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Showing 81 to 97 of 97 Records
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2025 (2) TMI 17
Maintainability of the writ petition due to the availability of appeal remedy under Section 19 (1) and Section 35 of FEMA - Delay in issuance of SCN - Violation of Foreign Exchange Management Act (FEMA) and Transfer or Issue of Security by a Person Resident Outside India, Regulations 2000 - contravention of provisions of Section 6 (3) (b) r/w Section 47 of the Foreign Exchange Management Act, 1999 r/w Regulations 3, 4 and 5 and para-3 and para 9(1) (B) (i) of Schedule 1 of TISPRO Regulations 2000 and annexure – B to para 2 of schedule – 1 of TISPRO Regulations 2000 r/w consolidated FDI Policies dated 01.04.2010 and 01.10.2010 - violation of principles of natural justice.
HELD THAT:- Merely, because a Subordinate Officer of 3rd respondent has sworn affidavit and filed it on behalf of the second respondent also in some of the writ petitions, it cannot be concluded that the second respondent has made up his mind. Further under the scheme of the Act, the order passed by the second respondent is not final and the same is subject to the appeal before the Appellate Tribunal under Section 19(1) and also subject to further appeal before this Court under Section 35 of FEMA.
In view of the appellate remedy available before Tribunal as well as before this Court, it cannot be said that relegating the party to submit his explanation before the second respondent would violate natural justice principles. First of all, the second respondent has not signed the counter affidavit and in some of the cases, counter affidavit was filed only for respondents 1 and 3 and no counter affidavit was filed on behalf of the second respondent. In some of the writ petitions, the counter affidavit was sworn by one of the Subordinate Officers in the Cadre of Assistant Director working in the office of the third respondent and the same is not binding on the Superior Officer namely the second respondent. Therefore, the arguments advanced on behalf of the petitioners is not impressive that the second respondent has already made up his mind regarding the delay in issuing show cause notice and the contravention of provisions of FEMA and accordingly, the arguments regarding violation of natural justice principles is also rejected.
The impugned show cause notice has been issued to petitioners by directing them to offer an explanation why adjudicatory proceedings shall not be initiated against them. After considering the explanation offered by the petitioner, the second respondent will decide whether to initiate the adjudicatory proceedings under Section 16 or not. In case he decides to go ahead with adjudication process, the petitioner shall be given reasonable opportunity to put forth his case. Any final order passed by the adjudicating authority under Section 16 is liable to be questioned by filing an appeal under Section 19 of FEMA - the petitioners are not only entitled to file one appeal, the petitioners are also entitled to file further appeal or second appeal before this Court under Section 35 of FEMA, if the petitioners are able to make out a question of law out of the order passed by the Appellate Tribunal.
The preliminary objection raised by the learned Additional Solicitor General regarding maintainability of the writ petitions upheld.
Delay in issuance of SCN - HELD THAT:- The maximum period of five years of limitation for the revisional authority to exercise its jurisdiction was fixed by taking into consideration the scheme of the said Act. Therefore, the maximum period of five years fixed as a reasonable period in the said case law cannot be made applicable as a general rule to all the cases - the reasonable necessary delay in issuing show cause notice depends on facts and circumstances of the case and the said factual aspect can also be raised by the petitioners before the second respondent.
Conclusion - i) The omission of Section 6(3)(b) of FEMA does not invalidate the show cause notice, as the omission is considered a repeal, preserving the provision's applicability to past actions. ii) The delay in initiating proceedings is a factual issue to be addressed by the adjudicating authority, not in writ jurisdiction. iii) The writ petitions were dismissed due to the availability of effective alternative remedies, with the Court emphasizing the importance of exhausting statutory appeals.
Petition dismissed.
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2025 (2) TMI 16
Money Laundering - seeking grant of bail - illegal procurement of empty vials and raw materials of anti-cancer drugs such as Keytruda and Opdyta - twin conditions prescribed under Section 45 of the PMLA satisfied or not - entire case of the respondent is based on mere conjectures and surmises, and no concrete evidence has been placed on record to substantiate the allegations leveled against the applicant - HELD THAT:- It is a settled position of law that statements recorded under Section 50 of the PMLA hold evidentiary value and are admissible in legal proceedings. The Hon’ble Supreme Court, while emphasizing the legal sanctity of such statements, has time and again observed that they constitute valid material upon which reliance can be placed to sustain allegations under the PMLA. In a recent judgment, the Hon’ble Supreme Court in Abhishek Banerjee v. Enforcement Directorate [2024 (9) TMI 508 - SUPREME COURT], has held that 'It has been specifically laid down in the said decision that the statements recorded by the authorities under Section 50 PMLA are not hit by Article 20 (3) or Article 21 of the Constitution, rather such statements recorded by the authority in the course of inquiry are deemed to be the judicial proceedings in terms of Section 50 (4), and are admissible in evidence, whereas the statements made by any person to a police officer in the course of an investigation under Ch. XII of the Code could not be used for any purpose, except for the purpose stated in the proviso to Section 162 of the Code. In view of such glaring inconsistencies between Section 50 PMLA and Sections 160/161CrPC, the provisions of Section 50 PMLA would prevail in terms of Section 71 read with Section 65 thereof.'
In the aforesaid judgment, the Hon’ble Court further underscored that such statements, being recorded in the course of an inquiry rather than an investigation, are not subject to the restrictions under Article 20 (3) and Article 21 of the Constitution. Instead, they are deemed to be judicial proceedings under Section 50 (4) of the PMLA and, therefore, admissible as evidence in proceedings under the PMLA.
It is well settled, as reiterated by the Hon’ble Supreme Court in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)]] and Manish Sisodia v. Enforcement Directorate [2024 (8) TMI 614 - SUPREME COURT], that while the stringent twin conditions under Section 45 of the PMLA restrict the right to bail, they do not impose an absolute bar. The discretion of the court in granting bail remains judicial and must be exercised in accordance with the settled legal principles. The governing principle that “bail is the rule, and jail is the exception” must be harmonized with the legislative mandate that requires satisfaction of the conditions laid down under Section 45 of the PMLA before bail can be granted.
In the present case, the respondent has placed on record material indicating the applicant’s active involvement in the procurement and sale of spurious anti-cancer medicines, the proceeds of which were funneled through various channels, including formal banking and hawala transactions. The applicant’s role in the laundering of illicit proceeds through his firms namely, M/s Delhi Medicine Hub and M/s Cancer Medicine Agency, stands corroborated by the investigative findings, including statements under Section 50 of the PMLA and independent documentary evidence.
The twin conditions prescribed under Section 45 of the PMLA have not been satisfied. The evidence on record, the ongoing nature of the investigation, and the applicant’s alleged role in the broader financial syndicate indicate that the rigors of Section 45 of the PMLA continue to apply.
Conclusion - This Court is of the view that considering the filing of the supplementary prosecution complaint and the ongoing nature of the investigation, this Court is not satisfied that the applicant has fulfilled the twin conditions under Section 45 of the PMLA. The respondent has presented sufficient material to warrant further judicial scrutiny, including financial records, electronic evidence, and statements of co-accused implicating the applicant. These materials suggest an active involvement in laundering proceeds of crime and a pattern of financial transactions that need further evaluation at trial.
In view of the seriousness of the allegations and the need to ensure the integrity of the investigation, this Court is not inclined to enlarge the applicant on bail - bail application rejected.
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2025 (2) TMI 15
Seeking grant of regular bail - Money Laundering - involvement of several accused persons in the procurement, manufacturing and sale of spurious anti-cancer medicines - amount involved falls below Rs. 1 Crore, making the applicant eligible for the benefit of the statutory proviso - twin mandatory conditions under Section 45 of the PMLA - reasonable grounds to believe for guilty of the offence - applicability of statutory presumption of guilt under Section 24 of the PMLA - admissible evidences or not - offences punishable under Sections 274, 275, 276, 420, 468, 471 read with 120B and 34 of the Indian Penal Code, 1860.
HELD THAT:- It is a settled position of law that statements recorded under Section 50 of the PMLA hold evidentiary value and are admissible in legal proceedings. The Hon’ble Supreme Court, while emphasizing the legal sanctity of such statements, has time and again observed that they constitute valid material upon which reliance can be placed to sustain allegations under the PMLA. In a recent judgment, the Hon’ble Supreme Court in Abhishek Banerjee v. Enforcement Directorate [2024 (9) TMI 508 - SUPREME COURT] held that 'It has been specifically laid down in the said decision that the statements recorded by the authorities under Section 50 PMLA are not hit by Article 20 (3) or Article 21 of the Constitution, rather such statements recorded by the authority in the course of inquiry are deemed to be the judicial proceedings in terms of Section 50 (4), and are admissible in evidence, whereas the statements made by any person to a police officer in the course of an investigation under Ch. XII of the Code could not be used for any purpose, except for the purpose stated in the proviso to Section 162 of the Code.'
The Hon’ble Supreme Court in the aforementioned judgment underscored that such statements, being recorded in the course of an inquiry rather than an investigation, are not subject to the restrictions under Article 20 (3) and Article 21 of the Constitution. Instead, they are deemed to be judicial proceedings under Section 50(4) of the PMLA and, therefore, admissible as evidence in proceedings under the PMLA.
Whether the applicant is exempted from the rigors of the twin conditions of bail, if not, then whether the applicant has satisfied the twin mandatory conditions under Section 45 of the PMLA? - HELD THAT:- The Hon’ble Supreme Court in Nikesh Tarachand Shah v. Union of India, [2017 (11) TMI 1336 - SUPREME COURT] struck down the twin conditions as unconstitutional. However, the legislature subsequently amended the provision to cure the defects, and it has since been upheld in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)], reaffirming the strict nature of bail conditions under the PMLA. In Prem Prakash [2024 (8) TMI 1412 - SUPREME COURT], the Hon’ble Supreme Court has also delved into the principles pertaining to bail in PMLA matters.
This Court holds that the applicant cannot claim the benefit of the monetary threshold exemption under the proviso to Section 45 of the PMLA. The entire scheme of laundering illicit funds, as uncovered by the investigation, extends far beyond the threshold of one crore rupees, and the applicant’s role must be assessed in the broader context of the criminal conspiracy in which he actively participated.
This Court finds that the twin conditions prescribed under Section 45 of the PMLA have not been satisfied and the applicant’s contention regarding his bail in the predicate offence holds no weight in the present case. The evidence on record, the ongoing nature of the investigation, and the applicant’s alleged role in the broader financial syndicate indicate that the applicant has failed to satisfy the rigors of Section 45 of the PMLA - this Court does not find any merit in the contention of the applicant that he is exempted from the twin conditions under the proviso to Section 45 of the PMLA or that he satisfies the twin conditions under Section 45 of the PMLA.
Whether the statutory presumption of guilt under Section 24 of the PMLA applies in the present case and whether the applicant has successfully rebutted this presumption? - HELD THAT:- From the bare perusal of Section 24 of the PMLA, it is evident that once a person is charged with the offence of money laundering under Section 3, the law presumes that the proceeds of crime are involved in money laundering unless the contrary is proven by the accused - In the present case, the investigating agency has relied not only on the statement of co-accused under Section 50 of the PMLA but also on financial records, WhatsApp communications, and transactional data, which indicate the applicant's active role in the alleged money laundering activities.
By virtue of Section 24 of the PMLA, the respondent is not required to conclusively establish the applicant's guilt at the pre-trial stage, rather, the applicant must demonstrate that the proceeds of crime attributed to him are not linked to money laundering. In the absence of any rebuttal by the applicant, the presumption under Section 24 of the PMLA stands in favor of the respondent, thereby justifying his continued detention.
In the present case, the respondent has placed on record material indicating that the applicant actively participated in procurement and sale of spurious anti-cancer medicines. The investigation has revealed that the applicant engaged in financial transactions involving the proceeds of crime, including payments made through banking channels and hawala transactions - Applying the legal presumption under Section 24(a) of the PMLA, once the respondent has demonstrated these foundational facts, the onus shifts to the applicant to rebut the presumption that the proceeds of crime were not involved in money laundering. The applicant, however, has failed to provide any credible evidence to rebut this presumption. Mere denial of involvement or assertion of being an investor in the firm without day-to-day operational control is insufficient to discharge the burden imposed by the statute.
Conclusion - i) This Court is of the view that considering the filing of the first supplementary prosecution complaint and the ongoing nature of the investigation, it is not satisfied that the applicant has fulfilled the twin conditions under Section 45 of the PMLA. The respondent has presented sufficient material to warrant further investigation, including financial records, electronic evidence, and statements of co-accused implicating the applicant. ii) The applicant has been unable to put forth any propositions before this Court that are sufficient for grant of bail and thus, the same are rejected.
Application dismissed.
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2025 (2) TMI 14
Money Laundering - challenge to summons issued by the Enforcement Directorate to the petitioners under Section 50(2) of the Prevention of Money Laundering Act, 2002 - petitioners challenge the summons on the ground that they had responded to the earlier summons issued by the Enforcement Directorate, the Enforcement Directorate ought not to have issued the impugned summons.
HELD THAT:- Section 44(1)(d) Explanation (ii) enumerates that “the complaint shall be deemed to include any subsequent complaint in respect of further investigation that may be conducted to bring any further evidence, oral or documentary, against any accused person involved in respect of the offence, for which complaint has already been filed, whether named in the original complaint or not”.
Although the alleged offence occurred prior to the amendment, impugned summons were issued after insertion of Explanation Clause under Section 44(1)(d)(ii). Therefore, there is no impediment for the authorities to issue summons for the purpose of collecting further information, documents, etc.
Courts at no circumstances shall dilute the rigor of investigation in money laundering cases instituted under the provisions of PMLA. Any judicial interference at the summons issuance stage may cause prejudice to an effective investigation. Therefore, the Courts should allow Investigating Agencies to function fairly and freely, enabling them to cull out the truth by collecting all necessary evidence, obtaining statements from the concerned individuals, and initiate all appropriate actions by following the due procedures as contemplated under the provisions of PMLA - Therefore, granting any leniency regarding appearance or otherwise, by the Courts based on misplaced sympathy or taking a lenient view, would undoubtedly hamper the investigation process. This would inevitably result in allowing individuals to escape from the clutches of PMLA proceedings, which is undesirable.
Conclusion - The validity of the summons issued by the Enforcement Directorate affirmed. The petitioners must comply with the summons and provide any additional explanations or documents required.
Petition dismissed.
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2025 (2) TMI 13
Failure to pay service tax for certain courses conducted by them on payment for certain assessment years - whether the Joint Commissioner had the jurisdiction to pass the final order without issuing a fresh show cause notice after the case was transferred from the Commissioner of Central Excise? - HELD THAT:- On perusal of the show cause notice, we find that the show cause notice was issued by the Commissioner while the final order was passed by the Joint Commissioner. On that ground, the impugned order was set aside and the matter was remitted back to the Joint Commissioner for fresh consideration. On perusal of the original impugned order passed by the Joint Commissioner, it is found that the very same point was agitated by the respondent herein (writ petitioner) and in the original impugned demand order was confirmed under Section 73(2) of the Finance Act, 1994 and appropriate interest was levied under Sections 75, 78, 77(1)(c) and 77(2) of the Finance Act, 1994. As against that order, the appeal lies to the Commissioner of Central Excise (Appeals), Coimbatore at Madurai.
When a show cause notice has been issued by the higher officer and after entering the appearance and after commencing the enquiry, in the middle of the enquiry, the matter has been made over to the lower officer, who had passed an order, here in this case, the Joint Commissioner. As against that order, appeal lies to the Commissioner of Central Excise (Appeals), Coimbatore at Madurai. As submitted by the learned Senior Standing Counsel, that the officer is also below the rank of the officer had issued the show cause notice, which is impermissible both under the administrative law as well as under the Finance Act.
Conclusion - Since the impugned order was set aside only on the technicalities, it is not proposed to delving into details as to whether the alleged service is said to have been rendered by the respondent to attract the GST or not, which is left open to be decided by the competent authority and hence, there is no positive reason to interfere with the order passed by the learned Single Judge.
Appeal dismissed.
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2025 (2) TMI 12
Levy of service tax on the entirety of income as consideration for having rendered ‘management, maintenance or repair service’ under the authority of section 65(105)(zzg) of Finance Act, 1994 and as consideration for ‘service’ as defined in section 65B(64) of Finance Act, 1994 for the respective periods - exclusion of amount received as ‘sub-contractor’ - HELD THAT:- It is noticed that partial disaggregation resorted to for taxing of ‘works contract service’ and ‘security services’, while excluding taxability for non-conformity of some with definition in section 65(64) of Finance Act, 1994, is tantamount to adoption of inconsistent ascertainment of leviability. There is no doubt that the provisioning of roads, facilities and infrastructure for residents of designated areas devolves statutorily upon ‘local authorities’ as defined in the Constitution and the respective statutes. These are not commercial ventures of the local authority and, consequently, should be covered in the exemptions or exclusions that are available to such authorities under law.
As pointed out by the Learned Counsel for the appellant, the decisions of the Hon'ble Supreme Court, in COLLECTOR OF C. EX., VADODARA VERSUS DHIREN CHEMICAL INDUSTRIES [2001 (12) TMI 3 - SUPREME COURT] and in COMMISSIONER OF CENTRAL EXCISE, BOLPUR VERSUS M/S RATAN MELTING & WIRE INDUSTRIES [2008 (10) TMI 5 - SUPREME COURT], bind subordinate officers to the confines of circulars of Central Board of Excise & Customs (CBEC) and the contextual reference to these in the submissions of the appellant-assessee have not been considered by the adjudicating authority.
The appellant-Commissioner, while not touching upon the exclusion of ‘multi-functional belts’, has assailed inclusion of consideration received from the principal contractor by reference to entries in the books of accounts.
Conclusion - The tax liability would have to be adjudged strictly in conformity with the proposal for taxing the consideration as ‘management, maintenance or repair service’ for the period prior to July 2012 and, to the extent that the impugned order has not, the matter requires a fresh appraisal.
The matter remanded back to the adjudicating authority for a fresh decision strictly on conformity of the proposals made in the show cause notice with the provisions of law as existed prior to 1st July 2012 and for the period thereafter - appeal allowed by way of remand.
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2025 (2) TMI 11
Refund of payment made on advance receipt prior to 30.06.2017 under Finance Act, 1994 - tax paid twice - rejection of refund on the ground that tax was appropriately paid under the provisions of Finance Act, 1994 as it then existed - HELD THAT:- After considering the merits of the matter and concluding that the double taxation was avoidable even under the two tax regimes the matter was remitted by the Learned Single Member Bench, in that case, due to the natural justice not having been followed. This court finds that the observations made on the aspect of double taxation under two different tax regime are relevant and deserves to be followed.
Due to the special features available in GST Regime, the Learned Member of Single Member Bench of Chennai in M/S. THIRUMAL FAÇADE SOLUTIONS VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, CHENNAI [2023 (2) TMI 1252 - CESTAT CHENNAI] has correctly held that there cannot be a double taxation. It is for department to choose whether it would like to refund tax or give credit under GST regume. Since in this case tax on the same transaction has been suffered twice, therefore, as per the provision of Finance Act, 1994 including provisions of refund as have been borrowed from Central Excise Act, 1944, the refund is permissible and deserves to be allowed.
Conclusion - The appellant is entitled to a refund of the service tax paid under the Finance Act, 1994, due to the subsequent taxation of the same transaction under the GST regime.
Appeal allowed.
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2025 (2) TMI 10
Classification of services - intermediary services or not - after sales services and promotion of goods - period involved is from July 2012 to September 2014 - extended period of limitation - HELD THAT:- In view of statutory provision the services having been provided in India to the customer of Koch Membrane, USA through the intermediary which in this case was the appellant, same as discussed by the Commissioner in order, cited above, cannot be treated as “Export of Services‟. Secondly, this court is also not impressed by the argument advanced by the appellants that they having provided technical services and technical promotional quality design installation, commissioning and testing services to clients of Koch Membrane Systems, USA in India, such services were not covered as intermediary services prior to amendment of 2014 in Section 2(f) as they prior to the period of Notification 14/2014 dated 01.10.2014 were only dealing with the goods and prior to amendment vide above notification for the impugned period i.e. July 2012 to September 2014 they were not providing service in relation to services but only in relation to the goods.
The appellants were facilitating and arranging for the services between the buyers of Koch Membrane, and Koch Membrane Systems, USA who was otherwise required to provide such services in India. Such services were very much within the ambit of Notification No. 28/2012-ST dated 20.06.2012 even prior to the amendment carried out by Notification No. 14/2014-ST dated 11.07.2014 which only widened the scope to include even those intermediaries which arrange for supply of goods between two or more persons which term would include importing of goods on behalf of the main producer or client or between two or more persons and therefore, would include those intermediaries or brokers or agents who act from the point of importation to the point of consumption and supply of goods which is not the case in this instance as only installation and designing and such other services in India were provided were being provided in relation to and for Koch Membrane Systems, USA,which they would have been required to provide in India. Therefore, considering the scope of the contract, it becomes abundantly clear from the object clause itself that they were provisioning for services and arranging and facilitating provision of service in India which as per statutory provisions was always covered under the ambit of Place of Provisions Rules, 2012.
The extended period for demand was justified due to non-disclosure of relevant information by the appellant.
Concluion - i) The services provided by the appellant were intermediary services and subject to service tax. ii) The appellant's argument regarding the retrospective application of the amendment was rejected. iii) The services did not qualify as export of services and were not exempt from service tax. iv) The extended period for demand was justified due to non-disclosure of relevant information by the appellant.
Appeal rejected.
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2025 (2) TMI 9
Disallowance of CENVAT Credit - scope of SCN - the grounds on which the impugned order was passed in confirming such demand was not the subject matter of the dispute in the SCN issued by the Department - HELD THAT:- The allegations levelled therein against the appellants was in context with mis-match of figures in ST-3 returns prepared for the period between October, 2009 to March, 2010 and April, 2010 to September, 2010. The said show-cause notice had not proposed for disallowance of CENVAT Credit on the ground that the disputed services were not confirming to the definition of ‘input service’. Such ground was considered for the first time by the Department in third adjudication order (impugned herein). Since the showcause notice is a primary document based on which the entire proceedings were initiated against the appellants for confirmation of the CENVAT demand, no new ground can be taken subsequently at the time of adjudication stage, inasmuch as it is only the allegation levelled in the show-cause notice, which can be addressed to or acted upon by the adjudicating authority, while passing the adjudication order.
The issue with regard to taking of new ground/plea in the adjudication order, which was not being alleged in the show-cause notice, the Hon'ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, NAGPUR VERSUS M/S BALLARPUR INDUSTRIES LTD [2007 (8) TMI 10 - SUPREME COURT] have held that the show-cause notice is a foundation in the matter to levy and recover of duty and if certain provisions have not been quoted or discussed therein, the adjudicating authority cannot invoke such statutory provisions to confirm the demand on the assessee.
The Hon'ble Supreme Court in the case of COMMISSIONER OF CUSTOMS, MUMBAI VERSUS TOYO ENGINEERING INDIA LIMITED [2006 (8) TMI 184 - SUPREME COURT] have also dealt with the identical issue, holding that the grounds did not find mention in the show-cause notice, then the Department cannot travel beyond such notice and the demand confirmed entirely on new grounds is liable to be set aside.
Conclusion - The demands confirmed in the impugned order was not dealt with or considered in the show-cause notice dated 16.07.2013 issued by the Department, such demand confirmed against the appellants cannot be sustained for judicial scrutiny, in view of the settled position of law.
Appeal allowed.
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2025 (2) TMI 8
100% EOU - Cenvat credit on various input services under the Cenvat Credit Rules, 2004 - applicability of time limitation - appellant could not make oral submissions and make effective representation before the authority - violation of principles of natural justice - HELD THAT:- From the facts of this appeal, it appears that input services viz., Rent a cab, Personal insurance, Air Travel Agent's services, Business Auxiliary Services, Commercial or Industrial Construction Services, Information Technology Software Services, etc. were not allowed by the Revenue for availment of Cenvat credit of the service tax paid on the ground that these were not related to the manufacture of their final products. These services appear to be activities forming part of the Appellant’s manufacturing business. However, the Appellant has not furnished any reply to the Show Cause Notice dated 04.09.2014 issued and not attended the personal hearing granted by the Original Adjudicating Authority.
The Appellant has reversed the credit voluntarily in respect of Rent-a-Cab service and also on personal insurance service which is not interfered with.
Conclusion - i) The definition of 'input service' prior to 01.04.2011 included activities related to business, requiring examination of eligibility based on this definition. ii) The burden of proof regarding Cenvat credit eligibility lies with the claimant. iii) Interest and penalties are not applicable if Cenvat credit is merely taken and not utilized, subject to verification.
The impugned Order-in-Original passed by the Commissioner of Central Excise, Puducherry cannot be sustained and so ordered to be set aside by way of remand. The Appellant is directed to produce all the relevant documents on the basis of which they have taken the Cenvat credit on various input services. It need not be reiterated that while adjudicating the issue of eligibility of the Cenvat credit on various input services as above strict observance of the principles of natural justice have to be complied with - appeal allowed by way of remand.
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2025 (2) TMI 7
CENVAT Credit - disallowance of credit towards transportation and difference in the amount received from the insurance company - credit on labour cost - time limitation - Penalty imposed under section 11AC of the Act.
Credit towards transportation and difference in the amount received from the insurance company - HELD THAT:- There is no reason to interfere with the findings that the ingredients to avail credit of duty of goods brought back to the factory, as contemplated under Rule 16(1) were not satisfied. The appellant having wrongly availed the benefit of the credit on the service tax paid on transportation charges is liable to reverse the said amount along with interest.
The loss due to damaged goods was valued at Rs. 4,83,825/- and against the same appellant received the insurance claim of Rs. 5,60,555/-, however, they reversed the credit on the amount of Rs. 4,83,825/- and failed to reverse the balance amount of credit of Rs. 11,793/- on the differential amount of Rs. 76,730/-. Therefore, the appellant was liable to reverse the credit of Rs. 11,793/- wrongly retained by them. In fact, the appellant had agreed and actually paid the Cenvat credit of Rs. 3,067/- along with interest and penalty, but failed to pay the balance amount of Rs.8,726/-. There seems to be no error in the demand raised and confirmed in this regard.
Reversal of the Cenvat credit in respect of labour cost - HELD THAT:- The appellant in their synopsis had submitted that they received a sum of Rs. 5,60,555/- towards the insurance claim which consisted cost of material of Rs. 4,83,825/- and the cost of labour of Rs. 1,56,717/-. From their own submissions, it is apparent that the amount received from the insurance company included the cost of labour and consequently, they were required to reverse the same.
Time limitation - HELD THAT:- The allegation of wilful suppression to evade payment of duty has been made out and therefore, the invocation of the extended period of limitation is justified in the facts of the present case.
Penalty imposed under section 11AC of the Act - HELD THAT:- The penalty imposed under section 11AC of the Act on account of suppression of facts so as to evade duty liability is mandatory and there is no reason to interfere with the same - The action/inaction on the part of the assessee points to the intent to evade duty and the same is writ large in the present case as though ER-1 Returns were filed by the appellant, however, the fact of availing the Cenvat credit on transportation charges was missing deliberately as the appellant knew that the activity carried out by them and did not amount to manufacture which is further evident by not availing the Cenvat credit in terms of Rule 16(1).
Conclusion - i) The appellant having wrongly availed the benefit of the credit on the service tax paid on transportation charges is liable to reverse the said amount along with interest. ii) The amount received from the insurance company included the cost of labour and consequently, they were required to reverse the same. iii) The allegation of wilful suppression to evade payment of duty has been made out and therefore, the invocation of the extended period of limitation is justified in the facts of the present case. iv) The penalty imposed under section 11AC of the Act on account of suppression of facts so as to evade duty liability, the same is upheld.
Appeal allowed in part.
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2025 (2) TMI 6
CENVAT credit - whether the appellant was required to reverse the credit taken on the capital goods or pay duty on the transaction value at the time of clearance? - HELD THAT:- From the worksheet enclosed along with the show- cause notice, it is seen that the capital goods were purchased in the year 1994-1995, 1995-1996, 1996-1997, 2002-2001, 2001-2002, 2002-2003, 2003-2004, 2004-2005, 2005-2006, 2006-2007 and were cleared to M/s. Volvo India Pvt. Ltd. under the Invoice No .236 dated 04.05.2007 on payment of duty of Rs.80,53,153/- on the transaction value of Rs.7,76,47,919/-, but the credit availed on these capital goods was Rs.1,14,06,152/-. The claim of the appellant is that these capital goods were put to use and were not cleared ‘as such’, hence, question of reversal of credit does not arise.
In the present case, since the Department does not dispute the fact that the goods were cleared after being put to use, the question of considering the capital goods cleared ‘as such’ for the purpose of reversal of credit cannot be sustained. Moreover, the Commissioner (Appeals) in the impugned order clearly notes that Notification No.39/2007 Central Excise (NT) dated 13.11.2007, the benefit of payment of amount equal to the cenvat credit taken on the said capital goods reduced by 2.5% for each quarter of a year or part thereof from the date of taking the credit has been provided for on removal of the capital goods being used, but holds that this benefit is available only from 13.11.2007 onwards.
Conclusion - There are no reason to deny the benefit of depreciation to the used capital goods for discharging the duty on the reduced value at the time of clearance.
The impugned order is set aside and the appeal stands allowed.
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2025 (2) TMI 5
Valuation of Excise duty - inclusion of amortized value of the moulds to the assessable value of the goods manufactured and cleared by the Appellant using the moulds - HELD THAT:- Larger Bench decision relied by the Revenue in the matter of M/s Mutual Industries Ltd. [2000 (3) TMI 74 - CEGAT, COURT NO. I, NEW DELHI], though the issue was amortization of mould, it was specific to the issue that whether the proportion of such inclusion need to be made even when after successive income tax depreciation, cost of the mould became zero. On that issue, it is held that cost of such mould has to be included in such value. However, the Larger Bench decision is not relevant considering the facts and circumstances of present case. As regards reliance on the M/s Bhor Industries Ltd., the customer of the appellant supplied 'Dies and tools' to the job worker without amortizing the cost of the same. However, in Appellant’s case, adjudication authority admits that the original equipment manufacturers (OEMs) being the customers of the Appellant have amortized the cost of the mould supplied by them and hence the above judgment cannot be applied to the facts of the present case.
As regarding the reliance on the decisions of the Larger Bench in the matter of M/s. Mutual Industries Ltd. Vs. Collector of Central Excise, Mumbai [2000 (3) TMI 74 - CEGAT, COURT NO. I, NEW DELHI], the movement of mould were neither undertaken under the job work challan nor the job worker amortize the value of the free issue material. However, in the present case, movement of mould from OEMs to the appellant was under job work challan and further the value of the mould in the present case is amortized, while clearing the final product, which includes the intermediate product manufactured and supplied by the appellant.
The impugned order confirming the demand along with the interest and imposition of penalty is unsustainable.
Conclusion - The intermediate product manufacturers are not liable for duty on free supply inputs when the final product manufacturer avails credit under the MODVAT Scheme.
Appeal allowed.
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2025 (2) TMI 4
Determination of the appropriate rate of interest on the refund of a pre-deposit made by the appellant during an investigation - Clandestine manufacture and removal - HELD THAT:- In the present case impugned order clearly observes that the amount that was deposited by the appellant at the time of visit of officers to their premises was appropriated by the Original Authority. The amount so appropriated acquired the character of duty, the moment it is appropriated against the demand made. In case of Mafatlal Industries [1996 (12) TMI 50 - SUPREME COURT], Hon’ble Supreme Court has observed 'Section 11B of the Central Excises and Salt Act and Section 27 of the Customs Act, both before and after the 1991 (Amendment) Act are constitutionally valid and have to be followed and given effect to. Section 72 of the Contract Act has no application to such a claim of refund and cannot form a basis for maintaining a suit or a writ petition. All refund claims except those mentioned under Proposition (ii) below have to be and must be filed and adjudicated under the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be. It is necessary to emphasise in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal - which is not a departmental organ - but to this Court, which is a civil court.'
Even if the amount is considered to be refund of deposit then also the same has to be refunded under section 11B as the said section has provided for the refund of deposit lying in account current.
All the refunds which are filed under the Central Excise Act, 1944 in terms of the decision of Hon’ble Supreme Court in case of Mafatalal Industries and the above provisions whether of the duty, interest or any deposit made are governed by the provision of Section 11B of the Act. The interest thus gets governed by the provisions of Section 11BB as has been held by Hon’ble Supreme Court in case of Ranbaxy, [2011 (10) TMI 16 - SUPREME COURT]. There has been exception carved out only for determination of relevant date for determining the period for which interest is to be paid in respect of deposit made as per Section 35F for filing the appeal before an appellate authority. Section 35FF provides that interest would be paid from the date of deposit made under Section 35F.
Conclusion - Statutory provisions must be adhered to when determining interest rates on refunds. The interest rate of 6% as granted by the adjudicating authority upheld.
Appeal dismissed.
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2025 (2) TMI 3
Rejection of application filed by the petitioner to rectify the Assessment Orders that were earlier passed on 17.12.2019 for the Assessment Years 2016-2017 and 2017-2018 - writ petition was earlier dismissed for default due to non prosecution - HELD THAT:- It is noticed that even as per the respondent, the correct method for determination of the classification would be either before the Appellate Commissioner or before the Advance Ruling Authority. Prima facie, it appears that the issue stands now covered in favour of the petitioner as the Appellate Commissioner has accepted the contentions of the petitioner that product manufactured and dealt by the petitioner was indeed animal supplement and was exempted in terms of Item No.5, Commodity Code No.705 of IV Schedule appended to TNVAT Act, 2006 in terms of the above mentioned orders of the Appellate Deputy Commissioner.
The impugned orders are set aside and the cases are remitted back to the respondent to pass a fresh order on merits and in accordance with the aforesaid order of the Deputy Appellate Commissioner (ST FAC). Needless to state, the Department is entitled to take up the issue before the Appellate Forum as has been done against the order of the Appellate Deputy Commissioner dated 17.03.2023.
Petition allowed by way of remand.
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2025 (2) TMI 2
Revision of assessment - escaped turnover - specific case of the petitioner is that the petitioner was deemed to have been assessed in terms of Section 22(2) of TNVAT Act, 2006 on 31.10.2014 - HELD THAT:- A reading of the impugned order indicates that barring discussion on the limitation and a conclusion that there was a escaped turnover there is no clear discussion as to how the proposal contained in the revised notice dated 04.12.2020 was sustained. It is however made clear that equitable principles of estoppal will not apply on tax and equity are strangers like chalk and cheese. Therefore, merely the first revised notice dated 28.11.2017 proposed a sum of Rs. 3,15,489/- ipso facto would not mean the respondent was precluded for issuing a revised notice dated 04.12.2020 proposing to revised escaped turnover of Rs. 17,12,472/-. The order has to clearly discuss the same. Therefore, to balance the interest of the parties, Court is inclined to set aside the impugned order and the remits the case back to re-do the adjudication on merits within a period of three months from the date of receipt of a copy of this order.
Conclusion - The impugned order was deficient in addressing the merits and thus set it aside, remitting the case for re-adjudication on the merits within three months.
Petition disposed off.
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2025 (2) TMI 1
Dismissal of appeal - appeal dismissed on the ground that the appellant had opted for composition under section 6 of the Delhi Sales Tax on Works Contract Act and so there was no need to examine whether the transaction of Rs. 2,59,19,818/- was in connection with inter-State sale or not - HELD THAT:- The preliminary objection raised by learned counsel for the State of Delhi is that this appeal is not maintainable since an appeal shall lie only against an order passed by the highest Appellate Authority of a State under the CST Act determining issues relating to stock transfers or consignment of goods, in so far as it involves a dispute of inter-State nature.
The preliminary objection has merits. An appeal would lie to this Tribunal only against any order passed by the highest Appellate Authority of the State under the CST Act. “Authority” has been defined under section 19 of the CST Act. Prior to 31.03.2023 an appeal would lie to the Central Sales Tax Appellate Authority, but after the amendment made by Finance Act No. 08 of 2023 w.e.f. 31.03.2023, appeal would lie to this Tribunal, namely, The Customs, Excise & Service Tax Appellate Tribunal.
The assessment order was passed under the provisions of the Delhi Sales Tax on Works Contract Act, against which the appellant filed an appeal under section 43(1) of the Delhi Sales Tax Act before the Deputy Commissioner (Appeal) as the provisions of section 16(1) of the Delhi Sales Tax on Works Contract Act make applicable the provisions of appeals under the Delhi Sales Tax Act. A further appeal was filed by the appellant before the Appellate Tribunal under section 43(2) the Delhi Sales Tax Act. The said appeal was dismissed by order dated 30.06.2014.
The order dated 30.06.2014 was certainly not passed by the Appellate Tribunal under the provisions of the CST Act - the appellant did have a remedy against the order dated 30.06.2014 of the Appellate Tribunal under section 45 of the Delhi Sales Tax Act by requiring the Appellate Tribunal to refer the matter to the High Court on any question of law arising out of such order, but that remedy was not exercised by the appellant and instead this appeal was filed under section 20 of the CST Act, which appeal is clearly not maintainable.
Conclusion - i) The appeal was dismissed as not maintainable under Section 20 of the CST Act. ii) The appellant was held liable to pay tax under the composition scheme without deductions for inter-State sales.
This appeal would, therefore, have to be dismissed as not maintainable and is, accordingly, dismissed.
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