 15 20 of the First Schedule to the Customs Tariff Act, when imported into India at the rate of:

1. thirty per cent. ad valorem during the period from 31st December, 2014 to 30th December, 2015;

2. twenty per cent. ad valorem, during the period from 31st December, 2015 to 30th December, 2016; and

3. ten per cent. ad valorem, when imported during the period from 31st December, 2016 to 30th December, 2017

This will not be applicable to imports from developing countries other than People's Republic of China.

Notification No.04/2014-Customs (SG)., Dated: December 31, 2014

FTP - IEC Online

FROM 1.1.2015, all applications for IEC would be made in online mode only. All applicants will have to fill IEC application and also upload all required documents online.

All IEC Certificates would also be issued by the concerned RA (with his digital signature) in digital format only. The applicant can take a print out of the digitally signed IEC, as and when required.

Applicants with digital signatures would sign the application with their digital signature and submit the same online.

In case the applicant does not possess digital signature, then he would be required to take a print out of the filled up application (without attachments), sign the same and submit it to the concerned RA, either by Post or at the counter.

All applications must be processed and disposed within two working days of their receipt.

RAs would record their observations with reference to the application, based on which either an e-IEC or a rejection letter, along with the reasons for rejection, would be issued. RA would also print the office note generated by the system on the application received for their office record.

There is no provision for issue of deficiency letter in the new system. If the IEC application is rejected, the applicant would be required to file a fresh application.

The authorised officer (not below the rank of FTDO) in the Regional Authorities (RAs) as in Appendix 1 of Handbook of Procedure (vol.1) (2009-2014) will be the competent authority to issue/reject applications for IEC.

DGFT Policy Circular No. 15 (RE-2013)/2009-2014., Dated: December 31, 2014

FTP - IEC Online - Detailed Guidelines

DGFT has modified Part V of the "Detailed Guidelines for Issue / Modification of Importer Exporter Code Number (IEC)" of  ANF2A as notified vide Public Notice No. 76 (RE-2013)/2009-2014 dated the 27th of November, 2014 to provide for inclusion of certain additional documents.

Further, Para 9.1 of Handbook of Procedure vol.1 is modified to the effect that applicants will have to submit online application for modification in IEC and pay Rs 500 /- as application fee.

DGFT Public Notice No. 79 (RE - 2013)/2009-2014., Dated: December 31, 2014

FTP - Export of Buffalo Tallow Allowed

EXPORT of Buffalo Tallow under heading 15021090 is now allowed free but only from APEDA registered integrated meat plants having rendering facilities subject to compulsory pre-shipment bio-chemical test by laboratories approved by APEDA.

DGFT Notification No 104 (RE - 2013)/2009-2014., Dated: December 31, 2014

Tariff Value of Gold, Silver and oils decreased

THE Government has decreased the Tariff value of Gold from 396 USD to 392 USD per 10 gms. The tariff value of Silver is also decreased from 561 USD to 519 USD per kilogram.

Apart from the above, Tariff values of all oils have been brought down .

The Tariff values as on 15.12.2014 and with effect from 31.12.2014 are as under:

Notification No. 117/2014-Cus.(N.T.), Dated: December 31, 2014

Best of Indirect Taxes 2014 - from Courts

2014 has been a busy year indeed and witnessed some really landmark decisions. It had been terrific for us. After ensuring that we will report only important cases, we had to report more than 6200 cases. We reported over 2400 cases from various High Courts and about 2700 cases from the CESTAT.

On an average, we brought you 17 cases a day - must be a record.

The Government's law making factory was also quite active in manufacturing notifications and circulars, as the Table below would show.

This does not include ADD, Safeguard duty Notifications and several instructions and includes some missing non-Tariff notifications of Customs which are nowhere to be found.

Today we bring you a run through on a few of the best cases we reported in 2014 - please see Guest Column.

Jurisprudentiol-Friday's cases

Central Excise

What is meaning of "his factory"? One or more factories?

MEANING of the expression ‘his factory': Under the Central Excise Taxation, duty of Central Excise is levied on the 'act of manufacture' as defined in Section 2(f) of the Central Excise Act 1944 and the person who carries out the 'act of manufacture' is the manufacturer. A 'manufacturer' who is liable to pay duty becomes an 'assessee' by virtue of Rule-2(c) and has to take out a Registration as per the provision s of Rule 9 of the Central Excise Rules 2002. From the above basic elements of Central Excise law a manufacturer is the person who carries out the act of manufacture.

In the present proceedings the 'act of manufacture' is being undertaken by the appellants' factory to whom demand show cause notices are issued and each factory will make the person carrying out the activity of manufacture as the 'manufacturer'. There is nothing in the definition of Section-2(f) to indicate that a legal entity only has to be considered as a 'manufacturer'. Rather each 'assessee' has to be treated as a manufacturer and not the entire group of companies as claimed by the Revenue.

Income Tax

Whether brokerage can be paid to Directors of assessee-company in case of sale of its property and same is deductible as transfer expenses from capital gains arising out of such transfer - NO: ITAT

DURING assessment proceedings the AO noticed that assessee has sold a property on which capital gain was determined. However, it was noticed that Assessee Company has paid huge amount to the Directors on such sales, which were claimed as transfer expenses. The AO observed that director of the company cannot be acting as property brokers because they being directors and owners of the company and, therefore, payment of commission were not justified. Thus, he disallowed the payment of commission of Rs. 48 lakhs.

On appeal, it was mainly submitted that for selling property, commission / brokerage is required to be paid. Since the property dealers could not arrange for the sale of said property for a long time, therefore, Board of Directors of the company withdrew the offer from the property dealers and entrusted the job of finding of customers to the Directors. The Directors successfully found a customer and were able to get much better price because of this fact the company decided to award the Directors. In other words, directors were paid for their services.

THE issue before the Bench is - Whether brokerage can be paid to Directors of the assessee-company in case of sale of its property and the same is deductible as transfer expenses from the capital gains arising out of such transfer. NO is the verdict.

Customs

Burning loss will not fall under clause (b) of Section 65(2) of the Customs Act, 1962 - Burning loss does not exist physically, therefore, it is neither capable of being cleared from the warehouse nor actually cleared - duty demands set aside: CESTAT

ON careful reading of Section 65(2)(b) of Customs Act, 1962, it applies only to such waste and scrap which resulted from manufacturing operations and are cleared from the warehouse for home consumption. In the present case the burning loss does not exist physically, therefore it is neither capable of being cleared from the warehouse nor factually cleared from the warehouse. Therefore, the burning loss occurred in the manufacturing process is nothing but the consumption in the manufacture, though physically not available, hence, the same does not get cleared from the warehouse. With this fact, the burning loss will not fall under the clause (b) of Section 65(2). Accordingly, no duty can be charged on non-existent quantity of burning loss.

See our Columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a nice day.

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