Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 30, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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TDS u/s 194C or u/s 192 - TDS on the amounts paid to the sanitation contractors - there is no contractor contractee relationship but is more in the nature of employee employer relationship as the assessee is also making contributions to the EPF and ESI - Payment is falling u/s 192 and not u/s 194C - AT
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Addition made on account of suppressed production / sales of TMT bars on the basis of electricity unit consumption - no addition can be made in the hands of the assessee on account of alleged investment in purchases u/s 69C - AT
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Deduction u/s 80IB - amount declared during the course of survey as additional income - assessee is not entitled to the deduction under section 80IB of the Act on the surrendered income - AT
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Disallowance u/s 54 - the assessee has invested only an amount in part as per section 54 - Therefore, he is eligible only for the amount he has invested as per sub-section (2) of section 54 - AT
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Offences punishable under Section 276B r.w.s. 278B - failure to remit TDS - Though Section 278B of the Act contemplates such vicarious liability, the basic requirement is, there must be specific allegation to that effect in the complaint which is lacking in the present case - HC
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Depreciation on the written down values of assets after including the gratuity liability taken over - ITAT allowed the claim - The gratuity liability taken over by the respondent does not fall under any of those categories specified in section 32 - No depreciation - HC
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Transfer of the property by way of distribution of assets on retirement of two partners - there is no error or illegality in the order of the CIT(A) in allowing the claim of the assessee regarding capital gain as long term capital gain u/s 45(4) arising from the land retained by the assessee which was purchased in the year 1960 - AT
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Delays in remittance of TDS amounts - Assessee could never be faulted for delay on the part of the bank or the clearing house, whatever may be the rules governing receipts and payments into the Central Government account. - AT
Customs
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Confiscation u/s 111 (b) and (d)- Gold Bars - chemical examiner can only give percentage of gold in gold bars but cannot say whether seized goods are of foreign origin and purity of gold has been certified to be 99.92% to 99.96% - Seized goods cannot be considered to be of foreign origin - AT
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Recovery of duty credit granted under Served From India Scheme - brand 'Four Seasons' is not an Indian brand - Not permissible for authorities adjudicating claims arising to recover from Petitioner SFIS benefits granted till 2007-08 and they are falling within earlier policy framework - HC
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Suspension of Custodianship – Unauthorised removal of seized Red Sander logs - Appellant being custodian of seized container had violated Regulations enshrined in 6(1)(a), 6(1)(f), 6(1)(i), 6(1)(k) and 6(1)(q) of HCCAR, 2009 – Action of Commissioner was fully justified - HC
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Export of prohibited goods - Agarwood of a plant Acquilaria malaccensis - Seized goods are also neither notified goods nor specified goods under Customs Act, 1962 and prohibitions under Export Policy will come into operation if goods are brought into Customs area - Order of confiscation and penalty liable to be set aside - AT
Service Tax
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Refund of Service Tax - input services used for export of goods - service tax paid by MIAPL is under category which was not classified under Notification 17/2009-ST - refund denied - AT
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Valuation - Reimbursement Expenses - Legal position is clear that expenses actually incurred and reimbursed by service recipient are not to form part of assessable value of services - AT
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Liability of Service Tax – Club or Association Service or Convention Services – Charge Subscription and Empanelment Fees - demand set aside - AT
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Liability of Service Tax - Whether the amounts recovered by Appellant from small time internet service provider who took connection from appellant for rendering services to their clients would be liable to service tax? – Revenue cannot argue against their own Board’s clarification - AT
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Refund of service Tax – Period of limitation - SEZ developer - Date of invoice should not be taken as relevant date thus not found maintainable as there is no such provision in Notification - Date of payment of service tax is relevant - AT
Central Excise
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Valuation - Inclusion of expenditure in developing the art work and plate making charges - no case is made to indicate that such art work/plates were used in the manufacture of laminated tubes and value of such artwork/plates was not included in the value of laminated tubes. - AT
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Cenvat Credit - Storage of input outside the factory - Removal of goods without necessary permission under Rule 8 of CENVAT Credit Rules 2004 - demand of duty with interest and confiscation upheld - penalty waived - AT
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Refund of duty paid earlier on export of goods - same tractors were admittedly brought back in the factory of the appellant and after testing etc. were cleared for export under Bond and by virtue of Rule 6(6)(v) of Cenvat Credit Rules the provisions of sub-rule (i), (ii), (iii) & (iv) of Rule 6 are inapplicable. - AT
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Clandestine removal of goods - only basis for the demand of duty is electricity consumption but no comments have been made by the adjudicating authority to demand on the basis of documents seized during the course of investigation - Matter remanded back - AT
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Refund claim - CENVAT Credit - denial of Cenvat credit refund on the ground that supply of goods from one 100% EOU to another 100% EOU will not be considered as 'physical export' is not proper - refund allowed - AT
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Clandestine removal and manufacture of goods - Allegation based predominantly on the basis of 62 reconstructed copies of delivery challans-cum-proforma invoices - documents are not reliable - demand set aside - AT
Case Laws:
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Income Tax
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2015 (10) TMI 2321
Penalties u/s 271C - Non deduction of TDS u/s 194C from the payments made to the contract workers - Held that:- the issue relating to the assessee’s liability to deduct tax at source from the similar payments made to contract labourers had come up for consideration before the Tribunal in assessee’s own case for the earlier years and the same was decided by the Tribunal in favour of the assessee concuding the allotment of work by the assessee to the SHGs is not by way of contract but is engagement of workers for a fixed period. The workers are being paid as per the agreed terms and conditions and the aggregate amount is paid to the group and not to any particular person. Therefore, as rightly held by the CIT (A), there is no contractor-contractee relationship but is more in the nature of employee-employer relationship as the assessee is also making contributions to the EPF and ESI and as rightly pointed out by the ld CIT (A), the payments made to an individual is not exceeding the prescribed limit u/s 192 of the I.T. Act, the TDS provisions are not applicable to the facts of the case before us. Cancelling the penalties imposed u/s 271C thus is duly approved by the Tribunal holding that the assessees were not liable to deduct tax at source from the payments made to contract labourers who formed Self Help Groups. - Decided in favour of assessee.
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2015 (10) TMI 2320
TDS u/s 194C - TDS on the amounts paid to the sanitation contractors - AO held that the TDS was deductible on such payments and for failure to deduct the TDS, assessee is in “assessee in default” u/s 201(1) and is also liable to pay interest u/s 201(1A) - whether the SHGs can be called as contractors - Held that:- The GHMC has engaged and issued the poceedings in favour of the SHGs by lots and work has been allotted per unit by fixing the wages per person and also specifying the number of workers to be engaged for each unit and per shift. The working hours of the workers as well as the shifts are also specified in the notification. From the bills paid to the SHGs also, it is seen that the payment is made on the basis of number of mandays and wages per day and is not a fixed amount per month. Thus, it is clear that the allotment of work by the assessee to the SHGs is not by way of contract but is engagement of workers for a fixed period. The workers are being paid as per the agreed terms and conditions and the aggregate amount is paid to the group and not to any particular person. Therefore, as rightly held by the CIT (A), there is no contractor contractee relationship but is more in the nature of employee employer relationship as the assessee is also making contributions to the EPF and ESI and as rightly pointed out by the ld CIT (A), the payments made to an individual is not exceeding the prescribed limit u/s 192 of the I.T. Act, the TDS provisions are not applicable to the facts of the case before us - Decided in favour of assessee.
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2015 (10) TMI 2319
Levy of penalty u/s. 271(1)(C) - undisclosed income which was disclosed by the Assessee and accepted by the Return in the return of income - A.R. submitted that during the course of survey, no incriminating material or evidences were impounded and the aforesaid statement has been controverted by Revenue by placing any material on record - Held that:- Considering the fact that Assessee had made the disclosure of income in the revised return of income and the AO has also accepted the same and in view of the fact that during the courses of survey, no incriminating material was found and since Revenue has not found actual concealment of income or furnishing of inaccurate particulars of income in the return of income, we are of the view that no penalty u/s. 271(1)(c) would be attracted in the present case. We further draw support from the decision of Hon’ble Gujarat High Court in the case of Kirit Dayabhai Patel vs. Act (2015 (1) TMI 201 - GUJARAT HIGH COURT) where the Hon’ble High Court has even in the case where income was shown in the return filed u/s. 153 of the Act has held that no penalty u/s. 271(1)(c) is leviable. - Decided in favour of assessee.
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2015 (10) TMI 2318
Bogus purchase of M.S.Steel from Dhruv Steel - Held that:- The purchases made by assessee were duly supported by various documentary evidences such as inward stamped bills and weigh bridge challans etc. Assessing Officer has not appreciated such evidences, particularly the confirmation of M/s. Dhruv Steel from whom assessee has purchased steel and the fact that if the purchases made by assessee were not genuine, it would not have been able to construct a huge plant of oil, which is evident from the evidences submitted on behalf of assessee. In view of above, CIT(A) held that conclusion reached as to bogus purchase of M.S.Steel in assessment order for AY. 2004-05 was not justified. Accordingly, disallowance made on the basis of observation in assessment order for A.Y. 2004-05 was not justified. We are not inclined to interfere in reasoned finding of CIT(A). - Decided in favour of assessee. Disallowance of the depreciation as being unexplained - CIT(A) deleted addition - Held that:- We have upheld the order of CIT(A) on the issue of genuineness of steel transaction whereby he has held the purchase of M.S. Steel from M/s. Dhruv Steel as genuine for A.Y. 04-05. Accordingly, disallowance made by Assessing Officer in subsequent order on point of depreciation was not justified held by CIT(A). In view of this, addition made in both years of disallowing claim of depreciation of building and plant & machinery was rightly held to be unwarranted by CIT(A) and same was rightly deleted by him.- Decided in favour of assessee. Disallowance of interest expenditure incurred by assessee on loan taken from - Held that:- Source of loan taken by M/s. Vimal Marketing who has received the same from M/s. Dhruv Steel. Assessing Officer should not go into the source of source of loan taken by assessee. In these circumstances, CIT(A) was justified in allowing assessee’s claim of interest expenditure. This reasoned finding of CIT(A) needs no interference from our side - Decided in favour of assessee.
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2015 (10) TMI 2317
Validity of reopening of assessment - non issue of notice - Held that:- AO has not issued any notice u/s 143(2) of the I.T. Act to the assessee. During the entire assessment proceedings, the assessment order in dispute is invalid, void abnitio and against the provisions of the law and the impugned order is not sustainable in the eyes of law and hence, we cancel the same by accepting the appeal filed by the Assessee. - Decided in favour of assessee.
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2015 (10) TMI 2316
Addition made on account of suppressed production / sales of TMT bars on the basis of electricity unit consumption - CIT(A) quantifying the suppressed production @ 4% as against the addition made by the Assessing Officer on account of the total suppressed production, where the assessee was found to be indulging in clandestine removal of goods without payment of Excise duty - Held that:- No extrapolation of sales for 300 days can be made in the hands of the assessee on the basis of the evidence found for clandestine removal of material without payment of Excise duty for few days, which in turn, has been admitted by the assessee by way of filing petition before the Settlement Commission, which in turn, has also been accepted by the Settlement Commission. Merely because the Settlement Commission accepted the claim of the assessee of additional Excise duty payable on the said clandestine removal of material without payment of Excise duty does not establish the case of the Revenue that the said figures of additional production should be utilized for extrapolating the sales in the hands of the assessee for the entire year. Admittedly, the assessee had offered additional income on the said clandestine removal of material without payment of Excise duty, which is to be added as income in the hands of the assessee. The learned Authorized Representative for the assessee fairly admitted that in case the said additional income has not been added while computing the income in the hands of the assessee for the respective years, the same may be directed to be added in the hands of the respective assessee in respective years. Accordingly, we direct the Assessing Officer to verify from the records for the respective years and include the additional income on account of such admitted clandestine removal of material without payment of Excise duty, by the assessee either before the Settlement Commission or before the Excise authorities, in the hands of the assessee. We have heard bunch of appeals and in some years, there is no admission of clandestine removal of material without payment of Excise duty and in those years in the absence of any evidence and / or any investigation or inquiry made by the Assessing Officer and where the Assessing Officer has failed to collect additional evidence, no addition can be made in the hands of the assessee, by way of extrapolation of sales for 300 days on account of any evidence found in any preceding or succeeding years. Further, no addition can be made in the hands of the assessee, where no petition has been filed by the assessee before the Settlement Commission in any of the respective years or before the Excise authorities. Since we have deleted the addition in the hands of assessee on both accounts i.e. addition made on account of erratic consumption of electricity and addition proposed on the basis of evidence found for the part of the year of clandestine removal of material without payment of Excise duty, next addition made in the hands of the assessee i.e. alleged investment in the purchases for effecting such sales which goods have been clandestinely removed, is not sustainable. Accordingly, we hold that no addition can be made in the hands of the assessee on account of alleged investment in purchases under section 69C of the Act One issue remaining to be adjudicated is non issue of notice under section 143(2) after issue of notice under section 148 of the Act. In view of our order in deleting the addition on account of suppressed production/sales, the said issue is dismissed as academic. - Decided in favour of assessee.
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2015 (10) TMI 2315
Addition made on account of entries contained in hand written sheet found during the course of search - Held that:- Once the assessee is not carrying on any construction work, then the natural corollary is that it would not make any payment for the purpose of construction and when hand written sheet depicted construction payments, the same could not be treated as the document belonging to the assessee. Further the assessee clearly pointed out that the name of the person on the said sheet was Mr.Sajjan Jain, who was employee of M/s Goel Construction Co.Pvt. Ltd. and the said facts could have been verified by the Assessing Officer, but the Assessing Officer had failed to discharge his onus and in the said circumstances there is no merit in the addition made in the hands of the assessee. Further the assessee has also filed affidavit to the effect that the said document was not in his hand writing or in the hand writing of his employees and also Shri Sajjan Jain was not in his employment and belonged to M/s Goel Construction Co.Pvt. Ltd. In the entirety of the facts and circumstances, we delete the addition - Decided in favour of assessee. Undisclosed income of the assessee - assessee had failed to furnish any proof that the cheques issued by Shri Chhabra had bounced again and again - Held that:- no merit in the claim of the assessee in this regard and in the absence of the assessee having furnished any evidence to prove its case that sum of ₹ 5 lacs was offered against cheuqes being dishonoured, does not establish the case of the assessee. In case the cheques were being dishonoured then how the total of ₹ 7,89,760/- has been taken and it does not talk of any dishonour of cheques. In the absence of any evidence filed to prove its case we find no merit in the plea of the assessee and we uphold the addition of ₹ 5 lacs in the hands of the assessee as income from undisclosed sources. - Decided against assessee. Addition on entries contained in seized papers A-l page 44 - assessee pleads that the said amounts have been considered by Shri J.C.Bansal in his computation filed before the Hon'ble Settlement Commission - Held that:- Where the applicant had also offered additional income before the Settlement Commission in the hands of Maa Saraswati Educatiional and Social Welfare Trust, we find no merit in the so called addition made in the hands of the assessee totaling ₹ 19,95,000/-. Accordingly, we direct Assessing Officer to delete the addition of ₹ 19,95,000/-. Further addition of ₹ 5,11,373/- was made in the hands of the assessee on protective basis. In view of the settlement petition having been filed by Shri J.C.Bansal before the Settlement Commission, the Settlement Commission has already decided the issue in the hands of Maa Saraswati Educatiional and Social Welfare Trust and which also incorporates the additional income offered by Shri J.C.Bansal and further being assessed in his hands. In view thereof, we find no merit in the said addition of ₹ 511,373/- and the same is directed to be deleted - Decided in favour of assessee. Disallowance of deduction under section 80IB - amount declared during the course of survey as additional income - Held that:- In view of the ratio being settled by the Hon'ble Punjab & Haryana High Court in the in National Legguard Works Vs CIT and another (2006 (9) TMI 100 - PUNJAB AND HARYANA HIGH COURT), M/s Tudor Knitting Works Pvt. Ltd. Vs CIT (2013 (10) TMI 1171 - PUNJAB & HARYANA HIGH COURT ), M/s Kim Pharma (P) Ltd. V CIT (2013 (1) TMI 495 - PUNJAB AND HARYANA HIGH COURT) we hold that the assessee is not entitled to the deduction under section 80IB of the Act on the surrendered income - Decided against assessee. Addition based on the seized document - Held that:- As per tabulated details at page 14, the amount credited/paid totaled to ₹ 46,43,115/- and the balance on each page was shown as receivable by Mr. Monga and his family members from the assessee vide letter dated 10.08.2008. Further sum of ₹ 13,00,000/- is mentioned in the said letter placed at page 67 as having been received by him. In totality thus, the total payments made by the assessee were of ₹ 46,43,115/- + ₹ 13,00,000/- and the addition is to be restricted to ₹ 59,43,115/- as held by the Commissioner of Income Tax (Appeals). The balance being the amount payable by the assessee to Shri Monga and his family members is not includible as income of the assessee. Accordingly, we uphold the addition of ₹ 59,43,115/- in the hands of the assessee and dismiss the grounds of appeal raised by both assessee and the revenue in this regard. Percentage completion method rejected by CIT(A) - determination of profit from the real estate business of assessee - Held that:- Where the assessee was following a particular method of accounting consistently, which has been accepted by the department from year to year and in the absence of any defect being pointed out by the Assessing Officer that by following such method, income had escaped assessment, we find no merit in the order of the Assessing Officer in holding that percentage completion method should be applied to the assessee for the year under consideration. It is the prerogative of the assessee to arrange its affairs in such a manner and follow any recognized method of accounting to compute its profits. In view thereof, we find no merit in the order of the Assessing Officer in re-computing the income in the hands of the assessee. Upholding the order of Commissioner of Income Tax (Appeals) - Decided against revenue.
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2015 (10) TMI 2314
Disallowance under section 54 - AO observed that the assessee could not get the property registered in his name within the period of two years from the date of sale of the original asset and hence the assessee was not eligible for deduction under section 54 - CIT(A) allowed the claim - Held that:- In this case, the assessee sold residential property during the financial year 2006-07 and thereafter entered into an agreement for purchase of new house dated 31.03.2007 for a consideration of ₹ 99,00,000/-. The assessee has paid ₹ 15,00,000/- on 30.07.2007 and subsequently on 25.02.2011, ₹ 50,00,000/- was also paid. As per the section 54, the assessee, after selling the original residential house, he has to invest within the period two years from the date of the original sale. In this case, the assessee has invested an amount of ₹ 15,00,000/- only on 30.07.2007 and final amount was paid only on 25.02.2011, almost after four years of sale of original property.Therefore, the assessee has invested only an amount of ₹ 15,00,000/- as per section 54 of the Act. Therefore, he is eligible only for the amount he has invested as per sub-section (2) of section 54 of the Act. The ld. CIT(Appeals), without considering sub-section (2) of section 54 of the Income Tax Act, proceeded on a different footing that whether the transfer was taken place or not, which is not relevant. Therefore, direct the Assessing Officer to allow the claim of deduction under sub-section (2) of section 54 of the Act to the extent of ₹ 15,00,000/-. - Decided partly in favour of revenue. Disallowance of losses under Future and Options - setting off of brought forward loss - Held that:- The transactions in Future & Options are not to be considered as speculation losses w.e.f. 01.04.2006 consequent to the Finance Act, 2006. In so far as set off of brought forward losses from one head against the income from another head, as per section 71(2) of the Act [with effect from assessment year 2005-06], where in respect of any assessment year, the net result of computation under the head ‘profits and gains of business or profession’ is a loss and the assessee has income assessable under the head ‘salaries’, the assessee shall not be entitled to have such loss to set off against such income. However, it shall be allowable from set off from income from any other head. The ld. CIT(Appeals), by considering the above provisions of law, directed the Assessing Officer to allow the set off of brought forward loss against one head to another head i.e. the claim of loss from Future & Options has to be set off against the capital gains income from the sale of house property. In view of the above, we find that the ld. CIT(Appeals) has correctly directed the Assessing Officer by following the section 71(2a) of the Act. Accordingly, we find no infirmity in the order passed by the ld. CIT(Appeals) on this issue, which is confirmed. - Decided against revenue.
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2015 (10) TMI 2313
Payment of technical know-how fee - revenue expenditure or capital in nature - Held that:- in terms of Article 5.1(d) of the Agreement. These clauses viewed in the context of the intention of the parties would certainly point out that both the parties intended to benefit for a considerable period of time out of the relationship emanating from the agreement. Even though in the Bio-technology field changes are likely to happen in fast phase, the assessee still has the benefit of the same in view of the dynamic nature of the agreement entered into between the assessee and the technology provider. This in our considered view is a distinct and distinguishing factor, which would benefit the assessee giving an enduring benefit to the assessee. In that view of the matter, the judgment of the Supreme Court in Alembic Chemicals Case (1989 (3) TMI 5 - SUPREME Court ) is distinguishable. In that view of the matter, apportioning a part of the expenditure in the nature of a capital expenditure by the CIT Appeals cannot be termed as erroneous. This single distinguishing factor is sufficient to answer the Question in favour of the revenue and against the assessee. Expenditure on account of payment of royalty - revenue v/s capital expenditure - Held that:- It is agreed to be paid by the assessee and the same needs to be treated as revenue expenditure particularly considering the fact that the same is linked to the percentage of consideration received on sale of the products produced by the assessee by use of the Germplasm and with the help of the technical know-how. - Decided against the revenue.
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2015 (10) TMI 2312
Jurisdiction of court - Held that:- This court has no territorial jurisdiction to adjudicate upon the lis over an order passed by the Assessing Officer at New Delhi. The petitions are returned to the petitioner for filing before the competent court of jurisdiction in accordance with law.
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2015 (10) TMI 2311
Offences punishable under Section 276B r/w. Section 278B - failure to remit TDS in respect of various payments made by the Company - Held that:- There is no dispute to the fact that the petitioner herein is a non-Executive Director of the Company. In the entire complaint there is no averment to the effect as to how this petitioner was involved directly or indirectly in the commission of the offences. It is the established position of law that there is no concept of vicarious liability under criminal jurisprudence, unless the statute specifically prescribed for the same. Though Section 278B of the Act contemplates such vicarious liability, the basic requirement is, there must be specific allegation to that effect in the complaint which is lacking in the present case. In that view of the matter, the prosecution against this petitioner is vitiated and initiation of such proceedings is pure abuse of the process of law. - Decided in favour of assessee.
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2015 (10) TMI 2310
Penalty where search has been initiated - whether two out of three conditions prescribed in section 271AAA are not fulfilled as concluded by CIT(A) and ITAT - Held that:- Commissioner (Appeals), after duly appreciating the material on record, has recorded a finding of fact to the effect that the assessee had duly satisfied the manner in which the undisclosed income had been derived and that the assessee had further substantiated the manner in which the undisclosed income was derived. Insofar as the third category, namely, payment of tax together with interest in respect of undisclosed income, there is no dispute. The learned counsel is not in a position to point out that the Tribunal has placed reliance upon any irrelevant material or that any relevant material has been ignored, nor is he in a position to dislodge the findings of fact recorded by the Tribunal. The Tribunal having based its conclusion upon the concurrent findings of fact recorded by it after appreciating the evidence on record, in the absence of any perversity in the findings recorded by it, it cannot be said that the impugned order passed by the Tribunal gives rise to any question of law, much less, a question of law, so as to warrant interference. - Decided against revenue.
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2015 (10) TMI 2309
Addition on unaccounted sales - assessee challenging the rate of gross profit estimated at 10% on the ground that it was on the higher side - Held that:- Entire sales cannot be added as income of the assessee but addition can be made only to the extent of estimated profits embedded in the sales and that the income from suppressed sales should be determined by assessing the gross profit of the assessee It is evident that the Commissioner (Appeals) had estimated the gross profit at 10%, whereas the Tribunal having regard to the gross profit of the previous year, which was 5.22% and which had been accepted by the revenue has, on the very same material, estimated the gross profit at 6.50%, which is higher than the gross profit accepted by the Department in relation to the previous year. Nonetheless, both, the Commissioner (Appeals) as well as the Tribunal, have resorted to estimation for the purpose of computing the gross profit. Thus, ultimately the gross profit has been determined on the basis of an estimate. As to whether the estimate of gross profit by the Commissioner (Appeals) is to be accepted or that by the Tribunal is to be accepted, cannot in any manner be said to give rise to a question of law, much less, a substantial question of law, so as to warrant interference. - Decided against revenue.
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2015 (10) TMI 2308
Pension fund trust - Whether the assessee had contributed funds need not be approved by the Jurisdictional Commissioner or Chief Commissioner? - whether Tribunal was right in holding that the income would crystallize on approval of assessee's claim for reimbursement by competent authority while dealing with the issue of reimbursement of the amount relating to the issue of free passes for traveling of freedom fighters, etc., by the assessee? - Held that:- Tribunal has recorded a finding that State Transport Corporations operating in different districts in the State are signatories to the Trust Deed for setting up the Pension Fund Scheme and that the said fund has been recognized by the CIT-VII, Chennai. A bare reading of the above provision clearly and unambiguously states that recognised provident fund means a provident fund which has been and continues to be recognised by the Chief Commissioner or Commissioner and nowhere it states that it should be recognised by the jurisdictional Commissioner. Therefore, it is not open to the Department to take a plea that the provident fund trust should be recognised by the Commissioner/Chief Commissioner of Income Tax, Salem, which is not the purport of the provision. Accordingly, this contention of the Revenue is also negatived. No question of law, much less substantial questions of law arise for consideration in this appeal. Accordingly, this appeal, filed by the Revenue/appellant, fails and the same is dismissed confirming the order passed by the Tribunal. - Decided against revenue.
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2015 (10) TMI 2307
Depreciation on the written down values of assets after including the gratuity liability taken over - ITAT allowed the claim - Held that:- the question is no longer res integra since the point has already been decided in favour of the Revenue by the Supreme Court in the case of the assessee itself in the case of Commissioner of Income Tax vs. Hooghly Mills Co. Ltd. reported in (2006 (11) TMI 137 - SUPREME Court) wherein held section 32 of the Income-tax Act states that depreciation is allowable only in respect of buildings, machinery, plant or furniture, being tangible assets, and know how patents, copyrights, trade marks, licences, franchises or other business or commercial rights of similar nature being intangible assets. The gratuity liability taken over by the respondent does not fall under any of those categories specified in section 32. The matter needs re-consideration by Their Lordships. - Decided in favour of revenue as directed.
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2015 (10) TMI 2306
Deduction u/s 80IB - assessee claim was denied by AO on the ground that Completion Certificate was not issued on or prior to 31.03.2008 - ITAT allowed claim - Is it permissible in law to compute the date on which the completion certificate in respect of housing is issued by the local authority as provided in explanation to section 80IB(10) of the Income Tax Act? Held that:- Date of completion of a project has to be the date of issuance of Completion Certificate by the Municipal authority. Admittedly, the Architect of the project had given a certificate prior to 31.03.2008. The respondent submitted application to the Municipal authority along with such certificate well in time on 25.03.2008. It seems that the Municipal authorities directed the respondent to deposit certain amount for issuance of Completion Certificate on 27.03.2008 and the amount was accordingly deposited on 31.03.2008. Thereafter, the certificate was issued in October, 2008. This delay cannot be attributed to the respondent assessee. In view of this, we are inclined to hold that the project, for which exemption is sought, was completed prior to 31.03.2008 and therefore, we are inclined to record our answer in affirmative to the substantial question of law referred to above. - Decided in favour of assessee.
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2015 (10) TMI 2305
Assessment u/s.153A - Assessing Officer treating the gifts received from Non-resident individuals as unexplained, within the meaning of section 68 - Held that:- No justification for the Assessing Officer to make the impugned addition in an assessment finalized under section 153A of the Act in the absence of any incriminating material having been found during the course of search, qua the impugned gifts from the Non-Resident individuals. We may categorically mention here that on the date of initiation of search, qua the assessment year 2004-05 under consideration, assessment was not pending and, accordingly, the assessment for this year did not abate in terms of the second proviso to Section 153A(1) of the Act. Therefore, the ratio of the judgment of Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava-Sheva) (2015 (5) TMI 656 - BOMBAY HIGH COURT) is clearly attracted and the impugned addition could not have been made in respect of an unabated assessment which had become final in the absence of any incriminating material having been found in the course of search, qua the impugned gift. Thus, we set aside the order of CIT(A) and direct the Assessing Officer to delete the addition as the same is purported to be beyond the scope and ambit of an assessment envisaged under section 153A of the Act. - Decided in favour of assessee.
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2015 (10) TMI 2304
Disallowance of loss under the head "capital gain" treating the transaction doubtful - whether there is no scope of any fair market value or estimation and in case of sale of shares, the Assessing Officer has no power to replace the value of the consideration agreed between the parties? - Held that:- In the present case, the assessee had shown sale of 10 lacs shares of Pioneer Ltd. for a total consideration of ₹ 1 lac only i.e. @ ₹ 0.10 per share. The cost of such shares had been shown at ₹ 4 crores i.e. ₹ 40 per share.The shares were sold to A.S.A. Agencies Pvt. Ltd. @ ₹ 0.10 per share on 31.3.2009. The loss incurred on the sale of shares was ₹ 4,47,75,491. In view of the of Nilofar Singh case [2008 (8) TMI 165 - DELHI HIGH COURT] that the expression "full value of consideration" used in section 48 of the Income-tax Act, 1961 does not have any reference to market value, we are of the view that the Assessing Officer was having no power to replace the value of the consideration agreed between the parties with any fair market value or estimation. Only because the Pioneer Ltd. had shown the book value of shares at the rate of ₹ 3.50 per share, the Assessing Officer was not justified to ignore the price agreed between the parties and to doubt the genuineness of the claimed loss, even ignoring the valuation report. We thus while setting aside orders of the authorities below direct the Assessing Officer to delete the disallowance of ₹ 4,47,55,491 incurred on the sale of shares of the Pioneer Ltd. The issue is thus decided in favour of the assessee.
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2015 (10) TMI 2303
GP rate @15% on the suppressed sales - additional income in the hands of assessee in the respective assessment years on account of admission of clandestine removal of goods without payment of Excise duty - Held that:- The issue being identical to the issue before the Tribunal in set of Rolling Mill cases, we delete the additions made in the hands of assessee on account of suppressed production. However, following the parity of reasoning we direct the Assessing Officer to compute the addition on account of profits relating to the clandestine removal of goods without payment of Excise duty as admitted by the assessee before the Settlement Commission, CESTAT and / or Commissioner (Appeals) of Excise in the respective assessment years after verification, by applying GP rate of 4% or actual GP rate declared by the assessee, whichever is higher, if so declared by the respective assessees. The assessee has furnished the details of show cause notices issued by the Central Excise Authorities and the quantity involved of clandestine removal of goods and suppression of production in the respective years and also the final result / status of the petitions moved by the assessee either before the Settlement Commission / CESTAT or Commissioner (Appeals) of Excise. The said tabulated details are appended as Annexure to this order. We direct the Assessing Officer to verify the claim of assessee in this regard and include the profit on the suppressed production @ 4% or actual GP rate declared by the assessee, whichever is higher. The assessee is directed to file the requisite details of proceedings before the Excise authorities, before the Assessing Officer in order to compute the additional income in the hands of assessee in the respective years. The directors of the assessee company and their family members had offered additional income of ₹ 14 crores, which has been declared in the respective returns of income and has been assessed in the hands of respective individuals. The major portion of income was declared in assessment year 2010-11 amounting of ₹ 12 crores and the balance of ₹ 2.80 crores was declared in assessment years 2006-07 to 2008-09. No benefit of telescoping has been allowed by the CIT(A) in respect of said declaration in the hands of assessee and no ground of appeal has been raised against the said denial by the CIT(A). In the totality of the above said facts and circumstances, we find no merit in the grounds of appeal raised by the Revenue for estimation of GP @ 15% as the basis for applying GP has been deleted by the Tribunal in group of furnace cases decided earlier. Further, there is no merit in any addition on account of investment for the alleged production under section 69C of the Act. We allow the grounds of appeal raised by the assessee with the direction to the Assessing Officer to compute the additional income in the hands of assessee in the respective assessment years on account of admission of clandestine removal of goods without payment of Excise duty by the assessee before the Settlement Commission, Commissioner (Appeals) of Excise and CESTAT. No other addition is warranted in the hands of assessee. - Decided in favour of assessee.
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2015 (10) TMI 2302
GP rate @15% on the suppressed sales - additional income in the hands of assessee in the respective assessment years on account of admission of clandestine removal of goods without payment of Excise duty - Held that:- The issue being identical to the issue before the Tribunal in set of Rolling Mill cases, we delete the additions made in the hands of assessee on account of suppressed production. However, following the parity of reasoning we direct the Assessing Officer to compute the addition on account of profits relating to the clandestine removal of goods without payment of Excise duty as admitted by the assessee before the Settlement Commission, CESTAT and / or Commissioner (Appeals) of Excise in the respective assessment years after verification, by applying GP rate of 4% or actual GP rate declared by the assessee, whichever is higher, if so declared by the respective assessee. The assessee has furnished the details of show cause notices issued by the Central Excise Authorities and the quantity involved of clandestine removal of goods and suppression of production in the respective years and also the final result / status of the petitions moved by the assessee either before the Settlement Commission / CESTAT or Commissioner (Appeals) of Excise. The said tabulated details are appended as Annexure to this order. We direct the Assessing Officer to verify the claim of assessee in this regard and include the profit on the suppressed production @ 4% or actual GP rate declared by the assessee, whichever is higher. The assessee is directed to file the requisite details of proceedings before the Excise authorities, before the Assessing Officer in order to compute the additional income in the hands of assessee in the respective years. The directors of the assessee company and their family members had offered additional income of ₹ 14 crores, which has been declared in the respective returns of income and has been assessed in the hands of respective individuals. The major portion of income was declared in assessment year 2010-11 amounting of ₹ 12 crores and the balance of ₹ 2.80 crores was declared in assessment years 2006-07 to 2008-09. No benefit of telescoping has been allowed by the CIT(A) in respect of said declaration in the hands of assessee and no ground of appeal has been raised against the said denial by the CIT(A). In the totality of the above said facts and circumstances, we find no merit in the grounds of appeal raised by the Revenue for estimation of GP @ 15% as the basis for applying GP has been deleted by the Tribunal in group of furnace cases decided earlier. Further, there is no merit in any addition on account of investment for the alleged production under section 69C of the Act. We allow the grounds of appeal raised by the assessee with the direction to the Assessing Officer to compute the additional income in the hands of assessee in the respective assessment years on account of admission of clandestine removal of goods without payment of Excise duty by the assessee before the Settlement Commission, Commissioner (Appeals) of Excise and CESTAT. No other addition is warranted in the hands of assessee. - Decided in favour of assessee.
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2015 (10) TMI 2301
Penalty u/s.271(1)(c) - disallowance under the head payment made by the Branch Office to the Head Office (HO) - Held that:- The prime factors required to be considered while imposing penalty under section 271(1)(c) are concealment of particulars of income or submission of inaccurate particulars of such income. There is no dispute that the assessee had disclosed all details about its HO Expenses and therefore it could not be treated as concealment of particulars of its income or furnishing inaccurate particulars of income. We also hold that as long as there was a possibility to understand the provision in different ways and the assessee had chosen one, the occasion to invoke section 271 did not arise. In the matter of Jugalkishore Hargopal Das (2000 (1) TMI 32 - KERALA High Court) held that if an assessee offers an explanation, the AO has to consider the acceptability of the explanation and pass necessary orders, that if the explanation is found acceptable, notwithstanding addition made by treating the amount as income from undisclosed sources penalty may not be levied. Also see NG Technologies Ltd. [2014 (12) TMI 481 - DELHI HIGH COURT] - Decided in favour of assessee.
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2015 (10) TMI 2300
Rectification of mistake - excise duty provision remained allegedly unpaid before the due date of filing of the return of income - Held that:- As per S. 154, the Assessee is entitled to satisfy the act of payment by furnishing evidences when opportunity is afforded to him. The assertions made tax audit report can not necessarily be taken as gospel truth. The Assessee has attempted to avail the opportunity before the CIT(A) to which coterminous powers are extended without success. The Assessee has attempted to lend support to eligibility of deduction with reference to tax audit report and return of income of subsequent assessment for the contention that claim for deduction has not been made in the next year while the Assessee was eligible for it in terms of S. 43B. Hence, having regard to the fact situation, we consider it expedient that the issue is set-aside to the file of the Assessing Officer to afford one more opportunity to the Assessee to place on record the evidences of actual payment of outstanding excise liability. The AO shall determine the quantum of deductions towards impugned excise duty provisions available to the Assessee for the relevant assessment year 2005-06 in accordance with law. The issue is therefore remitted to the file of AO in terms of above observations. Disallowance of warranty provision by way of rectification while computing the income under the normal provision of the Act - Held that:- AO has rejected the aforesaid amount of ₹ 1.49 cr. in order u/s 154 on the ground that it is contingent in nature based on tax audit report which is ex facie found to be based on incorrect presumption and thus wrong premise. Therefore, the entire amount would stand allowed on this score alone. Secondly, the entire argument is based on the acquisition of liability in slump sale which involves examination of the records of the transferor co. qua the issue and such exercise is not amenable to S. 154. Thirdly, the Assessee has not claimed any expenditure on this payment in the books. It has simply reduced the outstanding liability on payment. Therefore, the issue, if at to be examined, involves obvious complexity and cannot be said to be emanating apparently from records. The text and tenor of the Ld. DR itself suggests so. The facts marshaled by the Ld. DR on the other hand seeks to enlarge the reasonings of the AO which is not permissible in so far as exercise of jurisdiction under 154. These reasons apart, the contention of the Assessee that set off of the impugned warranty payments of ₹ 1.49 cr. against the gross liability of ₹ 1.51 cr. was express and explicit in the original assessment order dated 31/12/ 2007 after due deliberation has not been rebutted by the Revenue. Therefore, there is no justification to exercise power under section 154 concerning the issue. Addition towards warranty provision to the book profits computed under section 115JB on the ground that the liabilities are of presumably of contingent nature as reported in the tax audit report and not ascertained liability - Held that:- The relevant facts and tax audit report were available to the Revenue for its verification, if considered expedient. It will be far fetched to conclude on the basis of such remarks that the warranty provisions are in the nature of contingent liability particularly when the assessee is making specific denial. The possible difference in opinion can not be branded as ‘mistake apparent from record’. As stated, the records says exactly opposite to the version of the AO which is the foundation of this addition. In the light of aforesaid observations, we do not consider it necessary to deal with the various citations made during the course of hearing. Once the report itself has been blatantly misread which triggered an ab-initio perverse conclusion, all other incidental arguments on merits are rendered extraneous. Therefore, order of the CIT(A) on the issue deserves to be vacated and as a consequence, the addition to the book profit on this score stands deleted. Provision of doubtful debts while computing the book profits under section 115JB - Held that:- It is the case of the assessee as per clarification reply dated 6/03/2009 placed before AO that similar to the impugned provisions for doubtful debts substracted which has been disallowed by the Assessing Officer holding the same to be provision in the nature of unascertained liability, the assessee has also simultaneously added back provision of the similar nature to the extent of ₹ 2,51,53,409/- in the books which has resulted in substantial increased in the books profits. This aspect has not been dealt with by the Revenue. We find that the Assessing Officer could not have rectified the impugned amount debited to the Profit & Loss Account toward doubtful debts without applying the same yardstick to the credit amounts emerging from the same records. Therefore, the contention of the assessee deserves to be accepted on this count also and addition to the book profit requires to be deleted - Decided in favour of assessee as directed.
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2015 (10) TMI 2299
Genuineness of the transaction - Sale proceeds of shares in Bolton Properties Ltd. received by the appellant as income from undisclosed sources - assessee claimed the same as exempt under section 10(38) - Held that:- Considering the fact that some of the transactions were off marked transaction cannot be a ground to treat the transaction as a sham transaction. We are of the considered opinion that the assessee has discharged its onus of proving the fact that shares were purchased by the assessee in the year 2002 which were dematerialized in the Demat account of the assessee on 23/5/2003 and therefore these shares were held by the assessee up till the same were sold from the Demat account of the assessee. The transaction of holding shares are reflected in the Demat account and the sale of shares are also through Demat account and consequently the transaction cannot be doubted as sham or bogus transaction. Hence, we delete the addition made by the AO on this account. The orders of the authorities below qua this issue are set aside. - Decided in favour of assessee.
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2015 (10) TMI 2298
Transfer of the property by way of distribution of assets on retirement of two partners - LTCG or STCG - assessee contended that what has been transferred to the retiring partner is 50% of the FSI retained by the assessee firm which would naturally result into a LTCG to the firm - Held that:- What was available with the assessee after transfer of land under DA is only 50% of the land along with FSI available on the said 50% of the land. Accordingly, we find that the AO was not justified in considering FSI available on the entire land comprising of 50% portion which was already transferred under the DA and has already been subjected to capital gains for the assessment year 2006-07. As decided in the case of Citibank (2003 (4) TMI 92 - BOMBAY High Court) the land is an independent and identifiable asset and it continues to remain so even after construction of the building thereupon. Therefore, the land even if it is owned by the assessee for more than 36 months, it will be a long term capital asset and the gain arising there-from it will be a LTCG. Thus, the Hon’ble High Court has held that if there is a construction on the land which is a depreciable asset then the land and building has to be bifurcated and the super structure has to be treated as STCG and the land will be treated as LTCG. Similar view has been taken in the case of Hindustan Hotel Ltd. (2010 (10) TMI 16 - Bombay High Court). Accordingly, in view of the above facts and circumstances as well as the judgments of the Hon'ble jurisdictional High Court, we do not find any error or illegality in the order of the CIT(A) in allowing the claim of the assessee regarding capital gain as long term capital gain u/s 45(4) arising from the land retained by the assessee which was purchased in the year 1960. - Decided against revenue.
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2015 (10) TMI 2297
Reopening of assessment - condonation of delay - Held that:- In the matter of condonation of delay, no doubt lenient view has to be taken while interpreting the sufficient cause of delay however, this does not mean that the litigant has a free license to approach the court on its will. Therefore, in the absence of any satisfactory or cogent explanation, the inordinate delay in filing the CO remains unexplained with sufficient or reasonable cause. Accordingly, we decline to condone the delay of 803 days in filing the CO and consequently the CO filed by the assessee is dismissed being barred by limitation. Alternative plea that this issue can be raised under rule 27 of the ITAT Rules even without filing CO or appeal against the impugned order - Held that:- As per rule 27 of the ITAT Rules, 1963, the respondent even without filing an appeal can support the order of the CIT(A) on any of the grounds which have been decided against the respondent. Thus, the scope of raising a plea against the maintainability of the appeal without filing the appeal is limited under rule 27 of the ITAT Rules. In other words, if the respondent succeeds on the plea raised under rule 27, then the impugned order of the CIT(A) would stand and will have full effect insofar as it is against the revenue. Thus if the plea raised by the assessee is accepted as regards the validity of the assessment order then the effect of the same would be only to the extent that the appeal filed by the revenue will be defeated. - Decided against assessee and revenue both.
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2015 (10) TMI 2296
Addition under section 40A(2) - Held that:- In his impugned order, the ld. CIT(Appeals), however, has assumed that two parties, namely M/s. Regal Nirman (P) Ltd. and M/s. Prime Global (P) Ltd. are unrelated parties and it appears that on this wrong assumption, he has proceeded to confirm the disallowance made by the Assessing Officer under section 40A(2). In this regard, limited relief that has been sought by the ld. counsel for the assessee at the time of hearing is that the matter may be sent back to the ld. CIT(Appeals) in order to give the assessee an opportunity to establish that M/s. Regal Ni rman (P) Ltd. and M/s. Prime Global (P) Ltd. are also the parties related to the assessee and to decide the issue afresh relating to the disallowance under section 40A(2) after verifying this position. Accordingly, set aside the impugned order of the ld. CIT(Appeals) on this issue and remit the matter back to the ld. CIT(Appeals) for deciding the same afresh after giving the assessee proper and sufficient opportunity of being heard.- Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 2295
Delays in remittance of TDS amounts - delay on the part of the bank or the clearing house - Held that:- Remittance of TDS which were effected by the assessee either through e-gateways, or by cheques. These were admittedly done before the due dates. Such payments once made before the due date, it was beyond the control of assessee to ensure its transmission to the Government account within such due date. Assessee could never be faulted for delay on the part of the bank or the clearing house, whatever may be the rules governing receipts and payments into the Central Government account. In our opinion, reason given by the CIT (A) cannot be faulted with. We do not find any reason to interfere with his orders.- Decided in favour of assessee.
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Customs
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2015 (10) TMI 2333
Export of prohibited goods - Agarwood of a plant Acquilaria malaccensis - Whether Agarwood seized from the appellant can be confiscated under Section 113 and whether penalty can be imposed upon the appellant under Section 114 of the Customs Act, 1962? - Appellant explained the licit acquisition of agarwood and stated that he was carrying it to Mumbai for local sales and not for taking to Bangkok - No valid visa with appellant at the time of seizure - Revenue contended that appellant has taken Agarwood earlier as well to Bangkok and could not produce any evidence for legal acquisition of seized goods - Notification No.3(RE-2003)/2002-2007 read with Schedule 2 (Chapter-12) of Export Policy 2002-07 prohibits export of Agarwood. Held That:- There is no evidence on record that appellant during earlier two visits to Bangkok carried Agarwood - No valid visa found in passport of appellant for going to Bangkok - Seized goods are also neither notified goods nor specified goods under Customs Act, 1962 and prohibitions under Export Policy will come into operation if goods are brought into Customs area - Order of confiscation and penalty liable to be set aside - Decided in favour of Appellant.
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2015 (10) TMI 2332
Suspension of Custodianship – Unauthorised removal of seized Red Sander logs - Whether suspension was in violation of principles of natural justice and Commissioner was justified in invoking the provisions of Regulation 11(2) of Handling of Cargo in Customs Area Regulations 2009, when no enquiry against appellant was pending? – Appellant contends that there has been violation of tenets of natural justice as appellant was neither given any pre-decisional nor any post decisional hearing - After suspending custodianship neither SCN was issued under Regulation 12 of Handling of Cargo in Customs Area Regulations (HCCAR), 2009, nor any enquiry was initiated and thus Commissioner wrongly stated that an enquiry was pending or contemplated - Commissioner had not proved that removal of seized container was done with knowledge of appellant thus impugned order was absolutely erroneous. Revenue contended that offence committed in contravention to provisions of HCCAR, 2009 by appellant was not new and there was lack of supervision on part of appellant's CFS and no surprise checks were conducted during the night time to ensure that staffs on night duty would remain vigilant - Appellant admitted the role of his employees in illegal act of removal of seized container thus was responsible for every act by their employees - Where immediate action is not required, a prohibitory order can await compliance with requirements of natural justice. Held That:- Principles of natural justice have not been violated - Appellant being custodian of seized container had violated Regulations enshrined in 6(1)(a), 6(1)(f), 6(1)(i), 6(1)(k) and 6(1)(q) of HCCAR, 2009 – Action of Commissioner was fully justified in invoking provisions of Regulation 11(2) as it cannot be said that appellant was not aware of illegal removal of seized container - Employer is liable for acts of its employee in course of employment - Repeated instances of smuggling of goods in appellant’s CFS confirms serious lapses on part of custodian and cannot be overlooked – Commissioner directed to complete the investigation proceedings and pass orders as contemplated under Regulations of HCCAR, 2009 within a period of three months – Decided in favour of Revenue.
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2015 (10) TMI 2331
Recovery of duty credit granted under Served From India Scheme - brand 'Four Seasons' is not an Indian brand - Foreign Exchange Earnings - Petitioner contends that Revenue denied benefits implicitly secured by them under FTP 2009-14 and seek to amend eligibility criteria under SFIS - Power to amend FTP 2009-14 lies only with Central Government and as such SFIS and PIC minutes are contrary to FTP 2009-14 - Held That:- Challenge to impugned SCN as well as PIC minutes would have to fail - Not permissible for authorities adjudicating claims arising to recover from Petitioner SFIS benefits granted till 2007-08 and they are falling within earlier policy framework - Decision made in case of Shri Naman Hotels Private Ltd v/s The Union of India and Others [2015 (9) TMI 564 - BOMBAY HIGH COURT] followed - Decided in favour of Petitioner.
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2015 (10) TMI 2330
Revocation of license - Misdeclaration of goods as scrap metal - Appellant contends that there was a lapse of two years in completion of proceedings whereas it should be within nine months from date of receipt of offence report as specified in Circular No. 9/10-Cus and order not in confirmity with Regulation 22 - In absence of any evidence of involvement in fraud and as appellant has already suffered huge loss, he should not be penalised and order needs to be set aside - Revenue contends that CHA violated conditions in bond executed under Regulation 10 of CHALR 2004 and failed to comply with Regulation 13(a) of CHALR, 2004 - Further contended that Regulation 13(d) and 13(e) violated and attempted clearance of mis-declared along with negligence in supervision to ensure proper conduct of employees. Held That:- CHA got the endorsement for examination of goods from another D.C. Customs located at different CFS where goods were not lying and as such obtained examination report thus it clearly proves involvement of CHA and his employees and he cannot plead innocence - Applicant committed gross violation of Regulation 20 while acting as CHA and Applicant being experienced as a CHA when he paved way for his Power of Attorney to indulge in serious malpractices which ultimately resulted in loss of revenue to Custom House to the extent of more than 80 lakhs, Revenue is justified in revoking the license as it would be detrimental to interest of nation - Decison made in case of CC, Customs Vs. H.B. Cargo Services [2011 (3) TMI 816 - ANDHRA PRADESH HIGH COURT] followed - Decided in favour of Revenue.
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2015 (10) TMI 2329
Confiscation of goods and vehicle under Section 111 (b) and (d)- Gold Bars - Appellant contends that seized goods are not having any foreign markings and have purity of less than 99.99% - Gold bars were not of smuggled nature thus case is not covered under Section 123 and once bills are produced by appellant such gold and vehicle are not liable to confiscation - Revenue contends that no document showing licit acquisition of gold bars was produced by appellant at the time of interception and seizure and bills were created after thought - Quantity and purity of seized goods cannot be produced from jewellery thus order passed is correct. Held That:- Contention of Revenue that report of chemical examine will prevail over oral statements made but chemical examiner can only give percentage of gold in gold bars but cannot say whether seized goods are of foreign origin and purity of gold has been certified to be 99.92% to 99.96% - Seized goods cannot be considered to be of foreign origin. seized gold bars do not have uniform weight/purity and appellant has shown purchase bills covering gold bars having assorted size, weight and purity and person who sold seized goods has also confirmed to have supplied them to appellant - Minor mismatching of difference in weight will not make bills as an after thought - Appeal allowed - Decided in favour of Appellant.
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2015 (10) TMI 2328
Rejection of refund of duty – Provisional assessment under Section 18 – Burden of proof could not be proved – Appellant contends principal of unjust enrichment not applicable as refund claim is prior to amendment of Section 18 of Customs Act, 1962 – Certificate of Chartered Accountant produced as a proof – Revenue contends that it is an old case and documents were not produced to lower authorities - Matter should not be remanded – Held That:- Appellants should be given an opportunity to place the document before lower authorities in interest of justice – Matter remanded back.
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2015 (10) TMI 2327
Failure to comply with direction of Tribunal – No SCN issued under Regulation 22 of CHALR, 2004 – No offence reported to DRI thus license should not have been revoked – Appellant contends that once mandatory condition is not fulfilled, authority shall have no jurisdiction over the matter - Held That:- Tribunal shall not give further direction which is beyond jurisdiction since there is no date of offence report coming out from record to revive proceeding - Appeal is allowed to the limited extent against revocation of license – Decision made in case of Commissioner of Customs Vs. A.M. Ahmed & Co [….] and Tata Chemicals Ltd. Vs. Commissioner of Customs (Preventive), Jamnagar [2015 (5) TMI 557 - SUPREME COURT] followed. Proceeding pending before Tribunal shall have its independent effect – Court does not agree that present matter is out of its jurisdiction – Decided partially in favour of Appellant.
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Corporate Laws
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2015 (10) TMI 2326
Oppression and mismanagement in affairs of Company – It is case of Petitioner that Respondent has not conducted any business since year 2000 nor has been regular in filings with ROC – 2nd Respondent filed various forms with ROC using digital signature of Petitioner which was not permitted and has taken advantage of CLS Scheme – No approval of shareholders taken in doing such acts - Whether petitioners have any locus to file the present petition? - Whether petitioners have made out any case of oppression and mismanagement? - Whether the petitioners are entitled to seek reliefs as prayed in the petition? Held That:- 1st Petitioner has known 2nd respondent as both were the Chairman and Managing Director of M/s. Twenty First Century Management Services Limited for quite long time - Petitioners kept silence over all the years even after knowing the activities of R1 for reason that they have already transferred their shares - It is a clear case of ulterior motive and as such petitioners have no locus standi - Issue answered against petitioners. Further,petitioners are no longer shareholders thus cannot question allotment of shares and as such at this belated time have no locus standi to question the same - Petition is an abuse of process of law as petitioners have exited the Company, there cannot be any acts of oppression against them and in so far as mismanagement is concerned, when there is no business activity in the company there cannot be any allegation of mismanagement in the affairs - It is not the case of petitioners that they have invested huge money as there is no documentary evidence to prove that petitioners have invested any money in the company. It is unequivocal that petitioners are not entitled to any reliefs as prayed - Person approaching Court with unclean hands is not entitled to seek equity - Petition is miserably failed and liable to be dismissed – Decided in favour of Respondents.
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Service Tax
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2015 (10) TMI 2364
Refund of service Tax – Claimed under Service received by SEZ developer in terms of Notification No. 40/12-ST – Refund rejected on ground that filed beyond one year from date of payment of 15% advance and as such condition of clause 3(e) of Notification violated – Appellant contends that initially 15% advance payment was made by Respondent to service provider but on final billing stage 15% advance was reduced from total amount and on the balance amount service tax was charged - Refund claim filed within one year from date of payment against bills. Held That:- Service provider has charged service tax on net cost of provided services after adjusting 15% of advance already paid to service provider - Refund claim not found to be time barred in respect of 21 invoices involving refund of ₹ 17,80,316/- - No evidence regarding actual date of payment of service tax has been provided regarding one invoice no. Nashik/Misc/2012-13/RAB-021. Refund claim of ₹ 65,624/- - Date of invoice should not be taken as relevant date thus not found maintainable as there is no such provision in Notification. One year period envisaged in notification correctly reckoned from date of payment of service tax to service provider and not from the date of advance payment - Impugned orders are sustainable – Decided partially in favour appellant.
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2015 (10) TMI 2363
Liability of Service Tax - Online Information Access and/or Database Retrieval Service – Whether the amounts recovered by Appellant from small time internet service provider who took connection from appellant for rendering services to their clients would be liable to service tax? – Held that:- Board, through Circular No. B.11/1/2001-TRU, did not want to tax the amounts recovered by an ISP for interconnectivity services - Nothing found on record to show that small time ISPs had not discharged any service tax liability on the amounts collected by them from their clients - Revenue cannot argue against their own Board’s clarification – Decided against the Revenue.
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2015 (10) TMI 2362
Refund of CENVAT Credit - Manpower Recruitment Agency Service, Management Consultancy Service and Security Agency Service - Whether appellant is eligible for refund of CENVAT credit under Rule 5 of CENVAT Credit Rules, 2004 read with Notification No. 5/2006-N.T? – Held That:- Services provided are either covered by inclusive part of definition of input service or are necessary to provide output service – Appellant eligible to take credit. Rent-a-Cab and Outdoor Catering Services - Whether appellant has recovered any amount towards these services from employees or not? - Held That:- Original authority is required to verify the matter and quantify amount admissible – Matters remanded back.
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2015 (10) TMI 2361
Liability of Service Tax – Club or Association Service or Convention Services – Charge Subscription and Empanelment Fees - Appellant contends that services rendered would not fall under category of taxable services as members cannot be categorised as clients to whom services are provided – Held That:- Services rendered by appellant are for their own member banks and are more or less in consonance with Rules of appellant as published – Impugned order is unsustainable and set aside – Decision made in case of Federation of Indian Chambers of Commerce and Industry, M/s Electronic and Computer Software Export Promotion Council Versus CST, Delhi [2014 (5) TMI 183 - CESTAT NEW DELHI] followed – Decided in favour of appellant.
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2015 (10) TMI 2360
Restoration of appeal - Non- compliance of Stay Order - Pre-deposit of ₹ 8,00,000.00 - Partial compliance before dismissal of appeal and deposited balance after dismissal - Appellant pleads reason of financial hardship and to view the matter leniently - Revenue contends that amount deposited in month of June and July 2015 could not be verified - Held That:- Appellant have complied with stay order partly before dismissal of appeal - Submitted reply to letter of the Assistant Commissioner, Central Excise, Customs and Service Tax Vadodara-I stating amount remaining was paid in June and July 2015 - Department may initiate separate proceedings against any discrepancy - appeal restored.
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2015 (10) TMI 2359
Liability of Service Tax - Revenue states that appellant took CENVAT credit equal to said amount on various services which could not be considered to be input services - Appellant contends that credit on bank charges by bank is eligible as decided in case of Meghamani Dyes & Intermediates Ltd. vs. CCE, Ahmedbad [2014 (1) TMI 558 - CESTAT AHMEDABAD] - Credit on Insurance charges and Taxi charges has been allowed in various judgements - Credit i.r.o. Warehousing Rent and Commission charges has been allowed in case of Danmet Chemicals P. Ltd. vs. CCE, Mumbai [2013 (2) TMI 590 - CESTAT MUMBAI] and Zinser Textiles Systems Pvt. Ltd. vs. CCE, Ahmedabad [2014 (6) TMI 133 - CESTAT AHMEDABAD] respectively - Further contended that extended period is not invocable as there was no intention on part of appellant to take inadmissible CENVAT credit as credit taken was duly reflected in ST-3 return. Held That:- Cases cited covers the issue in Appellant's favour - Allegation of suppression cannot be sustained as there is force in contention of appellant that credit taken was duly reflected in ST-3 return - Decided in favour of Appellant.
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2015 (10) TMI 2358
Valuation - Reimbursement Expenses - Whether reimbursement of actual expenses undertaken by service provider are required to be includable in assessable value of services so provided by them or not? - Revenue contends that fact of expenses actually incurred requires verification and it includes reimbursement of incentives paid to workers as well which cannot be held as expenses incurred in behalf of service recipient - Held That:- Legal position is clear that expenses actually incurred and reimbursed by service recipient are not to form part of assessable value of services - Fact of the matter needs to be seen whether receipts by appellants were on account of reimbursement of actual expenses or not - Matter remanded back.
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2015 (10) TMI 2357
Refund of Service Tax - services used for Supply of ATF for foreign going aircraft - Refund claimed on grounds that ATF which has been fueled by them in air crafts that were undertaking foreign voyage and hence it is export of goods - Appellant contends that as per Notification 37/2010 services provided by air port authority to any other persons is included for refund of service tax - Held That:- Service tax discharged by MIAPL is under Section 65(105)(zzm) - Notification 17/2009-ST specifically grants refund of tax paid on services provided under category mentioned therein and service tax paid by MIAPL is under category which was not classified under Notification 17/2009-ST - Found no merit in appeal - Decided against the assessee.
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2015 (10) TMI 2356
Liability of Service Tax - Maintenance and Repair Service - scope of SCN - First Appellate Authority confirmed demand of service tax and interest thereof from 16.05.2008 to 31.3.2009 under the category of "Supply of Tangible Goods" service - Held That:- Appellate authority gone beyond the allegation made in SCN and impugned order to that extent it confirms the liability from 16.5.2008 under category of "supply of tangible goods" service is unsustainable - Impugned order set aside to that extent - Decided partially in favour of assessee.
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2015 (10) TMI 2355
Pre-deposit for hearing - Appeal dismissed for non-compliance - Appellant states that stay order was put to challenge before the Hon’ble High Court of Kerala and matter is still pending - Held That:- Dismissal of appeal for non-compliance not brought to notice of the Hon’ble High Court and no order of the Hon’ble High Court given for restoration of appeals - Only direction is no coercive proceedings would be initiated against appellant - Appeal dismissed - Decided against the Appellant.
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Central Excise
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2015 (10) TMI 2354
Duty demand - Clandestine removal and manufacture of goods - Allegation based predominantly on the basis of 62 reconstructed copies of delivery challans-cum-proforma invoices - held that:- Reconstructed challans were not recovered from the premises of any of the appellants. First Appellate authority in his order has also observed that nearly 20 of these reconstructed documents are fake or incorrect and accordingly dropped demand of ₹ 10,69,486/- out of total demand. Further, first Appellate Authority carried out detailed inspection during the proceedings before him and observed in Para 5.4.2 of the OIA dt 29.7.2011 that standing alone these documents have no evidentiary value as these are not found at the factory or recovered during the search. Regarding admissibility of documents whose origin is not disclosed it has been held by CESTAT, Delhi, in the case of Pan Parag India Ltd vs CCE [2012 (6) TMI 100 - CESTAT, NEW DELHI] that documents whose origin is not known cannot be relied upon for establishing a case. Once the author of the documents is uncertain or documents are unsigned then the same cannot be put to test and scrutiny of an aggrieved person. Cross examination of the person who created these documents cannot be allowed to the appellants, as the source has no been identified. It has also not been brought on record as to from where main appellant procured the raw-material for manufacture of clandestinely cleared goods as held by Allahabad High Court in the case of Continental Cement Co Vs UOI [2014 (9) TMI 243 - ALLAHABAD HIGH COURT]. No Confirmatory statements of the buyers are available to corroborate the authenticity of 62 reconstructed documents and the supply of finished goods contained therein. All such persons have stated that they have not received any goods against the reconstructed invoices. - 62 reconstructed challans-cum-proforma invoices cannot be relied upon for fixing the case of clandestine manufacture and clearance of finished goods against the appellants. No variation in the stock of raw-materials/finished goods was noticed in the factory of the main appellant during the search. No finished goods and cash have been seized anywhere in transit or in the premises of the buyers who disowned having received any such goods. No investigation has been done in order to refute the claim of the main appellant, by recording the statement of transporter or the supplier of trader from whom the goods have been claimed to be purchased from JBMC. It is a well established law that documentary evidence will prevail over an oral evidence especially in these proceedings where cross examination of such witness is not provided. - documentary evidence of DXN having emphatically held out through their marketing agency (Daehsan) and the latter s stockists/distributors before the general public that their products viz. RG & GL capsules were strictly herbal food supplements and recommended as drugs stands unrebutted and overrides an oral evidence to the contra given by any Daehsan functionary or stockist/distributor in cross-examination. It is trite law that documentary evidence would prevail over oral evidence. - Decided in favour of assessee.
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2015 (10) TMI 2353
Refund claim - CENVAT Credit - denial of Cenvat credit refund on the ground that supply of goods from one 100% EOU to another 100% EOU will not be considered as 'physical export' - whether, the time limit prescribed in Section 11B of the Act would be applicable for refund of accumulated Cenvat credit in terms of Rule 5 of the Rules: and, supply of goods between two EOUs, which is recognized as 'deemed export' under the FTP, would be considered as 'physical export'. for the purpose of getting the benefit of refund under Rule 5 of the said rules. Held that:- In exercise of the powers conferred by Rule 5 of the Rules, the Central Government vide Notification No. 5/2006-C.E.(N.T.) dated 14.3.2006 prescribed the conditions/limitations for claiming refund of service tax by a manufacturer. In Appendix No. 6 of the said notification, it has been provided that refund application in Form A is to be filed with the jurisdictional Central Excise authorities before the expiry of period specified in Section 11B of the Central Excise Act, 1994 - The term 'relevant date' has neither been defined in Rule 5 of the Rules nor in the notification issued there under. Further, the said term defined in Section 11B of the Act is not compatible with the situation envisaged in the aforesaid rule. Therefore, there was ambiguity in interpreting the importance/significance of the term 'relevant date' in context with the said rule. The Hon'ble High Court of Madras in the case of GTN Engineering (2011 (8) TMI 960 - MADRAS HIGH COURT), upon analysis of the provisions of Rule 5 of the Rules, Notification dated 14.03.2006 and Section 11B of the Act, have held that the date on which the export of the goods was made and for such goods, refund of Cenvat credit is claimed, should be construed as the relevant date for the purpose of Rule 5 of the Cenvat Credit Rules. Finding recorded in the impugned order that physical export is not to be equated with deemed export and thus, the appellant is not entitled for refund of Cenvat credit in terms of Rule 5 of Rules, in my considered opinion, is not legal and proper, in view of the judgment of Hon'ble Gujarat High Court in the case of Shilpa Copper (2010 (2) TMI 711 - GUJARAT HIGH COURT ). - impugned order so far as to the rejection of refund claim on the ground of being time barred under Section 11B of the Act is sustained. The rejection of refund claim on the ground that supply of goods between two EOUs, is not eligible for refund being a 'deemed export' is set aside - Decided partly in favour of assessee.
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2015 (10) TMI 2352
Benefit of concessional rate of duty under notification 8/99 dated to 8.2.99 - Non production of clarification on whose basis exemption claimed - Held that:- so far as availability of exemption is concerned the matter is settled by the decision of Hon ble Supreme Court in case of Modi rubber Limited (1986 (8) TMI 60 - SUPREME COURT OF INDIA) in favour of the revenue. We also find that so far as invocation of provisions relating to penalty are concerned the law has been laid down by Hon ble Supreme Court in case of Orient fabrics (2003 (11) TMI 75 - SUPREME COURT OF INDIA) against the revenue. In view above we uphold the demand of duty and set aside the imposition of penalty. - The 2nd appeal deals with adjustment of the above demand and penalty against a sanctioned refund. In view of the vacation of penalty the appellant s succeed in their appeal insofar as adjustment of penalty against the sanction of refund is concerned. They ve become entitled to refund of the penalty amount adjusted earlier. - Appeal disposed of.
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2015 (10) TMI 2351
Duty demand - Clandestine removal of goods - Demand on the basis of electricity consumption - Held that:- Admittedly the search was conducted in the factory premises of the assessee on 30.3.2007 and certain records were seized which pertained for the period January, 2007 to March, 2007. The departmental officers without doing any other exercise, compared the clearance during that period for electricity consumption and made the basis to determine the manufacturing capacity of the plant and concluded that M/s. Satguru has cleared 18000 MT of cement without payment of duty in that period. Consequently, for the impugned period on the basis of the formula for manufacture of 1 MT of cement, how much electricity is consumed the whole demand is proposed. Infact in assessee s own case for the earlier period, this Tribunal vide Order No.52006 52008/2015 dated 25.06.2015, this Tribunal has held that demand on the basis of electricity consumption is not sustainable - demand on the basis of electricity consumption to manufacturer the cement for whole of the period is not sustainable. We further found that during the course of investigation, certain documents were resumed and on the basis of those documents, electricity consumption was derived, the same was made basis of demand which is set aside. - only basis for the demand of duty is electricity consumption but no comments have been made by the adjudicating authority to demand on the basis of documents seized during the course of investigation - Matter remanded back - Decided in favour of Revenue.
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2015 (10) TMI 2350
Imposition of penalty - Penalty on co-noticees - if the main noticee discharges the duty liability alongwith interest and 25% penalty, whether the proceedings would come to an end in regard to other co-notices also - Held that:- in Abir Steel Rolling Mills case [2013 (7) TMI 405 - CESTAT NEW DELHI], the Tribunal has taken the view that if the proceedings have been concluded against the main notice, as provided in these provisions then no further proceedings can be continued against co-noticees. - The interpretation by the Tribunal of the words "such person" and "other persons" made in Abir Steel Rolling Mills case is more agreeable to me. The Tribunal in that case, has not only considered that when the proceedings against the manufacturer/assessee stand concluded on payment of disputed amount of duty plus interest and 25% of the duty as penalty, there would be no sense in continuing the proceedings for imposition of penalty under Rule 26 against other persons like traders who had purchased the goods, transporters who had transported the goods cleared by manufacturer/assessee, the directors/employees of the manufacturer/assessee company. The Tribunal has discussed the category of persons that would fall into the group 'other persons'. Further the Board's Circular No. 831/08/06-EX dated 26.7.2006 has also been considered. I concur with the ratio laid in Abir Steel Rolling Mills case, which is squarely applicable to the instant case, the facts in issue being similar. - penalty imposed on the appellants is unsustainable. The same is set aside - Decided in favour of assessee.
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2015 (10) TMI 2349
Manufacture - converting H.R. Coils/strips into C.R. Strips - whether the activity undertaken by the appellants amounts to manufacture or not as per Section 2(f) of the Central Excise Act, 1944 - Held that:- On the basis of the records available, the ld. Commissioner has not given independent finding thereon, who is at liberty to examine the relevant records and thereafter to arrive at a decision whether the activities undertaken by the appellant amounts to manufacture or not. - Commissioner has made an observation that the appellant has not provided co-relation of the entries in diaryA-38. Therefore, the co-relation statement cannot be relied upon. On the contrary, the contention of the ld. Counsel is that he has supplied the co-relation statement and corresponding invoices to the adjudicating authority but the same has not been considered, this fact is to be examined by the adjudicating authority. - As the impugned order has not complied with the directions of the Hon'ble Apex Court, moreover, have also not examined the co-relation of the diary A-38 with the corresponding invoices, therefore, the matter needs examination at the end of the adjudicating authority. Therefore, we set aside the impugned order and remand the matter back to the adjudicating authority - Decided in favour of assessee.
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2015 (10) TMI 2348
Refund of duty paid earlier on export of goods - Exemption of Basic Excise Duty in terms of Notification No. 6/2002-CE as amended by Notification No. 23/2004-CE dated 8.7.2004 - original adjudicating authority rejected the refund claims on the grounds that the appellants were not eligible for availing CENVAT Credit for inputs used in the final product in terms of Rule 6(1) of the Cenvat Credit Rules - held that:- Issue in the case of Jolly Board Ltd. (2014 (3) TMI 124 - CESTAT MUMBAI) is different than the issue in the present appeal. Further, I find that the learned Commissioner (Appeals) has admitted that no tax was payable when the tractor was cleared in the DTA for testing purpose and the same could have been done by adopting the process of Rule 4(5)(a) of the Cenvat Credit Rules. Accordingly, even when the tax is paid under mistake by way of reversal of CENVAT Credit, the same becomes refundable on the subsequent export of the goods by the assessee. Hence, in view of the fact that the same tractors were admittedly brought back in the factory of the appellant and after testing etc. were cleared for export under Bond and by virtue of Rule 6(6)(v) of Cenvat Credit Rules the provisions of sub-rule (i), (ii), (iii) & (iv) of Rule 6 are inapplicable. Accordingly, the amounted deposited become refundable - Impugned order is set aside - Decided in favour of assessee.
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2015 (10) TMI 2347
Benefit of reduced penalty - whether the Commissioner after holding the respondents guilty of committing violations of exemption notifications could have imposed penalty lesser than that provided in 114A of the Customs Act and 11AC of the Central Excise Act - Held that:- period in dispute in this case pertains to November 1990 to February 1996. It is also not in dispute that the provisions of 114A of the Customs Act, 1962 and 11AC of the Excise Act, 1944 came into force with effect from 20/09/1996. Further both these provisions have not been specifically made applicable retrospectively. The judgements cited by the learned AR in the case of Pothys Cotton Products (P) Ltd. (2014 (12) TMI 690 - MADRAS HIGH COURT) and KRM International Ltd. (2014 (8) TMI 11 - MADRAS HIGH COURT) are not applicable in the facts and circumstances of the case as the period involved in this case is from November 1990 to February 1996, when the provisions of Sections 114A and 11AC of the Customs Act were not in force. Both the penalty provisions are applicable prospectively and not retrospectively as held by the Tribunal in the case of Lakshi Packaging (P) Ltd. (1997 (4) TMI 216 - CEGAT, MADRAS). - there is no merit in the Revenue s appeal - Decided against Revenue.
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2015 (10) TMI 2346
Claim of ownership of confiscated goods - appellant is claiming to be the owner of plant and machinery confiscated in the impugned order on the basis of the litigation between RIL and the appellant which was decided in arbitration on 14.03.2012, consequent to the arbitration proceedings, the appellant claims to be owner of the plant and machinery - Held that:- The respondent are claiming that said plant and machinery has been confiscated and there ownership rest with Government of India. Although this Tribunal has powers to entertain the appeals against the order passed by Commissioner of Central Excise / Commissioner (A) under Central Excise Act but this Tribunal has no jurisdiction to decide the ownership of the goods. Moreover, in the impugned order only plant and machinery owned by M/s. RIL has been confiscated. If appellant is claiming to be the owner of said plant and machinery it is a dispute of civil in nature and this Tribunal is not the proper forum to seek remedy for that. Moreover, it is the claim of the appellant in their written submission that they have approached to the respondent on 30.09.2011 first time to seek the permission of removal of its plant and machinery it is also a claim of the appellant that they were not knowing that any departmental proceedings are pending against RIL by issuance of the show cause notice dated 20.03.2000 which was adjudicated vide order dated 20.03.2007. When the proceedings of the respondent against M/s. RIL were not known to the appellant, question arises how the appellant came to know about the confiscation of the plant and machinery. Further, the appellant has written to the respondent to seek permission on 30.09.2011 why the appellant had not brought this fact in the knowledge of the Arbitrator. This act of the appellant creates doubts on the bonafides of the appellant. Therefore, the appellant has not come with clear hands. - Decided against assessee.
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2015 (10) TMI 2345
Cenvat Credit - Storage of input outside the factory - Removal of goods without necessary permission under Rule 8 of CENVAT Credit Rules 2004 - delivery of the letter written by the Appellant has been questioned by the Department - Confiscation and penalty - Held that:- Inputs were cleared without necessary permission and without reversal of appropriate amount of CENVAT Credit as undertaken by the Appellant. As per the provisions of CENVAT Credit Rules 2004, when the inputs are cleared as such from the factory premises, then equivalent amount of CENVAT Credit is required to be reversed. By not doing so, the Appellant has contravened the provisions of CENVAT Credit Rules 2004 and by virtue of the provisions contained in Rule 15(1) of CENVAT Credit Rules 2004, such inputs are liable to confiscation. Accordingly, the order of confiscation made by the Adjudicating authority is proper and cannot be faulted with. - However redemption fine imposed by the Adjudicating authority is reduced to ₹ 1 lakh. In case, the entire quantity of inputs were used in the manufacture of finished goods or cleared as such on payment of duty, then the question of imposing penalty under Section 11AC of Central Excise Act, 1944 read with Rule 15 of CENVAT Credit Rules will not arise, except for payment of interest on CENVAT involved from the date of clearance of inputs from the factory till they are used in the manufacture of finished goods or cleared as such on discharge of appropriate amount of duty. So far as imposition of penalties upon other Appellants is concerned, it is observed that these penalties have been imposed under Rule 26 of CENVAT Credit Rules 2004 and not under CENVAT Credit Rules 2002. Penalties upon the other Appellants for violating CENVAT Credit Rules 2004, can only be imposed under the penal provisions of CENVAT Credit Rules 2004 and not under Rule 26 of Central Excise Rules, 2002. Appeals filed by the other Appellants are accordingly allowed. - Decided partly in favor of assessee.
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2015 (10) TMI 2344
Admissibility of CENVAT Credit - Invocation of extended period of limitation - Capital goods - Demand of Secondary and Higher Education Cess - Held that:- Issue was settled by the Larger Bench in the case of Vandana Global Ltd (2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) ) in the year 2010. When an issue was disputable, then no intention to evade payment of duty or taking of wrong CENVAT Credit can be attributed on the part of the Appellant. Accordingly, 5 years extended period under Section 11A Proviso cannot be invoked. The demand period is from May 2009 to May 2010, whereas the Show Cause Notice was issued on 11.08.2011, which is clearly beyond the normal limitation period of 1 year and is required to be set aside. Accordingly, no penalties are imposable by the Appellant. So far as the admissibility of payment of Secondary and Higher Education Cess from the CENVAT Credit balance of Education Cess is concerned, it is observed from the First Proviso to Rule 3(7)(b) of CENVAT Credit Rules, 2004 that credit of Education Cess on excisable goods and Education Cess on taxable services, can be utilized only for payment of Education Cess on finished excisable goods or payment of Education Cess on taxable service. Accordingly, the stand of the Appellant that there is no bar on utilization of Education Cess credit balance for discharging Secondary and Higher Education Cess, is not correct. The same is required to be paid by the Appellant, with the liberty of taking equivalent amount of credit in the account of Education Cess. - Decided partly in favour of assessee.
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2015 (10) TMI 2343
Denial of CENVAT Credit - Job work - credit was denied by the department on the ground that no duty paid clearances were made by appellant as a job worker - Held that:- When the job worker appellant was entitled to the exemption under mandate of notification, that does not alter characteristics of manufacture under Section 2(f) of the Central Excise Act, 1944. Therefore, denial of capital goods credit to the appellant is uncalled for. - Decided in favour of assessee.
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2015 (10) TMI 2342
CENVAT Credit - whether the respondent is entitled to avail cenvat credit on MS round and pig iron which has been used by them for repair and maintenance of plant and machinery or not - Held that:- issue has already been settled by Hon’ble Rajasthan High Court in the case of Hindustan Zinc Ltd. [2006 (5) TMI 44 - HIGH COURT RAJASTHAN ] which has been affirmed by the Hon’ble Apex Court wherein it has been held that any inputs used for repair and maintenance of plant and machinery is entitled for cenvat credit. Therefore, issue is no more res integra. - Decided against Revenue.
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2015 (10) TMI 2341
Imposition of penalty - Held that:- Assessee was engaged in the manufacture of Pharmaceutical products under Chapter 30 of Central Excise Tariff Act 1985. - issue involved in this case is against the Assessee by the decision of the Larger Bench of the Tribunal, in the case of Indica Laboratories P Ltd vs CCE, Ahmedabad [2007 (5) TMI 19 - CESTAT,AHMEDABAD]. The Learned Advocate on behalf of the assessee submits that the Tribunal on the identical issue in their own case dropped the penalty as the matter was decided by the Larger Bench. - As the issue was decided by the Larger Bench, imposition of penalty is not warranted. - Decided in favour of assessee.
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2015 (10) TMI 2340
Manufacture of processed knitted/crocheted cotton fabrics - Eligibility of the benefit of the Notification No 4/2002-CU dtd 1.3.2002 - Held that:- Issue is covered by the decision of the Larger Bench of the Tribunal in the case of M/s Arvind Products Ltd and Others vs CCE&ST, Ahmedabad, [2014 (11) TMI 79 - CESTAT AHMEDABAD]. It has been held that the reference regarding admissibility under Sr No 12 of exemption Notification No 14/2002-CE dtd 1.3.2002 has answered in favour of the appellant and against the Revenue. The Tribunal in the case of M/s Vishal Fabrics P Ltd & others vs CCE, Ahmedabad [2015 (10) TMI 1126 - CESTAT AHMEDABAD] allowed the appeal on the identical issue. - Decided against Revenue.
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2015 (10) TMI 2339
CENVAT Credit on inputs - Demand confirmed without considering their defense - Held that:- There is a clear finding by the adjudicating authority that appellant has not produced the documents on the strength of which they want to avail Cenvat Credit. In these circumstances, matter needs examination at the end of adjudicating authority. Therefore, I set aside the impugned order and remand the matter back to the adjudicating authority for verification of documents on the strength of which the appellant wants to avail Cenvat Credit and thereafter pass the order after considering the documents produced by the appellant how much credit is entitled to and how much demand remains against the appellant to be confirmed. - Matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 2338
Valuation of goods - whether the cost of transportation from the factory to depot will be includable in the value of the goods during the period April, 2002 to March, 2003 - Held that:- Tribunal’s order mentioned above has been upheld by the hon’ble Supreme Court vide order [2015 (4) TMI 73 - SUPREME COURT]. In view of the said decision of the hon’ble Supreme Court we dismiss the appeal filed by the Revenue. - Decided against Revenue.
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2015 (10) TMI 2337
Benefit of input tax credit - Invocation of extended period of limitation - Held that:- Commissioner (Appeals) found that there was no any act of fraud, collusion or suppression of facts to invoke extended period. He has found no malafide conduct of the assessee availing the benefit of input tax credit for the relevant period April 2005 to March 2006. Appellant explained this fact while filing their return on 16.11.2006 to the jurisdictional authority. Nothing is apparent from record to show that there was deliberate contravention of any of the provisions of the law. Therefore, learned Commissioner (Appeals) held that adjudication is barred by limitation. - No infirmity in impugned order - Decided against Revenue.
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2015 (10) TMI 2336
Imposition of penalty under Rule 26 of Central Excise Rules, 2002 - Penalty on co-appellant - Held that:- Tribunal in the case of manufacturer (M/s Abhishri Packagings Pvt. Ltd) set-aside the impugned order [2013 (8) TMI 915 - CESTAT AHMEDABAD] following the earlier decision of the Tribunal in the case of M/s Sumphony Comforts System Ltd. vs Commissioner of Central Excise, Vapi [2013 (6) TMI 4 - CESTAT AHMEDABAD]. - As the appeal of the manufacturer is allowed by the Tribunal and the impugned order is set-aside, imposition of penalty on the co- appellant would not be warranted. Accordingly, the penalty is set-aside - Decided in favour of assessee.
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2015 (10) TMI 2335
Demand of National Calamity Contingent Duty (NCCD) - captive consumption - Held that:- Tribunal in the appellants own case for the earlier period [2015 (6) TMI 45 - CESTAT AHMEDABAD], set-aside the demand. - Following the same - Decided in favour of assessee.
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2015 (10) TMI 2334
Waiver of pre deposit - CENVAT Credit - Held that:- when the matter was called for ascertaining compliance, neither anybody is present on behalf of the appellant nor the compliance is reported. Accordingly, the appeal is dismissed for non-compliance with the direction of this Tribunal under provisions of Section 35F of the Central Excise Act, 1944. - Decided against assessee.
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2015 (10) TMI 2325
Applicability of Rule 6(3)(b) - Whether just because the appellant did not maintain separate account and inventory of the input services meant for dutiable and exempted final product as per the provision of Rule 6(2) the provisions of Rule 6(3)(b) providing for payment of an amount equal to 10% of sale value of the exempted final product would be applicable - Held that:- w.e.f. 01.03.2008 Rule 6(3) had been amended to give an additional option to a manufacture manufacturing dutiable as well as exempting final product by using common cenvat credit availed input/ input services and this additional option was to reverse the proportionate cenvat credit attributable to input/ input services used in or in relation to manufacture of exempted final product. The proportionate amount of cenvat credit attributable to the input/ input services used in or in relation to manufacture of exempted final product was to be calculated as per the formula prescribed in Rule 6(3A). By Finance Act, 2010, the above provisions were made retrospectively applicable. Hon ble Gujarat High Court in case of Sh. Rama Multitech Ltd. vs UOI reported in [2011 (2) TMI 575 - GUJARAT HIGH COURT] has held that even if a separate account have not been maintained, in view of retrospective amendment by Finance Act, 2010, a manufacturer using common inputs in or in relation to manufacture of dutiable as well as exempted final product would be entitled to reverse the proportionate cenvat credit. In view of this position, during the period of dispute the option of paying an amount equal to 10% of the sale value of the exempted goods cannot be forced upon the appellant and the appellant would be entitled to reverse the cenvat credit attributable to the inputs/ input services used in or in relation to the manufacture of the exempted final product. - In view of the retrospective amendment introduced by Finance Act, 2010, the appellant were entitled to reverse the proportionate cenvat credit attributable to the quantum of input services used in or in relation to manufacture of exempted final product and by foregoing this credit, they have complied with this obligation. In view of this the impugned order is not sustainable. The same is set aside - Decided in favour of assessee.
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2015 (10) TMI 2324
Valuation - Inclusion of expenditure in developing the art work and plate making charges - Held that:- The main contention of the appellant is that the art work and plate making charges wherever they have raised in the form of debit note are pertaining to the cases wherein no manufacturing has taken place and it is for this reason that they have raised the debit note on the customer to recover the expenses incurred by them. We find force in the contention of the appellant inasmuch as the appellant is taking this stand from the time of audit. We also note that revenue has not investigated the explanation of the appellant by contacting the customers or at least ask the appellant to get the explanation from the customer. The art work and plate making as such are not excisable activities and these will form part of the assessable value only if the same are used in the manufacture of laminated tubes. Keeping in view the overall factual matrix, we are of the view that no case is made to indicate that such art work/plates were used in the manufacture of laminated tubes and value of such artwork/plates was not included in the value of laminated tubes. - Impugned order is set aside - Decided in favour of assessee.
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2015 (10) TMI 2323
Maintainability of appeal - Monetary limit - Held that:- Impugned order was passed by the Commissioner(Appeals) under Section 35A which is specified under Clause (b) of sub-section (1) of Section 35B. In view of Second proviso to Section 35B (1), this Tribunal has discretion to refuse of to admit the appeal in respect of order referred to clause (b) or Clause (c) or clause (d) where amount of duty, amount of fine or penalty determined by such order does not exceed ₹ 50,000/-(before 6/8/2014) and ₹ 2 Lakhs (on or after 6/8/2014). - appeal is dismissed only on the ground that amount is below threshold limit of ₹ 50,000/- without going into merit of the case. - Decided against assessee.
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2015 (10) TMI 2322
Denial of CENVAT Credit - Bogus invoices - Non receipt of actual goods - Held that:- manufacturer of inputs is not M/s. Jay Aay Alloys but is Ruby Stnps Pvt. Ltd. and M/s. Bee Cee Steels. No investigation are conducted at then end. Further, the statement of M/s. Sidh Balak Enterprises is only in respect of manufacturer M/s. Jay Aay Alloys. He has also not named the present manufacturing unit in his statement. As such, there is virtually nothing on record to show that the goods have not travelled from the concerned manufacturer to the appellant - Tribunal in the case of M/s. Talson Mill Store vs. CCE Ludhiana [2014 (2) TMI 443 - CESTAT NEW DELHI] has set aside the identical confirmation of demand. Accordingly by following the said order I set aside the impugned order confirming the demand and imposing penalty on all the appellants. - Decided in favour of assessee.
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