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TMI Tax Updates - e-Newsletter
November 17, 2017
Case Laws in this Newsletter:
Income Tax
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Circulars / Instructions / Orders
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Income Tax
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Rental income - income/loss from the multiplex is liable to be assessed as ‘business income/loss and not as income from house property. - AT
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TPA - ALP - Provision of expenses - The AO has misunderstood the provision debited and credited to the price support account as a mere provision and not as an actual expense. When this provision is a part and parcel of the total price support expense, such part of provision, which actually represents the expenditure incurred, cannot be disallowed. - HC
Case Laws:
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Income Tax
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2017 (11) TMI 862
Treatment to rental receipts - nature of income - business receipts or Income from House Property - Held that:- As perused the order of co-ordinate Bench of the Tribunal for A.Y. 2006-07 to 2009-10 [2015 (9) TMI 1562 - ITAT MUMBAI] the assessee’s objects are not in respect of letting of any particular property, but it has the main objects of acquiring, constructing, operating and maintaining of the multiplexes, business center, I.T. Parks, software zones, commercial & residential complexes and to grant the same on lease/license also. The very object is the commercially exploitation of the properties. Besides that the assessee is also providing hosts of amenities and facilities, as discussed above, which amounts to composite business activity. We therefore hold that the income/loss from the multiplex is liable to be assessed as ‘business income/loss and not as income from house property. The assessee consequently is also entitled to the claim of deductions in respect of expenditure incurred and depreciation on assets etc. in relation to such income. Hence, we do not find any reason to deviate from the findings recorded by the Ld. CIT(A) on this issue. - Decided in favour of assessee.
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2017 (11) TMI 861
Addition u/s 69C - bogus purchases - purchase from grey market at lower price - profit estimation - Held that:- The assessee did came forward and gave document to prove utilisation/consumption of material which was commented by learned CIT(A) to have proved utilisation/consumption of material for construction contracts executed by the assessee. Under these circumstances, the fair conclusion that can be drawn is that the assessee did purchased these material but from grey market at lower price and obtained bills from these ten parties at higher rates to justify utilisation/consumption for construction contracts and to suppress profits. The end of justice in this case will be met if the profit embedded in such alleged purchases is estimated being savings made by the assessee by obtaining material from grey market at lower price and brought to tax . In our view, the estimated profit in this case need to be estimated @12.5% of these alleged bogus purchases which need to be brought to tax. Thus, an additional income of ₹ 38,08,709/- is brought to tax and if the said income is added to the declared income of the assessee in return of income he total income stood at approx 8% of the gross contract value which in the case of the tax-payers engaged in civil contracts is considered as bench mark under presumptive tax scheme for small contractors u/s 44AD .
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2017 (11) TMI 860
TPA - Determination of ALP - Provision of expenses - allowable expenditure - A.O. concededly adopted a method of averaging out the entire expenditure after taking into account the total sum. - Held that:- This Court is of the opinion that the reasoning of the ITAT, cannot be faulted. The Assessing Officer concededly adopted the same characteristic to all parties related and unrelated as to the prevailing and local market conditions. There may be several reasons why an Assessee or a commercial venture might be compelled to provide discounts/price support etc. for ensuring the marketability of its product at the price that they proposes. ITAT held that the debit and credit of provision in the price support account is not a provision in the real sense, but an actual expenditure or its adjustment. The amount of provision of ₹ 15 created at the end of each month is credited to the respective bottler’s account ant the payment made does not enter into the price support account to the extent of the provision already debited. The AO has misunderstood the provision debited and credited to the price support account as a mere provision and not as an actual expense. When this provision is a part and parcel of the total price support expense, such part of provision, which actually represents the expenditure incurred, cannot be disallowed. Having regard to these, the method of averaging, to say the least, is illegal, this Court, therefore, is of the opinion that no question of law arises on this aspect.
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2017 (11) TMI 859
Declaration of voluntarily disclosed income - petitioner was not holding the assets on the date of declaration and it was declared invalid - Held that:- In the instant case, admittedly and undisputedly, the petitioner has not declared any jewellery towards undisclosed income, whereas he has stated that he had already sold jewellery and computation sheet of capital gains has been filed, therefore, the said clarification would not be applicable to the facts of the present case. There is no enabling provision in the VDIS, 1997 directing holding of assets included in the statement of capital gains on the date of declaration. Therefore, the reason assigned by the Assistant Commissioner of Income Tax rejecting the VDIS by the petitioner as invalid, is contrary to law and also contrary to the provisions of their own VDIS. Accordingly, it is quashed. The competent authority / respondents are directed to consider and accept the declaration as submitted by the petitioner under the VDIS, in accordance with law.
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2017 (11) TMI 858
Accepting the method of treatment of revenue and income by ITAT - assessee is a developer and undertakes construction projects including those of commercial buildings - AO ought to bring additional amount to tax on the ground that even while the assessee claimed to have followed the AS-9 method, he neither followed the Project Completion Method i.e. the Revenue recognition on transfer of goods, he also did not apply the other more recognized method approved under Section 145 i.e, the Percentage Completion Method Held that:- It is an established legal proposition that an assessee can follow any recognized method of accounting and the condition is that the same method has to be followed consistently. Since the assessee in the instant case was regularly following the project completion method and has offered the income in the year of completion of project, there is no sound reason as to why the same should be rejected and percentage completion method be followed. This Court is of the opinion that the instances pointed out by the ITAT, in the present case, are significant – both in the previous assessment year as well as in the subsequent assessment years, the AO appears to have accepted the system of accounting. There is nothing on record to suggest that the assessee was undertaking large scale activity. The findings rendered by the ITAT are peculiar to the circumstances of the case and, cannot be said to have universal or wide applicability so as to require a question of law.
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2017 (11) TMI 857
Penalty u/s. 271(1)(c) - indirect expenses claimed attributable to the unsold plot - Held that:- Indirect expenses incurred by the assessee attributable to unsold plots are genuine business expenses duly incurred by the assessee but the same were under a bonafide belief claimed by the assessee to be expenses of the impugned assessment year which were not allowed by the Revenue as these expenses as per version of Revenue were to be added to the cost of unsold plots of land to be allowed in the year when plots are actually sold as per accounting policy consistently followed by the assessee. In our considered view, the explanation offered by the assessee is a bonafide explanation as to the assessee was under bonafide belief that due to merger and demerger of the plots and their reconstitution, the expenses are to be claimed in the year under consideration , which explanation was however not favourably considered by Revenue which led to additions in quantum assessment which assessee accepted but this is not sufficient to fasten liability to penalty on the assessee u/s 271(1)(c). Thus in the factual matrix of the case no penalty u/s 271(1)(c) is exigible in the instant case as the case of the assessee is duly covered by the ratio of decision of Hon’ble Supreme Court decision in the case of Reliance Petroproducts Private Ltd. (2010 (3) TMI 80 - SUPREME COURT). We, therefore, order deletion of the penalty levied by the AO u/s 271(1)(c) - Appeal of the assessee is allowed.
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2017 (11) TMI 856
Validity of reopening of assessment - reopening relying on the information received from Investigation Wing that the assessee has taken accommodation entry from Sh. Harish Pawar - no independent application of mind by AO - borrowed satisfaction of AO - allegation in reasons cannot be treated equivalent to material in eyes of law - Held that:- No substance in the contention of the assessee that the assessment has been made without disposing of the objections of assessee. In this regard, we find that the CIT(A) has rightly dealt with this issue. It is not discernible either from the assessment order or from the remand report that the assessee did file any such objections before the AO, which he claims to have been filed. The AO categorically denied any objection filed by the assessee on record. CIT(A) also examined the case records of the assessee, where no such objections to the reasons recorded were found. Moreover, the assessee itself has failed to file even the copy of any such objection either before the ld. CIT(A) or before us. Therefore, ld. CIT(A) was justified to reject this contention of the assessee. As regards the contention of the assessee regarding invalid reasons recorded by the AO for forming a belief of escapement, we find considerable substance in this submission of the assessee. It is notable that the ld. Assessing Officer has formed his belief of escapement of income simply by relying on the information received from Investigation Wing that the assessee has taken accommodation entry from Sh. Harish Pawar, prop. M/s. Amit Impex (India) through its bank account. A perusal of the reasons recorded shows that the Assessing Officer appears to have simply concluded on the said information to form the belief of escapement of income, without applying his own mind and bringing on record any tangible material to record his satisfaction. It is worthwhile to note that though the AO has observed in the assessment order that the alleged donor, Shri Harish Pawar in his statement recorded by the Investigation Wing had deposed that the bank account of its proprietary concern, M/s. Amit Impex was being used for providing only accommodation entries, but no such fact regarding deposition of alleged donor is found mentioned in the reasons recorded by the AO so as to form a belief on some tangible material. The ld. Assessing Officer has felt satisfied only by concluding the information and therefore, the belief formed by AO on such conclusion is not tenable to justify the initiation of proceedings u/s. 147/148. See Pr. CIT vs. Meenakshi Overseas Pvt. Ltd. [2017 (5) TMI 1428 - DELHI HIGH COURT] - Decided in favour of assessee.
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2017 (11) TMI 855
Disallowance of interest on borrowed money - proof of money unitized for business purposes - purchase of plots - Held that:- The assessee has achieved the turnover of ₹ 10,08,23,511/- and the declared the gross profit rate @ 5.96%, which is higher than the immediate preceding year when it was 3.15% only. The purchase of the plot was to expand the business of the assessee to make go-down as the assessee was paying rent on the go-downs. Thus, there was a direct nexus of this expenditure with the business of the assessee. Since this expenditure was directly related to the business of the assessee, the interest paid on the borrowed money cannot be disallowed. CIT(A)’s observation that these plots were not utilized for the purpose of business is misplaced. The P&L account of assessee shows that the assessee was paying go-down rent of ₹ 6,90,366/- for the year under consideration F.Y 2012-13. Subsequently it was reduced to ₹ 3,29,264/- (F.Y 2013-14), which is evident from page No. 13 and 15 of the paper book respectively. Further the fixed assets schedule also shows that the assessee has spent on construction ₹ 16,01,000/- on these plots during the year under consideration. These plots are being utilized for the business purposes. The disallowance of interest on borrowed money was not justified as the money was utilized for business purposes only. - Decided in favour of assessee.
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2017 (11) TMI 854
Deduction u/s 54B - claim denied on the ground that no agriculture activities were conducted on Khasra No.890 & 886 in two preceding years prior to the date of sale - Held that:- There is no evidence in support of the contentions raised in the submissions by the ld AR. It is admitted fact that there was no agriculture activity on these lands in the two preceding years from the sale of the land. Therefore, have no alternate but to confirm the findings recorded by the ld. CIT(A) on this issue. Ground No. 1 of both these appeals stand dismissed. Sale consideration lower than the stamp duty valuation - additions made U/s 50C - Held that:- There is no choice with the Assessing Officer but to adopt the value U/s 50C of the Act as provided in the law. The law provides that if the assessee claims that the value adopted/assessed by the Stamp Valuation Authority under sub-Section (1) of Section 50C exceeds the fair market value of property as on the date of transfer then the Assessing Officer may refer the valuation of the capital asset to the Valuation Officer. The assessee has not sought relief under this provision of the law. Therefore, have no alternative but to confirm the findings recorded by the ld. CIT(A) while dismissing this ground of appeal. However, in the case of Surendra Singh, it was claimed that the Stamp Duty Authority has determined the value at ₹ 25,29,641/- while the Assessing Officer has taken it at ₹ 26,02,211/-. The relief shall be granted to that extent, which is apparently a mistake in adopting the value. Disallowing claim of Dalali payment and the fencing expenses incurred - Held that:- Admittedly, the assessee has not produced any evidence before the authorities below in support of the claim of payment of Dalali as well as claim of expenditure incurred on fencing. No expenditure can be allowed without any supporting documents. Therefore CIT(A) has rightly sustained the addition of disallowing the expenditure in the form of payment of Dalali and making of fencings in both these cases.
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2017 (11) TMI 853
Allowance of claim under the provision of 35DD - deduction being 1/5th of the restructuring expenses - Held that:- As the matter was now sub juice before the Tribunal, therefore, the assessee did not make any claim being 1/5th of restructuring expenses in the subsequent year. However, assessee is very much entitled for 1/5th of the expenditure in the five assessment years . Thus Assessee is very much entitle for restructuring expense u/s. 35DD of the Act. Accordingly, we direct the AO to allow the restructuring expense claim as per provision of law.
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2017 (11) TMI 852
Seeking extension of stay of demand - Non-deduction of tax in respect of payment made by the assessee to Google Ireland Ltd., as the same was in the nature of royalty - only ground on which learned counsel for the assessee is seeking extension of stay of demand is that he is proposing to appeal against the recent orders of the Tribunal for earlier years before the Hon’ble High Court and also intends to file Misc. Application before this Tribunal - Held that:- In our considered opinion, this cannot be a valid ground for stay of demand. Unless and until, the orders passed by an appellate authority are reversed by the higher appellate authority or reviewed by its own, the orders passed shall hold the field and shall be binding on both the parties. Even on the proposed action to file rectification application before this Tribunal, it is hypothetical situation since the appellant had not yet filed any Miscellaneous Petition before this Tribunal. Even assuming that any such petition is filed, scope and ambit of all such applications is very limited and having regard to the decision of the Hon’ble jurisdictional High Court in the case of CIT v. McDowell & Co. Ltd. [2004 (3) TMI 41 - KARNATAKA High Court] in proceeding u/s 254(2), the Tribunal is not empowered to change the final outcome of the appeal. Thus having regard to the above legal position, the assessee-company had not made out a case for stay of the demand. In the circumstances, the stay petition seeking extension of stay is not maintainable and is accordingly dismissed
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2017 (11) TMI 851
Disallowance on account of bad debts - tds liability on amount received on the amount from Sikkim and Bhutan Government - Held that:- In the assessee's case under consideration, the Sikkim and Bhutan govt. neither paid the said amount to the assessee nor deposited the said amount to the Central Govt. account, therefore, it is a revenue loss in the hands of the assessee company. We observe that Sikkim and Bhutan Govt. suppose to deposit the said amount to the Central Govt. account on behalf of the assessee but in fact the amount was not deposited to the Central govt. account, therefore, it is a revenue loss in the hands of the assessee company The assessee is entitled to write it off as a bad debt. Since the TDS certificate was not issued by the deductor nor any actual payment was made by them, the assessee company could not claim credit thereof against the tax liability. Therefore, when there was no possibility of TDS certificates being received from the clients, the assessee company decided to write off the TDS receivable and debited the same to the Profit &Loss account for the assessment year under consideration. We are of the view that if the loss occurred during the course of carrying on the business, it is incidental to it and hence allowable. Admittedly, in this case, the assessee suffered loss during the course of carrying on its business. Therefore, same is allowable. In the assessee's case under consideration. we note that necessary TDS certificates were not issued by the deductions/clients nor any actual payment was made by them, the assessee company could not claim credit thereof against the tax liability. Therefore, when there was no possibility of TDS certificates being received from the clients, the assessee company decided to write off the TDS receivable ot ₹ 21,72,227/- and debited the same to the profit & Loss account for the assessment year under consideration. We are of the view that in this case the assessee suffered loss during the course of carrying on its business and said loss is allowable. - Decided in favour of assessee.
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2017 (11) TMI 850
Addition u/s 37 (1) on Professional Fees - Held that:- The professional fee was incurred for various works including completion certificate at site conditions, attending court matters, and preparation of drawings plan, etc. The ld. CIT(A) has held that the assessee has not explained that the expenditure is not relating to benefit of enduring in nature. I find that no reason whatsoever for this assumption of the ld. CIT(A) is on record. It is clear that the fee paid includes expenditure for attending court matters, etc. This by no stretch of imagination can be considered to be expenditure of enduring benefit. Furthermore, if the expenditure is related to setting up of any property, the expenditure needs to be capitalized and the assessee be accordingly given the depreciation thereon or if the property is under development, the expenditure needs to be added to the cost of the project. Hence, we remit this issue to the file of the A.O. to examine the issue and decide as per the direction given hereinabove. Stamp duty and registration charges - Held that:- No mention whatsoever has been given by the ld. CIT(A) for disallowing the expenditure except mentioning that it is not the revenue expenditure. When the assessee had made the expenditure on account of stamp duty and registration charges, as the incentive scheme by duly advertising the same, we do not see any reason as to how the same cannot be treated as revenue expenditure. This expenditure is in relation with the flat which the assessee deals in and the same is its stock-in-trade. Hence, the expenditure related to the sale of the item in which the assessee deals in, can by no stretch of imagination be deemed to be capital expenditure - Thus claim allowed. Interest for delayed payment - Held that:- A.O. has made the disallowance by holding that this interest is of penal in nature and cannot be allowed as business expenditure. There is no discussion whatsoever as to how this is penal payment, not allowable as business expenditure. The ld. CIT(A) has upheld the disallowance by observing that this cannot be treated as compensatory in nature. This observation by the ld. CIT(A) is absolutely mechanic and does not speak anything. When the assessee is paying the creditors’ interest for payment made beyond the credit period allowed, the expenditure is undoubtedly in relationship to the business conducted by the assessee. Hence, the same is duly allowable
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2017 (11) TMI 849
Nature and taxability of interest earned on Fixed Deposits with banks - Held that:- In the instant case it has to be deduced that interest on FCCB funds temporarily placed in fixed deposits awaiting deployment in the construction of new projects is a capital receipt, since the FCCB proceeds are “inextricably linked” with the construction of new projects, as the same have been raised for that purpose alone. Thus it has to be held that the interest earned by the assessee by temporarily parking the FCCB funds in banks, pending its full deployment in the ongoing construction of hotel projects, was in the nature of capital receipt and was thus, required to be set-off against the cost of capital work-in-progress. Thus, assessee succeeds on this aspect. Disallowance under section 14A of the Act - Held that:- On this aspect, without going into much detail, it is directed that the disallowance be limited to the extent of exempt income in terms of the ratio of the ratio of the Hon'ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT, (2015 (9) TMI 238 - DELHI HIGH COURT) .
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2017 (11) TMI 848
Application for Renewal of Exemption u/s 80G(5)(vi) rejected - claim disallowed on the ground that the loan given to wife of one of the Trustees was in violation of provision of section 11(5) - Held that:- There is no violation of the provisions of section 11(5) of the Act because the assessee trust has taken the adequate security by way of gold ornaments and the loan was secured and bearing interest @12% per annum which was more than the prevailing rate in the market. Therefore, this loan given by the trust is not for personal benefit of the trustee or wife the trustee. The assessee trust is charging interest more than the market rate and there is a proper security. The assessee trust is deriving interest on loan given to wife of one of the trustees and the loan is secured by the gold ornaments. Therefore, it cannot be said that loan had been given by the assessee-trust with inadequate security or free of interest, therefore, exemption u/s 80G(5)(vi) of the Income Tax Act, 1961 should not be denied. - Decided in favour of assessee.
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2017 (11) TMI 847
Disallowance of technical consultancy fee - assessee has claimed that shri S.S. Mallikarjun is the chief promoter of distilleries and because of his dynamic support the assessee could expand its production and technical upgradation - whether shri S.S. Mallikarjun has rendered any service apart from his capacity of Managing Director of the assessee company? - Held that:- The assessee has produced certain certificates in this regard showing his knowledge and undergoing training and technical qualifications. However, no documents or material has been produced by the assessee to show which service has been rendered by shri S.S. Mallikarjun to the assessee. The assessee being a company was required to produce atleast some decision taken by the Board of Directors regarding the technical consultancy services to be rendered by shri S.S. Mallikarjun against which the fee was to be paid over and above the salary and other remuneration being a Director / Managing Director of the assessee company. In the absence of any material evidence regarding the service actually rendered by shri S.S. Mallikarjun the mere competence or qualification cannot be a criteria for allowing the payment made by the assessee on account of technical consultancy fee. - Decided against assessee Disallowance of interest u/s. 14A - contention of the assessee that the investment was made for the purpose of the business of the assessee - Held that:- Contention of the assessee is relevant in respect of the disallowance made u/s. 37(1) and not for the purpose of disallowance u/s. 14A. So long the assessee is showing the investment in the shares the said transaction clearly falls in the ambit of section 14A as a dividend income from the investment is exempt u/s. 10(38) of the IT Act. Further the assessee has raised the contention by pointing out that the increase in the overdraft limit during the year is only ₹ 2,79,00,000/- and there is much more corresponding increase in the current assets. However we note that neither the AO nor the CIT(A) has analysed these facts or given any finding on this issue. This aspect is relevant only when there is no direct nexus between the borrowed fund and investment. In case there is a direct nexus between the borrowed fund and investment and if it is found that the investment has been directly made from the overdraft account then the increase in the current assets is not relevant. Accordingly, we set aside this issue to the record of the AO for proper verification Addition on excess price paid towards purchase of jowar flour - Reworking of grain price by adopting the average rate of ₹ 950 per quintal - Held that:- The average rate computed by the CIT(A) is the maximum rates prevailing at these three APMCs. The assessee claimed before the CIT(A) that the AO should have considered the rates for moderate good jowar. Therefore the assessee itself has not claimed that it has purchased the best jowar available in the market. Accordingly, having considered the facts and circumstances of the case we are of the view that the mean rate which is minimum + maximum / 2 of all three APMCs to be considered for working out the average market price of jowar during the year under consideration. The AO is directed to apply the rate of ₹ 800/- per quintal. Disallowance made on account of husk purchase - excess of purchases during the year under consideration as compared to earlier year - Held that:- The total husk required for generation of this quantity of steam was computed at 25,379 MTs against which the assessee has shown the purchase of 10,312.75 MTs of husk during the year and the remaining fuel was used as biogas. The CIT(A) after considering all these facts has restricted the disallowance to 10% of the total disallowance made by the AO. In view of the above facts we do not find any reason to interfere with the impugned order of the CIT(A) qua this issue when the revenue has not brought before us to counter the facts recorded by the CIT(A). Disallowance on account of sundry creditors by invoking the provisions of section 41(1) - Held that:- The assessee filed the details of all the cases except the three cases for which the CIT(A) has confirmed disallowance. The details filed by the assessee have not been disputed by the revenue and therefore we do not find any error or illegality in the order of the CIT(A) qua this issue
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2017 (11) TMI 810
Request up the matter for final hearing - Held that:- Though there is a request to take up the matter for final hearing, but as we are close to Diwali vacation, it is not possible to take up the main appeal on this side of vacation so as to dispose of the same. But, considering the reasoning recorded by the learned Single Judge, we deem it appropriate that the matter can be expedited. Kept on 30.11.2017 for considering the matter on merits. Till the next date of hearing the respondents shall not take coercive steps, on a condition of depositing an amount of ₹ 5 crores in two installments by the appellant. The appellant shall deposit an amount of ₹ 2.5 crores within a period of 10 days from today and balance amount of ₹ 2.5 crores within a period of three weeks thereafter.
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Customs
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2017 (11) TMI 846
Valuation of imported goods - mixed lot of 100% polyester knitted fabrics - rejection of transaction value - Held that: - It is well settled that the High Court would not ordinarily entertain a writ petition directly aimed against an order-in-original in taxing statute where statutory appeals are available, more so when ultimately the issue is one which would travel to the Supreme Court by way of appeal instead of the High Court - In the present case, however, the adjudicating authority has referred to imports of identical material and based its conclusion on such imports. These observations are limited to making distinction between the earlier orders of adjudication passed by the authority and the present group of cases. This is not to curtail any of the legal contentions of the petitioners on merits of the orders passed. However, in cases where the adjudicating authority has substituted the declared value of the petitioner without any notice or hearing, such orders would have to be set aside and proceedings be remanded to the said authority for fresh disposal - appeal allowed by way of remand.
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2017 (11) TMI 845
Overvaluations of the goods - unlawful claim towards duty drawback - Held that: - The petitioners’ representatives shall be present at the respective ports at Mundra and the concerned port at Bombay at 12 Noon on 07th November, 2017 to facilitate the drawing of samples - All rights and contentions with respect to other reliefs such as withholding of the drawbacks etc. are kept open - petition disposed off.
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2017 (11) TMI 844
Confiscation - penalty - sale and purchase of pulses - case of Revenue is that it was bogus sale and all the pulses were supplied in contravention of provision, imposed on export of pulses - Held that: - there is no seizure of the pulses, even in small quantity. It is nowhere on record that either the Dal Mill owner or the broker or the said Sushil Kumar Agarwal, Siliguri have indulged in activity amounting to smuggling - none of these persons have carried the pulses for the purpose of smuggling in any Customs area or near the border proximity thereof. It is admitted fact on record that the pulses have been dispatched to a place in India and the same ultimately reached a place in India. There is no allegation that post delivery of Dal to a dealer located near the Indo Nepal Border, within India, was in violation of the provisions of the Customs Act or the respondents herein were involved in the presumed smuggling. The whole case of the revenue is based on presumptions and assumptions and lacking any corroboration and moreover suspicious how so ever strong cannot take place of legal proof - appeal dismissed - decided against appellant.
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2017 (11) TMI 843
Conversion of free shipping bills into duty drawback shipping bills - Grant of Duty Drawback - All Industry Rate - Held that: - A bare reading of Rule 12(1)(a) ibid and the Circular dated 16-1-2004 issued by the C.B.E. & C. demonstrate that the conversion is permissible, only when the exporter is able to satisfy the Commissioner of Customs that “for reasons beyond his control”, the drawback was not claimed - In the present case, documents available in the case file divulge that the appellant had applied to the Licensing Authority, Jaipur on 21-7-2006 for grant of Duty Free Replenishment Certificate (DFRC) under Para 4.2 of the Handbook of Procedures 2004-09. The correspondence exchanged between the appellant and the DGFT reveals that the appellant was diligently pursuing its matter for issuance of DFRC. Thus, filing of drawback declaration in respect of the shipping bills was beyond the control of the appellant, since revocation of DEL happened much later. Therefore, in terms of the C.B.E. & C. Circular dated 16-1-2004, the ld. Commissioner of Customs should have considered the case of the appellant and allowed the exemption from observing the provisions contained in Rule 12(1)(a) ibid for the purpose allowing drawback. Matter remitted back to the ld. Commissioner of Customs to examine and consider the request of the appellant on merits in terms of the Circular dated 16-1-2004 - appeal allowed by way of remand.
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Corporate Laws
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2017 (11) TMI 842
Oppression and mismanagement - in spite of the status quo orders Directors have changed and shareholding in the company has been considerably changed - transfer of shares - control of the Company itself has changed in the face of status quo orders - Held that:- It is clear that the Respondents knew about the Status Quo Order and pending petition. Still they entered into the MoU and took steps under the same. Disputes inter say the two groups of Respondents later on arose because it appears that original Respondents received a sum of ₹ 15 lakhs as token money but as the balance was not paid, they have started denying the transfer of shares to added Respondents while the added Respondents appear to be in-charge of the affairs of the Company on the basis of their claim that the original Respondents did transfer their shares. It appears there has been enhancement in the shareholding also. The original Respondent Nos. 2 to 4 violated the status quo orders and transferred their shares to added Respondents and the added Respondents have continued to act in violation of Status Quo Orders and there is change of shareholding in spite of knowing that there was a Status Quo Order and the shares could not have been transferred to them. It is clear that original Respondents 2 to 4 acted in an oppressive manner by taking advantage of the Appellant being sent behind the bars at the instance of the Respondent No. 2 and brought about the EGM on 31.05.2006 and illegally removed the Appellant from the post of Managing Director and in violation of the status quo order transferred their shares to added Respondents and it has further transpired that the shareholding of the Company itself has increased manifold and such acts of the Respondents clearly show that there is a grave mismanagement with these Respondents not paying any respect to the status quo order, which were admittedly there. Para- 14.3.2.3 reproduced above from the impugned order, where reference has been made to the agreement between these respondents shows that in the MOU dated 01.04.2009, these Respondents were aware that they need to tide over the status quo and the contract was to be concluded when the status quo is vacated and the petition filed by the Appellant is finally decided. It is surprising, however, that the learned NCLT even after noticing such conduct of the Respondents did not hold that Respondent Nos. 2 to 4 had committed acts of oppression and mismanagement because of which now added Respondents are in control of the affairs of the Company. We find that the Company Petition was wrongly dismissed. Appeal is allowed. The impugned judgment and order passed by learned NCLT is quashed and set aside.
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Insolvency & Bankruptcy
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2017 (11) TMI 841
Corporate insolvency procedure - 'Power of Attorney Holder' as given power of attorney prior to enactment of 'I&B Code', entitlement to file an application under Section 7 or 9 or 10 of the 'I&B Code - admission of application under Section 7 - appointment of Interim Resolution Professional - Held that:- In the present case, the appellant has enclosed the so-called “Power of Attorney” of the Punjab National Bank like ICICI Bank. As noticed in the case of Palogix Infrastructure Private Limited [2017 (10) TMI 913 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] in the present case also we find that by an instrument dated 5th November, 2015 the committee of Board of Directors empowered an officer of the Bank and delegated him power to move before a Court on behalf of the Bank, with power to do everything requisite for the purpose mentioned therein, including borrowing money from the Reserve Bank of India and financial institutions of big authorities in India and also to appear and take action on behalf of the Bank in any Court of original jurisdiction, court of appeal, revision, civil, criminal, revenue courts, tribunals and office/offices and to engage counsel on behalf of the Bank for such courts, tribunal and offices. In view of the aforesaid Board’s Resolution by letter dated 28th March, 2017 the Chief Manager, Branch Head, MCB Hisar was authorised to file petition before the Adjudicating Authority under Section 7 of the I & B Code and named the IRP for appointment. From the application filed under Section 7 in Form 1 filed by the respondent – Financial Creditor we find that the authorised officer of the Bank has signed the document. In the aforesaid circumstances, as the case in hand is covered by the decision of this Appellate Tribunal in Palogix Infrastructure Private Limited (Supra) and as the Senior Manager of the Bank has filed the application under Section 7, we find no ground to interfere with the impugned order.
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2017 (11) TMI 840
Corporate Insolvency resolution process - application filed by operational creditor incomplete - Held that:- As seen from the records that vide order dated 25.09.2017 the applicant was informed that the petition suffers from certain technicalities. Seven days’ time was duly afforded to the applicant to remove the objection with respect to the filing of certificate as required under section 9(3)(c) of the Code. Time was afforded to the applicant on 25.09.2017, for removal of the aforesaid defect. The applicant has filed certified copy of bank statement of the applicant company from 1.4.2017 to 27.9.2017, which cannot be termed as compliance of sub-sec. (3)(c) of Section 9 of the Code. In addition to the relevant bank account, the Code requires a certificate from the financial institution maintaining account of the operational creditor confirming that there is no payment of an unpaid operational debt by the corporate debtor. Despite opportunity afforded, admittedly the applicant has failed to file the requisite certificate as mandatorily required under Section 9(3 )(c) of the Code. The word “shall” used in sub-section (3) of Section 9 of the Code shows mandatory requirement, which includes inter alia clause C of sub section 3. Therefore, on a bare perusal of the above-mentioned provision it is clear that furnishing of certificate from the relevant financial institution by the applicant inter-alia is a mandatory requirement under Section 9 of the Code and in the absence of such certificate from the financial institution maintaining accounts of the operational creditor, the application filed by the applicant is clearly incomplete. Thus the present application filed by operational creditor is rejected being incomplete.
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FEMA
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2017 (11) TMI 839
Revision petition u/s 19(6) of FEMA against the order of penalty - contentions of the respondent is that revision petition filed by the revisionist is not maintainable as there is no specific provision in the Act - Held that:- As gone through provisions of section 16 which provides for appointment of Central Government Officers as at Adjudicating Authority for holding an inquiry for the purpose of imposing any penalty against the respondent. As informed that after passing the impugned order no complaint against the respondent was filed against the order passed by the Adjudicating Authority who has imposed the penalty nor any inquiry is conducted in this regard under section 16 of the Act as provided under sub-section 6 of section 19. Under these circumstances, there is a force in the submissions of learned counsel for the respondent that the revision petition filed by the appellant is not maintainable. The penalty amount as per impugned order has been deposited by the respondent. Thus revision petition is accordingly dismissed.
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PMLA
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2017 (11) TMI 838
Provisional attachment - Recovery of loan amount against the three-mortgaged properties - Appellant undertakes that after recovering the EMI due, from the attached Escrow accounts, the Appellant shall release the necessary amounts due, towards the ‘amenities charges’ to its borrowers - Held that:- As submitted that the appellants in the said appeals are not able to deposit service tax for the period April-September, 2016-17 for which it has received a notice from the office of Assistant Commissioner, Service Tax, Mumbai and it is directed to file the return within two days showing its self assessed tax and payment particulars. The appellants have also received a letter from Brihan Mahanagar Palika for payment of arrears of outstanding towards the property tax amounting to ₹ 16,60,400/- for the period 01.04.2016 to 31.03.2017. They have also received a letter from Ferani Developers for payment of maintenance charges of the property. The details of calculations required to be paid per month are given in the application. As the appellant in the present appeal has agreed to release the said amount due and undertake to pay the borrowers on regular basis once the past rent is released as deposited by the tenant. The impugned Order records that although the interest of the appellant herein needs to be protected, but in the larger national interest, the properties are being attached. Even otherwise if the Special Court trying the offences under Section 3 comes to the conclusion that the properties are not liable to be confiscated, then the same shall stand released the appellant in terms of Section 8(8) of the Act. It is thus sought to canvassed that the interest of the appellant is secured. When the properties do not even remotely or prima facie bear a link with the proceeds of crime or the criminal activity, then the said properties are not liable to be attached under the false pretext of ‘national security.’ This Tribunal by order dated 27.07.2017 had directed the tenant to deposit the rent in the new designated accounts of the Appellant in terms of para 17 of the Order. This Tribunal in its order dated 27.07.2017 had recorded the Appellant’s undertaking to the extent that, in the event Appellant loses the present appeal then the Appellant shall pay back/restitute all the withdrawn amounts to the concerned authority. The Appellant seeks to clarify that the Appellant shall be liable only to restitute the amounts withdrawn towards repayment of EMIs and not the amenities charges as they are actual expenses payable on behalf of the borrowers and not retained by the Appellant Bank. There is a force in the submission of the appellant. The clarification sought by the appellant is allowed. The appellant is now permitted to operate the Escrow Accounts, being Accounts No. 200999779905 and 200999779912, IndusInd Bank, Lower Parel Branch, Mumbai and withdraw the amounts lying in such Escrow Accounts, which comprises only of the instalments that were legitimately owed to the appellant by the borrowers for the loans advanced to them. The past amount deposited by the tenants be released to the appellant forthwith. The prayer present appeal as well as stay applications are allowed. The impugned order against the present appellant is modified. The appellant is granted the liberty to move application in the appeals filed by the borrowers appeals in case the appellant is not to recover the loan amount against the three-mortgaged properties. Till the decision of the said appeals of the borrowers the attachment of immovable properties shall continue. The impugned order is modified accordingly.
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Service Tax
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2017 (11) TMI 837
Immunities granted under the Order No.18/2014-ST dated 28.3.2014 - Section 32K of the Act - Held that: - this Court is of the opinion that it is not open to the Respondent-Commissioner of Central Excise and Service Tax to himself treat the order of Settlement Commission as non est because, in his opinion, the condition of granting immunity under the said order by payment of service tax dues to the extent of `2.19 crore was not satisfied. If at all factually the said Commissioner held such a view, the only course open to him was to approach the Settlement Commission by way of a suitable Miscellaneous Application with the relevant facts, whereupon the Settlement Commission, after giving an opportunity of hearing to the Petitioner could arrive at its own appropriate conclusions and pass appropriate fresh orders. The Petitioner and the Commissioner of Central Excise and Service Tax only being the rival parties before the said Settlement Commission could not undo the effect of the order passed by the Settlement Commission at their own level and therefore, it was incumbent for the Respondent Commissioner of Central Excise and Service Tax to have approached the Settlement Commission seeking a modification or review of the order passed by the Settlement Commission. The Petitioner was also required to be given an opportunity of hearing by the Settlement Commission in this regard. This petition is accordingly disposed of by directing both the parties to appear before the Settlement Commission again where the Respondent Commissioner of Central Excise and Service Tax - The Settlement Commission, after giving appropriate opportunity of hearing to the Petitioner, may pass appropriate orders in accordance with law - Petition allowed by way of remand.
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2017 (11) TMI 836
Maintainability of petition - condonation of delay in filing appeal - Held that: - It is true that this Court has under rare and exceptional circumstances entertained writ petitions directly against the orders of the adjudicating authorities where by virtue of the nonextendable period of limitation prescribed by the statute has expired. While doing so, the Court has always been careful of not exercising such powers in a routine manner, virtually providing for an alternative parallel forum and thereby diluting the legislative intent of not allowing appeals to be presented after indefinite period of time. Some of the self imposed restrictions recognized are that the delay should otherwise be satisfactorily explained and that the litigant would suffer gross injustice if the remedy is completely shut out. In the present case, the adjudicating authority passed the order on 08.03.2016 which would have been received by the petitioner shortly thereafter. For over one and half years, no steps were taken by the petitioner to challenge it. The present petition came to be filed on or around 11.09.2017. The delay is gross. Against the maximum period of limitation of three months, even considering additional one month upto which the Commissioner can condone the delay, the present petitioner moved its first challenge almost a year and a half later. No grounds are indicated to condone such delay - Delay, even otherwise, is gross and inordinate. Petition dismissed.
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2017 (11) TMI 835
Delayed payment of service tax - demand of interest and penalty - Held that: - the appellant though has not collected the service tax from their main contractor M/s. Wind World India Ltd. but still they have paid the same - the appellants have paid the interest amount of ₹ 15,56,161/- on 05.10.2015 against the demand of ₹ 15,18,104/- and the said amount has been appropriated also in the impugned order. Penalty - Held that: - in the show-cause notice, the demand of service tax is not under Section 73(1) of the Finance Act and therefore the imposition of penalty on the appellant is unwarranted - penalty set aside. Appeal allowed - decided in favor of appellant.
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2017 (11) TMI 834
Rebate Claim - Section 85(4) of the Finance Act, 1994 - Held that: - the Commissioner(Appeals) vide her order dt. 24/08/2016 has allowed the rebate along with interest and for quantification, she has remanded the case back to the original adjudicating authority as per Section 85(4) of the Finance Act, 1994. Thereafter after three months, the Commissioner(Appeals) on her own has issued a corrigendum whereby she has deleted the interest granted by the earlier order without any basis and without any application made by any party. The Commissioner(Appeals) has legally passed the order dt. 24/08/2016 and there was no justification in issuing the corrigendum deleting the interest relief to the appellant. Therefore, the corrigendum dt. 17/01/2017 issued by the Commissioner(Appeals) is not sustainable in law. Appeal allowed - decided in favor of appellant.
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2017 (11) TMI 833
Refund claim - invoices addressed to the premises other than the registered premises - Held that: - reliance placed in the judgment of the High Court of Karnataka in the case of mPortal (India) Wireless Solutions Pvt. Ltd. [2011 (9) TMI 450 - KARNATAKA HIGH COURT] wherein it has been held that there is no condition for availing CENVAT credit of input services, there is no condition for obtaining prior registration - appeal dismissed - decided against Revenue.
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2017 (11) TMI 832
Penalty - Non-payment of part of service tax - appellant case is that there was no suppression of facts with an intention to evade duty - Held that: - the appellant have failed to pay the service tax during the relevant period but there was no suppression on his part because he has shown the liability of service tax in his balance sheet which has been produced on record - Further, as soon as it was pointed out by the audit, he paid the service tax immediately and thereafter interest was also paid before the adjudication by the first authority - there is no material on record to show the intention to evade payment of tax on the part of the appellant - penalty set aside - appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (11) TMI 831
CENVAT/MODVAT credit - imported raw material - duty paying documents - the case of the assessee was that, they did produce the original triplicate copy of the Bill of Entry, at the time of paying the duty and only thereafter, it was lost during transit as the assessee company is having its factory at Cuddalore and head office at Chennai - whether the production of attested / certified photocopy of the triplicate Bill of Entry can be treated as a valid document for the purpose of allowing the MODVAT credit to the assessee? Held that: - the goods imported were received in the factory of production and the same were covered by the requisite documents including the triplicate Bill of Entry which was lost subsequently and in lieu thereof, the assessee had produced duly attested / certified photocopy of the triplicate Bill of Entry. The facts as well as the finding given by the Division Bench of the Allahabad High Court in the case of Commissioner of Customs And Central Excise Versus M/s. Matsushita Television And Audio India Ltd. [2015 (8) TMI 1057 - ALLAHABAD HIGH COURT] would be squarely applicable to the present case, where it was held that it is undisputed that the inputs were received in the factory under the cover of a triplicate copy of the bill of entry which was subsequently misplaced, and the credit was allowed. Even after the amendment made to Rule 57G by insertion of Rule 11 by N/N. 7/99 dated 09.2.1999, the filing of documents is only procedure for availing MODVAT credit and therefore, the substantive right of the assessee would in no way get affected - The aspects mentioned in Rule 57G, especially in the context of filing documents to claim MODVAT credit is procedural and if at all there is any lacuna on the part of the assessee in complying with these procedural requirements of filing documents that would not affect the substantive right of the assessee to claim MODVAT credit. The impugned order of the first respondent / Tribunal is set aside and the questions of law framed in this appeal are answered in favour of the assessee and against the Revenue.
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2017 (11) TMI 830
Manufacture - According to the department, the input i.e. Partially Oriented Yarn (POY) and the final product i.e. yarn were two distinct products having different names, characteristics and use and therefore, the process amounted to a manufacturing activity - Held that: - The Supreme Court has however entertained the department's appeal to the limited extent of deciding whether circular issued by CBEC providing that the proceedings be kept in call book is in conformity with the provisions of section 37B of the Central Excise Act. It can thus be seen that the judgment of the High Court rendered in identical facts is not disturbed by the Supreme Court insofar as its main impact on quashing the show cause notice and the order-in-original is concerned. Even without going into the question whether the circular of CBEC was valid or not, the judgment of the Division Bench in case of Siddhi Vinayak would apply in the present cases. In all cases, the department had issued SCN sometime in the year 2000. These proceedings were kept in call book without intimating the noticees. Without service of any further notices on the petitioners, the order-in-original came to be passed by the adjudicating authority - petition allowed - decided in favor of appellant.
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2017 (11) TMI 829
Maintainability of appeal - pre-deposit - appeal was dismissed on the ground that the amount equivalent to 7.5% of the duty or penalty as per Section 35F of the said Act was not deposited by the appellant - Held that: - Under unamended Section, the requirement was of deposit of the entire duty or penalty demanded. There was a discretion vested in the Appellate Authority to waive the said deposit. The amended Section 35F provides that only 7 ½ % of the duty or penalty in dispute will have to be paid as a condition for entertaining an appeal. The view taken by the Division Bench in the case of Nimbus Communication [2016 (8) TMI 451 - BOMBAY HIGH COURT] is based on consideration of several binding precedents. As far as this Bench is concerned, being a coordinate bench, we are respectfully bound by the said view. The appellant has neither demonstrated that the said decision is per curiam nor has satisfied this Court that the decision requires reconsideration by a larger bench. We concur with the view taken by the Division Bench in the case of Nimbus Communication - no substantial question of law arises. Appeal dismissed - decided against appellant.
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2017 (11) TMI 828
Admission of additional grounds - Tribunal procedure rules - without deciding the issue of admission of additional evidence, tribunal straight away decided the issue on merit - SSI Exemption - use of Brand name - The case of the Appellant was that while it was manufacturing membrane switches as per drawings and specifications given by its purchaser, the Appellant was printing the name of its customer on the membrane switches. The contention of the Appellant was that its customers themselves are manufacturers of electrical machines and equipments and the membrane switches are used by them for manufacture of electrical machines. The printing of the names of its customers did not amount to use of brand name or trade name as defined in explanation 9 in the said Notification 1 of 1993. Held that: - The purport of Rule 10 is that the Appellate Tribunal in deciding an Appeal, need not remain confined to the grounds set forth in Memorandum of Appeal. However, if the Tribunal wants to consider a ground which is not set forth in Memorandum of Appeal, it is a duty of the Tribunal to give sufficient opportunity to the parties to the Appeal of being heard on the said ground. If the Appellant wants to urge a ground, which is not taken in the Memorandum of Appeal, he is entitled to do so by seeking a leave of the Tribunal. While dealing with such an Application made for seeking leave under Rule 10 of the Procedure Rules, the Appellate Tribunal is required to apply its mind to a limited issue whether leave is required to be granted. However, while deciding the said Application, the Appellate Tribunal cannot decide the merits of the additional grounds sought to be urged. When such an Application is made for grant of leave, either a leave has to be granted or rejected. If leave is granted, at the time of final hearing of the Appeal, it is open to the Appellant to urge the ground in respect of which leave has been granted. In the present case, the Appellate Tribunal has purported to go into the merits of the additional grounds sought to be raised in the Application seeking grant of leave under Rule 10. The said course adopted by the Appellate Tribunal is completely erroneous and therefore, the order passed in the Application made by the Appellant for grant of leave is completely illegal - the error committed by the Appellate Tribunal is not merely a procedural error. The Appellate Tribunal has completely overlooked the object of proviso Rule 10 - matter placed on remand. Whether or not the Appellants i.e. M/s Kohinoor Elastics Private Limited are entitled to the benefit of the aforementioned Notification? - Held that: - The customer is getting the brand/trade name affixed because he wants the ultimate customer to know that there is a connection between the product and him. Of course the intention of the customer is not relevant for the purposes of this Notification. This is being mentioned only to indicate that interpretation sought to be placed by Mr. Sridharan would enable manufacturers, who are otherwise not eligible, to get manufactured from small scale industries like the Appellants their “goods” or some inputs, affix their brand/trade name and still avail of exemption. When the wording of the Notification are clear and unambiguous, they must be given effect to. By a strained reasoning benefit cannot be given when it is clearly not available. Appeal allowed in part and part matter on remand.
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2017 (11) TMI 827
CENVAT credit - input services - input service distributor - Held that: - there is nothing wrong in distributing the credit through ISD invoices; simply on the ground that the services have been received at the R & D Centre instead of factory - the courier service and housekeeping service have also been held to be input service - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 826
CENVAT credit - fake invoices - Held that: - There is no dispute about the fact that the payments for the inputs were made by the appellant by way of cheques. It is also not the Revenue s case that the consideration, which flows to M/s. M.K.Industries, stands received back by the appellant subsequently. As rightly observed by the Commissioner(Appeals), there is also no evidence indicating any alternative source of procurement of inputs in question. Admittedly the appellant s final product cannot be manufactured out of vacuum and requires inputs. If according to Revenue inputs were not received by the appellant, I really fail to understand as to how the appellant had manufactured their final product, which stand cleared on payment of duty. The Tribunal came to a finding that the assessee in fact had received the goods covered under the disputed invoices in as much as Revenue has not brought any tangible evidence to prove non-receipt of the goods by the respondent. The invoices issued by M/s.M.K.Steels, on the basis of which they have availed the credit were not valid documents for availing the credit. As such it seems that the said order was passed in the light of concession made by the appellant and has no relevance in the present case. Appeal dismissed - decided against Revenue.
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2017 (11) TMI 825
Clandestine Removal - appeal is on the sole ground that Gate Register and loose sheets showing the clinker consumption recovered from the factory are evidences to indicate that the assessee was indulging in clandestine removal - Held that: - Commissioner has rightly observed that the said two registers cannot be made the basis for arriving at adverse findings against the assessee. For establishing clandestine removal, positive evidence in the shape of procurement of raw materials, actual manufacture of the goods, clearances by transporter, identification of the customers and payment of consideration for such clandestinely removed goods, is required to be produced on record. In the absence of the same, the appellate authority has rightly concluded in favor of the assessee - appeal rejected - decided against Revenue.
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2017 (11) TMI 824
Valuation - compounded levy scheme - whether the appellant is required to pay interest for availing credit during the period 01.07.2008 to 31.08.2009, reversed on 31.08.2009, when they were governed under the provisions of Section 3A of Central Excise Act, 1944 and the Rules made thereunder? - time limitation - Held that: - the appellant during the relevant period required to discharge duty under Section 3A of Central Excise Act, 1944 and by the relevant provisions notified there under had been debarred from availing cenvat credit and the entire duty was required to be discharged through cash only. In these circumstances, the appellant's argument carries weight that while pursuing their Writ Petition before the Bombay High Court challenging the viries of the levy, recorded the receipt of inputs and availability of the amount of CENVAT credit of the duty paid on such inputs, in their books of accounts, so as to claim the same in the future, if the issue of viries decided in their favour. Thus, mere recording/taking such credit, in the present circumstances, cannot be equated to availing of credit for utilisation and be inferred that the appellant hadavailed the credit with an intention to utilize the same - appellant are required to pay interest for the period during which the credit was lying in their books of records - besides, during the relevant period they were debarred from utilising the credit in discharging their periodical liability under the compounded levy scheme. Thus, levy of interest is neither attracted nor recoverable under Rule 14 of the CCR, 2004. Time limitation - Held that: - the appellant had reversed the entire credit on 31.08.2009 and the demand was issued to them for recovery of interest on 28.09.2010, therefore, the same is barred by limitation, as there is no suppression of fact, nor misdeclaration in the recording the credit in the books of accounts. Appeal allowed - decided in favor of appellant.
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2017 (11) TMI 823
Refund claim - price variation clause - rejection on the ground that transaction value adopted at the time and place of removal cannot be reduced at a later date for any reason and also that the assessments are not provisional - Held that: - the Punjab & Haryana High Court in the case of Mauria Udyog Ltd. Vs. CCE [2006 (8) TMI 49 - PUNJAB & HARYANA HIGH COURT] has held that when the goods are cleared not on provisional basis, then subsequently reduction of price could not be made foundation for seeking refund u/s 11B of the CEA - refund rightly rejected - appeal dismissed - decided against appellant.
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2017 (11) TMI 822
CENVAT credit - Rule 16 of Central Excise Rules 2004 - Held that: - there is no dispute as to the fact that appellant had cleared their final products for the first time on discharge of appropriate duty; the purchasers of the said of the final products returned the same back to the appellant under cover of duty paying documents from their end which indicated discharge of duty liability; on receipt of said returned finished goods, appellant availed Cenvat Credit under Rule 16 of CER, 2002, and after remaking/re-fining/recondition t said final product were entered in RG-1 register, and cleared for home consumption of payment of appropriate duty - On perusal of the records, it is noticed that from page 74-103. appellant has annexed copies extracts of register maintained by them in respect of the finished goods received back and action taken on the same and subsequent clearance on payment of appropriate CES TAT Excise duty. The perusal of the said copies indicates clearly the quantum of receipt of finished goods and quantum of dispatched goods after recondition/refining. There is no dispute as to fact that the appellant had cleared the finished goods for home consumption on payment of appropriate duty as also receipt of the finished goods from appellant's purchasers - the provision of rules 16 of the CCR, 2002 have been fully complied with by appellant. Appeal allowed - decided in favor of appellant.
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2017 (11) TMI 821
Clandestine Removal - bogus invoices - invoices bearing identical serial numbers - Held that: - the records unearthed by the department clearly bring out clandestine production and clearance of finished goods. From the records it is also clear that the log book maintained by the said Shivachandra Kumar indicated both accounted scrap denoted as M and unaccounted scrap denoted as E . This finding has not been controverted by M/s. AKS. This being so, the contentions of the ld. counsel that there is no proof that unaccounted scrap was utilized will not succeed - the penalties imposed under section 11AC on M/s. AKS and on the kingpin of the entire modus operandi N.K. Kothari is also sustained. Penalty on N.C. Kothari, Managing Director - Held that: - there is nothing on record to suggest that the said person was involved in the day to day affairs of the unit on account of ill-health and further that no other employee or other persons have implicated otherwise. For this reason, the adjudicating Commissioner, in our view, has correctly found that Shri N.C. Kothari is not liable for penalty under Rule 26 ibid. In respect of penalties on other persons, there is a clear finding by the adjudicating authority that these persons acted only on the directions of their employers, they are all only paid employees having no pecuniary or other benefit from the activities - penalty set aside. Appeal allowed in part.
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2017 (11) TMI 820
CENVAT credit - applicability of Rule 6(3)(b) of Cenvat Credit Rules 2004 - amendment to Rule 6(6) of the CCR 2004 by N/N. 50/2008 CE dated 31.12.2008 - retrospective effect or prospective effect? - Held that: - reliance placed in the case of CCE Vs. Fosroc Chemicals (India) Pvt. Ltd. [2014 (9) TMI 633 - KARNATAKA HIGH COURT], where it was held that amendment has to be construed as retrospective in nature and the benefit of Rule 6(6)(1) as amended in 2008 has to be extended to the goods cleared to a "developer" of a Special Economic Zone for their authorized operations - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 819
CENVAT credit - N/N. 4/2006-CE dt. 01/03/2006 (as amended) - respondents had not reversed / repaid the CENVAT credit attributable to the inputs held in stock and input contained in semi/finished goods on the date of the availment of exemption - Held that: - Karnataka High Court in the case of TAFE Ltd. [2006 (11) TMI 48 - CESTAT, BANGALORE] has categorically held that the appellant is not required to reverse the CENVAT credit taken on inputs lying in stock and contained in work in progress and finished goods as on the date of exemption - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 818
100% EOU - CENVAT credit - ‘commission agreement’ for the services of sales promotion and marketing of the products in abroad - reverse charge mechanism - Held that: - from the reading of the marketing representation agreement between the respondent and the upcountry entity, clearly spells out the responsibilities of the upcountry entity which includes assisting the respondent in various activities and manage regarding marketing and sales objectives to be achieved. This would mean that the upcountry entity has to also do the promotional activities in respect of the goods manufactured and exported by the respondent. The first appellate authority has correctly recorded the factual matrix in the matter and held that CENVAT credit is available to respondent herein of the service tax paid under reverse charge mechanism. Appeal dismissed - decided against Revenue.
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2017 (11) TMI 817
Refund of interest paid - Department’s case is that the appellant was liable to reverse CENVAT credit as on 31/03/2015. However, it reversed the credit only on 29/07/2015 - appellant case is that they had sufficient balance in the CENVAT credit account and they have not utilised the CENVAT credit and therefore in view of the provisions of Rule 14(1)(i), appellants are not liable to pay interest and the interest paid by them is liable to be returned to them - Held that: - On perusal of Rule 1491)(i) and Rule 14(1)(ii), it is clear that when the CENVAT credit has been wrongly availed but not utilised, interest cannot be recovered. The appellant had sufficient balance in the CENVAT credit account and they have not utilised the CENVAT credit and therefore in view of the provisions of Rule 14(1)(i), appellants are not liable to pay interest and the interest paid by them is liable to be returned to them. Appeal allowed - decided in favor of appellant.
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2017 (11) TMI 816
CENVAT credit - duty paying documents - credit availed on the strength of photocopy of delivery challan (sales return) - Held that: - the goods were sent for testing as per the letter dt. 17/07/2010 issued by M/s. Unichem and after testing the goods were sent fact to the appellant and since the goods were sent for testing, no reversal was required as per the provisions of Rule 4(5)(a) and moreover the goods were received back within 180 days and therefore the contravention of provisions of Rule 11 of the CCR, 2002 does not arise - the CENVAT credit has been denied on mere procedural irregularities, which is not sustainable - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 815
Clandestine removal - Cotton Yarn - it appeared that the appellants were engaged in the purchase of cotton which were not properly accounted and the same were manufactured as cotton yarn and removed clandestinely in the guise of hank yarn as against cheese yarn without payment of appropriate duty - Held that: - The fact that M/s. SPRT could have purchased the alleged cotton yarn from any other parties cannot be ruled out. The income expenditure statement maintained by the broker Shri ThiruThirumoorthy is his personal accounts of income expenditure and this cannot be an authentic document so as to form the basis of demand of duty alleging clandestine removal against the appellant. Thus, the major part of the remaining evidence in this case is the statement obtained from various persons. In cross-examination, Shri Thirumoorthy has stated that he purchased hank yarn as well as cheese yarn from appellants. The ld. Counsel has strongly argued that the statements cannot be taken as evidence unless they are tested by way of examination of the persons as provided under section 9D of Central Excise Act - In the absence of examination of witnesses and their cross-examination, the statements are inadmissible in evidence and the demand of duty based on such statements alone, in our view, is unsustainable. The allegation of clandestine clearance of goods being a serious one, though not proved to mathematical precision has to be established at least to the extent of balance of probabilities. In the present case, the department has raised the demand on the basis of documents which are mainly third party documents and only on statements of various persons. Therefore, in our view, on the totality of facts and evidence presented, we find that the department has failed to establish the allegation of clandestine clearance as alleged by them in the show cause notice. In such circumstance, the demand raised is unsustainable and requires to be set aside. Appeal allowed - decided in favor of appellant.
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2017 (11) TMI 814
Refund of excise duty paid - refund claimed on the ground that they are eligible for refund since they had intimated the department about shifting of their premises and that the stock shifted from Bangalore had been duly accounted in their books of accounts - Section 11B of CEA, 1944 - Held that: - the appellant vide their letter dt. 18/12/2008 have intimated to the respondent that they are shifting the goods from their Unit-I to their Unit-II and they have also submitted a list of goods to be shifted and also sought the permission under Rule 10 of the CCR for availing the CENVAT credit of the duty paid on raw material, semi finished goods and packing material from Unit-I to Unit-II - there is no requirement that a written permission must be obtained from the Assistant Commissioner of Central Excise to take credit of duty when the whole unit is merged with the other unit of the same factory. The appellant can take the credit of the said amount instead of seeking refund - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 813
CENVAT credit - input service - courier service received for the purpose of transporting of the final product ‘Electronic Weighing Machine’ from the factory to the customer’s premises during the relevant periods - Held that: - it has been consistently held in various decisions that if the place of removal is customers’ premises, then the assessee will be entitled to take CENVAT credit on GTA services - To verify whether the goods are valued under Section 4A and all the sales are on FOR basis, these cases need to be remanded to the original authority - appeal allowed by way of remand.
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2017 (11) TMI 812
Classification of manufactured goods - job-work - respondents were of the view that their finished products fell under chapter 49, wherein the goods are not dutiable - Held that: - In the instant case, the subject receipts are nothing but the printed separate sheets, running in length, used by specific customer (Sahara) for a specified purpose - the very basis of the show-cause-notice that the finished products manufactured by the respondents are classifiable under Chapter 48 no longer exists - the order of the Ld. Commissioner (Appeals) impugned herein is correct and requires no interference - appeal dismissed - decided against Revenue.
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Wealth tax
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2017 (11) TMI 811
Inclusion of cash on hand of the proprietor business of the assessee to the net wealth of the assessee - Held that:- Cash in hand referred to in Section 2(ea)(vi) of the Act represents only the personal cash of the assessee emanating from his personal balance sheet. It nowhere contemplated the inclusion of cash which is held as business asset. If it is so held, then the purpose of valuation method prescribed in Schedule III Rule 14 of the Rule would become redundant. Admittedly, the cash in hand of ₹ 48,81,761/- represents the cash belonging to the business of the assessee and thereby partakes the character of a business asset. In view of all, we have no hesitation in directing the Ld. AO to delete the addition made in the sum of ₹ 48,81,761/- from the value of net wealth representing business cash. Accordingly, the grounds 1 to 4 raised by the assessee are allowed.
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