TMI Tax Updates - e-Newsletter
December 19, 2016

Case Laws in this Newsletter:

Income Tax Customs PMLA Service Tax Central Excise CST, VAT & Sales Tax

TMI SMS

• Deduction u/s 10A/10B would be allowed while computing the gross total income and not at the stage of computation of the total income - SC

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• Franchise agreement - Grant of non-exclusive licence to Franchisee for use of Brand name for consideration is exigible to VAT - HC

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• Assessment of high value transactions - GR Cell to represent the revenue before the AO before adjudicating the case - HC upheld the validity

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Articles

• COMPARATIVE ANALYSIS OF CHANGES MADE IN INPUT TAX CREDIT- PART-II
• ISSUE OF TAX INVOICE IN SPECIFIC CASES

News

• Finance Minister Arun Jaitley hints not all scrapped currency will be remonetised

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• Clarification of Status of Political Parties under Income Tax Act, 1961

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• India and Switzerland signed the ‘Joint Declaration’ for implementation of Automatic Exchange of Information (AEOI) on 22.11.2016;

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• Income Tax Searches lead to Admission of Undisclosed Incomes of ₹ 2600 Crore since 8th November, 2016

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• NITI Aayog announces launch of the schemes - Lucky Grahak Yojana and Digi-Dhan Vyapar Yojana - for incentivising digital payment

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• Action against defaulting companies under various provisions of the Companies Act, 1956

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• Growth of Corporate Sector

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• Early Warning System to Detect Fraud

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• Capital structure of Nidhi Companies

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• Contribution to Political Parties

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• Annual Filing by Corporates

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• Taxation Laws (Second Amendment) Act, 2016 came into force on 15th December, 2016 and rules notified and placed in public domain; The Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 introduced under the said Act to commence from 17th December, 2016 and to remain open for declarations up to 31st March, 2017

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• Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (the Scheme)

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• Reduction of import duty on the essential commodities

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• Government sets up fund namely Short Term Cooperative Rural Credit (Refinance) Fund in NABARD that aims at providing concessional short term refinance to Cooperative Banks.

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• Start-up Initiative: a ''Fund of Funds'' of INR 10,000 Crores to Support Innovation Driven Start-Ups has been Established to be Managed by Small Industries Development Bank of India (SIDBI)

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• Priority sector lending for all Scheduled Commercial Banks

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• Demonitization

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• Measures to absorb the excess liquidity in the banks post demonetisation

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• Revival of Guarantee Scheme where Banks can deposit directly with RBI

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• Valuation of Assets

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• Multi-Level Marketing (MLM) activities

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• Benefits of Demonitization

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• Black money holders get last chance to disclose till March'17

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Notifications

Income Tax

• 118/2016 - dated 16-12-2016 - IT
  Section 138(1)((a)(ii) specifies the Joint Secretary (Marketing), Ministry of Petroleum and Natural Gas, Government of India

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Highlights / Catch Notes

Income Tax

• Exemption / deduction u/s 10A or 10B - when to be allowed - Though Section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI. - SC
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• Donations - originally donation as paid was claimed as expenses - while scrutiny assessment, on being pointed out, deduction u/s 80G claimed - Since AO did not find the same as false or bogus, benefit of deduction allowed - AT
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Service Tax

• Denial of cenvat credit - input services - Financial Advisor to the appellant - the activity would definitely be services used in relation to financing and financial management of the appellant - credit allowed - AT
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• Demand of interest - reversal of credit on different dates - the period of limitation that applies to a claim for the principal amount would also apply to the claim of interest there on. - AT
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• Providing multi level marketing services - the activity is falling under the category of ‘Business Auxiliary Services’ - demand confirmed for the normal period of limitation only - AT
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Central Excise

• Whether the statement recorded u/s 14 of the Central Excise Act, 1944 is admissible? - if it is subsequently retracted or explanation is furnished then it has to be looked into the said admission and authority must have corroborative material and cannot base its finding u/s 14 - HC
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• Valuation - suppression of value/undervaluation - clandestine removal - statements of 11 witnesses cannot be made the basis to prove charge against the appellant - in the absence of any positive evidence against the appellant for clandestine removal and under-valuation, the charges are not sustainable - AT
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• Denial of CENVAT credit - Lighting equipments, fittings and fixture - these items are classifiable under the eligible category of Chapters 84, 85 and 9405 of the Tariff and their usage has not been disputed in an industrial operations involving steel production - credit allowed - AT
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• Recovery of refund already made - unjust enrichment - Refund claim - unjust enrichment - finalization of provisional assessment - appellant is entitled for the refund of excess duty paid provisionally at the time of clearance of goods - AT
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VAT

• Levy of VAT - Franchise agreement - Grant of non-exclusive licence to Franchisee for use of Brand name of petitioner under the agreement for consideration is exigible to tax under VAT Act - HC
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• Assessment of high value transactions - Government Representative Cell (GR Cell) to represent the case before the AO before adjudicating the case - it cannot be said that there is any external interference in exercise of quasi judicial functions by the AO - HC upheld the validity
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Case Laws:

• Income Tax

• 2016 (12) TMI 881
  Exemption / deduction u/s 10A or 10B - when to be allowed - before determination of gross total income or computing the net total income i.e. chapter IV or VI - introduction of the word ‘deduction’ - amendment made by Finance Act, 2003 with retrospective effect from 1.4.2001 - scope of total income as defined u/s 2(45) - Held that:- The introduction of the word ‘deduction’ in Section 10A by the amendment, in the absence of any contrary material, and in view of the scope of the deductions contemplated by Section 10A as already discussed, it has to be understood that the Section embodies a clear enunciation of the legislative decision to alter its nature from one providing for exemption to one providing for deductions. The difference between the two expressions ‘exemption’ and ‘deduction’, though broadly may appear to be the same i.e. immunity from taxation, the practical effect of it in the light of the specific provisions contained in different parts of the Act would be wholly different. From a reading of the relevant provisions of Section 10A it is more than clear to us that the deductions contemplated therein is qua the eligible undertaking of an assessee standing on its own and without reference to the other eligible or non-eligible units or undertakings of the assessee. The benefit of deduction is given by the Act to the individual undertaking and resultantly flows to the assessee. Though Section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI.

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• 2016 (12) TMI 880
  Rectification of mistake - period of limitation reckoned - non reducing the reversal of provisions for custom duty of ₹ 3.50 Cr from the book profits - Held that:- No amendment shall be made after expiry of four years from the end of the financial year in which the order sought to be amended is passed. In our opinion the assessee has filed an application seeking amendment in the order passed on 23rd July 2007 giving effect to the tribunal decision dated 9th March 2007. The period of limitation has to be taken from 31st March,2008 and accordingly the application of the assessee is not barred by limitation provided u/s 154(7) of the Act. The case of the assessee is also supported by the decision of Peninsula Land Ltd Vs CIT (2008 (2) TMI 354 - BOMBAY HIGH COURT) in which it has been held that provisions of section 154(7) does not apply to order passing on the benefit allowed to the assessee by virtue of order passed by the appellate order but such power of the AO to pass order giving effect to any appellate order is inherent and traceable to section 143(3) and 144 of the Act. Accordingly we hold that the application of the assessee u/s 154 is not barred by limitation. On the second issue we are of the considered view that the provisions reversed of ₹ 3.50 Cr has to be reduced from the income under MAT as no deduction has been allowed earlier. In our opinion the order passed by the CIT(A) is not correct and therefore can not be sustained. Accordingly we set aside the same and direct the AO to reduce the provisions for custom duty reversed of ₹ 3.50 Cr from income under MAT. - Decided in favour of assessee

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• 2016 (12) TMI 879
  Bogus purchases - addition u/s 69C - profit element in accommodation entries - Held that:- The conclusion of the ld. CIT(A) that the assessee has purchased material from some other dealers but quantitative reconciliation of the stock was duly done by the assessee of the sale and purchase and hence the profit element in this accommodation entries are to be added to the income cannot be faulted . The ld. CIT(A) restricted the addition by estimating GP ratio of 12.5% of ₹ 1,13,44,778/- being purchases from these alleged four accommodation entry providers. We do not find any infirmity in the well reasoned order of the ld. CIT(A) whereby net profit was estimated which was a reasonable estimation made by learned CIT(A) and we sustain/affirm the order of learned CIT(A). In the result , we dismiss both the appeal of the assessee as well of Revenue.

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• 2016 (12) TMI 878
  Validity of reopening of assessment - HC [2015 (10) TMI 637 - KARNATAKA HIGH COURT] dismissed the writ petitions preferred by the appellant/assessee herein challenging the issuance of notice - Held that:- The aforesaid view taken is contrary to the law laid down by this Court in Calcutta Discount Limited Company vs. Incom Tax Officer, Companies District I, Calcutta & Anr.[1960 (11) TMI 8 - SUPREME Court]. We, thus, set aside the impugned judgments and remit the cases to the respective High Courts to decide the writ petitions on merits. We may make it clear that this Court has not made any observations on the merits of the cases, i.e. the contentions which are raised by the appellant challenging the move of the Income Tax Authorities to re-open the assessment. Stay of re-assessment was granted

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• 2016 (12) TMI 877
  Validity of reopening of assessment - payment of purchase price in excess to the SMP - Held that:- HC order [2015 (7) TMI 297 - GUJARAT HIGH COURT] confirmed as in absence of any allegation in the notice under Section 148 of the Act that there was any failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment, the assumption of jurisdiction is absolutely wholly without jurisdiction and illegal.. We do not find any legal and valid ground for interference. The Special Leave Petition is dismissed. - Decided in favour of assessee

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• 2016 (12) TMI 876
  Revision u/s 264 against the assessment order cum intimation under Section 143(1) - revision in favor of assessee - petitioner working as a marine engineer filed income tax return for such assessment year under the residential status as non-residential Indian and had applied under Section 264 - Held that:- The impugned order is one under Section 264 of the Act of 1961. The power under Section 264 is wide enough to grant appropriate relief to an assessee. In the impugned order, the Commissioner notes that, the income received by the petitioner is in respect of services rendered for 286 days outside India. The Commissioner exercising powers under Section 264 of the Act of 1961 could have proceeded to grant appropriate relief to the petitioner by setting aside the intimation under Section 143(1) of the Act of 1961 and holding that, such income of the petitioner is not taxable in respect of the relevant assessment year. The Commissioner, however, did not do so. It has remanded the matter to the assessing officer to do the needful. In view of the discussions above, therefore, the intimation under Section 143(1) of the Act of 1961 dated December 7, 2012 as well as the order under Section 264 dated September 25, 2013 are set aside.

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• 2016 (12) TMI 875
  Reopening of assessment - capital gain - huge premium higher than the real worth of the share - Held that:- The Petitioner's filed its objections by letter dated 20th July, 2016 to the reasons recorded. In its objections, the Petitioner points out that the reasons as recorded have been premised on figures which were incorrect. In particular, the face value of the shares is not ₹ 411/per share as indicated in the reasons recorded but ₹ 10/per share. This, in fact forms the basis of the Assessing Officer doing the exercise to determine whether any income chargeable to tax has escaped assessment. However, the aforesaid objections has not been addressed to by the Assessing Officer in his order dated 9th September, 2016. The face value of the share being ₹ 411/per share is merely reiterated without any supporting evidence to meet the objections of the Petitioner. In the above view, it would be appropriate that the order disposing of the objections dated 9th September, 2016 be set aside and the issue be restored to the Assessing Officer to dispose of the Petitioner's objections as stated and confined to contents of its objections dated 20th July, 2016. AO would dispose of the objections dated 20th July, 2016 within a period of six weeks from today.

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• 2016 (12) TMI 874
  Eligibility of deduction under Section 80IB [10] - Held that:- As the assessee had already completed project/construction with respect to Tower “C” in Poddar Residency and penthouse, the assessee is entitled to deduction under Section 80IB [10] of the Act. No error has been committed by the learned Tribunal in holding in confirmation of the decision of CIT [A] that the assessee shall be entitled to deduction claimed under Section 80IB [10] of the Act. See Income Tax Officer Versus Saket Corporation [2015 (6) TMI 460 - GUJARAT HIGH COURT] - Decided in favour of assessee

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• 2016 (12) TMI 873
  Reopening of assessment - AO granted exemption though assessee did not claim the exemption on long term capital gain - Held that:- If, on the material on record, the Assessing Officer grants some benefit / exemption, that cannot be the ground to reopen the assessment beyond four years. A wrong grant of benefit / exemption by the Assessing Officer cannot be the sole ground to reopen the assessment beyond four years for reopening of the assessment beyond four years. What is required is that there shall be non disclosure of true and correct facts by the petitioner – assessee, which were required for assessment. Under the circumstances, without further entering into the larger question whether without filing the revised return of income and /or without claiming the exemption in the return of income whether such exemption can be allowed or not, on the aforesaid ground alone i.e on the ground that the conditions precedent, which are required under the provisions of Section 147 of the Income Tax Act to reopen the assessment beyond the period of four years are not satisfied, the impugned reopening proceedings deserves to be quashed and set aside. - Decided in favour of assessee

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• 2016 (12) TMI 872
  Validity of reopening of assessment - notice issued to non existent company - Held that:- It is not in dispute that the impugned notices under Section 148 of the Income Tax Act have been issued against the original assessee on 21/01/2011 to reopen the assessment for the Assessment Year 2009-10. It is also not in dispute that the respective petitioners – original assessee are ordered to be amalgamated with one Takshashila Gruh Nirman (subsequently named as Takshahila Realties Pvt. Ltd.). The scheme of amalgamation has been sanctioned by this Court, by which the respective petitioners are ordered to be amalgamated into Takshashila Gruh Nirman (subsequently named as Takshahila Realties Pvt. Ltd.) with effect from 01/04/2010. Under the circumstances, when the impugned notices are issued against the original assessee – amalgamating Company on 21/01/2011, it can be said that the same has been issued against the non-existent Company. It cannot be disputed that once the scheme for amalgamation has been sanctioned by the Court with effect from 01/04/2010, from that date amalgamating Company would not be in existence. Under the circumstances, the impugned notices, which are issued against the non existent Company, cannot be sustained and the same deserves to be quashed and set aside. - Decided in favour of assessee

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• 2016 (12) TMI 871
  Validity of reopening of assessment - objections raised by the audit party relied upon - Held that:- The assessee furnished necessary documentary evidence including books of accounts etc. and after having satisfied with respect to the accounting system of the assessee with regard to the accounting of the subsidy, Additional Commissioner of Income Tax, Range 4 Surat, communicated to the Commissioner of Income Tax, II, Surat that the objections raised by the Audit Party do not survive and / or observation made by the audit party may be treated as complied with and no remedial action was called for on the merits of the case. It is required to be noted that the assessment is reopened on the very ground on which the objections raised by the audit party. Under the circumstances and more particularly the allegations that the assessment is reopened solely on the objection raised by the audit party and there is no independent formation of opinion by the Assessing Officer that the income has escaped assessment, have not been denied or disputed, the impugned notice under Section 148 of the Act cannot be sustained. The decisions of this Court in the case of Raajratna Metal Industries Ltd ( 2014 (8) TMI 598 - GUJARAT HIGH COURT) and National Insurance Co (2015 (8) TMI 571 - GUJARAT HIGH COURT ) shall be squarely applicable to the facts of the case on hand. Under the circumstances on the aforesaid ground alone, the impugned notice deserves to be quashed and set aside. - Decided in favour of assessee

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• 2016 (12) TMI 870
  Deduction of donations u/s 80G - originally donation as paid was claimed as expenses - while scrutiny assessment, on being pointed out, deduction u/s 80G claimed - Held that:- The AO did not accept the request of the assessee and disallow the donation under the head charity and donation and added back to the total income of the assesee which in our considered opinion is contrary to law, because there is no need to file the revised return and during the course of assessment proceedings the assessee has requested vide letter dated 19.11.2011 and claimed the deduction of donation which has not been found false/ forged or wrong by the AO. We also find that the assessee has made the payment of donation in dispute to Bengar Shiksha Samiti which is approved under section 80G of the I.T. Act and assessee has also produced the receipt of the same which has not been found false, bogus by the AO. Therefore, in our considered view, the assessee is entitled for the donation claimed by the assessee and accordingly, we direct the AO to allow the benefit of donation in dispute claimed by the assessee u/s. 80G. Claim of 43B - Held that:- We note that in respect of payment of ESI and PF is concerned, the assessee has not furnished any evidence either before the AO or before the Ld. CIT(A), which is very much essential to claim in dispute. In the interest of justice, we remit back the issue in dispute to the file of the AO to consider the same afresh after giving adequate opportunity of being heard and assessee is directed to furnish the evidence before the AO to substantiate his claim. Addition of travelling allowance - Held that:- The issue requires fresh adjudication because the assessee have not produced evidence before the AO and AO has not afforded any opportunity to verify the details/ evidences. Accordingly, the issue in dispute is remitted back to file of the AO for fresh adjudication, after giving adequate opportunity of being heard to the assessee. Assessee is also directed to fully cooperate with the AO and produce all the details/ evidences before him. Direction to allow the claim u/s. 115JA after verification is concerned, we find that the Ld. CIT(A) has given a correct finding because the allowability of credit of tax u/s. 115 JA requires verification. Hence, we uphold the decision of the ld. CIT(A) on this issue wherein he directed the AO to make necessary verification and allow the credit as per law

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• 2016 (12) TMI 869
  Disallowance of interest claimed by the assessee on house building advance - Held that:- Looking into the factual matrix of the case, it is observed that the property in question is not in the name of the assessee which only concerns with the mother of the assessee i.e. Smt. Usha Sawhney. Since the property in question does not belong to the assessee, therefore, the interest claimed by the assessee on house building advance is not allowable u/s 24(b) - Decided against assessee Unexplained income u/s 69A - Held that:- Certificate of Registration of the Car bearing No. RJ-14-CA-6520 which establishes that the assessee was the owner of the Car -Maruti Wagon R which had been sold to Shri Hari Om Bhardwaj and the date of transfer was mentioned in the R.C. on 05-05-2010. The deposit of an amount of ₹ 1.50 lacs in HDFC Bank shows on 19-04-2010 and the transfer of the registration of the car in Registration Certificate of RTO shows on 5-05-2010 which establishes that whenever the old car is sold to the party then it takes time to change the ownership from seller to buyer. It is also noted from the Registration Certificate that transfer of the car was made on 05-05-2010 in the name of Shri Hari Om Bhardwaj S/o Shri Chiranji Lal R/o 18-A, Sri Ram Nagar Jhotwara, Jaipur. Hence, in view of the above facts and circumstances of the case, the assessee deserves relief on this count and the addition sustained by the ld. CIT(A) to the extent of ₹ 1.00 lac is deleted - Decided in favour of assessee

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• 2016 (12) TMI 868
  Disallowance of Vehicle running and maintenance, Depreciation on car and Telephone expenses on account of personal use - Held that:- It is noticed that the assessee is an individual. There is no log book maintained by the assessee to show that vehicle was run and telephone was used only for business purposes. In these circumstances, element of personal user from these expenses cannot be ruled out. Thus sustenance of disallowance at 10% of these expenses is reasonable, which does not require any interference.- Decided against assessee in part Low household withdrawals - Held that:- As assessee did not furnish any justification for the household withdrawals before the AO addition confirmed. - Decided against assessee Addition u/s 43B - delay in payment of PPF - Held that:- The Hon’ble Supreme Court in the case of CIT v. Alom Extrusions Limited [2009 (11) TMI 27 - SUPREME COURT ] has held that the amendment to first proviso and omission of the second proviso to section 43B by the Finance Act, 2003 is retrospective. The Hon’ble Delhi High Court in the case of CIT v. Aimil Limited [2009 (12) TMI 38 - DELHI HIGH COURT ] has allowed deduction in respect of employees’ share when the amount was paid before the due date. When I consider these two judgments, it becomes patent that both the employer’s and employees’ contribution are allowable as deduction if the amount of provident fund etc., though belatedly, but is paid before the due date of filing of return u/s 139(1) of the Act. Adverting to the facts of the instant case, it is seen as an admitted position that the assessee deposited its and employees’ share in EPF etc. before the due date u/s 139(1) of the Act. Thus deletion of the addition confirmed. - Decided against revenue

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• 2016 (12) TMI 867
  Disallowance of advance site expenses - Held that:- We are of the view that the assessee is under obligation to provide the underlying documents and details for claim of expenditure if so required by the Revenue. Admittedly, the assessee has failed to produce all the documentary evidences to support the expenditure claimed on the ground that such bills/vouchers are purportedly voluminous. In the circumstances, in the absence of complete details, we do not find any plausible reason to discredit the findings of the CIT(A) in this regard. - Decided against assessee. Disallowance of interest expenditure - Held that:- While in view of the proviso to sub-section (iii) of section 36(1) of the Act, we find force in the alternate contention of the Assessee that interest attributable to the investment in new assets is required to be capitalized till the date the new assets is put to use, the rate of interest attributable to such advances is required to be applied @ 3%p.a. instead of 14% p.a. as per AO. The AO is accordingly directed to grant appropriate relief by computing the revised disallowance applying the rate at which the unsecured loans has been borrowed by the assessee. The AO may seek required details in this regard if he so considers it expedient.- Decided partly in favour of assessee. Disallowance of interest expenditure attributable to construction of the new building - Held that:- In view of the fact that unsecured loans of ₹ 6.65 crores bearing interest 3% p.a. is available with the assessee as claimed the benefit of low rate of interest as claimed by the assessee for the purpose of capitalization of interest costs in terms of section 36(1)(iii) of the Act cannot be denied. We therefore find force in the argument of the assessee. The AO is accordingly directed to apply the interest rate at which unsecured loan has been borrowed for the purpose of capitalization of interest cost in terms of section 36(1)(iii) of the Act. For this purpose, the AO would be entitled to may seek requisite information from the assessee. - Decided in favour of assessee.

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• 2016 (12) TMI 866
  Accrual of interest - real income receipt - Held that:- Since the assessee has not received or realized any interest, it has not accrued to the assesee. The assessee has not offered the said interest for taxation in the return of income filed with the Revenue. Only real income can be brought to tax and not hypothetical income is a well settled proposition of tax-laws. In our considered view, there was a mistake committed by partnership while finalizing its return of income filed with Revenue which was corrected by the said assessee on the very next day i.e. On 1st April, 2006 and no expenditure was claimed. Hence, in our considered view this interest income cannot be brought to tax in the hands of the assessee as it is not a real income but a hypothetical income. No prejudice is caused to the Revenue as the said partnership firm did not claimed any expenditure in its return of income towards interest expenditure payable on capital contributed by partners but the same was added to the closing WIP.In any case it is reversed on 01-04-2006 by the firm by reducing WIP. We further find that the A.O. has not made any enquiry with the said firm to bring on record any incriminating material to disprove the contentions and the submissions of the assessee. The addition of interest expenditure of ₹ 33,23,178/- to the income of the assessee is in our considered view is not sustainable in the eyes of law and is hereby ordered to be deleted. - Decided in favour of assessee

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• 2016 (12) TMI 865
  Revision u/s 263 - claim of deduction under section 80IB(10) wrongly allowed - Held that:- We find that the findings as recorded by the Commissioner were contradictory and conflicting and there was no of application of mind to the facts on records and he proceeded to set aside the assessment for the reasons which were conflicting and based upon wrong appreciation of facts on record. On one hand the commissioner has observed that audit report in Form 10CCB was not filed whereas contradicting his own observation he further noted that AO failed to examine the audit report filed along with the return of income. According to the assessee the column no.26 of the audit report of form No.10CCB the column was marked as NIL as the assessee had not claimed any deduction u/s 80IB(3,4,5 and 7) whereas column No.29 and 30 were duly filled in and ₹ 4,12,60,224/- was mentioned as claim of deduction u/s 80IB(10) of the Act which appears to be correct. We also find that there was a certificate appended by the Auditor at the end of the said form in respect of the claim under section 80IB(10) of the Act . Thus the assessment framed by the AO was correct and was wrongly set aside by the Commissioner by exercising revisionary jurisdiction/powers u/s 263 of the Act. The case of the assessee is also supported and squarely covered by the decision in the case of Hindustan Samuh Awas Ltd (2015 (10) TMI 2306 - BOMBAY HIGH COURT ) in which the Hon’ble Bombay High Court has held that even if the project is part completed and was granted completion certificate for the work completed, the assessee is entitled for claiming benefit u/s 80IB(10) of the Act - Decided in favour of assessee

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• 2016 (12) TMI 864
  Disallowance u/s. 14A - Held that:- We find that disallowance made u/s. 14A of the Act of ₹ 14,56,385/- was against ₹ 50,400/- computed by the assessee as expenses related to earning of income on which tax is not payable in the eyes of law. We further find that disallowance out of expenses incurred by the assessee in the course of his practice as a Senior Advocate is not sustainable as at no stage it has been said that the authorities found any dissatisfaction as regards the correctness of the claim made by the assessee. In view of above, no disallowance under section 14A is sustainable in the eyes of law. - Decided in favour of assessee

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• 2016 (12) TMI 863
  Revision u/s 263 - reliance on audit objection raised by the internal audit party - Held that:- CIT has invoked the provisions of section 263 of the Act based upon the audit objection raised by the internal audit party team. The A.O. has categorically replied vide letter no. ACIT/Circle-8(3)/Audit Objection / 2009-10 dated 19-08-2009 to the objections raised by the internal audit party objections and dismissed audit objections by replying on each and every issue on merit which clearly refects that the AO has gone through every issue on merits and applied his mind before passing assessment orders and the decisions was taken by the AO on merits before passing assessment order. With respect to non-deduction of TDS on usance interest, the AO while replying to audit objection has sought permission to invoke provisions of Section 154 of the Act to rectify the mistake apparent from record. The assessee in proceedings before learned CIT u/s 263 of the Act and also before us duly demonstrated that all the facts were before the AO and the AO has taken a conscious decisions on merits which is a plausible decisions which does not warrant interference u/s 263 of the Act to revise concluded assessment. We have also considered all the replies given by the assessee on merits before AO and CIT as well before us which are set out in preceding para’s and are not repeated for the sake of brevity , and we find that the assessee has convincingly replied on all issues on merits and the view taken by the AO before passing assessment order was a plausible view on merit taken after due enquiries and cannot be categorized as erroneous so far as prejudicial to the interest of the Revenue With respect to the usance interest, the proceedings u/s 154 was contemplated by the AO vide reply to audit objection on 19-08-2009, while ld. CIT issued show cause notice only on 11.03.2011 u/s 263 of the Act. Thus, the record of proposal to take action by the AO u/s 154 of the Act was before the CIT before issuing notice u/s 263 and hence the order of the AO cannot be termed as erroneous so far as prejudicial to the interest of Revenue as the word ‘records’ used in Section 263 of the Act shall also contemplate including the record pertaining to proceedings u/s 154 of the Act arising subsequently out of the assessment order passed by the AO u/s 143(3) of the Act , and such record was before ld CIT before he issued notice u/s 263 of the Act on 11.03.2011. Thus, in our considered view, the assessment order dated 23.12.2008 passed by the A.O. u/s 143(3) of the Act is neither erroneous nor it is prejudicial to the interest of Revenue - Decided in favour of assessee

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• 2016 (12) TMI 862
  Validity of Reopening of assessment - Held that:- The AO had rightly exercised his power of reopening the assessment in proceedings under section 147/148 of the Act, as he had prima facie valid reasons to believe that income of the assessee exigible to tax for A.Y. 2003-04 had escaped assessment and had therefore correctly reopened the assessment for A.Y. 2005-06. Before us, no material evidence has been brought on record by the assessee to controvert the findings of the learned CIT(A) on this issue. In this view of the matter, while maintaining judicial consistency and finding no merit in the grounds raised or arguments put forth by the learned A.R. of the assessee, we uphold the action of the AO in reopening the assessment for A.Y. 2003-04 in the case on hand. Exemption claimed u/s 54F denied - treating the capital gains on sale of shares as bogus transaction - treatment of the investment in purchase of residential flat at Jaldarshan, Malabar Hills, Mumbai as unexplained investment - Held that:- As decided in assessee's own case for AY 2005-06 we hold that the learned CIT(A) erred in upholding the AO’s action in treating the capital gains on sale of shares amounting to ₹ 35,17,598/- as a bogus transaction, charging commission thereon and denying the assessee’s claim for exemption under section 54F of the Act. We accordingly set aside the orders of the authorities below on these issues. Since it appears that the authorities below have denied the assessee’s claim for exemption under section 54F of the Act summarily, without examining the facts of the claim and computation thereof, the AO is directed to do so while giving effect to this order. We hold and direct accordingly.

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• 2016 (12) TMI 861
  Assessment u/s 153A - no warrant of authorisation issued to search the assessee’s premises - Held that:- There was no warrant of authorisation issued to search the assessee’s premises on 24.02.2009 and Revenue was unable to produce the same, if any, to controvert our finding. This was specifically required in the light of the contradictory statements made by the AO in the order of assessment which led to the confusion of whether the assessee was subjected to search or not. In the absence of any warrant of authorisation to search the assessee’s premises under section 132 of the Act, on 24.02.2009, the AO had no jurisdiction to issue the notices under section 153A of the Act dated 05.10.2009 issued by him; thereby rendering them invalid and consequently the orders of assessment under section 153A of the Act for assessment years 2006-07 and 2007-08 subsequent to the issue of those notices under section 153A of the Act could not have been passed and the same are also held to be void abnitio and accordingly cancelled. - Decided in favour of assessee

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• Customs

• 2016 (12) TMI 831
  Restoration of CHA licence - violation of Regulation 12 - Held that: - though the said Manish Sangani was found to have utilised the licence, the said Manish Sangani himself was a CHA. His licence was suspended. Though the licence was suspended, the Customs did not forfeit the authorisation in his favour and seize the documents in that regard. Therefore, the involvement of the Customs Officers was also directed to be probed by the tribunal. In the facts and circumstances of the present case, though upholding the charges and the findings of the inquiry officer in that regard, the quantum of punishment was interfered with. Once we have found that the licence was not in use from 29th March, 2012 and till date, then, the tribunal's order does not require any interference. It cannot be termed as perverse or vitiated by error of law apparent on the face of the record. We, therefore, dismiss this appeal - the CHA licence of the respondent would be restored.

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• 2016 (12) TMI 830
  Correctness of circular - General Alert Circular No. 11 of 2013 (dated 30.09.2013) which was in turn based on Circular No. 21/2013-C1 dated 06.09.2013 - It is stated that the impugned circulars were preceded by a long standing classification of all varieties of seeds as “vegetable seeds” and spices having regard to their use. With the impugned General Alert Circulars, the CBEC had to depart from the earlier thinking which was reflected in the previous clarification dated 08.01.2002 by the Board itself to all customs authorities with regard to the proper classification of various kinds of seeds covered under Heading 09.04 of the Customs Tariff as opposed to Chapter 12 - inaction of the respondent in particular of the CBEC is leading to the considerable margin to the members of the association who have faced frequent harassment by way of furnishing bonds and in sometimes depositing differential duties on account of possible higher classification and consequently higher customs duty. Held that: - the respondent CBEC is hereby directed to consider the representations dated 18.10.2013 and 31.07.2014 which are part of the record of this case and also give hearing to the representative of the petitioner’s association after advance notice on the basis of submissions made and on the basis of the material furnished - petition disposed off.

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• 2016 (12) TMI 829
  Mis-declaration of value - non-fulfilment of stipulated export obligation specified for the first block - cancellation of EPCG authorisation - jurisdiction of Director General of Foreign Trade - licence issued at behest of Director General, Directorate of Revenue Intelligence - Held that: - For the present and when there is no challenge to the statutory power, then, merely because the impugned show cause notice refers to the communication from the Directorate of Revenue Intelligence, it will not be possible for us to agree, on the strength of this alone, with Mr. Shroff that it is the Directorate of Revenue Intelligence which is dictating to the Director General of Foreign Trade as to how the powers under the FTDR Act should be exercised. We do not think that on the present material it can be concluded that the show cause notice is issued only at the behest of the Directorate of Revenue Intelligence. It would not be proper to record any conclusive findings. EPCG licence - Held that: - We are also not impressed at this stage by the argument that the EPCG licences and their terms and conditions are not violated and still a show cause notice is issued only to please the Directorate of Revenue Intelligence. If indeed the EPCG terms and conditions are not violated, then, it will be open for the petitioner to produce such material as is permissible in law. Merely because the show cause notice is issued does not mean that it would result in imposition of penalty. Once all the opportunities are available, then, we do not think that we should interfere with the show cause notice. Petition dismissed - decided against petitioner.

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• 2016 (12) TMI 828
  Release of detained goods - issuance of a writ of Mandamus - case of the petitioner is that though the order of the appeal was delivered to him on 30.04.2015, the respondent has not implemented the order of the Commissioner of Customs (Appeals) Air, Chennai - Held that: - The Hon'ble Apex Court and this Court in various cases very categorically held that the order of the Joint Commissioner of Customs and the Commissioner of Customs (Appeal) clearly shows that the petitioner has not committed any violation, therefore, they should implement the order of the Commissioner of Customs in a true letter and dispute. Therefore, in my considered opinion that the petitioner is entitled to get release of the gold, since the long delay in release of the goods would, no doubt, reduce its potency and its market value would deteriorate to the detriment of the petitioner. In this case, there is nothing has been shown on behalf of the respondent to substantiate their claim that necessary steps had been taken to obtain interim order of stay against the order of the authority dated 24.04.2015. I am also convinced that mere filing of the revision against the order of appellate authority would not empower the respondent to deny release of the goods in question and the respondent have not given any proper explanation as to why no stay order has been obtained against the order of the Commissioner of Customs (Appeals) dated 24.04.2015, even though the said order said to have been challenged by way of further appeal. Therefore, in my considered opinion that the petitioner cannot be made to suffer due to detention of the goods in question, which had been imported by the petitioner, hence, the petitioner is entitled to get release of the goods. Accordingly, the writ petition is liable to be disposed of directing the respondent to release the goods (gold) for the purpose of re-exporting subject to the petitioner complying with the conditions imposed in the order passed by the Commissioner (Appeals) i.e., payment of redemption fine for re-export and personal penalty and also giving an undertaking to comply with the Order in Original, in the event the Department succeeds in the revision. Petition allowed - decided in favor of petitioner.

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• 2016 (12) TMI 827
  Valuation - technical assistant and royalty agreement - royalty - whether value of royalty to be included in assessable value? - Held that: - though the appellants have been held to be related to the collaborator, but declared value has not been examined under Rule 4(3) of the Customs Valuation Rules, 1988 for acceptance or otherwise in reference to test value. The Commissioner (Appeals) has observed that since there is no third party sale of these items, the Dy. Commissioner should have examined the provisions of relevant agreement. The Commissioner (Appeals) has thereafter allowed the appeal of the Revenue. This essentially means that the Commissioner (Appeals) has remanded the matter back to the original adjudicating authority. Import of Neopolitan chocolates, cocoa butter and cocoa butter flavor - related party transaction - foreign collaborator agreement - valuation to be done under Rule 4(3) of the Customs Valuation Rules or under Rule 9(1)(c) of the Customs Valuation Rules? - Held that: - So far as Neopolitan chocolates is concerned, it is a finished goods and it is totally unrelated to the collaboration agreement and, therefore, it cannot be a subject matter to the current dispute on account of the agreement entered into by the appellant. The Order-in-Original clearly held that the appellant and the foreign collaborator are related. However, these imports are not from the foreign collaborator and thus unless it is held that the supplier of these goods is related to the appellant, no charge under Rule 4(3) of the Customs Valuation Rules can be made. This argument regarding purchases not being made from foreign collaborator equally applies to the import of cocoa powder and cocoa butter flavors. Furthermore, Revenue has not shown that there is any restrictive clause or condition for import of cocoa butter and cocoa butter flavor from the foreign collaborator in the agreement. In these circumstances, Rule 9(1)(c) of the Customs Valuation Rules cannot be invoked - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 826
  Demand of CVD on the goods imported by the appellant - applicability of Notification 49/2008-CX, as the goods were in pre-packaged condition in 250 gms., intended for retail sale - Held that: - identical issue has been decided in the case of Starlite Components Ltd. vs. CCE, Nashik [2013 (4) TMI 624 - CESTAT, MUMBAI], where it was held that the appellants are importing the impugned goods not for retail sale but for repacking, labelling and branding and selling the same in bulk to M/s. Bajaj Electricals Ltd. Therefore, they are not required to declare MRP in terms of Rule 3 of the said Legal Metrology (Packaged Commodities) Rules, 2011 as they are industrial consumers - impugned order unsustainable - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 825
  Project import - The machineries imported were put to use for the intended purposes in the factory at Noida from 1989-90 till 11.05.1996 and the same were shifted to their factory at Silvassa, on closure of their Noida factory - whether the appellants are eligible for the benefit to reduced customs duty under PIR, 1986, for the machines and equipment imported under the nine Bills of Entry, during the period 1989-90? - Held that: - Regulation 7 of PIR inserted w.e.f. 07.01.1992 would have prospective effect and cannot be made applicable for the imports made during the period prior thereto. The Tribunal in the case of Kores India Ltd. vs. Commissioner of Customs, Mumbai, [2016 (4) TMI 9 - CESTAT MUMBAI], has held that when the regulation was not in the statute when the goods were imported, such new regulation cannot be pressed in the service for denying the benefit of PIR - in the instant case, imports were made in December, 1989 and January, 1990 and SCN dated 31.10.97 was forwarded to the Appellants by Deputy Commissioner of Customs, vide his letter dated 14.09.2005. Further, we also find that the Appellants have submitted reconciliation statement along with supporting documents for each of the nine Bills of Entry before the Commissioner (Appeals). The Affidavit of the Manager of the Appellants also testifies that the imported machineries were installed in their factory at Noida and were used for the manufacture of computers till the factory was shifted to Silvassa in May, 1996. Other records also duly submitted by appellants - With the above evidence on record substantiating the installation and use of the machines imported under PIR, we are satisfied that the Appellants are eligible for benefits of project import and are not inclined to accept the plea of the Dept. to remand the matter pertaining to the period 1989-90 at this stage. Appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 824
  Imposition of ADD - import of Tetrafluoroethane - import from China PR - Notification dated 30/05/16 - Held that: - Sinochem Ningbo belongs to Sino group. We note that the assertion made by the first appellant that Sinochem Ningbo was no longer part of Sino group has also been dealt with by the DA. The DA noted that any development post POI cannot be considered and further there is no documentary evidence in support of whatever development claimed by the first appellant. We have noted that in the written submission made by the first appellant before the DA it was submitted that Sinochem Taichang and Sinochem Ningbo as, two formerly related companies in the 300 subsidiaries, have no transaction between each other and it is impossible for Sinochem Taichang to know about operation of all its related companies. We further note that in a report dated 28/10/2005 of World Trade Organization, it was recorded that a single dumping margin only will be applicable when companies in the same group were involved in trading as well as exporting. Incorrect determination of non-injurious price - Held that: - The return on investment has been fixed as per the standard practice in terms of agreed norms and in the absence of commodity or industry specific recorded evidence to show different percentage of such return we find no reason to interfere in such finding. The volume effect as well as price effect of dumped imports with reference to price under cutting/under selling and price suppression and depression have been examined in detail by the DA. It was also noted that inventory levels of the domestic industries increased over the injury period. The DA concluded that the dumping margin of imports from China is substantial. The appellants pleaded that there is no proper analysis of likelihood of continuation or recurring of dumping and injury caused by such dumping in the review done by the DA. We have noted that despite imposition of anti dumping duties there is continuous dumping of the subject goods from China causing continued injury to the domestic industry which apparently indicates likelihood of continued or intensified dumping of subject goods causing injury to the domestic industry. The DA has noted that in case of termination of anti dumping duty the dumping may intensify causing injury to the domestic industry. The appellants have not made out any case with supporting evidence to persuade us to interfere with the findings of the DA and consequent customs notification imposing the anti dumping on the subject goods imported from China. Appeal dismissed.

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• 2016 (12) TMI 823
  Imposition of redemption fine and penalty in lieu of confiscation - import of rough marble blocks - mis-declaration of description - Held that: - I find that there is no merit in the appeals as adjudicating authority has correctly held that the goods imported are calcareous stone other than marble, which should be imported only under specific license during relevant period. To that extent, I uphold the impugned order. As regards the redemption fine imposed, I find that the adjudicating authority has imposed redemption fine of ₹ 38 lakhs as against the landed cost of ₹ 23 lakhs or the market price of ₹ 61 lakhs. Various decision of the Tribunal on the same issue is that the redemption fine is to be imposed @ 20% of the enhanced value which in that case approx ₹ 4.6 lakhs, which I find will meet the ends of justice. Accordingly, the redemption fine imposed in the case in hand of M/s Just Marble is reduced to ₹ 4.6 lakhs and in the case of Vaishno Marble, it is reduced to ₹ 4.6 lakhs. Subject to such modification, the impugned order of imposition of fine is upheld. As regards the penalties imposed, I find that the penalty imposed on M/s Just Marble is ₹ 7.5 lakhs, which is excessive in relation to the value of landed cost of the marble. Hence, I reduce the same to ₹ 2 lakhs. The penalty imposed on Vaishno Marble is also imposed ₹ 8 lakhs which is reduced to ₹ 2 lakhs. The penalties imposed by me are as per the various decisions of the Tribunal, wherein it was held that the penalty should be imposed @ 10% of the value of the landed cost of the imported goods. Appeal disposed off - quantum of redemption fine and penalties reduced - decided partly in favor of appellant.

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• 2016 (12) TMI 822
  Valuation of imported goods - Electrical Kitchens Chimney, Gas Hobs, Cook Tops, Cooking Ranges, Built Ovens and Kitchens sinks - The cases of import of above described goods was registered in the Special Valuation Branch of Customs - Rule 8 of Customs Valuation Rules, 1988 or not? - Held that: - the Ld. Commissioner(appeals) order is not reasoned, as the findings is with reference to payment of lump sum fees and royalty paid by the importer to the collaborator which is relevant to one supplier i.e. M/s. Nardi Elettrodomestici Spa of Italy. In respect of this issue as against detailed findings given by the adjudicating authority Ld. Commissioner(Appeals) has not rebutted the findings of Ld. Adjudicating authority. We therefore find that the matter should be re-considered by the Commissioner(Appeals) - appeal allowed by way of remand.

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• PMLA

• 2016 (12) TMI 816
  Money Laundering - bail application - Held that:- The nature and scope of offences imputed in the present case are entirely different from those covered in the previous case, which was drawn up under the NDPS Act. Here, the basic allegations are overwhelmingly financial in nature and the petitioner is alleged to have indulged in 'Money Laundering' by way of investing/utilizing a huge amount of money allegedly generated by him from illegal activities. His own statements recorded under section 50 of the PMLA at this prima facie stage cannot be simply brushed aside, since the admissibility of the same is not explicitly barred under the law. Furthermore, his failure to explain his income and assets do persuade us to reject his prayer for release on bail at this early stage when apparently the formal trial in the Money Laundering case is yet to commence. Consequently, bail application is dismissed at this stage and the matter thus stands disposed of.

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• Service Tax

• 2016 (12) TMI 860
  Imposition of penalty - Assessee was dealing in the sale of recharge coupons/vouchers of the Bharat Sanchar Nigam Limited and received certain amount from the Bharat Sanchar Nigam Limited towards commission - failure to discharge tax - pament of tax after issuance of SCN - invocation of section 80 and penalty set aside - whether setting aside of penalty justified? Held that: - Admittedly, the relevant period, during which the respondent Assessee did not pay the service tax, is 2003 to 2008. A Clear finding of fact has been recorded by the Tribunal that the sale of recharge coupons/vouchers purchased from the telephone service provider was a seriously contested issue before the Higher Judicial Forum at the relevant time and hence, there was reason to believe that the respondent Assessee bona fide believed that the same was not payable. Also, we do not find from the material on record that the registration of the respondent Assessee to service tax in the year 2004 is referrable only to the sale of recharge vouchers/coupons and not to anything else - section 80 rightly invoked. Penalty rightly set aside - appeal dismissed - decided in favor of respondent-assessee.

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• 2016 (12) TMI 859
  Demand of service tax - Security Agency and Manpower Recruitment Agency Services - demand raised on the ground that the appellant provided the said services to their clients - Held that: - We find that the appellants are a Board constituted under Section 6 of the Maharashtra Private Security Guards (Regulation of Employment & Welfare) Act, 1981 - it cannot be said that the Board is a Public Authority or Statutory Authority. Thus the service provided by them is not a statutory function and charges collected by them are not statutory levy. In view of above, they are chargeable to Service Tax as a regular service provider. It is apparent that the wages and allowances are collected by the Board as an Agency for payment to the concerned persons/authorities. Therefore, the wages and allowances are excludible from the value of service tax. Thus, the taxable value for the purpose of levy needs to exclude these charges. The demand is modified to that extent. As regards penalty imposed u/s 76, 77 and 78 of the Finance Act, 1994, we find that the board has been created for welfare of the working class. One of the purposes of the board is to ensure that working people are treated well and not exploited. In these circumstances, invoking Section 80 of the Finance Act, 1994, we set aside penalties under Sections 76 and 78 of the Finance Act, 1994. Appeal disposed off - decided partly in favor of appellant.

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• 2016 (12) TMI 858
  Denial of cenvat credit - input services - Financial Advisor to the appellant - denial on the ground that the services are not directly or indirectly related to manufacture - Held that: - In any case, the definition of "input service" as contained in Rule 2(l) ibid, particularly, after its amendment w.e.f. 1.4.2011 contains two parts. The first part is an inclusive definition laying down examples of the type of input services that would fall within the ambit of eligible "input services". The second part of the definition contains specific exclusions of services which cannot be considered as eligible "input services" for the purposes of Rule 2(l) ibid. The inclusive part of the definition therefore sets out only examples of input services which would fall in the genre of eligible "input services". It also includes services "used in relation to such activities". "Financing" finds a mention in the list of examples given in Rule 2(l). The type and nature of service provided by M/s.MAPE would definitely be services used in relation to financing and financial management of the appellant. This being the case, and considering that financial consultancy/advice is not disbarred otherwise in any of the exclusions in Rule 2(l) ibid, the eligibility of said input services should not be in question. Appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 857
  Non-payment of tax during the period April 2004 to March 2006 - the appellant had collected the service tax component from their customers and not deposited the same with the Government of India - Held that: - The appellant having collected service tax from their customers was duty bound to deposit the same with the Government of India. Having not done so, they have erred on the wrong side of law - the appellant should have been more diligent in depositing the service tax liability collected by them from their clients, having undergone identical investigation from the department. In view of the above we do not find any merits in the arguments put forth by the Learned Counsel that the service tax liability having been discharged, penalties should be set aside. Error in the calculation of tax liability - Held that: - when confronted with investigation the appellants have filed service tax returns and which according to them was correct. But subsequently, after a period of almost two years, they cannot revise the returns stating that they have committed an error in the earlier returns. Service tax liability on the amount received as reimbursements for the food of the employees - Held that: - while conducting the event management, transportation charges, we find from the debit notes that these amounts are collected at actual and there is no markup. The agreements which was produced before us indicate reimbursement of the amounts at actual for the food and other expenses incurred by the appellant for conducting the event management - the issue now stands squarely covered by the decision of the Hon'ble High Court of Delhi in the case of Intercontinental Consultants & Technocrats Pvt. Ltd [2012 (12) TMI 150 - DELHI HIGH COURT], where it was held that expenditure or costs incurred by the service provider in the course of providing the taxable service can never be considered as part of gross amount charged by the service provider for the service provided and reimbursement of expenditure for air travel, hotel stay, etc. may also lead to double taxation - Accordingly, we set aside the demand of service tax liability along with interest thereof and the amount of penalty imposed on them on this issue. Appeal disposed off - decided partly in favor of appellant.

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• 2016 (12) TMI 856
  Rejection of refund claim - CENVAT credit on input services used for providing exported output services - rejection on the ground that during the period in question appellant was not registered with the department - Held that: - the issue is no more res integra as Hon'ble High Court of Karnataka in the case of mPortal India Wireless Solutions Pvt. Ltd. Vs. Commissioner of Service Tax, Bangalore [2011 (9) TMI 450 - KARNATAKA HIGH COURT] settled the issue and held that Registration not compulsory for refund - rejection of refund set aside - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 855
  Service Tax liability - Business Support Services - period July, 2007 to December, 2009 and January, 2010 to December, 2010 - amount collected by appellant as an extra charge which are nothing RTO Registration charges, Smart Card fees, vehicle registration fees, fuel cost, number plate cost, articles of pooja of vehicle, documentation charges and handling charges - Held that: - Identical issue decided in the case of Wonder Cars Pvt. Ltd. Vs. Commissioner of Central Excise, Pune-I [2016 (1) TMI 738 - CESTAT MUMBAI], where it was held that the definition of Business Support Services as per Section 65(104c) of the Finance Act covers services which are rendered as indicated therein - demand unsustainable as held in this identical case - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 854
  Jurisdiction - power of Commissioner - Held that: - A reference to Finance (No. 2) Act, 2009 reveals that Section 84 of the Finance Act, 1994 has been substituted w.e.f 19.08.2009. It is a fact that till the date of substitution, Section 84 provided the powers of revision to the Commissioner. It empowered Commissioner to call for the records of any proceeding in which an adjudicating authority subordinate to him has passed a decision or order. The Section further empowers the Commissioner to pass orders in revision after due process of law. However, it is seen that such revision powers had been replaced by the power to review w.e.f. 19.08.2009. The Show Cause Notice has been issued under the erstwhile Section 84 on 23.03.2010. On such date the Commissioner did not enjoy the powers of revision inasmuch as the Section 84 has been replaced on 19.08.2009. Consequently, I find that the Commissioner did not enjoy the powers of revision while issuing the Show Cause Notice and hence the Impugned Order has been passed without Jurisdiction - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 853
  Demand of interest - reversal of credit on different dates - interest on such credits from the dates of availing till the dates of reversal - time bar - Held that: - The main contention of the appellant is that the Show Cause Notice issued to demand interest is barred by limitation inasmuch as it has been issued after the period of 1 year prescribed for demand of duty under Section11A. Perusal of Section 11 A, as it stood at relevant time, reveals that it did not specifically provide for recovery of interest. In the case laws cited by the appellant EMCO LTD. vs. Commissioner of C. EX., Mumbai [2011 (6) TMI 567 - CESTAT, MUMBAI], it has been held that the period of limitation that applies to a claim for the principal amount would also apply to the claim of interest there on. Such view which stands approved by the Hon’ble Supreme Court, also may be applied to the present case. I find on applying such a time limit that the demand for interest is hit by time bar as claimed by the appellant. Consequently, the demand raised for interest is to be set aside and the appeal succeeds. Appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 852
  Business Auxiliary Services - providing multi level marketing services - Period of limitation period - period involved is 2003 to September 2008 whereas the show cause notice stand issued on 24.10.2008 - Held that: - We find that the issue of multi level marketing falling under the category of ‘Business Auxiliary Services’ stands finally concluded by the Tribunal in the case of Charanjeet Singh Khanuja Vs. CST Indore [2015 (6) TMI 585 - CESTAT NEW DELHI]. However, in the same very decision, the Tribunal has observed that since there was bonafide belief in the industry itself and in as much as two views stands held by the department itself regarding taxability of activity, longer period of limitation would not be available to the Revenue. As such we find that the longer period of limitation was not available to the Revenue. Ld. Advocate however, fairly agrees that part of the demand would fall within the limitation period - In view of the above, we set aside the impugned order and hold that the demand beyond the limitation period would not be sustainable. Accordingly matter is remanded to the lower authorities for re-quantification of the demand falling within the limitation period. As regards penalty, we agree with Ld. Advocate that penal sections are invokable when there is fraud with an intention to avoid payment of duty. As we have also observed that there was bonafide belief in the industry itself, imposition of penalty upon the appellant would not be justified. Accordingly, we set aside the penalty. Appeal disposed off - matter on remand.

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• 2016 (12) TMI 851
  Jurisdiction of ld.Commissioner (Appeals) to remand the case - verification of the certificates of transporters in respect of payment of service tax - Held that: - this issue is no more res-integra and has been decided by the Principal Bench of this Tribunal in the case of Commr. of S.Tax Vs. Associated Hotels Ltd. [2014 (4) TMI 406 - GUJARAT HIGH COURT], where it was held that by virtue of sub-section (5) of section 85, the same limitation on the Commissioner (Appeals) to remand a proceedings contained in section 35A(3) of the Central Excise Act, 1944 must not apply in the appeals under section 85 of the Finance Act, 1944 also. Appeal rejected - decided against Revenue.

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• Central Excise

• 2016 (12) TMI 850
  Recovery of CENVAT credit - Rule 12 of the CC Rules read with Section 11A of the Central Excise Act, 1944 - to meet certain urgent requirements, the petitioners indulged in what is called as stock transfer. In such cases, inputs which are a stock with the other units were transferred on reversal of appropriate excise duty under the cover of an invoice - whether demand justified? Held that: - the finding of fact that there is violation of Rule 7(4) read with Rule 13(2) of the CC Rules and that would attract penalty and interest is a finding rendered without adverting to the important contention raised before us, namely, whether the provision in question, as amended, is clarificatory and, therefore, would apply irrespective of the date of clearance or availment of the cenvat credit or will it have prospective operation, namely, from the date of its introduction. That ought to be considered - without this order being treated as a precedent for future cases, the impugned demand can be and is accordingly quashed and set aside. However, the Show Cause Notice is kept alive for adjudication. Petition allowed - decided in favor of petitioner.

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• 2016 (12) TMI 849
  Validity of an order under Section 14AA of the Central Excise Act, 1944 - opportunity of being heard - principles of natural justice - Held that: - although the impugned order is a reasoned one, the same was passed without hearing the petitioners. The Commissioner has passed the impugned order. No materials have been placed on record to suggest that the Commissioner had given a notice of hearing to the petitioners. The show-cause notice was issued by a different personnel of the department. The reply thereto has not been taken into consideration by the Commissioner. In such circumstances, I am of the view that the Commissioner has acted in breach of the principles of natural justice in passing the impugned order - matter remanded to the Commissioner for fresh consideration - appeal allowed by way of remand.

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• 2016 (12) TMI 848
  Recovery - challenge to impugned order - the respondent has passed the impugned order without taking note of the Circular issued by the Commissioner, dated 11.02.2010 - the respondent also did not take into consideration the Notification No.25/2016, dated 14.06.2016, whereby, the earlier Notification No.67/95, dated 16.03.1995 was amended by substituting the words "Free Trade Zone" into "Special Economic Zone" - Held that: - it is seen that though the respondent has extracted the objections given by the petitioner in the impugned order, wherein, the petitioner has referred to the notification as well as the Circular of the Commissioner. However, there is no reference to the same and the impugned order has been passed totally on a different ground and by observing that the clearances to Special Economic Zone are not mentioned in the ExCus Notification No.25/2016, dated 14.06.2016. However, what the respondent should have seen is, as to the effect of the notification dated 14.06.2016, apart from the circular, dated 11.02.2010, wherein, it has been stated that though the SEZ are not listed in the proviso (i) to (vi) of Notification No.67/95 as per CBEC Circular 29/06, dated 27.12.2006, supplies from DTA to SEZ are exempted from excise duty under Rule 19 and such supplies shall also be eligible for rebate under Rule 19. Therefore, it is stated that clearances to SEZ are to be treated as exports and whether the unit clears the goods under Rule 18 or 19, no duty accrues to the Government. Thus, the respondent having not taken into consideration the submissions made by the petitioner which are very relevant to the facts of the case, this Court is justified in interfering with the impugned order. In the light of the above, the impugned order calls for interference with a further direction to redo the entire matter, after taking into consideration the contentions raised by the petitioner, some of which, have been noted above Appeal allowed by way of remand.

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• 2016 (12) TMI 847
  Erroneous understanding of the Tribunal with regard to the applicability of Section 11A of the Central Excise Act, 1944 - the concessional rate of duty in terms of serial No.3 of Notification No.23/2003Central Excise, dated 3132003 - wilful misstatement and until the evasion was discovered, it was not possible for the Revenue to proceed - extended period of limitation - substantial questions of law. Held that: - The Tribunal found and as a matter of fact that whatever may be the procedure adopted and if it contravenes the law, the Department should have taken prompt action. The Department though in the know of things on 1462004, allowed the assessee to avail of the benefit of the above Notification. The Tribunal found that the returns were filed in which the assessee indicated that it effected advance Domestic Tariff Area clearances under Notification No.23/2003. Thus the fact was known to the Department and hence issuing a show cause notice dated 372009 covering a period April, 2004 to March, 2006 was barred. These very facts were, therefore, appreciated by the Tribunal and in arriving at the conclusion that the show cause notice and the proceedings in pursuance thereof were barred by limitation. It may be that the Tribunal dealt with an incidental contention of the Revenue. Merely because that incidental question has been dealt with, we cannot loose sight and shift the focus from the main question. The main question was the applicability of Section 11A and invocation of the extended period thereunder. The extended period could not have been invoked in the absence of the requisite ingredients and to be found in Clauses (a) to (e) of subsection (4) of Section 11A of the Central Excise Act, 1944. This is clearly a finding of fact and reached in the backdrop of the assessee's peculiar case. We do not think that such findings raise any substantial question of law. The Tribunal's view cannot be said to be perverse - appeal being devoid of merits, dismissed.

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• 2016 (12) TMI 846
  Imposition of penalty - invocation of section 80 - cargo handling services - Held that: - the Tribunal was justified in invoking the provisions of Section 80 of the Finance Act and setting aside the order imposing penalty. Admittedly, the contract between the respondent assessee and M/s SAIL was executed in the year 1999 and in this background, it cannot be said that the respondent assessee could not have been under a bona fide impression that since the contract was executed in the year 1999, he was not liable to pay the service tax as the liability to pay service tax was fastened for the first time by insertion of the relevant provision in the Finance Act in the year 2002. The Tribunal also believed the case of the respondent assessee that the assessee was under a bona fide impression that since he was rendering the services to the public sector undertakings, the question of taxability may not arise - invocation of section 80 justified - appeal dismissed - decided in favor of respondent-assessee.

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• 2016 (12) TMI 845
  Whether the statement recorded under Section 14 of the Central Excise Act, 1944 is admissible when they were found to be given voluntary. Moreover without any coercion or duress? - Held that: - when shortage is there the mere factum of shortage cannot justify an inference of clandestine removal of molasses but in order to attribute an act of clandestine removal upon Assessee either there must be a clear admission to this effect on the part of Assessee or its representative or it must be corroborated by further credible evidence that there is clandestine removal of molasses but on mere statement and that tooo of the kind of statement as we have noticed above, it cannot be said that there is an admission and no further corroboration is required. Question answered holding statement under Section 14 of Act 1944 is admissible but mere statement will not be sufficient to justify an inference of clandestine removal unless there is some corroborative material or statement contains clear admission of clandestine removal and that is not retracted subsequently or explained. However, if it is subsequently retracted or explanation is furnished then it has to be looked into the said admission and authority must have corroborative material and cannot base its finding under Section 14 of Act 1944. Whether retraction of earlier statement would not amount to detract its acceptability? - Held that: - in the present case as we have already held that there was no admission on the part of official concerned so as to hold that Assessee admitted clandestine removal, it cannot be said that there was any issue of acceptability of retracted statement or change to earlier statement. Question therefore, is also answered in favour of Assessee and against Revenue. Whether the party correctly availed the Modvat credit of ₹ 57,60,900/-? - Whether the shortage of 115218 qtls. of molasses does not amount disposal molasses in a manner other than provided under Rule 57F of Central Excise Rule? - question answered against Revenue and in favour of Assessee since there is no sufficient evidence to show that there was a clandestine removal. Appeal allowed - decided in favor of assessee.

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• 2016 (12) TMI 844
  Valuation - suppression of value/undervaluation - clandestine removal - manufacturing and trading of photocopier machines / parts thereof - This is a second round of litigation. In the earlier round of litigation, this Tribunal has remanded the matter back to the adjudicating authority - Held that: - On going through the remand order of this Tribunal dated 23.8.1999, we find that there was clear cut directions to the adjudicating authority that cross examination of the witnesses is required for proper adjudication and the other evidence which has been relied upon by the Revenue for the charge of clandestine removal and under-valuation are not sustainable. But the adjudicating authority has considered those evidence which has been discarded by this Tribunal in the earlier round of litigation. Further 11 witnesses has not turned up for cross examination, therefore the statements of these 11 witnesses cannot be made the basis to prove charge against the appellant. Moreover, the witness Shri Ashok Kumar who has been examined, has also deposed in favor of the appellant. In that circumstances, in the absence of any positive evidence against the appellant for clandestine removal and under-valuation, the charges are not sustainable. In that view, we hold that proceedings against the appellant have no legs to stand and therefore, same are set aside - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 843
  SSI exemption - use of brand name of others - Held that: - The claim of small scale industries benefit was originally availed by the appellant by submitting that brand name is owned by M/s. Limca Flavour and Fragrance Ltd., who were entitled to SSI benefit. But the investigation conducted by the department has revealed that the brand name is owned and controlled not by Limca Flavour and Fragrance Ltd., but by M/s. Parle Exports Ltd. who were not entitled to small scale industries exemption benefit. Since the goods have been cleared with the brand name of Citra which is owned by M/s. Parle Exports Ltd. (who are not entitled to SSI benefit), the contravention of conditions specified in para 7 of Notification 175/1986 (para 4 of the succeeding notification No. 1/1993) stand established, disentitling the appellant from SSI benefit. Extended period of limitation - Held that: - We find justification in invoking the extended period of time limit inasmuch as the appellant has failed to reveal who is the real owner of Citra brand name. It is only after the investigation undertaken by the department, it has been revealed that the Citra brand is actually owned by M/s. Parle Exports Ltd. who is not entitled to SSI benefit. Consequently, the invocation of extended time limit is fully justified. Coming to the demand for the period June to November, 1993 for which the show cause notice has been issued on 3.1.1994, we are of the view that decision of Hon ble Supreme Court in the case of Nizam Sugar Factory [2006 (4) TMI 127 - SUPREME COURT OF INDIA] comes to the help of appellant. In the said decision, the Apex Court has held that once a Show cause notice stand issued, issuance of second show cause notice on the same facts could not be taken as suppression of facts on the part of assessee. In respect of second show cause notice, we find that a portion of demand fall beyond the period of normal time limit as prescribed under section 11A at the relevant time. Consequently, the demand in the second show cause notice beyond the period of six months will be hit by time bar. The original adjudicating authority is directed to requantify the demand by excluding the demand beyond the period of six months time. However, demand covered by the first show cause notice is upheld in toto along with consequential relief. We also set aside the penalty imposed under second show cause notice. Appeal disposed off - decided partly in favor of appellant.

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• 2016 (12) TMI 842
  Entitlement to interest - Section 11BB of Central Excise Act, 1944 - period for calculation of interest - Held that: - The provisions of Section 11BB of Central Excise Act, 1944 are very clear that wherever the refund is due to the assessee and the applicant assessee is not refunded the said refund from the date of receipt of application, the applicant is to be paid interest at the prescribed rate from the date immediately after the expiry of three months from the date of receipt of application till the date of payment of refund . Hon ble Supreme Court in the case of Ranbaxy Laboratories Ltd. Vs. Union of India [2011 (10) TMI 16 - Supreme Court of India] further makes it clear that the assesse would be entitled to the interest on the amount of refund if it is granted after the expiry of three months from the relevant date i.e. for the period after the expiry of 3 month period, till the date of granting of refund. Appeal dismissed - decided against Revenue.

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• 2016 (12) TMI 841
  Demand of 10%/ 5% of the value of electricity - Rule 6 (3) of the Cenvat Credit Rules, 2004 - certain common inputs as well as input services used in the manufacture of dutiable final products as well as in the production of electricity - no separate records maintained - credit already reversed - Held that: - The Hon’ble Supreme Court in the case of Chandrapur Magnet Works (P) Ltd. vs. CCE, Nagpur [1995 (12) TMI 72 - SUPREME COURT OF INDIA] has held that once cenvat credit is reversed, it is to be considered ab initio not availed. In the light of this judgement of the Hon’ble Supreme Court, the reversal of cenvat credit already made by the appellant is to be considered as not taken ab initio - there is no justification for demand of the amount equivalent to 10%/ 5% of the value of electricity wheeled out. We are of the considered view that the failure of the appellant to follow the procedure perfectly should not come in the way of extending the substantial benefit of proportionate reversal. However, we find that in the order passed by the lower authority, he has not given any finding as to whether the reversal already made satisfies the test of proportionate reversal in terms of quantum of reversal. Hence, we are of the considered opinion that the matter is to be remanded to the original adjudicating authority to verify whether the amount of cenvat credit already reversed alongwith interest satisfies the requirement of proportionate reversal - appeal allowed by way of remand.

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• 2016 (12) TMI 840
  Denial of CENVAT credit - PSC sleepers, railway construction materials like fish plates, elastic rail clips, fish plates, fish bolts, nuts, lighting structures, High Mast Light, HPSV flood light fixtures, tubes and glasses - denial on the ground that these will not fall under the definition of capital goods as they were not used for producing or processing any dutiable items - Held that: - these railway lines created by using these materials were exclusively used by the appellants for movement of the raw materials, processed materials, etc. in the course of manufacture of dutiable final products. The railway track is part and parcel of material handling system integrally connected with the production on movement of dutiable goods. We note that the Hon’ble Supreme Court in Jayaswal Neco Ltd. [2015 (4) TMI 569 - SUPREME COURT] examined similar sets of facts and allowed credit under the erstwhile Central Excise Rules, 1944. Lighting equipments, fittings and fixtures - denial on the ground that these are mounted on civil structures and become part and parcel of such civil structures - Held that: - these items are classifiable under the eligible category of Chapters 84, 85 and 9405 of the Tariff and their usage has not been disputed in an industrial operations involving steel production. Admittedly, 24 hours illumination of shop floors is essential requirement and as such, the role of these High Mast Lighting Equipment has to be recognized in the process of manufacturing activity - credit allowed. Appeal allowed - credit allowed - decided in favor of assessee.

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• 2016 (12) TMI 839
  Recovery of refund already made - unjust enrichment - Refund claim - unjust enrichment - finalization of provisional assessment - Held that: - It is fairly well settled that the test of unjust enrichment prescribed in Section 11B of the Central Excise Act, 1944, will be applicable only to the net adjusted duty arising as refund and not to the duty passed on in each invoice - the Commissioner (Appeals) have allowed the refund to be paid and in support of his contention held that the authority while passing the order has not correctly followed the word duty passed on. Here the word is duty and not Cenvat Credit and further words duty passed on materialises only when the duty involved has been collected from buyer and as in the case the duty collected is as per final bills made subsequent to final assessment order, the duty reimbursed against the final bills only can be said to have passed on and not the duty indicated in invoices and paid by appellant to exchequer making the payment on provisional basis as per the provisional assessment order made by authority. In above terms the appellant is entitled for the refund of excess duty paid provisionally at the time of clearance of goods. Refund allowed in cash - appeal dismissed - decided against Revenue.

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• 2016 (12) TMI 838
  Classification of manufactured product - Guard of Kiln Ring Gear, classified under head 8417 or 8483 - Travelling Carriage Bogie, classified under 8474 or 8431 - common parlance test followed to decided classification. Held that: - We are of the view that the classification of such goods can be finalized only after going through detailed technical write-up regarding nature of the product and its proposed use. Though the ld. Counsel for the appellant has explained during hearing that a technical write-up along with drawing has been submitted by the assesee before the adjudicating authority, we find that same has not been discussed in detail. Under the circumstances, we deem it proper to remand the matter to the Commissioner (Appeals) with the direction to consider the technical write-up of the product in question and finalise the classification by giving detailed finding - appeal allowed by way of remand.

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• 2016 (12) TMI 837
  Refund claim u/r 173L of the Central Excise Rules, 1944 - bringing back of defective goods sent to distributor, for reprocesssing u/r 173H - the goods cleared again on payment of duty - refund claim sought for duty paid originally - Held that: - The defective goods brought back into the factory cannot be categorized under either of the two categories; consequently, the claim of modvat credit has to be disallowed as has been rightly done by the authority below. A lot of arguments have been raised by the appellant regarding the 2nd proviso to Rule 57G which allows modvat credit to be taken only within a period of six months from the date of the gate pass. However, we find that the modvat credit itself is not admissible for the basic reason that these goods do not satisfy the criteria of input or capital goods. Time bar - Held that: - to obviate the difficulty of payment of duty twice, Rule 173L provides for refund of the duty paid on the goods at the time of original clearance. Such refunds are subject to the condition prescribed in Rule 173L. The refund claim under such circumstances is required to be filed within the period prescribed under Section 11B. The relevant date as per Section 11B in this case is the date of entry of the goods into the factory for the purposes of remaking, refinishing, reconditioning etc - It is on record that the last consignment was brought back to the factory on 29.03.1998. Consequently, the refund claim is required to be filed within a period of six months from this date i.e. 29.09.1998. It is on record that the refund claim stands filed on 04.01.1999 which is clearly time barred. The time limit prescribed under Section 11B of the Central Excise Act is mandatory and cannot be diluted for a reason that certificates cannot be procured. While we are able to appreciate the claim of the appellant that such delays might have occurred in procuring the certificates, we are unable to give any relief on the question of time bar. Appeal dismissed - decided against Assessee.

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• 2016 (12) TMI 836
  CENVAT credit - denial of credit on the ground that it belongs to the period prior to the period of amalgamation of Ghari Industries with assessee - Held that: - Commissioner (Appeals) in the impugned order has allowed the credit with detailed finding. It was held that the activities carried out by the transferor company (M/s Ghari Industries) after effective date of amalgamation i.e. 01.04.06, is deemed to have been carried on for the transferee company (M/s RSPL). In the present case as discussed earlier the transferor company (M/s Ghari Industries) had exhausted its total input service as on 31.03.07 and there was no balance available for distribution. Therefore, credit subsequently distributed vide invoice No. 114 dated 07.11.2009 was in respect of services deemed to have been availed by the appellants themselves. In the circumstances availment of credit by the appellant on the strength of invoice issued by its head office, who is holding registration for inputs service distribution cannot be defaulted. Appeal dismissed - decided against Revenue-appellant.

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• 2016 (12) TMI 835
  Reversal of CENVAT credit - packing and clearing the goods received from own unit situated separately after adding 15% overhead on the value - instrument panel, extension chamber, cubical transducer, junction box etc - the goods were treated as inputs by assessee and CENVAT credit was availed on the same - Whether the packing of said inputs would amount to manufacture? - the goods were cleared on payment of duty, is the reversal of credit now demanded is justified? Held that: - even though the activity undertaken by the appellant after receipt of the goods was only mere packing, it is not disputed that the goods have been cleared from the appellants factory on payment of duty. It is also not in dispute that the duty paid at the time of clearance is more than the cenvat credit taken. Further, it was the finding of the Commissioner that when the process is held to be not manufacture, then the duty paid on the final product should be treated as reversal of the ineligible credit on the inputs and the assessee cannot be called upon to pay the credit. Thus I find that when credit is proposed to be denied by holding that the process in which goods on which credit has been taken were used, did not amount to manufacture, duty paid by the assessee by utilising the credit on such goods is to be treated as reversed/ paid back. I find the issue is issue is Revenue neutral. Appeal dismissed - reversal of credit not required - decided against Revenue.

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• 2016 (12) TMI 834
  Determination of Assessable value - Valuation - excise duty on the sample bottles under Rule 8 of the Valuation Rules - whether the value of Re. 1/- adopted by the appellant in respect of the small bottles of 60 ml of Lens Care Solution is the correct assessable or the value has to be raised, by adopting the value of the full commercial bottle of 120 ml - appellants contending that the bottles of Lens Care Solution cleared by the appellants were required to be valued based on the price of comparable goods, i.e., half of the price of 120 ml bottles meant for retail sale Rules. Held that: - it appears that an identical issue came up before this Tribunal in the assessee's own case [M/s Bausch and Lomb Eyecare India Pvt. Ltd. vs. C.C.E., Jaipur [2016 (6) TMI 510 - CESTAT NEW DELHI] where it was held that The transaction is between the assessee and their distributors at the price charged by the assessee from the distributors and what the distributors ultimately did with these goods is extraneous and cannot be the relevant consideration to determine the valuation of the excisable goods - reliance was placed in the case of Sun Pharmaceutical Industries Versus Commissioner of C. Ex., Surat-II reported (2004 (12) TMI 501 - CESTAT, MUMBAI ) and it was held that inasmuch as the smaller packs were being sold by the assessee, though they were meant for further free distribution by the distributors, the price at which the same were being sold represents the transaction value and is required to be adopted as the assessable value in terms of the provisions of Section 4. Appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 833
  Denial of CENVAT credit - manufacture of sugar & molasses - credit on various items namely M.S. Bar, M.S. Plate, Shapes & Sections, H.R. Plates etc. and other items falling under chapter 38, 39 & 76 angles, beams and channel etc - denial on the ground that these items were used by the appellant for repair and maintenance of plant and machinery or for modification of the existing plant of the existing machinery and the items are neither inputs nor capital goods. Held that: - We note that the Tribunal has been consistently following the ratio that the steel items when they are used in fabrication of capital goods and their accessories inside the manufacturer premises are eligible for credit by applying user test as evolved by the Hon’ble Supreme Court in Rajasthan Spinning and Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA]. A reference can be made to latest decision of the Tribunal in Singhal Enterprises Pvt. Ltd. vs. CC&CE, Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI], where applying the “User Test”, it was held that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit. Appeal allowed - credit allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 832
  Denial of CENVAT credit - outward transportation services - denial on the ground that the appellants had failed to prove any contract between the buyer and the seller to deliver of the goods, further they have not established with documentary evidence that the sale had taken place at FOR destination - Held that: - on identical issue this Tribunal has referred appeals to the adjudicating authority for denovo consideration to reconsider the matter based on the guidelines contained in the Board's Circular dated 23.08.2007. Following judicial propriety, I too remand the case back to the adjudicating authority to reconsider the matter based on the applicable Board Circulars. Denial of credit - denial on the ground that the documents are not in the name of the appellant company, Cuddalore but issued in the name of their Head Office at Madurai - Held that: - The services availed have no nexus with the manufacturing or business activity of the appellants. On this count, this part of the appeal totalling disallowance of credit of ₹ 17.521/- is therefore, sustained and in consequence, the appeal of the appellants on this count stands rejected. Appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2016 (12) TMI 821
  Levy of VAT - Franchise agreement - whether Franchisee agreement amounts to transaction of "transfer of the right to use goods" for the purpose of levy of Value Added Tax (in short 'VAT") or the factum that petitioner since paying service tax, whether will stand absolved from liability of tax under VAT Act, 2008"? - Held that: - Right to use property, i.e., Brand name for consideration is a 'sale' under the definition of 'sale' in VAT Act, 2008 read with Article 366 (29A) of Constitution and on amount of consideration, VAT is chargeable. If there is simultaneously other activities which may come within the definition of 'service', petitioner may be liable to pay "service tax" on that or those aspect(s) but consideration of transfer of right to use Brand name, i.e., goods, is exigible to VAT having satisfied the definitions of "goods" and "sale". Grant of non-exclusive licence to Franchisee for use of Brand name of petitioner under the agreement for consideration is exigible to tax under VAT Act, 2008. If there is a composite transaction, part whereof amounts to sale of goods and other aspects amount to service, both taxes on different aspects are leviable and dominant intention test is no more available. Petition dismissed - decided against petitioner.

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• 2016 (12) TMI 820
  Deletion of tax levied on out and out sale of ₹ 7,84,182/with consequential interest - exemption under Section 6(2) of the Central Sales Tax Act, 1956 from that of out and out sale under Section 4 of the said Act - “C” Forms - inter state sale u/s 6(2) - Held that: - The appellant before the Tribunal and respondent before us produced a chart showing out and out sale and the relevant documents. These documents were perused by the Tribunal with the assistance of both the Advocates appearing for the dealer and the Revenue. No objection was raised to the course adopted by the Tribunal. The Tribunal had perused before it the entire set of documents, including the purchase order and the details of supply. It found that the goods were despatched from Madhya Pradesh to Hyderabad on 22-3-2004 in pursuance of a purchase order dated 2-3-2004. All the documents evidencing this were produced. Therefore, the Tribunal concluded, as a matter of fact, that the goods have directly gone to the purchasing party at Hyderabad, without entering the State of Maharashtra. Hence, the appellant before it and the respondent before us was not obliged to produce the “C” Form. It was found, as a matter of fact, that the State of Maharashtra cannot levy, assess and recover the central sales tax as the goods have not moved from Maharashtra. That is how the levy of tax to the extent of ₹ 1,19,980/was deleted - the entire exercise is factual in nature. Based on the undisputed factual position, the claim was granted - The direction to delete the tax in the light of the admitted documentary evidence, therefore, cannot be faulted - application dismissed.

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• 2016 (12) TMI 819
  Assessment of high value transactions - Government Representative Cell (GR Cell) to represent the case before the AO before adjudicating the case - Legality of circular dated 30.07.2016 - Held that: - On considering and going through the Circulars it appears that they are issued with a view to see that there is a proper and fair government representation before the Assessing Officer / Adjudicating Officer and more particularly in the case of high value cases. The Circulars have been issued to protect the interest of the Revenue and the public exchequer. It cannot be disputed that as per the old practice there was no independent representation on behalf of the government. The dealers were represented through their consultant / Advocates. Therefore, strictly speaking the entire burden was upon the Assessing Officers. The Assessing Officers though being quasi judicial officers can be said to be representing the case of the Department also. Therefore, with a view to see that there is a proper government representation before the Assessing Officer / Adjudicating Officer like before the High Court and the Tribunal, it has been decided to form the GR Cell who after considering the material on record including the submissions made on behalf of the dealer would prepare the case in consultation with the Authorities forming part of the GR Cell and the same are required to be produced before the Assessing Officer / Adjudicating Officer and the Circulars further provide that thereafter the Assessing Officer / Adjudicating Officer is required to pass a speaking and reasoned order after considering the submissions made on behalf of the Government as well as made on behalf of the Dealer - From the procedure which is provided under the Circulars, it cannot be said that there is any external interference in exercise of quasi judicial functions by the Assessing Officers / Adjudicating Officers - the challenge to the impugned Circulars dated 30.07.2016 fails. Requirement of sending the case papers to the respondent No.1 for preaudit - Held that: - the same is liable to be quashed and set aside in light of the decision of this Court in the case of M/s. Tanuj Agency Pvt. Ltd. [2016 (6) TMI 727 - GUJARAT HIGH COURT], where it was held that the procedure adopted by the department was wholly unauthorised and impermissible in law. To be bound by an order of higher authority in an administrative set up is entirely different from the discretion of a statutory authority being governed by an outside agency. Impugned action on the part of the first Appellate Authority to send the draft order to the higher Authority for preaudit is hereby quashed and set aside - challenge to circular fails - decided partly in favor of petitioner.

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• 2016 (12) TMI 818
  Validity of assessment orders - assessment made in spite of presence of documentary evidence - Held that: - it would be relevant to take note of the observations of this Court in the case of Dharani Sugars and Chemicals vs. Assistant Commissioner (CT), [2014 (12) TMI 1218 - MADRAS HIGH COURT], where it was held that if the assessing officer was of the view that the documents were not adequate to establish their claim, then fairness demands that the petitioner/dealer should have been issued a notice in this regard, information should have been called for, they should have been directed to appear in person and produce all records. However, the assessing officer appears to have drawn an adverse inference while passing the assessing order which is contrary to law. - matter remanded back.

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• 2016 (12) TMI 817
  Validity of Assessment order - non production of Form C - non-production of Form H Declarations - reversal of ITC u/s.19[5][c] of TNVAT Act - Held that: - In terms of the circular 23367/93 dated 30.04.1993, no strict guidelines have been fixed for production of such declaration forms and the object of production of these forms is to enable the dealer to avail concessional rate of tax. Therefore, a rigid and strict interpretation cannot be done in this regard and the Assessing Officer would be justified in accepting the forms even after the assessment is completed - this Court is of the view that the assessment can be re-done afresh after receiving Forms C and H declarations, which the petitioner is in position as on date. With regard to the proposal u/s.19[2][v] is concerned, since the petitioner is yet to challenge statutory provision before this Court, the court has given liberty to raise objections on the said issue. Petition allowed - matter on remand - petitioner is granted four weeks time to produce Forms C and H Declarations and also submit further objections to the proposals to reverse ITC u/s.19[5][c] and on receipt of the same, the respondent shall re-do the assessment in accordance with law.

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