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Bizsol UPDATE November - 2013

The most important development for an averageIndian at the moment is not the sorry state of the nationmired in corruption, degenerating moral values or eventhe upcoming big circus of them all - the generalelections of 2014. It is the impending departure ofSachin Tendulkar from the cricket pitch - that boy fromthe neighbourhood with the same middle class valueslike you and me. He straddled the cricketing worldlike a colossus conquering records at will as he passedby. Indians adore him for his cricket. But many lovehim more than just for cricket. He transcended tosomething far bigger. There are a number of lessonsone can learn from him as a person beyond cricket.Even as he is preparing to hang up his boots after anillustrious career in cricket in a country where thisgame is more than a religion let us look at the reasonswhich make Sachin Tendulkar the icon that he hasbecome. In his long career in cricket in a toxicenvironment riddled with scams and dominated bywheelers and dealers not once has his name comeup as a suspect for any shady fixing deals so muchso that if Tendulkar gets out the bowler gets creditand not any bookie in a far off land. Sachin RameshTendulkar stands tall as much for his personalcharacter as for his cricketing genius. Even when hestarted enjoying the fruits of sponsorships andendorsements of late which his cricket brought himno one grudged him, for his is the classic IndianDream for the middle class. This is especially so ifyou look at some of the stars of the brash younggeneration who not only flaunt their celebrity statuson their flannel sleeves but also indulges in vain machoexhibitionism. Humility is a difficult virtue to practiceespecially when you reach such giddy heights withsuch a fan following that Sachin enjoys today. Afterhis 200th Test match at Wankhade Stadium whenthis diminutive man walks back to the pavilion theworld would be bidding farewell to the greatestcricketer ever produced. All eyes then would be on

FROM THE DESK OF THE CHAIRMAN

what he would be doing after his retirement in hisnext innings away from the middle.

Diwali brought some cheer to the Indians in the formof a real rocket with firecrackers. India joined the eliteclub of nations who have managed to send a rocketto Mars. The news was heartening when onecompares our Mars mission with that of China. Foronce we are one up on them. Sending a rocket to theouter space may be the easiest part of this mission.What it does over the next nine to ten months when itis supposed to orbit Mars would be the challengingpart. We will perhaps have to wait till the final resultscome by then. Meanwhile it would be a worthwhileexercise to evaluate whether the entire exercise isindeed worth the money which is spent on thismission. A rocket to the outer space is not a toy evenfor a nation. It is not just about proving a point orstanding up and being counted in the comity ofnations. The price is too big for such frills and thrills.Unlike in the developed parts of the world in Indiawhere accountably is always in short supply informeddebates on such important issues are hard to comeby. In the name of sovereign secrecy even broadstrategic intents are shrouded in mystery. It may bepolitically incorrect to differ on issues which generateso much of national pride. But it will be in order to beaware that a mission to Mars costs the earth. A pricetag of something like Rs. 450 Crores is as stupendousas the achievement of the scientists who made thismission possible. The political executive will need toshow you the big picture. We are not talking about aone-off mission to an unknown planet to show caseour scientific capabilities. Let us not forget that whilespending millions on this mission millions of hungrypeople in India sacrifice something somewhere.Should India not be better off focussing on firingcommunication satellites and the like without going infor open ended missions like these? What is worse is

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that the Mars satellite is carrying just one-third of itsrated payload as it had to be launched in 2013 forsome technical reasons. It would suit the incumbentgovernment in an election year to showcase it as itsachievement and it would satisfy the principalopposition party who loves to whip up nationalisticfervour at the drop of a hat. What about the man onthe street? An urge to photograph a beautiful gardendoes not justify setting up a factory to producecameras. By the same logic is there something Indiagoing to bring out from the mission which theAmericans do not know and willing to share from itsearlier mission to Mars?

The Dravidian parties in Tamil Nadu are at it again.They want the Prime Minister to boycott the Summitof the non aligned nations to be held at Colombo.Once again regional parochialism is holding thesovereign interest to ransom. Dealing with issues ofethnic Tamils with the political parties in Tamil Naduis like dealing with an emotionally charged mob onthe streets. The only thing they do not understand isreason. But then again who will reason with achauvinistic people for whom Tamil pride is moreimportant than national honour. So far it has been acase of states in the country crying hoarse thatsuccessive central governments have undermined thefederal structure of the Constitution. It is now the turnof the Central Government to feel aggrieved.Repeated demands to scuttle nation - level dialoguesand other initiatives severely undermine diplomaticprotocols and international practices exposing onceagain the absence of decisive leadership at the top.The country of Rajas (for kingdoms) is now run byPrajas (more like mobocracy than democracy). As ifwhat is happening in Tamil Nadu is not bad enoughthe Telengana Rashtra Samithi (TRS) is whipping uppassions by trying to drive away the people ofSeemandhra from Hyderabad. We are now enteringdangerous territories by promoting fissiparoustendencies. We can now expect extremely strongbacklash from people from Seemandhra. Probablywith this ill conceived move the TRS will unwittinglyend up keeping the entire state of Andhra Pradeshon the boil preventing the creation of the state ofTelengana at least for some time to come.

It was interesting to read about the international"parallel economy" when an ATM was set up in

Canada for what are called "Bitcoins". Now it is officialand you cannot be dismissive about it. In India howRBI would ban or regulate its spread is another matter.Bitcoins are called crypto currency or cyber currency.Transactions happen online with no regulatoryauthority having any control over it. Those adept indealing with the grey economy it may be only a matterof time before people in India who wish to keep theirtransactions anonymous take to this system in a bigway. The biggest Bitcoin exchange is now in China(BTC China) headed by no less a person than the exYahoo and Wal-Mart executive by the name BobbyLee who has a degree in Computer Science! The newad for Bitcoin could as well proclaim "Welcome to thevirtual world - exciting times ahead". Good luck to thepaper currencies of the world.

It is generally believed that errors of commission aregraver than errors of omission. Not necessarily soalways. If you are in a position of influence with thepower to make a difference in the lives of others andstill do nothing about it, you are doing a disservice tothe society. But if you are in a position to influencethe outcome in a given situation which could preventa negative impact and still do nothing about it, it isakin to committing a crime and not just a disservice.Look at the way Dr. Manmohan Singh had beenconducting himself. When Raja was looting the nationhe looked the other way. It now turns out that whenShibu Soren as the coal minister was plundering theexchequer the PM again chose to look away and donothing about it. He was doing all this to uphold'coalition dharma'. This statement is an insult to theword "dharma" itself. Now let me indulge in someetymological exercise. No one has so far succeededin precisely defining "dharma". Like "Om" it is uniquelyIndian. When a duty is cast on you to safeguardsomething or you are accountable for its performanceyour attempt to shy away from discharging this solemnduty can never be called "dharma" of any variety. Evenin a coalition era when adjustments and compromisesare called for you do not sacrifice your basic valuesystems in the name of coalition compulsions. Youare the Chief Executive of the country and not awordsmith spinning out words and phrases to justifyyour inactions. The caged parrot (read CBI) may betrying to fly out of the cage. Or so it seems. If the CBIgoes ahead with its plan to file a charge sheet

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implicating the former Coal Secretary why should theformer Coal Minister (in this case the PM) be leftalone?

It is fascinating to watch how Sharad Pawar plays hispolitics. Come election time he becomes the masterof double-speak. However much you watch himclosely or listen to him carefully you will still be at aloss to understand what he really means when hesays something. He becomes so ambiguous that youfind it difficult to figure out what he means every timehe says something. He has mastered the fine art ofsaying something without telling anything. He is at itagain now that the elections are around the corner.An ambitious man with pliable value systems havingcultivated friends in all political parties, politickingcomes naturally to him. Pawar knows only too wellthat the 2014 elections would be his swan song. Itwould also be the last chance for him to realise theultimate ambition of his life. A hung Parliament with amotley crowd of disparate political entities should bea happy hunting ground for the politician in Pawar. Allpoliticians without exception would be watching closelyevery move he makes from now on and even afterthe elections are over.

In the distant past elections in India were fought onthe basis of man-power - the cadres who mobilisedvoters to vote for one party or other. Then it all changedto fights on the basis of muscle- power, especially inthe cow belt - booth capturing, intimidation, bogusvoting, et al. Now a new era is born where the electionsare sought to be fought on the basis of mind-power.The BJP under Narendra Modi has acquired the firstmover advantage in the cyber space. Modi appearsto have converted his appeal to the youth and theeducated class of voters to lead the attack from thecyber space. Here comes another ace from BJP. Theparty wants Modi to look prime ministerial. BJP hasdemanded SPG cover for Modi just like that of thePrime Minister. Their justifications are impeccable.Modi arguably has the highest threat perception. TheGandhi family has such protection. This demandshows how shrewdly the party has put the Congressparty on the defensive and in a no-win situation. Ifthey agree to the proposal Modi will look prime-ministerial (perhaps a little more than the presentincumbent). If they deny the request they would lookvengeful. Heavens forbid, if something happens in

any of Modi's rallies Congress would lose the electionsthen and there. Brilliant strategy. Congress now iswaking up slowly to the kind of threat they areencountering. Suddenly they are finding that the rulesof engagement for the coming elections have changedbeyond. The Grand Old Party of the land with its wornout strategies looks ill prepared in a modern world.

Barack Obama has a serious problem, all of his ownmaking. Having come from a less than modestbackground to the highest office of the land heconsiders himself to be a man of destiny created byGod for a purpose. In the pursuit of that purpose henow feels that it is his bounden duty to his people tokeep them safe by means fair or foul. Everyone knows,even without the Assanges and the Snowdens tellingus, that the Americans spy on others. The primetargets used to be institutions and known suspects.Now Obama feels compelled to take his cameras tothe private rooms of the heads of governments ofeven friendly countries like France, Germany andEngland. These countries might even have gone alongand looked the other way under normal circumstancesin the past; but not when the cameras are chasingthem and make them vulnerable. They couldn't careless about the intentions of the American President,even if they were to be noble. Obama has lost thetrust of those who trusted him. One can discern thesame mindset on the part of the US President whiledealing with the issue of Drone attacks on enemycamps in Pakistan and Afghanistan. For Obama it isa precise operation to take out the enemies withoutspilling American blood. According to him the endjustifies the means. Pretty little has been written aboutthe extent of collateral damages caused to innocentcivilians and their properties in such attacks exceptwhen the casualty figures are very large. A reportcommissioned recently by Amnesty International hasanother sordid story to tell. The Drones, known asthe Angels of Death kill more civilians than militants.That explains the intense hatred the Pakistanis haveagainst the US and the government of the day whichsupports the aggressor - a perfect breeding groundfor potential militants and terrorists sworn to revengekilling. What a paradox. You kill a militant to raise anarmy of militants!

Thank you.

Venkat R. Venkitachalam

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CUSTOMSNOTIFICATIONS

Tariff• Due to name change of "National Dope Testing

Laboratory" to "National Anti-Doping Agency"exemption notification no 146/94 has beenamended. [Notification No. 48/2013 dated30/10/2013]

• Import of goods into India from Malaysia willattract much lesser duties on majority of theproducts since, there is a drastic reduction ofduties when imported from Malaysia.[Notification No. 47/2013 dated 10/10/2013]

Non-Tariff• Tariff value has been increased of Crude Palm

Oil, RBD Palm Oil, Others - Palm Oil, CrudePalmolein, RBD Palmolein, Others - Palmolein,Crude Soyabean Oil, Brass Scrap (all grades),Poppy seeds, Gold, in any form and Silver, inany form. [Notification No. 104/2013 dated 30/10/2013], [Notification No. 106/2013 dated 30/10/2013]& [Notification No. 107/2013 dated30/10/2013]

Safeguard• No new notifications!!

Antidumping Duty• Anti-dumping duty has been imposed on imports

of paracetamol (hereinafter referred to as thesubject goods) falling under tariff item 2922 2933, originating in or exported from, People'sRepublic of China for a period five years.[Notification No. 26/2013 dated 28/10/2013]

• All imports of the vitrified and porcelain tiles byM/s FoshanQiangbiao Ceramics Co. Ltd, China

PR (producer) through M/s SheenwayCorporation Ltd., Hong Kong (exporter) whichhave been subjected to provisional assessment,shall be subjected to final assessment on thepayment of anti-dumping duty of ̀ 155 per squaremeter. [Notification No. 25/2013 dated22/10/2013]

• Anti-dumping duty has been imposed on importsof Methylene Chloride, falling under Chapter 29,originating in, or exported from the EuropeanUnion, United States of America and Korea RP,and imported into Indiafor a period not exceedingsix months. [Notification No. 24/2013 dated21/10/2013]

• Anti-dumping duty has been imposed on importsof Ductile iron pipesfalling under tariff items 730300 30 or 7303 00 90, originating in, or exportedfrom, People's Republic of China and importedinto Indiafor a period of five years. [NotificationNo. 23/2013 dated 10/10/2013]

• Anti-dumping duty has been imposed on importof Bulk Drug Cefadroxil Monohydrate, fallingunder Chapter 29, originating in or exported fromthe European Union (hereinafter referred to assubject country), and imported into India forperiod of five years. [Notification No. 22/2013dated 10/10/2013]

Circular• CBEC has instructed to the Chief Commissioners

for encouraging stakeholder participation andexpeditious resolution of local issues (withoutthese being escalated to the Department/Board)to conduct-

(a) The Permanent Trade FacilitationCommittee (PTFCs) are held regularly withminimum of one meeting each per monthon a pre-decided date.

(b) Minutes of the PTFC meetings are sent to

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the Board through DG, Directorate Generalof Export Promotion on issues having allIndia implication, if any.

(c) Apex trade bodies are allowed to attend thePTFC meetings along with their localconstituents, who are members of thePTFC.

(d) Efforts are made to regularly review themembership of the PTFC with the aim ofincluding all stakeholders in the Customsfunctioning.

(e) Chief Commissioners/Commissioners arereceptive to meeting local and apex tradebodies even outside the framework of thePTFC.[Circular No. 42/2013 dated 25/10/2013]

• It is clarified that an importer while availing ofBCD exemption on steam coal under FTAnotification No. 46/2011-Cus can simultaneouslyavail of concessional CVD at 2% undernotification No. 12/2012-Cus. [Circular No. 41/2013 dated 21/10/2013]

• The amnesty scheme for closure of EPCGlicenses for non-fulfilment of export obligation,granting immunity from penalty will not cover forcases where export obligation is not fulfilled &and license is still valid for the purpose offulfillment of export obligations. Similarly, licenseswhich have been already have been closed andpenalty is paid, then no refund can be claimed.However, there may be cases of calculationmistakes to be dealt on merits. Further a formathas been prescribed for monthly report to besubmitted by Chief Commissioner of Customs /Customs (Prev) / Central Excise & Customs toChief Commissioner of Customs Delhi Zone.[Circular No. 40/2013 dated 09/10/2013]

• Relevant date for calculation of interest for thegoods warehoused will be the date of deposit ofgoods & not the date of bill of entry, interest willbe calculated after 90 days from the date ofwarehousing. [Circular No. 39/2013 dated 01/10/2013]

Instruction• Procedure and format for verification/audit of

applications filed under Duty Drawback Schemehas been prescribed. [Instruction No. 603/01/2011-DBKdated 11/10/2013]

CENTRAL EXCISENotifications

Tariff• Exemption from central excise duty on specified

goods such as (a) Scientific and technicalinstruments, apparatus, equipment(includingcomputers);(b) Accessories and spare parts ofgoods specified in (a) above andconsumables;(c) Computer software, CompactDisc-Read Only Memory(CD-ROM), recordedmagnetic tapes, microfilms, microfiches;(d)Prototypes supplied to Departments andlaboratories of the Central Government andState Governments, other than a hospital hasbeen granted subject to condition specified in thenotified in the notification. [Notification No.28/2013 CE dated 01/10/2013]

Non-Tariff• Assesses of Kolkata under the jurisdiction of

"Chief Commissioners of Income-Tax , Kolkata -I , II , III and IV , Kolkata and the Commissionersof Income- Tax (Central) - I , II and III, Kolkataand Director of Income-Tax (InternationalTaxation), Kolkata" will be entitled to opt underLarge Taxpayers Unit. [Notification No.13/2013CE NT dated 25/10/2013]

Instructions• Board instructs the Chief Commissioners that all

efforts should be made to ensure that the claimsof rebate are disposed of within 30 days fromthe date of receipt of the claim complete in allrespect, except those requiring pre-audit.Further, claims requiring pre-audit may also beprocessed expeditiously. [Instruction No.267/39/13-CX.8 dated 01/10/2013]

SERVICE TAXNotifications• Exemption has now been granted even to the

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services provided to serving food or beveragesin canteen of the factory covered under theFactories Act, 1948 (63 of 1948), having thefacility of air-conditioning or central air-heatingat any time during the year. [Notification No.14/2013 dt. 22/10/2013]

Circulars• CBEC Clarified applicability of service tax on

services provided by restaurant

through Government of Andhra Pradesh `&Directorate of Revenue Intelligence (DRI).[Notification No. 47/2013-(RE - 2013)/2009-2014 dated 24/10/2013]

• Two more LCSs (Benapole/Petrapole&Agartala)across Indo-Bangladesh Border are permitted forimporting newmotorcycles. [Notification No. 46/2013-(RE - 2013)/2009-2014 dated 23/10/2013]

• MEP on export of edible oils in branded consumerpacks of upto 5 Kgs has been reduced from USD1500 USD per MT to 1400 USD per MT.[Notification No. 45/2013-(RE - 2013)/2009-2014 dated 09/10/2013]

Public Notice• Provisions of para 4.1.15 of FTP, as incorporated

vide Notification No. 31 dated 1.8.2013 andamended vide Notification No. 48 dated30.10.2013 will not be applicable for .

1. Where both export and import have beencompleted prior to 1.8.2013

2. If the DFIA has been endorsed as'transferable' by the concerned RA, before1.8.2013

3. If only export has been fully completed /partly completed before 1.8.2013, then thecorresponding import would be allowedsubject to an undertaking from theauthorization holder, that the inputs whichhave been actually used in the productalready exported shall only be imported.

Further every export made on or after 1.8.2013provisions of para 4.1.15 of FTP shall apply. It isimmaterial whether for such export,corresponding import has already been made(fully or partly) or import has not been made.[Public Notice No.35/2013-(RE - 2013)/2009-2014 dated -30/10/2013]

• Five new agencies are approved as PreShipment Inspection Agencies (PSIA) andenlisted in Appendix 5 of the Handbook ofProcedures (Vol-I), Appendices andAayaatNiryaat Forms [Public Notice No.34/2013 - (RE - 2013) / 2009-2014 dated -29/10/2013]

• The description of the import item at SI. No. 1 ofSION 'A-3504' has been correctedfrom " 7-

[Circular No. Circular 173/8/2013 dated 07/10/2013]

FOREIGN TRADE POLICYNotifications• Export of all varieties of onions as described at

Serial Number 51 & 52 of Schedule 2 of ITC(HS)Classification of Export & Import Items will besubject to a Minimum Export Price (MEP) of USD1150 per MT. [Notification No. 49/2013-(RE -2013)/2009-2014 dated 01/11/2013]

• Now supplies made to SEZ under in the AdvanceAuthorization scheme. Inputs actually used inmanufacture of the export product should onlybe imported under the Authorisation Scheme.Similarly inputs actually imported must be usedin the export product. The nexus of inputs usedin export products has to be established inrespect of every Advance Authorisation / DFIA.[Notification No. 48/2013-(RE - 2013)/2009-2014 dated 30/10/2013]

• Prohibition on export of Red Sanders wood inlog form has been relaxed for export of9784.1363 MT of Red Sanders wood in log form

Common kitchen servingfood to separatelydemarcate and havingseparate name for airconditioned section andnon A.C. section.

Service tax is applicableonly for A.C. section. Noservice tax is applicable tonon A.C. section,

A.C. restaurant serving thefood in other areas likeswimming pool or an openarea attached to therestaurant

Service tax is applicable

Serving of food on MRPbasis

Value of such goods to beexcluded while determin-ing taxable value.

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Chloro-1-cyclopropyl-6-fluoro-1,4-dihydro-4-oxo-3-Quinoline-3-carboxylic acid"to "7-Chloro-1-cyclopropyl-6-fluoro-1,4-dihydro-4-oxo-3-Quinoline carboxylic acid" [Public Notice No.33/2013-(RE - 2013)/2009-2014 dated -24/10/2013]

• In SIONs at entry G-7 and G-46 certain inputitems have been amended/changed. These arein the nature of (a) deletion, (b) change in thedescription, and (c) technical specificationdetailed. No changes have been made either indescription of concerned export product or in thepermissible quantity of relevant inputs (in somecases, input has been deleted). [Public NoticeNo 32/2013-(RE - 2013) / 2009-2014 dated -24/10/2013]

• Mono cartons containing strips/vials/bottlesto betreated as primary level packaging of exportconsignment of pharmaceuticals and drugs.[Public Notice No.31/2013-(RE - 2013)/2009-2014 dated -23/10/2013]

• Following SION has been suspended.

SION Export Item1. A 1143 Phosphorous Trichloride

2. A 1170 Soda Ash

3. A 3627 Glass Vials / Phials / Ampoules /Perfume Bottles/Nail Enamel Bottles /Foundation Bottles/Miniatures / CreamJars(Glass Scrap/Cullet route)

4. K 134 Glass Mosaics

[Public Notice No.30/2013-(RE – 2013)/2009-2014 dated -04/10/2013]

Policy Circular• It has been clarified that while giving declaration

declaration for non-availment of CENVAT creditfor claiming benefits under para 8.3(b), applicanthas to ensure that it has also not claimedCENVAT credit on service tax on input services.At the time of making an application, applicantmust ensure that it does not claim double benefitof CENVAT credit and duty drawback. [PolicyCircular No.9(RE-2013)/2009-2014 dated30/10/2013]

• Procedure for closure of cases of default in ExportObligation under Public Notice No.22 dated12.08.13 has been issued for the use of field

formation. [Policy Circular No.8(RE-2013)/2009-2014 dated 25/10/2013]

• Considering the worldwide recession list of suchproduct groups showing the percentage declinein exports during 2012-13 as compared to 2011-12.All Regional Offices has been requested tore-fix the annual average export obligation forEPCG Authorizations for the year 2012-13accordingly. [Policy Circular No.7 (RE-2013)/2009-2014 dated 23/10/2013]

MVATNOTIFICATIONSNo New Notifications.

INCOME TAXNOTIFICATION• Central government has notified the 15

institutionshas been approved under Sec 35ACof Income Tax Act, 1956 and contribution madeto them up to specified limit will be entitled for100% deduction from taxable income.[Notification NC-2 dated 7th Oct 2013]

• Government has made following amendmentsin Reverse Mortgage Scheme 2008-

a. LIC and other insurer under IRDA has beenincluded in the definition newly inserted"Annuity Sourcing Institution".

b. Loan can be disbursed in part or full to theAnnuity Sourcing Institution for the purposeof periodic payments by way of annuity tothe reverse mortgagor

c. The loan shall not be granted for the periodexceeding the residual life of the borrowerwhere the loan is disbursed by AnnuitySourcing Institution.

[Notification 79/2013 dated 7th Oct 2013]• Due date for filing Tax Audit Report extendedupto

31st Oct 2013:In cases where the 'due date' offurnishing reports of audit and correspondingincome-tax returns was 30th September, 2013and where the same are furnished electronicallyon or before 31st October, 2013, such reportsof audit and returns of income shall be deemedto have been furnished within the 'due date'prescribed under section 139 of the Income-taxAct, 1961. [Order dated 25th October]

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Company LawNotification• The Central Government has directed that the

companies incorporated with the namecontaining the expression "electoral trust" andapproved in accordance with the procedure laiddown in the electoral trust scheme, 2013, and towhich license is granted under section 25 of thesaid Act, shall be exempt from the provisionswhich restrict the contribution to any political partyor for any political purpose to any person asreferred in clause (b) of sub-section (1) and sub-section (2) of Section 293A of the CompaniesAct, 1956 which has since been replaced by sub-section (1) of section 182 of the Companies Act,2013. [Notification dated 7th November, 2013]

Circular• The last date of filing of e-form 23C for

appointment of Cost Auditor and to relax theadditional fee applicable on e-form 23C has beenextended to 30th November, 2013 or within 30days of the commencement of the company'sfinancial year to which the appointment relates,whichever is later. [General Circular No.17/2013dated 01/11/2013]

SEZInstructions

It has been decided that sub-contracting ofproduction or any production process by largemanufacturing SEZ units to DTA units may begranted for a period up to 3 years at a timesubject to certain conditions prescribed in thenotification. [Instruction No.78/ October, 13]

FEMA/RBI• Now unlisted companies incorporated in India are allowed to raise capital abroad by listing themselves

abroad, without the requirement of prior or subsequent listing in India. [A.P.(DIR Series) Circular No. 69dated November 8, 2013]

• The procedure relating to payment for exports/imports are further liberalised to allow payment for exportsto be received from a third party and payment for import of goods to be made to third party. [A.P.(DIRSeries) Circular No. 70 dated November 8, 2013]

Circular Number Date ofIssue Department Subject Meant for

RBI Circulars October - 2013

RBI/2013-2014/354A.P.(DIR Series)Circular No. 67

31.10.2013 Foreign ExchangeDepartment

Exim Bank's Line of Credit ofUSD 47 million to the Govt. ofthe Republic of Mozambique

All Category - IAuthorised DealerBanks

RBI/2013-2014/353A.P. (DIR Series)

Circular No.66


Exim Bank's Line of Credit ofUSD 149.72 million to the Govt.of the Republic of Mozambique


RBI/2013-2014/351FMD.MOAG. No. 93/01.18.001/2013-14


Marginal Standing Facility-Re-vision in timings

All Scheduled Commer-cial Banks (excludingRRBs)


Circular No. 65


Exim Bank's Line of Credit ofUSD 19.72 million to the Govt.of the Republic of Mozambique


RBI/2013-2014/349UBD.BPD. (PCB) CIR

No.34/13.1.000/2013-14

30.10.2013 Urban BanksDepartment

Settlement of Claims in respectof Missing Persons inUttarakhand Disaster

The Chief ExecutiveOfficers of All Primary(Urban) Co-op. Banks

RBI/2013-2014/346UBD.BPD.(PCB).Cir.

No.33/16.11.00/2013-14

29.10.2013 Urban BanksDepartment

Revision in Bank Rate The Chief Executive Of-ficer All Primary (Urban)Co-operative Banks

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Circular Number Date ofIssue Department Subject Meant for

RBI/2013-2014/345DBOD.No.Ret.BC. 64/

12.01.001/2013-14

29.10.2013 Department ofBanking

Operations andDevelopment

Bank Rate All Scheduled Commer-cial Banks & Local AreaBanks

RBI/2013-2014/343MPD. No.BC. 370/07.01.279/2013-14

29.10.2013 Monetary PolicyDepartment

Standing Liquidity Facilities forBanks and Primary Dealers

All Scheduled Banks [ex-cluding Regional RuralBanks(RRBs)] and Pri-mary Dealers

RBI/2013-2014/342DBOD.AML.BC.No.

63/14.01.001/2013-14



Due diligence in correspondentbanking relationship.

The Chairmen / ChiefExecutive Officers of AllScheduled CommercialBanks (excluding Re-gional Rural Banks)



Deferred Payment Protocolsdated April 30, 1981 and Dec.23, 1985 between Govt. ofIndia and erstwhile USSR



Circular No.63


Memorandum of Procedure forchanneling transactionsthrough Asian Clearing Union(ACU)

All Authorised DealerCategory-I banks

RBI/2013-2014/326DBOD.BP.BC.No.

59/21.06.007/2013-14



Change of Name of SME Rat-ing Agency of India Limited toSMERA Ratings Limited(SMERA)

The Chairman and Man-aging Director/The ChiefExecutive Officer AllScheduled CommercialBanks (Excluding LocalArea Banks and Re-gional Rural Banks)


Circular No. 62


Closing of Old OutstandingBills : Export-Follow-up-XOSStatements




Overseas Foreign CurrencyBorrowings by AuthorisedDealer Banks


RBI/2013-2014/334DBOD.NO.PSBD.BC.62/16.13.100/ 2013-14



Amendments to Banking Regu-lation Act 1949 - Banking Laws(Amendment) Act 2012- Appli-cability to private sector banks

All Private Sector Banks

RBI/2013-2014/324DPSS (CO) RTGS No.801/04.04.017/2013-14

11.10.2013 Department ofPayment & Settle-ment System

Launch of new RTGS System The Chairperson / ChiefExecutive Officer RTGSMembers

RBI/2013-2014/322DCM (Plg) No. G - 14/

10.65.03/2013-14

10.10.2013 Department ofCurrency

Management

Monetary Policy Statement for2013-14-Distribution ofBanknotes and Coins - Alter-native Avenues

The Chairman & Manag-ing Director / Chief Ex-ecutive Officer (AllScheduled Commercialbanks including RRBs)


Circular No. 60


Export Outstanding Statement(XOS) Online Bank wide Sub-mission

All Category - I Autho-rized Dealer Banks

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CBEC Notified Exchange Rate for Conversion of Foreign Currency w. e. f.8th Nov. 2013 (Notification No. 109/2013-Customs (N.T.) Dt. 07.11.2013)

SCHEDULE - I

S.No. Foreign Currency

Rate of exchange of one unit of foreign currencyequivalent to Indian rupees

(For Imported Goods) (For Export Goods)

1. Australian Dollar 60.10 58.55

2. Bahrain Dinar 170.85 161.50

3. Canadian Dollar 60.85 59.30

4. Danish Kroner 11.55 11.15

5. EURO 85.70 83.70

6. Hong Kong Dollar 8.15 8.00

7. Kuwait Dinar 227.85 214.65

8. New Zealand Dollar 53.00 51.70

9. Norwegian Kroner 10.65 10.35

10. Pound Sterling 101.80 99.55

11. Singapore Dollar 51.00 49.80

12. South African Rand 6.30 5.90

13. Saudi Arabian Riyal 17.15 16.25

14. Swedish Kroner 9.80 9.50

15. Swiss Franc 69.55 67.90

16. UAE Dirham 17.55 16.60

17. US Dollar 63.10 62.10

S.No. Foreign Currency

Rate of exchange of 100 units of foreign currencyequivalent to Indian rupees

SCHEDULE-II

(For Imported Goods) (For Export Goods)

1. Japanese Yen 64.30 62.75

2. Kenya Shilling 75.65 71.10

1 1


Coercive Recovery under Indirect Taxationin the Regime of Free India

By CMA Ashok B. Nawal

Each year some of the provisions are inserted forrecovery of dues to the Govt. As such there is nothingwrong to recover the outstanding dues; however,there is a different law applicable for Govt. dues anddues to others. Recovery of dues from others has tobe made by any person under Civil Procedure Code,whereas Govt. has taken special powers to recoverthe same from any person including Bank, FinancialInstitution or Person who is liable to receive anyamount from such person from which Govt. dues arepending.

Govt. has also taken such powers includingattachment of property even though such dues aredisputed or during the process of investigation where,any officer have reason to believe that there may besome demand.

Let us review the legal provisions under the CustomsAct 1962, Central Excise Act 1944 and Finance Act1994 as amended.

Sec 142 of Customs Act provides:Recovery of sums due to Government. - (1) whereany sum payable by any person under this Actincluding the amount required to be paid to the creditof the Central Government under section 28B is notpaid, -

(a) the proper officer may deduct or may require anyother officer of customs to deduct the amount sopayable from any money owing to such person whichmay be under the control of the proper officer or suchother officer of customs; or

(b) the Assistant Commissioner of Customs or DeputyCommissioner of Customs may recover or mayrequire any other officer of customs to recover theamount so payable by detaining and selling any goodsbelonging to such person which are under the controlof the Assistant Commissioner of Customs or DeputyCommissioner of Customs or such other officer ofcustoms; or

(c) if the amount cannot be recovered from such

person in the manner provided in clause (a) or clause(b) -

(i) the Assistant Commissioner of Customs or DeputyCommissioner of Customs may prepare a certificatesigned by him specifying the amount due from suchperson and send it to the Collector of the district inwhich such person owns any property or resides orcarries on his business and the said Collector onreceipt of such certificate shall proceed to recoverfrom such person the amount specified there underas if it were an arrear of land revenue; or

(ii) the proper officer may, on an authorization byCommissioner of Customs and in accordance withthe rules made in this behalf, distrain any movable orimmovable property belonging to or under the controlof such person, and detain the same until the amountpayable is paid; and in case, any part of the saidamount payable or of the cost of the distress orkeeping of the property, remains unpaid for a periodof thirty days next after any such distress, may causethe said property to be sold and with the proceeds ofsuch sale, may satisfy the amount payable and thecosts including cost of sale remaining unpaid and shallrender the surplus, if any, to such person.

Provided that where the person (hereinafter referredto as predecessor), by whom any sum payable underthis Act including the amount required to be paid tothe credit of the Central Government under section28B is not paid, transfers or otherwise disposes ofhis business or trade in whole or in part, or effectsany change in the ownership thereof, in consequenceof which he is succeeded in such business or tradeby any other person, all goods, materials,preparations, plants, machineries, vessels, utensils,implements and articles in the custody or possessionof the person so succeeding may also be attachedand sold by the proper officer, after obtaining writtenapproval from the Commissioner of Customs, for thepurposes of recovering the amount so payable by

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such predecessor at the time of such transfer orotherwise disposal or change.

(2) Where the terms of any bond or other instrumentexecuted under this Act or any rules or regulationsmade thereunder provide that any amount due undersuch instrument may be recovered in the manner laiddown in sub-section (1), the amount may, withoutprejudice to any other mode of recovery, be recovered

in accordance with the provisions of that sub-section.

The said provisions have been made applicable underCentral Excise Act 1944 as well Finance Act 1994 asamended.

Finance Act 2013 has incorporated certain changesunder Customs Act 1962 and Central Excise Act 1944as well Finance Act 1994 as amended which isenumerated below:

• Customs Act 1962 :

Section No./ Rule No.

Nature ofAmendment

ExistingProvision

Amendment in Existing /New Provision

Bizsol Analysis

SEC 28BA Provisionalattachment to

protect revenue

NA Addition of sub-section(4) of section28 - Relatedto recovery of duties incase of fraud / collusion

Provision for attachment of properties hasbeen extended to cases duty evasion by col-lusion / willful misstatement / suppressionof facts.

SEC 142 Recovery ofsums due toGovernment

NA Recovery of dues fromany other person fromwhom money is due /payable to the defaulterperson.

Power has been given to Customs Officerto issue the notice in writing to a person fromwhom the money is due or may become dueor who may subsequently hold the money oraccount of such person to pay the credit ofthe Central Government either forthwith uponmoney becoming due or within the timespecified in the notice to pay the amountdue from such person and such person shallbound to comply with such notice in particu-lar when the notice is issued to post office,banks, insurer, deposit receipts, or any otherdocuments. In other words, such amount duecan be recovered directly by issuing noticeto bankers, post offices, insurance compa-nies or mutual fund companies or any de-posit holders.


AmendmentEffective

date

ExistingProvision

Amendment in Existing /New Provision Bizsol Analysis

Section 11 Afterreceiving

the assentfrom thePresidentof India to

the FinanceBill

Recoveryof sumsdue to

Government

Recovery of sums due to the Gov-ernment can be recovered by attach-ing property under Section 142 ofCustoms Act and disposing the sameand pay the balance amount to theassesse. Now if balance is not suffi-cient, the amount to be recovered inany manner.

"Deduct" has been replaced with "de-duct or may recover the amount".

• Central Excise Act 1944:

1 3



AmendmentEffective

date

ExistingProvision

Amendment in Existing /New Provision Bizsol Analysis

Section 11(2) hasbeen

inserted

Afterreceiving

the assentfrom thePresidentof India to

the FinanceBill

Newprovision

"(2)(i) The Central Excise Officer may,by a notice in writing, require any otherperson from whom money is due tosuch person, or may become due tosuch person, or who holds or maysubsequently hold money for or onaccount of such person, to pay to thecredit of the Central Governmenteither forthwith upon the moneybecoming due or being held, or at orwithin the time specified in the notice,not being before the money becomesdue or is held, so much of the moneyas is sufficient to pay the amount duefrom such person or the whole of themoney when it is equal to or less thanthat amount;

(ii) every person to whom a notice isissued under this sub-section shall bebound to comply with such notice, andin particular, where any such noticeis issued to a post office, bankingcompany or an insurer, it shall not benecessary to produce any pass book,deposit receipt, policy or any otherdocument for the purpose of anyentry, endorsement or the like beingmade before payment is made,notwithstanding any rule, practice orrequirement to the contrary;

(iii) in a case where the person towhom a notice under this sub-sectionhas been issued, fails to make thepayment in pursuance thereof to theCentral Government, he shall bedeemed to be a person from whomduty and any other sums of any kindpayable to the Central Governmentunder any of the provisions of this Actor the rules made thereunder havebecome due, in respect of the amountspecified in the notice and all theconsequences under this Act shallfollow."

Power has been given to CentralExcise Officer to issue the notice inwriting to a person from whom themoney is due or may become due orwho may subsequently hold themoney or account of such person topay the credit of the CentralGovernment either forthwith uponmoney becoming due or within thetime specified in the notice to pay theamount due from such person andsuch person shall bound to complywith such notice in particular when thenotice is issued to post office, banks,insurer, deposit receipts, or any otherdocuments. In other words, suchamount due can be recovered directlyby issuing notice to bankers, postoffices, insurance companies ormutual fund companies or any depositholders.

Fortunately, such provisions so far have not incorporated in the Finance Act 1994 as amended (Service Tax)

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SECTION 142A of Customs Act, provides:Liability under Act to be first charge .- Notwithstandinganything to the contrary contained in any Central Actor State Act, any amount of duty, penalty, interest orany other sum payable by an assesse or any otherperson under this Act, shall, save as otherwiseprovided in section 529A of the Companies Act, 1956,the Recovery of Debts Due to Banks and the FinancialInstitutions Act, 1993 and the Securitization andReconstruction of Financial Assets and theEnforcement of Security Interest Act, 2002, be thefirst charge on the property of the assesse or theperson, as the case may be."

However, Banks or financial Institutions who havecreated first charge those are only protected over theGovt. dues. Some of the judicial decisions are givenbelow:

• 2012 (283) E.L.T. 188 (A.P.) IDBI LTD. VersusDY. COMMR. (ARREARS RECOVERY CELL) OFC.E. & C., HYDERABAD

• 2011 (267) E.L.T. 614 (Guj.) KOTAK MAHINDRABANK LTD. Versus DISTRICT MAGISTRATE

• 2007 (208) E.L.T. 3 (Mad.) UTI BANK LTD.Versus DEPUTY COMMISSIONER OF C. EX.,CHENNAI-II

The above decisions are upheld by Hon'ble SupremeCourt.

Perhaps considering the decisions of the Courts, Govt.brought such changes and amended the provisionsand effected incorporated changes effected throughFinance Act 2013.

Therefore, now Dept. of Revenue have got unlimitedpowers to recover Govt. dues from any personincluding Bank, Financial Institutions, Debtors or anyperson from whom amount is receivable by suchdefaulter of Govt. dues. Departmental officers havestarted utilizing such tools.

On a lighter mode, good relations can be establishedwith bureaucrats and recovery of probable bad debtscan be effected through such mechanism and adjustGovt. dues.

Provision has been incorporated even for provisionalattachment of property even during the investigationwhen there is no confirmation of demand.

In view of the above, there is no other option left withthe assesse but to introduce internal audit / internalcontrol system and be 100% statutory compliant.

o o o

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Corporate Social Responsibility - CSR as they arepopularly known is after all the human face of business.Conceptually it recognises the solemn duty thebusiness owes to the society. In a way it stands forthe external conscience of the corporate sector basedon a noble value system. It reiterates the need forthe business to respond and repay what it can to thesociety as part of good governance. This is one dutythe business is expected to do and it usually does ona voluntary basis. After considerable debates anddiscussions the government thought it fit toincorporate the essence of this social compulsion intoa legally binding commitment in the newly enactedCompanies Act.

Preamble:Requirements pertaining CSR are found in Sec 135and Schedule VII of the new Companies Act 2013.The government has put out the draft rules pertainingto CSR in the public domain inviting comments andsuggestions thereon. Once the Rules are acceptedand notified it will come into effect from the date sonotified. It is expected that the entire scheme of thingspertaining to CSR is likely to get implemented witheffect from the financial year 2014-15.

Coverage:The following categories of companies registeredunder the Companies Act would be covered by theprovisions relating to CSR:

A company having a net worth of Rs.500 Crores ormore

A company with a turnover of Rs. 1000 Crores ormore

A company with a net profit of Rs. 5 Crores duringany financial year

Though the threshold limit of net worth and turnoverare high the profit criteria is relatively low which wouldbring in a number of companies under the CSR ambit.

THE NEW COMPANY ACT 2013 - UPDATESBy Venkat R Venkitachalam

Company Secretary,

Article No. 3 – Corporate Social Responsibility

Commitment:Companies which meet the above financial criteriawill have to spend at least 2% of their average netprofits of the past three years on any of the specifiedCSR activities. The draft Rules also specify themethodology of calculating the net profits for thepurpose of CSR outlay. As per the draft Rules unspentamounts can be rolled over to the subsequent years,though it is unclear whether excess spent in aparticular year can be carried forward and adjustedin subsequent years.

Administration:A committee of the Board of Directors of the companywith at least three or more Directors with one or moreIndependent Director/s shall oversee the working ofCSR activities. The Committee is charged with theresponsibility of helping the Board to formulate a CSRPolicy, the activities to be undertaken, preparing thebudgets for various activities and monitor theimplementation of the CSR policy of the company.The draft Rules gives an outline of the broad contoursof the CSR issue.

The Board of Directors on its part have to review therecommendations made by the CSR Committee,approve a CSR Policy, publicise the policy and ensurethat the company spends the mandatory 2% of theprofits every year on approved activities. TheDirectors' Report shall carry prescribed details aboutCSR activities as per the draft Rules.

Penalties:A company which is mandated to spend on CSR asper Sec 135 of the Act fails to do so shall explain thereason for its inability to do so in any year. A failure todo so will attract a fine of not less than Rs. 50,000/-and not more than Rs.25,00,000/-.

Activities under CSR:Schedule VII gives a list of activities which can beundertaken by the company who is mandated tospend on CSR. They include:

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Eradicating extreme hunger and poverty

Promotion of EducationPromoting gender equality and empowering women

Reducing child mortality and improving maternalhealth

Combating human immunodeficiency virus, acquiredimmune deficiency syndrome, malaria and otherdiseases

Ensuring environmental sustainability

Employment-enhancing vocational skills

Social Business ProjectsContribution to the Prime Minister's National ReliefFund or any other fund set up by the CentralGovernment or the state governments for socio-economic development and relief and funds for thewelfare of the Scheduled Castes, the ScheduledTribes, other backward classes, minorities andwomen

Such other matters as may be prescribed.

The Tax Angle:Having seen the provisions of the Companies Act letus now turn to the taxation impact of these provisions.The draft CSR Rules leave it to the CBDT to look atthe taxation benefits which could accrue to thecompanies. Prima facie it looks as if companies wouldbe able to bring the CSR spend under the IncomeTax Act by contributing to approved scientific researchpurposes and through contributions to approvedUniversities for specific purposes.

The CSR initiative through the Companies Act couldnot have come in sooner. The corporate sector wasbeing sensitised to the requirements on socialspending in the past. This step by the new Act is anudge to encourage them to return something to thesociety. Should it fail, which one hopes not, next stagemay be a full line forcing by the government to getthe corporates to spend on social causes.

Thank you

Venkat R. VenkitachalamCompany Secretary

v CBI raids Office & residence of Additional Commissioner of Central Excise Ali Akbar Tahirali in Vadodara& Daman

v Film Producer Dhillin Mehta booked by service tax for evading service tax of Rs 8.8 Crore-Bank Accountsof Mehta frozen

v Emirates Airlines booked by service tax Department for evading service tax of Rs 175 Crore

v Assistant Commissioner of Customs Anil Kumar arrested by CBI in Kochi for being involved in gold smuggling

v Adnan Sami agrees to pay service tax dues after being booked for evading service tax

v Exports registers 13.5% growth in Oct.

1 7


"The learning and knowledge that we have, is, atthe most, but little compared with that of whichwe are ignorant."

– Plato

Strong words and stronger underlying sentiment. Ina world that is growing smaller and smaller with eachclick of a button, I believe our ignorance of thatshrinking world grows inversely. To twist the immortalwords of Plato to suit our requirements today, I wouldlike to talk about the inherent risk itself. Even in themost hazardous of activities of crossing a busy streetin India one is aware of the risks involved. Here theart is in maneuvering traffic fully aware of the riskinvolved. In the area of management of risks involvedin foreign currencies one has to first understand therisk itself before honing the skills for managing theserisks. Before we take a look at the currency risks andits management let us look at the very need forundertaking such an activity.

Back Ground:In the distant past relative competitive advantagesaccrued to the firms through product differentiation.A quality product with better features fetched themthis advantage. As times moved, the goalpost alsoshifted. Inherent quality in a product or service becamea given norm. Focus shifted to delivery mechanismsand logistics resulting in savings in costs. Now thedatum has shifted to sophisticated tools with the helpof evolving technologies in the form of financialproducts which separate the men from the boys. Somuch so that almost anyone can produce and sellbut the winner will always be the one who insulateshimself from the vicissitudes associated with financialenvironment in which the firm operates. This premisebecomes starker for those operating in foreignmarkets than in domestic markets. The single mostimportant risk that needs to be managed in this sphereis that associated with foreign currencies.

In the past, especially before India opened up itseconomy with a state calibrated exchange rate forthe Rupee, the only risk management need forcorporate enterprises was, literally, lobbying forgovernment intervention to protect ones margins whileexporting and importing. But the Indian economy sawa sea change in the year 1991 when, thanks to P.V.NarasimhaRao, the then Prime Minister, India ceasedto be a closed and protected economy, and adoptedthe globalization route, to integrate itself with the worldeconomy.

The liberalization of our economy resulted in significantinflow of foreign capital into India. Simultaneously,dismantling of our trade barriers also facilitated theintegration of our economy with the rest of the world.With the globalization of trade and comparativelyeasier movement of financial assets, foreign exchangerisk management has also become a necessity inIndia, just as in most other developed and developingcountries. As Indian businesses become more andmore global in their approach, evolution of a broadbased, active and liquid Foreign Exchange riskmanagement system is required to provide them witha spectrum of options for effectively managing theirforeign exchange exposures.

The Market Scene:Before we embark upon the skills to manage theforeign exchange risks let us first get a clearunderstanding about the risks themselves. Look atthe following as a primer or backdrop:

• The total volume of daily transactions ofcurrencies in the world is as high as USD 3.98Trillion (equal to INR 2,40,00,000 Crores)

• The currency markets in New York, London andTokyo work round the clock except on weekends.

• Exchange rates are susceptible to any news goodor bad beyond economics to geo-political tosimple plain gossip.

THE ART AND SCIENCE OF MANAGINGRISKS IN FOREIGN CURRENCIES

By Adwait Venkitachalam

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Foreign Exchange Risks:In this dynamic environment let us look at the risksinvolved in foreign currency management. The singlemost important risk is the inherent exchange of thecurrency.

Foreign exchange risk could be defined as a financialrisk posed by an exposure to unanticipated changesin the exchange rate between two currencies.Investors and multinational businesses importing orexporting goods and services or making foreigninvestments outside the parent country are faced withan exchange rate risk which can have severe financialconsequences if not managed appropriately.Firmsdealing in multiple currencies face the same risk (anunanticipated gain/loss) on account of sudden/unanticipated changes in exchange rates. In foreignexchange lexicon an exposure is defined as acontracted, projected or contingent cash flow whosemagnitude is not certain at the moment and dependson the value of the foreign exchange rates of a futuredate. The process of identifying risks faced by thefirm and implementing a system to protect it from theserisks by financial or operational means is the essenceof foreign exchange risk management.

Foreign Exchange Exposure:Risk management techniques vary with the types ofexposure (accounting or economic)and the term ofexposure.

Accounting exposure, also called translationexposure, results from the need to restate foreignsubsidiaries' financial statements into the parent'sreporting currency and is the sensitivity of net incometo the variation in the exchange rate between aforeign subsidiary and its parent.

Economic exposure is the extent to which a firm'smarket value, in any particular currency, is sensitiveto unexpected changes in foreign currency. Currencyfluctuations affect the value of the firm's operatingcash flows, income statement, and competitiveposition and hence its market share and stock prices.

Currency fluctuations also affect a firm's balance sheetby changing the value of the firm's assets andliabilities, accounts payable, accounts receivables,inventory, loans in foreign currency, investments(CDs) in foreign banks; this type of economic exposure

is called balance sheet exposure.

Transaction Exposure is a form of short term economicexposure due to fixed price contracting in anatmosphere of exchange-rate volatility.

Globally, 72 % of large corporations (those with morethan USD 100 mln in sales) actively manage foreignexchange risk. Their Corporate Treasury Departmentsdesign and establish effective hedges using OTCderivatives, and create internal policies, controls andmetrics. Hedging FX risk is considered a "best treasurypractice". Small and medium-sized companies withoutdedicated Treasury Departments usually use privateconsultants as their "virtual Treasury Department".

Some examples of poor outcomes of foreign exchangesituations are shown below:

"Pharmaceutical major Ranbaxy reported a loss ofover Rs 400 crore in the second quarter, its worstquarterly loss in nearly two-and-half years on the backof whopping forex losses in excess of Rs 600 crore.JSW Steel's forex losses rose to a staggering Rs 513crore in the quarter. This was about 75% of its profitbefore interest for the period."

–Times Of India, Nov 22, 2011

Drugmaker Ranbaxy Laboratories posted a loss forthe second straight quarter, hurt by foreign exchangecharges and a one-time write-off related to one of itsplants under an import ban by the US healthregulator."

– Financial Express, Oct 30, 2013

"The 1,600-crore derivatives liability that Wockhardtpiled up has hit more than just its numbers. In spite ofthe good things going for it, institutional investors arecold to the company."

– Economic Times, May 3, 2011

These examples only go to show that even multi-national companies fall prey to foreign exchange risksfrom time to time. The example of Wockhardt givenabove is mainly to prove that wanton use of financialproducts like derivatives could also be catastrophicwithout sound judgment to ascertain the best possibleoption to tailor-suit your companies' requirements.

Foreign Exchange Risk Management:The most commonly used tool to manage foreignexchange risks is hedging through forex derivatives.

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For Warrant Buffet considers these derivative productsas weapons of mass financial destruction as aninvestor. But for a businessman, these are essentialarsenals to insulate himself from financial disaster.

There is a wide spectrum of opinions about foreignexchange risks and the best practices for hedgingtheir forex exposures. Some firms feel hedgingtechniques are speculative in nature and do not wishto speculate on the markets due to limited technicalknowledge. Smaller firms are generally unaware ofthe foreign exchange risks involved or they lack theexpertise required to safeguard themselves.. Thereare a set of firms who only hedge some of their risks,while others are aware of the various risks they face,but completely oblivious to the methods to guard thefirm against such risks. There is another breed ofcompanies, that wish to believe that the markets area divine force that give as much as they take andvice-versa (in foreign exchange movements only) andthat they would be better off doing nothing.

Despite staunch opposition to the same, the existenceof different kinds of market imperfections, such asincomplete financial markets, positive transaction andinformation costs, probability of financial distress, andagency costs and restrictions on free trade makeforeign exchange management an appropriateconcern for corporate management. There is also avast pool of research that proves the effectiveness ofmanaging foreign exchange risks and a significantamount of evidence showing the reduction of exposureto risk with the use of appropriate tools for managingthese exposures.

One of the simplest but most important aspects tocurrency risk management is to set benchmarks. Ascurrency markets are ever evolving and unpredictable,the only predictable element within the control of thecompany remains the internal aspect of abenchmarking mechanism for pricing, and the

imperative objective of the corporate should be toprotect that benchmark, not run behind exponentialprofits from currency movements, a subject that isneither their forte nor a requisite source of incomefor the organization. Another important aspect ofhaving a risk management system i.e. a Board-approved forex policy, in place is that it simplifies thetask of middle management to take decisions withinthe purview of the policy, devoid of the fear anduncertainty that follows market related choices on aday-to-day basis.

Now picture a scenario where you happen to fall ill orhurt yourself, your first port of call would be adoctor;and in case of building a house, an architect or abuilder. And the simple reason behind this is the factthat these individuals, being experts,have a moreintrinsic knowledge of the field they are in. The foreignexchange market is no different. The currency marketsbeing infinitely volatile and the RBI constantly updatingtheir stance for market participants, most companieshave limited to nil knowledge of how their treasurysystem should function and those with the knowledgeoften lack the bandwidth to handle the escalatingsituation on hand. This is where treasuryadvisors/consultants come in. Not only are they in a position toview each company's set-up in a fresh, neutral light,but they might also be able to provide expert counselfrom their vast experience and industry insightsworking with other companies.

Despite the fact that this article is simply a briefintroduction to currency risk management forcorporates, it would have served its purpose if only topush a small wedge of doubt in the mind of mostcorporates about their foreign exchange riskmanagement mechanisms, or the lack of it. In today'sperennially dynamic, fickle and volatile markets, it isa compulsion, not a preference, to have a stable,evolving foreign exchange risk management systemin place for corporates of all shapes and sizes.

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CENTRAL EXCISE:v Tax Exemption: Every fiscal legislation providing

for tax exemption must have life span fixed inenactment. It is settled principle that there canbe no permanent tax exemption or incentive infiscal legislation. However, road map is not acondition precedent for Parliament to introducesunset clause. Parliament has sovereignlegislative power to withdraw tax exemption byway of legislative amendment. [2013 (295) E.L.T641 (Kar.)]

v Cenvat credit on debit note: Debit note discloseall essential particulars of statutory invoice.Cenvat credit cannot be denied as per Rule 2 ofcenvat credit rules, 2004. [2013 (295) E.L.T 751(Tri.-Del.)]

v Cenvat credit can be utilized for payment ofNCC duty on final product: National CalamityContingent Duty (NCCD) is nothing but a duty ofexcise and not exempted under Notification 32/99-CE which is only in respect of duty of Exciseor additional duty of excise under any of the Acts,namely Central Excise Act 1944, the AdditionalDuties of Excise Act, 1957 and Additional Dutiesof Excise Act, 1978. While cenvat credit of NCCduty can be utilized under Cenvat Credit Rulesonly towards payment of such NCC duty, CenvatCredit can be obtained from other sources canbe utilized for payment of NCC duty on finalproduct. [2013 (295) E.L.T 682 (Gau.)]

v Pre-deposit waived when Closure of PanMasala Unit for continuous period of 15 days:Pre-deposit is waived when there is closure ofPan Masala unit for continuous period of 15 days.Revenue contention that 15 days should be withreference of calendar month is not applicable. Aplain reading of Rule 10 of Pan Masala PackingMachines Rules, 2008 would suggest that thecontinuous period of 15 days need not fall in one

calendar month. The word "month" is not usedin the rule 10. Instead the word "period" is used.[2013 (295) E.L.T 721 (Tri.-Del.)]

v Penalty applicable in case default of paymentof duty through PLA: Assessee debarred thefacility of payment of duty in fortnightly installmentand directed to pay duty for two months fromPLA. Assessee utilized the credit in violation ofdebarment orders issued under Central ExciseRules,2002. Demand of duty on the ground thatthere was restriction in the use of the credit fortwo months would lead to double payment of dutyby assessee. Assessee directed to pay interestfor the period of months in each case. Sincethere is clear violation of Rules, assessee liableto penalty. [2013 (295) E.L.T 709 (Tri.-Del)]

v Penalty not applicable when duty paid alongwith interest before issue of SCN: Short-levydetected on audit and duty along with interestpaid immediately before issuance of show causenotice. When assessee has honestly paid theentire duty along with interest before theissuance of show cause notice and no evidenceshowing intention to evade is relied upon by theRevenue, no penalty would be attracted. [2013(295) E.L.T 716 (Tr.-Ahmed.)]

v Refund of duty on double payment: Importedgoods removed as such by debiting cenvat creditaccount. On objection from the department, dutyonce again paid from PLA. It is not thedepartment's case that the appellant hadrecovered duty twice from the customers. Inthese set of facts, bar of unjust enrichment isnot applicable to the case and assessee iseligible for the refund. [2013 (295) E.L.T 696 (Tr.-Mumbai)]

v Freight charges covered by separate contractnot includible in value: Assessee has enteredinto two contracts with customer. One for sale of

2 1


goods at the place of delivery and other fortransporting amount payable irrespective ofdestination of delivery. Goods supplied toelectricity board. Held that freight shall not formpart of assessable value. [2013 (295) E.L.T 745(Tri.-Del)]

v Cenvat Credit cannot be availed when goodscleared under rebate: Appellant cleared thegoods using cenvat credit were in fact exportedon payment of duty but no rebate was claimedon such goods and no drawback credit of suchdrawback claim is proved by appellant. Noseparate account is maintained of inputs usedin manufacture of dutiable goods. Appellantclaimed both cenvat & drawback which cannotbe done. Having operated under the schemewhere appellant had to forgo cenvat credit, theyare not entitled to take cenvat credit for inputs.[2013 (295) E.L.T 60 (Tri.-Del)]

v Remission of duty of goods destroyed by firein the presence of surveyor of unknownqualification: Goodshas been destroyed by firein the presence of only surveyor of unknownqualification who certified the destruction. Rangeofficer not informed for following detailedprocedure laid down in chapter 18 of excisemanual which gave instructions about goodsbeing unmarketable or unfit for consumption asper test conducted by a Government recognizedlaboratory. Non-observance of said rule shouldnot be adopted as a reason for denial of benefitotherwise available to appellant. [2013 (295)E.L.T 103 (Tri.-Del)]

v Rebate claim to be rejected on failure tosubmit original/duplicate copy of ARE-1: Inthe absence of original/duplicate copy of ARE-1duly endorsed by customs, export of duty paidgoods cleared on ARE-1 form from factorycannot be established which is fundamentalrequirement for sanctioning the rebate claim.Such requirement being the statutory obligation,allowing leniency would lead to fraudulent claimsof additional/double benefit claiming alternativeavailable benefit. Non-submission of original andduplicate copy of ARE-1 not to be considered ascondonable procedure. [2013 (295) E.L.T 165(G.O.I)]

v Rebate of duty on import of inputs when finalproduct is exempt from duty: Assesseeimported the inputs which were used for exportof goods which were exempt from payment ofduty. Rebate held inadmissible as applicant notpaid the duty on goods. Held that admittedly dutypaid on import of raw material and manufacturedgoods exported. Catena of Judgments holdingbenefit of rebate not to be denied for proceduralinfractions. Input rebate admissible and to besanctioned by lower authority subject to thecondition that input-output ration does notexceeds Standard I/P-O/P norms. [2013 (295)E.L.T 159 (G.O.I)]

v Rebate claim cannot be sanctioned on CIFvalue including freight & insurance: Assesseeclaimed full rebate of higher duty paid on CIFvalue including freight & insurance in transactionvalue. Held that rebate of duty paid on transactionvalue to be determined under section 4 of CentralExcise Act, 1944 admissible under Rule 18 ofCentral Excise Rule 2002. Exporter is not liableto pay duty on CIF value of goods. Cost oftransportation from factory to place of removalwhere the factory is not place of removal to beincluded in transaction value, transportation costupto port of export only can be included inassessment. [2013 (295) E.L.T 129 (G.O.I)]

v CENVAT Credit on Invoices addressed to oneunit - inputs received in another unit: Primafacie credit not sustainable.In this case theprovision of Rule 9(2) of CENVAT Credit Rulesalso cannot be invoked since it is not a meremention of wrong address in the invoice butactual non-receipt in the unit which has availedthe credit. Unfortunately, the appellants have notmoved the inputs under proper documentationto substantiate their claim for input credit, theappellant's claim for CENVAT credit on a primafacie basis is not at all sustainable. [2013-TIOL-1662-CESTAT-BANG]

v When the final product has suffered duty,there is no bar on availment of CENVAT crediton inputs/input services:By the impugnedorders, input service credit has been denied tothe applicant on the activity of job workundertaken by them under Notification No.214/

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1986-CE. The contention of the Revenue is thatas job worked goods have not suffered any duty,the applicant is not entitled for input service credit,therefore the impugned demands have beenconfirmed. When the final product has sufferedduty, there is no bar on availment of CENVATcredit on inputs/input services by jobworkers.[2013-TIOL-1657-CESTAT-BANG]

v CENVAT Credit is allowed for the goodswhich are used for erection of capital goodshence become component of the CapitalGoods:Cenvat credit on MS Angles, MS Beams,MS Channels and TMT bars used in the erectionof various machineries for Dry Process CementManufacturing Plant. Credit denied on the groundthat these are structures fixed to earth withconcrete foundations and immovable, which isnot covered under the definition of 'capitalgoods'. 'User test' of the goods satisfied. Creditallowed by Madras High Court on similar itemsfor earlier period as the goods were used forfabrication of structurals to support variousmachines without which, the machinery could notbe erected and would not function - Items usedfor erection of capital goods hence becomecomponent of the Capital Goods - Appeal allowe.[2013-TIOL-1649-CESTAT-MAD]

v Recovery of excise duty from successorcompany: Recovery of central excise dues fromthe appellant who purchased the assets of thedefaulted company from Gujarat IndustrialInvestment Corporation Ltd. Appellant cannot betreated as successor in business or trade of theprevious company for the purpose of Section 11of the Central Excise Act, 1944. [2013-TIOL-1648-CESTAT-AHM]

v Demand of duty for shortage of finishedgoods: Shortage of finished goods on physicalstock observed onverification by the department.The shortage was sought to be explained by themanager and the director of the company bygiving an explanation that over a period of timethere could be shortage due to the sizing of allthe ingots manufactured by them. Even such anexplanation could have been accounted for onlyfew kgs but could not be considered valid forentire shortage which has been noticed -

Demand of duty upheld. [2013-TIOL-1619-CESTAT-AHM]

v Edible coconut oil classified under chapter15: Edible coconut oil packed in the packing of200 ml or less cannot be considered aspreparation for use on hair in the absence of anyevidence that the compositions of both types ofoils are different. Goods rightly classifiable underchapter 15 of the CETA, 1985 and not underchapter 33 as alleged by Revenue - Orders setaside. [2013-TIOL-1609-CESTAT-MUM]

v Reversal of CENVAT Credit on Capital Goods/inputs:Plates, angles, channels etc. fallingunder Chapter 72 of Central Excise Tariff weresued in the supportive structures. Assesseereversed the Credit and paid interest. Decisionof the Larger Bench against the assesse, butprior to the decision of the Larger Bench, therewere contrary views taken by some in favor andsome against the assessee. In such situation theassessee was entitled to entertain a bona fidebelief. Prima facie case made out for waiver ofpre-deposit of penalty. Pre-deposit waived andrecovery stayed. [2013-TIOL-1608-CESTAT-BANG]

v Refund ofsecond time duty paid on re-import:Ascertainment of damage to imported goods hasbeen done by re-exporting the same for repairsand upon re-import by paying duty on the repairand freight charges.Refund of duty paid secondtime correctly allowed by appellate authority.Nothing wrong or unreasonable in the findingsof the appellate authority. So long as revenuehas received the duty on the fully value withoutany abatement towards damage, Revenuecannot have any cause for grievance. [2013-TIOL-1614-CESTAT-MUM]

v Condonation of delayfor filing appealbeyond stipulated time: It is well settled thatthe Commissioner (Appeals) has no power tocondone the delay in filing the appeal beyondthe period as prescribed under proviso to Section35(1) of the Act, 1944. Admittedly, the appealswere filed beyond the stipulated period underproviso to Section 35(1) of the Act, 1944. Noerror in the order of Commissioner (Appeals).[2013-TIOL-1602-CESTAT-MAD]

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CUSTOMSv Import of software through internet: There

was no physical import of magnetic media oroptical media with software recorded on it. Whatis taxable under Section 12 of the Customs Act,1962 read with the Indian Customs Tariff Act,1975 is discs, tapes, solid-state non-volatilestorage devices, Smart Cards and other mediafor the recording of sound or other phenomena,whether or not recorded covered under headingno.8523 of the Customs Tariff. Prima facie, willfulevasion is not apparent from the record-Pre-deposit waived[2013-TIOL-1661-CESTAT-DEL]

v Valuation of Import of artificial marble slabswhen imported as restricted goods: Appellantdeclared the value of USD 20/SQM. Departmentenhanced it to USD 50/SQM. If the value isconsidered as USD 20/SQM, the same becomerestricted goods as per Notification No 41(RE-2008)/2004-09. When appellant declares thegoods imported as restricted goods by valuecriteria, adoption of higher value by thedepartment makes the goods restriction free.Restricted goods cannot be converted into freelyimported goods since import was made withoutvalid license and that is patent from record.Goods in question do not lose the character ofrestricted goods. By artificial adoption of thevalue, restricted goods, do not becomeunrestricted goods. Valuation adopted byCustoms has no basis on law for which declaredvalue rejected by Customs is reversed. [2013-TIOL-1593-CESTAT-DEL]

v Conversion of shipping bills: Claim of theexporter for conversion of shipping bills fromEPCG to EPCG drawback and Advance licensescheme cannot be rejected under Sec 149 ofCustoms Act 1962. Conversion of shipping bill ispossible on the documents in existence at thetime of export. Shipping bills supported by CEcertificate and endorsement in certificate withexport particulars. [2013 (295) E.L.T 717 (Tri.-Chennai)]

v Import of goods under DEPB script: DEPBscriptwas issued against misrepresentation/forged documents. On transfer of license,

appellant imported the goods against DEPBscript. License was cancelled. Respondentobtained DEPB scrip on transfer and at the timeof its use he was not aware of fraud committedby seller. As per provision of Sale of Goods act,1930 respondent to be treated as having goodtitle to DEPB scrip. [2013 (295) E.L.T 739 (Tri.-Del)]

v Import of goods under Duty free importauthorization: Materials permitted to beimported under DFIA authorization or duty freeimport authorization for intermediate supply asthe case may be shall be of the same quantity,technical characteristics and specifications as thematerials used in the said reluctant product i.e.goods imported, should have nexus with thegoods exported. [2013 (295) E.L.T 63 (Tri.-Mumbai)]

v Drawback cannot be claimed on re-export ofimported goods after 18 months: Drawbackto be sanctioned only under notification 23/2008-Cus. As amended existing at the time of re-exportand not under notification 19/65-Cus as existedat the time of import. Drawback is rightly rejectedas not permissible on re-export of goods after18 months under notification 19/65-Cus. [2013(295) E.L.T 143 (G.O.I)]

v Fixation of brand rate of drawback forexports: Assessee has paid the drawbackclaimed on basic custom duty on imports byDEPB debits. Duty drawback not allowed whencustom duty paid through debit of DEPB scripunder proviso (ii) of Rule 3. As per circular 41/2005-Cus, only additional customs duty paidthrough DPEB to be considered for fixation ofbrand rate. Payment of Customs duty throughDPEB for allowing duty drawback not legallytenable. [2013 (295) E.L.T 155 (G.O.I)]

SERVICE TAXv No Service tax on spare parts used in repair

service of motor vehicle: Demand of servicetax on the cost of spares reimbursed by thevehicle manufacturer. Prima facie, there cannotbe levy of service tax on value of spare partsused in repair service of motor vehicles. In suchactivity the cost of materials and the service itself

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can be clearly vivisected and is perceived asseparate components by customers. Pre-depositwaived. [2013-TIOL-1575-CESTAT-MAD]

v Service tax on removal of jungle & bushesinside building area is not liable to servicetax: Removal of jungle and bushes inside thebuilding area prima facie is not liable to ServiceTax under the category of 'Site formation andclearance'. Strong prima facie case in favour ofassessee. Pre-deposit of dues waived and staygranted. [2013-TIOL-1680-CESTAT-MUM]

v No CENVAT credit of Service tax paid oninput services used for providing tradingactivities: Assessee is Non-banking FinancialService Company (NBFC) providing both taxableand non-taxable services. Credit disallowed oninputs services used in relation to certain itemstreating them as trading activities. Makinginvestments in gilt edged securities amounts toa service or trading for the purpose of CENVATcredit can be a contentious issue which needsto be heard at length during final hearing.Argument that sale of loan portfolio is not a tradingactivity not convincing. CENVAT credit cannot betaken on input services used for such activity.[2013-TIOL-1678-CESTAT-MAD]

v Service tax applicable on commissionretained for sale of Carbon EmissionReduction Certificate: Assessee retained 5%commission in respect of sale of Carbon EmissionReduction Certificates. Prima facie, it cannot beheld that it is a case of mere sale and purchaseof the certificate between the applicant-association and the Sweden Company. The stateof affairs would show that the applicant-association on behalf of their members sold theircertificates to the Sweden Company and earned5% commission in the transaction. Pre-depositordered. [2013-TIOL-1677-CESTAT-MAD]

v Service tax is not payable when spare partssold on which VAT discharged: Appellant isan authorized Service agents for Honda cars andundertake maintenance/service of motor cars.Appellant selling spare parts for MV during thecourse of undertaking repair on which they werepaying VAT. As per Master Circular dated

23/08/2007, ST is not leviable on a transactiontreated as sale of goods and subject to levy ofSales Tax/VAT. In a case where transactioninvolves both sale of spare parts and alsorendering of services, the value of such spareparts should be excluded if sales tax/VAT hasbeen discharged on such sales as is evident frominvoices/bills issued. [2013-TIOL-1669-CESTAT-MUM]

v Service tax would not be applicable onmarket research service conducted in Indiafor foreign Party: Appellant conducting marketresearch on behalf of customers situatedabroad.Results of research are communicatedto clients abroad and consideration received inconvertible foreign exchange. Services have tobe considered as export of service and wouldnot be liable to Service Tax. [2013-TIOL-1667-CESTAT-MUM]

v Service tax credit available for the invoicesaddressed at branch office: Appellant hasbranches at ten places in India and some of theinvoices by service providers are relating tobranch offices. As Appellant paying ST fromMumbai main office in respect of all branch officesthere is nothing wrong in main office taking credit.[2013-TIOL-1667-CESTAT-MUM]

v Service tax applicable for commission paidto foreign agent: Demand of service tax oncommission paid to overseas commission agent.The service is taxable as "Business AuxiliaryService" and chargeable in the hands of theapplicant under provisions of section 66A ofFinance Act, 1994 read with Rule 3(iii) ofTaxation of Service (Provided from Outside Indiaand Received in India), Rules 2006. [2013-TIOL-1665-CESTAT-MAD]

v Service Tax on Ship Management service:Before the adjudicating authority the applicantdid not make any submission that the paymentsremitted abroad were in relation to the paymentsmade to applicant's own staff and did notdemonstrate evidence to prove this contention.The definition as given in "Ship ManagementService" would cover arrangements of crew,victualling and supporting of such crew. Such

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service if done by any person located abroad iscovered by clause (iii) of Rule 3 of Taxation ofServices (Provided from Outside India andReceived in India) Rules, 2006. The servicebecomes taxable once the recipient is located inIndia and provider is located outside India. [2013-TIOL-1611-CESTAT-MAD]

v Appeal below Rs.5 lakhs is not tenable inCESTAT: Even though appeal was filed prior toissue of CBEC Instruction in F.No.390/Misc./163/2010-JC., Dated: August 17, 2011 prescribingmandatory limits for filing appeal by Revenue, inthe light of the decision of High Court ofKarnataka in the case of Commissioner ofIncome Tax, Bangalore vs. Ranka&Ranka [2012-TIOL-178-HC-KAR-IT ] appeal is notmaintainable. [2013-TIOL-1607-CESTAT-MUM]

INCOME TAXv Income Tax on accrued benefit of Advance

License and DEPB - An income accrues once itbecomes due but it must necessarily beaccompanied by a corresponding liability of theother party to pay the same. When an exporter,earns entitlements under the DEPB and theAdvance License, such entitlements do notbecome an income in the hand of the exporterunless it does actual import of raw materials andit also becomes a liability for the Customs to allowthe same. When an income accrues but there isno corresponding liability for the same, suchincome is only hypothetical and cannot besubjected to Income Tax. [2013-TIOL-52-SC-IT-LB]

v Unabsorbed Depreciation and section 10Abenefit - Unabsorbed depreciation carriedforward by the EOU unit from earlier years is tobe set off against the profits before computingexemption benefits under Ss 10A/10B. [2013-TIOL-53-SC-IT-LB]

v Independence of Companies, Separate Entityprinciple - In the context of taxation on Income,assessee and group companies are different.Incase, assessee has transferred shares of groupcompanies at a low price deliberately in order touse the losses to set off the same with short termcapital gains, it can be considered as a genuine

transaction. It is fairly well accepted that asubsidiary and its parent are totally distincttaxpayers. Consequently, the entities subject toincome tax are taxed on profits derived by themon stand-alone basis, irrespective of their actualdegree of economic independence andregardless of whether profits are reserved ordistributed to the shareholders/participants.Furthermore, shareholders/participants that aresubject to (personal or corporate) income tax,are generally taxed on profits derived inconsideration of their shareholding/participations, such as capital gains. Nowadays,it is fairly well settled that for tax treaty purposesa subsidiary and its parent are also totallyseparate and distinct taxpayers. [2013-TIOL-852-HC-MUM-IT]

v Disallowance of Reimbursement expenditureand addition of notional Income - Re-imbursement of expenditure by the collectionagent which is incurred slowly for the purpose ofbusiness of the assessee and are also as perthe clause of MOU is an allowable expenditure.Further, addition of Notional Interest, justbecause interest were charged from some of thedebtors and not from others and addition ofNotional interest from who interest were notcharged by the company cannot be done.Yardstick will have to be applied from thebusinessman's point of view and certainly notaccording to the AO. [2013-TIOL-850-HC-ALL-IT]

v Return of Income - Filing of Return of Incomebefore the wrong assessing officer cannot beconsidered as non filing of Return. [2013-TIOL-851-HC-KAR-IT]

v Expenses allowable as deduction - In thecontext of business "date of setting up business"and "date of commencement of business" aretwo separate dates. There may be an intervalbetween a business which is set up and abusiness which is commenced and all expensesincurred after the setting up of the business andbefore the commencement of the business, allexpenses during the interregnum, would bepermissible deductions under section 10(2).[2013-TIOL-846-HC-DEL-IT]

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v Exemption from Minimum Alternate Tax & taxon distribution of dividend: Sunset clause ofexemption introduced by provisos to Sec 115JBand 115O of Income Tax Act, 1961 added byFinance Act 2011. Amendments introducing theabove proviso were constitutional. Every fiscallegislation providing for tax exemption must havelife span fixed in enactment. It is settled principlethat there can be no permanent tax exemptionor incentive in fiscal legislation. RDEPB ealizingthis lapse, government introduced impugnedprovisos restricting exemption only for particularperiod and these amendments are prospective

in nature. Hence, impugned amendments wereneither unreasonable nor arbitrary and notviolation to constitution of India. [2013 (295)E.L.T 641 (Kar.)]

v Right to Information: Information about top tenpersons whose income tax arrears had beenwritten off is merely statistical information. As perSec 8 of Right to Information Act, 2005, thepeople of country have right to know the identityof individual/company/firm whose Income taxliabilities have been written off. [2013 (295) E.L.T690 (CIC)]

v Orissa Lawyers SK Mohanty&ChittaranjanDas selected for appointment as CESTAT Membersafter interview by selection committee heading by Justice Patnaik of Supreme Court.

v Cabinet okays setting up of 6 new Benches of CESTAT-new Benches to be set up atChandigarh, Allahabad, Hyderabad and additional Benches to be set up at Delhi, Mumbai &Chennai

v Haryana lowers VAT on textile products bed sheets, towels, curtains, saris, ladies suits, carpets,druggets from 12.5 per cent to 5 per cent

v Arundhati Bhattacharya appointed as First woman Chairperson of SBI

v Shobha Chari gets charge of Member(Budget) in CBEC on retirement of Sheila Sangwan

v J Chaturvedi appointed as Member of Customs & Excise Settlement Commission Chennai

v Nobel Peace Prize goes to Organisation for Prohibition of Chemical Weapons

v CBDT considering extension of last date for online filing of Tax Audit Report after Delhi HCdirects CBDT to constitute Committee to examine representation of CAs regarding difficultiesin uploading of Tax Audit Reports

v Mala Srivastava, Joy KumariChander& SB Singh selected for appointment as CBEC Member

v AK Jain joins as new Member of CBDT

v SS Rana appointed as Member of Authority for Advance Rulings(Customs & Excise)

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