TMI Tax Updates - e-Newsletter
December 2, 2013

Case Laws in this Newsletter:

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

Articles

1. Analysis of the amendments under Punjab VAT(Second Amendment) Act, 2013 - part-2

   By: AMIT BAJAJ ADVOCATE

2. LEARNING FOR REVENUE FROM RECENT RULING - RECEIVER NOT TO ESTABLISH PAYMENT BY SUPPLIER OR SERVICE PROVIDER SO FINAL COLLECTION OF TAX IS PREFERABLE

   By: DEVKUMAR KOTHARI

News

1. Index of Eight Core Industries (Base: 2004-05=100), October, 2013

2. Payment of Final Dividend to Government of India for Rs. 84.69 Crores Being 20% of Profit After Tax (Pat) of the Company for the Year 2012-13

3. Inflation Indexed National Saving Securities- Cumulative (IINSS-C)

4. e-BRC project wins 2013 eASIA Award

5. RBI Reference Rate for US $ and Euro

6. Public Stockholding for Food Security Must be Protected from All Challenges, Anand Sharma Tells G-33 at Bali on Eve of Wto Ministerial

7. Anand Sharma Firm on Core Agenda of Food Security at Bali WTO Ministerial

8. Financial Inclusion- Journey so far and Road Ahead (Speech delivered by Dr. (Smt) Deepali Pant Joshi, Executive Director, Reserve Bank of India at the Mint Conclave on Financial Inclusion, Mumbai on November 28, 2013)

9. Draft Guidelines on Entry of Banks into Insurance Business – Insurance Broking Business

Notifications

DGFT

1. 53 (RE – 2013)/2009-2014 - dated 2-12-2013 - FTP

Amendment in Chapter 8 of ITC (HS) 2012, Schedule 1 (Import Policy).

2. 52 (RE – 2013)/2009-2014 - dated 2-12-2013 - FTP

Policy for import of Human Embryo.

Circulars / Instructions / Orders

DGFT

1. 40 (RE: 2013)/2009-2014 - dated 2-12-2013

Modification of SION A-2439.

2. 41 (RE: 2013)/2009-2014 - dated 2-12-2013

Modification of SION A-315

Highlights / Catch Notes

Income Tax

• Section 154 Cannot Fix Taxpayer Errors in Income Tax Returns; Advance Tax and STT Credit Issues Remain.

  Case-Laws - AT : Credit for advance tax and STT paid – The mistake, if any, was in the return of income filed by the assessee. Section 154 cannot be utilized for rectifying the assessee's mistake in filling of the return - AT
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• Section 147 Proceedings Invalid: AO Failed to Identify Notice Recipient u/s 148 of Income Tax Act.

  Case-Laws - AT : Validity of assessment proceedings u/s 147 – AO was not able to name the person on whom the notice was served - The service of notice u/s 148 of the IT Act was invalid and cannot be said to be merely a procedural defect - AT
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• High Court Examines Share Capital Transactions: Assessee Fails to Prove Applicant Identity and Transaction Genuineness Under Tax Laws.

  Case-Laws - HC : Issue of share capital – camouflage transactions / accommodation entries - Assessee has not been able to discharge the initial onus and has not been able to establish the identity, creditworthiness of the share applicants and the genuineness of the transaction - HC
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• Import of Software for Duplication and Licensing Considered Revenue Expenditure, Not Capital Expenditure for Tax Purposes.

  Case-Laws - HC : Media cost for import of software - Capital expenditure or revenue - Software used for duplication and licensing - expenses allowed as revenue expenditure - HC
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• Gratuity and leave encashment are accrued liabilities, not conditional due to future settlement.

  Case-Laws - HC : Provision for gratuity and leave encashment – The liability would be an accrued liability and would not convert into a conditional one merely because the liability was to be discharged at a future date - HC
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• Section 80HHE: Receipts Must Resemble Brokerage, Commission, Interest, Rent, or Charges for 90% Profit Inclusion.

  Case-Laws - HC : Part of profits for section 80HHE - Before a receipt is liable to be included to the extent of 90%, it must be a receipt of a nature similar to brokerage, commission, interest, rent or charges - HC
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• Joint Land Venture: Parties Share Risks and Rewards, No Capital Gains for Assessee This Year.

  Case-Laws - AT : The transaction to be more in the nature of a joint effort to commercially exploit the land, each party agreeing to share the risk and reward from the activity, leveraging its advantage and deploying its resources - No capital gains arising to the assessee during the relevant year - AT
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• Interest Income Cannot Offset Payments Using Hypothetical Calculations Per Tax Rule.

  Case-Laws - AT : The assessee may have interest income on its capital or on its non-interest bearing funds received from somebody else but the said interest cannot be set off against the interest payment on the basis of some hypothesis or presumption - AT
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Customs

• Battery Separator Imports Under Heading 8507 90 90 Eligible for Benefits According to Notification.

  Case-Laws - AT : Import of Battery separator is classifiable under Heading 8507 90 90 and hence eligible for the benefit of the relevant Notification - AT
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Service Tax

• Service Tax Demand Raised for Club and Association Services in Thailand; Dubai Branch Considered Separate Entity u/s 66A.

  Case-Laws - AT : Demand of service tax - Service of club and association - Maintenance facility provided at Thialand - In the view of the provisions in section 66A of the Finance Act, 1994 it appears that the applicant and the Branch in Dubai have to treated as different entities - AT
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• Refund of Unutilized CENVAT Credit Allowed After Rectifying Registration Certificate Defect u/r 5 of CCR.

  Case-Laws - AT : Refund of unutilized CENVAT credit - Rule 5 of CCR - Non-inclusion of the ground floor in the centralized registration certificate may be at the most curable defect which was subsequently cured - refund allowed - AT
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• Partial Stay Granted on Service Tax Demand for Safe Vault Services' Margin Between Foreign Bank Purchase and Customer Sale Prices.

  Case-Laws - AT : Demand of service tax - Safe Vault Services - Service tax on the margin between the purchase price from the foreign bank and the sale price to the customers - stay granted partly - AT
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• Service Tax Rate Based on Service Provision Date, Not Agreement Date; Rate Changes Apply to Future Services Only.

  Case-Laws - AT : Applicable rate of service tax - The date on which the services were agreed to be provided has no relevance to determine the applicable tax rate when the service is already taxable at the time of revision of rate - AT
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• Company Wins Refund of Unutilized CENVAT Credit for Supplies to Export-Oriented Units u/r 5 CCR.

  Case-Laws - AT : Refund of unutilized cenvat credit - Rule 5 of CCR - supply part of their products to other 100% EOU - In the case of rebate and refunds on exports the policy of the government has been to grant such benefits when goods are supplied to SEZ. The same logic should apply for supply to EOUs also - refund allowed - AT
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Central Excise

• SSI Exemption Valuation Adjusted: Inputs with Exemption No Longer Added to Aggregate Value Determination.

  Case-Laws - AT : Eligibility for SSI Exemption - valuation - when the inputs which enjoys the exemption under the notification have already been dealt with, there is no reason why the value of the same inputs again be added for the purposes of aggregate value - AT
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• Copper Bronze Castings Classified Under Heading 7419.91, Not Submersible Pump Parts Under Sub-heading 8413.99, Per Central Excise Laws.

  Case-Laws - AT : Classification of copper bronze castings - the castings, in question, would be correctly classifiable under heading 7419.91 and not as part of submersible pumps under sub-heading 8413.99 - AT
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• Court Rules Longer Limitation Period Unavailable Due to Revenue's Prior Knowledge; Order Set Aside.

  Case-Laws - AT : Bar of Limitation - indicating knowledge on the parts the Revenue, in which case the longer period of limitation cannot be invoked – order set aside - AT
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• Tribunal's Decision on Interest for Excess Cenvat Credit Final; No Benefit from Later Supreme Court Ruling.

  Case-Laws - AT : Interest on Excess cenvat credit – Tribunal’s order to attain finality since no further appeal, they are not now entitled to avail the benefit of declaration of law by the Hon’ble Supreme Court subsequent to the conclusion of the proceeding - AT
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• Dispute Over Including Third-Party ESS Test Costs in Transaction Value for Duty Refund Claim.

  Case-Laws - AT : Refund claim - Duty under protest paid - Cost of third party test – Transaction value -the cost of ESS test whether it is paid to a third party or paid to the seller himself is includable. - AT
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• Eligibility for SSI Exemption under Notification No. 08/2003: Clarifying Clearance Limits for Refined Oils and Soap Duties.

  Case-Laws - AT : Eligibility for SSI Exemption under Notification No. 08/2003 - Value of clearances not beyond the limit - Clearance of refined oils and soap – Duty under Protest paid - The end is justice and show-cause notice is a means to that end - AT
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VAT

• Old Arms Purchasers Not Manufacturers u/s 2(ee), Affecting Sales Tax Liability.

  Case-Laws - HC : Sale tax liability - assessee cannot be treated to be a manufacturer in respect of of the old arms purchased by him from the licensees within the meaning of Section 2(ee) of the Act - HC
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Case Laws:

• Income Tax

• 2013 (12) TMI 20
  Validity of order u/s 263 – Held that:- Following CIT vs. M/s.Excel Industries Ltd. [2013 (10) TMI 324 - SUPREME COURT] - Parties are not permitted to begin fresh litigation because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the court of the legal result either of the construction of the documents or the weight of certain circumstances. The ld.CIT has not stated as to how the stand taken by the Revenue for earlier years was not correct and the AO taking a consistent view and order so passed was erroneous –The ld.CIT has not exercised his jurisdiction u/s. 263 in accordance with the settled principle of law - He has failed to consider the submissions of the assessee on both the aspects and has merely based its order on the basis that the AO has not made any enquiry - Following ITO vs. D.G. Housing Projects Ltd [2012 (3) TMI 227 - DELHI HIGH COURT] - "a distinction must be drawn in the cases where the AO did not conduct an enquiry; as lack of enquiry by itself renders the order being erroneous and prejudicial to the interest of the Revenue and cases where the Assessing Officer conducts enquiry but finding recorded is erroneous and which is also prejudicial to the interest of the Revenue” - In the second set of cases, CIT cannot direct the Assessing Officer to conduct further enquiry to verify and find out whether the order passed is erroneous or not - The assessee has been consistently claiming the income earned by way of interest as business income, the AO has made enquiry by way of questionnaire and assessee has given reply thereof - The AO has applied his mind under the facts and circumstances – Decided in favour of assessee.

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• 2013 (12) TMI 19
  Estimation of profit - Income from development works – Held that:- The amounts were recovered by the Government and are paid to the respective authorities - Since the amount was paid on behalf of the assessee, such recovery is included in the operating income and is claimed as an expenditure by debiting to the Profit & Loss Account - there is no profit element in respect of the said recoveries made - It is only in the year in which assessee receives such recoveries made by the Government that such income should be estimated and brought to tax. It is also the case of the assessee that the assessee has been following consistent method of accounting for the income in respect of the departmental reveries, only in the year in which such recoveries have been released in favour of the assessee by the Government – The issue was restored for fresh decision. Estimation of income – work entrusted to sub-contractors – Held that:- Following assessee's own cases for assessment years 2001-02 – The tribunal estimated the income on sub-contract receipts at 4% - Partly allowed in favour of assessee. Interest received on provision of bank guarantee – Held that:- Following assessee's own cases for assessment years 1991-92 and Tuticorin Alkali Chemicals & Fertilisers Ltd.[1997 (7) TMI 4 - SUPREME Court] – Income attracts tax as soon as it accrues. The application/destination of the income has nothing to do with its accrual/taxability - Interest income is always of a revenue nature unless it is received by way of damages/compensation - Decided against assessee. Deduction u/s 80IA – Held that:- following assessee's own case for earlier years - The contractor and the developer cannot be viewed differently. Every contractor may not be a developer but every developer developing infrastructure facility on behalf of the Government is a contractor - The assessee has developed infrastructure facility as per the agreement - Merely because in the agreement for development of infrastructure facility the assessee is referred to as a contractor or because some basic specifications are laid down, it does not detract the assessee from the position of being a ‘developer’ nor will it debar the assessee from claiming deduction u/s 80IA(4) – Decided against Revenue.

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• 2013 (12) TMI 18
  Object of general public utility – rejection of registration under Section 12A - a company by shares not for profit under Section 25 of the Companies Act, 1956 - Held that:- The assessee has incurred major portion of the expenditure on legal expenses and travelling expenses out of total expenditure - The assessee has not made any expenditure for charitable purposes to fulfill its objects – After examining the documentary evidence filed by the assessee and perusing the objects of the assessee-company along with the income and expenditure account CIT(A) was not satisfied about the genuineness of the activities of assessee as well as the work performed by the assessee as these are contrary to the objects of the assessee-company – Decided against assessee.

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• 2013 (12) TMI 17
  Credit for advance tax and STT paid – Held that:- The STT paid by the assessee was filled in the wrong column, i.e., in the column of TDS - If the assessee has committed any mistake in filling the return of income, the same cannot be rectified by the Assessing Officer under Section 154 - For the purpose of Section 88E, mere payment of STT would not entitle the assessee to claim the rebate - The assessee would be entitled to rebate only if the total income of the assessee included the income arising from the taxable securities transactions - In the return of income, the assessee has mentioned the income arising from transactions chargeable to securities transaction tax to be nil - The certificate only mentions the transaction entered into by the assessee but it nowhere mentions the income arising from such transaction - There is no apparent mistake in the intimation sent by the Assessing Officer under Section 143(1). The mistake, if any, was in the return of income filed by the assessee. Section 154 cannot be utilized for rectifying the assessee's mistake in filling of the return – Decided against assessee.

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• 2013 (12) TMI 16
  Validity of assessment proceedings u/s 147 – Held that:- A notice u/s 148 of the Act was issued on 22-03-2005 and as per the AO, the notice was served on the assessee on 24.03.2005 - Service of notice is the sine qua non for a proceedings u/s 147 of the Act to get underway - , Section 282 of the Act is the governing Section in respect of the procedure for service of such notice - Such a notice may be served either by post, or as if it was a summons issued by a court under the Code of Civil Procedure, 1908 - In the present case, the service was as a summons and not by post. Therefore, the service is governed by the relevant provisions of the CPC, i.e., Order V - The servicee of the notice has nowhere been identified in spite of repeated requests made by the assessee to the Assessing Officer to do so - The Ld. CIT (A) has noted that even after instructions from the CIT (A), the Assessing Officer was not able to name the person on whom the notice was served - In the absence of identification of the servicee, it is, obviously, well impossible to contend that the servicee was an agent of the assessee company - Not only has the alleged servicee not been identified, the person identifying such servicee has also not been even named, thereby violating the provisions of Order V, Rule 18, CPC, as has correctly been taken into consideration by the Ld. CIT (A) – The service of notice u/s 148 of the IT Act was invalid and cannot be said to be merely a procedural defect and it cannot be cured by the participation of the assessee in the re-assessment proceedings – Decided in favour of assessee.

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• 2013 (12) TMI 15
  Validity of assessment u/s 147 – Change of opinion – Held that:- The assessee has included labour charges receipts, while computing the profits of the eligible business under the head sales - Once, the Hon’ble Supreme Court interprets any law and lays down its decision on such interpretation of law then, such judicial decision applies retrospectively - The courts do not make any new law, they only discover and find the correct interpretation of the law, as if it is always the same and such a correct principle of law subsequently laid down by the Hon’ble Supreme Court applies retrospectively - Following the decision of the Hon’ble Supreme Court in the case of K.Ravindranathan Nair [2007 (11) TMI 10 - Supreme Court of India] - Such kind of charges i.e. labour charges have to be reduced by 90% while computing the profits of the business eligible for deduction under Section 80HHC and such a reduction is to be made from gross total income and would be included in the total turnover as per the formula given in Section 80HHC(3) - Such a law applies retrospectively overriding all the view taken earlier - There is no question of "change of opinion" because the earlier opinion was not in accordance with the provisions of law and subsequent decision of the Hon’ble Supreme Court reversing the earlier interpretation of law does constitute fresh material coming in possession of the Assessing Officer, so as to clothe him with the jurisdiction to reopen the case u/s.147 – Decided against assessee. While reducing the 90% labour charges receipts only the net labour charges should be reduced after setting off the labour charges paid – Following Hon’ble Supreme Court in the case of ACG Associates Capsules Pvt. Limited [2012 (2) TMI 101 - SUPREME COURT OF INDIA] - Only the net labour charges should be reduced while computing the deduction under Section 80HHC – Decided in favour of assessee.

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• 2013 (12) TMI 14
  Reassessment u/s 147 - Held that:- Earlier the assessment was being made in the capaty of HUF - Later on the reassessment was started in the capacity of AOP - The assessee has disclosed all the material facts and on the basis, the assessment had been made - No relevant material was brought by the A.O. for changing the status - As per the CBDT Circular No.549 dated 31.10.1989 - When no new material was brought on record before changing the status, then it amounts to "change of opinion", which cannot be a ground for re-assessment - Following CIT Vs. Kalvinator of India [2002 (4) TMI 37 - DELHI High Court] - There must be some tangible new material before changing the status - The same is absent in the instant cases - Decided in favour of assessee.

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• 2013 (12) TMI 13
  Issue of share capital – camouflage transactions / accommodation entries - Held that:- The Assessee company is a private limited company – The assessee company has issued share capital including premium of Rs.4,35,00,000/-, out of which only Rs.92,00,000/- was infused from the Directors/family members of the Directors. The remaining share capital had been infused from parties which were completely unrelated either to the Assessee or to any of its Directors - In a private limited company, normally the investment of shares is from parties or persons who are friends or relatives of Promoters/Directors – Later on these shares were transferred to directors of the company at a substantial loss - The entire investment happened during a short span of time and re-transfer of the shares to the Directors of the company also happened during a short span of few days - The modus operandi and the manner in which cash is deposited in a bank and then utilized by way of an account payee cheque for purchase of shares clearly establishes that the said transaction was a camouflage transaction - The Assessee failed to produce the persons who had invested towards share capital shows that these were people who were completely unrelated to the Assessee - All the entries were merely accommodation entries - It would not have been difficult in case of private company to produce persons who were investing substantial amount of money in the company towards share capital - The Assessee has not been able to discharge the initial onus and has not been able to establish the identity, creditworthiness of the share applicants and the genuineness of the transaction – Decided in favour of Revenue.

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• 2013 (12) TMI 12
  Loan from parties - amount taken by the partners for investment in the firm - Held that:- All the loans were old and only transfer entries were made during the year under consideration - The ITAT has righlty observed that the amount brought by the partners of the assessee firm in the capital account is to be assessed in their individual hands of of the partners, unless they failed to explain the same properly - No loan has been taken by the assessee firm in its capacity - Decided against Revenue.

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• 2013 (12) TMI 11
  Media cost for import of software - Capital expenditure or revenue - Software used for duplication and licensing - Held that:- The appellant was granted non-exclusive non-assignable right and authority to duplicate on appropriate carrier media software products - The appellant could enter into enforceable sub-licensing and services agreement in the prescribed form with third parties users - The holding company retained ownership of the copyright in the software and all associated and applicable intellectual property rights in the products. Following CIT versus IAEC Pumps limited [1997 (4) TMI 14 - SUPREME Court] - Payment towards royalty was revenue expenditure and was allowable after observing that the licence for use of software. The assessee had been only allowed use and there was no transfer of licence - Following CIT v. Sharda Motors Industrial Ltd [2009 (9) TMI 159 - DELHI HIGH COURT] - Depreciation claim in respect of intangible assets would arise only when it is first determined that the expenditure was capital in nature - Decided in favour of assessee.

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• 2013 (12) TMI 10
  Validity of penalty proceedings - Held that:- The Tribunal held that the assessee was entitled to claim deduction - Merely because the assessee withdrew the deduction, conceded to the demand of the department and paid tax and interest, it cannot be concluded that he was not entitled to deduction - As there is no malafide intention, the assessee cannot be imposed penalty - The claim made by the assessee under Section 80IB(10) of the Act was legal and valid subject to verification - Decided against Revenue.

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• 2013 (12) TMI 9
  Provision for bad debts – Held that:- The assessee is entitled to the benefit of rejection under Section 36(1)(vii) of the Income Tax Act, 1961 (for short ‘the Act’) when there is an actual write off by the assessee in its book – Following COMMISSIONER OF INCOME TAX VS. YOKOGAWA INDIA LTD [2011 (8) TMI 766 - KARNATAKA HIGH COURT] - Adjustment of provision for bad and doubtful debts is reduced from the loans and advances or the debtors from the assets side of the balance sheet - The assessee is now required not only to debit the P and L account but simultaneously also reduce the loans and advances or the debtors from the assets side of the balance sheet – Decided against Revenue. Provision for gratuity and leave encashment – Held that:- Following Bharat Earth Movers Vs. Commissioner Of Income Tax Reported [2000 (8) TMI 4 - SUPREME Court] - An assessee who is maintaining the accounts on mercantile system, a liability already accrued, though to be discharged at a future date, would be a proper deduction while working out the profits and gains of his business – Keeping in view the accepted principles of commercial practice and accountancy - The liability would be an accrued liability and would not convert into a conditional one merely because the liability was to be discharged at a future date - The gratuity payable and encashment of earned leave is not a contingent liability and provision thereof is deducted – Decided against Revenue.

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• 2013 (12) TMI 8
  Service income - Part of profits for section 80HHE - Held that:- Clause (d) of the explanation to section 80HHE does not refer to export turnover. Sub-Section(1) of Section 80HHE of the Act contemplates deduction to the extent of profits derived by the assessee from the export out of India on computer software or its transmission from India to a place outside India by any means or providing technical services outside India in connection with the development or production of computer software to which this section applies - In determining the profits of the business for the purpose of clause(d) of the explanation, the income which are susceptible to a reduction of 90% are those which are specifically prescribed by the Legislature - These are income contemplated by Section 28 of the Act and receipts by way of brokerage, commission, interest, rent, charges or receipts of similar nature included in such profits - Before a receipt is liable to be included to the extent of 90%, it must be a receipt of a nature similar to brokerage, commission, interest, rent or charges. The income emanating from services rendered, would not be susceptible to a reduction of 90% for simple reason that it would not constitute a receipt of nature similar to brokerage, commission, interest, rent or charges - Decided against Revenue.

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• 2013 (12) TMI 7
  Interest Expense - Disallowance u/s 14A - Held that:- The total interest paid was on account of interest on debentures and on unsecured loans taken – No interest has been incurred for amount of loan taken for the purposes of investment – Decided against assessee.

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• 2013 (12) TMI 6
  Short term capital gain on sale of plot of land - Held that:- The assessee has only sought to exploit the market potential of his land, buying it from one developer and contracting it to another for construction - The only difference is that the consideration for the same, rather than being in cash, is in kind, i.e., a defined share in the area to be constructed - The transaction to be more in the nature of a joint effort to commercially exploit the land, each party agreeing to share the risk and reward from the activity, leveraging its advantage and deploying its resources - No capital gains arising to the assessee during the relevant year - Decided against Revenue. Unsecured loans - Held that:- On oppurtunity being given to assessee - The assessee has only produced confirmations from the said parties and no return of income, bank statement were produced - The assessee has failed to prove the identity, capacity and genuineness of the loans taken and the parties from whom such loans were taken - Decided in favour of Revenue. Gift from elder sister - Held that:- The financial capacity of the donor to gift such a substantial amount of her wealth could not be established - The donor was the resident of Dubai which is a tax-free country - No return of income or any other tax document could be produced in respect of her business - The assessee's explanation as to the nature and source of the credit be considered as not reasonable - Decided in favour of Revenue.

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• 2013 (12) TMI 5
  Tax not deducted at source – applicability of provisions of section 40(a)(ia) on the amount which is due on last day of the year or amount paid during the year also - Held that:- As per amendment in Section 40 brought by the Finance Bill of 2004 - The legislature has replaced the words amounts credited or paid with the word payable in the enactment - Earlier year’s provision can be allowed in subsequent years only if TDS is deducted and deposited - The terms payable and paid are not synonymous. Word paid has been defined in Section 43(2) of the Act to mean actually paid or incurred according to the method of accounting, upon the basis of which profits and gains are computed under the head Profits and Gains of Business or Profession - This is a case of conscious omission and when the language was clear the intention of the legislature had to be gathered from language used - Section 40(a)(ia) would cover not only to the amounts which are payable as on 31th March of a particular year but also which are payable at any time during the year – Decided against assessee.

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• 2013 (12) TMI 4
  Transfer pricing adjustments - Held that:- Following Global Vantedge Pvt. Ltd. Vs. DCIT [2009 (12) TMI 668 - ITAT DELHI] - The total adjustments made together with the ALP already reported cannot exceed the total revenue earned by the appellant and its AEs from third party independent clients - The essential purpose of TP litigation is only to protect the legitimate tax base of India from being shifted out - It cannot mandate an assessee to earn more than what is has actually earned from independent third parties - Adjustments cannot exceed the global profits earned by the group from 'those transactions' that it has allowed the assessee's ground with regard to restricting TP adjustment to the global profits of the group from the international transactions - Decided in favour of assessee. Selection of comparables - Held that:- Once the assessee has accepted the aforesaid company as a comparable by not raising any objection before the DRP, the issue attained finality so far as the selection of the aforesaid comparable is concerned. The assessee cannot be permitted to raise objection - The assessee has not shown any reasonable cause as to why it did not object to the said company before the DRP - Decided against assessee. Differential ALP adjustment - Held that:- The assessee has not raised this issue before DRP, we are not inclined to entertain this issue raised for the first time before us without there being a valid reason by the assessee to show the reason for not raising this issue before DRP - Decided against assessee.

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• 2013 (12) TMI 3
  Investment in shares - Claim for interest paid on loan taken for investments - Held that:- The shares were kept by the assessee as investment and not as stock-in-trade - The assessee borrowed the money not for the purpose of business but for the purpose of investment in the shares of another company - The funds borrowed were invested in the shares of M/s Den Networks Ltd. The investment in the shares of M/s Den Networks Ltd., is in the form of long term non-trade investment/capital investment - The assessee is not entitled to the deduction of interest paid on the money borrowed - Decided against assessee. Interst income setoff against interest expense - Held that:- The CIT(A) allowed the relief on the basis of consequence of certain presumptive events. That income is to be computed on the basis of facts as they existed and not on the basis of some hypothesis that had the assessee not advanced the money to other company it would have been required to borrow less money - The assessee has borrowed the money from UFPL which was evidently not borrowed for the purpose of business. The interest paid on such borrowing cannot be allowed as a deduction under Section 36(1)(iii) - The assessee may have interest income on its capital or on its non-interest bearing funds received from somebody else but the said interest cannot be set off against the interest payment on the basis of some hypothesis or presumption - Decided in favour of Revenue. Office and administrative expenses - Held that:- The were the expenses of general nature - Even when the assessee has not carried on the business, the certain expenses which were required to be incurred for maintaining the corporate status of the assessee is allowable deduction - In fact the assessee carried on the business during the accounting year relevant to the assessment year under consideration, whatever small scale may be of the business - Decided against Revenue.

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• 2013 (12) TMI 2
  Undisclosed sales - Held that:- The sale made to the parties were through regular invoice and payment has also been received through regular banking channel - DG set is a high value item and normally there is a slim possibility for sale being totally unaccounted specially when they are made to public sector undertaking and reputed companies like General electric - During the Remand proceedings, the reconciliation statement along with the evidences submitted by the assessee was examined - The assessee's contentions were found to be factually correct as per his books of accounts - Decided against Revenue.

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• 2013 (12) TMI 1
  Expenses on repairs – Revenue or capital Expenditure – Held that:- The expenses were incurred to carry out changes in the manufacturing area on the direction of licensing authority - no new asset has been created by incurring said expenditure and the said expenditure was incurred to facilitate to run the factory – Following CIT V/s Associated Cement Companies Ltd. [1988 (5) TMI 2 - SUPREME Court] - "What is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of enduring benefit. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more effectively or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future" – Decided against Revenue.

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• Customs

• 2013 (12) TMI 38
  Demand of differential duty - Demand of respect of crude petroleum on the basis of bill of lading quantity of the liquid cargo - Held that:- duty of customs was leviable on the liquid cargo quantity mentioned in the bill of lading - Following decision of assessee's own case in [2006 (2) TMI 518 - CESTAT, BANGALORE] - Decided against assessee.

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• 2013 (12) TMI 37
  Suspension of license - Ex part order passed - Held that:- It is also not in dispute that a post-decisional hearing of the CHA was held on 24-10-2011 within the prescribed time. On that date, the learned Commissioner also took note of a representation filed by the CHA. However, no decision was taken in the matter. As per Regulation 20(3) of the CHALR, 2004, the Commissioner ought to have passed an order within 15 days from the date of post-decisional hearing - the Circular, by adding the clause “where it is possible to do so”, liberalised the sub-regulation with a departmental bias. The time limit of fifteen days has to be considered as mandatory as per Regulation 20(3). Therefore we hold that the non-passing of order by the learned Commissioner of Customs, Hyderabad within 15 days from the post-decisional hearing dated 24-10-2011 is in clear violation of the mandatory provision of Regulation 20(3) which, as rightly pointed out by the learned counsel, vitiated the ex parte suspension order passed by the Commissioner. From the report received from the respondent’s side today, it appears that it is not the case of the respondent that non-passing of the order was due to any omission or fault or mistake of the appellant - Decided in favour of Appellant.

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• 2013 (12) TMI 36
  Assessable value of flatbed knitting machine/crochet yarn machine - Enhancement in value of flatbed knitting machine/crochet yarn machine - Revenue's chartered engineer declared that value assessed by assessee is appropriate - Therefore Commissioner (Appeals) set aside the enhanced value of flatbed knitting machine/crochet yarn machine - Held that:- the chartered engineer’s certificate has endorsed the value declared by the respondents as the correct value. The chartered engineer was appointed by the Revenue itself and its opinion cannot be discarded lightly. Further, as pointed out by the ld. Advocate and as also recorded in the impugned order by Commissioner (Appeals), the bill of entry on which reliance is placed was provisionally assessed. As such it cannot be said that the same fits into the definition of contemporaneous evidence - Decided against Revenue.

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• 2013 (12) TMI 35
  Penalty u/s 112(a) - Import of 189.040 kgs of prohibited goods along with mixed brass scrap of 25.240 MT - Held that:- There is no dispute that in this case the appellant who is an importer, has taken proper precaution while awarding the contract of supply of cargo of mixed brass scrap Honey. The adjudicating authority has specifically held that the importer has specifically instructed the supplier not to load any prohibited items and due precaution be taken at the load port. I also find that the adjudicating authority has also specifically recorded that the importer or CHA cannot be held responsible for presence of 189.040 kgs of prohibited goods in the consignment of 25.240 MT and he also specifically has recorded that there is no deliberate mis-declaration by the importer or CHA - Penalty imposed on the appellant is unwarranted and liable to be set aside - Decided in favour of assessee.

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• 2013 (12) TMI 34
  Benefit of exemption under Notification No.21/2002-Cus. dated 1.3.2002 (Sl. No.503) - Classification of goods - Whether the goods imported by them and declared as battery separator in the relevant Bills of Entry (filed in March - April, 2006) should be classified under Heading 8507 90 90 as claimed by the importer or under Heading 7019 32 00 as determined by the Commissioner (Appeals) - Held that:- basis of the demand was that the imported material was not as such useable as battery separator and hence not classifiable under SH 8507.90. The whole controversy was revolving around the form in which the material was imported. The intended purpose of import (battery separator) was not in dispute - material imported by the appellant in March-April 2006 was classifiable under Heading 8507 90 90 and hence eligible for the benefit of the relevant Notification and further that this benefit cannot be denied on the ground that the material was imported in roll form - Decided in favour of assessee.

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• 2013 (12) TMI 33
  Demand of duty - Import of Linear Alkyl Benzene - Exemption under Notification No.203/92-Cus. dated 19.05.92 - Appellant did not produce a certificate regarding non availment of modvat credit from the supporting manufacturer - Held that:- appellants has produced the letter issued by JCCIE accepting their submission for inclusion of the supporting manufacturer in the licence - supplier was not availing modvat credit to submit that as evidence of showing that modvat credit has not been availed. We find that these two submissions render the two grounds on the basis of which credit was denied no longer existence - Decided in favour of assessee.

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• Corporate Laws

• 2013 (12) TMI 51
  Unfair trade practice - false or misleading representation for the need or for the usefulness of the goods or services – Goods of Particular standard u/s 36A(i) of MRTP Act – manufacture and sale of kitchen chimneys - The main complaint appears to be on the terminology of "Lifetime Warranty Chimneys" and the seal bearing the words "Lifetime Faber Warranty" - Held that:- There was no falsehood is proved in any manner during the enquiry - Question is about the warranty to be misleading on account of its silence. We do not think that any purchaser, who goes to the shop to purchase the domestic chimneys, will not enquire about the life of the chimney. That life is clearly indicated in owners manual. We refuse to believe the claim that the owners' manual would be kept a secret till such time the sale is complete. If such a practice is adopted, that may amount to a separate unfair trade practice but that is also not a complaint that any customer has gone to a shop, demanded to see a manual and was refused by any shopkeeper or by the respondent company in any manner. This was certainly not a complaint which could have been referred to the Director General - the DG has wasted its energy in investigating such frivolous matters and thereby spending public money - Such complaints obviously should have been thrown out at the initial stage - Even on the question of investigation, the DG has remained very causal in not leading any evidence relating to any information or relevant facts – Decided against Revenue.

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• 2013 (12) TMI 32
  Referral to be made to Arbitrator u/s 8 of Arbitration and Conciliation Act, 1996 - Failure to make payments under the agreement – Failure to execute the personal guarantee – Held that:- The Plaintiff is correct in contending that once the specific performance is ordered in their favour, the Court in the very same suit can grant enforcement of the mortgage - The suit is a composite suit including for enforcement of the mortgage - Those composite reliefs together form the subject matter of the suit - the relief for enforcement of the mortgage is not arbitrable as such relief affect the rights of third parties who are not parties to the Arbitration Agreement. Relying upon Booz Allen and Hamilton Inc. Versus SBI Home Finance Ltd. & Others [2012 (10) TMI 459 - SUPREME COURT] - mere Agreement to sell or an Agreement to mortgage does not involve any transfer of right in rem but creates only a personal obligation - if only specific performance is sought either in regard to an Agreement to sell or an Agreement to mortgage, the claim for specific performance will be arbitrable - A suit on mortgage is not a mere suit for money - A suit for enforcement of a mortgage being the enforcement of a right in rem, will have to be decided by the courts of law and not by the Arbitral Tribunal – the Suit filed by the Plaintiffs seeking both specific performance and enforcement of the mortgage, being a right in rem, will have to be decided by this Court and not by an Arbitral Tribunal - the subject matter being enforcement of the mortgage is not arbitrable and Reference under Section 8 of the Arbitration Act cannot be directed. Part referral to Arbitration u/s 8 of Arbitration and Conciliation Act, 1996 – Held that:- It would be difficult to give an interpretation to Section 8 under which bifurcation of the cause of action that is to say the subject matter of the suit or in some cases bifurcation of the suit between the parties who are parties to the arbitration agreement and others are possible - This would be laying down a totally new procedure not contemplated under the Act - If bifurcation of the subject matter of a suit was contemplated, the legislature would have used appropriate language to permit such course - there is no such indication in the language – Thus, bifurcation of the subject matter of an action brought before a judicial authority is not allowed – Decided in favour of Plaintiff.

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• Service Tax

• 2013 (12) TMI 52
  Commercial Training or Coaching Service - Computer training or vocational training - Benefit of exemption under Notification No. 9/2003-S.T., dated 20-6-2003 - Held that:- appellant, who was admittedly providing 2D and 3D animation courses to the aspirants through computer medium, cannot be said to have provided computer training and can be said to have provided vocational training. Prima facie, computer hardware and software constituted a medium for the appellant to provide vocational training to those who required training in 2D and 3D animation. In this view of the matter, the appellant has prima facie case against the major part of the impugned demand - Stay granted.

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• 2013 (12) TMI 49
  Cenvat credit of service tax - Commission agent’s service for procuring sales order – Admissible or not on the ground that it is a post manufacturing activity – Waiver of Pre-deposit – Held that:- Following Birla Corporation Ltd. vs. CCE, Lucknow [2012 (9) TMI 51 - CESTAT, NEW DELHI] and the Board’s Circular dated 29/4/11 - There is nothing in the clarification given by the Board, which is contrary to the provisions of the law, and the same would be binding on the Departmental officers - the appellant have a strong prima facie case in their favour –the requirement of pre-deposit of Cenvat credit demand, interest and penalty waived till the disposal – Stay granted.

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• 2013 (12) TMI 48
  Demand of service tax - Service of club and association - Maintenance facility provided at Thialand - Appellant did not pay any service on such payments remitted abroad - Held that:- in the case of these services the liability is determined with reference to place of residence of the recipient of service rather than place of performance. In the view of the provisions in section 66A of the Finance Act, 1994 it appears that the applicant and the Branch in Dubai have to treated as different entities - Assessee directed to make a pre deposit - Partial stay granted.

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• 2013 (12) TMI 47
  Demand of service tax - Commercial or Industrial Construction Service - specific exclusion under Section 105(25b) of Finance Act, 1994 - Held that:- Prima facie, considering the Board's Circular and the type of approval given by the local authorities, we are of the view that this building cannot be considered to be a "Commercial or Industrial Building". Therefore, we grant waiver of pre-deposit of dues arising from the impugned order and stay collection of such dues till disposal of the appeal - Stay granted.

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• 2013 (12) TMI 46
  Refund of unutilized CENVAT credit - Rule 5 of CENVAT Credit Rules read with Notification No.5/2006-CE (NT) dated 14.3.2006 - Rejection of refund claim - whether appellant is eligible for the refund of the service tax paid by the service provider and utilized by him for rendering output services - Held that:- car parking area and other maintenance charges levied by the apartment is in respect of the space rented by the appellant for rendering his output services. If there is service tax liability which has been discharged by the service tax provider and collected from the appellant, and if the premises are used by the appellant for rendering output services - appellant being registered with the authorities under STP, the appellants were admittedly rendering their output services from the premises which have been rented to them i.e., ground floor, first floor and second floor. Non-inclusion of the ground floor in the centralized registration certificate may be at the most curable defect which was subsequently cured. Be that as it may, it is not disputed that rent paid for such ground floor was also taxed under the category of renting-out of immovable property by the owner. It is seen from the records that the appellant has paid such service tax to the owner and hence in my view is eligible to avail the CENVT credit of the service tax paid on the rent for the ground floor. When the appellant pays service tax to service provider and has got documentary evidence which is as per the provisions of the Finance Act, 1994 and the Rules made thereunder, such CENVAT credit cannot be denied. Secondly, though the appellant has entered into an agreement with Mr. Mohammed Oomer Sait for renting of the entire premises, subsequently on written request of the owner, due to presumably his own tax problem, had directed the appellant to issue two different cheques. The issuance of two different rent cheques, one in the name of Mr. Mohammed Oomer Sait and Mrs. Tahseen Oomer Sait would not mean that the appellant is not paying any rent to the owner of the premises. In my view, point raised by the Revenue in denying the refund is hyper technical. This view is unsustainable and liable to be set aside, more so when it is undisputed that Mrs. Tahseen Oomer Sait has paid the service tax and indicated on the invoice - Decided in favour of assessee.

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• 2013 (12) TMI 45
  Demand of service tax - Safe Vault Services - Service tax on the margin between the purchase price from the foreign bank and the sale price to the customers - Held that:- After going through the agreement of the applicant with the foreign banks, it comes out that the nature of transaction between the foreign banks and the applicant is that of sale and purchase and there is a further sale to the customers. That being the case, there is no justification at all for demanding service tax on the margin which they earn on the transaction. The department during investigation has made a request to quantify the amount and the charges the applicant would charged for safe vaults of comparable size, which the applicant has not furnished - provisions of Rule 6 (2) (iv) of Service Tax (Determination of Value) Rules, 2006 will not apply only to monetary loan and not to loan given in the form of gold - applicant directed to make a pre-deposit - Partial stay granted.

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• 2013 (12) TMI 44
  Availment of CENVAT Credit - Banking and other Financial services - payment of service tax under wrong accounting head - Held that:- joint effort should be made for verification of the input invoices lying in their head office and at various places on a sample basis or on the basis that could be devised and made simplifier for verification. Regarding the other issues, the appellant had already deposited accepting their liability on renting of the immoveable property, which could be verified by the adjudicating authority. Regarding the demand of Rs.1,79,39,279/-, and the interest amount of Rs.4,63,116/- against a wrong accounting code/head - assessee could not be asked to pay the amount again if it is paid against wrong accounting head/code. Also, we find from the letter dated 6/8/2013 placed by the Ld. C.A. that for the subsequent period, the Department has regularized such wrong payment. In the result, the case needs to be remitted to the adjudicating authority for re-verification of the documents relating to the demand - Decided in favour of assessee.

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• 2013 (12) TMI 43
  Demand of service tax - Cogent reason not given to show how demand is not sustainable - Held that:- appellant had not brought the facts and figures and arguments necessary for determining relevant issues. It is not advisable to encourage such lackadaisical approach when it comes to compliance with tax laws. At the same time, we take note of the fact that the appellant is a body owned by the Tamil Nadu Govt and for the sake of balance of convenience, considering at least about 40% of rental income is from property given on rent to commercial establishments - Assessee directed to make a pre deposit - Partial stay granted.

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• 2013 (12) TMI 42
  Applicable rate of service tax - Whether rate of service tax applicable at the time of rendering of service or at the time of receipt of payment - Taxable event - Held that:- As per section 66 of the Finance Act, 1994, service tax shall be levied at the rate of 12% of the value of the taxable service. Section 67 pertains to valuation of taxable services for charging service tax. As per rule 6(1) of Service Tax Rules, 1994, service tax is required to be paid by the 5th of the month immediately following the calendar month in which the payments are received towards the value of taxable services. Service tax shall, therefore, become chargeable on receipt of payment and on the amount so received for the service provided or to be provided, whether or not services are performed. The rate applicable to a taxable transaction shall be the rate in force at the time the service tax becomes chargeable. This is a well settled legal position. The date on which the services were agreed to be provided has no relevance to determine the applicable tax rate when the service is already taxable at the time of revision of rate. Taxable events in the present writ petition had admittedly occurred prior to 01.03.2008. At that point of time the rate of service tax applicable in respect of the services in question was 2% and not 4%, which came into effect only on or after 01.03.2008. In both the writ petitions the date of receipt of payments was subsequent to 01.03.2008 but that would not make any difference because it is not receipt of payment which is the taxable event but the rendition of service - The only thing that happened after May 14, 2003 was that the payments were received after that date. That, in our view would not change the date on which the taxable event had taken place. Since, the taxable event in the present case took place prior to May 14, 2003, the rate of tax applicable prior to that date would be the one that would apply. In the present case, the rate of five per cent would be applicable and not the rate of eight per cent - Decided against Revenue.

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• 2013 (12) TMI 41
  Refund of unutilized cenvat credit - Rule 5 of Cenvat Credit Rules, 2004 - supply part of their products to other 100% EOU - Held that:- adjudicating authority processed the refund claim and granted entire amount of refund claimed which was denied in the first adjudication order. Against this order of the adjudicating authority, Revenue filed appeal before Commissioner (Appeals) on the ground that the order of the Commissioner (Appeals) was that the differential amount of refund involved in the appeal shall be granted if otherwise found to be eligible - impugned order is not maintainable because the issue which has attained finality is being re-agitated without filing an appeal against order-in-appeal of the Commissioner (Appeals) - In the case of rebate and refunds on exports the policy of the government has been to grant such benefits when goods are supplied to SEZ. The same logic should apply for supply to EOUs also - Following decision of Essar Steel Ltd. Versus Union of India [2009 (11) TMI 141 - GUJARAT HIGH COURT] - Decided in favour of assessee.

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• 2013 (12) TMI 40
  Interest u/s 75 - Penalty u/s 76, 77 and 78 - Service tax liability - Security services - DGCEI, Vadodara initiated investigation against assessee - After the commencement of the investigation, the appellant firm paid a sum towards the Service Tax liability - Interest on delayed payment of Service Tax - Assessee contends that there as arithmetic mistake in order - Adjudicating authority directed the appellant to furnish detailed calculation sheets for the verification of alleged arithmetical mistakes in the computation of Service Tax demand - Held that:- Neither in the appeal memorandum nor in other documents submitted by the appellant along with the appeal memorandum, any calculation-sheet has been furnished - The impugned order was passed on 16.3.2007 and more than six years have lapsed since then and inspite of such a long period, the appellant has not shown or produced any evidence in support of their claim that there are errors in computation of Service Tax demand. Therefore, the contention of the appellant remains a mere allegation without any supporting evidence. Section 73 provides for assessment of tax and thereafter, payment of tax. Demand under Section 73A does not require any assessment of tax at all. It deals with payment of tax to the exchequer if any amount has been collected in excess of the Service Tax assessed or determined. Even in a case where service is not available. If any amount has been collected, which is not required to be so collected, the Section provides for crediting of the amounts so collected to the exchequer. Thus, Section 73 and 73A deal with altogether different situations. Penalty under Section 76 is imposed for default in payment of tax and, no mens rea is required to be proved for imposing such penalty. For mere default and delay in payment of tax, the liability to penalty arises. As regards the penalty under Section 78, the same is attracted when Service Tax is demanded and confirmed invoking the extended period of time and short-levy or short-payment or non-levy or non-payment or erroneous refund is on account of fraud or collusion or willful mis-statement and suppression of facts and contravention of any of the provisions to chapter V of the Finance Act, 1994 or to the rules made thereunder, with an intent to evade payment of Service Tax. In the present case, the appellant had suppressed the value of the taxable service received by them in their ST-3 Returns and in respect of the year 2004-05 and 2005-06, the appellant did not file any return at all. It has also been admitted in the statements recorded under Section 14 of the Central Excise Act by the Managing Director of the appellant firm that they mis-declared the value so as to evade payment of Service Tax - Decided against assessee.

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• 2013 (12) TMI 39
  Penalty under Sections 76, 77 and 78 - The appellant was a registered tour operator but failed to file any returns nor remitted any tax - Notification No.15/2007/ST, dated 04.04.2007 - Held that:- . As the appellant is not entitled to the benefits under Notification No.25/2004/ST, dated 10.09.2004 (being a tour operator engaged in the business of operating tours in tourist vehicle covered by the permit granted under Motor Vehicles Act), it cannot claim exemption on the basis of this exemption Notification. The order of the Commissioner (Appeals) dated 04.02.2013 is therefore correct in its conclusion though for inadequate reasons recorded. In any event the appeal is against the conclusion and the conclusion of the appellate authority for the reasons we have recorded, is impeccable - Decided against assessee.

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• Central Excise

• 2013 (12) TMI 30
  Eligibility for Exemption under Notification No. 3/2004 – Pipes cleared for water supply Project – Held that:- What has been done is not a mere pump house but in reality the plant is built to ensure that the water supplied to the plant is of required quality and water inflow & outflow can be regulated - there is a water supply plant and a storage space and therefore the pipes supplied by the appellants are eligible for exemption. The exemption is claimed for pipes for moving water from the source to the distribution point - the principle is that exemption has to be given a strict meaning and it should not be extended - exemption is claimed for movement of water up to from distribution point only from source - appellants have a case on merit on the ground that the pump house can be considered supply plant and cistern a storage point - When a departmental officer has taken a view in favour of the appellant, naturally the question of applying extended period for imposing penalty should not arise – Decided in favour of Assessee.

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• 2013 (12) TMI 29
  Eligibility for SSI Exemption under Notification No. 1/93 - Parts of Wick Kerosene Stoves captively consumed in the manufacture of kerosene stoves - Whether parts of kerosene stove would be eligible for exemption which would be covered under Explanation 6 to Notification No.1/93 – Held that:- The kerosene stove is classified under sub-heading no.7321, which is a specified good under Notification No.1/93 – Relying upon Elso Machines Pvt. Ltd. Vs Collector of Central Excise [1988 (11) TMI 107 - SUPREME COURT OF INDIA ] Where inputs which are specified goods, are used within the factory of production for further manufacture of finished goods which are also specified goods, the clearance of such inputs for such use shall not be taken into account for the purposes of calculating the aggregate value of clearances under this notification. There appears to be a rationale behind this Explanation; firstly, when the value of the finished goods, which are exempted under different notifications, is to be excluded, having regard to the wording of Explanation II, on the same analogy, the value of inputs which are being used for manufacture of finished goods are also excluded as both are specified goods, subject, of course, to the limit of the notification - Secondly, the notification provides relief to small scale industries; when the inputs which enjoys the exemption under the notification have already been dealt with, there is no reason why the value of the same inputs again be added for the purposes of aggregate value – Thus the assessee would be entitled to the benefit of Explanation III while computing the aggregate value for the purposes of availing exemption under the notification – Decided against Revenue.

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• 2013 (12) TMI 28
  Classification of copper bronze castings - Levy of duty – Notification No.8/96 - Whether the copper bronze castings, as the same come out of the mould, are classifiable under Central Excise Tariff sub-heading 7419.91 – Held that:- The castings before being used as parts, are subjected to the process of grinding, fettling, proof machining and without these processes, the same are not usable as parts of submersible pumps – Following Shivaji Works Ltd. vs. CCE, Aurangabad [1993 (5) TMI 98 - CEGAT, NEW DELHI] - the castings, in question, would be correctly classifiable under heading 7419.91 and not as part of submersible pumps under sub-heading 8413.99, as there is no evidence produced by the appellant that the castings as such without being subjected to any process are usable as parts – as regards the marketability there are a number of internet websites offering copper bronze castings, for sale which show that the market for this product exists – there was no infirmity in the order – Decided against Assessee.

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• 2013 (12) TMI 27
  Setting aside of Refund claim of Pre-deposit amount - Assessee contended that the Assistant Commissioner is statutorily empowered to consider process and grant refund u/s 11B of the Central Excise Act, 1944 – Held that:- Any deposit made during investigation or after adjudication has to be refunded to the assessee when the OIO is set aside and no quantification has been done by passing a suitable order as directed by CESTAT in its order dt. 24/02/2011 – Relying upon Voltas Limited Vs. UOI [1998 (11) TMI 137 - HIGH COURT OF DELHI] - the demand was set aside by CESTAT vide order dt. 24/02/2011 and there is no sign of quantification for a period of over 2 years – AC was right in sanctioning the refund of remaining amount of deposit made by the appellant after making suitable adjustments – observations of the OIA dt. 22/02/2013 passed by Commr (A) set aside - Decided in favour of Assessee.

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• 2013 (12) TMI 26
  Bar of Limitation - Denial of Cenvat credit - Whether the appellant is entitled to avail credit of duty paid on the free supplied blades packed along with the razors manufactured by them, by treating the same as inputs – Held that:- The show cause notice was issued on 10.12.2003 for the period October 2001 to July 2002 - the entire period is beyond the normal period of limitation - The appellant have taken a categorical stand that the entire facts were in the knowledge of the Revenue inasmuch as number of quarries were raised by them, which stand replied to by the appellant. There being divergent views and the issue being a complex and technical in nature, the appellant cannot be held guilty of suppression or malafide with an intent to evade duty - The lower authority have not referred to or relied upon any evidence indicating any positive suppression or misstatement on the part of the appellant - there is correspondence on the above subject, thus indicating knowledge on the parts the Revenue, in which case the longer period of limitation cannot be invoked – order set aside – Decided in favouro of assessee.

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• 2013 (12) TMI 25
  Notification no. 39/2007 – Calculation of Duty on Quarterly basis - Waiver of pre-deposit of Penalty u/s 11AC of CE Act – Held hat:- If the capital goods on which credit has been taken are removed after being used, the manufacturer shall pay an amount equal to CENVAT credit taken on the capital goods reduced by 2.5% on each quarter of the year or part thereof from the date of taking of the CENVAT credit - The appellants while clearing the capital goods calculated duty on quarterly basis - it is not a case of intention to evade payment of duty - thus the penalty imposed u/s 11AC of the Central Excise Act set aside – Decided in favour of Assessee.

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• 2013 (12) TMI 24
  Interest on Excess cenvat credit – Raw materials used are exempted - Whether the assessee is liable to interest in respect of excess availed credit – Held that:- The issue has attained finality and the Assistant Commissioner was bound by the direction contained in the said order of the Tribunal in spite of the reversal of the decision of the IND-SWIFT LABORATORIES LTD. Versus UNION OF INDIA [2009 (7) TMI 98 - PUNJAB & HARYANA HIGH COURT ]- the Revenue should have challenged the Tribunal’s order before the appropriate forum by way of filing appeal so as to keep the matter alive - Revenue having not done so and having allowed the proceeding to arrive at dead end and the Tribunal’s order to attain finality, they are not now entitled to avail the benefit of declaration of law by the Hon’ble Supreme Court subsequent to the conclusion of the proceeding – There is no infirmity in the order - Decided against Revenue.

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• 2013 (12) TMI 23
  Refund claim - Duty under protest paid - Cost of third party test – Transaction value - Whether the cost of third party test got done at the instance of customer is to be included in the value or not - Held that:- As per Section 4(3)(d) ‘transaction value’ means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods - the cost of ESS test whether it is paid to a third party or paid to the seller himself is includable. Extended period of limitation - The extended period could have been invoked in respect of the appellant - Once the duty liability is confirmed as payable, if extended period is invoked even penalty becomes payable - In this case only the refund claim has been rejected and the appeal is only against the rejection of refund claim - the testing conducted is a condition of sale and therefore, the cost of such testing is includable in the assessable value – thus the refund claim has been rightly rejected – Decided against Assessee.

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• 2013 (12) TMI 22
  Clandestine clearance of paper and paper board – Show cause notice issued for confiscation of the seized goods – Principles of natural justice - Held that:- The Commissioner (Appeals) modified the Order of the Adjudicating Authority to the extent that the Commissioner (Appeals) allowed the release of the absolutely confiscated goods on payment of redemption fine, confirmed the demand and reduced the penalty - To this extent, the findings of the Commissioner (Appeals) and two separate Orders passed by him, are contradictory to each other - the Commissioner (Appeals) while disposing the Departmental Appeal had not issued any show cause notice to the assessee and they were also not heard by him and therefore, the Orders-in-Appeal were passed without observing the principles of natural justice – thus, the Orders passed by the Commissioner (Appeals) are bad in law – the matter remitted back to the Commissioner (Appeals) to decide the case afresh - Decided in favour of Assessee.

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• 2013 (12) TMI 21
  Eligibility for SSI Exemption under Notification No. 08/2003 - Value of clearances not beyond the limit - Clearance of refined oils and soap – Duty under Protest paid – Held that:- Whether there was any provision for payment under protest under law - No specific provision was brought to notice - where the payment under protest finds its place is in the Explanation to Section 11B(1) of Central Excise Act, 1944 - This proviso provides that the limitation of one year was not applicable where any duty has been paid under protest. This is contrary to the position existing under erstwhile Central Excise Rules, 1944. Earlier, there was a specific rule for payment under protest under Rule 233 of Central Excise Rules and this rule besides providing for payment under protest also gave the procedure to be followed briefly. However no such provisions exist under the law and either side could not bring any such provision to our notice. Whether a show-cause notice should have been issued for appropriation of the amount paid by the appellant under protest – Held that:- Once the appellant paid the amount and Department did not issue notice, the matter should have ended there - The appellants after making payment, wanted to convert it into a dispute and have asked the Superintendent concerned to issue a show-cause notice to them - The law does not contemplate this - the proceedings initiated by the Department were not required at all for appropriation and vacating the protest - the payment has attained finality after one year, appeal has no merit. When there is no contest of the demand or duty liability on merits and they are not in a position to say what documents are required by them or which provision of notification they do not understand, it is difficult to find fault with the procedure followed by the adjudicating authority who has given an opportunity of personal hearing and has passed an order outlining the provisions of notifications according to which appellant is liable to pay and hence has held that the payment made by them is proper and correct. Department has explained the notification provisions, informed the assessee in spite of the fact that the assessee did not explain why they were having an impression that they were not liable to pay and did give an importunity by giving personal hearing before appropriation to explain their case as to why they are eligible for exemption - The end is justice and show-cause notice is a means to that end – Decided against Assessee.

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• CST, VAT & Sales Tax

• 2013 (12) TMI 50
  Sale tax liability - Purchase of used/second hand arms from licensees - Whether the assessee can be recognized as a manufacturer in respect of used/second hand arms purchased by him from the licensees - Held that:- The assessee is said to have supplied the list of the persons/licensees from whom the old arms were purchased along with their complete details. The supply of said list is not disputed and none of the authorities have found or recorded finding that the assessee had not purchased old arms from the said persons. The said persons are mere licensees of arms and there is no finding that any of them ever indulged in sale and purchase of arms or carried the said business. In absence of any such finding the persons or licensees from whom the assessee purchased old arms cannot be recognized as dealer - The assessee is also not the person or the dealer who made the first sale of goods in the State after their manufacture, inasmuch, he makes the sale after purchase of the old arms from licensees who may be first or second purchasers after the goods were manufactured. The sale to the licensees of U.P. from whom the assessee had purchased old arms would actually be the first sale and not the one made by the assessee - Accordingly, the assessee cannot be treated to be a manufacturer in respect of of the old arms purchased by him from the licensees within the meaning of Section 2(ee) of the Act - Decided in favour of assessee.

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• Indian Laws

• 2013 (12) TMI 31
  Benefit of Financial upgradation in lieu of promotion – Sealed cover procedure - Held that:- The petitioner is technically correct as the process of sealed cover cannot be applied - as on the date of the consideration by DPC, no charge sheet was issued to him - the assessment by DPC is not the final word in the matter pertaining to promotion or extension of the benefit of financial upgradation - As long as the appointing authority has the power not to accept the recommendation of the DPC, may be by furnishing the reasons, which may include those, that were not in existence by the time the DPC met, the petitioner cannot be said to have derived or acquired any right, on the sole basis that DPC cleared his case - since the case is almost at twilight stage, viz., between the clearance by DPC and the issuance of consequential orders by the appointing authority – there is no harm either to the petitioner or to the respondents, if the sealed cover procedure is adopted - Decided in favour of Petitioner.

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