TMI Tax Updates - e-Newsletter
November 18, 2015

Case Laws in this Newsletter:

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

Articles

1. PROPOSED REFUND PROCESS UNDER GST – HAPPINESS ON THE WAY TO EXPORTERS

   By: Pradeep Jain

2. Customs Department does not need to go deep into matter and by hair-splitting and semantic niceties deny benefit of Exemption Notification

   By: Bimal jain

3. Principal manufacturer eligible to take credit of duty so paid by job-worker

   By: Bimal jain

News

1. RBI Reference Rate for US $

2. India’s Foreign Trade (Merchandise): October, 2015

3. Government notifies revised all industry rates of Duty Drawback and other Duty Drawback related changes effective from 23rd November, 2015

Notifications

Customs

1. 110/2015 - dated 16-11-2015 - Cus (NT)

Notifying All Industry Rates (AIR) of Duty Drawback w.e.f. 23.11.2015

2. 109/2015 - dated 16-11-2015 - Cus (NT)

Making amendment to The Customs, Central Excise Duties and Service Tax Drawback Rules 1995

VAT - Delhi

3. No. F.3(21)/Fin(Rev-I)/2015-2016/dsvi/907 - dated 12-11-2015 - DVAT

Delhi Value Added Tax (Amendment) Rules, 2015

4. No. F.3(20)/Fin(Rev-I)/2015-2016/dsvi/906 - dated 12-11-2015 - DVAT

Amendments in Delhi Value Added Tax, 2005

Circulars / Instructions / Orders

VAT - Delhi

1. 29/2015-16 - dated 16-11-2015

Filing of online return for second quarter of 2015-16 - extension of period thereof

Service Tax

2. 188/7/2015 - dated 16-11-2015

Accounting code for payment of Swachh Bharat Cess

Customs

3. 29/2015 - dated 16-11-2015

All Industry Rates of Duty Drawback and other Duty Drawback related changes

Highlights / Catch Notes

Income Tax

• Interest Rate on Loan to Associated Enterprise Deemed Arm's Length at LIBOR + 2%; No Adjustment Needed.

  Case-Laws - AT : Transfer Pricing Adjustment on account of interest on loans advanced to Associate Enterprise - interest rate charged by the assessee on the loan given should be benchmarked with LIBOR +2% as Arm’s Length and, therefore, no adjustment is called for. - AT
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• Tax Deduction Denied: Section 80P(2)(a)(iv) Doesn't Apply to Non-Agricultural Water Use Income.

  Case-Laws - AT : Deduction u/s.80P(2)(a)(iv) on income from operation of water treatment plant - the water was not exclusively intended for agricultural use - claim of the assessee was rightly denied - AT
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• Court Emphasizes Discretion in Imposing Penalties for Minor Breaches u/s 271B of Income Tax Act.

  Case-Laws - AT : Penalty u/s. 271B - failure to furnish the audit accounts u/s. 44AB - when there is a technical or venial breach of the provisions of law, the ends of justice requires that discretion should not be exercised in favour of punishing a minor default - AT
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• Unexplained Cash Credits u/s 68: Assessee Fails to Prove Legitimate Gift from Unrelated Donor, Raising Legitimacy Concerns.

  Case-Laws - AT : Unexplained cash credits u/s. 68 - the donor in question is not in any way related to the assessee. And also there is no corresponding channel in the gift instrument linking assessee’s amount credit to that of donor’s account - assessee has failed to prove the execution of a valid gift in question - AT
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• Excess Gold Found at Assessee's Premises; Delivery Must Include Documentation to Avoid Authority Inquiries.

  Case-Laws - AT : Addition on excess stock found at the premises of the assessee during the course of survey - while delivering gold at the premises of the assessee, something written on paper must have accompanied, because that would insulate the carrier from any inquiry on the way, if caught by any agency - AT
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Service Tax

• CENVAT Credit for Outdoor Catering Services Excluded Post-April 1, 2011; Pre-Date Services Still Eligible per Sub-Rule 4(7).

  Case-Laws - AT : CENVAT Credit – Outdoor catering service – Definition of Input service excluded these services from 1.04.2011 – Service which have been received by assessee before 1-4-2011, credit would be available even if the payment of the said appeal stand on or after 2011 as per sub-rule 4(7) - AT
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Central Excise

• CENVAT Credit Approved for Cement Plant Construction Inputs: OPC Cement, MS Materials, TMT and TOR Rods Qualify.

  Case-Laws - AT : Availment of cenvat credit - inputs such as OPC cement, MS plates, MS beam, MS Angle, MS channels, MS sheets, M.S. Flat, TMT Rod and TOR Rod which are used for the construction of their "Dry Process Cement Manufacturing Plant" - credit allowed - AT
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• Debate on CENVAT Credit Eligibility for School and ST/SC Colony Construction Under Central Excise Law's "Input Services" Definition.

  Case-Laws - AT : CENVAT credit - Construction of primary school as also ST/SC colony -The definition of input services cannot be stretched to such an extent that it is becomes practically illogical. If such an extended meaning is given to the said definition so as to include all the activities of the appellants, whether or not relatable to his business, the definition would lose its meaning, intended to be given by the legislation - AT
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• Court Allows Refund for Denied CENVAT Credit; Rebates Unrelated to Input Goods Deemed Unlawful.

  Case-Laws - AT : Refund claim - Denial of unutilized CENVAT Credit - since the rebate claim has been sanctioned in respect of export of excisable goods, which is not in relation to rebate on input goods denial of refund of input stage duty is not regally sustainable - AT
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• EOU-to-EOU clearances are deemed exports, qualify for Cenvat Credit refund u/r 5, Cenvat Credit Rules, 2004.

  Case-Laws - AT : Refund - the clearances made by one 100% EOU to another 100% EOU which are deemed exports are to be treated as physical exports for the purpose of entitling refund of unutilized Cenvat Credit contemplated under the provisions of Rule 5 of the Cenvat Credit Rules, 2004 - AT
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• Deposits during investigations not treated as excise duty; Section 11B refund provisions don't apply to these deposits.

  Case-Laws - AT : Refund - Bar of limitation - amount not paid towards excise duty but only by way of deposit during investigation should not be considered as payment of duty; and as such, the provisions of section 11B of the Central Excise Act will have no application for refunding such amount - AT
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Case Laws:

• Income Tax

• 2015 (11) TMI 753
  Penalty under section 271(1)(c) - addition on account of ingenuine share application received - Held that:- We find that in the instant case, the Assessing Officer levied penalty under section 271(1)(c) of the Act for concealment of income / submission of inaccurate particulars of income on the amount of addition of Rs. 90 Lac claimed to have been received as share application by the assessee. The addition made was confirmed by the Tribunal in appeal filed before it by the assessee. We find that the Hon'ble Bombay High Court in the case of Shree Nirmal Commercial Ltd. (2008 (8) TMI 158 - BOMBAY HIGH COURT) has held that no penalty under section 271(1)(c) of the Act can be levied where the income is assessed under section 68 of the Income Tax Act, 1961. Also in the case of M/s. Manjunatha Cotton and Ginning Factor, Ballary (2013 (7) TMI 620 - KARNATAKA HIGH COURT ) has held that if the explanation offered by the assessee, even though not substantiated, but is found to be bonafide and all facts relating to the same and material to the computation of his total income has been disclosed by him, no penalty could be imposed. - Decided in favour of assessee.

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• 2015 (11) TMI 752
  Interest u/s. 244A - whether interest arising out of order giving effect by the Assessing Officer is consequential, therefore, it is not an appealable order? - Held that:- The order resulting in payment of interest u/s 244A of the Act is appealable. We are of the considered view that the Commissioner of Income Tax (Appeals) has erred in not adjudicating the appeal of the assessee on merits. We deem it appropriate to remit the file back to the Commissioner of Income Tax (Appeals) with a direction to decide the issues raised by the assessee in first appeal on merits, in accordance with law. See CIT Vs. Biswanath Pasari [2015 (2) TMI 812 - CALCUTTA HIGH COURT] - Decided in favour of assessee for statistical purpose.

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• 2015 (11) TMI 751
  Addition u/s 41(1) - CIT(A) deleted the addition - Held that:- the assessee was simply acting on behalf of its customers/clients and Government and getting consultancy fee from the client on account of services rendered. The sundry creditors as appearing in its books are actually on account of clients and not of the assessee. In such circumstances, the provisions of section 41(1) cannot be applied. It is further a matter of record that the assessee furnished details about the disputes going on between the two sides for which the payments were not made. The Executive Director of the assessee in his certificate has confirmed that all the outstanding sundry creditors treated as cessation of liability by the Assessing Officer continue to be part of the assessee's outstanding as per records. The ld. CIT(A) after entertaining the Assessing Officer's report on additional evidence, in our considered opinion, was right in deleting the addition. - Decided against revenue. Disallowance on account of decrease in income due to change in method of accounting relating to consultancy fees - CIT(A) deleted the disallowance - Held that:- With the changed method of depicting consultancy fee, the assessee started recognizing income on the basis of work/stage completed as scheduled in agreement with clients as against the earlier policy of recognizing income on work done even in respect of incomplete stages. This change in the method has resulted in the understatement of income for the current year to the extent of Rs. 1.35 crore. This change was necessitated because of advice given by the statutory auditors. This advice was given by the auditors on the reason that in past same fees was taken as income, but, had to be reversed in the subsequent years. It is not the case of the Revenue that this revised practice of recognizing income has not been consistently followed by the assessee in future. In our considered opinion, the ld. CIT(A) was justified in deleting the addition made by the Assessing Officer on the basis of this better way of recognizing the income. - Decided against revenue. Depreciation @ 60% on computer peripherals like UPS, printers, etc. - Held that:- This issue is no more res integra in view of the judgment of the Hon'ble jurisdictional High Court in CIT vs. BSES Yamuna Powers Ltd., [2010 (8) TMI 58 - DELHI HIGH COURT] deciding the issue in the assessee's favour entitling assessee to depreciation at the higher rate of 60%.- Decided against revenue.

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• 2015 (11) TMI 750
  Disallowance of depreciation and additional depreciation on rough forged rolls - CIT(A) allowed the claim - Held that:- We reiterate that the Assessing Officer had invoked the impugned disallowance for the reason that the assessee had not be able to prove the necessary details of rolls in question being purchase followed by their installation in put to use condition before 31.03.2007. This resulted in disallowance of depreciation and additional depreciation in question. The CIT(A) discusses that relevant document of transportation, delivery and put to use condition before 31.03.2007 are already on record. The assessee has also filed a compilation of all these documents before us. The Revenue fails to controvert the same by taking us to any of the relevant material. We uphold the CIT(A)'s finding under challenge accordingly. - Decided in favour of assessee.

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• 2015 (11) TMI 749
  Disallowance of deduction u/s 10B - whether failure to obtain approval from Board despite fulfilling all the conditions makes the appellant ineligible to claim deduction u/s 10B? - Held that:- Approval by Software Technology Parks of India comes under the Ministry of Communication & Information Technology & is a competent authority to grant approval to such units for claiming benefits u/s 10B as 100% Export Oriented Undertaking and the same is possessed by assessee and also looking to the facts of the case of assessee wherein assessee has been allowed deductions u/s 10B in Asst. Years 2007-08, 2010-11 & 2011-12 consistently, we are of the considered view that the assessee’s claim of deduction under section 10B is justified and accordingly the order of CIT(A) is quashed and the appeal of assessee is allowed. - Decided in favour of assessee.

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• 2015 (11) TMI 748
  Eligibility of deduction u/s 80-IB(8A) - revision u/s 263 - Held that:- Once the Department of Scientific and Industrial Research which is an expert body exercises power to grant approval for the purpose of the impugned deduction under section 80-IB(8A) read with rules 18D and 18DA of the Income-tax Rules, the Revenue cannot decline the deduction claims arising thereunder on one pretext or the other by simply brushing aside the approvals obtained. More so, when the Revenue's seeking to get the approval cancelled from the Department of Scientific and Industrial Research stands declined. We hold the assessee entitled for section 80- IB(8A) deduction accordingly on merits in both the assessment years. The Commissioner of Income-tax's order dated March 29, 2014 in the assessment year 2008-09 passed under section 263 of the Act stands reversed on merits rendering the assessee's other arguments as to have been rendered infructuous. The Revenue's sole substantive ground in its appeal challenging the Commissioner of Income-tax (Appeals)'s order granting the assessee impugned section 80-IB(8A) deduction fails accordingly. - Decided in favour of assessee.

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• 2015 (11) TMI 747
  Disallowance of part of interest expenditure on the ground that the assessee has diverted interest bearing funds to its subsidiary companies - Held that:- As the sources of funds that were given to each of the subsidiary companies during the relevant years under consideration requires to be examined in order to find out about the diversion of interest bearing funds. Hence, in our view, this issue requires fresh examination at the end by the Assessing Officer Disallowance of licence fee paid - Held that:- This issue is covered by the decision of the co- ordinate Benches rendered in the assessee's own case in the earlier years [2012 (9) TMI 510 - ITAT, COCHIN] wherein the co-ordinate Bench of the Tribunal has examined this payment and has taken the view that this expenditure is allowable and it was so held by the Tribunal in more than one year. Hence, we are inclined to follow the view consistently taken by the Tribunal. - Decided in favour of assessee. Disallowance of employees' provident fund, labour welfare fund and employees' State insurance on account of delayed remittance, i.e., beyond the date prescribed in the respective enactments - Held that:- Assessing Officer has not given the details of date of payment of the employees' provident fund/employees' State Insurance, etc., in the assessment order. The learned Commissioner of Income-tax (Appeals) has also not examined the same.Since the details of dates of payment are not available on record, we are of the view that this issue requires fresh examination in all the years. If the payments have been made before the due date prescribed under section 139(1) of the Act for filing return of income, no disallowance is required to be made. Otherwise, the disallowance should be made in respect of the amounts paid after the due date prescribed under section 139(1) of the Act. Accordingly, we set aside the order of the learned Commissioner of Income-tax (Appeals) on this issue in all the years referred to above and direct the Assessing Officer to examine the same Addition of the amount realised on sale of old and unyielding rubber trees - applicability of rule 7A of the Income-tax Rules - CIT(A) deleted the addition - Held that:- Commissioner of Income-tax (Appeals) has taken the view with regard to the application of rule 7A, which is identical with the view expressed by us in the earlier paragraph, i.e., it applies only to a person who carries on the combined activity of growing rubber trees and also manufacturing or processing of field latex or coagulum obtained from rubber plants. The dominant purpose of growing rubber trees is to obtain liquid latex from them. The rubber trees are not used as it is for the purpose of manufacturing or processing, but only the latex obtained from them. Hence, the sale value of old rubber trees cannot be considered as salvage value obtained from the exhausted stock. Since the rubber trees continue to be the capital asset. Accordingly, the examples of sale of old gunny bags or old bottles quoted by the Assessing Officer are not applicable to the case of rubber trees. Hence, the decision of the Supreme Court in the case of Kalpetta Estates Ltd. v. CIT [1996 (7) TMI 4 - SUPREME Court] in holding that the rubber trees constitute capital assets shall hold good even after the introduction of rule 7A in the Income-tax Rules. In view of the above, we agree with the views expressed by learned Commissioner of Income-tax (Appeals) on this issue. Assessment of sale of Grevillea trees under the head "capital gains tax" - Held that:- This issue has also been decided in favour of the assessee by the learned Commissioner of Income-tax (Appeals) by following the decision rendered by the Tribunal in the assessee's own case in the assessment year 2006-07 as noticed that the Assessing Officer was taking consistent stand in the earlier years that no capital gain or capital loss can be computed on sale of Grevelia trees, as the cost of acquisition could not be ascertained in a reason able manner. Provision of gratuity cannot be added for computing book profit under section 115JA/JB of the Act. Provision for doubtful debts/advances - Held that:- As Commissioner of Income-tax (Appeals) has deleted this disallowance without discussing anything about the same we restore this issue to the file of the Commissioner of Income-tax (Appeals) with the direction to examine the issue afresh in accordance with law and after affording reasonable opportunity of being heard to the assessee.

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• 2015 (11) TMI 746
  Addition U/s 69 - unexplained investment - CIT(A) deleted the addition - Held that:- The assessee has explained the process of supply the goods through contract to VVNL. The assessee first awarded the contract by the VVNL. Thereafter he supplied the goods which is tested in the laboratory by the engineers, thereafter approved by it. In the present case, the assessee procured the material to be supplied to the electricity company from M/s Galaxy Concab (I) Pvt. Ltd.. The material was inspected on 11/4/2008, which was tested in the laboratory on 17/4/2008. Once the material was passed by the competent authority, the assessee was communicated, accordingly he raised the bill on electricity company for supply of cable. The supplier directly sent the cable to the electricity company through challans with all bills at vehicle, actual quantity. After the entire quantity was supplied, thereafter, issued a delivery challan, which was certified by the stock keeper of the electricity company. The Ld. DR has not controverted the finding given by the ld CIT(A), therefore, we uphold the order of the ld. CIT(A). - Decided against revenue. Addition U/s 40(a)(ia) - payment of interest to Non-banking Finance Company (In short NBFC) without deducting TDS - CIT(A) deleted the addition - Held that:- On issue of amount already paid during the year or amount shown payable as on 31st March of every year, the various courts have different views i.e. in favour of the assessee and against the assessee. The Hon'ble Supreme Court in the case of CIT Vs. Vegetable Products Ltd. (1973 (1) TMI 1 - SUPREME Court) has held that when there are to views on an issue, the view in favour of the assessee has to be preferred. Therefore, we confirm the order of the Ld. CIT(A). Further the recipient are NBFC, therefore, not possible to not be assessed to tax, these payments were related for A.Y. 2009-10 and return for A.Y. 2009-10 already might have been filed by these NBFC by including these interests receipts as their income. Therefore, we do not find any reason to interfere in the order of the Ld. CIT(A).- Decided against revenue.

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• 2015 (11) TMI 745
  Computation of capital gain - whether transfer was complete during the financial year 2004-05 and not in the impugned assessment year, therefore, no capital gain was accrued in the impugned assessment year? - CIT(A) deleted the addition - Held that:- Assessee has placed ample evidence on record to establish that the sale agreement was executed on January 27, 2005 and the sale consideration was paid on two occasions - one is on January 10, 2005 and the other is on March 31, 2005. The possession was also handed over to the buyer. The sale agreement is a registered document. Commissioner of Income-tax (Appeals) has examined this issue in the light of the provisions of section 2(47)(v) and 2(47)(vi) of the Act and 53A of the Transfer Property Act. Before taking a view in this regard, the learned Commissioner of Income-tax (Appeals) has also called a remand report which was also confronted to the assessee and comments were also obtained from the assessee. Having taken into account all these facts, the learned Commissioner of Income-tax (Appeals) has taken a view that the capital gain does not arise in the impugned assessment year, as it arise in the financial year 2004-05 relevant to the assessment year 2005-06 and the Assessing Officer may consider computation of capital gains in that assessment year. Since it has been established that the transfer took place as per the provisions of section 2(47)(vi) of the Act, no capital gain can be computed in the impugned assessment year. We, therefore, find no infirmity in the order of the learned Commissioner of Income-tax (Appeals) and we confirm the same. - Decided against revenue

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• 2015 (11) TMI 744
  TDS Sec.194C - disallowance u/s .40(a)(ia) - assessee has deducted the tax on payments made to sub-contractors but the same were paid belatedly in later years - Held that:- In this case, assessee has placed on record evidence that constituents has filed the returns of income and claimed TDS, whatever is deducted by the assessee which was also duly allowed. In view of this, there is no dispute that constituents have accounted for the incomes and also paid taxes accordingly. We are of the opinion that the provisions of amendment brought in Finance Act, 2012 are to be considered as clarificatory and as assessee has deducted tax and also paid though belatedly, we are of the opinion that provisions of section 40(a)(ia) can be liberally interpreted so as to exclude the amounts from the purview of the above section. A.O. is directed to allow the expenditure as claimed. See Deputy Commissioner of Income-tax, Circle 1, Udupi Versus Ananda Marakala [2014 (12) TMI 613 - ITAT BANGALORE] - Decided in favour of assessee.

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• 2015 (11) TMI 743
  Applicability of proviso to section 2(15) - income earned by the assessee trust from of sale/distribution of books, cassettes and CDs - exemption u/s 11 denied - Held that:- Since the assessee is engaged in imparting education, in that case if the books, cassettes etc. have been distributed as integral part of that activity, to attain the main object and without any profit motive, in that case it cannot be said that this activity has been carried out in the nature of trade, commerce or business, and accordingly, first proviso to section 2(15) shall not be applicable and the exemption granted to the assessee trust cannot be withdrawn on that reason alone. Assessee was engaged in the activity of imparting education, since there was no need to give restricted meaning to scope of meaning of the term ‘educational’; and that distribution of books and CDs even by way of ‘sale’ or otherwise, in pursuit of the aforesaid object cannot be said to be an activity in the nature of trade, commerce or business, especially in the absence of any profit motive. In view of these facts and circumstances, the Assessing Officer was not correct in denying the benefit of exemption. Ld. CIT(A) has rightly reversed the order and was justified in granting the benefit of exemption to the assessee trust - Decided in favour of assessee.

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• 2015 (11) TMI 742
  Penalty u/s 271(1)(c) - suppression of sales, sale of stores and spares and repairs and maintenance - Held that:- The Assessing Officer himself observes in assessment order that the assessee-company carried out negligible production and sold its stock of goods available at the beginning of the year. He further discusses the fact that it has sold out its plant and machinery with same movable/immovable assets. This gives credence to assessee’s plea of having entered into distress sale. Both the authorities below have proceeded on different criteria for making the first addition of suppression of sales. The other disallowance/additions of loss arising from sale stores/spares and repair and maintenance have been made due to unverifiable cash vouchers and supportive evidence; respectively. There is no dispute about the trite proposition of law that quantum and penalty proceedings are on separate footing and each and every disallowance/addition does not necessarily resulting in imposition section 271(1)(c) penalty as held by hon’ble apex court in CIT vs. Reliance Petro-products (2010 (3) TMI 80 - SUPREME COURT). We follow the same reasoning and affirms the CIT(A)’s order in Revenue’s appeal and reverse the lower appellate order under challenge to the extent of penalties corresponding to the additions of loss on account of sale of stores and spares and repairs/maintenance - Decided in favour of assessee. Short term capital gain addition - Held that:- We have given our thoughtful consideration to the assessee’s argument that its computation of short term capital gains is an arithmetic mistake. It has come on record that assessee sold its fixed assets in question, adjusted sale consideration thereof against WDV of the concerned block resulting in surplus which was further adjusted against WDV of the other block of assets. Needless to say, this latter course of action is nowhere prescribed in the Act. Therefore, we observe that the same is much more than an arithmetical mistake being in the nature of raising altogether a false claim. - Decided against assessee. Disallowance u/s 40A(2)(b) - Held that:- CIT(A)’s deleting section 40A(2)(b) disallowance by holding assessee’s sale made to its associate concern as under invoiced to the above stated extent. It is held in the lower appellate order that this statutory provision applies to an expenditure claim and not that of an income as held in the case law of United Exports vs. CIT (2009 (8) TMI 60 - DELHI HIGH COURT ) and ACIT vs. Grand Prix Fab Pvt Ltd. (2009 (10) TMI 74 - ITAT DELHI-D ). The Revenue fails to controvert this legal proposition in the course of hearing. - Decided against revenue.

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• 2015 (11) TMI 741
  Transfer Pricing Adjustment on account of interest on loans advanced to Associate Enterprise - Held that:- On the loan given to its AE, the assessee has charged interest rate worked out on the basis of six months at LIBOR + 2%, which worked out at 3.75%. This Arm’s Length interest was benchmarked by using Internal CUP on the basis of rate of interest paid on loans by the assessee availed from State Bank of India. However, the TPO has arrived at ALP 14.736% by taking the interest rate based on average yield rate of DB rated points based on data collected from CRISIL. The DRP has reduced the said interest rate by holding that domestic cost of borrowing + mark-up of 3% should be applied which works out 9.90%. The applicability of interest rate based on LIBOR had come-up for consideration before the Tribunal in the case of the assessee in AY 2008-09 wherein, the Tribunal relying upon the decision of Everest Kento Cylinder Ltd. (2015 (5) TMI 395 - BOMBAY HIGH COURT) had directed the Assessing Officer /TPO to adopt LIBOR +2% as Arm’s lengths interest. Thus, following the earlier year’s precedence, we also hold that interest rate charged by the assessee on the loan given should be benchmarked with LIBOR +2% as Arm’s Length and, therefore, no adjustment is called for.- Decided in favour of assessee. Transfer Pricing Adjustment on account of Corporate Guarantee given by the assessee to the overseas bank in favour of its AE - Held that:- The Tribunal in AY 2008-09 has held that Arm’s Length Guarantee Commission should be benchmarked by taking the rate of 0.5%. hus, rate of 0.5% is wholly justified on the present case also. Disallowance u/s 14A - Held that:- As disallowance u/s 14A is restricted to the calculation part wherein the interest paid on loan taken for investment in foreign subsidiary has to be excluded. Based on that, the aggregate working of disallowance needs to be worked out. Accordingly, we direct the Assessing Officer to verify the calculation given by the assessee as incorporated to give consequential relief. - Decided partly in favour of assessee. Legal claim with regard to DRUPA Exhibition expenses - Held that:- In view of the facts narrated by the Ld. Counsel, we direct the Assessing Officer to allow 1/4th of the exhibition expenses in this year also consistent with the treatment given by the Assessing Officer in AY 2009-10 - Decided in favour of assessee.

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• 2015 (11) TMI 740
  Deduction u/s.80P(2)(a)(i) - interest earned on the FDs placed by it with banks - Held that:- The money meant for lending, remaining surplus, there being no takers, if deposited in banks for earning interest, such interest income would be attributable to the business of banking carried out by the assessee. Thus assessee was eligible for claiming deduction u/s.80P(2)(a)(i) of the Act, on the interest earned on the FDs placed by it with banks, this being a part of its business income. See Tumkur Merchants Souharda Credit Cooperative Ltd., v. ITO [2015 (2) TMI 995 - KARNATAKA HIGH COURT] - Decided in favour of assessee. Denied deduction u/s.80P(2)(a)(iv) on income from operation of water treatment plant - Held that:- What is exempted by virtue of Section 80P is income arising on account of purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to the members. Here admittedly there was no purchase. Further, the water was not exclusively intended for agricultural use. We are, therefore, of the opinion that claim of the assessee was rightly denied by the lower authorities. We do not find any ground to interfere with the orders of authorities below. - Decided in favour of revenue.

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• 2015 (11) TMI 739
  Deduction under section 80P(2)(a)(i) denied - Held that:- After considering the aims and objects of the assessee, it is held that the assessee is not a co-operative bank in terms of the Banking Regulation Act. The case law relied upon by the Commissioner of Income-tax (Appeals) are not squarely applicable on the case of the assessee. Therefore, we reverse the order of the learned Commissioner of Income-tax (Appeals). The assessee is entitled to deduction under section 80P(2)(a)(i) of the Income-tax Act. - Decided in favour of assessee.

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• 2015 (11) TMI 738
  Penalty under section 221(1)- Held that:- Liability of the assessee has increased and that credit rating of the assessee has reduced but there was a profit in the assessment year under appeal as well as in subsequent assessment year 2011-12. May be the profit has reduced but it is not a case that the assessee has not earned any profit. Therefore, considering the material on record, we do not find it to be a case of good and sufficient reasons for not paying the taxes as per law. Therefore, penalty shall have to be levied in the facts and circumstances. However, considering the financial position of the assessee has worsened and that the credit rating of the assessee has also reduced and ultimately when self- assessment tax was to be paid in subsequent assessment year 2011-12, there was a fall in the profit. Therefore, considering the explanation given by the assessee, we are of the view that the Assessing Officer was not justified in levying the penalty of 20 per cent. of the arrears of tax. Considering the totality of the facts and circumstances as noted above, we hold that 20 per cent. of the penalty of outstanding demand was excessive, unreasonable and therefore, we modify the orders of the authorities below and direct the Assessing Officer to restrict the penalty under section 221(1) of the Act by restricting the penalty at 7.5 per cent. of the outstanding self-assessment tax of Rs. 8.14 crores and the Assessing Officer shall rework the penalty amount accordingly. The orders of the authorities below levying the penalty at 20 per cent. is thus, set aside and modified to the extent of 7.5 per cent. - Decided partly in favour of assessee.

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• 2015 (11) TMI 737
  Eligibility for deduction u/s 10B - whether DEPB benefits are eligible for deduction under Section 10B? - Held that:- The export benefits of DEPB interest should be considered for the purposes of deduction under Section 10B of the Act. Therefore we direct the Assessing Officer to consider the export benefits for the purpose of deduction under Section 10B of the Act. See Principle Commissioner of Income Tax Vs. Universal Precision Screws [2015 (10) TMI 951 - DELHI HIGH COURT] and CIT Vs. XLNC Fashions [2015 (10) TMI 1086 - DELHI HIGH COURT] and CIT Vs. Hritnik Exports Pvt. Ltd. [2015 (10) TMI 1009 - DELHI HIGH COURT] held that the business profit should be considered for the purpose of deduction under Section 10B - Decided in favour of assessee. Addition on account of interest for the investments made on the subsidiary company of the respondent assessee company - Held that:- Aggregate share capital and free reserve was stood at Rs. 15,57,04,538/- . The aggregate share capital are more than the investments made in the subsidiary company and it should be presumed that the investments are made out of the interest free funds and therefore, this ground of appeal filed by the Revenue is also dismissed. See Munjal Sales Corporation Vs. Commissioner of Income Tax [2008 (2) TMI 19 - Supreme Court] - Decided in favour of assessee. Disallowance on the ground that the interest incurred till the date of assets put to use should be disallowed - Held that:- As the assessee company on its own made disallowance of Rs. 7,35,226/- in respect of the interest liability incurred for the acquisition of assets till the date the assets were put to use. This contention had not been dislodged by the Department Representative and no further disallowance is called for. This ground of appeal filed by the Revenue is dismissed.- Decided in favour of assessee. Disallowance under the provisions of Section 14A -contention of the respondent assessee that no expenditure was incurred to earn the dividend income - Held that:- The Assessing Officer without giving any reason as to how he is not satisfied with the correctness of the claim of the respondent assessee company had proceeded with the disallowance. The Hon’ble Delhi High Court in the case of Maxopp Investment Ltd. Vs. CIT [2011 (11) TMI 267 - Delhi High Court] held that no such disallowance was permissible without recording the reasons as to how the claim is incorrect. Therefore, the grounds of appeal filed by the Revenue are dismissed.- Decided in favour of assessee.

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• 2015 (11) TMI 736
  Excess interest paid by the assessee under section 40A(2)(a) - CIT (A) has allowed partial relief to the assessee whereby the interest has been restricted to 13.5% instead of 15% - Held that:- It is the consistent view of the Hon ble Supreme Court that the rule of consistency should be followed in respect of assessment proceedings though the principle of res judicata is not applicable. During the course of hearing, it was enquired by the Bench whether the assessee and the person who had given the loan both are assessed to Income-tax at maximum marginal rate or not. To this, it was replied by the assessee that both are taxed at maximum marginal rate. Therefore, it cannot be said that higher rate of interest is paid by the assessee to the lenders to evade income-tax In the present case the matter before the ld. CIT (A) was payment of interest for the A.Y. 2006-07 and also for A.Y. 2008-09. In both the matters, the interest was restricted by the AO to 12% whereas in the matter for A.Y. 2006-07, the CIT (A) has uphold the payment of interest @ 15%. In the assessment year under consideration before us, the ld. CIT (A) has restricted it to 13.5% despite the fact that in the earlier assessment year the payment of interest @ 15% has been upheld. We do not find any justification in the order passed by the ld. CIT (A). The reason given by the AO were also available with him when ld. CIT (A) has passed the assessment order for A.Y. 2006-07. Since there is no material change in the circumstances, therefore, the interest payable cannot be reduced to 13.5%. Therefore, we are of the view that the orders passed by AO and ld. CIT (A) are required to be set aside and we accordingly held that the 15% interest claimed by the assessee for the loan borrowed is allowed. - Decided in favour of assessee.

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• 2015 (11) TMI 735
  Penalty u/s. 271B - failure to furnish the audit accounts u/s. 44AB - it is assessee’s submission that he was under bona fide belief that he was not required to get the accounts audited in view of CBDT Instruction No. 452 dated 17th March, 1986 and the various decisions relied upon by him - Held that:- No material has been placed on record by Revenue to demonstrate that the belief of the Assessee was not a bonafide belief. A reading of Section 271B makes it clear that the imposition of penalty is not mandatory as the word used is “may” meaning thereby that a discretion is conferred on the A.O to impose or not to impose the penalty. Further the provision with respect to imposition of penalty is not mandatory in view of the provision contained in Section 273B of the Act which interalia provides that notwithstanding the provisions of Section 271B, no penalty shall be imposable on the person or the Assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the failure. In the present case, the Assessee was having a bona fide belief that he was not required to get his books audited under 44AB in view of the CBDT Circular. In such a situation, we are of the view that there was a reasonable cause on the part of the Assessee for not getting the books audited. Further it is a settled law that when there is a technical or venial breach of the provisions of law, the ends of justice requires that discretion should not be exercised in favour of punishing a minor default and for which we get support from the decision of Hon’ble Apex Court in the case of Hindustan Steel Ltd. vs. State of Orissa ( 1969 (8) TMI 31 - SUPREME Court ) - Decided in favour of assessee.

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• 2015 (11) TMI 734
  Unexplained cash credits u/s. 68 - AO rejected the gift plea for want of creditworthiness - Held that:- neither the assessee produced his son having very good relations with the donor nor the donor himself for necessary deposition right from scrutiny till date. It goes without any gainsaying that what is left only the donee’s statement or assertion hereinabove in support of the gift and donor’s confirmation received from abroad not even naming the asseessee’s son. We put specific query to the assessee in the course of hearing as to why the donor was not produced. He replied that the Assessing |Officer did not ask him to do so. We are not impressed with this stand. Once the assessee had claimed a specific relation alike that of “Kanha and Nand” between donor and himself, it was for him to discharge at least initial onus. He has failed to do so. We deem it appropriate to observe at this stage that these income tax proceedings do not involve strict rules of evidence law. At the same time, there has to be some reasonable element in an explanation offered by the concerned assessee so as to shift the onus in the Revenue’s court. This case does not involve any such shifting of onus much less than the burden. Coupled with this fact that the donor in question is not in any way related to the assessee. And also there is no corresponding channel in the gift instrument linking assessee’s amount credit to that of donor’s account. We take into consideration all these facts and hold that the assessee has failed to prove the execution of a valid gift in question. - Decided against assessee.

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• 2015 (11) TMI 733
  Deemed dividend u/s 2(22)(e) - Held that:- For qualifying any loan or advance as deemed dividend, it must fulfill all the conditions of the section 2(22)(e) of the Act, on the date of such loan or advance received by that person. Therefore, in view of above, we hold that the loan/ advance obtained from the company by assessee till the date of sale of shares, when he ceased to be beneficial owner of shares not less than 10% of voting powers, was liable for the deemed dividend as per provisions of section 2(22)(e) of the Act and any loan or a advance received thereafter will not qualify as deemed dividend. The said share transfer form is filed in the office of the Registrar of Companies on 27.07.2007, so the date of transfer should be taken as 27.07.2007, however, the assessee in its submission has mentioned the date of share transfer deed as 30.07.2007, So even if we taken 30.07.2007 as date of transfer of shares, it does not make any material difference in present case. Thus finding of the AO and the ld CIT(A) as regards to considering the advance of Rs. 9.83 lakhs as deemed dividend , is not based on the correct appreciation of the law as well as facts and therefore, we hold that the loans/ advances given by the company to the assessee during the year under consideration till the date of sale of shares by the assessee, should only be considered for deemed dividend. Accordingly, we remit the matter back to the file of the AO and direct the AO to compute the loan/ advances given by the company till the date of sale of shares by the assessee as deemed dividend, subject the availability of accumulated profit of the company.- Decided in favour of assessee for statistical purposes. Addition against low house withdrawals - Held that:- The wife of the assessee as well as his father also contributed towards the household expenses, which increases the house hold withdrawal to Rs. 3,63,000/-. In our opinion, looking the family size of the assessee and living standard, the house hold withdrawals are sufficient and therefore addition made by the AO is deleted - Decided in favour of assessee.

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• 2015 (11) TMI 732
  Reopening of assessment - Unaccounted sale of property - CIT(A) deleted the addition - Held that:- CIT(A) has analyzed the facts concerning to the issue in a proper perspective and taken conscious decision that the addition made by the AO of Rs. 80 lakhs is not sustainable in law. Even though the assessee has submitted that the above said amount of Rs. 80.00 lakhs was not accounted for, yet we notice that what is really taxable under the Act is the capital gain arising on sale of shares only, since the transfer of land was automatic on the transfer of shares of M/s Mourya Realty Pvt Ltd. We further notice that the Ld CIT(A) has given a categorical finding that the impugned amount of Rs. 80.00 lakhs was included in the sale consideration and hence no separate addition is called for. Hence, we do not find any infirmity in his order on this issue. - Decided against revenue.

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• 2015 (11) TMI 731
  Deductions as claimed by assessee U/S 57 and 80C denied - invoking the provisions of section 115D - Held that:- In the peculiar facts and circumstances of the case, the impugned order does not meet the requirements of law. The specific grievances of the assessee though have been reproduced in the impugned order however while arrived at a conclusion why they cannot to be accepted has not been addressed. The statutory mandate of section 250(6) of the Act is found to be not fulfilled. In view thereof, the impugned order is set aside and the issue is restored back to the file to the CIT(A) with the direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. The said order was pronounced in the open Court. - Decided in favour of assessee.

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• 2015 (11) TMI 730
  Depreciation on Chlorine toners - whether @ 60% instead of 15% applicable to plant and machinery of Caustic Chlorine Plant? - Held that:- Admittedly, the toners are being used for storage and transportation of chlorine gas generated in the plant of the assessee. Certificate of the experts also indicated that the same was a gas cylinder. Reference is also made to the Gas Cylinders Rules where the term Gas Cylinder" has been defined as closed metal container having volume exceeding 500 millilitre but not less than 1000 litres intended for storage and transportation of compressed gas including Liquefied Petroleum Gas (LPG). The Tribunal was correct in law in considering the 'toners' as 'gas cylinders' and accordingly directing the Assessing Officer to allow depreciation @ 60% in Chlorine toners. SEE Commissioner of Income Tax Versus Gujarat Alkalies And Chemicals Ltd. [2014 (2) TMI 77 - GUJARAT HIGH COURT ] Disallowance of additional depreciation of Rs. 32,29,051/- on computers installed in the factory premises - ITAT deleted the disallowance - Held that:- t there cannot be universal preposition of law that computers are used only in offices and not for manufacturing activities. The insistence of the Assessing Officer that the same should therefore be treated as office appliance cannot be countenanced. Perhaps if it was shown that the computers formed part of the integrated manufacturing process, his stand that the same would form part of the plant and machinery may have some basis. In the present case, no such material was available on record. It is not as if that in factory premises, computers cannot be installed for direct use in manufacturing activity; thereby forming part of machinery used in such activity. There may be number of ways in which installation of a computer may enhance and improve the efficiency. There is nothing on record to suggest that the computers were part of the plant and machinery. Whether if the computers were the part of the machinery and plant eligible for additional depreciation u/s 32(1) (iia) of the Act, then allowable depreciation on computers would be 15% instead of 60% as claimed by the assessee? - Held that:- In the present case, it is noted that the assessee is engaged in the business of producing chemicals, such as, Caustic Soda, and Caustic Potash and installed a new machinery i.e. Wind Electric Generator. Therefore, in the light of judgment of the Hon'ble Madras High Court in case of CIT vs. Texmo Precision Castings (2009 (10) TMI 140 - MADRAS HIGH COURT), the Assessing Officer was not justified to disallow the claim of the assessee. The revenue has not placed any contrary judgment by Hon'ble Supreme Court or Jurisdictional High Court. Therefore, we do not see any reason to interfere with same and same is hereby affirmed. The ground of Revenue's appeal is dismissed.

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• 2015 (11) TMI 729
  Addition on excess stock found at the premises of the assessee during the course of survey - Held that:- The first and the foremost circumstance which is to be considered is the human conduct of the director at the time of survey. 3,000 grams of the gold is not a small quantity which might have not struck to the mind of the director when survey was going on. The learned first appellate authority, while appreciating this aspect has observed that conduct of the director is little unusual when he brought to the notice of jewellery purchased from M/s. Oasis Jewels. It is strange that the director informed one purchase but forgot to inform about other purchases. It is also pertinent to note that all the stocks as well as other details were brought to the notice of director. The employees were present and they were having ample time to recall this transaction. The learned first appellate authority also observed that as per market practice the owner of jewellery shop knew the gold purchase made in the recent past by heart because the purchase in terms of money is quite big. Keeping in mind this background, we have to appreciate the alleged evidence produced by the assessee along with the explanation. The first is the bank statement of Vijaya Bank. This is the statement of the assessee's account. In this bank statement, payments to M/s. Jain Creation through account-payee cheques are available, starting from August 14, August 18, and August 19, these payments were of Rs. 42 lakhs then on August 21st and 23rd, again the assessee paid Rs. 10 lakhs. It is not discernable against which purchases these payments have been given set off. The purchases of the jewellery on August 21, has been alleged to Rs. 35,68,000 but payments of Rs. 42 lakhs were made before August 19. If this amount was to be accounted for purchase of the jewellery then what was the need to make payment of Rs. 10 lakhs more on August 21st and 22nd. Though the confirmation is available at pages 33 given by M/s. Jain Creation do indicate that the gold was sold to the assesse and it was delivered to the assesse on August 21, 2008 but neither the assessee nor M/s. Jain Creation is able to substantiate this stand with any other corroborative evidence. To our mind, this evidence has been brought in picture by the assessee during the course of assessment proceedings in an anticipation that certain payments are reflecting in the bank account to M/s. Jain Creation, therefore, an effort should be made that these payments represent purchases of gold bars from M/s. Jain Creation. If it was true story then it would not have slipped from the mind of the director when his statement was recorded. The learned Commissioner of Income-tax (Appeals) has rightly observed that while delivering gold at the premises of the assessee, something written on paper must have accompanied, because that would insulate the carrier from any inquiry on the way, if caught by any agency. On an analysis of the evidence available on record, we are of the view that the learned first appellate authority has appreciated the controversy in right perspective and no interference is called for in the order of the Commissioner of Income-tax (Appeals). We do not find any merit in this appeal. It is dismissed. - Decided against assessee.

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• Customs

• 2015 (11) TMI 694
  Clandestine clearance of gold - Shortage of gold found - Non maintenance of waste account register - Held that:- Revenue could not make out any case of collusion, willful and mis-statement or suppression and, therefore, extended period of limitation was not applicable. Even on merits, the Tribunal followed its earlier decision in M.M.K.Jewellers vs. Commissioner of Customs, Mumbai [2003 (6) TMI 80 - CESTAT, MUMBAI]. The same view has been upheld by this Court in Commissioner of Customs, Mumbai vs. M.M.K.Jewellers[2008 (3) TMI 5 - SUPREME COURT]. - Decided against Revenue.

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• 2015 (11) TMI 693
  Refund claim - Classification of goods - Held that:- CESTAT has merely gone into the issue of classification and has not dealt with the issue which was really involved, viz., whether the respondent was entitled to refund or not. That appeal, in any case, against the order of rejection qua refund claim preferred by the assessee was not maintainable as held by this Court in 'Priya Blue Industries Ltd. v. Commissioner of Customs (Preventive)' [2004 (9) TMI 105 - SUPREME COURT OF INDIA]. - Impugned order is set aside - Decided in favour of Revenue.

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• 2015 (11) TMI 692
  Availment of fraudulent DEPB Scheme - Inflation of price - Held that:- A perusal of the order reveals that the CESTAT has noted that the respondents purchased the CD ROMs from the local market directly from the manufacturer. The purchase price of Rs. 640/- has not been challenged. It is not the case of the Department that the transaction between the manufacturer and the respondents is not genuine. It is also not Department's case that the transaction between the respondents and the foreign buyers is not genuine. Respondents have procured the goods for valuable consideration and in turn, received the foreign exchange fully for the sale of goods to the foreign buyers. Therefore, there is no reason to discard the transaction value as between the manufacturer and the respondents nor as between the respondents and foreign buyers. The CESTAT also found that the Department has not shown that at the time and place of exportation, such or like goods have been exported from India at much lower price as claimed by the Department. It is also an accepted fact that the respondents and foreign buyers are not related parties. - all the aspects have been duly and rightly considered by the CESTAT. The analysis of the material is on factual aspect and no substantial question of law arises for consideration in the instant appeal - Decided in favour of assessee.

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• 2015 (11) TMI 691
  Condonation of Delay - Supreme Court dismissed the appeal of the assessee filed against the decision of High Court [2015 (11) TMI 379 - BOMBAY HIGH COURT]; wherein High Court held that cause shown was completely insufficient, inasmuch as the enormous delay of three years could not have been condoned by the Tribunal simply by relying on some officials not being appointed or the company not having the benefit of complete set of officers.

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• 2015 (11) TMI 689
  Attachment of property - Garnishee order - Freezing of bank account - Auction of goods without prior permission - Held that:- cargo containing sheets cutting belonging to the second respondent was lying with the petitioner's CFS and thereupon, by conducting E-auction, the petitioner's Company sold the goods in question for a sum of Rs. 40,77,000/-. As per Section 150 of the Customs Act, the petitioner Company has to pay necessary fees to the customs department. - in the event of a public auction under the Act, the proceeds of the sale shall be applied in the above said order. Accordingly, in the present case, the petitioner Company had incurred Rs. 1,50,000/- towards E-auction, Rs. 9,27,303/- towards the customs duty and Rs. 2,03,850/- towards VAT arising from sale and Rs. 30,20,940/- towards storage, handling and overdue charges. These expenses have been supported by the various documents. Therefore, when the petitioner Company has sold away the goods belonging to the second respondent legally in E-auction only after issuing notices to both the respondents and thereby they have also realised a sum of Rs. 42,80,850/-, after adjusting all these amount as per Section 150 of the Customs Act, yet they have incurred additional expenses of Rs. 21,243/- and thus, they were ultimately left with no money from the sale proceeds of E-auction. Hence, since nothing has been left with the petitioner Company as balance money from the proceeds of the auction sale, the respondent is not legally entitled to attach the amount deposited in the third respondent Bank. Even before bringing the goods belonging to the second respondent to sell in E-auction, the petitioner Company had issued notice dated 22.07.2013 under Section 48 of the Customs Act requesting the second respondent to clear the said cargo, otherwise, necessary steps would be taken to dispose of the said goods. Again, finding no reply, the petitioner issued another notice dated 08.08.2013 under Section 48 of the Customs Act for disposal of the said goods and finally, since there was no response from the second respondent, the petitioner Company, with due intimation to the first respondent, sold the goods belonging to the second respondent for a sum of Rs. 40,77,000/- vide E-auction dated 28.11.2014, therefore, I do not find any irregularity in selling the goods as they admittedly issued notices to both the respondents before selling the goods. - Decided in favour of appellant.

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• 2015 (11) TMI 688
  Valuation - Enhancement in value - order passed without issuance of notice - Held that:- When the direction given by the learned Tribunal to the assessing authority is very clear, as pleaded by Mr.A.P.Srinivas, learned standing counsel, the petitioner was given all reasonable opportunity. But that does not mean that when the original authority in the earlier order has adjudicated the issue with regard to the provisional assessment with EDD equivalent to 15.122% of Assessable Value, cannot on their own by rejecting the value declared by the petitioner, order for re-determination of the value by loading the same by 19.70% without there being any specific further notice for enhancement of the value. Therefore, this Court being convinced with the submissions made by the learned senior counsel appearing for the petitioner is inclined to interfere with and accordingly by setting aside the impugned order, the matter is again remanded back to the assessing officer and the petitioner is directed to treat the order as notice and submit his case by appearing personally before the assessing authority. It is needless to mention that the assessing officer is directed to issue notice informing the date of hearing and thereafter to decide the matter on merits and in accordance with law. It is open to the petitioner to rely upon any documents at the time of hearing. - Decided in favour of assessee.

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• 2015 (11) TMI 687
  Import of Baggage - List of items declared by the owner without declaring value – Held that:- It is the admitted case that the matter is pending before the revisional authority. Without prejudice to the rights of the parties in the revision petition, this court directs the authorities to release the goods which are subject matter of the writ petitions. On an application made by the petitioner, the goods shall be released within a period of four weeks from that date. However, this court makes it clear that there should not be any demurrage as there is no fault on the part of the petitioner. - Petition disposed of.

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• 2015 (11) TMI 686
  Condonation of delay - Service of notice - Held that:- Even according to the learned counsel the order was sought to be served on the Appellant by Speed- Post. Admittedly, the order was not served upon the Appellant by the registered post as required under clause (a) of Section 153. The Division Bench of this Court in the case of Amidev Agro Care Pvt. Ltd. v. Union of India reported in [2012 (6) TMI 304 - BOMBAY HIGH COURT] while considering the para materia provisions under the Central Excise Act 1944 has held that since Speed-Post is not mentioned under Section 37-C of the Central Excise Act, service of notice by Speed-Post is not valid in law. We find that in the present case also since speedpost is not mentioned and since even according to the Respondent, the order was sought to be served by Speed-Post and since there is not even an acknowledgement in token of service by the Speed-Post, there was no valid service in law. - even an attempt was not made to serve the Appellant in the manner prescribed under clause (a) of Section 153. - Decided in favour of assessee.

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• 2015 (11) TMI 685
  Imposition of penalty - Assessee did not carry out physical examination of the shipping bills - Held that:- It is seen from the order of the Tribunal that what was alleged against the exporter was that they claimed duty drawback without actually making any export, by getting signatures of the officers pre-dated in the shipping bills. In other words, the proceedings against the exporters were on the basis that the officers had pre-dated the shipping bills. But, the charge against the petitioner was that without physically examining the shipping bills, he made false entries in the shipping bills as though he had physically examined them. Therefore, the charge is completely different from the allegation made against the exporter for cancellation of duty drawback. - no material to interfere with the order - Decided against assessee.

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• 2015 (11) TMI 684
  Challenge to the Show Cause Notice - Levy of anti dumping duty - import of the Ultra Slim Colour Picture Tubes in terms of the notification dated. 24th July, 2008 - Held that:- If the authorities find that the separate Bill of Entry, ex bond and supporting documents have not been filed, shall permit the petitioner to submit those documents within ten days from date and shall thereafter proceed to make assessment and upon payment of duty, shall allow the clearance of the goods to the petitioner. - The petitioner now says that the summons have been issued by the Appraisal Special Investigation Branch, Customs House, Calcutta, under Section 108 of the Customs Act, 1962, requiring certain documents to be produced before him. - One could ascertain from the said summons that it has no nexus with the present Bill of Entry and is an independent action unconnected thereto. Section 108 of the Customs Act empowers the authority to requisition the document, which is separate and independent action, and in view of the specific stand of the Customs Authorities that it has no nexus with the present Bill of Entry, this Court does not intend to interfere therewith. Furthermore, the Court should not interfere at the stage of the summons, which is issued in exercise of the power conferred in the said Act unless the issuing authority is incompetent or otherwise bad in law. This Court, therefore, refrains from making any observation thereupon and it is the issuing authority to take a decision after the compliance is made by the petitioner. - Court must record that the authorities would take utmost step to resolve the dispute, so raised, in this writ petition and shall also process the Bill of Entry expeditiously in accordance with law. - Petition disposed of.

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• 2015 (11) TMI 683
  Seizure of goods - on a suspicion that the consignment of betel nuts transported by the petitioner was of third country origin brought in through Nepal, the consignment was seized by the customs authorities - Held that:- Customs officer did have reason to believe that the transporter of the consignment in question was trying to avoid the Customs authorities. In the circumstances, the seizure could not have been set aside. The events subsequent to the seizure are not relevant for the purpose of examining whether the seizure was proper or not. - Impugned order is set aside - Decided in favour of revenue.

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• 2015 (11) TMI 682
  Imposition of penalty - Whether in the facts and circumstances of the case, the Hon’ble Tribunal is justified in setting aside the order imposing penalty upon the first respondent on the basis of the statement of the co-accused recorded by Customs officials in terms of the dictum delivered by the Apex Court in Shri Naresh J. Sukhavani v. UOI reported in [1995 (11) TMI 106 - SUPREME COURT OF INDIA] and various benches of the learned Tribunal. - Held that:- It is discernible to the extent that in customs cases, a confession alleged to have been given by a co-accused is binding upon other accused. - Jayakumar Nair has given a confession statement, wherein the alleged involvement of the first respondent has been mentioned. - only the said Jayakumar Nair has given the alleged confession. It may be true that in the confession alleged to have been given by the said Jayakumar Nair, some material ingredients are found place against the first respondent and that itself is not at all sufficient for coming to a conclusion that the first respondent has also involved in the offences alleged to have been committed by the said Jayakumar Nair. - The Customs, Excise and Service Tax Appellate Tribunal, Chennai after considering the rival contentions raised on either side and also after considering the correct position of law has rightly disallowed the claim made on the side of the Department. In view of the discussion made earlier, this Court has not found any force in the contention putforth on the side of the appellant and the substantial question of law settled in the present Civil Miscellaneous Appeal is not having substance at all and altogether the present Civil Miscellaneous Appeal deserves to be dismissed. - Decided against Revenue.

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• Service Tax

• 2015 (11) TMI 728
  Valuation - whether the value of sim cards sold by the appellant herein to their mobile subscribers is to be included in taxable service under Section 65(105)(zzzx) of the Finance Act, 1994 or otherwise - Held that:- The ratio of the decision of the Tribunal [2008 (3) TMI 59 - CESTAT KOLKATA] would squarely apply in the case in hand and we hold that the appellant is eligible for cum-tax benefit and therefore service tax liability and interest thereof needs to be recalculated by the lower authority. This view has also been taken by the bench in appellants own case - For the limited purpose of re-quantification of the service tax liability, we remand the matter to the adjudicating authority to do so and direct the appellant to discharge such service tax as re-quantified along with interest - entire position of law as to taxability of the sim cards and value to be considered for such tax was agitated before the various judicial forum and had to be settled by the apex Court in the case of Idea Mobile Communication Ltd. (2011 (8) TMI 3 - SUPREME COURT OF INDIA ), we are of view that the appellant could have entertained a bonafide belief as to the sale of sim cards is not a taxable activity. Accordingly, we, by invoking the provisions of Section 80 of the Finance Act, 1994, set aside the penalties imposed by the lower authority. - Appeal disposed of.

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• 2015 (11) TMI 727
  Denial of refund claim - Refund of service tax paid on the commission received for the services exported to foreign principals in respect of import of textile machinery by parties based in India - Held that:- Since it is an admitted fact that there is a double payment of service tax of an amount of Rs. 70,000/- we find that the appeal filed by the appellant needs to be allowed to that extent As regards the refund of an amount of Rs. 73,272, said amount was paid under reverse charge mechanism under the category of Business Auxiliary Services for the commission received by them. Appellant had provided foreign principals various inputs as to the requirement of trade in India during the period March 2005. We find that the appellant had rendered the services relating to sales promotion, marketing, procurement of order and other customer related services. We find strong force in the contentions raised by the learned C.A. that in the appellants own case, this Bench has clearly held that the services rendered by this very appellant in procuring orders from Indian Company and passing on to various overseas manufacturers will amount to export of services. - Decided in favour of assessee.

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• 2015 (11) TMI 726
  Demand of service tax - Demand confirmed under Business Support Services - Held that:- Allegations in show cause notice directed the appellants to show cause notice as to why service tax liability should not be demanded from them under the category of Business Auxiliary Services. We find that learned counsel was correct in stating that the first appellate authority has traversed beyond the allegations made in the show cause notice. - impugned orders in these appeals are incorrect and liable to be set aside - Decision in the case of Ratnaprabbha Motors [2015 (11) TMI 680 - CESTAT MUMBAI] followed - Decided in favour of assessee.

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• 2015 (11) TMI 725
  Demand of service tax - GTA Service - Reverse charge mechanism - Held that:- Rule 2(1)(d)(xii) and (xvii) of the Service Tax Rules, 1994 was held to be ultra vires by Supreme Court in the case of Laghu Udyog Bharti Vs. Union of India (1999 (7) TMI 1 - SUPREME COURT OF INDIA). The re-validation done by Section 117(i) of Finance Act, 2000 provide that any action for the period 16.11.1997 to 01.06.1998 was required to be taken before the Finance Act, 2000 got assent by the Hon'ble President of India, which was on 12.05.2000. Further re-validation only took place vide Finance Act, 2003. It is thus obvious on 15.11.2002, when the show cause notice was issued, Revenue lacked the competence to do so. As has been held by CESTAT in the cases of CCE Vs. EID Parry (India) Ltd. [2004 (10) TMI 7 - CESTAT (CHENNAI)], Vishnuram Textiles Pvt. Ltd. [2004 (11) TMI 574 - CESTAT CHENNAI] and CCE Vs. Vaidvambigai Textile Mills Ltd. & Others [2004 (12) TMI 673 - CESTAT CHENNAI], the show cause notices which were issued after 12.05.2000 were not sustainable. - Decided against Revenue.

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• 2015 (11) TMI 724
  CENVAT Credit - Renting of immovable property and Leasing of vacant land - Held that:- Entire case of the Revenue proceeds on the assumption that a common cenvatable account has been maintained whereas the appellants have contended that they have maintained separate account for the exempted and taxable final services. This fact requires verification. In some of the cases, common input services have been utilized like telephone services, we agree with the learned advocate that in terms of various decisions of the Tribunal segregation of the credit relatable to the exempted final services and reversal of the same to that extent would meet the requirement of law. In this connection, reliance can be placed on Tribunal’s decision in the case of Orion Appliances Ltd. vs. CST, Ahmedabad: [2010 (5) TMI 85 - CESTAT, AHMEDABAD] and BHEL-GE Turbine Service Pvt. Ltd. vs. CCE, Hyderabad: [2009 (12) TMI 407 - CESTAT, BANGALORE ] - Matter remanded back - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 723
  Waiver of pre deposit - Demand of service tax - Franchise service - Held that:- on 30.03.2015, the appellant remitted the entire amount of service tax demand proposed in Show Cause Notice, i.e., Rs. 2,38,26,834/- and in a covering letter dated 28.04.2015 also informed the respondent about such deposit made in relation to the adjudication order dated 17.12.2013. In the circumstances, we consider that the amount already deposited is sufficient pre-deposit for hearing the appeal. The balance demand is waived and we grant stay of proceedings for recovery, during the pendency of the appeal. - Stay granted.

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• 2015 (11) TMI 722
  Restoration of appeal - Appeal dismissed for non compliance of pre deposit - Held that:- In an ordinary course, the deposit of the dues as directed by the Tribunal after a gap of two years would call for arguments by both the sides as regards the restoration. But in the present case, we note that the appellant had filed a modification application and during the said period of two years, the application was pending disposal. In these circumstances, the appellant’s non-action of deposit of directed amount, expecting a favourable reasoned order on the modification application, seems to be a reasonable plea for non-deposit. - Appeal restored.

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• 2015 (11) TMI 721
  Denial of CENVAT Credit - whether Assessee would be eligible for Cenvat credit of service tax paid on Mandap Keeper service utilised for organising meetings with dealers, vehicle launch and other promotional activities and rent-a-cab availed for conveyance of employees to and from the factory, for official conveyance including visits to various Governmental authorities and for travel in connection with business meetings, visiting dealer sites, promotional activities, etc - Held that:- So far as, the question of eligibility for Cenvat credit of the Mandap Keeper service is concerned, there is no dispute that this service has been utilised for organising meetings with the dealers, vehicle launch events and other promotional activities. This issue stands decided in favour of the appellant by the judgments of the Tribunal in the cases of Tradex Polymers Pvt. Ltd. vs. CCE, Ahmedabad (2011 (4) TMI 728 - CESTAT, AHMEDABAD), Jaypee Rewa Plant vs. CCE, Bhopal (2009 (7) TMI 150 - CESTAT, NEW DELHI), Idea Cellular Ltd. vs. CCE, Meerut I (2011 (1) TMI 811 - CESTAT, NEW DELHI) and, Endurance Technologies Pvt. Ltd. vs. CCE, Aurangabad (2013 (8) TMI 601 - CESTAT MUMBAI). In view of this, the impugned order denying the Cenvat credit in respect of Mandap Keeper services is not sustainable and has to be set aside. As regards, eligibility for Cenvat credit of rent-a-cab service, this service is utilised for transportation of the employees from their residence to the factory and back, travel in connection with business meetings, visit to Government authorities and promotional activities etc. We find the question of eligibility of Cenvat credit in respect of rent-a-cab service also stands decided in favour of the appellants by the judgment in cases of CCE, Bangalore III vs. Stanzen Toyotetsu India (P) Ltd. (2011 (4) TMI 201 - KARNATAKA HIGH COURT ), CCE, Bangalore III vs. Tata Auto Comp Systems Ltd. (2009 (4) TMI 555 - KARNATAKA HIGH COURT ), CCE & ST vs. Lupin Ltd. (2012 (4) TMI 499 - CESTAT, MUMBAI), CCE, Bangalore I vs. Graphite India Ltd. (2013 (1) TMI 347 - KARNATAKA HIGH COURT), CCE, Bangalore I vs. Bell Ceramics Ltd. (2011 (9) TMI 792 - KARNATAKA HIGH COURT), CCE & ST, Raipur vs. HEG Ltd. (2010 (6) TMI 306 - CESTAT, NEW DELHI ) and CCE, Jaipur II vs. J.K. Cement Works (2009 (1) TMI 146 - CESTAT NEW DELHI).- Decided in favour of assessee.

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• 2015 (11) TMI 720
  Denial of CENVAT Credit - GTA service - whether the appellant is entitled to take input service credit on outward transportation services after 01.04.2008 or not - Held that:- The assessee can avail Cenvat Credit if the assessee satisfies the condition of the CBEC Circular No.97/8/2007 dated 23.08.2007. In this case the appellant has not provided any evidence that they have complied with the conditions of the said circular. Further, the contention of the Ld. Counsel is that the show cause notice has been issued be invoking extended period of limitation as there were conflicting decisions during the impugned period. But the Ld. Counsel has failed to produce any such contrary decision before me which relates to the impugned period. When specifically the definition for availment of the Cenvat Credit on outward transportation services has been changed w.e.f. 01.04.2008.The Ld. Counsel heavily relied on the decisions of this Tribunal in the case of Real Ispat Pvt. Ltd. to say that show cause notice is barred by limitation. The decision relied by this Tribunal while drafting the said case are of the period is prior to 01.04.2008. Therefore, said decision of this Tribunal is per incuriam and cannot be relied upon. As for the period post 01.04.2008 law is very clear that on outward transportation services Cenvat Credit is available if the assessee satisfies the condition of the CBEC Circular No.97/8/2007 dated 23.08.2007. As in this case appellant has failed to comply with the conditions of the said circular, therefore, appellant is not entitled to take Cenvat Credit on outward transportation services in this case for the period post 01.04.2008. - Decided against assessee.

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• 2015 (11) TMI 719
  Denial of CENVAT Credit – Appellant contends that appeal should be treated as Service Tax appeal and Appellate Authority has no power to condone delay – Revenue contends that appeal should be treated as an excise appeal – Held That:- Original adjudicating authority denied CENVAT Credit as per Rule 14 of Cenvat Credit Rules, 2004 – Appellant is a manufacturer and utilizer of credit for payment of duty of excise - Such matters are being treated as Excise matters – No mistake found in order of Tribunal – Decided against the Appellant.

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• 2015 (11) TMI 718
  Liability of Service Tax – Business Auxiliary Service - Services of marketing and promotion of Abacus CRS Software in India – Revenue contends that services rendered fall under BAS - Held That:- Services provided by assessees during 01.07.2003 to 01.05.2006 fall outside the ambit of BAS - Decision made in the case of Acquire Services Pvt Ltd vs CST, Delhi [2014 (11) TMI 168 - CESTAT NEW DELHI] is squarely applicable – Impugned order set aside - Decided in favour of assessee.

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• 2015 (11) TMI 717
  Availment of CENVAT Credit – Outdoor catering service – Services availed in March 2011 but credit taken in April 2011 – Definition of Input service excluded these services from 1.04.2011 – Held That:- Service which have been received by assessee before 1-4-2011, credit would be available even if the payment of the said appeal stand on or after 2011 as per sub-rule 4(7) – Issue also clarified in Board Circular No. 943/04/2011-EX. – Decided in favour of assessee.

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• 2015 (11) TMI 716
  CENVAT Credit - whether the service tax credit of one unit of the ISD distributed by it to the appellant makes the appellant eligible to such credit - Held that:- Tribunal by the Order [2015 (11) TMI 681 - CESTAT CHENNAI] has held that it is not necessary that the credit earned by one Unit need be consumed by that Unit only but can be transferred to the other Unit by ISD for consumption. - In absence of any dispute as to the earning of the credit distribution thereof is not deniable. - Decided in favour of assessee.

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• 2015 (11) TMI 715
  Denial of CENVAT Credit - Outdoor Catering Service - Held that:-manufacturer is entitled to avail the credit on Outdoor Catering Service. But, the manufacturer is not eligible to avail the credit in case, where the cost of the food is borne by the worker. In view of that, the impugned order is modified in so far as, in case, the cost of food is borne by the workers, the respondent is not eligible to avail credit. - Appeal disposed of.

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• 2015 (11) TMI 714
  CENVAT Credit - Cleaning service - Held that:- Commissioner (Appeals) when noticed that factory included the space used by technical and administrative staff, he has not made any effort to find out the area occupied by technical and administrative staff. In absence of working of the area occupied, the vague order shall not sustain. In view of the obligation of the appellant under Factories Act, 1948 to keep the factory clean, appellant is entitled to the Cenvat credit of service tax paid on factory cleaning service - Decided in favour of assessee.

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• Central Excise

• 2015 (11) TMI 712
  Duty demand - option to avail exemptions - Clearance of goods under serial No. 93 of Notification No. 4/2006-CE dated 01/03/2006 - Imposition of penalty - Held that:- s in view of the above mentioned two conditions, it cannot be said that serial No.90 provides absolute exemption to paper and paper board or articles made therefrom manufactured, starting from the stage of pulp, in a factory, and such pulp contains not less than 75% by weight of pulp made from materials other than bamboo, hard woods, soft woods, reeds (other than sarkanda) or rags. - appellant-assessees cannot be forced to pay duty as per serial No.90 of Notification 4/2006 and they have option to pay the duty under other numbers, viz. 91 and 93. Issue involved in this has already been decided by this Tribunal in the case of Balkrishna Paper Mill Ltd. & Ors. vs. Commissioner of Central Excise [2015 (11) TMI 210 - CESTAT MUMBAI] - we are holding on merits in favour of the appellant-assessee, there is no question of recovery of interest or imposition of penalty - Decided in favour of assessee.

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• 2015 (11) TMI 711
  Availment of cenvat credit - inputs such as OPC cement, MS plates, MS beam, MS Angle, MS channels, MS sheets, M.S. Flat, TMT Rod and TOR Rod which are used for the construction of their "Dry Process Cement Manufacturing Plant" - immovable property - Capital goods - Held that:- On an identical issue of the same appellant, this Tribunal in two different appeals had already allowed the appeals and the Revenue preferred C.M.As. against the Tribunal's order. The Hon'ble Madras High Court in both the orders in the case of CCE Trichy Vs India Cements Ltd. [2013 (1) TMI 5 - Madras High Court], and CCE & Service Tax Vs India Cements Ltd. - [2014 (7) TMI 881 - MADRAS HIGH COURT] had dismissed the Revenue's appeals - Madras High Court by relying their own order reported in [2014 (7) TMI 881 - MADRAS HIGH COURT] again dismissed the C.M.A. filed by Revenue and upheld the Tribunal's order. The Hon'ble High Court in a recent decision reported in [2015 (3) TMI 661 - MADRAS HIGH COURT] on an identical issue had allowed the C.M.A. filed by the very same appellant. - immovability is not a criteria for denial of cenvat credit, we hold that appellants are eligible for cenvat credit on the capital goods used in "Dry Process Cement Manufacturing Plant". Accordingly, the impugned order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 710
  Benefit of cum-duty-price - CENVAT Credit - Imposition of penalty - Held that:- Tribunal in the case of M/s Mamta Silk Mills Pvt. Ltd (2015 (11) TMI 251 - CESTAT AHMEDABAD) on the identical situation following the decision of the Hon ble Supreme Court extended the benefit of cum-duty-price. In the case of Dugar Tetenal India Ltd. (2008 (3) TMI 50 - SUPREME COURT ), the Hon ble Supreme Court held the cum-duty price would be extended even in the case of extended period of limitation. The case of Amrit Agro Industries Ltd. (2007 (3) TMI 14 - SUPREME COURT OF INDIA), as relied upon by the Learned Authorised Representatives in the context of the assessee cleared the goods, during the relevant period on the basis of exemption notification. Hence, the said case law would not be applicable in the present case. Further, the Tribunal in the case of Bhawani Weaving Factory (2008 (3) TMI 227 - CESTAT NEW DELHI) held that once duty is demanded the assessee, entitled to CENVAT credit benefit. It is a clear case of clandestine removal of the goods. It is noticed that the appellant No. 2 had indulged for removal of the goods without payment of duty, which was detected by the Central Excise Officer. The main contention of the Learned Advocate is that there is no proposal for confiscation of the goods, and therefore, penalty under Rule 26 cannot be imposed. On close reading of Rule 26 of the Central Excise Rules, 2002, we are unable to accept the contention of the learned advocate. The words “in any other manner deals with, which he knows or has reason to further are liable to confiscation” make it clear that if, the goods cleared without payment of duty, liable to confiscation, the penalty would be imposed on him. In the present case, the appellant No. 2 knowingfully well cleared the goods without payment of duty, and the penalty under Rule 26 is justified. However, we agree with the Learned Advocate that the quantum of the penalty on Appellant No. 2 is excessive. - Decided partly in favour of assessee.

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• 2015 (11) TMI 709
  Denial of CENVAT credit of service tax - Construction of primary school as also ST/SC colony - Nexus with Manufacture - Imposition of penalty - Held that:- The construction of the first floor of a school and the construction of colony for the SC/ST cannot be said to be having any nexus, whatsoever, with the manufacturing activity of the appellant. Even if the said construction activities, which are in the nature of community developments, were not taken by the appellants, the appellant s activity of manufacture and sale of excisable goods would have continued. Similarly the said construction activity has no connection with the appellant s business of manufacture and sale of their final product. The definition of input services cannot be stretched to such an extent that it is becomes practically illogical. If such an extended meaning is given to the said definition so as to include all the activities of the appellants, whether or not relatable to his business, the definition would lose its meaning, intended to be given by the legislation. I find no justifiable reasons to interfere in the impugned order of the lower authorities holding the said activities as non-cenvatable services. Period of limitation - There being no positive evidence on the part of the assessee to show that there was any suppression or mis-statement with any mala fide intent, I hold the first demand to be barred by limitation. For the same reasons, the penalty imposed upon the appellant is also set aside - Decided in favour of assessee.

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• 2015 (11) TMI 708
  Denial of CENVAT Credit - GTA service - Held that:- service of GTA is in respect of transportation of empty container from container yard to the factory and from factory to port of export towards stuff container has not been under dispute. The Cenvat credit was denied on the ground that since it is outward transportation beyond the place of removal ie. factory gate therefore it is not covered under the definition of input service. Firstly, there is no dispute that the entire transportation in respect of export goods. It is settled in the catena of judgments and also now in the Board circular when the transportation is of export goods, the place of removal stand extended to the port of export, therefore it is clearly covered by the definition of input service as applicable at the relevant time wherein transportation up to the place of removal was explicitly included in the definition of input service. Therefore in my considered view, in the present case GTA service for transportation of export goods is input service and Cenvat credit is legally admissible. - From the findings of this Tribunal in the appellant’s own case, the issue disputed in the present case has been settled, accordingly appellant is entitled for the Cenvat Credit in respect of GTA used for transportation of export goods as well as for bringing empty container to their factory. I therefore set aside the orders-in-appeal - Decided in favour of assessee.

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• 2015 (11) TMI 707
  Duty demand u/s 11A - Abatement of duty - since the value of Anode Slime had been determined on the value of its silver content and since during the period of dispute, there was no duty on silver, while determining the value of silver content, its excise duty element could not be abated - Bar of limitation - Held that:- In the order-in-original passed by the Assistant Commissioner, he has given clear finding that he does not find any evidence of wilful mis-statement, fraud or collusion, suppression of facts on the part of the assessee which resulted in short payment of duty and for this reason, while confirming he duty demand, he has not imposed any penalty under section 11AC. Since the duty demand is for the period beyond the normal limitation period of one year, it would be sustainable only if the proviso to section 11A(1) could be invoked which can be invoked only if non-payment or short payment of duty is on account of fraud, wilful mis-statement, collusion, suppression of facts or contravention of any provisions of the Central Excise Act, 1944 or of the rules made therein with intent to evade the payment of duty on the part of the assessee. In exactly the identical situations, the penal provisions of section 11AC are attracted. When with regard to the penal provisions of section 11AC, the Assistant Commissioner has given a finding that he does not find any evidence of wilful mis-statement, fraud or collusion on the part of the assessee etc. and for this reason, he has not imposed any penalty on the assessee under section 11AC, he cannot confirm the demand beyond the normal limitation period by invoking proviso to section 11AC. Therefore, without going into the merits of the case, we are of the view that duty demand is time barred - Decided against Revenue.

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• 2015 (11) TMI 706
  Denial of CENVAT Credit - whether, outward freight charges paid by the appellant for transportation of goods to its buyers premises should be considered as input service , defined under Rule 2(l) of the Cenvat Credit Rules, 2004 and whether service tax paid on the freight charges is admissible to the appellant as cenvat credit - Held that:- Invoices issued by the appellant clearly depict that the freight has been separately charged in the said invoices which is forming the part of overall sale price and also the certificates issued by the buyer of the goods by the practicing Chartered Accountant, clearly demonstrate that the ownership of the goods remained with the seller (appellant herein) till the same is delivered at the buyer’s end. Since the certificates were issued upon proper verification of the records/ documents, the same have the evidentiary value. Further the documents available in the file transpire that the appellant borne the risk or loss or damage to the goods during transit to the destination and also the freight charges mentioned in the invoices issued by the appellant were an integral part of the price of goods. Since, the conditions enumerated in the Circular dated 23.08.2007 have been duly complied with by the appellant, I am of the considered view that the freight charges incurred for transportation of goods up to the buyers premises should be considered as input service after amendment of the provisions of Rule 2(l) w.e.f. 01.04.2008 - principles enunciated are that outward transportation service utilized by the manufacturer for transportation of finished goods from the place of removal up to the premises of the purchaser is covered within the definition of input service. - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 705
  Activity manufacture or not - Refilling of gas from tankers to cylinders – Held that:- Even CBEC in Circular No.910/30/2009-CX dt. 16/12/2009 had considered the very same issue and had considered the amended Chapter Note and had come to the conclusion that tankers cannot be considered as bulk packs and therefore the activity of transferring the goods from tankers into smaller drums/cylinders cannot be covered by the Chapter Note. In view of the above, we take a view that on the first issue, the impugned order cannot be sustained. - Board had issued a clarification in the Circular No.236/70/96-CX dt. 01/08/1996 that conversion of anhydrous ammonia into aqueous solution of ammonia does not amount to manufacture. In the case of Hari & Mahesh (P) Ltd. Vs. CCE, Haldia [2008 (8) TMI 178 - CESTAT, KOLKATA], the Tribunal also had taken the view that conversion of anhydrous ammonia into liquid ammonia or ammonia aqueous solution does not amount to manufacture. - impugned order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 704
  Refund claim - Denial of unutilized CENVAT Credit - Notification no. 42/2001 C.E. (NT) dated 26.6.2001 - SEZ Unit - DTA Clearances - Held that:- The refund claim under Rule 5 of the Cenvat credit Rules, 2004 is restricted and is not admissible in the eventuality, when the assessee claims rebate of input stage duty and also claims refund of un-utilized credit, as it will amount to refund of the same amount twice. However, in the case in hand, since the rebate claim has been sanctioned in respect of export of excisable goods, which is not in relation to rebate on input goods, in my considered view, denial of refund of input stage duty is not regally sustainable, in view of the fact that Rule 5 of the rules specifically provides for claiming refund of accumulated credit available in the books, which the assessee is not able to utilize, because of exportation of goods on which no central excise duty is leviable. - impugned order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 703
  Interest claim - Delayed refund - whether, the appellant is eligible for interest in terms of Section 11BB of the Central Excise Act, 1944 for delayed sanction of refund amount beyond the period of three months from the date of filing the claim application - Held that:- Refund application, complete in all respect was filed by the appellant on 20.10.2011 and documents namely, ER-I return and the copy of PLA for the relevant period subsequently desired by the Original Authority and submitted by the appellant pursuant to the remand direction by the Commissioner (Appeals), were all along available with the Departments. Further, I find from the grounds of appeal filed by the appellant that on examination of refund claim, the Range Officer vide letter dated 26.12.2011 had submitted a report to the refund sanctioning authority, stating that the refund claim is admissible to the appellant. Since, genuineness of such report of the Range Officer has not been questioned by the ld. DR for Revenue; I am of the firm view that the date of filing the refund application by the appellant on 20.10.2011 should be taken into consideration for the purpose of determination / computation of the interest liability. Therefore, in view of the fact that the refund application filed by the appellant on 20.10.2011 was ultimately entertained and sanctioned by the original authority on 31.08.2012, which is beyond the statutory time limit prescribed under section 11BB of the Central Excise Act, in my opinion, the appellant should be entitled for interest for the period beyond 3 months from the date of filing refund application, till the date of actual payment of refund amount. In other words, in this case, the appellant is entitled for interest - Decided in favour of assessee.

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• 2015 (11) TMI 702
  Duty demand - manufacturer of pan masala / gutkha and paying duty under Pan Masala Packing Machines (Capacity Determination and collection of duty) Rules 2008 - Held that:- A similar case came up before this tribunal in the case of Godfrey Philips India Ltd. [2015 (8) TMI 35 - CESTAT NEW DELHI] wherein the factory of the assesse was not in operation during the period 01.06.2010 and 21.06.2012 and it was operative only for three days i.e. on 27th 28th and 29th June 2012. But the assesse paid the duty for four days and the claim of the assessee was of abetment of excess duty paid for 30.06.2012 - In this case also the factory of the respondent was closed from 01.05.2011 to 16.05.2011. On 01.05.2011 the respondent was not sure whether their factory will be function from 17.05.2011 or not. Therefore, respondent was not required to pay duty on 05.05.2011 but when the respondents factory became operational on 17.05.2011. Within five days thereof the respondent has paid duty for the period 17.05.2011 to 31.05.2011. Therefore, I hold that respondent have correctly paid the duty on pro rata basis and do not find any infirmity with the impugned order. Same is upheld. - Decided against Revenue.

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• 2015 (11) TMI 701
  Denial of CENVAT Credit - Capital goods - Held that:- Allegation against the appellant is that they have availed wrong cenvat credit and action of appellant is suppression of facts. In the show cause notice it was mentioned that the availment of cenvat credit on these items has been explained by the appellant with an evidence and was supported by certificate issued by Chartered Engineer for usage of items in capital goods which both the lower authorities have not accepted. From the above, the only inference can easily be drawn that it is appellants case that the impugned items have been used for fabrication of capital goods and to that extent certificate issued by Chartered Engineer was produced which was doubted by both the lower authorities. Therefore, inference of suppression of facts cannot be drawn. Therefore, after relying on the decision of Triveni Engineering & Industries Ltd. (2015 (1) TMI 760 - ALLAHABAD HIGH COURT) I hold that in this case the allegation of suppression of facts is not sustainable against the appellant. Consequently, extended period of limitation is not invokable. - demands against the appellant are barred by limitation. Consequently, impugned order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 700
  Denial of refund claim - refund of unutilized Cenvat Credit - deemed export - whether the refund under Rule 5 and Notification issued thereunder is admissible in case of the deemed export i.e. supplies made to 100% EOU by the appellant from their DTA unit - Held that:- In the case of NBM Industries(2011 (9) TMI 360 - GUJARAT HIGH COURT) the Hon ble Gujarat High Court following their own judgment in case of Shilpa Copper wire Industries(2010 (2) TMI 711 - GUJARAT HIGH COURT ) held that deemed export can be equated with physical export and accordingly the refund under Rule 5 cannot be denied on the ground that supply under deemed export and not under physical export. In the case of Shilpa Copper wire Industries(supra) the issue involved was refund under Rule 5 in a case where goods were supplied from one 100% EOU to another 100% EOU. The Hon’ble Court held that the Tribunal is justified and has not committed any substantial error of law in dismissing the appeal of the Revenue and confirming the order of the learned Commissioner(Appeals) holding that the clearances made by one 100% EOU to another 100% EOU which are deemed exports are to be treated as physical exports for the purpose of entitling refund of unutilized Cenvat Credit contemplated under the provisions of Rule 5 of the Cenvat Credit Rules, 2004. - appellant is entitled for cash refund of accumulated Cenvat amount in terms of Rule 5 of Cenvat Credit Rules, 2004. - Decided in favour of assessee.

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• 2015 (11) TMI 699
  Denial of CENVAT Credit - receipt of invoices without actual receipt of goods - allegation that suppliers have passed on inadmissible cenvat credit to various manufacturers including the appellants without actually supplying/ delivering the goods. - Held that:- No iota of credible evidence has been brought on record to prove non-receipt of goods by the appellant. Though, the statements recorded from outside agencies have been relied on for confirmation of the duty demand, but the same nowhere stated the name of the appellant that only the invoices have been issued to it, without supplying the disputed goods. Hence, in my opinion, confirmation of duty/Cenvat demand, without proper evidence, is not legal and appropriate. Further, in view of the fact that the appellant has maintained adequate records to demonstrate receipt of the disputed goods under the cover of valid and proper duty paid documents, the charges leveled against the appellant for taking fraudulent credit is not sustainable in the eyes of law. Thus, I am of the view that confirmation of the cenvat demand, imposition of penalty by the Authorities below are liable to be set aside. - Decided in favour of assessee.

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• 2015 (11) TMI 698
  Denial of refund claim - Finalization of provisional assessment - unjust enrichment - Refund being excess duty paid in respect of discount passed through invoices or by way of credit notes - Held that:- Appellants requested for finalization of provisional assessment and for valuation on various discounts on stock transfer of goods from their factory/dealers. The adjudicating authority while finalizing the provisional assessment for each year ranging from 2006 to March 2009 partly sanctioned refund being excess duty paid at factory on account of discount passed through depot/branch invoices and also rejected the amount as it failed the test of unjust enrichment clause. The LAA also held that said refund claims were hit by bar of unjust enrichment and relied the Tribunal's decision of this Bench in their own case wherein appellant's appeals were rejected and relying on another Final Order No.905/09 dt. 30.7.2009 wherein Revenue's appeal was allowed. In the present case, the appellants are not able to prove with any evidence. Therefore, the claims are hit by bar of unjust enrichment. By following this Tribunal orders in their own case referred above, I hold that the rejection of refund is valid and the LAA has rightly upheld the order - Decided against assessee.

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• 2015 (11) TMI 697
  Penalty u/r 26 - Under Valuation of goods - Demand of differential duty - Held that:- The original authority did not examine the contract between the railways and the appellant since the appellant had not appeared for personal hearing. The appellate authority relied upon the conclusions of the original authority. It has been the claim of the appellant that the bifurcation of value of materials and labour is only for convenience and not based on actuals. This claim has not been verified with reference to the contract. When it was a sale by the appellant s second unit to the railways, VAT would have been charged on the same separately and shown separately. - Further the claim of the appellant that they have paid central excise duty adopting a value which is more than 115% has also not been examined. Annexures C & D to the show-cause notice have been mentioned in the show-cause notice as the ones giving the details of basis for demand of duty. These annexures were not available when we heard the matter. The table in the order-in-original indicates differential value and assessable value. In the column for assessable value it is not written as differential assessable value. Therefore we do not know whether the duty paid by the assessee has been taken into account or not. Moreover for limitation purpose also there is a need to examine whether under these circumstances appellant could have entertained a bona fide belief or not. - Matter remanded back - Decided in favour of assessee.

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• 2015 (11) TMI 696
  Refund - Bar of limitation - whether amount deposited during the course of investigation should be considered as duty of excise, for which the provisions of section 11B of the Central Excise Act 1944 can be considered for the purpose of computation of the limitation period - Held that:- If the duty is paid with regard to the removal of excisable goods from the factory, then obviously the provisions of section 11B of the Act will have the application, since the said section provides for filing refund application claiming refund of any “duty of excise” and interest, if any, paid on such duty. Since the amount paid during the course of investigation conducted by the preventive wing, which is not attributable to clearance of finished product from the factory, the amount deposited will be construed as mere deposit and not to be considered as payment of duty. Hence, in absence of non-consideration of such deposit as payment of duty of excise, in my considered view, for claiming refund of such amount, the provisions of section 11B will have no application. I also find that the refund claim in the present case has not been lodged under section 11B of the Central Excise Act. Rather, the claim application has been filed before the appropriate authority in a plain letter-form without mentioning therein any statutory provisions under which the claim is lodged. Thus, the authorities below have erroneously assumed that the claim being filed under section 11B, time limit prescribed therein should have the application and the claim having been lodged beyond one year from the relevant date, is barred by limitation of time. Such views expressed by the authority below are not in conformity with the statutory provisions. - amount not paid towards excise duty but only by way of deposit during investigation should not be considered as payment of duty; and as such, the provisions of section 11B of the Central Excise Act will have no application for refunding such amount. - impugned order dismissing the appeal on the ground of limitation is not sustainable and accordingly, the same is set aside - Decided in favour of assessee.

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• CST, VAT & Sales Tax

• 2015 (11) TMI 713
  Exemption for payment of "entry tax" under section 3(2) of the Assam Entry Tax Act, 2008 - Import of hot rolled sheets in coil when processed to cold rolled sheets in coil form - Held that:- hot rolled coil, imported into local area in the State of Assam and the same is sold after processing it to a product which is called as cold rolled coil. It is found that both the products aforesaid are sold in coil form. Entry at Sl. No. 50 to the Schedule aforesaid reveals that sheets, hoops, strips and skelp, both in hot rolled coil as well as cold rolled coil, are specified goods and as such, only for changing the hot rolled coil to cold rolled coil, later does not cease to be the specified goods as mentioned in aforesaid entry and as such, the benefit under section 3(2) of the Act of 2008 needs to be extended to the petitioner provided VAT is also payable in respect of sale of such goods. - Decision in Tata Tea Ltd. v. State of Assam [2015 (11) TMI 326 - GAUHATI HIGH COURT] squarely cover the present case since facts and circumstances in both the cases are strikingly similar. - Decided in favour of assessee.

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• Indian Laws

• 2015 (11) TMI 695
  Conviction of appellant under Section 15 of the Narcotic Drugs and Psychotropic Substances Act 1985 - Appellant found in possession of poppy husk - Held that:- There is no legal proposition that evidence of police officials unless supported by independent evidence is unworthy of acceptance. Evidence of police witnesses cannot be discarded merely on the ground that they belong to police force and interested in the investigation and their desire to see the success of the case. Prudence however requires that the evidence of police officials who are interested in the outcome of the result of the case needs to be carefully scrutinized and independently appreciated. Mere fact that they are police officials does not by itself give rise to any doubt about their creditworthiness. - no infirmity is attached to the testimony of police officials merely because they belong to police force and that conviction can be based on the testimony of police officials in Girja Prasad (dead) by LRs. vs. State of M.P., [2007 (8) TMI 727 - SUPREME COURT] Once the possession of the contraband by the accused has been established, it is for the accused to discharge the onus of proof that he was not in conscious possession. Burden of proof cast on the accused under Section 35 of the NDPS Act can be discharged through different modes. One of such modes is that the accused can rely on the materials available in the prosecution case raising doubts about the prosecution case. The accused may also adduce other evidence when he is called upon to enter on his defence. If the circumstances appearing in the prosecution case give reasonable assurance to the Court that the accused could not have had the knowledge of the required intention, the burden cast on him under Section 35 of the NDPS Act would stand discharged even if the accused had not adduced any other evidence of his own when he is called upon to enter on his defence. From the evidence led by the prosecution, it has been proved beyond reasonable doubt that the accused being the driver of the tractor was in conscious possession of the thirty three bags of poppy husk in the trolley attached to the tractor. Upon appreciation of evidence, High Court rightly reversed the acquittal and convicted the appellant under Section 15 of the NDPS Act. The occurrence was in the year 1990 and the appellant has suffered a protracted proceeding of about twenty five years. In the facts and circumstances of the case, the sentence of imprisonment imposed on the appellant is reduced from twelve years to ten years. - Decided partly in favour of Appellant.

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• 2015 (11) TMI 690
  Application for transfer of case - Offense of preparation of intoxicating drugs - Offence under NDPS - Appllants pleads that they are made accused by false implications - Jurisdiction of Punjab Police - Held that:- The power to transfer or entrust the investigation of a case to an agency like Central Bureau of Investigation without the consent of State Government indubitably vests in the High Court. Nonetheless, one cannot invoke that power as a matter of right or by mere levelling allegations against the local police. Since the power flows from extraordinary jurisdiction conferred under Article 226, it has to be exercised sparingly, cautiously and only in exceptional circumstances with the avowed object to restore credibility and instill confidence in the ongoing investigation. It is an integral part of one’s fundamental as well as human rights. Such a right does accrue when the ongoing investigation by the local police lacks credibility or is hampered by influential and powerful people. Equally important is the evaluation of comparative efficacy and capability of the local police vis-à-vis the new agency, for securing timely, fair, equitable and unbiased investigation. Yet another relevant factor would be in regard to who has sought the transfer of ongoing investigation, namely, the suspects of the crime or its victim(s)? The majority of the cases where the Apex Court or High Courts have entrusted investigation to an independent agency are at the instance of the victims of crime who were at the receiving end due to the lackadaisical, offhand and callous approach of the investigating agency, or because police officials themselves were accused in the case, or when involvement of an influential person was causing an impediment to the fair investigation by the local police. The petitioner has relied upon (a) audio/video recordings; (b) mobile phone call details (c) the reports or complaints sent by Canadian Embassy; (d) the complaint sent by his friend Ravinder Grewal @ Robin; and (e) the reports of Truth Labs etc. etc. to substantiate his allegations. The veracity of these allegations or counter- allegations can be determined only by the Special Court after the evidence is led by the parties. The investigating agency whosoever may be has got no jurisdiction to pronounce a verdict on the guilt or innocence of the petitioner. The Enforcement Directorate has declared the said amount of Rs. 1 crore as an illicit income and the matter is sub judice before the Special Judge, hence it is not expedient or desirable to comment upon the merits of such allegations. The plea that the pharmaceutical industries located outside the State of Punjab have been implicated in total abuse of the police powers rests on the premise that such manufacturing units are duly licensed by the State Drug Controller(s) or the Narcotic Control Bureau whereunder they are lawfully entitled to manufacture, distribute, sell, purchase and possess the controlled substances included in Schedule ‘A’ of NDPS Act. The breach of any condition prescribed in these licences or the Rules, it was urged, may entail penal consequences at the instance of the Licensing Authorities but the Punjab Police has got no power to slap NDPS cases on the petitioners. - The plea taken by the manufacturers/proprietors of pharmaceutical units that the alleged violation of the terms and conditions of their licences would not clothe the police to slap a case under the NDPS Act thus carries no weight and deserves to be rejected. Objection against the jurisdictional competence of Punjab Police in registering cases against proprietors of pharmaceutical units located in State of Himachal Pradesh prima facie cannot be entertained at this stage. If the trails of the crime originating from those units were traced out in the Punjab territory also, it would be totally farcical to contend that Punjab Police cannot step in or take action against the suspects. - The very genesis of these drug scam cases lies in the police version that the proprietors or managers of the pharmaceutical units are involved in the illicit sale of their stocks of controlled substances like Ephedrine or Pseudoephedrine which have been supplied to them at concessional rates for manufacturing drugs but have been siphoned to the drug mafia for a hefty price. Both the controlled substances are stated to be the major constituents for manufacturing Methamphetamine (ICE). One of the Pharmaceutical units of Jagjit Singh Chahal i.e. MBP Pharmaceutical Private Limited approached Hon’ble High Court of Himachal Pradesh in CWP No.3496 of 2014, questioning the legality of searches and seizures conducted by Punjab Police in its premises on 15th & 16th November, 2013, on the ground that the due procedure and mandate of law was not followed and its action was “without any jurisdiction”. The High Court dismissed the writ petition vide order dated 20th August, 2014 being premature but only after observing that “in the given circumstances, prima facie, it appears that the writ petition filed before this Court is an afterthought, just to hamper the investigation, which has been conducted by the Punjab Police.” - So far as the common grounds taken by most of the petitioners are concerned, it may be seen that they have attempted to cause a dent and create doubt in the prosecution’s theory. They have made whole-hearted attempts to falsify the manner in which illicit drugs are reported to have been recovered. We do not deem it necessary to express any opinion in this regard for if the police version is found meritless by the Special Court, the prosecution case is bound to collapse. The petitioners in these cases thus want this Court to accept their oral or documentary evidence and give a verdict of their innocence after discarding the police version. Alternatively, they have suggested that the Court direct the CBI or any other independent agency to appreciate the merits of their evidence and proof of varied nature and discharge them from the criminal proceedings. - filing of charge-sheet under Section 173 CrPC or framing of charges alone will not divest a Constitutional Court from directing re-investigation by another agency. This Court, however, cannot overlook the fact that on completion of investigation, the police has already submitted charge-sheets in all the cases subject to any supplementary report which may be submitted under Section 173(8) CrPC. In some of the cases, prosecution has already started its evidence. In the absence of any exceptional circumstances where this Court must intervene and do complete justice, we are satisfied that the appropriate recourse at this stage is to follow the dictum in (i) Disha [2011 (7) TMI 1135 - SUPREME COURT] and (ii) Sudipta Lenka cases (2015 (11) TMI 130 - SUPREME COURT) and hold that the power to refer a case for further investigation to an independent agency like CBI, ought not to be invoked after filing of the chargesheet by the local police. Even as a cumulative effect of all the contentions raised on their behalf, the petitioners have failed to make out a case within those exceptional circumstances where this Court either, in exercise of its writ jurisdiction under Article 226 of the Constitution or inherent powers under Section 482 CrPC, can entrust these matters for a fresh or re-investigation to CBI or any other agency. These petitions are resultantly dismissed and the interim orders staying the trial Court proceedings are vacated and the Special Courts are directed to proceed with the cases in accordance with law subject to the effect of directions issued hereinafter - It is indisputable that mere boasting of recovery or unearthing the drug-business worth rupees thousands crore or branding one or the other accused as the kingpin is neither the first nor the last nail in the coffin of this menace. The high rank police officers, preferably with specialized trainings ought to have taken the call as soon as the first case was detected. There could be better coordination not only between intra-district police but with the agencies of neighbouring States as well. Since the cases in hand have been given so much publicity as if illicit drugs would never surface in the State of Punjab, it is the duty of Police administration to ensure that every case is taken to its logical conclusion. Society has a fundamental human right to live free from drugs. The failure of the prosecution agency to lead credible evidence so as to bring the guilt home in every case would lead to most agonizing disappointment and frustrations in a peace loving citizen. The upper echelons in the Police thus need to remind themselves of their duties as the statesmen of law and order machinery. Since all the opportunities have not gone out of hand and necessary lacunae can still be filled in through supplementary reports, and false accusations (if any) can be dropped, we direct the State of Punjab, in the interest of complete justice, to constitute a Supervisory Team comprising the three IPS Officers who shall within three days of the receipt of copy of this order take stock of the situation and examine the charge-sheets already filed in each of the subject FIRs - Appeal disposed of.

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