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TMI Tax Updates - e-Newsletter
October 13, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Computation of MAT tax liability - the tax liability arising under normal provisions of the Act and u/s 115JB of the Act should be compared before allowing rebate u/s 88E - AT
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Revision u/s 263 - since the Revenue had accepted similar transactions in the past and had allowed a view to sustain for several years, an exercise under Section 263 of the Act was not warranted. - HC
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Deemed dividend u/s 2(22)(e) - The break up of different kinds of loans and advances indicated by the said Finance Company in its balance sheet was for its convenience. The fact remains that the Finance Company was substantially carrying on the business of lending money which was its main business. - Not taxable - HC
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Validity of reopening of assessment - receipt of accommodation entry - the basic requirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the Assessee escaped assessment is missing in the present case. - HC
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Validity of reassessment proceedings initiated against a dead person after his death - liability of the legal representative - the notice issued to the petitioner as legal representative of her deceased husband is legal and valid. - HC
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The payment made by the appellant for carrying out entire operation and maintenance of power plant cannot be treated as fees for professional/technical services, therefore, the liability of TDS is under 194C and not U/s. 194J - AT
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Difference in job work receipts - The disclosure was strictly in conformity with the applicable AS-1 issued by ICAI and GAAP also. Many a times, the job work receipts accounted by the appellant in one year were accounted for in the subsequent year by the principal company. As a result, TDS was also deducted by the principal company in that year and credit for the same appeared in Form No. 26-AS. - No addition - AT
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Legality of order passed U/s 147 - addition on account of alleged unexplained sundry creditors - AO should have collected the information from the creditors directly to verify the outstanding creditors as on 31/3/2004 and should have compared with the assessee’s books of account before making any addition, which has not been carried out - No addition - AT
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Penalty U/s 271(1)(c) - The assessee was availing expert opinion on taxation matter as he was filing return since long and had number of businesses - claimed deduction U/s 54F by not disclosing the facts of the another house purchased in the return, proved that the assessee’s action was not bonafide - AT
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Exemption u/s 11 - Charitable activity u/s 2(15) - Addition on account of income from Samudaik Bhawan after allowing expenses - use of Samudaik Bhawan and Fitness Centre and receipts of charges/fees therefrom cannot be held as an activity in the nature of trade, commerce or business or rendering of any service in relation to trade, commerce or business - AT
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Penalty under section 271(1)(c) - disallowance of loss - Except non production of books, no reason or basis whatsoever has been assigned by authorities below in disallowing the entire loss. Thus disallowance is based on pure guesswork and not on any cogent reason. - AT
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Rejection of books of accounts - addition made for suppression of turnover - there was no occasion or instances of this nature pointed out by the AO in the assessment order, except for generalisations based on hypothetical standards, the source of which was never authenticated - No additions - AT
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Capital gain - exchange of flats - assessee has exchanged the existing flat with a new flat plus compensation amount. Under sec. 2(47) of the Act, the expression “transfer” includes exchange also. - capital gain to be determined - Assessee is eligible for Exemption u/s 54 - AT
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Computation of Capital gains - valuation of land as on 1.4.31981 - AO has simply adopted the value determined by the DVO - Registered Valuer has determined almost the double the amount of Guide Line Value, which also appears to be on the higher side - AO to redetermine the value - AT
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TDS - Late furnishing of Form 15G/15H - When assessee was well aware that recipients had no taxable income, just because the declarations in Form 15G/H were obtained late, it cannot be fastened with the consequence that arise for non-deduction of tax at source. - AT
Customs
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Over valuation of items imported - Consignment of CD ROMs declared as computer software – Declaration of price in the Bill of Entry was correct and goods are wholly exempt from customs duty thus there could be no motive in mis-declaration of value - SC
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Claim for Refund of Penalty – Once the orders-in-original have been set aside, the Respondent has no authority to retain the amounts deposited by the petitioners towards duty after being annulled by the orders passed by the Appellate Commissioner - HC
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Mis-declaration of country of origin - No dispute arise about the fact that goods in question were not dutiable goods, by virtue of the exemption notification - since no duty is payable, no penalty can be imposed - HC
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Failure to fulfil obligation of Custom Broker – Suspension of broking license – only upon establishing/determining whether impugned goods are steel strips or metal scraps, violation of Regulation 11 (d) of CBLR, 2013 on part of applicant CHA could be ascertained - AT
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Mis-declaration of goods – declaration of import as Diethyl Hexyl Pthalate (DEHP) instead of Di-Octyl Pthalate (DOP) – technical literature shows that DOP and DEHP are used interchangeably and that contention of manufacturer of products and importer cannot be brushed aside that products were different in quality and price - Demand set aside - AT
Service Tax
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Delay in passing order - Recovery of service tax - sitting on files and for months together and sometimes beyond the financial year is, thus, not conducive to the interest of nation's economy. The trust and faith reposed in them is also then betrayed. - HC
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Denial of benefit of abatement - GTA service - When Notification No. 1/2006-ST talks of not taking of Cenvat credit on input services taken by the transporter then it is obligatory on the part of the appellant or transporter to at least give a general declaration to the effect that no service credit of input services is taken by the transporters - AT
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Job work - whether manufacturing of medicines containing alcohol amounts to manufacture and liable for service tax under business auxiliary services or not – Service tax is not leviable - AT
Central Excise
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Levy of penalty u/s 11AC read with Rule 15 - Availment of inadmissible CENVAT Credit was reversed on pointing out by the department - this amount has not been determined u/s 11A (2) - No penalty can be imposed - AT
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Denial of rebate claim - Export of manufactured goods - excise duty paid both on the inputs and on the manufactured product - Rule 18 - exporters/appellants are entitled to both the rebates under Rule 18 and not one kind of rebate - SC
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Cenvat credit - supplier paid the amount on exempted goods as reversal of credit under Rule 6(3) and shown the same on the Invoice as duty of excise - credit is not admissible - demand confirmed invoking extended period of limitation - AT
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Valuation - advertisement by the dealers cannot be called as advertisements for the manufactured goods but are advertisements of the dealer - the said amount cannot be considered as additional consideration - demand set aside - AT
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Duty demand u/s 11A - the petitioner / director is not liable to be proceeded against for the recovery of Government dues pertaining to the company. - HC
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Condonation of delay - Delay of 175 days - CA did not performed his obligations - Alternate arrangements caused delay - we are satisfied to condone the delay and direct restoration of the appeal before the Tribunal for disposal in accordance with law. - HC
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Denial of refund claim - Unjust enrichment - The sole contention of the appellant was that they had deposited the duty under protest and that they had not passed on the sale duty to its customers - The fact, that the sale price remained constant does not lead to a conclusion that the duty has not been recovered from the customers - refund denied - HC
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Refund claim - Even if it is shown on the 'expense side' that does not mean that the presumption that the burden has been passed to the consumer can be raised - Revenue cannot invoke the plea or principle of unjust enrichment to the undisputed facts and circumstances - HC
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Denial of CENVAT Credit - whether the manufacturer is entitled to claim credit for the duty paid by the job worker or not - Held Yes - The original authority and the appellate authority wrongly construed the same as a double benefit by applying the theory of unjust enrichment. - HC
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The circular instructions are binding on the department and in pursuance of circular instructions only, the order impugned before appellate authority was passed and that order needs no interference by this Court - HC
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Duty demand u/s 11D - In terms of Section 11D of the Act, the demand can only be made from the manufacturer of the goods and if any duty amount is collected in any manner as representing duty of excise. - HC
Case Laws:
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Income Tax
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2015 (10) TMI 757
Computation of MAT tax liability - Whether the tax liability arising under normal provisions of the Act and u/s 115JB should be compared before allowing Rebate u/s 88E of the Act or after allowing the rebate? - Held that:- CIT(A) has followed the decision rendered by the Bangalore bench of Tribunal in the case of M/s Horizon Capital Ltd (2010 (7) TMI 991 - ITAT BANGALORE) and also the decision rendered by the Delhi bench of Tribunal in the case of M/s MBL & Co. Ltd (2011 (4) TMI 1312 - ITAT DELHI), wherein it was held that the rebate u//s 88A to 88E shall also apply to the tax computed u/s 115JB of the Act. The Tribunal has also noticed that the Return of income (ITR-6) prescribed in the Income tax Rules also supported the view taken by the assessees. Accordingly, the Ld CIT(A) reversed the view taken by the AO. We notice that the decision rendered by the Bangalore bench of Tribunal in the case of M/s Horizon Capital Ltd (supra) has since been approved by the Hon’ble High Court of Karnataka (2011 (10) TMI 489 - KARNATAKA HIGH COURT ), wherein it was held that the assessee is entitled to deduct the rebate u/s 88E of the Act from the tax liability arising u/s 115JB of the Act. Thus the tax liability arising under normal provisions of the Act and u/s 115JB of the Act should be compared before allowing rebate u/s 88E of the Act. - Decided in favour of assessee. Transaction charges paid to BSE/NSE - disallowance u/s 40(a)(ia) - non-deduction of tax at source - CIT(A) deleted the disallowance - Held that:- The various benches of the Tribunal have been holding that the tax was not deductible at source from the transaction charges paid to the Stock exchanges. Hence, it can be seen that the assessee before us also, was under bona fide belief in this regard and hence, we are of the view that the benefit of doubt given to the assessee by the Hon’ble Bombay High Court in the case of Kotak Securities Ltd (2011 (10) TMI 24 - Bombay High Court ) should also be extended to the assessee. The Ld A.R submitted that the assessee has started deducting tax at source from the transaction charges subsequent to the decision of Hon’ble Bombay High Court. Hence, for the foregoing reasons, we uphold the decision of Ld CIT(A) on this issue.- Decided in favour of assessee.
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2015 (10) TMI 756
Revision u/s 263 - whether the Assessee could include notional interest as income in computation of profits and gains derived by its undertaking from export of articles or things, for the purposes of claiming deduction under Section 10A ? - whether the CIT can assume jurisdiction under Section 263 of the Act and enhance the assessed income by reducing the deduction allowed to the Assessee in respect of the eligible undertaking? - Held that:- Supreme Court in Commissioner of Income Tax v. Max India Ltd. (2007 (11) TMI 12 - Supreme Court of India) reiterated that the phrase “prejudicial to the interest of revenue” as used in Section 263(1) of the Act must be read in conjunction with the expression “erroneous” and unless the view taken by the AO is found to be unsustainable in law, the powers under Section 263 of the Act cannot be invoked. Following the aforesaid decision, this Court in Commissioner of Income Tax v. DLF Ltd.(2012 (9) TMI 626 - DELHI HIGH COURT ) had also emphasized that powers under Section 263(1) of the Act were available only if the order sought to be reviewed was prejudicial to the interests of the revenue and was unsustainable in law. In the present case, the interest so credited and debited by the Assessee in the books maintained does not, in the first instance, represent any real profit or gain by the Assessee. Assessee has not derived any interest income. Therefore, reducing such notional income - which has neither been accrued nor received - from the Assessee’s total income is completely alien to the scheme of the Act. Such notional interest could never form a part of the Assessee’s income and thus the Assessee’s claim that the same is to be excluded under Section 10A of the Act is flawed and wholly unsustainable in law. The view as canvassed on behalf of the Assessee is not, even remotely, plausible and we find no infirmity with the CIT’s exercise of jurisdiction under Section 263 of the Act. We are also unable to accept the contention that since in the preceding year, no issue has been raised with regard to charging of interest by one unit to another, the same could not be picked up by the CIT under Section 263 of the Act. Merely because an issue remained unchecked in a preceding year does not mean that the CIT is estopped from exercising its powers under Section 263 of the Act. It is well established that the principles of res judicata do not apply to income tax proceedings and an error in the preceding year need not be repeated or ignored in the subsequent years. The decision of this Court in Escorts Ltd. (2011 (2) TMI 579 - DELHI HIGH COURT) was based on the principle of consistency. In that case, the Assessee had been carrying on transactions similar to the one which was sought to be questioned under Section 263 of the Act, for past several years preceding the relevant assessment year. The transaction had also received the attention of the Commissioner of Income Tax in an earlier year and had been decided in favour of the Assessee. The Revenue had accepted the same and not filed an appeal. It is in that context that the Court held that since the Revenue had accepted similar transactions in the past and had allowed a view to sustain for several years, an exercise under Section 263 of the Act was not warranted. In the present case, the issue was not picked up in the preceding year. Further, the claim of the Assessee cannot be stated to be of a nature which has been consistently accepted in past several preceding years since the entry in relation to notional interest had been passed by the Assessee only in one preceding year and had remained undebated. Insofar as the question whether the Tribunal had erred in not considering the submissions relating to deduction under Section 80HHC of the Act is concerned, we are of the view that the said issue did not arise for consideration. The CIT had rightly held that the only issue under Section 263 of the Act was related to “interest charged by the head office to NEPZ Branch”. He, nonetheless, proceeded to consider the alternative issue whether the turnover of the eligible undertaking (at NEPZ, Noida) could be considered for the purposes of computing exemption under Section 80HHC of the Act. Clearly, this issue did not arise as the CIT had only proposed to reduce the profits and gains claimed by the Assessee as being derived from the eligible undertaking. Thus, only question to be considered by the CIT was whether the notional interest credited in the books could be considered as income derived by the Assessee from the eligible undertaking. The Tribunal did not consider the aforesaid issue and in our view, rightly so. - Decided against revenue.
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2015 (10) TMI 755
Deemed dividend u/s 2(22)(e) - as per revenue alleged loan taken by the appellant was a deemed dividend and, therefore an income from other sources - Whether the loan/advance given by the Finance Company to the assessee, who is a share holder in the Finance Company was made in the ordinary course of its business, hence outside the scope of Section 2(22)(e)? - Held that:- It is not possible to give a fixed definition of the word "substantial" in relation to a substantial business of a Company. We are of the opinion that any business of a Company which is not trivial or inconsequential as compared to the whole of the business would be termed as substantial part of the business. In the instant case, the assessing officer has held that the business of giving loans and advances by Sarnath Finance Company constituted less than 20% of the total investment and, therefore, the same is not a substantial part of the business of the Company. In our view, such reasoning is per se misconceived. We find from a perusal of the order of the Tribunal that Sarnath Finance Co. is admittedly engaged in the business of loans and advances, as is clear from the memorandum of association. The Tribunal picks holes from the balance sheet of the Sarnath Finance Co. contending that under the heading "Loans and Advances" the Company had made sub groups, namely, "Loans and Advances" and "stocks on hire including hire purchase". The Tribunal, therefore, concluded that a substantial part of the business of the said Finance Company was hire purchase. In our view, the Tribunal has side tracked the issue without realising that "stocks on hire" was also shown under the heading of "Loans and Advances" in the balance sheet of the Finance Company. The break up of different kinds of loans and advances indicated by the said Finance Company in its balance sheet was for its convenience. The fact remains that the Finance Company was substantially carrying on the business of lending money which was its main business. We are of the view that the Tribunal and the authorities below committed a manifest error in holding that the loan and advance given by the Sarnath Finance Company to the appellant was a deemed dividend. In fact, it was covered by the exclusionary clause (ii) of Section 2(22)(e) of the Act. - Decided in favour of assessee.
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2015 (10) TMI 754
Validity of reopening of assessment - receipt of accommodation entry - whether the ITAT was correct in holding that the Assessing Officer (“AO”) has not applied his mind and not come to an independent conclusion that he has reason to believe that the income of the Assessee has escaped assessment? - Held that:- In the present case, after setting out four entries, stated to have been received by the Assessee on a single date i.e. 10th February 2003, from four entities which were termed as accommodation entries, which information was given to him by the Directorate of Investigation, the AO stated: “I have also perused various materials and report from Investigation Wing and on that basis it is evident that the assessee company has introduced its own unaccounted money in its bank account by way of above accommodation entries.” The above conclusion is unhelpful in understanding whether the AO applied his mind to the materials that he talks about particularly since he did not describe what those materials were. Once the date on which the so called accommodation entries were provided is known, it would not have been difficult for the AO, if he had in fact undertaken the exercise, to make a reference to the manner in which those very entries were provided in the accounts of the Assessee, which must have been tendered along with the return, which was filed on 14th November 2004 and was processed under Section 143(3) of the Act. Without forming a prima facie opinion, on the basis of such material, it was not possible for the AO to have simply concluded: “it is evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries”.Thus the basic requirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the Assessee escaped assessment is missing in the present case. In the circumstances, the conclusion reached by the ITAT cannot be said to be erroneous - Decided against revenue.
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2015 (10) TMI 753
Payment out of undisclosed sources - Tribunal upholding the decision of the CIT(A) in deleting the addition of ₹ 4 lakhs made by the AO - Held that:- CIT(A) and the Tribunal by their orders have rendered finding of fact to the effect that the sum of ₹ 4 lakh mentioned in the impounded document had in fact been canceled along with the narration. Thus no cognizance of the same was taken as two authorities under the Act. This was on the basis of concurrent finding of fact holding that there is no such payment of ₹ 4 lakhs as mentioned in the impounded document as it has been canceled by the respondent assessee by drawing a line across the amount and the narration there much before impounding of the document. In view of the concurrent finding of facts not shown to be perverse and/or arbitrary, no substantial question of law arises for our consideration. Prorata deduction u/s 80IB(10) - Whether on the facts and in the circumstances of the case and in law, the Tribunal was correct in upholding the decision of the CIT(A) who allowed a prorata deduction u/s 80IB(10) of the Act ignoring the fact that the said section does not allow a prorata deduction u/s. 80IB(10) of the Act? - Appeal admitted on Question No.1.
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2015 (10) TMI 752
Disallowance on account of invoking Rule 8D read with Section 14A - ITAT confirmed CIT(A)order in deleting the disallowance - Held that:- AO has indeed proceeded on the erroneous premise that the invocation of Section 14A is automatic and comes into operation as soon as the dividend income is claimed exempt. See Maxopp Investment Ltd. & Others Versus Commissioner of Income Tax [2011 (11) TMI 267 - Delhi High Court] wherin held the prescribed method being the method stipulated in rule 8D of the said Rules. while rejecting the claim of the assessee with regard to the expenditure or no expenditure, as the case may be, in relation to exempt income, the Assessing Officer would have to indicate cogent reasons for the same. In CIT v. Taikisha Engineering India Ltd.(2014 (12) TMI 482 - DELHI HIGH COURT ), in similar circumstances, the Court disapproved of an AO invoking Section 14A read with Rule 8D (2) of the Rules without recording his satisfaction and noted that the recording of satisfaction as to why "the voluntary disallowance made by the assessee was unreasonable and unsatisfactory" is a mandatory requirement of the law. - Decided against revenue.
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2015 (10) TMI 751
Reopening of assessment - Tribunal setting aside the order under Section 143(3) r.w.s. 147 - Held that:- Having gone through the reasons recorded for issuing notice, as well as the assessment order dated 27.12.2010, we do not find that there is any finding recorded to the effect that the assessee failed to disclose fully and truly all material facts necessary for the relevant assessment year. The submission of the learned counsel for the appellant is that certain deductions had been claimed on the basis of an agreement under which commission was paid by the assessee and since after the survey conducted on 5.11.2009, it was found that the agreement was not genuine, it would amount to failure on the part of the assessee to disclose fully and truly all material facts and thus the notice could have been issued beyond the period of four years under the first proviso to Section 147 of the Act. In our opinion, since such reason has not even been specified in the reasons recorded in the notice or in the assessment order itself, the notice issued beyond the period of four years has rightly been held to be invalid by the learned Tribunal. The Tribunal has rightly relied on the decision of this Court in the case of Hewelett Packard Digital Global Soft Ltd., (2011 (9) TMI 800 - Karnataka High Court ) and as such do not find any infirmity with the order of the Tribunal. - Decided against revenue.
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2015 (10) TMI 750
Gains from the purchase and sale of shares and mutual funds - treated as Long Term Capital gains or business income - Held that:- Twin test applied by the Assessing Officer and the CIT (A) to hold that the respondent-assessee is a trader in shares and mutual funds is not correct. As pointed out above, as per CBDT circular No.4/2007 dated 15 June 2007 it is open to the respondent-assessee to hold the securities in two portfolios i.e. one investment portfolio and another trading portfolio. There is no bar under the Act which prevents the assessee from investing partly as investment and partly for trading in the same scrip. Besides, the second test namely that it is at the sole discretion of the respondent to determine whether a particular scrip is to be treated as an investment or a scrip in which he trades, is permissible in terms of the Circular No.4/2007 dated 15 June 2007. It is for the respondent assessee to determine how he seeks to treat a particular scrip i.e. as an investment or for trading. This intent would only be reflected in maintaining different accounts for the two. There is no allegations of shifting of scrips from trading to investment or vice versa. Moreover, it is also pertinent to note that the respondent – assessee had shown all its scrips treated as investments at cost, while those held as stock-in-trade were shown at cost or market value whichever is low. This again is an indication of the fact that the respondent – assessee held the scrips offered for tax under the head 'long term capital gains' as investment. Further Assessee submission that so far as the long term capital account is concerned, even during the preceding assessment year, the percentage of tax charged on it was lower than that taxed on business income is not disputed by Revenue. Therefore, the issue arising in this Assessment Year should also have been a subject of enquiry in the assessment order passed in respect of preceding assessment year. Therefore, even on the principle of consistency no fault can be found with the impugned order. For the above reasons, we are of the view that the view of the Tribunal is a reasonable and possible view. Gains treated as Long Term Capital gains - Decided in favour of assessee. Disallowance under Section 14A r.w.r 8D - ITAT deleted the addition relying on case of Godrej & Boyce Mfg. Co.Ltd., [2010 (8) TMI 77 - BOMBAY HIGH COURT] wherein it is held that Rule 8D is prospective and applicable only from the AY 2008-09 - Held that:- The impugned order of the Tribunal has, merely followed the binding decision of this Court in 'Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT [suora] - Thus, Question does not raise any substantial question of law and, therefore, not entertained. - Decided in favour of assessee.
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2015 (10) TMI 749
Validity of re-assessment proceedings initiated against a dead person after his death - liability of the legal representative - Held that:- It is clear from the analysis of Section 159 of the Act as noticed that the legal representative of the deceased is liable for filing the returns and payment of taxes. It is, however, restricted to the extent of inheritance to the estate of the deceased by the legal representatives. In the present case, notice under Section 148 of the Act was issued to the petitioner as legal representative of her deceased husband Kulwinder Singh Johal and not as an assessee in her individual capacity for the assessment year 2008-09. It was not in controversy that Kulwinder Singh Johal had died on 25.7.2014. Thus, the notice issued to the petitioner as legal representative of her deceased husband, Kulwinder Singh Johal is legal and valid. None of the pronouncements relied upon by learned counsel for the petitioner comes to his rescue. Herein, the income of the deceased Kulwinder Singh Johal which has escaped assessment is sought to be brought to tax by issuance of a notice under Section 148 of the Act to his legal representative in accordance with the provisions of Section 159 of the Act. No justification to interfere with the impugned notice and the assessment proceedings. Petition dismissed. - Decided against assessee.
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2015 (10) TMI 748
Claim of deduction u/s 80IB(10) - Held that:- Appeals admitted on the following substantial question of law : “Whether on the facts and in the circumstances of the case and in law, the Hon'ble Income Tax Appellate Tribunal was justified in directing the Assessing Officer to allow the claim of deduction u/s 80IB(10) made by the assessee on pro rata basis without appreciating the fact that the provisions of section 80IB(10) clearly mandate that the assessee can be either eligible or not eligible for claiming deduction and the provisions do not contemplate any proportionate deduction?” The Registrar (Judicial)/Registrar, High Court, Original Side, Bombay to ensure that the original record in relation to this Appeal is summoned from the Tribunal and offered for inspection of the parties. This paper book is treated sufficient for the purpose of admission of this Appeal. However, the Registry must further ensure preparation of complete paper SRP 2/3 book in accordance with the Rules. The Registry in the first instance must send intimation of admission of this Appeal enclosing therewith a copy of this order so as to enable the Tribunal to act accordingly.The assessee waives service.
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2015 (10) TMI 747
Penalty under section 271(1)(c) - undisclosed remittance from US - contention of the assessee that the non-inclusion of said amount in the income was on account of bonafide belief of the assessee as she was a non-resident in earlier year, as such the said amount was not taxable in those years - Held that:- In the present case, it is an admitted fact that the assessee was a non-resident till the assessment year 2002-03, thereafter she shifted to India. The assessee was earning honorarium from the University of California, Irvine as there was a treaty between the USA and the India, the amount so received by the assessee was not taxable in USA. The assessee was under a bonafide belief that the income earned in USA was exempt under DTAA between USA and India and this fact was disclosed in Form No. 1040NR for the year 2005 comprising the Income Tax Return filed by US Non-Resident Alien. From the aforesaid facts it appears that there was no malafide intention of the assessee to either conceal any income or to furnish inaccurate particulars of income because the amount received as honorarium was disclosed by the assessee and due taxes was paid when it was pointed out that the said amount i.e. foreign remittance in USD received from USA was taxable. In the present case, the AO also made the addition by disallowing 50% of the expenses claimed by the assessee on account of her visit to University of California. The said disallowance was purely on adhoc basis, so it cannot be said that the assessee furnished inaccurate particulars of her income or concealed the income. In my opinion the present case can be a good case or making the addition but not for levying the penalty u/s 271(1)(c) of the Act. Therefore, considering the peculiar facts of this case deem it appropriate to delete the penalty levied by the AO and sustained by the ld. CIT(A). - Decided in favour of assessee.
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2015 (10) TMI 746
Income from House property - Computation of annual letting value (ALV) in respect of the property at K.K.Nagar Chennai - Held that:- Following the order of the co-ordinate bench of this Tribunal in the case of the wife of the assessee, this issue is set aside to the record of the AO for determination of the ALV in respect of the property in question after considering the property tax record filed by the assessee in terms of the direction given in the order. - Decided in favour of assessee for statistical purpose Vacancy allowance - Held that:- As regards the vacancy allowance claimed by the assessee, we note that the assessee never let out the property at Jubilee Hills, Hyderabad. Therefore, the question of remaining the property vacant during the year for the purpose of vacancy allowance does not arise. Accordingly, the claim of the assessee is devoid of any merit, when the assessee never let out the property in question. Hence, the claim of vacancy allowance is rejected - Decided against assessee. Disallowance of cost of improvement - Held that:- Though assessee has not produced any supporting evidence regarding the expenditure incurred by the assessee on account of improvement of the property in question, however, as pointed out by the learned counsel for the assessee, the property in question was purchased by assessee vide sale deed dated 19-10-1995 and as per the schedule of the property, there is no mention of any construction or any structure on the said property purchased by the assessee. We note that the assessee had sold the property vide sale deed dated 2nd December, 2008 and as per the schedule of the property, being part of the sale deed dated 2nd December, 2008 the property is described as 'House No.'. Therefore, prima facie it appears that what is sold by the assessee is a constructed property. However, it is a matter of verification and examination. Accordingly, this issue is set aside to the record of the AO to examine the facts of any construction physically existing on the property in question at the time of sale, in comparison to the state of property at the time of purchase vide sale deed dated 19-10-1995. - Decided in favour of assessee for statistical purpose
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2015 (10) TMI 745
Levy of interest on short deduction of tax u/s 201(1A) - Assessee had deducted TDS u/s. 194C on the amounts paid to A.P. Genco Ltd. for operation and maintenance of Plants - AO was of the opinion that assessee should have deducted tax u/s. 194J at 10% on O&M Charges - CIT(A) deleted the levy of interest - Held that:- Nothing was brought on record to counter the findings of Ld. CIT(A). As seen from the copy of the agreement placed on record along with decisions relied on by the Ld. Counsel, we agree with the findings of CIT(A) that A.P. Genco has undertaken the entire contract work for Operation and Maintenance of plants, equipments, amenities, fire fighting services etc., which is covered under the provisions of Section 194C and not by Section 194J. Ld. CIT(A) also analysed the issue keeping in mind the decision of coordinate bench of ITAT Ahmedabad in the case of Gujarat State Electricity Corporation Vs. ITO [2003 (5) TMI 190 - ITAT AHMEDABAD-C]. The payment made by the appellant for carrying out entire operation and maintenance of power plant cannot be treated as fees for professional/technical services, therefore, the liability of TDS is under 194C and not U/s. 194J. As the appellant had correctly deducted TDS U/s.194C, the question of levying interest U/s. 201(1A) does not arise - Decided against revenue.
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2015 (10) TMI 744
Difference in job work receipts - comparison between Form No. 26AS and the amount reported as per P&L account - CIT(A) restricted part addition - Held that:- It is noted that the difference as per Form No. 26AS and the amount reflected in P&L account is on account of bills pertaining to previous year, which have been booked in the current year by the principal company. Secondly, the bills of current year, which have been booked in the subsequent financial year by the principal company and thirdly rejection stock/debit notes, which have been received by the appellant during the year. It is also noted that the assessee has filed detailed reconciliation statement alongwith supporting documentation, which have been duly considered and examined in detail by the ld CIT(A). As many a times, the deductor either did not deduct the tax or accounted for the same in the subsequent year when the goods were lifted from the premises of the appellant company. It was not in dispute that the appellant company was following mercantile system of accounting and job receipts were accounted for in the books of account on accrual basis. The appellant company therefore declared the job receipts in the year of billing however the deductor/principal company accounted for part of job receipts in the subsequent year when the goods were removed from the premises of the appellant company. The mercantile system of accounting was consistently followed by the appellant company since last many years and it was clearly disclosed in the audited financial statements by the Auditors in scheduled 16, subpoint (A)(1) of the balance sheet. This disclosure was strictly in conformity with the applicable AS-1 issued by ICAI and GAAP also. Many a times, the job work receipts accounted by the appellant in one year were accounted for in the subsequent year by the principal company. As a result, TDS was also deducted by the principal company in that year and credit for the same appeared in Form No. 26-AS. - Decided against revenue. Addition on concealed sale of scrap on the basis of ER-1 return filed with the Excise Department - CIT(A) deleted the addition - Held that:- It is undisputed fact that the scrap generated out of manufacturing was retained by the vendors and not returned back to the appellant company. The assessee company had paid excise duty on nonreturnable scrap retained by the vendors by taking its notional value or assessable value by the Excise authorities. ER-1 return not only include the goods sold but also goods removed out of factor. Therefore, it is but natural to have difference between sale figures reported by the assessee and figures disclosed in ER-1 return. The ld CIT(A) has thoroughly examined this issue, which has not been controverted by the ld Sr.DR during the hearing. The ld Assessing Officer had not verified from the books of account of the vendors whether same scrap has been disclosed in its sale or not. As per agreement made between the appellant and the vendors, the scrap is to be remained with the vendor and it could not be returned back to the appellant as per the terms and conditions of job work charges. The vendor is also assessed to tax and both the parties i.e. the appellant as well as the vendor are also under the excise net. Thus, we do not find any reason to intervene in the order of the ld CIT(A) - Decided against revenue. Addition on account of concealed sales being the difference in figures of sale as per P&L account and that declared in ER-1 filed with the Excise Department - CIT(A) deleted the addition - Held that:- Whatever evidence filed by the appellant before the ld CIT(A) were not forwarded to the Assessing Officer during the appellate proceedings. The assessee filed explanation with evidence before the Assessing Officer on this point but whatever evidences narrated by the ld CIT(A) were not submitted before the Assessing Officer. The ld CIT(A) has coterminous power with the Assessing Officer. However, he has accepted the assessee's explanation without any verification from the third party, therefore, in the interest of justice, this issue required to be decided afresh by the Assessing Officer after providing reasonable opportunity of being heard and assessee also directed to cooperate with the Assessing Officer to produce all the evidences required by the Assessing Officer. Accordingly, this issue is set aside to the Assessing Officer. - Decided in favour of revenue for statistical purposes. Addition for late depositing ESI and PF dues received from the employees - Held that:- Where the PF and/or EPF, CPF, GPF etc., if paid after the due date under respective Act but before filing of the return of income under Section 139(1), cannot be disallowed under Section 43B or under Section 36(1)(va) of the IT Act. See CIT Vs. State Bank of Bikaner & Jaipur (2014 (5) TMI 222 - RAJASTHAN HIGH COURT) - Decided in favour of assessee
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2015 (10) TMI 743
Legality of order passed U/s 147 - addition on account of alleged unexplained sundry creditors - Held that:- As revealed from the chart that in case of Anurag Sales Corp, and Sunraj Steel, the credit balance has increased from 31/3/2004 and 31/3/2005. In case of Swastik trading company and P.K. Industry, the credit balance had gone down compared to 31/3/2004 to 31/3/2005, which proved that on 31/3/2005, these credit balances were cumulative. AO for A.Y. 2005-06 had considered the G.P. addition on account on discrepancy found in these creditors account. No separate additions were made on account of different in creditors. The credit balance as on 31/3/2005 i.e. for A.Y. 2005-06 cannot be added as income in A.Y. 2004-05. The ld Assessing Officer had not verified the creditor’s balance as on 31/3/2004 from the assessee’s books as well as creditor’s books and had not quantified the exact difference if any difference in their accounts. He simply made addition on the basis of difference in the credit balances in the accounts of these parties for A.Y. 2005-06. It is further confirmed from the CIT(A)’s order wherein sundry creditors list in case of Yash enterprises and Arihant Corp. there were no outstanding creditors as on 31/3/2004. Even the ld Assessing Officer considered these parties for addition to the tune of ₹ 1,11,715/- in case of Arihant Corp. and ₹ 1,72,435/- in case of Yash Enterprises, which is not justifiable as there was no outstanding balance as on 31/3/2004 in case of above two parties. The ld Assessing Officer made addition in A.Y. 2005-06 as well as A.Y. 2004-05 in case of four parties and in case of Arihant corp. and Yash enterprises, he made addition without any creditors outstanding as on 31.03.2004. Therefore, the ld CIT(A) was not right to confirming the addition between difference in creditors as on 31/3/2003 and 31/3/2004, this increase can be on the basis of further purchase made by the assessee herself. In some of the cases, there is even reduction in outstanding creditors on payment. The Assessing Officer should have collected the information from the creditors directly to verify the outstanding creditors as on 31/3/2004 and should have compared with the assessee’s books of account before making any addition, which has not been carried out by the Assessing Officer. Thus, the addition confirmed by the ld CIT(A) is deleted. Decided in favour of assessee.
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2015 (10) TMI 742
Penalty u/s 271(1)(c) - disallowance u/s 54F - CIT(A) confirmed part penalty - Held that:- From the facts of the case of the assessee and the provisions of Section 54F under which claim has been made, the claim is clearly inadmissible. Therefore, the penalty u/s 271(1)(c) is to be imposed on wrong claim u/s 54F made on purchase of plots at B-10 and B-1, Raghunandan Vihar, Jaipur for ₹ 3,05,336/- and ₹ 3,59,048/- respectively. The A.R. himself has admitted that the penalty may be reduced proportionately as per the order of the ld. CIT(A). Thus the AO is directed to reduce the penalty u/s 271(1) (c) proportionately on the tax evaded on the disallowance u/s 54F confirmed by the ld. CIT(A) of ₹ 6,64,384/-. To that extent, the penalty is confirmed u/s 271(1)( c) for filing inaccurate particulars of income - the directions of the ld. CIT(A) in the penalty order are in consonance with the directions of the ld. CIT(A) in the quantum proceedings in relation to disallowance of deduction of ₹ 664,384 claimed by the assessee. What the assessee has failed to consider is that he has raised an additional claim before the ld. CIT(A) towards the cost of construction of the house which has been allowed to him by the ld. CIT(A) by exercising his jurisdiction as he has coterminous power under the I.T. Act. The amount which is finally disallowed would ,therefore, suffer the consequent penalty provisions under section 271(1)(c) of the Act. - Decided against assessee. Exemption u/s 54F is available in respect of investments in two adjacent houses which constitute one residential unit. In the case of the assessee, it has invested the consideration received on sale of plot of land in 03 different plots of lands which were geographically located at 03 different locations i.e, at Santosh Vihar, at B-10 Raghunandan Vihar and at B-1, Raghunandan Vihar. Further, a residential house has been constructed only on the plot of land at Santosh Vihar. It is thus clear that in the facts of the present case, the assessee doesn’t have any legal and tenable basis for claim of deduction in respect of 03 separate plots of land which are physically at different locations as by no stretch of imagination, they would collectively satisfy the definition of “a residential house”. Therefore, it is clearly a case of striking in the dark which the assessee has been unsuccessful as rightly held by the lower authorities. It is clearly a case where the factual position doesn’t support the claim of the assessee and there cannot be any dispute or debate that the assessee was eligible for claim at first place. Accordingly, in the facts and circumstances of the case, we are of the considered view that claim of the assessee under section 54 was not a bonafide claim and levy of penalty u/s 271(1)(c) was justified and hence confirmed. - Decided against assessee.
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2015 (10) TMI 741
Penalty U/s 271(1)(c) - undisclosed salary received from RMC Gems Thai Co. Ltd., Bangkok - assessee disclosed salary receipt after search proceeding carried out in case of assessee and return filed U/s 153A - assessee had shown long term capital gain on sale of agricultural land, Kalyan colony plot and plot of Chitrakoot in the computation of income and taxable long term capital gain was also claimed by the assessee exempted by making investment in residential house - Held that:- The argument of the assessee that the assessee had disclosed salary received from RMC Gems Thai Co. Ltd., Bangkok voluntarily has not substantiated with any evidence. The Assessing Officer issued notice U/s 153A to file the return in response to survey proceedings. Thereafter, the assessee has disclosed the salary received in Thai Bhat in Bangkok in global income. Similarly the excess claim of exemption U/s 54F had also not been revised even notice U/s 153A was issued to the assessee. The assessee was availing expert opinion on taxation matter as he was filing return since long and had number of businesses. Therefore, the assessee’s claim that he was ignorant about legal position of salary received in Bangkok and second house purchased during the year under consideration and claimed deduction U/s 54F by not disclosing the facts of the another house purchased in the return, proved that the assessee’s action was not bonafide. We have considered view that the assessee has concealed the particulars of income and furnished inaccurate particulars of income. The case law cited by the assessee are not squarely applicable on it. Action of the assessee was neither bonafide nor voluntary, therefore, penalty is liable. Voluntary disclosure does not release the assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he has to be absolved from penalty. Therefore, we have considered view that the ld CIT(A) was right to confirm the penalty on given circumstances. Accordingly, we uphold the order of the ld CIT(A) - Decided against assessee.
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2015 (10) TMI 740
Bogus purchases - not providing opportunity of cross examination of the persons whose statements have been used against the assessee - Held that:- This Bench of ITAT has taken decision to apply 15% net profit rate on unverifiable purchases in the cases of Anuj Kumar Varshney and others vs. ITO (2015 (4) TMI 533 - ITAT JAIPUR). However, assessee's request is accepted and the AO is directed to reframe assessment order by considering outcome on this issue as appeal in case of un-verifiable purchases/ bogus purchases is pending before Hon'ble Rajasthan High Court. As regards the first ground of the assessee for not providing opportunity of cross examination, we find that this issue has not been seriously argued by the ld. AR of the assessee. However, the Bench has offered to allow cross examination by setting aside the orders of the lower authorities. The facts as available on records that the assessee was directed to produce the parties for verification by the AO but the assessee showed inability to produce the parties. The AO sent his Circle Inspector to verify the facts about the existence of the parties but they were not found at the given addresses. Therefore, the assessee has not discharged its onus to prove the purchases debited in profit and loss account as genuine and the assessee has not shifted his onus on the Revenue - Decided against assessee.
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2015 (10) TMI 739
Exemption u/s 11 - Charitable activity u/s 2(15) - Addition on account of income from Samudaik Bhawan after allowing expenses - whether net income rightly assessed by invoking proviso to section 2(15) - CIT(A) deleted the addition - Held that:- In the light of ratio laid down in the case of India Trade Promotion Organization vs Director General of Income Tax(Exemptions) (2015 (1) TMI 928 - DELHI HIGH COURT ), in the present case, we note that the use of Samudaik Bhawan and Fitness Centre and receipts of charges/fees therefrom cannot be held as an activity in the nature of trade, commerce or business or rendering of any service in relation to trade, commerce or business and hence the action of the AO was not in accordance with the provisions of the Act which was rightly dismissed by the CIT(A). On the basis of foregoing discussion we are unable to see any infirmity, perversity or any other valid reason to interfere with the conclusion of the CIT(A) on these issues. Therefore, we are inclined to hold that the CIT(A) granted relief for the assessee on justified reasoning and cogent basis and we uphold the same. - Decided against revenue.
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2015 (10) TMI 738
Working Capital Adjustment to the profit of the assessee - whether assessee is not eligible for the benefit of +/- 5% as standard deduction in view of provisions of section 92C(2) - selection of comparables - Held that:- On account of peculiar circumstances under which the assessee is carrying on its business i.e. providing services to its associate enterprises only with mark-up of 10% on the cost and where there is no adversity on account of working capital, then such working capital adjustment is to be made in the hands of the companies, which are picked up as comparables to bring the same to the level of the assessee, while benchmarking the international transactions entered into by the assessee. Thus, an endeavour is to be made to bring the results of comparables at par with the results of the tested party as if the same are working in the same environment. In the case of the assessee, where it is benefited on account of its transactions entirely with its associate enterprises on the basis of an Agreement, under which it is entitled to a mark-up of 10% on cost, working capital adjustment on such account merits to be allowed to the assessee. The OECD has provided guidelines for such working capital adjustment and the said guidelines are one of the accepted modes of computing working capital adjustment. In view thereof, we hold that the assessee is entitled to the working capital adjustment, which in turn is to be computed as per the OECD guidelines. The assessee has filed the computation of working capital adjustment to the results of the comparables before us and the same were also filed before the Assessing Officer and some adjustment has been allowed on account of working capital adjustment by the Assessing Officer, while giving effect to the order of CIT(A). However, the errors pointed out by the assessee vide different communications to the Assessing Officer / TPO and the concerned Commissioner, have not been carried out till date. Accordingly, we direct the Assessing Officer to complete the exercise of working capital adjustment to be allowed to the assessee within a period of 45 days from the date of this order, after affording reasonable opportunity of hearing to the assessee. Upholding the order of CIT(A) with regard to the allowability of working capital adjustment, we dismiss the grounds of appeal raised by the Revenue. In view of the concession of the learned Authorized Representative for the assessee that in case the working capital adjustment is allowed to it, then the margins shown by the assessee in respect of international transactions with its associate enterprises was within +/- 5% of the margins shown by the list of comparables, we do not adjudicate the issues raised in the appeal filed by the assessee.
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2015 (10) TMI 737
Procedure when assessee claims identical question of law is pending before High Court or Supreme Court u/s 158A - Amount received as a result of Indenture - whether Indenture signed by Late Sint. Bachoobai Woronzow, transferring her rights arising out of an agreement of 2" January, 1995 with developers, does not result in Capital Gain in the hands of the Assessee? - said question of law arising from the aforesaid receipts is identical with the question of law arising out in the present appeal before this Tribunal for A.Y. 2007-08 - Held that:- We find that the issue involved in the year under consideration are identical to the issue of earlier two AY.s., that the AO has not given any reason for not agreeing with the proposal of the assessee to keep the issue in abeyance till the appeal filed by the department is not adjudicated by the Hon'ble Bombay High Court. In our opinion, the provisions of section 158A of the Act cast a duty upon the AO and the Appellate Authorities pass a reasoned order. A reasoned order presupposes application of mind by the authority concerned i.e.A0/Appellate Authority. They are required to elaborate the reasons as to why they oppose or accept the proposal submitted by the assessee.A one liner submission-" I agree/I do not agree" is a bald statement and is of no judicial value. As stated earlier such an order is not subject to appeal or revision. Therefore, it becomes more important that the authority handling such application devote some time and pass an order that could show as to how and why it arrived at a particular conclusion. In our opinion the comment of the AO opposing the proposal of the assessee falls under that category. It is to remembered that the Central Board of Direct Taxes have advised the officers of the department to avoid unnecessary litigation. In our opinion, the proposal made by the assessee is justified and no harm would be caused to the AO if the issue is kept in abeyance till the final decision of the Hon'ble Court is delivered. As a result, we admit the declaration made by the assessee. Issue of nature of advance received by the assessee is to be kept in abeyance and has to be decided after receiving the order of the Hon'ble Bombay High Court for the earlier two AY.s. Appeal filed by the AO are kept in abeyance, as per the provisions of section 158 A of the Act. No useful purpose will be served in calling the comments of the AO on identical declaration filed by the assessee u/s 158A for the assessment year under consideration. Hence we dispense with the formality of seeking again the comment of the AO in view of the observations made by the Tribunal on similar declaration filed under section 158A in relation to A.Y. 2006-07. We admit the declaration filed by the assessee and dispose off this ground of appeal with the direction the AO will decide/ apply the findings/directions as will be given in the order of the Hon'ble Bombay High Court on the question of law framed by the Hon'ble Bombay High Court - Decided in favour of assessee as directed Disallowance under section 14A - CIT(A) restricted the disallowance to the extent of expenditure claimed by the assessee in the P & L account - Held that:- CIT(A) has observed that the total expenses debited in the P & L account is at ₹ 57,492/-. The AO himself has restricted the amount of disallowance to that extent. As per law, the disallowance of expenditure cannot go beyond the total expenditure claimed by the assessee in the P & L account. Under such circumstances, there is no infirmity in the order of the Ld. CIT(A) in restricting the total disallowance under section 14A to the extent of total expenditure debited in the P & L account. - Decided against revenue.
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2015 (10) TMI 736
Addition U/s 14A - CIT(A) deleted the addition - Held that:- There is a categorical finding by CIT(A) that investment in share was made prior to procurement of loan and security deposit given to East Commercial Pvt. Ltd. of ₹ 11.9 crores. According to CIT(A), the entire loan has a direct nexus with the taxable income and he also noted that assessee does have sufficient funds for investment and loan amount have not been invested in the investment i.e. purchase of share and mutual funds. Once this is the position, the same was put before to Ld. DR but he could not controvert the findings of CIT(A) that assessee has no funds available or the investment in share or mutual fund is out of borrowed funds. In view of the facts and circumstances of the case, we confirm the order of CIT(A). - Decided against revenue. Addition of commission expenses - AO disallowed the claim of commission on the ground that no services were rendered by the commission agents, and, that the payments made to them were otherwise than for the purpose of business - CIT(A) deleted the addition - Held that:- We find that the genuineness of the claim has been verified by the AO in course of the remand proceedings. We further find from the facts of the case that the assessee has entered into agreement with the commission agents, and, the commission paid as per the terms of the agreement. We find from records that the assessee has filed complete details before the AO. The payments were made through banking channel, and, tax was also deducted at source. The books of accounts, bank statements, and, other relevant documents were produced, and, the AO has not found any defects in such books or documents. We find that in immediately preceding assessment year, the AO in the remand report, the AO has admitted that the nature of services rendered has been mentioned in the agreement, and, the commission agents have also confirmed rendering of services to justify the claim of commission. On the other hand, there is no material on record to show anything that could cast suspicion or doubt about the genuineness of the claim. In view of the above, there is no basis or justification for the disallowance made by the AO and CIT(A) has rightly deleted the disallowance made by AO. - Decided against revenue.
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2015 (10) TMI 735
Penalty under section 271(1)(c) - disallowance of loss - books of account of the company deliberately not produced before the AO as concluded by CIT(A) - Held that:- This is not a fit case for imposition of penalty u/s 271(1)(c) as in assessment order, no incriminating document is alleged to be discovered as a result of search or has been relied on by AO in assessment order to disallow the loss. There is no finding of the AO alleging any document showing unaccounted sales or purchases or inflation of expenses or any other unaccounted income. Assessee's contention about non service of notice u/s 143(2) till the last date of limitation has not been rebutted. Consequently the impugned assessment stands deemed as abetted. In view thereof there is merit in assessee's plea that notice u/s 153A cannot be issued for an abetted assessment, based on search & seizure operations on 27-08-2008 where no incriminating documents as a result of search are discovered. The scope of the assessment u/s 153A is limited to incriminating documents/evidence found as a result of search. In search and seizure operations admittedly no incriminating material belonging to this assessee was found. It is by now settled law that the scope of the assessment u/s 153A is limited to incriminating documents/evidence found as a result of search. There is no justifiable basis to disbelieve the assessee's contention that the books of accounts could not be produced as they were in the custody of Shri Atul Burman who also replied that he has left the company. Besides ld. CIT(A) in AY 2007-08 has endorsed the fact of disputes between directors and assessee's sufficient cause in not producing the books of accounts. Assessee's contention that in search assessments of other group cases which were in their control, all the documents and books were duly produced is not rebutted. There is no reason to assume as to why assessee will not produce the books of a loss making concern. This also indicate that non production of books was non deliberate. Except non production of books, no reason or basis whatsoever has been assigned by authorities below in disallowing the entire loss. Thus disallowance is based on pure guesswork and not on any cogent reason. Hon'ble Apex Court in Hindustan Steels Ltd. Vs. State of Orissa (1969 (8) TMI 31 - SUPREME Court). has held that Penalty shall not be imposed merely because it is lawful to do so. Even if a minimum penalty is prescribed the authority shall exercise the discretion judicially and on consideration of all the relevant circumstances; the penalty should not be imposed when there is technical or venial breach of the provisions. - Decided in favour of assessee.
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2015 (10) TMI 734
Rejection of books of accounts - addition made for suppression of turnover - Held that:- AO all through the assessment order has not brought out any specific defect in the books of account produced by the assessee. No doubt he mentioned that assessee had consumed 34897.80 MT of coal and 32008.50 MT of iron ore but had given production of only 29082 MT of sponge iron. It is not known from where the AO found the norm that 1 to 1.1 MT of coal and 1.3 to 1.4 MT of iron ore was the standard requirement for producing 1 MT of sponge iron. Assessee had stated that consumption of these raw material was dependent on the moisture and dust content, operational environment and plant technology used. Assessee had also stated that it was operationalising a second kiln and this fact was not disputed by the lower authorities. When a new kiln is being operationalised for which the assessee had produced invoices in support of procurement of machinery and also pointed out the requirement of injecting washed iron ore for the new kiln, and pointed out these to be the reason why there were excess consumption of coal and electricity during the months of October to December 2005, these should not have been brushed aside lightly by the lower authorities. Purchase of large quantity of coal and maintenance of iron ore stock cannot be termed as defect in accounts when the purchases were duly reflected in the books and the stock register. As to the letter received by the AO from DGCEI it is not disputed that the survey done by the Central Excise were after the relevant previous year. Assessee cannot be saddled with any addition for suppressed sale based on a survey conducted in a succeeding year when the excess stock found at the time of survey is not collated with the production data for the preceding year Asssessee was not a simple producer of sponge iron but they were doing many other activities and there was no defects or lacuna noted by the sales-tax authorities. Hon'ble Allahabad High Court in CIT v. Subhash Chand (2004 (8) TMI 27 - ALLAHABAD High Court) has clearly held that the records of the assessee once accepted by the sales-tax authorities, could not be given a go-by by the Income-tax authorities. Rejection of the books of account u/s.145(3) of the Act has got very serious consequence on an assessee and cannot be done in a light hearted manner unless such defects are manifested in the books of account and can be pointed out with certainty. We are of the opinion that there was no occasion or instances of this nature pointed out by the AO in the assessment order, except for generalisations based on hypothetical standards, the source of which was never authenticated. The additions, in our opinion, had no legs to stand. Such additions stand deleted. - Decided in favour of assessee.
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2015 (10) TMI 733
Disallowance of interest expenditure claimed against Short Term Capital Gains - Held that:- In the instant case, it is not the case of the assessee that she has applied for Shares under Initial Public Offering. Hence, the case laws relied upon by Ld A.R is not applicable to the instant case. The question of deduction of interest against the sale value of shares would arise only if the interest expenditure is capitalized. In the instant case, it is not shown to us that the assessee has capitalized the interest expenditure in accordance with the principles discussed above. Accordingly, in our view, the Ld CIT(A) was justified in holding that the interest expenditure is not deductible against short term capital gains. - Decided against assessee. Non consideration of revised return of income - According to the assessee, the Ld CIT(A) was not correct in holding that the said fact is relevant only for penalty proceedings - Held that:- We have already noticed that the assessee has filed revised return of income only on 26.07.2010. Under the provisions of sec. 139(5), the revised return of income for the year under consideration could be filed on or before 31.3.2010. Since the revised return of income was filed by the assessee after the expiry of the time limit prescribed under the Act, the AO did not consider the same. As stated earlier, the AO has made certain observations by making certain inferences. Since those inferences are not relevant in the quantum assessment proceedings, the Ld CIT(A) held the ground urged against the same as premature. Though the assessee has urged this ground in this regard, we also do not find necessary to express any opinion in this regard. - Decided against assessee.
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2015 (10) TMI 732
Disallowance of prior period expenses - Held that:- In the instant case, there is no material to show that the assessee had acknowledged the liability by 31.3.2008. Since the contractor has raised the bill on 30-06-2008 and both the parties have agreed for the said amount by that date, the liability relating to the above bill gets crystallized only on 30-06-2008 and accordingly, in our view, it cannot be considered as prior period expenses. We find merit in the alternative contention of the Ld A.R also, i.e., even, if it is considered as an item of prior period expenses, the same is required to be allowed as deduction during the instant year only since the assessee has deducted TDS during the current year. As the assessee submitted that it is declaring income on completion of flats for accounting the income from building activities. If that be the case, the construction expenses will have been shown as Work in progress only in the immediately preceding year and the same would have been allowed as deduction only in the year in which the flats are sold. In that angle also, the impugned expenses may not fall in the category of “Prior period expenses”. - Decided in favour of assessee.
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2015 (10) TMI 731
Capital gain - exchange of flats - Held that:- We have heard the parties on this issue. Admittedly, the assessee, along with the other flat owners, has given the land and building for development purposes. There should not be any doubt that the builder has come with the proposal of development, only because he could make the profit by constructing additional flats by using the TDR available and selling those additional flats. In this process, the assessee has actually sold his share of right in the TDR and has also parted with his old flat and the said transactions, in our view also, would give rise to capital gain. Further, as observed the Ld CIT(A), the assessee has exchanged the existing flat with a new flat plus compensation amount. Under sec. 2(47) of the Act, the expression “transfer” includes exchange also. Hence, in our view, the Ld CIT(A) was justified in holding that the impugned transaction would give rise to Capital Gains. - Decided against assessee. Compensation received towards hardship and other inconveniences treated as part of consideration - Held that:- The assessee was entitled to receive a flat of 441 Sq. ft. and ₹ 2,50,000/- in cash towards hardship compensation. Since the above said amount has been given as consideration for handing over the old flat, in our view, the tax authorities are justified in taking as part of consideration. Amount received by the Assessee from the developer as rent compensation - According to the assessee, the AO has assessed the same as part of capital gains - Held that:- We notice that the first appellate authority has rejected the identical ground urged before him on the reasoning that there is no discussion in the assessment order about the assessability of the amount of ₹ 2,20,000/-, referred above. At the time of hearing, the ld A.R admitted that the AO did not discuss about the taxability of ₹ 2.20,000/- referred above. Hence, we are of the view that the ld. CIT(A) was justified in rejecting this claim, as the same is not an issue arising out of the assessment order. Taking cost of the of flat as NIL - computation of capital gain - Held that:- The ‘mother of the assessee’ becomes the previous owner of the property. Since she has acquired the property prior to 1.4.1981, the assessee is entitled to adopt the market value as on 1.4.1981 as the cost of acquisition of the property. Accordingly we set aside the order of Ld CIT(A) and direct the AO to adopt the market value as on 1.4.1981 as cost of the property for the purpose of computing the Capital gain. We have given this direction on the impression that the assessee herein has inherited the old flat from his father. We notice that the manner of acquisition of the old flat by the assessee is not clearly brought out in the orders. Hence, the AO may also verify the manner of acquisition of flat and if it is found that the manner of acquisition is not in the methods listed out in sec.49 of the Act, the AO may then decide the issue in accordance with the law. - Decided in favour of assessee for statistical purposes. Rejection of deduction claimed by the assessee u/s 54 - Held that:- CIT(A) did not adjudicate this issue. We notice that the AO rejected the above said claim on the reasoning that the allotment of new flat cannot be considered as either purchase or consideration. We are unable to agree with the same, since we have already held that the handing over of the possession of the old flat is a “transfer” within the meaning of Sec. 2(47) of the Act. In consideration of the transfer, the assessee has obtained a new flat and certain sum by way of money. When the value of new flat is taken as part of sale consideration, then the said value should also be considered as investment made by the assessee eligible for deduction u/s 54 of the Act. However, the assessing officer is required to examine whether the new flat was constructed within the prescribed period. From the assessment order, the relevant facts are emanating. Hence, we set aside this matter also to the file of the AO with the direction to re-examine the issue of deduction claimed u/s 54 of the Act. - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 730
Computation of Capital gains - CIT(A) confirming the amount of the fair market value as on 1.4.1981 determined by the AO - assessee was allotted a piece of land measuring 0.50 acres in an Industrial Estate located in Chennai by Tamilnadu Small Industries Development Corporation Ltd in the year 1979 and during the year under consideration, the assessee sold the above said industrial land - Held that:- There is no dispute with regard to the fact that the assessee had purchased the impugned land prior to 1.4.1981 and hence it is entitled to adopt the fair market value as on 1.4.1981 (hereinafter “FMV”) as its cost for the purpose of computing Capital Gains. In the original assessment proceedings, the AO had adopted the FMV at ₹ 67,500/-. However, in the impugned set aside proceedings, the AO adopted the rate of ₹ 44,000/- determined by the DVO. However, a perusal of the report given by the DVO would show that the said report is very much bald without giving any basis or authority. In this case, the assessing officer has simply adopted the value determined by the DVO. We have already noticed that the report given by the DVO is liable to be rejected. On the contrary, we have seen that the Guide line value as on 1.4.1981 fixed by the State Government for the impugned plot was ₹ 10,89,000/-. The other factors such as available infrastructure, access to the infrastructure, commercial importance etc. also need to be taken into consideration. The assessee has also claimed to have carried out certain improvements, which will increase the commercial value of the land. Therefore, this Tribunal is of the considered opinion that the fair market value fixed by the assessing officer at ₹ 44,000 is very low. We notice that the Registered Valuer has determined almost the double the amount of Guide Line Value, which also appears to be on the higher side. This Tribunal is of the considered opinion that after taking into consideration the commercial importance of the property and the infrastructures available, the ends of justice would be met if the fair market value of the property as on 1.4.1981 is adopted by increasing the Guide Line value by 25% and the same work out to ₹ 13,61,250/- (Rs.10,89,000/- x 1.25). Accordingly, the orders of the lower authorities are set aside and the assessing officer is directed to estimate the fair market value of the impugned property as on 01-04-1981 at ₹ 13,61,250/- and compute the capital gain accordingly. - Decided partly in favour of assessee.
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2015 (10) TMI 729
Reopening of assessment - disallowance made under sec.40(a)(ia) for non-deduction of tax at source - Held that:- As disallowance made under Sec.40(a)(ia) also becomes part of income in the final computation. Definition of income in sec.2(24) being inclusive and not exhaustive, additions made on account of disallowances also would fall under it, not withstanding sub-clause(va) to (ve) thereof which specifically mentions items falling under 28(iiia)(iiib),(iiic),(iv) and (v). We cannot also say that the reason mentioned by AO was irrelevant, especially since originally the return was subjected only to processing under section 143(1) of the Act. As for the ground raised by the assessee the objection raised by it on the notice under section 148, was not dealt with by the AO, it is necessary to have a look at such objection as a reading of it does not show any specific objection raised by the assessee for the AO to deal with, except narrating the course of events in its appeals on orders of tax deduction officer. - Decided against assessee. Applicability of provision of section 40a(ia) - as per the assessee the recipients furnished Form 15G/H and it had no obligation to deduct tax - Held that:- Assesee had obtained 15G/H form from the recipients, though filed belatedly. Irrespective of the date of filing these forms, assertion made therein by the payees that they were not having taxable income or were having income below taxable limits has not been found to be incorrect. When assessee was well aware that recipients had no taxable income, just because the declarations in Form 15G/H were obtained late, it cannot be fastened with the consequence that arise for non-deduction of tax at source. We cannot say that there was a failure on the part of the assessee that would attract the rigours of Sec.40a(ia). - Decided in favour of assessee.
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Customs
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2015 (10) TMI 763
Over valuation of items imported - Consignment of CD ROMs declared as computer software – Appellant alleged that consignment was overvalued and Respondent wrongly claimed benefit of exemption Notification No.11/97-Cus and evaded payment of excise duty – Respondent contends that Electronics and Computer Software Export Promotion Council opined that goods were computer software and valuation so made is fair and correct and the same would be exempted under the Notification – Held That:- Revenue accepted that CD ROMs which were imported by the respondent-company were capable of interactivity and the same would be covered by the definition of 'computer software' contained in the exemption Notification. - Declaration of price in the Bill of Entry was correct and goods are wholly exempt from customs duty thus there could be no motive in mis-declaration of value – Decided in favour of the Respondent.
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2015 (10) TMI 762
Claim for Refund of Penalty – Mis-declaration of goods – Penalty imposed - Commissioner (Appeals) annulled the adjudication order passed by Assistant Commissioner of Customs – As such, refund claim filed by the Petitioners with KASEZ, Gandhidham refused to refund the claim stating that there are no provisions in SEZ Act for refund of excess customs duty paid by SEZ units – Petitioner contended that Respondents have no authority to retain the amount paid towards penalty under the adjudication order – Respondent contested that Appellate Commissioner has not decided the case on merits and remanded the case back for de novo adjudication by the proper authority and the claims for refund filed by the petitioners are thoroughly misconceived. Held That:- Once the orders-in-original have been set aside, the Respondent has no authority to retain the amounts deposited by the petitioners towards duty after being annulled by the orders passed by the Appellate Commissioner – Contentions of the Respondent are premature, cannot be countenanced - Petitions succeed and allowed – Decided in favour of the Petitioner.
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2015 (10) TMI 761
Mis-declaration of country of origin - levy of penalty where no duty is payable - Re-import - Export goods were rejected by the foreign buyer - after examining the goods, the department came to the conclusion that the goods covered by the bill of entry were the same as those exported under the four shipping bills. - Held That:- exemption in terms of Notification No.94/96-Cus - No dispute arise about the fact that goods in question were not dutiable goods, by virtue of the exemption notification - since no duty is payable, no penalty can be imposed – Tribunal followed the express language of Section 112(a)(ii) - Found no merits in the appeal hence dismissed – Decision as made in case of Associated Cement Companies Ltd., v. Commissioner of Customs [2001 (1) TMI 248 - Supreme Court of India] – Decided against the Appellant.
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2015 (10) TMI 760
Failure to fulfil obligation of Custom Broker – Suspension of broking license – Applicant-CHA filed 11 Bills of entry for clearance of goods for importer-describing said goods as "Silicon Electrical Steel Strips/scrap originated from old and used dismantled transformer" under Tariff item 72044900 – It however, appeared to Department that impugned goods are used silicon electrical steel strips, being cleared under guise of scrap –appellant CHA failed to advise importer to obtain license or authorization for said import of second hand goods and by not advising importer into this matter, applicant violated obligation under regulation 11 (d) of CBLR 2013 – Consequently, license of applicant was suspended – Held that:- only upon establishing/determining whether impugned goods are steel strips or metal scraps, violation of Regulation 11 (d) of CBLR, 2013 on part of applicant CHA could be ascertained – Admittedly applicant is suffering as his livelihood is affected by not allowing him to operate his business as Customs broker since his license was suspended – In view of peculiar circumstances, it is appropriate to stay order of suspension – Accordingly, order is stayed.
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2015 (10) TMI 759
Mis-declaration of goods – declaration of import as Diethyl Hexyl Pthalate (DEHP) instead of Di-Octyl Pthalate (DOP) – Demand of differential duty – levy of penalties – Held that:- adjudicating authority has come to finding that DEHP and DOP are same product and therefore declared assessable in Bill of Entry is liable to be rejected – To hold appellant guilty of mis-declaration on ground that it did not mention in Bill of Entry all synomys of impugned goods is completely devoid of logic, reason, rationale and legal basis – No requirement under Customs law that all synonyms of goods imported must be declared failing which it will be tantamount to mis-declaration – Indeed in case of CC, New Delhi Vs. Vee Kay Polycoats Ltd. [2013 (8) TMI 775 - CESTAT NEW DELHI] tribunal held that technical literature shows that DOP and DEHP are used interchangeably and that contention of manufacturer of products and importer cannot be brushed aside that products were different in quality and price – Impugned order not found sustainable and therefore same is set aside – Decided in favour of Assesse.
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Corporate Laws
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2015 (10) TMI 758
Payment of License Fees post Winding Up – Appellant demands from Official Liquidator to vacate and/or shift goods and materials of the Respondent – Payment of arrears of License fees is also sought till the possession of the premises – OL of the Respondent contends that he may either dispose of the movables by public auction or shift the furniture, fixtures and records lying within the premises to another property of the Company – Respondent opposes the Applicant’s prayer for payment of arrears of Licence fees stating that the Applicant is in the position of an unsecured creditor and cannot get any priority in payment. Held That:- Applicant is entitled to preferential payment which comes under liquidation expenses - Official Liquidator is permitted to shift the furniture, fixtures and records lying in the premises - Handing over vacant and peaceful possession of the premises to the Applicant is directed – Payment of the licence fees to the Applicant till the date of handing over possession of the premises after adjusting the security deposit held by the Applicant is ordered – Decided in favour of the Applicant.
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Service Tax
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2015 (10) TMI 788
Pre-deposit - Refusal to give credit for Service Tax already deposited - classification - Service provided by Petitioner is “Transportation of Passengers by Air Services” - Department contends that Petitioner provides services of “Supply of Tangible Goods for use” - Tribunal refused to give credit for the deposit made under Section 35 of the Central Excise Act, 1944 on the ground of submissions made under different category – Held That:- petitioner has a prima facie case - Respondents ought to give the petitioner credit for the service tax amount – petitioner need not deposit 7.5% in the category of “Supply of Tangible Goods for use” and that its appeal shall not be rejected by the Tribunal on the ground that the petitioner has not deposited the amount in the said category.
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2015 (10) TMI 787
Validity of Tribunal's order - held that:- Tribunal had erred in dismissing the appeal instead of remanding the matter. - Once the Tribunal has remanded the matter to the Adjudicating Authority for a fresh decision, the same order should have been passed in the instant appeal. Consequently, on this short ground, we allow the appeal and quash the order of the Tribunal and remit the matter to the Adjudicating Authority to decide the matter afresh - Decided in favour of assessee.
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2015 (10) TMI 786
Delay in passing order - Recovery of service tax - Impugned order passed after a period of 22 months – Petitioner contended that any unreasonable delay to be avoided in passing adjudication order – Held That:- sitting on files and for months together and sometimes beyond the financial year is, thus, not conducive to the interest of nation's economy. The trust and faith reposed in them is also then betrayed. If no action is taken against such Officers and they are allowed to go scotfree, then, apart from the Revenue getting involved in litigation in higher Courts and Tribunal, others would be encouraged. Comprehensive affidavit needs to be filed by the Chief Commissioner of Service Tax stating measures taken or proposed to be taken - Number of files and matters pending and serially to be disclosed with complete data and figures – Commissioner needs to inform the time required to complete all the pending cases.
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2015 (10) TMI 785
Order passed without an opportunity of being heard given to the Petitioner - Impugned orders were passed on the merits of the Refund Applications – Letters filed by the Petitioner specifically accorded for an oral hearing which was not given – Respondent could not dispute that a prior hearing (oral / personal) was not given – Held That:- Opportunity of a personal hearing be given to Petitioners before passing fresh speaking order – Other contentions in regard to the Refund Application are kept open.
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2015 (10) TMI 784
Demand of Service Tax – Appellant provide services of dredging service, supply of tangible goods service and transport of goods by Road Service and contends that service tax pertaining to the same has already been paid by the Contractor; though the work order could not be produced – Held That:- Prima facie, appellant was not able to make convincing reasons for complete waive of the confirmed dues. - Partial stay granted.
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2015 (10) TMI 783
Waiver of Service Tax – Appellant agrees with the liability of service tax; disposed certain amount further agreeing to pay the balance due in time – Held That:- Appellant is required to deposit the amount as directed and on compliance of the same balance due would stand waived and recovery stayed – Decided in favour of the Revenue.
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2015 (10) TMI 782
Denial of benefit of abatement - GTA service - Whether appellant is entitled to take 75% abatement as per the provisions contained in Notification No. 1/2006-ST dated 01/3/06 - Held that:- under this notification transporters providing services to the appellant should give a declaration that no Cenvat credit of input services is taken. It is the argument of the appellant that subsequent Notification No. 13/08-ST dated 01/3/08 did not have any condition that any service tax credit on input services has been taken by the transporters and that subsequent Notification No. 13/08-ST convey the intention of the Government for earlier Notification No. 1/2006-ST also. The argument made by the appellant is required to be rejected on the grounds that the Notification issued on 01/3/08 cannot be made applicable to the service tax liability for the period 01/1/05 to 31/1/08 when Notification No. 1/2006-ST dated 01/3/06 was operative. When Notification No. 1/2006-ST talks of not taking of Cenvat credit on input services taken by the transporter then it is obligatory on the part of the appellant or transporter to at least give a general declaration to the effect that no service credit of input services is taken by the transporters - Decided against assessee.
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2015 (10) TMI 781
Demand of service tax - Cargo handling service - Loading unloading and stacking of sugar bags in godowns within the factory premises - Held that:- issue is indeed squarely covered in favour of the respondent by the judgement in the cases of Purshottam Lal (2014 (7) TMI 975 - CESTAT NEW DELHI) and Gaytri Construction Co. (2011 (9) TMI 481 - CESTAT, New Delhi) wherein it has been held that loading, unloading, lifting and stacking of sugar bags within the factory premises is not covered under cargo handling service. - Decided against Revenue.
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2015 (10) TMI 780
Demand of Service Tax – Business Auxiliary Service - Appellant conducted the lottery business liable to service tax under Section 55 (105) (zzb) ibid – Appellant contended that service is covered under Section 65 (105) (zzzzn) and the same is unconstitutional and demand is unsustainable – Appellant further contended that government of Arunachal Pradesh was providing service and the Appellant was paying them – Respondent contends that only state governments are allowed to conduct lotteries and Appellant was allowed certain amount of earning which was taken as taxable value. Held That:- Though Section 65(105)(zzzn) has been declared to be unconstitutional but constitutionality of a particular provision does not negate the constitutionality of other similar provision - BAS was rendered by the appellant to the Government of Arunachal Pradesh - Impugned demand is sustainable and appeal dismissed – Decided against the assessee.
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2015 (10) TMI 779
Job work - whether manufacturing of medicines containing alcohol amounts to manufacture and liable for service tax under business auxiliary services or not Appellant contested that medicines manufactured containing alcohol undoubtedly arise out of manufacturing process Revenue contented that exemption from payment of service tax under business auxiliary services can be claimed only when excisable goods are manufactured. Held That:- Appellant is manufacturer of medicines which contains alcohol which amounts to manufacture and exemption from service tax is available to a job worker in such case - Basic thrust of the Revenue that activity of manufacturing is not there, is on wrong footing and products manufactured by the Appellant are chargeable to Excise duty - Impugned order is unsustainable Appeal is allowed - Decision made in the cases of Rubicon formulations Pvt. Ltd., Vs. C.C., C.E. S.T., Aurangabad [2009 (11) TMI 356 - CESTAT, MUMBAI] and Midas Care Pharmaceuticals Vs. Commr. Of C. Ex. Aurangabad [2010 (1) TMI 247 - CESTAT, MUMBAI] followed - Decided in favour of the assessee.
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2015 (10) TMI 713
Validity of impugned order - whether the order passed by the First Appellate Authority can be set aside by the Tribunal without meeting the reasons recorded in the order of the First Appellate Authority - Held that:- Except for recording that there has been delay in deposit of the service tax and the delay is to be compensated by interest, no other reasons have been recorded for upsetting the findings recorded by the First Appellate Authority. The First Appellate Authority had found it just and proper to waive of the interest after recording a finding that the money had been deposited in the specific account of the Central Government and that to on day-to-day basis - minimum expected from the Tribunal was to pass a reasoned order, which may disclose the application of mind for the purpose of upsetting the finding recorded by the First Appellate Authority. - Decided in favour of assessee.
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2015 (10) TMI 706
Maintainability of appeal - Availability of alternate remedy - Held that:- against order of the 2nd respondent, the petitioner has an effective alternate remedy by way of an appeal before the Customs Excise and Service Tax Appellate Tribunal. No doubt, the learned counsel for the petitioner would point out that the filing of an appeal before the Tribunal necessitates a payment of 10% of the tax confirmed against the petitioner by Ext.P13 order, as a precondition for maintaining the appeal before the Tribunal. I find, however, that the said condition is not so onerous as would deprive the petitioner of an effective right of appeal against Ext.P13 order. This is more so because, when compared to the erstwhile provisions under the Finance Act, 1994, as amended, governing service tax, the present requirement of depositing only 10% of the tax amounts confirmed against the petitioner, as a condition for maintaining the appeal, is fairly reasonable and imposes a lighter burden on an assessee. - The present writ petition, in its challenge against Ext.P13 order, is hence dismissed as not maintainable. - Decided against assessee.
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2015 (10) TMI 698
Waiver of pre deposit - Invocation of extended period of limitation - Held that:- Issues which have been raised on behalf of the assessee would have to be adjudicated upon only at the final hearing of the appeal. The impugned order of the Tribunal is a reasoned order and cogent reasons have been indicated for directing a pre-deposit of the service tax together with proportionate interest. The appeal does not give rise to any substantial question of law. - Decided against assessee.
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2015 (10) TMI 640
Condonation of delay - delay of 109 days - person, who was dealing with the file did not bring it to the notice of the appellant and he left the job - held that:- aid reason is a bona fide and sufficient reason to condone the delay of 109 days. Sufficient cause having been shown, the Appellate Tribunal ought to have condoned the delay. - Delay condoned.
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Central Excise
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2015 (10) TMI 789
Levy of penalty u/s 11AC read with Rule 15 - Availment of inadmissible CENVAT Credit was reversed on pointing out by the department - Held that:- Where the duty is determined under Section 11A(2), the penalty under Section 11AC can be imposed. In the present case there was neither any show cause notice nor any adjudication order in respect of payment of cenvat amount of ₹ 4,38,508/- by the appellant. Therefore, this amount has not been determined under Section 11A (2). Consequently, in my considered view, the penalty under Section 11AC cannot be imposed in the present case. I, therefore, set aside the penalty imposed under Section 11AC read with Rule 15 of the Cenvat Credit Rules, 2004 - interest is chargeable from the date of credit taken in the cenvat account by the appellant irrespective of the fact that the said credit was not utilized. Therefore, the interest under Section 11AB demanded by the lower authority and upheld by the Commissioner (Appeals) is maintained. - Decided in favour of assessee.
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2015 (10) TMI 774
Denial of rebate claim - Export of manufactured goods - excise duty paid both on the inputs and on the manufactured product - Rule 18 - rebate / refund rejected on the ground that, the assessee is entitled to one of the two claims for rebate, i.e., either rebate of duty paid on exported goods or the duty paid on inputs used in the exported goods, and not on both of them - Held that:- Rule 18 is enabling provision which authorises the Central Government to issue a notification for grant of these rebates. Exercising powers under this Rule, the Central Government has issued necessary notifications for rebate in respect of both the duties, i.e., on intermediate product as well as on the final product. Further, and which is more significant, these notifications providing detailed procedure for claiming such rebates contemplate a situation where excise duty may have been paid both on the excisable goods and on material used in the manufacture of those goods and enables the exporter to claim rebate on both the duties. This kind of procedure and format of prescribed Forms, already described above, becomes a clincher insofar as understanding of the Government of Rule 18 of the Rules is concerned. It is to be borne in mind that it is the Central Government which has framed the Rules as well as issued the notifications. If the Central Government itself is of the opinion that the rebate is to be allowed on both the forms of excise duties the government is bound thereby and the rule in-question has to interpreted in accord with this understanding of the rule maker itself. Of course, these two words normally 'or' and 'and' are to be given their literal meaning in unless some other part of same Statute or the clear intention of it requires that to be done. However, wherever use of such a word, viz., 'and'/'or' produces unintelligible or absurd results, the Court has power to read the word 'or' as 'and' and vice-versa to give effect to the intention of the Legislature which is otherwise quite clear. Another principle of interpretation of statutes, namely, principle of contemporanea expositio also becomes applicable which is manifest from the act of the Government in issuing two notifications giving effect to Rule 18. This principle was explained by the Court in Desh Bandhu Gupta and Co. and others v. Delhi Stock Exchange Association Ltd. [1979 (2) TMI 175 - SUPREME COURT OF INDIA] - exporters/appellants are entitled to both the rebates under Rule 18 and not one kind of rebate. The impugned judgments are, accordingly, set aside - Decided in favour of assessee.
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2015 (10) TMI 773
Valuation - Whether the Physician Samples are required to be valued at the pro-rata basis of traded goods or the same are to be valued at transactions value or value determined by cost construction method - Held that:- both the sides are disputing on the facts and law of the case. Therefore, it should be re-examined by the Adjudicating authority. In view of that, we set aside the said impugned order. The matter is remanded to the Adjudicating Authority - Decided in favour of assessee.
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2015 (10) TMI 772
Extension of stay order - Held that:- Tribunal in the case of M/s Haldiram India Pvt.Ltd. & others Vs Commissioner, Central Excise & Service Tax - [2014 (10) TMI 724 - CESTAT NEW DELHI (LB)], held that the Stay Order passed by the Tribunal may be extended after considering the necessary facts as it would authorize the exercise of discretion by the Tribunal for grant of such extension. - Appeal was not taken for hearing by the Tribunal as there is huge pendency of the appeals. It is noted that lot of appeals have already been listed and therefore it is difficult to take up the appeal hearing at this stage. - Stay extended.
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2015 (10) TMI 771
Denial of CENVTA Credit - Capital goods - Held that:- as per the Hon’ble High Court of Karnataka in the case of CCE&ST, LTU, Bangalore Vs. Bill Forge Pvt. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT] wherein it was held that if credit has been inadvertently taken and stands reversed before utilization, no interest liability would arise against them. Revenue has also not given any reasons as to whether the said credit so availed and reversed was utilized - no reasons to interfere with the impugned order of the Commissioner (A) - Decided against Revenue.
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2015 (10) TMI 770
CENVAT Credit - Invoices against which the cenvat credit availed shows the address of their Head Office whereas the cenvat credit was availed by one of the units - Penalty u/s 11AC - Held that:- Appellants had taken cenvat Credit on the basis of invoices raised in the name of their Head Office. The said Cenvat Credit has been taken by one of their manufacturing unit. There is no allegation of double availment of the said Cenvat Credit by any other unit. It is also observed that the appellants had reversed the cenvat credit on being pointed out by the audit. The appellants have not seriously contested the necessity or correctness of reversal of the Cenvat Credit before the lower authorities. However, they are seriously contesting the levy of interest and penalty. On the issue of levy of interest, there are conflicting decisions by various Hon’ble High Courts and different Benches of the Hon’ble Tribunal - in this case the appellant had reversed the credit as soon as it was pointed out that they had wrongly availed the same and they had not utilised the Cenvat Credit so availed till the time of reversal of the same.Therefore, the decision of Hon’ble Jurisdictional High Court relying upon the decision of the Hon’ble Supreme Court on the very same issue is applicable in this case. We, therefore, hold that no interest is payable in the present case. On the issue of penalty under Section 11AC, it is seen that the same is not leviable as there were no intention to evade duty, as is evident from the facts of the case. - Demand set aside - Decided in favour of assessee.
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2015 (10) TMI 769
Cenvat credit - eligible credit - supplier paid the amount on exempted goods as reversal of credit and shown the same on Invoice as duty of excise - Invocation of extended period of limitation - Held that:- Input supplier paid the amount under Rule 6(3) of the said Rules, but, they have shown in the invoices as Central Excise duty. According to the learned Advocate, the input supplier shown amount in the invoices as Central Excise duty, therefore, it can not be treated an amount under Rule 6(3). Learned Advocate also contested the demand of the said amount as barred by limitation. I am unable to accept the contention of the learned Advocate on merit as well as on limitation. The mere mentioning of Central Excise duty wrongly in the invoice by the input supplier, appellant is not entitled to take CENVAT credit. - input supplier paid amount of ₹ 14,04,483/- as Central Excise duty, as evident from the invoices. But, in the case of ₹ 5,64,435/-, it was found that the input supplier have not paid Central Excise duty and wrongly declared the Central Excise duty in their invoices. This fact, is coming out from the verification report of the jurisdictional Assistant Commissioner, as mentioned in the impugned order. Thus, it is clear hit by Rule 3 of Cenvat Credit Rules, 2004. Regarding the demand is barred by limitation, it is seen that the appellant was earlier engaged in the manufacture of parts of syringes and were clearing the same without payment of duty and the amount 10% paid by the appellant on the value of exempted goods as per Rule 6(3) of the said Rules. - appellant knowing fully well had taken the credit, which they were not eligible to avail in the cenvat account. So, extended period of limitation would apply. - Decided against assessee.
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2015 (10) TMI 768
CENVAT Credit - whether the appellant is entitled to take Cenvat credit on the rejected goods received by them from their customers which were dismantled by them and part thereof used by them in manufacture of new product or not - Held that:- The provisions of Rule 16 (1) of the Central Excise Rules 2002 are relevant for availment of Cenvat credit thereon - assessee is entitled to take Cenvat credit which are duty paid. If the said goods are being remake, revision, recondition or for any other reason the assessee is required to record such receipts in their records and is entitled to take Cenvat credit on duty paid on such goods on their receipt. Admittedly, in this case the goods which have been received were damaged goods by the appellant have been dismantled and used for manufacturing of new product. Therefore, the appellant satisfied the conditions of Rule 16(1) ibid. Therefore, I hold that appellant is entitled to take Cenvat credit on these rejected goods. The said view has been supported by this Tribunal in the case of International Tobacco Ltd. (2011 (9) TMI 862 - CESTAT NEW DELHI), although that being a stay order. Therefore, I hold that appellant have taken the Cenvat credit correctly. - Impugned order is set aside - Decided in favour of assessee.
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2015 (10) TMI 767
Valuation - advertisement by the dealers - duty on the amount reimbursed by the appellant to the dealers - Held that:- Any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses etc. Thus, if any amount is spent by AMA or dealer for advertisement or publicity, the same will form part of the transaction value. However, in the present case, we note that AMAs are not advertising the goods per se but what they are doing is to put an advertisement such as in Yellow Pages and in other places like bill-board so as to indicate that they are dealers of INDEF equipment. The appellant has produced copy of certain advertisement which have been made in the Yellow Pages or the bill board which have been put on the sides of the road. - advertisements are mainly to the effect that a particular dealer deals in the product of the appellant. Thus, these advertisements cannot be called as advertisements for the manufactured goods but are advertisements of the dealer. Undoubtedly, such advertisement indirectly helps the appellant and it is for this reason that they are reimbursing 50% of the expenses. - this is an amount which is paid by the appellant to its dealer out of the sale proceeds or the value already recovered or to be recovered by the appellant from its AMAs/dealers. Thus, the said amount cannot be considered as additional consideration. - Decided in favour of assessee.
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2015 (10) TMI 766
Waiver of pre deposit - whether the Cenvat credit of duty paid on inputs used in the manufacture of finished goods, which were supplied to SEZ developers would be admissible or not - held that:- Amendment to Rule 6 (6) of Cenvat Credit Rules, 2004 w.e.f. 31/12/08 has to be treated as retrospective amendment and for the period prior to 31/12/08 also the supplies to SEZ developers have to be treated as exports and the Cenvat credit in respect of inputs used in the manufacture of finished goods supplied to SEZ developers would be admissible. - Stay granted.
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2015 (10) TMI 765
Waiver of pre deposit - Duty demand - Clandestine removal - Undervaluation - Denial of Cenvat credit on inputs and capital goods - Held that:- When the receiver of the goods to whom the invoices are made categorically states that he has received the entire quantity and also he has not received any subsequent quantity, the documentary evidence can be said to have been corroborated by the statements recorded from the receiver and in such a situation charge of clandestine removal has to be held as established. In some invoices amount towards freight and insurance was shown as towards freight, insurance and packing. Even though amount charged was equal to the amount agreed upon, entire amount collected in this manner has been treated as amount towards packing and differential duty has been demanded. Since appellant has paid on services of installation, erection service and Cenvat credit taken is a common pool and there is no finding that inputs have not been used to provide service, appellant has made out a case for waiver. We direct the petitioner to deposit ₹ 94.5 lakhs (Rupees ninety-four lakhs and fifty thousand only) within four weeks - partial stay granted.
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2015 (10) TMI 764
Demand of interest - appellant had paid the central excise duty applicable on such additional consideration, but did not pay the appropriate interest, which is relatable to late payment of the central excise duty - Held that:- Central excise duty is leviable on removal of excisable goods from the factory. As per the concept of transaction value, the amount charged over and above the sale price, should also form part of the transaction value, for the purpose of payment of central excise duty, which has been accepted by the appellant in the present case. The fact of receiving of surcharge from its customer, M/s. JSW Steel Ltd. was known to the appellant beforehand, even though the invoice was raised subsequently at the end of the year. Since the additional consideration received on account of surcharge is relatable to the goods removed from the factory on different dates, the appellant was under statutory obligation to discharge the duty liability during the relevant month, during which the goods have been removed from the factory. Since the duty liability has not been discharged within the stipulated period, the appellant is liable to pay interest on such delayed payment of duty, for the reason that interest is compensatory in character, and the recipient of the tax dues is eligible to be compensated in the form of interest, for late receipt of the duty amount. - issue regarding payment of interest is no more res integra and accordingly, I find that there is no infirmity in the impugned order - Decided against assessee.
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2015 (10) TMI 728
Evasion of duty - Imposition of penalty - Held that:- order of the Settlement Commission on the previous occasion is lucid and leaves no room for doubt. The order of January 4, 2011 found that the petitioner company was liable to the extent of ₹ 33,44,227/- on account of additional duty. Such amount was required to be appropriated from the sum of ₹ 35 lakh that had been kept in deposit by the petitioner company. The Settlement Commission found that the petitioner company was liable to pay interest of ₹ 62,876/-, which was also required to be deducted from the deposit already made. - it is clear from the previous order in this case as to why the penalty was imposed. The petitioners were found by the central excise Commissioner to have evaded duty. The petitioners approached the Settlement Commission by offering to pay a substantial part of the additional duty and the Settlement Commission found that the petitioner company ought to be penalised to a certain extent for having evaded the duty that it was originally liable to pay. - In the light of the penalty imposed on the petitioner company herein and such penalty covering the expression “concealment of particulars of his duty liability” in Section 32-O of the said Act, the Settlement Commission cannot be faulted for having rejected the subsequent attempt at settlement. - Decided against assessee.
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2015 (10) TMI 727
Waiver of pre deposit - Undue hardship - Section 35F - classification of Tobacco Dust/Refuse mixed with lime combined with water packed in pouches - Held that:- Division Bench of the Madras High Court in the case of (2013 (4) TMI 203 - MADRAS HIGH COURT) did consider fresh materials placed before it and opined to grant appropriate relief rather than remanding the matter to the Tribunal but the facts of the present case are completely distinguishable from the nature of conduct attributable to the appellant himself when the Tribunal has granted indulgence to it on more than one occasion. Likewise, in the case of M/s. Prosafe International, the subsequent amendment on 6-8-2014 in Section 35F was considered while granting relief as virus of the enactment was under challenge which is not the case presently. Even otherwise, we are not persuaded to give a retrospective effect to a legislation expressly made prospective in nature and that too while considering a limited issue against an interim order. The readiness to deposit at 7½ % of duty assessed appears incongruous to the earlier stand of the appellant that come what may it was not in a position to deposit anything. - if the pre-deposit amount as directed on 7-9-2012 is deposited along with interest at the rate of 9% per annum from 7-9-2012 within a maximum period of 30 days from today, the Tribunal shall proceed to adjudicate the appeal on merits - Partial stay granted.
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2015 (10) TMI 726
Duty demand u/s 11D - Whether for the purpose of invoking the provisions of Section 11D, one need to be a manufacturer of goods or would it suffice if he is liable to pay duty of excise. The refinery/depots/installations of the Oil Companies are extended arms of the respective companies and have to be treated as a single entity - Held that:- In terms of Section 11D of the Act, the demand can only be made from the manufacturer of the goods and if any duty amount is collected in any manner as representing duty of excise. - issue has been finally put to rest by the Supreme Court (sic) in the case of Commissioner of Customs and Central Excise, Bhopal v. Indian Oil Corporation Limited reported in [2013 (12) TMI 880 - MADHYA PRADESH HIGH COURT]. Therefore, since we find that the issue had already been resolved by the Supreme Court in favour of the assessee, nothing remains to be considered in this appeal. - Decided against Revenue.
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2015 (10) TMI 725
Denial of CENVAT Credit - Whether the appellant company can avail the Modvat credit on the basis of original invoice - Held that:- Modvat credit cannot be taken on the original invoice. It is not the case of the appellant company that it lost duplicate copy of the invoice in transit - Modvat credit can only be availed on duplicate invoices and the Department is bound to follow the circular instructions in view of the judgment reported in Union of India v. Arviva Industries (I) Ltd. - [2007 (1) TMI 6 - SUPREME COURT OF INDIA] - It is clear that the circular instructions are binding on the department and in pursuance of circular instructions only, the order impugned before appellate authority was passed and that order needs no interference by this Court - Decided against Assessee.
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2015 (10) TMI 724
Waiver of pre deposit - Section 35F - Held that:- At the prima facie stage, the Court is not required to minutely and meticulously scrutinise each and every document produced. Suffice to state that once there is an order under challenge before the appellate authority then so long as it is not set aside and by a final adjudication, the appellate authority would not be justified in ignoring the findings in the order impugned before him. At the prima facie stage, all that the Authority was expected to find out is as to whether the duty has been demanded by relying on the relevant and germane material. It may be that the findings and conclusion in the order under appeal may be ultimately set aside but so long as they are not set aside, they cannot be completely brushed aside. - prima facie case to the extent noted is not made out, as the entire exemption of duty was not available, that the Commissioner (Appeals) directed the petitioner to deposit a sum of ₹ 35,00,000 - We do not find that the condition of pre-deposit as imposed is vitiated - Decided against assessee.
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2015 (10) TMI 723
Denial of exemption under notification dated 23.7.1996 - Captive consumption - Held that:- Tribunal held that the assessee has good prima facie case on merit and accordingly granted unconditional stay on an application filed by the assessee for waiver of pre-deposit - There is no merit in the instant appeal and the same is hereby dismissed. - Decided against Revenue.
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2015 (10) TMI 722
Waiver of pre deposit - Held that:- when an amendment is made the intendment of the legislature is to make an amendment prospectively unless it is specifically to be applied retrospectively. In this case the amendment has not been made retrospectively. A stipulation to that effect is usually contained in the amendment itself. The Tribunal in the impugned order dated 14.08.2015 has refused to go into that question and has simply relied on its own previous decision. It has not taken into consideration at all the Division Bench decision of this Court in the case of Ganesh Yadav(2015 (7) TMI 304 - ALLAHABAD HIGH COURT) - Thus, in conclusion, the commissioner will reconsider his decision dated 31.03.2015 in the light of the decision of this Court in the case of the petitioner as decided in Writ Petition No.300 of 2015 passed on 01.04.2015 and the second order dated 14.08.2015 will be reconsidered in the light of the case of Ganesh Yadav(2015 (7) TMI 304 - ALLAHABAD HIGH COURT) within a period - No coercive action may be taken against the petitioner until fresh decisions are taken on merits - Appeal disposed of.
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2015 (10) TMI 721
Valuation of goods - Denial of abatement claim - Refund claim u/s 11B - Denial on the ground that appellant had only deducted the trade discounts and cash deposits and that particulars of certain other discounts such as turnover discount, monthly consistency incentive and additional discount for which discounts were not available at that time - Held that:- appellant, they could not produce either before all the authorities or even before this court, proof to show that the benefit was passed on to the end users, viz., customers . Therefore, the very same issue as against the very same assessee was answered by this court in [2011 (8) TMI 1004 - Madras High Court] against the very same appellant herein. Therefore, these appeals are also liable to be dismissed. We are in respectful agreement with the ratio laid down in the decision reported in [2011 (8) TMI 1004 - Madras High Court], since the appellant could not produce the credit notes at any point of time until now. - Decided against assessee.
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2015 (10) TMI 720
Denial of CENVAT Credit - whether the manufacturer is entitled to claim credit for the duty paid by the job worker or not - Held that:- First respondent/assessee handed over plastic materials during the period from July 2006 to December 2006 to a Company by name Nypro Forbes Products Private Limited for carrying out certain job works. The goods were handed over after availing credit for inputs, but, not actually paying duty. The Company which undertook the job work, while returning the goods, after carrying out the job work, raised invoices, for amounts including the duty that they paid. Even according to the Department, the job worker was not liable to make payment of duty. But, since the duty was paid by the job worker and also claimed from the first respondent/assessee, the first respondent/assessee claimed credit - Department went on a wrong presumption that credit had been claimed twice by the first respondent. As a matter of fact, the assessee did not claim credit twice over. At the time when the goods were supplied, they availed the credit. After the Company which undertook the job work, had paid the duty, even according to the Department, the job worker was not liable to pay it. Since they have paid and collected it from the assessee, what the first respondent collected was only the duty that had to be paid on account of the mistake committed by the job worker. The original authority and the appellate authority wrongly construed the same as a double benefit by applying the theory of unjust enrichment. This is what was rectified by the Tribunal. Hence, the order of the Tribunal is in accordance with law - Decided against Revenue.
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2015 (10) TMI 719
Denial of refund claim - Unjust enrichment - Held that:- Tribunal was not concerned with the treatment given to the amount and as deposited in the Assessee's profit and loss account. It is immaterial and irrelevant for the Tribunal and equally for us as to what the Assessee terms this amount in his Books of Account. Even if it is shown on the 'expense side' that does not mean that the presumption that the burden has been passed to the consumer can be raised. - principle in this decision is the same which is to be found and applied by this Court in the case of Suvidhe Ltd. v/s Union of India, reported in [1996 (2) TMI 136 - HIGH COURT OF JUDICATURE AT BOMBAY]. A Special Leave Petition against this judgment of this Court was dismissed by the Hon'ble Supreme Court of India on 7th August 1996. - It is this very principle which has enabled the Tribunal to conclude that the Revenue cannot invoke the plea or principle of unjust enrichment to the undisputed facts and circumstances - Decided against Revenue.
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2015 (10) TMI 718
Seizure of goods - Job work - Turnover below ₹ 30 Lacs - Held that:- In view of the fact that the adjudication order has already been passed, the cause of the writ petition ceases. However, we direct the petitioner to move an application before the concerned authority claiming refund of amount, which according to the petitioner is in excess of the amount of duty due. - Petition disposed of.
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2015 (10) TMI 717
Denial of refund claim - Unjust enrichment - Whether on the facts and circumstances of the case, the Tribunal was justified in law in holding that merely because the appellant had charged uniform prices from all its customers, it would be treated that the burden of excise duty had been passed on so as to deny the refund on the ground of unjust enrichment - held that:- Appellant applied for refund, which was rejected on the ground, that it amounts to unjust enrichment. The sole contention of the appellant was that they had deposited the duty under protest and that they had not passed on the sale duty to its customers, inasmuch as, the sale price remained constant prior to the imposition of duty and after the imposition of duty which leads to a presumption that the duty was not passed on the customers. The fact, that the sale price remained constant does not lead to a conclusion that the duty has not been recovered from the customers as held by the Supreme Court in CCE, Mumbai-II vs. Allied Photographics India Ltd., [2004 (3) TMI 63 - SUPREME COURT OF INDIA] - Decided against assessee.
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2015 (10) TMI 716
Review petition - CENVAT Credit - Not payment of duty and cess with stipulated time of 30days - ontravention of Rule 8(3A) - Recover u/s 11 - Review on the ground that petitioner did not bring to the notice of this Court about the order passed by the Hon'ble Division Bench in the case of Unirol Airtex vs. Assistant Commissioner of Central Excise, Coimbatore reported in [2013 (8) TMI 614 - MADRAS HIGH COURT], by which, the Hon'ble Division Bench reversed the decision - Judgment referred to above could not be placed for consideration of this Court on account of the fact that the same was not reported immediately - held that:- said decision having been rendered by the Division Bench much prior to the decision in the present writ petition, the applicant/petitioner has made out a case for reviewing the order. - Review allowed.
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2015 (10) TMI 715
Applicability/non-applicability of exemption in terms of Sr.No.195 of Notification No.12/2012-CE, dated 17.3.2012 - Held that:- Without expressing any opinion on the merits of the issue involved, the second respondent is directed to consider the representation of the petitioner dated 26.07.2012, and pass appropriate orders on merits and in accordance with law, within a period of two months - Petition disposed of.
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2015 (10) TMI 712
Delay in delivery and conclusion of judgment - Held that:- When the Apex Court [2001 (8) TMI 1330 - SUPREME COURT] has held that even in the case of the Constitutional Court i.e. the High Court, there should be no delay between the conclusion of the case and passing of an order, it will not be permissible for the Tribunals to pass orders after inordinate delay. - matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 711
CENVAT Credit - benefit of exemption of the notification dated 16.3.1995 - Captive consumption - Invocation of extended period of limitation - Suppression of facts - Held that:- Adjudicating Authority failed to take into account the object of the Central Excise Tariff (Amendment) Bill, 2004 as well as the statement of objects/reasons appended to the Bill. The adjudicating Authority has also over looked the fundamental principle of interpretation, thus, the order, so passed, by the Adjudicating Authority is non-speaking order. It has further been submitted that it is not open for the subordinate authority to refuse to give effect to binding judgments of higher quasi judicial authorities without assigning reasons - Prima face of interim relief is made out. - Stay granted.
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2015 (10) TMI 710
CENVAT Credit - Whether credit of duty is admissible to the inputs in the present case in terms of erstwhile Rule 57C & 57CC, used in exempted goods when the inputs (IC engine below 1800 cc) are not common with those used in the dutiable products, when an amount of 8% of the price of exempted product has been paid and when no separate account has been maintained in respect of the exempted goods - Held that:- appellant does not dispute and fairly states that the substantial questions of law raised and involved in these appeals are squarely covered by the judgment of the High Court of Punjab and Haryana in Escort Limited case (2004 (8) TMI 216 - CESTAT, NEW DELHI). She did not make any attempt to either distinguish the judgment of the High Court of Punjab and Haryana or to persuade us to take a view other than the one taken by that High Court. She only submits that the judgment of the High Court of Punjab and Haryana is carried by the Department to the Supreme Court in SLP No.556 of 2011 and the matter is now pending there for adjudication. - Petition disposed of.
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2015 (10) TMI 709
Penalty u/s 11Ac - Held that:- Section 11AC of the Central Excise Act, 1944, contemplates, penalty for short-levy or non-levy of duty in certain cases, i.e., where any duty of Excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by the reason of fraud, collusion, any wilful misstatement; or suppression of facts or contravention of any of the provisions of the Act or of the rules made thereunder with intent to evade payment of duty. - From the records, it is observed that the assessee had availed the wrong credit in their account but has not utilized the same and after it was pointed out by the audit party the same was reversed by the assessee. In such circumstances, the Tribunal has rightly held that there was no intention on the part of the assessee to evade payment of tax and the assessee had not utilized the amount credited. - Revenue having failed to establish the case of imposing penalty under Section 11AC, we are not inclined to interfere with the order passed by the Tribunal and in the circumstances, we do not find any substantial question of law arising for consideration. - Decided against Revenue
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2015 (10) TMI 708
Validity of stay order - Held that:- In the impugned order - had raised three issues and we had expected that the Revenue in its reply will deal with the three issues which were raised in the Court. We are sorry to say that not one of the issues has been even remotely answered in the reply. Most importantly, there is no reply to the third issue raised by us that in an identical situation the same two members of the CESTAT had granted stay order without any conditional deposit [2013 (10) TMI 1141 - CESTAT KOLKATA]. - Petition had shown similar decision decision wherein stay has been granted. - Stay confirmed.
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2015 (10) TMI 707
Condonation of delay - Delay of 175 days - CA did not performed his obligations - Alternate arrangements caused delay - Held that:- Tribunal appears to have been primarily of the opinion that the explanation for the delay was unacceptable in view of the failure of the respondent to even disclose the name of the Chartered Accountant making their application for condonation of delay casual in nature. Now that the appellant has furnished proper details of the Chartered Accountant in question and also explained the steps taken by it subsequently in the additional affidavit in support of the application for condonation of delay filed earlier, we are of the considered opinion that a final adjudicatory order is always desirable in preference to an order on technicalities. In the facts of the case, we are satisfied to condone the delay and direct restoration of the appeal before the Tribunal for disposal in accordance with law. - Decided in favour of assessee.
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2015 (10) TMI 705
Restoration of appeal - Held that:- petitioner is a Central Government Company wholly owned, managed, controlled and financed by the Central Government which has preferred an appeal before the CESTAT, but, in view of the decision rendered by the Hon'ble Supreme Court in ONGC case, the dispute between wholly Central Government owned company and the Central Government initially was to be referred to the HighPowered Committee and, therefore, the appeal preferred by the petitioner was closed i.e. not decided by CESTAT on the merits and now by virtue of subsequent judgment delivered by the Hon'ble Supreme Court, the said HighPowered Committee is no more effective and hence, the petitioner is seeking restoration of its appeal as well as the stay application before the CESTAT - Tribunal directed that if any restoration application is preferred by the petitioner for Appeal No.EDM799800/04 alongwith the stay application no. SP104344/04, the said restoration application will be decided in accordance with law as early as possible and practicable preferably, within a period of six months - Appeal disposed of.
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2015 (10) TMI 704
Extension of stay order - Held that:- Under the circumstances, though the learned Tribunal recorded those judgments while granting interim order, but found that there has been no fault on the part of the assessee and accordingly granted extension. - In view of orders of High and Supreme Court [2005 (1) TMI 114 - SUPREME COURT OF INDIA] no reason to admit appeal - Decided against Revenue.
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2015 (10) TMI 703
Waiver of pre deposit - Held that:- An order granting or declining waiver of pre-deposit in full or part is a discretionary order. But even a discretionary order which affects another, is required to be reasoned disclosing application of mind to the issues involved and a prima facie opinion for the conclusion. - There is no discussion in the order dated 29-9-2014 while disposing the stay application why the Tribunal was satisfied to deny complete waiver of pre-deposit and to direct deposit of the entire penalty amount. We further find that the appellant had taken a ground of financial difficulty which has not been considered at all. - Impugned order is set aside - Matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 702
Maintainability of petition - Held that:- Court has gone through the impugned judgment of the First Revisional Court and finds no infirmity in the same. This is the second revision filed by the Department in this Court, which is not maintainable - Decided against Revenue.
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2015 (10) TMI 701
Demand of duty, penalty and interest - Extension of stay granted - Revenue initiated recovery of duty - Held that:- traversing the controversy raised namely the nature of proviso to Section 35C (2A) of the Act is academic as admittedly an appeal is pending before the Tribunal. Tribunal directed to decide the appeal within three months the parties putting in appearance on 14.01.2015. Order dated 29.04.2014 shall remain in force for a period of three months - Petition disposed of.
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2015 (10) TMI 700
Clandestine removal of goods - Retracted statments - Held that:- Entire issue is based on realm of appreciation of evidence. The Tribunal came to the conclusion that the department did not have sufficient evidence to establish the clandestine removal of goods. Learned counsel for the Revenue, however, submitted that the reliance was placed by the department on diaries seized during the course of the investigation and on the statement of the responsible officer of the assessee - statement of the assessee was later on retracted. Further, the Tribunal having considered the evidence on record and come to the factual findings, in our opinion, no question of law arises. - Decided against Revenue.
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2015 (10) TMI 699
Waiver of pre deposit - Mandatory pre deposit - Held that:- Appellant has been directed to deposit an amount of ₹ 2.00 crores in addition to the amount of ₹ 45.00 lacs already deposited while ordering stay of the balance amount of duty, penalty and interest. We may not disagree entirely with the discretion exercised by the Tribunal but as the Tribunal has found a prima facie case, the amount of pre-deposit assessed by the Tribunal is too steep and may render the right to agitate the appeal illusory. It would be appropriate to point out that Legislature has, during pendency of the appeal, amended Section 35F of the Act by requiring an assessee to deposit 7.5% of the duty demanded. The amendment may not apply to the appellant as the appeal was filed before the amendment but taking a clue from legislative intent, modify the order passed by the Tribunal - Partial stay granted.
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2015 (10) TMI 697
Denial of extension of time to make the pre deposit - Held that:- Once the final order passed by the Appellate Tribunal dismissing the appeal stands affirmed by dismissal of the appeal by this Court on 19-11-2014, it is not open to the appellant to put to challenge the order passed interregnum proceedings. It is well settled that all orders passed during the pendency of the proceedings stands merged with the final order. - appeal is not maintainable - Decided against assessee.
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2015 (10) TMI 696
Duty demand - Clandestine removal of goods - Held that:- Tribunal noted that the confessional statements were retracted by the noticee. He had made statement before the notary and such affidavit was filed before the adjudicating authority at the time of personal hearing and also relied on the reply to the show cause notice. The adjudicating authority did not advert to this retraction but simply relied on such statements. The Tribunal also noted that as per the certificate of the Chartered Accountant, installed capacity of the manufacturing unit was 20 MT per day which would not justify production over and above the declared clearance leading to the belief of clandestine removal - entire issue is based on appreciation of evidence on record. The Tribunal having given its consideration and come to the factual findings, no question of law arises - Decided against Revenue.
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2015 (10) TMI 695
Duty demand - high electricity consumption - undisclosed entries and production - Held that:- It does not appear that any ground was taken by the appellant that even otherwise there was independent material available with it to prima facie conclude higher undisclosed production for the period excluding 1-1-1999 to 16-2-1999. Furthermore, the Tribunal has relied upon another order passed by it in M/s. R.A. Castings [2010 (9) TMI 669 - ALLAHABAD HIGH COURT] affirmed by the Allahabad High Court and the appeal before the Supreme Court against it dismissed [2011 (1) TMI 1302 - Supreme Court of India] to hold that demand of duty based only on electricity consumption could not be upheld - pleadings in the memo of appeal are completely silent with regard to the findings in law by three forums to distinguish how they are inapplicable. Even the order passed in the case of M/s. R.A. Castings, has not been brought on record, much less any distinction pleaded. - No substantial question of law arise - Decided against Revenue.
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2015 (10) TMI 694
Denial of refund claim - Accumulated CENVAT Credit - Held that:- In view of the subsequent order dated 26-3-2008 passed by the Assistant Commissioner of Central Excise, these appeals stand dismissed as infructuous and as such, we do not propose to go into the merits of the question of law raised. It is open to the appellant to challenge the order dated 26-3-2008 passed by the Assistant Commissioner of Central Excise in the manner known to law, if so advised. - Decided against Revenue.
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2015 (10) TMI 693
Waiver of pre deposit - Financial hardship - Held that:- Justice would be rendered in the event the appellant is directed to deposit an amount of ₹ 16.00 lakhs as pre-deposit and this shall be made within a period of fortnight from the date of receipt of a copy of this order. If such deposit is made within the above time, the appeal will be heard out by the learned Tribunal on merit as and when possible, failing which, the appeal before the Tribunal will automatically stand dismissed - Decided conditionally in favour of assessee.
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2015 (10) TMI 692
Obligations and liabilities incurred under Rules 96ZO and 96ZP - omission of Section 3A of the Central Excise Act, 1944 w.e.f. 11-5-2001 and also the omission of Rules 96ZO and 96ZP of the Central Excise Rules, 1944 w.e.f. 1-3-2001 - Held that:- writ petition is squarely covered by the order passed by the Division Bench of this Court made in [2013 (12) TMI 1478 - MADRAS HIGH COURT] - Following the same - Decided against assessee.
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2015 (10) TMI 691
Duty demand u/s 11A - Held that:- Issue of applicability of the Customs (Attachment of property of Defaulters for recovery of Government Dues) Rules, 1995, in a case where the authorities under the Central Excise Act sought to proceed against the Director of a company for realisation of the dues of the company, came up for consideration before the Delhi High Court in the decision reported in Anita Grover v. Commissioner of Central Excise and Others - [2012 (12) TMI 802 - DELHI HIGH COURT]. A Division Bench of that court, while considering the applicability of the aforementioned Rules, held that it is only the defaulter against whom steps could be taken under the Rules. It was clarified that a defaulter is a person from whom dues are recoverable under the Act and that there was no provision in the Customs Act 1962 corresponding to Section 179 of the Income Tax Act, 1961 or Section 18 of the Central Sales Tax, 1956, which enabled the revenue authorities to proceed against directors of companies, or such like third parties, who are not defaulters. On a consideration of the facts in the instant case, I find that they are similar to the case that was considered by the Delhi High Court in the aforesaid decision, and hence, following the said judgment of the Division Bench of the Delhi High Court, I allow this writ petition by quashing Ext.P2 notice, issued to the petitioner by the 1st respondent, and declaring that the petitioner is not liable to be proceeded against for the recovery of Government dues pertaining to the company. - Decided in favour of assessee.
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2015 (10) TMI 690
Condonation of delay - Delay of 100 days - petitioners urged that the peon of the Company who received orders in original did not hand over the same to the Managing Director for some time and therefore, there was some delay on his part and thereafter the Managing Director himself was suffering from diabetes and hyper-tension and other diseases - Held that:- The delay was not so inordinate that the same could not have been with sufficient explanation not condoned. If the Tribunal was of the opinion that some further evidence in support was needed, the same could have been called for. However, when such facts are stated before us on affidavit, we would be inclined to condone the delay. Since petitioners failed to represent their case before the Tribunal, it must be held that they were partially responsible in the ultimate result. - Decided in favour of assessee.
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2015 (10) TMI 689
Waiver of pre deposit - Held that:- There is a fundamental fallacy in the submission of the Revenue. Sub-section (2A) of Section 35-C of the Act requires the Tribunal to endeavour to dispose of the appeal within the stipulated period as set out therein. The first proviso provides that where an order of stay has been passed, the Tribunal shall dispose of the appeal within a period of 180 days from the date of the order. Under the second proviso, if the appeal is not disposed of within the period specified in the first proviso, the stay order shall stand vacated. Hence, the provisions which are contained in the second proviso to Section 35-C (2A) of the Act operate as a matter of law. In that view of the matter, it cannot be held that the Tribunal in passing the order of stay has acted in violation of the provisions of the second proviso to Section 35-C (2A) of the Act. - No substantial question of law arises - Decided against Revenue.
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2015 (10) TMI 688
Confiscation of goods - Non accounting of goods in RG-1 register - held that:- Assuming that there was some delay in making entries in the relevant form, the goods were not liable for confiscation. Rule 173Q of the Rules no doubt empowers confiscation of the goods on the ground that the entries are not properly made. However, every failure to make the entry or every defect therein does not constitute the basis for confiscation of the goods, as long as they are not removed from the premises. It is too fundamental to be reaffirmed that the liability to pay the excise duty arises only when the manufactured goods are removed from the premises. The rest of the measures are only regulatory in nature. Confiscation of goods that are not removed from the premises can be done, only when clear evidence exists to the effect that the goods were not manufactured but were stored with an oblique motive. No such grounds are even pleaded in the instant case - Commissioner as well as CEGAT took note of the judgment of this Court in M/s. Southern Steel Ltd. v. Union of India and others - [1978 (7) TMI 114 - ANDHRA PRADESH HIGH COURT]. We are of the view that no case is made out for directing CEGAT to refer the questions to this Court. - Decided against Revenue.
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2015 (10) TMI 687
Denial of exemption claim - Levy of excise duty - unit is not a new unit and it is old one and the Industrial Policy does not apply to the unit - Held that:- It may be that the appellant has the alternative remedy of appeal; however, the matter is admitted and pending since 2005. At this stage, it may not be proper to direct the appellant to exhaust the remedy of appeal. The illegality committed by the respondents is palpably glaring. The notices are issued without giving opportunity of hearing and without complying with the order of the appellate authority as well as the order of Tribunal. - Appeal disposed of.
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2015 (10) TMI 686
Waiver of pre deposit - Extension of stay order - maintainability of appeal - appeal lies under Section-35G(2) - Held that:- even though the appeal should have been filed but by not filing the appeal the petitioner cannot be nonsuited on this ground, inasmuch as, the appeal would also be filed before the same High Court and would have been dealt with by the same Bench. Further, we find that the limitation for filing an appeal before High Court is 180 days from the date of the order of the Tribunal and prior to the expiry of the said date the writ petition was filed - Decided against Revenue.
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2015 (10) TMI 685
Confiscation of goods - Imposition of redemption fine - Whether on the facts and in the circumstances the CESTAT has passed its order in total disregard to material facts and evidence on record and in complete arbitrary manner - Held that:- Assessee state that it would be in the interest of justice if the impugned order of the Tribunal is set aside in its entirety and the proceedings are restored back to the file of the Tribunal for consideration afresh. - Impugned order is set aside - matter remanded back - Appeal disposed of.
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2015 (10) TMI 684
Denial of CENVAT Credit - whether the petitioner, i.e., assessee is entitled to the Modvat credit for the high speed diesel oil used by it for generation of captive power for its cement plant. - Held that:- Assessing Officer, the Appellate Commissioner and the Tribunal took uniform view that the petitioner is not entitled to the Modvat credit. - high speed diesel utilized by the petitioner in generating power can be treated as one of the inputs for manufacture of the end product, viz., cement. However, not every item, which suffered Excise duty, which goes into the manufacture of item, would qualify for the Modvat credit. Rule 57B of the Central Excise Rules, 1944 enlists the goods or items, which qualify for the credit. The high speed diesel oil was never mentioned in the Rule and, by process of interpretation, in certain cases, it was allowed. - Clause 108 of the Act, in its legislated form, was challenged in several matters. In Sangam Spinners Ltd. v. Union of India - [2011 (3) TMI 4 - Supreme Court], the Hon’ble Supreme Court upheld the validity of the Act. - Decided against assessee.
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2015 (10) TMI 683
Duty demand - held that:- Since the dispute relates to prior to the notification, appeal should have been admitted by the Tribunal. Appellant argued that in one of such matters, In a precedent case, this Court has been pleased to admit the appeal. We have called for the original file of the matter referred to by the learned counsel appearing for the appellant and it appears that we have admitted the appeal on fact that at the time of preferring appeal the Circular was not in force. According to us, the date of filing of the appeal is reckoning factor in order to see whether above notification is to be applied or not and it is not the time when the dispute arose. - No reason to interfere with the impugned order - Decided against Revenue.
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2015 (10) TMI 682
Restoration of appeals - Applications for restoration were dismissed on account of reporting no instructions by the counsel appearing for the appellants - Held that:- appeals are liable to be restored as petitioners have serious contentions on merits. The dismissal for non-prosecution arises in extreme situation where parties continuously failed to prosecute appeals. Absolutely, there is no such finding in the matter that appellants were absent on all occasions. On mere absence of one or two occasions shall not deprive the appellants an opportunity to contest the impugned orders on merit. The petitioners also have explained delay in filing applications to restore the appeals. Though averments in the application to explain delay is not at all satisfactory, and there is a justification in observing so in the impugned orders by the Tribunal, however, interest of justice demands matter should be heard on merits. - Appeal restored.
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2015 (10) TMI 681
Levy of additional duty of excise - Whether the man-made fabrics which are excisable goods on which additional duty of excise is payable in terms of section 3(2) of Additional Duties of Excise (Goods of Special Importance) Act, 1957, shall also attract penal provisions of confiscation and penalty as is the case with all other excisable goods finding mention in the schedule to the Central Excise Tariff Act, 1985 - Held that:- When all these references are taken up for final hearing, Shri Bhatt, learned advocate appearing on behalf of the Department has fairly conceded that the issue/question referred to this Court is squarely covered against the Revenue by the decision of the Hon'ble Supreme Court in the case of Collector of Central Excise, Ahmedabad v. Orient Fabrics (P) Ltd. reported in (2003 (11) TMI 75 - SUPREME COURT OF INDIA) as well as the decision of the Division Bench of this Court in the case of Commissioner of Central Excise and Customs, Ahmedabad v. Aspiaf Textile Mills reported in [2008 (1) TMI 409 - HIGH COURT OF GUJARAT AT AHMEDABAD]. - Decided in favour of assessee.
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2015 (10) TMI 680
Clandestine removal - whether the burning loss of 6% and 5.5% as claimed by the appellants gives rise to the loss of Revenue and whether showing such high rate of burning loss there was suppressed quantity manufacture and such quantity clandestinely removal - A wholesale formula was applied by the appellant to claim higher burning loss - held that:- Tribunal has only directed payment of 15% of the duty demanded and has waived the pre-deposit of balance amount. The Tribunal has considered all the aspects and, prima facie, keeping in view the undue hardship to the appellant, the impugned order has been passed which is just and reasonable - no substantial question of law arises - Decided against assessee.
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2015 (10) TMI 679
Auction of attached properties - Held that:- when the present Special Civil Application is taken up for further hearing, Shri Y.N. Ravani, learned advocate appearing on behalf of the contesting respondent has stated at the bar that as such the Department has already appointed M/s. MSTC Ltd. as auctioneer and, therefore, the auction proceedings to auction the proceedings already attached shall be completed as early as possible. - respondents are hereby directed to auction the properties attached at the earliest but not later than three months - Decided against appellant.
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2015 (10) TMI 678
Benefit of Exemption Notification no.8/2000-CE dated 1.3.2000 - Invocation of extended period of limitation - Dutu demand u/s 11A - Held that:- It is evident from the preceding discussion that the Tribunal accepted the Revenues plea but limited the scope of the show cause notice and the demands to the normal period. The logic which persuaded the Tribunal to hold as it did was that at that time, the assessee could reasonably contend that there was a view which supported its declaration. In other words, during the period which was sought to be covered by the show cause notice, the Larger Bench ruling in Prakash Industries (2000 (5) TMI 59 - CEGAT, COURT NO. III, NEW DELHI) was in force. As far as the merits were concerned, the Tribunal affirmed the findings of the lower authorities - decision in Kohinoor Elastics (2001 (9) TMI 1133 - CESTAT NEW DELHI) was subsequently overruled by the Supreme Court; yet the fact remains that when the exemption was sought, the assessee could legitimately contend that it was entitled to it on the basis of the prevailing understanding. We are also not persuaded by the submissions that the assessees actions or omissions, in any event fell, within the mischief of Section 11A. Prakash Industries (supra) itself was a case where independently marketable items, i.e., bagged cement was in issue - no substantial question of law arises - Decided against assessee.
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2015 (10) TMI 677
Review petition - Held that:- Review petitioner by presentation of this review petition seeks an opportunity to argue the entire case afresh on merits under the garb of the review petition, which is not permissible and tenable in law. In fact, the order dated 19-3-2014, which is sought to be reviewed herein, has been passed by this Court in Tax Case No. 6 of 2014 in presence of both the counsel - under the garb of review petition, the petitioner should not be permitted to argue the entire case afresh, which would amount to convert the review petition into an appeal and the same is not sustainable in law. - Decided against assessee.
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2015 (10) TMI 676
Waiver of pre deposit - Undue hardship - Held that:- No financial hardship was pointed out by the Assessee - There was conflicting expert opinion - The question of limitation was also involved - The question of limitation was also involved - decided against assessee.
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2015 (10) TMI 675
Waiver of pre deposit - Held that:- Appellants are ready and willing to furnish an undertaking to this Court to comply with the other direction and order of the Tribunal within a period of eight weeks from today, but to comply with the same accounts which have been freezed by the Revenue/Department, be de-freezed so as to allow to operate the same. This request is opposed by Mr. Mishra. It is submitted by him that the assessee can pay the amounts from other sources and there is no need to defreeze the account - Appeal raises substantial questions of law - Partial stay granted.
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2015 (10) TMI 674
condonation of delay - Delay of 53 days - Whether the CESTAT committed an error in not considering the reasonable explanation put forth for condonation of delay of 53 days caused in filing the appeal - Held that:- Tribunal chose not to condone the delay of 53 days in preferring the appeal on the ground that no cause was pointed out for such condonation. The Tribunal also was of the opinion that the adjournment sought for, for the first time, came to be granted and matter was directed to be listed on 30th December, 2013. However, for the second time also adjournment application was preferred by the advocate on record, and therefore, the Tribunal considering the fact that application for condonation of delay was filed on 30th July, 2013 could not be delayed further despite the application of adjournment proceeded with the matter and on merit, rejected the same - adjournment application did speak about ill-health and personal inconvenience of the learned counsel representing the petitioner before the Tribunal. Having found that the application tendered before the Tribunal did explain sufficiency of the reason for seeking adjournment and the delay of 53 days having been sufficiently explained - Delay condoned.
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2015 (10) TMI 673
Application for direction to the President, Customs, Excise & Service Tax Appellate Tribunal, New Delhi, for assigning the matter, which has been referred for decision of the third Member of the Appellate Tribunal, to any of the Members except Shri Ashok Jindal, Member (Judicial) - Difference of opinion - Held that:- On perusal of the points of difference framed at an earlier stage of proceedings as well as points of difference framed for consideration at subsequent stage, we find that there are identical issues. It is also urged by learned Counsel for the petitioner that this is a administrative function of the President to assign the matter to the third Member, as provided under Section 35D of the Central Excises and Salt Act, 1944 - Court cannot cause interference in the matter in exercise of extraordinary powers. In the facts of the case, we refrain from expressing our opinion. However, we leave the matter to the learned President. Appellate Tribunal, for passing appropriate orders. It would be open for the President to reconsider the issue for making reference of the matter to himself or to the another learned Member for hearing and deciding the same. - Petition disposed of.
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2015 (10) TMI 672
Evasion of duty - Imposition of penalty - Held that:- Subsequent reduction of duty payable below ₹ 25 lac apparently renders continuance of proceedings arising out of complaint in question futile but since there is a reference to Central Board’s earlier circular of 4th April, 1994 in respect of which, no submissions were advanced during the course of hearing and the said Circular is also not placed on record. Therefore, it would be appropriate not to quash the proceedings arising out of complaint in question by referring to Board’s circular of 12th December, 1997 as Board’s earlier circular of 4th April, 1994 has reference to in reply/response, which is neither on record nor any meaningful arguments were advanced in respect of Central Excise Board’s earlier Circular of 4th April, 1994 during the course of hearing - Petition disposed of.
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2015 (10) TMI 671
Denial of CENVAT Credit - Rule 57Q - Held that:- Though the Rule in express terms does not provide for acceptance of the revised return, the said Rule needs to be read down to the effect that the credit as is sought for should not have been granted by the CEGAT, based upon the revised return and assessment thereof. The perusal of the order impugned discloses that the CEGAT has dealt with the said issue in detail. The CEGAT has considered all the factual matrix including that of the assessment orders passed by the income-tax authorities. The CEGAT has also given cogent reasons as to why the approach of the Commissioner, Central Excise in disallowing the credit is wrong. In that view of the matter, the contention raised by the learned Asstt. Solicitor General, that the assessment order passed by Income Tax Officer on the revised return submitted by the respondent should not have been accepted by the CEGAT is required to be rejected. That the reading down of the Rule as submitted by the learned Asstt. Solicitor General is also liable to be rejected in the light of reasons given by CEGAT in its order, which is impugned in the petition. - Decided against Revenue.
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2015 (10) TMI 670
Determination of annual capacity of production - held that:- order dated 7-11-2012 was passed on the agreement between the parties. It is for this reason that this Court had permitted the Assessee to withdraw the appeal and file review application before the Tribunal - Tribunal has again dismissed the review application holding that the fact recorded in the earlier judgment dated 7-11-2012 was correct - No question of law arises - Decided against assessee.
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2015 (10) TMI 669
Denial of CENVAT Credit - Held that:- Tribunal on fact found that in this case duty levied on the raw material has actually been paid. Once it is found on fact and it is not challenged on the ground of any perversity, the exemption is applicable automatically. The learned Tribunal has relied on the decision of the Madras High Court in the case of Commissioner of Central Excise, Chennai-I v. CEGAT, Chennai - [2005 (1) TMI 125 - HIGH COURT OF JUDICATURE AT MADRAS] and recorded that the facts in that case and the present case are identical and therefore, the said decision is applicable to the present case - No reason to interfere with impugned order - Decided against Revenue.
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2015 (10) TMI 668
Waiver of pre deposit - whether the petitioner has a prima facie case or not and whether the imposition of any condition would cause undue hardship to the petitioner or not - Held that:- There are several decisions of this Court and various Courts to the effect that the Commissioner (Appeals) should indicate application of mind in his orders to the issues of prima facie case and undue hardship before imposing any condition or before waiving pre-deposit condition. Since it is not reflected in the impugned order, the same is liable to go - Decided in favour of assessee.
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2015 (10) TMI 667
Wrongful availment of CENVAT Credit - Held that:- Issue relating to whether interest is payable for having wrongly taken credit in terms of Rule 14 of Cenvat Credit Rules read with Section 11AB of Central Excise Act, 1944 came up for consideration before this Court in (The Commissioner of Central Excise v. M/s. Sundaram Fasteners Limited) [2014 (2) TMI 551 - MADRAS HIGH COURT]. Since the issue involved in this appeal is squarely covered by the said decision, applying the said decision, the appeal filed by the Revenue stands allowed - Decided in favour of Revenue.
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2015 (10) TMI 666
Demand of interest - Whether the show cause notice dated 28.10.2004 claiming interest for a period of more than one year is tenable in terms of Section 11A read with Section 11AB of the Central Excise Act, 1944 - Held that:- Present appeal is squarely covered by the decision of this Court [2013 (10) TMI 30 - PUNJAB & HARYANA HIGH COURT ] (Commissioner, Central Excise Commissionerate v. M/s VAE VKN Industries Pvt. Limited), , wherein identical issue has been decided in favour of the assessee and against the revenue - respondent is unable to dispute the applicability of the said judgment - Decided in favour of assessee.
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2015 (10) TMI 665
Evasion of excise duty - Held that:- After the culmination of the adjudication proceedings, the matter is pending before the Central Excise Appellate Tribunal and hence, prosecution is not maintainable. I am not able to concur with this argument. Since the ingredient of the offence of duty evasion is different from the scope of enquiry in adjudication proceedings, the prosecution can proceed simultaneously with the adjudication proceedings. Hence, there is no merit in this contention - Decided against assessee.
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2015 (10) TMI 664
Constitutional validity of Rule 5 of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 - violation of Article 14 - runs counter to Section 3A of the Central Excise Act - Held that:- Karnataka High Court in [2015 (9) TMI 151 - KARNATAKA HIGH COURT] has repelled the challenge to Rule 5 of Hot Rerolling Steel Mills Annual Capacity Determination (Amendment) Rules, 1997, has not made ultra vires and contrary to Section 3A of the Central Excise Act, 1944, and thus learned counsel for the appellant states that the same deals with no scope to press the present appeals. - Decided against assessee.
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2015 (10) TMI 663
Manufacture of chewing tobacco - compounded levy scheme - Closure of factory - Period of closure - High Court dismissed the appeal of Revenue following the decision of Commissioner of Central Excise, Rohtak v. M/s. Kay Fragrance (P) Ltd., Village Livaspur, Bahadurgarh [2013 (9) TMI 697 - PUNJAB & HARYANA HIGH COURT]. The appeal was filed against decision of Tribunal [2013 (9) TMI 697 - PUNJAB & HARYANA HIGH COURT]; wherein tribunal held that Rules required a manufacturing unit to deposit the entire duty for that particular month by 5th day of that particular month. If subsequently the unit is closed, they are given liberty to file abatement and seek refund of duty. However, in a scenario where a manufacturing unit is aware of the closure of its unit, before the duty is deposited by him for the entire month, he may seek abatement at that particular point of time, make deposit of duty for working days only. The non following of the said procedure, may result in confirmation of interest against the assessee, but will not result in denial of the substantive benefit available to him in terms of the rules, in question.
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2015 (10) TMI 662
Waiver of pre deposit - held that:- In view of the orders passed by a learned Single Judge of the Kerala High Court in the case titled M/s Muthoot Finance Ltd. Vs Union of India and another, [2015 (3) TMI 634 - KERALA HIGH COURT], the respondents shall not treat the appeal as being not maintainable on account of the failure to deposit the amounts as per the amended Section 35-F of the Central Excise Act, 1944 which came into effect on 06.08.2014.
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2015 (10) TMI 661
Clandestine removal - documents recovered broker of final product of assessee - statement recorded from broker was retracted and broker could not be produced for cross-examination by the assessee – High Court dismissed the appeal filed by the Revenue against the decision of Tribunal [2010 (3) TMI 700 - CESTAT, BANGALORE] since an identical issue was dismissed in another appeal [2013 (9) TMI 1019 - ANDHRA PRADESH HIGH COURT]. Tribunal in the impugned order held that statement could not be used to find evasion.
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2015 (10) TMI 660
CENVAT Credit - Capital goods - Transfer of unutilized credit - High Court dismissed the appeal filed by Revenue holding that matter is fully covered by the judgment of Dalmia Cements Bharat Ltd. v. CCE, Tiruchirapalli [2007 (11) TMI 211 - CESTAT, CHENNAI] and no liability arises to reverse Cenvat credit availed by the CESTAT since there was no physical removal of such goods. The appeal was filed against the decision of Tribunal [2015 (1) TMI 1131 - CESTAT BANGALORE] wherein tribunal held that in the case of leasing out of the factory to another company, no liability arises to reverse CENVAT credit since there was no physical removal of such goods.
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2015 (10) TMI 659
Constitutional validity of Rule 8(3A) of Central Excise Rules, 2002 - Held that:- petitioner sought permission to withdraw the writ petition and he has also made an endorsement to that effect. Accordingly, granting such permission, this writ petition is dismissed as withdrawn - Decided against assessee.
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2015 (10) TMI 658
Compounded levy scheme – 50% duty not paid by 15th of the month - Held that:- Questions are no longer res integra as the Division Bench of this Court in Krishna Processing v. Union of India, [2012 (11) TMI 954 - GUJARAT HIGH COURT] has held that Rule 96ZQ(5)(ii) was invalid. Since the Rule has been held to be invalid by a Division Bench, therefore, under this provision, penalty cannot be levied against the assessee - Decided in favour of assessee.
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2015 (10) TMI 657
Validity of appeal - Appeal dismissed as non maintainable - Whether in the facts and circumstances of the case, the Appellate Tribunal was justified in dismissing the appeal filed by the appellants on the ground that the same is not maintainable under Section 35B of the Central Excise Act, 1944 - Held that:- After analysis of the legal provisions this court decided in [2015 (3) TMI 435 - BOMBAY HIGH COURT] that Tribunal’s view is incorrect and erroneous in law. The appeal to the Tribunal was maintainable. The order impugned before the Tribunal did not fall within the proviso to Section 35B of the Central Excise Act, 1944. - Decided in favour of assessee.
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2015 (10) TMI 656
Confiscation of goods - Penalty - Incomplete RG-1 register - High Court dismissed the appeal filed by assessee against the decision of Tribunal [2014 (6) TMI 234 - CESTAT NEW DELHI] as withdrawn.
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2015 (10) TMI 655
whether second-hand photocopying machines imported by the appellants should be treated as ‘capital goods’ which were freely importable at the relevant time or as ‘consumer goods’ which required specific import license - High Court dismissed the appeal filed by Revenue that neither the appellant nor its counsel is present and this clearly shows that the appellant is not interested in pursuing the matter and therefore, dismissed the appeal for non-prosecution. The appeal was filed against the decision of Tribunal [2006 (6) TMI 400 - CESTAT, CHENNAI]; wherein tribunal held that quantum of fine should not exceed 15% of the value of the goods in a case of this nature and the quantum of penalty should be around 10% of the fine. In taking this view, I have also considered the fact that, at the time of the import in question, it was widely held in legal circles that second-hand photocopying machines were capital goods, which trend appears to have been reversed with the Kerala High Court’s decision [2006 (4) TMI 140 - HIGH COURT OF KERALA].
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2015 (10) TMI 654
Denial of refund claim - Whether the action of the Appellate Tribunal in denying refund to the appellant on dimensions of galleries and panel patti despite the judgment of the Hon’ble Supreme Court in case of SPBL Limited reported in [2002 (9) TMI 113 - SUPREME COURT OF INDIA] was legally correct - Held that:- tax appeals are squarely covered by the decision of the Division Bench of this Court in Premraj Dyeing & Printing Mills Pvt. Ltd. v. Union of India, [2013 (6) TMI 118 - GUJARAT HIGH COURT] wherein it has been held that refund claims are maintainable without challenging the determination of Annual Production Capacity. - Decided in favour of assessee.
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2015 (10) TMI 653
Differential duty demand on transaction between two units of same person - assessee-unit not earned any profit in material period - High Court dismissed the appeal filed by revenue for non prosecution since when the matter was called, neither the appellant nor its counsel is present. This clearly shows that the appellant is not interested in pursuing the matter. The appeal was filed gainst the decision of Tribunal [2008 (7) TMI 274 - CESTAT, CHENNAI]; wherein tribunal held that profit of 8% with reference to the transactions of all the four units belonging to the assessee-company, is not relevant for determining the assessable value of excisable goods cleared by the assessee to its sister concern - manufacturer unit as well as buyer unit belong to the same company, therefore, a revenue neutral situation exists.
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2015 (10) TMI 652
Validity of Tribunal's order - Authorization of Commissioners - Held that:- A supplementary affidavit has been filed in which at annexure SA-1 is the file-sheet. The authorisation is signed both by the Commissioner, Ghaziabad and by the Commissioner, Noida. In the circumstances, the authorisation was proper. Hence, we are of the view that the appeal would have to be restored back to the file of the Tribunal for fresh consideration on merits. Insofar as the preliminary objection of the assessee on the issue of tax effect is concerned all aspects would be considered by the Tribunal when the appeal is considered. - Appeal disposed of.
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2015 (10) TMI 651
Condonation of delay - Delay since Petitioner was ill - Held that:- Petitioner admittedly filed an appeal before the Commissioner (Appeals) Customs and Central Excise beyond the period of limitation. The appeal was consequently dismissed. The appeal filed by the petitioner before the CESTAT was also dismissed. A Full Bench of this Court has held in [2015 (6) TMI 498 - High Court Punjab and Harayana] titled as State of Haryana and others vs. Hindustan Machine Tools Limited and others, that a writ petition to seek condonation of delay, in an appal dismissed for having been filed beyond the condonable period of limitation, is not maintainable. - Decided against assessee.
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2015 (10) TMI 650
Cenvat Credit - supplier paid the duty on clearance of goods procured locally under ARO or Invalidation Letter - Whether the Notification No. 44/2001-CE (NT) dated 26th June, 2001 has been complied with by the party or not - Held that:- anxiety of the revenue is that the appellant should avail of the benefit of this notification only on satisfaction of the conditions therein. Since the supplier who has supplied the goods and which are stated to excisable, to the assessee before us, he has recovered the price and on such recovery including of the Tax component divested itself completely of the title in the goods, then, the apprehension of the revenue has no basis. In the given facts and circumstances, the anxiety is taken care of. Any larger issue or wider controversy can be gone into and in an appropriate case. Thus, we find that no substantial question of law arises in the present appeals. - Decided against Revenue.
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2015 (10) TMI 649
Exemption from declaring MRP on Cement Bags - Procurement of Cement from depot - Notification No. 4/2006-C.E., dated 1-3-2006 - held that:- matter has been disposed of by the learned Tribunal, by following the earlier decision of the assessee’s own case rendered by it in Madras Cements Ltd. v. C.C.E., Trichy reported in [2008 (12) TMI 562 - CESTAT, CHENNAI] - Nothing has been placed before us to show that the aforesaid decision of the learned Tribunal, Chennai has been upset - Decided against Revenue.
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2015 (10) TMI 648
Condonation of delay - Delay of 43 days - consultant was not available for filing an appeal within the stipulated time - Held that:- appeals came to be numbered in pursuance of the order passed in [2013 (9) TMI 904 - KARNATAKA HIGH COURT] after condoning the delay and after setting aside the order passed by Tribunal and granting relief to the appellants herein. Therefore, nothing more survives for consideration in these appeals. - Decided against assessee.
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2015 (10) TMI 647
Cenvat/Modvat Credit - Capital goods - High Court dismissed appeal filed by Revenue for non prosecution.the appeal was filed against the decision of Tribunal [2005 (11) TMI 348 - CESTAT, CHENNAI]; wherein tribunal held that Revenue has not claimed that the operation of the order of the Tribunal [2002 (6) TMI 127 - CEGAT, NEW DELHI] has been stayed. The mere pendency of a civil appeal cannot be taken as having any impact on the precedent value of the Tribunal’s decision which is the subject-matter of the appeal.
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2015 (10) TMI 646
Whether the learned Tribunal is required to re-consider the matter in view of the fresh material produced before the high Court - held that:- balance sheet for the year ending 31-3-2014 has been produced before us and we think that the learned Tribunal should consider the same. - Tribunal directed on the date fixed for hearing, to re-consider the matter by taking note of the fresh material produced before us, namely, the balance sheet for the year ending 31-3-2013, and decide the question of financial hardship on fact afresh - Appeal disposed of.
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2015 (10) TMI 645
Stay application - Did the Tribunal fall into an error of law in its interpretation of Rule 25 of the Central Excise Rules, 2002 in the circumstances of the case and whether the expression ‘intent’ in the said rule pre-supposes existence of mens rea on the part of the manufacturer/assessee to attract its application - held that:- appellant shall pay the reduced redemption fine in terms of the impugned order. However, requirement of depositing penalty is hereby stayed till final disposal of this appeal. - Appeal disposed of.
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2015 (10) TMI 644
Denial of CENVAT Credit - Held that:- In the case of Commissioner of Central Excise v. M/s. Grand Card Industries and Ors.: [2014 (4) TMI 258 - DELHI HIGH COURT], this Court held that the assessee - an SSI unit, had the option to either avail the exemption in terms of applicable notification, or to pay duty on the final product by taking Modvat credit in terms of the Central Excise Rules, 1944. In the present case, the Tribunal had held to the contrary. - In view of the decision in M/s Grand Card Industries and Ors. (supra), the question of law are answered against the Revenue and in favour of the assessee. - Decided in favour of assessee.
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2015 (10) TMI 643
Waiver of pre deposit - Held that:- appellant has already deposited an amount of ₹ 5 lacs towards the principal demand - on deposit of ₹ 20 lacs within two weeks in addition to the amount already deposited, the Tribunal shall not dismiss the appeal for want of pre-deposit. - Decided conditionally in favour of assessee.
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2015 (10) TMI 642
Condonation of delay - Delay of 130 days - High condoned the delay in the appeal. The detailed order of case are given in Commissioner, Central Excise Commissionerate, Ludhiana v. M/s. K.C. Alloys & Steel Castings, Ludhiana [2014 (5) TMI 300 - PUNJAB & HARYANA HIGH COURT].
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2015 (10) TMI 641
Denial of CENVAT Credit - manufacture - Notification No. 24/2012 - High Court dismissed the appeal filed by Revenue since Tribunal has held that entire proposition of the learned Counsel for the appellant is agreeable to the Revenue.
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2015 (10) TMI 639
Determination of annual capacity of production - Abatement claim - Condonation of delay - Whether after taking into consideration the facts as stated in the statement of facts above, the said order of the Hon’ble CEGAT holding that delay in intimating the closure as required under Rule 96 ZO(2)(a) of Central Excise Rules, 1944, is condonable is legally correct and proper - Held that:- in identical reference, as against the orders, [2002 (10) TMI 435 - CEGAT, BANGALORE] of the Tribunal, another case was filed by the Department and this Court declined to call for the records by affirming the order of the Tribunal. In the circumstances, the same order also follows in this case as well.
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2015 (10) TMI 638
SSI Exemption - Brand name - Demand - Limitation - Valuation (Central Excise) - Penalty - High Court dismissed the appeal filed by assessee holding that Tribunal found that no record was brought to its notice either by M/s. ESPL or even by M/s. Kores (India) Ltd. to show that they had relinquished their title to the brand name “ECONOPRINT” w.e.f. 29-7-1995; coupled with the finding that the extended period of limitation for demanding duty is invocable in the fact situation of the present case as fact of using brand name of another person was never disclosed by M/s. ESPL to the Department; and also because of the appreciation of the statement of Sudhir Soni, Executive Director of the appellant and the Tribunal having negatived the plea of the appellant, no substantial question of law arises for consideration.
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2015 (10) TMI 637
Maintainability of appeal - Denial of refund claim - Refund amount less than monetary limit prescribed under Instruction F. No. 390/Misc./163/2010-JC, dated 17-8-2011 issued by the Ministry of Finance (Department of Revenue), Central Board of Excise and Customs, New Delhi, Government of India - Held that:- In view thereof and considering the aforementioned Instruction issued by the Government of India dated 17-8-2011 under Section 35R of the Central Excise Act, we dismiss these appeals as not maintainable. - Decided against Revenue.
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2015 (10) TMI 636
Early hearing of petition by Tribunal - Appeal not disposed by Tribunal since 2012 - Held that:- application of this nature should be heard out expeditiously and an endeavour should be made to see that the same is disposed of within a period of two months from the date of its filing - Tribunal should dispose of the stay application within a period of two months and the action, which is said to have been taken place, will abide by the result of the application, which is pending for adjudication before the Tribunal. - Petition disposed of.
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2015 (10) TMI 635
Waiver of pre deposit - High dismissed the appeal filed by assessee for want of prosecution. The appeal was filed against the decision of Tribunal [2001 (6) TMI 334 - CEGAT, MUMBAI]; wherein tribunal held that Assessee is not interested in permitting the processes of law to take its course. Their attempts are to delay the disposal of their case.
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CST, VAT & Sales Tax
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2015 (10) TMI 778
Levy of tax on expenses and elements of total sale price of flat/unit which have no relationship with value of goods transferred in execution of works contract on developers - violation of Article 246 of the Constitution of India - Held that:- Writ petitions are disposed of by directing the petitioners to produce the relevant record and to file a detailed and comprehensive representation(s) whereupon the assessing authority shall take a decision in accordance with law by passing a speaking order and after affording an opportunity of hearing to each petitioner or its authorized representative. It is, however, clarified that the question of vires is not being adjudicated upon at this stage and it shall be open to the petitioners to approach this Court again laying challenge to the vires in accordance with law, after the decision by the concerned authority, if need so arises. - Petition disposed of.
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2015 (10) TMI 777
Denial of input tax credit - Imposition of penalty - Held that:- Assessment order has been passed ex parte by the Assessing Authority, Jalandhar- II, holding total tax liability of the petitioner-firm to the tune of ₹ 1,41,29,588/-. The stand of the petitioner-firm is that no notice was ever served to it, before passing the impugned order. Mr. Roshan Lal Sharma, its alleged Accountant was never employed by it and, therefore, it does not lie in the mouth of the respondent-department that the petitioner-firm was represented by him before the department on one date. The petitioner has averred that it has in its possession, all the original tax invoices, which can be produced on demand. Thus, in the fitness of the things and in the interest of justice, it would be appropriate that the petitioner should be afforded an opportunity to put forward its case, before the relevant Assessing Authority along with documentary proof, if any, in its possession so as to enable the Authority to pass an appropriate and legal order - Matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 776
Whether in view of amendment of section 11 of the Punjab General Sales Tax Act, 1948 by Ordinance of 1998 effective from March 3, 1998 which was replaced by Punjab Act 12 of 1998 published on April 20, 1998, whereby limitation of three years for completion of the assessment has been prescribed, any assessment order for assessment years up to 1997-98 can be validly passed after April 30, 2001 - Held that:- Court while deciding identical issue against the appellant vide order [2015 (9) TMI 1327 - PUNJAB AND HARYANA HIGH COURT] (State of Punjab v. Patiala Cooperative Sugar Mills Limited, Rakhra, District Patiala along with connected appeals had held that in all those cases which pertain to assessment year prior to insertion of the period of limitation under section 11(3) of the Act by Ordinance with effect from March 3, 1998, which was replaced by Punjab Act 12 of 1998 published on April 20, 1998, the assessment was required to be finalised latest by April 30, 2001. - Decided against Revenue.
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2015 (10) TMI 775
Exemption under section 6(2) of the CST Act - Whether the notification issued prior to the introduction of the Haryana VAT Act could confer the valid jurisdiction on an officer to exercise the revisional power - whether the revisional power was properly conferred on the JETC or not - Held that:- Court while delving into identical issue in (H. M. Mehra & Co. v. State of Haryana [2014 (1) TMI 1618 - Punjab and Haryana High Court] after discussing certain provisions of the Act set aside the order passed by the Tribunal and referred the matter back to it to adjudicate the same after hearing counsel for the parties in respect of the issues raised in accordance with law. - order dated June 14, 2012, annexure A-4 passed by the Tribunal is set aside. - Matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 714
Revision petition - Confiscation of seized vehicle with whiskey bottles - held that:- P.Ws. 1 and 2 who are the attesting witnesses to prove the seizure. P.Ws. 3 and 4 who are the Excise Officers speak about the seizure and production of seized material. P.W. 3 also speaks to the initiation of confiscation proceeding before the Authorized Officer. But as contemplated under Section 43A of the Karnataka Excise Act, it is necessary that the seized vehicle and also the prohibited goods will have to be produced before the Authorized Officer without any unreasonable delay and it is only on production of said seized property under sub-section (1) of Section 43A that the confiscation proceedings have to continue. Unfortunately, neither P.W. 3 nor P.W. 4 though seized the vehicle and also the prohibited goods, did not comply with the requirements of Section 43A by producing them before the Authorized Officer and therefore, the very initiation of proceeding for confiscation are illegal. This fact was not taken into consideration by the Authorized Officer while passing the order of confiscation, but the learned Session Judge has looked into this aspect and quashed the order of confiscation. - Decided against Revenue.
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