TMI Tax Updates - e-Newsletter
October 11, 2013

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws FEMA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. CENVAT CREDIT ON CAPITAL GOODS

   By: Dr. Sanjiv Agarwal

News

1. Statement of Srikant Kumar Jena on Index of Industrial Production

2. Anand Sharma, Gita Wirjawan Discuss Doha Round Negotiations Indonesia Welcomes Indian Investment in Pharma

3. “Need to adopt National Competition Policy, which is need of the hour” says Ashok Chawla, Chairman, Competition Commission of India

4. RBI Reference Rate for US $ and Euro

5. Speech by Mr.P.Chidambaram, Union Finance Minister, at the Carnegie Endowment for International Peace on Recapturing India’s Growth Momentum

Notifications

Customs

1. 23/2013 - dated 10-10-2013 - ADD

seeks to levy anti-dumping duty on imports of Ductile Iron Pipe, originating in, or exported from the People's Republic of China, for a further period of five years

2. 22/2013 - dated 10-10-2013 - ADD

seeks to levy anti-dumping duty on imports of Ductile Iron Pipe, originating in, or exported from the People's Republic of China, for a further period of five years

3. 47/2013 - dated 10-10-2013 - Cus

Seeks to amend notification No. 53/2011-Cus dated 1st July, 2011 so as to provide deeper tariff concessions in respect of specified goods imported from Malaysia under the India-Malaysia Comprehensive Economic Cooperation Agreement (IMCECA).

Circulars / Instructions / Orders

Customs

1. F. No. 603/01/2011-DBK - dated 11-10-2013

Audit Report No. 15/2011-12, Section 2 – Duty Drawback Scheme: regarding

Highlights / Catch Notes

Income Tax

• Interest Charges Not Enforceable by Assessing Officer if MoU Specifies No Interest for Payments Within Two Months.

  Case-Laws - HC : Notional interest - When the parties have agreed not to charge the interest, as per the condition laid down in the MoU i.e. “if the remittance is within the less than two months“, then the AO cannot compel to do so - HC
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• High Court Rules Block Assessment Unnecessary for Toll Plaza Employee in Section 153A Case Involving Cash Seizure.

  Case-Laws - HC : Block assessment - Proceeding u/s 153A against the employee who was authorized to collect the money from the Toll Plaza- Cash seized from the employee - Proceedings for the block period is not required in the case of the employee - HC
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• High Court Rules No TDS on Contractor Supplies: Classified as Sale of Goods, Not Works Contract u/s 194C.

  Case-Laws - HC : TDS u/s 194C - sales of goods or works contract - Contractor undertakes to supply elevators, furnishing material, fire fighting and fire detection system, air conditioning, etc. during the execution of contract of construction - No TDS on supply as sales of goods - HC
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• High Court Rules No Deductions Allowed When Income Estimated After Rejecting Books of Accounts, Including Depreciation.

  Case-Laws - HC : Allowability of Depreciation, when income is computed on estimate basis after rejection of books of accounts - hen the Net Profit is made on estimate basis after rejecting the books of account, then no deduction including depreciation is allowed - HC
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• High Court Overturns AO's Decision on Taxpayer's Undisclosed Income u/s 68, Citing Lack of Basis.

  Case-Laws - HC : Nature, Source and genuineness of income - As per AO assessee failed to prove the source and genuineness of income hence taxed the same as undisclosed income u/s 68 - action of AO is not correct - HC
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• Section 142A DVO Reference Not Applicable to Assessments Finalized by September 30, 2004. Completed Assessments Remain Conclusive.

  Case-Laws - HC : Reference to Valuation officer (DVO) - Section 142A would not be applicable to the assessment made on or before 30.9.2004 and which has become final and conclusive on or before that date - HC
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• Assessing Officer's objection overruled; iron ore sale loss allowed due to verified physical movement for export.

  Case-Laws - AT : Disallowance of loss on sale of iron ore – AO's objection that there is no physical movement of stocks and it is only an accommodative transaction is incorrect as the iron ore was already mined and transported to the port for the purpose of export - Transaction is not a sham transaction - AT
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Customs

• Fraudulent Diversion of Crude Palm Oil Denies Leniency u/s 129E of the Customs Act, 1962.

  Case-Laws - AT : Illicit diversion of the imported CPO / non edible vegetable oil - Such fraudsters do not deserve the dispensation under the provisions of first provision to Section 129E of the Customs Act, 1962 - AT
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• Court Rules: Licenses Issued Must Follow Policy Effective at Issuance Date, Not Application Date.

  Case-Laws - HC : Grant of Value based license or quantity based license - Change in policy after filing application for grant of licence - respondent was bound to issue advance licences only in accordance with the policy in force on the date of issuance of licences. - HC
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FEMA

• Adhering to regulations is essential for importing or exporting foreign currency; compliance is mandatory for all transactions.

  Case-Laws - HC : Prohibition on export and import of foreign currency - as person as a matter of right, is not entitled to import or export in the manner as he wishes without complying with the provisions of the Regulations. - HC
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Corporate Law

• Companies can extend their financial year by up to three months without special approval from the Registrar of Companies.

  Case-Laws - HC : Extension of accounting year (financial year) - The decision to extend the financial year can be taken at any time though the period cannot be extended by more than three months without special approval of the Registrar of Companies - HC
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Service Tax

• Fees Collected for IATA Registration Not Considered Remuneration for Commercial Coaching Services.

  Case-Laws - AT : Valuation - commercial coaching and training services - The amount collected by the appellants for payment to IATA towards registration and examination etc. cannot be considered as a remuneration or consideration for the services rendered to the students in the form of Commercial/Coaching Service - AT
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• Tribunal Denies Waiver Request; Upholds Manpower Supply Classification Despite IT Service Claims.

  Case-Laws - AT : Waiver of pre deposit - man power supply services - prima facie we are not convinced by the argument of the applicant that the service rendered by them was in the nature of information technology service and not manpower supply service. - AT
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• Simultaneous CENVAT Credit and Abatement Under Notification No.1/2006 Violates Conditions; Extended Limitation Period Invoked for Recovery.

  Case-Laws - AT : Extended Period of Limitation - Availing cenvat credit while availing benefit of abatement under Notification No.1/2006 - prima facie case is against the assessee - AT
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• Court Rules Mineral Survey Data as Service, Not Goods; Affects Service Tax Applicability for Applicants.

  Case-Laws - AT : Survey and Exploration of Mineral Service – it cannot be said that the data/information received by the applicants were goods and not service. - AT
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• Court Considers Burden of Proving Nexus Between Cenvat Credit Inputs and Outputs; Assessee Challenges Requirement's Reasonableness.

  Case-Laws - AT : Stay application - Cenvat Credit - Nexus between output service and input service - Asking an assessee to prove nexus for each and every credit with output service can only be a attempt to tire out the assessee which should not be asked - AT
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• CENVAT Credit Denied for Capital Goods Acquired Before Service Tax Implementation Under Finance Act, 1994.

  Case-Laws - AT : CENVAT credit - t credit cannot be availed on the capital goods received before the service became taxable under the Finance Act, 1994 - AT
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Central Excise

• High Court Rules: Section 11-A Limitation Period for Principal Recovery Also Applies to Interest, Demand Time-Barred.

  Case-Laws - HC : Limitation Period u/s 11-A - As the period of limitation that applies to recovery of the principal amount shall also apply to the claim for interest thereon, the demand is time barred - HC
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• Section 11AC of Central Excise Act: Penalty Over 25% Not Payable if Pre-Notice Payment Made.

  Case-Laws - AT : Reduced Penalty u/s 11AC of the CE Act - penalty in excess of 25% of the penalty, already paid by the Respondent before the issue of show cause notice, is not payable under Section 11AC of the Central Excise Act, 1944 - AT
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• Court Rules: EOU Not Required to Export Reject Fabrics, Can Clear to DTA Without Additional Duty.

  Case-Laws - AT : 100% EOU - Duty on Clearance of Reject fabrics to DTA – Revenues argument that in the past the appellant had been exporting defective goods and hence appellant should have exported the impugned rejects also is not an acceptable argument - AT
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• Cenvat Credit Allowed for Motors and Parts Despite Tax Invoices Showing Complete Pump Sets Supply.

  Case-Laws - AT : Cenvat Credit – The credit was taken on the basis of Central Excise invoices under which the motors and other parts were separately received whereas the tax invoices were referring to supply of complete pump sets - prima facie credit to be allowed - AT
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Case Laws:

• Income Tax

• 2013 (10) TMI 383
  Disallowance of interest attributable to a loan to a subsidiary company – Interest incurred and claimed in the sum of Rs.24.08 lacs for the relevant year – Held that:- Reliance has been placed upon the judgment in the case of S. A. Builders Ltd. vs. CIT [2006 (12) TMI 82 - SUPREME COURT] - This has been a subsisting issue in the assessee's case, with the Tribunal, for the earlier years, restoring the matter back to the file of the Assessing Officer (A.O.) for an examination of the facts and a decision in accordance with law.

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• 2013 (10) TMI 382
  Disallowance u/s 14A of the Income Tax Act - Set off of the interest paid against interest received – Loan provided to sister concern – Held that:- Assessee pleads of sufficient capital being available with it, so that the investments under reference stand financed there-from – A.O. following the same logic considered that even the advance/s to sister concern/s, on which it has received interest at Rs.202.70 lacs for the year, has also been financed from own capital, and there is no basis to claim that the borrowed funds from the bank/s have been lent to the sister concern/s, so as to set off the interest suffered against the interest received on loans to the said concern/s - Argument, i.e., of set off of the interest received against that paid, it would be noted, also contradicts the assessee's claim of the secured (bank) loans being toward financing the current assets of its business – The case is fit and proper that the matter is restored back to the file of the A.O. for a proper examination of the assessee's case, even as the onus to establish its claim/s would only be on the assessee, and decide the same in accordance with law, issuing definite findings of fact.

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• 2013 (10) TMI 381
  Computation of deduction u/s 80HHC of the Income Tax Act – Over riding effect of section 80AB of the Income Tax Act - exclusion of income exempted u/s 10A from total turnover and export turnover for the purpose of Section 80HHC – Held that:- Section 80AB is in Chapter VI-A. It starts with the words "where any deduction is required to be made or allowed under any Section of this Chapter". This would include Section 80HHC. Section 80AB further provides that "notwithstanding anything contained in that Section". Thus Section 80AB has been given an overriding effect over all other Sections in Chapter VIA. Section 80HHC does not provide that its provisions are to prevail over Section 80AB or over any other provision of the Act. Section 80HHC would thus be governed by Section 80AB - Section 80AB makes it clear that the computation of income has to be in accordance with the provisions of the Act. While computing total income of the assessee, engaged in business in Free Trade Zone and also in export of goods or merchandise out of India, the turn over will be reduced by the turn over of the unit of the assessee, having benefit under Section 10A of the Act, and on which profits and gains derived, are not to be included in total income of the assessee - For deduction under Section 80HHC the turn over of the assessee of the industrial undertaking in Free Trade Zone of which profits and gains are exempt under Section 10A of the Act is not to be taken into consideration – Decided in favor of Revenue.

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• 2013 (10) TMI 380
  Classification of head of Income - Whether the income received by the assessee by way of sub-lease of the Anna Salai property, collection of maintenance charges, A.C., hire charges etc., would be income from "business" or income from “house property” – Held that:- Reliance has been placed upon the judgment in the case of CIT vs. Ideal Garden Complex [2011 (9) TMI 731 - MADRAS HIGH COURT] - Assessee company has stopped its business activities long back and is not carrying out any other business activity and the assessee has parted with the commercial assets and confined solely to receive some income by virtue of ownership thereof by lease or otherwise and the act of leasing was the out come of the assessee's decision to get out of the business - Income receipt from letting out of the property was rightly assessed by the Assessing Officer as "income from house property" – Decided in favor of Assessee. Re-opening of assessment u/s 147 of the Income Tax Act – Reason to believe for the re-opening – Held that:- In the present case, based on the materials, which include the accounts, the Assessing Officer evidently has not scrutinised earlier, rightly the Assessing Officer invoked the jurisdiction under Section 147 of the I.T. Act. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in section 147 of the Act. However, on receipt of representations from the companies against omission of the words "reason to believe", Parliament reintroduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer - Thus, in a case where there is no regular assessment and consequently no inquiry is held, proceedings in this case are initiated rightly so by the Assessing Officer under Section 147(a) of the I.T. Act – Decided in favor of Revenue.

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• 2013 (10) TMI 379
  Allowability of expenditure on estimate basis - Agreement between the assessee company and M/s. Sahara India dated 01.01.1991, M/s. Sahara India shall works as agent to the assessee company for collecting money, leading money, supply of receipts and documents and communicating various schemes and proposals launched by the assessee company from time to time. M/s. Sahara India was also authorized to collect the requisite amount from the members for its savings schemes and the so collected amount through its branches shall be send it to the assessee company. M/s. Sahara India shall submit to the assessee company, the statement of account or such other information as the company may require. For this purpose, the expenses were paid – Held that:- The expenditure are genuine. These expenditure were likely to be incurred by the assessee company, or to be paid to the M/s. Sahara India. The expenses so claimed pertains to the establishment, travelling, stationery and printing, advertisement and publicity and business development and these expenses were related to the business of the assessee. The said expenses were duly supported by the vouchers as observed by the CIT(A) in his order. But since these expenses were incurred by M/s. Sahara India, so the vouchers were in possession of that firm and that the assessee after having satisfied itself about the correctness of these expenses had accepted the debit note of M/s. Sahara India and credited in their account the amount by issuing debit vouchers - No doubt was raised about the genuineness of the said expenditure. When the expenses were incurred wholly and exclusively for the purpose of the business, the same are allowable - AO made the addition on estimate basis. The first appellate authority as well as Tribunal restricted the same on estimate basis. The estimation is a question of law, as per the ratio laid down in the following cases s.a. New Plaza Restaurant vs. ITO, [2008 (7) TMI 260 - HIMACHAL PRADESH HIGH COURT] and Sanjay Oil Cake vs. CIT, [2008 (3) TMI 323 - GUJARAT HIGH COURT]- Decided against the Revenue. Addition of Notional Interest – Held that:- M/s. Sahara India is the collecting agent not only of the assessee but also of various other companies. As per MoU, the assessee charges interest from M/s. Sahara India where delay in transmission of funds exceeds two months. From the record, it appears that the assessee has charged interest on the balance of Rs.13,80,08,484/- and no interest was paid on the balance of Rs.6,49,86,400/-, as the same did not exceed two months. When the parties have agreed not to charge the interest, as per the condition laid down in the MoU i.e. "if the remittance is within the less than two months", then the AO cannot compel to do so – Decided against the Revenue.

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• 2013 (10) TMI 378
  Extension of time period of standing council of department after completion of the stipulated period of engagement – Held that:- A term for a period of three months' can be extended by the Commissioner of Income Tax and as such his term was extended for a period of three months, which has also elapsed. In these circumstances, after expiry of the aforesaid extended period, Standing council is conducting the cases without any proper authorization

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• 2013 (10) TMI 377
  Block assessment - Proceeding u/s 153A against the employee who was authorized to collect the money from the Toll Plaza- Cash seized from the employee - Held that:- It appears that the amount was collected at the Toll Plaza, where the fee for the Car was Rs.45/- and for the Truck/Bus, Rs.160/- per trip - Explanation given by the petitioner prima-facie appears to be reasonable - The amount belongs to the company i.e. the petitioner no. 1 and certainly not to the petitioner no. 2, who is merely an employee of the company. The explanation, if any, will have to be sought from the petitioner-company. So, there is no occasion to start the proceedings U/s 153 A of the Act against the petitioner No. 2, who is simply an agent of the company. Proceedings for the block period is not required in the case of the employee i.e. petitioner no.2 specially when no such proceedings were initiated against the petitioner no. 1 - Mandamus is issued for not proceeding any further against the petitioner no.2 pertaining to the block assessment in pursuance of the notice under Section 153-A – However, department is always at liberty to take proceedings against the company i.e. petitioner no.1 but as per law.

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• 2013 (10) TMI 376
  TDS u/s 194C - Nature of the contact - sales of goods or works contract - Contractor undertakes to supply elevators, furnishing material, fire fighting and fire detection system, air conditioning, etc. during the execution of contract of construction - Circular No. 894 dated 08.03.1994 – Deduction not allowed u/s 40(a)(ia) of the Income Tax Act – Held that:- Copies of the bills were produced before the Assessing Officer, during the assessment proceedings and the same were also placed before the CIT(A). The bills proved that the payments was pertaining to the supply of goods. The case of the assessee is covered by the Circular No. 894 dated 08.03.1994, issued by the CBDT - Further, payment is duly reflected in the ledger account under the head "material purchased" and the same was part of the sums aggregating payment, which was appearing distinctly in the Profit & Loss Account also. When it is so, then the purchase of the goods/equipments as per the Circular (supra), the provisions of Section 194(C) is not attracted and the case of the assessee is covered by the Circular issued by the CBDT – Decided against the Revenue.

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• 2013 (10) TMI 375
  Penalty u/s 271(1)(c) of the Income Tax Act – Held that:- Reliance has been placed upon the judgment in the case of Commissioner of Income Tax –v- Reliance Petroproducts Private Ltd. reported in [2010 (3) TMI 80 - SUPREME COURT], wherein it has been held that where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under Section 271(1)( c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars – Decided against the Revenue.

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• 2013 (10) TMI 374
  Allowability of Depreciation, when income is computed on estimate basis after rejection of books of accounts - Penalty u/s 271(1)(c) of the Income Tax Act was levied – Held that:- Upheld Net Profit @ 3.5% estimated by the Tribunal, being question of fact. But directed the A.O. that no separate deduction like depreciation will be allowed - When the Net Profit is made on estimate basis after rejecting the books of account, then no deduction including depreciation is allowed - When the books of accounts were rejected, then the assessee is not entitled for the depreciation separately on the same set of books of accounts which have no value after its rejection - Penalty orders, which are consequential to the quantum appeals, have become meaningless. Therefore, the penalty orders are not sustainable.

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• 2013 (10) TMI 373
  Block assessment - Whether material found during the search and pre/post search operations were sufficient to establish the undisclosed income as computed by the Assessing Officer - On 29.09.1987, a survey was conducted under Section 133A of the Income Tax Act in various Banks pertaining to the Accounts and Lockers of the couple - On 26.03.1998, a search and seizure operation was conducted under Section 132 of the Act, at the official residence of the assessee at Butler Palace, Lucknow. The Bank Accounts/Lockers of the couple were also searched. On 31.03.2000, block assessment orders were passed under Section 158BC, against the couple – Held that:- During the search, except a slip containing details of some fixed deposits with the companies worth Rs.74,000/- (rounded up) no other material including cash and jewellery was seized from the premises. These fixed deposits have already been considered in the block assessment of Dr. Lalit Verma himself, other material found was of much less value and not treated as incriminating material. The first appellate authority as well as the Tribunal after examining the entire evidence has observed that the additions had already been deleted relating to her husband Dr. Lalit Verma in whose hands additions were made on substantive basis. Regarding fixed deposits of N.B.F.C., the factual position is that remaining investments stood already disclosed (prior to the search) in the partnership firm, namely, M/s. Three Aces Construction & Consultants where the assessee is one of the partners. The said firm was being assessed to tax since long and the disclosures of all these transactions had duly been made there in the pre-search period. Further, these additions again did not have their origin to any material found during the course of search. Regarding the firm, it is an individual assessee, regularly assessed to tax even in the period prior to the search - The said fixed deposits pertaining to NBFC were already disclosed in the hands of the partnership firm, prior to the search - So, no addition can be made in the block period. For the remaining additions, which were made on the protective basis were already deleted in the hands of the assessee's husband Dr. Lalit Verma, being the substantive additions, are not sustainable in the eye of law for the reason that when the substantive additions were deleted then protective additions have no meaning - No incriminating material was found during the course of search in the hands of the assessee, therefore, no addition can be made – Decided against the Revenue.

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• 2013 (10) TMI 372
  Additions on account of investment in purchase of 27.05 MTs of engine scrap and 12.31 MTs of spare scrap when this quantity formed part of the scrap shown by the assessee in the accounts – Held that:- According to these calculations, the excess scrap consumed in production works out to 29.04 MT, the assessee has not filed any evidence to substantiate his claim that the engines replaced in earlier years have in fact been received by the appellant in the year under consideration. Also no material has been brought on record to show that there has been any change in the method of accounting or that the scrap generated by way of replacement has not been utilized for production in the earlier years – Decided against the Assessee.

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• 2013 (10) TMI 371
  Allowability of recovery till the disposal of Miscellaneous application lying before the bench of Settlement Commission – Held that:- Assessing Officer should not recover the interest amount till the miscellaneous application is at least heard by the bench. It is pointed out that the Assessing Officer has already issued notice under Section 154 for recovery of interest. The Assessing Officer will not take coercive steps to recover interest amount for a period of one month or till the miscellaneous application is listed before the bench, whichever is earlier – Decided in favor of Assessee.

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• 2013 (10) TMI 370
  Disallowance of expenditure u/s 14A of the Income Tax Act – Held that:- Disallowance has been made under Section 14A and the question was whether a higher disallowance of more than Rs.94 lakhs would have been made and the Commissioner has not given or formed any opinion on whether or not the said disallowance was satisfactory or not. Commissioner was not sure and certain, though the Assessing Officer had applied his mind and accepted the offer made by the assessee – Decided against the Revenue.

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• 2013 (10) TMI 369
  Nature, Source and genuineness of income - As per AO assessee failed to prove the source and genuineness of income hence taxed the same as undisclosed income u/s 68 - Labour income – business of giving machinery for labour work - Held that:- it is not as if the amount is found to have been only credited in the books of the assessee maintained for the relevant previous year but the assessee has shown the same to be income from business for the assessment year in question - Question of invoking the provisions of section 68 would not arise at all. Section 68 of the Act does not permit changing of head of income already disclosed. Assessee was exploiting his land and machinery by putting the same to use for making chips from boulders. That the labour income had been derived by exploitation of the commercial asset of the assessee and as such is a business income – Decided against the Revenue.

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• 2013 (10) TMI 368
  Determination of ALP of a transaction – Held that:- In the present case it appears that the Assessing Officer has not given any basis while estimating the ALV at Rs. 24,000/- and the learned CIT(A) after considering the order dated 03/03/2009 of his predecessor in the preceding year, considered it fair and reasonable to restrict the ALV at Rs. 16,000/- - No infirmity in the order of Comm(A). Exemption u/s 10(38) of the Income Tax Act - Long term capital gain amounting to Rs. 19,00,196/- exempted under section 10(38) of the Act - Assessee claimed long term capital gain exempted under section 10(38) of the Act - In the preceding year, wherein the learned CIT(A) has allowed the exemption under section 10(38) of the Act vide order dated 03/03/2009 and the department has not preferred any appeal against the said order. Therefore, to maintain consistency, the department ought not to have filed the appeal for the year under consideration. On the identical issue, the claim of the assessee was allowed in the preceding year by the learned CIT(A) and no appeal was preferred by the department against the said order. Therefore, keeping in view the principles of consistency the department ought not to have filed the appeal for the year under consideration in view of the ratio laid down by the Hon'ble Bombay High Court in the case of CIT Vs. Gopal Purohit reported in [2010 (1) TMI 7 - BOMBAY HIGH COURT], wherein it has been held that "there should be uniformity in treatment and consistency when facts and circumstances for different years were identical particularly in the case of the same assessee". Against the aforesaid order, SLP filed by the department has been dismissed by the Hon'ble Supreme Court – Decided against the Revenue.

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• 2013 (10) TMI 367
  Deduction of eligible profit u/s 80HHC of the Income Tax Act - Submitted by the assessee in the letter that in the assessment order entire export profit was required to be reduced from the book profit and the deduction could not have been restricted to the extent of 30% as provided in sub-section (1B) of section 80HHC of the Act – Held that:- Claim of the assessee was genuine and acceptable on merits - A.O. Himself has stated in the assessment order that although the claim of the assessee is genuine - There is no dispute that the claim of the assessee is genuine and is in accordance with the judgment of Hon'ble Apex Court rendered in the case of Ajanta Pharma Ltd [2010 (9) TMI 8 - SUPREME COURT] – Decided against the Revenue.

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• 2013 (10) TMI 366
  Reference to Valuation officer (DVO) - Powers of assessing officer u/s 142A of the Income Tax - Revenue submitted that section 142A was insterted by the Parliament by Finance (No. 2) of the Act 2004 with effect from 15.11.1972 - Held that:- Proviso to section 142A makes it abundantly clear that the provisions of Section 142A would not be applicable to the assessment made on or before 30.9.2004 and which has become final and conclusive on or before that date - In the present case the assessment order was passed on 5.2.2001. The Commissioner of Income Tax, Appeals passed the order on 22.11.2001 and the Tribunal decided the matter on 30.6.2004 – Therefore, in the present case assessing officer has no power to refer to the Valuation Officer – Reliance has been placed upon the judgment in the case of Commissioner of Income Tax V. Gulam Mohammad [2009 (8) TMI 635 - ALLAHABAD HIGH COURT] – Decided against the Revenue.

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• 2013 (10) TMI 365
  Limitation - Execution of conveyance is concerned, the same is barred by limitation - Case of the Plaintiff that after the receipt of the amounts in lieu of the flat and in view of the fact that the Defendants had already received the amount of consideration as per the Consent Terms, the Defendants would come forward for execution of the Conveyance Deed - Consent decree passed in the said case was dated 20-8-1983 – Execution application undisputedly filed after the period of 12 years prescribed by Article 136 – A submission was sought to be advanced on behalf of the Decree Holders/Plaintiffs in the said case that the said decree was a conditional decree and the same would became enforceable only upon happening of the event of obtaining permission by Bombay Port Trust for the assignment of the lease of the said immovable property in favour of the Plaintiffs - Held that:- Certificate under Section 230-A of the Income Tax Act was to be obtained - Fact that the permission under Section 230-A was to be obtained would not make the decree in question a conditional decree so as to extend the period of limitation or suspend the period of limitation from running till such time as the certificate was obtained – Reliance has been placed upon Section 18(1) of the Limitation Act. Contended that since payment has been accepted by the Judgment Debtors between the years 2004 to 2007 in lieu of the flat admeasuring 600 sq.ft. which was to be handed over to the Judgment Debtors, the limitation period would get extended as a fresh period of limitation would have to be computed from the date of payment and therefore the application filed in the year 2010 was within time - Receipts which are sought to be relied upon in the present Petition do not disclose that the payment was made in lieu of the flat which was to be handed over to the Judgment Debtors – Moreover, reliance upon clause (c) of Section 18 of the Limitation Act which carves out an exception in so far as the application for execution of a decree is concerned, the said clause (c) provides that an application for execution shall not be deemed to be an application in respect of any property or right. Hence Section 18 (1) would have no application to the execution of a decree in the present case and therefore the receipts which are sought to be relied upon for payments being made in lieu of the constructed portion to be handed over to the Judgment Debtors, would not in any manner aid the Decree Holder in getting the time extended – Petition dismissed – No extension of time.

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• 2013 (10) TMI 364
  Disallowance of loss on sale of iron ore – sham transaction or not - Held that:- Assessee has sold 28.213.75 MTs to Trademin International Private Limited. Cuddapah on 17.01.2007 @ Rs.975 per MT which was exported by then to China in the same month. It is to be noted here that due to time gap between dates of purchase and sale and rains, the FE content of iron ore dropped to 56% and Silicon content increased to 13% which drastically reduced the market value of the ore. To compound the problem. prices of iron ore declined during that period - Parties to whom the material is sold are outsiders and are not connected either to the promoters or Directors in any way. They are well reputed organizations of international standing with experience in iron ore trading - Assessing Officer's objection that there is no physical movement of stocks and it is only an accommodative transaction is incorrect as the iron ore was already mined and transported to the port for the purpose of export - Transaction is not a sham transaction. Therefore, the Assessing Officer has wrongly disallowed a sum of Rs.3,10,49,752/- being loss incurred by the assessee on sale of iron ore while computing the income of the assessee – Decided in favor of Assessee. Disallowance u/d 14A of the Income Tax Act - Dividend income – Held that:- As per Mumbai High Court in Godrej Boyce Mfg. Co. Ltd. [2010 (8) TMI 77 - BOMBAY HIGH COURT], it has been held that Rule 8D applies prospectively from A.Y. 2008-09 only and hence its application in A.Y. 2007-08 is incorrect – Further, Mumbai High court held that quantum of disallowance u/s. 14A for years prior to A.Y. 2008-09 has to be worked-out by adopting some reasonable method - Subsequently the Mumbai Tribunal, amongst others, in Godrej Agrovet Ltd. [2010 (9) TMI 291 - ITAT, MUMBAI] and Reliance Industrial Infrastructure Ltd. vs. ACIT [2013 (5) TMI 473 - ITAT MUMBAI] has held that 2% of exempt income being a reasonable disallowance – In the instant case, assessee had not furnished the details of expenditure incidental to the earning of dividend income, estimation was made on the expenditure attributable to dividend income at 2% of the gross total income - It would be reasonable and appropriate if the disallowance is restricted @ 2% of the exempt income as returned by the assessee – A.O. is directed to restrict the disallowance in question @ 2% of the exempt income in hand.

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• Customs

• 2013 (10) TMI 362
  Import of old colour picture tubes - misdeclaration - Imposition of penalty - Valuation of goods - Stock lot goods - difference of opinion - matter referred to larger bench on the following issue: Whether there was delibate misdeclaration of classification and description as well as value inviting penal provisions were section 114 of Customs Act, 1962 as held by Hon'ble Member (Technical) or penalty is to be set aside as held by Member (Judicial) - referred to larger bench.

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• 2013 (10) TMI 361
  Evidential value of voluntary statement recorded under Section 67 of the NDPS Act had been retracted - whether officers under NDPS Act are police officers and and thus, the evidential value of the statement recorded before him is hit by the provisions of Section 25 of the Indian Evidence Act. - Quantification of punishment - Attempt of export of heroin - Trial Court acquitted accused - High Court convicted accused - Held that:- It is clear that section 25 of the Evidence Act was enacted to subserve a high purpose and that his to prevent the police from obtaining confessions by force, torture or inducement. The salutary principle underlying the section would apply equally to other officers, by whatever designation they may be known, who have the power and duty to detect and investigate into crimes and is for that purpose in a position to extract confessions from the accused. This Court has already doubted the dicta in Kanhaiyalal (2008 (1) TMI 828 - SUPREME COURT) in the case of Nirmal Singh Pehalwan (2011 (7) TMI 1026 - SUPREME COURT). The matter needs to be referred to a larger Bench for re-consideration of the issue as to whether the officer investigating the matter under NDPS Act would qualify as police officer or not. Comparison between section 67 of NDPS act and Section 14 of Central Excise Act and Section 108 of Customs Act - Held that:- Provisions of Section 67 of the Act cannot be interpreted in the manner in which the provisions of Section 108 of the Customs Act or Section 14 of the Excise Act had been interpreted by number of judgments and there is a qualitative difference between the two sets of provisions. In so far as Section 108 of the Customs Act is concerned, it gives power to the custom officer to summon persons “to give evidence” and produce documents. Identical power is conferred upon the Central Excise Officer under Section 14 of the Act. However, the wording to Section 67 of the NDPS Act is altogether different. As against the sentence of 10 years awarded to the appellant he has already undergone more than 9 years of sentence. In these circumstances, we deem it a fit case to suspend further sentence till the disposal of this appeal by the larger Bench. The appellant shall be released on bail on furnishing security in the sum of 50,000 with two sureties of the same amount, to the satisfaction of the trial court - Decided in favour of appellant.

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• 2013 (10) TMI 360
  Illicit diversion of the imported CPO / non edible vegetable oil - import was made at concessional rate of duty for manufacturing of soap - Non use of caustic soda - stay - Held that:- the Appellant have not be able to establish a prima facie in their favour and, therefore, conditions have to be imposed for safeguarding the interests of the Revenue. In fact, the appellant appear to have committed a huge fraud, the ramifications of which go beyond mere tax evasion as it is common knowledge that non-edible vegetable oil imported for manufacture of soap are illicitly diverted on large scale for adulteration of edible oils. Such fraudsters do not deserve the dispensation under the provisions of first provision to Section 129E of the Customs Act, 1962. - Appellant directed to make pre-deposit of duty with portion of interest and penalty - stay granted in respect of portion of interest and penalty.

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• 2013 (10) TMI 359
  Grant of Value based license or quantity based license - Change in policy after filing application for grant of licence - appellants contention that as all the requirements had been satisfied by them long time back, they should be issued only value based licences and not quantity based licences. - Held that:- power to exempt includes the power to modify or withdraw that benefit; and the liability to pay duty under the Customs Act, 1962 arises when the taxable event occurs being subject to payment of duty as prevalent on the date of the entry of the goods. In Kasinka Trading [1994 (10) TMI 64 - SUPREME COURT OF INDIA], it was held that the doctrine of promissory estoppel could not be invoked to question the withdrawal of notification issued under Section 25 of the Customs Act, 1962 when it was done in public interest. Equities have to be balanced and public interest must outweigh individual interest. There is also no contradiction between paras 48 and 66 of the Export and Import Policy during the period the appellants had applied for grant of advance licences. From a reading of paras 48 and 66 of the Export and Import Policy, as in vogue during the period appellants had applied for advance licences, this Court is of the view that respondent was bound to issue advance licences only in accordance with the policy in force on the date of issuance of licences. Reason for long period of 16 years taken for final judicial pronouncement - all parties to litigation as well as all counsel are under a duty to place on record true, complete and correct facts. If material facts like relevant paras of the export and import policy are suppressed, distorted, withheld or not placed either intentionally or unintentionally, the writ courts would find it difficult to dispense justice expeditiously - if correct para 66 of the Export and Import Policy during the period 1992 to 1997 had been brought to the notice of this Court at the earliest, rather than at the stage of final hearing before the Division Bench, the present proceedings would not have lasted for nearly sixteen years - Decided against assessee.

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• Corporate Laws

• 2013 (10) TMI 358
  Sanction of the Scheme of Amalgamation - Held that:- No objection has been received to the proposed Scheme from any other party. Mr. Sanjay Bhargava, authorized signatory of the Petitioner companies, has filed an affidavit dated July 19, 2013 confirming that the Petitioner companies have not received any objection pursuant to citations published in the said newspapers - In view of the approval accorded by the shareholders and creditors of the Petitioner companies, representation/reports filed by the RD and the OL, and no objections received to the proposed Scheme, there appears to be no impediment to grant of sanction to the Scheme. Consequently, sanction is hereby granted to the Scheme under Sections 391 and 394 of the Act. The Petitioner companies will comply with the statutory requirements in accordance with law - The certified copy of the order will be filed with the ROC within 30 days from the date of receipt of the same. In terms of Sections 391 and 394 of the Act and in terms of the Scheme, the whole of the undertaking, the property, rights and powers of the Transferor company shall be transferred to and vest in the Transferee company without any further act or deed. Similarly, in terms of the Scheme, all the liabilities and duties of the Transferor company shall be transferred to the Transferee company without any further act or deed. Upon the Scheme coming into effect the Transferor company shall stand dissolved without winding up. It is, however, clarified that this order will not be construed as an order granting exemption from payment of stamp duty or taxes or any other charges, if payable in accordance with any law; or permission/compliance with any other requirement which may be specifically required under any law - Petition allowed.

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• 2013 (10) TMI 357
  Extension of accounting year (financial year) - power of the company - By way of resolution dated 11.08.2011 that the company decided to extend the accounting year 2010-11 by three months so as to end the said year on 30.06.2011. - The contention of the petitioner is that the decision to extend the accounting year for a period upto three months can be taken by the company before the end of the financial year or at best before the period by which the financial year is to be extended, expires and not thereafter. - Held that:- Section 210 does not require the company to take decision to extend the financial year, either by the end of the financial year or within the time period by which the financial year is to be extended. The decision to extend the financial year, therefore, can be taken at any time though the period cannot be extended by more than three months without special approval of the Registrar of Companies. It would be unrealistic to take a view that in every case, the company must take decision to extend the financial year, before the financial year or the period by which the financial year is sought to be extended, expires. Neither there is such requirement laid down in Section 210 of the Act nor there is any necessity to read such a requirement in the provisions of the Act. - Decided against the petitioner and in favor of company.

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• FEMA

• 2013 (10) TMI 363
  Prohibition on export and import of foreign currency - Confiscation of foreign currency - Foreign brought to India without declaration - First adjudication authority ordered complete confiscation - Tribunal ordered release of confiscation stating no confiscation necessary at the time of leaving India and that the currency in possession of the first respondent was also within the limit permitted by Reserve Bank of India - Held that:- the first respondent, as a matter of right, is not entitled to import or export in the manner as he wishes without complying with the provisions of the Regulations. Whether foreign currency is goods for the purpose of confiscation - Held that:- Reading of the definition of "goods" as stated in Section 2(22) along with the definition of "currency" stated in Section 2(h) of FEMA, make it clear that export of currency contrary to prohibition imposed under any other law is liable for confiscation. Therefore, the contention of the learned counsel for the first respondent that there is no power to confiscate the currency under Section 113(d) of the Customs Act, is liable to be rejected. The order of the Tribunal holding that there is no provision to declare the foreign currency in hand, cannot be sustainable. The currency possessed by the first respondent, was contrary to the Regulation, particularly Regulation No.5 which clearly states that as per Regulation, no person shall, without the general or special permission of the Reserve Bank, export or send out of India or bring into India, any foreign currency. The goods attempted to be exported being foreign exchange, as defined under the FEMA. - Decided in favour of Revenue.

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• Service Tax

• 2013 (10) TMI 393
  Valuation - commercial coaching and training services - inclusion of amount collected for ayment to IATA towards registration and examination etc - The assessee was an Accredited Training Centre (ATC) imparting vocational training to students in Aviation Studies which enable the students to take specialized/responsible jobs that were technical in nature – Revenue was of the view that the appellants should have included the amount of registration fee for the purpose of determining the value for the purpose of payment of service tax - Held that:- The amount collected by the appellants for payment to IATA towards registration and examination etc. cannot be considered as a remuneration or consideration for the services rendered to the students in the form of Commercial/Coaching Service - Stay granted.

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• 2013 (10) TMI 392
  Cargo Handling Services - Waiver of Pre-deposit - Held that:- Adjudicating Authority had confirmed the amounts on the ground that appellant had not discharged the service tax liability on Cargo Handling Services rendered to DTA Unit and also to SEZ unit – Relying upon Norasia Container Lines vs. CCE [2011 (3) TMI 639 - CESTAT, NEW DELHI] - The entire issue needs to be gone into detail as to whether the appellant was covered under the category of Cargo Handling Services or not and needed to be appreciated from the facts as well as the services rendered by the appellant - At this juncture, we find that the issue was debatable one - As the appellant had deposited approximately 40-45% of the total demand raised on the appellant, we consider the same as enough deposit to hear and dispose the appeal - Accordingly, application for the waiver of pre-deposit of balance amounts involved was allowed and recovery thereof stayed till the disposal of appeal – Stay granted.

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• 2013 (10) TMI 391
  Waiver of pre deposit - man power supply services - Section 65 (105)(k) - assessee contended that they were not supplying man power for doing work under the supervision of clients. But, they had specific responsibilities in relation to development of software and the activities could be classified only as Information Technology Services made taxable under section 65 (105)(zzzze) - Held that:- wherever similar contracts by one party with other software companies, where the details of software developed were not specified in the contract, we had taken a prima facie view that the contracts were for man power supply. The contract do not show any specific software developed or any such activity but only has placed general contracts which does not seem to reveal the actual state of affairs. This issue will be looked into in more detail at the time of final hearing of appeal. At this stage, prima facie we are not convinced by the argument of the applicant that the service rendered by them was in the nature of information technology service and not manpower supply service. - stay granted partly.

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• 2013 (10) TMI 390
  Time-barred Demand – Extended Period of Limitation - Availing cenvat credit while availing benefit of abatement under Notification No.1/2006 – Waiver of Pre-deposit – Held that:- As applicant in the statutory returns were giving a declaration that no credit in respect of the service tax paid on the input services used in or in relation to the providing of and Outdoor Catering Services was availed and fact that applicants were actually availing credit came to the knowledge of the Revenue only during the audit i.e. in the year 2008 and show-cause notice was issued within 5 years from the date of knowledge - prima facie no merit in the contention of applicant as time bar - Partial stay granted.

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• 2013 (10) TMI 389
  Survey and Exploration of Mineral Service – whether supply of information in the form of data is in the nature of goods or services - reverse charge - The contention of the applicant is that the data which applicant received is off-the-shelf product and hence, it is not a service but are goods. - Held that:- Section 65(105) provides the service providing to any person, by any person, in relation of survey and exploration of mineral - The reading of above provisions shows that any activity of geological survey in respect of location or exploration of deposits of mineral, oil or gas was taxable service - In the present case, the service was conducted in India i.e. at various regions of east and west coast of India and the information collected by the foreign service provider was received by the applicants - Therefore, prima facie, it cannot be said that the data/information received by the applicants were goods and not service. - Partial stay granted.

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• 2013 (10) TMI 388
  Stay application - Cenvat Credit - Nexus between output service and input service - Rent-a-cab service and Air Travel agents Service - Held that:- In the case of Rent-a-cab service and Air Travel agents Service, the applicants have produced sample invoices. It is not proper to deny such credit without any material showing that they were making any false declaration regarding the usage of such service in relation to providing output service. It is not possible to prove nexus between services which are intangible with output services which are intangible through documents unless extensive documentation is done and such documents are scrutinized. Such procedure is not envisaged under the Cenvat scheme. Checks, if required, are to be done through auditing of the books of accounts and checks of sample vouchers at the time of audit. Asking an assessee to prove nexus for each and every credit with output service can only be a attempt to tire out the assessee which should not be asked for unless there is some material to doubt the veracity of the accounts and vouchers - there are credits taken on services which got excluded from definition of ‘input services’ from 01-04-11 for the reason that services were received prior to 01-04-11 though bills were received after 01-04-11. This issue is not raised in SCN and adjudicated - Stay granted.

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• 2013 (10) TMI 387
  CENVAT credit - Waiver of pre deposit - Held that:- Denial of credit of Rs.36,66,326/- on capital goods received prior to 1.6.2007 much before the introduction of levy on renting of immovable property. It is also noted that denial of credit of Rs.36,54,833/- in respect of service tax paid for the construction of immovable property, they have received service prior to 1.6.2007 has been clearly mentioned in the impugned order. It is further noted that the applicant had not produced the documents before the adjudicating authority. The submission of the learned counsel that the applicant placed all the documents would be examined at the time of appeal hearing at length. It has been held by the Tribunal in various cases, as cited by the learned AR, that credit cannot be availed on the capital goods received before the service became taxable under the Finance Act, 1994. Prima facie, we find that the applicant have not declared the details of the nature of CENVAT credit in their ST-3 returns - applicant has failed to make out a prima facie case for waiver of entire amount of tax along with interest and penalty - stay granted partly.

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• 2013 (10) TMI 386
  Admissibility of CENVAT Credit on Rent-a-Cab Services – Waiver of Pre-deposit - Held that:- Stanzen Tototetsu India Pvt. Limited [2008 (12) TMI 118 - CESTAT BANGLORE] and CCE vs. Cable Corporation of India Limited [2008 (6) TMI 4 - CESTAT, MUMBAI] - the input services besides being used in or in relation to the manufacture of final products and clearances of final products from the place of removal includes a plethora of other services which are eligible as Input Services - The scope of definition is wide enough and credit allowed - as a result of amendment in the definition of input services with effect from 01.4.2011, service tax credit admissibility has been made very clear - However, as per clarification issued by CBEC, cenvat credit of Rent-a-Cab services, before 01.04.2011 cannot be denied - the appellant has made out a prima facie case for complete waiver – Stay granted.

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• 2013 (10) TMI 385
  Manpower Recruitment or Supply Agency Service u/s 65(68) of Finance Act – Waiver of Pre-deposit - The applicants provided ‘Manpower Recruitment or Supply Agency Service' as provided u/s 65(68) of the Finance Act – Held that:- The information from the Assistant Commissioner of Labour, Aurangabad is obtained after the date of personal hearing and copies of the same are not supplied to the applicant and the same has been relied upon in the adjudication order - The copies of the relevant papers which were received from the Assistant Commissioner, Labour, Aurangabad, were now supplied at the direction of the Tribunal during the pendency of the stay application - the adjudication order is passed in violation to the principles of natural justice - the pre-deposit of the dues are waived for hearing the appeal and recovery of the same is stayed – Stay Granted. The adjudicating authority passed the order in violation to the principles of natural justice and the applicants received the relevant papers during the hearing of the appeals before the Tribunal - the orders are set aside and matter is remanded back to the adjudicating authority to decide afresh and after affording an opportunity of hearing to the appellants. The appeals are disposed of by way of remand.

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• Central Excise

• 2013 (10) TMI 356
  CENVAT Credit - export of raw bauxite/low grade bauxite, which attract nil rate of duty. - credit availed on Input services – Waiver of Pre-deposit - Held that:- The raw bauxite is first brought to their factory premises and from their same was exported by filing proper documents with the department - On a specific query, as to what is the evidence with the Revenue to indicate that raw bauxite is directly exported from the mine and not from the factory premises, learned A.R. could not bring out any documentary evidence - It is observed that once the proper export documents are filed by the appellant with the department and the relevant exports have also been reflected in their periodical returns filed with the department, prima facie, it cannot be considered a case of wilful misstatement or suppression of facts with intent to evade Central Excise duty - the appellant has made out a prima facie case on limitation in their favour – Stay granted.

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• 2013 (10) TMI 355
  Limitation Period u/s 11-A - Notice for Interest on Delayed Payment – Held that:- Following Hindustan Insecticides Ltd. v. Commissioner Central Excise, LTU [2013 (8) TMI 225 - DELHI HIGH COURT] – As the period of limitation that applies to recovery of the principal amount shall also apply to the claim for interest thereon, the demand is time barred - Issuance of show cause notice for interest on the delayed payment should also be within a period of one year as stipulated under Section 11-A of the Act - Therefore, department has absolutely no jurisdiction to issue show cause notice after expiry of the period of limitation for interest on the delayed payment for the period - period of limitation, unless otherwise stipulated by the statute, which applies to a claim for the principal amount should also apply to the claim for interest thereon – Decided in favour of Assessee.

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• 2013 (10) TMI 354
  Application for Modification of Order - Whether the Tribunal is justified to deal with the application for modification of the order without listing the same before the Bench who passed the order – Held that:- The same bench would have disposed of the application for modification appears to be misconceived as a perusal of Rule 31-A makes it abundantly clear that application for rectification of a mistake is to be heard by the same bench which had heard the appeal or otherwise as directed by the President - the order of which modification has been sought, has disposed of the application and not the appeal - Thus, the order has been passed by the Bench presided over by the President is fully within its competence and it is incorrect to say that it travelled beyond its jurisdiction. Whether the Tribunal was justified in dismissing the Misc. Application holding that the Modification Application is in the nature of an application seeking review of the order on merits - the modification of the order has been sought on account of the non-consideration of the facts of the case and the grounds taken in support of the stay cum waiver application – Held that:- The appellant has not deposited the amount as directed by the Tribunal vide order - the date on which none was present on behalf of the appellant - The appellant has stated that non-presence before the Tribunal was for the reason that the train reached late to New Delhi - It is also true that the appeal has been rejected in terms of the order whereby the application for modification was rejected. Section 35-F is not a condition precedent for filing an appeal, but it is certainly a condition precedent for hearing the appeal on merits - Statutory right of appeal subject to condition of deposit shall be treated as a valuable right of the assessee and the Tribunal should not be very harsh on the appellant while exercising the discretionary powers under Section 35-F. There was some misunderstanding as the appellant had never filed any appeal against the requirement of pre-deposit before the High Court, but as stated that he intends to file an appeal before the High Court against the stay order - there was no occasion for the appellant to produce copy of any order passed by the High Court as mentioned in the order -The fact remains that the appeal of the appellant has been dismissed for not complying the earlier orders of the Tribunal without touching the merit - Interest of justice would suffice, if the appeal preferred by the appellant before the Tribunal is restored and decided on merits provided appellant deposited amount – Decided in favour of Assessee.

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• 2013 (10) TMI 353
  Opportunity of being heard – personal hearing before Settlement Commission - Held that:- Section 32F(1) of the Act provides for seeking an explanation in writing from the applicants as to why the applications should be proceeded with, while Section 32F(5) of the Act mandates giving of personal hearing while disposing of the application at the final hearing - Section 32F(1) does not prohibit the Settlement Commission from granting a personal hearing in respect of explanation offered by the applicant if the context so requires - This would be so even if one does not read the necessity of giving a personal hearing into Section 32F(1) of the Act, as applicable in all cases - At the personal hearing they could have explained the manner in which the earlier order dated 12 October 2007 of the Settlement Commission is applicable to their case - In this case the granting of personal hearing was in the context of the facts not an empty formality but required so as to do complete justice in the matter – Order set aside and the matter remanded back to the Settlement Commission to decide the matter afresh after giving an opportunity of personal hearing to the petitioners – Decided in favour of Petitioner.

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• 2013 (10) TMI 352
  Reduced Penalty u/s 11AC of the CE Act - Whether the benefit of payment of 25% penalty u/s 11AC of the Central Excise Act was not admissible to the Respondent as it was not paid by the Respondent within 30 days of the order but was paid earlier and that can only be considered as a deposit made – Held that:- It has to be seen as to what could be the motive of the Respondent for denying the receipt of OIO on 06.4.2006 - The entire duty amount was paid by the Respondent on 06.8.2003 and a further amount was paid on 21.08.2003 and 29.08.2003, which represented 25% of the amount of duty involved – Relying upon Commissioner of Central Excise & Cus., Surat vs. Suncity Synthetics [2010 (2) TMI 829 - GUJARAT HIGH COURT] - All these payments were made much before the show cause notice was issued on 30.09.2004 - As the amounts involved in the proceedings were already paid by the Respondent then it was not to gain in any way by posing if it has not to have received OIO in time – the view taken by Commissioner (Appeals) is correct and upheld. It will be a very narrow view to hold that payment of 25% reduced penalty, if made within 30 days of the communication of OIO, will only be proper but if the same payment is made before the issue of show cause notice or Order in Original the same will not be proper and that in the latter situation, Respondent will be required to pay 100% of the penalty imposed under Section 11AC of the Central Excise Act, 1944 - penalty in excess of 25% of the penalty, already paid by the Respondent before the issue of show cause notice, is not payable under Section 11AC of the Central Excise Act, 1944 - Decided against Revenue.

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• 2013 (10) TMI 351
  100% EOU - Duty on Clearance of Reject fabrics to DTA – Duty of needles found short which was imported free of duty / procured duty free - Revenue was of the view that the appellant cleared goods of good quality in the guise of rejects – Held that- Appellant has explained how the defects can arise in major part of a roll due to thickness or thinness of yarn rather than for bits - It is quite possible that the appellant had not accounted defective goods as rejects separately till they got permissions to sell such goods in DTA at concessional rate of duty because such separate accounting would not have served any purpose - Revenues argument that some of the buyers who bought the rejects did not get the full quantity billed in their name can only create a doubt but cannot prove that the goods were not actually rejects - This is especially so because the goods were sold through brokers who were not examined to find out their version. Revenues argument that in the past the appellant had been exporting defective goods and hence appellant should have exported the impugned rejects also is not an acceptable argument because possibility of such export depends on the market conditions and it is for the manufacturer to decide the quality of the goods to be exported without affecting his reputation - Revenues interest is safeguarded through the maximum permissible limits for rejects and net foreign exchange to be earned - These safeguards were not contravened - So the arguments advanced by Revenue to say that the goods were of good quality and its value was suppressed are not acceptable in the absence of positive evidence. Regarding Exemption Notification No.13/98 – Held that:- The condition that fabrics should have been stamped as Rejects is plain and simple to understand - If the appellants did not stamp it so it can be only due to the fact that it will affect the price it can fetch in domestic market at different levels - So it cannot be taken as an innocent mistake - The whole matter came to light only due to detailed investigation. Extended period of limitation - Held that:- The plea of the appellant that Revenue was aware of the issue is not acceptable because there is nothing on record to show that the appellant had informed Revenue that the fabrics are not being stamped as Rejects while claiming exemption under notification of the type 13/98-CE - The show cause notice issued was for the reason that they were seen to be using imported needles obtained from another manufacturer and claiming said exemption meant for goods manufactured solely from indigenous goods - When a new fact which has been suppressed from Revenue came to light Revenue was justified in issuing Show Cause Notice invoking extended period of time. A demand based on value at which the goods were cleared to DTA as evidenced from the records of the appellant but without extending the benefit of exemption in notifications of the type will survive. Regarding duty on needles found short - Held that:- The inputs cleared as such by the appellants to 100% EOUs cannot be deemed to have been manufactured by the appellants - the supplies (which are deemed exports) cannot be treated on par with export under bond for the purpose of Rule 57F - The appellants are not entitled to remove the inputs without reversal of the credit or payment of equivalent amount of duty. - There is no warrant or justification to extend the instructions dated 31.12.1996 issued by the Ministry/Board to cover supplies to 100% EOU which are treated as deemed exports for certain purposes under EXIM Policy - Decided partly in favour of Assessee.

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• 2013 (10) TMI 350
  Admissibility of Cenvat Credit – Waiver of Pre-deposit - Held that:- The credit was taken on the basis of Central Excise invoices under which the motors and other parts were separately received whereas the tax invoices were referring to supply of complete pump sets - the cenvatable inputs and the documents were received in the appellants premises and the same has not been disputed - the same were installed in the factory premises and are available for verification even now also - All the parts required for assembling the pump set were received and it has not been disputed by the department that such duty paid inputs were not received in the factory premises - the appellant has made out a prima facie case for complete waiver of confirmed dues - there shall be stay on recoveries of the confirmed dues till the disposal of appeal – Stay granted.

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• 2013 (10) TMI 349
  SSI Exemption under Notification No. 8/1998 – MODVAT Facility under Rule 57H of the erstwhile Central Excise Rules for export clearances under Rule 12(1)(a) of the Rules – Held that:- Other condition for availing the credit under Rule 57 H is that input credit should be verifiable with duty paying documents and invoices - Commissioner (Appeal) in the order has observed that the appellants have entered in raw material register showing the inputs as steel from April 98 to 28.10 98 whereas invoices available in the file show the description of inputs as Alloy Bars-85x7mm, Alloy Bars-110x9mm, Alloy Bars-65x6mm - Commissioner (Appeal) has observed that closing balance as on 28.10.1998 is 228.543 M.T. and it nowhere indicates that material is same for which invoices are produced for claiming the credit under Rule 57H as no break up for various type of alloy with their sizes has been indicated - The Commissioner held that basic requirement of Rule 57H has not been fulfilled - I do not find any infirmity in this finding of the Commissioner as he has made this observation after seeing the invoices and records – Decided against Assessee.

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• 2013 (10) TMI 348
  Duty liability - Sale of used capital goods - Applicability of Rule 3(5) of the CENVAT Credit Rules, 2004 - Revenue contended duty liability together with interest and penalty on cenvat credit taken on capital goods - Held that:- Following HARSH INTERNATIONAL (KHAINI) PVT LTD Versus COMMISSIONER OF CENTRAL EXCISE [2012 (6) TMI 340 - DELHI HIGH COURT] - Appellant has used the capital goods in its factory for a period of 2 to 4 years, before selling - They cannot therefore be stated to be sold “as such” capital goods - They were sold as used capital goods - Rule 3(5) has no applicability when it removed the used capital goods - Appellant is not liable to the payment of duty, interest or penalty - the goods are not liable to be confiscated and ordered to be released without payment of any redemption fine and any penalty under Rule 25 of the Central Excise Rules, 2002 - Decided in favor of assessee.

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• 2013 (10) TMI 347
  Waiver of Pre-deposit - Penalty under Rule 25 of CE Rules 2002 – Default in Payment of duty as per Rule 8(3A) of the CE Rules – Held that:- Following CCE & Cus. vs. Saurashtra Cement Limited [2010 (9) TMI 422 - GUJARAT HIGH COURT] - There was no intention on the part of the assessee to evade any payment of duty - It is only because of stringent financial condition, that the duty could not be paid in time and as soon as liquidity was available, duty was paid along with interest - the appellant has prima facie made out a case for complete waiver of the amount of penalty - there shall be stay on recovery of penalty till the disposal of appeal – Stay granted.

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• CST, VAT & Sales Tax

• 2013 (10) TMI 396
  Application for Revision – Section 67F of the Abkari Act - Held that:- Relying upon State of Kerala v. Avinasiappan [2003 (11) TMI 327 - SUPREME COURT OF INDIA ] - The application filed by the petitioner can be considered by the Commissioner and if the Commissioner finds any material on which revisory powers are to be exercised, then it is for the Commissioner to do so under Section 67F and, if not, dismiss the same as not maintainable - the interest of the State is secured by the Bank Guarantee furnished by the petitioner and the application filed as a revision is still pending, this Court deems it fit that the Commissioner be directed to consider the application – Decided in favour of Petitioner.

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• 2013 (10) TMI 395
  Exemption of tax - whether woolen carpet yarn is exempted from tax? - Whether woolen yarn and woolen carpet yarn are different products - Held that:- A cumulative reading of these three notifications clearly and unequivocally reveals that the intention of the Government for issuance of these notifications was to serve the interest of public at large and while issuing these notifications, the State Government has formed a definite opinion that issuance of such notifications is necessary or expedient in the public interest. Whether woolen yarn and woolen carpet yarn are different products - Held that:- Exemption from tax for sale or purchase of woolen carpet yarn is envisaged in the Notification dated 13th of June 1994 issued by the State Government. Moreover, the subsequent Notification dated 20th of March 1997, which has been given retrospective effect and the same has been made effective from 15th of June 1994 clarifies that “woolen yarn” and “woolen carpet yarn” fall within the ambit of exempted category for levy of tax on its sale and purchase, by showing the true intention of the earlier Notification of 13th of June 1994 - Decided against Revenue.

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• 2013 (10) TMI 394
  Refund - unjust enrichment - Exemption from Duty – Wine Manufacturers - The Government of Maharashtra issued a notification thereby exempting the levy of excise duty to wine manufacturers partly for the year 2001 and remitted the whole of the excise duty – Held that:- The High Court had therefore concluded that if such an excise duty was collected by the manufacturers by making it a part of the maximum retail price, allowing them to retain it further without allowing it to flow back to the state coffers would amount to unjust-enrichment as noticed by this Court in the case of Mafatlal Industries Ltd. vs. Union of India & Ors. [1996 (12) TMI 50 - SUPREME COURT OF INDIA ]. The High Court had not committed any error whatsoever which would call for our interference under Article 136 of the Constitution of India - If for any reason the respondents/other authorities had issued notices directing the appellants and other wine manufacturers to deposit the excise duty which according to the respondents was collected by the manufacturers, it was for the manufacturers to file appropriate reply thereby bringing it to their notice that they have not collected such excise duty and the same was also reflected in their books of account - If such a reply was filed by the wine manufacturers, it was for the authority to consider the same and pass an appropriate reasoned order - If for any reason the appellants were aggrieved by the order that may be passed by the authority considered, they would be at liberty to ventilate their grievances before an appropriate forum.

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• Indian Laws

• 2013 (10) TMI 384
  Prayer to Cancel the Temporary Liquor License - The plea raised was that it was not open for the appellant to run a liquor bar in the said restaurant which was in the vicinity of religious places and school - The respondents contended that the religious places and school were situated within the distance of 550 feet of the premises where the license to operate the bar by the Excise Department was granted to the appellant and this was in violation of Rule 8 of the West Bengal Excise (Selection of New Sites and Grant of License for Retail Sale of Liquor and Certain Other Intoxicants) Rules, 2003 (hereinafter referred to as Rules of 2003 ), as amended in the year 2004. Rule 8 of Rules, 1993 as well as Rule 8 of Rules, 2003 apply only to new sites - Its implication is that those restaurants/ hotels etc. who were already granted license, before coming into force the respective Rules, would not be hit by the mischief of these rules and are allowed the continuation of such a bar license, as pointed out, though the application of the appellant was made in the year 1992, it was processed much after 2004 and the license is also granted after 2004 - Therefore, normally the application would be governed by the Rules prevalent on the date of grant of liquor license - The appellant drew attention to the Circular dated 28.9.2005 issued by the Excise Commissioner to its functionaries and on that basis, he made emphatic plea that pending applications were to be considered on the basis of un-amended Rules, 2003. We fail to comprehend as to how the application filed in 1992 could be considered in 2010 - In any case, when the request of the appellant was considered in the year 2010, Rules of 2003 as amended in 2004 had to be applied - On the basis of these Rules, the appellant could not have been granted for foreign liquor bar and restaurant license as there are many religious and educational institutions within the 1000 ft. of place from where the appellant is operating - The case of respondent No.4 was not of a new license but existing license - Rule 8 applied to new sites only and in so far as those who were operating already and having existing license, they are not hit by the mischief of this Rule - the judgment of the High Court upheld Decided against Petitioner.

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