Udyog Tax News Flash

February 2014

Customs: tariff values revised

The CBEC has notified tariff values for specified items under section 14(2) of the Customs Act 1962, by issue of notification 11/2014-Customs (NT) dated 11 February 2014. The tariff value of brass scrap (all grades) has been reduced to USD 3913 per MT. There are slight variations in the tariff values of palm oils, palmoleins and crude soyabean oil. The value of areca nuts has been revised from USD 1816 per MT to USD 1872 per MT. The tariff value of gold and silver has risen again. Now the value of gold in respect of which the benefit of serial numbers 321 and 323 of notification 12/2012-Customs has been availed is USD 421 per 10 grams (from the earlier value of USD 404 per 10 grams); and the value of silver in respect of which the benefit of serial numbers 322 and 324 of notification 12/2012-Customs has been availed is USD 663 per kilogram (from the earlier value of USD 635 per kilogram). The notification 11/2014-Customs dated 11 February 2014 under which the values have been notified can be seen at http://cbec.gov.in/customs/cs-act/notifications/notfns-2014/csnt2014/csnt11-2014.htm

Customs: threshold for declaration of Indian currency in baggage raised

The Baggage Declaration Form, effective from March 2014, will require an incoming passenger to declare Indian currency if he is carrying more than a specified value, which is the value allowed by the RBI. This was Rs 7,500; it has been raised to Rs 10,000 by amendment made to Form I prescribed under the Customs Baggage Declaration Regulations 2013, following an enchancement made by the RBI in the amount of Indian currency that is allowed to be brought in by a passenger. The amending notification 10/2014-Customs (NT) dated 10 February 2014 can be downloaded from http://cbec.gov.in/customs/cs-act/notifications/notfns-2014/csnt2014/csnt10-2014.htm The notification also changes the declaration of number of pieces of baggage, to include hand baggage.

Customs: Export of prohibited item under advance authorization: CBEC explains

The CBEC has issued circular 4/2014-Customs dated 10 February 2014 to convey the provisions of notification 1/2014-Customs dated 1/2014Customs, which allows export under advance authorization of products of chapters 7 and 15 of the ITC (HS) Schedule 2 that are otherwise prohibited

for export. The notification prescribes strict conditions for such export. The exporter is, inter alia, to furnish an undertaking which will contain details of imports and exports made under the authorization. The CBEC circular requires the customs officer to scrutinize this declaration to form a reasonable satisfaction that the goods under export are not the prohibited goods and record suitable comments in the EDI in this regard. Customs officers are also required to keep in view the circular 5/2010-Customs dated 16.3.2010 (http://cbec.gov.in/customs/cs-circulars/cs-circulars10/circ05-2k10cus.htm) and instruction no. 609/119/2010-DBK dated 18.1.2011 (http://cbec.gov.in/customs/cs-instructions/cs-instructions-11/cs-instrc-012k11.htm). The CBEC circular 4/2014-Customs can be downloaded from http://cbec.gov.in/customs/cs-circulars/cs-circ14/circ04-2014-cs.htm

Customs: Contempt proceedings proposed by CESTAT against Commissioner

The licence of Leadking Sea Air Forwarders Private Limited, a custom house agent (CHA) operating in Nagpur, was suspended, but no proceedings were instituted. The CHA approached the CESTAT for relief, and obtained an order that enquiry should be held and completed and a decision on his matter should be taken within three months. The authorities still did not act. The CHA came back again to the CESTAT, which set aside the order of suspension. However the customs authorities did not allow him to function as a custom house agent. Once again the CHA came to the CESTAT for relief. The CESTAT observed that the action of the Commissioner was in complete defiance of its order, and directed the Commissioner to implement its order forthwith; it also directed him to show cause within fifteen days as to why contempt proceedings should not be initiated against him. The events culminating in this order M/07/14/CSTB/C-1 dated 21 January 2014 of CESTAT Mumbai in appeal no. C/710/2010 filed by Leadking Sea Air Forwarders are narrated at http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail. php3&newsid=19713

Service tax: CESTAT upholds service tax on promotional activities by dealer

Premier Auto Garage, a dealer of Hindustan Motors, carried out sales promotion activities, for which it split the cost with Hindustan Motors. Service tax was demanded on the amounts received from Hindustan

Motors towards its share of expenses, on the ground that these were amounts received for promotional activities and were therefore taxable as Business Auxiliary Service. The Commissioner (Appeals) set aside the demand on the ground that there was no client relationship between the dealer and Hindustan Motors. However, in appeal by the department, the CESTAT upheld the demand, observing that though the activities may have benefited both the parties, yet the dealer will be treated as having provided service to the extent that he recovered the expenses from the other. This is one of the first definitive decisions on this controversial issue of services that are linked to a dealership. The order no. 58687/2013 dated 6 December 2013 was passed by CESTAT Delhi in appeal no. ST/426/2008 of CCE Chandigarh v Premier Auto Garage.

Central excise: Date from which higher rate of duty on cigarettes came into effect in 2012: CBEC clarifies
In the Finance Bill of 2012 the excise duty structure on cigarettes was changed, and the changes took immediate effect, that is, from 17 March 2012, under the Provisional Collection of Taxes Act. However, certain further changes were subsequently brought into the Finance Bill before its enactment in final form, and these had the effect of increasing the amount of duty payable. The Finance Act, which was effective from 28 May 2012, incorporated this changed duty structure for cigarettes. The CBEC at that time instructed its field formations under its post-Budget letter F.No. 334/1/2012-TRU dated 1 June 2012 that the higher rate of duty on cigarettes enacted in the Finance Act 2012 would be effective from 17 March 2012. However, trade and industry protested, and field formations were confused, and the CBEC referred the matter to the Ministry of Law and Justice for its opinion. The legal opinion was that the subsequent changes would have effect only from 28 May 2012, when the Finance Act came into effect upon receiving the assent of the President. The CBEC has accepted this opinion and issued Circular 981/5/2014-CX dated 11 February 2014 to this effect, which can be perused at http://cbec.gov.in/excise/cx-circulars/cx-circ14/981-2014cx.htm

Measuring the performance of customs and tax administrations: WCO calls for papers
The World Customs Organisation has announced that a conference will be held in June on Measuring the Performance of Tax and Customs Administrations in Emerging and Developing Countries. Academics,

researchers, civil servants and experts may send in papers even if they are not attending. An indicative list of topics (not exhaustive) is: the use of indicators to reform and evaluate the impact of reform the effects of measurement on practicesboth of civil servants and of users, and on hierarchical relationships the contextualization of informality within a reform based on quantification the potential quantification has to launch experimental procedures and measure their effects, before implementing them on a larger and more definitive scale quantification and its uses in terms of communication More about the conference can be perused at http://www.ferdi.fr/en/event/measuring-performance-tax-and-customsadministrations-emerging-and-developing-countries

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Updated and written by Radha Arun [radha.arjuni@gmail.com], Consultant to Udyog Software (India) Ltd.
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