TMI Tax Updates - e-Newsletter
November 16, 2015

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise

TMI SMS

• CE - Determination of cost of production as per CAS-4 - three elements i.e. interest, depreciation and profit margin not to be included - SC

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Articles

1. Effective Rates of Service tax after Swachh Bharat Cess

   By: CA Akash Phophalia

2. Clarifications on various aspects of Swachh Bharat Cess

   By: Bimal jain

3. 'Other Than Negative List' should be abolished

   By: KASTURI SETHI

4. Prices charged by job-worker cannot be regarded as understated where principal manufacturer has extended loan to job-worker for investment in machinery

   By: Bimal jain

News

1. Governing Council Constituted to Oversee the Activities of the National Investment and Infrastructure Fund (NIIF) Under the Chairmanship of Finance Minister

2. Finance Minister to Leave for Two Day Official Visit to UAE on Sunday, 15 th November, 2015

Notifications

Customs

1. 108/2015 - dated 13-11-2015 - Cus (NT)

Fixation of T V of Edible oil, Brass, Poppy seed, Areca nut, gold and Sliver

VAT - Delhi

2. F.3(515)/Policy/VAT/2015/1003-1014 - dated 12-11-2015 - DVAT

Extend the last date for filing of online returns for the 1st and 2nd quarter of the year 2015-16, in Forms EC-II and EC-III to 30/11/2015

Highlights / Catch Notes

Income Tax

• Court Reviews Deductibility of Energy Conservation Expenses for Business Purpose Under Income Tax Law.

  Case-Laws - AT : Disallowance of payment towards Energy conservation Contribution expenses - the assessee has incurred expenses wholly and exclusively for business purposes - AT
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• Unabsorbed Depreciation Cannot Offset Income from Unexplained Cash Deposits: CIT(A) Decision Upheld.

  Case-Laws - AT : Depreciation of earlier year was not allowed to be set off against the income offered as unexplained cash deposit made in the account of axis bank - CIT(A) is justified in disallowing set off of unabsorbed depreciation from earlier years against income from other sources - AT
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• Section 194H TDS not applicable to bank commissions on credit card payments; Section 40(a)(ia) disallowance also non-applicable.

  Case-Laws - AT : TDS under section 194H - section 40(a)(ia) of the Act was held to be not applicable on payment of “commission” to the banks on payment received from customers through credit cards. - AT
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• Tribunal Rules Payment as License Fee, Not Capital Asset Acquisition; Classified as Revenue Expenditure Under Agreement.

  Case-Laws - AT : Nature of expenditure - the features of agreement clearly established that what was obtained by the assessee was only a licence and what was paid by the assessee to the foreign collaborator was only a licence fee and not the price for acquisition of any capital asset and, therefore, the Tribunal was right in treating the amount as revenue expenditure - AT
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• Maintenance Charges Excluded from Rental Income for Tax Purposes: Assessee's Case Highlights Separate Treatment.

  Case-Laws - AT : The maintenance charges are not part of the rental income and therefore amount of maintenance charges, received by the assessee, in these facts and circumstances of the case is not part of the rental income. - AT
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• Reopening Assessment u/s 147 Invalid Due to Lack of Substantial Reason or Relevant Material.

  Case-Laws - AT : Reopening of assessment - the "reasons recorded" by the Assessing Officer for reopening the case under section 147 is bad in law as there is no reason to believe or any relevant material on the basis of which the assessee's case can be reopened. - AT
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• Section 195 Exemption: Commission Payments to Non-Resident Indians Not Taxable, No Disallowance u/s 40(a)(i.

  Case-Laws - AT : TDS - the provisions of section 195 would not be applicable to the commission payments made by the assessee to non-resident Indians, as such income is not chargeable to tax under the provisions of the Act. Consequently, disallowance made under section 40(a)(i) would also not survive. - AT
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• Assessee's VAT Payable Disallowed u/s 43B Due to Lack of Rejection Proof from Sales Tax Department.

  Case-Laws - AT : Disallowance of value added tax payable amount made under section 43B - assessee has not shown to us that the computations given in the value added tax audit report was not accepted by the Sales Tax Department - additions u/s 43B confirmed - AT
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• Approval Renewal u/s 80G(5)(vi) Shouldn't Be Denied If Facts Remain Unchanged From Previous Approval.

  Case-Laws - AT : When on the same set of facts and circumstances of the case, renewal of approval under section 80G(5)(vi) has been granted for earlier years and there being no change in the facts and circumstances in the years for which renewal is sought for, there is no justification to reject the assessee's application for renewal of exemption certificate under section 80G(5)(vi) - AT
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• Assessing Officer Estimates Taxpayer's Income from Agricultural Land; No Penalty Imposed u/s 271(1)(c.

  Case-Laws - AT : Penalty under section 271(1)(c) - The income of the assessee has been estimated. The AO cold have estimated the generation of agriculture income to this extent, out of such huge tract of agriculture land. - no penalty - AT
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Service Tax

• Service Tax Demand on Jewelry Appraiser's Commission Payments Overturned; Not Classified as Testing or Certification Charges.

  Case-Laws - AT : Individual jewellery appraiser - The amount received is paid by the bank as commission and not testing charges or certification charges - demand of service tax set aside - AT
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• Company Denied 67% Service Tax Abatement Due to MODVAT Credit Reversal Under Notifications 15/2004-ST, 19/2005-ST, 1/2006-ST.

  Case-Laws - AT : Denial of 67% abatement claimed by it under Notification No. 15/2004-ST, 19/2005-ST and 1/2006-ST - CENVAT Credit - the reversal of modvat credit amounted to non taking of credit inputs. - AT
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• Refund Claim Denied: Payment Acknowledged but Documents Missing, Department's Argument Invalid.

  Case-Laws - AT : Denial of refund claim - there is no dispute that the entire amount as tax liability has been paid by respondent and having been appropriated by the lower authorities in order in original now department cannot turn around and say, There is no payment of amount in the absence of documents - AT
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• Refund Claim Denied: Unjust Enrichment Applies After Service Tax Liability Recalculation and Settlement.

  Case-Laws - AT : Denial of refund claim - unjust enrichment - once service tax liability is worked back and discharged, it would be that amount of tax is being recovered by the appellant and principles of unjust enrichment gets attracted - AT
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• Court Rules Tour Operators Can Avail Abatement and CENVAT Credit Under Notifications 2/2004 and 01/2006-ST.

  Case-Laws - AT : Simultaneous availing the benefit of abatement and Cenvat Credit - Benefit of Notification No.2/2004 as amended and 01/2006-ST, dt.01.03.2006 - Tour Operator Service - the appellant reversed the CENVAT Credit and benefit of abatement cannot be denied - AT
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• Stay Granted on Service Tax Adjustment Case Pending Final Hearing: Short Paid vs. Excess Paid Analysis Underway.

  Case-Laws - AT : Adjustment of excess service tax paid - Whether the adjustment of service tax short paid and excess paid is permitted under the rules in the given circumstances requires a detailed analysis which can be taken up at the time of final hearing. - stay granted - AT
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Central Excise

• Charging and Lathe Machines Qualify as Capital Goods for MODVAT Credit Under Central Excise Rules.

  Case-Laws - AT : Disallowance of MODVAT Credit - Charging machine - Capital goods -Charging machine and lathe machine are qualified as capital goods and squarely covered under the of definition of capital goods - AT
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• Duty Demand Requires Concrete Evidence of Clandestine Removal; Non-Maintenance of Records Insufficient for Confirmation.

  Case-Laws - AT : Duty demand - Clandestine removal of goods - Lack of evidence - the demand cannot be confirmed for mere non-maintenance of records and more particularly, in absence of any proof regarding clandestine removal of such goods. - AT
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• Settlement Commission Decision Upheld: Appellants Can't Contest Penalty After Accepting Immunity Under the Act.

  Case-Laws - HC : Validity of order of settlement commission - since settlement under the Act is in the nature of a package, the appellants having accepted immunity from prosecution, cannot challenge the quantum of penalty imposed as harsh - HC
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• Supreme Court Upholds Exclusion of Interest, Depreciation, Profit Margin in Cost of Production Under CAS-4 for Excise Valuation.

  Case-Laws - SC : Valuation of goods - Undervaluation - determination of cost of production as per CAS-4 - inclusion of interest expenditure, depreciation and profit margin - tribunal has rightly concluded that three elements are not to be included in the cost of production - SC
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• Supreme Court Rules Industrial Dust from Brass and Copper Manufacturing Not Marketable, Exempt from Central Excise Duty.

  Case-Laws - SC : Marketetability of product - 'industrial dust' arising during the course of manufacturing of brass and copper articles in the factory - not a marketable commodity - not dutiable - SC
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• CENVAT Credit Approved for Input Services on Calendars and Greeting Cards Used in Sales Promotion Activities.

  Case-Laws - AT : Denial of CENVAT Credit - eligible input services - For availing credit on printing of calendar, greeting cards, diaries, etc., the appellant used these services for advertisement purposes of their products, therefore, these are integral part of their sale promotion - credit allowed - AT
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• Demand u/s 11D for Excise Duty Collection Challenged and Set Aside Due to Non-Compliance with Basic Requirements.

  Case-Laws - AT : Demand u/s 11D - collection in the name of duty of excise - respondent issued debit note to adjust the difference in the price of invoice and money paid, by cheque (for crude oil) - it is for adjusting the amount not payable - basic ingredients as required u/s 11D not fulfilled - demand set aside - AT
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Case Laws:

• Income Tax

• 2015 (11) TMI 590
  Disallowance of depreciation - as per AO the assessee had already claimed exemption in respect of expenditure on the fixed assets being application of income u/s 11 - Held that:- The assessee is entitled for depreciation u/s 32 of the IT Act on the assets cost of which has already been claimed as application of income. See case of Institute of Banking Personnel Selection [2003 (7) TMI 52 - BOMBAY High Court ] - Decided in favour of assessee. Treating advance fee received from the students for the future academic year as income for the accounting year under consideration - Held that:- The assessee is following mercantile system of accounting which is based on accrual. The AO has not disputed the accounting policy and method of accounting adopted by the assessee consistently. The assessee has been showing the advance fee received for the next academic session which is outside the previous year in which such advance fee is received. Similarly, the assessee is also not claiming any expenditure which has been paid by the assessee during the year but pertains to next academic session which is outside the previous year in which such expenditure is paid. Therefore, the assessee is following a uniform accounting policy based on accrual and arising of income and expenditure. There is no dispute that even in the case of trust the income has to be understood in its commercial sense and there can be no computation of such income until the expenditure which is necessary for the purpose of earning the receipt is deducted there-from. This concept of accounting is well recognised by the accounting standard. Accordingly, on merits also, we do not subscribe the view taken by the CIT(A) on this issue when the assessee is consistently following mercantile/accrual basis of accounting both for the income as well as for expenditure recorded in the books of account. - Decided in favour of assessee.

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• 2015 (11) TMI 589
  Disallowance of payment towards Energy conservation Contribution expenses - whether expenditure not incidental to the business of the assessee? - Held that:- The assessee company has nominated as a State Designated Agency of Bureau of Energy Efficiency, Ministry of Power, Government of India on March, 2003 for promote efficient use of energy and its conservation and also enforce the provisions of energy conservation Act, 2001. The company was incorporated to plan, promote and organize integrated and efficient development of thermal/hydro electric power, gas HSD and other petroleum fuel based power, solar, wind, Biomass and other non conventional and renewal energy used power (including those based on bio-mass’s, bio-gas) and power transmission systems in all its aspects including planning investigation research design engineering and preparation of preliminary feasibility and define project reports, construction, generation operation and maintenance of power stations and projects and sale of power generated in accordance with the state policy and broad economic consideration. To promote, support assist, sponsor the use of non-conventional energy sources in the country or abroad and disseminate useful knowledge and understanding in the various fields of non-conventional energy among mass. The assessee paid Rs. 5 lacs to perform the object of the company. This amount was paid towards energy conservation contribution fund, which is statutory liability as per provisions of Energy Conservation Act, 2001. The case law relied by the assessee in the case of CIT Vs. Raj Shipping and Weaving Mills Ltd. (2003 (11) TMI 6 - RAJASTHAN High Court) is squarely applicable in the case of the assessee wherein it has been held that contribution to the fund set up for products which was also the business of the assessee has direct nexus to the advancement of the assessee business. The object of the fund was not confined to the assessee but was open to all who wanted to participate could not alter the character of expenses incurred by way of contribution to such fund by the assessee from his benefit to other benefits. Thus we are of the considered view that the assessee has incurred expenses wholly and exclusively for business purposes - Decided in favour of assessee.

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• 2015 (11) TMI 588
  Revision u/s 263 - whether the income from running the hostel is to be assessed as income from house property or business property? - Held that:- The detailed questionnaire had been issued by the Assessing Officer, which was replied by the assessee from time to time. He not only enhanced the hostel receipts but reduced the hostel expenses and assessed the income from house property. He also allowed 1/3rd deduction U/s 24(a) and interest on loan. Therefore, he applied his mind and also made detailed inquiry on this issue. It is also a fact that the addition made by the Assessing Officer was challenged before the ld CIT(A), Ajmer at the same issue i.e. income from house property. Therefore, assessment of assessee got merged with the CIT(A) order, which was passed on 11/1/2013. Therefore, Hon'ble Rajasthan High Court decision in the case of CIT Vs. Jain Construction Company (2012 (11) TMI 1071 - RAJASTHAN HIGH COURT) is squarely application in the case of the assessee. - Decided in favour of assessee.

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• 2015 (11) TMI 587
  Depreciation of earlier year was not allowed to be set off against the income offered as unexplained cash deposit made in the account of axis bank - Held that:- As decided in Chandra Kumar v. ACIT [2009 (11) TMI 549 - ITAT MADRAS-A] according to section 71(2A) of the Act, if the net result of computation of income under the head “Profits and gains of business or profession” is a loss, then a set-off of such loss cannot be made against income assessable under the head “Salaries”. Once unabsorbed depreciation us considered as part of current depreciation, the net result of computation under the head “Profits and gains of business or profession” for any given year would be inclusive of such unabsorbed depreciation. Any loss as a result of such computation whether on account of unabsorbed depreciation or not would not be susceptible to set off against income under the had “Salaries” on account of the specific bar contained in sub-section(2A) of section 71 of the Act. Neither section 72 nor section 32(2) of the Act would in any way affect the inter-head adjustments specified under section 71 of the Act nor the application of specific bar contained under subsection (2A) thereof.Assessing Officer as well as the Commissioner(Appeals) were justified in disallowing set off of unabsorbed depreciation from earlier years against salary income. Accordingly, we are of the opinion that the CIT(A) is justified in disallowing set off of unabsorbed depreciation from earlier years against income from other sources. - Decided against assessee.

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• 2015 (11) TMI 586
  Reopening of assessment - reopening as based on audit objection - Held that:- AO has reopened the assessment within four years from the end of the relevant assessment year. The Id.AR has primarily questioned the reopening of the assessment based on audit objection. We disagree with this contention of the ld. AR. Reopening on the basis of audit objection was upheld as valid by the Supreme Court in CIT v. P. V.S. Beedies Pvt. Ltd (1997 (10) TMI 5 - SUPREME Court). - Decided against assessee. Disallowance of agricultural income - treatment of income earned from the activity of the nursery as agricultural income and exempt u/s.10(1) - CIT(A) allowed claim - Held that:- The decision taken by the CIT(Appeals) treating the income from nursery as agriculture income is justified and as in similar circumstances, in the case of CIT v. Soundarya Nursery (1998 (8) TMI 37 - MADRAS High Court)as held that the income from the sale of plants grown in pots and the sale of seeds derived on account of cultivation by the assessee was agricultural income. The facts of the present case are similar to that of the Jurisdictional High Court, we have no hesitation in following the same. Further, it is noticed that the Ahmedabad Bench of the Tribunal, in the case of CIT v. Best Roses Biotech (P) Ltd. [2011 (11) TMI 373 - ITAT AHMEDABAD], held that the income earned from floriculture activity of growing rose plants on leasehold agricultural land falls within the definition of ‘agricultural income’ as per sec.2(1A) of the Act. In view of all these decisions, we are inclined to uphold the order of the CIT(Appeals) and dismiss the appeal of the Revenue. - Decided in favour of assessee.

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• 2015 (11) TMI 585
  Deemed dividend under section 2(22)(e) - whether payments made by the company to the assessee firm represent trade advance? - CIT(A) deleted the addition - Held that:- No infirmity in the order of the Commissioner of Income Tax (Appeals) in holding that transactions between the lender company and assessee firm are in the course of business and the amounts received by the assessee are only trade advances and thus provisions of section 2(22)(e) have no application. Further when the assessee is not a shareholder of the lender firm, provisions of section 2(22)(e) are not applicable in view of the Mumbai Special Bench decision in the case of ACIT Vs. Bhaumik Colour Pvt.Ltd (2008 (11) TMI 273 - ITAT BOMBAY-E ). In the circumstances, we uphold the order of the Commissioner of Income Tax (Appeals) and reject the grounds raised by the Revenue. - Decided in favour of assessee.

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• 2015 (11) TMI 584
  Revision u/s 263 - Assessing Officer ought to have assessed the income arising to the assessee on the sale of plots under the head “business income” instead of assessing the same under the head “capital gains” - Held that:- The Assessing Officer has accepted the claim of the assessee under the head “capital gains” based on pertinent facts. The assessee has never purchased the impugned agricultural land or any other land in her life time as stated by her. The property was bestowed upon her by succession. We find no merit in the action of the Commissioner. In the background of fact narrated, mere selling of such agricultural land after its conversion into non-agricultural land and dividing the same into smaller plots for convenience and to overcome regulatory hurdles cannot be characterized as adventure in the nature of business under section 2(13) of the Act. The Commissioner is only seeking to replace the view of the Assessing Officer by indulging in long drawn and debatable process to assert his own view which is not permissible under section 263 of the Act. We do not find any error per se in taxing the income resulting from sale of plots impugned under the head “capital gains”. The Commissioner has also failed to take note of section 45(2) which helps the case of the assessee in the alternative. In our considered view, section 263 of the Act cannot be invoked only on any slightest pretext to chase a will-ò-the-wisp. - Decided in favour of assessee.

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• 2015 (11) TMI 583
  TDS under section 194H - whether no TDS is required to be deducted by the assessee company on the impugned payments retained by the banks/credit card agencies in respect of Hotel bookings through credit card - applicability of section 40(a)(ia) - CIT(A) delted the disallowance - Held that:- The issue is no longer res-integra and is squarely covered in favour of the assessee by the decision of the Hon’ble Delhi High Court in the case of JDS Apparels Private Limited (2014 (11) TMI 732 - DELHI HIGH COURT) and in the case of Jet Airways (India) Ltd. (2013 (8) TMI 586 - ITAT MUMBAI ) wherein held relationship between the bank and the assessee was not of an agency but that of two independent parties on principal to principal basis. The bank was also acting and equally protecting the interest of the customers whose credit card was used in the swiping machines. The bank was not associated with buying and selling of goods as such. The amount retained by the bank is a fee charged by them for having rendered the banking services and cannot be treated as a commission or brokerage paid in the course of use of any services by a person acting on behalf of another for buying or selling of goods. The banking services cannot be covered and treated as services rendered by an agent for the principal during the course of buying or selling of goods as the banker does not render any service in the nature of agency. Accordingly, section 40(a)(ia) of the Act was held to be not applicable on payment of “commission” to the banks on payment received from customers through credit cards. The CIT(A) has succinctly analyzed the facts of the case and has arrived at the conclusion in accordance with law and therefore no interference is called for. Thus, the ground of appeal raised by the Revenue is dismissed. - Decided in favour of assessee.

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• 2015 (11) TMI 582
  Eligibility of benefit of section 80IB(10) - Held that:- The housing project of the assessee at Bhujbal Township is eligible for deduction u/s. 80IB(10) of the Act. In respect of housing project at Damodar Residency is concerned assessee has claimed deduction u/s. 80IB(10) in respect of residential buildings A2 and A3 only. Thus, the total area of plot on which the residential project is developed by the assessee stands on land measuring more than 1 acre (conversion 1 acre = 4047 Sq. Mtrs.). Even if the project developed by the assessee is considered as the part of the larger project even then the area of plot is much more than the minimum area specified under the provisions of section 80IB(10) of the Act. There is no bar to claim deduction u/s. 80IB(10) on the housing project which has been developed on a plot of land having area more than 1 acres, even if some other residential projects are already in existence thereon. So far as the objection of the Department that the land on which the housing project is developed is not owned by the assessee and is still undivided, we do not find any merit. The Hon'ble Madras High Court in the case of CIT Vs. Sanghvi and Doshi Enterprise (2012 (12) TMI 84 - MADRAS HIGH COURT) has held that ownership of land is not a criteria to decide status of developer to claim deduction u/s. 80IB(10). The provisions of section 80IB(10) does not require that the developer who owns the land is only eligible to claim deduction u/s. 80IB(10). Thus, in the facts of the case and the case laws discussed above, we are of the considered view that the authorities below have erred in coming to the conclusion that the housing project of the assessee at Damodar Residency is not eligible to claim deduction u/s. 80IB(10) of the Act. The appeals of the assessee are allowed in all the three impugned assessment years and the Assessing Officer is directed to grant deduction u/s. 80IB(10) to the assessee on the housing project at Damodar Residency. - Decided in favour of assessee.

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• 2015 (11) TMI 581
  Deduction claimed by the assessee on account of amortization of premium paid on purchase of securities, classified under the category ‘Held to Maturity’ - Held that:- Pertinently, assessee’s claim for amortization of premium paid on the purchase of Government securities classified as HTM is consistent with the prudential norms issued by the RBI. It is also undeniable that the acquisition of the Government securities under the HTM categories has been undertaken by the assessee in the course of carrying on the ‘banking business’ under the mandate of RBI. Ostensibly, the predominant motive to purchase securities is to maintain the statutory liquidity ratio prescribed by the RBI. The Central Board of Direct Taxes vide its circular No.665 dated 5/10/1995 also provides that the question as to whether any particular securities constitute stock-in-trade or investment in the case of a bank shall be determined, inter-alia, having regard to the guidelines issued by RBI from time to time. The assessee is entitled for deduction on account of the amortization of premium paid on purchase of securities classified under HTM category. - Decided against revenue. Loss suffered by the assessee on compulsory redemption of Sardar Sarovar Narmada Nigam Ltd.(SSNNL) Bonds - Held that:- The bank is obliged to pay interest to its depositors, which it generates by way of interest receipts from loans advanced and earnings from investments made in various securities and other incomes received during the course of banking activities. In this context, assessee explained before the lower authorities that the investment in the bonds of SSNNL was with the predominant objective of earning interest so as to service the burden of interest payments to the depositors. The assessee also explained that the bonds were traded on stock exchanges and that they were available as a source of liquidity, if required. It was, therefore, contended that such investment was a ‘stock-in-trade’ and any loss suffered therefrom is a revenue loss. In our considered opinion, the business of banking includes in its fold making of investments for the purpose of generating incomes which would service bank’s requirement of paying interest to its depositors. The assessee has consistently explained the rationale for making the impugned investment, and the same has been merely brushed aside by the lower authorities. The characterization of such investments as an activity carried out in the course of the banking business cannot be doubted and, therefore, it would constitute assessee’s stock-in-trade of the business of banking. As a consequence, any loss suffered on sale of such stock-in-trade would be an allowable deduction while computing the business income. - Decided against revenue.

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• 2015 (11) TMI 580
  Transfer pricing adjustment - determination of arm’s length price of the international transaction of sale of old machineries to the associated enterprise - Held that:- The assessee selected the CUP method in order to benchmark the sale price of the international transactions. In support, assessee also adduced the relevant CUP data, namely, valuation report from a Chartered Engineer and claimed that the sale price recovered by the asessee from its associated enterprise was commensurate with the values arrived at by the valuer. Assessee also pointed out that the invoice values have been accepted by the Indian Custom authorities also. We find that the TPO has accepted the adoption of CUP method as the most appropriate method for benchmarking the international transaction of sale of old machineries. Out of the eight transactions of such sales, the CUP data relied upon by the assessee has also been accepted by the TPO in five cases inasmuch as the sale price stated in the invoices have been accepted. It is only in three sale transactions that such CUP data has not been accepted and the TPO considered the written down value of the machineries as the arm’s length sale price. Notably, in such three transactions, assessee had suffered a loss because sale values, based on the valuer’s report, was lower than the WDV of such machineries. Quite clearly, the approach of the TPO is inconsistent. The CUP data which has been found to be acceptable in considering five transactions of sales as being in consonance with the arm’s length price, cannot be disregarded in case of other three transactions merely because of the resultant loss. In the impugned orders of the authorities below, there is no charge against the assessee that the CUP data relied upon by the assessee qua the aforestated three transactions was inconsistent or otherwise unreliable in comparison to the similar data relied upon in the context of the other five transactions. Therefore, in our view the lower authorities have mis-directed themselves in making the addition - Decided in favour of assessee. Disallowance of expenditure incurred on account of royalty - revenue v/s capital in nature - Held that:- The Tribunal in assessee’s own case for assessment year 2009-10 on similar issue decided the assessee was not to disclose to third parties any of the documents made available to the assessee without having received a written authorization from the foreign collaborator. The Tribunal held that the amount paid by the assessee under the agreement constituted revenue expenditure. The High Court concluded that the features of agreement clearly established that what was obtained by the assessee was only a licence and what was paid by the assessee to the foreign collaborator was only a licence fee and not the price for acquisition of any capital asset and, therefore, the Tribunal was right in treating the amount as revenue expenditure. - Decided in favour of assessee.

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• 2015 (11) TMI 579
  Treatment and taxability of maintenance charges received by the assessee from its tenants in the hands of the assessee - deductibility of maintenance charges paid by the assessee, in turn, to the developer by the assessee - Held that:- Maintenance charges are different from the nature of rent. These charges are not paid for the users of the property as such. These charges have been paid for making some extra use of the property, the maintenance charges are not in the nature of the rent simplicitor. These have been called maintenance charges but these are for the extra facilities enjoyed by the tenants. These cannot be said to be necessarily integral part of the rental income. In our view, these are apparently, over and above, the rental income earned by the assessee company, therefore, in our considered view, this income cannot be clubbed with the rental income. There can be different types of arrangements by the land lords with different tenants. Therefore, presuming that this kind of charges, form part of the rental income, in the given facts of the case, would not be fair and justified, in our considered view. Accordingly, it is held that these maintenance charges are not part of the rental income and therefore amount of maintenance charges, received by the assessee, in these facts and circumstances of the case is not part of the rental income. Further examined with regard to taxability of the these charges in the hands of the assessee company, these charges should not be clubbed with the rental income, therefore, these charges cannot be brought to tax under the head ‘income from house property’, in the given fact and circumstances. In our view, these charges should be brought to tax under the head ‘income from other sources’. Accordingly, the assessee should be eligible to make claim of the expenses also, which have been incurred for earning this income. Therefore, we hold that the amount received by the assessee on account of maintenance charges would be taxable under the head income from other sources and assessee will be eligible to make claim of the payment made under this head to M/s Tamilnadu Real Estate Pvt. Ltd. - Decided partly in favour of assessee.

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• 2015 (11) TMI 578
  Depreciation on goodwill - whether the "goodwill" does not fall within the definition of eligible intangible assets for the claim of depreciation thereupon under section 32(1)(ii)? - Held that:- Issue relating to the depreciation of goodwill has now been settled by the hon'ble Supreme Court in the case of CIT v. Smifs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] to held hat the goodwill also falls under the expression "any other business or commercial right of a similar nature" and thus would be an asset under Explanation 3(b) to section 32(1) of the Act, we accordingly hold that the assessee is entitled to the claim of depreciation on goodwill. This issue is accordingly decided in favour of the assessee.

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• 2015 (11) TMI 577
  Accrual of income - addition being token advance received by the appellant from UTV Motion Pictures - Held that:- The advance received by the assessee from UTV Motion Pictures (Mauritius) Ltd. during the relevant assessment year cannot be treated as the income of the assessee for the assessment year 2009-10, since the income has not crystallised to the assessee. Accordingly we hereby direct the learned Assessing Officer to delete the addition which was further confirmed by the learned Commissioner of Income-tax (Appeals) for the relevant assessment year being advance received by the assessee for future performance. Amount received from Photon Factory and from AVM Production - assessee submitted that these amounts were already treated as income of the assessee during the assessment years 2007-08 and 2008-09 and therefore, if the same is treated as income for the relevant assessment year, it would amount to double taxation - Held that:- Considering the claim of the assessee, in the interest of justice we hereby remit the matter to the file of the learned Assessing Officer for verifying whether the claim of the assessee is true. If the submission of the assessee is found to be correct, then the learned Assessing Officer is duty bound to delete the addition made once again in the hands of the assessee for the relevant assessment year. Addition towards the value of gold jewellery - Held that:- It cannot be doubted that the family cannot accumulate jewellery worth Rs. 39,90,000 over a period of time being either purchased from own declared source of income or received as gifts during marriage functions, etc. Shri R. Sivakumar has also admitted during the course of search that he possessed 400 sovereign grams of gold jewellery. It is also pertinent to note that the learned Assessing Officer had made the addition without examining the veracity of the claim of the appellant's father. The learned authorised representative had also stated before the learned Commissioner of Income-tax (Appeals) by furnishing an affidavit of Shri R.Sivakumar dated February 25, 2013 that Shri R. Sivakumar was in the profession of acting nearly 40 years from 1965 to 2005 and his present source of income is from royalty received from the books written by him and public lectures. These facts were not taken into consideration by the Revenue. Therefore, we do not find it appropriate on the part of the Revenue to make an addition without verifying the claim of the assessee, the family's financial status and drawings made by the assessee and his family members over the earlier years. Accordingly we hereby delete the addition made - Decided in favour of assessee.

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• 2015 (11) TMI 576
  Reopening of assessment - income of the assessee should be assessed under the head "Income from house property" whereas in the impugned assessment order passed in pursuance of such reasons recorded the Assessing Officer has treated the income to be assessed under the head "Income from other sources" - Held that:- In the assessment year 2007- 08, the assessee admitted that income from flats owned by the assessee should be assessed as income from house property. Up to the assessment year 2001- 02, the Department itself has treated the licence fee and the service charges from the flat taken on tenancy basis as business income. Thus, the material on record itself negates the premise on which the Assessing Officer has entertained his reason to believe which is based on wrong presumption of facts and therefore, the same cannot be held to be a valid ground for reopening the case within the scope of section 147 of the Act. Accordingly, we hold that the "reasons recorded" by the Assessing Officer for reopening the case under section 147 is bad in law as there is no reason to believe or any relevant material on the basis of which the assessee's case can be reopened. Accordingly, the entire proceedings initiated vide notice under section 148 of the Act, is void ab initio and consequently the assessment orders are quashed. - Decided in favour of assessee.

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• 2015 (11) TMI 575
  Non deduction of tax at source u/s 195 - Disallowance of commission payment to foreign agents by applying the provisions of section 40(a)(i) - Held that:- section 195(1) envisages that tax is to be deducted at source on income which is chargeable under the provisions of the Income-tax Act. The hon'ble Supreme Court while interpreting the expression "chargeable under the provisions of this Act" as employed under section 195(1) of the Act has held in the case of GE India Technology Centre P. Ltd. v. CIT [2010 (9) TMI 7 - SUPREME COURT OF INDIA] that the said expression would mean that the remittance has got to be of a trading receipt, the whole or part of which is liable to tax in India. However, if the payments made to non-residents are not chargeable to tax under the provisions of the Income-tax Act, then, the provisions of section 195 would not apply. The hon'ble Supreme Court further observed that if the scope of section 195 is enlarged to that extent, then, it would result in a situation where, even though, the income will have no territorial nexus with India or is not chargeable in India, the Government would nonetheless collect taxes. In the present case, on a perusal of the assessment order or the order of the learned Commissioner of Income-tax (Appeals), we do not find any conclusive finding given by the authorities concerned that the payments made to non-residents are chargeable to tax under the Income-tax Act. Applying the principles laid down by the hon'ble Supreme Court as aforesaid, it is to be held that the provisions of section 195 would not be applicable to payments made by assessee to non-resident agents. Thus the provisions of section 195 would not be applicable to the commission payments made by the assessee to non-resident Indians, as such income is not chargeable to tax under the provisions of the Act. Consequently, disallowance made under section 40(a)(i) would also not survive. - Decided in favour of assessee.

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• 2015 (11) TMI 574
  Penalty under section 271(1)(c) - allowability of business losses under a particular head of brought forward losses or the other head of brought forward losses - Held that:- he assessee has disclosed all material facts relevant for its assessment to the Assessing Officer at the time of assessment itself. It is a case of honest difference of opinion between the assessee and the Revenue regarding allowability of business losses under a particular head of brought forward losses or the other head of brought forward losses. There being no material brought on record on behalf of the Revenue to suggest that the conduct of the assessee was not bona fide, we are of the considered view that it was not a fit case for levy of penalty for concealment of income or filing of inaccurate particulars of income under section 271(1)(c) of the Act, which is accordingly cancelled and ground of appeal of the assessee is allowed. In view of our decision that this case is not a fit case for levy of penalty under section 271(1)(c) of the Act on its merits, we are not adjudicating the other legal issues raised by learned counsel for the assessee on the legality of the penalty order. - Decided in favour of assessee.

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• 2015 (11) TMI 573
  Disallowance made out of salary and wages - Held that:- Considering the characteristics of contract works, we find some merit in the contentions of the learned authorised representative. Hence the disallowance of entire amount, in our view, is not justified. However, as pointed out by the Assessing Officer, there appears to be some deficiencies in the maintenance of vouchers, for example, the vouchers contain only the name of the labourer without any address. Hence it will be difficult for anybody to verify the genuineness of the payment. Hence, in order to put this issue at rest, we are of the view that a round sum disallowance of Rs. one lakh in order to cover up the deficiency, if any, in respect of claim relating to salary and wages expenditure may be made and the same, in our view, would meet the ends of justice. Accordingly, we set aside the order of the learned Commissioner of Income-tax (Appeals) on this issue and direct the Assessing Officer to restrict the disallowance out of salary and wages expenditures to Rs. one lakh. - Decided in favour of assessee in part Disallowance of value added tax payable amount made under section 43B - Held that:- The assessee had claimed input credit of Rs. 5,67,185, whereas the value added tax auditor determined that the input credit was available to the assessee only to the extent of Rs. 3,68,505. Further, there was difference with regard to value added tax amount paid by the assessee. Accordingly, the Assessing Officer has determined the value added tax amount payable at the year end at Rs. 1,92,087. It is not the case of the assessee that he has not accepted the value added tax audit report. Having accepted the value added tax audit report, in our view, the assessee was not justified in denying the value added tax liability shown in the audit report. Further, the assessee has not shown to us that the computations given in the value added tax audit report was not accepted by the Sales Tax Department. Under these set of facts, we are of the view that the learned Commissioner of Income-tax (Appeals) was justified in confirming the addition of balance amount of Rs. 98,689 by invoking the provisions of section 43B of the Act. - Decided in favour of revenue Addition of capital introduced by the assessee - Held that:- Since the assessee has filed returns of income in the earlier years by computing income under section 44AD of the Act and since the assessee has shown that he has withdrawn the funds from his bank account in the month of March, 2007, we do not find any reason to disbelieve the explanations of the assessee. Accordingly, we set aside the order of the learned Commissioner of Income-tax (Appeals) and direct the Assessing Officer to delete the addition made on this account.- Decided in favour of assessee

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• 2015 (11) TMI 572
  Levying penalty under section 271(1)(c) - Assessing Officer held that the assessee had routed her undisclosed income in the garb of scrap sales and had also made incorrect claim of deduction in respect of the amount of alleged scrap sales - claim of the assessee for deduction under section 80-IC denied - Held that:- The assessee submitted supportive bills and vouchers to justify the receipt of amount from sale of scrap before the Commissioner of Income-tax (Appeals) although the claim of the assessee for deduction under section 80-IC of the Act has been declined by the Revenue authority but rejection of the claim does not automatically attract penalty. Therefore, we reach to a logical conclusion that the Assessing Officer levied penalty in a hasty manner without assigning any justified and reasonable cause which was upheld by the Commissioner of Income-tax (Appeals) in a mechanical manner without going into the facts and circumstances of the case and ignoring this important fact that the assessee submitted details of ledger account, bills and vouchers during quantum appellate proceedings which cannot be ignored. Therefore, conclusion of the Assessing Officer that the assessee routed her own money earned from undisclosed sources in the garb of sale of scrap for levy of penalty under section 271(1)(c) is not sustainable. Finally, we hold that the penalty was imposed on the assessee without any justified reason and the same is not sustainable in view of our foregoing discussion and, therefore we direct the Assessing Officer to delete the penalty - Decided in favour of assessee.

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• 2015 (11) TMI 571
  Rejection of application filed under section 80G(5)(vi) - as per revenue the benefit of the activities of the assessee goes to the members of the assessee's council only and general public at large is not the beneficiary in any manner - Held that:- Contention of the assessee that registration of an Institution under section 12A by itself is a sufficient proof of fact that trust or institution concerned is created or established for charitable/ general public utility purposes and it is eligible for renewal of approval under section 80G enjoyed in the earlier years. The admitted facts in the case of the present assessee are that it was registered under section 12A of the Act and was enjoying the same when it moved the present application for renewal of approval under section 80G enjoyed earlier. It is also an undisputed fact that there were no new facts during the year under consideration in comparison to the facts of the other years when the assessee was granted benefit of section 80G of the Act When on the same set of facts and circumstances of the case, renewal of approval under section 80G(5)(vi) has been granted for earlier years and there being no change in the facts and circumstances in the years for which renewal is sought for, there is no justification to reject the assessee's application for renewal of exemption certificate under section 80G(5)(vi) for the assessment year 2010-11 onwards. it was not proper to characterise the activities of the assessee as activities amounting to a business in the generally understood sense of the word, the most important feature of business being profit motive. It was held that it had not been suggested by the Income-tax authorities that the activities carried out by the assessee were propelled by any profit motive, therefore, the provisions of section 11(4)(a) were not attracted. Under these facts and circumstances, we hold that the learned Director of Income-tax (Exemptions) was not justified in denying the renewal of approval under section 80G(5)(vi) of the Act to the assessee. Thus, while setting aside the order impugned, we direct the learned Director of Income-tax (Exemptions) to grant renewal of approval under section80G(5)(vi) of the Act as applied for by the assessee. - Decided in favour of assessee.

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• 2015 (11) TMI 570
  Reopening of assessment - Held that:- We deem it fit to send all the grounds back to the file of the AO. The AO shall provide copy of Reasons recorded by him, if any, to the assessee. The assessee shall file objections to the AO with regard to reopening of the case, if so desired by him. The AO shall follow the procedure, as laid down by the Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs. ITO. (2002 (11) TMI 7 - SUPREME Court). The AO shall dispose of the objections of the Assessee before framing the re-assessment order. The assessee shall be at his liberty to file all the details and evidences, as may be required by the AO or as may be considered appropriate by him, as per law. The AO shall give full opportunity of hearing to the Assessee before the framing reassessment orders. The Assessee shall extend all requisite cooperation to the AO in this regard. Thus, all three grounds i.e. Grounds No (i), (ii) and (iii), of all of these three appeals, are sent back to the file of AO. - Decided in favour of assessee for statistical purposes.

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• 2015 (11) TMI 569
  Penalty under section 271(1)(c) - assessee failed to substantiate its claim of agriculture income with the help of supporting evidence - Held that:- The land revenue record maintained by the State Government, it has been shown as owner in possession of land admeasuring 3,92,714 sq.meters, which is roughly 170 acres. In the column of cultivator, name of the assessee-company has been recorded. The assessee has produced land record from the revenue authorities of the State Government. It failed to substantiate its explanation about the agricultural income. It is the owner of the agriculture land. It has been shown as cultivator in the revenue record. Thus, its claim was not false. The AO has nowhere recorded any finding that the assessee has furnished any inaccurate particulars of its income. The only area of dispute between the AO and the assessee is that the assessee failed to substantiate its claim of agriculture income with the help of supporting evidence. But the claim was not found to be false, because the assessee is the owner and in possession of huge tract of agriculture land. The income of the assessee has been estimated. The AO cold have estimated the generation of agriculture income to this extent, out of such huge tract of agriculture land. Therefore, to our mind, the assessee does not deserve to be visited with the penalty under section 271(1)(c) of the Act, and we delete penalty - Decided in favour of assessee.

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• Customs

• 2015 (11) TMI 603
  Valuation of goods - whether the value of condenser imported by the respondent is $4 per pipe as declared by the respondent- assessee or it is to be taken at $45.6 per piece which was declared by the Revenue - Held that:- Tribunal rejected the case of the Revenue and further recorded that since no other evidence is produced by the Revenue to arrive at the transaction value, the value as declared by the assessee-respondent is accepted. These are mere findings of fact and no question of law arises for consideration. - Decided against Revenue.

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• 2015 (11) TMI 593
  Reward for informing evasion of duty - Partial reward given - Held that:- revenue stated that the quantum of the final reward and due to the Petitioner will be decided by the Reward Sanctioning Committee within this period of three months. - In the light of statements made on affidavit and reiterated before us by respondent, all of which are accepted as undertakings to this Court, nothing survives in the Writ Petition - Petition disposed of.

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• 2015 (11) TMI 592
  Seizure of silver - Smuggling of goods - Whether in a case where adjudication has been done solely on the basis of statement of co-noticee, whose cross-examination has not been allowed, the adjudication can be sustained - Held that:- From the findings of fact recorded by the Tribunal which is the last fact finding authority, it is evident that ample opportunity was afforded to the appellant during the course of adjudication proceeding. The appellant was involved in smuggling silver. Seventy nine silver bricks of foreign origin were recovered and seized from his doodh ki dairy. The place where these silver were concealed, was shown by the employee of the appellant, namely, Om Prakash whose statement was recorded under Section 108 and he clearly stated that the recovered silver was kept by the appellant in his doodh ki dairy. The appellant could have produced his aforesaid employee Om Prakash in evidence but he had not produced him. The story built by the appellant for letting part of the premises of the doodh ki dairy to one Sri Ram Avatar Singhal and that a suit for eviction was filed by his brother; was not found supported by any evidence. No document could be produced by the appellant that the silver seized was validly imported. - The burden to prove that the 79 silver ingots of foreign origin recovered from the premises of the appellant were not smuggled goods, was on the appellant since it was seized from the premises in possession of the appellant. The appellants have completely failed to prove that the aforesaid seized silver was not smuggled goods. Levy of penalty for improper importation of silver by the appellant as well as confiscation of the silver are wholly justified. The penalty was imposed by the Commissioner, Customs under Section 112 (b) of the Act on consideration of the relevant materials and evidences on record and after following the principles of natural justice. - Decided against the appellant.

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• Corporate Laws

• 2015 (11) TMI 591
  Guilty of sponsoring and managing “Collective Investment Scheme” without obtaining certificate of registration from SEBI - contravention of Section 12(1B) of the Securities and Exchange Board of India Act, 1992 and Regulation 3 of the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 - Held that:- Except finding fault with the appellant in not seeking registration before operating the scheme, no fault is found in the scheme operated by the appellant. In other words, SEBI does not find fault with the scheme of the appellant which neither offered guaranteed return nor offered interest on the amount invested. In such a case, on what basis appellant is directed to refund the amount invested with interest at the rate of 10% per annum is not set out in the impugned order. It is relevant to note that even after issuing a press note on February 13, 2008, SEBI itself was not sure till 2013 as to whether the scheme in question is covered under CIS or not. In fact when respondent no. 2 who had invested in the scheme had complained against the appellant, SEBI by its communication dated 31.01.2011 informed the respondent no. 2 that the scheme was not covered under CIS and therefore the investors who have invested in the scheme of the appellant cannot seek redressal of their grievances from SEBI. It is only when this Tribunal on 29.11.2012 set aside the said communication dated 31.01.2011 and directed SEBI to reexamine the issue afresh in accordance with law, SEBI has passed the impugned order on April 15, 2013 holding that the scheme floated by the appellant is covered under CIS. Thus decision of SEBI that the scheme in question does not fall within the purview of SEBI held the field till SEBI changed its stand and passed the impugned order on April 15, 2013. In such a case, for the error committed by SEBI in misconstruing its own regulations and for the inordinate delay on part of SEBI in arriving at correct conclusion whether the appellant can be penalized by directing to refund the amount with interest at the rate of 10% from the date of investment needs consideration, especially when the scheme has come to an end in the year 2010 and the terms of the said scheme neither offered guaranteed return nor offered interest on the amount invested. Although regulation 65 of CIS Regulations empower SEBI to direct refund with interest in appropriate cases, how in the facts of present case, directing refund of the amount invested with interest is justified, is not set out in the impugned order. Explanation given by the appellant that due to recession in the market the art works could not be sold at a profit is not doubted in the impugned order. In such a case, it is not known as to on what basis direction to pay amount of profits/income to the investors is given. Even counsel for respondent no. 2 finds fault with the impugned order, and submits that the WTM has not done the work of ascertaining the profits if any, at the time when the scheme ended and further submits that NAV (ex-income) ought to have been taken into consideration by the WTM while passing the impugned order. Thus while upholding the impugned order of SEBI to the extent it holds that the scheme operated by the appellant during the period from 2006 to 2010 constituted CIS, we set aside the directions contained in the impugned order to the extent it directs the appellant to refund the monies collected by it under the said scheme but remaining unpaid to all the investors and also set aside the direction given by SEBI to the appellant to pay profits/income due to the investors or pay interest at the rate of 10% per annum from the date of investment till the date of refund, whichever is higher and direct SEBI to decide those issues afresh after affording an opportunity of hearing to the appellant and the respondent no. 2.

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• Service Tax

• 2015 (11) TMI 625
  Waiver of pre deposit - dredging services - appellant submits that as per the definition of "dredging", it does not include canals and not specified in the definition in Section 65 (36a) - construction of Tsunami houses, quarters for Tamil Nadu Govt officers etc. - Held that:- Appellant's plea of rendering of dredging services which related to government is not tenable in view of Final Order of Tribunal in the case of Mackintosh Burn Ltd. (2010 (5) TMI 435 - CESTAT, KOLKATA) - appellants have not made out a case for waiver of service tax on the services. Appellant's reliance on International Seaport Dredging Ltd. (2013 (8) TMI 676 - CESTAT Chennai) is only an interim order. Accordingly, we direct the appellant to deposit a sum of Rs. 10,00,000 within 8 weeks. Upon such deposit, predeposit of balance demand, interest and penalty shall stand waived and recovery thereof stayed during pendency of appeal. - Partial stay granted.

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• 2015 (11) TMI 624
  Waiver of pre deposit - small service provider exemption - benefit of exemption Notification No.06/2005 - Commercial or Industrial Construction Service - Held that:- Prior to 01.06.2007, works contract was not liable to service tax and as a consequence of which, prima facie the appellant became eligible for the benefit of exemption Notification No.06/2005 during the remaining part of the financial year 2007-08. Extending that benefit, the appellant claims, the demand would reduce to Rs. 1,43,858/- (which is more than 50% of the impugned demand). Accordingly, we order pre-deposit of Rs. 1,43,858/- along with proportionate interest within eight weeks. Compliance is to be reported by 19.10.2015. Subject to such compliance, recovery of the remaining adjudicated liabilities is stayed during pendency of the appeal - Partial stay granted.

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• 2015 (11) TMI 623
  Waiver of pre deposit - Adjustment of excess service tax paid - Held that:- Prima facie, the demand seems to be as a result of non-permitting of adjustment of the service tax paid in excess during certain months with the amount of service tax short paid during certain other months. The appellant gave a month-wise/financial year-wise summary of the service tax paid which shows that overall it has paid service tax in excess by an amount of Rs. 1,77,26,240/- though the said summary has not been verified by Revenue. Whether the adjustment of service tax short paid and excess paid is permitted under the rules in the given circumstances requires a detailed analysis which can be taken up at the time of final hearing. Having regard to the fact that prima facie, overall it does not seem to be a case of short payment of service tax by the appellant we waive the requirement of pre-deposit and stay recovery of the impugned liability during pendency of the appeal. - Stay granted.

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• 2015 (11) TMI 622
  Waiver of pre deposit - Works Contract Services & Construction of Residential Complex Services - Held that:- Appellant did not co-operate during the investigation and adjudication proceedings. Various points raised by the appellant in the grounds of this appeal as well as during the course of hearing were not brought out and argued before the Adjudicating authority. The matter is, therefore, required to be remanded to the Adjudicating authority for fresh consideration. However, it is also observed that appellant has not co-operated with the Adjudicating authority during the course of adjudication proceedings Appellant is thus required to be put to some condition so that appellant takes the adjudication proceedings seriously. - Partial stay granted.

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• 2015 (11) TMI 621
  Simultaneous availing the benefit of abatement and Cenvat Credit - Benefit of Notification No.2/2004 as amended and 01/2006-ST, dt.01.03.2006 - Tour Operator Service - Held that:- Appellant should have taken decision about the benefit of notification for claiming abatement. We find that the Appellant had already reversed the CENVAT Credit. The Tribunal in the case of Khyati Tours & Travels Vs CCE Ahmedabad - [2011 (6) TMI 324 - CESTAT, AHMEDABAD] observed that the benefit denied on the ground of availment of CENVAT Credit alongwith benefit of abatement in respect of rent-a-cab service. It has been observed that reversal of CENVAT Credit amounts to non-availment of credit. Accordingly, the benefit of notification for claiming abatement cannot be denied. In the present case, the appellant reversed the CENVAT Credit and benefit of abatement cannot be denied. - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 620
  Denial of refund claim - unjust enrichment - Tour Operator Services - Held that:- Appellant's argument regarding non-consideration of various facts by both the lower authorities will not carry the case any further, as rightly pointed out by the learned departmental representative that in the case of Hardesh Ores Pvt. Ltd. (2015 (9) TMI 993 - CESTAT MUMBAI), this bench has held once service tax liability is worked back and discharged, it would be that amount of tax is being recovered by the appellant and principles of unjust enrichment gets attracted (I was one of the member of the said bench). According I hold that question of unjust enrichment is not satisfactorily explained by the appellant and it has to be held that they have passed on the incidence of tax liability. - Decided against Assessee.

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• 2015 (11) TMI 619
  Denial of refund claim - Business Auxiliary Services - assessee has failed to produce original GAR and other documents, evidences payments before the adjudicating authority - Held that:- Assessee respondent having contested of none applicability of tax under Business Auxiliary Services, before the tribunal nothing is brought on records that the said order is contested by revenue. - Tribunal categorically held in the favor of the assessee respondent by an order dated 2.4.2010 and if it is so, tax liability discharged by appellant assessee respondent is not in doubt. Consequent to the said order in his favor, assssee respondent filed the refund claim before the adjudicating authority. I find that the arguments put forth by the learned departmental representative will not carry the case for the Revenue any further, for a simple reason that discharge of tax liability has never been contested, in as much it is on record that, amounts paid by the appellants were appropriated by the lower authorities in the first round of litigation. As regards other points raised by the learned departmental representative that there is a mismatch of chalans produced and PLA. I find that there is no dispute that the entire amount as tax liability has been paid by respondent and having been appropriated by the lower authorities in order in original now department cannot turn around and say, There is no payment of amount in the absence of documents. On such a background, I find that the findings recorded by the first appellate authority in the impugned order are correct. - Decided against Revenue.

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• 2015 (11) TMI 618
  Denial of refund claim - CENVAT Credit - Nexus with output services - Held that:- Appellants have been denied an opportunity to submit documents and establish their contentions. It is stated that it is not necessary to verify the documents as the invoices do not have any nexus with the export of services. The appellate authority who is also a fact finding authority is duty bound to look into the documents and contentions of the appellants. Without verification of any records, the appellate authority has proceeded in a mechanical fashion to uphold the order of rejection of refund claim. - it is a fit case for remand to the Commissioner (Appeals) for denovo adjudication of the appeal. - matter remanded back - Decided in favour of assessee.

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• 2015 (11) TMI 617
  Denial of 67% abatement claimed by it under Notification No. 15/2004-ST, 19/2005-ST and 1/2006-ST - CENVAT Credit - Held that:- In the case of Hello Minerals Water (2004 (7) TMI 98 - HIGH COURT OF JUDICATURE AT ALLAHABAD) it was held in the context of Notification No. 15/94-CE that the reversal of modvat credit amounted to non taking of credit inputs. The said judgment has been followed in the case of Amola Holdings (2009 (6) TMI 71 - CESTAT AHMEDABAD). As regards the judgment of Bombay High Court in the case of Dilip Chhabaria Designs (2015 (4) TMI 387 - BOMBAY HIGH COURT) it is to state that in that case the credit was taken on duty paid on chassis and other inputs which was not utilised since the same lapsed due to the assessee no longer remaining under the Excise net. Thus, that judgment was dealing with rather different set of facts. We find that this issue has been analysed in detail by CESTAT in the case of Punj Lloyd [2015 (10) TMI 2294 - CESTAT NEW DELHI] where also it has been held that the said ratio of the judgment of Allahabad High Court in the case of Hello Minerals (supra) continues to be applicable on the subject and the ratio stands confirmed by Supreme Court in the case of Sonalac Paints and Coatings Ltd. vs. CCE [2015 (4) TMI 697 - SUPREME COURT]. - Impugned order is unsustainable - Decided in favour of assessee.

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• 2015 (11) TMI 616
  Denial of refund claim - refund under notification no. 40/2007-ST or 41/2007-ST - terminal handling charges - GTA service - Held that:- Regarding the amount of Rs. 80865/-, we find that the sample invoices produced by the appellant show the service tax having been paid under business support service which is not a service covered under notification no. 40/2001-ST or 41/2007-ST dated 6/10/2007. Further, the contention that notification no. 41/2007-S.T. should be given effect from 7/9/2007 when notification no. 40/2007-ST was issued is totally untenable as there is nothing in notification no. 41/2007-ST which would even suggest that it has any retrospective applicability. Consequently, the refund pertaining to Insurance Service is not admissible. The appellant itself has admitted that an amount of Rs. 5976/- was the service tax relating to handling charges and not in relation to freight charges, and therefore, even this amount is not admissible for refund under any of the two notifications. - No infirmity in impugned order - Decided against Assessee.

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• 2015 (11) TMI 615
  Refund claim in terms of notification no. 41/2007-ST as amended by the notification no. 03/2007-ST and 17/2008-ST - Bar of limitation - Held that:- In terms of the clause 2 (e) of the said notification, as amended, claim for refund shall be filed on a quarterly basis within 60 days from the end of the relevant quarter during which the said goods had been exported. The appellant has contended that it filed the refund claim within the time limit prescribed under section 11B of the Central Excise Act and the statutory time limit would prevail over the provision of a notification. In this regard, it is pertinent to mention that it is not the case of normal refund. It is a case of availment of exemption under notification 47/2007-ST. It is just that the exemption from service tax under notification no. 41/2007 is operationalized by way of refund of Service Tax paid. It is settled law that exemption under a notification is available subject to the fulfillment of all the conditions prescribed therein. Non-fulfillment of any of the conditions of exemption notification disentitles an assessee from the benefit of the notification. In the present case, the availability of exemption under notification no. 41/2007-ST as amended was inter-alia subject to the condition that the refund claim is filed on a quarterly basis within 60 days from the end of the quarter. As stated earlier, this condition has been violated by the appellant and so the appellant does not remain entitled to the benefit of the said notification under which the refund was claimed. - Decided against assessee.

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• 2015 (11) TMI 614
  Penalty u/s 76 & 78 - Business auxiliary services - Held that:- Commissioner has dropped the penalty under Section 78 of the Finance Act while reducing the confirmed demand. I find that while confirming the penalty under Section 76 of Finance Act, 1994, the Ld. Commissioner (Appeals) has observed that since the appellant had agreed to the short payment of service tax, therefore, the penalty under Section 76 of Finance Act, 1994 is justified. The Ld. Advocate assailing the impugned Order contended that since the appellant had discharged their liability before issuance of show cause notice, therefore, in view of the specific provisions contained under Section 73(3) of the Finance Act, 1994, no show cause notice for the said liability should have been issued to them. It is conceded by the Appellant that this plea has not been raised before the Ld. Commissioner (Appeals) and advanced for the first time before this Tribunal. In the interest of justice, I am of the view that the appellant be given a fair chance to raise the said plea before the Ld. Commissioner (Appeals) and the Ld. Commissioner should accordingly consider the same and decide the issue of imposition of penalty under Sec.76 of Finance Act,1994, accordingly. - Appeal disposed of.

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• 2015 (11) TMI 613
  Demand of service tax - individual jewellery appraiser - Technical Testing and Certification Service - Held that:- On perusal of the SCN and the adjudication order and impugned order, we find that the adjudicating authority has dropped the proceedings on the ground that certifying purity and value of the gold for pledging in the bank does not require any technical knowledge and technical instrument. The appellant is an individual jewellery appraiser and receives commission from the bank which is clearly recorded in both the SCN and in the adjudication order. The amount received is paid by the bank as commission and not testing charges or certification charges. Prima facie, we find that service rendered by the appellant is not Technical Testing and Certification Service. We find that the adjudicating authority has rightly held that examination of gold ornaments which is brought to the bank for pledging is for testing the purity and value of the gold. Hence, the amount received by the appellant as commission cannot be classifiable under Technical Testing and Certification Service and not liable for demand of service tax - Decided in favour of assessee.

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• 2015 (11) TMI 612
  Commercial Coaching and Training Centre - Imposition of penalty - Held that:- Apex Court has set aside the judgment of the Tribunal in the case of Sunwin Technosolution Pvt. Ltd. [2010 (9) TMI 71 - SUPREME COURT OF INDIA] as to fact that the services of the appellant in imparting computer training to the students will be liable to service tax under ‘Commercial Coaching and Training Centre Service' - issue of liability to tax on the education imparted under computer training was disputed and the dispute had to be settled by the apex Court in the recent judgment, in view the same, the respondent could be entertaining a bona fide belief that the tax liability would not arise. Further, we also find that the issue is of interpretation of a Notification. Since the issue is of interpretation and the Notification has also being contested before the apex Court, we are of the view that the penalties imposed on the appellant by the adjudicating authority are unsustainable. Penalties as sought to be imposed by the Departmental Representative are unacceptable and we hold that no penalty needs to be imposed on the respondent-assessee.

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• 2015 (11) TMI 611
  Demand of service tax - Consulting Engineering Service - Held that:- Karnataka High Court while upholding the order of the Tribunal, dismissed the Revenue’s appeal in the appellant’s own case reported as Commissioner of Service Tax, Bangalore Vs. Denso Corporation - [2012 (8) TMI 686 - KARNATAKA HIGH COURT]. - there is no provision to demand service tax during the period 19.5.1988 to 15.8.2002 on a foreign service provider as Section 66A was inserted to the Finance Act, 1994 only with effect from 18.4.2006. Accordingly, the impugned order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 610
  Demand of service tax - Whether appellant is liable to service tax liability on the payments made to service providers prior to 18-04-2006 as also post 18-04-2006 and whether service tax liability is to be discharged on the amount held back by the appellant as withholding tax for the remittances made the persons situated abroad - Held that:- first appellate authority has come to a conclusion that service tax liability arises on the appellant after 18.04.2006 by the virtue of provisions of section 66 A of the Finance Act 1994. The said findings of the first appellate authority is correct and does not require any interference. The impugned order to the extent it upholds service tax liability and the interest thereof, is correct and legal and does not suffer from any infirmity. This takes us to the penalties imposed on the appellant on this count. It is seen from the records that the appellant has discharged the entire service tax liability and the interest thereof before the issuance of show cause notice. The service tax liability having being discharged prior to issuance of show cause notice, we consider the same as it would fall under the provisions of section 73 (3) of the Finance Act 1994, show cause notice need not have been issued this point; be that is it may, since the issue involved was contested before the various forms, we invoke the provisions of section 80 of Finance Act 1994, set aside on the penalties imposed on this point as also wherever appellant has discharged the service tax liability and with the interest, before the issuance of show cause notice. As regard the service tax liability under the category of withholding amount for taxes, the first appellate authority as well as the adjudicating authority have not recorded any reasoning for coming to conclusion that appellant is liable to discharge the service tax liability. Both the lower authorities has only relied upon the Board circular and holding that the withholding tax is an amount which needs to be considered as TDS. - Matter remanded back - Impugned order is set aside

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• Central Excise

• 2015 (11) TMI 609
  Demand u/s 11D - the respondent issued debit note to adjust the difference in the price of invoice and money paid, by cheque (for crude oil) - Revenue felt that the amount reflected in the debit note as Excise duty, amounts to such collection by the respondent-assessee, which is required to be deposited with the Central Government in terms of the provisions of Section 11D of the Act - Held that:- It is admitted fact on record that the respondent-assessee received crude oil on which no Excise duty was chargeable. It is further admitted fact that the purchase invoices are for refined oil under the exigency of business, the assessee used to issue debit note as stated hereinabove, for adjusting the amount not payable. In view of the findings in the impugned order the learned Counsel prays for dismissing the appeal of Revenue. - Finding of the Commissioner (Appeals) are correct and there is no illegality or impropriety in the impugned order. Further I hold that the basic ingredients as required under Section 11D, for attracting liability are absent in the facts of this case, like recovery of any amount in the name of duty from the buyers of such goods, that is excisable goods, and such person should be the person liable to pay duty under the scheme of the Excise Act. These elements being absent I conclude that the respondent-assessee was not required to pay any duty under the provisions of Section 11D of the Act. - Decided against Revenue.

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• 2015 (11) TMI 608
  Duty demand - Clandestine clearance of goods - Shortage of goods - Held that:- Department could not produce any evidence regarding clandestine removal of input said to have been found short and respondent subsequently submitted photograph which shows that heap of rejected material lying in the factory which was ignored by the department. When this discrepancy was pointed out, the department could have taken sample from said heap and ascertain what was the material this fact was intimated to the officers during the statement at least at that stage samples could have been taken. Respondent got factory surveyed by chartered engineer who had certified 8500 MT steel material mix with slag etc is lying with the factory. This vital fact was ignored by the adjudicating authority that has all the opportunity to check this fact as the material was lying as it is in the factory. The respondent got rejected material tested at chemical laboratories which has confirmed that samples contains 46.35% iron. - No infirmity in the order passed by Ld. Commissioner(Appeals) and I am with the fully agreement with his findings therefore impugned order is sustained. - Decided against Revenue.

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• 2015 (11) TMI 607
  Denial of CENVAT Credit - eligible input services - SSI Exemption - Held that:- For availing credit on printing of calendar, greeting cards, diaries, etc., the appellant used these services for advertisement purposes of their products, therefore, these are integral part of their sale promotion. I accordingly, hold that the appellant is entitled to take credit on printing of calendar, greeting cards, diaries, etc. Further I hold that for organizing award functions, these activities are parts of their sale promotion as the students to whom the awards have been given, they give innovative idea for marketing their products in the public. Therefore, the said activities are also the activities for sale promotion. Accordingly, the appellant is entitled to take credit on printing of calendar, greeting cards, diaries, etc. and organizing award functions which are integral part of the sale promotion. For demand of service tax under the category of renting of immovable property for the period 2007-08 to 2010-11, the total demand of Rs. 44,030/- which is the below the threshold limit and the Revenue has not produced any contrary evidence that the appellant has crossed the threshold limit. In the absence of evidence, I hold that the appellants turnover is below the threshold limit of SSI exemption. Therefore, the appellant is not liable to pay service tax on these services. In these circumstances, I do not find any merit in the impugned orders of the Commissioner (Appeals) and the same are set aside. - Decided in favour of assessee.

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• 2015 (11) TMI 606
  Marketetability of product - industrial dust - Valuation - High Court held that 'industrial dust' arising during the course of manufacturing of brass and copper articles in the factory of the respondent is not marketable - Held that:- 'industrial dust' in the present case is almost identically placed as the products, viz., dross and skimmings which were involved in the Indian Aluminium Co. Ltd.'s case (1995 (4) TMI 62 - SUPREME COURT OF INDIA). - Decided against Revenue.

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• 2015 (11) TMI 605
  Valuation of goods - Undervaluation - determination of cost of production as per CAS-4 - inclusion of interest expenditure, depreciation and profit margin - Clearance of goods to sister concern - Captive consumption - Held that:- The impugned order of the Tribunal shall reflect that the Tribunal has kept in mind the Costing Accounting Standard – 4 (CAS-4) as adopted by the Department itself. On that basis, it has come to the conclusion that the three elements of cost which were sought to be included by the Department could not be the factors which would be taken into consideration for arriving at the cost of production. After going through the reasons given by the Tribunal in support of the conclusions, we find no error therein. - Decided against Revenue.

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• 2015 (11) TMI 604
  Demand of interest - Rejection of application under Kar Vivadh Samadhan Scheme, 1998 - Rejection on the ground that SCN already issued - Held that:- In the meantime, the respondents recovered the entire amount by encashing the Bank Guarantee on 13.10.2003. In view thereof, it is not necessary to go into the issue and we are of the opinion that having regard to the peculiar facts of this case and also that the appellant has some arguable case on merits, interest of justice would be subserved, if no interest is demanded - Decided in favour of assessee.

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• 2015 (11) TMI 602
  Waiver of pre deposit - Mandatory pre deposit - 7.5% pre deposit - Held that:- In the case of Fifth Avenue Sourcing (P) Ltd., vs. Commissioner of Service Tax reported in [2015 (7) TMI 391 - MADRAS HIGH COURT], I have directed the petitioner therein to file an appeal before the CESTAT along with stay application, without making pre-deposit of 7.5% of the tax amount confirmed against the petitioner, within a period of two weeks from the date of receipt of a copy of that order. But, as far as the present case is concerned, since the petitioner has got enough time to file an appeal before the appellate authority, the petitioner is directed to file an appeal before the appellate authority along with stay application and on such appeal being filed by the petitioner along with stay application, the appellate authority is hereby directed to entertain the same without insisting of pre-deposit of 7.5% of the tax amount confirmed against the petitioner. - Decided in favour of assessee.

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• 2015 (11) TMI 601
  Validity of order of settlement commission - Imposition of penalty - Suppression of facts - whether the Central Excise Settlement Commission erred in imposing penalty without quantifying the penalty and fine in full - Held that:- Appellants admittedly short paid duty by suppressing facts. Applications were filed disclosing fully and truly the duty liability. Section 32K, inter alia, speaks of immunity wholly or in part from the imposition of any penalty and fine under ‘this Act’. Section 32K does not contain separate provision for calculation of total penalty and fine. Therefore, for calculation of penalty and fine, section 11AC of ‘this Act’, that is, Central Excise Act, 1944, is applicable. Keeping the statutory provisions in mind, under section 11AC, in a regular adjudication, the appellants would have been subjected to payment of penalty equal to duty found to have been evaded. In the instant case the appellants disclosed that the whole amount of duty evaded was Rs. 1,09,92,429/-. Hence, the appellants were liable to pay an equal amount of penalty, that is Rs. 1,09,92,429/-. As section 32 K empowers the Settlement Commission to reduce penalty and fine and to grant immunity from prosecution, a power a central excise officer does not possess under regular adjudication, the Commission had passed the order imposing a total penalty of Rs. 52 lakhs, being a ‘part’ of the total penalty, and waving the balance and granting immunity from prosecution with respect to the case covered by the settlement. Thus, we find there is no infirmity in the order passed by the Commission. - since settlement under the Act is in the nature of a package, as rightly contended by Mr. Bhardwaj, the appellants having accepted immunity from prosecution, cannot challenge the quantum of penalty imposed as harsh. - Decided against assessee.

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• 2015 (11) TMI 600
  Demand of interest - Delayed payment of differential duty - whether on the delayed payment of differential duty, the respondent/assessee is liable to pay interest as provided under sub-rule (3) of Rule 8 at the rate as provided in the Notification issued under Section 11AB of the Act - Held that:- where the duty component involved is less than Rs. 2 lakhs, excluding mandatory penalty and any other penalty imposed under the law in force at the relevant time, no appeal shall be filed before the High Court. In the present case, it is admitted by either side that the differential duty component is more than Rs. 26 Lakhs, which has been paid by the respondent/assessee, though belatedly, on which interest is sought to be levied by the appellant/Revenue. In the present appeal, the imposition is only interest on delayed payment of duty component. Therefore, by no stretch of imagination, the argument of the learned counsel for the respondent/assessee could be accepted, as there is no duty involved in this case and it pertains only to interest on delayed payment of differential duty. Therefore, even at the threshold, the said objection is negatived. Show cause notice is issued in terms of Section 8 (1) of the Central Excise Rules and sub-rule (3) of Rule 8 makes it an obligation on the assessee to pay interest on account of delayed payment of duty in terms of the notification issued under Section 11AB of the Central Excise Act. - entire proceedings, in the instant case, is on the basis of the delayed payment of differential duty in terms of Section Rule 8 (1) of the Central Excise Rules, for which interest is leviable under sub-rule (3) of Rule 8 at the rate notified under Section 11AB of the Act. The show cause notice was issued under Rule 8 (1) of the Central Excise Rules, 2002 for failure to pay the duty in terms of Rule 8 (1) and, therefore, liability to pay interest specified under Section 11AB of the Act was mulcted on the assessee in terms of sub-rule (3) of Rule 8. Sub-Rule (3) of Rule 8 provides for quantum of interest, viz., interest as notified in terms of Section 11AB of the Act. However, the Tribunal, without going into the factual aspect of the show cause notice, laid emphasis on Chloritech Industries case (2008 (7) TMI 278 - GUJARAT HIGH COURT ) to allow the appeal in favour of the assessee. The Tribunal has not adverted to the merits of the matter and also the relevant provisions of law for levying interest, viz., Rule 8 (3), but decided the issue in the light of the decision in Chloritech Industries case (2008 (7) TMI 278 - GUJARAT HIGH COURT ), which has been subsequently reversed in Chloritech Industries case (2011 (4) TMI 1274 - GUJARAT HIGH COURT). - Matter remanded back - Decided in favour of Revenue.

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• 2015 (11) TMI 599
  Refund claim - Denial of MODVAT Credit - whether the duty paid through the credit of RG23A Part II account can be ordered to be refunded with debit of the account with liberty to the Department to take action for denial of availment of modvat claim as ordered by the Tribunal - Held that:- On the instructions of Superintendent of Central Excise, a declaration under Rule 173B was filed and the duty was paid. It is stated by the assessee that the said duty was paid under protest letter addressed on 14.10.1996, but the said protest letter was addressed to the Superintendent of Central Excise, which was acknowledged by him on the same day. The Superintendent is not the proper officer in terms of Rule 233B of the Rules, as the proper officer was notified as Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise. - Commissioner of Customs & Central Excise (Appeals), Hyderabad held that there was a protest under Rule 233B and the claim for refund was not time barred. The said finding was not challenged by the Revenue before the Tribunal. Now it is not open for the Revenue to contend that the protest was not before a proper officer and hence the claim for refund was time barred. Such a plea, at this stage, cannot be entertained. It is clear from the facts that the duty of Rs. 3,45,548/- was paid from the personal ledger account and the rest of the amount by credit of RG23A Part II account. The said total amount was disallowed by the Assistant Commissioner, whereas the Commissioner, in appeal, allowed to the extent of duty paid from personal ledger account to the tune of Rs. 3,45,548/- only on the ground that the DOT vide its letter dated 10.07.1998 had certified that they have not reimbursed excise duty for the supply bills raised for the said amount and further holding that there is no provision in law for restoration of the credit, once utilized in respect of the balance amount of Rs. 65,41,683/- and Rs. 26,69,033/-. - there is no evidence to show that the claimant has discharged such burden. But so far as the amount of Rs. 3,45,548/- is concerned, since the letter dated 10.07.1998 of the DOT was produced, the said amount was allowed. The modvat credit availed by the assessee was used for payment of excise duty, though under protest and there is no provision for cash refund of such duty paid through modvat credit. It is also relevant to consider Rule 57L of the Rules which says that no credit of money on the inputs used in the manufacture of the final products shall be allowed if the final products are exempt from the whole of the duty of excise leviable thereon or is chargeable to nil rate of duty. In this case, by the time of the judgment of this Court, the duty was paid from the input credits availed by the assessee. Both the authorities concurrently held that those credits cannot be reversed and there is no provision for reversal of the same. But the Tribunal directed that RG23A Part II should be ordered to be credited with the debits of duty made in the RG23A registers and the Department was given liberty to take such action as permissible under law to deny the availment of modvat claim. Since, in the instant case, the said credit was utilized for payment duty, we do not think it proper to direct the authorities to reverse the entries in RG23A registers by giving them liberty to deny the availment of modvat claim at a later point of time. Such a course of action has no sanction in law. - Decided in favour of Revenue.

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• 2015 (11) TMI 598
  Duty demand - Clandestine removal of goods - Lack of evidence - Held that:- After proper analysis of the entire case matter, the Commissioner (Appeals) has passed a reasoned and speaking order holding that the method of verification of stock by the Central Excise Officers was not proper and since the stock in process was not actually verified and the quantity declared by the proprietor of the Respondent company as stock in process was accepted by the officers of the Department, the duty liability cannot be fastened against the Respondent in absence of any plausible evidence that the goods have been removed from the factory. I also find from the grounds of appeal, that the findings of the Commissioner (Appeals) have not been contested especially by producing evidence that the Department has carried out the investigation and verified the records of the Respondent by themselves, and upon proper verification, the shortage quantity of the disputed goods were detected. Since, the duty demand in the Adjudication Order has been confirmed solely based on the statement of the proprietor who admitted that the stocks of the disputed goods were 25 Ton approximately and no proper accounts were maintained, the demand cannot be confirmed for mere non-maintenance of records and more particularly, in absence of any proof regarding clandestine removal of such goods. - Decided against Revenue.

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• 2015 (11) TMI 597
  Disallowance of MODVAT Credit - Charging machine - Capital goods - Held that:- On the issue of admissibility of modvat credit under Rule 57Q in respect of material handling equipment. In the present case also charging machine is used as a material handling machine therefore as per the use of the machine as well as issue supported by various judgments, the credit is admissible. As regard lathe machine, it is used for maintenance of rollers which is used in the rolling mills directly in relation to the manufacture of final product - use of the machine is not under dispute that the charging machine is used for transporting aluminium coil into the furnace and taking out coils after annealing from the furnace. The annealing process is vital process in the entire manufacturing process of the aluminium product in the appellant s factory. Annealing process cannot be carried out without using charging machine therefore in my view charging machine is directly used in the manufacture of final product i.e. aluminium product in the factory of the appellant. - even machine used in the work shop for maintenance are eligible for the modvat credit. I am therefore of the considered view that both the items i.e. Charging machine and lathe machine are qualified as capital goods and squarely covered under the of definition of capital goods provided under 57Q of Central Excise Act, 1944, hence eligible for modvat credit, therefore the impugned order is modified - Decided in favour of assessee.

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• 2015 (11) TMI 596
  Distribution of input services (ISD) - The dispute in the present case is in respect of Malanpur unit. The departments contention is that the credit of service distributed to Malanpur unit also included the credit attributable to Baddi unit. - Exemption under notification No. 56/02-CE and 32/99-CE - refund of duty paid through PLA - Held that:- appellant’s head office is registered as ISD and their units as located at Malanpur, Assam, Jammu and Baddi. Baddi unit is fully exempt from duty as the same is availing the benefit of Notification NO.50/03-CE while unit at Mallanpur cleared its products on payment of duty. Assam unit and Jammu unit availed the exemption under Notification No.32/99-CE and Notification No.56/02-CE respectively and initially cleared the goods on payment of duty by using Cenvat credit available at the end of the month to the extent possible and claimed exemption under these notifications of the duty, if any, paid through PLA. - appellant had raised the question of limitation and but the Commissioner has not given any finding whatsoever on this point. The Commissioner has passed a non-speeding order. Hence, the same is set aside and the matter is remanded to the Commissioner - Decided in favour of assessee.

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• 2015 (11) TMI 595
  Duty demand - Clandestine removal of goods - Commissioner dropped the penalty on the ground that the goods have lost in natural disaster i.e. flood and it is not the case of clandestine removal - Held that:- It is not the case of clandestine removal nor any act on the part of the respondent to defraud the department with intension to evade payment of duty. The goods on which demand was confirmed has not been cleared clandestinely whereas same has been admittedly destroyed in the flood which was beyond the control of the respondent. It is kept in the mind that without any intension of the respondent they have already suffered huge loss because of natural disaster therefore it will be very unfair to ask for penalty on the respondent. In view of my above discussion, I am of the view that the orders of the Ld. Commissioner’s (Appeals) are just and legal and I do not fine any infirmity therein. I therefore uphold the orders of the Commissioner (Appeals) - Decided against Revenue.

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• 2015 (11) TMI 594
  Reversal of CENVAT Credit - Whether the appellant is under a legal obligation to either reverse the CENVAT credit or to pay an amount in terms of the provisions of Rule 6 of the CENVAT Credit Rules in respect of services utilised for the manufacturer of the sugar, which have also resulted in emergence of bagasse as a waste product, which was further used as fuel to generate steam in boilers - Held that:- issues are no more res integra in terms of the decision of the Hon'ble Allahabad High Court in the case of Balrampur Chini Mills Ltd. Vs. UOI [2013 (1) TMI 525 - ALLAHABAD HIGH COURT], wherein the Board's Circular No. 904/24/2009-CX dt. 28/10/2009, requiring reversal of credit or payment of an amount in terms of Rule 6 stand quashed. By following the same, I set aside the impugned orders - Decided in favour of assessee.

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