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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter October 21, 2015 Case Laws in this Newsletter: Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax TMI SMS Use of email based communication for paperless Assessment Proceedings in Income Tax - a pilot project - Circular Rejection of application under Service Tax VCES, 2013 – Notice proposing to reject VCES is time barred since issued after 30 days - Tri Articles FILING AND SCRUTINY OF SERVICE TAX RETURNS SECTION 14A- some important aspects not yet considered by courts. Some suggested contentions / questions for appeal News Various Schemes Inaugurated by Commerce Minister in Andhra Pradesh Transfer Pricing Rules to incorporate range concept and use of multi-year data notified to reduce litigation on transfer pricing issues RBI Reference Rate for US $ In order to reduce litigation and improve ease of doing business in non-conventional energy sector, Central Board of Excise and Customs issues notification to clarify that parts such as tower, nacelle, rotor, blades and wind turbine controller etc. of Wind Operated Electricity Generators (WOEG) are eligible for exemption from Central Excise duty Circulars / Instructions / Orders Income Tax F. No. 225/267/2015-ITA-II - dated 19-10-2015 Use of email based communication for paperless Assessment Proceedings- 15/2015 - dated 16-10-2015 Revised and Updated Guidance for Implementation of Transfer Pricing Provisions Central Excise 1008/15/2015-CX - dated 20-10-2015 Clarification regarding tower and blades constitute an essential component of Wind Operated Electricity Generators (WOEG) Highlights / Catch Notes Income Tax Treatment to interest income - the assessee was engaged in granting of loans on regular basis and interest income was shown as business income, also attained finality on identical fact in earlier assessment year and accepted by the department as business income, the department is not justified in diverting from its earlier stand - HC Visit to Get Source Disallowance of expenses of Research & Development - this is a new line of business, which was to be started. - this was on- going process and these expenses are for earning of future income - no deduction u/s 37(1) - AT Visit to Get Source Use of email based communication for paperless Assessment Proceedings - a pilot project - Circular Visit to Get Source Customs Denial of registration of DEPB licence and DEPB script - CBEC gave specific direction to the Customs authorities not to insist for re-export from the same Port in case of duty drawback. - Commissioner is in error in refusing to allow registration of the DEPB scrip issued - AT Visit to Get Source Service Tax Levy of penalty u/s 77 for failure to comply with the audit objections - Department itself is not sure whether the appellant is guilty of failure to furnish information or failure to produce documents thus imposition of penalty cannot be imposed on flimsy and shaky evidence - AT Visit to Get Source Refund of Service tax paid initially on commission received for orders to procure and products sold by principal located outside, in India - amount deposit is thus not tax and as such there is no time limit for refund of deposit as Section 11B applies to refund of duty/tax only - refund allowed - AT Visit to Get Source Renting out of immovable property - Assessee leasing out vacant land and water front, is covered under the exclusion provided in the definition of taxable service given in Section 65(105)(zzzz) - demand set aside - AT Visit to Get Source Valuation - inclusion of reimbursement of expenses – Appellant functions as Share Transfer Agent and Registrar to an Issue – Actual expenses incurred for postages and reimbursement of other expenses are not to be included in the value for discharge of Service Tax liability - AT Visit to Get Source Rejection of application under Service Tax Voluntary Compliance Encouragement Scheme, 2013 – Letter issued by DGCEI is of roving nature and does not attract the rejection of the declaration - Notice proposing to reject the declaration is time barred in view of the clarificatory circular issued by CBE&C - AT Visit to Get Source Imposition of penalty – fabrication/alteration of TR-6/GAR-7 challans and bogus challans - fraudulent act on the part of the Consultant - Amount embezzled by Consultant - Penalty waived - AT Visit to Get Source Central Excise Valuation - deduction of sales tax - Difference between the sales tax payable and actual sales tax (equal to NPV) paid does not make the change in valuation - amount of sales payable at the time of remove to be deducted from the value u/s 4 of central excise act - AT Visit to Get Source Activity of converting /assembling Gas Generating Sets (Gensets ) comprising of engine (prime mover) coupled with Alternator on common base frame into Power Pack after certain processes - Activity is amount to manufacturing activity - AT Visit to Get Source Activity of blending to increase the viscosity of the product- Appellants had mixed Guar Dal Flour/Powder (75%), Guar Dal Powder/Saw Dust (5-10%) and TKP (10-15%) in a blender - Activity is a manufacturing activity - AT Visit to Get Source Suo moto credit versus filing of refund claim - suo moto credit can be taken if duty is paid twice as excess duty paid is not a duty and same is deposit - AT Visit to Get Source Case Laws: Income Tax 2015 (10) TMI 1745 Penalty u/s 271C - treating the assessee to be in default for not deducting tax at source u/s 194A(3) on interest paid / credited to Societies viz H.P. Society for Promotion of IT & E-Governance (SITEG) - CIT(A) deleted penalty levy - Held that:- provisions of section 194A were not applicable to H.P. Society for Promotion of IT & E Governance (SITEG) from whom tax has not been deducted by the bank and, therefore, it is clear that assessee bank was not liable to deduct tax. In any case the Hon'ble Supreme Court in the case of CIT Vs. Eli Lilly And Company (India) Private Limited [2009 (3) TMI 33 - SUPREME COURT] has clearly held that if the assessee has a genuine belief that assessee was not required to deduct tax then penalty u/s 271C of the Act was not liable. Therefore, we find nothing wrong with the order of Ld. CIT(A) and we confirm the same. - Decided in favour of assessee. 2015 (10) TMI 1744 Penalty u/s. 271C - Non deduction of TDS u/s. 194J on payment of MICR charges as towards fees for technical charges - Held that:- In the present case, Revenue has not brought any material on record to demonstrate that the reasons given by Assessee for non deduction of tax was not bona fide or to be false. We further find that CIT(A) by a very cryptic order has upheld the action of A.O. Considering the totality of the facts we are of the view that in the present case the reasons given by Assessee for non deduction of TDS appears to be bona fide and therefore the provisions for penalty u/s. 271C of the Act are not attracted. We accordingly direct its deletion. - Decided in favour of assessee. 2015 (10) TMI 1743 Addition on capital gain allegedly short declared by the appellant - estimation of selling price questioned - Held that:- As relying on Smt. Jaimala Agarwal, Jaipur case [2012 (2) TMI 507 - ITAT JAIPUR] Assessee has sold the shares of a company and not the land of that company. Therefore, by taking into consideration of the land value owned by that company making any addition in the hands of the assessee, in our view is not justified. There is no provision under the IT Act that value of land owned by a company whose shares has been given to any person and in the hand of that person any capital gain can be assessed on the basis of land or office sold by the company. If any addition can be made that can be made on the basis of value of those shares or taking into consideration that the sale consideration shown by assessee is not correct, if there is any evidence. No such material was there before the AO that assessee has sold the shares below market price and, therefore, in our considered view the basis on which the addition has been made by AO was not correct and, therefore, the ld. CIT (A) was also not correct in confirming the order of AO. Accordingly, we delete the impugned addition made and confirmed. - Decided in favour of assessee. 2015 (10) TMI 1742 Disallowance of expenditure u/s 40(a)(ia) - expenditure already “Paid” during the year - whether as Section 40(a)(ia) disallowance applies only to amounts “payable” as of 31st March and not to amounts already “paid” during the year.”? - Held that:- We find that the issue is now settled that the provision of Section 40(a)(ia) of the Act shall apply only to the amount “payable” as on the last day of the relevant accounting year. Accordingly, the Assessing Officer is directed to verify the amount in question and, if the amount was already paid during the year and no expenditure remained “payable” as on the last day of the relevant accounting period, the provision of Section 40(a)(ia) of the Act shall not apply - Decided in favour of assessee. Disallowance of expenditure u/s 40(a)(ia) - expenditure incurred on which no TDS was required to be deducted at source - Held that:- In the facts of the case, we restore this issue to the file of the Assessing Officer with the direction to decide the issue de novo after verification that whether the TDS provisions were applicable on the expenditure after allowing reasonable opportunity of hearing to the assessee - Decided in favour of assessee for statistical purposes. Disallowance of expenditure u/s 40(a)(ia) - expenditure on which TDS was already deducted at source - Held that:- In view of the evidence filed by the assessee in the compilation before us to prove that the assessee has made the TDS on the expenditure we decide the issue in favour of the assessee and direct that no disallowance be made under Section 40(a)(ia) of the Act. - Decided in favour of assessee. Disallowance u/s 40(a)(ia) - whether AO erred in making disallowing without holding assessee as “assessee in default” u/s 201 of the Act - Held that:- We find that there is no force in the arguments of the learned counsel for the assessee on this issue and, since the amount of expenditure in question was not paid during the year and was “payable” as on the last day of the accounting year, the disallowance was rightly made by the Assessing Officer and confirmed by the CIT(A) under Section 40(a)(ia) of the Act. - Decided against assessee. 2015 (10) TMI 1741 Treatment to interest income - business income or income from other sources - adjust B/F losses related to the assessment year 2001-02 against interest Income denied by AO - ITAT allowed assessee claim - Held that:- CIT(A) allowed the appeal on the issue of interest income by treating the same as business income. The CIT(A) also allowed the issue of set off of brought forward business losses with profit from money lending business of the assessee considering that the income from interest under the head 'Income from business or profession' confirmed by ITAT as relying on Commissioner of Income Tax I, Ludhiana vs. Late Smt.Reeta Gupta C/o M/s R.K.Cloth Mills, Ghass Mandi, Ludhiana [2015 (10) TMI 1740 - PUNJAB & HARYANA HIGH COURT] - Decided in favour of assessee. 2015 (10) TMI 1740 Treatment to interest income - business income or income from other sources - adjust B/F losses related to against interest Income denied by AO - ITAT allowed assessee claim - Held that:- Where the assessee is regularly engaged in money lending business and is earning interest therefrom, interest income is to be taxable under the head "business income", regardless of the fact that the assessee has obtained any licence for such money lending business or not. For this proposition, we are fortified by the decision in the case of Smt. Gulab Sundari Bapana vs. DCIT (2000 (9) TMI 219 - ITAT DELHI-D) and in the case of Loka Shikshana Trust vs. CIT (1975 (8) TMI 1 - SUPREME Court), wherein the Hon'ble Apex Court held that the regular course of dealing in money lending could not be brushed aside merely for the reason that the assessee was not having any money lending licence. In that case, the assessee entered into number of transactions over the year and earned interest on loans and advances given in the ordinary course of its activities. The Hon'ble Apex Court held that "absence of money lending licence is not so crucial for the purpose of Income Tax Act, if the nature of activity undertaken by the assessee can be decided on the basis of other facts." Admittedly, the assessee was engaged in granting of loans on regular basis and interest income was shown as business income, also attained finality on identical fact in earlier assessment year and accepted by the department as business income, the department is not justified in diverting from its earlier stand in the impugned assessment year. This ground of the revenue therefore, is having no merit. Once it has been held that the income of the assessee was to be assessed under the head income from business or profession, the assessee was entitled for set off against carry forward losses. The Tribunal was thus justified in allowing the same. - Decided in favour of assessee. 2015 (10) TMI 1715 Penalty u/s 271(1)(c) - furnishing inaccurate particulars and concealed the income - CIT(A) deleted the penalty - Held that:- The Tribunal in quantum matters in the case of the assessee [2015 (10) TMI 1743 - ITAT JAIPUR] has allowed the appeal of the assessee by deleting the addition. Since the addition made by the AO, no longer survives, no penalty is leviable on the assessee u/s 271(1)(c) of the Act. The ld. CIT (A) also deleted the penalty imposed @ 200% of tax sought to be evaded of ₹ 10,94,116/- under section 271(1)(c) of the Act after discussing the matter at length. In view of the above facts, we uphold the order of the ld. CIT (A). - Decided in favour of assessee. 2015 (10) TMI 1714 Exemption claimed u/s 54 or alternative claim u/s 54F - whether the property sold is a vacant land or residential house property? - whether the property takes the character of land or house property? - CIT(A) allowed the claim - Held that:- The property was sold on 03.07.2009. Even though it is vacant land, without prejudice to the rights of the assessee, assessee is eligible for exemption under Section 54F of the Act. Before the due date under Section 139(1) of the Act, the assessee has deposited long term capital gains in Capital Gains Account Scheme and complied with the pre-conditions and also took the possession of the property on 30.05.2012 and there is no dispute of possession by the A.O. in the assessment order. Further, the Ld. D.R. relied on the judgment of Andhra Pradesh High Court in CIT v. Smt. Zaibunisa Begum (1984 (7) TMI 62 - ANDHRA PRADESH High Court) where Lordships have considered the issue in respect of transfer of building and land appurtenant, and the issue is on different facts where the construction was in a smaller area compared to the open land left on which the building is constructed. The same cannot be applied to the present case, as the assessee in toto has sold the land along with building. - Decided in favour of assessee. 2015 (10) TMI 1713 Disallowance of expenses incurred for increasing the Authorized Share Capital of the Assessee - Held that:- This ground of the Assessee has to be decided against it in view of the decision of Hon’ble Supreme Court in the case of Brooke Bond India Ltd. vs. CIT (1997 (2) TMI 11 - SUPREME Court ) - Decided against assessee. Disallowance made u/s. 14A - Held that:- When there is no change in the value of investments or its composition from that of earlier years and when in earlier year the fact of non utilization of interest bearing funds having been accepted, we are of the view that no disallowance on account of interest in the year under consideration is called for. As far as disallowance of administrative expenses is concerned, we find that that in appeal for A.Y. 07-08, the disallowance was restricted to ₹ 50,000/- by the Co-ordinate Bench but however for the year under consideration being A.Y. 2008-09 and since provisions of Rule 8D are held to be mandatory, we are of the view that the disallowance on account of administrative expenses be made as per the formula prescribed i.e. 0.5% of average investments meaning thereby that the disallowance u/s.14A be restricted to ₹ 1,78,175/- as against ₹ 10,20,670/- made by A.O. - Decided partly in favour of assessee. 2015 (10) TMI 1712 Validity of reopening of assessment - addition u/s 68 - Held that:- The reasons and the information referred to is extremely scanty and vague. There is no reference to any document or statement, except Annexure, which has been quoted above. Annexure cannot be regarded as a material or evidence that prima facie shows or establishes nexus or link which discloses escapement of income. Annexure is not a pointer and does not indicate escapement of income. Further, it is apparent that the AO did not apply his own mind to the information and examine the basis and material of the information. The AO accepted the plea on the basis of vague information in a mechanical manner. The CIT also acted on the same basis by mechanically giving his approval. The reasons recorded reflect that the AO did not independently apply his mind to the information received from the Director of I.T. (Inv.) and arrive at a belief whether or not any income had escaped assessment. See Signature Hotels P. Ltd. vs. Income Tax Officer [2011 (7) TMI 361 - Delhi High Court] - Decided in favour of assessee. 2015 (10) TMI 1711 Unexplained credit - addition u/s 68 - Held that:- Against the above addition the assessee approached to CIT(A) and filed additional evidence under Rule 46A on the plea that sufficient opportunity was not given by the AO insofar as documents were required by the AO at the fag end of the proceedings. We found that assessee was prevented by sufficient case for producing evidence. We also found that some of the documents were submitted during the assessment proceedings. However, proper explanation could not be filed due to paucity of time as assessment was getting time barred. After going through the various documents placed on record, we are of the considered view that the inter branch account which remained un-reconciled since 1984 require huge working to ascertain the difference. Without going much into merit of the addition, we restore the entire matter to the file of AO for deciding afresh after calling necessary documents from the assessee. The assessee is also at liberty to furnish documentary evidence to substantiate its claim. The AO is to decide the entire issue afresh. - Decided in favour of assessee for statistical purposes. Disallowance of expenditure - CIT(A) restricted disallowance to 15% - Held that:- In view of the findings recorded by CIT(A) for sustaining disallowance of 15% which has not been controverted by ld. AR by bringing any positive material on record, we confirm the action of the CIT(A) for disallowing a sum of ₹ 3,22,401/-. - Decided in favour of assessee in part. 2015 (10) TMI 1710 Reopening of assessment - Held that:- We are of the view that reopening had been done merely on change of opinion in as much as that in the original assessment made u/s. 143(3) of the I.T. Act, the AO had apparently applied his mind and had raised queries with regard to the items which have been identified by the AO in this notice u/s. 147/148 of the Income Tax Act. We also find that AO has no fresh material to form his opinion regarding escapement of assessment and he has also not found any tangible material to record the reasons for reopening of the assessment of the assessee. It is merely a change of opinion which is not permissible under the law as well as according to the various decisions rendered by the Hon’ble Supreme Court of India in the case of CIT vs. Kelvinator of India Limited [2010 (1) TMI 11 - SUPREME COURT OF INDIA] and Usha International Ltd. [2012 (9) TMI 767 - DELHI HIGH COURT] the reassessment is invalid on the part of the AO and also on confirming the same on the part of the Ld. CIT(A). By these judgments the reopening of assessment beyond 4 years was also illegal. We also find considerable cogency in the contention raised by assessee’s counsel that the judgment of the Hon’ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers (P) Ltd. (2007 (5) TMI 197 - SUPREME Court) which the AO as well as Ld. CIT(A) has relied upon is distinguishable to the facts of the present case, as it was in different context of reopening when original assessment was not u/s. 143(3) of the I.T. Act. We are of the view that both the authorities below have gone wrong in deciding the reopening as valid. In the present case the issue reopening of assessment is incorrect and invalid. Therefore, we quash the orders of the authorities below on this legal issue is decide the same in favor of the assessee and against the revenue. 2015 (10) TMI 1709 Unexplained cash deposits in the savings account - Assessing Officer held that the appellant is not engaged in any kind of business - Held that:- Sale in Cash is deposited with Bank and all Cash Deposited is withdrawn at the time of payment within one or Two day of Deposits. Cash is deposited into Bank to avoid Loot/Theft. Assessee is regularly filing the income tax return from his business income and from LIC commission being agent, hence, it cannot be said that the assessee is not engaged in the business of supply of rice, grain etc. We also find considerable cogency in the assessee’s contention that no the details of vouchers and bills were not produced before the AO as well as before the Ld. CIT(A) for reasons mentioned above. Therefore, in our considered opinion, there is a need to examine in detail that how much the undisclosed income of the assessee is from his business or from the LIC commission being agent, after verifying the documents, bills and vouchers. Therefore, in the interest justice the issues in dispute are remitted back to the Assessing Officer to decide the same denovo. Needless to add that the assessee should be given adequate opportunity of being heard. Assessee is also directed to cooperate with the AO and submit all the details, bills and vouchers in support of his contention. - Decided in favour of assessee for statistical purposes. 2015 (10) TMI 1708 Stay of recovery proceedings - Demand including interest u/s .234A to 234D - Assessments passed u/s 153A read with sec.143(3) - Held that:- In the facts and circumstances of the case, when the claim was earlier allowed for the assessment year 2004-05 which has not been disturbed by the AO till date and further the assessees before us have already paid about 65% and 56% respectively of the total outstanding demand which includes the levy of interest u/s 234A to 234D then the assessees have made out a prima facie good case for grant of stay against the balance outstanding demand. In the case of Shri Dinesh Kumar Singhi, the total demand includes levy of interest u/s 234D amounting to ₹ 26.44 crores for the assessment years 2005-06 and 2006-07 and the assessment for those assessment years were already completed prior to the date of search u/s 132, therefore, assessment u/s 153A for these two assessment years would be re-assessment and not a regular assessment. Thus, the assessee has also made out a prima facie case on the point of levy of interest u/s 234D. Accordingly, having considered the totality of the facts of the case, we are of the considered opinion that the assessees before us have made out a good arguable case on merits as well as for grant of stay of the balance outstanding demand when the assessees have already made the payment of more than 50% of the total outstanding demand. Hence, the balance outstanding demand in case of these two assessees for all these assessment years before us is stayed for a period of 180 days or till disposal of the appeals, whichever is earlier. - Decided in favour of assessee. 2015 (10) TMI 1707 Addition u/s. 40(a)(ia) - assessee stated that the nature of payments made to eight parties was similar to the 15 parties in respect of whom details were submitted before the Assessing Officer - Held that:- We observe that the nature of activity carried out by the assessee is not disputed and the nature of payments made to the said eight parties was similar to the 15 parties, therefore, in the interest of justice, we restore the issue to the file of CIT(Appeals) for fresh adjudication after providing reasonable opportunity of being heard to the assessee. The ld. CIT(Appeals) is also directed to examine the authenticity of the bills before coming to any conclusion - Decided in favour of assessee for statistical purposes. Disallowance of expenditure incurred on improving, i.e. increasing the height of factory shed - revenue v/s capital expenditure - Held that:- Out of the total expenditure incurred an amount of ₹ 6,64,535/- related to improvement of height of factory shed whereas balance amount of ₹ 7,14,879/- was incurred on improvement of floor, and walls of shed. However, since the assessee had not given any basis or supporting material for such bifurcation and even exact nature of the said miscellaneous work had also not been elaborated, therefore, the ld. CIT(Appeals) rightly held that the expenditure was capital in nature, as it augmented the production capacity as a result of the expenditure, factory shed had become larger which could support higher production and give advantage to the assessee. We, accordingly, do not find any reason to interfere with the order of ld. CIT(Appeals). - Decided against assessee. Disallowance of job charges u/s 40(a)(ia) in contravention of the provisions of section 194C - CIT(A) deleted the disallowance - Held that:- Revenue has not brought on record any material to controvert the findings recorded by the ld. CIT(Appeals) that the transactions were for supply of goods fabricated as per the assessee’s requirements. These were not work contracts and therefore, not liable for TDS under section 194C. We, therefore, confirm the finding of ld. CIT(Appeals). - Decided against revenue. Disallowance of payment in nature of salary and not professional fee liable to deduction of TDS u/s 194J - CIT(A) deleted the disallowance - Held that:- In the course of appellate proceedings it had been stated before the ld. CIT(Appeals) that provisions under section 194J were not applicable as such payment was made to employee of the assessee, Shri Sagnik Banerjee. He was working as design head for the assessee and had requested that his salary payment cheque may be drawn in the name of ‘Apka Design & Drawing’. Before the ld. CIT(Appeals), the request letter of Shri Sagnik Banerjee to this effect and copy of Form No. 16 issued to him were also produced. Accordingly, ld. CIT(Appeals) correctly concluded that the payment was in nature of salary and not professional fee liable to deduction under section 194J.- Decided against revenue. 2015 (10) TMI 1706 Addition on account of foreign traveling expenses - Held that:- As decided in assessee's earlier AYs after considering the facts of the case as well as various details submitted by A.R. before the A.O. as well as the arguments made by him, inclined to agree with the arguments of the A.R. that there was no justification for making this disallowance. Accordingly the AO is directed to delete this addition since they have been already reflected in From No. 16 of the Directors and are part of their remuneration package approved by the Board of Directors of the Company. - Decided in favour of assessee. Addition on account of provision of gratuity and leave encashment - Held that:- In the present case, the assessee by way of scientific methodology had established that the impugned provisions were recognized by using a substantial scientific methodology and estimation which was also certified by an actuarial specialist. In this situation, the provision for gratuity and leave encashment made by the assessee are held to be fully explained or sustainable and the same is allowable as per ratio laid down by the Hon’ble Apex Court in the case of Rotork Controls (2009 (5) TMI 16 - SUPREME COURT OF INDIA). Accordingly, we are unable to see any infirmity or any other valid reason to interfere with the impugned order and we upheld the same. Accordingly, sole ground of the Revenue being devoid of merits being dismissed.- Decided in favour of assessee. 2015 (10) TMI 1705 Penalty u/s 271(1)(c) - assessee has furnished inaccurate particulars of its taxable income by treating the purchases from three parties as bogus - CIT(A) deleted the penalty - Held that:- The work performed as reflected in the trading Account has been accepted by the AO which implies that work could be completed only after having taken into account the ostensible bogus purchases. Thus without the purchases, the work executed as well as the closing stock which has been accepted by the AO could not have been possible. These purchases are building materials and the assessee is stated maintaining stock register which were also filed before the AO. No doubt the books of accounts were held not reflecting the correct state of affairs of the assessee's business but there has been no rejection of the same. Needless to say assessment proceedings are independent from penalty proceedings and imposition of the penalty depends on the facts and circumstances of each case. In this case at hand, the addition made by the AO was rightly deleted in appeal to be replaced by a trading addition by applying an estimation of the GP rate of 27% instead of 16% as shown by the assessee. This naturally becomes an addition sustained on estimate basis. A fact or allegation based on estimation cannot be said to be correct only; it can also be incorrect. Judgment of Punjab and Haryana High Court in the case of MM Rice Mills as reported in [2000 (10) TMI 4 - PUNJAB AND HARYANA High Court] is quite relevant in which it has been held that where the addition merely sustained on account of application of GP., the penalty would not be leviable. - Penalty deleted - Decided in favour of assessee. 2015 (10) TMI 1704 Penalty u/s 271(1)(c) - treating part of income from sale of shares as business income instead of capital gains by the assessee - CIT(A) deleted the penalty - Held that:- The bifurcation of the short term capital gain and treating the transaction as investment in the cases where the holding period of more than 30 days and as business transaction in the case where the holding period is less than 30 day, in our considered opinion, is not justified on the part of the CIT(A). Since there cannot be a single criteria for judging the transaction as capital asset or trading asset, the CIT(A) adopted only holding period as a sole criteria for bifurcating the transactions relating to the short term capital gain, which is neither proper and nor justified. Respectfully following the same we have to necessarily dislodge this direction of the Ld. CIT(Appeals). We hold that the entire profits from the purchase and sale of shares have to be assessed under the head “capital gains”. From the above findings of Hon’ble Tribunal we find that assessee has been granted relief in this respect and therefore the penalty imposed by AO does not survive. - Decided in favour of assessee. 2015 (10) TMI 1703 Disallowance u/s 14A read with Rule 8D - whether no expenditure was incurred in earning of exempt income? - Held that:- On the facts and circumstances of the present case, the Ld. CIT(A) held that investment would have been made out of common/mixed funds, and therefore the ld. AO has worked out the disallowance at ₹ 26,40,830/- on a proportionate basis with reference to investment of ₹ 166.50lacz out of total interest of ₹ 576.40 lacs paid on account of cash credits. The ld. CIT(A) should have passed a speaking order dealing with contentions of parties in specific terms with facts and figure. The decision of Hon’’ble Delhi High Court in the case of Maxopp Investments, reported [2011 (11) TMI 267 - Delhi High Court ], are very much relevant on the issue of working of disallowance u/s.14A r.w.Rule 8 D by the ld. A.O. We thus following the decision of the coordinate bench in assessee’s own case for assessment year 2009-10, set aside the issue back to the file of A.O to decide the disallowance of expenses u/s.14A r.w. Rule 8 D on the investments of shares in question as per the law, keeping in view the guidelines provided for the same in the case of Maxopp (supra), after affording opportunity of being herd to the assessee. - Decided in favour of assessee for statistical purposes 2015 (10) TMI 1630 Penalty u/s 271(1)(c) - income estimated at a higher percentage than what is disclosed by the assessee - assessee offered the income @ 10.75% on the receipt from extra work performed by the assessee in respect of bungalows sold by it but CIT(A) estimated the income @ 25% of the receipt which is upheld by the ITAT - Held that:- As decided in Commissioner of Income-tax Versus Whitelene Chemicals [2013 (8) TMI 144 - GUJARAT HIGH COURT] merely because account books of assessee were rejected and that profit was estimated on the basis of fair gross profit ratio, no penalty can be imposed. In this case finally the income is assessed by estimating the higher net profit ratio. No additional material has been brought on record by the Revenue that actual income of the assessee was 25% and not 10.75%. The assessee has given the explanation that the extra work is done by the builder as service to the buyer of the bungalows. The extra work is not done with the profit motive and usually, it is done either on no profit or no loss basis or on negligible profit. The assessee has already disclosed reasonable profit which is 10.75%. The explanation of the assessee is plausible and reasonable. - Decided in favour of assessee. 2015 (10) TMI 1629 Eligibility for section 80IB - Income from exchange rate difference - Held that:- We find that hon'ble jurisdictional high court in the case of CIT vs. Alps Chemicals Ltd.(2014 (10) TMI 251 - GUJARAT HIGH COURT) holds that similar foreign exchange fluctuation gain are entitled for section 80 IB deduction. The Revenue fails to point any distinction on facts Sundry balances written back - income in question has been derived from its industrial undertaking in question. The Revenue fails to file any evidence rebutting the same. We approve CIT(A)'s order in these facts and reject the Revenue's ground. Scrap sales - There is no issue on facts. The hon'ble jurisdictional high court in the case of Harjivandas Juthabhai Zaveri's (1999 (12) TMI 5 - GUJARAT High Court) has treated identical income as eligible for section 80-IB deduction. The Revenue is not able to point out any distinction on facts - Decided in favour of assessee. 2015 (10) TMI 1628 Addition of 30% of sundry creditors - CIT(A) deleted the addition - Held that:- Disallowance of 30% of sundry creditors on ad hoc basis is arbitrary. We do not understand how such addition can be made by the AO. The factual findings of the ld. CIT(A) could not be controverted by the ld. DR. - Decided in favour of assessee. Ad hoc disallowance of 30% of expenses on estimate basis - CIT(A) deleted the addition - Held that:- The records show that the necessary registers and details were produced by the appellant before the AO during the remand proceeding. The said expenses relate to salary, insurance paid to insurance companies on vehicles and stock, advertisement, legal and professional charges and telephone charges etc. The ld. AR has submitted that TDS has been deducted wherever required under the law, the details of which were produced before the AO except for interest paid Cholamandalam DBS. The AO has not pointed out any specific defects in the books of account, except making some flimsy comments in the remand report, despite the fact that the ld. CIT(A)-VI had remanded the matter to the AO for examination as many as three times. In view of the above, disallowance to the extent paid to Cholamandalam DBS without TDS is confirmed. The balance addition of ₹ 5,60,156/- is deleted - Decided against revenue. 2015 (10) TMI 1627 Disallowance u/s 40A(2)(b) - Held that:- whether the payment was excessive or unreasonable having regard to the fair market value of services rendered by the payees. The ld. Assessing Officer has not brought any evidence with regard to the comparability of the services rendered by these persons vis-à-vis availability in the open market. The Assessing Officer has simply compared the payments with the payments made by the assessee in earlier years. The requirement of the section is that such payment is to be compared with the fair market value of the services or whether these services can be availed at a lower rate from the persons who are not covered by sub-clause "b". No such evidence has been brought on record, therefore, ld. Commissioner of Income Tax (Appeals) has rightly deleted the disallowance. - Decided in favour of assessee. Disallowance of brokerage and commission - CIT(A) allowed the claim - Held that:- Out of the four years, the Assessing Officer has himself allowed in three years. Therefore, we do not see any reason to interfere with the order of Ld. Commissioner of Income Tax (Appeals). Ld. Commissioner of Income Tax (Appeals) has rightly deleted the disallowances in this year. We do not find any merit in this appeal.- Decided in favour of assessee. 2015 (10) TMI 1626 Rectification of mistake - additional grounds of appeal filed by the assessee with reference to Cross Objection were not considered by the ITAT - Held that:- The ITAT, after the considering the arguments of the both the sides, dismissed the Revenue’s appeal and the ground No. 2 of the assessee’s cross objection which was with regard to addition sustained by the CIT(A). In paragraph 9, the ITAT has mentioned that ground No. 1 of the assessee’s cross objection is not pressed by the ld. Counsel for the assessee at the time of hearing. From the above, the clear indication is that the only argument from both the side was with regard to the addition partly reduced by the CIT(A). There was no other ground in the Revenue’s appeal and in the assessee’s cross objection, though there were other grounds which were not pressed. When the regular grounds raised in the cross objections were not pressed except ground No. 2 of the cross objection, the question of pressing of the additional ground could not have arose. Moreover, on the record of the ITAT in the folder of cross objection there is no additional ground, though the assessee has furnished the copy of the additional ground alongwith Miscellaneous Applications. However, despite number of opportunities allowed by the ITAT to the assessee, none appeared on behalf of the assessee or if appeared, sought adjournment. Even in the Miscellaneous Application, the only assertion by the assessee is that there was a passing discussion about the additional ground. There cannot be a passing discussion on any ground, except when the assessee’s Counsel says that the ground is not pressed, because, if the ground is to be argued, then it is to be argued by both the parties and there cannot be a passing discussion in respect of such ground. In view of above, we are of the opinion that additional ground, if any, was not pressed by the assessee at the time of hearing. Therefore, now in the Miscellaneous Application the assessee cannot claim that there is apparent mistake in the order of the ITAT. We, therefore, reject the assessee’s Miscellaneous Application. - Decided against assessee. 2015 (10) TMI 1625 Benami transaction - Addition made on account of income from M/s.Chandan Carrier - Held that:- In the instant case, the AO made addition of ₹ 1,07,890/- being income from M/s.Chandan Carriers, holding the assessee as benami of his brother-in-law Shri Nilesh Shah. Considering the contention of the assessee that he has shown income from truck under section 44AE of ₹ 2,01,000/- which includes income of ₹ 1,07,890/- from M/s.Chandan Carriers, and therefore, no separate addition of ₹ 1,07,890/- is warranted none of the lower authorities has verified this contention of the assessee. Further, the contention of the assessee that he has transferred the trucks owned by him to his brother-in-law, Shri Nilesh Shah, as it had started new business of agriculture products, is not substantiated with any evidence as to how and on what terms, the same was transferred and what is the consideration received. Therefore, this contention has been rightly rejected by the lower authorities. However, we are of the considered view that it shall be in the interest of justice to restore the matter back to the file of the AO to verify whether income from trucks shown at ₹ 2,01,000/- under section 44AE by the assessee in the return of income include income from M/s.Chandan Carriers. If so, no further addition of ₹ 1,07,890/- to the income of the assessee is required. We, therefore, set aside the orders of the lower authorities on this issue and restore the matter back to the file of AO to re-adjudicate the issue afresh - Decided in favour of assessee for statistical purpose. 2015 (10) TMI 1624 Disallowance of brokerage/commission expenses - CIT(A) allowed the claim - Held that:- CIT(A) rightly points out that there is no dispute about the impugned payments having been made to the assessee's agents or services rendered in lieu thereof. It has come on record that the assessee's turnover has increased to almost 300% in the impugned assessment year as compared to that in the preceding assessment year. All other supportive material is already on record. The Revenue fails to point out any evidence in support of its plea seeking to restore the impugned disallowance. We express our agreement with the CIT(A) findings under challenge in these circumstances and reject the Revenue's first substantive ground. - Decided in favour of assessee. Unexplained cash credit - CIT(A) delted the addition - Held that:- The Revenue draws support from the assessment order doubtincreditworthiness of the abovesaid HUFs from whom the impugned deposit of ₹ 1 lac have come in assessee's account. The CIT(A) refers to their assessment records, books of account, interest charged along with TDS deducted and also sufficient capital balance for the purpose of advancing ₹ 60,000/ and 40,000/- to the assessee. The Revenue fails to rebut the said factual findings by referring to the case record available in the file. Thus, we affirm the CIT(A) findings accepting the assessee's plea of genuineness/creditworthiness of the impugned deposits thereby deleting the impugned addition of unexplained cash credits. - Decided in favour of assessee. 2015 (10) TMI 1623 Disallowance under section 14A - contention of the assessee is that no expenditure was incurred in relation to exempt income and no material has been brought on record to show that any actual expenditure was incurred in relation to earning of exempt income - Held that:- Held that:- We find that in the instant case, the Revenue has not brought any positive material on record to show that the assessee actually incurred any expenses in relation to earning of exempt income. In our considered view, before making disallowance under section 14A, it was imperative on the part of the Revenue to bring some material on record to show that the assessee actually incurred any expenditure in relation to exempt income. In the absence of the same, in view of the decision of in the case of CIT Vs. Torrent Power Ltd., (2014 (6) TMI 185 - GUJARAT HIGH COURT ) the disallowance confirmed by the CIT(A) is not sustainable. - Decided in favour of assessee. 2015 (10) TMI 1622 Addition u/s. 69A - peak credit in bank account No.2041 with Bank of Baroda - Held that:- Assessing Officer was not justified in rejecting the explanation of the assessee who had presented the books of accounts showing the receipts of undisclosed bank account from sale of foodgrain merely on the ground that it being an afterthought. It was incumbent upon the Assessing Officer to examine the books of accounts with the related evidences and documents and thereafter should have arrived at a decision. Without verification of books of accounts produced before him and bringing any material on record, the Assessing Officer was not justified in rejecting the books of accounts of the assessee as an afterthought and the CIT (A) was not justified in confirming the same. We therefore set aside the orders of the lower authorities and remand the matter back to the file of the Assessing Officer and direct him to decide the issue afresh after examining the books of accounts and related documents as per law. - Decided in favour of assessee for statistical purposes. 2015 (10) TMI 1621 Reopening of assessment - reopening on basis of audit objection - Mat computation - Addition for bad and doubtful debt in computation of book profit u/s 115JB - CIT(A) deleted the addition - Held that:- Respectfully following the case of Raajratna Metal Industries Ltd. vs. ACIT [2014 (8) TMI 598 - GUJARAT HIGH COURT] hold that the assessment for the year under consideration was not validly reopened u/s 147. Be that as it may be, the assessee has not filed any appeal or cross-objection against the order of the CIT(A). Under rule 27, the respondent may support the order appealed against on any of the grounds decided against him. Therefore, under Rule 27, the maximum relief assessee can get is the sustenance of the order of the CIT(A). In view of above, we, relying upon the decision of the Hon’ble jurisdictional High Court in the case of Raajratna Metal Industries Ltd (supra) and considering Rule 27 of the ITAT Rules, uphold the order of the CIT(A) and dismiss the appeal filed by the Revenue. - Decided against revenue. 2015 (10) TMI 1620 Disallowance of expenses relating to diesel and trip bhatta - as per assessee as in A.Y. 2010-11, the CIT (A) has sustained the disallowance at 1.11% and therefore, in the year under appeal the disallowance should be scaled down to1.11% of the total expenditure - Held that:- We find that in the Assessment Year 2010-11, the CIT (A) given a finding that the ratio of expenditure to transport income has come down from 62.47% to 52.39% and the gross profit has also increased to 37.53% and 47.61%. Before us the A.R. of the assessee has not brought any material on record to show that the ratio of expenditure to transport income has come down drastically and the gross profit has also increased substantially as was the case before the CIT(A) in the assessment year 2010-11. In absence of the same, the contention of the A.R. of the assessee cannot be accepted. We therefore, dismiss this ground of appeal. - Decided against assessee. 2015 (10) TMI 1619 Stay petition - 60% of demand u/s 201(1)/201(1A) for obtaining a stay of demand - Held that:- Considering the fact that the issue on merits is yet to be decided by the CIT(A) and being of the view that the findings arrived at in para 5 have not taken into consideration the relevant criteria for deciding the issue namely the existence of prima facie arguable case in favour of assessee or not; irreparable loss if any and the financial position of the assessee etc. as no reference to these settled legal parameters is found mentioned in the order. It also seen that the merits of the order of the Assessing Officer till date have not been tested by any Appellate Authority. Thus, in these peculiar facts and circumstances, we direct the Revenue authorities from refraining to take any co-ercive action against the assessee till the passing of the order of the CIT(A) on merits. In view of the same, the Ld. CIT(A) is directed to pass a speaking order in the appeals on merit after giving the assessee a reasonable opportunity of being heard. The Ld. Sr. DR on the above view being expressed by the Bench insisted that a direction to the assessee be included mandating that the assessee should cooperate in ensuring that the hearing takes place. In the fact of the insistence of the Ld. Sr. Dr, Ld. AR, Mr. Piyush Kaushik gave an oral undertaking on behalf of his client by stating that the assessee shall fully participate in the proceedings. - Decided in favour of assessee for statistical purposes. 2015 (10) TMI 1618 Computation of deduction u/section 10B - Held that:- The company has maintained and submitted separate set of audited accounts for the export unit, non export trading activity and consolidated accounts for the entire entity, whereas we find that the AO has not taken into account and has got confused between the total turnover of the business and total turnover of the undertaking. The CIT (A) also confirmed the same. We find that in the proviso to section 10B refers to computation of total income of "Undertaking". Further, the proviso states that the undertaking shall be entitled to deduction referred to the sub-section only for the unexplained part of the aforesaid ten consecutive assessment years. Hence we set aside the issue to the AO to compute deduction u/s 10B according to the proviso to section 10B after giving a reasonable opportunity to the assessee. - Decided in favour of assessee for statistical purposes. 2015 (10) TMI 1617 TDS liability u/s 194C - payment made to contractors - CIT(A)deleted tds liability - Held that:- Clause 3(e) and 3(f) clearly shows that the amount of ₹ 10 crores retained by the contractor, M/s. Arihant Ship Breakers Pvt. Ltd. from the sale of the scrap is clearly payment received by M/s. Arihant Ship Breakers Pvt. Ltd. in lieu of the contract and against the bid of ₹ 99 crores being the final amount due to the contractor. Just because the contract has not been completed for reasons best known to the contractor and the contractee, it does not mean that the payment made by the contractee to the contractor changes its character from 'payment of consideration' to 'deposit' nor can such arrangement be permitted to stop the levy of the dues to the crown. Here clearly, the amount retained by M/s. Arihant Ship Breakers Pvt. Ltd. is a part of the total contract and the provisions of Sec. 194C is clearly attracted to the said amount. In the circumstances, we are of the view that the order of the ld. CIT(A) on this issue is not sustainable on the facts of the case and consequently stands reversed. - Decided in favour of Revenue. 2015 (10) TMI 1616 Addition on account of mark to market loss claimed on account of trading in derivative transactions - CIT(A) deleted the addition - Held that:- Mark to market losses on account of trading in derivative transactions are allowable deductions. See KOTAK MAHINDRA INVESTMENT LTD. case [2013 (7) TMI 355 - ITAT MUMBAI ] Hence this issue is accordingly decided in favour of the assessee 2015 (10) TMI 1615 Unexplained Credit u/s. 68 - whether CIT(A) has erred in passing the exparte order against the principles of natural justice without affording the proper opportunity of being heard to the assesssee? - Held that:- As on 26.11.2012 the date on which the final opportunity was given by the Ld. CIT(A), a letter has been received from the assessee through speed post stating that their counsel Mr. Sunil Bhansali was down with viral fever and hence one month’s time was requested, which the Ld. CIT(A) has not considered and proceeded exparte qua assessee. Keeping in view of the above facts and circumstances of the case, we are of the considered opinion, that Ld. CIT(A) has not given sufficient opportunity to the assesee and proceeded exparte qua assessee, which is contrary to the principles of natural justice. Therefore, the impugned order is not sustainable in the eyes of law. In the interest of justice, we set aside the issue in dispute to the file of the Ld. CIT(A) with the direction to decide the same afresh, under the law, after providing sufficient opportunity to the assessee. Assessee is also directed to cooperate with the Ld. CIT(A) and not to take unnecessary adjournment. - Decided in favour of assessee for statistical purposes. 2015 (10) TMI 1614 Penalty imposed u/s 272B - CIT(A) deleted the penalty levy - Held that:- Provisions of section 272B are subject to section 273B of the Act, which provides that notwithstanding anything contained in the provisions, inter alia, of section 272B, no penalty shall be imposed for any failure referred to in the said provision if it is proved that there was a reasonable cause for the said failure. In he present case there was a reasonable cause in the assessee not mentioning the correct PANs in respect of a few deductees at the time of originally filing e-TDS quarterly statement of deduction of tax in Form No.26Q, which were in fact, not available with the assessee at the material time. As and when the necessary information was obtained, the assessee corrected the lapse and revised the statement by furnishing due particulars thereof. In my considered opinion, the ld. CIT(A) was justified in deleting the penalty by relying on the judgment of Hindustan Steel Ltd. Vs. State of Orissa (1969 (8) TMI 31 - SUPREME Court ), wherein laid down that penalty cannot be ordinarily imposed unless the party obliged either acts deliberately in defiance of law or is guilty of conduct contumacious or dishonest, or acts in conscious disregard of its obligation. - Decided in favour of assessee. 2015 (10) TMI 1613 Disallowance of depreciation on goodwill - Held that:- Respectfully following the decision of CIT Vs. SMIFS Securities [2012 (8) TMI 713 - SUPREME COURT] wherein the doctrin of ejusdem generic is applied and held that the Goodwill is of like nature of intangible asset as prescribed, therefore, we hereby hold that under the totality of the facts and circumstances of the case the assessee is entitled for the claim of depreciation on the DWV of the goodwill for the year under consideration. - Decided in favour of assessee. 2015 (10) TMI 1612 Additions made on account of shortage of 830 quintal of maize and 507 quintal of wheat - CIT(A) delted the addition - Held that:- The assessee has filed the complete quantitative and qualitative details of stock tally before the AO, before CIT(A) and even now before us. We find that there is no difference in the total quantity of stock in term of quantity and quality. In such circumstances, we do not want to interfere in the order of CIT(A), which is based on facts and shortage claimed by the assessee is very much within the reasonable limit i.e. 0.7%. The shortage is within the parameter laid down by government organization like FCI. The shortage is due to transit loss and loss of moisture. In term of the above, we confirm the order of CIT(A) and consequently, this issue of revenue’s appeal is dismissed. - Decided in favour of assessee. 2015 (10) TMI 1611 Addition on account of provision for standard asset - whether Standard Assets is diminution in value of stock-in-trade, were CBDT instruction states that provision created by Banks on different accounts cannot constitute deductible expenditure for the purpose of Income-tax, hence provision for standard asset is not allowable for deduction under I.T. Act? - CIT(A) deleted the addition - Held that:- The issue before us is squarely covered in favour of the assessee and against the Revenue by the decision of the Hon’bleSupreme Court in the case of Nainital (1964 (9) TMI 11 - SUPREME Court ), which has been followed by the Ld. CIT(A). Therefore, no interference is called for. The provision for standard asset is the diminution in the value of stock-in-trade and the same is allowable u/s. 28(1) of the Act. - Decided against revenue. Addition on account of loss incurred by bank due to fraud - CIT(A) deleted the addition - Held that:- The undisputed fact is that there was an embezzlement/fraud by the employees of the bank to the tune of ₹ 35 crores. It is also an undisputed fact that RBI asked the assessee to write off the loss in phased manner. It is also an undisputed fact that losses written off in F.Y. 2007-08 & 2008-09 have been accepted by the Assessing Officer. This is the last year of the write off wherein the dispute has arisen breaching the rule of consistency. Undoubtedly, the loss on account of fraud should be written off in the year of detection of fraud. Considering the peculiarity of the present case, in the light of the guidelines of the RBI, we agree with the findings of the Ld. CIT(A) and decline to interfere.- Decided against revenue. 2015 (10) TMI 1610 Validity of reopening of assessment - Held that:- As evident from the reasons that there is no imputation of any failure by the assessee to disclose the relevant material for the purpose of assessment. Under the proviso to section 147 for a re-opening to be valid beyond four years from the end of the relevant assessment year there is a statutory requirement, that the failure on the part of the assessee to fully and truly disclose material facts must be ascertainable before invoking the section. In this case, as it is evident from the notes to the accounts, computation of income, form 29B, available with the AO while completing the assessment u/s 143(3) and while issuing the notice u/s 154 dated 06/11/2008, all the material facts were available with the AO. The reopening is therefore in contravention of the first proviso to section 147. Since there is no new material brought on record by the AO nor any failure on the part of the assessee to disclose primary or material facts the reopening cannot be considered valid. - Decided in favour of assessee. 2015 (10) TMI 1609 Entitlement to exemption u/s 10A - Held that:- It is not disputed that the assessee had filed a letter before the bank for extension of time, and it is also not disputed that the bank cannot and did not take the said letter on record because the letter was not accompanied by Softex Forms. It is also undisputed fact that the assessee has filed necessary letters with details before the STPI authorities for issuance of Softex Forms and they were pending before the authorities. The AO has observed that the assessee did not pursue the matter with STPI authorities, but there is no positive evidence to come to this conclusion. Further, as held in case of Tyco Electronics Corporation India P.Ltd. [2012 (7) TMI 64 - KARNATAKA HIGH COURT] the object behind this provision appears to be that once sale proceeds are received in India, though late and the authority vested with the power to extend the time, exercises this discretion, the assessee should be entitled to the benefit. As recorded by the CIT(A) the assessee has received the sale proceeds by 8th of September 2011. Therefore, the competent authority i.e. the bank has allowed the assessee to realize the sale proceeds. Therefore we hold that the export proceeds received after the expiry of the period of six months from the end of the relevant previous year is to be allowed as a deduction u/s 10A of the Act - Decided in favour of assessee. 2015 (10) TMI 1608 Deemed dividend addition under section 2(22)(e) - Held that:- Undisputedly, the appellant is not a shareholder of M/s. Country-wide Promoters P. Ltd. It is trite law that the provisions of section 2(22)(e) have no application to non-registered shareholders. The hon'ble apex court in the case of CIT v. C. P. Sarathy Mudaliar [1971 (10) TMI 8 - SUPREME Court] while construing the provisions of section 2(6A)(e) of the Act, 1922 which are in pari materia with the provisions of section 2(22)(e) of the Income-tax Act, 1961, held that the provisions governing the deemed dividend can be made applicable only in the hands of the registered shareholders. Since, admittedly, in the present case, the appellant is not a shareholder of M/s. Countrywide Promoters P. Ltd. the amount of ₹ 1,73,262 cannot be taxed in the hands of the appellant-company. - Decided in favour of assessee. 2015 (10) TMI 1607 Penalty u/s. 271AAA - CIT(A) deleted penalty levy - Held that:- CIT(A) while deleting the penalty has noted that Assessee had disclosed the amount in the statement made u/s. 132(4), has substantiated the undisclosed income by quantifying the amount of ₹ 25 crore and thus the requirement of specifying the manner for which the income has been earned has been complied by the Assessee. He has further given a finding that the A.O in principle has accepted the disclosure and the method of earning the income. Before us, Revenue has not brought any material on record to controvert the findings of ld. CIT(A). Considering the aforesaid facts, we are of the view that ld. CIT(A) has rightly deleted the penalty and therefore we find no reason to interfere with the order of ld. CIT(A) and thus this ground of Revenue is dismissed. - Decided in favour of assessee. 2015 (10) TMI 1606 Addition of unexplained cash credits - Held that:- We observe that once the land record proves this creditor’s land to be fertile, presumption rather goes in favour of the creditor that he is sowing crops and deriving agricultural income. The land record rather specifies the nature of the crop grown as well. Merely because he is a farmer not having enough documentary evidence of having sold the produce is no ground to dispute the aforesaid land revenue document. The other presumptions of collateral security is also a technical reason. The Assessing Officer appears to have applied business law principles in agricultural farming intricacies. We deem it appropriate to observe that merely because a farmer has pledged his land as a collateral security for obtaining same bank loan scheme does not necessarily mean that he is not having sufficient agricultural income. The third objection of large family being maintained on the same agricultural income is also without any basis. The authorities below have not done any homework or to inquire about sources of income in case of other family member; if any. Therefore, we hold that the impugned presumptions drawn in the course of assessment and affirmed in the lower appellate proceedings are without any supportive material. We accordingly hold that the assessee’s maternal uncle a farmer had sufficient means to advancing cash loan of ₹ 2 lacs in cash since not having a bank account. There is no material on record apart from these presumptions so as to doubt source/genuineness/creditworthiness of the assessee’s claim. Therefore, this 2 lac amount is held to be explained. For the balance sum of ₹ 8.5 lacs in case of other four creditors AO himself holds them to be assessee’s relatives. Therefore, identity of the creditors is not an issue here. They have also filed confirmations along with all revenue documents. The only difference that they have not appeared in person before the Assessing Officer. As already indicated the assessing authority proceeded mere assumptions and presumptions. It also raises similar reasons against these four creditors as well. In these circumstances, we observe that AO’s reasons in all four cases are identical to those raised in case of Shri Govindbhai decided hereinabove. We draw support therefrom. And accept assessee’s arguments herein as well and ignore technical reason of personal nonappearance of these four creditors. The assessee’s explanation regarding balance cash credit of ₹ 8.5 lacs is accepted. He gets relief in this appeal to the tune of ₹ 10.5 lacs. The balance addition of unexplained cash credit amounting to ₹ 14,135/- is confirmed. - Decided partly in favor of assessee. 2015 (10) TMI 1605 Deemed dividend addition u/s.2(22)(e) - Held that:- The assessee has filed a paperbook on record which reveals that he gets a monthly salary of ₹ 50,000/- and also tractor rental income of ₹ 1,01,000/- in May-2005 and ₹ 1,40,000/- from June-2005 upto March-2006. It is further seen that the assessee has also received Qualish car rental income of ₹ 1,44,000/-. His books record tractor rental income as ₹ 15,01,000/-. The Revenue does not dispute the assessee's fixed assets in the shape of aforesaid vehicles. We find value of its tractor-trolly to be ₹ 37,45,500/- and Qualish Car that of ₹ 3,98,496/-. The assessee's books nowhere treat the sums received as loans and advances to have been received from the aforesaid company. The company's report does not disclose any such loan or advance to the assessee. The authorities below nowhere observe anything about accumulated profits so as to invoke section 2(22)(e) of the Act. We reiterate that this section stipulates addition of a deemed income statute liable to be strictly interpreted. The case file indicates that the impugned sums are routine business transactions/salary payments made between the company and the assessee-appellant not coming within the purview of deemed dividends u/s. 2(22)(e) of the Act. The assessee has filed a catena of case-laws. See DCIT vs. Chariot International Pvt.Ltd. [2013 (12) TMI 596 - ITAT BANGALORE] holding that routine commercial transactions involving trade advances are not to be treated as deemed dividends. The Revenue fails to point out any distinction on facts or law. We accept the assessee's arguments in these facts. The impugned addition of deemed dividends is deleted. - Decided in favour of assessee. 2015 (10) TMI 1604 Disallowance of expenses of Research & Development - Held that:- Assessee has debited a sum of project expenses written off, which was incurred by the assessee in past years in respect to testing of multi fuel system by Automotive Research Association of India. We find that the AO disallowed the claim in view of specific provision of section 37(1) of the Act by holding that the expenses are not expended wholly and exclusively for the purpose of business as no business activity in past years or in the relevant year are carried out, which can be said to be related to Multi Fuel System. He further opined that these expenses relates to prior period i.e. incurred in FY 2004-05 relevant to AY 2005-06 and not to the FY 2005-06 relevant to AY under dispute 2006-07. Today, when Ld. counsel for the assessee was enquired about the year of incurring of these expenses and also whether the assessee is in the business of pollution control devices, he categorically admitted that this is a new line of business, which was to be started. According to him, this was on- going process and these expenses are for earning of future income. We find no substance in the argument of the Ld. counsel for the assessee and the lower authorities have given a concurrent finding that there is no business relating to this project, which is abandoned. In such circumstances, we confirm the orders of the lower authorities and this issue of assessee’s appeal is dismissed. - Decided against assessee. 2015 (10) TMI 1603 Penalty u/s.271(1)(c) - treatment of transactions in shares and mutual funds - whether assessable under the head 'income from short term capital gains' as declared by the assessee and whether to be assessed under the head 'income from business' - Held that:- As decided in assessee's own case relating to assessment year 2006-2007 till last assessment year the assessee was showing income from share business under the head business income, that during the year it had converted its stock in trade in to investment, that it was maintaining two portfolios in the year under appeal, that it had showed income from certain share transaction under the business head. As per the provisions of the Act, the assessee can convert his stock in trade in to investment. So, if in the year under consideration, it had opted for that option, there was no reason to reject its claim. It had passed necessary entries in the books of accounts. Therefore just because of a decision taken in quantum proceedings, it cannot be held that the assessee had concealed particulars of income. It is said that decision in the assessment proceedings do not result in automatic imposition of penalty. In the matter before us, the assessee had filed all the necessary details before the AO. There was difference of opinion between the assessee and the AO about the treatment to be given to the share transactions undertaken by the assessee. The admission of the appeal by the Hon'ble jurisdictional High Court against the quantum proceedings prove that there is difference of opinion about the issue in question. In such matters, in our opinion, penalty should not be levied - Decided in favour of assessee. 2015 (10) TMI 1602 Registration under section 12A rejected - Held that:- Commissioner of Income-tax (Exemptions) was in a hurry to close the case and had given a very short time to the assessee, which establish the fact that the learned Commissioner of Income-tax (Exemptions) has not given sufficient opportunity of being heard to the applicant-society to substantiate its claim before him, which is contrary to the principles of natural justice. In the interests of justice, we set aside the issue in dispute to the file of the learned Commissioner of Income-tax (Exemptions) for deciding the issue afresh, after giving sufficient opportunity of being heard to the assessee-society, under the law. - Decided in favour of assessee for statistical purposes. 2015 (10) TMI 1601 Disallowance of employees' contribution of provident fund under section 36(1)(va) - Held that:- Though it is a fact that the assessee has remitted the employees' contribution to provident fund not within the due date as prescribed under the Explanation to section 36(1)(va), however, the assessee has remitted the amount within the due date of filing of return of income under section 139(1) of the Act. Therefore, in view of the provisions of section 43B the amount cannot be disallowed. Accordingly, we delete the addition made by the Assessing Officer. - Decided in favour of assessee. Restricting the depreciation on UPS at 15 per cent - Held that:- We hold that UPS being part and parcel of computer system, depreciation allowable on UPS is at 60 per cent. as prescribed for computers. There are number of decisions of different Benches of the Income-tax Appellate Tribunal including Hyderabad Benches expressing similar view. In the aforesaid view of the matter, we allow the assessee's claim of depreciation at 60 per cent.- Decided in favour of assessee. Computation of deduction under section 10A - Held that:- We direct the Assessing Officer to compute deduction under section 10A of the Act by reducing internet charges and onsite expenses both from export turnover and total turnover. - Decided in favour of assessee. 2015 (10) TMI 1600 Disallowance of deduction claimed u/s 80IA - reducing the eligible profit by the amount of losses and depreciation pertaining to earlier year already been set off against the profit of non-eligible unit - Held that:- Since the assessee has exercised the option of choosing the asst. yr. 2008-09 as initial assessment year as per sub-section (2) of S. 80-IA, only the losses of the years starting from that initial assessment year alone are to be brought forward as stipulated in S. 80-IA(5). Loss prior to the initial assessment year which has already been set off cannot be brought forward and adjusted in the initial assessment year as chosen by the assessee. It is only when the loss has been incurred in any year beginning from the initial assessment year, that the assessee has to adjust such loss in the subsequent assessment years and the profits have to be computed as if the eligible business is the only source of income and the deduction u/s. 80-IA is to be determined accordingly. This is the true import of section 80-IA(5). Therefore the losses of assessment year prior to the A.Y. 2008-09 which has already been set off against income of non-eligible unit could not be notionally carried forward in accordance with section 80IA for setting off against the income of eligible unit for the assessment years 2008-09 & 2009-10 under consideration. Thus we do not find any merit in the action of the lower authorities for allowing the claim of deduction u/s 80IA by reducing the eligible profit by the amount of losses and depreciation pertaining to earlier year which has already been set off against the profit of non-eligible unit. As we have already decided the issue on merit in the A.Y. 2009-10, following the same reasoning, we do not find any merit in the action of ld. CIT u/s 263 for directing the A.O. in the A.Y. 2008-09 to allow deduction u/s 80IA of the Act after reducing the loss and depreciation of earlier year which have already been set off against the profit of non-eligible unit. - Decided in favour of assessee. 2015 (10) TMI 1599 Disallowance u/s.80IB(10) - CIT(A) allowed the claim - Held that:- We find that the ld.CIT(A) has given categorical finding that the assessee has met the test laid by the Coordinate Bench in the case of Shakti Corporation (2008 (10) TMI 550 - ITAT, AHMEDABAD) and also the risk and consequences in developing the project are borne by the assessee. Reliance is also placed on the judgement of Hon’ble Gujarat High Court rendered in the case of CIT vs. Radhe Developers [2011 (12) TMI 248 - GUJARAT HIGH COURT]. Therefore, we do not see any reason to interfere with the order of the ld.CIT(A), same is hereby upheld. - Decided in favour of assessee 2015 (10) TMI 1598 Disallowance u/s 40A(3) - Held that:- The total cost of purchases of the land + the amount incurred for stamp duty recorded in page 5 of the assessment order, is the opening stock for the impugned AY. As the issue before us is the disallowance u/s 40A(3) of the Act and as the assessee has not claimed any expenditure during the year, the question of upholding disallowance u/s 40A(3) of the Act does not arise. - Decided in favour of assessee. Computation of loss on sale of land - Held that:- There is no doubt that the assessee paid full price i.e. ₹ 1,88,53,629/- on purchase of impugned land which has been paid to the land owners or to the consolidator. The AO is not justified in reducing the cost of acquisition and hence making an addition to the profit on sale of land. Nothing has been brought on record that the purchase and sale are not genuine. In view of these facts, the assessee is entitled to a relief of ₹ 19,32,269/-. The AO has adopted a cost of ₹ 1,69,21,360/-. The reason given by the AO for such deduction is vague and devoid of merit. - Decided against revenue. 2015 (10) TMI 1597 Carry forward balance 50% of claim of additional depreciation to subsequent year - Held that:- The Delhi Bench of the Tribunal in DCIT v/s Cosmo Films Ltd. (2012 (9) TMI 281 - ITAT DELHI ), held that in section 32(1)(iia) of the Act, the expression used is "shall be allowed". Thus, the assessee company earned the benefit as soon as it has purchased new plant and machinery in full but restricted to 50% in that particular year on account of period of usages. Such restrictions cannot divert the statutory right of the assessee. Thus, the assessee is entitled to depreciation in the subsequent year, if the entire depreciation is not allowed in the first year of installation. The assessee is entitled for 50% of the additional depreciation and there is no restriction to claim the additional depreciation, if otherwise available, to the assessee. - Decided in favour of assessee. 2015 (10) TMI 1596 Anfractuous and redundant appeal declared by CIT(A) - levy of interest u/s 201(1A) - Held that:- Order passed without hearing the assessee, is bad in law, we find force in the contention of the assessee that without specifying a date of hearing and informing the same by issue of notice, vitiates the impugned order. So we set aside the impugned order and direct the Ld. CIT(A) to pass a speaking order on the question of law, fact and mixed question of law or fact, if raised by the assessee before him. Needless to say that the assessee shall be given adequate opportunity of being heard before he passes the de novo appellate order. - Decided in favour of assessee for statistical purpose. 2015 (10) TMI 1595 Prior period expenditure disallowed - assessee canvassed that though the impugned expenses were incurred during the period January 2002, to March 2002 but the liability therein had crystallized only on execution of the agreement in August 2002 and, therefore, such expense was an allowable deduction in the assessment year 2003-04 - Held that:- Decision of the CIT Vs. Exxon Mobil Lubricants P. Ltd. [2010 (9) TMI 36 - DELHI HIGH COURT ] does not support the case of the Revenue before us, and, rather it supports the proposition canvassed by the assessee to the effect that the liability is to be allowed as deduction in the year in which it has crystallized. Factually speaking, the liability in question has crystallized during the year under consideration, as noted by us in the earlier paras and, therefore, in our view, the lower authorities have erred in disallowing the impugned expense. As a consequence, we set aside the order of CIT(A) and direct the Assessing Officer to delete the addition - Decided in favour of assessee. 2015 (10) TMI 1594 Deduction under section 80P(2)(a)(i) denied - Held that:- So far as activity of doing the insurance of its members-creditors is concerned, the same can be safely said to be connected to the business activity of providing loan to the members of the society. Moreover, the concept of mutuality will also be applicable to such commission income and policy charges, etc. However, the commission income and policy charges received from non-members though the borrowers of the assessee society will neither fall within the purview of business activity of providing credit facility to its members nor the same would fall within the scope of mutuality. Hence, in view of our above discussion, we do not find any infirmity in the order of the learned CIT(A) in holding that the interest income, commission income and policy charges, etc., received from non-members will not be eligible for deduction under section 80P. - As A.R. for the assessee has submitted that the assessee society has incurred some expenditure in the course of earning interest income and from doing the insurance of non-members-borrowers and that the expenditure so incurred is required to be deducted and only the net income is liable to be taxed, we find force in this contention of the assessee. Only the net income from non-members is required to be taxed. The Assessing Officer is, therefore, directed to re-compute the taxable income accordingly. - Decided against assessee. 2015 (10) TMI 1593 Enhancing effect of income by changing heads of income and imposing tax on the assessee - principles of natural justice denied - not providing the assessee with a reasonable opportunity of being heard - Held that:- if such change of head of income results in enhancement of income and consequently enhancement of tax, then the CIT(A) has to issue a notice u/s 251(1) of the Act before bringing it to tax. The Hon’ble Allahabad High Court in the case of Tarkeshwar Nath Agarwal vs. CST (1974 (3) TMI 92 - ALLAHABAD HIGH COURT ), has held that an assessment can be said to have been enhanced only if the tax assessed has been enhanced. In the case before us, the change of head of income has resulted in enhancement of assessed income and tax thereon and therefore the provisions of sec.251(1) are attracted. From the order of the CIT(A) before us, it is clear that before such enhancement of the assessment, by such change of head of income, no notice u/s 251(2) was issued to the assessee. Therefore, in our opinion, the CIT(A) ought to have issued notice u/s 251(2) of the Act. Since such notice has not been issued by the CIT(A), we set aside the order of the CIT(A) and remit the issue to the file of the CIT(A) with a direction to re-adjudicate the appeal before him de novo in accordance with law after issuing a notice u/s 251(2) of the Act - Decided in favour of assessee for statistical purposes. 2015 (10) TMI 1592 Entitlement for deduction under section 10AA - whether CIT(A) has erred in directing the AO to reduce the expenditure incurred in foreign currency, both from the export turnover as well as total turnover for the purpose of computation of deduction u/s. 10AA and allowed deduction of ₹ 36,065,831/- as claimed by the assessee? - Held that:- We are of the view that the arguments advanced by the ld. DR are contrary to the facts as recorded by the CIT(Appeals), about which there is no dispute. The arguments are also contrary to the principles laid down by the Hon'ble High Court of Karnataka in the case of CIT v. Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT]. We are therefore of the view that the order of the CIT(Appeals) is just and proper and calls for no interference. Accordingly the appeal by the Revenue is dismissed. - Decided in favour of assessee. 2015 (10) TMI 1591 Disallowance u/s 40(a)(ia) - non deduction of tds under section 194C for printing work - penalty u/s 271C - Held that:- Prima-facie, according to the provisions of section 194C r.w. definition given of "work" under the explanation to section 194C, the case of the assessee has to be accepted that assessee could be under bonafide belief for non-deduction of tax from the type of payments upon which it has been held that assessee is liable to deduct tax at source. Mere acceptance by the assessee of the addition does not make entitle the department to levy concealment penalty. In this case, is no allegation can be imposed upon the assessee to say that did not furnish all the particulars or it has disclosed inaccurate particulars so as to say that assessee is liable for concealment penalty. Keeping in view the entirety of facts and also reasonable belief of the assessee that it is not entitled for deduction of tax on the payments made to him by it as the same were excluded from the definition of "work" by the Explanation to section 194C, we are of the opinion that levy of concealment penalty in the present case is not justified and deserves to be deleted. Accordingly, the penalty is deleted and appeal filed by the assessee is allowed. - Decided in favour of assessee. 2015 (10) TMI 1590 Non deduction of TDS on the access charges paid to RCOM - whether payment of access charges to RCOM cannot be said to be payment towards 'fees for technical services' or 'rent' and hence the payment need not be subject to TDS under section 194-J or 194-I? - Held that:- The fact is that none appeared on behalf of the Revenue. However, we have gone through the record and since the AO passed an order under section 154 of the Act rectifying his earlier order passed under section 201(1) of the Act vis-a-vis access charges, assessee cannot be said to be in default (for non-payment of tax) and hence the issues raised by the Revenue in the appeals are of academic importance and hence deserve to be rejected. - Decided in favour of assessee. 2015 (10) TMI 1589 Condonation of delay in filling appeal - Held that:- The facts are exactly identical and similar to the decision of Hon’ble Supreme Court in the case of Office of the Chief Post Master General & Anr. Vs. Living Media India Ltd. & Anr.,[2012 (4) TMI 341 - SUPREME COURT OF INDIA] wherein the government machinery has worked in a particular fashion and in all the delay there is no explanation whatsoever. As such there is no reasoning and Ld. Counsel for the assessee has strongly objected to the Condonation of delay. In view of the above, we refuse to condone the delay and decline to admit the appeal. Appeal of revenue is dismissed as not admitted. 2015 (10) TMI 1588 Penalty u/s. 271C - Non deduction of TDS u/s. 194J on payment of MICR charges as towards fees for technical charges - Held that:- In the present case, Revenue has not brought any material on record to demonstrate that the reasons given by Assessee for non deduction of tax was not bona fide or to be false. We further find that CIT(A) by a very cryptic order has upheld the action of A.O. Considering the totality of the facts we are of the view that in the present case the reasons given by Assessee for non deduction of TDS appears to be bona fide and therefore the provisions for penalty u/s. 271C of the Act are not attracted. We accordingly direct its deletion. See case of Prime Co-Op. Bank Ltd. (2015 (10) TMI 1744 - ITAT AHMEDABAD) - Decided in favour of assessee. 2015 (10) TMI 1587 Disallowance u/s 14A r.w.r 8D - whether rule 8D cannot be made applicable without first rejecting the claim of the appellant as envisaged under sub-section (2) of section 14A? - Held that:- Considering the argument of the assessee, similar disallowance can be made in the year under consideration after examining the expenditure claimed in the year under consideration provided the expenses in this year is comparable. Both the parties agreed for remanding this issue for the limited purpose of analyzing the expenditure and comparing the same with that of the assessment year 2009-10. Accordingly, for the limited purpose, the matter is remanded to the file of the Assessing Officer for deciding the disallowance under section 14A after granting reasonable opportunity of being heard to the assessee. Accordingly, ground raised by the assessee is allowed for statistical purposes. - Decided in favour of assessee for statistical purposes. 2015 (10) TMI 1586 Receipt of advances - allowability of the expenses towards cost of land and development charges - CIT(A) held that as per accounting principles the true and correct income which could be taxed in the hands of the assessee company would be after deduction of relevant expenses as shown by the assessee only during first appellate proceedings - Held that:- We note that the assessee raised the issue of allowability of the expenses towards cost of land and development charges in A.Y. 2005-06 during first appellate proceedings. We also note that the CIT(A) did not afford another opportunity to the AO to submit his remand report and to comment upon the merits of the claim, explanation and submission of the assessee which were not submitted during assessment proceedings. The AO was not allowed to comment upon said claim, explanation and submissions of the assessee on merits and the CIT(A) considered and accepted the same in contravention of Rule 46A(3) of the I.T. Rules, 1962. Thus this issue requires proper examination and verification at the end as to whether the land and development charges were included in the amount of liabilities which was assessed as income of the assessee for the year under consideration on the basis of statement of Shri Sunil Sharma the Director of the company recorded u/s 131. The AO shall also verify and examine that whether the amount of ₹ 1,07,87,357/- was not reconciled while computing the trading results of the assessee for A.Y. 2005-06. Therefore, the only issue raised by the Revenue in this appeal is restored to the file of AO for denovo adjudication - Decided in favour of assessee for statistical purposes. 2015 (10) TMI 1585 Penalty u/s 271(1)( c) - receipt of transfer fees and TDR premium received by the assessee - CIT(A) deleted penalty levy - Held that:- in the quantum appeals for the assessment years 2003-04 to 2005-06 the issue is decided in favour of the assessee, therefore even if the Tribunal confirmed the addition for the assessment year under consideration it does not lead to the conclusion that the claim of the assessee by applying the principle of mutuality in respect of transfer fee and TDR premium is bogus claim or absolutely incorrect claim. When the issue is decided by the Hon’ble Jurisdictional High Court in favour of the assessee then the claim of the principle of mutuality of this receipt is a bonafied claim and does not attract the penalty under section 271(1)( c) of the Act. Accordingly, we do not find any illegality of infirmity in the order of ld. CIT(A) in deleting the penalty levied under section 271(1)(c) of the Act for all these assessment years. - Decided against revenue. 2015 (10) TMI 1584 Deduction claimed u/s. 80- IC - CIT(A) allowed the claim - Held that:- We find force in the submissions of the Ld. DR. Prima facie there appears to be difference in the sale figure taken by the AO and by the Ld. CIT(A). Such factual errors cannot be brushed aside lightly, therefore, in the interest of justice and fair play, we restore this issue to the file of the AO. The AO is directed to decide the claim of deduction denovo after giving reasonable and sufficient opportunity to the assessee to explain the difference, if any, in the sales. Thus restore the entire issue relating to the claim of deduction u/s. 80IC to the file of the AO with a direction to decide the issue afresh as per the provisions of law. - Decided in favour of assessee for statistical purpose. Customs 2015 (10) TMI 1723 Issuance of writ of certiorari calling for records relating to impugned order passed by respondent and quash the same - Petitioner contends that impugned order is in violation of principles of natural justice and without issuing any SCN and without holding any enquiry - Held that:- Administrative orders which affects the rights of a party can be passed only by following the principles of natural justice - Liberty granted to Respondent to pass fresh order giving an opportunity to petitioner of being heard - Impugned order set aside - Decision made in case of A.M.Ahamed and Co .vs. Commissioner of Customs, Tuticorin [2013 (6) TMI 91 - MADRAS HIGH COURT] followed - Decided in favour of petitioner 2015 (10) TMI 1722 Claim of benefit under FPS (focus product scheme) - Petitioner contends that he has submitted a representation stating that they exported only red chillies and the technical glitch faced during the course of filing were bought to their notice at the time of submission of their applications for FPS benefit – Further contended that they are facing financial crisis on account of rejection of their legitimate claims – Revenue contends that no acknowledgment is available as to the submission and receipt of the Petitioner’s representation. Held That:- The scope of the prayer sought by the Petitioner is limited and hence without going into the merits of the same he can submit one more representation to the Respondent – matter remanded back. 2015 (10) TMI 1721 Rejection of refund claim – Special Additional Duty – Primary adjudicating authority rejected refund claim of respondent on ground that respondent had taken credit of SAD and therefore was ineligible for refund thereof in terms of Notification No.102/2007-Cus – Commissioner by disagreeing with view of adjudicating authority, remanded case back to process, quantify and sanction refund – Held that:- Order of Commissioner amounts to remanding case to primary adjudicating authority which Commissioner is not empowered to do – However, merely because respondent took credit of SAD does not ipso facto amounts of passing it on to its buyers and deprive it from claiming refund thereof if conditions contained in Notification No.102/2007-Cus are satisfied – In light of analysis court remand case to Commissioner to decide it afresh at his level and determine amount of refund admissible – Decided partly in favour of revenue. 2015 (10) TMI 1720 Duty free goods diverted to local market – Imposition of penalty – Importer imported Polyester fabrics without payment of duty, for manufacturing finished goods to be exported – During investigation, it was found that importer diverted duty free imported material in local market – Show cause notice was issued to importer and Appellant – By impugned order, adjudicating authority confirmed demand of Customs duty alongwith interest and imposed penalty of equal amount of duty on importer and Appellant – Held that:- Appellant-1 was main architect of fraud for diversion of duty free goods in local market – He has admitted in various statements that he had involved in diversion and delivery of duty free materials to buyers as well as procurements these goods from Dubai based suppliers – Appellant-2(broker) accepted that he had arranged sale of duty free material to buyers without any bills or invoices – He may get sum of as commission and therefore, quantum of penalty upon him is excessive – Regarding imposition of penalty on buyers for purchase of duty free goods from importer illegally without any bills and invoices and payment made in cash, it is clearly evident that buyers had knowledge that goods were not duty paid and imposition of penalty is warranted – Therefore, imposition of penalty on appellant-1 confirmed while penalty on other appellants are reduced – Appeal disposed of. 2015 (10) TMI 1719 Denial of registration of DEPB licence and DEPB script - re-export has not been taken place from the same Port - Held that:- re-export have been done as required under the provisions of Section 74 of the Customs Act. I also find that all the facts have also been recorded in both certificates dated 21.4.2009 and 3.6.2009 issued by the Assistant Commissioner of Customs addressed to the Joint DGFT. Further, in view of the Circular No. 71/2002-Cus which gave specific direction to the Customs authorities not to insist for re-export from the same Port in case of duty drawback. Accordingly, I hold that the said Circular is binding on the Revenue authorities, and the learned Commissioner is in error in refusing to allow registration of the DEPB scrip issued - Decided in favour of appellant. 2015 (10) TMI 1718 Import of restricted goods - import of plastic content in the paper waste without declaration - Confiscation of goods - Held that:- the same is clearly liable for confiscation as they do not fulfil the condition for the import thereof. Also as a consequence, the used paper collected as road sweepings is liable to confiscate under Section 119 ibid as the goods used for concealing the smuggled goods, namely, the used plastic waste. Clause 7 of their contract with the suppliers provided for final load port quality inspection on seller’s account by surveyor mutually agreed upon. It is obvious that they had stipulated pre-shipment inspection that the goods imported were as per declaration in the Bill of Entry. Thus, the appellants cannot fully absolve themselves of the responsibility to ensure that the goods imported were as per their declaration in the Bill of Entry. - No infirmity in impugned order - Decided in favour of Revenue. Corporate Laws 2015 (10) TMI 1717 Penalty for Violation of SEBI Circular read with Clause A(2) of the Code of Conduct; Regulation 15 of Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992 – Whether 4 terminals, out of terminals granted, at 3 locations were allotted to ultimate clients in contravention to said regulations? – Held That:- Terminals under issue not managed by authorized employee or by sub-broker himself - Appellant found guilty of violating the Circular as well as the Code of Conduct and norms prescribed under Stock Brokers and Sub - Brokers Regulations, 1992 – Penalty imposed is not unjustified – Appeal dismissed. 2015 (10) TMI 1716 Allegation of cheating and fraud levelled against petitioner - Whether the expression “other legal proceedings” in Section 446 of the Companies Act would include Criminal Proceedings and FIR filed in Delhi can be quashed or not? - Urged by Appellant that since the matters before DRT had been settled and all the amount was paid, it would be an abuse of the process of Court and FIR be quashed - Revenue contends that Court has no jurisdiction to quash the FIR since the FIR is registered in Delhi and One time settlement does not refer to criminal proceedings; no approval given by RBI. Held That:- Section 446 does not prohibit proceedings being taken by company against any directors or officers or other servants of company; "other legal proceedings” used in Section 446(1) do not include criminal proceedings - Court has no jurisdiction to transfer a criminal case from one Court to another and petitioners could not have approached this High Court for quashing - Decision made in case of Pennar Paterson Ltd. Vs. Shikshak Sahakari Bank Ltd.[2008 (4) TMI 508 - SUPREME COURT OF INDIA] followed - Decided in favour of Respondent Service Tax 2015 (10) TMI 1739 Cenvat Credit - Distribution of input services / ISD – The department was of the view that appellant having various other branches and advertisement services being common to all units the credit has to be availed on proportionate basis. - Held That:- Rule 7 does not speak of distributing credit on proportionate basis; thus credit rightly availed - the appellant failed to take ISD registration it would amount only to a procedural lapse for which the benefit of credit cannot be denied. It is clear that the credit was rightly availed by the appellant - Decided in favor of assessee. Levy of penalty u/s 77 for failure to comply with the audit objections - Allegation that appellant did not furnish requisite information and documents, and did not respond to the letters. - Held that:- Department itself is not sure whether the appellant is guilty of failure to furnish information or failure to produce documents thus imposition of penalty cannot be imposed on flimsy and shaky evidence – Decided in favour of assessee. 2015 (10) TMI 1738 Refund of Service tax paid initially on commission received for orders to procure and products sold by principal located outside, in India - Export of services - Period of limitation Revenue contends that services rendered are of marketing of products and cannot be said as export services - Provisions of section 11B would be applicable for claim of refund. Held That:- Respondent rendered services to foreign principle in respect of products marketed in India, on commission basis - Rule 4 of the Export of Service Rules provides for export of service without payment of tax as export of service is not exigible to tax; amount deposit is thus not tax and as such there is no time limit for refund of deposit as Section 11B applies to refund of duty/tax only – Appeal devoid of merits – Dimissed in favour of assessee. 2015 (10) TMI 1737 Valuation - Mandap Keeper service - Whether Tribunal was right in holding that no evidence was produced by Appellant regarding quantum of room rent treating 80% of the consolidated charges collected as room rent and that entire consideration received by Appellant was towards banquet hall and liable to service tax under Mandap Keeper Service? - Held That:- Opportunity to produce evidence could have been given by Tribunal during the course of appeal and same was dismissed on a technical ground - Opportunity to produce evidence granted - Impugned order quashed - Matter remanded back - Decided in partly in favour of assessee. 2015 (10) TMI 1736 Renting out of immovable property - Assessee contends that they gave only vacant land which is excluded from taxable services while revenue contends that they had leased out Port land to private parties which is taxable - Assessee is aggrieved by demand of interest while revenue is aggrieved by non-imposition of penalties. Held That:- Assessee leasing out vacant land and water front, is covered under the exclusion provided in the definition of taxable service given in Section 65(105)(zzzz) - Appeal filed by revenue has no merits – Appeal of assessee allowed and appeal of revenue rejected – Decision made in the case of Mundra Port & Special Economic Zone Ltd. [2011 (9) TMI 93 - CESTAT, AHMEDABAD] and Gujarat Maritime board (supra) [2014 (7) TMI 972 - CESTAT AHMEDABAD] followed – Decided in favour of assessee. 2015 (10) TMI 1735 Valuation - Additional service tax liability on reimbursement of expenses of postage – Appellant functions as Share Transfer Agent and Registrar to an Issue – Assesee contends postage paid by appellant is duty and cannot be a part of the taxable value – Revenue contends that penalties under section 76 shall be imposed as expenses of postage are incurred on services mentioned above. Held that:- Actual expenses incurred for postages and reimbursement of other expenses are not to be included in the value for discharge of Service Tax liability – Matter is squarely covered under the case of Link Intime Pvt. Ltd. Vs. Commissioner of Service Tax [2015 (7) TMI 591 - CESTAT MUMBAI] – Decided in favour of assessee. 2015 (10) TMI 1734 Manpower recruitment agency and supply services - services provided to overseas client. - export of services - Held that:- the employees were recruited by the appellant for clients abroad for working, salaries are paid by the clients of appellant and the services of the appellant was engaged by the foreign clients for identifying the potential employees who can work abroad. It is to be seen that though the services of the appellant were for identifying, short listing and confirming the employment of the personnel in India, it was for working abroad and not in India. This would, in our considered opinion, would fall under the category of export of services. - Decision made in the case of SGS India [2014 (5) TMI 105 - BOMBAY HIGH COURT] followed - Decided in favor of assessee. Business Auxiliary services - Held That:- services are collateral to the services rendered by the appellant for recruitment of the personnel for the clients situated abroad - qualifies for export of services. Further, demand of small amount of ₹ 20,132/- is confirmed with interest but penalties set aside – Decided partly in favour of the Assessee. 2015 (10) TMI 1733 Rejection of application under Service Tax Voluntary Compliance Encouragement Scheme, 2013 – Period of limitation for rejection of VCES application - Pendency of an inquiry while filing VCES declaration - Revenue contested that assessee's application falls under the provisions of Section 106(2)(a)(iii); assessee is not eligible to make any declaration under VCES scheme - Appellant contends to set aside the order. Held That:- Notice proposing to reject the declaration is time barred in view of the clarificatory circular issued by CBE&C - Letter issued by DGCEI is of roving nature and does not attract the rejection of the declaration on the grounds mentioned in Section 106(2)(a)(iii) – Impugned order set aside in favour of assessee. 2015 (10) TMI 1732 Imposition of penalty – fabrication/alteration of TR-6/GAR-7 challans and bogus challans - fraudulent act on the part of the Consultant who had pocketed the amounts of service tax which has been paid by the appellant to him to pay into the Govt. treasury - Case of Revenue is that no criminal complaint filed against consultant by appellant – Further service tax returns were signed by appellant indicating the tax liability – penalty imposed is thus sustainable. - Manpower Recruitment or Supply Agency Services – Held that:- Amount embezzled by Consultant was without knowledge of assessee and same was done to enrich himself – Appellant discharged entire service tax liability and interest thereon - Question of vicarious liability on part of Appellant does not arise as consultant was not appointed for any mis-representation – Reports prepared by Consultant and signed by appellant that they were correct – Penalty imposed not sustainable - Decided against the Revenue. 2015 (10) TMI 1731 Refund of Service Tax – payment of service tax was prior to the issue of the notification u/s 11C - whether the notification is prospective or retrospective? - Held That:- Question involved has to be decided by the apex court under section 35L of the Central Excise Act – Decision made in case of Commissioner of Service Tax, Bangalore v. Scott Wilson Kirkpatrick (India) Pvt. Limited [2011 (4) TMI 500 - KARNATAKA HIGH COURT] followed – Appeal dismissed. 2015 (10) TMI 1692 Reversal of input service credit - Credit used for both exempted and dutiable final products under rule 6(3) (b) of CCR - Held that:- Adjudicating authority and the authority to decide the application is happened to be one and the same jurisdictional Commissioner of Central Excise. The adjudicating authority ought to have considered their application before deciding the SCN. On perusal of the application dt. 19.8.2010, appellants have already paid an amount of ₹ 19,17,821/- and interest of ₹ 2,87,494/- plus additional interest of ₹ 2,43,492/- which is certified by the Chartered Accountant by certificate dt. 5.8.2010 and another certificate dt. 20.12.2010. Accordingly, we find that appellants have complied with entire reversal of cenvat credit along with interest. Considering the above facts that application made under sub-section (2) of Section 73 is still pending before the adjudicating authority, the case needs to be remanded to the adjudicating authority. - Impugned order is set aside - Decided in favour fo assessee. Central Excise 2015 (10) TMI 1728 Export of goods - proof of export - Failure to file ARE-2 - Held that:- Issue involved in this writ petition is no more res integra - Division Benches of this Court have restated the legal position and concluded that failure to file ARE-2 would deprive the petitioner to get benefit under the scheme being a statutory condition. - no reason to take a different view. The issue involved in this writ petition is squarely covered by order [2013 (4) TMI 740 - MADHYA PRADESH HIGH COURT], passed in (M/s. Kriti Nutrients Ltd. v/s. Joint Secretary , GOI, Ministry of Finance & Anr.) - no case to interfere with the impugned order of the Government of India, passed in revision application as prayed by the petitioner is made out - Decided against assessee. 2015 (10) TMI 1727 Valuation - Determination of transaction value - sales tax Incentive scheme - Difference between the sales tax payable and actual sales tax (equal to NPV) paid - manufacturer-assessees are of the view that the sales tax amount payable was as per the sales tax rate applicable on the goods or the deferred amount of sales tax and thus they are liable to pay excise duty on the price excluding the deferred sales tax payable. Exercising the option to wipe out the deferred tax liability on NPV will not make any difference in their liability to pay excise duty. - demands are pertaining to period beginning prior to 1.7.2000 and in other cases after 1.7.2000. Held that:- As per old Section 4, normal value was defined under Section 4(4)(d)(ii) and excluded sales tax payable. - Thus under old section, sales tax payable was to be excluded while under new section sales tax actually paid or actually payable to be excluded. But both the normal value and the transaction value are at the time of removal. A combined reading of the definition of time of removal, place of removal and normal value or transaction value would indicate that the normal value or transaction value is required to be determined keeping in view the situation/factors prevailing at the time and place of removal. When the goods are being cleared (i.e. time of removal) actual sales tax paid is nil but sales tax actually payable is the normal sales tax or what has been collected by the assessee from its customers. Among the terms actually paid or actually payable used in transaction value, actually paid is not relevant in the present set of appeals. What is relevant is actually payable . Actually payable at the time of clearance is the deferral sales tax. Thus, in our view, the amount of deferral sales tax will require to be excluded. It would thus be seen from the above three circulars that the Board has all along been of the view that under the deferment scheme of sales tax, the sales tax is payable though after a long period of time and since the sales tax is payable, the same will stand excluded from the normal value or the transaction value. - Difference between the sales tax payable and actual sales tax (equal to NPV) paid - Held that:- As far as the Sales Tax Act authorities are concerned, whole of the deferred sales tax amount payable has been paid by the assessee/dealer. The fact that the said amount has been paid after the clearances of the goods and before the deferred date of payment, to our view will not make any difference. Further, the actual amount paid is equal to NPV (which is less than originally payable), cannot make the amount actually payable at the time and place of removal different, particularly when under Sales Tax Law such a payment is considered as deemed payment of the sales tax payable. Quantum of sales tax payable does not change in the above scheme of pre-payment. Demand set aside - Decided in favour of assessee. 2015 (10) TMI 1726 Manufacture - Activity of converting /assembling Gas Generating Sets (Gensets ) comprising of engine (prime mover) coupled with Alternator on common base frame into Power Pack after certain processes - Held that:- it is seen from the record that the process undertaken by the Appellant on the imported Gensets for the industrial customers. Thus, the industrial customer would buy Power Pack rather than Gensets. The imported Gensets and Power Pack are known separately in the trade and parlance. It is also noted that the use of both the items are for different purposes. - the process undertaken by the Appellant would constitute manufacture as it emerges a new commodity in the market. - Decided against the assessee. Change is classification is required to not - Held that:- the identical issue was raised before the Hon ble Supreme Court in the case of Laminated Packings Pvt. Ltd [1990 (8) TMI 141 - SUPREME COURT OF INDIA]. It has been observed that the goods belongs to the same entry is also not relevant because even if the goods belong to the same entry, the goods are different identifiable goods known as such in the market. If that is so, the manufacture occurred and if manufacture takes place, it is dutiable. The said decision would squarely apply in the present case and the Power Pack is rightly classified under sub-heading No.85022090 of Central Excise Tariff Act, 1985. - Decided against the assessee. Extended period of limitation - revenue neutral exercise - Held that:- Hon ble Supreme Court in series of cases, has held that the extended period of limitation, would not be invoked in the case of revenue neutrality as the CENVAT Credit is available against the demand of duty. - Benefit of period of limitation allowed. Appellant acted under a bonafide belief that the activities undertaken by them would not amount to manufacture. It is the case of interpretation of the provisions of law and therefore, the imposition of penalties on the Appellants are not warranted. - confiscation and penalties set aside. - Decided partly in favor of asessee. 2015 (10) TMI 1725 Manufacturing activity or not - activity of blending to increase the viscosity of the product- Appellants had mixed Guar Dal Flour/Powder (75%), Guar Dal Powder/Saw Dust (5-10%) and TKP (10-15%) in a blender - Guar Dal Powder, known as Guar Gum - classification under Sub Heading No.1301.10 - Imposition of penalty - Held that:- Appellants received the Guar Dal Powder which is derived from seed of Guar plant. The seed of Guar plant in powder form known as Guar Dal Powder, was received by the Appellant. The Appellant had undertaken a process of the said powder added with other product and TKP. It is also mixed with Methonol and Glycol in a minimum quantity. There is a chemical reaction during mixing of these items and the viscosity of the final product ranges from 0 to 5000 CPH as per requirement of end use of the product. The chemical reaction in the Blender is expressing the magnitude of internal friction in a fluid and there is a change of properties as per end use of the goods. Thus, there is a change of character of the impugned product. There is change of character of the goods of different properties as per viscosity used in various industries. - the activities undertaken by the Appellant would amount to manufacture. - Decided against the assessee. Classification - Held that:- the Guar Dal Flour/Powder was modified by chemical reaction in order to improve their properties as per end use of the product in various industries. So, it is rightly covered under Chapter 13 of the CETA. Extended period of limitation - bonafide mistake - Held that:- Considering the overall facts and circumstances of the case, we are of the view that the extended period of limitation cannot be invoked. In the case of M/s Ravi Gum Industries [2007 (10) TMI 272 - CESTAT, AHMEDABAD], the Appellant is a job worker. As the matter is related to interpretation of manufacturing and classification of the goods, imposition of penalty on the Appellants cannot be sustained. Demand of duty confirmed for the normal period of limitation with Interest - Penalty waived - Decided partly in favor of assessee. 2015 (10) TMI 1724 Denial of refund claim - Duty was paid whereas the activity was not amount to Manufacture - period of limitation - processing operations like punching, welding, trimming, drilling of holes, level cutting of edges and galvanizing in relation to erection of transmission tower - Held that:- appellant s case is squarely covered by the decision of the Tribunal in the case of CCE, Hyderabad vs. Deepak Galvanising & Engg. Indus. P. Ltd. reported in [2008 (4) TMI 105 - CESTAT Bangalore] Instant case relates to a period prior to 1.3.1988. Further, merely because specific entry was included viz. heading 73.08 that ipso facto does not mean that the process amounts to manufacture. The Revenue has to further prove that the process undertaken amounts to manufacture and also that the resultant products are marketable. Therefore, keeping in view all the facts and circumstances, we are of the considered view that the process undertaken by the appellant, viz. punching, welding, trimming, drilling of holes, level cutting of edges and galvanizing do not amount to manufacture. - activity carried out by the petitioner is not a manufacturing activity and the petitioner is entitled to refund of the duty paid during 1st March 1986 to 31st December 1986, then the refund claim of the petitioner shall be disposed of as per the provisions of Section 11B of the Central Excise Act. The adjudicating authority did not decide the question of refund as it has held the process as manufacture and liable to duty. Processes undertaken by the appellant do not amount to manufacture, therefore, we allow the appeal of the appellant and remand the matter back to the adjudicating authority to decide the refund claim of the appellant as per the directions of the Hon’ble High Court under Section 11B of the Central Excise Act, 1944 - Decided in favour of assessee. 2015 (10) TMI 1702 Duty demand - Illicit diversion of goods - Non availability of original ARE-1 - Held that:- consignment of the garments was available in the factory and the Jurisdictional Range Officer after inspecting the same has given a report that those goods are in accordance with the description given in the invoices, but still he has said that it cannot be proved that the goods available in the factory are the same as the goods cleared under ARE-1 No. 30/2011-2012 dated 10/5/11. While it is true that the appellant did not intimate the return of the goods within 24 hours, the fact remains that they have produced Transport company's GR and as such no inquiry has been conducted with the transporter. Moreover, there was a consignment of Kaftans available in the factory which appeared to be covered by the export invoice. In view of these circumstances, I hold that the duty cannot be demanded. Only lapse of the appellant is that he did not intimate to the department in time which cannot lead to demand of duty. - impugned order is set aside - Decided in favour of assessee. 2015 (10) TMI 1701 Denial of refund claim - Unjust enrichment - Held that:- Appellant paid certain dues under protest and reflected the same in the books of accounts as receivable. Chartered Accountant certificate produced by the appellant confirms that the amount paid by the appellant was accounted for in the books of accounts as deposits and receivable. The sale price of the finished goods had shown no variation before the period of refund and after the period of refund. In view of the evidences produced by the appellant, the initial burden, that the amount claimed as refund has not been recovered from the consumers, has been discharged by the appellant. - duty paid under protest and shown as amount receivable in the books of accounts; when the sale price of the finished goods as claimed has not shown any change; it has to be held that doctrine of unjust-enrichment is not applicable in the present case - Decided in favour of assessee. 2015 (10) TMI 1700 Denial of CENVAT Credit - Whether appellant has correctly availed cenvat credit with respect to appellant’s own goods received back as rejected goods for repairs, rectification etc. - Held that:- Rule 16(1) of the Cenvat Credit Rules, 2004 is not subject to the provisions of Rule 16(2) or maintenance of certain prescribed records. Rule 16(1) conveys that where any finished goods are received for remaking, refining, reconditioning or for any other reason than an assessee shall state the particulars of such receipt in his record and shall be entitled to CENVAT credit of duty paid on the returned goods. Since these conditions prescribed in Rule 16(1) are fulfilled, therefore, the credit taken can not be denied. - So far as Rule 16 (2) is concerned the same is procedural and does not indicate maintenance of special records. In Para 7 of the reply to the show cause notice, as reproduced by Commissioner (Appeals) in Para 9 of his OIA dated 07.11.2012, appellant has argued that the repaired containers or rejected and repaired containers or waste of such returned containers are all cleared on payment of duty. It is not the case of the Revenue that metal containers after repair were cleared clandestinely without payment of duty by the appellant. There is no shortage of metal containers brought out by Revenue. CENVAT credit can not be denied on procedural lapses when the rejected containers were duly reflected in the CENVAT credit account and shown utilised. One to one correlation of rejected containers received with subsequent clearances is not prescribed under Rule 16 of the Cenvat Credit Rules. - Decided in favour of assessee. 2015 (10) TMI 1699 CENVAT Credit - whether 5% amount under Rule 6 of the Cenvat Credit Rules, 2004 is required to be paid by the appellant on Bagasse cleared by the appellant at Nil rate of duty when CENVAT credit is taken on the inputs - Held that:- It is observed from reply dated 28.06.2011, filed by the appellant to the show cause notice that sugarcane is pushed into a cane crushing Mill to get Bagasse waste and sugarcane raw juice. It has not been brought on record as to what inputs, on which credit is taken is used during the process of crushing sugarcane into waste. The credit on chemicals etc. is taken for converting sugarcane raw juice to commercial sugar or molasses which are cleared on payment of duty. In the absence of any evidence on record, to show credit taken inputs used in the making of Bagasse, the ratio of High Court s order in the case of CCE, Ahmedabad-III vs. Nirma Limited (2012 (10) TMI 138 - GUJARAT HIGH COURT) will be applicable. - The assessee in the process of manufacturing soap uses acid slurry and in the process Spent sulphuric acid gets generated as a bye product. Though the products may be different, the ratio laid down by this Court would apply to the facts of the present case. We, therefore, do not think that the Tribunal committed any error in holding against the revenue. - The order passed by CESTAT Delhi, in the case of Indian Potash Limited vs. CCE (2012 (12) TMI 347 - CESTAT, NEW DELHI) is on the same issue - Decided in favour of assessee. 2015 (10) TMI 1698 Demand of excise duty - goods cleared under Rule 173H and Rule 57F (4) - Instead of repairing or reprocessing, appellants have cleared the excisable goods by using the inputs which were available in from their stock - held that:- Appellants have set up integrated aluminium plant where they have the facility of manufacturing of aluminium products from primary ore stage to the finished goods viz. aluminium Ingots, Rods, Sheets. They also carry out re-processing or remelting of the scrap and this is only a miniscule activity and done only when their finished goods are returned by the suppliers. I also find that the finished goods manufactured out of returned goods were subsequently cleared on payment of duty as normal clearance. D3 declaration intimation was duly filed upon the officers visited the unit on 10.2.2000 as recorded in para-2 of the SCN. It is found that from the production records that appellants have cleared the goods under rule 173H from the fresh stock. SCN should have been issued within 6 months whereas the department issued SCN on 10.2.2004. Hence there is no suppression of facts with intention to evade payment of duty. Therefore, demand raised on the goods cleared under Rule173H is hit by limitation and liable to be set aside and equal penalty imposed on the appellant is also liable to be set aside. - appellants are liable for under penalty under Rule 173Q as they have violated the procedure. Therefore, appellants are liable for penalty. In view of the foregoing discussion, demand and Section 11AC penalty is set aside - Decided partly in favour of assessee. 2015 (10) TMI 1697 Remission of duty - claim of remission of duty was rejected by the ld. Commissioner on the grounds that the storage tank was not filled to its full capacity, the storage tank was duly tested before put to use and the reports of other authorities was not provided to the ld. Commissioner to felt him satisfied under Rule 21 of the Central Excise Rules, 2002 to sanction the claim of remission of duty - Held that:- From the facts of the case, it is not coming out how the appellant was negligent in storing the molasses. It is not a case where appellant has stored more quantity than the capacity of the storage tank. So the appellant could be negligent. Moreover, before putting the storage tank into use, the storage tank was duly tested. Therefore, the appellant has taken all precautions before storing the molasses in the said storage tank. No prudent men will invite accident to incur losses. Revenue had not come with any tangible findings that appellant was negligent by not following the precautions. In fact, in show cause notice, it is recorded that the storage capacity was more than the quantity stored. Moreover, storage tank was duly tested before put to use. Then what more precautions were required by the appellant to avoid the accident. In the absence of any of these requirements it cannot be said that appellant was negligent while storing the molasses in the storage tank. - Impugned order set aside - Decided in favour of assessee. 2015 (10) TMI 1696 Demand of interest of confirmed duty u/s 11AA - period of limitation - Held that:- Demand has been confirmed by the adjudicating authority on 8.10.98 and 4.1.2000. The demand was confirmed under Section 11A of the Central Excise Act whereas appellants paid the amount only during 2004 and 2005 that too in installments. Appellant's contention that interest cannot be demanded beyond the period of one year is not justified as on perusal of letter issued by the Range Superintendent in OC No.268/2005 dt.1.7.2005, I find that the Superintendent has only quantified the interest as per the Orders-in-Original and only requested to pay the interest. This letter cannot be construed as demand of interest. I further find that SCN No.4/98 dt.2.3.98 was issued wherein the appellants have been asked to show cause before Asst. Commissioner of Central Excise as to why Central Excise duty of ₹ 3,68,850/- should not be demanded as per Section 11A of Central Excise Act with appropriate interest as per the provisions of Section 11AA of the said Act. - Since the SCN itself raises demand of Central Excise duty under Section 11A along with interest, there is no question of any further demand of interest. The Superintendent only quantified the interest as per the adjudication order. - Decided against assessee. 2015 (10) TMI 1695 Reversal of modvat credit - credit availed on 57E certificates issued by the Customs for payment of CVD after the amendment of Section 57F (4A) w.e.f16.3.95 - ineligible document issued by the supplier who is not registered with Central Excise - Held that:- appellants have availed modvat credit of ₹ 1,14,005/- on three invoices all dated 6.8.96 issued by M/s. Bihar Alloys Steels Ltd. On perusal of the letter OC No.535/96-97 dt.30.7.96 issued by the jurisdictional Superintendent Range IX F addressed to the appellant the Superintendent informed the appellant that supplier M/s. Bihar Alloy Steels Ltd. is availing notification No.27/92-(CE-NT) dt.9.10.92 and the supplier has authorised M/s. Global Steels Pvt. Ltd. who actually fabricates the goods for M/s. Bihar Alloys Steels Ltd. and complied with all Central Excise formalities under Central Excise and Salt Act, 1944. The Range Superintendent also certified that even though M/s. Bihar Alloy Steels Ltd. is not registered under his range and does not have a e.c.c. code number, they are eligible to remove the goods under their invoices based on which they party buying the said goods can take modvat credit. - invoice issued by the supplier who is exempted from taking registration is a valid document. Further, I find that there is no dispute on the payment of Central Excise duty on the inputs. Accordingly, the appellants are eligible for credit - demand of ₹ 19,50,097/-is upheld. Demand of reversal of modvat credit of ₹ 1,14,005/- is set aside - Decided partly in favour of assessee. 2015 (10) TMI 1694 Demand of differential duty - Fixation of Annual Production Capacity - Held that:- Facts of the present case are squarely covered by the decision of Tribunal in the case of Alwar Processing Pvt. Limited (2014 (12) TMI 156 - CESTAT NEW DELHI). It is noted that the Tribunal has followed the decision of the Hon’ble Gujarat High Court in the case of Krishna Processors (2012 (11) TMI 954 - GUJARAT HIGH COURT). In view of that, the impugned order cannot be sustained - Decided in favour of assessee. 2015 (10) TMI 1693 Denial of CENVAT Credit - Medical services - Held that:- In the absence of any documentary evidence it cannot be said that such services of Male nurse are provided only in the residential colonies. On the contrary, as per the provisions contained under Section 45 of the Factories Act 1948 read with Gujarat Factories Rules 1963, it is obligatory on the part of a specific manufacturer to maintain first Aid Appliances and ambulance alongwith trained medical staff to take care of certain situations. Once the facility is required to be provided statutorily, it cannot be said that the same is not be in relation to manufacture. Similar views have been taken by the court’s in relation to Pollution Control Activity where these services are required to be provided statutorily under the Pollution Control Act and the Factories Act. - Cenvat Credit with respect to medical facilities provided statutorily under the Factories Act 1948 will be admissible - Decided in favour of assessee. 2015 (10) TMI 1691 Denial of CENVAT Credit - Suppression of facts - whether cenvat credit on certain inputs, sent by the appellant to the job workers under Rule 4(5) (a) of the Cenvat Credit Rules, 2004, is admissible to the appellant or not - Held that:- Processing loss of 10% is claimed by the appellant with respect to only M/s. Vinayak Chemicals when no such processing loss is taking place in the case of another job worker M/s. Atlas Pallet Industries for the same process. This aspect has been discussed by the first appellate authority in Para 29 of the Order-in-Appeal dated 15.9.2012. The appellant has not produced any Scientific Literature or certificate from a Chartered Engineer to support their claim that in the process of conversion of Caustic Potash Flakes into Potash Pallets there is a loss of 10% as claimed by the appellant. In the absence of any such documentary evidence, there is no reason to interfere with the order passed by the first appellate authority and the same is required to be upheld in so far as denial of CENVAT credit and interest is concerned. Appellant was sending the inputs through challans under Rule 4 (5)(a) of the Cenvat Credit Rules, 2004, therefore the activities undertaken by the appellant and job-workers of the appellant and the processes being carried out with yield were known to the department. - it can not be said that there was any suppression/ mis-statement on the part of the appellant with intent to evade payment of duty. Accordingly, it is held that penalty imposed upon the appellant under Rule 15 (2) of the Cenvat Credit Rules, 2004, read with Section 11AC of the Central Excise Act, 1944 is required to be set-aside. - Decided partly in favour of assessee. 2015 (10) TMI 1690 Duty demand - Shortage of finished goods - admissibility of cenvat credit on duty paid on the inputs received from 100% EOU - SAD - Credit on education cess - Held that:- Appellant has relied upon the judgment of CESTAT Mumbai in the case of Emcure Pharmaceuticals Limited vs. CCE, Pune (2008 (1) TMI 147 - CESTAT, MUMBAI). No contrary judgment has been brought on record by the learned AR with respect to non admissibility of cenvat credit of education cess paid during the relevant period. Respectfully following the case law of Emcure Pharmaceuticals Limited vs. CCE Pune, I hold that cenvat credit of education cess of ₹ 60,291/- is admissible to the appellant - credit of ₹ 2,02,993/- with respect to SAD is admissible to the appellant. It is also observed from the case records that appellant has paid the entire amount of duty/ cenvat credit demanded in the show cause notice along with 25% of penalty. In view of the cenvat credit allowed with respect to education cess and SAD, the amount of remaining cenvat credit disallowed and quantum of 25% penalty is required to be reworked out. The same should be carried out by the adjudicating authority within a month from the date of receipt of this order under intimation to the main appellant. - However, penalty imposed is reduced - Decided partly in favour of assessee. 2015 (10) TMI 1689 Admissibility of CENVAT Credit - Capital goods - Invocation of extended period of limitation - Held that:- Issue was finally resolved by the Larger Bench in the case of Vandana Global Ltd Vs CCE Raipur (2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)). Under this case law, published in 2010, it was held that the CENVAT Credit on inputs used in the making of support structures for capital goods is not admissible. As the issue of admissibility of CENVAT Credit on these items in the manufacture in the present proceedings was disputable and different opinions were given by CESTAT and Courts, extended period of limitation for demanding duty is not applicable. Appellant has correctly relied upon the judgment of Megafine Pharma Ltd Vs CCE & ST, Daman (2014 (7) TMI 982 - CESTAT AHMEDABAD) to argue that the extended period is not invokable. - extended period cannot be invoked in situations for an earlier period where a part of dispute is subsequently decided by the Larger Bench of the CESTAT. The very fact that the issue is decided in 2010 by Larger Bench in the case of Vandana Global Ltd Vs CCE Raipur (supra) clearly convey that there was a confusion in the mind of the manufacturers regarding the admissibility of CENVAT Credit on disputed items. Appellant did not had any intention to evade payment of duty and accordingly, the extended period is not invokable. - Decided in favour of assessee. 2015 (10) TMI 1688 Duty Demand under Rule 96ZP - Assessee contends that adjudication proceedings was completed in 2006, long after omission of Section 3A read with Rule 96ZP in 2001 - Held that:- adjudication order was passed in 2006, long after the omission of Section 3A and the Tribunal following the decision of the Gujarat High Court in the case of Krishna Processors vs. UOI - [2012 (11) TMI 954 - GUJARAT HIGH COURT] has taken a view that the said proceedings would not sustain. In view of the decision of the Tribunal in the case of Alwar Processors Pvt. Limited (2014 (12) TMI 156 - CESTAT NEW DELHI). We set-aside the impugned order - Decided in favour of assessee. 2015 (10) TMI 1687 Availment of Cenvat Credit of service tax - GTA services - provision of Rule-3 of Cenvat Credit Rules, 2004, read with Rule-9 of Cenvat Credit Rules - Held that:- Provision of Rule-3 of Cenvat Credit Rules, 2004, read with Rule-9 of Cenvat Credit Rules were sought to be applied for denying to the Cenvat Credit on the ground that TR-6 challan on the ground is not a proper document for availing Cenvat Credit. - authoritative Judicial pronouncement (unreported) & Jurisdictional High Court on the same issue, I hold that the impugned order is unsustainable and is liable to be set aside. - Decided in favour of assessee. 2015 (10) TMI 1686 Admissibility of CENVAT Credit - Capital goods - Invocation of extended period of limitation - Held that:- Once a certificate from an appropriate and competent authority has been furnished by the Appellant, then it is not open to the Adjudicating authority to question that certificate unless another opinion from an expert is obtained which is contrary to the certificate given by the Appellant. The stand of the Appellant before the Adjudicating authority right from the beginning is that the inputs are used in the manufacture of the capital goods. There is no evidence on record that the use of such inputs was made by the Appellant in creation of support structures for the machinery. The claim of the Appellant is supported by the Chartered Engineer’s certificate and therefore, the CENVAT Credit of input used in the manufacture of capital goods, cannot be denied - In view of the confusion on the issue, Appellant had a bonafide belief that credit on the inputs was admissible and the extended period cannot be invoked as the same issue was settled by the Larger Bench judgment in the case of Vandana Global Ltd Vs CCE Raipur (2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)). Under the circumstances, the extended period cannot be invoked against the Appellant and no penalty can be imposed under Section 11AC of Central Excise Act, 1944. - Decided in favour of assessee. 2015 (10) TMI 1685 Valuation of the goods - Job works - benefit of Notification No. 38/97-CE dated 27/06/1997 and Notification No. 9/98-CE dated 02/06/1998 - Held that:- Appellant was receiving 80% by weight LDPE and 20% by weight LLDPE. However, while manufacturing the goods they were using 50% of LDPE and 50% of LLDPE. The additional LLDPE required was purchased from the local market and the excess quantity of LDPE received was detained by the appellant. Since the prices of LDPE and LLDPE are different and LDPE is comparatively costly material the difference in value has to be taken as additional consideration and hence will form part of the job-work. Accordingly, we hold that the difference in price of LDPE and LLDPE is required to be added for computation of the assessable value. - When the disputed period is 01/01/1998 to 31/03/1998 there is no reason to taken into account the value of LLDPE for the earlier or subsequent period. Either the appellant has to provide one-to-one co-relation of each consignment used in the manufacture of the goods or the average value during the period of three months required to be added. Since on-to-one co-relation of the value are not available, we order that the method adopted by the Revenue is correct and accordingly the value computed as also the turnover for the year 1997-98 is correct and the appellant will not be eligible for the benefit of Notification No. 9/98-CE dated 02/06/1998 for the subsequent period i.e. 1998-99. This is a clear case of suppression of facts and also willful mis-statement. The appellant have not declared that they are replacing the LDPE received from their customer by LLDPE, which is a cheaper material and it was only during investigation the same could be found out. We therefore, hold that extended period of limitation has been correctly invoked and penalty under Section 11AC is correctly imposed. - Decided against assessee. 2015 (10) TMI 1684 Refund claim - Reversal of CENVAT Credit - Exemption from duty in terms of Notification No.6/2002 - Capital goods - Held that:- In terms of the provisions of Rule 6(4) of CENVAT Credit Rules, 2002, no CENVAT credit is available on capital goods which are used exclusively in the manufacture of exempted goods. The issue of availability of credit is to be decided at the time of receipt of the capital goods. As such the issue to be decided is as to whether the capital goods, which were received by the appellant, when their final product was exempt, would be eligible for the purpose of CENVAT credit or not. - appellant had not even switched to manufacture of some dutiable products. It is only by operation of law that the exempt products become subsequently dutiable. Inasmuch as the availability of credit of duty paid on the capital goods is required to be judged at the time of receipt of the capital goods, subsequent becoming of goods as dutiable on account of withdrawal of exemption would not advance the appellant's case of claim after such change in law. The appellant having used the capital goods for a period of more than four years for manufacture of exempted final products are admittedly not entitled to the CENVAT Credit of duty paid on such capital goods. As such, I find no reasons to interfere in the impugned orders of the lower authorities. - Decided against assessee. 2015 (10) TMI 1683 Availment of CENVAT Credit - Cenvat Credit was denied on the ground that the appellant had not purchased to goods directly from the registered dealer and received through the intermediaries - Held that:- Advocate submits that the decision of Tribunal was upheld by the Hon’ble Gujarat High Court in the case of Commissioner of Central Excise, Ahmedabad-II vs Transformers & Rectifiers (India) Ltd [2012 (11) TMI 562 - GUJARAT HIGH COURT]. - Following the decision of the Tribunal in the appellant’s own case, which is upheld by the Hon’ble Gujarat High Court, the impugned order is set-aside. - Decided in favour of assessee. 2015 (10) TMI 1682 Maintainability of the appeal - Waiver of pre deposit - Section 35F - Mandatory pre deposit - Held that:- purported reversal of credit of ₹ 5,63,66,047/- cannot be considered, as the appellant has issued invoices and their customers would have already taken credit of the same. We find these issues will have to be gone into detail at the time of final hearing and cannot be decided at this stage. - keeping in view the provisions of Section 35F as enumerated above, as also the amount confirmed in the impugned order, the appellant is directed to deposit 7.5% of the duty involved minus the amount of ₹ 3,44,773/- already reversed. Since the appellant has not deposited the said amount, the appeal is not maintainable. However, in the interest of justice, the appellant is directed to pay the said amount within a period of four weeks - Partial stay granted. 2015 (10) TMI 1681 Duty demand - Valuation - Inclusion of delivery charges and road freight subsidy charges collected from the customers - Held that:- In an identical issue the Tribunal in the appellant s own case relating to Mangalore Central Excise reported in [2006 (7) TMI 495 - CESTAT, BANGALORE] has allowed their appeal and the Hon'ble Supreme Court dismissed the civil appeal filed by Revenue as reported in [2007 (5) TMI 600 - SUPREME COURT] - adjudicating authority demanded excise duty on delivery charges and road freight subsidy charges collected from the customers and the place of removal is depot and the appellants are governed by the administrative price mechanism which was in vogue during this period and these charges are not includible in the assessable value of petroleum products. - Accordingly, the impugned order is set aside - Decided in favour of assessee. 2015 (10) TMI 1680 Valuation - Calculation CENVAT credit reversed under Rule 6(3) and recovered from the customers – The Department, was of the view that the assessable value for the purpose of payment of the amount under Rule 6(3) would also include the amount of 5% / 10% of the sale price being recovered by the appellant from the customers and the appellant would be liable to pay an amount @ 5% / 10% on the extra amount of 5% / 10% being recovered from the customers - Difference of opinion - Majority order - Held that:- The value of the goods works out to equal in both the cases i.e. dutiable / exempted goods. 5% / 10% is payable as per Rule 6(3) of the value of the said goods which the appellant has already paid. Therefore, the analogy drawn by the Revenue is totally misconceived that the appellant is required to pay 5% / 10% of the sale price of goods as per Rule 6(3) of the Cenvat Credit Rules 2004. - Appellant is paying 5% / 10% of the value of the goods to the Revenue as per Rule 6(3) and not claiming any deduction of 5% / 10% on the said amount. Therefore, appellant is not required to pay 5% / 10% to the Revenue on the amount recovered from the buyer on account of amount paid to the Revenue as per Rule 6(3) of the Cenvat Credit Rules 2004. In these circumstances, I take support of the decisions in the case of Unison Metals Vs. CCE-[2006 (10) TMI 171 - CESTAT, NEW DELHI] and in the case of CCE Vs. Kisan Sahkari Chini Mills Ltd.-[2001 (8) TMI 119 - SUPREME COURT OF INDIA] to hold that the recovery of 5% / 10% amount from the customer which already stand paid to the Department cannot be held to be liable to be added in the assessable value of the goods. - Decided in favour of assessee. 2015 (10) TMI 1679 Denial of CENVAT Credit - Bar of limitation - Held that:- Materials were used for fabrication of machines namely, Winder Frame, Air Handling System, Cooling System, Dryer Structure etc. It is contended that weight, size and nature of the machines was such that its fabrication/ fixing to structures was essential with nuts and bolts because the attachment is not permanent and what is attached can be easily detached It is categorically stated that these items were used to install the machines at their factory. The appellant claimed that these items are accessories used in the plants and machineries. In terms of Clause (iii) of Rule 2(a) of Cenvat Credit Rules, 2004, “Capital goods” covers components, spares, accessories used in the goods specified in Clause (i) and Clause (ii) irrespective of any heading. The department failed to produce any material that these items were used as building materials. But, the appellant had given detailed use of these items in fabrication of machines in reply to show cause notice, which was not disputed by the adjudicating authority. Demand is barred by limitation. The appellant availed credit on these items and declared in their ER-1 returns. These items were used in various machineries. This fact was not refuted by the department. No material was available that the appellants suppressed the fact with intent to evade payment of duty. - impugned order can not be sustained on merits as well as on limitation. - Decided in favour of assessee. 2015 (10) TMI 1678 Denial of refund claim - Notification No.10/97-CE dt. 1.3.97 - Denial of exemption claim - Unjust enrichment - Held that:- Adjudicating authority in his order partly sanctioned the refund and held that they are eligible for the exemption notification No.10/97-CE dt. 1.3.97 in respect of goods cleared to M/s/BEML but credited same to the Consumer Welfare Fund on the ground that appellants have not produced any evidence that incidence of duty was not passed on to M/s.BEML. Appellants availed the exemption under the said notification and cleared the goods and it was only during audit verification that the objection was raised on the admissibility of the notification and the appellant had paid the amount. Therefore, the amount deposited on account of audit objection certainly to be considered a deposit only and the question of unjust enrichment does not arise in this case. Denial of refund of amount paid in respect of clearance of goods to M/s.NAL, we find the adjudicating authority has rejected the refund claim by denying the said exemption notification. On perusal of the certificate issued by NAL, it is evident that it is duly signed by the Senior Controller of Administration/Sr. Deputy Secretary and M/s.NAL is directly under the administrative control of Department of Space. Therefore, NAL correctly falls under the public funded research institution under category (a) of the condition of the notification. The certificate is duly signed by an officer at the rank of Senior Deputy Secretary and it clearly confirms that the goods were supplied for R&D purpose. - appellants are eligible for full exemption under notification No.10/97 in respect of goods cleared to NAL and the duty deposited during audit is liable to be refunded. We also hold that, as discussed above, the question of unjust enrichment is not applicable. - Decided in favour of assessee. 2015 (10) TMI 1677 Determination of annual capacity of production - Rule 96ZO(2) - Held that:- From the Rule, it can be seen that Rule does not envisage any application to be made by the manufacturer or the assessee. In this case, the appellant had requested the Deputy Commissioner to adjudicate the matter after personal hearing and had also stated that they are eligible for abatement. The proper course to be adopted by the Deputy Commissioner was to refer the matter to Commissioner for consideration. When Rules do not require any application to be made, denial of abatement on that ground cannot be sustained. - Therefore, in this case, the proceeding should not have been continued since it is not legal to continue with the same. - Decided in favour of assessee. 2015 (10) TMI 1676 CENVAT Credit - Penalty u/s 11AC - Factory - department contends that only the bakery/pastry division wherein the excisable goods are getting manufactured shall be regarded as factory of production as per definition of ‘factory' provided under section 2(e) of the Act and the other premises are not connected to the manufacture of excisable goods and hence, cannot be considered as factory - Held that:- Penalty under Section 11AC of the Central Excise Act, 1944 is imposable when there is any fraud, collusions, suppression or mis-declaration of facts on part of the appellant with intent to evade payment of duty. In the present case, I find that there is no suppression or mis-declaration of facts on part of the appellant with intent to evade payment of duty or to avail ineligible CENVAT Credit. Hence, I set aside the penalty imposed under Section 11AC of the Central Excise Act, 1944 read with Rule 15(2) of Cenvat Credit Rules, 2004 read with Rule 25 of Central Excise Rules, 2002 on the appellant. Since the appellant has reversed the credit wrongly availed on pointing out by the department, I direct the appellant to pay the interest till the date of duty was deposited or CENVAT Credit reversed. - Decided partly in favour of assessee. 2015 (10) TMI 1675 Remission of duty - Destruction of expired goods - Held that:- Authorised Representative on behalf of the Revenue submits that the letter dated 17.02.2014 of the Assistant Commissioner of Central Excise & Customs cannot be treated as an appealable order. He submits that in both the cases the duty involved is more than ₹ 5 lakh and therefore, Assistant Commissioner is not a competent authority to decide on the remission of duty, if any. On a query from the Bench, both the parties agree that the letter dated 17.02.2014 is not maintainable and the impugned order is liable to be set-aside. - Decided in favour of assessee. 2015 (10) TMI 1674 SSI exemption - brand name of others - Benefit of Exemption Notification No.8/2003-CE, dt.01.03.2003 - Imposition of interest and penalty - Held that:- Department failed to establish the owner of the brand name of other person and no person came forward to claim the ownership of the brand name 'VIMCRO'. It is seen from the record that the Director of M/s Vimal Microns Ltd claimed the ownership of the brand name in December 1995. The period of dispute in the present appeal is April 2004 to March 2005. We find that the Respondents had not seriously disputed this fact and therefore, the denial of SSI exemption on merit is justified. - cum-duty benefit and MODVAT Credit were not extended, while quantifying the demand of duty. We find that the Commissioner (Appeals) had not given detailed findings on the issue of limitation. The learned Authorised Representative for the Revenue submits that the Show Cause Notice dt.23.11.2005 is in respect of M/s Vimal Microns Ltd. In our considered view, the Commissioner (Appeals) should have examined the issue of limitation in detail and the other claims of the Respondent. - we uphold the demand of duty alongwith interest on merit. - Appeal disposed of. 2015 (10) TMI 1673 Duty demand - Penalty u/s 11AC - Job works - Held that:- On perusal of the adjudication order it is seen that the adjudicating authority proceeded on the basis that the job workers are hired labourers and the assessee herein, is manufacturer of the goods and liable to pay duty as per the provisions of Section 2(f) of the Central Excise Act, 1944. We are unable to accept such a finding of the adjudicating authority for the reason that there is no allegation in the show cause notice that the job workers are hired labourers. In any event, it is clearly coming out from the show cause notice that the appellant sent the material to the job workers, who issued the bills to the assessee. So, there is no material available that the job workers were the hired labourer of the assessee. - demand of duty alongwith interest can not be sustained. Accordingly, the demand of duty and interest is set-aside - Decided in favour of assessee. 2015 (10) TMI 1672 Denial of CENVAT Credit - Imposition of penalty - Whether the appellant is liable to penalty for clearance of goods during the period July 2003 to March 2004, without payment of duty - Held that:- The appellants are not challenging the duty element but submit that as they were under a bona fide belief that with the death of proprietor of the unit, the manufacturing unit had stopped working, they cleared the goods without payment of duty. It is also their stand that they did not avail any benefit of CENVAT credit or duty paid on the inputs and used in the manufacture of such exempted goods. I find that inasmuch as all the goods were cleared on paper transactions and all the documents were maintained by the appellant, no malafide can be attributed to them. There could be a bona fide belief on their part that the new unit with a new proprietrix is entitled to fresh exemption. As such I do not consider this to be a case ofmala fide intention and by extending the benefit of doubt to the appellant, set aside the imposition of penalty upon them - Decided in favour of assessee. 2015 (10) TMI 1671 Denial of CENVAT Credit - Utilization on the basis of Xerox copy of invoices - Held that:- in the absence of any dispute or doubt about the receipt, consumption and proper utilization of the inputs in the appellants’ factory, the credit cannot be denied to them merely on the ground of technicality. Accordingly, I set aside the impugned order - Decided in favour of assessee. 2015 (10) TMI 1670 Denial of CENVAT Credit - Penalty u/s 77 & 78 - Denial on the ground that appellant should have reversed it and transferred it under a proper invoice - Held that:- Stock transfer should not have taken place when a proper invoice is not issued, appropriate action should have been taken against Mumbai unit and because of merger no action could have been initiated against Mumbai unit since it ceased to exist. Since there is no dispute that the Bangalore unit had reversed the credit while transferring the inputs, the impugned order taking a view that the credit has to be denied and demanded cannot be sustained. At the same time it has to be taken note of fact that the procedure followed by the appellant for transferring the stock of inputs just by reversal without raising a proper invoice to their Mumbai Unit was not in accordance with the law. Since the denial of credit cannot be sustained, the demand for CENVAT credit availed with interest and penalty under Section 78 on the appellant cannot be sustained. Further, penalty of ₹ 10,000/- has been imposed under Section 77 of Finance Act, 1994 for contravention of Rule 3(5) and Rule 9(1)(f) of CENVAT Credit Rules, 2004. In my opinion, this penalty is sustainable since the appellant failed to issue a proper invoice and that was required in accordance with law. - demand for CENVAT credit and interest thereon and penalty under Section 78 are set aside and penalty of ₹ 10,000 imposed under Section 77 is upheld. - Decided partly in favour of assessee. 2015 (10) TMI 1669 Denial of CENVAT Credit - Imposition pf penalty - Held that:- only ground to deny the Cenvat credit is that the description of the goods on the invoice issued by the first stage dealer does not match with the invoice/manufacturer but no investigation has been conducted at the end of first stage dealer/manufacturer of the goods. Moreover, it is not the allegation against the appellant that the appellant has not received the goods and has not paid duty thereon. In these circumstances, whatever duty has been paid by the appellant on the said goods, appellant is entitled to take Cenvat credit. Therefore, we hold that appellant has taken Cenvat credit correctly. Consequently, impugned order is set aside. - Decided in favour of assessee. 2015 (10) TMI 1668 Denial of CENVAT Credit - Capital goods - Bar of limitation - Held that:- Larger Bench of the Tribunal in the case of Vandana Global Ltd vs CCE, Raipur -[2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) ] held that goods like cement and steel items used for laying foundation and for building supporting structure, cannot be treated either as input or capital goods or inputs to the final products and therefore no credit of duty paid on the said item can be allowed under the Cenvat Credit Rules. In my considered view, the Commissioner (Appeals) should have examined utilisation of all the items in detail alongwith other issues like limitation. - Impugned order is set aside - Decided in favour of Revenue. 2015 (10) TMI 1667 Waiver of pre deposit - Imposition of penalty - Held that:- It appears that during the course of audit, it was learnt that M/s. Ind Synergy Ltd. did not remit the Excise Duty to the full extent mentioned in the invoices covering transaction of sale to the appellant, Therefore, proceedings were initiated against M/s. Chopra Brothers, the appellant herein and other traders/dealers, manufacturer of the billets and against M/s. Jai Sidh Yogi Steel Rolling Mills. These proceedings culminated in the primary adjudication order dated 4-10-2010 whereby the specified penalty was imposed on M/s. Ind. Synergy Ltd. and penalty of ₹ 39,910/- was imposed on the appellant, M/s. Chopra Brothers. Penalty was also imposed on the other dealers. - Since it is not alleged that the appellant had passed on a credit of Duty in excess what was mentioned in invoices under which it had purchased billets and sold these to M/s. Jai Sidh Yogi Steel Rolling Mills, imposition of penalty on the appellant is illegal. Imposition of penalty without establishing any culpability cannot be sustained. The order passed by the primary Authority as confirmed by the Appellate Commissioner, New Delhi cannot therefore, be sustained. - Decided in favour of assessee. 2015 (10) TMI 1666 Denial of CENVAT Credit - Penalty u/s 11AC - Held that:- It Is seen that the applicant was expected to reverse the Cenvat credit at the time of clearance. The word ‘amount’ used in Rule 3(4) is with, reference to duty alone. In fact, whenever such an amount is reversed the same can also be used as credit by the recipient of such goods. In these circumstances; I do not find any force in the appellant’s contention that they are not liable to pay the interest. I accordingly, order that the appellant will pay the interest from the date of clearance till the date of payment of Cenvat credit. As far as the penalty under Section 11AC is concerned, I agree with the appellant’s contention that the ingredient as prescribed under Section 11AC for imposition of penalty are not present in the present case and accordingly, penalty under Section 11AC is set aside. - Decided in favour of assessee. 2015 (10) TMI 1665 Penalty u/s 11AC - Held that:- Adjudicating authority had not given any option to pay reduced penalty, under Section 11AC of the said Act. So, this issue is covered in favour of the Respondent as held by the Hon'ble Gujarat High Court [2010 (2) TMI 1148 - GUJARAT HIGH COURT]. The other issue regarding imposition of penalty on the partner, the Hon'ble Gujarat High Court held that no further penalty can be imposed on the partner as the firm is already penalised. In the present case, it is seen that penalty of equal amount of duty on the partnership firm was imposed under Section 11AC of the Central Excise Act. - Decided against Revenue. 2015 (10) TMI 1664 Denial of CENVAT Credit - Misdeclaration - Held that:- Cenvat credit sought to be denied on two grounds (a) the value of raw material is higher than the value of finished goods, (b) there is mis-match of vehicle number on invoice and GR. Although the appellant has explained both the issues, during the course of investigation, by saying that average price of finished goods is much higher than the average price of raw material and the supplier has transported the goods up to his godown in his own truck and also have explained to the investigating team. Thereafter, the goods have been transported by the transporter to the appellant’s premises. This explanation has not been considered by both the lower authorities. If same would have been considered then the appellant would not have travelled up to this Tribunal. As appellant has explained the discrepancy sought by the audit team, I do not find any discrepancy in the explanation given by the appellant and Revenue has not come up with any corroborative evidence to allege the allegations made in the show cause notice. In these circumstances, I hold that the appellant has correctly taken the credit consequently the impugned order is set aside - Decided in favour of assessee. 2015 (10) TMI 1663 Demand of interest - CENVAT Credit - whether interest is payable on the Cenvat Credit availed wrongly and subsequently reversed. - Held that:- Karnataka High Court in the case of Commissioner of Central Excise & Service Tax, Bangalore Vs. Bill Forge Pvt Ltd - [2011 (4) TMI 969 - KARNATAKA HIGH COURT and the Hon’ble Madras High Court in the case of the Commissioner of Central Excuse, Madras vs M/s Strategic Engg. (P) Ltd - [2014 (11) TMI 89 - MADRAS HIGH COURT] after considering the decision of the Hon’ble Supreme Court in the case of Ind-Swift Laboratories (2011 (2) TMI 6 - Supreme Court) held that mere taking credit itself and reversal, would not compel the assessee to pay interest an rejected the appeals of Revenue. - Decided against Revenue. 2015 (10) TMI 1662 Denial of CENVAT Credit - contravention of Rule 8 (3A) of the Central Excise Rules, 2002 - Held that:- Gujarat High Court in the case of Indsur Global Ltd. V/s. [2014 (12) TMI 585 - GUJARAT HIGH COURT] held that Rule 8 (3A) of the Central Excise Rules, 2002 for payment of duty without utilizing Cenvat Credit is unconstitutional - revenue submits that the respondent had not paid duty on consignment wise during the defaulted period under Rule 8 (3A) of the said Rules and they are liable to paid interest. Revenue is at liberty to raise demand of interest, if any, on failure to pay duty on consignment wise under the said rules. - Appeal disposed of. 2015 (10) TMI 1661 Refund claim - Unutilized CENVAT Credit - Violation of principle of natural justice - Held that:- Commissioner (Appeals) while observing that the adjudicating authority had neither passed a speaking order nor issued a show cause notice, then, the adjudicating authority should be directed to pass either a speaking order or to issue show cause notice, if necessary, in the interest of justice. - impugned orders are set-aside and the matter is remanded to the adjudicating authority to pass a speaking order after observing the principles of natural justice - Decided in favour of assessee. 2015 (10) TMI 1660 Waiver of pre deposit - Utilizaton of CENVAT Credit - interest under Section 11 AB/11AA - penalty under Section 11 AC - Held that:- Though the Hon'ble Madras High Court in the case of Unirols Airtex Vs. Assistant Commissioner of Central Excise (2013 (12) TMI 1398 - MADRAS HIGH COURT) has held that during the period of delay in discharge of monthly duty liability, which is beyond the period of one month from the due date, the duty is required to be paid through PLA only, without utilizing the cenvat credit, in this judgement the Hon'ble High Court has not gone into the vires of this provision, while the Hon'ble Gujarat High Court in its judgement in the case of Indsur Global Ltd. (2014 (12) TMI 585 - GUJARAT HIGH COURT) has gone into the question of constitutionality of the condition in Rule 8(3A) that during the period of forfeiture, the duty is required to be paid without utilizing the cenvat credit held that this provision is un-constitutional. In view of this, we are of the prima facie view that the impugned order is not sustainable and as such, the appellant have strong prima facie case in their favour. The requirement of pre-deposit of the duty demand, interest and penalty is, therefore, waived for hearing of the appeal and recovery thereof is stayed. - Stay granted. 2015 (10) TMI 1659 Duty demand - Availment of CENVAT Credit - Credit on building material that is Joist Angle which was used in fabrication of building material - On being pointed out, assessee reversed the credit - Held that:- In this case factory was visited on 29.07.2009 at 11.05 hrs and panchnama was drawn. It is also a fact on record that proceedings were concluded at 11.30 hrs on 29.07.2009. That is whole of the proceedings were completed within a span of 25 minutes i.e. drawing of the panchnama and physical verification of stock of almost 2000 Metric tonnes which is not possible by all the means. Therefore, stock taking is not proper and shortage found are only on the estimate basis which is not acceptable. In these circumstances, shortage found at the time of physical verification on 29.07.2009 is not sustainable. Accordingly, demand on this account is set aside. Consequently, interest and penalty is not imposable. - inadmissible Cenvat Credit on Joist Angle the appellant has already reversed the Cenvat Credit and not disputed the same. Therefore, demand on that account has been confirmed along with interest. As the appellant has immediately reversed on pointing out by the revenue at the time of investigation. I hold that penalty is not imposable - Decided partly in favour of assessee. 2015 (10) TMI 1658 Waiver of pre deposit -benefits of Notification No. 89/95-C.E., dated 18-5-1995 - Held that:- At the stage of consideration of the stay applications and for waiver of predeposit in the several appeals, we notice a clear conflict of authority between decisions of coordinate Benches of this Tribunal in CCE, Hyderabad v. Priyanka Refineries Ltd. [2009 (5) TMI 419 - CESTAT, BANGALORE] and in Maheshwari Solvent Extraction Ltd. v. CCE, Nagpur [2013 (7) TMI 51 - CESTAT MUMBAI], on the one hand; and in Commissioner v. A.G. Flats Ltd. [2011 (7) TMI 968 - CESTAT, NEW DELHI], on the other. Since the conflict is in decisions of coordinate Benches, it is appropriate that in the interest of doctrinal stability, the matter should be considered for resolution by a Larger Bench of the Tribunal. In the circumstances, we are of the considered view that the conflict, noticed supra be referred to a Larger Bench and we direct the Registry to place the papers before the Hon’ble President, CESTAT for appropriate orders. - it is appropriate to grant waiver of pre-deposit and stay all the proceedings for realization of the respective assessed liabilities, pending disposal of these appeals. - Stay granted. 2015 (10) TMI 1657 Determination of annual capacity of production - Compounded levy scheme - Demand of differential duty - Held that:- Tribunal in the case of Samarth Knitters P. Ltd. - [2013 (12) TMI 812 - CESTAT MUMBAI] has dealt with exactly similar issue - In view of the said decision and also keeping in view the fact that the appellant has represented to the Commissioner after the final order and there has been no response from the Commissioner for the said representation, the impugned order is set aside - Decided in favour of assessee. 2015 (10) TMI 1656 Confiscation of the goods - redemption fine and penalties - Held that:- Appellant has no case and the appellant has admitted duty liability and the same has been paid alongwith interest and also paid 25% duty as penalty by the main appellant within 30 days of issue of show cause notice. In such situation, the proceedings against the main appellant and co-appellant come to an end. - Reliance placed by the learned AR on the decision of the Tribunal in the case of CCE, Raipur vs. Anand Agarwal (2013 (2) TMI 569 - CESTAT NEW DELHI) is not helpful to him as the decision in Anand Agarwal is per incuriam as the decision in the case of Vikas Garg-[2011 (1) TMI 129 - CESTAT, NEW DELHI] has not been considered by this Tribunal. Further in the case of Jay Prakash Agarwal (2013 (7) TMI 827 - CESTAT NEW DELHI) a similar issue came up before this Tribunal after considering the decision in the case of Anand Agarwal have arrived at the decision that if duty, interest and 25% duty as penalty have been deposited by the manufacturer within the stipulated time as prescribed under section 11A (1) (a) of Central Excise Act, 1944, the show cause notice also stands concluded. - impugned order was not required to be passed and in this case the proceedings against the appellants would be concluded - Impugned order is set aside - Decided in favour of assessee. 2015 (10) TMI 1655 Duty demand - Clearance of goods on the basis of EPCG License - Penalty u/s 11AC - Held that:- Appellant is clearing the goods to their buyers on the strength of EPCG licence which were endorsed in the name of the appellant by the buyer of the goods and the appellant is filing ER-1 return showing clearance against EPCG licence. But it is admitted fact that the appellant has not disclosed that under which notification they are claiming exemption and were not paying duty. As the appellant is filing ER-1 return regularly showing clearance against EPCG licence and not disclosed that under which notification number they are claiming exemption, burden of proof cast on the Revenue to ask the appellant under which notification they are claiming exemption. Without doing this effort and without scrutinizing ER-1 return, the investigation was conducted. Therefore, suppression cannot be alleged in these circumstances. Furthermore, as the appellant paid duty along with interest on pointing out by the department, show cause notice was not required to be issued as per Section 11A(2B) of Central Excise Act, 1944 read with Board’s Circular No. 137/167/2006-CX-04, dated 3-10-2006. Consequently, the penalty is not imposable on the appellant. - Impugned order is set aside - Decided in favour of assessee. 2015 (10) TMI 1654 Reversal of CENVAT Credit - whether proportionate reversal of cenvat credit attributable to furnace oil is sufficient in compliance of Rule 6(3) of the said Rules or the appellant is required to pay duty equal to the 10% sale price of the exempted final products or not - Held that:- Both lower authorities have not disputed that the appellant has reversed the cenvat credit attributable to furnace oil used in the manufacture of exempted final products. Therefore relying on the decision of Hon'ble Gujarat High Court in the case of Rituraj Holdings Pvt. Ltd. (2013 (2) TMI 34 - GUJARAT HIGH COURT) wherein it has been held that if the assessee reversed proportionate cenvat credit attributable to final exempted product in this case the assessee has complied with Rule 6(3) of the Rules, is not required to pay duty equal to 10% sale price of the exempted final products. - Commissioner (Appeals) has observed that while reversal of cenvat credit, the appellant has taken the sale percentage of exempted goods i.e. agricultural implements as basis of calculation of proportionate credit, which is not correct and thereafter he denied the whole credit. The contention of the learned AR is not acceptable at all as in the show cause notice only charge against the appellant that they have contravened the provisions of Rule 6(3) and in their defence the appellant has stated that they are reversing proportionate cenvat credit. If at all there is difference, the Commissioner (Appeals) could quantify the demand which he failed to do so demanding duty from the appellant. It is not correct. Therefore, I set aside - Decided in favour of assessee. 2015 (10) TMI 1653 Waiver of pre deposit - Classification of goods - Held that:- The chapter note no. 12 of Chapter 48 reads as under "except for the goods of heading 4814 or 4821, paper, paper board, cellulose wadding and articles thereof, printed with motifs, characters or pictorial representation which are not merely incidental to the primary use of the goods, fall in chapter 49. Further the Learned Commissioner has also relied upon the explanatory of HSN under chapter 4821 which reads as under "this heading covers of varieties of paper and paper board, labels used for attachment to any type of article for the purpose of indicating its nature, identity, ownership, destination, price etc. They may be of the stick-on-type (gummed are self adhesive) or designed to be affixed by other means example string". - he second sticker produced relates to a product 'Nicetamol' and has a label which again identifies the product and its nature. The third sticker is covering an item and the label for the time which is given away as gift or presentation and therefore can be said to be advertisement or can be said to be a nature of label indicating the use of the products. Prima facie, the stickers produced by the appellants are covered by HSN chapter notes. Nevertheless, in view of the fact that at the original level the original adjudicating authority had taken a view in favor of appellant and further issue relates to classification and requires detailed consideration of Tariff description, HSN notes etc. in our opinion, it would be sufficient if appellant deposits an amount of ₹ 50,000/- as predeposit. - Partial stay granted. 2015 (10) TMI 1652 Denial of CENVAT Credit - benefit of exemption notification No 29/2004-CE dtd 29.7.2004 - Held that:- there was unutilised credit balance of ₹ 1,29,70,128/-, which should be maintained separately. It was found that subsequently in some cases the assessee utilized cenvat credit of ₹ 99,929/- out of the said amount for payment of duty on finished goods. The allegation is mainly based on that the appellant would not maintained record separately. The appellant took a stand that they have maintained record separately for the exempted duty and finished products. - Commissioner (Appeals) observed that neither the show cause notice nor the adjudicating authority has clearly mentioned the facts regarding the maintenance of separate records by the appellants. The appellant in the grounds of appeal stated before the Commissioner (Appeals) they have maintained records separately against the exempted as well as dutiable finished goods. This fact was not seriously disputed by the Commissioner (Appeals). - Impugned order is set aside - Decided in favour of assessee. 2015 (10) TMI 1651 Suo moto credit - whether the appellant have correctly taken suo moto credit of duty paid twice or not - Held that:- decisions of Sopariwala Exports Pvt. Ltd. (2013 (5) TMI 430 - CESTAT AHMEDABAD) wherein on the similar facts, this Tribunal had came to the conclusion that decision of Motorola India Pvt. Ltd. [2006 (7) TMI 223 - HIGH COURT OF KARNATAKA AT BANGALORE] was not placed before the Larger Bench of this Tribunal in the case of BDH Industries Ltd. (2008 (7) TMI 78 - CESTAT MUMBAI), therefore the decision of BDH Industries Ltd. (supra) cannot be relied upon and thereafter this Tribunal following the decision of Motorola India Pvt. Ltd. (supra) came to the conclusion that suo moto credit can be taken if duty is paid twice as excess duty paid is not a duty and same is deposit. In these circumstances, as the decision of Sopariwala Exports Pvt. Ltd. (supra) has been delivered by this Tribunal based upon the decision of Hon’ble High Court of Karnataka in the case of Motorola India Pvt. Ltd., therefore, I hold that the appellant has correctly taken suo moto credit of the duty paid twice. In these circumstances, impugned order is set aside. - Decided in favour of assessee. 2015 (10) TMI 1650 Demand of differential duty - Imposition of interest and penalty - Notification No. 11/2011-C.E. (N.T.), dated 24-3-2011 - Held that:- appellant contends that the last phrase of the Notification is not an essential condition. This contention appears prima facie not substantial though an arguable proposition. In the circumstances, we grant waiver of the assessed liability, on condition that the appellant remits ₹ 6,00,000/- within four weeks and reports compliance by 3-3-2015. In default the appellant would be liable to remit the entire amount and on such deposit as aforesaid would be entitled to stay all of the further proceedings for realization of assessed liability pending the appeal. - Partial stay granted. 2015 (10) TMI 1649 Clandestine removal of goods - Shortage of goods - Held that:- weighment done at the time of investigation is correct but the learned Commissioner (Appeals) has considered the production of whole of the manufacture to determine the goods produced on 18-12-2010 and 19-12-2010 whereas at the time of investigation production of these two days was taken into consideration as 36 and 66 MT but production during the period was found by the learned Commissioner (Appeals) from the statutory records as in the range of 80.80 to 93.40 MT per day. Therefore, conclusion drawn by the revenue with regard to production on 18-12-2010 and 19-12-2010 of 36 MT and 66 MT is totally incorrect. In these circumstances, I do agree with the observations of the learned Commissioner (Appeals) in the impugned order and thereafter holding that there was no excess production was done by the appellant during that period. Further, the case law relied upon by the learned AR is not relating to the facts of this case as in that case the raw material was found in excess which was not entered in the statutory records. In this case, the allegation against the respondent is that respondent has manufactured the excess goods to clear clandestinely. Therefore the case law relied upon by the learned AR is not applicable to the facts of this case. As discussed above, if the production of two days i.e. 18-12-2010 and 19-12-2010 are taken into consideration as per previous day’s production, in that way, there is no excess production made by the appellant during this time, no excess stock could be found. In these circumstances, I do not find any infirmity in the impugned order. - Decided against Revenue. 2015 (10) TMI 1648 Valuation of goods - Section 10A - Held that:- issue is no more res-inegra in view of the decision of the Tribunal in the Assessee’s own case, for the earlier period, in the case of Ravikiran Plastics Pvt. Limited vs. Commissioner of Central Excise, Vadodara - [2014 (2) TMI 211 - CESTAT AHMEDABAD]. The Tribunal set-aside the impugned order on the identical issue and allowed the appeals filed by the appellants. It has been held that transaction between the Assessee and M/s. Symphony are sales transaction, predominant supply of inputs or goods free of charge to Assessee not established. It is further held that initiations, monitoring and supervision of the manufacturing activities is purely a professional and commercial approach on the part of the brand owner to sustain his business, profitability and also to maintain the quality and timely supply of finished goods to the market to fulfil its sales commitments. It cannot be treated as job work under Rule 10A of the Valuation Rules. - impugned order is set-aside - Decided in favour of assessee. 2015 (10) TMI 1647 Confiscation and seizure of goods - Redemption fine - Held that:- Appellant failed to produce invoices for procurement of the goods and thereafter could not produce the invoices. As the goods are branded therefore both the lower authorities have correctly drawn conclusion that the goods are procured by the appellant without payment of duty by the supplier. In these circumstances, I hold that the lower authorities were correct in demanding the duty on the clandestinely procured goods by Devinod Trade Pvt. Ltd. and hold that goods are liable for confiscation, Considering the quantum of goods and value of the goods, I hold that redemption fine imposed on the appellant is absolutely correct. - Decided against assessee. 2015 (10) TMI 1646 Confiscation of goods - Imposition of redemption fine - Held that:- It is admitted fact that the production capacity of the appellant was not so much so as to get registration after crossing SSI exemption limit. In these circumstances, the burden casts on the Revenue to prove that the appellant has crossed the limit and that they were clearing the goods clandestinely. As discussed above, the production capacity of the appellant by all means is remained below the SSI exemption limit, therefore the goods were not required to be seized and consequently confiscated. In these terms, I set aside the order of confiscation, demanding duty and imposing penalty on the appellant. - Decided in favour of assessee. 2015 (10) TMI 1645 Denial of CENVAT Credit - Capital goods - Held that:- In the case of Vikram Cement vs. CCE, Indore - [2006 (1) TMI 130 - SUPREME COURT OF INDIA] held that the decision of J.K. Udaipur Udyog Limited (2004 (9) TMI 101 - SUPREME COURT OF INDIA) is contrary and not a good law. It is seen that the Hon’ble Supreme Court in the subsequent decision in the case of Vikram Cement vs. CCE Indore, held that if the mines are captively used, so that constitute one integrated unit together with the concerned unit, modvat/ cenvat credit on capital goods would be available. In that case, the Hon’ble Supreme Court remanded the matter to the respective original adjudicating authorities for decision only on that issue. - Following this decision, Matter remanded back - Decided in favour of assessee. 2015 (10) TMI 1644 Denial of CENVAT Credit - manufacture of exempted final products - whether the appellant was right in taking recredit of ₹ 4,30,325/- or they were required to file a refund application in terms of provisions of Section 11B of Central Excise Act - Held that:- there is no dispute about the fact that the said credit which was originally debited, was not taken into account at the time of final debit of the inadmissible CENVAT credit. As such admittedly there was double debit entries. - Denial of the same by the department on the technical ground of non-filing of refund application is neither proper nor justified. It is nothing but correction of entries in the accounts maintained by the assessee, which do not involve any ' lis' and any legal issue requiring the department to interfere. Further the said recredit was made under intimation to the Revenue in which case if the Revenue had any objection, they should have raised the same at the point of recredit itself. - no reason to uphold the impugned order. Accordingly, the same is set aside - Decided in favour of assessee. 2015 (10) TMI 1643 Duty demand - Whether during the period of default in discharge of duty liability beyond the period of one month from the due date, the assessee is required to pay duty without utilizing the cenvat credit or whether during this period, he can pay the duty on the clearances made by utilizing the cenvat credit - Held that:- Though on this issue, the Hon ble Madras High Court in the case of Unirols Airtex Vs. Asstt. Commissioner of Central Excise, Coimbatore (2013 (12) TMI 1398 - MADRAS HIGH COURT) has decided the issue against the appellant holding that during the period of default beyond the period of one month form the due date, the duty on the clearances is required to pay through cash without utilizing the cenvat credit, Hon ble Madras High Court in this case has not gone into the question of constitutionality of the provision. The Hon ble Gujarat High Court in the case of Indsur Global Ltd. (2014 (12) TMI 585 - GUJARAT HIGH COURT), after going into the question of constitutionality of this provision, has held that the condition contained in Rule 8(3A) regarding payment of duty without utilizing the cenvat credit during the period of default beyond the period of one month from the due date is unconstitutional. Accordingly, we hold that the appellant have strong prima facie case in their favour. Therefore, the requirement of pre-deposit of duty demand, interest and penalty is waived for hearing of the appeal and recovery thereof is stayed. - Stay granted. 2015 (10) TMI 1642 Reversal of CENVAT Credit - Whether the appellants are required to reverse the cenvat credit, when the inputs were being admittedly used by them in the manufacture of the final products, which were being cleared on payment of duty, on the ground that the process undertaken by them does not amount to manufacture - Held that:- Stands settled by various decisions of the Tribunal but reference can be made to the latest majority decision in the case of M/s. Asian Colour Coated Ispat Ltd. Vs. CCE, Delhi-III [2014 (9) TMI 974 - CESTAT NEW DELHI]. Originally there was difference of opinion between the two Members and the matter was referred to third Member. As per the majority decision, the credit cannot be disallowed to the assessee when he has used the same for payment of duty on its final product, when there was no requirement of payment of duty on the final product. As the said decision takes into consideration the entire precedent decisions, by following the same we set aside the impugned order - Decided in favour of assessee. 2015 (10) TMI 1641 Clandestine removal of goods - Imposition of interest and penalty - Held that:- In this case allegation of clandestine removal is made against the appellant on the basis of the ledger record of the transporter. In fact when the transporter is transporting the goods, the transporter is required to issue the goods transportation receipt and on the basis of this receipt the ledger account is prepared. Revenue has failed to produce the goods transportation receipt to establish their charge of clandestine removal of the goods by the appellant. In the absence of any corroborative evidence, benefit of doubt goes in favour of the appellant. In these circumstances, I hold that Revenue has failed to prove their case. Therefore, demand confirmed against the appellant is not sustainable. - Decided in favour of assessee. 2015 (10) TMI 1640 Waiver of pre deposit - Appeal dismissed for non complaince - Invocation of larger period of limitation - Held that:- when during the relevant period, decisions of the Higher Authorities are in favour of the assessees, no malafide can be attributed to the assessee so as to invoke longer period of limitation. Otherwise also when an expert body like the Tribunal is classifying the product under Chapter 50 which is being reversed by the Hon'ble Supreme Court, it only reflects upon the disputable nature of the issue, in which case, no malafide can be attributed to the appellant. The appellant during the relevant period had filed all the returns claiming the classification under Chapter 50, in which case again no suppression can be prima facie attributed to them. As such, we are of the view that appellant has a strong prima facie case on limitation and there should be no direction to deposit any amount. In view of the above, we allow the stay petition unconditionally. Further, as the Commissioner (Appeals) has not decided the appeal on merits, we set aside the impugned order and remand the matter to Commissioner (Appeals) who shall decide the appeal without insisting on any predeposit. - Decided in favour of assessee. 2015 (10) TMI 1639 Denial of CENVAT Credits - credit taken twice on the same documents - Held that:- When voluminous documents are handled, some mistakes do happen and since appellants have chosen to pay the entire amount of Cenvat credit including the last item the correctness of which is debatable, I consider that appellant deserves a lenient treatment as regards penalty. In view of the above, I consider since the appellant is not contesting the demand and have paid the entire amount with interest, penalty can be waived. In the normal course the demand could have been limited to the normal period in the absence of any intention to evade duty. Cenvat credit with interest voluntarily paid by the appellant stands upheld as not contested. Penalty imposed is, set aside - Decided in favour of assessee. 2015 (10) TMI 1638 Denial of CENVAT Credit - whether the appellant, who is engaged in manufacture of copper coated MS wires, is eligible for Cenvat credit - Held that:- In view of the decisions cited, the decisions were rendered taking a view that even when there is no manufacture, credit can be taken. The only difference is that in the case of the appellant, the goods were transferred to their own unit, whereas in other cases, input suppliers were there. In my opinion, appellants could have exercised and should have exercised proper assessment process in which case, there would have been no need to pay the duty again by the second unit after taking credit since there is no manufacture in the second unit. Even after the appellants were informed by the authorities, they went on taking the credit. Having regard to the facts and circumstances, in my opinion, the appellants are liable for imposition of penalty of ₹ 5,000/- that would meet the ends of justice. Accordingly the demand for Cenvat credit with interest is set aside and mandatory penalty is also set aside. - Decided in favour of assessee. 2015 (10) TMI 1637 Denial of CENVAT Credit - appellant has sold a portion of the electricity produced by the DG set to another unit - Held that:- It can be seen that Cenvat credit can be disallowed only when capital goods are used exclusively in the manufacture of exempted goods or in providing exempted services. That being the position, when there is no dispute that the appellants have not used DG set exclusively for manufacture of electricity which is in turn used for manufacture of exempted goods, credit could not have been denied. Electricity is in any case exempted but nevertheless the capital goods which are used for producing electricity which is in turn used for manufacture of duty paid goods in any case is eligible as per law. That being the position, just because appellants have sold a portion of electricity generated to others, credit cannot be denied unless it is shown that electricity generated has been used only in the manufacture of exempted goods - Decided in favour of assessee. 2015 (10) TMI 1636 Refund claim - Unjust enrichment - Held that:- Amount in question was shown in the balance sheet as recoverable. This was also certified by the Chartered Accountant. This fact was not disputed by the Revenue in the grounds of appeal. In our considered view, it is clearly evident from the balance sheet that the amount was not recovered from any other person. Then, it will be held that the applicant fulfilled the principles of unjust enrichment. No reason to interfere with the order of Commissioner (Appeals). - Decided against Revenue. 2015 (10) TMI 1635 Denial of CENVAT Credit - Absence of Invoices as well as entry in RG-23 register - Held that:- bill of entry was filed on 15.10.2005. The duty payment was made on 19.10.2005. The documents of the CHA indicate that on 20.10.2005 the goods moved through vehicle No. DD03 A9902 which had reached the weigh bridge in Taloja which is near to the factory and they have also produced the payment details to the weigh bridge, which includes number of consignments received by them. The invoices produced by the appellant indicate that the finished products were cleared on payment of duty. Thus, over all it appears that there are some procedural irregularities. However, from the document it is established that the goods were received by the appellant and were used in the manufacturing process and the finished goods were cleared on payment of duty - Impugned order is set aside - Decided in favour of assessee. 2015 (10) TMI 1634 Waiver of pre deposit - inputs written off fully - reversal of cenvat credit - Suppression of facts - Invocation of extended period of limitation - Held that:- The quantification of demand is based on the assumption as the department has adopted the highest rate while denying the credit which is contrary to the provisions of Rule 3(5B) of the Cenvat Credit Rules, 2004 - The provisions relating to reversal of credit on the value of inputs written off fully was introduced for the first time in the Cenvat Credit Rules, 2004 by way of insertion of Rule 3(5B) w.e.f. 11.05.2007 vide Notification No. 26/2007-CE (NT) dated 11.05.2007 and hence, the demand invoking the longer period alleging suppression of facts on the part of the applicants is not sustainable. The demand is, therefore, completely barred by limitation. - Stay granted. 2015 (10) TMI 1633 Penalty u/s 11AC - Credit taken on twice documents - Held that:- Appellant is a large tax paying unit and what had happened was a bona fide mistake and the fact that appellant had paid the money immediately after detection would show that there was no intention to evade duty. It cannot be said that appellant has suppressed the facts since the fact of availment of Cenvat credit invoice-wise and document-wise is not required to be provided. Therefore penalty could have been imposed by invoking Section 11AC of Central Excise Act, 1944 only if there was an intention to evade duty. Nowhere such evidence had been brought out. The statement of the Manager-Excise recorded immediately clearly reveals that what had happened was a bona fide mistake and happened because of large number of documents and manual maintenance of accounts - mandatory penalty imposed on the appellant is set aside - Decided in favour of assessee. 2015 (10) TMI 1632 Waivef of pre deposit - Classification of goods - Clearance of Silico Manganese slag - Held that:- Silico Manganese slag which emerges during the course of manufacture of the final product namely Silico Manganese was proposed to be classified under 2620 99 00 of CETA, 1985. Prima facie, we find force in the submission of the ld. Advocate for the applicant that in view of the Chapter Note 3 of Chapter 26 of the CETA, 1985, the refuse/residue, namely, Silico Manganese slag which are not used for the purpose of extraction of metal or chemical compound would not fall under the scope of the said Tariff Entry. Also, we find that the present demand pertains to the period prior to the amendment of Section 2(d) of Central Excise Act, 1944. In the result, the applicant could able to make out a prima facie case for waiver of pre-deposit of dues adjudged. Accordingly, all dues adjudged is waived and its recovery stayed during the pendency of the appeal. - Stay granted. 2015 (10) TMI 1631 Denial of CENVAT Credit - Fraudulent documents - Held that:- DR says that this is case adjudicated against the appellant for using fraudulent documents to get cenvat credit. Finding no merit as apparent from the ground of appeals - Decided against assessee. CST, VAT & Sales Tax 2015 (10) TMI 1730 Reversal of input tax credit - Assessee contends that when the issue raised before the Assessing Officer was on an interpretation of a circular issued by the Joint Commissioner and also covered by another decision in favour of one of the group companies, there was no necessity for the appellants to go to the appellate authority and exhaust all statutory remedies - Held that:- When the issue raised before the Assessing Officer was on an interpretation of a circular issued by the Joint Commissioner and also covered by another decision in favour of one of the group companies, there was no necessity for the appellants to go to the appellate authority and exhaust all statutory remedies - based upon the orders passed by the High Court on 17.7.2013 in a batch of writ petitions upholding the Constitutional validity of Section 19(20) and also based upon the representations of the association of manufacturers and traders, the Commissioner has directed in his circular that the provisions of Section 19(20) have nothing to do with the levy of tax on the discount, which has to be dealt with independently as per the provisions of the Act - Assistant Commissioner (CT) in Surapattu Assessment Circle had granted the benefit of the circular to one of the sister concerns. - Appellants is entitled to by-pass the alternative remedy of appeal - Matter remanded back - Decided in favour of assessee. 2015 (10) TMI 1729 Prohibition on selling and transporting the empty beer bottles duly collected inside the State of Tamil Nadu by the petitioner and to sell and transport outside the State of Tamil Nadu - Violation of Article 19(1)(g) and Article 301 of the Constitution of India - Held that:- Article 19(1)(g) of the Constitution of India guarantees, to all citizens the right to practice any profession or to carry on any occupation trade or business subject to reasonable restrictions imposed by this State under Article 19(6) of the Constitution of India. Thus, when the Constitution has guaranteed every citizen right to carry on any business whether rich or poor it is only the State which can impose reasonable restrictions within the ambit of Article 19(6) of the Constitution of India, without which, on the basis of a circular, the respondent cannot interfere with the petitioner's right to carry on business. - Decision in the case of syndicate bottles [2015 (10) TMI 298 - MADRAS HIGH COURT] followed - Decided in favour of petitioner.
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