Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 19, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Highlights / Catch Notes
GST
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Relaxation in return filing procedure for first two months of GST implementation
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JK Assembly adjourned indefinitely without taking up the GST bill for discussion
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West Bengal Goods and Services Tax Ordinance, 2017
Income Tax
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Validity of final assessment order u/s 143(3) r/w Section 144(C)(13) - Petitioner is entitled to file an appeal before the Appellate Authority as contemplated under Section 246(1)(a) of the said Act, which covers an order passed against the assessee under Section 144 of the said Act as well - WP dismissed - HC
Customs
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Whether, before finalization of Bill of Entry, which was provisionally assessed under Section 18 ibid, can the Department proceed against the importer to confirm the differential duty demand and for imposition of penalty? - Held No
Corporate Law
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When a Company is unable to pay the debt or refuse to pay the debt, the financial creditor or the operational creditor, as the case may be, can initiate insolvency proceedings since the corporate debtor defaulted in repaying the debt admittedly showing in the financial statement of the debtor Company, this application deserves admission.
Service Tax
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Rent-a-cab operator service - providing vehicles to the clients on hire basis - There is the fundamental distinction between rent-a-cab and a pure case of hiring - the appellants liability for service tax under rent a cab service cannot be contested.
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The appellant has received the parking income from the vehicles parked in the area allotted for parking. Similarly, the shooting income is received while the premises are let out by the appellant for the shooting purposes - demand of service tax sustained
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Penalty u/s 78 of FA - when the payment of service tax and interest is made and the said information is furnished to the authorities, then the authorities should not service notice in respect of the amount so paid - the penalty imposed on the appellant u/s 78 set aside
Central Excise
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Valuation - The Appellants are not clearing the seat covers along with Water Closets in all cases, does not take away the basic fact that these seat covers are essential parts of Water Closets - the value of seat covers supplied along with the Water Closets should form part of the assessable value of Water Closets.
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Refund of Terminal Excise Duty - supplies to 100% EOU - deemed export - claim is maintainable before the DGFT and not before the central excise authorities
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Classification of goods - boora - mishri - batasha - makhana - conversion of sugar into subject goods is “manufacture” - produce/goods are liable to be classified under Cental Excise Tariff Heading 17019100
VAT
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Mere affirmation of the reassessment order passed by the assessing authority under Section 39 of the Act by the two higher appellate forums does not deter us from holding that the very initiation of the reassessment proceedings without any further incriminating material was illegal. - HC
Case Laws:
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Income Tax
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2017 (6) TMI 736
Liability of the assessee to pay interest on short fall of payment of advance tax - Assessee in default - Interest u/s 234B and 234C - Held that:- The computation of advance tax would be made in advance and deposited with the Government Revenue as per the provisions contained in the said chapter. In absence of the amendment in Section 43(6) of the Act, at the relevant time no liability to pay tax in case of assessee existed. Such liability arose by virtue of a subsequent amendment brought into the statute with retrospective effect. Therefore, at the relevant time when liability to pay advance tax arose, there was no short fall as per the statutory provisions prevailing. No interest can be charged on the ground that by virtue of subsequent amendment with retrospective effect the tax liability arose, the law does not expect the person to perform the impossible. This is precisely what the Division Bench of Kolkata High Court in the case of Emami Ltd. v. Commissioner of Income Tax (2011 (6) TMI 163 - CALCUTTA HIGH COURT ) had held. The assessee cannot be branded as a defaulter in payment of advance tax and it would be nevertheless asked to pay interest in terms of Section 234B and Section 234C of the Act for default in making payment of tax in advance which was physically impossible - Decided in favour of assessee. Appeal is admitted for consideration of following substantial questions of law: “Whether on the facts and circumstances of the case and in law, the ITAT was justified in restricting the disallowance made u/s.14A r.w.r 8D of the I.T.Act to ₹ 10,00,000/without appreciating that provisions of Rule 8D(2)(iii) are applicable to the assessee?”
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2017 (6) TMI 735
Penalty u/s.271(1)(c) - receipt on transfer of intellectual property right - revenue or capital receipt - Held that:- Tribunal came to the conclusion that the assessee had made a claim making full disclosures and in a transparent manner. The assessee had not only disclosed the receipt in question, but had also recorded reasons for claiming that such receipt is not taxable. The Tribunal, therefore, correctly came to the conclusion that merely because such a claim was not accepted by Revenue, would not mean automatically that the assessee should be exposed to penalty proceedings. Where there was neither concealment of income nor concealment of particulars of income, the Tribunal rightly did not sustain the penalty orders. Tax appeal is dismissed. - Decided in favour of assessee.
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2017 (6) TMI 734
Validity of final assessment order u/s 143(3) r/w Section 144(C)(13) - Remedy available to the petitioner as against the order passed under Section 144C(13) - maintainability of writ petition - no objections received within the period specified - Held that:- Assessing Officer cannot proceed to pass the final order till the Dispute Resolution Panel passes an order as stated supra. Once the objection is filed within the period of limitation, consideration of the same is vested only with the Dispute Resolution Panel as provided under Section 144C(5),(6),(7) & (8) of the said Act and as such the Assessing Officer cannot decide such objection. Therefore, filing of such objection before the Assessing Officer within time itself will not get over the period of limitation, if such filing before the Dispute Resolution Panel was after such period. Whether final order passed by th 2nd respondent on 18.11.2016 cannot be treated as the one passed in accordance with Section 144C(13)? - Held that:- Dismissal or rejection of the objection and communication of the same has to be treated and construed as a direction given to the Assessing Officer to complete the assessment as per draft order. Only when the panel choses to reduce or enhance the variation proposed, it can give any specific directions. Therefore, I do not think that the petitioner is justified in contending that the final order is not an order passed under Section 144C(13) of the said Act. Remedy available as against the order passed under Section 144C(13) - Held that:- Petitioner is entitled to file an appeal before the Appellate Authority as contemplated under Section 246(1)(a) of the said Act, which covers an order passed against the assessee under Section 144 of the said Act as well. When such statutory appellate remedy is available to the petitioner, this Court is not inclined to entertain this writ petition by going into the contentions raised on the merits of the matter by either parties. It is well settled that when a statutory appellate remedy is available, more particularly in fiscal matters, parties should not be permitted to resort to the remedy under Article 226 of the Constitution of India.
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2017 (6) TMI 733
Validity of reopening of assessment - deduction under section 10B - change of opinion - Held that:- Assessing Officer was acutely conscious of the assessee's claim of deduction under section 10B of the Act during the original assessment. Assessing Officer by his order of assessment dated 28.02.2014, made a minor disallowance of a sum of ₹ 10,40,714/- out of the claim of deduction made by the assessee under section 10B of the Act. It can thus be seen that the assessee's claim of deduction under section 10B of the Act was part of the original assessment proceedings. Only after being satisfied about the validity of the claim that the same was substantial, accepted by the Assessing Officer. Any attempt on his part to reopen this claim would be based on mere change of opinion. - Decided in favour of assessee Disallowance u/s 14A r.w.r. 8D - Held that:- During the original assessment, this very question came up for consideration. Having taken note of the evidence on record, the Assessing Officer enlarged the disallowance voluntarily made by the assesseee from ₹ 3,66,749/- to ₹ 1,72,648/- and, in the process, made a further disallowance of ₹ 1,35,899/-. This ground for the reopening of the assessment, therefore, is not available to the Revenue. - Decided in favour of assessee
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2017 (6) TMI 732
Validity of block assessment - period of limitation - no notice under Section 143 (2) issued - whether the delayed return treated as non-est return - Held that:- AO had issued a letter seeking information from the assessee. This thus clearly was not a notice in any format. Section 143 (2) requires a notice by Assessing Officer, if he considers it necessary or expedient to ensure that the assessee has not under-stated the income or does not compute excessive loss or has not under-paid the tax in any manner. Only after issuance of such a notice, the Assessing Officer can frame the assessment under Section 143 (3). The fact that such a notice would be necessary even in case of block assessment is settled in the case of Hotel Blue Moon (2010 (2) TMI 1 - SUPREME COURT OF INDIA ). Had the assessee in the present case not filed the return in response to the notice issued by the Assessing Officer or for some reasons such return was held to be invalid or non-est, revenue's contention that no notice under sub-section (2) of Section 143 was necessary and the Assessing Officer could have proceeded to frame the assessment under Sub-section (1) of Section 144 would merit further consideration. In the present case, however, the assessee did file the return, though belatedly. The Assessing Officer did not discard such return but proceeded on the basis of such return and framed an assessment assessing the income higher than the returned income. Under the circumstances, before rejecting such income, notice under Section 143 (2) of the Act was necessary. Such notice not having been issued, the Tribunal correctly upheld the judgment of the CIT (Appeals). - Decided against revenue
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2017 (6) TMI 731
Advance tax liability adjustment from the cash seized - Held that:- In view of the discussion, considering the decision of Division Bench of this Court in case of Kamlesh Bhogilal Kandoi M/s. Bhogilal Mulchand Kandoi vs. A.C.I.T (2014 (11) TMI 1122 - GUJARAT HIGH COURT) we find that the Assessing Authority was in error in not permitting adjustment of the assessee's advance tax liability against the seized cash. Interest on defaults in payment of advance tax - Held that:- Sub section (4) of section 132B of the Act is amply clear and mandates the Central Government to pay interest at the prescribed rate for the prescribed period when the amount is so withheld. Petition allowed. The Revenue shall adjust the advance tax liability on the income of ₹ 70 lacs of the petitioner as requested by him in the letter dated 29.03.2012. Resultantly, the liability to pay interest on the premise that such advance tax was paid late, would not arise. The Revenue shall also pay interest in terms of sub section (4) of section 132B on the remaining amount from out of ₹ 70 lacs after making adjustments as permissible under sub section (1) of section 132B which will include the advance tax, interest under section 234C of the Act and the penalty under section 271AAA of the Act.
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2017 (6) TMI 730
Waiver of interest under Section 220 (2) - whether the Petitioner failed to show that it had suffered genuine hardship’? - Held that:- As rightly noted by the CIT, the mere fact that the interest was 1.5 times the tax by itself does not have any relevance for determining whether the Assessee was suffering from any ‘genuine hardship’. The fact that the Assessee is a part of ‘DuPont’, a global conglomerate which had in 2011 $37.96 billion in net sales and $6.253 billion as operating profit, cannot be said to be an irrelevant factor in considering whether any ‘genuine hardship’ was undergone by the Petitioner. Further, in comparison to the profitability of the Petitioner over the years, the amount paid by it towards interest under Section 220 (2) of the Act was merely $0.004 billion (approx). In the circumstances, the conclusion arrived at by the CIT that no ‘genuine hardship’ can be said to have been caused to the Petitioner cannot be said to be an erroneous exercise of discretion by the CIT. - Decided against assessee.
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2017 (6) TMI 729
TDS u/s 194(A) - TDS on compensation amount awarded under Section 28 of The Land Acquisition Act, 1894 - Held that:- The law laid down in the case of Movaliya Bhikhubhai Balabhai [2016 (5) TMI 488 - GUJARAT HIGH COURT ] is squarely applicable to the facts of the present case wherein held not to deduct TDS from the amount of compensation awarded under Section 28 of the Land Acquisition Act, 1894. - Decided in favour of assessee.
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2017 (6) TMI 728
Violation of Section 40A(3) - assessee has incurred huge expenses in cash for the payment or an aggregate payment made to one party in a day which exceeded ₹ 20,000/- - Held that:- AO has not disputed either the genuineness of the transaction or has not disputed the person to whom payment in cash was made by the assessee. The AO has only disallowed the deduction in view of Section 40A(3) of the Act Rule 6DD of the IT Rules. In our view, once the AO has not disputed the identity of the person to whom the payment was made and has also not disputed the business exigency, the disallowances made by the AO is not sustainable in the eyes of law. In the light of the above, we therefore, deem it appropriate to remand back the matter to the file of the CIT (A) so as to examine the business exigency. If on examining the documents and after seeking the remand report from the assessing officer, the authorities comes to the conclusion that there was business exigencies for making the payment in cash then the authority shall allow the deduction of such payment. The CIT(A) is also directed to examine the claim of the assessee in respect of a cash payment made on holidays for an amount of ₹ 29,38,968/-. in terms of Rule 6 DD of Income Tax Rules. Appeal of the assessee is allowed for statistical purpose.
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2017 (6) TMI 727
Addition on advance towards sale consideration - addition based on statement recorded during the survey - Held that:- No corroborative evidence was brought on record by the AO to show that the sum of ₹ 20 lakhs was paid as advance towards sale consideration to Shri. Chandre Gowda. Neither the sale deed, nor the statement confirming the receipt of ₹ 20 lakhs as advance, nor any statement from the attesting witnesses to the sale deed were brought on record. Further, there is also no evidence in respect of advance paid to Shri. Chunche Gowda. There is no evidence brought on record in the form of agreement to sale, wherein it was agreed that the total sale consideration of ₹ 29,38,000/- was agreed by the assessee to be paid to Shri. Chunche Gowda, out of which ₹ 5 lakhs was paid to him as advance. Neither Shri. Chunche Gowda was examined nor any other document was produced on record. Therefore, in the absence of any evidence, the additions were made merely on the basis of statement recorded during the survey. In our view, it is the duty of the AO to bring on record the corroborative evidence for the purpose of making the addition. Merely on the basis of the statement recorded during the survey or after survey, the addition cannot be made as held by the Hon’ble Supreme Court in the matter of S. Khader Khan Son (2013 (6) TMI 305 - SUPREME COURT ), as also so notified by the Board vide Circular, F. No.286/98/2013 –IT (Inv.II), dt.18.12.2014. Thus the additions for ₹ 25,00,000/-made on account of advances given to Shri.Chandre Gowda and Shri. Chunche Gowda are deleted. In respect of Smt. Giriyamma once the assessee filed a confirmation letter confirming the transaction that no sum of ₹ 8 lakhs was paid in cash to Smt. Giriyamma, then it is the solemn duty of the assessee to give all the details of her like date of her death, date of confirmation, Pan no, address etc. In the light of the above, we do not think the explanation given by the assessee is plausible and can be accepted. In view thereof, we uphold the order passed by the CIT (A) with respect to addition of ₹ 8 lakhs. Difference in cost of construction of residence, as well as upstairs - Held that:- The cost of construction of the property at Hammasandra as well as the first floor of residence at Joggihalli, Chikkanayakanahalli, were required to be based on some material. The ld AO has not made the addition based on some material or basis rather had made solely on the basis of the statement and an estimation. In our view, the whole basis of making the addition by the authorities below is the statement recorded during the course of survey on 04.02.2010 and there is no corroborative material available before the authorities below. On the other hand assessee had filed valuation report before the authorities below and the said report of approved valuer was not disputed or rejected by the authority below. Hence relying upon the judgment of the Hon’ble Supreme Court in the case of S. Khader Khan Son (supra), we are of the opinion that this addition made by the authorities below also was without any basis. Therefore the same is not sustainable in the eyes of law. - Assessee’s appeal is partly allowed.
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2017 (6) TMI 726
Penalty u/s. 271AAA - assessee did not specify the manner in which the income has been derived and has also failed to pay tax - Held that:- The first two conditions have been fully discharged and the third condition was also fulfilled by paying the taxes along with interest in installments. The assessee had requested for the adjustment of cash seized of ₹ 45 lacs towards payment of tax liability. Also there is no time limit prescribed for the payment of the interest. Considering the fact that the assessee has in fact paid all the tax as per the chart exhibited elsewhere, in our considered opinion, the assessee has fulfilled the third condition also. We, therefore, do not find any merit in the levy of penalty. We, accordingly set aside the findings of the ld. CIT(A) and direct the A.O. to delete the penalty - Decided in favour of assessee.
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2017 (6) TMI 725
Addition U/s.68 - sham transaction - Held that:- AO cannot say that the transaction was sham or bogus. The CIT(Appeals) specifically found that advance was returned back to M/s. Manish Traders. In view of the above, the addition made by AO is not sustainable. Accordingly addition made by the AO is deleted. - Decided in favour of assessee.
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2017 (6) TMI 724
Unexplained credits u/s.69C - Held that:- In reply to the remand report, assessee has alleged that the AO has failed to provide details for rebuttal / cross examination, that while giving the details of transactions in the name of the assessee, the AO has not provided any opportunity to the assessee to cross examine the parties who have alleged that the transactions have been done on behalf of the assessee. Thus the documents, on which the AO wants to rely, cannot be accepted without providing opportunity to the assessee to cross examine such persons. We also found that in reply to the remand report before the CIT(A), the assessee has contended that he has already given all the documents such as copy of bank account, return of income from the F.Y.2003-04, 2004-05 & 2005-06 in order to prove that he has not entered into any transactions with M/s. Alliance Intermediaries Pvt. Ltd., and no bogus purchases / profits have been claimed in the Return of Income. Thus we restore the matter back to the file of the AO for deciding afresh after considering the detailed reply filed by assessee with regard to the remand report and the decision of the Tribunal in the case of assessee’s daughter. Appeal of the assessee is allowed for statistical purposes.
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2017 (6) TMI 723
Addition on account of fall in GP - rejection of books of account of the assessee - Held that:- A perusal of the assessment order reveals that all discrepancies and incriminating material found during search in relation to stock, cash and debtors, was duly explained to the satisfaction of the assessing officer, who has categorically stated so in his order. The surrender made under various heads, we find, was only to buy peace. We are in agreement with the CIT (Appeals) that since complete records were maintained by the assessee and all defects pointed out by the Assessing Officer were duly explained by the assessee and further no specific defects in the books of account were pointed out by the Assessing Officer, the rejection of books of account was not acceptable more so, solely on the basis of fall in GP rate. We also find that the GP rate had increased in the current year from ₹ 411.64 lacs in the preceding year to 499.55 lacs in the impugned year. It is also admitted fact that the assessee had surrendered additional income during the course of search amounting to ₹ 160 lacs which included ₹ 145 lacs on account of difference in stock and unrealized sales/debtors. Undoubtedly the assessee’s surrender on these counts, which form part of GP, is much more than that being made by the AO and for this reason also there is no justification for making any addition on account of fall in GP. No infirmity in the order of the learned CIT (Appeals) in holding the rejection of books of account by the Assessing Officer as unjustified and deleting the resultant addition by applying GP rate of 16%. - Decided against revenue.
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2017 (6) TMI 722
Addition on adjustment to Arm’s Length Price (ALP) - Held that:- As the assessee is in the business of providing call centre services / business process outsourcing services to the clients of its parent company the companies functionally dissimilar with that of assessee need to be de-selcted from final list of comparable. If 13 comparables are excluded (ie comparables having RPT more than 25%, functionally not comparable, irregular business operations and having brand value as stated supra) and one comparable is included (i.e. Ask Me Info Hubs Ltd) and if the arithmetic mean of 15% is applied on the reduced Operating Cost of ₹ 28,16,08,026/- ( i.e. 31,09,36,578 – 2,92,51,866 – 76,686) as discussed above, then the ALP @ 115% of Operating Cost would be ₹ 32,38,49,230/-. If the 5% tolerance limit is applied on the same (i.e. 32,38,49,230 * 5% = 1,61,92,462), then the price charged by the assessee on its international transactions could range between ₹ 30,76,56,768 to ₹ 34,00,41,692/-. In the instant case, the price charged by the assessee for its BPO services (international transaction) was ₹ 31,21,86,866/-. Hence we hold that the price charged by the assessee for its international transaction is at Arm’s Length as it falls within the permitted range as supra and hence no adjustment is required to be made to its ALP - Decided in favour of assessee.
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2017 (6) TMI 690
Addition of cash deposit and credit card expenses - addition made as per AIR information - CIT-A allowed claim - Held that:- The Assessing Officer in the remand report had accepted substantial availability of the cash and credit card payment. Therefore revenue has no grievance against the order of the Ld. CIT(A) in deleting the addition to that extent which is agreed by the Assessing Officer to be deleted in the remand report. Ld. CIT(A) also considered the issue of cash deposit of ₹ 15,71,200/- and accepted the explanation of assessee based on the letters sent to the bank by the assessee in which no infirmity has been pointed out by the Ld. DR. CIT(A) correctly deleted the substantial addition on the basis of the remand report submitted by Assessing Officer agreeing to availability of funds with the assessee and that the cash withdrawal of ₹ 15,00,000/- post last date of deposit was considered favourably and available to assessee based on the evidence and material on record - Decided against revenue
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Customs
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2017 (6) TMI 698
Condonation of delay - delay in filing appeal before Tribunal - the case of the appellant is that the delay was caused, on account of the counsel, who was handed over the brief, failing to keep track of the period of limitation for lodging the appeal, before the Tribunal - Held that: - no doubt that the appeal which had been preferred, with the Tribunal, was filed, beyond the limitation of three months, stipulated in Section 129 A (3) of the Act - under sub-section (5) of Section 129 A of the Act, the Tribunal, has been vested with the power to condone the delay, if, sufficient cause is shown. The appellant, in the given circumstances, cannot be put to prejudice, because of the lack of professionalism of the Advocate engaged by it. Delay condoned - order of Tribunal set aside - application for COD allowed in favor of applicant.
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2017 (6) TMI 697
Revocation of CHA licence - forfeiture of security deposit - penalty - manufacturer/exporter was fraudulently misusing the DEPB benefit scheme by declaring export goods as OMEPRAZOLE - case of respondent is that he has not handed over the documents to unauthorized persons to conduct business at customs. The documents were taken away from their office and handed over to unauthorized persons with the help of one staff - Held that: - The records reveal that the signed documents which were kept by the respondent for use in emergency while he was out of station was taken unauthorisedly by Muninathan and handed over to M/s. Shri Bhabha Shipping Services for his own gain. There is no evidence in the present case to show that the respondent / CHA had received any monetary gain. Apart from the allegation that he had kept signed shipping bills which was unauthorisedly taken away by the employee and misused by him. There is nothing brought out by the department implicating the CHA on the allegations raised in the SCN. Shri Muninathan himself has admitted that he has done such acts without the knowledge of the respondent and also in his absence. In such circumstance, respondent cannot be held to be liable for violation of Regulations under CHALR, 2004. The allegations concerning failure to comply with the obligation under Regulations of CHALR, 2004 cannot be visited with the consequence of revocation of license and imposition of penalty. Appeal dismissed - decided against Revenue.
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2017 (6) TMI 696
Whether, before finalization of Bill of Entry, which was provisionally assessed under Section 18 ibid, can the Department proceed against the importer to confirm the differential duty demand and for imposition of penalty? Held that: - Section 28 of the Act contemplates issuance of SCN for recovery of duties which were not levied or short levied. For issuance of SCN under such statutory provision, the duty liability is required to be ascertained by the proper officer - In the present case, since the assessment is provisional and the proper duty liability has not been quantified/ ascertained as per the provisions of Section 18 ibid, there is no question of short levy or non-levy of duty - the proceedings initiated u/s 28, which culminated in the impugned order dated 17.12.2013, will not be sustainable. Hon’ble Supreme Court in the case of ITC Ltd. [2006 (10) TMI 149 - SUPREME COURT OF INDIA] held that proceedings under Section 11 A of the CEA, 1944 (perimateria with Section 28 ibid) cannot be initiated without completing the assessment proceedings - Since the present proceedings were initiated u/s 28 ibid before finalization of the assessment, the same is not maintainable. Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 695
Jurisdiction of Directorate of Revenue Intelligence (DRI) - power to issue SCN - Held that: - sub-section 11 was inserted under section 28 of the Customs (Amendment and Validation) Act, 2011 dated 16.09.2011, assigning the functions of proper officers to various DRI officers with retrospective effect - Later on, i.e. for the period subsequent to the amendment, the matter i.e. the DRI officers having the proper jurisdiction to issue the SCN or not had come up before the Hon’ble Delhi High Court in the case of Mangali Impex vs. Union of India [2016 (5) TMI 225 - DELHI HIGH COURT], and the High Court inter alia, held that even the new inserted section 28(11) does not empower either the officers of DRI or the DGCEI to issue the SCN for the period prior to 8.4.11. Matter remanded to the original adjudicating authority to first decide the issue of jurisdiction after the availability of Hon’ble Supreme Court decision in the case of Mangli Impex and then on merits of the case but by providing an opportunity to the assessee of being heard - appeal allowed by way of remand.
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2017 (6) TMI 689
Illegal arrest by customs authorities - petitioner claims that she reserves her rights and appropriate contentions to be urged in appropriate proceedings and does not press for any further directions in this matter - petition disposed off.
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2017 (6) TMI 688
Scope of Call Book Cases - Jurisdiction - power of Directorate of Revenue Intelligence to adjudicate the SCN - Held that: - The Court is of the view that since, admittedly, the Petitioner’s SCN would fall within the ambit of ‘Call Book Cases’ under para 9.3 of the Master Circular, there is no urgency at this stage to consider the plea of the Petitioner. It would have to await the outcome of the appeals filed by the Union of India in the Supreme Court against the judgment of this Court in Mangli Impex Ltd. v. Union of India [2016 (5) TMI 225 - DELHI HIGH COURT] - It will be open to the Petitioner to draw the attention of the adjudicating authority to the Master Circular dated 10th March, 2017 and pray for keeping the adjudication proceedings in abeyance in terms thereof.
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Corporate Laws
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2017 (6) TMI 693
Act of oppression - appointment of directorship of the Respondent No.3 - Held that:- Considering the equities between the parties and while exercising the equitable jurisdiction, as find that the equity is in favour of the respondent and it would be highly unjust to grant the relief as sought for by the petitioner. Rather, it is the conduct of the petitioner as detailed above which has been prejudicial to the interest of the functioning of the Company and the shareholders. The appointment of Respondent No.3, it was done in the interest of the Company, i.e. for the operational convenience. As the Company is not doing any business and the only asset is a Flat situated at New Alipore and the same has also been admitted by the petitioner. The further allegation that the appointment was done without issuing of notice to the Director is also not tenable in as much as, as per Articles of Association, Clause 10(b), speaks that “any omission to give notice to or the non-receipt of notice by any member or other person whom it should be given, shall not invalidate the proceeding at the meeting” as mentioned in page 50 of the CP. The Memorandum of Association and the Articles of Association are the mandate of the shareholders in the Company having the nature of quasi-partnership. They are supposed to abide by their own Memorandum of Association and the Articles of Association. As also when the Respondent No.4 having not actively participated in the affair of the Company and the Company since then could not carry on any active business due to dysfunctional Board of Directors, the appointment of Respondent No.3 was justified in the best interest of the Company, as also the shareholders of the Company. There is no act of oppression against the petitioner or that there is any lack of probity on the part of the Respondents. Thus, there is no scope to declare the appointment of the Respondent No.3 as invalid and/or to declare any Board meeting and the Annual General Meeting as illegal and void on the ground that it was an act of oppression.
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2017 (6) TMI 692
Operational creditor eligibility for filling Arbitration Application - period of limitation - Held that:- It is not right on the part of the operational creditor to raise debit notes charging minimum guaranteed conducting fee even after the dispossession of the corporate debtor from the premises. For there being material showing the corporate debtor was dispossessed on 26.03.2012, there is no occasion to the operational creditor to raise debit notes against the corporate debtor. Hence, the debit notes raised after March, 2012 will not constitute as debt. In respect of the dues from November, 2011 till the filing of the Arbitration Application, since the Arbitration Application was dismissed on 4.3.2014 without any liberty, based on partial settlement orally agreed between the parties, this Bench cannot go into the issue already decided against the operational creditor. The contention of the operational creditor that since the last debit note was raised on 5.4.2014, this petition filed on 4.4.2017 is within the period of limitation does not hold water. Arbitration Application was dismissed on 4.3.2014 and that claim covered the debit notes raised from November, 2011 to the date of filing of Arbitration Application on 30.3.2012. In order to save limitation on this portion of the claim, the operational creditor should have obtained liberty to proceed against the corporate debtor but that is not the case herein, the Arbitration Application was dismissed without any liberty. It is to be noted that after the last payment in September, 2011, neither there was an acknowledgement of liability nor any payment by the corporate debtor. In this situation, the whole debt as claimed by the financial creditor is time barred.
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Insolvency & Bankruptcy
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2017 (6) TMI 691
Initiation of Corporate Insolvency Resolution Process u/s 7 of Insolvency and Bankruptcy Code, 2016 - Whether enough evidence as mandated u/s 7 of the Code has been placed by the applicant for admission of this company Application or not? - Held that:- Here in this case for the financial creditor has produced the debenture certificate showing financial contract and thereafter financial statements of the company reflecting the payment above mentioned as remained overdue till date of filing this company application. In view of the evidence let in by the financial creditor, we believe that the record placed by the financial creditor is sufficient enough to prove that the corporate debtor has defaulted in repayment of the aggregate principal amount of ₹ 51 crores to which OCDs have been issued by the corporate debtor. Whether deficiency of stamp duty will invalidate the debenture certificate or not? - Held that:- Since it is evident that the corporate debtor company is a private limited company, for these debentures cannot be transferred like in a public limited company, these debentures cannot be called as marketable security and since the corporate debtor company already defaulted in making repayment after maturity date it can't in any way be considered as a security asking stamp duty. Hence this Bench has not found any merit in the argument of the Corporate Debtor counsel on this point. Whether the debt is time barred or not? - Held that:- The admission appearing in the financial statement of the company is an acknowledgement covered by section 18 of the Limitation Act, an acknowledgement need not be given to the financial creditor stating that debt is owed to him. If such debt is shown as due in the financial statements of the company which are rem in nature, it is to be construed as an acknowledgment of default. Since there has been express admission that the company has defaulted in repayment of principal toward the money received by issuing debenture certificates, this debt cannot be called as time barred debt. Thereby this bench has not found any merit in the argument taken by the corporate debtor counsel. Whether the pendency of arbitration proceeding between the parties will have any bearing on adjudication of this application or not? - Held that:- As no civil court shall have jurisdiction in respect of any matter in which the adjudicating authority is empowered by or under this court to pass any order, thereby it is clear that pendency of any proceeding before any court will not have any bearing on the proceedings initiated under this Code provided that dispute is covered under the respective section of this Code. Since this case is covered u/s 7 of the Code, pendency of section 21 proceedings under Arbitration Act will not have bearing on this case. Whether the applicant herein can file this application as a financial creditor when the applicant is continuing as one of the shareholders of the Company? - Held that:- As there is no legal bar against this applicant to make his claim as a financial creditor, this Bench cannot read into such proposition to deprive the right of this applicant. Therefore, we do not find any merit in the argument of the corporate debtor. When a Company is unable to pay the debt or refuse to pay the debt, the financial creditor or the operational creditor, as the case may be, can initiate insolvency proceedings since the corporate debtor defaulted in repaying the debt admittedly showing in the financial statement of the debtor Company, this application deserves admission. This Bench admitted this petition. The order for appointment of Insolvency Resolution Professional and other consequential directions will follow within fourteen days from the date of admission.
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Service Tax
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2017 (6) TMI 721
Jurisdiction of Commissioner (Appeals) - power to condone delay - case of Revenue is that the Commissioner (Appeals) is not empowered to condone any delay beyond the condonable period of one additional month after the allowed two months for filing the Appeal - Clause 85(3A) of the FA, 1994 - Held that: - we are in complete agreement with the view taken by the Allahabad High Court in the case of Ashok Kumar Tiwari [2014 (11) TMI 388 - ALLAHABAD HIGH COURT], where it was held that Once it is held that the Tribunal did, indeed, have a discretionary jurisdiction, as a first appellate body against the order of the Commissioner (Appeals), this Court would be slow to interfere, particularly having regard to the ambit of the jurisdiction of the Tribunal under Section 86(1) of the Act of 1994 - it cannot be said the learned Commissioner (Appeals) has committed any error in rejecting the Appeal on the ground of limitation by observing that beyond the condonable period of one month after the prescribed period of two months to prefer the Appeal he has no jurisdiction to condone the delay beyond the condonable period. Considering Section 85(3A) of the Finance Act, 1994 commissioner (appeals) has no jurisdiction to condone the delay beyond the condonable period of one month. Appeal dismissed - decided against Revenue.
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2017 (6) TMI 720
Rent-a-cab operator service - providing vehicles to the clients on hire basis - whether the service rendered by appellant is to be classified as rent-a-cab service - Held that: - similar issue decided in the case of Sachin Malholtra [2014 (10) TMI 816 - UTTARAKHAND HIGH COURT], where it was held that in the case of a rent-a-cab scheme, as is clear from the very fundamental principle underlying the scheme, it is to give the hirer the freedom to use the vehicle as he pleases, which, undoubtedly, implies that he must have possession and control over the vehicle. This is the fundamental distinction between rent-a-cab and a pure case of hiring - the appellants liability for service tax under rent a cab service cannot be contested. The claim of the appellant for abatement available as per N/N. 1 of 2006 dated 01.03.2006 as well as the exemption for threshold turnover limit applicable for small scale service provider during the relevant financial years have not been considered for a decision by the lower authorities - the matter has to go back to the original authority for reconsideration. Appeal allowed by way of remand.
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2017 (6) TMI 719
Classification of services - agency commission - whether the services provided by the appellants are Business Auxiliary Services as alleged in the show cause notice or renting of immovable property service as contended by the appellant? - Held that: - there is nothing to show that there is a transfer of right in the property either by way of lease, sub-lease or license. In fact, it is specifically stipulated that nothing in the Franchise Agreement shall be construed as creating any right, title, interest or easement tenancy or sub-tenancy in favour of M/s. PRIL in or over the said showroom premises for transferring any interest in favour of M/s. PRIL other than entitling PRILs products being put up for sale from the said showroom premises through the franchisee - the agreement is not lease agreement. Valuation - electricity charges - diesel charges - includibility - Held that: - Such reimbursable expenses cannot be included in the gross value of taxable services as held in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. [2012 (12) TMI 150 - DELHI HIGH COURT] - the electricity and diesel charges have to be deducted from the gross value to arrive at the net value of taxable services - For this limited purpose, the matter will be required to be remanded to the adjudicating authority who shall re-quantify the demand of service tax after deducting the electricity and diesel expenses - appeal allowed by way of remand. Parking income - shooting income - Held that: - It is very much clear that the appellant has received the parking income from the vehicles parked in the area allotted for parking. Similarly, the shooting income is received while the premises are let out by the appellant for the shooting purposes - demand upheld. Appeal allowed in part by way of remand - other matters decided against appellant.
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2017 (6) TMI 718
Refund claims - appellant availed CENVAT credit of various input services which were used for provision of output services and the CENVAT credit was accumulated - interest on rejected refunds - Held that: - appellant has rendered output services in form of ITSS and BAS which are exported. - the impugned orders which reject the refund claim filed by the appellant of the service tax paid on the above input services is unsustainable - refund allowed. Non-payment of interest on the delayed refunds - Held that: - similar issue was decided in the case of Ranbaxy Laboratories Ltd. Vs. UOI [2011 (10) TMI 16 - Supreme Court of India], where it was held that liability of the revenue to pay interest u/s 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made - the appellant is eligible for the interest in accordance with law in respect of the delayed refunds sanctioned to them. Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 717
Penalty u/s 78 of FA - manpower recruitment and supply agency services - discharge of service tax liability along with interest before issuance of the SCN - Section 73(3) of the FA, 1994 - Held that: - similar issue has been settled by the Hon'ble High Court of Karnataka in the case of Adecco Flexione Workforce Solutions Ltd. [2011 (9) TMI 114 - KARNATAKA HIGH COURT], where it was held that Sub-Sec.(3) of Sec. 73 of the FA, 1994 categorically states, after the payment of service tax and interest is made and the said information is furnished to the authorities, then the authorities shall not serve any notice under Sub-Sec.(1) in respect of the amount so paid - the penalty imposed on the appellant u/s 78, which is equal to the service tax, needs to be set aside and is set aside. Penalty - commercial coaching and training services - short payment of tax - Held that: - appellant has not produced any documents which would indicate that they had specifically billed and collected the value of the study materials supplied to the students. In the absence of any such evidence to show, the demand is confirmed. Appeal allowed - decided partly in favor of appellant.
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Central Excise
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2017 (6) TMI 716
100% EOU - shortage in stock - benefit of N/N. 1/95-CE or 53/97-Cus. - raw materials not used for the purposes they were imported duty free - Held that: - the fact that both shortages and excesses have been noticed in stock taking as well as the fact that the discrepancy is worked out to only 0.36% of the total materials consumed leads us to conclude that the duty demand is not justified - there is no allegation of any clandestine removal or diversion of either inputs or finished products. Similar issue decided in the case of CCE Vs Maruti Suzuki India Ltd. [2015 (8) TMI 493 - SUPREME COURT], where it was held that duty demand cannot be sustained in the absence of any allegation of clandestine removal. Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 715
Clandestine manufacture and removal - Ceramic Sanitaryware - case of the Revenue is based on the difference between RG-I Register and quality inspection records maintained by the Appellants - Held that: - It has been categorically stated that after firing of the products these are inspected and given grades; grade (a) which are saleable, good quality products are entered in the RG-I Register; grade (b) is further taken up for repair and re-firing; and whereas grade (c) is a waste and not saleable - the impugned order did not give a categorical finding as to how the Revenue still sustains the allegation of unaccounted production and clearance of excisable goods - the Department did not have any evidence regarding unaccounted manufacture and clearance, and shifted the burden on the Appellants to prove the absence of such unaccounted clearance. Such course of action is against the basic principle applicable to establish a case of unaccounted clearance resulting in short payment of duty - demand set aside. Short payment of tax - non-inclusion of value of seat covers while discharging duty on Water Closets cleared by the Appellants - extended period of limitation - penalty - Held that: - the item under consideration in the present appeal is seat cover for Water Closets. Admittedly, Water Closets are put to use with seat covers. These are not generic items and are actually made to the particular specification without which the Water Closets cannot be put to effective operational use. The Appellants are not clearing the seat covers along with Water Closets in all cases, does not take away the basic fact that these seat covers are essential parts of Water Closets - the value of seat covers supplied along with the Water Closets should form part of the assessable value of Water Closets. Appeal allowed - decided partly in favor of appellant.
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2017 (6) TMI 714
Captive consumption - N/N. 67/95-C.E dated 16.03.1995 - It is the case of the department that fuel oil was used in the refinery in the manufacture of Sulphur, an exempted product and therefore, the benefit of captive consumption Exemption N/N. 67/95-C.E dated 16.03.1995 is not available - Held that: - reliance placed in the case of MADRAS REFINERIES LTD. Versus COMMISSIONER OF CENTRAL EXCISE, CHENNAI-I [2005 (1) TMI 257 - CESTAT, CHENNAI], where it was held that the RFO is entirely used in the manufacture of dutiable petroleum products and sulphur was emerging as an incidental by product and hence no duty of excise could be demanded on the ground that RFO was used for manufacture of sulphur. Appeal dismissed - decided against Revenue.
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2017 (6) TMI 713
Valuation - whether the appellant is entitled for the deduction of secondary freight incurred by them from their depot to the place of delivery charged as equated (average secondary freight) in the determination of assessable value covering the period from 1.7.2000 to 31.3.2003? - Held that: - it is seen that the freight amount mentioned in the invoice are equated freight calculated at a particular pattern or system of pricing. They have also produced the certificate of the Chartered Accountant. It is not practically possible for the appellant to have the equated freight showing separately in the invoices. In the case of Commissioner of Central Excise Vs. Laxmi Engineering [2004 (10) TMI 426 - CESTAT, NEW DELHI], a similar view was taken for the transportation cost incurred by the assessee from the place of removal to the place of delivery is not to be included in determining the assessable value. Demand set aside - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 712
Manufacture - Whether the activity of transfer of Acetic acid from tankers to 35 Kgs Carbuoys amounts to manufacture or not in terms of Note 11 of Chapter 29 of the CETA? - Held that: - the Board has clarified vide Circular No.910/30/2009-CX dated 16.12.2009 that the activity does not amount to manufacture. Once it is found that in terms of the said Chapter Note, the activity does not amount to deemed manufacture, the other issue whether the assesse-respondent is eligible for exemption under N/N. 38/97 CE dated 27.6.1997 and N/N. 9/98 CE dated 2.6.1998, does not survive for consideration. Appeal allowed - decided in favor of assessee.
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2017 (6) TMI 711
Refund of Terminal Excise Duty - supplies to 100% EOU - deemed export - denial on the ground that as per policy Circular No. 16 dated 15.03.2013, Terminal Excise duty is not payable for supply made to EOU Unit - Held that: - similar issue has come up before the Hon'ble High Court of Bombay in the case of Sandoz Pvt. Ltd vs. UOI [2016 (8) TMI 710 - BOMBAY HIGH COURT] wherein the Terminal Excise duty paid by the assessee on the goods supplied to 100% EOU and re-credit of refund filed before the Central Excise authorities have been denied by the Hon'ble High Court holding that the same is maintainable before DGFT - refund claim not maintainable - decided against appellant.
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2017 (6) TMI 710
Refund claim - unjust enrichment - Whether the bar of unjust enrichment is applicable to pre deposit made by the appellant on the directions of the Hon’ble High Court of Punjab and Haryana for admission of their writ petition or not? Held that: - the bar of unjust enrichment is not applicable, as the amount has been paid as pre deposit on the directions of the Hon’ble High court of Punjab & Haryana after clearance of the goods for entertaining the writ petition - reliance placed in the case of Union of India Versus BSL Ltd. [2013 (1) TMI 813 - RAJASTHAN HIGH COURT] - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 709
SSI exemption - brand name of others - It appeared to the Department that the appellants were clearing the goods in the brand name of the German company and therefore not eligible for SSI exemption - Held that: - Para-4 of the SSI Notification disentitles the manufacturer from availing SSI exemption of specified goods manufactured by the assesse if bearing a brand name or trade name (listed or not) of another. From the technical collaboration agreement before us, it is seen that as per Article1.3 the appellant as the licensee has been authorized to manufacture contract products of the licensor viz., Kommerling Chemische Fabrik Gmbh, Germany - the appellant had exclusive right over the brand/trade name of the licensor/contract products, and the appellant cannot be disbarred by invoking clause-4 of the notification. Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 708
Duty liability of boiler components - N/N. 6/2006-CE dated 01/03/2006 - denial on the ground that the project for which the appellants were supplying components are having power plants with capacity 500/600/800 MW each - Held that: - the provision of notification relied upon by the Original Authority is not available during the period now under consideration - the Original Authority applied a non-existing legal provision to deny the exemption - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 707
Reversal of CENVAT credit - Rule 6 (3) of CCR - non-maintenance of separate records of taxable and exempted goods - natural justice - Held that: - non-providing of a copy of report received from the Assistant Commissioner at the back of appellant have caused prejudice to the appellant and did not get the proper opportunity - learned Commissioner are directed to provide the copy of the report of Assistant Commissioner relied upon by him in the impugned order and other documents - appeal allowed by way of remand.
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2017 (6) TMI 706
Reversal of CENVAT credit - loss due to fire accident - Held that: - The fire accident has been duly intimated. After completion of all formalities with the insurance survey, the quantum of credit is arrived at and the same is reversed. Penalty - Held that: - there is no legal justification for imposing equal amount of penalty in case of loss of duty paid inputs, due to fire accident - penalty set aside. Interest liability - Held that: - interest liability will arise in case the appellant have utilised any portion of credit availed and available in their books, attributable to the inputs lost in fire accident - this fact needs to be verified and for the purpose the matter is remanded. Appeal allowed in part and part matter on remand.
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2017 (6) TMI 705
Non-payment of duty on extra amount collected from customers - debit notes issued towards cylinder charge on rejection of the order from their buyers. - Held that: - the appellant had recovered certain amounts from their customers towards cylinder charge on rejection of the order from their buyers. The said recovery is nothing to do with he manufacture and sale of the finished goods, hence, such charges cannot be included in the assessable value of the goods. There are sufficient corroborative evidences on record in establishing the fact that the amount recovered against the said debit notes were not additional consideration/extra amount against the goods manufactured and cleared hence, cannot be chargeable to duty. Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 704
Manufacture of mineralized water from sea water - Revenue’s stand in the appeal is that for use of DM water in assessee’s unit as per N/N. 67/95-CE dated 16.3.95, the Respondent is required to pay duty @ 16% which is on consumption of DM water for further manufacturing of mineral water which attracts nil rate of duty - Held that: - the plea of the Revenue that adjudicating authority did not properly examine the facts and the facts that the impugned order was set aside earlier by the Tribunal vide its order dated 26.6.2008 mentioned above, we find that the subject matter raised in the present appeal of the Revenue deserves to be remanded for de novo decision by the original adjudicating authority who shall decide the matter afresh - appeal allowed by way of remand.
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2017 (6) TMI 703
Clandestine removal - demand - Held that: - There is no other evidence available on record to show that the appellant was engaged in the activity of clandestine removal of the goods - No corroboration of evidence has been made by the Revenue to substantiate the allegation of clandestine removal - demand set aside - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 702
Area based exemption - N/N. 50/2003-CE dated 10.06.2003 - denial on the ground that the respondent has not filed the due declaration as prescribed in the Notification, therefore, they are not entitled for the benefit of the said Notification - Held that: - As the respondent has intimated to the department, the change of their existing unit to new site and the area of new site is covered in the Notification. In that circumstances, the ld. Commissioner (A) has rightly granted the benefit of the notification - appeal dismissed - decided against Revenue.
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2017 (6) TMI 701
Exemption by way of substantial exemption - N/N. 50/03-CE dated 10.06.2003 - tariff classification of the furnace oil and industrial fuel oil - Held that: - initially the appellant was paying duty on industrial fuel oil and opted for exemption under N/N. 50/03-CE. Admittedly, the item falling under chapter heading 2710 1950 of the Central Excise Tariff Act, 1985 do not qualify for exemption under N/N. 50/03, therefore, the authorities below has rightly rejected the exemption under N/N. 50/03 to the appellant. The appellant has obtained differently new product which to be used by different class of buyers, therefore new product had emerged - the activity undertaken by the appellant amounts to manufacture. Appeal dismissed - decided against appellant.
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2017 (6) TMI 700
Molasses used captively - benefit of N/N. 67/95-CE dated 16.3.95 - denial on the ground that the same was used in the manufacture of exempted product - time limitation - Held that: - while clearing the ethyl alcohol from the factory, manufactured from the molasses, the appellant had discharged 8% of the price of denatured ethyl alcohol - the demand notice issued in the year 2000 for recovery of duty short paid for the period December 1996 to June 1999 on molasses, which was used in the manufacture of ethyl alcohol cleared after discharging 8% of the price, cannot be sustained being barred by limitation - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 699
Classification of goods - boora - mishri - batasha - makhana - N/N. 57/2008 CE dated 05.12.2008 - whether the goods fall under CTH 17019100 or otherwise? - Held that: - CBEC has issued circular 879/17/2008-Ex.1 dated 05.12.2008, which clarifies that the process by which sugar is converted into boora, makhana, patasha, mishri, etc. is a manufacturing process under section 2(f) of Central Excise Act, 1944 and these items are to be classified under Central Excise Tariff heading 17019100. The N/N. 57/2008 also includes these items under Central Excise Tariff sub-heading 171019100 exempting them from duty of Central Excise w.e.f .05.12.2008. The process involved for conversion of sugar into subject goods is “manufacture” under section 2(f) of Central Excise Act, 1954 - When the process undertaken by the appellant amounts to manufacture, when the produce/goods are liable to be classified under Cental Excise Tariff Heading 17019100 and when there is no exemption Notification for such goods for the subject period, the goods are liable to duty for the period prior to 05.12.2008 - But the duty is payable for such goods only for the normal period as there were interpretation issues involved during the relevant period. The appellants, therefore, cannot be charged with “suppression or misrepresentation of the facts with an intention to evade payment of duty of Central Excise - demand confirmed for normal period. Interest - section 11AB of CEA, 1944 - Held that: - Tribunal's decision in case of Aarti Drugs Ltd Vs Commissioner, Central Excise Thane-II, [2015 (9) TMI 1206 - CESTAT MUMBAI], referred whereunder it held that where there is no mis-statement on the part of the assessee duty is payable only for normal period but interest is payable under section 11AB for the amount of duty upheld. For the purpose of quantification of demand, matter remanded to original adjudicating authority - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2017 (6) TMI 694
Validity of reassessment order - Section 39 of the Act - tax liability having been paid with compounding fee under Sections 79 & 82 of the Act on the basis of assessment proceedings u/s 38 - Held that: - on the basis of the information and evidence gathered in the course of survey under Section 52 of the Act, the assessing authority has option to proceed under Section 39 of the Act, but it cannot do so once the regular assessment under Section 38 of the Act on the basis of the same evidence and material collected by him during the course of such survey is already made by it. The Revenue has failed to point out any other material on record on the basis of which the assessing authority could be said to have any reason to reject the books of accounts maintained in the ordinary course of business and pass reassessment order on the basis of best judgment. Mere affirmation of the reassessment order passed by the assessing authority under Section 39 of the Act by the two higher appellate forums does not deter us from holding that the very initiation of the reassessment proceedings without any further incriminating material was illegal. Revision petition allowed - decided in favor of assessee.
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