Draft Circular pertaining to disposal of seized/confiscated cylinder filled with refrigerant gases
F. No. 711/20/2013-Cus (AS)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
(Anti-smuggling Unit)
5th floor, Hudco Vishala Building,
Bhikaji Cama Place, R.K. Puram, New Delhi
Dated: 14.08.2014
ADDRESSED TO ALL STAKE HOLDERS
NOTE
Subject: Draft Circular pertaining to disposal of seized/confiscated cylinder filled with refrigerant gases seeking comments thereon- reg.
Your attention is invited to Circular no. 20/2009 -Cus dated 19.06.2009 on disposal of refrigerant gases. Looking into the difficulties faced by the field formations in disposal of refrigerant gases, a fresh circular on the issue is proposed to be issued to address the issue. Copy of the draft circular is enclosed below.
2. Feedback and suggestions are solicited from the stake holders for improvement / amendment in the same, to make the circular effective for speedy disposal of hazardous refrigerant gases. The comments / suggestions may be sent at acmallick@nic.in.
Encl: As above
(A.C. Mallick)
Under Secretary (AS)
Email: acmallick@nic.in
Telefax: 011-26177577
Draft Circular
F. No. 711.20.2013 Cus (AS)
Sir/ Madam,
Subject: Disposal of seized / confiscated cylinders filled with refrigerant gases – regarding.
Attention is invited to the Board's Circular No 20/2009-Customs dated 19.06.2009 as amended vide corrigenda dated 18.10.2010 and 15.02.2011 on the above subject. It has been brought to the notice of the Board that the field formations are facing difficulties with regard to disposal of seized / confiscated cylinders filled with refrigerant gases. Accordingly, the matter was taken up with Chief Controller of Explosives, Petroleum & Safety Organization(PESO), Nagpur; Director, Ozone Cell -Ministry of Environment and Forest (MoEF), New Delhi and the Refrigerant Gas Manufacturers Association (REGMA) – (an association of HCFC/HFC refrigerant gas producers in India). Based on the feedback received from them and after examination of the matter, the following instructions in this regard are issued in supersession of all earlier Circular /Instructions on the above subject:-
1. To facilitate a regulatory framework for smoother and safe disposal of such seized / confiscated cylinders filled with refrigerant gases the following need to be observed:
i. As per Rule 3 of the Gas Cylinder Rules, 2004 (in supersession of the Gas Cylinders Rules, 1981), framed under the Explosives Act, 1884, No person shall fill any cylinder with any compressed gas or import, possess or transport any cylinder so filled or intended to be filled with such gas unless
(a) such cylinder and its valve have been constructed to a type and standard specified in Schedule 1 as amended from time-to-time by an order issued by the Chief Controller,
(b) the test and inspection certificates issued by the inspecting authority in respect of cylinder and its valve are made available to the Chief Controller and prior approval of the said authority is obtained.
ii. As per Rule 29 of the said Rules, no person shall import any cylinder filled or intended to be filled with any compressed gas except under and in accordance with the conditions of a licence granted under these rules and the relevant provisions of Foreign Trade (Development & Regulations) Act, 1992.
iii Also, as per Rule 43 of the said Rules, no person shall fill any cylinder with compressed gas and no cylinder filled with compressed gas shall be possessed by anyone except under and in accordance with the conditions of a licence granted under these rules.
iv. In accordance with the provisions laid down under the Gas Cylinder Rules, 1981, Department of Explosives issues licence for filing/ re-filing / storing / transporting in gas cylinders. The disposal of gas cylinders which are not of a make and type approved by Chief Controller of Explosives, Nagpur under Rule 3 of the Gas Cylinders Rules, 2004 by way of auction can thus be made only to those parties which possess valid licences from PESO for filling of refrigerant gases into cylinders and facilities for storage of filled refrigerant cylinders and to deal with the same in the manner laid down under the Gas Cylinder Rules, 2004 (to store compressed gas in pressure vessels or vessels or cylinders and to produce / handle / store / fill refrigerant gases).
v. The said cylinder should be de-shaped after disposal of the refrigerant gas complying with the requirements of Rule 36 of the Gas Cylinder Rules, 2004. The cylinders after flattening or cutting may be sold as scrap. In this connection IS: 9200 may please be referred for the procedure for the condemnation and scrapping of such cylinders. The report of the same need to be forwarded to the Chief Controller of Explosives, Nagpur for record.
vi. Empty Seized /Confiscated cylinders (with no refrigerant gas inside) need not necessarily be auctioned by the Department to the firms listed under this Circular only and after getting it verified that the same are empty, may be disposed of by General auction / sold as scrap after obtaining undertaking to dispose of same as per requirements of Rule 36 of the Gas Cylinder Rules, 2004 following IS: 9200 procedure. The Controller of explosives has been requested to facilitate PESO permission to the purchaser firms of refrigerant gases from Customs for destruction/disposal of decanted cylinders in a week's time of putting in the application.
2 India, being a signatory to the Montreal Protocol- the multilateral environment treaty, needs to comply with the agreed schedule of production and consumption for phase-out of Ozone Depleting Substances (ODSs), including Hydro chlorofluorocarbons (HCFCs), and to comply with the regulatory regime in respect of consumption and production of these substances in India.
2.1 Chlorofluorocarbons (CFC 11 and CFC12) are already phased -out under the Montreal Protocol and are not allowed to be imported, produced, consumed in India and exported out of India under the ODS Rules. Hence, no one can participate in off-take of the seized cylinders containing CFCs. As it is a banned item and cannot be reprocessed/disposed off due to the above reasons, the importer should be asked to send the material back with punitive measures.
2.2 As a measure of accelerated phase-down of HCFCs under the Montreal Protocol, the Consumption of HCFCs in India is now frozen. Imports of HCFC 22 and their Blends are, therefore, not allowed in India without Licence as per the revised ODS Rules and FTP hence the importer should be asked to send the material back with punitive measures.
2.3 From time to time, as a measure to stop illegal import of refrigerants, Customs has been seizing/confiscating cylinders filled with refrigerant gases being brought into the country illegally. Such seized / confiscated refrigerants cylinders are required to be disposed of by the Customs through an auction process, to the eligible firms, who are required to re-export the same after reprocessing, or dispose of the same as per procedure prescribed by the MoEF in accordance with ODS Rules and to submit details as per Rules to the MoEF.
2.4 It is also seen that HCFC-22 is often imported by unscrupulous elements by mislabelling and misdeclaring the same. To prevent such illegal imports, it is necessary to identify the actual refrigerant gas being imported by use of refrigerant identifiers, viz. Refrigerant Analysers available with DRI to identify the actual gas being imported before clearance.
2.5 As per the Montreal Protocol requirements, the MoEF monitors production, consumption, import and export of ODSs through the data submitted by various Producers, concerned Departments / Ministries and also through the audit. The MoEF has stated that in case of traders / wholesalers/ Stockiest or other consumers, there is no possible system of audit through which the movement of ODS including HCFCs can be traced within the country. Hence, no system can be put in place for tracking the flow of ODS if the confiscated/ seized cylinders are sold to such firms. The MoEF favors disposal of HCFCs to the firms which are Producers of HCFC-22 and who have the wherewithal , technical resources and competency to dispose of HCFC-22 through safe recycling and reprocessing in their production facilities.
3. After consultation with the Ozone Cell, MoEF the prescribed following criteria / guide lines are prescribed for disposing of the seized/confiscated refrigerant CFC empty/full cylinders:-
i. They should have specific permission to decant such cylinder in approved cylinders.
ii. They should have facility to decant the gas, purify it and repack the gas for export.
iii. The Custom authorities must take an undertaking from the producers of refrigerant gas (who are approved by CCOE to purchase and sale such material) that the gas purchased from the Customs is only for export with a valid licence and should not be delivered for domestics sales
iv. In case the CFC producers are not able to export the entire stock, they should take measures to ensure that the stockpile is destroyed as per the guidelines/procedure of Montreal Protocol. The disposal of refrigerant gases(CFCs) by incineration would also require clearance from State Pollution Control Boards and / or Central Pollution Control Board on which the Director, Ozone Cell has agreed to facilitate the approval process subject to the proposal being received through the Customs field formations/CBEC.
v. Name of the countries from where the cylinder containing such refrigerant gases were illegally imported should be intimated to the Ozone Cell, so that the National Ozone Units (NOUs) of those countries may be informed of the same to prevent further illegal import to India.
4. The disposal of seized refrigerant cylinders can be made through auction in accordance with the provisions laid down under the Gas Cylinder Rules, 2004 to the firms listed here under provided they are specifically permitted in writing to decant such gases in approved cylinders by the Chief Controller of Explosives. The intimation to this effect may be given to the Chief Controller of Explosives, Petroleum and Explosives Safety Organisation, C.G.O Complex, 5th Floor, Seminary Hills, NAGPUR -440006 and to the Director, Ozone Cell Ministry of Environment & Forests Core 4B, 2nd Floor, India Habitat Centre Lodhi Road, New Delhi-110003 Fax No : +91-11-24642175 Email : ozone-mef@nic.in along with details of cylinders who will ensure that the corresponding quantity is accordingly debited from the prescribed quota of the concerned manufacturer. The firms are already advised by the Chief Controller of Explosives to extend necessary cooperation and guidance for disposal of refrigerant cylinders to the Customs authorities in the interest of public safety whenever any reference in this regard is received by them.
1) M/s Navin Fluorine International Limited, 2nd Floor, Sunteck Centre, 37/40, Subash Road, Vile Parle (East) Mumbai 400057. Factory : New Industrial Area Agra – Mumbai Road Dewas – Madhya Pradesh, PIN – 455002 India Tel: 91 261 2890325 Fax: 91 261 2890288
2) M/s Gujarat Fluorochemicals Limited : INOX Towers, Plot No. 17, Sector 16-A, Noida – 201301 U.P. E-mail : sunilarora@gfl.co.in (Plant at VADODARA)
3) M/s SRF LIMITED, Block-C, Sector-45, Gurgaon-122003 Haryana E-mail ryrl@sanmargroup.com
4) M/s Chemplast Sanmar Limited, 9, Cathedral Road, Chennai-600086 E-mail ryrl@sanmargroup.com
5) M/s Hindustan Fluorocarbons Limited, (a Subsidiary of M/s, Hindustan Organic Chemical Ltd a Government of India Enterprise) 303, 3rd floor Babukhan Estate, Bashir Bagh, Hyderabad 500001 Email : hiflonpurchase@gmail.com
5.1 Since only above mentioned firms are eligible so far to participate in auction the field formations taking up disposal of such refrigerant gas cylinders should communicate about the auction to all of them and to the Secretary, Refrigerant Gas Manufacturers Association (REGML-1), C/o SRF Limited, Block-C, Sector-45, Gurgaon-122003 to have better price and improved chances of disposal.
5-2 When the refrigerant cylinders to be auctioned are in large quantity, the auctioning authority may consider the option of having auction of smaller lots of cylinders (of 1,000 2,000 each) as a single enterprise may not be in a position to process such large quantity of cylinders.
5.3 All the field formations should send details regarding quantity and type of ripe for disposal refrigerant gas cylinders to the Commissioner, Directorate of Logistics,New Delhi (along with copy to the Under Secretary (Anti Smuggling Unit CBEC) by 31-08.2014 who will monitor the timely disposal of same by field formatins
6. Any difficulty in the implementation of the aforesaid measures may be brought to the notice of the Board. All the previous circulars / references issued on the subject may be deemed to have been superseded.
7. Suitable Public Notice may be issued for guidance of the trade.
Purchases cannot be bogus for mere listing of supplier as hawala dealer by Vat authorities
CA Sandeep Kanoi
ITAT Mumbai has in the case of Shri Rajeev G. Kalathil Vs. DCIT held that Purchases can not be termed as bogus by the AO merely because the supplier was listed as a hawala dealer by the Vat authorities.
First ground of appeal is about deleting an addition of Rs.13,69,417/- on account of non-genuine purchases.During the course of assessment proceedings,notices u/s. 133(6)of the Act were sent to some of the sundry creditors on random basis.However,notice in the cases of M/s D K Enterprises (DKE)and N B Enterprises(NBE)were returned back by the postal authorities with the "Not Known" remarks.Therefore,he was asked give correct addresses or in the alternative to explain as to why the purchases of Rs.5,05,259 from NBE and Rs. 8,64,158/- from DKE totaling to Rs. 13,69,417 should not be treated as bogus purchase. He was also asked to submit sample bills of those parties.The assessee submitted a letter dated 05-12- 2011 as under:
"……. we tried to communicate them but there is no response at all from parties. Further our person visited at parties' places as per address on our record, but parties are not available on respective places. Please find enclosed herewith letters from our banker stating the payment details to respective parties in subsequent year …"
The sample bills submitted contained TIN numbers of the vendors.The same were verified in the Maharashtra sales tax department official website www.mahavat.gov.in.The website had specifically put up the name of NBE with TIN number as 'Hawala Dealer' who issued bill without delivery of goods.As regards DKE,the website search did not yield any results for the TIN numbers shown in the bills.The AO concluded that the TIN number shown in DKE bill itself was bogus.After considering the submissions of the assessee,the AO held that same was not acceptable ,that merely payment to parties through banking channel did not prove the genuineness of purchase or genuineness of expenses made by the assessee.He made an addition of Rs. 13.69 lakhs (Rs.5.05 lakhs +Rs.8.65 lakhs)to the total income of the assessee.
Aggrieved by the order of the AO, assessee preferred an appeal before the First Appellate Authority(FAA).Before him it was argued that assessee had filed copies of bills of purchase from DKE and NBE,that both the suppliers were registered dealers and were carrying proper VAT and registration No.s,that ledger accounts of the parties in assessee's books showed bills accounted for,that payment was made by cheques,that a certificate from the banker giving details of cheque payment to the said parties was also furnished.Copies of the consignment,received from the Government approved transport contractors showing that material purchased was actually delivered at the site was furnished before the AO. It was also argued that some of the material purchased from the said parties were lying part of closing stock as on 31.03.2009 as per the statement submitted on record.After considering the assessment order and the submissions made by the assessee,FAA held that the transactions were supported by proper documentary evidences, that the payments made to the parties by the assessee were in confirmation with bank certificate,that the suppliers was shown as default under the Maharashtra VAT Act could not be sufficient evidences to hold that the purchases were non-genuine, that the AO had not brought any independent and reliable evidences against the assessee to prove the non-genuineness of the purchases, that there was no evidence regarding cash received back from the suppliers.Finally,he deleted the addition made by the AO .
Before us,Departmental Representative argued that both the suppliers were not produced before the AO by the assessee,that one of them was declared hawala dealer by VAT department, that because of cheque payment made to the supplier transaction cannot be taken as genuine.He relied upon the order of the G Bench of Mumbai Tribunal delivered in the case of Western Extrusion Industries.(ITA/6579/Mum/2010-dated 13.11.2013).Authrorised representative (AR) contended that payments made by the assessee were supported by the banker's statement, that goods received by the assessee from the supplie was part of closing stock,that the transporter had admitted the transportation of goods to the site.He relied upon the case of Babula Borana (282 ITR251),Nikunj Eximp Enterprises (P) Ltd. (216Taxman171)delivered by the Hon'ble Bombay High Court.
Wehave heard the rival submissions and perused the material before us.We find that AO had made the addition as one of the supplier was declared a hawala dealer by the VAT Department. We agree that it was a good starting point for making further investigation and take it to logical end.But,he left the job at initial point itself.Suspicion of highest degree cannot take place of evidence.He could have called for the details of the bank accounts of the suppliers to find out as whether there was any immediate cash withdrawal from their account.We find that no such exercise was done.Transportation of good to the site is one of the deciding factor to be considered for resolving the issue.The FAA has given a finding of fact that part of the goods received by the assessee was forming part of closing stock.As far as the case of Western Extrusion Industries. (supra)is concerned,we find that in that matter cash was immediately withdrawn by the supplier and there was no evidence of movement of goods.But,in the case before us,there is nothing,in the order of the AO,about the cash traial.Secondly,proof of movement of goods is not in doubt. Thererfore,considering the peculiar facts and circumstances of the case under appeal,we are of the opinion that the order of the FAA does not suffer from any legal infirmity and there are not sufficient evidence on file to endorse the view taken by the AO.So,confirming the order of the FAA,we decide ground no.1 against the AO.
Source- Shri Rajeev G. Kalathil Vs. DCIT (ITAT Mumbai), ITA No.6727/Mum/2012,Date of Pronouncement : 20-08-2014
HC directed fresh examination to ensure that sum indicated in seized docs was undisclosed investment
August 25, 2014[2014] 47 taxmann.com 366 (Delhi)
IT : Assessee claimed to have made payment of undisclosed amount towards a project but name of said project did not appear in any seized documents, matter was to be remanded for fresh examination
IT : Where Commissioner (Appeals) deleted addition of donations being undisclosed income, but Tribunal found certain documents expressly mentioned receipts of money and, therefore, remanded matter back, such remand was just
ALLAHABAD HIGH COURT - Income Tax
Exemption u/s 80G(5)(vi) – Registration u/s 12AA granted – Section 12AA and 80G operate under different fields or not – Held that:- The Tribunal in its judgment has wrongly proceeded on the basis that the sole reason for refusing an exemption u/s 80G was the denial of the registration u/s 12AA and since the Tribunal had already ordered the grant of registration under Section 12AA, an exemption u/s 80G should be allowed - there is a basic fallacy in the judgement of the Tribunal which proceeded on the basis that the only reason for refusing exemption u/s 80G was the refusal of the registration u/s 12AA - Since this premise is erroneous, the matter is to be remitted back to the Tribunal for fresh adjudication – Decided in favour of Revenue.
Income Tax
Whether even if investments made by assessee earn no income, expenditure incurred on such investments is liable to disallowed under Rule 8D(2) - NO: ITAT
THE assessee is a non-banking financing company engaged in the business of investing in micro finance companies in India. Assessee entered into a fund management agreement with CAPL as per which, the said company would render consultation services to the assessee in the matter of investment etc. as fund manager. Assessee filed its return declaring 'Nil' income. Initially the return was processed u/s 143(1) and refund on account of TDS was also issued to the assessee. Subsequently, assessee's case was selected for scrutiny. During the scrutiny assessment proceeding, after examining the books of account and other details submitted by the assessee, it was noted by the AO that the fund manager i.e. CAPL was holding 18.7% shareholding in the assessee company. One of the Director in the assessee company was also a director in CAPL with 99% shareholding. He further noticed that in lieu of the services rendered, the fund manager was to be paid remuneration to the fund based services. It was further noticed that while computing its income, assessee has disallowed expenditure u/s 14A read with Rule 8D, out of the fund management fees claimed. After examining the details, AO was of the view that the disallowance of fund management fees worked out by the assessee was not correct. On the basis of the agreement with fund manager, AO worked out the fees paid to the fund manager.
The issue before the Bench is - Whether even if investments made by assessee earn no income, expenditure incurred on such investments is liable to disallowed under Rule 8D(2). And the tribunal's answer is NO.
ITAT directs AO to reconsider issue of grossing-up as assessee didn't furnish details of tax withheld from sum paid
August 25, 2014[2014] 47 taxmann.com 370 (Delhi - Trib.)/[2014] 33 ITR(T) 118 (Delhi - Trib.)
IT/ILT : Income being payable net of tax, for purpose of deduction of tax, such amount of payment would be increased by amount of tax
IT : Where software was purchased in earlier year and fees and subscription was paid, expenditure would be revenue expenditure
IT : Where assessee had furnished all details, Assessing Officer should not disallow communication and travelling expenses merely on ground that expenditure was excessive in comparison to preceding year
Claim of disputed liability won't be a bar in allowing its deduction unless assessee gets relief in that regard
August 25, 2014[2014] 47 taxmann.com 376 (Delhi - Trib.)/[2014] 29 ITR(T) 42 (Delhi - Trib.)
IT: Where assessee disputes a liability, it would be no bar in allowing deduction for same unless and until assessee gets relief in that regard
DVAT – Furnishing of advance information in respect of functions organised in Banquet Halls, Farm houses, Marriage/Party Halls, Hotels and Open Ground etc.
GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI
DEPARTMENT OF TRADE AND TAXES
(POLICY BRANCH)
VYAPAR BHAWAN, I.P.ESTATE, NEW DELHI-110 002
No. F.3(393)/Policy/VAT/2013/311-317
Dated 21/08/2014
CIRCULAR No. 9 of 2014-15
Sub: Furnishing of advance information in respect of functions organised in Banquet Halls, Farm houses, Marriage/Party Halls, Hotels and Open Ground etc.
This department vide Notification No. 3(393)VAT/2013/1085-1096 dated 19/02/2013, directed the owner/lessee/custodian of the venue where programmes/functions are to be organised In the Banquet Halls, Farm Houses, Marriage/Party Halls, Hotels, Open Ground etc, where food and/or liquor items are to be supplied/provided and cost of booking exceeds rupees one lakh per function to get themselves enrolled by filing form BE-1 and thereafter to submit return in Form BE-2 at least 3 days before first day of a month and for second fortnight by 12th of the month.
This notification was made effective from the 2nd fortnight of January, 2014 vide Notification dated 27/12/13. All concerned are hereby directed to file the requisite information in Form BE-1 and BE-2 in a timely manner to avoid imposition of penalty under section 86 of the DVAT Act, 2004.
This issues with prior approval of the Commissioner, VAT.
(Sanjeev Ahuja)
Spl. Commissioner (Policy)
Coal blocks allocated since 1993 is illegal: SC
In the case of Manohar Lal Sharma Vs. The Principal Secretary & Ors., Honourable SC has held that entire allocation of coal block as per recommendations made by the Screening Committee from 14.07.1993 in 36 meetings and the allocation through the Government dispensation route suffers from the vice of arbitrariness and legal flaws. The Screening Committee has never been consistent, it has not been transparent, there is no proper application of mind, it has acted on no material in many cases, relevant factors have seldom been its guiding factors, there was no transparency and guidelines have seldom guided it. On many occasions, guidelines have been honoured more in their breach. There was no objective criteria, nay, no criteria for evaluation of comparative merits. The approach had been ad-hoc and casual. There was no fair and transparent procedure, all resulting in unfair distribution of the national wealth. Common good and public interest have, thus, suffered heavily. Hence, the allocation of coal blocks based on the recommendations made in all the 36 meetings of the Screening Committee is illegal.
The allocation of coal blocks through Government dispensation route, however laudable the object may be, also is illegal since it is impermissible as per the scheme of the CMN Act. No State Government or public sector undertakings of the State Governments are eligible for mining coal for commercial use. Since allocation of coal is permissible only to those categories under Section 3(3) and (4), the joint venture arrangement with ineligible firms is also impermissible. Equally, there is also no question of any consortium / leader / association in allocation. Only an undertaking satisfying the eligibility criteria referred to in Section 3(3) of the CMN Act, viz., which has a unit engaged in the production of iron and steel and generation of power, washing of coal obtained from mine or production of cement, is entitled to the allocation in addition to Central Government, a Central Government company or a Central Government corporation.
In this context, it is worthwhile to note that the 1957 Act has been amended introducing Section 11-A w.e.f. 13.02.2012. As per the said amendment, the grant of reconnaissance permit or prospecting licence or mining lease in respect of an area containing coal or lignite can be made only through selection through auction by competitive bidding even among the eligible entities under Section 3(3)(a)(iii), referred to above. However, Government companies, Government corporations or companies or corporations, which have been awarded power projects on the basis of competitive bids for tariff (including Ultra Mega Power Projects) have been exempted of allocation in favour of them is not meant to be through the competitive bidding process.
As we have already found that the allocations made, both under the Screening Committee route and the Government dispensation route, are arbitrary and illegal, what should be the consequences, is the issue which remains to be tackled. We are of the view that, to this limited extent, the matter requires further hearing.
By way of footnote, it may be clarified and we do, that no challenge was laid before us in respect of blocks where competitive bidding was held for the lowest tariff for power for Ultra Mega Power Projects (UMPPs). As a matter of fact, Mr. Prashant Bhushan, learned counsel for Common Cause submitted that since allocation for UMPPs is in accord with the opinion given in Natural Resources Allocation Reference20 and the benefit of the coal block is passed on to the public, the said allocations may not be cancelled. However, he submitted that in some cases the Government has allowed diversion of coal from UMPP to other end uses i.e. for commercial exploitation. Having regard to this, it is directed that the coal blocks allocated for UMPP would only be used for UMPP and no diversion of coal for commercial exploitation would be permitted.
Manohar Lal Sharma Vs. The Principal Secretary & Ors. (Supreme Court), Writ Petition (CRL.) NO. 120 OF 2012, Date of Pronouncement- August 25, 2014.
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