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Legislative and Regulatory Update
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In This Issue [No.36] Dec 30, 2002
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Secondary Market Department
Electronic Data Information Filing And Retrieval (EDIFAR)
Circular No. SMD/Policy/Cir- 27/2002 Dated 20.12.2002 : It has now been decided to make the requirement of filing of specific documents / statements applicable to further 500 companies, selected on the basis of market capitalization and turnover. These companies would be required to upload all the Statements / Information as mentioned in our circular SMD/Policy/Cir-13/2002 dated June 20, 2002, on the EDIFAR web site. This electronic filing would be applicable for these companies with effect from the quarter ending December 2002
Regulations
Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2002
Notification No. SO1328(E) Dated 18.12.2002 : In Securities and Exchange Board of India (SubstantialAcquisition of Shares and Takeovers) Regulations, 1997,in regulation 20, in sub-regulation (4) after clause (c), the following proviso has been inserted:
"Provided that the requirement of average of the daily high and low of the closing prices of the shares as quoted on the stock exchange where the shares of the company are most frequently traded during the two weeks preceding the date of public announcement, shall not be applicable in case of disinvestment of a Public Sector Undertaking"
Income-Tax (27th Amendment) Rules, 2002
Notification No. 398/2002 Dated 20.12.2002 : These rules shall be deemed to have come into force on the 1st day of April, 2002.Apart from other amendments ,following are the major amendmetns
1.New rule 18 DB has been inserted
"18DB- Prescribed area, facilities and amenities for multiplex theatres and particulars of audit report, for deduction under sub-section (7A) and clause (da) of sub-section 14 of section 80-IB "
2.In the Appendix II, new Form No. 10-CCBA has been inserted.
Railway Sports Promotion Board, New Delhi Notified for Section 10(23C)
Notification No 397/2002 Dated 19.12.2002 : Central Government has notified Railway Sports Promotion Board, New Delhi ,for Section 10(23C) for the assessment years 1999-2000 to 2001-2002 subject to certain conditions.
Institutions notified for Section 10(23C)(iv)
Notification No 395/2002 and No. 396/2002 Dated 13.12.2002 : The Society for Afro-Asian Association of Petroleum Geochemists, New Delhi and K. D. Malviya National Oil Museum, New Delhi have been notified for the sub-clause (iv) of clause (23C) of section 10 subject to the certain conditions,in respective notifications.
Petrotech, Petrotech Secretariat, New Delhi Notified for Section 10(23C)(iv)
Notification No 393/2002 Dated 13.12.2002 : Central Government has notified the “Petrotech, Petrotech Secretariat, New Delhi” for the sub-clause (iv) of clause (23C) of section 10 for the assessment years 2000-2001 to 2002-2003 subject to the certain conditions.
Issuance of Notification under Section 11C of Central Excise Act, 1944 Enforcement of recovery of arrears/duties - regarding.
Circular No. 75/684/2002 Dated 26.12.2002 : It has been decided that whenever a survey is floated for issuing/examining Notification under Section 11C of Central Excise Act, 1944, coercive action should not be taken for recovery of arrears/duties.
Diversion of credit taken on inputs for exempted products under the North-East Notifications for payment of central excise duty on other products -reg.
Circular No. 74/683/2002 Dated 24.12.2002 : It has been clarified that Notification No. 42/2002-CE(NT) seeks to disallow diversion of the credit taken on inputs used for manufacture of products exempted under the said North East notifications for payment of central excise duty on other products. Such diversion would imply payment of a greater amount of duty through account-current on the products exempted under the said North East notifications and thereby resulting in unintended benefit of higher amount of refund. Notification No. 61/2002-CE seeks to disallow such excess refund
Amendment to the Notifications Specified
Notification No. 61/2002 Dated 23.12.2002 : Central Goverment has made certain amendments in Notification No. 32/99 and No.33/99 dated 08.07.1999 by adding following proviso in both notifications :
“Provided that such refund shall not exceed the amount of duty paid less the amount of the CENVAT credit availed of, in respect of the duty paid on the inputs used in or in relation to the manufacture of goods cleared under this notification.”
Clarifications regarding Notification No. 56/2002-CE and 57/2002-CE both dated 14.11.2002
Circular No. 73/682/2002 Dated 19.12.2002 :It has been clarified that Notification No. 56/2002-CE and 57/2002-CE both dated 14.11.2002 for the State of J&K exempt that portion of the excise duty, which is paid by the manufacturers in cash. For this purpose, a suitable mechanism has been incorporated in the notifications.“Refund” envisaged in the notifications is not on account of any excise payment of excise duty by the manufacturers, but is basically designed to give effect to the exemption.notifications apply to goods cleared from a factory. As such, they do not apply to goods cleared from the warehouses.
Amendment to Notification No.39/2001 Dated 31-07-2001
Notification No. 60/2002 Dated 19.12.2002 : In para 3(ii) of Notification No.39/2001, for the words "the Chief Commissioner of Central Excise, Vadodara", the words "the Chief Commissioner of Central Excise, Ahemedabad" has been substituted.
CENVAT Credit (Amendment) Rules, 2002
Notification No. 42/2002 NT Dated 23.12.2002 : In the CENVAT Credit Rules, 2002, in rule 3, in sub-rule (3), after the proviso, the following proviso shall be inserted, namely:-
“Provided further that the CENVAT credit of the duty paid on the inputs used in the manufacture of final products cleared after availing of the exemption under the notification numbers 32/99-Central Excise, dated the 8th July 1999 [G.S.R. 508 (E) dated the 8th July 1999] and 33/99-Central Excise dated the 8th July 1999 [G.S.R. 509 (E) dated the 8th July 1999], shall be utilized only for payment of duty on final products cleared after availing of the exemption under the said notification numbers 32/99-Central Excise, dated the 8th July 1999 and 33/99-Central Excise, dated the 8th July 1999"
Amendment to Notification No.14/2002 dated 08.03.2002
Notification No. 41/2002 NT Dated 20.12.2002 : Central Goverment has made amendments in Notification No.14/2002 dated 08.03.2002 relating to Jurisdiction in terms of Commissioners of Central Excise/Chief Commissioners of Central Excise.
Amendment to Notification No. 21/2002 Dated 01.03.2002
Notification No. 140/2002 Dated 23.12.2002 : In Notification No. 21/2002 dated 01.03.2002 ,in the Table, after S. No. 101 and the entries relating thereto, entry relating to 2,3,5,6-Tetrachloropyridine has been inserted.
Assessment of Duty of Gold/Silver in SEZ - Clarification Reg.
Circular No. 95/2002 Dated 23.12.2002 : It has been decided that the gem and jewellery manufacturing units in SEZ operating under notification No. 137/2000-Cus dated 19-10-2000 shall also be allowed assessment of gold/silver at the effective rate of duty as specified in notification No 80/97-Cus dated 21-10-97, instead of assessment at tariff rate of duty. The value of bonds may be calculated accordingly. However, in case of clandestine removal, evasion of duty by collusion or any willful mis-statement or suppression of facts, the fine and penalty may be imposed adequately so as to make it equivalent to duty at the tariff rate.
Import of pets under Baggage - Regarding.
Circular No 94/2002 Dated 23.12.2002 : It has been decided that the import of pets (dog and cat only) upto two numbers per passenger may be allowed at one time subject to the production of the required health certificate from the country of origin and examination of the said pets by the concerned Quarantine Officer.Passengers may not be asked to produce the import licences or import sanitary permits
Removal of Brass Borings/Scrap to the Job Worker for Recycling into Brass Bars-Reg
Circular No. 93/2002 Dated 20.12.2002 : It has been decided that the EOUs, may be permitted to remove scrap/borings generated during the production process into DTA without payment of duty for conversion into ingots/bars and return thereof to the supplying EOU. For this purpose, the procedure prescribed in Board’s Circular No.65/2002-Cus dated 7.10.2002 may be followed.
Eligibility of duty free import of embellishments used in the manufacture of wallets and purses under Sr. No. 167A of Customs Notification No. 21/2002-Cus. under 1% Scheme - reg.
Circular No. 92/2002 Dated 20.12.2002 : It has been clarified that purses and wallets both made of leather would get covered under the broad heading of “handbags and similar containers all made of leather” as specified in condition 21A of said Sr. No. 167A would also be entitled for duty free benefit under 1% Scheme provided condition No. 21A of jumbo Customs Notification No. 21/2002-Cus. dated 01.03.2002 is satisfied
Transfer of Unutilized Raw Material from one EOU/ EPZ/ STP/EHTP Unit to another EOU/EPZ/STP/EHTP Unit under Paragraph 6.16 of the Policy- Reg.
Circular No. 91/2002 Dated 20.12.2002 : It has been clarified that in case the EOUs or units in EPZ/EHTP/STP are unable, for valid reasons, to utilise the goods imported or procured duty free, such unutilized goods may be allowed to be sold in DTA on full payment of duty or may be allowed to be transferred to other EOUs/ EPZ/EHTP/STP units under and in accordance with paragraph 6.16 of the Exim Policy
Issuance of Transhipment Permit at Ports on Saturdays - reg.
Circular No. 90/2002 Dated 19.12.2002 : It has been decided by the Board that Transhipment applications can be filed and Transhipment Permit can be issued on Saturdays.
Customs procedure for shipment of export cargo to Bangladesh by the inland waterways route from Haldia Docks Complex-reg.
Circular No. 89/2002 Dated 17.12.2002 : It has been decided to allow movement of export cargo to Bangladesh by the inland waterways route from Haldia Docks Complex.
Rate of Exchange of Conversion of Foreign Currencies Specified for Exports
Notification No. 82/2002 NT Dated 26.12.2002 : Board has determined ,for the purposes of sub-clause (i) of clause (a) of sub-section (3) of section 14 , the rate of exchange of conversion of each of the foreign currency relating to exported goods to be effective from the 1st January, 2003 .
Rate of Exchange of Conversion of Foreign Currencies Specified for Imports
Notification No. 81/2002 NT Dated 26.12.2002 : Board has determined ,for the purposes of sub-clause (i) of clause (a) of sub-section (3) of section 14 , the rate of exchange of conversion of each of the foreign currency relating to imported goods to be effective from the 1st January, 2003.
Levy of Service Tax on Depository Service under Banking & other Financial services.
Circular No. 50/11/2002 Dated 18.12.2002 : It has been clarified that service tax has been imposed on ‘banking and other financial service’ with effect from 16.07.2001. Depository service is one of the services covered under the category of ‘banking and other financial services.’ The service of ‘easi’ provided by CDSL is a part and parcel of depository service and hence covered under the category of “banking and other financial service”. They are liable to pay service tax on all depository service even if service is provided through Internet
Service Tax on Consulting Engineers - Reg.
Circular No. 49/11/2002 Dated 18.12.2002 : It has been clarified that once the design and drawings are completed by the construction company, it always seeks the approval of the client before proceeding with the construction. If the client suggests some changes they are incorporated in the design. This portion of the work is provided to its client and the service is definitely of a 'consulting engineer' and hence taxable.Moreover,The work of erection and commissioning of machineries and plants, is definitely one of providing "technical assistance" to buyer of plant/ machinery and is, therefore, in the nature of services provided by a " Consulting Engineer" and hence taxable
Resident Foreign Currency (Domestic) Account - Facility for Resident Individuals
Circular No. A.P. (DIR Series) Circular No.64 Dated 24.12.2002 : It has been decided that Resident Foreign Currency (Domestic) Account may also be credited with/opened out of, foreign exchange earned and/or gifts received from close relatives (as defined in the Companies Act) and repatriated to India through normal banking channels by resident individuals. Foreign exchange earnings could be through export of goods and/or services, royalty, honorarium, etc
Risk Management and Inter Bank Dealings
Circular No. A.P. (DIR Series) Circular No.63 Dated 21.12.2002 : Authorised dealers are permitted to offer foreign currency rupee swaps to a person resident in India to hedge long term exposures subject to the condition that the market access by Authorised dealers on account of such swaps shall not exceed USD 25 million.Moreover,Authorised dealers are now free to undertake investments in overseas markets subject to the limits approved by the banks’ Board of Directors.They are free to offer forward contracts to persons resident outside India subject to verification of the exposure in India. These forward contracts once cancelled are not eligible to be rebooked.
Prompt Corrective Action (PCA)
Notification No DBS.CO.PP.BC.9/11.01.005 / 2002-03 Dated 21.12.2002 : Scheme of Prompt Corrective Action has been finalized with the approval of the Board for Financial Supervision (BFS) and the Govt. of India.It has been decided to implement the scheme, initially for a period of one year.According to this scheme RBI will initiate certain Structured Actions in respect of the banks which have hit the Trigger Points in terms of CRAR, Net NPA and ROA.
Connected Lending by the select all-India Financial Institutions (FIs)
Notification No DBS.FID.No. C-10/ 01.02.00 / 2002- 03 Dated 21.12.2002 : It has been decided in consultation with the Government of India that, with immediate effect, the FIs should not grant any loan or advance on the security of its own shares or enter into any commitment for granting any loan or advance to or on behalf of:
i. any of its Directors, or
ii. any firm in which any of its Directors is interested as Partner, Manager, Employee or Guarantor, or
iii.any company (not being a subsidiary of the FI or a company registered under Section 25 of the Companies Act, 1956, or a Government Company) of which, or the subsidiary or the holding company of which, any of the Directors of the FI is a Director, Managing Agent, Manager, Employee or Guarantor or in which he holds substantial interests, or
iv.any individual in respect of whom any of its Directors is a Partner or a Guarantor
Opening of saving bank accounts in the name of certain bodies/organizations
Notification No. DBOD. Dir. BC. 51/13.03.00/2002-03 Dated 14.12.2002 : Banks are now allowed to open savings bank accounts in the names of State Government departments/bodies/ agencies in respect of grants/subsidies released for implementation of various programmes/schemes sponsored by State Governments on production of an authorization to the bank from the respective Government departments certifying that the concerned Government department or body has been permitted to open savings bank account
Relaxation in Daily Minimum Cash Resrve Maintenance Requirement
Press Release No. 666/2002-03 Dated 26.12.2002 : It has been decided to reduce the present requirement of cash reserve ratio (CRR) minimum of 80 per cent to 70 per cent with effect from the fortnight beginning December 28, 2002.This relaxation will provide flexibility to banks in choosing an optimum strategy of holding reserves depending upon their intra-period cash flows.
Trading in Government Securities on the Stock Exchanges Public Comments on the Draft Scheme invited
Press Release Dated 26.12.2002 : It is proposed to introduce trading in government securities on the stock exchanges in order to encourage wider participation of all classes of investors across the country, including retail investors. A scheme for implementation has been prepared in mutual consultation with the Ministry of Finance and Company Affairs, the Securities and Exchange Board of India and the Reserve Bank of India.The scheme envisages that trading in Government securities will be done in the same manner in which trading takes place in equities through a nationwide, anonymous, order driven, screen based trading system of the stock exchanges. This facility will be in addition to the present system of dealing in government securities through the Negotiated Dealing System (NDS) of the RBI
Cancellation of the certificate of registration as `surrendered'
Press Release No. 648/2002-03 Dated 21.12.2002 : RBI has cancelled as surrendered on December 16, 2002, the certificate of registration issued to Sree Lalithamba Auto and General Finance Private Limited, 3-2-392 and 3-2-393, Budhvarpet, Bus Stand Road, Nirmal, Andhra Pradesh-504 106 to carry on the business of a non-banking financial institution.
RBI's Substantial Relaxations for Forex Markets
Press Release No. 646/2002-03 Dated 21.12.2002 : The Reserve Bank of India has allowed banks to offer foreign currency-rupee swaps to their customers without any limit and exporters/importers to book forward contracts upto USD 100 million without documentary evidence as also freely rebook cancelled contracts. The Reserve Bank has also granted general permission to banks to offer hedging facility to foreign direct investments. Moreover, banks will be able to freely invest in overseas money and debt market instruments. Foreign banks will not be required to spread their requirement of hedging their Tier I capital over six months.
Acceptance of Third Party Exports under various Export Promotion Schemes
Circular No. 16/2002-2007 Dated 24.12.2002 : It has been clarified that in terms of Section 13 of the General Clauses Act, 1987, third party exports are permitted under various Exim Policy(s) for all the export promotion schemes. All the past cases of third party exports maybe regularised on submission of supporting documentation to the Licensing Authority.
Initiation of Anti-Dumping Investigation
Notification No 14/42/2002-DGAD Dated 19.12.2002 : Anti-Dumping Investigation Concerning Import of Potassium Carbonate Originating in or Exported from European Union (EU), China PR, Korea ( RP ) and Taiwan has been initiated.
Preliminary Findings regarding Anti-Dumping Investigation
Notification No. 14/13/2002-DGAD Dated 11.12.2002 : Preliminary Findings regarding Anti-Dumping Investigation Concerning Imports of Induction Hardened Forged Steel Rolls from Russia, Ukraine and Korea RP have been published.
Exemption to Companies specified from provisions of Rule 31(2) of the Explosives Rules, 1983
Notification No. SO1334(E) , No. SO1335(E) and No SO1336(E) Dated 19.12.2002 : Central Goverment has exempted Oil India Ltd.,Dibrugarh ,ONGC Ltd., Nazira and Kumagai - Skansa - HCC-ITOCHU Group, Delhi from provisions of Rule 31(2) of the Explosives Rules, 1983 for import of the explosives specified in respective notifications.
Shri V K Duggal Appointed as Chairperson of the Committee for the purpose of CPCSEA
Notification No. SO1350(E) Dated 20.12.2002 : President has appointed Shri V K Duggal, Special Secretary, Ministry of Environment and Forests as Chairperson of the Committee for the purpose of Control and Supervision of Experiments on Animals (CPCSEA) till further orders.
Delegation of Powers of Central Government to Commissioner of Railway Safety, New Delhi Under the Delhi Metro Railway (Operation and Maintenance) Act, 2002
Notification No. SO1331(E) Dated 19.12.2002 : Central Government has directed that its powers under section 20 of the Delhi Metro Railway (Operation and Maintenance) Act, 2002 shall also be exercised by the Commissioner of Railway Safety, Northern Circle, New Delhi, subject to certain conditions.
President's assent to Bills
Dated 24.12.2002,26.12.2002 and 27.12.2002 : The President has given his assent to the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Bill, 2002, the Negotiable Instruments (Amendment and Miscellaneous Provisions) Bill, 2002, the Salaries and Allowances of Officers of Parliament and Leaders of Opposition in Parliament (Second Amendment) Bill, 2002 and the Mysore State Legislature (Delegation of Powers) Repeal Bill, 2002 on 24.12.2002 ,the Unit Trust of India (Transfer of Undertaking and Repeal) Bill, 2002, the Securities and Exchange Board of India (Amendement) Bill, 2002, the Delhi Metro Railway (Operation and Maintenance) Bull, 2002, the Constitution (Schedule Castes) Orders (Second Amendment) Bill, 2002, the Consumer Protection (Amendment) Bill, 2002 and the Merchant Shipping (Amendment) Bill, 2002 on 26.12.2002 and the Medical Termination of Pregnancy (Amendment) Bill, 2002, the Countess of Dufferin’s Fund (Repeal) Bill, 2002, the Prevention of Food Adulteration (Extension to Kohima and Mokokchung Districts) Repeal Bill, 2002, the Appropriation (Railways) No.5 Bill, 2002, the North-Eastern Council (Amendment) Bill, 2002 and the Suppression of Unlawful Acts Against Safety of Maritime Navigation and Fixed Platforms on Continental Shelf Bill, 2002 on 27.12.2002
Bills passed and introduced during Winter Session of Parliament
Dated 24.12.2002 : 42 Bills were passed and of the Bills introduced during the Session, five Bills remained pending. Some inmportant bills passed are Constitution (Ninety-third Amendment) Bill, 2002,Securities and Exchange Board of India (Amendment) Bill, 2002,Unit Trust of India (Transfer of Undertaking and Repeal) Bill, 2002,Representation of People (Second Amendment) Bill, 2002,Transfer of Property (Amendment) Bill, 2002,Indian Evidence (Amendment) Bill, 2002,Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Bill, 2002,Negotiable Instruments (Amendment and Miscellaneous Provision) Bill, 2002,Biological Diversity Bill, 2002,Companies (Amendment) Bill, 2002,Companies (Second Amendment) Bill, 2002
DGFT becomes India's first digital signature enabled agency
Dated 20.12.2002 : The Directorate General of Foreign Trade (DGFT), Ministry of Commerce & Industry, has become India’s first digital signature enabled agency, marking a big step forward in the promotion of paperless trading in the country’s foreign trade sector. The DGFT, yesterday, signed an MOU (Memorandum of Understanding) with M/s. SafeScrypt Limited, who will provide the DGFT with necessary technical support and consultancy services in this regard. Accordingly, the infrastructure available in DGFT for Electronic Data Interchange (EDI) would now be PKI (Public Key Infrastructure) enabled and there would be seamless transmission of authorised information
Law Commission's recommendations on Land Acquisition Act
Dated 20.12.2002 : The Law Commission of India, in its 182nd Report on Amendment to Section 6 of the Land Acquisition Act, 1894, has recommended removal of the lacuna regarding the absence of a provision fixing a period for making of a declaration under Section 6 of the Land Acquisition Act, 1894 in the event of any action or proceeding initiated under Section 4 (1) notification or Section 6 declaration being quashed by the courts
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