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Showing 61 to 80 of 1721 Records
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2024 (9) TMI 1663
Validity of assessments framed u/s 153A - no valid approval u/sec.153D - HELD THAT:- Sec.153D approval has to be granted on standalone basis after perusing the entire records for each assessment year instead of treating it as a mere mechanical exercise. This tribunal’s recent coordinate bench’s order in SMW Ispat (P.) Ltd. [2024 (6) TMI 404 - ITAT PUNE] has rejected the Revenue’s arguments whilst concluding that a conditional approval than an absolute one is not sustainable in law and therefore, the corresponding assessment(s) framed u/sec.153A of the Act is null and void.
All the impugned sec.153A assessments, all are not sustainable in law and therefore, the same stand quashed in very terms since not framed after a valid approval u/sec.153D.
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2024 (9) TMI 1662
Deduction u/s 80IA(4) - profits derived from the projects awarded to JV / Consortium - HELD THAT:- Exemption provisions should be interpreted liberally in order to achieve the objectives of the legislature and going by the above ratio, in our considered view, there is no dispute with regard to the fact in the present case, the appellant is engaged in the business of developing infrastructure project like irrigation project, water supply system, hydropower plants and roads and railway lines and the statute provides for specific exemption under section 80IA(4) of the Act in respect of infrastructure projects, in our considered view, going by the liberal interpretation of the statute, the assessee must be given the benefit of deduction, having been satisfied all the conditions, including the condition of entering into an agreement with the State Government or Central Government or with any local authority, as a constituent partner of the JV/Consortium, more particularly, except entering into agreement, all other activities were carried out by the assessee
We are of the considered view that the assessee is eligible for deduction under Section 80IA(4) of the Act towards profits derived from infrastructure project awarded to JV / Consortium, but executed by the appellant. The ld.CIT(A) after considering relevant facts, has rightly allowed the deduction under Section 80IA(4) of the Act. Thus, we are inclined to uphold the findings of ld.CIT(A) and reject the grounds taken by the Revenue.
Disallowance of expenditure related to exempt income u/s 14A read with Rule 8D - CIT(A) to restrict disallowance under Section 14A read with Rule 8D to the extent of exempt income - HELD THAT:- As relying on Joint Investment Pvt. Ltd [2015 (3) TMI 155 - DELHI HIGH COURT] and Chettinadu Logistics (P) Ltd. [2018 (7) TMI 567 - SC ORDER] disallowance contemplated under Section 14A read with Rule 8D shall not exceed exempt income. Therefore, we are of the considered view that there is no error in the reasons given by the ld.CIT(A) or to restrict the disallowance to exempt income and thus, we are inclined to uphold the findings of ld.CIT(A) and reject the grounds taken by the Revenue.
Disallowance u/s 36(1)(va), in respect of belated payment of employee contribution to Provident Fund - HELD THAT:- We find that the Hon’ble Supreme Court in the case of Checkmate Services P. Ltd [2022 (10) TMI 617 - SUPREME COURT] has considered the issue and held that in case of belated payment of employee contribution to PF and ESI, beyond the due date specified under the respective Act, cannot be allowed as deduction under Section 36(1)(va) read with Section 2(24)(x) and this fact has been accepted by assessee.
We find that in case as claimed by the Ld.A.R. for the assessee, the assessee made payment on or before the grace period as provided in the respective statute, then the Assessing Officer may verify the claim of the assessee in light of relevant dates and in case, the AO find that the assessee has paid the amount within grace period, then disallowance should be deleted. Insofar as two payments, the assessee himself admitted that the above two payments are paid beyond the due date and thus, we reverse the findings of the ld.CIT(A) insofar as two items are concerned and addition made by the AO is upheld.
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2024 (9) TMI 1661
Assessment u/s 153A - Legality of approval u/s 153D - Addition u/s 69A - HELD THAT:- Legislature wanted that the assessment/re-assessment of the search cases should be made and the order should be passed with the prior approval of the superior authority.
In the group of cases of Shri Navin Jain [2021 (9) TMI 1068 - ITAT LUCKNOW] a similar issue has been considered by the Lucknow Bench of the Tribunal, wherein also, the approval under section 153D of the Act was given through the same letter dated 30.12.2018 by the ACIT, Central, Kanpur and the Ground raised in this regard by the assessee was allowed.
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2024 (9) TMI 1660
Validity of assessment framed u/s 153A r.w.s. 143(3) r.w.s. 153D - as alleged Approval granted by Additional Commissioner of Income Tax for framing the impugned assessment was without the application of mind - HELD THAT:- Admittedly, there is no form, or the manner specified under the Act in which the approval needs to be obtained by the AO from the ld. Joint Commissioner which has been specified, but the approval cannot be treated as mere administrative approval as observed by the learned CIT-A as evident in the light of the case laws cited above. The application of mind of the joint Commissioner is sine qua non while granting the approval under the provisions of section 153D of the Act.
Our view is further fortified about the nonapplication of mind by the ld. additional Commissioner of income tax while granting the approval under section 153D of the Act by the fact that the AO in the letter dated 30-03-2024 while taking the approval have enclosed the draft assessment orders and the checklist. On perusal of the letter of the AO dated 30 March 2022, it is mentioned that “Addition made in 143(3) orders dated 29.12.2017” whereas the assessment has been made by the AO vide order dated 31-03-2022 and that too under section 153A r.w.s. 143(3) r.w.s. 153D of the Act.
Likewise, the letter written by the AO for the approval under section 153D of the Act dated 30 March 2022 does not refer to any seized materials, statements, written submissions of the assessee except the checklist and draft assessment order whereas the ld. CIT-A in his order had made reference that all these documents have been duly verified by the Additional Commissioner of income tax while granting the approval under section 153D of the Act.
As observation of the ld. CIT-A does not consonance with the letter written by the AO dated 30 March 2022 for taking the approval from the ld. Additional Commissioner of Income Tax under the provisions of section 153D of the Act. As such, the above finding of the ld. CIT-A does not match with the letter written by the AO for seeking the approval under section 153D of the Act. All these details in fact strongly indicate that there was no application of mind by the ld. additional Commissioner of income tax while granting the approval under section 153D of the Act in the given facts and circumstances.
Checklist was prepared considering the assessee on hand as the person other than search person and the proceedings were initiated under the provisions of section 153C of the Act. However, all these information containing in the checklist are far from the reality for the reasons as discussed above. All these facts clearly establish that the approval was obtained by the AO at the fag end of the assessment from the higher authorities which was subsequently granted in the mechanical manner in a day and without application of mind.
Condonation of delay in filing an appeal against intimation under section 143(1) - Admittedly, there was no addition made to the total income of the assessee in the intimation generated u/s 143(1) of the Act. As such, there was no grievance to the assessee for the year in dispute. But what we find is this that the assessee has preferred an appeal to keep the proceedings pending in view of the fact that if any addition is sustained in the assessment order 2020-21 relating to joint development agreement, then it will certainly lead to the double addition which is not desirable under the provisions of the Act. Thus, we find force in the argument of the ld. Counsel for the assessee that it is a fit case where the delay in filing the appeal by the assessee deserved to be condoned.
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2024 (9) TMI 1659
Pendency of the appeals before the CIT (A) for more than three years - The petitioner before the CIT(Appeals) is pending for more than four years and the same is not being heard. As further submitted that though the petitioner is protected by this Court by permitting the petitioner to operate the bank account as per order dated 26.03.2020, till this date, no further progress has been made with regard to hearing of the appeal by the CIT(Appeals).
HELD THAT:- We take a serious note of the pendency of the appeals before the CIT (Appeals) for more than three years. It would be in the interest of all to join the following respondents to resolve the issues of pendency of appeals which has clogged the system.
The respondents are requested to file their response/affidavit on the following:
i) Pendency of appeals before the Commissioner of Income Tax (Appeals).
ii) The average life of the appeal.
iii) How many total appeals are allocated to each Commissioner of Appeals on average basis.
iv) If there is any inordinate delay, such as noticed in the instant case, what are the remedial measures that may be suggested by the Central Board of Direct Taxes.
Issue Notice to the newly added respondents returnable on 1st October, 2024.
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2024 (9) TMI 1658
Dismissal of application for restoration of appeal - non-compliance under the provisions of Section 35F of the Central Excise Act, 1944 - It is the contention of the appellant that they have made pre-deposit of Rs. 67,300/- i.e. 10% of the total amount in dispute on 08.10.2014, which is much after filing of the appeal - HELD THAT:- As the appellant/applicant has complied with the mandatory provisions of Section 35F of the Central Excise Act, 1944, therefore, the order dated 08.04.2015 is recalled by dismissing the appeal for non-compliance under the provisions of Section 35F of the Central Excise Act, 1944.
The Miscellaneous Application for restoration of appeal is allowed.
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2024 (9) TMI 1657
Addition u/s 69B r.w.s. 115BBE - higher rate of taxation regarding the assessee’s unaccounted stock conducted during the course of survey - declaration made on account of excess stock found in survey proceedings - main reason for excess stock found was because of unrecorded purchases - HELD THAT:- We find no merit in the Revenue’s instant sole substantive grievance as this tribunal’s recent order in Ashok Kumar Kesherchand Pande [2023 (7) TMI 1498 - ITAT PUNE] held admittedly, the income offered during the course of survey proceedings was credited to Profit & Loss Account and the additional income offered on account of deficit in the physical stock was credited to Trading Account. The income offered on account of alleged expenditure incurred on construction of the commercial building was offered to tax by crediting the same amount to the Profit & Loss Account. Thus, the income was offered to tax under the head “Income from business”, the Assessing Officer also assessed the same under the head “Income from business”. Therefore, the presumption is to be drawn that the additional income was derived from the business. Thus, it cannot be said that the source for the additional income remain unexplained and, therefore, the provisions of section 115BBE have no application to the present case.
The assessee’s survey statement had also explained the reasons of stock deficiency of non-maintenance proper book results in regular business only. We thus adopt the above detailed reasoning mutatis mutandis to uphold the learned CIT(A)’s detailed discussion reversing Assessing Officer’s action assessing the assessee’s entire stock u/sec. 115BBE - Decided in favour of assessee.
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2024 (9) TMI 1656
Denial of credit for foreign taxes - Form No. 67 was not filed with the return but was filed with the rectification application - HELD THAT:- Since the provisions of DTAA override the provision of Section 90 of the Act as they are more beneficial to the assessee, in view of judicial pronouncements since Rule 128(9) does not preclude the assessee from the claiming credit for FTC in case of delay in filing the return of income as the credit for FTC is a vested right of the assessee and since Form No. 67 was filed along with the rectification application, as contended by the assessee, therefore, there was no justification for not allowing the credit for FTC.
Hence, claim of foreign tax credit has to be allowed since it is a vested right of the assessee and provision of DTAA will override the normal provision of the Income-tax Act if the same are more beneficial to the assessee and there is no justification for not allowing the credit. AO is directed to allow the FTC in accordance with Article 24 of the DTAA between India & Sri Lanka and as per law. Hence, Ground No. 7 is allowed.
Carry forward losses claimed by the assessee in the return of income - The assessee had claimed loss in the return of income. No discussion has been made by the Ld. CIT(A) in this regard. Assessee is also directed to file necessary evidence for such claim before the Ld. AO who shall allow the loss claimed in accordance with law after verification of the details. Hence, Ground No. 8 is allowed for statistical purposes.
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2024 (9) TMI 1655
Classification of goods - Siapton 10L - Isabion - classifiable under ETI 3101 00 99 as a fertilizer or under ETI 3808 93 40 as a plant growth regulator? - whether the mode of usage of the product through soil or foliar application is a determinative test for classifying the goods under ETI 3101 00 99 or ETI 3808 93 43? - HELD THAT:- ETI 3101 00 99 and ETI 3808 93 40, when read with the relevant section and Chapter Notes and the HSN Explanatory Notes, do not provide a distinction based on the mode of usage of such elements. It needs to be noted that water-soluble fertilizers are used for soil and foliar applications.
When plant nutrients are applied by foliar application, smaller quantities of fertilizer materials are required when compared to application through the soil. Upon foliar application of the macronutrient fertilizer, the nutrients enter the leaves through the stomata, correct the disorders, and improve the yield and quality of the produce. Urea is generally suitable for foliar application owing to its high solubility, ease, and quick absorption by the plant tissue - It is an undisputed fact that plants absorb nutrients through their roots or foliage. Generally, in situations where soil conditions are not favorable, it is desirable to make foliar applications of the plant nutrients.
It is also important to notice that plant growth regulators are also used for soil and foliar applications. The EU Explanatory Note to ETI 3808 93 90 makes it aptly clear that the plant growth regulators can be applied to the whole plant or parts of the plant or to the soil - the test based on mode of application would not be a correct test.
Whether the two products, namely, Siapton 10L and Isabion are fertilizers or plant growth regulators? - HELD THAT:- P.I. Industries has stated that the product Siapton 10L has amino acids alone. It has clarified that 54% of the product is pure amino acids and the remaining ingredients are peptides and micronutrients, which are short chain amino acids. Dr. R. Uma Shankar in his opinion dated 08.01.2013 has confirmed that amino acids and peptides can be regarded as bio-stimulants and should be treated as organic nutrients or organic fertilizers and not as classical plant growth regulators. Isagro SPA, Italy which supplied the product to P.I. Industries has specifically stated that Siapton 10L is a product based on organic nitrogenous compounds (amino acids and peptides) and so should be considered as nitrogen based fertilizer with nitrogen in organic form only, incorporated in amino acids and peptides. It has also stated that Siapton 10L is not a plant growth regulator as it does not modify or control or alter any physiological process - SICIT, the company which supplied Isabion to Syngenta in bulk, has also in its communication dated 28.08.2012 stated that Isabion is an organic bio-stimulant and contains a well balanced and optimal ratio between short chain peptides, long chain peptides and free amino acids. The product label of Isabion also mentions that Isabion contains a well balanced and optimal ratio between short chain peptides, long chain peptides and free amino acids.
It needs to be noted that “bio-stimulants”, being a fertilizer, was brought under this Control Order by Order dated 23.02.2021 issued by Ministry of Agriculture and Farmers Welfare. The definition of “bio-stimulants” contained in the aforesaid Order excludes plant growth regulator, which have been stated to be regulated under the Insecticides Act, 1968. It is true that the aforesaid definition of “bio-stimulants” was included in the Fertilizer Order by Order dated 23.02.2021 of the Ministry, but as the Ministry has clearly expressed that bio-stimulants would exclude plant growth regulators, the definition would certainly provide guidance - It can, therefore, be said that fertilizers provide essential nutrients for plant growth and health, while plant growth regulators are chemicals that influence specific aspects of plant growth and development by regulating physiological processes. Both are vital tools in modern agriculture to optimize plant growth and maximize crop yields.
The two products, namely, Siapton 10L and Isabion merely provide nutrients to the plant. They do not alter the physiological processes in a desired direction. In other words, the amino acids and the nitrogen present help in cell building exercise, and thereby, help the plant grow using the nutrients (nitrogen, phosphorus and potassium). Therefore, the two products Siapton 10L and Isabion are in the nature of fertilizers (bio-stimulants) and not plant growth regulators.
The aforesaid discussion leads to the inevitable conclusion that the Division Bench, while referring the matter to the Larger Bench, was not justified in distinguishing the earlier decision of the Tribunal in Northern Minerals [2001 (5) TMI 74 - CEGAT, COURT NO. III, NEW DELHI]. The two products, namely, Siapton 10L and Isabion deserves classification as fertilizers under ETI 3101 00 99 and not as plant growth regulators under ETI 3808 93 40.
The reference is answered, accordingly. The papers may be placed before the Division Bench of the Tribunal to decide the appeals on merits.
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2024 (9) TMI 1654
Validity of assessment u/s 153A - disallowance of wages payable and disallowance of salaries payable on the basis of Provision Made - Assessee submitted that the same is based on information available in regular books of accounts and not based on any incriminating material - HELD THAT:- The assessee has reversed provision of wages payable in FY 2015-16 and claimed the same on actual payment basis in FY 2016-17. The same is very much clear from the above reconciliation. Since the provision as wrongly claimed in return of income filed u/s 139(1) has now been reversed in return of income filed u/s 153A, the payment made in subsequent year would be allowable as deduction in the subsequent year. If the same is not allowed, the assessee would suffer double disallowance which is wholly unjustified Therefore, considering the fact of the case, the amount would be allowed as deduction to the assessee during AY 2017-18. We order so.
Salaries payable, it could be seen that the assessee has reversed provision of Salaries payable for Rs.14.84 Lacs during FY 2015-16 and claimed deduction of the same on actual payment basis. Therefore, the disallowance, to that extent, could not be upheld. The balance provision of Rs.14.69 Lacs has been made on 31- 03-2017. The aggregate provision as on 31-03-2017 was Rs.29.53 Lacs which has fully been paid by the assessee through banking channels in the month of April and May, 2017 which is evident from ledger of salaries payable. Therefore, the impugned disallowance in toto, is not sustainable in law. We order so. The corresponding ground raised by the assessee stand allowed.
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2024 (9) TMI 1653
Rectification of mistake - HELD THAT:- To apply the case laws, the facts should be laid down and the error in the factual recording of the Tribunal has to be pointed out before the case laws have to be applied. A perusal of the order of the Tribunal clearly shows that on earlier occasion also, the appeal had been disposed of exparte after posting the same for hearing on 21 times.
The specific date as requested by ld Counsel had been provided. On the said date also, the counsel has sought adjournment.
Now in the present miscellaneous application, the fault is being placed on the accountant of the assessee. The appeal is disposed of after more than five years and it has been specifically recorded in the order of the Tribunal that what has not been collected in the last 5 years would obviously not be possible in 20 days and again the adjournment sought is nothing but to challenge to the functioning of the Bench. No mistake having not been pointed out in the order of the Tribunal, the M.A. filed by the assessee stands dismissed.
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2024 (9) TMI 1652
Service Tax under Reverse Charge Mechanism - all the expenditure are booked under the head of legal and professional fees - HELD THAT:- We find that the appellant has made out a prima facie case in as much as they have clearly shown the bifurcation of the expenses booked under the head of legal and professional charges in their books of account.
Merely because the appellant have booked the expenses of various professional under one head that is legal and professional charges this cannot be the reason to demand Service Tax from the appellant under Reverse Charge Mechanism on the assumption that all the expenses booked under the said head is towards the legal fees.
Appellant have produced the chart whereby it is explicit that the major amount pertains to various other professions such as Chartered Accountant, Chartered Engineer etc. for which the appellant is not liable to pay Service Tax under Reverse Charge Mechanism in terms of Section 68(2) r/w Notification No. 30/2012-ST. however, this clear bifurcation has not been submitted by the appellant before the adjudicating authority therefore the matter needs to be reconsidered by the adjudicating authority on all the issues.
Therefore, allow the appeal by way of remand to the adjudicating authority. Since the appeal pertains to very old period of 2017 and the period involved is July-2012 to November-2015 the adjudicating authority shall pass de novo order within a period of two months from the date of this order.
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2024 (9) TMI 1651
Seeking grant of Interim Bail - HELD THAT:- The fact must be noticed that, in the past, the petitioner was ordered to be released on interim bail on health grounds. It was further pointed out to us that charge-sheet came to be filed way back in August 2023 but till this date, the Special Court has not even framed charge.
Issue notice returnable within four weeks.
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2024 (9) TMI 1650
Violation of principles of natural justice - ex-parte adjudication proceedings against the petitioner - petitioner was not given any report of the SIB which the petitioner has specific plea requested by his letter - HELD THAT:- Since relevant documents for replying to the show cause notice were not supplied to the petitioner he was handicapped and prejudiced. It has been stated in the impugned order that the petitioner was informed by letter dated 11.5.2024 on the portal to collect the copies of the SIB report from the office of opposite party no.2 and to submit his reply by 10.6.2024, however, such letter dated 11.5.2024 was posted at wrong section of portal and as such it could not be seen by the petitioner.
The petitioner having been denied opportunity of hearing the order impugned are vitiated and therefore liable to be set aside.
This petition is disposed of with the liberty to the petitioner to file his appeal within 10 days from today. If such an appeal is filed the same shall be considered on its merits and decided as expeditiously as possible.
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2024 (9) TMI 1649
Seeking a direction to the Commissioner (Appeals) to hear appeal without insisting upon the mandatory deposit of Rs. 3.375 Crores corresponding to 7.5% of the penalty amount - Without going into the merits of the matter, after the petition was argued for some time, petitioner sought leave to withdraw the petition with liberty to file a fresh petition.
HELD THAT:- Petition dismissed as withdrawn with the liberty as prayed for.
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2024 (9) TMI 1648
Constitutional validity of section 16(4) of CGST Act/SGST Act 2017 - Petition seeking declaration of certain provisions as illegal and discriminatory - Blocking of credit balance - HELD THAT:- In view of the amendment by inserting Section 16(5) to the CGST / KGST Act, the present petition deserves to be disposed of relegating the parties to the original authority to implement and give effect to the said provisions after providing sufficient and reasonable opportunity to the petitioner and hearing them and proceed further in accordance with law and by issuing certain directions in this regard.
The parties are relegated to the stage of show cause notice at Annexure-C dated 13.02.2020 issued by the respondent(s) and the respondents are directed to give effect to and implement the amended provisions contained in Section 118 of “The Finance (No.2) Act, 2024” relating to insertion of Section 16(5) to the CGST Act / KGST Act by providing sufficient and reasonable opportunity and hear the petitioner and proceed further in accordance with law within a period of one month from the date of receipt of a copy of this order.
The petition is disposed off.
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2024 (9) TMI 1647
CENVAT Credit - outward transportation of the finished product namely cement from the factory / to dealers to the buyer’s premises - HELD THAT:- The issue of eligibility of credit on outward transportation of goods has been considered by the Tribunal in the appellant’s own case for different periods and the matters have been remanded. The Tribunal observed in M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF CGST & CENTRAL EXCISE, TRICHY [2024 (7) TMI 680 - CESTAT CHENNAI] where it was held that 'the Tribunal had considered the definition of input services prior to 01.04.2008 as well as after 01.04.2008 and held that the credit is eligible.'
The matter requires to be remanded to the Adjudicating Authority for ascertaining the place of removal and also for considering whether the appellant is eligible for Cenvat Credit of service tax paid on outward transportation. The impugned orders are set aside - Appeal allowed by way of remand.
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2024 (9) TMI 1646
CENVAT Credit - freight charges for outward transportation - credit is availed beyond the time limit of 6 months / 1 year - time limitation.
CENVAT Credit - freight charges for outward transportation - HELD THAT:- The very same issue was considered by the Larger Bench of the Tribunal in M/S. THE RAMCO CEMENTS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, PUDUCHERRY [2023 (12) TMI 1332 - CESTAT CHENNAI-LB] in which it was held that after the ascertainment of the place of removal, the assesse would be eligible for credit if the place of removal is buyer’s premises / depots.
Following the same, the Tribunal in the appellant’s own case M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF CGST & CENTRAL EXCISE, TRICHY [2024 (7) TMI 680 - CESTAT CHENNAI] had remanded the matter. Accordingly, this issue requires to be remanded to the adjudicating authority who is directed to ascertain the place of removal in accordance with Large Bench decision of the Tribunal and also to consider whether the appellant is eligible for credit.
Disallowance of credit alleging that the credit is availed beyond the time limit of 6 months / 1 year - HELD THAT:- In order to protect their right of credit, they were availing and reversing the credit to avoid unnecessary proceedings. The credit has been denied for the reason that it is availed beyond the period of time limit prescribed under sub-rule (7) of Rule 4 of CCR 2004. It has been held that the time limit prescribed cannot apply to invoices issued prior to the date on which the restriction came into force. This issue also needs to be looked into by the adjudicating authority. The issue of delay in taking credit was considered by the Tribunal in the Final Order dt. 10.07.2024 and the matter was remanded for reconsideration by the adjudicating authority.
The impugned order is set aside. The appeal is allowed by way of remand to the adjudicating authority.
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2024 (9) TMI 1645
Recovery of Central Excise duty with interest and penalty - plastic waste or not - popcorn waste used by the appellant for manufacturing PSF - benefit of NIL rate of duty under Serial No. 172A of the N/N. 17.03.2012 and concessional rate of duty @ 2% under Serial No. 70A of the Notification dated 01.03.2011 - Extended period of limitation under section 11A(4) of the Central Excise Act - suppression of facts or not - Imposition of penalty on Director.
HELD THAT:- It is not in dispute that PET bottles scrap constitutes 90 percent of the raw material that is used and the percentage of popcorn waste used in the manufacture of PSF is less than 10 percent.
In Tata Iron and Steel [1975 (12) TMI 79 - SUPREME COURT], the Notification of which benefit was claimed granted exemption to duty paid pig iron but duty paid pig iron was also mixed with other non duty paid materials. It is in this context that the Supreme Court held that if the intention of the government was to exclude exemption to duty paid pig iron when mixed with other materials, then the Notification would have used the expression, ‘only’ or ‘exclusively’ or ‘entirely’ in regard to duty paid pig iron but these expressions were not used. Thus, the benefit of the exemption could not have been denied.
In the absence of the word ‘only’, ‘exclusively’, wholly’ or ‘entirely’ in the two Notifications, the benefit of the two Notifications could not have been denied to the appellant merely for the reason that apart from using 90 percent PET bottles scrap, the appellant also used approximately 10 percent of popcorn waste in the manufacture PSF.
Whether popcorn is plastic waste? - whether denial of nil/concessional duty to PSF manufactured by the appellant on the ground that ‘popcorn’ in not plastic waste, is justified? - HELD THAT:- The benefit of the Notifications has also been denied to the appellant for the reason that ‘popcorn’ is recycled PET material and not plastic waste and, therefore, would not fall within the scope of the Notifications. It should not be forgotten that the purpose of the Notifications is to encourage manufacturers to use plastic material and help in recycling of plastic waste. The view taken by the adjudicating authority defeats this very purpose.
The adjudicating authority has examined ‘popcorn’ to see whether it is a plastic waste, classifiable under Customs Tariff Heading 3915 of the Customs Tariff Act, 1975. The Notifications do not provide that ‘only’ plastic waste or plastic scrap falling under Customs Tariff Heading can be used as inputs in the manufacture of PSF. There is no dispute that ‘popcorn’ waste used by the appellant is manufactured from waste of plastic, yarn and textile. The adjudicating authority has failed to appreciate that plastic scrap or plastic waste is not restricted to Chapter 39 only, and such an interpretation has the effect of adding words or conditions in the said Notifications.
Extended period of limitation - HELD THAT:- The present appeal relates to the period from March 2013 to 02.01.2017. The show cause notice was issued on 21.03.2018. The demand raised for period up to February 2016 amounting to Rs. 53,56,90,049/- out of the total demand of Rs. 66,44,69,751/- would be beyond the normal period of limitation. This demand has, however, been confirmed by invoking the extended period of limitation contemplated under section 11A(4) of the Central Excise Act on the ground that the appellant had procured ‘popcorn’ in the guise of PET bottle flakes and mis-declared the description of the goods in the invoices with intent to evade payment of duty and avail the benefit of the Notifications, which fact would otherwise have gone unnoticed if the investigation had not been carried out.
An audit of the records of the appellant had also been conducted, but objection relating to wrong availment of the benefit under the exemption Notifications was never raised. It had also been stated by the appellant in the reply to the show cause notice that the appellant had never denied using miniscule quantity of ‘popcorn’ for manufacturing PSF and in this connection, the appellant had referred to the various statements tendered to the department at the time of investigation. It was, therefore, stated in the reply that once all the facts were available with the department, the department cannot allege that the appellant had suppressed any material fact.
The impugned order merely mentions that ‘it is not the case of the noticee that they had produced all the relevant records to the audit team’. This finding is merely based on a presumption. It is expected that when an audit is carried out, all the relevant documents are examined by the officers who conduct the audit. The adjudicating authority cannot draw an inference that since an objection was not raised by the audit team, the appellant must not have disclosed all the documents to the audit team. The department, at all stages, had an opportunity to question the appellant within the stipulated time but that was not done. Even otherwise, the appellant had in the reply clearly mentioned that from the various statements tendered to the department at the time of investigation, the appellant had never denied that it was using minuscule quantity of ‘popcorn’ for manufacture of the final product.
It must also be remembered that mere suppression of fact is not enough. There has to be a deliberate attempt to evade payment of excise duty. The show cause notice must specifically deal with this aspect and the adjudicating authority is also obliged to examine this aspect in the light of the facts stated by the assessee in reply to the show cause notice.
The provisions of section 11A (4) of the Central Excise Act came up for interpretation before the Supreme Court in PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [1995 (3) TMI 100 - SUPREME COURT]. The Supreme Court observed that section 11A(4) empowers the Department to reopen the proceedings if levy has been short levied or not levied with in six months from the relevant date but the proviso carves out an exception and permits the authority to exercise this power with in five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. It is in this context that the Supreme Court observed that the act must be deliberate to escape payment of duty.
In EASLAND COMBINES VERSUS COLLECTOR OF C. EX., COIMBATORE [2003 (1) TMI 107 - SUPREME COURT] the Supreme Court observed that for invoking the extended period of limitation, duty should not have been paid because of fraud, collusion, wilful statement, suppression of fact or contravention of any provision. These ingredients postulate a positive act and, therefore, mere failure to pay duty which is not due to fraud, collusion or wilful misstatement or suppression of facts is not sufficient to attract the extended period of limitation.
It is, therefore, clear that the suppression of facts should be deliberate and in taxation laws it can have only one meaning, namely that the correct information was not disclosed deliberately to escape payment of duty.
In the present case, the show cause notice alleged that the appellant had suppressed using ‘popcorn’ in the manufacture of PSF and this fact was suppressed from the department with the sole intent to evade payment of duty by availing the benefit of the two Notifications - the appellant had filed ER-1 returns and disclosed the necessary facts required to be disclosed. There is, therefore, no suppression by the appellant of material facts from the department, much less with an intent to evade payment of central excise duty. The extended period of limitation contemplated under section 11A(4) of the Central Excise Act, therefore, could not have been invoked in the facts and circumstances of the case.
Penalty upon the Director - HELD THAT:- The imposition of penalty upon the Director of the appellant under rule 26(1) of the Central Excise Rules has also been questioned by the learned counsel for the appellant. It has been stated that no evidence has been disclosed by the department to prove that the Director dealt with the goods which were liable to confiscation with knowledge about the liability to confiscation. According to the learned counsel for the appellant, such a finding has not been recorded nor evidence was brought on record by the department.
The impugned order dated 16.09.2020 passed by the adjudicating authority deserves to be set aside and is set aside. The two appeals are, accordingly, allowed.
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2024 (9) TMI 1644
Validity of SCN - carry forward of transitional credit - It has been argued on behalf of the petitioner that for the same amount of Input Tax Credit availed by the petitioner, once the proceedings under Section 73 have been dropped in favour of the petitioner, same cannot be reopened under Section 74 of the CGST Act by simply stating that the petitioner had availed excessive Input Tax Credit - HELD THAT:- The impugned Show Cause Notice does not make even a whisper of the fact that petitioner has wrongly availed or utilized Input Tax Credit due to any fraud, or wilful mis-statement or suppression of facts to evade tax therefore, the proceedings initiated against the petitioner u/s 74 of the CGST Act are without jurisdiction for the lack of basic ingredients required under the said clause. So far as the argument advanced by the learned counsel appearing for the respondents that the writ petition against the Show Cause Notice is not maintainable, is concerned, we find that it is consistent view of the Hon’ble Supreme Court that if the Show Cause Notice is without jurisdiction then the same can be challenged by filing writ petition before the High Court under Artilce 226 of the Constitution of India.
It is not found that the basic ingredients required for initiating proceedings under Section 74 of the CGST Act are present in the impugned Show Cause Notice dated 30.12.2023. Therefore the entire exercise including the Show Cause Notice is without jurisdiction and thus this writ petition under Article 226 of the Constitution of India is maintainable.
The impugned Show Cause Notice dated 03.08.2024 in its present form lacks basic ingredients to proceed in the matter under Section 74 of the CGST Act. Therefore, the impugned Show Cause Notice dated 03.08.2024 and the entire exercise initiated pursuant thereto is absolutely without jurisdiction and is liable to be quashed.
Petition allowed.
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