TMI Tax Updates - e-Newsletter
November 13, 2015

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise

News

• Scheme formulated for Speedy grant of refund of accumulated and unutilised CENVAT credit to help in ease of doing business by unlocking the accumulated credit.

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Highlights / Catch Notes

Income Tax

• Penalty u/s 271(1)(c) - assessee having under declared its receipt is exigible to levy of penalty under Section 271(1)(c) of the Act view of the concurrent findings of concealment of income - HC
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• Scope of working partner within the meaning of Explanation 4 to Section 40(b)? - the assessee is not a partner of the firm - He is only representing the actual partner. Accordingly, AO was justified in holding that the assessee cannot be considered as working partner - AT
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• Claim of the assessee made u/s 54EC denied - short term capital gain u/s 50 on depreciable assets of shops - deduction u/s.54EC to be available on the capital gains computed u/s.50 - AT
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• Loss claimed as business loss - As all the three conditions of section 94(7) are not fulfilled, loss of sale of securities to the extent of dividend income cannot be disallowed or ignored invoking provisions of section 94(7) - AT
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• Addition on account of compensation for re-acquiring the rights of plots of land - the assessee has not treated the sale transaction as complete. Thus, when no asset is sold by the assessee, the question of reacquiring the same does not arise. - AT
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• Registration u/s 12A denied - fee collected from the students used for carrying out the objects of the society - . There is no time frame fixed by the Act that the assessee society has to make an application immediately when the society is constituted. - AT
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Customs

• Whether the provisions of sections 113(d) and 114 of the Customs Act, 1962 are invocable in the case of export under Duty Entitlement Pass Book (DEPB) scheme or not - Customs officers are empowered to invoke section 113(d) and 114 of Customs Act, 1962 in cases relating to export under claim for DEPB - AT
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• Suspension of CHA License - revocation of licence or any punishment on the CHA should be commensurate with gravity of the offence whereas the adjudicating authority ordered for revocation of CHA licence and forfeiture of deposit which appears to be very harsh when compared to the nature of lapse. - AT
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Service Tax

• Levy of Penalty - Short payment of service tax - Suppression of facts - Section 73(3) is not applicable in the case where suppression of fact is established - However, appellant has made reasonable cause for invoking of Section 80, penalty waived - AT
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• Imposition of penalty - Malafide intention - it is not the appellant who has committed an offence of non payment of service tax, it is the consultant, who has defrauded them therefore there is reasonable cause for waiver of penalty under Section 78 - AT
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• Penalty u/s 76 - there is no distinction between habitual and one time offenders u/s 73(3) - penalty u/s 76 is not imposable when the service tax liability alongwith interest is discharged before issuance of show cause notice. - AT
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Central Excise

• Duty on die research and development charges recovered separately by the appellant by way of debit note - on the cost of amortization, the duty has not been demanded on the final product cleared by the appellant, therefore, the demand of duty on die development charges is not sustainable - AT
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• Duty demand - CENVAT Credit - Ownership of the input material is of no consequences. - it is an admitted position that the made-ups are not manufactured by the appellant but by the job-workers. Hence the duty liability will be with the job-worker and not with the appellant - AT
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• Denial of CENVAT Credit - Respondent availed Cenvat Credit on duty on the strength of these invoices issued by M/s. JOPL. Later on M/s. JOPL failed to comply with certain formalities as per CBEC manual and supplementary instructions 2005. - Credit cannot be denied to the assessee - AT
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Case Laws:

• Income Tax

• 2015 (11) TMI 496
  Appeal admitted on following question of laws: Whether the Appellate Tribunal has substantially erred in holding that Product Registration expenses are revenue in nature when the Product Registration expenses made to Drug Regulatory Authorities in various countries give enduring benefit of exporting the registered drugs for many years? Whether the Appellate Tribunal has substantially erred in holding that Trademark Registration fee and Patent fee (Rs.37,92,606/- and ₹ 15,49,880/-) are revenue expenses, when the expenses were incurred for registration of Trademark in that country and also for registration of Patent, which are intangible assets under section 32(1)(ii) of the Act? Whether the Appellate Tribunal has substantially erred in holding that the expenses incurred outside the approved R & D facility would also get weighted deduction based on the word under "on in house" interpreting contradictorily to the finding of coordinate bench in Concept Pharmaceuticals Ltd. v. ACIT (2010 (11) TMI 147 - ITAT, MUMBAI)?

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• 2015 (11) TMI 495
  Entitlement to deduction under section 80HH - deduction allowed on gross or net income - Held that:- As decided in Motilal Pesticides (I.) Pvt. Ltd. Versus Commissioner of Income-Tax [2000 (2) TMI 9 - SUPREME Court] that deduction is to be allowed only on the net income and not on the gross income. The finding in paragraph 4 in Motilal Pesticides (supra) that the language of Section 80 -HH and Section 80 -M is the same is, with respect, prima facie, incorrect. Conceptually, "any income" and "profits and gains" are different under the Income Tax Act. The matters be placed before the Hon'ble Chief Justice of India to constitute an appropriate Bench to consider the correctness of the judgment in Motilal Pesticides (supra).

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• 2015 (11) TMI 494
  Penalty u/s 271(1)(c) - wrong entry in account books due to non receipt of proper and complete documents by assessee firm and thereby booking under wrong heads by treating - Held that:- The assessee is a contractor carrying on contracts of various government bodies. The assessee had short declared contract receipts from the civil work undertaken by it. Some part of the said amount was declared in the security amount by the assessee but not as part of the taxable receipts from PWD, Sirhind. Thus, the assessee had suppressed its contract receipts on which tax was also deducted at source by the said concern. The Assessing Officer, the CIT(A) and the Tribunal maintained levy of penalty under Section 271(1)(c) of the Act on that account. The Tribunal had correctly recorded that the assessee having under declared its receipt is exigible to levy of penalty under Section 271(1)(c) of the Act view of the concurrent findings of concealment of income - Decided against assessee.

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• 2015 (11) TMI 493
  Reopening of assessment - Held that:- A careful perusal of the return of income filed by the assessee would show that the assessee has declared income from capital gains and income from other sources. In the return of income it is nowhere mentioned that the assessee is a partner in the firm M/s Go Go International either in his individual capacity or as representative of M/s Sham Sunder Goenka Trust. Further, it is no where mentioned that the due date for filing return of income for the year under consideration was 30-11-2003 as per the extended time limit. Hence, in our view, it cannot be said that the assessee has disclosed all the material facts necessary for assessment fully and truly as required by the first Proviso to Section 147 of the Act. Whether assessee should be considered as “working partner” within the meaning of Explanation 4 to Section 40(b)? - Held that:- The working partner should be an individual actively engaged in conducting the affairs of the business or process of the firm of which he is a partner, meaning thereby, the individual should be a partner of the firm. In the instant case, the assessee is not a partner of the firm M/s Go Go international. He is only representing the actual partner. Accordingly, we are of the view that the AO was justified in holding that the assessee cannot be considered as working partner of M/s Go Go international. Even otherwise, the assessee has nowhere said that the accounts of M/s Go Go International is required to be audited under the provisions of the Act or under any other law, though the same is no relevant here. - Decided in favour of revenue

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• 2015 (11) TMI 492
  Treatment to pre operative expenses - revenue v/s capital expenditure - Held that:- In the instant case it is an admitted fact that the assessee company was incorporated on 09.04.2007 and it acquired development rights on 172.46 acres of land for the purpose of Real Estates Development at Village Bhagwanpur, Tehsil Kalka, District Panchkula. The assessee acquired the approval from the State Government for setting up of residential township on 136.89 acres, the approval was published in Official Gazette on 26.09.2007 and the expenses in question were incurred by the assessee for its business purposes. However, the project which was started in this year did not reach to the stage where revenue could be recognized but it cannot be said that the expenses incurred by the assessee were not for the business purposes - Decided in favour of assessee.

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• 2015 (11) TMI 491
  Claim of the assessee made under section 54EC denied - short term capital gain u/s 50 of the Act on depreciable assets of shops - Held that:- The capital asset sold by the assessee during the year is a shop, comprising of land (or rights therein) as well as building or the super-structure thereon, which are separate and distinct assets under the Act (refer: CIT v. Alps Theatre [1967 (3) TMI 6 - SUPREME Court] and CIT v. Citi Bank N.A. [2003 (4) TMI 92 - BOMBAY High Court] . The super-structure being a depreciable asset, on which depreciation had been allowed, as noted by the ld. CIT(A) (refer para 3 of the impugned order), the capital gain arising on its transfer would be, in terms of section 50 of the Act, a short-term capital gain (STCG), to be computed in the manner prescribed therein. To this extent, there is no dispute. The assessee, however, claims that the building having been held for a period in excess of three years, it would by definition qualify to be a long-term capital asset (LTCA) u/s.2(29A), and the capital gain arising on its transfer eligible for exemption u/s. 54EC. So, however, the Hon'ble jurisdictional High Court, even as noticed by the ld. CIT(A), has in Ace Builders (P.) Ltd. (2005 (3) TMI 36 - BOMBAY High Court) clearly held deduction u/s.54EC to be available on the capital gains computed u/s.50 of the Act. The said authority, as well as we are bound by the said case law. No difference in facts, as claimed, has been brought forth by the Revenue for the non-applicability of the said decision in the instant case. We, therefore, respectfully following the same, uphold his decision in the matter. - Decided in favour of assessee.

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• 2015 (11) TMI 490
  Reopening of assessment - non serving of notice - Held that:- No hesitation in holding that there has been no valid service of notice under section 148 of the Act upon the assessee as the same was neither tendered to the assessee or his agent, nor the same was refused by either of them. On the facts of the case and respectfully following the ratio of judgment laid down by the Hon’ble High Court of Delhi in the case of CIT Delhi – IV vs. Hotline International (P) Ltd (2007 (4) TMI 44 - DELHI HIGH COURT) and Dr. K.C. Verma vs ACIT [2002 (5) TMI 207 - ITAT DELHI] we hold that since there has been no proper service of notice on the assessee, the entire reassessment proceedings, resulting in the order dated 30-12-2008 are bad in law and the order passed u/s 148/143(3) dated 30.12.2008 is quashed. - Decided in favour of assessee.

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• 2015 (11) TMI 489
  Expenses of building repair - revenue v/a capital expenditure - Held that:- By applying the ratio of judgement in the case of Kaira Distt. Cooperative Milk Producers Union Ltd. [1991 (6) TMI 63 - GUJARAT High Court] and Delhi Press Samachar Patra (P.) Ltd. (2010 (2) TMI 43 - DELHI HIGH COURT) the expenditure incurred by the assessee for water proofing work, fall in the category of current repairs and not the luxury repairs, hence, allowable as deduction u/s 30A(ii) of the Act. - Decided against revenue. Disallowance of depreciation - Held that:- Depreciation on land which was used for installation of WEG at 80% as claimed by the assessee is concerned, no material whatsoever has been brought on record by the assessee to make out as to how the land on which WEG functions, got depreciated. Even no deterioration is proved to be caused to land because of installation of plant and machinery on the same. Rather, it is a matter of common knowledge that the land, on which some industry is running, gets appreciated in terms of its value. So, no ground is made out to interfere into the order of Ld. CIT(A) in disallowance of depreciation on WEG land to the tune - Decided against assessee.

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• 2015 (11) TMI 488
  GP addition - addition was partly sustained by the learned CIT(A) by applying a GP rate of 10% as against 9.67% declared by the assessee and thereby confirming the part addition - Held that:- CIT(A) has passed a well-reasoned order in this case. He has considered the history of the assessee for the relevant year and past two assessment years and has applied a GP rate of 10% as against the GP rate of 12% applied by the Assessing Officer. The assessee was able to declare higher sales at ₹ 3.12 crores during the relevant period as against ₹ 2.05 crores in the immediately preceding year with almost same rate of GP as compared to the last year. Learned CIT(A) has rightly allowed credit of ₹ 4.50 lakhs amount surrendered by the assessee during the course of survey and has sustained the balance addition of ₹ 1,03,270/-. There being no mistake in the order of learned CIT(A) on this issue, the same is confirmed - Decided against assessee. Addition on account of rent paid - Held that:- Assessee has paid the rent of ₹ 60,000/- for the business premises for the whole year as against the rent amount of ₹ 30,000/- paid for the same premises in the immediately preceding year. In reply to a specific query from the Bench, learned counsel for the assessee submitted that the rent was revised after more than five years during the relevant period. The Revenue could not controvert the submissions of the assessee that the fair market rent of the business premises was still more than the amount paid by the assessee. In these facts of the case, we are of the view that there was no justification for sustaining the addition on account of rent paid and the addition made is deleted - Decided in favour of assessee. Disallowance of total customer welfare expenses - Held that:- The expenses under this head has increased two-fold in comparison to the immediately preceding assessment year. The disallowance sustained by the CIT(A) could not be said to be excessive and accordingly is confirmed - Decided against assessee. Disallowance of car expenses and car depreciation at 15% of the total expenses and depreciation claimed by the assessee could not be said to be excessive Unexplained trade creditors - CIT(A) deleted the addition - Held that:- Since the balances were on account of purchases made in the normal course of business by the assessee and payments were made through account payee cheques and the assessee was able to produce the bills and goods received notes before the Assessing Officer and the creditors have sent their confirmation letters to the Assessing Officer and that no defects in the confirmation of copies of accounts received from the aforesaid creditors have been pointed out by the Assessing Officer and that the creditors have confirmed the closing balance which could not be disputed by the Assessing Officer, we hold that the CIT(A) was justified in holding that there was no basis left for making the addition.- Decided in favour of assessee.

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• 2015 (11) TMI 487
  Transfer pricing adjustment - Held that:- There are four types of gum base. In the case of orion and lotto the cost of production was adopted as the market price by the Assessing Officer. This is not tenable in view of decisions relied upon by the assessee in the case of JCIT vs.Cipla Ltd. (2005 (2) TMI 748 - ITAT MUMBAI) and the judgement of the Hon’ble Gujarat High Court in the case of Anil Starch Products Ltd. vs. CIT (1965 (9) TMI 55 - GUJARAT HIGH COURT). The A.O. on the one hand observed that the gum base sold ranges from ₹ 50 to ₹ 96 and that the information obtained from M/s Perfetti Van Melle was ₹ 168/- for the year 2003-04 and ₹ 124/- per kg for the A.Y. 2004-05. The A.O. has applied price of ₹ 95 per kg in respect of non acidic gum base. There is no logic given by him by adopting these rates. Thus, rates adopted by the A.O. for all the four types of gum base, in our opinion, has rightly been held as incorrect by the First Appellate Authority. As there is no other material available on record, to challenge the transfer price declared by the assessee, which is on the basis of invoices from CAFOSA, we have no other alternative but to uphold this claim. In the result we dismiss this appeal by the Revenue. - Decided in favour of assessee.

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• 2015 (11) TMI 486
  Re-opening of the assessment - Held that:- In the case on hand, the Assessing Officer reopened the assessment in respect of the income on account of advance given by the assessee for purchase of land and an addition of ₹ 1 Crore was made by the Assessing Officer on this account while passing the re-assessment order. However the learned CIT (Appeals) deleted the said addition of ₹ 1 Crore made by the Assessing Officer which was the reason for initiation of proceedings under Section 147 of the Act and the Assessing Officer has accepted the finding of the learned CIT (Appeals) and not preferred any appeal before the Tribunal. Therefore, the Assessing Officer accepted the explanation furnished by the assessee in respect of their income. In view of the above, we hold that the additions sustained by the learned CIT (Appeals) in the impugned order i.e. (i) ₹ 2,98,176 on account of negative cash balance and (ii) ₹ 4,50,000 on account of cash deposits in the bank account would not now survive since they are made not on grounds on which the assessments were reopened. These two additions at (i) and (ii) are accordingly deleted.- Decided in favour of assessee.

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• 2015 (11) TMI 485
  Undisclosed bank deposits - Held that:- As far as the bank statement of M/s Rattan Diesels in HDFC bank contained it is find that the said bank account is in the name of M/s Rattan Diesels. It is true that the said bank account does not contain the name of proprietor but that does not imply that merely because the name starts with ‘M/s’, therefore, it could be a partnership concern’s account. This observation of ld. CIT(A) is purely on conjecture. He failed to notice that the instrument number in the bank a/c of M/s Rattan Diesels tallied with the instrument number in the bank account of assessee with Federal Bank. The dates, amounts, cheque numbers, name of parties, all tally and, therefore, there was no reason to doubt the genuineness of these transactions. The assessee has filed the ledger account of assessee in the books of Rattan Diesels which clearly show that it is an old loan given by assessee to Rattan Diesels on which interest was regularly earned by assessee. Further, the AO has assessed the interest income received from Rattan Diesels in the hands of assessee and, therefore, the genuineness of the deposits in the accounts of assessee as refund of loan could not be doubted. Similarly, in respect of Nishant Bansal, all the details are tallying in respect of bank a/c of Nishant Bansal with the bank a/c of assessee including instrument number. However, wherein bank a/c of Nishant Bansal is contained, it is not coming out very clearly from the said statement as to which bank it relates to though at the bottom it is referred to as “kotak”. Therefore, for this limited purpose, verification by AO is required.

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• 2015 (11) TMI 484
  Loss claimed as business loss - whether the provisions of section 94(7) are applicable in respect of loss claimed by the assessee? - CIT(A) allowed the claim - Held that:- In the instant case, the assessee has purchased units of SBI Mutual Fund on 27.12.2004 and the same were sold on 29.03.2005. The record date of dividend in the case of SBI Mutual fund for the relevant year was 28.03.2005. Based on these dates, the ld. AR submitted a chart of calculation of no. of days of purchase of securities from the record date of dividend, according to which, the purchase of securities is 91 days before the record date of dividend. The Sr DR has also not disputed this calculation. In background of these facts, it is evident that units have been purchased 91 days before the record date of dividend. As the units have been acquired by the assessee beyond a period the three months from the record date, the condition (a) of section 94(7) of the Act is not fulfilled. For disallowance of loss u/s 94(7) of the Act, all the three conditions have to be fulfilled simultaneously. As all the three conditions of section 94(7) are not fulfilled, we hold that loss of sale of securities to the extent of dividend income cannot be disallowed or ignored invoking provisions of section 94(7) of the Act in the case of the assessee. Same view has also been upheld in the case of CIT Vs. Alka Bhosle [2010 (6) TMI 16 - BOMBAY HIGH COURT]. There is no error in the findings of the CIT(A) on this issue. - Decided against revenue. Disallowance of expenses u/s 14A - CIT(A) deleted part disallowance - Held that:- The disallowance upheld by the ld. CIT(A) is justified in view of the nominal expenses incurred by the assessee towards earning of interest from tax free bond and other exempted income. Therefore, no interference is required in the findings of the CIT(A) on this issue. The ground of the Revenue is accordingly dismissed. Difference in tax deducted and interest recorded in the TDS certificate - Held that:- As it is a matter of verification of the TDS certificate and if TDS has been deducted in excess by a particular deductor and the same has been deposited in the Government Account, the assessee cannot be faulted for that. In view of the above, we remit this matter back to the file of ld.AO and direct him to verify the facts of tax deducted and interest recorded in the TDS certificate. The ld. AO may also verify the TDS and corresponding interest income from the records of the Income-tax Department. If he finds that the submission of the assessee is correct, the assessee may be allowed relief accordingly. - Decided in favour of assessee for statistical purposes.

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• 2015 (11) TMI 483
  Addition on account of compensation for re-acquiring the rights of plots of land - CIT(A) deleted the addition - Held that:- FAA correctly held that, the compensation paid by the assessee is not to reacquire any rights. He recorded a fact that, when the advance is received for sale of a plot, it was not treated as sale of plot, in the books of the assessee. In the absence of receipt of full sale consideration, the assessee has not treated the sale transaction as complete. Thus, when no asset is sold by the assessee, the question of reacquiring the same does not arise. The Ld.CIT(A) records that the theory of purchasing something, which the assessee himself is the owner is in itself misconceived. - Decided in favour of assessee. Disallowance of foreign travel expenses, of the wife of the Director - CIT(A) allowed the claim - Held that:- CIT(A) observed that the visit of Smt.Kanchan Bhalla, W/o Shri Anil Bhalla was pursuant to an invitation for attending a formal meeting and dinner in connection with promotion of the company. He held that the expenses incurred on the travel of the wife of the Director, was for the benefit of the company and promoting its good will. This factual finding of the First Appellate Authority could not be controverted by the Ld.Sr.D.R - Decided in favour of assessee. Allowability of depreciation - A.O. disallowed the depreciation on the ground that the vehicles were registered in the name of the employees of the company and hence the assessee company is not having ownership - CIT(A) allowed the claim - Held that:- The vehicles were purchased in the name of Shri Gautam Bhalla, who was the Director of the company and the real and beneficial ownership as well as the use of the vehicles was with and for the purpose of the company. No infirmity in the order of the First Appellate Authority, as the assessee is the owner of these vehicles and the disallowance is made merely on the ground that the vehicles are not registered in the name of the company, but in the name of the Directors. Such disallowance cannot be made - Decided in favour of assessee. Addition claimed as agricultural income - CIT(A) deleted the addition - Held that:-he First Appellate Authority gives the factual finding that the assessee has produced the evidences of agricultural income earned by it and the bills for incurring of the expenditure. Further he records that one company by name VTPL, which was earning agricultural income, merged with the assessee company during the A.Y. 2005-06. Statistics from the A.Y. 1992-93 to the A.Y. 2005-06 have been extracted by the Ld.CIT(A), to demonstrate that the assessee has been earning agricultural income for all the earlier A.Ys and that this has been accepted by the Revenue. These factual findings could not be controverted by the Ld.Sr.D.R. - Decided in favour of assessee. Penalty u/s 271 - Penalty charges paid by the appellant - Held that:- The First Appellate Authority held that the fine/penalty in question, was incurred in relation to breach of a civil contract and not for violation of any provisions of law. He held that the expenditure is incidental to the business of the assessee and as the assessee is in the business of real estate and the compensation is related to its stock in trade, the expenditure is not capital in nature. He deleted the penalty. In our view the order of the First Appellate Authority on this issue does not call for any interference. The expenditure is claimed as incurred for breach of contractual obligation between two private parties. This expenditure is incidental to business. Be it as it may, the explanation given by the assessee is bonafide. Hence we uphold the order of the Ld.CIT(A) on this issue and dismiss this ground of the Revenue. Disallowance for depreciation - Held that:- The claim of depreciation made by the assessee, is an inaccurate claim. The assessee is advised by professionals and depreciation on foreign cars admittedly is not allowable. The source from which an asset is purchased is not relevant. Hence we confirm the order of the Ld.CIT(A), wherein the penalty levied u/s 271(1)(c) levied by the A.O. as a claim of depreciation on foreign cars is confirmed. - Decided against assessee.

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• 2015 (11) TMI 482
  Sale of Shares, Units and Securities through Portfolio Management Services - Capital gain or Profit and Gains of Business or Profession - Held that:- following the earlier years precedence in assessee’s own case, right from assessment year 2005-06 to 2007-08, we hold that the transaction made through PMS is to be taxed under the head “capital gains” and not ‘business income’ as relying on Manan Nalin Shah Versus DCIT 14(1), Mumbai [2012 (9) TMI 793 - ITAT MUMBAI] - Decided in favour of assessee.

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• 2015 (11) TMI 481
  Investment in immovable property - Held that:- the issue requires a fresh look by the AO. Documents produced by the assessee before the CIT (A) appears have been not readily available with the AO. In so far as unexplained deposit in Karnataka Bank is concerned, assessee’s argument is that it came out of the sale of a property acquired by her in 2007. In the submission made by the assessee before the CIT (A), assessee itself had requested the CIT (A) to call for a remand report from the AO with regard to the documents submitted by her. However, it appears that CIT (A) without calling for the remand report confirmed the addition. We are of the opinion that in the circumstances of the case, CIT (A) ought have examined the claim of the assessee that the deposit in Karnataka Bank had come out of sale proceeds of a property acquired by her in 2007 through the Assessing Officer. Taxability of the said transaction is entirely a different issue which the AO can consider. We are of the opinion that this issue also requires a fresh look by the AO. Addition being the closing balance with UCO Bank - argument of the assessee is that this money was received by her from BBMP for contract work. As per the assessee that debtors’ account were over stated - Held that:- A close verification of this claim is required to see whether the actual billing for the work done by her for BBMP during the previous year included the bills on which payments were received and credited in UCO Bank account. We are of the opinion that this issue also needs to be looked afresh by the AO.

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• 2015 (11) TMI 480
  Penalty u/s 271(1)(c) - bogus credit balance shown in the books of accounts of the assessee in the name of M/s. Mayank Fabrics and treated as assessee’s income u/s 41(1)(a) - Held that:- The AO has questioned the genuineness of the liability and in absence of the requisite confirmation, has held the same to be a bogus liability. Where the liability itself has been held to be a bogus liability, where is the question of remission or cessation thereof. Thus, in the instant case, where the addition itself is doubtful under the provisions of section 41(1), the same cannot form the basis for levy of penalty. See COMMISSIONER OF INCOME TAX Versus BHOGILAL RAMJIBHAI ATARA [2014 (2) TMI 794 - GUJARAT HIGH COURT] - Penalty deleted - Decided in favour of assessee.

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• 2015 (11) TMI 479
  Registration u/s 12A denied - fee collected from the students used for carrying out the objects of the society - Held that:- There cannot be any doubt that one of the objects of the society is to impart the education and for achieving that object assessee has established an educational institution and imparting the education. Therefore, there cannot be any doubt with regard to charitable object of the society. So far as the genuineness of its activities are concerned, the CIT(A) has not brought any specific instance which could prove that the activities of the society are not genuine. So far as application for registration u/s 12A of of the Act by the assessee dated 14.6.2013 is concerned, it is open to the assessee to make an application as per law. There is no time frame fixed by the Act that the assessee society has to make an application immediately when the society is constituted. The Commissioner has to examine the objects of the society and genuineness and accordingly registration u/s 12AA of the Act has to be granted. Therefore, once the conditions of section 12A of the Act are satisfied, the CIT(A) cannot deny the registration on extraneous conditions. - Decided in favour of assessee.

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• Customs

• 2015 (11) TMI 503
  Confiscation and penalty – Misdeclaration – Overvaluation to claim higher DEPB rates – Whether the provisions of sections 113(d) and 114 of the Customs Act, 1962 are invocable in the case of export under Duty Entitlement Pass Book (DEPB) scheme or not - Held that:- DEPB scrip is issued by the field offices of the Director General of Foreign Trade on the basis of value and description of export goods in accordance with the scheme envisaged in Chapter IV of the Foreign Trade Policy for the relevant period. The Foreign Trade Policy is notified in exercise of powers vested with the Director General of Foreign Trade under Section 5 of the Foreign Trade (Development & Regulation) Act, 1991. We observe that, in relation to exports, a declaration under section 50 of Customs Act, 1962 in the form of shipping bill is filed before the goods are brought into the customs area for examination and clearance thereof as per section 51. Thereafter goods are loaded on the designated conveyance in accordance with its availability for taking out of India and, thus, completing the process of export. Generally, the verification of particulars filed in the shipping bill is exclusively in the hands of the proper officer of Customs whose reports are relied upon by other agencies and offices of the Government of India. Mandates and rules, if not complied with, amounted to goods being exported in contravention of prohibition under other laws and hence crystallizing the liability to confiscation under section 113(d) of Customs Act,1962. We would note that section 113(d) used the word "prohibition" whereas in clauses (c), (e), (f), (g) and (h) of section 113 the word "prohibited" qualified the goods liable for confiscation. The deletion of this qualifying phrase by Finance Act, 2003 without any changes in clause (d) would indicate that the word "prohibition" was not intended to be read as related only to prohibited goods. It is, thus, amply clear that prohibition referred to in other sections of the Customs Act, 1962 are not limited to those notified under section 11 of the same Act. Prohibition has a much wider connotation that traverses beyond Prayag Exporters. - misdeclaration of quantity, description or value with intent to claim benefits under schemes in the Foreign Trade Policy would bring such goods within the prohibition envisaged in the Foreign Trade (Development and Regulation) Rules, 2003 which allows section 113(d) and section 114 to be invoked for confiscation of export goods that breach these Rules. - Customs officers are empowered to invoke section 113(d) and 114 of Customs Act, 1962 in cases relating to export under claim for DEPB - Appeal disposed of.

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• 2015 (11) TMI 502
  Seizure of goods - Attempt to smuggle goods - Misdeclaration of goods - Attempt to export red sander logs in guise of export of furniture - Suspension of CHA License - Held that:- Conclusion is irresistible and compelling that there has occurred gross violation of due process and there was total non-application of mind which culminated in the impugned order. The inquiry report dated 16.09.2014 exonerated the appellant wholly on analyses of the material on record referred to and reliance on statements of the appellant; of the appellant s G. Card Holder, Shri S.K. Singh and rejection of the statement of Shri D.S. Rawat, the CMC employee, to the extent that such statement inculpates the appellant s G. Card Holder as having been associated with the transaction in issue. - respondent in prohibiting the appellant from exercising his constitutionally entrenched right to pursue his occupation/business, without authority of law and what is more, contrary to rights declared in his favour pursuant to the final order of the Tribunal dated 3.7.2014. Revocation of his licence by the impugned order is another instance of acting without a semblance of an authority of law and in egregious abuse of seminal and elementary principles of due process. A senior officer of the rank of Commissioner of Customs is expected to be familiar at least with elementary standards of fairness and of principles of procedural principles - As a consequence of the perverse and shoddy processing of the case, the appellant is made a victim of patently incompetent administration of the law. We therefore consider it to appropriate, in the facts and circumstances of the case, to declare the impugned order dated 5.12.2014 passed by the Commissioner of Customs (General), New Delhi as void ab initio. - Decided in favour of appellant.

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• 2015 (11) TMI 501
  Demand of ground rent - Request for auction of cargo - whether the petitioner is entitled to get the cargo cargo destuffed from the FCL container which is lying at Cochin Ports C.Y.(Rajeev Gandhi Container Terminal) of the respective shipping lines beyond a period of two months from the date of its landing - Held that:- 4th respondent failed to take delivery of the cargo and the Port authorities failed to destuff the cargo from the container and to release the container. The Ground Rent charge was demanded by the Port authorities for retaining the goods kept in the container at the Port premises for a long time which is clear from the records itself. The Port Trust Authority has not destuffed the goods. Moreover, they have not filed any counter affidavit with regard to any difficulty to comply with the request. When the writ petitioners/Shipping Agents approached the customs to take the containers they contended that they have not detained any containers. In short, because of the lapse on the part of the 4th respondent on one side and the lapses from the side of Port authorities on the other side, the writ petitioners were forced to pay huge amount towards 'Ground Rent', for keeping the containers without being destuffed in the premises of the Port. Board, after the expiry of two months from the time when such goods have passed into its custody may think it fit to sell the goods by public auction. In such a case, the Board shall follow the procedure under Section 61 of the MPT Act. But, the petitioner has not made any application. Therefore, his contention regarding release of goods is unsustainable. In the circumstance petitioner is at liberty to file an application before the Port Trust authorities within 15 days from the production of this judgment - Decided against Appellant.

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• 2015 (11) TMI 500
  Suspension of CHA License - Levy of anti dumping duty - Appellants signed the blank documents for clearance of import of the said consignment without knowing the importer and without authorization from the importer - Held that:- As per the violation of CHALR, the sole proprietor of CHA himself had admitted that he signed blank documents, Bill of Entry without verifying the identification of the importer on the advice of persons of M/s.Dayspring Shipping Pvt. Ltd. and without obtaining authorisation from importer. We find that there is no allegation that appellant abetted or contravened any provision of Customs Act in the import of goods nor any notice was issued against him under Customs Act for contraventions of provisions of the Customs Act. This being the facts of the case, there is no justification for extreme penal action of revocation of licence. In this regard, we find that the Tribunal in the case of K.S. Sawant & Co. Vs CC Mumbai [2013 (12) TMI 119 - CESTAT, MUMBAI] held that a punishment to CHA should be commensurate with gravity of the offence and held that punishment of revocation of licence should be invoked as a extreme and harsh measure. - revocation of licence or any punishment on the CHA should be commensurate with gravity of the offence whereas the adjudicating authority ordered for revocation of CHA licence and forfeiture of deposit which appears to be very harsh when compared to the nature of lapse. Therefore, the revocation of licence and forfeiture of security deposit is liable to be set aside. - Decided in favour of appellant.

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• 2015 (11) TMI 499
  Import of medical equipment - condition of free treatment to outdoor and indoor patients - Violation of condition and benefit of notification 64/88-Cus dated 1/3/1998 - Held that:- On the identical issue there are two conflicting judgments of this Tribunal one is Sunitidevi Singhania Hospital & Medical Research Centre (2014 (11) TMI 738 - CESTAT MUMBAI) wherein division bench of this Tribunal - And another is in case of Sir H.N. Hospital & Research Centre (2010 (10) TMI 390 - CESTAT, MUMBAI) where this Tribunal has allowed the appeal holding that condition of the notification 64/88-Cus for the period past rescission of notification is not required to be fulfilled. - Since there are conflicting decisions in the issue in the case registry is directed to place this matter before the Hon'ble President for constituting Larger Bench for answering the question:- In case of non fulfillment of condition 2(a) and 2(b) of the table of the Notification No. 64/88-Cus dated 1/3/1988 during the period after rescission of Notification No. 64/88-Cus vide Notification No. 99/94 dated 1/3/1994, whether importer is entitled to the notification No. 64/88-Cus in respect of import taken place and condition 2(a) and 2(b) has been complied with before rescission of Notification No. 64/88-Cus.

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• 2015 (11) TMI 498
  Admissibility of CVD exemption on imported goods - Rate of duty application - CVD payable on the imported goods whether chargeable @ 6% under Notification No.19/2012-CE dt. 17.3.2012 or @ 1% in terms of Notfn 12/2012-CE d. 17.3.2012 - Held that:- No such CENVAT credit is availed by the appellant. However, the reason for denying the benefit of the aforesaid Notification is that in the case of the appellant, no such credit is admissible under the CENVAT Rules. On this basis, the CEGAT has come to the conclusion that when the credit under the CENVAT Rules is not admissible to the appellant, question of fulfilling the aforesaid condition does not arise. In holding so, it followed the judgment of the Bombay High Court in the case of Ashok Traders v. Union of India [1987 (10) TMI 53 - HIGH COURT OF JUDICATURE AT BOMBAY], wherein the Bombay High Court had held that "it is impossible to imagine a case where in respect of raw nephtha used in HDPE in the foreign country, Central Excise duty leviable under the Indian Law can be levied or paid." Thus, the CEGAT found that only those conditions could be satisfied which were possible of satisfaction and the condition which was not possible of satisfaction had to be treated as not satisfied. No such CENVAT credit is availed by the appellant. However, the reason for denying the benefit of the aforesaid Notification is that in the case of the appellant, no such credit is admissible under the CENVAT Rules. On this basis, the CEGAT has come to the conclusion that when the credit under the CENVAT Rules is not admissible to the appellant, question of fulfilling the aforesaid condition does not arise. In holding so, it followed the judgment of the Bombay High Court in the case of Ashok Traders v. Union of India [1987 (10) TMI 53 - HIGH COURT OF JUDICATURE AT BOMBAY], wherein the Bombay High Court had held that "it is impossible to imagine a case where in respect of raw nephtha used in HDPE in the foreign country, Central Excise duty leviable under the Indian Law can be levied or paid." Thus, the CEGAT found that only those conditions could be satisfied which were possible of satisfaction and the condition which was not possible of satisfaction had to be treated as not satisfied. As there is no stay granted by the apex court against Supreme Court order [2015 (3) TMI 690 - SUPREME COURT], the ratio of the Apex Court decision applicable to this case. The appellants have claimed CVD exemption under Notfn 12/12 before the Commissioner (Appeals), when there are two notifications are available on the rate of CVD, it is open to the appellant to claim the exemption which is beneficial to them. If they have not claimed before assessing officer, there is no bar in claiming before appellate authority. Accordingly, they have rightly claimed before appellate authority as Bill of Entry itself is an assessment order. - By respectfully following the apex court decision and this Tribunal's decision (2015 (8) TMI 191 - CESTAT CHENNAI), we hold that appellants are eligible for CVD @ 1% under Notification No.12/2012-CE dt. 17.3.2012 as at Sl.No.199 of the Table. Accordingly, the impugned order is set aside - Decided in favour of assessee.

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• Corporate Laws

• 2015 (11) TMI 497
  Complaint against Sri Samson Arthur and Sri N. Chandrasekhar Rao under sections 191, 192, 193 and 209 of the Indian Penal Code, 1860 - false information - winding up petition - whether a prima facie case is made out which, if rebutted, may have a reasonable likelihood to establish the specified offence and whether it is also expedient in the interest of justice to take such action? - Held that:- Affidavit filed by Sri N. Chandrasekhar Rao, prima facie, goes to show that he has given false statement that the applicant-company does not have assets at all and non-payment of outstanding amount due by the applicant-company was due to prevailing financial conditions of the applicant-company. Even in the counter affidavit, it is not the case of Sri N. Chandrasekhar Rao that they are unable to get the amount from Mack Soft and Mack Soft is not paying the amounts by which the applicant-company is disabled in paying the debts due to the petitioner. Similarly, in the statement made by Samson Arthur in the counter affidavit dated February 16, 2012 filed for appointment of provisional liquidator, the only reason for non-payment of the outstanding dues by the respondent-company was the prevailing financial condition of the respondent-company, which is contrary to the audit report filed by Sri M. Chandrasekhar Rao as representative of Mack Soft before Ranga Reddy Court in which it is shown that INR 62,91,40,970 (INR 62.91 crores) is due to the applicant from Mack Soft and that the amount due from Mack Soft to the applicant-company is also admitted in the counter to the present application. The company court, while appointing provisional liquidator in C. P. No. 30 of 2012 filed by the petitioner held that the court passed the order for appointing of provisional liquidator since the counter affidavit filed by Sri Samson Arthur is vague and has not chosen to give details of its assets nor has it assured the court that the assets would not be taken away beyond the jurisdiction of the court. Admittedly, caveat petition is filed by the applicant-company on February 10, 2012 and winding up petition is filed on February 14, 2012, by the petitioner and winding up order is passed on July 6, 2012. The sequence of events leading to winding up order in the company petition in quick succession would also give rise to a presumption that non-applicants Nos. 1 and 2 have not placed correct facts before the court before winding up order is passed. The respondents being legally bound by on oath to state the truth in their affidavits is prima facie held to have made a false statement which constitutes an offense of giving false evidence as defined under section 191 punishable under sections 193 and 209 of the IPC. Hence, the Registrar (Judicial) to depute one officer not below the rank of Assistant Registrar or above the rank to file a complaint under section 340(1) of the Cr.P.C., read with sections 191, 193 and 209 of the IPC against the respondents/non-applicants Nos. 1 and 2 herein before a Magistrate of competent jurisdiction at Hyderabad. Such officer is directed to file such complaint and take all steps necessary for prosecuting the complaint. The concerned Magistrate is directed to deal with the same as per law without being influenced by any of the observations made herein since they are made only for the purpose of preliminary enquiry under section 340(1) of the Cr.P.C.

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• Service Tax

• 2015 (11) TMI 529
  Demand of service tax - Repair and maintenance service - Penalty u/s 76, 77 & 78 - Benefit of Section 80 - Held that:- Appellant is a partnership firm providing repair and maintenance services to M/s. Hindustan Aeronautics Ltd. which is Government undertaking company. The services have been provided under the legal contract and as per the contract there was no terms of service tax liability and the same was not pointed out by the service recipient i.e. Government of India undertaking. In view of this fact it is clear that in non payment of service tax there cannot be intension for evasion of service tax, particularly when recipient is Government of India undertaking. - appellant has explained the reason for failure to make service tax payment and without contest admittedly paid service tax and subsequently they discharged interest and penalty of ₹ 24,000/- under Section 77. I am therefore of the considered view that appellant have shown reasonable cause for non payment of service tax. Therefore in terms of Section 80 of the Finance Act, 1994, the appellant deserves waiver of penalty. I therefore waive the penalties imposed under Section 76 and 78 - However, demand of service tax , interest and penalty of ₹ 24,000/- under Section 77 confirmed by the Commissioner(Appeals) stand upheld - Decided partly in favour of assessee.

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• 2015 (11) TMI 528
  Repair and maintenance services - Penalty u/s 76, 77 & 78 - Bonafide belief of non payment of service - evasion of service tax - Held that:- Commissioner (Appeals) in his order categorically held that the entire value of service tax is liable for service tax however service tax can be recovered only on the amount which was received till date of passing of this order. He also held that amount of service tax which not received till that date no service tax is paid. He also held that the amount which was not received and as and when the same is received it will be liable for service tax and at the same time Ld. Commissioner directed superintendent to verify correctness of the service tax and also directed to recover balance of service tax interest if found short paid. In view of the above order of the Ld. Commissioner (Appeals), I do not find any infirmity in the order and there cannot be any grievances of the Revenue because entire service tax leviable has been ordered to be recovered subject to receipt of service charges. Therefore I am of the view that impugned order is proper and legal and does not require any interference and hence the same is upheld - Decided in favour of assessee.

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• 2015 (11) TMI 527
  Denial of refund claim - services used in the export goods under Notification No.41/2007-ST and Notification No.17/2009-ST - Commission paid to overseas export commission agent and Banking & Financial services - Bar of limitation - Held that:- As regard nexus of commission service with the export I am of the view that the service is of overseas commission agent who provides services exclusively related to export of goods, therefore even by stretch of imagination it cannot be said that overseas commission agent’s service is used for the purpose other than for export. As regard the rejection of refund claim of ₹ 16,17,016/- on the ground of time bar I have observed that the Appellants have admittedly filed the refund claim on 31/03/2010 i.e., after the issuance of Notification No. 17/2009-ST, therefore the refund claim deemed to have been submitted under Notification No. 17/2009-ST - Commissioner (appeals) gravely erred, firstly mentioning that the application was filed before 07/07/2009 which is factually incorrect and secondly when refund claim was admittedly filed on 31/03/2010, it was wrong on the part of Commissioner to hold that the Appellants have filed refund claim under the previous notification no.41/2007-ST and for this reason benefit of public notice No.07/2010 dated 04/03/2010 was not extended to the Appellant. In view of my above observations, I am of the view that the Appellants are legally entitled for the refund as claimed before this Tribunal. However, it appears that both the lower authorities have not carefully verified the above discussed facts therefore committed serious error in rejecting the refund of ₹ 9,81,612/- and ₹ 16,17,016 - Impugned order is set aside - Matter remanded back - Decided in favour of assessee.

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• 2015 (11) TMI 526
  Penalty u/s 78 - Malafide intention - whether appellant have made out their case before the Commissioner (Appeals) for waiver of penalty under Section 78 - Held that:- Commissioner (Appeals) is not correct in holding that the appellant have not contested penalty under Section 78 in respect of intellectual property services. Now whether the appellant have made out the case for reasonable cause for waiver of penalty invoking Section 80 of the Act. On going through the records and the submissions, I find that as regard the intellectual property services appellant have entered into agreement for royalty. The agreement does not bear any clause for levy of service tax and payment thereof. The royalty amount has been accounted for in books of account of both the companies i.e. royalty holder and royalty payee. The service tax and interest have been paid by the appellant and they are not contesting such liability. In view of this position, appellant have not tried to hide any transaction of the royalty and for which legal agreement was singed by both the parties. - appellant have shown reasonable cause for non-payment of service tax on time, however the same alongwith interest has been paid by them. In view of the above position, I am of the view that appellant have made out the case of waiver of penalty under Section 78 by invoking Section 80 - Decided in favour of assessee.

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• 2015 (11) TMI 525
  Penalty u/s 76 & 78 - Short payment of service tax - Suppression of facts - Held that:- Appellant have not declared value of the service tax and service tax payable correctly in the ST3 returns but data was available in the books of account and on scrutiny by the department officers. They have retrieved data from books of account only. Since, on pointed out by the department officer, appellant has paid entire service tax alongwith interest, penalty under Section 78 should not have been imposed. - Section 73(3) is not applicable in the case where suppression of fact is established, however, I am of the view that taking into overall facts and circumstances of the case and data was available in the books account and the appellant has paid entire service tax alongwith interest. In my view the appellant has made reasonable cause for invoking of Section 80. In view of my above discussion, I find that in terms of Section 80, appellant deserves waiver of penalty under Section 78, therefore, I waive the penalty. Confirmation of demand of the service tax alongwith interest and payment thereof is maintained. - Decided partly in favour of assessee.

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• 2015 (11) TMI 524
  Short payment of service tax - security agency services - Penalty u/s 76, 77 & 78 - Imposition of interest - Held that:- During audit of the appellant s record such as balance sheet, profit and loss account and ST 3 return. The short payment is due the differences between income shown in balance sheet for the year 2005-06 and ST 3 returns. I find that since actual income was declared in the books of account cannot be intention for evasion of Service Tax. Moreover the appellant paid service tax alongwith interest before issuance of show cause notice. In this case merely because the appellant is not challenging extended period cannot be said that they have admitted the suppression of facts. The appellant time and again before lower authority and as well as before this Tribunal contesting the penalty only on ground that there is no suppression of fact with intent to evade payment of service tax. I am of the opinion that the appellant is having better conduct as compared to the assessees who never pay the service tax and contest service tax as well as penalties only for sake of litigate matter and evade payment of service tax. - since the appellant have paid service tax alongwith interest before issuance of show cause notice and the details were correctly declared in the books of accounts. I find that appellant has made out case for immunity in terms of 73(3) of Finance Act, 1994. In view of my above discussion, I set aside the penalties under Section 76, 77 and 78. However demand of service tax and payment thereof alongwith interest is upheld - Decided in favour of assessee.

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• 2015 (11) TMI 523
  Business auxiliary services - service tax on the commission received from banks and insurance company - Penalty u/s 77 & 78 - Held that:- As regard services of motor vehicle, appellant have been collecting service tax alongwith service charges and was not paying to the Government exchequer. When appellant was collecting service tax, they were well aware of the taxability of the service and for that reason only they were collecting service tax and retaining with them. I am of the view that appellant has not made out any reasonable cause for waiver of penalty imposed under Section 78 in respect of service tax demand on the services of motor vehicle. However appellant have complied with the option provided by the adjudicating authority, paid the service tax alongwith interest prior to issuance of show cause notice and 25% of penalty within one month from the date of adjudication order, therefore the penalty stand reduced to 25% of the service tax amount of ₹ 10,67,854 - Therefore taxability of the said services was not free from doubt, therefore the appellant in respect of these two services shown reasonable cause for waiver of penalty imposed under Section 77 and 78. Penalty of 25% of the service tax amount of ₹ 10,67,854/- and drop penalty imposed under Section 78 in respect of service tax paid on commission from bank/insurance company and handling charges of RTO. Penalty imposed under Section 77 for ₹ 10,000/- shall stand reduced to ₹ 5,000 - Decided partly in favor of assessee.

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• 2015 (11) TMI 522
  Imposition of penalty - Malafide intention - Held that:- Appellant have been making submission before the adjudicating authority and before the Commissioner(Appeals) that they did not have any intension to evade service tax as they have been making cash payment to their consultant, who was assigned the job for computing the service tax and depositing in the bank and also filing the return periodically. However, consultant has not deposited cash given to him as service tax in the bank and consultant defrauded the respondent when this fact came to the notice, the department has initiated investigation. - Therefore, it is not the appellant who has committed an offence of non payment of service tax, it is the consultant, who has defrauded them therefore there is reasonable cause for waiver of penalty under Section 78. - there is no reason to interfere in the findings of the Ld. Commissioner(Appeals) who has reduced penalty by proper application of mind. I, therefore upheld the impugned order and dismiss the appeal of the Revenue. - Decided against Revenue.

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• 2015 (11) TMI 521
  Demand of service tax - GTA service - Penalty u/s 78 - Held that:- it is audit party during the audit, has pointed out the short payment from the books of accounts of the appellant which shows that appellant have been correctly recording the data in respect of both the services in their books of account. If this is so, then it cannot be said that there is malafide intention on the part of the appellant to evade service tax payment. It is also taken into account that the appellant has paid service tax alongwith major portion of interest before issuance of show cause notice. Taking into the consideration above facts, I am of the view that appellant have shown reasonable cause for waiver of penalty by invoking Section 80 of Finance Act. Therefore, I waive the penalty imposed under Section 78. However the demand of Service tax alongwith interest and payment thereof by the Appellant is maintained - Decided partly in favour of assessee.

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• 2015 (11) TMI 520
  Penalty u/s 76 - whether or not penalty can be imposed under the provisions of section 76 of the Act - Held that:- In Shivas industrial Caterers India P.Ltd. v. Commissioner of Service Tax, Chennai- [2014 (1) TMI 1557 - CESTAT CHENNAI], it was observed that the allegation of the department that appellant being habitual offenders entire amount is to be recovered is not sustainable as there is no distinction between habitual and one time offenders under section 73 (3) of the Act. It was held therein that penalty under section 76 is not imposable when the service tax liability alongwith interest is discharged before issuance of show cause notice. - decisions squarely cover the issue in the present case. Accordingly, impugned order is set aside - Decided in favour of assessee.

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• Central Excise

• 2015 (11) TMI 519
  Waiver of pre deposit - whether demand of duty based on earlier order dt 31/3/93, passed by Assistant Commissioner finalizing the classification / rate of duty of the products manufactured by the appellant when the same was sad aside & remanded by CESTAT - Held that:- SCN dt 31/12/97 was issued for demanding duty of ₹ 2,62,29,188/- and for imposition of penalty. There was not proposal in this show cause notice to decide the classification of the products & non admissibity of an exemption notification. By re-deciding the issue of classification / exemption in Para- 4.12 to 4.23 adjudicating order, prime facie, Adjudicating authority has exceeded the scope of the show cause notice when the same was already decided by the Assistant Commissioner and appellant also brought to the notice of the Adjudicating authority that they are contemplating filing of appeal against the said order of Assistant Commissioner. The other issue raised by the appellant., that a demand raised on the basis of earlier order of Assistant Commissioner, which is set aside does not survive, also needs deeper considerations. Appellant is, therefore, able to make a prima facie good case for complete waiver of the confirmed dues & penalty - Stay granted.

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• 2015 (11) TMI 518
  Clearance of goods without payment of duty - Held that:- allegation against the appellant has been made out on the basis of differences of waste shown in ARE 2 and Form IV without any other supportive evidence. The differences in both the figures is explained by the appellant and same has not been considered by both the lower authorities. In these circumstances, allegation of clandestine removal cannot be made on the basis of assumption and presumption. - following the precedent decision in appellant's own case [2015 (1) TMI 168 - CESTAT NEW DELHI] - Decided in favour of assessee.

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• 2015 (11) TMI 517
  Penalty u/s 11AC - Non reversal of CENVAT Credit - Held that:- No allegation has been made out bringing out the facts of suppression, mis-declaration etc. On the contrary, it is acknowledged that soon after the mistakes were pointed out, the appellant had voluntarily discharged the deficit amount along with interest. - mere payment of amount outstanding dues, would not absolve the appellant from imposition of penalty but failed to discuss the circumstances under which the appellant could be said to have suppressed the facts warranting imposition of penalty under Section 11AC of CEA,1944 and Rule 15 of CCR,2004. The Ld. Commissioner(Appeals) observation that had the department not pointed out the discrepancy the deficit amount would not have been paid, is an inference not supported by allegation in the notice nor any evidence leading to the conclusion that the Appellant had suppressed the facts. In these circumstances, penalty imposed under Section 11AC of the Central Excise Act read with Rule 15 of CCR,2004 is unsustainable. Consequently, the impugned Order-in-Appeal is set aside - Decide din favour of assessee.

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• 2015 (11) TMI 516
  Determination of assessable value - Captive consumption - Inclusion of various expenditures - Held that:- Commissioner had doubts about two components of expenditure. The Cost Accountants certificate submitted by appellants answered her doubts. The commissioner has totally disregarded the cost accountant certificate answering her queries without assigning any reason or data. If commissioner had any doubt about it she could have got it verified herself. Without such verification the certificate cannot be discarded. Since no reason has been assigned to discard the said Cost Accountant certificate the same needs to be accepted. - Decided in favour of assessee.

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• 2015 (11) TMI 515
  Duty demand - Duty on die research and development charges recovered separately by the appellant by way of debit note - Held that:- In the show cause notice, the duty has been demanded from the appellant on the amount collected towards die development charges by the appellant during the impugned period. No effort has been made in the show cause notice for amortization of the cost of die and development charges toward the final product cleared by the appellant. Therefore, the show cause notice is defective. If, in the show cause notice the cost of die and development charges had been amortized, in that case definitely, the appellant was liable to pay duty, on amortized cost but same has not been done. - on the cost of amortization, the duty has not been demanded on the final product cleared by the appellant, therefore, the demand of duty on die development charges is not sustainable. - Impugned order is set aside - Decision in the case of Ashok Iron Works Ltd. (2004 (2) TMI 482 - CESTAT, BANGALORE) followed - Decided in favour of assessee.

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• 2015 (11) TMI 514
  Valuation - Appellant collected the cost of the moulds and dyes from their customers and it was not included in the assessable value - Held that:- Commissioner (Appeals) observed that balance sheet for the year 2004-05 could not have been available on 25.07.2005 which was prepared in October/November after closure of financial year. We do not find any material on record that the Department had initiated any enquiry for getting the figures despite their knowledge of non-inclusion of the value in the finished goods. All the facts are within the knowledge of the Department, when first show cause notice was issued on 25.07.2004. So the demand of duty for extended period of limitation by show cause notice dt.18.09.2006 and 26.09.2006 cannot be sustained. However, the demand of duty for the normal period by Show Cause Notice dt.26.09.2006 is liable to be upheld. But it is required to examine the quantification of demand by the lower authorities as per earlier order dt.22.06.2011 of the Tribunal. - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 513
  Abatement claim - abatement claim was allowed but were adjusted against so called demand for uses of their packing machines for manufacturing two types of goods of same MRP - for the same activity, the respondent is liable to pay duty twice - Held that:- As there is no notice of demand/show cause notice has been issued to demand the short payment of duty, therefore, question of adjustment of duty by the Adjudicating Authority does not arise. The same view has been taken by the learned Commissioner (Appeals) in the impugned order. Therefore, we do not find any infirmity in the impugned order. The same is upheld. - Decided against Revenue.

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• 2015 (11) TMI 512
  Duty demand - Invocation of extended period of limitation - Held that:- appellant did raise the ground of time bar before the lower authorities and in the grounds of appeal before this Bench. There is thus a mistake apparent from the face of records and the same needs rectification by giving suitable observations on time barred nature of demand. - The ingredients for imposing equivalent penalty under the provisions of Rule 15 are the same what are required for invokation of extended period. In the light of the opinion given by this Bench it was an interpretational dispute, therefore, it cannot be held that appellant had any intention to evade duty or take wrong CENVAT credit deliberately. Accordingly, it is held that extended period is not invokable in these proceedings. - Decided in favour of assessee.

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• 2015 (11) TMI 511
  Benefit of CENVAT Credit - Assessee availed CENVAT credit in respect of certain invoices twice - Imposition of interest u/s 11AB - Held that:- As there are two contrary decisions of the High Courts, one by the Hon’ble Karnataka High Court [2011 (4) TMI 969 - KARNATAKA HIGH COURT] and the other by the High Court of Madras [2014 (2) TMI 551 - MADRAS HIGH COURT] and inasmuch as the said issue keeps on repeatedly coming up before the Tribunal, I deem it fit to refer the matter to the Hon’ble President for constitution of a Larger Bench on the following question of law:- When the wrongly availed credit is reversed before utilising the same, whether interest liability would arise in respect of the same or not.

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• 2015 (11) TMI 510
  Review petition - Demand arises since appellant was disentitled to exemption under Notification No. 67/95-CE since the products in issue were not covered by the Hill Area Exemption under Notification No. 15/2003-CE - Held that:- An application for modification of an order passed in the stay application is essentially on seeking review of the analyses and conclusions recorded in the said order, whereby pre-deposit of ₹ 1.5 crores was directed on the appellant. It is axiomatic that an application for review is unavailable for reconsidering the very issues which were subject matter earlier and on which such earlier order was passed. Since the order dated 21.04.2014 recorded elaborate reasons and analysis for exercise of the discretion and directed pre-deposit of ₹ 1.5 crores, we do not see any justification for review of the said order. - Review denied.

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• 2015 (11) TMI 509
  Duty demand - CENVAT Credit - duty liability of made-ups - Held that:- Appellants are not disputing the duty liability. All that what they are asking is the credit of the duty paid on the inputs should be given on actual basis rather than deemed basis. In view of this position, as far as this issue is concerned, we remand the matter to the original authority. The appellant will produce the copies of the invoices to the original authority, who after examining the invoices, will determine the eligibility of the CENVAT credit and thereafter net duty liability through PLA. The duty liability is on the manufacturer. Ownership of the input material is of no consequences. In the present case, it is an admitted position that the made-ups are not manufactured by the appellant but by the job-workers. Hence the duty liability will be with the job-worker and not with the appellant. - Demand is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 508
  Clandestine removal of goods - Unaccounted stock - Held that:- Discovery of certain papers and documents during investigation revealed that the transporters have occasioned movement of goods without invoice proving the origin and destination thereof. That originated from factory of the appellant and reached to the intended party. That remained unrebutted. The abbreviations marked proved the destination of the goods(ref: para 11 of the Adjudication order). Appellant failed to prove its bonafide demonstrating the transactions as accounted. - The destination where the goods were delivered comes out from paras 33 and 34. That remained uncontroverted. Paragraph 34 sufficiently proves the case of Revenue as to the removal of the goods without payment of duty. In such a factual circumstance, in absence of any evidence to show that the movement of goods were accounted, there is no scope to differ with the adjudication finding. - Procurement of M.S. scrap was also unaccounted. Use of the unaccounted scrap in manufacture of the finished goods was not rebutted. Therefore, adjudication is confirmed. - Decided against assessee.

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• 2015 (11) TMI 507
  Denial of CENVAT Credit - Respondent availed Cenvat Credit on duty on the strength of these invoices issued by M/s. JOPL. Later on M/s. JOPL failed to comply with certain formalities as per CBEC manual and supplementary instructions 2005. The registration certificate was revoked on 21.09.2010. As the registration certificate was revoked therefore it was held against the respondent that they have not complied with the conditions of Rule 9(5) of the Cenvat Credit Rules 2004 as they have not verified the antecedents of the supplier of the goods who was not having registration certificate - Held that:- At the time of issuance of the invoices to the respondent M/s. JOPL was having registration certificate and registration number was allotted to them on 12.08.2010 which was revoked later on. Therefore, as at the time when the supplier of the goods had supplied the goods to the respondent was having valid registration. In these circumstances, respondent has complied with the conditions of Rule 9(5) of the Cenvat Credit Rules, 2004. In these circumstances, I hold that respondent has taken the Cenvat Credit correctly on the invoices issued by M/s. JOPL during the intervening period. - No infirmity with the impugned order. Same is upheld - Decided against Revenue.

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• 2015 (11) TMI 506
  Denial of CENVAT Credit - GTA Service - clearances to the job worker and their own unit made on payment of duty - Credit beyond place of removal - Held that:- Goods were cleared on payment of duty but it is admittedly not clearance for sale of the goods - where the goods is cleared from factory, but place of removal is determined only a place, where the goods is sold. In case goods is sold from factory, the factory gate is considered as place of removal but though the clearances is made from the factory but goods is not sold from factory, but sold at any other place after removal of goods from the factory, the said place from where the goods is sold shall be the “place of removal”. In the instant case though the goods were cleared on payment of duty from the factory of the appellant but not sold from the factory. In case of job work goods the sale of the finished goods took place from the appellant factory and in case of removal of goods to their own other unit the sale took place from that other unit. Therefore in the present case transportation (GTA) service is used up to the place of removal and hence qualified as input service. - GTA in the present case being used up to the place of removal covered under the definition of input service and hence admissible for Cenvat Credit. I therefore set aside the impugned order - Decided in favour of assessee.

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• 2015 (11) TMI 505
  Duty demand - imposition of penalty of equal amount of CENVAT Credit under Section 11AC of Central Excise Act, 1944 - Held that:- both the authorities below have not given option to pay penalty 25% of the duty under Section 11AC of the Act. - Appellant is entitled to pay the penalty 25% of the duty alongwith duty and interest within 30 days from the date of communication of this order. - Appeal disposed of.

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• 2015 (11) TMI 504
  Reversal of CENVAT Credit - cenvat credit on raw material, work in progress, and raw material contained in finished goods after crossing the exemption (SSI Exemption) limit which Revenue sought to deny to the appellant - Held that:- Appellant has filed a declaration showing quantity of raw material as 125.026 and 53.253 MT respectively. He also filed a declaration of inputs contained in the finished goods as 1,361 MT and 1,848 MT respectively. The scrap lying in the factory is 1.120 MT and 6.015 MT respectively. The total raw material shown by the appellant on which the cenvat credit is taken is 127.507 MT and 61.116 MT respectively. - On perusal of the verification report filed by the Range Superintendent and same has been got verified from the record of the appellant. On verification, there was difference of 294 Kg in inputs contained in work-in-progress on which the adjudicating authority has denied the Cenvat credit to the appellant, which might be due to the calculation error. The finding of the learned Commissioner (Appeals) is that report of the Range Superintendent is afterthought and is not acceptable as appellant has filed declaration at the time of availing cenvat credit on inputs contained in finished goods, work-in-progress and with the job worker. Therefore, I hold that appellant is entitled to take cenvat credit on inputs contained in the process of finished goods and lying with the job worker as per Rule 3 (2) of CCR, 2004. In these circumstances, I hold that appellant has correctly taken the cenvat credit. Consequently, the appellant is not required to reverse the cenvat credit - Decided in favour of assessee.

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