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TMI Tax Updates - e-Newsletter
November 24, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Customs
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Classification of imported of Act II Microwave Popcorn - classified under CTH 20058000 or CTH 2106 90 99 or CTH 20081190 - The correct classification of imported goods would fall under Chapter Heading No. 20081190 - AT
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Courier - revocation of registration - No serious infringement of KYC verification leading to any significant revenue loss was pointed out, even in the Show Cause Notice - Revocation of the Courier Registration set aside - AT
Service Tax
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CENVAT credit - rental services - Rule 2(l) of CCR, 2004 clearly mentions that the service utilised in or in relation to the manufacture of final products is eligible as an input service - AT
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Refund claim - N/N. 12/2005-ST - Export of services - filing of declaration is a procedural requirement which is condoned and the lower authorities are directed to process the refund claim on its merits in accordance with law. - AT
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Goods Transport Agency Services - delivery of food grains as per direction of the District Supply Officer/District Collector, Latur, under P.D.S. scheme - No service tax liability - AT
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Imposition of penalty u/s 78 - there was a bonafide error in not recording the amount in the ST-3 return is seems to be acceptable - penalty waived - AT
Central Excise
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Refund claim - compounded levy scheme - abatement in case of non-production of goods - no duty can be demanded when goods are not produced - refund allowed - AT
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Credit availed on inputs transferred to other unit - it is apparent that the other unit to which the material was transferred could not have benefited by taking the credit of the said duty. In these circumstances, the intention to evade duty is apparent. - AT
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CENVAT credit on PET Pre-forms - whether PET Pre-forms are not an input for their finished product-PS Radiators and Cylinders? - The allegations in the show cause notice does not have any legs to stand as it is based on wrong set of facts - AT
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The appellant has correctly taken suo motu Cenvat credit of Education Cess and S&H Education Cess paid by them by utilised Cenvat credit of BED after payment of Education Cess and S&H Education Cess through PLA. - AT
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CENVAT credit - capital goods - credit cannot be denied on the ground that the appellant have made a claim of drawback - the appellant is legally entitled for the Cenvat Credit and need not to reverse the Cenvat Credit on the export of capital goods - AT
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Imposition of interest u/r 14 of Cenvat Credit Rules, 2004 - Since the appellant had merely availed credit and had reversed the same before utilizing the availed credit for remittance of duty, interest liability would not arise. - AT
VAT
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Assessment of turnover - best judgement assessment - suppression of facts - The mere fact that these two loose papers were found in a desk present in the business premises would not on its own form sufficient ground for rejection of the books of accounts - HC
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Taxability of transactions taking place beyond or outside the Customs Frontier of India - duty free shops at various international airports and seaports in India - goods are not taxable - HC
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Input tax credit - if the selling dealer has not paid the collected tax and that liability has to be fastened on the selling dealer and it cannot be mulcted on the petitioners-purchasing dealers who had shown the proof of payment of tax on the purchase made. - HC
Case Laws:
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Income Tax
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2016 (11) TMI 974
Defective return - Held that:- This Court directs that the authority concerned may give to the present petitioner also an opportunity of rectifying the defect within the next 15 days. It is open to the assessee to place such material and evidence before the authority concerned that it may have to justify its claims. The authority may thereafter, pass fresh orders.
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2016 (11) TMI 973
Business expenses being commission on sales paid disallowed - Held that:- The arguments is that in order to turn down the claim for expenditure the demand of the above quoted Section 40 (1) and (2) of the Income Tax Act should have been met with and reasons should have been supplied. No reason has been supplied for turn down the claim at 15%. The arguments is also that dis-allowance would have been such expenditure, which is excessive or unreasonable having regard to the fair market value of the goods then alone it could have been turned down. There is not even a whisper in the order of the tribunal that the claim made by the assessee is either unreasonable or excessive. No comparative data has been examined. No evidence there too was produced as to how such business allowance are to be made. In view of the above, it would be in the interest of justice that the matter should be re-examined again after giving opportunity of hearing to the parties and fixing date in the matter. The matter be decided having regard to the above quoted sections 40 A (1) and (2) of the Income Tax Act within three months from the date of production of a certified copy of this order before the Tribunal.
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2016 (11) TMI 972
Grant of registration - whether apart from the sale deed had not been able to produce any document to substantiate the fact of the degree college being established for a charitable purpose? - Held that:- We are unable to agree with the submissions inasmuchas the impugned order categorically records that except for the fact of non filing of documents no other objection had been raised by the Commissioner Income Tax about the genuineness of the activities of the assessee trust. In such a situation, such a finding of fact having been recorded and without there being any element of perversity in the same or any other adverse material on record there is no reason to accept the argument of the learned counsel for the appellant as they do not raise any substantial question of law.
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2016 (11) TMI 971
Profit arising on transactions carried out with borrowed funds - “Short Term Capital Gain” OR “Business Income” - Held that:- The facts in the present case are completely different from the facts existing in Assessment Years 2005-06 and 2006-07. In the subject assessment year, the assessee has carried out the business activity out of its own funds and the authorities have also rendered a finding of fact that the transactions are not large nor so frequent so as to hold that the respondent assessee was a trader in shares. The finding of fact arrived at both by the CIT(A) as well as the Tribunal for the subject assessment year that the respondent assessee was an investor in shares out of its own funds and considering the volume and frequency of purchase / sale of shares is not a trader has not been shown to be perverse by the Revenue.
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2016 (11) TMI 970
Allowance of expenditure - set up of business - Held that:- Although the obtaining of license is on a slightly higher plain, the fact remains that in this case, there is nothing on record to say that the Memorandum of Association of the assessee company prevented it from earning the income that it did. It is not merely the earning of the income, but also the nature of expenditure incurred which is determinative at least in the facts of this case. The company strove and did all that it could to set-up the infrastructure which ultimately culminated in obtaining the NBFC license. In the process, the expenditure incurred by it had a nexus with the license that it could successfully obtain on 09.04.2008. Having regard to all these facts, this Court is of the opinion that the application of law declared in Whirlpool (2009 (8) TMI 28 - DELHI HIGH COURT) and the decision in CIT v. L.G. Electronics (India) Ltd. [2005 (5) TMI 30 - DELHI High Court ] was unexceptionable. Loss claim - whether the loss could have been allowed at all having regard to the fact that it was claimed in the revised return and not in the original return? - Held that:- The revised return was filed within the time prescribed. In fact, the revised return was finally taken up for assessment.; the orders too were passed on it. In the circumstances, the very purpose of filing a revised return and making a provision thereof would be defeated if the Revenue’s primary contention that the claims should have been made in the original return were to be followed and upheld. No question of law arises in such circumstances. The appeal is accordingly dismissed.
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2016 (11) TMI 969
Expenditure incurred in connection with the issue of share capital - revenue or capital expenditure - Held that:- We find that the Apex Court in Kodak India Ltd. (2001 (10) TMI 7 - SUPREME Court ), has held that expenses incurred in connection with issue of public shares to Indian public even when the issue of shares was done to comply with the directions of the Reserve Bank of India (RBI), would be an expenditure incurred in the capital field. - Decided against assessee Interest received on deposit of share application money - whether cannot be adjusted against the expenditure incurred in connection with the issue of such shares? - Held that:- This issue has been held in favour of the Applicant-Assessee by the decision in in Commissioner of Income Tax v/s. Shree Rama Multi Tech Ltd. [2012 (12) TMI 984 - GUJARAT HIGH COURT] held that the Assessee was statutorily required to keep the share application money in a separate account, till the allotment of shares is completed. Therefore, interest earned on such separately kept amount was adjustable towards the expenditure incurred for raising share capital. This is so as the earning of interest was inextricably linked with the requirement to raise share capital. In support, reliance was placed upon the decisions of the Apex Court in Commissioner of Income Tax v/s. Bokaro Steel Ltd. [1998 (12) TMI 4 - SUPREME Court ] and Commissioner of Income Tax v/s. Karnal Cooperative Sugar Mills Ltd. [1999 (4) TMI 7 - SUPREME Court]. We are in respectful agreement with this decision of the Gujarat High Court. - Decided in favour of assessee
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2016 (11) TMI 968
Validity of reopening of assessment - period of limitation - Held that:- Considering objection filed by the petitioner vide annexure P-5, particularly objection with regard to limitation has not been decided by the Assessing Officer by a speaking order we dispose of this writ petition with the following direction : The Assessing Officer shall first take up for consideration the objections raised by the petitioner both vide annexure P-3 and P-5, including the objection filed with regard to period of limitation in proceeding under Section 148, decide them by a speaking order and then only shall proceed in the matter of assessment, if permissible, under law based on decision taken on the representation.
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2016 (11) TMI 967
Grant of deduction under section 80-IA(4) - Held that:- MARS Planning and Engineering Services Pvt. Ltd. was appointed by GIDC for the purpose of certifying the quality control and completion of the project for State subsidy. MARS Planning and Engineering Services Pvt. Ltd. had already given such completion certificate well before March 31, 2011, on the basis of which the State Level Committee had approved the petitioner for grant of subsidy, which was also granted along with completion certificate. There was thus voluminous evidence on record to suggest that the project was completed before March 31, 2011. However, we do appreciate the anxiety of the Central Board of Direct Taxes that such task should normally not be part of its responsibility. It is in this regard that completion certificate should be provided by a local authority. In strict sense of the term, perhaps the petitioner did not fulfil this requirement. However, a more liberal or practical approach could be that when MARS Planning and Engineering Services Pvt. Ltd. was appointed by GIDC who had certified that the project was completed before March 31, 2011 and when the State Government had acted on such report and approved the subsidy, this should have been seen as a substantial compliance of such requirement. However, to put the issue beyond any controversy, we permit the petitioner to produce such certificate from GIDC, which is also a local authority, before the Central Board of Direct Taxes which may be done latest by September 30, 2016. If such certificate providing that the project of the petitioner is completed before March 31, 2011, is issued, the Central Board of Direct Taxes shall approve the petitioner for grant of deduction under section 80-IA(4) of the Act and issue necessary notification in this respect, within three months from the date of receipt of such certificate.
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2016 (11) TMI 966
Reopening of assessment - capital gain has escaped assessment - share transaction inflated - Held that:- It is an admitted position that the petitioner has not placed on record the cost of acquisition of shares of Krunal Oil Marketing. The nature of transaction of transfer of investment from Krunal Marketing's preference shares from Adani Infra preferential shares was immediately not visible from the declaration made by the petitioner. This is therefore, a case where a further scrutiny would be permissible even if the notice for reopening is issued beyond a period of four years from beyond the period of relevant assessment year. We notice that the Assessing Officer had raised certain queries regarding the series of investment by the petitioner in government or other securities. However, the question of transfer of shares of Krunal Oil Marketing Pvt. Ltd. by acquisition of preferential shares of Adani Infra was never examined by the Assessing Officer. Particularly, if we were to believe that there was no full and true disclosure with respect to acquisition of such shares of Krunal by the petitioner and the cost thereof and other relevant details, any inquiry by the Assessing Officer in this respect would not shut out the further scrutiny. - Decided against assessee
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2016 (11) TMI 965
Deduction u/s 80HHD - whether the reserve amounting to a sum of ₹ 44,68,966/- was properly utilized - Held that:- It is not in dispute that HRL has set up a new hotel which commenced business on April 1, 2002, i.e. to say in the same financial year in which the money was invested. It is also not in dispute that the prescribed authority has granted approval to HRL. The proceeds of the issue could be used for running of the new hotels under sub-clause (a) and could also have been used for the purpose of providing new facility for the growth of tourism in India. Tribunal did not record any finding that the money invested by the assessee or any part thereof to the share capital of HRL was utilised for any object which does not fall either within subclause (i) or sub-clause (ii). Unless such a finding is recorded, the benefit could not have been denied.The minutes of the meeting of the Board of Directors of HRL, held on March 28, 2003, shows that the funds were required by HRL for further diversification and expansion of the existing business. Expansion and diversification, according to us, are both activities pertaining to running of a hotel or any business for that matter. It could not, therefore, have been said that the reserve of a sum of ₹ 44,68,966/- was utilised by the assessee for a purpose not authorised by the statute.In that view of the matter, the addition was unwarranted altogether and the finding in that regard is arbitrary and perverse - Decided against revenue Addition of notional interest in respect of appellant’s balances with its subsidiaries - Held that:- Nothing is found from any of the judgments of the Assessing Officer, the CIT(A) or the learned Tribunal to show that the subsidiary (HRL) did not use its funds for the running of the hotel or for the purpose of providing for facilities for the growth of tourism in India nor is there any evidence to show that any part of the money due and owing by HRL to the assessee was spent for any personal business of any of the directors. Thus the addition made by the Assessing Officer and upheld by the CIT(A) and the learned Tribunal are not sustainable - Decided against revenue Rental income received - assessable as business income and not under the head ‘house property’ - Held that:- Hotel is obviously a business of the assessee. Terrace of that hotel was utilised for the purpose of installing a tower and the income arose out of the rental of the terrace. The business of the assessee is, in a sense, to let out the rooms to the guests for consideration, though strictly speaking in law it is not a case of letting out. It may be a case of licensing. Then can it be said that letting out of the terrace is not the business of the assessee? If the rental arising out of letting out of the terrace is to be treated as an income arising out of house property, the income arising out of letting out rooms of the hotel should also be similarly treated. The assessee is not prepared to have his income from hotel assessed as income arising out of house property. Therefore, the view taken by the learned Tribunal is a correct view. - Decided against assessee
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2016 (11) TMI 964
Deduction under section 36(1)(iii) - Interest expenses relatable to interest-free advances - ITAT allowed the claim - Held that:- In the judgment in CIT v. V. I. Baby and Co. [2001 (10) TMI 58 - KERALA High Court] this court considered this provision and held that in a case where interest-free advance was given by the assessee and deduction is claimed, the question to be considered is what is the benefit that is derived by the assessee by giving such interest-free advance. It was also held that so long as the assessee is not the beneficiary of the investments made by the partners, their relatives and the sister concerns from out of the interest free advances, the Assessing Officer is perfectly justified in disallowing interest in proportion to the advances made. Subsequently, in the judgment in S. A. Builders Ltd. v. CIT (Appeals) [2006 (12) TMI 82 - SUPREME COURT ] held that when a claim for deduction under section 36(1)(iii) is made, the authorities should enquire as to whether the interest-free loan was given as a measure of commercial expediency and on facts if it is so found, deduction is liable to be allowed. The court also explained that the expression "commercial expediency" is an expression of wide import and includes such expenditure that a prudent businessman incurs for the purpose of business and that such expenditure may not have been incurred under any legal obligation. Reading of the order passed by the Tribunal would show that, it has held that its work is only to decide whether the borrowed capital is used for the purpose of business. Thereafter without any further discussion, it has concluded that the funds advanced to the sister concerns were out of business expediency. All the three orders are totally unsustainable for the reason that the test for extending the benefit of section 36(1)(iii) laid down by this court and the apex court were not applied to the facts of the cases. Answering the questions of law in favour of the Revenue
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2016 (11) TMI 963
Disallowance of interest expenses - whether interest expense was incurred to earn interest income on capital balance in the firm which is taxable as business income? - "Income from other sources" OR "Business Loss" - Held that:- No doubt, the interest due to or received by partner on capital contributed by partners in partnership firm is assessed to tax as business income u/s 28(v) of the Act in the hands of the partner but the assessee could not show that the partners have in-fact agreed to pay interest on their capital contributed in the partnership firm M/s Systematic Exports during the impugned assessment year and a valid and legal binding obligation is cast on the partnership firm M/s Systematic Exports to pay interest on capital specifically to the partners in presenti during the impugned assessment year . The assessee’s had taken a contention that had there been any profits in Systematic Export, the assessee would have received interest from the partnership firm need verification from the actual conduct of Systematic Exports over the years to prove that the firm Systematic Exports in fact paid interest on capital contributed by the partners when there were profits in the said firm . The share of profits on the capital contributed by the assessee with the partnership firm M/s Systematic Exports , are exempt from tax u/s. 10(2A) of the Act. Thus, necessarily the expenses incurred in relation to earning of the income which does not form part of total income, has to be disallowed as per provisions and mandate of Section 14A of the Act unless it is shown that the interest is paid / payable on the capital contributed by the partner in the firm Systematic Exports which interest is chargeable to tax u/s 28(v) of the Act . Interest of justice will be best served if the matter is set aside and restored to the file of the AO for fresh determination of the issue on merits
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2016 (11) TMI 962
Addition of notional interest on the outstanding debtor balances with associated enterprises - Held that:- At the time of hearing, it is pointed out that if the notional interest calculated @ LIBOR + 200 basis points is reduced from the margin earned by the assessee, the entity level margin will reduce from 21.29% to 21.17% and if the notional interest calculated @ 6.19%, as taken by the Assessing Officer, is reduced from the margin of assessee, the entity level margin would reduce from 21.29% to 19.65%. It is pointed out that in both the situations, the reduced margin of assessee is much higher than the margin of the comparable concerns accepted by the TPO, i.e., 8% and, therefore, the transactions with the associated enterprises can be accepted to be at an arm’s length and no separate adjustment is required to be made. The aforesaid factual matrix is similar to that considered by the Tribunal in Assessment Year 2009-10 (supra) and, therefore, following the precedent, in the instant year also, it has to be held that the addition of ₹ 12,83,550/- made on account of notional interest chargeable on the outstanding debtor (i.e. associated enterprises) balances is not tenable and is directed to be deleted. - Decided in favour of assessee
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2016 (11) TMI 961
Unexplained investment u/s.69 - unexplained expenditure u/s 69C - survey conducted - Held that:- The whole exercise of revenue was based on conjectures and surmises and there was no material on record which proved that the renovation work was met out of money other than the borrowed from the Bank, nor could the AO or ld.CIT(A) record any findings that the assessee had any other source of income apart from its regular income of the assessee. In our opinion, the assessee has explained the source of expenditure and the nature of expenditure incurred and therefore the Additions made by the AO u/s 69 of the Act as unexplained investments and u/s 69C unexplained expenditure could not be sustained in the present facts and circumstances. Moreover, the co-ordinate bench of the Tribunal for the assessment year 2004-05 deleted the addition by ld. CIT(A) which was made by the AO on the basis of loose papers page no 4 and 5 impounded during the course survey action - Decided in favour of assessee Disallowance of depreciation on hotel building - Held that:- We find that the assessee has already proved before the authorities below that the assessee has incurred expenditure for the purpose of construction and renovation of the hotel for creating some more space/rooms for residential purposes and the source was out of money borrowed from Corporation Bank. We have already decided in grounds no.1 and 2 above that the source of renovation and repairs were out of funds arranged from the Corporation Bank by the assessee firm. Accordingly we are of the considered opinion that money spent by the assessee towards construction and renovation in the block of assets was eligible for depreciation as the same was being used for the purpose of business of the assessee as the fact of expenditure having incurred on renovation was proved - Decided in favour of assessee Disallowance of interest paid to the Corporation Bank - Held that:- We find that the assessee has already proved that the renovation and construction of hotel out of funds borrowed from the Corporation Bank which has already been elaborately discussed while deciding grounds of appeal no.1 and 2 of this appeal and decided in favour of the assessee. In our opinion, the assessee has proved that the loan was taken ,borrowed and used for the purpose of business of the assessee and therefore , the assessee is entitled to claim the depreciation on the amount of expenditure capitalized during the year. On the same analogy , the interest on loan from Corporation Bank would be allowed as admissible expenses.- Decided in favour of assessee Unexplained expenditure u/s 69C - Held that:- We find merit in the contentions of the assessee that since the assessee has already offered and added a sum of ₹ 50 lakhs suo mottu at the time of filing of return and the benefit of unexplained transactions ₹ 44,81,000/- should be allowed to be adjusted against the said voluntary disclosure which was specifically made to cover any expenses , notings or cash transactions as per the affidavit as in respect of suo motto disclosure no other materials was found. We are, therefore, not in agreement with the findings of the ld. CIT(A) in upholding the addition. In our opinion, the same should be allowed to be covered and adjusted against the surrender of ₹ 50 lakhs at the time of filing of return of income - Decided in favour of assessee Addition u/s 69C - Held that:- We find that the ld.CIT(A) has recorded the finding of the facts while deleting the said addition and by holding that the entries in the said papers/sheets did not belong to the assessee or sister concern or its partners. We are in agreement with conclusion drawn by the ld.CIT(A) as nothing to controvert the finding of ld.CIT(A) has been brought before us by the ld. DR. Therefore we dismiss the appeal of the revenue - Decided in favour of assessee
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2016 (11) TMI 960
TDS u/s 194J - non deduction of tds on transaction charges paid to the Stock Exchange - Held that:- As decided in Commissioner of Income Tax 4, Mumbai Vs. Kotak Securities Ltd.[2016 (3) TMI 1026 - SUPREME COURT ] the assessee was not liable to deduct the TDS upon the transaction charges paid to the Stock Exchange. Therefore, when the amount was not due then no interest was liable to be payable. Accordingly, the order passed by the CIT(A) is wrong against law and facts and is liable to be set aside and these issues are decided in favour of the assessee against the revenue.
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2016 (11) TMI 959
Treatment of gains arising out of sale of shares - whether short term capital gains or business profit - Held that:- No infirmity in the order of CIT(A) for treating gain arising out of sale of shares held for more than 12 months as long term capital gains. This issue is also covered by the order of Tribunal dated 21.02.2014 in assessee’s own case. Addition u/s 14A - Held that:- We have carefully gone through the orders of the authorities below and found that CIT(A) has recorded a clear finding to the effect that AO has made disallowance without giving any finding as to whether there was any expenditure claimed as deduction in relation to exempt income. The findings so recorded by CIT(A) has not been controverted, accordingly we do not find any reason to interfere in the order of the CIT(A). Treatment to rental income - Held that:- Rental income so received by assessee was in respect of fixtures and fittings which was either part of residential unit or attached to the house property. The CIT(A) observed that these fixtures and fittings cannot be let out independently without letting out the flat in question to which these are attached. Under these circumstances, we do not find any infirmity in the order of CIT(A) for treating the rental income in respect of these amenities as income from house property.
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2016 (11) TMI 958
Addition u/s 68 - undisclosed cash deposited by the assessee in her bank account - Held that:- The assessee cannot prove that cash was not utilized elsewhere. In our opinion, the assessee as was very much at her liberty to keep availability of cash in such a manner so as to fulfill her family needs by withdrawing cash from her one bank account, keeping it with with her and depositing it into another bank account, in accordance with her family needs and other requirements especially after the death of her husband. In our view, the assessee has been able to successful prove the source of cash deposited in her account maintained with Standard Chartered Bank. Thus, addition made was illegal and incorrect on facts and therefore same is directed to be deleted. This ground is allowed in favour of assessee. Addition on account of cash deposited in bank account - source of cash claimed to be reimbursement received from Imperial Academy and Ms. Sheetu Luthra against expenses incurred earlier by the assessee - Held that:- We do not appreciate the approach followed by the Ld. CIT(A) in this regard. While rejecting the evidence submitted by the assessee, in case the Ld. CIT(A) felt some deficiencies in the confirmation, the same should have been confronted to the assessee. Alternatively, it was well within the powers of the lower authorities to get these facts directly verified from Ms. Sheetu Luthra whose complete particulars were there before them. Without properly examining the evidences, these should not be rejected on some surmises and conjectures. Such kind of approach leads to unfairness and shakes the faith of the taxpayers and therefore, it should be avoided. Under these circumstances, in our opinion, the assessee had duly submitted the evidences with respect to said amount. Therefore, the AO is directed to delete sum. This ground is allowed in favour of assessee. Amount received from Imperial College of Professional Studies(ICPS) - Held that:- It is noted that assessee brought on record of complete details and findings on record, and copy of ledger account of Imperial College of Professional Studies was also submitted. When the Ld. CIT(A) himself believed the transaction to the extent of ₹ 1,80,000/-, there were no concrete basis to disbelieve the remaining amount of ₹ 20,000, merely because same was received in cash. The Ld. CIT(A) had full powers under the law to make direct verification from the said property in case there were any doubts. But, without making any verification, he was not justified to partly disbelieve the account. Thus, addition of ₹ 20,000/- has been wrongly sustained and same is directed to be deleted. This ground is allowed in favour of assessee.
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2016 (11) TMI 957
Addition u/s 14A - Held that:- In the present case, we note that the assessee had earned dividend income to the extent of ₹ 2,22,343 and has claimed it as exempt income and informed the Assessing Officer that it has not incurred any expenditure in earning the income which is claimed as exempt income and the hon'ble Delhi High Court in the case of CIT v. Taikisha Engineering India Ltd. [ 2014 (12) TMI 482 - DELHI HIGH COURT ] wherein it was held that "The Assessing Officer at the first instance must examine the disallowance made by the assessee or the claim of the assessee that no expenditure was incurred to earn the exempted income. If and only if the Assessing Officer is not satisfied on this count after making reference to the accounts, that he is entitled to adopt the method as prescribed, i.e., under rule 8D". This pre-condition is also mandated in sub-rule (1) of rule 8D. We find that the Assessing Officer in the instant case has relied on the order of the Kolkata Bench however, has not given any citation or I. T. A. Number and so it is not clear as to what were the facts or the reason given in that case and on what basis whether any observation has been made cannot be discerned and so the reliance by the Assessing Officer of the said decision of the Kolkata Bench of the Tribunal not to record any satisfaction has no legs to stand and so it falls down and since the pre-requisite condition for invoking rule 8D has not been satisfied as per law by the Assessing Officer so the entire disallowance made under section 14A has to go and the Commissioner of Income-tax (Appeals) has rightly done so and therefore we confirm the order of the learned Commissioner of Income-tax (Appeals) and dismiss the appeal of the Revenue. - Decided in favour of assessee Addition u/s 36(1)(va) regarding late deposit of the employee's contribution to the PF and ESI - Held that:- we find that the dues were paid before filing of return of income which was filed on September 29, 2012 and since the learned Departmental representative could not controvert this fact recorded by the learned Commissioner of Income-tax (Appeals) that PF/ESIC dues were in fact paid before the assessee filed the return of income, so we are of the considered opinion that the expenditure need to be allowed in the hands of the assessee as held by the hon'ble Supreme Court in the case of CIT v. Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT ].- Decided in favour of assessee
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2016 (11) TMI 956
TDS u/s 194J - payment made to the artist - non deduction of tds - Held that:- There is a difference between an "artist/entertainer" and a "film artist". An artist/entertainer can be called a film artist, if he renders his/her services pursuant to production of film. However, an artist/entertainer will not be film artist if he entertains people not involved in production of film. The case of the revenue is not that Jasbir Jassi, Kunal Ganjawala have performed an activity while film production was going on and the assessee had made the payment, for the said activity performed by these persons. There is no doubt that Jasbir Jassi, Kunal Ganjawala and others are artists and if they perform in film as an actor or director or music director or assistant director or art director or singer or editor or lyricist or story writer or dialogue writer or as a dress designer could have attracted section 194J of the Act. It is not the case of the revenue that the assessee was producing a film and the artists were engaged in any of these activities which has been stated before. Therefore, the payment made to the artist does not fall in the ken of section 194J of the Act and so no TDS need to be deducted on this as per section 194J of the Act. It has been pointed out by the learned authorised representative that the payments made to Sonlibre International and Rhythm is not as per any contract and it was only for managing and arranging the artist for carrying out the performance. The payments has been made event wise on different dates by means of different cheques. Thus, we find that each payment made to them is an independent contract so the provisions of TDS are not attracted in the facts and circumstances of this case- Decided in favour of assessee
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2016 (11) TMI 955
Computation of capital gain - Adoption of value - Held that:- In the instant case, the difference between the valuation adopted by the Stamp Valuation Authority and declared by the assessee is less than 10 per cent. Therefore, we hereby direct the Assessing Officer to adopt the value as declared by the assessee. This ground of the assessee is allowed. Disallowance of indexation on the amount paid for acquiring possession of strip of land for computing the long-term capital gain - Held that:- The assessee is claiming to be the owner of the land even prior to the allotment made by the concerned authority, thus the assessee is claiming indexation since April 1, 1981. On a pointed query, the assessee could not produce any material suggesting that the ownership of the land in question was transferred to the assessee prior to the date when the land was allotted to the assessee. Even in respect of the Theory of Adverse Possession, the assessee has not placed any material on record that the assessee was declared owner by virtue of theory of adverse possession. In our considered view, for claiming to be the owner of the land, the assessee was required to produce necessary evidences. In the absence of evidence, when contrary evidences are on record, we do not see any reason to interfere with the orders of the authorities below - Decided against assessee Not taking the fair market value of the asset as on April 1, 1981 as cost of acquisition under section 55(2) - Held that:- The Assessing Officer has adopted the value at indexed cost of acquisition as on April 1, 1981 at ₹ 4,31,940 and in respect of the strip of land, adopted the indexation cost of acquisition at ₹ 13,97,120. So far as the indexed cost of acquisition with regard to the strip of land is concerned, in ground No. 3, we have already decided the matter against the assessee. Therefore, we are not inclined to interfere with the finding of the learned Commissioner of Income-tax (Appeals) on this issue. The submission of the assessee is rejected. Fair market value ought to have adopted at ₹ 110 per sq. yard for other portions of land - Held that:- We find force in the contention of the learned counsel for the assessee that fair market value of the property is to be adopted on the basis of comparable sale instances. Therefore, we hereby direct the Assessing Officer to re-compute the cost of acquisition on the basis after ascertaining the fair market value of the property with reference to April 1, 1981 excluding the strip of land which was purchased in the year 2008. This ground of the appeal of the assessee is allowed for statistical purposes.
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2016 (11) TMI 954
Unexplained sales - sale of shops on account of cash receipts which was not disclosed in the books of accounts - Held that:- Specific documents have been found during the course of survey which established factum of cash component involved in the sale of a shop. If the other shops which are identical in all respects are sold, then these are expected to fetch a similar price. There cannot be a variation of more than four times. The Revenue is not expected to put linkers on its eyes in such cases and if it is so done then it will give rise to un-restricted tax evasion in our country. Under these circumstances, in the peculiar facts of this case, where specific documentary evidences were found, we find that the burden was clearly on the shoulders of the assessee to disprove or negate the effect of these documentary evidences upon other identical transactions. Therefore, the assessee cannot take the benefit of these judgments on the facts of the case before us. Our view also finds support from the judgment of Hon’ble Supreme Court in the case of CST vs. H.M. Esufali H. M. Abdulali [1973 (4) TMI 49 - SUPREME Court]. Thus, with the aforesaid directions, this issue is sent back to the file of the AO.
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2016 (11) TMI 953
Unexplained bank transactions - Held that:- The assessees could not explain as to how the amount of ₹ 5 lakhs withdrawn from the common bank account was utilized. Looking at the entire facts and circumstances, the issues were to be decided on surrounding circumstances and human conduct. The burden to prove the cash entries is on the assessee since the requisite burden has not been discharged by the assessee in this behalf. In view thereof, the orders of the ld. CIT(A) on this issue are upheld. Thus, assessees’ appeals are dismissed. Apropos Somabhai Ambaalal Prajapati for AY 2005-06, it has not been disputed that the corresponding purchases are not shown in the seized record. Consequently they remained unaccounted. In view thereof, ld. CIT(A) has rightly appreciated the issue and held the entire unaccounted sales to be unaccounted income as the purchases expenditure are not found recorded. Apropos Pankaj Somabhai Prajapati, ld. CIT(A) in his order has given proper calculation and established that the source of loan of ₹ 18,81,429/- remained unexplained. Assessee, except making general comments, could not objectively prove that the assessee’s prima facie onus in respect of this loan was satisfactorily discharged. Assessee appeal dismissed
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2016 (11) TMI 952
Eligibility of deduction under section 10AA - Held that:- We find the claimed deduction under section 10AA of the Act was started in 2007 for which approval was granted by CSEZ Development Commissioner, permitting the assessee to establish the unit at SEZ to undertake its trading activity. The assessee purchases item like cigarettes and foreign liquor, beside other foreign suppliers, from Flamingo DFS Pvt. Ltd. and from Flamingo Duty Free Shop Pvt. Ltd. having their registered office at Navi Mumbai. These two concerns import the item from abroad and Flamingo got the licence to operate duty free shops at various air ports/sea ports in India and also has bonded warehouses in different cities in India wherever its duty free shops. The purchases made by the assessee are by way of high seas purchases wherein the goods are sold by Flamingo to the assessee, while the cargo is on the high seas. These are done through high seas sales contract. The necessary documents were duly examined by the learned Commissioner of Income-tax (Appeals) and this factual matrix is not controverted by the Revenue. Original bill of lading, bill of entry were also examined. The purchases were made on the high seas and not in India. There is not a single instance where the local purchases were made within India.The totality of facts/provisions of SEZ Act and SEZ Rules provides that the benefit of section 10AA is available on trading. The ratio laid down in Gitanjali Exports Corporation Ltd. [2013 (11) TMI 563 - ITAT MUMBAI ] supports the case of the assessee. - Decided in favour of assessee MAT computation - Held that:- Since we have upheld the claimed deduction under section 10AA of the Act in favour of the assessee there is no question of adding the same while computing the book profit under section 115JB of the Act. Thus we find no merit in the appeal of the Revenue.
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2016 (11) TMI 951
Penalty u/s 271D - Held that:- The hon'ble jurisdictional High Court in the case cited as CIT v. I. P. India P. Ltd. [2011 (11) TMI 252 - DELHI HIGH COURT ] while examining the identical issue has held that share application money is not a "deposit" within the meaning of section 269SS nor it is a "loan" by any stretch of imagination and as such, penalty cannot be imposed under section 271D of the Act. So, finding no infirmity or illegality in the findings returned by the learned Commissioner of Income-tax (Appeals), we hereby dismiss the present appeal filed by the Revenue. - Decided in favour of assessee
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2016 (11) TMI 950
Addition u/s 36 - Held that:- The assessee had sufficient interest-free funds to make investment in the group companies. Hon'ble Supreme Court in the case of Hero Cycles Pvt. Ltd. v. CIT [2015 (11) TMI 1314 - SUPREME COURT OF INDIA ] has held that where the investments has been made out of own funds/non-interest bearing funds, the disallowance under section 36(1)(iii) is not allowed. - Decided in favour of assessee
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2016 (11) TMI 949
Disallowance of depreciation - installation and the commencement of production - Held that:- As noticed that first balance-sheet was drawn by the assessee in the assessment year 2004-05 when it came in production and, thereafter, the balance-sheet for the assessment years 2005-06 and 2006-07 were also prepared which included the cost of the building and plant and machinery and the claim of depreciation in those years. Considering the materials and the documents available on record, it appears that nobody visited the site where the factory of the assessee was situated which indicates that the Assessing Officer merely proceeded on suspicion. He failed to bring contrary evidence on record. It is also noted that after a lapse of a considerable period and after the installation and the commencement of production, the Assessing Officer made enquiry in the subjected year and merely proceeding on suspicion, disallowed the claim of depreciation made by the assessee and, therefore, of a considered view that the claim of the depreciation disallowed by the Assessing Officer and confirmed by the learned Commissioner of Income-tax (Appeals) is without any basis and deserves to be deleted. In view of the facts and circumstances of the case, the order of the learned Commissioner of Income-tax (Appeals) is reversed on this issue. - Decided in favour of assessee Disallowance of household expenses and marriage expenses of the daughter - Held that:- We find from the record that the assessee has not been able to substantiate the household expenses and marriage expenses of the daughter to the satisfaction of the lower authorities. In this view of the matter, we find no reason to interfere with the order of the learned Commissioner of Income-tax (Appeals) which is sustained - Decided against revenue
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2016 (11) TMI 948
Addition based on mere survey statement - non availability of incriminating document found - Held that:- not a single incriminating document or evidence or loose sheet has been found. We put a specific query to the learned departmental representative to place on record any evidence or material other than statements of assessee’s partners supportive of the impugned addition. He replied in negative. We are of the opinion in these peculiar facts and circumstances that the impugned addition based on mere survey statement is not sustainable - Decided against revenue
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2016 (11) TMI 947
Penalty under section 271(1)(c) - provision of penalty - disclosure of income on the basis of the search operation - Held that:- The penalty in this case, if at all leviable, it should have been levied under section 271AAA(1) and not under section 271(1)(c) as has categorically been provided in sub-section (3) of section 271AAA. The intention of the Legislature in incorporating the provisions contained under section 271AAA effective during the period June 1, 2007, to July 1, 2012, is to provide general amnesty in search and seizure cases, and the case of the assessee undisputedly falls under section 271AAA and cannot be dealt with under section 271(1)(c) by any stretch of imagination even. So, we are of the considered view that the very initiation of the penalty proceedings against the assessee under section 271(1)(c) are vitiated in view of the amended provisions of law applicable effective from June 1, 2007, till July 1, 2012, as the additional income to the tune of ₹ 36,80,520 was disclosed by the assessee on the basis of the search operation conducted on February 10, 2009. So, without going into the merits of the case, we are of the considered view that the initiation of penalty proceedings as well as the penalty orders and the impugned order passed by the learned Commissioner of Income-tax (Appeals) are not sustainable in the eyes of law. Hence, the present appeal is allowed and the penalty imposed in this case is hereby deleted. - Decided in favour of assessee
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2016 (11) TMI 946
Transfer pricing adjustment - MAM selection - adoption of written down value as the arm's length price under the comparable uncontrolled price method - Held that:- When the price was determined by comparing the uncontrolled transaction, the difference between the price paid by the assessee and the price so determined in a comparable uncontrolled transaction has to be worked out and the difference between the two shall be taken as the arm's length price. Unfortunately, the Transfer Pricing Officer has not taken any pain either to identify the comparable transaction or to identify the price paid by the third party company in the uncontrolled transaction. The Transfer Pricing Officer has simply compared the written down value of the machinery. As rightly submitted by the assessee, depreciation is provided for all machineries used for production of an article or thing and other capital asset under the Income-tax Act. In view of the specific provision in rule 10B(1)(a) of the Income-tax Rules, the written down value cannot be a determining factor to decide the arm's length price. The value of the machinery has to be compared with identified transaction in the uncontrolled market. Since such an exercise was not done by the Transfer Pricing Officer, this Tribunal is of the considered opinion that the Dispute Resolution Panel has rightly found that the sale price between the two parties cannot be merely on the basis of the written down value. Therefore, the Dispute Resolution Panel has rightly found that adopting the written down value as the arm's length price under the comparable uncontrolled price method is not justified. Hence, this Tribunal do not find any reason to interfere with the order of the lower authority. Accordingly, the same is confirmed. - Decided in favour of assessee.
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2016 (11) TMI 945
Penalty u/s 271(1)(c) - wrong claim of deduction under section 54F - Held that:- Only ground on which the assessee's claim of deduction 54F was disallowed was flats Nos. 103 and 104 are two separate properties. It is the claim of the assessee that these two flats are adjacent to each other and contiguous, hence, to be treated as one flat. In this regard, it is to be noted that the expression "a residential house" as provided under section 54F is a subject matter of judicial interpretation in a number of cases and it has been held that "a" would not denote one residential house. Therefore, in our view, the issue relating to the assessee's claim of deduction under section 54F, is debatable in nature. Merely because the assessee in the course of assessment proceedings, agreed for disallowance of its claim for deduction under section 54F, will not lead to a conclusion that the assessee has either furnished inaccurate particulars of income or concealed particulars of his income. That being the case, in our view, it is not a fit case for imposition of penalty under section 271(1)(c). Accordingly, accepting the assessee's explanation, we delete the penalty imposed under section 271(1)(c) of the Act. - Decided in favour of assessee.
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2016 (11) TMI 944
Addition under section 41(1) - liability of the assessee on account of amount payable to sundry creditors ceased to exist - Held that:- The expiry of the period of limitation prescribed under the Limitation Act would not extinguish the debt but it would only prevent the creditors from enforcing the debt. It has further been clearly held that obtaining by the assessee a benefit by virtue of remission or cessation is the sine qua non for the application of section 41(1). Similar view has been taken by the honourable Supreme Court in another judgment in the case of CIT v. S. I. Group India Ltd. [2015 (11) TMI 1004 - SUPREME COURT ]. Thus, taking into account totality of all the facts and circumstances of the case and the aforesaid judgments we find that the addition made by the Assessing Officer was not sustainable in the eyes of law and, therefore, it is directed to be deleted. - Decided in favour of assessee
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2016 (11) TMI 943
Disallowance of repair of machinery expenses - revenue v/s capital expenditure - Held that:- Replacement of the machinery was within the ambits of the expression "current repairs" which was needed as per the view point of the assessee as a business man. Hence, hereby direct to allow the expenditure in question as revenue expenditure. Ground allowed in favour of assessee.
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2016 (11) TMI 942
Revision u/s 263 - Held that:- Ample queries regarding the nature and source of income were made by the Assessing Officer during the assessment proceedings, which were duly replied to by the assessee. We do not hesitate to hold that even if the Assessing Officer has not mentioned the fact of the surrendered income being business income, specifically in his order, we understand that the Assessing Officer was satisfied to the effect that the income surrendered pertained to the business of the assessee. In view of this, we see that the Assessing Officer had made detailed enquiries and formed an opinion which was not illegal and his opinion is based on material and evidences on record. This is not the case of any error having crept in the order of the Assessing Officer, therefore, the Commissioner of Income Tax was not right in holding the order of the Assessing Officer to be erroneous. For assuming jurisdiction under section 263 of the Act, twin conditions of the order being erroneous as well prejudicial to the interest of the Revenue are to be applied simultaneously. Since we have already recorded that there is no error in the order of the Assessing Officer, the Commissioner of Income Tax cannot assume jurisdiction under section 263 of the Act. Accordingly, we quash the order of the Commissioner of Income Tax passed under section 263 of the Act. - Decided in favour of assessee.
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2016 (11) TMI 941
Unexplained cash credit addition u/s 68 - Held that:- The only point of difference is that in the balance-sheet it has been portrayed as a loan received in the earlier years whereas in the books of account of her husband the said sum was not appearing in the balance-sheet as it was treated as a gift in the earlier years itself. We find that after the Assessing Officer rejected her explanation, the appellant furnished a gift confirmation before the Commissioner of Income-tax (Appeals) but the same has been outrightly rejected. In our considered opinion, the Commissioner of Income-tax (Appeals) ought to have considered the gift confirmation filed by the assessee's husband because the same was in fact reiteration of the explanation which was already before the Assessing Officer. Thus the explanation rendered by the assessee has been unjustly rejected by the lower authorities and, therefore, the impugned addition made by invoking section 68 of the Act is unsustainable. We hold so. We, therefore, set aside the order of the Commissioner of Income-tax (Appeals) and the Assessing Officer is directed to delete the addition - Decided in favour of assessee
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Customs
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2016 (11) TMI 910
Power of CESTAT for Rectification of Mistake - warehousing of goods - impropriety of manner of drawal of sample - the evidences and records such as contemporaneous bills of entry, testing samples, warehousing of goods have not been considered by this Tribunal - Held that: - The Hon'ble Supreme Court CCE, Belapur, Mumbai Versus RDC Concrete (India) P. Ltd. [2011 (8) TMI 25 - SUPREME COURT OF INDIA] in the context of Rectification of Mistake has detailed out as to when a rectification of mistake can be undertaken - the applicants are seeking for reconsideration of the Bill of Entry, warehousing provisions which would tantamount to re-opening the matter and rehearing the matter in full and thus ROM petitions are rejected
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2016 (11) TMI 909
Import of old and used Sail Yacht Cunning Plan for personal use - requirement of import licence - whether old and used Sail Yacht Cunning Plan can be considered as second hand capital goods so as to exempt from requirement of import licence? - Held that: - during the policy -2004-09 as well 2009-14 the import of second hand goods were restricted. The import was permissible under license/authorization. Since in the judgment of Anand Mahindra Vs. Commr. Of Cus. (Import), Mumbai-I [2008 (2) TMI 104 - CESTAT MUMBAI] which was upheld by the Hon’ble High Court of Bombay, it was held that the goods Yacht for personal use is second hand goods, other than second hand capital goods, import thereof is restricted and for import license, authorization from DGFT is required. Hence the goods is liable for confiscation. As regards the submission of the Ld. Counsel that as per licensing notes on chapter 89, the ships, vessels, boats etc. are allowed to be imported without a license; old ships, vessels etc., for the purpose of breaking, are freely importable, I am of the view that only new ships, vessels etc. and old ships, vessels etc. imported for breaking purpose are only freely importable. Whereas in the present case the Yacht imported by the Appellant is neither new nor for breaking purpose. Therefore the submission in this regard is of no help to the appellant. As regard quantum of fine and penalty, I find that the issue and facts of Anand Mahindra case is identical in the present case. In the said judgment against the goods valued ₹ 1,21,32,120/-, a redemption fine of ₹ 5Lacs and penalty of ₹ 50,000/- was confirmed. Therefore following the ratio of the Tribunals and Hon’ble High Court judgment in case of Anand Mahindra, the appellant deserves the reduction in fine and penalty. I therefore reduce the redemption fine from ₹ 7.5Lacs to ₹ 2Lacs and penalty from ₹ 1Lac to ₹ 20,000/- Appeal disposed off - decided partly in favor of appellant.
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2016 (11) TMI 908
Revocation of CHA licence - CHA out of job due to delay on the part of Revenue - Held that: - It is a settled legal position in the case of Kamlakshi Finance Corporation Ltd. [1991 (9) TMI 72 - SUPREME COURT OF INDIA] and in various other judgments of Hon’ble Supreme Court that order of the higher appellate authorities is binding on the subordinate authority, which under any circumstances cannot be defied - the case relates to the revocation of the CHA License and due to delay CHA is out of the job due to delay on the part of the Revenue. We, therefore, direct the adjudicating authority to restore the CHA License subject to the de novo adjudication order. The CHA License shall remain restore till the original adjudicating authority passes the de novo adjudication order. The miscellaneous application is allowed in the above terms.
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2016 (11) TMI 907
Demand of differential customs duty, interest thereof and penalties imposed - mis-declaration of value of the goods imported - Held that: - there is a merit in the submission made by the learned Counsel, that despite giving a detailed written submissions highlighting various aspects on which the appellants has challenged the order-in-original, the first appellate authority has not recorded any findings on the said submissions made nor it is recorded that why she is not accepting the said submissions made by the appellants. In our considered view the impugned order not addressing the submission made by the appellants is not a speaking order and such order needs to be set aside - appeal disposed off - matter on remand.
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2016 (11) TMI 906
Valuation - enhancement of value - royalty - goods imported from sister/related company for supply - Held that: - I find that there is no express/implied condition in the Agreement inferring that the appellant is under any contractual obligation to import the raw material for manufacturing the final products from the Licensor/Bekaert, Belgium the related supplier only. The Appellant is free to import the raw material from the licensor or any anybody else. The Licensee is liable to pay royalty to the Licensor (Bekaert, Belgium) even when the licensee (the Appellant) imports the raw material from anybody else and do not at all import the same from the related foreign supplier. In such a situation, the condition that the payment of royalty is relatable to the imported goods and is a condition for sale of goods cannot be sustained in law. Thus, there is no nexus between the royalty payment and the import of components. The finished goods are manufactured by Technical knowhow from sister/related company; nothing was brought to notice that the agreement for technical know how between the importer respondent and their related person supplying the goods or finding that raw material needs to be purchased from the related person only. In the absence of any such restrictive Clause, the first appellate authority was correct in coming to a conclusion that the loading of value by an amount paid as royalty seems to be incorrect, is the correct decision and does not require any interference. Appeal rejected.
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2016 (11) TMI 905
Classification of imported article - Act II Microwave Popcorn - classified under CTH 20058000 or CTH 2106 90 99 or CTH 20081190 - Held that: - the revenue's claim of classification of the product under 2106 seems to be without any basis as the said Chapter Heading 2106 talks about food preparation is not elsewhere specified or included. To our mind the said entry of 2106 is a general residual entry which would cover the classification of the product if it cannot be classified anywhere else. We find that the imported goods are prepared or preserved or used for making of Popcorn. It cannot be disputed that the goods are edible part of the plant. In our view, if it has to be accepted as edible part of the plant, the correct classification would be under Chapter Heading No. 2008. Even the HSM Explanatory notes of Chapter 21 as well as the Customs Tariff in respect of Chapter Heading No. 21, talks primarily about the products which are generally preparation not else were specified or included the Chapter Heading Noe 2106, in our view this would apply in respect of Namkins or other items, which are not classifiable under any other Heading. We also find that evidence from records, that importer appellant is a manufacturer of very same product in India and classified the same on Central' Excise Tariff under Heading No. 20081190 and discharging appropriate rate of duty, which has been accepted by the Central Excise department. If the Central Excise department who are accepting the classification of said product under 20.08 and also accepting the duty payment, of the same product, we do not find any reason not to extend the said classification under Customs Tariff to the imported goods. In our considered view, it has to be held that the impugned order is unsustainable and the classification of the imported goods would fall under Chapter Heading No. 20081190. The correct classification of imported goods would fall under Chapter Heading No. 20081190 - appeal allowed.
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2016 (11) TMI 904
Valuation of CRNGO imported by the appellant - whether the rejection of the declared value/ transaction value only on the ground that there were contemporaneous imports of similar goods, justified? - Held that: - before rejecting the transaction value declared by the importer as incorrect or unacceptable, the Revenue has to bring on record some cogent material, which would indicate that the goods imported are comparable with the contemporaneous imports - It is also to be noted that there are no findings or allegation of the importer being in collusion with supplier for suppression of transaction value. The lower authorities have erred in rejecting the value declared by the appellant. We are of the considered view that the impugned order is unsustainable on the above reasoning. The impugned order is set aside upholding the value declared by appellant as correct transaction value and the appeals are allowed with consequential relief, if any.
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2016 (11) TMI 903
Authorized Courier - revocation of registration - business of clearing express cargo imported / exported through Mumbai in the Courier Mode as Authorized Courier - violations of the Couriers Imports & Exports (Clearance) Regulation, 1998 - Held that: - It is not in dispute that the Appellants had submitted in details as to how they had complied with the KYC verifications in the case of M/s. Smashing and other past clearances. They also informed about the steps taken to even revamp their website. No serious infringement of KYC verification leading to any significant revenue loss was pointed out, even in the Show Cause Notice. We have also seen that the Respondent himself has not considered violation of the KYC norms, as serious enough to merit of suspension - It is not in dispute that the Appellants had submitted in details as to how they had complied with the KYC verifications in the case of M/s. Smashing and other past clearances. They also informed about the steps taken to even revamp their website. No serious infringement of KYC verification leading to any significant revenue loss was pointed out. even in the Show Cause Notice. We have also seen that the Respondent himself has not considered violation of the KYC norms, as serious enough to merit of suspension. The Appellant and its employees have already faced much hardship and have been deprived of their livelihood for a considerably long period since suspension of their Courier registration since 25.9.2014 - no reasonable justification found to subject the appellants to any further punishment for minor lapses, if any, extending benefit of doubt. Revocation of the Courier Registration set aside - forfeiture of security at the time of registration of the courier License of ₹ 10 lakhs set aside - The Courier Registration of the Appellant stands restored with security deposit forthwith with consequential relief - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 902
Confiscation of imported car - imposition of interest and penalty - Valuation - import of car by Embassy of the Democratic Republic of Congo in India - abandonment of ownership subsequently - Held that: - The car was imported without any licence. Hence the adjudicating authority has correctly held that the vehicle is liable for confiscation. Since the appellant has accepted the valuation and paid the duty liability and not seriously contesting the valuation, we find that the redemption fine and penalty imposed by the adjudicating authority is disproportionate to the said value - the appeal is disposed of by reducing the redemption fine and the penalty imposed.
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2016 (11) TMI 901
Concessional rate of duty - benefit of N/N. 236/89-Cus. dated 1.9.1989 - import of empty 330 ml. aluminium can body - The appellant herein had produced opinion of Indian Institute of Packing, Mumbai, which was rejected and discarded by the first appellate authority on the ground that the opinion states the imported goods as semi-rigid and not collapsible. Since there was ambiguity, it was held that the appellant is not eligible for the benefit of Notification 236/89 - whether the stand that benefit of the Notification is not applicable to the goods as they were collapsible tubular container is justified? Held that: - the lower authorities have overlooked the certificate given by the Department of Metallurgy, Indian Institute of Science, Bangalore, dated 23.12.2003 wherein it was certified that the Aluminium can samples are Rigid Cans - the opinion expressed by the expert needs to be considered and we have to hold that the goods imported by the appellant are not collapsible containers and hence eligible for exemption under Notification 236/89-Cus. - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 900
Imposition of redemption fine and penalty - confiscation of approximately 105 cartons (pallets) of Nylon Filament Yarn - offending goods - whether the appellant assessee is able to co-relate the confiscated goods to the duty paying documents i.e. Bill of Entry or otherwise? - Held that: - the appellant has failed to prove that the goods which are confiscated were duty paying goods. On perusal, we find that the invoice has raised by the supplier of the goods indicates vessel name as ‘SIAM BRIDGE V-S105’. All the documents like invoice, packing list and certificate issued by the manufacturer of the said goods indicate the same vessel name while Bill of Entry which is produced before us indicates the vessel name and as “Kota Parwira-V-10”. We hold that the appellant is unable to co-relate the duty paid nature of the goods. In the absence of any evidence to indicate that the confiscated goods were of the duty paid nature, we hold that the impugned order is correct, legal and does not suffer from any infirmity - appeal rejected.
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Service Tax
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2016 (11) TMI 940
CENVAT credit - rental services - eligible input services - Held that: - I find that the appellant has availed the credit of service tax paid under “Renting of immovable property service”, being rent paid for the premises at Tamil Nadu Warehousing Corporation for undertaking the manufacturing processes and the resulted goods were returned to the appellant’s factory and cleared on payment of duty. It is also not disputed that the service provider has discharged service tax liability on renting of immovable property. Both unit-1 and unit-2 share some legal entity and the intermediate products are received back by unit-1 for the manufacture of final products. Therefore, renting of immovable property is having direct nexus in the manufacture of final products at unit-1. Rule 2(l) of CCR, 2004 clearly mentions that the service utilised in or in relation to the manufacture of final products is eligible as an input service. Hence, the benefit of Cenvat credit on input service cannot be denied to the appellant - appeal allowed.
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2016 (11) TMI 939
Refund claim - N/N. 12/2005-ST dated 19.04.2005 - rebate of the whole of Excise duty on excisable inputs or the whole of the Service Tax on the services used of providing taxable output service which is exported - non-filing of requisite declaration with the Assistant or Deputy Commissioner of Central Excise - Held that: - the appellant had filed the refund and rebate claim on 1st May, 2009 which is within time and they filed declaration as required under N/N. 12/2005-ST subsequently i.e. on 7th May, 2009 i.e. before the adjudication order was passed. We find from the records that both the lower authorities have not considered the issue of eligibility of the refund claim and have rejected the refund claim only a procedural lapse. The Tribunal in the case of Manubhai & Co. Vs. CST, Ahmedabad [2010 (9) TMI 294 - CESTAT, AHMEDABAD] and Kothari Infotech Ltd. vs. Commissioner of Central Excise, Surat [2013 (8) TMI 800 - CESTAT AHMEDABAD] considered the same issue and held that filing of declaration under N/N. 12/2005-ST is merely a procedural requirement, and if there is any delay and same can be condoned and the refund claim is to be processed if otherwise eligible. The ratio of decision of the Tribunal is squarely applicable in this case. Accordingly, we set aside the impugned order, holding that the filing of declaration is a procedural requirement which is condoned and the lower authorities are directed to process the refund claim on its merits in accordance with law.
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2016 (11) TMI 938
Service Tax liability - Goods Transport Agency Services - delivery of food grains as per direction of the District Supply Officer/District Collector, Latur, under P.D.S. scheme - Held that: - respondent issues periodical bill and it is not consignment note or billtees which is primary requirement to classify the activity under Goods Transport Agency as a taxable service. We perused the sample copy of invoice issued by respondent and found that these invoices are in form No. 2, a form prescribed by Government of Maharashtra, by any stretch of imagination cannot be considered as consignment note. This factual matrix is not contested by the Revenue in ground of appeal. The issue is now squarely covered by the judgments of the Tribunal Nandaganj Sihori Sugar Co. Ltd. Vs. CCE, Lucknow [2014 (5) TMI 138 - CESTAT NEW DELHI] - the impugned order is correct, legal and does not suffer from any infirmity. The appeal filed by the Revenue is rejected and cross objection filed by the respondent being in support of the impugned order is also disposed of.
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2016 (11) TMI 937
Service tax liability - Business Auxiliary Service - non-declaration of the correct value of an amount received from one of the clients as commission - imposition of penalty u/s 78 of the Finance Act, 1994 - Held that: - the appellant has admitted to short payment of the service tax liability and has paid the tax amount on being pointed out by the audit officers except for a small amount of ₹ 2.15 lakhs which was also paid off after issuance of show-cause notice. At this juncture we find that the contest in the appeal before us is only for the penalty imposed and as upheld. We find from the records that the appellant’s conduct prior and post to the period in question by discharging his service tax liability in time was being of a good assessee. There could be a bonafide error on the appellant’s part of not declaring the amount of ₹ 3.05 crores as the commission received in the ST return, but it is also undisputed that the said amount has been declared in the balance sheet as receipts. In our view this plea of the appellant that there was a bonafide error in not recording the amount in the ST-3 return is seems to be acceptable. In the facts and circumstances of this case, by invoking the provisions of Section 80 of Finance Act, 1994, we set aside the penalty imposed by the adjudicating authority under Section 78 of Finance Act, 1994 - appeal disposed off.
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2016 (11) TMI 936
Classification of services - commercial and industrial construction service - business support service - rent-a-cab service - manpower recruitment and supply service excluded from the trifurcation of services - eligibility for escapement on the basis of the instruction - Held that: - The adjudicating authority, while invoking section 80 of Finance Act, 1994 to drop the proposal for imposing penalties under section 76 and 78 of Finance Act, 1994, did not record reasonable cause for failure to pay the duty. The reasons cited would make it appear that the invoking of section 78 in the notice had no justification at all. If that were so, the resort to extended period for confirming tax liability is without basis. There is an apparent contradiction here. We also notice that noticee had made only partial payment of admitted tax liability. Considering the lacunae in the impugned order and that remedying of these lacunae will require re-examination of the submission of the noticee with reference to documentary evidence, we are of the opinion that the matter should be remanded back to the original authority for fresh consideration of all aspects. As the matter has been pending in adjudicatory and appeal process for almost seven years, the original authority is directed to complete the proceedings within three months of receipt of this order - appeal disposed off - matter remanded back.
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2016 (11) TMI 935
Revision - Section 84 of the Finance Act, 1994 - SSP - Held that: - I find that once the Commissioner has passed the revision order, the order of the adjudicating authority does not exist. Now as per the submission of the Ld. Counsel, I find that the appellant is a small scale service provider. They have paid the service tax along with the interest before the issuance of show cause notice and also filed the necessary returns of the transaction of service provided by the appellant and the value thereof was retrieved from their book of accounts. With the above facts, I am of the view that the appellant have been able to show the reasonable cause for non-payment of service tax in time. Therefore, the appellant is entitled for the waiver of penalty imposed under Section 76 invoking Section 80 of the Finance Act, 1994, therefore the penalty is waived. The impugned order is set aside the appeal is allowed.
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Central Excise
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2016 (11) TMI 934
Refund claim - compounded levy scheme - abatement in case of non-production of goods - The appellant started production of Gutkha under compounded levy scheme w.e.f. 01/04/2011 with one machine and paid the duty under the compounded levy scheme. Subsequently the appellant installed another machine on 16/04/2011 and commenced production from 16/04/2011 onwards. - Held that: - Rule 10 of the PMPM rules speaks about the abatement in case of non-production of goods. That the said Rule states that when the factory did not produce the notified goods during any continuous period of fifteen days or more, the y duty calculated on a proportionate basis shall be abated in respect of such period provided the manufacturer follows the procedure laid down therein. In the instant case, the authority below has denied the abatement stating that the relevant provision is not applicable to the appellant since during the period prior to 16/04/2011, the appellant had not installed the machines in the factory. It is not disputed that the appellant paid whole duty of ₹ 12,25,000/- for the whole month against the second machine. It is also not disputed that the second machine was neither installed nor operated during the period from 01/04/2011 to 15/04/2011 (both days inclusive). Rule (C) provides that appellant is eligible for abatement during the period for which goods were not produced if such period is not less than 15 days. In case, appellant has paid duty for whole month) as per compounded levy scheme, this Rule would help the appellant to get abatement for the period when goods are not produced. This is because no duty can be demanded when goods are not produced. Again, as per Rule 18, the appellants are not liable to pay duty upon the goods which are not produced by them as per the Central Excise Act and Rules. Therefore considering Rule 10 as well as the provisions of Central Excise Act, I am of the view that the appellants are entitled to abatement. Appeal allowed - decided in favor of appellant.
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2016 (11) TMI 933
Stock transfer - short payment of duty - Held that: - I agree with the arguments put forward by the learned counsel for the appellant referring to the various dates of payment made as per Annexure Il of the show-cause notice. It is seen that the appellant has made payment of ₹ 4,41,539/- in the month of July and the balance of ₹ 54,25,181/- in the end of the very same month. It has also to be mentioned that the re-transfer of the capital goods took place in the very same month by which the liability to pay duty/reverse the credit availed arose on the appellant. From the records, it is revealed that there has been neither suppression nor delay on the part of the appellant in making the payments. In such circumstances, the imposition of penalty under Section 11AC by alleging fraud, suppression etc. is totally unjustified. In view thereof, I hold that the impugned order imposing penalty is unsustainable - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 932
CENVAT credit - HR plates, base plates, MS channels, MS angles etc. - Held that: - The period involved is April 2012 to November 2012. The definition of input w.e.f. 01/04/2011 has drastically changed the scope of the definition whereby it says that input means all goods used in the manufacture of final products. The Department does not have any evidence to establish that subject items were used for any other purpose other than that as explained by the appellant. Credit has sought to be denied for the reasons that these goods do not fall under the definition of capital goods/inputs. It has to be seen that the process of manufacture cannot be carried out without the fabrication of these items like cable trays, pulp mill and storage racks etc as submitted by the appellant - appellants are eligible for credit - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 931
Interest and penalty for taking the Cenvat credit wrongly - suo moto reversal of credit before utilisation of the same - whether the appellants are liable to pay interest on the said credit which was reversed? - Held that: - it is seen that the appellant has reversed an amount of ₹ 6,57,169/which pertains to credit availed on capital goods/ventilation systems. The invoices produced by the appellant also evidence that these goods are classified under Chapter 84. In such circumstances, I am of the view that in the interest of justice, the appellant should be given a chance to establish and prove that the credit of ₹ 6,57,169/- is eligible for the reason that it is availed on ventilation systems. On this point, the matter has to be remanded to the adjudicating authority. However, the main issue whether appellant is liable to pay interest on the credit wrongly availed but reversed prior to utilization, is settled by the judgments relied upon by the appellants in the case of CCE Vs. Bill Forge pvt. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT]. In view thereof, I hold that the appellants are not liable to pay interest as well as the penalty which is confirmed in the impugned order. Therefore I set aside the impugned order to the extent of demand of interest and imposition of penalty The appeal is partly allowed as above and partly remanded for the limited purpose of adjudicating the issue whether the appellants are elgibile for the credit of ₹ 6,57,169/- availed on ventilation systems.
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2016 (11) TMI 930
CENVAT credit - crane rails, rails etc. - inputs under Rule 2(k) of CENVAT Credit Rules, 2004 - whether the appellant having availed credit under the category of inputs can content that they are eligible for credit under the category of capital goods? - Held that: - The said issue stands covered by the decisions laid by the Tribunal as well as various High Courts. In CC&CE, Meerut-l vs, Modi Rubber Ltd. [2000 (5) TMI 64 - CEGAT, NEW DELHI] where it was held that the declaration filed by the assessee in terms of Rule 57Q was Sufficient for the purpose of extending credit on glass bottles which were inputs within the meaning of Rule 57A. - I consider that the claim put forward by appellants under the category of capital goods in their reply to show-cause notice yields merit. Denial of credit is unjustified - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 929
Whether the goods imported are liable for confiscation as having been imported without license, in contravention of condition laid in Para 2.17 of the FTP? - Held that: - The restriction imposed is the case of MMFD is only from 05/06/2012 onwards as seen from para 2.17 of the FTP. The appellant had imported the goods prior to 05/06/2012. Further the classification description as well as the certificate of the Chartered Engineer shows that the imported goods are not per se photocopiers. Therefore the confiscation of the goods on the ground that they are restricted is without any legal or factual basis. Appeal allowed - decided in favor of appellant.
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2016 (11) TMI 928
CENVAT credit - GTA service - commissioning and installation service - repair and maintenance service - improper documents - Held that: - From the report, it can be safely concluded that the appellant has properly accounted the credit availed by them. The defect if any is only with regard to the particulars which are required to be included in the invoice. In para 12, the first appellate authority opines that appellant had not paid the service tax themselves and that it was paid by their Head Office and therefore the document is not in order. The report called for establishes that there is no dispute with regard to the service tax paid. Period of limitation - Held that: - the Department has raised the demand invoking the extended period of limitation for which there is no evidence at all. I do find substance in this argument put forward by the learned counsel for appellant. Though it is alleged in the show-cause notice that the appellant has suppressed facts with intent to evade payment of duty, the records before me including the report filed by Department does not reveal any fact of suppression on the part of the appellants. Further it has also to be stated that the appellants have been filing their ST3 returns regularly. Department has failed to adduce any evidence to establish suppression of facts with intent to evade payment of duty. Taking these facts into consideration, I am of the view that the demand raised invoking the extended period is not sustainable. Therefore the impugned order is set aside as being time barred. Appeal allowed - decided in favor of appellant.
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2016 (11) TMI 927
CENVAT credit - steel items - diesel generator - input services for construction of compound wall - whether the appellant is eligible for the credit availed on the steel items used for making the Surface Testing Bench? - Held that: - Chapter 90 of the CETA 1985 shows the entry of Surface Testing Bench at 90312000. Therefore the said item falls within the definition of capital goods and therefore the denial of credit is unjustified. Whether steel shots are capital goods or not and whether credit is admissible on MS items used for steel shots? - Held that: - The issue stands decided in the cases/judgments relied upon by the learned counsel for the appellant. In Mukand Ltd. vs. CCE, Mumbai-II [2005 (8) TMI 561 - CESTAT, MUMBAI], the Tribunal has analysed the issue and held in favour of assessee, where it was held that whether it is not disputed that the "Sted Shot" used in or relation to manufacture of the final products, Modvat credit is admissible irrespective of the fact whether they are capital goods or not under Rules 57A and 57Q of the Central Excise Rules, 1944. Denial of credit on the diesel generator set - Held that: - As per the proviso to Rule 9(2) of the CENVAT Credit Rules, in case of any doubt with regard to the particulars mentioned in the invoice, the concerned officer on being satisfied that the credit/duty has been properly accounted for has the discretion to allow the credit. When the Department has no dispute with regard to the receipt of the generator within the factory or with regard to the payment of duty, in my view, the denial of credit is unjustified. Appeal allowed - CENVAT credit allowed - decided in favor of appellant.
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2016 (11) TMI 926
CENVAT credit - MS plates, MS angles, MS channels, MS sheets - whether the appellant is eligible for credit availed on MS items which according to the appellant were used for fabrication of parts/accessories/components of capital goods and also for repair and maintenance of various machinery and equipment? - Held that: - On perusal of the list showing the purpose for which the subject items were used by the appellant, it is seen that the MS channels were used for repairs/maintenance of L.S. crusher hoos, cooler MCDC dust etc. which are machinery used in the manufacture of cement. Plates were used in cooler, MCDC ducts, hot air ducts, hoopers, wagon tippler etc., elevator chains were used in the cement mill bucket elevators and MN castings were used in grate cooler. Similarly hydraulic nut was used in the cement mill and dumper assembly used in dumper which is part of the handling equipment. These descriptions show that the MS items were either used for fabricating the parts / components / accessories of capital goods or for repair and maintenance of such machinery and equipment. The issue whether MS items used for fabrication of capital goods / accessories or components and also whether they can be used for repair and maintenance is no longer res integra. The issue stands settled by the decisions relied upon by the appellant as well as by the decisions passed by the Tribunal in the case of Madras Cements Ltd. Vs. CCE, Hyderabad [2016 (6) TMI 761 - CESTAT HYDERABAD] - the appellant is eligible for the credit - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 925
Verification of the deposit particulars against demand - Held that: - Looking into the length of litigation and its outcome, we do not propose to keep the matter pending further. When Tribunal’s stay order prima facie made categorical finding as to discharge of the liability by appellant there is no scope to doubt further as to such deposit in absence of any evidence to the Contrary. Ld. Counsel is correct in his averment to say that even after the stay order was passed, discrepancy in deposit has not been brought to the notice of the Tribunal - Revenue is directed to make verification of the challans stated by the ld. Counsel at page-4 of the stay order No. 860-861/2005 dated 07.10.2005 and reconcile the same. Discrepancy if any may be dealt appropriately - appeal allowed.
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2016 (11) TMI 924
CENVAT credit - iron ore - treatment of Iron Ore Fines for cenvat credit purpose, in dispute - Held that: - Admittedly, Iron Ore Lumps are put through a process of crushing to obtain the desired size and consistency. Iron Ore Fines of smaller size and of different consistency emerge which cannot be put into the intended use by the respondent. The point for decision is that whether the Iron Ore Fines, which are not used by the respondent in further manufacture and cleared, will attract the provisions of Rule 3 (5) of Cenvat Credit Rules, 2004. Admittedly, the Iron Ore procured on payment of duty cannot be used as such. The same are put through a process of crushing to obtain a required level of Iron Ore Concentrate. The respondent did obtain such concentrate and use the same for further manufacture. Such being the case, incidental emergence of Iron Ore Fines, which cannot be put into the same use by the appellant, and accordingly cleared by them, for a consideration, will not attract the provisions of the said Rules. The inputs are put to use as intended by them. The emerging fines, which is nothing but a incidental product, cannot be equated to the inputs (Iron Ore) as such - appeal rejected - decided against appellant.
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2016 (11) TMI 923
Refund claim - reversal of CENVAT credit wrongly - exported goods received for repairs, during the repair, certain goods were used on which excise duty was paid. The appellant had taken credit of those goods. The said credit was however reversed when the transformers were re-exported after repairs - Is refund claim justified? - Held that: - I find that co-ordinate Bench of this Tribunal in the case of Transformers & Electricals [2006 (7) TMI 441 - CESTAT, BANGALORE] has in exactly similar circumstances allowed the credit. I also find that the Commissioner in the appellant’s own case for the subsequent period has allowed the credit of such inputs. Further, in view of the Circular No.283/117/96-CX dated 31/12/1996 it is apparent that the credit on such inputs would be admissible - credit allowed - refund claim justified - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 922
Interest on the 50% amount of the credit availed and also imposition of penalty for violation of rules - capital goods and not inputs - Held that: - I find that the disputed items are in the nature of consumables and there can be a doubt regarding the same being classified as inputs or capital goods under the Cenvat Credit Rules. The appellants were undisputedly entitled to the credit, however the category could have been either “inputs” or “capital goods’. They have paid the interest on the part of credit availed earlier. In these circumstances, I find that there is no justification for imposing any penalty. The appeal is allowed.
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2016 (11) TMI 921
Demand of interest and penalty - credit availed on inputs transferred to other unit - reversal of the said credit on being pointed out after a year and a half - Held that: - the Cenvat Credit Rules are very unambiguous and clear. There is not an iota of doubt about the manner in which the credit is required to be taken in such cases and the amount of credit are required to be taken when the same goods are received. The appellant’s contention that it was an inadvertent error does not appear to logic as there is no ambiguity in law, so far as the availment of credit in these circumstances are concerned. This is also apparent from the fact that the moment it was pointed out the appellant was paid the same and not contested on merit. It is seen that the appellants are very well conversant with the process - Every time the inputs are cleared as such, the appellant is required to make invoice and the invoice contains the column where the duty reversed is to be mentioned. It is not something which can slip out of mind inadvertently. In this era of self assessment great trust has been placed on the assessee to do self assessment diligently and properly. In the instant case, it is apparent that the other unit to which the material was transferred could not have benefited by taking the credit of the said duty. In these circumstances, the intention to evade duty is apparent. Section 11A (2B) not applicable to the cases where the duty was short paid for reasons of fraud, collusion or any mis-statement or suppression of facts, as is apparent in this case - appeal dismissed.
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2016 (11) TMI 920
Confiscation of goods - imposition of redemption fine and penalty - Clandestine removal - non-accountal in their statutory records - Held that: - It is a evidence on records that on 1-10-2010, the search was conducted and seized goods were not accounted in the statutory records by the appellant. But the Revenue has not come with any positive evidence that the said goods are meant for clandestine clearance by the appellant. In that circumstances, goods cannot be confiscated. As these goods are meant for clearance to M/s. Giovani Fashions Ltd. and for export. Further, it is also an evidence on the records that at the end of M/s. Giovani Fashions Ltd. during search nothing incriminating was found. In that circumstances, without any corroborative evidence, it cannot be alleged that these goods are meant for clandestine clearance by the appellant. Therefore, I hold that goods are not liable for confiscation. Consequently, the redemption fine and penalty are not imposable on the appellant - appeal allowed.
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2016 (11) TMI 919
CENVAT credit on PET Pre-forms - whether PET Pre-forms are not an input for their finished product-PS Radiators and Cylinders? - Held that: - Even though the appellant had filed reply stating that the PET Pre-forms are part of water purifier system exported by them, the department has not cared to consider the incorrect fact stated in the show cause notice. The department is very well aware that the impugned inputs were part of consignment exported by appellants. There is no case for department that PS Radiators or Cylinders were exported by appellants. But the notice is issued stating that PET Pre-forms are not for manufacture of Radiators and Cylinders. The allegations in the show cause notice does not have any legs to stand as it is based on wrong set of facts. On such score, I find that the demand is unsustainable - appeal allowed.
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2016 (11) TMI 918
Request for cross examination - principles of natural justice - Held that: - the cross-examination of Sh. Shanker was required for proper adjudication of the case, as no cross-examination of Sh. Shanker was given to the respondent, therefore, statement of Sh. Shanker does not have any evidential value. Hence, I do agree with the observations of the ld. Commissioner (Appeals) to the extent in this case. As the statement of Sh. Shanker is the only evidence against the respondent, and the same is not reliable evidence, in that circumstances, proceedings against the respondent do not survive. In that circumstances, I do agree with the observation made by the Commissioner (Appeals) therefore, I do not find any infirmity with the impugned order, the same is upheld - appeal dismissed - decided against Revenue.
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2016 (11) TMI 917
Whether the appellant is entitle for Modvat credit in respect of testing instrument namely Instron Model 14464 Table Mounted Universal Testing Instrument under the Capital goods in terms of Rule 57Q of Erstwhile Central Excise Rules, 1944? - Held that: - the testing instrument is used for testing of raw material as well as finished goods. The testing of raw material and finished goods is integral part of the manufacturing process of the final product therefore it cannot be said that testing instrument is not used in the manufacture of final product. In the various judgments Modvat credit under the Capital goods was allowed in respect of testing equipment and apparatus. Reliance placed on the decision of the case of OBLUM ELECTRICALS INDUSTRIES PVT. LTD. Versus COMMR. OF C. EX., HYDERABAD [2003 (1) TMI 491 - CEGAT, BANGALORE] The Tribunal consistently held that testing process is vital part of the manufacturing of final product therefore the credit of testing instrument is admissible. As per my above discussion, which is based on judgments as cited above, the appellant is entitle for the Modvat credit under Rule 57Q in respect of testing instrument. The impugned order is set aside and appeal is allowed.
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2016 (11) TMI 916
Imposition of penalty u/r 26 of the Central Excise Rules, 2002 - excess duty has been passed on manufacturer/buyer to avail excess Cenvat credit - Held that: - The appellant has passed the Cenvat credit of the duty which they have paid to the manufacturer supplier and the appellant was under bona fide belief, that whatever duty, they have paid is the correct duty. In that circumstances, penalty under Rule 26 of the Central Excise Rules, 2002 is not imposable to the appellant, therefore, I set aside the impugned imposition of penalty on the appellant under Rule 26 of the Central Excise Rules, 2002 - appeal allowed.
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2016 (11) TMI 915
Suo motu re-availing of credit - Utilisation of Cenvat credit account for payment of Education Cess and S&H Education Cess which the appellant paid through PLA - Held that: - the appellant has utilised their Cenvat credit account of BED for payment of Education Cess and S&H Education Cess which they have later on paid through PLA. In that circumstances, the utilisation of Cenvat credit account of BED for payment of Education Cess and S&H Education Cess is double payment of duty by the appellant. Therefore, the appellant has correctly taken suo motu Cenvat credit of Education Cess and S&H Education Cess paid by them by utilised Cenvat credit of BED after payment of Education Cess and S&H Education Cess through PLA. In that circumstances, the impugned proceedings against the appeal were not warranted. Therefore, the impugned order is set aside and the appeal is allowed with consequential relief, if any.
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2016 (11) TMI 914
Demand was made under Rule 6(3) (1) at the rate of 10% of the value of the goods - M/s. Bajaj Holding & Investment Ltd. is not a SEZ Developers but it is a contractor, - Held that: - From the letter of the Department of Commerce, it is clear that the M/s. Bajaj Holding & Investment Ltd. is an SEZ Developer. Moreover, while making an allegation in the show cause notice that the appellant is contractor, no material evidence was adduced by the department that whether the M/s. Bajaj Holding & Investment Ltd. is contractor or SEZ Developer. This Tribunal in the case of Ultratech Cement Ltd. [2014 (8) TMI 655 - CESTAT MUMBAI] held that even if the buyer is contractor of SEZ unit or developer. Rule 6 of Cenvat Credit Rules cannot be made applicable for demanding 10% of the value of the goods supplied to SEZ. As per the above discussion, I am of the considered view that demand of 10% confirmed and upheld by the lower authorities is not sustainable. The impugned order is set aside and appeal is allowed.
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2016 (11) TMI 913
CENVAT credit - capital goods which was not installed and used in the factory - Subsequently the capital goods exported under drawback in terms of Section 74 of the Customs Act, 1962 - whether the denial of CENVAT credit on the ground that the capital goods was not put to use in the factory and cleared as such in terms of Rule 3(5) of the Cenvat Credit Rules, 2004, justified? - Held that: - the capital goods on which credit was availed, if it is cleared for export there is no need to reverse the Cenvat credit. As regard the drawback claim by the appellant, the appellant is not entitled for the drawback in respect of the Cenvat Credit availed by them. It is observed from the record that the appellant has proposed to reduce the drawback claim to the extent of Cenvat Credit availed by them and the same has been confirmed by the drawback department in their letter. For this reason credit cannot be denied on the ground that the appellant have made a claim of drawback - the appellant is legally entitled for the Cenvat Credit and need not to reverse the Cenvat Credit on the export of capital goods - appeal allowed.
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2016 (11) TMI 912
Refund claim - unutilised input credit - duty drawback - As per the provision of Rule 5 read with Notification No. 5/2006-CE(NT) if the drawback or rebate is claimed on the exported goods, refund under Rule 5 shall not be allowed - Held that: - the appellant under Rule 5 is only in respect of goods exported under UT-1. Under the provision of Rule 5 and Notification issued there under, there is no restriction that entire export should be made under a particular scheme either under Rule 5 of drawback or rebate. Therefore, the part of the consignment can be cleared under rebate, drawback or claim of refund under UT-1, therefore when the goods have been exported under UT-1 irrespective of the fact that other consignments were cleared under rebate or drawback, refund under Rule 5 in respect of goods cleared UT-1 cannot be denied. I find that the adjudicating authority has not correctly quantified the amount of refund on the input used in the goods exported under UT-1. Therefore the matter needs to be remanded to the adjudicating authority for correct quantification of the refund amount - appeal disposed off - matter on remand.
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2016 (11) TMI 911
Imposition of interest u/r 14 of Cenvat Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944 and penalty u/r 15A of the Cenvat Credit Rules - wrongly availed Cenvat credit, reversed - scope of Rule 14 of the Cenvat Credit Rules, 2004 (Rules, 2004) - Held that: - The decision of the Hon ble Karnataka High Court in Bill Forge Pvt. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT] being the decision of the jurisdictional High Court and in the context of the fact that the entire cause of action, the transactions in issue, the territory within which the appellant-assessee conducts its business and has its registered office and whereat proceedings were initiated and culminated, constitutes the operative law, for the parties to this appeal. Though the Hon ble High Courts of Madras, Bombay and Chhattisgarh are seen to have taken a contrary view, have distinguished and were not persuaded to accept the ratio expounded by the Hon ble Karnataka High Court, this would not result in eclipse of the precedential vitality of the jurisdictional High Court s ruling, since while a High Court is at liberty to distinguish a persuasive decision of another High Court, the same would not amount to an overruling of the said decision nor operates to operate eclipse` the precedential value of the other High Court s ratio insofar as it applies as an exposition of law within the territorial limits of that High Court. The decision of the Karnataka High Court in Commissioner of C. Ex. S.T., LTU, Bangalore v. Bill Forge Pvt. Ltd.[2011 (4) TMI 969 - KARNATAKA HIGH COURT] constitutes the law governing and operative on the facts and transactions in the current appeal. Since the appellant had merely availed credit and had reversed the same before utilizing the availed credit for remittance of duty, interest liability would not arise.
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CST, VAT & Sales Tax
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2016 (11) TMI 899
Assessment of turnover - best judgement assessment - suppression of facts - Held that: - While it is true that the Tribunal is the last fact finding authority, this Court cannot at the same time shut its eye or gloss over findings which have come to be recorded in the total absence of cogent and reliable material nor can findings of fact so recorded by the authorities be affirmed even though they may be wholly perverse - the two loose papers which were found in the business premises were not established to be connected in any manner with the business of assessee. The mere fact that these two loose papers were found in a desk present in the business premises would not on its own form sufficient ground for rejection of the books of accounts. More importantly and as this Court noticed above, the affidavits and the explanation which was submitted in respect of the two loose papers was not accorded any consideration. The Court notes that while the Act places the burden of proof in respect of special facts on the assessee, the burden to prove the occurrence of a taxable event lies solely on the shoulder of the revenue. This burden in the facts of the present case did not stand discharged - revision allowed.
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2016 (11) TMI 898
Works contract - benefit of deduction - Site Establishment Expenses - Consumables - Maintenance Charges in respect of Plant & Machinery - Material covered by section 3/ 4/5 of the Central Sales Tax Act - Held that: - whether the articles had been transferred in the execution of the works contract could not be left to mere supposition and it was the obligation of the assessing authority as well as the first appellate authority to record and arrive at a concrete conclusion as to whether there had in fact been a transfer of property in those goods in the execution of the works contract or not? Held that: - on mere presumptions, the assessing authority could not be permitted to bring to tax the articles which had been transferred in the execution of the works contract. Surprisingly however, after having held that the assessing authority had clearly erred in proceeding on a mere assumption that 60% of the value of the articles alone had been utilized in the execution of works contract it has proceeded to hold that 75% of the value of the articles in question were liable to be apportioned towards the temporary establishment whereas 25% of the value of the articles in question were liable to be attributed to the execution of the works contract. Insofar as the benefit of articles which are covered by Sections 3,4 and 5 of the Central Sales Tax Act are concerned, it has proceeded to hold that no material was placed which would indicate that these goods were brought from outside the State exclusively for the purposes of execution of the works contract. Both these findings in the opinion of this Court, are wholly conjectural and based entirely on surmises - this Court is of the opinion that the facts of the case would merit a remand of the matter to the Tribunal which shall now proceeded to consider the matter afresh - revision allowed - matter remanded.
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2016 (11) TMI 897
Taxability of transactions taking place beyond or outside the Customs Frontier of India - duty free shops at various international airports and seaports in India - Held that: - The Hon'ble Division Bench of this Court by order dated 08.10.2012, after taking into consideration the decision of the Hon'ble Supreme Court in the case of Indian Tourist Development Corporation Limited Vs. Assistant Commissioner of Commercial Taxes and Another [2012 (2) TMI 62 - Supreme Court of India] held that the goods of the petitioner had not been brought into the Customs Frontier of India before the transaction of sales had taken place and therefore, the transaction had taken place beyond or outside the Customs Frontier of India and they are not taxable under the Tamil Nadu General Sales Tax Act. The above decision has become final as no appeal has been preferred by the respondent. The ratio laid down by the Hon'ble Supreme Court would be equally applicable to the present case also. There is nothing on record to show that there was some material available with the Officer to show that the petitioner had made domestic sales and goods have been removed in contravention of the Facilitation Licence. The para wise comments given to the Additional Government Pleader do not state anything except that there is prima case of tax evasion - petition allowed - decided in favor of petitioner.
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2016 (11) TMI 896
Input tax credit - payment of tax on purchases - credit claim by registered dealer - Held that: - Sub- Section (16) of Section 19 states that the input tax credit availed of is provisional. It, however, does not empower the authority to revoke the input tax credit availed of on a plea that the selling dealer has not paid the tax. It only relates to incorrect, incomplete or improper calim of input tax credit by the dealer - the Petitioner-dealer, admittedly, had paid the tax to the selling dealer and claimed input tax credit and that was accepted at the time when the self-assessment was made. Even the pre-revision notices and the orders under challenge fairly state that the Petitioner-dealer had paid tax to the dealer. It is, therefore, for the Department to proceed against the selling dealer for recovery of tax in the manner known to law. The provision under which the present action has been initiated, namely, invoking sub-section(16) of Section(19) does not appear to be correct - if the selling dealer has not paid the collected tax and that liability has to be fastened on the selling dealer and it cannot be mulcted on the petitioners-purchasing dealers who had shown the proof of payment of tax on the purchase made. The petitioners already paid 25% of the tax amount - Therefore, the impugned orders are set aside and the matters are remitted back to the authority concerned and the authority shall give one more opportunity of hearing to the petitioner and thereafter pass appropriate orders on the same on merits and in accordance with law within a period of six weeks - petition allowed - decided in favor of petitioner.
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2016 (11) TMI 895
Properties under suit - proceedings against a deceased person - consequential relief of injunction restraining the defendant - Held that: - it is seen from the records that no assessment order was passed so far and only recovery proceedings was issued and that too, after the demise of the dealer, V.O.S.Syed Mohammed, who expired 11 years prior to the issuance of the recovery proceedings. No recovery proceedings can be initiated against a dead person. Thus, the judgment and decree passed by the Courts have no legal force at all - this Court is of the view that no question of law much less a substantial question of law involved in this second appeal. However, it is open to the respondent to proceed further by passing assessment order for the years in question and initiate appropriate action in regard to the recovery of arrears, in accordance with law - appeal disposed off - decided against petitioner.
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