TMI Tax Updates - e-Newsletter
December 5, 2016

Case Laws in this Newsletter:

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

TMI SMS

• Sharing of expenditure under joint venture agreement cannot be treated as common service - no service tax liability - SC

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Articles

1. Meaning and Scope of ‘Supply’ – Comparative view under Revised Model GST Law vis-à-vis Earlier Model GST Law

   By: Bimal jain

News

1. Constitutional compulsion to roll out GST from Sep next: FM

2. Income Tax Investigations Unearth Mis-use of Jan-Dhan Accounts

3. GUIDANCE NOTE ON FATCA and CRS

4. Action taken in cases of bank officials involved in carrying out irregular transactions violative of RBI’s instructions post demonetisation of Specific Bank Notes by the Government w.e.f. midnight of 8th November 2016

Notifications

Income Tax

1. 11/2016 - dated 2-12-2016 - IT

Procedure for the purposes of furnishing and verification of Form 26A for removing of default of Short Deduction and/or Non Deduction of Tax at Source- Reg.

2. 110/2016 - dated 1-12-2016 - IT

Section 10(46) of the Income-tax Act, 1961 Central Government notifies the ‘Maharashtra Electricity Regulatory Commission’, a Commission constituted by the State Government of Maharashtra, in respect of the following specified income arising to that Commission

3. 67/2016 - S.O. 3592(E) - dated 30-11-2016 - IT

U/s 35AC - Notifies the various institutions Approved by the National Committee

Circulars / Instructions / Orders

Customs

1. 58/2016 - dated 2-12-2016

Roll out of Express Cargo Clearance System (ECCS) at Courier Terminal, Sahar, Mumbai-reg.

2. 59/2016 - dated 2-12-2016

Outsourcing by an authorized Courier-reg.

Highlights / Catch Notes

Income Tax

• No TDS u/s 194D for insurance agents' expenses; applies to group expenses, not individual actions.

  Case-Laws - AT : TDS u/s 194D - TDS on expenditure incurred on its insurance agents and SBI employees - such expenditure has been incurred on the group as a whole and also the same is not a voluntary act on the part of insurance agents - no TDS liability - AT
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• Plastering, grills, granite flooring, and waterproofing costs classified as revenue expenses for maintenance, not capital assets.

  Case-Laws - AT : The expenditure in question, viz. plastering work, providing grills, granite flooring in corridors, terrace waterproofing, etc. are expenses which facilitate the upkeep of the premises and the enduring benefit, if any, is in the revenue field - AT
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• Penalty Confirmed for False Business Expense Claim u/s 271(1)(c); Assessee's Explanation Deemed Unreliable.

  Case-Laws - AT : Penalty u/s. 271(1)(c) - false claim of business expenditure - it is not a case where the explanation given by assessee was bona fide and there was full disclosure of facts - levy of penalty confirmed - AT
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Customs

• Bentley imports under EPCG scheme allowed despite non-foreign exchange use; no violation of conditions or exemption notice.

  Case-Laws - AT : Import of two Bentley cars under EPCG scheme - the usage for purposes other than earning of foreign exchange is not a breach of the conditions of the scheme or of the corresponding exemption notification. - AT
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• Exemption Notification No. 17/2001-Cus: Stents not classified as Cardiac Catheters, affecting customs exemption eligibility.

  Case-Laws - AT : Benefit of Exemption Notification No. 17/2001–Cus - whether “Cardiac Catheters” includes “Stents” or not? - it should not be misconceived that stent is to be understand as catheters - AT
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Service Tax

• Failure to Meet Burden of Proof u/s 73(1) Makes Extended Limitation Period Unjust and Unreasonable.

  Case-Laws - AT : Extended period of limitation - The initial burden of proving that the situations visualized by proviso to Section 73 (1) has, thus, not been discharged. It is, therefore, unjust and unreasonable to invoke the extended period of limitation. - AT
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• Court Evaluates if Printing Services for Bank Qualify as Business Auxiliary Services for Taxation, Suggests Possible Business Support Services Fit.

  Case-Laws - AT : Whether the printing service provided by the appellant to M/s. HDFC Bank Ltd during the period July, 2003 to March, 2004 falls under the category of Business Auxiliary Services? It may fall under the BSS category but cannot be taxed as BAS - AT
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• CENVAT Credit Validated for Refund Claims on Foreign Inward Remittances Certificates, Even When in Indian Rupees.

  Case-Laws - AT : Refund claim - certificates for a produced of foreign inward remittances, though in Indian rupees, cenvat credit cannot be denied as it is a certificate of foreign inward remittances. - AT
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VAT

• Court Rules Registration Cancellation Illegal After Petitioner Files Returns and Pays Taxes.

  Case-Laws - HC : The reason for cancellation of the petitioner's registration is for non filing of the returns for 3 months and this defect does not exist any longer, since the petitioner filed the returns and paid taxes - order for cancellation of registration held to be illegal - HC
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Case Laws:

• Income Tax

• 2016 (12) TMI 182
  Profit on sale of property – Business income or Capital Gain - Held that:- A perusal of the various recitals in the agreement indicate that apart from acquiring all development rights, the assessee is the de facto owner of the property as he has the absolute rights of possession, developing, selling, receiving sale proceeds, etc. to the total exclusion of the erstwhile owner. This view of ours is further confirmed as perusal of the sale agreement of the said property that the assessee has signed, sealed and delivered the property in his actual capacity as “OWNER” of the property. If the ownership still vested in the erstwhile owners, as claimed by the assessee, then they should have been at least consenting parties to the sale deed dated 30.12.2009. These documentary evidences, in our view, puts paid to the assessee’s claim on facts that the income/profit arising on sale of the gala was his business income. In our view, the income from sale of gala has been correctly held by the authorities below to be exigible to tax as STCG and not business income. - Decided against assessee Applicability of the provisions of section 50C - Held that:- Holding that the assessee’s profit on sale of the gala vide agreement dated 30.12.2009 is to be assessed as STCG and not business income the provisions of section 50C are to be invoked and have been rightly invoked in this case by the authorities below. Since the sale consideration stated in the sale agreement dated 30.12.2009 for sale of gala at Rs. 80 lakhs, was lower than the valuation shown for stamp duty papers by the Stamp Validation authorities at Rs. 1,02,20,000/-, the provisions of section 50C have been correctly invoked for taking the sale value of land at Rs. 1,02,20,000/- while computing the STCG. Cost of Improvement disallowed - Held that:- Except for raising these general arguments before us, the assessee had not placed on record any material evidence which controverts any of the findings of the authorities below on this issue. In this factual matrix of the case, we uphold the action of the authorities below in disallowing the assessee’s claim for having incurred expenditure as cost of improvement - Decided against assessee Disallowance out of Wages @10% - Held that:- CIT(A) upheld the said disallowance of 10% of wages expenditure as he found the explanation put forth by the assessee to be unsatisfactory. Before us, except for raising this ground, the assessee has not been able to bring on record any material to controvert the findings of the authorities below. In this factual matrix of the case, we uphold the disallowance of Rs. 38,344/- being 10% of expenditure incurred on wages. - Decided against assessee Disallowance of interest expenditure - Held that:- Both the AO and CIT(A) has summarily brushed aside the assessee’s arguments as unsatisfactory without assigning any cogent reason for the said disallowance. In this factual view of the matter we, in the interest of justice, set aside the orders of the authorities below on this issue and restore the matter to the file of the learned CIT(A) for fresh consideration and adjudication after affording the assessee adequate opportunity of being heard and to file details/ submissions required and the AO opportunity to rebut the same.

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• 2016 (12) TMI 181
  TDS u/s 194D - TDS on expenditure incurred by the assessee on its insurance agents and SBI employees - assessee in default under section 201(1) therefore, the expenditure cannot be considered as income in the hands of the individual insurance agent. Thus we do not find any merit in the action of lower authority for treating the payment made to travel agent for getting the accommodation and ticket booking for the insurance agent causing for treating and holding them liable to deduction of tax at source under section 194D of the Act. The assesse has already deducted tax at source under section 194C, accordingly there is no justification in the order of lower authorities holding the assessee in default under section 201(1) & (1A). TDS in respect of service tax component on insurance commission paid to the insurance agent - Held that:- No tax is required to be deducted at source in respect of component of service tax so paid to the commission agent. TDS u/s 194C or 194J - payment made for annual maintenance contract / routine repair - Held that:- No infirmity in the order of Ld. CIT(A) holding that annual maintenance charges paid by assessee was liable for deduction of tax at source under section 194C and not under section 194J of the Income Tax Act.

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• 2016 (12) TMI 180
  Disallowance of brokerage amount paid - Held that:- AO has not brought any evidence on record either to prove that the transaction is a colourable device to disallow the same or the brokerage paid by the assessee in the present case is excessive or unreasonable to apply the provisions of section 40(A)(2) of the Act. Similarly, the Ld. CIT(A) has not recorded the reasons for holding that the object behind making payment of the amount in question was tax avoidance through a colorable device. The finding of the Assessing Officer as well as the Ld. CIT(A) are, therefore, not based on any evidence. Since, the Ld. CIT(A) has not referred any evidence to justify the disallowance made by the AO or to enhance the same, it can safely be presumed that the payment in question has been made by the assessee as brokerage. The impugned order is therefore not sustainable in the eyes of law. Accordingly, we set aside the findings of the Ld. CIT(A) - Decided in favour of assessee. Disallowance of repairs and maintenance expenses - Held that:- We notice that the AO has disallowed 20% of expenses for want of evidence, however, the Ld. CIT(A) has taken altogether new ground and taken the view that the expenditure other than the society charges aforesaid, are capital in nature. We also notice that the CIT(A) did not seek any explanation from the assessee before arriving at such a conclusion. Accordingly, we are of the view that this issue requires fresh examination at the end of the Ld. CIT(A). We, therefore, restore this issue to the file of the Ld. CIT(A) with the direction to adjudicate this issue afresh after affording a reasonable opportunity to the assessee to explain the same.

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• 2016 (12) TMI 179
  Disallowance of Building - Repairs, Renovation & Maintenance expenses - Held that:- A perusal of the detail of expenditure reveals that the same is primarily incurred for maintenance and/or repairing/upgrading of existing structures. Though the Assessing Officer has canvassed that it results in creation of a new asset, but the details do not reflect so. Even with regard to the enduring benefit brought out by the Assessing Officer, it is to be understood that the enduring benefit in the case of repairs and maintenance may spread beyond one financial year, but that itself would not justify the characterisation of expenditure as capital in nature so long as it does not result in creation of any new asset or a benefit, in capital field. Apart therefrom, it is also to be appreciated that the expenditure in question, viz. plastering work, providing grills, granite flooring in corridors, terrace waterproofing, etc. are expenses which facilitate the upkeep of the premises and the enduring benefit, if any, is in the revenue field. Therefore, considering the fact-position, we find no reason to uphold the stand of the Revenue that the impugned expenditure is of capital in nature. Thus, the order of CIT(A) is set-aside and the Assessing Officer is directed to delete the addition. - Decided in favour of assessee. Disallowance u/s 14A - assessee had made a suo moto disallowance - Held that:- It is a well settled proposition that before the Assessing Officer proceeds to determine the disallowance u/s 14A of the Act by applying the formula contained in Rule 8D of the Rules, it is imperative that a satisfaction is recorded by him with regard to the incorrectness or otherwise of the stand of assessee, having regard to its accounts. In the present case, assessee had suo moto disallowed a sum of Rs. 13,000/- and the same has been mechanically brushed aside by the Assessing Officer and instead, disallowance has been worked out in terms of Rule 8D of the Rules. The aforesaid approach is clearly inconsistent with the mechanics of Sec. 14A(2) of the Act and, therefore, the said action is hereby set-aside and Assessing Officer is directed to retain the disallowance to the extent of Rs. 13,000/- suo moto disallowed by the assessee itself. Also assessee raised a point of law to the effect that the formula specified in Rule 8D(2)(iii) of the Rules prescribing disallowance @ 0.5% of the average value of investments should only take into consideration those investments on which assessee has received exempt income and not the investments on which no exempt income has been received. The aforesaid point of law raised by the assessee is kept open as assessee has been allowed the necessary relief otherwise - Decided in favour of assessee. Life membership fee treated as revenue receipt - Held that:- The said issue is a recurring issue and in the past years, the same has been held in favour of the assessee following the judgment of the Hon'ble Bombay High Court in assessee’s own case reported in (1979 (1) TMI 5 - BOMBAY High Court).

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• 2016 (12) TMI 178
  Disallowance under section 14A r.w. Rule 8D - Held that:- In view of the fact that the learned CIT(A) has not addressed the assessee’s claim made before him that the disallowance under section 14A r.w. rule 8D ought to be not more than Rs. 9,46,325/-, after having noted the assessee’s averments in this regard we are of the view that it would not be appropriate for us to adjudicate on the merits of the disallowance under section 14A w.r. rule 8D in the impugned order at this stage, without having the assessee’s claim addressed by the learned CIT(A)/AO. In this factual matrix of the case we are of the opinion that the best interest of justice would be served if the issue of the disallowance under section 14A r.w. rule 8D be set aside to the file of the learned CIT(A) to be reconsidered afresh and also in the light of the unaddressed claim of the assessee that the same should be restricted to Rs. 9,46,325/-. Needless to add that the assessee be afforded adequate opportunity of being heard and to file details/submissions in this regard and also to the AO for rebuttal of the same. - Decided in favour of assessee for statistical purposes. Expenditure on Advertisement Film - Held that:- In today’s world where business processes and products change rapidly, it cannot be said that any advertisement expenditure incurred by the assessee will be long lasting as most advertisement films have a short life. Most leading brands in different business keep on changing their advertisements from time to time based on the popularity of their brand ambassadors. In this factual matrix of the case on hand as discussed ,and respectfully following the decision of the Hon'ble Bombay High Court in the case of Geoffrey Manners & Co. Ltd. (2009 (2) TMI 13 - BOMBAY HIGH COURT ) which applies squarely to the facts of the assessee in the case on hand, we uphold the order of the learned CIT(A) in holding that the said expenditure incurred by the assessee on making of short commercial advertisement film to be revenue in nature - Decided in favour of assessee

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• 2016 (12) TMI 177
  Grant credit of tax deducted at source on the commission received - Held that:- We find that the assessee has shown income of from commission of Rs. 1,42,89,500/--AY 2012-13 on which TDS was deducted on 31.03.2011. We further find that the AO assessed the income as shown by the assessee, however, credit was allowed of Rs. 37,08,000/- which was deducted during the financial year 2011-12 relevant assessment year 2012- 13 which was claimed by the assessee in the succeeding year i.e. AY 2013-14 as the corresponding income was received in that year. In other words, the ACIT allowed the credit of TDS which was deducted during the year whereas the assessee following system of accounting wherein the commission was shown as income under on receipt basis and also corresponding TDS was claimed. Therefore, we are not in agreement with the conclusion drawn by the Id. CIT(A) that ACIT-CPC has rightly allowed credit of TDS from the commission as the assessee has claimed TDS which was deducted on 31.3.2011 whereas the TDS of Rs. 37,08,000/deducted during the financial year 2011-12 and the credit whereof was claimed in AY 2013-14 as the income was received in that year. The issue raised in this appeal stands covered by the decision of the Tribunal in the case of Mr. Anish Kapurchand Chandaria [2016 (11) TMI 655 - ITAT MUMBAI] we allow the appeal of the assessee for statistical purposes.

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• 2016 (12) TMI 176
  Prior period expenses allowance - Held that:- The project was sold in the preceding year but based on the minor defects and deficiencies pointed out by the buyer during the previous year relevant to the assessment year, these expenses were incurred by the assessee during the previous year relevant to the impugned assessment year to rectify those minor defect and deficiencies pointed out by buyers and hence cannot be considered to be prior period expenses as the same were arisen, accrued and incurred in the impugned assessment year and are wholly and exclusively for the purposes of business of the assessee. In our considered view, these are not prior period expenses but have arisen, accrued and incurred during previous year relevant to impugned assessment year and are wholly and exclusively connected with the project which was already sold in March, 2008 and hence have direct and live nexus with the business carried on by the assessee. Thus, based on our detailed discussion and reasoning as set-out above, we order deletion of the additions as made by the AO and sustained by the learned CIT(A). - Decided in favour of assessee.

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• 2016 (12) TMI 175
  Deduction u/s 80P claim denied - Held that:- The assessee had failed to establish its case of being engaged in cottage industries. The finding of CIT(A) is that the assessee had not carried on the activity of manufacture, production or processing, which was the requirement of claiming the said deduction. The assessee during the year under consideration had shown the opening stock of raw material, purchases, sales and finished goods at Nil. So, the claim of assessee that it was engaged in the business of cottage industries was held to be incorrect. The assessee has not controverted the finding of CIT(A) in this regard. Another aspect noted by the CIT(A) from the perusal of Profit & Loss Account was that the assessee was engaged in various PWD related contracts for earning income on account of providing training under various schemes. Accordingly, the order of CIT(A) is upheld in denying the claim of deduction under section 80P(2)(a)(ii) of the Act. In respect of other claims made in the grounds of appeal under section 80P(2)(a)(vi) of the Act, no plea has been raised before the authorities below except for claiming deduction under section 80P(2)(a)(ii) of the Act and hence, the same also is rejected - Decided against assessee Disallowance under section 40A(3) - Held that:- The assessee had failed to give any justification for making cash payments exceeding Rs. 20,000/- before the CIT(A) and hence, the addition was confirmed. Even before the Tribunal, the assessee has failed to establish its claim and hence, the said claim is also rejected.Similarly, the assessee had failed to explain the non-deduction of tax at source out of payments to Shri Govind Chawsaria on account of consultancy charges at Rs. 59,000/- and the same is also confirmed - Decided against assessee Addition made under section 68 - Held that:- The finding of CIT(A) in this regard was that the said amount were received from various persons, who did not have proper identity and creditworthiness, in most of the cases, the amount of each loan was Rs. 20,000/-. Since the assessee had failed to prove the identity, creditworthiness and genuineness of loans amounting to Rs. 3,79,500/- received during the year, the addition of the same was held to be justified by the CIT(A). The assessee has failed to establish any of three ingredients of section 68 of the Act before the Tribunal in the present appeal and hence, the addition is upheld. - Decided against assessee

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• 2016 (12) TMI 174
  Sale of shares - business income OR short term capital gains - Held that:- Where the assessee has repeatedly invested in shares, may be, the quantity was higher or the periodicity of transactions were more, does not decide the nature of activity to be a business. Where the intention of assessee was to make investment, wherein the delivery of shares were taken by the assessee and was then on appreciation sold in the open market, then gain arising on such investments is to be assessed as ‘Income from short term capital gains’ and not as ‘Income from business’. Accordingly, the order of CIT(A) is reversed in this regard. Further, in respect of shares of I Bulls and Astramic, the income is assessable as speculation business since the assessee had not taken the delivery of shares. Accordingly, the Assessing Officer is directed to re-compute the income in the hands of assessee. However, in respect of balance shares, the same are directed to be assessed as ‘Income from short term capital gains’. - Decided in favour of assessee.

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• 2016 (12) TMI 173
  Addition on undisclosed income on account of alleged profit earned on sale of flat - profit on sale of flat - taxability in the hands of Mr. Ravi Kiran Aggarwal or Mr. Dinesh Kiran Aggarwal - Held that:- The AO for both the tax payers is same i.e. DCIT, Central Circle-47, Mumbai. It has been held by the Hon’ble Supreme Court in Laxmi Path Singhania vs. CIT (1968 (8) TMI 8 - SUPREME Court) that it is the fundamental rule of the law of taxation that, unless otherwise expressly provided, income cannot be taxed twice. In view of the above, the order of the ld. CIT(A) is set aside and the case is restored back to the file of the AO to examine the above issue and make a fresh assessment as per the provisions of the Act , keeping in mind the above observation, after giving reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.

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• 2016 (12) TMI 172
  Validity of reopening of assessment - Held that:- AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped during the year. The reasons are vague and are not based on any tangible material as well as are not acceptable in the eyes of law. The AO has mechanically issued notice u/s. 148 of the Act, on the basis of information allegedly received by him from the Directorate of Income Tax (System), New Delhi. Keeping in view of the facts and circumstances of the present case and the case law applicable in the case of the assessee, it is of the considered view that the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed - Decided in favour of assessee.

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• 2016 (12) TMI 171
  Disallowance of Bad Debts Written off - Held that:- Admittedly the amounts written off as stated above includes a sum of Rs. 51,95,96,000/- relating to the assessment year 2009-10 which the assessee claims as deduction under section 36(1)(vii) . We find that if this deduction is allowed, then it would amount to double deduction granted to the assessee, in view of the fact that the assessee has already granted deduction under section 36(1) (viia)(c) of the Act in view of making provision in the year 2003-04. Since the bad debts written off in the current assessment year do not exceed credit balance in the provision for bad and doubtful debts account, the authorities below have rightly disallowed the amount claimed as deduction by the assessee, inasmuch as the intention of the legislature was to see that deductions for bad debts in respect of the very same amount covered by clause (viia) of the Act is not again claimed under clause (vii) of the Act. With this view of the matter, we do not find any merits in the contention of the Ld. AR. Hence, we find that the orders of the authorities below do not warrant any interference and the same are hereby upheld. This ground of appeal of assessee is dismissed.

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• 2016 (12) TMI 170
  Additions based on net profit ratio - Held that:- As we have noticed that it is not necessary that a businessman should always earn the profit. The profit includes loss also. The AO did not bring any cogent material on the record to show that there is a suppression of income or there is a siphoning of funds, the addition made by the AO is purely based on the surmises, conjectures and guess. Therefore, we do not hesitate to confirm the order of the ld. CIT(A). - Decided against revenue

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• 2016 (12) TMI 169
  Unexplained gold jewellery and silver articles - additions appreciating the fact such as wealth tax return, VDIS disclosure, streedhan, CBDT Circular, gift on marriage application and inherited articles - Held that:- CIT(A) upheld the action of the AO on the ground that assessee could not produce any evidence in support of any of the claim made by him. The reason given by the CIT(A) while sustaining the addition made by the AO has already been reproduced in the preceding paragraph. Since the AO has already granted sufficient relief to the assessee on the basis of evidences produced before him despite the admission of the assessee during the course of search in his statement recorded u/s.132(4) and since no other evidence was produced before the CIT(A) or even before us, therefore, we do not find any infirmity in the order of the CIT(A) upholding the addition made by the AO. Accordingly, the order of the CIT(A) being a reasoned one is upheld and the ground raised by the assessee is dismissed.

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• 2016 (12) TMI 168
  Penalty u/s. 271(1)(c) - false claim of business expenditure - Held that:- As in the notes to account there is no mention of the payment of Rs. 73,60,000/- and the reasons for making this payment. No rebuttal has been given by the assessee to these findings of fact, which go to suggest that the appellant has not made a complete disclosure in terms of Explanation 1 to section 271(1)(c) of the Act. We therefore, find no justification to disregard the finding of the ld. CIT(A) that the assessee had made a false claim that he is engaged in the hotel business with motive to claim deduction of impugned expenditure falsely as revenue expenses. The explanation offered by the assessee being not bona fide, the ld. Authorities below have rightly applied Explanation 1 to section 271(1)(c) of the Act in the peculiar facts and circumstances of the present case. In view of above discussion, it follows that it is not a case where the explanation given by assessee was bona fide and there was full disclosure of facts. The assessee has also not been able to substantiate the explanation offered by any credible evidence. - Decided against assessee

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• Customs

• 2016 (12) TMI 139
  Deposit of the amount directed by the Division Bench with interest at the rate of 12% per annum before the Tribunal within a period of eight weeks from today. If the amount is not deposited before the Tribunal within a period of eight weeks, the petition shall stand dismissed without further reference to the Court - However, if the amount is deposited, the Tribunal may consider the matter on merits. - the decision in the case of M/s. Picasso Overseas, Mumbai- 7 Versus The Customs, Excise and Service Tax Appellate Tribunal, The Commissioner of Customs (Appeals) , The Assistant Commissioner of Customs (Gr. 5B) [2016 (4) TMI 183 - MADRAS HIGH COURT] contested.

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• 2016 (12) TMI 138
  Import of two Bentley cars under EPCG scheme - Use of case for the purpose other than to earn foreign exchange - Jurisdiction - cars found parked at the residence of the Directors of the appellant-company for personal use. - Held that: - The scheme is limited to import of capital goods and, consequently, does not impose any condition of exclusive use for the purpose assigned in the import authorization - whether the holder be a manufacturer of goods or supplier of services. Such condition is not envisaged because it is not in public interest that capital goods utilized sub-optimally for solely for earning foreign exchange. Therefore, usage for purposes other than earning of foreign exchange is not a breach of the conditions of the scheme or of the corresponding exemption notification. While the 'proper officer' under the Customs Act, 1962 can initiate action for breach of conditions of notification, a certification of compliance with conditions of licence cannot be ignored or substituted by separate findings to the contrary. The adjudicating authority, in rendering the finding that export obligation has not been fulfilled, has erred in pre-empting a decision by the statutory authority vested with that responsibility. The exemption notification itself in paragraph 2(2) allows a period of six year from date of licence, i.e. upto August 2013, as the first reporting block, to fulfill the export obligation; and we notice that seizure was effected and importers directed to justify the imports well before that deadline. The service which the appellant was to render is not a readily identifiable taxable service in Finance Act, 1994. The authorization issued to appellant specifies the ITC HS classification of the service through which export obligation is to be achieved and this classification is alien to the Customs Tariff Act, 1975 and has naught to do with section 65 of Finance Act, 1994. The description and assigning of value to services earning foreign exchange are not amenable to interpretation or assessment by customs authorities. Consequently, no authority attaches to claim the right or duty to determine the extent of achievement of export obligation. In the light of this factual matrix, the determination of export obligation is best left to the licencing authority. The finding that export obligation has not been achieved is, thus, without authority of law. There is no allegation of breach of any other condition in the exemption notification - the demand of duty and confiscation of the cars fails as do the various penalties - appeal allowed - decided in favor of appellant-importer.

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• 2016 (12) TMI 137
  Mis-declaration of imported machine as Dairy Machine - exemption under serial No. 11 of Notification No. 6/2006- CE dt. 01.03.2006 - classification of imported machine - The investigation conducted by the department reveals that whereas out of the 5 consignments the first, fourth and fifth consignments were cleared by declaring the goods under the respective HS Codes and suppliers invoices. In case of 2nd and 3rd consignments cleared under Bill of Entry No. 763776 dt. 03.05.2007 and BE No. 801219 dt. 18.06.2007, the goods were shown as ‘Dairy machines’ and were cleared by availing exemption from CVD in terms of Notfn. No. 6/2006 - CE dt. 01.03.2006. Held that: - It was during investigation that the officers found that the original ‘Specification of Production equipment’ Sheets (SPE Sheets) received from the supplier containing HS codes were altered by the importer so as to show the same as ‘Dairy machines’ - In view of the fact that the goods were correctly classifiable in the SPE Sheets as per their respective description and individual function but were changed by the Appellant’s employee in consultation with the Management, we are of the view that the goods does not merit classification as parts of dairy Machinery. For the reasons stated above and looking to the fact that the issue involves of intended mis-declaration, mis-classification and suppression of facts we do not find any infirmity in the order passed by adjudicating authority and uphold the same in as much as the same is related to Appellant M/s Yakult Danone (India) Pvt. Ltd. As regard penalty imposed upon Shri Kiyoshi Tatsui Oike, Managing Director is concerned we find that he was concerned with overall working and not particularly involved in any contumacious conduct. The correspondence for changes of HS codes and alteration of SPE sheets was an act between its parent company M/s Yakult Honsha Ltd, Japan and Mr. Tomoshi Suzuki on the advice of Consultant M/s SBBFL. We thus find that no active involvement of Shri Oike is appearing in record that he orchestrated the alleged acts of violation of Custom laws and intended to cause revenue loss. We therefore do not find it fit to impose penalty and set aside the penalty imposed upon him - As regard penalty upon Shri Anil Choudhary is concerned, we find that he was merely an employee who acted on the directions of the company and had no personal involvement. We therefore do not find it fit to impose penalty upon him. The penalty upon Shri Anil Choudhary is therefore set aside. Appeal dismissed - decided against appellant-assessee.

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• 2016 (12) TMI 136
  Import against value based advance licence for export - Input stage credit u/r 57A - violation of condition V(A) of the Notification No. 203/92-Cus - Held that: - The department has not investigated anything to know whether the input stage credit under Rule 57 in respect of export goods was availed or otherwise. The show cause notice without any relied upon documents or without any factual information cannot sustain. In this regard this Tribunal has taken consistent view that show cause notice without having any evidence is not sustainable - reliance placed on the decision of the case of Consumers Plastics Pvt Ltd Vs. Commr. Of Cus.(export), Mumbai [2001 (7) TMI 456 - CEGAT, MUMBAI]. It is also observed that against the duty of total export of 20,000 kgs, for the quantity of approx. 16,000 kgs certificate of non availement of credit/reversal of credit was submitted by the appellant which also indicates that allegation of the show cause notice is contrary to the facts available on record. As per the above settled legal position demand confirmed against appellant denying exemption notification No. 203/92-Cus is clearly not sustainable - appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 135
  Jurisdiction of authority - section 127F(2) of the CA, 1962 - where the applications have been seized by the Settlement Commission, any other Forum lacks jurisdiction to entertain the matter relating to the said application - whether the appellant can be absolved from all liabilities for the reason that the main party M/s Sri Kumar Utensils Pvt.Ltd has settled the case before the Settlement Commission? - decision in the case of S.K. Colombowala Vs CCE, [2007 (7) TMI 514 - CESTAT, MUMBAI], where the specific question that was considered was whether the appellant who had not filed an application before the Settlement Commission can claim immunity from further proceedings on the ground that the main case has been settled before the Settlement Commission. Held that: - The decision in the case of Motilal Gupta[2016 (5) TMI 608 - CESTAT MUMBAI] relied by the Ld AR is one rendered by the single member bench of the Tribunal, where it was held that if the liability of the co-noticees arise from different act they will not get immunity from further proceeding. In the said case, the Tribunal in para 4.7 as well as 4.8 has given reasons for taking a different view from that laid in the case of SK Colombowala. The said view may be applicable to the facts of that case and I am not able to agree to the view expressed in the said paragraphs by the Ld. Single Member and more specifically because the issue stands covered squarely by the Larger Bench of the Tribunal. I hold that the appellant are entitled to be absolved from the liabilities for the reasons that the main case has been settled before the Settlement Commission. In the result, the impugned orders are set aside - appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 134
  Compounding of offences - interim relief under Rule 41 of the CESTAT Procedure Rules, 1982 - whether the Single Member Bench of the Tribunal had jurisdiction to hear the appeals (and the initial Miscellaneous Applications) filed against the order dated 04.02.2016 of the Chief Commissioner of Customs rejecting the compounding of offences applications filed by the Respondents? - Held that: - we find that there is no inherent lack of jurisdiction for the Single Member Bench in hearing the appeals and miscellaneous applications and in passing the interim order No. I.O./120-123/2016 dated 21.03.2016 - Moreover, ld. Authorised Representative for Revenue has not raised the issue of jurisdiction of the Single Member Bench during the hearing of the miscellaneous application. It was held that the power to recall the judgment will not be exercised when the said ground was available to be pleaded in the original action but was not done. The Bench had asked both sides whether they have any objection in transferring Miscellaneous Applications and the Appeals to the Division Bench of the Tribunal since important issues of law are involved in the matter. The Senior Counsel for the Respondents agreed to the said proposal of the Bench. However, the Ld. Special Counsel for Revenue insisted that first the subject Interim Order should be recalled, and Revenue has no objection for transfer of the pending Miscellaneous Applications and Appeals to Division Bench thereafter. We find it appropriate to transfer the hearing of the pending appeals C/10404-10407/2016 alongwith pending Miscellaneous Applications C/Others/10132-10135/2016 to the Division Bench in view of the important legal issues involved. The Registry is directed to list the Appeals and Miscellaneous Applications before the Division Bench expeditiously. Appeals are transferred to Division Bench.

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• 2016 (12) TMI 133
  Benefit of Notification No. 17/2001 – Cus dated 1.3.2001 - Stents - interpretation of the terms of Notification - whether “Cardiac Catheters” includes “Stents” or not? - Held that: - it should not be misconceived that stent is to be understand as catheters - In absence of any logical reason, the decision stated by the respondent does not have the character of precedent. Therefore, that shall not govern our decision today for which we accept the submission of Revenue and allow its appeal - benefit of notification denied - appeal allowed - decided in favor of appellant-Revenue.

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• Corporate Laws

• 2016 (12) TMI 126
  Scheme of Arrangement in the nature of amalgamation - Held that:- Pursuant to the report of the Official Liquidator, it is ordered that, the petitioner company shall preserve its books of accounts, papers and records and not dispose of the records without the prior permission of the Central Government as per the provisions of Section 396(A) of the Companies Act, 1956, and shall not be absolved from any statutory liability. Considering the above, it is ordered that, the Scheme at Exhibit “C” to the petitions, is hereby sanctioned and the prayers made in all the Company Petitions are granted. The petitioners are directed to pay the professional charges of Rs. 7,500/for each petitions to Mr.Devang Vyas, learned Assistant Solicitor General of India and the petitioners of the Transferor Companies are directed to pay the the professional charges of Rs. 7,500/each to the Official Liquidator.Filing and issuance of drawn up orders are dispensed with.

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• 2016 (12) TMI 125
  Scheme of Arrangement in the nature of amalgamation - Held that:- The observations made by the Regional Director and the Official Liquidator stand substantially addressed and hence, there does not appear to be any impediment to the grant of sanction to the Scheme of Amalgamation, inasmuch as from the material on record and on a perusal of the Scheme, the Scheme appears to be fair and reasonable and is not violative of any provisions of law. Nor is it contrary to public policy. As noticed earlier, none has come forward to oppose the Scheme. All requisite statutory compliances have also been substantially fulfilled. This court is, therefore, satisfied that the Scheme of Arrangement in the nature of Amalgamation amongst the Petitioner companies deserves to be granted. The Scheme of Amalgamation is hereby sanctioned. The same shall be binding upon all the Equity Shareholders, Secured Creditors, Unsecured Creditors of the petitioner Companies and all other agencies, departments and authorities of the Central, State and any other local authorities. It is ordered that as required under section 396A of the Companies Act, 1956, the Transferor Company shall not dispose of, or destroy, their books of accounts and other connected papers without the prior consent of the Central Government and shall preserve the same.

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• Service Tax

• 2016 (12) TMI 167
  Validity of part of the order of settlement commission - Irregular credit taken on ineligible input services - Irregular credit taken on common input services - health and fitness service - business auxillary service - principles of natural justice - Held that: - First and foremost what is to be borne in mine is that the petitioner cannot selectively accept the portion of the order passed by the Settlement Commission and dispute correctness of the other portions of the order which in the opinion of the petitioner is not fully favourable. The petitioner had full and effective opportunity before the Commission and it is on their own volition they had approached the Commission and filed an application for settlement of the case. Unless and until the petitioner is able to establish total non-application of mind or perversity in the approach of the Commission or when there is violation of principles of natural justice, the question of examining the correctness of the proceedings of the Commission in exercise of writ petition cannot be made. However, in this writ petition there is no challenge to the impugned order on these grounds. Hence, for the above reasons, the writ petition is liable to be dismissed. Accordingly, the writ petition is dismissed.

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• 2016 (12) TMI 166
  Extended period of limitation - Registrar and share transfer agent service - service was included in the statute took w.e.f. 01/5/06 - brokerage/incentive - fees for share transfer agent service - time bar - Held that: - for invoking extended period of limitation mere failure on the part of the assessee to pay the tax or file the prescribed Returns is not sufficient. It has to be proved that the assessee was aware that he is liable of pay service tax and he deliberately evaded to pay the tax or the facts required to be disclosed to the revenue authorities were not deliberately and consciously disclosed to the revenue authorities. In the present proceedings only a few allegations have been made without adducing the evidence to support the allegations. The initial burden of proving that the situations visualized by proviso to Section 73 (1) has, thus, not been discharged. It is, therefore, unjust and unreasonable to invoke the extended period of limitation. No evidence has been brought on record that the assessee has deliberately evaded service tax by over utilizing the Cenvat credit. Hence this is a case where only normal time limit will be available to the Revenue for demand of service tax under Section 73 - appeal dismissed - decided against Revenue.

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• 2016 (12) TMI 165
  Levy of service tax - purchase commission, sales commission, insurance premium of goods, Legal fees to legal consultant’s/ advocates for attending company’s matter in foreign country, Professional charges, Service Charges for services performed outside India, advertisement expenses displayed in foreign country, Registration consultancy and registration of products in foreign country, Rent on immovable property etc. - Held that: - though the Section 64 envisages that the provisions of service tax extends to the whole of India. However in the instant case looking to the above facts it has to be seen as to what the provisions prescribes in case where the outside service providers has though rendered the services outside India but the services has been rendered to the person located in India and bills has been raised to such Indian entity who made payment of such services in foreign exchange. Section 66A of the Finance Act provides charge of service tax on services, in case of services provided by a person who has fixed establishment or permanent residence outside India to a person who has place of business, fixed establishment, permanent address or usual place of residence, in India. In such case taxable service shall be treated as having been rendered by the Service recipient. Further we find that Rule 3 of Taxation of Services (Provided from Outside India and received in India) Rules, 2006 deals with the situation involved in present case i.e Taxable services provided from outside India and received in India. Prima facie it seems that the case in hand is covered by the provisions of Section 66A and Rule 3 supra. However we find that the order passed by the refund sanctioning authority as well as first appellate authority have not verified the vital facts as above. We are of the prima facie view that in case the service received by the person situated in India from the persons situated outside India would be liable for tax. In the present case the goods were cleared from a foreign country to another foreign country but the services related to such transaction was received by the Appellant who has permanent place of business in India and in whose names the bills were raised and who made the payment in foreign exchange. It is identical to case where the goods are exported outside India but the services related to such exports are availed from the overseas service provider such as commission agent etc.. In all such cases the service recipient in India i.e Exporter is liable to service tax. However all these aspects have to be gone into factually. To ascertain the status of the Appellant as the service recipient, it is necessary to verify the bills and invoices raised by the service providers, payment transaction therefore, treatment of the payment transaction in the books of accounts of the Appellant. Principles of unjust enrichment - Held that: - it is observed from the finding of the original authority that he has not verified the books of accounts of the Appellant and relied upon the submission made by the appellant in this regard and chartered accountant’s certification. It is incumbent on the adjudicating authority to verify from the books of accounts to ascertain the fact whether the incidence of service tax paid by the appellant has not been passed on or otherwise. Hence the aspect of the unjust enrichment also needs careful reconsideration. In view of our above observation and findings we thus remand the matter to the original authority to verify the above facts and decide the eligibility of the Appellant for refund. Appeal disposed off by way of remand.

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• 2016 (12) TMI 164
  Demand - printing services provided to bank - whether the printing service provided by the appellant to M/s. HDFC Bank Ltd during the period July, 2003 to March, 2004 falls under the category of Business Auxiliary Services Clause (iv) and liable for service tax? - Held that: - On careful reading of judgment in case of the Phoenix IT Solutions Ltd. [2014 (9) TMI 672 - Andhra Pradesh High Court] it is observed that in the said judgment more or less similar services such as spot billing, maintaining account etc were held to be classifiable as Business Support Service falling under Section 65(104c) of Finance Act, 1994 and not under Business Auxiliary Services. The Business Support Service became taxable w.e.f. 1-5-2006 therefore the appellant’s services being similar, more appropriately classifiable as Business Support Service and the same was not taxable during the period involved in the present case - demand of service tax on the printing service provided by the appellant is not taxable. Therefore demand of service tax and consequential penalty and interest are set aside. Whether input service credit in respect of service tax paid on the premium of insurance policies of employees is admissible in terms of Service Tax Credit Rules, 2002? - Held that: - It is observed that all the three insurance policies are for the employees of the appellant’s company. The issue whether this service are in or in relation to providing output service, has been considered in the judgments of the case of Commissioner of Central Excise, Bangalore-III, Commissionerate Versus Stanzen Toyotetsu India (P.) Ltd. [2011 (4) TMI 201 - KARNATAKA HIGH COURT], and it was held that the insurance of the employees is the service which is used in providing output service - the service tax credit in respect of insurance policy is admissible, hence following the ratio of the above judgment, we allow the service tax credit in respect of insurance policy. Appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 163
  Rejection of refund claim - invoices issued showing service tax amount are not in the name of the appellant - Held that: - the debit note can be correlated with the invoices produced by the appellant and invoices clearly indicate that they are concerned with the appellants, namely, Karnawat International (P) Ltd. Therefore, only on this ground that invoices are not in the name of the appellant, where the debit notes show direct correlation of the services provided by the service provider, refund of cenvat credit cannot be rejected. The matter, therefore, deserves to be remanded to the Original Adjudicating Authority, who will verify the documents and grant the refund accordingly. Time bar in filing refund claim - Held that: - relevant date for computing one year period prescribed under Section 11B of Central Excise Act, 1944 is to be determined by applying Rule 5 of Cenvat Credit Rules, 2004; limitation provided under Section 11B ibid has to be satisfied; and relevant date for computing one year period is the date on which final products are cleared from export. - the refund claims have to be examined by the Original Adjudicating Authority in the light of above findings and the matter is to be decided by him/ her within 4 months of receipt of this order. Appeal allowed - matter remanded back.

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• 2016 (12) TMI 162
  Imposition of penalty - manpower recruitment or supply service - cleaning services - supply of tangible goods service - security agency service - interior decorators service - non registration of assessee - intention to evade tax - Held that: - The respondent discharged his tax liability before the issue of impugned order. Whether the extended period of limitation is invoked or not, admittedly, no further tax is in arrears and non-invoking of section 78 of Finance Act, 1994 does not compromise the discharge of tax liability. Once the amount has been paid in full, there is no reason. In the circumstances narrated in the impugned order, to invoke the proviso to section 73(1) of Finance of Act, 1994. Therefore, the non-imposition of penalty in the circumstances of the specific finding that the pre-requisites for imposition of penalty under section 78 do not exist is tenable. Appeal dismissed - decided against the revenue.

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• 2016 (12) TMI 161
  Refund claim - cenvat credit that remains unutilized in the cenvat account due to non-submission of certificate of receipt of the payment in convertible foreign currency - whether various input services like service tax paid on insurance services and the service tax paid on food vouchers (meal coupons) are eligible for availing cenvat credit or otherwise? - Held that: - On perusal of the certificates given by appellant’s bank i.e. Deutsche Bank, we find that the appellant’s bank has clearly recorded that the amount is credited to their account, but the certificate is for foreign inward remittances and vide their letter dated 30.1.2012, they had specifically stated that the entire foreign inward remittance is received in convertible foreign exchange. We also were informed that there is no dispute as to the exports undertaken by the appellant. In our considered view, when there is no dispute as to the exports of the services rendered by the appellant, and no dispute as to the availment of the cenvat credit or eligibility thereof, the only reason for denying cenvat credit that the amounts are not received in convertible foreign currency seems to be irrational way of denying the legitimate refund to an assessee - reliance placed on the decision of the case of Sun-Area Real Estate Pvt Ltd Versus Commissioner of Service Tax, Mumbai-I [2015 (39) S.T.R. 897 (Tri. - Mumbai)] where it was held that certificates for a produced of foreign inward remittances, though in Indian rupees, cenvat credit cannot be denied as it is a certificate of foreign inward remittances. Cenvat credit availed on the service tax paid on insurance services - Held that: - the lower authorities have denied the refund only on the ground that the said insurance also covers the dependents of the employees who are insured - it is held that such cenvat credit cannot be denied and refund has to be sanctioned. Service tax credit of the service tax paid on the meal coupons - Held that: - such credit is available and refund needs to be sanctioned if the services are exported. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2016 (12) TMI 160
  Liability of tax - Tem Adhesive ‘C’ - The Revenue seeks to assess the impugned goods under the provisions of Section 4 on the ground that the product is of such nature, that can be used only by industrial consumer, namely, tyre re-treading units - whether the liability of appellant to discharge duty for the said goods is under the provisions of Section 4 or Section 4A? - Held that: - the appellants made categorical assertion, which is not rebutted with evidence, that they have never sold directly to any consumers, leave-alone, Institutional/Industrial consumers. All their sales are to dealers only. We find in such situation the exclusion made under Rule 2 A of P.C. Rules is not applicable to the present case. The said Rule defines institutional/industrial consumer who buy package commodities directly from the manufacturers. P.C. Rules will not apply to such transaction. In the present case the impugned goods are cleared in packages of size covered by the P.C. Rules and there is no endorsement on the packages to the affect that the goods are not meant for resale. We note that the Tribunal in the case of H&R Johnson India Pvt. Ltd. [2014 (6) TMI 453 - CESTAT MUMBAI] held that in the absence of such endorsement, it cannot be said that the goods are cleared for institutional/industrial consumers. Appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 159
  Reversal of credit of ADD - Nickel Cathodes and Nickel HP Squares - clearance of goods to sister concern as such - Rule 3(5) of Cenvat Credit Rules, 2004 - Held that: - It is seen from a plain reading of the Rule 3(5) that when the inputs on which Cenvat Credit has been taken are removed as such from the factory the manufacturer is required to pay an amount equal to the credit availed on such inputs - The fact that the party had reversed the credit on basic excise duty but did not reverse the credit on account of special additional duty has not been satisfactorily explained by the Director in his replies during the statement particularly since the law is quite unambiguous and when they were reversing the credit of special additional duty for the removal to other customers. The entire situation also needs to be seen in the context that the appellants are registered with the department for a long time and are well aware of the laws and procedures. Very clearly, there is an element of suppression and intention to evade duty. Revenue neutrality - Held that: - if the situation was revenue neutral, as argued by appellants, there was no need to even to reverse the input credit of basic excise duty - the plea of revenue neutrality in the instant case is not acceptable. The order passed by Commissioner (Appeals) is legal and proper and does not call for any interference - appeal dismissed - decided against appellant-assessee.

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• 2016 (12) TMI 158
  Demand - CENVAT credit in the name of other unit - job worker - appellants had not taken registration as Input Service Distributors (ISD) under Rule 4(A) of Service Tax Rule, 1994 - Held that: - I find that the appellants had kept the jurisdictional authority duly informed about the job work for them being done at their Unit-II. The procedure for registration as Input Service Distributer came into being on 16.06.2005, which is in the middle of the period involved in this case from June 2004 to February 2006. Admittedly, there was nexus between Unit-I and Unit-II. There is no allegation that credit was not admissible. It is merely that the procedure which came into being in June, 2005 was not followed - reliance placed in the decision of the case of Pricol Ltd. Vs. CCE, Coimbatore [2015 (1) TMI 350 - CESTAT CHENNAI], where it was held that in case of procedural irregularity, the substantive benefit should not be denied. The Cenvat Credit of Rs. 34528/- is held to be admissible to the appellants - appeal allowed - decided in favor of assessee.

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• 2016 (12) TMI 157
  Cenvat credit - duty paying documents - availing of CENVAT credit on the basis of challans and not the bills of entry - suppression of facts - contravention of Rule 9 and Rule 3 of CCR, 2004 - Held that: - It is not disputed that the inputs, on which credit has been taken, were imported by the appellants who filed the bill of entry for their warehousing. Due to problems with warehousing period, they could not file the ex-bond bill of entry and cleared the goods on payment of custom duty which was duly accepted by customs authorities. The duty payment challans have been signed by the customs officer for Assistant Commissioner of Customs (Bond Department), Nhava Sheva Custom House. Duty payment challans contain material particulars like bill of entry no., description of goods, bond no., assessable value, duty and interest amount. There is no allegation in the show cause notice that the goods were diverted or were not received in the factory. The goods have been cleared after payment of appropriate duty and proper entries have been made in the RG-23 Part-II register and duty paying challans correlate with the respective entry in RG-23 Part-II register. There is no allegation that the duty paying challans are fake or that the cenvat credit has been taken again on the basis of these challans - Tribunal in the case of CCE, Vapi vs. Mehta Hwa Fuh Plastics Pvt Ltd. [2013 (1) TMI 527 - CESTAT, AHMEDABAD], has held that when the receipt of the inputs and its final use in manufacturing is not disputed then the inputs cannot be denied the cenvat credit. The cenvat credit has been correctly availed by the appellants and the appeal filed by the appellants is allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 156
  Imposition of penalty - SSI exemption - clandestine removal - suppression of facts - Held that: - only part of the clearances made were accounted in SBI account of the unit. The super stockists/buyers have been making the deposits towards some part of the goods received by them in the KVB account of the Director. Though it is contended by the appellant unit that the said amounts deposited by the super stockists/buyers were withdrawn and deposited in the SBI account of the appellant unit on the same day or next day, the argument that this would prove that there were no accounted sales, is not tenable or acceptable. The modus-operandi of depositing the sale proceeds in to the KVB account of Director and thereafter re-depositing or transferring the same into the account of appellant unit can only be to cover up the unaccounted clearances. By such practice, the SBI account of appellant unit would reflect such amounts as transferred /withdrawn and deposited from KVB account of Director and not as amounts received from clearances of goods. It is crystal clear that this is an effort to cover up the unaccounted sales - there has been unaccounted sales which the appellant has not been able to explain properly. The activity of clandestine clearances having been established, I do not find any grounds to interfere with the equal amount of penalty imposed on the appellant unit. The facts and evidences establish that the Director Shri L Danunjaya had a consciouse role in the above activities of unaccounted sales. However, the penalty of Rs. 40 000/- imposed on the Director is on the higher side. I am of the view, that the penalty of Rs. 10,000/- would meet the ends of justice. Penalty of Rs. 25,000/- has been imposed on Sri K.Shivakamini Kumar which in my opinion is unwarranted. The said person is only an employee ie., Finance Manager of the appellant unit. The penalty imposed on Shri Shiva Kamini Kumar is therefore, set aside. Appeal disposed off - decided partly in favor of appellant-assessee.

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• 2016 (12) TMI 155
  Denial of CENVAT credit - forged documents - the debit notes were not prescribed documents and did not contain the details as required in order to avail Cenvat credit - Held that: - The debit notes contained details with address of the person who issued the same as well as the recipient. The credit distributed were specified with period. The debit note is with enclosures which contained elaborate details regarding invoice date, the name of the provider of service, nature of service, amount of service tax paid on such invoice etc. All the particulars relevant and required in terms of Rule 9 of Cenvat Credit Rules, 2004 are available in the said debit notes and its enclosures. We find in Shriram Pistons & Rings Ltd. vs. CCE, Ghaziabad [2012 (11) TMI 377 - CESTAT, NEW DELHI], the Tribunal examined similar set of facts and held that credit cannot be denied if the inputs have been received by a manufacturer under the invoices of the service providers issued in the name of head office, the head office had taken Cenvat credit and thereafter passed on the same to its manufacturing units, only on the ground that the said credits were passed on by letters and not by the document bearing the name “invoices” or “challans”. The only requirement is that the documents or letters issued by the head office should contain all the details which are required to be mentioned in the invoices/challans issued by the input service distributor. In the present case, we find there is no dispute regarding the eligibility of various input services for the credit. The dispute is more on the documentation followed by the Input Service Distributor. Debit note and its enclosures contained all the required details for a valid distribution of eligible credits - the denial of credit to the appellant is not based on any substantial legal provisions. The documentations followed by the Input Service Distributor in the present case contains the required/relevant particulars to enable the appellant to avail the credits. We find no justification for denial of credit on the grounds taken by the lower Authorities - appeal allowed - decided in favor of assessee.

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• 2016 (12) TMI 154
  Demand - duty liability at the time of clearance of capital goods on which credit has been availed by appellant - The admitted facts are that the appellants cleared old and used capital goods (DG sets and parts thereof etc.) on payment of duty @ 10% to their sister unit at Panipat. The Department contended that they have to pay duty @ 16% Ad- valorem as prevailing at the time of clearance of such capital goods. The impugned order held that the capital goods were cleared after prolonged use and by applying Rule 3 (5A) of Cenvat Credit Rules, 2004 the duty liability @ 16% prevailing at the time of removal should be discharged - Held that: - a plain reading the provisions of Rule 3 (5) reveals that when capital goods on which Cenvat credit has been taken are removed as such from the factory, the manufacturer shall pay an amount equal to credit availed in respect of such capital goods. In the present case, there is nothing on record to show that capital goods were cleared as waste and scrap. Accordingly, we find no reason to refer to the provisions of Rule 3 (5A) of the Cenvat Credit Rules, 2004. In fact it is clear that Rule 3 (5) was amended w.e.f. 13/11/07 providing for reversal of credit based on depreciated value. Further, during the period relevant to the present case i.e. February and March 2007, the pre-amended provision will apply. In fact we also note that there are many decided case laws to support the contention of the appellant that even the provisions of Rule 3 (5) were not applicable to the appellants as the goods have been cleared after prolonged use and cannot be considered as clearance as such. However, in the present case, the appellants reversed whatever credit availed by them on such capital goods. In these circumstances, we find no justification to demand any extra amount from the appellant. Appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 153
  Demand - unbranded chewing tobacco - suppression of facts - period of limitation - Held that: - mere non-payment of duty is not equivalent to collusion or willful mis-statement or suppression of facts as held by the Hon’ble Supreme Court in Uniworth Textiles Ltd. vs. CCE, Raipur [2013 (1) TMI 616 - SUPREME COURT]. The burden on the department to prove the malafide of the noticee, the onus is not on the assessee to prove his bonafide. In the present case, we find that the show cause notice did not elaborate the ground on which the demand for extended period was supported. In a similar set of facts this Tribunal in the case of Balaji Products Limited [2016 (11) TMI 406 - CESTAT NEW DELHI] held that there are no sufficient grounds to sustain allegation of willful mis-statement/ suppression of facts. In the said case also the liability of additional duty of excise on unbranded chewing tobacco for the period March, 2005 to March, 2007 was in dispute in connection with demand for extended period. The demand for extended period cannot be sustained - The duty for normal period is liable to be paid - On the same reason, imposition of penalty under Section 11AC was also not justified. Accordingly, these penalties are set-aside - appeal allowed - decided partly in favor of assessee.

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• 2016 (12) TMI 152
  CENVAT credit - Whether the main appellant M/s Hikal Ltd. is eligible to avail the CENVAT credit of CVD paid on the goods “Isoproturon Tech” or otherwise? - Held that: - It is the case of the Revenue that the “goods” which are imported not inputs as it is not consumed for manufacture any final product. I find that both the lower authorities have erred in coming to such conclusion in as much, it is undisputed that main appellant had discharged duty on the final product, and in my view were eligible to avail the CENVAT credit of C.V.D. and Central Excise duty paid on the said “goods”. This law is now settled by the Hon'ble High Court of Bombay in the case of Commissioner of Central Excise, Pune-III Vs. Ajinkya Enterprises [2012 (7) TMI 141 - BOMBAY HIGH COURT], where it was held that It is only on 24th June 2010, the Board has issued a Circular to the effect that the process of pickling does not amount to manufacture. Therefore, during the relevant period, that is, during the period from 2nd March 2005 to 31st December 2005, it could not be said that the issue was settled and that the assessee paid duty on decoiled HR/CR coils knowing fully well that the same were not manufactured goods. If duty on decoiled HR/CR coils was paid bona fide, then availing credit of duty paid on HR/CR coils cannot be faulted. CENVAT credit allowed - appeal allowed - decided in favor of assessee.

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• 2016 (12) TMI 151
  Refund claim - Manufacture - unjust enrichment - Held that: - As per the invoice, it is clearly mentioned that the appellant is not recovering any amount from their buyers towards duty and the buyers have not paid any amounts to the appellant towards duty. In that circumstances, I hold that the appellant has passed the bar of unjust enrichment. Therefore, the appellant is entitled for refund claim. In these circumstances, I direct the adjudicating authority to issue refund claim in dispute to the appellant within the 30 days of the receipt of this order with consequential, relief - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 150
  CENVAT credit - inputs - palm oil and packing material - Vanaspati was exempted from payment of duty whereas fatty acid continued to attract Central Excise Duty - Held that: - In this case till 28.02.2005, the respondent was not manufacturing exempted goods. W.e.f 01.03.2005, the vanaspati became exemption for the payment of duty therefore, from 01.03.2005, the respondent is required to maintain separate account of inputs used in manufacturing of dutiable as well as final exempted product, but the Ld. Commissioner (A) in the impugned order has observed that the cenvat credit on inputs lying in stock as contained in exempted final finished goods i.e. vanaspati lying in stock as on 01.03.2005 was not available to the respondent. The finding of the Ld. Commissioner (A) is absolutely correct. Therefore, the Id. Commissioner (A) held that the cenvat credit on the respondent cannot be denied on dutiable final product. He further observed that the respondent can avail cenvat credit on inputs contained in dutiable final product i.e. fatty acid. The said observation of the Ld. Commissioner (A) is absolutely correct and we do not find any infirmity with the same. Appeal dismissed - decided against Revenue.

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• 2016 (12) TMI 149
  Demand of duty on textile committee cess which was collected and not paid by the appellant - whether the cess collected to be included in the assessable value? - Held that: - As per amendment dated 1.1.1995, the units located in the State of Jammu and Kashmir were also liable to collect the textile committee cess, therefore, the observation of the Commissioner (Appeals) is factually incorrect. Further, we find that similar issue came up before this Tribunal in the case of Shruti Synthetics Ltd. [2004 (9) TMI 260 - CESTAT, NEW DELHI] wherein it was held that The mere fact that the respondents had collected the Textile CESS from their Customers but did not deposit with the Government does not mean that the CESS is not liable to be paid or the amount collected looses its character of the amount collected for payment of CESS. The textile committee cess collected by the appellant is not required to be included in the assessable value - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 148
  Imposition of penalty u/r 25 of Central Excise Rules, 2002 - wrong description and wrong classification of the goods sold to M/s Aster Tele Services Pvt.Ltd. - Held that: - It is seen that M/s Aster Tele Services Pvt. Ltd had accepted the liability and paid the demand, interest and penalty. Thereupon the proceedings were considered to be concluded against M/s Aster Tele Services(P)Ltd. and no show cause notice was issued to them. Therefore, J agree with the view of the authorities below and the Ld. AR that the appellant cannot be considered as a co-noticee and cannot be absolved from the liability under the first proviso to Subsection (2) of Section 11(A). However, taking into consideration that the appellant was only a dealer and that M/s Aster Tele Services Pvt.Ltd have paid the liability, I hold that penalty imposed is on the higher side and the same is reduced to Rs. 1.00 lakh - The impugned order is modified to the extent of reducing the penalty from Rs. 1,50,000/- to Rs. 1.00,000/- - appeal allowed - decided partly in favor of appellant.

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• 2016 (12) TMI 147
  Denial of CENVAT credit - bill did not contain the registration number of service provider - Rule 4A(2) of Service Tax Rules - Held that: - When it is not disputed that the duty has been paid and input services has been availed by the respondents, the fact that the invoices or the bills [did not contain full particulars cannot be considered as a ground for denial of credit. Further, the show cause notice dated 22-03-2013 is issued for the period 2009 to 2011, by invoking extended period. The Commissioner(Appeals) is seen to have imposed penalty of 50% of the amount involved. In Moser Baer India Ltd vs CCE, Noida, [2015 (1) TMI 1093 - CESTAT NEW DELHI], it was observed by the Tribunal that the basic requisite under Rule 7 of Service Tax Rules, 1994, is that the Head Office receives the invoices towards purchase of input services and pays the service tax. That credit on input services is not dependent upon actual receipt of the services in the factory unlike the credit of the duty paid on inputs which is dependant upon the actual receipts of inputs/capital goods within the factory. Tribunal in a number of cases has held that when documents are in the name of Head Office, credit can be availed in the factory belonging to the same manufacturer. Appeal dismissed - decided against Department.

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• 2016 (12) TMI 146
  CENVAT credit - The appellants received the waste paper, waste cuttings etc. from their sister units namely M/s APPM, (PSC unit) Serinarasannapalem, and M/s A.P.Paper Mills Ltd(APPM) Rajamundhry - these two sister concerns passed on excess Cenvat credit by paying Cenvat duty at higher rate of 10%, instead of paying the concessional rate of duty @ 4% and 5% as per the exemption notification - Held that: - The period involved is April, 2010 to October, 2011 and the show cause notice has been issued on 13.9.2012. It is not disputed that the appellant had paid higher rate of duty for their inputs during the relevant period. So also, there is no allegation made out in the show cause notice that the appellant had willfully suppressed or misstated, with an intention to evade payment of duty. More over, there is strength in the findings of original authority that the appellant had no malafide intention while availing the alleged excess credit - the demand raised, invoking the extended period of limitation in my view is unsustainable - The issue of limitation having been answered in favour of the respondent, I do not think it necessary to delve into the issue on merits - appeal dismissed - decided against Department.

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• 2016 (12) TMI 145
  CENVAT credit - MS beams, MS plates, flats, channels and angles etc - it is not disputed that the subject items were received in the factory of the appellant. The main contention of the Department is that the appellant has not established the purpose for which the subject items have been used. - Held that: - On perusal of the records, it is seen that the appellant has used the subject items for making moulds, erection of overhead crane, tracks for movement of goods, etc. The Department does not have the case that the subject items were used for laying foundation or construction of shed. The issue whether the subject items can be used for fabrication/manufacture of capital goods/parts/accessories is settled in the case of CCE, Jaipur Vs, Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA] where applying the user test, it was held that steel plates and MS channels used for fabrication of capital goods also under the ambit of definition of capita! goods. The appellant is eligible for the credit - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 144
  Valuation - the assessee was separating the elements of manufacture cost and transportation cost for calculating Excise duty and duty element was calculated on only for manufacture cost which appeared to be not correct - Held that: - it becomes evident that, only after the goods are inspected and passed by Railways can the goods be in fact dispatched out of appellant's factory. Once such inspection is completed only the "'last date of delivery"' is specified. Again, once such inspection is completed at appellants factory, there is no further inspection at the time of delivery, only condition being that IPSs should be received in "good and acceptable condition" at consignees end, after which balance 90% of the payment/reimbursement will be effected. Thus the road transport to consignee's stores is merely for the sake of convenience and a standard requirement in the Railway Tender/contract, and in any case the transportation charges are reimbursed by Railways to the appellant. In such a situation it is fallacious to hold that the place of removal has been shifted from factory gate to place of delivery. The place of removal is 'the factory gate of the appellant, and cost of transport charges and transit insurance cannot be included in the assessable value - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 143
  Rejection of refund claim - lack of evidence - Notification No 17/2009 dated 07.07.2009 - period from 13.12.2009 to 30.12.2010 - principles of natural justice - Held that: - I find that the Order-in-Original is passed violating the principles of natural justice without according the appellants any opportunity to present their case. In view of the above, I remand the matter to the adjudicating authority for de-novo adjudication, directing him to accord reasonable opportunity to the appellant allowing them to raise all issues - appeal allowed by way of remand.

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• 2016 (12) TMI 142
  Deemed credit - Notification No. 29/96-CE - fabric is processed or not - whether central excise duty is payable on an additional charge received by main appellants when appellant was paying excise duty on the processed goods on the basis of selling price of merchant manufacturer? - Held that: - The claim of the Revenue that main appellant has erred in availing the benefit of deemed credit under Notification No. 29/96 is without any merits - mere washing of grey fabrics before being delivered to the main appellant for further processing will not amount to a process carried out on the fabric and the said fabrics cannot be called as processed fabrics. In view of this, we hold that appellant is eligible to avail the benefit of Notification No. 29/96. As regards the issue of valuation, we note that that is no dispute as to the fact that the main appellant had discharged the Central Excise duty on the processed fabrics based upon the value at which the merchant manufacturer sells the goods in the market. We also perused the price list filed by the appellants, countersigned by the merchant manufacturer and also the declarations filed by the merchant manufacturer before the lower authorities wherein it is categorically declared that the prices at which the said processed fabrics are sold in the market, the job worker has to discharge the Central Excise duty. Factually, this position is undisputed by the lower authorities. Since the Central Excise duty payable on the processed fabrics is paid on the value at which the said fabrics are sold by merchant exporter, the question of main appellant getting additional amounts/charges are of no consequence as even if these are included, they may not exceed the value as declared by the merchant manufacturer as it is a common knowledge that sale price will undoubtedly, include all the expenses incurred by merchant manufacturer for manufacturing of the processed fabrics. Appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 141
  Whether refund claim can be granted beyond limitation when there is no protest on record? - Held that: - It is seen that the adjudicating authority had sanctioned the refund claim of the appellants from June 1999 to March 2000 Admittedly, the appellants had paid duty on galleries from June 1999 to February 2000 under protest. However, they had not mentioned “under protest” on the TR-6 Challan for the month of March 2000. As such, there was no protest on record for the month of March 2000. The Commissioner (Appeals) has therefore rightly rejected the claim for the month of March 2000 amounting to Rs. 65,000/- as time barred. - the order of Commissioner (Appeals) is legal and proper - appeal rejected - decided in favor of Revenue.

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• 2016 (12) TMI 140
  Demand - failure to pay duty on exempted product i.e. pressmud, while availing CENVAT credit on inputs to be utilised for discharging duty liability on sugar and molasses - Held that: - in Sharad SSK Ltd v. Commissioner of Central Excise, Kolhapur [2012 (8) TMI 922 - CESTAT MUMBAI], the Tribunal held that bagasse, pressmud and bio-compost generated during the manufacture of sugar are by-product and waste which are not liable to be treated as excisable goods. Though appeal of Revenue against this decision led to framing of substantial question of law on the inclusion of bagasse, press mud, etc among exempt goods after the amendment to section 2(d) of Central Excise Act, 1944 by the Hon’ble High Court of Bombay, attention was drawn to the decision of the Hon’ble Supreme Court in Union of India v. DSCL Ltd [2015 (10) TMI 566 - SUPREME COURT] which dealt with bagasse as a waste product of sugar industry after the amendment in section 2(d) of Central Excise Act, 1944 with effect from 10th May 2008. Respectfully following the decision of the Hon’ble Supreme Court which is equally applicable to ‘pressmud’, the appeal is allowed.

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• CST, VAT & Sales Tax

• 2016 (12) TMI 132
  Cancellation of the registration certificate - TNVAT Act, 2006 - belated filing of returns - principles of natural justice - Held that: - it is seen that the impugned order of cancellation has been passed in violation of the principles of natural justice without taking into consideration the objections dated 21.10.2016 to the show cause notice dated 20.10.2016. Further in the show cause notice, the petitioner was granted 15 days' time to give their objections and the objections given by the petitioner are well within the 15 days' time. Therefore, it is not known as to how the respondent could have passed a cancellation order on the very same day - the date on which the show case notice was issued i.e 20.10.2016. Further, there is no plausible explanation as to why the official has signed the order only on 15.11.2016. In any event, the reason for cancellation of the petitioner's registration is for non filing of the returns for the months of July, August and September 2016 and this defect does not exist any longer, since the petitioner filed the returns and paid taxes and the copies in proof of the same have been filed in the typed set of papers. For all the above reasons, the impugned order is held to be illegal. Registration restored to petitioner - appeal allowed - decided in favor of petitioner-assessee.

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• 2016 (12) TMI 131
  Validity of order of assessment - TNVAT Act, 2006 - petitioner was not given sufficient time to respond to the pre-assessment notice, as only three days was granted - principles of natural justice - Held that: - this Court is of the view that sufficient time should have been granted to the dealer to produce the documents and contest the proposal. According three days time, in the considered opinion of this Court, is inadequate and hence for that reason, this Court is inclined to interfere with the impugned order in respect of the above heads, as well as the consequential penalty which has been levied in the impugned order - Writ Petition is partly allowed, the impugned order in so far as it pertain to Sl.Nos. (1),(4) (5) & (6) viz. Reversal of ITC due, Tax Due on Sales return, Interest, tax Due on Sales suppression and penalty under section 27(3) and 27(4) of the Act are set aside and the matter is remanded to the respondent for fresh consideration and the petitioner is granted fifteen days time from the date of receipt of a copy of this order to submit relevant documents and on receipt of the documents and objections, the respondent shall afford an opportunity of personal hearing and redo the assessment in accordance with law. Petition allowed by way of remand.

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• 2016 (12) TMI 130
  Revision of assessment - principles pf natural justice - Held that: - Firstly, the respondent should have dealt with the petitioner's representation, dated 22.04.2013. In the representation, apart from the fact that the petitioner has given certain explanation and requested time for production of the declaration forms. Apart from that specifically, they sought for personal hearing. The Hon'ble Division Bench of this Court in several decisions has held that when a request is made by the dealer for grant of opportunity of personal hearing, it should be granted. Therefore, whether it is a revision of assessment under Section 22(4) or 27(4), when there is a request made by the dealer for personal hearing, the Assessing Officer should grant the same. The reason being that it will facilitate in the Assessment Proceedings and ensure that correct rate of taxes are recovered by the Department. This having not been is sufficient to hold that the impugned orders are in violation of the principles of natural justice. With regard to furnishing of "C" Forms and "F" Forms and other declaration forms, time and again, this Court has held that these forms are produced by the dealers only to avail the concessional rate of tax and there may be various reasons as to why the dealer cannot produce the forms within a time frame and the dealer should not be prevented from producing the form as and when they are able to secure the same, as it has to be furnished by the other end dealer. The impugned orders are in violation of principles of natural justice. Accordingly, these Writ Petitions are allowed and the impugned orders are set-aside and the matters are remanded to the respondent for fresh consideration with a direction to the respondent to accept "C" Forms and "F" Forms and other declarations, which are available with the petitioner and it should be produced by the petitioner within a period of four weeks.

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• 2016 (12) TMI 129
  Principles of natural justice - Held that: - In the impugned assessment order, the respondent has stated that the reply given by the dealer is routine and general in nature and does not reflect the branch-wise and day-wise details and that the sales reported can be verified with the Bill Tallying System to ascertain the correctness. If such was the opinion of the respondent, then it is all the more a valid reason for the respondent to have called upon the petitioner for personal appearance and directed them to produce all the details, more particularly the Bill Tallying System. However, this has not been done. Therefore, the impugned order has to be held to be in violation of principles of natural justice. Matter is remanded to the respondent for fresh consideration, who shall afford an opportunity of personal hearing to the petitioner, produce all records and if necessary call for records, including Bill Tallying System and after making a thorough verification, consider the objections raised by the petitioner and thereafter redo the assessment - appeal allowed by way of remand.

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• 2016 (12) TMI 128
  Levy of penalty u/Sec.78(10A) of the Act - inter stste transport of goods - failure to produce any documents - Held that: - the Driver was carrying all necessary papers, invoices and no tax was due makes out a case that the vehicle was carrying the goods along with requisite documents without intention to avoid or evade tax. That being so, the discretion vested in the assessing authority was not liable to be exercised even if there was technical violation of sub-sec. 10-A to impose the penalty equal to 50% of the value of the goods, though as noticed by us no case of violation of sub-sec. (10-A) was spelt out in notice under Sec. 78. Thus, penalty came to be imposed without affording opportunity to the driver to defend himself. The levy of penalty thus being in breach of requirements of sub-sec. (10-A) and in breach of principles of natural justice, could not have been sustained. Penalty u/s 78 (10A) of the Act not levied - petition dismissed - decided against Revenue.

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• 2016 (12) TMI 127
  Levy of turnover tax - high sea sales - the main grievance of the petitioner is that he was not afforded personal hearing before passing the impugned order inspite of his request insofar as relating to the the disallowance of exemption on high sea sales turnover of Rs. 7,18,29,120/- - Held that: - since the Department is safeguarded by the attachment made in the bank account, I am inclined to set aside the impugned order dated 13.7.2016 insofar as it relates to the disallowance of exemption on high sea sales turnover of Rs. 7,18,29,120/-, and remit the matter back to the authority concerned for affording an opportunity of personal hearing to the petitioner in respect of disallowance of exemption on high sea sales turnover of Rs. 7,18,29,120/-, and to proceed in accordance with law, within a period of 8 weeks from the date of receipt of a copy of this order - petition allowed - decided in favor of petitioner.

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• Indian Laws

• 2016 (12) TMI 124
  Indian Made Foreign liquor - contraband item - seizure - the prosecution had failed to establish the ownership of the building by A2 and there was no scientific evidence to establish that the seized item are Indian Made Foreign liquor, an intoxicating item. Thus, the learned Magistrate acquitted them - whether the prosecution has established offences under Sections 31 (a) and 33 of the Pondicherry Excise (Amendment Act), 1989 as against A1 beyond all reasonable doubts - Whether the finding of the trial Court, suffers from any legal perversity? Held that: - close reading of Sections 31 (a) and 33 of Pondicherry Excise (Amendment Act), 1989 shows that the offences prescribed therein requires certain basic elements viz., the person should be in possession, transportation etc., of an intoxicating item, without any authority, licence, order of the Pondicherry Government. Thus, only on establishing all these elements, the offences stated above would be made out. In this case, P.W.1 has been examined to speak about seizure of the contraband. P.W.'s 2 and 3 are seizure Mahazar witnesses. They have not supported the prosecution. P.W.6, admitted in the cross examination that no record has been seized to establish that the premises in question belongs to the accused. On the contrary, the defense side contended that it belongs to one Achutan and to probabilise their defence, the accused also examined then Municipal Commissioner as D.W.1. In such circumstances, the trial Court has rightly concluded that the prosecution had failed to prove that the premises belong to the accused - One of the main ingredient of Sections 31 (a) and 33 of Pondicherry Excise (Amendment Act), 1989 is that the prosecution should establish that the contraband seized is an intoxicating item. P.W.6 admits that the seized liquor bottles were not sent to clinical lab. However, an attempt has been made by the prosecution stating that the analysis report is available but not marked, which is not satisfactory - In the light of the above, the trial Court has rightly held that the prosecution has not established its case beyond all reasonable doubts - appeal dismissed.

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