TMI Tax Updates - e-Newsletter
November 17, 2015

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise Wealth tax

Articles

1. CBEC issues guidelines for speedy disbursal of pending refund claims to exporters of services

   By: Bimal jain

News

1. During his Meeting with his UAE Counterpart, the Finance Minister Arun Jaitley calls for Investment of UAE Sovereign Wealth Funds and Pensions Funds in National Investment and Infrastructure Fund (NIIF)

2. Auction for Sale (Re-Issue) of Government Stock

3. SWACHH BHARAT CESS (SBC)FREQUENTLY ASKED QUESTIONS (FAQ)

4. RBI Reference Rate for US $

Circulars / Instructions / Orders

Service Tax

1. FAQ-SBC - dated 16-11-2015

SWACHH BHARAT CESS (SBC)-FREQUENTLY ASKED QUESTIONS (FAQ)

Highlights / Catch Notes

Income Tax

• Tribunal's decision overturned: HUF assessment upheld u/s 292BB as return filed under this status.

  Case-Laws - HC : Validity of assessment in the status of HUF - The fact that the assessee himself had filed the return in the status of HUF coupled with the provisions of Section 292BB of the Act, the Tribunal was not right in declaring the assessment order as non-est. - HC
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• Section 80 JJAA Deduction: Only 2007-08 Employment Counts for Three-Year Tax Benefit, 2009-10 Hiring Irrelevant.

  Case-Laws - AT : Deduction u/s 80 JJAA - the deduction is available for three consecutive years in respect of the additional employment created by the assessee company during the first year itself i.e. A.Y. 2007-08 and, therefore, the fact that the assessee has employed 1022 new work men during the A.Y. 2009-10 is irrelevant for adjudication of the claim of deduction in respect of employment created by the assessee during the A.Y. 2007-08 - AT
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• Transfer Pricing Case: Operating Margin Reworking Requires Cost Apportionment by Man-Hour, Not Turnover Basis.

  Case-Laws - AT : Transfer pricing adjustment - Reworking of the operating margin - apportionment of cost has to be done on man-hour basis and not on turnover basis - AT
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• Trusts Can Offset Prior Expenditures Against Future Income for Tax Exemption u/s 11 of Income Tax Act.

  Case-Laws - AT : Exemption u/s 11 - The expenditure, if incurred in an earlier year is adjusted against the income of a later year, it has to be held that the trust had incurred expenditure on religious and charitable purposes from the income of the subsequent year, even though the actual expenditure was in the earlier years, if in the books of account of the trust such earlier expenditure had been set off against the income of the subsequent year - AT
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• Revised Tax Return Submitted to Avoid Litigation; No Penalty Imposed u/ss 271AAA or 271(1)(c.

  Case-Laws - AT : Penalty under section 271(1)(c) - The return was revised with a view to co-operate the Department and to buy peace and to avoid litigation. The disclosure was with a specific plea that no penalty proceedings be initiated under section 271AAA or 271(1)(c) - No Penalty - AT
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• Non-cash income can be taxed as business income; cash is taxed as deemed income u/s 69A.

  Case-Laws - AT : Treatment of surrendered income - apart from cash all other income surrendered may be brought to tax under the head "business income" while the cash has to be taxed under the head deemed income under section 69A - AT
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Customs

• Ministry Lacks Authority to Classify New Hazardous Wastes; Old Tyre Imports Remain Prohibited Without Legal Backing.

  Case-Laws - HC : Import of old and used tyres - prohibited goods - In the absence of any power conferred upon the Ministry of Environment and Forests, to specify any additional category of hazardous wastes, the memorandum is merely in the nature of administrative instructions and has no enforceability in law - HC
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Service Tax

• Service Tax Demand Deemed Unsustainable as Appellate Authority Exceeds Show Cause Notice Allegations Under Incorrect Service Category.

  Case-Laws - AT : Demand of service tax - Demand confirmed under Business Support Services whereas demand was raised under BAS - The first appellate authority has undoubtedly travelled beyond the allegations in the show cause notice - demand is incorrect and unsustainable - AT
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• CENVAT Credit Refund Approved: Service Tax on Rented Property Admissible as Essential for Service Provision.

  Case-Laws - AT : Denial of refund claim - CENVAT Credit - eligible input services - Without premises, we cannot imagine provision of service. Therefore the credit of service tax paid on renting of immovable property would also be admissible. - AT
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• CENVAT Credit Refund Can't Be Denied for Late Documents If Application Is Timely and Properly Submitted.

  Case-Laws - AT : Refund CENVAT Credit - since the refund application was filed in the proper format within time and the supporting documents were submitted subsequently, refund cannot be denied on the ground of period of limitation - AT
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• Cenvat Credit Allowed for Services Outside Factory Premises; Location Doesn't Affect Credit Eligibility.

  Case-Laws - AT : Admissibility of Cenvat Credit - merely because service in question are not received in the factory, the credit cannot be denied on this ground. The services are not tangible unlike inputs. Service can be provided and used anywhere either in the factory or outside factory - AT
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• Service Tax Rebate Claim Approved Despite Missing Service Details in Export Invoice for Centralized Registered Units.

  Case-Laws - AT : Rebate claim for refund of service tax paid on input services used in export of output services - claim for two units where the centralized registration taken later - export invoice do not contain the details of service provided - refund cannot be denied on these grounds - AT
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• Cenvat Credit on Service Tax for Terrace and Parking Space Allowed, Favorable Outcome for Claimant on Input Service Nexus.

  Case-Laws - AT : Cenvat Credit - input services - nexus with output / export of services - Commissioner disallowed a portion of the credit available on the ground that Service Tax credit in respect of terrace area and parking space in respect of rented immovable property is not admissible - credit allowed - AT
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• AC/DC Jurisdiction u/s 83A: Limited to Penalty Cases Over Rs. 5,00,000, Not Tax Assessments.

  Case-Laws - AT : Power of AC / DC to adjudicate the case u/s 83A where the amount involved is more than ₹ 5,00,000/- - Section 83A is applicable only when penalty is to be adjudged. It is not applicable to amount of tax. - AT
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Central Excise

• Drilling Rigs on Motor Vehicle Chassis Not Under Chapter Heading 8705.00 If Not Integrally Connected.

  Case-Laws - SC : Classification of goods - The goods in question are drilling rigs, though mounted on motor vehicles chassis. - when drilling rigs and the motor vehicles are not integrally connected, the case would not fall within Chapter Heading 8705.00 - SC
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• Higher Court Overturns Tribunal's Decision Allowing CENVAT Credit for Exporter's Stay Application Under Erroneous Assumptions.

  Case-Laws - HC : Validity of order of tribunal allowing the appeal of the assessee while deciding the stay application - The Tribunal merely proceeds on the footing that being an exporter, all services have been availed of during the course of export of goods and that is how this CENVAT Credit was admissible. - order set aside - HC
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• Small-Scale Exemption Denied: Use of Another's Brand Name Blocks Benefits Under Notification 8/2003.

  Case-Laws - AT : Benefit of small scale exemption - Use of brand name of others - brand name registered in favor of others for different goods -Benefit of Notification 8/2003 dated 01/03/2003 denied - AT
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• Factory Expansion Decision Rests with Assessee; Entitled to Extended Warehousing u/r 4(4) Central Excise Regulations.

  Case-Laws - AT : Permission for warehousing of goods - Rule 4(4) - the decision of expansion of the factory is the sole discretion of the assessee and department can not insist for that - applicant has never misused the facility of outside storage - there is no chance of danger to the Revenue, for this reason also appellant deserve extension of permission - AT
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• CENVAT Credit Denied: Assessee Failed to Prove Raw Material Usage and Proper Accounting, Appeal Dismissed.

  Case-Laws - AT : Denial of CENVAT Credit - The obligation to show that the raw materials have been used for the purpose they were obtained and accounted for in accordance with law is on the assesee and in this case they have failed to discharge the same. Therefore the appeal has no merits - AT
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• Exemption Denied: Missing Certificate for Yarn Supply to Handloom; No Demand Against Respondent for Alleged Diversion.

  Case-Laws - AT : Denial of exemption claim - there was no specific certificate certifying that the yarn received would be supplied to handloom units, the fact remains that merely from this it cannot be inferred that the respondent were aware of the illicit diversion of the yarn by the Punjab State Handloom Weavers Apex Co-operative Society to Power Loom Units - No demand - AT
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• SSI Units Can Use Buyer's Form 'H' for Export Proof via Merchant Exporter.

  Case-Laws - AT : Export of goods by SSI units - Board has categorically clarified that in case of goods cleared form exempted unit for the purpose of export through merchant exporter form ‘H’ provided by the buyer can be considered as proof of export - AT
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• Penalties u/s 11AC and Rule 15 not applicable for Cenvat credit reversal before Show Cause Notice.

  Case-Laws - AT : Imposition of penalty - reversal of cenvat credit towards exempted goods after audit objection but before issuance of Show Cause Notice (SCN) - penalty u/s 11AC and Rule 15 of the Cenvat Credit Rules 2004 is not imposable - AT
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• Refund Claim Approved Without Letterhead; Foreign Exchange Realization Not Required for Free Replacement Exports.

  Case-Laws - AT : Refund claim - Improper documentation - there is no prescribed rule that refund claim is required to be filed on letter head and only then the refund claim shall be entertained - the question of foreign exchange realization does not arise as these export goods are free replacement of defective goods - refund allowed - AT
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• Court Overrules Denial of Remission Application; Original Authority's Reason for Confirming Demand Found Legally Untenable.

  Case-Laws - AT : Remission of duty - Original Authority rejected the remission application on the ground that the appellant did not take proper care to prevent the fire. - reason for rejection of remission and consequently confirmation of demand is not legally tenable - AT
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• Transferring Goods from Tankers to Drums Not Manufacturing Under Chapter 38; Tankers Not Bulk Packs, Per Note 10.

  Case-Laws - AT : Manufacture - labelling and packing from bulk container to carboys - chapter 38 - the tankers cannot be termed as bulk packs and therefore the activity of transferring the goods from tankers into smaller drums cannot be said to be covered by the said chapter note 10. - AT
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Case Laws:

• Income Tax

• 2015 (11) TMI 649
  Addition made by reducing the sale - estimating the net profit @ 3% of the total sale - CIT(A) deleted the addition confirmed by ITAT - Held that:- Case made out by Mr.Suresh Kumar on behalf of the Revenue is being urged before us for the first time. The Revenue was not able to point out from the record the submission that the expenditure incurred in respect of suppressed sale were already included as a part of the cost in preparing food items which have been declared. The contention now raised that the entire turnover of Rs. 1.5 crores has to be considered as income as it is, without attributing any expenses to the suppressed sale was not the contention urged by the Revenue before the Tribunal. We find that the entire issue which arises in the present appeal is a matter of factual finding. The view taken by the CIT (Appeals) and the Tribunal is a possible view. The Revenue has not been able to show that the impugned order of the Tribunal, is in any way perverse. - Decided against revenue.

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• 2015 (11) TMI 648
  Disallowance of business loss and unabsorbed depreciation - whether the period of three years as prescribed u/s.72A(2)(a)(i) of the Act has to be computed including the period of setting up of business and not from the date of commencement of actual production? - Held that:- In the present case, the licence for setting up business of power generation, loans for the same, construction of the building and purchase of machinery etc., had started from the year 2000 itself, which was duly reflected in the books of account of the amalgamating company. As such, the view taken by the Appellate Authority [CIT (Appeals)] as well as the Tribunal, in this regard that the amalgamating company was engaged in the business of generation of power much prior to three years from the date of amalgamation of the Company, cannot be faulted. In the facts of this case, it cannot be disputed that the engagement of the amalgamating company in the business of power generation had begun from the year 2000, even though the production or generation of power, i.e., the commencement of business may have been with effect from 08.08.2003. We may also mention that Section 72A of the Act provides for set off of accumulated loss and unabsorbed depreciation, which is for the benefit of the assessee-amalgamated company. Thus, in our view, when a provision is for the benefit of an assessee, it should be liberally interpreted in favour of the assessee which has to be given the benefit of such provision. It is well settled law that if two views are possible, then the one in favour of the assessee (amalgamated company in this case) should be adopted. We are thus of the opinion that the assessee-amalgamated company would be entitled to the benefit of Section 72A of the Act.- Decided in favour of assessee.

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• 2015 (11) TMI 647
  Eligibility of deduction under Section 80P(2)(a)(i) - Held that:- There is a seriously disputed question of fact which the Authorities under the IT Act have taken upon themselves to interpret in the face of the BR Act prescribing that in the event of a dispute as to the primary object or principal business of any co-operative society referred to in clauses (cciv), (ccv) and (ccvi) of Section 56 of the BR Act, a determination thereof by the Reserve Bank shall be final, would require the dispute to be resolved by the Reserve Bank of India, before the authorities could term the assessee as a co-operative bank, for purposes of Section 80 P of the IT Act. Any opinion expressed therefore is tentative and is not final. The view expressed as to the assessee being a co-operative society and not a co-operative bank in terms of Section 80P (4) of the IT Act, shall hold the field and shall bind the authorities unless held otherwise by the Reserve Bank of India. - Decided in favour of the assessee

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• 2015 (11) TMI 646
  Validity of assessment in the status of HUF - Held that:- The fact that the assessee himself had filed the return in the status of HUF coupled with the provisions of Section 292BB of the Act, the Tribunal was not right in declaring the assessment order as non-est. In view of the above, the substantial questions of law are answered in favour of the revenue and against the assessee.

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• 2015 (11) TMI 645
  Entitlement for the accumulation of income - submission of form No 10 delayed - Held that:- Honourable Gujarat high court in case of CIT V Mayur Foundation Mayur Foundation [2004 (12) TMI 48 - GUJARAT High Court ] has held that if form no 10 is submitted at any time before the assessment is completed same should be considered as valid compliance of law. Admittedly in this case assessee has submitted the form No 10 before the completion of assessment proceedings therefore no fault can be found with the assessee. Therefore we are of the view that the form no. 10 submitted by the assessee before completion of assessment proceedings and is having the specific objects therefore trust is entitled for the accumulation of income. - Decided in favour of assessee. Allowability of depreciation - AO has disallowed the depreciation claimed by the assessee trust on the ground that once the assets are acquired assessee has claimed the deduction as application of income and further deprecation there on is also claimed - Held that:- this issue is squarely covered in favour of the assessee by the decision of Honourable Jurisdictional High court in case of Director of Income tax V Vishwa Jagriti Mission [2012 (4) TMI 289 - DELHI HIGH COURT] wherein held held that claim of depreciation on fixed assets utilized for the charitable purposes has to be allowed while arriving at the income available for application to charitable and religious purposes, since the income of the society should be computed on the basis of commercial principles - Decided in favour of assessee.

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• 2015 (11) TMI 644
  Validity of reopening of assessment - notice u/s. 148 has been issued with the approval of the Addl. CIT - Held that:- According to Section 151(1) of the I.T. Act, after the expiry of the 4 years from the end of the relevant assessment year, no notice u/s. 148 of the I.T. Act shall be issued unless the Chief Commissioner or Commissioner is satisfied on the reasons recorded by the AO that is fit case for the issue of such notice. In view the case of the Assessee is fall under section 151(1) of the I.T. Act and not u/s. 151(2) of the I.T. Act, because according to section 151(2) in the cases other than the case fallen under sub-section (1) of Section 151, no notice shall be issued u/s. 148 by the AO, who is below the rank of JCIT, unless the JCIT is satisfied on the reasons recorded by such AO, that is a fit case for the issuance of such notices. In the present case, the case of the assessee has been reopened after the expiry of 4 years and in the present case of the assessee the approval/satisfaction should be from the Chief Commissioner or Commissioner only. In the present case, the case of the assessee has been reopened and notice u/s. 148 has been issued with the approval of the Addl. CIT, therefore, the notice u/s. 148 is bad in law and liable to be quashed. Ld. CIT(A) has rigtly declared invalid the Notice u/s. 148 of the I.T. Act issued on 28.3.2011 for the asstt. Year in dispute i.e. 2004-05, which is beyond the period of 4 years from the end of the assessment year. - Decided in favour of assessee.

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• 2015 (11) TMI 643
  Validity of reopening of assessment - CIT(A) quashed reopening orders - Held that:- CIT (A) has rightly held that the AO was not correct to assume jurisdiction over the assessee for the year under consideration and no new facts were brought on record which gave reasons to believe that the income of the assessee had escaped assessment and, therefore, the reopening of assessment in the present case had been merely on the basis of change of opinion. Further, it is evident that all the material information was available in the course of original assessment for framing an assessment and the AO failed to bring on record new facts or material which provided reasons to believe that the income of the assessee has escaped assessment. Moreover, we take note that the objection of the assessee against reopening has not been answered by a speaking order as mandated by the Apex Court in GKN Driveshafts (India) Ltd. vs. ITO (2002 (11) TMI 7 - SUPREME Court) which also vitiates the reopening of the original assessment. In the aforesaid circumstances, we uphold the view of the ld. CIT (A) that the reopening is based on change of opinion which is not permissible as held by Hon’ble Supreme Court in CIT vs. Kelvinator of India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA).- Decided in favour of assessee.

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• 2015 (11) TMI 642
  Addition under the head income from NPA (non performing assets)- CIT(A) deleted the addition as the same has not been actually received by the assessee - Held that:- We respectfully take cognizance of the judgment of coordinate bench of Delhi ‘H’ Bench in asessee’s own group cooperative bank case wherein it has been expressly held that as per RBI guidelines, the interest on NPA is not to be recognised and also as per Accounting Standard 9 issued by Institute of Chartered Accountants of India, that income is to be recognised only when there is some reasonable certainly about the receipt of income. In view of above, we have no reason to take a deviated view from the order of the Tribunal and therefore, we are unable to see any valid reason to interfere with the conclusion of the first appellate authority and thus, we uphold the same. Accordingly, ground of the revenue being devoid of merits is dismissed. - Decided against revenue Addition under the head premium expenditure on Govt. securities - whether the buy and sale of the Govt. securities is a normal business activity and the premium expenditure is a normal business expenditure - CIT(A) deleted the addition - Held that:- CIT(A) was right in granting relief to the assessee on this issue as to when the assessee cooperative bank is holding government securities till its maturity, the premium paid by the assessee cooperative bank thereon is a necessary expenditure for the purpose of business of the assessee cooperative bank and thus, the same is an allowable expenditure under the provisions of the Act and the first appellate authority was correct in granting relief to the assessee. - Decided against revenue

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• 2015 (11) TMI 641
  Rejection of revised computation - whether the revised computation was to be considered by the Assessing Officer specially when time for filing revised return had elapsed? - Held that:- Hon'ble Bombay High Court in CIT vs Pruthvi Brokers and Share Holders Pvt. Ltd. (2012 (7) TMI 158 - BOMBAY HIGH COURT) held that appellate authorities have power to consider the claim not made in the return by following the decision from Hon'ble Apex Court in CIT vs Gurjagravureous P. Ltd. (1977 (11) TMI 1 - SUPREME Court), wherein, it was held that the assessee is entitled to raise not merely additional legal submissions, before the appellate authorities, but also entitled to raise additional claim before them and further appellate authorities have discretion to permit such additional claims. Thus, we are of the view, that even otherwise, the mandate of the constitution is to levy and collect due taxes, therefore, we remand this issue to the file of the ld. Assessing Officer to examine the claim of the assessee afresh and decide in accordance with law. The assessee be given opportunity of being heard. Disallowance u/s 40(a)(ia) - delay in depositing TDS - crux of argument advanced on behalf of the assessee is that the amount was deposited before filing the return - Held that:- In the case in hand when the assessee had deducted the tax in the last month of the previous year i.e., March 2005 and deposited the same before the due date of filing of the return under section 139(1) then it is covered under clause (A) of section 40(a)(ia). Therefore, when the assessee's case covered under the main provisions of existing law then we need not to go to the issue of prospective or retrospective effect of the amendment in the provisions by the Finance Act, 2010. As regards the decision relied upon by the learned DR when the proviso to section 40(a)(ia) is not contrary to the main section/enactment then the said decision will not help the case of the revenue. The assessee find support from the decision of the Tribunal in BAPUSHAEB NANASAHEB DHUMAL vs ACIT ( 2010 (6) TMI 513 - ITAT MUMBAI). Since, it was not controverted by the Revenue that the tax so deducted was deposited before filing of return, therefore, we find merit in the ground of the assessee, consequently, in view of the aforesaid discussion, the ground raised by the assessee is allowed. - Decided in favour of assessee.

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• 2015 (11) TMI 640
  Disallowance of NSE penalty expenses - CIT(A) deleted the addition - Held that:- Payment is towards compensation for delayed submission of compliance report to NSE and that too which is not an offence or towards infraction of law. It view of aforesaid facts, ratio of aforesaid decision relied upon by AO is not applicable to the facts of case of appellant. The case of appellant is squarely covered by decision of Crest Capital Market vs. ITO [2009 (1) TMI 553 - ITAT, MUMBAI] and respectfully following said order, addition made by the Assessing Officer is deleted. - Decided in favour of assessee. Disallowance of interest - CIT(A) deleted the addition - Held that:- similar disallowance was made in the earlier years. In the AY 2004-05, the matter travelled upto the stage of Tribunal and the Tribunal had deleted the disallowance and the disallowance made in AY 2005-06 was deleted by the predecessor of the ld.CIT(A). - Decided in favour of assessee. Disallowance u/s 14A - CIT(A) restricted part addition - Held that:- Since the Rule-8D of I.T.Rules, 1962 is not applicable, therefore in our considered view the AO was not justified in applying the Rule 8D for making disallowance. The ld.CIT(A) has given a finding that the assessee was having substantial funds and lesser borrowed funds. This finding of the ld.CIT(A) is not controverted by the Revenue by placing any contrary material on record, therefore, we do not see any reason to interfere with the finding of the ld.CIT(A), same is hereby upheld. - Decided in favour of assessee. The assessee has made investment and earned exempt income of Rs. 3 lacs. Therefore, we do not see any reason to interfere with the finding of the ld.CIT(A) on this issue because it cannot be assumed that the exempt income has been earned without incurring any administrative expenditure. Thus, ground raised in assessee’s cross-objection is partly allowed.

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• 2015 (11) TMI 639
  Disallowance of deduction u/s 80 JJAA - CIT(A) allowed the claim - Held that:- In assessee's own case for the A.Y. 2008-09 the Tribunal had upheld the observations of the Ld.CIT(A) that as per provisions of S.80 JJAA(1) of the Act the benefit is to be allowed for three years starting from the P.Y. in which the employment was provided, and as such the benefit will be available for the succeeding two years also. The Tribunal also considered the Proviso to S.80 JJAA of the Act and held that the same is applicable to the first year only and as per said Proviso in the case of existing undertaking the additional wages shall be 'nil' if the increase in the number of work men during the year is less than 10% of the work men employed in such undertaking on the last date of the preceding year. In view of above legal proposition when we analyse the facts and circumstances of the A.Y. 2009-10 we clearly observe that as per provisions of S.80 JJAA of the Act the deduction is available for three consecutive years in respect of the additional employment created by the assessee company during the first year itself i.e. A.Y. 2007-08 and, therefore, the fact that the assessee has employed 1022 new work men during the A.Y. 2009-10 is irrelevant for adjudication of the claim of deduction in respect of employment created by the assessee during the A.Y. 2007-08. Under the above noted facts and circumstances and respectfully following the propositions laid down by the Tribunal in the order for A.Y. 2008-09 in the assessee's own case we are unable to see any incorrectness or any other valid reason to interfere with the order of the First Appellate Authority and thus we hold that the impugned addition made by the A.O. was misconceived and not sustainable on the facts and in law and the same was rightly directed to be deleted by the Ld.CIT(A). - Decided against revenue. Addition on account of sales returns - CIT(A) deleted the addition - Held that:- We are in agreement with the conclusion of the Ld.CIT(A) that there was a difference between the disallowance of expenditure and the accrual of income and as per prudent concept of accountancy the income cannot be charged until and unless it is realised or accrued to the assessee. On this issue the AO tried to charge alleged excessive sales returns to tax by taking 4.5% average sales returns which is not a correct approach. The amount of sales return is an expenditure accrued to the assessee when sold newspapers returned by the vendors on account of unsold stock and the same is deducted from the amount of sales raised against the respective vendors. The revenue authorities can not ignore this fact that the amount of sales return shown by the assessee is varying from place to place and in the maximum cases the percentage of sales return is less than 4.5% which is as low as 2.08% in Agra, 2.32% in Punchkula. In this situation disallowance on the basis of average 4.5% sales returns cannot be held to be unsustainable. In this situation we are in agreement with the conclusion of the Ld.CIT(A) that the assessee has duly accounted sales returns on the basis of evidence produced and brought on record, therefore, disallowance made by the A.O. cannot be held as sustainable and in accordance with law and the Ld.CIT(A) rightly followed the proposition laid down by the ITAT Agra Bench in assessee's own case for the A.Y. 2003-04. Accordingly we incline to hold that the AO made disallowance and addition without any basis and by ignoring the relevant facts and explanation of the assessee and the sale was rightly held as unsustainable by the Ld.CIT(A) and the First Appellate Authority had rightly directed the AO to delete the same. - Decided against revenue.

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• 2015 (11) TMI 638
  TDS u/s 194C - disallowance u/s 40(a)(ia) - non deduction of TDS on Transport Charges - Held that:- The reasoning of the Hon'ble Supreme Court in the case of Alom Extrusions Ltd (2009 (11) TMI 27 - SUPREME COURT) will equally to the amendment to Sec.40(a)(ia) of the Act whereby a second proviso was inserted in sub-clause (ia) of clause (a) of Section 40 by the Finance Act, 2012, w.e.f. 1-4-2013. The provisions are intended to remove hardship. It was argued on behalf of the revenue that the existing provisions allow deduction in the year of payment and to that extent there is no hardship. We are of the view that the hardship in such an event would be taxing an Assessee on a higher income in one year and taxing him on lower income in a subsequent year. To the extent the Assessee is made to pay tax on a higher income in one year, there would still be hardship. Since the issue has not been adjudicated by the CIT(A), we are of the view to restore the file to CIT(A) for verifying that whether the parties to whom the transport charges have been paid, have shown in their income tax returns or not and pass the order according to Law. - Decided in favour of Revenue for the statistical purpose. TDS u/s 194C - disallowance u/s 40(a)(ia) - non deduction of TDS on Clearing & Forwarding Charges - CIT(A) deleted the addition - Held that:- In case of M/s Mithla Shipping Agency the TDS has been deducted and deposited. So the TDS provisions have been complied with. The necessary documents such as TDS certificate TDS paid challan and TDS return had been submitted.For the rest of the parties, the major payment was the reimbursement of the expenses and the services charges of the parties were below the limit as specified under the provisions of TDS. The bill for the service charge and reimbursement of expenses are placed Hence the ground of appeal of the Revenue is dismissed. TDS u/s 194I - disallowance u/s 40(a)(ia) - non deduction of TDS on rent charges - CIT(A) deleted the addition - Held that:- CIT(A) has given relief in respect of rent payment to certain parties on the basis of documents produced by the assessee. However the CIT(A) did not mention merit for the allowance of the rent. Further the disallowance of the rent payment due to violation of the provision of section 194C read with section 40(a)(ia) does not hold good as the rent payment to each party does not exceed Rs. 1.20 lakh. The Ld. AR drew our attention on page No. 21 of the paper book, where the details of the rent paid to the parties has been mentioned. The rent paid to the different parties is below the taxable limit specified u/s 194I of the Act. In view of the non- speaking order of the CIT(A) , we are of the opinion in the interest of justice and fair play to give one more opportunity to the assessee to produce the necessary documents for the verification. Hence we restore the file to the CIT(A) to call upon the assessee for the verification of necessary documents and pass the speaking order as per law. - Decided in favour of revenue for the statistical purposes. Unexplained credit under section 68 - receipt of advance unexplained - CIT(A) deleted the addition - Held that:- Since the confirmation from the assessee has been submitted for the advance receipt and the supply of the goods has also been made in the subsequent year, we do not want any merit in the ground of appeal of the Revenue. - Decided against Revenue

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• 2015 (11) TMI 637
  Eligibility for deduction u/s. 10B in respect to tea blended and exported - CIT(A) denied the exemption holding that even though assessee-company is a 100% Exported Oriented Unit (EOU for short) but merely engaged in trading activity in purchase and sale of tea and there was no processing or blending out of activities carried out by it - Held that:- There is a blending of tea in the present case of assessee and assessee before AO during remand proceedings have proved the complete procedure explaining that there is blending of tea. This is exactly in line with the order of Madhu Jayanti International Ltd (2012 (7) TMI 531 - ITAT KOLKATA). Hence, respectfully following the same issue is now covered against Revenue and in favour of assessee. Disallowance commission payment - whether payment of commission was illegal as it is in contravention to the UNO sponsored scheme of Óil for Food' programme in Iraq? - CIT(A) delted the disallowance - Held that:- This issue stands covered in favour of assessee and against Revenue and respectfully following the judgment of Hon'ble jurisdictional High Court in the case of Rajarani Exports P. Ltd. (2013 (5) TMI 410 - CALCUTTA HIGH COURT ) we confirm the order of CIT(A) in deleting the disallowance.

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• 2015 (11) TMI 636
  Penalty under section 271(1)(c) - difference between the reported and the assessed income on account of 'Non-compete fees' - Held that:- The only point of difference between the assessee and the Revenue is the relevant head of income under which the receipt from M/s. Termo Electron LLS India Pvt. Ltd. is liable to be taxed. Therefore, it is a case where a claim made in the return of income of taxing the receipt from M/s. Termo Electron LLS India Pvt. Ltd. under the head 'capital gain' has been found to be not sustainable in law. As per the authoritative pronouncement of the Hon'ble Supreme Court in the case of Reliance Petro Products Ltd. (2010 (3) TMI 80 - SUPREME COURT), such a fact-situation does not amount to furnishing of inaccurate particulars regarding income within the meaning of section under 271(1)(c) of the Act. Thus, on this aspect itself the penalty is unsustainable. The entire fact-situation of the dispute reveals that difference between the assessee and the Revenue revolves around the head of income under which the impugned receipt from M/s. Termo Electron LLS India Pvt. Ltd. is liable to be taxed. The Hon'ble Bombay High Court in the case of M/s. Bennett Coleman & Co. Ltd.(2013 (3) TMI 373 - BOMBAY HIGH COURT) held that where there is only a change of head of income and in the absence of facts to show that the claim of the assessee was not bonafide, penalty under section 271(1)(c) of the Act is not maintainable. On this count also, we find that the penalty imposed under section 271(1)(c) in the present case is unsustainable. - Decided in favour of assessee.

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• 2015 (11) TMI 635
  Transfer pricing adjustment - CIT(A) excluded M/s. Synergy Log-in Systems Ltd and M/s. Transworld Infotech Ltd from the list of comparables selected by TPO for bench marking the value of international transactions of assessee with its AE - Held that:- Unless and until there are reliable published accounting records, which would help to cull out the result of a comparable company for a financial year comparable to that of the tested party any attempted comparison would not yield correct results. In our opinion the CIT (A) was justified in directing exclusion of M/s. Synergy Log-in Systems Ltd and M/s. Transworld Infotech Ltd, since their accounting year ended on a different date, when compared to that of the assessee. - Decided against revenue. Foreign exchange loss / gain held as operating in nature by CIT(A) - Held that:- Considering the nature of activities of assessee and the nature of revenues earned by it from software development activities rendered abroad, we are of the opinion that the foreign exchange gain could have been construed only as incidental to the sales, payment to suppliers etc., We cannot therefore find any fault with the direction of the CIT (A) to consider such foreign exchange gain as operating in nature.- Decided against revenue. Reworking of the operating margin by allocating cost on the basis of man-hours as directed by CIT(A) - Held that:- There is no dispute that assessee was billing its AE on cost plus basis. Such cost was arrived at by the assessee by allocating the indirect cost on the basis of manhours and direct cost directly. When the revenue of the assessee itself was based on an allocation done on man-hour basis, in our opinion, it was not appropriate to adopt a different yardstick for working out its PLI. That for a software development company, the most appropriate method for allocating indirect cost is head-count method has been clearly brought out by Hon’ble Delhi High Court judgment in the case of EHPT India P. Ltd [2011 (12) TMI 49 - DELHI HIGH COURT ] - Direction of CIT (A) that apportionment of cost has to be done on man-hour basis and not on turnover basis could not be faulted with. We do not find any reason to interfere with the direction of CIT (A) in this regard. - Decided against revenue.

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• 2015 (11) TMI 634
  Entitlement to depreciation - Assessee enjoys registration u/s.12AA and is entitled to claim exemption of its total income u/s.11 - Held that:- The order of the CIT(A) in so far as it relates to allowing depreciation on opening WDV has to be confirmed but has to be reversed in so far as it relates to not allowing depreciation on the closing WDV of the block of assets. In other words, the Assessee should be entitled to depreciation as claimed by it - Decided in favour of assessee. Claim of loss/deficit of earlier years against income of the current year - Whether assessee, a trust, is entitled to carry forward expenditure incurred in excess of its income for setting off against income of the succeeding years? - Held that:- The principle that the loss incurred under one head can only be set off against the income from the same head is not of any relevance, if the expenditure incurred was for religious or charitable purposes, and the expenditure adjusted against the income of the trust in a subsequent year, would not amount to an incidence of loss of an earlier year being set off against the profit of a subsequent year. The object of the religious and charitable trust can only be achieved by incurring expenditure and in order to incur that expenditure, the trust should have an income. So long as the expenditure incurred is on religious or charitable purposes, it is the expenditure properly incurred by the trust, and the income from out of which that expenditure is incurred, would not be liable to tax. The expenditure, if incurred in an earlier year is adjusted against the income of a later year, it has to be held that the trust had incurred expenditure on religious and charitable purposes from the income of the subsequent year, even though the actual expenditure was in the earlier years, if in the books of account of the trust such earlier expenditure had been set off against the income of the subsequent year. The expenditure that can be so adjusted can only be expenditure on religious and charitable purposes and no other. Whether loan is repaid the Assessee would again claim deduction and hence the Assessee would get double deduction is without any sound basis? - Held that:- The claim of the Assessee for set off has to be allowed but with a rider that the Assessee in the year when the loan is repaid should not claim deduction of the sums repaid as loan as application of income. The above direction, to which the learned counsel for the Assessee had no objection, in our view, will sufficiently safeguard the interest of the Revenue. Accordingly, ground raised by the Assessee is allowed and the AO is directed to allow the set off of brought forward deficit as deduction.

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• 2015 (11) TMI 633
  Penalty under section 271(1)(c) - unexplained cash funds received from sale of the Bangalore property, and its utilisation for Pune property - Held that:- Money applied in acquisition of Pune properties was mainly out of money received from sale of shares of M/s. Ami Builders Pvt. Ltd. and S. K. Projects P. Ltd. No fault has been found by the Assessing Officer or the Commissioner of Income-tax (Appeals) in the above cash flow statement indicating one to one nexus between the cash funds received on sale of Bangalore property and utilisation for purchase of Pune property. Since all these income had been offered for tax, there cannot be double taxation on the same income one at a point of source and another at a point of application. Taxes have been paid on additional income out of sale of shares of M/s. Ami Builders Pvt. Ltd. and S. K. Projects P. Ltd. therefore, again there cannot be tax on the same income at the time of acquisition of property at Pune. In view of the above facts we may appreciate that declaring additional income of Rs. 40.35 crores as narrated in the letter dated December 8, 2011 filed before the lower authorities, covers each and every issue that has been pointed out during the search as well as post search proceedings. The assessee had paid taxes with a view to buy peace and to avoid litigations. As a matter of record group companies and their promoters have been filing return of income since more than two decades and also paying taxes thereon. It is also clear from the above statement so recorded by the Department under section 132(4) that cash component was there for the purchase of property at Pune. The said cash and cheque component was arranged and funded by the promoters of the company, namely, Sunil and Sneha Kotharis. The source of cash was made available from the sale proceeds on shares of M/s. Ami Builders Pvt. Ltd. and S. K. Projects Ltd. which was declared and offered for tax. In view of the cash flow statement as discussed above, the assessee has explained one to one nexus namely cash funds received from sale of the Bangalore property, and its utilisation for Pune property. The revised declaration of income so filed by the assessee was bona fide and voluntary and without detection of any irregularities found by the Department. The return was revised with a view to co-operate the Department and to buy peace and to avoid litigation. The disclosure was with a specific plea that no penalty proceedings be initiated under section 271AAA or 271(1)(c) of the Act. - Decided in favour of assessee.

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• 2015 (11) TMI 632
  Application of provisions of rule 7B of the Income-tax Rules, 1962 - CIT (Appeals) found that the assessee is not marketing any coffee product and the assessee is only an agriculturist observing that the provisions of rule 7B are not applicable - Held that:- If the assessee derives income from sale of coffee grown, cured, roasted and ground with or without mixing chicory or other flavouring ingredients, then 40 per cent. of income shall be treated as from business for the purpose of taxation under the Income-tax Act. The balance 60 per cent. has to be treated as income from business. The Commissioner of Income-tax (Appeals) found that the assessee is not engaged in coffee processing activity and the assessee is only selling the sun dried coffee seeds. In other words, the assessee is selling cured coffee seeds. If the assessee is selling only cured coffee seeds, the provisions of rule 7B(1) would come into operation. Therefore, the Commissioner of Income-tax (Appeals) may not be correct in observing that the provisions of rule 7B are not applicable in case the assessee is selling only the sun dried coffee seeds and not engaged in other processing activity. Therefore, this Tribunal is of the considered opinion that income from coffee estate has to be computed by applying rule 7B of the Income- tax Rules, 1962. Therefore, the order of the Commissioner of Income-tax (Appeals) is set aside and the entire issue is remitted back to the file of the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) shall apply the provisions of rule 7B and thereafter compute the income from coffee estate. Disallowance of expenditure for earning the agricultural income - Held that:- While considering the claim of the assessee for computation of income from coffee estate, this Tribunal remitted back the matter to the file of the Commissioner of Income-tax (Appeals) to compute the income by applying rule 7B of the Income-tax Rules, 1962. Therefore, this issue also needs to be reconsidered by the Commissioner of Income-tax (Appeals). Accordingly, the disallowance is also set aside and remitted back to the file of the Commissioner of Income-tax (Appeals). - Decided in favour of revenue for statistical purposes.

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• 2015 (11) TMI 631
  Treatment of surrendered income - whether the income surrendered is to be taxable as business income or income from other sources or as deemed income under sections 69A, 69B and 69C - Held that:- Assessing Officer has nowhere disputed the business losses incurred by the assessee. The books have not been rejected. It was stated at the Bar that even at the time of survey, in the trading account prepared by the survey team, there were losses incurred by the assessee. All these facts have not been disputed by the Assessing Officer. Further, the surrender made by the assessee was on account of cash found during the course of survey, discrepancy in the cost of construction of building, discrepancy in stock and discrepancy in advances and receivables. By no stretch of imagination, any of these incomes apart from cash can be considered as income under any head other than the "business income". Nowhere in his order the Assessing Officer has been able to bring on record the fact that the income surrendered during the course of survey was not out of the business of the assessee. Also nowhere he has objected to the heads under which the assessee had surrendered these amounts, i.e., cash, construction of building, discrepancy in stock and discrepancy in advances and receivable. Further, even the survey team has not found any source of income except the business income. Now, following the judgment of jurisdictional High Court, in the background of the facts of the present case, we can safely infer that apart from cash all other income surrendered may be brought to tax under the head "business income" while the cash has to be taxed under the head deemed income under section 69A of the Act. Now, as regards the business losses incurred by the assessee during the year, these can be set off against the income surrendered during the course of survey except for the amount of cash surrendered, as per the mandate of section 71 of the Act. No loss can be set off against the cash surrendered as the same has already been held to be taxed under a different head. The Assessing Officer is hereby directed to set off business losses suffered by the assessee out of the surrendered income except the element of cash surrendered. - Decided partly in favour of assessee.

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• 2015 (11) TMI 630
  Penalty levied under section 271C - assessee had not deducted tax at source under section 194A on interest payment - Held that:- As per the provisions of section 194A(3)(iii)(f) no tax is to be deducted at source on income by way of interest which are credited or paid to such other institutions, association or body which the Central Government may notify in this behalf in the special gazette. For the purpose of section 194A(3)(iii)(f) Notification No. S. O. 3489 dated October 22, 1970, lists a number of undertakings which includes any undertaking or body including a society registered under the Societies Registration Act 1860, financed wholly by the Government PEC University is claiming exemption under section 10(23C)(iiiab) of the Act. Section 10(23C)(iiiab), grants exemption from tax to incomes of educational institutions which are wholly or substantially financed by the Government. Undisputedly therefore PEC University is wholly or substantially financed by the Government. Therefore even as per the provisions of section 194A(3)(iii)(f) no tax was required to be deducted at source on the interest paid to it by the assessee. Since both as per the provisions of section 197A and section 194A(3)(iii)(f) the impugned payment was not to be subjected to tax deduction at source. No penalty under section 271C was therefore leviable. - Decided against revenue.

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• 2015 (11) TMI 629
  Denial of depreciation under section 32(1) - the assessee being a charitable institution has claimed exemption for the cost of asset by means of application of its income - Held that:- From the assessment year 2015-16, no depreciation can be allowed in respect of any asset, whose acquisition has been claimed as an application of income. In view of this later legislative insertion which is not applicable to the year under consideration and respectfully following the judgment of the hon'ble jurisdictional High Court in the assessee's own case for the immediately preceding assessment year [2015 (8) TMI 89 - DELHI HIGH COURT] to hold that depreciation should be allowed separately in the computation of income. - Decided in favour of assessee.

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• 2015 (11) TMI 628
  Interest income earned by the assessee - whether is an income chargeable under the head "Income from other sources"? - Held that:- Interest income earned through short-term deposits by investing the borrowed capital as income not connected with the construction and business activity of the assessee. The very same issue has also been considered by the hon'ble Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. v. CIT [1997 (7) TMI 4 - SUPREME Court] and held that the interest earned by the assessee before the commencement of business on short- term deposits with the bank's out of term loans secured from financial institutions is income chargeable under the head "Income from other sources" and would not go to reduce the interest payable by the assessee which would be capitalised after the commencement of commercial production. In the present case, the assessee has failed to substantiate that the assessee has already commenced its business operations. Therefore we are of the opinion that the interest income earned by the assessee is an income chargeable under the head "Income from other sources". - Decided against assessee.

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• 2015 (11) TMI 627
  Income of the assessee - whether assessable under the head "Income from house property" or "other sources" - Held that:- As held in Chennai Properties and Investments Ltd. v. CIT [2015 (5) TMI 46 - SUPREME COURT] held that holding of property and earning of income by letting out those property is the main business of the assessee, the income arising thereon is liable to be assessed under the head "Income from business" and cannot be treated as "income from house property." Thus we restore the matter back to the file of the Assessing Officer for deciding afresh after considering the proposition of law laid down - Decided in favour of assessee for statistical purposes.

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• 2015 (11) TMI 626
  Disallowance of bad debts - Held that:- The assessee was carrying out commission business and having business dealings with farmers which is not disputed by the lower authorities. As held by the hon'ble Supreme Court in the case of T. R. F. Ltd. v. CIT [2010 (2) TMI 211 - SUPREME COURT] if the assessee has written off bad debts as irrecoverable in the accounts of the assessee, the claim is to be allowed under section 36(1)(vii). The fact that the same were outstanding for last 3-6 years has not been disputed. It has not been disputed that the nature of business of the assessee is such that the assessee was required to give advance to farmers. Therefore, the debts are connected with the business income earned by the assessee. The same is allowable under section 36(1)(vii). Alternately, it is allowable under section 37 also. In view thereof, allow the assessee's claim as the assessee is eligible to claim bad debt. - Decided in favour of assessee.

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• Customs

• 2015 (11) TMI 677
  Import of old and used tyres - prohibited goods or restricted goods - Permission for provisional clearance of import of old and used tyres - Held that:- Goods that are covered thereunder are waste pneumatic tyres and not used pneumatic tyres. The operations mentioned in the entry are to be done to the tyres which are waste and not second hand tyres which are to be reused. At this juncture reference may be made to the Chapter 40 of the CTI (HS) Classification of Export and Import Items, which clearly shows that there exists a category of Used Pneumatic tyres which fall under Exim Code 4012 20. Insofar as waste pneumatic tyres are concerned, they, prima facie, would be covered under heading 4004 - In the absence of any power conferred upon the Ministry of Environment and Forests, to specify any additional category of hazardous wastes being traceable to any provisions of the Act or the rules, the impugned memorandum, as rightly submitted by the learned counsel for the applicant, is merely in the nature of administrative instructions and has no enforceability in law. Under the circumstances, the prohibition contained in the impugned office memorandum not being backed by any statutory provisions, prima facie, cannot be relied upon for the purpose of refusing to process the bills of entry submitted by the applicant. - applicant has made out a prima facie case for grant of interim relief. The balance of convenience also lies in favour of the applicant, inasmuch as, the import in question, prima facie, does not appear to be governed by the rules - Decided in favour of assessee

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• Service Tax

• 2015 (11) TMI 680
  Demand of service tax - Demand confirmed under Business Support Services whereas demand was raised under BAS - order beyond the scope of show cause notice - Held that:- The show cause notice specifically talks about the demands to be raised on the appellant under the category of 'Business Auxiliary Service' which was contested by the appellant before the lower authorities. The adjudicating authority has also recorded the findings as the service would fall under the category of ‘Business Auxiliary Services’ and in the appeal memorandum before the first appellate authority, the appellant herein contested the issue on that ground only. The first appellate authority has undoubtedly travelled beyond the allegations in the show cause notice and has confirmed the demands under 'Business Support Services' which, in our view, is incorrect and unsustainable. In the peculiar circumstances, we find that the impugned order to the extend it confirms the demand raised on the commission received form M/s. JCB under 'Business Support Services' is liable to be set aside - Decided in favour of assessee.

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• 2015 (11) TMI 679
  Denial of refund claim - CENVAT Credit - eligible input services - premises or the office was not registered earlier - Held that:- In Very same issue in [2015 (11) TMI 678 - CESTAT BANGALORE] & [2012 (7) TMI 601 - CESTAT, BANGALORE], this Tribunal has taken a view that credit is admissible even if the registration has not been taken. The decision of the Hon'ble High Court of Karnataka also supports the claim of the assessee. As regards the second issue, the definition of “input service” clearly provides that services used in relation to setting up, modernization, renovation or repair of a factory or premises of provider of output services are input services. Without premises, we cannot imagine provision of service. Therefore the credit of service tax paid on renting of immovable property would also be admissible. - Decided in favour of assessee.

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• 2015 (11) TMI 678
  Denial of refund claim - CENVAT Credit - Non registeration of branches - Bar of limitation - Held that:- Credit could not have been denied on the ground that the branches were not registered. As regards availment of credit by Bangalore headquarter without a centralized registration, the fact that appellant had applied for centralized registration but Department issued registration only in respect of headquarter would render it to be a technical issue since there is a substantive adherence of law in view of the fact that service tax has been apparently paid on the basis of centralized registration and therefore credit could have been taken in the centrally registered office. Therefore it cannot be said that credit has been availed wrongly. As regards nexus, without a premises it cannot be said that services can be rendered and therefore the service of renting of immovable property received in the branches were engaged in the activity of providing services cannot be denied. Therefore, on merits appellants have a case. - impugned orders have no merit and have to be set aside - Decided in favour of assessee.

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• 2015 (11) TMI 659
  Refund of CENVAT Credit - refund application under Rule 5 of the Cenvat Credit Rules, 2004, read with the notification no. 17/09-ST dated 7.7.2009 - Bar of limitation - Held that:- The additional documents desired by the Refund Sanctioning Authority were provided by the appellant on 26.11.2012 and 14.12.2012. It is also an undisputed fact that the refund application filed on 2.11.2012 has not been returned by the Central Excise Department to the appellant as not maintainable. Since, the refund claim has been filed by the appellant on 2.11.2012 and that application has not been returned by the Department and the same has been considered for the purpose of refund of the Service Tax, the objection raised by the Revenue that the claim is barred by limitation of time is not sustainable in view of the decisions cited by the Ld. Advocate for the appellant. - since the refund application was filed in the proper format and the supporting documents were submitted subsequently, the principles decided in the case of Arya Exports (2005 (4) TMI 90 - HIGH COURT OF DELHI) squarely applies to the facts of the present case, and thus, refund claim is maintainable. - appellant is eligible for refund of Service Tax under Rule 5 of the Cenvat Credit Rules, 2004 read with the notification dated 7.72009 issued by the Central Government. Therefore, the impugned order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 658
  Penalties under Section 76, 77 and 78 - Service of repair and maintenance of roads and survey and map making services - Held that:- As regard penalty commensurate to the service tax of management, maintenance or repair of roads the service tax liability was not maintainable in view of the retrospective amendment made under Section 97 of the Finance Act, 2012. For this reason itself appellant is not liable for any penalty, therefore penalty under Section 76, 77 and 78 are dropped. - transaction were recorded in their books of account, therefore they had no intention to evade service tax. Moreover, immediately on pointed out by the department, payment of service tax alongwith interest was admittedly made by the appellant and there is no contest thereon, they have made out fit case for waiver of penalty under Section 73(3) - I set aside penalties imposed under Section 76, 77 and 78 however demand of Service tax on both the services confirmed by the lower authority and admittedly paid by the appellant is maintained. - Decided in favour of assessee.

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• 2015 (11) TMI 657
  Denial of CENVAT Credit - GTA Service and Manpower Recruitment Agency services - Non maintenance of separate accounts - Held that:- Admittedly they were reflecting the entire facts in the returns filed by them to the Revenue. Revenue was aware of the fact that appellant is manufacturing dutiable as also exempted final products and is availing CENVAT credit of service tax paid on the entire services so received by them. Even then no objection was ever raised by them and it was only at the time of audit, that the said legal issue was raised. As such, I am of the view that there is no malafide on the part of the assessee, with an intent to evade payment of duty. The appellants are manufacturing dutiable goods to the extent of 95% and only a very small percentage is of exempted final products, which is clear from the chart of productions for various years, placed on record by the appellant. During the year 2006-07, percentage of production of exempted goods was to the tune of 0.10% and during 2007-08, it was 0.04%. It is only in the year 2009 that the percentage increased to 1.22%. Inasmuch the major part of the appellants final product was dutiable, which was being cleared on payment of duty, the availment of CENVAT credit in respect of various services to the extent of 100%, cannot be held to be reflecting on any malafide on the part of the assessee so as to invoke the longer period of limitation. As such, I am of the view that the demand falling within the limitation period would only survive. The lower authorities would re-quantify the said demand along with interest. - Imposition of penalty upon them is not called for. Accordingly, the same is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 656
  Imposition of interest and penalty imposed on the appellant under Section 75, 76, 77 and 78 - management, maintenance or Repair service - Held that:- Appellant paid total service tax amount well before the issuance of show cause notice. I find that the appellant though did not pay service tax at the relevant time but also not collected the service tax from the service recipient. - department should not have issued the show cause notice Section 73(3) of the Finance Act, 1994, consequently no show cause notice is to be issued, no penalty can be imposed. I also carefully considered the status of the appellant who is small time service provider, major portion of service charges approx, 85 % is expenditure towards the salary, PF paid to the labourer deployed by them for providing the service therefore taking into consideration over all position of the of the appellant and their conduct, I find that the appellant has made out fit case for waiver of penalty not only under Section 73(3) but also Section 80 of the Finance Act 1994. - Decided in favour of assessee.

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• 2015 (11) TMI 655
  Admissibility of Cenvat Credit - Rent a Cab service and Insurance service - held that:- actual use of rent a cab service has not been produced by the appellant before the lower authority. Ld. Counsel only gave broad submission that rent a cab service is used for the executive of the appellant company for official use, however no evidence was produced. I also observed that even show cause notice also have not verified or brought anything on record regarding actual use of rent a cab service. Therefore in this position this Tribunal cannot take final view whether Cenvat credit in respect of rent a cab service is admissible or otherwise. However in my considered view that if rent a cab service is not used for personal use of the employee and the director of the company but if it is used for official use of the appellant then it will be treated as used in the business activity of the appellant. In my prima facie view, in such case Cenvat credit should be allowed. But since fact is not on record, I prefer to remand the matter to the original authority to verify the fact of use of the rent a cab service If insurance in relation to the residential flat or individual, it is not admissible input service and the credit on such insurance service cannot be allowed. At the same time insurance of stock of input, finished goods, transit insurance, insurance of cash handling and also insurance of equipment and insurance of factory employees which are required under the statue of Factory Act are the services which has direct nexus with the manufacturing as well as business activity of the appellant, on which, in my prima facie view, the Cenvat Credit should be allowed. However the actual use of the such insurance service has not been verified by the lower authority and common allegation i.e. non receipt of input service in the appellant factory was made in the show cause notice. - merely because service in question are not received in the factory, the credit cannot be denied on this ground. The services are not tangible unlike inputs. Service can be provided and used anywhere either in the factory or outside factory. Only aspect to be seen that whether the services are in relation to the manufacture or related to the business activity of the assessee. - matter remanded back - Decided in favour of assessee.

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• 2015 (11) TMI 654
  Rebate claim for refund of service tax paid on input services used in export of output services - claim for two units where the centralized registration taken later - export invoice do not contain the details of service provided - Notification No.12/2005-ST dated 19.4.2005 - Business Auxiliary Service/Business Support Service - activity of business process outsourcing - Held that:- If the details of service provided are available and classification can be done on that basis and if the services have been exported, that would be sufficient for the purpose of granting rebate. While granting rebate what is required to be seen is whether the output service has been exported or not and whether input services have been used or not. In any case, the service exported is not liable to tax. Therefore as claimed by the appellants, certain omissions in terms of Rule4A of Service Tax Rules could not come in the way of sanction of rebate in respect of input services if the appellant is able to show that there is an output service and the same has been exported. A consolidated ST-3 returns in respect of two registered premises should be acceptable. Nexus between input and output services and correlation of FIRC are required to be considered afresh and this can be done by the original authority. Nexus can be considered in the light of Apotex Research (Interim Order): [2015 (3) TMI 346 - CESTAT BANGALORE], even though the issue as to whether nexus is required to be considered in the case of rebate itself would need a consideration. I consider that it would be proper to remand the issue to the original authority to consider these two aspects afresh after getting necessary details from the appellants. - Appeal disposed of.

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• 2015 (11) TMI 653
  Cenvat Credit - input services - nexus with output / export of services - Commissioner disallowed a portion of the credit available on the ground that Service Tax credit in respect of terrace area and parking space in respect of rented immovable property is not admissible - Benefit of refund under Notification No. 5/2006-C.E. (N.T.) read with Rule 5 of Cenvat Credit Rules, 2004 - Held that:- all the services are covered by the definition of input service and there is nexus between the output service and the input services. Further it was also submitted that in the show cause notice, one of the grounds taken was that according to Notification No. 5/2006-C.E. (N.T.) as it existed during the relevant time, Revenue is of the view that Cenvat credit use in providing output service was only admissible and therefore, the credit can be allowed only when the use is in providing output service which a far more restricted term than the used term ‘for’. - This removed distinction between the provisions of Cenvat Credit Rules which provide for use of input service for providing output service and the notification which used the words “used in”. I find this submission to be appropriate for considering the admissibility of Cenvat credit and refund thereof in respect of these services. - Decided in favour of assessee.

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• 2015 (11) TMI 652
  Delay in payment of service tax - GTA Service - Non payment of interest - Imposition of penalty - Power of AC / DC to adjudicate the case u/s 83A where the amount involved is more than Rs. 5,00,000/- Held that:- Section 83A is applicable only when penalty is to be adjudged. It is not applicable to amount of tax. - CA has not contested the interest which has already been paid and which is liable to be paid as per the recent decision of the Hon’ble High Court of Bombay wherein it has been held that interest becomes automatically payable once the principal is paid even they demand. - demand for interest is upheld and penalty is set aside. - Decided partly in favour of assessee.

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• 2015 (11) TMI 651
  Denial of CENVAT Credit - Service provided beyond place of removal - Held that:- Inputs service distributor is the office of manufacturer or producer of final product. Therefore, it cannot be said that input service distributor is not the manufacturer. It merely means office of the manufacturer and as per Rule 7 of the Cenvat Credit Rules which provides manner of distribution of Cenvat credit - As the services has been availed at the head office and same is a part of the appellant itself as a manufacturer. Therefore, I hold that appellant has availed the input service credit correctly. Consequently, the impugned order is set aside - Decided in favour of assessee.

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• Central Excise

• 2015 (11) TMI 681
  Denial of CENVAT Credit - Revenue alleges that the credit distributed by Head Office is only permissible to the manufacturer/appellant but not the credit distributed by its Regional Offices - Held that:- Definition of input service distributor using the term an office is applicable to the appellant, but the term an office cannot be limited to a physical boundary but shall be interpreted as different boundaries which are offices and distribute the credit. The requirement is that credit distributing agency should be an office only but not a confined boundary. The reason is probably an office maintains record to verify the credit distributed. - assessee is not merely entitled to take credit of the unit where the products is manufactured, but it may also get credit of input tax paid by its head office to arrest cascading effect which is the mandate of Rule 7 of Cenvat Credit Rules, 2004. That Rule governs the procedure/manner of distribution of credit by a input service distributor prescribing two conditions. - There is no finding by the Adjudicating authority of any violation of the above conditions. Therefore there cannot be denial of Cenvat credit distributed to the appellant for its consumption. - Decided in favour of assessee.

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• 2015 (11) TMI 676
  Classification of goods - whether drilling rigs mounted on motor vehicles chassis are classifiable under Chapter Sub-Heading 8703.00 as claimed by the Revenue or it is classified under Chapter Sub-Heading 8430.00 as claimed by the assessee - Held that:- The goods in question are drilling rigs, though mounted on motor vehicles chassis. By no stretch of imagination it can be treated as special purpose motor vehicles. - Tribunal rightly held that when drilling rigs and the motor vehicles are not integrally connected, the case would not fall within Chapter Heading 8705.00. On that basis, the Tribunal also distinguished the present case from the judgment of this Court in CCE, Baroda vs. L.M.P.Precision Engineering Pvt. Ltd.[2003 (12) TMI 57 - SUPREME COURT OF INDIA]. - Decided against Revenue.

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• 2015 (11) TMI 675
  Validity of order of tribunal allowing the appeal of the assessee while deciding the stay application - Denial of CENVAT Credit - whether the services which have been availed of could be said to be input services within the meaning of Rule 2(1) of the CENVAT Credit Rules, 2004 - Held that:- In certain matters and depending upon the agreement between the parties, the Tribunal may dispose of an Appeal finally at the stage of hearing of stay application or while disposing of and deciding the stay application. However, beyond that, the Tribunal is not expected to pass a cryptic order and by not assigning cogent and satisfactory reasons for its conclusion. It is too well settled to require any reiteration that appeal is a creature of the statute. A right of Appeal would confer in a litigant so as to enable the litigant to assail the original order on law and facts. The Court of Appeal is therefore expected to apply its independent mind and not endure same finding or conclusions in the original order. - it is difficult for the higher Court then to find out as to what prevailed with the appellate authority in reaching a particular conclusion. In the present case, when we were taken through the definition of the term “input service” and the facts in the present case, that we found that none of these aspects have been considered by the Tribunal. The Tribunal merely proceeds on the footing that being an exporter, all services have been availed of during the course of export of goods and that is how this CENVAT Credit was admissible. The impugned order is therefore quashed and set aside. The order of CENSTAT shall be treated as confined and restricted to the stay application. It will be held that the assessee has made out a strong prima facie case for grant of an unconditional stay, but beyond that the Appeal cannot be said to be finally disposed of by the impugned order. - Decided in favour of revenue.

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• 2015 (11) TMI 674
  Denial of refund claim - Whether a refund claim in terms of Rule 57F(3) of the Central Excise Rules, 1944 read with Notification No.85/87-CE dated 01.03.87 in respect of credit of duty taken under Rule 57A of the Central Excise Rules, 1944 which remain unutilized in respect of those consignments which were exported and sailed prior to 21.05.89, made after expiry of six months is not barred by limitation - Held that:- The credit of the duty taken under Rule 57A of the Central Excise Rules, 1944 which has remained unutilised in respect of those consignments which were exported and sailed prior to 21st May, 1989 is now time barred, if the refund application is made after six months from the date of export.The credit of the duty taken under Rule 57A of the Central Excise Rules, 1944 which has remained unutilised in respect of those consignments which were exported and sailed prior to 21st May, 1989 is now time barred, if the refund application is made after six months from the date of export. - Miles India Limited Vs Assistant Collector of Customs reported in [1984 (4) TMI 63 - SUPREME COURT OF INDIA] if the application is time barred, the same is liable to be dismissed - Decided in favour of Revenue.

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• 2015 (11) TMI 673
  Benefit of small scale exemption - Use of brand name of others - brand name registered in favor of others for different goods - Notification 8/2003 dated 01/03/2003 - Held that:- Appellant is using the brand/trade name for mixer grinder in class 7 while R.K.Fans and Allied Products for class 9 goods - appellant was using the brand name ‘Vipanchi’ on mixer grinder while their customer was using the same brand name on other products, does not help the cause of the appellant. - Goods were bearing brand name ‘Vipanchi’ along with logo of ‘Veena’ belonging to R.K. Fans and Allied Products Ltd. while what is registered was ‘Vipanchi’. - after issuance of the first show cause notice, extended period cannot be invoked in the subsequent show cause notices. It is noted that the appellant was not registered and they did not take the registration even after issuance of the first show cause notice of 16th July 2007. We also note that the SSI units are generally required to file quarterly returns. It is also noted that the fact that the symbol Veena continues to be used on the mixer grinder as also on the cartons could be found only during the visit of the officials at the premises of the appellant. Vital facts were suppressed and thus, in our view, this is appropriate case for invoking the extended period of limitation in subsequent notice. We, therefore, do not see any infirmity in invoking the extended period of limitation in subsequent notices. Levy of penalty - From the day one it was very clear that the appellant was manufacturing the goods in their own brand name and entered into a contract with Shri A. Ramkishan, Director of R.K. Fans and Allied Products, to manufacture mixer grinder in their brand name to be exclusively supplied to them. There can be no doubt that they were manufacturing the goods in the brand name of others and that is exactly what the said notification prohibits to permit. In any case, the period involved in the present case is 2004 onwards when the decisions of the Hon ble Supreme Court on the issue were available and there could have been no doubt whatsoever relating to the interpretation of the notification. - Decided against assessee.

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• 2015 (11) TMI 672
  Permission for warehousing of goods - Rule 4(4) - Rejection of the application for storage of finished goods outside the factory premise in terms of Rule 4(4) of Central Excise Rules, 2002 - whether the Commissioner is right in rejecting the application for extension of permission for storage of final product outside the factory premises without payment of excise duty or otherwise - Held that:- If the height of stacking of boxes is increased, it is obvious that due to heavy weight, the boxes as well as the goods packed therein will get broken and dmaged. Therefore the nature of the goods in the present case is such that it can not be stored above a limited height of the space. It is very important to note that in the above rule as regard nature of the goods, it is not specified what should be nature of the goods. Therefore the nature of the goods has to be seen on case to case basis. In the present case, in my view, since the nature of the goods is such that it can not be stored more than a particular quantity in the available space, this reason is sufficient to hold that the nature of goods in the present case is such that the same can not be stored more than a particular quantity of stock. - Expansion of factory is not every time possible due to various factors like availability of finance to buy the extra land and building, availability of land and building for purchase etc. particularly adjacent to existing factory premises. Therefore the decision of expansion of the factory is the sole discretion of the assessee and department can not insist for that. For consideration of the Assessee’s request for permission under Rule 4(4), the existing circumstances has to be seen. Appellant successfully demonstrated that over and above present quantity being stored, cannot create extra space for storage likewise there are more number of differences in the facts of the M/s. GKN Sinter Metals Pvt. Ltd case and facts of the present case therefore ratio of the M/s. GKN Sinter Metals Pvt. Ltd case is not applicable and therefore same is distinguished. Keeping in view the safeguard of Revenue, I observed that in the previous period when the Ld. Commissioner granted permission it was found that the applicant has never misused the facility of outside storage. No instances in leakage of Revenue as regard to the facility of storage of goods outside factory was reported, moreover the applellant is prepared to comply the condition specified by the Commissioner such as execution of security bond alongwith bank guarantee. Therefore there is no chance of danger to the Revenue, for this reason also appellant deserve extension of permission. - Decided in favour of assessee.

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• 2015 (11) TMI 671
  Duty demand - Clandestine removal of goods - Held that:- Diaries were recovered in Mumbai from a place where the appellant s office exists. A plea is being made that the office is a common office for three firms. Out of other two firms, one is owned by the father of Shri Pravesh Gautam in the name and style of M/s.Gautam Enterprises and other firm is owned by Shri Pravesh Gautam. The fact that the place is used as common office will not make any difference. - whole case is based upon the three diaries, namely, 23, 24 & 26 and contents of each diary has been explained by Shri Pravesh Gautam, Director in the appellant s firm. We also note that based upon these diaries detailed tabulations were prepared by Revenue indicating various suppliers from whom clandestinely cleared goods were purchased by the appellant. These were again shown to Shri Pravesh Gautam who after going through the diary and the tabulation has confirmed the details in the statements prepared. He has not stated in any of the statements about any particular entry that the said entry pertains to M/s.Gautam Enterprises or any other firm. Under the circumstances, we are of the considered view that the plea of the learned Counsel requires outright rejection and we accordingly do so. Statements of Shri Pravesh Gautam were recorded over a period of more than one year and there are as many as nine statements. We do not find anything contradictory in these statements. We also find that in the subsequent statements including the ones which have not been retracted, Shri Pravesh Gautam has confirmed the details given in the initial statements. It is also see that the retraction letters were sent under Certificate of Posting and not by Speed Post/Registered Post. We have also gone through the retraction letters which do not indicate which portion of the statement is incorrect or recorded under duress. - diaries were recovered from their office and the contents of the diaries are also not under dispute and the contents clearly indicate that the appellant has purchased clandestinely cleared goods without payment from various manufacturers. Under the circumstances, we do not see any reason to give any importance about the non-availability of transportation details or not able to find discrepancy in the factory in the facts and circumstances of the present case - Decided against assessee.

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• 2015 (11) TMI 670
  Denial of MODVAT Credit - Capital goods used in the captive mines and outside the factory - Held that:- As regard capital goods used in the mines as per the submission of the appellant and ground plan submitted by them it is clear that it is captive mines which is used exclusively for the appellant factory. Hon’ble Supreme Case in the case of Vikram Cement (2006 (2) TMI 1 - Supreme court) held that capital goods used in the captive mines, Cenvat Credit is admissible. Following the ratio of the Apex court and being facts identical in the present case, in my considered view, the appellant is entitled for Cenvat Credit in respect of goods used in the captive mines of the appellant. - As regard the claim of Cenvat credit on Tyre Protection Chain, the credit on same item has been allowed in the case of A.C.C. Ltd.(2000 (3) TMI 88 - CEGAT, NEW DELHI) which was passed by the Coordinate Bench of this Tribunal and upheld by the Hon ble Panjab and Haryana High Court. Following the ratio of the said judgment, I allow the Cenvat Credit to the appellant in respect of tyre protection chain. Once the material is used in the immovable goods, as held by the Larger Bench in the case of Vandana Global(2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)) the material used in the manufacture of such immovable goods shall not be eligible for Cenvat Credit. In the judgment of Rajasthan Spinning & Weaving Mills Ltd(2010 (7) TMI 12 - SUPREME COURT OF INDIA) of the Hon ble Apex Court and other judgment cited by the Counsel, the capital goods wherein material was used, the test of immovability was not dealt with. Since admittedly CTD bar and other steel items used for construction of Silo which is immovable goods, the same will not qualified as capital goods. In view of this position, I am of the considered view that appellant is not entitled for Cenvat Credit in respect of material i.e. CTD Bars, Angles, Channels, etc. used for construction of silo. - Decided partly in favour of assessee.

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• 2015 (11) TMI 669
  Denial of CENVAT Credit - Penalty u/s 11AC - Held that:- Appellants are using different types of raw material viz. MS Scrap, Pig Iron, Sponge Iron etc. However separate raw-materials account for each item admittedly has not been maintained at all. It is strange and surprising that raw-material account was maintained in a consolidated manner. The appellants have not disputed the short found at the time of stock taking which was undertaken on 3 days. According to the Register the balance should have been 2651.122 MTs whereas physical stock was found to be only 978.704 MTs. It is surprising that such a huge shortage which works out to almost 73% was not noticed by the melter or by the Managing Director or by the Central Excise in-charge over a period of 4 years. This itself shows that in spite of the huge difference between the actual raw material available and the stock as per the Register, the assessee did not take any steps whatsoever to check whether the accounting is being done correctly or not. The method adopted by the assessee for maintaining consolidated raw material account itself is a strange method of accounting. It was also admitted that from July 2008 onwards they were not even maintaining the record of use of raw materials on which cenvat credit has been taken. The claim that raw material accounting was done on a hypothetical basis is not at all logical in view of the fact that the melter of the appellant knew how much quantity is required for the furnace each heat to be charged. The melter could have and probably has given the correct consumption detail and also output details for different charge into the furnace, the capacity of which is 5 tonnes. Then there is no answer to the question why accounting was done in such a manner. Under these circumstances how there could be so much difference has not been explained at all. According to Shri. Raja Ramchander Rao, the Central Excise In-charge, the production and consumption figures were given by the melter. If this is so there could not be any shortage at all. Under these circumstances no other conclusion can be reached other than the conclusion that appellant has failed to account for the raw material on which cenvat credit has been taken and show that the same has been used for manufacture of finished goods on which duty has been paid. This is an obligation cast on the manufacturers who take cenvat credit and it is not necessary for the department to prove clandestine removal of raw material or finished products. The obligation to show that the raw materials have been used for the purpose they were obtained and accounted for in accordance with law is on the assesee and in this case they have failed to discharge the same. Therefore the appeal has no merits - Decided against assessee.

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• 2015 (11) TMI 668
  Denial of SSI Exemption - Clubbing of clearances - units situated within same premises - sharing of common brand name, infrastructure facility and expenses - dummy units - eligibility of benefit of Notification No. 175/86-C.E. dated 1.3.86 to the appellant - Held that:- Just because both the factories are situated in the same compound, it is not that the raw materials should not be stocked separately and for the purpose of transportation such common storage is required. The claim is that on several occasions, common transportation and common discharge facilities may be required to be utilized is very weak defense and therefore, we find that this finding has not been countered effectively by the appellant at all. - In the absence of any evidence to show that this amount had been paid back by other unit in whose account it was wrongly credited and details are not made available in the Appeal Memorandum, we have to uphold the stand taken by the Revenue that the appellants were treating both the units as a single entity. As regards use of common brand name, it has been stated that Apex is not a registered brand name of any one. However, the fact that whether brand name is registered is not relevant has not been taken note of and has not been explained by the appellant. In fact, they have stated that the use of brand name is not a criteria till 30.9.1987 since there was no concept at that time. However, why is not relevant has not been explained. In this case, period is from 20.11.86 to 18.7.89) - As regards transfer of goods from one unit to the other, it was stated that there was only one entry and one instance because of clerical error. However the details of when it was noticed and when it was rectified is not forthcoming in the Appeal Memorandum. The same is the case with explanation for clearance of raw materials from one factory to the other. As regards common infrastructure facility, the submission is that this cannot be a bar for denying benefit. However, there was no evidence of payment from one firm to the other has been brought out towards occupied space. It has also not been explained how travelling expenses, contribution of provident fund, salary, etc. have been made by one unit for the other. - appellants have not been able to show that both the units were functioning independently and were capable of functioning independently. In the circumstances, the appeal has no merit - Decided against assessee.

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• 2015 (11) TMI 667
  Denial of exemption claim - Notification No.4/97-CE dated 01.03.1997 (Sl.No.113) and Notification No.5/99-CE dated 28.02.1999 (Sl.No.129) - Penalty u/s 11AC - Held that:- Goods were supplied to Punjab State Handloom Weavers Apex Cooperative Society which as its letter head shows, as Punjab Government Partnership Undertaking. Though the supplies at nil rate of duty to the cooperative society had been made against letters issued by Punjab State Handloom Weavers Apex Cooperative Society simply stating that the society is exempt from Central Excise duty leviable under Chapter 55 by the Govt. of India, and as such, there was no specific certificate certifying that the yarn received would be supplied to handloom units, the fact remains that merely from this it cannot be inferred that the respondent were aware of the illicit diversion of the yarn by the Punjab State Handloom Weavers Apex Co-operative Society to Power Loom Units. In view of this, we agree with the judgment of co-ordinate Bench of the Tribunal (Final Order No.954/2011-EX dated 14.10.2011) holding that no malafide can be attributed to the respondent and hence the levy of interest under section 11AB and imposition of penalty under section 11 AC or Rule 173 Q (1) (d) would not be called for. - No merit in Revenue's appeal - Decided against Revenue.

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• 2015 (11) TMI 666
  Refund claim - Denial of CENVAT Credit - Capital goods - non-production of proof of exports - Held that:- Issue of show-cause notice well after the submission of proof of exports under various letters written by the appellant to the department is most unfortunate. The learned Counsel states that even the 10 ARE-1s selected for random check are not related to the ARE-1s which covered export through merchant exporters. These ARE-1s actually relate to the export to the EOUs. Therefore, we find that the matter needs to be examined afresh by the adjudicating authority taking into account all documents submitted by the appellant. The adjudicating authority while deciding the case afresh must also visit various judicial pronouncements referred by the learned Counsel to the effect that it is the merchant exporter who is responsible for accountal of the goods when the goods are no longer in the control of the consigner. Even in the matter of penalty, the judgements in the case of Jay Jagdish Sugar (2004 (3) TMI 604 - CESTAT, MUMBAI) and Shagun Processors (2008 (12) TMI 111 - CESTAT AHMEDABAD) hold that the responsibility rests on the merchant exporter. The revenue has not been able to explain how Rule 20 (3) is not applicable. Rule 20 (3) states that the responsibility for payment of duty on the goods that are removed from the factory of production to a warehouse or from one warehouse to other warehouse shall be on the consignee. Even if Rule 20 (4) which casts the responsibility upon the consigner is considered it is for the Revenue to seek documents from the Superintendent in charge of the consignee as laid down in Board Circular No.851/9/2007-CX dated 30/05/2007. In the absence of any such verification, the demand of duty cannot be sustained. The time limitation for determining the refund will start from the date of finalisation of the issue of demand of duty. Further, the fact that the proof of export was available to the department before issue of show-cause notice means that the amount was forcibly recovered from them and can only be termed as deposit and can definitely not be termed as an amount deposited towards excise duty. Reliance is placed on CCE Vs. Ucal Fuel Systems Ltd. - [2011 (9) TMI 903 - Madras High Court]. Therefore, refund is not hit by time bar. - Matter remanded back - Appeal disposed of.

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• 2015 (11) TMI 665
  Export of goods by SSI units against form H - Fraudulent availment of SSI Exemption - Notification No. 8/2003 dated 1/3/2003 - Floating of dummy unit - Clubbing of clearances - Held that:- Appellant has not disputed the issue of clubbing of both units before adjudicating authority. - Appellant have produced all the records such as form ‘H’ and other sales documents before adjudicating authority and considering those documents, original authority has extended the benefit of deduction of value of goods exported through merchant exporter strictly in terms of Circular dated 26/5/1996 and 25/7/2002. In both the Circulars, Board has categorically clarified that in case of goods cleared form exempted unit for the purpose of export through merchant exporter form ‘H’ provided by the buyer can be considered as proof of export. In view of the clear Board circular adjudicating authority has correctly allowed deduction of value of goods exported through merchant exporter. - No infirmity in the order, as original authority has only followed the Board Circular in correct perception and allowed the deduction of value of exported goods from the aggregate value of both units. - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 664
  Imposition of penalty - reversal of cenvat credit towards exempted goods after audit objection but before issuance of Show Cause Notice (SCN) - whether in the facts and circumstances of the case penalty is imposable on the appellant or not - Held that:- Admittedly, appellant is not maintaining separate account for input / input services which were being used for manufacturing of dutiable as well as exempted final product. It is also clear from the facts on record that at the time of availment of Cenvat Credit, it was not known to the appellant whether they will be clearing final product without payment of duty or not. Therefore, the allegation of suppression in these set of facts cannot be alleged against the appellant. As that is not known at the time of availment of Cenvat Credit whether these inputs will go in manufacturing of exempted goods. Further, on the legal aspect I find that the issue came up before the Hon ble High Court of P&H in the case of Sangrur Agro Ltd. (2010 (2) TMI 438 - PUNJAB & HARYANA HIGH COURT) wherein Hon ble High court has held that the case is related to reversal of amount under section 6(3)(b) of Cenvat Credit Rules 2004 penalty under section 11 AC is not imposable as the said provision are not applicable. Consequently, penalty under Rule 15 of the Cenvat Credit Rules 2004 is also not imposable. - Decided in favour of assessee.

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• 2015 (11) TMI 663
  Denial of CENVAT Credit - Issue of invoices without actual supply of goods - Held that:- Material which shown to have been cleared under the bill of entry have not been received by the M/s. Nakoda Trading Corporation. Therefore M/s. Nakoda Trading Corporation could not have passed on credit of CVD paid on material which has not been sold to appellant. However, it is observed that no much investigation has been carried out regarding supply of goods from M/s. Nakoda Trading Corporation to the appellant. The appellant has produced all the records to establish that irrespective of any discrepancy at stage of transportation of the goods from ICD Tughlakabad to their supplier but the appellant has received material may not be same material which was cleared from ICD Tughlakabad. - If the appellant has received material, statement of Shri. Ugamraj Jain, who stated that material has not been delivered to the appellant, his cross examination should be allowed. I am therefore of the view that there is contradiction between entire facts as appeared from the records of the appellant and the facts stated by Shri. Ugamraj Jain, therefore cross examination should be allowed. The adjudicating authority as well as first appellate authority irrespective of any conclusion must consider the records of the appellant which was failed to do so. In view of the above discussions, I am of the view that adjudicating authority has violated principle of natural justice inasmuch as not considered request of the appellant for cross examination of Shri. Ugamraj Jain and also in not considering all the documents of the appellant. - Matter remanded back - Decided in favour of assessee.

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• 2015 (11) TMI 662
  Denial of refund claim - Improper documentation - export of goods - Held that:- Revenue has filed the appeal on the ground that respondent has not shown their intention for claim of refund as per the invoice and refund claim has not been filed on the letter head. Another ground is that no foreign exchange has been released by exporting the goods in question. In this case, respondent has already filed refund claim which shows their intention to claim the refund. Therefore, same cannot be ground for filing the appeal before this Tribunal. Further, there is no prescribed rule that refund claim is required to be filed on letter head and only then the refund claim shall be entertained. As there is no such prescribed procedure, therefore, refund claim filed by the respondent cannot be denied. Further, in this case question of foreign exchange realization does not arise as these export goods are free replacement of defective goods. - No infirmity in the impugned order, therefore, same is upheld - Decided against Revenue.

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• 2015 (11) TMI 661
  Remission of duty - Original Authority rejected the remission application on the ground that the appellant did not take proper care to prevent the fire. - Held that:- Appellant kept the final product in open space and exhibited casual approach in dealing with the goods. Prescribed procedure for highly inflammable product has not been followed to avoid such fire accident. Sufficient fire fighting equipment were not put to service. Only fire brigade was informed who put out the fire later. The learned Commissioner rejected the remission claim on this ground and consequently confirmed the demand for excise duty on the product destroyed in fire. We find that the reason for rejection of remission and consequently confirmation of demand is not legally tenable. It is to be noticed that the appellants have lost substantial quantity of finished goods worth crores of rupees and the duty portion of the said loss is only a small part. It is nobody case that the fire accident benefited the appellant by way of remission of duty. It is also nobody case that as the owner of the goods, the appellant, are not inclined to take expeditious action to avoid or reduce the damage of their property. - even the swift action immediately after noticing fire could not have prevented some damage to the final product. Further, we find the Original Authority has confirmed the demand of excise duty on the said destroyed final products. Though the excise liability arises at the time of manufacture the payment of duty is at the time of clearance. There could be no clearance of destroyed products. As the destruction has been an admitted fact there could be no duty liability on the goods which are not cleared. - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 660
  Manufacture - labelling and packing from bulk container to carboys - sale of goods from the warehouse / dealers at higher price - Demand of differential duty - Held that:- Board vide Circular dated 16/12/2009 has examined this very issue and after examining both - before amendment on 01/03/2008 the relevant note, has clarified that the tankers cannot be termed as bulk packs and therefore the activity of transferring the goods from tankers into smaller drums cannot be said to be covered by the said chapter note 10. - In view of the circular of the Board, which is in line with the decision taken by this Tribunal in various case laws cited by the learned counsel, we allow the appeals. - Decided in favour of assessee.

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• Wealth tax

• 2015 (11) TMI 650
  Validity of Wealth Tax Assessments - whether ITAT was justified in holding that the assessment order passed on 7.2.2007 is within the limitation period and hence a valid return ? - Held that:- Assessment in the instant case was made on legal heir of late assessee who alone was declared to be the only legal heir by this court pursuant to dispute between different parties claiming to be legal heir of the assessee. Further assessment has been framed by the Assessing Officer to give effect to the conclusion of the Hon’ble High Court that the properties owned by the assessee were his self acquired property and not owned by him in his HUF status. The said order of assessment giving effect to the orders passed by this court were passed under Section 17A(4) of Wealth Tax Act/153(3) of the Income Tax Act and could be passed at any time and the provisions of sub section (1), (1A), (1B) and (2) of the said section, had no application to the facts of the instant case and, therefore, the assessment proceedings can definitely be held to have been completed within the prescribed time frame. The provision of sub section (2A) to Section 153, which provision, as discussed above, is not at all applicable to the facts of the instant case. The order passed by ITAT, holding that the assessment order passed on 7.2.2007 was within limitation period is factually and legally correct and the said order does not suffer form any irregularity, illegality or perversity. Accordingly, both the questions of law are answered against the assessee.

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