TaxTMI Updates e-Newsletter
Jan 04,2012

Summary: A divergence exists between AS 19 accounting treatment, which capitalises leased assets and allocates depreciation to the lessee, and income tax rules under Section 32 as clarified by a CBDT circular, which do not automatically recognise such accounting capitalization for tax depreciation. The draft DTC attempts to define "financial lease" and place depreciation with the lessee but the proposed definition is defective-requiring full cost recovery through rentals and ownership by lessee at lease end-thereby failing to capture the full accounting concept and leaving resolution to fact driven judicial analysis and the substance over form principle.

Summary: Central Board of Excise and Customs issued Notification No.89/2011 Customs (N.T.) dated December 30, 2011, formally notifying tariff values in US dollars per metric tonne for specified edible oil categories, brass scrap (all grades), and poppy seeds, with many edible oil values stated as unchanged, and providing chapter headings, tariff items and the corresponding US$/MT benchmark figures for customs valuation and assessment.

Summary: Exports in November 2011 showed modest growth while cumulative April-November 2011-12 exports rose significantly year-on-year. Imports grew markedly faster than exports both in November and cumulatively, driven in particular by a strong rise in crude oil imports; non-oil imports also increased but at a lower pace. These relative movements caused the trade deficit for April-November 2011-12 to widen compared with the same period in the previous year.

Summary: Qualified Foreign Investors may directly invest in Indian equities under the Portfolio Investment Scheme with Central Bank general permission. QFIs, resident in FATF compliant and IOSCO MoU signatory jurisdictions and excluding FIIs/sub accounts, face individual and aggregate limits of 5% and 10% of paid up capital respectively, in addition to existing investor ceilings. Investments must be routed through a SEBI registered Qualified Depository Participant, with a single demat and trading account, remittance into a single rupee pool account, DP responsibility for KYC, execution and tax deduction, and comparable risk management, margining and taxation; regulators will issue operational circulars.

Summary: Search and seizure and business surveys under the Income Tax Act are undertaken on the basis of specific, credible information and prior verification, with IT tools like CASS and ITDMS used to select and verify cases unobtrusively. The Note reports a decline in the number of search warrants and surveys in the current year compared with earlier years, asserts that substantial undeclared income has been detected and admitted in searches and surveys, and stresses that intrusive action is taken only when unavoidable, given the relative infrequency of such actions among the taxpayer base.

Summary: Amends notification No. 21/2005 by substituting HSN headings in the tariff table: 2403 10 10 is replaced by 2403 11 10 and 2403 10 90 is replaced by 2403 19 90; the changes take effect from 1 January 2012 under the powers of section 5A of the Central Excise Act, 1944 read with section 136(3) of the Finance Act, 2001.

Summary: Substitutes revised HSN entries in the Table of Notification No. 26/2001-Central Excise by replacing the column (2) entries at S. No. 2 and S. No. 4, under the powers of sub-section (1) of section 5A of the Central Excise Act, 1944 read with sub-section (3) of section 136 of the Finance Act, 2001, with the substitutions to take effect from 1st January, 2012.

Summary: Amends multiple Central Excise exemption notifications by substituting, omitting and inserting tariff/HSN entries in the Tables of specified notifications under section 5A of the Central Excise Act, thereby reclassifying goods across exemption schedules; the notification makes precise replacements of tariff item references, deletes certain serial entries and inserts new entries as listed, and takes effect from the commencement date stated in the instrument.

Summary: Amendment of tariff entries substitutes specific Harmonized System of Nomenclature (HSN) codes in two existing Central Excise notifications: Notification No. 62/1995-Central Excise replaces the tariff item at S. No.16 with two HSN codes, and Notification No. 20/2005-Central Excise replaces the figures at S. Nos.4 and 5 with updated HSN figures and wording as specified. These substitutions take effect from 1st January, 2012 and are issued under the powers conferred by section 5A(1) of the Central Excise Act, 1944 read with section 3(3) of the Additional Duties of Excise Act, 1957.

Summary: The Central Board of Excise and Customs appoints specified customs officers as Central Excise Officers and invests them with the powers under the Central Excise Act, the Central Excise Rules and Chapter V of the Finance Act to exercise authority in relation to service tax refunds arising from the stated service-tax notification and within the territorial jurisdiction specified in the earlier customs notification.

Summary: The Central Excise (Fifth Amendment) Rules, 2011 amend rule 12(1) of the Central Excise Rules, 2002 by omitting the second proviso and substituting the opening words of the third proviso with "Provided further that", thereby modifying the conditional provisions governing filing of central excise returns for manufacturers in the textile and garment sectors; the amendment takes effect on the stated commencement date.

Summary: Amendment inserts a requirement that assessees referred to in the second proviso to sub rule (1) of rule 12 must file return in Form ER-3 for the quarter beginning 1st October and ending 31st December, 2011, as an insertion after part (C) of Notification No.16/2011 Central Excise (N.T.), made under the Central Excise Rules, 2002 and the CENVAT Credit Rules, 2004.

Summary: The Government amends the principal central excise notification by omitting S. Nos. 135, 136 and 137 from the Table and inserting, after S. No. 143, a new S. No. 144 described as HSN 9619 covering all goods with the specified duty rate; this amendment takes effect from the notified commencement date.

Summary: The Central Government amended Notification No. 119/2010 Customs to revoke the anti dumping duty on subject goods originating in or exported from Saudi Arabia by omitting serial numbers 5 to 13 and their entries from the Table to the earlier notification, with the omission taking effect from the date of publication of this notification in the Official Gazette.

Summary: The Central Government, exercising powers under the Customs Act and acting in the public interest, amends Notification No.27/2011-Customs by directing that Serial Nos. 21 and 22 and the entries relating thereto in the Table to that notification shall be omitted, thereby altering the tariff exemption schedule as published in the Gazette.

Summary: The Central Government, under section 25(1) of the Customs Act, 1962, amends Notification No. 21/2002-Customs by substituting specified tariff classification codes against several table serial numbers, thereby revising which commodity codes are covered by the exemption notification; the amendments take effect from the stated commencement date.

Summary: Amendment to a customs exemption notification substitutes the tariff description for S. No. 4 in the Table so that column (2) now reads "Areca nut falling under subheading 0802 80," thereby altering the classificatory description that determines the scope of the exemption; the amendment is made under statutory powers and is effective from 1st January, 2012.

Summary: Amends the miscellaneous exemption notification by substituting the column (2) entry for S.No.47 with "0801" and for S.No.53 with "1701 13 10, 1701 14 10", changing the tariff classifications; the amendment takes effect on 1 January 2012 and is recorded in the Gazette as a formal substitution in the principal notification.

Summary: Amendments substitute specified tariff classification entries in the Tables of Notifications Nos. 25/1999, 22/2007 and 27/2011 by replacing listed tariff headings with newly specified codes under the authority of section 25(1) of the Customs Act, 1962, and direct that these substitutions take effect from the commencement date stated in the notification.

Summary: The Board assigns a show cause notice issued by a revenue intelligence unit to the Commissioner of Customs (Export Promotion), Mumbai, for adjudication, notifying the issuing office and relevant administrative recipients of the transfer to effect formal customs adjudication.

Summary: The Board assigns a Show Cause Notice issued by the investigative unit to a designated customs adjudicating authority for adjudication under the Customs Act, effecting an administrative reassignment of the proceedings to the receiving commissioner's jurisdiction and notifying the relevant offices to transmit the case for adjudicatory action.

Summary: A Show Cause Notice and corrigendum concerning alleged customs matters were assigned to the Commissioner of Customs (Preventive), Jamnagar, for adjudication under the notification issued pursuant to section 4 of the Customs Act, thereby transferring adjudicatory responsibility from the issuing investigative wing to the designated customs adjudicating authority to enable statutory adjudication under the customs non tariff framework.

Summary: The Board, exercising powers under the Customs Act, substitutes the Table in Notification No. 36/2001-Cus (N.T.) with an updated Table specifying tariff values in US dollars per metric tonne for listed imports, including edible oils (with most values unchanged), and newly specified values for brass scrap (all grades) and poppy seeds.

Summary: Central Government notification approves inclusion of an additional 76.893 hectares into the sector specific Special Economic Zone for information technology and information technology enabled services at Village Gangaikondan, Tirunelveli, increasing the SEZ total area to 117.373 hectares and listing the specific survey parcels added.

Summary: Compulsory electronic payment of tax, interest, penalty and other amounts under the Delhi Value Added Tax Act is mandated for registered dealers and TAN holders through specified banks' e payment portals; Part 'C' of the challan with the unique Challan Identification Number printed on internet payment will serve as proof with returns, and dealers must obtain signed and stamped Part 'D' from the bank, with credits effected after Reserve Bank of India confirmation.