TMI Tax Updates - e-Newsletter
February 9, 2016

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise Indian Laws

Articles

1. Valuation of goods under captive consumption

   By: ajay singh

2. Budget - subsidy

   By: DEVKUMAR KOTHARI

3. Rebate/refund of SB Cess on exports & services used in SEZ; Cenvat credit cannot be used for SB Cess & others

   By: Bimal jain

4. GLIMPSES OF REPORT OF ‘THE COMPANIES LAW COMMITTEE’ – PART III

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Bilateral Meeting held between the Union Finance Minister, Shri Arun Jaitley and the Finance Minister of Nepal, Shri. Bishnu Prasad Paudel; Finance Minister Shri Jaitley expressed hope that the Indian investors in the public and private sector will show interest across all sectors in Nepal especially power, healthcare and road construction

2. Make in India Week to showcase innovation, design and sustainability driving India’s new manufacturing revolution

3. RBI Reference Rate for US $

Highlights / Catch Notes

Income Tax

• Court Upholds Disallowance of Expenses for Soil Purchase and Tractor Maintenance Due to Lack of Reasonableness Evidence.

  Case-Laws - AT : Disallowance of expenditure under the head soil purchase, tractor maintenance and other expenses - e assessee has failed to prove the expenditure incurred was reasonable and not excessive - disallowance made by the AO is reasonable - AT
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• AO Incorrectly Imposed Penalty Under Wrong Section; No Violation Found, No Penalty u/s 269SS.

  Case-Laws - AT : AO initiated the penalty u/s 271E for violation of sec. 269TT, but levied penalty u/s 271D for violation of the provisions of sec. 269SS. From this conduct of the AO, it was clear that the Assessing Officer did not applied his mind before levying penalty - assessee has not accepted the loan or deposit in contravention of the provisions of sec. 269SS - No penalty - AT
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• Carrier Payments to Clikatel Exempt from Tax Deduction at Source; Not Classified as Fees for Technical Services u/s 195.

  Case-Laws - AT : TDS u/s 195 - carrier payments made to M/s. Clikatel, South Africa without deduction of tax at source - these services do not involve human intervention and these services cannot be regarded as fee for technical services. - AT
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• Income from buildings or lands assessed as house property income, not business income, affects tax treatment and liabilities.

  Case-Laws - AT : Addition under the head income from other sources as against income from business - The manner of end-use of the property consisting of buildings or lands will not alter the assessability of income from house property to a business activity. - AT
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• Assessing Officer's 200% Penalty u/s 271(1)(c) Reduced to 100% for Fairness in Tax Evasion Case.

  Case-Laws - AT : Penalty levied u/s 271(1)(c) - penalty imposed by the AO @ 200% - a penalty of 100% of tax which the appellant has tried to avoid will meet the end of justice in such cases - AT
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• Exemption Granted u/s 11 for Educational Payments to Teachers, Supervisors, and Principals Considered Charitable.

  Case-Laws - AT : Entitlement to exemption u/s 11 - payment was for the purpose of the education of the Fathers, who serve in various schools run by the assessee, as teachers, supervisors and principals, etc. - expenditure have been incurred for charitable purposes, allowed - AT
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• Section 10B Deduction Confirmed for Export Businesses: Profits from Subsidy, Interest, Scrap Sales, and Tax Refunds Qualify.

  Case-Laws - AT : Computing deduction u/s. 10B - eligibilty for deduction on the profits from subsidy, interest income, sale of scrap, sales tax refund and sundry balances written off - Assessee was not having any other business other than exports - deduction u/s 10B allowed - AT
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• Tax Authorities Must Independently Verify DIT Information Before Reassessment; Mere Reliance Is Insufficient for Valid Action.

  Case-Laws - AT : Reopening of assessment - mere information conveyed by DIT does not constitute to be a tangible material to re-assess the assessee company without any independent enquiry or application of mind - AT
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• Court Rules 15% Interest Rate Valid; No Reasonableness Test Applied to Excessive Interest Payments.

  Case-Laws - AT : Addition on account of payment of excessive interest @15% - there was no scope for application of the test of the reasonableness to a case of payment of interest and therefore the rate of interest could not be scaled down. - AT
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Service Tax

• Service Tax Not Applicable on Barge and Handling Charges from Oct 10, 2007; Integral to Customs Duty Value.

  Case-Laws - AT : The question of demand of Service Tax on barge charges and the handling charges connected therewith would not arise at all with effect from 10-10-2007 as they form an integral part of the transaction value for levy of customs duty. - AT
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• RIL's Services Beyond 12 Nautical Miles Not Subject to Service Tax Under Finance Act, 1994.

  Case-Laws - AT : Place of receipt of services - within in domestic services or outside India - location of fixed establishment. - RIL was not paying service tax on the belief that the imported services are used outside the territorial waters of India viz., beyond 12 nautical miles (NM) to which provisions of the Finance Act, 1994 are not extended. - services provided to the sea-bed are not taxable - AT
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• No interest on reversed CENVAT credit for incorrect service tax payments u/r 14 of CENVAT Credit Rules, 2004.

  Case-Laws - AT : Demand of interest on reversal of cenvat credit - reversal of credit against refund claim where the service tax was paid wrongly - provisions of Rule 14 of CENVAT Credit Rules, 2004 for recovery of interest on the subject CENVAT credit amount will not be attracted - AT
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Central Excise

• Plasticized Plywood Classified Under Heading 4408.90 in Disputed Tariff Decision.

  Case-Laws - AT : Classification of plasticized plywood - classifiable under 4410.90 OR under heading 4408.90 - the impugned product is classifiable under chapter heading 44.08. - AT
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• Refunds Allowed if Credit Notes Neutralize Excess Duty; Not Barred by Unjust Enrichment Principle.

  Case-Laws - AT : Eligibility to get refund of excess duty - unjust enrichment - if the credit notes are genuine and had been acted upon resulting in neutralizing the higher incidence of duty earlier passed on, the refund claim would no longer be hit by the principle of unjust enrichment - AT
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• Duty Remission on Molasses Loss Allowed; No 24-Hour Notification Required u/r 21 for Substantive Benefit.

  Case-Laws - AT : Remission of duty - molasses lost during storage - It is not disputed that the loss is within the prescribed limit of 2%. Rule 21 does not lay down any procedure for giving information within 24 hours. Therefore, the substantive benefit cannot be denied in the statute by prescribing time limit of 24 hours, which is not laid down in law. - AT
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• CENVAT Credit Denial Overturned: Demand Against Appellant Set Aside After Adjustment Through Personal Ledger Account.

  Case-Laws - AT : Denial of CENVAT credit on amount paid through PLA - the Cenvat credit utilized for payment of SED was made good by the appellant taking on account of payment of SED through Cenvat credit account of which claim received was paid through PLA - demand set aside - AT
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• Cenvat Credit Allowed for Rails Supporting EOT Cranes in Latest Ruling.

  Case-Laws - AT : Entitlement to take Cenvat credit on rails - rails are fixed to the earth and EOT cranes are being run over them - credit allowed - AT
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Case Laws:

• Income Tax

• 2016 (2) TMI 239
  Disallowance of hire charges under sec. 40(a)(ia) - non deduction of tds - CIT(A) deleted the addition - Held that:- The assessee has deducted TDS and deposited the same with the Central Govt. account as prescribed under the Act. The provisions of sec. 40(a)(ia) of the Act is applicable, in case there is a failure on the part of the assessee to deduct TDS and remit the same to the government account. There is nothing in the said section to treat inter alia that the assessee is defaulter where there is shortfall in deduction of TDS. If there is any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under the various TDS provisions, the assessee can be declared to be an assessee in default under sec. 201 of the Act and no disallowance can be made by invoking the provisions of sec. 40(a)(ia) of the Act. Therefore, we do not find any error or infirmity in the CIT(A)’s order, hence, we inclined to uphold the order of the CIT(A) and reject the ground raised by the Revenue. - Decided in favour of assessee Disallowance of expenditure under the head soil purchase, tractor maintenance and other expenses - Held that:-Assessing Officer disallowed 5% under the head soil expenses, 5% under the head tractor maintenance and 10% under the head other expenses. The Assessing Officer was of the opinion that the assessee has not furnished the supporting bills and vouchers for the expenditure debited in the profit & loss account and all the expenditure incurred are supported by self made vouchers, therefore made adhoc disallowance. The CIT(A), confirmed the additions made by the Assessing Officer. Even before us, the assessee has failed to prove the expenditure incurred was reasonable and not excessive. Having regard to the facts and circumstances of the case, we are of the view that the disallowance made by the Assessing Officer and confirmed by the CIT(A) is reasonable, hence, does not call for any interference at this stage. Therefore, we reject the ground raised by the assessee. - Decided against assessee

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• 2016 (2) TMI 238
  Penalty u/s 271D - whether the loan accepted by the assessee is a loan or deposit within the meaning of sec. 269SS - Held that:- Assessing Officer issued show-cause notice to levy penalty under sec. 271E of the Act, but finally levied penalty under sec. 271D of the Act. Sec. 271E deals with levy of penalty for violation of the provisions of sec. 269TT of the Act. In the present case on hand, the Assessing Officer initiated the penalty under sec. 271E for violation of sec. 269TT of the Act, but levied penalty under sec. 271D for violation of the provisions of sec. 269SS. From this conduct of the Assessing Officer, it was clear that the Assessing Officer did not applied his mind before levying penalty. The A.O. himself confused, whether the assessee accepted or repaid loan, which clearly shows that he has passed penalty order without application of mind. Therefore, the penalty order cannot be sustained in the eyes of law. Considering the facts and circumstances of the case and also applying the ratio of Gururaj Mini Roller Flour Mills ( 2015 (2) TMI 362 - ANDHRA PRADESH HIGH COURT ), we are of the opinion that the assessee has not accepted the loan or deposit in contravention of the provisions of sec. 269SS of the Act so as to levy penalty under sec. 271D of the Act. Therefore, we direct the Assessing Officer to delete the penalty levied under sec. 271D of the Act. - Decided in favour of assessee.

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• 2016 (2) TMI 237
  Penalty u/s 271(1)(c) - CIT(A) deleted the penalty - Held that:- Revenue has not made out any strong case for levy of concealment. In fact, as stated by the learned CIT(A), there was no evidence of investment in respect of assessment years, which could have been brought to tax as income of the year. The assessee has admitted income on his own and filed the returns in the course of proceedings under S.153A. That alone cannot be a basis for levy of penalty, unless there is evidence or nexus with the concealed income as stated by the CIT(A). The amount of Rs. 45 lakhs considered for penalty in assessment year 2007-08 was not invested in that year, but represents the investments made in assessment years 2002-03 to 2005-06. Likewise, the evidence in the form of scribblings on rough sheets cannot be considered as pertaining to assessment year 2008-09. In fact, any such undated evidence, at the most, can be considered as pertaining to the year of search, which could have been brought to tax in assessment year 2010-11, as the search took place on 20th August, 2009, but the Assessing Officer chose to bring to tax in the assessment year 2008-09, which is on the basis of the admission by the assessee under S.1342(4). In view of these facts of the case, we do not see any reason to disturb the findings of the learned CIT(A) for both the years. - Decided against revenue

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• 2016 (2) TMI 236
  Disallowance u/s. 14A - Held that:- The assessee company has made investment from earlier years and received dividend income every year and demonstrated that funds utilized for investments are surplus funds or interest free funds. The assessee earned exempt income ;1,64,06,932/-. Since Rule 8D provisions was introduced with effect from 24.03.2008, which was prospective in operation and cannot be regarded as being retrospective as held by Delhi High Court in the case of Maxopp Investment Ltd vs. CIT [2011 (11) TMI 267 - Delhi High Court]. However, incurring certain administrative expenses cannot be ruled out. Accordingly, we direct the Assessing Officer to disallow 2% of exempt income as expenditure towards earning that income. - Decided in favour of assessee Disallowance of setting off of loss u/sec. 10AA against the normal business income - Held that:- The assessee is having two separate units and as per the provisions of Secs.70 and 71 set off of loss from one source against the income from any other source under same head of income is allowed except capital loss and relied on CBDT circular No.07/2013. We after analyzing the provisions of set off and Sec.10A, the assessee company loss from the SEZ unit has to carried forward and set off against profit of eligible units only. We draw support from the decision of Delhi High Court in the case of CIT vs. KEI Industries Ltd [2015 (3) TMI 618 - DELHI HIGH COURT], wherein it was held that loss suffered by the assessee in a unit entitled for exemption cannot be set off against income from any other unit not eligible for such exemption. In the present case by applying the above ratio, we are not inclined to interfere with the order of the Commissioner of Income Tax (Appeals) on this ground and accordingly dismiss the ground of the assessee. - Decided against assessee

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• 2016 (2) TMI 235
  TDS u/s 195 - carrier payments made to M/s. Clikatel, South Africa without deduction of tax at source - Held that:- The nature of services rendered by non-resident i.e. M/s. Clickatel is only to transmit bulk SMS. The nature of service provided by Clickatel requires no technical knowledge and what was rendered was just transmission of data which requires no technical skill. The finding of the Commissioner of Income Tax (Appeals) that carrier which is a medium for sending bulk SMS and as such cannot be considered to be rendering any technical services. The Commissioner of Income Tax (Appeals) held that Clickatel which is a nonresident carrier rendered services outside India and no part of the payment made to Clickatel is chargeable to tax in India. The Commissioner of Income Tax (Appeals) also followed the decision of Hon’ble Supreme Court in the case of CIT Vs.Bharti Cellular Ltd. (2010 (8) TMI 332 - Supreme Court of India) on the issue. The Hon’ble Delhi High Court the case of CIT Vs. Bharti Cellular Ltd. (2008 (10) TMI 321 - DELHI HIGH COURT ) held that these services do not involve human intervention and these services cannot be regarded as fee for technical services. No good reason to interfere with the decision of the Commissioner of Income Tax (Appeals) in holding that payment made by the assessee to Clickatel is not fees for technical services and no TDS is required to be made - Decided against revenue Addition on income accrued not offered to tax - CIT(A) deleted the addition - Held that:- As decided in assessee's own case since the appellant maintains books on accrual system, income shall be recognized only when it accrues. In the given case, the income accrues only when the appellant sends the required no. of SMS. Therefore, the service charges received in advance for the service to be rendered in future years are not liable to tax in the year of receipt. Only on completion of the service, the appellant has right over the amount that was received in advance. .In view of the above, the action of the AO is not justified in making the above disallowance and hence directed to be deleted. - Decided against revenue

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• 2016 (2) TMI 234
  Addition under the head income from other sources as against income from business - CIT(A) with reference to the lease agreement and clauses thereon and held that Assessing Officer had correctly assessed the income from letting out of godowns for commercial space under the head ‘income from house property’ - Held that:- The appellant is not engaged in the business of leasing properties i.e. taking the properties on lease and again sub-leasing properties to various users. In the instant case the appellant has let out the property for a fixed consideration in the capacity of the owner of the property. The godowns which are rented by the appellant are not in the nature of plant and machinery. The manner of end-use of the property consisting of buildings or lands will not alter the assessability of income from house property to a business activity. The AO had correctly applied the ratio of the decision of the Hon'ble jurisdictional High Court in the case of Chennai Properties & Investments [2003 (3) TMI 28 - MADRAS High Court] and Shambu Investments [2003 (1) TMI 99 - SUPREME Court]. It is to be mentioned here that the various expenses claimed by the appellant in the P & L account are not laid out for purpose of earning the rental income. The various expenses claimed in the P & L account are in no way connected with the earning the rental income. Therefore, the considered view that the AO had correctly assessed the income from letting out the godowns or commercial space under the head "Income from house property" is acceptable. - Decided against assessee.

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• 2016 (2) TMI 233
  Amount received from sale of CDM - revenue or capital receipt - Held that:- Amount received on sale of carbon credit is capital in nature and therefore we reverse the order of Commissioner of Income Tax (Appeals) on this issue allow the grounds raised by the assessee. See CIT Vs. My Home Power Ltd [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] - Decided in favour of the assessee Entitlement for deduction under section 80IA - Held that:- The business undertaking of the assessee is wind mill power generation/hosiery goods, etc., and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills case (2010 (3) TMI 860 - Madras High Court). - Decided in favour of the assessee

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• 2016 (2) TMI 232
  Addition u/s 68 - Held that:- CIT (Appeals) in his order has given a finding that the details of the brokers through whom the shops were sold or agreed to be sold was not furnished. The assessee has further failed to provide any evidence to prove the source of cash advances received from the alleged buyers. The amount of compensation which is said to be source of funds is much less than the amount of advances received or the agreement value of the shops. All the transactions in respect of advances for booking shops are in cash. The ld. AR has not controverted any of the above findings of the Commissioner of Income Tax (Appeals). The documents placed on record does not inspire confidence to accept the explanation furnished by the assessee to substantiate the source of advances of Rs. 67,50,000/-. We find the order of Commissioner of Income Tax (Appeals) well reasoned and detailed on the issue. - Decided against assessee Addition being notional interest on advances given during the course of business - Held that:- Before the Commissioner of Income Tax (Appeals), the assessee never raised any plea that the assessee was having sufficient own interest free funds for advancing interest free loans. This plea of sufficient funds was raised by the assessee for the first time before the Tribunal. However, the assessee has not substantiated its plea from the records. In the absence of any such evidence, the reliance on the decision of Hon'ble Bombay High Court in the case of Commissioner of Income-tax Vs. Reliance Utilities and Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT) is misplaced. The assessee could neither show availability of sufficient interest free funds for advancing such loans nor the assessee has been able to show that loans have been given for business purposes. Therefore, in view of the facts of the case, we do not find any merit in the contentions of the ld. AR of the assessee. - Decided against assessee

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• 2016 (2) TMI 231
  Eligibility for the deduction u/s. 80IB(10) - non-completion of the few buildings - Held that:- The assessee is entitled to pro-rata deduction in respect of the buildings/units of the housing project ‘Kumar Padmalaya’ which have complied with the conditions laid down in section 80IB(10) of the Act. In other words, the AO cannot reject the claim of deduction u/s.80IB(10) of the entire project for non-completion of the few buildings. We therefore set aside the order of Ld.CIT(A) and direct the AO to allow pro-rata deduction claimed u/s.80IB(10) in respect of project ‘Kumar Padmalaya’. - Decided in favour of assessee

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• 2016 (2) TMI 230
  Disallowance u/s 14A - Held that:- Disallowance u/s.14A r.w. Rule 8D should not exceed the exempt income. The Mumbai Bench in its order sustained the disallowance on applicability of provisions of sec.14A r.w. Rule 8D. However, the alternative claim of the assessee was that disallowance if at all should be made, it should be restricted to exempt income earned and not beyond that. Accordingly, the AO is directed to look at this issue on this angle and decide it afresh in the light of the above decision of the Mumbai Bench of the Tribunal in the case of M/s Daga Global Chemicals Pvt. Ltd vs ACIT.[2015 (1) TMI 1204 - ITAT MUMBAI ] Disallowance of payment made to Registrar of Companies - Held that:- By placing reliance on the judgment of Supreme Court in the case of Punjab State Industrial Development Corpn Ltd vs CIT, [1996 (12) TMI 6 - SUPREME Court ], wherein held that the fees paid to the Registrar of Companies for expansion of the capital base of a company is directly related to the capital expenditure incurred by the company and although incidentally that would certainly help in profit making, it still retains the character of capital expenditure since the expenditure is directly related to the expansion of the capital base of the company. Following the above judgment of the Supreme Court, we dismiss the ground raised by the assessee.- Decided against assessee Retention money payable - Held that:- The provision for payment made by the assessee towards sub-contract is allowable expenditure as the assessee recognized the revenue from the said contract as income in the assessment year under consideration. Further, we make it clear that the assessee cannot claim the same expenditure on actual payment basis, otherwise it amounts to double deduction – one on the basis of accrual and another on the basis of actual payment. Hence, we direct the Assessing Officer to allow this retention money payment only on accrual basis and not on actual payment basis. With these observations, we remit this issue to the file of the Assessing Officer for quantification. Disallowance u/s 37(1) of the Act towards payment of trade licence fee - Held that:- This issue came up for consideration before the Tribunal in assessee’s own case for assessment year 2006-07 decided the issue in favour of the assessee by observing that the payment made to M/s Samruddhi Holdings is an allowable expenditure u/s 37 of the Act and thereby annulled the revisional order of the CIT dated 27.10.2010 passed u/s 263 of the Act. Being so, in our opinion, the expenditure incurred by the assessee is a revenue expenditure and to be allowed accordingly. - Decided in favour of assessee Disallowance of additional depreciation - CIT(A) deleted the addition - Held that:- The findings of the CIT(A) is justified and the contention of the Revenue is not sustainable in view of the judgment of the jurisdictional High Court in the case of CIT vs VTM Ltd, [2009 (9) TMI 35 - MADRAS HIGH COURT ], wherein held that the assessee which was a manufacturer of textile goods when set up a windmill was entitled to additional depreciation. - Decided in favour of assessee Disallowance of purchase of auto cad - CIT(A) deleted the addition - Held that:- As seen from the order of the CIT(A), the Autocad software is an application software. It helps in speeding up the process and to conduct the part of a business in a more efficient and better manner. The benefits of this software are accrued on day to-day running of the business but do not in any way give an enduring benefit. Though the software could be used for more than one year, that itself cannot be a reason for treating the expenditure incurred on application software as capital expenditure. In our opinion, the judgment of the jurisdictional High Court in the case of Southern Roadways Ltd. (2007 (6) TMI 193 - MADRAS HIGH COURT ) is squarely applicable to the facts of this case and the expenditure incurred on application software is only a revenue expenditure and it is to be allowed. Being so, we confirm the order of the CIT(A)- Decided in favour of assessee Corporate finance, industry research, preparing corporate strategy - Treatment to expenditure as capital expenditure or revenue - Held that:- In the present case, the assessee incurred expenditure towards corporate finance, industry research, preparing corporate strategy and growth for bringing out a business plan which gives enduring benefit to the assessee and therefore, the expenditure is not for a particular assessment year as such it cannot be neither a revenue expenditure or deferred revenue expenditure. The benefits of the expenditure are enduring in nature. In our opinion, the judgment of Supreme Court in the case of Brooke Bond India Ltd (1997 (2) TMI 11 - SUPREME Court ) is directly applicable to the facts of the case. Accordingly, we have no hesitation to hold that the Assessing Officer is justified in treating the expenditure as capital expenditure - Decided against assessee Disallowance u/s 14A - Held that:- Assessing Officer is directed to disallow 2% of the dividend income as expenditure

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• 2016 (2) TMI 229
  Taxability of contract receipt in India - Held that:- There is merit in the submissions of the Ld A.R that the profit attributable to Indian operations should be determined by undertaking FAR analysis. Since the assessee had taken the view that the profit arising from supply of equipments was not taxable in India, it appears that the assessee did not consider it necessary to put up its arguments on the profitability issue. Further, it is stated that the assessee is possessing evidences in support of the expenses claimed by it. Hence, we are of the view that the assessee should be provided with one more opportunity, in the interest of natural justice, to make its submissions before the AO and also to produce evidences. Hence, we are of the view that the issue relating to the attribution and determination of income should be examined afresh at the end of the assessing officer. Accordingly, we set aside the issue relating to determination of income to the file of the AO with the direction to examine the same afresh by duly considering the information and explanations that may be furnished by the assessee. The assessee is also directed to furnish evidences supporting various expenses claimed by it and also make its submissions with regard to the income attributable to the Indian operations.- Decided partly in favour of assessee for statistical purposes.

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• 2016 (2) TMI 228
  Transfer pricing adjustment - comparability of Saket Projects Ltd. company - Held that:- We concur with the conclusion of the TPO that a comparable cannot be excluded on the grounds of high profitability alone as high profit can be a measure of efficiency in management. While so holding taking into consideration the consistent finding on record qua the said comparable for the specific assessment year in consideration namely 2008-09 assessment year, we find that the judicial precedent concluding that segmental details in the public domain for the said year were not reliable has not been rebutted by the Revenue. On facts where segmental details qua the segment are not reliable then on this fact alone even dehors the judicial precedent a comparable has to be excluded. In the absence of any rebuttal on facts to the contrary the judicial precedent relied upon has to be followed. We also find that the consistent finding of fact that the said comparable organized events on sponsorship and was having an entirely different Revenue generation model of offering space on rent and selling event fees etc. has also not been rebutted. This fact further makes the said comparable as functionally not comparable to Business Support Services. Accordingly in the absence of any rebuttal on these crucial factual aspects, we find that the limited prayer of the assessee has to be allowed. Thus, for the detailed reasons brought and herein above Saket Projects Ltd. is directed to excluded as a comparable in the year under consideration

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• 2016 (2) TMI 227
  Penalty levied u/s 271(1)(c) - penalty imposed by the AO @ 200% - CIT(A) restricting the penalty to 100% of the tax sought to be evaded - Held that:- AR has already deposited the tax, interest and penalty on the concealed income. The ld. CIT(A) has arrived at his conclusion by relying on the order of the Hon'ble Jurisdictional High Court in the case of CIT VS. Mak Data Ltd [2013 (1) TMI 574 - DELHI HIGH COURT] and held the AO to be right in charging the assessee company with concealment of income and furnishing of inaccurate particulars. However, keeping in view the facts and circumstances of the case he has reduced the quantum penalty to 100%. We find the penalty imposed by the AO @ 200% is arbitrary and excessive. We find substance in the order relied upon by the assessee in the case of LMP Precision Engineering Co. Ltd [1997 (3) TMI 127 - ITAT AHMEDABAD-A ] wherein it has been held that a penalty of 100% of tax which the appellant has tried to avoid will meet the end of justice in such cases. Also in view of the fact that the assessee has already deposited the tax, interest and penalty, we decline to interfere with the order of the first appellate authority. - Decided against revenue

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• 2016 (2) TMI 226
  Entitlement to exemption u/s 11 - whether the payment is towards religious purposes and not charitable purposes? - Held that:- It is to reiterate that it has not been disputed that the payment was for the purpose of the education of the Fathers, who serve in various schools run by the assessee, as teachers, supervisors and principals, etc. Before the AO, it was because of the wrong admission of the assessee that the addition was made. The two rectification applications filed by the assessee before the AO met with a negative fate qua the assessee, i.e., they were rejected. However, the fact remains that it has not been shown that the payment in question was not towards the education of the Fathers serving in the schools of the assessee. As such, the narration in the table contained at pages 14-15 of the impugned order does not make the payment to be for a religious purpose and not for a charitable one. This narration, by itself, is not determinative of the nature of the expense, particularly when education of the Fathers has not been shown not to be towards education, which is a charitable purpose of the assessee. Therefore, the grievance of the department that the ld. CIT(A), holding powers co-terminus with those of the AO, ought to have held the expenditure not to have been incurred for charitable purposes, is found to be devoid of force, particularly in the absence of any material on record to prove the expenditure to be towards any religious purpose. - Decided in favour of assessee

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• 2016 (2) TMI 225
  Computing deduction u/s. 10B - eligibilty for deduction on the profits from subsidy, interest income, sale of scrap, sales tax refund and sundry balances written off - Held that:- he decision of Special Bench of Tribunal in the case of Maral Overseas (2012 (4) TMI 345 - ITAT INDORE ) wherein the ratio that once on income forms part of the business of the income of the eligible undertaking of the Assessee, the same cannot be excluded from the eligible profits for the purpose of computing deduction u/s. 10B of the Act, has been upheld in the case of Hritnik Exports Pvt. Ltd. & Motorola India Electronics Pvt. Ltd.[2015 (10) TMI 1009 - DELHI HIGH COURT ] Before us, Revenue has not pointed out any contrary binding decision in its support nor has placed any material on record to demonstrate that Assessee was having any other business other than exports and the aforesaid income were derived out of that other business. In view of the aforesaid facts, we are of the view that Assessee is eligible for deduction on the profits from subsidy, interest income, sale of scrap, sales tax refund and sundry balances written off. We thus set aside the order of ld. CIT(A). - Decided in favour of assessee

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• 2016 (2) TMI 224
  Reopening of assessment - information conveyed by DIT - undisclosed share capital received - Held that:- As there is no rebuttal from the side of Revenue of the assessee’s contention that the share capital received by the assessee company of Rs. 48,00,000/- received from the shareholders was duly disclosed in the return of income and books of account which were duly examined by the AO at the time of original assessment proceedings. The balance sheet of assessee placed before us at page 6 of the paper book clearly shows the receipt of Rs. 48,00,000/- as share capital money for 960 Equity Shares of Rs. 1000/- each – Rs. 500/- per share called and paid up. The assessee had shown total receipts in its hands at Rs. 51.30 lacs which consists of Rs. 48 lacs as share capital, Rs. 1.5 lacs as Rent, Rs. 91,608 as interest and Rs. 86,215 as sale of agricultural produce, which all stood accepted by the AO u/s. 143(3) of the Act. The ld. DR failed to adduce any tangible material to show that a sum of Rs. 62 lacs represented unaccounted money rotated through Shri Surender Kumar Jain group of cases. Therefore, mere information conveyed by DIT does not constitute to be a tangible material to re-assess the assessee company without any independent enquiry or application of mind. In presence of all these facts, we are of the considered opinion that the action initiated against the assessee u/s. 147 is not legally valid and is liable to be quashed - Decided in favour of assessee

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• 2016 (2) TMI 223
  Deemed dividend addition u/s 2(22)(e) - CIT(A) deleted the addition - Held that:- In the case of Parle Plastics Ltd.(2010 (9) TMI 726 - BOMBAY HIGH COURT) wherein it has been held that provisions of section 2(22)(e) of the Act are not applicable if the money borrowed by the share holder from the company in the ordinary course of business. The facts of the assessee’s case are squarely covered by the above mentioned decision as the assessee borrowed money in the ordinary course of business of the company where the money lending was substantial part of the business activity and had paid interest on such borrowings’. We ,therefore, respectfully following the above decisions, uphold and sustain the conclusion drawn by the CIT(A) on this issue - Decided in favour of assessee Addition on account of payment of excessive interest @15% - reasonableness - Held that:- As considered the relevant material on record find that the assessee has raised money from the market at the differential rate of interest. We note that out of 26 parties only to 3 parties interest was paid at the rate of 15%. We also note that assessee was engaged in the business of money lending in the ordinary course of business and for the purpose of doing its business the assessee had to borrow money from the market at the prevailing market rate of interest which are governed by several factors such as urgency of funds required, availability of funds in the market, notice at which fund are required and creditworthiness of the persons raising the money. The Ld. CIT(A) had given a very detailed observation for arriving at his decision. In the case of Bansidhar Omkarlal (1964 (12) TMI 50 - ORISSA HIGH COURT), it has been decided that there was no scope for application of the test of the reasonableness to a case of payment of interest and therefore the rate of interest could not be scaled down. Thus in view of the ratio laid down in the above decision by the Honble Orissa High Court , we find no infirmity in the order of CIT(A) and uphold the same on this point.- Decided in favour of assessee

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• Customs

• 2016 (2) TMI 207
  Demand of duty and levy of penalty - Import of fire crackers from China - restricted items - The appellants imported certain consignments of fire crackers by mis-declaring the same and on being importation, the goods were examined, they were found to be fire crackers which is a restricted item which can be imported only on the strength of license L 8. As the appellants were not having license L 8 , therefore, these goods were absolutely confiscated. It was also alleged that goods were undervalued. Held that:- On merits, there is no issue before me. Therefore, I confirm the order on merits. - the penalty imposed on the appellant upheld - Decided against the appellants.

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• 2016 (2) TMI 206
  Refund of Special Additional Duty (SAD) - Notification No. 102/07-CUS - mis-match between the description of goods indicated in the Bills of Entry and the sales invoices issued by the appellant. - as per the trade practice and for the purposes of easy identification of the said goods for selling to the local traders, the description of the goods was mentioned in the short form as 'fabric cloth' Held that:- the appellant had mentioned therein the reference of the Bills of Entry evidencing importation of the disputed goods on payment of SAD amount; that the said invoices also bore the declaration that no credit of the Additional Duty of Customs (SAD) levied under the Customs Tariff Act shall be available to the buyer of goods; that Central Sales Tax/ value added tax payable on sale of the disputed goods have been clearly mentioned in the said invoices. Thus, it is evident from the retail invoices that the goods imported on payment of SAD amount have been sold in the domestic market by the appellant. - Refund allowed.

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• Corporate Laws

• 2016 (2) TMI 205
  Scheme of Arrangement - Held that:- As on the basis of the material on record that the present Scheme of Arrangement would be in the interest of the shareholders and creditors of all the companies as well as in the public interest, therefore, the same deserves to be sanctioned.

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• 2016 (2) TMI 204
  Scheme of Amalgamation - As the requirements of the provisions of sections 391 to 394 of the Companies Act, 1956 are satisfied. The Scheme appears to be genuine and bonafide and in the interest of the shareholders and creditors. This Court, therefore, considers it proper to allow Company Petitions and approve the Scheme. The Scheme stands sanctioned and the prayers made in the respective Company Petitions are granted.

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• Service Tax

• 2016 (2) TMI 240
  Refund - correlation of input services with export of services - Held that:- the matter is remanded to the original adjudicating authority to examine the refund claims of these appellants in the light of the principles laid down by the CESTAT’s Interim Order in the case of Apotex Research Pvt. Ltd. [2013 (9) TMI 1087 - CESTAT BANGALORE] - Decided partly in favor of revenue.

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• 2016 (2) TMI 222
  Cargo Handling Services - handling of export cargo as part of Stevedoring services - transportation of goods through barges (sea) - whether the Appellant is liable to pay the Service Tax on Lighterage & Stevedoring services rendered by them in relation to vessel or goods at the Magdalla/Hazira port under Port Services as defined under Section 65(82) of the Finance Act, 1994. Held that:- The Appellant contended that the charges were fixed in the contract entered by way of negotiations. It is clear from the contract between the Appellant and M/s Essar Steel that it is an independent contract. In any event, the intimation given by the Appellant to GMB of the contract between them and M/s Essar Steels, cannot be treated as authorization by the port. - After considering the above decisions and the provisions of Finance Act, 1994, in our considered view, the facts in the case of Kandla Shipchandlers and Ship Repairers Association [2012 (9) TMI 850 - Gujarat High Court] would not be applicable in the present case, as there was no authorization issued by the GMB to the appellant and the demand of service tax on Stevedoring and Lighterage charges, under port service, on the appellant, prior to 01.7.2010, cannot be sustained. The question of demand of Service Tax on barge charges and the handling charges connected therewith would not arise at all with effect from 10-10-2007 as they form an integral part of the transaction value for levy of customs duty. Even for the period prior 10-10-2007, the same position would apply for the reason that the import transaction is complete only when the goods reach the customs barriers and the bill of entry for home consumption is filed. The demand of Service Tax alongwith interest on Lighterage and Stevedoring services rendered by the Appellant in relation to vessel or goods at the Magdalla/Hazira Port under 'Port services' would be upheld from 01.07.2010 and the extended period of limitation cannot be invoked. The demand of tax alongwith interest prior to 01.07.2010 and penalties are set aside. - Decided partly in favor of assessee.

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• 2016 (2) TMI 221
  Management consultancy services - Merchant Banking Services - Underwriting services - Stock broker services. - Receipt of Advisory fees, Retainership fees, Advisory fees for Mergers and Acquisitions ( hereinafter referred as M&A), fees for Merchant Banking services ( hereinafter referred as MBS), Management fees earned by appellant's subsidiary, fees for underwriting Government securities and some other minor fees. Held that:- what is to be seen is the obvious legislative intent to tax merchant banking services under the category of banking service w.e.f. 16.7.2001 and not to see any intended meaning of legislation in the definition of 'Management Consultant Service'. We hold that the MBS cannot be classified under Management Consultancy Service and therefore no service tax is payable. The fees are towards activities of financial ties/private placement, financial valuation services etc. We find these activities to be squarely covered under the definition of Banking and other Financial Services and therefore our views given above in the case of Merchant Banking Services would hold in this case also. The third category of service which have been classified under the Management Consultancy Service is the fees earned by the subsidiary of the appellant. We find that it has not been controverted by the department with any evidence that the payment is received in respect of activities undertaken by their subsidiary. The subsidiary is a separate legal entity under the Companies Act. The fees earned is not the income of the appellant company. Merely because the income is shown in the consolidated financial statement of the company and its subsidiary, the same cannot be a ground for demanding service tax from the company. Services in relation to software development projects - The service that is Information Technology Service was specifically excluded from the scope of 'Business Auxiliary Service(BAS). Both these facts indicate Government’s intention to classify the service under Gonsulting Engineer Service' or under BAS. Therefore we are inclined to give the benefit to the appellant and hold that service tax is not payable on the service in question under Management Consultant Service. The concept of Management Consultancy is clearly consultancy and technical assistance in the running of the affairs of an organization. The definition itself refers to various aspects of the working system of any organization. Whereas Mergers and Acquisitions is a highly technical and restrictive term. Mergers refer to the mergers of organizations. Similarly, the word 'acquisition' refers to acquisition of another entity by a company. Mergers and acquisitions cannot be related to the running of the affairs of an organization. If such a wide view is taken then, as stated by the learned Counsel, specific service entries in the Finance Act, 1994 such as practicing Chartered Accountants [Section 65 (83)], Cost Accountants [Section 65(84)], and Secretaries [Section65(85)] would all get covered under the definition of 'Management Consultancy Service'. It would render many entries otiose. The legal position is that an interpretation of the scope of an entry should not be such which will lead to an illogical situation and lead to unnecessary complexity. The legislative intent should not be negated as held by the Apex Court in the case of Balaji Enterprises [1997 (5) TMI 108 - SUPREME COURT OF INDIA]. We respectfully follow the High Court judgment in the case Indian National Shipowners Association [2009 (12) TMI 850 - SUPREME COURT OF INDIA]. The new entry of Mergers and Acquisitions extends the coverage of service tax and is not the result of carving out a new entry from the Management Consultancy Service. Consequently we hold that service tax is not payable on M&A Services prior to 16.7.2001 under the category of “Management Consultancy Service”. Demand set aside - Decided in favor of assessee.

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• 2016 (2) TMI 220
  Place of receipt of services - within in domestic services or outside India - location of fixed establishment. - RIL was not paying service tax on the belief that the imported services are used outside the territorial waters of India viz., beyond 12 nautical miles (NM) to which provisions of the Finance Act, 1994 are not extended. - Application of provisions of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006. Held that:- Not 21/2009 extends the taxable territory only to constructed installations and structures and not to under-construction installations. Therefore services provided to latter are not taxable. - The structures referred to in Not 21/2009 are complete structures. - Services provided by vessels traversing to and fro from shore to off shore and in the EEZ are not taxable under the provisions of Not 21/2009. - Not 21/2009 extends taxable territory to installations etc in the CS and EEZ in contradistinction to Not 14/2010 which also extends the taxable territory to the whole of the sea-bed and thus the services provided to the sea-bed are not taxable. Service tax is payable on the services namely “Commercial Training and Coaching service” and “Management Consultant Service”. Appropriate interest on demand confirmed in respect of these two services is payable. However no penalty is imposable - Decided partly in favor of assessee.

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• 2016 (2) TMI 219
  Demand of interest on reversal of cenvat credit - reversal of credit against refund claim - The appellant vehemently argues that their initial excess payment of service tax on receipt of input services from their foreign counterpart was unintentional and mainly because of wrong calculations; after the payment of the excess service tax they had taken the CENVAT credit for the same. - Held that:- strictly speaking do not clearly prove that the CENVAT credit taken on the excess payment of service tax was in the strict category of “wrongly taken or utilized CENVAT credit” and more so in the light of decision of the Hon’ble Karnataka High Court’s decision in the case of CCE vs. Bill Forge [2011 (4) TMI 969 - KARNATAKA HIGH COURT] - provisions of Rule 14 of CENVAT Credit Rules, 2004 for recovery of interest on the subject CENVAT credit amount will not be attracted. - demand set aside - Decided in favor of assessee.

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• 2016 (2) TMI 215
  Credit of service tax - whether the contractor which had engaged sub-contractor to provide the services and the services so provided suffered service tax, shall disentitle the contractee to avail credit of the service tax so paid to the sub-contractor by the contractor? - Held that:- There is no difference on the fact that the services of CHA who were M/s. SRS Cargo International and others was availed by M/s. MRF Ltd., through its agency M/s. VPC Freight Forwarders (P) Ltd., who in turn engaged M/s. SRS Cargo International and others to clear the imports of M/s. MRF Ltd. The service provider M/s. SRS Cargo International and others were no doubt engaged by M/s. VPC Freight Forwarders (P) Ltd., to cater to the need of M/s. MRF Ltd. That is not in doubt. Once there is no question on provision of service and that is attributable to the goods imported by appellant, denial of the credit of the service tax paid by appellant to M/s. VPC Freight Forwarders (P) Ltd., shall be prejudicial to the interest of justice. Department should have enquired as to whether any service tax paid by M/s. VPC Freight Forwarders (P) Ltd., to M/s. SRS Cargo International and others and such taxes have gone to the treasury. For no such enquiry, the appeals where penalty was imposed on the Head Office of M/s. MRF Ltd., those are allowed; waiving such penalties as well as setting aside that part of the impugned orders and the appeals which involved the disallowance of Cenvat credit with interest and penalty are also allowed which are in respect of different units of M/s. MRF Ltd. setting aside the impugned order on that count.

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• Central Excise

• 2016 (2) TMI 218
  Classification of plasticized plywood - classifiable under 4410.90 OR under heading 4408.90 - Held that:- The chapter heading 44.08 specifically speaks about plywood, veneered panels and similar laminated wood. Whereas, the chapter heading 44.10 speaks about articles of wood not elsewhere specified. Undeniably, the impugned product does not fall into ‘article of wood’. So the product which is plasticized plywood is classifiable under chapter 44.08 only. Moreover, this Tribunal in the case of Permali Wallace Pvt.Ltd.(2011 (6) TMI 663 - CESTAT, NEW DELHI ) examined the scope of heading 44.08 alongwith chapter Note 5 and held veneered sheets will be classified therein. In the light of the observations made by the Apex Court in the case of CCE, Noida vs. Kitply Industries Ltd. [2011 (9) TMI 3 - Supreme Court of India ] and apply the same, we are of the considered view, that the impugned product is classifiable under chapter heading 44.08. - Decided in favour of the Revenue.

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• 2016 (2) TMI 217
  Cenvat Credit - manufacture of dutiable and exempted goods - Rule 6 - Quantity of inputs and proportionate credit availed, on the manufacture of dutiable final products - Held that:- The entire demand has been worked out only on the basis of non-compliance of Rule 6(2) of CENVAT Credit Rules, 2002. Needless to mention that by virtue of Finance Act, 2010 an assessee has been allowed to reverse proportionate credit availed on the inputs that were used in the manufacture of exempted final products along with dutiable final products. Therefore, maintenance of separate inventories/stocks of inputs, maintenance of issue slips etc. became irrelevant. In the present case, the appellant all along have been claiming that they had availed CENVAT Credit only on the inputs that were used in the manufacture of dutiable final products, a fact remained undisputed by the Revenue even today, as is evident from the report of the Commissioner dated 09.07.2015. Hence, other issues raised by the Revenue about wrong calculation, reduction of demand etc. become irrelevant and accordingly not dealt with. Further, we find that for the subsequent period the department has accepted the formula adopted in availing the credit on inputs attributable to dutiable products and dropped the demands. In the result, the impugned order is set aside to the extent of confirming demand of Rs. 6,59,516/- and imposition of penalty of Rs. 3.00 Lakhs with interest and accordingly the assessee's appeal is allowed. - Decided against revenue

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• 2016 (2) TMI 216
  Energy generate by windmills used for the purpose other than manufacture or providing of service - Held that:- There is no dispute by Revenue that the generation of power using windmill was to share the same with Electricity Board to avail the same quantum of power at the place of manufacture on barter system. There is also no dispute by Revenue that for generating power, installation of windmill is required and also maintenance thereof is inevitable. Considering all these aspects in a batch of appeals in the case of India Cements Ltd. Vs Commissioner of Central Excise and Others reported in [2015 (6) TMI 580 - CESTAT CHENNAI]. assessees had succeeded. Therefore, finding of fact in the present case not being dissimilar to the decision in the above case, all the Revenue's appeals are dismissed. Thus in absence of any materials on record showing energy generate by windmills was used for the purpose other than manufacture of providing of service, all the appeals listed in the aforesaid Sl. Nos. are allowed.

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• 2016 (2) TMI 214
  Eligibility to get refund of excess duty - unjust enrichment - duty paid in cases where such excess duty collected from the buyers were restored to the buyers by way of credit notes - Held that:- In case of IBP Limited (2013 (10) TMI 263 - CESTAT NEW DELHI ) it was held that when initially goods have been supplied at a provisional price which subsequently had been reduced and when the higher price initially charged along with higher duty had been adjusted by the assessee from the subsequent supplies made, it cannot be said that the incidence of duty has been passed on by the assessee to their customer as held in Universal Cylinders Limited. The said judgment of the Tribunal has been affirmed by the Hon’ble Apex Court [2004 (8) TMI 690 - SUPREME COURT]. In the case of IBP Limited (Supra), this Tribunal held that if the credit notes are genuine and had been acted upon resulting in neutralizing the higher incidence of duty earlier passed on, the refund claim would no longer be hit by the principle of unjust enrichment. - Decided in favour of assessee.

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• 2016 (2) TMI 213
  Remission of duty - molasses lost during storage under Rule 21 of the Central Excise Rules - information delayed for occurrence of loss - Held that:- Remission of duty in terms of Rule 21 is permissible subject to the satisfaction that the goods are lost by natural causes. Even if the applications were not submitted within the prescribed time, although Revenue has not been able to show us the Board Circulars, no evidence is on record to show that the loss did not occur. It is also not on record whether during the three year period in question, the unit was ever visited by officers of the Audit etc. and whether any effort to investigate was made. The substantive benefit cannot be denied on the technical ground that the information was not given to the Revenue within 24 hours. It is not disputed that the loss is within the prescribed limit of 2%. Rule 21 does not lay down any procedure for giving information within 24 hours. Therefore, the substantive benefit cannot be denied in the statute by prescribing time limit of 24 hours, which is not laid down in law. - Decided in favour of assessee

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• 2016 (2) TMI 212
  Clandestine removal of cotton yarn in cones/cheese by mis-declaring the same as in PR Hanks - Wrong availment of benefit of exemption notification no.8/96-CE dated 27.03.1996 - the appellant mis-declared yarn produced by them as in the form of PR Hanks though they had manufactured and cleared the yarn in cone/cheese - also failure to maintain the record of manufacture of excisable goods - Held that:- The case for demand of duty based on the allegations of mis-declared clandestine clearance has not been supported by evidence and as such, we are not able to agree with the findings of the Original Authority as already narrated. The Original Authority himself appears to have confirmed the demand based on the “text of preponderance of probability” leading him “to the only possible conclusion that there has been misdemeanour committed by the party by surreptitious removal of dutiable cone yarn in the guise of exempted PR Hanks /yarns/”. On the question of time bar also, we find that the appellant have made out a case against the demand. They have been filing classification list declaration under Rule 173 B mentioning the nature of the product, rate of duty and the concessional notifications claimed by them. Investigation in the case started with the search on 25.03.2000. A show cause notice to confiscate the seized goods and to demand duty on the same was issued on 17.11.2000. Another show cause notice resulting in the impugned order was issued on 28.04.2003. This notice was issued invoking fraud, suppression, etc. for an extended period. Though the first notice was mainly relating to confiscation of the seized goods and to demand duty, there is nothing on record to show substantial additional evidence/facts have come into the position of the Department after issue of the first show cause notice resulting in the second show cause notice for the extended period. As such, we find that the impugned order cannot be sustained on the question of time bar also. In view of the above findings, we set aside the impugned order and allow the appeals. - Decided in favour of assessee.

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• 2016 (2) TMI 211
  Rectification of mistake - difference in opinion between Member (Judicial) and Member (Technical) the Hon’ble President nominated the Third Member (Technical) to resolve the difference of opinion - Whether the evidence produced by the Revenue establishes wrongful availment of Cenvat credit and consequently demand of duty and imposition of penalties is sustainable as held by Member (Technical)? - Held that:- In the present case, the question referred to the Third Member above, is very clear. What has been referred for opinion of the Third Member is whether the evidence produced is sufficient to establish fraudulent availment of credit. It is not brought out by the counsel that the two Members had agreed on the sufficiency of some evidence and disagreed on some other evidence. The issue is to be decided in the present case cannot be compared to the issues which were under consideration in the judgments cited by the ld. counsel. The Member (Judicial) held that the evidence produced by Revenue is not sufficient whereas Member (Technical) held that the evidence produced is sustainable. One Member may look at the evidence from a certain perspective whereas the other Member may look out the same evidence from different perspective. But the fact is that both the Members have given a definite conclusion based on the evidence on record. There is no finding in the order that a certain evidence was accepted by one Member and not accepted by other Member. Therefore, it is clear that a definite opinion has been framed by each of the Members. There being difference in opinion, the matter was appropriately referred to for nomination of the Third Member. It is up to the Third Member to agree entirely with one of the two Members or to agree partly with either Member depending on his appreciation of various pieces of evidence. The ROM appears to be a little far fetched. If the reasoning of the counsel were to be accepted in cases of evasion, it would lead to a conclusion wherein hundreds of pieces of evidence, the opinion of each Member would need to be expressed on each piece of evidence in the difference of opinion. This is neither practical nor the intention of the law. ROM application is dismissed.

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• 2016 (2) TMI 210
  Denial of CENVAT credit on amount paid through PLA - Held that:- In this case the appellant initially paid SED by utilizing their Cenvat credit account. The payment of excess rebate claim was paid through PLA is only a cross-entry for reversal of rebate claim received in cash by the appellant. Therefore, the Cenvat credit utilized for payment of SED was made good by the appellant taking on account of payment of SED through Cenvat credit account of which claim received was paid through PLA. In these circumstances, we hold that appellant has correctly taken the Cenvat credit in their Cenvat credit account being a peculiar situation in the matter. In these circumstances, we hold that appellant has taken Cenvat credit correctly as initially appellant has taken Cenvat credit in their Cenvat credit account on procurement of input/capital goods which was used for payment of SED by the appellant. - Decided in favour of assessee

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• 2016 (2) TMI 209
  Manufacture of Laminated Bagasse Board - Waiver of pre deposit of the duty demand along with interest and equivalent amount of penalty - Held that:- We find that as per the notification no. 12/2012 dated 17.03.2012 (Sl. No. 330) the bagasse board is exempted from payment of duty. We also take a note of clarification issued by the CBEC dated 19.06.2007 wherein it has been clarified that pre laminated bagasse particle board are exempted from duty and entitled for exemption under notification no. 6/2006 (Sl. No. 82) of the said notification. The said notification was superseded by the notification no. 12/2012 dated 17.03.2012. We further note that the Hon'ble High Court of Gujarat in the case of Dharshan Boardlam Ltd. (2013 (4) TMI 326 - GUJARAT HIGH COURT) also held that pre laminated bagasse board is entitled for exemption under notification no. 6/2006. In these circumstances, applicant has made out a case of complete waiver of pre deposit. Consequently, we waive the requirement of pre-deposit of entire amount of duty, interest and penalty and stay recovery thereof during the pendency of the appeal. The Ld. Counsel for the applicant also prayed that appeal be disposed of. As today only the stay application is listed before us, therefore, we are disposing of the same today. As it is the contention of the ld. Counsel for the applicant that issue is squarely covered by the decision of the Hon’ble High Court of Gujarat in the case of Dharshan Boardlam Ltd. (2013 (4) TMI 326 - GUJARAT HIGH COURT ) and clarification issued by the CBEC and the periodical SCN are being issued, therefore, we direct the registry to list the appeal for final disposal on 30.09.2015.

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• 2016 (2) TMI 208
  Entitlement to take Cenvat credit on rails - rails are fixed to the earth and EOT cranes are being run over them - Held that:- Credit on capital goods is available only on items, which are excisable goods covered under the definition of capital goods’ under Cenvat Credit Rules, 2004 and used in the factory of the manufacturer. As regards ‘inputs’, they have to be covered under the definition of ‘input’ under the Cenvat Credit Rules, 2004 and used in or integrally connected with the process of actual manufacture of the final product for admissibility of Cenvat credit. The credit on inputs used in the manufacture of capital goods, which are further used in the factory of the manufacturer is also available, except for items like cement, angles, channels, CTD or TMT bars and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods. Further, credit shall also not be admissible on inputs used for repair and maintenance of capital goods. In the instant case revenue has also failed to bring the evidences on record to show that the Appellant had used such inputs for construction of factory shed, building or laying of foundation or making of structures for support of capital goods. On the other hand the appellant has shown that the said inputs were used in the manufacture of Capital goods, under clause (i) of Rule 2(a) of Cenvat Credit Rules, 2004. - Decided in favour of assessee

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• Indian Laws

• 2016 (2) TMI 203
  Validity of detention under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (“COFEPOSA" for short) - delay in passing the detention order - Held that:- On the ground of delay, we are satisfied that the order of detention is vitiated by an enormous and unexplained delay. This Court and the Hon’ble Supreme Court on a number of occasions have criticized the approach of the Sponsoring Authorities and especially of the Detaining Authorities. If these authorities are indeed sincere about apprehending smugglers, checking smuggling and taking further steps to prevent its perpetuation, then they ought to have paid heed to the repeated warnings of the country’s highest Court. Instead, we are deeply troubled to see absolutely no change in their approach. The time consumed for scrutiny, evaluation and a detailed analysis of proposals received from the Sponsoring Authority should not be so much as would enable the live link to be snapped, the credible chain broken and the very purpose of the detention proposed itself defeated. After the detenu was enlarged on bail on 1st April 2015, if the detaining authority on receipt of the proposal on 15th April 2015 does not issue the detention order till 17th July 2015, then we have no alternative but to record our satisfaction that there is indeed a long and unexplained delay sufficient to conclude that the live link is snapped. Court will examine the types of grounds given for detention and consider whether such grounds could really weight with an office several months later in forming a subjective satisfaction as to the necessity for preventive detention. This, in our view, is the very principle being invoked when we speak of ‘the live link being snapped’. This is the causality implicit in our use of the phrase ‘credible chain’. The detaining authority is required, as a matter of Constitutional law, to ensure that the live link is not snapped, the credible chain not broken. It is in these circumstances, while reminding the Detaining Authority as also the Sponsoring Authority of their duties and responsibilities, we have no other alternative but to quash and set aside the detention order as admittedly it is vitiated by a delay of three months and four days. Thus The detention order is quashed and set aside.

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