TIOL-DDT 1122
01.06.2009
Monday
AS per Rule 49(4 )( b) of SEZ Rules, a unit may remove without payment of duty used packing materials except metal containers.
Now this is applicable to SEZ Units. Some Development Commissioners of SEZ Units have sought a clarification whether this rule is applicable only to SEZ units or also to Developers.
The Department of Commerce has clarified that “Rule 14 of SEZ Rules further provides that the procedure applicable to units on import or procurement of goods and services, their admission, clearance of goods, shall apply, mutatis-mutandis to the developer”
So, in view of Rule 14 of SEZ Rules, Rule 49(4 )(b) is equally applicable to SEZ Developers also.
DOC Instruction No. 10 –Dated: 25th May, 2009.
Procurement of used capital goods from DTA by SEZ Units - Income Tax benefits - Shifting
of existing businesses from DTA to SEZs
Department of Revenue, in order to regulate shifting of existing businesses from DTA to SEZs to avail of the direct tax exemption on the export income, had amended Section 10AA of Income Tax Act.
Keeping in view the provisions that exist in Section 10AA of the Income Tax Act, 1961 to deal with tax related issues in case of previously used Capital Goods, in terms of the provisions of sub-section (8) of Section 15 of the Special Economic Zones Act, 2005 , Department of Commerce prescribes that while granting any approval for setting up new units in any SEZ , the Approval Committee or the Development Commissioner, as the case may be, shall ensure that procurement of second hand capital goods shall be allowed only in terms of the provisions of sub-section (4) of Section 10AA read with Explanation 1 & 2 to sub-section (3) of Section 80 IA of the Income Tax Act ,1961.
And the following procedure is prescribed for the guidance of the units in the SEZs :-
(i) The units intending to move second hand capital goods in DTA should furnish details as prescribed in the enclosed annexure and must obtain prior approval of the Development Commissioner before such movement. No second hand capital goods will be allowed to be moved into the Zone without prior approval from the Development Commissioner.
(ii) While computing the value of the used/second hand capital goods sought to be transferred into the Zone from DTA , including from an EOU , EHTP / STP / BTP unit, within the Zone or from any other Zone, the depreciation rates stipulated as per the provisions of Income Tax Act and Rules made thereunder will be adopted for arriving at the depreciated value of such second hand capital goods intended to be moved into the Zone.
(iii) It should be ensured by the Unit that the sum total of S. No. 5 & 6 of the enclosed annexure shall not exceed 20% of the sum total of S. Nos 3 & 4 of the annexure at any given point of time. However, the units can shift used/second hand capital goods valuing more than 20% in which case they will not be entitled to benefits under the Income Tax Act.
(iv) For each transfer of used/second hand capital goods from the DTA into the zone the unit has to compute the values as mentioned above and indicate at the relevant S. Nos of the enclosed annexure.
(v) The details of such procurement of used/second hand Capital goods from DTA (including from an EOU , EHTP / STP / BTP unit) should be clearly mentioned in the Annual Performance Report submitted by the unit.
(vi) The limitation of 20% of the value of used capital goods Capital goods that can move into the zone would not be applicable in respect of capital goods moved to DTA under Rule 50 of the SEZ Rules, 2006.
DOC Instruction No. 11 –Dated: 27 th May , 2009.
Himachal Pradesh wants excise exemption extended
Prem Kumar Dhumal , Chief Minister of Himachal Pradesh, has made a request to the Prime Minister, Dr. Manmohan Singh, to deliver justice to the people of Himachal Pradesh by extending the Special Industrial Package.
In a letter written to the Prime Minister, he said the nation was poised to emerge the world economic power under his stewardship. He said that hilly people of Himachal Pradesh had pinned hope over his personal intervention in the issues relating to the state interest so that it could also keep pace with the changing time and overall development of the state carried, especially in the industrial developmental activities.
He said that under the Package the excise duty exemption was set to expire by March, 2010, which had attracted some multinational investors but implementation of the economic stimulus measures, especially involving cuts in the rates of Central Excise Duty were also to end up significantly eroding the comparative advantage of industry which had planned or made investments in Himachal.
He hoped that Shri Virbhadra Singh, Union Minister for Steel would use his good office to get the package extended well before the Central Excise Duty Exemption date expired. He said that with the State having two Union Cabinet Ministers the package would be got extended in the best interest of the people in general of the State.
Mind your witness
When a Grandma goes to Court:
In a trial, a southern small town prosecuting attorney called his first witness, a grandmotherly, elderly woman to the stand. He approached her and asked, “Mrs. Jones, do you know me”? She responded, “Why, yes I know you Mr. Williams. I have known you since you were a boy, and frankly, you were a big disappointment to me. You lie, you cheat on your wife and you manipulate people and talk about them behind their backs. You think you are a big shot when you haven't the brains to realize you will never amount to anything more than a two-bit paper pusher. Yes, I know you”.
The lawyer was stunned. Not knowing what else to do, he pointed across the room and asked, “Mrs. Jones, do you know the defence attorney”?
She again replied, “Why, yes I do. I've known Mr. Bradley since his childhood. He's lazy, bigoted and he has a drinking problem. He can't build a normal relationship with anyone, and his law practice is one of the worst in the entire state. Not to mention he cheated on his wife with three different women. One of them was your wife. Yes, I know him”.
The defence attorney nearly died.
The judge asked both the counsels to approach the bench, and in a very quiet voice, said, “If either of you asks her if she knows me, I'll send you both to the electric chair”.
Kamala Das is no more
She was my adolescent icon. Simply for her titillating writings. But yesterday she simply died at the ripe age of 75. Whether it was Allah or Krishna who attracted her most, the fact is that she was one of our best writers in English.
In her book , The Descendants, she wrote,
When I die
Do not throw the meat and bones away
But pile them up
And let them tell
By their smell
What life was worth
On this earth
What love was worth
In the end.
Sometime back we had carried an article Tax collection: Has Mr Chidambaram reverted to British-Nehru principle that citizen is always wrong? By Prof M D Nalapat .
Prof. Nalapat is Kamala's son.
Good Bye Kamala. Hope you meet Allah or Krishna for the eternal bliss.
Jurisprudentiol– Tuesday's cases
Income Tax
Compounding of offences can be done even after conviction by a court and appeal is pending: Madras High Court
This is a case where the Income Tax Department is determined to send an 83 year old woman to jail rather than accept compounding from her.
It is evident from Section 279 (2) of the Act that any offence under this Chapter may either before or after the institution of proceedings, be compounded by the Chief Commissioner or a Director General. The term 'proceedings' is not defined in the Income Tax Act. The term 'proceedings' is a term of wide amplitude and comprehensive and generally speaking means a prescribed course of action for enforcing a legal right. It is not a technical expression with a definite meaning attached to it, but one the ambit of whose meaning would be governed by statute. In the case on hand, against the conviction and sentence passed by the trial court, on the complaint preferred by the appellants, the respondent has filed an appeal and the same is pending, which is a prescribed course of action for enforcing a legal right. The said appeal is also a proceeding as contemplated under Section 279 (2) of the Act.
Customs
Warehousing – interest - goods cleared under DEPB Scheme cannot be treated as exempted goods – interest payable – High Court
The difference drawn by the Supreme Court makes it clear that under the DEEC Scheme, the clearance is allowed duty free, whereas under DEPB Scheme, the exporters are issued DEPB scrips which allow them specific amounts to be utilised for payment of Customs duty. Therefore, the importers, who use DEPB scrips , pay duty not by cash but only by way of credit. Therefore, the goods cleared under DEPB Scheme cannot be treated as exempted goods, but they can only be treated to be duty-paid goods and therefore, the interest is payable as per Section 61(2) of the Act. The debit of any amount under the DEPB Scheme is a mode of payment of duty on the imported goods and cannot be treated as exempted goods, unlike the goods under DEEC Scheme
Central Excise
Rule 6 of CCR , 2004 – common inputs – reversal of credit, before or after clearance of exempted goods, amounts to not taking any credit – Payment of 10% not required – Tribunal
The assessee took CENVAT credit on Cocoa beans and utilized the same in the manufacture of both dutiable as well as exempted products. No separate records were maintained by them. However, they reversed an amount of Rs.70 ,21,383 /- being the input credit availed on cocoa beans utilized for manufacture of exempted cocoa liquor and low moisture cocoa mass. They also paid the interest on the said amount.
See our columns Tomorrow for the judgements
Until Tomorrow with more DDT
Have a nice day.
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