Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 12, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Highlights / Catch Notes
Income Tax
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Penalty u/s 271(1)(c) - commodity futures trading and broking - client code modifications - unauthorised modification in the code - is is not a case where conscious and dishonest conduct of the assesse has been proved - no penalty - AT
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Genuineness of Commission paid to Directors - the payment commission by assessee company is wholly and exclusively for business purposes and same is allowable - AT
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Expenditure on protection of copyright - there is no requirement for any further written agreement between the owner of the trademark and the assessee for sharing of cost - Claim of Expenditure allowed - AT
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Taxability of Interest Income - inter-corporate deposits - PGBP or income from other sources -the income received by the assessee was assessed as income from other sources. - AT
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Reassessment - AO after applying his mind made part disallowance out of transportation expenses - now the AO cannot say that he has not formed an opinion. - AT
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Security Assessment - Decision of apex court in CIT v. Shelly Products & others [2003 (5) TMI 4 - SUPREME COURT] distinguished wherein it was held that, assessee's assessed income cannot be less that the return income. - HC
Customs
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Seizure and Confiscation of cigarettes depart from Imphal to Kolkata via Agartala on the reasonable belief that the goods were of foreign origin - Pre deposit ordered equal to 25% of penalty. - AT
Service Tax
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Condonation of Delay - Delay of 1677 days - no reasonable explanation has been given - Civil Appeal dismissed. - SC
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Refund claim on Cenvat credit of service tax denied - as per revenue input services have been received by the appellants after the period of export of services - refund allowed - AT
Central Excise
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Cenvat Credit - it is impossible to maintain separate account and inventory of the inputs used in the manufacture of finished products and exempted product (waste) - the provisions of Rules 6(2) and 6(3) cannot be invoked as lex non cogit and impossibilio is a well settled legal principle - AT
VAT
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Whether the petitioner bona fide purchaser of the property and that she was not aware of any of the proceedings or arrears of tax payable by the dealer? - it can be concluded that the petitioner is a bona fide purchaser and is entitled to protection under the proviso to Section 24(A) of the Act. - HC
Case Laws:
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Income Tax
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2013 (3) TMI 200
Re opening of assessment - violation of provisions of section of 36(1)(ii) in making claim of commission payment to Directors as expenditure - AY 2005-06 and 2006-07 - Held that:- The notices purporting to reopen the assessments for all the years do not even allege that there was any such failure on the part of the assessee to disclose the claim. On the contrary, the record would indicate that the assessee had initially by a letter dated 12 March 2007 and subsequently by a letter dated 31 August 2007 placed on the record before the A.O. the nature of payments, the agreements with the two directors in pursuance of which they were paid a fixed monthly remuneration and a commission/ performance bonus representing 35% of the net profit before taxation and a justification for the payment. The A.O. was apprised by the Assessee of all the material facts necessary for the assessment and there was no suppression. No such submission has in addition, been urged by the Revenue. The A.O. has stated that a payment made to a shareholder would not be covered by the section to be eligible for deduction as the payment could have been made to a director who is a shareholder as disbursement of profit or dividend. These reasons are not postulated on there being any suppression on the part of the assessee or a failure on the part of the assessee to state fully and truly all material facts necessary for the assessment. Thus the reopening orders of the assessments for 2005-06 and 2006-07 have to be quashed and set aside. AY 2007-08 AND 2008-09 - revenue submitted it to be within a period of four years - Held that:- This is a case where the nature of the payment, the basis of the computation and the rationale for computing the remuneration to the two directors with reference to a fixed remuneration in part and a proportion of the net profits in balance was brought in focus before the A.O. And as before this Court it is not in dispute at the hearing that the two directors have been assessed under section 143(3) on the amounts paid by the assessee to them as salary income and their assessments have been completed accordingly. Thus the reopening of the assessments for the two AY must be held to be based on a pure change of opinion and not on tangible material - appeal in favour of assessee.
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2013 (3) TMI 199
Short deduction of tax from the payment of commission paid by BSNL/MTNL to their public call office franchises - ITAT deleted the demand - Held that:- No substantial question of law arises for consideration, inter alia, for the reason that the Central Board of Direct Taxes vide circular dated 12.03.2008 has taken a stand that the demands are not to be enforced on BSNL and MTNL offices except in the cases where taxes have been deducted at source but not paid over to the revenue. The proviso is clarificatory in nature though it was inserted by the Finance Act, 2007 w.e.f. 01.06.2007. The nature of the amendment and the purpose which it seeks to achieve make it abundantly clear that it is a clarificatory amendment and would be applicable even in respect of assessment years prior to insertion of the said amendment. - Decided in favor of assessee.
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2013 (3) TMI 198
Penalty u/s 271(1)(c) - commodity futures trading and broking - client code modifications - unauthorised modification in the code - held that:- there is a modification of the Clients’ code in the transactions and considering the nature of the trade involved, in our opinion, the explanation of the assessee appears to be bona fide. - A.O. has not taken any pains to negativate the explanation of the assessee as to why the same should be treated as not bona fide or genuine. - The Director of the company, in his statement given to the A.O. has kept the consistent stand in the explanation that how the code modification is done even in the large number of the transactions without knowledge of the client by the dishonest dealers for getting a short benefit. The assessee has taken legal actions the dishonest dealers and it’s employees. That support the contention of the assesse that the dealers were involved in the malpractices by doing unauthorised client code modifications. - This is not a case where conscious and dishonest conduct of the assesse has been proved. The word ‘conceal’ contemplates conscious act and same has to be proved even after different explanations added to Sec. 271(1)(c) as stand today. - No penalty - Decided in favor of assessee.
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2013 (3) TMI 197
Reassessment - reason to believe - disclosure of information - held that:- The re-opening was within a period of four years and it is not the case of the assessee that there was change of opinion. When the rent received from shops located in North Stand, was Rs. 2,15,910, per annum and when the assessee has shown a loss of Rs. 5,22,053, we are of the considered opinion that the Assessing Officer has reason to believe that income has escaped assessment. Thus, we uphold the re-opening of assessments. Coming to the assessment of ALV, the assessee, in our opinion, ought to have furnished the information sought by the Assessing Officer, so as to enable him to come to a conclusion as to whether the Maharashtra Rent Control Act, 1999, applies to the facts of the case. Having said so, we also observe that the Assessing Officer has not examine the previous records of the assessee to determine as to whether the rental payments were, as claimed by the assessee, was offered on the same basis, as was done this year. - Reassessment proceeding justified. - Against assessee. Since the assessee has not furnished the information sought by the Assessing Officer and the Commissioner (Appeals) has failed to examine as to whether the Maharashtra Rent Control Act applies to the case or not, we are of the considered opinion that the issue is required to be restored to the file of Assessing Officer for fresh adjudication in accordance with law. - Matter remanded back.
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2013 (3) TMI 196
Genuineness of Commission paid to Directors - AO stated that assessee company failed to substantiate that commission was paid to Directors wholly and exclusively for the purpose of business and accordingly, disallowed an amount of Rs. 22,71,543/- - held that:- Assessee company has no managerial/other official as whole time employee save and except the staff in clerical section. - It is a fact that assessee company is an artificial entity and acts through natural person. Therefore assessee herein is acting through its non-whole time directors for complying with legal requirements and other Acts as applicable to a corporate entity besides interacting to carry out its business. - The payment of commission by assessee company is to its whole time directors is to facilitate and to carry out on its business. - Thus the payment commission by assessee company is wholly and exclusively for business purposes and same is allowable. - Decided in favor of assessee. Payment to adverting agency - The AO stated that payment has no relevance to the business affairs of assessee. There were personal relations existed - held that:- There is no document on record as well, to justify the payments that it was made for business purposes. Considering the facts of the case and in the absence of any material on record, we do not find any infirmity in the order of authorities below. - Decided against the assessee.
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2013 (3) TMI 195
Rental Income - Income from House Property or income from PGBP or Income from other sources - held that:- Merely because the building has been let out to the distributor of the assessee, the rental income cannot be treated as business income in the absence of any material to show that letting out was necessary for the purpose of business. Similarly, merely because one of the objects of the assessee was letting out of the property, it cannot automatically lead to the conclusion that the assessee was actually doing business in letting out buildings. - income in question has to be assessed as income from other sources. - Decided against the assessee. Valuation of closing stock - inclusion of MODVAT Credit - held that:- The issue is no longer resintegra and has been decided by the Hon’ble Delhi High Court in the case of CIT vs. Mahavir Alluminium Ltd., [2007 (11) TMI 41 - HIGH COURT, DELHI] , wherein the Hon’ble Delhi High Court held that whenever adjustment on account of Modvat credit is made corresponding adjustment is also to be made to opening stock. Rate Depreciation on Trucks - Electrically operated vehicles - held that:- The dictionary meaning of vehicle as given in Oxford English Reference Dictionary is “any conveyance for transporting people, good etc. especially on land”. - In our view the devices on which the assessee claimed 100% depreciation satisfy this requirement as they carried goods on land albeit within the factory. These provisions allowing depreciation at 100% being beneficial provision calls for broad interpretation. - it cannot be said that these provisions intended to cover vehicle as per the Motor Vehicle Act 1988. - these devices were battery operated and renewable energy saving devices. - depreciation at 100% allowed - Decided in favor of assessee. Depreciation versus Amortization - Capital Expenditure or Revenue Expenditure - held that:- the dies and molds are actually acquired by the packing material supplier and considering the fact that the cost of such molds and dies are reimbursed by the assessee to the packing material supplier, the assessee cannot be said to have acquired a capital asset in the form of molds and dies. - The test of enduring benefit is therefore not satisfied. - The assessee on a conservative basis amortized such cost for a period of 4 years and claimed deduction in 4 years. - Decided in favor of assessee. Expenditure on protection of copyright / trademark - trademark belong to others - held that:- the assessee would derive a benefit by any legal recourse taken by the proprietor of the trademark for protecting the trademark. If the Assessee does that on its own even that would protect the business interest of the Assessee. - the agreement clearly envisages that the assessee will bear cost as mutually agreed between the assessee and the owner of the trademark. - there is no requirement for any further written agreement between the owner of the trademark and the assessee for sharing of cost. - Claim of Expenditure allowed - Decided in favor of assessee. Deduction u/s 80IB - allocation of employee cost, depreciation, capital expenditure on R &D of Head office to the eligible units - held that:- The allocation has been made on estimate on the basis of turnover, which in our view is not correct. - The assessee had maintained separate accounts from which it could be easily found out whether the expenditure had been incurred or not but no material has been placed on record by the revenue to prove, that the assessee had incurred any such expenditure in relation to eligible Unit. - Decided in favor of assessee.
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2013 (3) TMI 194
Taxability of Interest Income - inter-corporate deposits - PGBP or income from other sources - held that:- AO examined what is the business of the assessee, what is the dividend income and what are the investments made by the assessee and thereafter gave a specific finding that the assessee has made investments of Rs. 28,24,05,056/- and the main income of the assessee is dividend income. He gave further finding that the assessee has advanced inter-corporate deposits of only Rs. 1.25 crores, out of the total funds available with the assessee of Rs. 34,84,38,144/-. After considering the entire facts of the case, the AO came to the conclusion that the assessee is not in the business of money lending or finance and, therefore, the income received by the assessee was assessed as income from other sources. - CIT(A) confirmed the action of the AO. - Order of CIT(A) sustained - Decided in favor of Revenue.
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2013 (3) TMI 193
Reassessment - to make disallowance u/s 40(a)(ia) - jurisdiction of reopening u/s. 147 r.w.s. 148 - held that:- AO during the course of original assessment proceedings has noted the transport expenses and given a definite finding regarding allowability and made disallowance of Rs.50,000/- on estimate basis, on that date i.e. on 24.05.2007, the provisions of section 40(a)(ia) of the Act was available for invocation for the AO and AO despite the fact that he made disallowance on estimate basis out of these transportation expenses, without invoking the provisions of section 40(a)(ia) of the Act, he has formed an opinion. Subsequently, the AO to make disallowance in view of the provisions of section 40(a)(ia) of the Act for transportation expenses reopened the assessment by recording reasons that the disallowance is to be made for non-deduction of TDS in view of the provisions of section 40(a)(ia) of the Act. When a regular assessment order was passed u/s. 143(3) of the Act and subject matter of the present appeal was before the AO and AO after applying his mind made part disallowance out of transportation expenses, the AO cannot say that he has not formed an opinion. - Following the decisions Supreme Court and Hon’ble Delhi High Court (FB) in the case of Kelvinator of India Ltd. ([2002 (4) TMI 37 - DELHI HIGH COURT] and [2010 (1) TMI 11 - SUPREME COURT OF INDIA]) decided in favor of assessee.
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2013 (3) TMI 192
Security Assessment - assessment of income u/s 143(3) below the returned income - rectification of mistake - additional grounds - held that:- In the case of National Thermal Power Co. Ltd. v. Commissioner of Income-tax [1996 (12) TMI 7 - SUPREME COURT] apex court hold that, There is no good reason to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of the assessment passed by the Income-tax Officer. This Court further observed that there may be several factors justifying the raising of a new plea in an appeal and each case has to be considered on its own facts. Following the decision of Apex Court [1996 (12) TMI 7 - SUPREME COURT] held that:- we do not find any reason to interfere with the Tribunal's ultimate conclusion in allowing the assessee's appeal. Though some of the observations may not appeal to us, nevertheless, for the reasons somewhat different from those recorded by the Tribunal we come to the same conclusion. Decision of apex court in CIT v. Shelly Products & others [2003 (5) TMI 4 - SUPREME COURT] distinguished wherein it was held that, assessee's assessed income cannot be less that the return income. Decided in favor of assessee.
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2013 (3) TMI 191
Reassessment - Charitable Trust set up for educational activities - held that:- there is no rebuttal to the claim of the ld. A.R that assessee had been receiving 20% profit from Bharati Sahakari Bank and Bharati Grahak Bhandar as a donation to the corpus of the assessee for the last number of years and it was not taxed by the A.O. It is also worth noting that same A.O had framed assessment for A.Y. 2003-04 and the assessment order for that year was passed just one day after the re-opening initiated by the same A.O for the A.Y. under consideration i.e. A.Y. 1999-2000. In the later years, i.e. A.Y. 2000-01 and 2003-04, the A.O has accepted the donations from the above 2 Societies as corpus. Under these circumstances, when the Department has been accepting a similar donation in past and future years, the reopening of the assessment on the basis that the said donation remained to be taxed for the A.Y. under consideration i.e. under 1999-2000 is nothing but mere change of opinion, which is not allowed as a basis for initiating re-opening proceedings. - Notice u/s 148 is not valid - Reassessment order on the basis of a invalid notice is null and void - Decided in favor of assessee.
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Customs
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2013 (3) TMI 190
Waiver of Pre deposit - Seizure and Confiscation of cigarettes depart from Imphal to Kolkata via Agartala on the reasonable belief that the goods were of foreign origin - held that:- appellant is not able to make out a prima facie case for total waiver of pre-deposit of penalty. - Pre deposit ordered equal to 25% of penalty. Regarding confiscation of hides and skins - held that:- , on examination the goods were found swamp deer etc. which are included in Schedule 1 of the Wildlife (Protection) Act, 1972 and trading of which is prohibited under the relevant provisions of the said Act read with definition of "Prohibited Goods" as per Section 2(33) of the Customs Act, 1962 - he has not been able to make out a prima facie case for total waiver of pre-deposit of penalty. - Pre deposit ordered equal to 25% of penalty.
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2013 (3) TMI 189
Duty drawback - entry No. 2207 10 90 - held that:- the dispute as to whether ENA of Min. 96.4% V/V strength is eligible for Drawback claim @ Rs. 4.00 per litre under Drawback heading 2207 10 90 has been put at rest by C.B.E. & C.’s Notification No. 84/2010-Cus. (N.T.) read with C.B.E. & C.’s Circular No. 42, dated 22-9-2011. Vide Notification No. 84/2010-Cus. (N.T.), the Drawback entry No. 2207 10 90 was expanded to include description as ‘‘Ethanol or Ethyl Alcohol, Rectified Spirit/ENA or otherwise having a minimum strength of 94.5% of Ethyl Alcohol”. It is further clarified by the C.B.E. & C. in para (10) of the Circular No. 42/2011-Cus., dated 22-9-2011 that ENA is covered under the heading of 2207 as Ethyl Alcohol and would cover all periods including those prior to 20-9-2011. Harmoneous reading of the said Notification No. 84/2010-Cus. (N.T.) with circular No. 42, dated 22-9-2011 dispels all the disputes and settles the issue. Further, respondent department has not given any submissions controverting the eligibility of the impugned goods for Drawback claim, in light of above said Notification and circular. - Matter remanded back to adjudicating authority to decide the issue in the light of above said clarification given by C.B.E. & C.
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Service Tax
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2013 (3) TMI 206
Condonation of Delay - Delay of 1677 days - no reasonable explanation has been given - Civil Appeal dismissed.
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2013 (3) TMI 204
Renting of Immovable Property Service - applicant are under an obligation to supply electricity to their tenants from a common electricity connection - assessee seeking waiver of pre-deposit of service tax, interest and penalty - Held that:- As decided in ECON HINJEWADI INFRASTRUCTURE (P) LTD. Versus COMMISSIONER OF CENTRAL EXCISE, PUNE-III [2012 (11) TMI 979 - CESTAT MUMBAI] Tribunal has granted unconditional waiver of pre-deposit relying as supply of Electricity is ‘goods' and the same shall not form part of taxable service as clarified by the Notification no. 12/2003 - stay allowed.
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2013 (3) TMI 203
Refund claim on Cenvat credit of service tax denied - as per revenue input services have been received by the appellants after the period of export of services - Held that:- This is a fact on record that these input services were received after the period of export not challenged by the appellants. Thus as decided in Shell India Markets Pvt. Ltd. vs. CCE, Bangalore(2012 (10) TMI 34 - KARNATAKA HIGH COURT) it is necessary to verify not only that particular input service is consumed for providing particular output service but also that eligible service received under various invoices have actually gone into consumption for providing impugned exported output service and not utilized for other purposes - refund has rightly been rejected in this case - against assessee. Refund of Cenvat credit of input services pertaining to Meal Vouchers denied - as per revenue these activities were undertaken by the appellant for welfare of the employees and not used for providing output service - Held that:- Cenvat Credit of service tax paid on the outdoor canteen services is available to the appellant if the employees have not borne the service tax amount and the appellant has not charged the employees for providing the service as held in the case of Ultratech Cement Ltd. (2010 (10) TMI 13 - BOMBAY HIGH COURT). Since the appellants are entitled for Cenvat credit of service tax on these services, they will also be eligible for refund of the same under Rule 5 if the services pertain to the period of refund in question - in favour of assessee.
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2013 (3) TMI 202
Waiver of penalties seeked u/s 80 of Finance Act, 1994 - Non discharge on service tax liability - Held that:- No doubt, indirect taxes permit shifting of incidence but does not immune a tax payer from tax liability in the event of non-recovery from consumers. No legal opinion was placed before the authorities below to prove bonafide. Nor such opinion or correspondence made with department to show innocence as placed. Therefore, it is not a fit case to be governed by Section 80 of Finance Act, 1994. As levy of penalty under Section 76 & 78 simultaneously is unwarranted. Therefore, there shall be waiver of penalty imposed under Section 76 while penalty under section 78 is confirmed. Since there was continuation of economic activity providing taxable service, penalty under Section 77 is also confirmed - as the assessee has come forward at a later stage to comply with the law, to reduce the litigation penalty under Section 78 reduced to 25% of Service Tax liability. This concession in penalty shall be permissible only if the Respondent pays 25% of service tax liability towards penalty under that section within 30 days of receipt of this order - allow Revenue's appeal partly.
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2013 (3) TMI 201
Outdoor catering service - applicant is engaged in the business of cooking and serving food at the staff training facility of three banks, the banks providing LPG cooking range with cutlery, crockery, utensils and other equipments installed in the kitchen and other equipments required running for canteen provided by the said banks - Held that:- As in the case of Rajiv Kumar Gupta [2009 (3) TMI 122 - CESTAT, NEW DELHI] with identical issue the assessee was held as not falling under the category of outdoor catering services. As from the agreement entered between the appellant and the banks terms and conditions are more or less identical. Thus the Tribunal's decision in Rajeev Kumar Gupta (supra) covers the disputed issue in favour of the appellant.
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Central Excise
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2013 (3) TMI 188
Valuation of intermediate product used for captive consumption - Circular No. 258/92/96-CX. dated 30-10-1996 and instruction No. 133/96, dated 27-11-1996 disobeyed - Differential excise duty - as per the department assessee while computing the provisional valuation took into account the margin of profit of spinning division only and ignoring weaving division - Held that:- As decided in CCE, AURANGABAD versus RAYMONDS LTD [2006 (10) TMI 7 - SUPREME COURT OF INDIA] for determination of valuation of intermediate product apart from the profit of manufacturing division of the intermediate product is to be taken into account and not the profit of all the divisions of respondent factory. No merit in the appeals filed by Department. Thus Commissioner (Appeals) allowing the appeals of the respondent with consequential relief can be computed only if an evasion of valuation of intermediate product i.e. yarn is undertaken by the jurisdictional authority to calculate the incidence of excise duty. Accordingly, the jurisdictional Assistant Commissioner directed to recalculate the differential excise duty, if any, payable by the assessee in terms of the observation made in this order.
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2013 (3) TMI 187
Non maintenance of separate account and inventory of the Cenvated inputs used for manufacture of dutiable final product and exempted final product - as per the department clearances of sludge (exempted final product) by assessee would be liable to pay an amount equal to 10% of its sale value as per Rule 6(3) of CCR 2004 - Held that:- As decided in Rallis India Ltd. v. Union of India (2008 (12) TMI 46 - HIGH COURT BOMBAY) the payment of an amount equal to 10% of the sale value cannot be insisted in terms of Rule 57CC of the erstwhile Central Excise Rules, 1944 when in course of manufacture of a particular dutiable final product, an exempted final product also emerged as an inevitable and unavoidable by-product. The present Rules 6(2) and 6(3) of the Central Excise Rules, 2004 are in pari materia with the provisions of Rule 57CC of erstwhile Central Excise Rules and, therefore, the ratio of Rallis India Ltd. case (supra) would be applicable to the facts of this case also. Moreover, prima facie view that in a case like this where the waste sludge has emerged as an inevitable and unavoidable waste, and it is impossible to maintain separate account and inventory of the inputs used in the manufacture of finished products and inputs used in the manufacture of exempted product - (waste), the provisions of Rules 6(2) and 6(3) cannot be invoked as lex non cogit and impossibilio is a well settled legal principle which is applicable in taxation matters also. Therefore of the view that the appellant have a prima facie case in their favour and the requirement of pre-deposit would cause undue hardship, the pre-deposit of the amount demanded under Rule 6(3), interest on it and penalty is waived for hearing of the appeal and recovery thereof is stayed till the disposal of the appeal.
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2013 (3) TMI 186
Notification No. 67/95 benefit denied - assessee contested that he at the time of clearance of stators & rotors had reversed the credit equal to 8% of the price of stators & rotors cleared against the CT 2 certificate as per the provisions of Rule 57 AD of the Central Excise Rules - Held that:- As per the provisions of Rule 57AD of the Rules, in case where the manufacturer is taking credit in respect of the common inputs used in or in relation to the manufacture of dutiable as well as exempted goods and not maintaining separate records, the manufacturer is required to pay 8% of the price of the exempted goods. As the appellants have reversed 8% of the price of the goods cleared at Nil rate of duty, therefore the appellants have fulfilled the conditions of Rule 57AD of the Rules. Thus the demand in respect of the intermediate product i.e. electrical lamination is not sustainable - in favour of assessee.
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2013 (3) TMI 185
Cenvat Credit denied as availed on the basis of EX-BOND Bill of Entry filed by their another unit at the time of de-bonding from EOU Scheme - Held that:- Physical removal of inputs and capital goods was not possible and never took place since the factory remains where it was and further it was always part of the premises where domestic unit was located and did not even have separate registration certificate. In the absence of separate registration certificate, the question of procedural requirements of issuing invoices for transferring the goods does not arise. Moreover, when credit was taken by DTA unit of the Respondents, the capital goods and inputs of 100% EOU ceased to be treated as part of 100% EOU and manufacturing operations of 100% EOU were treated as that of DTA unit and therefore it can be theoretically said that inputs and capital goods were transferred to the DTA unit. In view of the fact that 100% EOU and the DTA units were located in the same area and the fact that there was not even a separate registration to show that EOU was considered to be a division of the DTA and once the duty on capital goods and inputs were paid, it can be said that the same stood transferred to the DTA unit - there is nothing wrong in the impugned order taking a view that the credit has been taken correctly in the first instance and therefore question of demanding interest does not arise - in favour of assessee.
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2013 (3) TMI 184
Clandestine removal - Shortages in the stock of finished goods in all raw-material detected - demand of duty & penalty levied - Held that:- There is no statement accepting clandestine removal of the goods by any authorized representative. Also there is no evidence of clandestine removal of the goods. Thus as decided in Commissioner of Central Excise, Kanpur v. Minakshi Castings (2011 (8) TMI 896 - ALLAHABAD HIGH COURT) mere shortages of finished stock, without any other independent evidence, cannot lead to inference of clandestine removal. Also see L.M. Steels Pvt. Ltd. v. Commissioner of Central Excise, Ghaziabad (2010 (10) TMI 316 - CESTAT, NEW DELHI) & Commissioner of Central Excise, Kolkata v. Hanuman Udyog (2007 (9) TMI 148 - CESTAT KOLKATA). As such, the appellate authority was justified in setting aside the penalty imposed upon the assessee inasmuch as the demand of duty was not being contested by the respondent, he rightly confirmed the same. Confirmation of demand in respect of furnance oil - As the Revenue is not disputing the fact of procurement of the same and its use in the boiler on trial basis. Inasmuch as furnace oil stand procured by the appellant, the credit of duty paid on the same was rightly availed by the respondent. No infirmity is found in the order of Commissioner (Appeals) - in favour of assessee.
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CST, VAT & Sales Tax
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2013 (3) TMI 205
No Due Certificate from the seller obtained - whether the petitioner bona fide purchaser of the property from the said Mr.S.Prabhakaran in the year 2004 and that she was not aware of any of the proceedings or arrears of tax payable by the dealer? - orders passed under Section 8 of the Revenue Recovery Act against appeleant - Tamil Nadu General Sales Tax, 1959 - Held that:- Proviso to section 24-A of the Act, is to protect a honest person, who had purchased the property from a seller and further observed that there should not be any collusion with the seller, but the necessary ingredients of Section 24-A of the Act should be there, i.e., the sale effected should be for adequate consideration and want of notice. Taking note of Section 3 of the Transfer of Property Act if there was any wilful absentism or gross negligence in making any enquiry, that would tantamount to notice of fact, by the purchaser of the property, upon which a charge is created by operation of law. As per the version of the petitioner, she had purchased the property from a subsequent purchaser in the year 2004 and it was not a direct purchase from the defaulter. There is nothing on record to indicate that action has been taken against the vendor of the purchaser. There are no averments to suggest collusion of the petitioner with the defaulting dealer. Though the respondent has contended that the petitioner ought to have obtained a 'No Objection' from the revenue before purchasing the property, no provisions have been quoted by the respondent in the counter affidavit. Needless to say that a purchaser in normal course would only verify from the Registration Department as to whether the property to be purchased has any encumbrance. Unless the charge is duly registered in the Registration Department, it would not be possible for any prospecting buyer to know whether there is any charge over the property, for any arrears of tax or any statutory dues to be paid to the Government or statutory body. As stated supra, no materials have been produced before this Court to prove that notice demanding arrears of tax, has been served on the defaulter. No materials have been placed before this Court to prove that steps have been taken under the provisions of the Revenue Recovery Act, against the defaulter or the subsequent first purchaser, from whom the petitioner has purchased the property in the year 2004, after six long years, since the date of finalization of the assessment. In the absence of any specific plea of collusion, rebuttal of even doubting the bona fide of the purchase, the action taken in the year 2005, after seven years, from the date of finalisation of the assessment, against the second purchaser, who has taken diligent steps to verify from the Registration Department, before purchasing the property cannot be approved. That apart, there are no materials to indicate that the petitioner had any constructive notice of the charge. See Ahmedabad Municipal Corporation's case [1971 (3) TMI 89 - SUPREME COURT]. Thus it can be concluded that the petitioner is a bona fide purchaser and is entitled to protection under the proviso to Section 24(A) of the Act. Hence, the impugned restraint order dated 13.02.2006 issued by the respondent is liable to be set aside and accordingly set aside.
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