Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 24, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Legality of notice u/s 133(6) - The information sought is under section 133(6) and has nothing to do with any of the provisions of the Co-operative Societies Act - HC
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The samples were given to the foreign agents in person during their business exploratory visit in India and the same would fall under the expenditure laid out or expended wholly and exclusively for the purpose of such business - deduction allowed u/s 37(1) - HC
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Penalty under section 271(1)(c) - there is concealment of income from the HUF, i.e., knowingly the assessee furnished inaccurate particulars of income for computation of tax - penalty confirmed - HC
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Applicability of provisions of section 43B to interest payable on purchase duty - whether interest is a part and parcel of tax liability? - Held Yes, cannot be allowed on accrual basis - deduction to be allowed after actual payment only - HC
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Set off and carried forward of long-term capital loss against the long-term capital gain - if the loss arising in the previous year was under a head not chargeable to tax, it could not be allowed to be carried forward and absorbed against income in a subsequent year, from a taxable source - HC
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Depreciation of 10% on 'creche building' - For the purpose of increasing efficiency, productivity of the women employees were engaged in the factory, creche is created by the assessee in a separate building - depreciation allowed - HC
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Reopening of assessment - The mere fact that the assessment order does not discuss the issue of deduction under section 80-IA(4) of the Act would not lead to the conclusion that the Assessing Officer had made no opinion with regard to the issue. - HC
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Registration under section 12A - Commissioner could not grant registration with retrospective effect. If that be so, the Commissioner could have granted registration only with effect from the commencement of the assessment year in which the application in question was made - HC
Customs
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Refund of Excess duty claimed beyond one year - A person to whom money has been paid by mistake by another person, becomes at common law a trustee for that other person with an obligation to repay the sum received - the petitioner had, under Article 113 of the Limitation Act 1963, a period of three years to institute a suit from that time - HC
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Export of graphite blocks - graphite of nuclear grade - Prohibited goods - offence committed assumes significant dimension in the context of nuclear terrorism. - absolute confiscation and penalty confirmed - AT
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Advance license for deemed export - Compacting process of bulk drugs is a manufacturing process or not - The definition of 'manufacture' of the Exim Policy is very wide - prima facie is in favor of assessee - AT
Service Tax
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Penalty u/s 76, 77 & 78 - when objection has been raised during the course of audit, service tax has been paid by the appellant and later-on interest was also paid to avoid litigation - penalty waived - AT
Central Excise
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Benefit of exemption under notification in respect of playing cards as sports goods - the term ‘sports goods’ used in the notification is of wide purport and does cover ‘playing cards’ - SC
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Area based exemption in Jammu & Kashmir - Denial of Cenvat Credit - Labeling / relabeling & Repacking of imported goods being Coco Butter and Coco Powder is a manufacturing activity - refund allowed - AT
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Re-credited Cenvat account - Suo Motu credit - assessee can avail the amount lying to their credit in the deemed credit register after having succeeded before the Commissioner (Appeals) - AT
Case Laws:
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Income Tax
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2015 (2) TMI 821
Deduction of corporate and management charges paid by the assessee to United Breweries Limited - Held that:- The issue with regard to deduction which is the subject matter of the present appeal is outside the purview of the consideration of this Court in the aforesaid civil appeal arising out of the High Court's order [2005 (3) TMI 83 - KERALA High Court ]. In that view of the matter, this appeal will have to be remitted to the High Court for a de novo consideration on merits. Order of the High Court dated 18th May, 2005 is set aside
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2015 (2) TMI 820
Reopening of assessment - assessee is following the exclusive method of accounting for CENVAT, thus the assessee had not included the amount of ₹ 4,69,54,465 in its closing stock - Held that:- AO has sought to reopen the assessment previously framed. The very issue of accounting treatment that the unutilized Cenvat credit should receive for the purpose of valuing the closing stock has been examined by the Assessing Officer. Entire relevant materials had been placed before him. No addition on this count was made, without of course, giving any reasons. In other words, the Assessing Officer, for whatever reasons has chosen not to opine after having made the scrutiny on the very issue of the accounting method. In the absence of any tangible material that existed already before the Assessing Officer, the notice for reopening issued by the Assessing Officer should be held to have been based on a mere change of opinion. In the instant case, we are of the firm opinion that the Assessing Officer cannot be permitted to go ahead with the reassessment proceedings, in view of the fact that he raised the query as to why the unutilized Cenvat credit should not be included in the closing stock. He was aware fully regarding the accountability of the Cenvat credit, its utilization and the fact that no wrong benefit was availed of by the assessee. He still preferred not to make any addition on account of the accountant ability of such credit and, hence, he must be held to have formed an opinion and this exercise is nothing but an attempt to review its own order, which is impermissible under the law. -Decided in favour of assessee.
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2015 (2) TMI 819
Legality of notice u/s 133(6) [exhibit P1] - societies were required to furnish the details of entire cash deposits in savings bank accounts where the aggregate cash deposit is rupees five lakhs and above in an year for the last three previous years - Power of Income-tax officer (Intelligence), to issue such notice - Held that:- The authority who issued exhibit P1 under section 120(2) of the Income-tax Act by notification dated August 19, 2011, at Sl. No. 18 is the Director of Income-tax, having head quarters at Kochi, Kerala, who has jurisdiction over the area within the State of Kerala, Union Territory of Lakshadweep and Minicoy. He has all powers envisaged under the Income-tax Act related to and in connection with collection, collation, verification and dissemination of information in respect of the area over which he has jurisdiction. By office order dated November 1, 2011, the Income- tax Officer, Thiruvananthapuram, Alappuzha, Kochi and Thrissur were authorised to function as Income-tax Officer (Intelligence) of the above three places. Letter dated September 2, 2013, is issued by the Director of Income-tax (Intelligence) to the above Income-tax Officers (Intelligence) authorising them to issue notices to co-operative banks/urban co-operative banks/credit co-operative societies coming under the respective jurisdiction calling for information as contemplated under section 133(6) of the Income-tax Act. By virtue of these documents, the Income-tax Officer (Intelligence) is the authorised person who could issue exhibit P1, therefore After referring to section 133(6) of the Act, prior to the introduction of the second proviso and its effect and after the introduction of the second proviso to section 133(6), their Lordships opined that there was no scope for interfering with validity of notices. In the light of the dictum laid down in Karnataka Bank Ltd. v. Secretary, Government of India [2002 (2) TMI 1285 - SUPREME COURT] there is no much scope for considering the arguments of the learned counsel appearing for the appellants, according to whom, Kathiroor Co-operative Bank's case [2013 (11) TMI 728 - SUPREME COURT] has no application. Also it clearly indicate what exactly section 133(6) subsequent to the introduction of the second proviso would mean, thus to concluded that notices issued under section 133(6) are justified. it is in the nature of general enquiry by the authorities in order to ascertain whether any person who has taxable income has failed to comply with the provisions of the Act. Definitely, it is not with reference to constitution of appellant-societies and its functioning or any disputes between the society and its members. If the subject matter of information attracts any of the matters which has to be considered under the Co-operative Societies Act, then alone the argument of the appellants is meaningful, otherwise the said argument has no legs to stand. The information sought is under section 133(6) and has nothing to do with any of the provisions of the Co-operative Societies Act. - Decided against assessee.
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2015 (2) TMI 818
Addition on excess consumption of heptene and catalyst - Tribunal deleted the addition - Held that:- From the discussion of the Tribunal, it clearly emerges that the assessee had given reasons for excess consumption of heptene and catalysts. The change in the manufacturing process was also demonstrated. Such grounds were also placed before the Tribunal in the earlier years in which the assessee's stand was accepted. We have also perused the orders of the Tribunal made in the earlier assessment years, i.e., the assessment years 1994-95 and 1995-96 where such a question cropped up. Apparently, the Revenue has not carried the decision of the Tribunal in further appeal. - Decided in favour of assessee. Lease agreement and buy back entered with the Rajasthan State Electricity Board - Revenue vehemently contended that the machinery was purchased and leased back on the same day without actual payment - tribunal held the lease transaction as financial lease transaction - Held that:- Notice on the impugned judgment, the Tribunal has merely remanded the issue back to the Assessing Officer for reconsideration, after full opportunity to the assessee as AO has not brought anything on record with respect to the treatment given by the assessee to the income received and on the disputed lease transactions. - Decided in favour of assessee for statistical purposes. Disallowance of foreign travelling expenses - AO disallowed the claim as the assessee failed to establish that the expenditure was incurred for the purpose of business - CIT(A) and Tribunal, merely referring to their earlier orders in the case of this very assessee, allowed the claim - Held that:- CIT(A) and Tribunal committed an error in allowing the expenditure without its full verification. Surely, the foreign travelling expenses, if incurred for the purpose of business, would be allowable as the business expenditure. However, the assessee has to establish that the travelling was undertaken for the purpose of business, and, therefore, the expenditure was "business expenditure". Merely because on the basis of the material for the earlier years, the Commissioner (Appeals) and the Tribunal allowed such expenditure would not by itself mean that in the later years also, any expenditure under the same head must be automatically allowed. The assessee owed a duty to establish the basic facts to demonstrate, particularly when called upon by the Assessing Officer that the expenditure was in fact incurred for the purpose of business. The issue must be examined on year-to- year basis on the basis of evidence on record. - Decided in favour of revenue.
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2015 (2) TMI 817
Sample distribution expenses - Tribunal allowing deduction of expenses in terms of section 37(1) - Held that:- The Commissioner of Income-tax (Appeals) and the Tribunal had recorded a finding that the assessee-company was an export trading house and had distributed carpets and shawls as samples during the year. It was further noticed that these items were exported by the assessee in the subsequent assessment years 2005-06 and 2006-07. The samples distributed were not extraneous to the business of the assessee. Furthermore, the samples were given to the foreign agents in person during their business exploratory visit in India and the same would fall under the expenditure laid out or expended wholly and exclusively for the purpose of such business. Thus the Commissioner of Income-tax (Appeals) and the Tribunal were right in allowing deduction on account of expenditure on free sample distribution by the assessee. - Decided in favour of the assessee.
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2015 (2) TMI 815
Claim of Refund - Condonation of delay in filing of return u/s 139(1) - CIT rejected the petitioner's application under section 119(2) - Tribunal earlier rejected the appeal of the assessee but later modified its order and allowed the appeal against rectification application - Held that:- In the present writ petition we would not like to interfere for the primary reason that the question involved is of sum as small ₹ 16,000 claimed by way of refund by a retrenched/retired workman. His application for delay condonation was considered on incorrect factual premises. Had he against the order passed by the Commissioner on his application under section 119(2)(b) of the Act approached before this court, we would have in all probabilities directed the Commissioner to take a fresh decision. Considering these facts arising from the record, we refuse to exercise our discretionary writ jurisdiction. Whether order of CIT u/s 119(2)(b) is appealable - correction of ITAT order - Held that:- Tribunal was correct in first order holding that the Commissioner's order under section 119(2)(b) was not appealable before the Tribunal and that, therefore, such order did not call for rectification. The Tribunal referring to and relying on the same judgment of the respondent could not have repeated the same error in law. - We, therefore, expect the Tribunal not to repeat such mistakes in future whenever similar applications come up for consideration
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2015 (2) TMI 814
Order of the Settlement Commission challenged - first respondent admitted the application filed by the second respondent for the purpose of considering the same under Chapter XIX-A of the Income-tax Act, 1961 - whether order suffers from grave irregularities ? - Held that:- A close perusal of the order passed by the Settlement Commission, both at the stage of admission and also at the stage of passing of the final order, we find, as a matter of fact, ample opportunity was given to the Department to file their objections and also the representatives of the Department were heard before passing the orders and in that view of the matter, we are unable to concur with the contention of the learned counsel for the petitioner that the order is vitiated on account of violation of the principles of natural justice. Inasmuch as we are satisfied that it was within the discretion of the Settlement Commission at the stage of section 245D(1) of the Act to admit a case for consideration based on the prima facie view, the aspect of admission of a case by the Settlement Commission except in exceptional circumstances cannot be the subject matter of a judicial review. Thus no reasons to order the amendment petition or to interfere with the discretionary orders passed by the first respondent-Settlement Commission under section 245D(1) of the Act admitting the case which in fact fructified into a final order, given effect to and implemented as long as on December 29, 2000.- Decided against revenue.
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2015 (2) TMI 813
Penalty under section 271(1)(c) - CIT(A) opined that the contents of the letter amply prove that the assessee had voluntarily requested the Assessing Officer to include income of the HUF in his hands and there was justification for not furnishing the revised return as there was prevention, thus penalty deleted - Tribunal confirmed penalty deletions as during the assessment proceedings itself omissions were understood by the assessee and immediately rectified the same by bringing to the notice of the authorities - Held that:- In the light of the categorical statement that the entire income from the HUF was included in the individual income of the assessee which apparently was far from truth, we only have to opine that there was no honest and bona fide disclosure made by the respondent at the time of filing the return of income. On the other hand, but for the scrutiny taken up by the Department, the additional income from the HUF would have gone unnoticed and it would have escaped from computation of tax. Thus it is clear that what happened subsequent to February 6, 1998, though not crucial, the appellate authorities have placed much reliance on subsequent events than the categorical declaration in return of income on February 6, 1998. The criterion is not the contents of the letter dated February 23, 1998, nor the revised return filed in response to the scrutiny notice. The criterion in this case is categorical declaration made by the assessee at the time of submission of returns. The categorical statement with reference to the above reasoning clearly indicates there is concealment of income from the HUF, i.e., knowingly the assessee furnished inaccurate particulars of income for computation of tax. - Decided in favour of the Revenue
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2015 (2) TMI 812
Interest under section 244(1A) denied - whether an appeal lies against an order refusing to grant interest? - CIT(A) held that an appeal for claiming interest under section 244(1A) of the Act is not entertainable in a case where the order giving the appeal effect itself is not being challenged on any ground? - Held that:- The order passed by the CIT(Appeals) had virtually set aside the earlier order of assessment. Therefore, a fresh assessment was required to be made which the Assessing Officer did and directed refund but omitted to pass an order directing payment of interest. Therefore, it was an order passed under section 143(3) of the Act. It cannot be disputed that an appeal against an order passed under section 143(3) is permissible. It is altogether a different matter that the entitlement to interest arises out of section 244(1A) of the Act. A civil court may pass or refuse to pass an order for payment of pendentelite interest under section 34 of the Code of Civil Procedure. But it cannot be contended that the decree is one passed under section 34 of the Code of Civil Procedure. We are as such of the opinion that the learned Commissioner of Income-tax fell into a grievous error in proceeding on the basis that it was an appeal against an order refusing to grant interest under section 244(1A) of the Act. The appeal was an appeal against the order of assessment under section 143(3) of the Act in which the Assessing Officer omitted to grant interest which he should have done under section 244(1A) of the Act. Therefore, the question which has been posed on behalf of the Revenue does not, in our opinion, arise in the facts and circumstances of the case. - Decided in favour of the assessee.
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2015 (2) TMI 811
Rectification of mistake - intimation under Section 143(1) rectified - whether question of admissibility of deduction of interest income under Section 10B of the Act is a mistake apparent from the face of the record and hence the intimation under Section 153(1) can be rectified in a proceeding under Section 154 - Held that:- The interest earned from deposits with Corporation Bank, Electricity Board and on Staff advances does not have direct or immediate nexus with the business of the assessee's undertaking and consequently, they are not eligible for grant of deduction under Section 10B of the Act, which is akin to Section 80HH of the Act The order passed by the Assessing Officer under Section 154 of the Act is valid in the eye of law and the same has been rightly upheld by the Tribunal, as the true intent behind passing such a rectification order is to ensure that the law laid down by the Supreme Court in Pandian Chemicals case,[2003 (4) TMI 3 - SUPREME Court] is stricto sensu given effect to. - Decided against assessee.
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2015 (2) TMI 810
Applicability of provisions of section 43B to interest payable on purchase duty - whether interest is a part and parcel of tax liability ? - Held that:- Interest that becomes payable on tax, which is otherwise permissible for deduction under the provisions of the Income-tax Act, while computing the total income, is part of tax, within the meaning of section 43B of the 1961 Act. If the contention of the respondent that the component of interest must be permitted to be deducted just by making a provision and not making actual payment, it will lead to almost a semblance of absurdity. If the actual tax, duty, or cess can be deducted only on payment, it is just un-understandable as to how the interest thereon can be deducted without making payment thereof. Take an instance, where an assessee is placed under obligation to pay the tax, the duty or cess of ₹ 5,00,000 and it remained unpaid for about 5 or 6 years. He cannot make deduction thereof, because it was not paid. If the law, under which the tax, duty or cess is levied, provides for payment of interest, and a substantial amount had accrued on that amount, the assessee may try to get the benefit of deduction of that equivalent amount, without actually paying it by treating as separate and independent of the tax liability. Such a situation may, in fact, lead to absurdity, and courts would never permit it. - Decided in favour of revenue.
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2015 (2) TMI 809
Disallowance of interest payments - whether assessee entitled to deduct the interest paid on the loans borrowed by it, in its profit and loss account? - Held that:- matter needs to be examined by the Tribunal with reference to the relevant record, duly giving opportunity to both the parties. Expenditure on construction of building - whether meant for its commercial use, partakes of the character of revenue expenditure and deductible from the income ? - Tribunal allowed claim of revenue expenditure - Held that:- Tribunal has simply concurred with the view expressed by the Commissioner just by taking into account, the claim made by the respondent for the assessment year 1982-83 and the fact that the cost of construction incurred by it be treated as revenue expenditure was accepted. Beyond that, no discussion whatever was undertaken. Things would have been different in case the Commissioner has undertaken any discussion with reference to the relevant provisions of law and the facts pleaded by the parties. The purport of Explanation 1 to section 36 of the Act was not discussed at all. It was obligatory on the part of the Commissioner, or for that matter, the Tribunal, to examine whether the building in question was owned by the respondent or was taken on lease and whether the construction undertaken by it was permanent or semi- permanent in nature. - Decided in favour of revenue for statistical purposes.
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2015 (2) TMI 808
Reopening of assessment - exchange loss calculated on the basis of fluctuation in foreign exchange rate was not supported by actual remittance, thus cannot be allowed as deduction in computing the total income under the Act - Held that:- Supreme Court in case of Woodward Governor India P. Ltd. (2009 (4) TMI 4 - SUPREME COURT) held that the loss suffered by the assessee on account of fluctuation in the rate of foreign exchange as on the date of the balance-sheet is an item of expenditure under section 37(1) of the Act and further that under the mercantile system of accounting, what is due is brought into credit before it is actually received. It also brings into debit an expenditure for which a legal liability has been incurred before it is actually disbursed. As in the original assessment order, against the loss of ₹ 1.44 crores under the normal computation, the assessment was framed on book profit of ₹ 2.89 crores under section 115JA of the Act. Even if, therefore, expenditure of ₹ 116.86 lakhs is disallowed, there would be no resultant change in the petitioner's tax liability since the petitioner has already paid much higher tax. - Reopening quashed - Decided in favor of assessee.
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2015 (2) TMI 807
Set off and carried forward of long-term capital loss against the long-term capital gain - Loss on shares where were exempted u/s 10(38) as long term capital gain - Tribunal disallowed claim basing reliance on the provisions contained in section 10(38) of the Act - Held that:- The fact that the capital asset in question, namely, the shares of Suashish Diamond Ltd. was covered under section 10(38) of the Act was not in dispute, thus by virtue of section 10(38) in computing the total income of the previous year, any income covered under such clause shall not be included. If that be so, the loss also arising out of such an asset and covered by the said clause would likewise be not includable in computation of the income of the assessee for the year under consideration. The contention of the learned counsel for the assessee that for the purpose of section 10(38) of the Act the term "income" would not include "loss", cannot be accepted and rightly rejected by the Tribunal. If this is the conclusion, it can immediately be seen that any loss in respect of any such capital asset would not be available for set off. The Tribunal rightly relied on the decision in the case of Harprasad (1975 (2) TMI 2 - SUPREME Court) to come to a conclusion that the term "income" under section 10(38) of the Act would also include the loss. In the said decision, the apex court observed that the concept of carry forward of loss does not stand in vacuo. It involves the notion of set off. It postulates permissibility and possibility of the carried forward loss being absorbed or set off against the profits and gains of the subsequent year. Set off implies that the tax is exigible and the assessee wants to adjust the loss against profit to reduce the tax demand. It was held that if such set off is not permissible or possible owing to the income or profits of the subsequent year being from a non-taxable source, there would be no point in allowing loss to be "carried forward". Conversely, if the loss arising in the previous year was under a head not chargeable to tax, it could not be allowed to be carried forward and absorbed against income in a subsequent year, from a taxable source. - Decided against assessee.
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2015 (2) TMI 806
Reopening of assessment - assessees were not registered under section 12A nor had requisite approval under section 10(23C)(vi) - Held that:- From a bare perusal of section 148 of the Act, it is clear as crystal that the Assessing Officer is obliged to record reasons before issuing notice under section 148 of the Act. In this backdrop, we have examined the original records placed before us by the learned counsel for the Revenue. It is true that in one of the files, there was a draft of reasons purportedly prepared by the Assessing Officer on January 20, 2004. It was not signed by the Assessing Officer. The reasons recorded by the Assessing Officer were typed, as is clear from the printout of the original reasons, on February 4, 2004. The typed date was struck off with pen and the date January 30, 2004, was written by hand with the same pen. Though the original date (typed) was struck off with pen still the typed date is visible/could be read or is clearly seen, and it was typed as February 4, 2004. The typed date or the date of print out was February 4, 2004, and that it was changed to January 30, 2004, as the date of reasons recorded under sub-section (2) of section 148 of the Act. Thus, the record was set right by showing that the date of the notice and the date on which the reasons were recorded was the same. Why and how the date February 4, 2004, is appearing on the original reasons recorded under sub-section (2) of section 148 of the Act is not explained by the Assessing Officer. Neither in the order of the Assessing Officer nor in the order of the Commissioner of Income-tax (Appeals) an attempt was made to explain striking off the original date and writing the date January 30, 2004, by hand. thus is a finding of fact recorded by the Tribunal holding that the notice was issued even before the reasons were recorded. - Decided in favour of assessee.
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2015 (2) TMI 805
Penalty under section 271(1)(c) - furnishing false information in respect of investment allowance/ depreciation claims, while the quantum appeal of the assessee before the hon'ble High Court is pending for decision - ITAT deleted the addition - Held that:- The assessee had produced the report of M/s. Blue Star Ltd. through whom the assessee had purchased the machineries and who were responsible for erecting and commissioning of the same which corroborated the version of the assessee. The purchase of machinery during the assessment year 1977-78 was not doubted in view of bills, gate pass, freight charges paid, etc. However, while disallowing depreciation and investment allowance, on the basis of the report of M/s. ABC Consultants Ltd., it was recorded that the machinery was not put to use during the assessment year 1977-78. The report of M/s. ABC Consultants Ltd. was preferred over the report of M/s. Blue Star Ltd. and addition on account of disallowance of depreciation and investment allowance was sustained during the assessment proceedings. In the present case, the Tribunal while deleting the penalty had discussed the plausibility of both the reports and adopted a view deleting the penalty levied which is acceptable even though the addition has been sustained in the assessment proceedings regarding disallowance of depreciation and investment allowance by preferring one set of evidence.- Decided in favour of the assessee
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2015 (2) TMI 804
Higher rate of depreciation of 10 per cent. on 'creche building' - business assets or not - Held that:- It is not in dispute that the creche building is situated within the same compound of the factory where the assessee carries on manufacturing activity. For the purpose of increasing efficiency, productivity of the women employees were engaged in the factory, creche is created by the assessee in a separate building. In other words, the creche building is being utilized in the process of manufacturing of the products. Considering the importance of the creche building, the creche building is included as one of the business assets which is allowable for granting of depreciation. In this context, it may also be noted that the assessee is being assessed under the head of "Income from business". Thus the order of the Tribunal in allowing the depreciation at 10 per cent. treating the creche building as a business asset cannot be found fault. - Decided in favour of assessee. Excess prices recovered and deposited with the DPEA - ITAT allowing the assessee's claim of liability for the assessment years 1984-85 and 1985-86 under the Drugs (Price Control) Order, 1979 - Held that:- The relevant provisions of the DPCO does not leave any option to the assessee to retain the excess amounts collected. Liability under the provisions of the DPCO is fastened on the assessee the moment the sales are made at a price exceeding the price prevailing on the date of introduction of the DPCO. Merely because the assessee though challenged the liability by filing a writ petition in the High Court of Mumbai, the liability itself does not get obliterated as the liability is in fact on account of a statutory control order issued in exercise of the powers vested in the Government under the Essential Commodities Act. In fact, the Tribunal had taken the same view and had come to a conclusion after detailed analysis of the provisions of the DPCO that the liability imposed on the assessee with respect to excess amounts collected over and above the prices notified in the DPCO are of the statutory nature. See Kedarnath Jute Manufacturing Co. Ltd. v. CIT [1971 (8) TMI 10 - SUPREME Court] - Decided in favour of the assessee
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2015 (2) TMI 803
Reopening of assessment - admissibility of the claim of the assessee under section 80-IA in view of the fact that there is loss from the windmill project - Held that:- Revenue does not dispute the fact that the issue with regard to which the reopening is sought to be done was the subject matter of discussion and deliberation before the AO during the original proceedings leading to the order dated April 29, 2003. In these circumstances, it is an undisputed position that the Assessing Officer did have occasion to apply his mind to the deduction claimed by the respondent-assessee before allowing the same. The objection of the Revenue that there was no opinion formed during the original assessment proceeding as the order dated April 29, 2003, did not deal with the same is unsustainable. The mere fact that the assessment order does not discuss the issue of deduction under section 80-IA(4) of the Act would not lead to the conclusion that the Assessing Officer had made no opinion with regard to the issue. The Tribunal has reached a finding of fact that the question with regard to the claim for deduction under section 80-IA of the Act was raised by the Assessing Officer and responded to by the respondent-assessee. This position is also not disputed by the Revenue. Merely because the issue is not discussed in the assessment order would not lead to a conclusion that no opinion was formed as to the subject of the query as held by this court in the matter of Idea Cellular Ltd. v. CIT reported in [2008 (2) TMI 146 - BOMBAY HIGH COURT]. Reopening dismissed. - Decided in favour of assessee.
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2015 (2) TMI 802
Condonation of delay - Tribunal declining to condone the delay of 445 days in filing the appeal against rejection order - Held that:- Condonation of delay is not a matter of right. Delay can be condoned by the Tribunal only if it is satisfied that the delay has been satisfactorily explained by the appellant. Reading of the order passed by the Tribunal shows that the appellant failed in providing any satisfactory explanation for the inordinate delay of 445 days. It was, therefore, that the Tribunal rightly declined the prayer. - Decided against assessee. Registration under section 12A rejected - Retrospective registration under section 12A - Held that:- We are satisfied that the Commissioner could not grant registration with retrospective effect. If that be so, the Commissioner could have granted registration only with effect from the commencement of the assessment year in which the application in question was made. Therefore, we cannot find fault with the view taken by the Commissioner or the Tribunal granting registration with effect from April 1, 2006 as there was no circumstances justifying the condonation of delay for the previous period or registration for any period prior to April 1, 2006. - Decided against assessee.
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Customs
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2015 (2) TMI 826
Refund of Excess Custom duty - Period of limitation - Application of Article 113 or Limitation Act 1963 read with Section 72 of the Contract Act, 1872 - Late filing of refund application - Project Imports Regulations 1986 - Held that:- The Project Imports Regulations 1986 specifically stated that goods under heading No. 98.01 were to be assessed under those regulations and that any contract in relation to importation of those goods had to be registered with the authorities. Now, if the goods imported by the petitioners falls under Chapter 84 specifically and not under 98.01, the regulations did not apply to such import and it was not at all obligatory on the part of the petitioners to register the contract with the authorities. Section 27 only applies when there is over payment of duty or interest under the Customs Act 1962. Therefore, the duty or interest must be leviable under the Customs Act and paid under it. Any excess sum allegedly paid has to be claimed within one year. When the petitioners’ case is that the tunnel boring machines were not exigible to any duty, any sum paid into the exchequer by the petitioners was not duty or excess duty but simply money paid into the government account. The government could not have claimed or appropriated any part of this as duty or interest. Therefore, there was no question of refund of any duty by the government. The money received by the government, could more appropriately called money paid by mistake by one person to another which the other person as an obligation to repay, under Section 72 of the Contract Act, 1962. A person to whom money has been paid by mistake by another person, becomes at common law a trustee for that other person with an obligation to repay the sum received. This is the equitable principle on which Section 72 of the Contract Act, 1872 has been enacted. Therefore, the person who is entitled to the money is the beneficiary or cesti qui trust. When the said sum of ₹ 360.46 lakhs was paid by mistake by the petitioner to the government of India, the latter instantly became a trustee to repay that amount to the petitioner. The obligation was a continuing obligation. When a wrong is continuing there is no limitation for instituting a suit complaining about it. On or about September 2012 the said joint venture as a bidder of similar kind of works Project with the Kolkata Municipal Corporation for drinking water for human and animal consumption while processing the said Tender discovered that a sum of ₹ 360.46 lakhs was paid under bona fide mistake as ‘Customs duty’ on account of import of the said Boring Tunnel machines when the same are wholly exempted. Your petitioners state that the said joint venture has already been paid customs duty upon import of any other machines and have not ever raised any dispute. However, upon detection of the factum was being paid by way of customs duty under bona fide mistake the said joint venture immediately their Advocate by a letter dated June 4, 2013 submitted representation before the Respondent No.1 and 2 apprising them of such bona fide mistake committed by the said joint venture and prayed inter alia, for return of the said sum of ₹ 360.46 lakhs which is being unlawfully retained as customs duty on account of the import of the said machines which is otherwise exempted. I accept this explanation and hold that the period of limitation began to run against the petitioners from September 2012. If you take September 2012 to be the beginning of the period of limitation, the petitioner had, under Article 113 of the Limitation Act 1963, a period of three years to institute a suit from that time. Therefore, in my opinion, the claim in the writ application cannot be said to be barred by the laws of limitation. Decision in the case of Dunlop India Ltd. Vs. Collector of Customs, Calcutta [1997 (9) TMI 108 - SUPREME COURT OF INDIA] distinguished - Writ applicaiton is allowed. - Decided in favour of assessee
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2015 (2) TMI 825
Export of graphite blocks - graphite of nuclear grade - Confiscation of goods - Penalty under section 114 (Penalty for attempt to export goods improperly, etc.) - Prohibited goods - Prohibition may be complete or partial - License from the dept. of Atomic Energy - Export of nuclear grade graphite blocks of cetain specification - Held that:- In the documents available on record, a list of customers to whom the appellant had supplied graphite items is given. Two of the customers listed therein are M/s BARC, Mumbai and M/s Nuclear Fuel Complex, Hyderabad which are well known institutions dealing with nuclear materials in India. Therefore, the appellant cannot take the plea that they did not know what nuclear grade graphite is. Further as per the product brochure of Nickunj Group available in the file, they are dealers/distributors for Carbonne Lorraine group who are world-wide leaders in manufacture of graphite products including specific components for nuclear and aerospace industries. It is also on record that till 2006, the appellant had represented Carbonne Lorraine/Carbone of America who are manufacturers and exporters of graphite products world-wide, and were their exclusive agents for India. It is also on record that when they represented the said company, the said company used to apply for licences in respective countries and apst records of the purchasers were relevant criteria in getting licences for graphite exports. From these documents available on record, it is clear that the appellant had the knowledge about the procedures to be undertaken for export of nuclear grade material and therefore, the appellant cannot take the plea of ignorance to escape the consequences of their actions. From the evidences available on record, the malafide conduct of the appellant is clearly established. As regards the contention that the customs had allowed export of similar consignments earlier, this argument is not tenable for the following reason. First of all, there is no estoppels in a customs transaction. Merely because the Customs committed an error in allowing a transaction, that cannot be a reason for repeating the error. In Bel Pharma Ltd. case [2010 (9) TMI 307 - SUPREME COURT OF INDIA] the Hon'ble apex Court had held that in a tax matter, the doctrine of promissory estoppels as such may not be applicable and the revenue can be permitted to take a position different from its earlier stand provided it is able to demonstrate the distinguishable features of the case. In the present case, in our considered view, the Revenue has discharged this responsibility by obtaining the test report from BARC that the goods are nuclear grade which needs a specific permission/licence for its export. In the present case, we find that the goods were brought to the customs area for the purposes of export and the shipping bills had been filed. Further, the goods needed a specific licence for the purposes of export which the appellant exporter herein did not have. In these circumstances, the attempt to export prohibited goods is clearly established and the provisions of Section 113(d) are clearly attracted. Therefore, absolute confiscation of the prohibited goods under Section 113(d) by the adjudicating authority cannot be faulted at all as the discretion to absolutely confiscate or allow redemption lies with the adjudicating authority under the provisions of Section 125(1) of the Customs Act. In the present case, the adjudicating authority has exercised his discretion to absolutely confiscate the goods as the goods are prohibited/restricted for export in terms of an international resolution to which India is a party. Therefore, the offence committed assumes significant dimension in the context of nuclear terrorism. The next issue for consideration is imposition of penalty of ₹ 30 lakhs each on the appellant firm and its Director Mr. Nickunj Shah. Considering the value or ₹ 62 lakhs of the export goods, the penalty of ₹ 30 lakhs imposed on the appellant exporter cannot be faulted at all as it is much below the limit of "three times the value of the goods as declared by the exporter in the case of prohibited goods. As regards the penalty imposed on Mr. Piyush N. Sanghvi, there is no direct involvement on his part in the attempt to export nuclear grade graphite. He has only assisted Mr. Nickunj Shah in procuring fictitious bills showing purchase of graphite blocks. Therefore, it cannot be said that any of his action/omission to act made the goods liable to confiscation. Therefore, the provisions of Section 114 are not attracted in his case and accordingly we set aside the penalty imposed on Mr. Piyush N Sanghvi, Partner of M/s Parth Enterprises. Decided against the appellant.
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2015 (2) TMI 824
Waiver of pre-deposit - Advance license for deemed export - Compacting process of bulk drugs is a manufacturing process or not - Denial of benefit of Notification No. 47/2002-Cus dated 22-4-2002 - Held that:- From the Export and Import Policy 2002-2007, it is clear that advance licenses can be issued for duty free import of materials required for the manufacture and deemed export of final goods and supplies to 100% EOU would constitute 'deemed exports'. Since the customs notification No. 47/2002 has been issued in the context of para 4.1 of the Exim Policy 2002-2007, the concept of manufacture and final goods have to be understood in terms of the said policy. The definition of 'manufacture' under para 9.30 of the Exim Policy is very wide and any process which brings into existence a product having a distinctive name, character or use and even processes such as refrigeration, repacking, polishing and labelling would also come within the purview of the said definition. In other words, the expression 'manufacture' used in the aforesaid exemption notification has to be understood in terms of the Exim Policy 2002-2007 and not in terms of the Central Excise Act or the definitions thereunder. The requirement of the notification is manufacture and export of 'goods' and not repeat not manufacture of 'excisable goods'. The definition of manufacture under section 2(f) of the Central Excise Act, 1944, applies when 'excisable goods' are involved and not otherwise. We have also perused some of the advance licences issued to the appellant. Thus from the advance licences issued to the appellant importer, there is no violation of any of the conditions stipulated either in the licence or in notification No. 47/2002-Cus and therefore, denial of exemption to the appellant in the impugned order is prima facie unsustainable in law and we hold accordingly. We further notice that the issue whether compacting amounts to 'manufacture' was specifically examined by a Committee consisting of officers from DGFT, Dept. of Industrial Promotion & Policy and Dept. of Pharmaceuticals. This Committee in the meeting held on 21-12-2010 concluded that the compacting process is a manufacturing process in itself which is intermediate stage before making a tablet. Thus when all the concerned authorities have held the process of compaction to be 'manufacture', we do not understand how the customs authorities can take a different view. The ration of decision Dina International [2003 (10) TMI 372 - CESTAT, MUMBAI] is equally apply here. As regards the charge of aiding and abetting by the co-appellants, we do not find any evidence led by the Revenue in this regard. If payments have been adjusted against money due, it is only a normal commercial practice and cannot be attributed to aiding and abetment. In view of the factual and legal analysis as above, we are of the considered view that the appellants have made a strong prima facie case for grant of stay. - stay granted.
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2015 (2) TMI 823
Waiver of pre-deposits - Non compliance of condition No. 40 of Notification No. 21/2002-Cus - Imported Machine is not eligible machine & also not used for specified purpose - Held that:- As the Condition 40 of the Notification, a person is eligible to import road construction machinery having a contract for construction of roads awarded by the National Highway Authority of India and is further debarred from disposing of the machines for five years and it is to be exclusively used for road construction.In the present case, the applicants were having a contract for road construction awarded by the National Highway Authority of India. Further, during the execution of the contract, a dispute arose and the matter was referred to arbitrator and ultimately cancelled the contract by the National Highway Authority of India and the machines were also seized by the Authority and subsequently released. There is no evidence on record to show that the applicants disposed of the machines and not used for the specified purpose. In Appeal E/86834/13 the eligibility of the machine i.e. Electronic Road Paver Finisher, the issue is before the Larger Bench of the Tribunal. In these circumstances, we find that the applicants have made out a case for total waiver of the dues. - stay granted.
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Corporate Laws
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2015 (2) TMI 822
Arbitration Clause in agreement - Arbitration under the provisions of the Bye-laws of India Companies Act, 1956 - Held that:- Upon perusal of the aforestated clause, it is clear that the clause with regard to arbitration is quite vague and as there are no by-laws framed under the provisions of the Companies Act, no arbitrator can be appointed. Needless to say that it would be open to the parties to take appropriate remedy in accordance with law.The arbitration petition is rejected.
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Service Tax
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2015 (2) TMI 843
Practising Chartered Accountant and Management Consultancy Services - Exempted and Taxable services - Duty paid with out claiming benefit of Notifications No. 25/2006 & Notification No. 4/2006 - Cenvat credit of invoices raised in name of other office address - Held that:- The first issue is whether the credit of input Service Tax is available on basis of invoices which were addressed to the Worli office but the credit thereof was availed in the Mafatlal House office. We find that in similar cases, credit has been allowed. In the case of DNH Spinners [2009 (7) TMI 130 - CESTAT, AHMEDABAD] , the Tribunal held that credit cannot be denied on technical grounds that the documents were not in the name of assessee's factor at Silvassa but the same were issued in the name of the Head office of the assessee situated at Mumbai. In the case of Modern Petrofils [2010 (7) TMI 319 - CESTAT, AHMEDABAD] , it was held that credit may not be denied because the invoices were in the name of the Head office instead of factory, as long as there is no allegation that the inputs services are not relatable to the factory and were consumed in the factory. Following these decisions, we hold that credit cannot be denied for the procedural infraction that the addressee in the invoices was another office of the appellant. It is not the case of Revenue that the input services have not been used to provide the output services. It is also not the case of Revenue that the input services were consumed both in the Mafatlal House office and in the Worli office. The appellant's claim is that the invoices are normally addressed to the Worli office which is also their Financial Accounting office. Therefore we see no reason to disallow the credit. It was submitted by the learned Counsel during the hearing that he would not mind if this part of the matter is remitted to the Commissioner for factual verification. Accordingly we allow the CENVAT credit on principle, but remand the case to the Commissioner for verifying that the inputs services in respect of these invoices were actually used in the Mafatlal House office and not in the Worli office. The second matter to determined in this case is whether the appellant had provided taxable and exempted services so as to fall under the restrictive clause of Rule 6(3)(c) which allows credit only to the extent of 20% of the Service Tax payable on output services. Conditionality in Notification No. 4/2004 has not been discussed at all by the Commissioner in the impugned order. The Commissioner simply states that the appellant devised his own way of defeating the provisions of Rule 6 (3)(c) by paying Service Tax on their own volition in respect of exempted services. We cannot appreciate this finding of the Commissioner in view of the legal frame work in which the Notification NO. 25/2006 and 04/2004 operate. We reject this finding. Rather we do agree with the argument of the learned C.A. about the lack of provisions in Service Tax law which are akin to Section 5(A)(1A) of the Central Excise Act. It was held in the case of Crown Products Pvt. Ltd. [2012 (8) TMI 373 - CESTAT, MUMBAI] that there is no law barring an assessee from paying tax on exempted services and claiming refund thereafter. Thus it is clear that under Service Tax law, the assessee is not prohibited from paying tax on goods exempted under a notification. Having held so, we find that the appellant had not provided exempted and taxable services in terms of Rule 6(2) of the CENVAT Credit Rules and therefore the restriction of availment of CENVAT Credit up to 20% of the value of taxable services provided would not apply. Decided in favour of appellant.
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2015 (2) TMI 842
Business Auxiliary Service - grinding of wheat into wheat products such as Maida, Atta, Suji and Bran for various clients - Held that:- t the process would amount to manufacture and no service tax is leviable - Following decision of Jayakrishna Flour Mills (P) Ltd. Vs CCE Madurai [2014 (12) TMI 547 - CESTAT CHENNAI] - Decided in favour of assessee.
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2015 (2) TMI 841
Waiver of pre deposit - Transportation of Goods by Road Service - Held that:- Applicant had not produced the Reconciliation Statement before the Adjudicating Authority. We find some force in the submission of the learned Advocate and the difference will be ascertained after verification of accounts in depth which was not done. It shall be looked into at the time of appeal hearing. In view of that, the applicant failed to make out a strong prima facie case for waiver of pre-deposit of the entire amount of tax along with interest and penalty. The learned Advocate submits that the matter should be remanded as the Adjudicating authority had not considered the Reconciliation Statement of Accounts, which will be evident from the CD. Therefore, we direct the applicant to pre-deposit a sum of ₹ 50,00,000 within a period of eight weeks. Upon deposit of the said amount, pre-deposit of balance amount of tax along with interest and penalty would be waived. Both sides are at liberty to mention at the time of stay compliance for disposal of the appeal - Partial stay granted.
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2015 (2) TMI 840
Commission paid to the foreign agent for procuring the orders - exemption under Notification No.30/04-ST dt. 9.7.2004 - Held that:- Court has perused the case law relied upon by learned advocate, wherein the assessee paid 50% of tax. However, considering the observation of the Hon'ble High Court [2013 (12) TMI 499 - MADRAS HIGH COURT] in para-6 of the said decision, we direct the applicant to predeposit a sum of ₹ 5,00,000/- (Rupees five lakhs only) as offered by learned advocate within a period of 8 weeks. Upon deposit of the said amount, predeposit of balance amount of tax along with interest and penalty would be waived and recovery thereof is stayed till disposal of the appeal - Partial stay granted.
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2015 (2) TMI 839
Penalty u/s 76, 77 & 78 - Manpower Recruitment or Supply Agency Service - Held that:- In this case the appellant is engaged in the activity of jobwork on their factory on behalf of their principals. It is alleged that the appellant is providing Manpower Recruitment or Supply Agency Service during the course of Audit. Instead of litigate the matter; the appellant collected the service tax from their principals as whatever service tax paid by the principals is entitled to take CENVAT Credit. In these circumstances, it cannot be said that the appellant was having any intention to evade the payment of service tax. Therefore, when objection has been raised during the course of audit, service tax has been paid by the appellant and later-on interest was also paid to avoid litigation. In these circumstances, the show-cause notice was not required to be issued to the appellant as per Section 73(3) of the Finance Act, 1994. In these circumstances, the appellant is entitled for the benefit of Section 80 of the Finance Act, 1994. Accordingly, I set aside the order of imposition of penalty on the appellant. - Appeal disposed of.
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Central Excise
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2015 (2) TMI 844
Benefit of exemption under notification in respect of playing cards as sports goods - Held that:- Tribunal by order [2014 (7) TMI 985 - CESTAT AHMEDABAD] held that it can be seen from the above reproduced relevant Entry No.75 in the Notification No. 02/2011-CE, dt.01.03.2011 that the exemption is granted to all the products falling under Chapter 95. The said entry does not indicate any further sub-heading number and would mean that all products falling under Chapter 95 which are considered as sports goods are eligible for exemption other than articles and equipments for general physical exercise. The plain interpretation of said notification would indicate that the appellant is eligible to avail the said benefit of notification if his product falls under Chapter 95. In the case in hand, there is no dispute that the appellant’s product Playing Cards is classifiable under Chapter 95 and more specifically under Chapter sub-heading No.95.04. If that be the case, we are of the view that the benefit of notification cannot be denied to the appellant. Besides the above findings, tribunal find that identical issue in respect of playing cards was under the consideration of the Tribunal in the case of Esbee Playing Card Co [1996 (12) TMI 147 - CEGAT, NEW DELHI]. In this case it was held that the term ‘sports goods’ used in the notification is of wide purport and does cover ‘playing cards’. Apex Court has dismissed the revenue appeal against the impugned order. - The supreme court held that having gone through the records of the case, we are of considered opinion that the appeals, being devoid of any merit, are liable to be dismissed and, are dismissed accordingly. - Decided against the revenue.
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2015 (2) TMI 836
Clearance to Free Trade Zone - Denial of MODVAT credit-Rule 57C - Clarificatory amendment have restropective effect - Held that:- The settled principle is that if any amendment is clarificatory in nature the same is retrospective in operation. What is material to note is the application thereof to the given facts and circumstances. That general principle is no doubt laid down in several decisions but whether a particular amendment is clarificatory or substantive will depend on the amendment, the statute in which it is brought in and the object and purpose sought to be achieved. A bare reading of the amended provisions would denote as to how after the words or rather for the words "in the manufacture of a final product", the words "in the manufacture of a final product (other than those cleared either to a unit in a Free Trade Zone or to a hundred percent ExportOriented Unit)" were substituted. Once their substitution is read and in the light of the unamended rule, it would clearly emerge as to how credit of duty was not to be allowed if the final products are exempt. The intent was not to allow any such credit on the inputs used in the manufacture of a exempted final product. If the final product is exempted from whole of duty leviable thereon or is chargeable to nil rate of duty. However, upon manufacture if such final product is cleared either to a unit in a free trade zone or to hundred percent export oriented unit then the prohibition in rule 57C does not apply. This is really a substantive amendment. A free trade zone or units therein or exportoriented unit undertake activities which would facilitate the country in earning foreign exchange and which is considered extremely valuable. In that regard and to encourage such units to undertake the activities noted above, frequently, that this rule was amended. That was also enabling the suppliers of such duty free products and received in the free trade zone to claim credit on the basis of the clearances made. If such is the intent and purpose and the departure is specifically made from a particular date, then, such amendment cannot but be held to be prospective. In the light of the above discussion, we find that the Tribunal was justified in dismissing the appeal of the assessee. The Tribunal rightly held that the credit was inadmissible and could not have been availed of in the light of the legal provision prevailing at the time at which the credit was availed by the appellant assessee. In such circumstances and the view taken, not being perverse or vitiated by any error of law apparent on the face of the record, this appeal fails. - Decided against the assessee.
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2015 (2) TMI 835
Modvat credit on capital goods used in captive mines - Captive mines/ Integrated mines or other mines - Held that:- The Apex Court in Vikram Cement case [2006 (2) TMI 1 - Supreme court], in para-5 of the said judgment, observed that for availing Modvat credit on capital goods, if the mines are captive mines, they constitute one integrated unit together with the concerned cement factory. Therefore, Modvat/Cenvat credit on capital goods will be available to the assessee so long as the goods are used by the assessee. However, where the goods are supplied to other cement companies of different assessees, the credit is not available. The abovesaid view of the Supreme Court was reiterated in a subsequent decision in the case of Madras Cements Ltd. [2010 (7) TMI 179 - SUPREME COURT]. In view of the above law laid down by the Supreme Court, the question of fact as to whether the capital goods were utilised in the own factory or in an integrated mine of the assessee or in other mines is the core issue to be decided. From a perusal of the order passed by the Tribunal, it is evident that the Tribunal has not gone into the issue whether the capital goods were utilised in the own factory of the assessee or in an integrated mine of the assessee or in other mines. That being the core issue, there being no finding on the said aspect by the Tribunal, the orders of the Tribunal in disallowing credit on capital goods to the assessee cannot be sustained. Therefore, this Court, without going into the questions of law as raised by the appellant, is inclined to set aside the said orders and remand the matters back to the Original Authority for reconsideration. Decided in favour of appellant.
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2015 (2) TMI 834
Waiver of pre deposit - Classification of goods - Classification under 4819 2020 and or 4819 2090 - Boxes / Carons or others - Held that:- Issue is regarding the classification of the product which gets produced in the appellant s premises. The classification sought by the Department is that this would get covered under the category of boxes or cartons. The demonstration which has been provided by the ld.Counsel indicates that these would not be boxes. At the same time, it could also be possible that these products may fall under the category of others. There is an element of the doubt as to the correct classification of the product and such classification can be considered by us only at the time of final disposal of appeals. At this juncture, we are of the view that the appellants should be put to some condition for hearing and disposing the appeals on merit - Partial stay granted.
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2015 (2) TMI 833
Area based exemption in Jammu & Kashmir - Denial of Cenvat Credit - Manufacturing activity - Labeling / relabeling & Repacking of imported goods being Coco Butter and Coco Powder - Enhance the marketability of the product - proceedings were initiated against the appellant to deny the CENVAT Credit taken by them and consequently denying the rebate claim sanctioned to the appellant along with interest and penalty - Extended period of limitation - Held that:- In the case for the duty paid by Jammu unit, the Jammu unit has taken the refund and the Taloja unit has also taken the CENVAT Credit of the duty paid by Jammu unit. If instead of Jammu, the manufacturing unit would have located in some other area where the benefit of Notification No.56/2002 is not available, then it would be alleged the activity of labeling/relabelling amounts to manufacture. As similar issue came before this Tribunal in the case of United Distributors [2015 (1) TMI 983 - CESTAT MUMBAI] wherein the facts of the case are that the appellant was engaged in the activity of importing and trading of goods. The goods imported by the appellant were required to pay duty on MRP basis as per Section 3 of the CTA 85. The appellant was fixing sticker in their warehouse after clearance of the goods by discharging duty on the basis of MRP less abatement, the Revenue issued a show-cause notice to the appellant on the premise the activity of fixing stickers amount to manufacture as per Section 2(f)(iii) of the Central Excise Act, 1944. In that case also the goods after importation, wherever it was found that label/sticker was damaged or missing, the activity of labeling of sticker on the said goods took place and the contention of the appellant was that, their activity does not amount to manufacture. In that case, we held that as the activity of fixing MRP stickers took place after clearance of goods from Customs. Therefore, as per Section 2(f)(iii) of the Central Excise Act, 1944, the activity undertaken by the appellant amount to manufacture. In that case, we held that merely putting the stickers shall amount to manufacture. Therefore, following the said decision, we are of the confirmed view that in this case also the activity of fixing labels undertaken by the appellant, which is not in dispute, shall amount to manufacture as per Note 3 of Chapter 18 of the CETA although this activity does not enhance the marketability of the product. On limitation, we find that the activity of affixing the additional label and availlment of CENVAT Credit was known to the department during the impugned period as the appellant were filing their returns regularly and obtained registration for the activity of affixing label on the packages. Further, the issue in question is that whether the labeling/relabelling amount to manufacture or not as per Note 3 to Chapter.18 of CETA although the goods are already marketable needs interpretation of statute. Therefore, the demand for extended period of limitation is also not sustainable. Decided in favour of appellant.
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2015 (2) TMI 832
Delay in filing appeal - Sufficient cause - Administrative delay - Non-deliberate delay - Held that:- From a perusal of the documents available on record, it is clear that the delay of 37 days which has occurred is purely administrative in nature, as has been stated by the Department before the Tribunal. The finding of the Tribunal that the appellant has not shown sufficient cause, which prevented them in filing the appeal, does not merit acceptance in view of the decision of the Supreme Court in Mst. Katiji & Ors. [1987 (2) TMI 61 - SUPREME Court] , wherein the Supreme Court has held that the expression sufficient cause employed by the Legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner which subserves the ends of justice. Further, the Supreme Court also held that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. In an identical circumstance, this Court in case of M/s.EID Parry (India) Ltd.[2015 (2) TMI 700 - HIGH COURT OF MADRAS], following the above-said judgment allowed the appeal filed by the Revenue, thereby condoned the delay. The order passed by the Tribunal is set aside. Decided in favour of appellant.
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2015 (2) TMI 831
Refund claim - Re-credited Cenvat account - Suo Motu credit - Unjust enrichment - National Calamity Contingent Duty (NCCD) in case of captive consumption - Notification No 67/95-CE - Held that:- The Hon’ble Gujarat High Court in the case of Shyam Textile Mills [2004 (6) TMI 590 - GUJARAT HIGH COURT] on the identical situation quashed the show cause notice and allowed the petition filed by the petitioner. The relevant portion of the said decision is reproduced below: "Having heard the learned counsel for the parties, we are not in a position to appreciate as to how the respondents can find fault with the petitioner’s availing of the amount lying to their credit in the deemed credit register after having succeeded before the Commissioner (Appeals). The respondents appear to be harbouring in misconception that there has to be some provision under which the petitioner can take benefit of the refund only after seeking permission of the authority whose order has been set aside by the Commissioner (appeals)". The Learned Authorised Representative attempted to distinguish the decision of the Hon’ble Gujarat High Court in the case of Shree Shyam Textile Mills [2004 (6) TMI 590 - GUJARAT HIGH COURT] in so far as the said case was related to deemed credit. In my view, there is no much difference as the deemed credit register and cenvat account, both are under Cenvat Credit Rules. - Decided against the revenue.
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2015 (2) TMI 830
Mega Power projects - Exemption under Notification No.6/2006-CE dated 01/03/06 - benefit of exemption denied in adjudication on the ground that parts manufactured by the appellant are general fabrication structures, which are not specified in the notification in question, either as parts or components of any machinery. - Held that:- parts of boiler, being manufactured by the appellants, were Audo Weld, Beams, Bunker, Columns and Boxes, etc, which the Commissioner has held to be the General Structures, not specified in the notification and an identical question was considered by the Tribunal in the case of Ganges International Pvt. Ltd. Vs. CCE, Raipur [2014 (8) TMI 498 - CESTAT NEW DELHI] - notifications in question are identical to the items being manufactured by M/s. Ganges International Pvt. Ltd. and the notification is also the same. In fact, the reasonings for denial of benefit of the notification in question , by the adjudicating authority, is also identical to the objections raised by the Revenue in the case of Ganges International (supra). As such, following the above decision of the Tribunal, laying down that even if the general fabrication structures are being used as supporting structures for some machineries, the same are required to be treated as components parts of that machinery and the benefit in Sl.No.338 of the notification no.12/2012-CE would be available inasmuch as the same covers all the components whether finished or not. By following the said decision, we set aside the impugned order - Decided in favour of assessee.
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2015 (2) TMI 829
Denial of Input service credit - as per Rule 2(l) of the CENVAT Credit Rules, 2004 assessee do not qualify as input service - Held that:- On perusal of the records I find that the appellant used the services mentioned here-in during the course of manufacturing of goods as per Rule 2(l) of CENVAT credit as per the judgement of Ultratech Cement (2010 (10) TMI 13 - BOMBAY HIGH COURT). In these circumstances, I hold that the appellant is entitled to take CENVAT credit on the above services. In this term, the impugned order is set aside and the appeal is allowed with consequential relief, if any. - Decided in favour of assessee.
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2015 (2) TMI 828
Cenvat credit on welding electrodes - Capital goods - Held that:- As there is decision of Hon’ble Apex Court in case of Hindustan Zinc [2006 (11) TMI 551 - SUPREME COURT OF INDIA] , holding that Cenvat credit on items which were used in repair and maintenance of plant and machinery are entitled for Cenvat credit, therefore, I hold that respondents are entitled to take Cenvat credit on welding electrodes. The case law relied upon by the learned AR have not considered the decision of Hon’ble Apex Court. Therefore, these case laws cannot be relied upon. In these circumstances, I do not find any merits in the appeal filed by the Revenue, therefore same is dismissed by upholding the impugned order. Decided in favour of appellant.
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2015 (2) TMI 827
Restoration of appeal - appeal was dismissed for Non compliance of pre deposit order - Availment of re-credit of excess duty paid - Supplementary invoices - Held that:- It is the submission of the appellant that they have not received the information of hearing fixed by the Commissioner (Appeals) and the stay order was passed exparte without hearing them on merits. Since, the appellant has complied the Stay Order of the Tribunal, the matter is remanded back to the adjudicating authority to decide the case on merits. Needless to say, that the Commissioner (Appeals) shall give a reasonable opportunity to the appellants to place their case on merits without insisting for pre-deposit, before taking a decision. I make it clear, that all the issues are kept open for the decision of the Adjudicating authority. The appeal is allowed by way of remand. - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2015 (2) TMI 838
Validity of Tribunal's order - Whether the Tribunal has erred in deciding the appeals on merits, despite the fact that the first Appellate Authority dismissed the appeals for failure to deposit the predeposit - Held that:- Following decision of State of Gujarat Versus Fair Link Corporation [2015 (2) TMI 616 - GUJARAT HIGH COURT] - Tribunal has committed error in examining the matter on merits instead of examining the question for pre-deposit. Therefore, the order passed by the Tribunal would be required to be quashed and set aside with the further direction that the appeal stands restored to the Tribunal for fresh consideration - Decided in favour of Revenue.
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2015 (2) TMI 837
Validity of Tribunal's order - Jurisdiction of Tribunal - Whether the Tribunal was right in adjudicating the appeal on merits instead of restricting itself to the issue of pre-deposit - Held that:- approach on the part of the Tribunal to examine the merits of appeal instead of addressing itself to the aspects of condition of predeposit and entertainment of the appeal by the first Appellate Authority was not countenance and this Court had found that it was required for the Tribunal to address itself first on the aspect of condition of predeposit and thereafter, appropriate order could be passed on the aspects of remand or otherwise to the first Appellate Authority. Learned counsel appearing for the Revenue as well as for the Assessee have not shown any distinguishing circumstances in present appeals. - Following decision of GUJARAT AMBUJA EXPORT [2015 (2) TMI 480 - GUJARAT HIGH COURT] - judgement of the Tribunal is set aside. The appeal is restored before the Tribunal for fresh consideration bearing in mind the observations made. - Appeal disposed of.
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Wealth tax
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2015 (2) TMI 816
Occasion to invoke section 21(4)the Wealth-tax Act - Accelerated interest in the trust properties - whether right to wear the jewellery is not an asset - whether interest of the beneficiaries in the trust property was assessable under section 164 of the Act ? - Held that:- The key expression that plays a pivotal role in attracting section 21(4) is indeterminate or unknown beneficiaries. In the instant case, the terms of the trust deed are very clear and unambiguous. Even while conferring a limited privilege of wearing the ornaments in favour of the named women, the trust deed has clearly mentioned that on the death of the two women, the jewellery shall devolve upon their children. It is true that during the life time of the two women, it is difficult to treat any particular individual as the immediate beneficiary, particularly when the right was restricted only to the one of wearing and returning the jewels. However, in law, what becomes necessary is whether there are any beneficiaries at all. It is immaterial whether they are the beneficiaries at present or in future. Once the deed has stipulated that on the death of the two women, their children would become the beneficiaries, the occasion to invoke section 21(4) of the Act does not arise. The inescapable conclusion is that the assessment must be under section 21(1) of the Act. - Decided in favour of the assessees.
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