TMI Tax Updates - e-Newsletter
December 13, 2013

Case Laws in this Newsletter:

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

Articles

1. Rejection Order under VCES is appealable & recent clarifications issued pertaining to VCES

   By: Bimal jain

2. Eligibility of Cenvat Credit on Input Service Debit Notes – An Analysis of Relevant Judgements

   By: CA.Ankit Gulgulia

News

1. RBI Reference Rate for US $ and Euro

2. Financial Sector Reforms (Talk by Dr. Raghuram G. Rajan, Governor, Reserve Bank of India at the Delhi Economics Conclave 2013 at Delhi on December 11, 2013)

3. Continuation of the District Component of the Backward Regions Grant Fund Programme in the existing form during 2013-14.

4. Approval to set up an Alternative Investment Fund Category I and for receiving contributions from international investors

5. Enquiring Into Irregularities of Corporates

6. Measures to Prevent and Deal with Occurrence of Frauds

7. Exemption from Competition Act

8. Most Recommendations of The Damodaran Committee Taken Into Account In The Companies Act, 2013

9. Amount Credited to the Investor Education and Protection Fund

10. Bilateral Investment Promotion and Protection Agreement (BIPPA) Signed Between India and Government of UAE to Boost Investment Flows Between the Two Countries

11. Government Approves Two Proposals of Foreign Direct Investment (FDI) Amounting to About Rs. 97.85 Crore

12. RBI Reference Rate for US $ and Euro

Notifications

DGFT

1. 56 (RE – 2013)/2009-2014 - dated 12-12-2013 - FTP

Restriction on export of certain chemicals

Circulars / Instructions / Orders

FEMA

1. 79 - dated 6-12-2013

Exim Bank's Line of Credit of USD 30.94 million to the Government of Lao People's Democratic Republic

Central Excise

2. 976/10/2013-CX - dated 12-12-2013

Extension of warehousing and acceptance of LUT in place of Bank Guarantee for export warehousing for Status Holder Manufacturer Exporters – reg.

3. F. No. 267/78/2013-CX.8 - dated 11-12-2013

Judgement of Hon’ble Bombay High Court in the case of M/s Oil & Natural Gas Corporation Ltd. vs Union of India and others in Central Excise Appeal (L) No. 22 of 2013. – reg.

4. F. No. 275/83/2012-CX.8A - dated 29-11-2013

Clarification with regard to Clause (b) of the first Proviso to Sub-Section (2) of Section 23D of the Central Excise Act, 1944 and corresponding provisions in the Customs Act, 1962 and the Finance Act, 1994 reg.

Highlights / Catch Notes

Income Tax

• Court Rules Against Assessee; Section 68 Additions Sent Back to ITAT for Re-evaluation on Shareholder Credibility.

  Case-Laws - HC : Additions u/s 68 - discharging the onus in establishing the identity of the shareholders, their creditworthiness and genuineness of the transactions - While deciding the question of law against the assessee, matter remanded back to ITAT for fresh decision. - HC
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• Assessing Officer Must Address Assessee Objections on Chapter X Before TPO Referral for Transfer Pricing Adjustments.

  Case-Laws - HC : Transfer pricing adjustments - it is necessary for the Assessing Officer to decide the issue of objection to applicability of chapter X , if raised by the assessee, before referring the transaction to the TPO - HC
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• Court Rules TDS u/ss 194C & 194I Applies to Machinery Use Agreements Beyond Immovable Property Contexts.

  Case-Laws - HC : TDS u/s 194C or 194I - No basis for confining the effect of the words “other agreement or arrangement for the use of“ “either separately or together“ in regard to the machinery, only if it is part of immovable property. - HC
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• Authorities Err in April 1, 1981 Property FMV by Using Inadmissible Evidence, Ignoring Assessee's Accurate Calculation Memo.

  Case-Laws - HC : Valuation of property - determination of FMV as on 1.4.1981 - The authorities committed a serious error in relying on an inadmissible evidence and in not taking into consideration the undisputed facts as well as the memo of calculation filed by the assessee, which is more proper - HC
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• Assessing Officer to Decide on Successor's Tax Penalty Liability u/s 271(1)(c) of Income Tax Act.

  Case-Laws - HC : Recovery of tax dues and penalties from successor - Scope of section 270(1) - AO will decide whether penalty amount under Section 271(1)(c) can be recovered from the petitioner, even when the liability was determined subsequent to the date of succession - HC
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• Interest Deduction Denied for Second Loan Used to Repay Original Loan Unless Proven to ITO's Satisfaction.

  Case-Laws - AT : Disallowance of interest expenses – if the second borrowing has really been used merely to repay the original loan and this fact is proved to the satisfaction of the ITO, the interest paid on the second loan would also be allowed as a deduction - AT
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• Molasses and bagasse sales exempt from TCS; not considered scrap under Explanation (b) to section 206C of Income Tax Act.

  Case-Laws - AT : Applicability of TCS provisions - Selling of Molasses and bagasses – Molasses is not a waste or scrap and cannot be used as such - It does not fall within the meaning of scrap as defined in Explanation (b) to section 206C - AT
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• Sections 87 and 88A-88E Apply Post-Calculation u/s 115JB of Income Tax Act.

  Case-Laws - AT : The provisions of Sec. 87 & 88A to 88E apply after the total income is computed u/s. 115JB of the Act - AT
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Customs

• Electric Motor Import Valuation from China Stands; No Evidence to Discard Transaction Value or Enhance Assessable Value.

  Case-Laws - AT : Valuation of the said electric motor imported by the applicant from China - there is no evidence to discard the transaction value, which is a pre-requisite for enhancing the assessable value based upon the other evidences. - AT
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Service Tax

• High Court Rules: Orders Under Service Tax Voluntary Compliance Encouragement Scheme Are Appealable Under Finance Act 2013.

  Case-Laws - HC : An order passed under Service Tax Voluntary Compliance Encouragement Scheme vide Finance Act, 2013 is an appealable order - HC
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• CENVAT Credit Denied for Tower Components Used with Antennas; Not Classified as Capital Goods or Inputs.

  Case-Laws - AT : CENVAT Credit on Input Services - towers or their components on which the antenna was mounted were neither the component of antenna and have capital goods nor the same were covered by the definition of inputs and hence would not be eligible for Cenvat credit. - AT
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• Appellant's Tax Payment Under Mining Services from 2007 Shows No Intent to Evade Tax in Testing Services.

  Case-Laws - AT : We really fail to understand that if the appellant started paying a tax under the category of mining services w.e.f. 1.6.2007, how the said action of the assessee would reflect upon their malafide or any suppression or mis-statement of facts with an intent to evade payment of tax, during the relevant period under the category of ‘Technical Testing and Analysis’ - AT
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• Court Grants Conditional Stay in Case on Waiver of Pre-Deposit; Revenue-Neutrality Plea Considered Compelling.

  Case-Laws - AT : Waiver of pre-deposit - the plea of revenue-neutrality raised by the learned counsel is prima facie irresistible. This plea has been raised in the context of contesting the invocation of the extended period of limitation - Conditional stay granted. - AT
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Central Excise

• Suppliers Not Liable for Procurer's Use of Cleared Goods Under Central Excise Exemption Notification No. 6/2006.

  Case-Laws - AT : Benefit of Exemption Notification No.6/2006 – The supplier manufacture of the goods cannot be expected to ensure the intended use of the goods by the procurer, after clearance from the suppliers unit - AT
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• Tax Exclusion: Externally Purchased Items Incorporated into Assembled Plants Excluded from Assessable Value.

  Case-Laws - AT : The plants were erected at the site by assembling the items - The appellant has never supplied plant in toto - the value of bought out items are not includible in the assessable value - AT
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• Rule 16: Reverse Cenvat Credit When Show Cause Notice Identifies Goods as Non-Excisable Under Central Excise Rules.

  Case-Laws - AT : Cenvat credit under Rule 16 of the Central Excise Rules - The show cause notice itself mentions, the goods in respect of which duty has been demanded, as non-excisable goods - only credit to be reversed - AT
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Case Laws:

• Income Tax

• 2013 (12) TMI 555
  Whether the incentive received is capital or revenue - Held that:- Following CIT Vs. Ponni Sugars & Chemicals Ltd [2008 (9) TMI 14 - SUPREME COURT] - The incentive had to be utilized for repayment of loan taken by the assessee to set up new units or for substantial expansion of the existing unit. The subsidy received by the assessee was not in the course of a trade but was of capital nature - Decided against Revenue.

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• 2013 (12) TMI 554
  Additions u/s 68 - discharging the onus in establishing the identity of the shareholders, their creditworthiness and genuineness of the transactions - Held that:- It is important, to segregate cases of bonafide or genuine investments by third persons in a private limited company, from cases where receipt of share application money is only a facade for conversion of unaccounted for money or money laundering. The said question cannot be decided without taking notice of the surrounding facts and circumstances, by merely relying upon paper work which at best in some cases would be a neutral factor. The paper work though important may not be always conclusive or determinative of the final outcome or finding whether the transaction was genuine. When and under what circumstances onus is discharged, as held in N.R. Portfolio (supra), cannot be put in a strait jacket universal formula. It will depend upon several relevant factors. Cumulative effect has to be ascertained and understood before forming any objective opinion whether or not onus has been discharged by the assessee. Of course suspicion or doubts may not be sufficient and care and caution has to be taken that the assessee has limitations but this cannot be a ground to ignore contrary incriminating evidence or material which when confronted, meets silence or no answer. Assessing Officer had conducted enquiries and made a reference to the surrounding facts i.e. deposits/credit of the amounts in the bank account of the share applicants; substantial amount of Rs.41,88,000/- paid as premium and referred to the fact that only one Shri R.C. Verma, CA and Power of Attorney holder of M/s Ritika Finance & Investment Pvt. Ltd. had appeared alongwith Shri Dinesh Kumar, the AR of the assessee company during the assessment proceedings and filed the bank statement and copy of the balance sheet but, failed to file schedule of investments made by the said company. Others had failed to appear. While deciding the question of law against the assessee, matter remanded back to ITAT for fresh decision.

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• 2013 (12) TMI 553
  Penalty u/s 271(1)(c) - Held that:- The assessee was engaged in the business of food processing and packaging, for exports - Food items were perishable in nature and had expiry date beyond which they could not be sold and, therefore, the non-saleable/expired stock needed to be discarded - Products manufactured by the respondent-assessee were mainly exported to the USA - Compliance of FDA regulations, one of the most stringent requirements, was required - Details of items, which were written off, were set out, explained and elucidated by the assessee - The items included caps and cartons which had became unusable due to change in customer’s specifications, change in brand name or difference in quantities etc - Details and particulars of items were made available and ascertained - The respondent assessee was eligible for deduction under Section 10B of the Act - There was no cause or reason for the assessee to deliberately write off saleable goods which could be exported in the books of accounts as non-saleable - Decided against Revenue.

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• 2013 (12) TMI 552
  Power to reject books of accounts u/s 145 - Held that:- The assessee filed its return of income in response to notice u/s 148 - The AO as well as CIT(A) made addition on the basis of estimate - The Tribunal is a final fact finding authority - The Tribunal reduced the addition being made on estimate - The AO should first point out the defect in bokks of accounts and reject them rather making an addition on adhoc basis - Decided against Revenue.

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• 2013 (12) TMI 551
  Taxability of interest from FDR - Held that:- The interest income must be taken on receipt basis shown by the assessee from the F.D.Rs., Sahara and L.I.C. mutual funds - The assessee is maintaining the accounts on actual receipt basis and he is not maintaining any account on mercantile basis, as appears from the record - Decided in favour of assessee.

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• 2013 (12) TMI 550
  Freight and forwarding expenditure - Held that:- The Assessing Officer and the higher authorities fell into error in relying solely on the testimony and deposition of one Vineet Bhargava who stated that the freight expenses did not reflect actual expenditure or transactions - The pre-condition for adding back such amounts or disallowing the expenditure so that it could attract Section 68 was the exactitude with which the transaction could be pin pointed - Decided in favour of assessee. Unexplained income - Held that:- This credit balance had been reflected in the previous years’ books and also subjected to assessment - No question of law arises for interpretation in this appeal - Decided in favour of assessee.

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• 2013 (12) TMI 549
  Validity of reassessment u/s 147 - Held that:- The perusal of the reasons showed that the escapement of income from assessment had been attributed not to any existing material, but on assumption of state of things to exist for the reasons best known to the AO - The information received from the office of the ld. CIT (A)-I, Agra was wholly vague and incorrect regarding sale of flats by the assessee firm - Examination of the balance sheet made it clear that the assessee did not sell any flat in the assessment year under appeal - The reasons recorded by the AO for reopening of assessment was based on incorrect and non-existing facts - There was no evidence, document or material in possession of the AO to prove that the assessee had in fact sold any flat in the assessment year under appeal - The ld. CIT (A) is also not justified in confirming the reopening of assessment on the ground that the additions made by the AO are connected with the reasons as recorded to the construction business - Decided against Revenue.

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• 2013 (12) TMI 548
  Whether valuation made by AVO instead of DVO is liable to be rejected - Held that:- Inspite of clear directions for an estimation of the value of the property to be made by the DVO, if the valuation is more than Rs. 50 lacs, the report was submitted by the Assistant Valuation Officer (AVO) - The CIT (A) considered the description of the property and found that the method of valuation adopted by the AVO is a development method, which is the most appropriate method in the absence of any reliable sale instances and approved lay out plan as per master plan - The protest procedure prescribed in Section 50C (2) was followed in which the objections of the assessee were considered to the valuation report. The CIT (A) and the Tribunal agreed with the elaborate findings given in the report of Valuation Officer in support of the fair market value - The valuation in such case could be carried out only by DVO, does not in any way affect the findings as the ground is of technical nature - The valuation report was considered in detail, and the method of valuation and the reasons were found to be valid after considering the assessees objection - Decided against assessee.

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• 2013 (12) TMI 547
  Transfer pricing adjustments - arm's length price - draft assessment order - Jurisdiction under Chapter X - opportunity of being heard before referring to TPO - writ petition - alternative remedy - Solicitor General submitted that the action of AO in referring the international transaction to TPO is a mere administrative act, because as per CBDT Instruction No.3 dated 20 May 2003, AO is to exercise powers under Section 92C where the value of the transaction is upto Rs.5 crores (now revised to Rs.15 crores) and AO is required to refer the transaction to TPO where even the value of the international transaction exceeds Rs. 5 crores (now exceed Rs.15 crores). It is, therefore, submitted that in view of the above Circular, AO has no discretion in the matter and , therefore, AO hearing the assessee before making reference to TPO would be an empty formality and a futile exercise. Held that:- it is necessary for the Assessing Officer to decide the issue of objection to applicability of chapter X , if raised by the assessee, before referring the transaction to the TPO as it is a basic issue and would prevent loss of man hours on both sides in computing the ALP if it is finally concluded that Chapter X is not applicable. - this exercise could also be done by the Assessing officer before he determines the ALP in exercise of his powers under Section 92C(3) The petitioner shall within two weeks from today submit before the DRP its preliminary objections to Draft Assessment Order and the TPO's order by raising jurisdictional issues. - The DRP shall decide the issue of jurisdiction before considering issue of valuation / quantification raised by the petitioner in its objections filed before the DRP, this of course subject to the additional grounds on jurisdiction being filed by the Petitioner within two weeks from today. The DRP shall decide the issue of jurisdiction as a preliminary issue within two months from the date on which the petitioner files its objections on the question of jurisdiction. - Decided in favor of assessee.

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• 2013 (12) TMI 546
  TDS u/s 194C or 194I - disallowance u/s 40(a)(ia) for short deduction of TDS - agreement for hire of vehicles and to be used for loading and unloading and transport of the products - The party of the first part (the owner of the vehicles) was to retain the custody, ownership and possession of the vehicles. The vehicles were to be driven and operated by the persons who were to be paid by the owner. - Held that:- As correctly found by the tribunal, the agreement does not require the owner of the vehicle to do any work at all. It is the assessee who makes use of the vehicles and the equipment. He pays hire charges on the basis of the number of hours of use and thus clearly the appellant is not justified in contending that Section 194C applies. Section 194-I specifically contemplates liability with any person paying rent to deduct in come tax at the rate of ten per cent for the use of any machinery or plant or equipment. (As far as the assessment year in question is concerned, the rate of tax was increased to ten per cent). - Decided against the assessee. No basis for confining the effect of the words "other agreement or arrangement for the use of" "either separately or together" in regard to the machinery, only if it is part of immovable property. The Legislative intent is clear, in that, it intends liability to deduct tax in respect of "any machinery or plant or equipment". The machinery need not be the machinery annexed or immovable property otherwise under the Transfer of Property Act. - Decided against the assessee.

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• 2013 (12) TMI 545
  Undisclosed income - Gifts from NRI relatives - Held that:- The gifts received have been disclosedin the original return of income furnished u/s 139(1) - The search was made subsequent to such filing of return in which no incriminating evidence of undisclosed income was assessed - The Assessing Authority was wrong in concluding that the amounts shown as gift in the return constitute undisclosed income - Decided against Revenue.

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• 2013 (12) TMI 544
  Valuation of property - determination of FMV as on 1.4.1981 - Held that:- The assessee has failed to file the valuation report of the qualified valuer - A duty was cast on the authorities to assess the fair market value independent of the evidence adduced by the assessee - The Assessing Officer himself could have referred the matter to a valuator to get the valuation done under Section 55A of the Act, which he has not resorted to - The property is situated in the heart of Bangalore city, in a prime commercial locality where the value of the property has multiplied automatically over the years - The authorities committed a serious error in relying on an inadmissible evidence and in not taking into consideration the undisputed facts as well as the memo of calculation filed by the assessee, which is more proper - Decided in favour of assessee.

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• 2013 (12) TMI 543
  Addition on account of difference between the sale price declared by the assessee and the market price of the shares quoted at the recognised stock exchange - applicability of section 69B - Held that:- The primary contention of the Revenue is that the so-called oral trust, under which the shares were sold, is sham. HEICL could not have sold or transferred the shares. The fact is that the shares were sold and transferred and HEICL had acted as a "trustee". - The sales were duly recorded and there is no allegation that money or under table consideration was paid. There is no such finding by the Assessing Officer and the tribunal has categorically stated that there is no evidence or material to the said effect. Remanding back the issue to decided afresh - Held that:- on mere suspicion, the matter cannot be remitted to the Assessing Officer to conduct fresh inquiry without there being any concrete foundation justifying and asserting a firm apprehension. Even before us during the course of hearing, the standing counsel for the Revenue did not press or make any headway. The suspicions raised remained in the realm of conjectures and surmises and do not have a firm basis. The substantial question of law has to be treated as partly answered in favour of the Revenue and against the respondent insofar as transfer of 77929 shares by HEICL to V.C. Vaidya or ATPPL is concerned, on which we have passed an order of remit to the tribunal. However, on other aspects/transactions of HEICL, the appeal is dismissed and the question of law is answered in favour of the respondent-assessee and against the appellant-Revenue.

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• 2013 (12) TMI 542
  Recovery of tax dues and penalties from successor - Revenue claim that they are entitled to recover said dues under I.T. Act and W.T. Act, payable by S.C. Mangal from the petitioner as the successor who has taken over the assets and liabilities of S.C. Mangal. - it was accepted by the counsel for the Revenue that no order under Section 170(3) has been passed by the Assessing Officer. - Held that:- the assessing officer will examine scope and ambit of Section 170(3) of the IT Act and decide whether penalty amount can be recovered from the successor under the said section, though the penalty order is subsequent to the date of succession. Recovery of penalty - Section 18(1)(c) of the WT Act - held that:- Jurisprudentially, the person is actionable and responsible for himself, for what he does and not for what others do or for events or acts of others. Family per se or a spouse is not actionable or responsible for other family members and for the spouse. Doctrine of vicarious liability is not of general application and is applied in cases of statutory crimes. It is directed that the penalty amounts under Section 18(1)(c) of the WT Act relating to assessment years 1991-92 and 1992-93 cannot be recovered from the petitioner. With regard to the income tax demand including penalty for the assessment year 1995-96, relating to S.C. Mangal, it is open to the respondents to initiate recovery proceedings after deciding the dispute by passing an order under Section 170(3) of the Act. While passing an order under Section 170(3), the assessing officer will decide whether penalty amount under Section 271(1)(c) of the IT Act can be recovered from the petitioner, even when the liability was determined subsequent to the date of succession - Decided partly in favor of assessee.

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• 2013 (12) TMI 541
  Whether receipts of DEPB are eligible for deduction u/s 80HHC - Held that:- Following Topman Exports Vs. Commissioner of Income Tax [2012 (2) TMI 100 - SUPREME COURT OF INDIA] - Receipts on Duty Entitlement Passbook Scheme (DEPB) would form part of the profits and gains of the business, it being the assistance given by the Government of India to an exporter to pay customs duty on its imports - The "cash assistance" received under the DEPB scheme would fall under Clause (iiib) of Section 28 - This is chargeable to income-tax under the head "Profits and gains of business or profession" - The Explanation (baa) under Section 80HHC of the Act giving the formula for working out the deduction - "profits of the business" means the profits of the business as computed under the head "Profits and gains of business or profession" as reduced by ninety per cent., of any sum referred to in clause (iiia), (iiib), (iiic), (iiid) and (iiie) of Section 28 - 90% of the DEPB which is "cash assistance" against exports and is covered under clause (iiib) of Section 28 will get excluded from the "profits of the business" of the assessee, if such DEPB has accrued to the assessee during the previous year - Decided against Revenue.

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• 2013 (12) TMI 540
  Deduction u/s 37(1) - contribution made to M.S. Udyog Bandhu and payment made to H.B.T.I. - nature of expenses - wholly and exclusively for the assessee's business - held that:- setting up of the Park would promote the business of the appellant because with more entrepreneurs setting up businesses in the State, the role of the appellant would become significant for providing them the necessary finance. The appeal is concluded by findings of fact. No substantial question arises for consideration in this appeal.The deduction was clearly permissible under Section 37(1) of the Act, 1961. - Decided in favor of assessee.

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• 2013 (12) TMI 539
  Addition u/s 50C – Held that:- The assessee has not been able to explain as to why provisions laid down u/s 50C are not applicable in his case – The valuation done by the stamp value authority has been accepted by A.O. – Decided against assessee. Cost of acquisition – Held that:- The assessee had furnished bifurcation of the indexed cost into various years which was not accepted by the authorities - The AO had given the logical estimation while reallocating such expenses into various years which was agreed upon by the assessee – Decided against assessee. Deduction u/s 54F - Held that:- The investment was made in a vacant plot and not in the residential house – The assessee was not able to prove otherwise – Decided against assessee. Penalty u/s 271(1)(c) – Held that:- There was no concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee on the above addition/disallowance to attract the penal provisions laid down u/s 271 (1) ( C) – Decided in favour of assessee.

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• 2013 (12) TMI 538
  Disallowance of interest expenses – assessee has swapped earlier loan by new loan - purchase of Tenancy Development Rights(TDR) - The assessee has paid interest on unsecured loan from ACT Fininvest Pvt. Ltd., and Peninsula Land Ltd. on the loans borrowed in the earlier years - Held that:- During the year under consideration to repay the balance loan of ACT Fininvest Pvt. Ltd., the assessee has borrowed from Peninsula Land Ltd - If the earlier loan was accepted as taken for the purposes of business, the new loan should also be accepted as taken for the purposes of business - Akin to the transaction the CBDT vide Circular No. 28 dt. 20.8.1969 has declared that if the second borrowing has really been used merely to repay the original loan and this fact is proved to the satisfaction of the ITO, the interest paid on the second loan would also be allowed as a deduction u/s. 24(1)(vi) – Decided in favour of assessee.

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• 2013 (12) TMI 537
  Applicability of TCS provisions - Selling of Molasses and bagasses – Held that:- Following CIT vs. Deep Chand and others [2002 (5) TMI 37 - DELHI High Court] - Molasses is not a waste or scrap and cannot be used as such - It does not fall within the meaning of scrap as defined in Explanation (b) to section 206C - The assessee cannot be held to be in default and is not required to deduct tax under section 206C(6) on the Molasses and no interest could be charged under section 206(7) – Decided in favour of assessee.

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• 2013 (12) TMI 536
  Deduction under section 80IB - Excise Duty Refund and interest subsidy – Held that:- Following Shree Balaji Alloys v. CIT and Another [2011 (1) TMI 394 - Jammu and Kashmir High Court] - The Excise Duty refund & Interest Subsidy are to be treated as 'capital receipts' and are not liable to be taxed – Decided against Revenue.

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• 2013 (12) TMI 535
  Deduction u/s 80IB – Excise Duty Refund – Held that:- Following Shree Balaji Alloys v. CIT and Another [2011 (1) TMI 394 - Jammu and Kashmir High Court] - The Excise Duty refund is to be treated as 'capital receipt' and is not liable to be taxed – Decided against Revenue.

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• 2013 (12) TMI 534
  Penalty u/s 271(1)(b) – Non appearance or non-compliance of two notices - Held that:- The Authorized Representative of the assessee had attended the proceedings on 14th December, 2009 when he was told that a detailed show cause notice is being issued - It is not a case where the assessee did not willfully comply with the notice issued by the Department - This contention of the assessee is further substantiated with the show cause notice issued by the AO on 16th December, 2009 for which the reply was sought to be filed within five days - The assessee also had filed the reply on 29th December, 2009 - Sustenance of penalty for default of notice u/s 143(2) dated 8th December, 2009 is unjustified – Decided in favour of assessee.

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• 2013 (12) TMI 533
  Disallowance of depreciation – Held that:- Following Plastiplends India Ltd. vs. ACIT [2009 (10) TMI 39 - BOMBAY HIGH COURT] - For the purposes of deduction under Chapter VIA, the gross total income has to be computed inter alia by deducting the deductions allowable under section 30 to 43D of the Act, including depreciation allowable under section 32 of the Act, even though the assessee has computed the total income under Chapter IV by disclaiming the current depreciation – Decided against assessee. Disallowance of interest on borrowings – Held that:- both the parties have separate submissions – The issue was restored to examine the issue in the light of fund flow statements and also on the basis of section 14A(2) to examine whether at all with the correctness of the cash flow statement, any disallowance could be made u/s 14A and then section 36(1)(iii) - The disallowance shall be looked into from both the angels, i.e. 36(1)(iii) and section 14A. Bad Debts – Held that:- If the bad debts are written off in the books of accounts, the claim is allowable – Assessee neednot prove irrecoverability of such debts - Decided against Revenue. Excise Duty – To be included in total turnover or not – Held that:- Following CIT vs. Sudarshan Chemicals Industries Ltd. [2000 (8) TMI 73 - BOMBAY High Court] - Sales tax and excise duties are levied under the separate enactments which have different objects. We are concerned with section 80HHC which is a separate code by itself. Hence, the general definition of the word turnover or the case law dealing with the said definition under the Sales Tax Act which is a State levy, cannot be imported into section 80HHC – Decided against Revenue. Amount received on sale of DEPB – whether represents profit u/s 80HHC - Held that:- Following Topman Export vs. CIT [2012 (2) TMI 100 - SUPREME COURT OF INDIA] - Where DEPB accrues to the assessee in one previous year and it transfers the DEPB certificate in another previous year, only ninety per cent of the profits on the transfer of the DEPB covered under cl. (iiid) of s. 28 and not ninety per cent of the entire sale value including the face value of the DEPB has to be excluded to arrive at the "profits of the business" under cl. (baa) of Explanation to s. 80HHC - The issue was restored for fresh decision.

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• 2013 (12) TMI 532
  Validity of proceedings u/s 158BD – Search and seizure operation were carried out on the residential and office premises of M/s Keystone Realtors Pvt. Ltd., of which CPDPL is one of the group companies - In the search, the JV agreement was found and seized and along with that certain documents were seized wherein there was evidence on money having been received by the assessee on the sale of some flats by such company – Held that:- Following Manish Maheshwari vs ACIT [2007 (2) TMI 148 - SUPREME COURT OF INDIA] - For the purposes of initiating proceedings u/s 158BD, the AO who had conducted search, must record reasons for transferring material connected with another person and transfer the material to the AO having jurisdiction over the person, on whom the block assessment has to be framed - As borne out from the letter from the ACIT 17(3) “The material and statement asked for are not in possession" - This fact is further strengthened, because, the DR sought time to ask the AO one last time, which was duly allowed to the DR, to enquire, whether there is any material against the assessee, the DR, once again, showed his helplessness on the issue of producing the material relied upon by the AO to initiate and make an assessment under section 158BD – Decided against assessee.

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• 2013 (12) TMI 531
  Rejection of appeal u/s 249(4) – Non-payment of tax – Held that:- The assessee requested the learned CIT(Appeals) for recalling of the order as the defect of non-payment of tax on returned income was removed – Following Bhumiraj Constructions Vs. Addl CIT [2010 (4) TMI 754 - ITAT MUMBAI] - if the appeal is filed without payment of tax on returned income but subsequently the required amount of tax is paid, the appeal shall be admitted on payment of tax and taken up for hearing – Following J.K. Chaturvedi vs. ACIT [2003 (9) TMI 286 - ITAT AHMEDABAD] - Appeal in violation of 249(4) would be termed as defective one and the moment defect is cured then this can be disposed of on merit subject to limitation – The issue was restored for fresh decision.

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• 2013 (12) TMI 530
  Penalty u/s 271(1)(c) – Held that:- The assessee claims that the property was intended to be sold as per the market practices and in consequence thereof a business decision was taken to first let out the property and then sell the same as a gainful let out property - The assessee's conduct is supported by the fact that immediately after letting out, the property was sold and out of three months advance rent, two month's rent was passed on to the purchaser. The genuineness of the rent and brokerage has not been questioned - Earning rent, the incurring of business (brokerage) expenditure and business income on sale of property i.e. stock in trade was incorporated in the books of a/cs of the assessee and particulars thereof were filed with the return of income - Following Hindustan Steel Ltd. V. State of Orissa [1969 (8) TMI 31 - SUPREME Court] - As the assessee bona fide belief is discernable and the relevant details were furnished along with return of income – Decided in favour of assessee.

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• 2013 (12) TMI 529
  Reasonable opportunity not provided to assessee - Held that:- Due to paucity of time and bonafide belief, the Ld.AR was not in a position to file the relevant materials before the - When the assessee has relied upon the additional evidence in the first appellate proceedings, the same ought to have been admitted when the Ld.CIT(A) has been relying on remand report on the additional evidence filed by the assessee – The issue was restored for de novo assessment after giving reasonable opportunity of hearing and placing all the evidence on record which can support the case of the assessee.

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• 2013 (12) TMI 528
  Penalty u/s 271(1)(c) – Held that:- There is no concealment nor furnishing of inaccurate particulars in this case. The assessee had made disclosures and had made conscious claims for interest payable – Following CIT vs.Reliance Petro [2010 (3) TMI 80 - SUPREME COURT] - To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assesse in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under Section 271(1)(c) – Decided against Revenue.

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• 2013 (12) TMI 527
  Set off of capital loss from assets on which depreciation was claimed – Long term capital loss against long term capital gain – Held that:- Following CIT Vs ACE Builders [2005 (3) TMI 36 - BOMBAY High Court] - the deeming fiction under section 50 is restricted to section 50 only and the said fiction is restricted only to the mode of computation of capital gains contained in Sections 48 and 49 – Following Komac Investments & Finance Pvt. Ltd Vs ITO [2011 (4) TMI 705 - ITAT MUMBAI] - Although the gain is short term capital gain due to the fiction created by provisions of S. 50(2), the asset remains as "long term capital asset - The brought forward long term capital loss can be set off against the capital gain on account of transfer of the depreciable asset which has been held by the assessee for more than 36 months thereby making the asset a long term capital asset – Decided against Revenue.

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• 2013 (12) TMI 526
  Disallowance u/s. 40(a)(ia) – Leaseline and transaction charges - Held that:- Following DCIT Vs Sonal Shares & Stock Brokers (P) Ltd [2010 (2) TMI 910 - ITAT, Mumbai] - The stock exchange do not provide any technical services by installing VSAT net work. It is the facility provided to its members. Therefore payment of VSAT cannot be said to be of the nature of fees for any technical services rendered and hence the assessee is not required to deduct tax u/s. 194J on such payment – Decided in favour of assessee. Rebate u/s 88E – Deduction of STT - Held that:- Following Horizon Capital Ltd. Vs ITO [2011 (10) TMI 489 - KARNATAKA HIGH COURT] – The provisions of Sec. 87 & 88A to 88E also apply after the total income is computed u/s. 115JB of the Act - If the transaction on which STT is paid is included in the total income of the assessee where the total income is assessed either under the provisions of the Act or under Section 115JB when tax chargeable on such income is arrived at & it is from that tax which is chargeable, the tax paid u/s 88E is given deduction, by way of rebate, u/s 87 - The assessee is entitled to a deduction of the amount equal to the STT paid – Decided against Revenue. Disallowance of mark to market loss – Held that:- Following CIT Vs Arjan Khimji & Co [1978 (7) TMI 35 - BOMBAY High Court] - As per guidelines of SEBI, it is imperative to all who have open position, in the F&O segment on the end of the financial year i.e. 31st of march to show mark to market loss in their books of account - The losses booked on the close of the financial year in respect of open positions in futures is a crystallized liability and therefore allowable – Decided in favour of assessee.

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• 2013 (12) TMI 525
  Disallowance u/s 14A – Held that:- Following Godrej Boyce Mfg Co [2010 (8) TMI 77 - BOMBAY HIGH COURT] - The provisions of Rule 8D are not applicable to facts of the present case - The Assessing Officer is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act. The Assessing Officer must adopt a reasonable basis or method consistent with all the relevant facts and circumstances after furnishing a reasonable opportunity to the assessee to place all germane material on the record – The issue was restored for fresh decision. Disallowance u/s 36(1)(va) - Employee’s contribution towards PF and ESI – Held that:- Following assessee’s own case for A.Y. 2005-06 - Payment held within grace period are allowable under section 43B – Decided in favour of assessee.

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• Customs

• 2013 (12) TMI 524
  Valuation of electric motor imported by the applicant from China - Motor imported by the applicant was of 'Y' series whereas the price of EG and Y2 service stands adopted by the Commissioner - Held that:- entire case of Revenue is mainly based upon the NIDB data and Chartered Engineer expert opinion. As regards NIDB data, it stands held in various decision that the same cannot be adopted as the sole basis for enhancing the value and the evidence of contemporaneous imports is required. The contemporaneous import should also be in respect of the same type of goods, matching in all respects and even a minor difference in the imported goods and the contemporaneous imports would make the contemporaneous evidence as ineffective. We also note that there is no evidence to discard the transaction value, which is a pre-requisite for enhancing the assessable value based upon the other evidences. As such, at this prima facie stage, we are of the view that the appellant has been able to make a good case in its favour so as to allow both the stay petitions unconditionally - Stay granted.

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• 2013 (12) TMI 523
  Denial of refund claim - Bar of limitation - Higher amount of Customs duty paid - Refund claim filed after reassessment - Held that:- The duty was admittedly paid on 6-1-2010, on the basis of assessed Bill of Entry. The letter for reassessment was filed on 15-6-2010, that is within period of six months from the date of deposit of duty. If the Assistant Commissioner would have reassessed the Bill of Entry within a short period i.e. before 6-7-2010, when the limitation of 6 months expired, the appellant would have filed the refund claim accordingly. It is a fact that without reassessment order, refund could not have been filed by the appellant. As soon as the reassessment order was passed on 13-7-2010, the appellant filed the refund claim on 30-7-2010, i.e. within a period of six months from the date of reassessment order. Period of six months shall start running from the date of order of reassessment. Revenue cannot take the benefit of its own action, in late passing of reassessment order and then rejecting the refund claim on limitation. Admittedly, the appellant could not have filed a refund claim before passing of assessment order so as to escape period of limitation - Decided in favour of assessee.

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• 2013 (12) TMI 522
  Export of Automobile Spare Parts - Goods carrying markings like “suitable for Mercedes Benz” and “SM products Mercedes Benz” - Prohibition on export under Notification No. 135/60-Cus., dated 31-12-1960 and Notification No. 1/64-Cus., dated 18-1-1964 issued under Section 11 and S.O. 1272 issued under S.117 - Held that:- records do not show that the goods were indicating any wrong Trade Mark or Trade Name because there was no indication to the effect that the goods were manufactured by Daimler Chrysler, though there was a indication to the effect that goods were “suitable for Mercedes Benz”. Further Notification No. 1/64-Cus., dated 18-1-1964 prohibits only import of goods with false Trade Mark and not export of such goods. So reliance on this notification is misplaced - provisions of the SO 1272 did not apply to the impugned goods because there is nothing coming on record to show that the goods were manufactured with wholly or partly foreign parts. The Revenue has not produced any evidence to support their argument that the exemption in clause 5 will not apply. The lower authorities have accepted this argument. Now the only argument given is that the appellant is a trader. No other prohibition has been placed before us that would prohibit the exports of the impugned goods - Decided against Revenue.

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• 2013 (12) TMI 521
  Classification of goods - Classification under CTH 7606 or CTH 7610 - Import of aluminum composite panels - Held that:- panels under import are processed and prepared material meant for use in structures and not mere aluminum plates, sheets or strip. Though normally use of a material by itself is not a determinant for classifying a product, CTH 7610 particularly refers to materials “processed for use in structures”. Hence, the impugned goods which are prepared and used for cladding in structures, prima facie appear to be classifiable under CTH 7610 - Following decision of Rana Enterprises v. Commissioner of Customs, Mumbai [2011 (2) TMI 549 - CESTAT, MUMBAI] - Stay granted.

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• 2013 (12) TMI 520
  Import of HSD oil - Exemption under Notification 52/03-Cus dated 31-03-03 - appellants filed a Bill of Entry for Warehousing the goods - Demand of additional duty - Held that:- The entire premises of a 100% EOU has to be treated as a warehouse if the licence granted under Section 58 to the unit is in respect of the en tire premises. - Imported goods warehoused in the premises of a 100% EOU (which is licensed as a Customs bonded warehouse) and used for the purpose of manufacturing in bond as authorized under Section 65 of the Customs Act, 1962, cannot be treated to have been removed for home consumption - Decided against Revenue.

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• Corporate Laws

• 2013 (12) TMI 519
  Power to relax strict enforcement of regulation - Regulation 109, read with regulations 75 and 77, of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 - Conversion of 7.5 million outstanding warrants not made as per Regulation 3(2) of SAST Regulations, 2011 – Held that:- Appellant had totally failed to satisfy SEBI regarding any factor beyond control of issuer which would have prevented it from converting warrants in question into shares, SEBI rightly did not exercise its jurisdiction to permit relaxation - The threshold limit of 25% regarding minimum public holding prescribed by Rule 19(A) of SCRR, 1957 have been breached at by increasing the shareholding of the promoters along with the person acting in concert with them beyond 75% i.e. up to 93.15% - Appellant No. 2 should have atleast approached the Respondent for any relaxation or exemption from the applicability of Regulation 3(2) of the SAST Regulation, 2011 immediately after the same were Gazzetted on September 23, 2011 or after October 23, 2011 when they were brought into force and a further window of one month, was provided by the Respondent for considering and clearing such issues as remained unconverted. The order has been issued with the approval of the Chairman, SEBI, in accordance with the SEBI (Delegation of Powers) Order, 2010 - The decision has been communicated by the officer who has signed the order - there we find no legal infirmity in passing the order – the order is in the nature of a reply to the application for exemption sought by the Appellants under Regulation 109 (c) of the ICDR Regulations - there is no question of violation of the principles of natural justice in passing the same – Decided against Appellant.

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• Service Tax

• 2013 (12) TMI 568
  Maintanability of appeal - Appeal under 86 - Held that:- after incorporation of the Service Tax Voluntary Compliance Encouragement Scheme into the Finance Act, all other provisions of the Act except to the extent specifically excluded, apply to proceedings under the scheme - The impugned order passed by the Deputy Commissioner of Central Excise and Service Tax would necessarily be appealable under Section 86 of the Indian Finance Act, 1994 - writ petition is dismissed as withdrawn with liberty to file an appeal. In case, such an appeal is filed, it shall be considered and decided within a fortnight - Decided in favour of petitioner.

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• 2013 (12) TMI 566
  Rectification of mistake - Assessee deposited partial tax - While order recorded that assessee directed full tax - Held that:- while passing the stay order on 9.8.12, we had considered a letter written by the appellant dated 8.8.12 wherein it was stated that they had paid the entire amount of the service tax. It turns out that the appellant had not paid the entire amount of the service tax but an amount of Rs.27,907/- remains to be unpaid by him on the ground that this is an amount of service tax on the exempted value of laying of cable along the road side. At this juncture, we find that our order dated 9.8.12 has been passed based upon the letter written by the assessee and since the assessee himself is claiming that they have not paid the amount - Decided against assessee.

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• 2013 (12) TMI 565
  Stay application - Service to airlines - Penalty u/s 76, 77, 78 - Held that:- Taxability of the commission which the appellant receive as GSA from the foreign airlines whom they represent in India and whose products are being marketed by them. There is also no dispute that the commission is being received in convertible foreign currency and that the airlines do not have any office or establishment in India. Prima facie we are of the view that the issue involved in this case is covered by the judgment of the Tribunal in the case of Paul Merchants Ltd. (2012 (12) TMI 424 - CESTAT, DELHI (LB)) and accordingly the services being provided by the appellant to the foreign airlines have to be treated as export of service in terms of Rule 3 of the Export of Service Rules. Therefore, the appellant have a strong prima facie case and, hence, the requirement of pre-deposit is waived for hearing of the appeal and recovery thereof is stayed till the disposal of the appeal - Stay granted.

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• 2013 (12) TMI 564
  Stay application - Penalty u/s 78 - Held that:- Demands stand raised by invocation of longer period of limitation. Admittedly, the appellant were filing returns and were paying service tax under a belief that the activities undertaken by him are construction activities, which are entitled to the benefit of abatement. The appellant could be entertaining a bonafide belief that in as much as the activities undertaken by him are relatable to construction activities he would be entitled to benefit of abatement. Service tax is a newly introduced concept and a person may not be fully aware of the detailed technicalities of the law. No inquiries were raised by the Revenue as regards the exact job undertaken by him and no further investigation were made from the appellant as regards the availment of the benefit of the notification. As such, at this stage by prima facie holding that the demand is barred by limitation, we grant unconditional stay to the appellant - Stay granted.

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• 2013 (12) TMI 563
  CENVAT Credit on Input Services - CENVAT credit was denied - Whether the appellant would be eligible for Cenvat credit in respect of components of towers used by them for erection and installation of towers on which antenna is mounted and also in respect of input services used for erection and installation of towers and their repair and maintenance - Held that:- Neither the towers on which the antenna was mounted are eligible for Cenvat credit nor the services availed for erection and installation of towers and for their maintenance and repairs are eligible for Cenvat credit, that the towers were neither covered by the definition of inputs nor the same are covered by the definition of capital goods, that the towers being structures fixed to the earth are not even goods – Following Bharti Airtel Ltd. vs. CCE, Bangalore [2012 (7) TMI 233 - CESTAT, BANGALORE] - towers or their components on which the antenna was mounted were neither the component of antenna and have capital goods nor the same were covered by the definition of inputs and hence would not be eligible for Cenvat credit. - stay granted partly.

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• 2013 (12) TMI 562
  Technical Testing and Analysis Agency u/s 65(107) – Bar of Limitation – Waiver of Predeposit - Assessee was performing the services of well logging, perforation and other wireline services for M/s. ONGC, the appellant have provided services falling under category of ‘Technical Testing and Analysis Agency’ defined in Section 65(107) of the Finance Act, which are liable to duty to service tax – Held that:- When the assessee stopped payment of service tax under information to the Revenue, the Revenue never objected the same and allowed the appellant to do so - We really fail to understand that if the appellant started paying a tax under the category of mining services w.e.f. 1.6.2007, how the said action of the assessee would reflect upon their malafide or any suppression or mis-statement of facts with an intent to evade payment of tax, during the relevant period under the category of ‘Technical Testing and Analysis’ The appellant stopped paying service tax on the said services, though the value of the said services and the service tax payable on the same was being reflected by them in the returns required to be filed - all such returns were duly filed under the cover of a covering letter clarifying that they were not paying any service tax on the said services in terms of the advice obtained by M/s. ONGC and forwarded to them - the appellant also filed refund claim for the previous period when they had paid the service tax on the said services. As such, we are of the view that the appellant has a prima facie case on limitation - We accordingly dispense with the condition of pre-deposit of duty, interest and penalties and allow the stay petition unconditionally - Following decision of M/s. Schlumberger Asia Services Ltd. Versus CST, Delhi [2013 (9) TMI 554 - CESTAT NEW DELHI] - stay granted.

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• 2013 (12) TMI 561
  Waiver of pre deposit - Demand of service tax - Bar of limitation - Held that:- this prima facie stage, no deposit can be called for from applicant for admission of appeal - Stay granted.

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• 2013 (12) TMI 560
  Waiver of pre-deposit - Stay of recovery - Demand of service tax - Intellectual Property Service - Suppression of material facts - Evasion of service tax - Held that:- entire demand of service tax is on ‘Intellectual Property Service’ held to have been received by the appellant from abroad during the aforesaid period. The demand is in the reverse charge mechanism embodied in Section 66A of the Act. It is also not in dispute that CENVAT credit of any service tax paid by an assessee in the said mechanism can be claimed by them in terms of Rule 3 of the CENVAT Credit Rules 2004 as retrospectively amended under Section 71 of the Finance Act 2011. Again it is not in dispute that the appellant is engaged in the manufacture of excisable products and are paying duty thereon. They are also providing taxable services and paying service tax thereon. In this scenario, the plea of revenue-neutrality raised by the learned counsel is prima facie irresistible. This plea has been raised in the context of contesting the invocation of the extended period of limitation - Conditional stay granted.

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• 2013 (12) TMI 559
  Service tax liability - Circular No. 962/05/2012-CX., dated 28-3-2012 of the C.B.E. & C - Whether the debit of CENVAT credit available as on 29-6-2010 in the CENVAT credit register of the appellant towards payment of Service tax for the period from November to December, 2009 is legally in order - Held that:- appellant gets legitimate support from the above Circular to the proposition that CENVAT credit which accrued to the appellant on 29-6-2010 could be utilized for payment of arrears of Service tax for the period February to December, 2009. Therefore, there will be waiver of pre-deposit and stay of recovery in respect of the adjudged dues - Stay granted.

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• 2013 (12) TMI 558
  Denial of refund claim - Refund claimed in terms of Notification No. 5/2006 under Rule 5 of CENVAT Credit Rules, 2004 - Management or Business Consultancy Services - Held that:- Management Consultancy Services” can be treated as ‘input services’ in relation to the output services rendered by the appellant and therefore, the refund granted by the original authority is in order - There shall be waiver of pre-deposit of amount ordered to be recovered by the order-in-revision passed by the Commissioner and stay of recovery thereof till the disposal of the appeal - Stay granted.

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• 2013 (12) TMI 557
  Refund of CENVAT Credit - Notification No. 41/2007-S.T., dated 6-10-2007 - Terminal handling charges - Held that:- any service rendered at the port would be covered by the definition of port service. If that be so, terminal handling charges get included in the port service category and the assessee becomes entitled to the refund of the same in terms of the Notification - Following decision of Western Agencies reported in [2011 (3) TMI 528 - CESTAT, CHENNAI (LB)] - Stay granted.

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• 2013 (12) TMI 556
  Demand of service tax - Mandap Keeper and Convention Service - Held that:- renting of hotel rooms cannot be held to be covered by the definition of ‘Mandap Keeper’ inasmuch as the hotel has an identity, personality and function quite distinguishable from that of a mandap. In any case, we find that the activity of giving hotel rooms to the customers, who might organise function in the hotel is an activity entirely different from the mandap keeper activity. The definition of Mandap Keeper nowhere covers the temporary occupation of hotel rooms or the purpose of boarding, temporary residence. It is not disputed that no function is held in the hotel room which is used for the purpose of staying in the same. As such, we are of the view that the order of the lower authorities holding inclusion of the hotel rooms rent into the value of Mandap Keeper Service is not sustainable - Decided in favour of assessee.

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• 2013 (12) TMI 503
  Waiver of pre-deposit of Service Tax - Renting of Immovable Property Services - Held that:- entire amount of Service Tax liability has been secured by the order of the Hon’ble Apex Court and we find that the appellant has made out a prima facie case for waiver of amount of interest and the penalty involved. Accordingly, the application for waiver of pre-deposit of amount of interest and penalty is allowed and recovery thereof stayed till the disposal of appeal - Stay granted.

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• Central Excise

• 2013 (12) TMI 518
  Denial of cenvat credit - Clearance of goods made by invalidated advance licenses – Waiver of Pre-deposit – Held that:- Following Oleofine Organics (India) Pvt. Ltd. and others vs. C.C.E., Thane-I [2013 (7) TMI 157 - CESTAT MUMBAI] - The suppliers have not availed the refund of terminal excise duty - apart from the fact that the issue involved stands covered by the Tribunal decision , the circular which has been relied upon by the adjudicating authority is also not applicable on the disputed issue - the appellants have made out prima facie case in its favour – Pre-deposits waived till the disposal – Stay granted.

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• 2013 (12) TMI 517
  Clandestine removal of goods - Invoices issued – Waiver of Pre-deposit – Held that:- The appellants have not been able to make out a prima facie good case in their favour so as to allow the stay petition unconditionally - as clarified by the banks, such bank discounting can only be adopted on being satisfied that the goods covered by a particular invoice are actually received by the buyer - the fact that in some of the invoices having the same serial number, the amounts billed were different, also indicated that one serial number invoices was being used by the franchise units repeatedly - the evidences collected by Revenue as regards receipt of unaccounted cut-tobacco or receipt of tissue paper from M/s. Pamwi Tissues, against cash which do not stand reflected in their accounts are indicative of the activities of the franchise units - all the appellants directed to deposit 25% of duty amount as pre-deposit – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.

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• 2013 (12) TMI 516
  Capital goods removed after use from the factory – Duty liability under Rule 3(5) of Cenvat credit Rules 2004 – Held that:- When capital goods are removed after use, it cannot be considered as a case of removal of goods as such for the purpose of reversing the entire credit taken at the time of receiving the capital goods as prescribed in Rule 3 (5) of CCR 2004 - The use of capital goods is to spread over many years - A decision to the effect that assessees can bring in capital goods, use it for a few days and then remove it without reversal of any Cenvat credit taken is not consistent with the overall scheme of Cenvat credit and can lead to abuse of the scheme – Following CCE Salem Vs Rogini Mills Ltd. [2010 (10) TMI 424 - MADRAS HIGH COURT] – Decided in favour of Assessee.

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• 2013 (12) TMI 515
  Recall of Order – Rectification of mistake - The appellant was using power in the process of frame filling for manufacture of matches from 27.02.96 – Held that:- Matches were under physical control till 20-07-96 - There was a qualitative difference between physical control exercised over factories producing commodities like cigarettes and rubber products and factories producing matches - Because of the large number of factories producing matches it was not possible to post an officer in each factory - the total period for which this issue lasted during physical control was only about five months for the departmental officers to conduct any verification - even if it is taken as an absolute law that in the case of clearances made after assessment under physical control demand cannot be raised invoking the extended period, this argument can relate to demand prior to 20-07-96 and the demand from 21- 07-96 to 31-03-98 is still sustainable because the use of power in frame filling is not disclosed to the department – the order modified for the period prior to 21-07-96 and to confirm demand for the period 21-07-96 to 31-03-98 along with appropriate penalty under section 11AC as may be determined by the adjudicating authority – Decided partly in favour of Assessee.

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• 2013 (12) TMI 514
  Admissibility of cenvat credit on outward transportation charge – Goods delivered at customer’s premises – Held that:- Outward transportation charges upto a customers premises, can be treated as eligible input services provided it fulfills the various criterias laid down under Cenvat Credit Rules, 2004 and Section 4 of the Central Excise Act, 1944 – Relying upon AMBUJA CEMENTS LTD. Versus UNION OF INDIA [2009 (2) TMI 50 - PUNJAB & HARYANA HIGH COURT] and the Board’s Circular No.97/8/2007-ST dated 23.08.2007 held that for a manufacturer/consignor, the eligibility to avail credit of the service tax paid on the transportation during removal of excisable goods would depend upon the place of removal as per the definition of ‘place of removal’ under section 4 of the Central Excise Act, 1944 - the credit on the outward freight could be admissible provided the respondent fulfill all the conditions laid down in Boards Circular. Power to remand back by the Commissioner (Appeals) – Held that:- Following MIL INDIA LTD. Versus COMMISSIONER OF C. EX., NOIDA [2007 (3) TMI 8 - SUPREME COURT OF INDIA] and Commissioner of Central Excise, Noida v. Orient Crafts Ltd. [2010 (11) TMI 178 - CESTAT, DELHI] - The Commissioner (Appeals) has no power to remand the case back to the adjudicating authority after deletion of that power from Section 35A (3) of the Central Excise Act, 1944 by amendment made by the Finance Act, 2001.

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• 2013 (12) TMI 513
  Extra consideration received – Amount not included in the Transaction value of goods – Held that:- Following Kinetic Engineering vs. CCE [2012 (6) TMI 168 - CESTAT, MUMBAI] - changes in sales tax liability cannot be a cause for re-determination of assessable value determined in accordance with law of Central Excise as it stood at time of removal of goods, to saddled assessee with tax liability, abatement of sales tax allowed in terms of sales tax liability at time of clearance of goods, cannot be subsequently restricted to net present value of sales tax subsequently paid in complete discharge of such liability - It is permissible to be deducted in respect of sales tax whether it was paid immediately or deferred basis whether incentives were provided by the state government towards sales tax in any manner - the appellant is not liable to pay on the discount received for deferred payment of sales tax - Decided in favour of assessee.

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• 2013 (12) TMI 512
  Benefit of Exemption Notification No.6/2006 – Duty free Naphtha used for the purpose other than manufacture of fertilizers – Held that:- In a situation where the goods are locally procured under the Notification No.6/2002 - the liability to pay the differential duty will be that of the user manufacturer - Appellant at the time of clearance has satisfied both the pre clearance conditions of the notification - The actual use of the goods is a post-clearance condition and is required to be fulfilled by the buyer/user – the appellant cannot be expected to ensure the precise use of the goods - The supplier manufacture of the goods cannot be expected to ensure the intended use of the goods by the procurer, after clearance from the suppliers unit - it is not the case that procurer could have not used the goods for intended purpose - substantial quantity was used for the manufacture of the fertilizer, only part quantity was used for purpose other than manufacture of fertilizer - the duty cannot be demanded from the appellant – Decided in favour of Assessee.

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• 2013 (12) TMI 511
  Wrong Cenvat credit – SSI exemption under Notification No.8/2003 – Held that:- The present case is not covered by the exceptions and in respect of the branded goods being manufactured by the appellant, the provisions of the Notification No.8/2003-CE do not apply - no clause of this exemption notification would apply and in respect of branded goods being manufactured by the appellant, they would be eligible for Cenvat credit - If the appellant's contention is correct and the credit under dispute is in respect of the inputs meant for branded goods, which were lying in stock, they would be eligible for this credit, as they were not required to reverse the credit availed in respect of inputs meant for use in the branded goods which throughout the period of dispute were dutiable and not eligible for SSI exemption - this aspect has to be verified and for this purpose, the matter had to be remanded. Duty Demand - Shortage of Goods – Held that:- The Tribunal has upheld the allegation of clandestine removal detected in 2005, thus the appellant at this stage cannot say that in 2005 there was no shortage and the goods of same quantity cleared in 2007 are the same goods, which were alleged to have been found short and in respect of which duty had been paid - the duty demand and penalty upheld - Decided partly in favour of Assessee.

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• 2013 (12) TMI 510
  Restoration of Appeals – Held that:- Following Commissioner of Income Tax vs. Gas Authority of India Ltd. [2013 (11) TMI 17 - DELHI HIGH COURT] - the matters which have been considered and decided by the Committee on Disputes and permission specifically denied cannot be reopened – There was no merit in the application – Decided against assessee.

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• 2013 (12) TMI 509
  Appropriate duty not paid on Nitrogen/Oxygen Plants - Whether fabrication of Nitrogen/Oxygen Plant amounts to manufacture and is liable to duty – Held that:- The plants were erected at the site by assembling the items - The appellant has never supplied plant in toto - the value of bought out items are not includible in the assessable value as same are neither spare parts or accessories to the items manufacture by the appellant - Nitrogen/Oxygen Plants were assembled at the customers place i.e. factory of the manufacturer not by the appellants - the appellants have not supplied the plants to their customers - the appellants have not supplied the plants but supplied only 4 items manufactured by them and they have discharged proper excise duty - the appellant is not liable to pay any duty – Thus, confiscation of plant and imposition of duty is not sustainable – Decided in favour of Assessee.

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• 2013 (12) TMI 508
  Duty Liability u/s 11D of Central Excise Act 1944 - Processing of textile fabrics on job work basis – Aid of power/steam on hot air stenter – Held that:- The respondents are job worker and are processing the manmade fabrics for merchant manufacturers - the provisions of Section 11D of the Act are not applicable in the case as there is no element of sale – Following Gini Silk Mills Ltd. vs. CCE [2006 (11) TMI 405 - CESTAT, MUMBAI] - Section 11D has to be given a wider meaning so as to include a merchant manufacturer who is the supplier of grey fabric to the processor and to whom the processor returns the processed fabrics, is not tenable for the reason that only in the case of a sale transaction there will be a buyer of goods, and the case of the department itself is that no sale was involved in the transaction between the grey fabric supplier (merchant manufacturer) and the processor. The provisions of Section 11D are inapplicable to units operating under Section 3A of the Central Excise Act, 1944, who are required to pay duty based on the capacity determined by the Commissioner of Central Excise, and not for every clearance effected - the provisions of Section 11D are not applicable to units operating under the compounded levy scheme, as they pay duty on the basis of production capacity/number of chambers of a stenter, and duty liability has nothing to do with the quantity of goods manufactured and cleared by them - For attracting the provisions of Section 11D of the Act there has to be sale - there is no evidence of sale and therefore, the provisions of Section 11D are not applicable – no infirmity on the order – Decided against assessee.

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• 2013 (12) TMI 507
  Cenvat credit under Rule 16 of the Central Excise Rules - Appellant contended that even though the transformers have not been received under original or duplicate copy of the invoices, the same can be linked with the invoices under which the same had been cleared on the basis of CT numbers embossed on the Transformers – Revenue contended that the CT numbers as recorded in the RG-23A register in respect of the returned transformers do not match with the CT numbers as mentioned in the respective invoices on the basis of which the credit had been taken - This is a question of fact which can be gone into in detail only at the time of final hearing - this is not the case for total waiver. Duty Demand – Held that:- The show cause notice itself mentions, the goods in respect of which duty has been demanded, as non-excisable goods – thus there is no basis on which the duty had been demanded - Whenever they used non-Cenvat credit availed inputs for repair, there is no reversal of Cenvat credit, but still these parts having been sold are reflected in the balance sheet - only Cenvat credit on cenvated parts used in repairs is required to be reversed - as the duty demand is concerned, the appellant have prima facie case in their favour - Decided partly in favour of Assessee.

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• 2013 (12) TMI 506
  Duty demand - Cut Flowers grown in India – 100% EOU cleared goods for DTA sales – Held that:- Vikram Ispat vs. CCE Mumbai III [2000 (8) TMI 111 - CEGAT, NEW DELHI] - the assessee is the manufacturer of non-excisable goods – thus, the demand under Central Excise Act is not sustainable – Decided against Revenue.

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• 2013 (12) TMI 505
  Denial of benefit of Notification 6/2006 - CTC tea processing machines cleared for home consumption as well as for export - Waiver of Pre-deposit – Held that:- In the clearance documents the said leave cutting machine has been classified under chapter 84388040 and the department consistently accepting the said classification - There is no material suppression, on the function of the said machine. Besides, the applicant had submitted Chartered Engineer’s certificate in support of their claim that the said machines are used for the purpose of leaf cutting only - they have produced certificates from the consumers research associations and consumers forum establishing that their machines are used for the purpose of cutting tea leaves - the applicants have been able to make a prima facie case in their favour – Pre-deposits waived till the disposal – Stay granted.

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• 2013 (12) TMI 504
  Denial of the benefit of Notification No. 89/95 - Duty demand on by-products – Waiver of Pre-deposit- By-products could be considered as waste or not – Held that:- Representation made to CBEC which is based on the survey that is ongoing - Reference has also been made to an old Circular of the Board viz. No. 684/7/2002-CX., dated 26-12-2002 which stipulated that, whenever a survey was floated for issuing/examining Notification under Section 11C of the Central Excise Act, no coercive action should be taken for recovery of arrears/duties - the appellant is claiming the benefit of this Circular in view of the ongoing survey based on their representation dated 27-1-2012 – Pre-deposits waived till the disposal – Stay granted.

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• CST, VAT & Sales Tax

• 2013 (12) TMI 567
  Maintainability of Writ Petition – Alternate redressal available – Duty liability on labour charges and consumables used in the job work of printing - Held that:- The petitioner has filed invoice wise statement for labour receipt and furnished delivery challan to show that paper or board supplied by the customer for doing labour works - when certain charges are not leviable, it is for the authority concerned to assess the tax in accordance with law - While doing so, if there is any discrepancy in the order, it is incumbent on the petitioner to go before the appellate forum for redressal of such grievance and for consideration of such question which arises for consideration - Without doing so, the petitioner has invoked the jurisdiction of this Court under Article 226 of the Constitution of India contending that there is a levy without jurisdiction. When there is an effective, efficacious alternate remedy available to the parties, it is for them to exhaust such a remedy in accordance with law and they can agitate every merit of the case before such a forum - the petitioner's approach of without exhausting the appellate remedy, would definitely deprive the statutory right conferred on the parties - the claim of the petitioner cannot be gone into by in the writ petition when there is an effective statutory remedy – Decided against Petitioner.

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