TMI Tax Updates - e-Newsletter
December 5, 2017

Case Laws in this Newsletter:

GST Income Tax Customs Service Tax Central Excise Indian Laws

TMI SMS

• GST - The issue of misclassification and under valuation has to be gone into by the respective AO and not by the detaining officer - HC

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• TDS on payments made to subcontractors / JV partners - there is no subcontract relationship existed between JV partners - No TDS liability

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• Refund of cenvat credit u/Rule 5B cannot be allowed - service provider and person liable to pay under reverse charge are not equal - Tri

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Articles

1. Anti-Profiteering provisions – How far desirable? Anti-Profiteering provisions – How far desirable? Anti-profiteering provisions under GST-How far desirable

   By: Srinivasan Krishnamachari

2. Amendments made to the GST law based on 23rd GST Council Meeting

3. Refund procedure initiated under GST

News

1. First meeting of 15th finance panel takes off

2. Government of India and the Government of the Federal Republic of Germany Sign Government to Government Umbrella Agreement and other agreements

3. First Meeting of the Fifteenth Finance Commission held today under the Chairmanship of Shri N.K.Singh; To hold wide-ranging consultations with all stake holders including various Ministries of the Union Government, all State Governments, Local Bodies, Panchayats and Political parties of each State Government.

Notifications

GST - States

1. 30289-FIN-CT1-TAX-0043/2017-S.R.O. No. 503/2017 - dated 18-10-2017 - Orissa SGST

Notification on the evidences which are required to be produced by the supplier of deemed export supplies for claiming refund under OGST Act, 2017.

2. 30285-FIN-CT1-TAX-0043/2017-S.R.O. No. 502/2017 - dated 18-10-2017 - Orissa SGST

Notification specifying certain supplies as deemed exports under Section 147 of the OGST Act, 2017.

3. 30281-FIN-CT1-TAX-0034/2017-S.R.O. No. 501/2017 - dated 18-10-2017 - Orissa SGST

The Odisha Goods and Services Tax (Eighth Amendment) Rules, 2017.

4. 29807-FIN-CT1-TAX-0043/2017-S.R.O. No. 481/2017 - dated 13-10-2017 - Orissa SGST

Payemnt of tax at the time of issuance of invoice by small taxpayers on the outward supply of Goods whose aggregate turnover did not exceed one crore fifty lakh rupees in the preceding Financial year.

5. 29803-FIN-CT1-TAX-0043/2017-S.R.O. No. 480/2017 - dated 13-10-2017 - Orissa SGST

Amendment of Notification No.27473-FIN-CT1-TAX-0043/2017 dated 16th September, 2017 bearing SRO. No. 403/2017 specifying casual taxable persons making taxable supplies of handicraft goods such as Textile handloom products, Handmade shawls, stoles and scarves etc. to be exempted from obtaining registration under the OGST Act on certain conditions.

6. 29799-FIN-CT1-TAX-0043/2017-S.R.O. No. 479/2017 - dated 13-10-2017 - Orissa SGST

Amendment of Notification No. 19857-FIN-CT1-TAX-0043/2017 dated 29th June, 2017 bearing SRO No. 302/2017 omitting provision under Paragraph 1.

7. 29795–FIN-CT1-TAX-0043/2017-S.R.O. No. 478/2017 - dated 13-10-2017 - Orissa SGST

Notification on Cross-empowerment for refund under OGST Act, 2017.

8. 29787–FIN-CT1-TAX-0043/2017-S.R.O. No. 477/2017 - dated 13-10-2017 - Orissa SGST

Amendment of Notification No. 19877-FIN-CT1-TAX-0022/2017 dated 29th June, 2017 bearing SRO No. 307/2017 regarding payment of State Tax to be paid on reverse charge basis by the recipient on supply of services by the members of Overseeing Committee to Reserve Bank of India..

9. 29783–FIN-CT1-TAX-0043/2017-S.R.O. No. 476/2017 - dated 13-10-2017 - Orissa SGST

Amendment of Notification No. 19873-FIN-CT1-TAX-0022/2017 dated 29th June, 2017 bearing SRO No. 306/2017 regarding exemption of Supply of certain services by a Government Entity to Central Government, State Government, UT, Local Authority.

10. 29779–FIN-CT1-TAX-0043/2017-S.R.O. No. 475/2017 - dated 13-10-2017 - Orissa SGST

A Notification Amending further the Notification No.19869-FIN-CT1-TAX-0022/2017 dated 29th June, 2017 bearing SRO No.305/2017 specifying rates of State Tax on the intra-state supply of services.

11. 29775–FIN-CT1-TAX-0043/2017-S.R.O. No. 474/2017 - dated 13-10-2017 - Orissa SGST

A new notification for prescribing GST rate of 65% of the applicable GST rate for supply of motor vehicles [in certain cases].

12. 29771–FIN-CT1-TAX-0043/2017-S.R.O. No. 473/2017 - dated 13-10-2017 - Orissa SGST

Draft amending the Notification No. 19821-FIN-CT1-TAX-0022/2017 dated 29th June, 2017 bearing SRO No. 313/2017 for increasing the turnover limits eligible dealers for composition levy.

13. 29767–FIN-CT1-TAX-0043/2017-S.R.O. No. 472/2017 - dated 13-10-2017 - Orissa SGST

Amendment of Notification No. 19841-FIN-CT1-TAX-0022/2017 dated 29th June, 2017 bearing SRO No. 298/2017 regarding payment of State Tax on reverse charge basis by the recipient of goods like used vehicles, seized and confiscated goods, old and used goods, waste and scrap supplied by the State/Central Govt./UT/Local authority.

14. 29763–FIN-CT1-TAX-0043/2017-S.R.O. No. 471/2017 - dated 13-10-2017 - Orissa SGST

Amendment of Notification No.19833-FIN-CT1-TAX-0022/2017 dated 29th June, 2017 bearing SRO No.296/2017 regarding exemption of “Duty Credit Scrips” and supply of goods by a Government entity to Central Government, State Government, UT. Local Authority.

15. 29759–FIN-CT1-TAX-0043/2017/-S.R.O. No. 470/2017 - dated 13-10-2017 - Orissa SGST

Amendment of Notification No. 18929-FIN-CT1-TAX-0022/2017 dated 29th June, 2017 bearing SRO No. 295/2017 specifying rates of State Tax on certain goods like Mangoes sliced, dried etc.

Indian Laws

16. F. No.10(1)-B(S)/2016 - S.O. 3802(E) - dated 4-12-2017 - Indian Law

Corrigendum – Notification Number S.O.3755(E), dated the 27th November, 2017.

Circulars / Instructions / Orders

Income Tax

1. [F. No. 225/270/2017/ITA-II] - dated 31-10-2017

Order under section 119 of the Income-tax Act, 1961 : Due date for filing return as well as various reports of audit extended to November 7, 2017

2. F. No. DIT(R)/BIFR/2017-18 - dated 28-9-2017

Lodging of tax arrear claims in respect of Corporate cases filed under IBC 2016 before NCLTs

3. F. No. 225/231/2017-ITA-II - dated 27-9-2017

The taxation and investment regime for Pradhana Mantri Garib Kalyan Yojana 2016—representations under the Scheme pertaining to challan corrections and conversion, etc.—reg.

GST - States

4. S.R.O. No. 482/2017-01/2017-State Tax - dated 13-10-2017

THE ODISHA GOODS AND SERVICES TAX (REMOVAL OF DIFFICULTIES) ORDER, 2017

Highlights / Catch Notes

GST

• Court Rules GST Detaining Officers Shouldn't Address Misclassification; Goods Released on Simple Bond.

  Case-Laws - HC : Detention of goods under GST - inter-state or intra-state supply - The issue of misclassification and under valuation has to be gone into by the respective assessing officers and not by the detaining officer - allowed to be released on simple bond - HC
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Income Tax

• Interest Income from Fixed Deposits Treated as Capital, Can Offset Pre-Commencement Expenses for Year.

  Case-Laws - AT : Taxability of interest income - The interest income earned by assessee by depositing the share capital in Fixed Deposits under constraint are eligible to treat the income as capital in nature and allowed to set off against the precommencement expenses during the year. - AT
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• 7-Year Limit for Section 201(1) Proceedings Applies Only Post-2014; No Retroactive Effect for Prior Cases.

  Case-Laws - AT : Time limit for initiation of proceedings u/s 201(1) - treating the assessee “as assessee in default” - failure to deduct TDS - The period of 7 years has been brought in by the Finance Act, 2014 w.e.f. 1.10.2014 and therefore, cannot be applied to the case on hand as any amendment to the detriment of an assessee cannot be applied retrospectively. - AT
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• Court Emphasizes Assessee's Burden to Prove Genuineness in Bogus Transactions; Mere Book Entries Not Enough.

  Case-Laws - AT : Bogus sale purchase transactions - providing accommodation entries - Though it is not the case of reopening but assessment, hence the higher burden lies on the assessee to prove genuineness of purchase and sales - merely because the purchases and sales have been shown in the books of accounts when they are shrouded with the non-genuineness does not help the assessee. - AT
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• High Court Upholds ITAT's Decision: Books Rejected, Net Profit Rate Capped at 5.5% of Contract Receipts for Consistency.

  Case-Laws - HC : Rejection of books of accounts - G.P. estimation - ITAT restricted the net profit rate at 5.5% of contract receipts on the ground of consistency - order of ITAT sustained - HC
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• No TDS Liability for JV Payments u/s 194C as No Subcontractor Relationship Exists Among JV Partners.

  Case-Laws - AT : TDS u/s 194C - non deduction of tds on payments made to subcontractors - members of JV decided to form a JV only to secure the orders and execution of the orders will be done by one of the constituents of the JV - Thus there is no subcontract relationship existed between JV partners - No TDS liability - AT
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• Cementing services under contracts not classified as technical fees; Section 44BB applies, not Section 44DA, per IT Act.

  Case-Laws - AT : Consideration for the services under the contracts for provision of cementing services fall under the exclusion and doesn’t qualify as fees for technical services as per explanation to section 9(1)(vii) and in any case, the provisions of section 44BB being more specific, shall be applicable and provisions of section 44DA are not applicable in the instant case. - AT
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• Amendment to Section 40(a)(ia) on TDS for NBFCs is Retrospective: Impacts Past Interest Payment Deductions.

  Case-Laws - AT : Addition on account of non deduction of TDS from interest paid to NBFCs - disallowance u/s 40(a)(ia) - amendment brought by Finance Act 2012 in section 40(1)(ia) and 201(1) is declaratory and curative and therefore, such an amendment shall have retrospective effect from 1.4.2005. - AT
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Customs

• Assessees can contest assessed bill of entry even after paying enhanced duty for urgent goods clearance.

  Case-Laws - AT : Payment of duty at the enhanced value and clearance of the goods in urgency cannot preclude the assessee from challenging the assessed bill of entry on the sole ground that goods stand cleared at the enhanced value. - AT
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• Metal Rims in Shipment Classified as Waste and Scrap, Not Usable Vehicle Parts, Affecting Import Status.

  Case-Laws - AT : Classification of imported goods - whether the metal rims found in the two containers of the total consignment are required to be considered as waste and scrap or the same have to be held as metallic rims usable in the motor-vehicles? - Held as waste and scrap - AT
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Service Tax

• Service Providers Must Use Clear Documents to Determine Taxable Value u/s 67 of the Finance Act.

  Case-Laws - AT : The taxable value in terms of Section 67 of the Finance Act has to be arrived at based on clear documentary evidence. No doubt, such documentary evidences are to be submitted by the appellants as a provider of service. They are obliged by law to provide such data. - AT
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• Clearing and forwarding services post-manufacture, not covered under Drawback Rule 12(1)(a)(ii) at export ports.

  Case-Laws - AT : Refund - As the services in question, namely, clearing and forwarding agent service and custom house agent service are used at the port of export and after the goods have been manufactured, the provisions of Drawback Rule 12(1)(a)(ii) are clearly not applicable to these services. - AT
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Central Excise

• Debate on Rule 6(3) CENVAT Credit Rules: Should it apply to waste or by-products? Legislative intent questioned.

  Case-Laws - AT : CENVAT credit - waste - If rule 6(3) is made applicable in these goods this clarification will stand redundant. If legislator has intention even to apply Rule 6(3) on waste or by-product, refuse then either this para should have been amended or omitted. - AT
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• Dispute Over CENVAT Credit Refund: Appellant Claims Partial Service Tax Payment Makes Them a Service Provider u/s 68(2).

  Case-Laws - AT : Refund claim of cenvat credit of service tax paid under reverse charge - The appellant s claim is that by virtue of Section 68 (2), since liability to pay partial service tax has been imposed on them they become service provider is misplaced - The Act differentiates between the service provider and person liable to pay service tax under different circumstances - Rule 5B has no application in this case - AT
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• Advertisement Expenses Not Additional Consideration for Appellant; 50% Borne by Distributors Under Central Excise Law.

  Case-Laws - AT : Valuation - includibility - advertisement expenses - the 50% is borne by the dealers/distributors which is the expenses of the dealers/distributors and the appellant is nothing to do with that portion of the 50% - Amount of such advertisement is not flowing to the appellant as an additional consideration. - demand set aside - AT
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Case Laws:

• GST

• 2017 (12) TMI 202
  Release of detained goods - Jurisdiction of detaining authority - mis-declaration as well as mis-classification of goods - inter-state or intra-state supply - Held that: - the specific power invoked in issuing the impugned notice is under the CGST/SGST which is applicable only to the intra-state movement of goods. Admittedly the petitioner has consigned the goods from Tamil Nadu and was transporting it to the 3rd respondent at Pattambi - The issue of misclassification and under valuation has to be gone into by the respective assessing officers and not by the detaining officer. In such circumstances, this Court is not inclined to permit the further detention of the goods. The petitioners shall be permitted release of the goods on the execution of simple bond without sureties as expeditiously as possible - petition allowed - decided in favor of petitioner.

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• Income Tax

• 2017 (12) TMI 201
  Rejection of books of accounts - G.P. estimation - ITAT restricted the net profit rate at 5.5% of contract receipts on the ground of consistency - Held that:- ITAT [2016 (4) TMI 335 - ITAT JAIPUR] is justified in law in restricting net profit rate at 5.5% of contract receipts - Issue is answered in favour of the assessee and against the department.

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• 2017 (12) TMI 200
  Penalty u/s 271(1)(c) - non-specification of the accusation in the notice issued u/s 274 - Held that:- It is not in dispute that in the assessment order it was not specified as to whether the penalty proceedings were intended to be initiated on a single count i.e., for ‘furnishing of inaccurate particulars of income’ or ‘concealment of income’, or for ‘both’. As submitted by the Ld Counsel for the assessee, the notice, which is placed in the paper book, is a standard format signed by the Assessing Officer and forwarded to the assessee which does not indicate as to the reason for initiation of penalty proceedings. No doubt the chronology of events, preceding the process of initiation of penalty proceedings, clearly indicate that the proceedings are meant for levy of penalty on both counts, in which event it may not be necessary to strike off the word “or”, but the fact remains that it was not specified through penalty notice. Thus notice issued by the Assessing Officer has to be determined as a notice issued in violation of principles of natural justice and consequently penalty levied on the strength of such notice deserves to be quashed. - Decided in favour of assessee.

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• 2017 (12) TMI 199
  Unexplained investment in stock - difference in the stock statement submitted to the bank as compared to the stock statement furnished to the AO during the course of assessment proceedings - Held that:- We find that before the ld. CIT(A) as well as before the Assessing Officer, assessee has duly explained that difference amount of Rs. 5,10,30,357/-, which has been added by the Assessing Officer, was firstly, on account of plant and secondly, advance to the suppliers shown at Rs. 1,45,64,347/- reflected in Schedule XI of the balance sheet. Thus, there is no such difference apparently in the value of closing stock. It is also an admitted fact that there is no difference in the quantum and in the actual value of the closing stock as appearing in the books of account and there is no cash element on such difference because the amount aggregating to Rs. 5,10,30,357/- is on account of payment given to the suppliers for purchase/expenses incurred through account payee cheques from the bank account and such payments have been shown as amount recoverable and no expenses including purchase have been debited to the profit genuineness and creditworthiness. Simply because Directors or the authorized persons from the said company could not be produced, no adverse inference could have been drawn. Looking to the entire fats and circumstances of the case and on the basis of the plea taken by the ld. counsel for the assessee and in the interest of substantial justice, we feel that the issue of share application money of Rs. 90 lakhs should be set aside to the file of the Assessing Officer and assessee will try to produce the concerned from the said entities to confirm the said transaction. Addition on basis of documents found in search - Held that:- A document was seized from the premises of the assessee which mentioned sale transaction of land which reflected that property was registered for a consideration of Rs. 21.25 lakhs and other expenses like stamp duty of Rs. 1,64,300/-. In the said seized document, there is a figure of “62” which has been read as Rs. 62 lakhs which has been presumed to be made in cash. We at the outset agree that the presumption is raised against the assessee in terms of section 132(4A) and 292C that documents belongs to the assessee and onus is upon the assessee to rebut such presumption, however such a presumption is a rebuttal presumption which assessee has to explain with cogent evidence that it belongs to someone else, but here assessee has only denied the transaction without rebutting it by way of proper evidence. However, in the interest of justice, we are of the opinion that, since no proper opportunity was given by the Assessing Officer, therefore, the matter should be remanded back to the file of the Assessing Officer to examine this issue afresh

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• 2017 (12) TMI 198
  TPO - comparable selection - Held that:- Companies functionally dissimilar with that of assessee providing software development service need to be added to final list of comparable.

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• 2017 (12) TMI 197
  Rate of interest for the purpose of computation of arm’s length price - determination of arms' length rate of interest - Held that:- In the case in hand before us, the invoices have been raised in Australian Dollars and US Dollars and these amounts are receivables to the assessee, therefore, the receivables are payable to the assessee in respective currencies. Thus, following the finding of the Hon’ble Delhi High Court in the case of Cotton Naturals (I) (P) Ltd. (2015 (3) TMI 1031 - DELHI HIGH COURT ), we direct the AO/TPO to compute the interest rate applying the LIBOR rate prevalent during the relevant period in case of Australian Dollar/US Dollar plus suitable basis point keeping in view the credit score of the AEs. Accordingly, we restore the issue of computation of arm’s length price of the international transaction of the receivables in the case of the assessee in view of the above directions. The assessee shall be afforded adequate opportunity of being heard. The ground of the appeal is accordingly allowed partly for statistical purposes.

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• 2017 (12) TMI 196
  TPA - comparable selection criteria - Held that:- Assessee is engaged in providing business support services, thus companies functionally dissimilar with that of assessee need to be deselected from final list.

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• 2017 (12) TMI 195
  Undisclosed income - bogus sale purchase transactions - providing accommodation entries - Held that:- In the present case the sales recorded by the assessee has been shown in the disguised manner as regular income of the assessee whereas it is not so, because the assessee has failed to prove the purchases of the goods. On looking at the whole transaction, it is apparent that assessee is showing sales to some parties to suit their convenience without recovering money from them and in fact they are showing the amount due to assessee company as loans and advances. Therefore, it amounts to providing an accommodation entry to those parties as loans and advances in the guise of purchases booked by them. Though it is not the case of reopening but assessment, hence the higher burden lies on the assessee to prove genuineness of purchase and sales - merely because the purchases and sales have been shown in the books of accounts when they are shrouded with the non-genuineness does not help the assessee. It is a revelation that company without having any substances has got the outstanding credit of Rs. 35 crores for purchases. As a final fact finding authority we cannot close our eyes to the startling facts reveled before us. The ld AR has objected to the report of the ld AO placed before us wherein the transactions of the assessee were detailed for last three years. We do not hesitate to reject the objection of the assessee. In fact the report of the Ld AO has demonstrated the modus operandi of the assessee company prevailing for consecutive three years. Matter remanded back to AO - the ld. AO may examine the whole trail of these transactions of purchase and sales and find out the real beneficiaries of all these unusual transactions of purchase and sales entered by assessee without flow of consideration. Appeal of the revenue is allowed for statistical purposes.

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• 2017 (12) TMI 194
  Depreciation on assets as taken into account for application for the purpose of Section 11(1)(a) - double deduction - The first issue regarding allowability of depreciation on the assets which was considered as application of income in the earlier year, this issue is covered in favour of the assessee by the Tribunal order rendered in the case of DDIT(E) Vs. Karnataka Jesuit Educational Society (2016 (9) TMI 1046 - ITAT BANGALORE ) in which the Tribunal has followed the judgment of Hon'ble Karnataka High Court rendered in the case of DIT Vs. Al-Ameen Charitable Fund Trust (2016 (3) TMI 462 - KARNATAKA HIGH COURT) and several other Tribunal orders and hence, respectfully following these judicial pronouncements, we decide this issue in favour of the assessee and accordingly, the ground raised by the revenue in this regard is rejected. Carry forward of deficit - Held that:- We find that this issue is also covered in favour of the assessee by the Tribunal order rendered in the case of Jyothi Seva Society of Bangalore Vs. ADIT(E)(2015 (11) TMI 1270 - ITAT BANGALORE) wherein held The concept of application of the income for the year in which the income has arisen is not found in Section 11(1)(a) of the Act. No limitation to the above effect is found in the language of the section. It merely requires application of the income that has arisen from the property held under trust. In this view of the matter, the principles relating to set off of losses, etc. is not of any relevance and therefore any excess application of income during the year can be regarded as application of the income of future years and can be adjusted. Therefore, in our view, the claim of the assessee for carry forward of excess application is in accordance with the judicial precedents on the issue and the same is allowable.

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• 2017 (12) TMI 193
  Time limit for initiation of proceedings u/s 201(1) - treating the assessee “as assessee in default” - failure to deduct TDS - Held that:- Financial year before us is 2007-08 i.e. commencing on 1.4.2007 relevant to the A.Y 2008- 09. The payment has been made to Shri Ramoji Rao (HUF) by the assessee on 28.02.008 falling within the financial year 2007-08 which ends on 31.3.2008. Therefore, as per the proviso to section 201(3), an order treating the assessee “as an assessee in default” has to be passed before 31st day of March, 2011. In the instant case, the show-cause notice for treating the assessee “as assessee in default” has been issued only on 15.12.2014 i.e. beyond 31.3.2011 and even beyond the period of 6 years even if the provision as amended by the Finance Act 2012 is taken into consideration. The period of 7 years has been brought in by the Finance Act, 2014 w.e.f. 1.10.2014 and therefore, cannot be applied to the case on hand as any amendment to the detriment of an assessee cannot be applied retrospectively. Therefore, in view of the proviso to sub-section 3 of section 201(1), which was in force till 1.10.2014, we are of the opinion that the order of the AO treating the assessee as “an assessee in default” is clearly barred by limitation and ground of appeal No.2 is allowed. Charging of interest u/s 201(1A) - Held that:- The Hon'ble Supreme Court in the case of Hindustan Coco Cola Beverages Ltd (2007 (8) TMI 12 - SUPREME COURT OF INDIA ) has clearly held that the interest u/s 201(1A) is compensatory in nature and that even if the payee has paid the tax on the receipt, the payer is liable to pay interest u/s 201(1A) of the Act from the date of deductibility to the date of payment of tax by the payee. It is therefore, held that the assessee is liable to pay the interest u/s 201(1A) of the Act TDS on non-compete fee - Held that:- Except for an oral statement in the grounds of appeal, the assessee has not been able to produce any evidence in support of such a contention. In fact, the AO has clearly brought out on record that the recipient Shri Ramoji Rao (HUF) has taxable income, and that after taking into consideration the noncompete fee received by him, the assessee has been assessed to tax at Rs. 108,47,26,715. The learned Counsel for the assessee has not been able to rebut this finding of the AO except to state that the TDS was required to be effected on non-compete fee which is taxable as business income and in view of the carry forward business loss, nothing remains to be taxed. Therefore, we are not convinced with the argument of the assessee that the assessee under had a reasonable cause to deduct the tax at source. Penalty u/s 271C - non-deduction of tax at source u/s 194J - Held that:- The requirement to make the payment and the genuineness of the payment of non-compete fee by the assessee to Shri Ramoji Rao (HUF) has been adjudicated by the Tribunal in the assessee’s own case for A.Y 2008-09 and the contention of the assessee that the non-compete fee is the business expenditure of the assessee has been upheld. The assessee has always contended that it is its business expenditure and therefore, it was required to deduct the tax at source u/s 194J of the Act. For failure to deduct the tax inspite of being liable to do so, the penalty u/s 271C is clearly leviable.

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• 2017 (12) TMI 192
  Interest income earned by depositing the share capital money against the interest expenses - nature of income - capital gain or income from other sources - Held that:- The interest income earned by assessee by depositing the share capital in Fixed Deposits under constraint are eligible to treat the income as capital in nature and allowed to set off against the precommencement expenses during the year. Accordingly, grounds raised by the assessee are allowed.

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• 2017 (12) TMI 191
  Disallowance of employee’s contribution to ESI after the due date prescribed in the statute u/s 36(1)(va) - Held that:- The assessee has remitted the employee’s contribution to the Govt. A/c within the prescribed due dates, except for one day delay, with respect to a sum of Rs. 1,24,657. Clause (va) of section 36(1), clearly lays down that the deduction of employees contribution received by the assessee shall be allowed only, if such sum is credited by the assessee to the employee’s a/c in the relevant fund or funds on or before the due date, and for the purpose of this clause, “due date” means, the date by the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund. Therefore, in the strict sense, the sum which has not been credited to the employee’s a/c in the relevant fund is to be disallowed. However, we find that the assessee has all along been remitting the amount before the due date except for the delay of one day with regard to the sum of Rs. 1,24,657. As the delay is not inordinate, we are inclined to delete the disallowance and the consequent addition made to the returned income of the assessee. Benefit of credit of tax so paid - Held that:- DRP has directed the AO to verify the claim of the assessee with reference to the dividend distribution tax of Rs. 2,08,89,625 paid by the assessee as disclosed in the ROI and to refund the tax of Rs. 4,85,806 claimed by the assessee in accordance with law, but the AO, while giving effect to the order of the DRP, has failed to give the said credit. We, therefore, direct the AO to verify the claim of the assessee and allow the benefit of credit of tax so paid and process the refund accordingly.

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• 2017 (12) TMI 190
  TDS u/s 194C - non deduction of tds on payments made to subcontractors - subcontract relationship between JV partners - Held that:- As per the agreement, all the costs, liability and bank guarantees will be arranged by only AMRCL and KCL will only be a facilitator in procuring the orders. As per our view, JV is only an arrangement between two entities on mutual agreement, JV can be any type depending upon the mutual agreements and object of such agreement. The JV can be run on similar to partnership basis or mere an entity to secure the orders or may be just to execute the work orders. In the given case, members of JV decided to form a JV only to secure the orders and execution of the orders will be done by one of the constituents of the JV. JV is formed for the benefit of the individual members and a business is carried on for the benefit of the businessman. Thus there is no subcontract relationship existed between JV partners. Accordingly, the work executed by the AMRCL is not in sub-contract. See Hindustan Ratna case[2015 (2) TMI 1257 - ITAT HYDERABAD]. Accordingly, ground raised by revenue is dismissed. Estimation of the profit of the business as well as disallowance u/s 40(ba) - disallowing all the administrative expenses - Held that:- As the assessee has not shown any profit in the business and the assessee being used as a Passover entity and set up only to secure the order, the AO has the option of disallowing all the administrative expenses, if any. Since the assessee has not shown any profit nor paid any remuneration to any of the members, the provisions of section 40(ba) will not be attracted. Coming to the execution of the contract awarded to the assessee, we have already adjudicated that it does not amount to sub-contract. The payment made to AMRCL will never be considered as remuneration, but, paid for execution of back to back work order. Assesse has already considered as revenue in case of AMRCL and offered for taxation. It shows that the full value of revenue is already offered for taxation, by following the golden rule that a source of income can be taxed only once. The source of income is a work contract given by the corporation and the same was offered to tax by AMRCL. Same source of income can never be subjected to tax twice, first by the assessee and followed by AMRCL. As far as revenue is concerned, that source is already taxed, in the hands of AMRCL, therefore, it need not be taxed again in the hands of assessee. - Decided in favour of assessee.

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• 2017 (12) TMI 189
  Revision u/s 263 - proof of AO's order erroneous and prejudicial to the interest of revenue - non reference of matter to TPO - Held that:- We are of the view that the AO had issued a detailed questionnaire raising various queries. The appellant had appeared from time to time and filed the detailed replies to all the queries raised. Books of account were produced along with the supporting vouchers which were examined by the AO. The confirmed copies of account with PAN numbers of the parties to whom sales and purchases were made, were filed before the AO. The details of commission expense alongwith PAN numbers and TDS deducted were duly filed before the AO. The AO had raised a specific query about fresh loans raised during the year and reply was filed that no fresh loans were raised. The sales made to four/five parties as referred in the order u/s 263 of the Act has been made with profit margin of 19% which is more than the industry norm. A note was given alongwith the balance sheet that’s AS 11 is not applicable to the assessee. The foreign exchange fluctuation is duly recorded in the books of account. It is not the case of the ld. PCIT that Books of account have not been examined by the AO. The interest relating to the capital WIP is already capitalized by the Assessee. The assessee had made purchases/imports from two parties on CIF basis. It is not the case of the LD. PCIT that purchase vouchers and books of account were not produced before the AO during the course of assessment proceedings. Hence it cannot be said that this is a case of no enquiry made by the AO. Merely because the ld. PCIT feels that further enquiry should have been made does not make the order of the AO erroneous. We are also of the view that as per instruction no. 3 of 2016, it was not mandatory for the AO to make a reference to TPO. The assessee had explained before the ld. PCIT that its case does not fall under the conditions referred to in the instruction no. 3 of 2016 and as such it wasn’t obligatory for the AO to make a reference to TPO. The ld. PCIT has not dealt with this contention of the assessee and has given a bald finding that AO should have referred to TPO as per instruction no. 3 of 2016. The ld. PCIT has not specified under which condition of instruction No. 3 of 2016, the AO should have referred to TPO. The assessee had filed various replies to the ld. PCIT in response to notice u/s 263 of the Act stating that all the issues raised by the ld. PCIT have been examined by the AO during the course of assessment. The ld. PCIT has ignored the replies of the assessee. He merely states that the reply has been filed by the assessee but he nowhere discusses the contentions raised by the assessee and why he does not agree with the contentions of the assessee. The ld. PCIT has merely remitted the matter back to the AO without making any enquiry himself. The ld. PCIT has mentioned that the fresh loans have not been examined by the AO. The ld. PCIT has not considered the contentions of the assessee that there is no fresh loan. Similarly, the other replies of the assessee filed during the course of assessment and in response to notice u/s 263 of the Act have been totally ignored. No enquiry has been made by the ld. PCIT. - Decided in favour of assessee.

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• 2017 (12) TMI 188
  Revision u/s 263 - Disallowance u/s 14A - Held that:- We are of the view that the AO had issued a detailed questionnaire raising various queries. The appellant had appeared from time to time and filed the detailed replies to all the queries raised. Books of account were produced along with the supporting vouchers which were examined by the AO. The confirmed copies of account with PAN numbers of the parties to whom sales and purchases were made, were filed before the AO. The explanation regarding fall in GP rate was duly given. A specific query was raised in respect of disallowance during the course of assessment proceeding to which reply was filed by the assessee that there is no exempt income and provisions of section 14A of the Act will not be applicable. The details of traveling expense and godown rent expense were duly filed before the AO. Hence it cannot be said that this is a case of no enquiry made by the AO. Merely because the ld. PCIT feels that further enquiry should have been made does not make the order of the AO erroneous. The assessee had filed various replies to the ld. PCIT in response to notice u/s of the Act 263 of the Act stating that all the issues raised by the PCIT have been examined by the AO during the course of assessment. The PCIT has ignored the replies of the assessee. He merely states that the reply has been filed by the assessee but he nowhere discusses the contentions raised by the assessee and why he does not agree with the contentions of the assessee. The ld. PCIT has merely remitted the matter back to the AO without making any enquiry himself. The ld. PCIT has mentioned that the opening stock has not been verified by the AO, whereas the total opening stock was pledged with the bank. The ld. PCIT has not considered the contentions of the assessee. Similarly, the other replies of the assessee filed during the course of assessment and in response to notice u/s 263 of the Act have been totally ignored. No enquiry has been made by the PCIT. It was incumbent for the PCIT to make some minimum independent enquiry to reach to the conclusion that the order of the AO is erroneous and prejudicial to the interest of revenue. -Decided in favour of assessee.

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• 2017 (12) TMI 187
  Disallowance of Bid Loss Claimed in the computation of total income - Held that:- Bid Loss incurred on account of lifting the chit in the capacity of subscriber to chit is allowable in full in the year in which the chit was auctioned. Apex Court in the case of Taparia Tools Ltd., JCIT [2015 (3) TMI 853 - SUPREME COURT] finally concluded that assessee is entitled to the deduction of the entire expenditure in the year in which the amount was actually paid. - Decided against revenue

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• 2017 (12) TMI 186
  Disallowance being belated remittances of employees contribution towards ESI and PF - Held that:- Employees contribution to ESI & PF remitted prior to due date of filing of the return, had to be allowed. See CIT vs. M/s. Industrial Security & Intelligence India Pvt. Ltd [2015 (7) TMI 1063 - MADRAS HIGH COURT] - Decided in favour of assessee. Addition u/s.14A r.w.r.8D - Held that:- It is not disputed by the Revenue that assessee had not claimed any exempt income in the impugned assessment year. Accordingly, we are of the opinion that there could be no disallowance when there is no exempt income. As such disallowance stands dismissed - Decided in favour of assessee.

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• 2017 (12) TMI 185
  Levy of penalty u/s 271(1)(c) - undisclosed deposits - Held that:- In the instant case, the assessee having declared the additional income only after discovery of the Assessing Officer with regard to total deposits not reflected in the balance sheet, it was a clear case of ‘concealment of income’ and non-recording of the deposits in the balance sheet would amount to furnishing of inaccurate particulars of income. Under these circumstances, the order passed by the Ld CIT (A), in levying penalty, does not call for any interference. Accordingly, appeal of the assessee is dismissed.

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• 2017 (12) TMI 184
  Addition on account of non deduction of TDS from interest paid to NBFCs - disallowance u/s 40(a)(ia) - Held that:- In view of the amended provisions brought by the Finance Act 2012, we are of the opinion that in the interest of justice this matter needs to be re-examined by the AO in light of the second proviso of section 40(a)(ia) read with proviso of section 201(1) which envisages that, the assessee cannot deemed to be the ‘assessee in default’, firstly, if such resident payee has furnished return of income u/s 139; secondly, has taken into account such sum for computing the income in such return of income; thirdly, has paid tax due on the income declared by him in such return of income; and lastly, the person furnishes a certificate to this effect from an accountant any such form as may be prescribed, i.e., Form No. 26A, then in such situation neither the assessee can be treated as the assessee in default nor there can be any disallowance u/s 40(1)(ia). Now it is a settled proposition of law under the jurisdiction of Hon'ble Delhi High Court that amendment brought by Finance Act 2012 in section 40(1)(ia) and 201(1) is declaratory and curative and therefore, such an amendment shall have retrospective effect from 1.4.2005. Accordingly, we are setting aside the entire matter to the file of the Assessing Officer who shall examine the matter in view of the amended provisos and the onus would be upon the assessee to produce the certificates in respect of interest paid to other NBFCs also and Assessing Officer shall examine all the certificates and decide the issue in accordance with the law. Thus, the assessee’s appeal is treated as allowed for statistical purposes. Allowance of business expenditure - prove that the expenses incurred is purely for business purpose and or for commercial expediency - Held that:- CIT(Appeals) merely by comparing the net profit of the earlier years has deleted the said disallowance which according to us may not be the correct approach while dealing with the issue of disallowances of expenses debited and claimed as revenue expenditure. Expenses debited and claimed qua that year needs to be proven. If bills and vouchers are not available for some reasons, then other corroborative evidences like, the payments made through accounts payee cheques or through banking channels or the third party/ vendor duly confirming the transactions with evidences available with him etc. Here in this case, Ld. AR has contended that such kind of details along with the regular books of accounts have been produced, but none of the authorities have examined the same from this perspective. Accordingly, we are the opinion that the issue of disallowances of expenses should go back to the file of Assessing Officer to be examined afresh Disallowance being pre-paid expenses - Held that:- As relying on assessee’s own case for earlier year which admittedly is applicable on the facts of this year also, we uphold the deletion of the said disallowance by the Ld. CIT (Appeals) and accordingly the said ground no. 3 raised by the revenue is dismissed.

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• 2017 (12) TMI 183
  Fees for technical services - consideration for the services under the contracts for provision of cementing services - applicability of provisions of section 44BB - Held that:- Respectfully following the decision of the Hon’ble Delhi High Court in DIT vs OHM Ltd (2012 (12) TMI 1091 - DELHI HIGH COURT), given the nature of cementing services which are inextricably linked with activities of prospecting for, extraction or production of mineral oil, the provisions of section 44BB are applicable in the instant case, being more specific than the general provisions contained in section 44DA of the Act. In light of above discussions and in the entirety of facts and circumstances of the case, we are of the considered view that consideration for the services under the contracts for provision of cementing services fall under the exclusion and doesn’t qualify as fees for technical services as per explanation to section 9(1)(vii) and in any case, the provisions of section 44BB being more specific, shall be applicable and provisions of section 44DA are not applicable in the instant case. The assessee company has therefore rightly offered its income under the subject contracts in terms of section 44BB of the Act. In the result, ground no. 2 of assessee’s appeal is allowed.

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• 2017 (12) TMI 182
  Depreciation of Railway lines & sidings - Held that:- Disallowance of depreciation confirmed since the asset is owned by the Indian Railways but not by the assessee relying on the decision of Hon’ble Supreme Court in the case of Mysore Minerals Limited [1999 (9) TMI 1 - SUPREME Court] Disallowance of provision towards the Post retirement benefit Scheme - Held that:- Set aside the orders of both the lower authorities in disallowing the claim of the appellant towards provision for Post Retirement Benefit Scheme and direct the assessing officer to allow the claim of the appellant. Provision for employee family benefits - Held that:- As relying on assessee’s own case, we set aside the orders of both the lower authorities in disallowing the claim of the assessee company towards provision for Employees Family Benefit Scheme and direct the lower authorities to allow the claim of the assessee company. Provision for future leave encashment - Held that:- Claim of the assessee cannot be allowed in view of the specific provisions of S.43B(f) of the Income Tax Act, 1961 which provides for allowance of such claim only in the year of payment. Provision for Long service award - Held that:- As consistent with our view taken in assessee’s own case in earlier years, we hold that provision made by the assessee company towards long service award based on actuarial valuation is to be allowed as expenditure. Provision for mines closure - Held that:- We are of the considered view that the claim of the expenditure is quite premature. During the previous year relevant to the impugned assessment year, the assessee did not incur any expenditure in this regard. The provision was made merely in terms of the statutory provisions relating to the operation of mines. It is not a case where the expenditure accrues in proportion to the period for which the mines are operated. Therefore, we are in complete agreement with the view taken by the assessing officer Addition in respect of provision for leave travel concession - Held that:- LTC expenditure is allowed as per the scheme of the leave travel concession of the company. The liability commences no sooner the employee undertakes the tour, without the commencement of the tour, there is no liability accrue or arise under the leave travel concession. In the case of the company, it is evident from the assessment order that the assessee has not furnished the LTC rules, the operation of LTC account, the amounts actually incurred out of the account, treatment given to the unutilized amounts and the amount that cannot be utilized etc. Though the A.O. has called for the specific details, the assessee has not furnished the above details. The expenditure cannot be ascertained on actuarial valuation and the expenditure has to be ascertained and determined on the basis of the LTC rules and the details called for by the A.O. and the journeys undertaken as discussed above. Therefore, we are of the considered opinion that the assessee company required to submit the above details and the issue needs further verification at the end of the A.O. to ascertain the liability accrued. Payment made to A.P. Transco towards service line charges - Held that:- Expenditure is revenue expenditure and allowable in the year under consideration Disallowance u/s 14A r.w.r 8D - Held that:- When there is no exempt income, there is no case for making the disallowance u/s 14A r.w.r 8D of the Act. Entertainment expenditure disallowed - Held that:- On verification of the order of the Ld. CIT(A) the expenditure was incurred towards tea, snacks, milk and other expenses for customers or official guests at various office locations. The expenses were also incurred for dinner for airline officials and agro forest department, food arrangement for common wealth games teams and catering arrangements at cricket stadium, south zone volleyball team, etc. These expenses mainly incurred for the purpose of promoting the sports and games are in the nature of marketing and advertisement expenses related to the business activity of the assessee. On careful verification of the order of the Ld. CIT(A), there is no doubt regarding genuine of the expenditure and no lavish expenditure was incurred by the assessee except the lunch and dinner expenses. Therefore, we do not find any reason to restrict the disallowance. Accordingly, we allow the appeal of the assessee. Expenditure incurred for afforestation and horticulture - anture od expenditure - revenue or capital - Held that:- When the receipt from sale of trees is assessed as revenue receipt, the expenditure incurred on maintenance of the trees is also to be allowed as revenue expenditure. Further, the expenditure was incurred very much during the course of the business of the assessee and no enduring benefit is obtained on account of the expenditure incurred. Peripheral development expenditure - Held that:- Expenditure incurred by the appellant as a part of the corporate social responsibility is to be allowed. Community development expenses - allowable business expenditure - Held that:- There was no dispute with regard genuineness of the expenditure. Since the company has spent the sums towards the educational medical camps for the people who are re-located the same is allowable expenditure. It is obligation on the part of the company to give support to the people who are displaced due to setting up of the industry by losing their landed property and assets. The company is discharging its obligation for the same purpose. Therefore, following the decision of Hon’ble Madras High Court in the case of CIT Vs. Madras Refineries Limited [2003 (11) TMI 47 - MADRAS High Court ] we hold that the CIT(A) has rightly allowed the appeal of the assessee and accordingly uphold the order of the Ld. CIT(A) and dismiss the appeal of the revenue. Charging of interest u/s 201 & 201(1A) of the Act for non-deduction of tax at source - Held that:- The contract-I is a supply contract primarily for supply of the machinery equipment and spares and contract-II is works contract for commissioning the equipment. The Ld. CIT(A) after verification of the recitals of the contract given a finding that both are independent contracts and held that it is not possible to come to conclusion that due to services required to be rendered under contract no.(ii), the terms of the contract no.(i) would be in the nature of works contract. The Ld. DR did not bring any other evidence to show that the finding given by the Ld. CIT(A) is incorrect and also did not place any other decision to support the view of the department. The facts are identical to the decision of this Tribunal in the case of NTPC Limited cited (2013 (9) TMI 644 - ITAT VISAKHAPATNAM ). Since the CIT(A) has allowed the appeal of the assessee, following the order of this Tribunal, we do not find any infirmity in the order of the Ld. CIT(A) and the same is upheld.

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• 2017 (12) TMI 181
  Disallowance in respect of advertisement and publicity expenses - nature of expenditure - revenue or capital - Held that:- In the facts of the present case, it is evident that the AO has not demonstrated with cogent evidence, any special circumstances or reasons to hold that the impugned expenditure was capital in nature. It is also note-worthy that no specific instances have been pointed out by the AO in this regard. Ld. Sr. DR, while arguing on behalf of the department, also could not cite any judicial precedents in favour of the Revenue which were in opposition to the judgments relied upon by the Ld. CIT (A). In the given circumstances, we are of the considered opinion that the findings of the Ld. CIT(A) on this issue do not call for any interference on our part and we deem it appropriate to dismiss ground No. 1 of the departmental appeal. Disallowance u/s 14A - Held that:- Department could not negate the findings of the Ld. CIT (A) that the assessee did not have any exempt income during the year under consideration. Therefore, we find that the Ld. CIT (A) has rightly applied the ratio of the judgment of the Hon’ble Delhi High Court in the case of CIT vs. Holcim India Pvt. Ltd. [2014 (9) TMI 434 - DELHI HIGH COURT ] and we find no reason to interfere on this issue also - Decided in favour of assessee.

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• 2017 (12) TMI 180
  TPO - inclusion of Cybermate Infoteck Ltd. as comparable - Held that:- Unlike Resale Price Method (RPM) and Comparable Uncontrolled Price (CUP), TNMM involves comparison of margins at net profit level, not at gross profit level. TNMM is a transactional profit method; not a traditional transactional method like CUP or RPM . In general, closely comparable products/services are required if CUP method is used to determine ALP. And RPM and CPM (Cost Plus Method) generally require a lesser degree of products or services comparability and may be appropriate if functional comparables are available. The TNMM, however, requires only broad functional and product/services comparability. Thus TNMM is less dependent on product comparability and on functional comparability than the traditional transaction methods. As mentioned hereinbefore the services/products and functions rendered by the assessee and CIL fall broadly in similar domain. The assessee has adopted TNMM which has been followed by the TPO/AO. The initial inclusion of CIL as a comparable by the assessee proved to be a valid comparable later on by the TPO/AO as TNMM requires only broad functional and product/services comparability. That is the raison detre of TNMM. That being the case we uphold the order of the AO in including CIL as a comparable.

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• 2017 (12) TMI 179
  Validity of revised return - assessee being a working partner in VCE, and of it being an assessee covered u/s. 44AB - Held that:- In the present case, the claim is for negation or declaring invalid the assessee’s return in law and, consequently, the assessment framed in pursuance thereto, which the assessee is well entitled to make, provided there is no dispute qua facts required to determine the issue arising. Where the relevant facts are not on record, or the material or record points otherwise, or are to be brought on record, the claim cannot be admitted. At this stage, we may also clarify another aspect of the matter. It may be argued that the partnership deed of VCE shall bear out whether the assessee is or is not a working partner in the said firm for the relevant year. True, but the instrument of partnership shall be a part of the assessment record of the said firm and not of its partners. Further, even if, for the sake of argument, the assessment record or return for the earlier year indicates the assessee to be not a working partner, it cannot be said that the same position continues, or its accounts are subject to audit under law for the current year. That is, there is nothing on record to exhibit that the assessee is a working partner or not so, i.e., one way or the other, except the averment per Gd. 5.3 supra. Rather, the contrary claims by the assessee, stating the due date filing of return as 31.08.2012 (in the computation of income for the year), while at the same time preferring a revised return, i.e., u/s. 139(5), as well as contending per the grounds of appeal to be a working partner, so that the due date is 30.09.2012, makes his claim untenable, i.e., in the absence of any material establishing same. Our order stating the assessee’s legal claim as to the invalidity of his second ‘return’ as being inadmissible in view of indeterminate facts, being in fact subject to contrary claims and, in any case, answerable only against the assessee in view of its avowed stand in the assessment (filing a revised return, which can only be u/s. 139(5)) and appellate proceedings (per Gd.5.3 supra). The Revenue cannot treat the assessee’s first return as a valid return u/s. 139(1), so that it could be revised u/s. 139(5), and at the same time charge interest u/s. 234A (i.e., for the delay in filing the return), implying it to be a belated return, filed u/s. 139(4), again showing, if that was still necessary, indeterminate facts. We, accordingly, direct its deletion.

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• 2017 (12) TMI 136
  Denial of credit of TDS - difference between Form No. 26AS and the business receipts (contractor payments) - include the income declared from contract works in the return of income furnished by the appellant for the instant assessment year - Held that:- Additional ground that the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in not directing the learned Assessing officer to include the income from contract work declared by the appellant in the return of income furnished, by the appellant for the instant assessment year is directed to be allowed and TDS is also directed to be allowed. Thus the grounds of the assessee are allowed.

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• Customs

• 2017 (12) TMI 178
  DEPB Scheme - relevant date of export of goods - Polyester Fabrics - The respondent based on documents showing export on 21.09.2004 obtained DEPB Scrips from JDGFT, New Delhi having benefit of 10%. The Revenue contended that the date of export is 24.09.2004 with relevant applicable benefit of 5.5 % only - Held that: - Admittedly, the copies of the shipping bills submitted by the respondent clearly show the date stamp as 21.09.2004 along with the signatures of Inspector and the Superintendent of Customs dated 21.09.2004. The Revenue claims that the documents were forged and fabricated. The Revenue relied on another set of copies of shipping bills warehousing register, etc. to contend that the shipment date is only 24.09.2004. On close examination of these documents, we are convinced that contrary claims were made on the basic fact of date of shipment based on the documents, which bear the signature of customs offices. When the respondent produced various documents bearing signature of customs officers dated 21.09.2004, it is necessary for the department to enquire as to how such documents were presented and in case of questioning their bonafideness, to conduct further inquiry with reference to the alleged forgery. We are not informed of any such inquiry conducted internally by the Department to support the allegation of manipulation or forgery of these documents signed by the officers. Appeal dismissed - decided against Revenue.

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• 2017 (12) TMI 177
  Valuation of imported goods - Coloured Self Adhesive Paper Tape - enhancement of value - entire case of the department is that the goods were mis-declared in their description/classification and there was undervaluation of the goods - Held that: - As for the charge of mis-declaration, the appellant had correctly declared the items as coloured reflective sheeting and had changed the description of the goods to coloured self adhesive paper tape at the instance of the customs officers. They had claimed classification under tariff heading 39199090. However, Bill of Lading and the invoice carried two different descriptions of the same product and it was for this reason, the customs officer directed them to declare as per Bill of Lading - Revenue seems to be presuming that the decision to change the description of the goods was taken in view of prior information regarding declaration of the impugned goods available with the Anti Smuggling staff. However, no evidence to support this belief is coming forward from the impugned order - Hence, the charge of mis-declaration of description of the goods is not tenable in these circumstances. Since the allegation in show cause notice was based on the similar type of goods in the case of M/s.Tanmay International [2017 (10) TMI 220 - CESTAT CHANDIGARH], the above decision of this Tribunal in M/s.Tanmay International is squarely applicable to the present case, where it was held that the Ld. Commissioner (Appeals) has correctly concluded that the Department has not been able to adduce any evidence of contemporaneous import to support the value determined by the adjudicating authority. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 176
  Classification of imported goods - whether the metal rims found in the two containers of the total consignment are required to be considered as waste and scrap or the same have to be held as metallic rims usable in the motor-vehicles? - Held that: - it is for the assessee to test the veracity of the statement, procured by the Revenue, on which they intend to rely. Revenue cannot decide as to whether the cross-examination is useful to the assessee or not. As such, when there are two contra reports of two different Chartered Engineers, the benefit has to go to the assessee rather than to the Revenue, who by adopting a favourable report, cannot hold against the assessee. Except for making a bald declaration that there was deliberate mis-declaration by the importer, there is no evidence on record to show that the appellant knew about the presence of old and refurbished metallic rims in the two containers. All the documents issued by the foreign supplier are only reflecting that the waste and scrap has been imported by him - Revenue has not pointed out to any evidence to establish the knowledge on the part of the importer. As such, such mutilation request made by the appellant should have been accepted by the authorities. The appellant have produced evidence on record that the said rims were actually used by them in the furnace in their factory. Photographs stands produced showing such use along with a certificate of their Chartered Accountant, declaring that the rims in question were consumed for manufacturing of steel ingots on 18.08.2011 and 31.03.2012. Such certificate of the Chartered Accountant has neither been questioned nor doubted by the lower authorities - In the face of such an evidence of use of the rims in the furnace, the Revenue's case that the same are re-usable and serviceable items, cannot stand. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 175
  Valuation of imported goods - Alloy Wheels as also Car Truck tyres of various brands - rejection of declared value - whether clearances of goods by paying customs duty on the higher enhanced assessable value, precludes the assessee from challenging the same before the higher appellate forum? - Held that: - It is a matter of common experience that the importers, clear the goods, by payment of duty on the enhanced value, inasmuch as the goods imported by them are required and cannot be allowed to be retained by the Customs as the same incurr demurrage and other expenses. It is again a fact of common knowledge that settlement of dispute take years and the imported goods cannot be allowed to be deteriorated in quality till the final out-come of the dispute - Inasmuch as the goods imported by the appellant were required in the assessee's factory, the same were cleared by them on payment of the duty on enhanced value and this fact by itself cannot be adopted as a ground for resolving the disputed issue of valuation - payment of duty at the enhanced value and clearance of the goods in urgency cannot preclude the assessee from challenging the assessed bill of entry on the sole ground that goods stand cleared at the enhanced value. Valuation - enhancement of value - Held that: - Revenue has not adduced any evidence to show flow of any under hand consideration to the supplier of the goods - As per the settled law, the transaction value has to be adopted as correct assessable value for the purposes of payment of duty unless the same is proved to be incorrect, on the basis of positive and tangible evidences - transaction value has to be adopted as the correct assessable value. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 174
  Refund claim - payment under protest - Whether, challenge or contest of the assessment order is condition precedence for claiming the refund of duty, especially in view of the fact that the duty was paid under protest, for non-consideration of the request of appellant for extending the benefit of N/N. 3/2005-C.E., dated 24.02.2005 by the authorities below, before assessment of the Bills of Entry? - Held that: - a refund claim shall lie not only in a case, where the Customs Duty has been paid in pursuance of an assessment order, but also where the duty has been borne by the assessee - importer - It is noted that in the present case, the appellant had paid an excess amount of duty in the form of the CVD component paid by it under protest, while clearing the subject goods i.e. girders. Section 27 of the Act provides different situations or circumstances, under which the refund claim can be lodged and to be entertained by the proper officer. In this case, the appellant had objected to the assessment made by the authorities, in consonance with the audit objections raised for the earlier period. Further, the appellant had also represented the authorities regarding its claim for the exemption benefit. Thus, the appellant's case should fall in the second alternative provided in clause (ii) in Section 27 ibid, i.e. 'borne by him'. On perusal of some of the sample copies of Bills of Entry available in the case file, we find that the same were assessed by the proper officer on 19.02.2009, without extending the benefit of notification dated 24.02.2005, as claimed for by the appellant, which has resulted in payment of excess amount CVD by the appellant. It is an admitted fact on record that the authorities below have not adhered to the request of the appellant, in passing the order(s), negating the claim of entitlement for the CVD exemption as contemplated under the notification dated 24.02.2005. Thus, under the circumstances of the present case, it has to be construed that filing of refund claim by the appellant itself, is to be considered as challenge of the assessment of Bills of Entry, which is detrimental to its claim. Whether, the ratio of judgment of Hon'ble Supreme Court in the case of Priya Blue Industries [2004 (9) TMI 105 - SUPREME COURT OF INDIA] and Flock (India) Pvt. Ltd. [2000 (8) TMI 88 - SUPREME COURT OF INDIA] can be applied in the case of the appellant, in denying the refund benefit to it? - Held that: - The issue involved in the case of Priya Blue Ltd, is distinguishable from the facts of the present case, inasmuch as, the issue raised before the Hon'ble Supreme Court was with context with the ruling, as to whether, the words 'in pursuance of an order of assessment', necessary imply that a claim for refund can be made, without challenging the assessment, in an appeal. To answer such specific question framed therein, the Hon'ble Supreme Court were pleased to hold that without the order of assessment having been modified in appeal or reviewed, a claim for refund cannot be maintained. In this case, since the appellant had borne the incidence of CVD, for which it had filed the refund application, we are of the considered view that that such application is maintainable under Section 27 of the Act - Similarly, the ratio laid down by Hon'ble Supreme Court in the case of Flock (India) Pvt. Ltd. is not applicable to the facts of this case inasmuch as, in the said decided case an adjudication order was passed, which was appealable under the Central Excise statute, but the party aggrieved did not choose to exercise the statutory right of filing an appeal against such order. The rejection of claim of the appellant on the ground mentioned by the lower authorities is not sustainable - original authority should examine the issue, regarding entitlement of the appellant to the claimed exemption with reference to the defence submission and pass reasoned order on merit - appeal allowed by way of remand.

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• Service Tax

• 2017 (12) TMI 172
  Classification of services - Residential Complex service - Commercial or Industrial Construction services - extended period of limitation - it was alleged that the construction of building for SBI and Shrama Vikram Motors falls under category of Commercial or Industrial Construction Services under Section 65 (25b) of the Finance Act, 1994 and construction of Residential Complex is under Section 65 (91a) of the Act - whether the construction services provided along with material, falls under the Works Contract service or construction of Commercial or Industrial Construction Services / Residential Complex services? Held that: - the Works Contract means, transfer of property including such contract as sale of goods and such contract involve the purpose of carrying out various construction services. Admittedly, in the case in hand, the appellant has constructed Residential Complex and other construction services along with material which has not been disputed. Therefore, the proper classification of the activity undertaken by the appellant is more appropriately falls under Works Contract service and the same has not been alleged against the appellant in the show cause notice issued to the appellant. Extended period of limitation - the show cause notice has been issued by invoking extended period of limitation on the ground that, as the appellant has sought information through RTI applications whether their activity is liable to be taxed or not and the same has been replied by the different Commissionerates as well as service recipients that their activity is not liable to be taxed under Finance Act, 1994 - Held that: - reliance placed in the case of M/s. UNIWORTH TEXTILES LTD. Versus COMMISSIONER OF CENTRAL EXCISE. RAIPUR [2013 (1) TMI 616 - SUPREME COURT], where it was held that on account of the fact that the burden of proof of proving mala fide conduct under the proviso to Section 28 lies with the Revenue; that in furtherance of the same, no specific averments find a mention in the show cause notice which is a mandatory requirement for commencement of action under the said proviso, and that nothing on record displays a willful default on the part of the appellant, we hold that the extended period of limitation under the said provision could not be invoked against the appellant - extended period cannot be invoked. The appropriate classification of the services in question is Works Contract service and show cause notices not allege to demand service tax under Works Contract, therefore, the demand of service tax is set-aside - extended period also not invoked - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 171
  CENVAT credit - capital goods/inputs - towers, shelters & prefabricated building etc - Revenue is of the view that the appellant has taken cenvat credit wrongly, as the said items are not covered within the definition of capital goods or inputs - extended period of limitation - Whether the appellant is entitled to avail cenvat credit of duty paid on towers material, shelters & pre-fabricated buildings etc. or not? - Held that: - As the Larger Bench of this Tribunal in the case of BSNL and others [2016 (3) TMI 165 - CESTAT NEW DELHI (LB)] has held that cenvat credit is not available on the above said items, as they have become immovable property and has affixed to the earth. Therefore, relying on the decision of the Larger Bench of this Tribunal, it is held that the appellant is not entitled to avail the cenvat credit on the items in question - credit not allowed. Extended period of limitation - penalty - Held that: - availment of cenvat credit was in the knowledge of the department as the appellant was filling their service tax returns in time and availment of cenvat credt was shown - if the issue of availment of cenvat credit was in dispute upto the level of this Tribunal, in that circumstances, the allegation of suppression or concealment of fact/mis-statement is not sustainable - extended period not invokable - penalty also set aside. Demand along with interest within period of limitation is confirmed - appeal allowed in part.

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• 2017 (12) TMI 170
  Classification of services - works contract service - erection commissioning or installation, commercial or industrial construction service and construction of complex service - valuation - Held that: - there is an element of lack of clarity in various issues dealt with in the impugned orders. First of all, there is a dispute regarding quantification of taxable value itself. The Revenue proceeded to consider income figures in Profit and Loss Account - the same is not supported by legal provisions. The taxable value in terms of Section 67 of the Finance Act has to be arrived at based on clear documentary evidence. No doubt, such documentary evidences are to be submitted by the appellants as a provider of service. They are obliged by law to provide such data. Composite services or not? - Held that: - the impugned orders suffer from various infirmities attributable to factual appreciation and quantification. The tax liability of composite works contract is to be determined in line with the decision of Hon’ble Supreme Court in Larsen & Toubro Limited [2015 (8) TMI 749 - SUPREME COURT]. The tax liability on such contract will arise only with effect from 01.06.2007. The quantification on taxable value should be based on the actual receipts of consideration by the appellant. There can be no levy of service tax on composite works contract for the period prior to 01.06.2007. The impugned orders cannot be sustained in the present form - matter is remanded back to the original authority for a combined decision of all the notices which were considered and decided in the impugned orders - appeal allowed by way of remand.

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• 2017 (12) TMI 169
  Refund in respect of clearing and forwarding agent and custom house agent service - N/N. 41/12-ST dt.29.6.2012 - refund denied as drawback was availed - Held that: - as per Rule 12 (1) (ii) of the Drawback Rules, a declaration is required to be made in respect of input services used in the manufacture of export goods on which drawback has been claimed. As the services in question, namely, clearing and forwarding agent service and custom house agent service are used at the port of export and after the goods have been manufactured, the provisions of Drawback Rule 12 (1) (a) (ii) are clearly not applicable to these services. As for the contention that the notification is not admissible when the appellant have claimed drawback under Part-A of the drawback schedule, Ld. AR agrees that the said clause does not exist in the present Notification No.41/2012-ST. The Central Government has amended N/N. 41/2012-ST by way of Notification No.1/2016-ST dated 3.2.2016 in which the clause relating to place of removal has been deleted and input credit on these services beyond the factory of production has been allowed the facility of refund under this notification. Appeal dismissed - decided against Revenue.

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• 2017 (12) TMI 168
  Simultaneous penalty u/s 76 and 78 - case of appellant is that the penal provisions have been amended w.e.f. 10.05.2008 and the show cause notice in the present case has been issued on 23.06.2009 - Held that: - Tribunal in the case of Ramawat Construction Company [2017 (5) TMI 705 - CESTAT NEW DELHI] examined the identical dispute and concluded that the penalty would be liable as per the provisions at the time of offence and not at the time of issuance of notice - the penalty imposed on the appellant under Section 76 cannot be questioned on this legal point - appeal dismissed - decided against appellant.

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• 2017 (12) TMI 167
  Levy of service tax - Advertising Service - whether services taxable under the category of sale of space or time for advertisement service or not? - Held that: - In the present case there are two categories of activities; one-PCMC is providing their own property such as land, building to the advertising agency for advertisement purpose, in this case activity clearly covered under the aforesaid provisions, therefore whatever space of land, building was provided by PCMC to the advertising agency it is liable for service tax - However in a case where PCMC is charging fees/taxes by giving permission for providing space by private parties to advertising agency is a statutory levy for which PCMC has got power from the provisions under the constitution. Therefore such levies will not amount to provision of any service. There is no bifurcation of both types of receipts, therefore matter needs to be remanded back to the Adjudicating authority for correct quantification of demand - Appeal allowed by way of remand.

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• 2017 (12) TMI 166
  Valuation - includibility - reimbursable expenditure incurred during the course of their activity as C&F agent like godown rent, loading and unloading, security charges, electricity, cartage, stationery and printing, telephone, fax charges, photocopy expenses, repacking charges, travelling charges, internet charges etc - Held that: - reimbursable expenditure, as established by supporting documentary evidences, are not to be included for taxable purposes. This requires verifications of fact by the original authority - reliance placed in the case of M/s. Rajshree Enterprises Versus C.C.E., Jaipur-I [2017 (4) TMI 39 - CESTAT NEW DELHI], where the judgment in the case of Sri Sastha Agencies Pvt Ltd., Vs. Asst. Commissioner [2006(11)TMI 193- CESTAT, BANGALORE], relied upon, wherein it is held that no element other than remuneration received by a Clearing & Forwarding agent from their principal was to be included in the taxable value of the service. Matter remanded to the original authority to examine the supporting evidence with reference to all the contracts entered into by the appellants during the course of their service as C&F agents - appeal allowed by way of remand.

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• 2017 (12) TMI 165
  Business Auxiliary Service - loading, unloading of receipts of soyabean seed and other materials, stacking loading into the feeding points, filling, weignment, stitching, staking, de oiled cake, loading the cake in truck etc. - case of appellant is that the SCN did not make a specific allegation to the fact under what category of Business Auxiliary Service, the appellants are liable to pay service tax - Held that: - the Revenue could not make up their mind as to which category of BAS will apply to the activities of the appellants. Admittedly, the appellants carried out a whole range of activities loading, unloading of raw materials and up to loading de oiled cake for despatch - It is necessary to identify such activities for a tax liability under BAS. Admittedly, neither SCN nor the lower authorities could arrive at definitive conclusion in this regard - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (12) TMI 164
  Valuation - related party transaction - the appellant is clearing excisable goods to independent buyers as well as to relater person and the price charged by the appellant from their related person were comparatively low, as compared to the price charged from independent buyers - it was alleged that the appellant has undervalued the goods cleared to their related person - in case where the goods are sold to independent buyers as well as to related person, in that case, how the assessable value of the goods cleared to related buyers is to be arrived? - Held that: - there is no dispute that there is no specific provisions for valuation of the goods cleared to independent buyers as well as to related person to arrive at the assessable value for the goods cleared to the related person. Therefore, Rule 11 is applicable to the facts of the case which has not been disputed by both sides. As per Rule 11, valuation of excisable goods, is to be using reasonable means consistent with the principles of and general provisions of these rules and sub-section (1) of Section 4 of the Act. As per section 4 (1(a) of the Act which is applicable for the goods sold to independent buyers. Therefore, section 4(1) (a) is not applicable to the facts of the case and correct provision of section 4(1) (b) is applicable which states that in other cases i.e. which include sale made to independent buyers as well as to related person. In that circumstance, the value is to be determined as per Rule 11 of the Valuation Rules. CBEC vide Circular No.643/34/2002-CX. Dated 01.07.2002 has clarified that Rule 9 would apply only if the entire production is sold to related person. However, part of production is sold to related person and part of production is sold to non-related person, Rule 9 as such may not apply for valuing goods sold to related person. Still the value cannot be determined under Section 4(1)(a), as that section does not apply to sales to related person. Therefore, circular provides that such sales to related person would be assessed under Rule 11 read with Rule 9. The correct valuation is required to be arrived under Rule 11 read with Rule 9 of the Valuation Rules which has not been alleged in the show cause notice. Contrary to that in the show cause notice, the valuation is sought to be arrived under Rule 11 read with Section 4(1) (a) of the Act and Rule 4 of the Valuation Rules which is not applicable to the facts of case. The SCN is defective - impugned order not sustainable - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 163
  Valuation - includibility - advertisement expenses - case of the department is that the 50% advertisement expenses incurred by the dealers/distributors should be included in the assessable value of the appellant goods on the ground that the 50% sharing borne by the dealers/distributor is nothing but sales promotion expenses - Held that: - there is no compulsion on dealers/distributors to perform the advertisement. It is on the discretion of the dealers/distributors that whatever advertisement in respect of the appellants goods is done, 50% of the actual cost will be borne by the appellant and remaining 50% will be borne by the dealers/distributor. In this fact, the 50% is borne by the dealers/distributors which is the expenses of the dealers/distributors and the appellant is nothing to do with that portion of the 50% - Amount of such advertisement is not flowing to the appellant as an additional consideration. Therefore it cannot be said that the dealers/distributors bearing the advertisement cost to the extent of 50% is part of the assessable value. The relationship between the appellant and the dealers/distributors is on principal to principal basis, therefore only consideration received by the appellant alone will form the transaction value, no further addition should be made. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 162
  Valuation - removal of goods to the sister concern of the appellant - cost construction method - Rule 8 of Central Excise Valuation Rules, 2000 - revenue neutrality - Held that: - the goods have been cleared by the appellant on payment of duty, therefore no malafide intention is proved. Whatever duty is discharged by the appellant unit is taken as cenvat credit by their sister concern who is recipient of the goods. Therefore any differential duty arises in this case was also available as cenvat credit to their recipient unit. This is clear case of revenue neutrality. For arriving at the revenue neutrality it is necessary to see whether the recipient unit is discharging the excise duty from the PLA or cash. The consignee unit of the appellant has paid excise duty not only from CENVAT but also from PLA which is more than the excise duty demand involved in the present case. On this fact revenue neutrality is established. If it is established that the duty payable/paid is available as cenvat credit to the recipient which is appellants own sister concern who is discharging duty from PLA which is more than the duty payable by the appellant, the case falls under the category of revenue neutrality, hence, no demand will sustain - Since we have taken a view that demand is not sustainable on revenue neutrality, we need not go to other aspect of valuation of goods - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 161
  CENVAT credit of CVD - denial on the ground that in terms of Para 4.3.5 of the Exim Policy the cenvat credit of CVD paid through DEPB is not eligible for credit - Held that: - we find that once the para 4.3.5 was amended to remove the lines which denied credit of CVD paid through DEPB, the Appellant are eligible to avail cenvat credit - in case of seven bills of entry pertaining to period post 28.01.2004, there was no restriction in the law to avail the cenvat credit of CVD paid through debit in DEPB. Hence there is no reason to disallow credit for the said period - the period post 28.01.2004 when the prohibition was removed the cenvat credit cannot be denied and hence available to the Appellant - in case of bills of entry post 28.01.2004 the cenvat credit is available to the Appellant on merit. Extended period of limitation - Held that: - In case of Bills of entry of period prior to 28.01.2004 we find that the show cause notice does not brings out any malafide intention on the part of the Appellant to avail ineligible credit. Even the issue involved is of interpretation and no malafide can be alleged - the demands for the period prior to 28.01.2004 involving two bills of entry in the present case are hit by limitation and the demand is not sustainable. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 160
  Non-payment of duty - Revenue argued that the appellants were aware of the revision of price and chose not to pay the differential duty on their own - Rule 9 (1) (b) of the Cenvat Credit Rules, 2004 - Rule 6 of the Central Excise (Removal of Goods at Concessional Rate of duty for manufacture of Excisable Goods) Rules, 2001 - Held that: - A perusal of Rule 6 clearly shows that the duty under the Rule is for the goods received by the manufacturer and not in respect of goods sold by the manufacturer - It is apparent that in terms of Rule 6, the duty is paid on behalf of the supplier of inputs under the said procedure prescribed under Rule 6 of the Central Excise (Removal of Goods at Concessional Rate of duty for manufacture of Excisable Goods) Rules, 2001. Since the goods was received in the factory, the respondents were entitled to the credit of the same. A perusal of the show-cause notice shows that while the duty has been demanded for diversion of the goods received under Rule 19 (2) of the Central Excise Rules. No allegation that the said goods were used by the appellant for other purposes. Demand set aside - appeal dismissed - decided against Revenue.

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• 2017 (12) TMI 159
  Interest on refund - refund was sanctioned to the appellants and transferred to Consumer Welfare Fund - case of Revenue is that no interest would be payable if the amount was lying in Consumer Welfare Fund and not with Revenue - Held that: - similar issue decided in the case of PURNIMA ADVERTISING AGENCY PVT. LTD. AND 1 Versus UNION OF INDIA THROUGH SECRETARY AND 2 [2016 (4) TMI 291 - GUJARAT HIGH COURT], where it was held that the petitioner is entitled to interest from 24.04.2005 till the actual payment i.e. upto 10.03.2010 and the Tribunal was, not justified in holding that from the date of transferring the sum to the Consumer Welfare Fund, the petitioner was not entitled to payment of interest on the refund amount - interest allowed - appeal dismissed - decided against Revenue.

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• 2017 (12) TMI 158
  CENVAT credit - input services - cleaning work at the residential colony - outdoor catering services - Held that: - in respect of cleaning services, On being asked about the evidence of non utilisation of credit, ld. Counsel did not produce evidence, therefore the interest will be confirmed. - in respect of canteen services, The appellants are maintaining canteen in their factory. In terms of definition of input service, credit in respect of services utilised other than for primarily personal use is admissible. Thus, the service tax paid in respect of canteen maintained in the factory of the appellants would be admissible in terms of decision of the Hon'ble High Court of Bombay in the case of Ultra Tech Cements [2010 (10) TMI 13 - BOMBAY HIGH COURT] - credit allowed. CENVAT credit - rent a cab or bus service - Board circular no. 943/4/2011-CX dated 29.04.2011 - Held that: - the circular states that The credit on such service shall be available if its provision had been completed before 1.4.2011 - the credit of service tax for the period prior to 01.04.2011 would be admissible. CENVAT credit - service used in the residential colony - Held that: - These activities are not even remotely connected to the manufacture of final products and thus credit of the same cannot be allowed. CENVAT credit - service tax availed on repair and maintenance of DG Set of water treatment plant in the factory premises - Held that: - The impugned order does not discuss any reason for not granting the benefit of said decisions. The order in Para 6 summarily rejects the credit and pleas of the appellants regarding extended period of limitation without granting any cogent reasons. In these circumstances, I find that the impugned order is not a speaking order in respect of these items. Appeal allowed in part.

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• 2017 (12) TMI 157
  CENVAT credit - fruit pulp - Whether manufacturer of goods having Nil tariff rate of duty is eligible for Cenvat Credit at all? - Held that: - the Cenvat Credit cannot be denied as the final product fruit pulp is chargeable to Nil rate of duty as per tariff, exported by the appellants - the Hon'ble High Court of Bombay in the case of Sharp Menthol India Ltd. [2011 (4) TMI 27 - BOMBAY HIGH COURT] has held that The assessee was entitled to avail the Cenvat credit of duty paid on menthol used in the manufacture of exempted menthol crystals and utilize the said credit for payment of duty on clearance of peppermint oil either for home consumption or for export - credit allowed. Refund claim - man power recruitment service - security service - refund claims were rejected by the original adjudicating authority relying on Rule 5B of the Cenvat Credit Rules, 2004 read with N/N. 12/2004-CE (NT) dated 03/03/2014 - whether the appellants are providers of service or not in terms of Rule 5B of the Cenvat Credit Rules? - Held that: - It is clear from the notification and Rule 5B that the said rule and notification are intended solely for the service provider providing specific services - The appellant's claim is that by virtue of Section 68 (2), since liability to pay partial service tax has been imposed on them they become service provider is misplaced - The Act differentiates between the service provider and person liable to pay service tax under different circumstances - Section 68 (2) is a special mechanism for shifting part liability to pay service tax from service provider to service recipient but it does not convert in the service recipient into service provider - Rule 5B has no application in the appellant's case. Appeal allowed - decided partly in favor of appellant.

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• 2017 (12) TMI 156
  Valuation - physician samples sold on principal to principal basis and cleared on job work basis - Held that: - Identical issue involved in the present case has already been decided in the appellants own case M/s Medispray Laboratories Pvt. Ltd., M/s Meditab Specialities Pvt. Ltd., And M/s Okasa Pvt. Ltd. Versus Commissioner of Central Excise, Goa [2017 (2) TMI 309 - CESTAT MUMBAI], where it was held that Rule 4 of Central Excise Valuation Rules, 2000 shall apply only in those cases where the manufacturer manufacturing the physician samples and they themselves supplying free sample in the market. In the present case, all the three appellants are not supplying physician samples free of cost either in case of job-work basis or in the sale basis, the goods are sold to the principal. In such case, irrespective it is physician samples, the valuation shall be governed by Section 4 of the Central Excise Act - The valuation shall be determined on the basis of cost of raw material + job charges including the profit of the job worker. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 155
  Refund claim - Whether the appellants have not given sufficient proof of excess payment of duties of excise for which refund claim has been filed - unjust enrichment - Unjust enrichment - Held that: - Ld. Advocate submits that they are in a position to establish that the unjust enrichment does not stand attracted, in as much as, the payments were received by them from BSNL only in terms of revised final purchase order - Ld. Advocate however fairly agrees that the certificate of BSNL, now placed before us, was not before the Authorities below. As the issue relates to verification of the documents, which can only be done at the level of the Original Adjudicating Authority, we deem it fit to set aside the impugned order and remand the matter to the Original Adjudicating Authority for examining the Appellate's claim - appeal allowed by way of remand.

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• 2017 (12) TMI 154
  Non-payment of duty within stipulated time - confiscation - redemption fine - penalty - Held that: - at the time of filing the ER-1 return for the relevant period, the applicant had sated the reason of non-payment on admitted tax liability within the stipulated time. The ld. Advocate has also produced the acknowledge copy of ER-1 return, indicating such reason before the Bench - further, the appellant had deposited the interest amount for delayed payment of duty. Thus, it is evident that there is no element of suppression, mis-statement, fraud etc, on the part of the appellant No-1 in defrauding the Government Revenue. Applicability of Rule 25 ibid in the identical situation, came up for consideration before the Hon’ble Gujarat High Court in the case of Saurashtra Cement Ltd. [2010 (9) TMI 422 - GUJARAT HIGH COURT], wherein upon analysis of the statutory provisions, the Hon’ble Court held in the absence of intention to evade payment of duty, the provision of Rule 25 read with Section 11 AC ibid cannot be invoked for imposition of fine and penalty. Confiscation, redemption fine and penalties set aside - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 153
  Clandestine removal - 40.02 MT of Kamanies - Detention of stock and finished goods - confiscation - As the said appellant could not produce the documents showing the lawful possession of the stock, the same were detained for further investigation - Held that: - the entire case of the Revenue is based upon the said statement of Shri Dixit, which is in the nature of third party's statement. The same required cross-examined as also examination in chief to establish the correctness of the same. It is well settled law that adverse findings cannot be arrived at against the assessee based upon the statement of co-accused without any corroborative evidence. There is admittedly no corroboration to the effect that such 40 MT of Kamanies were manufactured in the factory of Raghuveer Rolling Mills - demand set aside. Revenue has not able to produce any evidence to show that such un-recording in their statutory records was with an intention to evade the payment of duty or to clear the gods without payment of duty. In any case, it is well settled that the raw materials cannot be confiscated on the ground of their non entry in the record. Revenue's entire case is based upon the statement of the proprietor of the appellant, which is to the effect that such non-entries were made with an intention to clear the goods without payment of duty. The said deponent has not been put to cross-examine or to examine in chief - confiscation set aside - penalty also set aside. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 152
  Abatement - pan masala - whether the appellant is entitled to abatement for the period 01/04/2010 to 08/04/2010 under the admitted facts that their production of Pan Masala remained admittedly closed from 14/01/2010 till 08/04/2010, continuously? - Held that: - Court below have erred in calculating the period of closure which has been defined as continuous period of 15 days or more and in the facts of the present case, admittedly the factory of the appellant was lying closed or out of production for a continuous period of 85 days - the appellant is entitled to abatement for the period 01/04/2010 to 08/04/2010 - The assessee is entitled to take credits/adjustments of the amount of Rs. 19,20,000/- relating to the month of April, 2010, with interest as per Rules. whether the appellant had filed the appeal within the condonable period before the Learned Commissioner (Appeals)? - Held that: - the limitation has to be counted from 30/08/2010 when the appellant received the Order-in-Original and from that date the time taken is about 27/28 days. The Learned Commissioner (Appeals) have erred in counting the limitation from 26/08/2010 - the appeal is filed with the delay of about 28 days, which is condonable and accordingly, the said delay stands condoned by this Tribunal. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 151
  CENVAT credit - input service - construction service - Alleging that after amendment to definition of Input Service with effect from 01.4.2011 construction service, being placed on the exclusion clause, therefore credit availed by the appellant is irregular - Held that: - After amendment to the definition of the input service, a clarification issued by the Board vide Circular No 943/4/2011-CX dt 29.4.2011 dt 29.4.2011 where-under regarding credit of service tax paid on construction service as an input service used in modernization, renovation or repair, it has been clarified that the said services being provided in the inclusive part of definition of input service are definitely eligible to credit. A harmonious reading of the inclusive part of the definition and the exclusion clause mentioned at clause (a) relating to construction service of the definition of input service, it is clear that the construction service relating to modernization, renovation and repair of the factory continued to be within the meaning of input service and accordingly, the Service Tax paid on such service is eligible to credit. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 150
  Abatement - closure of factory - manufacture of Pan Masala - compounded levy scheme - whether the appellant who were manufacturer of Pan Masala and operating under the compounded levy scheme whether they are entitled to abatement for closure of a part of their factory or some of the machines and not all machines during a particular month? - Held that: - proviso 4 to Rule 9 of PMPM Rules read with Section 3A (2) clause B read with proviso provides for a charging of duty on proportionate basis, in case of alteration of annual production capacity and further the 4th proviso of Rule 9 of the PMPM Rules specifically provides that duty shall be recalculated pro rata on the basis of number of days in that month during which a machine was in operation due to addition or not in operation due to discontinuation and the said proviso specifically provides that an assessee will not be considered to have discharged the duty liability unless the differential duty is paid by the 5th of the following month if any additional duty is payable due to alteration and further provides that if any excess is paid upon recalculating the same shall be refunded to the manufacturer by the 20th of the following month. The statute has provided specific provision for adjustment of duty - also, the appellant is entitled to rebate/refund of the excess duty paid during the period of closure of their packing machine during the month of July, 2009 as admittedly the said machine remain uninstalled for a continuous period of more than 15 days as required under the Rules. The appellant shall be entitled to interest on the amount of refund/ rebate from 20.09.2009 - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 149
  Interest - CENVAT credit - trading activity - case of appellant is that though the credit was availed attributable to the trading activity, the same was lying unutilized therefore interest even for the period April, 2010 to March, 2012 is not recoverable - Held that: - issue is squarely covered by Hon’ble Supreme Court in case of Union of India Versus Ind-Swift Laboratories Ltd. [2011 (2) TMI 6 - Supreme Court] wherein it was held that as per the amended Rule 14 upto 31st March 2012 interest was chargeable on the wrong availement of credit for taking or utilizing the wrong availement of credit from 1-4-2012, the term Taken or utilized substitute with taken and utilized therefore prior to 1-4-2012, even if the Cenvat credit was not utilized but only taken wrongly interest is chargeable - interest for the period from April, 10 to March, 12 was rightly demanded. Penalty u/s 11AC - extended period of limitation - Held that: - appellant was very much knowing that they are manufacturing and clearing dutiable goods as well as doing trading activity which is neither chargeable to duty nor to service tax and despite this fact they availed credit on common input service. It is only on pointed out by the audit party they have reversed the amount there is clear suppression of facts on the part of the appellant. Extended period of demand is rightly invoked - Ingredients for invoking extended period under proviso to Section 11A(1) is pari materia to the ingredient provided for imposition of penalty under Section 11AC - penalty also confirmed. Appeal dismissed - decided against appellant.

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• 2017 (12) TMI 148
  Remission of duty - case of Revenue is that Since the appellant had not applied for remission of duty, therefore, the entire duty is required to be paid - case of appellant is that application u/r 21 is a mere procedural one and in absence of such application duty cannot be confirmed against them - Held that: - it is crystal clear that on making an application for remission of duty, the proper officer will decide the same after taking into consideration various factors and imposition of such conditions as he deems fit. Therefore, it is not an absolute right but subject to condition that has to be prescribed by the proper officer. Hence, it cannot be considered as a mere procedural or technical formality. Since the applicant has not complied with said provisions, therefore, the duty is required to be paid on the goods claimed to have been destroyed but not cleared to M/s Hindustan Lever Limited and duty was collected from them - appeal dismissed - decided against appellant.

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• 2017 (12) TMI 147
  Benefit of N/N. 8/2001-CE - The case of the department is that appellant has availed SSI exemption under N/N. 9/2001, according to which they were discharging excise duty by applying 60% of normal rate of duty, hence benefit of N/N. 8/2001-CE will not be available - Held that: - once the appellant has opted for N/N. 9/2001-CE for the first clearance up to Rs. 100 Lacs the option of the said notification cannot be withdrawn during the remaining part of the financial year, that means appellant for the entire financial year up to Rs. 100 Lacs required to pay duty at 60% of the normal rate of duty - all the clearances which are made up to clearance of Rs. 100 Lacs, appellant cannot opt for any other option. In the present case appellant’s claim of N/N. 8/2001 CE in respect of job work goods is also within the first clearance of Rs. 100Lacs - the appellant was duty bound to comply with the condition and pay duty at 60% of the normal rate of duty therefore other N/N. 8/2001-CE is not available to the appellant. Appeal dismissed - decided against appellant.

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• 2017 (12) TMI 146
  CENVAT credit - waste - Rule 6 of the Cenvat Credit Rules - whether in terms of Rule 6(3) an amount of 6% is required to be paid on the clearance of such waste/by product? - Held that: - if any input is contained in waste by product or goods the cenvat credit shall not be denied. If rule 6(3) is made applicable in these goods this clarification will stand redundant. If legislator has intention even to apply Rule 6(3) on waste or by-product, refuse then either this para should have been amended or omitted. Since this clarification is still in force the Cenvat credit either by way of Rule 6(3) or otherwise cannot be denied - in case of removal of waste or by-product Rule 6(3) has no application - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 145
  CENVAT credit - input services - Banking and Other Financial Services - Legal Consultancy Services - Held that: - on going through the specimen bills issued by the Bank and enclosed with the Appeal Paper Book, invariably in all the bills Service Tax was paid on the Banking Commission charges in relation to foreign remittance and nowhere the charges in the said bills were collected relating to forward contract entered into between the appellant and the Bank - the Service Tax paid on Commission Charge on foreign remittance is eligible to Cenvat Credit under the category of “Banking and Financial Services”. With regard to Cenvat Credit availed on “Legal Service”, the issue is more of less covered by the Judgment of Hon’ble Allahabad High Court in the case of CCE Vs HCL Technologies Ltd [2014 (11) TMI 663 - ALLAHABAD HIGH COURT], where it was held that Legal Consultancy Services have been held to fulfill the definition of the expression "input service". Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 144
  CENVAT credit - service tax paid on sales commission under the category of Business Auxiliary Service - Held that: - the Tribunal in the case of Birla Corporation [2014 (6) TMI 385 - CESTAT NEW DELHI] has held that The definition of input service allows all credit on services used for clearance of final products upto the place of removal. Moreover, activity of sale promotion is specifically allowed and on many occasions, the remuneration for the same is linked to actual sale. Reading the provision harmoniously, it is clarified that credit is admissible on the services of sale of dutiable goods on commission basis - credit allowed. CENVAT credit - non-receipt of inputs on the basis of failure of respondents to produce the LR and weighment slips - Held that: - In the scheme of Cenvat Credit Rule 9 (5) puts the onus of establishing that the goods were received and used for the intended purpose, is the person availing the credit. The impugned order wrongly puts the onus on the Revenue - A show-cause notice was issued asking the appellant to produce evidence that the goods were received and therefore, the appellants have to discharge the burden of receipt of goods and it is not on revenue to establish that the goods were not received - matter on remand. Appeal allowed in part and part matter on remand.

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• 2017 (12) TMI 143
  Relevant date for calculation of interest - finalization of provisional assessment - whether interest is leviable/payable u/r 7(4) of CER, 2002 immediately from next month to the provisional assessment directed by the department or after finalization of the provisional assessment on determination of the duty? - interpretation of statute - Held that: - In sub Section (3) of Section 18 of the Customs Act, 1962 it is clearly laid down that interest would be payable after the provisional assessment is directed, whereas under sub Rule (4) of Rule 7of Central Excise Rules,2002 the interest would be attracted only on ‘determination of duty’ i.e. the when the duty paid initially by way of provisional assessment, determined through final assessment. The said Provision has been interpreted by the Hon’ble Bombay High Court in CEAT Ltd.’s Case [2015 (2) TMI 794 - BOMBAY HIGH COURT], where it was held that The liability to pay interest arises on any amount payable to Central Government and consequent to order for final assessment under Rule 7 subrule (3). Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 142
  Clandestine manufacture and removal - irregular availment of CENVAT credit - Held that: - even though relevant invoices, ledgers, LRs explaining the alleged clearances of the goods were by other units, but erroneously considered to be their clearance, in the Annexure to the SCN, however, the adjudicating authority has not considered the same - the Appellants in their Appeal paper book enclosed these evidences in the form of invoices, LRs, ledgers, etc. claiming that it relate to the confirmation of demand of Rs. 18,11,396/-, and demonstrated their point referring to the invoice issued by one M/s 1,51,976/-, but both the authorities below have not addressed the issue by analyzing the said evidences - these ledgers, invoices, LRs need to be examined and specific finding on these evidences ought to be recorded by the adjudicating authority - appeal allowed by way of remand.

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• 2017 (12) TMI 141
  Cash refund of unutilized CENVAT credit - whether the Appellants are entitled to cash refund of the unutilized CENVAT credit availed on various capital goods lying in balance as on the date 30.3.2009 under Rule 5 of CENVAT Credit Rules, 2004 since the Appellants had adopted the benefit of N/N. 30/2004-CE dated 9.7.2004, and later the factory was closed? - Held that: - identical issue decided in the case of M/s Scan Synthetics Limited Versus CCE, Jaipur- I [2016 (6) TMI 316 - CESTAT NEW DELHI], where it was held that In the absence of any provision specifically permitting the refund of such credit, in cash, the same cannot be allowed on the basis of equity, justice and good conscious - cash refund cannot be allowed - appeal dismissed - decided against appellant.

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• 2017 (12) TMI 140
  CENVAT credit - input - M/s Channel, Angle, TMT Bars etc. used in fabrication of capital goods, supporting structures within the factory - Held that: - the Principal Bench at Delhi in Singhal Enterprises Pvt. Ltd’s [2016 (9) TMI 682 - CESTAT NEW DELHI] in laying down the principle on the eligibility of credit on similar items held that applying the “User Test” to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit. Since the Appellant has produced the Chartered Engineer’s Certificate before this forum the matter may be remanded for verification of the said Chartered Engineer Certificate - appeal allowed by way of remand.

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• 2017 (12) TMI 139
  Demand of reversal of differential amount - appellant has cleared the goods to related persons which were exempt - Whether M/s SPL and M/s SPML are related person or not? - whether the provision of Rule 9 read with Rule 8 of the Central Excise Valuation Rules, 2000 are applicable in the facts of this case or not? - Held that: - we find that the goods are required to be sold by M/s SPL through M/s SPML the related person - by availing credit of duty paid on inputs going into the manufacture of both categories of pipes, the assessee was required to reverse Cenvat Credit equivalent to 8% of the value of the exempted goods as per the provisions of Rule 6 (3) (b) of Cenvat Credit Rules, 2002. But the assessee did not reverse the same correctly. The reversal of Cenvat Credit shown in the ER-1 returns is neither at the rate of 8% of the sale value of exempted pipes nor on actual basis, as all the inputs consumed in the manufacture of exempted goods were not taken into consideration while calculating the actual reversal. Moreover, the reversal on actual basis at the time of clearance is not permissible under the Rules. Thus, the assessee has short reversed the Cenvat Credit amounting to Rs. 3,20,429/- as per the details given in Annexure B to this show cause notice by mis-declaring the facts as well as the value of the goods as stated in the foregoing paragraphs. M/s SPL is clearing these pipes to M/s SPML as well as to independent buyers if that is the case than provisions of Rule 9 read with Rule 8 are not applicable to the facts of this case - relying on the provisions of Rule 9 read with Rule 8 of the Valuation Rules 2000, we hold that the demand is not sustainable against the appellants. Whether in terms of Finance Act, 2010 the reversal of proportionate Cenvat Credit attributable to exempted goods is sufficient or not? - Held that: - As per the Section 72 of Finance Act, 2010 which provides that if the Cenvat Credit attributable to exempted goods has been reversed, the same is sufficient and it is fact on record that the M/s SPL had reversed the Cenvat Credit attributable to the Pipes/Plate Plate exempted then they are not required to pay 8% of the value of the exempted goods. Therefore, on that account, the demand is not sustainable. Whether M/s SPL is required to pay duty on Bearing/Wearing Plate or not? - Held that: - As without Bearing/Wearing Plate pipe cannot be laid down and the same is in the case of pipe fittings. Without pipe fittings also pipe cannot be laid down - M/s SPL is entitle for exemption under Notification No. 06/2002 for clearance of Bearing/Wearing Plate. Whether the extended period of limitation is invokable to the facts of this case or not? - Held that: - there is no concept in the Central Excise Act/Rules to declare in advance that M/s SPL and M/s SPML are related person, therefore, it cannot be attributable that appellant has suppressed the fact that they are related person - As the necessary certificate obtained by M/s SPL in that circumstances, it cannot be alleged that M/s SPL is having malafide intention to misclassify the Bearing/Wearing Plate as pipes - extended period not invokable. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 138
  Valuation - Insulating Varnish falling under Chapter 3208 - Whether the appellant is required to pay the duty as per the Section 4A of the Act or Section 4 of the Act? - Held that: - the appellant is manufacturing Insulating Varnish in the packages of 5Kgs, 25Kgs and 205Kgs and affixing the MRP. At the time of the manufacturing of the said goods, the appellant is not known whether these goods are being sold to the industrial consumers or through whole seller or not - there is no allegation that at the time of manufacturing, the appellant was knowing that the goods are meant for industrial consumers. There is no marking on the containers that the goods are meant for industrial use. Therefore, the appellant is not entitled for exemption under Rule 34 of the said Rules. Reliance placed in the case of H & R JOHNSON (INDIA) LTD. Versus COMMISSIONER OF CENTRAL EXCISE, RAIGAD [2014 (6) TMI 453 - CESTAT MUMBAI], where it was held that discharge of duty liability tiles supplied in retail packages to real estate developers / developers, etc. has to be made under Section 4A of the Central Excise Act, 1944 - the appellant is not required to pay the duty under Section 4 of the Act and they have correctly paid the duty under Section 4A i.e. the MRP less abatement. Time limitation - Held that: - it is clear that at the time of manufacturing of the said goods, it was not known to the appellant that whether these goods meant for the industrial consumers or for retail sale. In that circumstances, suppression is absent from the facts of the case - extended period not invokable. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 137
  Rebate claim - CENVAT credit - whether the appellants have manufactured the goods in question in their factory or not? - Held that: - chartered engineer has issued a certificate that the appellant has not purchased any machinery during the period from 2007-2008 except Air-conditioner/Refrigerator which supports the fact that the appellants are having manufacturing facility in their factory - The appellants are having inadequate infrastructure to manufacture of building hardware, Garden and Agricultural Hand Tools and they are having D.C. power backup capacity - Further, the appellants filing regular ER-3 returns and same has not been disputed - All these evidences show that appellants are having manufacturing facility of the impugned goods and the same was not disputed during the period in question. The burden of proof cast on the Revenue that if the appellants are not having manufacturing facility then from where the goods were procured and exported by the appellants. The said crucial evidences is missing in the case. The benefit of doubt goes in the favour of the appellants as they have shown the ample number of machinery installed in the factory which have been used for the manufacturing of finished goods. As crucial evidences of diversion of inputs and procurement of finished goods is missing in the investigation, therefore, the Cenvat Credit cannot be denied to the appellants and consequently, rebate claim already sanctioned to the appellants is not recoverable. Appeal allowed - decided in favor of appellant.

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• Indian Laws

• 2017 (12) TMI 173
  Conviction and order of sentence under Section 22 of ‘NDPS Act’ - Held that:- The trial Court has completely ignored the defence evidence led by the appellant and has failed to evaluate the prosecution evidence in the light of defence set up by the appellant. The appellant has set up a defence that a complaint was lodged with the SSP, Mansa that one Sanjiv Kumar, in collusion with SHO, Police Station, Jhunir, is involved in the selling of intoxicants. The appellant has proved on record the complaint Ex.DW4/A, the inquiry report conducted on the same by DSP as Ex.DW4/D and final report Ex.DW4/E. Both the defence witnesses DW1 and DW2, Sarpanch and Panch have stated that PW3 Inspector Dalbir Singh, SHO, PS, Jhunir had come to the village 5-6 days before registration of the FIR and had threatened the appellant, for the reason that the appellant has filed the said complaint against him and immediately thereafter, the appellant was implicated in the present FIR. In the light of this defence set up by the appellant, the evidence of the prosecution, if examined minutely, proves the conduct of PW3 Inspector Dalbir Singh SHO that he has not acted and followed procedure in accordance with law. The statement of PW3 Inspector Dalbir Singh, on careful scrutiny, clearly make out a case that provisions of Section 50 of NDPS Act were not at all followed. This witness has clearly admitted that he has not informed the accused regarding his right under Section 50 of NDPS Act. The prosecution has examined only three witnesses, out of which PW1 HC Gurdeep Singh is a formal witness, who has deposited the sample parcel to FSL. However, there is no explanation given by him that why the sample was not deposited on the same day, as this witness has stated that after obtaining the sample on 16.06.2010, he stayed in police station, Mansa on 16.06.2010 and deposited the same with FSL on 17.06.2010. Even the statement of Investigating Officer PW2 ASI Gurdip Singh do not inspire much confidence. The trial Court, while convicting the appellant, has wrongly held that the provisions of Section 50 of NDPS Act were complied with, as the Investigating Officer himself was the SHO of police station and it has come in the evidence that he has kept the sealed parcel with him and has not deposited the same in judicial malkhana. It has also come in the evidence that he has sent the sealed parcels after a delay of about 11 days and therefore, the finding recorded by the trial Court that there is a compliance of Section 50 of NDPS Act, is erroneous. The trial Court has further ignored FIR Ex.DX dated 24.04.2013, vide which aforesaid Sanjiv Kumar was arrested in connection with an FIR under the NDPS Act. For the reasons stated above, this appeal is allowed. The impugned judgment of conviction and order of sentence of even date i.e. 05.09.2013 are set aside. The appellant-accused is acquitted of the charge under Section 22 of NDPS Act and he shall be released forthwith, if he is not involved in any other case.

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