Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 15, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Companies Law
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File No. 1/8/2013-CL-V - dated
11-5-2017
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Co. Law
Companies (Acceptance of Deposits) Amendment Rules, 2017
Customs
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20/2017 - dated
12-5-2017
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ADD
Seeks to impose definitive anti-dumping duty on imports of Aluminium Radiators, Aluminium Radiator Sub-Assemblies and Aluminium Radiator Core, originating in, or exported from, China PR
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19/2017 - dated
12-5-2017
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ADD
Seeks to impose definitive anti-dumping duty on imports of Clear Float Glass, originating in, or exported from, Iran
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18/2017 - dated
12-5-2017
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ADD
Seeks to levy definitive anti-dumping duty, on Cold Rolled Flat Products of alloy or non-alloy steel originating in or exported from China PR, Japan, Korea RP, or Ukraine for a period of five years (unless revoked, superseded or amended earlier) from the date of imposition of the provisional anti-dumping duty, that is, 17th August, 2016
Indian Laws
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F. No. S-10/05/2017-Cy.I - dated
12-5-2017
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Indian Law
Specified Bank Notes (Deposit of Confiscated Notes) Rules, 2017
SEZ
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S.O. 1510(E) - dated
3-5-2017
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SEZ
Central Government notifies 2.5906 hectares area at Outer Ring Road, Rachenahalli Village, Bangalore, in the State of Karnataka and constitutes an Approval Committee
Highlights / Catch Notes
Income Tax
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Income earned from the shopping center -It was for the appellant to produce sufficient material on record to show that its entire income or substantial income was from letting out of the property which was the principal business activity of the appellant. No such effort was made - taxable as income from house property - SC
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Taxability - no profit element has been included in the expenses reimbursed - amount received by the assessee on account of reimbursement which has been received over and above the amount of FTS cannot be included and taxed as part of FTS. - AT
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Penalty u/s 271(1)(c) - addition u/s 68 - opportunities were provided by the AO to the assessee to substantiate its claim and to disprove the contention of the non-confirming party but the assessee failed to show any initiative as it had not shown any willingness for crossverification and cross-examination of the said party - penalty confirmed - AT
Customs
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Undervaluation of imported goods - Brass Scrap, Electrolytic Copper Wire Bars/ Rods, LLDPE etc - ITC violation - mis-declaration of importer's relationship with the suppliers - non-existent importing firms - demand confirmed with penalty - AT
Indian Laws
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Bouncing of cheques - It is clear that the complainant itself was aware that the accounts had been frozen in terms of directions by some statutory authority. In these circumstances, the reasons for return of the cheques unpaid being not what is envisaged in Section 138 of the N.I. Act - complaints were rightly dismissed - HC
Central Excise
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SSI exemption - use of Brand Name of another person - assessee had applied for the registration of the brand name RADOJI and not RADO - the respondents have been clearing the goods under the brand name RADOJI and not RADO as alleged in the SCN - SSI exemption cannot be denied - AT
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Penalty u/s 11AC - case of Revenue is that appellant have sold the goods on higher MRP as compared to the MRP considered at the time of the clearance of the goods - The change of MRP is not with malafide intention to evade/avoid payment of duty whereas the same is under a practice prevailing in the case of the consumer goods therefore there is no suppression of facts or malafide intention of the respondent - AT
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Clandestine removal - computer systems and allied products - job-work - demand on the grounds that the appellant had manufactured and cleared computer systems in the guise of trading of bought out items - demand confirmed with penalty - AT
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Transfer of Cenvat credit from one registered unit to another - units merged and credit accounts of two units also merged, where credit balance of one unit before merger was utilised for payment of duty on all finished products - credit allowed - AT
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Payment of an amount at the rate of 8% or 10% under Rule 6(3)(b) of the Cenvat Credit Rules, 2004 is not a duty, not a tax and hence cannot be deducted from the price of the exempted goods cleared for by consuming cenvated inputs. - AT
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Clandestine manufacture and removal - manufacture of of automatic data processing machines - it was alleged that IDS had manufactured and cleared computer systems without payment of duty in the guise of trading activity by issuing trading invoices - demand confirmed - AT
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Deemed manufacture - fixation of MRP on specified goods - Telemarketing of products by TV advertising - appellants were in ignorance of schedule Third to the Central Excise Act - Extended period of limitation cannot be invoked - demand confirmed for the normal period - AT
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100% EOU - Refund claim towards input services submitted on the basis of Invoices only without availing the credit first - no credit was shown in their regular ER-2 returns - provisions of Rule 5 of the CCR, 2004 are not applicable - refund rightly denied - AT
VAT
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Classification - fruit juice based drink known as ‘Appy Fizz’ - in the case of 'Appy Fizz' the product does not undergo aeration or carbonation; the product is thermally processed with CO2 which help in preserving the Apple Juice concentrate which is otherwise perishable in nature - Revenue failed to prove it as 'aerated branded soft drink' - SC
Case Laws:
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Income Tax
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2017 (5) TMI 586
Income earned from the shopping center - legal owner - “income from House Property” or “Profits and Gains from the Business or Profession” - Held that:- It is not in dispute that having regard to the terms and conditions on which the leasehold rights were taken by the appellant in auction, constructed the market area thereupon and gave the same to various persons on sub-licensing basis, the appellant would be treated as deemed owner of these premises in terms of Section 27(iiib) of the Act. Before us, apart from relying upon the clause in the partnership deed to show its objective, the learned counsel for the appellant has not produced or referred to any material. The ITAT being the last forum insofar as factual determination is concerned, these findings have attained finality. In any case, as mentioned above, the learned counsel for the appellant did not argue on this aspect and did not make any efforts to show as to how the aforesaid findings were perverse. It was for the appellant to produce sufficient material on record to show that its entire income or substantial income was from letting out of the property which was the principal business activity of the appellant. No such effort was made. Tribunal was correct in holding that the appellant was owner of the shopping centre within the meaning of Section 22 read with Section 27 of the Income Tax Act, 1961 - Decided against assessee.
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2017 (5) TMI 585
TDS u/s 195 - commission paid to the subsidiary for services rendered - non deduction of tds - Held that:- GE International had in AY 1998-99 paid tax on gross basis as regards the payment received from the Assessee, the question of again remanding the matter to the AO for verification of the above tax payment by GEI was wholly unnecessary. Instead a categorical consequential finding ought to have been rendered by the ITAT that there was no obligation on the Assessee to deduct any tax under Section 195 of the Act on the payments made to GEI in Japan and therefore the question of disallowance under Section 40 (a) (i) of the Act of the payment of ₹ 9.10 crores in the AY 1998-99 did not arise. Consequently, question (i) framed above is answered in the negative i.e. in favour of the Assessee by holding that the ITAT ought not to have remanded to the AO the issue concerning the tax paid by GEI on the payments made to it by the Assessee. The claim for deduction of ₹ 9.10 crores ought to have been allowed in full to the Assessee in the AY in which was incurred i.e. AY 1998-99. - Decided against revenue.
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2017 (5) TMI 584
Eligibility to exemption under Section 11 although the Assessee was not registered under Section 12A(a) - Held that:- By an amendment with effect from 1st April, 1997 the words “whichever is later and such trust or institution is registered under Section 12 AA” were inserted at the end of Section 12A (a) of the Act. Therefore the said amendment did not apply to the Assessee during the relevant AY. It will be recalled that the Appellant’s application for registration under Section 12A of the Act was made on 23rd June, 1973 i.e. prior to 1st July 1973 and was pending as on the date of the above amendment. The first part of the condition in clause (a) as it read prior to the above amendment stood fulfilled. Section 12 AA was itself inserted by an amendment with effect from 1st April 1997. Therefore, the question of the Assessee having to get itself registered under Section 12 AA did not arise. By the time the ITAT answered the above question, the registration under Section 12 A (a) was granted. The registration related back to the date of the application i.e. 23rd June 1973.Therefore, question (i) framed by the Court is answered in the affirmative i.e. in favour of the Assessee and against the Revenue. Could the Assessee be granted exemption under Section 11 of the Act when there was a failure on its part to comply with the provisions of Section 12A (b) of the Act? - Held that:- The assessment order was passed on 29th February 1996 and the Assessee's audit report was ready on 12th March 1996. Had the AO granted the Assessee two weeks' time, the Assessee would have filed its audit report and the assessment order passed thereafter would still have been within the deadline of 31st March 1996. It would have caused no prejudice to the Revenue. CIT(A) noted that even if there was a non-compliance with Section 12 A (b) of the Act by the Assessee, thus disentitling it to exemption under Sections 11 and 12 thereof, the AO was still not justified in adding the entire corpus of the Assessee to its taxable income. The corpus fund had been present in the earlier years and was a capital receipt. Even as per the original return, the Assessee did not have any excess over expenditure which could have been taxed. The ITAT committed no error in concurring with the CIT (A). The question framed at (ii) above has to be answered in the negative, viz., in favour of the Assessee and against the Revenue. It is held that the Assessee could not have been denied exemption under Sections 11 and 12 of the Act as there was no failure to comply with Section 12A (b) of the Act.
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2017 (5) TMI 583
Exemption u/s 11 - Condonation of delay in respect of defective form - rectified Form No.10 filled - Claim of the petitioner under Section 11(2) - Held that:- The respondent authority has not considered at all the rectified Form No.10, which was filed somewhere on 16 & 21/11/2016 and in any case it was prior to the impugned order dated 28/11/2016 wherein the respondent authority has observed that the question of condonation of delay in respect of defective form does not arise. Under the circumstances, we are of the opinion that when the petitioner had already filed the rectified Form No.10, which was filed prior to the impugned order, the respondent authority was required to consider the same in accordance with law. Under the circumstances, the matter is required to be remanded to the respondent authority to consider the application of the petitioner and /or claim of the petitioner under Section 11(2) of the Act afresh by considering rectified Form No.10 in accordance with law for which we have not expressed any opinion whether such rectified Form was permissible or not. However, in any case, the respondent authority was required to deal with rectified Form No.10.
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2017 (5) TMI 582
Disallowance u/s 14A - Held that:- The investment in the earlier year was of ₹ 63,30,41,000/-. At the end of the current year, the amount came to ₹ 67,50,41,000/-. Thus, the increase of ₹ 4,20,00,000/- was on account of transfer of share application money to share allotment. The investments were made in the earlier year and no new investment had been made in the current year. Thus, as concluded that the investments made in the earlier year were made out of own funds of the assessee and no borrowed funds were used for such investments. It was further recorded that the interest paid during the year did not have any nexus to the investments and thus, no tax free income from these investments was earned. The findings above have been recorded by the Tribunal after appreciating the factual position on record and the relevant provisions of law, which have not been shown to be illegal or perverse by the learned counsel for the appellant. Thus, no substantial question of law arises. - Decided against revenue
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2017 (5) TMI 581
Condonation of delay of 326 days - Held that:- Actual matrix in this case seeking condonation of inordinate delay of 326 days in filing and 1334 days in refiling the appeal, we do not find any merit in the same. The question regarding whether there is sufficient cause or not depends upon each case and primarily is a question of fact to be considered taking totality of events which had taken place in a particular case. In the present case after appreciating the matter it cannot be said that there was sufficient cause for condonation of delay. The Tribunal had decided the matter on 25.11.2011. However, the appeal before this Court was required to be filed within the stipulated period of limitation. However, the appellant instead of filing the appeal within time, filed an application which was dismissed by the Tribunal vide order dated 30.10.2012. But the appellant filed the appeal on 27.2.2013 before this Court after the delay of 326 days and lastly refiled on 7/8.2.2017 after a colossal delay of 1334 days. The plea of the appellant would not satisfy the test of sufficient cause. The explanation of the appellant praying for condonation of delay in filing and refiling the appeal, as noticed hereinabove, is bereft of sufficient cause for delay caused in filing the appeal. Further, a stale matter cannot be revived by approaching the Court belatedly. Thus applications for condonation of 326 days' delay in filing and 1334 days' in refiling the appeal dismissed.
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2017 (5) TMI 580
Amount of travel, group health insurance and other incidental expenses received by way of reimbursement - treated as income of the assessee for the year under consideration - assessee company incorporated in USA is engaged in grading and certification of diamonds entered into agreement GIA India provoding training and technical services - Held that:- Costs and expenses incurred by the assessee on travel and insurance etc on the persons deputed in India for providing training and technical services to GIA India was in the nature of cost incurred over and above the cost of employment. This interpretation is further re-enforced when we read the next clause, i.e. clause 1.3 which says that GIA India shall reimburse to the assessee any expenses incurred on account of thirty party costs. The drafting of the agreement and manner of placements the clauses in the agreement clearly make out a case that FTS is different from the expenses incurred on third party costs. Thus, there is a clear bifurcation in the agreement between the internal cost incurred by the assessee and external cost borne or paid by the assessee on behalf of GIA India. There is no confusion in this regard and the lower authorities have unnecessarily made an issue out of that. whether the expenses incurred on cost to cost basis will also be included in the amount of FTS ? - Taxability of FTS on gross basis, it has been fairly admitted that there is no dispute on the proposition that FTS has to be taxed on gross basis. However, the issue that arise here for our consideration is . We find that this controversy has now been put to rest by Hon’ble Supreme Court by way of its latest judgment in the case of DIT vs A.P. Moller Maersk (2017 (2) TMI 993 - SUPREME COURT ). It is clear that the amount received by the assessee on account of reimbursement which has been received over and above the amount of FTS cannot be included and taxed as part of FTS. Our attention has been drawn on the Transfer Pricing Study report and Transfer Pricing orders passed in the case of GIA India from where it can be made out that no profit element has been included in the expenses reimbursed. Thus, taking into account the totality of facts and circumstances of the case, we find that addition made by the AO is contrary to facts and therefore, is directed to be deleted. - Decided in favour of assessee.
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2017 (5) TMI 579
Disallowance u/s 14A - Held that:- The exemption extended to dividend income would relate only to the previous year when the income was earned and none other and consequently the expenditure incurred in connection therewith should also be dealt with in the same previous year. Thus, by application of the matching concept, in a year where there is no exempt income, there cannot be a disallowance of expenditure in relation to such assumed income. See Redington (India) Ltd vs. ACIT [2017 (1) TMI 318 - MADRAS HIGH COURT] MOU entered into by the assessee with M/s. Sri Sai Ram Projects Ltd is placed on record. On perusal thereof, it is seen that by virtue of the investment in shares, the assessee has acquired interest in the company for getting a right over the property at concessional rates. Therefore, it is more of business investment and not an investment per se for earning of dividend income. It is also submitted by the learned Counsel for the assessee that in the subsequent year, the property acquired under the MOU has been sold and the income therefrom has been offered as business income. However, the relevant documents in support of these contentions are not filed before us. Even otherwise, the assessee has not earned dividend income under the relevant A.Y. The language of s.14A (1) should be read in that context and such that it advances the scheme of the Act rather than distort it. In conclusion, we are of the view that the provisions of s. 14A read with Rule 8D of the Rules cannot be made applicable in a vacuum i.e. in the absence of exempt income. The questions of law are answered in favour of the assessee and against the department
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2017 (5) TMI 578
Unexplained deposit into bank account - availing of jewellery loan by assessee’s husband on 30.04.2006 - Held that:- It is appropriate to examine the issue whether the jewellary loan was directly released to assessee’s husband in the form of cash or by cheque so as to deposit the same to assessee’s Indian Bank account and thereupon to decide whether the jewellery loan availed by assessee’s husband was actually used to deposit into assessee’s account. With this observation, we remit the issue in dispute to the file of AO for fresh consideration. Advance towards sale of land at Orattukuppai by executing the Power of Attorney - Held that:- The assessee made the same plea before us that sale deed was a mistake that it was a normal practice to note in such a manner in sale deed. The AO should be given a credit to the amount received from those parties. As rightly pointed out by the ld. Assessing Officer that the transaction took place on 23.03.2007 and the assessee received the amount of ₹ 5 lakhs by cash on 23.03.2007 and the amount was deposited on 28.09.06 which was prior to the receipt of money and the explanation of assessee that the same money was deposited earlier to receipt of the amount, which is impossible and impracticable. Accordingly, this ground raised by the assessee is rejected. Invoking the provisions of the section 50C - Held that:- The assessee has been offered the income under the head “capital gains” from the assessment year 2006-07. In the assessment year under consideration 2007-08, the assessee offered only short term capital gains and the property/asset was not shown as stock-in-trade. Being so, the lower authorities rightly assessed the income of assessee under the head “capital gains” in the assessment year under consideration. Judicial discipline requires consistency in its proceedings, we are inclined to confirm the invoking of provisions of the section 50C of the Act in respect of sale of properties so as to compute capital gains. This ground raised by assessee stands rejected. Non allowing of expenditure incurred by the assessee as commission towards purchase and sale of land - claim was rejected on the reason that assessee has not produced requisite evidence for allowing that expenditure - Held that:- We direct the AO to allow commission supported by the proper vouchers and receipts from the concerned parties. This ground is remitted to the file of AO for fresh consideration. Non consideration of agricultural income - Held that:- We are inclined to direct the AO to give credit to the extent of agricultural income accepted by the AO in earlier assessment year 2006-07 after due verification. This ground is partly allowed for statistical purposes.
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2017 (5) TMI 577
Short payment/non payment of TDS pertaining to Form No.24Q4 - “assessee in default” - Held that:- Assessee is a Government Company. The Revenue does not have a case that the TDS collected by assessee has not been paid to the Government account. The mismatch is only on account of processing of data by the computerized system, for which assessee cannot be penalised. The assessee, on the other hand had substantiated that it had deposited all the taxes that was deducted at source into the government account. There is no error in the conclusion of the CIT(A). Therefore, we uphold the same as correct and in accordance with law. It is ordered accordingly.- Decided against revenue.
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2017 (5) TMI 576
Grant of approval u/s.12A denied - books of account of financial year 2013-14 are not produced - Held that:- We find that none of the objects of the society has been found after examination by the CIT as not-genuine or not charitable in nature. CIT at the time of grant of registration u/s.12A of the Act, has to consider whether the objects of the trust are charitable and the activities of the trust are genuine. If he finds that the objects of the trust are charitable and the activities of the trust are genuine, then he should grant registration u/s.12A of the Act to the assessee society. It has been held that at the time of registration, the CIT is not to examine the application of income or carrying on any activity by the assessee trust or institution. In view of foregoing, we hold that the rejection of registration application of the assessee society u/s.12A by the CIT is not justified and hence, we set aside his order and direct him to grant registration u/s.12A to the assessee - Decided in favour of assessee.
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2017 (5) TMI 575
Application for grant of approval u/s.12A rejected - Held that:- We find that none of the objects of the society has been found after examination by the CIT as not-genuine or not charitable in nature. CIT at the time of grant of registration u/s.12A of the Act, has to consider whether the objects of the trust are charitable and the activities of the trust are genuine. If he finds that the objects of the trust are charitable and the activities of the trust are genuine, then he should grant registration u/s.12A of the Act to the assessee society. It has been held that at the time of registration, the CIT is not to examine the application of income or carrying on any activity by the assessee trust or institution. In view of foregoing, we hold that the rejection of registration application of the assessee society u/s.12A by the CIT is not justified and hence, we set aside his order and direct him to grant registration u/s.12A of the Act - Decided in favour of assessee.
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2017 (5) TMI 574
Penalty u/s 271(1)(c) - Held that:- As far as the appeal for AY 2005-06 is concerned, it is clear that in the instant case it cannot be said that the assessee had withheld any relevant information regarding the receipts and income from the AO. The amounts added back by the AO were the amounts disclosed by the assessee itself. With regard to the provisions of section 271(1)(c ) of the Act pertaining to penalty, the Hon’ble Apex Court has authoritatively laid down that making of a claim by the assessee which is not sustainable will not tantamount to furnishing inaccurate particulars. See CIT vs. Reliance Petroproducts Pvt. Ltd.(2010 (3) TMI 80 - SUPREME COURT ). As far as the appeal for AY 06-07 is concerned, the Ld. AR has raised a point that the penalty has been imposed on the wrong amount. However, this plea was not before the Ld. CIT (A). Further, the correct amount on which the penalty has to be imposed will have to be verified by the AO in terms of the submissions made by the Ld. AR before us. Therefore, without commenting on the merits of the imposition of penalty, we restore the issue to the file of the AO for considering the submissions of the assessee with regard to the quantum on which the penalty has to be worked out. Therefore, this appeal stands allowed for statistical purposes.
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2017 (5) TMI 573
Penalty under section 271(1)(c) - addition u/s 68 - Held that:- Assessing Officer went into great lengths to verify the genuineness of these transactions and issued summons to the share applicants and his reasons that transaction was not genuine based on statement of the party , and not the product of conclusions based on suspicion. We observe that the facts of the case indicate the onus on the assessee to discharge complete liability to establish that the genuineness, credit-worthiness of the credit entry found in the books of accounts. In the present case, when the Dugar Polymers Ltd itself denied of making an investment in the shares of assessee Company and enclosed the audited balance sheet for financial years 2009 – 2010 for ready reference then the assessee should have responded positively to proceed next step for cross-verification and cross-examination to prove its point. In view of the above facts and findings we considered that opportunities were provided by the assessing officer to the assessee to substantiate its claim and to disprove the contention of the non-confirming party but the assessee failed to show any initiative as it had not shown any willingness for crossverification and cross-examination of the said party. In view of the above mentioned facts and reasons, we uphold the order of the Ld. CIT(A) vide which penalty imposed u/s. 271(1)(c) of the act was sustained and justified. - Decided against assessee.
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2017 (5) TMI 572
Withdrawal of appeal - Held that:- As the assessee at the time of hearing filed an application seeking permission of the Bench to withdraw the appeal filed by the assessee on the ground that the assessee had erroneously filed a single appeal for all quarters, i.e. Qr.No .2, 3, 4 of 24Q and 26Q for A.Y. 2013-14. However, the assessee has now filed separate appeals for each quarter. Therefore, no objection from the side of the Ld. Departmental Representative, the request of the assessee seeking permission of the Bench to withdraw the appeal filed by him is accepted.
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2017 (5) TMI 571
Registration under S. 12A(1)(aa) - non-speaking order for the refusing the registration - Held that:- Details of voluntary contributions received by assesse ₹ 37 lacs; conformation of Gawar Construction Ltd., Gurgaon regarding donation of ₹ 37 lacs during 22.10.2014 to 31.3.2015; details of inter trust donations made in kind to Sh. Krishan Pranami Bal Sewa Ashram, Hisar at ₹ 32,79,951/- as per income and expenditure account; ITR-7 of assessment year 2015-16; Ack. Dated 31.8.2015 of AY 2015-16; ITR-7 of AY 2016-17 and Ack. No dated 2.8.2016 of AY 2016-17. Ld. Counsel of the assessee also certified that the above documents are on record of the Respondent and Income Tax Officer (Exemptions) and no new evidence is adduced. In view of the above, we are of the view that Ld.CIT(E) has not considered the vital and legally tenable documentary evidences tendered, as aforesaid and passed a non-speaking order and contention raised during the proceedings before the Ld. CIT(E), which goes to the root of the matter and are very essential to adjudicate the issue in dispute. Therefore, in the interest of justice, the issue involved in the present appeal requires fresh adjudication by the Ld.CIT(E). Assessee’s Appeal stands allowed for statistical purposes.
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Customs
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2017 (5) TMI 595
Duty Drawback - All Industry Rates - whether the appellant is eligible for drawback (All Industry Rates) on the goods exported by him by under shipping bill? - Held that: - Board Circular dated 23.09.2010 is very clear and it is does not lay down any limit for all industry rates duty drawback on goods exported by free shipping bills without conversion of duty drawback shipping bills as per Rule 12(1)(a) of the Customs Central Excise Drawback Rules - the adjudicating authority has not recorded any findings as to whether the shipping bills conversion can be allowed as per the Board Circular dated 23 09.2010 (Clause 4) - the issue needs reconsideration by the adjudicating authority with reference to the Board Circular dated 23.09.2010 (Clause (4)) and also Provision of Duty Drawback Rules - appeal allowed by way of remand.
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2017 (5) TMI 594
Denial of an opportunity to make alternative arrangements for its counsel who "at the last moment" declined to act as such - Held that: - Considering the developments subsequent to the filing of the present petition where the adjudication proceedings have virtually concluded with only the final orders having to be passed by the adjudicating authorities, the Court is not inclined, at this stage, to entertain the plea of the Petitioner - none of the applicants and coapplicants has questioned the order of the CCESC declining the relief prayed for by them arising out of the same SCN - Entertaining the case of the Petitioner in such circumstances is neither feasible nor practical - petition dismissed - decided against petitioner.
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2017 (5) TMI 593
Undervaluation of imported goods - Brass Scrap, Electrolytic Copper Wire Bars/ Rods, LLDPE etc - ITC violation - mis-declaration of importer's relationship with the suppliers - non-existent importing firms - Confiscation - penalty - Held that: - it is very much clear that the intention of the supplier as well as importing firms were not bonafide. M/s Donald did not come forward to show as to how they have entered into contracts with these non existing firms - Even during investigation or in adjudication process the bonafides of these firms could not be proved - The Appellant had been taking a ground that not having an IEC code is a procedural requirement but does not entitle the imported goods liable for confiscation. However it is to be seen that it is not the case of simply non availability of IEC Code but also that the importing firms were non existent which shows that the goods were intended to be imported improperly and thus making them liable for confiscation. The sale proceeds of the export goods cannot be remitted to the Appellant M/s Donal Macarthy. Moreover, no evidence of sale of the good were brought on records. Even if it is assumed that the imported goods in question has been disposed of by the custom/custodian, this is not the subject matter of this appeal, hence the issue, of sale of the goods and it's proceed, can not be entertained in the present appeals. Penalty on M/s Donald Macarthy and its Directors - Held that: - the said appellant concern and its directors were solely responsible for sending goods to India in violation of customs laws. Hence the penalties were rightly imposed upon the appellant company and it's directors. Penalty on other two appellants Shri Deendayal Didwania and Shri Navneet Kumar Didwania - Held that: - during searches no incriminating documents were found and no contumacious conduct or evidence has been brought on record which can show involvement of the said persons in importation of impugned goods. No instance has been brought to show that the Appellants attempted to clear the imported goods. Though some of the past consignments might have been cleared by these two appellants, however we find that no violation in import of those goods has been alleged - The only piece of evidence relied upon for imposing penalties on these two appellants is copy of auction notice issued by BPT in respect of consignments of Marvel Impex. We find that firstly, this is a public auction notice of BPT, secondly, investigation could not establish any wrong doing on the part of these appellants with reference to the said public auction notice - penalties cannot be imposed. Appeal allowed - decided partly in favor of appellant.
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Corporate Laws
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2017 (5) TMI 589
Scheme of Amalgamation - Held that:- upon considering the approval accorded by the members and creditors of the Petitioner Companies to the proposed Scheme, and the affidavits filed by the Regional Director, Northern Region, Ministry of Corporate Affairs and the Official Liquidator attached to this Court, whereby no objections have been raised to the proposed Scheme by the OL, and in view of the circumstance that the objections rasied by the RD stand satisfied, there appears to be no impediment to the grant of sanction to the Scheme. Consequently, sanction is hereby granted to the Scheme under sections 391 and 394 of the Act. The Petitioner Companies will however, comply with the statutory requirements, in accordance with law. A certified copy of this order, sanctioning the Scheme, be filed with the ROC, within thirty (30) days of its receipt.
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2017 (5) TMI 588
Oppression and mismanagement - Siphoning of funds of the company and turned a profit making and debt free company into a debt ridden company running into losses - demerger of assets between the shareholding group of petitioners and the majority seeked - Held that:- After considering and weighing all the facts, arguments made by the petitioners and respondents, and the judgments cited by them, we are convinced that the petitioners and respondents cannot get along and conduct business of the company. Both the parties have agreed to the parting of the ways by giving exit to the petitioners. We hold that it would be just and proper that the respondent group namely, R-2 to R-13 and particularly R-2 and R-3, who are admittedly in the control of the affairs of the company be directed to buy out the shares held by the petitioners in the company at a fair price to be determined by an independent valuer. The instant petition therefore stands disposed of with the following orders: The alleged violators of section 314 namely, S.Gursimran Singh Grewal (R-3), S.Paramvir Singh Grewal (R-4), S.Saminder Singh Grewal (R-6), S.Mandeep Singh Grewal (R-10) and Mrs.Harsimran Dutta (R-11) are required to refund to the respondent company, the amount paid to them in excess of the permissible limits u/s 314 along with interest payable at the bank rate enhanced by 2% within 30 days of receipt of this order. For this purpose, the bank rate applicable as on 31st March of each of the financial year shall be taken. M/s Ernst & Young New Delhi is appointed from out of the list of valuers submitted by the petitioners and agreed to by the respondents, as an independent valuer for fair value of the shares held by the petitioners of the company. Other procedures to be strictly adhered to.
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Service Tax
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2017 (5) TMI 628
Penalty u/s 78 of FA - erection, commissioning and installation service - belated payment of tax - suppression of facts or not? - Held that: - there is no intention to evade the service tax liability and delay in discharge could be due to non-receipt of payment from respondent’s customers if could be a justifiable and reasonable cause for belated discharged of tax liability be the respondent. Respondent have discharged the service tax liability before the issuance of the SCN is eligible to get the benefits of Section 73(3) of the FA, 1994 and the Revenue authorities should not have issued any SCN for penalty - penalty set aside by invoking section 80 - appeal dismissed - decided against Revenue.
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2017 (5) TMI 627
Interest - penalties - CENVAT credit - broadcasting service - The Department entertained a view that broadcasting service cannot be considered as an input service for the appellant - The assessee has withdrawn the contest with regard to irregularly availed credit to the tune of ₹ 18,77,641/-. Therefore the issue narrows down to the demand of interest and the penalties - Held that: - the Commissioner(Appeals) has taken note of the fact that the credit has been reversed before utilisation. The learned counsel for the assessee has also produced copies of the ST3 returns to show that the credit has been reversed before utilisation during the disputed period - the Commissioner(Appeals) has rightly set aside the demand of interest. Penalties - Held that: - The issue whether the appellant is eligible for credit on the broadcasting service prior to 01/05/2006 as well as after an interpretational issue - When the assessee has reversed the credit before utilisation, the judgment is in case of Bill Forge (P) Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT] will apply and the interest and penalty are not sustainable - penalties set aside. Appeal dismissed - decided against Revenue.
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2017 (5) TMI 625
Erection, commissioning and installation of wind mills - civil works - electrical works - denial of N/N. 19/2003-ST dated 21/08/2003 and 12/2006-ST - Held that: - it is a fact that appellant had not urged before the adjudicating authority that the contracts entered into by them with their clients, were in nature of works contract. Having not raised this point before the adjudicating authority and not produced any documents in support of that claim before him, we find that the adjudicating authority could not have arrived at any conclusion and record any findings as to whether the contracts entered into by the appellant were work contract or otherwise - matter is remanded back to the adjudicating authority to reconsider the issue afresh after following the principles of natural justice - appeal allowed by way of remand.
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2017 (5) TMI 624
Scope of SCN - refund claim - time bar - Held that: - in the SCN the Department has not raised any issue of time bar. Further in para 8.1 of the Order-in-Original, the adjudicating authority has categorically held that the refund claim filed in terms of N/N. 17/2011 is well within time. It is evident that the Commissioner(Appeals) has traveled beyond the SCN and also against the findings entered by the adjudicating authority and thereby putting the appellant under surprise by rejecting the refund claim on the ground of being time bar - rejection of refund claim is unjustified - appeal allowed - decided in favor of assessee.
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2017 (5) TMI 623
Works contract - activity of construction of retail outlets and erection of structures/electrification etc., of retail outlets for the period prior to 01.06.2007 - taxability - Held that: - similar issue decided by the Hon’ble Supreme Court in the case of CCE & Cus, Kerala Vs Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT], where it was held that Works contract were not chargeable to service tax prior to 1.6.2007 - The period in present appeal is prior to 01.06.2007, hence not taxable - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 622
Commercial or Industrial Construction Services (CICS) - Cargo Handling Services - three contracts in respect of CICS were awarded in their favour where two contracts were with the materials supplied by the client and in the last contract with M.s Om Power Corporation Ltd., the material was in the scope of the appellant - taxability - Held that: - all taxable services relating to transmission of electricity during the period upto 26.022.2010 and to distribution of electricity upto 21.06.2010 were exempted retrospectively as per N/N. 45/2010-ST dated 20.07.2010 - similar issue decided by the Tribunal in the case of CCE & C, Nashik Vs. S.Z. Dhanwate Engineering Works [2016 (1) TMI 676 - CESTAT MUMBAI], where it was held that Central Government had retrospectively exempted all the services rendered to the transmission and distribution of electricity provided for the period 26.02.2010 upto 21.06.2010 - the service tax is not liable in the instant case. Cargo handling services - for the period October 2005 to May 2007 - Board’s Circular No.104/7/2008 dated 06.08.2008 - Held that: - the appellant is not providing Cargo Handling Service but only GTA service. The recipient is already paying the tax. Therefore there cannot be any liability on Cargo Handling Services. Appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (5) TMI 629
CENVAT credit - welding electrodes - whether respondent is eligible to avail CENVAT credit on the Central Excise duty paid on welding electrodes which is consumed in the respondent's factory exclusively use for repair and maintenance of machinery? - Held that: - identical issue decided in the case of SREE RAYALASEEMA HI-STRENGTH HYPO LTD. Versus COMMR. OF CUS. & C. EX., TIRUPATI [2012 (11) TMI 255 - ANDHRA PRADESH HIGH COURT], where it was held that Once the assessee availed credit u/r 2(k) of the Rules of 2004 without entitlement it amounts to contravention of the rule with the intention of evading payment - the appellant is eligible for Cenvat Credit on the impugned goods - the first appellate authority has followed the judicial discipline by following order of this Tribunal in respect of the identical issues that also in respect of same assessee - appeal dismissed - decided against Revenue.
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2017 (5) TMI 626
CENVAT credit - duty paying documents - inputs - molasses - denial on the ground that the documents are not specified in rule 9 of CCR, 2004 - Held that: - Rule 9 of CCR, 2004 prescribes the documents on which credit can be availed - the purposed of this Rule is for verification whether duty is paid - the defects in the document on which credit is availed by appellant can be concluded to be a procedural irregularity and substantial benefit of CENVAT credit cannot be denied on account of this. Extended period of limitation - Held that: - The appellant having availed credit on the duty paid and also having disclosed the nature of the credit availed in the ER1 returns, they cannot be saddled with suppression of facts with intent to evade payment of duty - the appellants succeed on the ground of limitation also. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 621
CENVAT credit - Banking and Other Financial Services - Legal Consultancy Services - commission towards foreign remittance - scope of the definition of Input Service as laid down u/r 2(l) of CCR, 2004 - Held that: - the Service Tax paid on commissions towards foreign remittance is eligible to Cenvat Credit in view of the judgment of this Tribunal in the case of Meghmani Dyes & Intermediates [2014 (1) TMI 558 - CESTAT AHMEDABAD], where it was held that definition covers not only services used directly or indirectly in or in relation to manufacture of final products but also various services used in relation to business of manufacture whether prior to manufacture or after manufacture. Needless to say banking charges are paid in relation to purchase of raw materials and sale of finished goods and therefore such services is definitely relatable to the manufacture - credit allowed. Banking and Financial Service - Held that: - in all the bills Service Tax was paid on the Banking Commission charges in relation to foreign remittance and nowhere the charges in the said bills were collected relating to forward contract entered into between the appellant and the Bank. In these circumstances, the Service Tax paid on Commission Charge on foreign remittance is eligible to Cenvat Credit under the category of Banking and Forward Services. With regard to Cenvat Credit availed on Legal Service, the issue is more of less covered by the Judgment of Hon’ble Allahabad High Court in the case of CCE vs HCL Technologies Ltd [2014 (11) TMI 663 - ALLAHABAD HIGH COURT], where it was held that the service was governed by the definition of "input service" - credit allowed. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 620
100% EOU - Refund claim towards input services submitted on the basis of Invoices only without availing the credit first - Rule 5 of the CCR, 2004 - denial of refund on the ground that no CENVAT credit taken on input services by appellant - Held that: - for refund claim u/r 5 of the CCR, 2004, firstly, the assessee is required to take cenvat credit and the said cenvat credit if remained un-utilise, in that circumstances, the assessee can file refund claim u/r 5 of the CCR, 2004 - the appellant has not taken cenvat credit on input service in question at all and no credit was shown in their regular ER-2 returns - provisions of Rule 5 of the CCR, 2004 are not applicable - refund rightly denied - appeal dismissed - decided against assessee.
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2017 (5) TMI 619
Deemed manufacture - fixation of MRP on specified goods - Telemarketing of products by TV advertising - The Appellant purchases goods from importers at local level and carry out the process of packing in secondary boxes as well as putting stickers which bears the name of the product, the importer's name, name of the company marketing it, item code, date of import and the MRP - case of Revenue is that the Appellant has affixed the MRP on packing of goods and since the goods are falling under third schedule to the Central Excise Act, hence in terms of Section 2 (f) (iii) the activity of the Appellant amounts to manufacture - demand - Held that: - the Appellants were importing goods and after packing of same in corrugated boxes were affixing the importers name as well as MRP in addition to other details. Such activity is covered under manufacture under Third Schedule to the Central Excise Tariff as stipulated under Section 2 (f) of the Central Excise Act - the duty demand has been made from the Appellant by holding the goods excisable on ground of their activity being amounting to manufacture. In such case when the Appellant's activity are amounting to manufacture they are entitled for the credit of duty paid inputs and input services received by them - demand upheld. Extended period of limitation - Held that: - as apparent from the investigation there is no instance showing that the Appellant had intention to evade payment of duty. We find that the Appellants were in ignorance of schedule Third to the Central Excise Tariff - in absence of any contumacious conduct on the part of the Appellant as well as in absence of any intention to evade payment of duty, we hold that the demands made against the Appellant M/s Telebrands is hit by limitation of time and are time barred - the confiscation of goods and imposition of penalty cannot be justified - demand set aside being time barred. Penalty on appellant - rule 26 - Held that: - since the intention to evade payment of duty is not present in this case, there is no reason to impose penalty upon him. Consequentially, no penalty could have been imposed upon him u/r 26. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 618
Refund claim - Interest paid on the duty - provisional assessment - refund claim filed on the ground that the interest was not payable in respect of excise duty paid before finalisation of the assessment - rejection of refund on the ground that since the interest was not payable whatever amount was paid is an amount and no provision for refund of such amount - time limitation - Held that: - the appellants have paid interest in respect of duty paid before the finalisation of the assessment. In case duty paid before the finalisation of the assessment, interest is not chargeable as held by the Hon’ble Bombay High Court in the case of CEAT [2015 (2) TMI 794 - BOMBAY HIGH COURT] - The appellant admittedly paid the amount as interest and if it is not payable, the same is refundable, even if not u/s 11B otherwise also as the said amount which is not payable cannot be retained by the Government without authority of law. Time limitation - Held that: - the refund has arisen only after finalisation of the assessment and the appellant have admittedly filed the refund claim within one year from the date of finalisation. Therefore, it is clearly not time barred. Unjust enrichment - Held that: - the lower authorities have not examined the issue of unjust enrichment. Therefore, the matter needs to be remanded only for the verification of aspect of unjust enrichment. Appeal allowed - refund allowed subject to verification on the aspect of unjust enrichment - appeal allowed by way of remand.
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2017 (5) TMI 617
SSI exemption - use of Brand Name of another person - it was found that the respondents were clearing the finished products under the brand name RADO which was already being used by other persons - the case of Revenue is that the brand name RADOJI is deceptively similar to the brand name RADO which is registered in the name of other persons - Held that: - Since no allegation has been raised in the SCN that the respondents have been using deceptively similar brand name, the said plea of the department cannot be accepted at the stage of appeal - From the documents of the Trademark Registry also, it is seen that the respondents had applied for the registration of the brand name RADOJI and not RADO - the respondents have been clearing the goods under the brand name RADOJI and not RADO as alleged in the SCN - appeal dismissed - decided against appellant-Revenue.
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2017 (5) TMI 616
Clandestine removal - Shortage of raw material and finished goods - excess quantity of wire mesh - seizure - seizure of cash - CENVAT credit - difference in quantum of the goods produced as reflected in RG-1 register and accounted in private records recovered by the departmental officers from their head office - certain quantity of inputs were seen entered in the RG 23A register but there was no entries in the private records accounting receipt of the inputs - removal of certain quantity of inputs which were entered in their private records without reversal of the credit. Held that: - the shortage of 242.465 MT in stock weight against the total purchase of raw material from 2001 to September 2007 of 57099.535 MT came to 0.42% which itself has been over a period six years. In that circumstance, the charge of shortage of finished goods/raw materials are not sustainable - although the shortages were found but it has not been alleged that the goods cleared clandestinely. Moreover, the manufacturing process of the appellant reveal that there should be some wastage and considering the shortage which detected in six years is miniscule to 0.42% without any corroborative evidence for clandestine removal of the goods, the duty on shortages cannot be confirmed. Further taking into consideration the shortages of finished goods are not sustainable consequently the demand of duty on finished goods is not sustainable - demand set aside. Demand of ₹ 58,72,851/- confirmed on account alleged clandestine product - Held that: - the demand is not sustainable on the basis of difference between production slips and RG-1 register - it has not been coming out form the facts of the case that for manufacturing these quantities from where the raw material procured, how much electricity used and how the payment of these goods have been received, how the goods have been transported, therefore, in the absence of any corroborative evidence the demand sought to be confirmed on the bass of assumption and presumption is not sustainable - We further find that the demand has been confirmed on the basis of private registers and RG-1 register, the department did not raise any demand in the show cause notice dated 4.4.2008. Therefore, this demand cannot be confirmed by invoking the extended period of limitation - demand set aside. With regard to the credit of ₹ 83,09,894/-, the allegation of the department is that although the goods have been entered in RG-1 register and they did not find mention in the private records - it is alleged the appellants have diverted the quantities of goods without reversal of the credit - Held that: - As the Revenue has not given any evidence for diversion of inputs, merely on the basis of presumption the inputs is not find place in private records, the demand is not sustainable, therefore, we hold that the demand of ₹ 83,09,894/- is not sustainable against the appellant - demand set aside. With regard to the disallowance of the credit of ₹ 1,34,67,629/-, the contention of the Revenue is that the appellant has cleared goods without reversal of the credit - Held that: - The Revenue has not produced any evidence for the Cenvat Credit taken on this quantity of goods, therefore, the question of reversal of credit does not arise. In that circumstance - it is admitted fact that the appellant is engaged in trading activity of wire rods and it is also fact on record that the quantities of wire rods cleared as such, the appellant has not taken the credit. In that circumstance, the question of reversal of credit does not arise - demand set aside. Extended period of limitation - Held that: - on the same investigation and after completion of enquiry, a show cause notice dated 4.4.2008 was issued to the appellant to demand duty on the basis of alleged shortage and non payment of duty and cash recovered during the course of investigation. Thereafter, subsequent show cause notice dated 30.3.2008 was issued to the appellant - the facts of the case in the knowledge of the department at the time of issuance of show cause notice on 4.4.2008 and no new facts revealed - The show cause notice dated 30.3.2009 cannot be issued to the appellant by invoking the extended period of limitation. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 615
Interest on refund of pre-deposit - relevant period for calculation of interest - Circular No. 275/37/2K-CX-8A dated 2.1.2002 - Circular No. 802/35/2004-CX dated 8.12.2004 - Held that: - the assessee appellant is eligible for the interest on the delayed refund by the department as per instructions/clarifications issued by CBEC and the decisions of higher judicial fora - the appellant is entitled to the interest from the day when three-month period expires from the day of Tribunal’s order dated 27.3.1998. The Revenue’s submission that no proof regarding application for refund submitted by the assessee is not relevant for the present facts when CBEC in their circular makes a mention that refund in case of pre-deposit is to be made without insisting upon refund applications u/s 11B(1) of CEA within period of three months from the disposal of the appeal. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 614
Refund claim - excise duty paid on certain post manufacturing expenses(PME) - whether the refund of the appellant is time bar and whether it is hit by unjust enrichment? - Held that: - entire issue of valuation and consequential determination of duty has finally came to an end only after Tribunal's order. The Tribunal's order was passed on 12-11-2003 therefore in my view refund arises only thereafter, hence refund claim filed on 23-4-2004 is within the time limit - As regard the unjust enrichment, it is admitted in the adjudication that assessment was finialised on 15-7-1984 and by way of corrigendum dated 15-10-1984 and necessary adjustment of duty was made on 18-7-1997, therefore the present refund claim is arising out of the deposited amount of provisional assessment. Therefore refund which is arising out of finalization of assessment will not be governed by the provision of unjust enrichment. The refund claim is neither hit by time bar nor hit by unjust enrichment - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 613
Maintainability of appeal - Clause (b) of provisio to Section 35 (1) of the Central Excise Act, 1944 - Rebate claim - Held that: - the present issue is covered by the decision of the Larger Bench of this Tribunal in the case of Sai Wardha Power Ltd. Vs. Commr. of Central Excise, Nagpur [2016 (1) TMI 17 - CESTAT MUMBAI], where it was held that in respect of rebate on goods supplied from DTA to SEZ within India, the appeals would not lie to the Appellate Tribunal under clause (b) of proviso to Section 35(1) of the Central Excise Act - appeal dismissed as not maintainable.
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2017 (5) TMI 612
Clandestine manufacture and removal - aluminium scrap - Held that: - the demand against REPL and SEPL were confirmed only on the assumption and presumption that they might have manufactured and cleared the goods clandestinely - Even though it is accepted the JRD Bangalore has removed the aluminium scrap but no investigation has been carried out, as regards the receipt of such aluminium scrap by the aforesaid manufacturers and manufacture of goods out of said scrap. Therefore, in the absence of any investigation and evidence regarding receipt, manufacture and clearance of goods by the appellant, the demand was rightly set aside by the Commissioner (Appeals) - demand set aside - appeal rejected - decided in favor of assessee.
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2017 (5) TMI 611
Penalty u/s 11AC - suppression of fact on the part of the respondent - case of Revenue is that appellant have sold the goods on higher MRP as compared to the MRP considered at the time of the clearance of the goods therefore this was very much known to the respondent - Held that: - differential duty escaped from payment only due to revision of MRP in respect of stock lying at branches. The change of MRP is not with malafide intention to evade/avoid payment of duty whereas the same is under a practice prevailing in the case of the consumer goods therefore there is no suppression of facts or malafide intention of the respondent - after paying duty alongwith interest admittedly their case was suppose to be settled u/s 11A(2B) and no SCN should have been issued - appeal dismissed - decided against Revenue.
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2017 (5) TMI 610
Clandestine removal - computer systems and allied products - job-work - demand on the grounds that the appellant had manufactured and cleared computer systems in the guise of trading of bought out items and evaded payment of duty - Held that: - The salient features of the contract entered into between M/s. Everonn and the appellant specifically mandates that the latter should supply computers/equipment and installing the softwares as per the specifications mentioned in Schedule thereunder at the locations as per the address list attached - It therefore clearly emerges that the appellant was fully in the knowledge that they were supplying completed computer systems and that such complete systems were required to be supplied to the schools. We, therefore cannot digest why appellants, at this stage, are taking resort to the plea that they had not supplied such complete systems or that they had only manufactured CPU. There is no hesitation in holding that the appellant was indubitably supplying completed computer systems as per the contract enjoined on them. This being so, whether the complete computer system was assembled by him after procuring the required components, peripherals and accessories in his own premises or whether he does it at the rented premises at Besant Nagar, Chennai or for that matter even at the schools where he is supposed to supply the systems, will not make any difference to the inevitability that appellant is the manufacturer of these goods. Duty liability cannot be escaped from. The original authority has been generous and considerate in allowing not only Rs.one crore exemption limit of SSI but also has extended cum-duty benefit. In the process, the contract value of ₹ 2,78,80,500/- has been reduced to ₹ 1,61,85,686/- for the purposes of duty levy. Penalty - Held that: - contumacious conduct of the appellant has been exposed, they have attempted to weave a web of deceit with intent to suppress their value of dutiable clearances with intent to evade discharge of required duty liability to the exchequer - Penalty u/s 11AC of the Act is therefore fully justified - for the same reason, the equal penalty u/s 11AC of the Act has been imposed, we set aside the penalty of ₹ 5,00,000/- imposed u/r 173Q of the CER, 1944. Appeal dismissed - decided partly in favor of assessee.
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2017 (5) TMI 609
Shortages of goods - clandestine removal - Polyster Texturised Yarn - demand of duty - penalty - Held that: - The demands are based upon the comparison of computer sheets with the RG -1 and also some of the shortages was arrived at physical verification. The statements of the Assistant Manager Shri Madhusudan Tibrewalla has been relied upon to show that since he had accepted the shortage in case of some of the goods, hence duty is payable - it is not the case of the revenue that the goods were not returned back to Silvassa Unit after jobwork or that the goods were cleared elsewhere without payment of duty. Even the GRN and delivery challans related to processing of goods were not held to be forged or invalid which clearly shows that the goods were indeed jobwork goods. In such case when there is no evidence of goods elsewhere, there is no reason to uphold the demand against Appellant Unit - The absence of challan or documents towards reprocessing cannot be a ground to allege shortages and demand duty - Mere shortages in stocks would not ipso facto lead to demand on account of clandestine removal. No evidence in the form of procurement of any excess raw material, production of goods, clearance and transportation evidence of such alleged short found quantity, receipt of consideration on account of clandestine clearance has been brought on record. Since in the present case no evidence of clandestine removal of goods has been brought on record by supporting corroborative evidences, there is no merit in the impugned order - demand set aside - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 608
Clandestine removal - 187MT of TMT bars - entire demand was raised on the basis of records recovered from one steel broker Sri Umesh Modi and his statement recorded under Section 14 - retraction not accepted on the ground that the same was sent by ordinary post which cannot be considered as retraction properly filed therefore the same cannot be accepted - cross examination denied on the ground that there are various evidences available against the appellant therefore cross examination is of no use - Held that: - The charge of clandestine removal should be established beyond any doubt on the basis of tangible evidences which adjudicating authority failed to prove - there is no inquiry or investigation carried out in the factory premises of the appellant and no incriminating documents were recovered from the premises of the appellant company. In such a situation whatsoever evidences relied upon by the adjudicating authority for confirmation of demand is not sufficient to hold charge of clandestine removal - department could not establish the case of the clandestine removal against the appellant company - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 607
Job-work - N/N. 214/86-CE dt.25.3.1986 - case of Revenue is that it is responsibility of the respondent to ensure that the principal manufacturer/supplier of the goods has compiled with the condition of the N/N. 214/86-CE and they have failed themselves to ensure the same - whether the respondent is liable to pay duty in terms of N/N. 214/86-CE or not? - Held that: - the condition is cast on the supplier/principal manufacturer of the goods, that they have to file undertaking before the Assistant Commissioner or the Deputy Commissioner is having jurisdictional over the factory of the job worker. In the notification, it has been no where mentioned that the job worker is required to ensure to himself before doing job work that the principal manufacturer has filed required undertaking in terms of N/N. 214/86-CE - the principal manufacturer has filed undertaking and paid duty on the job work goods - condition of notification stands complied with - appeal dismissed - decided against Revenue.
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2017 (5) TMI 606
Excess paid duty adjusted towards the duty short paid - provisional assessments - whether the assessee-appellant can be allowed adjustment of short paid duty against excess paid duty during the provisional assessment? - Held that: - the matter is covered by the assessee’s own case decided decided by the Tribunal’s decision in the case of Hindustan Zinc Ltd. vs. CCE, Jaipur [2016 (6) TMI 1093 - CESTAT NEW DELHI], where it was held that When there is provisional assessment, the same is applicable to the entirety of the goods and to arrive at final duty liability, adjustments of duty excess paid to the short payment have to be made - there is no doubt that assessee is entitled to adjustment of the excess paid duty towards short paid duty. Liability of interest - whether assessee is required to pay interest on the differential duty payable which was paid suo moto by the assessee before the finalization of the provisional assessment? - Held that: - decision in the case of CCE Nagpur vs. Ispat Industries Ltd. [2010 (10) TMI 178 - BOMBAY HIGH COURT], relied upon, where it was held that Since differential duty was paid even before the final assessment was made, the Tribunal has held that the respondent assessee is not liable to pay interest - as differential duty has been paid by the assessee before the assessment were finalized, there cannot be any liability of interest against the assessee. Appeal allowed - decided in favor of assessee.
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2017 (5) TMI 605
CENVAT credit - Cough syrup - whether manufacture of cough syrup was governed by Medicinal & Toilet Preparation Law, 1956 disentitling the respondent to avail CENVAT Credit of the duty paid on the fuel used to produce steam meant for ultimate use in manufacture of final products? - Held that: - the goods is question is covered under the Medicinal & Toilet Preparation Act, 1955 and not subject to levy of duty under Central Excise Act, 1944. Accordingly such goods not being excisable goods, it cannot be presumed to be exempted goods, consequently it is out of the purview of the Central Excise Act, 1944 - appeal dismissed - decided against Revenue.
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2017 (5) TMI 604
Transfer of Cenvat credit from one registered unit to another - units merged and credit accounts of two units also merged, where credit balance of one unit before merger was utilised for payment of duty on all finished products - Revenue entertained the view that the cenvat credit in the account of Excel Fibre Division at the time of merger would lapse and the same could not be utilized for payment of duty by the merged entity - Held that: - there is no doubt that the common registration granted by the department covers the premises encompassing both SFD or EFD. The Cenvat Credit Rules contemplate maintenance of a Common Cenvat account for the factory as a whole. When the factory covers both SFD as well as EFD, there can be no objection to maintenance of a common Cenvat account and making payment of Excise Duty for any final product manufactured in the factory. Once the two divisions have a common registration certificate as a single factory, the Cenvat credit accounts, which were maintained separately will need to be merged. After such an event there can be no objection to the SFD making use of the accumulated credit under EFD prior to issue of common Registration certificate - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 603
Reversal of CENVAT credit - Rule 6(3)(b) of the CCR, 2004 - whether reversal of 10% of the price of the exempted product can be considered as 'any other taxes'? - Held that: - applying broadly the proposal of the taxation, cost of the exempted goods needs to be considered as a whole and claim of reduction for 10% of credit towards consumption of the common inputs cannot be upheld as the price of exempted goods is not determined as per provisions of law - the reversal of 10% of the price of the exempted good is not for maintaining separate account of inputs used in the manufacture of exempted and is an option extended and exercised, cannot be held as compulsory exaction of money for the purpose of public. Payment of an amount at the rate of 8% or 10% u/r 6(3)(b) of the CCR, 2004 is not a duty, not a tax and hence cannot be deducted from the price of the exempted goods cleared for by consuming cenvated inputs - appeal allowed - decided in favor of assessee.
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2017 (5) TMI 602
Penalty u/s 11AC - wrongful availment of CENVAT credit - appellant have paid entire duty along with interest before issuance of SCN - Held that: - there is no dispute that duty alongwith interest was paid prior to issue of SCN. But non-payment of duty due to suppression of fact on the part of the appellant as the fact related to non-payment of duty was no disclosed to the department. Accordingly there is suppression of facts - In case of suppression of facts Section 11A(2B) is not applicable therefore penalty was correctly imposable u/s 11AC. As per the Board Circular dated 22-5-2008, the adjudicating authority must give the option contained in first and second proviso to Section 11AC in order-in-original - appellant should be given one opportunity for exercising option of 25% penalty. Matter remanded to the adjudicating authority - appeal allowed by way of remand.
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2017 (5) TMI 601
Shortage of finished goods and raw material - manufacture of MS Ingots and Hot Re rolled product falling under chapter 72 of the Central Excise Tariff Act - the major demand of ₹ 6,46,31,888/- has been made against Appellant on the basis of power consumption in the Appellant unit - principles of natural justice - Held that: - the demands confirmed on the basis of electric consumption cannot be confirmed without considering the submission of the Appellants. The revenue has not considered the electric consumption for setting up of the Unit and rolling mill as well as electricity consumed in ancilliary uses. However no such exercise was undertaken which itself discard the claim of the revenue. The demand of clandestine removal of goods cannot be raised on the basis of power consumption in absence of any positive evidence of clandestine production and removal - the reasons for high consumption of electricity in the case of the appellants factory have not at all been studied and analysed by the Revenue independently. The clandestine manufacture and removal of excisable goods has to be proved viz. by excess receipt of raw material by the Appellant and non-accountal thereof in the statutory records, manufacture of finished goods, labour employed and payment made to them, packing material used and various factors - in the instant case not a single of such evidences was found. Even the department has not taken any step to investigate any such incidence for the very simple reason that nothing of that nature of evidence available - thus, there is no reason to hold that the demand based upon the electricity consumption is sustainable and hence is set aside. As regard other demands, all other demands are also set aside in the absence of corroborative evidence and lack of investigations on some issue. The Adjudicating authority has also disallowed the credit of ₹ 36720/- on cement and the Appellant has not pressed on contesting the said demand. We therefore hold that the demand of ₹ 36720/- is sustainable. The demands made against the Appellant Unit M/s Meenakshi Re-rollers Pvt. Ltd., except cenvat demand of ₹ 36,720/-, are not sustainable - Consequentially penalties imposed against them are also set aside - Since we have set aside the above duty demands and penalties against the Appellant company, the penalty imposed upon the Director, Shri Nikhil Bansal does not sustain, hence the said penalty is also set aside. Appeal allowed - decided in favor of assessee.
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2017 (5) TMI 600
CENVAT credit - input service - GTA service - Held that: - When appellant has sold the goods on FOR basis GTA services are part of inputs as defined u/r 2(l) of CCR, 2004 - reliance also placed in the case of CCE Vs. Parth Poly Wooven Pvt. Ltd. [2011 (4) TMI 975 - GUJARAT HIGH COURT], where it was held that the outward transport service used by the manufacturers for transportation of finished goods from the place of removal upto the premises of the purchaser is covered within the definition of “input service” provided in Rule 2(l) of the CCR, 2004 - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 599
CENVAT credit - distribution of Input Service Tax credit which was attributable to Services used in a Unit exclusively engaged in manufacture of exempted goods - N/N. 50/2003-CE dated 10/06/2003 - Held that: - Clause (b) of Rule 7 of the CCR, 2004 that existed during material time provided that such Cenvat credit of Service Tax paid was not admissible to be distributed which was exclusively used in unit engaged in the manufacture of exempted goods - The said SCN nowhere established that the Cenvat credit which was proposed to be recovered was used in a unit exclusively engaged in manufacture of exempted goods. It is admitted that the Services such as Advertisement Service & Sales Promotion Services, were utilized in Corporate Office, Kaushambi, Ghaziabad - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 598
Clandestine manufacture and removal - manufacture of of automatic data processing machines - it was alleged that IDS had manufactured and cleared computer systems without payment of duty in the guise of trading activity by issuing trading invoices and splitting the value into different categories and adopting such other practices to show as if it was a trading activity - case of appellant was that they have bought out computer systems and merely added peripherals and software which does not amount to manufacture to it and instead amounts to trading. Held that: - appellants obviously were following an ingenious modus operandi of camouflaging their manufacturing activities in the guise of trading. In the process, they were issuing split invoices purporting to be parts and components of computer systems while actually clearing fully assembled workable computer systems which they subsequently installed at the premises of their customers. Thus a fraud was perpetuated by the appellant to deprive the exchequer of duty liability amounting to ₹ 38,21,398/- as worked out in respect of 397 computer systems. The modus operandi has been corroborated in the statement of Shri R. Balakrishnan, then General Manager of the appellant (second appellant herein) wherein he admitted in his voluntary statement dt. 25.01.1995 that they were clearing fully assembled workable computer systems to the customers against orders, but, however, splitting the orders while issuing invoices as per instructions of company Directors - none of the customers or officials of the appellant from whose statements have been recorded have subsequently retracted their say. The activity carried out by the main appellant is nothing but manufacture of computer systems on which duty at applicable rate is very much liable to be discharged. We therefore find no infirmity with the findings of the adjudicating authority on this score. In the event, no merit is found in the appeals with respect to duty demand of ₹ 38,21,398/- on Integrated Data Systems. Penalties - Held that: - The imposition of penalty should always be proportionate and commensurate with the acts of omission and commissions of the persons concerned and should also have some bearing on the quantum of duty or tax that has been short paid or not paid on account of such acts of omission and commissions - we set aside penalties imposed by the de novo adjudicating authority in the impugned order against the appellant herein and restore the level of penalties to the extent imposed in the first round of adjudication namely to ₹ 10,00,000/- on IDS and ₹ 50,000/- on Shri R. Balakrishnan (second appellant herein). Appeal allowed - decided partly in favor of appellant.
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2017 (5) TMI 597
Non-application of law in its letter and spirit - valuation - removal on stock transfer basis to their depots / consignment sales agents (CSAs) across the country - place of removal - It appeared to the department that appellants were clearing polystyrene to certain depots/CSAs by adopting a price lower than the price prevailing at the depot on the day of clearances from the factory - Held that: - the periods covered in this appeal have undergone different phases of law in respect of method of valuation to be followed and the concept of "place of removal" thereof - the adjudicating authority has not analysed the contentious issues with respect to changes in law that were effected on at least two occasions during the entire period of dispute. While the period of disputes starts from 09/1999, the adjudicating authority has considered the law only from 01-07-2000 when Section 4 of the Central Excise Act was substituted vide Finance Act, 2000 - Although there is some discussion on provision of law prior to 01-07-2000 in para-25 of the order, however, the authority has only made a passing reference thereof and has not analyzed the applicability thereof and to what extent, to the disputed period prior to 01-07-2000. There is legal infirmity in the impugned order due to non-application of law in its letter and spirit - matter remanded for de novo consideration by original authority who will threadbare examine the material facts and considering the pleadings of the appellant, both on fact and law shall test the evidence and apply relevant law, to pass appropriate order recording reason of its decision - appeal allowed by way of remand.
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2017 (5) TMI 596
Rectification of Mistake - SSI benefit under N/N. 08/2003 dated 01.03.2003 - scope of Rural area - Held that: - The SCN was issued by the Department stating that the villages Thummaluru (Appeal No.E/2609/2010) and Maheswaram (Appeal No.E/2614/2010) are included in the GO No.274 dated 20.04.2007 where by these villages are added to the jurisdiction of HUDA. That therefore, these villages ceased to be rural area and that therefore appellants cannot claim the benefit of N/N. 8/2003. The Schedule produced by the appellant/assessee has serial Nos. 1 to 184 and therefore serial No. 561 to 600. The pages in between has conveniently not been produced by the appellant/assessee. The Tribunal relied upon incomplete documents. The missing pages are now brought to the notice of the Tribunal. Therefore, there is an error apparent on the face of record which need rectification - after notification by HUDA the appellant has not produce any revenue records/documents to establish that these villages are still in rural area. Further without producing the relevant pages the appellant ought not to have put forward the argument that they are not included in the Schedule to HUDA. There is an error in the impugned Final Order in both the appeals - ROM allowed.
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CST, VAT & Sales Tax
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2017 (5) TMI 592
Classification - fruit juice based drink known as ‘Appy Fizz’ - The appellant was classifying the product as fruit juice based drink under Entry 71 of the notification issued under Section 6(1)(d) of Act, 2003 till 2007 and was paying @ 12.5% VAT - the Committee of Joint Commissioner passed the clarification order dated 6th November, 2015 classifying the product as ‘aerated branded soft drinks', at the rate of 20% - What is interrelation between Section 6(1)(a) and Section 6(1)(d) of Act, 2003? - Held that: - Applicability of the power of State to issue notification under Section 6(1)(d) arises only when goods were not covered by Section 6(1)(a). Fruit juice based drinks, thus, were never treated as 'aerated branded soft drinks' which was the understanding of State of Kerala while issuing notification under Section 6(1(d). Had fruit juice based drinks were also to be covered by aerated branded soft drinks, there was no occasion for subordinate legislative authority, i.e., the State Government, to include such products in notification under Section 6(1)(d). What is scope and ambit of Item 5 of Entry 71 as amended? - Held that: - A bare perusal of Entry 71 as above indicates that the Entry covers nonalcoholic beverages and their powders, concentrates and tablets in any form including Item No.2 contains fruit juice, fruit concentrates, fruit squash, fruit syrup and pulp and fruit cordial - the Entry of fruit juice based drinks got subsumed in the residuary entry and the amendment by S.R.O. No.119 of 2008 did not change or affect the character and content of the products which were included in Entry 71. Whether common parlance test is the only test to be applied for understanding the different entries under Section 6(1)(a) and Section 6(1)(d)? - Held that: - the Entry 2 under Section 6(1)(a) uses the word 'aerated'. This is scientific term and has been repeatedly used in different statutes including the Central Excise Tariff and different HSN codes also uses the term 'aerated'. The word 'aerated' is scientific and technical word used under different statutes and the scientific and technical meaning of the word 'aerated' can be looked into for finding out the real import of the Entry - common parlance and commercial parlance test was not the only test which could have been applied for interpreting the entries in items mentioned in Section 6(1)(a) and the entries which contain scientific and technical word were also to be looked into in technical and scientific meaning. Both the High Court and the Committee of Joint Commissioners discarded the evidence of technical and scientific meaning of word - The appellant has rightly relied on the technical evidence brought on the record which indicate that use of carbon dioxide to the extent of 0.6 per cent was only for the purpose of preservative in packaging the commodities and the product was thermally processed and carbon dioxide was added to as the preservative. Principle of 'Noscitur a Sociis' - Held that: - Applying the principle of construction of 'noscitur a sociis' on Entry 71, it is clear that clause 5 of Entry 71 has to take colour and meaning from the other items included in Entry 71. Item 5 of Entry 71 uses the words “similar other products not specifically mentioned under any other entry in this list or any other schedule”. Thus, the products which are to be covered under Item No.5 are similar other products - When Item No.2 of the Entry 71 that is fruit juice, fruit concentrates, fruit squash, fruit syrup and pulp, and fruit cordial and item No.4 that is health drinks of all varieties, are kept in mind the fruit juice based drink shall fall in Item No.5. Both High Court and Committee of Commissioners overlooked this principle while interpreting item No.5 of Entry 71. Whether the Division Bench of Kerala High Court in M/s. Trade Lines [2014 (11) TMI 1045 - KERALA HIGH COURT] can preclude the Committee of Joint Commissioners to examine the materials filed by the appellant along with Clarification Application under Section 94? - Held that: - the judgment of the Division Bench of Kerala High Court in M/s. Trade Lines did not conclude the issue and the Committee of Commissioners was not absolved from its duty of deciding the same in accordance with the materials brought on the record by the appellant and although the Committee noticed all the pleadings and contentions but mainly relying on the ruling of M/s. Trade Lines dismissed the clarification application which cannot be sustained. Whether CESTAT decision in the case of COMMISSIONER OF C. EX., BHOPAL Versus PARLE AGRO PVT. LTD. [2008 (3) TMI 67 - CESTAT NEW DELHI], has any relevance with regard to the classification of product in question? - Held that: - the CESTAT did not hold the product to be under the “aerated water” was a factor which necessitated a more deeper consideration by the High Court to find out as to whether the product is 'aerated branded soft drink' or not. The High Court in its judgment found that since the product charged with air or carbon dioxide was an aerated drink. From the manufacturing process which was on the record, it is clear that carbon dioxide to the extent of 0.6 percent was added as preservative. Technical note submitted on behalf of the appellant clearly mentioned that use of carbon dioxide was only as a preservative of 'Appy Fizz'. Whether decision and opinion of Food Safety Authorities on the product in question were relevant? - Whether the Committee of Joint Commissioners as well as the High Court has rightly discarded technical and expert opinion relied by the appellant? - Held that: - Before the Committee of Commissioners the entire process of manufacture of the product was explained along with all relevant orders and certificates of Food Safety Authorities. It was stated that the Experts in their opinions and certifications have mentioned that product is commercially and technically distinct from products which have classified as 'aerated branded soft drinks'. The certifications which were relied by the appellant indicate that in the case of 'Appy Fizz' the product does not undergo aeration or carbonation; the product is thermally processed with CO2 which help in preserving the Apple Juice concentrate which is otherwise perishable in nature - Revenue has not filed any material on the record either before the Clarification Authority or before the High Court in support of its view that product is covered under Section 6(1)(a) that is 'aerated branded soft drink'. This Court in several cases has observed that onus to prove that particular goods fall in particular tariff item is on the Revenue. - It is thus concluded that orders of Food Safety Authority and expert opinion regarding process of manufacture relied by the appellant were relevant materials and Clarification Authority and High Court erred in law in discarding these materials. Appeal disposed off - decided partly in favor of appellant.
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2017 (5) TMI 591
Interest on delayed refund - shortfall of interest in the refunds - relevant date for calculation of interest - The difference in the calculation is because the DT&T has worked out the interest only from 5th April 2016 i.e. the date of the dismissal of its SLPs by the Supreme Court - Held that: - interest should be paid on the refund amounts due from the date of the making of the claim for refund i.e. 30th April 2013 - the interest due to the Petitioner for both AYs will be re-worked by the DT&T, for the period from 30th April 2013 upto 29th April 2017 - petition allowed - decided in favor of petitioner.
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2017 (5) TMI 590
Jurisdiction of VATO - refund claims - re-opening of the assessments - time limitation - Held that: - This court in several judgments including Swarn Darshan Impex (P) Ltd. v. Commissioner, Value Added Tax [2010 (6) TMI 725 - DELHI HIGH COURT] emphasized that the pendency of a refund application should not be viewed by the Department as an opportunity to create a fresh demand particularly if the time limits not only for making the refund but even for re-opening the assessments of previous years has long been crossed - The entire exercise indulged in by the VATO as above at the stage of refund is wholly without the authority of law. The re-opening of the assessments of earlier periods is time-barred and not in accordance with the procedure set out for that purpose under the DVAT Act. The Court therefore directs that the refund amount in the sum of ₹ 1,97,494/- together with interest payable thereon under Section 42 of the DVAT Act shall be directly paid into the account of the Petitioner by the Respondent DVAT Department - petition allowed - decided in favor of petitioner.
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Indian Laws
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2017 (5) TMI 587
Bouncing of cheques - offence committed under Section 138 of NI Act - memos indicating reasons for return to be “account blocked” - Held that:- The view taken by the Metropolitan Magistrate in the two complaint cases cannot be faulted. The provision contained in Section 138 of the N.I. Act makes it clear that it is not every return of a cheque unpaid which leads to prosecution of an offence under the said provision of law. For such purposes, the cheque must have been returned “unpaid” either because the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank. The bank which returned the cheques unpaid had made it clear that the accounts had been blocked. It is clear that the complainant itself was aware that the accounts had been frozen in terms of directions by some statutory authority. In these circumstances, the reasons for return of the cheques unpaid being not what is envisaged in Section 138 of the N.I. Act, these petitions are devoid of merit and, therefore, dismissed.
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