Payment of tax at compounded rate - works contracts - The singular contention of the petitioner is that they had already been granted an order to pay tax at compounded rates under the provisions of Section 8(a)(ii) of the Act and that, therefore, they are eligible to pay tax at such rates for all the works that they had obtained for execution.
Held that: - It is ineluctable that the provisions to pay tax at compounded rates is only in lieu of the obligation to pay tax under Section 6 of the Act. Therefore, the primary charging Section is always Section 6 of the Act and Section 8, which provides for payment of tax at compounded rates, is only an optional method offered to the assessee for ease and convenience in payment of tax. The main charging Section, namely, Section 6 of the Act, proposes levy of tax on sale or purchase of goods.
It is admitted by the petitioner and is evident from the permission granted under Section 8 of the Act, which orders are produced as Annexure-A in the revisions, that they had applied for compounding of certain works contracts covered by a particular work order but not for other works that were being undertaken by them. They had, however, claimed that going by the third proviso to Section 8(ii), they are entitled to pay tax even for those works at the compounded rates. This is totally unacceptable and against the express intendment of the provisions of the section.
The petitioner, having accepted the orders of the Assessing Authority under Section 8(a)(ii) of the Act to pay tax at compounded rates for certain works, cannot renege from the obligation cast upon them under the statute and then try to interpret the provisions to suit its convenience and its cause to claim benefits which they were never entitled to and which was never intended by the statute to be granted. The petitioner would be entitled to pay tax at the compounded rates only for the works for which permission was granted and not for the others.
100% EOU - Refund of unutilized CENVAT credit - various input services - Air Travel Agent Service - Business Auxiliary Services - Chartered Accountants Services - Clearing and forwarding agents services - CHA Services - Companies Secretaries Services - Courier Agency Services - Development and Supply of Content Services - Franchise services - General Insurance Services - Transportation of goods by Road - Outdoor cateringservice - Transport of goods by air - Works contract services - denial on account of nexus - Held that: - except for transport of goods by air, all other services on which refund has been denied on the ground that the said services are not input service is wrong - except transport of goods by air and for other services, the appellant is entitled to the said refund - appeal allowed in part.
Principles of Natural Justice - penalty u/r 26(2) of CER 2002 - Held that: - Revenue has been able to prove that the appellants were engaged in the activity of issuance of fake invoices without movement of the goods - as the appellants are involved in the matter by way of issuance of fake invoices, therefore, the provisions of Rule 26(2) of CER 2002 are attracted to the facts of this case - penalty rightly imposed - appeal dismissed - decided against appellant.
Whether the Soap Stock arising in the course of manufacture of ‘Vanaspati’ was the goods manufactured by oil plant of the appellant to enjoy exemption benefit under N/N. 115/75-C.E., dated 30-4-1975?
Held that: - Revenue did not rule out that ‘Vanaspati’ manufactured by a “oil mill” is also eligible to get exemption under the aforesaid notification - also, manufacture of soap stock was not ruled out by Revenue nor disputed that the same was marketable.
Exemption allowed - appeal allowed - decided in favor of appellant.
Manufacture - installing all items of Computer and connecting them by cord - whether the process amounting to manufacture? - Held that: - After receiving at the customer’s end while installing the cable of the monitor and key board need to be connect with the CPU. This activity does not amount to manufacture as whole computer is already manufactured items by way of assemble of various components and in the manufactured condition, it is bought and sold by the appellant.
There is no activity carried out by the appellant which amounts to manufacture of some new and distinct product - appeal allowed - decided in favor of appellant.
Dutiability - sludge generated in the course of manufacture - whether what that came out in the course of manufacture of principal goods whether shall amount to manufacture? - Held that: - reliance placed in the case of UNION OF INDIA Versus DSCL SUGAR LTD. [2015 (10) TMI 566 - SUPREME COURT], where it was held that it is not in dispute that Bagasse is only an agricultural waste and residue, which itself is not the result of any process. Therefore, it cannot be treated as falling within the definition of Section 2(f) of the Act and the absence of manufacture, there cannot be any excise duty.
Revenue raised the plea that the sludge generated was capable of being marketed stating that the waste generated was sold. It may be stated that amendment to the Section 2(d) of the Central Excise Act, 1944 was made with effect from 10-5-2008 to bring the capability of the goods being marketable to satisfy the twin test - But present case is prior to this amendment to law. The law came into force at a later stage does not fasten the appellant to the liability.
The High Court of Andhra Pradesh dismissed the Company Petition as withdrawn, allowing the petitioner to file a fresh petition before the Company Law Tribunal. (Citation: 2016 (12) TMI 1689 - Andhra Pradesh High Court)
EOU - Confiscation - import of second-hand tractor - it has been alleged that goods had been imported in violation of the licensing note (1)(ii)(d)(iv) in Chapter 87 of the ITC HSN appended to the Foreign Trade Policy - Held that: - It is apparent from the licensing notes in Chapter 87 that the restrictions therein are intended for vehicles that are imported for use as such on the roads in India. The appellant is a unit that is engaged in the manufacture of tractors and is not a user of the said tractor except in relation to its manufacturing activity. It would therefore not be in violation of the licensing notes referred to in the impugned order - the confiscation of the tractor is without authority of law and is set aside - appeal allowed - decided in favor of appellant.
Recovery of refund sanctioned earlier - it was found that Revenue instead of reviewing the respective refund orders and filing appeals before the Commissioner (Appeals) issued demand notices to the assessee to realize the amounts erroneously refunded - unjust enrichment - Held that: - When the assessee respondent gave a Chartered Accountant’s certificate saying that the burden of 4% CVD was not passed on by the importer to any other person, it is difficult to accept the Revenue’s argument against the assessee respondent without there being any documentary evidence to such effect.
Also, the department has not given any evidence either to prove the fact of such habitual and repeated offences by the present assessee respondent or to substantiate the fact of case of unjust enrichment on the part of the assessee respondent.
Valuation - certain goods cleared on stock transfer basis - Revenue entertained the view that the value of the two bought out items also need to be included for payment of excise duty - Held that: - excise duty can be charged only on the goods manufactured. The same is to be charged on the assessable value of the goods cleared from the factory - There is no dispute that lightening arrestor as well as insulator are bought out items which has been supplied from the head office along with goods manufactured in the respondent’s factory - It is nobody’s case that such deduction for bought out items is not to be extended - appeal dismissed - decided against Revenue.
Rectification of Mistake - rectification sought mainly on the ground that while disposing of the Final Order No. A/90720-90723/16/CB, dated 4-10-2016 the Bench has not considered the opinion given by the Department of Electronics and Information Technology, Govt. of India and some other relevant materials, which were relied upon and produced during the hearing before Bench - Held that: - it is noticed that the clarification issued by Department of Electronics and Information Technology, GOI though produced before us, escaped our attention while recording the order, as also other materials like orders of first appellate authority on the same issue for subsequent periods. The said clarification of the Department of Electronics and Information Technology, GOI and other materials may throw some light as to the classification of the products in question.
The order dated 4-10-2016 to the extent it is in respect of these applicants needs to be recalled. In the interest of justice and to be fair to both the sides, we recall our Final Order Nos. A/90720-90723/2016/CB, dated 4-10-2016 and direct the Registry to relist the appeals for fresh hearing.
Valuation - manufacture of single yarn which is captively used for manufacture of double or multi-fold yarn which are consumed for captive use or cleared as such - Revenue included duty-paid on the single yarn in the cost of the double yarn and also 10% notional profit for arriving at the value of double or multi fold yarn - Held that: - As regard inclusion of 10% notional profit, we find that there is no statutory provision to include a fixed amount of notional profit in the value of the captively consumed goods. The notional profit can only be added if there is a profit as per the books of accounts of the assessee. In the present case, it is admitted fact that, as per cost auditor’s report, the appellant is bearing losses. Therefore, there is no question of adding 10% notional profit in the value of doubled yarn.
Since the duty has to be re-quantified, the matter needs remand to the original authority - appeal allowed by way of remand.
Penalty u/s 11AC - Default in monthly payment of duty - contravention of the provisions of Rule 8(3A) of the Central Excise Rules, 2002 - Held that: - this is not a case of clandestine removal or the case of non-payment or short payment of duty. Moreover, there is no suppression of fact on the part of the appellant - Whatever default was made by the appellant that it is not amount to intentional evasion of duty particularly for the reason that they have disclosed the duty payable amount in their invoices as well as in the return - penalty set aside - appeal allowed.
Benefit of N/N. 25/99-Cus., dated 28-2-1999 - denial on the ground that as per clarification issued by TRU vide F. No. 345/40/2001-TRU, dated 7-12-2001, the appellant is not entitled for the benefit of above said notification - Held that: - it is clear that the appellant is entitled for the benefit of notification if they are manufacturing RF/IF transformers. Admittedly, the appellant is not manufacturing the said transformers. Therefore, the appellant is not entitled for such benefit of notification - appeal dismissed - decided against appellant.
Penalty u/r 26 of the CER, 2002 read with Section 112 of the CA, 1962 - the appellant has been considered as a mastermind in floating unit viz. Universal Impex (100% EOU) and by utilizing the status of 100% EOU, imported goods which were not used for manufacturing and export of the goods, but were diverted and clearance of finished goods, which were not manufactured out of the imported raw materials - Held that: - one of the employees of Universal Impex (100% EOU) in the presence of independent panch witness, categorically stated that he had prepared the invoices and AR-3As on the directions of the appellant and only invoices and AR-3As were to be sent and there was no material movement conducted and has to be handed over to such person sent by the proprietor or the appellant - On the face of such a categorical statement of the employee, which is not controverted by the appellant, impugned order upheld - appeal dismissed.
CENVAT/MODVAT credit - inputs used for making capital goods in the nature of M.S. Plates, M.S. Channels, M.S. Joists, etc. - main argument raised is that the user test has not been dealt with - Held that: - the Commissioner has specifically dealt with the functional usage of the various parts. User test as laid down in the Maruti Suzuki Ltd. v. Commissioner of Central Excise, Delhi-III [2009 (8) TMI 14 - SUPREME COURT] only provides that the authority should be satisfied that the use of these inputs is necessary for erection of the whole or part of the plant and machinery, which is essential for manufacture of the end product.
It is not disputed that the inputs like M.S. Angles, M.S. Plates, M.S. Joists and Channels were used for manufacturing of certain essential parts of the factory which are capital goods and since they are essential parts of the factory, they satisfy the twin tests of being capital goods as well as the user test.
Credit rightly allowed - appeal dismissed - decided against Revenue.
SSI exemption - confiscation of goods on the ground that certain goods not covered by the exemption notification - Held that: - since the appellant is otherwise eligible for SSI exemption, they were not required to obtain any registration. One of the item was not excluded from the exemption notification however the appellant was of bona fide belief that there unit itself is exempted under SSI exemption. In our opinion bona fide belief cannot be doubted for the reason that except the aforesaid goods, all other goods were under exemption. Just because the exemption notification is not applicable on one particular product, the said goods lying within the factory should not be confiscated - appeal allowed.
Addition u/s 68 - unexplained cash credit - burden of proof - identity and credit worthiness of the creditors - Held that:- Tax authorities have not discharged the burden of proof shifted upon their shoulders by bringing any material on record to disprove the claim of the assessee. On the contrary, the tax authorities have merely suspected the genuineness by making certain adverse inferences. It is pertinent to note that they have not disputed the genuineness of various documents furnished by the assessee to prove the identity and credit worthiness of the creditors and genuineness of the transactions. We are of the view that the tax authorities have not discharged the burden of proof placed upon them.
As noticed earlier that the Ld CIT(A) has deleted the addition pertaining to M/s ACPL, but confirmed the addition pertaining to M/s NVPL and M/s SVPL. Since we have held that the tax authorities have failed to discharge the burden of proof shifted upon them, we are of the view that they are not justified in making the addition in respect of all the three loans. Confirm the order of Ld CIT(A) in granting relief in respect of loan taken from M/s ACPL . Set aside the order passed by Ld CIT(A) in respect of loan taken from M/s NVPL and M/s SVPL and direct the AO to delete the additions relating to them. - Decided in favour of assessee
Undisclosed rental income from the property - Held that:- It is seen that the Assessing Officer in 2012-13 AY relying upon the order pertaining to 2013-14 AY wherein admittedly rent was received by the assessee where the limited prayer of the assessee being that facts and findings pertaining to 2012-13 AY may also be considered was not opposed by the Revenue, it was considered appropriate to restore the issue back to the AO with the direction to pass a speaking order in accordance with law.
Considering the facts accepted in the immediately subsequent assessment year, it is seen that the Ld.AR has not made a reference to the factual position of 2010-11 AY which has been taken note of by the AO in the year under consideration since at present stage his limited prayer is that the issue be remanded which prayer is not opposed by the Revenue. Appeal of the assessee is allowed for statistical purposes.
Whether a settlement of disputes or differences through a two-tier arbitration procedure as provided for in Clause 14 of the contract between the parties is permissible under the laws of India? - Held that: - the parties have agreed on a two tier arbitration system through Clause 14 of the agreement and Clause 16 of the agreement provides for the construction of the contract as a contract made in accordance with the laws of India. We see nothing wrong in either of the two clauses mutually agreed upon by the parties.
There is nothing in the A&C Act that prohibits the contracting parties from agreeing upon a second instance or appellate arbitration-either explicitly or implicitly. No such prohibition or mandate can be read into the A&C Act except by an unreasonable and awkward misconstruction and by straining its language to a vanishing point. We are not concerned with the reason why the parties (including HCL) agreed to a second instance arbitration-the fact is that they did and are bound by the agreement entered into by them. HCL cannot wriggle out of a solemn commitment made by it voluntarily, deliberately and with eyes wide open - the arbitration Clause in the agreement between the parties does not violate the fundamental or public policy of India by the parties agreeing to a second instance arbitration.
Assuming a two-tier arbitration procedure is permissible under the laws of India, whether the award rendered in the appellate arbitration being a 'foreign award' is liable to be enforced under the provisions of Section 48 of the Arbitration and Conciliation Act, 1996 at the instance of Centrotrade? If so, what is the relief that Centrotrade is entitled to? - Held that: - The appeals should be listed again for consideration of the second question which relates to the enforcement of the appellate award.
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