Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 11, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Highlights / Catch Notes
Income Tax
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Block assessment - notice u/s 158BC - Tribunal cancelled the assessments as invalid and void-ab-initio? - Search u/s 132 is a pre- requisite for invoking the provisions of the said Chapter XIV-B - HC
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Unexplained share capital - transactions were made through banking channel and existence of persons in whose names shares had been issued was shown - burden shifted on the revenue to establish that the investment came from the assessee company itself - HC
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Rectification application - Non-consideration Apex Court judgment is a mistake apparent in the common order passed by the Tribunal, which, in fact, really goes to the root of the Tribunal order - AT
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Unrecognised gratuity fund - the amount paid towards an unapproved gratuity fund can be deducted under sec. 37 of the I.T. Act, though not under sec. 36(1)(v). - AT
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Deduction of Interest paid in respect of capital borrowed for the projects - no distinction can be made between the money borrowed for acquiring capital asset or revenue asset - HC
Customs
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Refund claim - Reassessment was required to be done by the proper officer and is admittedly not in the hands of assessee. - Revenue cannot be allowed to have the benefit of its own lapses. - AT
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Imports from China - Confiscation orders and penalty - The term “Cosmetic” defined by Section 3(aaa) of the Drugs and Cosmetics Act, 1940 is altogether different goods from “drug” and “substance” in the eyes of law. - AT
Service Tax
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Refund of Cenvat Credit - Ratio of value of services realized for output services rendered in areas inside SEZ and outside SEZ is easily determinable - refund may be granted - AT
Central Excise
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Notification no. 10/2006-CE dated 01.03.2006 benefit denied - power driven pump - prima facie the applicants have made out a strong case for waiver of pre-deposit - AT
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Cenvat credit availed on the basis of annexures only and not the invoices - The possibility of misuse of the same by any other person cannot be made a ground for denial of credit to the appellant - AT
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CENVAT Credit - there is no requirement in the rules that the invoice number should be printed on the invoice - The only requirement is that invoice should be serially numbered - credit allowed - AT
Case Laws:
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Income Tax
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2013 (3) TMI 177
Block assessment - notice u/s 158BC - Tribunal cancelled the assessments as invalid and void-ab-initio? - Held that:- The Tribunal has rightly pointed out that jurisdiction to assess the undisclosed income for the block period under Chapter XIV-B vests in the AO by virtue of the provisions of Section 158BA in a case where a search under Section 132 is initiated after 30.6.1995. Again, in term of Section 158 BC, a notice under that Section can be issued where any search has been conducted under Section 132. However, assessment is to be carried out in respect of undisclosed income of other person i.e. a person in whose case, there was no search made under Section 132 of the Act, the provisions of Section 158 BD are to be invoked. As in the present case as emerges from the record there is no authorization of search or search warrants under Sections 132 (i) in respect of these assessees. No doubt, while searching the premises of their father Lal Singh, some documents and other material which were not belonging to the assessees were seized and on that basis, there could be block assessment. However, in such a situation when there was no authorization in respect of these assessees, it is the provisions of Section 158 BD which would be attracted and not the provisions of 158 BC. Such an assessment without authorization is void ab-initio. See Promain Ltd. vs. DCIT [2005 (6) TMI 224 - ITAT DELHI] & Ajit Jain Vs. Union of India [2000 (1) TMI 41 - DELHI HIGH COURT] upheld in [2003 (1) TMI 97 - SUPREME COURT] Thus search under Section 132 is a pre- requisite for invoking the provisions of the said Chapter XIV-B - in favour of assessees.
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2013 (3) TMI 176
Rejection of books of accounts - addition on bogus purchases - appellant challenged the application of net profit rate of 2.5% - ITAT dismissed the appellant's appeal in a summary manner - Held that:- ITAT has committed an error in dismissing the appellant's appeal merely by observing that while deciding the appeal of revenue the stand of the CIT (Appeal) has been upheld. The appellant's contention that the net profit at 2.5% could not have been applied by CIT (Appeal) was required to be decided by the ITAT and the appellant's appeal could not have been dismissed summarily on the basis of the decision in revenue's appeal without dealing with the appellant's contention. It is evident from the order of ITAT that while deciding revenue's appeal also the said question of applying of net profit rate at 2.5% was not dealt with by it - matter remanded back to the ITAT for deciding the appellant's contention that the CIT (Appeal) has wrongly applied the net profit at 2.5% - - in favour of the assessee by way of remand.
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2013 (3) TMI 175
Penalty levied for inaccurate particulars of income - As per AO assessee treated the revenue receipt of subsidy as capital receipt - Held that:- There is no dispute about the quantum of receipt of grant in aid from the State Government. The assessee reflected the same as capital receipt, whereas it has been treated as to be revenue receipt. The issue, whether the amount of grant in aid is capital receipt or a revenue receipt, is a debatable issue. The findings returned in the judgment relied upon of CIT Versus ECS Ltd. [2010 (2) TMI 713 - DELHI HIGH COURT] is on fact of non-furnishing of details of expenses. The issue was not debatable as in the present case. No error in the findings recorded by Tribunal while setting aside the penalty. The Tribunal gives rise to no substantial question of law for the opinion of this court.
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2013 (3) TMI 174
Unexplained share capital - ITAT upheld the order of the CIT(A) in deleting the addition - Held that:- As decided in Shree Barkha Synthetics Pvt. Ltd case [2005 (8) TMI 67 - RAJASTHAN HIGH COURT] if the transactions were made through banking channel and existence of persons in whose names shares had been issued was shown, the assessee-company could not be held responsible to prove as to whether the person himself invested the money or some other person did so and the burden shifted on the revenue to establish that the investment came from the assessee company itself. It was also observed that if at all the investment made by the shareholders is to be added, the assessment has to be carried out in their case and not in the hands of the appellant company. Thus the question as formulated does not even arise in this case because it remains settled with the consistent decisions of the Courts that even in case of doubt about subscribers to the increased share capital, the amount of share capital cannot be regarded as undisclosed income of the company - in favour of assessee.
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2013 (3) TMI 173
Re opening of assessment - appeal filed by the assessee u/s 260A assailing order of the ITAT dismissing appeal regarding reassessment - As per ITAT income declared by the company regarding business expenditure were dis-allowable u/s 40A(3) and the reasoning forthcoming from the assessee as regards expenses incurred for expenditure regarding training of staff was not acceptable - Held that:- Merely question of law is not sufficient and the requirement of statute as that there should be a substantial question of law which requires consideration u/s 260A of the Act and rightly so the legislature is certainly of the view that as regards the factual matrix the matter being examined at various levels upto the ITAT such factual matrix must be put to rest at some stage and that being so only substantial question of law if emerges certainly is to be considered by this Court. On submission made by appellant no substantial question of law at all emerges to be considered by this Court in the instant income tax appeal - against assessee.
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2013 (3) TMI 172
Transfer pricing adjustment u/s 92CA - assessee company is engaged in the business of software development services and information technology enabled services (ITES) - assessee contested against selection of comparable - Held that:- The assessee's objection regarding two companies Asit C Mehta Financial Services Ltd. and Goldstone Infratech Ltd., on the issue of abnormally higher margin is justified on the basis of various decisions of the Tribunal wherein it has been held that super profit making companies have to be excluded from the list of comparable before making transfer pricing adjustment. Thus direct the AO to exclude these two companies from the list of comparables for the purpose of making the transfer pricing adjustment. For Vishal Information Technologies Ltd. adopted by the TPO it is concluded that it has outsourced its call centre work and, therefore, the employee cost is less than 25% as is the common practice among other ITES services. The employee cost filter is important filter to be adopted for the purpose of computing ALP. In Maersk Global Service Centre (India) (P.) Ltd. (2011 (11) TMI 465 - ITAT MUMBAI)it has held that Vishal Information Technologies Ltd. has to be excluded from the list of comparables of ITES company as it has outsourced its services. Thus the AO directed to exclude this company also from the list of comparables. For Apex Knowledge Solutions Pvt. Ltd. the assessee submitted it is functionally different as it is provides services such as E-publishing knowledge based services etc. - TPO has rejected the objection on the ground the assessee has not considered the verticals or functional lines during the search process conducted by it therefore, it is not proper to make any objection on this basis now - Held that:- Merely because, the assessee itself has not considered the said filter while making its TP study it cannot be said that it cannot raise such an objection before the TPO. It is the TPO who has adopted this company as comparable. On such adoption, the assessee has every right to raise the objections as regards the functional differences between the assessee and comparable. As brought out by the assessee, the assessee is in the TT enabled services, whereas the said comparable company is in the business of E-publishing which cannot be said to be in the same line of business. Thus this company is also to be excluded from the list of comparables. For Datamatics Financial Services Ltd. and Allsec Technologies Ltd. merely because there were extraordinary events during the financial year, without demonstrating as to how these extraordinary events have influenced the profit margin of the company, they cannot be excluded from the list of comparables, but the adjustments for such extraordinary events have to be made to the profits of the companies to bring them on par with the assessee before comparing them with the assessee. Therefore,remand this issue to the file of the AO to consider the adjustments to be made to these two comparables before arriving at the ALP - assessee's appeal allowed for statistical purposes.
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2013 (3) TMI 171
Valuation of stock - non moving stock - identification of nonmoving items - held that:- if the method of valuation adopted by the assessee is a recognized method, the same cannot be disregarded on mere technicalities. - consistency in the method applied by the assessee is fairly emerging. - in the case before the Hon’ble High Court of Rajasthan in the case of Wolkem India Ltd. (2009 (1) TMI 241 - RAJASTHAN HIGH COURT), the valuation of unusable and non-moving items on account of obsolescence at 5% of the cost on estimation has been found to be reasonable. Since the non-moving items added to the closing stock during the year is only 19,28,259/-, the Assessing Officer shall be justified to put such working for further verification and examination. For examination of this aspect, matter remanded back to AO. - Decided in favor of assessee.
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2013 (3) TMI 170
Rectification application - Revenue or Capital Expenditure - held that:- in the appeals filed by the Revenue, the issue raised was whether the expenditure incurred for replacement of Membrane and Cell Elements were deductible or not in computing the taxable income of the assessee-company. - the assessee has nowhere raised the question of deducting its expenditure as ‘current repairs’. - In fact, the assessee had claimed expenditure as revenue expenditure under sec.37. The question of revenue expenditure deductible under sec.37 has been considered by the Hon’ble Supreme Court in the case of CIT vs. Ramaraju Surgical Cotton Mills [2007 (8) TMI 39 - SUPREME COURT OF INDIA]. - That is the decision which is directly relevant to the appeals considered by the Tribunal through its common order. - That decision has not been considered by the Tribunal. The Hon’ble Supreme Court in the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd. (2008 (9) TMI 11 - SUPREME COURT) has held that a patent, manifest and self-evident error which does not require elaborate discussion of evidence or arguments to establish it, can be said to be an error apparent on the face of the record and can be corrected while exercising certiorari jurisdiction. Non-consideration of the Hon’ble Supreme Court judgment rendered in the case of CIT vs. Ramaraju Surgical Cotton Mills [2007 (8) TMI 39 - SUPREME COURT OF INDIA] is a mistake apparent in the common order passed by the Tribunal, which, in fact, really goes to the root of the Tribunal order. All these rectification petitions filed by the assessee are accordingly allowed. - the appeals filed by the Revenue and the appeals and cross objections filed by the assessee, all are treated as partly allowed for statistical purposes.
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2013 (3) TMI 169
Unrecognised gratuity fund - Deduction u/s 37(1) - held that:- the Group Gratuity Scheme was not recognised by the Commissioner of Income-tax. This fact is not in dispute. - the amount paid towards an unapproved gratuity fund can be deducted under sec. 37 of the I.T. Act, though not under sec. 36(1)(v). Deduction of interest - investments made and loans advanced to its subsidiary - held that:- the assessee used its own non interest bearing funds and there is no cost to the assessee and it is a business decision taken by the assessee to make an investment in subsidiary company and that even if it is resulted in no income to the assessee, the notional interest cannot be disallowed on the reason that the assessee should have used its non interest bearing funds for the purpose of its own business purpose instead using borrowed funds for its business. - Decided in favor of assessee.
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2013 (3) TMI 168
Deduction of Interest paid in respect of capital borrowed for the projects - distinction between capital borrowed for acquiring capital assets or revenue assets - held that:- The Apex Court in the decision of the Core Health Care (2008 (2) TMI 8 - SUPREME COURT OF INDIA) thus has recognized the assessee's entitlement of deduction of interest under Section 36(1)(iii) for borrowed capital by holding that all that Section requires is that the assessee must utilize such amount for the purpose of business which is carried on by the assessee in the accounting year and regardless of result of use of such capital. Based on ratio, Tribunal also held that no distinction can be made between the money borrowed for acquiring capital asset or revenue asset as Legislature has not made such distinction of use of capital on the basis of capital purpose or revenue purpose. - Decided in favor of assessee.
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Customs
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2013 (3) TMI 167
Refund claim denied as goods were cleared by paying higher quantum of duty - assessee submitted to be due to calculation errors - Held that:- The conduct of lower authorities is not appreciable as on one hand they are sitting over the applications filed by the applicant for correction of Bill of Entry and on the other hand, they are rejecting the refund claim on the sole ground that reassessed Bill of Entries have not been produced by them. Reassessment was required to be done by the proper officer and is admittedly not in the hands of assessee. Revenue cannot be allowed to have the benefit of its own lapses. If the original adjudicating authority was of the view that reassessed Bill of Entry is required for grant of refund claim, the same was required to be decided first and then the order was required to be passed on the refund application. Thus finding favour with the appellants contention that inasmuch as there was no ‘lis’ involved on any legal point, between the appellant and the Revenue, the refund claim are required to be adjudicated independently. See Aman Medical Products Ltd. [2009 (9) TMI 41 - DELHI HIGH COURT], Flock (India) Pvt. Ltd. [2000 (8) TMI 88 - SUPREME COURT OF INDIA] & Priya Blue Industries [2004 (9) TMI 105 - SUPREME COURT OF INDIA] wherein held that where there is no dispute about any legal issue refund claims cannot be rejected on the sole ground that assessments were not put to challenge in appeal. Also see Central Excise, New Delhi v. Prima Telecom Ltd. [2011 (1) TMI 332 - CESTAT, NEW DELHI] wherein held that duty paid on higher value in the invoice as compared to the rate mentioned in the purchase order and foreign supplier apologised for the said mistake, the same has to be held as clerical mistake and in the absence of any lis between the appellant and the importer, for the challenge to assessment of import, refund claim has to be sanctioned. In view of the foregoing discussion the appellants are entitled to the refund claim of duty paid in excess - in favour of assessee.
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2013 (3) TMI 166
Imports from China not through prescribed point of entry into India - Confiscation orders and penalty - 3,21,264 pieces of “Z” MAGNETISM FOR MEN DEODORANT BODY SPRAY” confiscated - whether the goods imported were “cosmetics” or “substance” falling under Rule 133 r.w.r. 43 of the Drugs & Cosmetics Rules, 1945? - whether cosmetic is permitted to be imported through a point of entry different from point of entry prescribed by Rule 43A read with CBEC Circular No. 8/2010-Cus. dated 26-3-2010. Held that:- The term “drug” as defined by Section 3(b) of the Drugs and Cosmetic Act, 1940 has inclusive definition covering “substance” within its fold by sub-clause (ii) and (iii) thereof. Thus any “substance” which would be used for the preparation of medicine is also included in the scope and ambit of the term “drug”. Only when a “substance” is not intended for medicinal use, such substance enjoys exemption from Chapter III of the Drugs and Cosmetics Act, 1940 and Rules made thereunder subject to conditions prescribed by Schedule “D” under Rule 43 of the Rules. The term “Cosmetic” defined by Section 3(aaa) of the Drugs and Cosmetics Act, 1940 is altogether different goods from “drug” and “substance” in the eyes of law. As decided in Chimanlal Jagjivandas Sheth v. State of Maharashtra [1962 (9) TMI 34 - SUPREME COURT] the expression “substances” is something other than medicine but used for treatment. Such interpretation brings a significant different between “substance” and “Cosmetic”. Also interpreting meaning of the term “cosmetic” in the case of Puma Ayurvedic Herbal (P) Ltd. v. CCE (2006 (3) TMI 141 - SUPREME COURT OF INDIA) the cosmetic products are meant to improve appearance of person, that is they enhance beauty, whereas a medicinal product or medicament is meant to treat some medical condition. So another word “substance” used in the same legislation cannot be interpreted to mean “cosmetic” also. In Schedule “D” appended to Drugs and Cosmetics Rules, 1945 both the words i.e., “substance” and “cosmetic” appears under independent serial number bringing out significant difference between the two without being interchangeably used one for the other for their distinct character, nature and properties. So the argument of Appellant that “substance” covers “cosmetic” within its scope is devoid of merit. There is no dispute that present imports were cosmetic. That was not a “substance” since cosmetic is different goods altogether. Rule 133 of the Drugs and Cosmetics Rules limits the import of cosmetics through the points of entry specified under Rule 43A. However, under Schedule “D” to the said Rules, an exemption has been provided for substances not intended for medical use from the provision of Chapter III of the Drugs and Cosmetics Act and Rules made thereunder. The phrase ‘substances not intended for medical use’ would only relate to substances which would otherwise fall under the definition of the term ‘drug’ under section 3(b) of the Act, but are being imported not for medicinal use or for some other purposes or are of commercial quality and are being labeled indicating that they are not for medicinal use. For the purpose of import of cosmetics, provision of Rule 133 therefore remain applicable. Accordingly, import of cosmetics at points of entry/places other than those specified under Rule 43A may not be permitted as per the provisions of the Drugs and Cosmetics Rules, 1945. The points of entry have been specifically mentioned in Rule 43A such as Chennai, Kolkata, Mumbai, Nhava Sheva, Chochin, Kandla, Delhi, Ahmedabad, Hyderabad and Ferozpur Cantonment, Amritsar, Ranaghat, Bongaon and Mohiassan Railway Station. If the imports are noticed through Customs stations, other than the one notified as mentioned above, then necessary action may be taken for non-compliance of the Drugs and Cosmetics Rules in respect of such imports Appellant’s claim that the cosmetic imported by appellant shall fall in the category of “substance” in item of Schedule “D” under Rule 43 is baseless & when the goods were not imported through prescribed point of entry under Rule 43A of the Rules, the goods are bound to suffer consequence of law prescribed by Customs Act, 1962 being ‘prohibited goods’ as defined by section 2(33) thereof. First landing of container is not the criterion to be satisfied in the above Rule. Since in this case, the entry under Section 46 was made at Pithampur and not at Nava Sheva, there is a violation of Rule 43A of the Rule which is valid objection of Revenue - confiscation of the cosmetic imported by the appellant was justified and other consequence of adjudication is in conformity with law - redemption fine is reduced to Rs. 5,00,000 (Rupees five lakhs) and penalty is reduced to Rs. 1,00,000/- to prevent recurrence of contravention of the provisions of the law - partly in favour of assessee.
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Corporate Laws
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2013 (3) TMI 165
Offense committed under section 383 A - non appointing of qualified Whole Time Company Secretary - share capital of the Company as on 31.03.2001 was Rs.21,23,80,000/- Held that:- The case of the petitioners that they having submitted their resignations are not liable to be prosecuted for the violation or non-compliance of the provisions of the Companies Act for the year 2003 was accepted by the Court. In the light of the findings entered by this Court it has to be held that the prosecution in these cases also cannot be sustained, since the petitioners had submitted their resignation in August 2000 itself, whereas the non-compliance or violation alleged is of the year 2003-2004.
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Service Tax
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2013 (3) TMI 181
Refund of Cenvat Credit availed on Input Services utilized for providing Output services to SEZ - what should be the basis for apportioning the value of input services relatable to service rendered in area outside SEZ - held that:- The ratio based on areas developed in SEZ and outside SEZ is not a good criterion for the purpose in question for various reasons. In the first place, Revenue will not be able to do verification of the measurements considering the activity involved vis-a-vis amount of refund to be granted. Further the quality of development and facilities provided inside SEZ and outside SEZ are likely to be very different. The period during which such activity was carried out also is not easily determinable. Ratio of value of services realized for output services rendered in areas inside SEZ and outside SEZ is easily determinable and does not involve the defects pointed out above for the ratio of areas. - refund may be granted adopting the ratio of value of services rendered. - Decided in favor of assessee.
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2013 (3) TMI 180
Condonation of Delay - Proof of service of order - Held that:- the proof advanced by the Revenue indicates dispatch of the said order to M/s. Chandigarh Network Systems (P) Ltd. Chandigarh. There is no complete address given in the said registry. As such, a doubt can arise as to whether the said order stand actual received by the appellant or not. Otherwise also, we find that though the order was passed in 2009, revenue only approached the appellant in 2011 for recovery of dues. If the Revenue would have approached the appellant for recovery of the confirmed demand at an early date, the appellant could have come to know about passing of the impugned order. - Delay condoned.
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2013 (3) TMI 179
Valuation of taxable services - inclusion of advances - Dredging and Barging - Mis-match between the findings of the Commissioner and the operative portion of the order of the Commissioner - held that:- there is a mis-match between the demand as confirmed by the Commissioner and the findings in the body of the order. We, therefore, deem it appropriate that the matter requires fresh consideration by the Commissioner and, therefore the prayer for remand deserves to be accepted.
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2013 (3) TMI 178
Service of order of original authority - condonation of delay in filing an appeal - held that:- The learned advocate for the appellant has claimed that the factory premises of the appellant stands closed since April 2008. In this regard, she referred to the reply dated 24.5.2008 wherein it has been mentioned at paragraph 8 that "due to non-cooperation of other partner, I have temporarily stopped the business." It is not the case of the appellant that they have intimated a new address for communication to the department. The reply dated 24.5.2008 also contained the same address as to which the order-in-original was despatched. Further, it is not in dispute that the personal hearing fixed on 16.6.2008 has been received by the appellant and that they have appeared on the said date. It is not the case of the appellant that on 16.6.2008 (the date of personal hearing), they have specifically informed the original authority about the closer of factory premises and furnished new address for receiving any communication. - Request for condonation of delay rejected - Decided against the assessee.
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Central Excise
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2013 (3) TMI 164
Notification no. 10/2006-CE dated 01.03.2006 benefit denied - applicant seeking waiver of pre-deposit of duty, interest and penalty - applicants are engaged in the manufacture of power driven pumps - Held that:- Going through the provisions of the notification as well as the Central Excise Tariff classification. The applicants are claiming classification under Heading 84137010 which covers power driven pump primarily designed for handling water. As the classification is not disputed by the Revenue, therefore, prima facie the applicants have made out a strong case for waiver of pre-deposit of the dues. Pre-deposit of the dues is therefore waived and recovery thereof stayed for hearing of the appeal.
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2013 (3) TMI 163
Cenvat Credit - Duty paying document - Penalty u/s 11AC - allegation of wire rods and wire bars not having been received - held that:- Tribunal noted the fact that none of the statements have been retracted till date and the seized documents were never questioned at any point of time by the appellant. In short, it can be stated that there is extensive discussion on every argument that had been made by the the appellant. It also took note of the fact that this was an issue of clandestine activity relying on decisions of the Courts. It also was of the opinion that for all these kind of activities, all possible details cannot be substantiated by documents. However, all that had been put forth by the Department against the appellant was found to be sufficient by the Tribunal for upholding the order of Commissioner. In our opinion, there does not appear to be any error on part of the Tribunal in upholding the demand raised by the Department by way of show cause notice nor is there any perversity which would give rise to any substantial question of law for this Court to entertain this Tax Appeal. - Decided against the assessee.
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2013 (3) TMI 162
Cenvat credit availed on the basis of annexures only and not the invoices - Held that:- Appellant had produced copies of invoices issued by their Ponda unit as also copies of the invoices issued by Puttur unit, copies of annexures and RG-23D. All these invoices which accompanied the annexures are covering the goods mentioned in the annexures. The lower authorities have restricted the same on the sole ground that annexures are not certified documents for availment of credit. No merits in the above reasoning of the authorities as the goods mentioned in the annexures are duly accompanied with the invoices issued by the manufacturing units indicating payment of duty on the same very goods. The possibility of misuse of the same by any other person cannot be made a ground for denial of credit to the appellant when the duty paid character of the goods stands established and receipt by the dealer stands established. Thus denial of credit is not in accordance with the law. Invoking longer period of limitation - Held that:- The demand pertains to the period April 01 to March 04 whereas the show cause notice was issued on 9-11-2005, i.e., beyond the period of limitation. The appellant has been filing quarterly returns along with copies of RG-23D registers. Thus when the credit was availed by the appellant was being reflected by them in their RG-23D register and the same document was being annexed with the quarterly returns being filed by them, it is hard to arrive at a conclusion that appellant was having any mala fide suppression or mis-statement - no intent to evade duty - demand having been raised by invoking longer period of limitation is barred by limitation - in favour of assessee.
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2013 (3) TMI 161
CENVAT Credit disallowed - Commissioner (Appeals) set aside the order of disallowance CENVAT Credit however upheld the penalty of ₹ 5,000/- imposed under rule 27 of Central Excise Rules, 2002 - whether assessee entitled to avail input credit on the strength of the invoices in question having no serial no. ? - Held that:- CBEC vide Circular No. 441/7/99-CX. dated 23-2-1999 has clarified that Cenvat credit should not be denied for minor procedural lapse. However, AC/DC should ensure that inputs/capital goods have suffered duty and are being used/ are to be used in process of manufacture. Circulars and clarifications issued by C.B.E. & C. are binding on the Excise & Customs authorities as per various judgments of Supreme Court. However Deputy Commissioner has not followed the said Circulars in which it was categorically mentioned that AC/DC of the jurisdiction, before issuing Show Cause Notice for wrong availment of Modvat credit shall conduct enquiries with regard to duty paid nature of the goods as the goods as the suppliers send, ensure that necessary information as mentioned in the Notification are available on the invoice and satisfies himself whether the goods have been used or are intended to be used as contemplated in the Modvat Rules. Thus in the present case Dy. Commissioner, Sonarpur Division has not followed the said Circular and raised SCN without conducting any enquiry and issued SCN based on suspicion and doubt. Also it is seen that the Range Superintendent has categorically stated that so far no discrepancy appears to have found in respect of purchase of goods and passing of Cenvat credit by the said dealer during impugned period. Therefore no reason to disallow the Cenvat credit passed on by the said dealer. Rule 11 of Cenvat Credit Rules, 2002 provides that credit can be taken on the strength of invoice which shall be serially numbered. On going through the above provisions, it is found that there is no requirement in the rules that the invoice number should be printed on the invoice. The only requirement is that invoice should be serially numbered. It is not the case of the Revenue that invoices are not serially numbered. Therefore, the appellant have fulfilled the requirement of Cenvat Credit Rules, 2004 - Appellant Dealer has violated the provisions of Rules 11(2) & 11(6) of Central Excise Rules, 2002 which are technical in nature for which they are liable for penal action.
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2013 (3) TMI 160
Clandestine removal of final products without payment of duty - Held that:- Charges made by the revenue for non payment of duty required to be proved by the way of sufficient evidences but in the present case the Revenue has solely relied upon the recovery of certain photocopies of the bills from the trading unit as also on the statement of the Director, accepting the clandestine removal. Apart from the above, there is no other evidence showing clandestine manufacture and removal of the final products. As decided in Commissioner of Income Tax v. Dhingra Metal Works (2010 (10) TMI 29 - DELHI HIGH COURT) though a confessional statement is important piece evidence but it cannot be held to be conclusive. As such the sole reliance of the revenue on the statement of Sh. Agarwal without any other evidence to reflect upon the clandestine activities of the respondent is not proper and just - in favour of assessee.
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CST, VAT & Sales Tax
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2013 (3) TMI 183
Treating the utilization of the towers for installing antenas as a transfer of right to use goods for valuable consideration - revisionist was granted stay of 50% of the tax imposed whereas in further appeal to the tribunal stay to the extent of 85% of the tax imposed has been granted - Held that:- The tribunal while considering the stay application have not looked into the prima-facie merits of the case and have disposed of the stay matter only on the basis of the financial condition of the revisionist as for grant of interim protection prima-facie merits of the case are necessary to be considered. According to assessee in allowing use of the tower for the purpose of installation of antenas there is no transfer of any right in any goods in as much as it has been held by different High Courts that towers which have been erected and are permitted to be used for the purpose are not goods - As this aspect definitely needs consideration by the appellate authority and there may be sufficient good chance of success of the revisionist & the tribunal as well as the appellate authority in deciding the interim stay application have not taken into consideration the prima-facie merits of the above argument the revision is disposed of with the direction to the appellate authority to proceed and decide the pending appeal of the assessee in accordance with law as expeditiously within a period of one month from the date of this order.
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2013 (3) TMI 182
Detention of a Fork lift - the documents verified show that the sale is from Cochin and therefore, there was no reason to effect sale against C-Form - Held that:- Purchase order was placed at the Pune Office of the manufacturer and that it was from Pune, the sale in question was effected. Certificate of registration did not authorize to purchase the machinery in question - Ext.P4 is the certificate of registration. Although machinery and parts are also authorized to be dealt with by the petitioner, it is a matter to be enquired into whether the description of the goods will cover the nature of the machinery. Therefore, in any event, adjudication as contemplated under Section 47 of the KVAT Act is warranted - direct that pending such adjudication, Fork lift detained shall be released to the petitioner subject to the petitioner furnishing Bank guarantee for the security demanded.
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