Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 24, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Customs
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Valuation - enhancement of the value - US $ 85,000 paid for erection and commissioning which is post importation activity is not includible in the assessable value of imported goods - AT
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Import of Cigarettes - Smuggling - In a case where the Bills of Entry declared the goods to be Baby Diapers and the Proper Officer also cleared the goods for home consumption u/s 47(1), it may not be possible for the Department later on to contend that cigarettes concealed in Baby Diapers could have been imported and taken into the market - HC
Service Tax
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Cenvat credit - Input services - renting of immovable property - the entire input services have been received and utilized for their business activity at their head office - these services are necessary and having nexus with the manufacturing activity - credit allowed - AT
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Levy of penalty - There were some delay in deposit of the taxes and the same was deposited by the appellant along with interest from time to time - there is no case of short payment of tax payable and/or under importing of tax payable - no penalty - AT
Central Excise
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Refund claim - per-deposited amount - the amount which is in excess of the adjudged amount if retained that such retention of said amount shall be without authority of law and Article 365 of Constitution of India has not authorized Revenue to retain such amount - AT
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Waste and scrap - removal without payment of duty - when the capital goods are sold as waste and scrap the manufacture shall pay the duty leviable on such waste and scrap - AT
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Job-work - Rule 4 (5) (a) of the CCR - principal manufacturer is permitted to send inputs to his job worker and get back the processed goods for subjecting such processed goods to further processes and clearing the final product on payment of duty. - AT
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Refund of unutilized cenvat credit - availing area based exemption - there is no bar on payment of refund by way of cheque/cash in case the assessee ceases to exist as a manufacturing unit and has no cenvat account into which refund can be credited - the respondent is entitled for refund by way of cash - AT
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Valuation - sale of chewing tobacco in pouches - valuation to be done as per Section 4A instead of Section 4 of the CEA - assessee are required to pay duty as per Section 4 if the weight of pouch is less than 10 Gms - AT
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Refund - revenue filed an appeal against the order sanctioning refund order - mere filing of the appeal before the Tribunal did not result in granting an automatic stay order in favor of the respondents - refund allowed - AT
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100% EOU - refund claim of unutilized cenvat credit of Input services - the refund being a substantive right may not be denied merely because a notification prescribing the procedure for claiming was issued subsequently. - AT
VAT
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Works contract - transfer of material purchased by the assessee at concessional rate to contractor - whether such arrangement, permitting utilization of construction materials by contractor and adjustment of its consideration in the contractor's account, would constitute an act of 'sale' - Held Yes - HC
Case Laws:
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Income Tax
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2017 (2) TMI 993
Income from the use of Global Telecommunication Facility called 'Maersk Net' - whether can be classified as income arising out of shipping business and not as fees for technical services? - Held that:- Revenue itself has given the benefit of Indo-Danish DTAA to the assessee by accepting that under Article 9 thereof, freight income generated by the assessee in these Assessment Years is not chargeable to tax as it arises from the operation of ships in international waters. Once that is accepted and it is also found that the Maersk Net System is an integral part of the shipping business and the business cannot be conducted without the same, which was allowed to be used by the agents of the assessee as well in order to enable them to discharge their role more effectively as agents, it is only a facility that was allowed to be shared by the agents. By no stretch of imagination it can be treated as any technical services provided to the agents. In such a situation, 'profit' from operation of ships under Article 19 of DTAA would necessarily include expenses for earning that income and cannot be separated, more so, when it is found that the business cannot be run without these expenses. This Court in Commissioner of Income Tax-4, Mumbai v. Kotak Securities Limited (2016 (3) TMI 1026 - SUPREME COURT ) has categorically held that use of facility does not amount to technical services, as technical services denote services catering to the special needs of the person using them and not a facility provided to all. Thus High Court is correct in holding that the income from the use of Global Telecommunication Facility called 'Maersk Net' can be classified as income arising out of shipping business and not as fees for technical services
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2017 (2) TMI 992
Assessment u/s under Section 158 BC - Held that:- A finding of fact arrived at by the Income Tax Appellate Tribunal, which has been accepted by the High Court in the impugned judgment, is that there was no satisfaction recorded and assessment is to be treated as complete under Section 158 BC of the Income Tax Act and also that the notice was issued under the said provision beyond the one year limitation period. On this finding of fact, the appeal warrants to be dismissed.
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2017 (2) TMI 991
Disallowance made under section 14A - Held that:- In this case, the assessee has not earned any dividend income in the year under consideration and moreover no expenditure was incurred. The assessee has not made investment in wholly owned subsidiaries. When the assessee has made investments in its own subsidiaries, investment in subsidiaries was out of commercial expediency and hence no expenditure can be determined and disallowed in view of the decision of the Tribunal in the case of EIH Associated Hotels Ltd. v. DCIT (2013 (9) TMI 604 - ITAT CHENNAI ). - Decided against revenue
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2017 (2) TMI 990
Validity of reopening of assessment - reason to believe - Held that:- After going through the reasons recorded by the AO, as aforesaid, we are of the view that AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped during the year. In our considered view the reasons are vague and are not based on any tangible material as well as are not acceptable in the eyes of law. The AO has mechanically issued notice u/s. 148 of the I.T. Act, 1961 on the basis of information allegedly received by him from the Directorate of Income Tax (Inv.), New Delhi. Keeping in view of the facts and circumstances of the present case and the case law applicable in the case of the assessee, we are of the considered view that the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed. - Decided in favour of the Assessee.
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2017 (2) TMI 989
Entitlement for exemption under section 54F - whether the assessee will be entitled for the benefit of deduction U/s. 54F of the Act if he demolished the new asset being the residential house purchased by him within the period of three years from the date of purchase in violation to Section 54F(3) - Held that:- The Parliament in its wisdom had enacted Section 54F of the Act in the Finance Act, 1982 with a view to encourage housing construction. Thus the intention of the legislation was not for destruction of residential building but for promoting the construction of the residential housing units. If the benefit of section 54 is extended where the new residential building is demolished without constructing another residential building within the time limit prescribed under the Act, then the purpose of the Act is defeated. As rightly pointed out by CIT(Appeals), as in the case CIT Vs. V.Pradeep Kumar & another [2006 (4) TMI 99 - MADRAS High Court] it has been categorically held that “the burden is on the assessee to prove that he had actually constructed a new residential house for the purpose of the exemption under section 54F. Section 54F emphasizes construction of residential house. The construction must be a real one. It should not be a symbolic construction. Mere construction by way of extension of the old existing house would not mean constructing a residential house as contemplated under section 54F.” In view of intentions of the Act, decisions of the Hon’ble Jurisdictional High Court and the facts and circumstances of the case, we do not find it necessary to interfere with the order of the learned Commissioner of Income Tax (Appeals) on this issue wherein he has held that in the case of the assessee exemption under section 54F cannot be granted since he has demolished the newly acquired residential house instantly for the purpose of construction of a six floored shopping complex.- Decided against assessee Unexplained investment u/s.69 - Held that:- As before us, at this stage, the assessee has not produced any evidence or advanced any argument justifying his stand and could not substantiate the reason for the discrepancy. Therefore, we do not have any option but to confirm the order of the learned Commissioner of Income Tax (Appeals) on this issue also. - Decided against assessee
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2017 (2) TMI 988
Addition u/s 40A(2) - Held that:- Section 40A(2) empowers the assessing officer to effect a disallowance of payments that are, in his opinion excessive or unreasonable giving regard to fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit derived by him or accruing to him. Such opinion has to be based on tangible material and not assumptions and suspicions. The provisions of section 40A(2) are not automatic and can be called into play only if the assessing officer establishes that the expenditure incurred is, in fact, in excess of fair market value. This had not been done in the present case. The quantum of commission paid is thus at arms length. The decision to streamline business activities and establish a division of labour or hierarchy of operations is within the domain of the entities and cannot be trespassed upon by the assessing officer except where the officer establishes that such design or method is a ruse to circumvent legitimate payment of tax. The Supreme Court in the case of Vodafone International Vodafone International Holdings BV. Vs. Union of India and another (2012 (1) TMI 52 - SUPREME COURT OF INDIA) points out the difference between looking through a transaction and looking at a transaction settling the position that a conclusion of colourable /sham can be arrived at by viewing the transaction in a commercially realistic and wholistic perspective, not adopting a truncated and dissecting approach. In the present case, there is a consistent finding of fact that the transaction was bonafide and acceptable. Nothing is placed before us to indicate that the findings are perverse. We are thus not inclined to interfere with the concurrent findings of the authorities. - Decided in favour of the assessee.
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2017 (2) TMI 987
Remedy under section 264 - Held that:- the relief provided in terms of section 139(5) is specific to the correction of a wrong statement or an omission in the original return by way of a revised return. The power under section 264 of the Act extends to passing any order as the Principal Commissioner or Commissioner may think fit after making an inquiry and subject to the provisions of the Act, either suo-moto or on an application by the assessee. Though the remedies over lap, power under section 264 is significantly wider and the wisdom of choosing one over the other would really depend on the facts and legal position of each case. The facts in the present case are to the effect that the petition under section 264 was filed on 12.03.2009 once it became clear that the 144A directions issued in the case of SASTRA were in fact being accepted and applied by the Revenue in the re-assessments of the appellant dated 21.10.2008, 24.12.2008 and 14.12.2009 (AY 2003-04, 2004-05 and 2005-06), by which time, limitation under Section 139(5) for filing a revised return, being 31.3.2008, had lapsed. Suffice it to say that, on the facts of this case, the remedy under section 264 is appropriate and ought to have been exercised in favour of the appellant by the Commissioner of Income tax.
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2017 (2) TMI 986
Treatment of Dubbing Costs - allowable revenue expenditure - whether or not the dubbing cost incurred on translating the foreign language entertainment programmes into Indian languages for making them ready for use/broadcast on the assessee’s T.V. Channel ‘Hungama’ should have formed part and parcel of the licence fee for use of the foreign language entertainment programme and amortised along with the cost of such licences? - Held that:- The facts of the case on hand as per details on record are that the assessee was in the business of running a television channel ‘Hungama’ – an entertainment channel for children for broadcasting entertainment programmes; which it procured by payment of licence fees to various channels and production houses. The cost of such licence fees was amortised by the assessee over the period of the licence. It is seen that the dubbing cost was incurred for translating the foreign language entertainment programmes into Indian languages; without incurring of which, such foreign language programmes could not have been broadcast on the assessee’s channels since the viewers, mostly children, could not have understood or appreciated them. In this factual matrix of the case, we are of the considered view that without the incurring of dubbing costs, the asset, i.e. the licence could not be utilised for earning revenue. In our view, all expenditure incurred for setting up the asset, for making it ready for use, would amount to and be in the nature of capital expenditure and therefore the dubbing cost incurred by the assessee should form part and parcel of the cost of acquisition of such rights as part of licence, i.e. the foreign language entertainment programme and should be amortised alongwith the cost of the licence. We hold and direct accordingly and consequently reverse the order of the learned CIT(A) and restore the order/finding of the AO on this issue. Revenue’s grounds of appeal are accordingly allowed.
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2017 (2) TMI 985
Expenditure on crockery cutlery utensils and other consumables - revenue or capital expenditure - Held that:- These are necessary expenditure required to be incurred for the purpose of running of the restaurant and resort. The Ld. CIT appeal has held that out of a sum of ₹ 463916/- , ₹ 331404/- is considered to be capital in nature. The nature of the such expenditure are children game items. In our view such expenditure cannot be held to be capital in nature. Further with respect to the kitchen equipments such as cutlery of staff cafeteria and kitchen utensils cannot also be held to be capital expenditure because of the reason that the restaurant and the resort has been restarted during the year. It is not the case of the revenue that these are the new purchases for starting of the new restaurants and resorts. Furthermore a total claim of ₹ 1794501/- on account of expenses on testing kits, tools, tool bags etc which are been purchased for the resort area as it has become operational during the year under consideration and therefore the Ld. CIT appeal has held them to be capital expenditure and not revenue expenditure. We do not subscribe to the view of the Ld. CIT A as the facility tools and materials for resorts are small items which are required for the day to day use in resort. Such as housekeeping items of dustbins holders garbage dustbins etc are also held to be a capital expenditure. As the nature of expenditure incurred by the assessee no capital asset has come into existence but are the day today expenditure or minor expenditure for running business which is already in existence, such expenditure are incurred. According to us these expenditure cannot be held to be capital in nature and therefore we reverse the decision of Ld. CIT appeal in holding that the sum of ₹ 3192313/- is capital expenditure. In the result ground of the appeal of the assessee is allowed.
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Customs
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2017 (2) TMI 966
Benefit of N/N. 21/2002-Cus - denial on the ground that the said cryogenic rubber granules do not fall under Tariff Heading 4004 or CTH 95 - Held that: - the lower authorities have had no opportunity to consider the benefit of N/N. 146/94-Cus., as the said notification specifically talks about exemption to sports goods, sports equipment and sports requisites imported into India by a National Sports Federation and by a sports person of outstanding eminence for training purposes - appeal allowed by way of remand.
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2017 (2) TMI 965
Imposition of redemption fine - penalty - import of copper scrap - enhancement of value - Held that: - Since the enhanced value has been accepted by the appellant and discharged the Customs duty, there is no doubt such consignment is liable for confiscation u/s 111(d) & (m) of the Customs Act, 1962 in as much there was mis-declaration - the adjudicating authority in the facts and circumstances of this case, seems to have imposed penalty despite there being nothing in the consignment which was put through to 100%, despite this, in my view is not enough reason for imposing such a harsh penalty - ends of justice would be met if the redemption fine imposed in lieu of the confiscation is reduced, I reduce the redemption fine of ₹ 7,00,000/- to ₹ 4,00,000/- consequently penalty imposed on the importer-appellant u/s 112(a) of the Customs Act, 1962 is also reduced to ₹ 2,00,000/- from 3,00,000/- - appeal disposed off - decided partly in favor of appellant.
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2017 (2) TMI 964
Valuation - enhancement of the value of the goods imported by the respondent from M/s Haeusler, Switzerland - related party transaction - Held that: - department has not controverted the factual matrix, adducing any evidence in support of their claim - It is seen from the grounds of appeal that the case of the Revenue is that the amendment to agreement through the meeting have been created and presented before the Commissioner (Appeals), is a mere presumption and not supported by any evidence. US $ 85,000 paid for erection and commissioning which is post importation activity, the first appellate authority correctly recorded is not includible in the assessable value of imported goods. Appeal dismissed - decided against Revenue.
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2017 (2) TMI 963
Diversion of imported goods at concessional rate for use in manufacture of export goods - Clandestine removal - misdeclaration of export goods - Imposition of fines and penalties against M/s Jabs International, its director Shri Bhaskar Shah and M/s Gandhi Associates - Held that: - when M/s Jabs International or Shri Bhaskar Shah were not involved in any of the exports nor prepared any documents misdeclaring the export goods, in that case they cannot be saddled with any charges of misdeclaration - Moreover we find that except 15 export consignments which were exported by Appellants through M/s Aroma International, the Appellant were not even remotely concerned with remaining export whereas the fine and penalties has been imposed against them on all such exports which is absolutely illegal. Even the export bills submitted by them to the Bank for the purpose of discounting of export bills also contain the description of export goods as Chilli Powder. Thus in such a case the charges of misdeclaration against the Appellants cannot be made against Appellant. To bring home the charges of mis-declaration it is required that such mis-declaration was done by the person for export of goods. We find that in export of goods, M/s Jabs International or Shri Bharat Shah had no role to play. The export of goods took place from the factory of M/s Aroma International under the supervision of the jurisdictional officers of said EOU and the appellants were at no stage involved in exports. The Appellant came into picture only at the time of discounting of bills and at that stage also no misdeclared documents were filed. In such case we are of the view that the allegation of mis-declaration of export goods against M/s Jabs International or Shri Bhaskar Shah are not sustainable. In view of our observations we thus hold that the redemption fine against the Appellant under section 125 of the Customs Act and penalties under Section 114 (i) and (ii) against M/s Jabs International and Shri Bhaskar Shah are not sustainable. Imposition of penalty u/s 112 (a) - Held that: - neither in the show cause notice or the impugned order the role of Appellants for diversion of imported goods is forthcoming. Since the Appellant has no role in diversion of imported goods by M/s Aroma, therefore no penalty can be imposed upon the Appellant. Penalty against M/s Gandhi Associates - Held that: - they had acted merely as exporter of such goods and the goods were declared by them to be Chilli Powder only. Further no evidence of misdeclaration by them is appearing on record. Their role was limited only to the extent of showing the export goods as belonging to them and get some export income. This act on their part in no ways lead to inference that they intended to misdeclare any export goods. Hence there is no reason to impose fine and penalties against them. Fine and penalty against M/s Jabs International Pvt. Ltd its director Shri Bhaskar Shah and M/s Gandhi Associates is not sustainable and is set aside - appeal allowed - decided in favor of appellants.
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2017 (2) TMI 962
Natural justice - cross-examination denied - Held that: - denial of cross examination is gross violation of the principle of natural justice - The appeal is disposed of by way of remand to the adjudicating authority to reconsider the issue afresh after following the principles of natural justice.
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2017 (2) TMI 961
Import of Cigarettes - confiscation - interest - penalty - levy of duty, interest and penalty to past import of cigarettes also - whether the case falls under the category of natural justice or under the category of jurisdiction? - Held that: - the case may not fall under the category of violation of natural justice. A SCN was issued to which the petitioners submitted a reply. The petitioners were granted an opportunity to appear through counsel at the time of personal hearing. Therefore, the petitioners cannot complain of violation of natural justice. Jurisdiction - Held that: - what could be found out from the records alone could be the subject matter of proceedings u/s 28(4). What cannot be established merely by the records cannot form the basis of the proceedings under Section 28(4) - the power u/s 28(4) cannot be invoked in cases where a claim is made that what was imported was completely different from what was indicated in the Bills of Entry. In a case where the Bills of Entry declared the goods to be Baby Diapers and the Proper Officer also cleared the goods for home consumption u/s 47(1), it may not be possible for the Department later on to contend that cigarettes concealed in Baby Diapers could have been imported and taken into the market. The 2nd respondent could not have invoked the jurisdiction under Section 28(4) in respect of the past containers. If this is permitted, it would become a matter of surmises for any officer to claim that some goods could have been smuggled into the country by concealing them behind the goods that were declared to be the goods of import in the Bills of Entry. Hence, the Orders-in- Original impugned in these writ petitions are liable to be set aside only insofar as they impose a duty, interest and penalty in respect of the past 13 containers. Petition disposed off - decided partly in favor of petitioner - the petitioners will have to avail the alternative remedies available to them in law.
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Service Tax
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2017 (2) TMI 969
Pre-deposit - Section 35F of the CEA - section 83 of the FA, 1994 - natural justice - Held that: - Unfortunately, the concerned authority while passing the impugned order has not adverted to any of the assertions made by the petitioner. The order returning the appeal is silent on the aspects adverted to in the representation dated 16.12.2016 - The concerned authority will advert to the assertions made in the representation dated 16.12.2016 - petition allowed by way of remand.
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2017 (2) TMI 968
Cenvat credit - Input services - renting of immovable property for head office - Interest - Penalty - Held that: - the only issue needs to be addressed is: whether the appellants are eligible to avail credit at their factory, when the entire input services have been received and utilized for their business activity at their head office. I do not find any reason for not accepting the argument of ld. C.A. for the appellants that these services are necessary and having nexus with the manufacturing activity, therefore, credit availed is definitely admissible to them at their factory - Appeal allowed - decided in favor of the assessee.
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2017 (2) TMI 967
Construction service - Commission - sale/purchase of flats/plot of different builders - There were some delay in deposit of the taxes and the same was deposited by the appellant along with interest from time to time - Held that: - there is no case of short payment of tax payable and/or under importing of tax payable in the returns filed by the appellant-assessee - no penalty is imposable under the provisions of Section 76, 77, 78 of the Act - matter remanded to the Adjudicating Authority only for the limited purpose of reconciliation of the taxes paid and the verification of amounts found to be admissible by this Tribunal - appeal allowed by way of remand.
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Central Excise
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2017 (2) TMI 984
Refund claim - during the pendency of investigation and proceedings appellant had deposited ₹ 8,36,185/- and ₹ 1.5 crore and they were in the form of Revenue deposit and since they were not adjudged as duty through the proceedings, the provisions of Section 11B and Rule 233B of Central Excise Rules, 1944 were not applicable and requested to allow refund of said amounts. Held that: - the amounts, which are deposited during the pendency of investigation and proceedings, if the same are not adjudged as duty fine or penalty then the amount that is not adjudged as duty, fine and penalty is to be treated as Revenue deposit and the provisions of refund of duty shall not be applicable to the same. The amount which has been adjudged is as per the authority of law and the amount which is in excess of the adjudged amount if retained that such retention of said amount shall be without authority of law and Article 365 of Constitution of India has not authorized Revenue to retain such amount - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 983
SSI Exemption - whether the respondent Mercury (International) Pvt. Ltd. have manufactured and cleared goods of brand name of another and thus have wrongly claimed SSI exemption? - Held that: - Calfix Grade-A-Technical , could not be held as the brand name of EIPL and clearances effected by MIPL, merit SSI exemption, if otherwise admissible. - decided against Revenue.
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2017 (2) TMI 982
Whether Dross, Ash, Shimming and such by product(s) or waste of non-ferrous metals are non-excisable goods? - Held that: - Circular dated 25th April, 2016 issued by C.B.E.C., that Revenue has taken a view that Dross, ash or any such by-product or waste of non-ferrous metals are non-excisable goods - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 981
Natural justice - Mis-declaration of goods - Held that: - once the assessee is given sufficient opportunity to remain present, to argue his case, either by himself or with the assistance of an Advocate, then, the Revenue would be justified, if the assessee is prolonging the matter and deliberately, to pass orders in his absence - The principles of natural justice are not codified - the quasi-judicial authorities should realise that they need not be friendly or liberal with the assessee and to such an extent as would give an opportunity to the assessee to complain that the SCN having been issued decades back, it cannot be adjudicated. The petitioners should not be denied the relief - petition allowed - decided in favor of petitioner.
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2017 (2) TMI 980
Reversal of CENVAT credit - Rule 6(2) of CCR, 2004 - manufacture of dutiable as well as exempted product - maintenance of separate records in respect of receipt, Consumption and inventory of Furnace oil used in the manufacture of dutiable final products and exempted final products i.e. Maaza as per Rule 6(2) of the CCR, 2004 - whether u/r 6(3)(b) of the Credit Rules, the respondent is required to pay 10% of the total price of the exempted goods clear by them? - Held that: - the issue is no longer res integra and is decided in the assessee's own case [2016 (11) TMI 775 - CESTAT CHANDIGARH], where the reliance placed on the decision of Cadila Healthcare Ltd. [2009 (8) TMI 892 - CESTAT AHMEDABAD] where it was held that no credit stand taken in respect of that part of dutiable furnace oil which has been used in the manufacture of exempted products. The demand at the rate of 10% of value of such exempted products is not called for - appeal dismissed - decided against Revenue.
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2017 (2) TMI 979
SSI Exemption - the party never declared to the department that they were clearing the goods under the brand name belonging to the other person - Held that: - the respondent entertained a bonafide belief that they were eligible for the benefit of SSI notification appears to be reasonable and fair - the judgement of the Apex Court in the case of Astra Pharmaceuticals (P) Ltd. [1994 (12) TMI 77 - SUPREME COURT OF INDIA] which was delivered sometime in 1995 was being relied upon by this Tribunal to allow SSI benefit - appeal dismissed - decided against Revenue.
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2017 (2) TMI 978
Waste and scrap - removal without payment of duty - conveyor belts - credit of duty paid on conveyor belt was taken by the appellants. When the conveyor belt after repeated use became unfit for further use, these worn out conveyor belts were sold as waste and scrap by the appellants - whether duty is required to be paid on the waste and scrap of Conveyor belts on which the credit was taken by the appellants as capital goods? - Held that: - U/r 57S (2)(C) when the capital goods are sold as waste and scrap the manufacture shall pay the duty leviable on such waste and scrap - Therefore Revenue is rightly demanding duty on such waste and scrap. Extended period of limitation - public sector undertaking - whether the demand raised by invocation of limitation period has to be upheld as held by the Ld. Member (Technical) or the appeal has to be allowed on the point of limitation as held by the Id. Member (Judicial)? - Held that: - the appellants did not file due declaration u/r 173B for manufacture, classification and clearance of such waste and scrap and also did not indicate said clearance in their RT-12 monthly returns. I find that the question of filing declaration or indicating in the monthly return regarding sale of waste and scrap of conveyor belts would not arise in view of bonafide belief entertained by the appellant as could be deduced from different interpretations followed by the Tribunal itself. There could be no substance in the allegation of fraud, suppression, wilful misstatement with an intention to evade payment of duty against the appellant in such a situation. The appellant is liable to pay Central Excise duty on waste and scrap of conveyor belts sold and cleared by them - the demand shall be restricted to normal period - decided partly in favor of the appellant.
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2017 (2) TMI 977
Classification of goods - columns, fabricated beams, structure and staging. These items have been used for erection and support of fabricated structures in the sugar molasses mill machinery - classified under 84389010 or under chapter heading 7309? - Held that: - the department is not justified in seeking to the change the classification at the end of the recipients once the classification has been accepted by jurisdictional Central Excise Officer and assessment has been done on the basis of the manufacturer’s classification - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 976
Job-work - Rule 4 (5) (a) of the CCR - Rule 57 F (4) - whether the principal manufacturer is permitted to send inputs to his job worker and get back the processed goods for subjecting such processed goods to further processes and clearing the final product on payment of duty? - whether both the Rules mentioned above are not pari materi? - Held that: - Reliance was placed in the case of GAYATRI TEXTILES Versus COMMISSIONER OF CENTRAL EXCISE, SALEM [2005 (6) TMI 332 - CESTAT, CHENNAI], where it was held that The new Rule 4(5) ibid seems to be, by and large, pari materia with the old Rule. Under both these rules, principal manufacturer is permitted to send inputs to his job worker and get back the processed goods for subjecting such processed goods to further processes and clearing the final product on payment of duty. The ld. Commissioner (Appeals) has rightly extended the benefit to the assessee - appeal dismissed - decided against Revenue.
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2017 (2) TMI 975
Valuation - Plastic/Polyester Films, Matallized Films, Polycoated Paper and Paper board printed with DD Board and Printing Cylinder etc - clearance of goods at different prices to sister concern - Held that: - we find from these invoices which referred to the various categories of the Plastic/Polyester Films, Matallized Films, which itself established the films were not of one quality - Further the period is subsequent to July 2000 when the concept of transaction value was introduced and if the revenue is aggrieved with such adoption of such transaction value as assessable value, it is for the Revenue to produce the evidences to show that the differential value is being received by the appellants by way of some other consideration. Extended period of limitation - Held that: - there is no suppression of fact on the part of the assessee and inasmuch as the entire situation was revenue neutral, longer period of limitation would not be available to the Revenue. Appeal allowed - decided in favor of appellant.
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2017 (2) TMI 974
Refund claim - availing area based exemption - the respondent has opted to avail exemption under N/N. 50/03-CE dated 10.6.2003 and is not in a position to utilize the cenvat account - whether the respondent is entitled to take refund in cash or not? - Held that: - reliance placed in the case of Bombay Burmah Trading Corpn.Ltd. [2008 (3) TMI 12 - Supreme court] wherein this Tribunal has held that there is no bar on payment of refund by way of cheque/cash in case the assessee ceases to exist as a manufacturing unit and has no cenvat account into which refund can be credited - the respondent is entitled for refund by way of cash - appeal dismissed - decided against Revenue.
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2017 (2) TMI 973
Valuation - sale of chewing tobacco in pouches - valuation to be done as per Section 4A instead of Section 4 of the CEA - Held that: - This issue has already been settled by the Hon’ble Apex Court in the case of the Commissioner of C. Ex., Vapi Vs. Kraftech Products [2008 (3) TMI 12 - Supreme court] wherein it has been held as assessee are required to pay duty as per Section 4 if the weight of pouch is less than 10 Gms - appeal dismissed - decided against appellant-Revenue.
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2017 (2) TMI 972
Reversal of CENVAT credit - Rule 6(6) of CCR, 1944 - demand on the ground that the appellant has cleared goods without payment of duty to DMRC utilizing the common inputs which are used for both dutiable as well as exempted goods - Held that: - duty exemption certificates which are crucial for deciding the matter have not been examined by the Adjudicating Authority as well as the first Appellate Authority, the matter is remanded back to the Adjudicating Authority for examination of these returns and certificates to decide the appellant’s claim - appeal allowed by way of remand.
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2017 (2) TMI 971
Refund - revenue filed an appeal against the order sanctioning refund order - denial on the ground that the refund claim did not satisfy the conditions of Section 11B ibid - Held that: - there was no stay against the implementation of the order of the CESTAT. There are numerous judicial pronouncements reiterating that mere filing of appeal and stay petition does not entitle the department to refuse refund - reliance was placed in the case of Dhampur Sugar Mills Ltd. Vs. C.C.E., Moradabad [1985 (9) TMI 94 - HIGH COURT OF ALLAHABAD] where it was held that mere filing of the appeal before the Tribunal did not result in granting an automatic stay order in favor of the respondents - appeal dismissed - decided against Revenue.
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2017 (2) TMI 970
100% EOU - refund claim - rejection on the ground that the refund of service tax credit taken on input services used in the manufacturing of goods which are cleared for export under bond or letter of undertaking is admissible only w.e.f. 14.03.2006 when N/N. 05/2006-CE(NT) was issued - whether the refund claims of input service can be allowed u/r 5 of CCR, when the procedure for the same had not been notified? Held that: - all the refund claim pertains to period prior to 14-3-2006. However, as on 10-9-2004 itself, we have already given the reproduction of Rule 5, the rule itself provides the utilization of the input credit and input service credit and where such input service credit or input credit cannot be utilized, then the same can be given as refund. So, there is indeed a provision. Just because the notification has not been issued at that time; we cannot deny the benefit provided in the Rule. It is also seen that the Board Circular No. 702/18/2003-CX dated 13.03.2003 also supports the view that the refund being a substantive right may not be denied merely because a notification prescribing the procedure for claiming was issued subsequently. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (2) TMI 960
Time limitation - Levy of penalty u/s 22(2) of the TNGST Act 1959 - the tax was collected by the petitioner and not paid to the Department - whether the impugned order reviewing the penalty on the petitioner for the assessment year 1995-96 is barred by limitation within the meaning of proviso to sub section 2 of the 22 of the TNGST Act? - Held that: - this Court does not agree with the said argument advanced on behalf of the respondent that the five years limitation would start only from 22.02.2006, where appeal filed by the department was dismissed by the Sales Tax Appellate Tribunal. When section 22(2) is invoked and by which, the present impugned order has been passed levying penalty against the petitioner, certainly, the limitation point raised therein under the proviso, which has been subsequently inserted in the year 2004 shall be taken into account and the same can be treated as a mandatory one - the present order, which is impugned herein, since admittedly, initiated and passed only after the limitation period of five years ie., on 09.03.2010 and ended on 16.07.2010, whereas the limitation was over on 31.03.2011 itself for the purpose of assessment year 1995-96. Therefore, this Court has no hesitation to hold that the impugned order is not sustainable because of the limitation provided as per Section 22(2) proviso. Petition allowed - decided in favor of petitioner.
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2017 (2) TMI 959
Principles of natural justice - petitioner claim that none of the submissions, as set out in the sur-rejoinder dated 29.06.2015, were taken into consideration - judgments were cited in support of the submissions made, which were neither discussed nor referred to in the impugned orders passed by respondent No.2 concerning the relevant assessment years - Held that: - A bare perusal of the impugned orders would show that the submission advanced on behalf of the petitioner with regard to the fact that the objections raised in the reply filed with respondent No.2, in particular, as reflected in sur-rejoinder dated 29.06.2015, have not been adverted to - Amongst the various objections taken in the sur-rejoinder, one of the more crucial objection appears to be with regard to limitation. There is no reference in the impugned orders qua the concerned assessment years with regard to the objection taken that the demand is barred by limitation. Appeal allowed by way of remand.
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2017 (2) TMI 958
Validity of assessment order - demand of differential tax u/s 3G(3) of the U.P. Trade Tax Act - construction contract - transfer of material purchased by the assessee at concessional rate to contractor - whether such arrangement, permitting utilization of construction materials by contractor and adjustment of its consideration in the contractor's account, would constitute an act of 'sale', so as to bring it within the clutches of sub-section (2) of section 3G or not? Held that: - the condition required to be fulfilled, so as to legitimately invoke provisions of sub-section (2) of section 3G of the Act, is that goods have passed on for consideration - in the present case also the goods have been transferred to the contractor and the amount payable for such goods have been adjusted from the account of the contractor. The contract of sale therefore is complete. The provisions of sub-section (2) of Section 3G of the Act therefore gets attracted. The order passed by the assessing authority under sub-section (3) of section 3G of the Act thus cannot be questioned. The demand of differential of tax imposed by the department, and affirmed by the tribunal, is in accordance with law, and the challenge laid to it fails - revision dismissed - decided against revisionist.
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Indian Laws
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2017 (2) TMI 957
Right to appeal - Alternative efficacious remedy to approach Debts Recovery Tribunal - Held that:- the remedy provided under the Act is an efficacious remedy. The petitioners can lead evidence before the Tribunal to establish his case and the contentions. Even the Tribunal has power to restore back the possession if the aggrieved person succeeds before the Tribunal. The powers of the Tribunal are wider and the Tribunal can undertake the examination of various issues by virtue of the amendment brought in the aforesaid provision of the Act in the year 2016. Single Judge has not committed any error while relegating the petitioners to an alternative efficacious remedy i.e. appeal under Section 17 of the Act before the Debts Recovery Tribunal. At this stage, it is also relevant to note that the learned Single Judge has specifically observed that he has not gone into the merits of the case of the petitioners and therefore any observations made in the said order does not mean to and shall not be treated as expression on merits. It is also clarified that if the appropriate proceedings are initiated before the Debts Recovery Tribunal, the Tribunal shall examine the same in accordance with law and on merits.
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2017 (2) TMI 956
Guilty of gross negligence by advocate - faliure to get the acknowledgment from the complainant-respondent - Held that:- The act of the present appellant cannot be treated to be in the realm of gross negligence. It would be only one of negligence. The tenor of the impugned order, as we notice, puts the blame on the appellant on the foundation that he had not received the acknowledgment. He has offered an explanation that he had given the cheque to the police. There has been no delineation in that regard. That apart, there is no clear cut analysis on deliberation on gross negligence by the advocate. The Disciplinary Committee found the appellant guilty of gross-negligence as he had failed to get the acknowledgment from the complainant-respondent. The examples given by the Constitution Bench are of different nature. In the obtaining factual matrix, therefore, we are unable to accept the conclusion arrived at by the Disciplinary Authority of the Bar Council of India that the negligence is gross. Hence we are impelled not to accept the submission advanced by learned counsel for the respondent. Thus analysed, we are disposed to allow the appeal and accordingly, we so direct and the order passed by the Disciplinary Committee of the Bar Council of India is set aside. Though we have set aside the order, on a suggestion being made, Mr. Sanjay Parikh, learned counsel for the appellant, agreed that the amount paid to the complainant need not be refunded. The amount that has been deposited to the Bar Council of India shall be refunded by the Bar Council of India. There shall be no order as to costs.
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