TMI Tax Updates - e-Newsletter
December 20, 2014

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise

TMI SMS

• Extended period of limitation - wrong classification cannot lead to the conclusion of suppression of facts when no mens rea established - ST

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• Finance Minister tabled the Constitution Amendment Bill in the Lok Sabha today with respect to Goods and Services Tax

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Articles

1. Form F and H under Mvat

   By: Ankit Bhansali

2. POWER TO SEARCH IN SERVICE TAX

   By: Dr. Sanjiv Agarwal

3. GST-2016

   By: Deepak Aggarwal

4. Intermediary redefined - relevance of Notification 42/2012 lost?

   By: CA Akash Phophalia

News

1. Finance Minister tabled the Constitution Amendment Bill in the Lok Sabha today with respect to Goods and Services Tax (GST Bill)

2. Refinancing of Export Purchase Bills of Exporters

3. International Financial Reporting Standards

4. Norms of Corporate Fraud Reporting

5. Sharing Data with Regulators

6. Certificate Programme in CSR

7. Conducting of CA Exams

8. 7th India-China Financial Dialogue held Today;, Both Countries agreed to Coordinate Policy Action in facing Common External Challenges and Strengthen Cooperation amongst Financial Sector Regulatory Agencies;, Both Sides Underscored the need to Strengthen Cooperation under Multilateral Frameworks and Fora

9. Government Firmly Committed to Meeting its Fiscal Deficit Target for Current Year: Mid-Year Economic Analysis (MYEA) 2014-15

10. Corrigendum to Exchange Rate Notification 115/2014-Customs (NT) Dated 17.12.2014

11. Compulsory Licensing on Patented Drugs

12. Area Norms Under NIMZs

13. Awareness About Filing Patents

14. Export Through Micro, Small and Medium Industries

15. Export by Small and Medium Pharmaceutical Manufacturers

16. Foreign Trade

17. Incentives to Special Economic Zones

18. Trade Agreement with GCC

19. Exchange Rate of Foreign Currency Relating to Imported and Export Goods Notified

20. RBI Reference Rate for US $

Notifications

Customs

1. 116/2014 - dated 18-12-2014 - Cus (NT)

Rate of exchange of conversion of each of the foreign currency with effect from 19th December, 2014

Circulars / Instructions / Orders

Income Tax

1. ORDER NO. 224 OF 2014 - dated 12-12-2014

Distribution of work among Chairperson and Members of CBDT.

DGFT

2. 78 (RE-2013)/2009-2014 - dated 18-12-2014

Deferment of implementation of the procedure for export of certified organic products.

Customs

3. 15/2014 - dated 18-12-2014

Norms for Execution of Bank Guarantee in respect of Advance License/Export Promotion Capital Goods (EPCG) Schemes – reg.

Highlights / Catch Notes

Income Tax

• Court Upholds Settlement Commission's Order u/s 245D(4), Validating Original Declaration Despite Later Additional Amounts Offered.

  Case-Laws - HC : Validity of order of Settlement Commission u/s 245D(4) - the contention of the revenue cannot be accepted that merely by offering additional amounts, the original declaration by the assessee became one that was not full and true for the purposes of settlement - HC
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• High Court Rules: Assessment Accuracy Cannot Be Reviewed by Officer When Deciding Tax Refund Eligibility.

  Case-Laws - HC : Assessee seeks direction to be made to the revenue to refund the excess amount of tax paid AY 2000-2001, together with interest - orrectness of an assessment cannot be gone into by the officer concerned while determining the issue as to whether refund is due to the assessee or not - HC
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• Court Rules Hotel Pool Not Eligible for 33.33% Depreciation as Plant Under Tax Code.

  Case-Laws - HC : Entitlement for depreciation on Swimming pool @ 33.33% - building which is used as a hotel cannot be given depreciation as plant - HC
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• Higher Depreciation Rate Allowed for Windmills with Custom Electrical Works Tailored to Specific Needs.

  Case-Laws - AT : Higher claim of depreciation on Windmill – if the electrical works are specially designed devices to suit the need of windmills, then only the assessee is entitled for higher rate of depreciation - AT
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• Undisclosed Income u/s 68: Taxpayer Fails to Explain Donor's Financial Capacity for Gift from Brother.

  Case-Laws - AT : Addition of undisclosed income u/s 68 – Gift received from brother – as per sec. 68, the assessee is required to explain the capacity of the lender to advance money to the assessee to the satisfaction of the AO - additions confirmed - AT
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Customs

• Court Rules Commissions Up to 12.5% Not Deducted from FOB Value for Export Benefits Calculation.

  Case-Laws - AT : Denial of export benefits - Over Valuation of goods - any commission up to the limit 12.5% is not required to be deducted from FOB value for grant of export benefits. - AT
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Indian Laws

• Finance Minister Introduces Constitution Amendment Bill in Lok Sabha for Unified GST System to Boost Economic Growth.

  News : Finance Minister tabled the Constitution Amendment Bill in the Lok Sabha today with respect to Goods and Services Tax
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Service Tax

• Goods in Service Contracts Subject to Sales Tax or VAT; Confirmed as Works Contract Services by Appellant's Documents.

  Case-Laws - AT : Goods involved as part of Service Contract are subjected to payment of Sales Tax/VAT - appellant have submitted documents evidencing payment of works contract tax - services are correctly classifiable as works contract service - AT
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• Extended Limitation Not Applicable for Service Tax Errors Without Evidence of Suppression or Intent to Deceive.

  Case-Laws - AT : Extended period of limitation - wrong classification cannot lead to the conclusion of suppression of facts etc. when no mens rea established. - AT
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• Godrej Industries and Godrej Consumer Products' inter-unit reimbursements not taxable as Business Auxiliary Services.

  Case-Laws - AT : Inter unit services between the two units namely M/s. Godrej Industries and M/s. Godrej Consumer Products Ltd. - reimbursement of expenses - prima facie not taxable as BAS - AT
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• Refund Denied: Rs. 97,520 Franchise Service Claim Rejected Due to Interest Calculation Mismatch in Appellate Order.

  Case-Laws - AT : Denial of refund claim - Franchise service - interest paid by the appellant does not tally with the calculation as per the appellate order - adjudicating authority has erred in rejecting the refund claim of ₹ 97,520/- on the ground of mismatch. - AT
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Central Excise

• Revisional authority's denial of export rebate claim ruled unsustainable and illegal due to lack of due diligence.

  Case-Laws - HC : Denial of rebate claim - Export of goods - Order passed by the Revisional authority is unsustainable. It is manifestly illegal and erroneous. It is also vitiated by a non-application of mind to the vital materials - HC
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• High Court Rules on Input Service Credit Claims for Trading Activities Using Extended Limitation Period.

  Case-Laws - HC : Availment of input service credit paid on commission in respect of trading activities - extended period of limitation - demand confirmed - HC
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• Court Upholds Classification: Shampoo Not a Medicament, Classified as Cosmetic Under Sub-heading No.3305.00 for Excise Purposes.

  Case-Laws - HC : Classification of shampoo - whether the product is Medicaments - Classification under sub-heading No.3303.10 or under sub-heading No.3305.00 - Writ petition dismissed - HC
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Case Laws:

• Income Tax

• 2014 (12) TMI 686
  Capital gain accrue or arise or not in the present AY or not - Transfer took place on 30.04.2005 or not – Trasnfer u/s 2(47) - Held that:- There was the transfer of land to the builder in lieu of cost of construction as per specification of the agreement for Plot No. 14/138 - there was transfer of the capital assets - This transfer had taken place at the time of execution of the development agreement on 24.06.1999, whereby the builder had been vested with extensive powers by execution of power of attorney executed on same day i.e. on 24.06.1999 to deal with property for the purpose of development as stipulated by principal development agreement. So far as Plot No. 14/143 is concerned, it did not provide any transfer of land, but this plot was in the name of the brother of the assessee. The builder had launched its scheme of booking of flats by advertising in various well know newspaper on 20.04.2002 from 1.4.2002 - This evidence has also remained uncontroverted by the Revenue and explanation of assessee being plausible, had the possession not been given prior to a reasonable period, then the date of launching of the scheme, the builder could not have been in a position to launch the scheme on 21.4.2002 and demolition of old building and acquiring of the land for construction being not a childish job, was to take sufficient time and therefore, the assessee's plea is that the possession of the land was handed over latest by 23.11.2001 is liable to be accepted - the land was transferred in all manner except title to the builder by the assessee. The Tribunal rightly observed that as per terms and conditions of the agreement date 24.06.1999 the transfer was effective from that very day and not in the year of 2005 as wrongly observed by the AO - the capital gain is applicable in the year when the possession was handed over by the assessee - the assessee's all other rights, except title, stood transferred and the capital gain was to be computed on the basis of transfer and in the year of the transfer - the partial possession was given in the year 1999 - The title was transferred on 30.04.2005, so no capital gain could have been accrued on 30.04.2005 for the AY 2006-07, as wrongly claimed by the revenue - the transfer of the land under reference did not take place on 30.04.2005 – thus, the order of the Tribunal is upheld – Decided against revenue.

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• 2014 (12) TMI 685
  Validity of order of Settlement Commission u/s 245D(4) - During the pendency of the block assessment proceedings, assessee filed an application before the Settlement Commission - Interference made in the order of Settlement Commission u/s 245D - Nature of jurisdiction exercised - Whether the exercise of its jurisdiction under Article 226 of the Constitution of India, will interfere with orders passed by the Settlement Commission under Section 245D of the Income Tax Act, 1961 and if so, to what extent – Held that:- Following the decision in THE COMMISSIONER OF INCOME TAX (CENTRAL), KOCHI Versus SETTLEMENT COMMISSION (IT & WT) AND M/s. JOSCO JEWELLERS PVT. LTD. [2014 (11) TMI 734 - KERALA HIGH COURT] - in Jyotendrasinhji v. S. I. Tripathi and Others - [1993 (4) TMI 1 - SUPREME Court] it has been held that the scope of enquiry, whether by the High Court under article 226 or by this Court under article 136, is also the same - the power of judicial review is not to be exercised to decide the issue on facts or on an interpretation of the documents available - the enquiry by this Court can only be with regard to whether or not the Settlement Commission exercised a jurisdiction that it did not have or, alternatively, if it did have the jurisdiction, whether it erred in the exercise of that jurisdiction. One cannot discount the possibility of the Settlement Commission finding the disclosure of income made by an assessee as being full and true and yet requiring minor adjustments to include even those amounts, which though disputed by the assessee, would nevertheless be offered by the assessee in the interests of putting an end to litigation and in the spirit of settlement - These could be amounts, in respect of which, neither the department nor the assessee have sufficient material to substantiate their contentions, but the assessee is nevertheless willing to give up his claim in the interests of finality to litigation - The consent by an assessee to forgo such amounts, at the suggestion of the Settlement Commission, cannot have the effect of rendering his original disclosure dubious for the purposes of settlement under the Act - it is only in those cases where an assessee resiles from his original declaration of undisclosed income, by suo motu effecting revisions thereto, that he renders his application invalid for the purposes of settlement - the Commission found that there was no material with the Department to justify a demand of further amount from the assessee - Notwithstanding this, additional amounts were offered by the assessee to put a quietus to the matter - the contention of the revenue cannot be accepted that merely by offering additional amounts, the original declaration by the assessee became one that was not full and true for the purposes of settlement – thus, there is no reason to interfere with the order passed by the Settlement commission u/s 245D(4) – Decided against revenue.

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• 2014 (12) TMI 684
  Assessee seeks direction to be made to the revenue to refund the excess amount of tax paid AY 2000-2001, together with interest - Assessment for the AY 2000-2001 completed or not by Revenue - Held that:- Where the return indicated that a refund was due to the assessee on account of advance taxes paid by him, which were not actually payable in so far as the receipt was a capital receipt that was not liable to tax under the Income Tax Act, the AO ought to have dealt with the return and determined whether the refund claimed in the return was actually payable to the assessee or not - no such action appears to have been taken by the AO on the ground that the return itself was never received in the office - in cases covered by Sections 237 to 245, the correctness of an assessment cannot be gone into by the officer concerned while determining the issue as to whether refund is due to the assessee or not - It follows that the procedure can be followed only in cases where there is already an assessment and the assessee approaches the Department for a refund that is due to him in terms of the assessment order. What is to be done with regard to the excess payments made by the assessee, by way of advance tax for the AY in question – Held that:- The payments were in fact made, which is not disputed by the Department, and the payments relate to amounts that were not payable by way of tax – as decided in Guffic Chem P. Ltd. v. CIT - 2011 (3) TMI 6 - Supreme Court] it has been held that the amounts received under a non-compete agreement are not taxable under the Income Tax Act up to the AY 2003-2004 – thus, the revenue is directed to refund the amount of Rs. 1865376/-, that was paid by petitioner in excess for the AY 2000-2001, to the assessee but the revenue would not be liable to pay any interest on the amount – Decided in favour of assessee.

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• 2014 (12) TMI 683
  Entitlement for depreciation on Swimming pool @ 33.33% - Tribunal treating it as plant and machinery - Held that:- Following the decision in Commissioner of Income-Tax Versus Anand Theatres [2000 (5) TMI 4 - SUPREME Court] wherein it has been held that the building which is used as a hotel cannot be given depreciation as "plant" – the order of the Tribunal cannot be upheld - Decided in favour of revenue.

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• 2014 (12) TMI 682
  Factoring charges to be treated as interest or not – Applicability of section 194A – Disallowance u/s 40(a)(ia) – Held that:- The Tribunal was rightly of the view that the interest is a term relating to a pre-existing debt, which implies a debtor creditor relationship - unpaid consideration gives rise to a lien over goods sold and not for money lent – relying upon Bombay Steam Navigation Co. Pvt. Ltd. vs. CIT [1964 (10) TMI 12 - SUPREME Court] wherein it is held that, where interest on unpaid purchase price was not treated as interest on loan - before any amount paid is construed as interest, it has to be established that the same is payable in respect of any money borrowed or debt incurred - discounting charges of Bill of Exchange or factoring charges of sale cannot be termed as interest – as such no question of law arises for consideration – Decided against revenue.

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• 2014 (12) TMI 681
  Export of software development services – Selection of comparables – Functionally dissimilar company - Avani Cincom Technologies Ltd. - Persistent Systems Ltd. - Softsol India Ltd. - Held that:- Following the decision in M/s. 3DPLM Software Solutions Ltd. (Successor to Delmia Solutions Private Ltd.) Versus Dy. Commissioner of Income Tax [2014 (12) TMI 612 - ITAT BANGALORE] - it was the duty of the TPO to have necessarily furnished the information so gathered to the assessee and taken its submissions thereon into consideration before deciding to include this company in its final list of comparables - Non-furnishing the information obtained u/s 133(6) of the Act to the assessee has vitiated the selection of this company as a comparable - even in the earlier year, this company was not selected on the basis on any search process carried out by the TPO but only on the basis of information collected u/s 133(6) - the assessee has brought on record evidence that this company is functionally dissimilar and different from the assessee and hence is not comparable - the finding excluding it from the list of comparables rendered in the immediately preceding year is applicable in this year also – thus, this company cannot be considered as a comparable to the assessee – Decided in favour of assessee. Functionally dissimilar company – Celestial Biolabs Ltd. - KALS Information Systems Ltd. - Held that:- Following the decision in M/s. 3DPLM Software Solutions Ltd. (Successor to Delmia Solutions Private Ltd.) Versus Dy. Commissioner of Income Tax [2014 (12) TMI 612 - ITAT BANGALORE] - this company is held to be functionally dissimilar and different from a software service provider informatics as it is into bio software products and is not comparable to a mere software service provider - the TPO has not carried out any independent FAR analysis for this company for this year viz. Assessment Year 2008-09 – thus, this company is functionally different and cannot be considered as a comparable to the assessee who is a software service provider and AO is directed to omit this company from the final list of comparables. Functionally dissimilar company – Infosys Technologies Ltd. – Held that:- Following the decision in M/s. 3DPLM Software Solutions Ltd. (Successor to Delmia Solutions Private Ltd.) Versus Dy. Commissioner of Income Tax [2014 (12) TMI 612 - ITAT BANGALORE] - this company be omitted from the final set of comparables for the reason that this company is functionally different as it has its own intangibles, IPR, brand and has huge revenues from software products, whereas the assessee is a mere software services provider - assessee has brought on record sufficient evidence to establish that this company is functionally dis-similar and different from the assessee and hence is not comparable - this company owns its own intangibles, has huge software product revenues, brand, etc. and therefore cannot be considered as a comparable to the assessee who is a mere software service provider – Decided in favour of assessee. Functionally dissimilar company – Wipro Ltd. – Tata Elxsi Ltd. - Lucid Software Ltd. - Held that:- Following the decision in M/s. 3DPLM Software Solutions Ltd. (Successor to Delmia Solutions Private Ltd.) Versus Dy. Commissioner of Income Tax [2014 (12) TMI 612 - ITAT BANGALORE] - this company be omitted from the final set of comparables for the reason that it is not functionally comparable to software service providers as it is into development of software products, etc. - this company is engaged both in software development and product development services - There is no information on the segmental bifurcation of revenue from sale of product and software service - this company being into software development, etc is functionally different and cannot be considered as a comparable to the assessee who is a software service provider. Thirdware Solutions Ltd. (Segment) – Held that:- Following the decision in M/s. 3DPLM Software Solutions Ltd. (Successor to Delmia Solutions Private Ltd.) Versus Dy. Commissioner of Income Tax [2014 (12) TMI 612 - ITAT BANGALORE] - this company is to be excluded from the final list of comparables as it is engaged in product development and its income is also from trading in software licences and is, therefore, not comparable to a software development service provider like the assessee – thus, this company cannot be considered as a comparable to the assessee. Inclusion of Companies as comparables – Held that:- The TPO in his order u/s 92CA has not explained as to how these companies fail the RPT filter – thus, the matter is to be remitted back to the AO/TPO for examination of the computation given by the assessee on the percentage of RPT and for fresh adjudication – Decided in favour of assessee. Risk Adjustment – Held that:- The TPO has not allowed any adjustment by observing that this has been considered and discussed in detail in the order for earlier years – as held in Intellinet Technologies India (P.) Ltd. v. ITO [2012 (6) TMI 237 - ITAT BANGALORE] - the TPO ought to have given risk adjustment to the margins of the comparables for bringing them on par with the assessee and remanded the issue back to the file of the TPO – thus, the matter is remitted back to the AO/TPO for market risk adjustment. Reimbursement of Expenses incurred not to be considered for computing ALP – Held that:- The breakup of the expenses are not given in detail, in the absence of which it is not clear whether it is actually incurred – following the decision in LG Soft India (P.) Ltd. Versus Deputy Commissioner of Income-tax, Circle - 12(2) [2013 (9) TMI 191 - ITAT BANGALORE] - there appears to be need of examination and discussion of the same – the matter is to be remitted back to the AO/TPO for detailed examination and verification – Decided in favou of assessee. Deduction u/s.10A – Reduction of telecommunication expenses from export turnover - Held that:- Following the decision in CIT v. Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] has held that while computing the deduction u/s 10A, if the export turnover in the numerator is to be arrived at after excluding certain expenses, then the same should also be excluded from the total turnover in the denominator – the AO is directed to exclude the expenses on communication and travel incurred in foreign currency both from export turnover as well as from the total turnover while calculating the eligible deduction u/s 10A – Decided in favour of assessee.

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• 2014 (12) TMI 680
  Allowability of deduction u/s 35AB - Held that:- The AO as well as the CIT(A) denied the assessee's claim for deduction u/s 37(1) of the Act and instead deduction has been allowed in terms of section 35AB of the Act as the expenditure was for acquiring the use of Process know-how - the CIT(A) has noticed that assessee is following the mercantile system of accounting and the word "paid" has been defined in section 43(2) of the Act to include the incurrence of liability also – CIT(A) rightly relied upon Padamjee Pulp And Paper Mills Limited Versus Commissioner Of Income-Tax [1993 (10) TMI 16 - BOMBAY High Court] - wherein the applicability of the definition of expression "paid' contained in section 43(2) of the Act has been approved even while determining the deduction allowable u/s 35AB of the Act on accrual basis – the order of the CIT(A) is upheld – Decided against revenue. Entitlement of deduction u/s 37(1) - Entire amount of process know-how fees – Held that:- It was a common point between the parties that the AO has been allowing deduction to the assessee to the extent of 1/6th since assessee itself was debiting only 1/6th of process know-how fee in the Profit & Loss Account and what the AO was rejecting was the claim of the assessee made in the computation of income that the full amount should be allowed in the first year itself - In-fact, it was a common point between the parties that so far as the claim of deduction of 1/6th cost is concerned, the same was allowed by the AO – thus, the order of the CIT(A) is set aside – Decided in favour of revenue. Disallowance of provision of warranty – Difference between closing and opening provision – Held that:- The assessee made a provision on account of provision for warranty with respect to the products sold - Considering the opening balance of provision, the differential amount of provision was debited to the Profit & Loss Account of the year - The provision was made by the assessee on account of the fact that it is under an obligation to provide warranty for a period of one to two years on the products sold by it on account of any manufacturing defect found later - assessee was obliged to replace the product or repair the product free of cost during the period of warranty - thus, the AO is directed to allow the relief – Decided in favour of assessee. Allowability of provision for profit equalization – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that the allowability of provision for profit equalization while recognizing incomes on application of percentage of completion method in the case of long term contracts in the light of the AS-7 issued by the ICAI – Decided in favour of assessee. Cost of computer software disallowed – Held that:- Following the decision in CIT vs. Raychem Rpg. Ltd. [2011 (7) TMI 953 - Bombay High Court] - the expenditure incurred on acquisition of software which did not form part of the profit making apparatus of the assessee was treated as a revenue expenditure - the CIT(A) has given a finding that expenditure was incurred on acquisition of software connected with the manufacturing operations of the assessee - Such softwares have been identified as Autocad, project management software, designing software, etc. - The assessee is in the business of manufacturing of boilers and heat transfer equipment and therefore the aforesaid softwares form part of its profits making apparatus and thus it is liable to be considered as capital expenditure - assessee's business is of manufacturing of boilers and other heat transfer equipment and the aforesaid softwares merely facilitate assessee's trading operations and/or enable conduct of its business more efficiently and the same are not in the nature of the profit-making apparatus of the assessee company - the CIT(A) made no mistake in treating the expenditure incurred on acquisition of routine standard software as a revenue expenditure – Decided against revenue. Claim for depreciation @ 100% in respect of the items of plant and machinery installed in Plant No.11 of the company – Held that:- Having regard to the entry 3(xiii)(r) read with 3(xiii)(e) of the Depreciation Table annexed to the Rules, plant & machinery used for the manufacture of air/gas/fluid heating systems is eligible for depreciation @ 100% - the claim of the assessee has been rightly allowed by the CIT(A) - with regard to assessee's claim for allowance of depreciation @ 100% in respect of plant & machinery used in the manufacture of heat pumps is concerned, the same has been appropriately denied by the lower authorities - CIT(A) has rightly pointed out that machinery & plant used in the manufacture of heat pumps is not eligible for depreciation @ 100% as it does not find a place in any of the items in the Depreciation Table which is entitled for depreciation @ 100% - thus, the order of the CIT(A) is upheld – Decided against assessee. Deduction u/s 80HHC – Inclusion of export turnover – Exclusion of 90% of items from profits – Held that:- The stand of the assessee is quite reasonable and justified - The definition of expression "total turnover" in section 80HHC of the Act does not any prescription regarding the element of export turnover comprised in it. The profits eligible for deduction u/s 80HHC are computed as a proportion of the ratio of export turnover divided by the total turnover of the business - Therefore, if 'export turnover' forming part of numerator is calculated as per the definition contained in section 80HHC of the Act then it would be appropriate that a similar figure is taken as an element of the total turnover of the business which is the denominator - Thus, on this aspect assessee succeeds and the AO is directed to re- compute the eligible deduction u/s 80HHC – the matter is remitted back to the AO to allow the claim of assessee – Decided in favour of assessee. Disallowance of commission to Thermax Culligan Water Technologies Ltd. Deleted – Held that:- The assessee have transferred its ongoing business of water treatment product division vide a business transfer agreement dated 29.03.1997 - Clause (3) of agreement, clearly provides that ongoing business has been transferred consisting of assets, products goodwill, etc. as described in the Schedule annexed thereto to excluding any liabilities relating thereto - Clause (3) also suggests that pending customer orders and any other information/material relevant for the conduct of the business also stood transferred to the transferee company - the CIT(A) has referred to a remand report submitted before her by the AO in terms of which there is no dispute on such factual aspects – thus, the order of the CIT(A) is upheld – Decided against revenue.

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• 2014 (12) TMI 679
  Validity of revision u/s 263 – Invocation of section by Commissioner – Held that:- The AO has made an enquiry regarding the claim of depreciation on tangible asset and after considering the relevant agreement under which the assessee had acquired the right for revival of dormant subscribers of RCOM Ltd. - it is not a case of complete lack of enquiry on the part of the AO on the issue of allowing depreciation on intangible asset being business or commercial rights acquired under the agreement for revival of dormant subscribers of RCOM - once the AO has conducted the enquiry and after examination of relevant record as well as contention of the assessee has given a finding then the provisions of section 263 can be invoked by the Commissioner only if the view taken by the AO is not permissible under the law - when the matter was restored back to the file of AO for a fresh consideration after giving reasonable opportunity of hearing to the assessee then it is apparent that the Commissioner has not arrived to a concluding finding that the view taken by the AO is not permissible under the law. The issue of tangible asset being business or commercial right as per section 32(1)(ii) of the Act is a debatable issue - any business or commercial right which is obtained for carry on business with effectiveness is likely to fall or comes within the sweep meaning of tangible asset –in AREVA T & D INDIA LTD. Versus THE DEPUTY COMMISSIONER OF INCOME-TAX [ 2012 (4) TMI 79 - DELHI HIGH COURT] it has been held that the term business or commercial right of similar nature has been additionally used under the category of intangible asset referred to section 32(1)(ii) clearly demonstrates that the legislature did not intend to provide for depreciation only in respect of specified intangible asset but also to other categories of intangible assets which were neither feasible nor possible to exhaustively enumerate - the expression any business or commercial rights cannot be restricted to only the six categories of the assets as mentioned in section 32(1)(ii) - it cannot be said that the claim of the assessee and view of the AO is absolutely contrary to law but the issue of allowability of depreciation on intangible asset being business or commercial rights is a debatable issue - once the AO has taken a possible view then the Commissioner is not permitted to invoke the provisions of section 263 merely because he did not agree with the view taken by the AO. Share application money and unsecured loan – Held that:- The AO called for financial details of these companies and also examine the parties in order to satisfy himself about the genuineness of the transaction - on the basis of the record available before him, the Assessing Officer accepted the claim of the assessee – the Commissioner has not found any fault with the details and records filed by the assessee in support of the claim but has cited the reasons that the Assessing Officer has not conducted the proper enquiry - the assessee has also filed the bank statements of these companies showing the transaction of payment of share premium as well as loans to the assessee - the Commissioner has travelled beyond the jurisdiction as prescribed u/s 263 and the revision order is not sustainable and is set aside – Decided in favour of assessee.

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• 2014 (12) TMI 678
  Taxability of sale of shares and receipt of sum of Rs. 1.20 crores, after the death of her father - settlement of family dispute - nature of enhanced compensation, whether part of sale consideration of shares or otherwise - whether the amount of compensation of Rs. 1.20 crores is to be assessed under the head “income from other sources” or capital gain or partly as capital gain and or any other head of income - Shares were transferred in the year 2002 - family dispute was settled in the year 2004 - taxable in the AY 2003-04 or 2005-06 - Indo–French DTAA - Held that:- It has been specifically mentioned that out of sum of Rs. 1.20 crores, only sum of Rs. 33,38,135, pertains to settlement towards transaction of shares in respect of which Police complaint against Ms. Rashmi Agarwal, was filed by the assessee - The total sale consideration for sale of shares has been said to be for Rs. 93,70,135, out of which sum of Rs. 60,32,000, admittedly has been received by the assessee on 14th May 2002 i.e., in the A.Y. 2003–04 - no dispute other than the dispute relating to shares and land was involved - for the purpose of taxability/assessability of sum of Rs. 1.20 crores, the amount of Rs. 33,38,135, and Rs. 15 lakhs has to be segregated, because, the sum of Rs. 33,38,135, pertains to transaction of shares which is to be assessed and taxed under the head capital gains, which is not taxable by virtue of Article–14(6). The balance sum of Rs. 71,61,865, i.e. can neither be taxed as capital gain nor as income from other sources for the reason that the lump sum amount which has been agreed under the terms of settlement is basically a kind of compensation on account of personal damage done by Ms. Rashmi Agarwal, on the assessee for committing fraud, misappropriation of assets and breach of trust - it is not a case here, where the compensation has been paid on some kind of a breach of any agreement in the course of business or any transaction or any breach of contract between the two parties - Neither it is in the form of any interest on some principal amount, because nowhere it has been mentioned that M/s. Rashmi Agarwal, will pay any interest on the delayed payment of shares sold by her in the year 2002 - Thus, it cannot be taxed as income from other sources u/s 56 - Such a compensation is mainly towards damage for breach of trust or fraud which and has no co–relation with any such business transactions and, therefore, the compensation amount received by the assessee cannot be taxed under any heads of income. All the receipts would not necessarily be income or deemed to be income for the purpose of income tax, because it will depend upon the nature of receipt and the true scope and effect of the relevant taxing provisions - the payment is towards compensation on account of personal injury caused by fraud and breach of personal trust - The amount has been paid to withdraw the criminal complaint and suit - The nature and character of such kind of receipt cannot be brought under charging section and hence cannot be taxed under any other provision - out of sum of Rs. 1.20 crores, sum of Rs. 33,38,135, is assessable under the head “capital gain” which cannot be taxed in case of the assessee due to benefit under Article–14(6) of Indo–French DTAA, Secondly, sum of Rs. 15 lakhs towards sale of Alibaugh land has already been directed by the CIT(A) to be taxed as short term capital gain; and lastly, the sum of Rs Rs. 71,61,865, cannot be taxed under the charging provision of the Act, as the same is compensation in the form of capital receipt – Decided against revenue. Liability to pay advance tax for deletion of interest charged u/s 234B – Held that:- Following the decsoin in DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION) Versus NGC NETWORK ASIA LLC [2009 (1) TMI 174 - BOMBAY HIGH COURT] - when a duty is cast on the payer to pay the tax at source, on failure, no interest can be imposed on the payee-assessee – Decided against revenue.

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• 2014 (12) TMI 677
  Lease rentals claimed by the assessee disallowed – operating lease or financial lease - Held that:- There was a business arrangement between the assessee and M/s BD - the assessee agreed to purchase prescribed quantity of DMT from M/s BD - the assessee has sought assistance from M/s BD for expanding its capacity - M/s BD agreed to lease out the machinery to the assesse - the machinery was identified by the assessee and M/s BD purchased the same - M/s BD agreed to purchase the machinery and lease it out to the assessee only to provide financial assistance to the assessee to expand its production capacity, so that M/s BD would also be benefited from sale of DMT to the assessee - the intention of M/s BD was to provide financial assistance to the assessee and not leasing out of the assets - the AO has denied the benefit of depreciation also on the ground that the assessee is not the owner of the asset as per the lease agreement - There is a fallacy in the said decision - Once the AO has held that this was a case of finance transaction by ignoring the lease agreement, he should not refer to the very same lease agreement to decide about the ownership – thus, the assessee should be allowed depreciation benefit – thus, the order of the CIT(A) is set aside and the disallowance of lease rentals is upheld and the AO is directed to allow the depreciation - Decided in favour of assessee. Computation of book profits u/s 115JB – Held that:- The view of the CIT(A) that the unabsorbed depreciation should be taken as NIL does not appear to be correct view, since the unabsorbed depreciation as well as unabsorbed business loss shall be described as negative figures only - as per the provisions of sec. 115JB, lower of the both is required to be deducted from the book profit – thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO for examination of claim of assessee - Decided in favour of assessee. Interest pertaining to earlier years disallowed – Held that:- The assessee claimed interest on SBI loans relating to FY 2001-02 and 2002-03 as deduction –assessee rightly contended that if the loan account is categorised as “Non-Performing Asset”, nothing prevented the assessee to make provision for payment of interest - Though the assessee has not paid the interest amount either by way of cash or cheque, yet the fact remains that the bank has recovered the interest by enhancing the Cash credit limit - There should not be any dispute that the enhancement of Cash Credit limit places funds at the disposal of the assessee - recovery of interest from out of the enhanced limit is nothing but payment of interest by the assessee - the provisions of sec. 43B do not provide anything about the source from which the payment should be made - the claim of the assessee is admissible u/s 43B – thus, the order of the CIT(A) is set aside – Decided in favour of assessee. Depreciation on leased premises disallowed - Held that:- The assessee has not established that it was a case of letting out for a temporary period due to adverse situation prevailing in the business, which means that the building has ceased to remain as a business asset- thus, the CIT(A) was justified in confirming the disallowance of depreciation – Decided against assessee. Depreciation claimed on electrical fittings disallowed – Held that:- Under the Depreciation Schedule “electrical fittings” is clubbed along with “Furniture & fixures - the expression “Electrical fittings” should mean only those items which can be considered as “Fixtures” of general nature - the heavy electrical items, which are attached to plant and machinery should be considered as part of Plant and Machinery and it cannot be classified as fixtures of general nature – in Madhu Industries Ltd V/s ITO [2010 (7) TMI 953 - ITAT AHMEDABAD] it has been held that the electrical installation attached to plant and machinery should be considered as plant and machinery only – thus, the electrical fittings in the instant case should be considered as plant and machinery and the depreciation should be allowed at the rate of 25% to plant and machinery. Disallowance made u/s 40A(2)(b) – Held that:- The AO has compared the rates of M/s Arya Industries with that of M/s Excel Tubes and Cones. The AO has tabulated the said comparison in a Tabular form - there is a variation in the price - the AO has noted down the description of the product, quality, size and quantity - the AO has adopted the average rate of 12% for making the disallowance, with the observation that the variation ranges from 10 to 15% - on three occasions, the purchase rate of products purchased from M/s Arya Industries was lower than the rate of M/s Excel Tubes and Cones - the purchase rate was dependent upon various factors - the disallowance of 12% made out of purchases made from M/s Arya Industries is on higher side – thus, the AO is directed to compute the disallowance at the rate of 6% of the aggregate purchase value of purchases made from M/s Arya Industries – the order of the CIT(A) is modified – Decided partly in favour of assessee.

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• 2014 (12) TMI 676
  Application for condonation of delay of 1163 days – Asseessee contended that the delay was because of the massive change in the taxation department of assessee Company - Held that:- In Vedabai alias Vaijayanatabai Baburao Patil v. Shantaram Baburao Patil (supra), the Hon'ble [2001 (7) TMI 117 - SUPREME Court ] it has been held that in exercising discretion u/s 5 of the Limitation Act the courts should adopt a pragmatic approach - no hard and fast rule can be laid down in this regard - The court has to exercise the discretion on the facts of each case keeping in mind that in construing the expression "sufficient cause", the principle of advancing substantial justice is of prime importance - the appeal has been filed by delay of 1163 days and as per affidavit he joined post of Manager-Taxation on 29.02.2009 and while culling out the details/information in connection with filing of appeal against the order of the CIT(A) levying penalty in respect of proceedings u/s 147 for AY 2002- 03 - he found four sets of draft appeal documents for AY 2002-03 - condonation application has been submitted by his predecessors i.e. Mr. Suresh Chawla and Mr. Rohit Bhatla who were working as AVP Taxation and Manager Taxation respectively and left the assessee company in October 2007 and January 2007 respectively but the appeal could not be filed on time, therefore, delay was caused. There is an extraordinary delay of 1163 days in filing this appeal for which assessee has to show "sufficient cause" but the cause shown by the assessee may be considered a "sufficient cause" for the intervening period when old officers left or parted with the company and till new Manager Taxation Mr. Hemant Gupta joined, meaning thereby from October 2007 to 29.2.2008, but there was no "sufficient cause" which could justify or properly explain the delay which occurred from last date of filing the appeal as per statutory provisions of the Act to departure of Shri Suresh Chawla – AVP – Taxation i.e. from 17.6.2006 to October 2007 and from joining of Mr. Hemant K. Gupta – Manager Taxation to the date of filing this appeal i.e. from 29.2.2008 to 12.8.2009. From impugned order of the CIT(A) dated 30.3.2006. The date on which Mr. Hemant Kumar Gupta found relevant papers in a file folder is neither mentioned in the application for condonation of delay nor in the affidavit of Mr. Gupta - "sufficient cause" as shown by the assessee is not acceptable and if such kind of extraordinary delay is condoned without any sufficient cause, then the provisions of prescribed limitation period would become otiose and infructuous – thus, the assessee miserably failed in establishing and substantiating "sufficient cause", as required by the statutory provisions of the Act, for the extraordinary delay of 1163 days – delay not condoned – Decided against assessee.

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• 2014 (12) TMI 675
  Undervaluation of closing stock of sugar – Facts on record properly verified or not – Held that:- As decided in assessee’s own case decided in The Commissioner of Income Tax And Another Versus The Dhampur Sugar Mills Ltd [2013 (10) TMI 16 - ALLAHABAD HIGH COURT] wherein it has been held that change in method of accounting adopted from 1991-92 to 1997-98 was more scientific and did not result any evasion of payment of tax - no addition can be made for undervaluation of closing stock - Since the method of accounting has been consistently followed by the assessee, CIT(A) has rightly deleted the addition made on account of undervaluation of closing stock – the order of the CIT(A) is upheld – Decided against revenue. Allowability of expenses u/s 14A r.w. Rule 8D - Facts on record properly verified or not – Whether the assessee has already added back in the computation of income for the relevant assessment year – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been rightly held that the investment was an old investment made in 1993 in the subsidiaries for acquiring their shares and such investment was made out of own funds of the assessee - the entire borrowed funds, on which interest was paid, were used for business purposes and no portion was used for making investment - The amount of interest expenditure cannot be considered for proportional disallowance under rule 8D of the rules - CIT(A) has not made any disallowance on account of other expenditures as per sub-rule (2)(iii) of rule 8D – thus, the order of the CIT(A) is modified and the AO is directed to compute the disallowance at 0.5% of the average value of investment on account of other expenditures – Decided partly in favour of revenue. Disallowance of balance written off deleted – Held that:- CIT(A) rightly held that Rs. 35.63 lakhs were accounted for in earlier years as income and the Revenue has not brought anything on record to dispute these facts - once there is a compliance of provisions of section 36(2) of the Act, the same should be allowed as bad debt on its written off - assessee is entitled for the loss on its written off in the books of account either in the form of bad debt or in the form of business loss – thus, the order of the CIT(A) is upheld – Decided against revenue. Disallowance of trial run expenses deleted – Held that:- As decided in assessee’s own case decided in The Commissioner of Income Tax And Another Versus The Dhampur Sugar Mills Ltd [2013 (10) TMI 16 - ALLAHABAD HIGH COURT] wherein it has been held that pre-operational expenses in trial run were revenue expenses and not capital expenses – thus, the order of the CIT(A) is upheld – Decided against revenue. Disallowance of proportionate interest deleted – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that CIT(A) rightly deleted the disallowance of proportionate interest made by the AO - nothing has been brought on record by the revenue that these advances were given during the impugned AY, the advances on which proportionate disallowance was made are considered to be old advances, on which no disallowance made in earlier years – the order of the CIT(A) is upheld – Decided against revenue.

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• 2014 (12) TMI 674
  Estimation of book profits @ 8% on sale of plots and land – Facts properly appreciated or not – Held that:- During the course of survey, the assessee himself has disclosed in a statement that he has received ‘on-money’ on the sale of plots which was not recorded in the books - where the accounts of assessee are rejected, the AO is duty bound to make a fair estimation of the profit - the AO while estimating the profit has not given any basis for arriving at the net profit @ 8% - the order of the AO is defective, therefore, the matter is remitted back to the AO for fresh adjudication – Decided in favour of assessee. Addition of unaccounted expenditure u/s 69C - Failure to explain source of the expenditure – Held that:- The assessment and enhancement of assessment has been framed on the basis of such statements coupled with material in the form of loose-papers collected during the course of survey - addition is made partly on the basis of the statement recorded during the course of survey proceedings - it is noticed that two statements of same person has been recorded, consisting of 18 questions and 22 questions respectively - there are glaring inconsistencies in two statements - only profit element embedded into the business receipt is to be taxed - additions cannot be made solely on the basis of survey statement - sale-deeds were executed in other years, therefore the authorities below were not justified in taxing the sale consideration in the years under consideration - there is no finding by the authorities below and no inquiry has been made as to when such properties were transferred to the respective buyers in terms of the provisions of Income Tax Act - actions of both the authorities below cannot be justified, however, there was no effective representation by the assessee and relevant information was not placed but the AO did not make further enquiry on the basis of material collected during the course of survey proceedings – thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO for fresh adjudication – Decided in favour of assessee.

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• 2014 (12) TMI 673
  Validity of revision order u/s 263 – Invocation of provisions for higher claim of depreciation on Windmill – Held that:- The CIT was of the opinion that excess depreciation was allowed to the assessee in respect of windmill which was accepted by the assessee during the sec. 263 proceedings as typographical error - on this count, there was no infirmity in the order of the CIT. Electrical works including supply and installation of Electrical items” and “Development and other charges to KSEB part of renewable energy device or not – assessee is entitled to higher rate of depreciation or not - Held that:- In the assessment order, there is no discussion of whatsoever regarding this issue – AO has absolutely closed his eyes and accepted the claim of the assessee as it is - It is incumbent upon the AO to cause necessary enquiry regarding the nature of assets and entitlement of depreciation - the CIT was justified in invoking the provisions of sec. 263 on account of lack of enquiry from the side of the AO. For granting higher rate of depreciation, it is necessary to examine the functional test of electrical equipment - It has to be seen whether it is an integral part of the windmill or not. Such finding of fact is absent in this regard - there is nothing on record to establish that on this touchstone of functional test, the electrical equipment are so designed that they can only be used as integral part of the windmill and it is not meant for any other use - It is also not established that the electrical works are designed in such a manner to facilitate power generation and distribution from windmill. The scientific reason is often discussed as the period of diminution for tangible assets - If the period of diminution or wear-tear is very fast, then higher rate of depreciation is granted - naturally the speed with which wind mills get discarded due to wear and tear, the electrical works do not get wear and tear so fast - on this basis, as well, it cannot be held that electrical works are not at par with the "windmill" as far as the period of diminution is concerned - sometimes to promote a particular activity the statute provides certain incentives in the shape of higher depreciation - the Appendix and the depreciation schedule has categorically worded that "windmills and any specially designed devices which run on wind mills" are qualified for 100 per cent rate of depreciation - if the electrical works are specially designed devices to suit the need of windmills, then only the assessee is entitled for higher rate of depreciation – thus, the matter is to be remitted back to the AO for fresh consideration – Decided partly in favor of assessee.

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• 2014 (12) TMI 672
  Addition of undisclosed income u/s 68 – Gift received from brother – Genuineness of transaction – Held that:- Huge amount of Rs. 1,66,01,834/- was received from the assessee’s brother, Shri Sudeep Thomas through banking channel – assessee claimed that since Shri Sudeep Thomas has given the amount to the assessee who is his brother for the purpose of purchase of residential property - This amount received from the bank account of Shri Sudeep Thomas with ADCB Bank, Dubai was transferred to the bank account of the assessee in India - There is sufficient balance in the bank account of Shri Sudeep Thomas and being so, the capacity of Shri Sudeep Thomas to lend that much amount to the assessee cannot be doubted as he was employed as Consultant Engineer in an oil field in Dubai and he was also Managing Director of his own company - the real nature of the transaction should be ascertained by the AO and the assessee is required not only to prove the identity of the credit but is also required to prove the capacity of the creditor to lend the money and the genuineness of the transaction - assessee has been able to prove the identity of the creditor by furnishing the confirmation letter. The genuineness of the transaction is not proved - The receipt of money through banking channel is not sufficient to prove the genuineness of the credit - huge amount was deposited into the bank account of Shri Sudeep Thomas before transferring the same to the assessee’s bank account - assessee was not able to produce any bank account details of Shri Sudeep Thomas from where he has received such amount - as per sec. 68, the assessee is required to explain the capacity of the lender to advance money to the assessee to the satisfaction of the AO - the addition made u/s. 68 of the Act is warranted - The onus is on the part of the assessee to prove the creditworthiness of assessee’s brother, genuineness of the transaction, and identity of the creditor. Merely because confirmation letter from the creditor was furnished that funds were transferred to the assessee’s bank account, it will not prove the genuineness of the transactions as decided in CIT vs. P. Mohanakala 2007 (5) TMI 192 - SUPREME Court] - the order of the CIT(A) is upheld – Decided against assessee.

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• 2014 (12) TMI 671
  Validity of issue of notice u/s 153C – Assessment made on the merging companies – Company has already become non-existent on account of its merger with other company – Whether the issue of notice u/s 153C in the name of M/s P.D. Associates Pvt. Ltd. is a valid notice - Held that:- The erstwhile director of M/s P.D. Associates Pvt. Ltd. promptly informed the AO about the amalgamation of PDA with ARI, enclosed the copy of amalgamation order and also requested for issue of notice in the name of the successor company - the AO did not issue any notice in the name of M/s A.R. Infracon Pvt. Ltd. and completed the assessment in the name of the assessee, of course, after mentioning the factum of merger with A.R. Infracon Pvt. Ltd. - Following the decision in SPICE ENTERTAINMENT LTD. Versus CIT [2011 (8) TMI 544 - DELHI HIGH COURT] - notice u/s 143(2) was sent to the company which was not in existence on the date of issue of the notice - The amalgamated company appeared and brought this fact to the knowledge of the AO – the AO did not substitute the name of the amalgamating company - AO issued notice us/ 153C in the name of M/s P.D. Associates Pvt. Ltd. which was not in existence on that day after its amalgamation with M/s A.R. Infracon Pvt. Ltd. - no contrary decision is brought to our knowledge - the issue of notice u/s 153C in the name of M/s P.D. Associates Pvt. Ltd. which was not in existence at the relevant time was void ab-initio and nullity - Since the notice issued u/s 153C is held to be void ab-initio and nullity, the assessment order completed in pursuance to such notice cannot be sustained – Decided in favour of assessee.

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• 2014 (12) TMI 670
  Admission of additional evidences by CIT(A) - Penalty order barred by limitation or not –Held that:- As per provisions of Section 250(4) and 250(5) of the Income Tax Act the CIT(A) may dispose of the appeal after making such enquiry as he thinks fit or may ask the AO to carry out certain further enquiry - The CIT(A) can also admit such other additional ground which is not specified in the ground of the appeal if he is satisfied that the omission of the ground from the form of appeal was not willful or unreasonable - AO has made the order without giving sufficient opportunity to the assessee to adduce the evidence relevant to any ground in appeal - Before admission of additional evidence the CIT(A) has to give reasonable opportunity to the AO either to examine the additional evidence or to produce any evidence or document as any witness in rebuttal to the additional evidence produce by the assessee. In the case of CIT vs. Kanpur Coal Syndicate [1964 (4) TMI 18 - SUPREME Court] it has been held that there is no reason to justify the curtailment of power of CIT(A) to entertain the additional grounds of appeal raised by assessee in seeking modification of assessment order passed by AO - CIT(A) has not given proper opportunity to the AO, thus, the order of the CIT(A) is reversed and the matter is remitted back to the CIT(A) for adjudication – Decided in favour of assessee.

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• 2014 (12) TMI 669
  Validity of revision order passed u/s 263 - CIT noted that assessee sold land and against that deduction u/s 54F claimed – Held that:- CIT observed that the assessee had failed to furnish any documentary evidence regarding construction on the said plot, neither any approval for construction of plot from the Municipal Committee was available on record nor any map was available on record - show cause notice issued u/s 263 reflects that the enquiry was made in respect of the construction on the new plot of land purchased by the assessee – CIT while passing the order u/s 263 has directed the AO to make fresh assessment on the issue of deduction u/s 54F and the investment in land – revenue has failed to produce any other show cause notice issued by the CIT vis-à-vis the investment made in the purchase of land - as the CIT has failed to issue any show cause notice to the assessee on the issue of purchase of land which was declared by the assessee at Rs. 11,62,360/-, however before the bank, value of which was shown at Rs. 34,00,000/- there was no merit in the directions of the CIT in respect of the investment in purchase of land in the absence of any show cause notice being issued to the assessee u/s 263 of the Act and the same are reversed. Enquiries made by the AO vis-à-vis the cost of construction of the plot of land - Claim of the assessee u/s 54 – Held that:- The assessment was made after the case was selected for scrutiny through CASS on the basis of AIR information – AO has given a finding that the assessee had filed the reply and has also furnished the information as called for during the assessment proceedings - merely because the copy of sanctioned plans was not available on record, does not imply that the plans were not sanctioned - assessee in all fairness admitted that the plans were produced before the AO – following the decision in Malabar Industries Co. Ltd. v. CIT [2000 (2) TMI 10 - SUPREME Court] – the AO had already taken a view on the issue and there was no merit in the order of CIT in taking a different view on the issue –thus, there was no merit in exercise of power u/s 263 by the CIT and the same is cancelled – Decided in favour of assessee.

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• Customs

• 2014 (12) TMI 693
  Waiver of pre deposit - Evasion of duty - import of machinery for setting up of a plant to convert the skimmed milk to fermented milk under exemption notification - applicant have misdeclared the description of two consignments with an intention to avail undue benefit of concessional rate of customs duty under Notification 6/2006-CE and that the said importer had imported machinery which worked on the principles of heat exchange and were used for the purpose of sterilization, pasteurisation, incubation and dilution etc., which are excluded from the heading 8434. - Held that:- Plant has number of tanks and number of other machine some of which are interconnected. The plant also has a machine wherein they manufacture plastic bottles from granules and these plastic bottles are stored in plastic bottle storage tank and thereafter used along with filling and sealing machine and the milk is filled in the such bottles and packed. We have also gone through the printout of the correct SPE sheets as also the manipulated SPE sheets which were presented to the customs during clearance of the two consignments. We find that supplier has indicated certain HS code for each of the items. The manipulated SPE sheets had the same specification details but did not have these codes but the HSN Code was 8434 2000 in respect of all the items under the two bills of entry. We also note that the managing director or the Company has admitted the manipulation in his statement under Section 108 of the Customs Act. Shri Anil Choudhary also admitted the manipulation even though both of them have tried to put the blame on each other. We also note that Shri Anil Choudhary later on in email addressed to the managing director abroad has spoken about the manipulation being done and perhaps later on was removed from the service. Similarly, the invoice was manipulated. Prima facie we are of the view that the applicants have not made out a case for waiver of duty interest and penalties. During the hearing, advocate for the applicant has indicated that the unit is running into loss, though no documents in support of the same were produced. However, keeping in view the facts and circumstances of the case, we direct the appellant to deposit 50% of the duty demanded in cash within a period of six weeks. Further, the Bank guarantee for the 50% of the duty already executed by the applicant will be kept alive till the final disposal of the appeals. On payment of the said amount, there will be stay for recovery of Redemption fine, penalty and interest. While passing the said order, we keep in mind the Hon'ble Supreme Court decision in the case of Dunlop India. - stay granted partly.

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• 2014 (12) TMI 692
  Denial of export benefits - Over Valuation of goods - Seizure of documents - Inflation of the export value to the extent of 12.5% on account of commission and had availed undue export incentives on the inflated value. - Held that:- We really fail to understand the objection of the Revenue. - On one hand, it is being contended that no commission was payable as the entire contract between the respondents and their foreign buyers was a direct contract and no Commission Agent was involved. As per the Respondents, the said commissions are not exactly in the nature of the commission interests, the same are in the nature of the reward to the foreign persons, which have held the appellant in various fields and which stands paid to them through their own pocket. This fact reveal that the appellant have received the entire consideration from the one buyer and the export benefits filed on the entire consideration so received without being effected by any payment made by them to the foreign agent. It is clear from the Circular that any commission up to the limit 12.5% is not required to be deducted from FOB value for grant of export benefits. The circular 64/2003-Cus dated 21.07.2003 is fully applicable to the facts of the present case - No merit in Revenue appeal - Decided against Revenue.

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• 2014 (12) TMI 691
  DEPB conversion - conversion of free shipping bill into a DEPB Bill - Whether Free Shipping Bill can be converted into DEPB Shipping Bill after export by virtue of proviso to Section 149 of Customs Act, 1962 - Held that:- Section 149 of the said Act deals with discretion of the officer concerned to make such kind of amendment on the basis of the facts and circumstances mentioned therein. Since the claim of the first respondent is to convert Free Shipping Bill into DEPB Shipping Bill and that too on the basis of public notice, wherein certain benefits have been announced, the claim of the first respondent cannot be considered beyond scope of law. Such kind of conversion is permissible on the basis of submission of relevant documents for verification. Therefore, viewing from any angle, the order passed by the CESTAT cannot be considered as incorrect and the substantial questions of law settled in the present Civil Miscellaneous Appeal are not having substance at all and altogether, this Civil Miscellaneous Appeal deserves to be dismissed. - Decided against Revenue.

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• 2014 (12) TMI 690
  Penalty u/s 114 - Demand of differential duty - Mandatory penalty - whether the Appellate Tribunal is having power to reduce penalty from 25% to the tune of Rs. 30,000 - Held that:- As per the dictum given by the Hon’ble Apex Court [2008 (9) TMI 52 - SUPREME COURT], imposition of penalty is mandatory. Since the imposition of penalty is mandatory as prescribed in the Act, question of reduction does not arise. Under the said circumstances the reduction given by the Appellate Tribunal is not legally sustainable and further the Appellate Tribunal has not given any proper reason for reducing the penalty and it has reduced the penalty only on the basis of undertaking alleged to have been given by the respondent and therefore the order passed by the Appellate Tribunal is liable to be set aside and the matter is liable to be remitted to the file of the Appellate Tribunal for considering the legal point involved in the present Civil Miscellaneous Appeal afresh and since the matter is liable to be remitted to the file of the Appellate Tribunal, the substantial questions of law formulated in the present Civil Miscellaneous Appeal need not be decided now. - Decided in favour of Revenue.

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• 2014 (12) TMI 689
  Demand of differential duty on subsequent clearance of goods where the provisional assessment in earlier case is pending for finalization - Classification of goods - Classification of coal - Bituminous coal or Steam coal - wrong declaration filed - Held that:- respondents shall not demand duty without final adjudication if the past consignments have been cleared on provisional clearances and shall not raise demand without adjudication when the clearances have been made, otherwise than provisional basis and shall not detain the future consignments merely on the basis of past demands which have yet not been crystalised in law. It is clarified that it would be open for the Department to impose suitable conditions as may be permissible under the law, if the petitioner requests for provisional release. - Petition disposed of.

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• 2014 (12) TMI 688
  Provisional assessment - Adjustment of excess tax - excess payment of duty found in one set of Bills of Entry - High Court admitted appeal against the decision of Tribunal in 2011 (6) TMI 518 - CESTAT, MUMBAI] on following substantial question of law:- Whether the Customs, Excise and Service Tax Appellate Tribunal is right in law in directing the adjudicating authority to ascertain whether the respondents are required to pay any duty after adjusting the excess duty paid and thereafter decide the issue of unjust enrichment? Whether the Customs, Excise and Service Tax Appellate Tribunal is right in law in directing the assessing officer at the stage of final assessment to adjust excess payment in one Bill of Entry (i.e. one Provisional assessment) to short payment in another Bill of Entry (another Provisional Assessment)

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• 2014 (12) TMI 687
  Revocation of the CHA Licence and forfeiture of the security deposit - Whether on the facts and in the circumstances of the case, the findings of the CESTAT that proceedings under CHALR, 2004 cannot be initiated in respect of High Seas Sales Agreement executed prior to imports, and charge of diversion of goods is not sustainable is based on no evidence or partly relevant or partly irrelevant evidence and is otherwise perverse and arbitrary? - At this stage the petitioner cannot be denied the benefit of the impugned order [2012 (12) TMI 589 - CESTAT MUMBAI] passed by CESTAT. Therefore, we do not grant the interim stay as prayed for. However, since our attention is invited to the fact that against the order of adjudication dated 14 December, 2007 passed under the Customs Act an appeal is pending before CESTAT, we make it clear that CESTAT will be at liberty to hear and decide the appeal against the said order dated 14 December, 2007 without in any manner being influenced by the findings and observations made in the impugned order dated 9 October, 2012 - Matter remanded back - Decided in favour of Revenue for remand purposes.

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• Service Tax

• 2014 (12) TMI 712
  Nature of activity - Works contract or not - Availability of composition scheme - Availability of Cenvat Credit while paying service tax on works contract under composition scheme or abatement - whether use of materials such as nuts, bolts etc. are clearly incidental in nature while provided erection and installation services - Held that:- In this case the goods involved as part of Service Contract are subjected to payment of Sales Tax/VAT. In respect of both contracts the appellant have submitted documents evidencing payment of works contract tax under the West Bengal Value Added Tax Act, 2003. Thus, appellants' case is supported by the Board Circular. Therefore we are of the view that the Service contract entered into by the appellants are covered under Works contract category. Works Contract Service came into force vide Section 65(105)(zzzza) w.e.f. 01.06.2007. The appellants have rightly relied on the Board circular no. 98/1/08-ST dated 04.01.2008 to contend that both the contracts in question came into force after 1.06.2007 and therefore they are eligible to work under the WCS service. Cenvat credit on input services - Held that:- Appellant has availed credit on input services only - the statement of ld. AR in the written submissions that the Cenvat Credit has been availed on materials is not a correct statement. The Composition Scheme as mentioned above only requires that the provider of service must not have taken Cenvat Credit on inputs. Therefore, there is no reason to deny the option of Composition Scheme to the appellant. Extended period of limitation - Held that:- it has been held in various judicial pronouncements that wrong classification cannot lead to the conclusion of suppression of facts etc. when no mens rea established. The Adjudicating Authority has also wrongly come to the conclusion that availment of input service credit will debar the appellant form the benefit of Notification 1/06. In the present case, this benefit of Notification has not been availed, rather option of Composition Scheme has been availed which does not bar the availment of Cenvat credit on input service.. Demand set aside - Decided in favor of assexxee.

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• 2014 (12) TMI 711
  Condonation of delay - Delay of 107 days - reason for the delay is that the staff of the Chartered Accountant, suddenly met with an accident, resulting into severe injury - Held that:- Details of the staff has not been disclosed. The ld. Consultant for the Applicant, even today, could not be spelt out the name of the said staff, who met an accident. In these circumstances, we find deficiency in the bonafideness of the Applicant about the facts narrated in the Miscellaneous Application stating reasons for delay. The Hon’ble Supreme Court in the case of Living Media India Ltd. Vs. Office of the Chief Post Master General : [2012 (4) TMI 341 - SUPREME COURT OF INDIA], has specifically laid down that while considering the application of condonation for delay, bonafideness of the applicant needs to be examined. In the present case, we are of the view that the Applicant could not show their bonafideness. Accordingly, both the Miscellaneous Applications for condonation of delay are dismissed - Condonation denied.

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• 2014 (12) TMI 710
  Denial of refund claim - Whether the documents/invoices which were produced by the appellants before the Commissioner (Appeals) as well as adjudicating authority have proper import and export code number in terms of Notification No.17/2009-ST dated 7.7.2009 - Held that:- Issue for proper reconciliation could be looked into by the adjudicating authority for proper appreciation. Onus is on the appellant to produce necessary documents before the adjudicating authority alongwith invoices indicating import & export code number so that activities of export could be correlated with the documents and notifications which is mandatory requirement. - matter remanded back - Decided in favour of assessee.

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• 2014 (12) TMI 709
  Penalty u/s 76 therefore, we are not passing any order on that. The only prayer made before us by the counsel for the appellant is that they are seeking waiver of penalties under Section 76 & 78 of the Finance Act, 1994. As the activity undertaken by the appellant was under dispute during the impugned period, whether it attracts service tax or not, therefore as held by the Hon'ble Gujarat High Court [2012 (4) TMI 326 - GUJARAT HIGH COURT], we set aside the imposition of penalty under Section 76 and 78 of the Finance Act, 1994.

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• 2014 (12) TMI 708
  Waiver of pre-deposit of service tax - business support service - inter unit services between the two units namely M/s. Godrej Industries and M/s. Godrej Consumer Products Ltd. - reimbursement of expenses - Held that:- In the case of J.M. Financial Services Pvt. Ltd. (2013 (7) TMI 151 - CESTAT MUMBAI) and Paramount Communication Ltd. (2013 (3) TMI 134 - CESTAT NEW DELHI) on similar set of facts wherein the expenses incurred by one unit have been recovered from the other unit on sharing basis, it was held that it was not in the nature of business support service. Therefore, following the precedent decision of this Tribunal and in these circumstances, the applicants have made out a strong case for complete waiver of pre-deposit of entire amount of service tax, interest and penalty and the same shall stand waived and recovery thereof stayed during the pendency of the appeal. - Stay granted.

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• 2014 (12) TMI 707
  Penalty u/s 76 - Renting of Immovable Property Services - Whether penalty under Section 76 is leviable in the case of the appellant, who is owner of immovable property liable to Service Tax under the head 'Renting of Immovable Property Services' for the period April, 2009 to March, 2010 - Held that:- penalty was imposed vide Order-in-Original dated 16.11.2011 and confirmed by impugned Order-in-Appeal dated 27.2.2012. But, by introduction of sub-section (2) of Section 80 vide Finance Act, 2012, granting extension of time, the penalty imposed is bad and not sustainable. Thus, the impugned order is set aside by setting aside the penalty imposed under Section 76 - Decided in favour of assessee.

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• 2014 (12) TMI 706
  Denial of refund claim - Franchise service - interest paid by the appellant does not tally with the calculation as per the appellate order - Held that:- Amounts deposited by the appellant whether by way of tax or interest, it assumed the character of deposit when it was held in its favour that no Service Tax is payable and or exigible. Thus, I hold that the adjudicating authority has erred in rejecting the refund claim of Rs. 97,520/- on the ground of mismatch. Thus, the appeal is allowed, the impugned order is set aside and the adjudicating authority is directed to issue the refund - Decided in favour of assessee.

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• 2014 (12) TMI 705
  Waiver of predeposit - Construction of Complex Service - Held that:- Appellant carried out construction of residential quarters to the government through CPWD. On a perusal of the work order dt. 29.11.2006 issued by the CPWD wherein the appellant was awarded construction of 134 numbers of Type II residential accommodation for BSF Campus, Thekkalore village Avinash Taluk, Coimbatore District, Tamil Nadu which includes internal water supply, sanitary and drainage etc. Similar contracts have also been awarded for construction of hostel complex, Lecturers' Quarters for Central University of Tamil Nadu, Tiruvarur etc. Construction of residential complex is for BSF, Lecturers' quarters etc. is meant for their employees. The Award of Contracts issued by CPWD is on behalf of President of India and also the guarantee was executed by the appellant is also on behalf of the President of India. Therefore, in view of the decisions of this very Bench, (2013 (8) TMI 262 - CESTAT CHENNAI) and other decisions of the Tribunal, we are of the view that the appellant has made out a prima facie case for waiver of entire amount of tax along with interest and penalty. Accordingly, the predeposit of service tax along with interest and penalty is waived and recovery thereof is stayed till disposal of the appeal - Stay granted.

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• 2014 (12) TMI 704
  Waiver of pre deposit - Rent-a-Cab-Service - Held that:- The hon'ble Punjab & Haryana High Court as well as the Madras High Court and this tribunal in a series of decisions [2013 (6) TMI 607 - CESTAT MUMBAI], [2010 (4) TMI 283 - PUNJAB & HARYANA HIGH COURT] and [2001 (4) TMI 7 - HIGH COURT MADRAS] have been consistently following the classification of 'renting or hiring of bus/cabs services' under the category of 'rent-a-cab services'. We do not find any changes made in the law necessitating a new classification. The new service of 'supply of tangible goods for use' has not been carved out of 'rent-a-cab service'. In this factual and legal position, the impugned demand classifying the service under the category of 'supply of tangible goods for use service' is not prima facie sustainable in law. Thus, the appellant has made out a case for grant of stay. Accordingly, we grant unconditional waiver from pre-deposit of the dues adjudged against the appellant and stay recovery thereof during the pendency of the appeal. - Stay granted.

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• 2014 (12) TMI 703
  Refund claim - Notification No. 17/2007-ST - Violation of principle of natural justice - Opportunity of hearing not given - Held that:- personal hearing was held on 14.03.2012 and was attended by Shri Deepak Aggarwal Chartered Accountant on behalf of the appellants. Thus, it is incorrect to claim that no personal hearing was granted. However, there is substance in the appellants assertion that had the Commissioner (Appeals) asked them the reason for claiming refund of service tax on services relating to MV XN DA they would have been able to satisfy him about the sustainability of their claim. In these circumstances, we deem it fit that the appellants should get another opportunity to present their claim before Commissioner (Appeals). Accordingly, we set aside the impugned Order-in-Appeal to the extent it upheld the rejection of refund of Rs. 8,38,074/- and remand the matter to the Commissioner (Appeals) for de novo adjudication on merit - Decided partly in favour of assessee.

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• 2014 (12) TMI 702
  Construction service - Notification No. 45/2010-ST dated 20.7.2010 - Held that:- Appellant rendered service to facilitate erection of electricity of transmission tower. It is seen from the bills annexed in the Memorandum of Appeal that the appellant rendered service of setting concreting, earthing erection of towers and stringing of conductor earth wires. - As per the Notification 45/2010-ST dated 20.7.2010 the service tax was not required to be paid in respect of taxable service relating to transmission and distribution of electricity tower during the aforesaid period. We agree with the submission of the learned AR that the amount deposited by the appellant, which has been appropriated in the adjudication order would not be refunded. In any event, there is no dispute that the appellant rendered the service relating to transmission and distribution of the electricity tower during the said period and therefore the demand of tax is not sustainable in terms of the Notification dated 20.7.2010 - Decided in favour of assessee.

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• Central Excise

• 2014 (12) TMI 701
  Denial of rebate claim - Conditions, limitations and procedures, prescribed in Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004, as amended, issued under Central Excise Rules, 2002, for grant of rebate of duty on export of goods, have not been adhered - Evidence – As per stated that the photocopy of original can’t be adduced as a secondary evidence – Assistant Commissioner of Central Excise rejected the claim but on appeal filed by the respondent, Commissioner (Appeals) allowed the rebate claim but Revisional Authority again held in favour of Revenue - held that:- The powers of revision have to be exercised so as to correct a jurisdictional error. In the absence of a conclusion that the findings are vitiated by an error of jurisdiction or the jurisdiction has been exercised with material irregularity resulting in manifest injustice, the revisional authority should not have interfered with the orders under challenge. That is not a power to interfere with factual findings and when they are supported by enough materials. The findings of fact consistent with the materials on record would bind the revisional authority unless they are demonstrated to be perverse or vitiated by any error of law apparent on the face of the record. There is no warrant to interfere with the same unless these tests are satisfied. Order passed by the Revisional authority is unsustainable. It is manifestly illegal and erroneous. It is also vitiated by a non-application of mind to the vital materials, namely, the shipping bills and which contain the endorsement necessary for recording a finding that the goods were indeed exported by the petitioners. The date of the ARE-1 has also been mentioned there with other details. In such circumstances, the view taken by the revisional authority cannot be sustained - Following decision of UM Cables Ltd. Versus Union of India And Others [2013 (5) TMI 459 - BOMBAY HIGH COURT] - Decided in favour of assessee.

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• 2014 (12) TMI 700
  Clandestine removal of goods - estimation of value of clearance - demand based on packing and folding register - non consideration of production capacity and electricity consumption figures - Held that:- Tribunal has given its conclusion on the factual finding based on evidence on record. Such findings cannot be stated to be perverse. When the Tribunal is final fact finding authority, any interference in the factual conclusion of the Tribunal would be permissible only if it is demonstrated that such findings are perverse in sense that the same are not based on evidence on record or that irrelevant evidence is taken into account. Findings and conclusions of the Tribunal were based on evidence on record. Such evidence was not confined to a single statement of the proprietor. It is true that reliance was placed on such a statement which was not impermissible since the statement was never retracted. However, it would be incorrect to suggest that the conclusions of the Tribunal were based on a single factor namely unretracted statement of the proprietor. No substantial questions of law arise in these appeals - Decided against assessee.

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• 2014 (12) TMI 699
  Availment of input service credit paid on commission in respect of trading activities - extended period of limitation - Held that:- the pre-heater valued at Rs. 5.41 crores is the final product, which was manufactured and cleared from the place of removal, ie., from the appellant's factory. The remaining goods valued at Rs. 36.04 crores were not manufactured as final product and cleared from the place of the appellant. In such a case, it would not qualify for the benefit of cenvat credit under Rule 2(l) of the Cenvat Credit Rules, as rightly upheld by the Commissioner (Appeals) and the Tribunal. The service tax paid on sales commission in respect of procuring orders by M/s.Adhunik Corporation cannot be utilised by the appellant for taking credit for the goods not manufactured as a final product and cleared from the appellant's manufacturing unit. On an understanding of the Rule 2(l) of the Cenvat Credit Rules, there is no manner of doubt that input service means goods which is used by the manufacturer directly or indirectly in relation to the manufacturing of final product and clearance of final product from the place of removal. In the present case, the Department has allowed cenvat credit in respect of the value of goods amounting to Rs. 5.41 crores and denied for the balance. We find no error in such determination, which is in consonance with Rule 2(l) of the Cenvat Credit Rules. - there is a clear finding that the appellant had not disclosed the availment of input service credit on commission in respect of trading activities and it came to the knowledge of the Department only on verification of the documents, such as, contract agreements, commission agreements etc. and therefore the plea of limitation was rightly rejected by the Authorities below. - No substantial question of law arises - Decided against assessee.

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• 2014 (12) TMI 698
  Classification of shampoo - whether the product is Medicaments - Classification under sub-heading No.3303.10 or under sub-heading No.3305.00 - Held that:- Name of the product manufactured by the petitioner is Nizral Shampoo. The very name gives an indication that it is used as a substance that can be applied to hair be it for a healthy growth or for maintenance. - The literature and other material that was placed before the adjudicatory authority, i.e., Central Board of Excise ad Customs disclosed that the component by name Selenium Sulfide contained in it is a product, to cure certain skin diseases and its presence in profound quantity made the product nearer to medicine. After recounting the various values, which the product had, and the factum of the dropping the word shampoo, the Supreme Court agreed with the opinion expressed by the Central Board of Excise and Customs, which classified it as medicine. - continued use of the word shampoo to the product would certainly have made the difference. In the instant case, the product is being sold with the name Nizral Shampoo. Another aspect is that the classification of the product is determined on the basis of the process of manufacture and its proclaimed use and utility. The fact as to how the product is used, after it is manufactured, can not at all be taken into account. For instance, in respect of shampoos themselves, there are instances, where people use them for washing vehicles or cleaning floors, because their chemical impact is relatively less. On that account, the product cannot be treated as a washing medium. The circumstances under which the petitioner is said to have obtained licence for manufacturing shampoo, are not immediately before us. It is only when the relevant conditions are verified, that the proper conclusion can be arrived at. We have already mentioned that the purpose, which a particular enactment serves, are different from those under other enactments, though incidentally the same product may be dealt with by both of them. Further, the predominant object under the Act is to ensure that the products are not manufactured without licence. Unless necessary material is placed before us, we do not intend to deal with the contentions in this regard, in detail. - Writ petition dismissed - Decided against assessee.

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• 2014 (12) TMI 697
  Validity of order passed by Tribunal - Non compliance with pre deposit order - Whether Customs Excise and Service Tax Tribunal committed an error in allowing the assessee's appeal on merits when in such appeal the assessee had challenged the decision of the Commissioner dismissing its appeal for non-fulfillment of the predeposit requirement - Held that:- in any appeal, where the decision under challenge relates to any duty demanded instead of goods, which are not under the control of the excise authorities or is respect to any penalty levied, the appellant has the duty to deposit with the adjudicating authority such duty demanded or the penalty levied. Unless such pre-deposit requirement is waived either completely or partially either unconditional or on such condition as may be imposed such requirement would have to be fulfilled. It was, in this background, that the Commissioner, while substantially waiving the pre-deposit requirement, insisted that against a duty demand of Rs. 17.59 lacs (rounded off) with matching penalty, the appellant should either deposit a sum of Rs. 3.50 lacs or offer bank guarantee for such sum. It was because that the appellant did not fulfill this requirement that the appeal came to be dismissed by the Commissioner. Even if the Tribunal was of the opinion that the entire pre-deposit requirement was to be waived in view of a strong case of the assessee or any other such ground, the Tribunal ought and should have passed such an order placing the appellant back before the Commissioner for his consideration. In the present case, the Tribunal, instead of adopting such a route, virtually converted itself into the first appellate authority. The Tribunal is the final fact finding authority. Any further appeal against the decision of the Tribunal before the High Court would be available only on substantial question of law. When the statute provides for two layers of screening at the appellate stage, for questions of law and facts, it would even otherwise be not desirable to by pass the first appellate stage and permit the Tribunal to entertain the appeal as first appellate authority. - Matter remanded back - Decided in favour of Revenue.

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• 2014 (12) TMI 696
  MODVAT credit - benefit of Notification No.217/86-CE and Notification No.67/95-CE - Captive consumption - Marketability of castings - Held that:- as per the agreement between the first respondent and Vehicle Factory of the Defence Ministry, the first respondent was prevented from selling or marketing the castings or passing on any information about the same to any other persons. Hence, the finding of the Original Authority as well as the Tribunal that aluminium castings in question were not marketable is justified. The lower authority has not examined the applicability of the notification but confined to examination of marketability aspect alone. It is an accepted fact that the final product namely, Spring Brake Actuation equipment is cleared without payment of duty under Notification No.239/86 and 64/95. In the manufacture of the above said final product, the aluminium castings are used. These castings are manufactured in the factory premises itself and captively consumed. For such captive consumption, Notification No.217/86 and 67/95 have been availed by the respondent. This is not proper in my view as these two notifications are not applicable when the final product is exempted. Hence, there appears to be an error apparent on the face of the record and the Original Authority is required to consider this issue, which has been raised in the show cause notice. - Matter remanded back - Decided partly in favour of Revenue.

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• 2014 (12) TMI 695
  Maintainability of appeal - Notification 13/98-CE dated 2.6.1998 - Held that:- the duty has to be re-determined without extending the benefit of the Notification No.13/98-CE dated 2.6.98 together with interest and penalty under Section 11AC. The contention of the learned counsel for the appellant is that the rate of duty on the goods should be in terms of the Notification No.13/98-CE dated 2.6.98, whereas the department's contention is that the benefit of the notification dated 2.6.98 will not be applicable to the appellant and as a result import duty is to be charged on merit. Question raised by the appellant directly and proximately is relating to the rate of duty applicable to the goods cleared to DTA and contested by the Revenue, an appeal to determine any question having relation to the rate of duty would therefore not lie before this Court - Appeal not maintainable.

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• 2014 (12) TMI 694
  Waiver of pre deposit - Suppression of production and clandestine clearance of S.S. Billets - Held that:- Assessee had suppressed its actual production with a view to clandestinely remove the excisable goods without the payment of excise duty. When the matter had traveled before the Division Bench of this Court in the previous proceedings, the only point which had been urged, as would be evident from the order of the Division Bench, was the issue of financial hardship. Nonetheless, the Tribunal has also considered the prima facie case and has discussed the issue in a considerable amount of detail in various heads including (i) fictitious commission earning; (ii) disproportionate consumption of chrome (iii) falsification of record showing disproportionate consumption of chromium; and, (iv) undervaluation of job worked goods. After considering the case of the assessee the Tribunal has found that there is no reason or justification to grant complete waiver of pre-deposit. We find no substantial question of law that would warrant the Court to interfere since the submission which has been urged on behalf of the assessee essentially requires the Court to re-appreciate the evidentiary material. This is not the scope of the present appeal, which can be entertained only on a substantial question of law. - However, Pre deposit of penalty stands waived.

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