CA Terminal: 01/06/15

Tuesday 6 January 2015

CLB quashed defective oppression plea filed by ex-employee to take revenge of his removal from Co.

CL: Where petitioner was sacked as an employee of respondent-company and as a result of personal rivalry petitioner filed oppression and mismanagement petition, which suffered from many defects, it was to be dismissed

AO could disturb net profit for MAT purposes if assessee failed to prove adherence to accounting pri

IT : Where in course of reassessment, Assessing Officer finds that certain income other than item of escaped income for assessment of which, assessment originally completed was reopened, also have escaped from original assessment, he is bound to assess such item or items of income, as well

Issue of unjust enrichment can be decided on basis of does and judicial precedents, says Madras High

Excise & Customs : Question 'whether incidence of duty has been passed onto buyer' has to be decided in light of documents submitted and precedent decision

Full risk bearer service providers couldn't be chosen as comparable for restrictive ITES service pro

IT/ILT : Where assessee was only a restrictive service provider of IT enabled design engineering services to its parent company, TPO could not make addition to its ALP by selecting comparables who were full fledged risk bearers owning intellectual property rights both related to technology and brand name

No reassessment alleging TDS liability on sum paid to AE if AO had analyzed such issue at assessment

IT/ILT : Assessment order passed by Assessing Officer in case of assessee engaged in general insurance business after making detailed inquiries could not be revised on ground that assessee had made payment to its AE for providing reinsurance business without deducting tax at source

Interest subsidy received under 'technology upgradation scheme' is capital receipt

IT: Interest subsidy received under Technology Upgradation Fund Scheme is capital receipt

No sec. 69 addition as assessee had proved that source of deposit was proceed of land by filing copy

IT : Where assessee explained source of bank deposit as sale proceed of agricultural land and produced copies of sale/purchase agreements, no addition under section 69 without disproving said evidences

Non-compliance with summons issued under sec. 142 due to failure of CA won't lead to levy penalty on

IT : Where assessee handed over summons to Chartered Accountant who could not appear due to his personal illness, assessee could not be imposed penalty under section 271(1)(b)

Govt. permits 100% FDI via automatic in manufacturing of medical devices

FDI/FEMA/ILT : Consolidated FDI Policy Circular of 2014 – Review of the Policy on FDI in Pharmaceutical Sector – Carve out for Medical Devices

Even prior to 2013 India-UK protocol benefit of DTAA was allowed to fiscally transparent firm establ

IT/ILT: Where non-resident partnership was a firm under section 2(23)(i) and therefore it was a 'person' under section 2(31)(iv) and attracted operation of paragraph 2 of article 3 of Indo-UK treaty, revenue's view that said partnership was not covered by said convention failed

CCI rightly rejected application for appointment of law expert in absence of LLB degree and work exp

Competition Law: Where petitioner had failed to attach law degree and work experience alongwith application for appointment as a law expert, CCI was justified in rejecting said application

No seizure of goods lacking declaration if it was proved that goods weren't meant for sale where the

CST & VAT: U.P. VAT - Where assessee was transporting raw rubber from Tripura to Faridabad through State of U.P. and Assessing Authority having found that declaration form as required under section 52 was not available with driver seized raw rubber, since assessee had successfully rebutted presumption under section 52, there was no occasion to seize goods

Mandatory pre-deposit is payable even in case of duty drawback; CBEC clarifies

EXCISE & CUSTOMS LAWS : Clarification on mandatory pre-deposit of duty or penalty for filing appeal

[DGFT Public Notice] : Online IEC applications: Postponement of the date of operationalisation of Public Notice No. 76 dated the 27th of November, 2014

To be published in the Gazette of India Extraordinary Part-I, Section (I)

Government of India

Ministry of Commerce & Industry

Department of Commerce

Udyog Bhawan, New Delhi

Public Notice 80 / (RE-2013)/2009-2014

Dated the 06 January, 2015

Subject: Online IEC applications: Postponement of the date of operationalisation of Public Notice No. 76 dated the 27th of November, 2014

In exercise of powers conferred under paragraph 2.4 of the Foreign Trade Policy (2009-2014), the Director General of Foreign Trade hereby postpones the date of operationalisation of the Public Notice No. 76 (RE-2013) /2009-2014 dated 27th of November, 2014 vide which a mendments in ANF 2A of Handbook of Procedure Vol. I (Appendices and Aayat Niryat Forms), 2009-2014 were made.

2. Vide the Public Notice No. 76 (RE-2013), IEC applications were mandated to be submitted online with effect from 01.01.2015. However, due to some unforeseen technical problems it has not been possible to operationalise the new online IEC system. Therefore, till such time the new online system is operationalised and made effective, from a new date to be notified subsequently, applicants seeking to obtain IEC may fill the Application Form and submit requisite documents and fees (Rs.250/) to the concerned jurisdictional RAs as per the procedure, as existing prior to 01/01/2015.

3. Effect of this Public Notice: Operationalization of Public Notice No. 76 (RE-2013)/2009-2014 dated the 27th of November, 2014, vide which a mendments in ANF 2A of Handbook of Procedure Vol. I (Appendices and Aayat Niryat Forms), 2009-2014 were notified, has been postponed and the new date for the same will be notified at a later date. Till such time the new system is operationalised, applicants seeking IEC may submit their applications in the earlier format as per the earlier procedure (existing prior to 01/01/2015), along with requisite documents and fees to the concerned jurisdictional RA.

(Pravir Kumar)

Director General of Foreign Trade

E.Mail:dgft@nic.in

[F.No.01/93/180/20/AM-13/ PC-2(B)]

CBEC asks officials to use 'designation based NIC email-IDs' and to appoint nodal officers for repor

EXCISE & CUSTOMS LAWS : Building of a comprehensive MIS in CBEC

CBDT issues draft standard operating procedures for administering TDS

IT/ILT : Standard operating procedures (SOP) for administering TDS incorporating the re-engineered processes developed by the CPC-TDS

Monetary limits for filing appeal would apply to cases of recurring nature and to composite orders:

EXCISE & CUSTOMS LAWS : Section 35B, read with sections 35G & 35L of the central excise act, 1944 – appellate tribunal – appeals to - clarifications on monetary limit for filing appeal in tribunal/courts

Govt. releases chart indicating sector-specific FDI policy for industrial and other sectors

FDI/FEMA/ILT : Consolidated FDI policy Circular of 2014 – mapping of the sector specific FDI policy in terms of national industrial classification (NIC)-2008

Mango Treatment For Exports

Fruit flies were a major impediment for mango producing countries like Pakistan to market the ‘king of the fruits’ to developed countries. Mr A.Q. Khan Durrani, a researcher, is credited with saving and promoting Pakistan’s mango exports at a time when Indian mango exports to the European Union were banned.

Different countries have their own requirements for processing and treatment, but the most commonly used method in vogue is hot water treatment (HWT), radiation and vapour treatment.

Around 300 rejected mango consignments led to the imposition of a ban by the EU on the import of Indian mangoes at the start of the mango season on May 30, 2014 for two years.

But Pakistan — whose rejected consignments to the EU during 2013 stood at a lesser 234 — was warned that it will face a ban if five more of its shipments were rejected.

At this critical juncture, Mr Durrani — who has invested 27 invaluable years of his life on research for developing an indigenous HWT technology suited to Pakistani conditions— came to the exporters’ rescue, which helped the country earn $57m from mango exports in 2014.

Talking to this writer at his industry and research centre located opposite Baqai University on Super Highway, Mr Durrani said he has designed world’s three largest HWT plants, each with the capacity to process 12 tonnes of mangoes per hour.

Giving details about the technology, he said he had initiated the research work in 1983, but it took him 27 years to come up with a full solution to the fruit fly issue, in 2010.

According to international quarantine standards for HWT, the recommended temperature is 48 degrees Celsius, and the time for processing is 60 minutes. This results in producing pulp (mango) temperature at 46.6 degrees Celsius.

However, Mr Durrani said his research showed that under HWT, the temperature should be kept at 50 degrees, so that pulp’s temperature of 47.5 degree could be achieved. This is necessary to completely destroy or de-fertile fruit fly eggs.

Supporting his theory of keeping the temperature higher by two degrees over international standards, he said the mango produced in India and Pakistan has a very thin skin and the fruit fly thus easily manages to sting deeper into the fruit to lay eggs.

Yet, a number of issues crop up with the higher temperature, particularly the excessive opening up of mango pores and cells. In order to deal with this situation, a system has been developed where these pores and cells are semi-sealed by use of wax and shellac during the HWT process.

During a tour of these plants, Mr Durrani drew the writer’s attention toward a unit inside a small room and next to the HWT plant, which releases the wax and shellac, when needed.

After using ethylene process to fast ripen the fruit, another process is used to prolong the mango’s shelf life, he added. For this treatment, another plant developed by him rapidly cools the fruit to reverse the ageing process and also stops dehydration caused by HWT.

He explained that only the first step of HWT is needed for air shipments, whereas the two subsequent treatments (of sealing the pores and reversing the ageing and dehydration process) are done for sea shipments due to the time-taking journey.

Surprisingly, the world standard for the shelf life of fresh fruits and vegetables is not more than 7-8 days, but Pakistan has managed to develop an indigenous technology that has increased it to 35-40 days. Thus, they could still be labelled ‘fresh’ and not frozen, Mr Durrani claimed.

Meanwhile, radiation is Australia’s quarantine standard for treating mangoes. But when a team of experts carried out successive inspection and audits from 2010 to 2013, they approved HWT for mangoes.

Durrani added that Australia is also facing similar issues, and even after treating its mango shipments to China in 2012, they were rejected. However, Pakistani consignments were cleared even after it took them 23 days to reach there, against 12 days it took Australia’s shipments.

The approval and certification given by Australia to both Pakistan and India for HWT in 2013 benefited our exports because no Pakistani mango shipments were rejected by Australia, but India had to face a ban as all its three consignments were rejected.

However, when the mango export season started on June 5, Mr Durrani held video conference with EU officials for 26 days. During the discussions, the EU officials pointed out that they had initially rejected two Pakistani mango consignments, but there were no complaints after that.

Mr Durrani explained that the initial mango shipments were directly made from approved orchards, but were not processed under HWT. However, all the subsequent shipments were being treated under HWT. He regretted that even after having a technological edge, Pakistan exported only 4,700 tonnes of mangoes to the EU.

In fact, Pakistan’s mango export target of 9,000 tonnes per annum should have captured India’s share of around 7,000 tonnes exports to the EU.

A qualified mechanical engineer Mr Durrani focused on a single point agenda: that being an agricultural country, Pakistan could not progress without giving due importance to the farming sector.

He also came up with a solution for processing kinnow for the export market, and guided growers and exporters. Around 250 kinnow processing plants are operating on his technology today, and the country is earning around $124-147m from kinnow exports.

Source:dawn.com

Iran Ban, Iraq Duty Hike To Take A Toll On Rice Exporters

India's rice exporters may end the current fiscal on a damp note as Iraq has doubled the import duty to 40%, while Iran has clamped an outright ban at a time when price realisation has slipped 15-20% in overseas markets.

A senior official of All India Rice Exporters' Association (AIREA) told ET that traders are currently shipping only rice consignments with permits of last year to Iran. "We are hoping that Iran will lift the ban. We are planning to send a delegation to Iran in early February to sort out the issue," said the official, requesting not to be named.

The official added that the sudden increase in import duty by Iraq has come as a major blow and it is bound to impact exports to the country.

According to an estimate by exporters, basmati shipments are likely to come down to 35 lakh tonne from 37 lakh tonne in the previous year.

Iran has barred rice from other countries as its local crop is reported to be good this year and is set to arrive in the market there.The country imported over 12.5 lakh tonne of rice during April-July 2014, compared with 14.5 lakh tonnes in the year-ago period.

In the past two years, Iran has bought over 2.5 million tonne of basmati rice from India. The average price realisation has declined to $800-1,100 per tonne from $1,0001,300 per tonne last year.

Exports of basmati rice in the first seven months of the current fiscal declined over 8% to 19.36 lakh tonne from 21.13 lakh tonnes in the year-ago period. However, exports of non-basmati rice between April and October 2014 stayed almost the same as in the previous year, at about 4.2 lakh tonne.

The lacklustre export demand of basmati rice has pushed down prices in the domestic market as well, with farmers getting Rs 3,200 per quintal for Pusa 1121 crop, compared with Rs 4,100 last year.

Retail prices of basmati rice may fall further in the domestic market if exports slump, said Bal Krishna Mittal, managing director of Gurdaspur Overseas, which deals in basmati rice.

Output of basmati rice in the kharif, or summer, season in 2014 was robust at about 81 lakh tonnes, up from 66 lakh tonnes in the previous year.

Source:economictimes.indiatimes.com

India To Formulate ‘Long Term’ Gold Import Strategy To Benefit Exporters

The Indian government today announced its plans to devise a long term strategy for importing gold into the country in order to ensure smooth supply of the yellow metal to jewelry exporters. The government is working out on the new strategy which will also keep the current and trade account deficits under check.

The Union Commerce Secretary Rajeev Kher has scheduled a meeting on January 7th, which will be attended by representatives from country’s finance ministry, the Gems and Jewellery Export Promotion Council (GJEPC) and the Reserve Bank of India (RBI). According to reports, the government intends to extend the ‘Make in India’ campaign into gold sector.

According to traders, the supply of gold has eased considerably following the abolition of the 80:20 rule. Any rise in gold imports may unsettle the country’s trade balance data. To limit gold imports into the country, the government also plans to introduce quota system on gold imports.

Meantime GJEPC points out that a major portion of the exporters’ capital is being blocked to obtain bank guarantees for customs, since the duty on gold imports have sharply risen from 2% to 10% during the past two years. The Council Chairman Vipul Shah urged the government to allow exporters to provide legal undertaking to Customs in place of expensive bank guarantees. He also called upon the government to scale up the duty drawback rates to catch up with the prevailing high gold import rates.

The country’s trade deficit had climbed to 18-month high during November ’14, mainly on the back of surging gold imports. The imports of the yellow metal during the month had totaled 151.58 tonnes, rising sharply by 38% when compared with the previous month.

Source:metal.com

Mca Portal Clocks Over 5 Million Views In 8 Months

Indian steel mills set a new record by importing an all-time high of over 8 million tonne of key steel-making raw material in the 2014 calendar year.

Lack of stocks in the domestic market and falling prices in the overseas markets encouraged iron ore-starved steel mills to look out for imported material during the year. Major producers like Tata Steel and JSW Steel were the largest importers during the year. JSW Steel had announced its plans to import close to 10 million tonne during 2014-15.

Compared to the previous years, 2014 witnessed heavy imports. In 2013, import of iron ore stood at a mere 1.2 million tonne. CY 2012 had seen previous highest level of imports at 3.1 million tonne. CY 2011 on the other hand had witnessed just about 600,000 tonne, according to data compiled by Delhi-based Ore Team Research.

“Conditions have changed through the years and in the process of correcting the illegalities and regularising the mining industry the judiciary and state governments had to take hard decisions, which led to these circumstances today,” said Prakash Duvvuri, head of research at Ore Team Research.

As a result, India has turned out to be a net importer of iron ore as exports have dipped amidst the shrinking global prices. India exported barely 7.14 million tonne in CY 2014 against 8.12 million tonne of imports, he pointed out.

“We were the third largest exporter a few years ago. This year, India’s exports will come to zero level, unless the government takes some corrective steps and withdraws export duty. The government should at least withdraw duty on Goan ore, which is of low quality and there is no market for it within the country,” Basant Poddar, vice president, Federation of Indian Mineral Industries (FIMI) said.

Looking ahead at 2015, domestic production is likely to improve. Hence, India might see its dependency on imports come down slightly but not sharply.

Since the iron ore production would take time to come back on track and PSU mines would gradually increase their figures, the situation in the domestic market is set to improve in 2015 rather than turning further bullish, Duvvuri added.

However, imports will continue to be higher even in 2015 because the opening up of mines in Goa and Karnataka will take more time. “We can expect some more mines to open this year only by September,” Poddar said.

Source:business-standard.com

India Turns Net Importer Of Iron Ore In 2014

Indian steel mills set a new record by importing an all-time high of over 8 million tonne of key steel-making raw material in the 2014 calendar year.

Looking ahead at 2015, domestic production is likely to improve. Hence, India might see its dependency on imports come down slightly but not sharply.

Source:business-standard.com

Transformer was an accessory to manufacture fertilizer; entitled for concessional rate of tax

CST & VAT: U.P. VAT - Where assessee was engaged in manufacture of fertilizer and Assessing Authority had issued a recognition certificate to it for purchase of raw material, accessories and component parts at concessional rate of tax and it had purchased transformer at concessional rate of tax, transformer was accessories to manufacutre of fertilizer entitled for concessional rate of tax

Department couldn't come to a new conclusion to deny exemption if facts/circumstances of case remain

Excise & Customs : When there are no changes in circumstances, either factual or legal, it would not be open to department to upset apple-cart and come to a new conclusion; therefore, department cannot be permitted to take different stands, unless there are good and cogent reasons for a change in future

Exporters Seek Including Tirupur In Smart City Programme

Tirupur Exporters' Association (TEA) has requested the Centre to include the knitwear hub of Tirupur city in Smart City Programme as part of its programme to set up 100 Smart cities.

In the pre-budget memorandum submitted to Finance Minister Arun Jaitley, TEA said the textile industry, which provides employment next to agriculture, contribute about 13.25 per cent of India's total export basket and realized export earnings worth USD 41.57 billion in 2013-14.

This IT-driven programme will be helpful to faster decision making in the business and efficient communication apart from leading a quality life in Tirupur, with a populaton of nine lakh, and has recorded Rs.18,000 crores in Exports and Rs.9,000 crores in Domestic market in 2013-14, it said. The exports are marching ahead, with a new target of doubling to Rs.36,000 crore in the next three years, it said.

Despite the availability of resources for manufacturing textile and garment products in the country itself, the garment sector has not grown up to its expectations due to various adverse factors, TEA president A Shaktivel said in the memorandum.

He requested the minister to include the deduction of 15 per cent of value of new machinery acquired and installed in the year under provision of Sec.32 Ac, available to Corporate assessees, to the non-corporate sector also, by scaling down the ceiling of investment to Rs one crore from Rs.25 crore.

Under the Export Performance Certificate Scheme, the garment sector utilized only Rs.727 crore against Rs.2,712 crore for 3 per cent of FOB value of garment exports at Rs. 90,402 crore in 2013-14, he pointed out.

As the duty free import percentage has been increased to 5 per cent from July 10, the non-utilization value could be still on higher side and therefore, to utilize the given facility out of 5 per cent, a maximum of 3 per cent of the licence may be allowed for import of fabrics without keeping restriction of 1,000 metre, he said. The government should also expedite the signing of Free Trade Agreement with European Union and Canada.

As the cost was on higher side and also to encourage more number of exporters enter the garment field, Technology Upgradation Fund scheme subsidy for exporting units should be increased and interest subsidy should be increased from 5 to 8 per cent and Capital subsidy from 10 to 15 per cent, the memorandum said.

Source:economictimes.indiatimes.com

Depreciation at 15% and not 30% allowed on lorries used for captive transportation and not in busine

IT: Lorries let out by assessee under an arrangement to clay contractors to supply clay to assessee, would be entitled to depreciation at 15 per cent as applicable to lorries not used in business of hiring

Rupee Strengthens To 63.34 After Crude Prices Drop To 5 1/2-Year Low

The Indian rupee on Tuesday strengthened against the dollar after international crude oil prices fell to a five-and-a-half-year low, raising hopes among investors that it will help the government to achieve its fiscal deficit target of 4.1% of gross domestic product (GDP). Auction proceeds from coal mines and spectrum is also likely to help the government meet its deficit target.

The Indian currency opened the session at 63.37 per dollar compared with its previous close of 63.42. At 2pm, the rupee was trading at 63.34 a dollar, up 0.13%.

Brent crude oil suffered a 1.8% drop on Monday to $55.42 per barrel, a fresh low going back to April 2009. Since a recent peak in June, the price of the international benchmark has now fallen by 51.8%, due to concerns of slowing demand coupled with a glut of global supply, Reuters reported.

Prime Minister Narendra Modi on Monday chose the ordinance route to allow the auction of iron ore and other minerals, the eighth time the seven-month-old government used executive powers to push through a key decision, ignoring criticism that it is bypassing Parliament.

The cabinet also cleared the Telecom Commission’s recommendations on spectrum auction that is expected to begin next month, the government said in a statement.

The fiscal deficit as a percentage of budget estimates from April to November has already reached 99% of the full-year target, the highest since the Lehman crisis, due to weak revenue collections.

India’s benchmark equity index, S&P BSE Sensex, was trading at 27,307.57 points, down 2%.

Most of the Asian currencies were trading higher against the dollar. The South Korean won was up 1%, Japanese yen 0.42%, Philippines peso up 0.21%, China offshore spot 0.19%, Singapore dollar 0.15%, Thai baht 0.15% and China renminbi 0.11%. However, the Malaysian ringgit was down 0.62%, Indonesian rupiah 0.22% and Taiwan dollar 0.04%.

The yield on India’s 10-year benchmark bond stood at 7.889% compared with its Monday’s close of 7.892%. Bond yields and prices move in opposite directions.

In 2014, the rupee weakened 2% against the dollar, while foreign institutional investors bought $16.12 billion from local equity markets and $26.36 billion from the debt market.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 91.409, up 0.03% from its previous close of 91.378.

Source:livemint.com

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