Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 20, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
GST
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Input tax credit - As the deadline for completing this form and availing the credit is 20.10.2018, the respondents are hereby directed to permit the petitioners to fill the GSTR-3 form manually in a manner, as to permit it to claim a credit, subject to the final outcome of the proceedings
Income Tax
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Disallowance @ 10% of the total labour charges paid in cash - non production of relevant bills/vouchers - the impugned disallowance @ 10% is on little higher side is liable to be restricted to 5% only
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Nature of Copyright expense - only a licence to use the copyright was granted to the assessee company. The assessee company had not acquired the copyright. In such circumstances, licence fee paid was a revenue expenditure.
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Disallowance u/s 2(24)(x) r.w.s. 36(1)(va) - delay in payment of employee's contribution to PF and ESI - Appellant is therefore not correct in contending that if such wages are paid in the following month, the liability to deposit the employee's contribution to the fund gets differed by another month.
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Charitable activity - exemption u/s 11 - mandation to specify the object/purpose in Form No.10 for claiming accumulation u/s. 11(2) - Though it is necessary, but that by itself would not mean that any inaccuracy or lack of full declaration in the prescribed format by itself would be fatal to the claimant.
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Disallowance u/s 14A r.w.r. 8D - suo moto disallowance by assessee - the legal grounds as to applicability of Rule 8D as raised by the Revenue fails since the assessee, himself, has computed disallowance u/r 8D and there was no question of satisfaction by AO before proceeding to compute the disallowance in terms of Rule 8D.
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Eligibility for deduction u/s 80P - proof of charitable activities - a Society has to be registered under the Karnataka Society Act 1977 as Cooperative society for claiming deduction under 80P of the Act.
Customs
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Classification of imported goods - Bonded Fabric Width 58 - The most appropriate classification would thus be under CTH 6006 32 00.
IBC
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Action of RBI in selecting the petitioner as one of the borrowers and issuing instructions to the banks to make a reference under the IBC - whether is arbitrary, unreasonable and falls foul of Article 14 of the Constitution of India? - The RBI retains full discretion as to which account is to be included in which trench and this Court finds no reason to interfere with the exercise of such discretion. petition dismissed.
Service Tax
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Service Tax audit of a private agency by CAG after migration to GST - We have serious doubts whether, with the aid of Rule 5A of the Service Tax Rules, 1994, the CAG can carry out compulsory Service Tax audit of private agencies like the petitioner.
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BAS - marketing and promotion of pesticides/insecticide manufactured by their principal - The service in question do qualify as Agricultural Extension Services and are covered under negative list as per Section 66D.
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Business Auxiliary Service - appellant acting as purchase agents, for overseas buyers of processed sea foods - export of services or not? - consideration was received either directly in foreign exchange from foreign clients or in INR from Indian exporters from the expo proceeds - Benefit of export allowed during the relevant period.
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Refund of Service tax paid erroneously - services provided to SEZ unit - the approval of Co-developer agreement was issued on 28.01.2008 whereas the services provided during period August 2007 to December 2007 - since the approval granted with retrospective effect, refund allowed.
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Vires of Rule 10 of Place of Provision of Service Rules, 2012 - The present writ petition was filed on 29th May, 2018 after provisions relating to service tax in the Finance Act, 1994 have ceased to become applicable - Petition dismissed.
Central Excise
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CENVAT Credit - There is no manufacturing process involved in Bagasse’s production. “Bagasse” is not ‘goods’ but merely a waste or by-product, therefore Rule 6 of CENVAT Credit Rules, 2004 is not applicable in the present case.
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Classification of goods - screw hooks - These harrow hooks are called as trolley hooks and trailor hooks and they are used for tractor or trolley. - classifiable under chapter sub heading 843290 of the tariff.
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Attachment of property - Recovery of dues - same property was already attached by bank against Non-performing Assets - the property in question has disappeared from the scope of attachment to be made by the Central Excise department.
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Refund of duty paid - filing of refund claim before the wrong jurisdiction - if the adjudicating authority was of the view that the appellant has not filed refund claim with the authorities which is not competent to entertain the refund claim, he would have transferred the application for refund claim before the competent authority but could not have rejected the refund claim simply on the ground that he had no jurisdiction.
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CENVAT Credit - common inputs/input services - records have been lost by the department itself, in that circumstances, the benefit of doubt, the goods in favour of the assessee-appellant that they were maintaining separate records.
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Valuation - includibility - expenditure on sales promotion activities namely distribution of diaries and calendars to the buyers jointly with the appellants and while 50% of the expenditure had been borne by the appellant, remaining 50% had been borne by the dealers - the same would not be includible in the assessable value.
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Method of Valuation - goods sold to the wholesale dealer in boxes of 100 pieces each - MRP based Valuation u/s 4A or transaction value u/s 4? - appellant were not required to affix MRP on the product.
Case Laws:
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GST
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2018 (10) TMI 999
Transitional Credit/input tax credit - migration to GST Regime - difficulty in reflection of Tran-I credit in GSTR-3 - Held that:- It is highlighted that the reflection of Tran-I credit in GSTR-3 is essential as it would ultimately impact the availability of credit for the entire duration - both transitional credit and input credit for the period 01.07.2017 onwards - Learned counsel submits that unless appropriate directions are given to the respondents, it is likely to face severe adverse financial crisis because in the absence of credit, it would have to pay cash throughout the country to the tune of ₹ 37 crores. As the deadline for completing this form and availing the credit is 20.10.2018, the respondents are hereby directed to permit the petitioners to fill the GSTR-3 form manually in a manner, as to permit it to claim a credit, subject to the final outcome of the proceedings - It is clarified that in the GSTR-3B form, the petitioner can claim transitional as well as the post 01.07.2017 input tax credit. List on 23.01.2019.
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2018 (10) TMI 998
Interest on delayed refund - provisional refund of ninety per cent of the amount within seven days of the application - petitioner prays that Court should grant interest in the nature of compensation for delay. Notice, returnable on 23rd November 2018.
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2018 (10) TMI 997
Extension of period for filing GST TRAN-1 form - Held that:- Respondents submitted that N/N. 48, dated September 10, 2018 has been issued for amending the Central Goods and Services Tax Rules, 2017 giving power to the Commissioner for extension of time for submission of declaration form GST TRAN-1 upto March 31, 2019. The power can be exercised by the Commissioner on the recommendation of the Council - Petition disposed off.
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2018 (10) TMI 996
Transitional credit/input tax credit - filing of TRAN-1/TRAN-2 - technical/system errors - Held that:- The present petitioner is one of the 213 entities which were allowed the facility and benefit of transitional credit - It is urged that the petitioner should first ensure that the credits which it otherwise is entitled to – both transitional and input credit as on 01.07.2017, are duly claimed and reflected in the place of its registration i.e. Mumbai in order to ensure that thereafter, the other centres where it is registered, can claim it. List on 16.10.2018.
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Income Tax
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2018 (10) TMI 995
Charitable activity - exemption u/s 11 - mandation to specify the object/purpose in Form No.10 for claiming accumulation u/s. 11(2) - Held that:- The statement of purpose for which the income is being accumulated or set apart is one of the requirements which must be satisfied before the assessee can avail the benefit under sub-section (2) of section 11. However, that by itself would not mean that any inaccuracy or lack of full declaration in the prescribed format by itself would be fatal to the claimant. The prime requirement of this clause is of stating of the purpose for which the income is being accumulated or set apart. In the present case, we are prepared to accept the Revenue's stand that the declaration made in Form 10 by the assessee was not sufficient to fulfill this requirement. However, as noted, during the course of assessment proceedings, AO called upon the assessee to explain the position in response to which, the assessee in detail pointed out background under which the board of trustees had met, considered the material and eventually passed a formal resolution setting apart the funds for the ongoing hospital projects of the Trust and for modernization of the existing hospitals. There was thus a clear statement made by the assessee setting out the purpose for which the income was being set apart - Decided against revenue
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2018 (10) TMI 994
Disallowance u/s 2(24)(x) r.w.s. 36(1)(va) - delay in payment of employee's contribution to PF and ESI - whether it was deposited before due date of filling return of income? - Held that:- Provision thus requires an employer before paying the employee his wages to deduct the employee's contribution along with the employer's own contribution as fixed by the Government. It is further required that he shall within fifteen days of the close of every month pay the same to the fund such contribution and administrative charges. In terms of this provision thus, after deducting the employee's contribution towards the funds, the same has to be deposited with the Government within fifteen days of the close of every month. Reference to fifteen days of the close of the month must be in relation to the month during which the payment of wages is to be made and corresponding liability to deduct employee's contribution to the fund arises. The expression “within fifteen days of the close of every month” therefore must be interpreted as having reference to the close of the month, for which, the wages are required to be paid with corresponding duty to deduct employee's contribution and to deposit the same in the fund. Appellant is therefore not correct in contending that if such wages are paid in the following month, the liability to deposit the employee's contribution to the fund gets differed by another month. - Decided against assessee
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2018 (10) TMI 993
Non communication to the petitioner regarding fixing a specific date of hearing of a Miscellaneous Application invoking Section 254(2) - Held that:- Tribunal should inform parties well in advance by assigning specific dates of hearing on these Miscellaneous Applications. They should be taken in the order in which they have been instituted/filed. None should be compelled to move this Court and seek an out of turn hearing. That would mean if somebody approaches this Court, gets a priority and expeditious hearing, others will have to wait for outcome of their Miscellaneous Applications for years together. This is not a happy scenario and it is for the Tribunal to set right the lapses and put its house in order. We dispose of this Petition by clarifying that we have not expressed any opinion on the rival contentions or on the merits of the application. Let respondent No.2 not initiate any coercive measures to recover the amount of taxes and penalty, if any, in terms of the Tribunal's initial order dated 1st June, 2018 simply because the petitioner's Miscellaneous Application is pending.
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2018 (10) TMI 992
Reassessment proceedings - Held that:- For Assessment Year 2014-2015, an order of assessment has been passed on 29th December 2017 in which the issue, which is subject matter of this Writ Petition, has been raised for the first time. That order of assessment has been challenged by the assessee/petitioner and the First Appeal before the Commissioner of Income Tax (Appeals) is pending. On such facts being noticed, Mr. Charanjeet Chanderpal appearing on behalf of the respondents fairly stated that until the Appeal is heard and disposed of by the First Appellate Authority, the impugned notice and the order dismissing the objections will not be given effect to and implemented. We accept this statement made by Mr. Charanjeet Chanderpal, on instructions, as an undertaking to this Court.
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2018 (10) TMI 991
Deduction u/s 10A - excluding the expenditure incurred in foreign exchange and communication / internet charges from 'total turnover' for working out the deduction - Held that:- The first question stands answered in favour of the Assessee and against the Revenue by a judgment of in the case of Commissioner of Income Tax, Central-III v/s HCL Technologies Limited [2018 (5) TMI 357 - SUPREME COURT]. TPA - Selection of comparables - Held that:- Any inclusion or exclusion of comparables per se cannot be treated as a question of law unless it is demonstrated to the Court that the Tribunal or any other lower authority took into account irrelevant considerations or excluded relevant factors in determination of Arm's Length Price and that impacts significantly the same. See THE PR. COMMISSIONER OF INCOME TAX-1 VERSUS BARCLAYS TECHNOLOGY CENTRE INDIA PRIVATE LTD. [2018 (8) TMI 574 - BOMBAY HIGH COURT]. We think that whether one instance or one illustration or one entity is comparable to another in determination of the Arm's Length Price, is essentially a question of fact. There, the relevant factors and tests are applied to the circumstances of the given case. The entity before the Court or Tribunal its business and that of the comparables business activity is, therefore, the crucial issue. We do not see how the Revenue can complain before us when this Court has been emphasizing throughout such an aspect.
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2018 (10) TMI 990
Extension of due date of filing of tax, Audit Report and Income-Tax Return - Held that:- This petition can be disposed of at this stage with the direction to the respondent authorities to consider on or before 25.10.2018 the representation submitted by the petitioners on 20.09.2018 for extension of due date for filing return, by issuing a speaking order so that in the event the petitioners are aggrieved by the order that may be passed, they would have the liberty to approach this Court again.
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2018 (10) TMI 989
Nature of Copyright expense - revenue or capital - Nature of expenses - Held that:- Identical questions arose in the appeal filed by the revenue in the case of the assessee itself for the assessment year 2009-10 i.e. Principal Commissioner of Income Tax-2, Chandigarh vs. M/s Mobisoft Tele Solutions P. Limited [2018 (2) TMI 1654 - PUNJAB AND HARYANA HIGH COURT] where while dismissing the appeal this Court answered the questions against the revenue. It was held that the Tribunal on appreciating the agreement rightly came to the conclusion that only a licence to use the copyright was granted to the assessee company. The assessee company had not acquired the copyright. In such circumstances, licence fee paid was a revenue expenditure. Addition u/s 40(a)(ia) - second proviso to Section 40(a)(ia) of the Act applicability - Held that:- The Tribunal has dealt with the factual aspect of the matter and it has been specifically recorded that the assessee has been able to prove that the recipients of the interest income have included the income in their return and paid taxes thereon. The said findings have not been shown to be erroneous in any manner. The said expenses were allowable in view of the provisions of Section 40(a)(ia) r.w.s. 201(1) of the Act. In such circumstances, since the Assessing Officer has herself admitted that the addition made was unwarranted, the addition no longer survives vis-a-vis assessment order and there is no reason for the Revenue to have any grievance on the issue. - Decided against revenue
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2018 (10) TMI 988
Application seeking rectification of the mistakes in that order of the Tribunal has not been decided by the Tribunal till date. This Court is, therefore, constrained to adjourn this matter repeatedly, though it is pending for consideration of this Court from 2nd May, 2015. We direct the Income Tax Appellate Tribunal, Bench at Mumbai, to whom the rectification application is assigned, to dispose it off as expeditiously as possible and, in any event, by 30th August, 2018. We list this matter under the same caption on 3rd September, 2018.
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2018 (10) TMI 987
Eligibility for deduction u/s 80P - proof of charitable activities - registration under the Karnataka Society Act 1977 - Held that:- Assessee has placed registration certificate dated 28/6/2000 in order to demonstrate that it was registered under the Karnataka Souhardha Sahakari Act 1959 Act as Cooperative Society but side by side AO has categorically observed in its order that assessee has registered under the Karnataka Souhardha Sahakari Act 1977 and in the asst. order assessee itself has admitted that it is covered under Karnataka Souhardha Sahakari Act 1977. The scope of registration under the Karnataka Souhardha Sahakari Act 1977 has been examined by Tribunal in the case of M/s Udaya Souharda Credit Co-operative Society Limited [2018 (8) TMI 1063 - ITAT BANGALORE] in which it has been held that a Society has to be registered under the Karnataka Society Act 1977 as Cooperative society for claiming deduction under 80P of the Act. Matter was to be referred to the AO to examine whether the assessee was registered under the Karnataka Cooperative Souhardha Act or Karnataka Cooperative Society Act to make eligible for deduction under sec. 80P of the Act. In the instant case undisputedly there is a reference of registration No. on the 1st page of bye laws. Therefore it becomes necessary to verify that in what connection the registration No. is mentioned on the first page of bye laws. All these issues requires proper adjudication after making necessary verification. Under these circumstance, we are of the view that the matter should be examined by the AO afresh. - Decided in favour of assessee for statistical purposes.
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2018 (10) TMI 986
Addition on account of unexplained loan - addition on the ground that the said company was giving mere accommodation entries and did not have any business activity - Held that:- Since the facts of the instant case are identical to the facts of the case decided by the Tribunal in the case of husband of the assessee [2018 (10) TMI 878 - ITAT DELHI], therefore, in absence of any contrary material brought to our notice against the order of the Tribunal in the case of, husband of the assessee, we hold that the assessee has discharged the initial onus cast on her to prove the identity of the investor company, its credit worthiness and genuineness of the transaction. We, therefore, set aside the order of the CIT(A) and direct the Assessing Officer to delete the addition. The first issue raised by the assessee is accordingly allowed. Addition on account of income from house property - rental income - Held that:- We find identical issue had come up before the Tribunal in the case of the husband of the assessee Sh. Raj Kumar Chawla. We find the Tribunal had set aside the orders of the authorities below and directed the Assessing Officer to adopt the annual rental value of the properties with certain directions. We, therefore, restore this issue to the file of the Assessing Officer with direction to adjudicate the issue afresh in the light of the decision of the Tribunal in the case of the husband of the assessee. The second issue raised by the assessee in the grounds of appeal is accordingly allowed for statistical purposes.
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2018 (10) TMI 985
Disallowance u/s 14A r.w.r. 8D - suo moto disallowance by assessee - Held that:- As observed that the assessee has made suo-moto expense disallowance of ₹ 3,30,594/- u/s 14A read with Rule 8D(2)(iii), being 0.5% of average value of investment in shares [0.5% of average of ₹ 646.96 Lacs & 675.41 Lacs]. This being the case, the legal grounds as to applicability of Rule 8D as raised by Ld. AR fails since the assessee, himself, has computed disallowance u/r 8D and there was no question of satisfaction by AO before proceeding to compute the disallowance in terms of Rule 8D. The additional disallowance is arising only out of the fact that Ld. AO has added the value of inventories also while working out the said disallowance. MAXOPP INVESTMENT LTD. VERSUS COMMISSIONER OF INCOME TAX, NEW DELHI AND PRINCIPAL COMMISSIONER OF INCOME TAX-I VS. D.B. CORP LTD. [2018 (3) TMI 805 - SUPREME COURT OF INDIA] followed. No reason to deviate from the stand of lower authorities so far as disallowance u/r 8D(2)(iii) is concerned. The interest disallowance u/r 8D(2)(ii) has already been set aside by FAA to the file of Ld. AO to ascertain the factual matrix of assessee’s submissions that interest expenditure pertained only to wind mill business carried out by the assessee. Since the same is factual in nature and set aside to Ld. AO, we see no reason to interfere with the same at this stage. Ground Number-1 stands dismissed. Disallowance of education expenses incurred by assessee towards director’s son education - Allowable busniss expenses u/s 37(1) - as per assessee same is allowable to the assessee in terms of Section 37(1) on the premise that the candidate was under obligation to join the assessee after completion of studies - Held that:- No such general scheme was floated by the assessee for the other employees and no commercial expediency as to allowability of the same has been demonstrated before us. The perusal of various clauses of the agreement dated 24/06/2008 entered into by the assessee with Neeraj Anil Mutha reveal that the candidate was under no obligation to join the assessee & serve for any stipulated period of time. Further, the agreement did not provide for any security / safeguards for the assessee in case the various terms of the agreement were not abided by the candidate at later stage or in case the candidate decided not to join the assessee at a later stage. Therefore, finding no substance in the submissions, the ground stand dismissed. Addition of personal expenditure - Held that:- The details of the same have already been extracted in the quantum assessment order. Nothing on record controvert the findings of Ld. AO and the submissions of Ld. AR do not persuade us to delete the impugned additions. This ground stand dismissed.
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2018 (10) TMI 984
Addition being the discount allowed by the Appellant to its customers - assessee could not furnish relevant material before the CIT (A), but has filed additional evidence in the form of a paper book before this Tribunal. - Held that:- AO had made some enquiries from the customers to find out if they received any discounts from the assessee, but the assessee has not been confronted with the findings of such an ex-parte enquiry report. This is in clear violation of principles of natural justice. The assessee has now filed the confirmation from the parties and also relevant material in support of his claim that he has given cash discount to the customers and his explanation as to why it is not included in the invoices is that Mahindra & Mahindra does not allow such discount to be given and therefore, it could not be included in the invoices, but only to ward off the competition, the assessee was constrained to give the cash discount. We find that this evidence goes to the root of the matter and if it is proved that the assessee has given cash discounts, the same is allowable as expenditure. This material is filed before us for the first time. Therefore, we deem it fit and proper to admit the same and remand the issue to the file of the AO for verification - Decided in favour of assessee for statistical purposes.
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2018 (10) TMI 983
Penalty u/s 271(1)(c) - defective notice - Held that:- Penalty cancelled for not striking the relevant portion in the notice issued under section 274 of the Act to initiate penalty proceedings under section 271(1)(c). See COMMISSIONER OF INCOME TAX, BANGALORE AND THE INCOME TAX OFFICER, WARD-6 (3) , BANGALORE VERSUS M/S SSA’S EMERALD MEADOWS [2015 (11) TMI 1620 - KARNATAKA HIGH COURT] - decided against revenue.
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2018 (10) TMI 982
Disallowance @ 10% of the total labour charges paid in cash - non production of relevant bills/vouchers - Held that:- There is no dispute about the fact that this assessee is a contractor executing general orders as well as acting as a supplier. We do not find any discussion either in assessment or lower appellate order that the impugned expenditure carries inflated claim vis-à-vis preceding and succeeding assessment years. Learned Departmental Representative fails to dispute that such cash payments are very common in assessee’s line of business involving intensive labour employment. The fact also remains at the same time is that the assessee has not filed on record the relevant details for the purpose of payees verification as well. We therefore deem it appropriate in larger interest of justice that the impugned disallowance @ 10% is on little higher side is liable to be restricted to 5% only with a rider that it shall not form a precedent in assessee’s case. Addition u/s. 36(1)(iii) on interest in relation to its interest free advances - Held that:- emerges from assessment order dated 25.03.2013 that the AO has not proved diversion of interest bearing funds as per assessee’s books of account qua the impugned loans. He has rather added notional interest thereupon to the tune of ₹1,63,090/- ₹18,000/-, ₹1,80,000/- and ₹9,65,783/-; respectively, totaling to the sum in dispute of ₹13,26,873/-. Hon'ble Delhi high court’s decision in M/s Shivnandan Build Con Pvt. Ltd. vs. CIT [2013 (2) TMI 868 - DELHI HIGH COURT] summarises the relevant settled legal proposition to conclude that such an addition of notional interest is not sustainable. We thus direct the Assessing Officer to delete the instant disallowance. Disallowance of miscellaneous cash purchase as well as advertisement and sales promotion expenditure - assessee’s failure in producing the relevant documents in the nature of cash purchases, bills, cash books qua its miscellaneous cash purchases as well as absence of any material on record indicating the sales promotion / advertisement expenditure to have been wholly and exclusively incurred for the purpose of its business - Held that:- There is no abnormality or inflation being pointed out in the lower authorities respective orders. The fact also remains that the taxpayer has also not discharged its onus of having incurred the impugned expenses. We therefore accept assessee’s impugned claim(s) to the extent 50% only is as all these three heads by taking note of its failure in filing all supportive detailed evidence. It is made clear our instant estimation of the impugned disallowances(s) @ 50% shall not be treated as a precedent in any preceding or succeeding assessment year. The assessee partly succeeds in its instant corresponding substantive grounds. Failure in deducting TDS attracting u/s. 40(a)(ia) - Held that:- Referring to case of CIT VERSUS ANSAL LAND MARK TOWNSHIP (P) LTD. [2015 (9) TMI 79 - DELHI HIGH COURT] held that section 40(a)(ia) does not apply in case the payer assessee is not an assessee in default as per second proviso thereto inserted in the Act by the Finance Act, 2012 with effect from 01.04.2013 r.w.s section 201(1) first proviso. Their lordships have held the above 2nd proviso to section 40(a)(ia) as having retrospective effect being curative in nature. We therefore leave it open for the Assessing Officer to carry out necessary verification exercise in consequential proceedings. The instant substantive is taken as partly accepted.
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Customs
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2018 (10) TMI 977
Principles of natural justice - non-speaking order - petitioner's grievance is that its contention in appeal as recorded in the impugned order has not been dealt with by the impugned order passed by the Appellate Authority - Held that:- The order passed by the authority under the Act is not a speaking order. The impugned order merely rejects the submissions of the petitioner on the ground that the same is not acceptable. This indicates complete subjectivity in passing the impugned order. The authority is obliged to give reasons for its decision (the appellate order might not have elaborate reasons when it confirms the order of the original authority). the petitioner's appeal restored to the file of the Additional Director of Foreign Trade for fresh disposal in accordance with the principles of natural justice - petition allowed.
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2018 (10) TMI 976
Classification of imported goods - Bonded Fabric Width 58 - whether classifiable under Chapter CTH 5907 00 99 or under CTH 5407 10 39? - Rule 3(b) of the General Rules for interpretation of the Tariff - Held that:- The imported goods were in the form of bonded fabrics made up of two layers- the bottom layer comprising of knitted fabric and the top layer made up of woven fabrics. The two have been bonded together to form the imported goods. The classification claimed by the importer is under Chapter 59 as fabrics which are impregnated or coated. This classification is clearly in-correct in view of the opinion given by the Textile Committee, Mumbai to the effect that the imported goods are neither coated nor impregnated. Thereby, we rule out the classification under Chapter 59, claimed by the importer. In the circumstances, the classification is required to be decided on the basis of the General Rules for Interpretation of Import Tariff. Rule 3 provides for classification when the imported goods are prima facie classifiable under two or more headings. The imported goods are composite goods made up of knitted (Chapter 60) as well as woven (Chapter 54) fabrics. In terms of Rule 3 (b), the essential character will decide such classification. Original Authority has decided the classification under Chapter 54 considering the imported goods to have the essential character of woven fabrics. We agree with the view of Commissioner (Appeals) that neither knitted nor woven can be considered to be the essential character of the imported goods. In that case, Rule 3 (c) has to be resorted to whereby classification has to be decided as per the heading occurring last in numerical order among those which equally merit classification - The most appropriate classification would thus be under CTH 6006 32 00. Appeal dismissed - decided against Revenue.
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Corporate Laws
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2018 (10) TMI 978
Winding up petition - debt due and payable - Held that:- As noted earlier not a single document has been produced on record by the appellant to demonstrate that the appellant's dealer, either on 15th July, 2013 or even within 2-3 days thereafter actually corrected/modified or for that matter attempted to correct/modify the alleged error in punching in in the respondent's UCC in the record of the NSEL. This is despite the fact that the appellant, both in response to the statutory notice as well as in its reply opposing the company petition, has time and again asserted that such modification/correction was in fact carried out. Again, there is also no material produced on record by the appellant to even prima-facie establish that the factum of alleged error/mistake as well as its immediate correction/modification was intimated to the respondent either on 15th July, 2013 or within some reasonable period thereafter. In such circumstances, we cannot really fault the view taken by the learned Company Judge in holding that the defense raised by the appellant was neither bona-fide nor substantial. Mr. Sancheti, however chose to rely upon NSEL circular dated 8th July, 2011 in support of the primary defense. He submitted that this circular makes it clear that the NSEL permits client code modification and therefore, on the basis of such circular, it must be held that errors in punching in the client's code are quite routine and correction/modification is clearly permissible. Mr. Sancheti submits that on the basis of this circular the primary defense raised by the appellant deserves to be accepted. If modification had indeed been effected by the appellant, as repeatedly asserted, then surely the same would have been reflected in the records of NSEL, which was fully operational between 15th July, 2013 and 30th July, 2013. Admittedly, no such modification/correction is reflected in the records of the NSEL. As noted earlier the NSEL by its communication dated 29th September, 2014 has very clearly stated the subject trades stand recorded in the name of Sujana and not in the name of the NSEL. Therefore, it is not possible to accept Mr. Sancheti's contention that the NSEL circular dated 8th July, 2011 constitutes any prima-facie proof in relation to the primary defense urged by and on behalf of the appellant. In the facts of the present case it is difficult to accept that the defense raised by the appellant is either bona-fide or substantial. In any case, the appellant has failed to adduce any prima-facie proof in support of the primary fact on which the defense is based. Mr. Dhond, had in fact pointed out that this may not be some isolated instance, since, even criminal prosecution is launched against the appellant/its officers for routinely increasing trade volumes by deliberately punching incorrect client codes. In a jurisdiction of the present nature, obviously, we cannot go into such issues.
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Insolvency & Bankruptcy
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2018 (10) TMI 981
Action of RBI in selecting the petitioner as one of the borrowers and issuing instructions to the banks to make a reference under the IBC - whether is arbitrary, unreasonable and falls foul of Article 14 of the Constitution of India? - Held that:- This Court is not called upon to evaluate the criteria adopted by the RBI on merits. The scope of judicial review is limited and unless it is established that the same is arbitrary, unreasonable, capricious or mala fide, no interference by this Court would be warranted. Clearly, none of the aforesaid grounds are established. The criteria adopted by the RBI is based on expert advice and within the scope of their powers. In view of the above, no interference with the direction of the RBI is warranted. It is also apparent that the criteria adopted by RBI, for selecting the accounts to be referred for resolution under the IBC, is an objective criteria based on rational basis. The petitioner’s contention that inclusion of its name in the second list is arbitrary, is wholly unsustainable. Mr. Vashishth contention that there were several other accounts meeting the same criteria, but had not been included in the list of accounts to be referred under the IBC. This contention is seriously disputed by RBI. However, even if it is accepted that there are other accounts qualifying the criteria as adopted by the RBI but have not been included in the list, no interference in these proceedings would be warranted. Clearly, all accounts cannot be referred to the IBC in one trench, as that would tend to clog the docket of NCLT. The RBI retains full discretion as to which account is to be included in which trench and this Court finds no reason to interfere with the exercise of such discretion. petition dismissed.
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2018 (10) TMI 980
Corporate insolvency process - Held that:- This Petition clearly reveals that there is a debt as defined in Section 3(11) of IBC read with Regulation 7 of CIRP Regulation, also there is default in this case within the meaning of Section 3(12) of IBC and the corporate debtor having named the Interim Resolution Professional with his consent, there being no disciplinary proceedings against the IRP, this Bench hereby admits this petition filed under Section 9 of IBC, declaring moratorium.
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2018 (10) TMI 979
Corporate Insolvency Resolution Process (CIRP) - Resolution Professional as well as the CoC did not receive any Resolution Plan worth to be considered - order was challenged by one of the unsuccessful resolution application - Held that:- The appeal is pending for consideration by Hon'ble NCLAT. On 4.5.2018 NCLAT passed an order stating - “post appeal for consideration on 18.05.2018”. “During pendency of appeal liquidator / adjudicating authority may proceed with the liquidation proceeding but will not sale immovable or movable property of the corporate debtor nor confirm any sale, if already made, without prior permission of the Appellate Tribunal.” It further appears that meantime the promoter/director filed application for arrangement under sections 230-232 of the Companies Act, 2013 and that application was pending for consideration. On 12.07.2018 the Hon'ble Appellate Tribunal passed order that, “Until further orders, meetings of Secured/Unsecured Creditors and Shareholders shall remain stayed. Pendency of the appeal will not come in the way of Tribunal to decide question of maintainability of the petition under sections 230-232 of the Companies Act, 2013”. Now this application is filed by the promoter/director with a prayer to direct RP/Liquidator not to proceed with any sale proceeding till outcome of the meeting of the shareholders. Since Hon'ble NCLAT stayed the meetings of the Shareholders/Creditors (Secured and Unsecured), this application now become infructuous and stands disposed of.
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Service Tax
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2018 (10) TMI 1000
Service Tax audit of a private agency - Rule 5A of the Service Tax Rules, 1994 - Held that:- Subsection (2) of Section 174 is a Saving Clause and it inter alia provides that the amendment of the Finance Act, 1994 to the extent mentioned in Subsection (1) of Section 173, shall not revive anything not in force or existing at the time of such amendment or repeal. There was no saving of Rule 5A in such manner that fresh proceedings for audit could be initiated in exercise of powers under the said Rule. We, therefore, have serious doubts whether, with the aid of Rule 5A of the Service Tax Rules, 1994, the CAG can carry out compulsory Service Tax audit of private agencies like the petitioner. Interim stay granted. Issue Notice, returnable on 28.11.2018.
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2018 (10) TMI 975
Vires of Rule 10 of Place of Provision of Service Rules, 2012 - whether Rule 10 is ultra vires to Section 66B read with Section 64 and 65B (52) and 66C(1) of the Finance Act, 1994? - validity of Section 66B of the Finance Act, 1994 - validity of paragraph 4 and 4.1 of the TRU circular No. 206/4/2017-ST dated 13th April, 2017 - service tax on Held that:- Finance Act, 1994 including the rules and the circulars issued thereunder have ceased to become effective to transactions with effect from 1st July, 2017. The present writ petition was filed on 29th May, 2018 after provisions relating to service tax in the Finance Act, 1994 have ceased to become applicable - it would not be appropriate and proper to issue notice to examine validity and vires of statutory provisions that are no longer in operation and no proceedings are pending against the petitioner. Petition dismissed.
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2018 (10) TMI 974
Refund of Service tax paid erroneously - refund claimed on the ground that appellant provided services to the developer of SEZ and the services were consumed in the SEZ itself - case of Revenue is that the approval of Co-developer agreement was issued on 28.01.2008 whereas the services provided during period August 2007 to December 2007 - denial of refund also on the ground of unjust enrichment. Held that:- The Co-developer agreement dated 27.01.2007 was formed part of the same approval dated 28.01.2008, therefore, the approval become effective retrospectively i.e. from 27.01.2007. In this fact, the services provided during August 2007 to December 2007 is clearly to Co-developer M/s RGA Software Systems Pvt. Ltd, this to be approved as Co-developer of SEZ by Ministry of Commerce and Industries. Accordingly, the services provided to approve Co-developer of SEZ was exempted from payment of service tax, hence the service tax paid by the appellant is refundable. Unjust enrichment - Held that:- The appellant have admittedly not recovered the amount of service tax from the service recipient, which is evident from the certificate issued by the service recipient of M/s RGA Software Systems Pvt. Ltd. The adjudicating authority before sanction of the refund claim must verify the balance sheet that whether the amount of refund is shown as receivable on the asset side in the balance sheet, if it is found as receivable, the refund cannot be hit by unjust enrichment. Appeal allowed by way of remand.
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2018 (10) TMI 973
Business Auxiliary Service - appellant acting as purchase agents, for overseas buyers of processed sea foods - export of services or not? - case of Revenue is that the appellants provided services falling under Business Auxiliary Service and that the consideration received by them was not in convertible foreign exchange and thus, are not exempted from payment of Service Tax. Held that:- The service provider i.e. the appellant is situated in India i.e. in a taxable territory. The recipients of the services, to whom the benefit of the services accrued, are located outside India. Therefore, it is evident that the service provided by the appellants is either provided to a person located outside India or the benefit of service accrued to a person placed outside India or it could be construed to be provided at a place outside India as the nature of Service Tax was held to be consumption-based destination Tax. Thus, the services were rendered by the appellant who is located in India and the beneficiary of the services was located outside India and such services were required to be treated as export of services for a harmonious construction of the legal provisions over the years. The appellants have successfully demonstrated that the commission due to them was received either directly in foreign exchange from foreign clients or in INR from Indian exporters from the expo proceeds. Therefore, it is clear that the remittance is received by the appellants is nothing but a portion of the export proceeds received by the exporter, though paid to the appellants in Indian Rupees. It is to be considered as receipt in foreign exchange only albeit is an indirect fashion - the amounts received by the appellants as commission required to be treated as to have been received in freely convertible foreign exchange. Time limitation - Held that:- The appellants obtained registration or payment of Service Tax in 2004 itself and intimated to the Department vide letter dated 03.12.2004 that their services qualifies as export and hence they are not collecting service tax and the same was followed by way of letter dated 10.11.2007. In view of the same, it is incorrect for the Department to allege suppression of facts with intention to evade payment of duty etc., for the purposes of invocation of extended period - Extended period cannot be invoked. Penalty - Held that:- The case of the Department does not stand on merits, the question of maintaining the penalty etc. does not arise at all. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 972
Renting of immovable property service - undertaking of the Government of Punjab and owner of warehouses which have been rented by them to the Food Corporation of India of storage for food grains - Held that:- The issue is decided in appellant own case PUNJAB STATE WAREHOUSING CORPORATION VERSUS CCE, CHANDIGARH [2018 (2) TMI 154 - CESTAT CHANDIGARH], where it was held that as these services are for agricultural produce, which is not in dispute, therefore, the appellant is not liable to pay service tax on Storage and Warehousing which has been exempted from service tax as per section 65 (105) zza) of the FA, 1994 - demand set aside - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 971
Business Auxiliary Service - marketing and promotion of pesticides/insecticide manufactured by their principal - extended period of limitation - Held that:- The issue came up before this Tribunal in the case of M/s Frontier Agrotech Pvt Limited [2018 (8) TMI 1171 - CESTAT CHANDIGARH] wherein the services in question are identical to the services in hand and this Tribunal held that the services rendered by the appellant are “Agricultural Extension Services” and are covered under negative list as per Section 66D of the Finance Act, 1944. The service in question do qualify as Agricultural Extension Services and are covered under negative list as per Section 66D of the Finance Act, 1944 - the appellant is not liable to pay service tax - Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 970
Security Agency Services - non-payment of service tax - non-filing of returns - appellant failed to establish his case - Held that:- The appellant have not filed any grounds of appeal in support of their contentions except merely saying that Commissioner (Appeals) has erred in law and facts. The bare assertions made in the grounds of appeal have not been supported by any narration about basis or arguments or case laws. Such grossly inadequate pleadings in grounds of appeal do not further the cause of the appellant. Inadequate pleadings show that the appellants have been negligent in defending their case. Besides, they are not interested to pursue the appeal in the manner prescribed by the law i.e. additional evidence is to filed first by way of the miscellaneous application and subjected to judicial scrutiny for its admissibility or otherwise. Appeal dismissed - decided against appellant.
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Central Excise
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2018 (10) TMI 969
Attachment of property - Recovery of dues - same property was already attached by bank against Non-performing Assets - Whether the Financial Institution, which is a secured creditor, or the department of the Government concerned, would have the 'Priority of Charge' over the mortgaged property in question, with regard to the tax and other dues? - Held that:- Section 31-B of the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 clearly makes the issue raised between the petitioner and the second respondent clear that the rights of the secured creditors to realise secured debts due and payable to them by sale of assets over which the security interest is created, shall have priority and shall be paid in priority over all other debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or local authority - decided in favour of the financial institution, which is a secured creditor having the benefit of the mortgaged property. What are the status and the rights of a third party purchaser of the mortgaged property in question? - Held that:- The question is stated to relate only to auction sales, which may be carried out in pursuance to the rights exercised by the secured creditor having a mortgage of the property. This aspect is also covered by the introduction of Section 31B, as it includes “secured debts due and payable to them by sale of assets over which security interest is created.” The petitioner being a bona fide purchaser has purchased the property brought by the bank in public auction held on 02.05.2017. Moreover, the crucial aspect to be borne by us is the date of attachment of the property in question by the bank on 22.07.2008 - When the property in question was already attached by the fourth respondent bank after classifying the account of the original borrower as Non-Performing Asset and subsequently the property was also attached on 22.07.2008, almost six years ago, the property in question has disappeared from the scope of attachment to be made by the second respondent, the reason being that the charge was created only on 22.12.2014. The Sub Registrar, Kinathukadavu, Coimbatore District, third respondent herein, is directed to remove all the entries made in respect of Survey No.80/2, Nallatipalayam Village, Kinathukadavu Taluk, in favour of the second respondent by document No.27/2014, dated 29.12.2014 - petition allowed.
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2018 (10) TMI 968
Whether the execution of a bond or letter of undertaking by the noticee is not the pre requisite condition for export without payment of duty? Held that:- It remained conceded on behalf of the revenue that against the judgment of Karnataka High Court in the case of Commissioner of Customs Service Tax, Bangalore-II vs. Nash Industries [2017 (3) TMI 1277 - KARNATAKA HIGH COURT], no appeal was preferred by the revenue - As the revenue had accepted number of orders passed by the Tribunal granting relief to the assessees under similar circumstances where export of goods was not affected by the assessee himself but was through the merchant exporter or 100% export oriented unit, we do not find any substantial question of law arise in the present appeal. Appeal dismissed.
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2018 (10) TMI 967
Clandestine manufacture and removal - tread rubber - whether the Department has reasonably discharged its burden of proof on the allegation made by them on the appellants that they have clandestinely manufactured and cleared tread rubber without payment of duty? Held that:- The allegation of the department is that both the appellant companies, i.e. M/s. TRPL & M/s. TTRPL, have resorted to clandestine removals, the duty was confirmed jointly on both the companies. There is no mention of the amount of duty/penalty recoverable from each of the appellant companies although the department does not dispute the independent existence of both the appellant companies. It was submitted by Ld. AR that most of the finished goods came into existence at the premises of M/s. TTRPL but majority of the clandestine clearances were effected using the invoices of M/s. TRPL. However, demand has not been confirmed against any particular company, though the clearances were sought to be clubbed - also, Department does not dispute the distinct identity of both M/s TRPL & M/s TTRPL. In this case it is a recognized fact that both units are existing and paying duty separately. In such a situation, the legality of demand of duty from both units, becomes questionable. The confirmation of duty on both the units not only leads to inference that both the units exist differently but would also pose difficulties in execution of the order. It is not clear as to how much amount is to be recovered from which unit. Therefore, the Department needs to have a clarity with reference to the demand i.e. the so-called demand needs to be confirmed against a particular firm. In the absence of the same, this Bench is handicapped to conclude on the merits of the case. In the interest of justice, matter should go back to the Ld. Commissioner for arriving at a categorical conclusion as to on whom the demand needs to be confirmed, properly weighing the evidence available on record - appeal allowed by way of remand.
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2018 (10) TMI 966
CENVAT Credit - common input/capital goods/input services used dutiable product and exempted product - “Bagasse” emerges as a waste/by-product, which was being cleared by the Appellant at ‘Nil’ rate of duty in the course of manufacture of dutiable Sugar & Molasses - recovery u/r 14 of CENVAT Credit Rules, 2004 read with Section 11A(1) of the Central Excise Act, 1944 - penalty u/r 15(1) of CENVAT Credit Rules, 2004. Held that:- The Hon'ble Supreme Court decision in the matter of DSCL Sugar Ltd. [2015 (10) TMI 566 - SUPREME COURT] has clearly laid down that bagasse is agricultural waste of sugarcane and waste and residue of agricultural products, during the process of manufacture of goods cannot be said to be result of any process. There is no manufacturing process involved in Bagasse’s production. “Bagasse” is not ‘goods’ but merely a waste or by-product, therefore Rule 6 of CENVAT Credit Rules, 2004 is not applicable in the present case. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 965
CENVAT Credit - fake invoices - appellant had availed CENVAT credit on the invoices issued by M/s Annapurna Impex Pvt. Ltd., Ludhiana without actual receipt of the material - Held that:- There is no findings on the contention of appellants herein as to why M/s Annapurna Impex Pvt. Ltd., were not issued show cause notice for the complicity in passing of ineligible CENVAT credit or why the amount which have been debited by the said M/s Annapurna Impex Pvt. Ltd., is to be considered as duty - It is also noticed that the First Appellate Authority has selectively considered the statements of the various individuals of the appellants but has not consider the factual position arising out of holistic reading. Due to various gaps in the impugned order, the issue cannot be decided by the Tribunal with reference to the correct facts of the case. In the case in hand, the First Appellate Authority has not recorded to demolish the factual findings of the Adjudicating Authority. The matter needs reconsideration by the First Appellate Authority - appeal allowed by way of remand.
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2018 (10) TMI 964
SSI Exemption - use of brand name of another person - brand name of “Hot Pot” and “Automats” owned by M/s.Asra and as such M/s.Automats (India) or not - Shri Sudhir Malhotra is a Proprietor of M/s.Asra and is the active partner in M/s.Automats (India) - N/N. 1/93-CE dated 28/02/1993 - Held that:- Appellant fairly concedes that the legal issue as regards co-owner of brand names, was not specifically raised before the adjudicating authority and his attention was not brought to the decisions cited - The matters to the original adjudicating authority for fresh decision in the light of the referred judgments - appeal allowed by way of remand.
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2018 (10) TMI 963
CENVAT Credit - fake invoices - without supplying the goods, the said party had issued fake invoices - penalty - Held that:- Since the show cause notices issued to M/s. Jawala Steel Corporation, the supplier of goods are pending for adjudication, proceedings cannot be initiated against the appellants, who are only purchasers of the goods for confirmation of Cenvat demand and also for imposition of penalty. The matter is remanded back to the concerned original authority for passing reasoned and speaking order, subsequent to the adjudication of the proceedings pending against M/s. Jawala Steel Corporation - appeal allowed by way of remand.
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2018 (10) TMI 962
Method of Valuation - goods sold to the wholesale dealer in boxes of 100 pieces each - MRP based Valuation u/s 4A or transaction value u/s 4? - Held that:- The appellants are not liable to pay duty in terms of Section 4A of the Central Excise Act, 1944, and they have paid duty correctly under Section 4 of the Central Excise Act, 1944 - the issue is decided in the appellant own case M/S STERLING TOOLS LTD, SHRI ATUL AGGARWAL, DIRECTOR VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, FARIDABAD [2015 (10) TMI 1991 - CESTAT NEW DELHI], where it was held that As per Rule 29 of the said rules the appellant were not required to affix MRP on the product which were cleared as wholesale packages, therefore, the provisions of the SWM (PC) Rules are not applicable to the facts of this case which is squarely covered by the guidelines issued by the Hon'ble Apex Court in the case of Jayanti Food Processing (P) Ltd. [2007 (8) TMI 3 - Supreme Court] - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 961
Valuation - inclusion of amount retained by the assesse on account of VAT concession given by the Haryana State Government in assessable value - extended period of limitation - Held that:- The issue has already been decided by the Hon’ble Apex Court in the case of Maruti Suzuki India Ltd. [2014 (9) TMI 229 - SUPREME COURT] wherein it has been held that the amount retained by the assesse on account of VAT concession given by the Haryana State Government, the said amount is required to be added in the assessable value. Extended period of limitation - Held that:- The period in dispute is 2001-2004 & 2005 and the show cause notice has been issued on 30.03.2007 by invoking extended period of limitation, therefore, in terms of the CBEC Circular No. F/1063/2/2018-CX dated 16.02.2018, extended period of limitation is not invokable. As entire demand sought to be demanded from the appellant by invoking the extended period of limitation therefore the demand is not sustainable on account of limitation - appeal allowed on limitation.
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2018 (10) TMI 960
MRP Based valuation - appellant was affixing MRP on the cartons on the goods sold by them but it was paying duty under Section 4 of the Central Excise Act, 1944 - extended period of limitation - Held that:- The assessable value has been arrived as per formula i.e. Price List + 35% value addition, whereas, in terms of Section 4(A) of the Act, the assesseable value is to be arrived by adding 35% to the cost of the product. As MRP was not available during the course of investigation, therefore, the matter needs examination at the end of the adjudicating authority to arrive the correct assessable value. Extended period of limitation - Held that:- As Revenue has not challenged the impugned order, therefore, the extended period of limitation is not invokable. Appeal allowed by way of remand.
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2018 (10) TMI 959
Classification of goods - screw hooks - These harrow hooks are called as trolley hooks and trailor hooks and they are used for tractor or trolley. - whether classified under Chapter heading 7318 of the Central Excise Tariff Act, 1985 or under Chapter heading 843290 of the Tariff? - Held that:- As the classification of the impugned goods in the case of M/s PNA Agro Industries vide adjudication order no. 68/CE/ADC/YM/PKL/2016-2017 dated 13.01.2017 has been accepted by the Revenue, therefore, different treatment cannot be given to the appellant - correct classification of the harrow hooks manufactured by the appellant is classifiable under chapter sub heading 843290 of the tariff, on which, no duty is payable by the appellant therefore, the entire demand of duty is set aside. As there is no duty payable by the appellant, the seized goods are not liable for confiscation - confiscation and penalty also set aside. Extended period of limitation - Held that:- The entire demand has been raised against the appellant by invoking extended period of limitation. As Revenue itself is having two different views, in that circumstance, the extended period of limitation is also not invokable. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 958
Valuation - includibility - expenditure on sales promotion activities namely distribution of diaries and calendars to the buyers jointly with the appellants and while 50% of the expenditure had been borne by the appellant, remaining 50% had been borne by the dealers - Held that:- Tribunal in the case of Maruti Suzuki India Ltd. Vs. CCE, Delhi/Bhopal [2008 (8) TMI 118 - CESTAT NEW DELHI] which is with regard to the provisions of Section 4 as it stood during the period w.e.f. 01.07.2000 and also taking into account the definition of ‘transaction value’ in new section 4, has held that when the sales promotion expenses are jointly incurred by the assessee as well as his dealers and a part of expenses of the promotion activities are borne by the dealer and incurring such expenses on sales promotion is optional and not compulsory, to the extent such expenses are incurred by the dealers, the same would not be includible in the assessable value. Also, there is no evidence brought on record by the department to prove that the dealers in terms of their agreement with the appellant were under obligation to share 50% of the expenses on distribution of diaries and calendars to the customers as promotion gifts. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 957
Area Based exemption - N/N. 49/50-CE dated 10.06.2003 - scope of SCN - In remand proceedings, the directions of this Tribunal were followed and the adjudicating authority held that the appellant is entitled for exemption Notification No. 49/50-CE dated 10.06.2003. But on appeal filed by the Revenue before the Ld. Commissioner (A), the exemption was denied. Held that:- In compliance to the directions given by this Tribunal, both the witnesses were examined and it was revealed that the commercial production was started before 31.03.2010. The objection taken by the Ld. AR that some of the machinery has been imported was cleared by the appellant after 31.03.2010. The same was not the subject matter of the show cause notice to deny exemption to the appellant. In that circumstances, the evidence gathered after issuance of the show cause notice cannot be subject matter of the case in hand - the evidence gathered after issuance of the show cause notice cannot be taken on record and the same are beyond the allegation made in the show cause notice. When the appellant filed the declaration with the department on 21.03.2010 and till 31.03.2010, the departmental officers have taken not any pain to visit the appellant s factory, therefore, the benefit of doubt goes in favour of the appellant. The order of the adjudicating authority is restored - appeal disposed off.
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2018 (10) TMI 956
CENVAT Credit - common inputs used in manufacture of both dutiable as well as exempted goods - non-maintenance of separate records - demand of 5%/6% on the value of exempted goods - Rule 6(3)(b) of Cenvat Credit Rules, 2004 - Held that:- As the appellant has already reversed the Cenvat credit attributable to the exempted goods on inputs used in manufacturing of SLICE during the intervening period. In that circumstances, the same is equal to compliance of the Rule 6 (3) of the Cenvat Credit Rules, 2004 as they have not availed Cenvat credit on inputs used in manufacturing of exempted goods - Therefore, an amount equal to 5%/6% of the value of exempted goods can t be demanded and benefit of Notification No. 1/2011-CE dated 01.03.2011 cannot be denied to the appellant. Demand of Interest - Held that:- The matter requires verification at the end of the adjudicating authority, therefore, for the limited purpose, the matter is remanded back to the adjudicating authority for calculation of interest - Matter on remand. Penalty - Held that:- Admittedly, during the impugned order, there was a dispute going on whether the appellant is manufacturing exempted goods or not, in that circumstances, no penalty is imposable to the appellant - penalty set aside. Appeal allowed by way of remand.
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2018 (10) TMI 955
CENVAT Credit - common inputs/input services which were used in the manufacture of dutiable as well as exempted final products - non-maintenance of separate records - demand of 8% of the value of exempted goods in terms of Rule 57CC(1) of the erstwhile Cenvat Excise Rules, 1944 - Held that:- As the appellant has contended that they are maintained separate records of inputs used in the manufacture of Chloroquin Phosphate Tablet and records are with the department. These records have been lost by the department itself, in that circumstances, the benefit of doubt, the goods in favour of the assessee-appellant that they were maintaining separate records. As the records maintained by the assessee-appellant were not available with the department, therefore, by giving the benefit of doubt, it is held that the appellant were maintaining separate records during the impugned period. Therefore, the appellant cannot be asked to pay @8% of the value of the exempted goods. Appeal dismissed - decided against Revenue.
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2018 (10) TMI 954
Valuation - buyers have reimbursed the testing charges to the appellant - inclusion of testing charges in assessable value - N/N. 56/2002-CE dated 14.11.2002 - extended period of limitation - penalty -Held that:- In this case testing has been done before clearance of the goods, therefore, any activity undertaken before clearance of the goods and charges thereof are to be included in the assessable value, although, these testing charges has been re-imbursed by the buyers - demand upheld. Extended period of limitation - penalty - Held that:- The appellant is located in the state of Jammu & Kashmir and availing benefit of exemption Notification No. 56/2002-CE dated 14.11.2002. As per the said Notification, whatever duty paid by the appellant through PLA , the same is refundable or the appellant is entitled to take self credit. In that circumstances, charge of mala-fide is not sustainable, therefore, the demands for the extended period of limitation are set aside - penalty also set aside. The appellant is directed to pay the differential duty along with interest for the clearances made during the period of limitation - appeal disposed off.
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2018 (10) TMI 953
Refund claim - whether refund can be denied without challenging those assessment orders of refund claims by way of issuance of show cause notice under Section 11A of the Act or not? - Held that:- The issue is decided in the case of COMMISSIONER OF CENTRAL EXCISE, VERSUS M/S. JELLALPORE TEA ESTATE [2011 (3) TMI 11 - GAUHATI HIGH COURT], where it was held that Section 11A of the Act not applicable since the issue raised did not concern any approval, acceptance or assessment relating to the rate of duty on or valuation of any excisable goods. Thus, provisions of Section 11A of the Act are not applicable to the facts of this case - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 952
Method of Valuation - refund claim - packages were packed in bigger boxes of 15-20 packs - Revenue entertained a view that the appellant is required to assess the goods under Section 4 and has availed excess refund which is illegal - Held that:- Th issue is decided in appellant own case of KRISHI RASAYAN EXPORTS PVT. LTD VERSUS CCE & ST, JAMMU & KASHMIR [2018 (5) TMI 1342 - CESTAT CHANDIGARH], where it was held that The appellant have made packages for retail sale, they are legally bound to affix MRP of the said goods and thus appellant is entitled to refund claim. The appellant is entitled to refund claim of ₹ 29,39,465/- along with interest - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 951
Valuation - Compounded Levy Scheme - valuation on actual production basis under sub- Section 4 to Section 3A of the Central Excise Act, 1944 - principles of natural justice - Held that:- In compliance with the direction of the Hon’ble High Court, the appellant filed a reply and submissions before the adjudicating authority on 10.09.2008 and 29.09.2008 but without considering the submission made by the appellant, the impugned order has been passed which is in contravention of the principles of natural justice - the adjudicating authority is directed to pass the order to fix production of capacity as directed by this Tribunal vide order dated 29.06.1998 - appeal allowed by way of remand.
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2018 (10) TMI 950
Refund of education/ higher education cess - N/N. 56/2002-CE dated 14.11.2002 - denial on the ground that appellants are not entitled to self credit/ refund of education/ higher education cess paid by them in terms of N/N. 56/2002-CE dated 14.11.2002 and also on the ground that in terms of N/N. 19/2008-CE dated 27.03.2008 and 34/2008- CE dated 10.06.2008, there are some restrictions for refund/ self credit to the appellants, instead self credit/ refund of duty paid through PLA. Refund/ self-credit of education cess/ higher education - Held that:- The appellants are entitled to claim refund/ self-credit of education cess/ higher education paid by them through PLA - issue decided in the case of M/S. SRD NUTRIENTS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE GUWAHATI [2017 (11) TMI 655 - SUPREME COURT OF INDIA], where it was held that education cess/ higher education cess is continuation of duty paid by the assessee. If the assessee is entitled to refund of duty paid through PLA, then for the education cess/ higher education cess also, the assessee is entitled to claim refund/ self-credit - refund allowed. In terms of Notification No. 19/2008-CE dated 27.03.2008 and 34/2008-CE dated 10.06.2008, whether the appellants are entitled to claim refund/self-credit as restricted by these notifications or not? - Held that:- The notifications in question have been examined by the Hon’ble J & K High Court in the case of Reckit Benckiser vs. UOI [2010 (12) TMI 237 - JAMMU AND KASHMIR HIGH COURT], wherein the Hon’ble High Court quashed the notifications in question. Therefore, in terms of N/N. 56/2002-CE dated 14.11.2002, the appellants are entitled to claim refund/ self-credit of duty paid through PLA. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 949
Refund of duty paid - filing of refund claim before the wrong jurisdiction - payment of duty on exempted goods i.e bitumen under N/N. 108/95-CE dated 28.08.1995 - Scope of SCN - refund denied on the ground that there is no provision of refund under N/N. 108/95-CE dated 28.08.1995 - time limitation - Scope of SCN. Held that:- Although as per the notification, the supplier of bitumen was not required to pay duty in terms of Notification No. 108/95- CE dated 28.08.1995, but the supplier has supplied the goods on payment of duty to the appellant and it is a fact that as per the said notification duty was not payable on the goods. As per the notification bitumen was not liable to pay duty. In that circumstances, the persons who has suffered duty on the said goods is entitled to file refund claim in terms of the proviso to Section 11(B)(2)(e) of the Central Excise Act. The refund claims sought to be rejected on the ground that the appellant has executed project in Jhajjar and procured bitumen from various manufacturer but did not fall under the jurisdiction of that Division - Held that:- In a case where the assessee is not registered with the Central Excise Department, where to file refund claim of duty borne by him has not been prescribed under the Central Excise Act - further, if the adjudicating authority was of the view that the appellant has not filed refund claim with the authorities which is not competent to entertain the refund claim, he would have transferred the application for refund claim before the competent authority but could not have rejected the refund claim simply on the ground that he had no jurisdiction. Time limitation - Section 11B of the Act - Held that:- Admittedly, in this case, the refund claim initially was filed by the appellant before the DGFT and DGFT has rejected their refund claim only on 10.03.2013, thereafter the refund claim was filed by the appellant on 26.08.2013. In these circumstances, limitation for filing the refund claim was start on 10.06.2013 i.e. relevant date and the refund claim was filed in time. Revenue also contested that as the refund claim has been rejected by the DGFT, therefore, the appellant cannot file the refund claim - Held that:- It is not a case of appeal from one authority to another, but it is a case of filing the refund claim with two independent authorities when both are competent to consider the refund claim - the time spent in pursuing its remedy before the DGFT is to be excluded - refund claim is within time. Scope of SCN - refund claim in the impugned order has been denied on the ground which were not alleged in the show cause notice - Held that:- The said grounds cannot be entertained by the appellate authority as those grounds are not the part of the show cause notice and the ld. Commissioner (A) cannot travel beyond the allegation made in the show cause notice. The appellant is entitled for refund claim in terms of Notification No. 108/95-CE dated 18.08.1995 of the duty paid on bitumen as the appellant has borne the duty on the bitumen - refund allowed - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 948
Refund claim - whether without challenging assessment orders of refund claims, refund can be challenged by way of issuance of show cause notice under Section 11A of the Act or not? - Held that:- The said issue is exempted by the Hon'ble High Court of Gauhati in the case of Jellalpur Tea Estate [2011 (3) TMI 11 - GAUHATI HIGH COURT], where it was held that without challenging the said refund claim in appeal, show cause notice cannot be issued under Section 11A of the Act - the provisions of Section 11A of the Act are not applicable to the facts of this case. Demand not sustainable - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 947
Refund claim - whether refund can be denied without challenging those assessment orders of refund claims by way of issuance of show cause notice under Section 11A of the Act or not? - Held that:- The issue is decided in the case of COMMISSIONER OF CENTRAL EXCISE, VERSUS M/S. JELLALPORE TEA ESTATE [2011 (3) TMI 11 - GAUHATI HIGH COURT], where it was held that Section 11A of the Act not applicable since the issue raised did not concern any approval, acceptance or assessment relating to the rate of duty on or valuation of any excisable goods. Thus, provisions of Section 11A of the Act are not applicable to the facts of this case - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 946
Clandestine removal - different brands of aerated water, namely, Pepsi, Mirinda - quantity of finished goods entered in RG-I register was much less than the quantity of Crown Corks issued for production - non-accountal of Crown Corks. Held that:- Revenue on the basis of formula has deemed that to manufacture one bottle of aerated water, a particular quantity of essence/concentrate is required and number of Crown Corks issued by the appellant for production are more than as per the formula of concentrate production of essence/concentrate, but the essential input i.e. bottles in which the aerated water is to be sold, no effort was made to ascertain the fact how much bottles were sent for production and how much bottles of finished goods were received - no effort was made to ascertain the fact that how much crown corks were wasted during the manufacture of finished goods and how much bottles were issued for production and how much bottles of finished goods were received. It is a fact on record that aerated water cannot be sold without packed in bottle on which the crown corks is affixed, therefore, the investigation conducted by the Revenue is faulty and Revenue has alleged allegation of clandestine removal against the appellant on the basis of assumption and presumption - The whole case is made out against the appellant only on the basis of assumption and presumption, therefore, the demand is not sustainable. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 945
Exemption/refund of education/higher education cess paid - N/N. 56/2002-CE dated 14/11/2002 - Held that:- The issue stands settled by the Hon’ble Supreme Court in SRD Nutrients Pvt. Ltd. vs. CCE, Guwahati [2017 (11) TMI 655 - SUPREME COURT OF INDIA], where it was held that the assessee is eligible for such refund which is paid alongwith the excise duty once the excise duty itself was exempted - refund allowed. Valuation - inclusion of outward freight up to the place of delivery of their finished goods in assessable value - Held that:- The impugned order records that the appellant have not produced anything on record which would show that they had cleared the goods from the factory gate to a warehouse, any other premises, a depot, consignment agents premises etc. from where such excisable goods were sold - Admittedly, the goods sold by the appellant delivered at the buyers premises will not make the place of removal as buyers premises. Tthere is no justification for the appellant to consider the assessable value with inclusion of freight element after the goods were sold/removed from the factory. As such, the question of paying duty on such value addition to be covered by the exemption under Notification 56/2002-CE does not arise - reliance placed in the case of COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, NAGPUR VERSUS M/S ISPAT INDUSTRIES LTD. [2015 (10) TMI 613 - SUPREME COURT]. Appeal allowed in part.
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2018 (10) TMI 944
CENVAT Credit - substitution of re-rollable scrap with kabari scrap - procurement of higher valued scrap, diverting the same in open marker without issuance of any Central Excise invoice and substituting the same with the kabari scrap for maintaining the inventory of stocks of raw material - scope of SCN - Held that:- The facts of the case are contrary to the allegation made in the show cause notice as it is alleged in the show cause notice that the appellant/assessee has substituted the re-rollable scrap with kabari scrap which means the re-rollable scrap was reached to the factory of the appellant and thereafter, the same was substituted with kabari scrap to maintain their statutory records - The two allegations of the Revenue itself are contrary to each other which shows that proper investigation was not conducted to establish the fact whether the re-rollable scrap was not reached in the factory or the same has substituted by the appellant with kabari scrap. Benefit of doubt goes in favour of the appellant/assessee - cenvat credit cannot be denied on the basis of assumption and presumption and without any specific allegation. Moreover, no investigation has been conducted to establish the fact that the appellant/assessee has received kabari scrap in their factory instead of re-rollable scrap. As the investigation is deficient, in that circumstances, we hold that the appellant/assessee has taken cenvat credit correctly. Denial of credit not justified - imposition of penalty also not justified - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (10) TMI 943
Revision of assessment - denial of Input Tax Credit - case of petitioner is that that the prerevision notices are bereft of requisite particulars, in the absence of which, proper objection could not be submitted - Principles of Natural Justice. Held that:- On a perusal of the show cause notices, it is seen that they were bereft of particulars regarding the name and/or trade identification number (TIN) number of the dealer at the other hand. It is stated that cross verification of buyer and seller as per Annexure I is made through Web. But, web report was not enclosed. Unless the intranet web report along with all details are furnished, the purchaser would not be in a position to reconcile the mismatch. It is very unfortunate that neither the Circular issued by the Commissioner of Commercial Taxes nor the procedures, as discussed in the case of M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER [2017 (3) TMI 536 - MADRAS HIGH COURT] were scrupulously followed by the Assessing Officer in the present case on hand. The impugned orders passed by the second respondent in TIN33753681120/2011-12 to 2015-16, respectively, dated 14.03.2018 are set aside and the matter is remitted back to the file of the second respondent for fresh consideration - Petition allowed by way of remand.
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