TMI Tax Updates - e-Newsletter
December 21, 2016

Case Laws in this Newsletter:

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

Articles

1. AGGREGATE TURNOVER UNDER GST

   By: Dr. Sanjiv Agarwal

2. REVISION BY PRINCIPAL COMMISSIONER/COMMISSIONER OF INCOME TAX

   By: DR.MARIAPPAN GOVINDARAJAN

3. Registration , Amendment and Cancellation under Revised GST Law

   By: Sanjeev Singhal

News

1. Modified norms to lower taxes of small traders by 30%: FM

2. Release of Central Assistance of ₹ 450 crore to the State of Telangana for development of backward areas in terms of provisions under Andhra Pradesh Reorganisation Act, 2014

3. DRI seizes 85.58 lakhs Cigarette sticks of foreign origin (Indonesian) with a market value of about ₹ 10 crore at ICD Tughlaqabad

4. RBI Reference Rate for US $

5. Government ‘Ease of Doing Business’ meeting aims to raise India’s ranking among top 50 in the World Bank report

6. PFRDA Organizes Conference for State Governments to Discuss Implementation of National Pension System

7. Auction for Sale (Issue/Re-issue) of Government of India Floating Rate Bonds and Government Stocks

Notifications

Companies Law

1. F. No. 2/31/CAA/2013/-CL-V - dated 19-12-2016 - Co. Law

Delegations of Powers to Regional Directors under section 458 of CA, 2013

Service Tax

2. 53/2016 - dated 19-12-2016 - ST

Seeks to amend Service Tax Rules, 1994 so as to allow a person located in non taxable territory providing online information and database access or retrieval services to a non-assesse online recipient to issue online invoices not authenticated by means of a digital signature for a period upto 31st January, 2017

SEZ

3. S.O. 4085(E) - dated 8-12-2016 - SEZ

Corrigendum - Notification Number S.O. 3564(E), dated 26th November, 2016

Highlights / Catch Notes

Income Tax

• Court Stresses Factual Tax Assessment Before Interpreting "Tax Due" in Section 179 Tax Recovery Cases.

  Case-Laws - HC : Proceedings for recovery u/s 179 - before the issue of interpretation of the word 'Tax due' can be decided, the factual aspect of the amount due on account of tax and interest from the defaulting company has to be ascertained - HC
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• No Penalty Imposed for Non-Compliance u/s 271AA Due to Adequate Record-Keeping u/s 92D and Rule 10D.

  Case-Laws - AT : Penalty under section 271AA - failure to furnish the information or documents u/s 92D - assessee made the sufficient compliance for maintaining the record as required u/s 92D r.w. Rule 10D - there was no recommendation by the TPO for initiating any penalty proceeding u/s 271AA - No penalty - AT
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Customs

• Importer's Regular Chartered Accountant's Certificate for SAD Refund Claim Not Considered Independent Due to Ongoing Relationship.

  Case-Laws - AT : Refund claim - SAD - importer appointed a new Chartered Accountant, who becomes their regular Chartered Accountant and cannot be considered as a onetime independent Chartered Accountant giving a certificate - AT
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• Delay in Reexporting Rectified Goods Leads to Duty and Interest Demand Instead of Confiscation or Penalties.

  Case-Laws - AT : Confiscation - import of goods for reexport after necessary rectification - A delay in exporting the goods will make a case of demand of duty & interest and will not attract confiscation or imposition of penalty upon the appellant. - AT
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• Entities with 5%+ shared ownership in supplier and importer are related for import valuation. Scrutiny required.

  Case-Laws - AT : Valuation - import of goods - when any person directly or indirectly holds/owns 5% or more of the shares of both the companies then such concerns will be treated as related persons - supplier and the importer are related persons. - AT
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Indian Laws

• High Court Upholds Sentence Enhancement for Accused Misusing Legal System in Cheque Dishonor Case.

  Case-Laws - HC : Dishonor of cheques - despite admitting the liability the revisionist kept on taking undue benefit of the legal process and harassed the respondent/complainant and backed out many times - HC upheld the enhancement of sentence.
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Service Tax

• Cooperative Society's Catering Service Tax Liability Confirmed: Employees and Employer Share Costs for Non-Owned Premises Catering.

  Case-Laws - AT : Nature of activity - outdoor catering service being provided by the cooperative society - operation of the activity from a premise other than its own - some portion of the cost is met by the employer and remaining by the employees directly - service tax liability confirmed - AT
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• Tour Operators Entitled to Tax Exemption for Non-Tour Passenger Services Using Tourist Buses.

  Case-Laws - AT : Scope of tour operators service - assessee is entitled to exemption of tax on collections generated from use of ‘tourist buses’ for passengers other than tour etc. - AT
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• CENVAT Credit Denied: Assessee Failed to Prove Link Between Professional Charges and Renting of Immovable Property Services.

  Case-Laws - AT : Denial of CENVAT credit - providing renting of immovable property services - professional charges paid claimed as input services - assessee file to prove nexus - credit denied - AT
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Central Excise

• Cenvat Credit Reversal Not Required for Ore and Coal Fines; Rule 6 of CCR Not Applicable.

  Case-Laws - AT : Reversal of Cenvat Credit - ore fines and coal fines are by products emerging during the process of manufacturing the final product and do not pass the test of duty leviability, then the question of applying the provisions of Rule 6 of CCR does not arise - AT
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• CENVAT Credit Valid Across Different Factories of Same Company, Even If Not Used in Appellant's Factory.

  Case-Laws - AT : CENVAT credit - Even though the service is not used in the appellant factory, but received and used in different factory of the same company, credit cannot be denied - AT
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• CENVAT Credit Not Reversed for Waste Destruction in Manufacturing Process, Demand Set Aside.

  Case-Laws - AT : CENVAT credit - removal as such - waste has been destroyed in the course of normal manufacturing process and which is everyday occurrence - demand set aside - AT
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• CENVAT Credit Allowed Despite Mismatched Service Provider Address on Invoice; Initial Denial Overturned.

  Case-Laws - AT : CENVAT credit - denial on the ground that the address of the service provider given in the invoice is not their registered address as per the Registration Certificate - credit allowed - AT
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VAT

• Vegetable Fat Spread Classified Separately from Edible Oil, Taxed at 14.5% as Unscheduled Commodity.

  Case-Laws - HC : Classification of product - the product as vegetable fat spread is having separate marketability and different use hence cannot be said as same as that of the edible oil - the product is an unscheduled commodity and therefore, tax at the rate of 14.5% would be chargeable - HC
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Case Laws:

• Income Tax

• 2016 (12) TMI 1013
  Income accrual - Addition of commission as an advance in AY. 2003-04 but offered to tax in AY. 2008-09 - Held that:- The Hon'ble Supreme Court in the above case of CIT Vs. Excel Industries Ltd. [2013 (10) TMI 324 - SUPREME COURT] has held that ‘it is well settled that income tax cannot be levied on hypothetical income. Income accrues when it becomes due but it must also be accompanied by a corresponding liability of the other party to pay the amount only, then can it be said that for the purpose of taxability that the income is not hypothetical and it has really accrued to the assessee’. Keeping the principles in mind, we are of the opinion that the advance receipt of commission cannot be brought to tax in AY. 2003-04 and assessee has correctly accounted for the same in AY. 2008-09. In view of that, AO is directed to delete the said addition made in this assessment year. The grounds raised by assessee on this issue are accordingly allowed. In case, AO gave relief in AY 2008-09 consequent to Ld.CIT(A) order the same can be modified. Partial confirmation of election expenditure - Held that:- CIT(A) has accepted only the amounts pertaining to Sri Teju Maaraju, Sri Rana Pratapu Maaraju and Sri Sukhender Reddy, whereas Sri Muralidhar Reddy, Shri Yadi Reddy and Raghuveer Singh also have contributed to an extent of Rs. 24 Lakhs. Accordingly, no amount could be brought to tax in the hands of assessee. Moreover, assessee has admitted an amount of Rs. 9 Lakhs in his cash flow statements which the AO has not given credit. Even if the amount of Rs. 19 Lakhs is to be considered as expenditure spent by assessee towards election, the amount of Rs. 9 Lakhs which he himself has admitted should have been given credit. That leaves us with a balance of Rs. 10 Lakhs for which the entries in the diary itself shown that he has received more than Rs. 24 Lakhs from others. In view of this, we are of the opinion that no amount can be brought to tax in the hands of assessee. In view of that, grounds raised by assessee are allowed. AO is directed to delete the amount of Rs. 19 Lakhs as the same was received from others as noted in the diary. Unexplained investment in the house - Held that:- Bringing the entire amount to tax in this assessment year per se is not correct. Moreover, the building was constructed in the village and assessee being Sarpanch of the village could have invested less, so his claim for rebate not only on the rates for valuation adopted by the CPWD but also on the personal supervision are appropriate. We are unable to understand, why Ld.CIT(A) restricted the rebate for the rates adopted by the CPWD to 5% when ITAT in various cases was allowing 15% rebate. Following the Co-ordinate Bench decision, we direct the AO to reduce the valuation by 15% from the CPWD rates and by 10% for the personal supervision already granted by the CIT(A). Thereafter, only proportionate investment pertains to this year should be considered as ‘unexplained’. To that extent, the addition is sustained. Assessee gets relief partially on the grounds. AO is directed to re-work out the unexplained investment accordingly. With these directions, the grounds in this appeal are partly allowed.

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• 2016 (12) TMI 1012
  Penalty under section 271(1)(c) - Held that:- The case before us is not on the footing that the limb of section 271(1)(c) of the Act has not been specified at the time of initiation of penalty, but we are referring to the aforesaid only to emphasize the importance that is placed on the requirement to specify the charge to be made against the assessee out of the two limbs available in section 271(1)(c) of the Act. In the background of such schematic understanding of the operating mechanism of section 271(1)(c) of the Act, in our view, the initiation of penalty on one limb and its imposition ultimately on another limb cannot be sustained. Under these circumstances, in our view, the penalty imposed by the Assessing Officer in the present case on the ground of furnishing of inaccurate particulars of income is unsustainable for the reason that initiation was on another default i.e. concealment of particulars of income. Accordingly, we hold that the penalty imposed under section 271(1)(c) for assessment year 2005-06 is not sustainable and is hereby set-aside. - Decided in favour of assessee

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• 2016 (12) TMI 1011
  Validity of reopening of assessment - foundation of AO’s belief is the information received from Investigation wing of the department - Held that:- AO has not applied his mind to any tangible material in his possession before issuing notice u/s. 148, in absence of which the reopening of assessment cannot be accepted in the eyes of law, as laid down by Hon’ble Jurisdictional High Court as well as Tribunal in plenty of cases. Therefore, forming of belief of escapement and consequently reopening of assessment on the basis of mere information received by AO from Investigation wing is not tenable. See PR. Commissioner of Income Tax-4 Versus G & G Pharma India Ltd. [2015 (10) TMI 754 - DELHI HIGH COURT] - Decided in favour of assessee

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• 2016 (12) TMI 1010
  Levy of penalty u/s 271(1)(C) - fringe benefits arising out of depreciation on motor car - Held that:- Assessing Officer/CIT(Appeals) failed to prove that the explanation of the assessee that only by oversight and inadvertently the depreciation on motor car was not included in the value of fringe benefits. We see no reason other than an inadvertent mistake occurred in not including the depreciation on motor car in the value of fringe benefits because the assessee itself returned the fringe benefits in respect of other expenses like repairs, vehicle hire charges etc. The explanation of the assessee that since this is the first year of the provisions of fringe benefits coming into statute this mistake had happened and there is no such mistake had happened in any of the subsequent assessment years is a bonafide explanation and this is not proved to be false by the revenue authorities. In view of what is stated above we are of the opinion that there is neither concealment nor furnishing of inaccurate particulars by the assessee in not including the depreciation on motor car in the value of fringe benefits while filing FBT return and it had happened only on an inadvertent mistake by oversight. Hence no penalty is leviable u/s 271(1)(c) of the Act. - Decided in favour of assessee

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• 2016 (12) TMI 1009
  Penalty levied u/s 271(1)(c) - difference in interest income diclosure - Held that:- On a careful consideration of the facts, we find that there is no willful attempt to evade taxes by the assessee as the assessee has already returned substantial income in the return. The contention of assessee that he had acted bona fide based on the TDS certificates issued by Bank of Baroda appears to be genuine. In the circumstances, we find that there is no concealment of income or furnishing of inaccurate particulars of income by the assessee. The authorities below have not proved that the explanation given by the assessee is neither false nor genuine. Thus, we delete the penalty levied u/s 271(1)(c) of the Act. - Decided in favour of assessee

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• 2016 (12) TMI 1008
  Penalty under section 271AA - assessee failure to furnish the information or documents under section 92D - Held that:- We have seen the order of TPO u/s 92CA(3) dated 28/10/2011 which does not mention that there was any failure on the part of assessee to maintain documents as required under Rule 10D. Though, the order contain the reference that assessee failed to submit the document and Transfer Pricing Report. In part-5 of its report ld. TPO referred that “in view of the fact that these replica transactions of Cadbury India Ltd., where ALP is determined of these very transaction. As such the ALP determined by assessee is not being disturbed”. Further, we have seen that assessee filed Form 3CEB, Royalty Agreements entered into with AE and (copy of which are available at page no.19 to 53 of PB). These documents were furnished by assessee along with assessee’s letter dated 16.11.2011 which was duly acknowledged. The report is duly certified by C.A. that all the documents in respect of International Transaction have been maintained by assessee. Thus as assessee made the sufficient compliance for maintaining the record as required u/s 92D r.w. Rule 10D. We also find from the order of ld. TPO that there was no recommendation for initiating any penalty proceeding u/s 271AA of the Act nor any finding that assessee failed to maintain the record prescribed under Rule 8D. - Decided in favour of assessee

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• 2016 (12) TMI 1007
  Proceedings for recovery under Section 179 - Held that:- We are of the view that before the issue of interpretation of the word 'Tax due' can be decided, the factual aspect of the amount due on account of tax and interest from the defaulting company has to be ascertained. This is more so in view of the fact that the demand under Section 156 of the Act along with computation of tax, which is shown to us is dated 28th December, 2004 i.e. much before the petition was filed. However, no reference was made to it in the petition nor any amendments moved to the petition over the last 10 years when the petition was pending. Therefore it would be appropriate to restore the issue before the Assessing Officer at the stage of the notice dated 29th January, 2003 to determine the factual amount due from the defaulting company and consequently the petitioner. Thereafter the Assessing Officer will rule on the meaning of the words 'tax due' under Section 179 of the Act

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• 2016 (12) TMI 1006
  Penalty u/s 271(1)(c) - excess claim made under Section 80IA - non-allocation of Head Office (personnel expenses) to the eligible unit - Held that:- It is an admitted position before us that the issue of 10% of allocation to personnel expenses to the eligible unit for the Assessment Year 2000-01 was decided by the Tribunal much after filing of return of income for the subject assessment years. Thus, it cannot be said that non-allocation of eligible unit was deliberate to increase the profits of the eligible units. Before us, the respondent assessee in support of its submissions that non-allocation of Head Office (personnel expenses) to the eligible unit was on the basis of its understanding that only direct expenses i.e. having a direct nexus to the eligible unit is debitable. This view of the assessee in fact has found acceptance by the decision of this Court in Zandu Pharmaceutical Work Ltd. Vs. Commissioner of Income Tax, [2012 (9) TMI 620 - BOMBAY HIGH COURT ]. Therefore, the view / opinion of the respondent assessee in not allocating any personnel expenses of the Head Office to the eligible units is a possible view. Therefore, it cannot be said on these facts that there was any filing inaccurate particulars and / or concealment of income on the part of the respondent assessee warranting imposition of penalty.- Decided against revenue

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• 2016 (12) TMI 1005
  Addition made to Book Profit by an order u/s 154 - MAT - rectification of mistake - Held that:- We are of the view that the issue stands concluded by the decision of this Court in Sakseria Cotton Mills Ltd. (1979 (2) TMI 17 - BOMBAY High Court) in favour of the assessee and against the appellant Revenue. The distinction sought to be made by the appellant Revenue on the basis of the amendment to Section 115JB of the Act in 2009 with retrospective effect from 2001 does not address the fundamental issue of nonmerger of the order dated 27th February, 2004 with the order dated 30th December, 2008. Therefore, any rectification of the order dated 27th February, 2004 is required to be done within 4 years from 27th February, 2004 as provided under Section 154 of the Act. It is not disputed before us that issue of the provisions made for diminution in value of assets which is sought to be rectified is an issue which was never the subject matter of consideration in the order dated 30th December, 2008 passed under Section 143(3) r/w Section 254 of the Act. Therefore, in these circumstances, it could not be rectified under Section 154 of the Act. Thus, the distinction sought to be made is of no consequence. - Decided in favour of assessee

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• 2016 (12) TMI 1004
  Validity of reopening of assessment - Held that:- There is no allegation that there was any failure on the part of the assessee in not disclosing true and correct facts necessary for the purpose of assessment. Identical question came to be considered by the Division Bench of this Court in the case of Kanak Fabrics Vs. Income Tax Officer (2011 (3) TMI 1497 - GUJARAT HIGH COURT ) and it is held that if the condition precedent to reopen the assessment beyond four years are not satisfied i.e. in the reason recorded there is no whisper to the effect that the income had escaped assessment on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment reopening of the assessment cannot be sustained. Under the circumstances, as the condition precedent to invoke the powers under Section 147 of the Income Tax Act to reopen the assessment beyond four years are not satisfied, the impugned notice to reopen the assessment for the Assessment Year 2010-11 cannot be sustained. - Decided in favour of assessee

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• 2016 (12) TMI 1003
  Stay on demand - recovery notice - auction of the residential house - Held that:- As the demand in question not being under challenge and the petitioner – assessee ought to have paid the said demand in due course of time itself, however, looking to the fact that the residential house of the petitioner is intended to be sold by the Income Tax Department for recovery of the said dues and the market value of the said residential house is stated to be much more than the demand in question, it is directed by disposing of the present writ petition itself that if the petitioner – assessee deposits 50% of the disputed demand, i.e. Rs. 1,46,58,192/-, i.e. Rs. 75.00 lakhs within a period of two weeks from today and the remaining entire amount within six weeks from today, then the auction of the residential house of the petitioner, situated at No.1749, 25th cross, off 19th Main Road, 20th Main, Sector II, Hosur Sarjapur Road Layout (HSR Layout), Bangalore-560102 may not be undertaken and finalized.

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• 2016 (12) TMI 1002
  Gains arising on sale of shares - business income or capital gain - Held that:- Assessee has purchased and sold higher number of shares in respect of 12 scrips only, meaning thereby, the volume cannot be taken to be high. We notice that holding period of shares for major portion of shares is reasonable. We further notice that the assessing officer has accepted the profit as Capital gains in AY 2009-10 and 2013-14 in the scrutiny assessment made u/s 143(3) of the Act. There is no reason to assess the capital gains arising on sale of shares as business income. On a cumulative consideration of various factors, we are of the view that the assessee has acted as an investor only in respect of the impugned transactions. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to assess the gains arising on sale of shares under the head Capital gains only. Disallowance made u/s 14A - Held that:- A perusal of the statements of total income of the assessee would show that the assessee did not claim any expenditure against any income. The question of apportionment of expenses between taxable income and exempt income would arise only if any expenditure is claimed by the assessee. Hence we are unable to agree with the view taken by the Ld CIT(A) that the provisions of Rule 8D provide for “deemed disallowance”. It is well established proposition now that the assessing officer can resort to compute disallowance under Rule 8D only if he is not satisfied with the computation made by the assessee having regard to the accounts of the assessee. Since the assessee has not claimed any expenditure, in our view, there is merit in the contentions of the assessee that no disallowance u/s 14A is called for.

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• 2016 (12) TMI 1001
  Addition of sale proceeds of old jewellery - Held that:- In the instant case, the assessee has furnished the copies of sales bills of gold ornaments and has also explained the reason, which compelled the assessee to sell the jewellery. The assessee has also furnished a copy of confirmation letter given by him to M/s Shreeji Art Jewellers, being one of the buyers, whose PAN no. is stated as BWOPS 0889 N. The photocopy of PAN card was also furnished. Hence it is not understandable as to how the Inspector could not find the shop, when the assessee has furnished PAN No. of M/s Shreeji Jewellers. Assessee has also furnished a confirmation letter obtained from his father-in law/mother-in-law certifying the details of gold ornaments given at the time of marriage. Since the assessee is a salaried employee, he did not maintain regular books of accounts. Thus the assessee has discharged the primary responsibility placed upon him u/s 68 of the Act. On the contrary, the AO has claimed to have conducted enquiries through Inspector, but the same was not provided to the assessee. We have also noticed that the alleged enquiry conducted by the Inspector is found to be deficient. Hence we are of the view that the assessing officer has not discharged the responsibility shifted upon his shoulders. - Decided in favour of assessee

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• Customs

• 2016 (12) TMI 968
  Seizure - Smuggling - Penalty - Held that: - It is observed from the case records that there is no evidence on record as to how the seized goods are smuggled, by whom, and from which route these goods were brought into India. Seized goods are not one of the categories of goods appearing in Section 123 or which are notified under Section 123 of the Customs Act, 1962. The burden is on the department to lead evidence that goods of foreign origin are in fact smuggled. Simply, bearing some foreign marks does not mean that goods are smuggled ones. There is even no evidence on record that appellant was aware of the foreign origin of goods, much less knowledge of being smuggled. Knowledge of goods being of smuggled nature is an essential element for imposing penalty under Section 112(b) of the Customs Act, 1962. In the absence of such a knowledge of the appellant, who is a housewife, no penalty can be imposed upon her under Section 112(b) of the Customs Act, 1962 - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 967
  Refund claim - SAD - certificate from Chartered Accountant under dispute - Held that: - Adjudicating authority while sanctioning the refund claim found all the conditions of Notification No.102/2007-Cus dated 14.09.2007 as fulfilled - It is observed from the relevant para of CBEC Circular dated 13.10.2008 that the same does not use the words regular Chartered Accountant, but only clarifies that certificate given by any other independent Chartered Accountant would not be acceptable for the purpose of 4% SAD refunds - Respondent accordingly appointed a new Chartered Accountant, who becomes their regular Chartered Accountant and cannot be considered as a onetime independent Chartered Accountant giving a certificate - Decided in favor of the assessee.

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• 2016 (12) TMI 966
  Imposition of penalty u/s 112 (a) and 112(b) of the Customs Act, 1962 - import of Natural Lime Stone Powder - on testing goods found to be Calcium Carbonate Powder - Held that: - It is observed from the statement dated 24.11.2004 of the appellant that nowhere is stated that he was aware the goods being imported by the importer were not Natural Lime Stone Powder. The correct nature of the imported goods could be known only after chemical test was undertaken by the department. Even the examining officers could not detect the goods imported were other than Natural Lime Stone Powder. In the absence of any evidence, that appellant had the knowledge of imported goods being Calcium Carbonate Powder and not Natural Lime Stone Powder declared in the bill of entry, penalty imposed on the appellant is not justified and is set aside - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 965
  Confiscation - import of goods for reexport after necessary rectification - failure to reexport - Claim of exemption Notification No. 158/95-Cus dt 14/11/1995 - Penalty - Time limitation - It was claimed that appellant is also eligible to drawback as under Sec 74 of the Customs Act 1962 if appellant is made to pay import duty. That the entire exercise is revenue neutral - Held that: - By issuing show cause notice dt 29/9/2010 Revenue has taken steps to finalize the provisional assessment by demanding duty. As such demand is not time barred & has been correctly confirmed along with interest. On the issue of confiscation and imposition of penalty it is observed that all the relevant details were declared by the appellant at the time of clearance of goods. A delay in exporting the goods will make a case of demand of duty & interest and will not attract confiscation or imposition of penalty upon the appellant. According. Redemption fine imposed & penalty imposed upon the appellant is set aside. Appeal partly allowed - decided partly in favor of appellant.

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• 2016 (12) TMI 964
  Imposition of penalty u/s 112(a) of the Customs Act, 1962 - whether import of 352.245 MT of Zinc Flux Skimmings was ordered by the Appellant? - Held that: - It is observed from the findings portion of Order-in-Original dated 25.01.2006 that Adjudicating authority has heavily relied upon this statement dated 19.08.2003 of Shri Mustafa Seikh which was not a relied upon document in the show cause notice. Ld.AR appearing on behalf of the Revenue also could not indicate whether a copy of this statement, relied upon in the Adjudication order, was provided to the Appellant - matter is remanded to the Adjudicating authority with the direction to supply copies of statement dated 19.08.2003 of Shri Mustafa Seikh to the Appellant and also all other documents relied upon in the adjudication order dated 25.01.2006 which were not relied upon in the show cause notice - appeal allowed by way of remand.

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• 2016 (12) TMI 963
  Valuation - related party transaction - whether appellant M/s. Concept Pharmaceuticals Ltd. (India) is related to Concept Pharmaceuticals Ltd., Nepal? - Held that: - it is observed from the facts recorded in para 8.4 of Order-in-Original dated 15/7/2002 that Concept Pharmaceuticals Ltd. holds 20% and 7.13% shares in both the sister concerns situated in Nepal and India. Ld. Advocate could not clarify as to how in spite of holding of more than 5% shares both the parties should not be considered as a related persons under Rule 2 (2) (iv) of the Customs Valuation Rules, 1988. It is observed from the provisions of Rule 2 (2) (iv) of the Customs Valuation Rules, 1988 that when any person directly or indirectly holds/owns 5% or more of the shares of both the companies then such concerns will be treated as related persons - supplier and the importer are related persons. Method of valuation - Held that: - the valuation of the imported goods in the present proceedings should be done under Rule 7A of the Customs Valuation Rules, 1988 as both supplier and the importer are related persons. The appellant should furnish all the relevant data/cost of the imported goods to the Adjudicating authority, as prescribed under Rule 7A of the Customs Valuation Rules, 1988 read with the interpretative notes relied upon by the appellant. Needless to say that an opportunity of personal hearing should be extended to the appellant to explain their case. Appeal allowed by way of remand.

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• 2016 (12) TMI 962
  Revocation of CHA licence - forfeiture of security deposit - Regulation 18 of the Customs Broker Licensing Regulation 2013 (CBLR 2013) - the containers found to be carrying red sanders wood export of which is prohibited - Held that: - It is observed that the said revocation has been made for violating the provisions of Regulation 11 (a), 11 (d) and 11 (n) of CBLR, 2013. As per the provisions of Regulation 11 (a) of CBLR, 2013 every CHA shall obtain an authorisation from each of his clients whom he is being employed and produce such authorisation before the officers of Customs. It has been categorically observed by the adjudicating authority that no authorisation was produced or obtained by the appellant. Even during the proceedings before this Bench also no such authorisation from the exporter M/s. Bhadrakalj Exporters Pvt. Ltd. Nepal was produced. Further as per Regulation 11 (n), CHA is required to advise his client to comply with the provisions of Customs Act which will include transit routes required to be followed by the client. Ld. Advocate during the course of hearing submitted that the said CTD transit declaration was received by the appellant on 3/4/2014 and interception was done on 7/4/2014. Once the appellant came to know of CTD transit declaration on 3/4/2014, then it was his responsibility and duty to guide the driver of the truck/Nepal exporter to follow the routes specified and if the route is not followed then the same was required to be brought to the notice of officers of Customs as per Regulation 11 (d) of the CBLR, 2013. Due to non verification of the antecedents of the Nepal exporters, substitution with the prohibited Red Sanders Wood became possible in the container - In view of the above observations, we do not find anything wrong revoking CHA licence of the appellant. Reliance placed in the case of M/S. Shubham Enterprises Vs. C.C. (Airport & Admn., Kolkata) [2015 (12) TMI 587 - CESTAT KOLKATA], where similar issue was upheld. However, revocation period was restricted upto a certain date on the grounds that appellant had no knowledge of the contraband, nature of the goods substituted in the containers - In the present proceeding also we do not find any evidence on record with regard to the fact that appellant had knowledge of substitution of declared goods with ‘Red Sanders Wood'. Also the appellant is out of job from the date of suspension of his CHA licence. Accordingly, we hold that revocation of appellant's CHA licence shall be effective upto 31/3/2017 and thereafter CHA licence of the appellant, and forfeiture of security deposit ordered by the adjudicating authority, will be restored. Appeal disposed off - decided partly in favor of appellant.

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• 2016 (12) TMI 961
  Penalty u/s 117 of the Customs Act 1962 - role of appellant in export related activities - Held that: - Appellant had played prominent role in export related activities of the exporter M/s Promising Exports Ltd. and has been correctly visited with penalty of Rs. 10,000/- - appeal dismissed - decided against appellant.

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• 2016 (12) TMI 956
  Subrule (2) of rule 5 of the CEGAT (Countervailing Duty and Antidumping Duty) Procedure Rules, 1996 - whether appellant is a party to a captioned petition - Held that: - Subrule (2) of rule 5 enumerates the persons who are required to be joined as respondents to the appeal. The category of persons under clause (b) thereof is “Representative of the domestic industry on whose application investigation was commenced by the designated authority” - in present case, the investigation was commenced on the application of the applicant herein, the applicant can be said to be a necessary party to the captioned petitions - applicant is permitted to be joined as respondent No.3 in each of the captioned writ petitions - application succeeds.

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• Service Tax

• 2016 (12) TMI 1000
  Nature of activity - outdoor catering service being provided by the cooperative society - operation of the activity from a premise other than its own - some portion of the cost is met by the employer and remaining by the employees directly - benefit of abatement under N/N. 1/2006 dated 01/03/2006 - Held that: - the appellant has been engaged to render a service on behalf of the employer and compensated for by the employer with some portion of the cost. The appellant cannot escape the liability of tax in view of the provision of service which is taxable under the Finance Act, 1994. Time limitation - Held that: - the appellant has been rendering the service for long and also happens to be a co-operative society which could not have been unaware of the legal provisions of taxation. It cannot also claim to have lacked knowledge inasmuch as M/s Larsen & Toubro is also one of the members of the society - period of limitation invoked. Appeal rejected - decided against appellant.

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• 2016 (12) TMI 999
  Classification of services - whether the supply of personnel to the registered employers (Stevedores) is to be classified under the category of “Port Service” as claimed by the department or otherwise as contended by the appellant herein? Held that: - same activity cannot be taxed under different services for different periods unless sanctioned by the statute. From the records, we find that there is no carving out of one entry from the other. We have also perused the SCN dt. 9.5.2008 and we agree with the contention of the appellant that the demand has been made for the same activity under the category of “Manpower Recruitment or Supply Agency” during subsequent period. Accordingly, we remand the matter to the adjudicating authority for a fresh decision on the aspect of classification and while deciding the issue - matter on remand. The appellant had also contended that they are entitled for the benefit of cum tax value in the event of demand being confirmed against them. The learned Commissioner shall also take into consideration the aspect of the benefit of cum tax in the event of amount being confirmed against the appellant. Appeal allowed by way of remand.

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• 2016 (12) TMI 998
  Imposition of penalty u/s 78 of the Finance Act, 1994 - no intent to evade tax - invocation of section 80 - bonafide beleif - Held that: - it is seen that the appellant entertained the belief that they were not liable to tax because the objectives were in relation to public service. Further, upon proceedings being initiated against them, the full amount of tax as well as interest were paid. There is also no reason to disbelieve the contention of the appellant that there was no intent to evade tax and this has been sufficiently established by voluntary payment of the tax and interest - I find that this is a fit case for invoking section 80 of the finance Act, 1994. Accordingly, penalty imposed under section 78 of the finance Act, 1994 is set aside - appeal allowed - decided in favor of assessee.

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• 2016 (12) TMI 997
  Whether penalty of Rs. 43,819/-enhanced by First Appellate Authority under OIA dated 24.07.2012, read with ROM order dated 16.08.2012, is sustainable or not? Held that: - imposition of penalty under Section 78 of the Finance Act was not the subject matter of the show cause notice and OIO passed by the Adjudicating Authority and the appeal filed by Revenue. Therefore, First Appellate Authority has gone beyond the scope of the proceedings to hold liability of penalty under Section 78 of the Finance Act, 1994. Revenue has not filed any appeal against OIA dated 24.07.2012 and ROM order dated 16.08.2012 to contest that Commissioner(Appeals) has wrongly upheld imposition of penalty under Section 78 of the Finance Act, 1994 - appeal filed by the appellant with respect to enhanced penalty of Rs. 43,819/- is required to be allowed by setting aside the orders passed by the First Appellate Authority - appeal allowed by way of remand.

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• 2016 (12) TMI 996
  Refund claim - matter was remanded to the Adjudicating authority under N/N. 17/2009 ST dt 7/7/09 - Held that: - appellant produced a certified copy of a Chartered Accountant certificate which was not provided before the Adjudicating authority. Further its is also observed that verification / co-relation was not possible before the first appellate authority on the basis of records produced before him. Under the circumstances bench does not find anything wrong with the remand proceedings ordered by the first appellate authority. Interest on delayed payment of refund - Held that: - Notification No. 17/2009-ST dt 7/7/2009 does not have any interest payment clause on delayed payment of interest under the notification. Further the provisions of Sec 11B of the Central Excise Act 1944 are not made applicable to the refunds of Notification No. 17/2009-ST. Accordingly ordering of interest on refunds of Notification No. 17/2009-ST was not legal & is set aside. Appeal disposed off - decided partly in favor of Revenue.

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• 2016 (12) TMI 995
  Scope of tour operators service - retrospective amendment and its extent - section 65(105)(n) of Finance Act, 1994 - whether ‘tourist vehicles’ are eligible for the benefit of the retrospective exemption? - Held that: - the intent to accord parity to public and private point-to-point operations was embodied in exemption notification no. 20/2009-ST. On reference from operators, the distinction between ‘tourist vehicles’ and ‘contract carriages’ performing the same activity as state-run undertakings was eliminated by a corrigendum circular. Consequently, we find no difficulty in holding that, for the purpose of exclusion from tax, vehicles used by service providers is also to be so construed - appellant-assessee is entitled to exemption of tax on collections generated from use of ‘tourist buses’ for passengers other than tour etc. The impugned order has quantified the collection from conducted tour, charter etc as Rs. 91,21,825 for 2006-07 on which tax of Rs. 4,46,605 has been determined. The remaining amount confirmed in impugned order pertains to use of ‘tourist vehicles’ and does not sustain - penalty confirmed - appeal disposed off - decided partly in favor of appellant-assessee.

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• 2016 (12) TMI 994
  Whether Appellant is eligible to refund of services availed in relation to export of goods under Notification No.41/2007-ST dated 06.10.2007? - Held that: - As per Notification No.41/2007-ST certain co-relations are required to be made before sanctioning the refund claims. It is observed from CBEC Circular No. 120/01/2010-ST dated 19.01.2010 that exporters were facing certain difficulties in relation to one to one co-relation between input services and the exports made - Ld.AR appearing on behalf of the Appellant could not produce the required documents before the Bench to ascertain as to what extent co-relation can be made and whether any liberal view can be taken in these proceedings in view of CBEC Circular No.120/01/2010-ST dated 19.01.2010. In the Grounds-of-Appeal filed by the Revenue also no mention of this Circular is made and whether the same is applicable to the facts in hand. Thus, in the interest of justice the matter is remanded back to the Adjudicating authority to give specific findings with respect to CBEC Circular No. 120/01/2010-ST dated 19.01.2010 whether the claim of the Appellant is covered by the clarifications so issued - appeal allowed by way of remand.

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• 2016 (12) TMI 993
  Rejection of refund claim - N/N. 41.2007 ST dated 06/10/2007 - export of services - Custom House agent service - Port service - Transport of goods by road & Rail Services - Held that: - The Central Government in exercise of the powers conferred under sub-section (1) of Section 93 of the Finance Act, 1994 have issued the N/N. 41/2007-ST dated 06.10.2007, providing for refund of service tax paid on the taxable services used for exportation of the goods. With regard to the port service, the CBEC vide Circular dated 26.02.2010 has interalia, clarified that irrespective of the clarification of service provided by the service provider, if the same relates to the services provided in the port, the same shall be considered for benefit of refund in terms of the Notification dated 06.10.2007. We find from the available records that the services received by the appellant namely, Business Support Service and Business Auxiliary Service have in-fact been provided within the port, and thus, in our view, such services shall qualify for the benefit of refund contained in the Notification dated 06.10.2007. With regard to the CHA service, we find that the service providers have provided such service on export of goods by the appellant. Further, the GTA services have been availed by the appellant for transportation of goods upto port of export. Since, export of goods in question has not been disputed by the Department, service tax paid on the taxable services used for ultimate exportation of goods, in our opinion, should merit consideration for refund in terms of the Notification dated 06.10.2007. Refund allowed - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 992
  Denial of CENVAT credit - providing renting of immovable property services - professional charges paid claimed as input services - denied on the ground that the services have used at Gurgaon, not at Noida. As such, the same has not been used in providing output services at Noida - Held that: - the service relates to professional services for market-research. Without recording any finding that the appellant have no rental income from Gurgaon and or have not made any investment either prior to obtaining the report or after the obtaining of report for earning rental income from the tenants. Accordingly, I hold that the said expenditure is not with respect to earning of Revenue or providing of output service and as such, I hold the same is inadmissible - credit not allowed. Brokerage expenses paid to realistic agency for finding tenant - denied on the ground that the specific name of tenant or person was not mentioned - Held that: - being service tax to DTZ, it appears from the invoice & clarification issued by the service provider that the same is with respect to finding of tenant for the appellant with respect to the property located at Noida. I remand this issue to the adjudicating authority for verification of the rent agreement with the tenants and if the appellant have earned the income from them, service tax so paid amounting to Rs. 28,823/- shall be allowable - matter on remand. Appeal allowed in part by way of remand.

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• Central Excise

• 2016 (12) TMI 991
  SSI exemption - use of brand name of others - whether the main appellant is eligible for the benefit of exemption N/N. 175/96 or otherwise? - Held that: - the first appellate authority has clearly recorded that the gearboxes were dispatched from the appellant's premises without nameplate - there was no brand name affixed on the gearboxes when they were cleared from his factory premises - the main appellant has correctly availed the benefit of N/N. 175/86 - appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 990
  Valuation - non-inclusion of value of shrinkage - Held that: - if the claim of the appellant that they have already included a value which need not be included, is true, then the addition of value of shrinkage to the tune of 2.4% is uncalled for in these facts - to ascertain the fact that the appellant has included more value than it is due, only for limited purpose we remit the matter back to the lower authorities - appeal allowed by way of remand.

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• 2016 (12) TMI 989
  Denial of CENVAT credit - steel items such as MS Plates, Angles, Channels etc which has been used in fabrication of plant and machinery - welding electrodes which has been used for repair and maintenance of plant and machinery - denial on the ground that these two items are neither inputs nor capital goods to avail Cenvat credit - Held that: - I find that in the case of Singhal Enterprises Pvt. Ltd. [2016 (9) TMI 682 - CESTAT NEW DELHI] this Tribunal has examined the case also and thereafter arrived at the decision that appellant is entitled to avail Cenvat credit on welding electrodes which has been used in repair and maintenance of plant and machinery. Therefore, relying on the decision of the Tribunal in the case of Singhal Enterprises Pvt. Ltd., I hold that appellant has correctly availed Cenvat credit on welding electrodes. CENVAT credit on steel items - Held that: - In fact these structures wagon, loading system is the integral part of the plant and machinery and same has been used for transportation of finished goods. In these circumstances, user tests qualifies that these items have been used for fabrication of plant and machinery, therefore, appellant is entitled for Cenvat credit. The Cenvat credit on steel items and welding electrode is allowed - appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 988
  Refund - Cenvat credit - Rule 5 of CENVAT Credit Rules (CCR), 2004 - Held that: - the learned counsel submitted that this issue has already been decided in favour of the appellant by this Tribunal in the Final Order No.22070/2014 dated 21.11.2014 wherein this Tribunal relying upon the decision of the Hon’ble High Court of Karnataka in the case of CCE, Bangalore vs. Biocon Ltd. [2014 (9) TMI 716] wherein the Hon’ble High Court observed that if the assessee owns more than one unit and all the units are situated at one place, it would constitute a factory. No doubt the business support service also relates to the business operation and therefore fall in the definition of input service for which the appellant is entitled to refund but the appellant will have to satisfy the original authority by submitting the requisite documents that the said services were used in or in relation to the business - Appeal allowed - decided in favor of the assessee by way of remand.

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• 2016 (12) TMI 987
  Cenvat Credit - emergence of ore fines and coal fine during manufacturing - reversal of credit - Rule 6(3)(b) /6(3)(i) of Cenvat Credit Rules, 2004 - Held that: - The facts of this case are that the appellant, who are engaged in the manufacture of sponge iron during the process generate iron ore fines and coal fines. These are emerging when iron ore lumps of different sizes are subjected to crushing and thereafter screening in raw material plant - During the course of hearing, attention was drawn to the case of M/s G.R. Sponge and Power Ltd. [2016 (11) TMI 51 - CESTAT NEW DELHI] where it was held that subject goods, ore fines and coal fines are by products emerging during the process of manufacturing the final product and do not pass the test of duty leviability, then the question of applying the provisions of Rule 6 of CCR does not arise - appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 986
  Quantification of interest liability - whether CVD portion to be deducted from duty amount while calculation of interest? - Held that: - It is seen that in para-14 of the order, Settlement Commission had directed that the department, while calculating the interest amount, shall deduct the CVD portion from the duty amount. Finding of the Commissioner (Appeals) in para-12 of his order that appellant's representation to adjust the interest demand with their eligibility for refund cannot be entertained, therefore is not in consonance with the directions of the Settlement Commission. At the same time, I observe that appellant has also created further confusion by submitting two claims of different amounts of refund pursuant to Settlement Commission order, a fact which has been taken note of in the order of lower appellate authority - I am of the considered opinion that interest of justice will be best served by remanding the matter back to the original authority for de novo consideration of the matter - appeal allowed by way of remand.

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• 2016 (12) TMI 985
  Exemption under N/N. 108/95 dated 28.08.1996 - manufacturer of PCC poles, Beams and Pipes - Held that: - I find that condition No.C (i) deals with where the project is implemented by the Central Government itself and condition No.C(ii) deals with the situation where the project is approved by Government of India for implementation by Government of a State/Union Territory. Accordingly, I hold that only either of the condition C(i) or C(ii) is applicable. Admittedly, in the facts of this case, the project is approved by Government of India to be implemented by the State of Madhya Pradesh through its Public Works Department and the Implementing Authorities, M.P. Road Corporation Ltd. Thus, I hold that the appellant fulfils the conditions of the said notification and the exemption is allowable to them under the facts and circumstances under Notification No.108/95 CE - appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 984
  Reversal of CENVAT credit - job-work - inputs sent to job-worker not received fully - Held that: - We find that BHEL have categorically asserted that there will certainly be a process loss and also emergence of scrap in the form of off-cuts and other pieces. BHEL requires the product with a particular specification and length. The generation of such specified intermediate products will result in certain end cuttings and also certain process loss. This much cannot be disputed - If the resultant product has to meet the standard specification of the principal manufacturer, off-cuts and the copper scrap, which is not useable for the intended purpose or further use by the principal manufacturer, are retained by the job workers and have been put to profitable use in further manufacture of various other items - In such situation, we find that there is no justification for reversal of any credit availed on inputs by BHEL. There is no allegation of diversion of inputs or unaccounted clearance of the same either at the BHEL side or at the end of the job work- manufacturer - We find that there is no violation of provisions of Rule 4 (5)(a) of Cenvat Credit Rules, 2004 read with provisions of Notification No.214/96-CE. - no merit in the impugned order and the same is set aside - appeal allowed - decided in favor of assessee.

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• 2016 (12) TMI 983
  Denial of CENVAT credit - Rent-a-Cab service - Security service - mobile phones - denial on the ground that invoice in respect of such distribution of credit is not in proper format and service provided at job workers place where the job worker is carrying out cutting process of paper on behalf of the appellant - distribution of credit by ISD before obtaining registration - Held that: - As regard the issue, where the appellant has taken the credit not on valid invoice but on the allocation chart, I find that whatever document on which credit was passed on, if it contains all the information as required under Rule 4A of Service Tax Rules, 1994, the said document should be accepted and the credit cannot be denied. As regard the registration issue whether the ISD can distribute the credit before obtaining registration has been settled in the judgments in the case of Commissioner of C. Ex. Vs. Dashion Ltd. [2016 (2) TMI 183 - GUJARAT HIGH COURT], where it was held that there is nothing in the said Rules which would automatically and without any additional reasons disentitle an input service distributor from availing Cenvat credit unless and until such registration was applied and granted. It was in this background that the Tribunal viewed the requirement as curable. Particularly when it was found that full records were maintained and the irregularity, if at all, was procedural. As regards rent-a-cab service, the vehicle is used for transportation of employee for the purpose of factories activity. Therefore Rent-a-Cab service falls within the ambit of definition of input service. As regards security service, since the security service was received by the appellant even though at job worker’s place but it is in relation to job work activity carried out on behalf of the appellant, the job work activity is part and parcel of the over all manufacturing of the final product. Therefore the security service is used in or in relation to the manufacture of final product. In my considered view the credit is admissible on the security service. As regard credit on mobile phone which was denied on the ground that it does not have nexus with in or in relation to the manufacturer, it was found that as per the submission of the Ld. Counsel they are not contesting the same, as they already reversed the credit of Rs. 1847/-. On that count, I therefore uphold the demand of Rs. 1847/- related to mobile phone service. Penalties set aside, as major portion of demand is dropped - appeal disposed off - decided partly in favor of assessee.

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• 2016 (12) TMI 982
  Denial of CENVAT credit - denial on the ground that service not related to product - Held that: - I find that the fact is not under dispute that though input service on which the credit was disputed was not used in the factory of the appellant but it is related to the product Nescafe and Maggie Noodles which are manufactured in the appellant company's different factory. As regard the provision for distribution of the credit, there is no condition of one to one correlation between the credit distributed and the quantum of service received and used by a particular factory. Though the service is related to the product which is manufactured in the appellants company in other factories. But all the factories belonging to one company and in the absence of any provision of one to one correlation the credit can be distributed to any factory of one company - reliance placed on the decision of the case of Commissioner of C.Ex., Bangalore-I Vs. Ecof Industries Pvt. Ltd. [2011 (2) TMI 1130 - KARNATAKA HIGH COURT], where it was held that Merely because the input service tax is paid at a particular unit and the benefit is sought to be availed at another unit, the same is not prohibited under law Even though the service is not used in the appellant factory, but received and used in different factory of the same company, credit cannot be denied - appeal allowed - credit allowed - decided in favor of assessee.

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• 2016 (12) TMI 981
  Whether the appellant being manufacturer is entitled for cenvat credit in respect of service tax paid on bill of Mobile Phone which is in the name of the employee as well as company, insurance premium of motor vehicle owned by company insurance premium of accident policy of the employees and insurance premium of guest house? Held that: - I find that being a manufacturer, the appellant has availed cenvat credit in respect of service tax on the mobile phones and insurance policies. All these services in my considered view is related to the factory and over all manufacturing activity therefore admissible for the cenvat credit. This Tribunal in various decision has allowed the cenvat credit on these very input services - reliance placed on the decision of the case of TELENET SYSTEMS PVT. LTD. Versus COMMISSIONER OF C. EX., BELAPUR [2009 (7) TMI 259 - CESTAT, MUMBAI]. The cenvat credit on mobile phones and insurance policies are admissible to appellant, the impugned order is set aside - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 980
  Denial of CENVAT credit - waste products - Held that: - I find that subject waste has arisen in the course of normal manufacturing process and the facts are covered by Hon’ble Karnataka High Court decision in the case of Geltec Ltd. [2011 (4) TMI 212 - KARNATAKA HIGH COURT ] where the Revenue's appeal against the judgement was dismissed and it was held that it is clear that when inputs are removed "as such" from the factory or the premises of the factory then the Cenvat credit availed, should either be reversed or duty is paid by raising an independent invoice - Even if the said waste is excisable and duty is payable, that in no way enables the authorities to insist on reversal of Cenvat Credit or payment of excise duty - Though gelatin waste is also excisable, when it is destroyed the Commissioner has the power to waive the payment of excise duty payable on such excisable item. Considering the fact that waste has been destroyed in the course of normal manufacturing process and which is everyday occurrence and following the observations made by various higher judicial fora quoted above, the appeal is allowed with consequential relief - decided in favor of appellant-assessee.

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• 2016 (12) TMI 979
  Denial of CENVAT credit - various input services - eligible input services or not - Held that: - I hold that air travel agent’s service and renting of immovable property service are very much in the nature of ‘input service’ falling within the ambit of Rule 2 (l) ibid and hence appellant is eligible to avail the same. To this extent, impugned order is set aside. However, coming to the remaining disputed input services viz. tour operator service, repair and maintenance service and insurance service, matter is remanded back to the lower appellate authority to enable the appellant adduce necessary evidence in support of their claim that the same are not in the nature of services provided to employees or their spouses, and are very much used in or relation to the manufacturing or business activity and they are not disbarred from utilization of credit by Rule 2(l) ibid as it existed during the period of dispute. Taking note that the dispute has emanated on interpretational matters, the penalty imposed under Rule 15 (1) of Cenvat Credit Rules is an over kill and hence set aside. It is made clear that the remand is only for the purpose of ascertaining eligibility of input service tax credit in respect of these three services - Appeal disposed off - matter on remand.

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• 2016 (12) TMI 978
  Denial of CENVAT credit - Business Auxiliary Service - Rule 2 (l) of the Cenvat Credit Rules, 2004 - Held that: - When we are dealing with an inclusive definition, it would be inappropriate to put a restrictive interpretation upon terms of wider denotation - the inclusive part of the definition of Rule 2 (l) ibid should only be considered as examples of the genre of input service that would be permissible - when the services disputed in this case viz. Business Auxiliary Service, Banking and Other Financial Services and Technical Services are not specifically excluded by the exclusion portion of the definition and in any case they are services essential directly or in relation to manufacture or business activities, the same would definitely fall within the ambit of Rule 2 (l) ibid - Appeal allowed - decided in favor of the assessee.

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• 2016 (12) TMI 977
  Cenvat credit - Penalty - credit of another unit availed - suppression of facts - Rule 15 (2) of the Cenvat Credit Rules, 2004 - Held that: - the appellant has to be given benefit of doubt that its improper availment of credit was only on account of inadvertent error. It is also to be kept in mind that the credit per se was not ineligible, rather only its availment by Unit-I was - Appellant has reversed the irregularly availed credit along with interest thereof on being pointed out by department - Appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 976
  CENVAT credit - Advance licence - Notification No.44/2001 - Held that: - in the case of M/s. Oleofine Organics (India) Pvt. Ltd. [2013 (7) TMI 157 - CESTAT MUMBAI], where it was held that Rules do not require the appellants to necessarily clear the goods duty free by following the procedure under Notification No. 44/2001-CE(NT) dt 26.6.2001. We also note that overall there is no loss to the Revenue as the credit is being taken of the duty paid - appellant is entitled to avail cenvat credit of central excise duties paid on the inputs - appeal dismissed - decided against Revenue.

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• 2016 (12) TMI 975
  Valuation - under section 4A of the Central Excise Act, 1944 or under Section 4 of the Act - manufacture of excisable goods viz Washing Machines, Air Conditioners, Refrigeration etc. falling under Chapter 84 of the Central Excise Tariff Act, 1985 - The said Refrigerators were not sold in the open market and were made specifically for use by M/s Coca-Cola India Pvt Ltd, M/s Hindustan Coca-Cola and their dealers. On the body of the said Refrigerators stickers showing trade name of Coca-Cola were also pasted on one or more side. The assessee cleared such Refrigerators to M/s Coca-Cola India Pvt Ltd, M/s Hindustan Coca-Cola and their dealers directly from the factory and also through their Branch Offices located in various cities. Held that: - we find that the issue in the appeal is no longer res intergra and has been settled in favour of the assessee in the judgment of Hon’ble Supreme Court in the case of Jayanti Food Processing Pvt Ltd. vs. CCE [2007 (8) TMI 3 - Supreme Court] where the Hon'ble Apex Court held that these cases would be governed by the decision of the Tribunal in ITEL Industries Pvt. Ltd. vs. CCE [2003 (10) TMI 140 - CESTAT, BANGALORE] in which case the sale of telephones by the telephone manufacturing companies to DoT, MTNL & BSNL was considered and it was held that the duty will be under Section 4A of the Act and not under Section 4 - it was also held that the cases are similar, and so no reason found to take any other view than what is held in the case of ITEL Industries Pvt. Ltd. vs. CCE. Valuation under section 4A of the Act justified - Appeal dismissed - decided against Revenue.

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• 2016 (12) TMI 974
  Cenvat credit - duty liability / reversal of credit on clearance of capital goods - Period of limitation - Held that: - We take notice of the Law as applicable during the period and the provision for payment of duty on transaction value on removable of capital assets had been brought on statute with effect from 16/05/05 wherein Sub Rule (5A) provided that if the capital goods are cleared as waste and scrap, manufacturer shall pay an amount equal to the duty leviable on transaction value. The provisions relating to proportionate depreciation come vide notification with effect from 13/11/2007. We also find that Hon’ble Madras High Court in the case of Commissioner of Central Excise, Coimbatore Vs. Lakshmi Machine Works Ltd. [2015 (3) TMI 694 - MADRAS HIGH COURT] held, where the capital assets is removed after a period of use it does not amount to removal as such. Accordingly, we hold that the removal of capital assets by the appellant in the present appeal is not removal as such and accordingly, we hold that no duty was required to be paid by way of reversal, as demanded by the revenue, being the amount in dispute - decided in favor of appellant-assessee.

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• 2016 (12) TMI 973
  CENVAT credit - denial on the ground that the address of the service provider given in the invoice is not their registered address as per the Registration Certificate - Held that: - From a plain reading of the proviso to Rule 9(2) of CCR, it is evident that discretion has been vested in the adjudicating authority, wherever there were some defects in the document or invoice of input service, et cetera like defect in particulars, it is provided that if the material particulars are contained in the invoice like the details of duty or service tax payable, description of the service, service tax registration number of the provider, and name and address of the provider of taxable service, then the adjudicating authority if satisfied that the goods or services covered by the said documents have been received and accounted for in the books of account of the receiver, he may allow the Cenvat credit - Further, the appellant have led evidences before the ld. Commissioner (Appeals) that the service provider have deposited the returns with the Department and have also annexed the challans indicating full payment of tax by the service provider - decided in favor of appellant-assessee.

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• 2016 (12) TMI 972
  Entitlement to interest - Section 11BB of Central Excise Act, 1944 - the claim of refund was filed on 08.09.2004 and the refund was sanctioned on 27.06.2005 - whether the appellant is entitled to interest? - Held that: - Section 11BB of Central Excise Act, 1944 is amply clear that the interest is payable after three months of the filing of claim for refund. The claim for refund was filed on 08.09.2004 and Ld. Commissioner (Appeals) has allowed the interest from 07.12.2004. Therefore, we do not find any infirmity in the impugned order - appeal dismissed - decided against appellant.

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• 2016 (12) TMI 971
  Demand of interest - scope of SCN - Classification of goods - Notification No.9/2000 dated 01.03.2000 - Held that: - We find that the show cause notice does not call upon the appellant to show cause as to why interest should not be paid by them. Therefore, the direction of Ld. Commissioner (Appeals) to the appellant to pay interest is beyond the scope of show cause notice. The order-in-Appeal passed by Ld. Commissioner (Appeals) to that extent has traveled beyond show cause notice - appeal allowed partially.

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• 2016 (12) TMI 970
  Clandestine removal - Cenvat credit - Held that: - attributable Cenvat Credit was reversed time to time and said intimation was recorded in RT-12 and nothing was hidden from the department. Further, there are large number of Ruling by appellate fora holding that reversal of Cenvat Credit amounts to non-availment of Cenvat Credit and since the Cenvat Credit was not availed, the question of recovery of 8% amount does not arise - appeal disposed off.

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• 2016 (12) TMI 969
  Cigarettes - clandestine removal - samples drawn for various tests - non-destructive nature of quality control test - whether duty can be charged on cigarettes taken to in-house laboratory for conducting such tests? - Held that: - We note that cigarettes are the commodity under physical control Central Excise Officers are posted in the manufacturing units for all the 24 hours. Therefore, all the activities going on in respect of manufacture and levy of Central Excise duty in cigarettes factories are within the knowledge of Central Excise authorities. Therefore, the contention of the Department that there has been suppression of fact on the part of the appellant, is not sustainable. The entire demand is raised under extended period and since the suppression cannot sustain, the invocation of proviso to Sub-Section (1) of Section 11 A of Central Excise Act, 1944 also does not sustain. We, therefore, hold that the impugned show-cause-notice is not sustainable in Law - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2016 (12) TMI 960
  Valuation - inclusion of quantity discount given to the dealers as part of the turnover is justified or not? - Held that: - Section 7 only indicates that the dealer who allows trade discount or incentive in terms of quantity in goods in relation to any sale effected by him. The quantity so allowed as trade discount or incentive shall be deemed to be a sale by the dealer. Statute does not say that the said trade discount shall form part of the turnover of the dealer. This aspect has been clarified by the Commissioner in the circular along with the illustration. - There is no evidence to show that the end customer was given the benefit of trade discount, is not at all a matter, which the petitioner is concerned. As far as the petitioner is concerned, he had effected sale of goods by providing the quantity discount and the turnover is only with respect to the consideration received by the petitioner for the quantity which is actually sold and the discount given to the dealer in question. Under such circumstances, I am of the view that this writ petition is to be allowed - The assessing authority is directed to reconsider the matter afresh in accordance with the observations made above and Circular No.5/05 of the Commissioner of Commercial Taxes - appeal by way of remand.

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• 2016 (12) TMI 959
  Classification of product - interpretation of statute - Whether the product of the petitioner as vegetable fat spread can be said as included in Entry No.32 of the III Schedule or not? Held that: - If the market parlance test is considered, we do find that the product as vegetable fat spread is having separate marketability and different use hence cannot be said as same as that of the edible oil - Hence, we find that applying the market parlance test, the product of the petitioner-appellant cannot be considered as falling under Entry No.31. If the contention of the learned counsel for the appellant is further considered to trace the composition of product then also as stated by the appellant himself the product contains 80% of edible oil - In addition thereto the product also contains starch, not less than 10 ppm and not more than 150 ppm, as per the standard prescribed by Food Safety and Standard Authorities of the Ministry of Family Welfare. Therefore, it is not that the product of the appellant contains only vegetable oil. When the product contains addition of starch and other items may be in the residuary 20% in contradiction to 80% being the vegetable oil and of her edible oils, then also it is difficult to conclude that the product of the appellant can be termed as only of edible oil - The aforesaid coupled with the aspects that the meaning of any Entry is to be considered it is to be read in comparison and in contradiction to other entries in the very schedule. As recorded by us hereinabove for certain type of oils which are also used as edible oils separate entries are provided and for certain types of concentrates of the milk used as spreader (cottage cheese) separate entries are provided. Under these circumstances, we do not find that the second test of composition of the product even if applied with the product of the appellant in comparison to the contents of the edible oils or in comparison with the product of edible oil commodity would meet with the test so as to include the product under Entry No.31 of the Schedule. The view taken by the Advance Ruling Authority cannot be said to be erroneous - the Advance Ruling Authority clarified that the product is an unscheduled commodity and therefore, tax at the rate of 14.5% would be chargeable. The product of the appellant would fall in the category of unscheduled product as held by the Advance Ruling Authority - appeal dismissed - decided against appellant.

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• 2016 (12) TMI 958
  Carry forward of Input Tax Credit - Held that: - originally because of Explanation (1) to section 19 of the Act,2005, this petitioner was not permitted to carry forward Input Tax Credit from the month of January, 2015 to February, 2015. By now, an amendment has been carried out in Explanation (1) to Section 19 of the Act, 2005 by Amendment Notification dated 4th November, 2016, which is made effective from 7th May, 2011. Hence, we, hereby direct the respondents to allow this petitioner to carry forward Input Tax Credit for the month of January, 2015 to February, 2015 and for subsequent months, as per the amended version of Explanation (1) to Section 19 of the Jharkhand Value Added Tax Act, 2005 and the assessment will be carried out of this petitioner by the Assessing Officer, in accordance with law - petition allowed - decided in favor of petitioner.

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• Indian Laws

• 2016 (12) TMI 957
  Dishonor of cheques - Complaint filed under Section 138 of the Negotiable Instruments Act,1881 - Held that:- The revisionist tried his best to run away from its liability by showing the cards of Share Purchase Agreement, i.e. Ex.CW1/D2, dated 22.06.2010 as well as profit sharing project. So far as the acting upon the agreement Ex.CW1/D2 is concerned, the same is not acted upon by the parties. There is nothing proved on record by the revisionist in rebuttal to say that the money received by them was not in consideration of the loan amount but was an investment on profit sharing basis. The respondent/complainant has proved the complaint, i.e. Ex.CW1/A, the cheques nos. 246320 and 246321, i.e. Ex. PW1/10 and Ex.PW1/8 respectively, both dated 15.05.2011 and the legal demand notice dated 02.06.2011. It is pertinent to mention, that the defence of the revisionist is sham having no roots to see the twilight of the day. Consequently, the order on conviction passed by learned Metropolitan Magistrate dated 04.09.2015 is upheld and does not require any interference. So far as the enhancement of sentence awarded by the learned Additional Session Judge, i.e. rigorous imprisonment for three months to rigorous imprisonment for one year, is concerned the learned appellate Court has rightly appreciated the facts on record as the revisionist at the initial stage has admitted its liability and despite admitting the liability the revisionist kept on taking undue benefit of the legal process and harassed the respondent/complainant and backed out many times during the court proceedings too as per the order sheet of the learned Metropolitan Magistrate dated 29.03.2012 and 15.05.2012. Consequently, the order on conviction dated 04.09.2015 passed by the learned Metropolitan Magistrate and the subsequent order of enhancement of sentence passed by the learned Additional Sessions Judge dated 22.12.2015 remains upheld and requires no interference by this Court.

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