TMI Tax Updates - e-Newsletter
November 12, 2014

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. COMMISSION PAID TO NON RESIDENT HAVING NO PERMANENT ESTABLISHMENT IN INDIA IS NOT TAXABLE AND NO TDS IS REQUIRED TO BE MADE

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Second Services Conclave to Ideate Newer Export Paradigms

2. RBI Reference Rate for US $

3. India Signs Loan Agreements with World Bank for US$ 200 Million for Technology Centre System Programme (TCSP)

Highlights / Catch Notes

Income Tax

• Power of Attorney Does Not Transfer Property Rights or Allow Holder to Enjoy Property Benefits.

  Case-Laws - HC : Transfer u/s 2(47)(vi) – the terms of the power of attorney clearly show that property rights has not been transferred to the power of attorney holder and there is also no provision for enabling enjoyment - HC
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• Court Upholds Assessee's Deduction Claim u/s 80IC; Business Not a Reconstruction of Existing Business.

  Case-Laws - HC : Entitlement for claim of deduction u/s 80IC for first year - the business of the assessee could not be said to be reconstruction of a business already in existence - it is not necessary to define as to what the expression "splitting up of a business" means - HC
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• Capital Receipt Not Taxable: No Immediate Tax Implications; No Addition Needed Under Relevant Act Provisions.

  Case-Laws - AT : Non accounting of capital receipt, which is otherwise not taxable in pursuance of the provisions of the Act, may not have any immediate implication so far taxation is concerned - No addition - AT
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Customs

• Court Rules Confiscation of Used Digital Printers Unlawful; Respondents Wrong to Deny Provisional Release of Goods.

  Case-Laws - HC : Import of old and used Digital Multifunction Print and Copying Machines - Confiscation of goods - refusal of the respondents to permit the provisional release of the goods is not in accordance with law. - HC
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Service Tax

• Appellant Wins Stay in Service Import Case Due to Unclear Classification, Establishes Prima Facie Case Successfully.

  Case-Laws - AT : Import of services - in the absence of clear classification of service, appellant has made out a prima facie case - stay granted - AT
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• Appellants' Personnel Oversight at JBM Deemed Non-Taxable Under Manpower Recruitment Service Regulations.

  Case-Laws - AT : Manpower Recruitment or Supply Agency Service - The appellants are actually forcing upon JBM their personnel to supervise their operations and it is not that JBM are requesting for assistance of these personnel - prima facie not taxable - AT
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• Service Tax Not Applicable on Commission Sharing Between Banks; Classified as Income Sharing, Stay Granted.

  Case-Laws - AT : Banking and Other Financial Services - sharing of the commission between the Acquiring Bank and the Issuing Bank cannot be considered as service transaction but as sharing of income between two service providers - stay granted - AT
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Central Excise

• Rule 3(5B) CENVAT Credit: Lower Valuation of Inputs Not Equivalent to Writing Off; Demand Set Aside.

  Case-Laws - AT : CENVAT Credit - Rule 3(5B) of CCR, 2004 -Valuing at lower rate is not equivalent to writing of the value of inputs in the books of account - demand set aside - AT
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• No Interest Charged: Assessee Pays Duty Before Deadline for Goods Removed in March, Settled by March 31st.

  Case-Laws - AT : Levy of interest on removal of goods as such - assessee has paid the duty at the end of the month i.e. much prior to the 5th day of the following month or in case where the removal had taken place in March before 31st March of the relevant year - No interest - AT
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Case Laws:

• Income Tax

• 2014 (11) TMI 324
  Deemed dividend u/s 2(22)(e) - Applicability of the exclusionary clause - Lending of money includes hire purchase, transactions amounts to deemed dividend or not – Held that:- The Assessee states that there is no dispute about the applicability of the ingredients and the provision - the Tribunal held that the hire purchase transactions conducted by SFL are not in the nature of a loan but SFL owns the assets which are given on hire by it – the Tribunal has not considered the nature of the transactions of the company before determining as to whether, within the meaning of exclusionary clause (ii) of Section 22(2)(e) of the Act, the lending of money is a substantial part of the business of the company - According to the assessee, the exclusionary clause would be attracted because the lending of money constitutes a substantial part of the business of the company - it would not be possible to decide the issue of the applicability of the exclusionary clause merely on an a priori basis and it would be appropriate to restore the proceedings back to the Tribunal for a decision afresh – thus, the matter is remitted back to the Tribunal for fresh adjudication – Decided in favour of assessee.

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• 2014 (11) TMI 323
  Unexplained credits u/s 68 - Whether the Tribunal erred in giving relief on account of advances from customers to be refunded which were basically unexplained credits which could not be explained by the assessee as per the provisions/language of Section 68 – Held that:- The CIT (A) observed, after duly considering the accounts, that the amount of Rs. 1.75 crores had been credited in the account of the assessee in earlier years and was not a fresh credit shown for AY 2002-03 – the Tribunal is correct in the view which has been taken because Section 68 of the Act permits an addition to be made where any sum is found credited in the books of account of the assessee for that year - Section 68 of the Act was not attracted – no substantial question of law arises for consideration – Decided against revenue. Deletion of interest chargeable on delayed payments - Whether the Tribunal erred in deleting the interest chargeable from customers when it is clear that assessee had been charging interest on delayed payments and did not declare it under the head income from other sources – Held that:- The addition was made purely on a notional basis, was deleted by the FAA - The Tribunal has also noted that the AO made an addition only on a notional basis - the AO had presumed that the assessee had earned the interest income whereas, the assessee had not received the interest income from its customers, nor was there a right to receive such income as per the accounting policy followed by the assessee – the order of the Tribunal is upheld – Decided against revenue.

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• 2014 (11) TMI 322
  Materials properly scrutinized or not - Whether the Tribunal has not considered the plea of the assessee that the AO has not scrutinized the materials submitted before him and made additions based on a priori considerations – Held that:- The case of the assessee was decided on the basis of his own sworn statements dated 29.8.2006 and 10.10.2006 and admitted documents - with regard to the undisclosed income of Rs. 52,73,920/- supported by printouts, in the sworn statement dated 29.8.2006, the assessee says that he had separate business income which was not included in his income tax returns - admission of undisclosed income is categoric and undisputed - The assessee in the sworn statement made on 10.10.2006, stated that outstanding loans to the tune of Rs. 25 Lakhs to 30 Lakhs are to be recovered with interest at the rate of 18% - This is a clear admission - This amount has also been calculated and added as undisclosed income - When there is a clear and categoric admission of the undisclosed income by the assessee himself, there is no necessity to scrutinize the documents - The document can be of some relevance, if the undisclosed income is determined higher than what is now determined by the department - loose sheets found during the search are not the sole basis for determining the tax liability - It is a piece of evidence to prove undisclosed income - The printout statements of undisclosed income is not disputed by the assessee and in his sworn statements it is accepted - outstanding loans to be recovered are in the range of Rs. 25 Lakhs to 30 Lakhs – thus, the order of the Tribunal is upheld – Decided against assessee.

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• 2014 (11) TMI 321
  Admissibility of appeal - Tax effect less than the limit prescribed – Held that:- The tax liability involved in this appeal is below Rs. 2 Lac, which is prescribed as per circular dated 27th March 2000 – thus, the appeal cannot be admitted – Decided against revenue.

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• 2014 (11) TMI 320
  Transfer u/s 2(47)(vi) – Assessment of capital gains - Whether capital gains should be assessed at the hands of the assessee, who is a power of attorney holder – Held that:- The tribunal was rightly of the view that the recital contained in the registered power of attorney dated 01.09.2006 does not show that any consideration was paid to the actual owner and the assessee had acted merely as an agent - the assessee could not be treated as owner of the property sold on 23.10.2008 and therefore there was no question of computing capital gains in the hands of the assessee - There is no transfer to or enabling enjoyment of property in favour of the assessee in any manner and therefore, sub-clause (vi) of Section 2(47) of the Income Tax Act does not get attracted - Clause 21 of the power of attorney clearly reveals that no consideration was received from the power agent for appointing him as power of attorney - It also emphasised that the property right has not been handed over to the power agent - the plea of the Revenue cannot be accepted that there was an element of transfer or enabling enjoyment in favour of the assessee - The letter of the land owner subsequently issued does not come to the aid of the Department - It is the duty of the power of attorney holder to deliver the amount received for the purpose of transfer of property - no fault could be found on the part of the assessee. The circular No.495 dated 22.9.1987 also states that the legal ownership would continue with the transferor, but the property rights if it is transferred by way of power of attorney would come within the ambit of sub-clause (vi) of Section 2(47) - the terms of the power of attorney clearly show that property rights has not been transferred to the power of attorney holder and there is also no provision for enabling enjoyment – thus, the order of the Tribunal is upheld – Decided against revenue.

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• 2014 (11) TMI 319
  Entitlement for claim of deduction u/s 80IC for first year - Whether a new partnership firm which has been formed by the same partners by splitting up the business of an existing partnership by and which utilizes the infrastructure and employees of the existing firm, would be entitled to 1st year of deduction under Section 80 IC – Held that:- In Commissioner of Income Tax Delhi-I, vrs. Gedore Tools India Pvt. Ltd. [1980 (8) TMI 79 - DELHI High Court] it has been held that it is not necessary for the employment of the capital to be formal in the sense of actually raising the captial and putting it into the new industrial undertaking - Employment of capital in a new industrial undertaking is different from the capital belonging to the assessed company. The AO has erred in law by coming to the conclusion that the new undertaking was formed by splitting up of business, already in existence - For all intents and purposes, the assessee firm is a new Unit - The AO has ignored the quantum of fresh capital, investment in plant and machinery, new building, new registration number and PAN number - The new unit cannot be even presumed as reconstruction of the old existing business, much less the formation of the undertaking by splitting up the existing undertaking - The shifting of the employees would not affect the constitution of the new firm to avail the benefit u/s 80IC - If surplus reserve capital is available with the assessed company it can utilize a specific amount of this capital for the purchase of the plant and machinery, buildings and other assets of the new undertaking - it cannot be said that the same persons were carrying on substantially the same business - the business of the assessee could not be said to be reconstruction of a business already in existence - it is not necessary to define as to what the expression " splitting up of a business " means – thus, the assessee was entitled to the benefit of Section 80IC – Decided against revenue.

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• 2014 (11) TMI 318
  TDS not deducted on payments - Partial additions sustained – Bills and invoices could not be produced – Held that:- Section 40(a)(ia) was neither invoked by the AO nor by the first appellate authority - before the Tribunal, revenue did raise the contention that TDS provisions would be applicable - application of Section 194C of the Act was not pleaded before the Tribunal - as far as Section 195 is concerned, it would not be applicable as it is apparent that M/s. Global Reliance Inc. did not have any business operations in India and they were functioning and operating in the USA - it does not appear that the Revenue had relied upon deeming provisions under Section 9 of the Act to hold that M/s. Global Reliance Inc. was covered and should be taxed in India in respect of the said income and, therefore, the TDS u/s 195 of the Act should have been deducted - specific sub-section which could be applicable was not stated and adverted to – thus, the order of the Tribunal is upheld – Decided against revenue.

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• 2014 (11) TMI 317
  Claim of expenses incurred in earning interest declined – Held that:- The assessing authority did not accept the return filed by the assessee declaring a loss of Rs. 22,07,204 - It has disallowed the loss claimed and has made the additions in respect of Guest Fees, Interest received from Banks, Interest received on KEB Deposit, Discount received from liquour manufacturers and Outsourcing income from canteen activity - The authorities ought to have considered whether any expenditure is incurred in this regard - If any expenditure is incurred, it should have been deducted out of the interest income - Though the assessee declared loss, he has disallowed the same - when the assessing authority has chosen to take out the interest income and levied the income tax, the expenditure incurred if any, should have been taken into consideration in arriving at the income - the exercise has not been done – thus, the matter is remitted back to the Assessing authority only to consider whether the assessee has incurred any expenditure permissible in law in earning Interest Income from Banks, so that it could be given deduction before that income is taxed – decided partly in favour of assessee.

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• 2014 (11) TMI 316
  Nature of receipt - Non accounting of capital receipt - Addition of amount received from M/s Alokik Township Corporation – Held that:- There was nothing to suspect the genuineness of the agreement - the view taken by CIT(A) cannot be accepted that the MOU was only a facade prepared to give the colour of “refundable advance” to the receipt of Rs. 3.00 crores - the assessee has received the impugned amount of Rs. 3.00 crores as advance from M/s ATC in pursuance of MOU entered between the assessee and M/s ATC – the advance is described as “refundable advance” in the MOU and the terms of repayment of advance are also provided - The tax authorities have not brought anything on record to show that the above said amount is not refundable at all - the ‘refundable advance’ of Rs. 3.00 crores received by the assessee constitutes capital receipt in the hands of the assessee, which is not liable to tax under any of the provisions of the Act - Non accounting of capital receipt, which is otherwise not taxable in pursuance of the provisions of the Act, may not have any immediate implication so far taxation is concerned - the assessee is liable to refund the advance amount in terms of MOU - The addition of balance amount is also liable to be deleted, since the MOU was genuine one and also a refundable advance – thus, the order of the CIT(A) is set aside and the AO is directed to delete the addition of Rs. 3.00 crores pertaining to the advance amount received from M/s ATC. Assessment of unaccounted cash received on sale of plots – Held that:- The AO has drawn certain inferences on the chart found during the course of survey - the assessee has shown that the computation made by the AO, if followed in some other cases, would give the selling rate of Rs. 3,950/- and Rs. 4000/- per Sq. yard - the AO has reached conclusions about the selling rate of plots only on surmises and conjectures without bringing any credible evidence on record – assessee rightly contended that mere receipt of advance would not give rise to any income element - the assessee had proposed to execute sale agreements only in the subsequent years after the receipt of necessary approvals, meaning thereby the assessee has received only advances during the year, which are liable to refunded – the AO was not justified in presuming that the assessee had received 30% of sale consideration as advance in the form of cash without accounting for the same - CIT(A) was not justified in confirming this addition, the addition is set aside - Decided in favour of assessee.

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• 2014 (11) TMI 315
  Validity of addition made u/s 69B – purchase of land belong to the asssessee or company - Held that:- The assessee’s main sources of income are income Partnership firms, Salary income and Income from other sources - During the course of survey operations conducted at the business premises of the various concerns, certain documents were impounded. A paper found at page 12 of Annexure 17 of the bunch impounded during the course of survey operation revealed details of payment made for purchase of land at Jaipur - the land was purchased by M/s Builders Alliance (P) Ltd and the copy of conveyance deeds placed in the paper book filed by the assessee also show that the land was purchased by the company - There is an instance wherein the tax authorities themselves have ignored, i.e., not chosen to assess the amount declared by the assessee in the sworn statement taken from him - the tax authorities have also disregarded the admission made in the sworn statement, but proceeded to assess the income in the hands of right person only on due consideration of the facts surrounding the same, the tax authorities have acted in an objective manner to corroborate the admissions made in the sworn statement with other materials and have come to the conclusion to assess the said amount in the hands of right person – the order of the CIT(A) is set aside and the AO is directed to delete the addition made – Decided in favour of assessee. M/s GHP Corporation received Rs. 3.00 crores as advance in the financial year 2005-06 relevant to the AY 2006-07 - the amount of Rs. 2.00 crores received by way of cheque was credited to the capital account of the assessees herein available in the books of M/s GHP corporation – there is no reason to reject the claim of the assessees that they had taken away the remaining amount of Rs. 1.00 crores received by way of cash - Once it is seen that the assessees are possessed of Rs. 50.00 lakhs each, then there would merit in their contention that amount would be available as source for making investments - both the assessees have sought set off of Rs. 50.00 lakhs against the unexplained cash and unexplained jewellery found during the course of search - both the assessees are justified in the claim that the sources to the extent of Rs. 50.00 lakhs in each of their hand stand explained, the revenue did not bring any material on record to show that the amount of Rs. 1.00 crore was otherwise spent away – thus, the order of the CIT(A) is to be set aside and the AO is directed to give credit of Rs. 50.00 lakhs – Decided in favour of assessee.

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• Customs

• 2014 (11) TMI 326
  Valuation of goods - Enhancement in value of goods - Misdeclaration of value of goods - Held that:- only allegation made against the petitioner is that the petitioner made wrong declaration of assessable value of the consignment in question and therefore, the authority concerned has enhanced the assessable value of the goods to Rs. 12,69,374/-, the correctness of the order-in-original is subject to the outcome of the appeal, pending consideration by the Commissioner of Customs (Appeals). As the consignment in question are not prohibited or restricted items, this Court is of the view that the petitioner should be granted permission to clear the consignment in question, subject to the some conditions - Decided partly in favour of assessee.

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• 2014 (11) TMI 325
  Import of old and used Digital Multifunction Print and Copying Machines - Confiscation of goods - Redemption fine - Provisional release of goods - Held that:- If an import of hazardous wastes is made into India without the permission of the Central Government, it is deemed to be an illegal import under Rule 17(1). In such cases, the importer is obliged to re-export the waste in question within 90 days, at his cost. The implementation of this is to be ensured by the State Pollution Control Board. Even Schedule VII to these Rules, which contains the list of authorities under the Act and their corresponding duties, does not name the Commissioner of Customs as one of the authorities who is entitled to take action under Rule 17 for illegal traffic in hazardous wastes. Therefore, the action now taken cannot be construed as one for re-export under Rule 17(2) of the Hazardous Wastes Rules. Respondents are not competent to order the re-export, even though they are competent to order confiscation - No samples have been drawn as per Rule 16 of the Hazardous Wastes Rules, to decide whether the item imported into India by the petitioner, falls within Entry B 1110 under Part B of Schedule III to the Hazardous Wastes Rules. Hence, the refusal of the respondents to permit the provisional release of the goods is not in accordance with law. The Customs Act, 1962, provides for provisional release. Even the Foreign Trade (Regulation) Rules, 1993 allows redemption of confiscated goods under Rule 17(2). No proceedings have been initiated by an authority competent in terms of the Hazardous Wastes Rules for directing the petitioner to re-export the goods. Therefore, the petitioner is entitled to the release of the goods provisionally - Decided in favour of assessee.

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• Service Tax

• 2014 (11) TMI 337
  Waiver of pre deposit - import of services - claim of the appellant that there is no proper classification of the service under which the appellant was liable to pay service tax as a receiver - Held that:- provider of service is based outside India, the recipient of service is based in India, the payment is made by the recipient to the provider, the service received is used in relation to business or commerce, the service is received from outside India and is leviable to service tax as per the provisions cited above - in the absence of clear classification of service, appellant has made out a prima facie case. CENVAT Credit - input services - assessee is engaged in export of iron ore which is excisable but exported without payment of duty - Held that:- As regards the demand for Rs. 1,11,71,268/- which is the CENVAT credit availed of the service tax paid to M/s. Bothra Shipping Services for leasing the crane, it has been held that the assessee has not used the crane for providing service. In this case, the claim of the assessee was that it was used in relation to manufacture of goods which is dutiable but exported. They relied on the decision in the case of Repro India Ltd. Vs. UOI [2007 (12) TMI 209 - BOMBAY HIGH COURT]. services were used in respect of iron ore which was ultimately exported - appellant has made out a prima facie case for complete waiver and accordingly the requirement of predeposit is waived and stay against recovery is granted during the pendency of appeal. - Stay granted.

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• 2014 (11) TMI 336
  Commercial or Industrial Construction service - services rendered 'in relation to' transmission and distribution of electricity - exemption from service tax vide Notification No. 45/10-ST dated 20.7.2010 - Held that:- out of the total demand confirmed of Rs. 2,04,14,368/- bulk of the demand of Rs. 1,90,47,124/- pertains to Commercial or Industrial Construction service rendered to Maharashtra State Electricity Transmission Co. Ltd., Maharashtra State Electricity Distribution Co. Ltd., Sunil Hi-Tech, Suraj Constructions, V.B. Bhike, etc. for transmission of electricity. Vide Notification 45/10-ST, all taxable services rendered 'in relation to' transmission and distribution of electricity have been exempted from the purview of service tax. The expression 'relating to' is very wide in its amplitude and scope as held by the Hon'ble Apex Court in Doypack Systems P. Ltd. [1988 (2) TMI 61 - SUPREME COURT OF INDIA]. Therefore, all taxable services rendered in relation to transmission/distribution of electricity would be eligible for the benefit of exemption under the said Notification for the period prior to 27.02.2010. Various activities undertaken by the appellant, though classifiable under Commercial or Industrial Construction prior to 01.06.2007 or under works contract service on or after 01.06.2007, would be eligible for the benefit of exemption as held by this Tribunal in the case of Noida Power Co. Ltd. [2013 (8) TMI 746 - CESTAT NEW DELHI], Pashchimanchal Vidyut Vitran Nigam [2012 (8) TMI 688 - CESTAT, NEW DELHI], Purvanchal Vidyut Vitran Nigam [2012 (10) TMI 104 - CESTAT, NEW DELHI] and Shri Ganesh Enterprises [2014 (2) TMI 436 - CESTAT BANGALORE]. Therefore, the confirmation of service tax demand in respect of the construction, maintenance or repair activities undertaken by the appellant so far as it relates to the transmission/distribution of electricity cannot be sustained in law. in respect of the other activities of the appellant which are not related to either transmission or distribution of electricity, the demands confirmed are upheld along with interest - since the issue relates to interpretation of an exemption Notification and the statutory provisions, imposition of penalties are not warranted - Decided partly in favour of assssee.

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• 2014 (11) TMI 335
  Waiver of pre deposit - Manpower Recruitment or Supply Agency Service - appellants deputed certain personnel to JBM premises to carry out checks on the quality of biscuits manufactured by JBM on their behalf - Salaries of the said personnel were recovered from job-workers - Held that:- the deputed personnel continue to be employees of M/s Britannia Industries Ltd. (the appellant) and the service provided by them are for the benefit of the appellant and not for the benefit of JBM at all. The appellants are actually forcing upon JBM their personnel to supervise their operations and it is not that JBM are requesting for assistance of these personnel. In the case of manpower supply, the receiver makes a request for service and therefore, the service is provided. Prima facie, we do not find relationship of ‘manpower supply service’ provider and service receiver between the appellants and JBM. Moreover, we also find the entire demand is time-barred - Stay granted.

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• 2014 (11) TMI 334
  Waiver of pre deposit - Banking and Other Financial Services - appellant-Bank acts as both card Issuing Bank and also Acquiring Bank - Levy of tax on Interchange commission earned by Assessee - interest and penalty under Section 78 - Held that:- When a Credit card is swiped in a machine in the merchant establishment for verification, the issuing bank would verify and whether the credit card holder is eligible for using card before payment and thereafter it would, in turn, communicate the merchant establishment to complete transaction. In this case, both the banks are in reality providing a service to the card holder and the merchant establishment. The Issuing Bank is only providing service to the card holders to confirm their eligibility for credit which cannot be said to be a service to the merchant establishment or to the Acquiring Bank. service received or provided by an Issuing Bank or an Acquiring Bank in the kind of transaction is not covered in any of the clauses of definition of service. In such a situation, the taxability itself is in doubt. - sharing of the commission between the Acquiring Bank and the Issuing Bank cannot be considered as service transaction but as sharing of income between two service providers. - Stay granted.

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• 2014 (11) TMI 333
  Waiver of penalty - Whether for the short payments of Service Tax, the assessee needs to be penalized under section 76 of the Act and whether Cenvat credit to be denied to them along with imposition of penalty under section 76 and Rule 15(3) of CC Rules for the same - Held that:- no malafides could be attributed to the assessee as the amounts were duly reflected in their ST-3 return and also as the amounts of short payment are rather on the lower side which have been paid voluntarily. - penalty waived extending the provisions of section 80 - Decided in favor of assessee. Denial of the credit is on account of infirmities in the input invoices. I note that this is not the case of the Department that the input services have not been availed or payments not made for the same. In the circumstances, I find force in the plea made by Shri Rahul Aggarwal, CA for consideration of waiver of penalty and accordingly give benefit of section 80 of the Act and hold that no penalty under section 78 is imposable upon the assessee. I also note that this is not a case of short payment of Service Tax and therefore penalty under Section 76 of the Finance Act 1994 is not at all warranted. As regards imposition of other penalty is concerned, I hold some imposition is necessary as the invoices on which the Cenvat credit was availed have been found to have deficiencies which of course, which have been later rectified. Accordingly imposition of penalty Rs. 2000/- under Rule 15(3) of Cenvat credit Rules 2004 is justified and no interference is made. Penalties imposed under section 76 and section 78 of the Finance Act 1994 are not sustainable as per grant of benefit of section 80 of the Act. However token penalty of Rs. 2,000/- is held to be liable - Decided partly in favour of assessee.

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• Central Excise

• 2014 (11) TMI 331
  Waiver of pre deposit - Distribution of CENVAT Credit relating to exempted unit availing area based exemption - Held that:- at Pantnagar unit of applicant is manufacturing some exempted goods. As per Rule 7(b) of the Cenvat Credit Rules, 2004, it is clear that credit of service tax is attributable to service used by any unit exclusively engaged in the manufacture of exempted goods or for providing exempted services shall not be distributed. Therefore, whatever credit is attributable to exempted goods may not be distributed by the applicant. In these circumstances, applicants have failed to make out a case of complete waiver of pre-deposit. - Partial stay granted.

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• 2014 (11) TMI 330
  CENVAT Credit - Rule 3(5B) of CCR, 2004 - Written off of goods versus Devaluation of inputs / stock - Defective Inputs were segregated and were valued at lower rate for the purpose of valuation of stock - Held that:- Subsequent to taking of credit, if any amount is written off fully or where provision is made to write off fully in the books of account, then the manufacturer shall pay an amount equivalent to the CENVAT credit taken in respect of the said input. There is no such finding that the appellant have written off the "process rejection inputs". The only finding is that the appellant have valued the process rejection materials at the lower value than the purchase price for the purpose of finalization of account. Valuing at lower rate is not equivalent to writing of the value of inputs in the books of account. Thus on the finding, I hold that the proceedings initiated is due to mis-interpretation of the Rules - Decided in favour of assessee.

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• 2014 (11) TMI 329
  CENVAT Credit - Scope of input services - Business Auxiliary Service - availment of credit on input services by "Associate Enterprises" - Held that:- Appellant availed credit based on documents issued by M/s Grind Well Norton Ltd. only and the necessary details required are available therein. It is not the case of the department that the appellant has not paid service tax at all. It is also not the case of the department that the appellant has not received service or utilized the same. Further, it is also seen that on the very same issue for a different period, the Commissioner (Appeals) had allowed the benefit and the department had filed an appeal. In this case, the credit availed is during the period from September 2008 to April 2010 and the show-cause notice was issued on 7.9.2010. Therefore, substantial portion of the demand is also time-barred. this is a fit case for granting waiver of pre-deposit. - stay granted.

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• 2014 (11) TMI 328
  Levy of interest on removal of goods as such - demand of interest under Section 11AB of the Central Excise Act, 1944 from the date of actual clearance and the date of reversal of the credit - Held that:- Expression ‘on the date of such removal is referable to the rate applicable to such goods and it cannot be understood to mean that the duty should be paid at the time of removal in terms of substituted provisions. The expression ‘on the date of such removal’ stands deleted in the new sub-rule (4) to Rule 3 of CENVAT Credit Rules, 2002 - assessee has paid the duty at the end of the month i.e. much prior to the 5th day of the following month or in case where the removal had taken place in March before 31st March of the relevant year. In such circumstances, it cannot be said that the there has been delay in payment of duty so as to invoke Section 11AB of the Central Excise Act, 1944. Even though the Tribunal has proceeded on the basis that the deposit was made prior to the issuance of show cause notice, on facts, we found, such a contention is not tenable - No reason to interfere with order passed - Decided against Revenue.

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• 2014 (11) TMI 327
  Denial of CENVAT Credit - activity undertaken by the appellant on the input received does not amount to manufacture - Held that:- Appellant had paid a higher amount by way of excise duty on the products cleared by them. Therefore, in view of the Hon'ble High Court's decision in the case of Ajinkya Enterprises [2012 (7) TMI 141 - BOMBAY HIGH COURT] and Hon'ble Apex Court's decision in Narmada Chematur case [2004 (12) TMI 93 - SUPREME COURT OF INDIA], there is no cause for reversal of any credit taken inasmuch as the duty paid is more than the credit taken. Consequently, the impugned order confirming the demand fails - Decided in favour of assssee.

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• CST, VAT & Sales Tax

• 2014 (11) TMI 332
  Rate of tax - rate of tax applicable on the sale of Stainless Steel Pressure Cooker, Aluminium Pressure Cooker, Stainless Steel LPG Stoves, Kerosene Stoves and Aluminium Non-stick tawa - Authority, clarified that the rate of tax applicable on the sale of Stainless Steel LPG Stoves, Kerosene Wick Stove and Stainless steel vacuum flask would be 12.5% under Section 4(1) (b) of the KVAT Act and on Aluminium Non-stick cookware would be 4% under Section 5 in Third Schedule of KVAT Act - Held that:- Legislature has amended the Schedule by specifically excluding 'Stainless Steel LPG Stoves' and 'Kerosene Wick Stoves' from Entry 5 of the Third Schedule of the KVAT Act. Since the legislature has amended the relevant entries, in our opinion, as of now nothing remains to be considered and decided by this Court - Appeal disposed of.

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