Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 25, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Confirmation of notional addition Excise duty added in the value of the closing stock of finished goods a liability cannot be converted into an asset - AT
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Profit from trading of shares LTCG OR STCG When there is no instance of repetitive transaction in the same scrips then there is no justification in treating the investment as trading activity - AT
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Net profit @ 6% on bank deposits made - authorities below shall apply profit rate of 5% for the purpose of computing part addition as was directed in assessment year 2008-09 - AT
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Recall of exparte order - Levy of penalty u/s 271(1)(c) - The concept of reasonable cause or exception as contended by the assessee has no applicability to the penalty proceedings u/s. 271(1)(c) of the IT Act - AT
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Unexplained opening balance The opening balance of cash cannot be treated as unexplained in the assessment year - AT
Customs
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Maintainability of appeal - Jurisdiction of High Court - The conduct of the appellant in filing the appeal before this Court is not appreciable and it is a definite case of forum shopping. - HC
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Valuation of imported hair-oil - clearance without MRP stickers - such valuation attracted Sections 111(d) and 111(m) and thus, properly resulted in penalty and confiscation - HC
FEMA
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Under-invoicing of import - penalty under FERA - A perusal of the AO shows that it was based entirely on what was stated in the SCNs issued under the CA (Customs Act) and there was no investigation to verify the particulars set out in the said documents - order set aside - HC
Corporate Law
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Condonation of delay - appeal u/s 10F of the Companies Act, 1956 - delay is beyond the maximum period of 120 days prescribed -There is absolutely no explanation for the delay - The company application is dismissed. - HC
Service Tax
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The activity of data digitization for various Government department would not be covered by the definition of support services of business or commerce as the data digitization service for various Government departments cannot be treated as the service in relation to business or commerce. - AT
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Export of services - The performance of such service in India, would not make them received/consumed in India, if beneficiary user/recipient of said service provided in relation to business or commerce, who has paid for these service and has used the service in his business, is located abroad. - AT
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Refund - Taxability of service - construction of complex service or works contract service - duty paid under protest - refund allowed - period of limitation not applicable - AT
Central Excise
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Refund - Unjust Enrichment - Whether assessee is entitled for refund of duty on account of the discounts allowed to the dealers subsequent to the time of removal of the goods - Held yes - HC
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Benefit of Notification No. 60/88-C.E. - paper in question, was cleared to such organisations, which are not printer of newspaper hence the paper was not intended for printing of a newspaper - Exemption denied - AT
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Denial of CENVAT Credit - whether racks are capital goods - Procurement of racks for storage of the final products, terry towels, packed in cartons before removal/dispatch - credit allowed - AT
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Defect in service of order - condonation of delay - If the appellant has more than one unit, there is no provision in the law providing that the order can be served on any of the unit. - AT
Case Laws:
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Income Tax
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2014 (3) TMI 693
Confirmation of notional addition Excise duty added in the value of the closing stock of finished goods Held that:- The decision of English Electric Co. India Ltd. [1999 (2) TMI 24 - MADRAS High Court] followed a liability cannot be converted into an asset - If the assessee is to show in the accounts the liability incurred by it in relation to excise duty that is to be done by showing separately the extent of liability incurred in that year towards payment of excise duty - The liability, if so exhibited, would become an item which would have to be deducted for the purpose of arriving at the profit for the year - It is only when such deduction is given that the amount may be added to the value of the closing stock - Decided in favour of Assessee. Disallowance of printing and stationary expenses Held that:- The contention of the AO that the increase in expenditure under the head "printing and stationery" as compared to the earlier years were not proportionate with the increase in sales during the year, is not sustainable in law - the CIT(A) has recorded a finding that full supporting evidence were not produced before the AO the disallowance is restricted to 40,000/- as against Rs.85,722/- sustained by the CIT(A) Decided partly in favour of Assessee. Disallowance of conveyance expenses Held that:- The CIT(A) has recorded that maximum expenses were incurred in cash and are fully verifiable - but, the CIT(A) in his order has also recorded a contradictory finding that all claims were not verifiable - no case of disallowance could be made out by the Revenue Decided in favour of Assessee. Disallowance because of difference in closing balance Bogus purchases Held that:- After considering the volume of the business conducted by the assessee and the fact that the difference in the accounts does not pertain to this year, it has been held that no case of disallowance for the relevant assessment year could be made out by the Revenue Decided in favour of Assessee. Disallowance of sales promotion expenses Held that:- The disallowance out of sales promotion expenses at the rate of 10% thereof was made on the plea that the assessee could not furnish any details of the sales made through these parties and the basis for incurring the expenditure - the genuineness of the expenditure was not doubted by the Revenue - Considering volume of the business of the assessee, and that the reasoning of the AO regarding the sales made through these parties for whom these expenditure were incurred being untenable, and that the ad hoc disallowance was made - the disallowance made is not justified Decided in favour of Assessee.
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2014 (3) TMI 692
Addition made by the CIT(A) Records made on loose papers - Search u/s 132 of the Act Held that:- The addition of Rs. 17 lacs has been made on the basis of loose paper - no statement of Assessee was recorded at the time of search with respect to the cash receipts - AO had also not examined the purchaser Shri Yogeshbhai Lakhani to whom the said unit was sold and from whom the alleged cash of Rs. 17 lacs is said to have been received by Assessee assessee submitted that the notings were with respect to the tentative discussion held with Yogeshbhai Lakhani for the purchase of units which ultimately did not culminate the decision in COMMISSIONER OF INCOME-TAX Versus MAULIKKUMAR K. SHAH [2007 (7) TMI 267 - GUJARAT HIGH COURT] followed thus, the addition cannot be made Decided in favour of Assessee.
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2014 (3) TMI 691
Disallowance u/s 80IA of the Act Held that:- The direction of the Tribunal was that if the AO find that the workers employed were more than 10 then directed to allow the claim of deduction u/s 80IA - The AO has not strictly adhered to those directions - merely casting doubt on handwriting which was properly confronted, the AO was not justified in rejecting the claim of deduction u/s.80IA for the year under consideration - the assessee has suo motu withdrawn the claim Decided in favour of Assessee.
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2014 (3) TMI 690
Validity of admission of additional evidence under Rule 46A Typographical error - Held that:- The typographical mistake is inconsequential because it has not resulted into excess or inflated claim of purchase - the assessee has produced the reconciliation before the CIT(A) showing the discrepancy in the figure of only one party in question and all other purchases in respect of remaining parties were taken at correct figure and even this incorrect figure written in the details due to inadvertent typographical mistake have not resulted in any excess or inflated claim of purchase as debited in the P&L Account - when it is apparent by examining the detail already placed on record that it was only a typographical mistake and has not resulted in the excess claim and in the wisdom of CIT(A) it was not required to be investigated by the AO there is no illegality on the part of the CIT(A) - department has not pointed out as to why the reconciliation furnished by the assessee should not be accepted and the claim of purchases debited to the P&L Account is not as per the actual purchases and correct figure thus, there is no reason to interefere with the order of CIT(A). Deletion of labour charges Held that:- The AO has not examined the issue from the angle that the labour charges claimed by the assessee are bogus but the adhoc disallowance was made on the ground that some of the vouchers are self made - in the nature of civil construction work, hiring of daily labourers on daily wages is inevitable thus, the adhoc disallowance made by the AO is without any finding of bogus claim is not justified thus, there is no error or illegality in the order of CIT(A) in deleting the addition Decided against Revenue. Penalty u/s 271(1)(c) of the Act Held that:- In the quantum appeal on the issue of addition on account of bogus purchases the penalty would not survive thus, the order of CIT(A) is upheld deleting the penalty Decided against Revenue.
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2014 (3) TMI 689
Application for extension Stay of outstanding demand Reduction of the claim of deduction u/s 10A of the Act Held that:- Assessee relied upon CIT vs. Gem Plus Jewellery India Limited [2010 (6) TMI 65 - BOMBAY HIGH COURT] the decision had not been brought to the notice of the tribunal earlier even when the decision was available - Prima facie balance of convenience goes in favour of the assessee - because the Honble High Court has upheld the assessees claim of exemption u/s.10A, even on the disallowances of business expenses and the decision of the Jurisdictional High Court has not been considered by the Tribunal - several extensions of stay of outstanding demand have been granted to the assessee from time to time, primarily for the reason that assessee has deposited the entire tax amount and only part of the interest amount is outstanding and that the assessee has not been in default for not conducting the appeal before the tribunal thus, stay of the outstanding demand should be extended for further period of six months from the date of issuance of the order or passing of the order by the Tribunal in the appeal Decided in favour of Assessee.
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2014 (3) TMI 688
Profit from trading of shares LTCG OR STCG Held that:- There are various factors which has to be taken into consideration for determining the nature of transaction of purchase and sale of shares - no single criteria can be a decisive factor to determine the nature of transaction but a number of parameters and criteria has to be taken into account - The assessee has used his own funds and funds of his family members thus, no interest was paid on the funds used by the assessee for the purchase of shares and securities - keeping in view the total number of transactions and the number of transactions in which the holding period is less than 10 days, it will not change the character of transaction if the assessee has treated the shares as investment in the books of accounts and has not claimed the benefit of STT paid on the purchase and sale of shares of the transactions. When there is no instance of repetitive transaction in the same scrips then there is no justification in treating the investment as trading activity - when no change has been pointed out or brought on record in the facts and circumstances for the year under consideration in comparison to the facts and circumstances of the earlier years as well as in the subsequent year - the AO is not permitted to take a different view on a particular issue in the absence of any change in the facts and circumstances - when the claim of the assessee was accepted in the earlier years as well as in the subsequent year then to maintain the principle of consistency the claim of the assessee cannot be denied until and unless there is a material change in the facts and circumstances in the year under consideration - the surplus arising from purchase and sale of shares in the case of the assessee cannot be treated as business income - the claim of the assessee is allowed - the order of CIT(A) to the extent of treating the capital gain as business income is set aside Decided in favour of Assessee.
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2014 (3) TMI 687
Nature of land Agricultural land or not as per section 2(14)(iii)(b) of the Act - Sale of piece of land Whether the agricultural land is situated within 8 kms from the limits of Municipality Held that:- The CIT(A) by invoking his powers u/s. 250(4) of the Act asked the assessee to furnish certain details - the assessee has filed this certificate thus, it cannot be termed as violation of Rule 46A - even if there are no express provisions which could suggest that the CIT(A) is bound to give an opportunity to the AO in respect of the evidence gathered by virtue of Sec. 250(4) of the Act - the principles of natural justice demand that nothing should be used against a person which has been collected behind the back of that person - the certificate of Dy. Hydraulic Engineer (Operations) need to be confronted to the AO for this limited purpose of whether the approach road taken by the AO is a private road or public road thus, the matter is remitted back to the AO for verification of the genuineness of the letter - If the AO is satisfied with the genuineness of the letter, the land shall be treated as an agricultural land exempt from capital gain tax Decided in favour of Revenue.
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2014 (3) TMI 686
Disallowance u/s 36(1)(iii) of the Act - Interest paid on secured and unsecured loans - Whether the CIT(A) has erred in allowing the relief in respect of disallowances made u/s 36(1)(iii) of the Act Held that:- The CIT(A) rightly accepted the contention of the assessee that non-interest bearing funds have been used to make interest free advances, especially when the Assessing Officer had not been able to establish that the interest bearing funds raised by the company were used for making interest free advances - because of the wide gap between the total unsecured loan and the interest free funds available with the company, it cannot be presumed that the interest bearing funds were used for making interest free advances to the group concern by the assessee - the addition made in this regard by the AO is not sustainable which was rightly deleted by the CIT(A) thus, the order of the CIT(A) upheld Decided against Revenue.
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2014 (3) TMI 685
Addition made on expenses not incurred for employees - Nexus between levy of FBT to the employees - Held that:- The decision in Arvind Fashions Ltd. Vs. DCIT [2014 (3) TMI 628 - ITAT AHMEDABAD] followed - The provision of "FBT" could not be invoked in respect of the expenses which were not incurred on employees or their family members - the "FBT" could not be invoked on expenses which were not incurred on the employees or their family members - there is no clear cut finding recorded by the AO or the CIT(A) in their order that whether the addition made were relating to the expenditure in relation to non-employees and for the business purpose of the assessee. Assessee contended that the expenses were not related to its employees and were incurred only in relation to non-employees and for business purpose of the assessee this, the matter is remitted back to the AO for fresh adjudication - The AO is further directed to record a clear finding that whether the expenses in question were incurred with relation to non-employees for the business purpose of the assessee as claimed by the assessee-company Decided in favour of Assessee.
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2014 (3) TMI 684
Restriction in addition made u/s 69 of the Act - Net profit @ 5% on total cash deposits made Held that:- The decision in Kamal Kumar Versus Income-tax Officer [2014 (3) TMI 627 - ITAT AGRA] followed - CIT(A) held that initial stage of assessment clearly prove that the amount deposited in the bank account was in fact sale proceeds of the goods, which were sold by the assessee from time to time against whom the assessee issued cheques to various dealers and earned commission thus, addition u/s. 69 of the IT Act is wholly unwarranted and unjustified - Since the total deposit being the total sales of the assessee are only Rs.31,62,300/-, thus, the turnover of the assessee did not exceed the amount of Rs.40,00,000/- and as such, the provisions of section 40AF of the Act would apply in the case of assessee for the purpose of computing the profit and gains of retail business, which provides that sum equal to 5% of the total turnover in the previous year on account of such business shall be deemed to be the profit and gains of such business thus, 5% of the profit rate is applied - The AO made addition mainly on the basis of finding given in assessment year 2008-09 in respect of the same bank account the CIT(A) had correctly followed the order of the Tribunal thus, there was no infirmity in the order of CIT(A) Decided against Revenue. Net profit @ 6% on bank deposits made Held that:- As decided in earlier years also, the order of the CIT(A) is upheld confirmed on merits for applying the profit rate but the same is modified and it is directed that instead of applying net profit rate of 6% - thus, the authorities below shall apply profit rate of 5% for the purpose of computing part addition as was directed in assessment year 2008-09 Decided in favour of Assessee.
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2014 (3) TMI 683
Recall of exparte order - Levy of penalty u/s 271(1)(c) of the Act income from commission - Held that:- Vijay Kumar Gupta vs. ITO [2014 (3) TMI 175 - ITAT AGRA] followed It is clear case of concealment of income because the assessee has concealed the bank account maintained with ICICI Bank Ltd. from the Revenue department - The assessee admittedly accepted the order of the AO in maintaining the addition because no appeal was preferred before any authority against the addition - The assessee had admitted that he has earned unaccounted income from undisclosed business - in the penalty proceedings, finding of fact recorded by the AO which have reached finality cannot be disturbed. The AO in the quantum order has specifically mentioned that he was satisfied that the assessee has concealed the particulars of his income - The AO also held that Explanation 1(A) of section 271(1)(c) is also squarely applicable in the case of assessee and in fact the explanation offered by the assessee was found to be false - The ld. CIT(A) also found that the assessee has not filed any satisfactory explanation before him - Therefore, the AO is correct in holding that the assessee has willfully concealed the particulars of his income by not disclosing the fact of maintaining bank account with ICICI Bank - The concept of "reasonable cause" or exception as contended by the assessee has no applicability to the penalty proceedings u/s. 271(1)(c) of the IT Act - The assessee was maintaining unaccounted bank account and made huge cash deposits in the bank account and when the details were called for from the bank, the assessee had to make surrender of such income Decided against Assessee.
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2014 (3) TMI 682
Disallowance of mine closure obligation Expenses accrued bases on the quantity extracted - Whether the CIT(A) has erred in disallowing the mine closure obligation to the extent relating to the project under construction or not having any production during the year Held that:- There is a categorical finding given by the CIT(A) that there are certain mines not yet commenced - Relying upon Udaipur Mineral Development Syndicate Pvt. Ltd. Versus Deputy Commissioner Of Income-Tax (Assessment) And Another [2002 (8) TMI 26 - RAJASTHAN High Court] On that mine closure obligation cannot be allowed - mines at Kumaraswamy and Lalpur where there is no production, being so, no obligation is allowable - assessee has not given year-wise break-up - the CIT(A) directed the AO to ascertain the account of year-wise mining, which has been done from the remaining mines and allow mine closure obligation to the extent mining done corresponding to the current year - He further gave a direction to the AO if the assessee fails to provide such data, then, prorata has to be applied - there is no infirmity in the order passed by the CIT(A) Decided against Assessee. Disallowance of transitional liability Held that:- The decision in CIT Vs. Insilco Ltd. [2009 (2) TMI 31 - DELHI HIGH COURT] followed if a liability arises within the accounting period, the deduction should be allowed though it may be quantified & discharged at a future date - the provision was estimated based on actuarial calculations, deduction claimed is to be allowed - the provision for a liability is amenable to a deduction, if there is an element of certainty that it shall be incurred and it is possible to estimate liability with reasonable certainty even though actual quantification may not be possible, such a liability is not of a contingent nature thus, the liability relating to the AY is to be quantified by the AO and the same is to be allowed - Decided in favour of Assessee. Disallowing of depreciation on intangible assets Held that:- The decision in East India Minerals Ltd. Vs. JCIT [2014 (3) TMI 249 - ITAT CUTTACK] followed - the denial of claim of depreciation has been made on misinterpretation of law and the applicability - Explanation to Section 32(1)(ii) leans in favour of the assessee to the extent that it is the actual action of put to use which entitles the assessee to claim depreciation - All expenses are incurred for the purpose of business and are incidental to the holding of rights were claimed u/s.32(1)(ii) being the license to carry out the mining therefore could not be denied insofar as the Government and the lessee are in control of the asset thus, the assessee is entitled to depreciation as charged to the P & L account in accordance with its business exigencies the AO is directed to delete the addition made Decided in favour of Assessee. Disallowance of expenses - Payment of stamp duty and registration charges Held that:- The decision in Shri Jitendra Nath Patnaik Vs. DCIT [2014 (3) TMI 248 - ITAT CUTTACK] followed - the assessee is not acquiring any asset nor enduring benefit but is having only a right to work of mining in the land given to him for a specific period on lease - the amount is practically a revenue expenditure incurred by the assessee while doing his trade of mining operation - the claim of the assessee to allow the same as revenue expenditure is very much within the provisions of the Act thus, the order of the CIT(A) set aside and the AO is directed to allow the expenditure Decided in favour of Assessee. Disallowance of expenses on corporate social responsibility Held that:- The contribution is only a welfare measure for the upliftment of the Adivasis in the locality where the mining unit was situated and also for the welfare of the employees of the assessee - This contribution would definitely go a long way in conducting the assessee's mining business in a profitable manner - indirectly all the contribution made by the assessee takes care of the education of the employees' children - This would certainly be a welfare measure on the part of the assessee for carrying out the business in an effective and efficient manner thus, the contribution has to be treated as revenue expenditure for the purpose of the business thus, there is no justification in disallowing the amount Decided in favour of Assessee. Disallowance of claim of preoperative expenses Held that:- The CIT(A) gave a categorical finding that "these expenses are definitely capital and have been rightly categorized so by the appellant and also certified as capital expenditure by the auditors - It is only at the time of computation of income the assessee claimed this expenditure as revenue without providing any details or reasons - the assessee has not placed any evidence to establish the expenditure incurred as revenue expenditure thus, there was no infirmity in the order of the CIT(A) Decided against Assessee. Disallowance of PF contribution Held that:- In case of payment of contribution to PF is made before the due date prescribed in PF Act and the Scheme the deduction can be claimed and the right of deduction would be lost u/s 43B read with Explanation if the same is paid after the due date, i.e., after the due date of filing of return u/s 139(1) of the Act, as per the amended provisions of section 43B - only provision has been made which is not allowable in terms of section 43B Decided against Assessee. Valuation of closing and opening stock Held that:- CIT(A) held that With respect to closing stock, there is no ambiguity about the fact that the appellant is to recognize the same on cost or the market value, whichever is less - the Assessing Officer has not reduced the valuation of lump but has increased the valuation of fine iron are from zero to 20 Crores - This is incorrect as it increases the overall valuation - The fact that the market price of fine iron are has increased does not have anything to do with the closing stock valuation thus, any reallocation of closing stock cost between fine iron are and lump will necessarily have to be tax neutral - There is no circumstances which compels the Assessing Officer to revalue to closing stock of fine ore - as the fine iron ore is sold, the revenue so generated will be accounted for in the receipts - There was no infirmity in the findings of the CIT(A) with respect to closing stock valuation of lumps and fine iron ore thus, the order of the CIT(A) upheld Decided against Revenue.
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2014 (3) TMI 681
Claim of exemption u/s 11 of the Act - Whether the CIT(A) was right in directing the AO to allow the claim of exemption u/s 11, the same was not claimed in the return of income filed u/s 139(1) of the Act Held that:- The decision in Fellowship of Physically Handicapped[2014 (3) TMI 250 - ITAT MUMBAI]followed - the appellant has been filing amended clauses of Memorandums of Association along with return of income - As such it cannot be said that the appellant trust has not informed the Income tax Authorities regarding the change in Memorandum of Association - the assessee has been granted registration under section 12A and the original objects continued to exist apart from the fact that the amended objects remain charitable - the CIT(A) was of the view that the assessee is entitled to exemption under section 12A - the assessee is entitled to claim exemption u/s 11 of the Act Decided against Revenue.
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2014 (3) TMI 680
Transfer pricing adjustment - Selection of comparables - Filters adopted by the TPO - Turnover filter - Held that:- The TPO excluded the companies whose receipts are less than ₹ 1 crore and above ₹ 150 crores the range of companies adopted by the TPO is affirmed as the assessee's turnover was about ₹ 15.79 crores. Related party transactions filter Held that:- The TPO selected companies having transactions exceeding 25% - It would not be a practical approach to consider only companies with NIL related party transactions because almost all the companies have related party transactions to some extent - Nil % criteria would result in selection of very small number of companies which may not give sufficient base for comparison thus, 25% is a proper threshold limit for related party transactions - the threshold limit of 25% for RPT looks reasonable. Export sales filter Held that:- The TPO excluded companies having less than 25% revenue as export sales there was no reason to disagree with the TPO's filter adopted thus, the grounds raised by the assessee on various filters are rejected. Transfer pricing adjustment - Selection of comparables - Accentia Technologies Ltd. Held that:- The decision in Capital IQ Information Systems (India) (P.) Ltd. Versus Deputy Commissioner of Income-tax (International Taxation) [2014 (3) TMI 626 - ITAT HYDERABAD] followed - DRP was of the view that the extra-ordinary event like merger and de-merger will have an effect on the profitability of the company in the financial year in which such event takes place in the previous year there were extra ordinary events that took place in this company which warrants exclusion of this company as a comparable thus, this company cannot be considered as a comparable. Acropetal technologies ltd. Held that:- The major source of income for this company is from providing Engineering Design Service and Information Technology Services - The functions performed by the Engineering Design Services segment of the company cannot be considered as comparable to the ITES/BPO functions performed by the Assessee - The performance of Engineering Design Services is regarded as providing high end services among the BPO which requires high skill whereas the services performed by the Assessee are routine low end ITES functions even though the said company was excluded on the differentiation of high end services being provided by this company, as noticed assessee also provide high end services in CAD / CAE designing areas - These are High end services as considered by the Bangalore bench thus, the functions of assessee are similar to the Company. Crossdomain solutions ltd. Eclerx services ltd. - Genesys international corporation ltd. - Infosys BPO ltd. - Held that:- The business of Cross Domain ranges from high end KPO services, development of product suites and routine low end ITES service - there is no bifurcation available for such verticals of services Relying upon Symphony Marketing Solutions India (P.) Ltd. Versus Income-tax Officer [2014 (2) TMI 83 - ITAT BANGALORE] - in the absence of any reasons given to the contrary either by the TPO or the DRP for regarding this company as a comparable, this company should be excluded from the list of comparables, accepting the plea of the Assessee. Datamatics financial (BPO) div. Held that:- What the TPO has taken is only the receipts pertaining to ITES Division and the operating income was taken at ₹ 6.19 crores out of which export of ITES services admittedly was at ₹ 6.06 crores Therefore it has more than 75% of revenue from export of ITES services and therefore, it does not fail the filters provided, if only segmental profits are taken there is no reason to exclude this company from the comparables selected. Risk adjustment - Held that:- The issue needs to be examined by the TPO afresh - Assessee admits that it is having a single customer risk, whereas, other comparable companies has market risk - Since DRP has not given any opinion, the issue requires detailed examination afresh by the TPO and DRP- In case of any adjustment to be required to be done, after excluding the comparables as stated above and inclusion of other comparables if any after examination as directed therein, risk adjustments may be considered by the TPO, if such situation arises - In case the PLI determined after examination of the comparables is within the parameters and no adjustment is to be made for the international transaction, then, adjustment for risk may become academic in nature thus, the matter remitted back to the TPO for fresh adjudication Decided partly in favour of Assessee.
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2014 (3) TMI 679
Unexplained opening balance Held that:- Even though there may be difference of opinion as to the amount of agricultural income which could be obtained from the land and the lack of evidence produced with respect to the same, the issue of Assessing Officer not accepting the opening balance and treating the same as NIL is incorrect - the lower authorities have erred as they have overlooked the principle that the opening balance cannot be disturbed this year - The authorities can only reopen for the earlier year Relying upon ACIT vs. Smt. N.Sasikala [2004 (12) TMI 340 - ITAT MADRAS-A] - The opening balance of cash cannot be treated as unexplained in the assessment year Decided in favour of Assessee.
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Customs
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2014 (3) TMI 677
Analysis of the samples from these containers containing waste oil and various other waste materials was obtained way back on 8.5.2007 and still no action was taken to dispose of those hazardous materials - Held that:- There is a complete apathy and inaction on the part of the concerned officers. In fact, again in our last order we had asked the Director, Ministry of Environment and Forest to place on record as to who are the officers responsible and what action has been taken against them - only course available for us is to direct an appropriate inquiry so as to take cognizance of dereliction on the part of the concerned officers and, if satisfied, decide about the disciplinary and other measures. After having a word with Mr. Khanna, learned Additional Solicitor General who also had a word with the officers, we appoint a Committee consisting of (a) Joint Director (Customs), Department of Revenue and Finance; (b) Director, Ministry of Environment & Forest; and (c) Director, Ministry of Shipping, to hold appropriate inquiry to ascertain as to who were the officers from these three Ministries who were responsible for not taking necessary steps for all these years and if satisfied that there is dereliction on the part of some of the officers, initiating the disciplinary measures/appropriate actions in accordance with law.
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2014 (3) TMI 676
Maintainability of appeal - Jurisdiction of High Court - Determination of situs of the High Court in which appeals would lie under Section 35G(1) of the Central Excise Act - Section 35G(1) of the Central Excise Act - Held that:- The appellant filed Miscellaneous Application before the Tribunal to restore the appeal and to modify the pre-deposit order. This came to be rejected by the Tribunal by order dated 20.09.2011. Nevertheless, there was an observations by the Tribunal that the Commissioner should not decline to accept the sum of ₹ 25,00,000/-, the appellant pays the sum in one lump sum within one month. The appellant complied with the order and the said amount has been deposited on 22.10.2001. The Tribunal disposed of the appeal by order dated 19.12.2005. Therefore, the appellant having already agitated the matter before the High Court of Andhra Pradesh as against the interim order of the Tribunal and knowing fully well that the adjudicating authority as well as appellate authority are situated within the jurisdiction of the High Court of Andhra Pradesh, the appellant was carrying on business at Visakhapatnam, choose to file this appeal before this Court. That apart even earlier the appellant moved the High Court of Andhra Pradesh for release of the goods in which direction was issued to the Andhra Pradesh State Excise authorities to deliver the siezed goods to the Customs Authorities of Andhra Pradesh to be kept in the wareshouses. The conduct of the appellant in filing the appeal before this Court is not appreciable and it is a definite case of "forum shopping". This is one more reason for us to hold that the appeal cannot be entertained by this Court. Appellant submitted that the appeal having been admitted in 2006, the appellant should not be compelled to approach the High Court of Andhra Pradesh and the appeal should be heard on merits. The submission deserves to be rejected, since this is not a case where the appellant has approached this Court by way of writ petition under Article 226 without availing the statutory appellate remedy and in certain cases, the Hon'ble Supreme Court has held that if the writ petitions have been entertained and pending for a long period of time, the petitioner should not be relegated to the statutory Appellate Authorities. Such principle cannot be applied to the case on hand, as being a statutory appeal under Section 130 of the Act and the territorial jurisdiction of this Court cannot extend over the authorities functioning under the Customs Act in the State of Andhra Pradesh - The learned counsel appearing for the appellant requested this Court to grant liberty to the appellant to approach the High Court of Andhra Pradesh. No such liberty can be granted to the appellant except to observe that the appeal before this Court was presented on 10.04.2006, within the period of limitation and admitted on 13.04.2006 - Decided against assessee.
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2014 (3) TMI 675
Valuation of imported hair-oil - clearance without MRP stickers - Confiscation of goods - Imposition of redemption fine - Held that:- proprietor of the assessee had made a statement under Section 108 admitting that the items imported were covered under Schedule 3 of the items of Central Excise Tariff Act, 1985 and, therefore, required MRP disclosure. Furthermore, the show cause notice and the Order-in-Original are entirely premised upon the goods having been seized because they were found to be without MRP stickers at the time of the search on 16.5.2008. The Order in Original as well as the Order in Appeal are categorical that such valuation attracted Sections 111(d) and 111(m) and thus, properly resulted in penalty and confiscation. After considering these aspects, the redemption fine and penalty were reduced having regard to the entire conspectus of circumstances - No substantial question of law arises - Decided against assessee.
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2014 (3) TMI 674
Confiscation of goods - import of Knitted Fabric Polyester Lining. - Conditions which have been imposed for provisional release of the goods requiring the petitioner to furnish a bank guarantee well in excess of 100% of the determined value of the goods is unreasonable and at the highest a guarantee for 20% of the differential duty could have been demanded - Held that:- Conditions which have been imposed by the second respondent are arbitrary and excessive. Instead and in place of the conditions which have been imposed by the second respondent, we direct that provisional release under Section 110 -A of the Customs Act, 1962 shall be granted to the petitioner in respect of the consignment in question subject to the petitioner executing a bond for the entire differential duty and furnishing a bank guarantee of a nationalized bank to the satisfaction of the second respondent for an amount representing 30% of the differential duty. The guarantee shall be furnished to the satisfaction of the second respondent and shall be kept alive pending the disposal of the adjudication proceedings and for a period of 8 weeks thereafter. The goods shall be released within a period of three days of compliance of the above directions. The order for provisional release shall stand modified to the aforesaid extent - Decided partly in favour of assessee.
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Corporate Laws
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2014 (3) TMI 672
Condonation of delay beyond 120 days - appeal under Section 10F of the Companies Act, 1956. - Held that:- The learned Single Judge in [2009 (9) TMI 575 - HIGH COURT OF BOMBAY] held that on a correct reading of the Supreme Court decision in Union of India V/s. Popular Construction Company, (2001 (10) TMI 1044 - SUPREME COURT OF INDIA) it is clear beyond all doubt that the legislative intent underlying the constitution and establishment of the Company Law Board and insertion of section 10F is to limit the time within which an appeal can be filed. This time limit is absolute. It cannot be extended by a Court under section 5 of the Limitation Act. That decision binds me. - The appellant not only had knowledge of the impugned order in April 2012, but had a certified copy of it. The delay is beyond the maximum period of 120 days prescribed in Section 10F. There is absolutely no explanation for the delay. The company application is dismissed. There will be no order as to costs. - Decided against the applicant.
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FEMA
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2014 (3) TMI 678
Under-invoicing of import - manipulation this under invoicing was done for foreign exchange reasons to keep their value below the licensing restrictions imposed on them by the Indian authorities. - Levy of penalty for contravention of Sections 8 (1) read with Sections 68 (1) and 68 (2) of the Foreign Exchange Regulation Act, 1973 (FERA) - Held that:- It was incumbent under Section 72 (ii) FERA read with Clause (a) thereof for each of the documents gathered from outside India to be authenticated by the concerned officers of the Indian High Commission in both the UK and Italy. In the present case admittedly documents were simply forwarded by the office without any authentication as such. The procedure for authentication is set out in the Foreign Exchange Regulations (Authentication of Documents) Rules 1976. Clearly the said procedure was not followed in the present case. In the absence of authentication of the documents obtained from outside India in terms of the Rules prescribed for that purpose it was not open to the Commissioner to straightway rely on the said report as substantive admissible evidence for the purpose of holding the Appellants to be in violation of Section 8 FERA. A perusal of the AO shows that it was based entirely on what was stated in the SCNs issued under the CA (Customs Act) and there was no investigation to verify the particulars set out in the said documents. It was unsafe for the AO to proceed on the basis of the above documents to hold the Appellants guilty of contravention under Section 8 (1) FERA. - order set aside - decided in favor of appellant.
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Service Tax
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2014 (3) TMI 697
Waiver of pre-deposit - Commercial coaching and training service - taxability of grant received from government for various programmes like PMRY, EAC, EDP, RDSY, MDS/DOP etc. - taxability of data digitization charges - assessee claims that they undertakes various training programmes under the welfare scheme of the Central Government and State Government - Held that:- Since the appellant institute provides courses which result in the award of diplomas or degrees, as mentioned above, which are recognized under the law, the appellant institute would not be covered by the definition of commercial training or coaching centre and, therefore, we are of the prima facie view that any training programmes conducted or organized by the appellant would not attract service tax under Section 65 (105) (zzc) readwith Section 65 (27) ibid. Therefore, the service tax demand in respect of the appellants alleged activities as commercial coaching or training centres is not sustainable. - Decided in favor of assessee. As regards business support service - data digitization charges - Held that:- the activity of data digitization for various Government department would not be covered by the definition of support services of business or commerce as the data digitization service for various Government departments cannot be treated as the service in relation to business or commerce. Extended period of limitation - Held that:- it would be absurd to allege that an institution run by the State Government and which is associated in implementation of various welfare schemes of the centre and State Government like Prime Minister Rozgar Youjana (PMRY), Prime Minister Employment Generation Programme (PMEGP), Mass Employment Generation through Science & Technology (MEGSET), Swayam Siddha project for upliftment and development of women in the rural areas, Rani Durgawati Swarozgar Yojana (RDSY), CM Gharelu Kamkaji Mahila Yojana (CMGKMY) etc. by organizing various training programmes to improve the skills of poorer sections of the society, of having evaded service tax by taking recourse to fraud, wilful misstatement, suppression of facts etc. On this point, the approach of the department is absurd and, therefore, neither longer limitation period would be invokable not penalty under Section 78 would be attracted. Therefore, in any case, bulk of the service tax demand would be time barred. - Stay granted.
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2014 (3) TMI 696
Export of services or not - place of provision of services - location of recipient - receipt in foreign exchange - business auxiliary service - services in relation to export of goods - giving recommendation about the product integrity, inspecting export consignments and issuing inspection certificates, screening the vendors suitability in terms of child labour norms and pollution control norms and recommending the teams to be engaged in logistic work like transportation, clearing and forwarding etc. for export of the purchased products out of India - Export of Service Rules, 2005 - Held that:- the arguments of the department are absurd as the DR has not mentioned as to who is the consumer of the services in India, if the services, in question, provided in India by the appellant have not been used and consumed by their principal in U.S.A. It would be absurd to say that the recipient and user of these services are the persons in India and not M/s GAP, U.S.A. for whom all these services provided by the appellant are meant, who have used these services for their business and have made payment for these service in convertible foreign exchange. The Export of Service Rules, 2005 and Taxation of Service (provided from outside India and received in India) Rules, 2006, readwith Section 66A of the Finance Act, 1994 are fully in accordance with the law laid down by the Apex Court in case of All India Federation of Tax Practitioners [2007 (8) TMI 1 - Supreme Court] and Association of Leasing and Financial Service Companies (supra) that service tax is a value added tax, which, in turn, is a destination based consumption tax in the sense that it is not a charge on business but is a charge on the consumer. Therefore what constitutes export of service has to be decided strictly in accordance with the provisions of Export of Service Rules, 2005 and for this purpose, in case of services in relation to business or commerce covered by Rule 3 (1) (iii), the term service recipient has to be understood in the sense as explained in para 8.3. The performance of such service in India, would not make them received/consumed in India, if beneficiary user/recipient of said service provided in relation to business or commerce, who has paid for these service and has used the service in his business, is located abroad. - The position would be different if the company located abroad who has paid for the service, also has some branch/ project in India and the service provided in India is meant for that branch/project only in that case, the consumption of service would be in India and the service would be taxable in India. The Boards Circular No. 141/10/2011 dated 13/5/11 clarifying that for the period prior to 27/2/10, the condition regarding used outside India also needs to be independently satisfied for availing the benefit of export and that effective use of advertisement services shall be the place where the advertising material is disseminated to the audience though the actual benefit to my finally accrue to the buyer who is located at another place is not only not in accordance with the provisions of Rule 3 (1) of the Export of Service Rules, 2005, but is also contrary to the law laid down by the Apex Court in the case of All India Federation of Tax Practitioners [2007 (8) TMI 1 - Supreme Court] and Association of Leasing and Financial Service Companies [2010 (10) TMI 4 - SUPREME COURT OF INDIA], as a service which has not been consumed in India, cannot be taxed in India. In any case, the issue involved in this case is identical to the issue involved in the case of Paul Merchant Ltd. and Ors. vs. CCE [2012 (12) TMI 424 - CESTAT, DELHI (LB)] which stands decided in favour of the appellant. - order set-aside - Decided in favor of assessee.
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2014 (3) TMI 695
Cenvat Credit - scope of input services i.e. (i) group health insurance scheme as regards employees, (ii) services utilised for construction, maintenance or repair or renovation of Global Training Centre, (iii) services used in respect of hostel, food court, gym etc - Demand of service tax in respect of information technology software services received from overseas sub-contractors to overseas branches of the appellant - reverse charge - Held that:- if the insurance policy covers persons other than employees and no contribution is required from the employees towards such coverage, the service tax paid on insurance premium to that extent on a proportionate basis will have to be reversed. It cannot be said that the insurance provided to the parents or family towards all the employees is relatable to output services provided by the appellant. - matter remanded to verify and limit the demand to the extent of service tax payable on insurance premium attributable to families of employees, if other family members are covered and expenses are borne by the appellant. - Decided partly in favor of assessee. As regards global training centre, in view of the fact that learned counsel has made vehement submission that the appellant was providing commercial training and coaching service and the premises of global training centre is often used for conducting commercial coaching service on which service tax is paid, credit would be admissible since it becomes a premises of the service provider for providing the service of commercial training or coaching centre. At this juncture, it becomes necessary to note the fact up to 1.4.2011, setting up of a premises of output service provider was also an activity for which services used were eligible for credit. As regards hostel and gym, in respect of which various services received had been claimed to be input service, it is quite clear from the definition that both of them cannot be considered as premises from where the service is provided or an office relating to the premises from where service is provided. Liability of service tax - reverse charge - information technology software services received from overseas sub-contractors to overseas branches - Held that:- If the service has been rendered in USA or Canada received by the branch office of the appellant in USA or Canada and utilised by the branch office at USA or Canada and paid for out of the foreign exchange earned, unless the Revenue is able to show that the service has been received in India, or the benefit of service rendered abroad has been received in India, the tax, in our opinion, would not be payable. It is not the case of the appellant that money was not paid. It is the case of the appellant that whatever consideration is received for services rendered by them abroad goes into EEFC account and the appellant is entitled to spend 75% of such receipts in EEFC account for payments abroad. Therefore the fact that appellants have made payment from EEFC account and not from funds in the hands of Infosys in India would go to show that whatever payments were made were made from export earnings only. This would mean that services were paid for by the earnings abroad - Following the decision in the case of KPIT Cummins Infosystems Ltd. [2013 (12) TMI 792 - CESTAT MUMBAI], decided in favor of assessee. Levy of penalty and extended period of limitation - Held that:- In all these cases, wherever there is demand for service tax, the appellant would be eligible for the benefit of CENVAT credit also and therefore it cannot be said that there was any intention to evade payment of duty. - the demands wherever are sustainable in our opinion and where we have held so, would be only to the extent of denial of CENVAT credit within the normal period of limitation with interest but penalties are not sustained. - Decided partly in favor of assessee.
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2014 (3) TMI 694
Refund - Taxability of service - construction of complex service or works contract service - residential complex having more than 12 residential units - agreements entered into by a builder/promoter/developer with prospective buyers for construction of residential units in a residential complex against payments being made by the prospective buyers in instalments during construction - Held that:- such contracts are to be treated as works contracts, it has to be held that during the period of dispute, there was no intention of the Government to tax the activity in terms of such contracts a builder/developer with prospective customers for construction of residential units in a residential complex. Such works contracts involving transfer of immovable property were brought within the purview of taxable service by adding explanation to Section 65 (105) (ZZZh) w.e.f. 01/7/10, and therefore, it has to be held that such contracts were not covered by Section 65 (105) (ZZZh) during the period prior to 01/7/2010. - Decided in favor of assessee. Tribunal in the case of CCE, Chandigarh vs. U.B. Construction (P) Ltd. [2014 (1) TMI 402 - CESTAT NEW DELHI] has held that the explanation to Section 65 (105) (ZZZh) added w.e.f. 01/7/10 expands the scope of this clause and hence the same is not a clarificatory amendment and, as such, it cannot be given retrospective effect and accordingly during period prior to 01/7/10, when this explanation was not there, no service tax can be charged on the amount received by the builders/developers from the prospective buyers, that same view has been taken by the Tribunal in the case of R.F. Properties & Trading Ltd. vs. CCE, Jaipur [2013 (7) TMI 44 - CESTAT NEW DELHI] that in view of this, in both the cases, the appellant/respondent are eligible for refund on merits Refund - period of limitation - Held that:- since in terms of the findings of the Commissioner (Appeals) which have not been disputed, the service tax had been paid under protest, the limitation period would not apply. Unjust enrichment - Held that:- there is no evidence that they had charged any amount towards service tax from their customers. The presumption under Section 12B of the Central Excise Act, 1944 is a rebuttable presumption and when an assessee shows invoices issued by him is support of his claim that no amount representing service tax had been charged by him from his customers, the burden would shift to the department to produce evidence that the incidence of the tax, paid whose refund is sought had been passed on to the customers. In this case, no such evidence has been produced by the department. - Refund allowed.
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Central Excise
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2014 (3) TMI 671
Entitlement for refund of excise duty - Unjust Enrichment - Whether assessee is entitled for refund of duty on account of the discounts allowed to the dealers subsequent to the time of removal of the goods Whether Tribunal was right in rejecting the appeal in view of Section 11-C ignoring decision of the High Court of Madras on Section 11-B and 12-B - Held that:- Judgment in ADDISON AND CO. v. COMMISSIONER [2000 (11) TMI 146 - HIGH COURT OF JUDICATURE AT MADRAS] followed - while dealing with the matters arising u/s 35-G the High Court is bound to accept the findings of fact recorded by the Tribunal - The orders of the primary and first appellate authorities have merged with the orders of the Tribunal and the Tribunal by itself did not disturb any of the findings of fact as recorded by the authorities below - both the authorities, primary as well as the appellate, had categorically recorded that the Assessee had made over the excise duty component, which was collected originally on revision of the invoice price, in the process of allowing discounts. Trade practice of allowing quantitative discounts and the aspect of adjustment of the excise duty in conformity with the discounts are allowed - The principle of taking the value for the purpose of determining tax as the transaction value of the goods, as reflected in the invoice price at the time of delivery of goods to the buyer is established- the appropriate provision applicable are the proviso (d) to Section 11-B (2) - Section 12 is relevant when the party who is liable to pay excise duty on any goods, has to file the sales invoice and other documents relating to assessment at the time of clearance of the goods itself - all the appeals are allowed Miscellaneous petitions pending, if any, stands closed - Decided in favour of assessee.
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2014 (3) TMI 670
Validity of Tribunal's order - Tribunal relied on previous precedent - Held that:- CESTAT while dismissing the appeal merely relied upon their own decision in Mafatlal Industries case [2004 (3) TMI 577 - CESTAT, MUMBAI] - Order in Mafatlals case accepted by Government - Department placing on records the copy of the Letter of Additional Commissioner stating that Tribunal decision in Mafatlals case accepted by Government - Appeal is dismissed because while deciding the issue against the revenue the Tribunal has merely relied on the decision of the Tribunal in the case of Mafatlal Industries Ltd. - Decided against Revenue.
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2014 (3) TMI 669
Waiver of pre deposit - Denial of benefit of Cenvat credit - Held that:- Prima facie, If the appellant had availed Cenvat credit in terms of the decisions contrary to the decision in Vandana Global by any stretch of imagination malafide intention to conceal or suppress the facts cannot be attributed to the appellant. As such, taking into account that only part of the demand would be within limitation - Conditional stay granted.
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2014 (3) TMI 668
Waiver of pre deposit - Cenvat Credit - the waste bagasse emerged - Applicability of Rule 6 for production of exempted and non-dutiable goods - Held that:- Following decision of Balrampur Chini Mills Ltd. vs. Union of India and others [2013 (1) TMI 525 - ALLAHABAD HIGH COURT] and that bagasse was held to be a marketable product but not a manufactured product. The Hon'ble High Court so held even after considering the aforesaid amendment to Section 2(d) of the Act. On this basis, a demand raised on the party in terms of Rule 6(3)(b) of the CCR, 2004 came to be set aside - Decided in favour of assessee.
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2014 (3) TMI 667
Restoration of appeal - Non-compliance with the direction to make a predeposit - Held that:- a report received from the jurisdictional Assistant Commissioner (AR) on 5.08.2013, to the effect that the amount of Rs.2.00 lakh has been deposited by the Applicant by a Pay Order dated 03.06.2013 and realized by the Department on 17.06.2013 - In view of the fact that the Applicant has ultimately complied with the Tribunals Order dated 25.06.2007 and the direction of the Honble High Court dated 08.05.2013, we recall our Order dated 08.08.2007 and restore the Appeal to its original number - Decided in favour of assessee.
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2014 (3) TMI 666
Valuation of goods - Revenue contends that appellant should have gone by the residual rule in the said Rules and adopted the valuation principle under Rule 8 of the Central Excise Valuation Rules prevailing prior to 2007 and after 2007 - Held that:- consumption is by any other person other than the main supplier of material, it cannot be considered as a case of captive consumption. The job worker has no means of realizing the profit, if any, in the further use of the manufactured product in manufacturing other products. Therefore, the entire argument that Rule 8 is applicable to the situation has no prima facie basis except that the person supplying raw material is using the finished goods in his factory for further manufacture. Since the matter is already considered by the Tribunal in the decisions CCE, Ahmedabad v. Palco Metals Ltd. [2011 (4) TMI 460 - CESTAT, AHMEDABAD] and Indian Extrusions v. CCE, Mumbai [2012 (5) TMI 271 - CESTAT, MUMBAI], we adopt the principle laid down in those decisions. Consequently, we consider the offer made by the counsel is reasonable for admission of appeal - Conditional stay granted.
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2014 (3) TMI 665
Waiver of pre deposit - Duty u/s 4 or 4A - Excisability of toilet paper - Held that:- under the Central Excise Tariff, toilet papers are separately classifiable than handkerchiefs, cleansing or facial tissues and towel and the third schedule to the Tariff does not cover toilet papers. In view of this, prima facie the applicants have made out a strong case in their favour. The pre-deposit of the dues is waived and recovery of the same is stayed during the pendency of the appeal - Stay granted.
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2014 (3) TMI 664
Waiver of pre deposit - Duty demand - Inclusion of price of Ujala Supreme in value of detergent powder known as Ujala Bright Wash - Held that:- Ujala Supreme is not manufactured in the factory where assessment is taking place. The goods given free are not packed along with the detergent powder and if at all they are packed the maximum price at which the goods are sold is the price of detergent powder which alone can form the basis for arriving at the excisable value and therefore the entire approach of Revenue to add the MRP of the two products to arrive at the assessable value is wrong - Therefore, we grant waiver of pre-deposit of the dues arising out of the impugned order and stay its collection during the pendency of the appeal - Stay granted.
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2014 (3) TMI 663
Benefit of Notification No. 60/88-C.E., dated 1-3-1988 - Manufacture of Newsprint - Classification of goods under sub-heading No. 4801.90 or under heading No. 48.02 - Held that:- as per the Central Excise Tariff Heading No. 48.01 covers new print in rolls of sheets and as per the Chapter Note 3 of Chapter 48 of the Tariff News prints means paper intended for printing of a newspaper. In the present case, as the paper in question, was cleared to such organisations, which are not printer of newspaper hence the paper was not intended for printing of a newspaper - Following decision of assessee's own case in [2008 (4) TMI 620 - CESTAT, NEW DELHI] - Decided against assessee.
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2014 (3) TMI 662
Denial of CENVAT Credit - whether racks are capital goods - Procurement of racks of various sizes falling under heading No. 73.26, for storage of the final products, terry towels, packed in cartons before removal/dispatch - Held that:- in relation to the manufacture have been used to widen and expand the scope, meaning and content of the expression inputs so as to attract goods which do not enter into finished goods. In the case of M/s. J.K. Cotton Spinning and Weaving Mills, Co. Ltd. v. The Sales Tax Officer, Kanpur and another - [1964 (10) TMI 2 - SUPREME COURT OF INDIA], Supreme Court has held that Rule 57A refers to inputs which are not only goods used in the manufacture of final products but also goods used in relation to the manufacture of final products. Where raw-material is used in the manufacture of final product it is an input used in the manufacture of final product. However, the doubt may arise only in regard to use of some articles not in the mainstream of manufacturing process but something which is used for rendering final product marketable or something used otherwise in assisting the process of manufacture. This doubt is set at rest by use of the words used in relation to manufacture - Following decision of CCE & Ors. v. Solaris Chemtech Ltd. & Ors [2007 (7) TMI 2 - SUPREME COURT OF INDIA] - Decided in favor of assessee.
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2014 (3) TMI 661
Duty demand - Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - appellant found it unviable to operate under the new scheme they filed a declaration with Range Office on 7-7-2008 declaring that they had only one packing machine in their factory and they wanted the department to seal the machine immediately since they do not want to carry on their manufacturing activity - Held that:- situation being dealt with was a stage of transition from the old scheme of paying duty to the new scheme of paying duty. The appellants had complied with the requirements of giving intimations and getting the machine sealed. Machine was sealed at 10 AM on 9-7-2008. In such circumstances no liability more than the duty liability on proportionate basis for the first eight days will arise in view of provisions like Rule 10 and Rule 16 of the said Rules - In the facts of the case no penalty is warranted on the appellants. Appellants are directed to pay proportionate duty liability for 8 days with appropriate interest - Decided partly in favour of assessee.
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2014 (3) TMI 660
Defect in service of order - condonation of delay - Demand of Cenvat credit - Shortage in raw material - Held that:- as far as Central Excise law is concerned, registration is given to the factory and as per law, each premise is required to be registered. Therefore, when Section 37C of Central Excise Act, 1944 provides that order part has to be served by sending it by Registered Post Acknowledgement Due, it has to be sent to the unit which has been registered. If the appellant has more than one unit, there is no provision in the law providing that the order can be served on any of the unit. It is actually strange as to how the order has been served on other address. In fact, Section 37C of Central Excise Act, 1944 itself provides different means of service when the order cannot be served by Registered Post Acknowledgement Due. But, obviously in this case, provisions of Section 37C of Central Excise Act, 1944 have not been followed and there is no evidence to show that effort was made to serve the order in the premises where the offence case was booked - Matter remitted back - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2014 (3) TMI 698
Sufficiency of opportunity Levy of tax, penalty and interest - Held that:- Imposition of penalty and levy of interest must precede full opportunity assessee was under the treatment in hospital for uncontrolled HTN and BPPV, consequent to which he could not pursue the matter - Though assessee was called upon to produce documents But the same was not to the satisfaction of the authority - If the petitioner has sufficient material in his possession, then the interest of justice demands he should be given opportunity to produce them so that there will be a realistic assessment of tax due and not notional - The impugned orders and demand notices quashed - Assessee directed to produce all books of accounts, documents and any other material that is required for assessment before the respondent within two weeks - Thereupon the authority shall give reasonable opportunity and pass a fresh order - Petitions allowed - Rule issued is made absolute Decided in favour of assessee.
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Indian Laws
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2014 (3) TMI 673
Suspension of license - Adulteration in foods - Held that:- No where the impugned order would record the factum that Sri G. Yadaiah was the nowkarnama holder of the licensee. It is rather surprising that an Enforcement wing official of the Prohibition & Excise Department missed out to record such a factum. If Sri G. Yadaiah was not the nowkarnama holder of the licensee, he could not have applied for analysis of the second sample within three days period. The absence of the licensee or his nowkarnama holder, at the time of drawl of sample, therefore, requires the respondents to communicate, in writing, the factum of drawl of sample from the shop of the licensee, but the impugned order does not make any reference to any such communication. In my opinion, this is a failure on the part of the respondents. Therefore, the suspension order dated 03.02.2014, at best, can be understood as the notice delivered to the licensee that the sample has been drawn from out of his licensed shop premises. In such cases where no intimation relating to drawl of sample has been delivered to the licensee, the seven-day period built into the aforementioned portion of Rule 27(1) of the Rules, commences with the date of receipt of the order of suspension. Moment an order of suspension pending enquiry is passed, appropriate action must be initiated for conducting the enquiry. Enquiry will have to be completed within a time frame of 30 days. If the licensee were to ask for time, it would be a different matter, but any failure on the part of the officials to complete the enquiry in quick time is likely to degenerate into a punitive measure by itself, as was already pointed out. If suspension as a punitive measure is to be imposed upon a licensee, the requirement of providing an opportunity of hearing to him as built in under Section 31 has got to be complied with. Therefore, the respondents shall conclude the entire enquiry within 30 days and based upon their findings, action considered appropriate shall be taken - Decided in favour of assessee.
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