TMI Tax Updates - e-Newsletter
November 23, 2013

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise

News

1. Monitoring of Foreign Investment under PIS in Indian Companies - Incorporation in Ban List : M/s Axis Bank Ltd

2. Auction for Sale (Re-Issue) of 1.44% Inflation Indexed Government Stock 2023

3. Central Board of Excise and Customs puts up a Pavilion at the India International Trade Fair (IITF), 2013; focus of the pavilion this year is to Popularize/Publicise Service Tax Voluntary Compliance Encouragement Scheme (VCES)

4. Competition authorities of European Union, USA, Australia, France, Canada share experience with BRICS Competition authorities during the 3rd BRICS International Competition Conference

5. Heads of Competition authorities of Brazil, Russia, India, China and South Africa (BRICS) sign the Delhi Accord

6. RBI Reference Rate for US $ and Euro

Notifications

Service Tax

1. 15/2013 - dated 21-11-2013 - ST

Seeks to amend notification No. 12/2013- Service Tax, dated the 1st July,2013

Circulars / Instructions / Orders

FEMA

1. 77 - dated 22-11-2013

Overseas Foreign Currency Borrowings by Authorised Dealer Banks

Highlights / Catch Notes

Income Tax

• Court Prioritizes Business Records Over Bank Statements for Tax Discrepancies; Books of Accounts Presumed Truthful.

  Case-Laws - HC : Difference in value of stock – Books of accounts prepared in regular course of business have got presumption of truth whereas no such presumption is available to stock statement furnished to the bank for purpose of availing credit facilities - HC
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• Court Clarifies Section 10(23C) for Educational Institutions; Remands Case for Proper Law Application.

  Case-Laws - HC : Educational institutions u/s 10(23C) – General observations should not and cannot become the basis of invoking 13th proviso to Section 10(23C) - issue restored for fresh decision. - HC
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• Bandwidth and telecom services outside India classified as 'royalty' under Income Tax Act Section 9(1)(vi) Explanation 2.

  Case-Laws - HC : Bandwidth/Telecom Services outside India – internet sharing - consideration being for the use and the right to use of the process, it is 'royalty' within the meaning of Clause (iii) of Explanation 2 to Section 9(1)(vi) - HC
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• High Court Allows Depreciation on Non-Compete Fee for Intangible Assets Transfer u/s 32 of Income Tax Act.

  Case-Laws - HC : Depreciation on Non-compete Fee – The transfer of the trade mark, patents and other rights in favour of the assessee was undoubtedly the transfer of intangible assets - depreciation u/s 32 allowed - HC
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• Taxpayers Can Offset Losses Against Income in Block Period u/s 158BB(4) Interpretation.

  Case-Laws - HC : Block assessment - section 158BB(4) - set off of the loss suffered in any of the previous year in the block period against the income assessed in other previous years in the block period is not prohibited - HC
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• High Court Affirms ITAT: Survey Material (Section 133A) Separate from Search Material (Section 132) in Tax Cases.

  Case-Laws - HC : Survey u/s 133A versus search u/s 132 – ITAT is correct in saying that the material found during the course of survey operations is independent and has nothing to do with the material found during the course of search operation - HC
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• High Court Allows Late Filing Due to Change in Income Tax Practitioner; Affidavit from Former Practitioner Not Required.

  Case-Laws - HC : Condonation of delay - Once the Income Tax Practitioner is changed it may not be possible for the assessee to get affidavit of Income Tax Practitioner - delay condoned - HC
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• Accounting Method Change Isn't Grounds for Rejection if More Expenses Claimed, Says Court Decision.

  Case-Laws - HC : Change in method of accounting system – Loss incurred - The change cannot be rejected on the ground that it has resulted into claiming more expenditure during the year under consideration. - HC
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• High Court Reviews Tribunal's Application of Amended Section 271(1)(c) on Income Tax Penalties.

  Case-Laws - HC : Penalty u/s 271(1)(c) - Tribunal was required to consider post-amended provision of section 271 [1] of the Act. - HC
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• Tribunal to Re-examine Classification of Electrical Installations: "Electrical Fittings" or "Plant and Machinery" for Depreciation Rate.

  Case-Laws - HC : Electrical installations – “electrical fittings” or “plant and machinery” – Rate of depreciation 10% or 15% - issue remanded back to the tribunal to examine the question once again - HC
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• Interest Charges on Income Tax Reassessment Imposed Due to Lack of Finalized Previous Assessment u/ss 147 and 234B.

  Case-Laws - HC : There was no previous assessment finalized therefore, in the assessment framed in re-assessment proceedings under Section 147 of the Act would attract levy of interest under Section 234B - HC
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• High Court Upholds Legitimacy of Reassessment Notices u/s 148 Proviso, Effective from October 1, 1991.

  Case-Laws - HC : Reassessment u/s 143(3)/147 – n view of the newly inserted proviso to sub-section (1) of Section 148 of the Act, w.e.f. 1.10.1991, the notice issued under section 143(2) is a valid notice - HC
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Customs

• Customs House Licence Suspension Under Regulation 20(3) Overturned; Enquiry Proceedings to Continue per Regulation 22(2).

  Case-Laws - AT : Suspension of the Customs House Licence under Regulation 20(3) of the CHALR, 2004 - Non compliance of procedure of Regulation 22(2) - Suspension set aside, enquiry proceedings to continue - AT
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• Refund Claim for Special Additional Duty Approved Despite Missing Original TR-6 Challan, Bond and Copy Provided.

  Case-Laws - AT : Refund of SAD - Notification No. 102/2007 - refund claim was rejected on the ground that original TR-6 challan was not filed - they had filed a bond with copy of the challan - refund allowed - AT
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• Legal Penalties for Misdeclaring Goods in Customs: Human Intervention Key in Fraud Cases, Case Laws Highlighted.

  Case-Laws - AT : Classification of goods - Mis declaration of goods - As no fraud can occur without human intervention, the persons connected to the illicit import were rightly brought to fold of law for penal consequence of law - AT
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• Refund Allowed for SAD or SCVD on Timber Logs Processed and Sold as Smaller Pieces Under Notification No. 102/07.

  Case-Laws - AT : Refund of SAD / SCVD - Notification No.102/07 - If only for cutting length of the logs, which were in excess of 40 feet, sawing operations were carried out and after some cleaning and scaring was done, timber logs of smaller pieces were sold, refund allowed - AT
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• WOEG Classification: Determining if Components Fall Under CTH 7308 or 8503 Without Tower Parts for Customs.

  Case-Laws - AT : Classification under CTH 7308 or 8503 - Wind Operated Electricity Generator - in the absence of tower parts imported for the manufacture of WOEG, WOEG cannot be said to be presented in an unassembled / disassembled condition - AT
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Service Tax

• Cenvat Credit for Commission Agents' Services Allowed; Includes 'Advertisement and Sale Promotion' Before April 2011 Definition Change.

  Case-Laws - AT : Cenvat credit - commission agents service would be cenvatable, as the term ‘advertisement and sale promotion’ was there in the definition of input service even during period prior to 1.4.2011 - AT
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• Stay Application on Service Tax Valuation: Advances Adjusted in Bills, Only Payments for Provided Services Count as Consideration.

  Case-Laws - AT : Stay application - valuation - Business Support Service - When advances are received towards services rendered, the same would get adjusted in the bills raised - only payment made towards services provided can be brought under the ambit of consideration received and not any other amount. - AT
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• Stay Granted on Service Tax Valuation in Property Case Involving Executor's Payment of Taxes and Utilities for Flat Owners.

  Case-Laws - AT : Valuation - Appellant was obliged to discharge property tax, water and electricity tariff etc. on behalf of the flat owners and the appellant has undertaken these activities in the capacity of an executor - stay granted - AT
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Central Excise

• Goods Essential for Manufacturing Qualify for Cenvat Credit as Inputs Despite Theoretical Alternatives, Says Ruling.

  Case-Laws - AT : The goods used in any activity without which the manufacturing operation, though theoretically possible but commercially inexpedient, have to be treated as having nexus with the manufacture and would be eligible for Cenvat credit as input - AT
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• Assessee Must Prove Receipt of Goods in Bogus Invoice Case to Claim Cenvat Credit.

  Case-Laws - AT : Bogus invoices issued for supply of scrap – Burden to prove – the burden is on the assessee to prove that they had received the goods covered under the invoices on the basis of which Cenvat Credit had been taken - AT
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• Appellant Can Contest Confiscation and Penalties Even After Paying Redemption Fine, Ensuring Legal Rights Remain Intact.

  Case-Laws - HC : Mere payment of redemption fine in no way dwarfs the right of the appellant to challenge not only confiscation but also imposition of redemption fine and final penalty - HC
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• Appellant Granted Credit for Capital Goods; Revenue's Scrap Claim Dismissed Due to Lack of Dispute on Usage.

  Case-Laws - AT : Cenvat credit – Revenue was of the view that the appellant received was scrap and not capital goods – as the use of the goods received by the Appellant from their other units as capital goods is not disputed - credit allowed - AT
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• Paying Duty Before Show Cause Notice Doesn't Avoid Penalty u/s 11AC; Rule 26 Penalty Still Applies.

  Case-Laws - AT : Penalty u/s 11AC - just because the duty on the goods paid before the issue of show cause notice, the same cannot be treated as the ground for non-imposition of penalty under Rule 26 - AT
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• Show Cause Notice for Interest Valid Even After Pre-Notice Duty Deposit u/s 11A(2.

  Case-Laws - AT : Determination of duty u/s 11A (2) before demanding interest –- duty was deposited before issuance of show cause notice - SCN demanding interest portion is not invalid - AT
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• Refund Claim for Excise Duty Mistake: Suo Moto Credit via CENVAT Not Allowed u/r 3.

  Case-Laws - AT : Mode of application of Refund – his is not case where duty was paid by mistake on the same goods more than once - suo moto credit of duty paid through cenvat credit is not permissible - AT
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• Issuance of Bogus Invoices for Commission Leads to Confirmed Penalty; Section 11D Demand Dropped.

  Case-Laws - AT : Demand u/s 11D – assessee had issued bogus invoices for 3% commission without supply any goods - demand u/s 11D dropped - levy of penalty confirmed - AT
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• Combining Clearances for SSI Exemption: Evaluating Control and Interest When Lifting the Corporate Veil for Eligibility Assessment.

  Case-Laws - AT : When on lifting the corporate veil it is found that only one person/company has extraordinary interest and pervasive control over the financial matters and management of other companies, their clearances have to be clubbed for determining their eligibility for the SSI Exemption - AT
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• Penalty u/r 15(2) and Section 11AC Annulled Due to Incorrect Citation in Show Cause Notice.

  Case-Laws - AT : Wrong Quotation of Penalty Provision in the SCN – The imposition of penalty under Rule 15 (2) of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944, is bad in law, thus set aside - AT
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• Court Grants Stay on Duty Payment Issue for Kraft Paper u/s 5A(1); No Absolute Exemption Found.

  Case-Laws - AT : Unconditional exemption or not - whether payment of duty is incorrect as per section 5A(1) - Notification No. 4/2006-CE - manufacturing of kraft paper - there is no absolute exemption - stay granted - AT
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Case Laws:

• Income Tax

• 2013 (11) TMI 1064
  Remuneration to partner - Held that:- In assessee’s case the remuneration is clearly specified to be computed in the manner provided by Explanation 3 to Section 40(b) of the I.T. Act. The remuneration clause is further clarified in various clauses of the partnership deed - The terms and conditions of the assessee’s partnership deed are specific and cannot be termed as non-specific - Following Durga Dass Devki Nandan Vs. ITO [2011 (3) TMI 20 - HIMACHAL PRADESH HIGH COURT] - CBDT issued circular No.739, dated 25.3.1996 - for the assessment year 1996-97 and subsequent thereto, the circular provided that unless the partnership deed specified the amount of remuneration payable to each individual working partner or lays down the manner of quantifying such remuneration, the benefit of Section 40(b)(v) would not be available to the assessee Firm - Decided against Revenue. TDS not deposited within the time limite - Held that:- Following CIT Vs. Naresh Kumar [2013 (9) TMI 275 - DELHI HIGH COURT] - Sec. 40(a)(ia) will not be attracted in case where relevant TDS is deposited before due date of filing of the return - The amended provision clearly states that the expression “said due date” used in clause A of proviso to unamended section refers to time specified in Section 139(1) of the Act. The amended section 40(a)(ia) expands and further liberalises the status when it stipulates that deductions made in the first eleven months of the previous year but paid before the due date of filing of the return, will constitute sufficient compliance - Decided against Revenue.

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• 2013 (11) TMI 1063
  Rejection of Bokks - Held that:- The Assessing Officer did not point out any specific defects in the maintenance of books of account or the audit report - He did not reject the books of account before calculating the average interest on various type of advances - The Assessing Officer did not examine the books of account before arriving at the finding of charging of lower interest and also did not refer the matter for special audit - Unless the books of accounts are rejected addition cannot be made - Decided against Revenue.

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• 2013 (11) TMI 1062
  Depreciation on assets - application of income - double deduction as cost of assets purchased had already been claimed fully as expenditure/application of income - Held that:- Following assessee's own case Income Tax Officer Vs. Krishi Utpadan Mandi Samiti Jalaun and others for the earlier assessment year 2007-2008 - The findings of facts so recorded by the Appellate Tribunal are on the basis of cogent material on records - It cannot be said that the findings recorded by the Tribunal are perverse or contrary to the material on record. It is settled law that the findings of fact cannot be upset unless perversity is shown - Decided against Revenue.

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• 2013 (11) TMI 1061
  Difference in value of stock – Held that:- Conclusion drawn by the AO is not based on any verification of stock statement submitted to the bank authorities so as to question the genuineness of books of accounts - The AO had not rejected the books of accounts of the assessee and no resort was made to provisions of Section 145 of the Act - Books of accounts prepared in regular course of business have got presumption of truth whereas no such presumption is available to stock statement furnished to the bank for purpose of availing credit facilities - Reference to physical verification report of the bank being hypothecated stock as per statement furnished by the assessee was not made – Decided against Revenue.

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• 2013 (11) TMI 1060
  Educational institutions u/s 10(23C) – Held that:- General observations should not and cannot become the basis of invoking 13th proviso to Section 10(23C) – Following ICAI Accounting Research Foundation & Anr. Vs. Director General of Income Tax (Exemptions) & Others [2009 (8) TMI 61 - HIGH COURT OF DELHI] - As long as the user of that money is charitable, then the exemption has to be granted - Merely because some remuneration was taken by the Petitioner Foundation for undertaking these projects would not alter the character of these projects, which remained research and consultancy work - The amended definition of charitable purpose would not alter this position – The issue was restored for fresh decision. Separate books of accounts – Held that:- Proviso to Section 10(23C) applies only if the authority comes to the conclusion that the charitable institution is incidentally carrying on business for the purpose of attainment of objects - In these circumstances only, separate books of account are required to be maintained - The petitioner’s returns for the earlier years have been duly accepted by the Assessing Officer without any objection or observation that the maintenance of accounts was defective and separate books were not maintained for the “incidental business” – The issue was restored for fresh decision.

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• 2013 (11) TMI 1059
  Validity of proceedings u/s 263 - doctrine of merger - Held that:- The subject matter considered by the First Appellate authority was not with respect to the method of computation but altogether a different subject matter therefore the original assessment order accepting the book profit computed by the assessee on 28.12.2007 would be the criterion so far as limitation issued and not the subsequent order of the assessing authority consequent to the order of the First Appellate Authority - In order to exercise suo motu powers under Section 263 finding fault with the book profit computation accepted by the assessing authority, it ought to be from original assessment order and not with reference to First Appellate Authority's order which was nothing to do with acceptance of book profit computation adopted by the assessee - Decided against Revenue.

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• 2013 (11) TMI 1058
  Bandwidth/Telecom Services outside India – internet sharing - whether the consideration paid for providing IPLC is towards service and not towards equipment; - Held that:- the receipts are liable to be treated as 'royalty' for the use of IPLC under Section 9(1)(vi) read with Explanation 2(iva) and correspondingly Article 12(3) of DTAA between India and Singapore. We also agree with the Tribunal that even if the payment is not treated as one for the use of the equipment, the use of the process was provided by the assessee, whereby through the assured bandwidth the customer is guaranteed the transmission of the data and voice. The fact that the bandwidth is shared with others, however, has to be seen in the light of the technology governing the operation of the process and this by itself does not take the assessee out of the scope of royalty. Thus the consideration being for the use and the right to use of the process, it is 'royalty' within the meaning of Clause (iii) of Explanation 2 to Section 9(1)(vi) of the Income Tax Act. – Decided against assessee. Levy of interest u/s 234A, 234B, 234C where no TDS was deducted u/s 195 - Held that:- The Tribunal has not considered the grounds on the levy of interest under Section 234A 234B and 234D inspite of grounds raised therein. - matter remanded back on the issue of charging of interest.

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• 2013 (11) TMI 1057
  Depreciation on Non-compete Fee – Held that:- Non-compete is a commercial right because that right is relatable to the transfer of trade mark, copy rights and patents – The view taken by the Commissioner of Income Tax(Appeals) in this regard is acceptable - The transfer of the trade mark, patents and other rights in favour of the assessee was undoubtedly the transfer of intangible assets, which in terms of section 32(1)(ii) of the Act would be a capital asset entitled to depreciation – Decided in favour of the assessee.

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• 2013 (11) TMI 1056
  Block assessment - set off of losses - Held that:- Analysing section 158BB(4) read with Explanation (a) thereto, one finds that only brought forward losses of the past years under Chapter VI and unabsorbed depreciation under section 32(2) are to be excluded while aggregating the total income or loss of each previous year in the block period but set off of the loss suffered in any of the previous year in the block period against the income assessed in other previous years in the block period is not prohibited. Following E.K.Lingamurthy and another v. Settlement Commissioner (IT and WT) and another [2009 (1) TMI 8 - SUPREME COURT] - The learned Judge was not justified in disallowing the benefit granted to the assessee by the Settlement Commission so far as losses brought forward pertaining to the house property -Section 158BB(4) read with Explanation (a) the loss brought forward could be considered while determining the undisclosed income and the benefit thereunder is in accordance with the procedure under the Act – Decided in favour of assessee.

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• 2013 (11) TMI 1055
  Survey u/s 133A versus search u/s 132 – proceedings u/s 158BD – Held that:- ITAT is correct in saying that the material found during the course of survey operations is independent and has nothing to do with the material found during the course of search operation - If there is any material found during the course of survey operation though it does not form basis for proceedings so far as protective assessment under Section 132 proceedings read with Section 158. So far as material recovered during the course of survey, it has to be in accordance with the procedure contemplated under Section 133A. Such material could be considered for relevant action as provided under the Act but not for any course of action so far as Section 132A search and seizure - If in the exercise of powers by the assessing officer to make fresh orders they are at liberty to consider the case of the appellant assessee also only in accordance with the procedure under Section 132(4) read with provisions under Section 158 of the Act. This shall not come in the way of the authorities taking independent course of action if any under that provision on account of material collected by them during the survey – Decided against assessee.

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• 2013 (11) TMI 1054
  Condonation of delay - The assessee requested the learned Tribunal to condone the delay by submitting that earlier tax matter were being looked after by a Chartered Accountant M/s. J M. Patel & Brothers and even after losing the appeal before the learned CIT(A), he did not advise the assessee to file further appeal before the Tribunal. - Held that:- Considering the affidavits filed by the assessee before the Tribunal which are even reproduced by the learned Tribunal, the learned Tribunal has committed error in not condoning the delay and not considering the appeals on merits - There is no observation by the learned Tribunal that there was any deliberate delay on the part of the assessee and / or there was any mala fide intention on the part of the assessee in not preferring the appeals within a period of limitation. Once the Income Tax Practitioner is changed it may not be possible for the assessee to get affidavit of Income Tax Practitioner - The condonation of delay was not required to be refused on this very ground - It is a cardinal principle of law that normally by and large, the appeals are required to be decided on merits rather than dismissing the same on technical ground like delay etc. unless it is found that there was gross negligence on the part of the assessee and / or there was any mala fide intention on the part of the assessee in not preferring the appeal within the period of limitation - Following Collector, Land Acquisition, Anantnag and Another vs. Mst. Katiji and Others [1987 (2) TMI 61 - SUPREME Court] - Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated - Decided in favour of assessee.

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• 2013 (11) TMI 1053
  Change in accounting system – Loss incurred - Held that:- The change in method of accounting was bona fide and with the compliance of the Accounting Standard – AS 9 – Under new system the income is required to be accounted for or offered for taxation in the year in which it is accrued to the assessee - This method of account is more accurate, scientific and as per the various statutory requirements - The change cannot be rejected on the ground that it has resulted into claiming more expenditure during the year under consideration. Rejection of books - The assessing officer has not pin-pointed out any defects in the books of accounts of the Appellant - The assessing officer has not established that profit cannot be deduced because of method of accounting adopted by the appellant - The new accounting system followed by the assessee is permissible under the law - When the assessee changed the accounting system and started following the new accounting system which is permissible under the law – It is not justified to reject the change in the method of accounting just because it resulted in loss – Decided against Revenue.

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• 2013 (11) TMI 1052
  Penalty u/s 271(1)(c) - Held that:- tribunal had granted relief following the decision in Parmanand M. Patel [2005 (7) TMI 72 - GUJARAT High Court] - It is not in dispute that the decision in case of Parmanand M. Patel [Supra] was rendered considering pre-amended Section 271 [1] of the Income-tax Act, 1961 {“Act” for short}. It is also not in dispute that the Tribunal was required to consider post-amended provision of section 271 [1] of the Act. Under the circumstances, the impugned judgment and order passed by the Tribunal cannot be sustained and the same deserves to be quashed and set-aside - matter remanded back to ITAT for fresh decision.

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• 2013 (11) TMI 1051
  Bogus purchases/sales - Held that:- The assessee relied upon the decision in Commissioner of Income Tax vs. President Industries [1999 (4) TMI 8 - GUJARAT High Court] - The tribunal has failed to consider and/or deal with the decision cited and relied upon by the assessee - All these appeals are required to be remanded to the tribunal to consider the addition made by the Assessing Officer towards alleged bogus purchases/sales and to take appropriate decision in accordance with law and on merits - The issue was restored for fresh decision.

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• 2013 (11) TMI 1050
  Allowability of lease rent - Held that:- When the tribunal has remanded the matter to the Assessing Officer for a fresh decision, we fail to appreciate why the tribunal should restrict the decision by the Assessing Officer considering the decision of the Special Bench of the tribunal rendered in the case of IndusInd Bank Ltd [2012 (3) TMI 212 - ITAT MUMBAI] only. - The issue was restored for fresh decision.

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• 2013 (11) TMI 1049
  Electrical installations – “electrical fittings” or “plant and machinery” – Rate of depreciation 10% or 15% - Held that:- The items include transformers, window ACs, split ACs, invertors, etc - The majority of the expenses are in respect of transformer, panel switch gear, LT PVC Cable, Poly Cab Cable, electric generating set, Electrical Control Panel, Electric Items, installation work, DG Set, etc. All these show that all such expenditure cannot be part of the plant and machinery - The details of expenditure show that majority of expenses were towards the electric fittings - The case laws relied upon by the ld. AR are also having different facts - There is a variation in the nature of the business and facts of case - The matter requires greater consideration as different rates have been specified for electrical fittings including electrical wiring, socket etc. and plant and machinery - Each item has to be examined separately and it has to be determined whether the entry “electrical fittings” is applicable or the items/goods fall in the entry “plant and machinery” – The issue was remanded back to the tribunal to examine the question once again with reference to each and every particular item.

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• 2013 (11) TMI 1048
  Loss in business – Eligible for deduction u/s 080HHC – Held that:- Following IPCA Laboratory Ltd. Vs. Deputy Commissioner of Income Tax [2004 (3) TMI 9 - SUPREME Court] - If there is a loss then no deduction would be available under section 80HHC(1) or (3)(a) or (3)(b) – Decided against assessee.

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• 2013 (11) TMI 1047
  Interest u/s 234B – Held that:- The return of the assessee was initially processed under Section 143(1) of the Act - The re-assessment proceedings were initiated against the assessee under Section 147 – Decision in the case of Commissioner of Income Tax v. Nahar Spinning Mills Ltd. [2011 (7) TMI 961 - Punjab and Haryana High Court] followed - The Tribunal has failed to notice the fact that the Assessing Officer has framed the assessment for the first time on 30.1.1992, therefore, Explanation No.2 is applicable with full force in respect of levy of charging of interest under Section 234-B of the Act. There was no previous assessment finalized therefore, in the assessment framed in re-assessment proceedings under Section 147 of the Act would attract levy of interest under Section 234B of the Act - Explanation No.2 is applicable to the case of assessee – Decided in favour of Revenue.

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• 2013 (11) TMI 1046
  Reassessment u/s 143(3)/147 – Held that:- The return was furnished on 1st May, 2000. The notice under section 143(2) of the act was served upon the assessee after twelve months from the date of filing of the return but before the expiry of the time limit for making the assessment/ reassessment as provided under section 153(2) – The time limit for making reassessment was upto 31st March, 2002 - Notice u/s 143(2) of the act having been served before 31st March, 2002 and reassessment having been made before that date - In view of the newly inserted proviso to sub-section (1) of Section 148 of the Act, w.e.f. 1.10.1991, the notice issued under section 143(2) is a valid notice – Decided in favour of Revenue.

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• 2013 (11) TMI 1038
  Block assessment - Gold sovereigns found in search – Held that:- Among other jewellery 27 gold sovereigns were found - The assessee stated that the jewelery found at the time of search including gold sovereigns belonged to his mother and wife and which had been acquired over years - Even though gold sovereigns (ginnis) may not be an item of jewelery, the word 'jewelery' is being used in a loose term and part of the explanation regarding jewelery has been accepted by the Department, then there is no occasion as to why the remaining part relating to 27 gold sovereigns (ginnis) ought not to have been accepted – Decided in favour of assessee.

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• Customs

• 2013 (11) TMI 1045
  Suspension of the Customs House Licence under Regulation 20(3) of the CHALR, 2004 - Non compliance of procedure of Regulation 22(2) - Held that:- CHAs handling UB Bills of different passengers through Chennai Aircargo Complex. It has been alleged that there are some falsifications in the documents produced by the CHA for baggage clearance during the period June to October 2009. The statements were recorded only in October 2011. After receipt of the offence report, the Commissioner immediately issued suspension order under Regulation 20(2) of the CHALR, 2004. The Commissioner after complying with the procedure insofar as personal hearing was granted and the appellants filed representation and thereafter the impugned orders were passed directing continuation of the suspension of the CHAs under Regulation 20(3) of the CHALR, 2004. There is no dispute that Regulation 20(2) of the CHALR would apply in respect of suspension of licence of CHA in appropriate cases where immediate action is necessary and where an enquiry against such agent is pending or contemplated. Thereafter, the Commissioner of Customs, in terms of Regulation 20(3) after hearing the CHA may pass such order either revoking the suspension or continuing it. In the present cases, by the impugned orders all dated 23.5.2012 issued under Regulation 20(3), the Commissioner of Customs directed continuation of suspension. Commissioner of Customs upon receipt of the reply to notice issued under sub-Regulation (1) of Regulation 22, would direct the Deputy Commissioner of Customs or Assistant Commissioner of Customs to inquire The learned Advocate rightly submitted that sub-Regulation (2) of Regulation 22 is linked with sub-Regulation (1) of Regulation 22 - investigation to unearth evidence required to issue SCN and inquiry as envisaged in Regulation 22(1) are two distinct processes. Investigation is to be done by Revenue using its powers to unearth documents and to record statements which process apparently has been done in this case substantially even before the suspension order was passed and investigating authority had given report and on that basis suspension order was passed. Now, the next stage is the enquiry as envisaged in Regulation 22 (1). This can commence only after issue of a Show Cause Notice, as envisaged in Regulation 22(1), which has not been done in this case so far. Where the immediate suspension has been ordered under the provisions Regulation 20(2) and thereafter the procedure would follow procedure for enquiry under Regulation 22(1), which starts from the issue of notice, has to be followed - Procedure of Regulation 22(2) was not followed insofar as no notice was issued till date as stated above and therefore continuation of suspension orders by the impugned orders dated 23.5.2012 under Regulation 20(3) of the CHALR, 2004 are not justified and the impugned orders are set aside - Decided in favour of appellant.

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• 2013 (11) TMI 1044
  Import of Tubular Towers of different seizes - Benefit of duty exemption under Notification No.6/06-CE dt. 1.3.2006 (Sl.No.84) - Classification of goods under Customs Tariff Heading 85030010 or 73082019 - Held that:- 7308 will cover those towers which are not parts of any machine as per C.B.E. & C. Telex/Circular No. 924/2/97-Cus. (TU), dated 9-8-1997. This Circular has clearly opined in the conference of the Commissioners of the Customs on Tariff and Allied matters that WOEG tower parts constitute essential components of WOEG and that in the absence of tower parts imported for the manufacture of WOEG, WOEG cannot be said to be presented in an unassembled/disassembled condition. It was also clarified that these parts will be classifiable as components and will be liable to duty as applicable to the components - Prima facie case in favour of assessee - Following decision of Vestas Wind Technology India Pvt. Ltd. [2013 (11) TMI 1015 - CESTAT AHMEDABAD] - Stay granted.

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• 2013 (11) TMI 1043
  Refund of SAD - Import and sale of watch in domestic market - No declaration made on the invoices issued for domestic sale to the effect that no CENVAT credit can be taken based on such invoice - Refund claim filed after the finalization of assessment - Held that:- provisions of Section 27 of Customs Act, 1962 cannot be read into Notification No. 102/2007. No doubt the decision in the case of Global International Vs. CCE, Kanpur [2013 (11) TMI 1016 - CESTAT NEW DELHI] was not brought to the notice of the learned Member when the decision relied upon by the appellant was taken but the fact remains that the earlier decision was rendered taking the peculiar facts into consideration in that case and in the absence of existence of such facts, the proper decision to be applied would be the one in the case of Global International. In this view of the matter I am unable to accept the submission that the date of finalization of provisional assessment has to be taken into account for the purpose of considering the refund claim. Accordingly the rejection of the refund claim filed on 31.08.2009 is upheld - Decided against assessee.

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• 2013 (11) TMI 1042
  Import of ceramic tiles from abroad - Refund of SAD - Notification No. 102/2007 - Held that:- certificate issued by the VAT authorities gives the correlation between the bills of entry and the VAT paid - this cannot be one of the requirements as per the notification in the absence of specific requirement in the notification. Therefore this ground also cannot be sustained for rejection of refund claim - refund claim was rejected on the ground that original TR-6 challan was not filed. He submits that they had filed a bond with copy of the challan and in my opinion this would be sufficient - Decided in favour of assessee.

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• 2013 (11) TMI 1041
  Classification of goods - Mis declaration of goods - Confiscation of goods - Held that:- From the uncontroverted evidence of shipment of virgin acrylic staple fibre by exporter and subsequent manipulation made to the documents in transit at the behest of the importer, it is established that the appellant importer mis-declared the imported goods in the bill of entry as waste to get the duty free benefit by the notification aforesaid. That is corroborated from the test reports of CRCL New Delhi & IPCL Baroda. Examination of the goods stuffed in container no. SXSU 232477/0 revealed that all the 24 bales packed in the container were with manufacturer’s labels indicating that the goods were ‘acrylic staple fibre’ commercial quality of denier of 2.5 and 3 and fibre length of 110 mm. Fraudulent act of manipulation of the description of the goods in transit by the appellant importer and persons connected thereto resulted in deliberate mis-declaration of the description and value of the goods imported. Duty exemption was availed under Notification No. 117/88 unlawfully when that was not due to the appellant. The fraud so committed against Revenue proved oblique motive of the appellant. Enquiry conducted with M/s World Wide Cargo and M/s CMA UK Agents established that Bill of lading No. BCM/001758 was issued by CMA s agent in Barcelona on the basis of instructions received from the booking and freight forwarding company and the description of the cargo was declared as ‘Acrylic Staple Fibre’, Commercial Quality BRIGHT and the cargo was shipped from Barcelona and was routed through Dubai. Containers were stored in shipper s premises at Barcelona and freight was indicated as ‘Collect’. But the UK based Shipping Agent paid the freight to CMA s agent in Bradford. Investigation result revealed that M/s Linear Shipping Containers had amended the description on the Bill of Lading to read as ‘Synthetic Waste/ Soft Quality with predominance of staple fibre with wide variation in denier and length and containing drawn and undrawn fibre’. The real description of the goods ‘Acrylic Staple Fibre Commercial Quality Bright’ was deliberately changed on the basis of the UK Shipper’s instructions. Appellant followed dilatory tactics calling the experts for cross examination and ultimately did not yield any result out of that except embarrassing them putting irrelevant questions running into more than hundred. The appellant failed to prove that the exporter exported waste but not virgin goods. Neither process of examination carried out by testing experts was proved to be faulty nor the credibility of the test reports impeached. Textile expert revealed the technicalities of the goods. That remained unrebutted by the appellant. Malafide of the DRI Officers was all along been recited by the appellant without that being proved. Manipulation of the transit documents detected by the DRI with full proof could not be repelled by the appellant. Such self-speaking evidence brought out the ill design of the appellant. It acted to the detriment of the Revenue deliberately suppressing the material fact. Entire discussion and finding of the ld. Adjudicating authority brings out how he applied his mind proving that there was deliberate mis-declaration committing fraud against Revenue. Such reasoned and speaking order establishing deliberate mis-declaration should sustain - Appellant failed to gain any benefit from the citation made in view of Crystal laboratory test findings and fraud committed against Revenue in the manner aforesaid. As no fraud can occur without human intervention, the persons connected to the illicit import were rightly brought to fold of law for penal consequence of law - Decided against assessee.

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• 2013 (11) TMI 1040
  Import of timber - Notification No.102/07 - Refund of SCVD paid upon sale of the goods in local market - Whether the respondents fulfilled all the conditions of exemption notification dated 14.9.2007 or not - Held that:- whether the conditions are to be satisfied or not, has to be viewed from attending facts and circumstances of the case. The words "when imported into India for subsequent sale" or "the sale of said goods", cannot be seen in isolation. It is not in dispute that except for the above mentioned objection of the department, all other conditions specified in the exemption notification, have been fulfilled by the respondents. It is also not in dispute that the proper documents were filed and that the goods were imported after paying the SCVD, upon which ultimately the goods were sold in the local market and Sales tax or VAT, as applicable, was also paid. Respondents imported the goods after paying SCVD. At the time of its sale in the local market, they also paid local taxes such as sales tax or the Value Added Tax as may be applicable. Before transportation of timber, they were required to reduce its size since the RTO rules did not permit transportation of logs longer than 40 feet. If only for cutting length of the logs, which were in excess of 40 feet, sawing operations were carried out and after some cleaning and scaring was done, timber logs of smaller pieces were sold, we do not see how respondents can be stated to have breached any of the conditions of the exemption notification dated 14.9.2007 - Following decision in the case of M/s Agarwala Timbers Pvt. Ltd. [2010 (9) TMI 950 - CESTAT AHMEDABAD] - Decided against Revenue.

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• 2013 (11) TMI 1039
  Fraudulent license - License by forgery or wilful mis-declaration - Export of prohibited goods - Held that:- When forgery and fabrication is brought to record that should have been tested with evidence recorded. It appears that none of the export consignments nor specific shipping bills were put to test by customs to know the manner of occurrence of the transaction from the origin of goods till termination at the export stage. None of the evidence have been properly appraised nor evaluated while the evidence of the driver, transporters, supervisor, doctor and many other persons have been recorded under section 108 of Customs Act, 1962. Once the adjudication has not brought out clearly what was the issue before the authority for decision on the basis of facts and the relevant evidence on the touch stone of law applicable - Therefore, in all fairness adjudication has to go back to the learned Adjudicating Authority to determine the facts in issue and testing such facts on the touch stone of evidence and law - Decided in favour of assessee.

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• 2013 (11) TMI 1037
  Maintainability of appeal u/s 129A(1) of Customs Act against Communication made by Commissioner of Customs (Export) - Communication stated that when the case is pending before the Adjudicatory Authority thus the CC had not examined the issue of Import Utilisation certificate – Held that:- The Communication dated 04.08.2010, the Commissioner of Customs (Exports) refused to issue Import Utilisation Certificate as the matter is pending before the adjudicating authority - it is appropriate that the appellant should approach to the adjudicating authority in de novo proceeding for issuance of the Import Utilisation Certificate – there is no reason to interfere with the Communication dated 04.08.2010 of the Commissioner of Customs.

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• 2013 (11) TMI 1016
  Refund of SAD - period of limitation of one year in case of provisional assessment of BE - Import of LDPE granules under different Bills of Entries - Refund claim for Special Additional Duty of customs - Held that:- Refund of SAD is to be made in accordance with provisions in Notification No. 102/2007-Cus. The provision under Section 27 of the Customs Act cannot be read into the provision made in Notification No 102/2007-Cus - Claim rejected as time barred - Decided against assessee.

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• 2013 (11) TMI 1015
  Classification under CTH 7308 or 8503 - Whether the tower sections imported by the appellant for Wind Operated Electricity Generator should be classified under CTH 7308 or 8503 of the Customs Tariff Act, 1975 - Held that:- As per Rule 1 of General Rules of interpretation to the Customs Tariff Act, the classification of imported goods is required to be done as per the relevant Section notes and Chapter notes. Section Note 2(b) of Section XVI is the relevant Section note for deciding the parts solely or principally used in a particular kind of machine - Commissioner has considered the parts imported goods and held the imported goods to be towers for classification under Heading 7308 20 19. It is observed that 7308 will cover those towers which are not parts of any machine as per C.B.E. & C. Telex/Circular No. 924/2/97-Cus. (TU), dated 9-8-1997. This Circular has clearly opined in the conference of the Commissioners of the Customs on Tariff and Allied matters that WOEG tower parts constitute essential components of WOEG and that in the absence of tower parts imported for the manufacture of WOEG, WOEG cannot be said to be presented in an unassembled/disassembled condition. It was also clarified that these parts will be classifiable as components and will be liable to duty as applicable to the components - Prima facie case in favour of assessee - Stay granted.

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• Corporate Laws

• 2013 (11) TMI 1033
  Penalty u/s 15A(b) of the SEBI Act, 1992 read with Regulation 7 of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 - Whether the acquisition of shares of PPL by the appellant on April 9, 2001 and May 8, 2001 would attract the provisions of the unamended Regulation 7 of the SAST Regulations, 1997 or the amended provisions brought into force w.e.f. September 9, 2002 - Held that:- case of the appellant, as far as substantive provisions are concerned, would be governed by the unamended provisions of SAST Regulations, 1997 which were in vogue on the relevant dates i.e. April 9, 2001 and May 8, 2001 when the appellant admittedly acquired 2,50,000 shares and 3,50,000 shares, respectively of PPL. Undoubtedly, the amended Regulations which brought into existence the requirement of intimating to the stock exchange regarding the acquisition was also introduced in addition to the earlier requisite of making such disclosure to the concerned company whose shares were sought to be acquired by a person. It is, therefore, clear that the appellant cannot be held guilty of violating a substantive provision which came into force on September 9, 2002 for an alleged violation which took place on April 9, 2001 and May 8, 2001 - passing of the impugned order relying on a provision clearly inserted post the happening of the alleged violation exhibits a sort of pre-conceived inclination on the respondent's part to impose a penalty on the appellant without really considering whether or not such an act of the respondent might be sustained in law - Decided in favour of appellant.

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• Service Tax

• 2013 (11) TMI 1074
  Cenvat credit on Commission Agent Service - Revenue was of the view that the commission agent’s service (Business Auxiliary Service) for procuring sales orders is not covered by the definition of ‘input service’ – Held that:- Following CCE, Ahmedabad vs. Cadila Healthcare Ltd. [2013 (1) TMI 304 - GUJARAT HIGH COURT] - The definition of input service allows all credit on services used for clearance of final products upto the place of removal - activity of sale promotion is specifically allowed and on many occasions, the remuneration for the same is linked to actual sale - credit is admissible on the services of sale of dutiable goods - According to the Circular No.943/4/2011-CX dated 29.4.2011, the service of commission agents (Business Auxiliary Service) is covered by the term ‘advertisement or sales promotion’ - there is nothing in the circular which is contrary to the provisions of law and hence the same would be binding on the Departmental officers - commission agents service would be cenvatable, as the term ‘advertisement and sale promotion’ was there in the definition of input service even during period prior to 1.4.2011 – order set aside – Decided in favour of Assessee.

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• 2013 (11) TMI 1073
  Stay application - valuation - Business Support Service - Section 65 (104c) r.w. Section 65(105)(zzzq) - Held that:- Received amount was towards the expenditure incurred by M/s. RCOM even before the appellant-firm came into existence by way of expenses towards the initial setting up and also by way of payments made to vendors for supply of materials. When such payments have been made before the appellant-firm came into existence, we do not understand how this amount can be treated as a consideration received for the services rendered by the appellant. It is also seen from the books of accounts, that the said amount has been repaid by the appellant during the same financial year and these transactions are reflected in the books of accounts of both the parties. Thus, what is coming out form the books of accounts is that the amount of Rs. 283/- crore received by the appellant from M/s. RCOM is not towards any consideration towards any services rendered but it is a financial support given by M/s. RCOM to the appellant by way of loans. When advances are received towards services rendered, the same would get adjusted in the bills raised - only payment made towards services provided can be brought under the ambit of consideration received and not any other amount. At best, the interest saved by the appellant by securing interest-free loans from the holding company can be considered as a consideration for the services rendered and not the loans per se - Prima facie case not in favour of assessee - Stay granted partly.

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• 2013 (11) TMI 1072
  Stay application - GTA Service - Reverse Charge mechanism - Held that:- Following decision of assessee's own case [2010 (1) TMI 145 - CESTAT, MUMBAI] where Tribunal has dropped penalty and held that applicant was rightly under bona fide belief that the impugned activity was not leviable to service tax. In view of that the applicant has made out a prima facie case for waiver of entire amount of penalty - Waiver of pre deposit granted to assessee.

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• 2013 (11) TMI 1071
  Stay application - Construction of residential flats - Payment of fees - Held that:- Appellant was obliged to discharge property tax, water and electricity tariff etc. on behalf of the flat owners and the appellant has undertaken these activities in the capacity of an executor. Therefore, the appellant has not rendered any management, maintenance or repair services - In view of provisions of Section 5 of the Maharashtra Ownership Flats (Regulation) Act, 1963, prima facie case is in favour of assessee - Stay granted.

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• 2013 (11) TMI 1070
  Waiver of pre deposit - Business Auxiliary Service - Exemption Notification 8/05-ST - On perusal of the agreement, it appears that the applicant supplied man power for rendering the service to M/s. Sree Ram Fibres Ltd. In view of that, applicant failed to make out a prima facie case for waiver of predeposit of entire amount of tax along with interest and penalty - Stay granted partly.

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• 2013 (11) TMI 1069
  Modification of the stay Order - Reversal of CENVAT Credit - Held that:- Appellant reversed CENVAT credit of Rs.2,21,159/- towards the impugned demand of Rs.2,98,046/-, a fact not in dispute. Hence, there will be waiver and stay in respect of the penalties imposed on them and the balance amount of CENVAT credit and interest thereon - stay order is passed on erroneous fact and we are of the view that it the error is a case of bona fide error - Stay order is recalled.

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• 2013 (11) TMI 1068
  Stay application - valuation - Construction of residential flats - inclusion of Payment of fees - Held that:- Appellant was obliged to discharge property tax, water and electricity tariff etc. on behalf of the flat owners and the appellant has undertaken these activities in the capacity of an executor. Therefore, the appellant has not rendered any management, maintenance or repair services - In view of provisions of Section 5 of the Maharashtra Ownership Flats (Regulation) Act, 1963, prima facie case is in favour of assessee - Stay granted.

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• 2013 (11) TMI 1067
  Stay application - Waiver of pre deposit - Availment of ineligible cenvat credit of the service tax distributed by head office under Input Service Distributor invoices - Held that:- Cenvat credit is availed of the service tax distributed by the appellant’s head office as an ISD. The amount of service tax paid by the appellants head office is in respect of sale of properties of the assessee, which, in my view, on merits is a question which is debatable, as it would not fall under the definition of input services as defined under Rule 2(l) of the Central Excise Rules, 2004. At the same time, the appellant’s counsel raised question of limitation which merits some consideration as, this so called ineligible Cenvat credit was pointed out by the audit party in June 2009, for which the appellant replied in detail in July 2009. Despite such correspondence, I find that the show cause notice was issued in February 2011. Appellant has point on limitation. Accordingly, prima facie, the appellant has made out a case on limitation - Stay granted.

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• 2013 (11) TMI 1066
  CENVAT Credit - Whether the appellant, a manufacturer of lead and zinc and ingots, would be eligible for cenvat credit of service tax paid on the services of the man power supply for maintenance of lawn and green belt around the factory - Held that:- cenvat credit cannot be denied by re-opening the assessment at the end of the buyer of the inputs without review of the assessment by the jurisdictional Central Excise Authorities/assessing authorities at the supplier’s end - even if the duty has been paid in excess of the amount finally held to be payable, unless the excess duty paid has been refunded, the assessee could claim cenvat credit as the department could not get the duty twice - Following decision in assessee's own case in [2013 (11) TMI 407 - CESTAT NEW DELHI] - Decided in favour of assessee.

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• 2013 (11) TMI 1065
  Waiver of pre-deposit - Construction of Residential Complex - more than 12 houses - appellant contended that separate approvals were taken for each of the house from the municipal authorities and commons roads were surrendered to the local panchayat. - Held that:- this is very highly contentious issue - the issue can be decided only by going into the details of the facts of this case. Considering that pre-deposit was called for the earlier period in respect of the same project of the assessee, we do not find it proper to grant complete waiver of pre-deposit in this case - Pre-dposite ordered partly.

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• Central Excise

• 2013 (11) TMI 1036
  Eligibility for cenvat credit - Welding electrodes and other goods used for repair and maintenance of plant and machinery – Whether the goods used can be treated as inputs and having nexus with the manufacture – Held that:- Following Hindustan Zinc Ltd. vs. UOI [2008 (7) TMI 55 - HIGH COURT RAJASTHAN ] and Ambuja Cements Eastern Ltd. vs. CCE, Raipur [2010 (4) TMI 429 - CHHAITISGARH HIGH COURT ] – and J.K. Cotton Spinning and Weaving Mills Co. Ltd. vs. Sales Tax Officer [1964 (10) TMI 2 - SUPREME COURT OF INDIA] – while interpreting the scope of the expression used in the manufacture in Section 8 (3) (b) of the Central Sales Tax Act, 1956 has held that if a process or activity is so integrally related to the ultimate manufacture of good so that without that process or activity, manufacture may, even if theoretically possible, be commercially inexpedient, goods intended for use in that process or activity would qualify for special treatment i.e. for being treated as used in manufacture of goods. The scope of the expression used in or in relation to the manufacture of final product whether directly or indirectly in the definition of ‘input’ in the Cenvat Credit Rules, 2004 would be much more wider and any goods used in any process or an activity having nexus with manufacture of final product would be covered by the definition of ‘input’ and the goods used in any activity without which the manufacturing operation, though theoretically possible but commercially inexpedient, have to be treated as having nexus with the manufacture and would be eligible for Cenvat credit as input - Repair and maintenance is an activity having nexus with manufacture - the inputs used for repair and maintenance of the plant and machinery would be eligible for Cenvat credit – Decided in favour of Assessee.

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• 2013 (11) TMI 1035
  Bogus invoices issued for supply of scrap – Burden to prove – Held that:- Following Ranjeev Alloys Limited Vs. CCE, Chandigarh [2008 (9) TMI 223 - CESTAT NEW DELHI] - when the registration number of the vehicles mentioned in the invoice in which the goods are claimed to have transported is found to be fake or of two wheeler & three wheeler etc. not capable of transporting the goods mentioned in the invoice, the burden would shift to the assessee, who had taken Cenvat Credit on the basis of such invoice, to prove that the goods covered on the invoice were, indeed, received by him - Non-mentioning or wrong mentioning of vehicle number issued for the transportation of the goods does not bar any assessee to avail Cenvat Credit or any other benefit under Central E Only the production of creditable evidence in support of receipt of goods by the Respondent would shift the burden of proof to the Department - The Commissioner (Appeals) travelled beyond the scope of the remand has accepted newspaper reports as evidence produced by the Respondent which is totally incorrect - the invoices on the basis of which the Cenvat Credit used to be taken, were not required to be enclosed with the ER-1 Return - the burden is on the assessee to prove that they had received the goods covered under the invoices on the basis of which Cenvat Credit had been taken, it is the assessee who have to produce evidence in this regard and for this purpose they cannot ask the Department to produce evidence regarding alternative raw-material used by the respondent for manufacture of final products – order set aside – Decided in favour of Revenue.

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• 2013 (11) TMI 1034
  Recovery of interest on the erroneous refund sanctioned – Held that:- Applicability of Section 11AB for deemed of interest as determined by the adjudicating authority is required to be examined and thereafter the case laws would be looked into, the matter requires to be examined on the provisions of demand of interest and in the light of the decision of the Hon’ble Supreme Court - It is appropriate that the matter should be re-examined by the Commissioner (Appeals) - appeals are allowed by way of remand to the Commissioner (Appeals) – Decided in favour of Revenue.

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• 2013 (11) TMI 1032
  Uniformity in imposition of final penalty - Consideration of prior Orders while reducing the amount of redemption fine and penalty - Held that:- No standard formula is possible but when facts of the case are taken for evaluation, it is found that the Tribunal had side-tracked the issue only by taking into account the fact that the appellant had already got the goods released on payment of redemption fine, whereas it remains a fact that mere payment of redemption fine in no way dwarfs the right of the appellant to challenge not only confiscation but also imposition of redemption fine and final penalty. Even otherwise, to save cost of detention and demurrage as also to avoid further deterioration in value and quality of goods, making of payment of redemption fine by the importer for release of goods at the earliest, cannot be said to be bad or improper - It also remains a fact that for release of the goods, the appellant had to pay detention and demurrage charges which also entailed cost of legal expenses etc. - The purpose of imposition of redemption fine is to wipe out the element of profit on import of restricted goods - element of wiping of profit in the interface of expenditure incurred on detention and demurrage charges as also in defraying of legal expenses and interest, was also required to be considered - The Tribunal did not consider these aspects at all and just side-tracked the entire issue by holding that on making payment of disputed amount, the goods had been released to the importer. Sequelly, redemption fine is reduced to 10% of the value assessed by the department. Penalty is reduced to 5% of such value except in case of appeal No.8 of 2012 where penalty has already been reduced to 50% i.e. less than even 5%, by the Tribunal itself. - Decided partly in favour of Appellant.

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• 2013 (11) TMI 1031
  Order of Penalty set aside u/s 11AC the Central Excise Act, 1944 r.w Rule 15 of the Cenvat Credit Rules, 2004 – Held that:- As per the Circular dated 07.08.2011 issued by Department, the appeal ought not to have been preferred by the department, as the amount involved is less than Rs. 10 Lakhs, unless the issue involved is recurring and/or it raises a pure substantial question of law - CESTAT has quashed the order of penalty on the ground that there will be a revenue neutrality and there was no loss to the department - the penalty under section 11AC of the Central Excise Act, 1944 has been quashed and set aside, Thus, the Tribunal has not committed any error and/or illegality - no substantial question of law has arisen – Decided against the revenue.

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• 2013 (11) TMI 1030
  Interest liability u/s 82 and 83 of the Finance Act, 2005 Held that:- The appellant has as such admitted the reversal of cenvat credit and infact had reversed the cenvat credit voluntarily - From the order passed by the Tribunal, it appears that the Tribunal has also tried to strike the balance and has observed that the interest liability under sections 82 and 83 of the Finance Act, 2005 would be from that day – there is no reason to interfere with the order passed by the Tribunal in appeal as well as in rectification application - No substantial question of law arises in the appeal – Decided against Appellant.

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• 2013 (11) TMI 1029
  Rectification of error – Restoration of appeal – Held that:- CCE BELAPUR, MUMBAI Vs RDC Concrete (India) P. Ltd. [2011 (8) TMI 25 - SUPREME COURT OF INDIA ] - a mistake apparent on record must be an obvious and patent mistake and the mistake should not be such which can be established by a long drawn process of reasoning - The Commissioner (Appeals) dismissed the appeal filed by the applicant without going into the merit, on the ground that the appeals were filed beyond the time limit prescribed under Section 35(1) of the Central Excise Act, 1944 –the Tribunal had given a detailed finding about the conduct of the appellant in the final order - the applicability of Section 14 of the Limitation Act would depend on the examination of the entire facts on record of the case and such re-appreciation of facts are not permissible in the present application. It is seen that no appeal or revision was pending before any court, even before the Tribunal – During the intervening period, no appeal/writ petition was pending before the High Court/Tribunal – the relief under Section 14 of the Act, 1963 depends upon bonafide and with due diligence pursuing the remedy before a court without jurisdiction - It would be decided after considering the fact and law of the case by a long process of reasoning, which is not permissible under ROM application – there was no reason for modification of order – Decided against Assessee.

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• 2013 (11) TMI 1028
  Refund under Rule 5 of the CENVAT Credit Rules, 2004 – deemed CENVAT credit on the grey fabrics - Held that:- After considerable passage of time it is not possible for the appellant to produce such document which did not belong to the appellant - The merits of this case has to be seen against such factual matrix - Once it is agreed in principle that refund as per provisions of Rule 5 of CENVAT Credit Rules, 2004 shall be granted, in situation where the goods are supplied to any manufacturer without payment of duty under provisions of Rule 19(2) of the Central Excise Rules, 2002 and Notification No. 43/2001, the concerned assessee can, at this point of time, be asked only to produce the procurement certificate countersigned by the Assistant Commissioner having jurisdiction over the person procuring the goods. Quite often it may not be possible to establish one to one correlation between the raw material supplied and the goods exported and consequently between the raw material supplied and the Shipping Bills and ARE-2s - The raw materials get used in manufacture of different products and different products are exported under different Shipping Bills - if the Assistant Commissioner having jurisdiction was not enforcing his responsibility as envisaged under Notification No. 43/2001, the assessees cannot be penalized - both the appellant and some of the persons procuring the goods were in the same jurisdiction but no effort was made to do any verification at the relevant time - the balance of refund should be granted to the appellant – Decided in favour of Assessee.

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• 2013 (11) TMI 1027
  Eligibility for cenvat credit – Revenue was of the view that the appellant received was scrap and not capital goods – Held that:- Even if the appellant unit had received scrap capital goods, it is not disputed that they had used the same as capital goods - The question as to whether any goods are capital goods or otherwise has to be determined on the basis of how the same are used – Following Maharshi Alloys (P) Ltd. vs. CCE, Tirupathi [2005 (11) TMI 281 - CESTAT, BANGALORE] - just because in this judgment is in respect of the provisions of Central Excise Rules, 1994 pertaining to the Modvat credit, it cannot be said that the ratio of this judgment would not be applicable - there is no certificate of Chartered Engineer regarding the usability of the goods as capital goods, as the use of the goods received by the Appellant from their other units as capital goods is not disputed – the order is not sustainable – Decided in favour of Assessee.

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• 2013 (11) TMI 1026
  Waiver of Pre-deposit - Evasion of Central Excise Duty - Not recording of correct clearance – Held that:- There is factual recording by the adjudicating authority that the appellant maintained parallel set of statutory records like RG 1 and invoices etc. - the authorities has given reasoning for coming to the conclusion for confirmation of the demands - shortage of raw materials, maintenance of parallel records by the appellant, raises suspicion against the appellant; as to why they need to do so - at this juncture it is not possible to appreciate, that the records were maintained by the appellant in order to enhance their loan and credit limit with the bankers - revenue has not corroborated the clandestine removal findings or clandestine manufacture - All the legal points raised by the appellant’s needs deeper consideration and is possible only at the time to final disposal of appeal - the appellant has not made out prima facie case for complete waiver of pre deposit amount involved – Assessee directed to submit Rs.15 lacs as pre-deposit – upon such submission rest of the duty to be waived till the disposal – Partial stay granted.

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• 2013 (11) TMI 1025
  Reversal of credit attributable to the inputs contained in the goods prior to clearance at Nil rate of duty – Following Chandrapur Magnet Wires (P) Ltd. Vs CCE Nagpur [1995 (12) TMI 72 - SUPREME COURT OF INDIA ] - The appellants were unable to identify the inputs attributable to the use of the exempted final products and therefore they have reversed the credit prior to the clearance of the goods. Where the manufacturer produces dutiable final products and also final products which are exempt from duty and it is not reasonably possible to segregate inputs utilised in manufacture of the dutiable final products from the final products which are exempt from duty - the manufacturer may take credit of duty paid on all the inputs used in the manufacture of final products on which duty will have to be paid - This can be done only if the credit of duty paid on the inputs used in the exempted products is debited in the credit account before the removal of the exempted final products - The appellant is unable to identify the inputs used in the exempted final product and they have reversed the credit before clearance of the goods - the demand of 5% of value of the exempted goods under section 6 (3) (a) of the Cenvat Credit Rules is not sustainable – order set aside – Decided in favour of assessee.

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• 2013 (11) TMI 1024
  Penalty u/s 11AC of Central Excise Act dropped by the Commissioner (Appeals) - Clandestine removal of goods – Held that:- Following Union of India vs. Rajasthan Spinning and Weaving Mills [2009 (5) TMI 15 - SUPREME COURT OF INDIA] - when the elements for imposition of penalty under Section 11AC are present, the penalty under this Section has to be imposed irrespective of whether the duty involved on the goods cleared clandestinely had been paid before the issue of show cause notice - the order waiving the penalty on the assessee company under Section 11AC is not correct. Penalty on Authorised Signatory under Rule 26 – Held that:- He himself had admitted that the goods found short were removed from the factory without payment of duty and without issue of invoice and he also accepted the duty liability, penal provision of Rule 26 would be attract as he has dealt with the goods found short and were removed from the factory without payment of duty and without issue of invoice - just because the duty on the goods paid before the issue of show cause notice, the same cannot be treated as the ground for non-imposition of penalty under Rule 26 – order set aside – Decided in favour of Revenue.

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• 2013 (11) TMI 1023
  Determination of duty u/s 11A (2) before demanding interest – assessee contended that what is being demanded is CENVAT credit and the same has been treated as duty, since Section 11A has been mentioned in Rule 14 and therefore there should have been determination of duty in this case. - Held that:- Section 11A (2B) is an exception to the procedure prescribed in Section 11A - It caters to a situation where an assessee makes a voluntary payment and there is no suppression or fraud or mis-declaration or collusion, etc. The Section itself provides for recovery of the entire amount and it also provides that subsection 2B would not apply where there is fraud, suppression, mis-declaration, etc. when Section 11A has been made applicable for recovery/payment of credit wrongly taken or utilized, it would be unfair to an assessee to make a claim that when the credit is treated as duty, determination under section 11A (2) is a must - short payment would include nonpayment or short payment of interest also - the procedure adopted by the Revenue to demand only interest cannot be found fault with - Once section 11A (2B) provisions are applicable to a particular situation, the provisions of Sections 11A (1A), (2) and (2A) would not apply. The circumstances covered in Section 11A (2B) refers to duty of excise not being levied or short-paid on the final products is really surprising - Rule 14 clearly provides that for the purpose of recovery of wrongly utilized credit or wrongly taken credit, provisions of Section 11A and 11AB would apply mutatis mutandis - This does not mean that when Section 11A (2B) is invoked, it becomes duty and not the wrongly utilized CENVAT credit - the appellant has failed to make out any case whatsoever for setting aside the order demanding interest from the - Decided against Assessee.

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• 2013 (11) TMI 1022
  Mode of application of Refund – Waiver of Pre-deposit - Whether the appellant should have applied for refund under the appropriate provisions of the Central Excise Act or they could take suo moto credit of this duty – Held that:- Relying upon BDH INDUSTRIES LTD. Versus COMMISSIONER OF C. EX. (APPEALS), MUMBAI-I [2008 (7) TMI 78 - CESTAT MUMBAI ] - this is not case where duty was paid by mistake on the same goods more than once - suo moto credit of duty paid through cenvat credit is not permissible - the appellant have not been able to establish prima facie case in their favour and as such - Appellant directed to deposit 50% of the amount as pre-deposit – Upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.

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• 2013 (11) TMI 1021
  Applications for extension of stay already granted – Held that:- The third proviso to Section 35C (2A) of the Central Excise Act, 1944 was inserted by Finance Bill, 2013, in the context of such appeal is not disposed of within the period specified in the first proviso of the said Section, which was inserted by Finance Bill, 2002 – Following CCE, Ahmedabad Vs. Kumar Cotton Mills Pvt. Ltd. [2005 (1) TMI 114 - SUPREME COURT OF INDIA] - after considering the periods as specified in proviso to sub-section (2A) held that the Tribunal has power to extend stay after specified period - There is a direction that pre-deposit of the balance amount shall remain waived during the pendency of the appeal – application for extension of stay already granted allowed – Decided in favour of Assessee.

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• 2013 (11) TMI 1020
  Demand u/s 11D – Whether the assessee had issued bogus invoices for 3% commission without supply any goods - Held that:- This section is applicable to the manufacturer who has collected some amount from his customers as duty in respect of certain goods sold by him and that amount collected as duty has not been paid to the Government - When no goods have been supplied against the invoices and except for 3% commission, the appellant have not received any thing, there is no question of the appellant having received any amount towards duty which was not paid by them to the Government - Just because the invoices were issued by the appellant to M/s. Polymermann Asia Pvt. Ltd. showing sales of duty paid capital goods, it cannot be presumed that they had received the payment against those invoices when the evidence on record shows otherwise – order of the Commissioner (Appeals) set aside – Decided in favour of Assessee. Imposition of penalty under Rule 173Q(1)(bbb) of Central Excise Rules 1944 for issue a fake invoices – Held that:- Rule 173Q(1)(bbb) provided for imposition of penalty on any manufacturer, producer, a registered person of a Ware House or registered dealer, who willfully enters any wrong or incorrect particulars in the invoices issued for the excisable goods dealt by him with intent to facilitate the buyer to avail credit of the duty of excise in respect of such goods, which is not permissible under the Rules - issue of fake invoice of capital goods by M/s. MGM Tools Pvt. Ltd. would be covered by Rule 173Q(1)(bbb) - appellant’s plea that during the period of dispute there was no provision for imposition of penalty on any manufacturer for issue a fake invoice, is not correct – Thus, Penalty under Rule 173Q(1)(bbb) of Central Excise Rules 1944 upheld – Decided against Assessee. Penalty on Director of appellant company under Rule 209A of Central Excise Rules – Held that:- He was also involved in issue of fake invoices – Following Vee Kay Enterprises Vs. CCE [2011 (3) TMI 133 - PUNJAB AND HARYANA HIGH COURT] - penalty is imposed under section 26 of Central Excise Rules 2001/2002 analogous to Rule 209 A of Central Excise Rules, 1944 for issue of fake invoices - The appellant issued invoices without delivery of goods with intent to enable evasion of duty – Thus the director of the company would be liable to pay penalty – Decided against Assessee.

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• 2013 (11) TMI 1019
  Clubbing of clearances for the purpose of SSI Exemption - Company controlled by family members - Dummy units - Assessee contended that each of the units is an independent entity and there is no justification for treating them as the units owned by one person – Held that:- The question of identifying the main unit and the dummy unit and demanding duty only from the main unit arises only in that situation when on investigation, only one unit is found to be actually functioning and other units are found to be just non-functional fake units established just to show bogus production and clearances in their name – Following Income Tax Commissioner, Madras Vs. Meenakshi Mills, Madurai [1966 (9) TMI 34 - SUPREME Court] and CCE Vs. Modi Alkalies & Chemicals Ltd. [2004 (8) TMI 108 - SUPREME COURT OF INDIA] - when on lifting the corporate veil it is found that only one person/company has extraordinary interest and pervasive control over the financial matters and management of other companies, their clearances have to be clubbed for determining their eligibility for the SSI Exemption Notification No. 1/93-CE. the evidence on record is sufficient to establish that it is BSL, Delhi controlled by Sh. H.R. Shiv and his family members, which had pervasive financial and management control over ESIL, LHIL, NIPL, SGBL & FSIL and only to wrongly avail the SSI Exemption, the manufacturing activities had been split up into several companies. Therefore, ESIL, LHIL, NIPL, SGBL & FSIL have to be treated as the units owned by BSL, Delhi and for determining their eligibility for SSI Exemption, their clearances during the preceding financial year have to be clubbed and if this is done, none of them would be eligible for SSI Exemption. - The duty demands have, therefore, been correctly confirmed and penalty under section 11AC has been correctly imposed on each of the six Appellant companies Imposition of Penalty u/s 11AC - Imposition of Penalty under Rule 209A of Central Excise Rules 1944/ Rule 26 of Central Excise Rules, 2001 – Held that:- Sh. H.R.Shiv, his son Sh. Neeraj Hans have dealt with the goods which they knew or had reason to believe, were liable for confiscation, penalty on then under Rule 209A of Central Excise Rules, 1944/Rule 26 of the Central Excise Rules, 2001, has been correctly imposed – Decided against Assessee.

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• 2013 (11) TMI 1018
  Duty paying documents - Availability of cenvat credit – Bills of Entry not in the name of manufacturer – Bills in the name of the person who sold the goods and endorsed the bill – Held that:- Following Vimal Enterprises Vs. Union of India [2005 (7) TMI 111 - HIGH COURT OF GUJARAT AT AHMEDABAD] and Marmagoa Steel Ltd., Vs. Union of India [2005 (4) TMI 89 - HIGH COURT OF JUDICATURE AT BOMBAY] - Rule 57G of the Central Excise Rules, 1944 did not require that Bill of entry should be in the name of the person claiming credit of duty and there was no provision regarding endorsement of the Bill of entry, Modvat Credit on the basis of such bill of entry cannot be denied – Decided against Revenue.

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• 2013 (11) TMI 1017
  Wrong Quotation of Penalty in the show cause notice – Revenue proposed penalty under Rule 15 (1) of Cenvat Credit Rules, 2004 – but imposed Penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 - The Appellants were not put to notice - Held that:- The cenvat credit has not been availed by suppressing any facts or by way of mis-declaration - The show-cause notice has proposed a penalty under Rule 15 (1) of the Cenvat Credit Rules, 2004 where penalty has been imposed under Rule 15 (2) of the said Rules –There was no substance in the contention of the Revenue that it was a mere wrong quotation of Rules. Following Devans Moderen Breweries Ltd. Vs. Commissioner of Central Excise, Chandigarh [2006 (8) TMI 15 - SUPREME COURT OF INDIA] - before imposition of penalty under the relevant Rules, the relevant Acts or omissions are required to be disclosed, so as to enable the notice to submit the reply to the allegation of violation of Rules quoted in the notice - The imposition of penalty under Rule 15 (2) of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944, is bad in law, thus set aside – Decided in favour of Assessee.

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• 2013 (11) TMI 1014
  Unconditional exemption or not - whether payment of duty is incorrect as per section 5A(1) - Concessional rate of duty under Notification No. 4/2006-CE - manufacturing of kraft paper - Irregular CENVAT credit – revenue of the view that since unconditional exemption is available assessee wrongly paid duty and should be demanded u/s 11D and demand has been raised towards uitlization of cenvat credit – Held that:- serial numbers 90 & 91 imposed different conditions - There is no condition upto the first clearance of 3500 MTs of kraft paper in respect of Sl. No. 90 of the said Notification - the exemption under the Notification has not been granted absolutely - the applicant has made out a prima facie case for waiver of the entire amount of duty, interest and penalty – Pre-deposit of the entire amount of duty, interest and penalty waived till the disposal – stay granted.

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