Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 17, 2016
Case Laws in this Newsletter:
Income Tax
Customs
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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Whether the compressed natural gas produced by the appellant, having different name, character and use from natural gas can be said to be covered by the phrase manufacture or production? - Held Yes - HC
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If the relevant television set was installed in the office of the assessee as claimed, it was used for the purpose of the business of the assessee and depreciation thereon thus was rightly claimed. - AT
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The lady Directors being well qualified persons and associated with the company since earlier period cannot be disallowed the remuneration of 50% - AT
Customs
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EPCG scheme - it is not open to the Customs authorities to initiate action for non-fulfillment of export obligation until the period of export obligation is complete. - AT
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Unjust enrichment - Since there is no dispute that the amount of refund sought was shown as receivables, appellant has been able to prove that he has not recovered the same their customer, refund allowed - AT
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Import of goods by contractor of nuclear project - 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 - AT
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Revocation of CHA licence - time limitation - inordinate delay in the processes by Revenue - due to the delays, people who are not guilty will continue to suffer the suspension and revocation on account of delays by Revenue due to lack of responsibility. - AT
Indian Laws
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THE TAXATION LAWS (SECOND AMENDMENT) ACT, 2016
Service Tax
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Validity of SCN - so long as material is relevant, how it is sourced is immaterial and the courts would examine it provided it fulfils the test of relevance - HC
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SEZ - rejection of refund claim - refund of CENVAT credit availed on rent-a-cab service - wrong mention of the name of place i.e. Bombay will not take away the benefit of refund - AT
Central Excise
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Classification of goods - grain cleaning and drying machine - the goods manufactured by the appellant serves no useful purpose of entry 84.19 rather it serves useful purpose of the entry 84.37 being specifically used in the milling entry - AT
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CENVAT credit - credit of service tax on warranty provided by their dealers - repair and maintenance of transformers during warranty period is an activity of relating to sale of goods - credit allowed - AT
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Valuation - the financial assistance given by the principal manufacturer to the job worker appellant was given for capital expenditure to upgrade/renovate the machinery. Therefore, the notional interest on the deposit has been rightly computed by the authority and added to the assessable value - AT
VAT
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Classification - when the assessee is selling the purified water under the brand name “Shital” in a capsule jar i.e. in the jars / water jugs having the capacity of 5 or 10 liters and having a top which is closed, it can be said that the assessee is selling the “purified water” under the brand name in a capsuled jar - HC
Case Laws:
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Income Tax
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2016 (12) TMI 815
Assessment u/s. 158 BC read with section 158 BD - addition to income - Held that:- As no satisfaction as is required to be recorded with regard to the re-opening of the case was done in the case of the present assessee in order to initiate proceedings under Section 158BD of the I.T. Act. - Decided in favour of assessee
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2016 (12) TMI 814
Manufacture or production - Whether the compressed natural gas produced by the appellant, having different name, character and use from natural gas can be said to be covered by the phrase manufacture or production? - Held that:- Compressed natural gas in its compressed form has a distinct identity and character and use. It is settled law of the Apex Court in the case of Income Tax Officer Vs.Arihant Tiles and Marbles P. LTD. reported in (2009 (12) TMI 1 - SUPREME COURT) that when a commodity acquires a distinct name, use and commercial identity, it would acquire the trait of 'manufacture'. In view of above, the question is answered in favour of the assessee
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2016 (12) TMI 808
Validity of assessment u/s 153A - defective notice - Held that:- The searched premises were not in the occupation of the assessee is being established by the assessee on a different basis that the firm was reconstituted and after reconstitution, the address changed and the new address was brought on the record of the department also on a date prior to search by filing return of income for A. Y. 2010 – 11 and in the sworn statement of the person found at the time of search also, this fact was pointed out that this assessee firm was not having any office at that address at that point of time and hence, in our considered opinion, at least after knowing this fact at the time of search, the department should have conducted search at the correct address of the assessee if the department wanted to search the assessee after finding out the present address of the assessee and after obtaining search warrant for that address. The department carried out the search at the old address only although the new address was brought on record by the assessee by filing return of income for A. Y. 2010 – 11 on 15.10.2010 and the search was conducted on 10.12.2010 i.e. after almost two months. Considering these facts, we hold that the present assessment orders are null and void - Decided in favour of assessee
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2016 (12) TMI 807
TDS u/s 194C - non deduction of tds on labour charges - Held that:- As rightly pointed out by the ld. D.R., the payments in question were made by the assessee in the present case on account of labour charges and it is thus not a case of outsourcing of manufacturing activity as sought to be contended by the ld. counsel for the assessee. It is thus a case of works contract to which provisions of section 194C are clearly applicable and since there was a failure on the part of the assessee to deduct tax at source from the payments in question made towards works contract as required by the provisions of section 194C. It is of the view that the disallowance made by the Assessing Officer under section 40(a)(ia) and confirmed by the ld. CIT(Appeals) is fully sustainable. - Decided against assessee Disallowance of business expenditure - Held that:- At the time of hearing before the Tribunal, nothing has been brought on record by the ld. counsel for the assessee to rebut or controvert the finding recorded by the Assessing Officer that part of the expenses claimed by the assessee under the relevant heads was not fully verifiable as they were merely supported by self-made vouchers. The disallowance on account of the involvement of unverifiable element in the said expenses thus was called for and find in agreement with the ld. CIT(Appeals) that the same as made by the Assessing Officer at 5% of the total expenses was fair and reasonable Depreciation on Television Set - Held that:- Disallowance made by the Assessing Officer on account of assessee's claim for depreciation on television set and confirmation of the same by the ld. CIT(Appeals) are not well founded. If the relevant television set was installed in the office of the assessee as claimed, it was used for the purpose of the business of the assessee and depreciation thereon thus was rightly claimed. The action of the Assessing Officer in disallowing the same for want of any supporting evidence as well as the action of the ld. CIT(Appeals) in confirming such disallowance on the basis of less number of employees, is not well founded. - Decided in favour of assessee Disallowance of interest expenditure - Held that:- The assessee's own fund at the relevant time in the form of capital alone were to the extent of ₹ 13,53,380/- and since the same were sufficient to give the advance of ₹ 5,00,000/- in question by the assessee to his wife, find merit in the contention of the ld. counsel for the assessee that the said advance is deemed to have been given by the assesese out of his own funds and not out of borrowed funds. There is thus no diversion of borrowed fund for any personal purpose as alleged by the authorities below calling for any disallowance out of interest paid on borrowed funds. Therefore, delete the disallowance made by the Assessing Officer out of interest and confirmed by the ld. CIT(Appeals) - Decided in favour of assessee.
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2016 (12) TMI 806
Disallowance on account of 'accommodation entries' - whether the assessee does not have any business activity - Held that:- AR has adduced the proof by showing the I.T return for the previous year that the so-called assessee company was in existence. The assessee also produced before us the object clause of the memorandum of Association, date of incorporation, comparative chart of revenue earned by the company and lease agreement where the registered office of the company is situated. All these evidences show that the company was in existence - Decided in favour of assessee Disallowance of expenses on the ground that the assessee company was not engaged in any activity - Held that:- The assessee has shown before us the object of the company by way of its memorandum of association. The assessee has also demonstrated before us the previous years figures of income and expenditure by way of its P and L account. The assessee company since its inception/incorporation i.e on 11-11-1994 has been doing its business. Before us the assessee has also filed the comparative chart of the revenue receipts during the previous and subsequent years. The ld.AR of the assessee has also shown before us the copy of lease agreement of the building, where the company's registered office is situated. On verification of the documents/evidences as submitted by the assessee before us, we are of the view that there is business activity.We find that the matter in hand requires further examination by the AO. Therefore, it is appropriate to remit the matter/case to his file to examine the details of expenditure and receipts afresh as submitted by the assessee before us.
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2016 (12) TMI 805
Liability of directors of private company in liquidation - Held that:- The search was made in the premises of the company in the year 1997 and the block assessment was made for the block period 1986-97 and for some of the period the company was Private Ltd. and for some of the period the company was Public Ltd. The same argument has also been advanced by the learned counsel for the petitioner. He, therefore, submits that provisions of Section 179 are not applicable. As considered the submissions of the learned counsel for the parties. The petitioner has an alternative remedy to file a revision before the Commissioner under Section 264 of the Income Tax Act. The plea that the provision of Section 179 are not applicable in the case of the petitioner can be raised by the petitioner before the revisional authority.
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2016 (12) TMI 804
Penalty levied u/s. 271(1)(c)- Held that:- Admittedly, the assessee has acted in total disregard of the statutory obligations and has not co-operated in the assessment proceedings and has driven the Assessing Officer for making the assessment u/s. 144 of the Act. The assessee had also courted the penalty u/s. 271B as well as the penalty u/s. 271(1)(e) which were also appealed against before the Ld. CIT(A) who confirmed the same. Thus there is clear and categorical finding by both the Assessing Officer as well as the Ld. CIT(A) that the assessee acted in total disregard of the statutory obligations and was callous in his approach to the statutory notices issued and there was failure to comply with such notices. In the circumstances and facts of the case, we are not inclined to interfere with the orders of both the Assessing Officer as well as of the Ld. CIT(A) and accordingly, we uphold the same as correct and in accordance with law. Thus all the grounds of the assessee are dismissed.
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2016 (12) TMI 803
Disallowance of remuneration of 50% to lady director - Held that:- As lady Directors are well qualified persons. The authorities below have drawn adverse inference that since they are occupied in other engagements also they cannot give time to this company. Find that this is a totally untenable surmise and conjecture devoid of any cogency. If the proposition advanced by the Revenue is accepted then no person can be allowed to be engaged as Directors or otherwise gainfully engaged in more than one concern. The authorities below have totally ignored submissions that these lady Directors have been engaged in the functioning of the company since the inception. There is no presumption that ladies engaged in medical profession cannot be engaged as Directors in company. Moreover on what basis learned CIT(Appeals) has held that they be paid for only 50% of the salary is also not comprehendible. It is not the case that the learned CIT(Appeals) has compared the services rendered with prevailing market price. Dehorse any cogent basis, it is an arbitrary order, which is not sustainable. The Revenue should not try to sit into the shoes of a businessman and decide how to conduct the business.Accordingly find that the lady Directors being well qualified persons and associated with the company since earlier period cannot be disallowed the remuneration of 50% as held by the learned CIT(Appeals). - Decided in favour of the assessee.
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2016 (12) TMI 802
Penalty u/s 271(1) - nature of income on share transactions - capital gain or business income - Held that:- The argument of the assessee with respect to its claim as a short-term capital gain was not benefited and, therefore, in the circumstances of the case penalty was not justified. Having regard to the volume and frequency of the transactions, no separate books of accounts or demat accounts and other facts and circumstances, we are of the opinion that overall effect of all the factors revealed that the activity of sale and purchase of shares claimed under the head 'short-term capital gain' cannot be sustained and it is held as the activity in the nature of business and assessable under the head 'profit and gains of the business’. Mere making a claim not acceptable does not lead to concealment of income - Decided in favour of assessee
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2016 (12) TMI 801
Disallowance u/s 14A r.w.r. 8D - Held that:- The assessee admittedly borrowed funds for the purpose of business and paid interest. The interest paid by the assessee is not relatable to any particular income. Therefore, the second limb of Rule 8D(2) is squarely applicable. We have carefully gone through the order of the Assessing Officer. The Assessing Officer has found that there was no direct expenditure relating to income which does not form part of total income. Therefore, he computed the disallowance under the second limb of Rule 8D(2) and also computed the average amount / expenditure to the extent of ₹ 8,66,34,771/-. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly confirmed the order of the Assessing Officer. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.- Decided against assessee
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2016 (12) TMI 800
Addition on assessee's share on account of profit generated on arrangement of additional land - Held that:- The Assessing Officer made the above addition on the basis of tripartite agreement to sell dated 29.06.2005. The ld. CIT (Appeals) noted that properties were sold by the respective persons by entering into agreement directly with M/s. Gee City Builders and assessee has never entered into any agreement with six persons for purchase of properties. This fact is also mentioned by Assessing Officer in the assessment order that sellers entered into transaction directly with the buyer M/s. Gee City Builders. If any profit is to be assessed or generated, it should be assessed in the hands of seller only. The Assessing Officer in the assessment order has noted that these are agreements from individual persons for sale of property in the name of M/s. Gee City Builders. No evidence was found against the assessee that he was involved in any deal either through any document or agreement to sell. The Assessing Officer has not conducted any further inquiry to find out the involvement of assessee in any purchase and sale of land through six registered sale deeds. In the absence of any evidence on record against assessee to act as middleman or conduit, ld. CIT (Appeals) was justified in deleting the addition. This ground of appeal of the revenue has no merit. Same is, accordingly, dismissed.
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2016 (12) TMI 799
Revision u/s 263 - cash deposits in bank accounts - Held that:- It is clear that Assessing officer examined the issue of cash deposits in bank accounts of the assessee in question, in detail, by examining the books of account, agreement to sell and other material on record. The view of the Assessing officer is permissible under the law and is sustainable. The assessee thus proved the source of the cash deposits in his bank accounts. Reasons given by the Ld. Principal CIT in totally for setting aside the assessment order are not justified as the same are not in accordance with law. No factual error has been pointed out by the audit party in this case because case was selected for scrutiny for cash deposits in the bank accounts of the assessee. The audit party did not agree with the findings of the Assessing officer, therefore, it could not be said that the assessment order was erroneous in so far as the prejudicial to the interest of the Revenue. The Ld. Counsel for the assessee therefore, rightly contended that the contents of the show cause notice u/s.263of the I.T. are similarly worded as have been noted in the audit objection. Therefore, subsequently on mere audit objection, the Ld. Principal CIT, was not justified in initiating the proceedings u/s.263of the I.T. Act. The Principal CIT was, therefore, not justified in holding that Assessing officer did not make necessary enquiry into the matter. The Ld. Principal CIT merely disagree with the findings of the Assessing officer, therefore, it could not be termed as assessment order to be erroneous and prejudicial to the interest of Revenue. Therefore, we do not subscribe to the view of the Principal CIT in exercising jurisdiction u/s.263 - Decided in favour of assessee
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2016 (12) TMI 790
Allowability of deduction of payment of the ONGC - Held that:- We are of the view that taking into consideration the issue which was pending before the Apex Court regarding the liability to be fixed but ONGC has already consumed the gas. In that view of the matter, ONGC is required to make payment as it is a statutory body. Apart from that, it is required to be noted that the consumption of gas was the basic need for ONGC failing which the corporation could not have functioned. In that view of the matter, we are of the opinion that the Tribunal is justified in allowing deduction of payment to ONGC. In the assessee’s own case, the Assessing Officer for the assessment year 2004-05 has in the assessmnet order stated that amount is allowed on payment basis and accordingly in the year under consideration where the liability is crystallized by the order of Supreme Court, the deduction claimed on protective basis shall not be granted. Considering the decisions cited hereinabove, we are of the view that issue raised in both these appeals is required to be answered in favour of the assessee and against the revenue. Rejection of claim to allow deduction u/s 43B - payments made beyond the due dates under the relevant Acts - Held that:- The said issue is now squarely covered by the decision in the case of Commissioner of Income-tax vs. Alom Extrusions Ltd [2009 (11) TMI 27 - SUPREME COURT ] wherein observed that deletion of second proviso to Section 43B by Finance Act 2003 is retrospective and it would operate with effect from 01.04.1988. In the present case the assesee has paid the said amount beyond due dates but before due date for filing return of income. The Tribunal has relied upon various case laws wherein it is held that second proviso to Section 43B is to be applied retrospectively as the said proviso was inserted to remove hardship caused to assessee. We accordingly answer the question in favour of assessee Allowance of depreciation @100% in respect of air pollution control equipments - Held that:- The Tribunal has allowed the claim by citing the reason that the work “being” used as item no. III(2)(iv) and III(3)(iii) as illustrative in nature and not exhaustive and the context in which words are used and that all the assets functioned with main plant and integral part of plant. The said issue has now been decided in favour of the assessee by this Court in COMMISSIONER OF INCOME TAX-I, BARODA Versus ALEMBIC CHEMICAL WORKS CO. LTD [2016 (6) TMI 562 - GUJARAT HIGH COURT]. We therefore answer the said question in favour of assessee and against the revenue. Disallowance of stores and spares treating the same to be of capital expenditure - Held that:- Tribunal held that the description of items consisting of centrifugal pumps, humidity indicators, temperature controller, vaccum pump, 3-phase industrial motors, submersible pump etc and that the same falls in the category of consumable stores and spares. We are of the view that the same should be considered under the head of revenue expenditure and the Tribunal is justified in considering the same as revenue expenditure and accordingly the said question is answered in favour of assessee and against the revenue.
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Customs
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2016 (12) TMI 766
100% EOU - confiscation of goods - import of yarn - Held that: - the entire case of duty demand and confiscation of the goods was made out on the basis of statements of various persons. Therefore in our view looking to the nature of the case the cross examination as was requested by the appellant ought to have been granted to the appellant in the interest of justice. Moreover, we observed that the submission made by the appellant that the imported goods though seized but after provisional release claimed to have been used by the appellant in their EOU unit for the manufacture of final product and the said final product was exported. The claim of the appellant is that since the final product has been exported, the export obligation required for EOU has been fulfilled therefore no duty demand can be confirmed. However the Commissioner has not given any findings on this issue. For this reason also the principles of natural justice was violated. In these circumstances, we are of the considered view that matter needs to be re-considered by the Adjudicating authority - appeal allowed by way of remand.
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2016 (12) TMI 765
Refund claim - unjust enrichment - Whether the doctrine of unjust enrichment is applicable in respect of raw material imported and consumed in the manufacture of a final product? - Held that: - We find that both the lower authorities even in the denovo proceedings denied the refund merely on the ground that imported goods were captively used for manufacuter of final product and as per the Hon’ble Apex Court judgment in case of Solar Pesticide Pvt Ltd. [2000 (2) TMI 237 - SUPREME COURT OF INDIA], unjust enrichment is applicable on captive consumption. However, we observed that appellant has made submission before the lower authorities that though the imported goods were used captively but the price of the final product was not changed due to payment of duty on the imported goods. Moreover the appellant has produced C.A. certificate certifying that incidence of duty paid by the appellant has not been passed on to consumer. The appellant had also submitted that the price of the medicine manufactured out of the imported input i.e. DPCO price which is fixed by the government and therefore extra payment of duty does not influence the DPCO price of the goods. We observed that both the lower authorities have not considered all these above submission in the proper perspective as no finding was given on the aforesaid submission made by the appellant. Both the lower authorities were mainly confined to the judgment of Hon’ble Apex Court in case of Solar Pesticide Pvt Ltd. Here the issue is not that whether the provision of unjust enrichment is applicable or otherwise but matter has to be examined on the factual matrix in the facts narrated by the appellant, whether the incidence of the duty has passed on or otherwise, which both the lower authorities have failed to address. We therefore find that this is a fit case for remand to the original adjudicating authority who should consider all the submission made by the appellant and give cogent findings regarding the passing/not passing of incidence of duty paid on the imported goods - appeal allowed by way of remand.
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2016 (12) TMI 764
EPCG scheme - restrain from taking any action till the completion of prescribed export obligation period - import of cranes - concessional rate of import duty at 3% permitted by notification no. 103/09-Cus dated 11 September 2009 - principle condition of furnishing certificate of installation was contravened and for diversion of the imported goods to an unauthorized site - appellant's capability to fulfill export obligation in doubt - Held that: - The authorization to the importer having been issued by the competent authority and amended by a Committee empowered to do so, it is not open for any other agency to question the bona fides of the license. A Larger Bench of this Tribunal has held, in Rainbow Silks Vs Commissioner of Customs (Exports), ACC, Mumbai [2015 (11) TMI 503 - CESTAT MUMBAI], held that Customs authorities are competent to initiate action against offending goods even in matters of violation of the Foreign Trade Policy. However, such an empowerment does not extend to questioning the scope of a validly issued license but is to be invoked for contraventions arising from the failure to discharge obligation or the conditions of import. Therefore, and in consequence, it is not open to the Customs authorities to withdraw the benefit of exemption or to curtail the period within which export obligation is to be fulfilled. It would appear that, in the present case, the adjudicating authority has done so. The impugned order has held that the appellant is incapable of meeting the export obligation and, thereby, Pre-empted that possibility well before the period of export obligation. This is patently improper. The learned Authorized Representative made an earnest plea that the matter to be remanded back to the original authority to enable the adjudicating authority to consider the various developments relating the amendment of the license and arrive at a proper conclusion on the notice issued by him. We have rendered a finding on the flexibility of movable capital goods as well as on the error in alleging diversion of the goods. We have also noted that it is not open to the Customs authorities to initiate action for non-fulfillment of export obligation until the period of export obligation is complete. There is, therefore, no aspect that requires a further scrutiny by the lower authority. We, therefore, do not agree that a remand is necessary - appeal allowed by way of remand.
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2016 (12) TMI 763
Unjust enrichment - whether the appellant is eligible for the refund of the amount or the said amount has been correctly credited to the Consumer Welfare Fund? - Held that: - It can be seen from the adjudication order and the impugned order that appellant is eligible for the refund as claimed by them. The only question that falls for our consideration is whether appellant has crossed the hurdle of unjust enrichment or not. It is undisputed that appellant had shown the amount claimed as refund as receivables in Balance Sheet, with a narration that this amount is due from Revenue Authorities. It is a common knowledge that when the amount is shown as receivables, it is not expensed out in the Balance Sheet, hence will not form a part of the cost of the final product manufactured. Since there is no dispute that the amount of refund sought was shown as receivables, appellant has been able to prove that he has not recovered the same their customer, we hold that the impugned order is unsustainable and liable to be set aside. The impugned order is set aside - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 762
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 761
Exemption benefit under Notification No.30/2004 dated 09.07.2004 - import of undyed and unprinted silk fabrics - non-fulfillment of condition stipulated in notification - Held that: - It is noted that the Hon'ble Supreme Court in the case of SRF Ltd. vs. Commr. Of Customs, Chennai [2015 (4) TMI 561 - SUPREME COURT] on the identical issue, allowed the appeal of the importer where the CEGAT found that only those conditions could be satisfied which were possible of satisfaction and the condition which was not possible of satisfaction had to be treated as not satisfied. - Following decision of Thermax Private Limited v. Collector of Customs (Bombay), New Customs House [1992 (8) TMI 156 - SUPREME COURT OF INDIA] and Hyderabad Industries Limited v. Union of India [1999 (5) TMI 29 - SUPREME COURT OF INDIA] and AIDEK Tourism Services Private Limited v. Commissioner of Customs, New Delhi [2015 (3) TMI 690 - SUPREME COURT] appellants were entitled to exemption from payment of CVD in terms of Notification No. 6/02. In view of the above, I do not find any reason to interfere with the Order of the Ld.Commissioner (Appeals) - appeal dismissed - decided against Revenue.
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2016 (12) TMI 760
Revocation of CHA licence - the goods were found to have been misdeclared in quantity and description; the goods were held to have been undervalued by five times and the importer-on-record was found to be a college student through whom an Import-Export Code had been obtained following which he issued a power-of-attorney to the alleged operator of the import business - SCN based on whims and surmises - section 108 of Customs Act, 1962 - Held that: - The suspension was ordered seven months after the search of premises. The charge-sheet was issued almost three months thereafter. It is also alleged that the inquiry was closed by issue of order-sheet on 11th February 2014 but the inquiry officer chose to re-open inquiry for cross-examination of the partner of the licence-holder about six months later. The revocation was ordered almost thirty months after the search of the premises of the licencee. The appellant did participate in the proceedings. There is no justification for this delay that is so much at variance with the prescriptions in the Regulations. This compounds the casual manner in which the inquiry was conducted by placing reliance on statements that were recorded for purposes other than proceedings under the Regulations. The harsh penal consequence visited upon the appellant has compounded the disregard for deadlines prescribed in the Regulations - appeal allowed - decided in favor of appellant.
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2016 (12) TMI 759
Doctrine of res-judicata - appellant's grievance is that once the matter reached to finality by the appellate order dt. 13.6.85 (nearly 31 years ago) and all illegalities have been done by the department, no proceeding at all survived - Held that: - Law is well settled that repetitive litigation on the self-same cause is to be avoided following doctrine of resjudicata. Appellant's prayer is therefore justified to set aside the impugned Order-in-Appeal emerging out of adjudication made on the basis of SCN dt. 6.8.85 as is apparent from the factual matrix set out herein before. It is very painful to state that the assesse has been dealt to the detriment of justice from 1984. We also inform to the adjudicating authority that the Hon’ble High Court of Bombay in the case of Lanvin Synthetics Pvt. Ltd. Vs. UOI [2015 (8) TMI 387 - BOMBAY HIGH COURT] has noticed that any undesirable delay made by the adjudicating authority to reduce litigation makes his order fatal - We observe that the order dated 31.08.2005 passed by the ld. Commissioner (Appeals) was in excessive exercise of his jurisdiction to the utter dis-regard to law. Therefore, that is set aside. The matter is remanded to the adjudicating authority with the directions to complete the re-adjudication afresh by March, 2017 - appeal allowed by way of remand.
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2016 (12) TMI 758
Revocation of CHA licence - time limitation - inordinate delay in the processes by Revenue - time limits prescribed under Customs Broker Licensing Regulations, 2013 (CBLR) for carrying out processes - amendment made in the Custom House Agent Licensing Regulations, 2004 (CHALR) vide Notification No. 30/2010-Cus (NT) dated 8.4.2010 prescribing various time limits - Held that: - it is obvious that none of the time limit prescribed under the CBLR, 2013 has been followed. In fact there has been as inordinate delay of exceptional nature. The matter has been delayed by almost three years beyond time limit and almost 4 times the prescribed time limit. This is a case of exceptional delay. It was obvious that there is lack of supervision and effort to adhere to the time limit prescribed by law. This will assume serious implications especially in view of the fact that Courts have held time limit to be mandatory in nature. By the miscellaneous application filed, the Revenue seeks the time of 8 to 12 months just to compile the data of such delays. Suffice to say in such a serious issue needs immediate attention of CBE&C and Chief Commissioner of Customs. As a result of such delay, a number of serious offenders will get the benefit and be left of the hook and go scot free, which is not the intent of law. Similarly, due to the delays, people who are not guilty will continue to suffer the suspension and revocation on account of delays by Revenue due to lack of responsibility. The appeal is allowed on limitation without going into merits of the case - The license which is revoked by the impugned order is restored forthwith and Commissioner of Customs (General), Mumbai is directed to do the needful immediately - decided in favor of CHA-assessee.
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Service Tax
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2016 (12) TMI 813
Rejection of refund claim - N/N. 41/2007-ST dated 06.10.2007 - export of goods - Held that: - We note that the Notification No. 41/2007-ST dated 06.10.2007 stands amended by Notification No. 33/2008/ST dated 07.12.2008. The net effect of such amendment is that for the period prior to 7.12.2008, refund of Service Tax paid on the services used in the export of goods, will not be admissible wherever drawback has been claimed. After 7.12.2008, however, such claims would be admissible. Both sides agreed that there are exports made both prior 7.12.2008 as well as after this date. It has also been submitted that in many cases the exports have been made under advance licence where no drawbacks are admissible. Under these circumstances, we find that the issue needs to be remanded to the Original Adjudicating authority for denovo decisions - appeal allowed by way of remand.
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2016 (12) TMI 812
100% EOU and STP - CENVAT credit - denied on account of nexus and lack of documents - Movement of personnel baggage service - Association / Membership Fees - Event Management Service - Manpower Recruitment or Supply Agency Service / Management Consultancy Service - Management, Maintenance or Repair Service - Air Travel Agent s Service - ineligible services - Traffic Control services - Procedural Non-compliance - Difference of credit as per statement submitted and ST-3 filed. Movement of personal baggage service - Held that: - During the employment, employees move from one location of the company to another or to customer site, where movement of their baggage become necessary to render services and therefore all the services are an activity relating to business and is covered under the definition of input service - the appellant is entitled to avail CENVAT credit on movement of personal baggage. Association and Membership Fee - Held that: - the expenses incurred by the company towards Association and Membership charges do not have any nexus with the output service rendered by the assessee as the said service is made available to the Members mainly for the purpose of entertainment, amusement and relaxation - credit not allowed. Event Management service - Held that: - the learned counsel for the appellant submitted that the company has to incur expenses for events such as Technical Day Functions, Value Events, Bosch Annual Day which are organized for the development of employee and which results in betterment of individual performance. In reply to this, the learned AR submitted that impugned order has observed that the company has spent on organizing seminars, social functions, birthday parties, anniversaries and other functions which have no nexus with the output service - In view of the contradictory stand taken by both the parties, I hold that the original authority will verify each service under the category of Event Management before allowing the CENVAT Credit - matter on remand. Credential Verification of employees - Held that: - in order to ensure that the credentials of the employee s background are adequately verified, background check becomes critical and part of the employee recruitment process. In view of this, I hold that this activity is relating to business and is covered under the definition of input service - credit allowed. Air Transport Service - Held that: - the employees of the company have to travel to various places in order to perform the job of the company and it has a direct nexus with regard to output service rendered by the assessee - Air Transport is an input service - appeal allowed. Ineligible services - The learned consultant did not press for this amount as he was unable to justify the same. Similarly the learned consultant did not press for input CENVAT credit on AMC for dish washer and traffic control procedure on account of lack of documents - credit disallowed. Denial of CENVAT credit on account of difference of credit as per statements submitted and the ST-3 returns filed by the assessee - Held that: - I hold that this will be verified by the original authority regarding its correctness and accordingly the original authority will decide as to how much the appellant is entitled to avail CENVAT credit - matter on remand. Appeal partly allowed - matter on remand.
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2016 (12) TMI 811
Validity of SCN - jurisdiction of authority - Rule 5A (2) of the Amended Service Rules was held to be ultra vires its parent statute - Held that: - so long as material is relevant, how it is sourced is immaterial and the courts would examine it provided it fulfils the test of relevance - the argument that the materials on the basis of which the impugned show-cause notice was issued could not have been used is rejected. No statute is deemed to be ultra vires or void - it is actually upon the court declaring it to be so, that it is void. As far as the issue of jurisdiction of the Principal Commissioner, the court notices that there is no denial of the fact that the official who issued the show cause notice holds the rank of Principal Commissioner of Central Excise as defined by the Central Excise Act, 1944 read along with the rules. That he was assigned audit task is a matter of convenience; it in no way inhibits the officer from issuing the show-cause notice in exercise of primary authority concerned by the statute. Consequently, the argument about lack of authority/jurisdiction fails. - Writ petition dismissed.
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2016 (12) TMI 809
Validity of circular of the Central Board dated 10.2.2012 - decision in the case of N. Bala Baskar Versus Union of India and Others [2016 (4) TMI 1036 - MADRAS HIGH COURT] contested - Held that: - We are not inclined to interfere with the order passed by the High Court - The special leave petition is dismissed. However, the petitioner may apply for refund, if permissible in law.
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2016 (12) TMI 798
Levy of Interest on reversal of CENVAT credit - online information and data base access or retrieval service - Cenvat Credit in respect of input services received by them at the various branch offices denied - Held that: - It is not disputed that the assessee has availed Cenvat Credit in respect of input services received by the head office as well as by the branch offices situated in different places. It is also not disputed that the Cenvat credit has been used to discharge service tax liability pertaining to all the above offices. In the impugned order the learned Commissioner (Appeals) has held that the lapse on the part of the assessee is of technical nature, not affecting the Revenue in as much as due service tax stands discharged by the assessee. Accordingly, he has absolved the assessee from any contravention of the provisions of the Finance Act, 1944. We are in agreement with the views expressed in the Impugned Order and find no reasons to interfere with the same - the impugned order is upheld and Revenue’s appeal is rejected - decided against Revenue-appellant.
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2016 (12) TMI 797
Classification of services - providing of labour - whether the service would fall under the head cargo handling services or manpower supply agency service? - Held that: - Department has not given any additional facts to hold that services rendered by the respondent are under the category of cargo handling services and not under the category of man power recruitment agency service. The CESTAT Delhi’s decision in the case of J J Enterprises [2005 (3) TMI 14 - CESTAT, NEW DELHI] also supports the stand of the respondent, where it was held that Cargo handing cannot take place in the absence of packing machine and conveyer - besides the Commissioner (A) also found that The appellant has taken registration on 18.08.2005 under the category of Man power supply agency’s services. Since then the appellant is discharging service tax liability under the said service and filing ST-3 returns. The demand is to the effect that for the period 01.08.2004 to 15.06.2005 i.e. prior to 16.06.2005 the appellant were covered under the category of “Cargo Handling Services” for which neither any registration was taken nor service tax was discharged. The appellant have come up with a plea that the activities undertaken by them having remained the same i.e. during the period 01.08.2004 to 15.06.2005 and from 16.06.2005 till date, no reasons have been given for the change of classification of services before and from 16.06.2005. At present the appellants services are being accepted as Man power supply agency’s services an taxes are being collected under this head. As on date the “Cargo handling services” are still in existence. No efforts have been made to change the present classification to “cargo handling services”. Neither the investigators nor the adjudicating authority have given the reasons as to why the impugned services were classifiable under cargo handling before 16.6.2005 and under man power recruitment from 16.06.2005. We are in agreement with the findings of the Commissioner (A). Consequently, the Revenue’s appeal is without merits and is hereby rejected - decided against Revenue.
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2016 (12) TMI 796
Whether appellant is liable to service tax on an amount received by them during the period October 2004 to March 2008 from their client as lease rental for Oxydeep unit of treatment of waste water erected at their client's place? - Held that: - similar issue decided in appellant's own case [2013 (11) TMI 400 - CESTAT MUMBAI], and were disposed in favor of appellant - As a view is already taken in favour of the appellant in their own case an identical issue, we do not find any reason to deviate from such a view - tax not levied. Appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 795
Repair and Maintenance service - nature of contract - Works Contract introduced with effect from 01.06.2007 - Valuation - Held that: - the said legal issue was not placed before the Commissioner and as such his opinion is not available. For the said purpose, he has already moved a Miscellaneous Application for raising the said legal ground - As the additional ground raised by the appellant is a legal ground and not relatable to any verifiable facts, we allow the same to be taken up for consideration. Further in-as-much-as the said ground was not raised before the adjudicating authority, we deem it fit to remand the matter for examining the said issue. - appeal allowed by way of remand.
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2016 (12) TMI 794
SEZ - rejection of refund claim - refund of CENVAT credit availed on rent-a-cab service - denial on the ground that the service provider M/s. Mahindra Logistics has mentioned the place as Mumbai in the invoice - time bar - Held that: - Since the refund application in terms of Notification No.40/2012-ST dated 26.02.2012 was filed by the appellant on 17th Jan., 2014, immediately upon obtaining the permission from the Development Commissioner, in my view, such delay should have been condoned by the service tax authorities. Clause (e) contained in the Notification dated 20.06.2012 clearly provides that the Assistant Commissioner or the Dy. Commissioner of Central Excise shall permit the applicant to file the application even beyond the period of limitation. Since due to the genuine and practical difficulties, the appellant was not in a position to obtain the permission from the Development Commissioner, it has applied for extension of time period for filing the refund application before the service tax authorities. The action on the part of the appellant seems reasonable and justified for the purpose of condonation of delay, which has specifically been provided in the Notification. Thus, I am of the view that rejection of refund claim on the ground of limitation will not hold good and the application should merit consideration for grant of refund. The certificate placed at page 204 in the appeal paper-book clearly shows that the transportation services were availed by the appellant for transportation of its employees from Indore to Pithampur and back. Thus, wrong mention of the name of place i.e. Bombay will not take away the benefit of refund, to which the appellant is statutorily entitled to. Appeal allowed - refund allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 793
Taxability of rent received - cum-duty benefit for calculation of service tax - Held that: - the appellant have not charged Service Tax from the receivers of service being renting of immovable property - we are satisfied that it is a fit case for allowing the cum-duty benefit for calculation of Service Tax and accordingly, we allow this ground. Under the facts and circumstances, we also hold that there is no contumacious conduct or suppression of facts or deliberate default in compliance with the provisions of the Service Tax Act and Rules on the part of the appellant and accordingly, we set aside the penalty under section 76, 77 and 78 of the Act. So far, late fee under Section 70 read with Rule 7 is concerned. We modify the same holding that penalty under this Section 70 read with Rule 7 would be payable for default after 27th May, 2011, when Revenue initiated enquiry. Accordingly, the appeal is allowed in part, and remanded to the adjudicating Authority for re-calculation of tax on cum-duty basis - appeal allowed by way of remand.
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2016 (12) TMI 792
Rectification of mistake - vehicles of the applicant not being tourist vehicle - trips can be held planning, scheduling and organizing etc or not? - whether the service would fall under the head 'Tour Operator' service or not? - Held that: - From the findings of Tribunal Order, it can be seen that the findings in para 5.4 flowing from the Commissioner (Appeals) order, and it is confined to those cases where vehicle was given on hire on fixed period of time for transporting the employees of the client. Therefore mentioned in para 4 is related to only those cases where Commissioner(Appeals) himself dropped the demand. As regard the findings of the this Tribunal in para 5.6, the Tribunal has confirmed that vehicle given for picnic tours, marriages, etc the activity will fall under the ambit of planning, scheduling etc therefore the demand was upheld under the category of tour operator. In view of the combined reading of Commissioner (Appeals) findings and this Tribunal's findings, we do not find any mistake occurred apparently from record. As regard the limitation, we agree that the no findings was given on the issue of limitation in this Tribunal's order - the adjudicating authority in original order held that it is undisputed fact that the activity of the appellant was not brought to the notice to the department. If this is so, department cannot be expected to take any action without knowledge of the activity of the appellant, therefore we hold that the extended period of demand was rightly invoked. Application for ROM disposed off - decided against applicant.
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2016 (12) TMI 791
Pre-deposit - Section 35F of the Central Excise Act,1944 - interpretation of statute - Held that: - I find that the wordings employed therein are as clear as daylight. In clause (iii) it is unambiguously prescribed that any person aggrieved by a decision or order referred to Clause (b) of sub- Section (1) of Sec. 35B of Central Excise Act, unless deposits 10% of the duty/penalty or duty and penalty, as the case may be, the appeal shall not be entertained. I do not find any reason to read the said provision in any other manner, so as to come to the conclusion that the Appellant is required to deposit 2.5% and not 10% as prescribed under the said provision, in view of the settled principle of statutory interpretation. The Hon'ble Bombay High Court in the case of Greatship (India) Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai-I [2015 (4) TMI 1006 - BOMBAY HIGH COURT] on the principle of interpretation of Taxing statutes held that a taxing statute is required to be strictly construed. Common sense approach, equity, logic, ethics and morality have no role to play while interpreting the taxing statute. It is equally settled that nothing is to be read in, nothing is to be implied and one is required to look fairly at the language used and nothing more and nothing less. Appeal dismissed - decided against assessee.
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Central Excise
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2016 (12) TMI 789
Ex-parte adjudication - appellant’s failure to cause appearance before the adjudicating authority - matter of valuation having far reaching consequence may affect right of either party. Therefore, to resolve the issue at the grass root level, without delaying the matter further, we remand the matter to the adjudicating authority and direct him to redo the adjudication. All the eight appeals are remanded to the adjudicating authority for fresh decision - matter on remand.
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2016 (12) TMI 788
Valuation - cost construction method - job work - We find that there is no dispute about the method of valuation to be done in respect of job work goods of the appellant i.e. as per the principle laid down in the Hon’ble Supreme Court judgement in the case of Ujagar Prints Etc.Etc. Vs. Union of India & Others [1989 (1) TMI 124 - SUPREME COURT OF INDIA]. The only dispute raised by the lower authority is the quantum of cost of manufacture - cost of DEO - cost of packing material - Held that: - From the certificate of Chartered Accountant, it is clear that the cost of DEO at Sr. No. 19 and packing material at Sr. No. 20 was included. We find that job charges of ₹ 103/- per kg. added which as per the agreement between the appellant and the principal supplier of the raw material - it is clear that the job charges is ₹ 103/- per kg., therefore there is no reason to take the job charges as ₹ 109/- per kg. In view of the above facts, it is very clear that the entire basis for rejecting the value declared by the appellant is factually incorrect. We, therefore, find that the valuation was done by the appellant and certified by the Chartered Accountant in the above referred certificate is correct. Accordingly, the impugned order does not survive, hence the same is set aside - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 787
Exemption under Notification No.164/87 dt. 10.6.87 - Chapter X Procedure of Central Excise Rules, 1944 - imposition of penalty u/r 209A of the Central Excise Rules, 1944 - Held that: - When Revenue makes an allegation, it should ensure that such allegation is based on evidence - The Central Excise Act, 1944 requires that there should be a manufacture of excisable goods in order to invoke Section 3 of the said Act. Meaning of “manufacture” although has not been given, the definition of “manufacturer” is provided by Section 2(f) of the said Act. The said Act covers activity resulting in ‘manufacture’ as taxable event. That Act also deals with the term “excisable goods”. Such goods should have been emerged in the course of manufacture. There is no whisper in the order as to what was the manufacturing infrastructure facility available with the appellant, M/s.SPT - To enquire further, we proceeded to know whether there was any factory of the appellant SPT in accordance with the provision contained in Section 2(e) of the above Act. There was no such factory in absence of any evidence laid before us. Therefore, in absence of factory and in absence of manufacture so also in absence of any manufacturing activity carried out by appellant, manufacture of excisable goods by SPT is inconceivable. Accordingly, in so far as adjudication relating to M/s.SPT is concerned, that is set aside. The principal appeal succeeds, the secondary appeal of M/s.URL is allowed - appeal allowed.
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2016 (12) TMI 786
Whether duty collected without authority of law is exempted from the requirement of ascertainment of having borne the incidence of duty in disposing off claim for refund of this amount and, if not, whether the competent authority did comply with statutory requirements thereon? - Held that: - The proper course of action to be pursued when the applicant for refund has not been able to satisfy that duty collected without authority of law has not been passed on to customers is to sanction the refund and credit it to the Fund. For having failed to notice this departure from legality and propriety and for not remedying the flaw, the impugned order is liable to be set aside - It is surprising that the authorities empowered to review the two orders also failed to enable the necessary rectification despite being mandated to call for and examine orders-in-original and orders-in-appeal to ascertain their legality and propriety. Apparently, an order that was not detrimental to revenue, no matter its abundance of illegality, is justification sufficient for disregarding statutorily mandated obligations. We suggest that the Central Board of Excise & Customs issue suitable instructions to its field formations to avoid recurrence of such blatant disinclination to discharge duties of office. We set aside the impugned order and restore the refund application to the competent authority to examine, issue appropriate notice, if warranted, and pass fresh orders in accordance with the law - appeal allowed by way of remand.
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2016 (12) TMI 785
Valuation - interested party transaction - favoured sale to related parties - Held that: - similar issue decided in the case of Dagger Die Cutting Vs Commissioner of Central Excise, Chennai-II [2010 (4) TMI 304 - MADRAS HIGH COURT] - We don't find anything different in facts of both the cases i.e., case before this Tribunal and the reported judgment in the case of Dagger Die Cutting - It appears that the show cause notice dated 19.05.2000 gave rise to the proceeding of 1995-2000 which is similar to the allegation in the show-cause notice dated 20.03.2001 related to the present appeal. When the matter has reached finality before Hon'ble High court of Madras in the reported Judgment, the Tribunal being subordinate, although a final court of fact, is bound to follow the Judgement of higher court as Judicial discipline. There is no factual difference brought out by the Revenue in the present case. Finding no difference and noticing that adjudication under appeal was made on the self-same allegations, the adjudication made is not sustainable. Accordingly, both the appeals are allowed holding that duty demand should be confined to the principles of normal valuation in absence of any related party transaction. At this stage, learned departmental representative says that the adjudicating authority shall verify whether the duty in the normal circumstances is paid or not i.e., under section 4(1)(a) of the Central Excise Act, 1944. To make it clear that what that is normally payable is to be realized and there is no difference to such proposition of law - Learned counsel prays that consequential relief, if any, may be admissible in accordance with law. Such prayer is allowed.
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2016 (12) TMI 784
Valuation - disproportionate use of raw material - compound P - computation of assessable value - acceptance of CAS-4 certification for determination of assessable value in question - Held that: - An adjudicating authority, in de novo proceedings, cannot deviate from the directions issued by the appellate authority. Doing so would have imperilled the fresh order. Had Revenue any misgivings about the directions given then by the Tribunal, that grievance should have been agitated before the competent appellate Court. That was not done and to attempt to get the impugned order set aside for complying with remand directions is not a proper or timely exercise of power of review under Central Excise Act, 1944. It would appear that the reviewing authorities entertained the belief that the adjudicating authority would make use of this opportunity to flout the directions of the Tribunal and hence did not opt for remedying of their grievances against the remand directions of the Tribunal that are now sought to be articulated. Contrary to all canons of judicial propriety, this appeal seeks to review our own earlier order. This we must decline to do - The grounds of appeal have not raised any point of substance on the findings of the adjudicating authority in denovo proceedings. Consequently, we find nothing upon which we are required to exercise our judgment - appeal of Revenue dismissed.
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2016 (12) TMI 783
Denial of CENVAT credit - no stated rationale for distribution of the credit to the appellant-assessee and that the input services cannot be said to have been used for directly or indirectly in the manufacture of output - credit availed on invoices dated prior to 10th September 2004 was also not eligible - whether the denial of credit on the ground that with a number of units and all having derived the benefit of services procured by headquarters, it was the responsibility of the ‘input service distributor’ to articulate the rationale for assigning the said amount to the assessee and, in its absence, it was appropriate to deny the availment for not having been put to use in the manufacture of output, is justified? Held that: - We find from the records that head office of appellant-company is registered as ‘input service distributor’ and is entitled to distribute the credit of services availed for supporting the manufacture of output goods by the constituent units. The impugned order has objected to the distribution for failure to justify the proportion allocated to the Tarapur unit. There was no such allegation leveled in the show cause notice and the adjudicating authority appears to have travelled beyond the notice in holding that the dues are liable to recovery. Also, reliance placed on the decision of the case of Castrol India Ltd v. Commissioner of Central Excise, Vapi [2013 (9) TMI 709 - CESTAT AHMEDABAD], where it has not been alleged in the show cause notice nor there is finding that the credit distributed against the documents is more than the amount of service tax paid and in any case, this can be verified only at the end of ISD. It is also not the case of the department that credit has been received by the assessee in respect of services/goods which are totally exempted. Under these circumstances, on this ground alone, probably the matter can be decided but the learned advocate is fair enough to argue the case on merits and also agree to reverse the credits which are patently inadmissible. The reasoning adopted by the adjudicating authority in the impugned order does not stand the test of legality. For that reason, we set aside the impugned order and allow the appeals - decided in favor of appellant-assessee.
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2016 (12) TMI 782
Denial of cenvat credit - Management Service - Share Registry Service - Advertisement Service - Company Secretary Service - Chartered Accountant Service - services commonly availed by the four units of appellant - period April 2012 to March 2013 - Held that: - It is very clear from the above rules that, only w.e.f. 1.4.2012, credit of service tax attributable to service used in more than one unit shall be distributed pro rata on the basis of turn over during the relevant period of the concerned unit to the sum total of the turnover of all the units to which the service relates during the same period. However, in the instant case, the disputed services are not definitely in the nature of those which are attributable or utilized in all the units. In any case, these services are very much in the nature of management services, share registry etc. which would be commercial and availed by corporate office which is situated in the premises of the appellant herein, and as per Rule 7 (c), credit of service tax attributable to service used wholly in an unit shall be distributed to that unit. It is also seen that while the Commissioner (Appeals) has made mention of the discrepancy in period of dispute in para-3 of his order, however, he has not agreed or disapproved the same. In this circumstance, I am constrained to remand the matter to Commissioner (Appeals) who will give a reasonable opportunity of hearing to appellant and pass a reasoned and analysed order in the matter. Appeal allowed by way of remand.
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2016 (12) TMI 781
100% EOU - Eligibility for concessional rate of duty under notification no. 8/97-CE dated 1st March 1997 - clearance of cotton yarn to DTA - Held that: - a more fundamental issue has not been considered by the lower authorities, viz. the appellant’s contention that they have used only domestic procurements for clearances effected domestically and that they have records to establish the contention. This aspect needs consideration - we set aside the impugned order and remand the matter back to the original authority to determine whether the domestically cleared yarn has been manufactured out of domestically procured materials including consumables and to pass a fresh order thereafter - appeal allowed by way of remand.
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2016 (12) TMI 780
Clandestine removal - clearance of 92.200 M.T. of Sponge Iron to the appellant without issuing Central Excise invoices - Held that: - I find that the proceedings were initiated against the other assessees on the basis of search and enquiry with reference to activities of Indian Steels, Raipur. The Tribunal in the case of M/s. Raipur Forgings Pvt. Ltd. & Ors. vs. CCE Raipur-I [2016 (2) TMI 763 - CESTAT NEW DELHI], where it was held that It is essential to have some piece of corroboration for such a clandestine activity other than the sole evidence of general admission statement of the Director or /partner and the appeal was allowed - In view of the above decision, I am of the view that the impugned orders can not be sustained - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 779
CENVAT credit - whether it is justified in holding that C.B.E.C. issued a Circular No. 877/15/2008 dated 17-11-2008 wherein it has been clarified that when the credit or debit notes are issued duty paid on inputs does not change therefore, it will not affect the admissible Cenvat credit? - Held that: - I find that the issue is already settled through the case of Dixon Technologies (India) Pvt. Ltd. and Others Versus C.C.E., Noida [2016 (11) TMI 1214 - CESTAT ALLAHABAD], where it was held that any circular issued by C.B.E.C. is a clarification on the existing provisions of Rules and therefore it is applicable for the entire period for which such Rules and para materia Rules existed on statute - It is very clear from the above circular that when subsequently the supplier allows some trade discount or reduces the price, without reducing the duty paid by him, the duty paid is admissible as Cenvat Credit. It is undisputed that the duty paid by the input manufacturers remained unaltered in the present case even after issue of credit notes. Therefore, I allow the appeal and set aside the impugned Order-in-Original & Order-in-Appeal and hold that the appellant shall be entitled for consequential benefits, if any, in accordance with law - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 778
Demand - CENVAT Credit availed was inadmissible as per Rule 6(4) of CENVAT Credit Rules, 2004 - Held that: - It is not in dispute that the major portion of the electricity generated was used in the manufacture of dutiable goods viz. carbon black. Thus, it is clear that the capital goods installed are not exclusively used in the manufacture of finished goods which are exempted from duty. The aforesaid issue is considered by Hon'ble Gujarat High Court in United Phosphorous Ltd case [2015 (7) TMI 665 - GUJARAT HIGH COURT], albeit in the erstwhile Rule 57Q of Central Excise Rules 1944, however, the same is relevant in deciding the issue in the new set of rules also. In the said judgment, the Hon'ble Court, referring to the judgment of this Tribunal in the case of Kothari Sugars & Chemicals Ltd Vs Commissioner [2005 (11) TMI 124 - CESTAT, CHENNAI] and the decision of Hon'ble Supreme Court in the case of Solaris Chemtech Ltd [2007 (7) TMI 2 - SUPREME COURT OF INDIA], held that since the electricity generated by the Appellant was not totally sold outside but partly consumed captively, therefore, the CENVAT Credit availed on the capital goods cannot be denied. Following the aforesaid decision, I have no hesitation to hold that the Appellants are eligible to CENVAT Credit on capital goods installed in the factory for generation of electricity, which in turn, used in the manufacture of carbon black even though a part of it sold to M/s Adani Exports Ltd through Gujarat State Electricity Board - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 777
CENVAT credit - whether the items, welding electrodes, M.S. Plates, Channels, Angles, H.R. Coils, Shapts, Bolds etc. are eligible for Cenvat Credit as capital goods or spares, components or accessories thereof as defined in Cenvat Credit Rules, 2004 or not? - Held that: - Welding electrodes etc., which are used for repair and miantenance of plant and machinery, are part of manufacturing process and are eligible to modvat Credit - it is further held that the welding electrodes used by the appellants in repair and maintenance and fabrication of machinery parts are eligible inputs. I also find that as the present issue is interpretational, extended period of limitation, is not invocable - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 776
Demand - GTA service - denial of CENVAT credit - whether Cenvat Credit of Service Tax on G.T.A., service was rightly taken on strength of TR-6 challan prior to 16.06.2005 when Rule 9 was amended and TR-6 challan was included as a specified document vide notice No.28.2005-CE? - Held that: - As the issue is covered in favour of respondent-assessee in the case of CCE & S.T., Coimbatore Vs. MRF [2015 (10) TMI 1056 - MADRAS HIGH COURT], where it was held that In the absence of specified documents for availing cenvat credit at the relevant time, TR-6 challan has to be considered as the proper document reflecting payment of duty - Appeal is dismissed - decided in favor of respondent-assessee.
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2016 (12) TMI 775
Valuation - There is no dispute by the appellant that the transactions made by it during the impugned period were with its related party. This attracted section 4(1)(b) of the Central Excise Act, 1944, read with Section 4(3)(b) thereof. For such reason, Rule 9 of the Central Excise (Valuation) Rules 2000, was applied - Rule 9 requires that the value of related party transactions shall be determined in the manner prescribed by that Rule, which requires that reasonable means consistent with the principles and general provisions of valuation rules read with section 4(1) of the Central Excise Act, 1944 is to be followed. Held that: - In view of the application of Rule 9, the adjudicating authority has to re-determine the value of the related party transactions in accordance with law prescribed by Rule 4 to 7 of the valuation Rules. Appellant is entitled to know the methodology sought to be adopted by the adjudicating authority to lead its defence - It is expected that the authority shall issue notice to the appellant within three months of receipt of this order and hear the appellant on merits. Granting reasonable opportunity of hearing to the appellant, he shall consider the defence plea and pass a reasoned and speaking order within three months of the last date of hearing. He shall expressly record in his order that the rule he applies for valuation is consistent with the principles of law laid down in the valuation Rules. Appeal allowed by way of remand.
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2016 (12) TMI 774
Evasion of duty - clandestine removal - imposition of penalty - Held that: - The evidences gathered from three persons corroborated the questionable modus operandi of the appellant company as has been recorded in para 60 of the order. That establishes that there was proper application of mind by the adjudicating authority demonstrating loss of Revenue - Being satisfied that there was no evidence to rebut the finding of the adjudicating authority, we uphold the impugned order in so far as the appellant M/s. Selvakumar Spinners Pvt. Ltd. is concerned. In so far as penalty on the Managing Director is concerned, discarding plea of innocence by appellant it is submitted by Revenue that the Managing Director was involved consciously in evasion for which no reduction in penalty is permissible. The adjudicating authority appears to have presumption of conscious involvement of the Managing Director in para 61 of his order finding that there was knowledge and consent of the Managing Director to cause evasion. But his finding is not based on any cogent evidence. No doubt, pre-ponderance of probability is in favour of Revenue. But the penalty proceeding being qusi-criminal in nature, that cannot be imposed mechanically. However considering totality of facts and circumstance of the case and extent of evasion as well as human intervention in causing evasion, it is considered that imposition of penalty of ₹ 50,000/- on the managing Director is Justified. Appeal disposed off - decided partly in favor of appellant.
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2016 (12) TMI 773
Served From India Scheme - N/N. 34/2006 - Status Holder Incentive Scheme - N/N.33/2012 dated 09.07.2012 - clandestine removal - recovery - Held that: - First of all I take objection to the language used by learned Commissioner (Appeals) in the impugned Order-in-Appeal. The learned Commissioner (Appeals) cannot pass judgment on the understanding, interpretation and appreciation by any Member of higher appellate forum. He should not have used the words “the Member of the Tribunal has wrongly equated the debit entries” and the words like “Single Member has failed to appreciate”. This Tribunal expresses unhappiness as use of such language by concerned learned Commissioner (Appeals) and expects that the said Commissioner (Appeals) shall be careful in future in use of language while analyzing the order passed by higher appellate forum. Further, I find that the ratio of the final order in the case of Universal Power Transformer Pvt. Ltd.[2010 (5) TMI 411 - CESTAT, BANGALORE], passed by this Tribunal is squarely applicable in the present case. I, therefore, allow the appeal and set aside the impugned Order-in-Original. The appellant shall be entitled for consequential benefit, if any, as per law.
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2016 (12) TMI 772
Classification of goods - grain cleaning and drying machine - Whether the impugned goods “grain cleaning and drying machine” was manufactured and cleared and such fall under the tariff entry 84.37 or under 84.19? - Held that: - when the tariff entry is looked into, Revenue has not discharged its burden of proof to show the very purpose that the machinery serves. Various purpose are listed in the entry and treatment of materials by the processes involved as stated in the entry. The term ‘drying’ also appears in that entry but that cannot be read in isolation. Intention of the entry is to cover a machine or plant or laboratory equipment, which is basically meant for the treatment of the materials. But the goods manufactured by the appellant serves no useful purpose of entry 84.19 rather it serves useful purpose of the entry 84.37 being specifically used in the milling entry - No technical test of the goods has been done by the Revenue to show that the impugned goods cannot be used by milling industry. Its purpose, capacity and usage remained uncontroverted leading in evidence. In absence of any technical test, report or expert opinion, the benefit of doubt goes to the assessee - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 771
CENVAT credit - credit of service tax on warranty provided by their dealers - input services or not - Held that: - The issue has been settled by this Tribunal in the case of Commissioner of Central Excise, Vodadara II Vs. Danke Products [2009 (7) TMI 137 - CESTAT, AHMEDABAD] wherein it has been held that repair and maintenance of transformers during warranty period is an activity of relating to sale of goods. Therefore, relying on the decision of the Tribunal in the case of Danke Products, I hold that the appellant is entitled for input service credit on repair charges paid to the dealers by the appellant as the same is an activity relating to sale of goods by the appellant - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 770
MODVAT credit - relaxation of time period for filing declaration - Held that: - I do not find any grounds raised by the appellant sustainable to establish that the Order of the Ld. Commissioner (Appeals) passed through impugned Order-in-Appeal is not sustainable in Law. I, therefore, dismiss the appeal filed by the Revenue.
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2016 (12) TMI 769
Denial of CENVAT credit - imposition of penalty - denial to manufacturer buyer of the Aluminum Scrap on the ground that the consignment agent’s godown was located in Gurgaon and the invoices were issued from their office in Delhi for dispatch - Held that: - The facts of the case are that the goods against which invoice have been issued from Gurgaon and stored in godown is not in dispute. It is not also disputed that the goods are not received to the buyer. The payment of these goods has been received by the importer from the manufacturer buyers. In that circumstances, I hold that the cenvat credit to the manufacturer buyer cannot be denied. Therefore, I hold that the impugned proceedings were not warranted against the appellant. Accordingly, the same are set aside - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 768
Valuation - inclusion of notional interest on the deposits given to job workers - levy of duty - emergence of waste cotton in the course of manufacture - Held that: - It cannot be said that both parties to the contract had no knowledge of emergence of waste while fixing the job charges. It was well within their knowledge. This being one of the material fact value of the scrap generated is necessarily to be added to the assessable value of the job worked goods - On this count appellant fails to succeed. The second issue raised by appellant is that notional interest charges on the deposit received from the principal manufacturer has been computed by the authority below and added that to the assessable value, which is uncalled for and unwarranted since that has not influenced assessable value. Ld. DR at this stage points out that the advance was not on earnest money deposit but both parties agreed for utilisation of such deposit for capital expenditure to upgrade/renovate the machinery used for production of good and maintain quality of output manufactured for the principal manufacturer - Materials on record reveal that the financial assistance given by the principal manufacturer to the job worker appellant was to serve the above object. Therefore, the notional interest on the deposit has been rightly computed by the authority and added to the assessable value. The last count of the argument is that the amount received on account of fulfilment of hank yarn obligation is not includible in the assessable value. But Revenue has found out that the same is in relation to manufacture only. Authority below rightly adjudicated that the said receipt is includible in the assessable value. In absence of any cogent reason stated to disturb the findings of the authority, that part is confirmed. When order of the adjudicating authority does not bring out appellant’s contumacious conduct to cause evasion and in all issues question of law was involved, there shall be no penalty. Appeal disposed off - decided partly in favor of appellant.
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2016 (12) TMI 767
Cement and clinker - CENVAT credit - Wear Resistant Plates, Impact Liner Plates, Cooler Sidewall Plates, Blow Bar Chains, LS Crush Hammers which were used by the appellant for repairs and maintenance of capital goods - Held that: - The Hon’ble High Court of Karnataka in the case of CCE, Bangalore-I Vs Alfred Herbert (India) Ltd.[2010 (4) TMI 424 - KARNATAKA HIGH COURT], following the ratio laid in the case of Hindustan Zinc Ltd.[2006 (5) TMI 44 - HIGH COURT RAJASTHAN], has held the issue in favor of assessee holding that the credit availed on subject items used for repairs and maintenance of the machinery is eligible for credit. In view thereof, following the judgment laid in the above cases as well as taking note of the dropping of proceedings in the subsequent year in the appellant’s own case I find that the impugned order is unsustainable. The same is set aside - appeal allowed - decided in favor of appellant-assessee.
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CST, VAT & Sales Tax
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2016 (12) TMI 757
Reversal of ITC - manufacture of castings and valves out of the raw materials purchased from the local registered dealers - reversal on the ground that the ITC claimed on the capital goods is not eligible to be refunded to the dealer/petitioner, and restricted the claim of refund, by estimating 5% of the purchase value to be 'Invisible Loss' and 1% of the Export sales turnover to be 'Visible Loss' - Held that: - reliance placed on the decision of the case of M/s. Interfit Techno Products Ltd. Versus The Principal Secretary/Commissioner of Commercial Taxes, The Assistant Commissioner (CT) (FAC) [2015 (4) TMI 935 - MADRAS HIGH COURT], where it was held that the Assessing Authorities are not justified in adopting uniform percentage as invisible loss and calling upon the dealer to reverse the input tax credit availed to that extent. Consequently, all notices issued to the petitioner for reopening and all consequential order passed reversing the input tax credit to the extent of either 4% or 5% or on adhoc percentage stands set aside. However, liberty is granted to the concerned Assessing Officer to issue appropriate show cause notices to the petitioners clearly setting out under what circumstances they propose to revise or call upon the petitioner to reverse refund sanctioned and after inviting objections proceed in accordance with law. Petition allowed - reversal of ITC set aside - liberty is granted to the concerned Assessing Officer to issue appropriate show cause notices to the petitioners clearly setting out under what circumstances they propose to revise or call upon the petitioner to reverse refund sanctioned and after inviting objections proceed in accordance with law - decided in favor of petitioner.
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2016 (12) TMI 756
Reversal of Input tax credit - stock transfers - The petitioner's case is that they never undertook a stock transfer of goods so purchased inside the State of Tamil Nadu. As a result, there was no occasion for the petitioner to reverse the Input Tax Credit under section 19(4) of the VAT Act. - Held that: - In terms of the provision under sub-section (1) of Section 63A, every registered dealer whose total turnover including zero-rate sale and sale in the course of inter-state trade or commerce as specified in section 3 of the Central Sales Tax Act, 1956, in a year, exceeds one crore rupees, shall get his accounts in respect of that year, audited by an Accountant and submit a report of such audit in the prescribed Form, duly signed and verified by the Accountant, to the Assessing authority, within such period as may be fixed. Thus, the petitioner's turnover having exceeded Rupees One Crore, they are required to file the Audit Report and they have got time to file the Audit Report i.e. within nine months from the end of the financial year and the end of the financial year was 31.03.2016. Therefore, the respondent/assessing officer has to necessarily await the Audit Report, as the statute provides time limit for the petitioner to submit the same. The impugned order is set aside and the respondent is entitled to pass final assessment order after the petitioner files the Audit Report in terms of Section 63-A of the TNVAT Act, within the time prescribed under Rule 16(1) of the TNVAT Rules and in the event the respondent for any valid reason does not accept the report, then the respondent is directed to issue show cause notice to the petitioner and proceed in accordance with law - petition allowed.
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2016 (12) TMI 755
Validity of order of assessment - change in place of business - assessment circle has been now shifted to the jurisdiction of the second respondent - principles of natural justice - Held that: - On a bare perusal of the impugned assessment order, dated 06.01.2015, it shows that the petitioner did not have any opportunity to submit their objections and the impugned assessment order has been passed without even issuing a show-cause notice. This is sufficient to hold that the impugned order has been passed in violation of principles of natural justice. Nevertheless, in respect of the transactions covered by the 'C' forms, the first respondent has given credit to the those 'C' forms and applied the concessional rate of tax. But, however, with regard to the transactions not covered by 'C' forms, the higher rate of tax has been imposed and the export documents were not called for and considered. Therefore, the claim for exemption was totally disallowed - Since this Court has convinced that the impugned assessment order dated 06.01.2015 is in violation of principles of natural justice, the same is required to be set-aside in so far as revised higher rate of tax in respect of transactions not covered by 'C' forms and in respect of dis allowance of the exemption on account of not considering the export documents and transit sale documents. Therefore, to that instant, the impugned order dated 06.01.2015 is quashed. Having held so, the impugned demand, dated 28.04.2016 also required to be set-aside with further directions. At this juncture, it is relevant to point out the Circular issued by the Principal Commissioner, dated 28.02.2011 with regard to acceptance of the statutory forms - The above circular issued by the Commissioner binds the assessing officer. Therefore, belated production of Form 'C' declarations cannot be a sole ground to reject the same. That apart, the first respondent while completing the assessment did not consider the export sale documents and the transit sale documents nor those documents were called for, but assessment was completed ex-prate. Therefore, Form 'C' declarations that the petitioner may produce and the export documents and the transit sale documents should be considered by the second respondent. The Writ Petition is allowed and the impugned order order is set-aside and the matter is remanded to the second respondent for fresh consideration, who shall direct the petitioner to appear for personal hearing and permit the petitioner to produce Form 'C' declarations, export documents and transit sale documents etc., and on perusal of those documents and after hearing the petitioner's objections, the assessment shall be redone in accordance with law - appeal allowed by way of remand.
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2016 (12) TMI 754
Classification of goods - whether “purified water” sold by the assessee in loose jars would fall under Entry 154 of Schedule IIA to the Sales Tax Act as contended on behalf of the Revenue or it would fall under Entry 93 of Schedule I to the Sales Tax Act as contended on behalf of the assessee? - Held that: - when the assessee is selling the purified water in a jar having the capacity of 5 or 10 liters, having a top which is closed, it cannot be said that the assessee is selling the purified water in a sealed jar. Similarly, it cannot be said that the assessee is selling the purified water in a corked bottle, jar or pouch. However, considering the dictionary meaning of the word “Capsule”, it can be said that the assessee is selling the purified water under the brand name (Shital) in a capsuled jar. As per the meaning of “capsule” in the Oxford Dictionary and other general dictionaries, “Capsule” means a small case or container; a top or cover for a bottle; contains small or compact; enclose in or provide with a capsule. Under the circumstances, when the assessee is selling the purified water under the brand name “Shital” in a capsule jar i.e. in the jars / water jugs having the capacity of 5 or 10 liters and having a top which is closed, it can be said that the assessee is selling the “purified water” under the brand name in a capsuled jar and therefore, Entry 154 of Schedule IIA of the Sales Tax Act shall be attracted and the “purified water’ sold by the assessee fall under Entry 154 of Schedule IIA of the Sales Tax Act. Appeal disposed off - decided in favor of Revenue.
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Indian Laws
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2016 (12) TMI 810
Maintainability of appeal - application filed by the appellant under Order VII Rule 11 of the CPC was rejected mainly for the reason that the Tribunal had no jurisdiction to entertain the proceedings under the provisions of Section 1(4) of the DRT Act as the value of the suit was less than ₹ 10 lakh - Held that:- The application submitted by the appellant bank under Order VII Rule 11 of the CPC should have been granted by the trial Court as, according to Section 34 of the Act, a Civil Court has no jurisdiction to entertain any appeal arising under the Act. Thus, we hold that the Debt Recovery Tribunal constituted under the DRT Act has jurisdiction to entertain an appeal as per Section 17 of the Act even if the amount involved is less than ₹ 10 lakh. But, the said appellate jurisdiction need not be misunderstood with the original jurisdiction of the Tribunal. For the aforestated reasons, the impugned judgment as well as the order rejecting the application filed under Order VII Rule 11 are set aside. The appeal is allowed with no order as to costs.
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