CA Terminal: 11/09/13

Saturday 9 November 2013

Supreme Court grants stay on High Court's order treating constitution of CBI as 'unconstitutional'

CL : Supreme Court granted stay on the ruling of Gauhati High Court after hearing the Central Government's petition that the verdict will adversely impact thousands of criminal cases pending across the country

RBI paves the way for international trade; allows third party payments for export or import

FEMA/ILT : Third Party Payments for Export / Import Transactions

Revised fund raising norms - RBI allows unlisted cos. to raise funds via ADRs or GDRs without listin

FEMA/ILT : Amendment to the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993

Even fiscally transparent Danish firm would be entitled to India-Denmak treaty relief

IT : Once payment has been made from one non-resident to another non-resident in connection with entire global business in Denmark only, then it cannot be held that such a payment can be taxed in India either as fees for technical services or as royalty

100% EOU carries on its business in India, its source of income is in India ; technical service used

IT: When no human intervention is involved in any services, such services cannot be treated to be of nature which can be covered by scope of section 9(1)(vii)

Recovery order rejecting title of other party over property entitles it to file civil suit to establ

IT : Where order is made for recovery of tax by sale of property rejecting right of other party over said property, in term of rule 11(6) of Schedule II, parties would be entitled to file civil suit to establish their right over property

RBI/2013-14/363 A.P. (DIR Series) Circular No. 69 dated 08-11-2013

RBI/2013-14/363

A.P. (DIR Series) Circular No. 69

November 8, 2013

All Category – I Authorised Dealer Banks

Madam / Sir,

Amendment to the “Issue of Foreign Currency Convertible Bonds and Ordinary shares (Through Depository Receipt Mechanism) Scheme, 1993”

Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to A.P. (DIR Series) Circular No.11 dated September 5, 2005 regarding issue of American Depository Receipts (ADRs)/ Global Depository Receipts (GDRs) read with Paragraph 4 of Schedule 1 to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 notified vide Notification No. FEMA.20/2000-RB dated May 3, 2000 , as amended from time to time, in terms of which unlisted Indian companies which have not yet accessed Global Depository Receipts/ Foreign Currency Convertible Bond route for raising capital in the international market were required to have prior or simultaneous listing in the domestic market.

On a review, it has now been decided to allow unlisted companies incorporated in India to raise capital abroad, without the requirement of prior or subsequent listing in India, initially for a period of two years, subject to conditions mentioned below. This scheme will be implemented from the date of the Government Notification of the scheme, subject to review after a period of two years. The investment shall be subject to the following conditions:
1. Unlisted Indian companies shall list abroad only on exchanges in IOSCO/FATF compliant jurisdictions or those jurisdictions with which SEBI has signed bilateral agreements;
2. The ADRs/ GDRs shall be issued subject to sectoral cap, entry route, minimum capitalisation norms, pricing norms, etc. as applicable as per FDI regulations notified by the Reserve Bank from time to time;
3. The pricing of such ADRs/GDRs to be issued to a person resident outside India shall be determined in accordance with the captioned scheme as prescribed under paragraph 6 of Schedule 1 of Notification No. FEMA. 20 dated May 3, 2000 , as amended from time to time;
4. The number of underlying equity shares offered for issuance of ADRs/GDRs to be kept with the local custodian shall be determined upfront and ratio of ADRs/GDRs to equity shares shall be decided upfront based on applicable FDI pricing norms of equity shares of unlisted company;
5. The unlisted Indian company shall comply with the instructions on downstream investment as notified by the Reserve Bank from time to time;
6. The criteria of eligibility of unlisted company raising funds through ADRs/GDRs shall be as prescribed by Government of India;
7. The capital raised abroad may be utilised for retiring outstanding overseas debt or for bona fide operations abroad including for acquisitions;
8. In case the funds raised are not utilised abroad as stipulated above, the company shall repatriate the funds to India within 15 days and such money shall be parked only with AD Category-1 banks recognised by RBI and shall be used for eligible purposes;
9. The unlisted company shall report to the Reserve Bank as prescribed under sub-paragraphs (2) and (3) of Paragraph 4 of Schedule 1 to FEMA Notification No. 20.

A copy of the Press Release dated September 27, 2013 issued by Ministry of Finance, Government of India and the Government Notification dated October 11, 2013 are annexed (Annex 1 and 2, respectively).

AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,
(Rudra Narayan Kar)

Chief General Manager-in-Charge

RBI/2013-14/364 A. P. (DIR Series) Circular No.70 dated 08-11-2013

RBI/2013-14/364

A. P. (DIR Series) Circular No.70

November 8 , 2013

All Category-I Authorised Dealer Banks

Madam / Sir,

Third party payments for export / import transactions

Attention of Authorized Dealer Category – I banks is invited to various provisions of FEMA Notification No. 14 dated May 3, 2000 dealing with the manner of receipt & payment for trade transactions. Normally payment for exports has to be received from the overseas buyer named in the Export Declaration Form (EDF) by the exporter and the payment shall be received in a currency appropriate to the place of final destination as mentioned in the EDF irrespective of the country of residence of the buyer. Similarly, the payments for the import should be made to the original overseas seller of the goods and the AD should ensure that the importer furnishes evidence of import, such as, Exchange Control copy of the Bill of Entry to satisfy itself that goods equivalent to the value of remittance have been imported.

With a view to further liberalising the procedure relating to payments for exports/imports and taking into account evolving international trade practices, it has been decided as under:
1. EXPORT TRANSACTIONS
  AD banks may allow payments for export of goods / software to be received from a third party (a party other than the buyer) subject to conditions as under:
  1. Firm irrevocable order backed by a tripartite agreement should be in place;
  2. Third party payment should come from a Financial Action Task Force (FATF) compliant country and through the banking channel only;
  3. The exporter should declare the third party remittance in the Export Declaration Form;
  4. It would be responsibility of the Exporter to realize and repatriate the export proceeds from such third party named in the EDF;
  5. Reporting of outstandings, if any, in the XOS would continue to be shown against the name of the exporter. However, instead of the name of the overseas buyer from where the proceeds have to be realised, the name of the declared third party should appear in the XOS; and
  6. In case of shipments being made to a country in Group II of Restricted Cover Countries, (e.g. Sudan, Somalia, etc.), payments for the same may be received from an Open Cover Country.
  Note: Restricted cover Group II country is country which experiences chronic political and economic problems as well as balance of payment difficulties.
2. IMPORT TRANSACTIONS
  AD banks are allowed to make payments to a third party for import of goods, subject to conditions as under:
  1. Firm irrevocable purchase order / tripartite agreement should be in place;
  2. Third party payment should be made to a Financial Action Task Force (FATF) compliant country and through the banking channel only;
  3. The Invoice should contain a narration that the related payment has to be made to the (named) third party;
  4. Bill of Entry should mention the name of the shipper as also the narration that the related payment has to be made to the (named) third party;
  5. Importer should comply with the related extant instructions relating to imports including those on advance payment being made for import of goods; and
  6. The amount of an import transaction eligible for third party payment should not exceed USD 100,000. This limit will be revised as and when considered expedient.

These instructions will come into force with immediate effect.

AD Category – I banks may bring the contents of this Circular to the notice of their constituents concerned.

The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(C.D Srinivasan)

Chief General Manager

CCI approves of new official seal and emblem of Commission

Competition : Competition Commission of India (General) Amendment Regulations, 2013 - Amendment in Regulation 4

Complaint dismissed as identical quote in a railway tender didn’t prove cartelization among parties

MRTP Act : In absence of proof of cartelization by respondents in quoting price for tender floated by Railways, complaint against them was to be dismissed

Sec. 10(23C) is independent of sec. 11; relief to a trust available even if Sec. 10(23C) exemption n

IT: Benefit under section 11 cannot be denied on ground that assessee has not obtained exemption from prescribed authority under section 10(23C)

Sec. 54EC exemptions allowable despite deeming fiction of sec. 50 treating capital gains as short-te

IT: Where capital gain arose out of long-term capital asset was invested in specified assets, exemption under section 54EC could not be denied on account of fact that deeming fiction of short-term capital gain was created under section 50

Customs Circular No 43/2013 dated 08-11-2013

Government of India

Ministry of Finance

(Department of Revenue)

Tax Research Unit

*****

Circular No. 43/2013-Customs

New Delhi, dated the 8^th November, 2013

To,

All Chief Commissioners of Customs.

All Chief Commissioners of Customs & Central Excise.

All Chief Commissioners of Central Excise.

All Directors General of CBEC.

Subject: Exemption from payment of SAD to parts, components and accessories etc. of Mobile Handsets under Notification No. 21/2012-Cus, dated 17/03/2012-reg.

I am directed to invite your attention to notification No. 21/2012-Cus, dated 17-03-2012 (S. No. 5 of the Table) providing exemption from payment of SAD to parts, components and accessories etc for the manufacture of mobile handsets. The exemption was valid until 31.3.2013 and was subject to actual user condition, that is to say, the importer was required to follow the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996.

It has been reported that after 31.3.2013, manufacturer/importers are claiming exemption from SAD on the said goods under the said notification in terms of S. No. 1 of the Table, which provides exemption from SAD to all goods that are exempt from payment of BCD and CVD. As this S. No. does not stipulate observance of any actual user condition (unlike S. No. 5 of notification No. 21/2012-Cus, which provided exemption subject to actual user condition), a doubt has been raised whether exemption from SAD should be allowed on the said goods.

The matter has been examined. Under notification No.21/2012-Cus dated 17.3.2012 (S. No. 1 of the Table), “goods which are exempt from the whole of the duty of customs leviable thereon or in case of which “Free” or “Nil” rates of duty of customs are specified in column (4) under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and which are also exempt from the whole of additional duty of customs leviable thereon under sub-section (1) of section 3 of the said Act, or on which no amount of the said additional duties of customs is payable for any reason,” are exempt from SAD. Parts, components and accessories, etc required for the manufacture of mobile handsets are exempt from BCD and CVD under notification No. 12/2012-Cus, dated 17.3.2012 (S. No. 431 of the Table) subject to the condition that the importer follows the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. As per these rules, the manufacturer/importer is required to produce before Customs a certificate from the jurisdictional Central Excise authorities as laid down under the said Rules. In view of this, particularly considering that the manufacturer/importer furnishes to the customs authorities the required certificate for availing of the benefit of exemption from BCD and CVD in respect of parts, components, accessories etc imported for the manufacture of mobile handsets, it has been felt that the benefit of exemption from SAD should not be denied in respect of the same goods if claimed under S.No.1 of notification No.21/2012-Customs . The certificate which is valid for claiming exemption from BCD and CVD ought to be taken cognizance of and the benefit of SAD exemption allowed.

Accordingly, it is clarified that exemption from SAD under notification No. 21/2012-Customs (S. No. 1 of the Table) may be allowed at the port of import on the basis of registration and the certificate issued by the jurisdictional central excise authorities w.r.t S. No. 431 of notification No. 12/2012-Customs without any requirement of a separate registration/certificate issued under the said Rules w.r.t notification No. 21/2012-Customs, dated 17-3-2012 .

Difficulties, if any, faced in the implementation of above instructions may be brought to the notice of the Ministry at an early date.

Yours faithfully,

(Amitabh Kumar)

Director (TRU)

Telephone: 011 23092236

F.No.354/173/2013-TRU

Notification No 49 (RE-2013) / 2009-2014 dated 01-11-2013

Government of India

Ministry of Commerce & Industry

Department of Commerce

Udyog Bhawan

Notification No 49 (RE-2013)/2009-2014

New Delhi, Dated 1 November, 2013

Subject:- Export Policy of Onions.

S.O. (E) In exercise of powers conferred by Section 5 of the Foreign Trade (Development& Regulation) Act, 1992 (No. 22 of 1992) read with Para 2.1 of the Foreign Trade Policy, 2009-2014, the Central Government amends para 2 of Notification No.03(RE-2012)/2009-14 dated 29.06.2012 read with Notification No.41(RE-2013)/2009-14 dated 19.09.2013 with immediate effect.

The amended para 2 of Notification No. 03(RE-2012)/2009-14 dated 29.06.2012 will now read as :
“Export of onion for the item description at Serial Number 51 & 52 of Schedule 2 of ITC(HS) Classification of Export & Import Items shall be permitted subject to a Minimum Export Price(MEP) of US$ 1150 per Metric Ton F.O.B. or as notified by DGFT from time-to-time”.

Effect of this Notification:

Export of all varieties of onions as described above will be subject to a Minimum Export Price (MEP) of USD 1150 per MT.

(Anup K. Pujari)

Director General of Foreign Trade

E-mail: dgft[at]nic[dot]in

(Issued from File No. 01/91/180/922/AM’08/PC-III/Export Cell)

DGFT Public Notice No.35/(RE 2013)/2009-14 dated 30-10-2013

GOVERNMENT OF INDIA

MINISTRY OF COMMERCE AND INDUSTRY

DEPARTMENT OF COMMERCE

PUBLIC NOTICE No. 35 (RE-2013)/ 2009-2014

NEW DELHI, DATED THE 30^th October, 2013

Subject: Applicability of provisions of para 4.1.15 of FTP, as incorporated vide Notification No. 31 dated 1.8.2013 and amended vide Notification No. 48 dated 30.10.2013

In exercise of the powers conferred under Paragraph 2.4 of the Foreign Trade Policy, 2009-2014, the Director General of Foreign Trade hereby specifies the applicability of para 4.1.15 of the Foreign Trade Policy 2009-2014, as follows:

Where both export and import have been completed prior to 1.8.2013, such cases will not be covered under Notification No. 31 dated 1.8.2013 (as amended), irrespective of whether the concerned authorization (AA/DFIA) has been redeemed or not.

If only export has been fully completed / partly completed before 1.8.2013, then the corresponding import would be allowed subject to an undertaking from the authorization holder, that the inputs which have been actually used in the product already exported shall only be imported.

If the DFIA has been endorsed as ‘transferable’ by the concerned RA, before 1.8.2013, the provisions of Notification No. 31 dated 1.8.2013 (as amended) will not be applicable to such DFIA.

For every export made on or after 1.8.2013 provisions of para 4.1.15 of FTP shall apply. It is immaterial whether for such export, corresponding import has already been made (fully or partly) or import has not been made.

Effect of this Public Notice: Applicability of provisions of para 4.1.15 of FTP have been further elaborated.