Central Excise-Customs-Service Tax-Tax Judgment-India

Exchange Rate for imported goods is Rs 74.03 Per Pound Sterling and Rs 51.22 Per Yen-Exchange Rate for export is Rs 72.45 Per Pound Sterling and Rs 49.94 Per Yen-Customs Non-Tariff Notification No.128 Sensex slips further and closes at 8773 100 per cent EOUs allowed to export non-basmati rice-DGFT Notification No.59 Customs duty of 5 per cent imposed on import of Pig Iron, spiegeleisen, semi-finished products, flat products & long products Import of Crude Soyabean Oil subjected to 20 per cent customs duty- no change in import duty on refined soyabean oil-Customs Tariff Notification No.122 Time-limit for filing refund of service tax extended to 6 months-Service Tax Notification No.32 Rahul Bajaj asks Industry to prepare for the worst Tariff Value for import of Brass Scrap is 3525 and for poppy seeds 5206-Customs Non-Tariff Notification No. 127 CBEC clarifies the entire amount of duty paid by the manufacturer, as shown in the invoice would be available as credit irrespective of the fact that subsequent to clearance of the goods, the price is reduced by way of discount or otherwise-Central Excise Circular No.877 Mandavariya (Kishangarh), District Ajmer notified for Unloading of imported goods and loading of export goods-Customs Non-Tariff Notification No.117 SC Ruling-the entitlement of benefit in terms of Section 32AB, Section 80HH and Section 80I of the Income Tax Act- conversion of Jumbo rolls of photographic films into small flats and rolls in the desired sizes amounted to manufacture/production-AIT-2008-413-SC SC Ruling-Whether any "gift" arose in terms of Section 2(xii) of the Gift-tax Act, 1958 on the allotment of rights issue by the appellant company to its shareholders vide Board's Resolution- Whether there was any element of "gift" as defined under Section 2(xii) in the appellant issuing Bonus shares in the ratio of 1:23-AIT-2008-412-SC DEPB benefit allowed on export of cement and steel-DGFT PN 108 exports of cement in all types and forms and primary steel products eligible for export incentives under Focus Market Scheme-DGFT Notification No.58 Import of Marble Tiles-DGFT Notification No.57 Clarification on setting up Duty Free Shops approved by FIPB-Customs Circular No.19 HC Ruling-Income Tax-"reserves" arising out of the acquisition of the business of Tata Cellular Limited could never have the character of "income" in the hands of the petitioners-pre-requisite condition contained in proviso to section 147 to enable the re-assessment to be opened after period of 4 years have elapsed have not been met-AIT-2008-410-HC HC Ruling-Central Excise- valuation of the goods for the purpose of excise duty and whether excise duty was chargeable under Section 4 or Section 4A of the Central Excise Act 1944-while construing rule 3, who are excluded are only the institutional or industrial consumers as explained in Rule 2A and the industrial or institutional consumers in terms of the proviso to rule 2(p) for the purpose of chapter-II are the same-If the person who purchase the prepacked commodity not directly from the manufacturer or packers, they are consumers and the declaration will be of no effect-AIT-2008-408-HC Government considering imposition of import duty on steel Bad News for Consulting Engineers- whether turnkey contract can be vivisected?- The conclusion in Daelim case on the point, prima facie, being not in accordance with law, matter goes to Larger Bench-AIT-2008-405-CESTAT Larger Bench of CESTAT rules Credit is admissible on an input service relating to the business-AIT-2008-407-CESTAT credit of the service tax paid on the outdoor catering (canteen) service is admissible as input service under Rule 2(l) of the Cenvat Credit Rules, 2004-AIT-2008-406-CESTAT The payment for use of "services for MTNL/other companies via the interconnect/port/access/toll by the assessee would not fall within the purview of payments as provided for under section 194J of the Act, so as to be eligible for tax deduction at source-The interconnect charges/port access charges cannot be regarded as fees for technical services-AIT-2008-404-HC Computation of Value under Section 14 for Levy of Export Duty - Customs Circular No. 18 Advance Ruling- Whether the service fee paid by the applicant to Intertek Testing Management Limited UK under Global Management Service Agreement is taxable as "Royalties & Fee for Technical Services" as per the provisions of Article 13 of DTAA between India & UK? Whether the applicant is required to deduct tax at source on the service fee paid to Intertek Testing Management Limited, UK, at the rate of 10% plus applicable surcharge and cess as per the provisions of section 115A(1)(b)(BB) of the Income-tax Act-AIT-2008-401-AAR Larger Bench of SC Ruling-whether the revenue can be precluded from filing an appeal even though in respect of some other years involving identical dispute no appeal is filed -AIT-2008-403-SC SC Ruling-whether transfer of Banking Undertaking gave rise to taxable capital gains under Section 45 of the 1961 Act-it was not possible to compute capital gains and, therefore, the said amount of Rs. 10.20 cr. was not taxable under Section 45 of Income Tax Act-AIT-2008-400-SC Export duty of 8 per cent notified in place of earlier rate of Rs. 200 per tonne on export of iron ore fines-Customs Tariff Notification No.121 Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Second Amendment Rules, 2008-Central Excise Non-Tariff Notification No.45 SC rules Ethylene and propylene manufactured by the assessee and used in its factory in the further manufacture of the same goods would be entitled to the benefit of exemption contained in notification no.217/86-AIT-2008-398-SC New DEPB Rates on export of all products notified–DGFT PN 102 service tax paid under Section 66A is available as 'input credit' under Cenvat Credit Rules, 2004 provided the said services are used as input services by the manufacturer or producer of final products or a provider of output taxable service-Service Tax Trade Notice No.43/2008 Anti-dumping duty imposed on import of cable ties from China & Taiwan-Customs Tariff Notification No.118 Definitive Anti-dumping duty imposed on import of Phenol from Singapore, South Africa & European Union-Customs Tariff Notification No.114 High-tech products entitled to benefits under High-Tech Products Export Promotion Scheme –DGFT PN 101

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Commissioner of Customs loses his shirt

AIT News Network

NEW DELHI. Nothing can be a worse news for Customs than its Commissioner of Delhi Customs losing his shirt as a result of Delhi High Court ruling AIT-2006-300-HC for non-payment of Refund to Honda Siel Cars India Ltd. The interest of Rs.65 lakh on delayed payment of refund is now to be recovered from the salary of the Commissioner of Customs and Assistant Commissioner of Customs (Refund) and other defaulting Officers.

The direction to initiate disciplinary proceedings has already taken its toll. Assistant Commissioner(Refund) has already been transferred and the search is on for a suitable candidate for Position of Commissioner of Customs for which many candidates have started making rounds of North Block to be in circulation at the right place at the right time.

The Settlement Commission, Customs and Central Excise, Principal Bench, New Delhi settled the case holding that the correct duty liability of the applicant in the case at Rs.32,63,032/- which was paid by them by appropriating from the deposit of Rs.3 crores made during the investigation. Revenue was directed to consider the return of the balance amount of deposit in accordance with the law.

The Respondents sought the issuance of a direction to the Petitioner to refund Rs.2,67,36,968/-, being the balance amount of principal deposit, along with interest thereon, which the Respondents were constrained/ compelled to deposit during the investigation. The Respondents filed a Refund Application dated 10.4.2003 for the aforementioned sum, followed up by their letters dated 5.5.2003, 7.5.2003 and 13.5.2003.

T H E R U L I N G:

The evasive conduct of the Petitioners in these proceedings has also pervaded all throughout in their Departmental proceedings in respect of the said Refund Application.

Our attention has been drawn to circular No. 802/35/2004-CX., dated 8-12-
2004 The salient portion of the circular reads as follows:
”3. The Board has noted in the observations of the Hon'ble Supreme Court in its order dated 21-9-2004 and has decided that pre-deposits shall be returned within a period of three months of the disposal of the appeals in the assessee's favour.
…It is again reiterated that in terms of Hon'ble Supreme Court's order such pre-deposit must be returned within 3 months from the date of the order passed by the Appellate Tribunal/Court or other Final Authority unless there is a stay on the order of the Final Authority/CESTAT/Court, by a superior Court.
5. Delay beyond this period of three months in such cases will be viewed adversely and appropriate disciplinary action will be initiated against the concerned defaulting officers. All concerned are requested to note that default will entail an interest liability, if such liability accrues by reason of any orders of the CESTAT/Court, such orders will have to be complied with and it may be recoverable from the concerned officers.”

It is a matter of great regret that till date requisite action has not been taken by the Petitioners. Instead, Mr. Dubey would have us believe that the concerned Commissioner was under the bona fide belief that the refund ought not to be made during the pendency of this writ petition and more particularly owing to the pendency of the stay application. We may simply reiterate that no orders had been passed, or for that matter have been pressed for, on the stay application. We may add that we find it difficult to accept this plea of “bonafide belief” particularly when the Department would itself never accept such a plea of an assessee who has gone in appeal against an outstanding demand of duty and has failed to obtain a stay of recovery of such demand. These very officers, who seem to “bonafide” believe that mere pendency of a stay application of the Department tantamounts to a stay, would insist that the assessee should in fact produce an order of stay of recovery. What is sauce for the goose is sauce for the gander. The yardstick can be no different when the appellant/petitioner is the Department.

It is a matter of regret that although three and half years have elapsed since the Respondent filed an application seeking refund, the petitioners have not till date passed orders thereon.

The loss to the public exchequer due to the willful inaction of the Commissioner of Customs is indeed staggering. In the wake of these Orders we cannot but express our doubts whether the obduracy of the Commissioner was bonafide. Since the impugned Order is dated 20.8.2002, the refund ought to have been made within three months thereof, i.e. latest by 20.11.2002. Section 27A was inserted into the Customs Act by Act 22 of 1995 by Section 55 thereof with effect from 26.5.1995; Section 11BB was inserted into the Central Excise Act, 1944 also by Act 22 of 1995 by Section 75 thereof with effect from 26.5.1995. Prior to these changes in the statutes both these Sections stipulated that if a refund is not made within three months from the date of the receipt of the application, interest at such rate not below ten per cent and not exceeding thirty per cent per annum as may be fixed by the Central Government by Notification in the Official Gazette would become payable. Act 14 of 2001 has substituted the words “not below ten per cent” by the words “not below five per cent”.

Assuming that the Respondent is entitled to a refund of Rs.2,67,36,968/-, the Department has needlessly incurred a liability for payment of interest at the rate of 6 per cent from 20.11.2002 to 19.12.2006 i.e.Rs.65,50,557/-. Furthermore, it has often been contended on behalf of Department that where a party presses for a refund and it is ultimately found that no refund was legitimately due, the Department would be entitled to claim interest at the rate of 15 per cent on the said amount at least on the premise of delayed payment of duty. In the event that the writ petition were to be decided in favour of the Petitioner/Department, by 19.12.2006 the
Respondents would have become liable to pay interest at the rate of 15 per cent on the said sum of Rs.2,67,36,968/- which from 20.12.2002 to 19.12.2006, would be as much as Rs.1,63,76,392/-. In other words if the Respondents request for refund the excise duty had been acceded to instead of paying Rs.65,50,557/- the Department may have been able to stake a claim for the amount of refund together with Rs.1,63,76,392/-. It is thus always in the interest of the Department to refund the excess amount of duties as per the adjudication given at that point of time. The failure to take prompt action on an application for refund may give rise to a legitimate apprehension that such inaction was not bonafide.

It is in these circumstances that we allow C.M. 13551/2006 by directing the Petitioner to comply with the Circular No. 802/35/2004-CX., dated 8.12.2004, the relevant portions of which had been extracted by us in our Order dated 11.12.2006. Furthermore, in terms of paragraph 5 of the Circular dated 8.12.2004 it prima facie appears to us that appropriate disciplinary action should be initiated against the concerned defaulting officers and the additional liability incurred by the Department should be recovered from the concerned officers if they fail to furnish a plausible defence. We order accordingly. Departmental proceedings should be commenced against Commissioner-Refund (Customs), I.C.D. Tughlakabad, Assistant Commissioner (Refund) I.C.D.Tughlakabad, among other officers. The Petitioner shall file a Report before the next date of hearing furnishing details of the action that has been initiated against the delinquent officers and its progress. The Petitioner shall pay costs of Rs.25,000/-, within four weeks from today, to be deposited with the Prime Minister's Relief Fund. The application is allowed in these terms.

A copy of this Order be dispatched by the Registry to the Comptroller and Auditor General of India, and Chairman, Central Board of Excise and Customs.

( Click here for full text of ruling AIT-2006-300-HC )