TMI Tax Updates - e-Newsletter
January 3, 2014

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. Some lights on section 44AA

   By: tarannum khatri

News

1. RBI penalises Shree Vardhaman Sahakari Bank Ltd. Vadodara (Gujarat)

2. Exchange Rate of Foreign Currency Relating to Imported and Export Goods Notified

3. RBI Reference Rate for US $ and Euro

4. Minimum Support Price of Raw Jute for 2014-15 season

5. Construction of 220kV Transmission System from Alusteng (Srinagar) to Leh and interconnection system for Drass, Kargil, Khalsti and Leh substations in Jammu & Kashmir

6. The World Bank assisted Rural Drinking Water Supply and Sanitation Project for Low Income States of Assam, Bihar, Jharkhand and Uttar Pradesh

7. Indian Leather Development Programme for 12th Plan

8. Conversion of Perpetual Non-Cumulative Preference Shares subscribed by Government of India in Public Sector Banks including Indian Bank, UCO Bank and Vijaya Bank into Equity Shares

9. India Signs Credit Agreement with World Bank for Rajasthan Road Sector Modernisation Project

Notifications

Customs

1. 01/2014 - dated 2-1-2014 - Cus (NT)

Rate of exchange of conversion of each of the foreign currency with effect from January 03, 2014

Circulars / Instructions / Orders

SEZ

1. No. 1/10/2010-EOU - dated 2-1-2014

Recommendations of the Committee on Review and Revamp of EOU Scheme regd.

FEMA

2. 83 - dated 3-1-2014

Overseas Direct Investments – Rollover of Guarantees

Highlights / Catch Notes

Income Tax

• Section 54F Exemption Upheld: Property Suitability or Material Storage Not Grounds for Denial.

  Case-Laws - HC : Exemption u/s 54F - merely because the property is not suitable to the assessee and construction material are kept there, is not a ground to deny exemption under Section 54F of the Act - HC
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• Authorities Confirm Additions in Corpus Donation Case; Newly Bound Receipt Books Raise Unexplained Cash Credit Concerns.

  Case-Laws - HC : Unexplained cash credit in form of corpus donation - During remand proceedings, four donation receipt books were produced which were newly bound and freshly written - additions confirmed - HC
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• Temporary Structures Eligible for 100% Depreciation, Not Limited to Wood, Tax Department's Claim Incorrect.

  Case-Laws - AT : Temporary erection which was intended to use for temporary purpose is entitled for 100% depreciation - The department is not correct in saying that the wooden structure alone is entitled for 100% depreciation - AT
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• Interest u/s 220(2) Applies After 35 Days from Demand Notice Post New Assessment Order.

  Case-Laws - AT : Levy of Interest u/s 220(2) - when the assessment is reframed, interest can be charged only after the expiry of 35 days from the date of service of demand notice pursuant to such fresh assessment order - AT
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Central Excise

• Court Rules Outward Transportation as Input Service Under CENVAT Credit Rules, Allowing Manufacturers to Avail Credit.

  Case-Laws - HC : Availment of CENVAT Credit - Interpretation of Input service - By no stretch of imagination can it be stated that outward transportation service would not be a service used by the manufacturer for clearance of final products from the place of removal - HC
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• Appellant Denied SSI Notification No.1/93 Benefits for Using Non-Owned Brand Name; Permissible for Different Goods Use.

  Case-Laws - AT : Denial of Benefit of SSI Notification No.1/93 – Brand name not belonging to appellant – use of brand name for different goods is permissible under the law - AT
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Case Laws:

• Income Tax

• 2014 (1) TMI 142
  Validity of power exercised by CIT u/s 263 - Held that:- The present appeal under section 260A is directed against the order of the Tribunal dated 15 July 2003 allowing the appeal of the assessee against the order passed by the Commissioner under section 263 on 22 March 1999 - Following the order of the Commissioner dated 22 March 1999, a fresh order of assessment was passed on 29 March 2001 against which the appeal of the assessee was allowed on 12 April 2002 - Following this the departmental appeal was dismissed by the Tribunal on 12 October 2007. The order of the Tribunal has attained finality - In any event, the order of the Commissioner under section 263 has been duly worked out and nothing further would survive in the present appeal by the revenue - No substantial question of law ha arised - Decided against Revenue.

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• 2014 (1) TMI 141
  Recovery proceedings - Held that:- The petitioner's appeal is pending before CIT (A), the recovery proceedings should be initiated only after the decision in appeal - CIT(A) has inherent power to do all that necessary for the just disposal of the appeal and the same would include the power to stay the demand pending disposal of the appeal before it - The petitioner has already filed a stay application before the CIT(A) in its pending appeal - Petition was disposed with a direction to CIT(A) to hear and decide the petitioner's stay application as expeditiously as possible, preferably within four weeks from today.

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• 2014 (1) TMI 140
  Penalty u/s 271(1)(c) - Held that:- The vast difference between voluntary disclosed income and the income arrived by the Assessing Officer in the reassessment proceedings clearly indicates, there is concealment of income without even filing of the returns by the appellant-assessee in response to Section 148 notice. Mere reference to Explanation 3 to Section 271 would not imply that reassessment proceedings which led to penalty proceedings are based on deemed concealment of income. There was no occasion for the authorities to invoke this provision in the present situation. Quantum of penalty imposed by the Assessing Officer was substantially reduced by the CIT (Appeals) which came to be confirmed by the Tribunal - Decided against assessee.

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• 2014 (1) TMI 139
  Appealability of order u/s 154 - Held that:- As per section 246A - Appeal can be filed against order made under Section 154 only before Commissioner of Income Tax (Appeals) which the appellant assessee has adopted in the above case and the Commissioner of Income Tax(Appeals) has also considered the appeal on merits and disposed of the same - There was no justification on the part of the Tribunal to opine that the appeal before the Tribunal was not maintainable - The Tribunal ought to have decided the appeal on merits after entertaining the same – Decided in favour of assessee.

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• 2014 (1) TMI 138
  Penalty u/s 271(1)(c) - Held that:- During the search and survey operation unaccounted income was disclosed and accepted by the assessee - The assessee also failed to furnish the details of depositors - The assessee has no objection for disallowing the interest claim made on these deposits in the computation of income - The explanation offered by the assessee is false - Decided against assessee.

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• 2014 (1) TMI 137
  Exemption u/s 54F - Held that:- If the material on record shows, prior to sale, the vendor lived there with his family and he has sold the site along with the residential construction, merely because the property is not suitable to the assessee and construction material are kept there, is not a ground to deny exemption under Section 54F of the Act - The orders by the lower Authorities are based on the report submitted by the Inspector who visited the place three years after the sale - Decided against Revenue.

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• 2014 (1) TMI 136
  Failure to deposit tax deducted at source - Held that:- Following H.S Mohindra Traders v. Income tax Officer, Ward 39 (2), New Delhi [2010 (7) TMI 801 - ITAT DELHI] - The amended provision of Section 40 (a)(ia) clearly gives the time to the assessee to deposit the TDS on or before the due date specified in subsection (1) of Section 139 of the Act - The amendment came into effect from 1.04.2010. This is clearly erroneous in as much as Section 40(a)(ia) was amended by the Finance Act, 2008 with effect from 01.05.2005 whereby the words “on or before the due date specified in subsection (1) of Section 139” was substituted by the words, “has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under subsection (1) of Section 200” of the Act - Decided against Revenue.

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• 2014 (1) TMI 135
  Order passed violating principles of natural justice - Held that:- It was for the Departmental Representative to have requested the Tribunal to grant some further time - The Departmental Representative did not seek any further time to file counter affidavit or to produce the record to controvert the averments made in the affidavit filed by the assessee regarding non service of the notice - The date of hearing was fixed after seven months from date of notice, also casts suspicion on the issue and service of the notice itself - The order passed by the Tribunal does not suffer from any legal infirmity - Decided against Revenue.

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• 2014 (1) TMI 134
  Perquisite value of the house allotted - Held that:- The assessee was not drawing any salary from the Company and other Directors were being paid salary of Rs. 10,000/- per month - There is nothing on record to show that annual letting value of the house in the neighbourhood is higher than what has had been fixed for the house provided by the Company to the assessee - Only house tax payable for the rent free accommodation has been mentioned at Rs. 540/- per annum - The value of the rent free accommodation cannot be fixed without considering the materials on record and the circumstances of the case - Decided against Revenue.

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• 2014 (1) TMI 133
  Protective assessment - Validity of mode of service of notice - Held that:- The notice issued to assessee returned unserved - A notice was handed over to the departmental representative for service on the assessee - The departmental representative was unable to report whether service was effected on the assessee or not - He placed before the Tribunal a copy of the letter from the concerned assessing officer in which it was reported that the assessments of the A.O.P. was set aside by the appellate authority and fresh assessment has already been made vide order under section 144 of the Act which has become final - The Tribunal, did not go into the merits of the matter and treated the departmental appeal as unadmitted and consigned it to record leaving it open to get the matter revived after giving satisfactory explanation for its failure to get the earlier notice serviced - The Tribunal ought not to have consigned the matter to record and should have taken appropriate steps by exercising powers under section 255(6) read with section 131 of the Act - Substantive assessment of the same income has been made at the hands of the AOP consisting of nine persons which has become final, therefore, protective assessment of the same income made at the hands of the respondent assessee cannot stand - Decided against revenue.

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• 2014 (1) TMI 132
  Unexplained cash credit in form of corpus donation - Held that:- The AO carried out enquiries to satisfy himself about the identities and creditworthiness of the donors and the genuineness of the transactions - The letters were sent to a number of donors, out of which 11 letters came back to him unserved - From 12 persons, incomplete replies were received without copies of the donation receipts which was called for - All the 12 letters were sent by one person - The AO found that the donors had meager incomes, not enough to enable them to make the donations of amounts claimed by the appellant - No PAN etc. were there in respect of most of the donors - One donor assessed to tax denied to have made any donation - During remand proceedings, four donation receipt books were produced which were newly bound and freshly written - The assessee has failed to establish the genuineness of the transactions and the creditworthiness of the donors - Decided against assessee.

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• 2014 (1) TMI 131
  Disallowance of excessive interest rate - Held that:- The assessee had paid interest @ 10.5% on secured loans whereas paid ineterest 2 18% on loans from relatives - The assessee has not shown that there was payment of interest @ 18% to outside parties in the year under consideration or in any of the earlier or subsequent years - No other justification to show that payment of interest @ 18% rate is reasonable was given nor any compelling circumstances have been brought to our notice - Following assessee's own case for A.Y. 2006-07 - The CIT(A) took reason to allow deduction of interest @ 2 to 3% higher than the rate at which secured loans are available - It is considered reasonable to allow a deduction of interest @ 15% - The issue was restored for fresh adjudication.

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• 2014 (1) TMI 130
  Unexplained investment - unexplained excess cash - Held that:- The assessee has disclosed and accepted his income during the survey operation through return of income filed - He has also filed an affidavit in respect of retraction - After the assessee had filed the affidavit, he was neither cross examined on that point nor was he called upon to produce any documentary evidence - The assessee was entitled to assume that the income tax authorities were satisfied with the affidavit as sufficient proof on this point - The A.O. has not even rejected such an affidavit of the assessee in the entire proceedings before him - Following Sohan Lal Gupta Vs. CIT [1957 (3) TMI 54 - ALLAHABAD HIGH COURT] - The assessee has made a bonafide claim of application of the income that stood surrendered in the aforesaid five years and there being no contrary material on record, the addition of Rs. 6 lacs in the hands of Shri Kishorebhai Mohanlal Karia and cash in hand as unexplained investment in stock in the hands of M/s M.P. Scrap Traders are unjustified - Decided in favour of assessee.

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• 2014 (1) TMI 129
  Validity of assessment u/s 143 r.w.s 147 - Held that:- The recording of reasons before the issue of notice under section 148 has absolutely no nexus with the assessment made - Even though assessee belongs to Satyam Group of Companies, there is no evidence of siphoning of funds or escapement of income - What the Assessing Officer has done in the assessment is denial of the explanations given by the assessee with reference to various investments made through the books of accounts, various credits and loans obtained and also addition to fixed assets on the reason that the evidences have not been filed - Following Ganga Saran he has the power to reassess - The A.O. has power to reopen, provided there is 'tangible material' to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief – Decided in favour of assessee.

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• 2014 (1) TMI 128
  Penalty u/s 271(1)(c) - Held that:- The assessee has filed return of income in response to notice u/s 148 - Following MAK Data (P.) Ltd. V. CIT [2013 (11) TMI 14 - SUPREME COURT] - The voluntary disclosure does not free the assessee from the mischief of penal proceedings under section 271(1)(c) - The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he has to be absolved from penalty - The surrender of income in this case was not voluntary in the sense that the offer of surrender was made in view of detection made by the Assessing Officer in the survey conducted - The Assessee had not given any reasonable explanation for not offering the income he had offered in the return filed pursuant to the Notice issued u/s 148 - Such income offered in the return filed is concealed income and exigible to penalty u/s 271(1)(c). Quantum of concealed income - Held that:- Only income which was returned in the return filed by the Assessee should be considered as concealed income - In the reassessment the AO has accepted the turnover and depreciation as returned by the Assessee - The additions made by the Assessing Officer in the reassessment order is merely based on his estimate that profitability should be at 8% in the place of the profits offered by the Assessee - This is merely an adhoc estimate made by the AO without any cogent reason for adopting such percentage - The issue was restored to the files of AO to determine the income eligible for penalty at the income returned by the Assessee in his return of income filed on 5.10.2009 and re-work and levy minimum penalty.

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• 2014 (1) TMI 127
  Interest liability under section 36(1)(iii) – Held that:- Following assessee's own case for A.Y. 2005-06 - The assessee has placed on record copy of the CC A/c and demonstrated that debit balance was not on account of purchase of the assets - The assessee has a substantial profit which was deposited in this very account - The assessee has declared income which suggest that it has excess interest free funds, then the investment made in the acquisition of the assets - Proviso to section 36(1)(iii) is not applicable on the facts of the present case. Non-deduction of tax out of the payment – Held that:- Following assessee's own case for A.Y. 2005-06 – As per article 15 of DTAA between India and Italy - Income derived by a resident of a contracting state in respect of professional services or other independent activities of a similar character may be taxed in that State - Such income may also be taxed in India but subject to fulfillment of conditions of clauses (a) and (b) of Article 15 - Mr. Andrea Bonotto is entitled for the beneficial provisions of the DTAA - He is covered by Article 15 of the DTAA - The income would not be taxable in his hand in India and, therefore, no TDS would be deductible – Decided against Revenue.

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• 2014 (1) TMI 126
  Allowance of 100% depreciation of temporary shed – Held that:- A temporary structure constructed for the purpose of carrying out a massive construction project is eligible for depreciation at 100% in view of Item I(4) of Part A of New Appendix I of the Income-tax Rules, 1962 - temporary erection which was intended to use for temporary purpose is entitled for 100% depreciation - The department is not correct in saying that the wooden structure alone is entitled for 100% depreciation - If that is the intention of the rule making authority, then the structure made of teak wood and rose wood which would last for several hundred years has to be allowed depreciation at 100% - this is not the intention of the rule making authority - If the structure is for temporary purpose, then the assessee is entitled for depreciation @100% - the structure constructed by G.I. pipes, etc. is only for the purpose of temporary use so as to facilitate the carrying out of massive construction activity - the assessee is entitled for 100% depreciation - the assessee has claimed only 50% of the total expenditure since the structure was used for less than 180 days - The CIT(A), after taking note of the fact has allowed only 50% of the expenditure as depreciation – There was no infirmity in the order – Decided against Revenue. Additional Depreciation u/s 32(1)(iia) of the Act – Held that:- Following Apollo Tyres Ltd. Versus The ACIT., Range 1, Kochi [ 2014 (1) TMI 33 - ITAT COCHIN] - the assessee is entitled for additional depreciation of 10% in the subsequent assessment year - The balance 50% of the depreciation has to be allowed in the subsequent year, therefore, the orders of the lower authorities set side and the assessing officer is directed to allow the claim of balance 50% additional depreciation in the year under consideration – Thus, the assessee is entitled for additional depreciation of 10% in the year under consideration – Decided against Revenue.

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• 2014 (1) TMI 125
  Application for registration u/s 12AA - Held that:- None of the activities of the assessee-trust, from which the income was received, falls in the definition or scope of the purpose of relief of the poor, education, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest but at the most can be included within the scope of an activity for advancement of any other object of general public utility - During the previous financial year 2011-12 is concerned, the total receipts of the assessee was much more than the prescribed limit of Rs.10,00,000 - The assessee has also failed to prove that the alleged 'sanatorium' at Lonowala was in fact not used as a Guest house - A perusal of the record on file reveals that the most of the occupants stayed there for a very short duration and the occupancy remained much more during week-ends/holidays - Even on the deposit receipts, it has been mentioned as "Atithi Griha" and further no one is allowed to stay there for more than seven days - Even if the activities of the assessee trust are considered to be falling in the definition or within the scope of 'an activity for advancement of any other object of general public utility', still the case of the assessee trust is hit by the second proviso to section 2(15) of the act being its total receipts much more than the prescribed limit of Rs.10 lakhs for the year under consideration - Activities of the institution were not motivated by a spirit of genuine charity but in fact were business or commercial activities - Decided against assessee.

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• 2014 (1) TMI 124
  Estimation of income @ 10% of total sale consideration – Held that:- The ld. CIT(A) observed that there was no evidence to show that the notice dated 13.11.09 was ever served by the AO upon the assessee - He further observed that the AO estimated the 10% profit on the sale consideration without any valid basis - He further observed that the AO had not indicated in the assessment order anything, as to why, the books of account of the assessee were not reliable or that there was any defect in the books of accounts, which were well audited and the audit report was submitted along with the return of income - The onus was on the AO to prove that the assessee had earned more income than that was shown in the books of accounts. Tax not deducted at source on expenses of brokerage and legal and professional fees – Held that:- The TDS was duly made by the assessee relating to brokerage fees and no TDS was deductable on the amount paid as professional fees as the amount paid was below the prescribed limit. Property tax paid – Held that:- The AO had wrongly disallowed the genuine expenditure of property tax paid by the assessee to the local authority - The same was paid through account payee cheques and further it was reflected in the books of account of the assessee – Decided against Revenue.

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• 2014 (1) TMI 104
  Nature of Expenses – Revenue OR Capital Expenditure – Replacement of Machinery – Held that:- The order of the CIT(A) upheld - The expenditure incurred on machinery is revenue in nature and is allowable under section 37 of the Act - The remaining expenditure incurred on replacement of machinery has either resulted in giving enduring benefit or upgradation of the existing machinery or replacement of the worn out machinery which is capital in nature - the assessee has incurred expenditure for the efficient working of the existing machinery - The expenditure incurred on replacement of parts of the existing machinery in order to make the machinery work more efficiently has to be capitalized - The assessee is entitled to claim depreciation on the same in accordance with the provisions of the Act – Following Commissioner of Income-tax, Madurai Versus Madura Coats [2011 (12) TMI 293 - MADRAS HIGH COURT] – decided against Assessee. Levy of Interest u/s 220(2) of the Act – Held that:- where an assessment order is cancelled u/s.146 or cancelled/set aside by an appellate/ revisional authority and the cancellation/setting aside becomes final, no interest under section 220(2) can be charged pursuant to the original demand notice. The necessary corollary of this position will be that even when the assessment is reframed, interest can be charged only after the expiry of 35 days from the date of service of demand notice pursuant to such fresh assessment order - Following The Commissioner of Income Tax-1, Mumbai Versus M/s. Chika Overseas Pvt. Ltd [2011 (11) TMI 118 - BOMBAY HIGH COURT] – Interest u/s 220 of the act could not be sustained – Order of the CIT(A) set aside – Decided in favour of Assessee. Interest u/s 234B and 234C of the Act – Held that:- Levy of interest u/s 234B and 234C in mandatory in nature - the interest is charged for contravening the provisions of the Act i.e. non-payment of advance tax within the stipulated time - The provision is compensatory in nature inasmuch as the Revenue is deprived of such payment which should not have been made on an earlier date – there was no infirmity in the order of the CIT(A) – Decided against Assessee.

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• Customs

• 2014 (1) TMI 123
  Stay of encashment of bank guarantees - Jurisdiction to invoke bank guarantee - Held that:- petitioner can really protest and object to invocation of the bank guarantee on the ground that imports under EPCG scheme were transferred and became liability of Sanya Hospitality Pvt. Ltd.. Letter dated 23.12.2011 shows that certain conditions had to be fulfilled and the Regional Authority had to take necessary action. Letter dated 11.04.2013 records that the conditions imposed were not fulfilled and licence was not transferred and endorsement was not made - petitioner has furnished a bank guarantee to the Customs Authorities, which could be invoked for loss caused or would be caused for violation of the terms of the bond. The letter invoking the guarantee states that terms of the bond have been violated. The petitioner has not filed the said bond on record. Guarantee is specific in terms and states that it can be invoked when there is a breach by the importer of any term and condition mentioned in the bond. There is no stipulation for show cause notice, reply and adjudication order. Terms of the bank guarantee do not stipulate that the same cannot be invoked till an adjudication order is passed. The petitioner was allowed to import capital goods on payment of 5% customs duty in view of the bond and the bank guarantee for the balance amount. The bank guarantee is for the unpaid customs duty and not in respect of penalty, interest etc. - Decided against appellants.

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• 2014 (1) TMI 122
  Duty demand - Confiscation of goods - Notification 85/2013 - Held that:- So long as the said tariff value fixed by the Revenue is not under challenge, the respondent/importer insisting to pay duty on the transaction value does not arise. It is, however, open to the respondent/importer to challenge the assessment proceedings, if aggrieved in accordance with law. If the respondent/importer prays for a speaking order, the authority shall issue a speaking order so as to enable the respondent/importer to work out his remedy as per law - no justification to allow the respondent/importer to pay balance 25 % by way of bond when the duty is payable on the tariff value fixed. Further, the Notification 85/2013, it is stated that this may not apply to the earlier import of which we do not want to comment at this stage. Taking note of the plea of the respondent/importer that several orders have been passed by this Court for the release of the goods on payment of substantial duty together with bond and taking note of the vagaries of nature that is likely to cause severe hardship to the import of Betel Nuts, we are inclined to allow the appeals and modify the orders of the learned single Judge to safeguard the interest of revenue as well. Orders are modified to the extent that 75% of the duty demanded on assessment shall be paid and for the balance 25%, duty demanded by way of bank guarantee. The goods shall be released on compliance of the above, immediately. Since the assessment has already been made, if there is a request made by the respondent/importer for passing a speaking order, the authority shall pass a speaking order - Decided partly in favour of Revenue.

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• 2014 (1) TMI 121
  Refund of additional duties of customs (SAD) paid on imported goods - Notification No. 102/2007-Cus., dated 14-9-2007 - Held that:- refund claim in respect of disputed 26 bills of entry were filed on 4-11-2009 i.e. within one year. It is only after department took the view that the bills of entry were provisionally assessed that the respondent had withdrawn the refund claim and filed subsequently on bills of entry finally assessed. We find no infirmity in the view adopted by the Commissioner (Appeals), that inasmuch as the original refund claim was well within time, withdrawal of the same and subsequently filed will not affect the limitation provided under the law. The date of original filing of refund is required to be taken as the date of filing refund claim. As such, he has rightly set aside the impugned order of the lower authorities and have directed the lower authorities to scrutinise the refund claim as per law and if found in order, sanction the same. No infirmity is found in the order - Decided against Revenue.

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• 2014 (1) TMI 120
  Waiver of pre-deposit - Penalty u/s. 114A, 114AA and 112 - Misuse of the licences granted to them under Target Plus Scheme Licences - Held that:- goods were imported in the year 2007 more specifically during the period May, 2007 to August, 2007. It is also undisputed that the appellant had produced the relevant documents of Target Plus Scheme Licences to the authorities for claiming benefit under Notification No. 32/2005. The authorities before clearing the consignments could have gone into the details as to the eligibility. We also find that the Show Cause Notice was issued on 28-8-2009 by invoking the extended period of time. On perusal of the condition of Notification which was sought to be pressed into service for extended period of time for confirmation of demand, prima facie, we find that the said condition cannot be pressed into service and demand for extended period cannot sustain - appellant have made prima facie case for waiver of pre-deposit of the amounts only on the ground of limitation - Stay granted.

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• 2014 (1) TMI 119
  Duty demand - Confiscation of goods - Duty drawback - Imposition of redemption fine - Mis declaration of goods - Held that:- impugned goods were having elastic tightening at the bottom. It has been observed by the original authority that as per the explanatory notes envisaged in the Classification Guidelines for knitted and woven garments issued by Textiles Committee, Ministry of Textiles, G.O.I., the blouse does not include garments with pockets below the waist or with ribbed waistbank or other means of tightening at the bottom of the garments. From perusal of said explanation, it is ample clear that garment having any means of tightening at the bottom does not fall within the meaning of blouse. Hence, the impugned goods cannot be classified as ‘Blouse’ classifiable under drawback Heading 620603A - goods were mis-classified to avail undue drawback. As such, provisions of Section 113(ii) and Section 114 of the Customs Act, 1962 are attracted and penalty and redemption fine were rightly imposed. Commissioner (Appeals) has already substantially reduced quantum of fine and penalty in this case - Appeal dismissed.

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• Service Tax

• 2014 (1) TMI 152
  Demand of service tax - Disallowance of service tax credit - Penalty u/s 76 & 78 - Held that:- appellate authority fail to deliver upon its quasi judicial obligations of dealing with every aspect presented - except to the extent the order has specifically confirmed the primary order with regard to disallowance of cenvat credit taken on the basis of invoices issued by unregistered input service distributors. This conclusion of the appellate authority, concurring with the adjudicating authority suffers from no error and therefore. The matter is remitted to the appellate authority for passing a detailed order, considering the several grounds of appeal - Decided partly in favour of assessee.

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• 2014 (1) TMI 151
  Best judgment assessment order - Demand of service tax - Revenue contends that no assessment order was passed - Assessee contends that Best judgment assessment order was passed withopur issue of show cause notice - Held that:- assessment/adjudication is subjudice and no decision has been pronounced. Counsel for the respondents, on instructions, has stated that the show cause notice can be marked to a different Commissioner/officer but learned counsel for the petitioner states that he has no objection in case the show cause notice is examined and considered by the Commissioner who had issued demand-cum-show cause notice dated 19.12.2012 - time granted to petitioner to file reply to the show cause notice and direct that adjudication order-in-original will be passed after hearing in accordance with law - Decided in favour of assessee.

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• 2014 (1) TMI 150
  Waiver of pre deposit - Demand of service tax - Held that:- impugned order came to be passed without considering the dispute raised by the petitioner with regard to the quantum of interest - it would be appropriate to waive the pre-deposit of the penalty component - Conditional stay granted.

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• 2014 (1) TMI 149
  Condonation of a delay - Documents not provided - Held that:- an appellate or other litigative remedy should not be permitted to fail merely on account of a delay in preferring the remedy; a liberal view must be taken in considering an explanation offered for delay; if reasonable cause is offered, the extent of the delay would per-se not be a factor for negating a prayer for condonation of delay; and while considering a plea for condonation, the explanation offered for the delay must be duly considered. While condonation of delay is a matter of exercise of discretion of the Court, it must be recognized that the discretion is a discretion of the law and not the subjective discretion of the judge. Judicial discretion should always be exercised on the basis of consecrated principles informed by tradition and norms. Exercise of discretion on an assumption that a judge is provided a reservoir of eleemosynary Jurisdiction would be a negation of liberty. While the extent of delay is per-se not the sole criterion, what is critical is that the delay must be explained - there is no satisfactory cause whatsoever pleaded or established for the extraordinary of delay 431 days in preferring the appeal - Condonation denied.

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• 2014 (1) TMI 148
  Availment of CENVAT Credit - Service tax paid for Business auxiliary service - Adjudicating authority disallowed CENVAT Credit - Nexus between its output and the two services - Held that:- vehicles owned and used by the appellant for efficient execution of its business of manufacture of cement and allied products and the expenditure incurred in the legitimate use of such vehicles i.e. by obtaining statutory insurance for the vehicles and expenditure incurred for their maintenance i.e. for periodical service of the vehicles, would be inputs and wherever the service providers, of insurance of the vehicles or for maintenance of such vehicles are compensated in respect of the service tax payable by those entities for having provided the taxable services, those amounts could lawfully be treated as input services on which cenvat credit could be availed - impugned order is unsustainable and is accordingly quashed - Decided in favour of assessee.

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• 2014 (1) TMI 147
  Waiver of pre-deposit of duty, interest thereof and equal amount of penalty - Availment of the Cenvat credit of the Service Tax paid by the service provider who provided the Commercial and Industrial Construction services - Interpretation of provisions of Rule 6(5) of Cenvat Credit Rules, 2004 - Held that:- It can be seen from the above reproduced rule that it was amended w.e.f. 1-4-2011, credit of the services in question in the appeals in hand, were falling under the category of (zzq) i.e. Commercial and Industrial Construction services. The restriction of provisions of Rule 6(5) of Cenvat Credit Rules, 2004 was only that if these services are used exclusively in or in relation to the manufacture of exempted goods or providing exempted services, credit should not be availed. Since there is no dispute that the appellant is manufacturing dutiable products, prima facie, for the prior to 1-4-2011, Cenvat credit of Service Tax paid cannot be denied to the appellant - Stay granted.

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• 2014 (1) TMI 146
  Service tax on co-loader service - Commissioner confirmed tax liability - Held that:- sub-brokers are not liable to pay any service tax as the same has already been paid by the main stock broker - self same service provided shall not be doubly taxable - If service tax is paid by a sub-broker - same taxable service provided by the stock-broker - credit of the tax paid - Following decision of Vijay Sharma & Co. Vs. CCE, Chandigarh [2010 (4) TMI 570 - CESTAT, NEW DELHI] - Decided in favour of assessee.

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• 2014 (1) TMI 145
  Demand of service tax - Manpower supply service - Parent company sent a few of their employees to the appellant-company for managing the affairs of the appellant-company - Held that:- prima facie the persons are employees of the appellant-company during the relevant time and they are being paid. Routing part payment through parent company by itself may not make it a case of manpower supply. Further we note that in another case where payment of staff was being made through the parent company of the employee without involving any additional consideration being paid to the parent company, stay petition was allowed for hearing the appeal without pre-deposit - Stay granted.

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• 2014 (1) TMI 144
  Demand of Service tax - Exemption availed on inter-State sales - Differential amount treated as charges for rendering “Business Auxiliary Services" - Held that:- Prima facie it is a case of sale by Eastern India Company to the appellant who in turn sold the goods to their parent company. Therefore, question of levying Service tax on this transaction under the “Business Auxiliary Service” treating the profit made as consideration for services does not arise - Stay granted.

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• 2014 (1) TMI 143
  Demand of service tax - Storage and Warehousing Services - Held that:- The appellants, on an optional basis, are providing the storage tanks at the premises of the customers. We do not find any evidence of the appellants overseeing the receipt and issue from the said storage tanks. Under these circumstances, these activities may not fall under the category of ‘Warehousing and Storage Services’ and therefore, the appellants have made out a strong case for waiver of balance of dues as per the impugned order - Stay granted.

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• Central Excise

• 2014 (1) TMI 118
  Availment of CENVAT Credit - Interpretation of Input service - Whether the CESTAT was right in considering the service namely Outward Transportation in respect of courier service and clearing agents, availed by the assessee, as eligible services for availing input service credit - Held that:- Words 'clearance of the final products from the place of removal' are significant. Means part of the definition has not limited the services only upto the place of removal, but covers services used by the manufacturer for the clearance of the final products even from the place of removal. It can thus be seen that main body of the definition of term 'input service' is wide and expansive and covers variety of services utilized by the manufacture. By no stretch of imagination can it be stated that outward transportation service would not be a service used by the manufacturer for clearance of final products from the place of removal - Service would certainly be covered within the expression: any service used by the manufacturer directly or indirectly in or in relation to the manufacture of final products and clearance of final products from the place of removal - Decided against Revenue.

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• 2014 (1) TMI 117
  Clandestine removal of goods – Benefit of SSI Exemption Notification No.8/2001withdrawn – Held that:- There is no indication at the time of reintroduction of the disputed goods to the benefit of exemption notification so as to reflect upon the fact that such exemption was with retrospective effect - Budget speech clearly states that SSI exemption is being withdrawn in respect of arms and ammunition is clear indication of the fact that such exemption was withdrawn with clear understanding and is a conscious ac - judiciary cannot act as legislature and enact the provisions of law so as to fill any gap, which have been consciously left by the legislature. Grant of SSI exemption to various goods is the policy matter of the Government of India and cannot be interpreted by the judiciary on the ground that such benefit should have been extended to the manufacturers of arms and ammunition with effect from 1-4-2001 -the notifications issued have to be held as having prospective effect and cannot be claimed retrospective unless such notifications are clarificatory in nature or have been specifically pronounced to be with retrospective effect – Relying upon Shri Bakul Oil Industries v. State of Gujarat [1986 (11) TMI 45 - SUPREME COURT OF INDIA] – Decided against Assessee.

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• 2014 (1) TMI 116
  Denial of Benefit of SSI Notification No.1/93 – Brand name not belonging to appellant – Held that:- C.B.E. & C. Circular No. 88/88-CX.6, dated 30-12-1988, while dealing with the eligibility of small scale exemption Notification No. 175/86 clarified that a trade mark need not necessarily be in respect of goods unless the registration has been so acquired - It is, quite possible and permissible to have the same trade mark/brand name for different classes of goods owned by different persons - a company being legal registered owner of trade mark Hotline in respect of Gas Stoves, the same brand name can be used by another company for a different commodity like television - use of brand name for different goods is permissible under the law – Relying upon CCE, Ahmedabad v. Vikshara Trading & Invest P. Ltd. [2003 (8) TMI 49 - SUPREME COURT OF INDIA] - While giving the full description of the goods manufactured by the appellant the words “SKN” are written at the top - there could be a bona fide belief on their part as regards the use of brand name SKN in respect of the goods manufactured by them, which were not being manufactured by the brand name owner M/s. SKN Associates – order set aside and the matter remanded back to the original adjudicatory authority – Decided in favour of aseesee.

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• 2014 (1) TMI 115
  Classification of Vehicles – Classified under sub-heading No. 8704 21 90 of Central Excise Tariff as ‘motor vehicles for transportation of goods’ OR under sub-heading No. 8703 33 99 – Waiver of Pre-deposit – Held that:- The chapter note relating to station wagon was not in existence - the decision of the Tribunal came for the period between 1996-2000, the chapter note relating to station wagon was not incorporated in the Tariff and the Chapter Heading 8703 did not include expression “including station wagon” - There was no occasion for the Tribunal to consider the impact of introduction of chapter note relating to station wagon and the impact of non-inclusion of expression ‘station wagon’ in the chapter Heading - The distribution of weight cannot be a consideration - weight allocation for transportation of goods is more than the weight allocation for persons cannot be a consideration. The appellants have not made out a prima facie case in their favour - the case has to be heard in much greater detail and much more analytical study statutory and other provisions are required to be made and further more detailed consideration of all the records is also required - the appellants directed to deposit Rupees Twenty crores as pre-deposit – upon such submission rest of the duty to be waived till the disposal – partial stay granted.

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• 2014 (1) TMI 114
  Reversal of cenvat credit – No separate accounts maintained – Held that:- As per the Board’s circular, the manufacturer may take credit or duty paid on all the inputs used in the manufacture of final products on which duty will have to be paid - This can be done only if the credit of duty paid on the inputs used in the exempted products is debited in the credit account before the removal of the exempted final products - Apart from the fact that there are various decision of the Tribunal laying down that wherever the Cenvat Credit stand reversed by the assessee, the provisions of Rule 6 (3)(b) of Cenvat Credit Rule, 2002 would not apply - the law now stands amended retrospectively laying down that if an assessee reverses the Modvat Credit in respect of inputs used in the manufacture of final exempted product, there is no need for payment of 10% of amount of value of the exempted products – Assessee has admittedly reversed the credit – Decided against Revenue.

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• 2014 (1) TMI 113
  Advance secured by way of loan - Interest Rate to be 10% OR 18 % - Held that:- Notional interest on the advances taken by an assessee from its customers is liable to be added in the assessable value of the final product only when the same influences the price of the goods – Following CC, Mumbai -III vs. ISPL Industries Ltd. [2003 (4) TMI 99 - SUPREME COURT OF INDIA] - no presumption can be drawn by mere fact of interest free advance by the buyer to the manufacturer and such depression in prices on account of advances, is required to be proved by the Revenue - even the advance is not interest free and attracts interest of 10% - Decided in favour of Assessee.

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• 2014 (1) TMI 112
  Waiver of Pre-deposit of MODVAT credit on capital goods - Penalty under Rule 57U (6) r.w 173Q(bb) of erstwhile Central Excise Rules, 1944 – Held that:- In the Chartered Accountant Certificate it is clearly mentioned that the applicant had neither claimed depreciation under Section 32 of Income tax Act, 1961 nor as ‘Revenue expenditure’ under any other provisions of the Income Tax Act, against the capital goods namely Ball Bearing, Laminator Dies, Timing Belt etc. - the Certificate even though placed before the adjudicating authority, the same has not been considered - Besides, the term ‘Revenue expenditure’ has been substituted retrospectively by the Finance Act, 2003 – Relying upon Honda Siel Cars (I) Ltd. vs. CCE-Noida [2003 (9) TMI 596 - CESTAT, NEW DELHI] – the assessee could able to make out a prima facie case for total waiver of dues – Pre-deposits waived till the disposal – Stay granted.

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• 2014 (1) TMI 111
  Denial of Cenvat credit – Cut sheet as an activity amounts to manufacture or not – Stay application – Held that:- The duty has been paid by M/s. Neel Metal P. Ltd. and goods have been received by the appellant and further utilized - The reassessment cannot be done at their level - proceedings having been dropped at the end of M/s. Neel Metal P. Ltd. which was the entire basis of the Revenue’s case which no longer survives - Prima facie case is in favour of the assessee so as to allow the stay petition unconditionally – Stay granted.

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• 2014 (1) TMI 110
  Goods produced on job work basis – Duty to be paid on value vehicles cleared by the principal manufacturer – Waiver of Pre-deposit – Held that:- Following Audi Automobiles vs. CCE, Indore [2009 (5) TMI 426 - CESTAT, NEW DELHI] - the activity of the body building would be treated as job work, even if substantial raw material is used by him and the provisions of Rule 10A of the Central Excise Valuation Rules would be applicable and accordingly the duty would be payable on the price on which the fully finished vehicles are sold by the principle manufacturer - the appellants are directed to deposit the entire amount of duty demand – upon such submission rest of the duty to be waived till the disposal – Stay granted.

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• 2014 (1) TMI 109
  Recall of final order – Held that:- The order of the Tribunal was put to challenge by the Revenue before the Hon’ble Supreme Court, their order refused to condone the delay of 645 days in filing the appeal before the Hon’ble Supreme Court and civil appeal filed by the Revenue was dismissed on the ground of delay - As such, the Tribunal’s order stand merged with the offer of Hon’ble Supreme Court and cannot be recalled.

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• 2014 (1) TMI 108
  Interest on differential duty u/s 11AB of Central Excise Act - Waiver of Pre-deposit – Necessary particulars for determination of assessable value by CAS-4 method was not available - Held that:-The differential duty payment was not at the instance of the department - voluntary payment of duty would squarely attract sub-section (2B) – Thus, the liability to pay interest in terms of the relevant Explanation to the sub-section is irresistible - Prima facie, the appellant is liable to pay interest under Section 11AB of the Act on the differential amounts of duty paid under supplementary invoices – Following Commissioner of C. Ex. vs. SKF India Ltd. [2009 (7) TMI 6 - SUPREME COURT ] - Assessee offered to make pre-deposit of Rs. 10 lakhs towards the total demand of interest of Rs. 1.15 crores – the amount offered by the assessee accepted as the pre-deposits – Upon such submission rest of the duty to be waived till the disposal – Partial stay granted.

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• 2014 (1) TMI 107
  Condonation of Delay – Delay of 35 Days – Held that:- Following COLLECTOR OF CENTRAL EXCISE Versus MM RUBBER CO. [1991 (9) TMI 71 - SUPREME COURT OF INDIA] - The delay is not in filing of appeal under Section 35E (4) after issue of Review order under Section 35 E(1), but is in issue of the order under section 35E(1) by the Board, that in terms of the provisions of Section 35 E(3), while the Committee of Chief Commissioners or the Board, in case of difference of opinion between the two chief Commissioner of the Committee can review the order passed by the Commissioner within a period of three months from the date of communication. The limitation period under section 35E(3) is the same, i.e three months from the date of communication of the order, irrespective of whether the order under section 35E(1), was issued by the committee of Chief Commissioners or in case of difference between the Chief Commissioners, by the Board – the delay is not condonable – Decided against Revenue.

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• 2014 (1) TMI 106
  Restoration of appeals - Non-compliance with the pre-deposit ordered - Held that:- Following decision of FORGE & BLOWER INDUSTRIES LTD. Versus COMMR. OF C. EX., AHMEDABAD [2013 (4) TMI 27 - CESTAT, AHMEDABAD] and assessee's own previous cases - Appeal restored and Stay granted.

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• 2014 (1) TMI 105
  Waiver of pre-deposit - Duty demand - Discharge of the Central Excise duty liability - Receipt of royalty from the company for the rightful use of the brand names - Held that:- appellant has discharged the Central Excise duty based on the retail sale price minus 15% discount as provided under Notification No. 245/83. It is to be noted that the said notification talks about retail sale price which is MRP minus said duty and other taxes from the VAT. If that be so, prima facie, we find that the entire amount which has been received by the appellant for a particular business centre gets included in the cost of the product which they are selling - appellant has made out a prima facie case for pre-deposit of the amounts involved. Accordingly, the application for waiver of pre-deposit of balance amounts involved is allowed and recovery thereof stayed till the disposal of appeal - Stay granted.

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• CST, VAT & Sales Tax

• 2014 (1) TMI 153
  Error in the date of order entered in the register – Held that:- The department has sufficiently explained the error in the dispatch register of the assessing authority - the dispatch register put a wrong date i.e. 4.3.2013 and the same date has been entered on the right side column of the order sheet against the date of dispatch i.e. 18.3.2013 as well as the dispatch register. The petitioner is unnecessarily capitalising on the mention of wrong dispatch date - He has participated in the proceedings before the assessing officer in which the order was passed on 15.3.2013 to re-open the assessment - The petitioner also received the notice dispatched by the assessing officer on 18.3.2013, on 22.3.2013 - All these dates are subsequent to the dates given in the dispatch register - It clearly shows that the dispatch clerk had committed an apparent error - the dispatch of notices is only a ministerial act, which does not affect the order passed by the competent authorities in the proceedings in which the petitioner had also participated - Decided against Petitioner.

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