Cost of barricades to be reduced from income earned from advertisements placed on such barricades

IT: Where assessee construction company had erected barricades for smooth construction of roads, cost of their erection was to be allowed against income from advertisements placed on such barricades

Delay to inform carry forward of unspent fund by trust condonable if investment in next year exceeds

IT : Irregularity and delay in filing form No. 10 for claiming exemption under section 11 can be condoned and exemption can be allowed to assessee society, where amount of investment in next year exceeds unspent amount

Service provider is liable to pay excess service tax paid by service recipient under sec. 73

ST/ECJ : If service recipient has paid excess service tax by way of book adjusted than that payable on services and service provider has not contested it, then, service provider is liable to pay such excess sum under section 73A

RBI/2013-14/259 A.P. (DIR Series) Circular No. 45 dated 16-09-2013

RBI/2013-14/259

A.P. (DIR Series) Circular No. 45

September 16, 2013

To,

All Authorised Persons in Foreign Exchange

Madam/ Dear Sir,

Memorandum of Instructions governing money changing activities – Location of Forex Counters in International Airports in India

Attention of Authorised Persons is invited to Para 2 (b) of the A.P.(DIR Series) Circular No. 38 dated October 25, 2011 .

2. On a review, it has been decided to allow non-residents to carry Indian currency upto a maximum of `10,000/- beyond Immigration/Customs desk to the Duty Free Area/Security Hold Area (SHA) in the departure hall in international airports in India for meeting miscellaneous expenditures subject to the condition that non-residents will not be allowed to carry any Indian Rupee beyond SHA and that they should dispose of Indian currency before boarding the plane.


3. In order to provide money changing facility to non-residents to convert unspent Indian Rupees with them, Foreign Exchange Counters in the departure halls in international airports in India may be established in the Duty Free Area/SHA beyond the Immigration/ Customs desk. Such Foreign Exchange Counters will however, only buy Indian Rupees from non-residents and sell foreign currency to them subject to usual terms and conditions. Putting up suitable display at these counters, reminding the passengers that the area is the last point for non-residents to possess Indian Rupees (INR) will be the responsibility of the Airport Authorities.


4. Authorised Persons may bring the contents of this circular to the notice of their constituents concerned.


5. The directions contained in this Circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and non-compliance with the guidelines would attract penal provisions of Section 11(3) of the Act, ibid.

Yours faithfully,

(Rudra Narayan Kar)

Chief General Manager-in-Charge

DGFT Policy Circular No 06 (RE-2013/2009-14) dated 16-09-2013

Government of India

Ministry of Commerce and Industry

Directorate General of Foreign Trade

Udyog Bhavan, New Delhi-110011

Policy Circular No. 6 (RE-2013)/2009-2014

Dated the 16^th September, 2013

To

All Regional Authorities.

All Development commissioners, SEZ.

All Custom Authorities.

All Export Promotion Councils/Commodity Bodies.

Subject: Use of Importer-exporter Code Number allotted to them by the importers/exporters

It has been brought to the notice of this Directorate that some importers/exporters are effecting imports/exports by using IECs issued to others which is a complete violation of provisions of Foreign Trade Policy.

2. As per the Section 7 of The Foreign Trade (Development and Regulation) Act, 1992, as amended in 2010 read along with Rule 12 of Foreign Trade (Regulation) Rules, 1993 every person should make import or export only with Importer-exporter Code Number allotted to him. This has been further amplified by Para 2.9.2 of Handbook of Procedures, Vol.1, 2009-14 which states that an IEC number allotted to an applicant is valid for all its branches / divisions / units / factories. Therefore, the IEC Number cannot be used by anyone other the IEC holder himself/herself.


3. In view of the above, use of IEC by the person other than IEC holder himself is a violation of the above provisions and would attract action under Section 8 and 11 of The Foreign Trade (Development and Regulation) Act, 1992, as amended in 2010, except in case importers or exporters are exempted from obtaining IEC and who use permanent (common) IEC Numbers under Para 2.8 of Handbook of Procedure, Vol.1, 2009-14.


4. Therefore, importers/exporters as well as all other stake holders are cautioned to comply with the provisions of FT(DR) Act and Rules made thereunder while using their IEC Number. Non-compliance/ violation of these provisions would attract action in the form of suspension/cancellation of IEC or imposition of penalty, as appropriate, under the relevant provisions of FT(DR) Act and Rules.

(G. Parthasarathi)

Joint Director General of Foreign Trade

E-mail : parthasarthi.g@nic.in

(Issued from F. No. 01/93/180/05/AM 12/PC- 2(B)

Direct tax deficit to be offset by rise in customs duty collection: Parthasarathi Shome

The impending shortfall in direct tax collections could be partly offset by a likely increase in customs duty collection, spurred by a depreciation in rupee, said Parthasarathi Shome, advisor to the Union finance minister, who ruled out any plans by the government to consider a tax amnesty scheme. He said that such amnesty schemes do not improve behaviour of tax evaders and is unfair to honest tax payers.

With the rupee depreciation, imports become costlier in rupee terms; hence the expectation of a rise in customs duty collection, Shome said. The amnesty scheme now underway for service tax will also bring in additional revenue, he added.

Finance minister Chidambaram's target of limiting the fiscal deficit at the projected level of 4.8% of GDP will be achieved, Shome asserted.

He said the objective behind setting up of Tax Administration Reforms Commission (TARC), of which he is the chairman, is to undertake major changes in the current tax administration structure and practices.

For example, a huge amount of data are collected by the income tax and excise, customs and service tax authorities. The tax administration should be able to set up a machinery to analyse the data and use these effectively to improve tax administration and shape tax administration policy. But the system is not equipped enough at present to make full use of the data being collected. It will be addressed by TARC, he said.

He emphasised that computerisation is a major factor in streamlining and modernising tax administration. The use of computers should be spread to more areas of electronic filing and more segments of taxpayers as well as for better exchange of information among departments.

Exchange of information among tax departments and the intelligence and enforcement arms of the finance ministry could help match data, identify tax evaders and enforce compliance.

At the same time it was equally important to minimise the cost of voluntary compliance for taxpayers so that honest taxpayers can pay tax with ease and confidence.

The committee will also make recommendation to strengthen the mechanisms for dispute resolution between assessees and the tax departments. This will cover both domestic and international taxation issues since the latter has come to centrestage in the present environment of international capital movements.

Shome said that as chairman of the independent committee on the taxation of indirect transfers of assets located in India, he maintains the views expressed in the report. However, he declined to comment on the Vodafone tax matter, as he thought it inappropriate to comment on a single assessee's tax issues.

Housing Board is not State Government

IT: Where assessee, on directions of State Government, paid certain amount as infrastructure expenses to State Housing Corporation Board for implementing projects with which it was no way connected, said expenditure not being in nature of expenditure incurred for purpose of business, assessee's claim for deduction in respect of same was to be rejected

Fluctuation in operating margin of comparables isn't an exception to Rule 10B for using multiple yea

IT/ILT: Fluctuation in operating margin per se cannot be an exception as carved out in proviso to rule 10(B)(4) for using multi year data in specific situation

Prevention of cruelty against animals is a charitable activity and falls within term 'general public

IT : Advancement of animal welfare directed towards prevention or suppression of cruelty of animals or prevention or relief of suffering by animal is charity under section 2(15)

Coal Imports Would Be Costly, Discoms Tell Govt

16-Sep-2013

Power utilities have told the government that former chief economic adviser and current RBI governor Raghuram Rajan’s suggestion on incentivising power plants set up before 2009 to import more coal to lessen the dependence on domestic output would be an expensive exercise and further deteriorate the financial health of distribution companies.



Rajan had suggested on May 22 that if power plants which had signed fuel supply agreements (FSAs) before 2009 get 90 per cent of their annual input from Coal India, could be incentivised to blend as much imported coal, it would free up domestic coal which could be allocated to other thermal power producers.



In effect, Rajan had pitched for pooling the prices of domestic and imported coal wherein imported fuel is supplied to them at a price equivalent to Coal India’s domestic prices. The differential between the actual price of the imported coal by Coal India and the price at which this is supplied is to be recovered by across the board increase in price of local coal to all power plants, Rajan had argued.



But various electricity producing utilities have told the power ministry that Rajan’s suggestion is untenable as they would have to pay higher prices for domestic coal apart from shelling out more money for imports.



“The producers have conveyed that there is lack of faith in Coal india in supplying 90 per cent of the annual contracted quantity. Besides the states have a feeling that the entire exercise could be at the expense of state-run power utilities and the main beneficiaries would be the merchant power companies,” the power ministry said in a note on July 29.



The average coal consumption by power companies has been 328 million tonne (MT) during the past three years against which Coal India committed only 306 MT. However, the supply has been further lowered to 275 MT. This reveals that there is a big gap between the requirement of domestic coal and the quantity which would be made available to the pre-2009 plants.

Source:- financialexpress.com

To Push Gems/Jewellery Export, Duty Refund Rate Raised By 31%

16-Sep-2013

In an effort to boost gems and jewellery export, the Finance Ministry has raised the duty refund rate by nearly 31 per cent, compared with June. The incentive scheme, better known as duty drawback, now stands over 100 per cent higher than last year. Duty drawback allows the exporter to get back the duty paid on an item when it is exported.



The duty drawback rate on gold jewellery now stands at Rs 227.20 per gram of net gold content, against Rs 173.20 in June, and Rs 100.70 in 2012-13. The rate has also been revised for silver jewellery to Rs 3,436.80 a kg of net silver content, against Rs 2,590.80 in 2012-13. The new rates will be effective from September 21.



The rates have been revised to neutralise the increase in import duty on gold and silver. During the current fiscal, the import duty on gold has been revised twice, the latest one on August 13, when duty was raised to 10 per cent from 8 per cent.



On the same day, import duty on silver was raised to 10 per cent from 6 per cent. This was done to curb imports to check the rising current account deficit.

Total drawback



While announcing the new rates, the Finance Ministry said the Government would continue to support exporters with substantial total drawback.



The rates were revised on the basis of the recommendations of the Saumitra Chaudhuri Committee, which suggested a revision on the basis of relevant parameters, such as prevailing prices of inputs, rates of duty or tax and value of export goods.



“The increase in duty has been factored in in the revision of duty drawback,” Ajay Sahay, Director General of the Federation of Indian Exporters (FIEO), told Business Line, adding that this would encourage gems and jewellery exporters.



Total exports turned positive in the end of August, but gems and jewellery export are still negative. However, Sahay expects that with the revision in drawback rates, annual exports of this sector will also register a positive growth.



The Commerce Ministry did announce that overall export grew by nearly 13 per cent in August, but it is yet to give out sector-specific data.



However, data till July show that gems and jewellery registered positive export growth in April, but was negative for the next three consecutive months.



Sahay said it was expected that September data would show positive results.

Source:- thehindubusinessline.com

Mitsui’S $1 Bn Steel Venture With Ruchi Group In Gujarat On Hold

Japanese conglomerate Mitsui and Co. Ltd’s plans to set up a $1 billion integrated steel complex in Gujarat in partnership with Indian company Ruchi Group has been put on hold due to the ongoing downturn in the Indian economy, a top official said.



The project was seen as Mitsui’s big-ticket investment in the world’s third-largest market for steel—and a market where its rivals ArcelorMittal and Posco have some sort of presence.

The new project was to be executed under the joint venture company Indian Steel Corp. (ISC).

Speaking on the sidelines of a product launch in Ahmedabad on Monday, Umesh Shahra, managing director of ISC, said the company would revisit the project once the economy revives, hopefully by next year after elections. “When we planned the project about three years ago GDP (growth) was at 8.5% and steel consumption was (growing) about 10-12%. Today the scenario has changed. Steel consumption has come down to 4-5% and GDP is at 5.5%. We have put the project to set up a steel complex in Kutch on hold for now,” he said.



Mitsui and Ruchi group, the promoters of Ruchi Soya, created ISC in 2005. The Japanese group has a 20% stake in the company and its Indian partner holds the rest. ISC has steel cold rolling and galvanizing plant at Bhimasar in Kutch with an annual capacity of 600,000 tonnes.

ISC trebled the capacity of this factory in June last year. According to Shahra, the company’s current revenue is around Rs.3400 crore, and it will touch Rs.5000 crore by 2015.



ISC initially wanted to build the new steel complex in a special economic zone, according to a proposal submitted to the Gujarat government. The steel plant was planned to have a production capacity of 1.2-1.5 million tonnes (mt) in the first phase, according to a state government official familiar with the matter. An expansion plan to raise the capacity of the steel complex to 3-4 mt in the second phase was also on the cards, added this person who asked not to be identified.

The state government had earmarked 1,000 hectares in Tagdi village in Kutch for the project.

Last year, the company dropped its plans to set up the project in a special economic zone because “global demand weakened while the domestic growth story was positive,” according to Shahra.



He declined comment on the source of iron ore for the project.



Steel consumption in India increased in the first quarter at the slowest pace in at least five years as demand for automobiles waned amid an economic slowdown, according to a 10 July Bloomberg report. Demand rose 0.2% to 17.8 million metric tonnes in the three months ended 30 June from a year earlier, the report said, quoting initial data from the steel ministry. Production climbed 3.9% to 19.7 million tonnes.



Shahra said Mitsui is interested in increasing its stake in the joint venture and that “it could even be an equal partnership for the new steel complex”.



Getting started on steel projects in India hasn’t been an easy journey for foreign companies. Posco’s $12 billion steel project in Odisha, billed as the largest foreign direct investment in the country, has been delayed by more than seven years due to local protests. In July, Posco pulled out of a $5.3 billion steel mill development project in Karnataka due to delays in receiving iron mining rights and local opposition in acquiring land.



About a month later, ArcelorMittal, the world's largest steel maker, said it abandoned plans for an $8.5 billion steel plant in eastern India. The company said on 17 August that it decided to scrap the steel plant in Odisha after a 7-year delay in acquiring land. The company said it was still pursuing two other steel plant projects in Jharkhand and Karnataka states



“Foreign companies were not in a very good shape when the Indian economy was conducive for steel business. Now when the Indian economy is in a bad phase, their plans will naturally get deferred or they may even exit,” said Sanjay Jain, an analyst at Motilal Oswal Securities who tracks the steel sector. While new companies are battling land acquisition problems, another major hurdle is sourcing iron ore, said Prakash Duvvuri, head of research, OreTeam, a mining and metal information website.



“While there is a lot of iron ore available in the country, having it at the right place and of the right quality is a problem. Gujarat, for example, may be one of the best locations to set up a steel plant, but it does not have iron ore mines,” Duvvuri said over phone.

Source:- livemint.com

India’S Saudi Rice Import Share Reaches 63 Percent

India's share in Saudi rice import is 63 percent with the basmati rice much in-demand, said the Indian delegation from the Ministry of Commerce and Industry, which is in Riyadh to participate in the ongoing international agriculture and agro-industry trade show, in which India is the largest participating country with 40 companies.



“Sixty three percent of rice import to Saudi Arabia comes from India with the Indian basmati much in demand,” said the Indian official.



The government is keen to increase export of basmati rice by providing assistance to Indian exporters with mounting trade delegations abroad and participation in international fairs, the official stated.



India, the largest supplier of rice to the Kingdom, is also getting more orders as Indian companies have renewed their efforts to fulfill the ever increasing demand from the Gulf country, which is one of the world’s largest rice importer.



Rice is a major staple food of the people in the Kingdom with an average annual per capita consumption of about 43 kg. The country is dependent on rice imports to meet its growing requirements.



According to statistics provided by the commerce and Industry ministry of India, the country's basmati rice export to the Kingdom till April-May this year was 138,704 million tons valued at $171.15 million, whereas the export of non-basmati rice during the same period was 22629.83 tons with its value to the tune of $13.58 million.



Rehan Zaheer, a top official from the Indian ministry of food processing industry urged Saudi businessman and agriculture companies to invest in India's food processing sector, especially in rice and meat processing.



He, however, clarified that India does not allow direct investment in farmlands.

India recently relaxed foreign direct investment (FDI) norms in a number of key sectors, including food processing and agro-based industries as the hike in caps with liberalizing routes will stimulate FDI inflows into the country.



Ajit Kumar, a high official from the Indian ministry of commerce and industry said that Saudi Arabia was an important market for Indian rice, especially basmati, and one of the largest market in GCC countries in terms of productivity.



“We look forward to the Saudi market for our services in value added products,” he said.

"There is a huge opportunity to look at food processing industry and we are looking forward to the growing demand of the industry,” he added.



He also disclosed that a Saudi delegation including some senior officials of the Saudi Food and Drug Authority will visit India this year to check the conditions of abattoir in order to grant licenses for meat processing in the Kingdom's interest.



Apart from rice, major Indian products being exported to Saudi Arabia include buffalo, sheep and goat meat, as well as fresh and preserved fruits and vegetables, confectionery and other processed foods that will be showcased at the Indian pavilion in the agro-industry trade show.

The four-day agro-food exhibition, which ends on Wednesday at Riyadh International Convention Center, features a dedicated Indian pavilion comprising 40 companies.



The pavilion will showcase export products from India’s major companies, which include APEDA represented by its General Manager S.S. Nair, Nutrilite agro products Pvt Ltd., Indian food tech Ltd. and Kabir foods apart from the ministries of food processing and commerce and industry.

India Trade Promotion Organization (ITPO), the premier trade promotion agency of the government of India, has organized India's participation in the India pavilion.



The visitors to the exhibition can visit the India pavilion to savor biryani, the Indian cuisine, made of basmati rice, and other processed foods from India.



They will also be benefited from the personal presence of selected and leading exporters of agro-products including rice, chutneys and pickles, ready-to-eat snacks, processed foods and other Indian delicacies.



Senior officials from ITPO, Agricultural and Processed Food Products Export Development Authority, Ministry of Food Processing Industry, Ministry of Commerce and Industry, and the exhibitors are also available to explain the characteristics of Indian food in detail and hold extended discussions on matters related to the subject, including investment in Agro-food sector in India.



According to the Indian embassy, Saudi Arabia is the fourth largest trading partner of India and their bilateral trade crossed $43 billion in 2012-2013.

India’s huge agro resource base and host of natural advantages make it a chosen destination for sourcing a variety of agricultural products.

The embassy figures suggest that the total Indian agricultural exports were $221 billion during 2012-2013, of which Saudi Arabia accounted for $120 billion during this period.

The 32nd edition of this bi-annual event is the Kingdom’s leading food industry event providing an opportunity to introduce new products, equipment, and technologies.

Attended by the region’s food trade and business professionals, it is considered a unique platform to expand existing exports or establish new ones, at the center of the region’s fastest growing market.

Source:- arabnews.com

Thwarted By Oil And Gold, India Wants To Tackle Its Import Binge With Electronics

16-Sep-2013

If India could do something about oil and gold, its trade deficit would look respectable; indeed it might even tip towards a surplus. From 2012 to 2013, India spent $169 billion on oil imports and $54 billion on gold imports, creating a deficit of $190 billion. But there is a third category that worries India’s policymakers: electronics hardware.



With imports of $31.5 billion, the category is small fry compared to oil and gold. Yet electronics hardware makes up the country’s third largest expense, and it’s rising fast. Unlike oil or gold, which India cannot magically wish into existence, hardware is something it can produce locally. Yet India’s department of electronics and information technology estimates that by 2020 domestic production will account for only a quarter of the forecast demand of $400 billion worth of hardware. That is huge: The government thinks it is “likely that by 2020, electronics imports may far exceed oil imports.”



No wonder Indian policymakers are rejoicing this week. After years of trying to promote local semiconductor manufacturing with generous subsidies that could amount to 25% of the investment, the government has approved proposals from two consortia to build plants in India. Together, they will invest more than $8 billion in India. More importantly, they will help bring down India’s reliance on imports. Semiconductors account for $7 billion of India’s electronics imports and are expected to reach $50 billion by 2020.



It is not just the trade deficit that will benefit from India’s ambitions to manufacture chips domestically. India, like many countries, worries that using imported chips in its national infrastructure could in fact invite foreign powers to tap into its communications. Domestically-produced chips are less likely to contain hidden vulnerabilities. The plants are also good for the economy moreover, creating 22,000 jobs and help pushing up manufacturing’s share of GDP from 16% to a desired 20% by 2020. Chips are also the first step to creating a wider ecosystem of electronics manufacturing, the government hopes.



There are, however, significant obstacles to India’s fabrication dreams. Making semiconductors requires significant quantities of high-quality water and uninterrupted electricity supply, neither of which India does well. Others worry that the particular kind of semiconductors the two plants will manufacture will soon be outstripped by newer technologies, leaving India back where it started. Still, the government remains hopeful that it can help prospective manufacturers overcome these hurdles and attract many more. Among the optimists is Kapil Sibal, the minister for communications and information technology. “India needs not less than 15 fabs,” he told reporters, referring to chip-fabrication units.

Source:- qz.com

India May Export 1-3 Million Tonnes Of Sugar In '13-'14: Analyst

16-Sep-2013

India may export 1 million to 3 million tonnes of sugar in the new season beginning in October to ease excess supply and tap rising demand from the Middle East and Indonesia, analyst Jonathan Kingsman told Reuters on Monday.





India, the world's largest sugar consumer, has been exporting sugar in recent years after a severe drought in 2009 forced it to turn to imports, sending global prices to their highest in decades.



"Indonesia's economy is doing very well, overall consumption is rising and there is more demand for processed food, making it a very big market now," said Kingsman, who is the head of agriculture for data and information provider Platts.



"Increasingly, I see raw sugar demand going up in the Middle East which otherwise was buying more white sugar," he said on the sidelines of a conference in the Indian capital.



Kingsman gave no estimates for exports in the current crop year ending September, but the Indian Sugar Mills Association ( ISMA), a producers' body, said exports are expected to be around 300,000 tonnes for the year.

Source:- economictimes.indiatimes.com

Indian Rupee Ends At One-Month High Of 62.83 Against Us Dollar

16-Sep-2013

The Indian rupee added 65 paise to close at a one-month high of 62.83 against the US dollar on Monday on hopes that the market regulator's steps to ease investment norms for overseas entities would attract more capital flows.



"Market regulator Sebi's decision to do away with the debt auction mechanism for FIIs investment is a welcome step and its reflection we have seen on the rupee," said Anindya Banerjee, a currency analyst at Kotak Securities. "Global markets are less risk averse now, that is also helping the rupee."



The rupee opened at 63.70 per dollar from 63.48 on Friday at the Interbank Foreign Exchange Market. It recovered to 62.45 before ending at 62.83 per dollar, a gain of 65 paise or 1.02 per cent. It was the highest level for the rupee since closing at 61.65 on August 16.



Bankers and exporters preferred to reduce their dollar positions on expectations more foreign capital would flow into the equity market.



In the global markets, the dollar was weaker after reports that former US Treasury Secretary Larry Summers had withdrawn from the race to be the next Federal Reserve chief.



The rupee's gains were trimmed after the government said wholesale price inflation for August came in at 6.1 per cent from 5.79 per cent in July, raising concerns the central bank would find it difficult to lower interest rates.



RBI Governor Raghuram Rajan will review the monetary policy on September 20 amid expectations the rupee's recovery from an all-time low of 68.85 on August 28 would help to unwind some liquidity-tightening measures introduced by the central bank to curb exchange rate volatility.



The government is seeking to revive economic growth and curb the fiscal and current account deficits.



In London, Brent crude fell as much as $2.97 to $108.73 a barrel after a deal to avert a military strike on Syria.

Source:- businesstoday.intoday.in

[Indian Custom Non-Tariff Notification] : Amends the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 36/2001-Customs (N.T.), dated the 3rd August, 2001

SC quashes criminal proceedings against alleged breach of trust as no specific allegations were made

CL: Where appellant having opened demat account with respondent-company, filed a complaint that respondent and its directors committed criminal breach of trust as they failed to transfer shares purchased by appellant from pool account to its demat account even after making necessary payments, in view of fact that there was no specific allegation in complaint except bald allegations and, moreover, Magistrate while issuing summons did not record his satisfaction that a prima facie case of breach o

TP provisions applied to AMP exp. incurred by assessee for its foreign AE; LG's case followed

IT/ILT: Transfer Pricing provisions are applicable to advertisement, marketing and sales promotion (AMP) expenses incurred by assessee-company for its foreign associate enterprise

Setting-up of question papers for non-educational institutions is a 'Business Consultancy Services'

ST: Setting of question papers and conducting exam for non-educational institution is, prima facie, Management or Business Consultant's Service

Bank interest and interest on term loans sanctioned for business projects not subject to sec. 14A di

IT : Where Commissioner (Appeals) adopted fair market value of property as adopted by Tribunal in earlier year, no interference required

Transaction amongst Indian PE of a foreign Co. and another resident entity isn’t an ‘International T

IT/ILT : Substance over form rule under section 92B(2) applies only when third party interposed in International Transaction between two Associated Enterprises. Transactions between resident assessee and resident AE being JV-AOP of foreign parent can't be deemed as international transaction by invoking the substance over form rule under section 92B(2). Nor can transaction between resident assessee and PE in India of foreign parent be deemed as International Transaction under section 92B(2) espec

Consultant's fees to negotiate waiver of interest under Corporate Debt Restructuring Scheme is reven

IT : Where assessee had more funds than investment in shares, and borrowed funds were not proved to be used for same, disallowance of 10 per cent of exempted dividend income was unsustainable

Services to related parties can’t be valued at cost of service, if sum charged corresponds to market

ST/ECJ : In case of services provided to related parties, if price charged is similar to normal market value, value cannot be determined as being equal to costs of providing services

INDIA TRADE PROMOTION ORGANISATION Vs. COMMISSIONER OF INCOME TAX

$~21&8. * IN THE HIGH COURT OF DELHI AT NEW DELHI + INCOME TAX APPEAL NOS. 167/2012 & 168/2012 Date of decision: 6th September, 2013 INDIA TRADE PROMOTION ORGANISATION ..... Appellant Through Mr. Ajay Vohra, Ms. Kavita Jha & Ms. Bhoomika Choudhury, Advocates. versus COMMISSIONER OF INCOME TAX ..... Respondent Through Mr. Abishek Maratha, Sr. Standing Counsel. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE SANJEEV SACHDEVA SANJIV KHANNA, J. (ORAL): These appeals by India Trade Promotion Organisation under Section 260A of the Income Tax Act, 1961 (Act, for short) relate to Assessment Years 1989-90 and 1990-91. By order dated 22nd August, 2013, the following substantial questions of law were framed in these two appeals: Whether the Income Tax Appellate Tribunal was right in denying interest of Rs.1,60,30,495/-, which it is claimed was payable alongwith the refund? ITA Nos. 167/2012 & 168/2012 Page 1 of 17 Whether the Income Tax Appellate Tribunal was right in denying interest of Rs.41,11,644/-, which it is claimed was payable alongwith the refund? 2. Facts relevant for adjudication of the present appeals may be noticed in brief. ASSESSMENT YEAR 1989-90 (a) At the outset, we record that there was an earlier round of litigation resulting in order of the Income Tax Appellate Tribunal (tribunal, for short) dated 22nd June, 2007 wherein it was held that the appellant was entitled to interest under Section 244A of the Act, it being a substantive right and the same cannot be denied on the basis of a letter written to Government of India, Central Board of Direct Taxes. We observe and record that the said order dated 22nd June, 2007 has attained finality and has not been challenged by the Revenue. Thus, we are required to proceed on the basis that the appellant is entitled to interest under Section 244A of the Act and the issue raised in the question of law framed above relates to quantification of interest payable under Section 244A of the Act. We further clarify that we have not examined the effect of the letter written by the appellant to the Government of India, Central Board of Direct Taxes and whether in view of the said letter no interest was payable. ITA Nos. 167/2012 & 168/2012 Page 2 of 17 (b) After the order of the tribunal dated 22nd June, 2007, an amount of Rs.1,60,30,495/- was paid by the respondent vide order dated 11th June, 2008. The contention of the appellant is that they are entitled to interest on this amount of Rs.1,60,30,495/- from the date it was due and payable. In order to appreciate the contention, we would like to refer to the following: (i) Pursuant to the assessment order/appellate order, the appellant became entitled to refund of taxes paid of Rs.2,06,52,845/-. (ii) On 28th March, 1995, Rs.1,70,01,266/- was refunded. (iii) Rs.36,51,579/- was refunded on 1st June, 1999. (iv) Rs.1,42,04,705/- had accrued as interest under Section 244A on Rs.2,06,52,845/- upto 28th March, 1995 when part payment of Rs.1,70,01,266/- was made. (v) Interest of Rs.18,25,790/- had accrued on balance amount of Rs.36,51,579/- from 29th March, 1995 till 1st June, 1999. (vi) Thus in all, interest of Rs.1,60,30,495/- had accrued and payable but was not paid when the two refunds were issued. (Rs.1,42,04,705/- had accrued and should have been paid on 28th March, 1995 and Rs.18,25,790/- had accrued and should have been paid on 31st May, 1999). (vii) The interest of Rs.1,60,30,495/- was paid on 11th June, 2008. (c) The appellant claims that they are entitled to interest on this amount, i.e., on Rs.1,42,04,705/- with effect from 1st April, 1995 to 31st may, ITA Nos. 167/2012 & 168/2012 Page 3 of 17 2008 upto the date of refund of Rs.1,42,04,705/- and interest on Rs.18,25,790/- from 1st June, 1999 upto the date of refund. Interest on the said amounts is payable under Section 244A of the Act. (d) The contention of the Revenue is that this would amount to payment of interest on interest and this is forbidden and should not be paid. ASSESSMENT YEAR 1990-91 (a) In this year also the question whether the appellant was entitled to interest under Section 244A of the Act was decided in the first round by the tribunal vide order dated 22nd June, 2007. We need not, therefore, decide the question whether the appellant was entitled to interest because a letter was written by them to the Central Board of Direct Taxes. The said order has become final and, therefore, we are not required to go into the said issue and examine on merits whether or not this order dated 22nd June, 2007 passed by the tribunal was justified. The question raised in the present appeal relates to quantification of interest payable under Section 244A and not whether the interest was justified or should be denied on account of the said letter. (b) On the basis of assessment proceedings, the appellant became entitled to refund of Rs.53,01,570/-. (i) On 28th March, 1995, Rs.38,12,810/- was refunded. ITA Nos. 167/2012 & 168/2012 Page 4 of 17 (ii) On 31st March, 1997, Rs.10,87,686/- was refunded. (iii) On 19th March, 1999, Rs.4,01,074/- was refunded. (iv) The appellant became entitled to interest under Section 244A of Rs.36,58,084/- upto 28th March, 1995. This interest is calculated on Rs.53,01,570/-. (v) Interest of Rs.3,57,302/- upto 31st March, 1997 on amount of Rs.14,88,760/- (Rs.53,01,570/- minus Rs.38,12,810/-). (vi) Interest of Rs.96,258/- on Rs.4,01,074/- from 19th March, 1999 upto date of refund on balance amount of Rs.4,01,074/-. 3. The appellant claims that it is entitled to interest on Rs.36,58,084/- from 1st April, 1995 upto the date of refund/payment. Rs.3,57,302/- from 1st April, 1997 upto the date of refund/payment and Rs.96,258/- from 1st June, 1999 upto the date of refund/payment. Interest, it is claimed, is payable under Section 244A of the Act. 4. The contention of the Revenue is that this would amount to paying interest on interest and this would be contrary to Section 244A of the Act. DECISION 5. At the outset, we note that there is no dispute and debate on the initial interest, which is payable and should have been paid by the Revenue when they made the refund of the taxes. The dispute has arisen as the Revenue did not pay along with the refund of taxes, the ITA Nos. 167/2012 & 168/2012 Page 5 of 17 interest which had accrued and had become due and payable on the tax amount refundable. The Revenue, therefore, had made part payment of the refund by not including the interest element. 6. Secondly, it should be clarified that the interest payable on the refund stands quantified on the date when the refund was issued/granted by the respondent. The quantum or the calculation of interest does not and has not undergone a change or modification. Interest has not accrued or is not payable by the Revenue after they have made payment of the refund as interest payable under Section 244A stopped running on the said day and became quantified and an amount due and payable. In other words, it became a part of the capital or principal amount due and payable. 7. The question really is in case the Revenue does not make payment of interest element, which had accrued and had become payable on the date when the tax amount is refunded, whether they would be liable to pay interest under Section 244A on the said amount. One can casually or loosely call it as interest on interest but in reality payment of interest on the said amount occurs because of non-payment of the total amount refundable, which is due and payable to the assessee, inter alia, consisting of the tax, which had to be refunded and the interest accrued on the delayed refund of the tax. It is not uncommon and in the ITA Nos. 167/2012 & 168/2012 Page 6 of 17 commercial world and even in civil suits while computing interest under Section 34 of the Code of Civil Procedure, 1908 the principal amount and the interest due are added and treated as the primary amount in the decree drawn. Interest becomes due and payable on this primary amount. In other words, interest stands capitalised. We further note that it is not a case of compounding of interest as understood except once, i.e., on the date when it is quantified, i.e., when part refund payment is made by the Revenue. Therefore, it will be wrong to call it and treat it as compounding of interest. 8. It will be now relevant to refer to the provisions of the Act relating to refund and examine whether under the Act, interest is payable. Section 244A with effect from 1st April, 1989 reads as under:- Interest on refunds. 244A. (1) Where refund of any amount becomes due to the assessee under this Act, he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely:- (a) where the refund is out of any tax paid under section 115WJ or collected at source under section 206C or paid by way of advance tax or treated as paid under section 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of one-half per cent for every month or part of a month comprised in ITA Nos. 167/2012 & 168/2012 Page 7 of 17 the period from the 1st day of April of the assessment year to the date on which the refund is granted: Provided that no interest shall be payable if the amount of refund is less than ten per cent of the tax as determined under sub-section (1) of section 115WE or sub-section (1) of section 143 or on regular assessment; (b) in any other case, such interest shall be calculated at the rate of one-half per cent for every month or part of a month comprised in the period or periods from the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted. Explanation.--For the purposes of this clause, date of payment of tax or penalty means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand. (2) If the proceedings resulting in the refund are delayed for reasons attributable to the assessee, whether wholly or in part, the period of the delay so attributable to him shall be excluded from the period for which interest is payable, and where any question arises as to the period to be excluded, it shall be decided by the Chief Commissioner or Commissioner whose decision thereon shall be final. (3) Where, as a result of an order under sub- section (3) of section 115WE or section 115WF or section 115WG or sub-section (3) of section 143 or section 144 or section 147 or section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount on which interest was ITA Nos. 167/2012 & 168/2012 Page 8 of 17 payable under sub-section (1) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and in a case where the interest is reduced, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the amount of the excess interest paid and requiring him to pay such amount; and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly. (4) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989, and subsequent assessment years: Provided that in respect of assessment of fringe benefits, the provisions of this sub-section shall have effect as if for the figures 1989, the figures 2006 had been substituted. 9. The words used in the Section 244A are where refund of any amount becomes due and payable to the assessee under the Act, the assessee shall be entitled to receive in addition to the said amount simple interest calculated in the manner stipulated. The Legislature has not used the words tax paid or the principal amount of tax paid. The words used by the Legislature are any amount and said amount. The words are, therefore, much wider and broader than the tax amount, which is to be refunded. The words any amount would include within its scope and ambit the interest element, which has accrued and is payable on the date of the refund. Thus, when the Revenue does not ITA Nos. 167/2012 & 168/2012 Page 9 of 17 pay full amount of refund but part amount is paid, they will be liable to pay interest on the balance outstanding amount. The balance outstanding amount may consist of the tax paid or the interest, which is payable till the payment of the part amount and interest payable on the principal amount, which remained outstanding thereafter. 10. The Delhi High Court in the case of Commissioner of Income Tax versus Goodyear India Limited, 2001 (249) ITR 527 (Delhi) had occasion to examine the earlier provisions of refund under Sections 240 and 244 of the Act and had observed as under:- Section 244 deals with interest on refund where no claim is needed. Sub-section (2), inter alia, provides that where a refund is due to the assessee, "in pursuance of an order referred to in Section 240" and the Assessing Officer does not grant the refund within the stipulated time, the Central Government is required to pay simple interest at the stipulated rate. Section 240 deals with refund on appeal, etc. This provision clearly lays down that where as a result of any order passed in appeal or other proceedings under this Act, refund of any amount becomes due to the assessee, the Assessing Officer shall, except as otherwise provided in this Act, refund the amount to the assessed without his having to make any claim in that behalf. The crucial expressions in Section 240 are "any amount which becomes due to the assessee as a result of any order passed in any appeal or other proceedings under the Act" and the "amount becomes due to the assessee". Section 244 refers to the liability fastened on the Central Government in case of failure to grant refund within the stipulated time ITA Nos. 167/2012 & 168/2012 Page 10 of 17 in a case where refund is due to the assessee in pursuance of an order referred to in Section 240. A combined reading of both the provisions makes the position crystal clear that it is any amount which becomes due to the assessee and not necessarily the tax component. Undisputedly, a sum of Rs. 1,90,499 which qualifies for interest became payable to the assessee on the basis of an order passed under Section 240 of the Act. Merely because this was inclusive of an amount which was payable under Section 214 of the Act, that would not make the position any different. It is an amount which became due to the assessee on the basis of the appellate order. Therefore, the assessee was entitled to interest in terms of Section 244 of the Act. A similar view has been taken by the Gujarat High Court in D. J. Works v. Deputy CIT [1992]195 ITR 227and Chiman Lal S. Patel v. CIT [1994]210 ITR 419 though with different conclusions. Above being the position, we answer the question in the affirmative, in favor of the assessee and against the Revenue. 11. In R.K. Jain and Sons versus Commissioner of Income Tax, 2005 (142) Taxman 445 (Delhi) reference was made to several judgments passed by Gujarat High Court and decision of the Supreme Court in CIT versus Narender Doshi, (2002) 245 ITR 606 and it was held that interest should be awarded on the interest component of the unpaid refund. Recently in Motor and General Finance Limited versus Commissioner of Income Tax and other cases reported in [2010] 320 ITR 88 (Delhi) reference was made to the decision of the Supreme Court in Sandvik Asia Limited versus CIT, [2006] 280 ITR 643 (SC) and Narendra Doshi (supra) and it was observed as under:- ITA Nos. 167/2012 & 168/2012 Page 11 of 17 20. It is, thus, manifest that at both the stages, namely, while passing intimation under Section 143(1)(a) of the Act, refund along with interest under Section 244A was given of the excess TDS and advance tax. Again, after the orders of the Tribunal were passed and the refund became payable as a consequence thereof, the excess amount of tax was refunded along with interest payable thereupon under Section 244A of the Act. Thus, the calculations are not disputed, as observed by the Tribunal also. 21. When the refund of tax becomes payable as a result of orders passed in appeal or other proceedings under the Act, this refund is to be given along with interest, which is to be calculated as per Section 244 of the Act. If that interest is paid along with the excess tax, no further payment is to be made. It is only when the excess amount of tax is refunded but the interest is not refunded along therewith, the retention of interest amount would become unjustified and interest on interest would also become payable. The reason is simple. It is the tax which was paid in excess by the assessee which became refundable. The assessee would be compensated by paying interest thereupon. It is only when the interest is not refunded along with excess tax that the withholding of the said interest becomes unjustified and it becomes an amount due to the assessee on which the assessee can claim further interest. Such a situation has not happened in the present case as the amount of interest is calculated and refunded along with the refundable tax amount. 12. Same view has been taken by Punjab and Haryana High Court in Roadmaster Industries of India Private Limited versus Commissioner of Income Tax and Another, [2010] 329 ITR 69 (P&H) and Gujarat ITA Nos. 167/2012 & 168/2012 Page 12 of 17 High Court in Commissioner of Income Tax versus Hynoup Food and Oil Industries Limited, [2010] 320 ITR 365 (Guj.) and Gujarat Flourochemicals Limited versus Commissioner of Income Tax and Others, [2008] 300 ITR 328 (Guj.). The said cases refer to the principle of compensation when money, which is due and payable and refundable, is not paid. 13. Madhya Pradesh High Court had the occasion to deal with the similar issue in their decision in Commissioner of Income Tax versus HEG Limited, [2009] 310 ITR 341 (MP). The facts of the said case may be noticed. The assessee became entitled to refund along with interest under Section 244A. Referring to Section 240 of the Act, the High Court observed that the term used was refund of any amount becomes due to the assessee. The same words were also used in Section 244A. Reference was made to the decision of the Delhi High Court in Goodyear India Limited (supra) and decisions of the Supreme Court in Narender Doshi (supra) and Sandvik Asia Limited (supra). Decision of the Madras High Court in CIT versus Needle Industries Private Limited, [1998] 233 ITR 370 (Mad) reflected upon and it was held that the words or the phrase any amount would include the amount refundable plus the interest due and payable on the tax amount refunded. Thus, in view of the express provisions of Section 244A, interest was directed to be paid by the Revenue. ITA Nos. 167/2012 & 168/2012 Page 13 of 17 14. Matter was taken by the Revenue before the Supreme Court in the case of HEG Limited and the SLP was granted and civil appeal was registered. The Supreme Court thereupon answered the question against the Revenue in the following words:- Therefore, this is not a case where the assessee is claiming compound interest or interest on interest as is sought to be made out in the civil appeals filed by the Department. The next question which we are required to answer is ­ what is the meaning of the words refund of any amount becomes due to the assessee in Section 244A? In the present case, as stated above, there are two components of the tax paid by the assessee for which the assessee was granted refund, namely TDS of Rs.45,73,528 and tax paid after original assessment of Rs.1,71,00,320. The Department contends that the words any amount will not include the interest which accrued to the respondent for not refunding Rs.45,73,528 for 57 months. We see no merit in this argument. The interest component will partake of the character of the amount due under Section 244A. It becomes an integral part of Rs.45,73,528 which is not paid for 57 months after the said amount became due and payable. As can be seen from the facts narrated above, this is the case of short payment by the Department and it is in this way that the assessee claims interest under Section 244A of the Income-Tax Act. Therefore, on both the afore-stated grounds, we are of the view that the assessee was entitled to interest for 57 months on Rs.45,73,528/-. The principal amount of Rs.45,73,528 has been paid on December 31, 1997 but net of interest which, as stated above, partook of the character of amount due under Section 244A. ITA Nos. 167/2012 & 168/2012 Page 14 of 17 15. A reading of the aforesaid passage from the decision of the Supreme Court in HEG Limited (supra) indicates that it would be incorrect and improper to regard payment of interest when part payment is made as interest on interest. What has been elucidated and clarified by the Supreme Court is that when refund order is issued, the same should include the interest payable on the amount, which is refunded. If the refund does not include interest due and payable on the amount refunded, the Revenue would be liable to pay interest on the shortfall. This does not amount to payment of interest on interest. An example will clarify the situation and help us to understand what is due and payable under Section 244A of the Act. Suppose Revenue is liable to refund Rs.1 lac to an assessee with effect from 1 st April, 2010, the said amount is refunded along with interest due and payable under Section 244A on 31st March, 2013, then no further interest is payable. However, if only Rs.1 lac is refunded by the Revenue on 31st March, 2013 and the interest accrued on Rs.1 lac under Section 244A is not refunded, the Revenue would be liable to pay interest on the amount due and payable but not refunded. Interest will not be due and payable on the amount refunded but only on the amount which remains unpaid, i.e, the interest element, which should have been refunded but is not paid. In another situation where part payment is made, Section 244A ITA Nos. 167/2012 & 168/2012 Page 15 of 17 would be still applicable in the same manner. For example, if Rs.60,000/- was paid on 31st March, 2013, Revenue would be liable to pay interest on Rs.1 lac from 1st April, 2010 till 31st March, 2013 and thereafter on Rs.40,000/-. Further, interest payable on Rs.60,000/-, which stands paid, will be quantified on 31st March, 2013 and on this amount, i.e., interest amount quantified, Revenue would be liable to pay interest under Section 244A till payment is made. 16. The aforesaid manner of computation is not only applicable to cases where Revenue has to pay interest on refund, but is equally applied when an assessee is in default and interest is payable under Section 220(2) of the Act. Interest payable under Section 234B and 234C become part of the demand notice issued under Section 156 and it is on this amount, i.e., the tax payable plus interest payable under Sections 234B and 234C that interest under Section 220(2) is calculated from the date mentioned in the notice of demand till the date of actual payment. Under Explanation to Section 140A(1), it is stipulated where the amount paid by an assessee under self-assessment falls short of the aggregate amount of tax and interest aforesaid, the amount paid shall first be adjusted towards the interest payable and the balance, if any, shall be adjusted towards the tax payable. The interpretation given by us follows the same principle, when Revenue defaults and makes part payment of the amount refundable. The ITA Nos. 167/2012 & 168/2012 Page 16 of 17 aforesaid interpretation also ensures that the Assessing Officer/Revenue refund the entire amount, which is due and payable, including interest payable under Section 244A. It discourages part payment. There is no other provision under the Act under which an Assessing Officer/Revenue can be made liable to pay interest when part payment is made and the entire amount, which is refundable is not paid to the assessee. Otherwise the Assessing Officer/Revenue can refund the principal amount and not pay the interest component under Section 244A for an unlimited period with impunity and without any sanction, which would amount to granting premium to a non- compliance of law. In the present case, the interest component was withheld for the period ranging between 9 to 13 years. 17. In view of the aforesaid discussion, we answer the questions of law in favour of the appellant and against the Revenue. The appeals are disposed of. No costs. SANJIV KHANNA, J. SANJEEV SACHDEVA, J. SEPTEMBER 06, 2013 VKR ITA Nos. 167/2012 & 168/2012 Page 17 of 17

ITAT elucidates law on condonation of delay; argument as to sufficient cause isn’t a license to file

IT : If sufficient causes for delay in filing of appeal are presented, discretion is available to the appellate authority to condone the delay and admit the appeal. The expression 'sufficient cause' is not defined, but it means whether it could have been avoided by the party by the exercise of due care and attention

RBI devises new declaration forms for export; declaration must for transactions of less than USD 25,

FEMA/ILT : Export of goods and services-simplification and revision of declaration form for Exports of Goods/Softwares

IT dept. send letters to next batch of non-filers of returns; AOs asked to contact taxpayers on chan

IT : Income Tax Department sends letters to another batch of 35,000 non-filers to file returns and pay taxes thereon

AO to establish that undisclosed income belongs to other person to initiate sec. 158BC proceedings

IT: For initiating proceedings under section 158BC against person not searched, Assessing Officer must record his satisfaction during search that undisclosed income belonged to such person

Decision passed under a repealed Act is an obvious mistake apparent from record; must be rectified

ST : Where Tribunal passed judgment considering provisions of Gujarat Sales Tax Act while case was to be decided under Gujarat VAT Act, such an obvious mistake committed by tribunal must be rectified by recalling entire order and passing fresh order in accordance with law

Customs Notification No 97/2013 (NT) dated 14-09-2013

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No. 97/2013- Customs (N.T)

New Delhi, the 14^th September, 2013

G.S.R. (E). – In exercise of the powers conferred by section 75 of the Customs Act, 1962 (52 of 1962), section 37 of the Central Excise Act, 1994 (1 of 1944) and section 93A read with section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995, namely:-

1. (1) These rules may be called the Customs, Central Excise Duties and Service Tax Drawback (Amendment) Rules, 2013.
   

   (2) They shall come into force on 21^st September, 2013.

   
   


2. In the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995,-
   
   
   
   1. in rule 3, in sub-rule (1), in clause (v) of the second proviso, for the words and figures “falling within heading 0401, 0402, 0403, 0404, 0405, 0406, 1006 or 3501”, the words and figures “falling within heading 1006 or on wheat falling within heading 1001” shall be substituted;
   
   
   2. in rule 6, in sub-rule (4), for the words and figures “falling within heading 0401, 0402, 0403, 0404, 0405, 0406, 1006 or 3501”, the words and figures “falling within heading 1006 or on wheat falling within heading 1001” shall be substituted;
   
   
   3. in rule 7, in sub-rule (5), for the words and figures “falling within heading 0401, 0402, 0403, 0404, 0405, 0406, 1006 or 3501”, the words and figures “falling within heading 1006 or on wheat falling within heading 1001” shall be substituted;
   
   
   
   

F. No. 609/111/2013-DBK

(SANJAY KUMAR)

Under Secretary to the Government of India

Note.- The principal rules were published in the Gazette of India, Extraordinary, Part II, Sub-Section (i), vide number G.S.R.441 (E), dated the 26^th May, 1995, and was last amended by notification number 69/2011-Custom (N.T.), dated the 22^nd September, 2011 vide number G.S.R 713 (E), dated the 22^nd September, 2011.

Winding up petition admitted as respondents failed to comply with terms of restructured borrowing fa

CL: Financial Institution would be justified in filing winding up petition against respondent-company on default by respondent in complying with terms and conditions governing sanction of restructuring of financial facility provided by financial institution

Customs Notification No 98/2013 (NT) dated 14-09-2013

GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) Notification No. 98/2013 - CUSTOMS (N.T.) New Delhi, dated the 14th September, 2013 G.S.R. (E). In exercise of the powers conferred by sub-section (2) of section 75 of the Customs Act, 1962 (52 of 1962), sub-section (2) of section 37 of the Central Excise Act, 1944 (1 of 1944), and section 93A and sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994) read with rules 3 and 4 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 (hereinafter referred to as the said rules) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No.92/2012-Customs (N.T.), dated the 4th October, 2012 published vide number G.S.R. 742 (E), dated the 4th October , 2012, except as respects things done or omitted to be done before such supersession, the Central Government hereby determines the rates of drawback as specified in the Schedule annexed hereto (hereinafter referred to as the said Schedule) subject to the following notes and conditions, namely:- Notes and conditions: The tariff items and descriptions of goods in the said Schedule are aligned with the tariff items and descriptions of goods in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) at the four-digit level only. The descriptions of goods given at the six digit or eight digit or modified six or eight or ten digits are in several cases not aligned with the descriptions of goods given in the said First Schedule to the Customs Tariff Act, 1975. The General Rules for the Interpretation of the First Schedule to the said Customs Tariff Act, 1975 shall mutatis mutandis apply for classifying the export goods listed in the said Schedule. Notwithstanding anything contained in the said Schedule, - (i) all artware or handicraft items shall be classified under the heading of artware or handicraft (of constituent material) as mentioned in the relevant Chapters; (ii) any identifiable ready to use machined part or component predominantly made of iron, steel or aluminium, made through casting or forging process, and not specifically mentioned at six digit level or more in Chapter 84 or 85 or 87, may be classified under the relevant tariff item (depending upon material composition and making process) under heading 8487 or 8548 or 8708, as the case may be, irrespective of classification of such part or component at four digit level in Chapter 84 or 85 or 87 of the said Schedule; (iii) the sports gloves mentioned below heading 4203 shall be classified in that heading and all other sports gloves shall be classified under heading 9506. The figures shown in columns (4) and (6) in the said Schedule refer to the rate of drawback expressed as a percentage of the free on board ( f.o.b.) value or the rate per unit quantity of the export goods, as the case may be. The figures shown in columns (5) and (7) in the said Schedule refer to the maximum amount of drawback that can be availed of per unit specified in column (3). The figures shown under the drawback rate and drawback cap appearing below the column “Drawback when Cenvat facility has not been availed” refer to the total drawback (customs, central excise and service tax component put together) allowable and those appearing under the column “Drawback when Cenvat facility has been availed” refer to the drawback allowable under the customs component. The difference between the two columns refers to the central excise and service tax component of drawback. If the rate indicated is the same in both the columns, it shall mean that the same pertains to only customs component and is available irrespective of whether the exporter has availed of Cenvat or not. Drawback at the rates specified in the said Schedule shall be applicable only if the procedural requirements for claiming drawback as specified in rules 11, 12 and 13 of the said rules, unless otherwise relaxed by the competent authority, are satisfied. The rates of drawback specified in the said Schedule shall not be applicable to export of a commodity or product if such commodity or product is - (a) manufactured partly or wholly in a warehouse under section 65 of the Customs Act, 1962 (52 of 1962); (b) manufactured or exported in discharge of export obligation against an Advance Licence or Advance Authorisation or Duty Free Import Authorisation issued under the Duty Exemption Scheme of the relevant Export and Import Policy or the Foreign Trade Policy: Provided that where exports are made against Advance Licences issued on or after the 1st April, 1997, in discharge of export obligations in terms of notification No. 31/97 - Customs, dated the 1st April, 1997 , or against Duty Free Replenishment Certificate Licence issued in terms of notification No. 48/2000-Customs, dated the 25th April, 2000 , or against Duty Free Replenishment Certificate Licence issued in terms of notification No. 46/2002-Customs, dated the 22nd April, 2002 , or against Duty Free Replenishment Certificate Licence issued in terms of notification No. 90/2004-Customs, dated the 10th September, 2004 , drawback at the rate equivalent to Central Excise allocation of rate of drawback specified in the said Schedule shall be admissible subject to the conditions specified therein; (c) manufactured or exported by a unit licensed as hundred per cent. Export Oriented Unit in terms of the provisions of the relevant Export and Import Policy and the Foreign Trade Policy; (d) manufactured or exported by any of the units situated in free trade zones or export processing zones or special economic zones; (e) manufactured or exported availing the benefit of the notification No. 32/1997–Customs, dated 01st April, 1997 . The rates and caps of drawback specified in columns (4) and (5) of the said schedule shall not be applicable to export of a commodity or product if such commodity or product is – (a) manufactured or exported by availing the rebate of duty paid on materials used in the manufacture or processing of such commodity or product in terms of rule 18 of the Central Excise Rules, 2002; (b) manufactured or exported in terms of sub-rule (2) of rule 19 of the Central Excise Rules, 2002. Where the export product is not specifically covered by the description of goods in the said Schedule, the rate of drawback may be fixed, on an application by an individual manufacturer or exporter in accordance with the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995. The rates of drawback specified against the various tariff items in the said Schedule in specific terms or on ad valorem basis, unless otherwise specifically provided, are inclusive of drawback for packing materials used, if any. The term “dyed”, wherever used in the said Schedule in relation to textile materials, shall include yarn or piece dyed or predominantly printed or coloured in the body. In respect of the tariff items in Chapters 60, 61, 62 and 63 of the said Schedule, the blend containing cotton and man made fibre shall mean that content of man made fibre in it shall be more than 15% but less than 85% by weight and the blend containing wool and man made fibre shall mean that content of man made fibre in it shall be more than 15% but less than 85% by weight. The garment or made-up of cotton or wool or man made fibre or silk or noil silk shall mean that the content in it of the respective fibre is 85% or more by weight. Wherever specific rates have been provided against tariff item in the said Schedule, the drawback shall be payable only if the amount is one per cent. or more of free on board value, except where the amount of drawback per shipment exceeds five hundred rupees. The expressions “when Cenvat facility has not been availed”, used in the said Schedule, shall mean that the exporter shall satisfy the following conditions, namely:- (a) the exporter shall declare, and if necessary, establish to the satisfaction of the Assistant Commissioner of Customs or Assistant Commissioner of Central Excise or Deputy Commissioner of Customs or Deputy Commissioner of Central Excise, as the case may be, that no Cenvat facility has been availed for any of the inputs or input services used in the manufacture of the export product; (b) if the goods are exported under bond or claim for rebate of duty of central excise, a certificate from the Superintendent of Customs or Superintendent of Central Excise in-charge of the factory of production, to the effect that no Cenvat facility has been availed for any of the inputs or input services used in the manufacture of the export product, is produced; Provided that the certificate regarding non-availment of Cenvat facility shall not be required in the case of exports of handloom products or handicrafts (including handicrafts of brass artware) or finished leather and other export products which are unconditionally exempt from the duty of central excise. Whenever a composite article is exported for which any specific rate has not been provided in the said Schedule, the rates of drawback applicable to various constituent materials can be extended to the composite article according to net content of such materials on the basis of a self-declaration to be furnished by the exporter to this effect and in cases of doubt or where there is any information contrary to the declarations, the proper officer of customs shall cause a verification of such declarations. The term ‘article of leather’ in Chapter 42 of the said Schedule shall mean any article wherein 60% or more of the outer visible surface area (excluding shoulder straps or handles or fur skin trimming, if any) is of leather notwithstanding that such article is made of leather and any other material. The term “dyed” in relation to fabrics and yarn of cotton, shall include “bleached or mercerized or printed or mélange’’. The term “dyed” in relation to textile materials in Chapters 54 and 55 shall include “printed or bleached”. In respect of the tariff items appearing in Chapter 64 of the said Schedule, leather shoes, boots or half boots for adult shall comprise the following sizes, namely: - (a) French point or Paris point or Continental Size above 33; (b) English or UK adult size 1 and above; and (c) American or USA adult size 1 and above. In respect of the tariff items appearing in Chapter 64 of the said Schedule, leather shoes, boots or half boots for children shall comprise the following sizes, namely: - (a) French point or Paris point or Continental Size upto 33; (b) English or UK children size upto 13; and (c) American or USA children size upto 13. The drawback rates specified in the said Schedule against tariff items 711301, 711302 and 711401 shall apply only to goods exported by airfreight, post parcel or authorised courier through the Custom Houses as specified in para 4A.12 of the Hand Book of Procedures (Vol. I), 2009-2014 published vide Public Notice No.1 (RE-2012) / 2009-2014 dated the 5th June, 2012 of the Government of India in the Ministry of Commerce and Industry, after examination by the Customs Appraiser or Superintendent to ascertain the quality of gold or silver and the quantity of net content of gold or silver in the gold jewellery or silver jewellery or silver articles. The Free on Board (FOB) value of any consignment through authorised courier shall not exceed rupees twenty lakhs. The drawback rates specified in the said Schedule against tariff items 711301, 711302 and 711401 shall not be applicable to goods manufactured or exported in discharge of export obligation against any Scheme of the relevant Export and Import Policy or the Foreign Trade Policy of the Government of India which provides for duty free import or replenishment or procurement from local sources of gold or silver. 2. All claims for duty drawback shall be filed with reference to the tariff items and descriptions of goods shown in columns 1 and 2 of the said Schedule respectively. 3. This notification shall come into force on the 21st day of September, 2013.

Customs Circular No 37/2013 dated 14-09-2013

Government of India Ministry of Finance, Department of Revenue Central Board of Excise & Customs Circular No. 37 / 2013-Customs New Delhi, dated 14th September, 2013 To All Chief Commissioners of Customs/Customs (Prev.) All Chief Commissioners of Central Excise/Customs & Central Excise All Director Generals under CBEC All Commissioners of Customs/Customs (Prev.) All Commissioners of Central Excise/Customs & Central Excise Subject: All Industry Rates of Duty Drawback effective 21.09.2013 - Reg. Ma’am/Sir, The Ministry has notified the revised All Industry Rates (AIR) of Duty Drawback vide Notification No. 98/2013-Customs (N.T.), dated 14.09.2013 . This notification comes into force on 21.09.2013. Some of the broad aspects, from amongst the changes notified with respect to AIR of duty drawback and entries in the Schedule, are the following – As in previous years, the drawback rates have been determined on the basis of certain broad average parameters including, inter alia, prevailing prices of inputs, standard input output norms, share of imports in input consumption, the applied rates of central excise and customs duties, the factoring of incidence of service tax paid on taxable services which are used as input services in the manufacturing or processing of export goods, factoring incidence of duty on HSD/Furnace Oil, value of export goods, etc. Many items, but not all, that were already covered under the drawback schedule prior to incorporation of erstwhile DEPB items, shall see some reduction in AIR of duty drawback. Few items like gold and silver jewellery, silk yarn, silk fabric, silk garments and made-ups, wooden art-ware etc. shall see an increase in AIR. The residuary AIR of 1% (composite) and 0.3% (customs) is being provided to hitherto Nil rated items under chapters 4, 15, 22, few items in chapter 24 and casein and its derivatives in chapter 35. AIR is being provided to articles of silver (silversmiths’ wares) subject to similar conditions as applicable to gold/silver jewellery and the Notes and Conditions (22)/(23) of the said Notification shall also have relevance. The specific rate provided to Ethanol/ENA under tariff item no. 22071090 is being changed to ad valorem 1% (composite) and 0.3% (customs). Ad valorem rates are being provided to certain items of chapter 37 and imitation jewellery of chapter 71. Though, the existing residuary rate of 1% ad valorem (composite) and 0.3% (customs) continues, the higher residuary rates are being reduced from 1.5% to 1.3% (customs) or from 2% to 1.7% (customs), as the case may be. The process of realignment of rates, on items incorporated in the drawback schedule from the erstwhile DEPB scheme, is continued along with rationalizing these rates. In general, these items shall see a reduction in the AIR, including some to the applicable residuary rate. In the case of certain electronic goods of chapter 84, 85 or 93, the residuary rate is being provided at 1% (customs). In the case of most tariff items with ad valorem all industry rates above 2%, the rates are being supplemented with drawback caps. Separate tariff entries are being created for cotton bags, grey and dyed knitted fabrics of cotton, of MMF, of blend where cotton predominates and of blends where MMF predominates, grey and dyed cotton fabrics with lycra, women’s/girls’ tops, embroidered fabrics of MMF, imitation jewellery of glass, multi-speed complete bicycle with geared hubs, cranks made of aluminum, single speed chain wheel and crank (crank made of aluminum), pillows/cushions/quilts/pouffles filled with poly-fil/polyfill, etc. A few tariff items are also being replicated with same rates and caps under different four digit levels and descriptions of certain tariff items are being modified to address classification issues. AIR on wheat is being made Nil. Amendments vide Notification No. 97/2013- Customs (N.T.), dated 14.09.2013 shall also make the brand rate unavailable on export of wheat. For entries in the Schedule that are related to pharmacopeia, where the product descriptions bear suffix like IP and/or BP and/or USP, it is hereby clarified that the pharmacopeia standards IP, BP, USP, EP, JP shall be treated as inter-changeable. Commissioners are expected to ensure that the due diligence is exercised to prevent any misuse. As before, it may be ensured that exporters do not avail of the refund of service tax paid on taxable services which are used as input services in the manufacturing or processing of export goods through any other mechanism while claiming AIR. Moreover, there is need for continued scrutiny for preventing any excess drawback arising from mismatch of declarations made in the Item Details and the Drawback Details in a shipping bill. For example, when quantities declared in Item details and Drawback details are same, but units of their measurement are different, or unit of measurement is same but quantities declared do not match or the 4-digit RITC in the Item Details and Drawback Tariff Item No. in Drawback Details are different. It is requested to download the notification with the revised Schedule of AIR effective 21.09.2013 from Board’s website (www.cbec.gov.in) and carefully peruse it and thereby take note of all the specific changes notified. While every effort has been made to avoid errors / omissions, these are not ruled out. If an error is noticed, please immediately inform the Board for appropriate corrective action. Difficulties faced, if any, in implementation of the changes may also be brought to Board’s notice. In cases where the drawback caps have not been provided against a particular tariff item, suggestions may be sent to the Board. In the case of export of articles of silver (silversmiths’ wares), which are high value items, there should be close monitoring and a monthly report indicating quantum of export and drawback availed may be sent to the Board for the next 12 months by the Commissioners having jurisdiction over the relevant Custom Houses. Suitable public notice and standing order may be issued for guidance of the trade and officers. Receipt of this Circular may be acknowledged. (Rajiv Talwar) Joint Secretary F. No. 609/115/2013-DBK

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