Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 27, 2017
Case Laws in this Newsletter:
Customs
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
FEMA
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23(R)/(1)/2017-RB - dated
23-6-2017
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FEMA
Foreign Exchange Management (Export of Goods and Services) (Amendment) Regulations, 2017
GST - States
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F.3(10)/Fin(Rev-I)/2017-18/DS-VI/339 - dated
22-6-2017
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Delhi SGST
Lt. Governor of the National Capital Territory of Delhi appoints the 22nd day of June, 2017, as the date on which the provisions of sections 1, 2, 3, 4, 5, 10, 22, 23, 24, 25, 26, 27, 28, 29, 30, 139, 146 and 164 of the said Delhi Goods and Services Tax Act, 2017 (Delhi Act 03 of 2017) shall come into force
Highlights / Catch Notes
Customs
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Valuation - the transaction value has been sought to be rejected only on the basis of the price list, catalogue, market enquiry as well as contemporaneous import of some of the items. All these grounds can at best raise a suspicion that value declared for assessment may be less.
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Valuation - rejection of declared value - The price of the identical goods which has been adopted to be assessed is not the declared value. In fact, the same is the assessed value. Therefore, the said value cannot be said as the value contemporaneous import.
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Valuation - the enhancement cannot be based merely on contemporaneous imports. The time, place, the relationship of parties as well as the quantity to be supplied are all factors which have influence on the price fixed in the contract. This being so, the enhancement is without basis.
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Valuation - rejection of declared value - The price of the identical goods which has been adopted to be assessed is not the declared value. In fact, the same is the assessed value. Therefore, the said value cannot be said as the value contemporaneous import.
Service Tax
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Amendment in notification - retrospective effect or prospective? - A benefit available on a plain reading of the notification cannot be denied retrospectively by issuing a notification. The Explanation introduced under N/N. 15/2002-S.T., dated 01.08.2002, therefore, takes effect only from the date of its issue - demand set aside
Central Excise
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SSI exemption - clubbing of clearances - mutuality of interest - The free flow back of finance between the two firms establishes that there was mutuality on interest between the two firms and that the two were inter joined in their management and flow of funds.
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Natural justice - when there is no adjudication order passed by the competent authority under the Statute there cannot be any appeal against interim order/communication passed during those proceedings - appeal is dismissed as pre-mature and non-maintainable
Case Laws:
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Customs
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2017 (6) TMI 991
Valuation - The declared value of the imported goods was proposed to be rejected in terms of Rule 10A of the Customs Valuation Rules, 1988 - valuation of contemporaneous import of identical / similar goods as found in NIDB data and proceeded to step up the value - Held that: - Section 14 of the CA, 1962 as well as Customs Valuation Rules do not sanction such a method for redetermination of assessable value. The transaction value is required to be accepted unless there are valid reasons for rejection of such value as provided in the Customs Valuation Rules - In the present case, no valid reasons have been recorded for ignoring the transaction value. Neither the market enquiry nor NIDB date will be a valid ground to disregard the transaction value - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 990
Valuation - Sony and Pioneer brand CD players and speakers - it was felt that the value declared by the importer for Sony and Pioneer brand CD players and speakers was very low in comparison with the contemporaneous imports - Held that: - the Customs authorities have arrived at the value of the imported goods by deduction method from the market price - It is settled position of law that in terms of Section 14 of the Customs Act, 1962, the transaction value is required to be accepted as above. The value can be determined by resorting to Customs Valuation Rules only in those cases when the transaction value is rejected for valid reasons. Only thereafter, the value shall be determined by proceeding sequentially through Valuation Rules. In the present case, the transaction value has been sought to be rejected only on the basis of the price list, catalogue, market enquiry as well as contemporaneous import of some of the items. All these grounds can at best raise a suspicion that value declared for assessment may be less. However, none of these can be considered as valid reasons for ignoring the transaction value - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 989
Valuation of imported goods - Betel nuts/ Arecanuts of second quality - enhancement of value from USD 800 per MT to USD 900 per MT - the Commissioner (Appeals) has observed that merely because the respondents have agreed for the enhancement, it cannot be said that the declared value has to be rejected - Held that: - the decision of the Tribunal in the case of Vikas Spinners Vs. Commissioner of Customs, Lucknow [2000 (11) TMI 196 - CEGAT, COURT NO. IV, NEW DELHI], relied upon, wherein it is held that when the importer has not contested the value and voluntarily accepted the same by payment of duty, then he is estopped from contesting the same - appeals are allowed restoring the order passed by the original authority as per the Bills of Entry - decided in favor of appellant.
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2017 (6) TMI 988
Valuation - rejection of declared value on the basis of contemporaneous imports which were at higher price of USD 22-25 per kg, whereas the declared value was USD 15.25/kg - Held that: - The department has no case that any amount higher than the agreed contract price has been received by the assessee. So also there is no discrepancies brought out with regard to the contract or in respect of supplier being related. When all such elements do not raise any doubt, in our view the enhancement cannot be based merely on contemporaneous imports. The time, place, the relationship of parties as well as the quantity to be supplied are all factors which have influence on the price fixed in the contract. This being so, the enhancement is without basis. On identical set of facts, the Tribunal in the case of Pushpanjali Silks Pvt Ltd [2006 (3) TMI 515 - CESTAT, CHENNAI] has held that the transaction value cannot be enhanced merely basing on contemporaneous imports. The enhancement of transaction value is unjustified - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 987
Valuation - rejection of declared value - Held that: - the Commissioner (Appeals) has relied on the assessed value and not the value declared. Rule 5 of the Valuation Rules provide for enhancement of the value is to be done as per said rule. Moreover, the declared value is found less than the assessed value which cannot be the basis of enhance the value - In this case, the department has assessed identical goods at the rate of 2.85 US$ per kg whereas the value declared by the appellant ranges between 2.00 US$ to 2.63 US$ per kg. The price which has been adopted to be assessed is not the declared value. In fact, the same is the assessed value. Therefore, the said value cannot be said as the value contemporaneous import. The value of imported goods in question cannot be enhanced on the basis of DRI alert and the basis of assessed bill of entry - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2017 (6) TMI 985
Transfer of pending winding up petitions to NCLT - Held that:- Though the starting sentence refers to all pending petitions relating to winding up on the ground of inability to pay debt as a condition for transfer to the NCLT, it is a conjunctive sentence, the later part of which specifies or refers to a situation where the petition has not been served on the respondent as required under Rule 26 of the Companies (Court) Rules, 1959. Petitions, which have been filed but not served, would also come within the ambit of the all encompassing expression used in the first two words of the aforesaid provision. In my opinion, however, since all the petitions have been qualified with the expression “where the petition has not been served …”, only those petitions, filed in the Court but service thereof have not been effected on the respondent, shall stand transferred We do not contemplate transfer of winding up petitions which are pending before this Court in respect of which service has already been made.
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2017 (6) TMI 984
Corporate Insolvency Resolution Process - Application under Insolvency & Bankruptcy Code, 2016 - Held that:- Requirement under sub-section (3)(c) of Section 9 while independent operational creditor to submit a certificate from the financial institution as defined in sub-section (4) of section 3 including Schedule Bank and public financial institution and like which is a safeguard prevent the operational creditor to bring a non-existence or baseless claim, similarly the adjudicating authority is required to examine before admitting or rejecting an application under Section 9 whether the 'dispute' raised by corporate debtor qualify as a 'dispute' as defined under sub-section (6) of Section 5 and whether notice of dispute given by the corporate debtor fulfilling the conditions stipulated in sub-section (2) of Section 8 of I&B Code, 2016. In the present case the adjudicating authority has acted mechanically and rejected the application under sub-section (5)(ii)(d) of Section 9 without examining and discussing the aforesaid issue. If the adjudicating authority would have noticed the provisions as discussed above and what constitute and as to what constitute 'dispute' in relation to services provided by operational creditor then would have come to a conclusion that condition of demand notice under subsection (2) of Section 8 has not been fulfilled by the corporate debtor and the defence claiming dispute was not only vague, got up and motivated to evade the liability. For the reasons aforesaid we set aside the impugned order passed by adjudicating authority and remit the case to adjudicating authority for consideration of the application of the appellant for admission if the application is otherwise complete.
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FEMA
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2017 (6) TMI 983
Condonation of delay - period of limitation - submission of the respondents that FEMA is a special statute and, therefore, the provisions of Section 5 of the Limitation Act, 1963, would have no application - Held that:- Having regard to the provisions of the Statute, we are of the view that, given the language of the proviso to Section 35 of FEMA, this Court does not have a power to condone the delay beyond the time prescribed therein. The language used in the proviso appended to Section 35 of the FEMA by necessary implication excludes applicability of Section 5 of the Limitation Act to FEMA, being a Special law, which operates in a field, inter alia, connected with economic offences. Speed coupled with certainty are the bedrock of the statute. Clearly, even according the Revenue, the accompanying appeal has been filed beyond the prescribed time frame. We are unable to condone the delay. The application will have to be dismissed.
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Service Tax
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2017 (6) TMI 1003
Amendment in notification - retrospective effect or prospective? - Management Consultancy Service - Manpower Recruitment Service - N/N. 59/98 - whether the services of Management Consultant and Manpower Recruitment Agency provided by appellants in their professional capacity during the disputed period is taxable or not? - Held that: - the issue is settled by the decision of the Chennai Bench of the Tribunal in the case of M/s SB. Billimoria & Co, M/s. AF. Ferguson & Co Versus Commissioner of Service Tax, Chennai [2015 (4) TMI 217 - CESTAT CHENNAI], where it was held that A benefit available on a plain reading of the notification cannot be denied retrospectively by issuing a notification. The Explanation introduced under N/N. 15/2002-S.T., dated 01.08.2002, therefore, takes effect only from the date of its issue - demand set aside - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 1002
Refund claim - services used for export of goods - whether the claim of refund of Service Tax paid on services received by the appellant-assessee, a manufacturer cum exporter, in the course of export of their products, post clearance from the factory, whether the refund has been rightly rejected? - Held that: - N/N. 17 of 2009-ST read with clarificatory Circular No. 112/06/09-ST dated 12/03/2009, wherein CBEC clarified that N/N. 41/2007-ST dated 06/10/2007 does not require verification of the registration certificate of the supplier of services. Further CBEC vide Circular No. 106/09/2008-ST dated 11/10/2008, further clarified that it is not incumbent upon the exporter to give proof that the service provider has actually paid service tax to the Government and to that extent, the rejection of refund claim on transport services on the ground that the proof of payment of Service Tax has not been submitted is untenable - refund allowed with interest - appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (6) TMI 1001
Time limitation - CENVAT credit - steel wire - Held that: - the period of limitation cannot, but commence from the date, when, the order is signed and thereafter, upon its receipt by the Assessee - application allowed - decided in favor of applicant.
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2017 (6) TMI 1000
Condonation of delay in filing an appeal - determination of date of service of order - Precedent - Scope of writ court - maintainability of appeal - time limitation - case of appellant is that the order in original passed by the authorities was not served upon the petitioner. Consequently the petitioner could not file the appeal within the statutory period - Held that: - The scope of a writ Court and an appeal Court in respect of an order passed by a statutory authority are different. A writ court can interfere if the petitioner substantiates that, there has been breach of principles of natural justice or that, the impugned order suffers from such perversity so as to shock the conscience of the Court or that, the impugned order is vitiated by malice or has been rendered wholly without jurisdiction. In the present case, no facade of breach of principles of natural justice is pressed into service by the petitioner in assailing the three orders. CESTAT in its second impugned order is of the view that, it is to follow the decision of the High Court as it is of superior authority rather than the larger Bench of the CESTAT itself. As a writ Court, I am not concerned with the decision per se of the authority rather the decision making process of the authority as noted above. I find no material irregularity in decision making process of the authority in respect of any of the two impugned orders to interfere under Article 226 of the Constitution of India. Petition dismissed - decided against petitioner.
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2017 (6) TMI 999
Captive consumption - naptha - generation of electricity - Exemption under N/N. 67/95-CE dt. 16.3.1995 - Held that: - when the captively consumed Naphtha itself is non-excisable, there is no need to pay Excise Duty by denying the benefit of N/N. 67/95 - there is no justification for imposition of penalty on the appellant - appeal allowed - decided partly in favor of appellant.
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2017 (6) TMI 998
Liability of interest - duty not paid or short paid - Sections 11 A and 11 AB of CEA - Held that: - it appears that there are two views on the issue and the matter is now pending with the Larger Bench of the Hon’ble Supreme Court. When it is so it is deemed fit to set aside the impugned order and remand the matter to the Original Adjudicating Authority to decide the same afresh, as and when the decision of the Larger Bench of the Hon’ble Supreme Court is made available on the subject and after giving the opportunity of personal hearing to both sides - appeal allowed by way of remand.
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2017 (6) TMI 997
Adjustment of pre-deposit - Valuation - Railway siding and shunting charges - includibility - Held that: - The Hon'ble High Court of Karnataka in the case of CCE Bangalore Vs Stella Rubber Works (Unit-II) [2013 (3) TMI 299 - KARNATAKA HIGH COURT] has held that Section 11 of the CEA does not contemplate adjustment of monies due to the assessee towards the amount due to the Revenue - Since Section 11 of the Central excise Act does not grant any powers of such adjustment, the same cannot be allowed - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 996
SSI exemption - clubbing of clearances - mutuality of interest - Held that: - the picture which emerges is that Mr. Pawan Jain is the proprietor of Mr. Jain and is also the de facto owner of ASC. The suppliers and buyers considered Mr. Jain as the owner of both funds. The evidences also indicate all the pervasive Role of Mr. Pawan Jain in the affairs of ASC. The free flow back of finance between the two firms establishes that there was mutuality on interest between the two firms and that the two were inter joined in their management and flow of funds - the correct vale of clearances intended to nil rate of duty should include the value of clearances of one arm factory belonging to the same manufacturer. In the facts and circumstances of the present case, we are inclined to upholding the findings of the adjudicating authority that the clearance of two firms are to be clubbed for the period 2006-2007 to 2008-2009 and the benefit of SSI exemption is to be determined barringly. Clandestine removal - goods were being cleared without payment of duty on the basis of only delivery challans/ kachi purchis - Held that: - the total demand for central excise duty has been calculated by including the value of clearances evidenced by the kachi parchis in addition the turnover of both firms have been clubbed. The impugned order is set aside and remanded to the original adjudicating authority with the direction to re-quantify the demand by excluding those attributable to clandestine clearance. The clubbing of the value clearances of both the firms is upheld - appeal dismissed - decided against appellant.
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2017 (6) TMI 995
Valuation - under-invoicing of waste and scrap - Held that: - The department has conducted investigations with regard to the bank account and found that there has been withdrawal of amount by these employees. All these would sufficiently prove the allegation raised in the show cause notice that the appellant has been under-invoicing the goods and receiving the consideration by way of cash, thus thereby not accounting the clearance of the goods - appeal dismissed - decided against appellant.
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2017 (6) TMI 994
Duty drawback - brand rate withdrawn by Revenue by taking the view that Aluminium sheets used in the exported Aluminium utensils are specified in the Standard Input and Output Norms (SION) and hence the respondent will not be eligible for brand rate of duty drawback in terms of CBEC circular No.603/35/2001-DBK dt. 06.07.2001 - Held that: - since the respondents have paid the duty of excise on aluminium sheets which went into the manufacture of aluminium utensils which was exported, and since no CENVAT credit has been availed from the duty paid on such sheets, the respondents will be eligible for duty drawback in terms of the brand rates fixed by the department - appeal dismissed - decided against Revenue.
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2017 (6) TMI 993
Natural justice - denial of cross examination of chemical examiner of CRCL - Held that: - If each and every interim order passed during the adjudication proceedings by the adjudicating authority is appealed before the Tribunal, it would go against the meaning object and purposes expressed by the wordings finding place in the provisions of Section 35B(1) of CEA, 1944. The subject letter simply conveying the decision of adjudicating authority by Supdt. (Adj.) is mere information without any details, backgrounds, reasons etc. and the Tribunal cannot pass any order against such an order. This is not an appealable order in terms of the provisions of Section 35B(1) of CEA, 1944. This appeal therefore is a pre-mature one on the part of the appellant - the Tribunal on similar issue in the case of Delta Overseas Vs. CCE [2015 (7) TMI 1091 - CESTAT NEW DELHI] has held that when there is no adjudication order passed by the competent authority under the Statute there cannot be any appeal against interim order/communication passed during those proceedings - appeal is dismissed as pre-mature and non-maintainable - decided against appellant.
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2017 (6) TMI 992
Clandestine removal - it appears that the goods which were lying in the factory premises in WIP (Work in Progress) have wrongly been confiscated though the Department mentions that they had the reasonable belief that goods were likely to be removed without payment of duty - Held that: - this case appears to be more of unreasonable interpretation of facts and thus committing unreasonable action against the manufacturer assessee. In this case no confiscation was warranted; however, the Department confiscated the goods and imposed redemption fine of unreasonable amount of ₹ 3,25,000/-. There is neither any justification for the confiscation of the goods nor any proper reason to impose high amount of redemption fine for redeeming the confiscated goods - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (6) TMI 986
Validity of assessment order - in the order of assessment, there is a difference between the Annexure-I filed by the petitioner and Annexure-II filed by the other end dealer - Held that: - the Assessing officer has only shown one transaction as an sample case to conclude the assessment against the petitioner. Such kind of approach cant be accepted as proper and legally sustainable one. If the Assessing Officer has found that there are differences between the Annexure-I filed by the petitioner and Annexure-II filed by the other end dealers, he should give all those details in the order of assessment with discussion and findings. Showing one example alone is not sufficient to sustain the conclusion of the Assessing Officer - it is for the Assessing Officer to look into all those aspects and re-do the assessment, after giving due opportunity of hearing to the petitioner - petition allowed by way of remand.
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