Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 24, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Transfer pricing adjustment - in the absence of a machinery provision it would be hazardous for any TPO to proceed to determine the ALP of such a transaction since BLT has been negatived by this Court as a valid method of determining the existence of an international transaction and thereafter its ALP. - HC
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Compensation on termination of joint-venture agreement - the receipt of ₹ 6080.95 lakhs by the Assessee as a result of the termination of the JVA during AY 1998-99 was a capital receipt but in light of Section 55 (2) (a) of the Act as it stood at the relevant time, the said amount cannot be brought to capital gains tax. - HC
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Addition under Section 68 - ITAT was fully justified in coming to the conclusion that there exists no evidence to establish that there was any re-routing of the money collected by the Respondent-Companies. None of the shareholders denied having contributed to their share capital. - No addition - HC
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Exemption u/s 54F - LTCG - Even before the sale of the property, he had borrowed housing loan and started construction on the site belonging to him. After the sale, the amount spent towards construction of the house is more than the consideration received by the sale of agricultural land and therefore, he is entitled to the benefit of Section 54F - HC
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Levy of penalty u/s 221 - Delay in the remittance of TDS to the Government (TDS) Account - the explanation of the assessee that on account of cash crunch, remittance of TDS into Government account could not be made has not been rebutted - no penalty - AT
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Reopening of assessment - there was no negligence on the part of the assessee in furnishing the required details for completing the assessment. Thus reopening of the assessment beyond four years period from the end of the relevant assessment year is not justified - AT
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Since the operating profit to cost margin of the appellant at 9.26% is higher than the operating profit to cost ratio of the comparable companies at 6.30%, the adjustment made by the AO/TPO/DRP, in relation to international transaction of provision of business support services, is deleted - AT
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Foreign agent is not providing any technical service for the purpose of running of the business of the assessee in India. Therefore, the commission paid to the agent is not a fee for technical service, hence, the assessee is not liable to deduct tax u/s 195 - AT
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Interest expenditure on borrowed capital - expenditure is only to contain the losses of the borrower-company, by diverting it to the shareholders to that extent. The assessee’s claim is without merit - AT
Customs
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Classification - imported goods Virginiamycin is a well defined chemical of 100% purity with anti bacterial properties included specifically under Chapter 29 by virtue of Chapter Note 1(a). - SC
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Import of Erythritol - Application of Food Safety and Standards (packaging and Labeling) Regulations, 2011 - the contention advanced by the petitioner that the goods in question 'Erythritol' is used as a food additive in manufacture of the foods and cannot be termed as item which meets the personal needs of the consumers, is liable to be rejected outright - HC
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Availment of CENVAT Credit while claiming Duty drawback - Misdeclaration - This fact cannot be held to be a human error so as to extend the benefit to the appellant. - levy of penalty confirmed - AT
Corporate Law
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Appellant floated as many as 27 companies to allure the investors to invest in their different companies on a promise of high returns and funds were collected from the public at large which were subsequently laundered in associated companies of Rose Valley Group - High Court has not committed any wrong in refusing bail in the given circumstances. - SC
Service Tax
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Technical testing and analysis service - reverse charge - services are imported or not - Proviso to Rule 3(ii) states that when a service is partly performed in India, it shall be treated as performed in India. Revenue has not justified how the service is performed outside India - Demand set aside - AT
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Denial of rebate claim - receipt of commission on transaction - service was received by the recipient abroad and it is partly performed in India and partly performed abroad - refund allowed - AT
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Denial of rebate of Service Tax - no nexus between the input services and the exported output service - There is no clear proposition or proposal for this in the show cause notice. In the absence of a clear proposal, the ground of nexus to reject the rebate claim of tax paid on output service could not have been used - AT
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CENVAT Credit - appellant has availed this credit without any documents evidencing the payment of service tax and without specifying input services and the input service provider as mandatory under the Cenvat Credit Rules - appellant failed to rebut the allegation - demand confirmed - AT
Central Excise
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Imposition of cost by CESTAT on grounds of quality of adjudication order - CBEC issues Instruction
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Undervaluation of goods - The case set up in the Show Cause Notice was that at the relevant time, manufacturing of electric hair removers and dyers was reserved for SSI unit, hence, Gillette could not have directly manufactured the said goods. Therefore, in connivance with Braun, which is a group company of Gillette and Rialto, it got the same manufactured in the premises of Rialto. - Revenue has no merit in the case - Demand set aside - SC
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Transaction value u/s 4 or MRP based Valuation u/s 4A - sale of footwear to institutional buyers in bulk - the footwear is an item which is specified under Section 4A, which is covered by Weights and Measures Act and Rules, and MRP was affixed on the products supplied, which were not exempted under Rule 34 of the Rules, the provision of Section 4A of the Act shall stand attracted. - SC
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Valuation - deduction of cash discount / interest on receivables - Invoices for sales on credit terms, interest for the credit period was in built in the credit price - SC
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Clim of refund of duty paid where the demand of duty has been set aside in another case holding the activity is not amount to Manufacture - refund of amount before the date of decision cannot be allowed - SC
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Non reversal of outstanding CENVAT Credit while availing SSI Exemption - Rule 11 of CCR - appellant filed the declaration for opting the exemption. Now the duty cast on the department to verify whether they have discharged their obligation u/r 11(2) - demand set aside as beyond the period of limitation - AT
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Duty demand - revenue neutrality - since the goods were cleared to sister concern whatever duty payable and availed as credit to their own unit hence entire exercise would be revenue neutrality - if the ultimate exercise benefited the Revenue by collection of duty and in that case, no such benefit accrues to exchequer. - AT
VAT
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Recovery from wife for husband's dues - Attachment of property - there is nothing on the record to suggest that the husband had any right, title or interest in such property - Mere reference to the powers under Section 48A of the Gujarat Sales Tax Act would not save the situation for the Department. - HC
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Misuse of C-Forms / D-Forms - Even assuming for the sake of argument that if there is mis-utilisation of C-Forms or any of the Forms which are issued under the Act, at best, a dealer may invite penalties or punitive measures, but sale turnover cannot be enhanced - HC
Case Laws:
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Income Tax
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2015 (12) TMI 1188
Transfer pricing adjustment - Was there an international transaction between WOIL and its AE involving the AMP expenses within the meaning of Section 92B of the Act read with Section 92F(v) of the Act? - Held that:- As far as the present appeals are concerned, the Revenue has been unable to demonstrate by some tangible material that there is an international transaction involving AMP expenses between WOIL and Whirlpool USA. In the absence of that first step, the question of determining the ALP of such a transaction does not arise. In any event, in the absence of a machinery provision it would be hazardous for any TPO to proceed to determine the ALP of such a transaction since BLT has been negatived by this Court as a valid method of determining the existence of an international transaction and thereafter its ALP. Question put as there an international transaction between WOIL and its AE involving the AMP expenses within the meaning of Section 92B of the Act read with Section 92F(v) of the Act is answered in the negative, i.e., in favour of the Assessee and against the Revenue. Consequently Question (ii) in the Assessee's appeal is not required to be answered. Further, the only question framed in the Revenue’s Appeal viz., "Whether the ITAT erred in deleting the addition of ₹ 180,73,10,769 made by the AO/TPO on account of AMP expenses under Section 37 of the Act?" is answered in the negative, i.e. in favour of the Assessee and against the Revenue.
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2015 (12) TMI 1187
Compensation on termination of joint-venture agreement - whether taxable as income under the Head ‘Capital Gains’ - Held that:- In the present case what stood extinguished as a result of the termination of the JVA was a bundle of rights of the Assessee. This included the right to manufacture computers using HP knowhow and HP labels, trademarks and patents. At the same time it was not as if the Assessee's right to manufacture its own computers was also taken away by the termination. That stood revived. In any event, there has been no attempt at unbundling the compensation amount, as it were, to determine how much of it pertained to the above constituent rights in the bundle of rights of the Assessee that were extinguished. The AO proceeded on the basis that the entire sum received by the Assessee was for it giving up the right to manufacture HP computers. This overlooked the factual position concerning the extinguishment, as a result of the termination of the JVA, of the entire bundle of rights not limited to the right to manufacture HP computers. The right of HCL HP to revive manufacturing its computers cannot be construed as a 'transfer' of a right. At the same time HP HCL lost its status as an exclusive distributor of HP products. The transfer, if any, of the intangible assets of the kind described under the JVA could not, at the relevant time, be held to fall within the ambit of the kinds of capital assets that were contemplated in Section 55 (2) (a) as it then stood. Therefore, their cost of acquisition could not have been deemed to be 'nil' in terms of Section 55 (2) (a) (ii) of the Act as it stood at the relevant time. The Court, therefore, holds that the receipt of ₹ 6080.95 lakhs by the Assessee as a result of the termination of the JVA during AY 1998-99 was a capital receipt but in light of Section 55 (2) (a) of the Act as it stood at the relevant time, the said amount cannot be brought to capital gains tax. At the relevant time, there was no provision in regard to determining the cost of acquisition of the above intangible assets for the purposes of computing capital gains tax. - Decided in favour of the Assessee.
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2015 (12) TMI 1186
Deduction under Section 80IC - fabrication of steel Held that:- the fabrication of steel as undertaken by the Assessee, which involves several of the processes does fall within the definition of ‘manufacture’ for the purposes of Section 80 IC of the Act Assessee furnished the requisite documents to demonstrate that it carried on the manufacturing activity at its Agartala unit. The Assessee produced during the assessment proceedings as well the appellate proceedings copies of the excise returns filed by it before the Central Excise authority at Agartala, the bills of machinery and of raw material purchased, details of freight and cartage for purchase of raw material, and details of job work paid. Documents to show that the Assessee paid ₹ 1.66 crores for the fabrication work carried out with the help of contract labour were produced. Further, the documents of registration with the VAT, CST, Service Tax, and Central Excise Authorities were furnished. The Assessee also produced details of the rent paid to the Tripura Industrial Development Corporation Ltd., the bills of construction of the factory sheds and the details of payment of electricity charged to Tripura State Electricity Corporation Ltd. The appellant has produced the bills purchase of the machinery installed at the premises, comprising drilling machines, welding machines, motors, gas cutting machines.: air compressor, etc. It produced details and bills of purchase of raw material comprising nuts, bolts, rods M.S. angles, channels, HR sheets metal etc. As rightly pointed out by the Assessee there was no requirement under Section 80 IC that the Assessee had to employ 10 or more workers directly. In the circumstances there appears to have been no justification for the AO to disallow the deduction under Section 80IC of the Act for the AYs in question. - Decided in favour of assessee
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2015 (12) TMI 1185
Addition under Section 68 - ITAT deleted the addition - Held that:- ITAT was fully justified in coming to the conclusion that there exists no evidence to establish that there was any re-routing of the money collected by the Respondent-Companies. None of the shareholders denied having contributed to their share capital. The Revenue has not been able to show why the decision of the Supreme Court in CIT v. Lovely Exports (P) Ltd. (2008 (1) TMI 575 - SUPREME COURT OF INDIA ) does not apply to the facts and circumstances of the case. The Court accordingly concludes that in the present appeals the Revenue has not been able to show that the impugned decision of the ITAT in its analysis of the facts or application of the law governing Section 68 of the Act suffers from any legal infirmity. - Decided in favour of assessee.
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2015 (12) TMI 1184
Deduction u/s 10A - Tribunal holding that Section 10A is a deduction provision and not an exemption provision - Held that:- Decided in favour of the Assessee and against the Revenue by holding that the ITAT was in error in considering Section 10A of the Act to be a deduction provision. Whether brought forward losses should first be deducted from the total income of the current year and thereafter the deduction u/s 10A of the Act should be allowed? - Held that:- Brought forward losses are to be set off only after giving effect to Section 10A of the Act. The Assessee earns both exempt income as well as income which is ineligible for exemption under Section 10A of the Act. The ineligible business income will be available for adjustment of brought forward losses of the earlier years - Decided in favour of the Assessee
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2015 (12) TMI 1183
Amortization of premium on HTM securities - treating the same as revenue expenditure could not be said to be erroneous within the meaning of section 263 - Held that:- We are of the view that no fault can be found with the impugned order holding that in such a case no occasion to exercise powers of Revision under Section 263 of the Act can arise as held by the Supreme Court in MALABAR INDUSTRIAL CO.LTD (2000 (2) TMI 10 - SUPREME Court). In view of the above settled position of law in regard to jurisdiction under Section 263 of the Act the impugned order of the Tribunal does not give rise to a substantial question of law.
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2015 (12) TMI 1182
Addition of 25% undisclosed sales - Held that:- Revenue, has produced a chart to show the difference between the figures of sales as per the AISR and the figures of sales given in the return of income. The difference is 15 to 20%. The Court is unable to accept the rough and ready method of determination of the percentage of the difference in the two sales figures. The exercise must be done at the micro level. Individual invoices have to be examined to see what the actual discounts allowed for the transactions were. This appears to be the exercise undertaken by the ITAT before it came to the conclusion that there was no difference between the figures reported in the AISR and the sales as per the return of income. It was based on the thorough examination of the books of accounts and is purely factual. Consequently, the Court finds no reason to differ with the conclusion of the ITAT on this aspect. The addition made by the AO of 25% of the sales was rightly deleted. - Decided in favour of the Assessee and against the Revenue. Commodities speculation - ITAT deleted the addition - Held that:- It is not understood why the AO undertook this exercise to arrive at a notional figure. On the other hand, in the impugned order of the ITAT, it has been noted that the Assessee announced several schemes, one of which was distribution of gold chains on the birthday of Mr. Dharam Pal Gulati, to the dealers who achieved certain targets. The Assessee purchased the gold and alloy and got them converted into chains from M/s Vijay Kumar Jewellers with whom the Assessee had a regular account. The ITAT found that “the assessee is not engaged in purchase and sale of gold on the basis of which it could be presumed that the assessee was engaged in speculative business.” It was further pointed out that if the Revenue wanted to rely on the surrender of certain amount made by the Directors after the search, the necessary evidence should have been brought on record since the statements made had been retracted. As rightly pointed out by the ITAT, the conclusion of the AO that the Assessee was engaged in the speculative business in agricultural commodities and gold was based on surmises and not on the basis of any credible evidence. The Court therefore holds that the deletion by the ITAT of the addition on the ground of speculative trading was for cogent and valid reasons. - Decided in favour of the Assessee and against the Revenue. Addition on inflated purchases - ITAT deleted the addition - Held that:- The Court is unable to find any error in the approach of the ITAT in the matter. Indeed if the amount has already been taxed at the hands of Mr. Sushil Kumar Trehan it is not understood how it could be brought to tax again in the hands of the Assessee by disallowance of the expenditure. Moreover the papers on the basis of which addition was made were found in the office of Mr. Sushil Kumar Trehan, who himself was engaged in the procurement of haldi and chillies. Further Mr. Rakesh Gupta, learned counsel for the Assessee informs that Mr. Trehan has paid the tax along with the interest in terms of the order of assessment of his return which has attained finality. - Decided in favour of the Assessee and against the Revenue. Disallowance of advertisement expenditure - ITAT deleted the additionHeld that:- MDH deals primarily in household products. The contention of MDH that Mr. Dharam Pal Gulati is a pioneer of packaged spices in India and has built the business by his vision and hard work for over six decades has been unable to be contradicted by the Revenue. It is entirely up to the Assessee as to how it promotes its products. The Court finds no basis for the AO to have concluded that the expenses on advertisement was not for business purposes and for disallowing 20% of it. The ITAT rightly upheld the order of the CIT (A) deleting the said disallowance - Decided in favour of the Assessee and against the Revenue. Addition under the head “Income Expenditure Investments” - Held that:- The revenue frankly states that he has been unable to ascertain how the said question arises in the concerned AYs. It may also be noticed that certain amounts attributed to the Assessee have in fact been brought to tax in the hands of Mr. Trehan and therefore, their addition in the hands of the Assessee was not justified.- Decided in favour of the Assessee and against the Revenue. Whether the expenses incurred by the Assessee in construction of school building at Byadagi, Karnataka require to be added as income - Held that:- during the course of search Mr. Rajiv Gulati had surrendered a sum of ₹ 10 crores towards difference in stock and ₹ 1 crore on account of discrepancy in stock. The contention was that he was misled on account of pressure during the search operation into surrendering the said sum . This explained his retraction of the said surrender on 28th November 2006 itself. The ITAT also referred to the CBDT Instruction dated 10th March 2003 in this regarding making it mandatory that in the absence of discrepancy in the search inventory of the stock, no addition can be made. In the circumstances, the Court holds that the ITAT was justified in holding that the AO should have brought material in the form of inventory on record, if he wanted to make an addition of ₹ 11 crores. The ITAT, therefore, rightly deleted the said addition. - Decided in favour of the Assessee and against the Revenue.
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2015 (12) TMI 1181
Penalty u/s 271(1)(c) - Held that:- The issue stands covered by the judgments delivered in Commissioner of Income-Tax, Central-I, Kolkata vs. Amardeep Singh Dhanjal [2013 (2) TMI 291 - CALCUTTA HIGH COURT] and Commissioner of Income Tax, Central-III, Kolkata vs. Brijendra Gupta [2015 (7) TMI 451 - CALCUTTA HIGH COURT] the manner in which the income was derived has also been disclosed and the assessee has thereafter paid the tax and the applicable interest, thus all the requirements of the clause were met by the assessee and, therefore, the correct view of the matter is taken in allowing the immunity and upholding the view of the CIT appeals and setting aside the order of penalty passed by AO - in favour of assessee.
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2015 (12) TMI 1180
Addition on account of labour charges - ITAT deleted the addition - Held that:- The assessee claimed deduction in respect of labour charges paid to about 50 labourers. The Assessing Officer reduced this amount having come to the conclusion that only a few labourers were traceable at the given addresses and some of the addresses were not even confirmed. The Tribunal kept in mind the ground realities in such cases. There were comparable results in expenses of labour charges in earlier years. The deductions were allowed to the assessee. The quantum of expenditure can be compared to the production done by the labour. The labour was engaged on piece rate bases. It was found that there was a co-relation between the production as well as the number of labour engaged. The issue really is a question of fact and appreciation of facts. We are unable to say that this analysis and the findings of the CIT(A) and of the Tribunal are perverse or absurd. - Decided against revenue
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2015 (12) TMI 1179
Entitlement to benefit to the assessee under section 54F - ITAT allowed claim - Whether the Tribunal was correct in holding that the order passed by the Commissioner under Section 263 of the Act with a direction to pass the fresh assessment by considering the housing loan raised by the assessee before getting benefit under Section 54F of the Act is not erroneous and prejudicial to the interest of the revenue? - Held that:- It is not in dispute that the assessee sold the agricultural land and the consideration received is in the nature of a long term capital gain. Even before the sale of the property, he had borrowed housing loan and started construction on the site belonging to him. After the sale, the amount spent towards construction of the house is more than the consideration received by the sale of agricultural land and therefore, he is entitled to the benefit of Section 54F of the Act. Therefore, we do not see any infirmity in the order passed by the Tribunal which calls for interference. However, argument of the learned counsel for the revenue that without fully investing the money which he received as a consideration from the sale, he has completed the construction and he is claiming benefit of deduction of tax paid towards housing loan which would amount to double benefit. That is the question which is to be considered, if they arise and not at the time of granting benefit under Section 54F is available or not. - Decided against the revenue.
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2015 (12) TMI 1178
Addition on deemed dividend - Held that:- The section clearly states that the shareholder may be a member of the concern or a partner, which implies that the interest of the shareholder in the concern is to be determined with reference to the percentage of shareholding of the directors/ partners in the said concern. It is not necessary that in every case the detailed mechanism should be provided for computing the income and, if, by reasonable construction of the section, the income can be deduced then merely on the ground that specific provision has not been provided, it cannot be held that the computation provisions fails. It is well settled law that the construction which advances the object of legislation should be made and not the one which defeats the same. The percentage of shareholding in the concern to which loan is given, is the determining factor of the deemed dividend in case of shareholder. In the present case, since in M/s Aesthete International Ltd., Mr. Puneet Bhagat had 53.85 shareholding. Therefore, ₹ 5,38,500/- should have been assessed as dividend in the hands of Shri Puneet Bhagat and ₹ 4,61,100/- should have been taxed as deemed dividend in the hands of Mrs. Suneeta Bhagat. Since in case of Mr. Puneet Bhagat, this will lead to enhancement of income, uphold the addition of ₹ 5 lakhs only in his case. - Decided against assessee
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2015 (12) TMI 1177
Addition made under the head ‘bogus purchase’ - CIT(A) deleted the addition - whether where sale is genuine, purchase cannot be bogus, whereas no stock register and quantity wise details of purchase and sale is not available? - Held that:- It is clear from the order of the CIT(A) and the evidence on record that there was no valid basis to treat the entire purchases as bogus as was done by the AO. If purchases are being disallowed to the extent of ₹ 10,14,942/- what will happen to the corresponding sales being shown. The CIT(A) therefore was right in concluding that the A.O. was not justified in considering the entire purchases as bogus from these nine parties. The fact that the other parties avoided notices u/s. 133(6) of the Act could be because they were not disclosing sales made to the Assessee in their books of accounts. The AO at best could have rejected the books and estimated income of the assessee but he has not done so. Treating the entire purchases as bogus and making addition would result in absurd results in that the entire sale proceeds would get taxed as income. In the given facts and circumstances of the case, the addition made was rightly deleted by the CIT(A). We find no ground to interfere with the order of the CIT(A). - Decided against revenue Addition u/s.41(1) as cessation of liability - CIT(A) deleted the addition - Held that:- There was no evidence to show cessation of liability. Assessee still shows the liability in its books of accounts which itself is primafacie evidence that the liability exists.The transaction of purchase, if regarded as bogus then there is no liability in law and hence the question of applying section 41(1) will not arise for consideration.The sums in question has been repaid in the subsequent assessment years, thereby rendering the theory of cessation of liability not sustainable. - Decided against revenue
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2015 (12) TMI 1176
Penalty u/s. 271(1)(c) - Held that:- The assessee has not furnished inaccurate particulars of income and there are no findings of the Assessing Officer and the CIT (Appeals) that the details furnished by the assessee in his return are found to be inaccurate or erroneous or false. Under these circumstances, in our view the penalty in dispute is totally unwarranted and deserve to be deleted. Accordingly, we delete the penalty made u/s. 271(1)(c) of the I.T. Act and quashed the orders of the authorities below on the issue in dispute. - Decided in favour of assessee
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2015 (12) TMI 1175
Levy of penalty u/s 221 - Delay in the remittance of TDS to the Government (TDS) Account - Held that:- In the instant case, in these appeals, the plea of the assessee all along was there was a genuine cash crunch because of the fact that most of the payments were received under several schemes after a gap of two to six months, whereas the assessee has to make some urgent payments for the purpose of running its day-to day business on account of which the assessee could not have sufficient liquid cash to make the payment, which is evident from the fact that all the three bank accounts of the assessee together had a total cash balance of ₹ 6 lakhs only. These facts were not disputed by the Learned Departmental Representative. In other words, the explanation of the assessee that on account of cash crunch, remittance of TDS into Government account could not be made has not been rebutted. Under these circumstances, we do not find any infirmity in the order passed by the learned CIT(A). We therefore, uphold the same and dismiss these appeals of the Revenue - Decided in favour of assessee
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2015 (12) TMI 1174
Taxability of amount received on retirement from partnership firm - whether taxable under the head “Capital Gains” on the mistaken belief that “retirement from partnership” amounts to “transfer” within the meaning of section 2(47)? - Held that:- The amount received by assessee on retirement from partnership firm is not taxable under the head ‘capital gains’. See Riyaz A. Sheikh [2013 (12) TMI 248 - BOMBAY HIGH COURT] wherein held Amounts received on retirement by a partner is not subject to capital gains tax - Decided against Revenue.
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2015 (12) TMI 1173
Reopening of assessment - negligence on the part of the assessee in furnishing necessary particulars for completing the assessment in regard to capital introduced - Held that:- The detailed questionnaire issued by the Assessing Officer to the assessee, shows that the Assessing Officer called for details with regard to capital introduced to the extent of ₹ 6,50,000/- and the advance receipt to the extent of ₹ 96,75,000/- for sale of the land. The assessee filed reply on 15.10.2009 as well as on 21.10.2009. The CIT(Appeals), by referring to the letter of the assessee dated 15.10.2009, observed that the reply given by the assessee is very vague, therefore, there was negligence on the part of the assessee in furnishing the required particulars. The CIT(Appeals) has not commented on the reply given by the assessee on 21.10.12009. The Ld. D.R. clarified that the assessee has also filed letter dated 21.10.2009 and a copy of the letter is available on the files of the Department. The assessment proceeding was completed originally on 23.10.2009. The assessee filed the letter on 21.10.2009. Therefore, it is obvious that the details with regard to advance receipt of ₹ 96,75,000/- and the capital to the extent of ₹ 6,50,000/- were very much available on the file of the Assessing Officer. In other words, the assessee has furnished the details with regard to the capital said to be introduced by the assessee to the extent of ₹ 6,50,000/- and the receipt of ₹ 96,75,000/- as advance for sale of land at Chinnasalem. The assessee has also filed a copy of the agreement dated 01.03.2006 before the Assessing Officer. In those factual situation, this Tribunal is of the considered opinion that the assessee has filed all the details before the Assessing Officer before completing the assessment. It is unfortunate that the CIT(Appeals) has not considered the letter of the assessee dated 21.10.2009, which was filed before the Assessing Officer. The letter dated 21.10.2009 is very clear and the assessee has explained before the Assessing Officer with regard to so-called capital of ₹ 6,50,000/- and receipt of ₹ 96,75,000/-. Thus there was no negligence on the part of the assessee in furnishing the required details for completing the assessment. Thus reopening of the assessment beyond four years period from the end of the relevant assessment year is not justified. - Decided in favour of assessee
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2015 (12) TMI 1172
Disallowance under section 37(1) - expenditure incurred towards distribution of free samples to doctors/medical practitioners - whether the same to be incurred in contravention of the guidelines issued by Indian Medical Council read with circular 05/2012 issued by the CBDT - whether the free samples were neither ‘freebies’ not ‘gifts’ and were distributed by the appellant to doctors/medical practitioners on the specific written request of the latter? - Held that:- As held by the Hon’ble Supreme Court in the case of Eskayef Pharmaceuticals (2000 (7) TMI 1 - SUPREME Court ), “the object of distribution of the samples of the drugs to the doctors is to make them aware that such drugs are available in the market in relation to the cure of a particular affliction and, therefore, to persuade them to prescribe the same in appropriate cases and this is tantamount to publicity and sales promotion.” Accordingly, such expenditure cannot be said to be disallowable u/s 37(1) of the Income-tax Act in the hands of the Pharma companies distributing such free samples to doctors. In the light of the details discussion made above, the Panel holds that the free samples are not covered by the IMC regulations of 2002 (as amended in 2009) read with CBDT circular no. 5/2012, UCPMP and the Drugs and Cosmetic Act and regulations made there under. Accordingly the AO is directed to delete the proposed addition on this account.- Decided against REVENUE Transfer Pricing Adjustment on account of provision of business support services - Held that:- Since the operating profit to cost margin of the appellant at 9.26% is higher than the operating profit to cost ratio of the comparable companies at 6.30%, the adjustment made by the AO/TPO/DRP, in relation to international transaction of provision of business support services, is deleted. In view of the above conclusion, we do not find, it necessary to adjudicate as to the comparability of inclusion of ‘Aptico Limited’, ‘Global Procurement Consultants Limited.’ and HCCA Business Services (P) Ltd., and the objection of the assessee in respect of these two companies are kept open. The grounds are allowed to the extent discussed above.
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2015 (12) TMI 1171
Disallowance towards purchase of leather - Held that:- Admittedly, the assessee engaged in the business of manufacturing and export of leather and leather garments. The assessee claimed before the Assessing Officer that it purchased leather to the tune of ₹ 2,00,292/-. The assessee filed copies of the books of account for the period 01.04.2009 to 31.03.2010 and 01.04.2010 to 31.03.2011. The Revenue authorities have not disputed the purchases made by the assessee. From the orders of the lower authorities it appears they are disputing only the payment. The assessee is in the manufacture of leather and leather garments. Without purchasing the leather, it cannot manufacture leather garments. When the purchase is not doubted, this Tribunal is of the considered opinion that there is no reason to doubt the payment. In those circumstances, in view of the smallness of the amount of ₹ 2,00,292/-, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of the lower authorities are set aside and the addition is deleted. - Decided in favour of assessee TDS u/s 195 - Disallowance of commission paid to foreign agents - non deduction of TDS - Held that:- Admittedly, the assessee is engaged in manufacturing leather and leather garments. In order to market its product in foreign countries, the assessee engaged agents and paid commission to them. The question arises for consideration is whether the commission payment made by the assessee is in the nature of fee for technical services or not? This issue was considered by the Madras High Court in Faizan Shoes Pvt. Ltd. (2014 (8) TMI 170 - MADRAS HIGH COURT ) wherein found that the foreign agent is not providing any technical service for the purpose of running of the business of the assessee in India. Therefore, the commission paid to the agent is not a fee for technical service, hence, the assessee is not liable to deduct tax under Section 195 of the Act. The payment made by the assessee to the agents outside India cannot be construed as fee for technical service. Hence, the assessee is not liable to deduct tax.- Decided in favour of assessee
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2015 (12) TMI 1170
Transfer pricing adjustment - international transactions of provision of support services in respect of Clinical Study Management and Monitoring Support Services - Held that:- While deciding this issue, the DRP has not given detailed reasoning to arrive at its conclusion. The real issues raised by the assessee in detailed submissions filed before the DRP have not been dealt with properly. It appears that the DRP could not properly appreciate the facts of the case and issues involved therein. It has been pointed out by the Ld. Counsel that some incorrect facts have been noted by the DRP in its order. It has been mentioned by the DRP that the assessee had sole right to decide investigator, whereas as per Ld. Counsel, the correct facts are that the assessee company has right to only monitor the progress of the investigator. In its letter dated 14.07.2011, addressed to the DRP, the assessee has made detailed submissions and also contested the comparables considered by the TPO. It is noted from the order of the DRP that no findings have been given with regard to the objections made by the assessee with respect to selection of comparables by the TPO. No proper decision has been given by the DRP on the merits of the case also. Therefore, in our considered opinion, this ground needs to go back to the file of the DRP to re-adjudicate the same - Decided in favour of assessee for statistical purposes. Rental income from leased properties - AO taxing as as profit and gains of business or profession instead of income from house property - Held that:- As relying upon assessee's own case [2010 (6) TMI 433 - Bombay High Court ] held that Rental income received by the assessee-company from sub-leasing of commercial premises is to be considered as Income from house property even though the renting out of the premises amounts to commercial exploitation for business purposes by the assessee-company - Decided in favour of assessee TDS u/s 194C - disallowance u/s.40(a)(ia) - non deduction of TDS on payments made to manufactures towards purchase of finished goods - Held that:- The purchases have been made by the assessee from manufacturer/suppliers on principal to principal basis. The manufacturers/suppliers had also levied excise duty or sales tax or VAT, as was applicable. As per the terms of the agreement, title in these goods was transferred to the assessee at the time of delivery. It is further noted that the Central Board of Director Taxes had issued Circular No.681 dated 8th March 1984 providing that a contract undertaken to supply any article or goods according to the specifications given by any person and the property in such article or thing passes to such person only after such article or thing is delivered, then contract will be a contract for sale and as such outside of the proviso of section 194C. Thus, in view this circular as well as amendment brought out by Finance Act, 2009, in our view the impugned transactions were not liable for deduction of TDS u/s 194C.- Decided in favour of assessee Determination of Fair Market Value of Chandigarh property - reference to DVO - re computation of capital gains - Held that:- As in the case of Puja Prints (2014 (1) TMI 764 - BOMBAY HIGH COURT ), as per which the AO was empowered under the law to make a reference to DVO, if in his opinion the fair market value of the impugned property was more than the value as adopted by the assessee in the return of income on the basis of report of its registered valuer. The facts of the present case are clearly covered with the judgment of Hon’ble Jurisdictional High court, and therefore, respectfully following the same we hold that reference made by the DVO was bad in law and is held to be invalid and therefore, consequent to this, all further proceedings made by the AO in pursuance to such reference are also illegal, and therefore, the addition made by the AO on the basis of illegal reference and report of DVO is also illegal, and the same is hereby deleted. - Decided in favour of assessee Unexplained investment u/s 69 - Held that:- As gone through the material placed before us and the submissions made by the assessee. It is noted that no specific arguments were made, nor anything has been shown that this difference was duly reconciled.- Decided against assessee Interest u/s 234C levied - Held that:- The facts narrated by Ld. Counsel remain undisputed. The property was sold after 15th March of the F.Y., and thus, capital gain arose to assessee after time for payment of advance tax had passed. The assessee could not have, apparently forecasted the amount of income accrued to it by way of aforesaid capital gains. The legislature has taken care of this situation by inserting a proviso below section 234C(1)(b).There is no dispute on the fact that the exact estimate could not be done by the assessee on the amount of capital gains. The assessee has relied upon the judgment of Hon’ble Rajasthan High Court in the case of CIT vs. Smt. Premlata Jalani (2003 (7) TMI 62 - RAJASTHAN High Court ), wherein held interest is chargeable on delayed or deferred payment of advance tax, it shall be payable only with effect from the date the liability to pay advance tax in respect thereof has been incurred. There cannot be any interest prior to the date in respect of such liability when there was no liability to pay advance tax under any provisions of the Act. Interest has been levied ignoring the effect of aforesaid proviso as well as judgment therefore in the interest of justice, we send this issue back to the file of the AO to decide the same in terms of our directions as contained above - Decided in favour of assessee for statistical purposes. Interest income granted u/s 244A - Held that:- interest income u/s 244A has been done in such a manner that it has led to double taxation, as on date. We feel that the role of the income tax authorities, under the law, is to make fair assessment of income and determine tax payable thereon. No tax can be collected except with the authority of law, as per clear mandate of our Constitution, as enshrined in article 265. The law does not intend to make unjust enrichment of the Government, at the cost of taxpayers. Therefore, in the interest of justice and in all fairness, we direct the AO to look into all these aspects and ensure that impugned interest income is taxed only once, in appropriate year. For this purpose, necessary rectification orders shall be passed, as per law. The assessee shall extend requisite cooperation to the AO by providing required details, information and documentary evidences. Thus, Ground is sent back to file of the AO, with our directions as contained above.- Decided in favour of assessee for statistical purposes. Addition under section 145A to the closing stock on account of unutilized modvat credit - Held that:- as the fairness demands and as per law, the value of closing stock of a particular year should be the opening stock of the next year. There can be no doubt or debate on this proposition. If this principal is not followed, it may give rise to absurd results, leading to excessive and unfair assessment of income in the hands of the assessee. Therefore, we direct the AO to adopt the value of closing stock of A.Y. 2006-07 as value of opening stock of assessment year 2007-08, in case the addition made by the AO in the closing stock of A.Y.2006-07 has attained finality. Accordingly, this ground is sent back to the file of the AO with the directions as given above - Decided in favour of assessee for statistical purposes. Deduction u/s 35DD - assessee has sought direction to be issued for granting 1/5th of the expenses amounting to ₹ 13,06,200/- related to merger of Pharmacia Healthcare Limited with Pfizer Limited, as per the provisions of section 35DD - Held that:- As per law deduction has to be allowed equivalent to the amount of 1/5th of the total expenditure u/s 35DD as has already been allowed to the assessee in A.Y. 2004-05. We direct the AO to maintain consistency, and follow the order for A.Y. 2004-05. - Decided in favour of assessee Adjustment to Arms Length Price on account of interest on outstanding receivable - Held that:- This issue has been thrashed out by the Hon’ble Pune Bench in the case of iGATE Computer System Ltd. (supra), wherein it has been held that once the transaction between the assessee and its AEs was in foreign currency, then the same partakes the nature of international transaction and the said transaction has to be looked upon by applying the commercial principles with regard to an international transaction. If that is so, then the domestic lending rates cannot be applied in order to benchmark the transaction of the assessee with its AEs and the international rates fixed by LIBOR would come into place. As no serious objections have been raised by the Ld. CIT-DR for adoption of international rates fixed by LIBOR, keeping in view the fact that amount was to be received back in US currency only. Thus, we hold that Indian prime lending rates cannot be applied and the international rate fixed by the LIBOR would come into play. In our considered view, as per as per the suggestions received from both the sides, the rate of interest should be LIBOR plus 150 basis points. Period up to which adjustment on account of interest can be made to the income to the current year - Held that:- This issue has been very well explained by the Mumbai Bench of ITAT in case of Tecnimont ICB House (2015 (7) TMI 602 - ITAT MUMBAI), wherein it has been held that interest should be charged only up till the end of the F.Y. Thus, it is held that interest should be calculated from the due date till the date of realisation, if the outstanding amount has been received during the year. In case the outstanding amount has been received back after 31st March 2008, then interest will be calculated from the due date till the last date of this F.Y. i.e. 31st March 2008. We direct the AO to give effect to our directions, accordingly. Thus, Ground no.2 is partly allowed as in terms of our directions as stated above. Disallowance u/s 40(a)(ia) - non deduction of TDS on payment towards clinical trial expenditure - Held that:- As per the order passed by Ld. CIT(A), it has been held, in principle, that out of clinical trial expenses amounting to ₹ 3.56 crores, TDS was not required to be deducted. Keeping in view nature of these expenses, and for the purposes of requisite verification of facts as was claimed by the assessee, the matter was sent back to the file of AO. Thereafter the AO passed an order giving effect dated 31st December 2014. We, therefore, send this ground back to the file of the AO to examine these facts that out of total disallowance of ₹ 3.56 crores, how much amount has been deleted by the AO in the order dated 31.12.2014. The disallowance shall be deleted equivalent to this amount and balance amount of disallowance shall be sustained. Thus, assessee gets part relief - Decided in favour of assessee for statistical purposes. Profit on sale of right to use the trademark/license pertaining to consumer health brands - short term capital gains OR long term capital gains - Held that:- real substance of the transactions is that the assessee company was rightful and legal owner of these assets since 1st December 2001 and has been holding these assets in the capacity of defacto as well as dejure owner. These are clearly long term assets under the income tax law, having been held for more than 36 months by the assessee. Therefore, in view of these facts and circumstances of the case, it is held that the capital gain arising on the transfer of these assets is long term capital gain. Thus, the AO is directed to recompute the income of the assessee - Decided in favour of assessee Addition made by the AO on account of mismatch of individual transaction statement transactions with insurance companies - Held that:- The primary onus is upon shoulders of the AO to show that the transactions reported in AIR belong to the assessee. It is only thereafter, the onus of the assessee shall start to show that these transactions have been duly recorded in the books of account of the assessee, failing which the addition may be liable to be made. With these directions, this issue is sent back to the file of the AO with further directions to grant adequate opportunity of hearing to the assessee. The assessee shall also extend requisite cooperation to the AO. - Decided in favour of assessee for statistical purposes. Addition on account of some differences on the basis of AIR information and on account of mismatch with From 26 - Held that:- Our prima facie view is that the addition has been made and sustained by the lower authorities by following a casual and irresponsible approach. The assesse has submitted complete information showing proper reconciliation. These have been either ignored or not properly appreciated by the lower authorities. Both of these grounds are sent back to the file of the AO with our directions as have been given while disposing Ground no. 7 above. - Decided in favour of assessee for statistical purposes. Credit of tax deducted at source - Held that:- It is noted that DRP has already given direction to the AO to verify the claim, and accordingly grant credit of tax debited at source by HSBC. We reinforce direction given by the DRP and direct the AO to grant credit for TDS after making requisite verification, as per law. - Decided in favour of assessee for statistical purposes.
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2015 (12) TMI 1169
Disallowance of excess expenditure - Interest expenditure on borrowed capital not generating adequate revenue - Held that:- The assessee as well as the lendee-company being only aware of the going interest rate (in the market), the same (arrangement) only amounted to the assessee bearing the interest burden (of the company) to that extent (i.e., to the extent of difference), or the company diverting – by way of curtailing, its losses to that extent. The ld. AR would, upon this, submit that the company having incurred losses, an arrangement limiting the interest rate which it would allow to its shareholders (12% p.a.) was put in place. This, rather, only confirms what stands stated above. That the loss stands incurred not with a view to earn a positive return – irrespective of its extent, but to contain the losses of the investee-company. The matter is to be looked at from the stand-point of the assessee in-as-much as it is the law as applicable to him that is to be seen. Reference to the decision in the case of Rajendra Prasad Moody (1978 (10) TMI 133 - SUPREME Court ) by the assessee is, again, misplaced. The same nowhere approves of premeditated losses. It has already been clarified that no other benefit enures to the assessee from the said loan/s. A company cannot oblige the shareholders to extend loans, much less at a concessionary rate of interest. It is only where the actual earning of income is not certain, with the purpose of expenditure being toward earning the same, that the deduction in its respect cannot be denied. In the facts and circumstances of the case, the impugned expenditure is only to contain the losses of the borrower-company, by diverting it to the shareholders to that extent. The assessee’s claim is without merit, and the Revenue’s stand in disallowing the excess expenditure is, for the fore-going reasons, is upheld. - Decided against assessee
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Customs
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2015 (12) TMI 1150
Classification - whether the Virginiamycin imported under brand name STAFAC 1000 is classifiable under Customs Tariff Heading 2941.90 and Central Excise Tariff Heading 2941.90 or under Customs Tariff Heading 2309.90 and Central Excise Tariff Heading 2302.00 - Held that:- Insofar as the judgment in Tetragon Chemie Pvt. Ltd. is concerned, which was upheld by this Court, it pertains to two competent classifications, i.e., 29/36 as Vitamins or 23.09/23.02 as preparation of a kind used in animal feed. In that case, the product was a premix, the additional items in the product were calcium carbonate, benzene, dextrose, lactose, yeast, soya flour etc. On the other hand, in the present case, imported goods Virginiamycin is a well defined chemical of 100% purity with anti bacterial properties included specifically under Chapter 29 by virtue of Chapter Note 1(a). The judgment of Tetragon Chemie Pvt. Ltd. has, therefore, no application to the facts of the present case. - Decided in favour of revenue.
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2015 (12) TMI 1149
Levy of penalty on CHA / agent, broker - Import of high end luxury cars from various foreign suppliers by mis-declaring as new - Undervaluation of goods - Imposition of penalty under sections 112(a) and 114AA of Customs Act, 1962 - Demand of differential duty - Held that:- Court noted that the CCIG proceeded to adjudicate the SCN in question, as far as Respondent No. 1 is concerned, without recording the statement of anyone on behalf of Respondent No. 1. Further Respondent No. 1 was not confronted with the statement made by Mr. G.S. Prince. As rightly pointed out by Mr. Sanjay Kantawala, learned counsel for Respondent No. 1, there was no evidence to show that Respondent No. 1 was aware of the acts of his agent, Mr. Prince, as far as clearance of the car in question was concerned. Sections 112 (a) and 114AA of the Act are penal in nature. Therefore, in the absence of some tangible material to show that the illegal import was with the knowledge of Respondent No. 1, no penalty can be imposed on Respondent No.1. - There was no finding, based on the evidence on record, that Respondent No. 1 was aware of the illegal import in which the G-card holder was involved. Considering that it was a question of penalty, there ought to have been some tangible material to show that Respondent No. 1 was aware of the acts of its employee/agent, Mr. Prince. As rightly pointed out, if Respondent No. 1 was found to have acted in breach of Regulation 19 (8) of CHALR 2004, that might call for a separate action to be initiated under those regulations. However, that by itself will not justify the imposition of penalty under Sections 112 and 114AA of the Act unless knowledge of the illegal acts of the agent/employee is able to be attributed to his employer/principal, i.e. Respondent No.1. Registration certificate of the car obtained by the First Secretary (Trade), High Commission of India, London (UK) was produced before the Appellant. The car was imported into India through M/s. A.K. International and cleared through customs on 4th April 2008 on payment of duty on the basis that it was a new car. It was ultimately sold to Respondent No. 2 on 21st April 2008. The CCIG sought to place the onus on Respondent No. 2 to show how the prior registration in UK, though stated for the purpose of onward sale to India, “has helped the transport authorities of UK for allowing the export of the impugned car.” There was no warrant for shifting the burden to prove the negative to Respondent No.2 unless the Department had discharged the primary onus of showing the involvement and knowledge of Respondent No.2 in the illegal import of the car in question. - deletion by the CESTAT of the penalty imposed on Respondent No. 2 cannot be faulted. The reduction of the redemption fine also does not call for interference - No substantial question of law arises - Decided against Revenue.
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2015 (12) TMI 1148
Scope of Provisions of CBLR 2013 - Mandatory or Directory - Maintainability of petition Held that:- Writ petitions have been filed, questioning the authority to issue the notice and that the respondent has already predetermined the issue. Though this court is aware of its limitation, while entertaining a writ petition against a notice, the show cause notices in the present cases are clearly predetermining the issue and when the sustainability of the notice is questioned as being barred by law, this court is of the view that directing the petitioners to submit their objections would be a futile exercise. Hence, this Court is of the view that the writ petitions are maintainable. Customs Broker Licensing Regulations, 2013 were promulgated in exercise of powers conferred under Sub-Section (2) of Section 146 of the Customs Act,1962. It is only under the regulations, the licence is granted and the regulations also contain various provisions to regulate the affairs of the customs broker including the revocation of the licence. The Regulations contemplates action against the customs broker dehors the provisions under the Customs Act. Therefore, the regulations cannot be treated as sub-ordinate legistlation. Moreover, every implementing authority of any fiscal statute is only performing a public duty. Therefore, it cannot be said that the provision is to be termed as 'directory' just because its adherence is in the nature of performance of a public duty. What is to be considered is the object of the enactment in prescribing a period for the performance of such public duty. Purpose for which time limit has been prescribed is to curb the smuggling of goods and in the result to cancel the licences of the brokers if they are involved and to impose penalty. The interpretation of a statute must always be to give a logical meaning to the object of the legislation and the aim must be to implement the provisions rather than to defeat it. When a time limit is prescribed in Regulations, which empowers action in Regulation 18 and procedure in Regulation 20 (1), the use of the term 'shall' cannot be termed as 'directory'. It is pertinent to mention here that the CBLR, 2013 have replaced the CHA Regulations. The CHA regulations did not have any time limit to complete the proceedings. Therefore, by a Circular 09/2010 dated 08.04.2010, the necessity to include a time limit for initiating action was addressed by the Board after field inspection and by a notification dated 08.04.2010, amendments prescribing time period for initiating action and completing proceedings was made. The same was given effect by notification dated 20.01.2014. Whereas, under the CBLR, 2013 having found the necessity to prescribe a period, the Central Board, the statutory authority had included the same in the Regulations itself, when they were brought into force. Therefore, when a time limit is prescribed in Regulations, which empowers action under Regulation 18 by following the procedure in Regulation 20 (1), the use of the term 'shall' cannot be termed as 'directory'. Under such circumstances, the rule can only be termed as 'Mandatory'. It is only when the provision is strictly adhered to the object can be achieved. Moreover, such an exercise would open the Pandora box. Hence, this court is not inclined to exercise the discretion in favour of the respondents. - writ petitions are liable to be set aside - Decided in favour of appellant.
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2015 (12) TMI 1147
Import of Erythritol - Whether it is only pre-packaged food required to be labelled as per the Food Safety and Standards (packaging and Labeling) Regulations, 2011 but also any kind of food - Rejection of the request of the petitioner for drawing the samples from the consignment for analysis - Held that:- Goods in question namely, 'Erythritol' whether it is a food or food additive is admittedly a food product and finally eatable, therefore, even the remote argument of the petitioner that the product of the petitioner are indeed meant for retail as well as industrial sale, hence, they need not be labelled, is highly unacceptable as per the regulation 2.2.2 of the Food Safety and Standards (Packaging and Labelling) Regulations, 2011 which states that every package of 'food' shall carry the information on the label as required by the regulation, therefore, it is not only for the pre packaged food but also all kinds of foods whether it is going to be sent to retail outlet or directly to the market for consumption, the labelling regulations will apply. As a matter of fact, all goods are likely to perish, hence, to avoid undue delay in clearance that may result in degradation of the product making it useless of the food item, labelling has been made mandatory, therefore, the contention advanced by the petitioner that the goods in question 'Erythritol' is used as a food additive in manufacture of the foods and cannot be termed as item which meets the personal needs of the consumers, is liable to be rejected outright, therefore, the impugned order rejecting the request for drawing of sample from the consignment for analysis cannot be interfered with. When the petitioner failed to affix necessary label on the imported goods with all details, namely, 'Best before use', 'Use by date', and date of manufacture, it is not known whether the goods in question is having the life time for further future use, therefore, this Court finding that the product in question namely, 'Erythritol' has miserably failed to satisfy the labelling requirements, is not able to see any merits in this writ petition, hence, the same fails and is dismissed - Decided against the assessee.
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2015 (12) TMI 1146
Suspension of CHA licence - Rule of consistency - violations of various conditions by the CHA - Held that:- In the affidavit in reply it has been asserted that a look at the charges against “S.P. Pawar & Sons” would show that similar are the violations alleged to have been committed by the present respondents. Hence, a different treatment is not warranted. We are of the opinion that the case of “S.P. Pawar & Sons" and the present appellant is more or less identical. Though a larger issue of discrimination in the matter of punishment need not be gone into, what we find is that the consistent view of the Tribunal in such cases and in similar circumstances was not found to be perverse or vitiated by any serious error of law apparent on the face of the record. it is for the Authorities issuing the licence to inquire into the allegations of violations thereof and equally into the lapses committed during the operation of the licence. However, they have certain amount of discretion in matters of this nature and equally while imposing penalty. That should not be lightly interfered with. However, that does not mean that once the orders of the Authorities like Commissioner are capable of being challenged in further appeal, then, the Appellate Tribunal's powers are in any way restricted or circumscribed. In order to render substantial justice and if the Tribunal feels that there is a certain period which has gone by during which the agent has been out of business, then, that is sufficient penalty but such a view cannot be taken in all cases and as a matter of rule. However, that having been taken in this case consistent with the material produced and seriousness of the charges, that we are of the view that substantial question of law cannot be answered in favour of the Revenue - Tribunal's order in the present case shall be construed as substitution of the penalty imposed, namely of permanent revocation of Respondent's CHA Licence with partial revocation from 20th December, 2007 till 3rd March,2011 and forfeiture of entire security deposit - Decided in favour of appellant.
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2015 (12) TMI 1145
Classification of Brass Builder Hardware - Classification under CTH 8302 1010 under Tariff heading 7415 - Held that:- Respondent has clearly described the goods as Brass Builder Hardware (Nuts). Although the respondent has classified the goods under Tariff heading 8302, later-on they classified the goods correctly under Chapter heading 7415. In those circumstances, it cannot be said that the respondent has mis-classified the goods as the description of the goods given by the respondent is correct. Therefore, confiscation of the goods is not warranted and consequently, redemption fine and penalty is not imposable. In these circumstances, I do not find any infirmity with the impugned order and the same is upheld - Decided against Revenue.
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2015 (12) TMI 1144
Confiscation of goods - Misdeclaration of goods - penalty under Sections 112(a) and 114AA - Held that:- The vehicle before reaching to India was first registered in U.K. and was deregistered thereafter to give an impression to Customs that the said vehicle was new. The motive behind such act is well known to the commonsense - no one can buy a foreign vehicle just casually. Sumit Walia cannot be ruled out to be unknown to the appellant. So also Tarun Kumar does not appear to be unknown to the appellant, when both the persons came to the scene were not unknown to the appellant, he cannot claim innocence being a buyer of Mercedes Benz GL 320 Cdi car came from England. The authority has recorded that vehicle was first registered in the name of Tarun Kumar with registration No. DL4CAV1366 and subsequently within 17 days that was transferred to the appellant. That Registration was supported by indemnity bond to immune Customs duty in the event there is a loss. When the bond was executed the appellant was fully aware about the history of the vehicle. - Bank account was opened in the HDFC and Standard Chartered Banks to deal with the transaction. Tarun Kumar was middleman between Sumit Walia and appellant, it has also come to record that the appellant’s approach to buy the foreign vehicle was not a sudden decision. - Assessee directed to make a pre deposit - Decided against assessee.
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2015 (12) TMI 1143
Availment of CENVAT Credit while claiming Duty drawback - Misdeclaration - Held that:- Fact of availment of Cenvat credit and the fact of making wrong declaration in the ARE-I has not been disputed by the appellant. The Commissioner has observed that inasmuch as the appellant has intentionally mis-declared the facts and have claimed the excess drawback, the goods in question are liable for confiscation under Section 113 (h)(ii) of the Customs Act, 1962. As the same are not physically available, having been exported, the appellant is liable to penalty under Section 114. Appellants are regular exporter their product in question and were aware of the legal position that no Cenvat credit is admissible if the exports are being made under drawback scheme. It is precisely for this reason that they availed the credit but did not declare the same in the export documents. On the contrary, they declared that no such credit has been availed. This fact cannot be held to be a human error so as to extend the benefit to the appellant. Huge drawback to the extent of around ₹ 11 lakhs stand availed by the appellant on the basis of mis-declaration made by them. I find no reasons to accept the appellants contention that the penalty should not have been imposed upon them neither do I find justifiable reason to reduce the penalty amount. - Decided against assessee.
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2015 (12) TMI 1142
Condonation of delay - Delay of 74 days - provisional release of the goods - Held that:- As the provisional release order was passed on 23-9-2013 and received by the applicant. Thereafter the applicant made three representations to the customs authorities for modification of the conditions for release of the goods. We find the appropriate authority has passed the order for provisional release of the goods and there is no provision for modification. In the present case as the applicant filed the appeal with the delay of 74 days, therefore the application for condonation of delay is allowed subject to payment of cost of ₹ 25,000/- (Rupees twenty-five thousand only). The cost is to be deposited with the jurisdictional customs authorities within a period of two weeks - Delay condoned conditionally.
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2015 (12) TMI 1141
Valuation - Inclusion of demurrage charges - Held that:- In the appellant’s own case, the Larger Bench of the Tribunal [2013 (10) TMI 246 - CESTAT AHMEDABAD] (both of us were Members) had taken a view that if the demurrage charges cannot be included for levy of Customs duty on the imported goods, even if the assessments are made provisionally. Since the issue is now settled by the decision of the Larger Bench of the Tribunal, we hold that the impugned order passed by the first appellate authority is correct, legal and does not suffer from any infirmity. - Decided against Revenue.
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2015 (12) TMI 1140
Bar of limitation in filing appeal before Commissioner (appeals) - date of communication of order - Held that:- The order is passed by the Joint Commissioner of Customs, Customs House, Kolkata, against which the appellant has preferred appeal before the ld. Commr. of Customs (Appeals). The preamble of the order itself is very clear, it mentions the date of issue as 6-7-2006 i.e. apparently the date of the communication of the order. It is irrelevant, under what circumstances and how the appellants had paid the dues against the assessed bill of entry, but it is relevant, in filing appeal, the date of communication of the order. In our opinion, the date of communication of the order passed by the Joint Commissioner of Customs as per Board’s Circular No. 16/2003-Cus., dated 17-3-2003, is the relevant date of issue i.e. 6-7-2006 mentioned in the said order for filing the appeal under Section 128(1) of the Customs Act, 1962. No merit in impugned order - Decided in favour of assessee.
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Corporate Laws
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2015 (12) TMI 1134
Winding up petition - Held that:- The Company Petition is admitted and made returnable on 4 January 2016. The Petitioner is directed to advertise the Petition in two local newspapers, viz. “Free Press Journal” (in English) and “Nav- Shakti” (in Marathi) and also in Maharashtra Government Gazette. Any delay in publication of the advertisement in the Maharashtra Government Gazette, and any resultant inadequacy of the notice shall not invalidate such advertisement or notice and shall not constitute non-compliance with this direction or with the Companies (Court) Rules, 1959. The Petitioner shall deposit an amount of ₹ 10,000/- with the Prothonotary and Senior Master of this Court towards the publication charges, within a period of two weeks from the date of this order, with intimation to the Company Registrar. After the advertisements are issued, the balance, if any, shall be refunded to the Petitioner. Notice under Rule 28 of the Companies (Court) Rules is dispensed with by the company.
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PMLA
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2015 (12) TMI 1133
Rejection of Bail Application under Section 439 of the Code of Criminal Procedure, 1973 - offence alleged to have been committed under Section 3 of the Prevention of Money Laundering Act, 2002 - A complaint was filed by the respondent authorities, being C/14214 of 2013, alleging that the Rose Valley transferred the money raised by issue of debentures from the account of one company to that of another company. It is also alleged that the money collected by issuing the debentures for the purpose of one business has been invested in some other business. Held that:- Conditions specified under Section 45 of the PMLA are mandatory and needs to be complied with which is further strengthened by the provisions of Section 65 and also Section 71 of the PMLA. Section 65 requires that the provisions of Cr.P.C. shall apply in so far as they are not inconsistent with the provisions of this Act and Section 71 provides that the provisions of the PMLA shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. PMLA has an overriding effect and the provisions of Cr.P.C. would apply only if they are not inconsistent with the provisions of this Act. Therefore, the conditions enumerated in Section 45 of PMLA will have to be complied with even in respect of an application for bail made under Section 439 of Cr.P.C. That coupled with the provisions of Sect ion 24 provides that unless the contrary is proved, the Authority or the Court shall presume that proceeds of crime are involved in money laundering and the burden to prove that the proceeds of crime are not involved, lies on the appellant. There is no denying the fact that Section 24 of the SEBI Act is a penal provision of inclusive nature and thus it clearly reflects the legislative intent of a scheduled offence under PMLA. Admittedly, the complaint was filed by SEBI against the appellant on the allegation of committing offence punishable under Section 4 of PMLA. The complaint reveals that SEBI received a letter from the Ministry of Corporate Affairs, Office of the Registrar of Companies, West Bengal, with reference to Rose Valley in which the ROC had stated that Rose Val ley has repeatedly issued debentures in the years 2001-2002, 2004-2005, 2005-2006 and 2007-2008 to more than 49 persons in each financial year without filing offer documents with either the ROC or the SEBI and requested SEBI to investigate into the matter. - case is relating to Money Laundering which we feel is a serious threat to the national economy and national interest. We cannot brush aside the fact that the schemes have been prepared in a calculative manner with a deliberative design and motive of personal gain, regardless of the consequence to the members of the society. Appellant floated as many as 27 companies to allure the investors to invest in their different companies on a promise of high returns and funds were collected from the public at large which were subsequently laundered in associated companies of Rose Valley Group and were used for purchasing moveable and immoveable properties. - allegations may not ultimately be established, but having been made, the burden of proof that the monies were not the proceeds of crime and were not, therefore, tainted shifted on the accused persons under Section 24 of the PML Act, 2002. The same proposition of law is reiterated and followed by the Orissa High Court in the unreported decision of Smt. Janata Jha v. Assistant Director, Directorate of Enforcement (CRLMC No. 114 of 2011 decided on December 16, 2013). Therefore, taking into account all these propositions of law, we feel that the application for bail of the appellant should be seen at this stage while the appellant is involved in the economic offence, in general, and for the offence punishable under Section 4 of the PMLA, in particular. High Court has not committed any wrong in refusing bail in the given circumstances. Accordingly, we do not find any reason to interfere with the impugned order so passed by the High Court and the bail, as prayed before us, challenging the said order is refused - Decided against the appellant.
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Service Tax
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2015 (12) TMI 1168
Denial of CENVAT Credit - Courier Service - whether the Courier Service and Mobile service availed by the manufacturer for the period from April 2008 to June 2011 would be available as input service in terms of Rule 2(l) of Cenvat Credit Rules, 2004, enabling the manufacturer to take credit of service tax paid on such Courier Services and Mobile services - Held that:- Bench of the Tribunal in the case of CCE & Cus. Vapi vs. Apar Industries Limited [2010 (8) TMI 407 - CESTAT, AHMEDABAD ] has held that service tax paid on the input services namely Courier Services would be eligible for cenvat credit. The said decision was upheld by the Hon’ble Gujarat High Court [2013 (2) TMI 276 - GUJARAT HIGH COURT]. Further, the Hon’ble Gujarat High Court has also held that service tax paid on mobile phones would be eligible for taking cenvat credit vide vs. Excel Crop Care Limited [2008 (7) TMI 160 - HIGH COURT GUJARAT ]. - no reason to interfere with the impugned Order-in-Appeal - Decided against Revenue.
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2015 (12) TMI 1167
Technical testing and analysis service - reverse charge - services are imported or not - penalties under section 76, 77 and 78 - Non filing of ST-3 returns - Held that:- Service in question is purely a testing service which is performed in the laboratory of M/s KHVL, Netherlands. The certificate from KHVL shows that the test was conducted in their laboratory in Netherlands. Under section 66(A), any service received by a person in India from outside India shall be treated as if the recipient had himself provided the service. Rule 3 of the Taxation of Services (Provided from Outside India and received in India) Rules, 2006 determine the fact as to when a service is considered to be received in India. Service categorized under section 65(105)(zz) is covered under Rule 3(ii). The lower authorities have failed to understand the provisions of Rule 3 ibid, particularly Rule 3(ii). Proviso to Rule 3(ii) states that when a service is partly performed in India, it shall be treated as performed in India. Revenue has not justified how the service is performed outside India. Therefore, it cannot be said that the service has been received in India. The service tax is clearly not payable by the appellant in the present case. As tax is not payable, the question of interest and penalties and other fees does not arise. - Impugned order is set aside - Decided in favour of assessee.
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2015 (12) TMI 1166
Denial of rebate claim - receipt of commission on transaction - output service was not exported and this is on the ground that the service was performed in India, the benefit was received by the recipients of the machines/equipments purchased by the Indian customers and therefore, the service cannot be said to have been exported - Held that:- Service has to be held as rendered to the recipient abroad and used abroad. When the service recipient analyses the orders and decides either to accept the order or to reject the same, it has to be held that service was received by the recipient abroad and it is partly performed in India and partly performed abroad. Therefore, the stand taken by the lower authorities that it cannot be considered as export of service cannot be sustained - Decided in favour of assessee.
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2015 (12) TMI 1165
Denial of rebate of Service Tax - no nexus between the input services and the exported output service - whether the appellant is eligible for the rebate of Service Tax paid at the time of export of their services under Notification No. 11/2005-S.T - Held that:- while considering the rebate claim for output service, the nexus issue cannot be raised. The only thing that can be considered is whether the tax has been paid or not. The proper course of action would have been to propose to denial of the Cenvat credit which has been used for payment of Service Tax on the output service on the ground that there is no nexus. There is no clear proposition or proposal for this in the show cause notice. In the absence of a clear proposal, the ground of nexus to reject the rebate claim of tax paid on output service, in my opinion, could not have been used. - I do not consider it appropriate that the rebate claim could have been rejected. - Decided in favour of assessee.
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2015 (12) TMI 1164
Short payment of service tax - Security service - guilty of wilful mis-statement/suppression of fact - Penalty u/s 78 - Held that:- Appellants have been collecting service tax as part of gross amount charged and therefore non-deposit thereof on the ground of financial crunch is totally unacceptable. Financial crunch is no circumstance can justify non-deposit of service tax collected. Obviously thus there is not a great deal of discussion required to conclude that the appellants deliberately short paid the service tax due and the impugned order does not suffer from any appealable infirmity on merit. The appellants during the hearing have pleaded that for penalty under Section 78 the benefit of payment of 25% of the mandatory equal penalty as per proviso to Section 78 of the Finance Act should be given to them as the same had not been done in the impugned order. - No merit in the appeals except to the extent that the benefit of 25% of mandatory equal penalty under Section 78 ibid is required to be extended to the appellants - Decided partly in favour of assessee.
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2015 (12) TMI 1163
Denial of refund claim - buyers of the flats/apartments from builders/developers have filed refund claims of service tax paid by them during the period prior to 1.7.2010 - Held that:- appellants submits that in these cases also the impugned orders may be set aside and the matter may be remanded to the original adjudicating authorities to decide the matters afresh following the observations in the final order referred to above after giving opportunity to the appellants to present their case. - since an order has already been passed earlier. - matter remanded back.
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2015 (12) TMI 1162
CENVAT Credit - Duty paying documents not produced - Reverse Charge Mechanism - Held that:- Adjudicating authority in the impugned order specifically held that these demands were neither disputed by the appellant in the written submission nor during the personal hearing. The adjudicating authority further held that the credit has been availed and utilized without any document evidence for the payment of service tax and without specifying the input service - in the show cause notice there is a specific allegation that appellant has availed this credit without any documents evidencing the payment of service tax and without specifying input services and the input service provider as mandatory under the Cenvat Credit Rules. In spite of this specific allegation in reply to show cause notice appellant had not contested this averment in the reply to show cause notice nor in the written submission filed at the time of personal hearing. In the appeal before us the appellant in the grounds of appeal has challenged this demand but had not produced any evidence as mentioned in the show cause notice regarding the payment of service tax. In these circumstances, we find no infirmity in the impugned orders where these demands are confirmed - Decided against the assessee.
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Central Excise
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2015 (12) TMI 1161
Duty demand - whether the chemical processing of Platinum, Palladium, Rhodium, Gold and Silver is intermediary product which is exigible to excise duty - Held that:- final goods which fall under Chapter 71, no CENVAT/MODVAT credit is taken on the aforesaid products which are treated as intermediary products. On the other hand, the goods manufactured falling under Chapter 71, in respect whereof the dispute is raised by the Revenue, the goods are cleared at nil rate of duty. We, thus, do not see any reason to interfere with the orders of the Tribunal which are deciding the issue correctly on the facts of these cases. - Decided against Revenue.
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2015 (12) TMI 1160
Undervaluation of goods - Demand of differential duty - Evasion of duty - The case set up in the Show Cause Notice was that at the relevant time, manufacturing of electric hair removers and dyers was reserved for SSI unit, hence, Gillette could not have directly manufactured the said goods. Therefore, in connivance with Braun, which is a group company of Gillette and Rialto, it got the same manufactured in the premises of Rialto. Held that:- Evidence which was produced and relied upon by the Commissioner in his order, the CESTAT has arrived at an categorical finding of fact that Rialto was not a dummy or shadow company of Gillette and further that the contract between the parties was on principal to principal basis. It has also stated that, if at all, such a contract can be treated as one whereby Gillette had given job work to Rialto, the transaction between the parties were not sham. Even if, it was a job work done by Rialto, Rialto had been paying excise duty thereon. Findings which are returned by the CESTAT in this behalf included finding that Rialto and Gillette are separate and independent Companies with separate juristic personality; Rialto manufactured the goods and supplied the same to Gillette on payment of duty of excise under statutory invoices; in the Show Cause Notice, the Department did not raise any objection with regard to these returns; the goods were not manufactured by Rialto out of raw materials procured by themselves; the capital goods used for the purpose, i.e., machinery, was lawfully acquired by Rialto under a lease agreement with Braun. Facts which weighed with the Commissioner were brushed aside by the CESTAT with cogent reasons. It pointed out that the same were insignificant and were, in any case, satisfactorily explained by both Gillette and Rialto. - Decided against Revenue.
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2015 (12) TMI 1159
Transaction value u/s 4 or MRP based Valuation u/s 4A - sale of footwear to various buyers in retail as well as to various institutional buyers in bulk - Held that:- CESTAT had recorded specific findings to the effect that the shoes in question which were supplied in packages to the aforesaid customers had MRP affixed on them. It was further found that clearances were not under Rule 34 of the Rules which exempts supplies of materials in bulk from the operation of Weights and Measures Act, meaning thereby it was obligatory and essential on the part of the respondent to affix MRP on the goods supplied. Once we find that the footwear is an item which is specified under Section 4A, which is covered by Weights and Measures Act and Rules, and MRP was affixed on the products supplied, which were not exempted under Rule 34 of the Rules, the provision of Section 4A of the Act shall stand attracted. Issue is no more res integra and has been elaborately dealt with by this Court in 'Jayanti Food Processing (P) Ltd. v. Commissioner of Central Excise, Rajasthan' [2007 (8) TMI 3 - Supreme Court] - There is no error in the judgment of the CESTAT - Decision in favour of assessee.
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2015 (12) TMI 1158
Valuation - deduction of cash discount / interest on receivables - Finalization of provisional assessment - Held that:- Tribunal in the impugned order, mentioned that the price charged in the invoices for sales on credit terms are of WHEEL BEARING GR 88 and ALL PURPOSE GRS 88 as ₹ 68.00 and ₹ 69.50 respectively. On the other hand, price charged in invoices for cash sales was ₹ 66.81 and ₹ 68.28 respectively. - Tribunal itself, after mentioning those prices, failed to notice that the difference between price charged on credit terms and cash sales was to the extent of 1.75 per cent, which was nothing but cash discount. - Invoices for sales on credit terms, interest for the credit period was in built in the credit price. - Impugned order is set aside - Decided in favour of assessee.
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2015 (12) TMI 1157
Benefit of Notification No. 1/95 dated 04.01.1995 - Held that:- A reading of the notification makes it clear that the benefit thereof is available in respect of goods mentioned in Anenxure I and the items specified therein includes raw material as well as consumable goods - A finding of fact is arrived at by the Tribunal that the aforesaid inputs could be treated as consumables. On this finding of fact, benefit of the notification was rightly extended to the respondents. We, thus, do not find any merit in these appeals which are, accordingly, dismissed. - Decided against Revenue.
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2015 (12) TMI 1156
Clim of refund of duty paid where the demand of duty has been set aside in another case holding the activity is not amount to Manufacture - cutting of marble blocks into marble slabs and tiles - Held that:- Duty was paid by Respondent after proper adjudication and a particular view was taken which was upheld by the Tribunal as well. As mentioned above, no further appeals were brought by the respondents and, therefore, such proceedings had attained finality. The order of refund of this amount, merely because this Court took different view thereafter in some other case, would not permissible. Thus, insofar as direction contained in the impugned judgments to refund the amount of duty, interest and penalty is concerned, the same is set aside. However, once this Court has settled the position of law holding that the aforesaid process would not amount to manufacture, from the date of the judgment of this Court, the Excise Department is not entitled to recover any such excise duty from the respondents - Decided in favor of revenue.
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2015 (12) TMI 1155
Availment of concessional rate of duty in terms of Notification No.14/2002-CE, dt.01.03.2002 - Held that:- Explanation-II of the said notification provides for the purpose of condition specified in the said notification, textile yarn or fabrics shall be deemed to have duty paid even without production of documents evidencing payment of duty thereon. The larger bench of the Tribunal in the case of Arvind Products Ltd. vs.CCE & ST, Ahmedabad-[2014 (11) TMI 79 - CESTAT AHMEDABAD] in the context of Explanation-II of notification No.14/2002-Ce grey fabrics purchased from the market may be deemed to be duty paid eligible to exemption under Sr.No.16 of the said notification when processed. Reference was answered in favour of the assessee and against the Revenue. - appellant claimed benefit for the finished goods under Sr.No.16, We find that in all the cases, the assessees received unprocessed textile fabrics for the processing, so, the appeals before us are covered by the decision of the larger bench of the Tribunal in the case of Arvind Products Ltd. (supra). - Impugned order is not sustainable - Decided in favour of Revenue.
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2015 (12) TMI 1154
Denial of CENVAT Credit - outdoor catering services - Penalty u/s 11AC - Invocation of extended period of limitation - Held that:- As decided by the Hon'ble High Court of Bombay in the case of Ultratech Cement Ltd. (2010 (10) TMI 13 - BOMBAY HIGH COURT ) vide order dated 25.10.2010, the appellant is not entitled to take Cenvat Credit on the amount recovered from the employees for providing subsidized food under the category of outdoor catering services. Before that there was a decision of the larger bench of this Tribunal in the case of GTC Industries Ltd (2008 (9) TMI 56 - CESTAT MUMBAI) wherein it was held that irrespective of the fact whether the appellant has recovered any amount towards providing subsidized food to the employees, the appellant is entitled to take Cenvat Credit. As there was divergent views and same has been settled by the Hon’ble High Court of Bombay in the case of Ultratech Cement Ltd. (Supra) on 25.10.2010. Therefore, I hold that in this case extended period of limitation is not invokable as held by the Hon’ble High Court of Delhi in the case of Wonderax Laboratories (2007 (10) TMI 388 - DELHI HIGH COURT ) which has been affirmed by the Hon’ble Apex Court. As the extended period of limitation is not invokable, therefore penalty under section 11(AC) of the Act is also not imposable. Denial of amount recovered from the employees is calculated on the basis of net amount recovered from the employees towards subsidized food. In fact, the said amount is considered as gross amount inclusive of all taxes. Therefore, the calculation of the actual amount on Cenvat Credit is also required to be computed - Matter remanded back - Decided partly in favour of assessee.
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2015 (12) TMI 1153
SSI exemption - registration of brand name subsequently - assessee was registered with the trade mark Weston on 01.05.1992, but, a demand alongwith interest for the period November 1991 to 31/04/1992 (prior to registration of the trade mark) was upheld - Held that:- Tribunal in the earlier order directed the Adjudicating Authority as to whether the brand name 'Weston' was registered under the Trade and Merchandise Marks Act, 1958 in favour of the appellant for telephones w.e.f. 01.05.1992. There is no dispute that the trade mark authority registered the trade mark w.e.f. 01.05.1992. So, the Commissioner (Appeals) rightly set aside the demand for the period from 01.05.1992. - Board clarified that before the denial of benefit of SSI exemption notification regarding ownership of the brand name/trade name, it should be ascertained from each case. In the present case, there is no dispute that the assessee owned the brand name w.e.f. 01.05.1992. We find that the case is covered by the decision of the Tribunal in the appellants own case. Hence, the appeal filed by the Revenue has no merit. - Matter related to limitation need to decided - Decide against Revenue.
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2015 (12) TMI 1152
Non reversal of outstanding CENVAT Credit while availing SSI Exemption - Rule 11 of CCR - Held that:- Appellants filed a declaration for availing exemption under notification No. 8/03 on 1.4.2006. Although an obligation is being cast on the appellant to discharge their obligation as per Rule 11(2) of Cenvat Credit Rules, 2004 but when the appellant filed the declaration for opting the exemption. Now the duty cast on the department to verify whether they have discharged their obligation for availing the exemption or not which was not done by the Revenue within time. Thereafter in 2010, an audit took place and it was came to the knowledge of the department that the appellant has not discharged their obligation under Rule 11(2) of Cenvat Credit Rules 2004. Thereafter a show cause notice was issued on 5.5.11 which is also beyond the normal period of limitation. Admittedly in this case, show cause notice has been issued after 5 years of filing the declaration by the appellant. Therefore relying on the decision of Muhammed Ismail Mills (2014 (1) TMI 1647 - MADRAS HIGH COURT), I hold that show cause notice is barred by limitation. In these terms, impugned order is set aside - Decided in favour of assessee.
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2015 (12) TMI 1151
Duty demand - revenue neutrality - duty is available to sister unit as cenvat credit - Whether dropping of demand of duty in respect of certain items such as Printer, PC Workstation, Modem, Cable Line, ISDN Telephone, Terminal Adapter, which were bought to the premises of the unit valued at ₹ 21,19,90,054/- and cleared without payment of Central Excise duty amounting to ₹ 3,43,67,490.00 during the period from 1st April 1998 to 31st May, 2000 1st April 1998 to 31st May, 2000 1st April 1998 to 31st May, 2000, under the cover of non-excisable invoices, was proper - Held that:- Revenue had not disputed findings of the Adjudicating authority on revenue neutrality. The Hon’ble Gujarat High Court in the case of CCE, Vadodara-II Vs Indeos ABS Ltd - [2010 (3) TMI 656 - GUJARAT HIGH COURT] dismissed the Revenue’s appeal, holding that since the goods were cleared to sister concern whatever duty payable and availed as credit to their own unit hence entire exercise would be revenue neutrality. It has further been observed that the Revenue’s grievance is acceptable, if the ultimate exercise benefited the Revenue by collection of duty and in that case, no such benefit accrues to exchequer. The said decision was upheld by the Hon’ble Supreme Court as reported in [2011 (3) TMI 1575 - SUPREME COURT]. In the present case, we find that if the Respondents avail CENVAT Credit, demand of duty would not be sustainable. - No reason to interefere with impugned order - Decided against Revenue.
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2015 (12) TMI 1139
Confiscation the excess found seized Marble Slabs - Anti evasion duty - Non accounting of goods - Held that:- Appellant authority has relied upon and identical decision of the Tribunal passed in the case of Eurasia Marbles Pvt. Ltd., Udaipur v. CCE, Jaipur-I [2011 (2) TMI 581 - CESTAT, NEW DELHI]. In the said decision, an identical issue was the subject matter of the Tribunal decision and the verdict was passed in favour of the assessee. Apart from the above, the appellant authority has also found that that the seizure was effected under Rules 24, which relates to the seizure of the goods on which duty has not been paid. Inasmuch as the seized goods were still within the factory premises, there was no requirement of duty payment. As such, seizure under Rule 24 and the consequent confiscation was not call for - there was no evidence to show that the goods were not entered in the records with a mala fide motive of clandestine removal. Similarly, invocation of provision of Section 117 of the Customs Act for imposition of penalty stand rightly held to be not applicable by the appellant authority - Decided against Revenue.
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CST, VAT & Sales Tax
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2015 (12) TMI 1138
Auction of petitioner's property - Held that:- in respect of the dismissal of the appeal on the ground of limitation, the petitioner has moved an application for restoration, which is still pending before the concerned authority. During the pendency of the said application, the respondents have resorted to auction of the properties of the petitioner. Under the circumstances, the interests of justice would be met if the second respondent, Deputy Commissioner of Commercial Taxes (Appeals-7) is directed to decide the restoration application pending before him within a stipulated period and till then the petitioner may be protected by restraining the respondents from taking any further coercive steps. Since the petitioner had not moved any application for condonation of delay along with the restoration application, it would be open for the petitioner to move such application. - Petition disposed of.
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2015 (12) TMI 1137
Recovery from wife for husband's dues - Attachment of property - Held that:- We do not see any authority in law permitting respondent No.1 to attach the property of the petitioner for the dues of her husband. Nothing has been brought on record to suggest that the property in question was purchased from the sources other than that of the petitioner herself. It is not the case of the Department that the sale transaction of 31.12.1994 was 'benami' transaction and that the husband of the petitioner had funded for purchase of the property. In any case, as noted, the sale took place on 31.12.1994 and the husband of the petitioner started his current business in the year 1998. The sales tax dues pertain to the Assessment Year 1999-00. Nothing has been stated in the affidavit in reply to justify the action of the Department in attaching the property of the petitioner for the dues of her husband. By merely stating that only qua share of the husband, the said property was attached, would nor further the case of the Department. This is in fact curious statement. It does not clarify whether the share referred to is that of the sales tax dues or of the interest in the property. If later is the case, there is nothing on the record to suggest that the husband had any right, title or interest in such property - Mere reference to the powers under Section 48A of the Gujarat Sales Tax Act would not save the situation for the Department. Such powers can be exercised only where the facts so permit. - Decided in favour of appellant.
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2015 (12) TMI 1136
Inclusion of value of land for charging Value Added Tax - development and sale of apartments/flats/units - Held that:- Issues raised in the present petition have been adjudicated by this Court in [2015 (4) TMI 784 - PUNJAB AND HARYANA HIGH COURT] (CHD Developers Limited, Karnal v. The State of Haryana and others). It was urged by the learned counsel for the petitioner that additionally the proceedings initiated were barred by limitation and even the statutory notice in Form N-2 issued, considering the petitioner as lump sum dealer, is also barred by limitation. - Petition disposed of.
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2015 (12) TMI 1135
Misuse of C-Forms / D-Forms - disputed turnover relating to the manufacture and supply of missiles is sale or job work - majority of the bulk of material was purchased by the respondent by issuance of C-Forms and D-Forms and which material was got incorporated in the final product which were sold to Government of India and also the foreign buyer. Held that:- Applying the ratio laid down by this Court in Bharat Dynamics Limited (1 supra) and in the absence of any material to come to a different conclusion, respectfully agreeing with the ratio laid down by earlier judgment, question No.1 is required to be answered in favour of the Assessee and against the Department. So far as question No.2 is concerned, the Tribunal had found that ERDL, Pune is not one of the entity listed in G.O.Ms.No.882 dated 28.12.1988, which fact is not being disputed before us. It is only those specific entities which are listed in G.O.Ms.No.882 dated 28.12.1988 that are prohibited to issue D- Forms. We may also further add that the fact that ERDL, Pune, had issued D-Form for procuring material would go to show that they are eligible and entitled to issue such D-Forms and the D-Forms are validly issued. In that view of the matter, allowing the respondent to avail the concessional rate of duty, as applicable to the transaction, is unassailable. We are also not persuaded by the argument of the learned counsel for the Department that on account of the alleged misuse of C-Forms, we have to assume that there is a sale transaction involved. Even assuming for the sake of argument that if there is mis-utilisation of C-Forms or any of the Forms which are issued under the Act, at best, a dealer may invite penalties or punitive measures. This aspect of the matter is settled by the judgment of the Hon’ble Supreme Court in Commissioner of Sales Tax v. Leather Facts Co. [1987 (3) TMI 481 - SUPREME COURT OF INDIA]. Hence, we find no reason to interfere with the orders of the Tribunal. - Decided against Revenue.
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Indian Laws
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2015 (12) TMI 1132
Enlargement on bail in FIR of NDPS Act, 1985 (Sections 468, 471 IPC and Sections 25,25A,27,29 NDPS Act & 25/54/59 Arms Act) - Held that:- The summary of cases registered against the petitioner in different States prima facie reveals that he is member of an organized group involved in the theft of vehicles for further sale to drug traffickeers with fake and forged ‘engine’, ‘chassis’ and ‘registration’ numbers. If proved, the petitioner might be liable for punishment under Section 25 of the NDPS Act as well for allowing the use of conveyance for the commission of an offence punishable under that Act. The allegations made against the petitioner are of indirect financing of the illicit traffic within the meaning of Section 27-A, besides abetment thereof in terms of Section 29 of the Act. His past credentials and the fact that he was declared PO, surely dissuade us to release him on bail at this stage.
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