Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 16, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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The work in the case of assessee, are meant to altogether change the use by way of expanding its capacity substantially and changeover of its look. The expenditure is certainly capital in nature on which depreciation can only be allowed.- AT
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Validity of reopening of assessment - reasons to believe - bogus entries made - Clearly, there was no full disclosure of material facts. - The petitioner is disentitled to relief. - HC
Service Tax
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Cenvat Credit - duty paying documents - The instant case is not a case of endorsed invoice. A perusal of invoice clearly shows that the appellant’s name mentioning as a advertiser and therefore it is an invoice issued in the name of the appellant - Credit allowed - AT
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Valuation - renting of immovable property service - The other amounts are paid a reimbursement for common additional services. These services can no stretch of imagination of renting of immovable property services - AT
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Just because the Nepalese suppliers had billed the appellants separately for transportation from Nepal border to factory premises alongwith other expenses, they do not become the agents of the appellants - appellants cannot be treated as recipients of GTA services - AT
Central Excise
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CENVAT credit - the fact of loss of Iron Ore during the process of screening, when screening process is a part of the manufacturing process, cannot result in denial of part amount of Cenvat credit. - AT
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Refund - The goods having been exported, it is immaterial whether the accumulated credit has been shown as receivable/advances and the appellant is eligible for refund of accumulated credit in terms of Rule 5 of Cenvat Credit Rules, 2004 - AT
VAT
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ITC - Product Information Literature and Laboratory Stores purchased by the appellant are eligible for Inputs Tax Credit - HC
Case Laws:
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Income Tax
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2016 (12) TMI 753
Disallowance under section 14A r.w. Rule 8D - Held that:- The mandate of Rule 8D will follow as per the method prescribed for making disallowance under section 14A of the Act. In the case on hand, we find that the AO has gone directly to the second stage of invoking Rule 8D to make the disallowance under section 14A r.w. Rule 8D, only on the factually incorrect and uncorroborated assumption that the assessee agreed to disallowance thereunder; without considering or addressing the submission made by the assessee vide letter dated 05.11.2012 that no expenditure was incurred and rendering a finding on the correctness or otherwise of the assessee's claim that no expenditure was incurred by her to earn the exempt income which does not form part of total income. We therefore set aside the finding of the authorities below on this issue and restore the matter to file of the AO for fresh examination and adjudication of the issue of whether or not disallowance under section 14A r.w. Rule 8D is called for at all, after taking into consideration of our above observations and after affording the assessee adequate opportunity of being heard and examining the assessee's claims in this regard. We hold and direct accordingly. - Decided in favour of assessee for statistical purposes.
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2016 (12) TMI 752
Levy of penalty under section 271AAA - taxes due on the surrendered/undisclosed income had not been paid before the date of filing of the return of income - Held that:- For the purpose of claiming immunity from penalty there is no requirement of paying taxes on the undisclosed income before the due date of return of income under section 139(1) of the Act. Further it is not disputed that the assessee had paid taxes on the undisclosed income surrendered in the statement made under section 132(4) of the Act. The manner of earning the income and its substantiation thereof has also been accepted by the Ld. CIT(A) and is not the matter of dispute. The assessee therefore has fulfilled all the conditions required for claiming immunity from the levy of penalty under the provisions of section 271 AAA of the Act. Moreover we find that in the case of other assessees belonging to the same group, the Ld. CIT(A) accepted the contentions of the assessee, wherein besides other pleadings made, the assessee relied upon the aforestated apex court decision in the case of Gebilal Kanhaiyalal (2012 (9) TMI 297 - SUPREME COURT) on the impugned issue, and deleted the penalty levied. Further, admittedly, no appeal has been filed by the Revenue against the said orders of the CIT(A). - Decided in favour of assessee.
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2016 (12) TMI 751
Warehousing Receipts - nature of income - income from business OR Income from House property - Held that:- The issue is squarely by earlier order of Tribunal in the case of M/s. Jaibhavani Warehousing Co. v. ITO (2016 (10) TMI 1005 - ITAT PUNE) and erstwhile partner Mr. Ramdas T Khutwad and following the same parity of reasoning, it is held that the income is assessable in the hands of assessee as 'Income from business'. - Decided in favour of assessee
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2016 (12) TMI 750
Disallowance u/s.14Aread with Rule 8D - Held that:- We come to the finding that assessee on one hand is having sufficient interest free funds to meet the investments and secondly the major portion of exempt income at ₹ 18 lacs out of total exempt income at ₹ 1820.83 lacs is only out of dividend of Sayaji Sethness Ltd. and these investments were made way back in 1995-96 and 1996-97. In these facts we find that the judgment of Hon. Jurisdictional High Court in the case of Principal CIT vs. India Gelatine and Chemicals Ltd. (2015 (11) TMI 392 - GUJARAT HIGH COURT ) is squarely applicable to the assessee's case wherein Hon. Jurisdictional High Court has upheld the order of the Tribunal deleting the entire disallowance made by Assessing Officer on the ground that assessee had sufficient interest free funds out of which investment was made. Thus No disallowance out of the interest expenditure is to be made in the case of assessee u/s.14A. However, suo motu disallowance made by assessee at ₹ 20,000/- and 0.5% of average investment as recalculated at ₹ 64215/- by Assessing Officer ₹ 64215/- is sustained as disallowance u/s.14Aof the IT Act. Accordingly this ground of assessee is partly allowed. Disallowance u/s.14A made by the AO while, computing book profit u/s.115JB - Held that:- As decided in assessee's own case for Asst. Year 2007-08 isallowance u/s.14Aof the Act has to be considered for calculating book profit u/s.115JBof the Act. Therefore, disallowance sustained by us in ground No. 2 above at ₹ 84215/- is to be added to arrive at the book profit u/s.115JBof the Act. Interest charged u/s.234C - Held that:- Assessee is liable to pay interest u/s.234C only on the returned income where income is assessed as book profit u/s.115JB of the Act as the normal income is loss then not on the assessed income. Disallowance u/s 2(24)(x)r.w.s.36(1)(va) - delay in deposit of PF contribution - Held that:- We observe from the facts placed before us that for Asst. Year 2009-10 assessee has deposited the PF contribution before the lapse of grace period i.e. 20th of the next month. Grace period is the time for 5 days which is given by PF Department to the employer for making the payment after the completion of due date of 15th. This fact is duly supported by annexure 5 to Tax Audit Report. Hon. Jurisdictional High Court in assessee's own case for Asst. Year 2005-06 and 2006-07 has held in favour of assessee by upholding the order of the Tribunal by observing that Tribunal was justified in deleting the disallowance made under the provisions of sec.36(1)(x)of the Act with regard to delayed employers contribution to P.F. - Decided in favour of assessee Disallowance on account of depreciation on flat - Held that:- We find that the issue is squarely decided against the assessee for Asst. Year 2007-08 and even for the year under appeal assessee has been unable to place any record to demonstrate that the flat has been used for commercial purposes and not for residential use and also failed to provide any evidence that the building was exclusively used for business and not for the use of stay of directors and other employees. In the facts and circumstances of the case, we are of the view that assessee should be allowed depreciation @ 5% as against 10% claimed in the return of income. Accordingly, this ground of Revenue is allowed.
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2016 (12) TMI 749
Addition made under section 68 - Held that:- In case the entirety of the facts are taken into consideration, then though the assessee claims that it had to incur expenditure of ₹ 49,20,000/- on account of compensation due to the farmers but the Assessing Officer and the CIT(A) had allowed compensation only to the extent of ₹ 19,50,000/- i.e. claim of ₹ 20 lakhs on account of amount received from M/s. Nirmal Seeds and ₹ 50,000/-disallowed by the Assessing Officer and the CIT(A) which was to be paid to one Shri Ishwar Manik Mali. In case the assessee has been held to have paid compensation only to the extent of ₹ 19,50,000/-, then the onus was upon the assessee to prove the source of said payment to the extent of ₹ 19,50,000/-only. The assessee admittedly, had received ₹ 20 lakhs from M/s. Nirmal Seeds which has been accepted by the Assessing Officer and hence, the compensation amount is sourced from the said loan and no further addition is to be made on this account in the hands of assessee. Coming to the second part of the order of CIT(A), who had perused the bank statements and also scanned and reproduced the same as part of the appellate order. On perusal of the same, the assessee was found to have deposited ₹ 5 lakhs each on 05.01.2005 totaling ₹ 15 lakhs in respect of said amount received from three persons. Though before the Assessing Officer in the original assessment proceedings, the assessee only produced 7/12 extract of the said persons but could not produced the same, hence addition was made to the extent of ₹ 15 lakhs. However, before the CIT(A) during the course of remand proceedings, all the three persons were produced, who admitted to have advanced sum of ₹ 5 lakhs each to the assessee. The entire transaction was through banking channel. In such circumstances, where the identity of the persons have been proved and even the creditworthiness has been established by filing relevant 7/12 extract, agricultural land holding and the produce, then the genuineness of transactions stands established and there is no merit in the addition made under section 68 of the Act and the same is deleted. Accordingly, the grounds of appeal raised by the assessee are allowed.
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2016 (12) TMI 748
Disallowance u/s. 14A - Held that:- From going through the audited balance sheet of the assessee and more specifically schedule-5 of the paper book we observe that there are various investments regularly made during the year in the Mutual Funds and tax free bonds, some of them are brought forward, some have been sold out and in some cases there have been addition to the previous balance. In all regular activity in the investment account has been carried out during the year and certain amount of expenditure towards administrative cost, salary expenditure, bank charges etc. cannot be ignored in the given circumstances. Further looking to the provisions of rule 8D(iii) r.w.s. 14A of the Act we believe that it is not easy for the Assessing Officer to go into the intricacies of the books of accounts in order to extract particular details in order to calculate the cost incurred towards managing investment. In order to cure this situation amended Rule 8D comes into fore play. We find that as per rule 8D (iii) amount of ₹ 3,53,002/- has been calculated and looking to the size and variety of investments, we find that the disallowance has been reasonably sustained by ld. CIT(A). We uphold the same. Accordingly, this ground of assessee is dismissed. Addition made u/s. 41(1) - Held that:- One last opportunity may be given to assessee and we restore this limited issue to the file of Assessing Officer for verifying unpaid liability of Pal Peogeot Limited ₹ 5,49,929/- and Oriental Transport Co. ₹ 4,93,486/-. Further we direct the assessee also to show all necessary evidences and documents to prove that there exists a dispute to the extent of impugned amount of ₹ 10,33,414. In case assessee is unable to prove the dispute both these parties in the past then the impugned amount of ₹ 10,33,414/- will be sustained as an addition u/s. 41(1) of the Act. Accordingly, this ground is allowed for statistical purposes. Assessing Officer erred in rejecting the books of account and estimate the profit.
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2016 (12) TMI 747
Addition under section 69C - unexplained expenditure - Held that:- Assessing Officer has given ample opportunity to the assessee to explain this issue but no evidence was filed before Assessing Officer at assessment stage. The assessee also failed to explain the relevance of the additional evidence because in the certificate of Secretary, Agriculture Market Produce Committee, Solan, it is nowhere clarified as to how the contents of the same were relevant to the matter in issue. It merely explains the identification of firms' names instead of writing full name. Since assessee failed to explain as to how the additional evidence was relevant to the matter in issue, we are of the view ld. CIT (Appeals) correctly refused to admit the same at appellate stage. However, considering the totality of the above findings, it is clear that addition is wholly unjustified in the matter. We, therefore, set aside the orders of authorities below and delete the addition of ₹ 8,11,490/-. This ground of appeal of the assessee to that extent is allowed. Addition under section 69C - Held that:- In the light of provisions of Section 292C, it is clear that assessee has made purchases of construction material which belong to the business of the assessee and in the absence of any plausible explanation, the authorities below were justified in making the addition under section 69C of the Act. No infirmity have been pointed out in the orders of authorities below. We, therefore, do not find any merit in this ground of appeal of the assessee. Addition on account of estimation of net profit - Held that:- Hon'ble Punjab and Haryana High Court in the case of CIT vs. K.S. Bhatia [2002 (9) TMI 8 - PUNJAB AND HARYANA High Court] held that, "Mere fact that the profits were low compared to the earlier years was not a circumstance or material which could justify an estimate in the circumstances of the case". As noted above, since the assessee has already surrendered additional income of ₹ 25 lacs in assessment year under appeal and no other reasons have been given by the Assessing Officer for estimating higher profit rate. Therefore, mere low NP rate shown in assessment year under appeal by itself is no ground to make addition of this nature against the assessee. We, therefore, do not justify the orders of authorities below in making and upholding this addition. We, accordingly, set aside the orders of authorities below and delete the addition
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2016 (12) TMI 746
Unexplained cash deposits - applicability of peak theory - Held that:- The source of deposits of ₹ 7,74,000/- by the assessee were from his past capitals, past savings, recoveries from debtors (as proving that assessee showing interest income), withdrawals from the banks during the year and receipts from business. Since we have held above that the all the money deposited amounting to ₹ 29,88,000 in the two bank accounts belong to the assessee, the above explanation regarding source of such deposits thus has to be seen and examined in context of deposit of ₹ 29,88,000. However, we find that there is no finding by the AO in this regard. We therefore, set-aside the matter to the file of the AO to examine a fresh the source of cash deposits in the appellant’s bank accounts taking into consideration the above explanation by the ld AR. Where the appellant’s is able to provide appropriate explanation to the satisfaction of the AO, the AO will provide appropriate relief to the appellant. In a situation, where the appellant is unable to provide appropriate explanation to the satisfaction of the AO or the AO is not fully satisfied with the appellant’s explanation, given the periodicity of deposits and utilisation of such deposits from time to time, the AO is directed to apply the well-accepted peak theory to determine the quantum of additions in the hands of the appellant. - Decided in favour of assessee for statistical purposes.
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2016 (12) TMI 745
Validity of notice under Section 158 BC (a) - Held that:- Notice under Section 158 BC (a) as well as under Section 158 BC (b) are mandatory. Notice under Section 158 BC (a) has a different intent and requirement of notice under Section 143(2) read with 158 BC (b) is with different intent. Two are mutually exclusive but both have to comply with. In the present case, Tribunal has held that no valid notice under Section 158BC was given to assessee and provision being mandatory block assessment made by Assessing Officer is illegal. Judgement of Bombay High Court in Shirish Madhukar Dalvi Vs. Assistant Commissioner of Income Tax and others [2006 (7) TMI 145 - BOMBAY High Court] cannot help Revenue in view of law laid down by Supreme Court in M/s Hotel Blue Moon (2010 (2) TMI 1 - SUPREME COURT OF INDIA ), wherein notice under Section 158 BC (a) and (b) read with 143(2) of Act, 1961 have been held mandatory. Questions formulated above against Revenue and in favour of assessee
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2016 (12) TMI 744
Revision u/s 263 - write off investment - Held that:- The facts remain that during a y 2006-07, the assessee has written off the investment of Rs. One crore & claimed it as a revenue expenditure. In the assessment made for ay 2006-07 u/s.143 (3) dated 31.12.2008, the A O has disallowed it as a capital expenditure and that order had attained finality. Out of that one crore , the assessee recovered ₹ 60 lakhs on 31.03.2007, ie during the period relevant to the a y 2007-08 & ₹ 40 lakhs on 03.04 & 30.4.2007, ie during the period relevant to the a y 2008-09. Although, the assessee has recovered ₹ 60 lakhs only in ay 2007-08, recognized it as an income & credited it in its P & L account, but claimed a deduction of Rs. One crore in the computation memo of its revised return , then arrived the total income and declared such total income which was ultimately accepted by the AO in the impugned assessment order. Such an action is not correct as per the ratio relied on by the DR, supra. Thus, there is an error in the impugned assessment order. Alternatively, as held by the Pr. CIT, even if the assessee’s argument that when its claim of write off at Rs one crore as an expenditure is not allowed as a deduction in ay 2006-07 on the ground that it was capital in nature, subsequently , when such amounts are recovered by it & was offered as an income in the ays 2007-08 and 2008-09 , then such receipts should also be treated as capital in nature & they should be reduced from the income of the respective year is considered in its favour, even then, the assessee has recovered ₹ 60 lakhs only in ay 2007-08 and offered it as an income in that ay. However, it claimed a deduction of Rs. One crore which was accepted by the AO in the impugned assessment order. Thus, an excess deduction of ₹ 40 lakhs was allowed to the assessee in ay 2007- 08, which is an error and it clearly falls within the scope of section 263 of the Act. - Decided against assessee. Under invoicing - Held that:- The FOB rate per weighing metric tonne amounted to Rs,1,955/- (under invoicing to the extent of 53%). The extent of under invoicing was calculated on the basis of information provided by the Customs Department of Marmagao and Panjim ports for the year 2008-09. The Shah Commission report is on the basis of average sale FOB price for the same grade of iron on the same day since it is based on the average freight on board (FOB). On a review of records, the Pr CIT found that the AO has not verified the pricing adopted by the assessee while making exports so as to examine whether there is any under invoicing resorted by them. The A O did not make any enquiries/verification and reconciliation of sales. Since the A O has not considered the issue of under invoicing by conducting necessary enquiries, on the transactions recorded by the Shah commission, the Pr. CIT held that his action resulted in under assessment and the same is erroneous and prejudicial to the interests of Revenue. On the other hand, the assessee could not furnish any material to dislodge the findings of the Pr. CIT to say that the AO has examined this issue and then recorded his findings in the impugned order. When the AO has not examined the impugned issue and did not record a finding in his order, his order clearly falls within the scope of Section 263 of the Act. In pursuance of Section 263, when the Pr. CIT passed an order holding that the assessee can demonstrate before the A O that the said transaction mentioned in the show cause notice did not pertain to them by producing necessary evidences and materials as explained in their submission. The AO should duly consider such evidence and make necessary enquiries and complete the assessment in accordance with law by giving reasonable and sufficient opportunity to the assesse before completing the assessment, such an order could not have been contended as detrimental to the interest of the assessee, as it was always open to the assessee to justify its claim - Decided against assessee.
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2016 (12) TMI 743
Depreciation claimed on temporary erections - Held that:- It is evident from the bills raised by the different vendors, that the work carried out by the assessee was not in the nature of the repair work or refurbishing or renovation of the old premises, but it was in the nature of addition to the premises, which have been taken on the lease for initial period of five years The renovation made by the assessee company is in the nature of permanent structure by way of Brick Wall partitions, panelling of Aluminium, Flooring etc. which cannot be covered under current repairs as provided in s. 30 of IT Act, 1961. Such work as made by the assessee company, cannot be stated so as to keep the premises as restored to good condition or save it from exhaustion or compensation of loss. The work in the case of assessee, are meant to altogether change the uses by way of expanding its capacity substantially and changeover of its look. The expenditure is certainly capital in nature on which depreciation can only be allowed.
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2016 (12) TMI 742
Levy of penalty u/s 271(1(b) - non attendance of the assessee - Held that:- The facts emanating from the orders of the authorities below the assessee was given notice which was served on 11-01-2013 by which the assessee was requested to attend and submit the details on 15-01-2013. It was this non attendance of the assessee against which penalty u/s 271(1)(b) was levied. On 15-02-2013 a show cause letter was issued which was served on 18-02-2013 in response to which the assessee submitted a reply. Thereafter assessment order u/s 143(3) was passed. Now perusal of the facts clearly indicate that this was a case of search and seizure on a big group. Four days time to submit details in such a case is not at all reasonable from any stretch of imagination. Further more the assessee did reply to the subsequent show cause notice and assessment was framed u/s 143(3) of the I.T. Act. This has also to be looked into on the anvil of assessee's submission that the AO has refused the assessee recording of attendance on the specified date and for which the assessee has petitioned to higher authorities.In these circumstances, in our opinion, there was a reasonable cause for non attendance of the assessee. Hence on the anvil of section 273B penalty is not leviable. As the above fact clearly indicates it is a technical breach and in such circumstances, as held by Hon'ble Apex Court in the case of Hindustan Steel Ltd. vs. State of Orissa [1969 (8) TMI 31 - SUPREME Court] penalty need not be levied. Hence in the background of aforesaid discussion and precedent have no hesitation in deleting the levy of penalty. - Decided in favour of assessee
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2016 (12) TMI 741
Penalty under section 271(1)(c) - disallowance of prior period expenditure - Held that:- Hon'ble Punjab and Haryana High Court in the case of "CIT, Ludhiana vs. East Man International" (2012 (10) TMI 249 - PUNJAB AND HARYANA, HIGH COURT) observed that mere making of claim for deduction of prior period expenses which was ultimately found to be unsustainable would not by itself be inaccurate particulars of income as to pass penalty order under section 271(1)(c) of the Act. As assessee is a government undertaking and no personal interest was involved for furnishing of inaccurate particulars of income or concealment of income. In our view, it is not a case of furnishing of inaccurate particulars of income or of concealment of income. We, therefore, do not find any infirmity in the order of the Ld. CIT(A) while deleting the impugned penalty. - Decided in favour of assessee
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2016 (12) TMI 740
Addition unexplained expenditure under Section 69 (C) - Held that:- While confirming the order passed by the Assessing Officer, the CIT (Appeals) gives no reason for rejecting the ground as made by the assessee. It does not deal with the contention of the assessee at all that the assessee was being charged twice for the same amount and this was not justified. The CIT (Appeals) simply confirmed the orders of the assessing authority without recording any reason why it has rejected the contention of the assessee that it amounted to double addition. This issue is, therefore, required reconsideration by the CIT (Appeals). Expenses from meals is concerned, the Tribunal while dealing with the matter has made general statement that ₹ 15 would suffice for a meal of a labourer and has not accepted the contention that it was a cost of ₹ 35. No reason had been given for coming to such a conclusion. There is no examination of any material or evidence on the basis of which it has arrived at such a conclusion. Therefore, the matter requires reconsideration on both the accounts made by the CIT (Appeals). The matter is, therefore, remanded back to the CIT (Appeals) for reconsideration.
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2016 (12) TMI 739
Validity of reopening of assessment - reasons to believe - bogus entries made - Held that:- Whilst the assessee, no doubt, replied to the queries (especially question no.10) addressed to it on 21.12.2009, the materials on record clearly show that there was no full disclosure. The requirement in such cases - whether the AO is prima facie not satisfied about the genuineness of the transaction (Section 68), is not merely to establish the genuineness of the identity but also genuineness of the transaction itself and the creditworthiness of the investor. The materials supplied to the AO at the relevant time on 07.02.2009 (by the assessee) there is singular absence of documents such as bank details of the share applicants: undoubtedly, the cheque numbers were disclosed whereby amounts were received by the assessee and credited to its accounts. They were, however, not a full disclosure. A further look into the bank accounts or even the bank branches would be sufficient in the circumstances, which was possible if Bank details were given (i.e. name of bank branch etc.). Likewise, the ITR form disclosing returns raise more questions than satisfy the queries. They merely show that the share applicants paid paltry amounts as income tax even while claiming to have invested amounts ranging over ₹ 8 crores. Clearly, there was no full disclosure of material facts. Thus we are of the opinion that the petitioner is disentitled to relief. The impugned notice is valid. - Decided against assessee
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2016 (12) TMI 738
Undisclosed cash deposits - Held that:- On perusal of the Bank statements and narration in those bank statements, it is noticed that the purchases of the assessee was through cheque which establishes the trading business of the assessee. It is further noticed that assessee had furnished the sales accounts, purchase accounts and cash flow statements, bank A/c etc before the authorities below. It is further noted that the assessee is a retail trader and the assessee is not required to maintain books of account as per provision of Section 44AF and the case of the assessee fall u/s 44AF of the Act. As noted that in the case of ITO Kishangarh vs. Sh. Pushpendra Kumar Jain (2016 (1) TMI 1190 - ITAT JAIPUR), the ITAT Jaipur Bench had treated the cash deposit in the bank account of the assessee as undisclosed turnover of the assessee and directed to apply the gross profit rate @10%. Thus taking into consideration all relevant facts and also the decision of Coordinate Bench in the case of ITO Kishangarh vs. Sh. Pushpendra Kumar Jain (supra), the AO is directed to estimate the net income of assessee @ 10% on the turnover of ₹ 23.05 lacs. Thus the appeal of the assessee is partly allowed.
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Customs
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2016 (12) TMI 705
Illicit import of RBD Palmolein - DEPB scheme - fake and forged DEPB licences - whether the clearance of imported goods by utilization of fake/forged DEPB licences are in order and whether extended period of duty demand is sustainable and if both these are upheld, whether imposition of penalty is in order? - Held that: - We note from the very same Commissionerate another appellant viz. M/s.DCW Ltd.[2016 (2) TMI 387 - CESTAT CHENNAI] has contested this issue and held that buyer has no remedy against the seller and takes all risks of defect and based on the principle of "Caveat Emptor" laid down by the Supreme Court, the appeal filed by M/s.DCW Ltd. the demands were confirmed. Extended period of limitation - Held that: - While we agree that the SCN has not made a connection with regard to the fake and forged licences and guilty mind of the appellants, we are of the view that since we have taken a decision in the case of DCW Ltd., there is no reason for us to deviate from the same, and accordingly invocation of extended period is also upheld. Imposition of penalties - Held that: - While we are following the precedence in the case of DCW Ltd. in so far as the confirmation of demand of duty is concerned, we do not wish to follow this as a precedence for the purpose of imposition of penalty for the reason that in those cases, the penalty was not under Section 114A but in the instant appeals, the penalties are under Section 114A where there is no discretion for the Tribunal to impose any lesser penalty. The appellant made a plea before the Bench that they had filed police complaint and got the offenders arrested and it was the department duty to have taken up the matter further but failed on this score. This issue has also been dealt by the Tribunal's decision in the case of DCW Ltd. and therefore there is no reason for us to deviate from the said view taken by us. Demand of duty is upheld - Invocation of longer period is upheld and the penalties are upheld. Appeal dismissed - decided against appellant-assessee.
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2016 (12) TMI 704
Valuation - enhancement in declared value - Held that: - we find that from the letter dated 29.10.2002, which is on the letter head of the respondent, it appears that the order was received by the respondent in the year 2000 itself. In the said letter, the respondent requested for an appealable copy of the Order-in-Original dated 23.6.2000. However, this letter was not available before the Commissioner (Appeals). In view of the aforesaid letter, the finding of the learned Commissioner (Appeals) that the respondent had not received the order dated 23.6.2000 become incorrect. Since in the second appeal, the Order-in-Original is based on the first order dated 23.6.2000, therefore, the second order is consequential to the first order dated 23.6.2000. We are therefore of the considered view that both the matters should be remanded to the Commissioner (Appeals). The Commissioner (Appeals) shall reconsider both the case in the light of the respondent letter dated 29.10.2002, which is to be verified with Dy. Commissioner of Customs, SVV, whether this letter was submitted by the respondent and genuineness of the same. Accordingly, after such verification, the learned Commissioner (Appeals) shall pass a fresh order on limitation as well as on merit of the case - appeal allowed by way of remand.
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2016 (12) TMI 703
Denial of benefit of Notification No.21/2002-Cus. dt. 1.3.2002 - contractor of nuclear project - goods meant for project used therein - Held that: - The notification is concerned with the goods required for setting up of nuclear project having a capacity of 440 MW or more as certified by an officer not below the rank of a Joint Secretary to the Government of India in the Department of Atomic Energy. Requirement of law is that described goods as specified in List 43 in the notification should be imported for the purpose of setting up of nuclear projects. Such fact is not in dispute. The second condition is that projects should be of 440 MW. That is also not disputed. The last condition is that the requirement of the goods as well as the capacity is to be certified by a specified officer of Govt. of India which is also not disputed. Appellant says that the goods imported was within the knowledge of the nuclear project authority. They were the essential party to the import since their name appears in the Bills of Entry also. He demonstrates that the goods were imported on account of the nuclear project. The sum and substance of the requirement of the notification is that the goods is subjected to exemption but not the person who imported. Therefore, without any doubt as to the import of the goods and use thereof in the Nuclear Project as per certificate issued by the Notified Authority not disputed by Revenue, there cannot be denial of benefit of the notification to the appellant - appeal allowed. So far as the project import benefit is concerned, in view of grant of benefit under the notification, that ipsofacto allows such benefit. Appeal allowed - decided in favor of appellant.
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2016 (12) TMI 702
Validity of addendum to the SCN - Seizure of Heroin concealed in books attempted to be couriered to Maldives - imposition of penalty - Held that: - There is no dispute that the parcel in question was received and handled by the appellant. With regard to the contention that the addendum issued to him does not have validity, I find myself in agreement with the views of the lower appellate authority that when the show cause notice was issued within the prescribed time from the date of seizure, any addendum or corrigendum issued was with reference to the said notice only. In any case, the addendum in question, dated 03/05/2013 specifically indicates that it is issued as part and parcel of the show cause notice dt. 22.11.2011 and further, it only seeks to give notice, as to why penalty should not be imposed, inter alia, on the appellant under Section 114 (i) of the Customs Act, 1962. I am of the considered view that since his role in the entire modus has been established, he cannot claim ignorance as an excuse for non-imposition of penalty. Further, from the investigation it has emerged that in the accompanying invoice to the Airway Bill, his name was shown partially as 'Narayana, Habsiguda, Hyderabad' and his identity card issued by Election Commission only was enclosed as proof of consignor/exporter. These facts only serve to demolish the claim of innocence by the appellant. The appellant cannot in any way claim that he was an unwitting accomplice who happened to be in the wrong place at the wrong time. On the other hand, the conduct and role played by the appellant give the lie to any such averment. Thus, concerning the complicity of the appellant, the principle of res ipsa loquitur (the thing speaks for itself) will verily apply. Those who come for judicial succour should come with clean hands. Therefore, no merit is found in the appeal and hence the same is dismissed. MA filed by appellant is also disposed of accordingly.
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2016 (12) TMI 701
Refund sanctioned to be paid - Rule 41 of CESTAT Procedure Rules - Held that: - Once the Revenue loses its right to retain sums which are not due to it, as per an order of any appellate forum, be it the Commissioner (Appeals), Tribunal or the High Court, it has to become vigilant in either refunding it back to the assessee or obtaining an order from the higher forum for stay of such refund. It goes without saying that the Revenue must weigh the pros and cons of seeking a stay against implementation of the order of the lower appellate authority as there will be interest liabilities that the Revenue will have to discharge ultimately if its challenge before the higher appellate forum does not succeed. Ld. Departmental Representative submits that they be given another chance to move the Hon’ble High Court for expeditious hearing of the stay petition as soon as the Hon’ble High Court reopens after Diwali vacation, though we are not convinced with such an argument in the absence of inactivity from January 2014. However, in the interest of justice, respecting the word of the Id. Departmental Representative, we adjourn these applications to 28.11.2016 to give revenue an opportunity, to either get a stay order from Hon’ble High Court or implement our orders by sanctioning the refund to applicants herein. Ld. Departmental Representative is specifically instructed to apprise the bench about the action - Matters adjourned to 28.11.2016.
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2016 (12) TMI 700
Levy of penalty for abetting export fraud - imposition of penalty - export of red sanders - Held that: - they have been omitted to take sufficient care by plainly trusting the CHA appointed by them and totally handing over the responsibility of transportation and inspection by Customs at Chennai to the latter. The very same CHA was found to have played a major role in the attempted fraudulent export of red sanders by replacing the granite slabs. Both the Director/Managing Partner have accepted that the export orders have been obtained without knowing the details of the person involved and also the buyers. Hence, while there is not any direct involvement of appellants in the alleged attempted export of red sanders, nonetheless, they cannot go scot-free for their association with the fraudsters even if only by way of omission. - levy of penalty confirmed though reduced - decided partly in favor of appellant.
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2016 (12) TMI 699
Benefit of Notification No. 25/99-Cus dated 28.2.1999 - concessional rate of duty on ‘Strontium Carbonate’ falling under Chapter 28 used in manufacture of “Glass Shells/Parts for Colour Picture Tubes” - certificate in terms of Rule 4 of the said Rules - Held that: - Exhibit –‘H’ of the appeal memorandum is a letter of the appellant addressed to the Dy. Commissioner of Customs, wherein they have claimed that they had sought exemption under Notification No. 25/99-Cus. In the said letter, they have also claimed that they had submitted a copy of the certificate also. In the letter, there is no mention of request of reassessment under Section 149, though the gist of the letter clearly indicates that they are seeking reassessment and rectification of mistake - matter is remanded to the original adjudicating authority to reexamine the case of the appellant in light of Section 149 of the Customs Act, 1962 - appeal allowed by way of remand.
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2016 (12) TMI 698
Maintainability of petition - mixed question of law and facts - import of goods on the basis of illegal amended Bill of Lading - Raw Cashews - Held that: - It cannot be forgotten that when a right or liability is created by a statute, that itself prescribes a remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy, as opined by this Court. Further, just because the statutory remedy is an onerous one, without exhausting the same, a litigant is not entitled to file a writ petition - In the upshot of qualitative and quantitative discussions and also this Court, keeping in mind of an essential fact that the Petitioner makes a claim for the cargo in question based on proforma Bill of Lading and when the claim of the Petitioner is very much disputed by the Respondent Nos.4 and 5, and further when the Sixth Respondent falls in line with that of the Petitioner to the effect that the writ Petitioner is only entitled to get the cargo and thereby its Firm is entitled to get delivery of the cargo, pursuant to High Sea Sale Agreement, dated 21.04.2016 and that apart, when the Fourth Respondent comes out with the plea that the IGM can be amended as per Section 30(3) r/w Levy of Fees (Customs Documents) Regulations, 1970, then, this Court is of the considered view that the disputes between the parties are only to be settled before the Adjudicating Authority/proper officer (Fact Finding Authority) under the Customs Act. In fact, the rival claims/disputes between the parties in the instant case, which centres around on mixed questions of Facts and Law, cannot be investigated/not to be gone into by a writ Court under summary proceedings. Viewed in that perspective, this Court holds that filing of writ petition by the Petitioner is per se not maintainable. Consequently, writ petition fails. Petition dismissed - Liberty granted to the respective parties to approach the Adjudicating Authority/proper officer under the Customs Act, 1962 or to seek appropriate remedies under the General Law, Civil Law or Criminal Law and to seek redressal of their grievances, if they so desire/advised.
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2016 (12) TMI 697
Benefit of exemption Notification No. 132/94-Cus dated 20.06.1994 - non-fulfillment of condition of notification - Held that: - the appellant is under obligation to produce the certificate that the goods are required for such petroleum operations and have been imported under aforesaid contract, therefore we do not find any infirmity in the impugned order, whereby it was directed to produce the end use certificate as required under the notification. In this scenario, we are of the view that the matter needs to be remanded to original authority to pass a fresh order by taking into account the observations of the findings given by the Commissioner(Appeals) - Appeal is allowed by way of remand.
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Corporate Laws
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2016 (12) TMI 691
Reduction of the share capital - Held that:- There is no objection to the reduction of the share capital to be allowed and approved by this Court under Section 100 of the Companies Act, 1956. The same is therefore allowed and the company petition is accordingly allowed. The order including the minutes shall be delivered to the Registrar of Companies within twenty one days from the date of receipt of a certified copy of this order. The notice of reduction of paid-up equity share capital, shall be published by the petitioner company in the English Daily “The Hindu” and Kannada Daily ‘Udayavani’ Bengaluru edition within fifteen days from the date of registration of the order and minutes by the Registrar of Companies and a copy thereof shall be filed by the petitioner with the Registry.
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2016 (12) TMI 690
Maintainability of application U/s. 543 of the Companies Act, 1956 - misfeasance, malfeasance or breach of trust - application barred by limitation - Held that:- The application under Section 543 of the Act of 1956 was admittedly filed on 6-3-2002 following the winding up order dated 20-3-1997-i.e. within five years of the winding up order. Section 543(2) of the Act of 1956, provides for a limitation of five years to file an application under Section 543(1) of the Act of 1956. And Section 458A of the Act of 1956 further excludes a period of one year from the date of winding up order in computing limitation under Section 543(2) thereof. The application under Section 543(1) of the Act of 1956 could have therefore been filed in fact within six years of the winding up order. It was in the instant case thus filed within limitation Winding up - respondents directors Jointly and severally liable to compensate and or to contribute to the applicant company - Held that:- Evidence on record establish that the respondent directors thus cannot be held responsible for unaccounted inventory. It was further pointed out that as against the specific case and evidence in support thereof by the respondents, it is not the OL’s case that the inventories of the company in liquidation were not available at site when possession of land, building, plant, machinery and raw materials was taken by RIICO on 3-9-1996. Mr. Ajeet Bhandari submitted that none from RIICO has been produced by the OL to prove the said fact to controvert the evidence of Shri Sanjay Jain in regard thereto. The evidence of Dw.1 Mr. Sanjay Jain remained unshaken. And the evidence of the OL’s witnesses which included himself and the Chartered Accountant remained confined to accounts reflected in the company's books of account and the Statement of Affairs submitted by the Directors of the Company in liquidation on 28-9-2001. Based thereon inference of liability of the respondent directors was sought to be drawn.In the evidence on record, issues deserve to be decided in favour of the respondent directors and against the Official Liquidator. Allegation of non recovery of an amount towards security deposit, security for Oxygen cylinder and security pledged with the Sales Tax Department - Held that:- Ex.A-8 and A-9 filed by the respondent Directors and proved by Dw.1 Mr. Sanjay Jain, indicates that the said amount along with interest aggregating to ₹ 6500/- has been deposited with the OL through receipt No.1349 dated 12-9-2002. Therefore, this issue deserves to be decided against the OL and in favour of the respondents directors. Allegations of misfeasance and/ or breach of trust by respondent directors on the basis of the report by the Chartered Accountant - whether on the evidences of the OL a case against the respondent directors under Section 543(1) of the Act of 1956 is made out - Held that:- no specific evidence obtains on record against any of the respondent directors having misappropriated or otherwise having wrongly acted or omitted to act to cause loss to the company in liquidation to their corresponding enrichment/ benefit or otherwise. In fact no allegation of the respondent- directors benefitting personally from the assets of the company has been at all made by the OL. In fact, the Chartered Accountant in his report dated 27-12-2001 which is the basis of this application under Section 543 of the Act of 1956 has stated that no dishonesty in the affairs of the company can be attributed to the directors of the company. Only because the respondents were the Directors of the company as on date of passing of winding up order, it is presumed that they were in possession of the properties and records of the company in liquidation. Non accounting of which to the OL’s satisfaction tantamounts to their being fastened with damages/ liability under Section 543(1) of the Act of 1956. That is impermissible. No liability on the rebound is contemplated under Section 543 of the Act of 1956. Concrete positive evidence at the instance of OL and his witnesses is mandatory. Unless that burden has been discharged no liability on the directors can accrue. This has not been done in the instant case. Thus no case of misfeasance, malfeasance or breach of trust is made out against the respondents Sanjay Jain, Abhay Jain and Ajay Jain Ex-Directors of the company M/s. San India Electro Chem Private Limited (in liquidation).
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Service Tax
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2016 (12) TMI 737
Cenvat Credit - duty paying documents - services of sale of space ad time for advertisement - denial of CENVAT credit of Service Tax availed in respect of invoices to broadcaster issued in respect of advertisement of appellant broadcasted by the broadcaster - Held that: - In the instant case, the agency being an advertising agency has engaged the broadcaster for the purpose of advertisement. A perusal of the invoices clearly shows that the agency has merely acted as a conduit for transfer of money from the appellant to the broadcaster. The invoices of the broadcaster clearly show the name of advertiser as M/s Zapak Digital Entertainment Ltd. (the appellant). Name of the advertising agency is mentioned and is an agent in the said invoice. In the said circumstances, there is no doubt that the invoices of the broadcaster is issued in the name of Zapak Digital Entertainment Ltd. and not in the name of Mudra Radar as alleged in the notice. Reliance placed on the decision of the case of Marigold Coatings [2016 (5) TMI 10 - GUJARAT HIGH COURT], wherein it was held that duty credit cannot be taken on the strength of endorsed invoice. It can be seen that the instant case is not a case of endorsed invoice. A perusal of invoice clearly shows that the appellant’s name mentioning as a advertiser and therefore it is an invoice issued in the name of the appellant. The advertising agency in the instant case is only act as a conduit for payment. Appeal allowed - demand set aside - decided in favor of appellant-assessee.
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2016 (12) TMI 736
Levy of tax - benefit of SSI extended - whether the appellant is liable to discharge Service Tax liability under the category of “renting of immovable property” during the period 01.06.2007 to 30.09.2010? - Held that: - We find that liability to pay tax on “renting of immovable property” service is not in dispute as appellant, though Municipal Corporation have leased their commercial property during the relevant period and collected rent. The Service Tax liability and interest thereof in accordance with law is upheld. However, the Service Tax liability needs to be reworked out and we do find force in the contention raised by the learned Counsel that for the first year, i.e. 01.06.2007 to 31.03.2008 benefit of small scale service provider exemption needs to be extended. For the entire period in question i.e. 01.06.2007 to 30.09.2010 benefit of cum-tax value needs to be extended to appellant. The lower authorities are directed to re-work out the service tax liability and interest thereof; the appropriated the amount already deposited by the appellant towards liability and the interest thereof. As regards penalties, we find that in appellant’s own case in an identical issue, we have set aside the penalty invoking the provision of Section 80 of the Finance Act, 1994. We do not find any reason to deviate from such a view already taken. Accordingly by invoking the provision of Section 80, we set aside the penalty imposed on the appellant - appeal disposed off - decided partly in favor of assessee.
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2016 (12) TMI 735
Valuation - renting of immovable property service - the appellants were providing various common additional services and collected certain amounts from the tenants - whether the appellant was required to include the amount collected for such services under the head of “Renting of Immovable Property Services”? - Held that: - on perusal of rent agreement, it is found that ₹ 9,500/- per month is paid for the purpose of renting of the premises. The other amounts are paid a reimbursement for common additional services. These services can no stretch of imagination of renting of immovable property services and therefore, demand under the said head cannot be confirmed. The impugned order is set aside - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 734
Rejection of refund claim - rejection on the ground of non-furnishing of the requisite documents and correlation statements - appellant submits that the impugned order is not sustainable as the same has been passed without seeing the documents produced by the appellant along with the refund claim application. She further submitted that there is no requirement to submit the original documents in order to avail the refund of unutilized CENVAT credit - also reliance was placed on the decision of the case of C Bay Remote Services Pvt. Ltd. Vs. CST [2016 (8) TMI 990 CESTAT Mumbai] by appellant, where it was held that if the Adjudicating authority has any doubt, he may call for the original documents, in that event appellant should submit original documents as and when required. Held that: - this case needs to be remanded back to the original authority to examine the documents already produced by the appellant and also any other document which the appellant may produce before the original authority and the original authority is directed to decide the refund claim of the appellant keeping in view the judgments passed by the Tribunal and is relied upon by the appellant. - appeal allowed by way of remand.
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2016 (12) TMI 733
Reverse charge mechanism – import of yarn from Nepal – separate invoice raised for expenses like transportation, clearance expenses etc – is appellant receiving GTA services from exporter? - Held that: - similar issue decided in many case and thus the issue id no more res integra - reliance placed on the decision of the case of Chairman Silk Mills Pvt. Ltd. Vs. CCE Jaipur [2016 (8) TMI 946 - CESTAT NEW DELHI], where it was held that the contract of appellant with the Nepalese suppliers is for supply of yarn and not for providing any particular service. Transport of goods is an activity incidental to the supply of goods for which Nepalese suppliers has engaged transporters. Nepalese suppliers had not acted as the agents of the appellants for arranging transportation from Nepal border to the factory premises of the appellants. Just because the Nepalese suppliers had billed the appellants separately for transportation from Nepal border to factory premises alongwith other expenses, they do not become the agents of the appellants. In view of this, the appellants cannot be treated as recipients of GTA services in terms of Notification No. 35/04-S.T. – appellant not liable to pay service tax. Appeal allowed - demand set aside - decided in favor of appellant-assessee.
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2016 (12) TMI 732
Levy of tax - freight charges for transportation of sugarcane from fields - whether during the period 2005-06 to 2006-07, appellant is liable to discharge the Service Tax liability on the amounts paid by them as freight charges for transportation of sugarcane from fields? - Held that: - We have scrutinised the bill no. 93537 which was produced by the learned Counsel. On perusal of the said bill which had been settled by the appellant, to the farmer, clearly indicated that the appellant had deducted an amount paid by them towards harvesting cost to labours and transportation cost of sugarcane to their factory. After reducing the amount paid, appellant settled balance bill to the farmer. We also find that the learned departmental representative putting on record a letter received also includes a bill settled by the appellant wherein it is indicated that appellant had deducted the transportation cost and paid the same to the transporter. On this factual matrix in this case, we have to hold that appellant need not pay Service Tax on the amount of transportation charges. If the appellant had borne and paid transportation charges that would have been liable to pay Service Tax liability under Reverse Charges Mechanism as per the provision of Finance Act, 1994 and Rules made there under. Again there are no provisions for appellant to pay tax on deducted amount, from the final settlement of sale of sugarcane, as it cannot be treated as transportation charges paid by the appellant. The learned Counsel was correct in placing on record that similar issue came in before the Bench, in the case of Bhima Sahakari Sakhar Karkhana [2015 (10) TMI 627 - CESTAT MUMBAI] for taxability of amount paid to truck owner, are squarely applicable in this case and are in favour of the appellant herein, where it was held that there will be no Service Tax liability on the appellant sugarcane mills, as they have not received the service from a Goods Transport Agency. Appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 731
GTA services for the outward transportation of goods - period from 01-01-2005 to 31-10-2008 - failure to discharge tax liability - Held that: - The appellant has not put forward any valid contention to establish that there was sufficient ground for non-payment of Service Tax. The ignorance of law cannot be considered as an excuse for non- payment of tax. In view thereof, I do not find any infirmity in the impugned order - appeal dismissed - decided against appellant-assessee.
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2016 (12) TMI 730
Principles of natural justice - Mandate of the statute under section 35A(4) of Central Excise Act, 1944 - whether controversy is to be decided by the evidence and law applied thereto - Held that: - learned Commissioner (Appeals) is directed to deal each item under controversy and testing the evidence in respect of each such item shall apply the law. Appellant is entitled to fair opportunity of hearing in the course of re-adjudication. The authority shall pass a reasoned and speaking order dealing each item of the CENVAT credit claimed - appeal is remanded to the Commissioner (Appeals) - appeal allowed by way of remand.
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2016 (12) TMI 729
Commercial and Industrial Construction Service - demand - received goods and material like steel, cement etc. free of cost from their customers, which were used by them and their value was not included in the assessable value - Held that: - the issue is no more res integra as the judgment of Larger Bench of this Tribunal in the case of Bhayana Builders (P) Ltd vs. CCE [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] is directly applicable to the issue and is in favour of the assessee, where it was held that The value of goods and materials supplied free of cost by a service recipient to the provider of the taxable construction service, being neither monetary or non-monetary consideration paid by or flowing from the service recipient, accruing to the benefit of service provider, would be outside the taxable value or the gross amount charged, within the meaning of the later expression in Section 67 of the Finance Act, 1994. Accordingly, respectfully following the said decision of the Larger Bench, we hold that the impugned order is unsustainable and liable to set aside. Sale of scrap amounting to ₹ 17.10 lacs which was generated during the course of providing taxable service - whether demand of service tax on such sale justified? - Held that: - We find that sale of scrap, whose nature is not defined in show cause notice, cannot be said to be consideration for the taxable services provided or to be provided. There is no provision in Service Tax Rules for inclusion of value of scrap as an additional consideration; only the amounts received towards taxable services are leviable to service tax. The case of M/s Jay Engineering Works Ltd. vs. C.C.E, Hyderabad [1996 (12) TMI 206 - CEGAT, MADRAS] relied on by the Commissioner pertains to Central Excise and the Commissioner has clearly erred in concluding that its ratio decidendi is applicable to the instant issue. In the absence of any legal provision to include value of sale of scrap in the assessable value for service tax purposes, the same is liable to be set aside. Demand set aside - appeal allowed - decided in favor of assessee.
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2016 (12) TMI 728
Reverse charge mechanism - amount of commission paid to overseas agent - Section 66A of the Finance Act, 1994 - the service tax had to be paid in cash and payment thereof by utilising the cenvat credit was not permissible - Held that: - I find that the issue as to whether service tax can be paid from cenvat account by the appellant under reverse charge mechanism is no more res-integra, in view of the decision of this Tribunal in the case of the appellant Commnr. of Central Excise, Jaipur Versus M/s. Shree Rajasthan Syntex Ltd. & Others [2015 (3) TMI 1241 - CESTAT NEW DELHI] where the Tribunal held that cenvat credit can be utilized for payment of service tax payable under reverse charge mechanism in respect of services received from abroad - appeal allowed - decided in favor of appellant-assessee.
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Central Excise
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2016 (12) TMI 727
Manufacture - deputation of manpower - Appellant for the purpose of administrative convenience deputed its persons to the premises of SPPL. There was no relation between both the parties to cause evasion to Revenue when the transaction was at arm’s length. The party only agreed to manufacture medicine on behalf of appellant in its factory i.e., of the SPPL. According to the provisions of Central Excise Act, 1944 and according to the Loan License Agreement, appellant is not the manufacturer of the goods. Department merely relied on certain statements to proceed to hold that the appellant as the manufacturer. Held that: - The moot question in these appeals is to decide who is the manufacturer. We are not concerned with any “Loan License Agreement” because such term is used for convenience of the parties and that has no relevance to the Central Excise law. We are also not concerned with the quality or standard of the drugs manufactured by the loan licensee or anybody manufacturing such product. We are only concerned with the parameters of Section 3 of the Central Excise Act. Mere supply of the raw material shall not alter the status of a manufacturer or a job worker. The term “manufacture” or the “Loan Licensee” if used in the Drugs and Cosmetics Act, 1940 has no relevance to Section 3 of the Central Excise Act, 1944. Both the statutes serve their own purpose. Revenue law is concerned with the manufacture of excisable goods. The factual scenario of the case brings SPPL to the fold of “manufacture” under Section 3 of the Central Excise Act, 1944. Therefore, in absence of any evidence to the contrary, appellant cannot be held to be a manufacturer of the product. Accordingly, its appeal is allowed - The other two appellants are the persons concerned with the appellant-company. Once the principal-appellant gets relief in its appeal, consequential appeals of these persons are allowed. Appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 726
Denial of CENVAT credit - polypropylene chips - PP chips - suppliers of the said inputs had paid duty of excise on the inputs - Held that: - as no re-assessment proceedings have been conducted against the supplier and the assessment against the supplier has been final, in that circumstance, credit of duty paid on the inputs cannot be denied to the appellant - The said issue came up before this Tribunal in the case of MDS Switchgear Ltd. [2001 (4) TMI 130 - CEGAT, MUMBAI] wherein this Tribunal has held that we find absolutely no substance in the attempt of the learned Commissioner to convert a part of the duty so paid into "deposit of duty". There is no legal basis for such presumption. The rules entitled the recipient manufacturer to avail of the benefit of the duty paid by the supplier manufacturer. A quantum of duty already determined by the jurisdictional officers of the supplier unit cannot be contested or challenged by the officers in charge of the recipient unit - we hold that the credit cannot be denied to the appellant - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 725
Refund claim - time bar - Held that: - In this case it is admitted position that the respondent paid the duty during the course of investigation after clearance of the goods and not recovered of any duty from the buyers. The sole ground in the appeal filed of the Revenue is that the refund claim is barred by the limitation. In fact, the issue of liability was settled by this Tribunal vide Final Order No. 810/04-B dated 27.09.2004, thereafter, the respondent has filed refund claim of 10.11.2004 on receipt of the order to this Tribunal. In that circumstances, We hold that the refund claim has been filed by the respondent within time and the same has been entertained by the adjudicating authority below in favor of the respondent - appeal dismissed - decided against Revenue-appellant.
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2016 (12) TMI 724
Demand of interest - in case of the inputs are cleared as such, the reversal of the Cenvat Credit should be on the consignment basis and not on the last day of the month, this facility for payment of duty on last of the month is in respect of manufactured goods. A show cause notice was issued to demand interest from the appellant - Held that: - we find that interest can be demanded under Section 11AB of the Act and the provisions of Section provides that the interest was charged from the first day of succeeding the month in which duty ought to have been paid. Admittedly, the reversal of cenvat credit was done on the last day of the month. In that circumstances, we hold that the provisions of Section 11AB of the Act are not attracted. Consequently, demand of interest is not sustainable. In these circumstances, impugned order deserves no merits, hence set aside - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 723
Reversal of cenvat credit - input services commonly used in the manufacture of dutiable as well as exempted products - Held that: - Rule 6(3) of the Rules requires that if separate accounts are not maintained for the inputs / input services used for manufacture of dutiable as well as exempted products, the manufacture should reverse an amount at the rate of 10% of the value of the exempted products. However, I find that the amendment in Rule 6 vide N/N.23/2004-CE (NT), dated 10.09.2004 has given an option for proportionate reversal, instead of reversal of 10% of the value of the exempted products. The Notification has also been given retrospective effect for the period from 10.09.2004 to 31.03.2008. I find that the entire demand covered in the present case falls within the time frame covered in the retrospective amendment. It is also on record that the entire input service credit stands reversed along with interest payable thereon. Under the circumstances, the demand does not survive - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 722
Refund claim - on finalisation of provisional assessment certain excess were found which was claimed by the respondent has received and the adjudicating authority sanctioned the refund claim to adjust the said amount against the same of outstanding demand against the respondent and some part of the refund claim was credited in their account - Held that: - I find that although the adjudicating authority sanctioned the refund claim but the same was adjusted the amount outstanding demand against the respondent. The outstanding demand was challenged before this Tribunal and this Tribunal vide order no. 788-94/2006 dated 26.09.2006 has already dealt the issue and decide the issue in favour of the respondent and the said demand have been dropped. Therefore, on that part, I do not find any infirmity in the impugned order - Further, I find that the respondent is paying duty first utilising cenvat credit account and balance amount of duty has been paid through PLA. In that circumstances, the Ld. Commissioner (A) has rightly allow refund claim in cash, therefore, I do not find any infirmity in the impugned order on this account also - appeal dismissed - decided against Revenue-appellant.
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2016 (12) TMI 721
Utilisation of CENVAT credit - Held that: - I find that Central Excise duty liability attributable to the defaulted period was paid by the appellant alongwith interest, which has been appropriated in the adjudication order dated 28.02.2012. It is a fact on record that the appellant had paid the excise duty on the goods removed from the factory during the defaulted period by utilizing the cenvat credit. The issue regarding utilization of cenvat credit was the subject matter of dispute before the Hon’ble Gujarat High Court in the case of Indsur Global Ltd. [2014 (12) TMI 585 - GUJARAT HIGH COURT], wherein the Hon’ble Court have declared the phrase “without utilizing the cenvat credit” contained in Sub-Rule (3A) of Rule 8 of the Central Excise Rules, 2002, as invalid. The effect of said judgment is that during the defaulted period, the assessee can pay the excise duty either from the cenvat account or by making debit in its Personal Ledger Account (PLA). In the case in hand, since the appellant has paid the Central Excise duty on clearance of goods by debiting its cenvat account, the same is in conformity with the provisions of Central Excise Rules as per the law declared by the Hon’ble High Court. Therefore, I do not find any merits in the impugned order - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 720
CENVAT credit - Manufacture of cement - The appellant is availing credit of the taxes paid on the coal as also on various services utilized by them for bringing the coal in their factory - Held that: - I find that admittedly the service tax stand paid by the washery on the full valued coal received by them. The appellant has taken the credit of the service tax paid by the washery. It is well settled law that the amounts cannot be challenged at the service recipient end and whatever tax has been paid by the service provider, would be available as credit to the service recipient - Otherwise also I find that an identical issue was considered by the Tribunal in the case of M/s Real Ispat & Power Ltd. vs. CCE, Raipur [2016 (4) TMI 327 - CESTAT NEW DELHI], the entire credit was held as admissible, irrespective of the wastage having occurred at the end of the coal washery. Further Tribunal in the case of Seven Star Steels Ltd. vs. CCE, CUS & ST, BBSR - II [2013 (5) TMI 119 - CESTAT KOLKATA] has held that the fact of loss of Iron Ore during the process of screening, when screening process is a part of the manufacturing process, cannot result in denial of part amount of Cenvat credit. The appellants have also contended that the washing process can be undertaken by them in their own factory, in which case the entire credit would be available to them. As such, I find no justifiable reasons to deny a part of the credit, as has been done by the Adjudicating Authority. Appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 719
Imposition of penalty - exemption criteria not followed - adjudication was beyond the SCN - Held that: - The facts of the case would clearly prove there was no commissioning of any offence on the part of the appellant in as much as no duty liability would also have accrued on the main appellant M/s. Devi Fabricators, the charge of contravention of rule 209A is not sustainable - There are no ingredients present under Rule 209A warranting imposition of penalty on the appellant. We normally do not prefer to remand the matter but this is a case, which prima facie shows that appellant may be aggrieved if the appeal is disposed exparte by Tribunal when above grounds of appeals have been raised in the appeal memo, which go to the root of the matter challenging basis of appeal order. We do not prejudge the matter, but prima facie noticing grievance of the appellant that adjudication has travelled beyond the SCN, it is considered that the appellate authority should grant reasonable opportunity of hearing to the appellant to lead defence and recording his defence both on fact and law shall pass a reasoned and speaking order - In view of the above prima facie observations, appeal is remanded to the ld. Commissioner (Appeals), who shall issue notice to the appellant within three months of receipt of this order and hearing the appellant shall pass appropriate order - appeal allowed by way of remand.
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2016 (12) TMI 718
Admissibility of credit availed on MS Angles, Plates, Channels etc - Held that: - It is observed that the subject items were mainly used by appellant for fabrication of structure used as basement for the capital good and for laying pipe lines. The original authority has entered into the conclusion that these cannot be considered as component/spare/accessorises to capital goods. On perusal of the month wise details of the credit availed it is seen that the appellant has not availed credit in the month of June and July, 2009. The period as per the invoices is seen to be prior to 07-07-2009 - In India Cements Ltd Vs CCE, Chennai [2015 (3) TMI 661 - MADRAS HIGH COURT], the Hon'ble High Court of Madras held that credit availed on MS items used for fabricating structural support is eligible, as without such support of the machines cannot be used without vibration and manufacturing process cannot be carried out - credit allowed - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 717
Denial of CENVAT credit - denial on the ground that appellants have availed irregular credit on MS Channels, MS Angles, MS Rolls, MS Bright Bars and Beams under the category of capital goods for the period August 2010 to January 2012 - Held that: - On perusal of records it is seen that MS Angles, Beams, Channels etc., were used by appellants for fabrication of tubes connecting the various machineries. There is no case for the department that the subject items were used for laying foundation or for building/shed. There is no allegation that the subject items were diverted in any other manner. Pipes fall within the definition of capital goods and therefore the subject items used for fabrication of steel tubes/pipes to connect the machines would fall under the category of parts/components of capital goods. Further it is seen that the department had full knowledge of the credit availed by appellants in the earlier audit conducted in 2010. Further the ER-I returns filed by appellant disclosed the credit availed. - Therefore on merit I find that the appellant has succeeded and the credit is eligible. Extended period of limitation - Held that: - The Show Cause Notice is issued invoking the extended period even though, the department had full of knowledge with regard to credit availed by the appellant in 2010. No objection was raised by the department after the earlier audit. There is no evidence to establish suppression of facts with intent to evade payment of duty. On such score, the appeal is allowed on merit as well as on the ground of limitation. CENVAT credit allowed - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 716
Shortages in stock - shortages of 1,236.240 MT of sponge iron - clandestine removal of 495.240 MT of sponge iron - demand of duty along with interest and penalty - Held that: - even if the assessee fails to explain the shortages themselves, the charge of clandestine removal cannot be imputed in absence of independent investigation to corroborate the allegation. As rightly observed by the Commissioner (Appeals), the investigations have failed to bring the charge of clandestine removal by leading evidences in the form of statement of buyers, transporters, flow back of funds, extra use of electricity, etc. He has rightly concluded that huge quantity of sponge iron would require a large fleet of lorries/trucks for their transportation and in the end in the absence of any such evidence on record, the findings of clandestine removal cannot be upheld. I also note that the Revenue has not produced any evidence for procurement of such a huge raw-material to manufacture the said quantum of assessee's final product. Before the final product is removed, the same is required to be manufactured. As such, heavy onus is placed upon Revenue to establish the manufacture of the said goods. There are no statements on records, either admitting the manufacture of the said goods or removal of the same in clandestine manner. As such, I fully agree with the Commissioner (Appeals) that the findings of clandestine removal based solely on the shortages detected by the officers cannot be upheld. As regards Revenue's allegation for clandestine manufacture and removal of 495.000 MT of sponge iron during the period of three days preceding to the visiting of officers, I find that the Commissioner (Appeal) has discussed each and every document recovered by the visiting officers and has held that the same cannot be made the basis. The Commissioner (Appeals) has taken into account all the relevant facts, discussed the various documents and has decided the issue on the basis of precedent decisions of the Tribunal. It is a fact that even deponents of the statements at the time of recording, have nowhere admitted the fact of clandestine removal. The entire case of the Revenue is based upon the assumptions and presumptions. Ld. Departmental Representative has argued that the appeal should be decided on the basis of preponderance of probability and Revenue cannot be expected to substantiate its case by arithmetical precision. However, I find that in the present case, the Revenue has failed to produce the evidences, even to tilt the weight of the evidences in their favour. Recovery of documents if any may be the starting point of investigation and it is expected from the investigating agency to go ahead to make enquiries from relevant factors. In the present case, Revenue's entire case is based upon the recovery of certain loose sheets or non-statutory documents, which admittedly require corroboration. No such corroboration being provided by Revenue, I am of the view that the findings arrived at by the Commissioner (Appeals) are appropriate and do not require any interference - appeal rejected - decided against Revenue.
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2016 (12) TMI 715
Jurisdiction of Dy. Commissioner - sanctioning the refund claim and crediting the refunded amount to the Consumer Welfare Fund under Rule 7 (6) of Central Excise Rules, 2004 - Held that: - the jurisdictional Range Officer and not the Dy. Commissioner Concerned is the adjudicating authority of this order. Dy. Commissioner is therefore functioning merely as administrative authority rather than a quasi judicial authority. This indifference will render the whole process futile, because it is pre-judged, based on administration report by the jurisdictional Range Officer and not on his own application or analysis of the facts of the claim under consideration - I am constrained to remand the matter back to the adjudicating authority, with specific instructions to grant an opportunity to the appellant to produce all the necessary documents in support of their contention that duty liability has not been passed on to its customers. The said authority will also give reasonable opportunity of hearing to the appellant and pass a reasoned and speaking order based on the facts and documents and proof adduced by the appellant during the course of proceedings - appeal allowed by way of remand.
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2016 (12) TMI 714
Opportunity of being heard - ld. Counsel says that both the EOU Unit and DTA unit were located at the same premises. When the dispute arose what that was debited in the DTA unit in respect of Cenvat credit has been claimed as relatable amount in the EOU unit. This aspect is totally ignored in the impugned order. Whereas, that was substantiated from the aforesaid extracts from the SCN - Held that: - Since adjudication record is not available for verification as well as the records which has initiated the SCN dated 28.03.2011 not available before the Tribunal, only for a limited purpose, the matter is remanded to the ld. Adjudicating authority to examine the pleading as above, and reach to a proper conclusion. Since the amount involved is very small and the assesse has already undergone suffering from the year 2010, it would be preferable for the authority to issue notice for the resolution of the dispute within a month of receipt of this order and recording the pleadings of the appellant as well as taking into account the evidence led as well as material facts into consideration shall pass appropriate order within three months from the last date of hearing - The authority shall grant a reasonable opportunity of hearing to the appellant to plead its defence both on fact and law before passing a reasoned and speaking order - appeal allowed by way of remand.
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2016 (12) TMI 713
Default in payment of duty - contravention of provisions of Sub-rule 3(A) of Rule 8 of Central Excise Rules, 2002 - the appellants cleared the goods using the Cenvat credit account during the period, which they defaulted payment of education cess and higher education cess as part of the duty - Held that: - The fact remains that a quantum of ₹ 4,260/- was defaulted by the appellant during the relevant period. It needs to be mentioned that the said amount had been reflected in the ER 1 return by the appellant. Taking into consideration, that the amount defaulted is nominal and also the fact that it was only educating cess, and secondary education cess that is to be calculated on the duty that has already been discharged, I am convinced that there is no mens rea /intention on the part of the appellant to evade payment of duty - In view thereof, on the facts as well, following the decision of the case, I hold that the demand is unsustainable - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 712
Refund claim - manufacture of Tray Cart System - As the appellants did not clear any goods in DTA and had exported entire quantity of Tray Cart Systems manufactured and the Cenvat credit taken on the inputs could not be utilised. The appellants filed refund claims for refund of accumulated Cenvat credit to the tune of ₹ 30,94,591/- - whether Cenvat credit of duty paid on inputs used in the manufacture of exempted final product is admissible when goods are cleared for export under bond? Held that: - In the case of Union of India Vs Sharp Menthol India Ltd [2015 (1) TMI 623 - SUPREME COURT] the Apex Court had occasion to consider the similar issue, which has also been decided in favour of the assessee by dismissing the appeal filed on the part of Revenue. The Hon’ble High Court of Bombay, in the case of UOI Vs Sharp Menthol India(Ltd) [2011 (4) TMI 27 - BOMBAY HIGH COURT] held that assessee is entitled to the credit of the duty paid on inputs viz. Menthol used in the manufacture of exempted goods ie menthol crystal which were exported under bond without payment of duty. Such cases are covered under Rule 6(6)(V) of Central Excise Rules,2002 and not under Rule 6(1)(6)(4) of Cenvat Credit Rules, 2004. Following the same, I hold that the first ground raised in the show cause notice for rejection of refund is not sustainable. The goods having been exported, it is immaterial whether the accumulated credit has been show as receivable/advances and the appellant is eligible for refund of accumulated credit in terms of Rule 5 of Cenvat Credit Rules, 2004 - I hold that appellant is eligible for refund - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 711
Whether the assessee is liable to pay duty on the goods manufactured by the job workers which were removed without payment of duty to their duty paid spare parts store? - Held that: - When the principal ground of the appellant is that job workers were entitled to the SSI benefit, appellant was deprived of the process of justice without consideration of such defence plea by the Authorities below. Appellant also categorically submitted that in absence of any undertaking given by it and such undertaking not borne by record, it cannot be presumed otherwise to hold against the appellant on the allegation that it had undertaken to bear the duty liability on the job worked goods. We did not find any material showing any undertaking by the appellant in the order of the ld. Adjudicating authority. Law is well settled that job worked goods shall be liable to duty in the hands of the job worker being manufacture unless otherwise exempt. But such liability is subject to consideration as to whether job worker was entitled to SSI benefit. Such specific plea being made by the appellant, authority should confine his re-adjudication to this limited issue for verification of record with the plea of the appellant made before him in the course of the proceeding. If he is satisfied with the pleading and that is borne by record as well as the material suggest that the appellant had not given any undertaking to bear duty liability on the goods manufactured by job worker, there shall be no duty liability on the appellant. As it appears that except interpretational issue there was no intention to cause evasion, there shall not be penalty. Appeal allowed by way of remand.
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2016 (12) TMI 710
Unjust enrichment - refund claimed on the tax paid on excess collection on the freight on demand - Held that: - the appellant could not establish the fact that the incidence of the duty for which refund was sought for has not been passed on to any other person. Therefore the Ld. Commissioner has held that the refund is not admissible in respect of the amount which was not borne by the appellant. Even today when the matter was argued by the Ld. Counsel, he could not produce any evidence as regard unjust enrichment, therefore the appellant is not entitled for the refund on the ground of unjust enrichment itself. - decided against appellant-assessee.
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2016 (12) TMI 709
Maintainability of appeal - Section 35B of the Central Excise Act, 1944 - whether the Tribunal can entertain an appeal from any order which relates to an order of rebate? - Held that: - it is clear that the Tribunal does not have jurisdiction to decide any appeal in respect of an order passed by the Commissioner (Appeals) if the order relates to rebate of duty of Excise. Even though the issue is only with regard interest on rebate, interest being a compensation for delay or denial of legitmate amount, I am of the view that it is integrally connected to the issue of rebate. From the above, I hold that the appeal is not maintainable for the reason that Tribunal has no jurisdiction to decide the appeal. The appellant however can persue the remedy before appropriate forum as they have been contesting before a wrong forum - The appeal is dismissed - decided against appellant.
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2016 (12) TMI 708
Extended period of limitation - ailing input services for transportation of inputs/capital goods into their factory - manufacture of exempted goods - Held that: - The assesse has reversed the irregularly availed credit before utilisation. The same was reversed prior to issuance of show cause notice. The issue is whether the assessee is liable to pay interest when the credit is reversed before utilisation. The issue is settled in the cases of COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE Versus M/s BILL FORGE PVT LTD, BANGALORE [2011 (4) TMI 969 - KARNATAKA HIGH COURT], Strategic Engg. Ltd. Vs CCE, Madurai [2014 (11) TMI 89 - MADRAS HIGH COURT]. The Hon’ble High Court of Karnataka and Madras, in the above decisions have referred to the judgment laid in Ind-Swift Labs case [2011 (2) TMI 6 - Supreme Court]. The Commissioner(Appeals) has observed that the assessee has disclosed the availment of credit in ER-1 return and that the said fact was well within the knowledge of the department and therefore, it cannot be alleged that the respondent/assessees has wilfully suppressed the facts with intent to evade payment of duty. As the assessee/ respondents has reversed the credit prior to utilisation, relying upon the decision in the case of Billforge Ltd and Strategic Engineering Ltd, I find no grounds to interfere with the well reasoned order passed by Commissioner (Appeals) - demand set aside - appeal dismissed - decided against Department.
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2016 (12) TMI 707
Maintainability of appeal - Second proviso to Section 35B of Central Excise Act, 1944 - the amount involved in the case is less than ₹ 50,000/- - Held that: - the impugned order was passed by the Commissioner under Section 35A which is specified under Clause (b) of sub-section (1) of Section 35B. In view of Second proviso to Section 35B (1), this Tribunal has discretion to refuse of to admit the appeal in respect of order referred to clause (b) or Clause (c) or clause (d) where amount of duty, amount of fine or penalty determined by such order does not exceed ₹ 50,000/-(before 6/8/2014) and ₹ 2 Lakhs (on or after 6/8/2014) - In exercise of the above discretion we refuse to admit these appeals. Therefore, the appeals are dismissed, without going into merit of the case, on the ground that the amount involved is below the threshold limit of ₹ 50,000/- - appeal not maintainable.
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2016 (12) TMI 706
Cenvat credit - whether credit is admissible on welding electrodes? - Held that: - Welding electrodes was used for repair and maintenance activity within the factory. This tribunal in [2016 (1) TMI 1187 - CESTAT HYDERABAD] had decided the issue in favour of the appellant in the appellants’ own case for the previous period. Following the same, I hold that the impugned order is not sustainable and the same is set aside and appeal is allowed with consequential reliefs if any.
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CST, VAT & Sales Tax
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2016 (12) TMI 696
ITC - ‘Product Information Literature’ - ‘Laboratory Stores’ - Whether on the facts and in the circumstances of the case, Gujarat Value Added Tax Tribunal was justified in law in holding that ‘Product Information Literature’ and ‘Laboratory Stores’ purchased by the appellant was not eligible for Inputs Tax Credit under the provisions of Section 11(3)(a)(vi) of the Gujarat Value Added Tax Act, 2003? - Held that: - the “laboratory stores” used in the laboratory unit for testing at pre-manufacturing and post-manufacturing stage are required to be held as “consumable stores” and therefore, are required to be held as “raw materials used in the manufacture”, as the requirement of testing is mandatory under Rule 22.4 of the Rules, 1945 and unless and until such a test is conducted and/or carried out the final product is not commercially saleable/marketable. Under the circumstances, the assessee shall be entitled to the Input Tax Credit under Section 11(3)(a)(vi) of the VAT Act on the “laboratory stores” such as glassware/glass tube, raw material, chemical etc. used in the laboratory for testing at pre-manufacturing and post-manufacturing stage. The question is, therefore, answered in favour of the assessee and against the Revenue. ‘Product Information Literature’ - Held that: - The ‘Product Information Literature” which is mandatorily required under the provisions of the Drugs and Cosmetics Act, 1945 and unless and until such information mentioned in the “Production Information Literature” is provided, the final product/drug cannot be sold. For the reasons stated above, it is to be held consumable stores and therefore, raw material as defined under Section 2(19) of the VAT Act and therefore, being the raw material used in manufacture of taxable goods i.e. in the present case the drugs, the assessee shall be entitled to the Input Tax Credit on such “Product Information Literature”. It is answered in favour of the assessee and against the Revenue and it is held that on such “Product Information Literature” giving the information as required under the provisions of the Drugs and Cosmetics Act, 1945 and to be pasted on the box containing the drug, the assessee is entitled to the Input Tax Credit. Appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 695
Imposition of penalty - detention of goods - clandestine removal - extra goods found loaded in the truck, apart from what was evident from the records - Held that: - The fact, clearly shows that the authorities themselves have found the goods covered by bill No.24 dated 22.4.2002 and form-31 No.F/JJ-0952524 were being imported in accordance with law. No discrepancy or breach of any of the provisions of the Act, was found. Under the circumstances, there was no occasion to levy penalty under Section 15-A (1)(o) of the Act with respect to the goods covered by the aforesaid bill. Justification of penalty upon the assessee with respect to the extra found metal waste of 2000 Kgs. - Held that: - the assessee has clearly stated that he has no concern with extra found goods and thereupon such extra found goods were seized and the same were released on deposit of security by one Subhash Chand. There is no finding in the penalty order that the extra found goods of 2000 Kgs. belong to the assessee and the same were got released by him. On the contrary, the transporter had also issued a certificate that the assessee has no concern with the aforesaid 2000 Kgs. metal scrap. This certificate was also filed before the authority. Under the circumstances, there was no evidence before the assessing authority or the first appellate authority or the Tribunal for import or transport of extra found metal waste by the assessee in contravention of the provisions of Section 28-A of the Act. Under the circumstances, with respect to those goods, no penalty could have been imposed upon the assessee. Penalty set aside - revision allowed - The amount of penalty, if any, deposited by the assessee shall be refunded by the assessing authority within four weeks from today along with interest from the date of deposit. The revision is allowed with costs of ₹ 5,000/-which shall be paid by the respondent to the assessee within four weeks - decided in favor of assessee.
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2016 (12) TMI 694
Rectification of mistake - one important legal ground has not been raised by the petitioner both before the Assessing Officer and before the Appellate Authority - section 84 Act - Held that: - Section 84 of the said Act gives power to the Assessing Authority, Appellate Authority, Revisional Authority including the Appellate Tribunal, at any time, within five years from the date of any order passed by it, to rectify any error apparent on the face of the record. It may be true that the petitioner has not raised this ground specifically in the grounds of appeal before the second respondent. Nevertheless, this being a legal contention, this Court is of the view that the petitioner can be granted one opportunity to raise the same before the Appellate Authority by way of an application under Section 84 of the said Act - the writ petition is disposed of by granting liberty to the petitioner to file an application under Section 84 of the said Act before the Appellate Authority in A.P.No.130/13 VAT within a period of 15 days from the date of receipt of a copy of this order. If such application is filed, the second respondent-Appellate Authority shall consider the same on merits and in accordance with law and pass a speaking order - decided in favor of petitioner-assessee.
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2016 (12) TMI 693
Maintainability of petition - alternative remedy of appeal - principles of natural justice - Held that: - It is seen that the respondent has taken note of the C-Form declarations, which were produced by the petitioner along with the letter dated 27.10.2016. If that be the case, the respondent could have granted some more time or passed an order either accepting or rejecting the request for adjournment. This has not been done by the respondent. Thus, there has been a violation of the principles of natural justice in the manner, in which, the assessment has been completed - this Court is not inclined to set aside the impugned assessment order, as partial relief has been granted to the petitioner in the impugned proceedings and proposes to pass the following order, which will meet the ends of justice and also protect the interest of the Revenue (i) The petitioner is directed to treat the impugned assessment order dated 14.11.2016 as a show cause notice and submit their objections along with documents, within a period of 10 days from the date of receipt of a copy of this order (ii) On receipt of the objections, the respondent shall consider the same and pass a speaking order on merits and in accordance with law and (iii) Till such time, the demand for the tax, as quantified in the impugned order, shall be kept in abeyance. Petition disposed off.
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2016 (12) TMI 692
Validity of assessment order - rectification of mistake - Section 84 of the Act - Held that: - the language employed in the said provision confers power on the Assessing Authority or an Appellate or Revising Authority including the Appellate Tribunal at any time within five years from the date of any order passed by it, rectify any error apparent on the face of the record. Thus, if the dealer is able to point out the errors which are apparent on the face of the record, then obviously the Authority can exercise its powers. However, in case where the Assessing Authority refused to exercise power, he should spell out the reason as to how he is of the prima facie view that there is no error apparent on the face of the record. In the instant case, the said finding is lacking as the order dated 24.12.2013 is devoid of reasons. Hence, to that extent, this Court is inclined to interfere in the orders passed by the respondent. The writ petition is partly allowed and the order dated 24.12.2013 rejecting the petitioner's application under Section 84 of the Act is set aside and the matter is remanded to the respondent for fresh consideration. The respondent shall re-consider the petitioner's application for rectification of error dated 13.12.2013, afford an opportunity of personal hearing and after considering the matter in its entirety, pass a speaking order on merits and in accordance with law on the two issues which have been pointed out by the petitioner, namely, with regard to the error in inclusion of the purchase turnover which has been exempted and with regard to the sale of assets.
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Indian Laws
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2016 (12) TMI 689
Rejection of application moved under Section 5 read with Section 8 of the Arbitration and Conciliation Act, 1996, to get the dispute referred to arbitral tribunal - whether filing of an application for extension of time to file written statement before a judicial authority constitutes – ‘submitting first statement on the substance of the dispute’ or not? - Held that:- We find it difficult to agree with the High Court that in the present case merely moving an application seeking further time of eight weeks to file the written statement would amount to making first statement on the substance of the dispute. In our opinion, filing of an application without reply to the allegations of the plaint does not constitute first statement on the substance of the dispute. It does not appear from the language of sub-section (1) of Section 8 of the 1996 Act that the Legislature intended to include such a step like moving simple application of seeking extension of time to file written statement as first statement on the substance of the dispute. Therefore, in the facts and circumstances of the present case, as already narrated above, we are unable to hold that the appellant, by moving an application for extension of time of eight weeks to file written statement, has waived right to object to the jurisdiction of judicial authority. Before disposing of application under Section 8 of the 1996 Act the High Court has not looked into questions as to whether there is an agreement between the parties; whether disputes which are subject-matter of the suit fall within the scope of arbitration; and whether the reliefs sought in the suit are those that can be adjudicated and granted in arbitration. In view of the above, we think it just and proper to request the High Court to decide the application afresh in the light of law laid down by this Court in para 19 of the judgment in Booz Allen and Hamilton Inc. v. SBI Homes Finance Limited and others (2012 (10) TMI 459 - SUPREME COURT ) except the point, which has already been answered in the present case by us.
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2016 (12) TMI 688
Arbitration proceedings - Held that:- Disputes have arisen between the parties, resulting in an exchange of e-mails. The Petitioner has a claim for unpaid dues. The Petitioner invoked arbitration by an e-mail dated 2 November 2015 addressed by its advocate to the respondent. The Petitioner claimed an amount of USD 38,13,723.76 together with interest by its e-mail and suggested the names of two former judges of the Delhi High Court. The Petitioner sought the concurrence of the Respondent to the appointment of one of them as sole arbitrator, in terms of the arbitration agreement. Finding no response, these proceedings were instituted under Section 11(5) of the Arbitration and Conciliation Act, 1996. Notice was issued in these proceedings on 8 March 2016. On 7 October 2016 the Respondent informed this Court that it was willing to negotiate an amicable settlement with the Petitioner and would either finalize a settlement or file its objections to the petition for appointment of an arbitrator within four weeks. Neither has any settlement been arrived at between the parties nor has a reply been filed to the Arbitration Petition. As learned counsel have not disputed the existence of the arbitration agreement. Disputes have evidently arisen between the parties and a mutual settlement has not been possible. We hereby appoint Mr Justice FM Ibrahim Kalifulla, former judge of the Supreme Court of India to act as a sole Arbitrator in terms of the arbitration agreement. The learned arbitrator shall be at liberty to determine the fees payable to him for the arbitration
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