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Unveil One Nation; One Debt Code; One Compliance Rule for Centre & StatesChina moves WTO against US tax subsidies for EVs & renewable energyMore on non-doms - The UK Spring Budget 2024 (See TII Edit)Notorious history-sheeter Mukhtar Ansari succumbs to cardiac arrest in UP jailTraining Program for Cambodian civil servants commences at MussoorieNY imposes USD 15 congestion taxCBIC revises tariff value of edible oils, gold & silver45 killed as bus races into ravine in South AfricaCBIC directs all Customs offices to remain open on Saturday & SundayBankman-Fried jailed for 25 yrs in FTX scamI-T- Once the citizen deposits the tax upon coming to know of his liability, it cannot be said that he has deliberately or willfully evaded the depositing of tax and interest in terms of Section 234A can be waived: HCHouthis attack continues in Red Sea; US military shoots down 4 dronesI-T- Secured creditor has priority charge over secured asset, over claims of I-T Department & other Departments; any excess amount recovered by Secured Creditor from auction of secured asset, over & above the dues payable to it, are to be remitted to the Departments: HCFederal Govt hands out USD 60 mn to rebuild collapsed bridge in BaltimoreI-T - Receipts of sale of scrap being part & parcel of activity and being proximate thereto would also be within ambit of gains derived from industrial undertaking for purpose of computing deduction u/s 80-IB: HCCanadian School Boards sue social media titans for 4 bn Canadian dollar in damagesI-T - Once assssee on year of reversal has paid taxes on excess provision and similar feature appeared in earlier years and assesee had payments for liquidated damages on delay of deliverables, no adverse inference can be drawn: HCFormer IPS officer Sanjiv Bhatt jailed for 20 yrs for planting drugs to frame lawyerST - Software development service & IT-enabled service provided by assessee was exempt from tax during relevant period, by virtue of CBEC's Notification & Circular; demands raised for such period not sustainable: CESTATUN says Households waste across world is now at least one billion meals a dayCus - Order rejecting exporter's request for conversion of Shipping Bills on grounds that the same has been made by exporter beyond period of three months from date of Let Export Order in terms of CBEC Circular No. 36/2010-Cus : CESTATIndia, China hold fresh dialogue for complete disengagement on Western borders: MEACus - No Cess is payable when Basic Customs Duty is found to be Nil: CESTATThakur says India is prepared for 2036 OlympicsCX - As per settled law, a right acquired as result of a statutory provision, cannot be taken away retrospectively unless said statutory provision so provides or by necessary implication has such effect: CESTAT
 
Recent Supreme Court Judgements

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TIOL-DDT 2718
04 11 2015
Wednesday

CENTRAL Excise - SSI Exemption - Exemption for own goods and duty payment with CENVAT Credit for branded goods - Permissible

The issue before the Supreme Court was whether availing the benefit of   MODVAT /CENVAT credit in respect of branded goods of third parties manufactured by the assessees on job work basis, disentitles them from availing the benefit of the SSI Notifications?

The Supreme Court held that clearances bearing the brand name or trade name of third parties are concerned, they are kept outside the scheme inasmuch as:

(a) they are not to be included for the purposes of determining the aggregate value of the clearances for home consumption; and

(b) such products bearing brand names or trade names of third parties, even if manufactured by the SSI Unit, are not eligible for any exemption and excise duty thereupon has to be paid.

Once we understand the scheme of the Notifications in this perspective, which according to us is the only manner in which it has to be understood, it becomes apparent that so far as manufacture of branded goods of third party on job work basis by the SSI Unit is concerned, they are to be dealt with differently in the sense that they do not come within the ambit of exemption on which normally excise duty, as per the provisions of the Act, is payable.

As a sequitur, it also follows that once excise duty is paid by the manufacturer on such branded goods manufactured, the brand name whereof belongs to another person, on job work basis, the SSI Unit would be entitled to CENVAT/ MODVAT credit on the inputs which were used for manufacture of such goods as on those inputs also excise duty was paid. To put it otherwise, these branded goods manufactured by the SSI Units meant for third parties are regulated by the normal provisions of excise law and will have no bearing or relevance insofar as availing the benefit of the SSI exemption notifications in respect of its own products manufactured by the SSI Units is concerned .

Please see  Breaking News and Commissioner of  Central Excise, Chennai Vs Nebulae Health Care Ltd 2015-TIOL-261-SC-CX

Central Excise - EOU - Concessional rate to goods cleared to DTA, when manufactured from indigenous raw material - Imported wax used in manufacture of cotton yarn - not eligible for exemption

As per Notification No. 8/97-CE dated 1-3-1997, there is a concessional rate of duty for clearances of goods from EOUs to DTA, if the goods are manufactured by the EOU using indigenous raw material only. In this case, imported wax was used in the manufacture of cotton yarn. The Commissioner found that Wax disc acted as a lubricant and facilitated processing and use in the manufacturing process and remained a temporary coat and allowed the exemption.

The Supreme Court held that a particular item, though required for a manufacturing process or participates in the said process would be treated as 'consumable', if it does not form part of end product and instead it gets substantially or totally consumed during the manufacturing process. In contrast, if any materials or goods are required for the manufacturing process, such materials or goods would be treated as the 'raw material', whether they have actually been previously manufactured or are processed or are still in a raw or natural state. The wax coating is found to be essential for lubrication of the yarn and was allowed to remain on the yarn in order to facilitate its winding on cones and its use in knitting hosiery.

The Supreme Court ruled against the assessee.

Please see  Breaking News and Meridian Industries Ltd Vs Commissioner of  Central Excise - 2015-TIOL-262-SC-CX

Customs - Conversion of free shipping bills into drawback shipping bills - Conversion permissible only when claim for duty drawback was beyond the control of the exporter - Drawback on AIR can be considered without converting the Shipping Bill

The Commissioner (Customs) after hearing the appellant rejected the request for conversion. The CESTAT vide its final order dated 23.12.2009 set aside the order of the Commissioner(Customs) holding that the appellant was entitled to get the bills converted from free shipping bills to duty drawback bills in terms of Rule 12(1)(a) of the Rules, ingredients whereof are satisfied by the appellant.

The Department challenged the aforesaid order in the High Court in which the Department has succeeded. Exporter is before the Supreme Court.

The Supreme Court held that conversion is permissible only when the exporter is able to satisfy the Commissioner that "for reasons beyond his control" drawback was not claimed. In the instant case, a finding of fact is arrived at by the Commissioner (Customs), which has been accepted by the High Court also, that no case was made out by the appellant to suggest that claim for duty drawback was beyond the control of the appellant. It is rightly pointed out that merely because the appellant was not aware of the correct legal position would not afford any such ground that it was beyond his control.

However the Supreme Court held that drawback on All Industry Rate can be granted even without converting the shipping bill. So, the matter is remanded to the Commissioner to consider that issue afresh.

Please see  Breaking News and Cargill India Pvt Ltd Vs Commissioner of Customs and  Central Excise, Visakhapatnam-II - 2015-TIOL-263-SC-CUS

Central Excise - Exemption Notification No. 38/2003-CE dated 30.04.2003 - Subject to process subsequent to purchase

A bare reading of the Notification makes it clear that the benefit thereof is given to those assessees when, at their hands, article of apparel or clothing accessories is subjected to any one or more of the processes, which are mentioned. However, any of such process as mentioned is to be carried out by the assessee "subsequent to purchase" of the article of apparel or clothing accessories in question.

The only question is as to whether such process was undertaken by these assessees after the purchase of material. The submission of the Department in this behalf is that since it is the assessees who had assigned the work, that is fabrication of the apparel etc. to the job workers with the supply of material as well, and the job workers after undertaking the job had supplied the said material back to the assessees, this does not amount to purchase.

As per the Supreme Court judgement in  Ujagar Prints, etc. etc. vs. Union of India & Ors. -  2002-TIOL-03-SC-CX-CB, for the purpose of arriving at the value of the jobwork at the hands of job workers, factory gate is treated as "deemed" factory gate as if the processed fabric was sold by the assessee. It cannot be disputed that the fact situation in these cases is identical where the job workers had paid the excise duty at the time of supply of these processed fabric to the respondent assessees. Once that could be treated as sale, the necessary corollary is that so far as the assessees are concerned, they had purchased processed fabric from the job workers and, therefore, would satisfy the condition of "subsequent purchase" contained in Notification No. 38/2003.

Revenue Appeal was dismissed.

Please see  Commissioner of Central Excise and Service Tax Vs Aditya Birla Nuvo Ltd -   2015-TIOL-260-SC-CX.

Central Excise: Manufacture - No manufacturing process involved in by-products:

The issue involved in these appeals is regarding the confirmation of duty on the aluminium dross and aluminium ash that arises during the manufacture of die-casting of aluminium parts. The appellants herein supplied aluminium ingots to job worker and the job worker manufactured the parts, by melting this aluminium and die-casting the same. This factual position is undisputed. During the course of such die-casting of items/parts of aluminium, ash and dross arises. It is the contention of the Revenue that such aluminium ash and dross are liable for payment of excise duty.

For a future period, the CESTAT has held that during the manufacture of die-casting of aluminium parts, dross and ash emerge as by-products and, therefore, insofar as these by-products are concerned, no manufacturing process is involved and on that basis, it has held that no excise duty shall be payable thereupon. And this decision has been accepted by the Revenue.

The appeal was allowed in favour of the assessee.

Please see  Bajaj Auto Ltd Vs Commissioner of Central Excise and Customs -   2015-TIOL-264-SC-CX

CBEC - Please enable assessees to view NSDL challan report

YESTERDAY DDT had carried a request from a Netizen to provide a facility to view excise and service tax challans (just like Form 26 AS in case of Income Tax).

We are happy to report that DG, Systems has already taken up the matter and a new feature to view list of challan numbers of the assessee for a given period is being proposed in the EASIEST website.

We thank the DG, Systems for this ‘ease of doing business' and hope that this will become a reality soon.

CBDT cautions about phishing emails

CBDT has requested taxpayers not to respond to any email or any type of communication sent to them requesting them to furnish their personal particulars such as bank account details, passwords, one-time password etc purported to be from the Income Tax department.

The Income Tax department does not seek any such information through email or any other mode of communication from the taxpayers. the advisory said.

If you have received any such fraud mails, kindly do not respond and register a complaint by forwarding the actual phishing email as per procedure and details given in http://www.Incometaxindia.Gov.In/pages/report-phishing.Aspx

The Advisory: If you receive an e-mail from someone claiming to be the authorized by Income Tax Department or directing you to an Income Tax website:

• Do not reply.

• Do not open any attachments. Attachments may contain malicious code that will infect your computer.

• Do not click on any links. If you clicked on links in a suspicious e-mail or phishing website then do not enter confidential information like bank account, credit card details.

• Do not cut and paste the link from the message into your browsers, phishers can make link look like real, but it actually send you to different websites.

• Use anti-virus software, anti spyware, and a firewall and keep them updated. Some phishing e-mails contain software that can harm your computer or track your activities on the internet without your knowledge. Anti-virus & Anti-spyware software and firewall can protect you from inadvertently accepting such unwanted files.

Reporting:

•  If you receive an e-mail or find a website you think is pretending to be of Income Tax Department, forward the e-mail or website URL to  phishing@incometax.gov.in . A copy may also be forwarded to  incident@cert-in.org.in

•  You may forward the message as received or provide the Internet header of the e-mail. The Internet header has additional information to help us locate the sender.

•  After you forward the e-mail or header information, delete the message.

•  If you receive a phishing mail not pertaining to the Income Tax Department, forward the same to  incident@cert-in.org.in???

Customs Brokers cautions US Customs on ACE

ACS - 'Automated Commercial System' is used by CBP (US Customs and Border Protection) to track, control, and process all goods imported into the United States.

A key component is the Automated Broker Interface (ABI), which allows qualified participants to electronically file required import data with Customs. CBP is currently working to transition cargo processing to the Automated Commercial Environment (ACE). ACE is being developed as the primary, modernized system through which the U.S. government will track, control and process all imported and exported goods.

The National Customs Brokers and Forwarders Association of America  - NCBFAA, has urged CBP to exercise caution as it approaches February 28, 2016, when it plans to replace ACS with ACE.

The rollout of new technology is always fraught with uncertainty but when international commerce is concerned extra steps must be taken to minimize that uncertainty. The NCBFAA pointed to CBP's recently released functionality allowing air carriers to file their import manifests with CBP in ACE.

“It did not work properly and created havoc with air shipments, resulting in an inability to move shipments, lost business for importers, and significant additional costs for everyone in the supply chain,” the NCBFAA said.

It was reminded of the catastrophe to trade occasioned by Australia's launch of its own new system in 2005 that was driven by a similar approach.

Our GSTN should consider this while they go out for their ambitious plan to link GST components.

China Customs Seize Live Ants

THE Chinese Customs has recently seized over 1200 live ants being smuggled into the country.

The ants were harvester ants, which are among the largest ants in the world and are usually kept as pets. Each ant was shipped in its own 10-cm-long test tube filled with honeydew melon.

These ants reproduce quickly, with ant queens laying as many as 2,000 eggs per day.

Until Tomorrow with more DDT

Have a nice day.

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