Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 12, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Disallowance of Commission paid to Direct Selling Agents (DSA) - the liability to pay the commission / brokerage to DSAs had duly crystallized and hence the comments of the ld AO in this regard that it had not crystallized does not hold water.
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Penalty u/s 271 (1)(c) - computing the revenue neutral income by the assessee as per provisions of Section 10(38) for the Long Term capital gain - Bonafide interpretation of ITAT sustained - HC
Customs
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Import of restricted item - used tyres of various sizes - imported goods cannot be treated as "hazardous waste" - the clearance of goods shall be allowed for home consumption however on payment of redemption fine under section 125 ibid and penalty under section 112(a) ibid which is reduced to 15% and 10% of assessed value respectively.
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Redemption fine - Whether the Tribunal has misdirected itself in law and on facts in holding, that under the provisions of Section 125(1) of the Customs Act, 1962, the redemption fine shall be the present market value of the subject goods less the customs duty paid thereon? - Held Yes - HC
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Anti Dumping duty - Whether Anti Dumping Duty is applicable on flat roll product of stainless steel having width between 1250 mm to 1280 mm under N/N. 14/2010-Cus., dated 20.02.2010 as amended? - Held Yes - SC
Service Tax
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Benefit of abatement - N/N. 1/2006-ST - To the extent that the assessee did not utilise credit, the availment of which is in dispute, there is no detriment to Revenue. Wrongful availment of CENVAT credit is visited with specific consequence under the Rules; that is a different cause of action leading to a different outcome which does not concern us in this dispute.
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Reverse charge - transaction between the overseas branch and the appellant. - In the absence of an activity between the branch and the headquarters for an identified consideration, the remittance received from overseas customers through the branch to the appellant would not be liable to tax.
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Erection, Commissioning and Installation charges - services provided in respect of erection of sub stations, erection of transmission lines - We fail to understand how the adjudicating authority came to the conclusion that this notification is applicable only to the transmission companies and not for the services rendered
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Refund claim - rejection on the ground that at the time of export of goods, the appellant was entitled for the benefit of exemption N/N. 17/2008-ST dated 01.04.2008 whereas, they have filed refund claim under the benefit of exemption N/N. 33/08-ST dated 07.12.2008, therefore, the refund claim is not admissible - refund allowed
Central Excise
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Suo-moto the re-credit of such amount debited erroneously - the amount paid by mistake cannot be termed as duty - suo motto credit of Cenvat can be allowed if there is no dispute as to availment of Cenvat Credit in the first place i.e. original Cenvat Credit is not contested.
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Rate of duty applicable on subject goods - P&P medicaments - The demand of duty would be at the rate as applicable on the day of destruction, when the appellant had chosen to destroy the goods and made the payment of duty to the department.
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100% EOU - Remission of duty - Rule 21 of Central Excise Rules, 2002 - remission is allowed on the goods which were cleared for export but could not be exported due to accident.
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CENVAT credit - Since the godonwn was not a part of the registered factory premises, the same cannot be considered as “place of removal” for the purpose of consideration for CENVAT credit under Rule 2 (l) ibid - credit not admissible.
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Classification of Micronutrients - Chelamin, Agromin, Chelafer and Chelacop - In view of presence of nitrogen, and also considering that they are mixtures and not separate chemically defined compounds, the said goods would therefore come under the ambit of micronutrient fertilisers and will then required to be classified as in other fertilisers in CETH 31.05
Case Laws:
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Income Tax
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2017 (7) TMI 308
Penalty u/s 271 (1)(c) - computing the revenue neutral income by the assessee as per provisions of Section 10(38) for the Long Term capital gain - carried forward as per Section 74 - Held that:- Provisions of Section 271 (1)(c) can only be invoked upon satisfaction of the ingredients as laid down in the said section. In the present case, it appears that the Assessee had disclosed in its return the loss of ₹ 80.64 Crores sustained by him and further in the return, note was also given that it reserves its right to carry forward the loss. The same was made by the Assessee keeping in mind its interpretation of Section 10(38) of the Income Tax Act. According to the Assessee, the Assessee bonafidely believed that under Section 10(38), the loss is not required to be considered and only income is required to be considered relying on the phraseology of the said provision. In the present matter, we are not testing the interpretation on the provisions of Section 10(38). However, suffice it to state that the assessee bonafidely and in good faith acted upon the said interpretation. It is also not a matter of debate that on the tax liability also, there was no effect of not setting off the said loss of ₹ 80.64 Crores. The Tribunal has considered the aspect in it's correct perspective. We do not see that the act of the assessee in giving the said note was with some ulterior intention or concealment of income or giving inaccurate particulars. - Decided in favour of assessee.
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2017 (7) TMI 307
Stay of demand - Held that:- Justice would be met if writ petition is disposed of by directing the First Appellate Authority(3rd respondent)to dispose of the appeal preferred by the petitioner on 27.04.2016 on merits and in accordance with law within the time frame fixed by this Court with a direction to the petitioner to pay ₹ 5,00,000/- per month till the disposal of the appeal as ordered by this Court. Hence the following order: The petition stands disposed of. The First Appellate Authority(3rd respondent) is hereby directed to dispose of the appeal preferred by the petitioner on 24.07.2016 as per Annexure -E on merits and in accordance with law after providing an opportunity of hearing to the petitioner within two months from the date of receipt of a copy of this order. Petitioner shall pay ₹ 5,00,000/- per month till the disposal of the appeal regularly in terms of the interim order granted by this Court on 11.05.2016. This arrangement is subject to final result of the appeal pending before the First Appellate Authority(3rd respondent). Petitioner shall extend co-operation with the First Appellate Authority(3rd respondent) in order to enable the First Appellate Authority to dispose of the appeal within the time stipulated herein above.
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2017 (7) TMI 306
Disallowance of Commission paid to Direct Selling Agents (DSA) - Held that:- With regard to the objection of the ld AO that assessee changing the fee structure at its discretion does not imply that the DSAs will not get their due fees for the work done by them. They would receive their due fees as per the changed / revised fee structure by the assessee. Thus expenditure crystallized during the year even in this scenario. The aforesaid clauses together with the other clauses in the agreement with DSA provides adequate checks and balances to protect the interests of the commission payment made by MFL (assessee herein) to DSAs. Thus the liability of expenses on account of DSA commission / brokerage amounting to ₹ 150,62,00,000/- had accrued to the assessee on disbursal of total loan facilities amounting to ₹ 708662.96 lakhs during the relevant asst year which was discharged by it during the year itself. Hence the liability to pay the commission / brokerage to DSAs had duly crystallized and hence the comments of the ld AO in this regard that it had not crystallized does not hold water. upfront claim of expenses - Held that:- Upfront expenditure should be allowed in the year of incurrence on accrual basis Treatment of portfolio acquisition cost - revenue or capital - Held that:- We hold that these portfolio cases are to be treated as stock in trade for NBFCs and the expenses incurred for purchasing these portfolios would be revenue in nature. We draw support in this regard from the ratio laid down by the Hon’ble Delhi High Court in the case of CIT vs Goyal M.G.Gases P. Ltd reported in (2008 (4) TMI 465 - DELHI HIGH COURT )
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2017 (7) TMI 305
Penalty order u/s 271(1)(c) - Short term capital gain - Held that:- There is no mechanism to determine the amount of tax sought to be evaded in this case, as the short term capital gain declared is accepted as ‘zero’, even though the carried forward losses got reduced in the computation. Since explanation-4 cannot be invoked, question of determining the amount of tax sought to be evaded does not arise in this case. Therefore, there can be no penalty u/s 271(1)(c) of the IT Act, where the returned income is accepted as such. - Decided in favour of assessee.
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2017 (7) TMI 304
Addition u/s 68 - unexplained share application money - proof of genuineness - Held that:- The creditworthiness of Shri Harnek Singh stood proved by virtue of the copy of account of commission agent showing availability of sufficient funds on the date of making investment in assessee’s company coupled with the statement of Shri Harnek Singh affirming the investment made in assessee company and explaining the source of the same as being out of his agricultural produce sold. Share application money to the extent of ₹ 4,50,000/- has not been proved to be genuine in the absence of creditworthiness of the applicants to make the same. The same has been held on the basis of facts on record. Merely because no addition has been made in the case of other share applicants in allegedly identical circumstances, it cannot be the reason or basis for deleting the addition made in the case before us, because it does not change the fact situation which calls for making addition. Even otherwise we find that the Ld Counsel has only placed copies of bank statements and the statements recorded of the other share applicants, which in our view does not demonstrate that the facts were identical in all the cases.We therefore find no merit in this argument of the Ld.Counsel for the assessee and reject the same. We uphold the order of the CIT (Appeals) making addition u/s 68 on account of share application received to the extent of ₹ 4,50,000 and delete the balance amounting to ₹ 3 lacs pertaining to share application money invested by Shri Harnek Singh. - Decided partly in favour of assessee.
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2017 (7) TMI 303
Disallowance made u/s 40(a)(ia) - non deduction of tax at source vis-à-vis expense incurred on account of “display rights payment” - Held that:- We are in agreement with the contention of the Ld. Counsel of the assessee vis-à-vis the proposition of law that where the payee has included the impugned payment in its income and paid taxes on the same and disclosed it in its Return of Income, no disallowance on account of the said payment/ expenses is to be made in the hands of the payer. Also we find that the assessee has adduced evidences before us by way of additional evidences to prove that the payee had included the aforesaid payment in its income and paid taxes on the same also. Since we agree with the Ld. Counsel of the assessee that these evidences go to the root of the matter and are necessary for the adjudication of the issue in the present appeal, we therefore admit the same and further restore the issue to the file of the A.O to examine the issue afresh in the light of the proposition as laid down by the Hon’ble Delhi High Court in Ansal Land Mark Township (P) (Ltd)(2015 (9) TMI 79 - DELHI HIGH COURT). Appeal of the assessee is allowed for statistical purposes.
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2017 (7) TMI 302
Disallowance of exemption u/s.54 - admission of additional evidence - Held that:- There is strength in the submissions of the Ld. AR and the assessee filed petition under Rule 29 of the ITAT Rules for admitting the additional evidence having valuable impact on the assessment of the assessee. Further, there is no dispute on the sale and purchase of the property but only on the claim of exemption by the assessee and additional construction cost. We are of the opinion that the Assessing Officer shall be provided an opportunity to verify these additional evidences and comply the provisions of Rule 46A of IT Rules. In the interest of justice, we remit the disputed issue to the file of the Assessing Officer to verify and examine the genuineness of evidence filed and Ld. AO shall provide an adequate opportunity of hearing to the assessee before passing the order on merits. Assessee appeal is allowed for statistical purposes.
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2017 (7) TMI 301
Addition on account of profit earned on sale of property - stock-in-trade - substituting sale consideration with FMV of the property - assessee has challenged the reference made to the DVO u/s 131(1)(d) - Held that:- We are inclined to agree with the contentions of the assessee that reference made in the present case to the DVO for determining the FMV of the property sold was not in conformity with law. It is not disputed that the reference in the present case was made u/s 131(1)(d) of the Act and further it is also not disputed that the asset was a stock-in-trade of the assessee. It is settled law that the reference to the DVO can be made only by resorting to specific provision providing for the same by the Legislature and not by virtue of or by invoking any general provision. The reference in the present case having been made under general provision u/s 131(1)(d) is, therefore, illegal and invalid and beyond the powers of the Assessing Officer. Further, even for a moment if we assume that reference was made u/s 142A and the mentioning of section 131(1)(d) was wrong, the reference, we hold, is still not valid since, as rightly argued by the Ld. counsel for the assessee, as per the provisions of section 142A prevailing at the time the reference was made, the reference could have been made only for determining the cost of construction of the asset and not the sale consideration of the asset. Considering the fact that the assessee has established the sale consideration received by virtue of the sale deed, coupled with the fact that no shred of evidence, of the assessee having earned more than the stated consideration, has been brought on record by the Revenue, we unhesitantingly hold that the Assessing Officer has erred in taking the fair market value as the sale consideration received by the assessee and by doing so has sought to tax the notional profits of the assessee, which is not permissible under the Act. Assessee has rightly referred to the decision of the Apex Court in the case of CIT vs Calcutta Discount Co. Ltd. (1973 (4) TMI 6 - SUPREME Court) wherein it was held that where a trader transfers goods to another trader at a price less than the market price and the transaction is a bonafide one, the taxing authority cannot take into account the market price of those goods, ignoring the real price fetched to ascertain the profit from the transaction. Thus reference made to the DVO for determining the FMV of the property was invalid and as consequence the sale consideration of the property could not have been substituted by FMV determined by the DVO. - Decided in favour of assessee.
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Customs
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2017 (7) TMI 276
Anti Dumping duty - Whether Anti Dumping Duty is applicable on flat roll product of stainless steel having width between 1250 mm to 1280 mm under N/N. 14/2010-Cus., dated 20.02.2010 as amended by N/N 86/2011-Cus, dated 06.09.2011? - Held that: - From the narration of facts, particularly mid term review culminating in Notification dated 06.09.2011, it becomes clear that tolerance level of + 30 mm is to be taken into account. In this manner, if the width is between 1251 mm to 1280 mm, the anti dumping duty would be payable as per the Notification. The learned counsel for the respondents could not dispute that the imports are of the period after the issuance of the Notification dated 06.09.2011 and the width of their product was between 1251 mm to 1280 mm. These imports were, therefore, clearly liable for anti dumping duty - The CESTAT while deciding the appeal in favour of the responents did not consider the impact of review Notification dated 06.09.2011 in its proper prospects, therefore, order of CESTAT set aside - appeal allowed.
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2017 (7) TMI 275
Mis-declaration of goods - provisional release - grievance of the Petitioner is that the conditions are too harsh; that mis-declaration was found only to a small extent in 4 of the 5 B/Es; that the procedure that ought to have been followed for effecting seizure was not followed; that the seizure actually did not take place in the presence of the importer but purportedly in the presence of its CHA which is also disputed by the Petitioner - Held that: - what is required to be examined in the instant case is whether the conditions imposed by the Respondent in the impugned order of provisional release of the imported consignments in favor of the Petitioner requires any interference by this Court. The Court is not persuaded to accept the submissions of learned counsel for the Petitioner that the conditions imposed in the impugned order are harsh or unreasonable or arbitrary so as to warrant interference by this Court in the exercise of its jurisdiction under Article 226 of the Constitution - petition dismissed - decided against petitioner.
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2017 (7) TMI 274
Redemption fine - Whether the second respondent has misdirected itself in law and on facts in holding, that under the provisions of Section 125(1) of the Customs Act, 1962, the redemption fine shall be the present market value of the subject goods less the customs duty paid thereon? - Held that: - A perusal of Section 125 of the Act would show that whenever confiscation of goods is ordered, the officer may give the owner of the goods or where the owner of the goods is not known, the person from whom possession or custody of the goods is seized, option to pay in lieu of confiscation, such fine as he thinks fit. A plain reading of the section shows that this option would also extend to those confiscated goods, the importation or exportation of which is prohibited under the Act or any other law for the time being in force. In the instant case, the proviso to subsection (2) of Section 115 of the Act need not detain us, which generally relates to confiscation of conveyances. Suffice it to say that the authority concerned has the discretion to give an option to seek release of confiscated goods, upon payment of such fine as the authority thinks fit and, the fine so imposed should not exceed the market price of the confiscated goods and in arriving at the market price, adjustment of duty chargeable in case of imported goods is required to be made. The proviso to section 125(1) of the Act does not say as construed by the Tribunal that the redemption fine should equal the market value. Furthermore, it appears that the Tribunal did not give enough time to the revenue to revert with the necessary information as to what would be the market price of the subject goods - matter requires reconsideration - appeal allowed by way of remand.
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2017 (7) TMI 273
Extension of warehousing period - it appeared to Revenue that the appellant importer failed to remove these goods during the warehousing period permitted under Section 61 of the said Act and instead left the goods warehoused after the expiry of warehousing period - Held that: - This matter was earlier heard on 11/01/2017 when we noticed that there appears to be no proper consideration and disposal of the direction of the Hon'ble Allahabad High Court in the aforementioned writ petition by the learned Commissioner - the order of Hon'ble High Court dated 24 May, 2013 have not been complied with. As claimed by the Department in the said order in original, it appears the learned Commissioner have refused to comply with the order of the Hon'ble High Court stating that he cannot travel beyond the scope of show cause notice and therefore, refrain from examining the same. We have gone through the entire order in original and we have nowhere found any reference and/or consideration of the said order of the Hon'ble High Court dated 24th may 2013. The order in original impugned herein is not maintainable - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 272
Penalty u/s 117 on CHA - there was a deliberate attempt on the part of the appellant in getting to export the prohibited good mischievously - Held that: - under said Section 117 of the Customs Act, 1962 penalty is provided for contravention of any provisions of Customs Act, 1962 or for abatement of contravention or for failure to comply with any provisions of Customs Act, 1962 - there is no finding by the Original Authority indicating any specific contravention on behalf of the appellant or any abatement by the appellant for any contravention by anybody else or any failure on the part of appellant to comply with any provisions of Customs Act, 1962 - penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 271
Import of restricted item - used tyres of various sizes - Department took a view that the goods though would fall under the category of Hazardous Waste (Management, Handling and Transboundary) Rules, as such permission from Ministry of Environment & Forest is required for such goods which was not produced - confiscation - redemption fine - penalty - Held that: - the very identical issue has been decided in the case of Al-Noor Exports & Imports Vs. Commissioner of Customs [2017 (6) TMI 840 - CESTAT CHENNAI], where it was held that condition that tyres must have a BIS certification except for tyres imported by Original Equipment Manufacturer (OEM), this requirement is restricted only to newly manufactured tyres and are not applicable to used tyres - imported goods cannot be treated as "hazardous waste" - the clearance of goods shall be allowed for home consumption however on payment of redemption fine under section 125 ibid and penalty under section 112(a) ibid which is reduced to 15% and 10% of assessed value respectively - appeal allowed - decided partly in favor of appellant.
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2017 (7) TMI 270
Levy of Customs Duty - sea food harvesting - It was the case of the Revenue in the SCN that the mid-sea bunkering facility for fishing activity is being mis-utilised and on completion of the enquiry, SCN was issued alleging misutilisation of duty-free bunkers procured in the mid sea for the purpose other than the fishing i.e. using the boats as chase boats during the period - Held that: - instead of going into various arguments put forth by both sides, the matter can be disposed of only on the jurisdiction issue. The appellant had submitted that the activities undertaken by the vessels took place beyond the territorial waters which are undoubtedly part of India falling under Territorial Waters, Continental Shelf, EEZ or other Maritime Zones Act and to make law which is the prerogative of the Govt of India and can exercise limited sovereignty over EEZ and Continental Shelf for specific purposes. We find that this argument of the appellant seems to be correct - Further it is noticed that by N/N. 108/2008-Cus (NT) dated 23.09.2008 while amending original N/N. 15/2002-Cus(NT) dated 07.03.2002, the territorial status of the Commissioner of Customs, Visakhapatnam has been specified which does not contain the EEZ near Visahkapatnam. Consequently, the activities undertaken by the appellants vessels beyond the territorial waters are not falling within the territorial jurisdiction of Commissioner of Customs, Visakhapatnam. Learned DR was not able to produce anything contrary to the said N/N. 108/2008-Cus. Appeals have been allowed only on jurisdiction.
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2017 (7) TMI 269
Levy of ADD - Soda Ash - whether the appellant is required to discharge Anti dumping duty (ADD) on Soda Ash imported as per Serial No. 21 of N/N. 34/2012-Cus dated 03.07.2012 or as per Serial No. 22 of the same Notification? - Held that: - Serial No. 22 of N/N. 34/2012-Cus is for import of higher ADD in respect of goods produced in Kenya but cleared from Kenya another exporter. There is no dispute as to the fact of the case in the hand that exporter is Tata Chemicals, Singapore and Tata Chemicals, Kenya is a manufacturer and has loaded the goods from Kenya. The findings of the first appellate authority on this point are very correct and in consonance of law - appeal dismissed - decided against appellant.
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2017 (7) TMI 267
Valuation - The adjudicating authority confirmed the demands raised by applying the value of the goods based upon the contemporaneous/locally purchased goods and also imposed penalty - Held that: - It is undisputed that indigeneously procured diesel oil as well as furnace oil was tanked in the same bunkers wherein the furnace oil and diesel oil was recorded as opening balance when the vessel reached the Tuticorin port from Singapore. In the absence of any other evidence to indicate that the furnace oil and diesel oil which was shown as opening balance when the vessel reached Tuticorin port was kept separately, the findings recorded by the first appellate authority are correct and legal and does not require any interfearance - appeal dismissed - decided against appellant.
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Insolvency & Bankruptcy
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2017 (7) TMI 265
Application under Section 8 and 9 of the Insolvency and Bankruptcy Code, 2016 - default in making the payment of operational debt - Held that:- The Application is admitted. We declare a moratorium in terms of Section 13 of the Code for the interim resolution professional to follow various provision and comply with each one of those. Section 14 of the Code shall also come in operation. The Interim Resolution Professional shall take all steps in terms of Section 13 (2), Section 14 & 15 of the Code. As no insolvency resolution professional has been named by the Applicant we request the Insolvency and Bankruptcy Board of India (IBBI) to appoint one. Let a reference be made to the Insolvency and Bankruptcy Board of India to furnish the name of a resolution professional within a period of ten days in accordance with Section 16(4) who shall, thereafter, perform all functions and duties as per the provisions of Sections 13,14,15,17,18 of the Code so on and so forth. All the personnel of the Corporate Debtor, its promoter or any other person associated with the management of the Corporate Debtor are duty bound to extend all assistance and co-operation to Interim Resolution Professional as may be required for managing the affairs of the Corporate Debtor. In case such co-operation is not rendered, then the interim resolution professional shall be entitled to file application before this Tribunal as per the terms of Section 19(2) of the Code.
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2017 (7) TMI 264
Corporate Insolvency Resolution Process - Insolvency and Bankruptcy Code, 2016 - notice of dispute - Held that:- A notice of the dispute was sent by the corporate debtor by way of reply to the demand notice. It is stated in the reply that as per the books/ledger account of the petitioner for the financial year ending 31.03.2016, the opening balance was ₹ 58,452/-, which was paid on 17.11.2015. The total purchases made during the said year from the petitioner was ₹ 1,21,80,347/-, but it is explained that after adjustments and payments, debit note was issued for a total amount of ₹ 65,53,043/-. There is also reference to the debit notes in the next financial year. If the respondent has prepared forged and fabricated record of its accounts and the debit notes in order to create a defence in the proceeding under the Code, that would be a matter of serious concern, for which the petitioner can always apply for prosecuting the respondent at the appropriate stage on determination of the dispute by a civil court. But to adjudicate upon the issue of forgery of the record is the handicap of the Adjudicating Authority in the summary jurisdiction. The present is thus not a case in which it can be safely inferred that no notice of dispute was received by the operational creditor for entitling the petitioner to an order of admission under clause (i) of sub-section 5 of Section 9 of the Code. Having said so, there is no alternate except to hold that the notice of dispute has been received by the operational creditor and, therefore, the petition deserves to be rejected.
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Service Tax
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2017 (7) TMI 300
Refund claim - rejection on the ground that at the time of export of goods, the appellant was entitled for the benefit of exemption N/N. 17/2008-ST dated 01.04.2008 whereas, they have filed refund claim under the benefit of exemption N/N. 33/08-ST dated 07.12.2008, therefore, the refund claim is not admissible - Held that: - similar issue came up before this Tribunal in the case of ABG Shipyard ltd. [2011 (8) TMI 363 - CESTAT AHMEDABAD], wherein this Tribunal has held that It is undisputed fact that the service tax stands paid by the respondent, has been admitted by the department as tax liability on the commission paid by the assessee, the non-mentioning of such commission amount in the shipping bill in any way, will not come in the way for granting of refund to the assessee, in terms of the N/N. 17/2008 - at the time of filing the refund claim, the notification which is in force is available to the appellant to claim refund of tax paid on the services which were received by the appellant for export of goods - refund allowed - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 299
Technical Inspection and Circulation Service - The dispute in the present case relates to service tax liability of the appellant in respect of consideration received under the heading ‘Quality Inspection Charges’ collected by the Ordinance Factory, Kamaria, which were credited to the appellants accounts - Held that: - there can be no service tax liability on the charges collected by the appellant. Hence, there is no question of interest payable by them - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 298
Refund claim - service tax paid on warehousing services - unjust enrichment - Held that: - It is obvious that at the material time, for the period of 5 years duty was not paid under protest and the same was being charged against expenditure means that the Service Tax amount was recovered from their customer. It is further seen that the C.A. certificate does not hold that the said amount has not been charged to expenditure. Moreover the reasons for holding that the amount has not been recovered from others is blind statement without any reasoning or arguments - appeal dismissed - decided against appellant.
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2017 (7) TMI 297
Penalties u/s 76, 77 and 78 of FA - classification of services - business support service - development of supply of content services - Held that: - It is apparent that the Finance Act itself recognizes that it is possible for a service to be classified in more than one classification and in such case the more specific classification is to be preferred. Thus merely because a service is more specifically classifiable in one entry does not mean it cannot be classified in any other entry less specifically. Thus the entire premise of the impugned order that since a new service describes a service specifically it cannot be classified in any other service cannot be sustained. Moreover the impugned order does not specifically deal with the possibility of classification of the service provided under Business Support Services(BSS) during the period 01/05/2006 to 30/05/2007 and Development & Supply of content services (DSCS) during the period 01/06/2007 to 15/05/2008. The impugned order also does not give any reasons for treating the service under consideration similar to the service referred in the letter issued by CBEC to Controller of Certifying Authorities to the effect that issuance on digital signature certified by the certifying authorities does not fall under the specified taxable services. As the impugned service is not a speaking order, the matter is remanded for fresh adjudication - appeal allowed by way of remand.
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2017 (7) TMI 296
Erection, Commissioning and Installation charges - services provided in respect of erection of sub stations, erection of transmission lines and in more cases erection of distribution transformers for Andhra Pradesh Southern Power Distribution Company Limited - Held that: - N/N. 45/2010, dt. 20.07.2010 unequivocally exempts any taxable services provided by the Service Provider to the service recipient relating to transmission and distribution of electricity. We fail to understand how the adjudicating authority came to the conclusion that this notification is applicable only to the transmission companies and not for the services rendered - reliance placed in the case of M/s Hyderabad Power Installations Pvt. Ltd. Versus CCE, C& ST, Hyderabad-II [2016 (7) TMI 1151 - CESTAT HYDERABAD] - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 295
Penalty - invocation of section 73 of Finance Act, 1994 - appellant claims that the entire tax liability having been discharged before issuance of SCN, hence section 73 not invocable - Held that: - It is very clear from the provisions of section 73 (3) of Finance Act, 1994 that further proceedings are not to be initiated whenever the tax liability alongwith interest thereon has been discharged before crystallisation of the demand. Admittedly, the appellant has not discharged the interest liability. Consequently, recourse to section 73 of Finance Act, 1994 cannot be faulted - The failure to report the receipt of the services from overseas entities is apparent in the ST-3 returns - appeal dismissed - decided against appellant.
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2017 (7) TMI 294
Non-payment of service tax - services received from the branches as well as the services availed by the permanent establishment for which payment has been made by the headquarters of the appellant - Held that: - It is apparent that the tax authorities find themselves confounded by the inappropriate application of section 66A to the transaction between the overseas branch and the appellant. That tax should be levied on services enumerated in section 65 (105) of Finance Act, 1994 received from abroad is axiomatic. That corporates exist as globalised entities with subsidiaries, branches and other establishments is a commercial reality. Though such branches have an independent status owing to the existence of frontiers in legislative jurisdiction, commercially, there is no distinction between a branch and its head office. More so, in the context of accounting treatment except that the final accounts of the entity may indicate the branch operations separately. Nevertheless, an expense of the branch is an expense of the entity and a receipt in the branch is a receipt of the entity. Unless it is also established that the service has been provided to the person in India, a monetary transfer is not sufficient to invoke section 66A of Finance Act, 1994. In the absence of an activity between the branch and the headquarters for an identified consideration, the remittance received from overseas customers through the branch to the appellant would not be liable to tax. With the adjudicating authority having segregated the services that are not relatable to the location of the recipient under the Place of Provision of Services Rules, 2012, taxes been confirmed on such services as are relatable to the location of the recipient. It has been held that it is not the overseas branch/permanent establishment that has received the service but the entity in India. We note that the demutualisation that has been legislated in section 66A would not be applicable after 1st July 2012. Consequently, there is no distinction between the overseas establishment and the controlling establishment in India. It would therefore appear that, for the period after 1st July 2012 the services that have been availed and which fall within the scope of rule 4 of Place of Provision of Services, 2012 are liable to tax - matter needs reconsideration for the purpose of quantification - appeal allowed by way of remand.
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2017 (7) TMI 293
Benefit of abatement - N/N. 1/2006-ST dated 1st March 2006 - commercial and industrial construction service - erection, commissioning or installation service - Held that: - It is common ground that the appellant had availed CENVAT credit which was reversed subsequently so that the eligibility for abatement of 67% is not denied. There can be no two opinions that an exemption notification, being a deviation, albeit authorised, from the legislative mandate to levy tax, must be subject to strict interpretation. Credit is merely an accounting acknowledgement of a fact and the sole test of compliance with scheme of CENVAT credit is sufficiency of balance of credit in the CENVAT credit account after all adjustments have been effected. To the extent that the assessee did not utilise credit, the availment of which is in dispute, there is no detriment to Revenue. Wrongful availment of CENVAT credit is visited with specific consequence under the Rules; that is a different cause of action leading to a different outcome which does not concern us in this dispute. There is no prejudice to Revenue by such erasure as it has not deprived the State of any tax that was due. On the contrary, denial of abatement would be an act of encroachment by taxing sale of goods which is beyond the scope of legislative authority. To avoid such encroachment, erasure of credit is the only option. There is no allegation that such erasure has lead to deficiency of available credit at any time. Erasure would thus be substantial compliance and hence denial of abatement in the impugned order is not tenable. Appeal allowed - decided in favor of appellant.
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2017 (7) TMI 292
Refund claim - N/N. 17/209 ST dated 07.07.2009 - rejection on the ground that the appellant filed the certificate required in consolidated manner instead of certifying each and every document enclosed with respective refund claim - Held that: - when the requirement has been fulfilled substantially, it is not necessary that each and every document is to be certified individually - Hon’ble Supreme Court in the case of CC (Preventive) Amritsar v. Malwa Industries Ltd [2009 (2) TMI 41 - SUPREME COURT] has observed that an assessee should not be deprived of entitled benefit by interpreting narrowly the conditions provided in law - the refund claim of ₹ 2,57,527/- is sanctioned for which further action shall be taken by the Original Adjudicating Authority. In case of the refund claim of ₹ 14,718/-, no finding has been given by the lower Authority in the impugned Order - the matter is remanded for fresh adjudication to the Original Adjudicating Authority. Appeal allowed by way of remand.
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2017 (7) TMI 291
Refund claim - various services like original document, manual documentation, business auxiliary service, business support service, express release fees and B.L. charges etc. - denial of refund claim on the ground that these are not port services - Held that: - In case of similar issue the Tribunal in the case of Pacific Exports V/s CCE Ahmadabad [2011 (2) TMI 369 - CESTAT, AHMEDABAD] has observed that Revenue should examine invoices/other documents to find out if Service Tax was paid in the relevant budget head of port services or not - matter requires fresh consideration. Refund claim - denial on the ground that it was a claim of VAT instead of Service Tax - Held that: - The appellant submits that it was a typographical error in the invoice and actually it is Service Tax amount. When it is so, this matter also needs fresh examination at the end of Original Adjudicating Authority, who shall examine the matter afresh after giving opportunity of personal hearing to the appellant. Appeal allowed by way of remand.
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Central Excise
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2017 (7) TMI 290
Recovery of the amount of excise duty - Held that: - the demand of excise duty itself could have been challenged before the Tribunal, but that demand was not challenged and attachment order was challenged in this Court. When the demand order is still there, it cannot be called as an illegal at present and further when the petitioner had undertaken to make payment of the said amount in the present petition, which was to the effect that he will deposit the amount by the end of December, 2005 and January, 2006, this Court is not expected to stay only the attachment order. The petitioner has virtually misused the process of law and the recovery was virtually stalled due the interim order passed by this Court - petition dismissed - decided against petitioner.
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2017 (7) TMI 289
Classification of Micronutrients - Chelamin, Agromin, Chelafer and Chelacop - Held that: - the impugned products definitely do contain more than one of the essential nutrients listed in the circular, they have also contain recognisable percentage of nitrogen. This being so, the disputed items are certainly micronutrients - In view of presence of nitrogen, and also considering that they are mixtures and not separate chemically defined compounds, the said goods would therefore come under the ambit of micronutrient fertilisers and will then required to be classified as in other fertilisers in CETH 31.05 - appeal dismissed - decided against Revenue.
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2017 (7) TMI 288
Doctrine of merger - refund claim - Payment of duty through CENVAT account - required balance was not available on due dates in CENVAT account - Held that: - in view of the Principles of Doctrine of Merger no refund of Cenvat Credit, as ordinarily debited for payment of duty wrongly, arises. Thus, the refund of such amount of ₹ 10,30,893/- have been rightly rejected by the Adjudicating Authority - appeal allowed - decided in favor of Revenue.
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2017 (7) TMI 287
CENVAT credit - denial of credit on the ground that at the time of procurement of the capital goods, the assessee was availing the exemption provided under Notification dated 10.06.2003 - Held that: - Sub Rule (4) of Rule 6 of the CCR mandates that no cenvat credit shall be allowed on capital goods, which are used exclusively in the manufacture of the exempted goods - In the present case, it is an admitted fact on record that during the time of procurement of the capital goods and their installation within the factory, the appellant was availing the exemption provided under Notification No. 50/2003-CE dated 10.06.2003. Since at the time of installation, the final products were exempted from payment of duty and no other goods were manufactured, which attracted payment of duty, as per provisions of sub rule (4) of Rule 6 ibid, CENVAT benefit is not permissible to the appellant. CENVAT credit - godown rent - denial on the ground that the said service is not confirming the definition of input service inasmuch as, said service was utilized by the appellant beyond the place of removal - Held that: - Since the godonwn was not a part of the registered factory premises, the same cannot be considered as “place of removal” for the purpose of consideration for CENVAT credit under Rule 2 (l) ibid - credit not admissible. Appeal dismissed - decided against appellant.
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2017 (7) TMI 286
CENVAT credit - Rule 6(3) of the CCR, 2004 - Palladium - Platinum - case of the department is that both the products are exempted goods in terms of Notification No. 6/2002-CE dated 1.3.2002, therefore for removal of these goods, the appellant is required to pay 10% for the reason that they have availed CENVAT Credit in respect of certain services namely, Advertising Services, Business Auxiliary Services, Broadband services, Chartered Accountancy Services, Cleaning services, Courier services, GTA services - Held that: - Rule 6(3) is applicable only in respect of manufactured goods, but if it is found that the goods sold by the appellant are traded goods, Rule 6(3) is not applicable as the trading goods are not manufactured exempted goods - both the lower authorities have not properly verified whether the goods sold by the appellant is a traded goods or it is manufactured by the appellant - matter requires reconsideration - appeal allowed by way of remand.
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2017 (7) TMI 285
CENVAT credit - activity of replacement of roof - whether the appellant is eligible to availed CENVAT credit of service tax paid by them to service provider? - Held that: - appellant may have entertained bonafide belief that they were eligible for availment of CENVAT credit hence the activity of availing of CENVAT credit cannot be held as with malafide intention to evade the duty liability. Accordingly, it is to be held that the penalty imposed in this appeal is unwarranted - CENVAT credit of the service tax on the service rendered by the service provider being an activity of replacement of roof, demands are confirmed with interest but the penalty imposed is set aside - appeal allowed - decided partly in favor of appellant.
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2017 (7) TMI 284
Refund claim - maintainability, or otherwise, of the refund claimed which, in effect, seeks restoration of a credit that had been reversed consequent upon an adjudication order - denial on the ground that claim for refund had not been filed within the stipulated period prescribed in section 11B of Central Excise Act, 1944 - Held that: - restoration of credit is mere accountal that was not required to be processed in accordance with section 11B of Central Excise Act, 1944. Consequently, the claim for refund, the show cause notice for rejection, the adjudication order and the impugned order are not sustainable in law - when the refund claim itself deprived of the authority of law, the appeal before the Tribunal is infructuous - the entire proceedings from the beginning are not maintainable in law and that the appellant is at liberty to adjust the CENVAT credit to the extent permitted by the CENVAT Credit Rules, 2004 - appeal allowed - decided partly in favor of appellant.
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2017 (7) TMI 283
Clandestine manufacture and removal - It is the case of the Revenue that appellant had dispatched processed manmade fabrics in the guise of cotton fabrics by claiming an ineligible exemption. While it is the case of the appellant that the samples which were drawn by the authorities do not match with the lot register maintained by the appellant in the factory premises and there is no evidence indicating that there was clandestine manufacture and removal of manmade fabrics - Held that: - the merchant manufacturers have given a declaration, we find that the said declaration as per the N/N. 305/77 is only in respect of payment of differential duty in the case of final assessment, if there are findings that selling price declared by the merchant manufacturers are incorrect. The Revenue's case in this appeal is not that the selling price was incorrect. In view of this, this argument of the appellant also fails. The test results of the samples would be applicable only to those consignments wherein the samples were drawn - the findings recorded by the adjudicating authority while dropping the demands, raised by holding that there are no test reports to confirm that the goods were manmade fabrics, are correct and legal. Appeal dismissed - decided against appellant.
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2017 (7) TMI 282
100% EOU - Remission of duty - Rule 21 of Central Excise Rules, 2002 - claim of appellant is that the goods though cleared for export by customs authorities at ICD, the same could not have been exported due to accident - Held that: - It is the case of the appellant that the issue is res integra as the Larger Bench of this Tribunal in the case of Honest Bio-Vet Pvt. Ltd. Vs. CCE, Ahmedabad-I [2014 (11) TMI 579 - CESTAT AHMEDABAD] was considering the same issue and held that remission is allowed on the goods which were cleared for export but could not be exported due to accident - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 281
Refund claim - excise duty paid on the inputs consumed by the respondent and exported - Held that: - the lower authorities have missed larger point inasmuch that the Government of India's stated policy is to encourage export and not to export taxes. In the case in hand, both the lower authorities have come to a correct conclusion that there being exports and other documents which are correlating to the refund claim filed by the appellant as duty paid on inputs, we do not find any reason to interfere in such reasoned order passed by the lower authorities - appeal dismissed - decided against appellant.
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2017 (7) TMI 280
Clandestine manufacture and removal - the manufactured goods were cleared clandestinely in the guise of trading under the trade invoices on the sole allegation that imported goods did not bear ‘Accentrix’ brand whereas the goods supplied under the Tarde invoices bore such brand name - It is the claim of the appellant that manufactured goods were cleared bearing this brand name whereas the imported goods did not bear such brand name - Held that: - After considering the details of imported goods, the Commissioner upheld the demand in the de-novo proceedings by observing that on comparison of the goods covered by the Bills of Entry as well as trade invoices it emerges that the goods covered by trade invoice were different from the imported goods. He has further recorded that the tax auditor in report ‘3 CD’ has not mentioned anything about the appellant being engaged in the trading of the goods. The Department has alleged clandestine clearances on the part of the appellant by adopting the modus operandi of selling goods manufactured in the guise of imported / traded goods. Such a charge will need to be supported by tangible evidence regarding the manufacture of such goods in the factory. Appeal allowed - decided in favor of appellant.
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2017 (7) TMI 279
Rate of duty applicable on subject goods - P&P medicaments - whether rate of duty should be the rate of duty of the day, when the goods were imported or it should be the rate of duty of the day, when the goods were removed/ destroyed in the factory? - Held that: - In this case, after the manufacture of goods and when their shelf life expired, the appellant was not in a position to clear / remove them even for home consumption. Therefore, the appellant chose to destroy the subject goods. They have paid duty of Central Excise @ leviable on the day of destruction - Once the goods have been allowed to reach the factory premises of the appellant under Notification No.94/96 dated 16.12.96, the significance of the day of reimportation of the goods is not valid for charging the duty. If the appellant removes such goods for home consumption, by taking necessary permission if required, rate of duty would be applicable for the day when the goods are to be removed for home consumption. The demand of duty would be at the rate as applicable on the day of destruction, when the appellant had chosen to destroy the goods and made the payment of duty to the department. When there is no dispute on the fact of payment of duty made by the appellant payable on the day of destruction there is no further liability of payment of duty of Central Excise against the appellant - once we have decided that the appellant has rightly paid the duty on the day of destruction of the goods there cannot be any liability of interest as well as liability of penalty against the appellant. Appeal allowed - decided in favor of appellant.
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2017 (7) TMI 278
Suo-moto the re-credit of such amount debited erroneously - due to error in software, debited amount against clearances effecting by following notification No.108/95 - whether the appellant was correct in availing suo motu credit of ₹ 30,02,093/- on the ground that it was debited inadvertently or otherwise? - Held that: - similar issue came up for decision of Tribunal for consideration of the bench in the case of S. Subrahmanyan & Co. [2011 (3) TMI 396 - CESTAT, AHMEDABAD)], wherein it was held that the amount paid by mistake cannot be termed as duty - suo motto credit of Cenvat can be allowed if there is no dispute as to availment of Cenvat Credit in the first place i.e. original Cenvat Credit is not contested - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 277
Clandestine clearance of excisable goods - the whole case against the main appellant is based on the certain entries in the records maintained by the transporter - Held that: - It appears that the Revenue placed reliance on sales register of the main appellant. It is also seen that the record seized from the transporter did not show the nature of items transported, weight, rate and freight amount, in any of the entries. Most of the entries even do not have the weight of materials transported. Only in respect of the four entries, where the weights were noted, the Revenue demanded duty stating that the same is not figuring in the appellant’s records. It would appear that a case of short payment was sought to be made on the basis of presumption rather than admissible, cogent evidences. Revenue has failed to bring out any cogent, credible and corroborative evidence of unaccounted clearance of dutiable items by the main appellant. In our opinion, the case is built up on some entries maintained by the third party without any element of corroboration from any other source - impugned order set aside - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 268
CENVAT credit - inputs removed to 100% EOU - Revenue authorities were of the view that appellant should have reversed Cenvat Credit on the inputs which were removed to 100% EOU - Held that: - similar issue decided in appellant's own case Commissioner of Central Excise, Customs and Service Tax - HYDERABAD-I Versus MATRIX LABORATORIES LTD. [2014 (6) TMI 685 - CESTAT BANGALORE], where it was held that According to Rule 19(2) of Central Excise Rules, any materials can be cleared without payment of duty by a manufacturer for export. Provisions of Rule 19(2) which provide for clearance of goods without payment of duty irrespective of the fact that they were manufactured by the assessee or otherwise in my opinion would cover the issue in favor of the appellant - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (7) TMI 266
Reversal of CENVAT credit - TIN number of the petitioner was wrongly shown by the seller - penalty - Held that: - the impugned order was passed only on the reason that the wrong TIN number was shown, that too by oversight, the petitioner should be given one more opportunity for producing the original Registration Certificate in order to substantiate their claim - matter is remitted back to the respondent to pass fresh orders, after giving an opportunity of hearing to the petitioner - appeal allowed by way of remand.
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