TMI Tax Updates - e-Newsletter
December 14, 2015

Case Laws in this Newsletter:

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

Articles

1. REVIEW OF ORDER

   By: DR.MARIAPPAN GOVINDARAJAN

2. Invoice under Service Tax

   By: Ganeshan Kalyani

3. Cenvat credit is allowable of Service tax paid on the insurance premium to the Insurance Company for Group Insurance and medi-claim policies taken for existing employees as well as for the retired employees

   By: Bimal jain

News

1. Value of Indian Rupee

2. Repo Rate and Inflation

3. CCI Invites Comments from Public in Respect of Proposed Combination between PVR Limited and DT Cinemas

4. Government Approves Seven (07) Proposals of Foreign Direct Investment (FDI) Amounting to ₹ 5240.35 Crore Approximately

5. High Level Committee constituted by the Government to suggest measures for monitoring the progress of implementation of Corporate Social Responsibility (CSR)

6. Serious Fraud Investigation Office (SFIO)

7. National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT)

Notifications

Customs

1. 56/2015 - dated 11-12-2015 - Cus

Seeks to further amend notification No 39/96-Customs dated 23.07.1996

Circulars / Instructions / Orders

Customs

1. F. No. 528/22/2015-STO (TU) - dated 11-12-2015

Clarification on classification of Biodiesel under oleochemicals

Highlights / Catch Notes

Income Tax

• US Court Penalty Payments to Government Not Tax Deductible Under Income-tax Act, 1961, Says AAR.

  Case-Laws - AAR : Tds on penalty amount - whether the Penalty Amount payable pursuant to the Final Judgment/Decree of the US Court and paid to the Government of USA/US Court would be liable to tax deduction at source under the provisions of the Income-tax Act, 1961? - Held No - AAR
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• Interest u/s 234B stops at total income determination date, not extended by revisional or appellate orders.

  Case-Laws - HC : Interest u/s 234B - the liability would end on the date of determination of total income u/s 143(1) or, in case of regular assessment, the date of such assessment. In view of such clear language of Section 234B(1), there is no scope for extending such liability to a later date and relate it to a revisional appellate or a rectification order as is desired by the revenue. - HC
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• Foreign Trips for Doctors Allowed as Business Expenses for Tax Purposes Despite Ethical Concerns.

  Case-Laws - AT : The only purpose of the assessee company to sponsor the foreign trip of the doctors was for the purpose of promotion and sale of the products of the assessee company. It may be unethical practice for the doctors to accept such type of incentives, however, so far as the assessee is concerned, sponsorship was purely on account of business angle of the assessee company - expenditures allowed - AT
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• Machinery repair costs exceeding 20% of WDV shouldn't automatically be capitalized; no such rule exists.

  Case-Laws - AT : Disallowance of machinery repair expenses - There is no such ratio propounded that as and when a repair exceeds 20% of the WDV, the same would need to be capitalized. - AT
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• Taxpayer Fails to Overturn DVO's Valuation Report u/s 50C; Lacks Evidence to Dispute Capital Gains Tax.

  Case-Laws - AT : Taxing of capital gain by invoking the provisions of section 50C on the sales of property - the assessee should have rebutted the entire DVO’s report before the CIT(A) by evidence and proper material as to how and why the DVO’s report cannot be relied upon and the assessee’s sale value is actually the fair market value. Here such an exercise has not been done by the assessee - AT
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• Trust Permitted to Use Later Year's Income for Earlier Charitable Expenditures Due to Accounting Practices.

  Case-Laws - AT : The trust had incurred expenditure on religious and charitable purposes from the income of the subsequent year, even though the actual expenditure was in the earlier years, if in the books of account of the trust such earlier expenditure had been set off against the income of the subsequent year - AT
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Customs

• SVB Accepts Invoice Price as Transaction Value; Customized Goods Exempt from Comparing Similar Imports Per OIO and Order.

  Case-Laws - AT : Valuation - SVB has accepted the invoice price as transaction value - When the goods are customised as clearly recorded in the OIO as well as in the impugned order, the comparison of contemporaneous imports of similar goods or identical goods does not arise. - AT
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• CHA License Revoked for Serious Offense: Lack of Authorization from Non-Existent Exporter and Due Diligence Failure.

  Case-Laws - AT : Revoking the CHA licence of the appellant - Offense is really grave inasmuch as no authorization was obtained from the exporter, the exporter was found to be non-existent and no due diligence whatsoever was undertaken. - punishment awarded is not unreasonable and excessive - AT
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• 4% SAD refund via re-credit post-June 30, 2013, upheld; exemption rights can't be revoked by circulars.

  Case-Laws - AT : Refund of SAD - whether sanctioning of 4% of SAD refunds by way of re-credit in the respective licenses after 30-6-2013 was proper or not - a right given under an exemption notification cannot be taken away by the issue of Departmental Circulars - AT
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Service Tax

• CENVAT Credit Denied for Services Preceding Output Service Start Date in 2008; Timing is Crucial for Eligibility.

  Case-Laws - AT : CENVAT Credit - Renting of Immovable Property service as input service - Authorized service station service being output service - When the appellant has started providing output service only on 7.9.2008, renting of immovable property prior to 7.9.2008 is not eligible for credit. - AT
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Central Excise

• Supreme Court to Review Interest on Differential Duty Paid via Supplementary Invoices u/s 11AB.

  Case-Laws - SC : Demand of interest - Supplementary invoices - whether interest is leviable u/s 11AB on the differential duty amount paid under supplementary invoices due to price increase by virtue of price variation clause in the sale contract - SC referred the matter to larger bench
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• Court Finds No Basis for Demand in Gutka, Pan Masala Case; Machine Declaration Rules Not Violated.

  Case-Laws - HC : Allegation of Suppression of production - manufacture of gutka and pan masala under the brand name ‘Vimal’ - At the relevant time there was no bar against an Assessee having more machines than what was declared as long as the machines that were operational tallied with the number declared - No demand - HC
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• High Court Overturns Penalty on Three for Duty Evasion; Lack of Evidence Violated Rule 26, Central Excise Rules 2002.

  Case-Laws - HC : Imposition of personal penalty on 3 persons for duty evasion by the manufacturer - the requisite evidence necessary for levy of penalty on each of the Appellants under Rule 26 of the CE Rules 2002 was not brought on record by the Department - no penalty - HC
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• Court Overturns Demand for Acid Slurry Removal Due to Lack of Evidence and Reliance on Assumptions and Theoretical Calculations.

  Case-Laws - AT : SSI Exemption - Clandestine manufacture and removal of goods - Estimation of production - electricity consumption - Entire demand of clandestine removal of acid slurry has been made based on assumption and theoretical calculations by arriving taking notional quantity of LAB - demand set aside - AT
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Case Laws:

• Income Tax

• 2015 (12) TMI 635
  Tds on penalty amount - whether the Penalty Amount payable pursuant to the Final Judgment/Decree of the US Court and paid to the Government of USA/US Court would be liable to tax deduction at source under the provisions of the Income-tax Act, 1961? - Held that:- It is trite law that unless the payment made attracts the tax under the Income Tax Act, there would be no liability to deduct tax under Section 195 of the Income Tax Act. A penalty ordered by the US Court can never attract any tax nor would such a payment made by the applicant attracts any tax liability. It is, therefore, axiomatic that the payment being a penalty amount as ordered by the court of competent jurisdiction for the same, can never attract any such tax liability. Hence, the applicant would not be required to deduct any such amount under Section 195. The law is very clear on this aspect. Mr. Srivastava appearing for the Department very fairly stated and, correctly in our opinion, conceded that there would be no necessity of deducting tax from the penalty amount of 10 million US $.

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• 2015 (12) TMI 634
  Transfer pricing adjustment - determination of arm’s length price (‘ALP’) of the advertisement, marketing and sales promotion (‘AMP’) expenses incurred by the Assessee, MSIL - Held that:- Question stands answered by the judgment in Sony Ericsson viz. [2015 (3) TMI 580 - DELHI HIGH COURT ] that the TPO could have examined the question whether AMP expenses by themselves constitute an international transaction in the absence of any specific reference being made in that behalf by the AO. Whether under Chapter X of the Income Tax Act, 1961, a transfer pricing adjustment can be made by the Transfer Pricing Officer/ Assessing Officer in respect of expenditure treated as AMP Expenses and if so in which circumstances? - Held that:- Question No.2 is answered in the negative i.e. in favour of the Assessee and against the Revenue. In other words, it is held that AMP expenses incurred by MSIL cannot be treated and categorised as an international transaction under Section 92B of the Act. Since answer to Question above is in favour of the Assessee, the question of the TPO making any transfer pricing adjustment in respect of such transaction Chapter X does not arise and, therefore, question (3) is answered in the negative and in favour of the Assessee and against the Revenue. Whether the Income Tax Appellate Tribunal was right in directing that fresh bench marking/comparability analysis should be undertaken by the Transfer Pricing Officer by applying the parameters specified in paragraph 17.4 of the order dated 23.01.2013 passed by the Special Bench in the case of LG Electronics India (P) Ltd. [2013 (6) TMI 217 - ITAT DELHI ]?” - Held that:- Question is answered in the negative i.e. in favour of the Assessee and against the Revenue. It is held that the ITAT was not right in directing a fresh benchmarking comparative analysis to be undertaken by the TPO in view of the decision of the Special Bench of the ITAT in LG Electronics India Pvt. Ltd.

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• 2015 (12) TMI 633
  Entitlement to additional depreciation - machinery used to broadcast radio programs in the FM channel - ITAT allowed the claim - Held that:- In the facts and circumstances of the present case, the Assessee can be said to have used the plant and machinery acquired and installed by it after 31st March 2005 for manufacture/production of an ‘article or thing.’ Since the Assessee has satisfied the requirements of Section 32 (1) (iia) of the Act, it is entitled to the additional depreciation as claimed by it for the AY in question. The Revenue has also no answer to the submission of the Assessee for AYs 2009-10 and 2010-11 its claim for additional depreciation has been allowed by the AO. - Decided in favour of assessee. Depreciation on Licence Fee i.e. a non-intangible asset - Held that:- No provision of the Act has been brought to the notice of the Court which states that an Assessee would be denied the claim of depreciation on intangible assets only because there was no claim also on the tangible asset. For the purpose of Section 32 it is sufficient that assets be kept ready for use in order to claim depreciation thereon. As decided in Capital Bus Service Pvt. Ltd. (1980 (2) TMI 69 - DELHI High Court ) it was held that while interpreting the expression ‘used’ “it would be more appropriate to envisage the expression as comprehending cases where the machinery is kept ready by the owner for its use in the business and the failure to use it actively in the business is not on account of its incapacity for being used for that purpose or its non-availability. - Decided in favour of assessee.

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• 2015 (12) TMI 632
  Undisclosed sale of plot - Assessing Officer said that the assessee had paid an aggregate amount of Rs. 7,10,22,110/- during the assessment year 2006- 07 and had failed to explain the source of the same. Since the documented price of Block No.509, 500, 494, 504 and 510 was Rs. 58,11,901/-, the Assessing Officer treated the difference of amount of Rs. 6,52,10,209/- as the deemed income of the assessee under section 69 - ITAT deleted the addition - Held that:- From the concurrent findings recorded by the Tribunal, it is evident that the appellants have not been able to establish the fact that any funds have actually been paid by Vivek Patel to the sellers. While the sellers have stated that they have received the funds by a representative of Vivek Patel, the name of such person has not been disclosed nor have the dates on which such funds have been received come on record. A perusal of the power-of-attorney on which strong reliance has been placed on behalf of the appellant to contend that it establishes a link between the assessee and Vivek Patel, shows that the same has been executed by one of the sellers in favour of Vivek Patel in relation to one of the plots purchased by the assessee, but, significantly, such power-ofattorney has been found to be from the possession of the seller and not from Vivek Patel. Therefore, there is no material on record that prior to the search, Vivek Patel acted upon such power of attorney so as to establish a link, howsoever tenuous, between the assessee and Vivek Patel. As noticed earlier, the assessee has denied having paid any more consideration than that reflected in the sale deed executed in his favour. Vivek Patel has denied having paid any consideration to the sellers pursuant to the agreement to sell. The revenue has failed to bring any reliable material to establish payment of consideration by Vivek Patel to the sellers or to establish any link between the assessee and Vivek Patel, who have both asserted that they did not know each other prior to the search. Under the circumstances, on the evidence which has come on record, the revenue has failed to establish that any higher consideration has been paid by the respondent assessee in connection with the sale deeds executed in his favour by the sellers in respect of the plots of land in question. The conclusion arrived at by the Tribunal is based upon findings of fact recorded by it upon appreciation of the evidence on record. The learned counsel for the appellant, despite strenuous efforts, is not in a position to point out any perversity in the findings recorded by the Tribunal. In the opinion of this court, having regard to the evidence which has come on record, which reveals that there is an agreement to sell executed between Vivek Patel and the sellers, which reflects the price of the plots of land in question to be a much higher figure than the documented price and the fact that the sellers have stated that they have received higher amounts by way of on-money and have also shown receipt of such amount in their income-tax returns, the circumstances do raise a suspicion. However, as held by the Supreme Court in Commissioner of Income-tax v. Daulatram Rawatmull, (1964 (3) TMI 14 - SUPREME Court ), even if circumstances raise a suspicion, suspicion cannot take the place of evidence.- Decided against revenue

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• 2015 (12) TMI 631
  Addition u/s 68 - ITAT deleted the addition - Held that:- As based on the documents and the records of the revenue and other bank statements and financial transaction available, the finding of fact has been recorded by the Tribunal to say, that identity and creditworthiness of the lender and the transactions have been established. For the reasons as indicated hereinabove, and also lender Shri Juned Qazi to be an NRI, who has submitted his entire financial transaction and his creditworthiness is said to have been established. This being the finding of fact by the learned Appellate Tribunal which consisted of a Judicial Member and an Accountant Member, based on due consideration of materials available. Decided in favour of assessee.

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• 2015 (12) TMI 630
  Withholding of the silver bullion - Held that:- It has been an admitted fact that a routine checking has been conducted during the Lok Sabha election in the year 2014 and M.P. Assembly election in the year 2013. Moreover, according to the requisition filed by the assessee petitioner, it clearly indicated from the books of accounts that the goods belonging to Rupam s/o Rajendra Gorecha and all necessary documents were filed before the Income Tax Department and the application under Section 132-A(1)(c) of the Income Tax Act was not at all justified. Considering the facts, we find that neither the police nor the Commissioner, Income Tax had at the stage of proceedings gathered any information on record regarding the ownership of the silver to dispute the version of the assessee company. It was then fallacious on the part of the learned Judge of the lower Court, Badnagar, Ujjain to have entertained the application under Section 132-A of the ITA by the department. At the same time the fact drawn to the notice of this Court that the proceedings under Section 132-A (1)(c) of the ITA regarding assessment of the assessee company is still pending consideration before the Assessment Officer. We find that the learned Judge of the lower Court was right in considering the payment of security on production of silver bullion etc.and hence, there is no infirmity in the impugned order in this regard. The condition was imposed by way of abundant caution. Both the writ petitions are disposed of by holding that the impugned order dated 23/4/2014 is set aside and it is directed that fresh application be moved by the assessee company and liberty is granted to the Income Tax Department to move an application under Section 132-A, if it has come to any fresh information regarding the ownership of the silver bullion etc.

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• 2015 (12) TMI 629
  Prosecution under Section 276C(1) - willful attempt to evade tax by the petitioners by the Income Tax Department before the Special Court Economic Offence, Jaipur be stayed/suspended during the pendency of the present petition - Held that:- The order dated 28.06.2013 passed by the Settlement Commission is indeed under challenge before this Court. The petitioners appear to have made out a prima facie case with regard to lack of jurisdiction of the Settlement Commission for the reason that vide order dated 17.10.2014 on proceedings commencing with an interim order in the present writ petition, the Hon'ble Supreme Court has required the petitioners to deposit only Rs. 3 crores of Rs. 30 crores of the due tax “assessed” by the Settlement Commission. It also prima facie appears that in view of the state of law prior to the amendment of the Act of 1961, effective 1st June, 2007 as reflected in the judgment of the Hon'ble Apex Court in the case of Ajmera Housing Corporation (2010 (8) TMI 35 - SUPREME COURT OF INDIA), the Settlement Commission had no jurisdiction to make a regular assessment qua an applicant who approached it for a settlement under Section 245C(1) of the Act of 1961. No clearly enunciated amendment altering this state of law has been brought to my notice. That no change of a substantive nature was made appears to be an admitted fact as reflected in the judgment of the Delhi High Court in the case of Commissioner of Income Tax Vs. Income Tax Settlement Commission & Ors. [2013 (7) TMI 95 - DELHI HIGH COURT] where even after the amendment of the Act of 1961, effective 1st June, 2007, the Income Tax Department itself relied upon the Ajmera Housing Corporation (supra) decided by the Apex Court prior to the amendment, to put forth its contention on the limitations of the jurisdiction of the Settlement Commission and for it not to exceed its brief beyond the application for settlement filed before it. The issue before this Court regarding the power of the Settlement Commission, despite finding lack of true and full disclosure, to make a regular assessment qua the applicant before it, is in the circumstances a seriously contested one in respect of which no definitive opinion can be formed at the interim stage, as it would require an extended hearing. Consequently, in the overall facts of the case, would direct that even though the prosecution against the petitioners initiated by the Income Tax Department may continue during the pendency of the petition, no final order thereon be passed till further direction of this Court. During their prosecution, the petitioners shall be free to take their remedies in accordance with law.

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• 2015 (12) TMI 628
  Interest u/s 234B - upto which date interest under Section 234B can be admitted - ITAT directing the Assessing Officer to charge interest u/s 234B after giving effect to the order of the Tribunal till the date of order of original assessment - Held that:- Section 234B has two parameters. One is the principal on which such interest would be computed and the other is the period, during which, such interest liability would arise. Two terminal points of the liability are the 1st of April next following the financial year in question and the date of determination of total income under Section 143(1) assessment or the date of regular assessment as the case may be. Sub- section (4) of Section 234B, however, further provides that where, as a result of an order under rectification or revision etc., the amount on which interest is payable under sub-section (1) is increased or decreased, the interest will also correspondingly increased or decreased. Sub section (4) of Section 234B of the Act thus only pertains to the adjustment of the principal on the basis of any change in the principal liability of the tax of the assessee and has no reference to the two terminal points of time for which the interest liability would arise under sub-section (1). Here, the liability would end on the date of determination of total income under Sub-section (1) of Section 143 of the Act or, in case of regular assessment, the date of such assessment. In view of such clear language of sub-section (1) of Section 234B of the Act, there is no scope for extending such liability to a later date and relate it to a revisional appellate or a rectification order as is desired by the revenue. Tribunal, in the present case, has followed the decision in case of Frightship Consultants P. Ltd. vs. Income Tax Officer reported in [2007 (5) TMI 259 - ITAT DELHI-A] referring to the decision of Supreme Court in case of Modi Industries Ltd. vs. CIT [1995 (9) TMI 324 - SUPREME Court] to hold that the term 'regular assessment' would mean the original order of assessment and would not include any other debt of the consequential order which can be treated as the debt of the regular assessment - Decided against revenue

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• 2015 (12) TMI 627
  Validity of assessment under section 153A - whether the assessments were completed within the time stipulated therein? - Held that:- In the present case, as noted by the ITAT, there is only one authorisation which was issued on 20th March 2007. The panchnama drawn up on 23rd March 2007 shows that the search that commenced on that date i.e., 23rd March 2007 stood finally concluded on that date itself. It appears that no further authorisation had been issued for the search of the Assessees who are the Respondents in these appeals. Consequently, the Revenue cannot take advantage of the restraint orders passed in respect of other persons in order to seek extension of the time period for completion of the assessment proceedings in terms of Section 153B qua the Respondent Assessees herein. Even assuming that the restraint orders were validly passed, once the search stood concluded on 23rd March 2007 in respect of these Assessees, in the absence of a fresh authorisation for another search, the time period for conclusion of the assessment in terms of clause (i) of the second proviso to Section 153 B (1) of the Act does not get extended only because their names were included in the panchnama drawn up on 15th May 2007. It is possible that their names were included in the said panchnama drawn up on 15th May 2007 in order to avoid the consequence of expiry of the period of limitation which, as far as these Assessees are concerned, commenced on 23rd March 2007, when the search "finally concluded". Thus the impugned order of the ITAT, holding that the assessments in question were barred by limitation, and therefore liable to be quashed, does not call for any interference. - Decided against revenue.

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• 2015 (12) TMI 626
  Addition on account of suppression of sales - rejection of the books of account - ITAT deleted the addition - Held that:- Tribunal being a final fact finding authority has not examined the material and evidence on record. Detailed reasons have not been given for deleting the additions. Consequently, the impugned order is set aside and the matter is remanded to the Tribunal to decide it afresh after hearing learned counsel for the parties in accordance with law and giving detailed and cogent reasons. The appeals stand disposed of. - Decided in favour of revenue for statistical purposes.

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• 2015 (12) TMI 625
  Deductions under Section 80HH and 80I - non adjusting the losses of other loss making industrial undertakings of the same assessee with the profit of eligible profit making units as directed by ITAT - Held that:- In Bajaj Motors P. Limited's case (2011 (3) TMI 475 - PUNJAB AND HARYANA HIGH COURT ), identical issue was considered by this Court. In the said case, the assessee manufactured automobile parts at Gurgaon. It was entitled to deduction under section 80I of the Act. The Assessing Officer took into account loss of the assessee in another manufacturing unit. It was held that the benefit under section 80I of the Act was referable to total income which was required to be worked out after taking into account the loss, if any. This view was upheld by the CIT(A) as well as the Tribunal. This Court while dismissing the appeal of the assessee held that in computing the quantum of deduction under section 80I of the Act, out of the profits and gains of unit No.1, the loss incurred in another independent unit No.2 should be set off against the profits of unit No.1 - Decided in favour of the revenue

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• 2015 (12) TMI 624
  Chargeable income u/s 29 - whether once the claim of the appellant as 'business' of accommodation entries is accepted, then the 'charge' has to be computed in accordance with the 'integrated scheme of taxation' of Income Tax Act, 1961? - Held that:- As decided in Commissioner of Income-tax Versus Kap Scan and Diagnostic Centre P. Ltd. [2012 (6) TMI 620 - Punjab and Haryana High Court] assessee would not be entitled to deduction of payments made in contravention of law. Similarly, payments which are opposed to public policy being in the nature of unlawful consideration cannot equally be recognized. Disallowance of the claims made by certain assessees in respect of payments on account of protection money, extortion, hafta, bribes, etc., as business expenditure. It is well decided that unlawful expenditure is not an allowable deduction in computation of income. Further, the addition had been made to the total income under Sections 68 and 69 of the Act as the cash was found credited in the books of account of the assessee and had been invested in the bank account of the assessee. In such circumstances, no fault can be found with the orders of the Assessing Officer, the CIT(A) and the Tribunal which may warrant interference by this Court. - Decided against assessee.

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• 2015 (12) TMI 623
  Dealership deposit disallowed - ITAT deleted the addition - Held that:- The Tribunal scrutinized the record and found that apart from giving the particulars of cheque and demand draft the assesse has also furnished photocopy of Vouchers and bank statement and from these records it is found that these amounts were credited through bank transactions. It is also found in addition thereto entries of the withdrawn and deposits are available in the bank’s passbook and other bank documents filed by the assessee. That being so it is reasonable finding of facts, arrived at on due appreciation of the evidence on records and, therefore, no error is committed by the tribunal warranting reconsideration, accordingly we find no ground to go into this question.- Decided against revenue Late deposit of provident fund - ITAT deleted the addition - Held that:- Amount deposit with the statutory provident fund authority is within the period stipulated including the grace period, therefore, the reason for disallowance is not permissible and such disallowance has been interfered with. It is found by the learned tribunal that for the sum of Rs. 2,40,980 as the same was not deposited in time, no relief can be granted, but for the remaining amount deposited with the provident fund in time, as per law, the benefit is extended. This is also finding of fact based on due appreciation of the evidence and the material available on record and therefore we find no substantial question of law arising for consideration in this appeal. - Decided against revenue

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• 2015 (12) TMI 622
  TDS u/s 194H - Non-deduction of TDS on payment made to M/s ACE Calderys Limited - ITAT held that the transaction is in the nature of principal to principal and not principal to agent basis - Held that:- Even though the Assessing Officer held M/s ACE Calderys Limited to be a broker of the assessee and liable for deduction under section 194-H, the appellate authorities found that the assessee company sells the branded product to M/s ACE Calderys Limited at mutually agreed price and the appellant’s liability in respect of the product sold ceases as soon as the products are dispatched from the premises of the appellant for delivery. It was found that the product order, dispatch instructions etc are given by M/s ACE Calderys Limited, and even particulars of the party to whom supply is made is given by M/s ACE Calderys Limited alongwith the quantity to be dispatched, the billing rate etc. Thereafter, in the invoice prepared for payment of Excise, M/s ACE Calderys Limited is shown as the consignee and the person to whom the purchase is made is shown as the purchaser of M/s ACE Calderys Limited. The appellant company raises commercial invoices in the name of M/s ACE Calderys Limited on mutually agreed prices. It was also found that documents required for Excise Act, Central Sales Act and General Sales Tax are issued to the appellant by M/s ACE Calderys Limited, who was responsible for making payment of commercial invoices raised by the appellant company and the responsibility of settlement of any dispute for loss etc was solely on M/s ACE Calderys Limited. - Decided against revenue

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• 2015 (12) TMI 621
  Unexplained cash credit u/s 68 - cash gift received by the assessee - Held that:- The assessee has not brought out any new facts or submissions on record, no documentary evidences have been referred in these written submissions, and no proper book has been filed before us to negate the findings of Ld CIT(A), and to substantiate the claim made by the assessee. No reasoning has been given in the written submissions to assail the detailed findings given by the Ld. CIT(A) against the genuineness of impugned gifts. It is noted, general and vague submissions have been made in these written submissions, but on the other hand, the AO has made detailed discussion and has given detailed findings and reasoning in the assessment order while making additions, which have been further elaborated by Ld. CIT(A) and he has given categorical findings to establish that the alleged gifts were not genuine. These findings remain uncontroverted, no interference is called for therein, and therefore these are confirmed. - Decided against assessee.

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• 2015 (12) TMI 620
  Unexplained purchases - estimation of income - Held that:- It is not in dispute that the assessee made sales out of the purchases made from grey market and even if some benefit is accrued it has to be in tune with the normal profit earned in this line of business. We are concerned with A.Ys. 2009-10 and 2011-12 wherein the assessee has declared gross profit of 19.49% and 18.85%. For A.Y. 2008-09 she declared 22.34% GP and for 2013-14 it was 22.46%. Thus by taking into consideration the additional benefit, if any, availed by the assessee by making purchases in the grey market, I am of the view that an estimate of income at 22.5% of the gross purchases would meet the ends of justice and I direct the AO accordingly. In other words, addition reference to 22.5% of purchases made in grey market is hereby directed to be added to the total income. As regards interest charged under section 234A, 234B and 234C of the Act, as rightly observed by the learned CIT(A), the AO has no discretion in this regard. However, the assessee would get substantial relief, if any, in the light of the fact that the disallowance is scaled down further. - Decided partly in favour of assessee.

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• 2015 (12) TMI 619
  Disallowance expenses - company to sponsor the foreign trip of the doctors - CIT(a) deleted the addition - Held that:- The assessee is in the business of manufacturing and marketing of medicines and skin care products. There is a stiff competition in the market for the sale of the identical products manufactured by other companies. It is commonly known that the medicine companies sponsor the trips of the doctors to overseas so as to influence them to prescribe the medicines manufactured by their company. The assessee had produced a set of photographs to show that by sponsoring of the foreign trips, the product awareness exercise was also done. It is not the case of the Revenue that the persons/doctors whose overseas trip was sponsored were otherwise in any manner related to the assessee company. The only purpose of the assessee company to sponsor the foreign trip of the doctors was for the purpose of promotion and sale of the products of the assessee company. It may be unethical practice for the doctors to accept such type of incentives, however, so far as the assessee is concerned, sponsorship was purely on account of business angle of the assessee company. We, therefore, do not find any justification on the part of lower authorities in disallowing the said expenditure. Accordingly, the order of the ld. CIT(A) is set aside the addition made on this issue is deleted and the appeal of the assessee is allowed. - Decided in favour of assessee.

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• 2015 (12) TMI 618
  Eligibility for exemption u/s 54EC - whether the investment was made by the assessee within the six months from the transfer of the original asset as prescribed u/s 54EC - Held that:- The assessee had filed an application with National Housing Bank on 23.12.2004 and submitted along with this application Cheque No.669766 drawn on bank of India, Mulund Branch Mumbai, dated 23.12.2004. This fact has not been disputed by the Ld. DR appearing on behalf of the revenue. Thus, assessee has clearly made the investment within the period of 180 days also. Thus, viewed from any angle it can be safely said that the assessee has made investment within the period of six months. The assessee should be granted the benefit of deduction and the same has been wrongly denied to the assessee. - Decided in favour of assessee.

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• 2015 (12) TMI 617
  Disallowance of business expenditure - Held that:- The assessee has already purchased residential flat for the purpose of resale/lease, and therefore assessee was apparently ready to do its business. Under these circumstances, it can be said that the business is set up by the assessee during the year under consideration. For the deductibility of expenses incurred after this stage, earning of the business income is not a mandatory condition under the law. The assessee may not have been successful in getting customers or earning the business income, but if the assessee has done requisite preparations and if the assessee can be said to be in a position to cater to its customers, then it can be said that business is set up and it would amount to carrying on the business and accordingly the expenses would stand allowable to the assessee, irrespective of the fact whether actually assessee got any customer and earned any business income during the year or not. Thus, the disallowance made by the AO is contrary to law and facts and the same is deleted and the AO is directed to allow the expenses claimed by the assessee - Decided in favour of assessee.

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• 2015 (12) TMI 616
  Denial of deduction u/s.80IA(4) - whether Government or Statutory body is the developer of infrastructure facility and here appellant is not entitled to deduction under the section? - Held that:- As decided in CIT vs. ABG Heavy Industries Ltd or operates and maintain; or develops, maintains and operates an infrastructural facility. In other words a developer who only develops (i.e., constructs) an infrastructural facility is not envisaged to operate and maintain such facility, cannot be accepted to fulfil the condition in clause (c) of sec. 80IA( 4) since it would be an impossibility. Therefore, in view of the construction placed by the Hon’ble Bombay High Court on the requirements of clause (c) of sec. 80IA( 4)(i) requiring it to be harmoniously read with the main sec. 80IA( 4), we do not find substance in the objection raised by the Revenue. - Decided in favour of assessee

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• 2015 (12) TMI 615
  Disallowance of claim of bad debt - Held that:- While loss on account of writing off the trade advances is, in principle, admissible as deduction under section 28 of the Act, in the light of the law laid down by Hon’ble jurisdictional High Court in the case of CIT vs. Abdul Razak & Co. (1981 (2) TMI 27 - GUJARAT High Court), the factual elements embedded in stand of the assessee remain unsubstantiated. It is for the assessee to demonstrate at least by way of corroborative evidences, that the amounts were advanced in the course of, and for the purposes of business and have become unrecoverable. No such exercise has been carried out on the facts of this case. We, therefore, approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter. - Decided against assessee. Disallowance of expenditure on club membership etc. - Held that:- We find that the expenses in question are in respect of renewal/annual fee for credit card issued to Shri M.T. Tahakkar and Shri N.J. Thakkar. These are not as such, club expenses. It is also not in dispute that these cards were used for the purposes of business of the assessee. In view of these discussions, as also bearing in mind entirety of the case, we uphold the grievance of the assessee and direct the Assessing Officer to delete the impugned disallowance. - Decided in favour of assessee. Disallowance of notional interest on interest free advances - Held that:- As the assessee had sufficient interest free funds, and, therefore, no disallowance could be made in respect of notional interest on interest free advances given by the assessee. She, however, fairly admits that this aspect of the matter has not been examined by any of the authorities below, and, therefore the matter can be remitted to the file of the Assessing Officer for this purpose. Learned Departmental Representative does not seriously oppose this prayer but submits that the matter should be left open, without any observations on the merits. In view of thee discussions, and with the consent of the parties, the matter stands restored to the file of the Assessing Officer for adjudication de novo. Addition u/s 41(1) - Held that:- As far as this addition is concerned, it was added as income of the assessee on the ground that it represented ceased liability but then, as pointed out to us by the learned Counsel for the assessee, it has been subsequently reopened by the assessee. This fact was not before the Assessing Officer. In view of this development, and with the consent of the parties, this issue is also restored to the file of the assessing Officer for adjudication de novo.

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• 2015 (12) TMI 614
  Disallowance of machinery repair expenses - CIT(A) deleted the addition - Held that:- There is no rebuttal to the CIT(A)’s findings about kerosene, diesel oil expenses. And also that each head is of less than Rs. 25,000/- except in one case. Revenue fails to single out a case wherein any repair item gives enduring advantage or increases machine capacity. It quotes case law of Mahalaxmi Textile [1967 (5) TMI 4 - SUPREME Court ] and Ballimal Navalkishor (1997 (1) TMI 3 - SUPREME Court) in support. We find the former judicial verdict upheld the tribunal’s reference made to the concerned high court as the nature of expenditure involved. The latter precedent holds that when purpose of the repair in question is of preserving or maintaining already existing asset, it would amount to corrent repair only. There is no such ratio propounded that as and when a repair exceeds 20% of the WDV, the same would need to be capitalized. The Revenue fails to justify the Assessing Officer’s view abovesaid. - Decided against revenue Bad debts disallowance - CIT(A) deleted the addition - Held that:- The case file reveals that the assessee maintained two accounts under the heads security ledger deposits and a running one. Its former sum of security deposits could not be recovered despite exercising all civil and penal remedies (supra). The same proves non-recoverability thereof. The lower appellate authority also allows it as a business loss by following tribunal’s order (supra). The Revenue fails to point out any distinction on facts or quote any case law to the contrary. We affirm the CIT(A)’s argument in these circumstances - Decided against revenue

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• 2015 (12) TMI 613
  Penalty under section 271(1)(c) - undisclosed payments - Held that:- The assessee has made payment of Rs. 70,000/- to Shri Dinesh Jethwa, meaning thereby, this party is a genuine party, it has relation with the assessee, otherwise has no occasion to make a payment of Rs. 70,000/- also. The assessee failed to substantiate the remaining payment. Therefore, in our opinion, the assessee has an explanation, which cannot be proved as a false by the AO. It is a different matter that the assessee failed to substantiate its explanation. This aspect is to be appreciated in the light that the AO has disallowed sub-contract expenses of Rs. 3,41,38,500/-. The ld.CIT(A) has only upheld the disallowance of Rs. 87,35,038/- which has been further reduced to Rs. 86,643/- by the Tribunal. In view of the above facts, the assessee does not deserve to be visited with penalty on this issue. As far as second amount is concerned, the ld.AO has made an ad hoc disallowance at 10% of the total administrative expenses. He disallowed a sum of Rs. 73,31,295/-. Out of which, the disallowance upheld by the CIT(A) is Rs. 5,33,909/-. It is an estimated disallowance from a payment of Rs. 7.33 crores. This amount has been disallowed for the reason that complete bills and vouchers could not be produced by the assessee. In our opinion, genuineness of the assessee’s claim to the extent of 99% was not in doubt. Therefore, on this ad hoc disallowance, the assessee should not be visited with penalty – his explanation is, otherwise, not false. In view of the above discussion, we allow the appeal of the assessee and delete the penalty. - Decided in favour of assessee.

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• 2015 (12) TMI 612
  Deduction u/s. 80IB(11A) - provisions of Sec.80AC ignored - whether no deduction under this section shall be allowed to an assessee who does not furnish a return of his income on or before the due date specified under sub-section (1) of section 139? - CIT(A) allowed the claim - Held that:- In the light of the decision of the Special Bench in the case of Saffire Garments (2012 (12) TMI 193 - ITAT RAJKOT) and Avasarala Technologies Ltd.(2013 (3) TMI 644 - ITAT BANGALORE), the plea raised on behalf of the Assessee cannot be accepted. Accordingly, we hold that provisions of Sec.80AC of the Act were mandatory and not directory, thus deduction u/s 80-IB(10) of the Act could not be allowed to an assessee who fails to furnish a return of income on or before the due date specified u/s 139(1) of the Act. We therefore reverse the order of CIT(A) and restore the order of the AO. - Decided against assessee.

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• 2015 (12) TMI 611
  Penalty u/s u/s 271(1)(c) - whether mere disallowance of any expenditure can not be treated as a case of concealment? - Held that:- The assessee had claimed the expenditure on interest incurred by the assessee to certain parties which was disallowed by the AO. We find that the claim of the assessee, in respect to loan from unsecured creditors, is not disputed and that disbursement of interest free loan have not been concealed by the assessee before the AO. Here we find that the claim made by the assessee is not a false claim. At best, it can be termed as a wrong claim, though the genuineness of the expenditure has not been suspected by the AO. So when the expenditure made by the assessee which was claimed as an allowable expenditure when disallowed by the AO cannot be termed as concealment or providing inaccurate particulars. Even if assessee firm engages assistance of tax consultants and then for the mistake of tax consultants, the assessee cannot be penalized. In the light of the above facts, we find that the instant case does not merit penalty to be levied against it. Therefore, we are inclined to delete the penalty levied against the assessee. - Decided in favour of assessee.

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• 2015 (12) TMI 610
  Taxing of capital gain by invoking the provisions of section 50C on the sales of property - Held that:- This is the second round of proceedings passed in pursuance of direction given by the Tribunal, wherein it was directed that the Assessing Officer will process the assessee’s claim u/s 50C(2)(a) and referred the matter to the DVO for ascertaining the fair market value. In pursuance thereof, the assessing officer had made the reference to the DVO who has valued the property at a higher value at Rs. 23,27,000/- as against the stamp duty valuation of Rs. 20,06,500/-. Section 50C is a deeming provision where fair market value has to be deemed at the value adopted by the stamp valuation authority. However, such a deeming provision will not apply, if the assessee claims that the value adopted or assessed by the stamp valuation authority exceeds the fair market value of the property as on the date of transfer. In case of such a claim, Assessing Officer has to refer the matter to the Valuation Cell and in such cases, the Assessing Officer is bound by such a valuation. Here in this case, since value adopted by the DVO is more than the stamp valuation, therefore, the Assessing Officer had rightly adopted the FMV as per the stamp valuation authority. To wriggle out from such a situation here in this case, the assessee should have rebutted the entire DVO’s report before the CIT(A) by evidence and proper material as to how and why the DVO’s report cannot be relied upon and the assessee’s sale value is actually the fair market value. Here such an exercise has not been done by the assessee. Accordingly, the order of the CIT(A) confirming the fair market value as per section 50C is affirmed. - Decided against assessee.

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• 2015 (12) TMI 609
  Disallowance of deduction u/s 54EC - as per certificate issued by Rural Electrification Corporation Limited (RECL) the deposit was beyond the prescribed period - CIT(A) deleted the addition as the deposit was made by the assessee within the prescribed time and delay was on account of issue of bond by the RECL - Held that:- We entirely agree with the order of the CIT(A). Admittedly, the assessee deposited the money in time with the REC Ltd. However, it was REC Ltd who took time to issue the certificate of the bond. The responsibility of the assessee is to make investment with REC Ltd within time, which was admittedly made. The assessee has no control over the issue of the certificate by the REC Ltd. In view of above, we do not find any justification to interfere with the order of the CIT(A) in this regard and the same is sustained. - Decided against revenue Addition on low household withdrawals - CIT(A) deleted the addition - Held that:- Withdrawal of Rs. 10,000/- per month for house-hold expenditure cannot be said to be adequate or reasonable withdrawal, though the estimate by the Assessing Officer at Rs. 1,00,000/- per month is also excessive. In our opinion, it would meet the ends of justice if the house-hold expenditure is estimated at Rs. 25,000/- per month, i.e., Rs. 3,00,000/- per annum. Therefore, after considering the withdrawal of Rs. 1,20,000/- per month, the addition is sustained at Rs. 1,80,000/-. There was no res adjudicata for the Assessing Officer for considering the reasonableness for the house-hold expenditure in this year. It was also contended by the ld. Counsel that the Assessing Officer made the addition merely on the basis of estimate. In our opinion, when no day to day details of expenditure of the house-hold is maintained by the assessee, then naturally by the very nature of the expenditure it has to be determined on estimate basis. Accordingly, we partly reverse the order of the CIT(A) in this regard and sustain the addition of Rs. 1,80,000/- for low withdrawal of house-hold expenditure. - Decided in favour of revenue in part Addition on account of difference of the amount of sale consideration in respect of sale of land by the assessee - CIT(A) deleted the addition - Held that:-As per section 48, capital gain is to be computed on the full value of the consideration received or accrued as a result of transfer of the capital asset. Admittedly, the full value of the consideration accrued was Rs. 32,00,000/-. Payment to Ms. Maya Garg, Proprietor of Shree Balaji Trading Co. was given as per the desire of the assessee. That, merely because the assessee could receive only the part money from Ms. Maya Garg would be no ground for reducing the full value of the consideration for the purpose of section 48. We, therefore, reverse the order of the CIT(A) in this regard and restore that of Assessing Officer. - Decided in favour of revenue

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• 2015 (12) TMI 608
  Diversion of interest bearing funds to one of its partner Shri Deepak Khanna for non business purposes - CIT(A) deleted the addition - Held that:- The interest in the case of firm has to be calculated on both the accounts of the partner in debit and credit by the Assessing Officer not only debit balance of the partner. The firm had not charged or paid any interest to the partner either on debit or credit since inception. Therefore, there is no justification in calculating the disallowance on debit balance of one of the partner namely Shri Deepak Khanna. The ld DR has also not controverted the finding given by the ld CIT(A). Therefore, we uphold the order of the ld CIT(A). - Decided against revenue

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• 2015 (12) TMI 607
  Entitlement to carry forward expenditure incurred in excess of its income for setting off against income of the succeeding years for a trust - Held that:- The income of the trust has to be arrived at having due regard to the commercial principles, that s. 11 is a benevolent provision, and that the expenditure incurred on religious or charitable purposes in earlier year or years can be adjusted against the income of the subsequent year. The principle that the loss incurred under one head can only be set off against the income from the same head is not of any relevance, if the expenditure incurred was for religious or charitable purposes, and the expenditure adjusted against the income of the trust in a subsequent year, would not amount to an incidence of loss of an earlier year being set off against the profit of a subsequent year. The object of the religious and charitable trust can only be achieved by incurring expenditure and in order to incur that expenditure, the trust should have an income. So long as the expenditure incurred is on religious or charitable purposes, it is the expenditure properly incurred by the trust, and the income from out of which that expenditure is incurred, would not be liable to tax. The expenditure, if incurred in an earlier year is adjusted against the income of a later year, it has to be held that the trust had incurred expenditure on religious and charitable purposes from the income of the subsequent year, even though the actual expenditure was in the earlier years, if in the books of account of the trust such earlier expenditure had been set off against the income of the subsequent year. The expenditure that can be so adjusted can only be expenditure on religious and charitable purposes and no other. - Decided against revneue

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• Customs

• 2015 (12) TMI 588
  Seizure of gold biscuits - onus to prove - Smuggling of gold biscuits - Held that:- Appellant has discharged the onus of licit acquisition of foreign marked gold biscuits by producing a bill.It is also observed from the first statement dated 5/9/2000 of Smt. Chhabi Biswas and Shri Joy Gopal Biswas that it was only their belief that said gold biscuits were from Bangladesh. It is also not coming out of the investigation as to how both of them believed that gold in their possession was of Bangladesh origin. As already observed trace leading to Joynal, mentioned by Shri Joy Gopal Biswas in his very first statement dated 5/9/2000, was not followed by investigation to establish that seized foreign marked gold biscuits were in fact smuggled into India. Reasonable doubt of smuggled nature of foreign marked gold may be sufficient for the purpose of seizure of gold, by virtue of Section 123 of the Customs Act, 1962, but the same is not sufficient for confiscation under Section 125 of the Customs Act, 1962 when appellant has produced legal document of their licit acquisition. Accordingly, it is held that department is not able to establish the smuggled nature of seized foreign marked gold whereas claimant appellant has been able to discharge his burden by providing licit document of the purchase of 60 foreign marked gold biscuits. In the light of liberalized policy of the Central Government it cannot be held that all the foreign marked gold being bought and sold in India is of smuggled nature. Statements of both Smt. Chhabi Biswas and Shri Joy Gopal Biswas were written by one of the panch witnesses Shri Chandan Dey. Even their first statements dated 5/9/2000 only convey that they believed that foreign marked gold came from Bangladesh. The trail of Joynal was not pursued by investigation. It was not existing in the statements of Smt. Chhabi Biswas & Shri Joy Gopal Biswas as to how the seized gold was brought into India and by whom. In the above factual matrix, subsequent statement of Shri Joy Gopal Biswas dt. 22/9/2000 recorded in Judicial Custody was more detailed, authentic and the trail given by Shri Joy Gopal Biswas and Shri Nitya Gopal Biswas was followed by investigation. Shri Laljibhai K. Soni confirmed to have sold the said 60 gold biscuits to the claimant appellant. In view of the above observations made, the findings arrived at by the Adjudicating authority, can only raise strong suspicion about the smuggled nature of seized gold but suspicion howsoever grave cannot take the place of evidence when appellant has discharged his onus. It is accordingly held that statements recorded on 5/9/2000 were not reflecting the correct facts of the case. - Decided in favour of assessee.

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• 2015 (12) TMI 587
  Suspension of CHA License - whether appellant has violated the provisions of Regulations 13 (a), 13 (b), 13 (d) & 13 (o) of the CHALR 2004 inviting revocation of their CHA License - Held that:- No effort was made by the appellant to check up with the exporter or the freight forwarder whether Shri Sanjoy Singh is their assigned representatives for carrying out the transit of their containers from LCS Jogbani to Dock Kolkata. Regulation 13 (o) of CHALR 2004 clearly provides that CHA, interalia, should verify the identity of his client and functions of his client at the declared address. Shri Amreek Singh and Shri Sanjoy Singh conducted business with the CHA as an agent of M/s. Osia Enterprises and freight forwarder and thus fell into the footsteps of the exporter. No independent efforts were made by the CHA to verify whether the persons dealing with him on behalf of the exporter/freight forwarders are genuine. No confirmation over phone/Mobile was made by the appellant when documents were handed over to the CHA. It is also observed that Shri Dilip Kumar Sharma, Jetty Sircar of the appellant was deputed to attend to the examination of the container when DRI was carrying out the investigation. CHA was out of business for 8 years but Hon’ble Court while deciding clearly observed that trust between the CHA and the Customs authorities has to be viewed seriously. It was also held that punishment has to be proportionate to the nature and extent of violation. Based on the existing facts in the present appeal before us we hold that appellant was found wanting in discharging his obligations under Regulation 13 (a), (b) & (o) of the CHALR 2004 and accordingly orders passed by the Adjudicating authority under Regulation 20 (1) of CHALR 2004 are upheld - appellant had no knowledge of the contraband nature of the goods substituted in the containers and in view of the ratio of the relied upon case law, punishment for a life time cannot be imposed upon the appellant. We are of the considered opinion that revocation ordered by the Adjudicating authority should be for a limited period. As there is no irregularity committed by the appellant from the date of offence detected by DRI, the revocation ordered by the Adjudicating authority is made effective upto 31/3/2016 and with effect from 1/4/2016 CHA License of the appellant and forfeiture of Security deposit will be restored. - Decided in favour of Appellant.

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• 2015 (12) TMI 586
  Smuggled goods from NEPAL - Evidence - Valuation - Foreign origin mobile phones were classified in CTH 8517 for the purpose of assessment and were admitted subject to MRP based assessment under Section 4A - Confiscation of goods - Imposition of redemption fine and penalty - Held that:- There is force in the contention of the appellants that mobile phones are not notified under Section 123 of the Customs Act, 1962 and therefore the onus is on Revenue to prove that the impugned goods were smuggled. - Only ground on which the goods are held to be smuggled is that the Bills of Entry produced by M/s. Gold Manner Overseas and M/s. Waho Wireless Pvt. Ltd. did not cover the impugned goods. In this regard, it is pertinent to mention that the Bills of Entry filed for import of mobile phones do not mention details of individual mobile phones. Once the goods are in the open market, it is the onus of Revenue to establish with sustainable evidence that these goods were smuggled in any sense other than that they did not carry MRP. We find that Revenue has not been able to discharge this onus. Even if the appellants had not produced any Bills of Entry to show the licit import of the impugned goods, they would not have been worse of because it is Revenue's onus to establish smuggled nature of goods and there is no evidence in the Show Cause Notice or in the impugned order which even prima facie discharged that onus. Valuation - It has clearly been brought out that no such MRP was printed on the impugned mobiles and therefore their import and clearance were in violation of provisions of Exim policy which rendered them liable to confiscation under Section 111(d) ibid. In the case of Pacific India Trade Concern Vs. CC (Prev) [2014 (3) TMI 675 - DELHI HIGH COURT], Delhi High Court held that in case of goods which required MRP to be declared on the goods, non-declaration of MRP results in violation of Foreign Trade Policy and rendered the goods liable to confiscation. Twenty nine Cartons of mobile phones remained unclaimed and therefore their absolute confiscation is clearly sustainable. Regarding mobile phones which were claimed, we find that an option was given to the claimants to redeem the same on redemption fine, which was about 20% of the value of the goods, which in our view is not unreasonable or arbitrary having regard to the nature of the goods and therefore does not warrant appellate intervention. Penalties imposed on the claimants-appellants are on the higher side and need to be suitably moderated. Similarly, M/s. Gold Manner Overseas and M/s. Waho Wireless Pvt. Ltd. have claimed that they had imported these goods which became liable to confiscation in the absence of MRP thereon. Therefore, they are liable to penalty under Section 112 ibid. Shri Arun Kumar Gupta has admitted that he was concerned in carrying and transporting the impugned goods as he collected them from various persons in Delhi before they were loaded in SLR van. He was regularly doing so and therefore there was no way that he was not aware that the goods did not carry the MRP which rendered them liable to confiscation and so he is liable to penalty - Appeal disposed of.

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• 2015 (12) TMI 585
  Valuation - SVB has accepted the invoice price as transaction value - no contemporaneous imports as moulds are tailor made - importer/ respondent and the foreign supplier were related under Rule 2(2) of CVR - Held that:- AC(SVB) in his order after examining the agreements and documents and CA certificate accepted the invoice price as transaction value. When the Revenue initially reviewed the said OIO, we find that there is only one ground on which the Revenue filed the appeal before the Commissioner (Appeals) is that the adjudicating authority has not compared the value of contemporaneous import of similar goods before passing his order. On perusal of the impugned order, we find that para 6 & 7 of clearly dealt the issue in detail and concluded that both for the raw material as well as for the pressing machine there is no contemporaneous imports as moulds are tailor made. - Revenue coming to the Tribunal against new grounds is not maintainable. We find that it is the Revenue who preferred the appeal before the Commissioner (Appeals) against the adjudication (SVB) order. Nothing prevented the Revenue to raise any number of grounds when the department reviewed the OIO and filed appeal before the Commissioner (Appeals). This is the case of SVB order and not confirmation of demand of customs duty under Section 28 of the Act. The adjudicating authority had only determined the relationship between the appellant and supplier and whether any remittance made by the respondent to the principal supplier and whether the invoice price is influenced by the relationship. When the goods are customised as clearly recorded in the OIO as well as in the impugned order, the comparison of contemporaneous imports of similar goods or identical goods does not arise. Moreover, we also find that the validity of the said SVB order had expired in the month of May, 2015 and due for renewal by the authority - No infirmity in impugned order - Decided against Revenue.

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• 2015 (12) TMI 584
  Revoking the CHA licence of the appellant - Duty drawback claim - Overvaluation of goods - Held that:- Appellant had not taken authorization from the exporter who was found to be non-existent and the goods were found misdeclared and highly overvalued. - The appellant did not obtain any authorization from the exporter. It never met the exporter nor was in touch with the exporter even telephonically. Thus the question of advising his client to comply with the provisions of the Act simply does not arise. It did not exercise any due diligence vis-a-vis the exporter. Thus, the Commissioner is correct in holding the appellant guilty of violation of various provisions of Regulation 13 ibid. As is evident the violation of Regulation 13 ibid is blatant and serious. - enquiry report was submitted on 16.1.2015 and the impugned order revoked the licence on 13.4.2015 and therefore the order was passed within the time limit prescribed under Regulation 22 of the CHALR, 2004. Several other judgments cited are in regard to reasonability of the punishment stating that the punishment should be commensurate with the offence. This ratio is unexceptionable. It is pertinent to mention that reasonability of the punishment and whether the punishment is commensurate with the gravity of offence is a mixed question of facts and law and needs to be determined in the light of factual matrix of each case. Offense is really grave inasmuch as no authorization was obtained from the exporter, the exporter was found to be non-existent and no due diligence whatsoever was undertaken. In these circumstances mere filing of shipping bills can not be tantamount to authorization more so when the exporter is found to be non-existent. The documents filed by CHA are treated with a certain degree of trust by the Customs and such trust was completely violated in the present case. Nothing can possibly be a graver mis-conduct on the part of a CHA than to file Shipping Bills in the name of a non-existent exporter without making even preliminary enquiries about the genuineness of exporter in the name of which the documents were filed. Such dereliction of duty on the part of a CHA, can potentially have even graver financial/security consequences. Thus the appellant totally failed to discharge its duties as CHA thereby grossly violated Rule 13 of CHALR, 2004. Such serious violation on the part of the CHA can hardly deserve any condonation or leniency. - appellant blatantly and grossly violated the provisions of Regulation 13 ibid and having regard to the seriousness of the offence, it cannot be said that the punishment awarded is unreasonable, excessive is arbitrary or is in any way not commensurate with the gravity of offense. - No infirmity in impugned order - Decided against the appellant.

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• 2015 (12) TMI 583
  Determination of assessable value - import of old and used photocopier mainframes is restricted and the importer required an import licence for the same - Held that:- Revenue has not first rejected the transaction value by production of any evidence. Further, it is not Revenue’s case that any extra money has been delivered to the foreign supplier, without reflecting the same in the records. Revenue has simplicitor adopted the value of another import of old and used photocopier machines. It may not be out of place to observe here that the value of the second hand goods depends upon the number of factors including the conditions of the goods and as such, the second hand goods cannot be held to be contemporaneous to each other. In view of the foregoing, we find no merits in the impugned order of the lower authorities. The same are accordingly set aside - Decided in favour of assessee.

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• 2015 (12) TMI 582
  Confiscation of goods - Imposition of redemption fine - clearance have been allowed on execution of bond and bank guarantee in terms of the DEEC scheme, the adjudicating authority should have confiscated the goods and given an option to the importer to redeem the goods on payment of fine - Held that:- The goods are not available nor the person who own the goods now are known to the department. Section 125(1) of the Customs Act stipulates that whenever confiscation of any goods is authorised by this Act, the adjudicating authority should give an option to the owner of the goods or, where such owner is not known, the person from whose possession/custody, such goods have been seized, an option to pay in lieu of confiscation such fine as the officer thinks fit. In other words, the option to redeem has to be given to the owner or to the person from whose possession the goods have been seized. In the case before us, the details of both these persons are not known nor the goods are available for confiscation. In these circumstances, we do not find any infirmity in the order wherein the adjudicating authority has correctly refrained from imposing any fine. - Decided against Revenue.

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• 2015 (12) TMI 581
  Imposition of penalty - Misdeclaration of goods - whether CHA has knowingly participating in the misdeclaration and was involved helping exporter for exporting non basmati rice in the guise of basmati rice - Held that:- From the facts it clearly comes out that container was stuffed in the factory of exporter and CHA was not present there. Neither circumstantial evidence which could show that CHA contributed to the misdeclaration nor any mens rea has been imputed to him. Even on examination of containers, the sample was drawn and sent to the laboratory and laboratory has rightly pointed out that rice contained in the container were non basmati rice and not basmati rice. I do not find any support or instance which could lead to CHA being made liable for imposition of penalty although I am aware that CHA has great responsibility in following export and import procedure requirement. Considering totality of facts and circumstances, I am not able to find active participation of CHA in misdeclaration. - penalty imposed on CHA is not justified and the same is set aside - Decided in favour of appellant.

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• 2015 (12) TMI 580
  Appeal before the commissioner (Appeals) - date of receipt of order by the appellant - Bar of limitation - Denial of refund claim - Held that:- order was sent by speed post and not under registered A/D, we also note that the appellant addressed a letter as early as on 13-10-2008 to the department seeking to know the result of their refund claim. By that time, the order was already passed by the Asstt. Commissioner and if the said letter would have been responded by the Revenue, the delay would not have been so huge and would have been within the powers of Commissioner (Appeals) to condone the same. We also note that the dispute is as regards the refund claim of the appellant and there is no duty demand so as to attribute any mala fide to the appellant for delayed filing of the appeal. As regards the assessee’s contention it is only subsequently when the Order-in-Original was again sent under the cover of letter dated 16-7-2009, the same was received by them on 25-7-2009. As such, we are of the view that the appeal having been filed within the period of limitation, starting from the date of receipt of the order has to be held as having been filed well within the time. - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (12) TMI 579
  Provisional assessment - Refund of excess export duty - Held that:- Purchase contract entered between the parties has prescribed that payment shall be made on the basis of DMT quantity of the goods. It is an admitted fact that the duty has been paid by the appellant on WMT basis, without deducting the moisture content. Thus, I am of the opinion that the goods actually not exported, should not suffer the duty liability, and accordingly, the excess paid duty will be eligible for refund. Further, I find that the contract entered into between the parties clearly stipulates that duty or tax levied in the country of origin shall be to the account of the seller, which evidently demonstrates the fact that the incidence of duty has not been transferred to the overseas buyer and the same has been borne by the appellant. Upon verification of the Chartered Accountant also certified that the incidence of Customs Duty has not been inbuilt in the selling price and has not been passed on to any other person. Therefore, considering the above, I am of the prima facie view that the operation of the impugned order can be stayed in the interest of justice.

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• 2015 (12) TMI 578
  Refund of SAD - whether sanctioning of 4% of SAD refunds by way of re-credit in the respective licenses after 30-6-2013 was proper or not - Held that:- utilisation of re-credited amounts was permitted/revalidated by C.B.E. & C. Circulars till 30-6-2013 which was further extended up to 30-9-2013. In Para 7.6 of the orders dated 20-1-2014 passed by the first appellate authority it is factually stated that the re-credits were given well before 30-9-2013. It has not been brought on record by the Revenue that re-credit was allowed by the adjudicating authorities after 30-9-2013. It is also seen that there is no condition under Notification No. 102/2007-Cus. that SAD duty should be initially paid through cash. It has been correctly agitated by the respondents in the cross objections that a right given under an exemption notification cannot be taken away by the issue of Departmental Circulars. In view of the above observations orders passed by the first appellate authority are legally correct and are not required to be interfered with. - Decided in favour of assessee.

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• Corporate Laws

• 2015 (12) TMI 573
  SARFAESI Act - proceedings initiated by the 2nd respondent-bank herein, under Section 13(4) of the SARFAESI Act, against the scheduled property - whether the procedings are void, illegal and arbitrary - petitioners seeking a writ of mandamus to direct the 2nd respondent-bank to give a valid discharge of the liability over the scheduled property; and to deliver the documents/execute a sale deed in favour of the petitioners - Held that:- a private company carrying on banking business as a scheduled bank, cannot be termed as an institution or a company carrying on any statutory or public duty. A private body or a person may be amenable to writ jurisdiction only where it may become necessary to compel such body or association to enforce any statutory obligations or such obligations of public nature casting positive obligation upon it. We dont find such conditions are fulfilled in respect of a private company carrying on a commercial activity of banking. Merely regulatory provisions to ensure such activity carried on by private bodies work within a discipline, do not confer any such status upon the company nor put any such obligation upon it which may be enforced through issue of a writ under Article 226 of the Constitution. Present is a case of disciplinary action being taken against its employee by the appellant Bank. The respondents service with the Bank stands terminated. The action of the Bank was challenged by the respondent by filing a writ petition under Article 226 of the Constitution of India. The respondent is not trying to enforce any statutory duty on the part of the Bank. That being the position, the appeal deserves to be allowed Division bench held that an agreement of sale was not prohibited by Section 13(13) of the SARFAESI Act; if at all entered into, that would be subject to the mortgage already created by the borrower in favour of the bank; and it could not, therefore, curtail the rights of the banks in any manner whatsoever. As this finding is binding inter-parties, this question could not have been re-agitated before the Division bench and the Division Bench ought not to have re-examined this question to hold that the sale in favour of the petitioners was void ab initio in view of the interdict contained under Section 13(13) of the SARFAESI Act. To the extent the Division bench, examined this question, in a subsequent proceeding inter-parties, the order under review suffers from an error apparent on the face of the record and necessitates being reviewed. Point No.2 is answered in favour of the review petitioners. While point Nos.1 and 2, decided by the Division bench necessitate being reviewed, and the conclusions recorded thereunder being set aside, we see no reason to review the order on point No.3. Consequently the contentions urged by the petitioner, on the validity of the order of the Debt Recovery Tribunal cannot be examined on merits. To the extent that the petitioner has been relegated to the remedy of a statutory appeal, under Section 18(1) of the SARFAESI Act, the review petition fails and is, accordingly, dismissed.

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• Service Tax

• 2015 (12) TMI 606
  Levy of penalty - Transport of Goods through Road service and Construction of Residential Complex - Transfer of ready mix concrete - Held that:- Scope of new tax entry though clarified by the CBSE Circular dated 27.07.2005, bringing the appellants’ liable to service tax under sub-clause (zzz) of Section 65 (105) of the Finance Act, 1994. But, it was not clear to them and there was no malafide intention for non-payment of service tax. In view of the provisions of Section 73 of Finance Act, 1994, which provides that once the service tax with interest is paid in full, no SCN shall be issued and hence there will be no further proceedings. In this case, I find that the appellant assessee has not disputed the liability and has paid the entire service tax liability along with interest before the issue of SCN. In the case of Marketing & Advertising Services Pvt. Ltd. (2006 (2) TMI 20 - CESTAT BANGALORE), the Bangalore Bench of this Tribunal set aside the interest and penalty imposed under Sections 75 & 76 of the Finance Act, 1994. In the case of Rashtriya Ispat Nigam Ltd. (2002 (11) TMI 234 - CEGAT, BANGALORE) also the Bangalore Bench of this Tribunal held that penalty and interest not imposable and allowed the appeal. - appellant has paid the entire service tax liability along with interest on 05.10.2006, ie., much prior to the issuance of show cause notice on 30.11.2006. Accordingly, I set aside the penalty imposed - Decided in favour of assessee.

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• 2015 (12) TMI 605
  Disallowance of CENVAT Credit - Renting of Immovable Property service as input service - Authorized service station service being output service - Held that:- appellant took service tax registration for Authorized Service Station only on 28.03.2008. The premises for running the service station was taken on rent prior to taking registration. Appellant availed credit for the rent paid during the period prior to taking registration and prior to providing output services by the authorized service station. It is submitted by the learned counsel for appellant that the first invoice of authorized service station was issued on 7.9.2008. These dates demonstrate that credit was availed for the tax paid on the input service prior to providing output service. Rule 2 (l) of the Cenvat Credit Rules define 'input service' as any service used by a provider of taxable service for providing an out put service. When the appellant has started providing output service only on 7.9.2008, renting of immovable property prior to 7.9.2008 is not eligible for credit. The credit, in my view has been rightly denied. - impugned order is modified to the extent of reducing the penalty imposed to 25% of the duty demand - Decided partly in favour of assessee.

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• 2015 (12) TMI 604
  Waiver of pre deposit - Reimbursement of charges for insurance service - Held that:- It is the findings of the authority that the charges which have been received by the appellant for foreclosure charges, surrender charges and policy reinstatement charges are in respect of the services i.e. insurance services. The adjudicating authority has relied upon the judgement of the Tribunal in the case of Housing & Development Corporation (HUDCO) - [2011 (11) TMI 95 - CESTAT, AHMEDABAD] which was doubted by the same Bench of the Tribunal in the case of small Industries Development Bank of India vs. Commissioner of Service Tax, Ahmedabad - [2014 (12) TMI 668 - CESTAT AHMEDABAD] as a contrary view was produced before the Bench. By an order dated 13.11.2014 the Division Bench referred the matter to the Larger Bench and we were informed that the matter is still pending for disposal by the Larger Bench. - issue involved in the case in hand is similar to the issue as referred to the Larger Bench, Court followed the same - Stay granted.

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• 2015 (12) TMI 603
  Classification of service - Construction of Residential Complex service or works contract service - Held that:- Show-cause notice issued to the appellant indicates that the classification of the services is to be considered under the category of "Commercial or Industrial Construction Services" and directed the respondent to show-cause why it should not be done so whereas the adjudicating authority has confirmed the demand of service tax on "Construction of Residential Complex" service which, the first appellate authority has correctly held that the adjudicating authority has traversed beyond the allegation of the show-cause notice. If the assessee is not put to notice under which category the service tax sought to be demanded, the conclusion reached by the first appellate authority is correct and does not suffer from any infirmity. Be that as it may, we also find that the contract which has been entered by the respondent is a "works contract" and the entire contract has been executed prior to 01.06.2007. In our view the issue is no more res integra as the judgement of the Hon'ble Apex Court in the case of CCE v. Larsen and Toubro Ltd and Ors. - [2015 (8) TMI 749 - SUPREME COURT] it has been held that works contract cannot be vivisected prior to 01.06.2007 for taxing separately. - Decided against Revenue.

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• 2015 (12) TMI 602
  Cenvat Credit - Club service - Held that:- It is a fit case for de novo adjudication as the authority have not considered the issue whether the appellant is entitled to adjustment of credit. Learned Counsel for the appellant submitted that they are ready to produce all necessary documents regarding the credit availed. It is also submitted that the issue of limitation was not considered. In view thereof, the matter is remanded to the primary adjudicating authority for de novo adjudication in the light of the recent judgement regarding the issue whether the services rendered by a Club to its members is liable to levy of service tax and also if taxable whether the appellant is entitled to adjustment of credit; and also consider the issue of limitation. - Decided in favour of assessee.

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• 2015 (12) TMI 601
  Denial of CENVAT Credit - GTA services - Imposition of penalty - Held that:- Appellant has already paid the entire CENVAT Credit demand on GTA services on 16.07.2012. During the course of hearing, the learned Advocate appearing on behalf of the Appellant fairly agreed that the interest on the irregularly taken credit may be payable. In view of the case law of Market Systems Ltd Vs CCE & ST Vadodara-II (2014 (6) TMI 33 - CESTAT AHMEDABAD), passed by the Bench, it is held that the interest on the in-admissible CENVAT Credit taken is payable by the Appellant. So far as the imposition of penalty upon the Appellant under Rule 15(4) of CENVAT Credit Rules 2004 is concerned, it is observed that there was a favourable case law with the Appellant in the form of Larger Bench decision of the Tribunal of Bangalore in the case of ABB Ltd Vs CCE & ST Bangalore (2009 (5) TMI 48 - CESTAT, BANGALORE) wherein it was held that the GTA services from the place of removal is admissible even after the date of amendment to CENVAT Credit Rules. This order passed by Larger Bench was set aside by Hon'ble Karnataka High Court [2011 (3) TMI 248 - KARNATAKA HIGH COURT] only in the year 2011. Therefore, the Appellant had a bonafide belief that such CENVAT Credit taken is admissible. Accordingly, it is held that present case is not a fit case for imposition of penalty under Rule 15(4) of CENVAT Credit Rules 2004. - Decided in favour of assessee.

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• 2015 (12) TMI 600
  Waiver of pre deposit - works contract service - Held that:- No prima facie case made out for exclusion from service tax liability in respect of works contract services provided for APMC since facilitation of marketing activities by market committees is clearly for furtherance of business and commerce. - Partial stay granted.

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• 2015 (12) TMI 599
  Waiver of pre deposit - Business Auxiliary Service - Held that:- Proceedings were initiated by show cause notices dated 24/01/2012 and 26/04/2012 covering the block period 2007-08 to November 2011 proposing to levy service tax for the taxable ‘renting of immovable property’ service defined in Section 65(90a) read with Section 65(105)(zzzz) of the Finance Act, 1994. The petitioner contended in response that the service provided by the Petitioner would fall more appropriately, but generically within Clause (v) of Section 65(19)(i) i.e. as Business Auxiliary Service (BAS), namely production or processing of goods for and on behalf of the client (Aurobindo Pharma Ltd.). The service provided by the Petitioner is clearly classifiable as BAS and in terms of clause (v) of Section 65(19) it would not be a taxable service since the activity of the Petitioner amounts to manufacture of excisable goods and would therefore be outside the purview of the taxable service. - In the light of our analysis of a substantively similar service in the decision in Jubilant Industries supra, we find a strong prima facie case in favour of the Petitioner and therefore we grant waiver in full of pre-deposit and stay all further proceedings for recovery of the adjudicated liability, pending disposal of the appeal - Stay granted.

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• 2015 (12) TMI 597
  Valuation - whether the appellants, who were engaged in ‘Commercial or Industrial Construction Service' and were availing the benefit of Notification No. 20/2004-S.T. and 1/2006-S.T., are under a legal obligation to include the value of the items supplied free of cost by service recipient for the purpose of payment of service tax - Held that:- items supplied free of cost by service recipient would not form value of service and would get excluded for the purpose of the notification in question. - Decision in the case of Bhayana Builders [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] followed - Decided in favour of assessee.

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• 2015 (12) TMI 596
  Denial of input service credit - Technical service - job work charges paid to the job worker for re-shelling of the rollers - Held that:- In this case the technical services is not an issue. The issue is that the appellant has paid job work charges of the re-shelling of the rollers to the job workers. It is very much related to the manufacturing activity of the appellant. Therefore, I hold that appellant is entitled to take Cenvat credit on these charges paid to the job workers. - Decided in favour of assessee.

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• 2015 (12) TMI 595
  Review petition - Appeal decided ex parte - Held that:- It is observed from the case records that Order No. A/12268/2014 dated 12-12-2014 was passed by the bench on merits after rejecting the adjournment request of the appellant as the same was not convincing. On merits once the appeal has been rejected then this bench has no power to review its own order. - Decided against assessee.

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• Central Excise

• 2015 (12) TMI 598
  Waiver of pre deposit - benefit of exemption Notification No.6/2006-CE and No.12/2012-CE - Held that:- In terms of Sl.No.13 of List 5 of the said notification grants exemption to wind operated electricity generator, its components and parts thereof. Inasmuch as the rubber products manufactured by the appellant ultimately became part of the wind operated electricity generator, we are of the view that the said sl.no. would be applicable and the appellant's product would be exempted. Thus the appellant has a good prima facie case. - Stay granted.

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• 2015 (12) TMI 594
  Demand of interest - Supplementary invoices - whether interest is leviable under Section 11AB of the Act on the differential duty amount paid under supplementary invoices due to price increase by virtue of price variation clause in the sale contract - Held that:- Bench did not consider the effect of the expression 'ought to have been paid' occurring in Section 11AB of the Act. It is undeniable that under Section 4 of the Act, the excise duty is to be paid on the 'transaction value' and such a transaction value has to be seen at the time of clearance of the goods. Indubitably, when the goods were cleared, the excise duty was paid taking into consideration the price that was actually charged and was reflected in the invoices raised for the said purpose. The Department cannot plead that as on that date, this was not the price charged. No doubt, when the differential payment is made at a later date, further amount towards excise duty becomes payable as a result of said differential in price. Further, such an event took place at a subsequent date. As on the date when the goods were cleared, there was no certainty that there would be price escalation and it was beyond comprehension to ascertain the exactitude of such an escalation. It would be impossible to expect the assessee to pay the excise duty, at the time of clearance of the goods, on the basis of price escalation that took place at a later date in future. Therefore, as on the date of clearance when excise duty was paid, it could not be treated as 'short paid' on the said date. As a consequence when the principal amount, namely, the excise duty itself was not payable (i.e. on the differential) on the date of clearance of the goods, there cannot be any question of law to pay interest. Registry is directed to place the matter before the Hon'ble Chief Justice of India for constituting a Larger Bench to go into the issue involved in this case which is of seminal importance having far reaching ramifications. - Matter referred to larger bench.

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• 2015 (12) TMI 593
  Clandestine removal of goods - Suppression of production - manufacture of gutka and pan masala under the brand name ‘Vimal’ - reliance primarily on ambiguous records maintained by transporters and the oral statement of the employees of the transporters - Held that:- noticees had sought the cross-examination of 20 persons whose statements had been recorded by the Department in the course of investigation. Some of these persons had retracted their initial statements through affidavits tendered subsequently or resiled from the statements when cross-examined - burden of showing that the confession statement was given under coercion or threat was on the person making such allegation. It was observed that if the confession was voluntary, there was no legal bar on the Court relying on it to order a conviction. However, where it was retracted, and even if the person retracting was unable to show that it was obtained under duress, “however, rule of prudence and practice does require that the Court seek corroboration of the retracted confession from other evidence.” It was further observed that “each case would, therefore, require to be examined in the light of the facts and circumstances in which the confession came to be made and whether or not it was voluntary and true.” There was no ‘confession’ as such by any of the noticees as to their involvement in the activities alleged against them in both the SCNs. The Department relied on the statements made by third parties including transporters, agents, and their employees. Where such statements are subsequently retracted or resiled from, it becomes necessary for the Department to produce other evidence which is of an independent nature which corroborates the retracted statements. - none of the witnesses who were cross-examined stood by their earlier statements. It is one thing to overlook this feature on the premise that all of them were under the pressure and control of the noticees. The other approach is to view this with some caution and ask what might be the case if the remaining witnesses were also produced for cross-examination? Importantly, what would be the prejudice caused to the noticees, in such circumstances, by their non-production for cross-examination? Thus a doubt is created in favour of the noticees when such witnesses do not turn up for cross-examination. It is the latter approach that has weighed with the CESTAT. That, in the view of this Court, was a possible approach and does not render its order perverse on that score. The delivery challans mentioned the registration numbers of trucks and yet no enquiry was made with the drivers or owners of the trucks. Moreover, Mr. Rajiv Gupta, Managing Director (MD) of RLRC was not available for cross-examination. He submitted an affidavit to the effect that certain quantities of canvas bags bearing Vimal brand had been sold at factory gate also in cash. Regarding the jute bags, the panchnama and seized bags from M/s. Shyam Jute Industries did not per se reveal any shortage of jute bags. These documents by themselves were insufficient to conclude that there was shortage of jute bags and menthol, thereby permitting an inference that they were used in the unaccounted manufacture of gutka cleared clandestinely. - mere fact that Mr. Dubey accompanied the goods to the transporters' offices did not mean that it was VCPL which was removing the goods for despatch. The Department was unable to produce any tangible evidence to link VCPL with the despatches made through the transporters. The CESTAT took note of the fact that VCPL had lodged an FIR much prior to the date of search. Pursuant thereto, the police recovered 480 bags of gutka manufactured spuriously. The CESTAT also noted that the Department had not contested the filing of the FIR. Therefore, in the absence of other positive evidence the mere fact that the goods seized from the transporters originated at the factory gate of VCPL or from the same source was not sufficient to establish that it was VCPL which was clandestinely clearing such consignments. The Court is not persuaded to hold that the CESTAT erred in the appreciation of evidence or failed to consider any material evidence in coming to the above conclusion - Some of the GRs show that bags of gutka were transported by M/s. Gupta Chemical Works to 'self' at Hubli on 3rd July 2003 and 4th July 2003. Mr. Rajiv Gupta, partner of Gupta Chemical Works was not questioned about the said GRs. One general observation in this regard is that the Department does not appear to have carried the investigations to their logical end. The CESTAT examined 17 truck guidance notes and the Court has also been shown a sample of one of them which shows that the consignment was to be sent to Gujarat. It does not show who the consignor is and whether it had anything to do with VCPL. The loading register also showed only some private marks and numbers without any mention of the description of the goods. The Court has also been shown some of the copies of the loading challans/registers. They only describe the goods as pan masala. The persons who wrote the loading registers and the day book were not identified and their statements were not recorded. One employee of GG Carriers, Mr. Harjinder Singh, was examined. He mentioned the name of the booking clerks as Naresh Kumar and Vishnu but neither of them was examined. In his cross-examination, Mr. Harjinder Singh denied transporting gutka of VCPL. It was for the Department to explain why the entries in the documents were not further investigated by them and why someone in a responsible position in GG Carriers was not examined. It was for the Department to establish the link between such evidence and VCPL. If CESTAT was not prepared to rely on the above evidence, then certainly its approach could not be faulted. At the relevant time there was no bar against an Assessee having more machines than what was declared as long as the machines that were operational tallied with the number declared. This aspect of the matter was overlooked by the CCE and the fact that there were 120 machines was taken to mean that they ought to have been used in manufacturing excess quantities of gutka which were clandestinely removed without payment of excise duty. - Department has been unable to show that the impugned order of the CESTAT suffers from illegality or is perverse so as to warrant interference in the present appeals. - Decided against Revenue.

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• 2015 (12) TMI 592
  Imposition of personal penalty on 3 persons for duty evasion by the manufacturer - Whether the Tribunal is right in imposing penalty of Rs. 5 crores on the Appellant under Rule 26 of the Central Excise Rules, 2002 and Rule 209A of the Central Excise Rules, 1944 - Held that:- Rule 209A of the CE Rules 1944 was more or less similarly worded. These are penal provisions that call for a strict interpretation. Therefore, in order that penalty may be levied, it will have to be satisfactorily proved that the ingredients of Rule 26 of the CE Rules 2002 are existent qua the person proposed to be subject to the penalty. In other words, for the purposes of levy of penalty the Department would have to show the actual involvement of the person sought to be penalised in the actions of possessing, transporting, removing, keeping, concealing, selling or purchasing, etc. of the excisable goods, which he knows or has reason to believe are liable to confiscation. - Considering that Mr. Gautam’s statements implicating the Appellants were retracted, the CCE and the CESTAT should have produced other independent corroborative evidence. That clearly was not available in the present case. It is the statement of Mr. Gautam that has been relied upon to hold that there was 'maximum involvement' of Mr. Rakesh Kumar Garg in the clandestine activity although as already noticed hereinbefore the statement of Mr. Gautam was a weak evidence. Even in the statement of Mr. Santosh Garg, there was no admission about his being involved in the management or control of AJP. No cross-examination was offered of any of the witnesses whose statements were relied upon in the order of the CCE. There is no question of application of Rule 25 since that applies only to the actual manufacturer of the excisable commodity whereas that is not even the case of the Department vis-a-vis the three Appellants. - entire duty was raised on the basis of the capacity of the packing machines for the period 1st April, 2000 to 31st August, 2002, whereas the Department after having conducted the search on 20th October, 2000 did not, in fact, apprehend a single consignment clandestinely removed after 20th October, 2000 up to 31st August, 2002. - prior to the amendment introducing Section 3A under the Finance Act 2008, empowering the Central Government to charge excise duty on the basis of capacity of production in respect of notified goods (the provision was made effective from 10th May, 2008), there was no provision to levy duty on pan masala or gutka on the basis of the pouch packing machine(s). Considering that the demand was being raised for the past period 1st April, 2000 to 31st August, 2002, the Department had to demonstrate the legal basis for demanding the duty on the basis of the capacity of the pouch packing machines - neither the SCN notice nor the order in original or the impugned order of the CESTAT discussed any evidence regarding purchase and storing and transporting of the huge quantity of raw material of 6,200 MT, which would be required to manufacture the quantity stated to have been produced in excess by AJP. There appears to have been no investigation conducted on this aspect of the matter. Court holds that the requisite evidence necessary for levy of penalty on each of the Appellants under Rule 26 of the CE Rules 2002 was not brought on record by the Department and, therefore, the levy of penalty was in the first place is unsustainable. - amounts deposited by the Appellants during the pendency of these appeals will be returned to them together with any interest accrued thereon. The guarantees furnished by the Appellants shall stand discharged. - Decided in favour of assessee.

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• 2015 (12) TMI 591
  100% EOU - Benefit of Notification 23/2003 (condition No.3) - consumption of indigenous raw materials for manufacture of final products - DTA Clearances - Valuation - Section 11A - penalty under section 11AC - Held that:- Board has categorically clarified that jurisdictional officer need to satisfy themselves that the goods in DTA have been manufactured wholly out of indigenous raw material. The said circular also empowers the adjudicating authority to engage Cost Accountant if necessary and get the input and output norms fixed for both indigenous and imported goods. - The computer audit team (CAAP) have been functioning in all the Commissionerates with specially trained officers for carrying out computer based audit. Under these circumstances, we find that the adjudicating authority has various mechanism to satisfy whether indigenous raw materials are used or not, either by appointing special auditor under Section 14A or depute his internal audit team specialised in CAPP audit or to engage cost auditor to audit the unit which is functioning under any ERP system. - Matter remanded back on this issue. Valuation of DTA clearance - majority of goods were cleared to sister unit on stock transfer basis - Held that:- this issue has been settled by various Tribunal decisions wherein the Tribunal held that FOB value of export cannot be adopted for payment of duty for DTA sales. - The appellant being a EOU and by relying Tribunal s decision, we are of the considered view that when the department is not able to bring out clear cut evidence to show that computed value arrived at by the appellant is either manipulated or otherwise, merely taking FOB price for DTA sales is not justified. Therefore, the value adopted by the adjudicating authority by taking the FOB price and the consequential demand of differential duty is not sustainable. Accordingly, the demand of customs duty in respect of four appeals on account of taking FOB price is liable to be set aside. As regards the demand of educational cess and higher secondary education cess thrice while calculating excise duty, we find that appellants have already calculated educational cess twice while computing the transaction value and the same cannot be calculated again. In this regard, the Tribunal’s Larger Bench in the case of Kumar Arch Tech Pvt.Ltd. Vs CCE Jaipur (2013 (4) TMI 482 - CESTAT NEW DELHI), the Larger Bench of Tribunal clearly held that levy of CESS cannot be levied third time. - As regards the demand of educational cess and higher secondary education cess thrice while calculating excise duty, we find that appellants have already calculated educational cess twice while computing the transaction value and the same cannot be calculated again. In this regard, the Tribunal’s Larger Bench in the case of Kumar Arch Tech Pvt.Ltd. Vs CCE Jaipur (supra), the Larger Bench of Tribunal clearly held that levy of CESS cannot be levied third time. - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (12) TMI 590
  SSI Exemption - Clandestine manufacture and removal of goods - Estimation of production - electricity consumption - Availment of exemption under Notification No. 1/93 dated 28.02.1993, for the period 16.10.1993 to Feb, 1995 - Confiscation of seized goods - Held that:- As seen from the Tribunal order, we find this Tribunal while remanding the case gave clear direction to the adjudicating authority to establish with evidences that for manufacture of acid slurry two important raw materials are required ie., sulphuric acid (oleum) and LAB, and the procurement of sulphuric acid from other units, and also clear evidences on removal of Acid slurry ie., final product which is very essential to establish for clandestine removal. Further the adjudicating authority was also directed to examine and to give clear findings on the electricity consumption for the alleged manufacture of finished goods and also to consider the cum-tax benefit. Whereas on perusal of the denovo order, we find that the adjudicating authority has discussed and reiterated only the statements of persons with regard to supply of LAB through SWC and failed to address the issue on the procurement of sulphuric acid/oleum, which is another raw material required for manufacture of acid slurry and electricity consumption. On perusal of various statements and records, it is seen that these are mainly recovered from SWC who manipulated and used various fictitious names for sale of LAB received from TNPL to various customers including the appellants. Adjudicating authority has computed the quantity and value purely on mathematical formula and worked out the total quantity of acid slurry by adopting the ratio of raw materials LAB and sulphuric acid purely based on the alleged quantity of LAB received by the appellants from SWC and not supported with any evidence. As regards the payments made to three employees of SWC, the appellants claimed that this was paid for the expenses. Regarding payment of Rs. 11 lakhs made by Fintex Chemicals to TNPL, we find that there is no finding to link the said payments to supply of LAB to the appellants and mere statements that they are related and controlled by the appellants, is not an evidence to hold that appellants revived LAB. In spite of clear directions by the Tribunal by giving an opportunity to the adjudicating authority to bring out all the evidences including the electricity consumption, adjudicating authority failed to bring out any material evidence in support of supply of LAB by SWC to the appellants, no evidence for such a huge amount of manufacturing activity, or no evidence of any payments for sale of finished goods clandestinely removed and no evidence on removal of spent acid. We also find that no attempt has been made to obtain the documents and records from TNPL, which is crucial for sale of LAB instead the LA had only relied on the statements and records of SWC who is a sole selling agent of TNPL. Entire demand of clandestine removal of acid slurry has been made based on assumption and theoretical calculations by arriving taking notional quantity of LAB. Accordingly, we hold that the demand is not sustainable and entire demand is liable to be set aside. The confiscation of the seized goods of 449 kgs of Acid slurry and imposition of fine ordered by the adjudicating authority is upheld. The excise duty demanded in the impugned order is set aside - However, Penalty on second assessee is reduced - Decided partly in favour of assessee.

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• CST, VAT & Sales Tax

• 2015 (12) TMI 577
  Reassessment - period of limitation - Adjustment of additional tax liability - Adjustment against Incentive limit - Revenue contends that assessee should paid the additional liability as cash - Held that:- Nothing is indicated therein as to what was the nature of concealment or incorrect declaration or return furnished by the assessee. A perusal of the order of assessment dated 27.7.2004 clearly shows that the assessing authority at the relevant time had taken into consideration the additional tax payable under section 4A of the Act and had duly computed the tax liability after considering the component of additional tax and had adjusted the same against the exemption limit. Under the circumstances, on the facts as emerging from the record, the Commissioner had no reason to believe that the assessee had concealed any material particulars or had furnished incorrect declaration or return. Therefore, the ingredients of clause (a) of section 44 of the Act are clearly not satisfied. Consequently, the Assessing Authority was not justified in invoking the extended period of limitation under section 44(a) of the Act. The Tribunal, therefore, did not commit any legal error in holding that the reassessment was barred by limitation. Having regard to the fact that the reassessment under section 44 of the Act is itself barred by limitation, it is not necessary to enter into the merits of the other issues adjudicated by the Tribunal. - order of reassessment has been held to be time barred, it is not necessary to enter into the merits of the other questions proposed by the appellant - Decided against Revenue.

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• 2015 (12) TMI 576
  Liability of turn over tax - Held that:- Sales tax revision petition regarding turn over tax is squarely covered by the decision of this Court in the case of Assistant Commissioner, Special Circle, Udaipur Vs. M/s H.E.G. Limited, Rishav Textiles, Rishavdev, Udaipur wherein it was held that, the assessing authority was not justified in imposing or computing the exemption fee under the notification dtd. 28.6.2003 on the basis of annual gross turnover including therein the turnover representing branch transfers, consignment transfers, interstate sales or export sale made by the assessee during the relevant year. - Following the same - Decided against Revenue.

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• 2015 (12) TMI 575
  Sale of plant and machinery and vehicles has been overruled by the respondent on the ground that no documentary evidence is produced - opportunity to produce the documentary evidence - Held that:- A perusal of the impugned orders would show that the notices were issued on 5.6.2014 and the petitioner submitted their objections on 16.6.2014. The orders were passed on 7.7.2014 without calling upon the petitioner to produce the documentary evidence. it is settled law as per the decision of the Division Bench of this Court in SRC Projects Private Limited Vs. Commissioner of Commercial Taxes [2008 (9) TMI 914 - MADRAS HIGH COURT] that an opportunity of hearing ought to be granted. - Therefore, one opportunity needs to be given to them to produce proof to show that the sale of the items actually took place in Visakapatnam. - Decided in favour of assessee.

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• 2015 (12) TMI 574
  Whether the dealer can file tax invoices and forms VATC-4 claiming benefit of input tax credit at appellate stage and in that eventuality the liability of the dealer is to be redetermined - Held that:- no notice for disposal of remand case was sent to the appellant and, therefore, the assesse could not produce the invoices and forms VATC-4. It was urged that the appellant is in possession of these forms and the assessee be permitted to submit the same before the Assessing Authority. - issue raised in this appeal is no longer res integra and stands concluded by the decisions of this court in [2013 (12) TMI 1447 - Punjab and Haryana High Court] titled as Vijay Cottex Ltd., Panipat v. State of Haryana [2013 (12) TMI 1447 - Punjab and Haryana High Court] and [2013 (12) TMI 1448 - Punjab and Haryana High Court] titled as Jai Hanuman Stone Crushing Mills, Bhiwani v. State of Haryana [2013 (12) TMI 1448 - Punjab and Haryana High Court] wherein it has been held that the dealer is entitled to produce form VATC-4 and tax invoices before the assessing authority who shall verify the same and pass a fresh order, in accordance with law. - Petition disposed of.

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• Indian Laws

• 2015 (12) TMI 572
  Non execution of conveyance deed - Held that:- The facts reveal that the sale has been confirmed way back on 16th July, 1990 and upon payment of the entire amount of consideration, the physical possession has also been handed over on 10th August, 1990. However, despite a passage of 25 years, till date the sale deed has still not been executed in relation to the property in question. Having regard to the fact that the sale has taken place way back in the year 1990 and the total amount of consideration has been paid at the relevant time, as well as the fact that it is not the case of the respondents that there is any impediment in executing the conveyance deed, a further period of four months for execution of the conveyance deed does not seem to be justified. Under the circumstances, the petition deserves to be allowed with a direction to the respondents to execute the sale deed within a reasonable period as stipulated hereunder. For the foregoing reasons, the petition succeeds and is accordingly allowed. The respondents are directed to execute the conveyance deed in favour of the petitioners for the property bearing Final Plot No.320, Sub Plot 2A, admeasuring 854 square metres and Sub Plot 2B admeasuring 595 square metres of Town Planning Scheme No.3-Navrangpura within a period of one and half months from the date of receipt of this order.

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• 2015 (12) TMI 571
  Permission to increase in authorised share capital of the Petitioner Company as per the orders passed by BIFR without the payment of the requisite fees - Held that:- In the first instance, there was considerable debate and argument as to whether the BIFR prepared and sanctioned the Scheme within the meaning of section 18 of the Sick Industrial Companies (Special Provisions) Act 1985, the representative of the State was present or not and whether the Scheme was duly circulated and brought to the notice of the State Government. However, after taking instructions, Mr Patwardhan states that the Petitioners would make an application referring to the State's power under section 9 and invoke the same specifically so as to claim remission or compounding of the proper stamp duty on the instrument in question. If such an application is made to the Government and addressed to the Principal Secretary, Revenue Department, Government of Maharashtra, the same shall be duly considered on its own merits and in accordance with law and a decision taken thereon. Such a decision shall be taken and duly communicated to the Petitioners within a period of three months from the date of receipt of such application. Once the Authorities have agreed in the aforesaid terms, then we need not decide any wider question or controversy. We keep the same open to be gone into in an appropriate case or state. We dispose off the Petition by accepting the statement of the learned Additional Solicitor General and in terms of the directions issued to the State of Maharashtra above. There will no order as to costs. The State Government shall also take into consideration the Petition before us and the averments and statements therein, so also contents of all the annexures.

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