Where duty is mistakenly paid in excess, Assessee is entitled to refund
Where the duty is mistakenly paid in excess, the Assessee is entitled to refund – No need to challenge the assessment of the Bill of Entry
Cipla Ltd. Vs. Commissioner of Customs (ACC & IMPORT), Mumbai [2015-TIOL-201-CESTAT-MUM]
Cipla Ltd.(the Appellant)imported Fermoterol Fumarate and filed a Bill of Entry dated March 31, 2010 for home consumption. The Appellant paid excess CVD at 10% instead of effective rate of 4% in terms of unconditional exemption Notification No. 4/2006-CE dated March 1, 2006 (the Notification) and therefore filed a refund claim Rs. 1,33,779/- towards the excess paid duty.
The Assistant Commissioner of Customs relying on the ratio of the judgement in the case of CCE Vs. Flock India [2000 (120) ELT 285 (SC] and Priya Blue Industries Ltd. [2004 (192) ELT 145 (SC)] rejected the refund claims on the ground that the Appellant has not challenged the assessment of Bill of entry. On appeal being filed,the Ld. Commissioner (Appeals) upheld the order of the Assistant Commissioner. Being aggrieved, the Appellant preferred an appeal before the Hon'ble CESTAT, Mumbai.
The Hon'ble CESTAT, Mumbai relying on the Aman Medical products Ltd. Vs. CC, [2009-TIOL-566-HC-DEL-CUS] ("Aman Medical Case") held as under:
- In the present case, there is no dispute that at the material time of import the effective rate of CVD was 4% by the Notification and the Appellant has paid excess duty of 10% by oversight. Further, the judgments relied upon by the lower Appellate Authority have been distinguished by the Hon'ble Apex Court in Aman Medical Case;
- In light of the judgement of the Hon'ble Delhi High Court in the Aman Medical Case, it is settled that where the duty was mistakenly paid in excess, there is no need to challenge the assessment of the Bill of Entry. The refund of excess paid duty is admissible;
- Although the Revenue in the instant case contended that the judgement in Aman Medical Case has been challenged before the Hon'ble Supreme Court, but it is observed that though the Revenue has filed appeal before the Supreme Court, the Apex Court has not granted the stay of operation of the order of the Hon'ble High Court of Delhi. Therefore, the judgement of the Delhi High Court in case of Aman Medical Case is binding.
Therefore, the Hon'ble Tribunal allowed the refund of excess paid CVD to the Appellant with an instruction that the sanctioning Authority must verify the aspect of unjust enrichment before sanctioning the refund.
Distribution fees paid to non-resident for rights to distribute a service has nothing to do with the Imported Goods, therefore enhancement of Assessable Value of Imported Goods to the extent of remittance of distribution fees is untenable Multi Screen Media Pvt. Ltd. Vs. Commissioner of Customs, Mumbai [2015-TIOL-191-CESTAT-MUM] Multi Screen Media Pvt. Ltd., Mumbai (the […]
Distribution fees paid to non-resident for rights to distribute a service not includible in Assessable Value of Imported Goods
Distribution fees paid to non-resident for rights to distribute a service has nothing to do with the Imported Goods, therefore enhancement of Assessable Value of Imported Goods to the extent of remittance of distribution fees is untenable
Multi Screen Media Pvt. Ltd. Vs. Commissioner of Customs, Mumbai [2015-TIOL-191-CESTAT-MUM]
Multi Screen Media Pvt. Ltd., Mumbai (the Appellant) imported 72 consignments of Digi beta tapes/beta tapes/video tapes (Imported Goods) by courier through CSI Airport, Mumbai, during June to December, 2007 on payment of Customs duty.
During the Departmental investigations, it was found that the Appellant had entered into the Service Agreement namely "Programme Acquisition and Service Agreement" and the Distribution Agreement with MSM Satellite Singapore Pvt. Ltd. (Foreign Entity). Foreign Entity was engaged in broadcasting of channels from Singapore and they regularly sent foreign movies, programmes and other contents acquired by them to the Appellant for the purpose of distribution to channels, for which the Appellant remitted Rs. 19.76 Crores to Foreign Entity towards their share of distribution fees.
The Revenue contended that such distribution fees will be included in the Assessable value of Imported Goods in terms of Rule 10(1)(c) of the Customs Valuation Rules, 2007 (the Valuation Rules) as distribution fee is a condition of sale of Imported Goods. Therefore a Show Cause Notice was issued, which was adjudicated by the Commissioner of Customs, CSI, Mumbai (the Commissioner). The Commissioner ordered for re-assessment of Imported Goods resulting in enhancement of value of Imported Goods to the extent of remittance of distribution fees and confirmed the demand of differential Customs duty of Rs. 4.83 Crores along with interest, penalty and also held that the Imported Goods are liable for confiscation. Being aggrieved, the Appellant preferred an Appeal before the Hon'ble CESTAT, Mumbai.
The Hon'ble CESTAT, Mumbai held as under:
- The payment of distribution fees was for acquiring non-exclusive rights for satellite delivered, advertiser supported, and television service. Hence, payment made was for the rights to distribute a service and has nothing to do with Imported Goods;
- The letter dated December 28, 2007 addressed to the Standard Chartered Bank reveals that the Appellant remitted Rs. 19.76 Crores towards distribution fees in terms of the Distribution Agreement and this factual position was confirmed by the Chartered Accountant's Certificate dated December 28, 2007 for remittance under Section 195 of the Income Tax Act, 1961. Hence, no evidence was adduced to support the Department's contention;
- The Appellant was registered under the taxable category of 'Broadcasting Services' and distribution fees collected has been declared for payment of Service tax in their Service Tax Returns filed;
- The Commissioner mis-directed himself in including the value of a taxable service rendered in India in the value of the Imported Goods. The television programmes have been aired from Singapore and the tapes were not required for broadcasting the programmes. The requirement of the tapes was for the limited purpose of obtaining certification from Central Board of Film Certification and technical quality checks and has nothing to do with the distribution activity. Therefore, there are no records to show that the remittance made to Foreign Entity had anything to do with the Imported Goods.
Hence, the Order enhancing the value of the Imported Goods to the extent of remittance of distribution fees and demanding Customs duty thereon under the Valuation Rules was set aside by the Hon'ble Tribunal as being unsustainable in law.
IT/ILT: Where a company was not a persistent loss making company, merely because it had incurred loss during impugned financial year, it could not be rejected from list of comparables
IT/ILT: Data to be used in analyzing comparability of an uncontrolled transaction with an International transaction shall be data relating to financial year in which international transaction had been entered into
IT/ILT: Working capital is a factor which influences price in open market and, therefore, requisite adjustment on account of working capital has to be made while determining arm's length operating margin of comparables
[2015] 53 taxmann.com 401 (Pune - Trib.)
IN THE ITAT PUNE BENCH 'A'
John Deere India (P.) Ltd.
v.
Assistant Commissioner of Income-tax, Circle- 11 (1), Pune
IT/ILT: Data to be used in analyzing comparability of an uncontrolled transaction with an International transaction shall be data relating to financial year in which international transaction had been entered into
IT/ILT: Working capital is a factor which influences price in open market and, therefore, requisite adjustment on account of working capital has to be made while determining arm's length operating margin of comparables
[2015] 53 taxmann.com 401 (Pune - Trib.)
IN THE ITAT PUNE BENCH 'A'
John Deere India (P.) Ltd.
v.
Assistant Commissioner of Income-tax, Circle- 11 (1), Pune
When Auditors Get Mixed Up In M&A, Smaller Clients Get Hurt
When Auditors Get Mixed Up In M&A, Smaller Clients Get Hurt http://feedproxy.google.com/~r/ReTheAuditors/~3/1k87swfCCZQ/?utm_source=feedburner&utm_medium=email
Over at Medium.com I've written https://medium.com/bull-market/when-m-a-actors-share-auditors-targets-get-the-short-straw-4e7112df5f07 about a new academic study, Shared Auditors in Mergers and Acquisitions http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2254077, that documents an interesting, rarely commented on auditor conflict of interest. The data suggests that when an acquiring company and its target share the same auditor, the audit firms favor acquirers at the expense of the smaller target audit clients. The researchers are also more bold than I have ever seen in an academic study in alleging that auditors prioritize their own self-interest and larger clients by using confidential information about the smaller clients to benefit the big ones.
From the study:
"Results suggest that auditors frequently violate their duty to put the interests of their clients ahead of their own in what appears to be a failure to protect confidential client information within their practice offices."
There are plenty of studies that talk about shared advisors in M&A like investment banks and lawyers. Banks and lawyers are also known to favor the larger clients. But companies choose those advisors for the deals and, I assume, do so willingly and knowing that conflicts must be managed.
From the study:
We anticipate that shared auditors may favor acquisitive clients over targets for at least two reasons. First, an auditor's long-term incentives (even within an auditor's practice office) are more closely aligned with those of their acquisitive clients. Our intuition follows that applied to shared investment bank advisors who are more likely to favor acquiring firms when representing both a target and an acquirer in the same deal (Agrawal et al., 2013).
And…
We do not incorporate selection into our main analysis as selection issues with shared auditors in M&A appear to be less of a concern as compared to shared advisors in M&A deals (Agrawal et al., 2013). This is because both an acquirer and a target make the explicit choice to have a shared investment bank advise each of them for a specific transaction. In contrast, a shared auditor is a result of both a target and acquirer independently contracting with an audit firm to receive audit services prior to a bid being announced.
Recently the New York State Department of Financial Services (NYSDFS) http://www.dfs.ny.gov/ fined and sanctioned Deloitte and PricewaterhouseCoopers for sacrificing independence, integrity and objectivity while providing consulting services to Standard Chartered http://retheauditors.com/2012/08/07/service-provider-to-profit-deloitte-and-standard-chartered-bank/ and Bank of Tokyo-Mitsubishi http://retheauditors.com/2014/08/19/pwc-put-guy-who-whitewashed-for-bank-in-partner-spot/, respectively, that were mandated by regulatory sanctions against the banks. These regulatory actions go beyond a typical focus by the SEC and PCAOB on the audit relationships of public accounting firms only.
From my article at Medium https://medium.com/bull-market/when-m-a-actors-share-auditors-targets-get-the-short-straw-4e7112df5f07:
All of the largest public accounting firms provide advisory services that fall between the cracks of what the US Securities and Exchange Commission — which regulates public companies and their audits — and the PCAOB — which regulates auditors of public companies in a post-SOx environment — think they are supposed to monitor.
If you still think auditors would never risk the reputational damage of getting caught sharing confidential information to benefit one client over another, just look at what NYDFS says Deloitte did for Standard Chartered.
From a report I wrote for Forbes http://www.forbes.com/sites/francinemckenna/2013/06/21/deloitte-by-any-name-wont-be-monitoring-ny-banks-for-a-while/at the time:
[The NYDFS] fined the firm $10 million this week and banned Deloitte from accepting new consulting engagements http://www.dfs.ny.gov/about/press2013/pr1306181.htm at financial institutions regulated by Lawsky. Deloitte's violations took place while standing in the shoes of the regulator as a "monitor" at Standard Chartered. The original Deloitte engagement was the result of a 2004 joint written agreement between Standard Chartered and the New York State Banking Department – a DFS predecessor agency – and the Federal Reserve Bank of New York which identified several compliance and risk management deficiencies in the anti-money laundering and Bank Secrecy Act controls at Standard Chartered's New York branch.The order addresses Deloitte's "misconduct, violations of law, and lack of autonomy during its consulting work" at Standard Chartered Bank on those anti-money laundering (AML) issues.
From a press release http://www.dfs.ny.gov/about/press2013/pr1306181.htm from New York Governor Cuomo's office:
DFS's investigation into the conduct of firm professionals during its consulting work at Standard Chartered found that Deloitte:
Did not demonstrate the necessary autonomy required of consultants performing regulatory work.Based primarily on Standard Chartered's objection, Deloitte removed a recommendation aimed at rooting out money laundering from its written final report on the matter to the Department. The recommendation discussed how wire messages or "cover payments" on transactions could be manipulated by banks to evade money laundering controls on U.S. dollar clearing activities.
Violated New York Banking Law § 36.10 by disclosing confidential information of other Deloitte clients to Standard Chartered. A senior Deloitte employee sent emails to Standard Chartered employees containing two reports on anti-money laundering issues at other Deloitte client banks. Both reports contained confidential supervisory information, which Deloitte FAS was legally barred by New York Banking Law § 36.10 from disclosing to third parties.
All of the Big Four have corporate finance http://www.pwc.com/us/en/corporate-finance/about-pwc-corporate-finance-llc.jhtml, broker-dealer https://medium.com/bull-market/when-big-four-audit-firms-need-an-audit-they-choose-cheap-5c64d3d827b5 subs that are hungry for M&A work. The Big Four also go down market and pitch smaller public companies as audit clients by pricing below cost, sucking them in at the pre-IPO stage and spouting aspirational crap.
Now we know just what they are up to. You, smaller private company, are paying a premium for the prestige of a Big Four auditor but you're just chum http://en.wikipedia.org/wiki/Chumming for larger acquisitive shark audit clients. You may think that getting acquired is not such a bad thing. This study, however, says there is strong evidence you will be betrayed and cheated before you're swallowed whole.
Main page photo courtesy FineArtAmerica.com http://fineartamerica.com/featured/big-fish-small-fry-joan-pollak.html and the artist Joan Pollack.
__._,_.___
No comments:
Post a Comment