TMI Tax Updates - e-Newsletter
December 5, 2014

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise

Articles

1. Un-necessary litigation before High Court on petty matters ignoring ground realities when CIT(A) and Tribunal had concurrently allowed relief to assessee.

   By: DEVKUMAR KOTHARI

2. Inputs lost during manufacturing does not amount to receipt of Inputs in short quantity and accordingly whatever tax has been paid by Assessee on Inward Transportation service is entitled for Input Service credit

   By: Bimal jain

3. DIRECTOR IDENTIFICATION NUMBER UNDER COMPANIES ACT, 2013 AND RULES MADE THERE UNDER

   By: DR.MARIAPPAN GOVINDARAJAN

News

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

2. FM asks the Customs Officials to use Latest Technology to Gather and Analyze Intelligence Information to Curb any Illicit Transaction Across the Border

3. RBI Reference Rate for US $

4. Government Sets-up A High Level Committee to Interact with Trade and industry on Tax Laws

Notifications

Customs

1. 113/2014 - dated 4-12-2014 - Cus (NT)

Rate of exchange of conversion of each of the foreign currency with effect from 05th December, 2014

Income Tax

2. 76/2014 - dated 1-12-2014 - IT

Central board authorises Commissioner of Income-tax (Exemptions) to act as 'prescribed authority' for the purpose of 10(23C) - S.O. 852(E)dated the 30th May, 2007, superseded.

Circulars / Instructions / Orders

VAT - Delhi

1. F.4.2014.Sys/941 - dated 2-12-2014

Details of new application uploaded in the DVAT Server

Income Tax

2. F. No. 225/303/2014/ITA.II - dated 28-11-2014

Advisory for conducting scrutiny assessment proceedings in the State of Jammu and Kashmir, in the aftermath of Floods — regarding.

FEMA

3. 44 - dated 4-12-2014

Exim Bank's Line of Credit of USD 25 million to the Government of the Republic of Niger

Highlights / Catch Notes

Income Tax

• Interest Income on Share Application Money from Fixed Deposits is Taxable for Assessment Year 1995-96.

  Case-Laws - HC : Interest income on share application money - the interest accrued on Fixed Deposits up to 31.3.95 was legally assessable in the hands of the assessee company in AY 1995-96 and AO was quite justified in assessing the same on accrual basis in AY 1995-96 - HC
  Visit to Get Source

  ---

• High Court Invalidates Reference to Valuation Officer Due to Lack of Evidence u/s 55A(a.

  Case-Laws - HC : Reference made to DVO for determination of FMV u/s 55A(a) - AO before making a reference to the Valuation Officer has not brought anything on the record indicating that the assessee has disclosed lesser sale price - reference is not valid - HC
  Visit to Get Source

  ---

• Court Excuses 550-Day Delay in Appeal Filing, Highlights Flexibility for Litigants Acting in Good Faith.

  Case-Laws - HC : Condination of delay of 550 days in filing appeal – provision is elastic and to assist especially such litigants whose conduct is not vitiated by lack of care or utter negligence or malafides - assessee have paid the tax, therefore, shows that throughout he was acted on legal advice - Delay condoned - HC
  Visit to Get Source

  ---

• Tax Deduction Eligibility for SEZ Development Confirmed; Board of Approval Not Sole Authority u/s 80IB.

  Case-Laws - AT : Deduction u/s 80IB - development of SEZ - revenue was of the view that as per sec. 9(2) only Board of Approval is empowered to grant approval of SEZ or authorized operations in the SEZ and not the Ministry of Commerce - contention of revenue not correct - deduction allowed - AT
  Visit to Get Source

  ---

• CIT Cannot Use Section 263 to Overturn AO's Assessment Solely Due to Disagreement on Specific Issue.

  Case-Laws - AT : CIT cannot invoke jurisdiction u/s 263 of the Act for setting aside the assessment order if he does not agree with the conclusion of the AO on a particular issue - AT
  Visit to Get Source

  ---

• Forfeited Share Application Money in Capital Reserve is a Capital Receipt, Not Taxable Income u/ss 28(iv) or 41(1).

  Case-Laws - AT : The amount of forfeited share application money transferred to “warrant, forfeiture account” in the capital reserve, is a capital receipt only and cannot be taxed as income of the assessee, either u/s 28(iv) or u/s 41(1) - AT
  Visit to Get Source

  ---

• AO's Disallowance u/s 14A Invalid Due to Non-Compliance; CIT(A)'s Partial Uphold Overturned.

  Case-Laws - AT : Disallowance u/s 14A – once the AO has failed to comply the statutory requirement, then he cannot proceed to make the disallowance u/s 14A(1) and the disallowance made by the AO and partly sustained by the CIT(A) over and above the disallowance made by the assessee is deleted - AT
  Visit to Get Source

  ---

• Repair and Maintenance Costs for Machinery, Including Band Knives, Deemed Revenue Expenses.

  Case-Laws - AT : Nature of Expenses – huge expenses towards repair and maintenance on machinery and plant made – purchase of band knives for use in splitting machine - expenditure on removing the roller jammed in order to make it functional - held as revenue in nature - AT
  Visit to Get Source

  ---

• Tax Officer to Allow 1% of Expenses for Interest and Service Charges Income on Estimated Basis.

  Case-Laws - AT : Expenses incurred for earning interest income on estimation basis - AO is directed to allow 1% of expenses on account of interest income and on service charges income - AT
  Visit to Get Source

  ---

• Service of Tax Notice via Speed Post Deemed Valid, Taxpayer Cannot Deny Receipt.

  Case-Laws - AT : Scrutiny / Regular Assessment - Service of notice through speed post - it is not open for the assessee to say that the post was received by the some other person - The presumption in law is that it has been served upon the assessee - AT
  Visit to Get Source

  ---

• Long Lease Costs for New Business Premises: Capital Expenditure Classification Explained.

  Case-Laws - AT : Nature of expenses - The expenditure was made in order to secure a long lease of new and more suitable business premises at a lower rent - Held as capital expenditure in Nature - AT
  Visit to Get Source

  ---

• Purchasing a Non-New Residential House Within a Year Disqualifies Deduction u/s 54F of Income Tax Act.

  Case-Laws - AT : When the assessee has purchased any residential house other than the new residential house within a period of one year after the date of transfer, then the assessee shall not be eligible for claim of deduction u/s 54F - AT
  Visit to Get Source

  ---

• Debate on 10% vs. 15% Tax Rate for Royalties u/s 115A and UK DTAA Agreement.

  Case-Laws - AT : Rate of tax on Royalty / License fee - 10% u/s 115A or higher rate @ 15% as per DTAA with United Kingdom - The provisions of section 115A(1)(b)(AA) does not debar the assessee to enter into new agreements after change of situation - AT
  Visit to Get Source

  ---

Customs

• High Court Affirms Officer's Jurisdiction to Issue Show Cause Notice in Customs Seizure Case, Upholding Legal Authority.

  Case-Laws - HC : Jurisdiction of the officer issuing Show Cause Notice - Proper Officer or not - Seizure of goods - writ petition dismissed - HC
  Visit to Get Source

  ---

Service Tax

• Multi-Level Marketing Company Faces Prima Facie Case Over Service Tax Obligations on Marketing Services Provided.

  Case-Laws - AT : Multi-level marketing company - Service of providing various marketing materials for the purpose of marketing of their (the appellant's) products - prima facie case is against the assessee - AT
  Visit to Get Source

  ---

• Appellant Not Required to Pay Service Tax on Incentive from Foreign Principal for Ocean Freight Cost Savings.

  Case-Laws - AT : Saving in Ocean Freight - Amount is given to the appellant by the foreign principal as an incentive out of the freight saved by the principal. - demand of service tax set aside - AT
  Visit to Get Source

  ---

Central Excise

• Appellant's Manufacturing Activity Qualifies for Duty Exemption Despite Missing Declaration, Per Notification No. 50/2003-C.E.

  Case-Laws - AT : Area based exemption - When the Department at a later date took a view that the appellant’s activity amounted to manufacture, the benefit of duty exemption under Notification No. 50/2003-C.E. could not be denied just on the ground that before effecting clearances they did not file the required declaration. - AT
  Visit to Get Source

  ---

• Court Denies Waiver of Pre-Deposit in Tyre Cord Fabric Classification Dispute; Claims Deemed Unsupported by Evidence.

  Case-Laws - AT : Waiver of pre deposit - Classification of goods - distinction between dipped tyre cord fabric and rubberised tyre cord fabric - the appellants contention that the impugned goods were rubberised tyre cord fabrics obtained after stage 2 is an afterthought contrary to the evidence on record - AT
  Visit to Get Source

  ---

• SSI Exemption Requires Combined Clearances for Multiple Manufacturers in Same Factory Under Central Excise Rules.

  Case-Laws - AT : SSI Exemption - Clubbing of the clearances of the excisable goods manufactured - same factory premises - the clearances effected during a financial year by all the three manufacturers have to be clubbed together for determination of eligibility as well as quantum of exemption. - AT
  Visit to Get Source

  ---

• Year-End Discounts Lead to Duty Refunds for Motor Vehicle Dealers via Credit Notes; Duty Incidence Adjusted Favorably.

  Case-Laws - AT : Quantity discounts given to dealers of Motor Vehicles at the end of the calendar year - incidence of duty refunded to the dealer through credit notes - refun allowed - AT
  Visit to Get Source

  ---

• Provisional Assessment Allows Adjustments of Excess Payments Against Short-Payments u/r 7 of Central Excise Rules.

  Case-Laws - AT : Provisional assessment - there is no bar under Rule 7 of the Central Excise Rules relating to provisional assessment for adjustment of excess payments against short-payments. - AT
  Visit to Get Source

  ---

• Company Exiting EOU Scheme Faces Unfavorable Findings After Applying for Zero-Duty EPCG License on Nov 18, 2010.

  Case-Laws - AT : 100% EOU - capital goods were imported free of duty - while opting out from EOU scheme they applied for the zero duty EPCG licence on 18-11-2010 - prim facie case is against the assessee - AT
  Visit to Get Source

  ---

Case Laws:

• Income Tax

• 2014 (12) TMI 171
  Adjustment of interest - Entitlement for claim of deduction on interest income u/s 80HH and 80I – Whether the Tribunal was right in not permitting adjustment of interest debited to the P&L Account - Held that:- The assessee received additional income towards discount of the sales of raw materials which the assessee purchased - assessee claimed such amount as part of deduction u/s 80IA/80HH - If on the basis of the discounts given by the sellers, the total profit of the assessee from the activity which was otherwise eligible for deduction 80I/80HH of the Act was to that extent increased, there is no reason why such larger sum should qualify for deduction. Transport income – Netting of the income for the exclusion from deduction - What should be excluded is net income and net gross received - Assessee contended that it would not qualify for deduction u/s 80-I/80HH of the Act - Held that:- M/s ACG Associated Capsules Pvt. Ltd. (Formerly M/s Associated Capsules Pvt. Ltd.) & Others Versus The Commissioner of Income Tax, Central-IV, Mumbai & Others [2012 (2) TMI 101 - SUPREME COURT OF INDIA] it has been held that for the purpose section 80HHC of the Act, it is not the entire amount received by the assessee on sale of DEPB credit, but the sale value of less the face value of the DEPB that will represent profit on transfer of DEPB credit by the assessee - even other amounts, such as, interest or rent when are to be excluded for the purpose of explanation (baa) to section 80HHC of the Act - Ninety per cent of not the gross rent or gross interest, but the net thereof shall have be excluded. SC has already laid down the foundation for the logic for excluding the net profit and not the gross profit from the claim of deduction when it is found that the source of income does not quality for such deduction u/s 80HHC - section 80HHC represents vastly different scheme of deduction and also provides for complex formula for deriving for the eligible profit for deduction under different situations depending on whether the exporter is also engaged in the local business or not – thus, it would be the net and not the gross income which would be excluded – Decided against revenue.

  ---

• 2014 (12) TMI 147
  Pro-rate disallowance on sale of land – Lands purchased from unexplained sources - Whether the Tribunal was justified in deleting the disallowances made by the AO on pro-rata basis in respect of costs of sales of land made by the assessee by invoking proviso to Section 69C of the Act – Held that:- The Assessee is in the business of real estate and land development – the AO was of the opinion that the assessee was not an investor, but he traded in lands - the assessee was given relief because the AO could not have reassessed the income beyond a period of six assessment years immediately preceding the AY, relevant to the previous year in which the search was conducted - the Tribunal has rightly understood the factual matrix and concluded that when the extent of five transactions are prior to 1-4-1997, and three transactions have not been interfered with and sent back to the file of the AO for verification, then what would be the governing factor is the year in which the expenditure, which is unexplained, can be deemed to be income of the Assessee – assessee has not incurred any expenditure in the financial year in question - the plots were acquired admittedly prior to 1-4-1997 - It is only the pro-rata deduction which was claimed and in the form of adjustment against this purchase price as the plots were sold - the primary condition which has to be fulfilled so as to apply section 69C was not at all fulfilled – relying upon The Commissioner of Income Tax Versus M/s. Tips Industries P. Limited [2010 (1) TMI 50 - BOMBAY HIGH COURT] - thus, the order of the Tribunal is upheld – Decided against revenue.

  ---

• 2014 (12) TMI 146
  Interest income on share application money - Whether the Tribunal was right in holding that interest income on the share application money deposited in the bank was the income accrued – Held that:- The Tribunal was rightly of the view that once it is held that the share application money received by the assessee was for all intents and purposes, except the prohibition put by the provision of section 69 of the Companies Act, the assessee's money, the natural corollary follows that the income earned on deposits of such money with the banks, if any, also belonged to the assessee and consequently was liable to be taxed in accordance with the system of accounting followed - though the assessee might have not withdrawn the deposits and interest but the banks had duly credited the interest upto 31.3.95 because it is mandatory for the banks to provide for interest payable or received on Mercantile System and therefore, the assessee cannot say that the interest upto 31.3.95 was not credited bank on such deposits - assessee has not furnished any evidence to the contrary except the claim the interest was offered for taxation in the AY 1996-97 – thus, the interest accrued on Fixed Deposits up to 31.3.95 was legally assessable in the hands of the assessee company in AY 1995-96 and AO was quite justified in assessing the same on accrual basis in AY 1995-96 – thus, the order of the Tribunal is upheld – decided against assessee.

  ---

• 2014 (12) TMI 145
  Rejection of application for exemption u/s 10(23C)(iv) – 85% of Trust income used for the objects of trust or not - Held that:- The view of the Commissioner was rightly upheld by the Tribunal that the receipts of Rs. 162.53 crores and as against which expenditure amount spent is Rs. 138.82 including capital expenditure on purchase of equipments of Rs. 6,94,43,011/-, percentage of profit is 14.6%, which is lower than 15% permitted to be accumulated as per the Act, whereas 85% of Trust income had been applied and towards the object of the Trust. Claim of depreciation - Held that:- The income which has been spent for acquisition of assets would not mean that thereafter the depreciation on these assets in subsequent years cannot be taken into account - it is not that the Tribunal followed the course and unknown to law - the Tribunal was justified in allowing the depreciation on capital assets as deduction in computing the income – the order of the Tribunal is upheld – Decided against revenue.

  ---

• 2014 (12) TMI 144
  Reference made to DVO for determination of FMV u/s 55A(a) - Whether the Tribunal is right in law in holding that the AO ought not to have made reference to the departmental valuation officer for determination of fair market value of the proper u/s 55A(a) – Held that:- The Tribunal was rightly of the view that a reference to the Valuation Officer is to be made u/s 55A - The provision specifically provides that if the AO is of the opinion that the value disclosed by the assessee is less than the fair market value only, then he can make a reference to the DVO - the formation of opinion should have rational connection with the material brought on record - It should not be based on extraneous or irrelevant reasons – the AO before making a reference to the Valuation Officer has not brought anything on the record indicating that the assessee has disclosed lesser sale price - there is nothing on the record which can suggest to ignore the report of the registered valuer and to adopt the report of the Valuation Officer - Both these persons are technical persons and before accepting the evidence of an expert, there should be corroboration of some other material – the AO ought to have not made a reference to the DVO for determination of the fair market value of the property - the report of the DVO alone is not sufficient for estimating the capital gains – thus, the order of the Tribunal is upheld – Decided against revenue.

  ---

• 2014 (12) TMI 143
  Partial deletion of penalty u/s 271(1)(c) – Inaccurate particulars furnished or not - Rejection of claim of deduction u/s 80IB(10) could be a ground for invoking penalty or not - Held that:- The AO has merely referred to the facts of the case on account of which, penalty proceedings u/s 274 r.w.s. 271(1)(c) of the Act came to be initiated for furnishing inaccurate particulars of income - despite the fact that show cause notice was served upon the assessee, the assessee had not responded, either by appearing before the AO or filing a written reply - CIT(A) rightly was of the view that this is not a case wherein income had been concealed by the assessee – relying upon CIT v. Reliance Petroproducts Private Limited [2010 (3) TMI 80 - SUPREME COURT] - where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars – a mere wrong claim made in the return cannot amount to furnishing inaccurate particulars - the assessee had made a claim u/s 80IB (10) of the Act which was found to be not allowable - CIT(A) as well as the Tribunal have rightly held that the assessee had disclosed all material facts and the revenue had not brought anything on the record that any particulars were not available to the AO – thus, the order of the Tribunal is upheld – Decided against revenue.

  ---

• 2014 (12) TMI 142
  Refusal on condination of delay of 550 days in filing appeal – Penalty order served upon assessee - Held that:- The Tribunal has referred to the contents of the affidavit of the assessee – assessee is a senior citizen and aged 87 years - the matter is technical and involving legal issues and the assessee himself not being aware of the intricacies and niceties of law, acted upon legal advice - his conduct is not termed as malafide nor it is termed as negligence and callousness - the Tribunal was not justified in proceeding on these lines - The Tribunal was aware that the provisions of section 5 of the Limitation Act, 1963 and the term "sufficient cause" have to be liberally construed - that provision is elastic and to assist especially such litigants whose conduct is not vitiated by lack of care or utter negligence or malafides - assessee have paid the tax, therefore, shows that throughout he was acted on legal advice – thus, he should get opportunity to substantiate his case on merits – the order of the Tribunal is set aside and delay condoned in filing the appeal u/s 254 and the matter is restored back to the Tribunal – Decided in favour of assessee.

  ---

• 2014 (12) TMI 141
  Deduction u/s 80IB - development of SEZ - authorized operation as per SEZ Act 2005 and SEZ Rules, 2006 - transfer of bare shells buildings by the assessee to co-developer – revenue was of the view that as per sec. 9(2) only Board of Approval is empowered to grant approval of SEZ or authorized operations in the SEZ and not the Ministry of Commerce - Admission of additional evidence – Application of provision of Rule 46A(1) clause (c) and (d) of the Rules – Held that:- Following the decision in DLF Info City Developers (Chennai) Ltd. Versus Addl. CIT Range-1, Gurgaon [2014 (5) TMI 737 - ITAT DELHI] - The additional evidences form integral part of the decision making process of the Board of Approval and are necessary for arriving at correct legal conclusion -These evidences are very crucial and necessary for deciding the legal status of the appellant under the SEZ Act as well as its consequential entitlement or otherwise of deduction u/s. 80IAB of the Act - if the evidence is genuine and reliable, then the assessee should not be denied the opportunity to produce such evidence and it would be incorrect to shut out an assessee in the process of administration of justice from leading evidence to prove its case. As per the provisions of clause (a) and (b) subrule (3) of Rule 46A, the AO is duty bound to examine the evidence or document produced by the appellant and/or to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant – the evidences are in the nature of further clarifications, form integral part of the correspondence between Department of Commerce and Department of Revenue before granting the approval vide letter dated 01.06.2009, go to the very root of matter in deciding the eligibility or otherwise of the appellant's claim of deduction u/s. 80IAB of the Act and need to be taken into account in deciding major grounds of appeal - the provisions of clause (c) and (d) of sub-rule (1) of Rule 46A are clearly attracted in the assessee's case – the order of the FAA is comprehensive and reasoned, thus, there is no reason to interfere in the order. Allowability of claim of deduction u/s 80IAB of the Act - Profits derived from transfer of bare shells buildings - Deductions in respect of profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone – Held that:- Following the decision in DLF Info City Developers (Chennai) Ltd. Versus Addl. CIT Range-1, Gurgaon [2014 (5) TMI 737 - ITAT DELHI] - There was clear approval to both the assessee and the co-developer for development, operation and maintenance of the SEZ wherein the initial arrangement by the assessee was to carry out part development and lease out the land and the building thereupon to co-developer for a lease period of 49 years - The assessee and co-developer later on executed an addendum to the co-development agreement dated 29/11/2006, wherein the lease of land continued to be for 49 years and the bare shell buildings constructed by the assessee were proposed to be transferred to the co-developer for a development consideration of Rs. 4,845 per square fit - From the clarifications dated 18/1/2011 and 20/1/2011 issued by the Ministry of Commerce as well as from the letter of Director CBDT their remains no scope for any doubt that this disclaimer is applicable only to transfer of land in the guise of long term lease by receiving lease rentals/down payments/premium etc commensurate with the sale value of land as provided in the letter dated 6/5/2009 of the Director CBDT. CIT(A) was rightly of the view that once the authorized operations were approved by the Board of Approval vide letter dated 19/6/2007, there was no further requirement of getting the same authorized operations approved again in terms of approval letter dated 1/6/2009 - No further approval of transfer of bare shell was required since the agreement dated 20/3/2008 providing for transfer of bare shell to the co-developer for an agreed development consideration forms integral part of approval letter dated 1/6/2009 issued by BOA - the AO was having no jurisdiction or authority to sit in the judgment of the Board of Approval and challenge the validity of approval given by the Ministry of Commerce. CTI(A) has rightly agreed with the plea of the assessee that the tax disclaimer condition mentioned in the co-developer approval is primarily to be in by the BOA in the approvals granted to put a curb on the wrong practice of leasing the land for long periods and receiving one time payment in the form of lease rentals/down payments/premium etc. which tantamount to sale of land in the guise of long term lease - The assessee has obtained requisite approvals from the BOA in most transparent manner by disclosing not only development consideration but also the basis for determining the same - the consequential benefits that is available to a developer under the Income Tax Act cannot be denied - The AO does not have any jurisdiction to question the validity or the legality of authorized operations which have been approved by the BOA/Central Government - all the conditions as required to be specified under the SEZ Act/Rules are fulfilled and the assessee is approved developer for all the intent and purposes of Section 80 IAB of the Act – Decided against revenue.

  ---

• 2014 (12) TMI 140
  Jurisdiction of CIT for invoking section 263 – Search and seizure – assessment made u/s 153A – AO properly applied his mind or not - Held that:- A search and seizure operation was carried out on 24.9.2010 upon the assessee at Choudhary Charan Singh Airport, Amausi, Lucknow where it was found that Shri. Mehtab Alam and his wife, Smt. Nausheen Farah Lari were carrying cash of Rs. 1 crore each in their two bags - during the course of search operation, the statement of the assessee i.e. Shri. Mehtab Alam was recorded u/s 131 of the Act and in his statement it was categorically stated by the assessee that he was carrying cash of Rs. 2 crores for purchase of raw hides from Kolkata - while completing the assessment not only in the case of the assessees but also in the case of other assessees, to whom the cash was claimed to relate, were thoroughly examined by the Assessing Officers in their respective hands by making detailed enquiries/investigations and once the AO was convinced with the explanations with regard to the source of cash of Rs. 2 crores found from the assessee during the course of search, no addition was made by the AO either in the hands of the assessee or in the hands of the respective parties to whom the cash of Rs. 2 crores relate - the assessment order cannot be set aside or revised for inadequate enquiry by the CIT u/s 263. These assessments are framed u/s 153A of the Act consequent to the search operation upon the assessees in which cash of Rs. 2 crores were found - While framing the assessments, questionnaires were issued with regard to the availability of cash and source and the same were duly replied by the assessees - according to the assessees, this cash belongs to certain other parties/concerns in whose cases assessments were also framed u/s 153C of the Act - it cannot be said that the AO has not applied his mind to the factum of seizure of cash during the course of search operation – CIT cannot invoke jurisdiction u/s 263 of the Act for setting aside the assessment order if he does not agree with the conclusion of the AO on a particular issue - since the factum of seizure of cash during the course of search operation was duly examined by the AO, invocation of provisions of section 263 of the Act for setting aside the assessment order is not valid and is to be set aside – Decided in favour of assessee.

  ---

• 2014 (12) TMI 139
  Disallowance u/s 14A – Computation of average interest under Rule 8D @ 0.5% - Held that:- The assessee is mainly engaged in the hotel business - It has made investment in the shares and mutual funds on which it has earned dividend income - surplus funds were sufficient to cover the investments - the assessee has also given the nature of utilization of loan and details of interest paid which has been incorporated - for the purpose of indirect expenses, the assessee has given the calculation of expenditure from its account which can be said to be attributable for the purpose of earning of the exempt income – once all these details were made available along with the entire accounts of the assessee, the AO was required to record his “satisfaction” or satisfied himself that having regard to the accounts of the assessee, the claim of the assessee in respect of expenditure debited is not correct and there could have been certain other expenditures which can be said to have been incurred in relation to the earning of exempt income. The A.O. has straight away proceeded to apply Rule 8-D for the purpose of disallowance u/s 14A without satisfying or complying with the mandatory requirement of section 14A(2) or Rule 8-D(1) - once the AO has failed to comply the statutory requirement, then he cannot proceed to make the disallowance u/s 14A(1) and the disallowance made by the AO and partly sustained by the CIT(A) over and above the disallowance made by the assessee is deleted – Decided in favour of assessee. Computation of book profits u/s 115JB – Held that:- As admitted by both the parties, once the disallowance u/s 14A has been made, then the same disallowance shall also form part of the computation while calculating the book profit u/s 115JB of the Act - Thus the disallowance as made by the assessee in its computation of income will be the disallowance while computing the book profit u/s 115JB – Decided partly in favour of assessee. Treatment of forfeiture of share application money for equity warrants – Capital receipt or revenue receipt – Applicability of the SC’s decision in Commissioner of Income-Tax Versus TV Sundaram Iyengar And Sons Limited [1996 (9) TMI 1 - SUPREME Court] - Held that:- During the FY 2007-08, the assessee company had issued equity warrants convertible into equity shares under preferential issue to the public in accordance with SEBI Guidelines, 2000 - the assessee treated it as capital receipt and therefore it was not offered as income - In the case of T.V. Sundaram Iyengar secondly, the assessee has not forfeited the amount and transferred to the P&L account, but directly to the capital reserve under the head “warrant forfeited account” - The assessee is not in the business of raising money through issue of share warrant and it is not a receipt in the normal course of business - If a particular amount is not received as trading receipt or during the course of trading transaction, it cannot be later on treated as arising out of trading transaction so as to hold as revenue receipt – thus, the amount of forfeited share application money transferred to “warrant, forfeiture account” in the capital reserve, is a capital receipt only and cannot be taxed as income of the assessee, either u/s 28(iv) or u/s 41(1) – Decided in favour of assessee.

  ---

• 2014 (12) TMI 138
  Treatment of STCG on shares - business income or not – Nature of assessee investor or trader - Held that:- The AO in re-assessment proceedings has treated the income from short term capital gains as business income mainly on the ground that the volume of transactions of shares is more, there is frequency in transactions and therefore, the motive is earning of profit - the main source of income is from investment activity - the assessee's normal activity is not buying and selling of shares but his purchase and sale of shares were in the nature of investment of her own surplus money and therefore, the excess amounts received by sales were capital receipts being merely surplus and not profits - in case the assessee is earning large income from his normal business activity and it was his surplus income which he was interesting in buying the shares - whenever he found it profitable he converted his holding that the very nature of investment was such that they had to be constantly charged so that the monies invested may be used to the best advantage of the investor and that the sales were really for the purpose of employing the monies that he had invested to his best advantage. Volume of frequency, continuity and regularity of transaction of purchase and sales are found in character and however what is more important is the intention of the assessee - the sale of shares held for more than one month would be charged capital gain and surplus of shares held for less than one month will be treated as profit from business - all share transactions undertaken by the assessee would be charged to capital gain irrespective of their holding, the AO was directed to compute the capital gain - the order of the CIT(A) is upheld and the AO is directed to treat the income from sale of shares as assessable under the head ‘capital gain’ and not as business income – Decided in favour of assessee.

  ---

• 2014 (12) TMI 137
  Validity of notice for reassessment u/s 147 r.w 148 – Determination of total loss by AO in reassessment – Disallowance u/s 14A being change of opinion - Reopening made after four years or not - Held that:- A specific query was asked on the issue of disallowance required to be made u/s 14A of the Act, by the AO during the original assessment proceedings - after considering the reply of the assessee, the AO accepted the explanation given by the assessee and did not make any disallowance - the AO who completed the original assessment has clearly come to a conclusion that the expenditure is not relatable to the earning of dividend income which is not part of total income - the reopening in this case is made on a change of opinion which is not permissible in law - relying upon Commissioner of Income-tax-VI, New Delhi Versus Usha International Ltd. [2012 (9) TMI 767 - DELHI HIGH COURT] - the reopening is bad in law as the AO during the original assessment proceedings examined the issue and it was only on a change of opinion that the assessment was reopened – thus, the reassessment proceedings are set aside – Decided in favour of assessee.

  ---

• 2014 (12) TMI 136
  Capital expenses or revenue expenses – huge expenses towards repair and maintenance on machinery and plant made – Held that:- In respect of the addition(s) of Rs. 3,11,405/- and Rs. 4,26,400/-, such additions were also made in earlier years and the Tribunal has decided the issue in favour of the assessee – following the decision in DCIT, CIRCLE-1(1), BARODA Versus BANCO PRODUCTS (I) LTD. [2012 (12) TMI 572 - ITAT AHMEDABAD] wherein it has been held that the expenditure is in Revenue nature – Expenses that were incurred on purchase of band knives for use in splitting machine - The nature of the item indicates that it is spare parts which require frequent replacement - the expenditure was incurred on removing the roller jammed in order to make it functional - the order of the CIT(A) is upheld – Decided against revenue. Addition made u/s 14A r.w Rule 8D – Held that:- Assessee rightly contended that Rule 8D would be applicable only with effect from AY 2008-09 as decided in GODREJ AND BOYCE MFG. CO. LTD. Versus DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [2010 (8) TMI 77 - BOMBAY HIGH COURT] - the AO was not justified in computing the disallowance by invoking the provisions of Rule 8D of the I.T. Rules, 1962 - the AO has observed that during the financial year, the assessee has received dividend income of Rs. 19,31,316/- and Long Term Capital Gain on the sale of Equity shares which is exempt under the IT Act - The AO has observed that the assessee has not given details as to when shares were acquired and what was the source of financing cost of acquisition of shares, etc. in earlier years and current year - the assessee has earned exempt income, therefore the expenditure related to earning of such income would be disallowable in terms of the provisions of section 14A of the Act - disallowance of Rs. 2,05,481/- is restricted to disallowance of Rs. 1 lac – Decided partly in favour of assessee.

  ---

• 2014 (12) TMI 135
  Expenses incurred for earning interest income on estimation basis disallowed – Nexus between earning of interest income and expenditure on estimation basis established or not – Held that:- There is a force in the argument advanced by the assessee which is supported by the documentary evidence – in Rajpath Club Limited vs. Commissioner of Income Tax [1993 (11) TMI 20 - GUJARAT High Court] it has been held that expenditure incurred by the assessee which is wholly and exclusively for the purpose of earning interest income was required to be deducted while computing income from other sources - the assessee has claimed the expenditures on estimation basis, but the same has not been fully substantiated by the assessee - But it does not mean that assessee is not entitled for any expenditure for the income earned by the assessee - It is not logically acceptable that if any person earned any income and did not incur any expenditure for earning the same - assessee has deputing their staff who used their skills mentally as well as physically to earn the income - They managed its fund for better utilization and also identify the funds from time to time for their better investment to maximizing the assessee's return - This exercise of identifying the funds is time consuming needs day to day involvement of assessee company staff and also requires allocation of resources and infrastructure. The cost attributable to involvement and was claimed as deductible against interest income on estimation basis - the other disallowances on the service charges income on gross basis - The assessee has also filed details of services charges received before the authorities expenditure attributed to the earning of service charges have been computed/allocated the assessee has also filed detail before the authority - the service charges are brought to tax under the head "Income from Other Sources" - The amount of expenditure allocated on a consistent and reasonable basis to the earning of service charges being directly related is clearly allowable - But in the present case the assessee has itself estimated the expenditure in dispute for which the assessee had not filed sufficient evidence for substantiating its claim before the Revenue Authority - assessee is entitled for some expenditure on the incomes - the AO is directed to allow 1% of expenses on account of interest income and on service charges income of Rs. 36,66,291/- on gross basis – Decided partly in favour of assessee.

  ---

• 2014 (12) TMI 134
  Transfer Pricing Adjustment - International transactions with Virtusa, U.K - software development services rendered to its overseas associated enterprises - Held that:- CIT(A) cannot be blamed for having dismissed assessee’s ground on TP adjustment - the MAP resolution, which is under the Indo-US DTAA is in respect of international transactions with Virtusa, USA involving operation cost attributable to US entity of Rs. 78,30,10,895 out of the total operating cost of Rs. 84,32,16,557, which works out to 92.86% - MAP resolution is in respect of 92.86% of the operating cost which relate to transactions with Virtusa, USA, thereby giving credence to the fact that balance 7.14% of the operating cost relates to international transaction with other entities i.e. Virtusa, UK - assessee also filed a petition u/s 154 of the Act before the CIT(A) seeking rectification of the order which is still pending - the matter needs to be examined by CIT(A) on the issue of TP adjustment of Rs. 63,91,764, which as claimed by assessee, relates to transactions with Virtusa, UK – thus, the matter is remitted back to the CIT(A) for fresh consideration – Decided in favour of assessee. Computation of export turnover - Exclusion of communication expenses and insurance charges – Held that:- Following the decision in CIT Vs. Gem Plus Jewellery India Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT] wherein it was held that communication expenses and insurance charges have to be reduced both from the export turnover as well as total turnover while computing deduction u/s 10A of the Act – thus, the order of the CIT(A) is upheld – Decided against revenue. Treatment of disallowance u/s 40(a)(ia) and 43B – Loss on sale of fixed assets, provision for gratuity – Held that:- As decided in assessee’s own case for the earlier assessment year, wherein it has been held that disallowances made u/s 40(a)(ia) and 43B, since, enhances the profit of the assessee, have to be treated as part of the eligible business profits for computation of deduction u/s 10A – the order of the CIT(A) is upheld – Decided against revenue.

  ---

• 2014 (12) TMI 133
  Various additions made - AO disallowed various amounts only of sub-contracts given by assessee and in some cases monies seems to have deposited or advanced to the Directors of the assessee company – Held that:- There is no objection for estimation of income by the Revenue – Revenue contended that the CIT(A) should have excluded the amounts on which there is clinching evidence against the assessee regarding non-execution of work or unexplained expenditure - Neither the A.O. nor the Addl. CIT(A) in the remand report indicated or quantified the amounts on which there was clinching evidence against the assessee - revenue could not point out any of those clinching evidences which are to be excluded from the turnover or to be brought to tax separately - In the absence of any quantification of the amounts either by the AO or by the Addl. CIT in their reports or before the tribunal by any particular means - CIT(A) seems to have examined all the issues, accepted part of the findings of the AO that the sub-contracts are only name sake - as both the authorities of Revenue accepted the estimation of income and as CIT(A) resorted to estimation based on the norms already been formed in this regard i.e., estimation of income at 12.5% on the main contracts and 8% on sub-contracts undertaken, there is no reason to interfere with the order of the CIT(A) – the order of the CIT(A) is upheld - since Revenue has not questioned the estimation at the rates and since no evidence has been filed to establish the clinching evidence of non-execution of contract work or unexplained expenditure, the grounds raised by the Revenue do not require any consideration on merits – Decided against revenue.

  ---

• 2014 (12) TMI 132
  Concealment of penalty u/s 271(1)(c) – Correct and true facts supplied for claim u/s 80JAA - Whether penalty is exigible where the issue is covered by the Hon’ble Supreme Court, only because, Hon’ble Supreme Court interprets the law – Held that:- The assessee is in the business of trading, processing and exporting of cut and polished diamonds had during the year engaged new regular employees, to whom the assessee had paid additional wages and in that view of fact, claimed the deduction u/s 80JJAA on those additional wages - The AO held that the deduction as claimed cannot be allowed, since there was no manufacture or production of any article by the undertaking - when the deduction was claimed, i.e. in AY 2005-06, Explanation 4 to section 10A w.e.f. 01.04.2004, was already in the statute book, which read as, "For the purposes of this section, "manufacture or produce" shall include the cutting and polishing of precious and semiprecious stones". The Finance Act, 2003 inserted Explanation 4 in section 10A of the Act w.e.f. 01.04.2004, the assessee was under bona fide belief that the definition can be extended for claiming deduction u/s 80JJAA of the Act as well, as the business of the assessee was cutting and polishing of rough diamonds - as canvassed by the assessee is well supported by Explanation 4, inserted in section 10A with effect from 01.04.2004 and also certain decisions, which are relied upon by the AR, has to be held to be bona fide - This is case where the claim made by the assessee u/s 80JJAA has only been rejected - the explanation given by the assessee with regard to its belief for the claim of the impugned deduction cannot be said to be mala fide – in COMMISSIONER OF INCOME-TAX Versus RELIANCE PETROPRODUCTS PVT. LTD. [2010 (3) TMI 80 - SUPREME COURT] it has been held that the claim made by the assessee, which cannot be sustained in law, will not give rise to penalty to section 271(1)(c) of the Income Tax Act - penalty u/s 271(1)(c) is not exigible in respect of disallowance of claim of deduction, made by the assessee – thus, the order of the CIT(A) is set aside – Decided in favour of assessee.

  ---

• 2014 (12) TMI 131
  Scrutiny / Regular Assessment - Service of notice - Notice served u/s 143(2) within the prescribed time or not – assessee contended that the acknowledgement of service of notice does not bears the signature of the assessee - Held that:- The notice u/s 143(2) dated 29th October 2002, was sent through speed post duly addressed in the name of the assessee and sent on the address which was provided in the return of income on 30th October 2002 - The post was duly delivered at the address mentioned therein on 31st October 2002, which is evident from the acknowledgement of the postal department placed on record - it creates a legal fiction by which the service of a notice is deemed to be effected, once the notice is properly addressed, pre–paid and posted by registered post - Such a contention of the assessee is legally not tenable, because once the notice has been sent through post and the postal authorities have duly acknowledged that the same has been served on a given date on the correct address of the person on whom the post was addressed, then it is not open for the assessee to say that the post was received by the some other person - The presumption in law is that it has been served upon the assessee. No other notice u/s 143(2), was sent by the AO, which has been claimed to have been received by the assessee on 15th November 2002, other than the one dated 29th October 2002, sent through speed post - If there is no second notice, then the presumption is that the same notice dated 29th October 2002, sent through speed post which was served on 31st October 2002, has been received by the assessee – thus, the notice u/s 143(3) was validly served upon the assessee with the statutory time limit and the order of the CIT(A) is upheld – Decided against assessee.

  ---

• 2014 (12) TMI 130
  Treatment of expenses incurred on construction of superstructure on leasehold land – Revenue expenses or capital expenses - Whether the assessee is carrying on business or profession in a leased building or other rights of occupancy and whether the assessee has incurred any capital expenditure for the purpose of business on the construction of any structure or doing of any work in or in relation to and by way of renovation or extension or improvement in the building Held that:- The assessee has taken the land on leasehold on which the assessee constructed super structure and claimed as revenue expenditure – revenue contended that the assessee constructed the building in the leased land and it is not the case of renovation of the leased building or improvement of the leased building - These construction activities carried out by the assessee if put on to the test of Explanation 1 would show that the construction made by the assessee on the leased out premises would amount to capital expenditure – in Commissioner of Income-Tax Versus Madras Auto Service Pvt. Limited [1998 (8) TMI 1 - SUPREME Court] - what advantage did the assessee get by constructing a building which belonged to somebody else and spending money for such reconstruction - The assessee got a long lease of a newly constructed building suitable to its own business at a very concessional rent - The expenditure was made in order to secure a long lease of new and more suitable business premises at a lower rent - it is essential that the expenditure incurred on the construction of any structure on the leased premises should result in enduring benefit - the case of the assessee very much falls within the ambit of Explanation 1 of section 32(1) of the Act – Decided in favour of revenue.

  ---

• 2014 (12) TMI 129
  Indexed Cost of Acquisition - assessee had acquired the asset from her late father - Held that:- Following the decision in Commissioner of Income-tax Versus Manjula J. Shah [2011 (10) TMI 406 - BOMBAY HIGH COURT] - indexed cost of acquisition as envisaged in Explanation (iii) to section 48, has to be reckoned from the year in which previous owner acquired the asset and not from the year in which the assessee had acquired - Therefore, in this case the cost of acquisition has to be taken from 1st April 1981 as the previous owner had acquired the asset much prior to it i.e., on 28th December 1966 – thus, the order of the CIT(A) is upheld – Decided against revenue. Cost of acquisition of capital asset u/s 55(2) – Held that:- Both the Revenue authorities have held that cost of acquisition should be taken on the value on which it was acquired by the previous owner that is at 3.50 lakhs, on 28th December 1966 - the subject matter of sale is lease hold rights - the property has become the capital asset of the assessee by way of Will, therefore, cost of acquisition as prescribed in section 55(2)(a)(ii) will not be applicable – thus, the cost of acquisition has to be worked out as per clause (b) of section 55(2), which provides that it is the option of the assessee if the property has been acquired by the assessee before 1st April 1981 to adopt the fair market value as on 1st April 1981 - the assessee has opted to fair market value as on 1st April 1981, and therefore, the assessee has rightly adopted the fair market value of the asset as on 1st April 1981 – thus, the order of the CIT(A) is set aside and the AO is directed to take the fair market value as adopted by the assessee as on 1st April 1981 for the purpose of cost of acquisition – Decided in favour of assessee. Claim made u/s 54F disallowed - acquisition of another residential house - Held that:- The assessee has claimed the deduction u/s 54F on account of long term capital gain, arising out of sale of lease right of the property - The capital gain arising out of transfer of such a long term capital asset was utilized for purchasing of a residential flat at Forest Castles, Mundhawa, Pune - the assessee has also purchased two adjacent flats in a different locality and in a different building called as Water Front - sub–clause (ii) of clause (a) clearly provides that when the assessee has purchased any residential house other than the new residential house within a period of one year after the date of transfer, then the assessee shall not be eligible for claim of deduction u/s 54F - there is a clear violation of conditions laid down in proviso to section 54F(1), therefore, the AO as well as the CIT(A) have rightly denied the assessee’s claim of deduction – thus, the order of the CIT(A) is upheld – Decided against assessee.

  ---

• 2014 (12) TMI 128
  Rate of tax on Royalty / License fee - 10% u/s 115A or higher rate @ 15% as per DTAA with United Kingdom - Whether New licence fee agreements is to be treated as extension of old licence fee agreements – Held that:- The assessee has received Rs. 6,20,94,207/- from M/s. GKN Driveline (India) Ltd and Rs. 87,97,966/- from M/s. GKN Sinter Metals Ltd. offered this income as royalty @ 10.56% as per section 115A of the Act - the rate of tax on licence fee income to be taxed @ 10% at the strength of the agreement - the assessee was having earlier agreement dated 12.07.2004 with M/s. GKN Sinter Metals Ltd. and it was renewed from 01.01.2007. The provisions of section 115A(1)(b)(AA) does not debar the assessee to enter into new agreements after change of situation in the provisions of section 115A(1)(b)(AA) as far as the reduced rate of royalty is concerned – the new agreements entered into on 29.05.2007 between the assessee and GKN Sinter Metals Ltd. and in the same year with GKN Driveline (India) Ltd. are independent agreements - The assessee can manage its affairs within the framework of statute - The Revenue authorities cannot sit into the business decisions of the assessee - By no stretch of imagination, the new agreement entered into in 2007 can be said to be the extension of old agreements entered into between the parties - Even if the assessee has managed its affairs as far as renewal of agreement is concerned, the Revenue authorities should not interfere with the same, unless it is proved beyond doubt that it is nothing but colourable devise. Even if the assessee had entered into new licence agreement with GKN Sinter Metals Ltd. and in the same year with GKN Driveline (India) Ltd. to take advantage of lower rate of tax of 10%, it cannot be denied to the assessee on the ground that it is nothing but extension of old agreement which is not correct otherwise - the new licence fee agreement entered into by the assessee with GKN Sinter Metals Ltd. and in the same year with GKN Driveline (India) Ltd. is nothing but a new and separate agreement - licence fee income should be taxed at 10% - Decided in favour of assessee.

  ---

• Customs

• 2014 (12) TMI 172
  Denial of refund claim - claim of refund of amount deposited during investigation, confirmed in the original proceedings but tribunal has set aside the part of the demand on the ground of period of limitation - Refund sanctioned but required to be credited to Consumer Welfare Fund as the refund sought falls within the ambit of doctrine of Unjust-Enrichment - MRP based duty valuation - Whether in the refund claims filed by the appellant the bar of unjust-enrichment under the provisions of the Customs Act, 1962 is applicable or not - Held that:- Appellant earlier paid duty on MRP at the time of clearance and selling the goods at a MRP. There is no evidence on record brought by appellant that appellant has changed his pattern of sale after July 2005 to the practice what was prevailing before July 2005. As the appellant was following MRP based sale before July 2005 and does not indicate any change in pattern of sale simply saying that amount of Rs. 1,63,59,968/- is shown in their accounts as customs duty receivable, will not be of any evidentiary value that CVD paid has not been recovered from the customers. In view of CESTAT s order dated 26.9.2009 in the case of the appellant the sale prices of ceramic tiles will be deemed MRP for the goods imported and sold after July 2005. By not declaring the MRP at the time of import, it cannot be said that ceramic tiles were not sold at MRP. Further from the case of Seaking marine Services vs. Commissioner of Customs, Mumbai (2010 (6) TMI 427 - CESTAT, NEW DELHI) and GAIL India Limited vs. CCE, Gwalior (2010 (10) TMI 445 - CESTAT, NEW DELHI), relied upon by the Revenue, the ratio laid down is loud and clear that mere claim of deposit of a money during investigation and production of Chartered Accountant s certificate is not the ultimate fact to hold that incidence of duty has not been passed on to the consumers. In the case of present appellant, it is more glaring as appellant are having a sale pattern of declaring MRP at the time of imports and selling the same at that MRP at the time of sale. There is no evidence on record that sale pattern of MRP has been revised by the appellant based on transaction value/ invoice value, after July 2005 to what was prevailing earlier. As the facts are different from the facts of the relied upon case laws, therefore, the same are not applicable to the present proceedings. An amount paid during investigation, when confirmed by appellate authority as duty, will be in the nature of payment of duty - claim of refund rejected - Decided against assessee.

  ---

• 2014 (12) TMI 151
  Jurisdiction of the officer issuing Show Cause Notice - Proper Officer or not - Seizure of goods - Goods imported in name of dummy firms - misdeclaration of goods in terms of description, quantity and value - Jurisdiction of custom officer - Proper officer - Held that:- If the show cause notice has been issued by the Director of Intelligence, then, we have to find as to whether he was competent to do so. In that regard, we have on record the Notification dated 26th April, 1990 Exhibit-I at page 369 of the paper book - when section 17 and 28 are specifically referred to in the Notification, then, we do not see any force in the argument of the Petitioner that the DRI was not competent to issue the subject show cause notice. The Notifications clearly indicate that the officers of this directorate have been entrusted or assigned the functions of the Customs Officers for the purpose of these sections. They could have therefore set the law in motion. Section 28(11) was inserted by Act 14 of 2011 w.e.f. 16th September, 2011. That alters the basis of the Judgments, which have been delivered by any Court of law, Tribunal or other authority. Once this section says that all persons appointed as officers of Customs under section 1(4) before 6th July, 2011 shall be deemed to have been and always to be the proper officers for the purpose of this section, then, the Notifications, which are referred by us above at page 369 and 373 of the paper book are specifically saved and validated. They have been given a retrospective effect. These Notifications were holding the field and were not quashed or set aside. In the teeth of such Notifications, the legislature stepped in to clarify the position that if the functions of the Customs officer can be entrusted or assigned by the Central Government or the Board in terms of section 6 of the Customs Act, 1962, then, all such Notifications, have been validly issued and enforced. They enable the parliament to clarify that the officers mentioned therein shall be deemed to be the proper officers for the purposes of section 17 and 28 of the Act. Precisely, that has been done in the instant case. The assignment of functions to these officers, who were earlier carrying on preventive work came w.e.f. 6th July, 2011. That Notification was not, at the relevant time, given retrospective effect. It is in such circumstances that the Hon'ble Supreme Court held that in terms of the Notifications, which were issued and holding the field, not designating the Collector of Customs (Preventive) as a proper officer for the purpose of section 28 as it then stood, he was not competent to issue show cause notice (see para 24 of Sayed Ali's Judgment). This position has now undergone a change and from 6th July, 2011, admittedly, they have been assigned these functions and of the Custom officers. They are therefore competent and the Notification in that behalf at page 373 of the paper book has been given a retrospective effect. - Even those cases which are governed by section 28 and whether initiated prior to the Finance Bill 2011 receiving the assent of the President shall continue to be governed by section 28, as it stood immediately before the date on which such assent is received. The reference to Finance Bill therein denotes the bill by the section itself was substituted by Act 8 of 2011 w.e.f. 8th April, 2011. Prior to this Bill by which the section was substituted receiving the assent of the President of India, some cases were initiated and section 28 was resorted to by the authorities. - Decided against assessee.

  ---

• 2014 (12) TMI 150
  Application for withdrawal of petition - Premature petition - Held that:- petitioners have expressed their desire to withdraw these writ petitions realizing the remote possibility of getting any relief in these writ petitions having regard to the premature stage at which this Court was approached by filing of these writ petitions, we are convinced that the petitioners can be permitted to withdraw these writ petitions with the right to work out their remedy as and when any appropriate situation arises for working out such remedy. We also make it clear that whatever impediment caused in pursuing the proceedings by the respondents pursuant to the issuance of the summons under Section 108 of the Customs Act or Section 14 of the Central Excise Act, during the period when the interim order was in operation can always be excluded for availing the statutory period available under the respective provisions of law. - Petition withdrawn.

  ---

• 2014 (12) TMI 149
  Imposition of penalty - Misdeclaration of goods - Abetment in pilferage – Valuation of the goods - Retraction of statement – u/s 108 of the Customs Act – Condonation of Delay – Hospitalisation after bail – Conduct of Accused - Supreme Court dismissed the appeal filed by the assessee against the decision of High Court [2014 (4) TMI 803 - KERALA HIGH COURT] wherein Court held that Commissioner was justified in opining that retraction was an afterthought and he did not make use of the earliest opportunity to do so when he was produced before the Magistrate concerned .

  ---

• 2014 (12) TMI 148
  Validity of Circular No. 18/2006 (Customs), dated 5-6-2006 - Levy of SAD u/s 3(5) on import of Crude Palm Oil, Vanaspati Ghee and Fatty Acid - Supreme Court after condoning the delay dismissed the appeal filed by the revenue against the decision of Gujarat High Court [2013 (6) TMI 536 - GUJARAT HIGH COURT] wherein the Court held that any goods whenever the customs duty or additional duty is not fully exempt when imported under DEPB scheme, the entire amount of SAD would have to be paid by the importer.

  ---

• Service Tax

• 2014 (12) TMI 170
  Waiver of pre deposit - multi-level marketing company - Service of providing various marketing materials for the purpose of marketing of their (the appellant's) products - Classification of service - Penalty u/s 76 & 77 - Held that:- It is seen that the material provided to the distributors is clearly meant for the purpose of marketing of the appellants products and a perusal of the definition of Support Services of Business or Commerce prima facie makes it evident that this would get covered under the scope of the said definition, at least under that limb of the inclusive part which says operational assistance for marketing’. It is pertinent to mention that the main part of the definition of Support Services of Business or Commerce is arguably too broad to be a valid taxable expression and therefore its inclusive part has to be fallen upon to delineate the scope of the said definition and that is what has been done presently. - Prim facie case is against the assessee. Allowing companies to address in conferences - Business Support service - Held that:- The service tax was demanded on the ground that the Support Services of Business or Commerce was rendered to the insurance-related companies by providing them platform of meetings of the distributors/leaders in order to address the distributors/leaders for furtherance of their insurance business. Prima facie, it is not at once very clear as to under which the limb of the inclusive part of the aforesaid definition this activity would fall. Thus prima facie with regard to this component of demand the appellants have a fairly reasonable case for waiver of pre-deposit. Activity of Mailing List Compilation - Held that:- the appellants’ contention that they had not compiled any data for the insurance related companies falls totally flat face first. Having thus shown that the data was actually compiled for their clients, it may not be necessary to state that a careful reading of the definition of ‘mailing list compilation and mailing’ reveals that the words ‘for or on behalf of the client’ are applicable only to clause (ii) of the definition and not to clause (i) because clause (ii) is separated from clause (i) by a semi colon and the word ‘or’. Separation by semi colon makes clause (i) and (i) self-contained. Thus, the contention of the appellants that the compilation has to be for or on behalf of the client does not represent the correct reading/appreciation of the statutory definition. Thus, prima facie, the department has a strong case with regard to this component of demand. A deposit of 50% of the demand components mentioned at Sr. No. 1 and 3 of the table above would meet the requirement of Section 35F of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 - Partial stay granted.

  ---

• 2014 (12) TMI 169
  C&F Agent services - Business Auxiliary Services - Export of services - Cargo Handling services & Storage & Warehousing Services - Whether the Distribution fee/ Agency fee, received by MIPL from their foreign principal is liable for payment of service tax under the category of Business Auxiliary Services - Whether the benefit of saving in Ocean freight passed on by the principal to them is chargeable to service tax under the category of Cargo Handling Service - Whether the amount received by them towards customs clearances, port clearances and transportation should be considered as taxable service under the single head of clearing and forwarding Agent - Held that:- a service which has not been consumed in India, cannot be taxed in India. - Services rendered by the appellant under ‘Commission Sales Agreement’ and Non-exclusive Distributor Agreement’, pertaining to Distribution Fee/ Agency Fee, have to be considered as export of services and no service tax is leviable on such export of services. Following decision of M/s. GAP International Sourcing (India) Private Limited vs. CST [2014 (3) TMI 696 - CESTAT NEW DELHI] Saving in Ocean Freight - Amount is given to the appellant by the foreign principal as an incentive out of the freight saved by the principal. There is no service involved as the goods, for which facilities of appellant are availed, belong to the appellant. charging service tax there has to be a service provider and a service recipient. One cannot be held to be a service provider to one s own self. On the same issue of the appellant for a subsequent period adjudicating authority has dropped the demand. In view of these observations appeal of the appellant with respect to service tax on amount received from the principal on saving in ocean freight is required to be allowed. Demand of service tax on other activities - composit contract or not - Held that:- There is no evidence that the contract were artificially splited to avoid service tax. As the services are separate and service recipient in future could avail the services of a service provider from a service provider other than the appellant, therefore, it can not be held that all the independent and separate contracts represent a common composite contract. - Decided in favour of assessee.

  ---

• 2014 (12) TMI 168
  Scientific or technical consultancy - transaction value as cum-tax value - High Court admitted appeal of assessee against the decision of Tribunal in [2011 (3) TMI 224 - CESTAT, MUMBAI] on following questions of law:- Whether the Tribunal was justified in holding that the services rendered by the assessee under the marketing assistance agreement dated 18-9-2001 as amended on 26-11-2001 constituted “Market Research Agency Services” covered under Section 65(105)(y) of the Finance Act, 1994 and accordingly confirm the demand of service tax raised by invoking the larger period of limitation.

  ---

• 2014 (12) TMI 166
  Waiver of pre-deposit - Revenue found that the appellants were rendering many other services on which they were not paying service tax - Valuation of services - Whether incentives and discounts will form part of value of services under Business Auxiliary Service - Held that:- In the case of consideration received for freight we are of the prima facie view that ocean freight was not liable to service tax. While there are specific entries in Finance Act, 1994 levying tax on transportation of goods by road, rail, aircraft, pipeline, etc., there is no entry levying tax on transportation by sea. It has to be reasonably presumed that this is kept outside the tax net and it cannot be taxed under a general entry like business support services. Further it appears that such services are rendered in respect of export cargo. It appears that the expression “aircraft operator” as defined in Finance Act, 1994 may cover any person who may not be having an aircraft also. But in the case of transportation of goods by air, there is an exemption under Notification 29/2005-S.T. for services rendered for transport of export goods by air. All these aspects are not considered while demanding tax on such charges. The deposits already made are sufficient for the purpose of Section 35F of Central Excise Act made applicable to appeals under Finance Act, 1994. So we grant waiver of pre-deposit of balance dues for admission of appeal. Appellant had not given adequate assistance to adjudicating authority in reconciling the figures appearing in the balance sheets and to explain the nature of services for which charges were being collected by them and also the charges which have been already included in the value of the services on which they have paid service tax. Since the applicants understand their accounts and returns better than the department it is their duty to explain the figures properly rather than argue that the Revenue has not been able to prove that consideration received is for non-taxable service or that on such consideration received tax has been paid under other heads. While making submissions for a fresh adjudication the appellant is directed to make full submissions in this regard. - Since there are basic flaws in the adjudication order as already pointed out and there is need for readjudication, we consider it proper to set aside the impugned order at this stage itself and remit the matter to the adjudicating authority for a fresh decision after hearing the appellant on all issues. - matter remanded back - Decided in favour of assessee.

  ---

• 2014 (12) TMI 165
  Waiver of pre deposit - CENVAT Credit - Capital goods - Use of pipeline system instead of pipes - Held that:- There are multiple questions of law which require examination in the appeals. We also notice that there are sizeable duty amounts arising out of the Tribunal’s judgment, even after deletion of penalty and denial of extended period to the Department. At the same time, we also notice that GSPL is a Government company. Therefore, at this stage the appellant-GSPL would deposit with the respondent, 50% of the duty demand arising out of the judgment of the Tribunal. Counsel far the GSPL pointed out that the respondent has not yet quantified such demand after the judgment of the Tribunal. This shall be done within a period of two weeks from the date of receipt of copy of this order. The appellant thereafter to make deposit as mentioned above within six weeks therefrom. Considering the fact that GSPL is a Government company, there shall be no further requirement of any security for remaining demand. - Decided partly in favour of assessee.

  ---

• 2014 (12) TMI 164
  Waiver of condition of pre-deposit - Non Co-operation with department and the plea sought to be raised for the first time before the Tribunal was neither taken before the adjudicating authority nor raised in the pleading - Held that:- Tribunal is required to deal with an application seeking waiver of pre-condition deposit of duty after recording its satisfaction relating to undispute hardship and the interest of revenue. The point of non co-operation before the adjudicating authority by no stretch of imagination can be considered for disposal of such application, it is a settled proposition of law that while considering an application seeking waiver of pre-condition deposit of duty, there must be a recording relating to a prima facie case, and unjust hardship taken into account the interest of the revenue. The order impugned before this Court is bereft of any such findings. The Tribunal have proceeded to dispose of the said application on extraneous consideration and, therefore, cannot be legally sustained. Accordingly the order impugned is quashed and set aside. - Matter remanded back - Decided in favour of assessee.

  ---

• 2014 (12) TMI 163
  Intellectual property service - Demand of interest as well as penalty under Section 76 on payment of service tax which was found later as not payable - Held that:- Service Tax in question is related to the year 1999 to 15-8-2002. The period in question is prior to 16-8-2002. Since the said period is prior to 16-8-2002, it is very clear that the respondent is not liable to pay Service Tax. Since the respondent is not liable to pay Service Tax, the respondent is also not liable to pay penalty as well as interest. The Commissioner (Appeals) as well as the Appellate Authority, after considering the date of amendment made to Service Tax Rules, 1994, have rightly rejected the claim of the appellant with regard to interest and penalty and also with regard to Service Tax. In the light of the discussion made earlier, this Court has not found any force in the contention put forth on the side of appellant and altogether, these Civil Miscellaneous Appeals are liable to be dismissed. - Decided against Revenue.

  ---

• 2014 (12) TMI 162
  Goods transport Agency Service - CENVAT Credit - High Court dismissed the appeal filed by the Revenue against the decision of CESTAT Chennai [2007 (11) TMI 92 - CESTAT, CHENNAI] since the issue is covered against the Revenue by reasons of the decision dated 5-7-2013 in C.M.A No. 2860 of 2008 as regards the utilisation of Cenvat credit towards payment of service tax on goods transport agency service.

  ---

• Central Excise

• 2014 (12) TMI 167
  Activity of repacking and change of MRP of toothpaste tubes - manufacturing activity or service activity - Area Based Exemption - department was of the view that the appellant’s activity amounted to manufacture, not service and the same attracted central excise duty and since the required declaration for Notification No. 50/2003-C.E. has not been given, and since one of the item in combo pack/promo pack is toothbrush manufactured outside the state, the benefit of this exemption would not be available to the appellant. - Held that:- Toothpaste and toothbrushes are mentioned in Third Schedule to the Central Excise Act, 1944. The process undertaken by the appellant involves making promo packs/combo packs of toothpaste and toothbrush (to be given free) so that each combo pack contains one 200 gm. toothpaste tube, one 100 gm. toothpaste tube and one toothbrush. The 100 gm. toothpaste tube, 200 gm. toothpaste tube, toothbrush and combo pack carton with contents and MRP printed, are received from CPIL. Since this process involves repacking and change of MRP of toothpaste tubes, we are prima facie view that the same would be covered by the definition of manufacture. Thus the activity of the appellant, prima facie, is manufacture of toothpaste. There is no dispute that the Khasra No. in which the unit is situated is specified in the Notification No. 50/2003-C.E. and the goods alleged to be manufactured are also covered by this notification - The purpose of the declaration required to be filed in terms of the conditions (i) and (ii) of the Notification No. 50/2003-C.E. is to enable the jurisdictional central excise authorities to ascertain whether the manufacturer is eligible for the exemption after ascertaining as to whether the unit is located in the Khasra No. specified in the notification and whether the goods manufactured are covered by the exemption. We find that all the information as mentioned in the condition (ii) of the notification, Khasra No. and address of the appellant, nature of their activity, etc., was contained in the letter dated 11-10-2007 and 1-11-2007 submitted by CPIL. Beside this, the appellant under impression that their activity is Business Auxiliary Service, had taken service tax registration and were paying service tax on the job charges. When the Department at a later date took a view that the appellant’s activity amounted to manufacture, the benefit of duty exemption under Notification No. 50/2003-C.E. could not be denied just on the ground that before effecting clearances they did not file the required declaration. In the circumstances of the case, what the Department seeks is an impossibility - more so when from the facts of the case, it appears that the Department from very beginning had all the information about the location of the appellant’s factory and nature of their activity and could have told the appellant that the activity is excisable. - Appellant have a prima facie case in their favour and compliance with the requirement of pre-deposit would cause undue hardship to them. The requirement of pre-deposit of duty demand, interest and penalty is, therefore, waived for hearing of the appeal and recovery thereof is stayed till the disposal of the appeal. - Following decision of Formica India Division v. CCE reported in [1995 (3) TMI 98 - SUPREME COURT OF INDIA] - Decided in favour of assessee.

  ---

• 2014 (12) TMI 161
  Waiver of pre deposit - Classification of goods - distinction between dipped tyre cord fabric and rubberised tyre cord fabric - marketability of goods - Held that:- It is evident from the Show Cause Notice that the impugned goods are actually the goods obtained after stage 1 of ‘rubberisation’ and before stage 2 of rubberisation and that is what has been referred to in the Show Cause Notice as ‘dipped rubberised fabrics’. The appellants dwelt on this issue at great length to contend that the Show Cause Notice was issued for rubberised tyre cord fabrics which is classifiable under 58.06 as rubber pre-dominates therein. In this regard, it is seen that in paras 13 (c) and 14 of the order-in-original, the adjudication authority makes it amply clear that the goods in question are obtained after dipping (stage-1) (in which certain amount of rubber gets deposited) and the dispute of classification in this case is limited to the classification of stage-1 dipped fabric only. The fact that there was no ambiguity in this regard in the appellants mind is evident from the fact that the quantity and value on which the duty has been demanded were given by the appellants themselves vide their letter dated 24.7.1998 and those quantity and values clearly pertained to the goods obtained after stage-1 (after dipping) and before their rubberisation (referred to as stage-2 in para 13(c) of the impugned order. Thus the appellants contention that the impugned goods were rubberised tyre cord fabrics obtained after stage 2 is an afterthought contrary to the evidence on record. Marketability of goods - Held that:- Product has actually been transported by road by the appellants on payment of duty for being used several hundred kilometres away in the manufacture of excisable goods. This clearly shows that the product is not only classifiable as distinct commodity but is also stable and capable of being transported by road long distance and bought and sold. In view of the foregoing prima facie it is evident that the impugned goods are also marketable. - Thus prima facie the appellants have not been able to make a case for full waiver of pre-deposit - Partial stay granted.

  ---

• 2014 (12) TMI 160
  Clandestine manufacture and removal of goods - Goods manufactured in name of other company - Held that:- Admittedly the appellants factory was searched subsequent to a search by Commercial Tax department of Government of Rajasthan. The Revenue has relied upon the documents recovered by the Commercial Tax Department and procured by them from the said department as also on the kachcha parchi recovered by the officers themselves during the course of their search in the appellants factory on 6.7.11. Number of statements of the proprietor of the unit stand recorded, which are inculpatory in nature and have not been retracted by them. We also find that the Revenue has approached the appellants buyers, who have given statements admitting the receipt of branded power cables as also the other cables without the cover of documents. Driver of the appellant has also admitted having transported the goods under the cover of kachchi parchis. All these evidence, according to us are sufficient to conclude that the appellant was indulging in clandestine activities. - Partial stay granted.

  ---

• 2014 (12) TMI 159
  SSI Exemption - Clubbing of the clearances of the excisable goods manufactured - same factory premises - appellants submits that these three appellants are different and distinct legal entities and they have maintained separate records - Held that:- Notification No. 8/2003-C.E. grants duty exemption to small scale manufacturers, subject to conditions. The condition stipulated for availing the exemption is that clearances effected by a manufacturer from one or more factories or clearances effected from a factory by one or more manufacturers should be clubbed together for determining the eligibility as well as quantum of exemption. It is not in dispute in the present case that all the three appellants operated from the same factory premises. If that be so, the clearances effected during a financial year by all the three manufacturers have to be clubbed together for determination of eligibility as well as quantum of exemption. Conditions specified in clauses (v), (vi) and (vii) leaves no room for any doubt as to how to compute the exemption. It is a settled position in law that an exemption notification has to be construed strictly and if the conditions of exemption are not satisfied, the benefit cannot be extended. In this factual and legal scenario, we do not find any merits in the contention of the appellants that since they are distinct and different legal entities, their clearances should not be clubbed while determining their eligibility to the exemption. Therefore, prima facie, we are of the view that the appellant has not made out a case for complete waiver of pre-deposit of the dues adjudged against them. In the absence of a prima facie case and reasonable financial position of the appellants and considering the need to protect Revenue’s interests, we direct the appellants to make a pre-deposit of 50% of the duty demands confirmed against each of them within a period of eight weeks and report compliance by 21-7-2014. On such compliance, pre-deposit of balance of dues adjudged against the appellants, that is, balance of duty, interest and penalties imposed on the three appellant firms and on Shri Ranjan Kumar Das and Smt. Mousumi Das shall stand waived and recovery thereof stayed during the pendency of the appeals - Partial stay granted.

  ---

• 2014 (12) TMI 158
  Denial of refund claim - Quantity discounts given to dealers of Motor Vehicles at the end of the calendar year - incidence of duty refunded to the dealer through credit notes - Unjust enrichment - The actual quantum of discount was known only after completion of the calendar year - Held that:- Refund not affected by unjust enrichment - ruling of Hon’ble Madras High Court in the case of Addison & Co. [2000 (11) TMI 146 - HIGH COURT OF JUDICATURE AT MADRAS] is good law. No stay have been given by the Hon’ble Apex Court [2002 (11) TMI 768 - Supreme Court of India]. Further the Hon’ble Andhra Pradesh High Court in order [2014 (3) TMI 671 - ANDHRA PRADESH HIGH COURT] have followed Addison & Co. I also find that the facts of present appeal are common with the facts of the Addison & Co. (supra) - Decided in favour of assessee.

  ---

• 2014 (12) TMI 157
  Provisional assessment - Adjustment of excess payments against short payments - Valuation of goods - Sanction of refund during provisional assessment - Held that:- From the records, it is seen that the assessments for the quarters October to December, 2008 and January to March, 2009 were finalised and the refunds sanctioned. The assessments for these quarters were not appealed against by the Revenue before the lower appellate authority and, therefore, they had become final. If the assessment had become final, the time limit that would apply would be from the date of finalisation of the assessment and if the show cause notices have been issued after a period of one year from the date of finalisation of assessment, they would be clearly time-barred. Therefore, in respect of these two quarters, the contention of the appellant that the show cause notice is time-barred has merit. There is an error committed by the adjudicating authority by taking the transaction value at which the greatest aggregate quantity of goods were sold, we observe that as per Rule 2(b), normal transaction value means the transaction value at which the greatest aggregate quantity of goods are sold and, therefore, this is the price which has to be adopted for determination of transaction value at the time of removal of the goods from the factory. Therefore, this finding of the lower appellate authority is clearly wrong. If the appellants are able to show that they have not passed on the duty burden and have borne the duty burden by themselves, then there is no bar under Rule 7 of the Central Excise Rules relating to provisional assessment for adjustment of excess payments against short-payments. However, this is a pure question of fact which needs verification. If the assessee is able to produce documentary evidences in support of their claim that where-ver they have made excess payments they have not passed on the duty incidence but have borne out themselves, then such excess payments can be adjusted against short-payments of duty and the bar of unjust enrichment will not apply. - Matter remanded back - Decided in favour of assessee.

  ---

• 2014 (12) TMI 156
  Compounded Levy Scheme - Notification No. 36/98-C.E., dated 10-12-1998 - discharge of duty liability under Rule 96ZQ read with Notification No. 41/98-C.E., dated 10-12-98 - Held that:- All proceedings which were pending as on 11-5-2001, even if initiated prior to omission of Rule 96ZQ would thereafter automatically lapse and no order could be passed if they were not concluded at the time of omission of Section 3A w.e.f. 11-5-2001. In this judgment, the Hon’ble High Court has also considered the judgment of Punjab & Haryana High Court in the case of Shree Bhagwati Steel Rolling Mills v. CCE, Chandigarh reported in [2006 (10) TMI 17 - HIGH COURT OF PUNJAB & HARYANA (CHANDIGARH)] and expressed its disagreement. In view of the above judgment of the Hon’ble Gujarat High Court, which is based on the judgment of the Apex Court in the case of Rayala Corporation Ltd. (1969 (7) TMI 109 - SUPREME COURT OF INDIA) and Kolhapur Cane Sugar Works Ltd. (2000 (2) TMI 823 - Supreme Court of India), after omission of Rule 96ZQ w.e.f. 1-3-2001 and omission of Section 3A of the Act without saving clause w.e.f. 11-5-2007, the proceedings initiated prior to omission which had not been concluded as on 11-5-2001 would lapse. In this case, though, initially the show cause notice issued prior to 1-3-2001 had been adjudicated by the Asstt. Commissioner, the Commissioner (Appeals) had set aside the orders and had remanded the matter for part of the period of dispute to the Asstt. Commissioner for de novo adjudication and de novo proceedings were concluded in 2004, long after omission of Rule 96ZQ w.e.f. 1-3-2001 and Section 3A w.e f. 11-5-2001 without any serving clause and therefore the same would lapse. - Decided against Revenue.

  ---

• 2014 (12) TMI 155
  DTA Clearances - clearances of acrylic yarn, polyester/blended yarn and blended waste in DTA - Levy of Additional Duties of Excise (Textiles and Textile Articles) - Imposition of interest and penalty - Notification No. 23/2003-C.E., dated 31-3-2003 - Held that:- Chartered Accountant’s certificate is not a document on the strength of which duty exemption can be claimed. It is based on the records maintained by the appellants, the eligibility to exemption has to be determined. As regards the contention of the appellant that in respect of polyester blended yarn, inasmuch as they have not imported any polyester fiber, the goods should be deemed to have been manufactured out of indigenous material. Though there is some merit in this contention, there is no evidence forthcoming with respect to the composition of blend. If the blended yarn consist of acrylic fiber, even if polyester yarn might not have been imported, inasmuch as acrylic fiber has been imported, the appellant would not be eligible for the duty concession under Notification No. 23/2003. Further, to claim the benefit under the aforesaid notification, the clearance to DTA has to be in terms of the EXIM policy mentioned therein. The composition of the blended yarn could have been easily ascertained from the sales invoices and the prices quoted. This is the second round of litigation and during the first round, the matter was remanded to the adjudicating authority with appropriate directions in this regard. In the absence of a clear finding recorded by the adjudicating authority based on documentary evidences, we are constrained to remand the matter back to the adjudicating authority once again for verifying all the facts involved and thereafter pass an order in accordance with law - Matter remanded back - Decided in favour of assessee.

  ---

• 2014 (12) TMI 154
  Waiver of pre deposit - 100% EOU - capital goods were imported free of duty - while opting out from EOU scheme they applied for the zero duty EPCG licence on 18-11-2010. - Benefit of Notification No. 22/2003-C.E - Whether in respect of indigenous capital goods no Central Excise duty would be payable or whether duty at the prevailing rate on the depreciated value would be payable in terms of the provisions of Para 8 of the Notification No. 22/2003-C.E. as amended by Notification No. 24/2008-C.E. - Held that:- Appellant unit had achieved the positive NFE and had been allowed by the Development Commissioner to debond and migrate to zero duty EPCG scheme - prima facie in absence of a Central Excise exemption notification prescribing nil rate or a concessional rate of duty, in respect of the capital goods procured from a 100% EOU against EPCG licence, at the time of debonding, the duty at the prevailing rate on the depreciated value in accordance with Para 8 of the Notification No. 22/2003-C.E. would be payable, even if the 100% EOU on debonding had been allowed to migrate to zero duty EPCG scheme. Thus, the appellant do not appear to have prima facie case in their favour - Partial stay granted.

  ---

• 2014 (12) TMI 153
  Denial of Refund claim - Bar of limitation - manufacture of sugar - free sale of sugar and levy sugar - rebate claim claiming that the excess production during the period from 1-5-1982 to September 1982 - Notification No. 132/82-C.E., dated 21-4-1982 issued under Rule 8(1) of Central Excise Rules, 1944 - Held that:- As per the scheme of the notification, towards the end of the sugar season, the sugar manufacturer determined his excess production and submitted his rebate claim to the Jurisdictional Assistant Commissioner who was required to sanction 60% of the rebate claim on presentation of the rebate claim and balance 40% after pre-audit. This rebate was being given as credit entry in the PLA and this PLA credit could be used for payment of duty on the clearances of the sugar. In this case, the rebate claim had been presented in September 1982 and 60% of the amount was sanctioned in June 1983. Subsequently while considering the payment of balance amount, the Assistant Commissioner, after issue of show cause notice, rejected the rebate claim as time barred. One of such exception is the case where the incidence of duty whose refund is sought has been borne by the assessee claiming the refund. The rebate claim in respect of excess production of sugar during lean season in terms of Notification No. 132/82-C.E. is not mentioned among the exceptions in the proviso to Section 11B(2). In this case it is not in dispute that the appellant while claiming this rebate under the Notification No. 132/82-C.E. recovered duty at the normal rate from their customers and therefore in terms of the provisions of Section 11B, as the same stood at the time of sanctioning the rebate, they would not be eligible for the same unless they prove that they had borne the incidence of duty whose refund/rebate is being claimed by them. But in this case, it is not disputed that the incidence of duty whose refund is claimed has been passed on. In view of the non obstante provisions of sub-section (3) of Section 11B, all refund claims made during the period w.e.f. 20th September 1991 would be subject to the principle of unjust enrichment incorporated in sub-section (2) of Section 11B. no infirmity in the impugned order - Decided against the assessee.

  ---

• 2014 (12) TMI 152
  Waiver of pre deposit - Valuation of goods - Method of valuation - whether the cost of production in CAS-4 format is to be determined on annual basis when all the data for this format is available or it could be determined for month to month basis - Held that:- The appellant during a particular financial year, instead of determining the cost of production for the entire year in CAS-4 format, have determined the same from time to time as and when the cost of the raw materials changed. The information regarding duty payment during each month during the period of dispute, placed on record by the appellant clearly shows that if the cost of production is determined in CAS-4 format on annual basis, as sought by the Department and 110% of such cost of production is adopted, the assessable value, while during certain months there would be excess payment of duty, during other months there would be short payment of duty. It is also seen that if the excess duty paid is adjusted against the short payment there is net excess duty payment. Excess payment during certain months has to be adjusted against short payment during other months. In view of this, we hold that the appellant have strong prima facie case in their favour - Following decision of CCE, Panchkula v. Yamuna Gases & Chemicals Ltd. [2011 (7) TMI 984 - CESTAT, NEW DELHI] - Stay granted.

  ---