CA Terminal: 12/15/13

Sunday 15 December 2013

ITAT weights past experience to fix reasonable provision for warranty needed in relevant year

IT : Provision for performance warranty should be considered on basis of past data of warranty expenditure

Interest paid by Indian branch to its foreign head office not taxable in India; no disallowance for

IT/ILT : Where Assessing Officer did not inquire into detail of expenditure incurred by Indian branch of Belgian bank in respect of services of credit analysis, etc. provided by head office, same was to be remanded back for consideration

Payment of duty on non-dutiable products tantamounts to reversal of credit taken in respect thereof

Cenvat credit : If duty is paid on final product and credit is availed and subsequently it is found that duty was not payable on final product, discharge of duty liability on final product by assessee would, prima facie, amount to reversal of Cenvat credit

Iran To Continue Importing More Goods From India

Iran will continue to increase imports from India despite a recent deal with Western powers that has eased economic sanctions against it in exchange for curbing its nuclear ambitions.

“A team of senior officials from Iran, who visited India recently, assured us that the West Asian nation is serious about continuing to engage more with India as we had stood by them in its time of trouble,” a Commerce Ministry official told Business Line.

The assurance has put to rest speculation that Iran may look at other trading partners more earnestly now that the sanctions regime was ending.

The key reason for the apprehension of a cutback in imports from India, according to industry observers, was India’s stance at the time of sanctions. India, seemingly under the US pressure, had drastically reduced crude oil imports from Iran, while nations such as China had sustained imports within the permissible limits.

The P5 plus One grouping of the major Western powers last month agreed to relax economic sanctions worth $7 billion in return for Iran’s promise to curb some of its nuclear activities. Iran will be watched (for any escalation in nuclear activity) for six months after which a permanent solution will be worked out, according to the deal.

India’s exports to Iran have more than doubled over the last two years and is likely to cross $5 billion this fiscal, aided chiefly by intensive business-to-business interactions by the two Governments. In fact, to sustain business even during sanctions, India and Iran had put in place a rupee payment mechanism for continuing oil trade. This was because foreign banks had refused to deal with Iran fearing action by the US.

Both nations had then started a joint effort to increase India’s exports to Iran so that the rupee payment for oil deposited in Iran’s account could be gainfully utilised. India imports petroleum products worth over $10 billion from Iran.

There has been buzz recently that Iran wants to do away with the rupee mechanism, while India sought for full payment of oil imports in the rupee. At present, India makes 45 per cent of its oil payments in rupees, which Tehran uses to purchase items such as rice, soyameal, tea, pharmaceuticals, and automobile parts. India pays the remaining trade balance in euros, but this too had been hit due to sanctions.

On whether India would seek full rupee payment for oil imports, Minister of State in the Ministry for Petroleum & Natural Gas Panabaaka Lakshmi had informed the Lok Sabha earlier this month that there was no such proposal.

According to Ajay Sahai, Director-General, Federation of Indian Export Organisations, every month letters of credit worth Rs 2,500 crore are being opened (by banks on both sides that are part of the rupee payment mechanism) which demonstrates that things are on the right track. “We are optimistic that exports to Iran would be to the tune of $5.5 billion this year,” Sahai said.

A delegation of Indian exporters led by FICCI is at the moment in Iran as part of the ongoing efforts to step up exports.

Source:- thehindubusinessline.com

Clay Craft India Plans To Set Up A Skill Development Center.

India's fastest growing manufacturer and retailer of bone china and ceramic tableware, Clay Craft India plans to set up a Skill Development Center at Ringus, Rajasthan. Group aims to train 2500 workers every year and in turn expects the growth if the industry by providing the skilled workers to the fine bone china and ceramic industry.

As per industry sources, Indian fine bone china and ceramic tableware industry's size is nearly Rs. 700 Cr. including organised and unorganised segments. Due to anti-dumping duty imposed on China by European countries, the export demand for Indian players is now growing at a rate of 30-35% comparing to earlier years. To meet this increasing demand, it is also expected that Indian players will double their production capacity and skilled labour will be also required.

Mr. Rajesh Agarwal, Director of Clay Craft India, says, "Indian fine bone china and ceramic industry is currently facing the 50% shortage of skilled labour. To meet the industry growth, the skilled labour supply will be the crucial point for any company's management. Our aim is to generate the skilled workers for the industry and in turn this will also help industry to develop the product quality standards to compete international market."

He further added, "We have purchased a land at Ringus-Jaipur and are planning to launch this center in by the end of 2014. Initially, we will provide training to existing workers for giving them technical learning and refining their skills by classroom training and factory training both. Later, we will also invite entries of freshers to make their career in fine bone china and ceramic industry."

This is the first of its kind initiative taken by any company in this industry. Clay Craft is planning to invest nearly Rs. 5 Crore to set up this center. This institute will also provide recruitment opportunities in this industry through the campus recruitment cell. Going forward, the group shall plan to launch few more such skilled development centers in other cities of country.

Source:- equitybulls.com

Illegally Mined Iron Ore Was Exported To China

Investigations into Jabalpur iron ore mining case in which top officials of city-based Indian Bureau of Mines (IBM) have been booked have revealed that huge quantities of the mineral allegedly to be illegally extracted from the mine finally reached China. The case came into limelight this September as CBI booked three senior officials including the second-in-command of IBM, the government agency for regulating mining operations. Two Jabalpur-based businessmen Sumit Agrawal and Pradip Mittal running M/s Pacific Exports the company which was allotted the mine were booked too.

The company has been charged with having extracted iron ore much beyond what it was permitted to. The IBM had fixed the limit of extraction at 80,000 tonnes a year from the mine at Selora Tehsil in Jabalpur district. Within seven months of the first year of operations, 17 lakh tonnes were mined. The value has been pegged at over Rs 1,000 crore.

The market was so flush with iron ore from this company that even sponge iron manufacturers for whom it is a raw material exported it in sizable quantities, said sources. These include quite a few firms from Madhya Pradesh and Chhattisgarh. The transactions were routed through various layers.

M/s Pacifc Exports mined the ore and sold it to different companies that included domestic sponge iron makers who ultimately exported the commodity. CBI is now looking whether sponge iron manufacturers are allowed to export ore they ostensibly buy for own consumption, said the source. The process of ascertaining the quantum of iron ore exported was underway for which the amount mined will have to be exactly assessed first, the source said.

However, sources in this industry said iron ore exports being free, there was no bar on even the sponge-iron makers selling the commodity abroad. "Certainly there is a shortage of iron ore in the country now after the crackdown on mines in Bellary pushing the rates to as much as Rs 7200 a tonne from Rs 4,000 earlier. Exports are further worsening domestic availability," said a senior officer in a city-based iron and steel unit.

Most of the consignments reached the Vizag port in Andhra Pradesh from where it was shipped to China. The investigators have compiled a list of around 50 companies that purchased the ore from M/s Pacific Exports and its related concerns. CBI is learnt to have started correspondence with these companies and some have confirmed having purchased the ore.

The affair is being dubbed as another Bellary and the IBM officers booked by the CBI are alleged to have turned a blind eye even as the rampant mining beyond the permitted limit continued. IBM did not hold a single inspection though it was mandatory soon after production crossed half the limit.

Source:- timesofindia.indiatimes.com

As Exports Fall Short Of Mark, Govt Sets $500B Target For Fy17

The government will come out with a new three-year export strategy soon to reset India’s merchandise export target beyond $500 billion a year by 2016-17. It is to be noted that the target for the three years ending in March will be missed by a wide margin.

“We are resetting our exports target for the next three years. It is expected to be ready by the middle of January. Yes, we did not achieve the target set prior to the global slowdown for three years ending March 2014. Now with the global economy recovering, we are likely to have a three-year target which will be more than $500 billion a year,” a top commerce ministry official told Financial Chronicle.

The new target will be for the three years beginning next April to March 2017.

When the economy was growing by over 9 per cent during 2004-08, India clocked over 22-27 per cent annual growth in exports. But subsequently it fell and for the most part of 2010-11 exports actually declined.

Later, with a fiscal and monetary stimulus, the economy picked up; so did exports which clocked $246 billion in 2011-12 when the target was $200 billion. Buoyed by this, the government set an ambitious target to double annual exports to $500 billion by 2013-14. This required annual exports growth of 26.7 per cent.

But actual exports are expected to be $325 billion in 2013-14, which the commerce ministry is confident of achieving.

India should be happy to clock 12-15 per cent export growth this year, a trade analyst said. In certain months clocking even double-digit growth appeared difficult, he added.

India’s export growth this year will be nowhere near the 22 per cent annual growth projected in the five-year foreign trade policy, which also expected $446 billion annual exports, analysts say.

There are lessons to be learnt from China, which kept its currency stable for decades, making manufacturing competitive and helping exports grow rapidly. “In India, our currency keeps on depreciating, hiding the deficiencies in our manufacturing,” Atul Joshi, MD and CEO of India Ratings & Research, said.

Unless India’s manufacturing became competitive, it was not possible for our exports to grow at the brisk pace of 25-30 per cent on a sustained basis like China, he said. India had a high economic growth potential, but it would take at least two years for the country to get back to 8 per cent GDP growth, he added.

Government economists say that from a longer-term perspective, accelerating growth in merchandise exports will build up the manufacturing strength of the economy. Production of goods meeting international standards requires awareness of how frontiers of technology and innovation are widening. There were also need to diversify India’s export basket and destination, they say.

The double-digit (11.7 per cent) growth in merchandise exports during July-October can be attributed to a tentative revival of global demand and a low base effect. In aggregate merchandise exports in the first 10 months of 2013 were 5.2 per cent and 2.6 per cent higher than in the corresponding periods of 2012 and 2011, respectively, India Ratings said in a report.

In the absence of any further global shocks and continuation of the easy money policy in the US and the euro zone, the revival in India’s export growth is likely to be sustained with a marginal positive bias, the report says.

Source:- mydigitalfc.com

India Likely To Meet Export Target Of $325 Bn

Industry bodies have exuded confidence that country's export target of USD 325 billion for financial year 2013-14 would be met even as growth in overseas shipments slowed to a five-month low in November, reports media.

"Export target for the current fiscal will be achieved easily and November figures may be seen as an aberration. Trade deficit will be within USD 140 to USD 150 billion in the current fiscal as against USD 190 billion recorded in 2012-13, helping to keep CAD (current account deficit) between USD 50 to USD 60 billion," said Rafeeque Ahmed, President, Federation of Indian Exporters Organisation (FIEO).

Exports increased 5.86 percent to USD 24.6 billion in November, the slowest pace in five months, as shipments of petroleum goods and rough diamonds declined. Imports stood at USD 33.83 billion last month, the lowest level since March 2011.

Imports last month fell 16.3 percent as inward shipments of gold and silver dropped sharply, helping to narrow the trade deficit to USD 9.21 billion, the second-lowest in this financial year. The gap in November 2012 was USD 17.2 billion, the report said.

"The continued rise in exports for the fifth month in a row is noteworthy. The first eight months of this fiscal have witnessed a nearly 23 percent decline in the cumulative trade deficit, which will considerably ease the pressure on the current account deficit and make the rupee more stable," Ficci president Naina Lal Kidwai said.

In April-November, exports grew 6.27 percent to USD 204 billion while imports stood at USD 304 billion.

"While a significant fall in trade deficit is a good development...it is largely a result of a steep import compression rather than a smart rise in exports," said Anupam Shah, chairman of engineering exporters body EEPC India.

"Falling imports are a welcome sign at this juncture. However, fall in the imports of capital goods owing to less investment activity and rising imports of consumer goods does not augur well," ASSOCHAM Secretary General, D S Rawat said.

"The evolving trend strongly indicates that India's trade balance in 2013-14 would improve. While exports may touch USD 325 billion, imports are expected to fall to USD 450 billion.

Gold and silver imports in November dipped by more than 80 percent from a year earlier to USD 1.05 billion. Oil imports dropped 1.1 percent to USD 12.96 billion.

"Compression of imports is a factor...However, we will be able to meet export target of USD 325 billion," said Sanjay Budhia, chairman of the CII Committee on Exports and Imports.

"The government should come out with a scheme to expand new products basket, duty drawback rates should be restored. Besides, the government should take a holistic view and make special economic zones viable," he added.

Source:- smetimes.in

Uttarakhand Should Be Made Sez: Narendra Modi In Dehradun

Addressing a rally of around 80,000 people at Dehradun in Uttarakhand on Sunday, BJP PM candidate Narendra Modi expressed his anguish over the manner in which the Central government handled the natural crisis.

He raised objections over the treatment meted out to him when he had come at the time of rescue and rehabilitation operations after the tragic natural crisis that left many pilgrims dead, injured and stuck without supplies. "I had come here to perform my duty but the government did not allow me," he said.

Modi lauded the brave men and women of Uttarakhand, whom he said have always made for fearless soldiers and dedicated servants to the national cause.

Speaking on the economic situation of Uttarakhand, Modi said he would like to see it being made into a Spiritual Environmental Zone (SEZ). That would enable greater number of people to visit the area and in turn help the localites ease their economic pressures.

Both Modi and BJP president Rajnath Singh were vocal against the Congress and the UPA government on a number of issues ranging from the mismanagement of borders to widespread corruption.

"The PM wants us to welcome intruders rather than dragging them away with our might. The ruling goverment has no respect for our soldiers even after they give their lives to defend the nation," Singh said.

Modi cited the recently concluded state elections as a signal for what is to come in 2014. "What four states did to Congress, whole India will do in the General Elections," he said.

Modi also hailed the legacy of Atal Bihari Vajpayee, who headed the NDA coalition government and served as the Prime Minister between 1998 and 2004, and was responsible for separate statehood for Uttarakhand. "We are his proud heir. He gave us Uttarakhand and now its my responsibility to fulfill his dreams," he said.

Recalling the tenure of the NDA at whose helm was the BJP, Rajnath Singh said, "Vajpayee is the real son of the soil and Narendra Bhai will now take the things further."

The rally was held at the local Parade Ground where, due to threats, the security was stringent. Despite that, locals turned up in numbers to hear the BJP PM candidate whose influence is steadily growing as the country gears up for the elections to the Lok Sabha next year.

Source:- indianexpress.com

Rise In Legal Gold Import

15-Dec-2013

Customs authorities have said that gold brought in by air passengers through the legal channel at the Kochi airport has jumped multifold while smuggling has ebbed.

While gold brought in by passengers, mostly from Dubai and other Gulf destinations, by paying the import duty in September was just 3.26 kg, it shot to 62 kg in the first two weeks of December. Since September, the import duty on gold collected at Kochi was Rs. 2.30 crore.

However, the smuggled gold seized was 20 kg in September. This dropped to zero this month. In November, 11.21 kg of gold was seized. Of this, 11 kg was from 54 Sri Lankan nationals arriving from Colombo.

Following a series of gold seizures, the Customs authorities intensified checking of passengers and their baggage deploying more personnel and using advanced equipment.

In the wake of the Central Government’s imposition of hefty duties and restrictions on gold imports, there had been a jump in smuggling through Kerala’s three international airports. A substantial part of the smuggling was from Dubai and other Gulf countries.

While the smuggling was mostly by carriers hired by smuggling rackets, the gold brought in through the legal channels was mainly by non-resident Keralites working in the Gulf.