TMI Tax Updates - e-Newsletter
June 19, 2014

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise

Articles

1. Service Tax & VAT on Softwares & Software Licensing

   By: CA.Ankit Gulgulia

2. Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 - New Companies Act

   By: CSSwati Rawat

3. Preparedness of Central Excise duty IF imposed on Textiles - July 2014

   By: Madhukar N Hiregange

4. EMPLOYEE'S SERVICES ARE NOT TAXABLE

   By: Dr. Sanjiv Agarwal

News

1. Imposition of Minimum Export Price on Onion Export

2. RBI Reference Rate for US $ and Euro

Circulars / Instructions / Orders

FEMA

1. 145 - dated 18-6-2014

Annual Return on Foreign Liabilities and Assets Reporting by Indian Companies – Revised format

Companies Law

2. 20/2014 - dated 17-6-2014

Clarification with regard to voting through electronic means -reg.

Highlights / Catch Notes

Income Tax

• Court Upholds Rejection of Accounts u/s 145(3) for Tax Assessment; Dismisses Wastage Claim as Lacking Merit.

  Case-Laws - HC : Rejection of books of accounts u/s 145(3) - estimation of sale and income – there is no weight in the plea that the claim of wastage allowed to the assessee in the subsequent year be adopted - HC
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• Deduction Claim Approved: Exported Ready-to-Print Books Qualify as Customized Electronic Data u/s 10B of Income Tax Act.

  Case-Laws - AT : Assessee is entitled to claim deduction u/s 10B - the ready to print books exported in the form of a CD or e-mail are customised electronic data eligible for claiming benefit of deduction - AT
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• Assessee Eligible for Section 12AA Registration; Publishing Magazine Doesn't Disqualify Charitable Status u/s 2(15.

  Case-Laws - AT : Registration u/s 12AA – Charitable purpose u/s 2(15) - assessee cannot be deprived of registration u/s 12AA of the Act, merely on account of engaging itself in publication of a magazine - AT
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• Andhra Pradesh Government Grant Classified as Capital Receipt; Subsidy Calculation Method and Fund Allocation Details Irrelevant.

  Case-Laws - AT : Grant from Govt. of AP – Capital receipt or not - The method of determination of the quantum of subsidy will not matter, similarly the various heads under which the grants were actually spent is immaterial - AT
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• Court Rules 18% Interest Rate in Recovery Suits Cannot Be Presumed Accrued, Affecting Tax Liabilities Assessment.

  Case-Laws - AT : Accrual of interest - uncertainty - it cannot be presumed that the interest accrued to the assessee at the rate of 18% p.a. as claimed by the assessees in the suits filed for recovery of advances - AT
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• Additional Lease Premium for Hotel Construction Not Considered Rent; Not Tax Deductible u/s 194I of Income Tax Act.

  Case-Laws - AT : TDS u/s 194I - nature of payment of additional lease premium - Construction of the hotel beyond the specified period – it cannot be said to be not in the nature of rent and not exigible to deduction of tax at source u/s 194I - AT
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• Transport and Commission Expenses Disallowance Requires Proof of Illicit Payments to Saddam Hussain, Not Business Parties.

  Case-Laws - AT : Disallowance on transport and commission expenses – until and unless it is otherwise proved that the payment was an illicit payment to the Saddam Hussain regime and not to the parties it cannot be concluded that the payments are not made for the purpose of business of the assessee - AT
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• Vacant land transfer to developer for flats is a property exchange u/s 2(47)(i) of Income Tax Act.

  Case-Laws - AT : Joint development agreement - having handed over the possession of the vacant land to the developer on promise to be handed over four flats equivalent to 40% of the value of the property to be constructed, it was a clear case of transfer by exchange within the meaning of S.2(47)(i) - AT
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Customs

• Appellant's Failure to Prove Kerosene Sold to PDS Beneficiaries Results in Denied Exemption Benefits.

  Case-Laws - AT : Import of kerosene oil - Appellant has not produced any evidence in their support that the supply in excess of quota fixed under PDS, was sold by the dealers only to the ultimate beneficiary of the public distribution system. benefit of exemption Notifications is not available - AT
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• Confiscation of GPS Devices in India Under Customs Act 1962: Legal Distinction Between GPS Receivers and Transreceivers Crucial.

  Case-Laws - AT : Confiscation of goods - import of GPS and Modem - GPS receiver versus GPS Transreceiver - Law is clear that when the goods enter into India in contravention of law that becomes smuggled goods under section 2 (39) of Customs Act 1962 - AT
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• Fraudulent Waiver of Pre-Deposit in Customs and Tax Cases: Unfair Advantage Through Deception.

  Case-Laws - AT : Waiver of pre-deposit - Fraud is an act of deliberate deception of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss - AT
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Service Tax

• No Service Tax Liability on Business Support Services for Couriers Using Buses Before May 1, 2011.

  Case-Laws - AT : Business Support Services - Transportation of parcels, goods and operation of courier services in the buses of the appellant - there may not be any liability prior to 1.5.2011. - AT
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• Service Tax Not Applicable on Processing Tobacco Leaves for Clients; Classified as Agricultural Activity.

  Case-Laws - AT : Demand of service tax - processing of tobacco leaves - activity of processing of tobacco for and on behalf of the client relates to agriculture. - not taxable - AT
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• Appellant's Choice of Cenvat Credit for Exports Upheld; Law Allows Refund or Credit Options.

  Case-Laws - AT : Refund of Cenvat credit - export - department contended that appellant should have claimed refund of service tax instead of availing the Cenvat credit - two option having been extended to the assessee, it is his choice to avail any one such option. - AT
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Central Excise

• Interest Demand on Delayed Tea Duty Payment Under Finance Act 2003: Central Excise Act Provisions Not Applicable.

  Case-Laws - HC : Demand of interest on delayed payment of additional duty on TEA - levy u/s 157(1) of the Finance Act 2003 - provision of Central Excise Act, 1994 toward demand of interest are not applicable - HC
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• Refund Denied for Unjust Enrichment: Payments to Closed Units in 2006 Not Barred by Unjust Enrichment Rule.

  Case-Laws - AT : Denial of refund claim - Unjust enrichment - when a unit has been closed in the year 2006 and there is no activity going on, if any payment is made in that account, the question of bar of unjust enrichment does not arise at all. - AT
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• Duty Demand Issued: P.D. Pumps Denied Exemption for Not Being Primarily Water-Handling; Includes Flameproof and Non-Water Liquid Pumps.

  Case-Laws - AT : Duty demand - P.D. pumps - one of the pumps are flame proof and other is used for liquid other than water also - The pumps in question cannot be said to be primarily designed for handling water. - exemption denied - AT
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Case Laws:

• Income Tax

• 2014 (6) TMI 509
  Rejection of books of accounts u/s 145(3) - estimation of sale and income – Held that:- The Tribunal was rightly of the view that the AO being not satisfied with assessee's reply because apart from not submitting the consumption ratios, even the inventory of the opening and closing stocks was not furnished - The AO held that the trading account prepared by the assessee was incorrect and incomplete and could not be relied upon - he was applying the ratio of 1:3 between grocery contention and sales holding that it was a reasonable basis - the AO held that the ratio of 1:3 was to be applied for estimating the sales made by the assessee - Taking into account the value of the purchases, opening and closing stock, the consumption by the assessee was worked out to Rs.38,77,186/- and the sales were estimated at 3 times this figure at Rs.1,16,31,558 - this was in excess of the declared sales of Rs.92,25,262/- by Rs.24,06,296/-, the difference in two figures was added to the total income as undeclared sales. The assessee had not maintained proper books of account and the same were rejected u/s 145(3) of the Act - The claim of wastage in each year depends upon various factors and cannot be applied uniformly unless the comparable circumstances are analyzed and found to be identical - This would primarily be a question of fact - there is no weight in the plea that the claim of wastage allowed to the assessee in the subsequent year be adopted – thus, no substantial question of law arises for consideration – Decided against Assessee.

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• 2014 (6) TMI 508
  Disallowance u/s 40(a)(ia) of the Act – Business promotion expenses – TDS provision – Held that:- CIT(A) has granted the relief to the assessee by considering the correct facts pointed out by the assessee in respect of the rebates allowed to the customers which was shown under the head business promotion expenses - the correct amount of TDS deducted by the assessee as per the e-TDS return - the assessee raised a fresh plea before the CIT(A) that the expenses debited to the P&L account under the head business promotion expenses also includes a sum towards the bad debts – the amount cannot be disallowed by applying the provisions of section 40(a)(ia) - CIT(A) has accepted the explanation of the assessee without getting the fact verified from the AO – the AO was not given the opportunity to verify the correctness of the claim and further the claim of bad debts also requires to be examined – thus, the matter is to be remitted back to the AO for fresh adjudication – Decided partly in favour of Assessee. Deletion of commission income – Held that:- The commission income is in respect of the air travel insurance and the accrual of income depends on the actual journey undertaken by the passenger - If the passenger decides not to undertake the journey and the ticket is cancelled then the insurance also gets automatically cancelled - The commencement of the policy is dependent upon the commencement of the journey and once the ticket is cancelled then there is no question of commencement of the policy - the revised policy of accounting wherein the revenue of the commission on travel insurance is recognized by the assessee only when there is a commencement of the policy and not on mere sale of policy - the accrual of the revenue depends upon the actual journey undertaken by the passenger, the accounting policy of recognizing the revenue only at the time of commencement of the policy is proper and justified – Decided against assessee. Disallowance of payment made - Reimbursement of expenses – Held that:- The parent company namely TCIL is having taxable income and subjected to the highest rate of tax - the sharing of the expenses is revenue neutral - expenses which were relatable to the area being used by different companies e.g. rent/ electricity / rates the taxes, general maintenance, housekeeping and security were allocated on the basis of 'area' being occupied/used by each of these companies - certain expenses which were directly relatable to the employees for e.g. staff welfare, internet usage and resource input were being allocated on the basis of 'head count' of each company - the basis of allocation of expenses is fair and reasonable - the allocation of expenses relating to resource input is on the basis of 'head count' and secondly because no useful tax planning purpose will be served for this group of companies since the appellant as well as the parent company are paying taxes at the same rate – Decided against Revenue.

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• 2014 (6) TMI 507
  Disallowance of commission paid - illicit payment - surcharges paid directly or indirectly to Iraq - Exports made to Iraq under "Food for Oil Programme" – Held that:- The United Nations’ sanction was with reference to payment made to Iraq Government by suppliers and not the payment made to intermediaries - commission paid by the assessee are duly approved by the Reserve Bank of India and the payments were made to a third party - The Volker Commission report had discussed about the utilisation of money by the recipient of the commission received as commission with the government and parting of such commission with the Government of Iraq – but, there is no finding at all by the tax authorities that the third party had rendered any services and the commission paid to the third party was diverted to the Government of Iraq – Following NSIL EXPORTS LTD. [2014 (6) TMI 496 - ITAT MUMBAI] – thus, the disallowance made by the AO is not in accordance with law – Decided partly in favour of Assessee.

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• 2014 (6) TMI 506
  Partial deletion of interest paid to bank u/s 57(iii) of the Act – Held that:- The assessee claimed to have borrowed the sum of Rs.77,48,250/- from ICICI Bank and out of which, Rs.75,00,000/- is advance to SBPL - the details furnished by the assessee, the working of the disallowance of interest made by the CIT(A) is not verifiable – thus, the matter is required to be remitted back to the AO to rework out the disallowance of interest considering the utilization of borrowed money - Decided in favour of Revenue. Deletion made u/s 68 of the Act – Held that:- CIT(A) had found from the examination of bank account of Yakub Khan that the sum of Rs.9,00,000/- was deposited by Mr. Khan in his bank account which sum was withdrawn by him from the bank a few days earlier for procurement of some material - CIT(A) has examined in detail the facts of the case relating to each and every creditor - He has meticulously examined the source from where the creditor advanced the money to the assessee and had allowed the relief to the assessee only when he was fully satisfied about the creditworthiness of the creditor and exact source from where creditor advanced the money – there was no infirmity in the order of CIT(A) – Decided against Revenue. Deemed dividend u/s 2(22)(e) of the Act – Held that:- CIT(A) has recorded the finding that SBPL has not given any loan or advance to the assessee - it was assessee’s own money which was utilized by SBPL for making the payments on behalf of the assessee - the assessee produced the copy of account of SBPL in assessee’s books of account - there was always substantial debit balance in the account of SBPL - the assessee advanced the sum to SBPL during the accounting year - the assessee gave the loan to SBPL and not SBPL gave the loan to the assessee - SBPL has incurred certain expenditure on behalf of the assessee and debited the sum to the assessee’s account but, nevertheless, the net result was always substantial debit balance in the account of SBPL - when no loan is given by SBPL to the assessee, the question of application of Section 2(22)(e) does not arise – Decided against Revenue.

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• 2014 (6) TMI 505
  Levy of penalty u/s 271(1)(c) of the Act – LTCG on sale of shares - Held that:- The assessee has disclosed the income in the return of income, paid tax but claimed that the income is not taxable - The AO did not accept the assessee’s claim and also levied penalty u/s 271(1)(c) in respect of the capital gains which is already disclosed by the assessee in the return of income - The very basis of the levy of penalty u/s 271(1)(c) is the concealment of income or furnishing of inaccurate particulars of income – Relying upon CIT Vs. Reliance Petroproducts Pvt.Ltd. [2010 (3) TMI 80 - SUPREME COURT] - The assessee disclosed the income in the returned income, made a claim by way of a note and the law does not bar or prohibit an assessee from making a claim which he believes is a plausible claim. The assessee’s claim is duly supported by the opinion of a Senior Advocate - Department may or may not accept the assessee’s claim as correct but the law does not bar an assessee from making a claim and the denial of such claim by the Revenue will not make the assessee liable for penalty of concealment of income - all the relevant facts were disclosed by the assessee and it is not the case of the Revenue that any facts disclosed by the assessee in the return of income were found to be incorrect or erroneous or false – thus, the levy of penalty u/s 271(1)(c) of the Act was not justified – Decided in favour of Assessee.

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• 2014 (6) TMI 504
  Disallowance of deduction u/s 10B - producing a ready to print e-book - customized electronic data – Held that:- Following Kiran Kapoor Versus ITO Ward-23(2) New Delhi [2014 (5) TMI 548 - ITAT DELHI] - The assessee after collecting raw data and pictures has utilized its expert designing skills in producing a ready to print e-book - The final product is intended for use of a particular customer and it does not fit in the category of production of “any customized electronic data” as per the definition of computer software defined in Explanation 2 to section 10B of the Act - even if it is said that the assessee has merely customized the data, which was already available and has not created altogether new software then too the appellant cannot be deprived of the benefit of deduction – the definition of "produce" is wider than the term manufacture. The Assessee’s business involved export of ready to print books which in the instant case is the “customized electronic data” - The nature of activity done by the assessee in the EOU was that of producing designs, drawings, layouts and scanning for the projects of foreign clients on the basis of their parameters and specifications - This activity is done by taking into consideration the data collected by the assessee itself or from clients – the assessee is entitled to claim deduction u/s 10B of the Act - the ready to print books exported by the appellant in the form of a CD or e-mail are customised electronic data eligible for claiming benefit of deduction –the AO to allow the claimed deduction u/s 10B of the Act – Decided in favour of asseessee.

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• 2014 (6) TMI 503
  Denial of registration u/s 12AA of the Act – Charitable purpose u/s 2(15) of the Act - Division opened for publication activity – Held that:- Following Asst. Director of Income-tax (Exemption) -III, Hyderabad Versus Gideons International in India, Hyderabad [2014 (5) TMI 815 - ITAT HYDERABAD] - the placement and distribution of Bible and New Testament is for the benefit of the general public, and thus, is one of the charitable purposes referred to in S.2(15) of the Act being ‘advancement of any other object of general public utility’ - exemption u/s 11 is available for trusts which are charitable or religious or partly charitable and partly religious - even if the income is earned by trust, which is charitable as well as religious and part of the income is applied for religious purposes, exemption u/s 11(1)(a) is still available - the assessee cannot be deprived of registration u/s 12AA of the Act, merely on account of engaging itself in publication of a magazine – thus, the matter is to be remitted back to the DIT(E) for passing appropriate orders, granting registration to the assessee, subject to fulfillment of other conditions, in accordance with law and after giving reasonable opportunity of hearing to the assessee – Decided in favor of Assessee.

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• 2014 (6) TMI 502
  Disallowance of expenses - Domestic segment being common expenses in the nature of rent, power, telephone, depreciation proportionately allocated to the export segment – Held that:- CIT(A) has recorded the finding that export segment services rendered by the assessee were outsourced and the expenses which have not been allocated by the assessee were not incurred for the purpose of export business – the findings recorded by the CIT(A) have not been controverted by the revenue - Outsource agreements were produced by assessee before the CIT(A) and perusing the same he has recorded the findings – thus, there was no infirmity in the order of the CIT(A) - the allocation as done by the AO was not required to be done in respect of expenses relating to rent, power, telephone and depreciation – Decided against Revenue.

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• 2014 (6) TMI 501
  Grant from Govt. of AP – Capital receipt or not - Uplifting the poor cobblers to a higher standard of living above the poverty line – Held that:- The character of the subsidy would depend on the purpose for which the same is given - If it is for promoting setting up of new Industries, then it is capital in nature - The method of determining the subsidy and the mode of distribution does not matter - the Government of AP had taken a decision to develop leather industrial parks in the state which will result in huge employment generation potential - the State government declared the Assessee as the Nodal Agency to act as a facilitator and for setting up Leather Industrial parks all over AP - Merely because a portion of the grant is paid to enable the Assessee to meet the expenses, it would not alter the character of the grant - it is the overall purpose of the grant that determines the character of the grant - The method of determination of the quantum of subsidy will not matter, similarly the various heads under which the grants were actually spent is immaterial as such expenses are only part of the overall object and purpose for which grant has been given - even if the amount of Rs. 2.03 given by the State Government is treated as grant/ subsidy, the same is a capital receipt not taxable – thus, the order of the CIT(A) is upheld – Decided against Revenue. Allowability of claim of loss – Held that:- The figures of sale of goods, purchase and figures of opening and closing balances of stocks, the CIT(A) agreed with the plea of the assessee that there was no stoppage of business activity, and the AO mistook the plea of the assessee that the manufacturing activity was stopped as admission of stoppage of business activity - No material to the contrary has been brought on record by the Revenue – thus, there was no infirmity in the conclusion of the CIT(A) – Decided against Revenue. Treatment of lease rental – Business income or property income – Held that:- The assets that yielded the rental income are the business premises, plant and machinery of thee assessee, which were hitherto used by the assessee for its own business activity, and such leasing out was done in view of the stoppage of manufacturing activity by the assessee, just to use the idle assets for income generation purposes - No evidence has been brought on record by the Revenue to contradict these findings – thus, there was no infirmity in the order of the CIT(A) – Decided against Revenue.

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• 2014 (6) TMI 500
  Refusal to grant registration u/s 12A of the Act – Original MOA and other documents to be produced - Held that:- The DIT (E) has refused registration to the assessee society on the ground of its bye-laws not being in conformity with the requirements of the A.P. Societies Registration Act, and the variance between the objects, redundantly stated in the Bye Laws, and the objects stated in the MOA - both being too general, and not verifiable - the assessee has expressed its preparedness to amend the byelaws, so as to make the bye laws specific and verifiable, to the satisfaction of the DIT(E) – thus, the matter is remitted back to the DIT(E) for fresh examination of the assessee’s application for registration u/s 12AA and approval u/s 80G, after giving reasonable opportunity to the assessee to make necessary amendments to its byelaws, so as to make them specific and in conformity with the provisions of A.P. Societies Registration Act – Decided in favour of Assessee.

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• 2014 (6) TMI 499
  Accrual of interest - Chargeability of interest – uncertainty - Money given as advance - dispute between parties – Held that:- The assessees have advanced the loans/temporary advances to M/s. SCSL - the assessees have advanced the loans or temporary advances through banking channels and immediately after the statement of Sri Ramalinga Raju, the assessees have also issued legal notices for the repayment of the loans and also filed civil suits for recovery of the loan amounts along with interest in the City Civil Court, Secunderabad – Relying upon CIT V/s. Walchand & Co. P. Ltd. [1967 (3) TMI 2 - SUPREME Court] - the assessees have stated before the CIT(A) that the amounts advanced are from out of the share application monies and temporary advances - It is so stated on the basis of entries in the Balance Sheet and the Profit & Loss Accounts of the respective assessees filed along with their returns of income. There is no certainty with regard to the said rate of interest - it cannot be presumed that the interest accrued to the assessee at the rate of 18% p.a. as claimed by the assessees in the suits filed for recovery of advances - unless and until the liability to pay the advances and the rate of interest at which the temporary advances are to be repaid is determined by the Civil Court, it cannot be said that the same has accrued or arisen to the assessees - if the assessees had advanced interest bearing funds as interest free advances, the interest paid by the assessees towards such borrowed funds would have to be disallowed and treated as the income of the respective assessees – the order of the CIT(A) is set aside and the matter is remitted back to the AO for fresh adjudication – Decided in favour of Assessee.

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• 2014 (6) TMI 498
  Disallowance of advances written off by debiting to P & L account – Held that:- Assessee has made the deposits in the course of obtaining the advertisement business and these were written off as assessee has closed down that particular business - No asset has been created at the time of making deposit and assessee as part of its business only has to make deposits – Relying upon United Motors India Ltd. vs. ITO [2010 (4) TMI 726 - ITAT, MUMBAI] - by making the interest free deposits for the purpose of obtaining the permissive use or licence to use the premises, assessee did not obtain any enduring advantage or capital asset - the security deposits and earnest money deposits made did not give any enduring advantage or capital asset and the amounts were written off in the course of assessee’s business, they are to be considered as incidental to the business - Expenditure was not incurred for acquisition of any profit earning apparatus as wrongly observed by the CIT(A) – Decided in favour of Assessee. Disallowance of expenses written off - Forfeiture of rental deposit by the owners of the property – Held that:- The acquisition of premises on lease was not ordinarily be in the capital field as the monies are advanced for the purpose of running business - advances even if crystallized would not result in any capital asset - the advances are made in the course of assessee’s business on which assessee did earn incomes, premature closure of lease agreements resulted in forfeiture of deposits - the rentals paid are on revenue account, the forfeiture of the deposits in the rentals also shall be on revenue account - the write off of deposits is to be allowed as loss to assessee in the course of its business – Decided in favour of Assessee. Advance written off as not recovered – money paid for advertising contract – Held that:- There is nothing on record to notice whether the advances and deposits were made as part of obtaining advertising space or for doing any project or for any other purpose of acquiring asset/business - It is also not on record whether the said company is sister concern or not - There is nothing on record to consider why the contracts have been cancelled and assessee has to forego the amounts - CIT(A) did not analyse the claim, thus, the matter is required to be remitted back to the AO for fresh consideration – Decided in favour of Assessee. Disallowance of interior work advance payment – Setting up of study abroad centres – Held that:- Payments are for purchase of machinery, some of them are acquiring certain intangible rights and some amounts are for interior works - Whether interior work was undertaken or not, whether that may result in any capital asset, has not been examined - Unless the nature of advances, the purpose for which the amount was paid were analysed in detail, it is difficult to hold that expenditure is capital or revenue – thus, the matter is remitted back to the AO for reexamination – Decided in favour of Assessee. Cost of acquisition treated as NIL – STCG arrived by denying WDV – Held that:- The contention of the assessee is accepted - ITAT while analyzing the TPO orders held that website purchased by assessee was at arm’s length, therefore, cost paid should be considered as cost of the asset - the AO is directed to allow the depreciation as claimed - the WDV for the year has to be allowed as deduction while computing short term capital gain- Decided in favour of Assessee.

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• 2014 (6) TMI 497
  TDS u/s 194I - nature of payment - renting or acquiring of lease hold rights - Construction of the hotel beyond the specified period – payment of additional lease premium due to extension of lease period for construction - distinction between payments on revenue or capital account - Held that:- The payment made for an extension of time for the construction of the hotel beyond the period as originally specified in the lease deed - this does not lead to acquisition of any lease-hold rights, or any capital asset for that matter, by the assessee and would not qualify as additional lease premium - there could be no doubt that the sum is not in the nature of rent - also not covered by any other tax deduction provision, being only by way of modification in the terms of the original deed, so that it could be said to be in the nature of a charge or fee paid under the lease agreement for extension of time – revenue could not controvert it in any manner – thus, it cannot be said to be not in the nature of rent and not exigible to deduction of tax at source u/s 194I – Decided against Revenue.

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• 2014 (6) TMI 496
  Disallowance on transport and commission expenses – illicit payment to the Saddam Hussain regime - Held that:- The obligation of the transportation of the goods from ports to the destination is on the part of the assessee - the assessee had to arrange the transportation of the goods from to port to the destination - when the payment of transportation is as per the terms of the agreement then it cannot be treated as bogus or illegal payment - the payments were barred in terms of Explanation to Section 37(1) of the Income-tax Act - until and unless it is otherwise proved that the payment was an illicit payment to the Saddam Hussain regime and not to the parties it cannot be concluded that the payments are not made for the purpose of business of the assessee. The Explanation to Section 37 cannot be invoked merely on the basis of some doubt about expenditure whether made infraction of law. There should be a direct and cogent evidence to show that the payment made by the assessee is contrary to law. The Authorities below failed to bring anything on record to establish that the payments in question were illegally made by the assessee to the Iraqi Authorities. On the contrary, the assessee has produced the evidence of payment to the agent who is not connected to the Iraqi Authorities. Therefore, in the absence of specific finding that the payments were made to the Iraqi Authorities, it cannot be held as illegal payment infraction of law. Even if the assessee fail to prove beyond doubt that the payments in question are inconsonance to the service rendered by the agent the same cannot be held as illegal in the absence of any evidence to prove that the assessee intended to pay the amount illegally through agent. Relying upon TIL Ltd. Versus Assistant Commissioner of Income-tax, Circle-1, Kolkata [2007 (3) TMI 404 - ITAT KOLKATA] - the payments were made purely for the purpose of procuring export orders to Iraq and also for after sale services perform by agent in Iraq and therefore was an allowable expenditure - the payment made to Dalala & Company as commission, included any part of illicit payment termed as kickback in the Volcker Committee Report, on which basis, the payment made to Dalala & Company has been disallowed. The revenue authorities have not been able to pin the assessee on illicit payment made to Dalala, which also is stamped with approval from the RBI, a very heavy burden is cast on the revenue authorities to prove that the payment was made with an illicit intent, which in the end, the revenue authorities were unable to shift - the payments made by the assessee as commission are fully deductible as the said expenditure was incurred by the assessee for the purpose of its business and does not fall under the category of an expenditure incurred for any purpose which is an offence or which is prohibited in law in terms of Explanation to section 37(1) – Decided in favour of Assessee.

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• 2014 (6) TMI 495
  Invocation of section 50C of the Act – Verification of sale deeds - Understated sale consideration – Cost of acquisition – Held that:- The AO and the CIT(A) has brought to tax the capital gains arising from both the transaction viz., the development as well sale of the developed areas handed over to the Assessee - capital gains arising out of the development of the land on the basis of an agreement in 2001 and 2002 cannot be taxed in the year - The Assessee had given possession of the land and the developer has also commenced construction on the same from those years – Following Potla Nageswara Rao [2014 (6) TMI 494 - ITAT HYDERABAD] - in case of development agreement which were executed the capital gains cannot be postponed - the profits/ capital gains arising from development of the land cannot be brought to tax this year, except to the extent the Assessee himself has offered for Tax in his return. Only the profits accrued on the sale of the built up area during the year shall be subject to tax - The AO is directed to compute the profit arising from sale of the built up area, together with undivided interest in land if any, made during the year - The addition made by the AO in respect of unsold area cannot be sustained as only profits arising from land and building transferred can be brought to tax - As regards the addition of Rs. 18,55,000/- the explanation of the Assessee is not clear - As the other issues have been set asided to the file of the AO this issue is also remitted back to the AO for fresh adjudication - The AO will consider the applicability of sec 50C and if he feels that the provisions are applicable, he may refer to the Valuation officer for determining the market value- as required in that section – Decided in favour of Assessee.

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• 2014 (6) TMI 494
  Addition of LTCG – transfer / extinguishment of right - Joint property development agreement - Held that:- The land is a capital asset was transferred by the assessee to the developer during the AY 2003-04, for construction and it is enough if the assessee has received the right to receive consideration on a later date, so as to attract exigibility to tax on capital gains during the year under appeal - Mere accrual of the consideration, as it is to be received in the subsequent years does not defer the taxability of the capital gains - The assessee being owner of the capital asset, having parted with the possession of the land under a joint development agreement, for construction of residential flats/villas and having handed over the possession of the vacant land to the developer on promise to be handed over four flats equivalent to 40% of the value of the property to be constructed, it was a clear case of transfer by exchange within the meaning of S.2(47)(i) of the Act. Relying upon Chaturbhuj Dwarkaddas Kapadia V/s. CIT [2003 (2) TMI 62 - BOMBAY High Court] - S.2(47)(v) read with S.45 indicates that capital gains was taxable in the year in which such transactions were entered into even if the transfer of immovable property is not effective or complete under the general law - the date on which possession was handed over to the developer is relevant for determination of the year in which the capital gains are assessable to tax – there was no merit in the contentions of the assessee that there is no taxability of capital gains – Decided against Assessee. Addition of undisclosed income u/s 64(1) of the Act - Gifts received by minor children - Held that:- The gifts received by the assessee’s children cannot be disbelieved in total - even though the claim of the assessee is in relation to gifts aggregating to Rs 29,10,000, actual withdrawals are seen only at Rs. 26,00,000 - there was a receipt of gifts only to the extent of Rs 26,00,000 only because there are withdrawals only to the extent of Rs 26,00,000 from the accounts of Sri. Y. Venkateswar Rao - donor has confirmed having given gifts and donees also claim to have received gifts - the donees have received gifts of Rs 26,00,000 only and accordingly confirmed the view taken by the assessing officer with regard to balance amount of Rs 3,10,000, for which no corroborative evidence was found – there was no infirmity in the action of the CIT(A) – Decided against Assessee. Determination of capital gain – Development agreement between assesee and his children – Held that:- The agreement for development with M/s Adithya Constructions envisaged the Assessee and other co-owners to transfer 70% interest in the land for 30% of constructed area - the agreement was not fully given effect to and it was subsequently cancelled - some land was utilised by the developer who had constructed 13 houses on the land - the Assessee is liable for tax on capital gains as if the entire development agreement was given – Decided against Assessee. Validity of allowance claimed – Held that:- CIT(A) rightly was of the view that there is no basis for the estimation made by the AO - The Assessee has stood for election as MLC and certain expenses have to be necessarily incurred for canvassing purposes – the benefit of doubt is given to the Assessee and the order of the CIT(A) in deleting the addition of Rs. 1,00,000/- made on estimate basis towards unexplained expenditure is upheld – Decided against Revenue. Profits from sale of lands - Agricultural land not situated within prescribed limit – Capital asset or not u/s 2(14) of the Act – Held that:- It is not clear as to whether the assessee has converted the land for non-agriculture purposes - The AO has observed that originally the intention of the assessee was to develop the land for commercial purposes as the outer ring road was passing near to the land – a part of the same land was given for development for construction of houses and the other part of land which has been entered into agreement with M/.s Amsri Developers P Ltd. has to be proved beyond doubt to be agriculture in nature - Relying upon Smt. Gousia Begum And Others Versus Dy. Commissioner of Income-tax And Others [2013 (9) TMI 559 - ITAT HYDERABAD] - the lower authorities are justified in determining the land as capital asset liable for income-tax. Determination of cost of acquisition – Held that:- As per section 54B of the Act, assessee has to purchase the agricultural land within a period of two years - mere payment of advance does not entitle the assessee for relief u/s 54B of the Act, if ultimately whole transaction of purchase of land was completed within a period of two years as contemplated u/s 54B of the Act, assessee is entitled for relief u/s 54B of the Act – thus, the matter is remitted back to the AO for fresh adjudication as to the nature of land i.e., whether the land can be classified as agriculture land and also beyond 8 kms. of any municipality – Decided in favour of Revenue.

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• Customs

• 2014 (6) TMI 512
  Import of kerosene oil - Denial of benefit of exemption Notification - whether supplies to railways, airforce/defence and PDS dealers beyond quota fixed by the State Government, are eligible for the benefit of the exemption Notification Nos.23/98-Cus. dated 22.06.98, 20/99-Cus. dated 28.02.99 and 16/2000-Cus. dated 01.03.2000 - Held that:- On harmonious reading of the provisions of the exemption Notifications and the definition of the Public Distribution System, it appears that any supply/distribution not meant for sale to public distribution system or the sale through this system in excess of the quota approved by the Central Government/State Government, would not be eligible for the benefit of impugned Notifications. We also notice that Section 3A of the Control Order, 1993 puts restriction on sale and use of kerosene imported under parallel marketing system. The Appellant has not produced any evidence in their support that the supply in excess of quota fixed under PDS, was sold by the dealers only to the ultimate beneficiary of the public distribution system. benefit of exemption Notifications is not available to the Appellant in this case - Decided against assessee.

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• 2014 (6) TMI 511
  Confiscation of goods - import of GPS and Modem - GPS receiver versus GPS Transreceiver - restricted goods - Redemption fine - Penalty - Held that:- Appellate authority appears to have applied his mind to understand whether the goods imported was covered by EXIM policy of 2004-09. He has noted what that GPS trans-receiver means. He was of the view that GPS receiver is different from GPS trans-receiver. Accordingly, he held that there was licensing requirement under EXIM policy. When no licence was obtained, the goods were liable to confiscation. Law is clear that when the goods enter into India in contravention of law that becomes smuggled goods under section 2 (39) of Customs Act 1962 - Decided against assessee.

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• 2014 (6) TMI 510
  Waiver of pre-deposit - Fraud - Mis declaration of goods - Attempt of clandestine removal of goods - Held that:- Prima facie, record reveals that import of 5010 number of bottles of whisky in 501 cartons covered by B/E 795029 dated 26.05.2009 valued at Rs. 1,00,87,566/- (as against declared value of Rs. 83,94,779/-) were concealed under 847 cartons of Carbonated/Aerated water, Beverages and Ketchup etc. Valued at Rs. 5,51,518/- came in container No. DCCU 6984503. Such fact remained undisputed when physical verification of the container was made by Customs which resulted in above inventory as per Panchnama. Above bill of Entry was filed by M/s Swaraj International, Karol Bagh owned and run by one Harsh Anil Vasant. This was confirmed by the appellant Mool Chand Sharma Director of CHA M/s R.U. Import & Export Pvt. Ltd. The CHA was attempting to clear above consignment. In his statements recorded under section 108 of Customs Act, 1962 on 02.06.2009and 03.06.2009 Shri Mool Chand Sharma brought out his role affirming that Harsh Anil Vasant was also owner of both Swaraj International and M/s Mohit International. Statement of Mool Chand Sharma director of M/s Import Export Pvt. Ltd. prima facie, brought out his close connection with Harsh Anil Vasant designing the above modus operandi to defraud Revenue. Para 49.1 of adjudication order brought out how he extended his assistance to Harsh Anil Vasant for clearance of mis-declared goods filing a wrong bill of entry on 26.05.2009 deliberately and twice in past. Mool Chand Sharma laid hands on the stamp of Commissioner of Customs, ICD, TKD adopting unscrupulous means to make use thereof and forge document to make an attempt for clearance of the offending goods. His conduct dragged him to arrest along with Harsh Anil Vasant. Deliberate mis-declaration surfaced in respect of all the 3 B/Es and Shri Mool Chand Sharma failed to defend before learned Adjudicating Authority. Fraud is an act of deliberate deception of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intending to get an advantage as has been held in the case of S.P. Chengalvaraya Naidu V. Jagannath [1993 (10) TMI 315 - SUPREME COURT]. In Ashok Leyland Ltd. V. State of Tamil Nadu [2004 (1) TMI 365 - SUPREME COURT OF INDIA] it has also been held that fraud is proved when it is shown that a false representation has been made knowingly. Therefore there is no scope to grant total waiver of pre-deposit to the appellants for hearing their appeals. - stay granted partly.

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• Service Tax

• 2014 (6) TMI 525
  Cenvat Credit - input services - cable operator service, repair and maintenance service, manpower supply service, pest control service, telephones, Business Auxiliary Service used/received in the residential colony located outside the factory for residence of their employees has been denied by the lower authorities - in relation to manufacture - Held that : - any service availed in residential colony has no nexus with the manufacturing activity of the appellant. Therefore, input service credit is not available to the assessee - Following decision of CCE vs. Manikgarh Cement [2010 (10) TMI 10 - BOMBAY HIGH COURT] - Decided against assessee.

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• 2014 (6) TMI 524
  Business Support Services - Transportation of parcels, goods and operation of courier services in the buses of the appellant - Held that:- services provided by the appellant would come under the category of ‘business support services’ only from 1.5.2011 when the words ‘operational or administrative assistance in any manner’ were included in the definition of ‘business support services’. It is his submission that services provided by the appellant would clearly come under this category and after 1.4.2011, the appellant is paying service tax under this category. - In view of the clarification issued by the Board while considering the nature of services provided by the appellant, we consider, prima facie, the appellant has been able to make out a case to show that the services provided by them would come under the category of ‘operational or administrative assistance’ and therefore, there may not be any liability prior to 1.5.2011. Accordingly, the requirement of pre-deposit of the adjudged dues is waived and stay against recovery of the same is granted during pendency of the appeal - Stay granted.

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• 2014 (6) TMI 523
  Demand of service tax - processing of tobacco leaves - whether the process are in relation to agriculture produce - Notification No. 14/2004-S.T., dated 10-9-2004 - Held that:- All these operations according to the appellant is in relation to agriculture. In terms of Notification No. 14/2004-S.T., dated 10-9-2004 it was clarified that processing of above goods is in relation to agriculture and shall be exempted from the purview of Service Tax. The said notification underwent amendment by further Notification No. 19/2005, dated 7-6-2005, without altering the substratum of exemption aspect. When further confusion came up, Central Board of Customs & Excise issued Circular No. 143/12/2011-S.T., dated 26-5-2011, clarifying that the activity of processing of tobacco for and on behalf of the client relates to agriculture. Accordingly the appellant has no Service Tax liability. - Decided in favour of assessee.

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• 2014 (6) TMI 522
  Business Exhibition service - reverse charge mechanism - Held that:- In the case of Merino Industries Ltd. v. Commissioner of Central Excise, Meerut-II reported in [2011 (7) TMI 820 - CESTAT, NEW DELHI] on the same issue this Tribunal has granted unconditional waiver of pre-deposit of entire amount of service tax, interest and penalty in similar facts. Therefore, the applicants are entitled for waiver of pre-deposit. Following the ratio of the precedent decision, in this matter also, we find that the applicants had made out a case for waiver of the pre-deposit. Accordingly, we waive the requirement of pre-deposit of the entire amount of Service Tax, interest and penalty and stay recovery thereof during the pendency of the appeal - stay granted.

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• 2014 (6) TMI 521
  Maintenance and Repair services - demands of Service Tax - Held that:- Finance Act, 1994 has been amended by introducing Section 97(1) wherein special exemption has been granted for ‘management and maintenance of roads’ for the period 16-6-2005 to 26-7-2009 and for the period after July, 2009, the activity of ‘management and maintenance of roads’ has been exempted from Service Tax. In view of this observation, we find that in all the matters, the period is subsequent to 16-6-2005 when the entry of ‘management and maintenance of roads’ came into existence - Decided in favour of assessee.

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• 2014 (6) TMI 517
  Cenvat credit - place of removal in case of export - Shipping Services, Documentation charges and Terminating Handling charges - Refund of the service tax paid on the services in terms of Notification No. 41/2007-ST dated 06.10.2007 and subsequent Notification No. 17/2009-ST dated 07.07.2009 - Held that:- Tribunal in a number of decisions has held that inasmuch as for export purposes, the place of removal get extended to the load port, the Shipping services availed at the port have to be held as cenvatable input services within the meaning of clause (l) of Rule 2 of the Cenvat Credit Rules, 2004. Reference, in this regard, can be made to the Tribunal decision in the case of CCE V/s. Adani Pharmachem Pvt. Ltd. [2008 (7) TMI 102 - CESTAT AHMEDABAD]. It stands held that as ‘Port’ is place of removal for export cargo for the reasons that ‘sale’ takes place only when the bill of lading is issued by the shipping company, which is issued only after the goods are loaded into the ships, the port area becomes the place of removal. Regarding contention of the department that appellant should have claimed refund of service tax instead of availing the Cenvat credit - Held that:- two option having been extended to the assessee, it is his choice to avail any one such option. It is not the revenue's case that the notification in question, which permits refund, debars availment of credit, in case refund is not claimed. As such it is absolutely the assessee option to claim the Cenvat credit or to claim the refund. For the above proposition reliance is placed upon the Hon’ble Supreme Court in the case of Commissioner of Central Excise & Customs (Appeals), Ahmedabad Vs. Narayan Polyplast-[2004 (11) TMI 112 - SUPREME COURT OF INDIA] laying down that an assessee can choose to avail the benefit under any of the schemes, when benefits are available under two different schemes. Commissioner (Appeals) in the assessee own case, for a different period has held in favour of the assessee. It stands observed by the appellant authority that Cenvat credit was available to them and they cannot be pressurized to claim the refund in terms of notification No. 41/2007. He has also observed that the entire issue is revenue neutral inasmuch as if the appellant had not availed the credit, they were entitled to refund - Decided in favour of assessee.

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• Central Excise

• 2014 (6) TMI 520
  Jurisdiction of court - Whether High Court of Delhi have the jurisdiction to entertain the appeal of the Revenue - Condonation of delay - Held that:- against an earlier order in the case of the respondent-assessee, the Revenue has preferred an appeal before the Madras High Court - Court is not inclined to issue notice in the application for condonation of delay as this Court does not have jurisdiction to entertain the appeal. It will be open to the appellant to file an appeal before the High Court having jurisdiction - Decided against Revenue.

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• 2014 (6) TMI 519
  Demand of interest on delayed payment of additional duty on TEA - additional duty of excise payable under Section 157(1) of the Finance Act 2003 - applicability of provision of Central Excise Act, 1994 toward demand of interest - Held that:- there is no substantive provision contained in the Finance Act 2003 to charge/levy interest on delayed payment of additional excise duty payable under Section 157(1) - liability to pay additional duty of excise on tea is created for the first time by Section 157(1) of the Finance Act 2003. However, the Finance Act of 2003 does not contain any substantive provision to charge/levy interest from the assessee in case if payment of additional duty of excise is not made or made late. So far as Section 157(3) is concerned , it does not mention the word “interest” but only mentions the words “imposition of penalty, refund and exemption”. In other words, by virtue of Section 157(3), only provisions relating to “imposition of penalty, refund and exemption” from Central Excise Act are made applicable to Finance Act, 2003. This, therefore, clearly suggests that so far as levy of additional duty of excise on tea is concerned, no provision is made applicable to the levy relating to payment of interest for its delayed / short / non-payment. To put it differently, firstly, there is no provision made to levy/ charge interest in the Finance Act, 2003: secondly, substantive provision relating to levy/ charging of interest from Central Excise Act is not made applicable to Finance Act, 2003 and thirdly, by virtue of Section 157(3), only provisions relating to penalty, refund and exemption contained in Central Excise Act are made applicable to Finance Act, 2003. Revenue may have power to charge interest from the assessee for non-payment/ short payment/ delayed payment of “excise duty” on the excisable goods but there is a distinction between “ additional duty of excise” and “ excise duty”. The former is paid under the Finance Act 2003 whereas the later is paid under the Central Excise Act. Since the Finance Act, 2003, does not contain any substantive provision to charge interest, a fortiorari - no demand for interest could be raised for non-payment/ short payment/ delayed payment of additional excise duty under the Finance Act, 2003. Such is not the case of non-payment /short payment /delayed payment of “excise duty” because it is paid under the Central Excise Act which contains a specific substantive provision to charge the interest. If the intention of legislature was to levy interest also on non-payment/short payment of “additional duty of excise” then, it would have made separate specific substantive provision in the Finance Act, 2003 itself. However, it was not done. Impugned demand raised by respondent is without jurisdiction as it was issued by the department without there being any substantive provision to levy/charge interest in the Finance Act, 2003. It is therefore not legally sustainable and has to be quashed. - Following decisions of J.K.Synthetics Ltd Vs CTO [1994 (5) TMI 233 - SUPREME COURT] and India Carbon Ltd vs State of Assam [1997 (7) TMI 566 - SUPREME COURT OF INDIA] - Decided in favour of assessee.

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• 2014 (6) TMI 518
  Ex gratia reward - identity of informer - Evasion of CENTRAL Excise duty - Reward Policy dated 20.06.2001 - Whether reward can be claimed as a matter of right - Held that:- The question of identity of the informer, in the opinion of this Court, at least at this stage cannot arise because what was found in the sealed envelope corresponds entirely with the translation of the document placed on record along with the Writ petition An analysis of the Policy would reveal that it consolidates existing practices and policies prevailing in the three departments and outlined the eligibility for granting rewards to informants - petitioner provided what is characterised by the respondents themselves as ‘basic information’. During the submissions, learned counsel had relied upon certain show cause notices sought to have been issued to JV Industries’ sister concern to show that parallel line of investigation existed. Yet the proximity of the information provided by the petitioner on 12.11.2007 and the subsequent raid, which took place in December, 2007, in the opinion of this is Court decisive for a conclsion that the basic information provided in this case was also of a significant character. Therefore, it is held that the petitioners claim could not have been brushed aside in the manner that is sought to be urged by the respondents in the present case.. Given the nature of the discretion which the competent officials have under Rules 5 & 6.3 of the 2001 policy, all that can be said at this stage is that the denial of the petitioners’ representation on the ground of her being unable to establish identity and that she had only provided basic information which was insufficient to generate Interim Reward is not sustainable in law. As to whether the respondents would in the light of this finding wish to grant Interim Reward during the pendency of CESTAT proceedings as they appear to have done in the case of their own officers or await the decision of the CESTAT, is left to the discretion of the authorities who shall after considering all the materials available on record, pass appropriate orders and communicate the same directly to the petitioner within four weeks. - Decided in favour of appellant.

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• 2014 (6) TMI 516
  Denial of refund claim - Unjust enrichment - Closure of 1 unit - Certificate surrendered - Held that:- when a unit has been closed in the year 2006 and there is no activity going on, if any payment is made in that account, the question of bar of unjust enrichment does not arise at all. Both the lower authorities have not examined the provisions of law. They merely relied on the decision of Sahakari Khand Udyog Mandal Ltd. - [2005 (3) TMI 116 - SUPREME COURT OF INDIA]. In fact, in this case the facts of Sahakari Khand Udyog Mandal Ltd. are not relevant at all. In the present case the duty has been paid wrongly in the PLA of a closed down unit which was not required to be paid, therefore bar of unjust enrichment is not applicable - The adjudicating authority is directed to sanction the refund claim within 7 days of receipt of order - Decided in favour of assessee.

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• 2014 (6) TMI 515
  Duty demand - P.D. pumps - one of the pumps are flame proof and other is used for liquid other than water also - Denial of benefit of Notification Nos. 54/93-C.E., dated 28-2-1993, 46/94-C.E., dated 1-3-1994 and No. 56/95-C.E., dated 16-3-1995 - whether the appellants are entitled for the benefit of the Notifications which provide nil rate of duty in respect of P.D. pumps primarily designed for handling water - Held that:- Notification No. 54/93-C.E., dated 28-2-1993 provides nil rate of duty in respect of the pumps classifiable under Chapter Heading 84.13 of the Central Excise Tariff “primarily designed for handling water”. The other notifications are similarly worded. The product literature produced by the appellant shows that the pumps in question are not exclusively designed for handling water as one the pumps are flame proof and other is used for liquid other than water also. The product literature also shows that these are cleared to various industrial consumers. The pumps in question cannot be said to be primarily designed for handling water. Hence the appellants are not entitled to the benefit of the Notifications in question which provide nil rate of duty in respect of the pumps which are primarily designed for handling water. - appellants filed classification lists on 1-3-1993, 1-4-1994 and 16-3-1995 and clearing the pumps in question at nil rate of duty by claiming the benefit of Notifications. In view of this, the allegation of suppression with intent to evade payment of duty is not sustainable. Hence the demand beyond the normal period of limitation is not sustainable and set aside. - Decided in favour of assessee.

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• 2014 (6) TMI 514
  100% EOU - waiver of pre-deposit - paper waste aggregated in the factory premises - Held that:- Appellant cannot clear the said paper to DTA due to the amendment to the policy. We find that the appellant’s own case [2012 (10) TMI 499 - CESTAT, AHMEDABAD] which is held that the appellant is a EOU and segregation of the scrap in his factory would be amounting to manufacture as per the provisions during the relevant period. If that be so, the clearance of paper waste in the DTA would be permissible under the Foreign Trade Policy during the relevant period. We are of the view that the appellant has made out a prima facie case for the waiver of the pre-deposit of the amounts involved. Accordingly, the application for waiver of pre-deposit of the amounts involved is allowed and recovery thereof stayed till the disposal of appeal - Stay granted.

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• 2014 (6) TMI 513
  Waiver of pre-deposi - Fixure of MRP on boxes - Held that:- Adjudicating authority has clearly recorded in his finding that the appellant is not affixing RSP on their boxes. As regards the goods imported by the appellant, the same goods are cleared from customs area on payment of customs duty and CVD. It is common sense that CVD is discharged on the said products only if the RSP is affixed on the said boxes. At this juncture, we find that the appellant is able to make out prima facie case for waiver of pre-deposit of amounts involved. Accordingly, the applications for waiver of pre-deposit of amounts involved is allowed and recovery thereof stayed till disposal of appeals - Stay granted.

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