TMI Tax Updates - e-Newsletter
December 14, 2013

Case Laws in this Newsletter:

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

Articles

1. REGISTERED VALUERS UNDER COMPANIES ACT, 2013

   By: dhanapal sreepathi

2. Noscitur A Socii for Interpreting 'Gross Amount Charged" - Free Supplies Does Not Constitutes Non Monetary Consideration under Service tax

   By: CA.Ankit Gulgulia

News

1. Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds and Gold, Silver and Areca Nuts Notified

2. Date of Payment of December Installment of Advance Tax Extended From 15th December 2013 To 17th December 2013

3. Constitution of CCI

4. Fraudulent Investment Operations

5. Criteria for Central Assistance

6. Cut in Key Policy Rates by RBI

7. Insurance Repositories System

8. Financial and Corporate Disclosures

9. Flow of Foreign Capital

10. Policy for Loan Sanction to Weaker Sections

11. Mahila Banks

12. Impact of Price Rise on Savings

13. Bank for BRICS Countries

14. Establishment of IT Office

15. Printing of Currency Notes

Notifications

Customs

1. 130/13 - dated 13-12-2013 - Cus (NT)

Amendment Notification No. 36/2001-Customs (N.T.), dated the 3rd August, 2001

2. 129/2013 - dated 11-12-2013 - Cus (NT)

Appointment of Common Adjudicating Authority

3. 128/2013 - dated 11-12-2013 - Cus (NT)

Appointment of Common Adjudicating Authority

4. 127/2013 - dated 11-12-2013 - Cus (NT)

Appointment of Common Adjudicating Authority

5. 126/2013 - dated 11-12-2013 - Cus (NT)

Appointment of Common Adjudicating Authority

6. 125/2013 - dated 11-12-2013 - Cus (NT)

Appointment of Common Adjudicating Authority

7. 124/2013 - dated 11-12-2013 - Cus (NT)

Appointment of Common Adjudicating Authority

8. 123/2013 - dated 11-12-2013 - Cus (NT)

Appointment of Common Adjudicating Authority

9. 122/2013 - dated 11-12-2013 - Cus (NT)

Appointment of Common Adjudicating Authority

10. 121/2013 - dated 11-12-2013 - Cus (NT)

Appointment of Common Adjudicating Authority

11. 120/2013 - dated 11-12-2013 - Cus (NT)

Appointment of Common Adjudicating Authority

12. 119/2013 - dated 11-12-2013 - Cus (NT)

Appointment of Common Adjudicating Authority

13. 118/2013 - dated 11-12-2013 - Cus (NT)

Appointment of Common Adjudicating Authority

FEMA

14. 293 /2013-RB - dated 12-11-2013 - FEMA

Amendments to the Foreign Exchange Management (Establishment in India of Branch or Office or Other Place of Business) Regulations 2000, Notification No. FEMA 22/2000-RB dated 3rd May, 2000

Circulars / Instructions / Orders

Service Tax

1. F. No. B1/19/2013-TRU (Pt.) - dated 11-12-2013

The Service Tax Voluntary Compliance Encouragement Scheme – issues for clarification – reg.

Highlights / Catch Notes

Income Tax

• Room Tariffs Qualify for Deductions u/s 80HHD as Part of Services to Foreign Tourists.

  Case-Laws - HC : Deductions u/s 80HHD - The room tariff should also be taken into consideration for granting deduction under section 80HHD of the Income tax Act - The room tariff comes within the expression, 'services provided to foreign tourists' - HC
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• Court Rules No Tax Addition for Unreceived Damages Claim in Enhanced Compensation Case.

  Case-Laws - HC : Taxability of claim for damages - enhanced compensation - No amount has been received till date by the Assessee pertaining to the damages as claimed by the assessee - No addition - HC
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• High Court Upholds Order: Assessing Officer's Error on Exempt Income Expenditure Affects Book Profits Calculation u/ss 115JA, 115JB.

  Case-Laws - HC : Validity of order u/s 263 - Computation of book profits u/s 115JA/ 115JB - Assessing Officer had failed to disallow expenditure in respect of exempt income as per the mandate of Section 14A - revision sustained - HC
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• High Court Emphasizes Mandatory Prior Approval u/s 158BG to Prevent Misuse by Lower Authorities.

  Case-Laws - HC : Improper authorization u/s 158BG - The legislature provides for previous approval so that these harsh provisions are not abused by the Lower Authorities - The noncompliance of said provision cannot be construed as a mistake, defect or omission - HC
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• Court Upholds Rejection of Books Due to Unexplained Profit Decline; Profit Estimation by Officer Deemed Reasonable.

  Case-Laws - HC : Rejection of books of account - The steep decline in the rate of net profit cannot be attribute to the increase in input costs - The estimation of profit by the AO is reasonable - The order of rejection is not required to be expressed - HC
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• Ignoring Grounds in Appeal Recognized as Mistake u/s 254(2) of the Act.

  Case-Laws - AT : An omission to consider the Ground, which appears in the Memorandum of Appeal filed by the assessee, is a mistake apparent from record within the meaning of section 254(2) of the Act - AT
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• Expenses from Abandoned Film Projects Deductible, Not Capital Assets, Says Regulation.

  Case-Laws - AT : Whether expenses on abandoned film are allowable as deduction or not - Held Yes - Where the film for some reason cannot be completed and the project is shelved it cannot be reharded as a capital asset - AT
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• Transfer pricing adjustments mandate benchmarking transactions with associated enterprises against non-associated ones to ensure market-aligned pricing.

  Case-Laws - AT : Transfer pricing adjustment – When the indent/commission transaction with the associated enterprises is to be benchmarked, the same should be done with indent/ commission transaction with non-associated enterprises - AT
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• Assessee retains eligibility for Section 54 exemption after investing in FDRs and using a loan for new asset purchase.

  Case-Laws - AT : The assessee having parked its funds in FDRs with banks, of sale proceeds of the old assets and utilized housing loan for the purchase of new asset, does not disentitle the assessee from the benefit of exemption u/s 54 - AT
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Customs

• Applicant Fails to Establish Prima Facie Case; Goods Misdeclared as Industrial Salt, Found to be Fertilizer Grade Potassium Chloride.

  Case-Laws - AT : Misdeclaration of Goods – Goods declared as Industrial salt chemical grade but actually found as fertilizer grade potassium chloride - applicant has failed to make out a prima facie case for waiver of amount of penalty - AT
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• Court Rules on Timing of Crude Palm Oil Quantity Measurement Post-Import; Fresh Dip Impractical After Clearance.

  Case-Laws - AT : Import of crude palm oil - Timing of measurement of quantity - since the goods had already been cleared after import, it was not practically possible to take fresh dip measurement of the same stock of liquid in the same tank - AT
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Service Tax

• Service Tax Demand Only Sustainable for Monthly Parking Income from Mall Shop Owners, Totaling Rs. 9,63,645.

  Case-Laws - AT : Demand of Service tax - out of total income parking of Rs. 3,88,45,204/- an amount of Rs. 9,63,645/- only pertains to the monthly parking income in respect of parking space provided to the shop owners - prima facie demand is sustainable only on parking income pertaining to the parking service provided to shop owners who own shops in the mall. - AT
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• Service Tax Shortfall Uncovered in Investigation Leads to Confirmed Demand and Penalties for Non-payment.

  Case-Laws - AT : Imposition of penalty - Demand of service tax - Had the investigation not conducted the said short payment of service tax would not have been detected - demand and penalties confirmed - AT
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• Authorities Wrongly Deny Cenvat Credit Refund Due to Non-Registration, Decision Not Supported by Law.

  Case-Laws - AT : Denial of refund claim of Cenvat Credit on the ground that assessee is not registered - authorities committed a serious error in rejecting the claim for refund on the ground which is not existence in law - AT
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• Re-rubberisation of Old Rollers Classified as Business Auxiliary Service Under Clause 65(105)(zzb) for Tax Purposes.

  Case-Laws - AT : Classification of service - Re-rubberisation of old, worn out rubberised rollers - Since Business Auxiliary Service comes first under Clause 65(105) (zzb), service is classifiable under BAS - AT
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• CENVAT Credit Approved by Assistant Commissioner; Stay Granted Amidst Revenue Department's Non-Dispute Over Letter's Contents.

  Case-Laws - AT : CENVAT Credit - assessee had written a letter that Asstt. Commissioner was kind enough to permit the appellant to take the credit. Revenue is not disputing that the said letter - stay granted - AT
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VAT

• High Court Rules Business Unit Sale Price Should Not Count Towards Turnover According to Agreement Terms.

  Case-Laws - HC : Sale of entire business unit - The bifurcation of the price would not in any manner go against the intention of the parties and going by the various terms of the agreement - there was no justifiable ground to accept that the sale consideration would form part of the turnover - HC
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Case Laws:

• Income Tax

• 2013 (12) TMI 614
  Deductions u/s 80HHD - Held that:- Following assessee's own case [2009 (10) TMI 22 - ALLAHABAD HIGH COURT] for earlier assessment year 1990-91 - The room tariff should also be taken into consideration for granting deduction under section 80HHD of the Income tax Act - The room tariff comes within the expression, 'services provided to foreign tourists' - Decided against Revenue.

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• 2013 (12) TMI 613
  Stay for recovery of demand and removal of provisional attachment u/s 281B - Held that:- The tax demand or issues are inchoate and it may take a considerable time before the issue is finally settled - The dispute may be taken to the Supreme Court for final adjudication and this is a time consuming process - The final outcome is uncertain and not free from doubt. Even if the matter is decided against Nokia India/Nokia Finland, the quantum of demand itself in respect of deduction under Section 40(a)(i), interest and penalty including penalty under Section 271C/271(1)(c) of the Act would depend upon several factors which may take their own time to decide. In view of the closing down or keeping out Nokia India, when Nokia Finland is globally transferring and disposing of their hand devices/mobile phones business, the attachment of assets may not be the sound and considered decision or even in the interest of the Revenue as there could be sharp decline in the market value of the assets of Nokia India. The interim order dated 26th September, 2013, in particular clause (1) and (3) is passed to allow sale of assets by Nokia India to Microsoft/Microsoft International subject to fulfilment of certain conditions - Nokia Finland, will receive about Rs.31,000 crores pursuant to the global transfer of hand devices/mobile phones from the Microsoft International - It will continue to exist and operate, even after handset/mobile phone business is sold to Microsoft International as it being a listed company having several businesses and business interests. Nokia Finland, in addition to the undertaking or letter of guarantee already quoted, will file another letter in form of guarantee/undertaking incorporating the terms and conditions and file the said letter/undertaking with the income tax authorities - It will pay the tax dues dues of the company sold out to the extent permissible and recoverable under the provisions of the Act - Partly allowed in favour of assessee.

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• 2013 (12) TMI 612
  Validity of reassessment u/s 147 - Held that:- The provisions of section 142A of the Act was inserted by Finance (No. 2) Act, 2004 with effect from 14th November, 1972 - The original assessment order passed on 14.1.1991 that is much before 28.11.2003 - It had become final between the parties on the date when section 142A was inserted by Finance (No. 2) Act, 2004 - Following CIT vs. Gulam Mohammad [2009 (8) TMI 635 - ALLAHABAD HIGH COURT] - The proviso to section 142A states that the provisions shall not apply where the assessment has become final before the applicability of this section - Decided against Revenue.

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• 2013 (12) TMI 611
  Interest on excess levy price - Held that:- Following Commissioner of Income Tax, Lucknow vs. Dhampur Sugar Mills etc. Dhampur [2004 (8) TMI 44 - ALLAHABAD High Court] - The interest payable for the assessment years in question accrued during the previous year relevant to the assessment in question as provided under the provisions of the Levy Sugar Price Equalization Fund Act, 1976 - There was statutory liability of payment of interest every year - Decided in favour of assessee. Liability towards the additional cane price - Held that:- Following Commissioner of Income Tax, Lucknow vs. M/s Dhampur Sugar Mills Ltd. Dhampur [2005 (4) TMI 548 - ALLAHABAD HIGH COURT] - No disallownace can be made on this ground - Decided in favour of assessee.

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• 2013 (12) TMI 610
  Taxability of claim for damages - Held that:- When the assessee is maintaining the books of account on the basis of actual receipts then damage amount can be brought to tax as and when it will be received after finalization in the appeal pending before the Hon'ble High Court - Following Commissioner of Income- Tax vs. Ghanshyam (HUF) [2009 (7) TMI 12 - SUPREME COURT] - In view of insertion of section 45(5) of the Act - When the assessee-claimant is in receipt of enhanced compensation it shall be treated as "deemed income" and taxed on receipt basis - The year in which enhanced compensation is received is the year of taxability - Even in cases where pending appeal, the court/tribunal/authority before which the appeal is pending, permits the claimant to withdraw against security or otherwise the enhanced compensation (which is in dispute), the same is liable to be taxed under Section 45(5) of the Act in the year of receipt - No amount has been received till date by the Assessee pertaining to the damages as claimed by the assessee - Decided against Revenue.

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• 2013 (12) TMI 609
  Intimation of accumulation of income - Held that:- The application under Section 11 (2) was not filed with the return by the assessee - The information was given during the process of the assessment, before the assessment was completed - There was sufficient material before the Assessing Officer both in the shape of the information furnished within the prescribed period and the proof of not only setting apart 85% of the amount to be spent in next year but also the expenditure of that amount in the next year - The insistence of furnishing of information on Form 10 as a condition precedent, is insistence on the form and not the substance of the provisions of the Act - The Tribunal was justified in remanding the matter back to examine the books of account of the assessee for assessment year 2009-10 to find out whether the amount was spent in the next year and if the investment exceeds unspent amount within the prescribed period, the Assessing Officer will condone the delay and irregularity in filing Form 10 - Decided in favour of assessee.

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• 2013 (12) TMI 608
  Gold biscuits found during search - Held that:- The two gold biscuits recovered from the locker of the assessee were not owned by Shri Ashok Kumar Varshney at the time of recording his statement while making declaration/surrender of undisclosed income - So far as the slip A-4 is concerned, the Income tax authorities recorded findings that the assessee has tried to get the benefit of that addition in his hands without sufficient evidence - The details recorded in the slip A-4 were the investment and not the actual quantity of gold, which was recovered from the locker of the assessee - There is no substantial question of law - Decided against the assessee.

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• 2013 (12) TMI 607
  Validity of order u/s 263 - Held that:- The Commissioner in her order under Section 263 has recorded specific findings as to why and for what reason she felt that the order passed by the Assessing Officer on two accounts was erroneous and prejudicial to the interest of Revenue - Computation of book profits u/s 115JA - Under proviso to clause (i) of the Explanation to Section 115JA reserve or provision made may relate to any period and not during the period between 1st April, 1997 and 31st March, 2001 - These two dates are relevant as Section 115JA is applicable during this period. Clause (i) operates when an amount is withdrawn from provision made or reserve created but as per the proviso adjustment can be made only when at the time of creation of reserve or the provision, the amount in question was duly accounted for by increasing the book profits by the said reserve or provision - Transfer from revaluation reserve either should have been credited to the profit and loss account or reduced from the depreciation provided in the books - The respondent-assessee had credited the same amount to the depreciation account and also the profit and loss account in the year in question. Disallownace u/s 14A - Held that:- the Assessing Officer had failed to disallow expenditure in respect of exempt income as per the mandate of Section 14A of the Act - Section 14A was introduced by Finance Act, 2001, which was tabled in the Parliament on 28th February, 2001. The said provision was introduced with retrospective effect from 1st April, 1962 - The quantum of deduction should be made on reasonable basis - The the Commissioner had rightly invoked Section 263 of the Act as the order of the Assessing Officer was erroneous and prejudicial to the interest of the Revenue - adjustment of Rs.1.35 crores should not have been allowed under clause (i) to Explanation to Section 115JA and deduction should have been also made towards expenditure to earn dividend income, which did not form part of taxable income under Section 14A of the Act. - Decided in favour of Revenue.

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• 2013 (12) TMI 606
  Interpretation of articles of DTAA - Held that:- A plain reading of provisions of DTAA between India and France makes it absolutely clear that Sub-Articles (1) & (2) will apply inter alia when the recipient of interest does not have a permanent establishment in the country, where he has received interest - The respondent assessee had a permanent place of business in India and, accordingly, submitted to the taxing jurisdiction of India and paid tax on its income except income from interest under Section 44BB of the Income Tax Act - The interest earned in India on the refund of income tax is not covered by Sub-Articles (1) & (2) of Article 12 of the said Treaty - Decided in favour of Revenue.

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• 2013 (12) TMI 605
  Understatement of sale consideration - Held that:- The Tribunal has referred to the material produced by the assessee before the Assessing Officer, which included other contemporaneous sale deeds, copy of valuation certificate issued by the registered valuer etc - The said evidence was rejected by the Assessing Officer observing that “the value determined by the government authorities is more acceptable than the value determined by the registered valuer - The Assessing Officer has recorded the date of purchase and the value declared at the time of purchase, which was not disturbed - Decided against Revenue.

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• 2013 (12) TMI 604
  Improper authorization u/s 158BG of ground of appeal - Held that:- Following Shirish Madhukar Dalvi Vs. Assistant Commissioner of Income Tax & others [2006 (7) TMI 145 - BOMBAY High Court] - The provisions of section 158BG are not procedural and and it need to be complied - These provisions are specially inserted into the Act with a specific purpose - Before a Block Assessment Order is passed, certain legal requirements are to be complied - The legislature provides for previous approval so that these harsh provisions are not abused by the Lower Authorities - The noncompliance of said provision cannot be construed as a mistake, defect or omission - If the said provision is not complied, the order passed by the Authority without the previous approval is no order in the eye of law - Decided against Revenue.

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• 2013 (12) TMI 603
  Whether confirmation form party are sufficient to hold that such services were actually rendered by the parties - Held that:- Evidence is produced to show brokerage was paid and the brokerage was duly acknowledged and the recipient has accounted for it in its books of accounts and has offered it for tax - The Tribunal has given cogent reasons why it has not granted benefit to the assessee - The material on record shows the persons to whom the brokerage was paid, who are interested are closely connected to the Directors of the assesee Company - Though book entrites were there and the Revenue offered it for tax, on appreciation of the entire material on record, they have recorded a categorical finding that no such brokerage fee was paid - When the evidence on record discloses that the amounts paid were not brokerage, merely because the amounts were confirmed that by itself would not enable the assessee to claim the exemption - Decided against assessee.

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• 2013 (12) TMI 602
  Whether the ground of appeal not raised before FAA be raised before the Tribunal through miscellaneous petition - Held that:- Where the Miscellaneous petition is dismissed the proper course of action is to file appeal against the original order - The appeal cannot be raised against the rejection of miscellaneous petition - The assessee has deducted the tax at source while paying commission - No substantial question of law arises - Decided against Revenue.

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• 2013 (12) TMI 601
  Rejection of books of account - Held that:- From sub-section (3) of Section 145 of the Act it can be concluded that it is the absolute subjective satisfaction of the Assessing Officer about the correctness or completeness of the accounts of the assessee - The method of accounting is not under consideration - If there is an increase in the cost/purchase price, there will be a corresponding rise in the price of sale - The assessee could not justify its claim that there is increase in the cost of inputs with there being no corresponding rise in the price of sale - There is no significant increase in the expenses viz. personnel cost, administrative & selling expenses, interest & finance charges, etc. considering the increase in turnover reported from year to year - The increase in output costs is almost insignificant compared to the increase in input costs - The steep decline in the rate of net profit, the assessee cannot, therefore, attribute to the increase in input costs - The estimation of profit by the AO is reasonable - The order of rejection is not required to be expressed - Decided against assessee.

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• 2013 (12) TMI 600
  Validity of proceedings u/s 147/148 - Held that:- Dispensation of justice should not suffer on account of a fault which is not attributable to an assessee-subject - The bonafides of the averment made by the appellant petitioner are not assailed before the Court - The Tribunal committed an error in dismissing the wrong plea made on behalf of the assessee - Decided in favour of assessee. Estimation of income - Held that:- the books of account were not reliable and therefore the income was required to be estimated. Further, the estimation as made by the CIT(A) was affirmed by the Tribunal - Plea does appear in the Ground of Appeal raised by the assessee and the non-consideration of the same, constitutes a mistake apparent from record within the meaning of section 254(2) of the Act - Following CIT vs. K. M. Sugar Mills (P.) Ltd. [2004 (8) TMI 59 - ALLAHABAD High Court] - An omission to consider the Ground, which appears in the Memorandum of Appeal filed by the assessee, is a mistake apparent from record within the meaning of section 254(2) of the Act - It is justified to recall the order of the Tribunal - Decided in favour of assessee.

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• 2013 (12) TMI 599
  Penalty u/s 271(1)(c) due to disallowance of depreciation on account of capitalized value of steel purchased - Held that:- there cannot be a straight jacket formula to apply that the assessee has furnished any inaccurate particulars of income but it depends on the facts of each case. - there were purchases and recorded in the books of accounts of the assessee and correctness of the books of accounts of the assessee have not been rejected by department on the ground that the assessee has made bogus purchases. - levy of penalty u/s 271(1)(c) of the Act on the claim of depreciation made by assessee in the assessment years under consideration is not justified. - Decided in favor of assessee.

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• 2013 (12) TMI 598
  Whether expenses on abandoned film are allowable as deduction or not - Held that:- Following Alembic Chemical Works Co. Ltd. vs. CIT [1989 (3) TMI 5 - SUPREME Court] - A feature film is only a stock-in-trade of his business for a film producer - Where not released for exhibition, i.e., sold directly or indirectly, the same is to be necessarily carried over as such - Where the film for some reason cannot be completed and the project is shelved it cannot be reharded as a capital asset - The value of the film declines considerably within a short period of its release - The only condition to which this would be subject is of the said suspension of work being not temporary, so that there is in fact no loss of value, of which though there is no indication in the present case - The loss ensuing thus would only be the loss for the year of its incurrence, i.e., the year in which the film project is abandoned - Decided against Revenue.

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• 2013 (12) TMI 597
  Whether Tribunal can review its own order u/s 254 - Held that:- In all the points raised by the assessee in its miscellaneous application is basically a review of the detail finding and conclusion given by the Tribunal and there is no ‘mistake apparent from record’ which can be rectified within the scope of Section 254(2) - Decided against assessee.

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• 2013 (12) TMI 596
  Advance taken from other company - Deemed dividend - Held that:- The factual submissions made by the assessing officer reveal that the transactions are of commercial in nature - Following CIT v. Raj Kumar [2009 (5) TMI 17 - DELHI HIGH COURT] - Section 2(22)(e) did not bring within its ambit advances received against the future supply of goods - The word advance which appears in the company of the word loan could only mean such advance which carries with it an obligation of repayment - Trade advance which are in the nature of money transacted to give effect to a commercial transactions would not, fall within the ambit of the provisions of section 2(22)(e) of the Act - Decided against Revenue.

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• 2013 (12) TMI 595
  Interest on investment - Held that:- Following assessee's own case for A.Y. 2003-04 - Business relationship can be said to exist even with the persons from whom funds are borrowed - The principle of commercial exigency cannot be blindly applied in the case of persons with whom the assessee has some business relationship - The assessee had borrowed money for its own purpose but has been investing it in shares. Prima facie it appears to be diversion of funds for acquisition of share - If there was no condition in the very first year or in subsequent years, the amounts invested in various years in shares of Lakhani India Ltd. cannot be treated as assessee's compulsion to make investment in shares within the meaning of Commercial expediency - The issue has not been examined either by the Assessing officer or the learned CIT(A) - The issue was set aside for fresh adjudication. Expenses on exempt income - Held that:- Following assessee's own case in A.Y. 2003-04 and 2004-05 - The group concern namely Lakhani Marketing Incorporation in A.Y 2000-2001 are exactly identical to the facts of the assessee in A.Y. 2006-07 - The applicability of the facts pertaining to commercial expediency as considered in the facts of group concern needs to be seen and brought on record - No such exercise has been done by the A.O. - The issue was set aside for fresh adjudication. Tax not deducted on interest - Held that:- Following Merilyn Shipping & Transports vs. Addl. CIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] - what can be disallowed u/s 40(a)(ia) is only the outstanding balance as on 31st March of the year and cannot be invoked against payment made prior to 31st March of every year - The issue in question has become debatable in view of Special Bench judgment and contrary judgments of High Courts - The issue was set aside for fresh adjudication to verify whether the TDS has been deducted in the subsequent year and to decide the same in accordance with law keeping in view the latest legal position.

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• 2013 (12) TMI 594
  Transfer pricing adjustment – Comparable data – Arm’s length price - Held that:- Mere difference in turnover is not sufficient for treating two entities or two transactions as not comparable or warrant any adjustment - Following Symantec Software Solutions P. Ltd. [2011 (5) TMI 107 - ITAT MUMBAI] - Low turnover does not necessarily mean high margin in competitive market condition - Unless and until it is brought to record that the turnover of such comparables has undue influence on the margins, it is not the general rule to exclude the same that too when the comparables are selected by the assessee itself – Following Distributors (Baroda) P. Ltd. v. Union of India [1985 (7) TMI 1 - SUPREME Court] - Commission percentage in associated enterprises segment should be compared with commission percentage in non-associated enterprises segment - Following Bayer Material Science P. Ltd. [2011 (12) TMI 393 - ITAT MUMBAI] - When the indent/commission transaction with the associated enterprises is to be benchmarked, the same should be done with indent/ commission transaction with non-associated enterprises - Decided against the assessee. Legal and professional charges – Held that:- The assessee-company employs foreign nationals for the purpose of its business, as they have requisite expert knowledge of the markets outside India - The assessee-company has many of the foreign nationals, on its rolls, working at various managerial positions - As per the general policy of the assessee-company and the market wide practice, the company at the time of the departure of such foreign assignees, after completion of their assignments, bears the cost of their return journey to their respective home countries - The expenditures were incurred by the assessee on its employees who were returning to their home countries, after completion of the assignments. The expenditures were charges in connection with passenger baggage clearing – Decided in favour of assessee. Disallowance of deduction of deposits written off – Held that:- The assessee has debited an amount to the profit and loss account under head "Deposits written off - The AO misread the profit and loss account and amount claimed in the assessment year 2006-07 was understood by him as the amount claimed in the assessment year 2007-08 - The such write off was claimed in the assessment year 2006-07 – The issue was restored for fresh decision.

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• 2013 (12) TMI 593
  Addition on account of fall in GP rate – Held that:- Following assessee's own case from A.Y. 2003-04 to 2006-07 - In view of the past records of the gross profit rate of the assessee – The small variation in GP rate is considered while accepting books of accounts - Factually there was no fall in GP rate for the year under consideration – During previous year the percentage of GP ratio was taken by including the "other income" in the total turnover; while the turnover of the assessment year compared with was after excluding the "other income".

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• 2013 (12) TMI 592
  Exemption u/s 54 – The assessee had invested sum of Rs. 23,61,550/- out of withdrawals from its bank account jointly held and utilized the same for acquisition of the residential house in Sector 11, Panchkula - The balance sum of Rs. 20 lakhs was out of the housing loan raised by the assessee from LIC Housing Finance - Held that:- The assessee having parked its funds in FDRs with banks, of sale proceeds of the old assets and utilized housing loan for the purchase of new asset, does not disentitle the assessee from the benefit of exemption u/s 54 - Decided in favour of assessee.

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• 2013 (12) TMI 591
  Whether income from lease rent taxable under the head “Income from businesss” or “Income from other sources” – Held that:- The assessee has not brought on record any material to show that it has intention to revive its business activities - The question whether the assessee is having an intention to revive its business activity is a question of fact and the same is required to be considered every year - Though the Government licences are still continuing in the assessee's own name, it has not proved the claim of the assessee that it had an intention to revive its business activity – Decided against Revenue. Expenses u/s 57 and 58 - Held that:- The assessee did not get opportunity to contend about the deduction of eligible expenses as per the provisions of sec. 57 - The issue remitted back for fresh examination at the end of the AO for the limited purpose of deduction of expenses.

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• 2013 (12) TMI 590
  Restriction of rate of depreciation claimed on lorries to 25% - Held that:- Following CIT vs. Gupta Global Exim P. Ltd. [2008 (5) TMI 7 - SUPREME COURT] - Mere inclusion of certain amount in the total business income is not the determinative factor for deciding whether trucks were used by the assessee during the relevant year in a business of running them on hire - The returns filed by the assessee as well as the constitution of the assessee-company were not available - No evidence was produced to show that the assessee was in the business of hiring out motor lorries for running them to earn business income - The entire inference is drawn by the Commissioner of Income-tax(Appeals) only on the footing that the Assessing Officer had treated Rs. 12,59,639/- as part of total business income which is not determinative of the above test, viz., whether the trucks were used in the transportation business as claimed by the assessee – The issue was restored to AO for fresh examination. Disallowance of purchase of iron and steel of Rs. 6,59,164 – The assessee could produce only photocopy and carbon copies of the relevant purchase bills and not the original bills - Held that:- The assessee failed to produce the photocopies of the relevant bills before the Tribunal - The Assessing Officer also did not record a finding that the bills have been authenticated by the concerned sellers - The claim of the assessee have not been verified by anybody – The issue was restored to AO for verification of the photocopies of the bills. Disallowance of a part of purchases of broken stones Rs. 1,08,876 – The purchases of broken stones are supported by either type written papers or hand written papers and not proper printed bills - Held that:- The AO examined some of the suppliers of the broken stones he could not obtain proper bills as expected by him - The trade practice prevailing in that trade is to supply the broken stones on the basis of type written slips or hand written slips only – The details were required from various suppliers of broken stones and most of them confirmed the transactions entered by them with the assessee - The assessee has effected payments by way of cheques in most of the cases – Based on the facts and circumstance of the assessee’s business and prevailing trade practice – Decided in favour of assessee.

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• Customs

• 2013 (12) TMI 589
  Misdeclaration of Goods – Goods declared as Industrial salt chemical grade but actually found as fertilizer grade potassium chloride - Waiver of pre-deposit of penalties u/s 114(i) and u/s 114 AA of the Customs Act, 1962 – Assessee contended that the goods were consigned to the address of the applicant’s sister - Held that:- There is no material available that the applicant has taken steps against the use of the name of the applicant’s sister’s address in the attempted export- Penalty was imposed under Section 114AA for use of false and incorrect material and penalty under Section 114(i) was imposed for attempt to export the goods for which prohibition is in force under the Customs Act - the applicant has failed to make out a prima facie case for waiver of amount of penalty - the applicant directed to deposit Rs. One lakh as pre-deposit – upon such submission rest of the amount to be stayed till the disposal – partial stay granted.

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• 2013 (12) TMI 588
  Finalization of provisional assessments of ex-bond Bills of Entry filed - Import of crude palm oil - Timing of measurement of quantity - Assessee contends that liquid would take at least 48 hours to settle and, therefore, any measurement of its depth in the shore tank before this period would yield incorrect results - Held that:- Though the appellant has referred to certain opinion of FOSFA (Federation of Oil, Seeds and Fats Association International) in the memoranda of appeals, there is nothing in that opinion concerning the time taken by the liquid to settle. The case of the appellant is that dip measurement should have been done after at least 48 hours from the time of receipt of the liquid cargo in the shore tank. The FOSFA opinion does not throw any light on this aspect. On the other hand, we have found the appellate Commissioner’s view in this connection to be more acceptable. The learned Commissioner (Appeals) observed thus: In my opinion the time for stabilization depends on the type of bulk liquid cargo and also the length of the pipeline from the vessel to the shore tank through which the liquid is pumped and various other parameters. The appellate authority further noted, quite rightly so, that the appellant never raised any dispute at the time of shore tank dip reading by the Customs which was taken in the presence of the appellant’s representative. Further since the goods had already been cleared after import, it was not practically possible to take fresh dip measurement of the same stock of liquid in the same tank - Decided against assessee.

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• 2013 (12) TMI 587
  Rejection of conversion of advance licence shipping bills to DEPB Scheme - Advance license cancelled - Benefit under DEPB Scheme - Held that:- appellants made export and they also got advance licence against the export made which was subsequently cancelled by the DGFT at the request of the appellant. It is not the case of the appellant that no export benefit was allowed. The appellant made request for conversion to DEPB Scheme, that too beyond the period prescribed under the Board Circular. For DEPB Scheme, the exporter has to declare the standard input-output norms and it has to be verified by the customs authorities. In the present case, this was not done - Decided against assessee.

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• 2013 (12) TMI 586
  Restoration of appeal - Clearance from committee of disputes - Refund claim rejected on the ground of unjust enrichment - Held that:- Revenue has filed this appeal on 20-7-2008 which was dismissed by this Tribunal on 30-12-2009 holding that the Revenue has not applied for clearance from COD, therefore, obtaining of COD clearance does not arise. Therefore, the appeal was dismissed for want of COD clearance. Admittedly, when the application for restoration of appeal is filed, again clearance of COD was not obtained. The reliance by the learned SDR is not applicable to the facts of this case as when the order was passed dismissing the appeal for want of COD clearance and at the time of filing the application for restoration of appeal, the order in the case of ONGC (1991 (10) TMI 58 - SUPREME COURT OF INDIA) was in operation wherein it was held that to file an appeal before CESTAT, COD clearance is required. If the application for restoration of appeal is allowed, which was dismissed following the decision of ONGC for want of clearance from COD, then all the appeals dismissed prior to the decision of Electronic Corporation of India (2011 (2) TMI 3 - Supreme Court) shall deserve for restoration, which will certainly an abuse of law - Decided against Revenue.

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• 2013 (12) TMI 585
  Imposition of anti dumping duty - Import of various types of lamps along with the Circular and 2D shapes Compact Fluorescent Lamps contained with the lamps - Notification No. 138/2002-Cus., dated 10-12-2002 - Held that:- as the plain reading of the definitive anti-dumping duty imposed by Notification No. 138/2002 clearly indicates that anti-dumping duty is to be levied on all CFLs - Anti-dumping duty is liable to be imposed on them. In view of this, we find that the orders of the lower authority are correct and legal and does not require any interference - Decided against assessee.

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• Corporate Laws

• 2013 (12) TMI 584
  Minimum public shareholding requirement of 25 per cent to be maintained - Continuous listing requirement - Rule 19A of the Securities Contracts (Regulation) Rules, 1957, r.w. regulation 10 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 - Held that:- Appellant made an application proposing a method to attain mandatory requirement of minimum public shareholding of 25 per cent in all listed companies, as current public shareholding of appellant was 11.2 per cent, which was significantly below prescribed 25 per cent limit – SEBI Rejected the method adopted by the appellant - the Appellant seems to have overlooked the fact that the underlying philosophy behind the requirement of a minimum public holding of 25% is prevention of concentration of shares in the hands of a few market players by ensuring a sound and healthy public float to stave off any manipulation or perpetration of other unethical activities in the securities market which would unfortunately be the irrefragable consequence of the reins of the market being in the hands of a few. The appellant intended to violate law by raising shareholding of P&G Group substantially beyond 75 per cent benchmark and thereafter by relegating Poddar Group to ostensible stature of a public shareholder and once appellant had intentionally broken law, P&G Group proposed to offer an insignificant 4.9 of their shares to public - The Appellant does not comply with the requirement of 25% of public shareholding by adopting a simple and straight forward approach and offering the shortfall in 25% public shareholding to the public through one of the methods elucidated by SEBI - The appellant should comply with requirement of 25 per cent of public shareholding by adopting a simple and straight forward approach and offering shortfall in 25 per cent public shareholding to public through one of methods elucidated by SEBI, or which gets approval of SEBI – Decided against Appellant.

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• Service Tax

• 2013 (12) TMI 628
  Demand of service tax - Imposition of equivalent penalty - Held that:- When the plea of not realising the charged amount was not raised before the Adjudicating Officer, it was not open to the appellant to raise it for the first time in the appeal - since the BSNL is a Corporation, which is owned and controlled by the Central Government, the CESTAT should have considered the waiver of pre-deposit of penalty as the question raised in view of the amendments in Rule 6 (1) (ii) vide Notification dated 1.3.2011 - Conditional stay granted.

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• 2013 (12) TMI 627
  Demand of service tax - Penalties under section 76, 77 & 78 - ST-3 returns not filed - Commissioner waived penalties - Held that:- nature of law relating to import of service and also the fact that during the relevant time there was considerable confusion in the mind of exporters regarding their liability, orders of the lower authorities are proper and there is no need to interfere with the same - Decided against Revenue.

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• 2013 (12) TMI 626
  Refund of service tax under Section 11B - Commissioner rejected refund claim - Held that:- appellant herein who is a recipient of the taxable service provided by the RGTIL and had borne the burden of service tax is entitled to claim refund, consequent on the downward revision of the charges payable by the appellant to RGTIL in terms of the determination of the appropriate rate of charge, by the Regulatory Board, and the excess quantum of Service Tax remitted as a consequence - order of the Commissioner (Appeals), in brushing aside the contention of the petitioner to support its claim for refund by reference to the law declared by the Constitution Bench in Mafatlal Industries [1996 (12) TMI 50 - SUPREME COURT OF INDIA], is perverse and in total non-application of mind. The ld. Commissioner (Appeals) distinguished the clearly applicable law declared in Mafatlal Industries, as to the scope of Section 11B of the 1944 Act, without any analysis whatsoever of either the facts, the circumstances or the ratio of the judgment of the Constitution Bench - Decided in favour of assessee.

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• 2013 (12) TMI 625
  Demand of Service tax - Availment of CENVAT Credit - Renting of immovable property - Renting of parking space available in mall - CENVAT Credit for processing of loan taken by the construction of mall - Held that:- applicant has appointed an agent M/s Building Control Solutions Pvt. Ltd. for collecting parking charges from the customers who were visiting their mall and parking their vehicles in the parking slots provided by the applicant. The receipts are issued by BCS in name of applicant and applicant is paying management fees to BCS. The clients parking their vehicles in the parking area are of two types firstly the shop owners who own their shops in the mall and the secondly the visitors who visit the mall for shopping, food, movie, leisure etc. Property taken on rent if used for business or commerce purposes is Prima facie liable to service tax on the rental income. In the present case we notice that out of total income of Rs. 8,42,40,810/- during the period 2007-08 to 2009-10 the monthly parking income amounting to Rs. 22,51,755/- only pertains to those clients who are having shops in the mall and similarly out of total income parking of Rs. 3,88,45,204/- in year 2010-11 amount of Rs. 9,63,645/- only pertains to the monthly parking income in respect of parking space provided to the shop owners. We therefore are of prima facie view that service tax is payable on this parking income pertaining to the parking service provided to shop owners who own shops in the mall. Construction of mall the applicant has taken loan which was converted into corporate loan in February 2008 and bank charged processing charge for such conversion of loan and the applicant has availed the Cenvat Credit amounting to Rs. 12,17,460/- on such loan processing charges. We find that Cenvat Credit of processing of loan taken by the construction of mall which is immovable property is prima facie not available. Applicant does not have a strong case for waiver of pre-deposit in respect of Cenvat Credit availed by them on processing charges of loan taken by them for construction their mall - Conditional stay granted.

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• 2013 (12) TMI 624
  Waiver of pre deposit - Commercial or Industrial Construction Service - Works Contract Service - Penalty u/s 75, 77 and 78 - Abatement in relation to commercial or industrial construction service - Held that:- despite the specific claim by the petitioner for the benefit of abatement to the extent of 67% of the gross taxable value, the claim for this benefit was unreasonably rejected. Exemption Notification No.15/2004 dated 10.9.2004 and the later Notification No.1/06 dated 1.3.2006 grant abatement in relation to commercial or industrial construction service to the extent of 67% of the gross value, subject to the conditions stipulated thereunder. According to the petitioner, it has fulfilled and has not violated any of the specified conditions but exemption was nevertheless denied on the sole ground that the value of supply of material free of cost by the service recipient was not included in the gross value submitted for tax, by the petitioner. Prima facie, rejecting the claim for abatement on this ground, recorded in the adjudication order, appears to be unsustainable - Conditional stay granted.

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• 2013 (12) TMI 623
  Imposition of penalty - Demand of service tax - Exemption under Notification No 6/2005-S.T. dated 01.3.2005 - Goods Transport Agency Service - Held that:- person who pays or is liable to pay the freight will pay the service tax. I find that the appellant are a Private Company and, admittedly, they have paid the freight charges, therefore, they were liable to pay service tax - appellant had not paid the appropriate tax which was required to be paid by them and they also did not disclose the said facts in any manner to the department. If they had any confusion, they should have approached the jurisdiction Range officer or any other service tax officer. It was the liability of the appellant to pay the proper service tax within the stipulated time period and to disclose all relevant information to he department, which was not done by the appellant in the instant case. Had the investigation not conducted the said short payment of service tax would not have been detected. Thus the appellant suppressed the fact of payment made to transporters with intent to evade payment of service tax; therefore, they are liable for penal action under Section 76 and 78 of the Finance Act, 1994 - Decided against assessee.

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• 2013 (12) TMI 622
  Waiver of pre-deposit of service tax - Marketing and sale promotion of the firm outside India - Held that:- Board issued a clarification vide Circular dt.24.1.2009 where it has been clarified that it is possible that export of service may take place even when all the relevant activities take place in India so long as the benefits of these services accrue outside India. In view of the above circular, prima facie we find that the applicant has a strong case in their favour. Therefore, the pre-deposit of dues are waived and recovery of the same is stayed during the pendency of the appeal - Commissioner (Appeals) dismissed the appeal for non-compliance to the conditions of the stay order. Hence, the impugned order is set aside and the matter is remanded to the Commissioner (Appeals) to decide the appeal on merits - Stay granted.

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• 2013 (12) TMI 621
  Denial of refund claim - Cenvat Credit - Information Technology Software Services & Manpower Recruitment Agency Services - Notification No. 05/2006-CE - eligibility of refund under the Rule 5 of the Cenvat Credit Rule read with Notification No.05/2006-CE - Held that:- Insofar as requirement of registration with the department as a condition precedent for claiming Cenvat Credit is Concerned, learned counsel appearing for both parties were unable to point out any provision in the Cenvat Credit Rules which impose such restriction. In the absence of statutory provisions which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the authorities committed a serious error in rejecting the claim for refund on the ground which is not existence in law - registration of the premises is not necessary for claiming the Cenvat Credit - Following decision of mPortal India Wireless Solutions Pvt. Ltd. [2011 (9) TMI 450 - KARNATAKA HIGH COURT] - Decided in favour of assessee.

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• 2013 (12) TMI 620
  Demand of service tax - Classification of service - Re-rubberisation of old, worn out rubberised rollers - Whether this service is classifiable under Business Auxiliary Service - Held that:- appellants are receiving worn out rubber rollers from various customers - activities at various stages are nothing but various processes undertaken by them on goods received by them - activities are covered under clause V of the Business Auxiliary Services as these are processing of goods on behalf of the client. We therefore hold these activities can be classified under Business Auxiliary Service - appellants are equally classifiable under two services namely Business Auxiliary Service and Maintenance or Repair service. Since the service can not be classified under clause 'a' and 'b' of Section 65 A, clause 'c' of Section 65A is attracted according to which service is classifiable under the sub-clause of clause 105 of Section 65 which comes first. We find that Business Auxiliary service is covered under Section 65 (105) (zzb) and Management, Maintenance or Repair Service is covered under clause 65(105) (zzr). Since Business Auxiliary Service comes first under Clause 65(105) (zzb), we hold that service is classifiable under Business Auxiliary Service - Decided in favour of assessee.

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• 2013 (12) TMI 619
  Waiver of pre deposit - Demand of service tax - Non inclusion of amount received in hire charges for vehicle - From 16-5-2008, the statute has provided for services under supply of tangible goods wherein this kind of activity of hiring of vehicle mounted diesel generating sets would fall - Held that:- activity which has been into Service Tax net w.e.f. 16-5-2008, cannot be considered as an activity which will fall under some other heading prior to 16-5-2008. This is the ratio which has been settled by the Tribunal in various decisions like in the case of Board of Control for Cricket in India - [2007 (5) TMI 24 - CESTAT, MUMBAI] , and also the judgment of Hon’ble High Court of Mumbai in the case of Indian National Shipowners’ Association - [2009 (3) TMI 29 - BOMBAY HIGH COURT] - Stay granted.

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• 2013 (12) TMI 618
  Demand of service tax - Interest u/s 75 - Penalty u/s 76, 77, 78 - Held that:- Prima facie department has treated the expenses involved in handling of D.G. Sets as the value of cargo handling services, while the Tribunal in a series of judgments has held that cargo handling services is in respect of handling of cargo meant for transportation. In view of this, the services demand of Rs. 9.70 lakhs appears to be not sustainable. As regards the demand of Rs. 1.61 lakhs on service of supply of tangible goods, prima facie, we find that this demand also does not appears to be sustainable, as the same is in respect of providing ambulance, cranes, etc. to Moradabad Toll Road Co. (an SPV of NHAI) for insuring road safety - appellant thus have a strong prima facie case in their favour - Stay granted.

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• 2013 (12) TMI 617
  Waiver of pre deposit - Manpower Recruitment or Supply Agency Service - Held that:- The appellant viz. M/s. BPL Ltd. has formed a joint- venture with M/s. Sanyo Electric Company Ltd., Japan and this joint- venture is called M/s. Sanyo BPL Pvt. Ltd. Under this arrangement, M/s. BPL Ltd. would ask their employees to resign, who would then join M/s. Sanyo BPL Pvt. Ltd. As some time was taken for the joint- venture to launch its business activities, M/s. BPL Ltd. continued to retain the employees and pay their salaries and wages though the employees were sitting idle. This “idle period” is from June to December, 2005. In order to compensate the loss arising out of this, the joint-venture paid Rs. 5 crores to M/s. BPL Ltd. (appellant), which was shown as ‘expenditure’ in the accounts of the joint-venture - prima facie there is no ingredients of ‘Manpower Recruitment or Supply Agency Service’ in the aforesaid transactions. Hence, 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 616
  Waiver of pre deposit - Penalty u/s 76 & 77 - Demand of service tax - Erection, commissioning and business auxiliary services - Held that:- penalty has been imposed u/s 76 & 77 of the Finance Act, 1994. Circular issued by the Board support the view that if service tax and interest are paid before issuance of show-cause notice, no proceedings are required to be initiated. This is supported by provisions under Section 73 of the Finance Act, 1994 also. Therefore, penalty under Section 76 cannot be sustained and accordingly is set aside - Decided in favour of assessee.

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• 2013 (12) TMI 615
  CENVAT Credit - Revenue contends that appellants are clearing their final product on payment of service tax as also without payment of service tax, they are entitled to use only 20% of the credit as availed - Assessee accepting the same made self-book adjustment - Imposition of penalty - Held that:- From the letter dated 30-6-2009, we find that a proper intimation was given to the Asstt. Commissioner and the said letter also discloses the discussion between the appellant and the Asstt. Commissioner. It is also written in the said letter that Asstt. Commissioner was kind enough to permit the appellant to take the credit. Revenue is not disputing that the said letter was filed by the appellants. If that be so, the permission of the Asstt. Commissioner is deemed to have been granted during the personal discussion between the appellant and the Asstt. Commissioner. We find no reasons to direct the appellants to deposit any part of demand or the penalty imposed - Stay granted.

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• Central Excise

• 2013 (12) TMI 583
  Bar of Limitation – Refund claim on accumulated credit - Notification No.11/2002 issued under Rule 5 of the Cenvat Credit Rules, 2002 – Application to be filed in the prescribed form – Proof of export and other records along with Documents to be submitted before the expiry of the period as per section 11B of central excise act 1944 – Held that:- The relevant date for the purpose of counting limitation period under Section 11 B is defined in Explanation B to Section 11 B - But it does not cover the claims for cash refund of accumulated credit under Rule 5 of the Cenvat Credit Rules, 2002 - Relying upon STI Ltd. V/s. CCE, Indore [2008 (10) TMI 246 - HIGH COURT OF MADHYA PRADESH AT INDORE] - In respect of cash refund of accumulated credit filed under Rule 57F (4), the limitation period prescribed in Section 11 B is not applicable. Strict law of limitation provided under Section 11 B of the Central Excise Act would not apply to a claim for cash refund of accumulated credit made in terms of the notification issued under Rule 57F, as in such a case the requirement of filing of claim within the limitation period provided under Rule 11 B is procedural in nature rather than mandatory - any limitation for filing any claim, appeal etc., prescribed under any law, has two components - the period of limitation during which the claim, appeal etc. is to be filed and the date from which the limitation period is to be counted - If the date from which limitation period is to be counted is missing, it would amount to not prescribing any limitation period - the claim for the period from April, 2002 to June, 2002 is not hit by limitation. Admissibility of cash refund under Rule 5 of the Cenvat Credit Rules – Held that:- Rule 5 of Cenvat Credit Rule, 2002/2004 is different from Rule 3(4) - utilization of cenvat credit for payment of duty on final product, one to one co-relation between the inputs in respect of which canvat credit has been taken and the final product for payment of duty on which the credit is utilized, is not required - credit taken in respect of any input can be utilized for payment of duty on any final product - he credit in respect of inputs used in the manufacture of final products cleared for export under bond or LUT etc. can be utilized for payment of duty on clearances for home consumption of any final product including those made out of other inputs, as, as per the provisions of Rule 3(4), there is no restriction in this regard - only the credit which cannot be utilized for payment of duty on any final products cleared for home consumption would be eligible for cash refund under Rule 5. The cash refund of accumulated cenvat credit under Rule 5 is equivalent to input duty rebate under Rule 18 of Central Excise Rules, 2002 or excise/service tax duty drawback under Customs & Central Excise Duties Drawback Rules, 1975 of which only one benefit can be availed by a manufacture exporter at a time. Eligibility for Cenvat credit - Whether a manufacture can take cenvat credit in respect of inputs which have been used in the manufacture of finished goods exported out of India, but the finished goods are fully and unconditionally exempt from duty – Relying upon COMMISSIONER OF CENTRAL EXCISE Versus DRISH SHOES LTD. [2010 (5) TMI 334 - HIMACHAL PRADESH HIGH COURT] - cenvat credit would be admissible in respect of inputs used in the manufacture of excisable goods which though fully exempt from duty, have been exported out of India as the term ‘excisable goods’ in Rule 6(5)/ 6(6) of the Cenvat Credit Rules, 2002/2004 is wide enough to include both dutiable as well as exempted excisable goods and accordingly, if the credit accumulated due to export of such finished products, even if fully exempt from duty, cannot be utilized for payment of duty on domestic clearances, its cash refund would have to be allowed – order set aside and matter remanded back to the original adjudicatory authority.

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• 2013 (12) TMI 582
  Inputs under Rule 2(k) – Fabrication of Capital goods – Waiver of Pre-deposit – Held that:- The definition of inputs as given in Rule 2 (k) covers the inputs used in the fabrication of capital goods for use in the factory and if the MS coils/sheets have been used for fabrication of MS Trays which are used in the ovens, the same would be eligible for Cenvat credit - the appellant from the very beginning had given an intimation to the department specifically mentioning that they would be sending the MS coils/sheets to the job workers for fabrication of MS trays and the job workers would return the MS trays alongwith the scrap to them. The appellant have also placed on record the job work challans under which the raw material had been sent to the job workers - when the appellant had specifically intimated the department as early as in March 2006, that they would be sending the Cenvat credit availed MS coils/sheets to job workers to get the MS trays fabricated, the department should have at least asked the appellant to produce the job work challans which according to them are available with them – Prima facie the appellant have case in their favour - The requirement of pre-deposit of Cenvat credit demand, interest and penalty waived till the disposal of appeal – Stay granted.

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• 2013 (12) TMI 581
  Notification No.94/1996 - Cenvat credit of the CVD - Provisions of Rule 16 of the Central Excise Rules, 2002 -Waiver of Pre-deposit – Held that:- The categorically provide for availment of such cenvat credit by an assessee - the appellate authority seems to have not considered these provisions – Following M/s. Alembic Pharmaceuticals Ltd. Versus CCE [2013 (12) TMI 334 - CESTAT AHMEDABAD] - unconditional waiver to the assessee granted till the disposal – Decided in favour of Assessee.

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• 2013 (12) TMI 580
  Unjust enrichment – Evidences to rebut - Refund not adversely affected by unjust enrichment - Held that:- From the ‘Grounds of appeal’, it can be seen that no case has been made out by Revenue as to why the Commissioner’s (Appeals) observations are wrong and what irrefutable evidence was required - Commissioner (Appeals) while passing a very detailed order has clearly brought out the fact that there was no unjust enrichment - In the appeal filed by Revenue, no ground has been made out to show that there was unjust enrichment – Decided against Revenue.

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• 2013 (12) TMI 579
  Classification of Goods – Denial of Benefit of concessional rate of duty under Notification No.4/2006 - Waiver of Pre-deposit – Held that:- Duty amount to be credited to the Consumer Welfare Fund under Section 12C of the Central Excise Act, 1944 in terms of Section 11D of the said Act – Following Akshara Papers Vs. Commissioner of Central Excise, Salem [2013 (11) TMI 1014 - CESTAT CHENNAI] – Unconditional stay granted - the applicants have paid the amount as duty which has already been credited to the Consumer Welfare Fund – Pre-deposit of duty and penalty waived till the disposal – stay granted.

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• 2013 (12) TMI 578
  cenvat credit availed on inputs and on capital goods - Eligibility for cenvat credit of distribution control system of co-generator – Held that:- The definition of capital goods as given in Explanation 57 Q specifically covered the goods (other than of a kind used for refrigerating and airconditioning appliances) falling under Heading no.90.32 and also the components /spares and accessories of the goods of Heading No.90.32 - the DCS System is an item falling under Heading No.90.32, the same was specifically covered by the definition of capital goods and the low frequency transmission system, which is part of the DCS System, would also covered by the definition of capital goods - thus denial of capital goods is not sustainable. Cenvat credit on welding machines and welding electrodes – Used for repair and maintenance of the plant and machinery Held that:- Following JAWAHAR MILLS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, COIMBATORE [1999 (4) TMI 153 - CEGAT, NEW DELHI] - welding electrodes and welding machines is eligible for cenvat credit – thus denial of cenvat credit in respect of these items is also not sustainable - Decided Partly in favour of Assessee.

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• 2013 (12) TMI 577
  Eligibility for cenvat credit – Clandestine removal of goods – Capital goods purchased from registered dealer – Whether the appellant is eligible to avail CENVAT Credit – Held that:- Having discharged the duty liability on the capital goods subsequently, after the clearance will itself an indicator that CENVAT Credit availability of Central Excise duty paid on such capital goods is barred as there was suppression and mis-statement by the manufacturer - Though the appellant has claimed that they were not aware of non-duty paid character of the goods received by them from a registered dealer - the appellant’s Deputy General Manager has clearly admitted that the entire transaction of over-valuing the capital goods and making the payment to the registered dealer was in order to square up the account of the outstanding payments due - there is an element of doubt as to the contentions raised by the appellant that they were not aware of such clearances of capital goods by the manufacturer without payment of duty. Once there is over-valuation of value of capital goods, which were cleared by the manufacturer, subsequently having been affirmed that there was something wrong in the transaction - the appellant is in-eligible to avail CENVAT Credit - though the manufacturer of capital goods paid the duty, the same was not available as credit to the appellant as per the provisions of Rule 9(1)(b) of CENVAT Credit Rules, 2004. Period of limitation - The Revenue authorities have issued a show cause notice to the appellant on detecting irregularity within one year of the payment of Central Excise duty by the manufacturer and from the date of TR-6 challan which the manufacturer had paid the duty - the appellant may be in knowledge of entire transaction that has taken place which has resulted in clandestine removal of the goods by manufacturer – Decided against Assessee.

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• 2013 (12) TMI 576
  Denial of Rebate under rule 96ZO (2) of the Central Excise Rules 1944 – Held that:- Following Commissioner of Central Excise, Kanpur Vs. Ram Shree Steels Pvt. Ltd. [2011 (7) TMI 702 - ALLAHABAD HIGH COURT] - subject to fulfillment of conditions in Rule 96ZO(2) did not amount that all five conditions there were required to be fulfilled procedural requirements could be disposed with if sufficient explanation was given and if there was no allegation of fresh or administrative inconvenienced - although the appellant has not mentioned the hours, the day beginning of the period involved for rebate can be excluded for considering the rebate - although the appellant has not complied with the condition (e) of Rule 96ZO (2) but they are entitled for rebate from the payment of duty – Decided partly in favour of Assessee.

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• 2013 (12) TMI 575
  Demand u/s 11D of Central Excise Act - Goods cleared from depot at revised price – Excess amount charged - Held that:- Following BPCL Vs. CCE [2002 (5) TMI 107 - CEGAT, COURT NO. III, NEW DELHI] - No evidence has been brought on record by the Revenue to show that what was collected as prices by the appellants from their buyers represented the amount of Central Excise duty – the demands under Section 11D of the Central Excise Act 1944 are not sustainable – order set aside – Decided in favour of Assessee.

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• 2013 (12) TMI 574
  Denial of cenvat credit - Non-production of duty paying document - Credit taken on inputs after six months from the date of issue of invoice under Rule 57 G of Central Excise Rules, 1944 – Held that:- Assessee agrees that the credit stand taken in the absence of duty paying documents as also after a period of 6 months from the date of issue of the invoice – Following SAIL V CCE, Raipur [2008 (4) TMI 94 - CESTAT, NEW DELHI] and Kamakhya Steels (P) Ltd. V. CCE, Meerut [2000 (8) TMI 113 - CEGAT, NEW DELHI]. Non-filing of declaration under Rule 57 G – Credit taken on extra copy of Invoice - Non-Production of duplicate copy of invoice as per Rule 57 G of the Central Excise Rules, 1944 - Held that:- Following CCE, Chennai v. ITC Ltd. [2007 (11) TMI 188 - HIGH COURT MADRAS] - The infirmity has been held to be of a nature so as not to result in denial of credit - denial of credit on the technical ground of non-production of duplicate copy of invoice could not result in denial of credit. Credit taken on non-specified duties - basic customs duty and special customs duty as per Rule 57A of Central Excise Rules, 1944 - Excess Credit availed than that shown in the parent invoice - Credit taken on re-issued goods under Rule 173 H of the Central Excise Rules, 1944 – Held that:- The appellant fairly agrees that the credit would not be available to them. Discrepancies in Dealer's Invoices - Non-mention of certain details such as manufacture's details and invoice no. – Held that:- Following Bajaj Tempo Ltd. V CCE, Pune [1998 (9) TMI 157 - CEGAT, MUMBAI ] - The credit was denied on the technical and procedural ground of non-availability of certain particulars in the dealers invoices - The defects pointed out by the Revenue are rectifiable defects and should not be made basis for denial of credit, if availability of same is otherwise not disputed.

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• 2013 (12) TMI 573
  SSI exemption Notification No. 1/93-CE – Cotton yarn manufactured and cleared without payment of duty – Clubbing of the value of clearances – Held that:- It is evident from the profit and loss account that the appellant paid the conversion charge and a lease rent for use of the machineries - there are three different sheds with machineries available and various authorities had given the registration for both the units - Merely because one partner is common in both the units and the other partners of both the units are in the same family, it cannot be held that the units are one - There is no material to show that there was any financial flow back among the two units – Relying upon CCE Vs. Electro Mechanical Engg. Corporation [2008 (7) TMI 77 - SUPREME COURT ] - when a show-cause notice proposed for clubbing the value of clearances for two units and notice was issued only one unit and not to the other, when the separate existence of both the units are projected, the notice is bad in law and the proceeding is liable to be set aside - the demand of duty, interest and penalty are not sustainable – Decided in favour of Assessee.

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• 2013 (12) TMI 572
  Suits pending from long time – Held that: Interim stay granted after a brief hearing - procedure laid down in Chapter XII of the Judicial Manual followed -Substantial time has been spent in identifying deserving cases & grant of relief of interim stay - this benefits neither the assessee nor the Revenue - Assessees continue to get notices and approach the Tribunal and officers continue to issue notices generating a lot of additional work for the Registry and the Bench adding thereby to the already grim pendency situation - If the time spent on such matters could be used to hear the listed stay applications, the Revenue can legitimately expect to gain from pre-deposit orders passed in cases where the assessees fail to make out prima facie case during such time. The circular and actions in pursuance thereof have mostly spoiled these chances of the Revenue - The cases falling within the exceptions, the field formations coming within the jurisdiction of the Tribunal shall not resort to any action as proposed in the Board’s Circular - where the Commissioner of Central Excise/Customs/Service Tax thinks that the assessee does not have a prima facie case & pre-deposit is to be ordered and where the Duty/Service Tax/CENVAT credit demanded is more than Rs. 1 crore, it will be open to the Commissioner concerned to file an application for out-of-turn hearing of the stay application filed by the assessee, certifying both the aspects - Such applications shall be listed to be considered within 30 days of filing.

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• 2013 (12) TMI 571
  Addition of Cost of Freight in the assessable value – Supply of goods made to electricity board – Held that:- Following CCE v. Accurate Meters Ltd. [2009 (3) TMI 1 - SUPREME COURT] -Transport contract does not appear to be based on distance and rate for payment of freight on actual basis, these payments were not required to be supported by any documentary evidence as per contract - Value of electricity meter was fixed at the factory gate and certain insurance charges were stipulated and freight charged on overall basis but not on actual basis - Separate transport contract not being on actual basis, respondent was to transport the goods at an agreed rate to electricity board - Once there were two contracts distinctly executed and known to both sides, it cannot be said that price of goods sold is to be enhanced taking freight into consideration The peculiar feature of the contract was not considered and the conclusion arrived that the freight shall not form part of the assessable value – Decided against Revenue.

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• 2013 (12) TMI 570
  Denial of exemption under Notification No. 89/95 CE - By product emerged out of manufacture process – Revenue was of the view that Rice Bran Fatty Acid, Rice Bran Wax and Rice Bran Gums are not waste – Waiver of Pre-deposit – Held that:- The Board is considering a plea of the Association against recovery of duty on items such as gums, waxes, soap stocks and fatty acids arising during the course of refining of crude vegetable oils - the appellant and other similarly situated manufacturers had represented to the Board for issue a notification under Section 11C in respect of by-products emerging during the course of manufacture of refined vegetable oils - A Circular issued by the Board way back in 2002 is against coercive recovery of duties on goods in respect of which survey has been floated. If that be the case, no pre-deposit should be ordered under Section 35F of the Central Excise Act which is a provision to safeguard the revenue during the pendency of the appeal in the Tribunal - the survey is going on and, in future, the Board may or may not come out with Section 11C notification - during the intervening period, there shall be no recovery – Thus, there will be no pre-deposit – stay granted.

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• 2013 (12) TMI 569
  Clandestine removal of cement - Excess quantity of Cement found in some bags – Held that:- Following C.C.E. v. Sagar Cements Ltd. [2004 (10) TMI 208 - CESTAT, BANGALORE] - The weighment of 10 bags were conducted in the premises and it was found that the bags were of the weight 51.070 kgs. 700 gms. is the weight of the bags hence the total quantity in excess is only one kg. - As per Board’s Circular dated 20-10-2008 the variation of 1% is allowed for cement filled in bag for the purpose of levy of Central Excise duty - as per the Standards of Weights and Measures (Packaged, Commodities) Rules, 1977 the maximum permissible error in relation to the packing is 2% in respect of cement bag. The Managing Director in his statement had never admitted that they were clearing the cement in excess to the quantity packed in the bags clandestinely and receiving consideration in respect of excess quantity - The respondent were clearing showing weight of the bag is 50 kg. and paying duty on 50 kgs. – Decided against Revenue.

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• CST, VAT & Sales Tax

• 2013 (12) TMI 629
  Applicability of Explanation 3 to Section 2(r) of the Tamil Nadu General Sales Tax Act, 1959 - Revenue was of the view that the separate value given to immovable and movable assets, intangible and tangible assets – Held that:- The intention of the parties was to sell Thoraipakkam and Ranipet Units, the authorities including the Sales Tax Appellate Tribunal committed serious error in holding that there was separate sale of immovable assets and movable assets by referring to the balance sheets and profit and loss account produced before the authorities - when the parties to the agreement had agreed upon the value for the sale of two units - the assessee had not agreed to piecemeal sale of business, on the mere fact that the purchaser had given the value of the immovable assets and movable assets separately by itself would not defeat the claim of the assessee for exemption from taxation - The sale of the entire stock-in-trade as such could not be treated as sale of business in entirety - the assessee continued to be in business and retained business in those units, the question of exclusion of turnover relating to stock in trade does not arise. The bifurcation of the price would not in any manner go against the intention of the parties viz., sale of entire unit at Thoraipakkam and Ranipet in favour of the purchaser and going by the various terms of the agreement - there was no justifiable ground to accept that the sale consideration would form part of the turnover – Following Deputy Commissioner (C.T)., Coimbatore Vs. K.Behanan Thomas [1976 (4) TMI 202 - MADRAS HIGH COURT] - when there is transfer of business as a whole even if it be an unit, were two independent units, Explanation 3 to Section 2(r) of the Tamil Nadu General Sales Tax Act, 1959 cannot be attracted to the assessee - The demand as well as the penalty levied on the assessee set aside – Decided in favour of Assessee.

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