Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 23, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
Articles
News
Highlights / Catch Notes
Income Tax
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Foreign travel expenditure of wife of partner in the assessee- firm - it proper to restrict its allowance to 50%, so that the assessee gets part relief. - AT
Corporate Law
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Inspection of Member Register - Since these companies are private limited companies, the parties can only get limited information, however these petitions being decided on the ground that he is not qualified u/s. 163 to seek inspection and copies thereof - Tri
Indian Laws
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Dishonour of cheques (PDC) - the substantive sentence awarded to the revisionists could have been one year concurrently rather than independent/consecutive sentence in each complaint cases - HC
Service Tax
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Nature of various activities provided in the mines of the service recipient - activities undertaken by the appellant under a composite contract will amount to providing ‘Mining Services’ which were made chargeable to Service Tax only with effect from 18.06.2002. - AT
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General Insurance Service - service provided by the appellant as co-insurer along with lead insurer to the insured, whether attracts service tax or not? - demand set aside - AT
Central Excise
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Manufacture - crushing, grinding, gravity separation of High Carbon Ferro Chrome (HCFC) Slag by jigging in water - whether activities carried out by the main Appellant amounts to manufacture? - Held Yes - AT
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Valuation - transaction value or MRP based value - Sales Promotion Scheme - pack of Maggie Noodles supplied along with Sundrop Oil freely, each pack of the product bear the word Free Not For Sale and also did not bear MRP - to be valued u/s 4 and not Section 4A - AT
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Clandestine removal - Job work - input output norms of 1 kg of lead for every 1.07 kg of waste & scrap can not be made applicable to all categories of waste & scrap and can be made applicable only to standards waste & scrap where metal content in the waste and scrap is 97% or more - AT
VAT
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Whether in the facts and circumstances of the case on combined reading of Section 14(6), Section 24 and Rule 33, can interest be charged from the contractor for late deposit of TDS by contractee - Where tax is not deposited in time, interest is to be levied - HC
Case Laws:
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Income Tax
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2016 (12) TMI 1146
Levy of penalty u/s 271(1)(c) - addition on account of income estimated @ 10% of turnover - Held that:- We find that the assessee in the course of statement recorded u/s 132(4) of the Act on 25/01/2006 had stated that his income from business of construction of godowns was around 10%. This statement of the assessee was a general one indicating the approximate rate of net profit which would be earned by the assessee from the said business. The net profit finally declared by the assessee vide his return of income from the said business was 9.53% i.e. 10% figure stated by the assessee in the 132(4) statement. The addition made by the AO is solely based on the statement of the assessee recorded u/s 132(4) of the Act and no defect or deficiency has been pointed out by him in support of the addition. Therefore, the penalty u/s 271(1)(c) would not be attracted on the addition of ₹ 5,58,372/-. The order of the ld. CIT(A) on the penalty in respect of ₹ 5,58,372/- is set aside and the AO is directed to delete the same. - Decided in favour of assessee. Addition made u/s 68 as unexplained cash credit on account of consideration received on sale of equity shares - Held that:- Penalty u/s 271(1)(c) is a civil liability and the wilful concealment is not an essential ingredient for attracting civil 16 liability unlike the matter of prosecution u/s 276C. While considering an appeal against an order made u/s 271(1)(c), what is required to be examined is the record which the officer imposing penalty had before him and if that record can sustain the finding that there has been concealment, that would be sufficient to sustain penalty. See UoI vs. Dharmendra Textile Processors (2008 (9) TMI 52 - SUPREME COURT ) The order of the ld. CIT(A) directing the AO to impose penalty u/s 271(1)(c) @ 100% on addition made u/s 68 is confirmed.- Decided in favour of revenue.
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2016 (12) TMI 1145
Addition on account of alleged balance sheet difference - Held that:- Addition is indeed devoid of any legally sustainable merits inasmuch as the entry is reasonably explained and just because a machinery is not shown, due to accounting error, it cannot be added to income. Thus we direct the Assessing Officer to delete the addition on account of balance sheet difference. - Decided in favour of assessee Disallowance of the exemption u/s 10AA in respect of total business income - Held that:- The issue is now settled, in favour of the assessee, by Hon’ble Bombay High Court’s judgement in the case of CIT vs. Gem Plus Jewellery India Limited [2010 (6) TMI 65 - BOMBAY HIGH COURT] .The Assessing Officer is, therefore, directed to grant exemption under section 10AA in respect of assessed business income.- Decided in favour of assessee
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2016 (12) TMI 1144
Penalty u/s. 271AAA - commission income on accommodation bills - Held that:- The assessee has made truthful declaration while recording the statement u/s 132(4) of the Act whereby the assessee claimed that he earned commission income @0.75% of the accommodation bills provided by the assessee and also explained the manner in which the said commission income on accommodation bills is derived , while it is a different matter that at later stage while recording statement u/s 131 of the Act in 19/03/2013, the assessee is not able to produce the brokers to whom commission expenditure @ 2.25% was paid during the course of assessment proceedings in 2013 to prove such payments out of books due to obious reasons cited by us as set out above and the assessee was left with no choice but to surrender additional 2.5% to buy peace and to avoid protracted litigation with the Revenue but the fact remains that the assessee earned 0.75% net commission income on accommodation bills provided by the assessee, while it is a different matter that the assessee declared net commission income 0.75% of the accommodation bills provided by the assessee, after claiming expenditure of 2.5% towards brokerage payable by the assessee to brokers which was ultimately surrendered by the assessee during assessment proceedings as these brokers were not traceable due to sales tax raid on them and the assessee was unable to prove brokerage expenditure incurred by him due to reasons set out above. Thus, based on our above detailed discussions and reasoning as set out above , in our considered view, the penalty is not leviable in the instant case u/s 271AAA of the Act as the assessee is entitled for immunity from penalty u/s 271AAA(2) of the Act and the penalty levied by the AO and as sustained by learned CIT(A) u/s 271AAA of the Act is hereby ordered to be deleted. - Decided in favour of assessee.
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2016 (12) TMI 1143
Penalty u/s 271(1)(c) - income offered to tax during the quantum assessment - Held that:- The due taxes along with applicable interest were paid to the Revenue and assessment order in quantum was accepted by the assessee and no appeal was filed by the assessee before learned CIT(A) against quantum assessment order. On being asked by the authorities below, the assessee has submitted that it is inadvertent mistake/ommision and the assessee was under a bonafide belief that tax having deducted at source , and hence there was no need to show the same in the return of income filed with the Revenue. In our considered view based on peculiar facts of the case, the assessee has committed the mistake inadvertently for which explanation has been given by the assessee before the authorities below which is a bonafide explanation. The assessee filed revised computation of income before the AO including the above income during the assessment proceedings and claimed the tax deducted at source on these two income and paid the differential due taxes to the Revenue along with applicable interest. The assessee has come forward with bonafide explanation and therefore the penalty u/s 271(1)(c) of the Act levied by the A.O. on the assessee is not justified and is hereby ordered to be deleted as the case is covered by explanation 1 to Section 271(1)(c) of the Act. - Decided in favour of assessee
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2016 (12) TMI 1142
Undisclosed capital gain - legal transfer - Held that:- We find that the assessee had denied to have received any money in lieu of transfer of immovable property where sale deed was actually signed by the assessee and a receipt was also found attached with the sale deed which was obtained from the office of the Registrar by the assessee after AO raised a query in respect of the said deed on the basis of AIR information. The assessee pleaded that he was forced to sign the papers/documents which he was not knowing to the documents concerning sale deed transferring the property to Mrs. Sayali S Sawant. We also find from the record that the assessee has inherited the property from his mother. The assessee has totally denied to have received any sale consideration and executed any sale deed in favour of Mrs. Sayali S Sawant. Also during the course of assessment proceedings the transaction could not be confirmed. In our opinion, the ends of justice would be met if the matter is restore back to the file of the AO to decide the issue afresh on the facts and circumstances of the case - Decided in favour of assessee for statistical purposes.
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2016 (12) TMI 1141
Accrual of income - Sale of DEPB licenses - Held that:- The entire revenue has been stated to be offered for taxation by the assessee voluntarily of its own , albeit in the subsequent year when the DEPB licenses were sold. Thus we are of considered view no prejudice has been caused to the Revenue as the said gross sale proceeds on transfer of DEPB licenses by the assessee in its entirety is stated to be offered for taxation in the next year and tax rate remained the same in the next year. However , these claims as made by the assessee needs verification by the authorities below and therefore, we are inclined to set aside and restore this matter back to the file of the A.O. to verify that the total income in its entirety from sale of the afore-stated DEPB licenses is subjected to tax in the subsequent assessment year and the Revenue has got all the due taxes on total income chargeable to tax albeit in the subsequent assessment year as in that case revenue effect shall be tax neutral. The assessee is directed to appear before the AO and produce all necessary evidences and explanations in support of its contentions that no prejudice is caused to Revenue by making payment of taxes on the total income arising in its entirety from sale of DEPB licenses in the subsequent assessment year. Addition u/s 14A of the Act read with Rule 8D - Held that:- The assessee has earned exempt income and offered disallowance to the tune of ₹ 3,32,482/- under Rule 8D(2)(iii) of 1962 Rules as administrative and indirect expenses @ 0.5% of average investment held by the assessee. There are sufficient own funds available with the assessee for the investment and no borrowed funds were stated to be utilized by the assessee for making investments in shares and mutual funds capable of earning tax-free income. The assessee has also filed financial statements which reveal that the assessee has own funds available in its hand which are far in excess of investments made in the shares, mutual funds and other securities yielding tax-exempt income. Perusal of audited financial statements for the financial year 2009-10 will reveal that the assessee’s own funds are to the tune of ₹ 12.47 crores as at 31-03-2010 and ₹ 12.37 crores as at 31-03-2009, while investments capable of yielding exempt income are to the tune of ₹ 4.65 crores as at 31- 3-2010 and ₹ 8.65 crores as at 31-03-2009. We agree with the proposition and contentions of the assessee that presumption will apply unless contrary is brought on record by the Revenue , that the assessee has made investment in shares , mutual funds and other securities capable of yielding exempt income out of its own surplus funds unless contrary is brought on record by the AO. Thus u/s 14A of the Act r.w.r. 8D(2)(ii) of 1962 Rules is not sustainable - Decided in favour of assessee.
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2016 (12) TMI 1140
Depreciation on new Windmill - whether an asset, ready to be used, is actually used? - Held that:- The assessee’s claim for depreciation is without basis, both on facts and in law. We have, after visiting the law, based on factual findings and on the basis of material on record, found the assessee’s case, resting on claim of trial production, as completely unfounded, even exhorting the assessee qua any further material to evidence it’s claim of trial production, which is facile in the absence of any material on record, nay, even generation of any electricity, a fact emphasized by the Assessing Officer (AO) and confirmed by us during hearing. Rather, the trial production should lead to the removal of operational glitches or defects, even as explained by the assessee itself per its submissions before the Revenue authorities – finding reproduction in their orders, leading to regularizing its authorization, and of which the assessee ought to have adequate evidence in the regular course. The allowance by the ld. CIT(A) is on the ground of trial production, a claim we find as without basis in-as-much as there is nothing to show that the Windmill worked or even any electricity generated, by 31.3.2010. How could there be, one may ask, trial production without any production? The question of it being concluded successfully, removing all operational glitches, etc., as is required to be, is farfetched - Decided against assessee Short-term capital gain (STCG) on the sale of the old Windmill - Held that:- We have already adjudicated on the eligibility of the new Windmill, purchased on 31.3.2010, for depreciation, deciding against it in view of its’ non-user (refer paras 3 & 4 of this order). The same would, therefore, not enter the block of assets as at the relevant year-end, and its correct representation in the final accounts (as at the year end) is as (part of) ‘capital work-in-progress’. The WDV of the relevant block (i.e., comprised of Windmills) would therefore stand to be computed without including the same, with consequential effect on the computation of STCG u/s. 50. The said provision, we may further add, is by way of a legal fiction, which however is limited to the computation of the gain arising on the transfer of depreciable assets, i.e., modifies the computational provisions of ss. 48 & 49 only. The character of the gain, nevertheless, and even as explained in CIT vs. Ace Builders (P) Ltd. [2005 (3) TMI 36 - BOMBAY High Court] would remain the same. As such, where the capital asset (old Windmill) transferred is beyond the minimum holding period prescribed in its respect (thirty six months), the same would be a long term capital gain, subject to tax u/s. 112 of the Act. We decide accordingly. This decides Gd. of the Revenue’s – which has taxed the gain as STCG, appeal partly in its favour. Disallowance of commission allowed to foreign agents - non deduction of tds - Held that:- In the facts of the case, the commission is for soliciting sale orders. No part of the said activity is stated as carried out in India, where there is admittedly no permanent establishment (PE) of the non-resident agents. The income is by way of commission per se, so that no part of it can be said to be taxable in India, as clarified by the Apex Court in Toshoku Ltd. (1980 (8) TMI 2 - SUPREME Court ). The sales in the instant case, on the supply of goods in pursuance to the purchase order booked by the agents, and for which therefore commission is allowed to them, takes place outside India, thus the provisions of section 195 of the Act and, consequently, of section 40(a)(i), are inapplicable. We decide accordingly, and the assessee succeeds. Disallowance of the claim for damaged goods - Held that:- We agree that the candid declaration before us materially alters the nature of the assessee’s claim, so that the Revenue’s stance would also be required to be revised. It is unfortunate that the assessee comes out with the facts at a much later stage and not before the Revenue, particularly before the assessing authority. Be that as it may, the same, in view thereof, is to be regarded as a trade discount allowed by the assessee to its foreign buyers. Under the circumstances, we only consider it proper that the matter is restored to the file of the A.O. to examine the assessee’s claim – which is to be looked at from a businessman’s point of view, in light of the facts admitted before us, and who shall decide the same in accordance with the law, be it u/s. 37(1) or u/s. 36(1)(vi), issuing definite findings of fact. Depreciation at 80%, i.e., the rate exigible on Windmil on expenditure, being components of its cost, viz.development rights for restoration, paid to the State Government of Andhra Pradesh,Erection and commissioning expenditure and Transportation expenditure, as against at 15% allowed to it - Held that:- We find no reason not to accept the assessee’s claim or to take any different view in the matter in the admitted facts of the case, i.e., each of the expenditure forming part of the cost of the windmill, i.e., up to its’ commissioning stage, on which, therefore, depreciation is allowed. It is well settled that all the expenditure up to the commissioning of the plant is to be capitalized and, therefore, no differentiation could be made between one expenditure and another; all the expenditure incurred to bring the capital asset to the condition and location of its intended use forming part of, and is to be accordingly capitalized at its cost. We decide accordingly, and the assessee succeeds. Foreign travel expenditure of wife of partner in the assessee- firm - Held that:- We find some merit in the argument, which was also advanced before the ld. CIT(A). The product sold, i.e., footwear, is an item of common, daily wear/use, and of which its design and fashion are important aspects, and qua which she, as an informed consumer, can definitely contribute, even if informally. It is only presumable that she, accompanying her husband, engages herself physically and mentally on such tours, i.e., as claimed. The nature of evidence to prove a claim would depend on its nature, and a direct proof may not be forthcoming qua every claim. The impugned expenditure, however, is not proven to be incurred wholly and exclusively for business purposes. We, accordingly, consider it proper to restrict its allowance to 50%, so that the assessee gets part relief.
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2016 (12) TMI 1139
Penalty u/s 271(1)(c) - long term capital gains earned on sale of shares under Buyback scheme wherein no STT was paid was claimed exempt u/s. 10(38) - Held that:- It is an inadvertent and bonafide mistake made by the assessee while filing return of income with the Revenue wherein long term capital gains earned on sale of shares under Buyback scheme wherein no STT was paid was claimed exempt u/s. 10(38) of the Act, and the assessee explanation offered thereto is a bona-fide whereby the assessee claimed it to be inadvertent and bonafide mistake was under an impression that long term capital gains earned on sale of shares is exempt from tax u/s 10(38) albeit no STT was paid, while complete particulars were filed in the return of income filed with the Revenue claiming exemption u/s 10(38) of the Act on long term capital gains earned on sale of shares. It is an inadvertent bona-fide mistake and as such the penalty is not sustainable in the eye of law and the same is hereby ordered to be deleted as the assessee has come forward with an explanation which is a bona-fide explanation which takes it out of provisions of Section 271(1)(c) read with explanation 1 to Section 271(1)(c) of the Act. Merely because a claim is made by the assessee which is not accepted by the AO to be sustainable in law penalty is not leviable automatically more so when all the details were duly furnished by the assessee in the return of income filed with the Revenue and the particulars of income filed by the assessee were not inaccurate. - Decided against assessee.
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2016 (12) TMI 1138
Disallowance under section 40(a)(ia) - reimbursement of transportation expenses - Held that:- We hold that the provisions of section 40(a)(ia) have no application for the payments made by the assessee towards reimbursement of transportation charges, which were paid by the end of the accounting year. See Shri Jitendra Mansukhlal Shah Versus Dy. Commissioner of Income Tax, Central Circle 45, Mumbai[2015 (3) TMI 1118 - ITAT MUMBAI ]. Thus, this ground of appeal of the assessee is allowed in favour of assessee Disallowance of handling loss - Held that:- We agree with the ld. CIT(A) that there would definitely be handling loss while the iron ore is uploaded, loaded etc. Therefore, taking the totality of the facts and circumstances into consideration, we feel that the handling loss should be fixed at 0.95% to meet the ends of justice, we do so. Thus, this ground of appeal is partly allowed.
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2016 (12) TMI 1137
Disallowance of administrative expenses - Held that:- From the record we found that the AO had wrongly disallowed 7/8th of the administrative expenses considering that the said expenses are incurred for the other 7 group companies mentioned in the order. The 7 group companies have their own business set up and functions independently, are separately assessed under the Income Tax Act and do not have any common business interest with the assessee. We found that expenses incurred for and on behalf of such companies aggregating to ₹ 45,91,976/- have been recovered from the said group companies. A statement showing the said recovery with a brief rational was submitted before the lower authorities. This shows that no part of the group companies expenses are included in the Profit & Loss account of the company which the learned DCIT has wrongly noted. We had also verified the break-up of the expenses included in the Administrative Expenses are fixed overheads in nature and irrespective of the volume / turnover of the company; it has to be incurred and cannot be reduced immediately. The Administrative expense are incurred based on the set up of the business and commercial expediency in the context of type of activity, business profile of the company and the volume of turnover / activity. We also found that during the year under consideration expenses have been reduced by 7% as compared to the expenditure of last year. Moreover, company’s total income for the AY 2009-10 was ₹ 2.89 crores as per Profit and Loss Account which is more or less same as per last year. Disallowance of interest - interest attributable to funds given free of interest or given on interest but no interest on such advances were accounted for in the books of accounts - Held that:- We have considered the rival contention and found that for not providing interest income on advances, no material was brought on record by assessee to substantiate that even principle amount is in doubt. In the interest of justice, we restore this issue back to the file of the AO to find interest free funds available with the assessee which has been used for giving interest free advances. Assessee is also directed to place on record the position of borrower so as to find out if the principle loan itself is in doubt, so as to justify assessee’s claim of not accounting of interest on such advances. We direct accordingly.
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2016 (12) TMI 1136
Taxability of borrowed / loan services charges received - Indo-Singapore DTAA - AO treated it as Fees for Technical Services / Fees for Included Services (FTS / FIS) under Article 12 of the treaty - held that:- On hearing both the parties, we have perused paras 5, 6 and 7 of the order of the assessment, which are extracted above, and find that it is obvious that the Assessing Officer relied heavily on the assessment order for the AY 2007-2008 and found the issue is one and the same ie ‘if the borrowed service charges constitutes FTS under Article 12 of the Indo-Singapore DTAA. Since, the language of Article 12 is common for Indo-US and Indo-Singapore DTAA, the order of the Tribunal is equally relevant for all the US based companies as well. Issue involved regarding borrowed service charges was decided by this Tribunal in favour of the assessee and further the department has resolved that the issue under MAP and consequently withdrawn the appeals filed before the Hon’ble High Court. Further, the assessee has filed a letter dated 12/02/2014 thereby stated that the issue relating to taxability of firm function charges does not arise in case of these three appeals and the only issue involved in these appeals is the taxability of borrowed service charges, which has been decided in favour of the assessee under the Mutual Agreement Procedure. In view of the above facts and circumstances, when the issues involved in these appeals have already resolved under the Mutual Agreement Procedure, we direct the AO to grant the relief accordingly to the assessee after verification of fact that the issues have already been resolved under the Mutual Agreement Procedure. - Decided in favour of assessee
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2016 (12) TMI 1135
Transfer pricing adjustment - most appropriate method selection - Held that:- The assessee claims that Transaction Net Margin Method is the most appropriate method. For the purpose of transfer pricing adjustment, Section 92C provides for the method to be adopted. Therefore, the Transfer Pricing Officer and Dispute Resolution Panel have to determine the transfer pricing adjustment by following any one of the methods prescribed under Section 92C of the Act, which would be appropriate to the international transaction made by the assessee. In the case before us, the Dispute Resolution Panel and the Transfer Pricing Officer have not adopted any of the methods prescribed under Section 92C of the Act. As rightly contended by the Ld.counsel for the assessee, the DRP resorted to statistical method to benchmark the international transaction. This Tribunal is of the considered opinion that the DRP is expected to find out most appropriate method among the methods prescribed under Section 92C of the Act. The Dispute Resolution Panel is not expected to travel beyond the method prescribed under Section 92C of the Act. Cusstoms duty adjustment and working capital employed, the Dispute Resolution Panel has simply placed its reliance on its own order in the assessee's own case for assessment year 2009-10. This Tribunal examined the directions of the Dispute Resolution Panel in the assessee's own case for assessment year 2009-10 wherein Dispute Resolution Panel directed the Transfer Pricing Officer to determine the transfer pricing adjustment afresh. This Tribunal found that such a direction cannot be given by the Dispute Resolution Panel. The Dispute Resolution Panel can at the best call for a remand report from the Transfer Pricing Officer and determine the issue by directing the Assessing Officer to make adjustment as determined in the directions of the Dispute Resolution Panel and accordingly, this Tribunal remanded the matter back to the file of the Assessing Officer. In the case before us, the issue is identical to that of assessment year 2009-10 and the Dispute Resolution Panel has simply followed their earlier order. This Tribunal is of the considered opinion that the matter needs to be reconsidered as directed by this Tribunal in the earlier order. Accordingly, the orders of the lower authorities are set aside and the entire issue is remitted back to the file of Assessing Officer. - Decided in favour of assessee for statistical purpose
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Customs
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2016 (12) TMI 1108
Redemption fine - Penalty - smuggled gold bars/jewellery - Revision order - Held that: - the Hon'ble Division Bench of High Court of Punjab and Haryana in the case of NVR Forgings vs. Union of India reported in [2016 (5) TMI 7 - PUNJAB AND HARYANA HIGH COURT] held that the revision by the Central Government entrusted to a Joint Secretary level officer equal to Commissioner is not empowered to pass revisional order against the order passed by the Officer of same rank and therefore the order passed by the revisional authority which was challenged in a writ petition was set aside. Taking into consideration of the fact that orders have been passed by the Commissioner (Appeals) during September/December 2015, the gold bars/jewellery cannot be endlessly be retained by the Department, more so, when the petitioner has consented before the adjudicating authority as well as the appellate authority who have granted the relief of re-export subject to payment of redemption fine and penalty -
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2016 (12) TMI 1107
Demand - Interest - Penalty - Held that: - the petitioner has agreed to deposit entire amount of ₹ 83,49,189/being benefit availed by the petitioner under VKGUY Scheme from the date of “Spices” was deleted / removed from VKGUY Scheme and considering the fact that during the pendnecy of the present petition, in which, initially, petitioner challenged action of the respondent in putting the petitioner in the DEL, the final order has been passed by the First Authority on the show cause notices confirming the demand of ₹ 83,49,189/+ applicable interest and imposing fiscal penalty. In the meantime, it will be open for the petitioner to submit appropriate application before the appropriate authority to remove the name of the petitioner from the DEL which may be considered by the appropriate authority in accordance with law and on merits at the earliest - Petition partly allowed.
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2016 (12) TMI 1106
Release of detained goods - 86 numbers of Hot Rolled Alloy Steel Coils - Held that: - the goods cannot be detained. The purpose of detention has almost been achieved. The test results are available with the Department. What remains to be examined is, how best we can protect the interests of the Department and chances of its quick recovery of the duty, which might be levied against the importer - thus, ends of justice would be better served, by directing the appellants to release the detained goods imported through Bill of Entry No.3371951 to the respondent/writ petitioner, subject to condition that bank guarantee of ₹ 25.00 lakhs given to department, bond to be executed and also respondent/writ petitioner shall promptly participate in the enquiry, initiated pursuant to the show cause notice, dated 17.10.2016 - appeal disposed off - decided partly in favor of petitioner.
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2016 (12) TMI 1105
Release of detained imported goods - Axe Oil, 5 different container (bottle) 3ml, 5ml, 10ml, 28ml and 56 ml imported from Singapore - requirement of MRP declaration - Held that: - MRP or RSP is not required to be declared in respect of bottles of 10ml and less than that. Therefore, the Court observed that if there is no requirement for smaller quantities, appropriate orders may be issued for release of the items and in respect of larger quantities, the respondents were granted discretion to pass appropriate orders - petitioner directed to execute a bond for a sum of ₹ 20,00,000/- and furnish Bank Guarantee for a sum of ₹ 2,50,000/- and on complying with both the conditions, the respondents are directed to provisionally release the seized goods under Section 110A of the Customs Act, 1962 - petition allowed - decided partly in favor of petitioner.
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2016 (12) TMI 1104
Classification of imported goods - Low Noise Block Down Converter - classified as Low Noise Block Down Converter under CTH 85437099 or as Universal Single KU Low Noise Booster under CTH 85299090? - Held that: - this Court is of the view that in respect of the identical import, the Commissioner [Appeals], in the Order-in-Appeal No.580/2013 dated 04.04.2013, has accepted the petitioner's classification of the goods as CTH 85437099. That apart, Circular No.13/2013 dated 05.04.2013, also prima facie appears to be fully in favour of the petitioner. Thus, the petitioner has been able to establish a prima facie case, which also would lien in favor of the petitioner while considering the aspect of balance of convenience. Stay of order-in-original dated 05.11.2013 sought for - Held that: - The three cardinal principles which have to be satisfied by the petitioner for being entitled to the grant of stay are [1] prima facie case; [2] balance of convenience; and [3] irreparable hardship. Petition allowed - decided in favor of petitioner.
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2016 (12) TMI 1102
Confiscation of seized truck, imposition of redemption fine and penalty - Held that: - In terms of Section 115(2) of the Customs Act, 1962, any conveyance used as a means of transport in the smuggling of any goods shall be liable for confiscation only when it was so used in the knowledge of the owner, his agent or person in charge of the conveyance - The Adjudicating Authority observed that the noticees have admitted in their statements that Urea was loaded on the seized vehicle in their conscious knowledge - confiscation is valid - however redemption fine and penalty reduced.
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2016 (12) TMI 1101
Seizure - smuggling of the goods - Held that: - It is the accepted premise that the activity of smuggling is not committed in the manner to leave the footprints of such activities in the form of marks and evidences for future convenience of law enforcement authorities, who are to investigate such criminal activities - the purchase of the sale invoices, bank transactions, stock registers produced by M/s. Surana Trading Company, the main notice, did not support the statement made by the noticee respondent Shri Kamal Kumar Surana. The concerned trading license was also found lapsed - The Hon’ble Supreme Court in the Collector of Customs, Madras and Ors. vs. D.Bhoormull [1974 (4) TMI 33 - SUPREME COURT OF INDIA] also holds that there can be circumstances where direct evidences indicating the smuggling of the goods may not be available but there could be several circumstances of determinative character leading to the conclusion that the seized articles are smuggled goods - Appeal allowed by way of remand.
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2016 (12) TMI 1100
Validity of order of Original authority - foreign collaboration agreement - non-examination of the relevant documents - Rule 4(3) of CVR, 1988 - Held that: - Revenue’s appeal was allowed only on the ground that the Adjudicating authority passed the order without examination of the relevant documents whereas the Commissioner(Appeals) has not gone into facts and legal issues of the matter therefore appeal was not supposed to be allowed but it should have been remanded to the Adjudicating authority - appeal allowed by way of remand.
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2016 (12) TMI 1099
Valuation - import of a consignment of 79.040 MTs of LLDPE/HDPE mixed granual/powder (floor sweeping) - goods were imported at a price of US$ 225 PMT CIF - on examination goods found to be of US$ 352.35 PMT CIF - Ld. Commissioner(Appeals) on the case being remanded confirmed the valuation done by respondent and held the value at US$ 225 PMT CIF to be correct - whether the contention of the Revenue that the price should be at US$ 352.35 PMT CIF, justified? - Held that: - it is observed that Commissioner(Appeals) has considered the contemporaneous import, various judgments, PLATT price and standing order dated 3-12-1999. Ld. Commissioner(Appeals) found that there is no case of extra commercial consideration that might have influenced the transaction between parties. On going through the detailed discussion of the findings of the Commissioner(Appeals), we do not find any infirmity therein, therefore the same is sustainable - appeal dismissed - decided against Revenue.
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Corporate Laws
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2016 (12) TMI 1096
Qualification for seeking inspection - Inspection of Member Register from the date of incorporation of the Company till date and last Annual Returns - Held that:- Looking at the submissions it is an admitted position that this petitioner is not a shareholder in any of the Companies nor did he claim any commercial interest in any of these Companies, therefore, this petitioner, as rightly stated by the Respondent counsel, is not entitled to file these Petitions claiming for the section 163 permits any other person to seek inspection and supply of copies. Because the word any other person, if read along with the preceding words Member and debentures, that the word "any other person" has to be taken into count as person having commercial interest in the Company by applying the doctrine of ejesdem generis. Since these companies are private limited companies, the parties can only get limited information, however these petitions being decided on the ground that he is not qualified u/s. 163 to seek inspection and copies thereof, the effect of section 610(B) of the Act 1956 has not been dealt with.Accordingly, these Petitions are hereby dismissed making it clear that this petitioner is not qualified to file these petitions under section 163 of the Companies Act 1956.
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2016 (12) TMI 1095
Scheme of Amalgamation - Held that:- No impediment to the grant of sanction to the Scheme. Consequently, sanction is hereby granted to the Scheme under sections 391 to 394 of the Act. The Transferor Company/Petitioner will however, comply with the statutory requirements, in accordance with law. A certified copy of this order, sanctioning the Scheme, be filed with the ROC, within thirty (30) days of its receipt. Resultantly, it is hereby directed that the Transferor Company/Petitioner will comply with all provisions of the Scheme and, in particular, those which are referred to hereinabove.
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2016 (12) TMI 1094
Scheme of Arrangement, in the nature of amalgamation is hereby sanctioned and the prayers made in the Company Petitions are granted. The petitioners are directed to pay professional charges of ₹ 7,500/for each petitions to Mr.Devang Vyas, learned Assistant Solicitor General and petitioner of the Transferor Companies are directed to pay the fees of ₹ 7,500/each to the Official Liquidator.
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Service Tax
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2016 (12) TMI 1133
Receipt of commission from foreign principle in foreign currency convertible in India - Business Auxiliary Services - whether export of services? - Held that: - the issue stand decided by the Larger Bench decision of the Tribunal in the case of Microsoft Corporation (I) (P) Ltd. Vs. CST New Delhi [2014 (10) TMI 200 - CESTAT NEW DELHI (LB)], where it was held that in as much as marketing operation in India were not at behest of any Indian customer and the same were being provided to foreign recipients, the same has to be treated as export of services and not liable to tax - the procurement of orders in Indian market on behalf of the foreign principle would not be taxable as no service is considered to have been provided in India - appeal allowed in favor of appellant.
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2016 (12) TMI 1132
Rejection of refund claim - N/N. 41/2007-ST dated 06.10.2007 - denial on the ground that though, to and fro freight charges have been claimed by service provider, no separate freight has been mentioned on the bills from pithampur to port of export - period of limitation - Held that: - no separate freight has been mentioned on the bills raised by the transporter for transportation of goods from Pithampur to Port of Export. Rather, the invoice issued by the service provider mentioned the claim of to and fro freight charges. Since the freight charges are in connection with transportation of export goods, in absence of any specific prohibition contained in Notification 41/2007, the benefit of refund should be available to the appellant. Classification of services - THC, BL charges, Inland Haulage Charges, documentation charges, SB, Pallitization charges, Handling charges and weighment charges, claimed under CHA service by the appellant are covered under the said category of service or not? - Held that: - reliance placed on the decision of the case of M/s. Shivam Exports, M/s. Mecshot Blasting Equipment (P) Ltd. And M/s. Shree Ram Industries Versus CCE Jaipur [2016 (2) TMI 259 - CESTAT NEW DELHI], where it was held that the services are in relation to the services provided within the port and merits consideration for refund Time bar - Held that: - since the appellant is not contesting the refund on the ground of limitation, the rejection of refund claim by the authorities below on the ground of limitation is sustainable.
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2016 (12) TMI 1131
Nature of various activities provided in the mines of the service recipient - Whether the activities undertaken by the appellant for service recipient Tata Steels, amounts to providing of ‘Mining Services’ and whether the same could be taxed as ‘Site Preparation Services’ and ‘Cargo Handling Services’ etc. before 18.06.2007, the date when ‘Mining Service’ was specifically brought under the Service Tax net? - Held that: - Service Tax as ‘Site formation Service’ could be levied if there is a ‘Service Contract Simplicator’ to that effect. However, once the contract is a composite contract for the entire activities from Site formation to segregation of Ores then the same has to be charged as a separate service (Mining Services), which was made chargeable to Service Tax w.e.f. 18.06.2007 only. Such operations under a composite contract cannot be treated as ‘Site formation’ or ‘Cargo Handling Service’ before 18.06.2007 - Appeal is allowed holding that activities undertaken by the appellant under a composite contract will amount to providing ‘Mining Services’ which were made chargeable to Service Tax only with effect from 18.06.2002. Time bar - Held that: - We have not gone into the time bar aspect of the demand as on merits the appeal has been allowed in favour of the appellant. Appeal allowed - decided in favor of appellant.
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2016 (12) TMI 1130
Discharge of tax - security agency service - cleaning services - whether Respondent herein has correctly discharged service tax liability? - Held that: - It is observed that short levy is only due to calculation / quantification errors. Secondly, providing of cleaning services to Assam University & Kendriya Vidyalayas (KVS) has been held to be non taxable by the first appellate authority against which Revenue is not in appeal. Further Respondent has made out a point that many other entries in Annexure-A to the show cause notice dt 20/4/09 also pertain to cleaning services on which no service tax levy is attracted. As the matter pertains to re-quantification of service tax, it is required that appellant should produce a cost accountant's certificate to the Adjudicating authority to demonstrate as to what is the extent of exempted services (cleaning services) allowed - appeal allowed by way of remand.
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2016 (12) TMI 1129
Maintainability of appeal - appeal was filed after a delay of 18 months - whether appeal time barred or not? - Held that: - In the event of non-availability of Commissioner at the headquarters the ADC/JC present in the headquarters in Patna (who was having authority to do so) was marking the dak and then passed on the letters to the CCE Cell. Both the OIO and its corrigendum are not received even by the CCE Cell. It is rightly concluded by the inquiry report that non-receipt of both the OIO and its corrigendum in CCE Cell and RRA branch of the Reviewing Authority cannot be a sheer coincidence. In view of the facts brought on record by inquiry report dated 07.06.2012 there is no reason as to why 18.11.2011 should not be considered as the date of receipt of OIO dated 29.03.2010 as the date of receipt by the Reviewing Authority. The appeal in the present case was filed on 02.02.2012 which is within a period of 3 months from the date of receipt of OIO dated 29.03.2010 - appeal was filed in time. Appeal filed by the Revenue is allowed by way of remand to the First Appellate Authority who should restore the appeal to its original number and decide the issue on merits - appeal allowed by way of remand.
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2016 (12) TMI 1128
General Insurance Service - re-insurance - service provided by the appellant as co-insurer along with lead insurer to the insured, whether attracts service tax or not? - Held that: - circular has been issued by the Ld. Commissioner of Service Tax-I, Mumbai vide F.No.ST/HQ/EA-2000/GR.01/TATA/23/2011/2308 dated 10.09.2013 wherein the service of co-insurance has been accepted and clarified that the said business is different from the insurance. There is no separate service rendered by the lead insurer to the co-insurer or otherwise relating to insurance business, except for certain administrative matters. The only service rendered is between the co-insurers and the policy holder. For this service, the insurance premium is received in full by the lead insurer and after payment of service tax on the entire amount, the rest is distributed among the co-insurer on the basis of their agreed shares - the entire insurance premium has already suffered tax at the time of its receipt in the hands of the lead insurer - demand set aside - penalty set aside - appeal allowed - decided in favor of appellant.
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Central Excise
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2016 (12) TMI 1127
Manufacture - crushing, grinding, gravity separation of High Carbon Ferro Chrome (HCFC) Slag by jigging in water - whether activities carried out by the main Appellant amounts to manufacture or not? - levy of duty along with interest and penalty - Held that: - The main point here is that the raw material namely HCFC Slag is classifiable under different Chapter and whereas HCFC, which is the outcome product of the assessee Appellant is in different Chapter Heading of Central Excise Tariff. The issue is whether by the processes undertaken by the assessee, a new identifiable, marketable product comes into existence - When the HCFC Slag is an altogether different product, which is subjected to different processes like crushing, grinding, watering etc. and resultant product is only HCFC, which has got separate existence in relation to its raw material namely HCF) and is an identifiable product, having independent marketability, then the yardstick of definition of manufacturing given in Section 2(f) of the Central Excise Act, 1944 is satisfied. It is clear that subject process has not been free from doubt regarding its coverage under the definition of manufacturing under Section 2(f) of the Central Excise Act, 1944 - The matter was not free from doubt, the non-payment of duty of Central Excise by the assessee is a bona fide mistake and there cannot be imposition of any penalty on the Noticees in this regard. Therefore all the penalties imposed on the Noticee Appellants are hereby set aside. The for quantifying the liability of duty of Central Excise against the Appellant assessee for the period of 1(one) year - appeal allowed by way of remand.
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2016 (12) TMI 1126
Irregular availment of CENVAT credit - clandestine removal - improper accounting in the stock register - suppression of facts - Held that: - there exist dispute in the management, it has to be borne in mind that there is a chance that evidences may be shadowed by the collusion and rivalry between the two factions. It is worth mentioning that when on one side, the Department alleges production of goods and clearance of goods without payment of duty which indicates that there could be excess finished stocks, it is also alleged that the appellant factory has not received inputs but has received only invoices. These allegations are not established by input and output quantifications during the relevant period so as to establish a case of fraudulent availment of credit. Appeal dismissed - decided in favor of respondent-assessee.
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2016 (12) TMI 1125
Valuation - transaction value or MRP based value - Sales Promotion Scheme - pack of Maggie Noodles supplied along with Sundrop Oil freely, each pack of the product bear the word Free Not For Sale and also did not bear MRP - whether the valuation is to be done u/s 4 or u/s 4A of the Central Excise Act? - Held that: - the identical issue has been decided in the case of Jayanti Food Processing (P) Ltd. Vs. Commissioner of C. Ex., Rajasthan [2007 (8) TMI 3 - Supreme Court], where it as held that the sale of goods to the buyer who used the goods not for retail sale but for free distribution under Sales Promotion Scheme, the value of the goods shall be governed under Section 4 and not Section 4A of the Central Excise Act. After-all if the contract of the chocolates was for the purpose of advertising of a particular product of the particular industry, it would be covered within the expression servicing any industry - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 1124
Valuation - Refrigerators sold to Soft Drink manufacturer in bulk whether liable to be valued under Section 4 or Section 4A of the Central Excise Act, 1944? - Held that: - the issue involved in the present case has already been settled in the appellant's own case by the Hon’ble Supreme Court in the case of Jayanti Food Processing (P) Ltd. [2007 (8) TMI 3 - Supreme Court], where it was held that the sale of goods to the buyer who used the goods not for retail sale but for free distribution under Sales Promotion Scheme, the value of the goods shall be governed under Section 4 and not Section 4A of the Central Excise Act - appeal dismissed - decided against Revenue.
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2016 (12) TMI 1123
Demand of duty, interest and penalty - appellant did not pay the duty in terms of Rule 96ZP(3) of the Central Excise Rules, 1944 - whether the demand is sustainable when Rules were held ultra virus? - Held that: - reliance placed on the decision of the case of the decision of Punjab & Haryana High Court in the case of Mittal Alloys Vs. Commissioner of Central Excise, Chandigarh [2013 (12) TMI 1241 - PUNJAB AND HARYANA HIGH COURT], wherein it was held that the omission of Rule 96ZO(3) would not affect any obligation or liability already accrued or incurred - only interest and penalty cannot be demanded however as regard the demand of duty it is legally recoverable - appeal partly allowed in favor of appellant.
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2016 (12) TMI 1122
CENVAT credit - MS angles, shapes, sections, channels etc - denial of credit on the ground that supporting structures of furnace plant and rolling mill were permanently embedded to earth and hence these were not goods and consequently it cannot be said that these goods were used in the manufacture of capital goods - Held that: - The issue of Cenvat credit on structural items used in the fabrication of support structures for capital goods has been decided in favor of the appellants in the case of Monnet Ispat & Energy Ltd. vs. CCE, Raipur [2016 (1) TMI 917 - CESTAT NEW DELHI], where it was held that Applying the principle of “user test” laid down by the Hon’ble Supreme Court in Jawahar Mills case (2001 (7) TMI 118 - SUPREME COURT OF INDIA ) the angles, beams and channels used in the making and fabrication of these capital goods are found eligible for Cenvat credit. Appeal allowed - decided in favor of appellant.
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2016 (12) TMI 1121
CENVAT credit - steel items namely, MS Channels, Beams, Joists, rounds, sheets, angle, plates etc. for fabrication and erection of various technological structures and also oxygen gas, welding electrodes for repair and maintenance of plant and machineries falling under Chapter 84 of the Tariff Act - Held that: - I find that relying on the judgment of Hon’ble Gujarat High Court, this Tribunal in the cases of M/s. Singhal Enterprises Pvt. Ltd. V. CC & CE, Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI], M/s. Topworth Steels and Powers Pvt. Ltd. vs. CCE, Raipur [2016 (9) TMI 1229 - CESTAT NEW DELHI], Monnet Ispat & Energy Ltd. vs. CCE, Raipur [2016 (1) TMI 917 - CESTAT NEW DELHI] has allowed the cenvat benefit on the disputed steel items. I also find that the Hon’ble Chattisgarh High court in the case of Ambuja Cements Eastern Ltd.[2010 (4) TMI 429 - CHHAITISGARH HIGH COURT], have allowed cenvat benefit on Oxygen / Arzan gas and welding electrodes used for repair and maintenance of plant and machineries. Further, this Tribunal in the case of Singhal Enterprises Pvt. Ltd and M/s. Topworth Steels and Powers Pvt. Ltd. has also allowed the cenvat benefit on Oxygen gas and welding electrodes used within the factory for repair and maintenance of the machines/machineries. Appeal allowed - decided in favor of appellant.
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2016 (12) TMI 1120
Default in payment of duty - Rule 8(3A) - debarring the assessee from using Cenvat credit for making payment of excise duty for a period of two months - Time limitation - Held that: - it stands held in favour of the assessee that they will be entitled to use Cenvat credit during the period of two months following the default during which the Revenue had passed orders debarring them from using this Cenvat credit. Consequently, I find that this issue already stands settled in favour of the assessee. Consequent upon this fact, refund claim stands filed before the Assistant Commissioner which he rejected on grounds of time bar vide his order dated 10.10.2006, observing that the refund will be eligible on merits. However, from the facts outlined above, it is clear that the refund has also been decided in favour of the assessee on merits vide CESTAT order dated 6.7.2011 - Appeal dismissed - decided in favor of the assessee.
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2016 (12) TMI 1119
Demand - SSI exemption - use of brand name of others - time bar - Held that: - while clearance of the goods under exemption Notification No. 8/2000-CE the Department was having the knowledge that the product Ivomec Injection bearing the brand name of another person is being cleared. In such case nothing prevented the Department from issuing the show-cause notice within a period of one year, which Department has failed - Moreover from August, 2001 itself the appellant started paying duty without availing exemption, at least the Department could issue a show-cause notice immediately in August, 2001 and before 22.02.2002, but the show-cause notice was issued, much after all the disclosers were made on 04.11.2003 - appeal allowed - decided in favor of appellant.
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2016 (12) TMI 1118
Classification of goods - 2048 Solution - classified under CETH 3206.19 of the Central Excise Tariff Act, 1985 or under CETH 27.15? - Held that: - It is observed from the case records that the product ‘2048 solution’ manufactured by the respondent is consisting of Dark Brown coloured free flowing liquid composed of Bituminous materials in a medium of volatile organic solvent - From the Tariff description given for CETH 27.15, it is observed that Bituminous Mixtures including emulsions, suspensions and solutions based on natural asphalt, or natural bitumen etc. are classifiable under this heading. Reliance placed on the decision of the case of Shalimar Paints Ltd. vs. Commissioner of Central Excise, Calcutta [2001 (7) TMI 1284 - SUPREME COURT] where it was also held that similar preparations based on Bituminous materials in a medium of volatile organic solvent are classifiable under CETH 27.15. Appeal allowed - decided in favor of Revenue.
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2016 (12) TMI 1117
Demand - clandestine removal - M.S. Ingots - it is the contention of ld. Counsel that they are not pressing for their appeal in respect of ₹ 6,96,832/-. So, the issue now left for decision is confirmed demand of ₹ 52,955/-, 62,481/- & ₹ 64,187/-. The ld. Counsel has argued that ₹ 64,187/- is on account of shortage found which is already covered in the accepted liability which has not been passed. He has further contended that the confirmed demands of ₹ 52,955/- & 62,481/- are also repetitive demands which are already covered in ₹ 6,96,832/- which is not pressed. He has further argued that it is an admitted fact that ₹ 11 lakhs were paid before issue of Show Cause Notice. Therefore, as provided under Sub-section 2A of Section 11A of Central Excise Act, 1944 during the relevant time proceedings get concluded on payment of liability before issue of Show Cause Notice. Therefore, penalty imposed on appellant manufacture and director may be set aside. Held that: - I find force in the arguments put forth by the counsel for the appellant. Therefore, I set aside the confirmed demand of ₹ 52,955/-, ₹ 62,481 & ₹ 64,187 and set aside penalty imposed under Section 11AC and Rule 25 on the appellant manufacture and personal penalty imposed on Shri Babu Lal Jain and modify the impugned Order-in-Appeal dated 22-04-2009 to above extent. Appeal disposed off - decided partly in favor of appellant.
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2016 (12) TMI 1116
Valuation of physician samples cleared by the respondents - valued under Rule 4 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 or not? - Held that: - reliance placed on the decision of the case of Themis Laboratories Pvt Ltd., & Meghdoot Chemicals Ltd., Versus Commissioner of Central Excise, Mumbai [2011 (2) TMI 713 - CESTAT, MUMBAI], where it was held that when there is a transaction value available on sale of the impugned goods, such transaction value is to be followed in terms of Section 4 (1)(a) of the Central Excise Act, 1944 - appeal dismissed - decided against Revenue.
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2016 (12) TMI 1115
Refund - time bar - unjust enrichment - Cash discount - Held that: -The appellant had submitted in the grounds of appeal that the cash discount was not collected from their customers and cash discount was not part of the assessable value and therefore, it was not part of cum-duty price and therefore Excise Duty was not collected on that component and as a result Excise Duty was not collected from their customers and duty incidence was not passed on - We further find that proviso to Sub rule 5 of Rule 9B of Central Excise Rules, 1944 came into operation w.e.f. 25.06.1999, Section 11B for unjust enrichment was not applicable for refund arising out of provisional assessment - The Original Authority shall also take into consideration the interest to be paid on the said amount from the date on which provision for paying interest on delayed refund came into operation on the statute of Central Excise Act, 1944 - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 1114
Levy of duty - Clandestine removal - recovery yield ratio - finished goods processed as job worker under Rule-4 (5) (a) of the Cenvat Credit Rules 2004 - Whether RFPL is required to discharge duty on intermediate goods manufactured on job work basis when inputs are received from EIL under Rule-4 (5) (a) of the Cenvat Credit Rules 2004? - Held that: - the issue is no more res-integra and is decided in the case of Wyeth Laboratories Ltd. Vs CCE Bombay [2000 (7) TMI 109 - CEGAT, NEW DELHI], where it was held that there is no question of holding scrap as final product and disallowing the benefit of clearance of scrap for converting into ingots, under Rule 4(5)(a) - no duty liability is attracted when goods are processed by the appellant under Rule-4(5)(a) of Cenvat Credit Rules 2004. Annexure-II challans prepared by M/s EIL contain the description of inputs, its quantity, etc and Part-II of this challan filled in by the appellant also contained the quantity of finished goods sent back to M/s EIL. In view of the above appellant is not required to discharge Central Excise duty on the finished goods processed as job worker under Rule-4 (5) (a) of the Cenvat Credit Rules 2004. Whether standard input-output norms have been rightly made applicable by the department for calculating the yield of Alloy Lead ingots manufactured by the appellant out of the raw materials supplied by EIL under job work challans? - Held that: - input output norms of 1 kg of lead for every 1.07 kg of waste & scrap can not be made applicable to all categories of waste & scrap and can be made applicable only to standards waste & scrap where metal content in the waste and scrap is 97% or more. If the department was not agreeable to the % recovery prescribed by M/s EIL then the only way to reject that could have been to have sample yield studies done by the investigation to determine recovery yield percentages. There is no evidence that any lead ingots have been cleared clandestinely except presumptions surmises & theoretical calculations based on standard Input-output norms which does not apply to the waste & scrap received by the appellant from M/s. EIL. There is no justification either for demanding duty or for imposition of penalties against the appellants - appeal allowed - decided in favor of assessee.
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2016 (12) TMI 1113
Denial of CENVAT credit - forged invoices - Held that: - There has been clear evidence on record that the original importer of the goods namely M/s Sulabh Impex Incorporation, Delhi never imported the goods which had been purportedly received under respective invoices by the manufacturer-appellants viz. Sarda Industrial Enterprises and M/s Bright Metals (I) Pvt. Ltd. It is also on record that original importer M/s Sulabh Impex Incorporation. Delhi is holding IEC code issued by DGFT and this code was being used by certain other importers. In case of present appeals Shri Sunil Kumar Mittal, proprietor of M/s Sulabh Impex Incorporation, Delhi had admitted that they did not import subject goods; only issued Cenvatable invoices and never supplied the goods along with said invoices. These Cenvatable invoices have been instrumental in allowing wrong Cenvat credit claims in favour of manufacturer-appellants. Order-in-Original passed by Asst. Commissioner gives the fact on record, which again clearly prove that factually goods were never received by the manufacturer appellants. Further, there is no question of receipt of such goods, when the said goods were never imported by the importer viz. Sulabh Impex Incorporation, Delhi. Appeal dismissed - decided against appellant.
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2016 (12) TMI 1112
Extended period of limitation - Held that: - It is observed that said clause 4.0 of the contract dated 4/8/95, relied upon by the appellant, is a general clause & also covers situations where duty is also payable. It is not correct on the part of the appellant to say that when wagons are supplied to oil companies also, the same shall stand exempted. It has been rightly pointed out by Learned AR that there are clauses which convey that the impugned wagons were meant for Oil Companies. Appellant never reflected in their returns that such wagons are intended for Oil companies. Even after coming to know that said exemption is not applicable appellant did not brought to the notice of the department & also did not pay the duty liability. In view of the existing factual matrix applicability of extended period has been correctly upheld by the Adjudicating authority - appeal dismissed - decided against appellant.
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2016 (12) TMI 1111
CENVAT credit - credit of duty paid by the assessee during pendency of appeal, and taking suo-muto credit under intimation to revenue on being successful in appeal - the suo motu taking credit of Cenvat credit debited in excess due to clerical mistake, whether the same is in violation of the provisions of the Act and the Rules? - Held that: - the issue is no longer res-integra and this issue have been considered by Hon’ble Karnataka High Court in the case of Commissioner of Central Excise, Bangalore-III Vs Motorola India Pvt. Ltd. [2006 (7) TMI 223 - HIGH COURT OF KARNATAKA AT BANGALORE], wherein under similar facts and circumstances, where the assessee had debited excess Cenvat credit and sought permission of revenue for taking re-credit by correcting the error, but was advised to apply for refund. When such refund claim was made, the same was rejected as time-barred. The Hon'ble High Court held that the contention of the assessee that the amount paid by mistake is not duty, merits consideration. In fact, duty paid on goods is indicated in the invoices. Therefore, there is no question of time bar. The amount paid should be considered as deposit and not duty. Further, on going through the relevant provisions of Rule 12 of CCR, 2002 or Rule 14 of CCR, 2004 which provides for recovery of Cenvat taken wrongly or erroneously, does not call for any recovery of Cenvat credit taken of an amount of pre-deposit made during pendency of appeal, taken suo motu. Thus, I hold that the show cause notices in both the matters are misconceived. Accordingly, the impugned orders are set aside - appeal allowed - decided in favor of assessee.
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2016 (12) TMI 1110
Waiver of pre-deposit of ₹ 9,80,000/- - CENVAT credit wrongly availed - Held that: - the petitioner's factory was destroyed by fire, which was also reported in the Tamil Dailys dated 09.12.2010 and also taking note of the fact that the Writ Petition is pending before this Court from 2014, and there is an order of stay, ends of justice would be met if the amount directed to be remitted towards pre-deposit, is reduced - the petitioner directed to deposit a sum of ₹ 2,50,000/- - petition disposed off - decided partly in favor of petitioner.
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2016 (12) TMI 1109
Rejection of rebate claim - early hearing of revision application - Held that: - The Court pointed out that the Court cannot issue any positive direction to the first respondent to take up the Applications on out of turn basis, as it is not known about the procedure followed by the first respondent and how many Revision Applications are listed before the first respondent and as to whether the first respondent is regularly hearing the Revision Applications. Petitioner pleaded to atleast as to when the Revision Applications will be taken up for hearing - this plea was considered reasonable - there will be a direction to the first respondent to consider the petitioner's representations dated 10.06.2016, 30.06.2016, 07.09.206, and inform the petitioner in writing as to the Registration Numbers of the petitioner's Revision Applications, and within what time, the Applications will be heard and disposed of. Petition disposed off - decided against petitioner.
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CST, VAT & Sales Tax
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2016 (12) TMI 1098
Whether in the facts and circumstances of the case on combined reading of Section 14(6), Section 24 and Rule 33, can interest be charged from the contractor for late deposit of TDS by contractee - Held that: - Rule 33(5) of the Rules provides that the amount of tax deducted by a contractee is to be paid by him to the department within 15 days of the close of the month - the payee to whom certificate of deduction and payment of tax has been furnished, shall be entitled to take credit thereof subject to verification of documents and correctness of the certificate - Merely on presumption about deduction or payment of tax by the contractee on his behalf, a contractor cannot absolve himself from liability to pay tax as per the returns filed - Even if there is delayed payment of tax by the contractee, the contractor shall be entitled to claim benefit thereof at the time of framing of assessment and circulation of interest and entitlement of refund, if any, shall be determined at that time - As the assessing authority found that the tax had not been deposited in time, interest on account of delayed payment of tax was levied - On account of proofs attached by the appellant along with the returns showing payment of tax on his behalf by the contractees, deduction to the tune of ₹ 94,05,576/- was granted - Appeal disposed of.
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2016 (12) TMI 1097
When the re-opening of assessments can be made? - reassessment under Section 31 of the Act - Held that: - the provisions of the section 31 are on similar lines as the un-amended provisions of Section 147 of the Income Tax Act and that they provide for two categories of cases; but even the provisions of Section 147 of the Income-tax Act amended in the year 1989 make it clear that there must be reason to believe that there has been under-assessment or escaped assessment, etc. and as has been held in the case of Kelvinator [2010 (1) TMI 11 - SUPREME COURT OF INDIA] by the Apex Court, it should not be a mere change of opinion, otherwise it would amount to arbitrary exercise of power by the assessing officer to reopen the assessment. The said law emphatically laid down by the Supreme Court in Kelvinator's case is squarely applicable in the present matter also and it has to be held that reassessment cannot be made on a mere change of opinion. - Decided in favor of assessee. Whether the decision of the Supreme Court subsequent to the assessments can be considered a mere change of opinion? - Held that: - a subsequent reversal of legal position by the judgment of the Supreme Court does not authorize the Department to reopen the assessment which stood closed on the basis of law at the relevant time. Cases where no assessment was done earlier - Held that:- If the assessing authority had no occasion to form an opinion during the course of such deemed assessment of the returns filed by the petitioner, and subsequently a notice was issued under Section 31 (1) of the Act, or assessment made under Section 27, albeit on the ground of decision rendered by the Supreme Court, it could not be said that there has been any change of opinion. For the said reason, I am of the view that so far as the remaining eight cases are concerned, the plea of the petitioners regarding change of opinion is not applicable. - Decided against the assessee.
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Wealth tax
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2016 (12) TMI 1134
Stock Exchange Card of Ahmedabad Stock Exchange liability to Wealth Tax Act - Held that:- So long as assessee holds Membership Card and is non defaulting Member such a Membership Card can be said to be an “assets” within the definition of Section 2(e) of the Act, 1957 and on the same the assessee is liable to pay Wealth Tax. The question answered in favour of Revenue and against the assessee.
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Indian Laws
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2016 (12) TMI 1093
Offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - Dishonour of cheques (PDC) - default sentence in case of non-payment of the compensation - High Seas Sale Agreements - loss of government dues / input duty (tax) liability - Held that:- The issuance of legal notices by the respondent/Govt. company to the revisionists are not disputed between the parties. It is also not in dispute that the payment so demanded was made by the revisionists within the stipulated period or subsequent period till date which attracts conviction under Section 138 read with Section 141of the Negotiable Instruments, Act, 1881. However, all the aforesaid cheques issued by the revisionist to the respondent company were to meet their liability amounting to ₹ 9,94,98,634 which forms part of one single transaction giving rise to one cause of action and the same could not be said to be distinct offences committed in each of the complaint cases to attract the provisions of Section 138 read with Section 141 of the Negotiable Instruments, Act having different cause of action. Therefore, the substantive sentence awarded to the revisionists could have been one year concurrently rather than independent/consecutive sentence in each complaint cases The conviction of the revisionists in the eighteen complaint case under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 is affirmed. The Court below went wrong while awarding substantive sentence to run consecutively rather than to award the sentence concurrently.
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2016 (12) TMI 1092
Levy of property tax on “mobile towers” - Validity of Section 145A of the Gujarat Provincial Municipal Corporations Act, 1949 - Held that:- If the definition of “land” and “building” contained in the Gujarat Act is to be understood, we do not find any reason as to why, though in common parlance and in everyday life, a mobile tower is certainly not a building, it would also cease to be a building for the purposes of Entry 49 List II so as to deny the State Legislature the power to levy a tax thereon. Such a law can trace its source to the provisions Entry 49 List II of the Seventh Schedule to the Constitution. Though several other decisions of this Court and also of different High Courts have been placed before us we do not consider it necessary to refer to or to enter into any discussion of the propositions laid down in the said decisions as the views expressed in all the aforesaid cases pertain to the meaning of the expressions ‘land’ and ‘building’ as appearing in the definition clause of the statutes in question. We, therefore, set aside the judgment passed by the Gujarat High Court and answer the appeals arising from the order of the Bombay High Court; transferred cases and the writ petitions accordingly.
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