TIOL-DDT 2592
07 05 2015
Thursday 

PRESIDENT of CESTAT Justice Raghuram said sometime back in a trade association meeting,

When I saw the GST Bill, it is mind-boggling constitutional complexity. It is neither the exclusive list nor the concurrent list; it's a fourth dimensional animal. It is post Einstenian Physics. Heisenberg's uncertainty of quantum mechanics is elementary compared to the complexity of this. Even the political complexity of States and Union coming together on a continual basis to ratchet the policy of GST is a huge challenge. It is an economical challenge, it is a political challenge, policy challenge, an administrative challenge; it's an adjudication challenge. So that is the next animal that is waiting to pounce on you.

Well, we are almost at the pre-final stage. Yesterday the Bill was passed in the Lok Sabha with 336 Members voting for and 11 against. Thus the motion was carried by a majority of the total membership of the House and by a majority of not less than two-thirds of the members present and voting. A landmark in the tax legislation history of India has been created.

Speaking in the Lok Sabha, the Finance Minister Arun Jaitley said, "So, if you are opposed to the concept of GST, you have changed in your mind or in the words of Shri Adhir Ranjan Chowdhury, "Kabhi Haan Kabhi Naa". I thought that he made a very valid point. I am glad that Mrs. Sonia Gandhi was smiling yesterday when he said so………..

……….

But the last laugh is always a louder one." - Who will have it?

Please also see today's CobWeb

CX - Inputs or Capital Goods Cleared as such - Reversal of CENVAT Credit - CAG wants Rule to be amended

THE CAG in its latest report on Central Excise presented to Parliament on Tuesday observed,

As per rule 3(5) of the Cenvat Credit Rules, 2004, when input or capital goods on which Cenvat credit has been taken, are removed as such from the factory, the manufacturer of final products shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in rule 9. However, there is no provision for reversal of proportionate Cenvat credit of input services at the time of clearance of inputs/capital goods as such .

So the CAG has suggested that:

Board may consider incorporating suitable provisions in Cenvat Credit Rules, 2004 requiring reversal of proportionate credit attributable to input services at the time of clearance of inputs or capital goods as such .

Let us hope the Board doesn't embark upon any such misadventure, which would make life more miserable for the assessee, and the revenue earned will not cover the cost of even one audit report.

And the CAG does not suggest how to quantify the proportionate credit.  

CX - Destruction of Goods - CAG wants Rules Amended for more Departmental intervention

THE CAG seems to be in a hurry to take the Central Excise Administration back to the nineteenth century. When everyone is talking of less points of contact, the CAG wants to initiate yet another permission raj. In its recent Report No. 7 of 2015 (Central Excise), the CAG recommended:

Section 5 of the Central Excise Act, 1944 and rule 21 of the Central Excise Rules, 2002 contain provisions for remission of duty if the excisable goods is found unfit for consumption or marketing. However, there is no provision in Act/Rules requiring the assessee to intimate department prior to the destruction of goods by him or goods destroyed by natural cause and claiming remission of duty. Chapter 18 of CBEC's Excise Manual of Supplementary Instructions, 2005 contain instructions and procedure to be followed by the assessee for destruction of goods and claiming remission of duty which requires that the assessee should intimate department about goods to be destroyed along with reasons and all goods will be destroyed under the supervision of the department. However, these instructions are binding only on the departmental officers. Though there are legal pronouncements which also confirm that prior permission is essential for remission, there is nothing in the rules which prevent destruction of goods suo-moto.

The CAG recommends,

CBEC may consider inclusion of suitable provisions in the Rules for proper procedure to be followed by the assessee before destruction of excisable goods and for intimating department for goods destroyed by natural cause and claim remission of duty .

Let us pray the Board is not impressed by the recommendation of the CAG.

FTP - Export of Red Sanders - time limit

TIME upto 30.04.2016 has been allowed to the Government of Andhra Pradesh & Directorate of Revenue Intelligence (DRI) to finalize the modalities and export of respective allocated quantity of Red Sanders wood.

Time upto 30.04.2016 has been prescribed for export of 1998.5917 MTs value added products of Red Sanderswood by Government of Andhra Pradesh, permitted vide  Public Notice No. 42  (RE - 2013)/2009 - 2014 dated 03.12.2013

DGFT Notification No. 06/2015-2020, Dated: May 6, 2015 - DGFT Public Notice No. 11/2015-2020, Dated: May 6, 2015

Customs - High Court directs Settlement Commission to follow principles of natural justice

WHEN the matter was heard on 18.2.2014 and the Counsel for the petitioner was heard by the Settlement Commission, neither the report of the Commissioner of Customs i.e. Respondent No.2 was placed on record nor the representative of the Revenue was present before the Settlement Commission. However, subsequently, the Revenue submitted its report dated 11.3.2014. The impugned order has been passed on 20.5.2014 after taking into consideration the submissions made by the petitioner as well as the report of the Respondent No.2, which was admittedly filed after the hearing was given to the petitioner by the Settlement Commission.

The matter reached the High Court.

The High Court observed,

"It is thus clear that the impugned order has been passed by the Respondent No.3 - the learned Settlement Commission by taking into consideration the material, a copy of which was neither supplied to the petitioner nor the petitioner was given an opportunity to meet the said material.

In that view of the matter, we are of the considered view that the impugned order is in utter violation of the principles of natural justice. On the short ground, the Petition deserves to be allowed."

The High Court sent the case back to the Settlement Commission.

Members of the Settlement Commission are former Chief Commissioners of the Department. Don't they know about principles of natural justice?

Please see 2015-TIOL-1175-HC-MUM-CUS

Effective Representation before ITAT - No takers for training

THE National Academy of Direct Taxes (NADT), Nagpur proposes to conduct a Training Programme on "Effective Representation before ITAT" at NADT on 14th & 15th May, 2015. NADT had written to all Principal Chief Commissioners requesting them to send nominations for the programme. And they drew a blank.

Now they have again requested the Principal Chief Commissioners to kindly nominate at least two to three officers of the rank of CsIT/Addl.CsIT/JCsIT who are posted or are likely to be posted as Departmental Representatives (DR) at ITAT in their region. Even the officers who are not posted to ITAT but appear before ITAT by roster system may also be considered to be nominated.

Training is not a very interesting affair and Nagpur in this mid summer is certainly not a favourite destination.

NADT's Reminder in F.No.NADT/P&R/Effective Reprn.ITAT /2015-16., Dated May 05 2015

Central Excise Officers' conviction upheld by Supreme Court

HERE we have a Superintendent of Central Excise and his subordinate an Inspector of Central Excise, who took a bribe of Rs. 1000 each from an assessee on 4.6.1996 and were promptly picked up by the CBI. Actually the Superintendent was not in his cabin when the assessee came to his office with CBI in tow. The Inspector assured him that he was empowered to take the bribe on behalf of both himself and the Superintendent. So, the bribe amount of Rs. 2000 was handed over to him. He counted the money with both hands and kept it in his shirt pocket.

Both were charged with offences under the IPC and the Prevention of Corruption Act. Now, interestingly the Inspector claimed that he had not taken any bribe and had taken the money only on behalf of the Superintendent and he had no share in it. The Superintendent said he had nothing to do with the whole episode, as he was not caught red-handed. The trial court, High Court and the Supreme Court were not amused.

In a recent judgement, the Supreme Court upheld the conviction of the Superintendent and Inspector and ordered that they may be taken into custody immediately. For that 1000 rupees in 1996, both would lose their jobs and will be in jail for some time added to the misery of the last nearly twenty years. Worth it?

Jurisprudentiol - Recent SC Judgements 

CX - Appeal - Judicial Discipline - when there is conflict of opinion between two benches, Tribunal should refer the issue to a Larger Bench:  There used to be an honourable Member of the Tribunal in a particular Bench who had no respect for honourable Members of the same Tribunal in other Benches. He used to believe that he is a law unto himself.

In this case, there were two conflicting decisions of the Tribunal before this particular Bench and the Bench followed one decision and holding that the other decision was not a binding precedent. The Supreme Court observed, " After finding a conflict of opinion rendered by two coordinate Benches in the aforesaid two cases, the only course of action open for the Tribunal was to refer the matter to the larger Bench to resolve this conflict "

Please see Commissioner of Central Excise and Customs Vs, Kraps Chem Pvt Ltd - 2015-TIOL-102-SC-CX

Central Excise - Demand - Limitation - Suppression proved - appeal dismissed:  The assessees have suppressed the facts and contravened the provisions of the Central Excise Act and the rules made there under with intent to evade payment of duty; No doubt, the cost audit report was supplied by the P&G. However, based thereupon, it is the appellant which had worked out the final costing and it is the chartered accountant of the appellant which had prepared the said costing and submitted to the Department. Therefore, the appellant cannot feign ignorance or be pretentious about its innocence in allegedly acting upon the cost audit report as supplied by P&G.

The assessee was a job worker and the dispute started in the year 1996.

Please see Phaarmasia Ltd Vs Commissioner of Central Excise, Hyderabad - 2015-TIOL-97-SC-CX

Central Excise - Valuation - goods cleared at factory gate and for captive consumption in another factory not same - not comparable - Demand - limitation - no mala fide intentions - and revenue neutral - demand beyond normal period and penalty set aside:  The question is about the intention, namely, whether it was done with bona fide belief or there was some mala fide intentions in doing so. It is stated at the cost of repetition that when the entire exercise was revenue neutral, the appellant could not have achieved any purpose to evade the duty. Once it is found that there was no mala fide intention on the part of the appellant, the penalty is set aside as well.

In this case also the duty demand period started in 1996.

Please see Nirlon Ltd Vs Commissioner of Central Excise, Mumbai - 2015-TIOL-96-SC-CX

Please see Breaking News.

Until Tomorrow with more DDT

Have a nice day.

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