TMI Tax Updates - e-Newsletter
June 24, 2017

Case Laws in this Newsletter:

Income Tax Customs Insolvency & Bankruptcy Law of Competition Service Tax Central Excise Indian Laws

News

1. GST registrations for ecommerce, new cos to begin on June 25

2. Advisory for migration - GST

3. Textiles minister takes stock of industry's GST preparedness

4. Auction for Sale (Re-issue) of Government of India Floating Rate Bonds Auction for Sale (Re-issue) of Government Stock

5. RBI Reference Rate for US $

Notifications

Customs

1. 24/2017 - dated 23-6-2017 - Cus

Project Imports (Amendment) Regulations, 2017

2. 56/2017 - dated 23-6-2017 - Cus (NT)

Seeks to amend Notification No. 61/94(NT) - Customs, dated the 21st November, 1994 to declare Kannur International Airport as Customs Airport under sub-section (2) of section 7 of the Customs Act, 1962

3. 55/2017 - dated 21-6-2017 - Cus (NT)

India-Malaysia Comprehensive Economic Cooperation Agreement (Bilateral Safeguard Measures) Rules, 2017

DGFT

4. 11/2015-2020 - dated 23-6-2017 - FTP

Amendment in export policy of Muli Bamboo and export policy for bamboo products

Circulars / Instructions / Orders

DGFT

1. Trade Notice No.02/2018 - dated 19-6-2017

Constitution of Help Desk for GST issues related to Foreign Trade Policy-reg.

Highlights / Catch Notes

Income Tax

• Court Upholds Tax Additions Based on Seized Documents u/s 132(4A) of Income Tax Act; Partner Linked to Cash Receipts.

  Case-Laws - HC : Addition - presumptions u/s 132(4A) - this is not a case where the additions are made on the basis of mere loose papers seized during search. It is a case where the documents seized during search contained entries made by the partner of the firm admittedly in his own handwriting and contained reference to the cash receipts - Additions confirmed - HC
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• Assessee Challenges Disallowance of Section 80IB(10) Deduction Due to Authority's Delay in Issuance Despite Timely Completion.

  Case-Laws - AT : Disallowance of deduction u/s 80IB(10) - period of completion of project - The project was completed within the stipulated period, applied within time by the assessee and if there is a delay in issuing the same by the competent authority, the assessee cannot be penalyzed
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• Interest Deductions Allowed by AO; CIT(A) Decision on Section 68 Additions for 31 Creditors Overturned.

  Case-Laws - AT : Unexplained cash credit - AO has allowed interest on the borrowed funds in the current years and also in the subsequent years and therefore the order of the ld.CIT(A) confirming the addition u/s 68 in respect of 31 creditors is not correct and cannot be sustained
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Customs

• High Court Upholds Extension of Warehousing Period for Duty-Free Goods; No Interest Levied on Zero Percent Duty.

  Case-Laws - HC : Warehousing of goods - extension of warehousing period - Since, the goods were cleared against zero per cent duty, no interest could have been levied. - HC
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• Director Held Accountable for Company's Undervaluation; Penalty Imposed Deemed Lawful.

  Case-Laws - AT : Once the company has admitted the undervaluation and has paid the penalty, the appellant who is the Director of the company and also looking after the affairs of the company is equally responsible and therefore imposing the penalty on the appellant is absolutely lawful.
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Service Tax

• Services Classification Debate: Works Contract vs. Maintenance & Repair; Pre-June 2007 Work u/s 65(105)(zzm) Finance Act.

  Case-Laws - AT : Classification of services - whether works contract services or maintenance and repair services? - the work prior to 1st June, 2007 is also classifiable under the classification works contract as defined under Section 65(105) (zzm) of the FA
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Case Laws:

• Income Tax

• 2017 (6) TMI 956
  Reopening of assessment - objections of the petitioner against reopening - non application of individual mind by AO - Held that:- The very action of the Assessing Officer to deal with the objections of the petitioner in the final order of reassessment, runs contrary to the judgment of the Supreme Court in case of GKN Driveshafts (India) Ltd. v. ITO and Ors.[2002 (11) TMI 7 - SUPREME Court] wherein held hen a notice under section 148 of the Income-tax Act is issued, the proper course of action for the noticee is to file a return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. Assessing Officer was acting under the compulsion of the audit party. As noted, the audit party raised its objections on 16.01.2012. While issuing notice for reopening on 26.03.2012, the Assessing Officer had cited three very reasons. Subsequently on 24.05.2012, he sent a detailed note to the audit party, justifying why the audit objections should be dropped. It is true that in the present case such resistance from the Assessing Officer came after the notice for reopening. Nevertheless, if we see entire sequence, it becomes clear that the Assessing Officer was clearly acting under the dictates of the audit party. Even after issuing the notice, he still maintained an opinion that no income chargeable to tax had escaped assessment. If that be so, he ought to have dropped the assessment proceedings, at least at that stage when the petitioner raised the objections which even without such objections, the Assessing Officer was convinced, were valid. - Decided in favour of assessee.

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• 2017 (6) TMI 955
  Addition on account of alleged premium on alleged cash sales - presumptions u/s 132(4A) - Held that:- The entire issue was based on appreciation of evidence on record. Though the Assessing Officer had proceeded on the basis of certain statements made by Shri Balkrishna Devidayal, who had not appeared for cross-examination, the Tribunal noted that subsequently cross-examination was offered and carried out, but no contrary evidence came on record. This is, therefore, not a case where the additions are made on the basis of mere loose papers seized during search. It is a case where the documents seized during search contained entries made by the partner of the firm admittedly in his own handwriting and contained reference to the cash receipts. His explanation was simply either non-existent or not acceptable. With respect to M/s.Jhaveri Polymers, however, the case stands on a slightly different footing. The primary reason for adding such sales for computation of premium was that in case of M/s.Jhaveri Polymers also the sales were not reflected in the accounts of the said firm. The Tribunal, however, noted that such sales were later on reconciled. If that be so, in our opinion, there was no other basis for the Tribunal to confirm the premium on such sales. We may recall that M/s.Jhaveri Polymers was not one of the firms, who was mentioned in the documents seized by the revenue on which Shri J.L.Mehta had made his remarks. In the result, the question is answered partly in favour of the assessee and partly in favour of the revenue. Insofar as the sale of 11.61 Lacs made to M/s.Jhaveri Polymers is concerned, premium paid at the rate of 27.5% would be deleted from the additions made by the Assessing Officer and confirmed by the Tribunal. Remaining additions are confirmed.

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• 2017 (6) TMI 954
  Reopening of assessment - disallow the assessee's claim of deduction under Section 80IA - Held that:- Under similar circumstances, in case of this very assessee for the assessment year 2006-07 [2017 (6) TMI 834 - GUJARAT HIGH COURT] we set aside the notice for reopening as held that there was no failure on the part of the assessee to disclose necessary facts. The documents in the nature of contracts between the government and other agencies were very much part of the record. Further, during the assessment pursuant to the first notice for reopening, the Assessing Officer had examined the claim of deduction under Section 80IA (4) of the Act. It may be that the Assessing Officer had only one of the units of the assessee in mind when such assessment was being framed. Nevertheless nothing prevented him from disallowing such deduction qua other units also if similar situation obtained. - Decided in favour of assessee.

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• 2017 (6) TMI 953
  Disallowance of deduction u/s 80IB(10)- period of completion of project - Held that:- The project was completed within the stipulated period, applied within time by the assessee and if there is a delay in issuing the same by the competent authority, the assessee cannot be penalyzed. Even in the assessment order/impugned order, there is no mention that the project was not completed. The assessee cannot be expected to fulfil the conditions which are beyond his control. The assessee applied for completion certificate on 03/10/2007, addressed to the Executive Engineer (CIDCO) (VVSR) for the concerned project, it can be inferred that the assessee completed the project within time, against the sanction plan, therefore, we direct the Assessing Officer to grant the claimed deduction to the assessee. - Decided in favour of assessee.

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• 2017 (6) TMI 952
  Disallowance of agricultural income - Held that:- Except for reiterating the submissions made before the authorities below, the learned Counsel for the assessee has not been able to produce before us any evidence whatsoever in support of earning of the agricultural income as explained by the assessee in his returns of the income for the respective A.Ys. We find that the CIT (A) has considered all the aspects of the issue before allowing certain part of the income as agricultural income. The assessee has not filed any evidence to rebut the findings of the CIT (A). As the order of the CIT (A) is a well considered order, we do not see any reason to interfere with the same on the issue of agricultural income for all the A.Ys. The assessee’s grounds of appeal for all the A.Ys against disallowance of part of the agricultural income are accordingly rejected. Interest Income - accrual of income - Held that:- We find that the assessee is following the mercantile system of accounting and therefore is bound to offer the income on accrual basis. Further, the assessee himself is the Director of the company in which the interest is shown to be payable and the assessee has not challenged the assessment completed in the hands of the company. Therefore, the interest income receivable by the assessee is taxable in the hands of the assessee even if it is not yet received by the assessee. Therefore, we see no reason to interfere with the order of the CIT (A) on this issue. Addition on “unexplained loan creditor" - Held that:- When the AO has not offered any comment, it is to be presumed that he has satisfied with the submissions of the assessee. If at all any addition is to be sustained, it can only be of 2.00 lakhs which is still shown to be payable to the assessee out of the advance of 10.00 lakhs given to his wife. Therefore, we sustain the addition of 2.00 lakhs only. The assessee gets a relief of 12,72,000. Therefore, the assessee’s grounds of appeal for the A.Y 2007-08 on this issue are partly allowed. As regards the loan from the assessee’s daughter-in-law for the A.Y 2008-09 an amount of 8,30,000 has been shown to have been cleared through SBH and only a sum of 1,90,000 was brought in cash from the cash received by her from the assessee in earlier A.Y. The CIT (A) has clearly observed that the assessee has not filed any reliable evidence to explain the cash credit of 1,90,000. The assessee has not filed any details before us also to substantiate his claim. Addition on account of investment in construction of commercial complex - Held that:- We find that the assessee has filed the details of year-wise investment before us and further that these investments were also reflected in the balance sheet of the respective A.Ys and none of the authorities have verified the same. Therefore, we are inclined to set aside the issue to the AO and direct the AO to verify the contentions of the assessee and since the CIT (A) has considered the difference in the valuation as per the CPWD rates and the State PWD rates and has given relief of 10% accordingly and since the CIT (A) has also given relief of 10% for self supervision, we direct the AO to allow the same while arriving at the cost of construction as per the details furnished by the assessee. In the result, assessee’s ground of appeal on this issue is partly allowed Addition on account of additional investment in the residential property - Held that:- DVO has adopted the CPWD rate as against the State PWD rates and as held by the CIT (A) in the assessee’s husband’s case, 10% relief is to be given for the difference between the CPWD and State PWD rates. Therefore, grounds of appeal partly allowed. Architect & Structural Engineers fee inclusion in valuation report - Held that:- We find that the CIT (A) has already given relief of 10% for self supervision and we are satisfied that it would take care of the Architect and Engineer’s fee as well. Therefore, no further exemption is to be allowed. Disallowance of the loans allegedly received by the assessee from her spouse - Held that:- The assessee has claimed these amounts for the relevant A.Ys as remission of advances given by her to her husband in the earlier years and has submitted relevant financial statements. During the remand proceedings, the AO has verified the same, but did not offer any comment, leave alone, any adverse comments. Therefore, it has to be deemed that the AO is satisfied with the contention of the assessee. Since considerable time has lapsed, we are of the opinion that no useful purpose would be served in remanding the issue to the file of the AO at this stage for re-verification of assessee’s contentions. In view of the same, we are inclined to accept the contentions of the assessee and the assessee’s appeals for the A.Ys 2007-08 to 2009-10 are allowed

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• 2017 (6) TMI 951
  Income from share trading - nature of income - Capital gain or business income - volumes of transaction - Held that:- AO was not justified in recording the finding of fact against the assessee for the purpose of holding that the assessee was indulged in trading activities only. The assessee has been dealing in shares in earlier and in subsequent years and on the identical transaction has shown capital gains which have been accepted by the AO in the scrutiny assessment u/s 143(3) in assessment years 2006-07 and 2009-10 by accepting the claim of the assessee of capital gains. The assessee has been able to prove that the assessee made investment with objective to earn income by way of dividend. There are no transactions conducted by the assessee during the shorter period, therefore, authorities below should have followed the principle of consistency and should have accepted the claim of the assessee of capital gains instead of business income. - Decided in favour of assessee.

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• 2017 (6) TMI 950
  Unaccounted investment - addition based on entries in the seized documents found during the course of search on Chhoriya group - connection between the assessee and the Chhoriya group concern - Held that:- In the absence of any corroborative evidence found during the course of search from the Chhoriya group of cases in order to establish any business link or otherwise, merely because similar sounding name is found in the seized document, does not merit addition in the hands of assessee. In the absence of same, no addition on account of such entries in the seized document is warranted in the hands of assessee. - Decided in favour of assessee.

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• 2017 (6) TMI 949
  Unexplained cash credit u/s 68 - proof of creditworthiness of the creditors and genuineness of the lenders - Held that:- AO examined six persons only and accordingly made addition by forming the opinion that the loans taken by the assessee were non-genuine and bogus. It is also undisputed fact that the AO has allowed interest on these borrowings amounting to 7,78,282/- during the year. While making the addition of money borrowed from these parties as being bogus and non-genuine. Similar deduction in respect of interest on these unsecured loans was also allowed in the subsequent years. Now it is very strange that how the AO has accepted the transaction in part by allowing the interest on these loans while making the addition for the amount of loans by treating the same as non- genuine and bogus under section 68 of the Act. Moreover, these loans were repaid by account payee cheques in the subsequent years and no more outstanding in the books of account of the assessee. The identity of the creditors have not been doubted whereas the creditworthiness of the creditors and genuineness of the lenders seems to be doubted which becomes meaningless and absurd in the present case as the AO has allowed interest on the borrowed funds in the current years and also in the subsequent years and therefore the order of the ld.CIT(A) confirming the addition u/s 68 in respect of 31 creditors is not correct and cannot be sustained. - Decided in favour of assessee.

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• 2017 (6) TMI 944
  MODVAT credit - waste - Whether the clearances of paper waste for purposes of recycling is to be covered under the erstwhile Rule 57 F(4) of Central Excise Rules, 1944 as has been done by the appellant or whether they are to be considered as clearance of waste on payment of duty under rule 57F (18)? Held that: - the issue has been settled by the Larger Bench of the Tribunal in the case of Wyeth Laboratory [2000 (7) TMI 109 - CEGAT, NEW DELHI], where it was held that The rules do not impede the desire of the manufacturer to extract as much final product out of the inputs under Rule 57F(2) as possible or desired. The procedures under Rule could be 'aborted' and recourse taken to Rule 57F(4) at a stage, but only at the option of the assessee. The option to exercise the routes available between 57F(2) and 57F(4) procedures remains with the manufacturer and is not lost by a change in form of the input, due to processing - appeal allowed - decided in favor of appellant.

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• Customs

• 2017 (6) TMI 930
  Warehousing of goods - extension of warehousing period - CBEC Circular 47/2002, dated 29.07.2002 - Whether the Tribunal mis-directed itself, in coming to the conclusion, that the first proviso to Section 61 of the Act, does not require, that an application be made, prior to the expiry of the warehousing period? - whether there is any impediment under the Act, in the Revenue, extending the warehousing period, after it has expired? - Held that: - reading of the provisions of Section 61 of the Act, as it obtained, at the relevant time, would show that there is no such impediment. This view has also found favor with the Bombay High Court in the matter of Sunil Jugalkishore Gupta Vs. Union of India and Others, [1987 (1) TMI 103 - HIGH COURT OF JUDICATURE AT BOMBAY], albeit, in the context of Section 61 of the Act, which was some what differently worded. The moot point, however, which was decided by the Court, was that, in the absence of any statutory impediment, the extension of warehousing time application could be entertained, even after the initial period of warehousing had expired - In the context of Section 61 of the Act, as obtaining at the relevant point in time, the initial warehousing period could be extended on a "sufficient cause" being shown. There is nothing in Section 61(1)(b)(i)(B), which is suggestive of the fact, that an application, for that purpose, was required to be moved, prior to the expiry of the initial period of warehousing. Liability of interest - whether any interest, as demanded by the Revenue, was payable by the Assessee - Held that: - the Assessee had obtained a licence, as indicated above, under the EPCG Scheme on 20.03.2013 and, accordingly, the subject capital goods, were cleared from the warehouse, without being mulct with duty. The record shows that the Bills of Entries were assessed on the following dates: 12.09.2013, 23.06.2015 and 23.06.2015 - Since, the goods were cleared against zero per cent duty, no interest could have been levied. Appeal dismissed - decided against Revenue.

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• 2017 (6) TMI 929
  Refund of SAD - time limitation - Section 27 of the CA, 1962 - Circular No. 06/2008-Cus. dated 28/04/2008 - Held that: - limitation has to be computed on or after 30/11/2010, being the month of November, when the goods were finally sold under the concerned Bill of Entry No. 93 dated 04/11/2009 - the Id. Commissioner (Appeals) have erred in rejecting the refund claim on the ground of limitation relying on the Circular No. 06/2008-Cus. dated 28/04/2008 under Section 27 of the CA, 1962 - refund allowed - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 928
  Maintainability of appeal - non-compliance with condition of pre-deposit - Section 129E of the CA, 1962 - Valuation - cost, freight, insurance and canalizing commission on the crude oil imported - includibility - Held that: - reliance placed in the decision in the case of Mangalore Refinery & Petrochemicals Ltd. vs. CC [2015 (9) TMI 245 - SUPREME COURT], wherein the Supreme Court has held that customs duty is to be paid on the goods which are received in the shore tanks of the importer - Since in the impugned order, the Commissioner (A) has not decided the appeals on merit but has dismissed the appeals for non-compliance with the condition of pre-deposit as provided for under Section 129E of the Customs Act, we are of the considered opinion that all these cases are to be remanded back to the learned Commissioner (A) for deciding the same on merits keeping in view the law laid down by the apex court - appeal allowed by way of remand.

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• 2017 (6) TMI 927
  Basmati rice - misdeclaration - confiscation - Held that: - it has been admitted by the appellant themselves that the goods were found mis-declared. In that circumstances, the goods were rightly held liable for confiscation by the adjudicating authority. Quantum of redemption fine and penalty - Held that: - the value of goods as declared by the appellant is 1,29,63,498/- on which the redemption fine of 15,90,000/- has been imposed and the penalty of 10 Lac has been imposed - considering the quantum to be excessive, the redemption fine reduced to 13 Lacs - the penalty shall remain of 10 lacs on the appellant. Appeal allowed - decided partly in favor of appellant.

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• 2017 (6) TMI 926
  Valuation of imported item - Digital Coiling Machine - two set of Assembling machine - undervaluation - Held that: - in his statement under Section 108 of the Customs Act the appellant who is a Director of the company has accepted the under-invoicing done by him - once the company has admitted the undervaluation and has paid the penalty, the appellant who is the Director of the company and also looking after the affairs of the company is equally responsible and therefore imposing the penalty on the appellant is absolutely lawful. Appellant placed reliance in the case of Bosch Chassis Esystems India Ltd. Vs. CC, New Delhi (ICD TKD) [2015 (11) TMI 549 - CESTAT NEW DELHI], where it was held that there was no wilful mis-statement on the part of M/s Bosch Chassis Ltd. The representatives of the CHA have merely relied on the invoice handed over by M/s Bosch Chassis Ltd./ Importer - this case is not applicable in the facts and circumstances of present case and is distinguishable. Appeal dismissed - decided against appellant.

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• Law of Competition

• 2017 (6) TMI 925
  Composite Scheme of Arrangement - Held that:- Transferee company has in compliance with Section 230(5) of the Companies Act, 2013 read with Rule 8 of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, has issued the notice to the respective statutory authorities in Form No.CAA.3 on February 17, 2017 by way of registered post as a way of service upon (a) The Regional Director; (b) The Registrar of Companies; (c) The Competition Commission of India; (d) The Commissioner of Income Tax; (e) The Securities and Exchange Board of India; (f) National Stock Exchange; and (g) Bombay Stock Exchange. As stated supra, all stake holders of company are put under due notice as per law, of the proposed Scheme of Arrangement and the Chairman appointed by the Tribunal has also conducted the required meeting of shareholders as per due process of law. As such, the scheme in question has the approval of majority of all stake holders of the company. All statutory compliances have been made by the company for approval of the scheme in question. It is of the considered view that the Company petition deserved to be allowed as prayed for. The Composite Scheme of Arrangement as approved by the Board of Directors is hereby sanctioned and further declare it is binding on all the Shareholders, Secured Creditors, Unsecured Creditors/Trade Creditors and Employees of the Petitioner Company and also on the Petitioner Company itself.

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• Insolvency & Bankruptcy

• 2017 (6) TMI 924
  Corporate Insolvency Resolution Process on request of the Financial Creditor - application not been properly served on the Corporate Debtor - Held that:- Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 specifically directs that the applicant shall dispatch forthwith, a copy of the application filed with the Adjudicating Authority, by registered post or speed post to the registered office of the corporate debtor (Italics supplied). In the absence of any material or document to demonstrate that the registered office of the Corporate Debtor having been shifted from 1st Floor NBCC Tower, 15 Bhikaji Cama Place, New Delhi 110 066 to any other address, particularly to the address as claimed to be registered office address by the Financial Creditor in the application, we are constrained to hold that the application has not been properly served on the Corporate Debtor and that we consider basically explains the absence of the Corporate Debtor before us, more so, when according to the records produced by the Financial Creditor, the Corporate Debtor seems to be defending its cause in the proceedings pending before DRT I, Delhi as manifest vide order dated 01.03.2017 passed in O.A.218 of 2016. Also despite considerable opportunity being afforded to the Financial Creditor to rectify the defects in relation to service of proper notice of the application as required under IBC, 2016 read with AAA Rules, 2016 on the Corporate Debtor not done, we are constrained to dismiss this Company Petition.

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• Service Tax

• 2017 (6) TMI 948
  Refund claim - Inland Haulage Charges - denial on the ground that the service in question is Business Support Service and is therefore not covered by the Board N/N. 17/2009-ST dt. 09.07.2009 - Held that: - the services were provided by CHA to the appellant when they exported the goods under the aforesaid shipping bills - services were provided by the CHA in relation to exports on which there is no dispute and the CHA services are covered under Sr. No. 11 which reads service provided by a CHA in relation to export goods exported by the exporter - the original authority has to scrutinize the refund claims - appeal allowed by way of remand.

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• 2017 (6) TMI 947
  EOU - Refund of accumulated Input service credit - Event Management Service - Real Estate Agent service - Tour Operators service - travel agent service - denial on the ground that they are not essential for discharge of the output services - Held that: - in view of the various judgments relied upon by the appellant wherein the definition of input service has been rightly interpreted to include any service which is essential for providing the output service - appellant has been able to establish the nexus between the disputed four input services and the output services exported and all these services have been held to be input services - refund allowed - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 946
  Classification of services - whether works contract services or maintenance and repair services? - period prior to 1st June 2007 - Held that: - it is evident that the said deemed supply of materials in the execution of the works of contract has also been subjected to payment of sales tax/VAT. In this view of the matter, the work prior to 1st June, 2007 is also classifiable under the classification works contract as defined under Section 65(105) (zzm) of the FA - Diesel Locomotive Works Varanasi being a manufacturing facility of the railways or Indian Railway is also includable in the definition of railway as per definition hereinabove. Accordingly, the work done by the appellant for DLW is exempt under the definition of works contract under the FA - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 945
  Outdoor Catering Services - demand of tax u/s 73 with interest u/s 75 and penalty u/s 78 of the Act - Held that: - the appellant has paid the entire dues along with interest and he has also submitted that on account of recession he had to close down his business and further, he has not collected the service tax from his customers and the delay happened on account of non-recovery of dues from his customers - ends of justice would be met if the appellant is directed to pay 25% of the penalty amount which would come to 2,39,243/- - demand of tax with interest upheld - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (6) TMI 943
  Valuation - sale of goods from Factory Gate as well as from Depots - Revenue is of the view that as per Rule 7 of Central Excise Valuation Rules, 2000, the appellant is required to pay duty for the clearances made from depot at the depot price - Held that: - a similar issue has come up before this Tribunal in the case of Tata Engineering and Locomotive [2005 (3) TMI 218 - CESTAT, NEW DELHI], wherein this Tribunal observed that the price of goods sold to dealers at the time of removal from the factory is available, then the Valuation rules will not be applicable to the facts of the case - Admittedly, in this case, the factory gate price is available, therefore, Valuation Rules are not applicable to the facts of this case - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 942
  CENVAT credit - rent and maintenance charges with regard to Research and Development activities - denial on account of nexus - Held that: - services utilized in respect of R & D Centre is clearly a part of the production and therefore, appellants are entitled to CENVAT credit on the service tax paid on rent and maintenance service with regard to the R & D Centre - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 941
  Penalty u/r 26 of CER, 2002 - case of appellant is that in respect of their offence, there were no excisable goods in existence; therefore, provisions of the then Rule 26 for imposing penalty on them are not applicable - Held that: - provisions of Rule 26 as it existed prior to 1st March, 2007 and after March, 1, 2007, when insertion of sub-rule ‘2’ was made in Rule 26, it is clear that the offences concerning issual of excise duty invoice and also issual of any other document without delivery of the related goods for availing/taking ineligible benefit under law of Central Excise in the form of Cenvat credit or otherwise; or abetment of making invoices/ documents for availing said ineligible benefit have been made liable to penalty under Rule 26 (2) of CER - issual of invoices/documents, and the abetment in making such documents leading to claiming/taking of ineligible benefit of Cenvat credit etc. by an assessee was not liable to penalty during the relevant period under the then Rule 26 of CER - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 940
  Reduction in penalty - suppression of facts - Held that: - The Commissioner (A) has taken a very lenient view and reduced the penalty to 1,20,000/- only - there is no infirmity in the impugned order reducing the penalty from 6,75,535/- to 1,20,000/- which the appellant is liable to pay as per the impugned order - appeal dismissed - decided against Revenue.

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• 2017 (6) TMI 939
  Refund claim - cash discount, quantity discount and dealer discount - denial originally on the ground that no discounts were shown in the invoices at the time of clearance of the goods and thereafter on the ground of Time bar - Held that: - once the High Court has allowed the refund, it was not incumbent on the appellant to file a fresh application claiming refund and the department should have implemented the judgment of the Hon’ble High Court and should not have raised any objection with regard to time bar - the rejection of refund on time bar is also not justified because from the date of receipt of the copy of the judgment of Hon’ble High Court, the refund was filed within time - refund allowed - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 938
  Liability of interest - excess refund granted earlier - Held that: - in the earlier refund also under Rule 5 of CCR, 2002/2004 assessee was sanctioned 1,78,80,551/- being the amount sanctioned in excess and the same was recovered subsequently in April, 2005. Hence, for the period February, 2004 to April, 2005 as the said amount remained with the assessee, the interest was calculated amounting to 6,71,691/- and the same was adjusted out of the refund for the period October, 2004 to December, 2004 - the interest on refund excess granted earlier, have been rightly adjusted. Amount short debited - Held that: - the adjustment for the said amount upheld. Interest on delayed refund - Section 11 BB of the Central Excise Act - Held that: - there is no delay on the part of revenue, rather with the intervention of revenue, against the original refund claim amount of 3,56,18,711/- appellant was sanctioned a refund of 3,67,64,436/-. Thus, in the errors pointed out by revenue, which were finally corrected by the appellant in course of time and thereafter, we find, refund has been granted and sanctioned and also disbursed within a period of approximately one month, we hold that no interest under Section 11 BB of the Act is payable. Appeal dismissed - decided against appellant.

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• 2017 (6) TMI 937
  Rectification of mistake - relevant date of order - Held that: - We have gone through Para 3 of the said Final Order bearing A/172/2004 passed on 24/02/2004, from which it is clear that for the period from 01/04/1994 to 24/04/1994 the appellant had paid Central Excise duty of 6,54,567/- and as per the condition of said N/N. 1/93-CE dated 28/02/1993, first clearance of 30,00,000/-was over on 16/06/1994 in the Financial Year 1994-95 and with the Notification of exemption to the commodity on 25/04/1994 the appellant had paid Central Excise duty of 11,67,010/- for the period from 25/04/1994 to 06/06/1994 and the same was deducted from the duty payable and therefore we do not find any mistake in the said order - application for ROM rejected - decided against applicant.

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• 2017 (6) TMI 936
  CENVAT credit - Rule 6(3) of CCR - the respondent is not maintaining separate accounts of inputs of Zinc skimming and Zinc Ash and clearing the Zinc Ash without payment of duty as exempted goods - Held that: - verification report is on record which shows that respondent has not taken Cenvat credit on Zinc Ash/ inputs used in Zinc Ash - the respondent is not taken Cenvat credit on inputs used in the manufacture of Zinc Ash. Therefore, the respondent is not required to pay 10% of the value of Zinc Ash cleared by them - appeal dismissed - decided against Revenue.

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• 2017 (6) TMI 935
  CENVAT credit - input service distributor - whether one of the unit out of the four units can avail and utilize service tax credit passed on by the Head Office in the capacity of Input Service Distributor to the exclusion of other units and that too without taking any Registration Certificate? - Held that: - Hon’ble Karnataka High Court in the case of Commissioner of Central Excise, Bangalore-I vs. ECOF Industries Pvt. Ltd. [2011 (4) TMI 560 - KARNATAKA HIGH COURT] observed that the assessee is entitled to distribute the Cenvat Credit on input service on its manufacturing units or other units providing output service. Rule 7 does not impose any restriction. In the case of Doshion Ltd. vs. Commissioner of Central Excise, Ahmedabad [2012 (10) TMI 952 - CESTAT AHMEDABAD] the Tribunal observed that there being no restriction for utilization of Cenvat Credit of input service without allocating proportionately to various units during the relevant period and the omission to take registration as input service distributor can at least be considered as procedural irregularity. Appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 934
  Clandestine removal - hand made biris - case of the appellant is that no enquiry was conducted and no statement was recorded from the appellant - natural justice - Held that: - the Central Excise Officers visited the appellant s factory on 09.06.1999 and procured a letter dated 09.06.1999 of the appellant s father written in Bengali stating that he was paying duty only on 20,000 pieces of hand made biris - the said letter cannot be treated as statement under Section 14 of the Act, 1944. The Hon’ble Calcutta High Court in the case of Sanwar Agarwal Vs. Commr. of Customs (Port) [2016 (4) TMI 621 - CALCUTTA HIGH COURT], observed that where the statute empowers an authority to do a certain thing in a certain way, that thing must be done only in that way or not at all. Therefore, the statement under Section 14 of the Act would require to be recorded as per procedure specified in the said Section and the letter of the father of the appellant has no statutory force. Appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 933
  Liability of interest - time limitation - suo moto payment of differential duty on revised value - Held that: - It has been held by the Hon’ble High Court of Delhi in the case of Kwality Ice Cream Company Vs. UOI [2012 (1) TMI 88 - Delhi High Court] that the period of limitation that applies to a claim for the principal amount should also apply to the claim of interest thereon - In these cases too, the extended period has not been invoked and the both demands are beyond the period of limitation. Hence, the impugned demands do not appear to be sustainable - Penalties proposed are not sustainable in absence of demands - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 932
  SSI exemption - N/N. 8/2003-CE dated 01/03/2003 - duty short paid on the export to Nepal under Section 11AC of the Act - contravention of the provisions of Rule 19 - Held that: - there is no suppression of facts and/or any contumacious conduct on the part of the appellant - At the very first instance they have stated that duty had not been paid to the factum of export to Nepal and other countries which have not been found to be untrue. The duty was payable for the export of 30,000/- in Nepal in view of Explanation (G) to Clause 5 of the N/N. 8/2003-CE. In this view of the matter, the penalty of 10,000/- dropped. Appeal allowed - decided partly in favor of appellant.

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• 2017 (6) TMI 931
  Refund of unutilised CENVAT credit - closure of factory - Held that: - the appellant s case is squarely covered by the decision of the Karnataka High Court in the case of Slovak India Trading Co. Pvt. Ltd. [2006 (7) TMI 9 - KARNATAKA HIGH COURT], where it was held that there was no prohibition under Rule 5 of CCR, 2004 to refund the unutilised credit when the factory is closed - appeal allowed - decided in favor of appellant.

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• Indian Laws

• 2017 (6) TMI 923
  Confiscated/disposed/destroyed under Section 52A of NDPS Act or under Section 63(2) of NDPS Act - Held that:- For the purpose of the instant petition the proper procedure for confiscation and disposal of the case property could be done under Section 52A of NDPS Act and not under Section 63(2) of NDPS Act as the instant facts of the petition is not that of the unclaimed articles (narcotic drug, psychotropic substance or controlled substance) seized from a public place as claimed by the respondent/NCB. In the instant petition since the seized articles belonged to the aforementioned persons therefore, the lower Court was right in adopting the procedure for disposal of the case property under Section 52A of NDPS Act instead of under Section 63(2) of NDPS Act directly. In the present petition out of the nine parcels/packets seized, one parcel/packet does not discloses the person who booked it. Since all the nine parcels/packets were seized jointly from the same spot/place the possibility of the said parcel/packet being booked by one of the above-mentioned person cannot be ruled out therefore, the same could be kept jointly. There is one provision in NDPS Act for disposal of the seized narcotic drugs and psychotropic substance, i.e. under Section 52A of NDPS Act, is set aside to that extent only in presence of Section 63(2) of NDPS Act. However for the purposes of the instant petition confiscation and disposal of the case property is rightly done under Section 52A of NDPS Act resulting into dismissal of the present petition.

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