Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 26, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
News
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Levy of IGST on warehoused goods - the supply of goods before their clearance from the warehouse would not be subject to the levy of integrated tax and the same would be levied and collected only when the warehoused goods are cleared for home consumption from the customs bonded warehouse - Applicable w.e.f. 1.4.2018
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Inter-state trade - purchase of high speed diesel in the course of manufacturing of cement - C-Form - Chhattisgarh Value Added Tax Act, 2005 - situation post GST-implementation. - the operation of the CST Act, 1956 is kept intact even after the enactment of the CGST Act, 2017 with effect from 1-7-2017- HC
Income Tax
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Scope of the scrutiny assessment u/s 143(3) - The circulars relied on by the petitioner have no application to the facts of this case and the same would apply only in cases where the assessing officer needs to take the case of the assessee for a comprehensive scrutiny on a finding that there is potential escapement of income on other issues. - HC
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Exemption u/s 11 - charitable purpose u/s 2(15) - the transport activities of the assessee trust are not in the nature of business, inasmuch as the transport is also incidental to the attainment of the main object of the trust of the education - AT
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Application of section 40(a)(ia) - payment made without TDS - the payee has declared the income in his ITR - penalty can be levied on assessee but no disallowance of the expenditure can be made u/s.40(a)(ia) - AT
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Expenses towards mount paid on out of court settlement on behalf of subsidiary company - assessee paid the amount on behalf of the subsidiary company and thus incurred an expenditure - assessee has not acquired any capital asset - AT
Customs
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Customs Tariff Tables updated as per the notification - Seeks to increase tariff rate of basic customs duty (BCD) on Walnuts in shell [0802 31 00 ] from 30% to 100% and increase tariff rate of basic customs duty (BCD) on Protein concentrates and textured protein substances [2106 10 00] from 30% to 40%
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Customs Audit Regulations, 2018 - Proper officer make take the assistance of a professional like Chartered Accountant, Cost Accountant, an expert in the field of computer sciences or information technology etc.
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Customs Audit Regulations, 2018 - Audit may be conducted at the premises an auditee or in the office of proper officer - Auditee may be an Importer or Exporter or custodian or licensee of a warehouse etc.
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Customs Audit Regulations, 2018 - Selection of Importer or Exporter or custodian or licensee of a warehouse etc. or declaration made for Import or Export to the selected for audit based on risk evaluation through appropriate selectivity criteria.
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Customs Audit Regulations, 2018 - Importer or Exporter or custodian or licensee of a warehouse etc. are required to preserve for a minimum period of five years and make available relevant documents on request, when required.
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Duties of customs on import of Protein concentrates and textured protein substances - Benefit of reduced rate of duty withdrawn.
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Levy of customs duty on import of wheat - rate of duty increased from 20% to 30%
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Duty of customs on import of OTHER NUTS, FRESH OR DRIED - Almonds in Shelled falling under the heading 0802 12 00 - Benefit of reduced rate withdrawn
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Violation of import conditions - DEEC license - once the percentage is fixed by the notification, mere fact that the one manufacturer may use more inputs and the another manufacturer use less inputs in terms of the norms prescribed is irrelevant as long as conditions of the notification are fulfilled - AT
Service Tax
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Reversal of Cenvat Credit - The Appellant is collecting the fee and then remitting it to the IGNOU - The whole consideration received by the Appellant is value of exempted service and the computation of 5/6% shall be made on such value - AT
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BAS - Job-work - process of lamination of solar cells - The job work activity carried out by the respondents will only have to be considered as amounting to ‘manufacture’, hence same cannot be again considered as ‘Business Auxiliary Service‟ - AT
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Technical Testing and Analysis Services - the testing done by TWAD is a statutory duty - it cannot be said that the testing is done for the contractor and that a service is rendered to him. The testing fee therefore does not take the colour or character of ‘consideration’ - AT
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Manpower Recruitment or Supply Agency service - the assessee cannot be said to be a commercial concern engaged in providing such specified services to a client - demand do not sustain - AT
Central Excise
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Valuation - inclusions - whether value of depreciation on technical know-how and the royalty paid to Directors of the assessee have to be included in the assessable value of the goods cleared by them? - No effort has been made in the show cause notice for amortization of the cost of die and development charges toward the final product cleared by the appellant. Therefore, the show cause notice is defective. - AT
Case Laws:
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GST
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2018 (5) TMI 1494
Inter-state trade - purchase of high speed diesel in the course of manufacturing of cement - C-Form - Chhattisgarh Value Added Tax Act, 2005 - situation post GST-implementation. Whether the petitioner is entitled to be issued C-Form under the Central Sales Tax Act, 1956 read with the Central Sales Tax (Registration and Turnover) Rules, 1957 in respect of high speed diesel purchased by it in the course of inter-State trade and used by it in the course of manufacturing of cement, after the promulgation of the Central Goods and Services Tax Act, 2017 with effect from 1-7-2017? Held that: - the declaration (C Forms) are required by the registered dealer to purchase goods from other States at concessional tax rate under the CST Act, 1956. C Form is prescribed under Rule 12(1) of the Rules of 1957 as a declaration form for the purpose as specified under Section 8(4) of the CST Act, 1956 and if the registered dealer fails to procure C Form from the respondents / State and thereafter, do not provide C Form to the supplier/seller of another State, then the registered dealer is being exposed to high tax rate imposable on inter-State goods purchases which is much higher as compared to the 2% rate of tax prescribed under the CST. If the declaration C Form is not provided to the sellers of other States, this will lead to increase in the cost of goods being purchased. The CGST Act, 2017 and the Chhattisgarh GST Act, 2017, both have been introduced with effect from 1-7-2017 by the effect of which the statutes which were imposing indirect taxes were repealed and the only indirect taxes that prevailed are the Central GST and the State GST - Section 174 of the CGST Act, 2017 contains a provision pertaining to repeal and saving. It is pertinent to notice that Section 174 of the CGST Act, 2017 does not include the CST Act, 1956 for the purpose of repealing and as such, the operation of the CST Act, 1956 is kept intact even after the enactment of the CGST Act, 2017 with effect from 1-7-2017. The Chhattisgarh Value Added Tax Act, 2005 has not been repealed qua the items specified under the amended Entry 54 of the State List of the Seventh Schedule to the Constitution, whereby high speed diesel is included. After the promulgation of the CGST Act, 2017 and the State Act, the items mentioned in the amended Entry 54 of the State List of the Seventh Schedule to the Constitution are governed by the CST Act, 1956, as no notification has been issued even under Section 9(2) of the CGST Act, 2017 by the Central Government or by the State Government under Section 9(2) of the Chhattisgarh GST Act, 2017, on the recommendation of the GST Council, therefore, the inter- State trade of high speed diesel would be governed by the CST Act, 1956 and the petitioner is entitled to make inter-State purchases of high speed diesel from other States as before and his registration certificate under the CST Act, 1956 and the rules made thereunder still holds the field and is valid. The petitioner is a registered dealer under the provisions of the CST Act, 1956 read with the Rules of 1957 and his registration certificate under the CST Act, 1956 read with the Rules of 1957 continues to be valid for the purpose of inter-State sale and purchase of high speed diesel despite the petitioner having been migrated to the GST regime with effect from 1-7-2017, as the definition of goods as defined in Section 2(d) of the CST Act, 1956 has been amended prior to coming into force of the CGST Act, 2017 from 1-7-2017 which includes high speed diesel - the respondents shall be liable and are directed to issue C-Form to the petitioner in respect of high speed diesel to be purchased by the petitioner and used in the course of manufacture of cement and for that, it is further directed to rectify and remove the error on their official website and entertain the petitioner's application submitted on-line on the official website seeking issuance of C Form to the petitioner for said goods. Petition allowed.
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Income Tax
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2018 (5) TMI 1492
Scope of the scrutiny assessment - Jurisdiction to assess the income u/s 143(3) as per the CBDT circular - Whether the funds received in the form of share premium are from disclosed sources - additions u/s 56(2)(viib) - the issue whether the funds received by a company in the form of share premium have been correctly offered for tax has to be determined and assessed in accordance with the said provision. - Held that:- the assessee cannot be heard to contend that the AO has exceeded its jurisdiction in the matter of passing the order merely for the reason that the funds received by them in the form of share premium have been assessed u/s 56(2)(viib) The circulars relied on by the petitioner have no application to the facts of this case and the same would apply only in cases where the assessing officer needs to take the case of the assessee for a comprehensive scrutiny on a finding that there is potential escapement of income on other issues. - thus the writ petition is without merits and the same is dismissed - Decided against the assessee.
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2018 (5) TMI 1491
Stay of recovery of demand - Taxation of unexplained cash credits u/s 68 - whether assessee is entitled for exemption u/s 80P - the assessee has has credited in their books of account cash receipts and despite of several notices, the assessee has not divulged the source thereof - Held that:- if the asessee divulged the sources of the cash credits referred to by the assessing officer when called for, a situation of this nature would not have arisen - if the assessee is compelled to pay 50% of the demand as ordered by the appellate authority, the business of the assessee is likely to be crippled and in that event, the customers of the petitioner including their depositors would also suffer - thus assessee to pay 20% of the demand in 6 equal monthly instalments - decided partly in favor of assessee
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2018 (5) TMI 1490
Revision u/s 263 - doctrine of merger - Whether the purchases were bogus - Held that:- The entire issue was at large before the Appellate Commissioner. It is well known that the Commissioner (Appeals) while hearing the assessee's appeal has powers to even enhance the assessment. If he was of the opinion that not only limited additions made by the Assessing Officer but much larger additions were justified, he could have certainly exercised such powers, of course after putting the assessee to notice. The provisions thus statutorily recognizes the principle of merger and avoids any conflict of opinion between two quasi judicial authorities of the same rank. - Decision in the case of Nirma Chemicals Works P. Ltd. (2008 (2) TMI 373 - GUJARAT HIGH COURT) followed. When we therefore hold that the Commissioner had no jurisdiction to exercise revisional powers, asking the petitioner to submit to said impugned notice does not arise. - notice is therefore set aside - decided in favor of assessee.
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2018 (5) TMI 1489
Reopening the assessment u/s 147 after processing of return u/s 143 - assessee is a broker and has made Client Code Modification [CCM] - normally a broker charges 0.5% to 1% of losses/profits - as per AO CCM were not genuine and from which the assessee would have earned sizeable unaccounted income as a broker - Held that:- the reasons recorded by the AO does not lack validity and AO have reason to form belief that income chargeable to tax had escaped assessment - thus the issue on reassessment are kept open - decided against the assessee
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2018 (5) TMI 1488
Disallowance of Employees Contribution to PF & ESI u/s 36(1)(va) - Held that:- no disallowance can be made towards PF/ESI contributions made by the assessee within the FY or before filing of the return - here the assessee has remitted the employees contribution to PF & ESI before the filing of the return u/s 139(1) - thus the assessee was entitled to deductions under sections 43B and 36(1)(va) - Decided in favor of assessee.
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2018 (5) TMI 1487
Jurisdiction of ITAT to entertain the appeal against the penalty order u/s 271F - Held that:- in the case of the Citizen Cooperative Society Ltd, Hyderabad vs. DIT (I&CI) [2018 (2) TMI 426 - ITAT HYDERABAD] has observed that, since a penalty order u/s. 271FA is not directly appealable order before this forum, the appeal preferred by assessee is liable to be dismissed. In the course of arguments, assessee's counsel was advised to prefer an appeal before the Ld.CIT(A) as directed by the DIT(I&CI) after levying the penalty in the demand notice. If the order has been passed by the Ld.CIT(A), this forum can entertain the appeal on such an order. Otherwise, assessee can choose to file a Writ Petition before the Hon'ble High Court, as this forum is only a statutory authority constituted under the Income Tax Act and the right of appeal on every order has to be statutorily provided either to the CIT(A) or to the ITAT as the case may be. Since a penalty order u/s. 271FA is not directly appealable order before this forum, the appeal preferred by assessee is liable to be dismissed. - appeals are dismissed.
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2018 (5) TMI 1486
Whether the delay of 1142 days in filing of the appeal before CIT(A) can be condoned - order passed u/s 200A(1) was appealable before 1.6.2015 or not - Held that:- When a case with arguable points is shut on presumptions of limitation, it results in throwing out a good case at the threshold with only a necessary implication of justice being propagated and justice being denied. - the delay in filing of appeal before CIT(A) is to be condoned in the interest of justice - the issue is to be considered on merits in accordance with law and after providing reasonable opportunity of being heard to the assessee - allowed for statistical purposes
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2018 (5) TMI 1485
Applicability of section 13(1)(b) - claim for the benefit of exemption u/s 11 & 12 - trust created for the benefit of a particular religious community - Held that:- as per decision in case of CIT vs Dawoodi Bohara Jamat [2014 (3) TMI 652 - SUPREME COURT] - It is only the objects of a trust as declared in the trust deed which would govern its right of exemption u/s 11 or 12 - thus the case is remitted back to the authority to consider the law on subject - matter remanded back - appeal of the assessee is allowed for statistical purposes
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2018 (5) TMI 1484
Deposits in the bank accounts by both cheques and cash - unexplained cash income U/s 68 - cheque deposits were accepted as business turnover u/s 44AD - none appeared on behalf of assessee - appeal by the CIT(A) was also determined ex-parte - Held that:- there is no reason why the cash deposits should be assessed u/s 68 when cheque deposits were accepted as business turnover - assessee has not co-operated in the proceedings - order of CIT(A) is confirmed - appeal of revenue is dismissed - decided against the assessee.
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2018 (5) TMI 1482
Exemption u/s 11 - charitable purpose u/s 2(15) - Whether or not the activity of running school buses exclusively for the facility of the students and staff, is an intrinsic part of the activity of running a school? - Held that:- the transport facility is not provided to the outsider - the transport activities of the assessee trust are not in the nature of business, inasmuch as the transport is also incidental to the attainment of the main object of the trust of the education - thus section 11(4A) does not apply - decided in favor of assessee
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2018 (5) TMI 1481
Application of section 40(a)(ia) - additions made for expense common area maintenance and rent for non deduction of TDS - Held that:- if a person furnishes a declaration in writing in prescribed Form and verified in the prescribed manner to the effect that tax on his estimated total income is to be included in computing his total income will be nil there is no need to deduct tax - here assessee has not filed such Form 26A with Director General of Income Tax (Systems) or his authorised persons - thus penalty can be levied on assessee but no disallowance of the expenditure can be made u/s.40(a)(ia) - decided in favor of assessee.
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2018 (5) TMI 1480
Disallowance of bad debts due to failure of rental payments - disallowance of amount paid on out of court settlement by the assessee on behalf of the subsidiary company - set off and carry forward of unabsorbed depreciation- Held that:- assessee is a NBFC and was advancing loans to its customer as one of its objects - the decision of the assessee to write off ₹ 4. 71 crores was a commercial/business decision - The AO cannot question the business prudence of an assessee - thus the transaction is a business transaction and therefore loss suffered by the assessee has to be allowed as deduction u/s 36 - decided in favor of assessee. Amount paid on out of court settlement on behalf of subsidiary company - Held that:- assessee paid the amount on behalf of the subsidiary company and thus incurred an expenditure - assessee has not acquired any capital asset - relying upon the case of Madras Auto Services Private Ltd [1998 (8) TMI 1 - SUPREME COURT] - decided in favor of assessee Unabsorbed depreciation - Held that:- As per the decision of Gujarat High Court in General Motors India Pvt. Ltd. v. Deputy CIT reported in [2012 (8) TMI 714 - GUJARAT HIGH COURT] - any unabsorbed depreciation would be dealt with in accordance with the provisions of section 32(2) - thus the amount of business loss and unabsorbed depreciation to be carried forward for the set of against income of the subsequent years - decided in favor of assessee.
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Customs
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2018 (5) TMI 1479
Violation of import conditions - DEEC license - It is detected that the appellant had consumed lesser quantity than the prescribed under the standard norms for manufacture of their export product and as a result the quantity of inputs imported duty free saved in the process - Confiscation - redemption fine - penalties - Held that: - Hon'ble Bombay High Court in their own case ARKEMA CATALYST INDIA PVT. LTD. VERSUS UNION OF INDIA [2009 (10) TMI 630 - BOMBAY HIGH COURT] in identical issue has held that once the percentage is fixed by the notification, mere fact that the one manufacturer may use more inputs and the another manufacturer use less inputs in terms of the norms prescribed is irrelevant as long as conditions of the notification are fulfilled - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1478
100% EOU - violation of import conditions - N/N. 53/97-Cus. Dt.3.6.97 - case of the department is based on the allegation that respondent did not use the imported raw materials for manufacture of final products, but removed them 'as such' which is violation of condition of notification - time limitation. Held that: - the Department was informed that the appellants are not able to use the goods for manufacture of adaptors and chargers as intended by them due to the deterioration of the quality of goods due to long storage. The department had given permission to clear to job worker for redrawing. This itself would show that the goods have become unusable, and have to be considered as rejects/wastes. Thus the allegation that respondents removed the imported goods 'as such' is without basis and not acceptable. Time limitation - Held that: - Respondents have paid duty on clearing the goods in 2003 itself. However, the SCN was issued only in 2006 beyond the normal period alleging suppression - there is no evidence to support the allegation of suppression of facts - In the absence of such evidence, the SCN issued invoking extended period is time barred. Demand cannot sustain - appeal dismissed - decided against Revenue.
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2018 (5) TMI 1477
Valuation - enhancement of value based on contemporaneous imports - no speaking order - Held that: - The basic premise is that since duty was paid on enhanced value after re assessment under Section 17 of the Customs Act, 1962, there is no question of challenging the same - it is found that the appellants have filed appeals within statutory period against all the impugned bills of entry before the Ld. Commissioner (Appeals) challenging the said assessment orders on the bills of entry - no speaking orders on reassessments made were issued as is the requirement under Section 17 (5) of the Customs Act, 1962. It is the contention of the Ld. Advocate for the appellant that since they did not agree with the assessment order enhancing the value, therefore, the appeals have been filed before the Ld. Commissioner (Appeals). In the case of Gateway and Commodities Pvt. Ltd. [2014 (1) TMI 1729 - CALCUTTA HIGH COURT], Hon'ble High Court of Calcutta has held that it is the statutory responsibility of the assessing officer to issue reassessment order within 15 days of the re-assessment of bills of entry. Hon'ble Court also held that payment of duty by the importer on such re assessment cannot be a ground for non-issuance of the order of reassessment. The impugned matters are remanded back to the Adjudicating Authority to decide the issue on merit - appeal allowed by way of remand.
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2018 (5) TMI 1476
Refund claim - case of Revenue is that no refund could be sanctioned unless the incorrect assessments were modified in appeal on the basis of the CBEC Circular No.24/2004-Cus dt. 18/03/2004 - case of appellant is that that the Commissioner(Appeals) has wrongly held that the assessment carried out by the Department was accepted in toto by the appellant and once the assessment is accepted, the appellant has no cause of action to challenge the said assessment and the Commissioner (Appeals) has no jurisdiction in such matters. Held that: - case is remanded back to the Commissioner(Appeals) to decide the same on merit on the basis of the documents which may be produced by the assessee in support of his submission - appeal allowed by way of remand.
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2018 (5) TMI 1475
Mutilation of goods - scrap imported - Held that: - in view of the principles of law settled by this Tribunal in DEWAN STEEL INDUSTRIES VERSUS COMMISSIONER OF CUSTOMS, AMRITSAR [2008 (2) TMI 128 - CESTAT, NEW DELHI], where under this Tribunal has directed clearance of imported goods after mutilation and conversion into scrap. It is directed that before clearance of the imported scrap, the same could be mutilated and allowed to be cleared as scrap at the cost of the appellant - appeal allowed.
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Service Tax
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2018 (5) TMI 1483
Commercial Concern or not - Whether the services provided with the objective of awareness of the preservation of historic buildings of the town and domestic architecture are commercial in nature - Held that:- the agreement furnished by the assessee shows that they had no profit motive and cannot fall under the nature of a commercial concern - thus no tax along with interest penalties and penalties shall be imposed - thus the demand cannot sustain - Decided in favor of assessee.
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2018 (5) TMI 1474
Declaration made under Voluntary Compliance Entitlement Scheme - rejection on the ground that they have not submitted the amended declaration in accordance with the procedure prescribed in Circular No.170/5/2013-ST dated 8.8.2013 - Held that: - As per the said circular, in a case where a mistake is discovered in the declaration by the declarant, he has to approach the designated authority who, after taking into account the over all facts of the case, may allow amendments to be made in the declaration provided that the amended declaration is furnished by the declarant on or before 31.12.2013. The Scheme is one brought into force in terms of the provisions contained in the Finance Act, 2013. The Finance Act, 2013 does not deal with the amendments to be made to the declaration provided for under the Scheme. It is in terms of Circular No.170/05/2013-ST dated 8.8.2013, tax payers were permitted to amend the declaration without changing the date of payment. Insofar as the Finance Act, 2013, does not deal with the amendment of the declaration made under the Scheme - denial of the benefits of the Scheme to the petitioner merely for the reason that the petitioner has not furnished the amended declaration within the time stipulated in terms of the Circular is unjust, unfair and unreasonable. The first respondent is directed to consider whether the petitioner has paid the service tax payable in terms of the Scheme within the time stipulated and if found so, extend them the benefits of the Scheme - petition allowed.
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2018 (5) TMI 1473
Extended period of limitation - terminal handling charges - Held that: - even the department was under total confusion as to how these charges fall under BAS. Nothing with clarity is coming out neither from the show cause notice nor from the adjudication order - the Commissioner (Appeals) has rightly set aside the demand for the extended period - appeal dismissed - decided against Revenue.
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2018 (5) TMI 1472
Business Auxiliary Service - incentive / commission received from insurance companies for arranging overseas mediclaim policy for the clients - incentive received from CRS AMADEUS for booking air tickets - income from airlines towards cancellation of tickets. Incentive received for use of AMADEUS software - extended period of limitation - Held that: - the issue was under litigation and highly contentious, invocation of extended period do not sustain - the penalties on this count also cannot sustain - demand with penalties set aside. Incentive / commission received from insurance companies for arranging overseas mediclaim policy for the clients - Held that: - the said commission would be promotion of business of the insurance companies and therefore would rightly fall under BAS - taking into consideration that the appellant had bonafide belief that as per Board clarification, they would not be liable to pay and the same would be subject to levy only under insurance auxiliary service, the penalties imposed requires to be set aside - demand upheld - penalty set aside. Income from airlines towards cancellation of tickets - Held that: - the issue stands covered by the decision in the case of Sharma Travels [2008 (8) TMI 102 - CESTAT NEW DELHI], where it was held that it is established that the Respondent had not passed the incidence of tax to any other person. Commissioner (Appeals) rightly set aside the demand of duty - demand set aside. Tour Operator Service - charges towards delivery and handing over of tickets together with itinerary and such handing over charges - Held that: - It is not brought out from records that the appellant is engaged in tour operator service. Merely booking of tickets and collecting charges for handing over the tickets would not amount to tour operator service - demand set aside. Appeal allowed in part.
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2018 (5) TMI 1471
Benefit of abatement - N/N. 1/2006 dated 1.3.2006 - Department was of the view that the respondents are not eligible for the benefit of notification for the reason that they have availed CENVAT credit on input services - Held that: - the respondent has reversed the credit availed - The Hon’ble High Court of Allahabad in the case of Hello Minerals Water (P) Ltd. [2004 (7) TMI 98 - ALLAHABAD HIGH COURT] has held that reversal of Modvat credit amounts to non-taking of credit on the inputs - benefit of notification allowed. Benefit of N/N. 4/2004 dated 31.3.2004 - denial on the ground that they had provided services to units situated at SEZ - Held that: - the respondents are eligible for benefit of N/N. 4/2004. Appeal dismissed - decided against Revenue.
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2018 (5) TMI 1470
Reversal of Cenvat Credit - Refund claim of excess service tax paid - the tax was paid on estimated basis and also due to arithmetical error in making calculation of amount payable under Rule 6 (3) (b) - valuation of services - Held that: - in terms of Section 67 (i) of the Finance Act, 1995 the value of service in case where the provision of service is for a consideration in money shall be the gross amount charged by the service provider for such service provided or to be provided by him. In the present case the services in question has been provided to the students by the Appellant. It is not the case that the students are directly remitting the fee to the IGNOU. The Appellant is collecting the fee and then remitting it to the IGNOU. The agreement between the Appellant and the IGNOU is of revenue sharing. However it does not ipso facto leads to exclusion of said amount remitted to the IGNOU from the purview of the consideration. Hence such amount is part of value of services. The whole consideration received by the Appellant is value of exempted service and the computation of 5/6% shall be made on such value - appeal dismissed - decided against appellant.
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2018 (5) TMI 1469
BAS - Job-work - process of lamination of solar cells - It appeared to the department that the processes undertaken by the respondents do not amount to 'manufacture', in terms of Section 2 (f) of the Central Excise Act, 1944 and the activity is squarely covered under 'Business Auxiliary Service' - benefit of N/N. 8/2005 dt. 1.3.2005. Held that: - it cannot be disputed that respondents receive Photovoltaic Cells from their principal on which they carry out job work, resulting in Photovoltaic Solar Laminate. The product Solar Laminate that emerges after all of these activities is sent to the principal for further processing and completion of Solar Photovoltaic Module - The lower appellate authority has noted that the SCN is limited to the activity of ‘lamination‟, however it is silent on how the lamination does not amount to 'manufacture'. The lower appellate authority arrived at a conclusion that activity “lamination’ for which the job order was given to the respondent by the 100% EOU is in fact, a series of activities to manufacture “Solar PV Laminate’ and that the process amounts to ‘manufacture‟ within the meaning of Section 2(f) of the Central Excise Act, 1944, hence the job work activity will not attract levy of service tax under “Business Auxiliary Service’ as defined in Section 65 (19) of the Finance Act, 1994. We are not able to find any infirmity in these findings of the lower appellate authority. The job work activity carried out by the respondents will only have to be considered as amounting to ‘manufacture’, hence same cannot be again considered as ‘Business Auxiliary Service‟ and service tax cannot be demanded on the activity under BAS - appeal dismissed - decided against Revenue.
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2018 (5) TMI 1468
Business Auxiliary Services - commission received for canvassing advertisement - extended period of limitation - Held that: The issue whether the services are subject to levy of service tax has been considered in the case of Malar Publications [2010 (11) TMI 155 - CESTAT, CHENNAI] wherein it is held that the said activities fall within BAS. Time limitation - Held that: - taking note of the fact that the issue was interpretational and there being no malafide established against the respondent, the order passed by the Commissioner (Appeals) is held to be legal and proper which requires no interference - appeal dismissed - decided against Revenue.
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2018 (5) TMI 1467
Technical Testing and Analysis Services - respondent is a statutory body set up by Government of Tamil Nadu as per the Tamil Nadu Water Supply & Drainage Board Act, 1970 (TWAD Act) created to carryout works related to water and drainage schemes in Tamil Nadu - Board Circular 89/7/2006-ST dt.18/12/2006. Held that: - the testing done by TWAD is a statutory duty and the fees collected is a statutory fees - there is no service provider – service recipient relationship between TWAD and the contractors and as such there is no taxable event - Consideration presupposes a certain level of reciprocity. In the instant case it is TWAD who wants to ensure the quality of the pipes used in the Water Supply and Drainage Schemes floated by them. Therefore it cannot be said that the testing is done for the contractor and that a service is rendered to him. The testing fee therefore does not take the colour or character of ‘consideration’. There is no ‘service’ rendered by TWAD to the contractor and the fees collected is not a consideration that can be subject to levy of service tax under the Finance Act, 1994 - Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1466
Penalty u/s 78 - the appellant had delayed the payment of service tax under reverse charge mechanism but the interest amounting to ₹ 24,87,141/- due thereon had not been discharged by the assesse, at the behest of the department, the appellant later on paid full interest liability on 18.06.2016 - Held that: - when the appellant was asked to pay the interest for delayed payment, the appellant paid interest on the delayed payment. Both the amount of service tax due and interest amount were admittedly made before issuance of show cause notice which was issued 7 months after all dues have been cleared. From the spirit of the Board Instructions dated 08.07.2016, the intention was to encourage voluntary compliance and introduce the consultation process for evading issuance of show cause notice. The situation in the present case is Revenue neutral as the duty was paid under reverse charge mechanism and the Cenvat credit would only be availed by the appellant himself - reliance placed in the case of Modern Woolens vs CCE, Jaipur-II [2016 (11) TMI 1353 - CESTAT NEW DELHI], where it was held that whatever Service tax was required to be paid by the appellant, was available to them as cenvat credit. As such, the entire situation is revenue neutral, in which case, no malafide can be attributable to the appellant. The imposition of penalty under Section 78 is not justified - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1465
Business support services - whether the provision of Refrigeration and Air Cooling facility of chilled water by the appellant to M/s STML for their manufacturing process would be taxable service under the category of "Support Service of Business and Commerce"? - non-speaking order. Held that: - after incorporating the show cause notice and the adjudication order and the submissions made by the appellants in their appeals before the Commissioner (Appeals), the Commissioner (Appeals) has passed a cryptic, non-speaking order without giving any analysis of the legal issues involved in the interpretation of the activity being undertaken by the appellants. In such a situation / where the first appellate authority has given no findings on the issues involved and the order is bereft of any kind of judicial analysis of the submissions made by the appellant before the first appellate authority, it would be in the interest of the justice that the matter is remanded back to Commissioner (Appeals) for de novo consideration. Appeal allowed by way of remand.
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2018 (5) TMI 1464
Manpower Recruitment or Supply Agency service - appellant was providing staff to their different related companies and was recovering certain amount of salary from them - Held that: - the issue is no longer res-integra and is squarely covered by the decision of Hon’ble High Court of Gujarat. In the case of Commissioner of Service Tax Vs. Arvind Mills Limited [2014 (4) TMI 132 - GUJARAT HIGH COURT], where it was held that The definition though provides that Manpower Recruitment Supply Agency means any commercial concern engaged in providing any services directly or indirectly in any manner for recruitment or supply of manpower temporarily or otherwise to a client, in the present case, the respondent cannot be said to be a commercial concern engaged in providing such specified services to a client - demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1463
Liability of service tax - sub-broker - N/N. 25/2004-ST dated 10.09.2004 - Held that: - there is-no infirmity in the impugned order as the Commissioner (Appeals) has considered the relevant Notification issued by the Department and has also considered the precedent decision on the same issue. On an identical issue, this Tribunal in AMH TRADE SERVICE VERSUS COMMISSIONER OF C. EX., CUS. & S.T., CALICUT [2015 (12) TMI 267 - CESTAT BANGALORE] has considered the similar issue and has allowed the appeal of the assessee. The demands in this case on the appellant have arisen on the ground that the appellants have acted as sub-brokers for commodity trading. N/N. 3/2014-S.T. exempts service tax payable on the services provided by an authorized person or sub-broker to the member of a recognized association or a registered association in relation to a forward contract during the period from 10-9-2004 to 30-6-2012. Appeal dismissed - decided against Revenue.
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2018 (5) TMI 1462
Penalty - the appellant had paid the service tax along with interest prior to the issuance of the show-cause notice - Section 73(3) of the Finance Act, 1994 - Held that: - the case of the appellant is squarely covered by Section 73(3) of the Finance Act because after the payment of service tax along with interest before issuance of show-cause notice, he informed the authorities for not issuing the show-cause notice - penalty not warranted - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1460
Refund of service tax paid - input services used in the export of goods - time limitation - even though the refund claim was filed within 6 months from the stipulated date i.e. from the date of the exported goods, but, it was disallowed on the ground that the payment of service tax on reverse charge mechanism was effected on 07.05.2009 - Held that: - the department has not rejected the refund claim and returned the same to the appellant for deficit of document, namely, proof of payment of service tax, after it was filed on 16.3.2016. The refund claim cannot be rejected on the ground of time bar, since, they have complied with the condition of filing the refund claim within 6 months from the date of export of goods for the relevant quarter i.e. from July 2008 to Sept. 2008 - appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (5) TMI 1461
100% EOU - Refund of unutilized CENVAT credit - rejected mainly on the ground that during the period from February 2005 to March 2006, the appellant did not manufacture anything as per the ER-2 return - Held that: - the appellant has manufactured during the said period which he can easily establish before the lower authorities, if the case is remanded back to the original authority - the case needs to be remanded back to the Original Authority with a direction to examine whether the appellant carried out production during the relevant period, by examining the documents which may be produced by the appellant - appeal allowed by way of remand.
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2018 (5) TMI 1459
Refund - maintainability of petition - alternative remedy - Held that: - the petitioner has an alternative remedy of appeal against the impugned order. The narration of facts noticed hereinbefore clearly shows that certain factual matrix is required to be established for which the first appellate authority would be proper forum instead of invoking writ jurisdiction of this Court under Article 226 of the Constitution of India at the first instance. The Apex Court in Commissioner of Income Tax and others vs. Chhabil Dass Agarwal, [2013 (8) TMI 458 - SUPREME COURT], considered the question of entertaining writ petition where alternative statutory remedy was available and it was held that Writ Court ought not to have entertained the Writ Petition filed by the assessee, wherein he has only questioned the correctness or otherwise of the notices issued under Section 148 of the Act, the re-assessment orders passed and the consequential demand notices issued thereon. The writ petitions are disposed of by relegating the petitioners to alternative remedy of appeal against the impugned orders.
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2018 (5) TMI 1458
Demand of penalty u/s 11AC of CEA - CENVAT credit availed wrongly - reversed on being pointed out - Held that: - In a similar matter where the assessee had wrongly availed the Cenvat Credit but immediately reversed it after pointing the mistake by the Revenue, this Tribunal in the matter of Commissioner of C. Ex, Allahabad Vs. Balrampur Chini Mills Ltd. [2013 (7) TMI 567 - CESTAT NEW DELHI] has held that The show cause notice does not attribute any malafide intention to the appellant so as to invoke the penal provisions of Section 11AC. Also, there has to be element supported by evidence to invoke the provisions of Section 11 AC, penalty not warranted. In the present case the appellant had filed ER-1 return for the period in question. The appellant had clearly declared everything in their ER-1 Returns. The Show cause notice also does not attribute any malafied on the part of the appellant. Therefore, there is no fraud or mis-statement or suppressions or malafied on the part of the appellant and for the same reason no penalty is liable to be imposed on the appellant under Section 11 AC of the Act. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1457
Valuation - inclusions - whether value of depreciation on technical know-how and the royalty paid to Directors of the assessee have to be included in the assessable value of the goods cleared by them? - Held that: - the issue is squarely covered in favour of appellant by the decision of Tribunal in the case of Man Industries (India) Ltd. Vs CCE Indore [2015 (11) TMI 515 - CESTAT NEW DELHI], where it was held that In the show cause notice, the duty has been demanded from the appellant on the amount collected towards die development charges by the appellant during the impugned period. No effort has been made in the show cause notice for amortization of the cost of die and development charges toward the final product cleared by the appellant. Therefore, the show cause notice is defective. In this case also, the SCN is defective - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1456
Clandestine manufacture and removal - demand based on incriminating documents recovered from the factory of the appellant, statements recorded from various persons including the transporter as well as various buyers and also significantly the data printed-out from the electronic devices recovered during the search proceedings - data printed-out from the electronic devices - Held that: - It is not in dispute that these electronic devices were recovered from the factory premises of the appellant under proper Panchnama. Several summons were issued to Shri Mukhtiar Singh, prop. requiring the presence in the office for retrieval of data from such devices. But Shri Mukhtiar Singh chose to ignore such summons and did not respond with his presence. Finally, retrieval of data from the resumed electronic devices was done on 27.08.2013 with the help of an expert under proper Panchnama - it is clear that the data in the electronic devices were in relation to the transactions undertaken by the appellant and for such transactions, no evidence of excise duty payment have been produced by the appellant. Retracted statements - Held that: - It is a settled position of law that the original statement does not become null and void only because it has been retracted on a subsequent date. Such retraction is to be assessed by the adjudicating authority in the light of the circumstances of the case and the existence of corroborated evidence - In the present case, we note that Shri Mukhtiar Singh has gone against his original statement, several years after the initial admission. Likewise, the buyers retracting such statements at the time of cross examination by itself will not make their statement inadmissible. Such retraction especially when supported by other evidences is to be ignored. The allegation of clandestine manufacture and clearance and evasion of duty stands established - confiscation upheld - appeal dismissed - decided against appellant.
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2018 (5) TMI 1455
Benefit of N/N. 6/2006-CE dated 1.3.2006 - denial on the ground that the certificate issued by the relevant authority, it is not clear whether the pipes are used to draw water from the source to storage reservoir or as a part of integral water supply project - Held that: - as per notification, Sl. No. 2 does not prescribe any diameter for the pipes that is to be used whereas Sl. No. 3 prescribes that the pipes of outer diameter exceeding 20cm will be eligible for exemption when such pipes are integral part of the water supply project - From the certificate produced by appellant, it is clear that the pipes are used for carrying water from the source to treatment plant and to the reservoirs in various villages. For such reason, it is established that the pipes are used as integral part of water project and also for drawing water from the original source to the reservoir. The appellant having fulfilled the condition in the notification is eligible for the benefit of exemption from payment of duty - demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1454
CENVAT credit - input services - outward transportation during the period April, 2011 to March, 2016 - Board vide Circular No. 97/8/2007-ST dated 23.8.2007 - Held that: - during the relevant period, there was a clarification of Board vide Circular No. 97/8/2007-ST dated 23.8.2007, according to which the credit on outward transportation was allowed, subject to conditions imposed - As per the facts of the present case, the sale is undisputedly on FOR basis as transportation charges is included in the assessable value of the goods, which is seen from the purchase order. Since it is on FOR basis the risk upto the place of removal was borne by the purchaser. Therefore, looking all the three criteria required by Board, the place of removal is at buyer s place. Therefore, in terms of the circular, appellant was very much entitled for the CENVAT Credit. Penalty u/s 11AC - Held that: - since appellant did not have any mala fide intention, penalty imposed under Section 11AC is also not sustainable. There is no dispute raised either by the assessee or by the Revenue. Therefore, once the assessment attained finality, no benefit can be taken from the final assessed position of the final product for the purpose of adjustment of separate credit taken on outward transportation. Appeal allowed in part.
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2018 (5) TMI 1453
Clandestine removal - excesses of finished goods - shortage of raw material - Held that: - Revenue has not produced any evidence to ascertain the fact that the goods have been physically weighed, in that circumstance, the benefit of doubt goes in favour of the appellants - RG-1 register was updated upto 30.8.2012 wherein the production of 31.8.2012 was not entered in the RG-1 register. It is not the case of the Revenue that on 30.08.2012, the factory of the appellant was closed. If the departmental officers found how much is the quantity manufactured on 30.8.2012 then also the excess/shortage of raw materials and finished goods could have been deducted. In the absence of this, the allegation of shortage of raw materials and excess of finished goods is not sustainable. Confiscation and penalty not warranted - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1452
Valuation - Physician sample pack (P.S. Pack) - It is the contention of the Revenue that the PS Packs are required to be assessed u/s 4(1)(b) of Central Excise Act, 1944 as the medicines in PS Packs are ultimately distributed free on behalf of the appellant - Held that: - the issue is now settled by the Hon’ble Supreme Court in their own case reported as Commissioner of C.Ex. &Cus. Surat Vs. Sun Pharmaceuticals Inds. Ltd. [2015 (12) TMI 670 - SUPREME COURT], where it was held that The transaction in question was between the assessee and the distributors. Between them, admittedly, price was charged by the assessee from the distributors. What ultimately distributors did with these goods is extraneous and could not be the relevant consideration to determine the valuation of excisable goods. When we find that price was charged by the assessee from the distributors, the Show Cause Notice is clearly founded on a wrong reason - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1451
Cash refund - appellant was not in a position to utilize the CENVAT credit - Held that: - the issue involved in the present case is squarely covered in favour of the appellant by the decision of Uttrakhand High Court in the case of CCE, Meerut-l Vs. Apco Pharma Ltd. [2011 (10) TMI 38 - UTTARAKHAND HIGH COURT] wherein it has been held that refund could be sanctioned in cash when the assessee is unable to use it - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1450
Manufacture - marketing of Hydrogen Gas Cylinders - The department was of the view that filling and marketing of hydrogen gas cylinders with label amounted to manufacture in view of Chapter Note 9 of Chapter 28 of Central Excises and Salt Act as applicable at that time - extended period of limitation - Held that: - Tribunal in the case of Goyal M.G. Gases Pvt. Limited vs. CCE, Chandigarh [2016 (1) TMI 1055 - CESTAT NEW DELHI], where it was held that the activity undertaken by the appellant does not amount to manufacture therefore, the appellant is not liable to pay duty. Repacking of gas by the appellant does not amount to manufacture as marketable - demand not sustainable - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1449
Liability of Interest and penalty - it was alleged that the appellant had issued supplementary invoices to collect differential price and the appellant discharged the duty liability at the rate of 14% and 10%, instead of discharging at the rate of 16% and 14% thereby leading to the short payment of duty - Held that: - the impugned order alleging suppression by the appellant is not tenable in the facts and circumstances of the case. The appellant had a bona fide belief that the rate of duty as applicable at the time of raising the supplementary invoice and paid the said duty and also subsequently reversed the proportionate credit along with interest on 13/06/2012. The issue is settled in the case of CCE, Pune Vs. SKF india Ltd. [2009 (7) TMI 6 - SUPREME COURT] wherein the Supreme Court has laid down that differential duty covered by sub-section (2B) of Section 11A attracts interest - the assessee is liable to pay interest on delayed payment of differential duty. Penalty - Held that: - since there was no suppression on the part of the appellant and the appellant paid the duty after finalization of price, penalty not warranted and is set aside. Appeal allowed in part.
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2018 (5) TMI 1448
Valuation - Rule 8 of the Central Excise(Determination of the price of excisable goods) Valuation Rules, 2000 - M/s GSK manufacturers the raw materials at its different factories and supplied them to the appellants by paying excise duty based on Rule 8 of the Valuation Rules viz. Cost of production plus 10% - Held that: - the facts of the case are not in dispute that the cost of raw material supplied to the appellant by GSK were provisionally assessed and the appellant also paid duty provisionally. Later on, the actual value of goods cleared by the GSK was ascertained and the said value was adopted by the appellant for finalisation of their assessment. In that circumstances, the provision of Rule 8 are not applicable for the valuation of goods cleared by GSK for supplying the raw material to the appellant. In fact, when the actual sale price is available, in that circumstances, the provisions of Rule 8 are not applicable. The assessment was required to be finalised taking the cost of raw material supplied by the GSK at actual price arrived for determination of the assessable value at the end of appellant for finalisation of provisional assessment - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1447
Refund of accumulted CENVAT credit - rejection of the claim under the provisions of Section 11B, as the appellant have failed to furnish requisite details and documents to justify the claim under N/N. 05/2006-CE (NT) dated 14.03.2006 issued under Rule 5 of CCR 2004 - Held that: - this issue is no more res integra and has been settled by the Hon'ble High Court of Karnataka in the case of Slovak India Trading Co. Pvt. Ltd. [2006 (7) TMI 9 - KARNATAKA HIGH COURT], where it was held that Assessee made claim for unutilized credit when there was no manufacture in the light of closure of factory and he has come out of Modvat scheme. Refund of credit is admissible - the impugned order is not sustainable in law and the same is set aside subject to furnishing the proof of closure of business by the appellant - appeal disposed off.
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2018 (5) TMI 1446
Clandestine removal - unaccounted finished goods–Polyester Films - shortage of inputs–Polyester Chips - Held that: - so far the alleged confiscation of the Polyester Film 18.2MT is concerned the same is only a part of base production. The Panchnama proceedings started at 3.00P.M. Thus, the adverse inference drawn by the Revenue is fit to be set aside - it is apparent that the statement was recorded in the dead of the night and as such for some minor discrepancy in recording or the word “not” having been missed out in the subsequent question, in spite of specifically mentioning by Mr. Singh that the goods were yet to be tested and had not reached RG-1 stage, the adverse inference drawn by Revenue is fit to be set aside. So far the alleged shortage of Polyester Chips is concerned, it is admitted fact that the Polyester Chips lying in the silos were not measured. Thus, there is no proper basis for the charge of shortage of Polyester Chips - the charge of shortage is vague and fit to be set aside. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1445
Clandestine removal - excess stock of finished goods which was not accounted for in the books - time limitation - Held that: - the commissioner had decided the case against the appellant on flimsy grounds without any evidence on record. The enquires made from the consignors revealed that they had confirmed the contents of the affidavit. In fact no records were required when the affidavits were filed. Since the issue is 22 to 23 years old, hence the records were not available as the same were destroyed; but since the bank accounts were furnished, that is enough to prove the veracity of the affidavits. Moreover the officers failed to make any enquiries from the consignees to whom the goods were sold by the consignors. The affidavits were filed long long ago at the appellate stage after the initial adjudication order. When the eight distillation columns installed in the trading unit were operating in full swing at the time of visit of the Central Excise Officers then it was not possible that there was nobody to claim the goods in question. The officers ought to have recorded the statement of the labourers to corroborate their stand, that in fact the goods were being manufactured by the appellant and not by the trading unit. The appellant was availing small scale exemption and if the clearances of the trading units and all the GRs are not included in that event they were exempt from payment of duty as their clearances will be within the prescribed limit - the entire demand is time barred - The circumstances of the case does not justify the invoking of the extended period of limitation. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (5) TMI 1493
Condonation of Delay in filing appeal - proceedings have already been initiated for realisation of the amounts covered by the order impugned in the appeal - Held that: - it is appropriate to dispose of the writ petition directing the Tribunal to consider the application preferred by the petitioner to condone the delay in filing the appeal
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