TMI Tax Updates - e-Newsletter
December 11, 2014

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise

Articles

1. Adjustment of excess Service tax paid, against tax payable in following months cannot be denied merely on the grounds of non-compliance of procedure

   By: Bimal jain

News

1. Structural Reforms Needed to Create at Least Five Million Jobs Every Year Along with High Growth Rate of 7-8%; Growth to be Non-Inflationary, Job Oriented, Sustainable and all Inclusive: Jayant Sinha, MOS (Finance)

2. Development of Industrial Areas and Estates in Andhra Pradesh

3. Functioning SEZs

4. Setting Up of Industrial Parks

5. Illegal Import of Foreign Made Crackers

6. Think Tank to Draft IPR Policy

7. RBI Reference Rate for US $

8. WTO Appellate Body Accepts Major Indian Challenges to US Countervailing Duties on Hot Rolled Carbon Steel Flat Products Exported from India

Circulars / Instructions / Orders

Service Tax

1. 181/7/2014-ST - dated 10-12-2014

Audit of the Service Tax assessees by the officers of Service Tax and Central Excise Commissionerates

Highlights / Catch Notes

Income Tax

• Reopening of Assessment u/s 147 Invalid if Based on Flawed District Valuation Officer's Report.

  Case-Laws - AT : Validity of reopening of assessment u/s 147 – Reopening made on the basis of DVO’s report - once reference itself is held to be invalid or bad, the DVO’s report obtained consequent thereto cannot be used for reopening of the assessment - AT
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• Property Owner's Rental Income Taxable as Income from House Property Under Tax Laws.

  Case-Laws - AT : Addition of income from amenities – assessee as the owner of the building was only exploiting the property as owner by letting out the same and realizing income by way of rent - taxable as income from house property - AT
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• Assessee's Income Estimation with Centage Charges Deemed Unscientific; Case Remanded for Further Review.

  Case-Laws - AT : Estimation of income - the assessee has also shown centage charges - the working of the assessee is not proper and the basis adopted by the AO is also not scientific - matter remanded back - AT
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• Unexplained Deposits: Rs. 50,000 Confirmed, Rs. 50,000 Deemed Unexplained u/s 68 of Income Tax Act.

  Case-Laws - AT : Addition of unexplained deposits u/s 68 - when the depositor is confirming only ₹ 50,000/- out of ₹ 100,000/- shown by the assessee, it has to be accepted that balance deposit was not explained. - AT
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• Trust's Bank Deposit Deemed Unaccounted Income; Additions to Assessee's Income Confirmed for Non-Disclosure in Tax Returns.

  Case-Laws - AT : The deposit made in the bank account of the trust represents unaccounted income of the assessee, as the same was not disclosed by the these assessees in their respective returns in India - additions confirmed - AT
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Customs

• Commissionerate of Customs Handles Refund Claims for SEZ Units on Customs Duty Overpayments Under Customs Act, 1962.

  Case-Laws - HC : SEZ - Which authority would be competent to entertain and dispose of the refund claims of units situated within the Special Economic Zones which claims arise out of over payments of customs duty, redemption fine or penalties under the Customs Act, 1962 - it is Commissionerate of Customs - HC
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• High Court Confirms Penalty for Customs Duty Evasion; Misdeclaration of Tin Sheets Invalidates Abandonment Claim u/s 23(2).

  Case-Laws - HC : Evasion of custom duty - import of Tin Sheets in the name of Tin Free Sheets - If he is not the owner, as stated by him, there is no question of seeking abandonment under Section 23(2) of the Act, where a right is given to the owner to abandon the goods - levy of penalty confirmed - HC
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• Central Government and DGFT Cannot Retroactively Amend Foreign Trade Policy or Revoke Export Benefits.

  Case-Laws - HC : Neither the central government, nor DGFT would have the power to amend the Foreign Trade Policy or withdraw any export benefit with retrospective effect. - HC
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Service Tax

• Court Rules Transporting Slag for Metal Extraction is Not a Cleaning Service; Grants Partial Stay in Case.

  Case-Laws - AT : Cleaning Service - slag is removed from the factory to the slag yard for undertaking extraction of metal - prima facie it is not a cleaning activity - stay granted partly - AT
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• Appellants' Claim of VAT Payment on Goods' Value Dismissed Due to Lack of Documentary Evidence.

  Case-Laws - AT : Valuation - The appellants' claim that they have paid the VAT on 80% of the value may possibly be an indicator of the value of goods involved but it cannot be accepted on the face value in the absence of any documentary evidence - AT
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• Court to Decide if Study Material Costs Affect Tax on Coaching Services Under Commercial Training Regulations.

  Case-Laws - AT : Whether the value of study material /text books sold by the appellants is includible in the value of commercial training or coaching service - prima facie case is in favor of assessee - AT
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• Health Club & Fitness Centre's Tax Status Disputed: Revenue Fails to Prove It's a Hospital for Tax Purposes.

  Case-Laws - AT : Health Club & Fitness Centre - Assessee a hospital or not - obligation to show that the service provided by the appellant is a taxable service is on the Revenue and this basic obligation has not been fulfilled in this case. - AT
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Central Excise

• Yarn Industry: Rule 16 Confirms Duty Demand on Returned Goods Due to Infeasibility of Re-winding or Remanufacturing.

  Case-Laws - AT : Return of goods - Rule 16 - it is observed that in yarn industry, it is not possible to undertake re-winding or remanufacturing of yarn -demand of duty confirmed - AT
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• CENVAT Credit: 10% Charge on Sludge as By-product Deemed Unsustainable Under Central Excise Rules 2004, Rule 6(1)(i).

  Case-Laws - AT : CENVAT Credit - 'sludge' is in the nature of by-product or waste and demand of amount of 10% on the value of the 'sludge' under Rule 6(1)(i) of the said Rules 2004 is not sustainable - AT
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Case Laws:

• Income Tax

• 2014 (12) TMI 355
  Deletion of addition on Non-performing Assets – Applicability of provisions of section 43D - Revenue was of the view that the interest income even in relation to such NPAs was liable to be included in this year’s total income, having regard to the mercantile system of accounting followed by the assessee - Held that:- so far as the applicability of section 43D of the Act to the assessee is concerned, there is a convergence of opinion between the assessee and the Revenue to the effect that the same is not applicable to the assessee. Following the decision in DCIT vs. The Durga Cooperative Urban Bank Ltd. [2011 (3) TMI 1552 - ITAT VISAKHAPATNAM] – the assessee is a cooperative bank and also governed by the Reserve Bank of India - the directions with regard to the prudential norms issued by the Reserve Bank of India are equally applicable to the assessee as it is applicable to the companies registered under the Companies Act - assessee is a Co-operative Bank carrying on banking business in terms of a license granted by RBI and is not a ‘scheduled bank’ included in second schedule of RBI so as to fall within the scope of section 43D of the Act - in Commissioner of Income tax Versus Vasisth Chay Vyapar Ltd. & others [2010 (11) TMI 88 - Delhi High Court] it was held that what to talk of interest, even the principle amount itself had become doubtful to recover - In this scenario it was legitimate move to infer that interest income thereupon has not “accrued”- thus, there was no infirmity with the decision of the CIT(A) in holding that the interest income relatable on NPA advances did not accrue to the assessee – Decided against revenue.

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• 2014 (12) TMI 354
  Validity of admission of additional grounds – Rule 11 of ITAT Rules - Revenue contended that the grounds ought not to have been raised before the Tribunal which was not adjudicated before the CIT(A) – Held that:- The provision makes it clear that the assessee has the right to raise additional grounds and if it is beneficial to the assessee, the same should be considered by the Tribunal - the very same issue, raised as additional grounds, has already been considered by the Tribunal in respect of the assessee's own case - when the additional grounds is beneficial to the assessee, the Tribunal is right in allowing the same – Decided against revenue.

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• 2014 (12) TMI 353
  Exclusion of sales tax and excise duty for computation of total turnover u/s 80HHC - Whether the Tribunal was right in upholding the order of the CIT(A) directing to exclude sales-tax and excise duty while computing total turnover for the purpose of deduction u/s. 80HHC – Held that:- The Tribunal was rightly of the view that the sales tax and excise duty shall not form the part of total turnover - following the decision in Commissioner of Income-Tax Versus Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME Court] wherein it has been held that while interpreting the words "total turnover" in the formula in Section 80HHC, one has to give a schematic interpretation and the various amendments made therein show that receipts by way of brokerage, commission, interest, rent, etc. do not form part of business profits, as they have no nexus with the activity of export, and therefore, excise duty and sales tax also cannot form part of the "total turnover" u/s 80HHC(3) – thus, the amounts towards sales tax and the excise duty cannot be included in the total turnover – thus, the Tribunal committed no error in directing the AO to exclude sales tax and excise duty from the total turnover – Decided against revenue.

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• 2014 (12) TMI 352
  Jurisdiction of CIT u/s 263 – Whether the TDS on reimbursement of freight charges to the suppliers had already been considered by the AO after due application of mind in the original order passed u/s 143(3) or not – Held that:- Assessee contended that the assessee had not made any freight payment to the transporters – in Malabar Industries vs CIT [2000 (2) TMI 10 - SUPREME Court] - it has been held that the CIT has to satisfy twin conditions, the order of the AO sought to be revised is erroneous and it is prejudicial to the interests of the Revenue - If any one of them is absent CIT cannot exercise jurisdiction u/s 263(1) - every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interest of the Revenue – the amount of freight was included in the bills for supplies received from suppliers - assessee has only reimbursed the freight payment made by the suppliers of the goods - AO has decided that no disallowance u/s 40(a)(ia) of the Act is called for - reimbursement of expenses cannot be said to be payment of freight which may call for deduction of TDS u/s 40(a)(ia) - the view adopted by the AO cannot be said to be unsustainable in law – thus, the exercise of jurisdiction by the CIT u/s 263 is not sustainable - AO has done proper enquiry and thereafter he has formed an opinion which cannot be said to be prima facie unsustainable - CIT’s conclusion that AO has not applied his mind is also not sustainable – thus, the order of the CIT passed u/s 263 is set aside – Decided in favour of assessee.

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• 2014 (12) TMI 351
  Validity of reopening of assessment u/s 147 – Reopening made on the basis of DVO’s report - Held that:- The assessments were reopened on the basis of the DVO’s report and the assessments were completed u/s 147 read with 144 of the Act and in some cases under section 143 of the Act – in assessee’s own case it has been already decided that reopening was done on the basis of the DVO’s report, therefore, the reopening is bad in law – AO was of the believe that some income has escaped assessment is only on the basis of DVO report because he has worked out the difference in the amount of investment as per the investment declared by the assessee and as per DVO report – CIT(A) has given a clear finding that there was no reason available with the AO except the report of a valuer which showed the valuation of the building higher than the investment disclosed by the assessee - the only basis regarding the AO’s belief that some income has escaped assessment, is DVO’s report only – relying upon Assistant Commissioner of Income-tax Vs Dhariya Construction Co. [2010 (2) TMI 612 - Supreme Court of India] wherein it was held that the opinion given by the District Valuation Officer is not per se information for the purpose of reopening an assessment u/s 147 of the Income-tax Act - in all the AYs the reopening was done by the AO on the basis of same DVO’s report - once reference itself is held to be invalid or bad, the DVO’s report obtained consequent thereto cannot be used for reopening of the assessment – thus, the reopening is bad as the reopening of the assessment on the basis of the valuation report – Decided against revenue.

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• 2014 (12) TMI 350
  Genuineness of claim of loss – Addition as income from other sources upheld – Sale and purchase in shared - Held that:- The sale and purchase of shares shown by the assessee are supported by documentary evidence which has not been refuted by AO or CIT(A) - The addition is based simply on information according to which the assessee has entered into the transactions with one of the concern engaged in the bogus billing - However, there is no material on record to suggest that the transactions entered into by the assessee were bogus either in the terms of sale and purchase or in the terms of rates at which these shares were purchased and sold - assessee has filed evidence to show that these shares were purchased for a price which were prevalent in the market and payments were made through banking channel and these shares were also sold at the prevalent market rate - These shares were also credited in the D-mat account and have gone out of the D-mat account – following the decision in Chandrakant Babulal Shah Versus AO [2010 (12) TMI 713 - ITAT, Mumbai] - the assessee has proved the genuineness of the share transactions - Decided in favour of assessee.

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• 2014 (12) TMI 349
  Transfer pricing adjustment – Determination of ALP - Payment of interest on loans raised from associated enterprises – Held that:- The loans have been availed by the assessee from Goodyear Tyre and Rubber Co. an associated enterprise based in USA - assessee has made a payment of interest in respect of the three loans - Regarding the technical knowhow loan, the details are that the assessee company entered into a technical assistance and license agreement with its associated enterprise on 21.06.1994 for provision of technical assistance in manufacturing of Earthmover tyres, Radial tyres, Radial passenger tyres, etc. - assessee was required to pay a lump sum technical knowhow fee of USD one crore - assessee paid interest to its associated enterprises - The assessee benchmarked the aforesaid transaction of payment of interest by applying Comparable Uncontrolled Price (CUP) method as the most appropriate method and thus justified that the payment of interest was at an arm's length price - The stand of the assessee was that interest charged on technical knowhow loan and foreign currency cash loan @ 12% was lower than the Prime Lending Rate (PLR) of interest charged by the State Bank of India at the relevant point of time, i.e. 12.25% - 13.25% - the TPO is justified in saying that the transactions involve loan liabilities in foreign currency and it is not a domestic borrowing so as to compare the transaction of payment of interest with the domestic Prime Lending Rate of the Indian banks. Whether it is relevant to consider the stated rate of interest of 12% or the effective rate of interest for the purpose of benchmarking the transaction with comparable cases – Held that:- The terms and conditions of the agreement approved by the RBI in relation to technical knowhow and foreign currency cash loans, which have been succinctly noted by us in the earlier part of this order, clearly establish that in the initial period of nine years there was a moratorium on interest payment and that assessee was not required to incur any interest costs - It is only subsequent to the moratorium period, assessee was to incur interest cost and that too, during the period of repayment of loans - it would be appropriate to compute effective rate of interest in respect of international transaction of loan entered into with the associated enterprise before carrying out the exercise of benchmarking such international transactions vis-à-vis the arm's length price/interest of the comparable uncontrolled transactions - while computing the yearly effective rate of interest in respect of loans what is being sought is the factoring of the terms and conditions of the loan agreements - the data to be used in analyzing the comparability of an uncontrolled transaction with an international transaction shall be the data relating to the financial year in which the international transaction has been entered into. Relying upon DCIT vs. Hitachi Home & Life Solutions (India) Ltd. [2014 (9) TMI 278 - ITAT AHMEDABAD] - wherein the royalty paid by the assessee at 3.75% to the associated enterprise was sought to be benchmarked – thus, the addition with respect to the interest paid on Technical knowhow and foreign currency cash loans on the ground that the effective rate of interest incurred by the assessee is lower than the arm's length rate of interest considered by the TPO is to be set aside – Decided in favour of assessee. Adjustment of ECB raised by assessee – ECB loan raised for financing working capital requirements - Held that:- The comparable uncontrolled transactions i.e. the transaction between the associated enterprise and M/s J.P. Morgan Chase Bank provides a direct benchmark for the purposes of determining the arm's length price of payment of interest in respect of ECB loans - while applying CUP method, it is appropriate that the amount charged in an controlled transaction is examined with the amount charged in an uncontrolled transaction - the transaction brought out by the assessee qualifies the tests – Reference made to Tecnimont ICB P. Ltd. and another Versus Additional Commissioner of Income-tax and another [2013 (9) TMI 595 - ITAT MUMBAI] wherein the context of the clause (i) of rule 10B(e) of the Rules, the rule itself provides that a preference shall be given to internal comparable uncontrolled transaction vis-à-vis external comparable uncontrolled transaction - since the rate of interest paid by the assessee to its associated enterprise in respect of ECB loan is lower than the rate of interest paid by the associated enterprise to M/s J.P. Morgan Chase bank, the transaction of payment of interest on ECB loan raised from the associated enterprise is at an arm's length price - the addition on account of interest paid on ECB loan is directed to be deleted. Depreciation on assets forming part of block assets but not used during the period disallowed – Held that:- As decided in assessee’s own case decided in Asstt. Commissioner of Income Tax Versus South Asia Tyres Ltd., Good Year South Asia Tyres Pvt. Ltd. [2014 (10) TMI 288 - ITAT PUNE]- the claim of the assessee for depreciation was allowed by the Tribunal – the order of the Tribunal continues to hold the field and therefore following the precedent the assessee has to succeed on this aspect also – the AO is directed to allow appropriate relief to the assessee – Decided in favour of assessee. Addition towards impost of capital goods – Held that:- CIT(A) rightly was of the view that having a Global Transfer Pricing Policy does not mean that the markup stated in the Policy is automatically justified - the reasonableness of the markup has to be established. 10% markup over and above the cost of capital goods to AE cannot be said to be on lower side under any parameter of comparison - the evidences or certificate certifying the actual cost of incidental expenses as stated by the appellant like handling, warehousing, insurance, freight, etc. were not produced before the AO nor before the TPO - the adjustment on account of excess price paid over and above the ALP, considering 10% as the reasonable range of markup to the AE is upheld – Decided against assessee.

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• 2014 (12) TMI 348
  Unexplained investment u/s 69 confirmed - Unexplained stock found during survey – Held that:- CIT(A) has rightly directed to consider the figure of opening stock while working out the opening stock as on the date of survey for the purpose of calculating the excess stock as per the books of accounts of the assessee at the time of survey, and opening stock of relevant year was only Rs. 6,94,502/- and not Rs. 24,12,412/- as mentioned in the grounds of the appeal of the Revenue - The opening stock of current year in which the survey operation was conducted by the department, has to be considered for the purpose of working out the opening stock of the assessee, as on the date of survey, for determining the excess stock as per the account books of the assessee as on the date of survey, and accordingly, there is no mistake in the order of the CIT(A) on this issue, in directing the AO to take opening stock of current year and work out the excess stock as per the books of accounts of the assessee as on the date of survey, and there being no mistake in the order of the CIT(A) on the issue, it is being upheld – Decided against revenue. Mistake in totaling and addition in amount of Heena Fabrics – Held that:- The issue regarding totaling mistake of Rs. 1,03,406/- and addition of amount of Heena Fabrics of Rs. 50,895/- was not adjudicated by the CIT(A) – thus, the matter is remitted back to the CIT(A) for adjudication – Decided in favour of assessee.

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• 2014 (12) TMI 347
  Status of the assessee – AOP or Firm - Joint venture - Held that:- The assessee has made it clear that the status in which the returns was filed was that of an AOP - when electronic filing had to be done, due to computer error the status appeared as ‘firm’ on the ITR acknowledgement,whereas in the computation of total income, it was correctly mentioned as AOP - assessee has also filed computation of total income along with acknowledgements from A.Y. 2002-03 to A.Y. 2006-07 in which the status was regularly shown as AOP and even in the application form for allotment of PAN it was shown as AOP, each of the two parties has agreed to bear its own loss or retain its own profit separately - Both have agreed to execute the job together for better co-operation in their relationship with the Chennai Port Trust - If the cost incurred by the HCC or the applicant was more than their income,each party will have to bear its loss without any adjustment from the other party - the applicant and HCC cannot be treated as an AOP for the purpose of levy of income-tax - The applicant will be liable to be taxed as a separate and independent entity. Disallowance of contract receipts u/s 40(a)(ia) - the fact that the work contract order issued were in assessee’s name and so also the payments were credited to the assessee’s account and as such reallocation of these contracts among the members of the assessee would amount to sub contracting not appreciated – Held that:- Following the decision in ITO, Ward-3(1), Pune Versus Swapnali RDS Joint Venture [2014 (12) TMI 320 - ITAT PUNE] - CIT(A) was justified in holding that in absence of any contract or sub-contract work by joint venture to its member companies, provisions of section 194C were not applicable for the purpose of TDS - The two corporate entities forming joint venture were already being assessed since A.Y. 2000-01 onwards on their respective shares and TDS apportionment certificates were also issued by the AO every year for these eight years including the current assessment year to enable them to claim the same - there was no Profit and Loss Account in the assessee’s case and there was no claim of any expenditure - there was no question of any disallowance under the provisions of section 40(a)(ia) - disallowance u/s. 40(a)(ia) made by the AO cannot be sustained - the finding of the CIT(A) cannot be interfered who has rightly held that there is no question of disallowance made u/s. 40(a)(ia) of the Act – Decided against revenue.

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• 2014 (12) TMI 346
  Remuneration paid to partners disallowed – Whether the additional income of Rs. 50,08,220/- is eligible for the purposes of computing the partners’ remuneration – Held that:- It forms a part of the profit for the purposes of computing the remuneration of the partners- In so far as the additional income declared which is not found to be assessable as ‘income from business’, the stand of the Revenue is that the same cannot qualify for the purposes of section 40(b) of the Act – relying upon Md. Serajuddin & Brothers vs. CIT [2012 (8) TMI 104 - CALCUTTA HIGH COURT] wherein it has been held that for the purpose of computation of allowable remuneration to partners, book-profit has to be ascertained not only from income of business alone but also income from other sources - Section 40(b)(v) read with Explanation cannot be separate method of accounting for ascertaining net profit and/or book-profit - the net profit as shown in the profit and loss account not the profit computed under the head profit and gains of business or profession – thus, the AO is directed to calculate the allowable remuneration by ascertaining not only income from business but also income from other sources. – Decided in favour of assessee. Additional income declared representing excess stock – Whether or not additional income surrendered during the course of survey is assessable as income from business or not - Held that:- There cannot be an absolute proposition that any income surrendered during the survey is a business income or vice versa - in the absence of the nature of source of cash being proved it was held not to be assessable as income from business - an amount contained in the excess stock declaration of Rs. 15,01,620/- can be said to be assessable as income from business - For balance of the amount of excess stock, assessee has not demonstrated on the basis of evidence, the source from where such investment has been made and therefore it cannot be assessed as income from business – Decided in favour of assessee.

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• 2014 (12) TMI 345
  Deletion of addition on Non-performing Assets – Applicability of provisions of section 43D - Revenue was of the view that the interest income even in relation to such NPAs was liable to be included in this year’s total income, having regard to the mercantile system of accounting followed by the assessee - Held that:- Following the decision in ACIT vs. The Omerga Janta Sahakari Bank Ltd. [2014 (12) TMI 355 - ITAT PUNE] wherein it was held that so far as the applicability of section 43D of the Act to the assessee is concerned, there is a convergence of opinion between the assessee and the Revenue to the effect that the same is not applicable to the assessee - assessee is a Co-operative Bank carrying on banking business in terms of a license granted by RBI and is not a ‘scheduled bank’ included in second schedule of RBI so as to fall within the scope of section 43D of the Act - in Commissioner of Income tax Versus Vasisth Chay Vyapar Ltd. & others [2010 (11) TMI 88 - Delhi High Court] it was held that what to talk of interest, even the principle amount itself had become doubtful to recover - In this scenario it was legitimate move to infer that interest income thereupon has not “accrued”- thus, there was no infirmity with the decision of the CIT(A) in holding that the interest income relatable on NPA advances did not accrue to the assessee – Decided against revenue. Addition of interest on securities purchased – Securities paid to the seller of the securities and corresponds to the period prior to the date of purchase by the assessee bank – Held that:- In CIT vs. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] has held that the ‘broken period interest’ is allowable as a deduction – there was no justification to uphold the stand of the income-tax authorities. Following the judgement of the Hon’ble Bombay High Court in the case of HDFC Bank Ltd. – the order of the CIT(A) is upheld – Decided in favour of assessee. Claim of employee’s contribution to PF disallowed – Held that:- Following the decision in CIT vs. Ghatge Patil Transports Ltd. [2014 (10) TMI 402 - BOMBAY HIGH COURT] - It has been held that the payment of employees contribution to the Provident Fund was also subject to the provisions of section 43B of the Act and therefore the assessee was to be allowed the benefit of amendment inserted w.e.f. 01.04.2004 by way of the first proviso - even the employees contribution to the Provident Fund paid beyond the respective due dates but before the due date applicable for furnishing of return of income u/s 139(1) of the Act, would not suffer the disallowance u/s 43B – thus, the order of the CIT(A) is set aside and the AO is directed to allow assessee’s claim for deduction representing employees contribution to the Provident Fund deposited before the due date of filing of return prescribed u/s 139(1) - Decided in favour of assessee.

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• 2014 (12) TMI 344
  Addition deleted by CIT(A) - Whether the CIT(A) failed to appreciate that there was no client agreement, KYC details, broker's note with purported clients – Held that:- Even if it is claimed by the assessee he acted as a broker or sub-broker on behalf of the 170 parties or clients but he has no valid license or authorisation as per the Forward Contract (Regulation) Act, 1952 - the assessee has contract with M/s. A.M. Futures and Others and the assessee was using those entities for carrying out its transactions with the NCDEX (National Commodities & Derivatives Exchange) - The assessee also used M/s. Sanjay Pulse Processors Pvt. Ltd., Jalgaon, M/s. Shubh Commodities, Jalgaon and M/s. Shanti Commodities, Jalgaon – it could not be understood as to how the 170 clients confirmed that the assessee firm represented as a broker for them and carried out the trading derivatives and transactions in the NCDEX. Many of the clients who have filed their returns of income and even those to whom the assessee transferred all profits or losses by putting into their accounts are assessed by the AO by accepting income declared by the assessee’s clients - when the entire evidence is in favour of the assessee that cannot be brushed aside and tax liability of the assessee cannot be determined on the basis of suspicion and surmises - if the assessee has violated the provisions that specific statute, the action can be taken against the assessee under that enactment but merely because without authority or without license the assessee carried out the trading derivatives and other transaction with the NCDEX may be wrongly representing himself as a broker or misusing the ID but that still not changed the nature of the transaction carried out by the assessee on behalf of its clients- the entire evidence support the case of the assessee save one aspect that the assessee has not followed the provisions of Forward Contract (Regulation) Act, 1952 - the entire exercise done by the AO contrary to the evidence available on record in favour of the assessee – thus, the order of the CIT(A) is upheld – Decided against revenue. Legality of transactions resulting in speculation loss done through Madhya Bharat International (I) Ltd. – Held that:- CIT(A) has rightly deleted the addition by holding that Sec. 41(1) is not applicable - in the subsequent year i.e. FY 2006-07 relevant to AY 2007-08 M/s. Madhya Bharat International Pvt. Ltd. has credited the profit to the account of the assessee on account of transaction carried out by it for the assessee firm - The balance amount of Rs. 5,22,000/- was paid by M/s. Madhya Bharat International Pvt. Ltd. to the assessee by account payee cheques - the speculation loss is to be allowed to the assessee - CIT(A) has rightly held that the transaction was genuine between the assessee and M/s. Madhya Bharat International Pvt. Ltd. - The benefit of the said speculation loss is to be given to the assessee – Decided against revenue. Loss from trading in commodity derivatives – Loss incurred through M/s. Madhya Bharat International Pvt. Ltd. towards the transactions in the NBOT to be treated as non-speculation loss or not – Held that:- Nothing was on record to show that the transactions were settled by the assessee on actual delivery – thus, loss incurred in the oil trading through M/s. Madhya Bharat International Pvt. Ltd. in the NBOT is a speculative loss within the meaning of Sec. 43(5) – The speculation loss cannot be set off against the regular business set off as per the provisions of Sec. 73(1) - Decided against assessee. Levy of penalty – Held that:- The forward market commission (FMC) lays down limit of the quantity to be traded by each party and if transaction of any party exceeds the limit than amount at certain percentage of the value of commodity traded is charged - The said charges are treated as a penalty to regularise the transaction –relying upon Prakash Cotton Mills P. Ltd. Vs. CIT [1993 (4) TMI 3 - SUPREME Court] - the penalty levied which is in the nature of civil liability and similar to the nature of compounding fees - It is not for something charged for serious violation of provisions of law but these are the routine procedural violations - CIT(A) has rightly deleted the addition – the order of the CIT(A) is upheld – Decided against revenue.

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• 2014 (12) TMI 343
  Addition of income from amenities – income from property or not – assessee offered the rental income under the head ‘house property’ whereas income received towards amenities was shown as business income and assessee also claimed deduction towards interest expenditure and depreciation from such business income. - Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that the amenities provided are incidental to letting out the building, hence, such rental income is to be treated as income from ‘house property’ - the annual rent in a case when the property is let throughout the year is the actual rent received or receivable by the owner - the assessee made two agreements one for let out of the property and another for providing amenities and there is a doubt in the mind of the assessing officer regarding the correctness of the income declared by the assessee as ‘income from house property’ and income from business - the authorities have the freedom to go beyond the documents to find out the real intention of the parties - the AO came to the correct conclusion that real rental value was bifurcated into two separate income viz., one is rental income of house property and another is hire charges of the equipment. No precise test can be laid out to ascertain whether income referred to by whatever nomenclature, lease amount, rent or licence fee received by an assessee from leasing or letting out of assets would fall under the head ‘profit and gains of business or profession and it has to be determined from the point of view of a businessman in that business depending upon the fact and circumstances of each case and there is no readymade jacket formula - the intention of the assessee has to be seen as to whether the letting was the doing of a business or to exploitation of his property by an owner - The assessee when exploited the property to derive rental income it has to be held that the income realized by him by way of rental income from a building if the property with other asset attached to the building to be assessed as ‘income from house property’ only - the rental would not have been realized but for the letting out of the machinery, plant or furniture along with such building and therefore, rental received for the building is to be assessed under the head ‘income from other sources’ - the assessee as the owner of the building was only exploiting the property as owner by letting out the same and realizing income by way of rent - Such rental income was liable to be assessed under the head ‘income from house property’ – thus, the order of the CIT(A) is upheld – Decided against assessee.

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• 2014 (12) TMI 342
  Enhancement of income – Treatment of opening balance appearing in cash book – Held that:- The claim of the assessee that as per the cash book for financial year 96-97 and 97-98, the assessee was having cash in hand of Rs. 14,16,946/- as on 31/03/98 is not acceptable because as per the income declared by the assessee in these years, the assessee cannot have such cash in hand and the assessee’s claim regarding receipt of advance to the extent of Rs. 6 lac in assessment year 1996-97 and Rs. 8 lacs in AY 1997-98 is not supported by any credible evidence. Moreover, no valid return was filed by the assessee for any of these years - the claim of the assessee regarding having opening cash in hand of Rs. 14,16,946/- is not supported by any credible evidence – assessee relied upon several cases which are held as distinguishable for various reasons - the assessee could not establish the availability of opening cash in hand as has been claimed by the assessee in the cash book and the order of the CIT(A) is upheld – Decided against assessee.

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• 2014 (12) TMI 341
  Estimation of income - Rejection of books of accounts u/s 145 maintained in the regular course of business – Held that:- Assessee contended that the statements showing the working of centage for the current year and the same working for the preceding years from AY 2004-05 to 2008-09 - centage was considered in each year and thereafter, the closing work in progress was determined and therefore, the addition made by the AO is not justified - centage charges are not fixed and it is varying on the basis of type of contract - certain state government works are allotted to the assessee on which no centage is admissible - these works include M.P./M.L.A. works allotted by the district level authorities works and non centage works - the assessee is bound to execute these non centage works also - the addition was made by the AO by applying the blanket rate of 12.5% for centage charges whereas the claim of the assessee is that on M.L.A./M.P. Nidhi, no centage charges is receivable but as per the details available, in respect of some contracts in respect of M.L.A./M.P. Nidhi, the assessee has also shown centage charges - the working of the assessee is not proper and the basis adopted by the AO is also not scientific – thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO for fresh decision – Decided in favour of assessee. Addition of earned interest on unutilized fund payable to UP Govt. deleted – Held that:- Out of total amount shown as interest on unutilized fund at Rs. 34,07,81,937/- as against opening balance of Rs. 29,12,39,888/-, the AO has treated the amount of Rs. 4,95,42,098/- as income of the assessee for the present year - This amount is difference in opening balance and closing balance - no finding is given by CIT(A) that in fact, the amount of interest income is earned in respect of interest on unutilized fund – thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO for fresh decision in after examining this contention of the assessee that as per the direction of the U.P. Government, from whom the grant was received by the assessee, if any unutilized fund is kept in bank and any interest is earned then such interest income is not income of the assessee and it has to be treated as extra grant by the Government – Decided in favour of revenue.

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• 2014 (12) TMI 340
  Disallowance u/s 14A r.w Rule 8D(2) – Held that:- CIT(A) was rightly of the view that the assessee had its own funds of capital and reserve & surplus more than the investments appearing in the balance sheet for the year - the assessee had not used borrowed funds as the assessee’s own funds were available for the purpose of investment – relying upon CIT vs. Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - HIGH COURT BOMBAY] - the disallowance made by the AO in relation to administrative and managerial expenses under Rule 8D(2)(iii) is upheld – Decided against revenue. Disallowance on late deposit of Employees’ Contribution to Provident Fund deleted - Held that:- CIT(A) rightly deleted the disallowance relying upon CIT vs. Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT] wherein the effect of deletion of second proviso to section 43B of Finance Act, 2003 is retrospective therefore, the assessee would be entitled to claim the benefit of deduction if the amount of contribution to Employees’ Provident Fund is deposited on or before the due date of filing of return for the relevant AY - a grace period of five days is available to the employer even after the due date for deposit of PF under Provident Fund Act - assessee has deposited the contribution within the grace period - when the assessee had made a payment within the grace period, then it can be safely said that the assessee had made the payment within the due date under the Provident Fund Act, the requirement of section 43B even otherwise is deemed to be complied with – the order of the CIT(A) is upheld – Decided against revenue. Deemed dividend u/s 2(22)(e) – Held that:- CIT(A) was rightly of the view that the payee company was a public limited company, hence the provisions of section 2(22)(e) were not attracted to the company - the amount was not in the form of loan or advance but it was inter-corporate deposit upon which the interest payment had been made by the assessee after deducting TDS as per law - the payment was made to the assessee company in the ordinary course of business - since the payee company is a public limited company and the inter-corporate deposits were made due to business exigencies and in the ordinary course of business, the provisions of section 2(22)(e) are not attracted – the order of the CIT(A) is upheld – Decided against revenue. Disallowance on club entry fees deleted – Held that:- CIT(A) was rightly of the view that the expenses were incurred by the directors of the assessee company for the purpose of promoting the business activity of the assessee company - the expenditure was revenue in nature - the expenditure was not incurred for obtaining club membership –the order of the CIT(A) is upheld – Decided against revenue. Capitalization of cost of investment disallowed – Held that:- The assessee during the year has earned substantial dividend income and long term capital gains which had been claimed as exempt u/s 10(38) - The disallowance of expenditure made u/s 14A is relating to the expenditure which the assessee had incurred in earning the exempt income - the expenditure is to be allowed in the relevant AY in which the exempt income has been claimed – the order of the CIT(A) is upheld – Decided against assessee.

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• 2014 (12) TMI 339
  Non-adjudication of two grounds – Facts and details submitted considered or not - Held that:- From the order of the CIT(A), it is ex-facie evident that the submissions of the assessee were not considered - the CIT(A) ought to have adverted to the submissions of the assessee and passed a speaking order - the order of the CIT(A) is hereby set aside and the matter is remitted back to the CIT(A) for fresh decision – Decided in favour of assessee. Disallowance u/s 40(a)(ia) – TDS deducted and paid before due date of furnishing return – Held that:- The AO observed that the assessee-firm has paid an amount to M/s.Ramjki Hari and to Shri Ashokbhai Ramjibhai towards interest on unsecured loan availed from them - the assessee has not raised any objection against the disallowance made u/s.40(a)(ia) of the Act - CIT(A) has confirmed the addition made by the AO on the basis that the payments to the parties were made after 31/03/2005 and there is no evidence of deduction of tax prior to 31/03/2005 - after considering the totality of the facts of the case, the issue is also to be remitted back to the CIT(A) for verification of claim of the assessee that the TDS was deducted prior to 31/03/2005 and deposited in the Government account prior to due date of filing of return – Decided in favour of assessee.

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• 2014 (12) TMI 338
  Maintainability in law of the penalty u/s 271(1)(c) – Assessee complied with the show cause notices u/s.274 or not - Held that:- If the assessee had filed its’ explanation, it is being admittedly not considered by the AO, he ought to have called for a remand report from him after verifying/ascertaining the veracity of the assessee’s claim, toward which there is no finding - the same to be on facts the same as that assumed by the assessee at the assessment stage, which stands considered by the AO. Non-acceptance of assessee’s claim of write off – Held that:- The CIT(A)’s treatment of the assessee’s appeal on merits is again cryptic and inconsistent with the facts of the case, even as he delineates the issue arising for consideration correctly, i.e., as to whether the assessee could be considered as having concealed or furnished inaccurate particulars of income – He correctly framing the issue, does not explain if the conditions of Explanation 1, providing the circumstances under which the assessee would not be deemed to have concealed his income, and thus is to be read along with, stand satisfied or not. Concealment or furnishing inaccurate particulars – Held that:- The assessee has clearly stated to have, as a part of its existing business, also tried to promote young talent in the field of sports, as a separate division, since FY 2000-01, incurring expenditure on salaries, rent, etc. since that year - assessee’s method of accounting, peculiar to its business, stands in fact accepted by the Revenue - there is no question of the assessee having failed to specify any event, which reason prevailed with the AO, so that a claim in its respect would arise only for the year in which the same stood incurred – assessee rightly contended that the fixed assets also includes fixture and fittings, claim qua which may be valid, being in respect of rented premises - the question of the assessee’s explanation being not found to be erroneous or false, in departure of the Revenue’s case, would arise only after the assessee furnishes one – thus, the matter is to be remitted back to the AO – Decided partly in favour of revenue.

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• 2014 (12) TMI 337
  Determination of ALP – Selection of Comparables - Maple eSolutions Limited - Nucleus Net Soft & GIS (India) Ltd. - Loss making comparables rejected – Violation of OECD guidelines or not – Held that:- In Stream International Services (P.) Ltd. Versus Assistant Director of Income-tax (International Taxation) - 7(2), Mumbai [2013 (9) TMI 339 - ITAT MUMBAI] it has been held that Maple eSolutions Limited has to be excluded from the list of comparables – also, in M/s. HSBC Electronic Data Processing India Ltd. Versus Dy. Commissioner of Income-tax Circle 2(2), Hyderabad [2013 (9) TMI 485 - ITAT HYDERABAD] it has been held that as against Rs. 24.02 lakhs of employee cost for the year ending 31st March, 2005, employee cost increased to Rs. 132.54 lakhs - also the data processing charges to the extent of Rs. 1.04 crores has increased which indicates that the assessee is outsourcing the work - due to amalgamation during the year the assessee's business model has changed - For all the three reasons, employee cost filter, outsourcing and amalgamation, and Nucleus Net Soft & GIS (India) Ltd. cannot be selected as comparable – thus, the TPO should verify the financials of the company and there after decide the issue taking into account the ratio of the decision on the issue – thus, the matter is remitted back to the TPO for decision – Decided partly in favour of assessee.

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• 2014 (12) TMI 336
  Deletion of disallowance out of interest paid by assessee - Investment in shares – Held that:- There is investment in shares of sister concerns to the extent of Rs. 4,58,75,850/- including fresh investment in present year of Rs. 3,50,60,700 - there are advances recoverable in cash or in kind from sister concerns of Rs. 8,85,20,483/- including fresh advances in present year of Rs. 3,00,99,83 - even if any interest expenditure is incurred on borrowing utilized for making investment in shares, the same is allowable either u/s 36(1)(iii) of the Act, if making investment in shares is a business activity of the assessee and otherwise, the same is allowable as deduction u/s 57(iii) of the Act, because in that situation, the dividend income is taxable as income from other sources and accordingly, expenditure is allowable under section 57(iii) of the Act. Advances to sister concerns and partners – Held that:- It is noted by the AO in the assessment order hat on advances to sister concerns, interest has been charged by the assessee except advances to two sister concerns i.e. Kailash Auto Finance Ltd. and Kailash Moser Industries Pvt. Ltd. - The amount of advances to Kailash Auto Finance Ltd. was only Rs. 43.21 lakhs as noted by the AO and outstanding amount with other company i.e. Kailash Moser Industries Pvt. Ltd. was not indicated in the assessment order – the decision in Commissioner of Income-Tax, West Bengal III Versus Rajendra Prasad Moody [1978 (10) TMI 133 - SUPREME Court] supports assessee - interest expenditure for earning taxable dividend income has to be allowed irrespective of the fact that there was no dividend income earned during this year. The decision delivered by the SC in S. A. Builders Ltd. vs. CIT [2006 (12) TMI 82 - SUPREME COURT] stands applicable in present case - interest on such loan will be allowable as deduction u/s 36(1)(iii), only if such loan has been advanced for purpose of business as a measure of commercial expediency - money was advanced by the assessee firm to its sister concerns and it is not a case of the AO that such money advanced by the assessee firm to the sister concerns were used by the Directors of these two companies for their personal purposes – assessee claimed that money advanced by the assessee firm to these two sister concerns were used by these two companies for business purposes – thus, no disallowance of interest can be made for making such interest free advances to these two sister concerns – Decided against revenue. Addition of unexplained deposits u/s 68 – Held that:- Out of total four deposits, one deposit of Rs. 1.10 lakhs of Mr. Anand Saptak is on account of renewal of old FDRS and therefore, addition on account of this deposit is not justified at all – regarding other three deposits also, the assessee has filed confirmation of these three persons also and the AO has allowed interest expenditure incurred in respect of these four depositors - regarding deposit of Rs. 1 lakh by Mrs. Asha Agarwal, since reply received from Mrs. Asha Agarwal is for confirmation of Rs. 50,000/- only, excess claim of deposit of Rs. 50,000/- has to be held as not explained - addition made by the AO is justified because when the depositor is confirming only Rs. 50,000/- out of Rs. 100,000/- shown by the assessee, it has to be accepted that balance deposit was not explained. Regarding deposit of Rs. 1.01 lakhs from Smt. Satyawati Sanghi, addition made by the AO is justified because when the depositor is confirming only Rs. 31,000/- out of Rs. 101,000/- shown by the assessee, it has to be accepted that balance deposit was not explained - in respect of Smt. Smita Agarwal of Rs. 20,000/-, AO noted that this bank certificate shows the repayment of Rs. 11,090/- against the deposit of Rs. 20,000/- claimed by the assessee - no nexus is proved between the two transactions – thus, the additions made are partly upheld – Decided partly in favour of assessee.

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• 2014 (12) TMI 335
  Validity of reopening of assessment u/s 147 – tax haven banks - undisclosed income - income lying in the name of the trust - opportunity of being heard provided to assessee or not - Held that:- There was no substance in the assertion of the assessee that the reopening of assessment was bad, without following the due process of law or violation of principle of natural justice, more specifically when sanction was granted by the Additional Commissioner after considering the facts and due application of process of law - The AO provided the reasons for reopening of the assessment wherein it was specified that a tax-evasion petition (TEP) has been received from CBDT - in the return of income the assessee neither offered any income with reference to the trust nor disclosed any details to the effect that the appellant was a beneficiary of the said trust. CIT(A) was rightly of the view that the assessee has wrongly alleged that complete material was neither given nor opportunity to cross examine was given - AO has handed over complete set of documents received by him to the appellant during the course of assessment proceedings - as a part of the remand report, the AO had called the appellant and opportunity to cross examine the AO himself was available to the appellant, however, the appellant chose not to appear and hence cannot raise the bogey of cross examination here - Further, the right to cross examine is available when the department has already recorded the statement and is being used against the appellant. In the instant case, no such thing was done by the department or the AO - the information passed to the AO had been received as a part of the tax information exchange treaty and therefore, there could not have been any cross examination – thus, the AO rightly assumed jurisdiction to reopen the assessment – Decided against assessee. Addition of undisclosed income – Held that:- Not only the documents rather the English translated copy of such documents was also provided - another assertion made by the assessee was that the information was unvouched and not corroborated with any evidence - the documents were received officially by the Government pursuant to an investigation made by permanent subcommittee on investigation of United States Senate - the distribution to the beneficiaries as well as profits earned are not subject to any further tax and, further, the supreme authority is vested in the settler and is transferable - the Liechtenstein jurisdiction qualifies as an off shore financial centre due to a very modest tax regime, high standard of secrecy laws and further foreign investors had the opportunity to establish companies or trust with “HOST trust reg.” in the principality of Liechtenstein to enjoy the advantages of off-shore financial centre. As per the report Indian Investigating Agencies came across a number of cases where individual or entities from India were detected using banking channels of Liechtenstein to hide their illegal income or stash funds and it was only possible when India became signatory to a world-wide convention formulated by OECD an international policy advisory body which formulated global tax standards to fight tax evasion and concealment of illicit funds - It also provided option to undertake automatic exchange of information - It is a common knowledge that discretionary trusts are created for the benefit of particular persons and those persons need not necessarily control the affairs of the trust - still the fact remains that they are the sole beneficiaries of the trust - the deposit made in the bank account of the trust represents unaccounted income of the assessee, as the same was not disclosed by the these assessees in their respective returns in India, consequently, the addition was rightly upheld by CIT(A) – Decided against assessee.

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• Customs

• 2014 (12) TMI 361
  SEZ - Jurisdiction of authority to entertain refund claim - Which authority would be competent to entertain and dispose of the refund claims of units situated within the Special Economic Zones which claims arise out of over payments of customs duty, redemption fine or penalties under the Customs Act, 1962 - Held that:- without making statutory changes, it was simply not possible for the Ministry of Finance by a mere communication to stop the Commissioner of Customs from processing refund claims which was his statutory duty. Secondly, if such mechanism was to be changed for SEZ units from the authorities of the Customs Commissionerate to Commissionerate(SEZ), there had to be matching provisions providing such mechanism under the SEZ law. This admittedly was not done. In fact, till date it has not been done. Thirdly, all the refund claims, appeals and reviews were to returned with an advise to approach the Ministry of Commerce. We may recall this communication was issued by the Ministry of Finance. We wonder what Ministry of Commerce would do with such refund applications, appeals and reviews. There is no clarification whatsoever in this connection. The Ministry of Commerce per se did not have any statutory power either to process the refund claims or entertain appeals or reviews. The powers can be shifted into another authority if a valid law is made in order to do so. By a mere letter, Ministry of Finance could not have suspended the power of Commissioner(Customs) to exercise his statutory functions. It is undisputed that duty was collected by the Commissioner of Customs. Whatever be the character of the duty, the Commissioner of Customs collected the same on a perceived opinion that unit concerned was required to pay such customs duty, redemption fine or penalties as the case may be. If later on such duty, fine or penalty is declared illegal, the person from whom the same has been collected would have a right to seek refund thereof. Such right would be covered by statutory provisions particularly, section 27 contained in the Customs Act, 1962. Such refund application would have to be made within the time permitted under section 27 of the Customs Act, 1962. It may also be subject to verification on the question of unjust enrichment. Many issues may arise which are not clear to us. But one thing is clear that such issues can be decided only by the authority under the Customs Act. Directives issued by the Ministry of Finance in its letter dated 1.11.2012 are invalid and would have no force of law. It is declared that unless proper mechanism is framed under the SEZ laws and statutory provisions are enacted/amended, the Commissionerate of Customs would continue to hold the authority under section 27 of the Customs Act, 1962 to entertain refund claims of excess payment of customs duty, redemption fine or penalties as the case may be, adjudicated and collected by the Customs authority under the Customs Act, 1962, even with respect to units situated in SEZ areas. Whatever refund claims being returned to the petitioners by the Customs Commissionerate, the petitioners would represent the same to the appropriate authority. If the petitioners do so latest by 15.12.2014, all such applications shall relate back to the first presentation before the Customs authority. The period of limitation for presenting such application and computation of interest in case eventually the refund is granted, shall be reckoned from such date.

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• 2014 (12) TMI 360
  Evasion of custom duty - import of Tin Sheets in the name of Tin Free Sheets - Misdeclartion of goods - Suppression of value of goods - Confiscation of goods - Penalty u/s 112 - Held that:- Here is a case where the importer attempts to import goods one after the other and the investigation revealed that there is a clear intent to evade payment of duty. The importer realizing that he would suffer not only the consequences of confiscation, but penalty, has chosen not to file bill of entry for subsequent consignments and has proceeded to abandon the goods. From a reading of the statement recorded at the time of investigation, it is evident that the import was made with an intention to evade duty by clearing Tin Sheets of higher value by declaring them as Tin Free Sheets of lower value. There is also a clear admission that differential price was paid through other than banking channels. There is a clear admission that only on investigation, the importer tried to cover up the imports by seeking amendment to import documents. There is not only an admission regarding misdeclaration of goods, but the investigation reveals that the goods are attempted to be imported contrary to EXIM Policy 2002-2007. Accordingly, on the ground of misdeclaration and improper import contrary to the EXIM Policy, there has been a violation of the Customs Law and, in our considered opinion, show cause notice issued invoking Section 111(d) and 111(f) of the Act is proper. Inasmuch as dutiable goods required to be mentioned under the Import General Manifest have not been mentioned as Tin Sheets and in the shipping documents it has been wrongly stated as Tin Free Sheets, the contention of the department that there was case for confiscation of improperly imported goods is justified. We find that the provisions of Section 111(d) and 111(f) of the Act have been clearly breached by the importer, inasmuch as there has been an attempt to import goods contrary to the prohibition imposed by or under the Act or other law for the time being in force. Since the goods are attempted to be improperly imported and that has been admitted by the importer, the consequence by way of penalty would follow. The Tribunal fell into error by stating that merely because the goods have been abandoned and bill of entry has not been filed, it is not a case for imposition of penalty. The right of a person to abandon the goods and seek exemption from payment of duty is under Section 23(2) of the Act, but that does not absolve him of his liability to be proceeded against under the provisions of the Act for any violation which renders the goods improperly imported liable for confiscation. The penalty under Section 112(a) of the Act is in relation to such conduct of improper importation of goods. Plea of the importer that he is not the owner of the goods also appears to be a fallacy. If he is not the owner, as stated by him, there is no question of seeking abandonment under Section 23(2) of the Act, where a right is given to the owner to abandon the goods. At the first instance, as an importer, the first respondent chooses to abandon the goods as owner and thereafter pleads that he is not the owner. In the statement recorded by the Customs authority, he has accepted that he is the owner of the goods and the reason for misdeclaration has also been stated. The statement is not retracted. The complicity of the importer in the improper import is, therefore, evident from the narration of facts as above. - Section 112 of the Act stands clearly attracted to the case of improper importation of goods by any person. The key words of Section 112(a) of the Act are that in relation to any goods, if any person does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111 of the Act, he shall be liable to pay penalty. In this case, the importer did not make a proper declaration in respect of the goods with an intent to evade payment of customs duty and, therefore, the consequence of penalty will flow automatically. In our firm view, the Commissioner was justified in imposing penalty, though we find it is meager in the facts of the present case. - Decided in favour of Revenue.

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• 2014 (12) TMI 359
  Benefit available under Focus Product Scheme in respect of “Technical Textiles” - Denial of claim of incentive under FPS - grievance of the petitioners is compounded as the impugned circular excludes the products exported by them from the definition of technical textiles with retrospective effect - whether the Director General of Foreign Trade (hereafter ‘DGFT’) could issue the impugned circular to recall a benefit provided to the petitioners under the Foreign Trade Policy, with retrospective effect - Held that:- In terms of Section 5, the Central Government is empowered to formulate and announce the Foreign Trade Policy and/or also in the like manner amend that policy. A bare reading of the provisions of Section 5 of the Act indicates that a policy cannot be made with retrospective effect. The expression ‘formulate and announce’ used in Section 5 clearly means that the power is to be exercised prospectively. The power exercised by the Central Government is a power delegated by the Legislation. It is well settled that in absence of an express provision enabling a delegate to make delegated Legislation with retrospective effect, no such power can be inferred. Section 5 of the Act does not empower the Central Government to frame policy with retrospective effect. Thus, the schemes framed under the Foreign Trade Policy cannot be altered or amended with retrospective effect. Benefit granted to the petitioners under the FPS has already been availed by them in terms of the Foreign Trade Policy as in vogue at the material time. Thus, the effect of the impugned circular is to recall a vested right; this, in my view, would also violate Article 300A of the Constitution of India. Neither the central government, nor DGFT would have the power to amend the Foreign Trade Policy or withdraw any export benefit with retrospective effect. The impugned circular inasmuch as it seeks to restrict the list of eligible items under entry 33 of Table 4 of Appendix 37D of the Handbook-I with retrospective effect is set aside. Accordingly, the impugned letters of demand are also set aside. - Decided in favour of assessee.

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• 2014 (12) TMI 358
  Confiscation of goods - Procedure in case of goods not cleared, warehoused, or transhipped within thirty days after unloading- Whether the first respondent is right in relying on Section 48 of the Customs Act, 1962 when the said Section has no application at all to the facts of the case - Held that:- On facts, the original authority found that there was no relinquishment of goods by the original buyer and there could have been no such relinquishment, more so, when the Customs authorities have already seized the goods for violation of conditions of advance licence. The claim made by the appellant was after long lapse of time, by then the property was vested with the Government. Appellant pointed out that the Tribunal in Paragraph No. 7 of the Order has referred to Section 48 of the Act and the said provision has absolutely no relevance. In our view, the misreading of the observations made by the Tribunal has led to such a ground being raised by the appellant. The Tribunal has referred to Section 48 of the Act to state that it contemplates clearance on import of goods within thirty days from its landing and this applies to the person who filed the bill of entry on 8-9-2003 viz., Sandip Exports Limited. Therefore, the Tribunal has not committed any error in referring to Section 48 of the Act while taking note of the conduct of M/s. Sandip Exports Limited. So far as the claim made by the appellant the Tribunal noted that the appellant made its claim in December 2003 only after the offence was detected by the Customs Authorities and the goods were seized. That apart, the Tribunal also set aside the penalty imposed on M/s. Sandip Exports Limited and therefore rightly pointed out that there would be loss of public revenue if the appellant is allowed to clear the impugned goods on payment of normal duty and only on normal redemption fine of Rs. 2,00,000/- as ordered by the Tribunal earlier which was set aside by this Court in [2009 (11) TMI 70 - MADRAS HIGH COURT] - Decided against assessee.

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• 2014 (12) TMI 357
  Suspension of CHA license - Regulation 22 of the Customs House Agents Licensing Regulations, 2004 - violating of any of the conditions enshrined under Regulation 13 - disciplinary authority did not agree with the findings of the enquiry officer and proceeded to impose the penalty in the form of revocation of licence - disciplinary authority did not communicate to the petitioner the reasons for disagreement with the enquiry report as such disagreement sees the light of the day in the impugned order - Held that:- As the order-in-original impugned in this writ petition have been passed in gross violation of principles of natural justice, it does not get cured by an appellate court by affording of fullest opportunity to the petitioner to canvass all the points which were available to him before the disciplinary authority or is available before the appellate authority. The unfair trial does not get corrected and/or rectified by providing an opportunity of hearing before the appellate authority. Therefore, this Court does not agree with the submission of the department that the writ petition should be thrown on the ground of alternative remedy. Court finds that the order impugned in this writ petition cannot be sustained and is hereby quashed and set aside. - Decided in favour of appellants.

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• 2014 (12) TMI 356
  Detention under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 - forfeiture of the property under the SAFEMA - hold of properties purchased and/or developed by tented money earned out of smuggling activities - Bar of limitation - Held that:- There is delay in issuing the impugned notices. However, we believe that delay is to be considered inclusively, as it differs from case to case. In service matters, delay is an important aspect but, the same yardstick cannot be applied in matters involving smuggling and foreign exchange manipulations. Persons engaged in such activities do not keep regular and proper accounts with respect to such activities. Evasion of taxes is integral to such activity. It would be difficult for any authority to say, in the absence of any accounts or other relevant material, that among the properties acquired by a smuggler, which of them or portions thereof, are attributable to violation of law. It is probably for this reason that the burden of proving that the properties specified in the show cause notice are not illegally acquired properties is placed upon the person concerned. For this reason also, the SAFEMA does not prescribe any time-limit for issuance of show cause notice u/s 6(1). Whether the competent authority had “reasons to believe” that the properties of the original petitioners are “illegally acquired properties” under the definition of SAFEMA - Held that:- Section 6(1) of the SAFEMA provides that the competent authority is empowered to serve a notice of forfeiture upon such person whom it has reason to believe that all or any of the properties of such person is illegally acquired. The condition precedent for issuing a notice u/s 6(1) is that the authority should have reason to believe that all or any of such properties are illegally acquired properties and the reasons for such belief have to be recorded in writing. The language of the section does not show that there is any requirement of mentioning any link between the detenue and property ostensibly standing in the name of the person to whom the notice has been issued. Section 8 of SAFEMA states that the burden of proving that any properties specified in the notice u/s 6 is not illegally acquired property shall be on the person affected. It is apparent that the authority had sufficient reasons to believe that the said two properties had been illegally acquired. The authority recorded the satisfaction on the ground that neither AP-2 nor AP-3 had any ostensible source of income. They were not income tax assessees. In spite of that the properties stood in their name and also in the revenue records. Considering the antecedents of AP-1 and his criminal record and when AP-2, who is the wife of AP-1, was found to be having no ostensible source of income and also not an income tax assessee, the impugned notice u/s 6(1) cannot be said to have been issued without arriving at a subjective satisfaction regarding the alleged financial manipulation. Decision in the case of Whirlpool Corporation distinguished [1998 (10) TMI 510 - SUPREME COURT] since the instant case do not would fall under any of the three contingencies mentioned in Whirpool's case. Neither there is any breach of the fundamental rights of the affected party nor there is any violation of the principles of natural justice or that the proceedings are without jurisdiction. The impugned action is only a show cause notice issued under the SAFEMA. Mere issuance of a show cause notice by a statutory authority cannot be said to be infringing the fundamental rights of a person. In our opinion, it also cannot be said to be violative of the principles of natural justice since the impugned action is only the initiation of proceedings and not the final conclusion. The affected persons could avail the opportunities provided under the SAFEMA to defend themselves. The proceedings are ripe and at this stage, to say that there has been breach of the principles of natural justice, would be premature and improper. Writ jurisdiction under Article 226 ought to be refused by Single Judge since the issue was totally premature. - Impugned order set aside - Decided in favour of Revenue.

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• Service Tax

• 2014 (12) TMI 378
  Waiver of pre deposit - Mining of mineral, oil or gas service - Imposition of interest and penalty - Held that:- Activity undertaken by the appellants is mining of iron ore and there is no dispute on that aspect. Iron ore is also an item for which a separate heading is available in the schedule of Tariff. It is also covered by Chapter 26. Therefore the same activity of mining of iron ore can be liable to service tax as well as excise duty. When it comes to Central Excise duty, excise duty will be leviable on the total transaction value and on the entire quantity of iron ore extracted. When it comes to service tax, the amount paid as consideration for the iron ore extraction would be the amount leviable to service tax. The nature of taxes is entirely different; taxable events are different. The mines were owned by individuals who are partners of Sree Gavisiddeshwara Minerals. The right to extract/mine the ore and sell was given to Sree Gavisiddeshwara Minerals. Sree Gavisiddeshwara Minerals and all the partners constituting the partnership firm entered into a contract with the appellant and entrusted the work of mining of ore for a consideration of 64% of the ore that is extracted. In such a situation, when two parties viz. Sree Gavisiddeshwara Minerals and the appellant have treated themselves as two separate entities, obviously the appellant becomes the service provider and the others who owned 36% become the service receivers. In fact in this case, the iron ore mined is initially handed over to Sree Gavisiddeshwara Minerals, who in turn allocated 64% to the appellant and distributed the balance 36% to the other partners. Therefore the appellant, a limited company, has provided a service of mining of ore to Sree Gavisiddeshwara Minerals, a partnership firm. Therefore we consider that prima facie, the appellant may not have a case - Partial stay granted.

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• 2014 (12) TMI 377
  Waiver of pre deposit - Cleaning Service - slag is removed from the factory to the slag yard for undertaking extraction of metal - Demand of interest and penalty - Held that:- no doubt the slag is removed from the factory to the slag yard. But it is removed for undertaking extraction of metal and not for disposal as waste. Such slag is cooled by spraying water and thereafter metal is removed by using magnetic force. Different types of activities undertaken by them explained in scope of work and the schedule of appellant would show that prima facie except for Sl. No. 4 of the table showing the schedule of rates, the other items cannot be considered as a cleaning activity. Since both the sides could not indicate what exactly is the amount collected by the appellants for each category of activity, the only option available to us is to arrive at an approximate figure we do by dividing the amount paid for cleaning activity under Sl. No. 4 by the total amount payable to the appellant for all the activities per ton - Partial stay granted.

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• 2014 (12) TMI 376
  Exemption under notification No. 1/2006-ST - willful mis-statement / suppression - Abatement of 67% - completion and finishing services - Held that:- It is prima facie obvious that benefit of notification No.1/2006-ST is not available to the appellants in respect of impugned service namely, completion and finishing service in view of the said service having been specifically excluded from the purview thereof. However, they cannot be disallowed to claim the benefit of notification No. 12/2003-ST and the same can be claimed by them even at this stage. However, the benefit of the said notification (No. 12/2003-ST) can be extended only if they satisfy the condition subject to which the benefit thereunder can be granted. It is seen that for the benefit of notification No.12/2003-ST the appellants have to show documentary evidence specifically indicating the value of goods/ material sold. The appellants' claim that they have paid the VAT on 80% of the value may possibly be an indicator of the value of goods involved but it cannot be accepted on the face value in the absence of any documentary evidence to the effect that the said VAT was indeed paid on the goods/material used in respect of the service on which impugned demands have been confirmed. While at the stage of deciding their stay application, it is not possible to go into the details of the evidence with regard to the value of such goods and materials sold by the appellants, the fact remains that they have already paid the service tax on 33% of the gross amount received. In view of the this, and having overall regard to the appellants' contention about the goods and materials being a substantial part of the gross amount received, we are of the view that the requirement of section 35F of the Central Excise Act 1944 would be fairly met with a pre-deposit of Rs. 60 lakhs with proportionate interest. - Partial stay granted.

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• 2014 (12) TMI 375
  Waiver of pre deposit - Valuation of goods - Exemption under Not. 12/2003-ST - Whether the value of study material /text books sold by the appellants is includible in the value of commercial training or coaching service - Held that:- clarification in the Board Circular dated 20.06.2003 is misconceived, clearly illegal and contrary to the statutory exemption Notification dated 20.06.2003. Where the legislature has spoken or in exercise of its statutory power exemption is granted by the Central Government under Section 93 of the Act, the CBEC has no manner of power, authority or jurisdiction to deflect the course of an enactment or the exemption granted. Grant of exemption from the liability to tax is power exclusively authorized to the Central Government under Section 93 of the Act. This statutory provision accommodates no participatory role to the Board. In seeking to engraft restrictions on the generality and plenitude of the exemption granted by the Central Government, the CBEC transgressed into the domain of the Central Government under Section 93 of the Act, a course of action clearly prohibited. No notice or cognition can be taken by any authority or such unauthorized exertions by the CBEC. If this illegal and unauthorized condition, imposed on the generality of exemption granted by the Central Government vide Notification No. 12/2003-ST., dated 20.06.2003 is ignored, as it must, the assessee/appellant is clearly entitles to the benefit of the exemption. Appellants have made out a good case for waiver of pre-deposit - Stay granted.

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• 2014 (12) TMI 374
  Refund of service tax - CHA service - Notification No. 9/2009-S.T., dated 3-3-2009 - Exemption to goods supplied to SEZ - Held that:- According to clause-2(f) of the Notification No. 9/2009-S.T., dated 3-3-2009 “the claim for refund shall be filed, within six months or such extended period as the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall permit, from the date of actual payment of service tax by such developer or unit to service provider.” In this case, the respondents have good reasons for the delay but the same have been rejected on the ground that the respondent is very big and they are well aware of all the provisions of law and they have the latest communication technologies available to them. In my opinion, since the respondents are eligible for refund claim and this was in the initial period of implementation of new procedure for claiming the refund, the observations of learned Commissioner (Appeals) are valid and condonation of delay by him is in accordance with law. - Decided against Revenue.

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• 2014 (12) TMI 373
  Health Club & Fitness Centre - Assessee a hospital or not - Held that:- Commissioner (Appeals) has taken a stand that the appellant has to show proof that the service provided by them was therapeutic treatment and the department presumed that such service was not provided as part of treatment and hence confirmed the demand. It may not be a right approach. This is not a case where the assessee is claiming the benefit of exemption notification. This is a case where the Revenue has considered that the service provided by the appellant is taxable service. Therefore, obligation to show that the service provided by the appellant is a taxable service is on the Revenue and this basic obligation has not been fulfilled in this case. The demands have been confirmed on the ground that in three sample cases, the treatment has been taken by the clients for few hours The department had enough opportunity and enough powers to gather necessary evidence to show that the claim of the appellant that the service provided by them is part of treatment was wrong. No such action has been taken by the department. Taking note of the learned counsel’s vehement assertion that in case the Revenue is able to show even in one case that the treatment was provided to tourists as part of the tourism, the appellant is ready to pay the entire service tax, we find that the appellant has made out a case for waiver. Accordingly, the requirement of pre-deposit of the dues adjudged is waived and stay against recovery is granted during pendency of the appeals - Stay granted.

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• 2014 (12) TMI 372
  Security services - Interest u/s 75A - Penalty u/s 76, 77 & 78 - Invocation of extended period of limitation - Held that:- From the records, it is evident that the appellant did not cooperate with the department and did not furnish the copy of the bills raised on various service recipients. Therefore, the department was constrained to take the figures from the books of account and audited balance sheet for computation of the demand. In these circumstances, the appellant’s contention that the Revenue did not provide copies of the documents relied upon is totally devoid of merits and has to be rejected outright. It is also seen from the statements given by the various officers including one Director of the appellant company and also the statements given by the recipient of the services that the appellant has been rendering security agency services to the clients and has charged Service Tax for the services rendered during the impugned period. However, the appellant did not take out any Service Tax registration nor comply with any of the statutory requirements. They also did not remit the Service Tax collected from their customers to the exchequer. Thus, the demand of Service Tax based on the figures furnished in the audited balance sheet of the appellant firm is sustainable in law. Invocation of extended period of time is also sustainable inasmuch as the appellant deliberately withheld the details of the services rendered from the department and accordingly confirmation of demand invoking the extended period of time is correct in law. Consequently, all the penal provisions would ensue and the penalties imposed on the appellant firm under Sections 75A and 76 for default in payment of Service Tax and under Section 77 for not filing the returns and compliance of the statutory provisions and under Section 78 for evasion of Service Tax by indulging in suppression of facts and wilful misstatement are liable to be confirmed. - Decided against assessee.

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• 2014 (12) TMI 371
  Waiver of pre deposit - Site formation and clearance, excavation and earth moving and demolition service - Suppression of facts - Penalty u/s 77 & 78 - Held that:- On a careful perusal of the two work orders and on examination of the definition of “site formation and clearance service”, we are inclined to take the prima facie view that the transportation of earth excavated from one part of a large area (site for power plant to be set up by Reliance) to another part of the area for the purpose of filling/levelling was also a part of “site formation and clearance service” which includes “earth moving” also. We take this view, considering the totality of the work awarded to the appellant by Reliance. However, the tax paid by Reliance for transportation of earth can be counted as pre-deposit by the appellant towards the demand raised under site formation and clearance service. Moreover, we have found prima facie case for the appellant against the demand for the extended period of limitation. In the circumstances, the service tax and education cesses demanded under site formation and clearance service for the normal period have to be pre-deposited by the appellant and the same have been estimated at around 10.5 Lakhs. - Partial stay granted.

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• 2014 (12) TMI 363
  CENVAT Credit - Whether the appellants were legally permitted to utilize Cenvat credit account for paying service tax on the Goods Transport Agency services and Business Auxiliary Services on which they were required to pay service tax as receiver under reverse charge mechanism - Held that:- when the explanation under Rule 2(p) of Cenvat Credit Rule was deleted only the services actually provided by an assessee could be treated as output services and not the services received by him even if he was liable to pay service tax on such received services. in fact the explanation deeming the taxable services received by an assessee as an output services was also applicable to persons who were neither a manufacturer nor a service provider. It was further clarified that even during the period prior to 19.4.2006 also the service tax on the taxable services received by an assessee on which he was liable to pay service tax under reverse charge mechanism, he was required to pay service tax in cash and not by utilising Cenvat Credit Account. prima-facie case is in favour of revenue - Partial stay granted.

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• Central Excise

• 2014 (12) TMI 370
  Validity of order passed - Opportunity for hearing not granted - Held that:- Commissioner (Appeals) observed that the appellant (respondent therein) had not filed any cross objection to the appeal filed by the Revenue and, therefore, Departments version remains unrebutted and, therefore, survives. We are unable to accept such a reasoning of the impugned order. Section 35A(3) of Central Excise Act, 1944 provides that the Commissioner (Appeals) shall, after making such further enquiry as may be necessary, pass such order, as he thinks just and proper, confirming, modifying or annulling the decision or appealed against. Sub-Section (4) of Section 35A of the said Act, 1944 provides that the order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision therefor and the reason for the decision. Thus, it is a statutory duty of the Commissioner (Appeals) to give reasons, which cannot be discharged by use of vague words. It requires proper, adequate reasons on the basis of material on record as available. while disposing the Department’s appeal, the Commissioner (Appeals) should have examined the grounds of appeal and relevant records as available and state the points for determination and give the reasons for the decision. Commissioner (Appeals) allowed the appeal of the department only on the ground that the Respondents had not filed any cross objection, which cannot be a good reason - Matter remanded back - Decided in favour of assessee.

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• 2014 (12) TMI 369
  CENVAT credit - place of removal - services are post-manufacturing activity - Board vide Letter F. No. 345/1/2008-TRU dated 27.6.2008 - Held that:- Board has clarified that input service credit is eligible in respect of payment of service tax under Section 66A. It appears that the said circular was not placed in the case of PMP Auto Components (P) Ltd. (2012 (6) TMI 529 - CESTAT, MUMBAI). We also find force in the submission of the learned counsel regarding the limitation. it is noted that the Hon’ble Bombay High Court in the case of Alumayer India Pvt. Ltd. (2014 (2) TMI 356 - BOMBAY HIGH COURT) observed that when the position in law has been settled only as a result of decision of Larger Bench, it cannot be postulated that there was necessarily a suppression on the part of the assessee merely on the basis that the assessee had not applied for a licence and has not paid the duty. The Hon’ble Bombay High Court waived the predeposit and remanded the matter to the Tribunal for final hearing without requiring the appellants to deposit the duty. - Applicant has made out a strong prima facie case for waiver of predeposit of entire amount of dues. Accordingly, we grant waiver of predeposit of entire amounts of dues and stay its recovery during the pendency of the appeal - Stay grated.

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• 2014 (12) TMI 367
  Waiver of pre deposit - Clandestine removal of goods - Discrepancy in RG-1 register - Held that:- Revenue's allegation of clandestine manufacture and clearance are based upon mainly the installed capacity as disclosed by one of the deponent employee, read with the entries made in various records, resulting in theoretical calculations of production. There is virtually no evidence of procurement of excess raw material, conversion of the same into final product, clearance of the same through transporters and identification of the buyers and the consequent flow of money from the buyers to the appellants. It is well established, by catina of judgment that the allegations of clandestine removal cannot be upheld on the basis of surmises and conjunctures and are required to be established by production of positive and tangible evidence. In the present case, we do not even find, prima facie, preponderance of probabilities to conclude the allegations of clandestine removal against the assessee. - Following decision of Sagarika Acoustronics Pvt. Ltd. vs. Union of India reported in [2007 (3) TMI 723 - Supreme Court of India] - Stay granted.

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• 2014 (12) TMI 366
  Waiver of pre deposit - Clandestine removal of goods - Discrepancy in stock - Held that:- The duty demand on account of shortage of the finished goods and cenvated raw material is based on the difference between the stock found on the officer’s visit to the factory on 16/12/08 and the balance of finished goods and raw material recorded in the statutory registers as on 24/11/08, while for determining the actual shortage, the entries in the raw material register and finished goods register should have updated to 16/12/08. However, as regards the duty demand of about Rs. 14,00,000/- on 443.885 M.T. of MS Ingots, the same is based on the production slips pertaining to November 2008 and first fortnight of December 2008. Since, the power consumption figure for these periods are also available, the power consumption during November 2008 comes to 900 units per M.T. and the same for first fortnight December 2008 comes to about 500 units per M.T. The power consumption thus is in the range of 500 to 1000 units per M.T. as per the IIT, Kanpur study and, therefore, prima facie the production recorded in these slips appears to be the actual production and, as such, the duty demand for November 2008 and first fortnight of December 2008 based on production slips appears to be on stronger footing. Partial stay granted.

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• 2014 (12) TMI 365
  CENVAT Credit - whether the appellants are liable to pay the amounts on the clearance of Sludge cleared during the period from April 2011 to January 2012 and August 2010 to March 2011 under Rule 6 and 14 of CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 inasmuch as the appellants have availed cenvat credit on the common inputs used in the manufacture and clearance of the dutiable products of "Paper and Paper Boards as well as the exempted product of "Sludge" - Held that:- 'sludge' is in the nature of by-product or waste and demand of amount of 10% on the value of the 'sludge' under Rule 6(1)(i) of the said Rules 2004 is not sustainable. - Following decision of assessee's own previous case [2013 (12) TMI 928 - CESTAT CHENNAI] - Decided in favour of assessee.

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• 2014 (12) TMI 364
  Waiver of pre deposit - Cenvat Credit - Trading activity - credit availed on the retail agent's commission and other input services - Held that:- Prima facie it appears that the adjudicating authority has committed an error while disallowing the retail agency commission which pertains to the manufactured products. Therefore, credit to the extent of Rs. 1.26 crore seems to be entitled to the appellant. Similarly, in respect of advertising agency service, storage and warehousing agency service and goods transportation by road, these services were also availed by the appellant in respect of manufactured goods inasmuch as the traded goods are supplied directly to the retail outlets by the concerned parties. Therefore, these services cannot be attributed to the trading activities. - Following decision of Mercedes Benz India Pvt. Ltd. vs. Commissioner of Central Excise, Pune–I [2014 (4) TMI 12 - CESTAT MUMBAI] - Partial stay granted.

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• 2014 (12) TMI 362
  Rectification of mistake - Appeal dismissed for non compliance order - Held that:- While considering the appeal against the final order of the Commissioner (Appeals) dismissing the appeal for failure of pre-deposit the Tribunal shall not adjudicate upon the merits of the appeal and if the order of pre-deposit passed by the Commissioner (Appeals), in the given facts and circumstances, is erroneous, the Tribunal is required to set aside the order of the appellate authority and remit the matter to the Lower Appellate Authority for de-novo consideration, after passing appropriate order as to pre-deposit and while considering appeal against the order of the Commissioner (Appeals) dismissing the appeal for failure of pre-deposit, the Tribunal is authorised to consider the correctness appropriateness of the pre-deposit order passed by the Commissioner (Appeals), the non-compliance whereof resulted in dismissal of the appeal by that authority. - Matter remanded back - Following decision of Girnar Transformers [2014 (2) TMI 1132 - CESTAT NEW DELHI] - Rectification allowed.

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