TIOL-DDT 2575
10 04 2015
Friday

CBEC in Circular No 6/2008-Customs dated 28.04.2008 prescribed the manner of claim and sanction of 4% SAD refund in terms of notification No. 102/2007-Customs dated 14.09.2007. The Circular in para 4.2 stipulated that an importer can file only one refund claim in month in a Commissionerate.

Board has received representations that this stipulation is not feasible in the Commissionerate having Customs locations widely spread and in situations where imports are made by an importer from more than one Customs location in a Commissionerate.

Board was requested to simplify the procedure.

The good Board is in a good mood and as a trade facilitation has decided that importers may file refund claim of 4% SAD refund in terms of notification No. 102/2007- Customs dated 14.09.2007 at the Customs stations where imports are made.

But the number of such claims at a Customs station shall be limited to one in a particular month.

CBEC Circular No.12/2015-Cus, Dated: April 9, 2015

Jurisprudentiol

CUSTOMS - Import - Failure to fulfill conditions of exemption - Confiscation - redemption fine - Is duty payable under Section 125 if goods are not redeemed? - No, rules Supreme Court

If goods are confiscated under the Customs Act and if they are not prohibited goods, the owner has to be given an option to redeem the goods on payment of a fine. As per Section 125 of the Customs Act,

1. When goods are confiscated, the owner is given an option to pay a fine in lieu of confiscation.

2. When redemption fine is imposed, the owner shall in addition be liable to pay duty.

Now what happens if the owner declines to or refuses to redeem the goods, is he still required to pay duty?

As it happened in this case, a Hospital imported without payment of duty medical equipment in 1990. The Commissioner passed an order confiscating the goods and allowing redemption in 2002 and demanded a duty of Rs. 1.65 crores. By this time the value of the goods must have come down to a few hundreds. It is not worth redeeming or paying duty. But can the importer escape the clutches of duty?

The Appellant in this case, a hospital imported medical equipment without payment of Customs duty under Notification No. 64/88-cus dated 01.03.1988. The Notification imposed conditions that the Hospital should provide free treatment to at least 40% of their outdoor patients and free treatment to families having less than five hundred rupees income. These are post import conditions. Department found that the appellant had failed to fulfill these conditions. Notice was issued under Section 124 of the Customs Act proposing to confiscate the equipment and impose penalty. There was no demand for duty. The Commissioner confiscated the goods, but allowed the importer to redeem the goods on payment of a redemption fine of Rs. One lakh. He also demanded a duty of 1.65 crores (there was no mention of duty in the notice). The appellant did not redeem the goods and appealed to CESTAT pleading that duty was payable only when goods are redeemed. CESTAT allowed the appeal, but Revenue appealed to the High Court which held that under Section 125(2), the duty payable on the confiscated goods has to be paid on imposition of fine in lieu of confiscation and it is immaterial whether such option is exercised or not. This is the issue in appeal before the Supreme Court.

The Supreme Court held that payment of duty under Section 125(2) was only subject to the exercise of option to redeem. If goods are not redeemed, no duty is payable under Section 125.

Not everything is lost to the Department: The Supreme Court observed, “if the Department wanted the Institute to pay the duty, which may have become payable, it could have taken independent action; de hors Section 124 of the Act, for payment of duty, simultaneously with the notice under Section 124 of the Act or by issuing composite notice for such an action. No doubt, it could have waited for option to be exercised by the Institute under Section 125(1) of the Act as well and in that eventuality, duty would have automatically become payable under Section 125(2) of the Act. But when such an option was not exercised, it could have taken separate and independent action by issuing Show Cause Notice to the effect that the Institute had violated the terms of exemption notification and therefore, was liable to pay duty.

Supreme Court allowed the appeal of the importer but made it clear that it would still be open to the Department to take appropriate independent action against the appellant for payment of import duty, in case it is still within period of limitation.

Please see Fortis Hospital Ltd Vs Commissioner of Customs, Import - 2015-TIOL-57-SC-CUS

FTP - Export from India Schemes - CBEC brings into force Foreign Trade promises

THE Foreign Trade Policy (FTP) 2015-2020 allowed two Exports from India Schemes:

(i) Merchandise Exports from India Scheme (MEIS).

(ii) Service Exports from India Scheme (SEIS).

Duty Credit Scrips are granted as rewards under MEIS and SEIS and are freely transferable. The Duty Credit Scrips can be mainly used for :

(i) Payment of Customs Duties for import of inputs or goods, except certain items.

(ii) Payment of excise duties on domestic procurement of inputs or goods, including capital goods as per DoR notification.

(iii) Payment of service tax on procurement of services as per DoR notification.

But these are only wishes as far as they remain only in the Foreign Trade Policy. They will come into force only when CBEC notifies them under the respective statutes of Customs, Central Excise and ST, which they have done now. The CBEC gives effect to these scrips by exemption Notifications. They have issued two exemption notifications each under Customs, Central Excise and Service Tax for the two Schemes as:

Now these scrips will be floating around and will surely be the cause of tremendous litigation. The CBEC has opted for the primitive method of physical scrips which have to be presented before Customs officers, who will validate the amounts on the reverse and these have to be presented to the Central Excise and Service Tax authorities, with a declaration. All too much of contact with officers (elsewhere in this edition of DDT, we have reported the news of a Central Excise Superintendent caught by CBI while demanding a bribe for accepting a bond) and paperwork, leading to complications and fraud.Why can't they do all these electronically, something like DMAT shares? How are they going to GST with this kind of archaic procedures?

Wealth Tax - No interest on tax paid before due date

INTEREST under section 17B of the Wealth-tax Act is charged in case of default in furnishing of return of net wealth by an assessee. The interest is charged at the specified rate on the amount of tax payable on the net wealth. Since the provisions of section 17B do not provide for reduction of the amount of self-assessment tax from the amount on which interest under section 17B is chargeable, interest is being charged on the amount of self- assessment tax paid by the assessee even before the due date of filing of return of net wealth.

CBDT clarifies that no interest under section 17B of the Wealth-tax Act is chargeable on the amount of self-assessment tax paid by the assessee before the due date of filing return of net wealth.

CBDT Circular No. 05/2015, Dated: April 9, 2015

Goods for 'Airborne Early Warning and Control (AEW&C) System' exempted from customs duty - Again

IN 2006, the government exempted aircraft and their parts, aircraft engines and their parts, radars, machinery, equipment, computer hardware and software, accessories and consumables etc, required for the Airborne Early Warning and Control (AEW&C) System Programme of Ministry of Defence. This was to be valid till 1.1.2012. Later they extended it till 5.4.2014 and then 5.10.2014. And now it is extended till 1.1.2016. Strangely these exemptions are by different entries in the Notification No. 39/96-Customs, dated the 23rd July, 1996.

The entries 31, 31A and now 31B of the notification are all almost identical.

Notification No. 26/2015-Cus, Dated: April 9, 2015

Calling a thief 'a thief' is no defamation

A very interesting order was passed recently by the Special Judge, CBI Court, New Delhi.

A whistle blower, let's call him JKB and a Central Excise Assessee, let's call it BSL are the two main characters.

BSL had filed a defamation case against JKB that by writing various letters to various Government authorities JKB, by way of imputations and accusations, has harmed the reputation of the Company. He has made several pernicious and contumacious comments in these letters wherein he has referred to the Company as a 'tax evading unit' and has accused it of having connived and colluded with the top officials of Central Excise Department. JKB has also made allegations against senior officials of BSL of having fabricated records and intentionally giving false statements and also of carrying out underhand cash transactions. It is averred that all these letters were read by several persons and, consequently, the reputation and goodwill of the Company have been tarnished.

The Court noted that on the information given by JKB, a successful raid was conducted on 21.09.2000 at the factory and its branches of BSL all over the country and, consequently, three Show Cause Notices forRs.45 crores were issued by Central Excise Department and a penalty of Rs.45 crores was imposed. This fact has not at all been denied by BSL before the Court.

The Court observed, Calling a thief 'a thief' is no defamation. It cannot be said that by using term 'tax evading unit' JKB has defamed BSL.

The Judge further observed,

Even though bribe giving as well as bribe taking, both are offences under the Indian Law but in our society no stigma is attached to a bribe giver who is sometimes considered a 'victim'. The allegations that the petitioner connived or colluded with the top officers of Central Excise Department and made underhand cash transactions cannot, be considered defamatory.

The act of the petitioner in reporting the matters to the concerned Government agencies was, in fact, an act as of a 'whistleblower' for public good.

NACEN Hindupur Bhoomi Puja Tomorrow - Grand Show

FINALLY it is happening - NACEN at Hindupur in Andhra Pradesh. And for the State Government it is a big event. The Bhoomi Puja at Hindupur tomorrow will be attended by Finance Minister Arun Jaitley and AP Chief Minister Chandra Babu Naidu. The Mega Show will witness not less than 8 Central Ministers including Venkaiah Naidu, Ashok Gajapathi Raju and Nirmala Sitharaman.

NACEN has obtained 500 acres of land from the Andhra Pradesh Government for its future academy. This will perhaps be the largest Academy in India and may be all the Civil servants can be trained here.

Central Excise Superintendent Trapped By CBI

THE Anti Corruption Branch of CBI, Chennai, had trapped a Superintendent of Central Excise, Chennai-I Commissionerate for demanding and accepting a total bribe amount of Rs. 11,000/- for himself and for his Assistant Commissioner. The bribe was for handing over the copy of the Accepted General Bond for Rs 20 lakhs, for procurement of Excisable Goods for Export without payment any Excise duty and for issuing of certificate under Form CT-I against the said General Bond.

The accused was caught red handed while demanding and accepting the bribe and on further questioning it was revealed that the bribe amount was shared with the Assistant Commissioner. Subsequently, he was also arrested. Both the accused persons were produced before the Special Judge Court for CBI Cases, who remanded them to Judicial Custody.

Searches were conducted at 5 places. During searches incriminating documents were seized including cash of Rs 29,15,200/- and Rs 18.50 lakhs worth FDRs were seized. Investigation is in progress.

For 11,000 rupees, their careers have gone for a toss - may be, at Hindupur the officers should be educated about the ill-effects of these activities too...

Until Monday with more DDT

Have a nice weekend.

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