Customs Endorsement on Bill of Entry has to be treated as Notice - SC
05 08 2015
Wednesday
IT all started in 1993. The appellant imported a ship for breaking up and claimed exemption from 'additional customs duty'. Revenue thought otherwise and an endorsement on the Bill of Entry was made for payment of additional customs duty of Rs. 52,20,000 in addition to the basic customs duty.
The appellant challenged this in the High Court which directed them to submit a bank guarantee for 50% of the disputed amount and a personal bond for the balance 50%.
In the meanwhile the Government came up with an amnesty scheme called ‘Kar Vivad Samadhan Scheme 1998', under which all other liabilities were waived if an applicant pays 50 per cent of the tax arrear. One of the conditions was that a Show Cause Notice/ Demand Notice must have been issued pertaining to the demand.
The appellants filed an application under the Scheme which was promptly rejected by the Customs Authorities on the ground that no Show Cause Notice had been issued!
The Supreme Court yesterday held that an endorsement on the Bill of Entry and return thereof to the importer asking the importer to pay the amount therein would amount to issuing a demand. It would be absurd to hold that though there is a tax arrear, as the appellants were liable to pay the tax/duty demanded, and still the Scheme is inapplicable.
The Supreme Court held that the appellants shall be entitled to the benefit of Kar Vivad Samadhan Scheme.
There is no Scheme that the Government can introduce for the welfare of the people and its own welfare that the babu will not use his brilliance to frustrate. Had the babu accepted the Kar Vivad Declaration, the Government would have got 26 lakh rupees seventeen years ago and the nation would have saved some protracted litigation, but that is not how revenue is collected.
We bring you this judgement today. Please see Breaking News
Customs - No retrospective effect for exemption notification; No interest payable if bond does not specify it - Supreme Court.
The Supreme Court delivered another important judgement yesterday.
The case had all the complications - Export obligation, anti dumping duty, calculation of duty, interest, and penalty.
The important issues decided by the Supreme Court were:
No retrospective effect for exemption: The exemption from Anti Dumping Duty has no reference to the earlier proceedings in the case and is obviously intended to apply only prospectively.
Appellant cannot be worse off by reason of filing an appeal: In this case, the CESTAT increased the rate of anti dumping duty on an appeal filed by the assessee. There was no appeal by Revenue. Supreme Court held that Tribunal could not have enhanced the rate at which the appellant would have to pay Anti-dumping duty in the appellant's own appeal. The appellant cannot be worse off by reason of filing an appeal.
No condition of interest in the Bond - No interest payable. In this interesting issue, the appellant took a plea that in the bond executed by him, he had not undertaken to pay interest. The Supreme Court looked at the bond and observed that the bond says nothing about any interest that is payable in case the conditions of the Notification are not met. On this short ground alone, it is clear that no interest is payable on any of the customs duties that are due from the appellant.
Whether Anti-dumping duty can be included in calculating special customs duty and special additional duty. No; It will be noticed that additional duty and special additional duty would include "any sum chargeable on that article under any law for the time being in force as an addition to, and in the same manner as, a duty of customs". What has been contended is that these words would refer only to a surcharge provision and not to a provision which levies an independent duty, as the relevant words are "an addition" and not "in addition". This is as per the Law in force at the relevant time..
Penalty: As far as penalty is concerned, the Court found that the appellant has not diverted goods meant for export to the domestic tariff area. The market considerations made it difficult, if not impossible, for the appellant to fulfill its export obligations and therefore, the penalty imposed in the present case is set aside.
Please see Breaking News
Shampoo or Medicine? Shampoo manufactured by the assessee is basically a medicine - Supreme Court
Shampoo and toothpaste are not simply objects, which reach our heads and mouths. They can also be subjects reaching the Supreme Court.
Assessee manufactures 'Ketoconazole Shampoo' and 'Nizral Shampoo' which are sold in the bottles of 50 ml and 5 ml. Dispute is about the classification of the product for the purposes of payment of central excise duty. The assessee had filed the declaration classifying the said product under CSH 3003.10 of the Central Excise Tariff Act, 1985 on the ground that it is basically a medicine. However, as per the appellant/Revenue, the appropriate classification of this product is under CSH3305.99 as it perceives the product as 'preparation for use on hair'.
In a recent judgement, the Supreme Court observed, "product known as 'Nizral Shampoo' gives the nomenclature of the product as shampoo. However, the assessee claims that it is a patent or proprietary medicament as its essential characteristics is therapeutic in nature. The use is suggested only on the advice of a Doctor and there is a suggestion that Doctor should be consulted for any further information. The respondent has also provided the literature/material showing that dandruff is a disorder which affects the hairy scalp. It is generally triggered by a single celled organism which is kind of fungus, with scientific name 'Pityrosporum Ovale'. For treatment of this disease, Nizral Shampoo 2% (i.e. shampoo containing 2% 'Ketoconazole') is shown as 'a new medicine' use whereof cures clears a dandruff. It is suggested that it should be used once a week and on other days, normal shampoos may be used which clearly shows that 'Nizral Shampoo' is to be used like a medicine, unlike other normal Shampoos."
Please see Breaking News
Transportation by barges from the mother vessel to the jetty onshore - Is Service Tax leviable? No, affirms Supreme Court:
The Tribunal had in 2014-TIOL-2500-CESTAT-MUM, emphatically held that question of levying service tax on the transportation by barges from the mother vessel to the jetty onshore would not arise at all since the said activity is part of the import transaction leviable to import duty.
Service Tax cannot begin before Customs ends!
The Supreme Court found no ground to interfere with the judgment and order passed by the Tribunal.
Please see Commissioner of Central Excise, Thane-II Vs United Shippers Ltd - 2015-TIOL-172-SC-ST-LB
Customs - Exemption to goods used for repairs of Vessels.
IN the Table to the Notification No. 12/2012-Cus dated 17.03.2012, the entry in column (3) Sl. No 459 reads as:
"Capital goods and spares thereof, raw materials, parts, material handling equipment and consumables, for repairs of ocean-going vessels by a ship repair unit registered with the Director General of Shipping, Government of India"
Now, the words marked in red are deleted.
Notification No 43/2015 -Cus., Dated August 04, 2015
CESTAT Member Transferred
CESTAT Technical Member Mr. HK Thakur has been transferred from Ahmedabad to Kolkata. Recently the Technical Member in Kolkata, Dr. IP Lal had retired. It was reported that Mr. Thakur had resigned.
CESTAT Order F. No. 27(39)/Transf.Policy/CESTAT/Admn.08., Dated August 04, 2015
Rewards to informers and officers - CBEC revises guidelines
CBEC has issued revised guidelines for grant of rewards to officers and informers. The salient features are:
1. Reward should not be granted as a matter of routine:- Reward is purely an ex-gratia payment which, subject to guidelines, may be granted based on the judgment of the authority competent to grant rewards and taking into account facts and circumstances of each case and cannot be claimed by anyone as a matter of right.
2. Informers and Government Servants will be eligible for reward upto 20% of the net sale-proceeds of the contraband goods seized and/or amount of duty/ Service Tax evaded plus amount of fine and penalty levied/imposed and recovered.
3. Officers up to the rank of Additional Commissioner are eligible for reward.
4. The maximum reward in a case is Rs. 2 lakhs for officers.
5. To ensure that the Government Servants do not exceed the ceiling of Rs. 20 Lakh of total reward during their career, all rewards sanctioned to the Government Servants should be entered in their Service Book, before the same are disbursed.
6. To ensure that reward is not given only to a small group of Government Servants, it is necessary to ensure that larger numbers of Government Servants are given an opportunity to work in the anti-smuggling and anti-evasion assignments.
7. There is reward for even tax recovery.
CBEC Circular No. 20/2015., Dated July 31, 2015
Hyderabad Service Tax arrests MD of Management Firm
THE Hyderabad Service Tax Commissionerate has in a Press Note stated that they have arrested the MD of a Management Firm. It is alleged that the firm has provided management consultancy service, collected Service Tax from their clients and did not pay it to the Government. The alleged evasion is to the tune of two crores.
This is the second arrest by the Commissionerate this year.
Foreign Investors not liable to pay MAT - Shah Panel
THIS morning dna has reported that the recommendations of Justice AP Shah-led three-member committee on minimum alternative tax (MAT) has come in for big relief to foreign investors. The 64-page report, exclusively accessed by dna, says a foreign investor is not liable to pay MAT prior to April 1, 2015.
Babus directed to attend Independence Day Parade-Invitation is direction
THE Cabinet Secretary has written to all Secretaries to the Government of India to the effect that attendance in the Independence Day Ceremony, if invited, is not optional.
In his D.O. Letter, the Cabinet Secretary says,
The Independence Day Flag Hoisting Ceremony at the Red Fort is an important historic and national function held every year on the 15th of August. Considering the importance of this national function at which the Prime Minister addresses the nation, it is expected that all the officers who are invited attend the ceremony.
It has been observed that there is, at times, low attendance of the official invitees to the ceremony. This is unacceptable considering that the occasion is of great national importance. This is clearly to remind the officers that it is their duty to attend the ceremony.
The cab Sec cautions the babus that a serious view would be taken of their absence on this occasion.
Cabinet Secretary's D.O.No. 281/29/2/2015-T5., Dated July 20, 2015.
Until Tomorrow with more DDT
Have a nice day.
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