TMI Tax Updates - e-Newsletter
December 23, 2014

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise

Articles

1. Where all the factual facts are available on the records, the Tribunal couldn’t remand back the case

   By: Bimal jain

2. CENVAT Credit on Capital Goods - III

   By: CA Akash Phophalia

3. PLACE OF REMOVAL

   By: Dr. Sanjiv Agarwal

News

1. Most of the States to benefit from GST from day one; Provisions have been Made in the Constitution Amendment Bill on GST to Ensure that none of the States Lose any Revenue after the Implementation of the GST: FM

2. Auction for Sale (Re-Issue) of Government Stock

3. RBI Reference Rate for US $

Circulars / Instructions / Orders

Customs

1. 18/2014 - dated 22-12-2014

Review of Accredited Clients Programme (ACP) - Reg.

Highlights / Catch Notes

Income Tax

• Cooperative Society's Income Tax Exemption Challenged Under New Act; Sections 80P and 80T Now Apply.

  Case-Laws - HC : Co-operative society claiming exemption - Effect on Notification issued under old act, on the enactment of new Act – under the new Act, the notification issued under the earlier Act stood repealed and the present case will be governed by Sections 80P and 80T of the Act - HC
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• Court Rules Assessee Fulfilled Obligations u/s 11(2), Grants Exemption for Financial Assistance in Key Events.

  Case-Laws - HC : Obligations mentioned u/s 11(2) fulfilled or not - assessee was to provide financial assistance to the members in case of death, retirement and permanent disability - exemption allowed - HC
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• Salary Reimbursements Classified as Fees and Royalties u/s 9(1)(vii) and Article 7 of Indo-US DTAA.

  Case-Laws - AT : Reimbursement of salary cost treated as fees for technical services – Royalty u/s 9(1)(vii) – Indo-US DTAA - If there is a PE, then Royalty or FIS cannot be taxed under Article 12, albeit only under Article 7 of the DTAA - AT
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• Court Disallows Short-Term Capital Loss on Shares Bought at Inflated Prices to Manipulate Tax Liabilities.

  Case-Laws - AT : Disallowance on Short term capital loss – assessee cannot incur short term capital loss by purchasing fresh shares at an inflated rate and to sell it out at a nominal rate - AT
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• Section 2(22)(e) Deemed Dividends Not Applicable: Inter-Corporate Deposits Not Classified as Loans or Advances.

  Case-Laws - AT : Deemed Dividend - provisions of section 2(22)(e) will not apply to the facts of this case as the inter corporate deposits cannot be treated as loans or advances in terms of section 2(22)(e) - AT
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• Company Car Use by Directors/Employees Not Non-Business; Tax Expenses Shouldn't Be Disallowed.

  Case-Laws - AT : Use of car by directors-employees of a company cannot be characterized as used for non-business purpose and, hence, no part of car expenses incurred on such cars can be disallowed. - AT
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Customs

• Anchor-Handling Tug/Supply Vessel Maintains Supply Vessel Classification for Customs and Tax Purposes Despite Multifunctional Features.

  Case-Laws - AT : Import of Anchor-Handling Tug/Supply Vessel (AHTS) - Classification - Even if the vessel has a capacity to do anchor handling, even then it would remain as a supply vessel as anchor handling feature is only as an additional facility and would not take away the vessel from the scope of a cargo vessel or a vessel which can transport persons. - AT
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• M/s. Dhakane & Co.'s Customs House Agent license revoked by Commissioner for violations and concealment attempts.

  Case-Laws - AT : Revocation of CHA License - It is in view of violations and trying to cover up the violations by the CHA, the licence issued to M/s. Dhakane & Co. has been rightly revoked by the Commissioner - AT
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• Concessional Duty on LPG Imports Covers All Types Under Tariff Headings 2711 20 00, 2711 13 00, 2711 19 00.

  Case-Laws - AT : Import of Commercial propane - the benefit of concessional rate of duty cannot be restricted to LPG used as fuel but would be applicable to all types of liquefied petroleum gases falling under Headings 2711 20 00, 2711 13 00 and 2711 19 00. - AT
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• Court Rules Against Importer for Misdeclaring Vehicle Condition; Highlights Importance of Accurate Customs Declarations Under Notification No. 21/2002-Cus.

  Case-Laws - AT : Imports of high end cars/SUVs - Valuation - Old car or new car - Benefit of Notification No. 21/2002-Cus., dated 1-3-2002 - misdeclaration proved - decided against the assessee - AT
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• Clarification on Adjournment: Offering three dates for a hearing in one letter isn't three separate adjournments.

  Case-Laws - AT : Power of adjournment - giving a choice of three dates for personal hearing in one letter and seeking of adjournment by the appellant by one month, would not amount to granting of adjournments three times - AT
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Service Tax

• Appellant Successfully Claims Cenvat Credit Despite Different Address on Insurance Policy.

  Case-Laws - AT : Cenvat credit - service tax paid by the insurance providers on various insurance policies taken out by the appellant - insurance policy has another address - credit allowed - AT
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• SSI Exemption for 2007-08: Turnover Limit Set at Rs. 10 Lakhs, Not Rs. 8 Lakhs as Previously Determined by Commissioner.

  Case-Laws - AT : SSI Exemption - Notification No. 6/2005-S.T. - during the year 2007-08 aggregate turnover of previous year to be eligible for SSI benefit should not be more than ₹ 10 lakhs and not ₹ 8 lakhs as held by the Commissioner. - AT
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• Refund Allowed for Export Input Services Initially Denied Under Wrong Category; Corrected to Port Services.

  Case-Laws - AT : Denial of refund claim - input services used in export of goods - Service Tax has been paid by the service provider under the category of Renting of Immovable Property Service but the service received by the appellant qualify under port service - refund allowed - AT
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• Party Denied Cash Refund for Service Tax; Allowed to Amend CENVAT Entries for Second Reversal.

  Case-Laws - AT : Revision of service tax return after 90 days to avail and utilize cenvat credit - No justifiable reason for grant of refund of service tax paid in cash. However, as the appellants have also paid the service tax again through CENVAT credit, they are entitled to the correction of entries, by correcting the second time reversal in their CENVAT account - AT
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Central Excise

• Rebate Claim Denial Invalid Without Original ARE-1 Forms: Exporters Deserve Benefits Without Unnecessary Barriers.

  Case-Laws - CGOVT : Denial of rebate claim - export of goods - benefit cannot be denied to the respondents for the-reason of non-submission) of originart1duplicate copies of ARE-1. - CGOVT
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• Rebate Claims Filed Late u/s 11B of Central Excise Act Face Rejection Due to Time Limit Violation.

  Case-Laws - CGOVT : Denial of rebate claim - Bar of limitation - When the rebate claims are filed after, stipulated one year as mentioned in Section 11B of the Central Excise Act, the rebate claims are liable to be rejected on limitation - CGOVT
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• Simplified Rebate and Drawback Claims: Focus on Export Facts, Avoid Overly Technical Procedures Interpretation.

  Case-Laws - CGOVT : Rebate claims - rebate/drawback etc. are export-oriented schemes. A merely technical: interpretation of procedures etc. is to be best avoided if the substantive fact of export having been made is not in doubt - CGOVT
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• High Court Quashes Penalty Proceedings Initiated After Five Years, Deems Them Unreasonable Under Established Timeframe.

  Case-Laws - HC : Initiation of penal provisions after expiry of 5 years - The period of five years has been held to be reasonable period for initiating penalty proceedings - proceedings beyond that were rightly quashed - HC
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Case Laws:

• Income Tax

• 2014 (12) TMI 793
  Violation of section 40A(2A)(b) or not – Assessee being preference shareholder of Company – Claim of ampount on capital loss by assessee in sale of old shares not cleared - Held that:- Revenue contended that the purchase price paid by these assessees to SSAIL for purchase of shares on 07/12/2007 is excessive because only after 8 days, these shares were sold by the assessee at 3.15 per share - even if it is noted by the AO that the sale price in respect of fresh purchase of shares to the extent of 19 lac shares of SSAIL on 07/12/2007 on the face value of 10/- per share was excessive, then he can disallow the Short Term Capital Loss in respect of sale of 19 lacs shares but the loss in respect of remaining old shares has to be allowed as Long Term Capital Loss - It is not understandable as to when 19 lacs shares were acquired by the assessee on 07/12/2007, how the share held in SSAIL on 15/12/2007 was only 10.10 lac shares - the shar holding of Shri Yogendra Mohan Gupta is stated to be 21.60 lac shares including 19 lac shares acquired by the assessee on 07/12/2007 – it is not clear as to the correct figure regarding total shareholding and how much long term capital loss was claimed by the assessee in respect of sale of old shares held by the assessee and whether the same was allowed by the AO or not - The order of CIT (A) is without throwing any light on these aspects. The fresh shares should be considered as issued and thereafter sold on such market value per share of the old shares for raising same amount resulting in increase in number of shares issued because whatever loss is incurred by the company and consequently the shareholders, the same was incurred till this date and it cannot be said that further loss was incurred between 07.12.2007 to 15.12.2007 - the loss in the hands of the shareholder should also be in respect of old shares only held by him on 07.12.2007 - more shares were issued to garner enough funds for making repayment of preference shares along with the accumulated dividend and other liabilities - increased long term capital loss on sale of old shares should be allowed to the assessee as long term capital loss - CIT (A) should decide the issue in this manner - the purchase price paid by the assessee for acquiring new shares on 07/12/2007 has to be determined as per the market value of the shares of the company SSAIL on 07/12/2007 - new shares at a price below than the face value, such issue of shares at a discount is permissible as per the Companies Act and hence, there is no problem on that aspect - thus, the matter is remitted back to the CIT(A) for fresh consideration – Decided in favour of revenue.

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• 2014 (12) TMI 766
  Co-operative society claiming exemption - Effect on Notification issued under old act, on the enactment of new Act – Notification No. SRO/992 dated 22.12.1950 will remain applicable or not - Whether the Tribunal is right in holding that 'Notification No. SRO/992 dated 22.12.1950 of the old Act, 1922 was not withdrawn and, therefore, it provided a good basis to the Co-operative Society to seek exemption of its income from business - Held that:- Assessee is a co-operative society and was assessed by the Income-tax Officer in the status of A.O.P – assessee prayed that its income was exempt under notification issued in 1950. -The Income-tax officer agreed that the income of the assessee was exempted under certain notifications issued in 1950 – CIT was of the view that the income of the assessee was not entirely exempt in accordance with the I.T. Act, 1961 but that it was entitled to certain exemptions governed by section 80P of the I.T. Act. Assessee contended that its income was exempt as per notification No. SRO/998 dated 22.12.1950 which was though issued under the Act of 1922 but was not withdrawn - the Tribunal had taken a view that the income of a Coop. Society was exempt but that decision was not accepted by the department and a reference was filed u/s. 256(2) of the Act, 1961 – revenue contented that it is well settled principle of law that once the new Act comes, unless there is specific mention in the earlier Act and the notifications issued therein cannot be made applicable - under the new Act, the notification issued under the earlier Act stood repealed and the present case will be governed by Sections 80P and 80T of the Act - since the basis of the assessment order was erroneous, notice under Section 263 is justified - the old notification could not have been relied by the Appellate Tribunal or the Assessing Officer and the Appellate Tribunal cannot be said to be right in setting aside the order of the CIT - thus, the order of the CIT(A) is restored and the matter is remitted back to decide the same afresh by the ITO to decide the case u/s 80P of the 1961 Act – Decided in favour of revenue.

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• 2014 (12) TMI 765
  Obligations mentioned u/s 11(2) fulfilled or not - Whether the Tribunal was correct in holding that by mentioning “Further utilization” in Form No. 10 read with Rule 17 of the Income Tax Rules, 1962 the Assessee has fulfilled its obligation as required u/s 11(2) – Held that:- THE Tribunal rightly observed that the assessee had mentioned the words “further utilization” in column No. 1 of Form No. 10, which meant that the assessee was to utilize the funds for the benefit of the members i.e. the employees of the New Bank of India in case of death, retirement and permanent disability - the funds were paid/given to the employees of New Bank of India in the eventualities and it was in this context, the words “further utilization” had been mentioned - assessee was to provide financial assistance to the members in case of death, retirement and permanent disability - This was the sole and only purpose for which funds could be utilized - the description “further utilization” was neither vague nor unspecific. During the course of assessment proceeding, the assessee has clarified and stated that the money would only be used for the purpose of making payments to the members or their legal representatives in case of their death, retirement or permanent disability - The Tribunal rightly referred to the scheme floated by the assessee under which the employees who were desirous of becoming members had to deposit 10/- as admission fees and thereafter pay 25/- per month for a period of 25 years - other benefits which were specified in part (b) of the Scheme, which stipulated that a sum of 500/- shall be paid to the members on the event specified – the order of the Tribunal is upheld - Decided against revenue.

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• 2014 (12) TMI 764
  Reassessment held as invalid u/s 147 by Tribunal - Investment reflected in the books of accounts of M/s Ishwar Dass Sahni 1,66,23,750/- The finding of the Tribunal is that the assessee had made this disclosure at the time of original assessment by responding to question asked from assessee – the issue is a factual matter and there is no need to interfere in the order of the Tribunal – Decided against revenue.

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• 2014 (12) TMI 763
  Application for condonation of delay of 400 days – Hyper-technical view taken by Tribunal - Held that:- The bifurcation of the exempt income for each unit was clearly stated and given - revenue did not contended that certain aspects were not clear or concealed or eligible profits of each unit could not be ascertained - no such assertion and contention is raised - copy of the form has also not been filed - The view taken by the Revenue is hyper-technical and does not merit issue of notice in the present appeal – thus, the notice on the application for condonation of delay in re-filing cannot be issued and the appeal is dismissed – Decided against revenue.

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• 2014 (12) TMI 762
  Determination of character of amount – claim of deduction on refund of customs duty - Whether determination as to the character of the amount could have been done at the stage of prima facie adjustment or not - Held that:- Wherever there exists a debatable issue, recourse must be had to Section 143 (2) and (3) of the Act and it is only when the facts are undisputed that the procedure u/s 143 (1) (a) of the Act can be resorted to – assessee claimed deduction of substantial amount which was in the form of refund of customs duty - a return could have been the subject matter of a prima facie adjustment u/s 143(1)(a), if only the AO accepted the version or the contention of the assessee – once he has decided not to accept that contention, there was no occasion or basis for him to invoke Section 143(1)(a) – thus, the view taken by the Tribunal is correct – Decided against revenue.

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• 2014 (12) TMI 761
  Reimbursement of salary cost treated as fees for technical services – Royalty u/s 9(1)(vii) – Article 12 of Indo-US DTAA - Whether the payment received by the assessee on account of reimbursement of cost of salary paid to the Seconded employee, constitutes fees for included services (FIS) within the meaning of Article 12(4) of India-US DTAA, that is, it is taxable in India and hence TDS u/s 195 of the Act was required to be deducted - Held that:- The assessee is a tax resident of USA and is providing support services to various Indian companies, who are subsidiaries - the salary paid to the seconded employees by the parent company, the TDS has been already been deducted u/s 192 of the Act, which has been credited to the Government of India account – revenue relied upon M/s. Centrica India Offshore Pvt. Ltd. Versus Commissioner of Income Tax-I & Others [2014 (5) TMI 154 - DELHI HIGH COURT] wherein it has been held that reimbursement of costs or re-payment, is ‘fees for technical services’. If there is a PE, then Royalty or FIS cannot be taxed under Article 12, albeit only under Article 7 of the DTAA - DTAA benefit has been availed by the assessee and therefore, treaty benefit has to be given to the assessee for granting relief - the seconded employees will constitute Service PE of the assessee in India and in that case any payment received on account of rendering of service of such employees will have to be governed under Article 7 as per unequivocal terms of para 6 of Article 12 - Thus, the ratio laid down in the decision of M/s. Centrica India Offshore Pvt. Ltd. Versus Commissioner of Income Tax-I & Others [2014 (5) TMI 154 - DELHI HIGH COURT] Hon’ble Delhi High Court, will not help the case of the revenue, in any manner because under the concept of PE, FIS cannot be taxed under Article 12, but only as a business profit under Article 7 – thus, the payment made by the Indian entity to the assessee on account of reimbursement of salary cost of the seconded employees will have to be seen and examined under Article 7 only, that is, while computing the profits under Article 7, payment received by the assessee is to be treated as revenue receipt and any cost incurred has to be allowed as deduction because salary is a cost to the assessee which is to be allowed – thus, the AO is directed to compute the payment strictly under terms of Article 7 and not under Article 12 of the DTAA – Decided in favour of assessee.

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• 2014 (12) TMI 760
  Disallowance on Short term capital loss – AO observed that shared purchased by assessee on an extraneous consideration – Violation of section 40A(2a)(b) – Held that:- In the case of Dy. CIT vs. Shri. Sanjay Gupta (2014 (12) TMI 793 - ITAT LUCKNOW), the Tribunal has taken cognizance of all these facts and has held that if the entire shareholdings of the assessee in SSAIL were sold to some other company at a lesser rate, in the original shareholdings the assessee may incur long term capital loss, but the assessee cannot incur short term capital loss by purchasing fresh shares at an inflated rate and to sell it out at a nominal rate. The Tribunal has also observed in that order that whatever value of the shares are declined, it was declined upto September, 2007 and thereafter there was no decline in the value of shares, as it was purchased and sold within a period of three months. In that case, the Tribunal has only allowed long term capital loss to the assessee and not short term capital loss. Following the decision in case of Dy. CIT. -4, Kanpur Versus Shri Sanjay Gupta and others [2014 (12) TMI 793 - ITAT LUCKNOW] the assessee has not claimed any long term capital loss. Only short term capital loss was claimed on purchase made between 11.9.2007 to 12.12.2007 and the sales made on 15.12.2007. The purchase and sales were made within a short period, therefore, there cannot be change in the market value of shares. Therefore, there is no question of short term capital loss to be suffered by the assessee. - Decided in favour of revenue.

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• 2014 (12) TMI 759
  Selection of comparables - Infosys Technologies Limited – Diverse nature of services provided by comparable - Held that:- The Annual report/website of Infosys provides information on the diverse nature of services provided by it as Infosys is the largest publicly held software development company in India - It service profile includes consulting application design, development, re-engineering and maintenance, systems integration, package evaluation and implementation, business process management - The company has diverse domain expertise in areas such as engineering enterprises financial services, healthcare, technology, manufacturing, retail and distribution, telecom, transportation, utilities and energy - unlike the assessee, Infosys is extremely diversified and undertakes a wide range of services apart from software development- . Since the revenue and profitability for software development cannot be ascertained from the data in the annual report, Infosys cannot be included as comparable – also CIT v. Agnity India Technologies (P) Ltd [2013 (7) TMI 696 - DELHI HIGH COURT] Infosys Technologies Limited is directed to exclude from the list of comparable on account of its giant-ness which was decided on cumulative factors including risk profile, nature of service, turnover, ownership of brand, onsite versus offshore service, expenditure on R & D and advertisement etc. - Infosys Technologies Ltd cannot be held to be a comparable company to that of the assessee. Nucleus Netsoft & Gis India Limited – Functionally dissimilar - Software development services – Held that:- company is functionally dissimilar to that of the assessee on account of diversified operation - during the relevant financial year, Nucleus Netsoft&Gis India Ltd underwent restructuring exercise on account of amalgamation which impacted the financial statement of the company - since the assessee had neither raised any objection of Nucleus Netsoft&Gis India Ltd being included as comparable company before the TPO nor the DRP considered the assessee’s objection, thus, the matter is remitted back to the TPO. Grant of working capital adjustment – Held that:- The TPO had rejected the assessee’s claim for working capital adjustment, primarily for the reason that there was no accurate or sufficient data/working given by the assessee to make reliable working capital adjustment - assessee contended that it had worked out the computation for working capital adjustment with accurate and sufficient data and also in accordance with the settled economic principle - DRP had not elaborately considered the assessee’s objection and since the assessee has contested the TPO’s finding that no accurate and sufficient data was available to make reliable working capital adjustment, the matter is to be remitted back to the TPO for fresh consideration. Restriction of depreciation claim to 15% instead of 60% on computer peripheral/accessories – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that depreciation on computers peripheral, namely, UPS & Printers would be admissible @ 60% - Decided in favour of assessee.

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• 2014 (12) TMI 758
  Loan to be treated as deemed dividend u/s 2(22)(e) – Loan paid to M/s. Ernst & Young Merchant Banking Services Pvt. Ltd. - Inter corporate deposits to be treated as loans or not - Substantial part of the business of the lending company is that of money lending or not – Held that:- The assessee took inter corporate deposits from its subsidiary company Ernst & Young Merchant Banking Services Pvt. Ltd. - assesses had offered it to tax initially but he claimed it as not taxable and therefore the matter has to examined on merits and to determine as to whether it is taxable under the Act - it is not taxable as decided in Utkarsh Fincap (P.) Ltd. Versus Income-tax Officer, Ward 8 (4) [2005 (11) TMI 167 - ITAT AHMEDABAD-A] as held that interest on inter-corporate deposits are not chargeable to interest tax, as the deposits are in the nature of loan or advances - the main objects of the company was to carry on the business of merchant banking i.e. financing, which clearly reveals that the assessee is in the business of financing and once assessee is in the business of financing, the provisions of section 2(22)(e) of the Act will not apply to inter corporate deposits - the assessee has accepted inter corporate deposits from a sister concern and also assessee is engaged in the business of finance, as is clear from the objects mentioned in Memorandum of Association, the provisions of section 2(22)(e) of the Act will not apply to the facts of this case as the inter corporate deposits cannot be treated as loans or advances in terms of section 2(22)(e) of the Act – Decided against revenue.

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• 2014 (12) TMI 757
  Restriction of rate of depreciation on ITG Networking Equipments @ 25% against 60% - Held that:- The AO restricted the claim of depreciation on ITG Networking Equipments by relying on the view taken by him for the AY 2002-03 - the applicability of higher rate of depreciation is accepted by relying on the Special Bench order passed in the case of DCIT vs. Data Craft India Ltd. [2010 (7) TMI 642 - ITAT, MUMBAI] - in the absence of any distinguishing feature having been brought to our notice by the revenue about the facts of the instant year and the preceding year – Decided in favour of assessee. Depreciation on company owned vehicles disallowed – Held that:- The company provided vehicles to its employees for their use for which the purchase price was paid by the company, unless it exceeded the benchmark fixed by it – in DCIT vs. Haryana Oxygen Ltd. [1999 (12) TMI 107 - ITAT DELHI-D] it has been held that use of car by directors-employees of a company cannot be characterized as used for non-business purpose and, hence, no part of car expenses incurred on such cars can be disallowed. In Sayaji Iron and Engineering Company vs. CIT 2001 (7) TMI 70 - GUJARAT High Court] it has been held that once the directors of the assessee company were entitled to use the vehicles of the company for the personal use as per the terms and conditions of their appointment, it cannot be said that the assessee incurred expenditure for the personal use of cars by the directors - such user of vehicles by the employees of the company cannot even be considered as ‘non-business user” - There are innumerable judgments on this point holding that there can be no disallowance of depreciation or other expenses on maintenance of the vehicles used by the directors/employees by treating it as personal user or non-business user of the company – there is no rationale in treating the amount of depreciation on cars as for personal use, when admittedly these have been provided to employees - a company is a separate legal entity distinct from its directors or employees - as such, there can be no occasion to treat the use of vehicles by the directors/employees as a personal use by the company - the deletion of the addition of depreciation on such vehicles is ordered. Prior period expenses disallowed – Held that:- The assessee debited ‘Prior period expenses’ amounting to 83,62,295/- These expenses were voluntarily not claimed as deduction in the computation of income for the AY 2007-08 - the ‘Prior period expenses’ appearing in the accounts for the AY 2007-08 would mean that the expenses were incurred for the earlier years including AY 2006-07 – the assessee incurred some expenses for the period relevant to the AY 2006-07 during the period relevant to the AY 2007-08 without claiming deduction in the computation of income of any of the years - Such expenses deserve to be allowed as deduction in the computation of income, to which they pertain - there can be no reason to deny deduction for such expenses genuinely incurred for the purpose of business, if these are otherwise deductible as per law – thus, the matter is remitted back to the AO to scrutinize the details of such ‘prior period expenses’ booked in the accounts for AY 2007-08 for ascertaining if these were incurred for the AY 2006-07 and then to that extent allow deduction, if these are otherwise deductible. Transfer pricing adjustment – Selection of comparables - Engineers (India) Ltd.- International transaction of provision of marketing support services – Held that:- Simply because the assessee chose an incomparable company as comparable for an earlier year, cannot bind it for all the years to come - What is required to be examined is the actual comparability for the year in question rather than what was done in the past - If the assessee, having included the name of a company in its comparables for the earlier years or even for the current year, contends before the TPO or DRP etc., that this company is not, in fact, comparable, then it is for the authorities to first decide the comparability on merits and then proceed for its inclusion or exclusion in/from the list of comparables. A mere claim made by the assessee for considering a company as comparable, does not ipso facto lead to its final inclusion or exclusion. It is only when the TPO examines the assessee’s contention that he can reach a positive conclusion about the comparability of such a company - Engineers (India) Ltd., is a company providing engineering and related technical services for petroleum refineries and other industrial projects - This company has two business segments, namely, Consultancy Export of Rolling Stock, Equipments and Spares; and leasing of Railway Rolling Stock and Equipments - the functional profile of this company is nowhere near the assessee, which is simply providing marketing support services by largely creating customer awareness for the Microsoft products in India - This company is directed to be excluded. TCE Consulting Engineers Ltd. – Held that:- This company is engaged in the provision of engineering services, such as, operation and design engineering, upgradation & renovation services, surveys & field investigation services - This company is operating only in one segment, namely, engineering consultancy services - there can be no comparison of this company with the assessee company - This company is also directed to be expelled from the list of comparables – Decided in favour of assessee.

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• 2014 (12) TMI 756
  Maintainability of appeal – Tax effect less than prescribed monetary limit for filing appeal – Tax effect less than 4 lacs – Revision of monetary limits through circular - Held that:- Following the decision in CIT Vs M/s. P. S. Jain 4 Lacs - no appeals would be filed in the cases involving tax effect less than 4 Lacs notwithstanding the issue being of recurring nature - the prevailing instructions fixing the monetary limit for the tax effect would hold good even for pending cases – revenue could not point out any of the exceptions - this being a low tax effect case, the appeal cannot be admitted – Decided against revenue

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• 2014 (12) TMI 755
  Maintainability of appeal – Tax effect less than prescribed monetary limit for filing appeal –Tax effect less than 4 lacs – Revision of monetary limits through circular - Held that:- Following the decision in CIT Vs M/s. P. S. Jain 4 Lacs - no appeals would be filed in the cases involving tax effect less than 4 Lacs notwithstanding the issue being of recurring nature - the prevailing instructions fixing the monetary limit for the tax effect would hold good even for pending cases – revenue could not point out any of the exceptions - this being a low tax effect case, the appeal cannot be admitted – Decided against revenue.

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• 2014 (12) TMI 754
  Confirmation of protective assessment –Held that:- The AO replied that till date they could not find the status of substantive addition and shown ignorance - as the revenue could not point out, where the substantive addition made and what happened to the same, the appeal was kept pending since 2010 and adjourned 36 times - this appeal cannot be kept pending for ever for the fault of revenue - the protective addition is deleted because the revenue is unable to bring on record what happened to substantive addition - in case, revenue is able to show us that substantive addition has been deleted in the hands of Siliguri Prabhupada International Research Society and there is a direction that this addition should be considered in the hands of the assessee, then they may get this order recalled as per the provisions of the Act – decided in favour of assessee. Addition made on the basis of difference between investment shown by the assessee in the cost of construction of building in its books of account and cost estimated vide DVO’s report - Whether reference can be made without rejecting book results or not, to DVO for estimating cost of construction, particularly when no defects were found in books of account except disallowance of small discrepancies and other preliminary expenses being capital in nature, which were added, while completing assessment u/s. 143(3) - Held that:- Following the decision in ITO Vs. M/s. Sahul India Limited [2011 (8) TMI 1038 - ITAT KOLKATA] - there is no whisper about any discrepancy in books of account and there is no rejection of books of account by AO – the AO should not have referred the matter to the DVO for estimating cost of construction particularly when the cost of construction is fully described in the books of account. A clear finding to that effect, along with materials on which such finding is based, has to be made out and given by AO - no assessment under the first proviso to section 145(1) of the Act or under section 145(2) of the Act can be sustained if the AO has not considered and recorded a finding against the assessee as to whether he has been regularly employing a method of accounting or whether his income, profits or gains can properly be deduced from his method of accounting if he has been regularly employing a method of accounting or whether the accounts are correct and complete, and the AO’s decision on these matters is not to be a subjective or arbitrary decision but a judicial decision and cannot be accepted if there is no material to support his findings - the AO referred cost of construction to DVO without rejection of books of account, which is not as per established legal propositions – thus, the addition based on DVO’s report estimating cost of construction without rejection of books of account, as the books of account were maintained properly by assessee recording the cost of construction is set aside – Decided in favour of assessee.

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• 2014 (12) TMI 753
  Deletion of disallowance of expenses on repairs – Capital expenses or not – Held that:- Held that:- No material was brought on record to show that any new asset was acquired by the assessee – in ACIT vs. Desai Bros. [1974 (9) TMI 9 - GUJARAT High Court] it has been held that even replacement of the petrol engine by a diesel engine would not bring into existence a new asset and was allowable as current repairs - replacement of parts of a machine, even if such replacement was more than cost of the machine itself, would qualify for deduction as revenue expenditure as no new asset or advantage of enduring benefit was brought into existence by any such expenditure - CIT(A) was rightly of the view that after treating 55% of the expenditure of 71,86,752/- as revenue, there was no justifiable basis for the AO to arbitrarily treat 45% of the same expenditure as capital in nature - The expenditure incurred can be either capital or revenue but it cannot be partly Revenue and partly capital - In respect of balance amount of 24,25,216/-, the CIT(A) found that the same was incurred for replacing the existing asset and not for acquiring any new asset – there was no material to show that any new asset which was not existing earlier was acquired by the assessee incurring the expenditure of Rs. 24,25,216/-, there is no reason to interfere with the order of the CIT(A) – Decided against revenue.

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• Customs

• 2014 (12) TMI 772
  Import of Anchor-Handling Tug/Supply Vessel (AHTS) - Classification - Rate of duty - Inclusion of freight value @20% and insurance amount @1.125% to the goods - Held that:- In view of the classification of the vessel by the Indian Register of Shipping as a ‘supply vessel', which is the competent authority for issue of certificate of class of vessels in India, and also in view of the Chartered Engineer's certificate issued at the time of importation, there is merit in the appellant's contention that the vessel would merit classification under CTH 8901. We also find that the American Bureau of Shipping has also classified the vessel as a ‘supply vessel'. Even if the vessel has a capacity to do anchor handling, even then it would remain as a supply vessel as anchor handling feature is only as an additional facility and would not take away the vessel from the scope of a cargo vessel or a vessel which can transport persons. Valuation - Held that:- As regards the re-determination of value, we find that the Commissioner has adopted a rate of 21.125% of the cost towards freight and insurance. The appellant had given details of the expenditure incurred by them for the transport of the vessel from Dubai to India. In such a situation, the Commissioner could not have added freight and insurance @21.125%. Since the vessel had come on its own motion, only the actual cost of transportation incurred should have been added for determination of assessable value. As regards the confiscation and imposition of penalty, we do not find any reason for the same. The vessel was examined by the Customs Officers along with a Chartered Engineer before its clearance was allowed. When the appellant claims a classification under CTH 8901, it is based on its understanding of the subject matter and the same cannot be treated as a mis-declaration as held by the hon'ble apex Court in the case of Northern Plastic Ltd. vs. Collector of Customs & Central Excise [1998 (7) TMI 91 - SUPREME COURT OF INDIA]. In the present case, the vessel was boarded by the Customs officers and was examined. Thereafter, the goods have been cleared accepting the declaration of the appellant. In such circumstances, the question of mis-declaration would not arise at all. Therefore, the wrong classification claimed by the appellant as held by the adjudicating authority, with which we do not agree, cannot be a reason for invoking the provisions of Section 111(m) for confiscating the goods and imposition of fine and penalty on the appellants. Such a unilateral action on the part of the department without any rhyme or reason cannot be sustained in law. - Decided in favour of appellant.

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• 2014 (12) TMI 771
  Revocation of CHA License - Forfeiture of security - Section 108 of the Customs Act, 1962 - Violation of Regulation 13 of CHLAR - Attempt to smuggle red sanders - Held that:- From the records of the case and also the inquiry officer's report, it is seen that the authority letter issued by M/s. Leed Impex in favour of the appellant is a fabricated one. The proprietor of M/s. Leed Impex Shri Bhujwala Arif Yakub has confirmed to the Investigating authority that his firm has never issued any such letter in favour of M/s. Dhakane & Co. Therefore, the charge against the CHA of acting without an authorisation from the exporter is clearly established. In order to cover up the transaction, a fabricated letter has been produced by the CHA which has been found to be bogus as confirmed by the proprietor of M/s. Leed Impex. Thus the charge of contravention of Regulation 13(a) is established beyond any doubt. As regards the contravention of Regulation 13 (b) i.e. the CHA transacted the business through a person who was not its employee and who was not authorised to represent the CHA. This is clearly established from the statement of Shri Deepak Sejpal who in his statement recorded under Section 108 of the Customs Act has admitted that he was not authorised to attend the Customs clearing/documentation work and he used the CHA licence of M/s. Dhakane & Co. and it was done with the knowledge of Director Shri Ashok Pandurang Dhakane of the CHA firm. This is also corroborated by the statement of Shri Bala Baburao Jadhav and Shri Vinod Shinde, employees of the appellant CHA firm and therefore, the charge of contravention of Regulation 13 (b) of having transacted the business through unauthorized persons also stands proved. As regards the third charge of contravention of Regulation 13 (d), it is clear that the CHA never dealt with the exporter or the persons authorised by the exporter but dealt with another person, viz., Shri Deepak Dariyalal Sejpal. Therefore, the question of advising the client to comply with the provisions of the Act would not arise at all. In the light of these evidences available on record it is clear that the relevant provisions of the CHALR 2004 have been violated by the appellant. It is in view of these violations and trying to cover up the violations by the CHA, the licence issued to M/s. Dhakane & Co. has been revoked by the Commissioner. - Following decision of H. B. Cargo Services [2011 (3) TMI 816 - ANDHRA PRADESH HIGH COURT] - Decided against appellant.

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• 2014 (12) TMI 770
  Duty drawback claim - Failure to produce Cenvat credit non-availment certificate - Since the applicant failed to reply the query within 15 days, claim was made zero and the applicants were asked to file supplementary claims with relevant documents - Supplementary claims rejected by the original authority as ‘time-barred’ - Held that:- The applicant as an exporter was duty bound to rectify deficiencies and reply to query as pointed out by the department and non-compliance of the same rendered their claim liable for rejection. The applicant themselves stated that claims filed in EDI system were zeroed vide the scroll number dated 1812/23-6-2009 and 1813/1-7-2009. So he cannot argue that the said claims are still pending. Applicant was aware of the rejection of claims and the supplementary claim was required to be filed under Rule 15 in time. Further, they admitted that they were advised by the department to file supplementary claim, which they filed only on 25-1-2011 i.e. after lapse of more than 18 months. As such, the supplementary claims filed after lapse of stipulated time limit of 3 months were rightly rejected as time-barred. It has been also pointed out by the department that the applicant by suppressing the fact that their earlier supplementary claims were already rejected, filed fresh supplementary claim on 7-5-2012. This action on the part of the applicant is an attempt of getting illegitimate export benefit which was already rejected. Keeping the whole facts in mind, Government finds that the applicant were rightly held ineligible for drawback claim by treating the supplementary claim as time-barred - Decided against assessee.

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• 2014 (12) TMI 769
  Commercial propane cleared as liquefied petroleum gases - concessional rate of duty - Classification of goods - commercial parlance test - LPG classifiable under CTH 2711 19 00 or under CTH 2611 12 00 - Notification 4/2006-C.E., dated 1-3-2006 - Entry at serial No. 27 - Held that:- These goods are nothing but gases at the ambient temperature and pressure and are of petroleum origin. However, these gases get liquefied even at the normal temperature but at certain pressure. Such goods are termed as liquefied petroleum gases. Even the Tariff entry further sub-classifies into two categories, viz. liquefied and in gaseous state. Thus, if natural gas is imported or cleared in gaseous form, then it gets classified under 2711 21, but the same goods if imported or cleared in liquefied form, then these get classified under 2711 11. The term petroleum gases is a generic term and covers a vide range of gases or mixture of such gases within its fold. For example, ethylene, propylene, butylene, butadiene, butane, propane are some of the petroleum gases. Each individual component such as ethylene and other gases mentioned earlier can be separated from the mixture and used for a specific purpose. - liquefied petroleum gases (LPG) is a term which is generic in nature and covers a wide range of petroleum gases which are in the liquefied form. Propane is one of such gas. Scope of the exemption notification - Held that:- it is clear that the term ‘liquefied petroleum gases’ though not defined in the Notification but is a term used in the Tariff as also other entries in the Notification. Since the Notification does not define the scope of the said term, the scope of the term as envisaged in the Tariff will be applicable. As per our analysis, in the Tariff “liquefied petroleum gases” would cover propane and therefore propane would be chargeable to concessional rate of duty as per the entry in the Notification. In the ISI Specification, in the beginning it is stated that the term applies to a mixture of certain light hydrocarbons derived from petroleum. Clause 3.1.1 further clarifies that LP gases mainly consist of one or more of the specified hydrocarbons. Propane is one of the specified hydrocarbons. Para 3.1.2 also states that a small quantity of ethane, ethylene, pentane and pentene may also be present in the liquefied petroleum gases. In clause 4, different types of LP gases are mentioned. Commercial propane is specifically mentioned as a type of LP gases. We also note that one of the respondents in the present case is actually using the commercial propane as a fuel in its factory. We do not consider it necessary to go into the various details provided by the respondents from the internet. Suffice to state that these details indicate propane as liquefied petroleum gas. Thus in our view, propane is considered as Liquefied Petroleum Gases (LPG) in trade or commercial understanding. No basis of stating that LPG is produced by mixing butane and propane in such a way that it meets the specification prescribed for LPG. Even if that is so, the proper course for the Government would have been to include such specification in the Notification. It would have also been appropriate to include the end-use if the intention was to restrict the benefit of concessional rate to LPG used for fuel only. In the absence of such stipulation in the exemption Notification, the benefit of concessional rate of duty cannot be restricted to LPG used as fuel but would be applicable to all types of liquefied petroleum gases falling under Headings 2711 20 00, 2711 13 00 and 2711 19 00. Goods under dispute can be used either as fuel or in the manufacturing process. If used in the manufacturing process, they are entitled to get the credit of duty paid by them. Thus, they do not gain by paying the lower rate of duty. - Decided against Revenue.

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• 2014 (12) TMI 768
  Imports of high end cars/SUVs - Valuation - Old car or new car - Benefit of Notification No. 21/2002-Cus., dated 1-3-2002 - confiscation under Section 111(d) & Section 111(m) - Held that:- All that the appellant has been arguing that the value should be taken based upon the import price of similar vehicles by the dealers in India. First of all, we find no such invoice has been produced. Even no claim has been made how much will be the value for the vehicles imported by the dealers in India. We also note that dealers would be importing the said car in large quantity and will be storing the cars in their showroom for sale. They will also be spending on advertisement etc. They also provide sale after service. Therefore, these two imports viz. by dealer and individual passengers are not comparable. In any case, since no invoice has been produced for the dealer’s import nor it is stated what should be the correct value, we do not find any merit in the argument of the appellant. impugned order provides details of two Bills of Entry of similar car which were imported around the same time by individuals as in the present case. These details were also given to the appellant vide demand notice and he has not questioned the correctness of the same. We also note that the department has given depreciation for the period 10-11-2007 to 16-7-2008. The department has also decreased the value due to the fact that the impugned car was with 6-speed manual transmission system while in the two invoices it was R-Tronic transmission. - there is no such claim by the appellant that due to some extraordinary reasons they were able to get the car at a cheaper price. - Decided against the assessee. Old car or New Car - Held that:- DRI approached the local dealers to find out certain details. They informed that the car was manufactured on 10-11-2007 in Neckarsulam, Germany and the car was registered first time on 7-12-2007 in UK. It was also indicated that the said car was repaired on 7-12-2007 on a customer complaint relating to “Q/S/F, window goes up and then drops back down”. At that time it has run 1030 kms. The date of shipment from Felixstowe was on 16-7-2008. We do not see any reason to discard the said details and M/s. Audi Mumbai had provided the said details at the request of investigating officers. - the car was used one. Consequently the benefit of Notification No. 21/2002-Cus., dated 1-3-2002 will not be available to the said vehicle. - Decided against the assessee. Absolute confiscation of cars - Held that:- the adjudicating authority is required to give option to the owner of the goods or where such owner is not known to the person from whose possession or custody such goods have been seized. The only exception to the said position is in case of prohibited goods under the Customs Act or any other law, for the time being in force. It is true that the cars can be imported. However, these are not freely importable but there are policy conditions for the import of such vehicles. - option will have to be given for redemption as per Section 125 of the Customs Act, 1962 to the owner of the car or where such owner is not known to the person from whose possession or custody such goods are seized. Disposal and claim for sale proceeds - Held that:- the application of sale proceedings will have to be as per Section 150 of the Customs Act, 1962. The car imported is chargeable to customs duty. The said customs duty has to go to Government Exchequer from the sale proceeds. In view of the said position, the ld. Adjudicating authority may first decide whether the car is available and whether the car is required to be redeemed on payment of redemption fine. Depending upon the factual position, the sale proceeds have to be decided as per Section 150 of the Customs Act along with any case law on the subject. Levy of penalty - Held that:- it is very clear that the Appellant No. 2 has been importing the car by misdeclaring in the name of different persons and in this case he has imported the said car in the name of Appellant No. 1. We also note that only Appellant No. 2 approached CHA for clearance. In view of this position, penalties imposed under Section 112(a) and 114AA are upheld. The penalties imposed are not excessive. - Decided against the assessee.

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• 2014 (12) TMI 767
  Power of adjournment - Choice of three dates for personal hearing in one letter - Adjudication procedure u/s 122A - Violation of principle of natural justice - Held that:- The words “give an opportunity of being heard to a party in a proceeding” in sub-section (1) of Section 122A of the Customs Act, 1962 make it clear that an opportunity of hearing is to be given to a party. The power of adjournment is given in sub-section (2) of Section 122A of the said Act. Proviso to Section 122A(2) has restricted to such adjournment not more than three times. In the present case it is seen from Para 26 of the adjudication order that an opportunity of hearing was given under Section 122(A)(1) of the Act, 1962 and the applicant requested for adjournment by letter dated 13-10-2013. Thereafter as contended by the learned advocate, personal hearing notice was issued by fixing the date at 16-11-2011 or alternatively at 18-11-2011 which would be taken as one opportunity. The Tribunal in the case of Afloat Textiles (P) Ltd., (2007 (7) TMI 444 - CESTAT, AHMEDABAD) observed that giving a choice of three dates for personal hearing in one letter and seeking of adjournment by the appellant by one month, would not amount to granting of adjournments three times. - Principles of natural justice have been violated by the adjudicating authority, which is in favour of the applicant and therefore, there is no need to look into the other two issues. - Matter remanded back the original adjudicating authority - Decided in favour of assessee.

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• Service Tax

• 2014 (12) TMI 792
  Waiver of pre deposit - Commercial or industrial construction service - construction of shops, flats and bungalows etc. for Raipur Development Authority - Held that:- Regarding the classification prior to 1.6.2007, the same has to be determined as per the definitions of taxable services during the relevant period. Whether the flats and bungalow constructed by the appellants satisfied the definition of construction of complex service requires a detailed look into to arrive at a finding thereon. - the appellants have already paid close to the entire service tax demand - Stay granted.

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• 2014 (12) TMI 791
  Denial of cenvat credit - service tax paid by the insurance providers on various insurance policies taken out by the appellant - insurance policy has another address - Held that:- Insurance of plant and machinery, company’s vehicles, cash in box and in transit at various counters etc. and the services provided in relation to the business activity of an assessee. On merits, I find that appellant has made out a case that they are eligible for availment of such cenvat credit of the service tax paid on the insurance policies taken out for plant and machinery, cash in transit, cash in hand etc. Second address mentioned in the insurance policy is also of the same assessee. It was claimed by the appellant assessee before the lower authorities that the second address indicated in the insurance policy is nothing but an open plot purchased and allotted to them by GIDC vide allotment letter dated 12.10.2010. On perusal of the records, I find that the premium paid on the insurance policies were prior to the allotment and in the said allotment letter it is specifically indicated that the appellants were handed over an open and vacant plot by the GIDC for further constructions. Be that as it may, since the open and vacant plot is also of the same assessee, even if the insurance policy covers the said plot, denial of cenvat credit of service tax paid seems to be not in consonance with the law. Appellant is eligible to avail cenvat credit and the impugned order to that extent is incorrect and is liable to be set-aside and I do so. Since I allowed the appeal of the appellant upholding reversal of small amount, there is no necessity of visiting the appellant of any penalty - Decided in favour of assessee.

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• 2014 (12) TMI 789
  SSI Exemption - Renting of Immovable Property Service - Notification No. 6/2005-S.T. as amended by Notification No. 8/2008 dated 1.3.2008 - Held that:- during the year 2007-08 aggregate turnover of previous year to be eligible for SSI benefit should not be more than 10 lakhs and not 8 lakhs as held by the Commissioner. Since the appellant has not exceeded 10 lakhs turnover during the year 2007-08, the appellant is eligible for the benefit of SSI exemption during the year 2007-08. In the year 2007-08, the gross amount received by the appellant was 9,13,700 - appellant does not deserve to be penalized at all. Accordingly, we uphold the demand of 8,303 plus interest towards service tax. Demand for balance amount and penalty are set aside. - Decided in favour of assessee.

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• 2014 (12) TMI 788
  Penalty u/s 76 & 78 - Held that:- Adjudicating Authority has not imposed the penalties under Section 76 which was contested by the Revenue before the First Appellate Authority and the First Appellate Authority also concurred with the views of the Adjudicating Authority. I find that the contention raised by the Learned Department Representative are having strong force inasmuch as the show cause notice which is issued in this case is on 14-2-2008 and the provisions of Sections 76 and 78 for imposition of penalties were invoked. The provisions of Section 78 of the Finance Act, 1994 were amended from 16-5-2008 which provided for imposition of penalties either under Section 76 or 78. In the facts and circumstances of this case, since the show cause notice is issued prior to the amendment, I find that both the Lower Authorities were in error in not imposing penalties under Sec 76 of Finance Act, 1994. The orders of both the Lower Authorities are liable to set aside to the extent they held the penalties under Section 76 cannot be imposed. Impugned order is set aside - Decided in favour of Revenue.

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• 2014 (12) TMI 787
  Renting of immovable property service - service tax on movable fixtures/movable assets which were transferred to the tenants for using in the facility - Held that:- Commissioner (Appeals) took a totally new ground. He has stated that these are all fixtures fixed to earth and therefore cannot be removed and have to be considered as immovable assets. Further he has not revealed the evidence, on the basis of which, he has come to the conclusion. We were also not able to find any evidence for coming to such conclusion. The original authority had relied on trial balance sheet and financial statements to decide that these are movable fixtures. In the absence of any basis to show that the assets for which service tax is being demanded was immovable, we are unable to uphold the impugned order. In the result the impugned order is set aside - Decided in favour of assessee.

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• 2014 (12) TMI 786
  Waiver of pre deposit - Information Technology Software Services - Held that:- On going through the definition ITSS as provided in clause (zzzze) of Section 65(105), the software supplied electronically only appears to be liable and therefore in the case which is before us where software has been provided after loading on physical media, is not covered. Therefore appellant has made out prima facie case for waiver on merits. Accordingly, the requirement of pre-deposit is waived and stay against recovery is granted - Stay granted.

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• 2014 (12) TMI 785
  Denial of refund claim - input services used in export of goods - Renting of Immovable Property service at port - Service not notified under Notification 41/2007 - Held that:- As per Section 65(82) of the Finance Act, 1994, the port service means “any service rendered by a port or any person authorised by the port, in any manner, in relation to a vessel or goods.” A plain reading of the above definition clarifies that in port area any service received by the appellant is to be known as port service. If the service provider has paid Service Tax under Renting of Immovable Property Service, the same will be classified service as port service availed by the appellant. Same view has been taken by this Tribunal in the case of Pratap Re-rolling P. Ltd. (2014 (9) TMI 814 - CESTAT MUMBAI) wherein this Tribunal has held that “The board vide Circular No. 112/6/2009-S.T., dated 12-3-2009 has clarified that irrespective of the categorisation of the services under which the taxes have been paid, if the services received are notified in Notification 41/2007-S.T., the benefit of refund would be available.” In this case the Service Tax has been paid by the service provider under the category of Renting of Immovable Property Service but the service received by the appellant qualify under port service. Therefore, relying on the decision of Pratap Re-roling P. Ltd. (2014 (9) TMI 814 - CESTAT MUMBAI), the appellant is entitled for refund claims. - Decided in favour of asessee.

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• 2014 (12) TMI 784
  Revision of service tax return after 90 days to avail and utilize cenvat credit - refund claim filed for claiming service tax paid in cash - Held that:- Service tax liability was discharged by the appellants in the month of October, 2009 and S.T.-3 return was filed on 24-4-2009. At that particular point of time, their CENVAT account was nil. Subsequently, the entries made in the CENVAT account was checked by them and certain mistakes were detected, resulting in availability of CENVAT credit. They subsequently sought revision of the same on 21-12-2011, i.e., after a period of 2 years and 8 months which according to the lower authorities was not in accordance with law inasmuch as Rule 7B of the Service Tax Rules, 1994 allows any revision to correct a mistake or omission within a period of 90 days of the filing of such return. Though the correction of entries in the CENVAT account is not the subject matter of the present appeal, but the same are inter-connected and inter-related to the issue of refund. Appellants having paid the duty through cash, at the relevant time and having duly reflected the same in their S.T.-3 return, has to be treated as the correct payment of duty. Subsequently, correction of CENVAT account resulting in availability of CENVAT credit cannot be held to be a ground for refund of the cash deposit and acceptance of the tax through cash. Even the fact of correction of entries in CENVAT account does not stand accepted by the Revenue. I find no justification for refund of the cash deposit, which were, when made, were correct. No justifiable reason for grant of refund of service tax paid in cash. However, as the appellants have also paid the service tax again through CENVAT credit, they are entitled to the correction of entries, by correcting the second time reversal in their CENVAT account. - Decided against assessee.

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• Central Excise

• 2014 (12) TMI 783
  Denial of rebate claim - Non submission of original ARE-1 and duplicate copies for the goods exported - Held that:- rebate sanctioning authority shall not reject the rebate claim on the ground of non-submission of original and duplicate copies of ARE-1 forms if it is otherwise satisfied that conditions for grant of rebate have been fulfilled. - proof of export may be examined on the basis of collateral evidences where original and duplicate ARE-1 form is not submitted. - on the basis of collateral evidences, it is established that duty paid goods have been exported. This detailed factual verification by the appellate authority has not been controverted by department on the basis of any substantial documentary evidences. Under such circumstances, Government is of considered opinion that the benefit cannot be denied to the respondents for the-reason of non-submission of originart1duplicate copies of ARE-1. Rebate/drawback etc. are export-oriented schemes. A merely technical interpretation of procedures etc. is to be best avoided if the substantive fact of export having been made is not in doubt, a liberal interpretation is to be given in case of any technical lapse. - Decided against Revenue.

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• 2014 (12) TMI 782
  Denial of rebate claim - Bar of limitation - Held that:- As per explanation(a) to section 11B, refund includes rebate of duty of excise on excisable goods exported out of India or excisable materials used in the manufacture of goods which are exported. As such the rebate of duty on goods exported is allowed under Rule 18 of the Central Excise Rules, 2002 read with Notification No. 19/2004-CE(NT) dated 06.09.2004 subject to the compliance of provisions of section 11B of Central Excise Act, 1944. The explanation A of section 11B has dearly stipulated that refund of duty includes rebate of duty on exported goods. Since the refunds claim is to be filed within one year from the relevant date, the rebate claim is also required to be filed within one year from the relevant date. When the rebate claims are filed after, stipulated one year as mentioned in Section 11B of the Central Excise Act, the rebate claims are liable to be rejected on limitation. Though there is specific provision regarding time limit of filing rebate claim, there is no specific provision of filing rebate claim within 1 year from date of payment of duty as, contested by the applicant. Under such Circumstances, Government finds that original authority has rightly rejected this rebate claim which was filed beyond stipulated one year period and is clearly hit by limitation clause. As such it is rightly rejected and government does not find any, infirmity in the impugned order-in-appeal upholding the rejection of said claim as time barred. - Decided against assessee.

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• 2014 (12) TMI 781
  Rebate claims - failure to follow procedure prescribed in Board's circular No.294/1O/94-Cx dated 30.1.97 - Notification No.19/2004-CE (NT) dated 6.09.2004 - Held that:- Goods have been examined by the Customs at the Place of export of port as per provision of para 7.3 and 7.4 of the Chapter 8 as enumerated above. The Customs Officer has duly endorsed the duplicate copy of the ARE Is, after satisfying himself about the fact that the goods intended for export are the same which were cleared on the relevant ARE-Is Further Superintendent Central excise Range, Jalna has certified that goods cleared under the relevant ARE-Is were cleared from the factory of manufacture on payment of duty. Applicant has been able to prove the export of the duty paid goods by way of various documents duly endorsed by the Customs Officers and Certificate of Central Excise Range Superintendent certifying the duty paid nature of the exported goods. Moreover, the exported goods are co-relatable with the goods cleared from the factory of manufacture as the ARE Is, Shipping Bill, Invoice and Pan Masala Pouches/packages bear the Mark Nos/Batch Nos. of the goods The ratio of the GOI Order No. 54 to 60/09 dated 5.02. 09 in the case of M/s Gujarat Trading Co., Rajkot vs. CCE Rajkot is squarely applicable in this case wherein it has been held that where the exported goods are corelatable with the goods cleared from the factory of manufacture or warehouse, the Procedure prescribed for merchant exporter exporting the goods from a place other than factory of manufacturer or warehouse by the CBEC's Circular 294/10/97-CX dated 30.01.1997 can be relaxed and the rebate is admissible for merchant exporter. Govt. further observes that rebate/drawback etc. are export-oriented schemes. A merely technical: interpretation of procedures etc. is to be best avoided if the substantive fact of export having been made is not in doubt, a liberal interpretation is to be given in case of any technical lapse. In Suksha International Vs- UOI [1989 (1) TMI 316 - SUPREME COURT], the Hon'ble Supreme Court has observed that an interpretation unduly restricting the scope of beneficial provision is to be avoided so that it may not take away with one hand what the policy gives with the other. Rebate claims are admissible to the applicant in terms of Rule 18 of Central Excise, Rules; 2002 read with Notification No. 32/2008-CE (NT) dated 28.08.08 subject to verification of duty paid on the exported goods as verified by the jurisdictional Central Excise Superintendent - Decided in favour of assessee.

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• 2014 (12) TMI 780
  Power of Tribunal to extend stay beyond the period of 365 days - Held that:- As such on expiry of maximum period of 180 days, the assessee – orig. appellant is required to submit application for extension of stay each time after completion of 140 days and the learned Tribunal is required to consider the individual case and pass a speaking order whether the delay in not disposing the appeal is attributable to original appellant – assessee or not and if it is found that the original appellant – assessee in whose favour the stay has been granted is not cooperating in early disposal of appeal and/or the delay in disposing appeal is attributable to the original appellant – assessee, the learned Tribunal is not required to extend the stay more particularly considering the provisions of section 35C( 2A) of the Central Excise Act. - appeal disposed of by reserving the liberty in favour of the department to submit appropriate application before the learned Tribunal and place the order passed by this Court in [2014 (7) TMI 738 - GUJARAT HIGH COURT] and other allied appeals in the appeal so that the learned Tribunal may pass appropriate order on the said application calling upon the appellant – assessee to prefer separate application after completion of every 180 days and thereafter the Tribunal to pass appropriate speaking order considering the observations in our judgment and order passed in Tax Appeal No.341/2014 and other tax appeals - Appeal disposed of.

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• 2014 (12) TMI 779
  Initiation of penal provisions after expiry of 5 years - Tribunal held that penal proceedings under Rule 96ZP(3) cannot be initiated after expiry of five years - Held that:- any law or stipulation prescribing a period of limitation to do or not to do a thing after the expiry of period so stipulated has the consequence of creation and destruction of rights and, therefore, must be specifically enacted and prescribed therefor. It is not for the Courts to import any specific period of limitation by implication, where there is really none, though Courts may always hold when any such exercise of power had the effect of disturbing rights of a citizen that it should be exercised within a reasonable period. The period of five years has been held to be reasonable period for initiating penalty proceedings. Tribunal had rightly upheld the order of Commissioner (Appeals) deleting the penalty on the ground that the proceedings for the same were initiated after 5 years from the relevant date. Accordingly, no substantial question of law arises - Following judgment in Raghuvar (India) Limited’s case [2000 (5) TMI 40 - SUPREME COURT OF INDIA] - Decided against Revenue.

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• 2014 (12) TMI 778
  Power of Tribunal to extend stay beyond the period of 365 days - non-speaking order for extension of stay - Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in granting extension of stay beyond 365 days by ignoring specific provision contained in third proviso to section 35C(2A) of the Central Excise Act, 1944 - Held that:- Following decision of Commissioner Versus Small Industries Development Bank of India [2014 (7) TMI 738 - GUJARAT HIGH COURT] - Question No.1 is held in favour of the assessee and against the revenue and Question No.2 is answered in favour of the revenue and against the assessee. The matter is remanded to the learned Appellate Tribunal to pass a fresh speaking order on the application submitted by the assessee to extend the stay granted earlier - Decided partly in favour of Revenue.

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• 2014 (12) TMI 777
  Power of Tribunal to extend stay beyond the period of 365 days - S.35C(2A) of the C.E. Act, 1944 - Held that:- Following decision of Commissioner Versus Small Industries Development Bank of India [2014 (7) TMI 738 - GUJARAT HIGH COURT] - The matter is remanded to the learned Appellate Tribunal to pass a fresh speaking order on the application submitted by the assessee to extend the stay granted earlier - Decided partly in favour of Revenue.

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• 2014 (12) TMI 776
  Simultaneous availment of benefit of exemption under Notification No 1/93 CE and 22/94 CE - Assessee contends that it did not avail the benefit under both the Notifications simultaneously at any given point of time from 15.03.1995 onwards and that depending upon the circumstances, it availed the benefit either under Notification No.1/93 or 22/94 - whether the respondent was entitled to avail the benefit under Notification No.1/93 on the one hand and Notification No.22/94 on the other hand, within the same financial year, even for different periods, by pressing into service one of the notifications - Held that:- The period in question in the instant case is 15.03.1995 to 31.03.1995. This is obviously subsequent to the publication of Notification No.22/95. Notification No.22/95 became operational at the end of the financial year 1994-95. Though the record is not that clear, it appears that for the substantial part of the financial year 1994-95, the respondent availed the benefit under both the notifications till Notification No.22/95 came into force, but with effect from the date on which it came into force, it availed the benefit under only one of the notifications i.e.,22/94. It is not even alleged that the respondent has availed such dual benefit after Notification No.22/95 came into force. In fact, the assessing authority, who issued show cause notice, examined the record and found that the benefit under Notification No.22/94 alone was utilised for the period in question. The appellate authority however proceeded on the assumption that once the respondent has availed the benefit under Notification No.1/93, for a part of financial year 1994-95, it is not entitled to switch over to the benefit under the other notification. This is not at all evident from either the notification or any decided case. The Tribunal has in fact pointed out that accepting the contention of the Department would amount to giving retrospective effect to Notification No.22/95. We do not find that any substantial question of law arises for consideration. - Decided against Revenue.

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• 2014 (12) TMI 775
  Restoration of appeal - Non compliance of pre deposit order - Held that:- When the order of pre-deposit has not been complied with, the Tribunal has no discretion to entertain the appeal - another aspect which needs consideration in the case on hand is the averment made by the applicant in the affidavit filed before the Tribunal in July, 2014, wherein the reason for the non-compliance of pre-deposit order is attributed to the fault of their former advocate Mr.Bharathi. It is the specific plea of the appellant that their former counsel Mr.Bharathi was responsible for not intimating the appellant about the proceedings before the Tribunal and, therefore, the appellant had sought for change of counsel and is pursuing the matter. it is evident that the appellant has been pursing the matter diligently from the adjudication stage and the reason for non-compliance is attributed to the fault of their former advocate Mr.Bharathi, which is stated in the affidavit of the appellant filed before the Tribunal during July, 2014. - In view of bona fides as pleaded by the appellant - Appeal restored.

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• 2014 (12) TMI 774
  Eligibility for CENVAT Credit - 'Plastic Crates' - Capital goods or inputs - Held that:- Question raised in this appeal is squarely covered by a decision of this Court in M/s.P.K.P.N. Spinning Mills (P) Ltd. - Vs The Commissioner of Central Excise (2013 (3) TMI 345 - MADRAS HIGH COURT), wherein a Division Bench of this Court, accepting the Larger Bench decision of the Ahmedabad Tribunal in Bango Products (India) Ltd. - Vs Commissioner of Central Excise, Vadodara (2009 (2) TMI 101 - CESTAT AHMEDABAD), had decided the issue in favour of the assessee and allowed the appeal. A copy of the said order has also been placed before this Court. As submitted by either side, the issue being covered by the above judgement of the Division Bench, this Court is in agreement with the above rational laid down - Decided in favour of assessee.

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• 2014 (12) TMI 773
  Maintainability of appeal - Held that:- Appeal under Section 35G of the Central Excise Act, 1944 would not be maintainable before the Delhi High Court as the order-in-original was passed by the Collector of Central Excise, Bombay- II. This question is settled by the decision of the Supreme Court in Ambica Industries versus Commissioner of Central Excise [2007 (5) TMI 21 - SUPREME COURT OF INDIA]. Appeal not maintainable.

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