Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 4, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Reassessment - validity of notice issued u/s 148 - the Tribunal could not have gone into the adequacy and sufficiency of reasons - HC
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Depreciation on lease hold building and plant & machinery - AO has misconstrued whole constitution of the Society. He was not justified to assume that three governments who are promoters of the Society have given subsidy instead of contribution for creation of the Society. Here the governments are doing business themselves by constituting the Society. - Depreciation allowed - AT
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TDS - payments made to the farmers representing cutting and transporting of the sugarcane - Supply of sugarcanes at the gates of factories of the respective assesses was a part of sale transaction, and therefore, the assesses are not liable to deduct TDS - AT
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Penalty u/s 271(1)(c) - Assessing Officer was quite unsure as to which of the two sections namely, section 271(1)(c) or section 271AAA was he intending to proceed. Such an approach is also reflective of non application of mind by the Assessing Officer - No penalty - AT
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Escapement of income - works contract - A.O. directed to estimate net profit of 10% on main contract works and 7% on sub contract works, net of all expenditure including depreciation, but subject to further deductions towards interest on capital and remuneration to partners u/s 40(b) - AT
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Disallowances of certain expenditure - Mere production of ledger extract without supporting bills and vouchers would not absolve the assessee from proving the genuineness of expenditure - AT
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Lease premium paid by the Assessee to MMRDA for acquiring staircase, lifts, lift room, lobbies etc. as additional FSI is not in the nature of rent within the meaning of Section 194-I and therefore the Assessee need not deduct TDS - AT
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Deduction U/s 80IE - eligible of deduction towards excess provision written back - by this amount the deduction u/s 80IE has been reduced in the said year since the deduction is available for the unit for consecutive 10 years, AO’s action in treating the excess provision written back as income cannot be justified - AT
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Reopening of assessment - disallowance u/s 43B - interest was payable and had not been actually paid before the due date of filing of return of income - Once all the facts were before the AO during the assessment proceedings, then without there being tangible material coming on record, it cannot be held that, there is any failure on the part of the assessee to disclose fully and truly all material facts necessary for the purposes of assessment - AT
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The assessee had made investment in FDRs with banks but the same were not encashed for several reasons while the assessee made borrowals from different concerns in order to make investment with various concerns - Set off of interest expenditure with interest income allowed - AT
Customs
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Duty Drawback - deficiency memo has been issued stating that the department does not agree with the classification - deficiency memo travels much beyond the scope of sub-rule (3) of rule 13 of the rules - claim of duty drawback claim allowed with interest - HC
Service Tax
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Valuation - abatement claimed of 85% - Board Circular No. B43/1/97-TRU dated 06.06.1997 - the Agency Commission actually attributable to the CHA services will be far lesser than the 15% already consider for payment of service tax - demand set aside - AT
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Turn Key Contract - classification of services - The appellants herein are claiming the classification of their services under the category of ‘Custom House Agents’ and other services while Revenue seeks to classify these services under ‘Port services’ - Port service is taxable only from 08.05.2010 - AT
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Penalty u/s 78 of FA - waiver of penalty - The appellants contention that section 73(3) is applicable in their case is not correct - Once, the ingredients of section 73(4) are present the provisions of section 73(3) are not applicable - AT
Central Excise
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Refund claim - since there was no liability to pay Education Cess and Secondary and Higher Secondary Education Cess, the provisions of the Central Excise Act as incorporated in the OIC Act would also not apply to the amount paid by mistake. - AT
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Mere shortage of the goods ascertained during stock verification, would not be treated as clandestine removal of the goods. There is required positive act to establish clandestine removal of the goods - AT
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CENVAT credit on security services received at Unit-II cannot be denied on the ground that the same is not used by the manufacturer, as both the units belong to the same manufacturer and both are connected and integrated units - AT
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Classification of goods - FRANCH OIL NH - Having noticed the character of the goods which is drug in nature and also for the features aforesaid, including the trade name it bears that squarely falls under the Chapter 30.03 - AT
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SSI Exemption - availing Benefit of N/N. 67/95-CE against captive consumption - intermediate goods - the goods are neither exempt nor subject to nil rate of duty by virtue of appellant’s status as SSI whose clearances were otherwise dutiable - benefit of N/N 67/95 allowed - AT
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Shortage of goods - CENVAT credit - portion of the pet coke was not received in the factory - demand of duty with interest and penalty confirmed - AT
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Valuation - cost of packing material received free of cost - If some goods are marketable without being put into the containers, the cost of containers including their testing charged would not be includible in the assessable value - AT
VAT
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Levy of VAT on sale of Business - AO was completely wrong in thinking that the sale of a business as a whole is taxable simply because such a sale also involves a sale of several items used in the course of business - HC
Case Laws:
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Income Tax
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2017 (5) TMI 126
Determination of capital gain on sale of property - assessee claimed that she was not the not the owner of the property - assessee never signed such a sale deed and that therefore upon coming to know of the same she has already lodged a police complaint. - case of the respondent-department is that the name of the petitioner, her fathers name and other particulars tally with those mentioned in the sale deed and that the petitioner had inherited the property from her father under a gift settlement deed dated 30.09.1982. Held that: - Assuming that the petitioner has played fraud upon the Income Tax Department after having sold the property, the best way of exposing such a fraud would be to bring the property disowned by her to sale. It is true that the property has now passed on to several hands. But once notices are issued to all the purchasers including the one under the disputed document, the truth will come out. Till then, it is not possible to tax the petitioner - petition allowed.
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2017 (5) TMI 125
Reassessment - validity of notice issued u/s 148 - Whether the Tribunal is justified in law in holding that the Assessing Officer had no relevant material to issue notice u/s 148 of the Income Tax Act, for the year under consideration? - Held that: - Section 147 came up for constitution in Ganga Saran & Sons P. Ltd Vs Income Tax Officer & others [1981 (4) TMI 5 - SUPREME Court], where it was held that If there is no rational and intelligible nexus between the reasons and the belief, so that, on such reasons, no one properly instructed on facts and law could reasonably entertain the belief, the conclusion would be inescapable that the Income Tax Officer could not have reason to believe that any part of the income of the assessee had escaped assessment and such escapement was by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts and the notice issued by him would be liable to he struck down as invalid - the Tribunal could not have gone into the adequacy and sufficiency of reasons - appeal allowed - decided in favor of Revenue.
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2017 (5) TMI 124
Condonation of delay in filing return - application for condonation has been turned down not on the merits but on the interpretation of proviso to Section 119(1) (a) i.e. that the relief sought would amount to interference with the powers and jurisdiction of a quasijudicial authority - Held that: - the petitioner’s request was limited, and if one may say so, uncontroversial and that the CBDT was merely asked to condone the delay in the filing of the revised return having regard to her mental health - the CBDT, in the opinion of the Court, misunderstood the scope of the proviso (a) to Section 119(1) of the Act when it said that granting the relief would amount to directing the AO to a particular course of action. The discretion, if exercised, would merely result in enabling the assessee to file a revised return, no more, no less. The CBDT shall decide the matter afresh i.e. as to whether to condone the delay in the filing of the revised return having regard to the circumstances - petition allowed by way of remand.
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2017 (5) TMI 123
Depreciation on lease hold building and plant & machinery - disallowance - case of Revenue is that since building and infrastructure were stated to have been provided by the Govt. of Gujarat/Govt. of India/German Government, depreciation claimed by the assessee and allowed in the assessment mainly on lease holding building and plant & machinery was not in order - whether the contributions made by three governments, viz. Govt. of India, Govt. of Gujarat and German Government was to be treated as a contribution on behalf of the promoters or it was to be treated as a subsidy by the Government? Held that: - the ld.AO has misconstrued whole constitution of the Society. He was not justified to assume that three governments who are promoters of the Society have given subsidy instead of contribution for creation of the Society. Here the governments are doing business themselves by constituting the Society. It is not a benefit given by the government for any particular assessee or class of assessees by exercising its Legislative powers. The ld.CIT(A) has considered this aspect and therefore allowed the claim of the assessee. After going through the order of the ld.CIT(A), we do not find any error in it - appeal dismissed - decided against Revenue.
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2017 (5) TMI 122
TDS - whether the assessee was required to deduct the TDS under Section 194C of the Income-tax Act, 1961 on the payments made to sugarcane growers for harvesting and transporting sugarcane to the factory premises of the assessee? - Held that: - the issue has been decided in favor of the assessee by holding that the assessee was not under the obligation to deduct the TDS because the farmers were required to deliver the sugarcane at the factory gate of the assessee and the price which was paid by the assessee to the farmers for sugarcane was “Ex-factory Price” - appeal dismissed - decided against Revenue.
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2017 (5) TMI 121
Penalty u/s 271(1)(c) - unaccounted receipts - assessee was receiving incomes outside the books of account - claim of assessee is that the notice does not specify the exact ground on which penalty is to be charged i.e. whether for concealment of income or for furnishing of inaccurate particulars of income - Held that: - it was imperative for the Assessing Officer to strike- off the irrelevant limb so as to make the assessee aware as to what is the charge made against him so that he can respond accordingly - having regard to the manner in which the Assessing Officer has issued notice under section 274 r.w.s. 271(1)(c) of the Act dated 30/12/2010 without striking off the irrelevant words, the penalty proceedings show a non-application of mind by the Assessing Officer and is, thus, unsustainable. At the time of initiation of penalty, the Assessing Officer was quite unsure as to which of the two sections namely, section 271(1)(c) of the Act or section 271AAA of the Act was he intending to proceed. Such an approach is also reflective of non application of mind by the Assessing Officer. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 120
TDS - payments made to the farmers representing cutting and transporting of the sugarcane - assessee claims that the assessee used to pay sugarcane price to the growers at “ex-factory price” and any advance to the farmer is only towards cost of sugarcane finally adjusted from the sugarcane price payable to the grower on the basis of final price determined - Held that: - The Tribunal has followed the judgment of Hon’ble Gujarat High Court in assessee’s own case for AY 2003-04 and held that the supply of sugarcanes at the gates of factories of the respective assesses was a part of sale transaction, and therefore, the assesses are not liable to deduct TDS - appeal dismissed - decided against Revenue.
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2017 (5) TMI 119
Admission of additional evidence u/r 46A - Dis-allowance of interest expenditure - set off of interest expenditure against salary income - According to the assessee he has not made investment for earning exempt income, rather, he has made investment for the purpose of business - Held that: - the AO has never asked assessee to produce copies of acknowledge exhibiting return filed by the lenders. He has issued one SCN to the assessee and thereafter issued summons under section 133(6). He did not confront the assessee whether summons have been served upon lender or any other evidence would be required. The reason for this failure was paucity of time with the AO. He concluded the assessment proceedings within 20 days after seriously taking cognizance of the issues considered in the assessment order. To our mind conditions enumerated at sub-clause (a) to (d) of Rule 46A are available in the present case. Apart from that an irregularity has crept in the proceedings before the ld.CIT(A) vide which the ld.CIT(A) failed to take cognizance of the application moved for permission to lead additional evidence - this irregularity is required to be removed and proceeding is to be instituted at the stage where this irregularity has happened. Matter remanded back to CIT(A) - Decided partly in favor of assessee.
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2017 (5) TMI 118
Provision for foreign tour of sub-commission agent - disallowance - denial on the ground that it was a provision only, and not an ascertained liability - Held that: - The ld.CIT(A) theoretically allowed, but with a rider that in case provision is allowed to the assessee in Asstt.Year 2008-09, then the deduction granted in Asstt.Year 2009-10 on actual incurrence of the expenditure would be withdrawn. Since we have allowed the provision in the Asstt.Year 2008-09 in the foregoing paragraphs, therefore, if any deduction is being granted to the assessee of ₹ 23,09,500/- in A.Y.2009-10, the same will be withdrawn by the AO - appeal rejected. It is a factual issue which requires verification at the end of the AO, and the ld.CIT(A) has rightly relegated the issue to the AO for verification and adjudication. We do not find any merit in this ground raised by the assessee. Accordingly, it is rejected. Charging of interest under section 234D of the Act - granting of interest under section 244 of the Income Tax Act - Held that: - these are consequential in nature and hence, rejected. Appeal allowed - decided partly in favor of assessee.
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2017 (5) TMI 117
Escapement of income - understatement of closing work in progress - Since, the assessee has failed to substantiate the expenses claimed with proper supporting evidences and also most of the expenditure were supported by selfmade vouchers, the A.O. rejected books of accounts u/s 145(3) of the Act and estimated income and adopted net profit rate of 12.5% on main contract works, 8% on sub contract works and 4% on sub contract works given to third parties, subject to further deductions towards interest on capital and remuneration to partners u/s 40(b) of the Act - Held that: - There is no straight jacket formula for estimation of net profit. Before estimation of net profit, facts and circumstances of each case should be considered. In the present case on hand, on perusal of the facts available on record, we find that the assessee is a large contractor having a turnover of more than ₹ 90 crores. Therefore, keeping in view of the facts and circumstances of the case and also considering the assessee’s own case for the earlier period, to meet the ends of justice, we direct the A.O. to estimate net profit of 10% on main contract works and 7% on sub contract works, net of all expenditure including depreciation, but subject to further deductions towards interest on capital and remuneration to partners u/s 40(b) of the Act - ground raised by the revenue is partly allowed. Validity of re-assessment proceedings - A.O. has re-opened the assessment merely on ‘change of opinion’ without there being any new material or information which suggests escapement of income within the meaning of section 147 of the Act - Held that: - Since, we have directed the A.O. to estimate net profit by following the assessee’s own case for the assessment year 2011-12, subject to a modification in respect of net profit on sub contract works, we dismiss ground raised by the assessee challenging the validity of re-assessment proceedings as not pressed. Estimation of net profit on contract works given to others - Held that: - the assessee has failed to advance any reasons for estimation of 3% net profit on sub contract works given to others. We further observed that the A.O. has adopted net profit of 4% which is quite reasonable when compared to the nature of business of the assessee. Therefore, we uphold the net profit estimated by the A.O. and reject ground raised by the assessee. Appeal disposed off - decided partly in favor of assessee.
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2017 (5) TMI 116
Rental receipt from letting out commercial properties - the assessee is involved in the activity of taking lands lease and construction of commercial buildings and let out the same on monthly rental - assessable under the head ‘income from profit & gains of business or profession’ or ‘income from house property'? - Held that: - the coordinate bench of this Tribunal, under similar circumstances held that rental income from letting out commercial properties is assessable under the head “income from profits and gains of business or profession” but not under the head “income from house property” - appeal dismissed - decided against Revenue.
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2017 (5) TMI 115
Disallowances - certain expenditure - labour charges - conveyance and travelling expenses - sales commission - business promotion expenditure - disallowance on the ground that the assessee has failed to prove the genuineness of expenditure by filing necessary supporting bills and vouchers - Held that: - Though, the assessee claims to have furnished evidences in support of expenditure, failed to prove with necessary evidences. We find merits in the findings of the A.O. for the reason that the assessee has filed ledger extract of expenditure without there being any supporting bills and vouchers. Mere production of ledger extract without supporting bills and vouchers would not absolve the assessee from proving the genuineness of expenditure. - the assessee has failed to furnish any cogent reasons for not furnishing relevant bills and vouchers before the lower authorities - disallowance upheld. Disallowance of payment to auditors u/s 40(a)(ia) of the Act for failure to deduct TDS - Held that: - The Ld. A.R. for the assessee, during the course of hearing, submitted that he did not press the ground challenging the additions towards site expenses, advertisement and architect fees. Therefore, the ground raised by the assessee, challenging these two additions has been dismissed as not pressed. Disallowance of depreciation of Ritz car and interest on Ritz car loan - Held that: - Though the Act does not prescribe ownership of asset in the name of the assessee for claiming depreciation, assessee failed to prove the use of such vehicle in the business of the assessee. Therefore, we are of the view that the assessee failed to prove the use of vehicle in the business of the assessee, which is mandatory for claiming depreciation on any assets. Similarly, in respect of interest on vehicle loan, for the similar reasons, the A.O. has disallowed interest paid on vehicle loan - disallowance upheld. Addition towards negative cash balance in the cash book for the assessment year 2011-12 - Held that: - the assessee has filed a chart showing negative cash balances on various dates. On perusal of the chart filed by the assessee, we find that the highest negative cash balance appeared on 13th August, 2010. Once the peak negative cash balance as on 13.8.2010 is treated as unexplained income of the assessee, then it will take care subsequent negative cash balances. Therefore, we are of the view that the A.O. was erred in making additions towards all the negative cash balances appeared on various dates - we set aside the issue to the file of the A.O. and direct the A.O. to verify the details filed by the assessee to arrive at peak negative cash balance for the purpose of addition. Appeal disposed off - decided partly in favor of assessee.
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2017 (5) TMI 114
Gross freight earnings including detention collection - profits derived from the operation of ships international traffic - taxability as per Article 8 of the Agreement for Avoidance of Double Taxation between India and Singapore - Held that:- After careful consideration we find that prima facie the facts of the present case appear to be same as that assessment of year 2008-09 dealt with as above. However we note that in its direction the DRP has noted that assessee has sought to file addition evidences in the DRP and declined to admit the addition evidences on the ground that assessee had not been able to state as to why the addition evidence was not filed before the assessing officer. In this regard Ld. Counsel submitted that the addition evidence, that the DRP mentioning is a letter /confirmation/certificate from the IRAS (Inland Revenue Authority of Singapore) which clarified the assessee position for the impugned assessment year in the same manner as mentioned in the tribunal’s orders above. Ld. Counsel submitted that this certificate/confirmation from IRAS could be obtained from the concerned authority only after the date of the assessing officer orders. However, a similar earlier letter was dully shown to the assessing officer, however the A.O. did not dwell upon on this aspect. Hence Ld. Counsel submitted that there was reasonable cause for not submitting the additional evidence before the A.O. Upon careful consideration we find that this limb of adjudication by the tribunal was not at all before the authorities below. However it is clear that argument to that effect were duly made as it is evident from the submissions of the assessee. However, we note that the aforesaid confirmation/certificate from IRAS is a very crucial document and similar document was heavily relied upon by the tribunal in aforesaid orders. 15. We also agree that there was reasonable cause for the same not being submitted before the A.O., as it was obtained after the date of AO’s orders. Hence in our consider opinion interest of justice will be served if the aforesaid additional evidence is admitted and matter is remitted to the file of the A.O to consider the issue afresh in the light of the aforesaid document and the tribunal’s order as mentioned above.
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2017 (5) TMI 113
Validity of acquiring the jurisdiction by the Assessing Officer u/s 153C - absence of satisfaction note - Held that:- decide this issue in favour of the assessee by holding that in absence of any ‘satisfaction’ noted by the Assessing Officer of the searched person, the initiation of the impugned proceedings u/s 153C is invalid and accordingly, all the assessment orders for the impugned assessment years are hereby quashed as void-ab-initio. The said finding would be applicable in all the years, because the jurisdiction u/s 153C has been acquired only on the basis of same ‘satisfaction note’ as incorporated above which has been recorded by the Assessing Officer of the assessee and not by the Assessing Officer of the searched person during the course of the assessment or search proceedings of the searched person. Accordingly, for all the years the assessment orders are quashed. - Decided in favour of assessee
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2017 (5) TMI 112
Non deduction of TDS - rent - premium paid to MMRDA by the Assessee for additional FSI - AO treated the premium paid by the Assessee as akin to rent and therefore since the Assessee failed to deduct TDS u/s 194-I of the Act he held the Assessee as defaulter u/s 201(1) and also charged interest u/s 201(1A) for failure to deduct TDS on such premium paid by the Assessee to MMRDA - Held that: - the Tribunal in Assessee’s own case for the assessment year 2009-10 considered similar issue and held that the lease premium paid by the Assessee to MMRDA for acquiring staircase, lifts, lift room, lobbies etc. as additional FSI is not in the nature of rent within the meaning of Section 194-I and therefore the Assessee need not deduct TDS - appeal dismissed - decided against Revenue.
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2017 (5) TMI 111
Rental value of the property - determination of Annual Letting Value of the property - The Assessing Officer was of the view that 10% of the security deposit should be considered as reasonable percentage of interest and this should be added to the rental value of the property for arriving at Annual Letting Value of the property - Held that: - this issue has been considered by the Coordinate Bench in the case of DCIT Vs. Dinesh M Shah [2017 (2) TMI 1191 - ITAT MUMBAI], wherein on similar circumstances, the Assessing Officer considered 10% interest free deposit as part of rental income on account of letting out of properties while computing ALV. Disallowance of deduction of society charges of ₹ 2,92,615/- from rental income u/s 23 of the Act - Held that: - from the order of the Coordinate Bench in Assessee’s own case in ITA Nos.7210/Mum/2007 & 3552/Mum/2009 for the assessment years 2002-03 & 2006-07 that this issue has been restored back to the file of the Assessing Officer for necessary verification and deciding the issue afresh - issue restored to the file of the Assessing Officer for fresh adjudication. Appeal allowed by way of remand.
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2017 (5) TMI 110
Deduction U/s 80IE of the Act - eligible of deduction towards excess provision written back - foreign currency fluctuation gain - manufacturing work in Arunachal Pradesh - Held that: - the issues are covered in favor of the assessee by the order of the ITAT in assessee’s own case for the assessment year 2011-12 [2016 (7) TMI 1050 - ITAT JAIPUR], where it was held that The foreign currency gain is the part of raw material there is nothing wrong in this claim. Assessee is entitled for deduction u/s 80IE of the Act. As regards excess provision written back it was held that this is the expenditure, which has been booked in excess in earlier year and by this amount the deduction u/s 80IE has been reduced in the said year since the deduction is available for the unit for consecutive 10 years. AO’s action in treating the excess provision written back as income cannot be justified, hence deleted - appeal dismissed - decided against Revenue.
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2017 (5) TMI 109
Section 40(a)(ia) applicability - amount paid or “paid” and “payable.” - TDS on interest - Held that:- The authorities below have specifically brought the material on record that loan was granted to the assessee company and that repayment of loan amount and interest was paid through the account of the assessee company. The asset pledged was owned by the assessee. Since no TDS was deducted on interest payment, authorities below were justified in disallowing interest u/s 40(a)(ia). The issue is covered against the assessee by judgement of Hon’ble Gujarat High Court in the case of CIT vs Sikander Khan N Tunvar [2013 (5) TMI 457 - GUJARAT HIGH COURT] in which it was held that “provisions u/s 40(a)(ia) would cover amount payable at any time during the accounting year”. The issue is also decided against the assessee by judgment of Hon’ble P & H High Court in the case of P.M.S.Diesels [2015 (5) TMI 617 - PUNJAB & HARYANA HIGH COURT] in which on the same principle, the appeal of the assessee has been dismissed. No infirmity has been pointed out in the order of the Ld.CIT(A), therefore, the appeal of the assessee has no merit, the same is accordingly dismissed.
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2017 (5) TMI 108
Reopening of assessment - disallowance u/s 43B as the said amount of interest was payable and had not been actually paid before the due date of filing of return of income - Held that:- It is seen that there is a specific finding as well as observation in the impugned order that during the course of the original assessment proceedings the Assessing Officer in his detailed questionnaire had required the assessee to furnish all the details of interest payment as appearing in the balance sheet. In response thereof, the entire details were furnished by the assessee along with the details of liabilities and also the interest accrued but not due and interest payable as appearing in the balance sheet. Based on such scrutiny assessee’s claim was allowed by the AO. Once all these facts relating to interest and claim of deduction, both in relation to interest paid and interest payable were there before the Assessing Officer during the time of the original assessment proceedings, then without there being tangible material coming on record, it cannot be held that, there is any failure on the part of the assessee to disclose fully and truly all material facts necessary for the purposes of assessment. The impugned notice u/s 148 for reopening the assessment is purely based on material already on record which has been also considered by the Assessing Officer and once that is so, then ostensibly, reopening u/s 147 is not permissible in law as it amounts to “change of opinion”. Not only that, as submitted by the ld. counsel and also noted by the Learned CIT(Appeals), the amount of interest which is a subject matter of reassessment in the impugned proceedings was not payable to any Public Financial Institution or any Scheduled Bank, albeit out of total interest accrued but not due for sums amounting to ₹ 184.66 lakhs, interest aggregating to ₹ 44.33 lakhs was paid before filing of the return on which deduction was allowed u/s 43B and balance interest payable of ₹ 140.33 lakhs was unpaid liability on cumulative FDR (Rs. 137.90 lakhs) and other interest liability (Rs. 2.41 lakhs) and therefore, prima facie such interest amount was not hit by the provision of section 43B. On this count also, the Assessing Officer was not justified for reopening the assessment u/s 147 as there could not be any prima facie “reason to believe” based on any tangible material. Thus, the order of the Learned CIT(Appeals) holding that reassessment proceeding is bad in law is upheld - Decided in favour of assessee Addition u/s 36(1 )(iii) - interest free loan given to subsidiary - Held that:- Once it is found that the assessee company had huge surplus funds then it can be safely presumed that any such advance or interest free loan given to subsidiary is out of such surplus funds only unless the department brings on recrd that the surplus funds have been utilized for some other purposes and borrowed funds have been diverted to subsidiary/sister concern. The sole reliance placed by the Assessing Officer on the judgment of CIT vs. Abhishek Industries Ltd. (2006 (8) TMI 123 - PUNJAB AND HARYANA High Court) for making the disallowance, now does not hold ground in view of the judgment in the case of Munjal Sales Corporation vs. CIT (2008 (2) TMI 19 - Supreme Court ), wherein the judgment of CIT vs. Abhishek Industries Ltd. (supra) has been reversed and it has been specifically held by the Hon’ble Apex Court that so long as funds have been given to the sister concern out of interest free funds, no disallowance u/s 36(1)(iii) can be made. Thus, without their being material to controvert the finding of the Learned CIT (Appeals) that advance standing in the name of the subsidiary is out of assessee’s own interest free funds, we do not find any reason to deviate from such a finding of fact. Accordingly, the order of the Learned CIT (Appeals) is upheld - Decided in favour of assessee
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2017 (5) TMI 107
Working out disallowance under section 14A - depreciation and other related expenses dis-allowed by apportioning them in the ratio of exempt share income from firm u/s 10(2A) to taxable income - Held that:- There is no merit in the plea of the assessee as the element of personal use out of the car expenses incurred cannot be ruled out, however, the said disallowance is restricted to 10% of the total expenditure under section 37(1) of the Act. On the perusal of the record and the ratio laid down by the Special Bench of the Tribunal in the case of Vishnu Anant Mahajan Vs. ACIT (2012 (6) TMI 297 - ITAT, Ahmedabad ) while working out disallowance under section 14A of the Act, no disallowance is to be made on account of car depreciation claimed as deduction under section 32 of the Act. However, in respect of the interest expenditure on the car loans raised by the assessee there is no merit in the claim of the assessee. Accordingly, 50% of the balance expenditure is to be disallowed in the hands of assessee. In the paras hereinabove, we have already restricted the disallowance to 10% out of the total expenses for personal use and after excluding the same 50% is to be disallowed under section 14A of the Act. Disallowance made on account of interest paid against the interest income earned by the assessee on FDRs and other deposits - Held that:- the nexus between the amount borrowed by the assessee and the amount being deposited in various concerns. Admittedly the assessee had made investment in FDRs with banks but the same were not encashed for several reasons while the assessee made borrowals from different concerns in order to make investment with various concerns. In the totality of the present facts and circumstances where the assessee had earned interest income from bank FDRs at ₹ 2,95,750/- and against deposit with other concerns at ₹ 5,23,500/-, the interest expenditure claimed at ₹ 5,62,761/- merits to be allowed in the hands of assessee. Accordingly, the Assessing Officer is so directed. - Decided partly in favour of assessee.
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Customs
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2017 (5) TMI 131
Principles of natural justice - import of broadcasting equipment - The petitioner was aggrieved by the fact that his goods were auctioned off without its knowledge and before giving it opportunity of being heard - respondents’ contentions are that the goods could not be held by the Custodian for an indefinite period; advertisement for sale was given due publicity. Had the petitioner wished, it could have either cleared the goods, or later, participated in the auction. Their actions, according to them, are in consonance with provisions of the Customs Act. Held that: - Once the customs authorities were aware that the confiscation order was not final, but subject to the outcome of the appeal, they were accountable to the importer in the event of its success. A notice to the petitioner could have averted a possible risk of liability, because it was to notify the importer to make arrangement for purchase. The customs authorities allowed to sell the goods, at a vastly depressed price, despite their assumption that they were prohibited articles. However, the CESTAT upheld the declared value of the goods. The amount payable to the petitioner, is that which was assessed to be the value of the goods at the time of seizure i.e., ₹ 51,70,619/- and not the amount for which the respondent sold the petitioner’s goods for i.e., ₹ 81,000/-. Furthermore Circular No.711/4/2006-Cus (AS) dated 14.02.2006 mandates the customs authorities to give due notice of sale to the petitioner before making the auction. Petition allowed - decided in favor of petitioner.
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2017 (5) TMI 130
Duty Drawback - validity of deficiency memo - classification of goods exported - deficiency memo has been issued stating that the department does not agree with the classification and self-assessment of the exported goods as made by the petitioner and that the items exported by the petitioner as detailed therein are nothing but part of main products of scaffolding, that is, temporary structure used to support people and material in construction and repair or building and other structure and more appropriately classifiable under Chapter 73084000 - Held that: - it may be germane to refer to rule 13 of the rules, which bears the heading “Manner and time for claiming drawback on goods exported other than by post”. A deficiency memo is required to be issued in case of two eventualities. Firstly, where the claim for drawback is incomplete in any material particulars, and secondly where the drawback claim is not accompanied by the documents specified in sub-rule (2) of rule 13 of the rules. The rule further provides that in case where the above two eventualities are not satisfied, the claim for drawback has to be returned to the claimant together with the deficiency memo and such claim shall be deemed to not having been filed for the purpose of section 75A of the Act, viz., for the purpose of payment of interest. Once the claim for drawback is returned with the deficiency memo, it can only be considered after it is submitted after removal of the deficiency. The deficiency memo is, therefore, not in the nature of a show cause notice, but is in the nature of an information to the party stating the deficiency in the claim for drawback and calling upon it to remove such deficiency and thereafter, submit the claim. In the facts of the present case, on a reading of the contents of the deficiency memo, it is evident that the same does not relate to either of the two eventualities mentioned in sub-rule (3) of rule 13 of the rules - The deficiency memo has been issued on the ground that the Department does not agree to the classification and selfassessment of the exported goods made by the petitioner - From the very nature of the deficiency memo, it is evident that the question of raising a dispute with regard to classification and self-assessment would not arise, inasmuch as, a deficiency memo can only be issued pointing out the deficiencies specified in sub-rule (3) of rule 13 of the rules. Evidently therefore, the deficiency memo travels much beyond the scope of sub-rule (3) of rule 13 of the rules. If the claim for drawback is deficient, it is required to be returned together with the deficiency memo calling upon the party to remove such deficiency. The approach adopted by the respondents in the present case, therefore, is clearly not in consonance with the provisions of rule 13 of the rules. The impugned deficiency memo being contrary to the provisions of sub-rule (3) of rule 13 of the rules, cannot be sustained. Petition allowed - decided in favor of petitioner.
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Service Tax
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2017 (5) TMI 152
CENVAT credit - input service - GTA service - Held that: - reliance placed in the case of Commr. of Central Excise & Service Tax Vs. Supreme Industries Ltd [2011 (6) TMI 898 - CESTAT MUMBAI], where it was held that in respect of GTA service received by the assesse, there is no question of payment of Service Tax through the Cenvat Credit account and the same has to be paid in cash prior to 19-04-2006 - In the present case the dispute relates to the period January, 2005 to August, 2005 - the demand of Service Tax alongwith interest is justified in light of above decision - demand of service tax with interest upheld - penalty set aside - decided partly in favor of appellant.
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2017 (5) TMI 151
CENVAT credit - eligible input service - technical inspection and certification service with respect of pipe lines for supply of water from dams to the Dariba Mines - Held that: - subject input service is having nexus with the manufacturing process of the appellant, and, therefore, service tax paid on such service can be claimed as Cenvat Credit by them - reliance placed in the case of M/s Hindustan Zinc Ltd. Versus CCE & ST, Udaipur [2016 (7) TMI 1064 - CESTAT NEW DELHI] - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 150
Refund claim - N/N. 17/2009-ST dt. 07.07.2009 - rejection on the ground of time limitation - Held that: - As per the condition of the said notification, the claim for refund shall be filed within one year from the date of the export of said goods. Admittedly, the appellants have filed refund claim beyond one year from the date of export of goods - the time frame within which claim for exemption to be presented is the mandatory requirement for presenting the claim for exemption - refund claims filed by the appellants are not maintainable as time barred - appeal dismissed - decided against appellant.
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2017 (5) TMI 149
Turn Key Contract - classification of services - The appellants herein are claiming the classification of their services under the category of ‘Custom House Agents’ and other services while Revenue seeks to classify these services under ‘Port services’ - case of Revenue is that various services were rendered by the appellant were within the Port area and hence were to be classified under the category of Port services - The contention of the appellant is that the license issued to the appellant by the port authority to carry out service inside the port cannot be considered as authorization by port - Held that: - In the assessee's own case Aspinwall & Co. Ltd. Versus Commissioner of Central Excise, Mangalore [2010 (10) TMI 321 - CESTAT, BANGALORE], dealing with their operation in Mangalore Port, the Tribunal has decided the issue and held that It would imply that the modified/altered or expanded definition of Port Services would definitely encompass the services rendered by the appellants herein, but from 08.05.2010 - the demand for service tax under Port Services is not sustainable and hence is set aside. Valuation - CHA services - abatement claimed of 85% - Board Circular No. B43/1/97-TRU dated 06.06.1997 - Revenue has been taken that the benefit of the 1997 Circular will not be allowable to the appellant, since, the appellant is showing the items separately - Held that: - It is not in dispute that the contracts of the appellant with their clients is on lumpsum basis and Service Tax already stands discharged on 15% of the consideration received in terms of the 1997 Circular - the Agency Commission actually attributable to the CHA services will be far lesser than the 15% already consider for payment of service tax - the demand of Service Tax made by considering the entire amount received from the client is without basis and hence merits to be set aside. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 148
Penalty u/s 78 of FA - Mining Services - The main contention of the appellant is that they are covered u/s 73(3) of the Act as they had paid the duty plus interest before issuance of SCN - Held that: - Though the appellants paid the duty and interest after investigation begun, the fact remains that they did not make payment of Service Tax within the prescribed time and did not come forward to pay the due Service Tax on their own. They were not filing the prescribed returns nor declaring the taxable income by any declaration. In that manner we find that there has been continuous suppression during the entire period for which the demand has been issued - The appellants contention that section 73(3) is applicable in their case is not correct because provision of section 73(3) of Finance Act, 1994 are subject to the provisions of sub-section 4 of section 73 of Finance Act, 1994. Once, the ingredients of section 73(4) are present the provisions of section 73(3) are not applicable. Appeal dismissed - decided against appellant.
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2017 (5) TMI 106
Refund claim - denial on the ground that the service tax has been paid after filing the refund claim by the respondent - Held that: - the export took place prior to filing the refund claim and the amount of goods exported was received by the respondent for Foreign Importer after filing the refund claim. The services taken from the commission agent were paid on receipt of the amount and service tax was paid under reverse charges mechanism accordingly - the ld. Commissioner has rightly sanctioned the refund claim to the respondent as it has been established that the service tax has been paid by the respondent for export of the goods - appeal dismissed - decided against Revenue.
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2017 (5) TMI 105
Refund claim - commission agent service - N/N. 41/2007-ST dated 6.10.2007 - case of Revenue is that the respondent has not paid service tax being service recipient from the service provider before filing refund claim, therefore, they are not entitled for refund under N/N. 41/2007-ST dated 6.10.2007 - Held that: - it is not disputed that the respondent has paid service tax on the service on foreign commission agent provided to them, in that circumstance, the refund claim of service tax paid to the foreign commission agent for export of the goods under N/N. 41/2007-ST dated 6.10.2007 cannot be denied - appeal dismissed - decided against Revenue.
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Central Excise
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2017 (5) TMI 147
Scope of jurisdiction of Settlement Commission - clandestine removal - natural justice - Held that: - Settlement Commission is not an adjudicating authority. The role of the Settlement Commission is to arrive at an amicable settlement of the dispute between the parties. If the Settlement Commission is also converted into an adjudicating body, then the very purpose of having a Commission will get lost. This is why certain pre-conditions are laid in Section 32E. The assessees who have excellent cases, may be entitled to fight out their cases in the normal channel of remedies available under the Act - The Settlement Commission in this case has recorded certain findings about clandestine removal of goods and thought fit to still accept the application for settlement, by imposing certain conditions. The scope of the jurisdiction to interfere with those conditions or to set aside the order on the ground of violation of natural justice, is extremely limited and we do not find the case on hand fit enough to undertake that exercise - petition dismissed - decided against petitioner.
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2017 (5) TMI 146
Jurisdiction to issue SCN - time limitation - the appellant had suppressed the manufacture of the activity warranting invocation of extended period of time limit under proviso to Section 11A of the Central Excise Act, especially when the matter involves interpretation of the said activity - the allegation was that, the excisable goods had been cleared, without following the requisite procedures and without payment of excise duty - Held that: - A mere perusal of Section 11A of the Act would show that in a case where duty has not been levied or paid or has been short-levied or short-paid or erroneously refunded and the said amount is ₹ 1 Crore or less, a SCN under Section 11A(1) read with first proviso to the sub-section could only be issued by the Commissioner of Central Excise or, with his prior approval, by any officer, subordinate to him. The vital issues, which had been raised by the appellant, were not dealt with, by the authorities below. On account of failure of the authorities below to discuss the issues and/or the defences raised by the appellant, we are constrained to answer the questions, as framed, including one framed via this order, in favor of the appellant - The matter is remanded to the Adjudicating Authority for a fresh decision - appeal allowed by way of remand.
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2017 (5) TMI 145
Refund claim - time limitation - unjust enrichment - It is the case of the petitioners that since OID Cess is levied under an Act administered by the Ministry of Petroleum & Natural Gas and collected by the Department of Revenue, Ministry of Finance, in terms of the above circular, they are not liable to pay Education Cess and SHE Cess on the OID Cess levied on crude oil. The petitioners, therefore, filed a refund claim - Held that: - reliance was placed in the decision of this court in the case of Joshi Technologies International, INC-India Projects v. Union of India [2016 (6) TMI 773 - GUJARAT HIGH COURT], where it was held that since there was no liability to pay Education Cess and Secondary and Higher Secondary Education Cess, the provisions of the Central Excise Act as incorporated in the OIC Act would also not apply to the amount paid by mistake. It is evident that the above decision would be squarely applicable to the facts of the present case. It is, however, an admitted position that the above referred decision of this court which was rendered on 16.6.2016 is subsequent to the passing of the order-in-original dated 28.4.2015, and therefore, was not available at the time when the order-in-original came to be passed - It would, therefore, be in the interest of justice if the matter is restored to the file of the appellate authority to consider the appeal afresh in the light of the observations made in the above referred decision. Appeal allowed by way of remand.
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2017 (5) TMI 144
Unjust enrichment - refund claim - Held that: - M/s.Indian Oil Corporation Ltd., by letter dated 23rd December 2010, in respect of recovery of excess payment of Excise Duty, debit notes have been issued to the appellants. Thus, it is clearly evident that the appellant initially passed the incidence of duty to its customers - There is no corroborative evidence on record that the customer returned the duty amount to the appellant and therefore, the refund claim was rightly rejected on the ground of unjust enrichment - appeal dismissed - decided against appellant.
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2017 (5) TMI 143
Refund claim - Higher Education Cess and the Secondary & Higher Secondary Cess paid on tea cess for the period 2004 to 2014 - rejection on the ground of Time bar and unjust enrichment - Held that: - the present case is squarely covered by the decision of the Hon’ble Gujarat High Court in the case of Joshi Technologies International v. UOI [2016 (6) TMI 773 - GUJARAT HIGH COURT], where the the petitioner was paying Cess on the clearance of Petroleum/crude oil under the provisions of OIL Industry (Development) Act, 1974. It was held in the case that Crude Oil Cess is not in the nature of excise duty and consequently, the Education Cess and Secondary and Higher Secondary Education Cess computed thereon, also does not bear the character of a duty of excise, but is merely an amount paid under a mistake of law. As a necessary corollary, it follows that the provisions of the Central Excise Act, 1944 would not be applicable for refund of such amount paid by mistake. Moreover, since there was no liability to pay Education Cess and Secondary and Higher Secondary Education Cess, the provisions of the Central Excise Act as incorporated in the OIC Act would also not apply to the amount paid by mistake. Refund allowed - appeal allowed - decided in favor of assessee.
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2017 (5) TMI 142
Clandestine removal - penalty - The main contention of the Ld. A.R. of the Revenue is that Shri Sanjay Khaitan, Director of the respondent Co., in his statement admitted the clandestine removal of the goods - It is further contended that the retraction of the statements nothing but an afterthought and is not acceptable - Held that: - Apparently, the investigation officers, had proceeded on the basis of the statement recorded at the time of visit. Subsequently, the statement was retracted - In any event, there is no material on record of further investigation of the case. Revenue has not placed any positive evidence before the Tribunal except the statement of the Director which was subsequently retracted - appeal dismissed - decided against Revenue.
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2017 (5) TMI 141
Re-credit of CENVAT account - the appellant availed and utilized Cenvat Credit for payment of duty for clearance of machineries / capital goods and purchased raw-materials / inputs from their units from August, 2008 onwards. Subsequently, the appellant debited the amount alongwith interest from their PLA account as the amount was utilized irregularly. Thereafter, the appellant reaccredited the amount paid earlier in their Cenvat account - Held that: - the Tribunal in the case of sopariwala Exports Pvt. Ltd. Vs. Commissioner of Central Excise, Vadodara-I [2013 (5) TMI 430 - CESTAT AHMEDABAD], on an identical issue allowed the appeal by following the decision of Motorola India Pvt. [2006 (7) TMI 223 - HIGH COURT OF KARNATAKA] - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 140
Refund claim - finalization of the provisional assessment - refund of excess amount paid by the assessee - Section 11B of CEA, 1944 - denial on account of time bar - Held that: - as per section 11B, the limitation starts from the date on which the order was communicated to the assessee. As the details of communication of the order of adjustment of duty is not available, the matter should be remanded to the Adjudicating Authority to decide the refund claims on the basis of the above observation in accordance with law - appeal allowed by way of remand.
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2017 (5) TMI 139
CENVAT credit - catering service - guest house maintenance service - Held that: - the outdoor catering service fall in the definition of input service and the appellants are entitled to CENVAT credit on the same. As far as maintenance of guest house is concerned, the same does not fall in the definition of input service and therefore appellants are not entitled to the CENVAT credit of service tax paid on maintenance of guest house. Appeal allowed - decided partly in favor of appellant.
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2017 (5) TMI 138
Shortage of finished product - Non Alloy Ingot - the case of appellant is that the joint Verification Report, by which shortage was discovered, was prepared without any weighment and it was only eye estimation - Held that: - joint verification report of the physical stock was prepared in presence of the representatives of the appellant. No dispute was raised - the demand of duty alongwith interest is justified. Mere shortage of the goods ascertained during stock verification, would not be treated as clandestine removal of the goods. There is required positive act to establish clandestine removal of the goods. In the present case, there is no material on record of the clandestine removal of the goods. So, the imposition of penalty u/s 11AC of the CEA, 1944 is not warranted. Demand of duty with interest upheld - penalty set aside - appeal allowed - decided partly in favor of appellant.
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2017 (5) TMI 137
CENVAT credit - security service - capital goods - integrated units - The appellant did not register second unit under the Central Excise provisions since there was no manufacturing process undertaken but was only a supporting unit for first registered unit of the appellant - Held that: - both the units belong to the appellant but due to shortage of space in Unit-I, the appellant has established Unit-II which is situated in the same area and fall under the same Range and Division of the Commissionerate and both the units are integrated units as some of the processes are being carried out in another unit and are returned back to the first unit and from there it is cleared on payment of duty and this arrangement has been informed to the department - CENVAT credit on security services received at Unit-II cannot be denied on the ground that the same is not used by the manufacturer, as both the units belong to the same manufacturer and both are connected and integrated units - Similarly, the other issue that capital goods were not used in the factory is also not sustainable. The denial of credit on capital goods on the ground that the appellant have taken the 100% credit in the first year itself instead of 50%, the denial of 100% credit is also not sustainable because in the subsequent financial year, the appellant is entitled to take credit and the appellant had sufficient CENVAT credit balance in their account which they have not utilized. Therefore, denial of CENVAT credit on this count is also wrong. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 136
Classification of goods - FRANCH OIL NH - whether FRANCH OIL NH is covered by the Tariff entry 30.03 or shall be classifiable under Tariff heading 15.02? - Held that: - the goods is basically a drug providing relief and remedy for wound healing used as antifungal-antibacterial, analgesic and has also anti-inflammatory properties. The goods has trade name ie. “FRANCH OIL NH” having the character of proprietary medicine - Having noticed the character of the goods which is drug in nature and also for the features aforesaid, including the trade name it bears that squarely falls under the Chapter 30.03 as classified by Revenue - appeal dismissed - decided against Revenue.
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2017 (5) TMI 135
SSI Exemption - availing Benefit of N/N. 67/95-CE against captive consumption - intermediate goods - whether the intermediate PP strips manufactured by the SSI appellant falling under Chapter 38 of the CETA,75 ultimately used in the manufacture of woven sacks which were finished goods is exempted in terms of N/N. 67/95-CE dated 16.03.1995? - Held that: - the goods are neither exempt nor subject to nil rate of duty by virtue of appellant’s status as SSI whose clearances were otherwise dutiable - It is mandate of the notification that when conditions attached to column 2 and 3 of the Table appended to the Notification are satisfied, grant of the notification is undeniable - The input was thereby an intermediate manufactured in the factory of the appellant and was not at all covered by the barring clauses contained in (i), (ii) and (iii) and (iv) of Col.2 of the Table appended to the N/N. 67/95-CE dated 16.03.1995 - benefit allowed - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 134
CENVAT credit - duty paying invoices - denial on the ground that the appellant is not eligible to avail CENVAT credit on the strength of invoices raised on sales office and not on manufacturing unit - Held that: - the appellants are entitled to avail CENVAT credit on the input services availed at the Branch Office - reliance placed in the case of Manipal Advertising Services Pvt. Ltd. vs. CCE [2009 (10) TMI 434 - CESTAT, BANGALORE] - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 133
Shortage of goods - CENVAT credit - case of Revenue is that the CENVAT credit availed by the appellant is not available on that portion of the pet coke which was not received in the factory as the same has not been used in the manufacture of final products - Held that: - The appellant had not intimated the short receipt of goods to the jurisdictional Central Excise Authorities and unless the Departmental officers audited the records, the said irregular availment of Cenvat Credit would not have come to the knowledge of the Department - the decision of the Adjudicating Authority in disallowing the irregularly availed Cenvat Credit and demanding of appropriate interest and also imposition of penalty u/r 15(2) of CCR, 2004 read with Section 11AC of CEA, 1944 is legal and proper - appeal dismissed - decided against appellant.
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2017 (5) TMI 132
Valuation - cost of packing material received free of cost - corrugated cartons - includibility - whether in terms of Rule 6 of Central Excise Valuation Rules, 2000, the cost of such packing material supplied free of cost is to be treated as additional consideration flowing from the buyer to the assessee in relation to sale of the goods, and to be included in assessable value? - Held that: - the respondents have been receiving the packing material viz. corrugated cartons from their buyer on free of cost basis for use in packing of PET bottles/jars manufactured by them. The jars and containers are meant only for carrying the excisable goods manufactured by the respondents. Clearly, these cartons do not render the excisable goods to be marketable and are meant only for transportation - the PET containers are marketable without being put in the corrugated cartons and the ratio of judgement in the case of CCE, Indore Vs. Grasim Industries Ltd. [2014 (4) TMI 650 - CESTAT NEW DELHI] is applicable in the present case where it was held that he cost of only that packing would be includible in the assessable value which is necessary to make the goods marketable and this principle would be applicable while interpreting the provision of Section 4. If some goods are marketable without being put into the containers, the cost of containers including their testing charged would not be includible in the assessable value - appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2017 (5) TMI 129
Levy of VAT - steel wires - Tribunal was of the view that when steel rod is used to manufacture steel wires, then the product so manufactured would not be liable to be taxed under the provisions of the U.P. Trade Tax Act, as tax has already been paid upon purchase of steel rod - Held that: - It is admitted that steel wire is a distinct commodity brought into existence pursuant to manufacturing process undertaken. Since a new commodity has come into existence pursuant to manufacturing activity, Tribunal was not justified in relying the circular to hold that tax is not payable upon such commodity, on the ground that tax was paid upon the rod used for manufacturing - appeal allowed - decided in favor of Revenue.
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2017 (5) TMI 128
Detention of vehicle - Penalty u/s 13-A(4) of the U.P. Trade Tax Act, 1948 - whether Tribunal was justified in disbelieving documents produced on the day of interception of vehicle on the surmises and speculations of having been prepared after the detention of the vehicle, and without any substantive material on record to hold so? - Held that: - It is settled that if the dealer before an order of seizure could be passed if produces relevant documents and materials to show that goods were duly accounted for and there was no intention to evade tax then the order of seizure or for imposing penalty would not ordinarily be passed - In view of the fact that the transaction was duly accounted for in the books of account, and the transaction could not be disputed effectively, the order passed by the Tribunal is not liable to be sustained - penalty set aside - decided in favor of assessee.
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2017 (5) TMI 127
Levy of VAT on sale of Business - Validity of assessment order - violation of principles of natural justice - lack of jurisdiction - the writ petitioner/dealer claimed exemption invoking Rule 36 of the Telangana VAT Rules. But the assessing officer came to the conclusion that the Rule went beyond the charging provision and other provisions of the Act - Whether The Assessing Officer Had Jurisdiction? - Held that: - No business can be transferred in the course of trade or business, unless a person is in the very business of buying and selling business houses. Therefore, unless a sale takes place in the course of trade or business, it is not covered by the Act - What the assessing officer has done in this case is to take the consideration fixed under the Business Transfer Agreement for every item of asset, as the sale of individual items of goods including goodwill and confirmed the demand made in the show cause notice. Therefore, it is clear that even the Assessing Officer could not regard the transfer of business as a sale, but split such transfer as involving the sale of individual items. The Assessing officer was completely wrong in thinking that the sale of a business as a whole is taxable simply because such a sale also involves a sale of several items used in the course of business. Another important feature is that the petitioner which is a partnership firm, sought to transfer the entire business as a going concern under a business transfer agreement to a private limited company of which the partners of the petitioner were the shareholders. In consideration of the transfer of the business as a whole, the partners of the petitioner were allotted equity shares and preferential shares in the company. Therefore, to treat the same as a sale of goods merely on the ground that all the assets of business are individually mentioned in the Schedule together with their value, is completely contrary to the Statutory prescription. Therefore, the impugned order has been passed on an assumed jurisdiction, where none exists. The impugned order was without jurisdiction - petition allowed - decided in favor of petitioner.
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