Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 2, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Penalty u/s 140A(3) r.w. Section 221 – The assessee on account of having incurred heavy losses in share trading was not in a position to make payment of self-assessment tax at the relevant time and the revenue itself had granted installments to the assessee - no penalty - HC
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Effect of repealing section – Benefit of section 10B - once the section is omitted from the statute book, the result is it had never been passed and be considered as a law that never exists - HC
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Applicability of provision of section 14A on insurance companies – in the present situation the provisions of s. 14A need not to apply while granting exemption to an income earned on sale of investment - AT
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Correction / modification in the ITR - AO is not correct in taking the positive figure and ignored the negative figure - he cannot refuse to determine the correct receipts - AT
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Disllowance of various expenses - Ex parte order - assessee has not appeared before the CIT( A) or before us to make out a case that any expenses which was allowable has been disallowed by the Assessing Officer. - AT
Customs
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Levy of anti dumping duty - Extension of time period for completing the investigation by the DGAD - extension granted under the first proviso to Rule 17(1), after the expiry of the original period, was perfectly valid. - HC
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Condonation of delay - Petitioner is trying to take advantage of its own wrong committed earlier in approaching this Court - condonation denied - HC
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Import of mobile for software development - Notification No. 52/03-Cus., dated 31-3-2003 - Exemption allowed - AT
Service Tax
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Levy of interest on service tax demand when the assessee has sufficient balance in CENVAT Credit - delayed payment of service tax through cenvat credit - demand of interest set aside - AT
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Denial of refund claim - Notification No. 41/2007-ST - It is also not clear from the findings of the lower authorities as to why service tax paid on the documents cannot be correlated with the export documents - matter remanded back - AT
Central Excise
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Duty demand - failure to produce proof of export - Habitual offender - rebate claim allowed with penalty of ₹ 10,000/- - CGOVT
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Clandestine manufacture - No doubt the outcome of cross examination has to be given due importance but keeping in view the overall facts and circumstances of the case including the fact of alleged excess and shortages detected at the time of visit of officers, and the fact of deposit of duty, has to be taken into consideration which lead only to one and one fact of clandestine removal of the appellants final product - AT
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CENVAT Credit - Bogus invoices - When the transaction between M/s. Pasondia Steel Profiles and first stage dealer M/s. Ayushi Steel were bogus, the subsequent transaction will also be bogus - AT
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CENVAT Credit - Merely because testing charges have been shown separately, it does not mean that these charges are not to be considered part of assessable value of the moulds and CVD levied on these charges should not be available as Cenvat Credit - AT
VAT
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Scope of manufacture under UPTT - treating or adopting of the syrup and converting into soft drink after subjecting the syrup through carbon dioxide in a fountain machine - the commercial product is outcome of a process to manufacture - HC
Case Laws:
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Income Tax
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2015 (1) TMI 15
Refusal to grant stay of outstanding demand - prima facie case on merits considered or not – Guidelines laid down in KEC International Ltd. V. B.R. Balakrishnan not considered - Held that:- In KEC International Ltd. V. B.R. Balakrishnan [2001 (3) TMI 32 - BOMBAY High Court] guidelines has been laid down to be kept in mind by the Authorities while disposing of the stay applications - one of the factors to be considered while granting stay is to examine the question in appeal before directing the petitioner to deposit the full amount or pay the amount partially till the disposal of the appeal by the CIT(A) – CIT(A) while passing the order has clearly ignored the decision and the parameters laid down while disposing of the stay applications – thus, the order is set aside and stay granted till the disposal of appeal – Decided in favour of assessee.
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2015 (1) TMI 14
Deletion of penalty u/s 140A(3) r.w. Section 221 – failure to pay advance tax - Whether the Tribunal was justified in analyzing the accounts of the assessee as on 31st December 2006 and coming to the conclusion that the assessee had incurred huge losses despite the fact that as per provisions of I.T Act, the assessee was liable to pay advance tax or otherwise by 31st March 2006 – Held that:- The Tribunal found that the facts on record indicated that although the assessee had earned profit in the FY 2005-06, by the time he was required to file the return of income, he had suffered heavy losses to the tune of ₹ 1,36,46,928/- in share trading and the entire profit had been washed away. Consequently, the assessee had only ₹ 47,873/- by way of cash on hand and the balance in the bank account was only to the tune of ₹ 8,848/- and that the assessee did not have any liquid funds to make payment of the selfassessment tax - the revenue itself had granted installments to the assessee, who had subsequently paid up the amount - when there was a good and sufficient reason for the default, no penalty ought to have been levied, more particularly, when the assessee had later on deposited the entire amount. The assessee on account of having incurred heavy losses in share trading was not in a position to make payment of self-assessment tax at the relevant time and the revenue itself had granted installments to the assessee - considering the difficulties faced by the assessee, the revenue itself had thought it fit to grant installments to the assessee, and the fact that pursuant thereto the assessee had deposited the entire amount of self-assessment tax, the Tribunal was right in holding that there was good and sufficient reason for default on the part of the assessee and invoking the second provision of subsection (1) of section 221 of the Act and holding that no penalty ought to have been levied under the section – thus, the order of the Tribunal is upheld – Decided against revenue.
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2015 (1) TMI 13
Computation of deduction u/s 80HHC - Exclusion of indirect expenses related to factory from total turnover – Held that:- The Tribunal was rightly of the view that in absence of any material to show that a sum was not pertaining to factory expenses, the AO was rightly directly to exclude the said sum from indirect expenses being related to factory expenses – the similar matter has been decided in Hero Exports vs. Commissioner of Income-Tax, [2007 (11) TMI 13 - Supreme Court of India] - 10% of expenses for earning incentives, commission, interest etc. is required to be granted for computation of deductions u/s. 80HHC – Decided against the revenue.
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2015 (1) TMI 12
Withdrawal of deduction under section 36(1)(viia) - Rectification of order by the Tribunal u/s 254 - Validity of Tribunal’s order – Held that:- The Application was filed by the assessee bringing to the notice of the Tribunal that the ground in respect of withdrawal of deduction u/s 36(1)(viia) of the IT Act of ₹ 405,17,20,944/- in relation to standard assets was raised in the Memo of Appeal - The Tribunal has merely followed its order for the preceding AY 2005-06 and upheld the order passed by the CIT, which is the complaint - what the Tribunal was called upon to consider in the Miscellaneous Application is that the Commissioner in AY 2005-06 has not decided the ground on merits but directed the AO to redo the assessment after giving sufficient opportunity of being heard to the Assessee - However, in the AY 2006-07, the CIT has decided the ground on merits - Hence, this part of the Tribunal's order is vitiated by an error of law apparent on the face of the record. If the Tribunal was required to devote so much time for assigning reasons in more than five paragraphs in a lengthy eight page order on the Miscellaneous Application so as to correct an obvious mistake by exercising powers u/s 254(2) of the IT Act, then, interest of justice would have been sub-served and better had the Tribunal revived the entire Appeal and not partially - the Tribunal does not find sufficient ground to uphold the objection raised by the assessee to the exercise of powers u/s 263 by the Commissioner - If there was a mistake and with regard to claim of deduction running into ₹ 405,17,20,944/-, then, the tribunal was justified in directing partial revival of the Appeal - the Tribunal should pass a fresh order not only in relation to the objection raised by the assessee to the exercise of powers u/s 263 of the IT Act, but on the merits of the claim as well - merely because such an opportunity is given does not mean that the Tribunal is obliged to uphold any of the grounds – thus, the matter is remitted back to the Tribunal – Decided in favour of assessee.
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2015 (1) TMI 11
Show cause notice - Opportunity of being heard – Withdrawal of exemption u/s 10(23C)(vi) – Held that:- The content of the letter indicates that the petitioner is requested to attend the office on that date in person or through a representative duly authorised in this behalf, thereby commencement of very proceeding itself is without giving show cause notice - apart from that, with regard to investment of ₹ 37 crores made by the real estate agent, it is noticed by the AO that there are some irregularities - as such, he sought to opine that there is non-compliance of Section 11(5) of the Act and thereby tried to exercise the power in withdrawing the recognition granted seeking for an exemption from payment of income tax by the petitioner as a charitable trust - the Assessing Authority shall on the facts available as on today, go into the question whether assessee has violated the terms and conditions of Section 11(5) of the Act subject to which, exemption was granted - If it records a finding that there is violation of Section 11(5) of the Act, then it shall bring the said violation to the notice of the prescribed authority - if the prescribed authority decides to rescind the order of exemption granted earlier, it shall do so and shall send a copy of the same to the Assessing Authority as well as to the assessee - this is the clear indication of requirement in following the principles of natural justice – thus, the order is set aside and the matter is remitted back to the Assessing authority – Decided in favour of assessee.
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2015 (1) TMI 10
Effect of repealing section – Benefit of section 10B to be granted or not - Whether the Tribunal was correct in holding that in view of the omission of sub section 9 to Section 10B of the Act, w.e.f. 01.04.2004, it should be understood that the section never existed in the statute book and therefore the benefit claimed by the assessee u/s 10B should be allowed – Held that:- The decision in KOLHAPUR CANESUGAR WORKS LTD., VS. UNION OF INDIA 2000 (2) TMI 823 - Supreme Court of India] - the effect of deletion of a provision in the statute is delat with and held that the normal effect of repealing a statute or deleting a provision is to obliterate it from the statute book as completely as if it had never been passed, and the statute must be considered as a law that never existed - there is no saving clause or provision introduced by way of an amendment while omitting sub-section (9) of Section 10B - therefore, once the section is omitted from the statute book, the result is it had never been passed and be considered as a law that never exists and therefore, when the assessment orders were passed in 2006, the AO was not justified in taking note of a provision which was not in the statute book and denying benefit to the assessee - the whole object of such omission is to extend the benefit u/s 10B of the Act irrespective of the fact whether during the period to which they are entitled to the benefit, the ownership continues with the original assessee or it is transferred to another person - benefit is to the undertaking and not to the person who is running the business – the order of the Tribunal is upheld – Decided against revenue.
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2015 (1) TMI 9
Applicability of provision of section 14A on insurance companies – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that the applicability of s. 14A in respect of sale of investment which is not taxed under the special circumstances of deletion of a sub-rule from the statute - It is not questioned that the profit was nontaxable per se rather the accepted legal position is that the impugned profit was very much taxable in the past – assessee rightly contended that in the present situation the provisions of s. 14A need not to apply while granting exemption to an income earned on sale of investment primarily because of the reason of the withdrawal or deletion of sub- r. 5(b) to First Schedule r.w.s. 44 of IT Act – Thus, the AO is directed to delete the disallowance made at ₹ 62.53 crores on account of section 14A - Decided in favour of assessee.
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2015 (1) TMI 8
Computation of profit u/s 44BB - Correction / modification in the ITR - AO took the positive figure and ignored the negative figure - extraction or production of mineral oils - Applicability of Goetze (India) Limited Versus Commissioner of Income-Tax [2006 (3) TMI 75 - SUPREME Court] – Held that:- In Chicago Pneumatic India Ltd. Versus Deputy Commissioner of Income-tax, Special Range-45, Bombay [2007 (3) TMI 409 - ITAT MUMBAI] applicability of the decision in Goetze (India) Limited Versus Commissioner of Income-Tax [2006 (3) TMI 75 - SUPREME Court] wherein it has been held that it is the duty of the AO to determine the correct tax liability of the assessee - during the assessment proceedings the assessee did not make any new claim but only modified the figure of receipts from Cairn Energy and ONGC - The AO accepted the modification of the receipts from Cairn Energy which was upward revision but did not accept the modification of receipts from ONGC which was downward revision - the correct determination of receipts is a part of the duty of the AO and he cannot refuse to determine the correct receipts from ONGC - in Goetze (India) Ltd. V. CIT, deduction claimed by way of a letter before AO, was disallowed on the ground that there was no provision under the Act to make amendment in the return without filing a revised return - Appeal to the Supreme Court, as the decision was upheld by the Tribunal and the High Court, was dismissed making clear that the decision was limited to the power of assessing authority to entertain claim for deduction otherwise than by revised return, and did not impinge on the power of Tribunal. The assessee’s correct receipts from the contract of Cairn Energy as well as ONGC needs to be determined and thereafter Section 44BB should be applied on the correct receipts - so far as the receipts from Cairn Energy is concerned, now there remains no dispute - The only dispute remains is with regard to the receipts from ONGC which was originally disclosed by the assessee as ₹ 153.13 crores which was sought to be reduced to ₹ 143.85 crores - AO rejected the assessee’s claim on technical ground and did not go into the question that what was the correct receipts of the assessee from ONGC – thus, the order of the authorities below is set aside on this limited point and direct the AO to determine the correct receipts from ONGC in the year under consideration and thereafter apply Section 44BB - the assessee is directed to produce necessary evidences with regard to correct receipts before the AO – Decided in favour of assessee.
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2015 (1) TMI 7
Validity of notice for reopening of assessment u/s 147 r.w 148 – Reopening made because the provisions for FBT and disallowance made u/s 14A were not added to the book profits for the purpose of calculation of MAT - Held that:- CIT(A) while holding that there was no income which has escaped assessment so as to issue notice u/s 148 of the Act has given a finding that during the course of scrutiny, the aspect of computation of book profit have been analyzed and after due application of mind, the AO had determined the figure of book profit for the purpose of computation of minimum alternative tax - the reopening to be a case of change of opinion and therefore invalid - no material has been placed on record to controvert the findings of CIT(A) – in Cliantha Research Ltd. Versus Deputy Commissioner of Income-tax, Ahmedabad Circle - I [2013 (7) TMI 452 - GUJARAT HIGH COURT] it has been held that where during original assessment assessee's claim was processed at length and after calling for detailed explanation same was accepted, merely because a certain element or angle was not in mind of AO while accepting such a claim, could not be a ground for issuing notice u/s 148 for reassessment – thus, the order of the CIT(A) is upheld – Decided against revenue. Adjustment to book profit - MAT - Validity of direction made to not add the FBT liability – Held that:- CIT(A) while deleting the addition has inter alia held that the issue of considering FBT for the purpose of MAT is directly covered in favour of the Assessee by the Circular of the Board dated 29.08.2005 which inter alia holds that FBT whether or payable or provision thereof is not required to be added back while computing book profit u/s. 115JB of the Act - the liability of FBT having been crystallized and quantified in the books of account, it cannot be treated as contingent liability and therefore cannot be added back to the amount of book profit – thus, the order of the CIT(A) is upheld – Decided against revenue. Deletion of disallowance u/s 14A from being added to book profit – Held that:- CIT(A) after relying on the decision of Apollo Tyres vs. CIT [2002 (5) TMI 5 - SUPREME Court] has held that the amount of disallowance made u/s 14A cannot be added to book profit while working out the tax liability under provisions of MAT - revenue has not brought any material on record to controvert the findings of CIT(A) nor has brought any contrary binding decision in its support – thus, there is no reason to interfere in the order of the CIT(A) – Decided against revenue.
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2015 (1) TMI 6
Transfer pricing adjustment – Selection of comaprables - Assessee into the business of rendering technical help desk for end users – Held that:- Assessee has rightly submitted that if the above four entities are excluded from the final list of comparables for the purpose of comparability analysis, the Arithmetic Mean Margin of the remaining eight comparables would come to around 17% and the same being lower than the profit margin charged by the assessee company to its AE in the relevant international transactions, no addition on account of TP adjustment is required to be made in the case of the assessee – the AO/TPO is directed to verify the claim of the assessee by re-computing the Arm’s Length Price of the international transactions of the assessee company with its AE after excluding the four entities form the list of final comparables – Decided in favour of assessee. Computation of deduction u/s 10A - Mistake in taking the amount of book profits or not – Held that:- The assessee has only sought a direction from the Tribunal to the AO to verify the relevant mistake from the record and rectify the same - Since the revenue has no objection in this regard, the AO is directed to verify from the record the mistake pointed out by the assessee – Decided in favour of assessee.
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2015 (1) TMI 5
Penalty u/s 271(1)(c) - whether the CIT(A) is justified in deleting the penalty imposed u/s 271(1)(c) of the Act amounting to ₹ 4,37,711 - Held that:- CIT(A) has made threadbare analysis of disallowance of expenditure made in the quantum assessment which had resulted in the imposition of penalty u/s 271(1)(c) of the Act and had come to a correct conclusion that two disallowance of expenditure is only an incorrect claim and does not amount to concealment of income. The conclusions /findings of the CIT(A) have not been dispelled by the revenue. The CIT(A)’s reliance on the various case laws on the subject is apt to the facts of this case. The revenue in its grounds of appeal relied on the case of CIT vs. Rubber Udyog Vikas (P) Ltd. [2011 (2) TMI 858 - PUNJAB AND HARYANA HIGH COURT]. This decision has been taken note of by CIT(A) at para 3.8 of the impugned order. The dictum laid down in case of Rubber Udyog Vikas (P) Ltd. is that incorrect claim would not tantamount to furnishing of inaccurate particulars unless it is established that assesee has acted with malafide intention. The decision relied on by the revenue is in no way helpful to the case of the revenue. - Deided against Revenue.
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2015 (1) TMI 4
Transfer pricing adjustment - ITES segment - difference between the assessee’s profit rate and that of comparables was more than 5%, standing at 5.68% - Held that:- claim of the ld. AR before us was that the authorities below failed to grant working capital adjustment which was legally due to it. It can be seen from the TPO’s order that the assessee made a claim for the grant of working capital adjustment which has been dealt with on page 7 onwards of the TPO’s order. The decision of the TPO is recorded on page 9 rejecting the assessee’s claim at the very outset without examining its details. The DRP affirmed the view taken by the AO in the order passed pursuant to the TPO’s order rejecting the assessee’s claim. The relevant discussion is made in para 8.6 of DRP’s direction. It is noticed that the authorities below failed to consider the assessee’s claim of allowing working capital adjustment on merits and simply rejected at the same at threshold by canvassing a view that the same is allowable only in manufacturing sector or trading sector etc. We are unable to accept the view taken by the authorities below. The Delhi Bench of the Tribunal in Mercer Consulting (India) Pvt. Ltd. vs. DCIT in [2014 (7) TMI 715 - ITAT DELHI] has held that the claim for working capital adjustment cannot be dismissed without examining the same on merits. In that case also, the authorities did not admit the assessee’s claim of working capital adjustment on merits by holding that such an adjustment is possible only in the case of manufacturers/traders. In that case, the Tribunal after setting aside the order of the AO/TPO remitted the matter to the file of AO/TPO for examining the assessee’s claim for grant of working capital adjustment on merits and thereafter, allowing the same, if available. The ld. AR pointed out that the TPO himself has allowed working capital adjustment for the immediately two succeeding assessment years. - Matter remanded back - Decided in favour of assessee.
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2015 (1) TMI 3
Validity of tribunal's order - petition for rectification - Tribunal has not considered the grounds raised by the assessee in its entirety - Held that:-The assessee has no grievance against the issues framed by the Tribunal and considered and adjudicated by it. While doing so, the Tribunal might not have reproduced in verbatim the grounds of appeal raised by the assessee in his appeals. It is also might be true that the Tribunal might not have reproduced the contentions advanced by the learned counsel in its entirety. It is also true that it is possible that the Tribunal might not have reproduced the relevant statements of the assessee made in the paper book in its entirety. The grounds raised by the assessee in the petitions are general in nature and the petitioner is not able to point out any specific mistake apparent in the order passed by the Tribunal. The real grievance of the petitioner is that the decision of the Tribunal is against the assessee, with which we cannot help. The remedy of the assessee lies elsewhere. - Decided against the assesse.
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2015 (1) TMI 2
Disllowance of various expenses - Ex parte order - Held that:- CIT(A) has followed the judgment of Hon'ble Bombay High Court rendered in the case of Cooper Engineering Ltd. Vs Commissioner of Income-tax as reported in [1981 (3) TMI 49 - BOMBAY High Court] wherein it was held that when the details are not furnished claim could be disallowed on the ground that the assessee has not established the expenditure. He also relied upon the judgment of Hon'ble Delhi High Court rendered in the case of Commissioner of Income-tax Vs Motor General Finance Ltd. as reported in [2001 (12) TMI 62 - DELHI High Court] wherein it was held that if the assessee fails to produce documents, adverse inference can be drawn to the effect that if produced they would have gone against the assessee . In support of the same contention, CIT( A) has also followed another judgment of Hon'ble Delhi High Court rendered in the case of [2011 (9) TMI 546 - DELHI HIGH COURT], CIT vs. Gold Leaf Capital Corporation Ltd . We find that a clear finding is given by CIT( A) that the Assessing Officer has allowed all those expenses which could be verified in course of assessment proceedings. The assessee has not appeared before the CIT( A) or before us to make out a case that any expenses which was allowable has been disallowed by the Assessing Officer. Considering these facts, we do not find any reason to interfere in the order of CIT( A). - Decided against the assessee.
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2015 (1) TMI 1
Addition on account of cash deposits and credit card payments - Admission of additional evidences - Held that:- In the interest of justice and taking a sympathetic view of the matter, though the assessee has not appeared before the AO and the CIT(A) on several occasions, we deem it fit to accept the additional evidences. As the Assessing Officer has no occasion to examine these additional evidences, we remit the entire issue back to the file of the AO with a direction to the Assessing Officer to examine the Paper Book filed by the assessee. The Assessing Officer shall satisfy himself as to whether the assessee has sufficient cash balances to make such deposits and after giving reasonable opportunity to the assessee to represent his case, the Assessing Officer shall decide the issue in accordance with law. - Decided in favour of assesse.
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Customs
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2015 (1) TMI 23
Levy of anti dumping duty - Extension of time period for completing the investigation by the DGAD in terms of first proviso to Rule 17 (1) of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 - Whether the Government can extend the period of investigation retrospectively after expiry of the last date - Held that:- No right is created or gets vested in the importer, upon the expiry of the period stipulated in Rule 17(1). Similarly, no right which is vested in the importer is taken away by the extension of the period for conclusion of investigation. If a right is created in the importer, upon the expiry of the period of one year stipulated in Rule 17(1), then the extension of the period granted post facto, may infringe upon such a right. An inconclusive investigation, will never confer any right upon the person against whom the investigation is made. It will be a different story if the investigation is concluded and a finding in favour of the importer is recorded, since in such cases a right accrues. In the case on hand, no right got created or accrued in favour of the petitioner, upon the expiry of either the original period, namely 09.12.2013, or upon the expiry of the period of first extension, namely 09.3.2014. This is also not a case where the retroactive extension ordered on 30.4.2014, sought to take away any vested right created in favour of the petitioner during the period from 09.3.2014 to 30.4.2014. If an order of extension does not either take away any vested right or extinguish any right sought to be created by efflux of time, such an extension cannot be assailed, on the sole ground that it was not granted, during the life of the thing itself. If the initiation of any investigation does not infringe upon any right, the continuance of the same also cannot. As a corollary, the abrupt termination of an investigation would not create any right that may get defeated upon the resumption of the investigation. Another simple test to determine whether a time limit stipulated in a rule is directory or mandatory, is to see whether there is any indication in the Rule itself about the consequences of non compliance with the same. If a statutory provision contains a prescription and also stipulates the consequences of non compliance with the condition, it would normally be taken to be mandatory. If the consequences of non compliance are not indicated, then, the provision has to be seen only as directory. - If the Parent legislation uses a word or expression, to mean something, the subordinate legislation cannot be taken to use the very same word or expression, to mean a different thing. The word "extension" used in the first proviso to Section 9-A(5), gives an indication that if an order of extension is passed after sunset review, the extended period will commence only from the date of the order of extension. By specifically providing for a situation, under the second proviso, where a sunset review commences "before the expiry of the period of five years", but fails to conclude before the said date, the interpretation to be given to the word extension is made as clear as a crystal. Therefore, I am of the view, on the first issue that the extension granted under the first proviso to Rule 17(1), after the expiry of the original period, was perfectly valid. Violation of principle of natural justice - whether the final order passed by the Designated Authority on 09.06.2014 which is kept in the sealed cover, is in violation of the principles of natural justice or not - Held that:- An investigation by a Designated Authority under the Rules in question, is not like (i) a criminal charge, (ii) a domestic enquiry against an employee, or (iii) a quasi judicial proceeding where what is at stake is individualistic. An investigation by a Designated Authority, as seen from (a) GATT 1994, (b) the amended provisions of the Customs Tariff Act, 1975, and (c) the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, is in the nature of a multi-party assessment of the socio economic conditions that come to the fore when a product is imported into India. Sub-rule (1) of Rule 6 obliges the Designated Authority to issue a public notice, not only containing the particulars of the articles involved, but also containing the name of the exporting country, the date of initiation of investigation, the basis on which dumping is alleged and a summary of factors on which the allegation of injury is based. What is provided for in the anti-dumping rules is (i) a public notice and a public hearing, just as the ones contemplated for environment impact assessment, in contrast to an inquiry that is individualistic and adversarial, (ii) the participation of various sections of the international (not just national) community, including the foreign governments, foreign exporters, domestic industrial houses, domestic importers and consumer organisations, (iii) the collection of information rather than of evidence in the strict sense of the term, (iv) the maintenance of confidentiality of the information furnished by the participants, if they wish to have such confidentiality, and (v) even the circulation of information known as "disclosure of information" under Rule 16, so that the participants in the investigation are informed in advance of the essential facts that would form the basis for the ultimate decision. Therefore, there is no use in contending that the newly appointed Designated Authority ought to have given a personal hearing. Public notices were issued in terms of Rule 6 and an opportunity of hearing was granted to several persons. Most of those persons were represented either by consultants or by eminent lawyers at Delhi. I have already furnished the list of persons who participated in the proceedings and the consultants/solicitors who represented them before the Designated Authority. Except the petitioner herein, none other participant in the public hearing has complained about the denial of an opportunity of hearing. The grant of a request for adjournment need not necessarily form part of the principles of natural justice. If an adjournment could prove fatal to a case, a quasi judicial authority can always deny the request for adjournment. If the adjournment of a case by one day would make the case infructuous and make one party the winner by default, the adjudicating authority should reject such request. Such rejection would not be a violation of the principles of natural justice. Therefore, I am unable to accept the contention that there was a violation of the opportunity of hearing in this case. Even in respect of notices to be issued for the hearing by the Designated Authority, Article 12 of the aforesaid Agreement contains detailed provisions. These provisions also make it abundantly clear that what is contemplated is not an oral hearing, in the strict sense of the term. Therefore, the entire Scheme of GATT 1994 and the provisions of the Act and the Rules, focus on (i) public notices, (ii) collection of information, (iii) interpretation of the information, and (iv) the recording of findings regarding dumping. Hence, the principles of natural justice as applicable to investigation/inquiries against individuals, may not have a strict application to the investigation under the Anti-dumping Rules. - interpretation is also fortified by the fact that all the information collected by the Designated Authority in the course of investigation, cannot and need not be shared with all the parties to the investigation. Whenever a party to an investigation claims confidentiality, the Designated Authority is obliged to accede to the same. The other parties cannot claim that there was violation of natural justice. Therefore, the dosage of the medicine of natural justice, to be administered to different patients, vary from case to case. In the case on hand, the dosage was adequate and the petitioner cannot ask for more. Hence the second contention of the petitioner is also liable to be rejected. - Decided against assessee.
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2015 (1) TMI 22
Condonation of delay - Petitioner submitted that the said application be considered sympathetically and reasonably, because the delay in filing the same has been occasioned on account of the Petitioner being advised to file a Writ Petition under Article 226 of the Constitution of India in this Court to challenge the order in original dated 27th June, 2011 - it is only when this Court passed the order that the Writ Petition cannot be entertained, as there is an alternate equally efficacious remedy of a statutory Appeal that the Petitioner became aware of the legal provision and the time limit within which the said Appeal has to be filed. Held that:- the Hon’ble Supreme Court held in the case of Mohinder Singh (1996 (8) TMI 513 - SUPREME COURT) that once limitation starts running, till its running is stopped by an order of the competent Civil Court or competent Authority, it cannot stop. It overruled the earlier Judgment in the case of P. K. Kutty Anuja Raja and Anr. vs. State of Kerala and Anr. reported in [1996 (2) TMI 532 - SUPREME COURT] only because no argument was advanced as regards the applicability of doctrine of merger. The Hon’ble Supreme Court entertained the SLP and granted leave to Appeal as also stay. The time spent in prosecuting the proceedings before the Hon’ble Supreme Court and which is bonafide was permitted to be excluded. Pertinently, the test laid down is applicable in a case where a Appeal is filed that being a continuation of the lis, its pendency can be relied upon to claim the benefit. A Writ Petition's pendency will not stand on the same footing always. If the time has not stopped running, then, none of the principles relied upon by the Petitioner will assist it. As we have noted above, in this case, Writ Petition was pending in this Court, but neither it was entertained nor any interim relief was granted, leave alone admitting it. If the Petitioner decides not to approach the appropriate, correct or right Forum, but tries to bypass it by filing a Writ Petition and allows the time to run, then, it cannot request this Court in its discretionary and equitable jurisdiction to set right a wrong, for which it is itself responsible. In other words, the Petitioner is trying to take advantage of its own wrong committed earlier in approaching this Court, though knowing fully well that it had refused to exercise jurisdiction, because the alternate efficacious remedy of Appeal to the Commissioner of Customs was provided by law. The Petitioner did not take steps to file such an Appeal even during the pendency of the Writ Petition and allowed the time to run. In these circumstances, we cannot extend any benefit, as that would allow the Petitioner to take advantage of its own wrong. As a result of the above discussion, the Writ Petition fails. Rule is discharged. - Decided against assesse.
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2015 (1) TMI 21
Offences under Sections 21 and 29 of the Narcotic Drugs and Psychotropic Substances Act, 1985 - Acquittal of Respondents - Seizure of heroin - Held that:- conviction cannot depend only on the fact that a huge quantity of heroin is shown to have been seized. Also, the argument that the prosecution will not needlessly implicate innocent persons does not impress the Court. The NCB has to discharge the burden of proving beyond reasonable doubt that it is the Respondents who are guilty of the offences with which they have been charged. Since the NCB has presented a version in which independent witnesses are stated to have participated throughout the raid, the NCB has to satisfactorily explain how and why the addresses given for such witnesses has turned out to be non-existent and they have not been produced in Court. No effort appears to have been made by the NCB to ascertain the correct addresses and summon the independent witnesses. That was not the responsibility of the Court. In the circumstances, the only inference that was possible to be drawn was that the said witnesses and their addresses did not exist. There was also a serious discrepancy regarding the signatures of the so-called independent witness Shiv Dayal on the seizure memo (Ex.PW-2/D) and on his purported statement under Section 67 NDPS Act (Ex.PW-8/J). They were shown by DW-1, a handwriting expert, not to be of the same person. - On the voluntariness of the statements of the Respondents under Section 67 of NDPS Act, the trial Court noticed that as far as A-2 was concerned, in her statement under Section 313 Cr PC she stated that no summons were served upon her. The NCB had forcibly taken her from her house to their office and they mercilessly gave beatings to her cousin brother co-accused Rakeshnath Tiwari (A-3). She got scared and as per the dictation of the NCB officials, she wrote the statement in her own handwriting and signed it. This was substantiated by the medical report of A-3 (Ex.PW-2/A) prepared by the doctors of Safdarjung Hospital after the jail officials of Tihar Jail had refused to admit him on the ground that there were injuries on his body which were not mentioned in his medical report prepared by the NCB officials after arresting him. The medical report clearly shows that A-3 had a swelling and abrasion on his forehead and bruises all over his back and on his knee. The injuries noted in the said report substantiated his statement given under Section 313 Cr PC that his head was banged against the wall by the NCB officials and that he was beaten mercilessly by them at their office. Consequently, the conclusion drawn by the trial Court as to the statements of the Respondents under Section 67 NDPS Act not being voluntary, cannot be faulted. - Decided against Revenue.
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2015 (1) TMI 20
Condonation of delay - Delay of 20 days - Held that:- appellant is a partnership firm and the main partner who was looking after the factory was on business tour therefore, there was a delay of 20 days in filing the appeal before the Commissioner (Appeals) - Commissioner (Appeals) has not given the findings on the issue as on which date the order of adjudication was communicated to the appellant. He merely said that there is a delay of 20 days in filing the appeal and the reason for causing delay is not satisfactory. He has also not described why the reason for the delay is not satisfactory to him. In these circumstances, as explained by the learned Counsel that the main partner who was dealing with the matter was on business tour and could not be filed appeal within the prescribed time of limitation therefore, I condone the delay of 20 days in filing the appeal before the Commissioner (Appeals). With this terms the impugned order is set aside and the matter is remanded back to the Commissioner (Appeals) - Delay condoned.
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2015 (1) TMI 19
Import of mobile for software development - Notification No. 52/03-Cus., dated 31-3-2003 - Exemption from custom duty being prototype or a technical sample for each of the existing products - Held that:- Appellant was given procurement certificate by the Customs authorities on 1-2-2008 allowing Nokia N25 mobile phones to be cleared duty free. Similarly there is also a copy of certificate on record issued by STPI to make import of the goods duty free. That certificate relates to invoice No. 991315, dated 22-1-2008 (copy of which is available at page 14 of appeal folder). Co-relation of these documents indicates that the goods imported were meant for software development. - Decided in favour of assessee.
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2015 (1) TMI 18
Import of liquor for domestic purpose - Due to business exigencies they could not clear the goods within the permissible time and sought for relinquishment of 912 cases of ‘beer’ vide their letter dated 3-8-2005 before the goods were cleared for home consumption - Demand of interest - Held that:- When the duty itself is not demandable and demand has been dropped, the question of payment of interest and penalty does not arise. While it is clear that upon relinquishment of the title of the goods, the importer gains a freedom from liability to pay duty thereon, there appears to be some confusion in the field, whether such freedom also extends to the ‘interest accrued on the said duty till the date of such relinquishment’. The confusion appears to have generated from the word ‘interest’ appearing in the text of the proviso - In this regard it is clarified that the word ‘interest’ appearing in the said proviso, does not relate to ‘interest accrued on the said duty till the date of such relinquishment’ but relates to interest on other dues such as warehouse charges, rent etc. I find that as submitted by the learned counsel, the Board’s circular o. 42/2003-Customs, dated 20-5-2003 is in favour of the assessee. - Decided in favour of assessee.
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Corporate Laws
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2015 (1) TMI 17
Rejection of application filed u/s 9 Arbitration & Conciliation Act, 1996 - Whether the appellant was entitled to interim injunction in aid of his claim for specific performance of an agreement to sell iron ore or not – Held that:- The arbitration proceedings between the parties herein are pending where the main question is - whether the respondent is entitled to seek specific performance of the agreement dated 27.02.2005 by which the appellant agreed to sell iron ore excavated from the mines specified in the agreement to the respondent? If the answer to the said question is in affirmative then the next question would be – what is the rate at which the appellant is required to sell the iron ore to the respondent - the appellant stated that in the SLP that during the pendency of this litigation, it has already set up a beneficiation-cum-pelletisation plant where the entire quantity of iron ore extracted by the appellant is being consumed as a raw material - Therefore, the question of the appellant selling the iron ore to any third party does not arise at all. In view of the categorical assertion made by the appellant and the undertaking that the appellant would consume the entire iron ore excavated captively, there is no reason to give any direction to the appellant to sell the iron ore to the respondent during the pendency of the arbitration - Such a direction, would virtually amount to the enforcement of the agreement without adjudication of the right of the respondent to seek specific performance of the agreement - no doubt, if the appellant company were to be selling the iron ore excavated by it to any third party, there was some justification by the respondent to seek an interim direction to the appellant to sell the ore to the respondent, subject of course to the determination of the cause finally in the arbitration proceedings - But it is not the case here – respondent submitted that in case an interim order is not granted, even if the respondent eventually succeeds in the arbitration proceedings and obtains an award for the specific performance of the agreement, the success would remain only on paper as huge amount of mineral excavated by the appellant would already have been sold by that time and there is no way of the respondent obtaining the said mineral. No doubt, if the respondent eventually succeeds in the arbitration, it would be entitled to specific performance of the agreement in question - The respondent can always seek monetary compensation for the loss sustained by it by virtue of the non-supply of the minerals by the appellant during the pendency of the arbitration proceedings - appellant gave an undertaking that during the pendency of the arbitration proceedings the appellant will not sell any part of the iron ore excavated from the mines covered by the agreement and such ore would be consumed captively by the appellant in its plant and the appellant would maintain a complete account of the minerals excavated and consumed captively by the appellant – Decided in favour of appellant.
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2015 (1) TMI 16
Scope and power of arbitrator regarding the jurisdiction - Amount payable to the contractor in relation to extra work done by the contractor - Held that:- The matters for which provision had been made in Clauses 18, 22(5), 39, 45(a), 55, 55-A(5), 61(2) and 62(1) (xiii)(B)(e)(b) of the General Conditions of Contract were “excepted matters” and they were not to be referred to the arbitrator - upon perusal of both the clauses included in the contract, it is crystal clear that all the disputes were not arbitrable - there was no finality so far as the amount payable to the contractor in relation to the extra work done by it is concerned, because the said dispute was never decided by the Chief Engineer - when the disputes had been referred to the Arbitrator, the disputes which had been among “excepted matters” had also been referred to the learned Arbitrator - before the learned Arbitrator, the contractor did object to the arbitrability of the disputes covered under Clause 39, but the Arbitrator had decided the issues by holding that the same were not “excepted matters” but arbitrable. Whether the Arbitrator could have decided the issues which were not arbitrable – Held that:- Arbitration arises from a contract and unless there is a specific written contract, a contract with regard to arbitration cannot be presumed - Section 7(3) of the Act clearly specifies that the contract with regard to arbitration must be in writing - the disputes which have been referred to in Clause 39 of the contract are concerned, it was not open to the Arbitrator to arbitrate upon the said disputes as there was a specific clause whereby the said disputes had been “excepted” - when the law specifically makes a provision with regard to formation of a contract in a particular manner, there cannot be any presumption with regard to a contract if the contract is not entered into by the mode prescribed under the Act - If a non-arbitrable dispute is referred to an Arbitrator and even if an issue is framed by the Arbitrator in relation to such a dispute, there cannot be a presumption or a conclusion to the effect that the parties had agreed to refer the issue to the Arbitrator - the respondent authorities had raised an objection relating to the arbitrability of the afore stated issue before the Arbitrator and yet the Arbitrator had rendered his decision on the said “excepted” dispute - the Arbitrator could not have decided the said “excepted” dispute – thus, it was not open to the Arbitrator to decide the issues which were not arbitrable and the award, so far as it relates to disputes regarding non-arbitrable disputes is concerned, is set aside – decided partly in favour of appellant.
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Service Tax
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2015 (1) TMI 43
Penalty u/s 76 & 78 - Commercial Training and Coaching services - Held that:- Appellant is not agitating the issue on merits but has claimed non-imposition of penalty under Section 76 of the Finance Act, 1994. The entire amount of service tax along with interest was paid before the issue of show cause notice dated 27.7.2011. 25% of the Section 78 penalty was also paid by the appellant on 25.2.2013, within one month from the date of order-in-original (29.01.2013). The issue therefore left in these proceedings is whether Section 76 penalty required to be imposed upon the appellant when Section 78 penalty to the extent of 25% is paid within one month from the date of order-in-original. penalty in excess to 25% cannot be imposed upon the appellant. Accordingly, appeal filed by the appellant is allowed to the extent that penalty in excess to 25% of the Section 78 penalty is not imposable - Decided partly in favour of assessee.
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2015 (1) TMI 42
CENVAT Credit - Imposition of penalty - whether penalties are required to be imposed upon the appellant and whether cenvat credit for the corresponding period is admissible to the appellants - Held that:- Appellant is not contesting the issue on leviability of service tax. The arguments of the appellant for setting aside the penalties imposed are on the ground that ST-3 returns were filed belatedly along with payment of tax and interest and therefore, penalties are not imposable upon them. Belated filing of returns and payment of taxes along with interest is permissible under the Finance Act, 1994. If the view expressed by the Revenue is accepted then every delay in payment will attract penalties and provisions, regarding non issuance of show cause notice when entire service tax and interest is paid, will become redundant. There is no evidence in the show cause notice indicating that there was any suppression on the part of the appellant with intention to evade payment of tax. The entire service tax was paid by the appellant, along with interest, before the issue of show cause notice. Accordingly, it is held that order of the lower authorities regarding imposition of penalties under Section 76 and 78 of the Finance Act, 1994 is required to be set-aside. So far as denial of cenvat credit is concerned, it is observed that no show cause notice has been issued to the appellant for denial of cenvat credit and confirming demand without issue of show cause notice to that effect is in violation of principles of natural justice. Further the observations made by the first appellate clearly convey that cenvat credit was denied merely for procedural lapses. In the realm of liberalisation in the scheme of Cenvat Credits availed and reflected in the books of accounts of the appellant, as taken on the basis of duty paying documents to that effect, procedural latches cannot be made the basis for rejection of cenvat credit. - Decided in favour of assessee.
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2015 (1) TMI 41
Levy of interest on service tax demand when the assessee has sufficient balance in CENVAT Credit - payment of service tax made quarterly through their CENVAT credit account was delayed for which the assessee was asked to pay interest on service tax u/s 75 of the Finance Act, 1994. - Held that:- It is observed from the case records that appellant had sufficient balance to debit that portion of duty demand which was due in the relevant month. No contrary evidence has been brought on record by the Revenue that appellant was not having sufficient balance in its CENVAT account to debit that differential duty in the CENVAT account. Even in a clandestinely evasion cases also the CENVAT credit of inputs/ input services admissible, during the period of offence, is allowed to be abated from the total duty demanded even at the appeal stage. The interest payable is only calculated on the duty liability finally determined and not with respect to the duty demanded in the show cause notice. In this case appellant stands on a better footing as the CENVAT credit was available in the CENVAT account but could not be debited. It has to be thus held that interest is not payable with respect to duty required to be debited in the CENVAT Credit Account provided sufficient balance was available in the CENVAT Credit Account. Nothing has been brought on record that such a credit was not available in the CENVAT Account during the relevant period for debit. - Decided in favour of assessee.
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2015 (1) TMI 40
Denial of refund claim - Notification No. 41/2007-ST dated 06.10.2007 - Held that:- Under Notification No. 41/2007-ST dated 06.10.2007 certain services have been allowed exemption to the exporters by way of exemption notification when used for export of goods. Appellant provided all the details showing payment of service tax and its co-relation with the documents and the refund claims. One such representative document No. 51/2008-09 dated 10.10.2008 of M/s. West Shipping Agency International Freight Booker, Ahmedabad furnished by the appellant show payment of service tax at the rate of 12.36%. This document also mentions Shipping Bill No., Invoice No. and Bill of lading No. which can be easily linked to the export of goods. It is not understood as to how lower authorities have come to the conclusion that service tax payment details are not co-relatable with the export consignment. Learned Adjudicating authority is discussing a CBEC Circular No. 106/9/2008-ST dated 11.12.2008 for denying refunds but failed to consider a favourable CBEC Circular No. 112/6/2009-ST dated 12.3.2009 now relied upon by the appellants. Further a number of case laws deciding these issues have been relied upon by the appellant which were not produced before the adjudicating authority. It is also not clear from the findings of the lower authorities as to why service tax paid on the documents cannot be correlated with the export documents. The admissibility of refunds and verification of documents/ records is properly required to be done in view of the judicial pronouncements of this Bench and CBEC Circular dated 12.3.2009, which can only be done by the Adjudicating authority. - matter remanded back - Decided in favour of assesse.
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2015 (1) TMI 39
Rejection of appeal by the commissioner (appeals) for non compliance of pre-deposit order - Penalty u/s 76, 77 & 78 - Held that:- In the ad interim order the Commissioner (Appeals) had inter alia stated that in case of failure to pre-deposit ‘the appeal shall be liable to be dismissed for non-compliance to the order’. The Commissioner (Appeals) had not said that in case of failure to pre-deposit, the appeal shall stand dismissed. In the case of Prem Nath Monga Foods and Beverages Pvt. Ltd. Vs. Collector of Central Excise - 1[1992 (10) TMI 152 - CEGAT, NEW DELHI] CESTAT remanded the matter as Show Cause Notice prior to dismissal of appeal for non-compliance of stay order was not issued - commissioner (Appeals) had not disposed of the application for modification in accordance with the principles of natural justice. Therefore we set aside the impugned order and remand the case to the Commissioner (Appeals) - Decided in favour of assessee.
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2015 (1) TMI 38
Penalty u/s 77 – Clearing & Forwarding Agent service – ‘Reasonable cause’ shown for delay in payment of tax – ‘Sick unit’ declared by BIFR - Held that:- as regards the non-payment of tax, it pointed out to the sickness of the company, which ultimately, ended up on filing of petition before BIFR (Board for Industrial and Financial Companies) in the year 2001 declaring as sick company under Section 3(1)(a) of the Sick Industrial Companies (Special Provisions) Act, 1985 - It is no doubt true that the default is with reference to the period from October 1999 to March 2003. It is also a matter of record that the assessee had paid service tax for the period from April 2002 to March 2003. Considering the financial constraint that the assessee had undergone and on satisfaction that sufficient cause shown by the assessee for not having been able to pay service tax in time, the CESTAT had deleted the penalty - Decided against Revenue.
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2015 (1) TMI 37
Service tax paid before issuance of SCN - Appellant facilitated financing facility to the purchasers of cars - Held that:- According to the provisions of Section 73(3) of the Finance Act, 1994, no show cause notice shall be served if an assessee pays the entire amount of service tax payable with interest before issue of show cause notice. In this case this obligation has been fulfilled, therefore no show cause notice should have been issued in the first place. When show cause notice itself should not have been issued, penalty naturally could not have been imposed. Therefore, there is no merit in the impugned order and accordingly the penalty imposed under Section 76 is set aside - Decided in favour of assessee.
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2015 (1) TMI 36
Waiver of pre deposit - Commercial training or coaching servie - Held that:- Prima facie, the appellant conducted recognized courses by D.G.C.A. and issued degree or certificate to the qualified students. Therefore, on merits, appellants have a good case. Even though learned Authorised Representative took us through some paragraphs of the adjudication order wherein the Commissioner has given a finding that courses conducted by appellant are not covered by exemption but in fact, the courses conducted by appellant are covered by the definition. There are no specific finding based on records or investigation or documents to come to the above conclusion. Needless to say that it requires further detailed examination of documents, nature of courses conducted by appellant and certificate/degree issued by them etc. and that can be done only at the time of final hearing. At this stage, based on the case made out on merits and the decisions cited by appellant, we consider it appropriate that the requirement of pre-deposit has to be waived. Accordingly, there shall be waiver of pre-deposit and stay against recovery during pendency of the appeal. - Stay granted.
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2015 (1) TMI 35
Commission paid to the foreign agents in relation to agriculture - import of service u/s 66A - exemption under Notification No. 13/2003-S.T., dated 20-2-2003 - Held that:- Claim of the learned counsel that agriculture covers pisciculture etc. is not borne out from the meaning given in the Notification. For general purposes, agriculture may include different operations but when the Notification gives the meaning, that meaning has to be applied. Under these circumstances, we do not find any prima facie case in favour of appellants. Accordingly, the appellants are directed to deposit 50% of the service tax demanded within six weeks. - stay granted partly.
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2015 (1) TMI 34
Cenvat credit - Nexus with manufacturing activity - Held that:- Range officer has committed a mistake and at least after taking decision of filing an appeal, another verification could have been conducted. As there was no such verification conducted, Revenue is contesting the verification report of Range officer without saying as to why that was not accepted. Further, refund has been sanctioned after pre-audit by the officer of higher rank of Central Excise. In these circumstances, the grounds taken by Revenue that respondent did not produce sufficient evidence does not appear to be sufficient for filing appeal. In any case, prima facie, the services cannot be said to have been utilized for different purposes and have a nexus with manufacture. - Decided against Revenue.
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Central Excise
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2015 (1) TMI 33
Duty demand - failure to produce proof of export - Imposition of penalty - original authority accepted the proof of export, however, imposed penalty on applicants on the ground that the proof of export was submitted late - Habitual offender - Held that:- rebate sanctioning authority shall not reject the rebate claim on the ground of non-submission of original and duplicate copies of ARE-1 forms if it is otherwise satisfied that conditions for grant of rebate have been fulfilled. Government, therefore, applying the ratio of above said judgement of Hon'ble High Court of Bombay in the said case, is of the view that the proof of export may be examined on the basis of collateral evidences where original and duplicate ARE-1 form is not submitted. In the light of above, Government proceeds to examine the aspect of proof of export on the basis of collateral evidences available on records or submitted by the applicants. On the basis of collateral evidences, the correlation stands established between export documents and excise documents and hence, export may be treated as completed. As such, demand of duty is not sustainable for aforesaid reasons. However, such verification has been done on the basis of copies of documents submitted by the applicants. Hence, the original authority is required to carry out necessary verification on the basis of original documents either available with applicants or submitted to the department by the applicants as claimed by them by virtue of acknowledgement of receipt of such documents. - The shipping bill Nos. mentioned in excise invoice and export invoice tallies with the shipping marks mentioned in the relevant bill of lading. Further, the quantity/weight, description of excise invoice tallies with quantity/weight and description mentioned in the export invoices. However the amount mentioned in export invoices does not tally exactly with amount mentioned in the relevant remittance documents. The applicants is required to submit such proof of remittance before original authority and if the value mentioned in export documents found tallies with the amounts mentioned in export remittance documents in dollar term then the correlation may be treated as established between export documents and excise documents and hence, export may be treated as completed. Original authority has dropped the demand of duty, however, confirmed the imposition of penalty on the ground of habitual offence of frequent failure to submit original and duplicate copies of ARE-1. Government finds that though the applicants has been extended benefit as regard to proof of export on the basis of collateral evidence in absence of original and duplicate copies of ARE-1, the applicants cannot take recourse of the habit of frequent non-compliance of such documentary requirements. Hence Government finds that for such frequent non-compliance, imposition of penalty of ₹ 10000/- cannot be faulted with and hence, upheld to the extent of such imposition. - Decided parlty in favour of assesse.
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2015 (1) TMI 32
Denial of rebate claim - Bar of limitation - incomplete rebate claims - documents like ARE-1 original/duplicate copies were filed after expiry of one year - Held that:- original refund/rebate claim filed initially within prescribed time limit laid down in section 11B of Central Excise Act, 1944 and the claim resubmitted along with some required documents/prescribed format on direction of department after the said time limit cannot be held time barred as the time limit should be computed from the date on which rebate claim was initially filed. - rebate claims cannot be treated as time barred since it was originally filed before department well within the limit period of one year stipulated in section 11B of Central Excise Act, 1944. Government is of considered view that case is required to be remanded back for denovo consideration, for deciding the case on merits. - matter remanded back - Decided in favour of assesse.
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2015 (1) TMI 31
Clandestine manufacture and removing final products, without payment of duty - Levy of interest and penalty - Penalty u/s 11AC r.w.s Rule 25 - Held that:- Date of visit of the officers in the appellants factory, there were admitted excesses and shortages being of near about Rs. one crore of value of the materials.The recovery of loose papers led the revenue to believe that the appellant was indulging in clandestine activities. The subsequent development of the recording of all statements of Director of the company as also of their key employees as also of the author of the entries,during the course of investigations clearly lead to only one fact that appellants after recording of the statements admitting clandestine activities, was retracting the same mechanically. After each retraction,the Director as also Shri Dubey, in his subsequent statement again admitted clandestine activities.Such repeated retractions, have rightly held to be infructous and of no consequence by the adjudicating authority. Infact I find that the final statement of the said deponents have not been retracted at all. Though it is well settled law and does not require the support of any decision of the judicial or quasi-judicial courts to observe that the activities of clandestine nature are required to be proved by sufficient, tangible and positive evidence. However, the facts present in each and every case are required to be scrutinized and examined independently. As already observed, in the present case, the department has not simplicitor relied upon the statement of authorised representatives. Repeated statements of various persons stand recorded after each and every retraction. Further, the statement of Shri Dubey, admitting clandestine removal stand corroborated by Shri Manoj Kumar Jain, Director of the appellant as also by Shri Raghunandan Aggarwal and two supervisors of the company. Not only that, even the Director of the customers company M/s. Vardhman Cables has also in his initial statement, admitted having received the goods without payment of duty. No doubt the outcome of cross examination has to be given due importance but keeping in view the overall facts and circumstances of the case including the fact of alleged excess and shortages detected at the time of visit of officers, and the fact of deposit of duty, has to be taken into consideration which lead only to one and one fact of clandestine removal of the appellants final product. - Decided against assessee.
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2015 (1) TMI 30
CENVAT Credit - Cenvat credit in respect of certain items of spares of capital goods - writing of the slow moving capital goods spares - notification no. 26/07 CE (NT) sub-rule 5B - Reversal of CENVAT Credit - Penalty u/s 11AC - Held that:- provision for writing off of slow moving spares was made for the first time in December, 2006 and the Cenvat credit availed in respect of the spares was of ₹ 8,82,465 - as the writing of inputs/ capital goods and making provision for writing off of inputs/capital goods cannot be equated. In this case, while at the time of making provision for writing off of slow moving spares in December 2006, Rule 3(5B) was not there, this sub-rule had come into force when the provision for writing off was carried forward in the next financial year and at that time, the Cenvat credit should have been reversal. - amended provisions of Rule 3(5B) effective from 1.3.11 cannot be applied retrospectively. Therefore, if the appellant's claim that the provision made by them was for partial writing off of slow moving spares and not for full writing off, there would be no requirement to reverse the credit . The appellant's plea is that they had furnished evidence in this regard along with reply to show cause notice, but the same has not been considered. The impugned order is therefore set aside and the matter is remanded to the original adjudicating authority for de novo adjudication. In the course of de novo proceedings, the appellant's plea that the provision made by them December 2006 and carried forward to subsequent financial years was for partial writing off and not for full writing off of slow moving spare is to be examined and if their claim is found to be correct, they would not be required to reverse the Cenvat credit. - Decided in favour of assesse.
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2015 (1) TMI 29
CENVAT Credit - Bogus invoices - Held that:- goods CR strips which are claimed by the appellant to have been sold to M/s. Rasandik Engineering Industries, had been procured by them from M/s. Ayushi Steel. and also M/s. Ayushi Steel. would have procured the same from M/s. Pasondia Steel Profiles. But the investigation at the end of M/s. Pasondia Steel Profiles clearly shows that there was no manufacturing activity at their end and they have only issued bogus invoices for CR sheets/strips to M/s. Ayushi Steel. without supply of any goods. When the first chain of transaction between the manufacturer M/s. Pasondia Steel Profiles and the first stage dealer M/s. Ayushi Steel is bogus, the subsequent transaction would also be bogus and therefore, it is for the appellant M/s. Nidhi Enterprises to prove as to from where the material (CR strips/sheets)claimed to have been supplied to M/s. Rasandik Engineering Industries had been procured. When the transaction between M/s. Pasondia Steel Profiles and first stage dealer M/s. Ayushi Steel were bogus, and when M/s. Ayushi Steel are supposed to have sold the material procured from M/s. Pasondia Steel Profiles to M/s. Nidhi Enterprises and M/s. Nidhi Enterprises are supposed to have sold the same material to M/s. Rasandik Engineering Industries, the transaction between M/s. Ayushi Steel. and M/s. Nidhi Enterprises and M/s. Nidhi Enterprises and M/s. Rasandik Engineering Industries would also be bogus transaction and the burden to prove that these transactions are not bogus would be on M/s. Nidhi Enterprises and M/s. Rasandik Engineering Industries. No evidence in this regard has been produced by M/s. Nidhi Enterprises that they had indeed received the CR strips from M/s. Ayushi Steel. In view of this, I hold that transaction between the appellant and M/s. Rasandik Engineering Industries are bogus transaction and appellant has issued bogus invoices without supply of any material and not only this, they have also taken Cenvat credit wrongly in a fraudulent manner on the basic of bogus invoices of M/s Ayushi Steels. penalty is imposable on the appellant. However, since the quantum of Cenvat credit involved is ₹ 98,813/-, which has already been reversed, the penalty on the appellant is reduced to ₹ 30,000 - Decided partly in favour of assesse.
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2015 (1) TMI 28
Notification No. 84/2003-C.E. (N.T.), dated 31-12-2003 - Duty demand on Gold Potassium Cyanide (GPC) - intermediate product for the manufacture of exempted jewellery - whether benefit of Notification No. 84/2003-C.E. (N.T.) is available to GPC - Held that:- final product manufactured by the respondent is imitation jewellery. The respondents are procuring inputs for the manufacture of GPC which was manufactured in the factory and is further in the manufacture of final product i.e. imitation jewellery. In these circumstances, we find no infirmity in the impugned order whereby the adjudicating authority held that GPC is emerging in the course of manufacture of imitation jewellery. - Decided against Revenue.
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2015 (1) TMI 27
CENVAT Credit -Inclusion of testing charges in assessable value - Whether Cenvat credit of CVD on design & testing charges paid on Bill of Entry on import of mould is admissible under Cenvat Credit Rules, 2004 - Held that:- appellants themselves have termed it as “testing charges” of the said jig, whereas the documents mention it was “testing JIG Kwah T/L”. On examination of documents, the crucial point remains unanswered as to why testing ‘charges’ or ‘fee’ has not been mentioned in same fashion as has been inked in case of ‘design fee’ and as to why it has been shown separately. There is nothing on records to show that the captioned “testing JIG KWAH T/L” is in any way related to and is an integral part of the said imported moulds, i.e. capital goods. Merely because testing charges have been shown separately, it does not mean that these charges are not to be considered part of assessable value of the moulds and CVD levied on these charges should not be available as Cenvat Credit. - Decided in favour of assesse.
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2015 (1) TMI 26
Cenvat credit - SSI Exemption - Payment of duty on scrap - Held that:- CBEC Circular has clarified that input contained in any waste and scrap generated during the course of manufacturing of final product is admissible. Therefore, it is immaterial if the scrap has been generated at the end of job worker who is availing SSI exemption on the scrap. In these circumstances, the appellant is entitled for Cenvat credit on inputs which contained in waste and scrap generated at the end of job worker. With these observations, I do not find any merits in the impugned order therefore, the same is set aside. - Decided in favour of assessee.
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2015 (1) TMI 25
Waiver of the pre-deposit - ineligible Cenvat credit availed - Violation of principle of natural justice - Held that:- adjudicating authority has not indicated anything about adjournment request received from the appellant nor there is any mention of subsequent personal hearings being granted. In our view, the adjudicating authority having passed an order on 14-2-2013, could have definitely granted another personal hearing to appellant, before coming to any conclusion on the role authorized to the appellant. In our view, there seems to be violation of natural justice. At the same time, we have also find that the appellants attitude for not co-operating with the adjudicating authority, as well as non-appearance before the Tribunal seems to be delinquent in as much as, when the matter was first called and the stay petition was disposed of, due to non-appearance. Be that as it may, we find that since there is a violation of principles of natural justice, the matter needs reconsideration by the adjudicating authority. - Matter remanded back conditionally - Decided partly in favour of assessee.
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2015 (1) TMI 24
Transit loss - Naphtha - duty has been demanded on account of less receipt of goods than mentioned in the invoices - Held that:- There is no doubt that the Lube Base Oil are being transported through pipeline. If any goods are transported through pipeline or by other means of transports, if they are not solid, there is every chance of loss of quantity of the goods by way of evaporation. Therefore, as held by the Hon’ble High Court of Bombay in the appellant’s own case (2013 (3) TMI 481 - BOMBAY HIGH COURT) transit loss can be allowed. I also find that in this case the transit loss is varying between 0.01 and 0.72% which is admissible in the facts and circumstances of the case. Therefore, I hold that there may be variation in the transportation of the quantity of the goods accordingly, transit loss is allowable. Hence, I hold that the appellant is entitled for input credit as shown in the invoices. Accordingly, the impugned order is set aside - Decide in favour of assessee.
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CST, VAT & Sales Tax
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2015 (1) TMI 44
Classification of fountain drinks - Whether fountain drinks sold by the applicant was rightly taxed being manufactured soft drink - Held that:- In Sonebhadra Fuels Versus Commissioner, Trade Tax, UP., (and other appeals) [2006 (8) TMI 304 - SUPREME COURT OF INDIA] it has been held that the word 'manufacture' in other statutes are not necessarily applicable when interpreting Section 2(e-1) of the UP Trade Tax Act - the definition of 'manufacture' in Section 2(e-1) of the UP Trade Tax Act is very wide, which includes processing, treating or adapting any goods - the expression 'manufacture' covers within its sweep not only such activities which bring into existence a new commercial commodity different from the articles on which that activity was carried on, but also such activities which do not necessarily result in bringing into existence an article different from the articles on which such activity was carried on. In the present case there is processing, treating or adopting of the syrup and converting into soft drink after subjecting the syrup through carbon dioxide in a fountain machine - the commercial product is outcome of a process to manufacture as defined in Section 2(e-1) - whether the commercial identity of the goods subjected to processing, treating or adopting changes or not, is not very material – Decided against assessee.
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