Legislative and Regulatory Update
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In This Issue [No.85] May 10, 2004
International SEBI CBEC Excise Tariff CBEC Customs non Tariff RBI DGFT Department of Commerce Department of Information Technology Press Information Bureau Supreme Court High Courts
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Cases
Source: Westlawinternational.com
Criminal Justice: Federal court lacked jurisdiction over crime committed in government housing facility in Germany.
A federal District Court dismissed a criminal prosecution against an Air Force employee who was accused of sexually abusing a minor while he was visiting a U.S. Government housing facility located off the premises of Ramstein Air Force Base in Germany, because that housing facility was not part of the special maritime and territorial jurisdiction of the U.S. The German government had never granted either exclusive or concurrent jurisdiction over the facility to the U.S.
U.S. v. Morton
Litigation: A writ of mandamus was inappropriate means to challenge dismissal for forum non conveniens.
The Supreme Court overruled its prior cases holding that writ relief was the proper method to challenge dismissal of an action for forum non conveniens. The court held that dismissal was a final judgment, appeal from that final judgment provided an adequate remedy at law, and as such, writ relief was not available.
Pan v. The Eight Judicial Dist. Court of State
Government: Term-limit law for state legislators was unconstitutional.
The term-limit law that was adopted by ballot initiative violated the unambiguous and exclusive provisions of the Wyoming (U.S.A.) Constitution providing eligibility requirements for membership in the state legislature. A constitutional amendment was required to alter the eligibility requirements for the legislature.
Cathcart v. Meyer
International Law: Lack of statehood barred sovereign immunity for Palestinian organizations.
Palestine was not a "state," precluding claims by the Palestinian Authority (PA) and the Palestine Liberation Organization (PLO) that they had sovereign immunity, as instrumentalities of a foreign state, from a suit seeking damages for the killing of an American citizen and his wife while they were traveling in Israel. At most Palestine was an "amorphous entity" with statehood aspirations.
Estates of Ungar v. Palestinian Authority
Litigation: Successor corporation did not waive attorney-client privilege of merged client corporation.
The successor corporation became the holder of the attorney-client privilege of the merged client corporation with respect to the attorney's premerger advice to the predecessor corporation, where the predecessor corporation disappeared as a result of the merger. Since the successor corporation did not waive the privilege, the attorney could not answer deposition questions without violating the attorney-client privilege.
Venture Law Group v. Superior Court
Social Security: Foster children for whom State was representative payee of benefits were not denied equal protection.
Foster children receiving Social Security benefits that were paid to the State as representative payee were not denied equal protection, despite the contention that private representative payees had discretion to conserve Social Security benefits for the future use of the child, rather than spend the entirety on the child's costs of care. All representative payees were required to spend the money in accordance with federal and state laws and regulations, which required that the money be used in the best interest of the child. A private payee who did not spend the money on the child's care could be found not to be using the money in the child's best interest, and could be removed by the Social Security Commissioner. Moreover, the State had discretion to conserve a portion of the child's benefits, just as did a private payee. There was no distinction between children with private payees and children for whom the State was payee and, thus, there was no equal protection violation.
Guardianship Estate of Keffeler v. State
E-commerce: Computer pornography statute was constitutional.
The Florida computer pornography statute making it unlawful for any person to knowingly utilize a computer on-line service to seduce a child to commit any illegal act relating to sexual battery was constitutional. The statute was not overbroad or vague. Furthermore, the statute did not violate the commerce clause of the Federal Constitution. The State had a compelling interest in protecting minors from being seduced to perform sexual acts, and no legitimate commerce was burdened by penalizing the transmission of harmful sexual material to known minors in order to seduce them.
Cashatt v. State
Government: A tax abatement could be challenged by a taxpayer as an expenditure of public funds.
A taxpayer could challenge a tax abatement granted to a hospital for construction of a new facility, provided the taxpayer could show a probable net increase in his taxes as a result of the abatement. The abatement was the equivalent of an expenditure of public funds for which taxpayer action had been previously recognized.
Henson v. HealthSouth Medical Center, Inc.
Judicial Administration: Alabama Supreme Court Chief Justice's violations of Canons of Judicial Ethics warranted removal from office.
The special Supreme Court of Alabama, appointed by the Governor, has held that the Alabama Supreme Court Chief Justice's violations of the Alabama Canons of Judicial Ethics warranted his removal from office. The violations occurred when the Chief Justice willfully refused to obey a lawful and binding order of a United States District Court requiring him to remove a monument engraved with the Ten Commandments which he had placed in the Alabama State Judicial Building.
Moore v. Judicial Inquiry Com'n
Labor and Employment: Tina Conner does not have sexual harassment claim against former Governor of Kentucky.
Tina Conner, a woman who had a sexual relationship with Governor Patton of Kentucky, did not have a sexual harassment claim against the Governor or the Commonwealth. There was no evidence that Conner was denied access to housing, insurance, financial services, public accommodations or government-supported facilities, and she did not have an employment relationship with either the Governor or the Commonwealth. Conner's claim that the Governor and the Commonwealth retaliated against her when she called off her relationship with the Governor by not issuing nursing home licenses also failed, as there was no evidence that she individually was a potential licensee who suffered discrimination.
Conner v. Patton
Torts: Mental anguish damages were not recoverable in action for loss of pet dog.
A dog-owner was not entitled to recover damages for mental anguish or emotional harm in her action against a pet store based on the loss of a pet dog, absent evidence of the pet store's ill-will, animus or desire to harm her personally. The case arose when the dog was killed in traffic after escaping from a pet groomer employed by the pet store. The dog-owner's claims for counseling costs, intrinsic value, lost wages and exemplary damages were also not recognized.
Petco Animal Supplies, Inc. v. Schuster
News
1955 Murder Probe reopened by U.S. In Civil Rights Case
Nearly after half a century when Emmett Till's mutilated body was found in a Mississippi river, the U.S. Justice Department reopened an investigation into the murder of the black teenager whose death helped spark the civil rights movement. FBI agents and other personnel have been directed to assist local authorities in Mississippi in investigating the 1955 murder, which horrified the country and added fuel to the civil rights movement.
Citigroup Settles WorldCom Suit
Citigroup Inc. <C.N> said it would pay $2.65 billion to investors in WorldCom Inc. who had accused it of participating in financial fraud, and has also set aside billions more for other lawsuits in order to put the financial scandals of the late 1990s market behind it.
Judge Upset On Grenade Defendant's Dozing
An Army sergeant accused in a deadly grenade attack on his fellow soldiers fell asleep twice during a pretrial hearing, causing an annoyed military judge to order defense attorneys to deal with the man's sleep disorder. It is the first time since the Vietnam War that a U.S. Army soldier has been prosecuted for the murder or attempted murder of another soldier during wartime. Defendant's attorneys argued that the judge should order the government to provide treatment to their client for sleep apnea, a condition that causes periodically stoppage of breathing while asleep and can often make people drowsy in a quiet or monotonous environment.
Safety Proposal May Lead To Side Air Bags
The federal regulators plan to take a major step toward protecting passengers in side-impact crashes, which are responsible for 10,000 deaths each year on the nation's highways. It is for the first time since 1990, the National Highway Traffic Safety Administration is expected to propose a new set of safety standards that vehicles will have to meet in side-impact crashes. The rules are expected to result in the installation of side air bags in all vehicles, since vehicles won't be able to meet the standards without them.
Date Set In PeopleSoft Suit Vs. Oracle Case
November 1st has been set as the trial date for PeopleSoft Inc.'s <PSFT.O> lawsuit against Oracle Corp. <ORCL.O> for unfair business practices related to its $9.4 billion hostile takeover bid. Oracle launched its bid for PeopleSoft in June 2003. PeopleSoft then sued its rival business software maker, claiming Oracle's bid was aimed at undermining its business. PeopleSoft is seeking undisclosed financial damages.
EPA Regulations Aiming To Cut Pollution From Equipment
The Environmental Protection Agency in Washington announced regulations aimed at cutting pollution from diesel-powered farming and construction equipment and other off-road machinery by more than 90 percent over the next six years. The regulation which is yet to be formally signed requires refiners to nearly eliminate sulfur in diesel fuel used in construction, farming and other off-road activities by 2010 and for use in large ships and locomotives by 2012.
Pension Reforms Approved By Japan
Japan's lower house of parliament has voted in favour of reforming the pension system, which is under strain due to the country's ageing population. The proposal involves the public making higher payments for lower benefits. The reform plans have been overshadowed in recent weeks by the news that a number of senior politicians have not been paying into the pensions system.
Arrest Warrant Issued For Jakarta General
An arrest warrant has been issued by a UN-backed tribunal in East Timor for one of Indonesia's main presidential candidates, General Wiranto. The former military chief has been accused of human rights abuses after East Timor's vote for independence from Jakarta in 1999. Around 1,000 people died during the violence, with many deaths blamed on militias linked to the Indonesian army.
Court In S Korea To Decide On Roh
The constitutional court in South Korea said it will announce its final ruling on the impeachment of the president, Roh Moo-hyun, in the coming week. The ruling will decide whether to dismiss him or override the impeachment, and restore his suspended executive powers. The opposition controlled National Assembly passed the impeachment motion against President Roh five weeks ago, accusing him of illegal campaigning and corruption. However, he has specifically denied the charges framed against him.
Forum Created For World's Child Workers
The first Children's World Congress on child labour opened in Florence. The conference which was organised by trade unions and NGOs - intends to bring together current or former child workers and child activists to exchange ideas and put pressure on governments to combat child labour. The best part of the event is that for the first time, young people will take centre stage speaking about their own experiences and pressing for action to end exploitation and ensure free education for all young people. The International Labour Organisation estimates that 246m children around the world are exploited in full-time work.
First Court Martial On Iraq abuse
US forces have announced the first court martial to try a soldier over the Iraqi prisoner abuse scandal. Specialist Jeremy Sivits, a 24-year-old military policeman, will go on trial in Iraq on 19 May. He is the first person for whom a trial date has been set over the abuse of prisoners at Abu Ghraib prison outside Baghdad.
Capital Punishment For Bangladesh Serial Killer
One of the most notorious serial killers in Bangladeshi history has been hanged, and his body will soon be handed over to his family. Ershad Sikder was an influential political figure in the south-western city of Khulna before his arrest five years ago on a murder case. The Bangladeshi president refused to entertain his mercy petition in the Khalid murder case, clearing the way for his hanging. He was a member of both main political parties throughout his criminal career.
Editors Cleared In BBC Hutton Inquiry
The BBC has declared that no staff will be sacked following an internal inquiry in the wake of the Hutton affair. The probe was launched after Lord Hutton's inquiry concluded that BBC reporter Andrew Gilligan's report into weapons of mass destruction was "unfounded". The BBC inquiry said the proper process had been in place but was not then followed by Mr Gilligan, who resigned after Lord Hutton's report.
Move To Tackle Anti-Social Behaviour
Northern Ireland Government has published plans to introduce measures to protect people from anti-social behaviour. Already operating in England and Wales, Anti-Social Behaviour Orders (ASBOs) are designed to prevent disruptive behaviour by individuals and families who make life difficult for their communities. ASBOs are civil orders rather than criminal penalties, but breaches are punishable by up to five years in prison.
Secondary Market Division
Frequent Change of Names by Listed Companies
Circular No. SEBI/MRD/Policy/AT/Cir-20/2004 04 Dated 30.04.2004 :It has been decided that all listed companies which decide to change their names shall be required to comply with the following conditions :
1 A time period of atleast 1 year should have elapsed from the last name change
2 Atleast 50% of its total revenue in the preceding 1 year period should have been accounted for by the new activity suggested by the new name
3 The new name along with the old name shall be disclosed through the web sites of the respective stock exchange/s where the company is listed and also through the EDIFAR web site for a continuous period of one year, from the date of the last name change.
Press Release
SEBI Signs MOU with Commodity Futures Trading Commission, United States
Press Release No. PR No.95/2004 Dated 29.04.2004 : SEBI signed a MOU with United States Commodity Futures Trading Commission (CFTC) in Washington on April 28, 2004. The MOU was signed by Mr. G N Bajpai, Chairman, SEBI and Mr. James E. Newsome, Chairman, CFTC. The MOU aims to strengthen communication channels and establish a framework for assistance and mutual cooperation between the two organizations. The MOU marks the beginning of greater collaboration between SEBI and CFTC to effectively regulate and develop futures markets, in view of greater cross-border trade and cross-market linkages brought about by the globalisation of financial markets.
CENVAT Credit Involved on Stock of Light Diesel Oil as on 28.3.2003
Circular No. 784/17/2004/CX Dated 30.04.2004 : The Department has decided to file a SLP in the Supreme Court against the order Hon'ble High Court of Karnataka in the case of M/s Grasim Industries Ltd. wherein Circular No. 704/20/2003-CX dated 31.3.2003 has been set aside. In view of the above, show cause notices which are yet to be adjudicated, may be kept pending till the department's SLP is finally decided by the Supreme Court. In other cases, show cause notices may be issued to safeguard revenue but should be kept pending.
Treatment of CENVAT Credit Balance at the Year End
Circular No. 783/16/2004/CX Dated 28.04.2004 : It has been brought to the notice of the Board that in certain commodities, where there is accumulated CENVAT credit either due to inverted duty structure i.e. less duty on finished products and more duty on inputs/ raw materials, or due to other reasons, such accumulated/ unutilized credit lying in balance at the end of the financial year is claimed as expenditure and is debited to Profit and Loss account. At the same time, even after claiming the amount as expenditure for Income Tax purposes, the said amount is maintained in the CENVAT credit account which can be subsequently utilized for the purpose of payment of duty on any other finished goods manufactured by the same assessee or for any other purpose in accordance of Central Excise law. As there is no time limit to utilize the balance Cenvat credit and there is no one to one co-relation between the inputs and the finished products, such availment of double benefit may escape notice.
Accordingly, Board has desired that field formations may be sensitized against the unintended dual benefit availed of by certain assessees on account of treatment of unutilized CENVAT credit balance at the year end. In case the CENVAT credit balance has been treated as expenditure in Profit and Loss account and has not been written off in Books of Accounts, the concerned Income Tax authorities should be suitably intimated. The audit parties should also keep this aspect in mind while conducting audit.
Special Economic Zones (Customs Procedures) (Amendment) Regulations, 2004
Notification No 59/2004-N.T. Dated 30.04.2004 : The amendment has been made in the enforcement date of Special Economic Zones (Customs Procedures) Regulations, 2003. Through amendment the date 11th May, 2004 has been made as the date of enforcement of the said regulations.
Special Economic Zones (Amendment) Rules, 2004
Notification No 58/2004-N.T. Dated 30.04.2004 : The amedment has been made in the enforcement date of Special Economic Zones Rules, 2003. Through amendment the date 11th May, 2004 has been made as the date of enforcement of the said rules.
Acquisition of Foreign Securities by Resident Individuals under ESOP Scheme
Circular No. A.P.(DIR Series) Circular No. 90 Dated 03.05.2004 : Earlier a resident individual who is an employee or director of an Indian office or branch of a foreign company in which the foreign holding is not less than 51% is permitted to acquire foreign securities under ESOP Scheme, without any monetary limit, provided the shares under ESOP are offered at a concessional price.
Now as a measure of further liberalisation, it has now been decided to dispense with the condition that the shares should be offered at a concessional price. It has also been decided to permit sale of the shares so acquired, without obtaining prior permission of the Reserve Bank, provided the proceeds thereof are repatriated to India.
Guidelines on Compliance with Accounting Standards (AS) by Banks
Circular No. DBOD.NO.BP.BC.82/ 21.04.018/2003-04 Dated 30.04.2004 : Guidelines pertaining to the Accounting Standards, AS 5, AS 9, AS 15, AS 17, AS 18, AS 22, AS 23, AS 25, and AS 27 have already been operationalized. These guidelines were based on the recommendations made by the Working Group constituted under the Chairmanship of Shri N.D.Gupta, former president of ICAI to recommend steps to eliminate/ reduce gaps in compliance by banks with the Accounting Standards issued by the ICAI. The Working Group had also made recommendations in respect of the three Accounting Standards 24, 25 & 26. Now, AS 26 relating to intangible assets has become operational from the accounting period commencing from April 1, 2003. The remaining standards viz. AS 24 and AS 28 have been made effective for the accounting period commencing from April 1, 2004.
RBI considers that with the issue of the guidelines as above and adoption of the prescribed procedures, there should normally be no need for any Statutory Auditor for qualifying balance sheet of the bank being audited for non-compliance with Accounting Standards. Hence, it is essential that both banks and the Statutory Central Auditors adopt the guidelines and procedures prescribed. Whenever specific difference in opinion arises among the auditors, the Statutory Central Auditors would take a final view.
Half- yearly Reporting System in Respect of SSI Sick and Non-SSI Sick/Weak Industrial Units
Circular No. IECD. IRD No.11 /06.33.01/2003-04 Dated 27.04.2004 : In terms of the circular IECD. No 24 / 06.01.03 / 92-93 dated March 23, 1993, the banks were required to submit to RBI a statement in form Part III containing the data on qualitative assessment of the performance in rehabilitation of SSI sick and non- SSI sick / weak units, on a half -yearly basis. Now, on a review, it has been decided to discontinue the obtention of the statement with effect from the half year ended March 2004. Accordingly, banks are advised not to forward the captioned statement as on March 31,2004 and onwards.
Transactions in Government Securities
Circular No. BPD.SUB. CIR. 5 /09.80.00/2003-04 Dated 28.04.2004 : It has been decided:
a. to permit sale of a government security already contracted for purchase, provided:
(i) the purchase contract is confirmed prior to the sale,
(ii) the purchase contract is guaranteed by CCIL or the security is contracted for purchase from the Reserve Bank and,
(iii) the sale transaction will settle either in the same settlement cycle as the preceding purchase contract, or in a subsequent settlement cycle so that the delivery obligation under the sale contract is met by the securities acquired under the purchase contract (e.g. when a security is purchased on T+0 basis, it can be sold on either T+0 or T+1 basis on the day of the purchase; if however it is purchased on T+1 basis, it can be sold on T+1 basis on the day of purchase or on T+0 or T+1 basis on the next day); and,
b. to shift the settlement of government securities transactions carried out through CCIL to the DVP-III mode so that each security is deliverable/receivable on a net basis for a particular settlement cycle as against the current system of gross settlement of securities under the DVP-II mode.
It has been clarified that so far as purchase of securities from the Reserve Bank through Open Market Operations (OMO) is concerned, no sale transactions should be contracted prior to receiving the confirmation of the deal/advice of allotment from the Reserve Bank. It has been further clarified that the existing special dispensation pertaining to the sale of government securities allotted by the Reserve Bank under the primary auctions will continue to be available.
Government of India Announce the Sale Two Dated Securities through Price Based Auctions
Press Release No. 2003-2004/1285 Dated 30.04.2004 : Government of India had announced sale of "Floating Rate Bonds, 2016" (bonds) for an aggregate amount of Rs. 6,000 crore (nominal) by auction using uniform price format. Government of India had also announced the sale (sale (re-issue) of "6.01 percent Government Stock 2028"(stock) for a notified amount of Rs.3,000 crore (nominal) through a price based auction using multiple price auction method. The auctions was conducted by the Reserve Bank of India, Mumbai Office, Fort, Mumbai on Thursday, May 6. 2004.
Clarification on Import of Approved and Unapproved Drugs under the Advance Licensing Scheme
Circular No. 33 (RE-2004)/2002-2007 Dated 30.04.2004 : In continuation of Policy Circular No. 9(RE-2004)/2002-2007 dated 30.6.2003 and No.15(RE-2004)/2002-2007 dated 17.9.2003. whereby import of approved and unapproved drugs were allowed without the requirements of registration procedure under the Drugs and Cosmetics Act etc., it has been further clarified that the import of bulk drugs in terms of Para 4.2.7 of the EXIM Policy,2002-07 is allowed without the requirement of manufacturing site registration and import licence as required under Ministry of Health Notification No.GSR 604(E) dt. 24.8.2001.
Anti Dumping Case
Notification No 15/11/2004-DGAD Dated 29.04.2004 : Initiation of mid-term review has been made of the definitive anti-dumping duty imposed on Lead Acid Batteries originating in or exported from Taiwan, Singapore and Hong Kong.
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