Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 11, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Articles
News
Highlights / Catch Notes
Income Tax
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TDS u/s 195 - merely because an entry is made in the books of accounts does not mean that the nonresident received any payment in India. Since no part of the income could be deemed to have accrued to the non-resident in India, there was no obligation to deduct TDS from the payment made to such non-resident - HC
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Corporate/bank guarantee recharge - nature of receipt - India U.K. DTAA - this payment does not fall within the expression of interest and in view of Clause 3 of Article 23 of the Treaty, in the absence of any specific provision dealing with corporate/bank guarantee recharge, the same has to be taxed in India as per the provisions of the Income tax Act, 1961 - AT
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The limitation for revising of the order u/s 263 would start from the order passed u/s 143(3) read with section 148 of the Act but not from the date when the original assessment order was passed u/s 143(3) - AT
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Accrual of income - mere filing of insurance claim did not give any right to the assessee to receive income as the claim was not accepted by the insurance company. Had there been any acceptance by the insurance company, then the income would have definitely accrued on the basis of the accounting entry. - AT
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Accrual of income - real income - whether the rate of interest by the assessee on the ICD @ 7.5% p.a. could have been enhanced by the AO or not? - AO cannot step into the shoes of the businessman to hold that he should have maximum profit from the transaction - AT
Customs
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Continuation of exemption under GST regime - continuation of exemption until the validity of registration granted to the petitioner’s R&D centre - exemption cannot be claimed as a matter of right - matter requires elucidation - HC
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Classification of goods - unbranded Micro SD Cards - the appellant is not liable to pay the Basic Customs Duty on the imported goods, even under the classification made by the Department, which was different than the classification made by it. - AT
Service Tax
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Photographic Service or not? - The appellants did supply a variety of equipments apart from Cameras, which has nothing to do directly, if used independently, with photography - the activity of supply of equipments which may be used in Photography Services by itself cannot be covered under Photography Services. - AT
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Jurisdiction - power of Settlement Commission to reject an application - the argument that after crossing the stage of subsection 1 of section 32-F, the application cannot be rejected on the basis of the bar created by section 32-O, cannot be accepted at all. - HC
Case Laws:
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Income Tax
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2017 (12) TMI 476
Revision u/s 263 - Held that:- In all these cases, we find that the Commissioner of Income Tax had passed an order under Section 263 of the Income Tax Act, 1961 with the observations that the Assessing Officer did not make any proper inquiry while making the assessment and accepting the explanation of the assessee(s) insofar as receipt of share application money is concerned. On that basis the Commissioner of Income Tax had, after setting aside the order of the Assessing Officer, simply directed the Assessing Officer to carry thorough and detailed inquiry. It is this order which is upheld by the High Court. We see no reason to interfere with the order of the High Court. [2017 (12) TMI 409 - CALCUTTA HIGH COURT]
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2017 (12) TMI 475
Application under Section 264 - treatment to sales tax subsidy - AO had added back the sales tax subsidy received by the Assessee as a revenue receipt thereby rejecting its plea that it had to be treated as a capital receipt - Held that:- The scheme under which the Petitioner received the said subsidy also formed the subject matter of appeal filed by Johnson Matthey India (P) Limited [2014 (8) TMI 800 - ITAT DELHI] referring to the decision of the Supreme Court in CIT v. Ponni Sugars and Chemicals Limited [2008 (9) TMI 14 - SUPREME COURT] held that the sales tax subsidy received by the Petitioner will be treated as a capital receipt and not be added to the income of the Petitioner. Thus he impugned order of the Pr CIT dismissing the Petitioner’s application under Section 264 is hereby set aside
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2017 (12) TMI 474
TDS u/s 195 - Disallowing the payment under Section 40 (a)(i) for failure to deduct TDS - Held that:- Section 40 (a) (i) could not be invoked to disallow such payment as deduction on the ground that no TDS under Section 195 (1) was deducted from such payment. Further the CBDT Circular No. 23 dated 23rd July 1969 stated that “A foreign agent of an Indian exporter operates in his own country and no part of his income arises in India.” It acknowledges that such commission is remitted to the agent abroad and “not received by him or on his behalf in India. Such agent is not liable to income-tax in India on the commission.” This was reiterated by the subsequent Circular No 786 dated 7th February 2000. Both the circulars are binding on the Revenue. The contention of the Revenue that the above Circulars cannot override the Act, was negatived by this Court in CIT v. EON Technology (P.) Ltd. (2011 (11) TMI 20 - DELHI HIGH COURT) by holding that when a non-resident operates outside the country, no part of his income arises in India. Further it was held that merely because an entry is made in the books of accounts does not mean that the nonresident received any payment in India. Since no part of the income could be deemed to have accrued to the non-resident in India, there was no obligation to deduct TDS from the payment made to such non-resident. Consequently, the question of disallowing the payment under Section 40 (a) (i) of the Act for failure to deduct TDS did not arise. - Decided in favour of the Assessee and against the Revenue.
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2017 (12) TMI 473
Penalty u/s. 271(1)(c) - Survey operations u/s.133A(1) conducted simultaneously in the premises of some of the members of the group and Assessment u/s.153A(1)(b) completed - 'undisclosed income' was declared by the appellant in the statement recorded during search and the same was also disclosed in the return filed pursuant to notice issued under section 153A - Held that:- We find that in the case of Alok Bhandar [2017 (9) TMI 954 - ITAT DELHI] under similar circumstances held that here cannot be any dispute to the fact that once a return is filed pursuant to notice under section 153A, the same is treated as return filed under section 139 of the Act [refer clause (a) of section 153A(l)]. Further, concealment/ furnishing of inaccurate particulars of income/undisclosed income, has to be necessarily seen vis-a-vis return filed by the appellant Once, income it is declared which is accepted as such under section 139 r.w.s. 153A of Act, then, the question of there being concealment/ furnishing of inaccurate particulars of income/undisclosed income, does not arise at all. In the present case, the entire undisclosed income has been offered for tax by the appellant-company in the return income, which was subject matter of assessment before assessing officer. The return filed by the appellant has been accepted as such by your assessing officer, without any variation. Therefore, in the absence of any undisclosed income being found in the assessment vis-a-vis the return filed, the issue of imposition of penalty does not, arise. - Decided in favour of assessee.
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2017 (12) TMI 472
Addition u/s 68 - assessment u/s 153A - Held that:- As the assessee submitted before Ld. CIT(A) that original return of income was filed under section 139(1) of the Act on 30th May, 2008 which was assessed under section 143(3) on returned income of ₹ 4,97,60,866. It is, therefore, clear that prior to the search the assessment under section 143(3) was completed. It is also an admitted fact that during the course of search and seizure no incriminating evidence as regards the addition under section 68 of the act were found and seized during the course of search. Therefore, no assessment/re-assessment were pending as on the date of search. In the absence of any incriminating material during the course of search, the Ld. CIT(A) was justified in relying upon the decision of the Hon’ble Delhi High Court in the case of Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT) for the purpose of deleting the addition - Decided in favour of assessee.
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2017 (12) TMI 471
Addition on account of Profit reworked for Ghaziabad sub-project plotted - Held that:- CIT(A) in the present year i.e. AY 2010-11 while passing the impugned order has thus observed that since there is no reason for him to differ from the findings of his Predecessor on this issue. Therefore, in order to maintain the Rule of consistency, respectfully following the decision of the Ld. CIT(A) in the AY 2008-09, the issue in hand was decided in favour of the assessee and AO was rightly directed to delete the addition which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on the addition in dispute and reject the ground no. 1 raised by the Revenue. Addition on account of Profits reworked for Meerut sub project - Held that:- In order to maintain the Rule of consistency, respectfully following the decision of the Ld. CIT(A) in the AY 2008-09, the issue in hand was decided in favour of the assessee and AO was rightly directed to delete the addition of ₹ 4,37,87,000/-, in respect of plots in Meerut project on account of 98.72% of completion as against 96.04% of completion declared by the assessee, ₹ 16,97,000/- in respect of built up area in Meerut project on account of 60.36% of completion as against 60.23% declared by the assessee, ₹ 9,65,000/- in respect of constructions of Mall in Meerut project on account of adoption of 38.41% of completion as against 35.97% declared by the assessee. Therefore, the Ld. CIT(A), also rightly directed to adopt the loss of ₹ 30.7 lacs on account of percentage completion declared by the assesse at 32.09% as against 32.4% adopted by the AO, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on the addition in dispute and reject the ground no. 2 raised by the Revenue. Addition being know how fee surrendered - addition u/s Section 40(a)(ia) - Held that:- CIT(A) has observed that AO has not considered the above judicial pronouncement on the issue. In view of the above facts and circumstances of the case and judicial pronouncements on the issue, Ld. CIT(A) has rightly held that the second proviso to Section 40(a)(ia) is clarificatory and curative in nature and therefore, the assessee was entitled for claim of deduction and AO was rightly directed to verify the claim of the assessee that the tax has been paid on the above amount by the payee i.e. Ansal Properties and Infrastructure Ltd. in terms of the aforesaid judgments and allow the aforesaid deduction if the tax has indeed been paid by the payee. Respectfully following the precedents, we do not find any infirmity in the finding of the Ld. CIT(A) on the issue in dispute, hence, we uphold the action of the Ld. CIT(A) on this issue, and reject the ground no. 3 raised by the Revenue.
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2017 (12) TMI 470
Corporate/bank guarantee recharge - nature of receipt - India U.K. DTAA - payment relate to the tendering of any technical or consultancy service - payment towards seconding an expatriate employee - fee for technical services (FTS) or not - concept of make available - Held that:- Having examined the issue of corporate/bank guarantee recharge with reference to Article 12(5) of the Indo U.K. Treaty and Section 2(28A) of the Act, we are of the considered opinion that the authorities below are perfectly justified in concluding that this payment does not fall within the expression of interest and in view of Clause 3 of Article 23 of the Treaty, in the absence of any specific provision dealing with corporate/bank guarantee recharge, the same has to be taxed in India as per the provisions of the Income tax Act, 1961. We do not find any illegality or irregularity in the reasoning given or conclusions reached by the authorities below. We, therefore, dismiss Ground Nos. 2 to 4 & 10. Amount received from JMIPL on account of charges received for the services rendered by senior management employee seconded by the assessee to India - Held that:- Both the authorities below recorded a finding that the secondment contract, secondment agreement, the employment contract and salary reimbursement agreement are not made available by the assessee. Statement of Ld. DR that the assessee failed to furnish these documents before the authorities below, by forcing them to consider only such documents as are produced by the assessee and referred to in the order of the AO stood uncontroverted. No administrative convenience or inconvenience is proved before us with reference to any evidence whatsoever. The need of assessee remitting the amounts to the account of the employee is not brought out. It is not known whether it is the regular practice with the assessee to remit the salaries of the seconded employees to their overseas accounts and to claim reimbursements. However, record does not reveal that either the Ld. AO or the Ld. DRP directed the production of these documents and in spite of such direction the assessee failed to produce the same, thereby permitting the authorities to draw an adverse inference against the case of the assessee. However, we feel that in order to appreciate the contention of the Ld. AR as to the nature of this particular receipt in the hands of the assessee on account of the services rendered by the seconded employee - whether it is reimbursement or FTS or business income and the existence or otherwise of the PE – these consideration of these documents is absolutely necessary. It is only on such consideration this aspect could be conclusively decided. We find it difficult to give any finding on this aspect without looking into such documents. In these circumstances, we deem it just and proper to direct the assessee to produce such documents before the Ld. AO and to set aside the issue to the file of the AO to give a fresh finding after looking into the documents to be produced by the assessee. We, therefore, restore Ground Nos. 5 to 7 to the file of the AO for considering the nature of receipt of ₹ 55,80,855/- with reference to the above documents and other material to be filed by the assessee.
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2017 (12) TMI 469
Validity of reassessment proceedings u/s 148 - under invoicing of sales - Held that:- No evidence whatsoever was found from the department suggesting that assessee was indulged in any kind of under invoicing of sales for the year under consideration; secondly, assessee’s name does not found place in the documents found and seized from the possession of Shri Kamlesh Gupta; thirdly, no confrontation or documents from the possession of employee Shri Kamlesh Gupta has been found nor any cross examination of Shri Kamlesh Gupta has been done; and lastly, in the case of Shri Kamlesh Gupta it has been found that these documents pertain to him and is unrelated to the assessee and adverse inference has already been drawn there against him in the appellate order which has been stated to be final. In the light of these facts on record and in view of our finding given above the aforesaid findings of the Ld. CIT (A) on the issue of quashing the notice u/s 148 and on merits cannot be tinkered with and the same is affirmed.
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2017 (12) TMI 468
Interest on loan given to the subsidiary - Held that:- No adjustment was made on account of interest on loan given to the subsidiary for assessment year 2009-10, we are of the considered opinion that no addition is called for on account of difference in arm’s length price on the transaction on account of interest on loan given to the subsidiary. The grounds raised by the assessee are accordingly allowed. Addition on account of the interest on export proceeds receivable - rectification application u/s 154 - Held that:- We find the rectification application filed before the Assessing Officer u/s 154 is pending. It is the submission of the ld. counsel for the assessee that there was some calculation error and there is no international transaction at all on account of receivables. Considering the totality of the facts of the case and considering that the rectification application is pending before the Assessing Officer which is yet to be disposed of, we deem it proper to restore this issue to the file of the Assessing Officer for fresh adjudication. The grounds no.7 and 8 are accordingly allowed for statistical purposes.
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2017 (12) TMI 467
Revision u/s 263 - period of limitation for revising of the order u/s 263 - bogus purchases - Held that:- In re-opened proceedings as the issue of purchases was re-opened and this issue was also subject matter of original proceedings. Hence, the issue related to verification of purchases merged with the re-opened proceedings, where admittedly issue of bogus purchases was the basis for re-opening. Thus, the facts in the present case are distinguishable from the facts of the Judgment of the Hon’ble Supreme Court rendered in the case of CIT vs. Alagendran Finance Ltd. [2007 (7) TMI 304 - SUPREME Court]. In the instant case thus the limitation for revising of the order u/s 263 would start from the order passed u/s 143(3) read with section 148 of the Act but not from the date when the original assessment order was passed u/s 143(3) of the Act. Thus, this ground of the assessee’s appeal is dismissed. Genuineness of the investment - eligible for deduction u/s 10B - Held that:- The assessee can not be allowed to take advantage of its own wrong. By claiming the bogus expenditure the assessee has certainly caused prejudice to the interest of the revenue. The component of investment which is claimed as business expenditure may be unexplained investment, which is claim under the garb of trading expenditure. Keeping this in view, we do not see any reason to interfere into the action of the Ld. CIT(A), same is hereby affirmed. This ground of assessee’s appeal is dismissed. Before parting we may also hold that even if the Ld. CIT(A) has decided the issue that the profit arising out of the bogus purchases would be eligible for deduction u/s 10B even then the revenue cannot be precluded to examine the issue from the stand point of genuineness of investment. - Decided against assesee
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2017 (12) TMI 466
Addition towards share capital - search assessment framed u/s 153A/143(3) - proof of incriminating material found during the course of search - Held that:- In respect of abated assessments (i.e pending proceedings on the date of search), fresh assessments are to be framed by the ld AO u/s 153A of the Act which would have a bearing on the determination of total income by considering all the aspects, wherein the existence of incriminating materials does not have any relevance. However, in respect of unabated assessments, the legislature had conferred powers on the ld AO to just follow the assessments already concluded unless there is an incriminating material found in the search to disturb the said concluded assessment. In our considered opinion, this would be the correct understanding of the provisions of section 153A of the Act, as otherwise, the necessity of bifurcation of abated and unabated assessments in section 153A of the Act would become redundant and would lose its relevance. Hence the arguments advanced by the ld DR in this regard deserves to be dismissed. We hold that the assessment framed u/s 143(1) of the Act for the Asst Year 2010-11, which was unabated / concluded assessment, on the date of search, deserves to be undisturbed in the absence of any incriminating material found in the course of search and accordingly the addition made on account of share capital u/s 68 of the Act is hereby directed to be deleted. - Decided in favour of assessee.
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2017 (12) TMI 465
Disallowance on account of commission payment - Held that:- The assessee has not produced the requisite details before the assessing officer and further, the Ld. CIT (Appeals) has also not taken a remand report from the assessing officer with respect to the observations made by the assessing officer while making the disallowance. Therefore, in view of above facts, and in interest of justice, we set aside the whole issue back to the file of the assessing officer with a direction to the assessee to produce the commission agents before the assessing officer for verification about the rendition of the services and, for production of any other information and details to prove the allowability of commission expenses. The assessing officer is also free to make necessary enquiries as he deems fit to decide the issue. Needless to say, proper opportunity of hearing will be granted to the assessee before deciding the issue. Accordingly, ground no. 1 is allowed for statistical purposes. Addition on account of interest on insurance claim and deletion of income from insurance claim - Held that:- In the case of Godhra Electricity Co. Ltd. vs. CIT (1997 (4) TMI 4 - SUPREME Court) held that if the income does not result at all, it cannot be taxed even though in book keeping an entry has been made about the hypothetical income which does not materialise. Thus, we are of the considered opinion that mere filing of insurance claim did not give any right to the assessee to receive income as the claim was not accepted by the insurance company. Had there been any acceptance by the insurance company, then the income would have definitely accrued on the basis of the accounting entry. But in the instant case it is not so. Even during the course of proceedings before us, the department could not produce any cogent evidence to the contrary in this regard. Accordingly, we find no reason to interfere with the adjudication of the Ld. CIT (A) on this issue and dismiss ground Nos. 2 and 3 of the department appeal. Adhoc disallowance of expenses - Held that:- Personal element in all these expenses could not be ruled out. The Ld. CIT (A) also noted that relevant details were furnished before the AO but the AO had failed to point out specific instances of personal element in such expenses. While deleting the disallowances, Ld. CIT(A) has placed reliance on numerous orders of the ITAT Delhi Bench where the jurisdictional Tribunal for the assessee has held that where the expenditure was disallowed without pointing out any expenditure in the nature of personal expenses, there was no justification in making ad hoc disallowances. This adjudication of the Ld. CIT (A) could not be negated by the department by leading any evidence to the contrary even during the course of proceedings before us. Therefore, on this issue also we find no reason to interfere with the adjudication of the Ld. CIT (A) and we, accordingly, dismiss ground No. 4 of the departmental appeal.
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2017 (12) TMI 464
Accrual of income - real income - whether the rate of interest by the assessee on the ICD @ 7.5% p.a. could have been enhanced by the AO or not? - Held that:- There cannot be any enforceable right to receive the income to the assessee over and above what has been agreed amongst the party, because as per the mutual agreement between the parties the rate of interest agreed was 7.25%, which alone could have enforced by the assessee and not what has not been agreed upon. Hence here in this case it cannot be held that any income has accrued to the assessee. In any case the assessee has tried to justify the rate of interest agreed amongst the parties by bringing on record the various rate of interest on FDRs at the relevant time offered by different the bank which was far below than 7.25%, which in our opinion the onus on the assessee if any to prove the reasonableness too has been discharged, which though in our opinion was not required. AO has treated the subscription of ICD as a loan which in our understanding is not a correct way to interpret an ICD, because it is a deposit made by the subscriber of the ICD issued by a company on a fixed rate of interest and hence it cannot be treated as a loan. Thus such an enhancement of notional income as done by the AO cannot be appreciated, because the AO cannot step into the shoes of the businessman to hold that he should have maximum profit from the transaction. There is no real income which has accrued to the assessee and accordingly, the view taken by the Ld. CIT (A) for deleting the addition is upheld and the ground raised by the revenue is dismissed
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Customs
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2017 (12) TMI 463
ADD - Elastomeric Filament Yarn (EFY) - import from China PR, Korea, Taiwan and Vietnam (subject countries) - It is claimed that there is no injury to the DI and there is no reason for imposition of AD duty. The thrust of the argument is that the DI is doing well and is having good commercial return and there is no apparent injury caused to the DI due to import of the subject goods - Held that: - There is no ground to support the claim of the appellants that there is no material injury to the DI due to imports of subject goods. It is clear that a comparison of landed values with the non-injury prices of the DI reveals significant price under selling. The DA had concluded that the performance of DI remained negative in respect of profit, return on investment and inventory level. In the face of such conclusion based on facts we have no reason to arrive at any contrary finding. It is relevant to note that there is only one unit in the DI which started operation in the year 2012 and engaged in commercial production and sale of the PUC with gradual increase in production and sales in India. The various relevant parameters which will determine the material injury of the DI has been examined by the Original Authority and as already noted, we have no reason to interfere with the same. Accordingly, there is no merit in the appeals filed by the user–importer of PUC in India. On the appeals filed by Hyosung Corporation, Hyosung Vietnam we note that Hyosung group had stated that no commission has been paid to Hyosung Delhi office, however, Hyosung Vietnam provides monetary support to Hyosung Delhi office which undertakes various activities on their behalf. We note that the DA had asked Hyosung Corporation and Hyosung Vietnam to respond to the representation of DI regarding payment of large commission to their Delhi office - The adjustments on account of inland freight, overseas freight, handling charges, marine insurance, credit cost, bank charges and drawback reimbursement have been accepted after necessary verification. An additional adjustment has been made on account of commission paid to their Delhi office. The DA accordingly arrived at normal value and export price for the producer/exporter. We find no infirmity in such process. Accordingly, there is no merit in the appeal filed by Hyosung Vietnam. On the appeal filed by Hyosung Corporation, Korea we note the DA had recommended nil duty rate for PUC produced and exported by Hyosung Corporation from South Korea. The Customs notification also did not impose any anti dumping duty on such imports - we find no justification in the claim made by the appellant for termination of the investigation only for them. In any case, as already noted no AD duty has been recommended or imposed on the exports made by the Hyosung Corporation, as mentioned in Sl. No. 7 of the table attached to the Customs Notification dated 03/05/2017. As such, there is no merit in the present appeal. Appeal by the DI - The DI is partially aggrieved by the impugned final findings and customs notification - Held that: - In the absence of specific instances, we could not identify the source of grievance for the DI. The applicability of Rule 7 of AD Rules to various data submitted by interested parties have been examined by the D.A. The sufficiency of the claim of confidentiality has been recorded by D.A. As such, we find no merit in the present appeal filed by the DI. Principles of Natural Justice - Held that: - We note that more than one hearing was held with due notice. The appellants did submit their side of the case. In our opinion, there is no breach of due process in the present case. Appeal dismissed - decided against appellant.
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2017 (12) TMI 462
Exemption from customs and excise duty - continuation of exemption under GST regime - continuation of exemption until the validity of registration granted to the petitioner’s R&D centre - Held that: - This Court is prima facie of the view that an exemption cannot be claimed as a matter of right in terms of the judgment of the Supreme Court in Union of India v. Parameswaran Match Works [1974 (11) TMI 40 - SUPREME COURT OF INDIA]. The petitioner claims to be a Non-commercial Research Institution recognized by the Department of Scientific and Industrial Research, Ministry of Science & Technology. Imports by Non-commercial Research Institutions are completely exempt from payment of customs duty as also payment of Integrated tax which is clear from a reading of N/N. 27/2017- Customs dated 30th June, 2017 - However, insofar as local purchases made by Non-commercial Research Institutions are concerned, the exemption from payment of excise duty, stands rescinded vide N/N. 9/2017- Central Excise dated 30th June, 2017. The matter requires elucidation and the Government should respond as to the basis of the said rescission to Non-commercial Research Institutions. The matter requires elucidation - The Court is of the opinion that notice should be issued to the respondents.
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2017 (12) TMI 461
Refund claim - duty paid under protest - claim of the appellant on the basis of proviso to subsection (1) of Section 20 of the said Act was that the benefit of the proviso will be available and no duty will be payable on reimported goods - It is alleged that in absence of the failure to establish identity at the time of importation, benefit of the proviso could not be made available - Held that: - Sub-Section (1) of Section 20 lays down the rule with regard to reimportation of goods produced or manufactured in India which are imported into India after exportation therefrom. Such goods are liable to duty and are subject to such conditions and restrictions, if any, to which goods of the like kind and value not so produced or manufactured are liable or subject, on importation thereof. The proviso is by way of an exception to the general Rule under Sub Section (1) of Section 20. Only if the conditions of the proviso are satisfied, reimport without payment of duty is permissible. The proviso is applicable provided satisfaction is recorded by the Assistant Collector of Customs that the goods are the same which were exported. In fact of the case and even in the reply, the appellant accepted that the goods are not the same, in the sense that what was exported was the Nylon yarn and by adopting a process, the same was converted into Tyre cord. Thus, going by the stand taken by the appellant, this is not a case of slight or minor transformation of the goods. In this case, goods were exported in one form and re-imported in another form. Thus, it cannot be said that the goods imported are the same. Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 460
Classification of goods - unbranded Micro SD Cards - classified under CTH 85235220 or CTH 85235100? - Held that: - the CBEC vide Circular dated 20.07.2016 has also clarified that the benefit of the said notification is extendable to Micro/Mini SD cards classified under CTH 85235100. Thus, it is apparent that change in classification of subject goods by the Department will not create any additional Basic Customs Duty liability for the appellant - the appellant is not liable to pay the Basic Customs Duty on the imported goods, even under the classification made by the Department, which was different than the classification made by it. So far as the issue of confiscation of impugned goods is concerned, we are of the view that the provisions of clause (m) of Section 111 ibid is attracted, inasmuch as, the value and declaration of the goods made in the post parcel do not correspond to the actual goods imported by the appellant. Thus, confiscation of goods and imposition of redemption fine in the impugned order is sustainable under the law - however, the quantum of redemption fine need to be reduced. Penalty u/s 112 and 114 AA of the Act - Held that: - the statute mandates that penalty can be imposed for use of false and incorrect material, the authorities have to prove that in fact, the person concerned has deceived the exchequer for his wrongful gain - In this case, the Department has not brought on any evidence to prove appellant's guilt in mis-declaring the goods - in absence of any specific substantiation regarding the involvement of the appellant in fraudulent activities like mis-declaration in the present case, penalty set aside. Appeal allowed in part.
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2017 (12) TMI 459
Penalty u/s 114AA of the CA, 1962 - imposition of penalty on the ground that the premises of the appellant showed that the goods were clandestinely diverted by him to M/s. ESS ESS Traders, which were imported under the cover of Bill of Entry dated 29.11.2012 - Held that: - it cannot be said that the appellant had provided certain false or incorrect material in relation to such import. Further, the Department was also in doubt as to the persons, who were actually filed the Bill of Entry for assessment purpose - Since contradictory stand has been taken by the Department at page 13 and at page 16 in the adjudication order, it cannot be said that the appellant is the importer of the goods and has made false declaration in context with the subject import - penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 458
Classification of goods - micronutrients - Department has a taken a view that the goods merit classification under CETH 38.08 as Plant Growth Regulator, whereas the respondents claim classification as other fertilizers under CETH 31.05 - Held that: - the issue has already been settled in the case of CCE & ST, Hyderabad-IV Versus M/s Aries Agrovet Industries Ltd [2017 (7) TMI 289 - CESTAT HYDERABAD], where it was held that In view of presence of nitrogen, and also considering that they are mixtures and not separate chemically defined compounds, the said goods would therefore come under the ambit of micronutrient fertilisers and will then required to be classified as in other fertilisers in CETH 31.05. Micronutrients will be classified under CETH 31.05 as other fertilizers - appeal dismissed - decided against Revenue.
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2017 (12) TMI 457
Penalty - smuggling of Ketamine concealing into the tobacco packet - Held that: - it is crystal clear that it is a case of the drugs export, Ketamine which is injurious to the health. It is subject matter of the Narcotics and Drugs Act. The main offender, as usual, absconded so the appellant cannot escape from his liability especially when he has confessed that he knows the CFA exporter and the item to be exported. The Commissioner (Appeals) has already taken a lenient view and reduced the penalty substantially. There is no further scope to reduce the same - appeal dismissed - decided against appellant.
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2017 (12) TMI 456
Valuation - Assessing Authorities entertained a view that the goods are not valued correctly and accordingly, proceeded to re-determine the value in terms of Customs Valuation Rules, 2007 - Held that: - Admittedly, the value declared by the appellant was rejected and enhanced to US$10 per piece on the sole ground that there were certain imports of similar goods with this value. Neither the basis of NIDB data with full description and specifications of comparable goods were made available to the appellant nor the NIDB data was examined in full for the relevant period. Admittedly, against certain selected entries the data were taken by the Original Authority and summarily applied for enhancement of value - there is no legal justification in such fixation of assessable value. It is also not clear whether the NIDB value referred to by the Original Authority itself is a re-assessed value - appeal allowed by way of remand.
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Corporate Laws
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2017 (12) TMI 455
Rehabilitation by giving financial assistance - whether the sanctioned scheme in this case was binding on the States of Gujarat and Maharashtra as far as UCIL’s claim for refund of VAT/Sales Tax and electricity duty in terms of clauses 12.1 and 12.2 - Held that:- As is evident from Section 19(4) of SICA, it is in the absence of consent by any person, the Board may adopt such other measures including the winding up of the sick industrial company as it may deem fit. Likewise, the Maharashtra State had no notice of the scheme and became aware of it later. In its case too, its consent cannot reasonably be deemed. Therefore, BIFR could not have overridden or completely ignored the requirement of consent required under Section 19(2) of SICA. The argument that since there is a provision for filing an appeal against the order of BIFR (under Section 25 of SICA), the BIFR can ignore the mandate of Section 19(2) of SICA and sanction a scheme in the absence of consent without intimation to any state, or contrary to its object is an untenable proposition. To admit of this eventuality is to countenance any order of BIFR contrary to the law as it can be challenged in an appeal. There is nothing to indicate to why the BIFR thought it fit to reject the State of Gujarat’s objections, to the proposed scheme. In the circumstances mentioned above, this Court is of the opinion that the sanctioned scheme was not binding on both the States for want of consent on part of the State authorities rendering financial assistance. In the present case, the previous discussion clearly reveals that SICA was not followed, in that one State had objected to the scheme; the other was not even aware of it. Therefore, there was no consent, but opposition in one case and lack of knowledge: both contingencies could not have attracted the provision for “deemed consent”. In such event the scheme, being violative of SICA, could not have prevailed, by virtue of Section 32. This Court is further of the opinion that the petitioner’s grievance was to be redressed by it, within reasonable time of the denial of exemption, i.e. within one or two years of the sanction for the BIFR scheme. By not seeking recourse, firstly by pursuing with the State authorities for notifications or directions, to grant the needed exemption, on the one hand, and proceeding to recover VAT and other levies on the other, after the duration of the scheme, the petitioner has approached the Court after an inordinate delay. The idea of granting exemption was to incentivize growth and ensure commercial viability. The petitioner effectively gave up that relief by its inaction (in not seeking exemption or approaching BIFR or the courts in a timely manner) and by collecting taxes and depositing them.
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2017 (12) TMI 453
Oppression and mismanagement - whether there was due diligence on the part of the applicant petitioner? - Held that:- According to the applicant petitioner, he has got knowledge of appointment of respondent No. 3 as Director only after he made part inspection of record on 29.07.2016. The facts appearing on record is glaringly different. Respondent No. 3 is Director of the first respondent company from 02.05.2015 and relevant forms have been filed with Registrar of Companies on 07.05.2015. Company Petition has been filed on 25.08.2015. When the petitioner inspected the records of the company he must have got knowledge that the third respondent is Director of the first respondent company. In the cause title of main petition itself respondent No. 3 is shown as Director/shareholder. Therefore, it is clear that applicant petitioner has got ample knowledge that respondent No. 3 is Director of the first respondent company by the date of filing this petition. Having knowledge of appointment of the third respondent as Director of first respondent company even before filing of this petition, applicant petitioner did not chose to make any such grievance or any comment on appointment of respondent No. 3 as Director of the first respondent company. Therefore, the amendment now sought to be made seeking removal of third respondent as director is nothing but an afterthought and omission of seeking such relief in the main petition is absence of due diligence. Coming to the amendment of siphoning of funds by respondents No. 2 and 3 together, there are some allegations in the main petition. Now the petitioner wants to bring on record subsequent acts of siphoning of funds on record. When the petitioner is alleging that the oppression and mismanagement is continuous act, petitioner is at liberty to bring on record subsequent oppression too by filing affidavit without amending the pleadings. Therefore, the amendment now sought to be made by the petitioner is not covered by proviso and it is lacking bona fides. Crucial point for allowing any amendment is that the amendment must be necessary for the purpose of determining the real question or issue involved in the proceedings. When the petitioner did not chose to question the appointment of respondent No. 3 in the petition although he has got knowledge, then, it cannot be said that the real question involved in this case is appointment of third respondent as Director. The real controversy involved in this case is whether there are acts of oppression and mismanagement qua the petitioner and the first respondent company. To decide such acts of oppression and mismanagement, appointment of third respondent as Director of the first respondent company, need not be taken up by way of amendment. In view of above discussion, application seeking amendment is not a bona fide application and deserves to be dismissed and accordingly dismissed
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Insolvency & Bankruptcy
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2017 (12) TMI 454
Limitation Act, 1963 applicability for triggering 'Corporate Insolvency Resolution Process' under Insolvency and Bankruptcy Code, 2016 - Held that:- In view of the settled principle, while we hold that the Limitation Act, 1963 is not applicable for initiation of 'Corporate Insolvency Resolution Process', we further hold that the Doctrine of Limitation and Prescription is necessary to be looked into for determining the question whether the application under Section 7 or Section 9 can be entertained after long delay, amounting to laches and thereby the person forfeited his claim. If there is a delay of more than three years from the date of cause of action and no laches on the part of the Applicant, the Applicant can explain the delay. Where there is a continuing cause of action, the question of rejecting any application on the ground of delay does not arise. Therefore, if it comes to the notice of the Adjudicating Authority that the application for initiation of 'Corporate Insolvency Resolution Process' under section 7 or Section 9 has been filed after long delay, the Adjudicating Authority may give opportunity to the Applicant to explain the delay within a reasonable period to find out whether there are any laches on the part of the Applicant. The stale claim of dues without explaining delay, normally should not be entertained for triggering 'Corporate Insolvency Resolution Process' under Section 7 and 9 of the 'I & B Code'. However, the aforesaid principle for triggering an application under Section 10 of the 'I & B Code' cannot be made applicable as the 'Corporate Applicant' does not claim money but prays for initiation of 'Corporate Insolvency Resolution Process' against itself, having defaulted to pay the dues of creditors. In so far it relates to filing of claim before the Insolvency Resolution Professional', in case of stale claim, long delay and in absence of any continuous cause of action, it is open to resolution applicant to decide whether such claim is to be accepted or not, and on submission of resolution plan, the Committee of Creditors may decide such question. If any adverse decision is taken in regard to any creditor disputing the claim on ground of delay and laches, it will be open to the aggrieved creditor to file objection before the Adjudicating Authority against resolution plan and for its necessary correction who may decide the same in accordance with the observations as made above. For the reasons aforesaid, we set aside the impugned order dated 11th April, 2017 passed by the Adjudicating Authority (National Company Law Tribunal) New Delhi in Company Petition No. (IB)-41(ND)/2017 and remit back the case to the Adjudicating Authority, New Delhi to find out whether the application is otherwise complete or not and, after notice and hearing the parties, will pass appropriate orders in accordance with law. In case, the application is complete, the Adjudicating Authority will admit the application preferred by the Appellants. In case it is incomplete, the Appellant be granted minimum seven days' time to remove the defects in terms of proviso to sub-section (5) of Section 9 of the 'I & B Code'.
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Service Tax
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2017 (12) TMI 452
Jurisdiction - power of Settlement Commission to reject an application - case of petitioner was that the application cannot be rejected subsequent to the stage of subsection 1 of section 32-F on the ground of bar created by section 32-O. Paragraph 9 is exactly to the contrary - penalty - Held that: - section 32-O creates a bar for entertaining subsequent application for settlement. It provides that the bar will be attracted if there is an imposition of penalty on the person who makes an application for settlement on the ground of concealment of his duty liability. If the order dated 31st October 2014 is read in its entirety, there is a finding that particulars of the duty liability were concealed and were disclosed subsequently as set out in paragraph 2.1 of the said order. The bar under clause (i) of subsection 1 of section 32-O is attracted once it is established that there was a penalty imposed on the ground of concealment of particulars of duty liability. There is no specific requirement that the penalty should be imposed under section 78. Moreover, the said order of imposing penalty has become final. Therefore, the petitioner is bound by the said order and findings recorded therein. Therefore, we cannot accept the submission that there was no penalty imposed which is covered by clause (i) of subsection 1 of section 32-O. There is an option available for the Settlement Commission either to reject the application or to proceed with the application. If subsection 5 of Section 32-F is considered, it is apparent that even after crossing the stage of subsection 1 of section 32-F, the Settlement Commission is empowered to reject the application. In fact, subsection 5 of section 32-F clearly indicates that the Commission may pass such order as it thinks fit on the matters covered by the applications. Section 32-O is a disqualification provided for entertaining an application for settlement. Therefore, the argument that after crossing the stage of subsection 1 of section 32-F, the application cannot be rejected on the basis of the bar created by section 32-O, cannot be accepted at all. In the fact of the present case, the impugned order itself records that that the applicants before the Settlement Commission were put to notice that the contention regarding bar of section 32-O would taken into consideration. Petition dismissed - decided against petitioner.
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2017 (12) TMI 451
Liability of service tax - export of service or not? - the service is received by the foreign based client and consideration is received by the appellant-assesses inconvertible foreign exchange - Held that: - It is clear that though the data information and other analysis is collected and done by the appellant-assesses in India, the same is in terms of an agreement with a foreign based company. The foreign based client paid consideration inconvertible foreign exchange. The nature of service being such, the same is for consumption and benefit of the foreign client. Service tax being consumption/destination based tax, we find that the services rendered by the appellant-assesses are, in fact, to be considered as export - the appellant-assesses are not liable to service tax on this service - in favor of assessee. Liability of service tax - expenditure incurred in foreign exchange - includibility - reimbursable expenses - Held that: - It is clear that there is no categorical finding as to how the expenditure incurred in foreign exchange can be considered as a payment towards specific category of taxable service and thereafter can be subjected to tax at the hands of the appellant on reverse charge basis. We find considerable force in appellant-assesse’s plea with reference to presumptive nature of the demand for service tax attributable to expenditure in foreign currency - Admittedly, the reimbursable expenditure incurred by the appellant is as per pre-arrangement and reimbursed by the client on actual basis - The non-includability of reimbursable expenditure in the taxable value has been upheld in large number of decisions by this Tribunal also - in favor of assessee. Appeal allowed - decided in favor of assessee.
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2017 (12) TMI 450
Non-payment of service tax - Management Maintenance or Repair Service - Erection Commissioning and Installation Service - validity of SCN - Held that: - We are not in the agreement with proposition that the appellants can be allowed to take advantage of their own action of non-cooperation with the revenue. In any case they have participated in proceedings before the Original Authority by submitting all the contract documents which resulted in the present impugned order. The objection regarding the split up figures not available in the notice cannot be taken to a level to set aside the proceedings themselves, considering the attitude of the appellant during the proceedings - No grievance or violation of principles natural justice would arise in the of the present case. Erection Commissioning and Installation Service - abatement - Held that: - The Hon’ble Supreme Court in the case of Larsen and Tubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] held that the composite contracts involving supply materials along with provisions of service are liable to Service Tax only w.e.f. 1/06/2007. The law laid down by the Hon’ble Supreme Court has to be applied to various contracts which are now in dispute, wherever relevant. The appellants claimed that most of their contracts are relating to roads. However, we note that the contracts may be either relating to electrification of roads or other incidental miscellaneous work with reference to roads. The actual scope of each of the contract which are claimed to be road work by the appellant are to be examined for proper finding - Since we are inclined to remand the matter to the Original Authority in view of above analysis the question of limitation also can be examined by Original Authority for a fresh decision. Appeal allowed by way of remand.
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2017 (12) TMI 449
Jurisdiction - whether the Commissioner (Appeals) is empowered to consider the fresh issues for the first time as per the provisions of Rule 5 of Central Excise (Appeals) Rules, 2001? - Held that: - It is the fact that the issues involved in the appeal before the Commissioner (Appeal) relate to both question of facts as well as the point of limitation, which is a question of law. Since both the aspects are involved in this appeal, the appellant can raise such points even for the first time before the ld. Commissioner (Appeals), if not raised before the Adjudicating authority - the matter should go back to him for fresh consideration of the factual aspect of taxability and the issue of limitation raised before him - appeal allowed by way of remand.
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2017 (12) TMI 448
Cargo Handling Services - extended period of limitation - Held that: - Admittedly, the issue under consideration regarding the tax liability of such activities has been as contentious one with various correspondences and clarifications issued by the concerned authorities - there is no sustainable ground for a demand with extended period. Since the demand is set aside on the limitation, we are not examining further any merits of the case. Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 447
Abatement - N/N. 1/2006-ST - Commercial or Industrial Construction Service - Held that: - similar issue decided in the case of Hindustan Steel Works Construction Ltd. Versus Commissioner of Central Excise, Raipur [2015 (6) TMI 378 - CESTAT NEW DELHI], where it was held that such abatement should be allowed - the tax liability requires re-calculation by the Original Authority - matter on remand. Penalty - Held that: - the tender proceedings for this contract were initiated before the introduction of tax liability. The appellant, Central PSU, entered into an agreement with another Public Sector Undertaking to execute the work. They have taken registration immediately after being pointed out about the tax liability but discharged the service tax thereafter - there is a reasonable cause for non-payment of service tax in time - penalty set aside by invoking section 80. Appeal allowed by way of remand.
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2017 (12) TMI 446
Construction of Residential Complexes - case of appellant is that the appellants have undertaken such construction for use by army personnel. These constructions do not attract service tax liability as they are not covered by the statutory definition for such tax - Held that: - the tax liability of such residential units built for DGMAP, Ministry of Defence, has been clarified by the jurisdictional Commissionerate vide letter dated 10.08.2008 based on the Board’s clarification to the effect that construction of complexes for MAP for Army personnel is not liable to tax if their lay out does not require approval by an authority under any law for the time being in force. This clarification has been issued after a specific reference has been made by the Director (Contracts), DGMAP, Army Headquarters, New Delhi - the construction is for the Ministry of Defence for use of the Army personnel and as such, these are for personal use. In such situation also, it gets excluded from the tax entry - demand set aside. Commercial and Industrial Construction Services - the appellant claimed that these are carried out in pursuance to a composite works contract - Held that: - This aspect requires re-verification and a fresh decision by the Original Authority as the Apex Court decision laying down the law on the tax liability in the case of Commissioner, Central Excise & Customs Versus M/s Larsen & Toubro Ltd. and others [2015 (8) TMI 749 - SUPREME COURT] on composite works contract was not available during the adjudication proceedings - matter on remand. Appeal allowed in part and part matter on remand.
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2017 (12) TMI 445
Photographic Service or not? - Revenue held a view that supplying these equipments and receiving consideration for the same will be covered in the broad ambit of Photography Service - scope of service - Held that: - The Revenue emphasized on the terms "in relation to" and "in any manner". We find that such an expansion of the scope of the tax entry to include the activity of renting of a camera is not sustainable. The scope cannot be extended to such any type of activities, which are connected or conjunction with the Photographic Services - Admittedly, the appellants are not professional photographers or in any business involved in studio activities or in any manner shooting movies or photography. Their business is to supply equipments for other professionals to do their photographic work. The nature of the activities undertaken by the appellants cannot be brought under Photographic Services. It is to be noted that there are various equipments which may have general functions not restricted to photography. Equipments like A.C. Generators, Cranes etc., are general equipments. They may be used along with Cameras; does not make them photographic equipments. The appellants did supply a variety of equipments apart from Cameras, which has nothing to do directly, if used independently, with photography - the activity of supply of equipments which may be used in Photography Services by itself cannot be covered under Photography Services. Appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (12) TMI 444
Clandestine manufacture and removal - suppression of facts - Revenue has alleged that during the disputed period SI failed to account the entire raw materials purchased and used such unaccounted raw materials in the manufacture of CTVs which were clandestinely removed to trading unit M/s AEPL without payment of Excise Duty - Held that: - All the three firms viz M/s SI, M/s BE and M/s AEPL belonged to the same family and are controlled and run by Shri Vinod Kumar Garg as well as Shri K. M. Garg. Both of them are partners in M/s BE as well as M/s SI and are also directors in M/s AEPL. It is not difficult to see that all the three firms are managed and run as one single enterprise - Raw materials such as CPTs, sub assemblies etc have been shown as procured by M/s AEPL and also M/s BE through four fictitious firms who had their own bank accounts but did not have any physical presence. All the addresses were found fictitious. This clearly evidences the fact that the raw materials have been procured clandestinely by M/s AEPL. It stands admitted by Shri K.M. Garg, Director, M/s AEPL that these fictitious firms did not have any manufacturing facility and that the raw materials procured by M/s AEPL were only to make CTVs and further that the goods made by M/s BE and M/s SI were sold through M/s AEPL. M/s AEPL had got CTVs manufacture by M/s SI and M/s BE and sold to various dealers. The raw materials were procured through fictitious firms and utilized the same in the manufacture by M/s SI as well as M/s BE. The documentary evidences further reveal that such raw materials as well as CTVs were not properly accounted. The claim made by the appellant that M/s BE was only manufacturing black and white TVs but were repairing colour television is not borne out by the documents recovered during search. The documentary as well as oral evidences of the case support the allegation of clandestine manufacture and clearance by M/s SI and M/s BE - appeal dismissed - decided against appellant.
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2017 (12) TMI 443
Valuation - whether clearances effected by the appellant to various customers have to be considered as supplies made to industrial / institutional customers or otherwise? - Held that: - similar issue decided in the case of M/s HEIDELBERG CEMENT (INDIA) LTD And M/s ULTRA TECH CEMENT LTD Versus COMMISSIONER OF CENTRAL EXCISE [2014 (8) TMI 251 - CESTAT MUMBAI], where it was held that packages of commodities containing a quantity of more than 25 kg or 25 litre excluding cement and fertilizers sold in bags upto 50 kg and packaged commodity meant the industrial or institutional consumer are excluded from the provisions of the said Rules - appellant has a good case in their favor - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 442
Clandestine removal - cement - Held that: - On a specific query from the Bench, Revenue was not able to confirm whether an appeal is preferred or otherwise. Learned Counsel for the respondent make responsible statement that being a Counsel for M/s Sagar Cements Ltd., and M/s My Home Cement Industries Ltd., they have not received any intimation of filing of appeals by the Revenue - appeal dismissed - decided against Revenue.
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2017 (12) TMI 441
Clandestine production and removal - Held that: - Shri Rakesh Kumar Gupta, Director of the appellant company vide his statement dated 16.08.2012 had admitted shortage of the finished goods and non-issuance of invoices for removal of the goods. Further, the Department also recovered 7 numbers of invoices belonging to the appellant for clearance of 105 M.T. of excisable goods from the factory. Since the appellant has not provided any plausible evidence against the charges levelled by the Department and more particularly, statement furnished before the Departmental officers was not retracted by the appellant, the adjudged demand confirmed against the appellant is not proper and justified - appeal dismissed - decided against appellant.
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2017 (12) TMI 440
Validity of SCN - whether show cause notice have been rightly issued on presumption of removal of scrap without payment of duty? - Held that: - no case of clandestine removal is made out in the show cause notice. The whole show cause notice is presumptive - the SCN is not maintainable - appeal allowed - decided in favor of assessee.
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2017 (12) TMI 439
Clandestine removal - cross-examination of witnesses (the basis of allegation) denied - natural justice - Held that: - cross examination of the witnesses sought by the appellant makes it necessary and relevance for effective defense in view of the judgment of the Hon’ble Supreme Court in Andaman Timber Industries’ case [2015 (10) TMI 442 - SUPREME COURT] - the cross examination of the witnesses requested by the appellants before the authorities below be allowed and thereafter, the issues be decided afresh on merit - appeal allowed by way of remand.
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2017 (12) TMI 438
CENVAT credit - input services - sales commission - whether the sales commission paid to agents would fall under the scope of sales promotion mentioned under the inclusive part of the definition of ‘input service’ prescribed under Rule 2(l) of CCR, 2004? - Held that: - the present appeal is disposed of with the liberty to both sides to approach the Tribunal soon after the verdict of the Hon’ble High Court in the pending Appeal against the Division Bench judgment of this Tribunal in Essar Steel India Ltd.’s case [2016 (4) TMI 232 - CESTAT AHMEDABAD] filed by the Revenue, where it was held that even for the period prior to 03.02.2016, the service tax paid on sales commission has been held to be admissible to CENVAT credit - appeal disposed off.
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2017 (12) TMI 437
CENVAT credit - input - M.S. Channel, Angles, M.S Plates etc. used in the repair and maintenance of the capital goods installed in the factory premises - Held that: - There is no dispute of the fact that these items were used in the factory for repair and maintenance of the capital goods, hence eligible to credit - reliance placed in the case of Commissioner of Central Excise, Customs And Service Tax, Visakhapatnam-I Versus Jindal Stainless Ltd [2015 (6) TMI 821 - CESTAT BANGALORE] - credit allowed. Dutiability - scrap generated during the course of repairing of capital goods on which credit availed without payment of duty - Held that: - the Ld. Commissioner(Appeals) has rightly confirmed the order of the adjudicating authority directing recovery of duty with interest on the MS Scrap cleared from the factory without payment of duty. Appeal allowed in part.
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2017 (12) TMI 436
CENVAT credit - manufacture of dutiable as well as exempt goods - Held that: - even though specifically the appellant had submitted that out of the total credit of ₹ 35,82,694/- the amount of ₹ 30,38,664/- pertains to clearance of dutiable goods and only ₹ 5,54,030/- pertains to clearance of 100% made up articles i.e. exempted goods, therefore, credit availed on inputs attributable to exempted product only to be reversed, no finding has been recorded by the Ld. Commissioner in the impugned order - the matter is remanded to the Adjudicating Authority to ascertain the quantum of credit required to be reversed - appeal allowed by way of remand.
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2017 (12) TMI 435
CENVAT credit - input services - sales commission - whether the sales commission paid to agents would fall under the scope of sales promotion mentioned under the inclusive part of the definition of ‘input service’ prescribed under Rule 2(l) of CCR, 2004? - Held that: - the present appeal is disposed of with the liberty to both sides to approach the Tribunal soon after the verdict of the Hon’ble High Court in the pending Appeal against the Division Bench judgment of this Tribunal in Essar Steel India Ltd.’s case [2016 (4) TMI 232 - CESTAT AHMEDABAD] filed by the Revenue, where it was held that even for the period prior to 03.02.2016, the service tax paid on sales commission has been held to be admissible to CENVAT credit - appeal disposed off.
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2017 (12) TMI 434
CENVAT credit - Service Tax paid on the commission paid towards promoting the sale of goods in foreign countries - Held that: - the CBEC vide Circular No.943/4/2011-CX. Dated 29/04/2011 has clarified that Cenvat credit is admissible on the services of the sale of the dutiable goods on commission basis. The said circular was endorsed by the Central Government vide N/N. 2/2016-CE (NT) dated 03/02/2016 - the said notification should be considered as declaratory in nature and effective retrospectively - the issue has been settled in the case of KEI Industries Ltd. Vs CCE [2017 (12) TMI 426 - CESTAT NEW DELHI] - appeal dismissed - decided against Revenue.
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2017 (12) TMI 433
CENVAT credit - input service - sales commission - Held that: - reliance placed in the case of M/s Mangalam Cement Ltd. Vs. CCE, Udaipur [2017 (12) TMI 426 - CESTAT NEW DELHI], where it was held that CBEC vide Circular No.943/4/2011-CX. Dated 29/04/2011 has clarified that Cenvat credit is admissible on the services of the sale of the dutiable goods on commission basis - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 432
Validity of SCN - extended period of limitation - Valuation - Held that: - earlier two show cause notices were issued on the same issue and this being third show cause notice on the same issue and that the third show cause notice issued on the same set of facts by invoking proviso for extension of time limit is contrary to the ruling by Hon’ble Supreme Court in the case of Nizam Sugar Factory [2006 (4) TMI 127 - SUPREME COURT OF INDIA] - the SCN dated 01.10.2009 is not sustainable - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 431
Classification of goods - motor spirit or not? - The contention in the grounds of appeal is that the scheme of Central Excise Tariff Act, 1985 does not mandatorily required goods to meet BIS specifications and, therefore, the impugned Order-in-Original is not sustainable - Held that: - The learned counsel for the respondent has taken us through the reports given by CRCL dated 29.08.2003 which indicated that it was not possible for the CRCL to say whether the samples drawn from the goods manufactured by the respondent could be used as fuel in the spark ignition engines - also, Shri Rathore during his cross examination has agreed that the opinions given by him were without any conduct of any test in CRCL - the respondent shall be entitled for consequential relief as per law - appeal dismissed - decided against Revenue.
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2017 (12) TMI 430
Valuation - allowability - discounts - Held that: - some of the expenses taken into consideration in the finalization of assessment are dealing with expenses incurred after the goods were removed from the factory gate - all the expenses which are incurred after goods are cleared from factory gate are admissible for deduction - such expenses which are incurred after the goods are cleared from the factory gate do not become part of the transaction value and do not qualified to be subjected to assessment for Central Excise duty - matter remanded for re-determination of assessable value - appeal allowed by way of remand.
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2017 (12) TMI 429
Valuation - allowability - outward freight - cash discount - Held that: - the transaction does not include the cost of transportation of goods from the factory gate to either depot or place of delivery. The transaction value has included all the expenses incurred such as storage and outward handling but did not include expenses incurred on transportation of goods from the factory gate outwards. It clearly indicates that the concept was clearance at the factory gate and expenses incurred after clearance from factory gate do not become part of transaction value - in the present case, cost of transaction or expenses incurred on transportation were not part of transaction value and, therefore, Central Excise duty on the same cannot be collected. In respect of cash discount for the period subsequent to 01.07.2000 if it is established that cash discount was passed on and was not realised then it does not become the part of transaction value - matter requires re-examination. Appeal allowed by way of remand.
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2017 (12) TMI 428
CENVAT credit - inputs/capital goods - MS sheets, plates, joist, angles, channels etc. which were used for manufacture/installation of molasses tanks/boilers - Held that: - appellant is entitled to take Cenvat Credit on these inputs used in fabrication of capital goods - Similar view have been taken in CBEC Circular No.964/07/2012 CX dated 02.04.2012 - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 427
Restoration of MODVAT credit - refund of interest - benefit of N/N. 203/92-Cus - amnesty scheme - case of Revenue is that there is no provision for restoration of the Cenvat Credit as has been rightly pointed out by the ld Commissioner (Appeals) - Held that: - The Modvat credit availed by the assessee was used for payment of excise duty, though under protest and there is no provision for cash refund of such duty paid through Modvat credit. It is also relevant to consider rule 57L of the Rules which says that no credit of money on the inputs used in the manufacture of the final products shall be allowed if the final products are exempt from the whole of the duty of excise leviable thereon or is chargeable to nil rate of duty - Since, in the instant case, the said credit was utilized for payment duty, we do not think it proper to direct the authorities to reverse the entries in RG 23 A registers by giving them liberty to deny the availment of Modvat claim at a later point of time. Such a course of action has no sanction in law. The restoration/refund of the Modvat Credit under the said Rules is denied - appeal dismissed - decided against appellant.
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