TMI Tax Updates - e-Newsletter
December 6, 2016

Case Laws in this Newsletter:

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

Articles

1. DEFERRED PAYMENT OF IMPORT DUTY

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Influx of Chinese Firecrackers

2. EDI Facilities

3. Trade Agreement between India and Bhutan

4. Products Included in Export List

5. Setting up of SEZ

6. Benefits of Debit Card Activation – FAQs

7. Government of India takes policy decisions to encourage cashless/electronic transactions; Asks the Government employees to take the lead and maximize the usage of Debit Cards for personal related transactions instead of cash

8. Any Payment above ₹ 5,000 to Suppliers, contractors, grantee/loanee institutions etc by Government Departments to be now made through e-Payment to attain the goal of complete digitization of Government payments

9. RBI Reference Rate for US $

10. Government firms up plans to take the Digital Payment Communication Campaign to district, taluka and panchayat levels

11. Commerce & Industry Minister says Gem & Jewellery sector has direct impact on job creation and provides maximum jobs to people who come from rural areas

12. Verification of High Value Suspicious Declarations made under the IDS 2016

Notifications

DGFT

1. 31/2015-2020 - dated 3-12-2016 - FTP

Continuation of Minimum Import Price (MIP) on 19 HS Codes of Iron and Steel under Chapter 72 of ITC (IIS), 2012 -Schedule — 1 (Import Policy): amendment in import Policy Conditions

Income Tax

2. 109/2016 - dated 1-12-2016 - IT

Section 10(46) of the Income-tax Act, 1961 Central Government notifies the Chandigarh Building and Other Construction Workers Welfare Board , a board constituted by the Administrator, Union Territory, Chandigarh in respect of the following specified income arising to the said board

Highlights / Catch Notes

Income Tax

• Society's Income Excludes Transfers to 'Distribution Pool Fund Account' per Chapter XVI Bye-laws.

  Case-Laws - HC : Income of the Society cannot be anything beyond the scope of Chapter XVI of the Bye – laws. Therefore, logically the amount transferred to the ‘Distribution Pool Fund Account’ cannot be brought within the umbrella of Chapter XVI. - HC
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• Independent Enterprises Not Subject to Section 92A; ALP Adjustments Invalid by Law.

  Case-Laws - AT : Once the assessee and Northstar are held to be independent enterprise, outside the scope of Section 92A, the very basis of ALP adjustments ceases to hold good in law. - AT
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• Direct assessment u/s 143(3) valid without draft order when no income variation proposed for eligible assessee.

  Case-Laws - AT : AO was justified in directly issuing the assessment order u/s 143(3), without first issuing a draft assessment order, even though the assessee was an ‘eligible assessee’ u/s 144C, as the AO did not propose to make any variations in the income returned by the assessee. - AT
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• Assessee challenged over unproven cash payments for removing encroachments from sold land, raising questions about development expenses.

  Case-Laws - AT : Allowability of development expenses incurred in respect of land sold - assessee failed to prove that the said charges was paid for removal of encroachments have been paid in cash - AT
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• Section 43B: Incentive Payments Not Considered Bonuses for Tax Purposes, Despite Label Used by Taxpayer.

  Case-Laws - AT : Disallowance u/s 43B on account of bonus - an incentive which has been paid out of his business consideration would not partake the nature of bonus, merely because the nomenclature applied by the assessee is bonus - AT
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Customs

• Court Upholds 10% Deposit Requirement u/s 129E of Customs Act, 1962, Rejecting Appellant's 2.5% Claim.

  Case-Laws - AT : Pre-deposit - Section 129E of the Customs Act,1962 - The argument cannot be accepted that, Appellant is required to deposit 2.5% and not 10% as prescribed under the said provision - AT
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Indian Laws

• New Rule: Government Must Use E-Payments for All Transactions Over Rs. 5,000 to Suppliers and Contractors.

  News : Any Payment above ₹ 5,000 to Suppliers, contractors, grantee/loanee institutions etc by Government Departments to be now made through e-Payment
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• Activating Your Debit Card: Enhance Security, Convenience, and Financial Management with Easy Access to Funds and Better Tracking.

  News : Benefits of Debit Card Activation – FAQs
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• Out of 331 notified Special Economic Zones (SEZs) in India, 206 are currently operational.

  News : Presently, out of 331 notified SEZs a total of 206 SEZs are operational.
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Service Tax

• CENVAT Credit Restriction: Invoices Must Match Individual Names; Separate Entities Can't Claim Joint Credit Benefits.

  Case-Laws - AT : Principle of seperate purposes - CENVAT credit - Under any circumstances an individual cannot avail CENVAT credit on the basis of invoices which is not in his name - For registration sake all individual appellants are separate entities but only for availing CENVAT credit they are joint entity. This type of change of principle for separate purposes is not justified. - AT
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• Reverse Charge Mechanism: Commission on Invoices Not Taxed as Business Auxiliary Service Without Third Party Involvement.

  Case-Laws - AT : Import of services - reverse charge mechanism - Business Auxiliary Service - though the amount shown in the Invoice as Commission, in the absence of third party, it cannot be taxed as BAS - AT
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• Imported Services Exempt from Tax if Protected by International Agreements, Section 66A Cannot Override These Protections.

  Case-Laws - AT : Exemption from levy of service tax on import of services - When the enactments that honour international agreements specifically immunize the operations of the service provider from taxability, a law contrary to that in the form of section 66A which legislates such operations into tax net will not prevail - AT
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Central Excise

• Valuation of Metallic Goods: No Legal Mandate to Value Bought-Out Items Solely on Cost Basis under Central Excise Laws.

  Case-Laws - AT : Valuation - metallic - reduction of value of bought out items supplied with manufactured goods - There is no legal requirement that any bought out items are to be considered only on cost basis - AT
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• Jute carpets without pile or loops classified under subheading 5703.20 for central excise purposes.

  Case-Laws - AT : Classification of manufactured carpet - no pile or looped surface formed - the impugned goods are jutes carpet classifying the same under sub heading 5703.20. - AT
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VAT

• High Court Quashes Reassessment Order Due to Lack of New Material u/ss 49 and 24.

  Case-Laws - HC : The STO virtually reviewed the decision of the Commissioner u/s 49 which, merged with the order of the Tribunal, as it were, based on no new material much less any significant material which could have permitted an authority to validly reopen assessment u/s 24 - re-assessment order quashed - HC
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Case Laws:

• Income Tax

• 2016 (12) TMI 252
  Expenditure incurred on Dry Docking - HC order [2015 (7) TMI 995 - UTTARAKHAND HIGH COURT] alowing Payment made on account of royalty to State Govt. and Expenditure incurred on Dry Docking expenditure - Held that:- We do not find any legal and valid ground for interference. The Special Leave Petitions are dismissed.

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• 2016 (12) TMI 251
  Claim of deduction u/s 80IA - initial assessment year - HC order [2016 (4) TMI 259 - MADRAS HIGH COURT] stating once such initial assessment year has been opted for by the assessee, he shall be entitled to claim deduction u/s 801A for ten consecutive years beginning from the year in respect of which he has exercised such option subject to the fulfillment of conditions prescribed in the section. Hence, the term 'initial assessment year' would mean the first year opted for by the assessee for claiming deduction u/s 80IA - Held that:- The special leave petition is dismissed. Pending application, if any, stands disposed of.

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• 2016 (12) TMI 250
  Addition u/s 68 - admitted liability - addition of share capital - HC held [2016 (6) TMI 965 - CALCUTTA HIGH COURT] upholding the addition on account of alleged share capital to the extent of Rs. 8,77,500/- under Section 68. A sum of Rs. 6,62,000/- had earlier been admitted by the assessee during a disclosure as submitted by Mr. Khaitan - Held that:- We find no reason to entertain this special leave petition, which is, accordingly, dismissed.

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• 2016 (12) TMI 249
  Review application - Addition to income - survey operation under Section 133A - Held that:- The learned counsel appearing for the petitioner has submitted that the findings of fact recorded, more particularly, in paragraph No.10 in HC order [2015 (2) TMI 256 - DELHI HIGH COURT] stating that the actual reply to the show cause notice is silent as to the date. This itself casts doubt as to whether the retraction was in fact made or was claimed as an afterthought is incorrect and in the circumstances, the petitioner would like to file a review application before the High Court and, therefore, he seeks permission to withdraw this special leave petition. Permission is granted with the above liberty.

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• 2016 (12) TMI 248
  Interpretation of the provisions of Section 158BB and Section 158B (b) - undisclosed income - Held that:- The assessee has rightly relied on a decision of this Court in the case of Commissioner of Income Tax Vs. N.K. Laminates P. Ltd. reported in (2014 (4) TMI 565 - ALLAHABAD HIGH COURT ) wherein the Court has examined at length the provisions of Section 158B, 158BB and 158 BC of the Act which relate to undisclosed income and has come to the conclusion that the material which is not found at the time of search or as a result of requisition of books of account or other document, cannot be made the basis for determination of undisclosed income under Section 158(B)(B). It is necessary mandate of Section 158(B)(B) of the Act that any material which is found during the search itself should form the basis of any additions which may be made. The facts in this case are otherwise. The matter is therefore, concluded by the facts and even otherwise on merits the question is answered in favour of the assessee

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• 2016 (12) TMI 247
  Refusal to renew the registration under Section 80G - Held that:- It is evident that after the omission of the proviso to Section 80G (5) (vi) of the Act there is no requirement of any renewal of registration under Section 80G at all in case the registration was valid as on 01.10.2009, which evidently is the position in the case of both the petitioners since their registration under Section 80G was valid till 31.03.2010. The said position is even accepted by the CBDT in its Circular issued from time to time. The plea of learned counsel for the Income-tax Department that the petitioners having themselves approached the CIT for renewal of their registration and not compelled by the Department to do so, it was open to the Commissioner to have passed an order refusing renewal under Section 80G of the Act does not have any force. The statutory authorities have to exercise their power in terms of what has been given to them by the statute under which they have been created. If the power of renewal of registration has been taken away by the amendment from 01.10.2009, there was no occasion for the CIT to exercise his power merely on the ground that the petitioner had filed an application for renewal of registration, rather he ought to have acted in the same manner as the Director of Income-tax (Exemption), Delhi by his letter dated 09.09.2010, communicating that in view of the amendment to Section 80G (5) (vi) through Finance Act (No.2), 2009 there was no need to seek renewal of the certificate. It is evident from the legal position as obtained from 01.10.2009 that the registration granted under Section 80G would operate in perpetuity, unless specifically withdrawn. For the aforesaid reasons, we hold that the impugned orders dated 29.09.2010 and 27.10.2010 of the CIT-1, Patna are illegal and invalid and they are, accordingly, quashed. Cancellation under Section 12AA (3) - Held that:- This Court is, of the view that the order dated 28.11.2012 of the CIT-1, Patna cancelling the registration of Imarat Shariah Trust under Section 12AA is contrary to law. With regard to the Nyas Samity as to be held to be a trust in existence at least since the year 1958 and in that view of the matter even if it had been created or established for the benefit of a particular community or caste, which is not factually so as held above, it would not be covered by the exclusion provided under Section 13 (1) (b) of the Act from the benefit of the provisions of Section 11 or 12 of the Act. Thus, for the aforesaid reasons, the show cause notice dated 13.12.2010 in the case of the petitioner, Nyas Samiti as also the show cause notice. Revision u/s 263 - Held that:- On a consideration of the order of the CIT, while reference to the fact that the assessing officer has not considered the refusal of renewal of the exemption under Section 80G of the Act and the show cause notice for cancellation of registration under Section 12AA of the Act can be considered as an attempt to overreach and ignore the stay order granted by this Court but the same would not apply to the remaining part of the order where he has set aside the order of the assessing officer by pointing out the lacuna during the assessment process. This Court does not agree with the submission of learned counsel for the petitioner that merely because it has been granted exemption under Section 12AA of the Act, therefore, nothing is required to be done during the assessment proceeding except to accept the return. For the aforesaid reasons, while the CIT-1, Patna is warned not to try to overreach the orders of this Court in the future, but at the same time it is not a fit case for setting aside the order dated 27/29.3.2014. The assessing officer, however, while making assessment should keep in mind the fact that both the impugned order dated 28.09.2010 and the show cause notice dated 13.03.2010 have been quashed by this Court and accordingly decide the matter in accordance with law keeping the same in view. It shall also be open to the petitioner to take such plea with regard to sale of medicines, commissions, Naivedya and Prasad as per the principles of law laid down by the Courts.

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• 2016 (12) TMI 246
  Admission of additional evidence - grievance of the Revenue is that the additional evidence ought not to have been admitted in the context of the remand report - Held that:- We find that the additional evidence was in the form of confirmation letter from the lender and details of repayment which was not available on record during the Assessment Proceedings. It is this, additional evidence which was produced by the Respondent-Assessee to establish the genuineness of the loan. Thus, the exercise of discretion by the CIT(A) in admitting the to admit additional evidence under Rule 46A( 1)(d) of the Income Tax Rules cannot be said to be perverse. Incidentally, it needs to be noted that on merits of the claim being allowed on the basis of the additional evidence, the Revenue has made no grievance. No substantial question of law.

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• 2016 (12) TMI 245
  Penalty under section 271(1)(c) - addition u/s 68 - Held that:- The assessee has failed to even furnish the basic details of confirmation and / or PAN numbers of the said parties. The assessee cannot take the shelter under the garb of filing the ledger accounts / receipts issued by MSRTC to establish its case. The assessee has shown the said parties as loan creditors and the onus was upon the assessee to fulfill the conditions laid down in section 68 of the Act. Where the assessee has failed to discharge its onus and the addition has been confirmed in the hands of assessee, then the assessee is held to have concealed the particulars of income and is thus, liable for levy of penalty under section 271(1)(c) of the Act. - Decided against the assessee.

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• 2016 (12) TMI 244
  TDS u/s 194C - demands raised u/s 201/201(1A) - payments made by the assessee towards Carriage Inward and Carriage Outward - Held that:- TDS is not to be deducted from the payment made to transporters who furnished PAN. The Assessing Officer has wrongly interpreted that this provision is applicable to tax deducted by assessee who are engaged in transport business. This in my considered opinion is an erroneous interpretation not sustainable in law. In my considered opinion learned CIT(Appeals) has correctly appreciated the law and the facts of the case and the same does not need any interference. When the assessee has satisfied the conditions of Section 194C(3), liability of payee to deduct tax at source would cease and accordingly, application of Section 40(a)(ia) would also not arise. See Soma Rani Ghosh [2016 (10) TMI 55 - ITAT KOLKATA ] - Decided in favour of assessee

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• 2016 (12) TMI 243
  Penalty u/s. 271(1)(c) - non declearion of short term capital gain on sale of land - assessee has claimed that the assessee has sold agricultural land - Held that:- The plea of the assessee that the land is an agricultural land lacks merit and is not borne out of the records and the assessee during assessment accepted that the land is not agricultural land but an industrial land. Thus, this explanation offered by the assessee that the said land was an agricultural land and hence not exigible to tax could not be held to be a bonafide explanation as the facts narrates a totally different story that the said land being under MIDC and a barren land having no source of water is not under cultivation , to take it out of ambit from the penalty provisions u/s 271(1)(c) of the Act. The plea of the assessee that the assessee has reduced the sale consideration of the said land from the Block of the asset is again and hence capital gains were not declared is again devoid of merits. The assessee held industrial land which was sold during the impugned assessment year and the land is not eligible for depreciation as per scheme of the Act . Thus, the contention of the assessee that the assessee reduced the sale consideration from the Block of asset is also not borne out from the records as on perusal of the financial statement of the financial year ended 31-03-2008 reveals that there was not block of asset created by the assessee for the land held by the assessee and this land was shown as separately under the schedule of investment(page 45/pb). The assessee has sold the said land vide sale deed executed in the previous year relevant to the impugned assessment year and also even during the succeeding assessment year, the assessee did not declare the said capital gain in the return of income filed with the Revenue. While on the other hand we order deletion of penalty levied by the authorities below on the allegation of tax sought to be evaded by the assessee on difference between full value of consideration as determined by DVO of Rs. 35.75 lacs and the actual sales consideration of Rs. 31.20 lacs as the same was brought to tax owing to deeming fiction created by Section 50-C of the Act and no evidence has been brought on record by the Revenue that any onmoney in excess of actual sale consideration of Rs. 31.20 lacs was actually received by the assessee which was not declared and disclosed to the Revenue in the return of income filed with the Revenue by the assessee.

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• 2016 (12) TMI 242
  Income from share transactions - Nature of income - Short Term Capital Gains or income from business - Held that:- As decided in assessee's own case for AY 2007-08 the issue has been decided against the assessee. We, therefore , respectfully following the decision of the coordinate bench uphold the orders of authorities below in treating the STCG as income from business. Disallowance u/s 14A read with Rule 8D - Held that:- We find that in the case of assessee the exempt income from dividend was Rs. 40,000/- during the year. We are in agreement with the arguments advanced by the ld.AR that the disallowance u/s 14A r.w.r 8D should not exceed the exempt income earned during the year. The case of the assessee is also supported by the decisions referred and relied to by the ld AR in which it has been held that disallowance cannot be exceed the amount of exempt income. We set aside the order of the ld. CIT(A) and direct the AO to delete the addition of Rs. 18,51,670/- by sustaining the disallowance to the extent of Rs. 40,000/- only. Confirmation of disallowance on account of car expenses, depreciation of motor car, telephone expenses, conveyance allowance and travelling expenses - Held that:- We find that the adhoc disallowances has been made by the AO at the rate of 20% of the total expenses in respect of car expense, depreciation , telephone, office expenses, conveyance, miscellaneous expense, foreigen travel and other travelling. The ld CIT(A) reduced qua car , depreciation and telephone to 1/6th whereas the disallowance in respect of office expense, conveyance and miscellaneous was retained at 10% and the disallowance on account of foreign travel and other travel was confirmed. . Having seen the nature of expenses incurred , we find that the basis of confirmation is tribunal decision and CIT(A) decisions in the case of the assessee himself. Further we find that disallowances were purely on adhoc basis. We are therefore of the considered opinion that it would be justified and reasonable if the disallowances is restricted to 10% of the total expenses Addition on account of commission income on the basis of AIR information available with the department - Held that:- We find from the reconciliation statement that most of the entries attributing to the difference between the books of the assessee and Form 26A were duly recorded by the assessee either in the preceding or succeeding year. We, therefore, consider it fit and proper to restore the mater to the file of the AO to verify the facts and decide the matter on the basis of reconciliation statement filed by the assessee as per fact and law. This ground is allowed for statistical purposes. Disallowance on account of foreign travel expenses - Held that:- As find from the record that the ld.CIT(A) while confirming the action of AO observed that the assessee failed to demonstrate that the expenses of Rs. 2000/- were incurred wholly and exclusively for the purpose of business. We do not find any infirmity in the findings of the ld.CIT(A) and accordingly same is confirmed on this issue Disallowance of travelling expenses - Held that:- CIT(A) upheld the action of the AO on the ground that the assessee failed to prove that one of his employees visited Shirdi for cracking the business deal with one of the client but relevant documents have not been submitted as to which employee was sent to Shirdi, to whom did he meet and what business purpose was served. Since, the assessee failed to controvert the findings of the AO before the ld.CIT(A) and here also no contrary documents were submitted by the ld.AR to disprove the finding of the ld.CIT(A), we confirm the findings of the lower authorities

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• 2016 (12) TMI 241
  Assessment u/s 153A - long term capital gain assessed as income from other sources - Held that:- No jurisdiction to assess the long term capital gain as income from other sources as the same is not based upon the seized or incriminating materials found during the search proceedings qua the long term capital gain. Similarly the CIT(A) enhancing the assessment is also not based upon any seized or incriminating materials found during the search and therefore the enhancement is also without jurisdiction u/s 153A Addition made u/s 69C - Held that:- We find from the orders of AO as well as CIT(A) that these additions are not based upon the seized or incriminating material found during search proceedings on the assessee and therefore additions are beyond the scope of assessment u/s 153A. Treating the entire sales proceeds of Shares as unexplained cash credit u/s 68 - long term capital gain was not genuine - Held that:- In the case of the assessee the purchase of shares were made through SEBI registered brokers though off market which were accepted by the AO in the AY 2003-04 including the source of purchase out of speculation gain of Rs. 1,49,916/- and out of cash Rs. 8,383/-. Similarly sale of shares were also made through SEBI registered brokers. All the transactions of purchase and sales of shares were evidenced and supported with bills and vouchers of the brokers and confirmations from the brokers, acknowledgements of payments and receiving the sale proceeds by account payee cheques. The ld CIT(A) or AO could not bring any evidence on records to prove or rebut the evidences on records except the some enquiries which could not prove anything.We therefore set aside the order of CIT(A) on this issue and direct the AO to delete the addition Addition towards the cost of purchase of shares u/s 69C of the Act as unexplained expenditure - Held that:- The assessee has purchased the shares for a consideration of Rs. 1,58,299/- in the AY 2003-04 out of speculation income of Rs. 1,49,916/- and cash of Rs. 8,383/- and the investment was shown in the balance sheet as on 31.03.2003 and also the speculation income was shown by the assessee in her return of income as short term capital gain and assessed and accepted by the AO even while framing the assessment u/s 143(3) r.w.s. 153A of the Act for AY 2003-04. We also find the necessary evidences in the form of bills of SEBI registered brokers, shares duly transferred in name of the assessee, confirmation of brokers qua the share transactions and payments receipts etc were produced before the AO as well as CIT(A) though the shares purchases were off market. We have already deleted the addition on account of treating the entire sales consideration u/s 68 of the Act in para 8 of this order above. In our opinion the investments in the shares were made in the AY 2003-04 and accordingly order of CIT(A) confirming the addition cannot be sustained. Addition being commission payments to brokers @ 5% of sales consideration from sales of shares - Held that:- We find that the assessee has proved the genuineness of the transactions of sales and purchase of shares by producing the supporting evidences and the revenue has not brought anything contrary on records except guessing the practice of charging commission @ 5% of sales proceeds in case of bogus transactions. We find merit that nothing incriminating was found by the search team qua the commission payments and therefore addition can not be sustained which is just a guess and hypothesis by the AO Disallowance of short term capital loss on sale of shares - not allowing the set off of the said short term capital loss against the long term capital gain - Held that:- We find from statement of Citibank at page 113 that a payment was cleared in favour of G R Pandya Share brokering ltd on 19.10.2005 of Rs. 5,00,000/-. Similarly, a payment was cleared on 2.12.2005 of Rs. 3,34,924/- by clearing but name is not clear from the statement. The AO has not made any enquiry from the bank and thus failed to verify the transaction despite assessee s furnishing the bank statement before him. He proceeded to disallow the STL of Rs. 6,54,961/- only on the basis of statement of share broker denying the transactions. Under these circumstances the addition as made by the AO and confirmed by the CIT(A) cannot be sustained. In our opinion the AO has not made any enquiries from the bank even and has not considered the bills vouchers, D-mat a/c confirming the purchase and sales of shares by the assessee furnished by the assessee, BSE records for sale of Shakun Construction Ltd ,purchase of Kailash Ficom Ltd. Under these circumstances we are inclined to set aside the order of CIT(A) on this issue and direct the AO to delete the disallowance. Disallowance of exemption u/s 54F of the Act out of long term capital gain on sale of shares - Held that:- The various reasons cited by the authorities below are that the assessee did not furnish the agreements with the builder qua the purchase of flat and also that the income by way of long term capital gain on sale of shares was found to be bogus. As we have decided the issue of long term capital gain on the sale of shares as genuine and deleted the additions under the head of other sources, we are of considered view that it would be fair and reasonable to restore the issue back to the file of AO to decide the matter afresh after affording a reasonable hearing to the assessee and the decide the issue of allowability of exemption u/s 54F of the Act accordingly as per facts and law. In view of our discussion hereinabove we set aside the order of CIT(A) on this issue and direct the AO to decide the issue afresh.

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• 2016 (12) TMI 240
  TDS u/s 194I - TDS towards sublease of 5 Bigha land - Held that:- This payment of Rs. 3 lacs paid by the assessee to Suzlon Energy Limited towards sublease charges for 5 bigha land at Baramsar, Tehsil and District Jaisalmer, Rajasthan for setting up windmill project is not covered within the ambit and mandate of Section 194-I of the Act and no tax is deductible at source as the payment is made albeit as sublease charges for acquiring the rights in property which is akin to ownership rights. Common infrastructure facilities as detailed above require rendering of services associated with these infrastructure facilities for availing these infrastructure facilities which are in the nature of payment to contractor for carrying out the work associated with the utilization of these common infrastructure facilities. These are payments which are contractual payment for provision of various common infrastructure facilities by Suzlon Developers Private Limited to the assessee and is covered u/s 194-C of the Act. The assessee has claimed that the lower deduction certificate was issued by ACIT in favour of Suzlon Developers Private Limited to deduct tax at source @0.55% on contractual payments during the financial year 2003-04 which was produced by the payee (pb/page 19). In our considered view,this payment of Rs. 3 lacs was covered under the provisions of Section 194-C of the Act and the assessee has defaulted in not deducting tax at source u/s 194-C of the Act on this payment of Rs. 3 lacs to Suzlon Developers Private Limited. The verification is required from the side of A.O. w.r.t. claims of the assessee that the said Suzlon Develoeprs Private Limited hold lower deduction certificate issued by Revenue u/s 197(1) of the Act as also the claim of the assessee that the said Suzlon Develoeprs Private Limited has duly paid taxes on these payment of Rs. 3 lacs paid by the assessee( page 19-20/pb) and accordingly we set aside and restore this issue to the file of the A.O. with a direction to verify the afore-stated contentions of the assessee that M/s Suzlon Developers P. Ltd. has produced TDS certificate issued u/s 197(1) of the Act in their favour for the impugned assessment year 2004-05 for lower deduction of tax at source @0.55% on contractual payments and also that they have duly paid the taxes to Revenue after including afore-stated receipts.

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• 2016 (12) TMI 239
  Validity of assessment against non-existent concern - Held that:- We set-aside the action of the Assessing Officer in framing the impugned assessment against the Siemens Corporate Finance Pvt. Ltd. on 16/08/2012, because on the said date, it was a non-existing concern on account of its amalgamation with Siemens Technology and Services Pvt. Ltd. w.e.f. 01/10/2011 following the scheme of amalgamation approved by the Hon'ble Bombay High Court on 26/08/2011.As a consequence, the assessment order dated 16/08/2012 is held to be as invalid and void-ab-initio - Decided in favour of assessee

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• 2016 (12) TMI 238
  Disallowance of claim of depreciation - depreciation on the capitalise WDV on account of unpaid customs duty - Held that:- We find that the FAA had followed the order of his predecessor for the earlier year and upheld the addition.Nothing has been brought on record to challenge the findings given by the AO and the FAA about the disallowance.Therefore, confirming the order of the FAA, we decide the first ground against the assessee Addition on account of notional interest at the rate of 8% on the sums advanced to subsidiary - Held that:- We find that the assessee had not established the basic fact of not charging the interest from RCA and charging interest from the other subsidiaries. It has to explain as to why different treatment was given with regarding charging of interest.In our opinion, the FAA was justify in holding that making a bald statement of commercial expediency for an expenditure is not enough, that the assessee has to establish the fact. In the case under consideration, the assessee had not proved the said basic fact.Therefore, we hold that there is no need to interfere with the order of the FAA. Confirming his order, we decide the second ground against the assessee. Disallowance of professional fees paid - Held that:- We find that the assessee had paid and amount of the 50 lakhs to JA, that it had detected tax at source as per the provisions of the act, it had claimed that project was abandoned, that JA did not return the money, that arbitration proceedings were going on at the time of assessment proceedings, that it had shown the amount in question in the balance sheet under the head loans and advances. In our opinion, the FAA was justified in holding that claim made by the assessee was premature and did not pertain to the AY.under appeal. As the order of the FAA does not suffer from any legal infirmity,so,confirming the same we decide the third ground against the assessee. Addition on account of reversal of provision doubtful debts and bad debts - Held that:- FAA has clearly given a finding of facts that the assessee has filed the details of amounts written off by it and same constituted the part of the audited accounts.In our opinion, once the amounts have been written and not have been shown as provisions, same have to be allowed.Considering the facts and circumstances of the case, we are of the opinion that the order of the FAA does not suffer from any legal or factual infirmity.So confirming her order we decide the effective Ground of appeal against the Revenue.

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• 2016 (12) TMI 237
  Taxability in hands of society - fund transferred to ‘Distribution Pool Fund Account’ - respondent – Society assessed to tax on its income as ‘person’ as defined under Section 2(31) - entitlement to claim exemption over its profits paid to its members and claim it as expenditure in the accounts before offering the profit for tax - Held that:- A combined reading of the preamble to the Bye – laws and salient objects noted supra, lead to an irresistible inference that the Society was formed to save individual salt manufacturers from extinction as per the advise tendered by the Salt Expert Committee. The very fact that the Bye-laws permit the Society to recover the ‘manufacturing expenses’ and ‘other dues’ from its members is a sufficient and a robust indication that the ownership of the Salt to the extent of their respective share of each individual member continues to remain with the respective member himself. This inference is fortified by Clause 80 of the Bye – laws, which permits the members to raise loan on the ‘security’ of their proportional interest in the ‘Agar’ and ‘Salt produced’. Income of the Society cannot be anything beyond the scope of Chapter XVI of the Bye – laws. Therefore, logically the amount transferred to the ‘Distribution Pool Fund Account’ cannot be brought within the umbrella of Chapter XVI. Hence, it is not taxable in the hands of the Society. In the premise, the substantial question of law deserves to be answered against the appellant – Revenue.

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• 2016 (12) TMI 236
  Distribution Partners (DPs) - treated as deemed AEs u/s 92A(2)(i) - TPA - Held that:- Given the fact that the assessee’s exports through the distribution part constitutes less than 5% of its entire exports, and less than 6% of its entire sales, Northstar is certainly not in a position to exercise any dominant influence, over the assessee. The assessee’s decision to accept the terms set out by Northstar, even if that be so, may be justified on account of commercial expediencies or warranted by business exigencies or may simply be compulsion of this somewhat unique and complex business model, but it cannot, by any stretch of logic, be on account of dominant influence of Northstar as a customer. It may even be a sound business strategy to accept a rather passive and back seat role, if one can term it that way, in day to day decision making under this business model, but cannot be on account of dominant influence that Northstar exercises on buying of products from the assessee. The influence of Northstar, given the scale of business through Norrthstar as a distribution part, is too modest to make it a dominant influence in the nature of control. In this view of the matter, as also bearing in mind the earlier discussions on the issue, the assessee and Northstar can not be treated as ‘associated enterprises’ under section 92 A. We uphold the plea of the assessee. Once the assessee and Northstar are held to be independent enterprise, outside the scope of Section 92A, the very basis of ALP adjustments ceases to hold good in law. The impugned ALP adjustment of Rs. 2,51,91,556 must stand deleted for this short reason alone - Decided in favour of assessee

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• 2016 (12) TMI 235
  Income offered to tax under section 42(2)(b) - business for prospecting, etc., for mineral oil - Assessment u/s 143 - nature of receipts - assessment of business income or capital gain - taxability in the hands of the assessee as business income under section 44(2)(b) - classification of income -‘eligible assessee' - selection of assessment year Held that:- The Assessing Officer was justified in directly issuing the assessment order under section 143(3), without first issuing a draft assessment order, even though the assessee was an ‘eligible assessee’ under section 144C, as the Assessing Officer did not propose to make any variations in the income returned by the assessee. The mere fact that the assessee had offered the income of Rs. 14,52,08,040 to tax as business income, by itself, cannot justify the said income being taxed as business income. The receipt of Rs. 14,52,08,400 which was brought to tax in the hands of the assessee as business income under section 44(2)(b) could not be taxed in the hands of the assessee as a business income, since section 44(2)(b) only seeks to reverse, under certain circumstances, the deduction for prospecting expenses already granted to the assessee in computation of business income but no part of the prospecting expenses incurred by the assessee, in respect of the participation interests sold, was ever allowed as deduction in computation of business income. The receipt of Rs. 14,52,08,400, which was in the nature of part consideration for sale of participation interests in PY-1 and CT-OSN-97/1 oil and natural gas exploration site, was liable to be taxed in the hands of the assessee as capital gain. However, such capital gain could be taxed in the hands of the assessee only in the assessment year 2006-07 as transfer of related capital asset, i.e. participation interests in PY-1 and CT-OSN-97/1 oil and natural gas exploration site, took place in the previous year relevant to the assessment year 2006-07. It was for this reason that the said capital gain could not be taxed in the assessment year before us, i.e. 2010-11. In view of the fact that the Assessing Officer has the power, as indeed the corresponding duty, under section 153(6) read with Explanation 2 thereto, to bring the said amount of Rs. 14,52,08,400 to tax in the hands of the assessee for the assessment year 2006-07, we see no reasons to hold that in the event of the said income not being taxed in the present assessment year, i.e. 2010-11, the revenue will be put to undue loss, and that, for this reason, the assessee’s offer for taxability of this capital gain in the assessment year 2010-11 should be accepted.

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• 2016 (12) TMI 234
  Allowability of development expenses incurred in respect of land sold by the assessee - Held that:- In respect of first person, Shri Namdeo Vishwanath Karale, to whom the assessee claimed to have paid Rs. 1 lakh, the said person has categorically stated that he had not done any work in 2002-03. He states that he had received an amount of Rs. 1,50,000/- with the work completed in 2009-10. First of all, there is difference in the amount claimed and received by the said person. The assessee’s claim was of Rs. 1 lakh, whereas the said person claimed to have received Rs. 1,50,000/- for work completed in the later years. The assessee has failed to establish its case and hence, the disallowance of Rs. 1 lakh is warranted. In respect of second disallowance of Rs. 1 lakh, amount being paid to Shri Vishal Ashok Gaikwad for removal of encroachments. The assessee has failed to establish that the said person was residing at the said property against which, the said charges for removal of encroachments have been paid in cash. In the absence of any proof of residence of said person on the said property, there is no merit in the claim of assessee and the same is dismissed. Coming to the last claim of assessee of Rs. 1 lakh, which is claimed to be incurred on construction of compound wall. The recipient has admitted to have carried on the said work and also admitted to have received the amount. However, he did not remember exact number of poles and only for this minor issue, the claim of assessee cannot be rejected. The Assessing Officer is directed to allow the claim of assessee to the extent of Rs. 1 lakh. Accordingly, the order of CIT(A) is modified in restricting the disallowance to Rs. 2 lakhs and allowing the claim of assessee to the extent of Rs. 1 lakh. - Decided partly in favour of assessee As in the case of wife of assessee part of claim of assessee has been accepted out of total expenditure of Rs. 12,90,000/- and only balance of Rs. 7,50,000/- has been disallowed for want of source of making the said payment and whether the expenditure was incurred by the assessee and was allowable in the hands of assessee is a secondary factor. The first fact it has to be proved by the assessee in the present set of facts is whether the assessee had requisite cash available with her to undertake the development work. In the absence of assessee proving the same, there is no merit in the claim of assessee and the same is rejected. The grounds of appeal raised by the assessee are thus, dismissed.

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• 2016 (12) TMI 233
  Disallowance u/s 43B on account of bonus - Held that:- The amount of incentive is being paid to the extent of salary. In such circumstances, where the said payment has been made in majority as equivalent to the salary due, cannot be termed as bonus. This is an incentive which has been paid by the assessee out of his business consideration and would not partake the nature of bonus, merely because the nomenclature applied by the assessee is bonus. The second aspect is that the said amount allegedly claimed as bonus has been credited to the accounts of employees and nothing is shown as payable in the books of account by the assessee. In the entirety of the above said facts and circumstances, there is no merit in applying the provisions of section 43B of the Act which are strictly applicable to the payment of bonus. The nature of payment made by the assessee to the employees is not bonus and is not covered under the Bonus Act and hence, no merit in disallowance of expenditure claimed by the assessee. Accordingly, the Assessing Officer is directed to allow the claim of assessee in entirety. - Decided in favour of assessee

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• 2016 (12) TMI 183
  Condonation of 131 days delay in filing an appeal - Held that:- We are satisfied with the reasons set out in the affidavit in support that the delay in filing the present appeal arose on account of the applicant bonafide prosecuting its Miscellaneous Application for rectification from the order dated 26th October, 2015.

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• Customs

• 2016 (12) TMI 200
  Levy of penalty on co-noticee - Rejection of transaction value - demand of differential duty of Rs. 5,60,481/- - imposition of penalties on Shri Uttam Chand Sawal Chand Jain, M/s.Devasai International, Shri M.Ritesh, Shri T.R. Bhoopalan and M/s.Santon Shipping Services - import of "Glass Chatons" - Held that: - The Tribunal's decision in the case of S.K. Colombolowala Vs CC [2007 (7) TMI 514 - CESTAT, MUMBAI] relied upon by learned advocate has put forth the ratio that proceeding against the co-noticeee comes to an end once the matter concerning the main person has been settled by Hon’ble Settlement Commission. However, in the instant case, the Hon’ble Settlement Commission themselves have, in its order, clearly elucidated that adjudicating authority was free to proceed against other co-noticees in the SCN. This part of the order of Settlement Commission has attained finality since the same has not been challenged or stay thereof was obtained from the competent forum - Coming to the appeal of M/s.G. Devasai International and T.R. Bhoopalan, I note that in the impugned order Commissioner (Appeals) has already reduced the penalties to considerable extent as indicated herein above. I do not find any reason for further interference in respect of the penalties imposed on M/s.Devasai International and Shri T.R. Bhoopalan. They are fair and just with respect to the roles played out by them in the entire matter and also the findings with regard to the said persons. With respect to the penalties under Section 112 (a) and Section 114AA imposed on Shri M.Ritesh, I find that the same requires a revisit. The role of Shri Ritesh, is only as a middleman. While the said paragraph does mention that he has also involved himself in the clearance of the goods, there is no allegation that the said appellant has in any way put his hand or signed any of the Customs documents. This being the case, and especially, considering that the main player in the entire matter has already settled his case with the Settlement Commission. The other penalties on M/s.G.Devasai International and Shri T.R. Bhoopalan have also been considerably reduced by the lower appellate authority. The department has also not filed appeal either against the order of the original authority or against the impugned order. In these circumstances, I set aside penalties under Section 112 (a) and Section 114AA of the Customs Act imposed on Shri M.Ritesh. Appeal filed by M/s.G.Devasai International and Shri T.R. Bhoopalan are dismissed - Appeal filed by Shri M.Ritesh is allowed - appeal disposed off - decided partly in favor of appellant.

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• 2016 (12) TMI 199
  Conversion of shipping bills - 189 free shipping bills to drawback shipping bills - Rule 12 (1) (a) of Drawback Rules - deliberate error made by appellant - request of conversion was made more than one year after the issue of Let Export Order - learned advocate relied in the decision of the case of CC Tuticorin Vs Thiru Arooran Sugars Ltd. [2014 (12) TMI 691 - MADRAS HIGH COURT] - Held that: - In the first place, it is noticed that the decisions of Hon'ble High Court and Tribunal decisions cited by learned advocate relate to the Board's circular No.4/2004-Cus. dt. 16.1.2004. As such, I hold that they cannot be made applicable to the facts of the present case since thereafter Board vide Circular No.36/2010-Cus. dt. 23.9.2010, has taken note of series of judgements and accordingly guidelines had been issued for evaluating and decided upon the request for such conversion. From perusal of the circular, it emerges that Board has empowered the Commissioner of Customs to allow conversion of shipping bill from schemes involving from rigorous examination to schemes involving less rigorous examination (for example, free advance authorization, DFIA reward schemes to drawback/DEPB scheme or schemes involving same level of examination). However, it has been clearly laid down in the circular that since free shipping bills are subjected to NIL examination norms, conversion of free shipping bill into export promotion scheme shipping bill should not be allowed. At the same time, it has been clarified that, in the light of para-4 of the circular, the Commissioner may allow All Industry Rate of duty drawback on goods exported under free shipping bills without conversion of such free shipping bill to Drawback Scheme shipping bill. I find that in the impugned order, the lower authority has only considered the matter of conversion of free shipping bills to drawback shipping bills. However, the alternative allowance of All Industry Rate of duty of drawback on goods exported under free shipping bills without such conversion has not been considered by the lower authority. In the event, the matter is once again remanded to adjudicating authority to re-examine the matter - It is clarified that time bar provision will not apply in this matter - appeal allowed by way of remand.

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• 2016 (12) TMI 198
  Pre-deposit - Section 129E of the Customs Act,1962 - interpretation of statute - adjustment of amount of pre-deposit made while filing appeal befor the commissioner (appeals) - Held that: - The argument cannot be accepted that, Appellant is required to deposit 2.5% and not 10% as prescribed under the said provision in view of the settled principle of statutory interpretation. The Hon’ble Bombay High Court in the case of Greatship (India) Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai-I [2015 (4) TMI 1006 - BOMBAY HIGH COURT] on the principle of interpretation of Taxing statutes, held that The Court interpreting the statute should not proceed to add the words which are not found in the statute. - It is equally settled that nothing is to be read in, nothing is to be implied and one is required to look fairly at the language used and nothing more and nothing less. No doubt, there are certain judgments of the Apex Court which also holds that resort to purposive construction would be permissible in certain situation. However, it has been held that the same can be done in the limited type of cases where the Court finds that the language used is so obscure which would give two different meanings, one leading to the workability of the Act and another to absurdity. I do not find substance in the argument that the amount paid under clause(i) of Sec.129E, which was paid at the time of filing Appeal before the first Appellate Authority can be adjusted against the amount of deposit required to be made under clause (iii) while filing the Appeal before this forum. In the result, the appeals are not entertained - appeal dismissed - decided against Appellant.

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• 2016 (12) TMI 197
  CENVAT credit - the assessee filed an appeal before the Tribunal along with an application for COD in filing the appeal. The Tribunal dismissed the application for COD against which the appellants approached the Hon'ble High Court. Meanwhile the appellants who had reversed the credit earlier had taken suo moto credit of the same amount. The present appeal relates to this credit availed by the appellant suo moto - Held that: - In view of the finding that the appellant had availed credit before the finality of the demand raised as per the earlier show-cause notice, the claim of interest on behalf of the Department is legal and proper. In view thereof, the impugned order is modified only to the extent of setting aside the demand of interest - appeal allowed - decided partly in favor of Department.

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• 2016 (12) TMI 196
  Valuation - the contemporaneous import made in Calcutta Port as is appearing in para 4 of the show cause notice was just a day after the import made by the Bill of Entry No. 805156 dated 30.8.2005 by the appellant. The value declared was USD17.52 in the contemporaneous import but the appellant declared the value at USD13. When there is a data available very near to the present import and that too after the present import, the value of the contemporaneous import has to be accepted. Revenue relies on the decision of the Hon’ble Supreme Court in the case of Rajkumar Knitting Mills (P) Ltd. Vs. Collector of Customs, Bombay [1998 (1) TMI 76 - SUPREME COURT OF INDIA] Held that: - we do not find a comparable basis in absence of the source of supply, terms and conditions of supply as well as quantity of supplies. The judgment relied on by Revenue categorically shows that the supplier is same, quantity supplied is also brought out clearly and there was no much difference between the date of imports. Once the conditions of supplies are known to the importer and that is hidden, then Revenue would have made a case in their favour. But that is not the case in the present appeal. The contemporaneous value cannot be treated as contemporaneous in absence of details relating to source of supply, quantity and conditions of contract. Therefore, Revenue is not benefitted from the Apex Court judgment cited We do agree with the serious contentions of Revenue, but in absence of comparable value, it is difficult to accept such contention. Learned AR supports the adjudication and opposes the order of learned Commissioner (Appeals). We fully agree with learned AR that learned Commissioner (Appeals) has gone only for the comparison of the contemporaneous evidence without looking to the valuation rule as is agitated by learned AR. But to come to rescue of learned AR, the ingredients of valuation have not also been invoked in the show cause notice - appeal dismissed - decided against Revenue.

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• 2016 (12) TMI 195
  Liability of duty - section 28 of the Customs Act, 1962 - crucial date to determine the value of the foreign exchange so as to determine the value of import under section 15 (1) (b) of the said Act - Held that: - Law is well settled that question of law can be raised at any stage of the litigation. That was failed to be appreciated by ld. Commissioner (Appeals) and ignored the above question of law to settle. Law is also settled that unless a dispute arises on a issue emanating from the proceeding and such issue was settled by a lower Court and either party to the settlement are aggrieved, a higher Court has no scope to made a judicial review thereof creating & jurisdiction for it. Absence of the decision of the lower authority on the above two issues is an impediment for decision against the order appealed - matter is remitted back to the ld. Commissioner (Appeals), who shall deal with all questions of law arising out of the dispute and hearing defence plea shall pass a reasoned and speaking order. Only upon the issue as to the person liable to duty is determined, the issue of valuation shall be determined. Appellant is entitled to a fair opportunity of hearing - matter on remand. Appeal allowed by way of remand.

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• 2016 (12) TMI 194
  ROM - there is typographical error in the cause title of the order passed by this Tribunal dated 25.2.2016, therefore, the cause title may be read as 010 No 08-CUS-2008 dated 31.12.2008, OIO No.01-CUS-2008 dated 28.04.2008, OIO No.02-CUS-2008 dated 24.04.2008 and OIO No.03-CUS-2008 dated 28.04.2008 passed by the Commissioner, Customs, Amritsar instead of Order-in-Appeal No.JAL-EXCUS-000-APP-239-14-15 dated 07.01.2015. In that order, it is also mentioned that "Excise Appeal No.C/233/2009 & C/534-536/2009". It should be read as "Customs Appeal No.C/233/2009 & C/534-536/2009" - ROM allowed.

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• 2016 (12) TMI 193
  Review order - dismissal of appeal on account of time bar - Held that: - I find that the learned Commissioner (Appeals) had dismissed the appeal filed by the department as time-barred without going into the merits of the case. The appeal is remanded back to the Commissioner (Appeals) to decide the issue on merits without going into the aspect of limitation. The respondents are at liberty to agitate the matter on the issue of unjust enrichment and produce all relevant documents and defend their case. The learned Commissioner (Appeals) shall afford a fair and reasonable opportunity of hearing to the respondent before deciding the issue on merits. The appeal is thus allowed by way of remand to Commissioner (Appeals).

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• Corporate Laws

• 2016 (12) TMI 187
  Scheme of demerger - Held that:- Considering the entire facts and circumstances of the case and on perusal of the Scheme and the proceedings, it appears that the requirements of the provisions of sections 391 to 394 of the Companies Act, 1956 are satisfied. The Scheme appears to be genuine and bonafide and in the interest of the shareholders and creditors. This Court, therefore, accordingly allows the Company Petitions and approves the Scheme, which includes reductions of the paid up equity share capital and paid up preference share capital of the Demerged Company. The Scheme is hereby sanctioned. Thee prayers made in the respective Company Petitions are granted. The petitions are allowed accordingly.

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• 2016 (12) TMI 186
  Compounding for violation of provisions of section 299 of the Companies Act, 1956 - Held that:- Considering the documents filed, report of the Registrar of Companies, Karnataka. Bengaluru and submissions made by the Practicing Company Secretary we are of the opinion that violation can be compounded by levying the compounding fee . As in pursuant to our Order dated 17/09/2016 mentioned herein above, the Applicants have paid the compounding fee by depositing Demand Draft for Rs. 1,13,400/- (Rupees One lakh thirteen thousand four hundred only) of City Bank, Bangalore drawn on 23/09/2016 in favour of ''Pay and Accounts Officer, Ministry of Corporate Affairs, payable at par". As the compounding fee has been remitted by the Applicants, the offence stated in the petition is compounded. A copy of this Order be sent to Registrar of Companies, Karnataka. Bengaluru for appropriate action.

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• Service Tax

• 2016 (12) TMI 232
  Principle of seperate purposes - CENVAT credit - renting of immovable property service - forged invoices, on which credit availed - invoices instead of being in the name of appellants, were in the name of Shri D.C. Shah and Others - appellant claims that the name D.C. Shah and Others is used synonymously with that of the individual co-owners of the block - reliance was placed in the case of Pharmalab Process Equipments Pvt. Ltd. Vs. CCE, Ahmedabad [2009 (4) TMI 142 - CESTAT AHMEDABAD], by the appellant. Held that: - I find that there is no infirmity in the impugned order - Just because D.C. Shah & Co. signifies the 23 appellants, they cannot be allowed to avail the CENVAT credit individually on the basis of invoice which is in the name of D.C. Shah & Co. When all the appellants can get registered individually and separately and maintain all the records accordingly, what made them not to follow the same fashion in case of availment of CENVAT credit is not forthcoming. Under any circumstances an individual cannot avail CENVAT credit on the basis of invoices which is not in his name. The appellants are replying on cases wherein CENVAT credit was allowed to individual factory on the basis of invoices in the name of head office is irrelevant to the present case. The appellants are not branch offices and the D.C. Shah & Co. is not the head office. For registration sake all individual appellants are separate entities but only for availing CENVAT credit they are joint entity. This type of change of principle for separate purposes is not justified. Under this I hold that all the above appellants are not eligible to avail CENVAT credit on the basis of invoices issued in the name of D.C. Shah and Co. Further, the case law relied upon by the appellant, is not applicable to the case in hand, as the case relates to the CENVAT credit of branch office and Head Office which is altogether different then the facts involved in the present appeals. I find no merit in the appeals of the appellants and uphold the impugned order by dismissing all the appeals of the appellants - CENVAT credit not allowed - appeal dismissed - decided against appellant-assessee.

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• 2016 (12) TMI 231
  Levy of tax - fees paid under Club or Association Service - imposition of penalty u/s 76 and 77 of the act - Held that: - It is not disputed that till introduction of negative list from 1.7.2012, there was no clarity on the nature and taxability of the service provided by the appellant. In fact for the earlier period, it was held that services availed were not in the nature of 'Club or Association Service' but were only 'Technical Inspection and Certification Services'. No doubt, OIA dt. 12.12.2011 upholding such a view of the original authority was not appealed by the department on monetary grounds as per litigation policy. Nonetheless, the fact remains that the matter was not free from doubt and disputed by the appellant on interpretation during the impugned period. It is also to be noted that appellants are a Public Sector Undertaking and that they have accepted their tax liability after 1.7.2012, after introduction of negative list and as of date, the tax liability after 1.7.2012 has been discharged by them with interest, albeit, belatedly. In the circumstances, I am of the considered opinion that the imposition of penalty under Section 76 of the Finance Act, 1994 is not called for and is hereby set aside. Levy of penalty for non filing of return - Their plea of bonafide belief of not requiring to apply for registration and non-filing of returns as no service tax was payable by them, merits consideration. For these reasons, I find that there is sufficient ground for setting aside penalties under Section 77 ibid also, which I hereby do. Tax liability and interest upheld - penalty set aside - appeal disposed off - decided partly in favor of appellant-assessee.

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• 2016 (12) TMI 230
  Import of services - reverse charge mechanism - Business Auxiliary Service - amount paid to their purchaser situated abroad as deduction / commission on the sale of goods - Held that: - There is nothing on record to show that the said DEL was appointed as “commission agent” for the sale of the goods of the appellant to third parties. It may be that DEL might purchase the goods from the appellant and sells the same in Europe. The reliance placed by learned D.R. and adjudicating authority on the clause of agreement that “DEL shall increase the market share of appellant’s products” to conclude that DEL was a commission agent, seems to be erratic reading of the clauses of agreement and this itself does not amount DEL has been appointed as “commission agent”. The amount indicated on the invoice and recorded in the accounts as commission, in our view, will not attract tax under reverse charge mechanism. We also find strong force in the contentions raised by learned Counsel that in order to tax this account as a commission, there has to be necessarily three parties, seller, purchaser and a person who negotiates such transaction. From the records it is very clear that DEL had not negotiated purchase or sale on behalf of appellant or their customers; to our mind the deduction/commission is nothing but trade discount. In view of the factual position as ascertained from the records, we hold that the impugned orders demanding service tax under reverse charge mechanism from appellant are unsustainable and liable to be set aside. Appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 229
  Exemption from levy of service tax on import of services - interpretation of statute - reverse charge transaction - reimbursements made over to service providers - transaction in the nature of commitment charges and waiver fees - whether that exemption can lead to escapement from tax in the hands of the recipient of service in a reverse charge transaction? - claim of exemption under immunity provisions in the Asian Development Bank Act, 1966 and International Finance Corporation (Status, Immunities and Privileges) Act, 1958 - Held that: - while analyzing section 66A of Finance Act, 1994, the fiction of taxable service is legislated and thereafter the recipient is legislated as tax payer. When the enactments that honour international agreements specifically immunize the operations of the service provider from taxability, a law contrary to that in the form of section 66A which legislates such operations into tax net will not prevail In arriving at this interpretation, we are guided by two important considerations both of which flow from the mandate to respect and honour international commitments; more particularly when they have force of law. We have already observed the mischief that would follow to the principle of national treatment if we were to accept the position taken by the adjudicating Commissioner. Our place in the comity of nations is determined by our respect for commitments made at the international negotiation tables. Compliance, as a signatory to international treaties, conventions and agreements, has been the subject of various disputes before the Supreme Court. In the initial years, a strict view with Article 253 as the centre-piece was the trend of judicial thinking. Thus the Hon ble Supreme Court was not much convinced that the doctrine of pacta sund servanda could override the constitutional prescription of legislating treaties into enactment for acquiring force of law. In the evolution of judicial interpretation, the obligation of the State in accordance with Article 51 has been held to render treaties and agreements as binding. In the situation of Agreements having been enacted to have force of law, there can be no doubt that the intent of the those Agreements must prevail over an interpretation that begins and end within the framework of a taxing statute We do not concur with the need for a separate exemption as held in the impugned order. The existing laws enacted by the sovereign legislature of the Union suffice for the purpose of giving effect to Agreements. And to attain that end, the taxing statute, if it offers the scope, must be so interpreted. Confirmation of demands of tax, interest thereon and imposition of penalties are without authority of law. Impugned order is set aside with consequential relief.

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• 2016 (12) TMI 228
  Rectification of mistake - in the final order no. 60144/2016 dated 26.05.2016, wherein the appeal was filed by the Revenue. While drafting the order, this Tribunal instead of Revenue as appellant by inadvertent mistake has written the respondent M/s Airtech Refrigeration as appellant and in the para 3 of the order, infact the appeal was dismissed but inadvertently recorded that the appeal is allowed - Held that: - As mistakes pointed out by the applicant for the respondent are correct, therefore, the application for rectification of mistake is allowed - ROM allowed.

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• 2016 (12) TMI 227
  Demand - non-verification of payment made by appellant - payment of service’ tax could not be verified as same has been deposited in wrong head by the bank - business auxiliary services - Held that: - The documents placed before me has been verified. As the appellant has been able to produce all the relevant documents showing that the payment which has wrongly deposited by bank in wrong head has been rectified and certificate to the effect has been obtained from the PLA Account Officer, New Delhi. In view of that the impugned order deserves no merits, as payment made by the appellant is correct - demand set aside - appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 226
  Levy of service tax or VAT? - activity of leasing of building and machinery to various clients. On this activity, the appellant is paying/booking VAT on the amount of consideration received by them, as they have given right to use the property/machinery - whether the activity amounts to provision of service or sale? - Held that: - I find that in this case, the appellant was paying/booking VAT on the Lease amount. As per the VAT Act, right to use property is liable to VAT also. In that circumstances, it cannot be alleged against the appellant that they have suppressed facts, therefore, the payment of service tax along with interest is sufficient and qualifies as per section 73(3) of the Finance Act, 1994 - I hold that as the appellant was paid service tax along with interest on being intimated to the appellant. No penalty is imposable on the appellant, therefore, the impugned order is qua imposing penalty is set aside - appeal allowed in favor of assessee.

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• Central Excise

• 2016 (12) TMI 225
  Rejection of request of inspection of electronic devices - application for early hearing - Held that: - The appellant has sought examination / comparison of data supplied which is contained in ACER brand laptop and relied upon the show cause notice in the presence of computer expert. The examination of laptop is vital for adjudication of the case. Therefore, the appellant is having a legal right for examination of laptop in question. In that circumstances, we direct the adjudicating authority to allow the appellant to examine the ACER brand laptop and all the record pertaining to that electronic devices be provided to the appellant for consideration - principles of natural justice to be followed - appeal allowed by way of remand.

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• 2016 (12) TMI 224
  Exemption under notification no.67/95-CE dated 16.03.95 for captively consumed goods - The dispute of classification is between the Central Excise Tariff Heading 5902 and 5906. Notification No.67/95-CE allowed exemption for dipped fabrics from whole of basic excise duty when used for the manufacture of final dutiable products. Since the appellants are using Dipped Rubberized Fabrics captively in the manufacture of Nylon Tyres, they are entitled to avail such exemption. However, no exemption is available from payment of Additional Excise Duty leviable under Additional Duties of Excise (Goods of Special Importance) Act, 1956 on such captive consumption. Held that: - the dispute of classification in the present case is limited to the classification of Rubberisation Stage-I Dipped fabric only - it is noted that the product is having shelf life and is also being transported as evidenced from the appellant s own declarations. The length of the shelf life is immaterial as long as it can be established that the product has got identify and is capable of being marketed. The actual sale of such product need not be established in each case. In this connection, reference can be made to the decision of the Hon ble Supreme Court in Cadila Labs. Pvt. Ltd. [2003 (2) TMI 65 - SUPREME COURT OF INDIA]. In the present case, it has been clearly shown that the product has been actually transported by road by the appellant on payment of duty for being used several kms away for the manufacture of excisable goods. This will indicate that the product will not be only classifiable as distinct commodity but is also capable of being transported by the road long distance and capable of being bought and sold. Regarding appellant's claim for exemption of Additional Excise Duty under Notification no.67/95-CE, we note that the said notification grants exemption only for basic excise duty i.e. duty of excise specified in the schedule to the Central Excise Tariff Act, 1985. This issue has been examined by the Original Authority, who noted that the Board vide Circular dated 22.01.2001 categorically clarified that the classification of Tyre Cord Warp Sheet is covered under Heading No.5902 on which AED is leviable from 16.03.1995 to 01.06.1998. The appellants are held liable to pay duty on dipped rubberized fabrics manufactured by them in their factory, they are rightly eligible for modvat credit of the duty paid on inputs used in such manufacture. On submission of proper supporting documents and records, such credit shall be available to them to discharge duty on dipped rubberized fabrics. Regarding the penalties imposed on the appellants, we note that the whole issue involved is interpretation involving classification of impugned goods, which are manufactured and captively used by the appellants. No allegation of any intentional contravention of provisions of law has been alleged or discussed by the lower authority. The Original Authority only recorded that the appellant did not deposit the full liability demanded in the seven notices and hence the penalty. We find that imposition of total penalty of Rs. 30 Lakhs in the present case is not justifiable and cannot be sustained. The penalties are accordingly set aside. The classification and duty demand as made in the impugned order is sustainable - The modvat credit wherever supported with due documents shall be available to the appellant to discharge the duty liability - The penalties imposed are set aside - appeal disposed off.

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• 2016 (12) TMI 223
  Denial of CENVAT credit - there are some input services which have been used for trading activity - Held that: - it appears that during the personal hearing held before the lower authority i.e. Commissioner, the appellant took the plea that they had taken cenvat credit only in respect of input service(s) which were used in the manufacturing of goods. However, this submission has not been supported by any evidence either before the lower authority i.e. Commissioner or before the Tribunal. Hence when there is no evidence produced to establish nexus between the input service and the manufacturing conducted by the appellant, the cenvat credit based on such invoices/bills/challans issued by the ISD is not admissible - appeal dismissed - credit not allowed - decided against appellant-assessee.

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• 2016 (12) TMI 222
  Valuation - chassis cleared by the appellant to body builder who after building the body cleared the complete vehicle to the depot of the appellant for sale by appellant - valuation u/r 8 of Valuation Rules, 2000 or as per Section 4 (1) (a) of the Central Excise Act, 1944 - Held that: - On the first issue whether at all there is a sales of chassis to the body builder, we note that the appellants were clearing the same under a contract to built chassis thereafter deliver to the depots for final sale as vehicle to the intended buyers. The body builder is not buying the chassis from the appellant. There is no sale of chassis to the body builder. No evidence to that effect has been submitted. Further it is clear by the appellant own admission the body built vehicle is cleared from the body builder to the depot of the appellant and sold from there to the customers by the appellant. This clearly shows that there can be no sale of chassis separately to the body builder. We note that transaction value in terms of Section 4 (1) (a) cannot be arrived at based on costing figures provided by the corporate office of the appellant. Whereas the appellants claimed in the written submission before the Tribunal that they had sale of similar chassis to unrelated buyers. Now, this aspect requires verification with documents. In case the appellants were having independent sales of similar chassis, ex-factory, then the valuation of chassis cleared to body builder during the relevant period can be arrived at based on such independent transaction value. This aspect is required to be verified by the Original Authority. Accordingly, the matter is remanded back to the Original Authority for re-adjudication afresh - appeal allowed by way of remand.

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• 2016 (12) TMI 221
  Rejection of refund claim - coal - The sale is governed by the price notified by Coal India Ltd.(CIL). CIL enhanced the price of coal with effect from 01/01/2012. However, later by notification dated 31/01/2012 the enhancement was withdrawn retrospectively with effect from 01/01/2012. The appellants paid excise duty for the month of January 2012 with enhanced price. The buyers of coal paid coal price and duty thereon as per earlier terms without enhancement - whether the refund claim filed for excess paid duty due to withdrawal of enhancement of coal price notified by CIL, justified? - Held that: - We note that both the lower Authorities have rejected the claims without verifying the claims and documents submitted by the appellants. The orders were perfunctory and vague. Certain case laws were relied without examining factual context and applicability - The Original Authority simply rejected the appellants claim with no finding/order regarding crediting the amount to welfare fund in terms of Section 11B. Both the lower authorities failed to appreciate that the presumption under Section 11B is rebuttable. When evidences for such rebuttal are produced by the appellant by way of certificates from customers and CA, bank statement and other documents, then it is the duty of the sanctioning authority to consider all such evidences and pass order. We note that the same was not done in the present cases with required diligence. Presumptive conclusions were drawn and to support various case laws were relied upon. The impugned orders are not sustainable in view of the analysis as above. The same are set aside. The matters are remanded back to Original Authority for due verification of the refund claims by the appellant alongwith all supporting documents. Due opportunity shall be provided to the appellant to submit their defence/clarification - appeal allowed by way of remand.

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• 2016 (12) TMI 220
  Valuation - metallic - reduction of value of bought out items supplied with manufactured goods - Held that: - We note, on careful consideration of the facts of the case, the Revenue has not contested the impugned findings on any legal basis. We find that the respondent had contract for supply of complete Fuse Switch Unit comprising of three components. Only one component is manufactured by them, the other two are bought out and supplied directly to the consignee. We find no reason as to why the respondent should not have a profitable trading of the two items bought and added to final consignment. In the absence of any allegation of manipulated or incorrect invoice/ transaction details, the reasoning adopted by the Commissioner (Appeals) cannot be faulted. There is no legal requirement that any bought out items are to be considered only on cost basis. The Revenue also did not support such plea with any legal basis - appeal dismissed - decided against Revenue.

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• 2016 (12) TMI 219
  Denial of CENVAT credit - manufacture of sponge iron - whether the denial of credit for the period April 2005 to March 2010, invoking the extended period of limitation, on the ground that the inputs have been used in the manufacture of supporting structures, justified? - Held that: - the issue is squarely covered by the earlier decision of the Tribunal in the case of M/s Singhal Enterprises Pvt. Ltd. vs. CCE, Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI], where it was 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 In the light of the above facts and circumstances, we find no reason to interfere with the impugned order passed by the Commissioner (Appeals) - appeal dismissed - decided against Revenue.

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• 2016 (12) TMI 218
  CENVAT credit - cement and steel used for construction of foundation - Held that: - similar issue decided in the case of Commissioner of Central Excise, Jaipur Vs Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA], where the matter was remanded - this case is also remanded to the adjudicating authority to decide afresh in the light of the aforesaid judgment considering the evidence and pleadings of the appellant granting reasonable opportunity of hearing - appeal allowed by way of remand.

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• 2016 (12) TMI 217
  Whether gold bar manufactured by the appellant from Anode Slime/ Dore Anode is eligible to the benefit of exemption Notification 6/2002-CE dated 01.02.2002? - Held that: - similar issue decided in the case of CCE, Vadodara vs. Birla Copper Limited [2015 (11) TMI 901 - SUPREME COURT], where it was held that benefit was eligible - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 216
  CENVAT credit - clandestine removal to avail fraudulent credit - bogus invoices - fictitious firm - Held that: - The evidences placed by department before me are not cogent to establish that appellant is guilty of fraudulent availment of CENVAT Credit. Mere suspicion or assumptions and presumptions cannot be the basis for such serious allegation of fraudulent availment of credit. From the facts and evidences placed before me, I am of the view that department has not succeeded in establishing the allegations raised in the SCN against the appellant. In view thereof, the impugned demand alleging fraudulent availment of credit is not sustainable - appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 215
  CENVAT credit - liability to pay amount of 10% of the value of exempted goods - goods cleared following chapter X - common input and input services in the manufacture of exempted goods as well as dutiable goods without maintaining separate accounts as envisaged under Rule 6(2) of CENVAT Credit Rules, 2004 - Sulphuric Acid classifiable under Central Excise Tariff Heading 2807 00 10 of the First Schedule to the Central Excise Tariff Act, 1985 - Held that: - the appellant cleared the goods without payment of duty not because the goods were per se exempted goods. Sulphuric acid is leviable to excise duty. Only on following the procedure under chapter X does the appellant be eligible to clear the goods without payment of duty. Thus the exemption from payment of duty is based upon fulfillment of conditions by the appellant or the buyer. Therefore at the time of manufacture the appellant cannot ascertain with full confidence that the end product is exempted from duty. The exemption being contingent upon conditions, it cannot be said to warrant a situation to maintain separate accounts. The demand raised alleging that pre-fabricated construction and stationary pre-cooling equipments cleared without payment of duty on the strength of C.T-2 certificate are exempted goods is not sustainable - demand not sustainable - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 214
  Classification of manufactured goods - carpet - classified under sub heading 5703.90 of the First Schedule to the Central Excise Tariff Act, 1985 or under sub heading 5703.20 at nil rate of duty? - Held that: - We have gone through the sub heading sub heading 5703.90 note 2(B) (ii) of Section XI of the Central Excise Act, 1985 wherein the textile products consisting of a ground fabric and a pile or looped surface no account shall be taken of the ground fabrics in the description of the goods or in the process of manufacture. We find that the goods in question consisting of a ground fabric and a pile or looped surface which is essential condition to specify the product in the sub heading note 2(B) of Section XI of the Central Excise Act, 1985. In the absence of such evidence sub heading note 2 (B) Section XI of the Central Excise Act, 1985 is not applicable to the facts of this case. Therefore, we do not find any infirmity in the impugned order, the same is upheld and the appeal filed by the Revenue is dismissed.

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• 2016 (12) TMI 213
  Reversal of input tax credit - common input service - the respondent has not reversed the credit availed on common input service used in the manufacture of final exempted products before their clearance, therefore, the respondent is required to pay 10% of the value of final exempted products - Held that: - reliance placed on the decision of the case of Dr. Writer's Food Products Pvt.Ltd.[2009 (3) TMI 846 - CESTAT, MUMBAI], where similar issue was decided, and it was held that payment of duty on yarn on deferred basis took place before clearance of grey fabrics on which exemption was claimed. Therefore, payment was made before the stage of exemption. Similarly, on payment of duty on the input (yarn) the assessee got the credit which was never utilized. That before utilization, the entry has been reversed which amounts to not taking credit. Hence, in this case, both the conditions are satisfied. Hence, item no. 1 of the table to Notification No. 14/2002-C.E would apply and accordingly the grey fabrics would attract nil rate of duty. Respondent not required to pay an amount equal to 10% - appeal dismissed - decided against Revenue.

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• 2016 (12) TMI 212
  CENVAT Credit - Insurance & Auxilliary Services - input service under Rule 2 (l) of the CENVAT Credit Rules, 2004 - Held that: - The definition of input service after 01.04.2011 has introduced certain exclusions. Sub Clause (c) of the exclusion portion of the definition states that the services of life insurance, health insurance, etc., which are used primarily for personal use or consumption of any employee is not covered within the definition of input service - From the very object of keyman insurance it is evident that the service is availed for protecting the loss that may occur to the company in the event of death of the keyman. Needless to say that the Managing Director of the company falls within the category of keyman of the organization. In such circumstances the activity of insurance and auxiliary services availed for taking KIP cannot be said to fall within the exclusion portion of the definition. The KIP taken by the appellant is a pure financial step as per the requirement of various exigencies like repayment of loans, advances etc., which is intricately related to the financial aspect of manufacturing activity. On happening of contingency as the sum assured is paid to the company, it cannot be said that it is for personal consumption. The appellants are eligible for credit - Appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 211
  Whether the adjudicating authority shall automatically invoke Rule 6 (b) (ii) of the Central Excise (Valuation) Rules, 1975 without ruling out the application of sub-rule (i) of the said rule? - Held that: - the exercise of the Authority in the impugned order is confined to determination of value of clearance for captive consumption under Rule 6, the authority is directed to compute the value in accordance with law within a month of receipt of this order comparing the price charged to independent buyers with the value declared by the appellant in respect of clearance to the sister unit of appellant. Appellant is entitled to the reasonable opportunity of hearing and provide details to satisfy the authority - We make it clear that Rule 6 (b) (ii) shall apply only in the event Rule 6 (b) (i) is not applicable. This should be kept in mind by the authority before any decision is taken. The authority shall issue notice to the appellant within three months of receipt of this order for pleading defence, if any and considering the matter in controversy, defence, material facts and law applicable shall pass the order within three months of last date of hearing. Such time frame has been fixed keeping in view that the matter has travelled a lot from the year 1988 - appeal allowed by way of remand.

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• 2016 (12) TMI 210
  Application of Notification No. 43/2001-CE dated 26.06.2001 - procurement of raw materials - Held that: - When the scope of notification is read, it is the goods that is emanating from imported raw material intended to be exported. Who exports is immaterial. Therefore, the goods that was exported was the outcome of the imported input. Without any contrary finding by the authority below, benefit of the notification is undeniable. There appears no violation of condition of Notification No. 43/2001-CE dated 26.06.2001 - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 209
  Pre-deposit - non-compliance - Section 35F of Central Excise Act, 1944 - Held that: - Since, the Ld. Commissioner (Appeals) dismissed the appeal for non-compliance without considering the merits of the case; I remand the matter back to the Ld. Commissioner (Appeals) to decide the case on merits after giving a reasonable opportunity of hearing to the appellants and the appellants are also requested to co-operate and file all the required documents in support of their claim - appeal allowed by way of remand.

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• 2016 (12) TMI 208
  Demand - Clandestine removal - Held that: - It is noticeable from the finding recorded by the adjudicating authority that conduct of the appellant was good and accounts maintained were trustworthy, as is Revealed from para 12.02 of the adjudication order. He records that there was no doubt about the conduct of the appellant. But surprisingly in para 12.03, he imputed culpability of the appellant for no reason stated. In such circumstance, decision of the authority is arbitrary and is liable to be set aside From the finding recorded by Adjudicating Authority any mischievous conduct of the appellant is not appreciable. Therefore imposition of penalty under section 11AC as well as Rule 25 of the Central Excise Rules, 2002 is uncalled for. In absence of mens rea of the Managing Director, penalty imposed on him is also unsustainable - appeal disposed off - parties are allowed only on penalty aspect - decided partly in favor of appellant.

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• 2016 (12) TMI 207
  Refund claim - sale of cement at contracted price - unjust enrichment - Held that: - I find that the respondents are selling the cement at contracted price i.e. inclusive of duty. Whatever price has been agreed by the respondent with their buyers is the sole consideration of the goods. Further, the Revenue has not given any specific instance that the buyer has taken the credit of higher amount of duty shown in the invoices by the respondent. In that circumstance, I hold that the decision of this Tribunal in the case of Amadalavalasa Cooperative Sugar Ltd. vs. CCE, Visakhapatnam [2007 (1) TMI 432 - CESTAT, BANGALORE] is squarely applicable to the facts of this case. Therefore, I do not find any infirmity in the impugned order and the same is upheld - appeal dismissed - decided against Revenue.

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• 2016 (12) TMI 206
  Refund claim u/r 5 of Cenvat Credit Rules, 2004 - manufacturer of 100% blended yarn during the period January, 2010 to March, 2010 - export of goods - whether the denial of refund on the ground that as the refund is more than Rs. 5lakh, the certification from the chartered accountant required, is justified? - Held that: - The appellant has been able to produce the certification of documents from the chartered accountant for entertaining the refund claim, therefore, the same is required to be examined by the adjudicating authority. In that circumstance, the impugned order is set aside and the appeal is allowed by way of remand to the adjudicating authority for verification of the documents done by the chartered accountant or not. If the adjudicating authority found that the documents filed by the appellant in respect of their refund claim have been certified by the chartered accountant, in that circumstance, the appellant is entitled for refund claim - appeal allowed by way of remand.

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• 2016 (12) TMI 205
  Reversal of CENVAT credit - glass bottles and crates - Rule 3(5) of the Cenvat Credit Rules, 2004 - manufacture of aerated water and Beverages syrup falling under Chapter 21 & 22 respectively of the Central Excise Takiff Act, 1985 - Held that: - It is an admitted fact on record that used glass bottles and crates returned by the customers to the Respondent were removed to its sister unit under proper challans. Since, no new bottles / plastic crates received in the factory of the Respondent were removed to its sister concern as such the provisions of Rules 3(5) of the Cenvat Credit Rules, 2004 will not applicable to such situation, inasmuch as the said provisions mandate payment of amount equal to cenvat credit, in the eventuality, when the inputs or capital goods are removed as such from the factory. I also find that based on the available records, the Commissioner (Appeals) has held that used bottles were removed from the factory of the Respondent, for which no reversal of Cenvat Credit is called for. Further, the Commissioner (Appeals) has also held that even if bottles and crates are capable for repeated use, but the same cannot be considered as capital goods, since the definition does not cover packing material within its purview for consideration as capital goods. Appeal dismissed - decided against appellant-Revenue.

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• 2016 (12) TMI 204
  Refund claim - interest of Rs. 2,80,257/- having been earlier charged and appropriated against a demand was not required to be so charged and adjustable - whether the appellant was entitled to refund? - Held that: - It is strange to notice that learned Commissioner (Appeals), who granted refund on proper adjudication of the matter by his order dated 21.05.2012, without that order being appealed by the department, was reviewed by him for the purpose of ordering recovery of the refund in terms of the order dated 18.06.2013. It does not appeal to common sense as to how the same authority who passed an order shall change his mind in a subsequent proceeding to review his previous order and reverse the same contrary to the judicial discipline and to the detriment rule of consistency. In absence of appeal by Revenue, the order dated 21.05.2012, reached to finality - there is no necessity to dilate the matter further, for which, the appeal is allowed, setting aside the order of learned Commissioner (Appeals).

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• 2016 (12) TMI 203
  CENVAT credit - reverse charge mechanism - Held that: - It has already been held in the case of the same appellant viz., M/s. Exide Industries Ltd. Vs Commissioner of Central Excise, Chennai -III [2016 (5) TMI 1283 - CESTAT CHENNAI] that under reverse charge mechanism, the recipient of service tax is not barred to take credit thereof unless law otherwise requires. There is nothing on record to show the law relating to inadmissibility of the credit claimed by appellant. Accordingly, the Cenvat credit of the service tax claimed by appellant is allowed - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 202
  Clandestine removal - manufacture of MS ingots - Held that: - I find that the adjudicating authority in his OIO No.07/2014 dt. 07.07.2014 at para 6.3 has held that a comprehensive show cause notice proposing demand of duty covering the entire investigation would be issued by DGCEI in due course on conclusion of the investigation. During the course of hearing, a copy of the said Show Cause Notice No.70/2015-CEX dt. 30.09.2015 issued by DGCEI, Chennai was placed. I find that in terms of para 3.2 of Part-I of Chapter 17 of CBEC Central Excise Manual on "Search and Seizure", the adjudicating officer is the competent authority for release of goods and for imposition of penalty. With the issuance of detailed SCN dt. 30.9.2015 by DGCEI, I have no other option but to remand the matter back to the adjudicating authority to adjudicate the issue afresh on merits after granting a fair opportunity to the appellant to defend their case. Accordingly, the orders passed by lower authorities are set aside - Appeal is allowed by way of remand.

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• 2016 (12) TMI 201
  Denial of credit distribution - the head office is not registered with the Central Excise department as input service distributor - Held that: - In a similar set of facts in the case of Samita Conductors Ltd. [2012 (11) TMI 432 - CESTAT, AHMEDABAD], where only ground on the basis of which the credit has been denied is that the registration number was not available and this has been explained subsequently by the respondent by explaining by the time instructions were issued by the Government, the Head office had already issued the invoice and therefore, procedural requirement could not be fulfilled, credit allowed. I hold that in this case, the appellant has taken the credit righty. Consequently, the impugned order deserves no merits - appeal allowed - decided in favor of appellant-assessee.

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• CST, VAT & Sales Tax

• 2016 (12) TMI 192
  Whether the Sales Tax Tribunal fell into error in upholding the re-assessment under Section 24 of the DVAT Act, 2004 given the nature of previous order in relation to proceedings initiated under Section 49 of the Delhi Sales Tax Act, 1975 by the Assessee? - Held that:- it is quite evident that Tribunal’s earlier observation with regard to classification based on the material before it was conclusive. Apparently, the revenue accepted it. What was remitted after the decision of the Tribunal which emanated from the determination under Section 49, was the tax on verifying statutory forms given and that too in the form of a remand by the First Appellate Authority. The materials available with this Court on the record point to the fact that the Sales Tax Officer took this opportunity of a limited remand to issue a notice under Section 24. Neither the order of the AO nor of the STO nor indeed that of the Tribunal throw any light as to on what material persuaded the STO to revisit the entire issue. Thus, it is evident that the STO virtually reviewed the decision of the Commissioner under Section 49 which, merged with the order of the Tribunal, as it were, based on no new material much less any significant material which could have permitted an authority to validly reopen assessment under Section 24. Appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 191
  Pre-deposit of Rs. 15 lakhs - dismissal of appeal for non-deposit of pre-deposit - Held that: - instead of Rs. 15 lakhs, as ordered by the learned tribunal, if the petitioner is directed to pay / deposit Rs. 10 lakhs by way of pre-deposit to be deposited within a period of six weeks from today, the Appeal is directed to be decided by the learned First Appellate Authority on merits and till then rest of the recovery is stayed, it will meet the ends of justice. The impugned orders passed by the learned tribunal is hereby quashed and set aside. Even the order passed by the learned First Appellate Authority dismissing the Appeal is also hereby quashed and set aside and the learned First Appellate Authority is hereby directed to decide and dispose of the Appeal on merits on condition that the petitioner shall deposit Rs. 10 lakhs as pre-deposit within a period of six weeks from today. It goes without saying that on such deposit of Rs. 10 lakhs as pre-deposit, the learned First Appellate Authority to decide the Appeal on merits and on such deposit rest of the demand shall stand stayed - appeal restored on deposit of Rs. 10 lakhs.

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• 2016 (12) TMI 190
  Works' contract - applicability of provisions of M.P. VAT Act, 2002 on works contract - Held that: - The legal question with regard to imposition of liability only with effect from the date the agreement is entered into is a question legal in nature based on the law laid down in the case of Larsen & Toubro Ltd. [2013 (9) TMI 853 - SUPREME COURT] and this aspect of the matter has to be considered. That apart, finding the order identical in nature, not to be a speaking order without disclosing any reason, similar order has been quashed by this Court in W.P. No.1767/2014 and in certain other cases. Order impugned Annexure P/4 and all consequential action thereto stands quashed and the matter remanded back to the Assessing Officer for reconsideration keeping in view the observations made herein above. The petitioner shall appear before the Assessing Officer on 15th December, 2016 and on the same being done, the Assessing Officer shall proceed in accordance with law - petition allowed - decided in favor of petitioner.

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• 2016 (12) TMI 189
  Validity of assessment order - TNVAT Act, 2006 - Held that: - Considering the fact that the assessments are being reopened with retrospective effect from 2009-10 onwards and the petitioner's specific plea is that the manufacture of detergent powder commenced only from October 2014 and that they have sufficient documents to substantiate production, this Court is of the view that one indulgence can be shown to the petitioner to prove the above stand before the Assessing Officer. However, for such purpose, this Court is not inclined to quash the impugned assessment orders. The petitioner can be permitted to file a petition under Section 84 of the said Act and produce necessary documents in support of their contentions, which shall be examined by the first respondent - the writ petitions are disposed of by directing the petitioner to file petitions under Sections 84 of the said Act within a period of two weeks - appeal disposed off by way of remand.

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• 2016 (12) TMI 188
  Recovery of tax dues from the debtors - Remittance by the debtors of the petitioner company of the moneys owed to the petitioner company - Section 45(1) of the KVAT Act, 2003 - Held that: - Though such a prayer is opposed by the learned counsel for the Revenue, this Court considers it expedient to grant some breathing time to the petitioner-company to approach the Hon’ble Supreme Court in pending Civil Appeal No.8505/2011 for the purpose of obtaining the interim relief, if any, in the present case Writ petitions are disposed of with a direction to the petitioner-company to deposit a further sum of Rs. 10 Lakhs within a period of four weeks from today with the first respondent-authority, as undertaken by the petitioner subject to the final decision of the matter by the Hon’ble Supreme Court with a liberty to the petitioner to approach the Hon’ble Supreme Court for seeking the aforesaid interim relief as prayed for.

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• Indian Laws

• 2016 (12) TMI 185
  Professional misconduct by chartered accountant - gross negligence and professional misconduct by respondent, a Chartered Accountant - Held that:- The specific omissions or commission attributed to the respondent are as follows: (1) The respondent issued a certificate, being the statutory Auditor of Ritesh Polysters Limited, which formed the basis for issuing a notification inviting the general public to contribute to the share capital, without verifying actual receipt of cash of Rs. 4.50 crores for allotment of 15,00,000 shares to the promoters worth Rs. 2,25,00,000/-, and the cheques issued by the promoters bounced later. (2) Respondent issued a certificate without qualifying that allotment of shares to the promoters was subject to realisation of cheques. (3) The respondent did not verify the individual bank accounts of the promoters to ascertain whether there was sufficient balance in their account to ensure that the cheques would be honoured, by the payee bank, on its presentation. (4) Respondent failed to verify actual receipt of cash while allotting shares. (5) Contribution of Rs. 2,25,00,000/- as promoters contribution by Ritesh Exports was not examined, similarly routing of Rs. 22,00,000/- through M/s Pratha Investments (owned by the wife of the respondent and being managed by the respondent himself) to the promoters Sri Deepak Agarwal and Sri Ritesh Agarwal, who allegedly contributed Rs. 10,50,000/- each was also not examined. Thus, the said investment of Rs . 22,00,000/- by Sri Deepak Agarwal and Sri Ritesh Agarwal was only a book entry without actual receipt of consideration. The companys money was divered and was brought back as contribution by the promoters. The professional misconduct attributed to the respondent is grave and serious in nature which affects public confidence, and their faith in the integrity and impartiality of the Chartered Accountants and the Institute of which they are members. A false certification by the respondent has enabled the promoters of the company to squander public money, on inducing the general public to subscribe to the share capital of the company. Taking a lenient view, or exonerating such professionals, would encourage others to indulge in similar acts, and completely erode the faith of the general public in the impartiality and integrity of the members of the Institute, and bring the Institute itself into disrepute. The Council of the Institute has recommended removal of the name of the respondent from the Register of the Institute for a period of three (3) years i.e. suspending him from practicing as a Chartered Accountant for a period of three (3) years. The recommendation of the Institute, regarding the nature of the punishment, is not binding on this Court and, in exercise of the wide powers conferred on it by the Act, this Court can impose a different punishment. Thus after anxious consideration of the matter, we find it appropriate that the respondent herein should be suspended from practising as a Chartered Accountant for a period of three years from 01.11.2016 to 31.10.2019.

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• 2016 (12) TMI 184
  Payment of dues of the Company under liquidation - preference to receive the dues - Held that:- The applicant can be paid his dues only on the basis of pari passu, i.e., amount which is paid to all similarly situated workers/employees of the Company under liquidation and no priority can be given to the applicant under the provisions of the Companies Act. Considering the various reports which are filed by the Official Liquidator in the proceedings as well as in OLR No.16/15 by making payment of Rs. 53,266/-, the applicant is brought at par with the other regular workers/employees of the Company under liquidation. Under the provisions of the Act, the applicant for whatever reason, cannot be given priority over any other similarly situated workers/employees of the Company and his claim even if verified, can be satisfied only to the extent at par with the other workers and employees. Only because the applicant has approached this Court time and again would not entitle him to get any priority dehors the provisions of section 529A. The Official Liquidator has declared before this Court that claim of the applicant shall be considered as and when disbursement is done. It is a matter of fact that the Company in which the applicant was working has been wound up by an order of this Court and still the winding up proceedings are pending and the disposal of the properties of the Company in liquidation is still to take place. In light of such facts, this Court has passed the order dated 08.06.2016 as per the provisions of the Act. The applicant would be entitled to any further amount of his claim as and when some amount is available for disbursement at the hands of the Official Liquidator and the case of the applicant shall be considered for disbursement of any further amount at par with the other similarly situated workers/employees.

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