TIOL-DDT 2604
25 05 2015
Monday

MAYBE you would like to have a Coke or Pepsi with a cigar, cigarette, Pan Masala or Gutkha, but can you group them all together?

In his Budget Speech 2014, the Finance Minister said, …..

While undertaking all these measures, I also need to mobilize resources. Accordingly, I propose to increase the specific excise duty on cigarettes ….. Similar increases are proposed on cigars, cheroots and cigarillos. Likewise, the excise duty is being increased … on pan masala, ….on unmanufactured tobacco and …..on gutkha and chewing tobacco. I also propose to levy an additional duty of excise at 5 percent on aerated waters containing added sugar. These are healthy measures and I hope everyone would welcome them from the point of view of human and fiscal health.

So he categorised aerated waters along with cigars and pan masala as unhealthy products.

Actually, the tobacco products were grouped together in the 2005 Budget for imposition of an additional excise duty by the seventh schedule to the Finance Act 2005. In the 2014 budget, the Finance Minister just added aerated waters into that group (in the seventh schedule to the Finance Act 2005) to collect an extra 5 per cent duty.

The effervescent industry was not so much up against the extra levy, as against the categorisation.

Writing in our columns in February 2015, Mr.Rishabh Kumar Sawansukha , stated,

"Classifying aerated beverages with added Sugar in category of proclaimed hazardous products like Tobacco and Pan masala is a great injustice and insensitive approach to the fact that non-alcoholic beverage do not cause any externalities.

Indian Council of Medical research has observed that per capital consumption of sweetened beverage in India is too low and insignificant to warrant any health concern. Report issued by Oxford Economics, International Tax & Investment Centre in February 2013 has said that Non Alcoholic Beverage neither cause any externalities nor a luxury goods.

Drinks classified under central excise tariff 2202 10 also includes "Lemonades" which provide instant source of energy and hydration needs of masses with a hygienic and affordable drink. Targeting this segment for wrong reasons will not only create adversaries for Industry but also allow un-organized and spurious drink manufacturer to fill the vacuum. It is important to note that adverse impact on human health may be caused by substandard and poor quality products flooded in market.

He suggested , "Remove Non Alcoholic Aerated Beverages from the 7th Schedule of Finance Act 2005 and any change in the duty rate should be brought by amending Central Excise Tariff."

Government heard him. In the Budget 2015, ‘aerated waters' was removed from the seventh schedule to the Finance Act 2005. But what happened to the 5% additional duty. The Finance Minister enhanced the duty on aerated waters from 12% to 18%. (Mr. Rishab Kumar had actually suggested a 16% or 17% basic duty instead of the 5% additional duty along with tobacco.). So aerated waters got out of the bad company.

Well all this involves a lot of legal jugglery.

1. Clause 184 of the Finance Bill 2015 proposed that the entries relating to sub-heading 2202 10 in the Seventh Schedule in the Finance Act 2005, be omitted. (This is the 5% AED on aerated waters; but this would come into force only after enactment of the Finance Bill 2015.)

2. The duty on aerated waters was increased from 12% to 18% in the 2015 budget and this had immediate effect. That would make the duty 18%+5% AED

3. So, the Government gave an exemption from 5% AED by amending Notification No. 6/2005-CE, by Notification 9/2015 - CE dated 1.3.2015, which made the effective rate of AED as ‘nil'. This was to be valid till enactment of the Finance Bill 2015.

4. After the Finance Bill 2015, was enacted, this exemption was to be withdrawn as now there is no Additional Duty on aerated waters.

5. Though the Finance Act 2015 came into existence on 14.5.2015, they amended this notification only on 22.05.2015.

Though there is a delay of 8 days, there is no damage as any way from 14.5.2015, there is no additional duty on aerated waters and before that from 1.3.2015, it was exempted. It is only a technical correction - if they had not done this they would be exempting additional duty which is not leviable at all.

This is the story of the latest Notification No. 29/2015 - CE, which in one line stipulates, "In the said notification, in the Table, S. No. 1A and the entries relating thereto shall be omitted."

Notification No. 29/2015-CX, Dated: May 22, 2015

Raining Black Money

FRIDAY 22 May 2015 - India Habitat Centre, New Delhi: It was a truly elite gathering consisting of two former Supreme Court judges, Justice MB Shah and Justice Arijit Pasayat, the Azadi Bachao Andolan crusader Shivakant Jha, former CBDT Member S S Khan, retired Chairmen of the CBEC, present Commissioners and Principal Commissioners from the Tax Departments, eminent journalists and lawyers. The occasion was the release of the book on "Black Money"written by our Editor Shailendra.

Justice MB Shah releasing the book

Yesterday the Money Mantra programme of DD News had a discussion on the book with its author Shailendra.

Packaged Commodities Rules Amended - New Definition of industrial consumer

THE Government has notified amendments to the Legal Metrology (Packaged Commodities) Rules, 2011, making several important changes.

The new definition of "industrial consumer" and "institutional consumer" are as follows:

(bb) "industrial consumer" means the consumer who buys packaged commodities directly from the manufacturer or from an importer or from wholesale dealer for use by that industry and the package shall have declaration 'not for retail sale';

(bc) "institutional consumer" means the institution who hires or avails of the facilities or services in connection with transport, hotel, hospital or other organisation which buy packaged commodities directly from the manufacturer or from an importer or from wholesale dealer for use by that institution, and the package shall have declaration 'not for retail sale';'

Earlier "industrial consumer" was the consumer who buys packaged commodities directly from the manufacturer for use by that industry; now it includes purchase not only from manufacturer but also from importers and wholesale dealers. This has been done at the request of the trade to exempt items not meant for retail sale.

E-mail address mandatory on packages with effect from 1.1.2016 : From 1st January 2016, every package shall bear the name, address, telephone number, e-mail address of the person who can be or the office which can be contacted, in case of consumer complaints.

'L' for litre : for indicating the unit for litre, the letter 'L' may be adopted to avoid confusion with the letter ‘I' and figure '1'.

The change in definition of "industrial consumer" may have impact on Excise Duty in the context of RSP valuation. When the goods are cleared to the wholesale dealer, duty has to be paid under Section 4A. Whether Section 4 or 4A applies can be decided only when the goods are cleared from the wholesale dealer. At that time, will excise allow re-assessment?

Department of Consumer Affairs Notification in F. No. WM-9(86)/2014 ., Dated May 14 2015.

Anti Dumping Duty on Pentaerythritol

THE Government has imposed anti dumping duty on Pentaerythritol falling under Chapter 29 of the First Schedule to the Customs Tariff Act, originating in, or exported from Russia. This will be valid for a period of five years.

Notification No. 20/2015-Customs (ADD)., Dated May 22 2015 .

Anti Dumping Duty on Cast Aluminium Alloy Wheels - Resurrection. Arun Jaitley's policy of ‘no retrospective tax' goes for a toss in CBEC?

WHEN provisional anti dumping duty was imposed on Cast Aluminium Alloy Wheels or Alloy Road Wheels used in Motor Vehicles, falling under heading 8708 of the First Schedule to the Customs Tariff Act, originating in, or exported from the People's Republic of China, Korea RP and Thailand , for a period of six months from 11.04.2014, DDT commented, "What will happen if they forget after six months? Government can retrospectively amend anything to cause misery to its Citizens." (DDT 2333 15.04.2014)

This is what exactly happened. The provisional anti dumping duty expired on 10.10.2014 and then they were sleeping. They woke up after seven months and imposed the duty with retrospective effect from 11.04.2014 for a period of five years. What could have been the fate of imports during the period 11.10.2014 to 21.05.2015, when this anti dumping duty was not in force? The Customs Department would illegally force the importers to pay this duty on the assumption that Government was sleeping and will wake up after a few months.

Notification No. 21/2015-Customs (ADD)., Dated May 22 2015 .

Anti Dumping Duty on USB Flash Drives

GOVERNMENT has imposed anti dumping duty on USB Flash Drives falling Chapter 8471, 8473, 8504, 8517, 8519, 8523, 8524, 8538, 8542 or 8543 of the First Schedule to the Customs Tariff Act, originating in or exported from People's Republic of China and Chinese Taipei. The anti dumping duty is about 200 rupees, which is the price at which you can buy a flash drive. And the anti dumping duty is the same irrespective of whether the flash drive's capacity is 4GB or 128GB.

Notification No. 22/2015-Customs (ADD)., Dated May 22 2015 .

FTP - Implementation of Track and Trace system for export of drug formulations

DGFT has issued a Public Notice amending Para 2.89 A of Handbook of Procedure, 2015-20, as notified vide Public Notice No. 4/2015-20 dated 01.04.2015 for laying down the procedure for implementation of the Track and Trace system for export consignments of drug formulations.

With effect from 01.10.2015, all drugs with manufacturing date on or after 01.10.2015 can be exported only if both the tertiary and secondary packaging carry barcoding as applicable and the relevant data as prescribed by DGFT is uploaded on the central portal.

DGFT Public Notice No. 13 /2015-2020.,Dated May 22 2015

More than two lakh cases pending with CITs(Appeals)

THE Income Tax Department has 2,32,126 appeals pending with the Commissioners (Appeals) as on 01.04.2015 and they want these Commissioners to dispose of 1,52,283 cases by the end of 2015-16. (What a precise number!). There are 362 CIT(Appeals) in the Department.

The pendency as on 01.04.2014 was 2,15,174 and last year's target was to clear 1,34,060 cases. But now they are starting with more arrears than the previous year. They got 119 additional posts of CIT (Appeals) in the cadre review.

The figures are from the Central Action Plan of the CBDT. The CentralBoard of Direct Taxes (CBDT) devises the Central Action Plan annually to focus onmeasurable activities that are necessary for revenue mobilization. It says that collection of direct taxes in a non-adversarial and fair manner and facilitating voluntary compliance are the main thrust area of work of the Income Tax Department.

Dubai is best place if you don't like paying income tax

WHICH are the best and worst places to live in across the world?

If you don't like paying income tax, choose Dubai as your place to live in, as there is virtually no tax; but if you are happy paying taxes, go to Ireland, which has one of the highest tax rates.

If you need a good pension, Denmark is the place and avoid India or China as there is hardly any pension.

The cheapest cities are Riyadh and Jedda, but if you don't like the Middle East, move over to Mumbai or Delhi if you want value for money - by western standards. If you want to blow up your money, Singapore is the most expensive city in the world. (one of our chief ministers is planning a Singapore model Capital City for his State).

If you have money and want to spend lavishly and have a good time, US of A should be your destination.

If you want to leave wealth to your children, don't live in Ireland - they have a maximum limit on how much each child can inherit - the rest is taken by the State as taxes.

The Single Member Board?

THE CBEC is supposed to consist of a Chairman and six Members. At present there is a Chairman and just one Member. This is the last week of service for that lone Member. She will retire on 31st May. So far, the Government has not appointed any Member. When this lone Member retires effectively this Friday, there will be no Member. This will be a unique Board with only a Chairman and no members. Even this Chairman will retire on 31 st July. If the Government does not appoint Members till then, this will be a chairman-less, member-less Board. If a Member is appointed now, he will become Chairman in two months and if they wait for two more months, the next person to join the Board can join directly as Chairman.

What will happen if the Board is without a Chairman? Will they abolish the Board? Can the Revenue Secretary take over? Only an officer with at least 20 years of experience in administering and running the indirect tax administration in the Central Government is eligible to be appointed as Chairman. The IRS officers want more powers and status for the Board. Now the Board's existence itself is in jeopardy.

Until Tomorrow with more DDT

Have a nice day.

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