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Legislative and Regulatory Update
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In This Issue [No.44] March 20, 2003
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Secondary Market Division
Risk Management for T+2 rolling settlement
Circular No. SMD/Policy/ Cir - 9/2003 Dated 11.03.2003 : The SEBI constituted Group on Secondary Market Risk Management discussed the issue of the rationalisation of the margining structure in the shortened T+2 rolling settlement. The Group held various meetings and pursuant to the deliberations of the Group, the stock exchanges have been directed to follow risk management structure as prescribed w.e.f. April 01, 2003.
Derivatives
Monthly Reporting Format
Circular No. SMD/DC/ 5413 /03 Dated 12.03.2003 : As the risk containment measures and eligibility criteria for selection of stocks for derivatives trading have undergone a change, the monthly reporting format stands modified in the following aspects:
1. Trading Statistics as given in Table I shall be given for Futures and Options contracts traded on all stocks and indices.
2. Table II giving the details of the Price Scanning Range shall be replaced and the information shall be given for all derivative contracts traded in the exchange
Income-Tax (2nd Amendment) Rules, 2003
Notification No. 49/2003 Dated 11.03.2003 : In rule 3, in sub-rule (6), in proviso, for the words "the Railways", the words "an airline or the Railways", have been substituted.
"All India Tennis Association, New Delhi" Notified For Section 10 (23)
Notification No. 48/2003 Dated 05.03.2003 : The Central Government has notified "All India Tennis Association, New Delhi" For Section 10 (23).
Clarification Regarding Service Tax On Authorised Service Station
Circular No. 15/699/2003 Dated 05.03.2003 : It is clarified that as per section 65(8) of Finance Act, 1994, “Authorised Service Station” means any service station, or centre, authorised by any motor vehicle manufacturer, to carry out any service or repair of any motor car or two wheeled motor vehicle manufactured by such manufacturer. As per section 65 (90) (zo), the taxable service is any service provided to a customer, by an authorised service station, in relation to any service or repair or motor cars or two wheeled motor vehicles, in any manner. Therefore, service tax is leviable only on such services which are provided in relation to motor cars or two wheeled motor vehicles for which the service station is authorised.
Refund of unutilized deemed credit on grey fabrics used in the processed fabrics exported under bond – regarding
Circular No. 702/18/2003-CX Dated 13.03.2003 : It is clarified that refund of unutilized deemed credit due to export of processed fabrics may not be denied on the ground that the eligibility of deemed credit is under dispute with C&AG. Similarly, the refunds for the period 01.07.2001 to 28.02.2002 may also be dealt with on merit in accordance with the notification No.11/2002-CE (NT), dated 1.3.2002.
Central Excise- Refund of unutilized Credit of Additional Duty of Excise (Goods of Special Importance) in terms of rule 5 of CENVAT Credit Rules, 2002 – regarding
Circular No. 701/17/2003-CX Dated 12.03.2003 : It is observed that as per rule 3 of the said rules, CENVAT credit of AED(GSI) paid on fabrics may be taken even though the manner of utilization of such credit is restricted in terms of sub rule (6). Incidentally this restriction is also removed vide Notification No.13/2003-CE (NT) dated the 1st March, 2003. Since the admissibility of credit of such duty cannot be disputed in view of specific provision of the said rule 3, the refund of unutilized credit of such duty is admissible under rule 5 of the said rules. Accordingly, it is clarified that the refund of AED(GSI) shall be allowed under rule 5 of CENVAT Credit Rules, 2002 regardless of the fact that the said duty is not leviable on the finished product. Pending cases if any, may be decided accordingly.
Duty Of Excise Payable On Such Softy Ice Cream And Non Alcoholic Beverage
Notification No. 16/2003 NT Dated 12.03.2003 : The Central Government has directed that the whole of the duty of excise payable on softy ice cream and non alcoholic beverage dispensed through vending machines, but for the prevailing practice, shall not be required to be paid in respect of such softy ice cream and non alcoholic beverages on which the duty of excise was not being levied during the period commencing on and from the 1st day of March, 1997 and ending with 28th February, 2001 in accordance with the said practice.
Duty Of Excise On Parts Of Bicycle
Notification No. 15/2003 NT Dated 11.03.2003 : In exercise of the powers conferred by Section 11C of the Central Excise Act, the Central Government hereby directs that the whole of duty of excise payable under the Central Excise Act on bicycle parts, but for the prevailing practice, shall not be required to be paid in respect of such parts of bicycle on which the duty of excise was not being levied during the period commencing from 1st March, 2002 and ending with 26th April, 2002 in accordance with the said practice.
Imports of free gifts under Bilateral Agreement
Circular No. 15 /2003-Cus. Dated 11.03.2003 : This is with reference to Notification No. 148/94-Cus. dated 13.07.1994, Sl. 8 which exempts from customs duty goods gifted free of cost under a bilateral agreement between the Government of India and a Foreign Government. The only inherent condition prescribed in it is that the imports should have been made in terms of the provisions of the bilateral agreement. The above notification may be applied strictly in accordance with its provisions and the imports should comply with conditions/provisions of the bilateral agreement.
Anti-Dumping Duty
Notification No. 40/2003-Customs Dated 07.03.2003 : Anti-Dumping Duty has been Imposed on all imports of vitamin A Palmitate from European Union and Georgia, falling under tariff Item 2936 21 00 of the First Schedule to the Customs Tariff Act.
Decentralisation of the work relating to fixation of Brand Rate of drawback under Rule 6 and Rule 7 of the Customs & Central Excise Duties Drawback Rules, 1995.
Circular No. 14 /2003-Customs Dated 06.03.2003 : The Govt. has announced the decision to take the work of Brand Rate fixation right to the doorsteps of the exporters by delegating the works of Brand Rate fixation to the jurisdictional commissionerates of Central Excise. Accordingly, starting from the 1st April,2003, all applications for fixation of Brand Rate of drawback under Rule 6 and Rule 7 of the Customs & Central Excise Duties Drawback Rules,1995 ( as amended ), are required to be filed (in duplicate) only under the Normal Scheme in the Headquarters Office of the Commissionerate of Central Excise having jurisdiction over the manufacturing unit in which the export goods are declared to have been manufactured.
Amendment To Notification No.80/97-Customs, Dated 21.10.1997
Notification No. 39/2003-Customs Dated 06.03.2003 : In the said notification, in the Table, against S.No. 2, for the entry in column (2), the following have been substituted,
"Gold in any form including liquid gold and tola bars, other than at S.No. 1 above".
Amendment to Notification No. 62/94-Customs (NT), dated the 21st November, 1994
Notification No. 23/2003-Customs (N.T) Dated 11.03.2003 : In the Table, against serial Number 8 relating to the State of Maharashtra, against item (7) occurring in column (3) relating to Revdanda , in column (4), in item number (b) after the entry (ii) following entry has been inserted,
"(iii) Bauxite".
Appointment of Commissioner of Customs
Notification No. 22/2003 NT Dated 07.03.2003 : Commissioner of Customs (Exports), New Delhi has been appointed as Commissioner of Customs, Amritsar, Commissioner of Customs, Mumbai or , Commissioner of Customs, Inland Container Depot, Tughlakabad, New Delhi for matters pertaining to M/s. Safetag International, Noida (UP)
Appointment of Commissioner of Customs
Notification No. 21/2003 NT Dated 07.03.2003 : Commissioner Of Customs, Inland Container Deport, Tughlakabad, New Delhi has been appointed as Commissioner Of Customs (Import), Mumbai for matters pertaining to M/S. Jersey India Limited, Dist. Gurgoan, Haryana.
Pattern of Investment to be Followed by the Non-Government Provident Funds, Superannuation Funds and Gratuity Funds
Notification No. F5(18)ECB/2001 Dated 06.03.2003 : In partial modification of this Ministry's Notification of number F. 11(3)-PD/98 dated 31st March 1999, the pattern of investment for investment For incremental accretions by the non- Government Provident Funds, Superannuation Funds and Gratuity Funds has been prescribed which would be effective from 1st April, 2003.
Section 42 of the RBI Act, 1934 -Payment of interest on eligible CRR balances on monthly basis - Revision in the format for submission of interest claim - Introduction of New software for Form A
Notification No. DBOD.Ret.BC.No. 79 /12.01.001/2002-2003 Dated 07.03.2003 : Since the procedure for calculation of CRR has undergone certain changes from time to time, it has been decided to make suitable modifications in the existing interest claim statement format as indicated below.
(i) Columns No.14 & 15 (relevant for the period 1-12-1999 to 31-01-2000 as indicated in Para 1( iv ) of our circular dated December 28, 1999 ibid) have been omitted.
(ii) As Liabilities to the Banking System (Net) and credit balance under ACU Dollar accounts are presently covered under Liabilities under Zero Reserve prescription, the remarks against footnote + + have been suitably amended.
It is clarified that Form A (New Software) will be filed in hard copy and Form A (Old Software) will be filed as a duly authenticated hard copy.
Section 42 (2) Of The Reserve Bank Of India Act, 1934 - Collection Of Data From Scheduled Commercial Banks In Annexure A.
Notification No. DBOD.No.Ret.BC 78 /12.01.001/2002/03 Dated 07.03.2003 : It has been observed that the banks are not complying with the instructions on the reporting of revaluation of foreign currency assets/liabilities leading to errors. The attention of the banks is, therefore, once again invited to the provisions contained in the relevant circulars for their guidance.
Procedure relating to import of Plastic Waste/Scrap
Circular No. 20 /2002-2007 Dated 12.03.03 : With reference to Public Notice No.392 (PN)/92-97 dated 1.1.1997 according to which import of Plastic Waste/Scrap (except PET Bottle Waste/Scarp) and animal dung or animal excreta shall not, be permitted, except against a license, Applicants have been advised that while submitting the application as per provisions laid down in para 1(iv) of the said public notice shall adhere to all guidelines / conditions of this public notice. They shall also furnish the additional information / details while submitting the application to DGFT as specified.
Extension Of Date For Obtaining Replenishment Of Gold/Silver/Platinum From Nominated Agencies
Public Notice No. 68/2002-07 Dated 07.03.2003 : The Director General of Foreign Trade, in exercise of powers conferred under paragraph 2.4 of the EXIM Policy 2002-2007, has permitted extension of the time limit for exports effected on or before 31.3.2002 and effected under para 8.37 of the EXIM Policy 1997-2002 to obtain replenishment from the nominated agencies by 31st March, 2003.
Rules Regulating The Method Of Recruitment To The Certain Group `D' Posts In The National Pharmaceutical Pricing Authority.
Notification No. G.S.R. 203(E) Dated 05.03.2003 :President has made the National Pharmaceutical Pricing Authority, Department of Chemicals and Petrochemicals, Ministry of Chemicals and Fertilizers (Group `D’ posts) Recruitment Rules, 2002, regulating the method of recruitment to the certain Group `D’ posts in the National Pharmaceutical Pricing Authority, Department of Chemicals and Petrochemicals, Ministry of Chemicals and Fertilizers.
Consumer Protection (Amendment) Act, 2002 to Come into Force from 15.03.03
Notification No. SO270(E) Dated 10.03.2003 : Central Government has appointed the 15th day of March, 2003 as the date on which all the provisions of the Consumer Protection (Amendment) Act, 2002 shall come into force.
Amendment to Notification No. S.O. 60(E) Dated 27.01.1994 and S.O. 319(E) Dated 07.05.1992
Notification No.SO248(E) Dated 28.02.2003 : 1. In the notification of the Ministry of Environment and Forests number S.O. 60(E) dated 27th January, 1994, in paragraph 3, in item (a), for the words, figures and letter "nos. 3, 18 and 20 of the Schedule-I", the words, figures and letter "numbers 3 and 18 of the Schedule-I" have been substituted.
2. In the notification of the Ministry of Environment and Forests number S.O. 319(E) dated 7th May, 1992, in paragraph 1, for item (ii), the following has been substituted,
"(ii) Mining processes and operations, except mining project (major minerals) with lease areas of more than five hectares covering--
(a) all new mining operations including renewals of mining leases, or
(b) existing mining leases in sanctuaries or national park and areas covered under Project Tiger, or
(c) mining is being done without permission of the competent authority."
Amendments in the Drugs and Cosmetics Rules, 1945
Notification No. GSR198(E) Dated 07.03.2003 : 1. Rule 155-B relating to Certificate of award of G.M.P. of Avurveda, Siddha and Unani Drugs, has been inserted.
2. in rule 157, condition (1A), has been inserted.
3. Form 26E-I relating to Certificate of Good Manufacturing Practices (GMP) to manufacturer of Ayurveda, Siddha or Unani drugs, has been inserted.
4. In Schedule "T" provisions relating to Good Manufacturing Practices For Ayurvedic, Siddha And Unani Medicines, have been substituted.
Stamp Duty to be Rationalised
Dated 10.03.2003 : Rationalisation of stamp duty all over the country to not more than 5% by the end of Xth Plan is sought to be taken up as an urban reform measure which has been included in the draft Memorandum of Agreement circulated by Central Government to the State Governments under Urban Reforms Incentive Fund.
CP (Amendment) Act, 2002 Comes Into Force On March 15
Dated 10.03.2003 : The Consumer Protection (Amendment) Act, 2002 will come into force on March 15, 2003 coinciding with the World Consumer Rights Day.
Amendments In The Advocates Act
Dated 10.03.2003 : The National Human Rights Commission set up a high-level Committee to consider all aspects of the problem of sexual harassment of women in the legal profession. The Committee after considering as to how the legal fraternity could implement the guidelines and norms prescribed by the Supreme Court in Vishakha Vs. State of Rajasthan (AIR 1997 SC 3011), came to the conclusion that there was need to suitably amend the Advocates Act 1961, so as to make provision for an appropriate mechanism to deal with complaints of sexual harassment.
Steps For Effective Legal System
Dated 10.03.2003 : The Government have been constantly taking steps to make the legal system more effective. Apart from increasing the Judge strength from time to time, various steps have been taken by the Courts, viz. grouping of cases involving common questions of law, constitution of specialized benches and organizing Lok Adalats at regular intervals etc.
nternational Coach Builders Ltd. Vs. Karnataka State Financial Corpn.
I
During the pendency of the winding up petition Karnataka State Financial Corpn. which was the second charge holder on the assets of the said company, took possession of the mortgaged assets of the said company in purported exercise of its power under Section 29 of the SFC Act. The respondent filed an application under Section 446(2)(b) read with Section 537 of the Companies Act, 1956 before the High Court of Karnataka praying for leave to stand outside the winding up proceedings and realize its securities by selling the assets mortgaged to it. Company Court allowed the application of the respondent-Corporation for standing outside the liquidator proceedings to work out its remedies under Section 29 of the SFC Act subject to an undertaking to discharge the workmen's dues.
The Official Liquidator appealed against the order of the Company Judge praying that the sale of the assets of the company under liquidator should only be done by the Official Liquidator under the supervision of the Company Court. The appeal of the Official Liquidator was dismissed by a Division Bench of the High Court of Karnataka. An application for review. Review Application was also dismissed by the High Court of Karnataka. The Official Liquidator filed two Special Leave Petitions before Supreme Court challenging the order of the Division Bench.
The Hon'ble Supreme Court held that
1. The right unilaterally exercisable under Section 29 of the SFC Act is available against a debtor company, only so long as there is no order of winding up
2. The SFCs cannot unilaterally act to realise the mortgaged properties without the consent of the official liquidator representing workmen for the pari passu charge in their favour under the proviso to Section 529 of the Companies Act, 1956.
3. If the official liquidator does not consent, the SFCs have to move the Company court for appropriate directions to the official liquidator .
Goaplast Pvt. Ltd. Vs. Shri Chico Ursula D'Souza and Anr.
Present case involves a pure question of law as to applicability of Section 138 of the Negotiable instruments Act, 1881 (hereinafter referred to as "Act") to a case in which a person issuing a post dated cheque stops its payment by issuing instructions to the drawee bank before the due date of payment.
The Hon'ble Supreme Court held that by giving instructions to banks to stop payment of a cheque after issuing the same against a debt or liability, a drawer will easily avoid penal consequences under Section 138. Once a cheque is issued by a drawer, a presumption under Section 139 must follow and merely because the drawer issued notice to the drawee or to the bank for stoppage of payment it will not preclude an action under Section 138 of the Act by the drawee or the holder of the cheque in due course.
United India Insurance Company Ltd. Vs. Lehru and Ors.
Insurance Company seeks to avoid its liability on the ground that the licence of the driver of the car was a fake licence. The Hon'ble Supreme Court held that where the owner has satisfied himself that the driver has a licence and is driving competently there would be no breach of Section 149(2)(a)(ii). The Insurance Company would not then be above of liability. If it ultimately turns out that the licence was fake the Insurance Company would continue to remain liable unless they prove that the owner/insured was aware or had notice that the licence was fake and still permitted that person to drive.
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