Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 9, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
GST
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Classification of Polypropylene Leno Bags - ‘PP Leno Bags’, if specifically made from woven Polypropylene fabric using strips or the like of width not exceeding 5 mm and without any impregnation, coating, covering, or lamination with plastics, are to be classified under Tariff Sub Heading 6305 33 00.
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Levy of GST on Rakhi - Mere inclusion of “Rakhi” in a Puja Thali at the discretion of either the Customer or the Supplier does not make it an integral and essential part of Puja Samagri - Benefit of exemption not available to Rakhi.
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Levy of IGST - Concessional rate of tax - supply of goods to specified institutions - Is the concessional tax rate of 5% as given under N.No. 47/2017 is applicable only for Interstate sales i.e., on IGST or also applicable for sales within the state i.e., on SGST & CGST? - Both type of supplies are eligible for concessional rate with Input Tax Credit (ITC) benefit.
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Classification of goods - Rate of GST - Lyophilizers-Machinery for the plant - Machinery meant for manufacturing life saving drugs - The tax rate leviable on supply of “ Lyophilizers” falling under the tariff heading 8419 of the GST Tariff is 9% CGST + 9% SGST.
Income Tax
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Levy of penalty u/s 271(1)(b) - non compliance of notices u/s 148/142(1) - assessee was not served with any of the notices issued by the AO due to the change of address and since the assessee has not filed any return of income, therefore, the AO was not having the present address of the assessee - no penalty.
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Nature of expenses - capital or revenue expenditure - license expenses towards WAN and local hardware - annual fee - license expenses incurred by assessee do not create any asset but only provides means for running the business - allowed as revenue expenditure.
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Validity of reassessment proceedings - validity of reasons to believe - Mere repetition of the language of the section is not sufficient. It has to be proved as to how and which material facts were not disclosed.
Customs
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Classification of imported goods - MTS Heavy Melting Scrap - ship anchor chains - the imported goods are required to be considered as metallic scrap as per the internationally accepted parameters for such classification.
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Refund of SAD - whether the rice bran and the extracted rice bran oil are one and same commodity to avail benefit of notification? - Held No - refund not allowed.
Corporate Law
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Maintenance of liquid assets and creation of deposit repayment reserve account - Rule 13 of the Companies (Acceptance of Deposits) Rules, 2014.
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Manner and extent of deposit insurance - Rule 5 Omitted - Rule 5 of the Companies (Acceptance of Deposits) Rules, 2014.
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Intending to invite deposit from its members - A certificate from Statutory auditor shall be required in prescribed form - Rule 4 of the Companies (Acceptance of Deposits) Rules, 2014.
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Directors KYC - Due date of submission of e-form DIR-3-KYC is 30th April (each year) - However, for the individual who has DIN as on 31.3.2018, the due date is 31-8-2018
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DIN shall be deactivated if e-form DIR-3-KYC not submitted within stipulated time - Rule 11 of the Companies (Appointment and Qualification of Directors) Rules, 2014
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Companies (Registration of Charges) Amendment Rules, 2018 - Important amendments
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FEE FOR FILING e- Form DIR-3 KYC under rule 12A - Nill fee if submitted Upto 30th April (this year upto 31-8-2018) - Else ₹ 5000/-
Service Tax
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Services rendered to SEZ unit - Even if the event is held outside, since the services were for advertisement of product of SEZ, the services provided is to be considered as consumed within SEZ.
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CENVAT credit - input services - painting service - Any service which is not per se for construction of building but is merely for renovation/ modernisation/ maintenance works, the same is very much inclusive in the definition of input services and as such are eligible for credit under this rule.
Central Excise
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Reversal of CENVAT Credit - clearance of inputs as such - The appellant is not required to reverse the credit on input services that was taken along with duty paid on such inputs.
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CENVAT credit - credit of the ‘Sugar Cess’ as a duty of excise - Rule 3 of the Cenvat Credit Rules, 2004 - It is settled that Sugar Cess is a tax and not a fee - credit allowed.
Case Laws:
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GST
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2018 (7) TMI 391
Classification of goods - Polypropylene Leno Bags - Applicant is of the opinion that the PP Leno Bags manufactured is classifiable under Tariff Head 6305 33 00 of the GST Tariff which is aligned to the First Schedule of the Customs Tariff Act, 1975 - Held that:- To be included in Chapter 63, the width of the tapes, manufactured from Plastics or articles thereof of Chapter 39, used to weave the fabric should be less than or equal to 5mm and should not be impregnated, coated, covered or laminated with plastics or articles thereof, of chapter 39 - From the explanatory notes and clarification provided for determination of classification of goods it is seen that two more factors are to be considered, namely, the width of the tape used in the weaving and whether or not there is a layer/lining in these bags - The specifications of the PP Leno Bags being manufactured by the Applicant, therefore, become an important feature for determining their classification for the purpose of GST. Ruling:- ‘PP Leno Bags’, if specifically made from woven Polypropylene fabric using strips or the like of width not exceeding 5 mm and without any impregnation, coating, covering, or lamination with plastics, are to be classified under Tariff Sub Heading 6305 33 00.
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2018 (7) TMI 390
Classification of “Rakhi” - whether exemption under N/N. 2/2017-Central Tax (Rate) dated 28/06/2017 (1126-FT dated 28/06/2017 of State Tax), is applicable for such manufacture, and if not, the taxability of the same? Held that:- “Rakhi” is not an essential part of any Puja or Religious Ceremony to pay obeisance to any deity. Mere inclusion of “Rakhi” in a Puja Thali at the discretion of either the Customer or the Supplier does not make it an integral and essential part of Puja Samagri. Serial number 148 of the Exemption Notification lists the items to be considered as Puja Samagri and “Rakhi” is not listed therein. “Rakhi”, therefore, cannot attract NIL rate of duty under Serial No 9(1) of FAQ dated 03.08.2017 (later, Serial No 92(1) of F. No 332/2/2017-TRU issued by the Tax Research Unit, Govt of India, Ministry of Finance, Department of Revenue) - The “Rakhi”s the Applicant intends to make, therefore, are not in the form of “kalava” and hence, cannot attract NIL rate of duty under Serial No 92(2) of the TRU Clarification. Under the GST Act the identity of an item at the point of supply is of paramount importance - In this case “Rakhi” appeals to the end-consumers because of its specific characteristics which gives the identity of Decorative/Designer/Fancy/Kids “Rakhi”. All the constituent materials are to be considered under Serial No 92(3) of the TRU Clarification and “Rakhi” is to be classified in terms of Rule 3(c) of the Interpretation Rules and will be leviable to GST accordingly - It is seen that “Rakhi” is an independently identifiable product and is also known to be so in common and commercial parlance. The multifarious constituents that go into the making of the “Rakhi” cannot be considered as accessories; the material which provides the essential character to “Rakhi” is varied and the buyer may also be motivated to purchase the same as much for its for its designer/decorative/fancy part, as for its symbolic characteristic of a bond of protection. Ruling:- The Applicant has to classify the goods “Rakhi” as per its constituent materials in accordance with Rule 3(c) of Rules for Interpretation of the Customs Tariff Act, 1975, as laid down in Explanatory Notes (iv) of Notification No 1/2017-CT(Rate) dated 28.06.2017. Rakhi will attract GST in accordance to its classification as stated above. Exemption under Notification No. 2/2017-Central Tax (Rate) dated 28/06/2017 is not applicable for “Rakhi”.
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2018 (7) TMI 389
Levy of IGST - Concessional rate of tax - supply of goods to specified institutions - Is the concessional tax rate of 5% as given under Notification No. 47/2017 dated 14.11.2017 is applicable only for Interstate sales i.e., on IGST or also applicable for sales within the state i.e., on SGST & CGST? If this concessional tax rate of 5% is applicable for both Interstate and within the state sales, then can we avail the Input tax credit (ITC) for the raw materials used for these supplies? Held that:- In respect of such clearances effected within the State, Govt. of India vide Notification No. 45/2017-Central Tax (Rate) dated 14.11.2017 which exempts the goods specified in column (3) of the Table, from the so much of the central tax leviable thereon under section 9 of the said Act, as in excess of the amount calculated at the rate of 2.5 per cent., when supplied to the institutions specified in the corresponding entry in column (2) of the Table, subject to the conditions specified in the corresponding entry in column (4) of the said table given in the notification. The total tax payable under GST in respect of such clearances effected within the state is 5% (2.5% CGST+2.5% SGST). Input tax credit - Section 17 (5) of the Central Goods & Services Tax Act, 2017 - Held that:- Section 17 (5) of the Central Goods & Services Tax Act, 2017 (which is reproduced hereunder for the ease of reference) has clearly mentioned the list of goods and services on which input tax credit is not allowed - However, goods and services on which concessional rate of tax is applicable are not figured in the list. Hence, the ITC is allowed on the supplies effected by paying duty at concessional rate of tax. Moreover, the supplies effected at concessional rate of duty are not exempt supplies. Hence, Input tax credit is allowable on the raw materials used for these supplies. Ruling:- The concessional rate of tax @ 5% as given under Notification No. 47/2017- Integrated Tax (Rate) dated 14.11.2017 is applicable only for Interstate sales i.e., on IGST and concessional rate of tax @ 2.5% CGST + 2.5% SGST is applicable for Intrastate supplies as per Notification No. 45/2017-Central Tax (Rate) dated 14.11.2017. Input tax credit is available on the raw materials used for the supplies made under concessional rate of tax.
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2018 (7) TMI 388
Classification of goods - Rate of GST - Lyophilizers-Machinery for the plant - Machinery meant for manufacturing life saving drugs - applicant is in strong belief that Lyophilizers i.e. Machinery for Plant manufactured by the applicant fall under Entry No.320 of schedule III by following the amendment carried over to it by N/N. 41/2017- Central Tax(rate) dated 14.11.2017. Held that:- The process of Lyophilization, is defined as a freeze-drying process that removes water from a product after it is frozen and placed under a vacuum. It is a low temperature dehydration process which involves freezing the product, lowering pressure, then removing the ice by sublimation. Freeze drying results in a high quality product because of the low temperature used in processing - the application of the process of lyophilization is found not only in pharmaceutical industry, but also in various other industries - On examination of the process of Lyophilization, it is found that the goods “ Lyophilizers” are classifiable under Tariff heading 84198990 as per the Section notes to Section XVI and Chapter notes to Chapter 84 of the Customs tariff. As the rules for interpretation of Customs Tariff Act, 1975 was made applicable to GST Tariff, the goods “ Lyophilizers” are classifiable under heading 8419 of the GST Tariff. As per S.No.320 to Schedule - III of the Notification No. 41/2017 dated 14.11.2017, ”Machinery, plant or laboratory equipment, whether or not electrically heated (excluding furnaces, ovens and other equipment of heading 8514), for the treatment of materials by a process involving a change of temperature such as heating, cooking, roasting, distilling, rectifying, sterilizing, pasteurizing, steaming, drying, evaporating, vaporizing, condensing or cooling, other than machinery or plant of a kind used for domestic purposes; instantaneous or storage water heaters, non-electric [other than Solar water heater and system]” falling under heading 8419 of the GST Tariff have been brought under Schedule-III of the Notification, notifying the rate of central tax as 9% as per G.O.Ms No. 250, Revenue (CT-II) Department, Dt. 21-11-2017. As the goods Lyophilizers are classifiable under the heading 8419 of the GST Tariff, the rate of central tax applicable is 9% only. Ruling:- The tax rate leviable on supply of “ Lyophilizers” falling under the tariff heading 8419 of the GST Tariff is 9% CGST + 9% SGST.
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Income Tax
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2018 (7) TMI 387
Denial of natural justice - statement recorded from one Ranga Rao behind the back of the assessee, the order of assessment came to be passed without supplying the copy of the statement or giving an opportunity to the assessee to cross-examine - Payment of on-money - addition u/s 69B - Held that:- Special leave petition is dismissed. Since the special leave petition is from an order of remand, the observations of the High Court will not stand in the way of a fresh disposal of the matter by the Assessing Officer.
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2018 (7) TMI 386
Interest on sticky loans and advances not be charged to tax - assessee not offered income on account of interest accrued on sticky loans and advances - Held that:- SLP dismissed.
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2018 (7) TMI 385
Disallowance u/s 14A made in the course of the search - ITAT cancelled the disallowance in excess of ₹ 69 lacs, was unwarranted because there was no tax imposition income in the given year relying on decision in Cheminvest Ltd. vs Commissioner of Income Tax [2015 (9) TMI 238 - DELHI HIGH COURT) - Held that:- SLP dismissed.
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2018 (7) TMI 384
Reopening of assessment - reasons to believe - Long term capital gain addition - Held that:- SLP dismissed.
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2018 (7) TMI 383
Applying transfer pricing formula - associate enterprises - bar on the AAR entertaining and allowing the application - Held that:- SLP dismissed.
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2018 (7) TMI 382
Applying transfer pricing formula - associate enterprises - relationship between two firms - Held that:- Special leave petition is dismissed.
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2018 (7) TMI 381
TPA - reject the 53 comparable entities - scope of adjudication in remand proceedings - controversy about the appropriateness of inclusion of any comparable for the ALP determination purpose - Held that:- No reason to entertain this Special Leave Petition, which is, accordingly, dismissed.
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2018 (7) TMI 380
TPA - Comparable selection - substantial question of law - Held that:- This Court in Prl.Commissioner of Income Tax & Anr. Vs. M/s.Softbrands India Pvt. Ltd. (2018 (6) TMI 1327 - KARNATAKA HIGH COURT ) has held that in these type of findings of the learned Tribunal remained final fact findings of the learned Tribunal and are binding on the lower authorities of the Department as well as this Court and unless an established ex-facie perversity is found in the findings of the learned Tribunal, the appeal u/s.260A of the Act is not maintainable.
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2018 (7) TMI 379
TPA - MAM - resale price method OR transaction net margin method - substantial question of law - Held that:- This Court in a recent judgment in Pr. Commissioner of Income Tax, Bangalore and Another Vs. M/s. Soft brands India P. Ltd. (2018 (6) TMI 1327 - KARNATAKA HIGH COURT) has held that in these type of cases, unless an ex-facie perversity in the findings of the learned Income Tax Appellate Tribunal is established by the appellant, the appeal at the instance of an assessee or the Revenue under Section 260-A of the Act is not maintainable - No substantial question of law - Appeal dismissed.
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2018 (7) TMI 378
Levy of penalty u/s 271(1)(b) - non compliance of notices under section 148/142(1) - Held that:- As it is clear from the provisions of section 271(1)(b) that this provision can be invoked only for non compliance of notice under section 115WD(2) or section 115WE(2) or section 142(1) or 143(2) or directions issued under section 142(2A) of the Act, therefore, other than the default committed by the assessee specified in the clause (b) of section 271(1) the non compliance to the other notices or directions would not attract the penalty under section 271(1)(b) of the Act. Accordingly, the penalty levied under section 271(1)(b) for non compliance of notice under section 148 is not valid and the same is deleted. As regards the penalty levied for non compliance of notice under section 142(1), we find that the assessee was not served with any of the notices issued by the AO due to the change of address and since the assessee has not filed any return of income, therefore, the AO was not having the present address of the assessee. Hence when the notice issued under section 142(1) was not served upon the assessee, and the AO has not conducted further enquiry regarding the current address of the assessee then in the facts and circumstances of the case that the assessee had already furnished the current address in the quantum proceedings, the reasons explained by the assessee are bonafide and reasonable. We delete the penalty imposed under section 271(1)(b) of the Act for non compliance of section 142(1). - Decided in favour of assessee
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2018 (7) TMI 377
Assessment u/s 153A - Addition u/s 68 - Held that:- What has been written by the Assessing Officer in the remand report is that there were certain undisclosed loans and advances for which the assessee group made disclosure of additional income. This exhibits that the assessee group voluntarily made disclosure of certain undisclosed loans/advances and offered additional income to that extent. It implies that the creditors which have been instantly added u/s 68 do not form part of the undisclosed loans/advances which were surrendered by the assessee group for which some incriminating material was found. Be that as it may, it is apparent from the assessment order itself, as has been candidly admitted by the ld. DR as well, that there is no reference to any incriminating material in the assessment order qua these creditors/advances in respect of which addition made - decided in favour of assessee.
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2018 (7) TMI 376
Assessment u/s 153A - issue of subsidy received holding the same as capital receipt - Held that:- It is evident that addition in dispute made in regular assessment proceeding has already been deleted by the Tribunal. Assessing Officer has made addition in proceedings under section 153A of the Act for the purpose of computing of the total income only and no incriminating material related to the addition in dispute was found during the course of the search proceedings - set aside the order of the Ld. CIT(A) and direct the Assessing Officer to delete the addition in dispute. - Decided in favour of assessee.
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2018 (7) TMI 375
Penalty u/s 271(1)(c) - Held that:- We are of the view that in the quantum appeals the issues in dispute has been set aside and restored back to the AO for denovo proceedings and some of the issues were allowed and dismissed, in the aforesaid manner, therefore, the penalty in question involved in both the appeals are set aside to the file of the AO with the liberty to initiate the fresh penalty proceedings, if any, as per Rules in both the appeals and pass a speaking orders. Appeals of the Assessee stand allowed for statistical purposes.
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2018 (7) TMI 374
Revision u/s 263 - freight receipts undisclosed - addition on account of net profit - Held that:- Not only the AO had made enquiries during the course of scrutiny assessment proceedings but also the assessee gave specific replies which were supported by documentary evidences. Yet, the CIT, in his wisdom, not only proceeded with his fallacious view but also computed the addition on account of net profit at ₹ 26,81,028/- to be added to the total income of the assessee from business. - No error in the assessment order which could make it erroneous and prejudicial to the interest of the Revenue which could have prompted the CIT to assume jurisdiction u/s 263 of the Act. Therefore, to this extent, the order of the CIT is bad in law and on facts of the case in hand. Insurance claim receivable - Held that:- CIT is of correct opinion that insurance claim was not received in A.Y 2007-08 and since the assessee is following the mercantile system of account, he was liable to credit insurance claim receivable in profit and loss account on accrual basis Non verification of TDS details in respect of 10 persons to whom total freight paid to hire tanker owners totalling to ₹ 84.24 lakhs - Held that:- A perusal of the assessment order vis a vis the enquiry made during the assessment proceedings show that the AO did not make any enquiry on these issues and the CIT has rightly assumed jurisdiction u/s 263 of the Act and has rightly set aside these issues to the file of the AO for proper verification. Therefore, to the extent of these issues, we do not find any infirmity in the order framed u/s 263 of the Act and accordingly to this extent the order of the CIT is confirmed. Thus on the first issue, the CIT has wrongly assumed jurisdiction u/s 263 of the Act and to that extent the order of the CIT is set aside and that of the AO is restored. On the other two issues, the order of the CIT is upheld. - Decided partly in favour of assessee.
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2018 (7) TMI 373
Nature of expenses - capital or revenue expenditure - license expenses towards WAN and local hardware - annual fee - Held that:- Assessee incurred license expenses towards WAN and local hardware, annual fee which has been treated by AO to be capital expenditure. Assessee has to incur these expenses annually on which tax has been deducted. Assessee claimed license expenses of ₹ 49,62,461/-in Profit and Loss account for the year under consideration out of total invoice amount of ₹ 83,51,907/-. CIT (A) that the license expenses incurred by assessee do not create any asset but only provides means for running the business with a view to earn profits. No infirmity in the addition being deleted as assessee has capitalised the value of the structures on which depreciation has been allowed. - Decided in against revenue Addition u/s 40(a)(ia) - payments on account of reimbursement made to holding company, on which no TDS was to be deducted - Held that:- Considering totality of facts as well as the contradiction in the nature of payment, we are of the considered opinion that it would be justifiable to set aside this issue to Ld. AO. Assessee is directed to furnish all receipts in respect of which it was alleged that these are reimbursement. AO is directed to verify the details filed by assessee and to allow assessee’s claim as per law. Set aside this issue to Ld. AO. Assessee is directed to file reconciliation of income vis-a-vis the TDS claimed. Ld. AO shall verify the relevant details filed by assessee and allow the claim as per law. Addition on account of property tax - AO made addition in the hands of assessee, as assessee was not the owner of property for which the taxes were paid - Held that:- It is an admitted position that assessee incurred these expenses towards the property taken on lease as per the agreement entered into by assessee and lessor. In our considered opinion, payment of local taxes was agreed by assessee as per agreement and therefore was binding. Thus, it was an expenditure incurred by assessee to discharge an obligation under the agreement for purposes of business, which is an allowable expenditure. Addition being 50% claimed towards guesthouse expenses - Held that:- Admittedly Assessing Officer estimated disallowance of 50% of total expenditure being personal in nature, without there being any material evidence on record to establish element of personal use by Directors. However, it also appears from record that assessee has not provided any bills and vouchers in order to verify the guesthouse expenses. We are, therefore, inclined to set aside this issue back to file of Ld. AO. Assessee shall file all requisite details in respect of bills and vouchers/agreements, as the case may be with the Assessing Officer in respect of guest house expenses incurred by assessee. Assessing officer shall then verify the details filed and allow the claim as per law.
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2018 (7) TMI 372
Addition u/s 263 - addition u/s 68 - Held that:- AO has prepared the remand report after taking note of the evidence in support of the claim made by the assessee that share capital along with the share premium for the total sum of ₹ 54,95,00,000/- was actually received by the assessee company during the FY 1999-2000 i.e. AY 2000-01 The principle of Rule of Law mandates the Government i.e, in this case the AO to act only in accordance to law. The ‘Rule of law’ is an over-arching principle of law, which is a basic feature of the Constitution. So read together with Article 265 of the Constitution, that “No. tax shall be levied or collected without authority of law”, means that AO should assess the income of the assessee only in accordance to law and, therefore, the addition u/s. 68 of the Act could not have been legally added in the hands of the assessee company in this assessment year, so considering the AO’s remand report all the documents filed by assessee for substantiating that share subscription relates to earlier assessment years, we find no infirmity in the order of ld CIT(A) and confirm the impugned order of Ld. CIT(A).
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2018 (7) TMI 371
Validity of initiation of proceedings u/s 148 - validity of reason assigned by the AO in the purported 'reasons to believe' - approval in accordance with law - Commissioner/board satisfaction on the reasons recorded by the ITO/IAC(A) that it is a fit case for the issue a notice - Held that:- As per the mandate of section 151 (2) of the Act, the Competent Authority has to examine the reasons, material or grounds on which the reopening is sought to be based and to judge as to whether they are sufficient and adequate to the formation of the necessary belief of escapement of income from taxation on the part of the AO. It is if and only if the Competent Authority, after applying his mind, is of the opinion that the AO’s belief is well reasoned and bonfide, that he will accord his sanction thereon. Also In ‘Chhugamal Rajpal vs. S.P. Chaliha’ (1971 (1) TMI 9 - SUPREME COURT), it has been held that where the Commissioner, while granting the sanction just noted the word “Yes” and affixed his signature thereunder, he had only mechanically accorded permission, and that the important safe-guards provided in section 151 were lightly treated. Thus the approval granted by the Pr. CIT in the present case, is also found to be unsustainable in law and the same is quashed alongwith all proceedings pursuant thereto - Decided in favour of assessee.
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2018 (7) TMI 370
Denial of claim of exemption U/s.11 - Held that:- Assessee was held entitled for exemption u/s.11 & 12 of the Act by the Tribunal for the assessment years 2000-2001 to 2009-2010 consistently. Further, in subsequent assessment year i.e. 2015-16, the Assessing Officer himself has held in an assessment made u/s.143(3) of the Act that the assessee is entitled for exemption u/s.11 & 12 of the Act. Assessing Officer observed in the assessment years under appeal, that certain payments were made to the relatives of founder members without rendering of any service by them in violation of provisions of section 13 of the Act. The amounts which have been paid in violation of the provisions of section 13 of the Act are to be charged to tax at maximum marginal rate. From the orders of the lower authorities, it is not clear that how much payment was made in violation of provisions of section 13 of the Act. We, therefore, for this limited purpose, restore the matter back to the file of the Assessing Officer to determine the amount which was paid by the assessee in violation to provisions of section 13 of the Act and thereafter complete the assessment afresh as per law. - Appeals filed by the assessee are allowed for statistical purposes
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2018 (7) TMI 369
Denying the exemption u/s 80P - belated filing of return by the assessee - Held that:- Hon’ble High Court in the case of Chirakkal Service Co-op Bank Ltd vs CIT (2016 (4) TMI 826 - KERALA HIGH COURT) had held at para 21 that appeals are continuation of assessment proceedings and even if the return of income was filed before the appellate authority claiming deduction u/s 80P(2), the same has to be acted upon Return filed beyond the period stipulated u/s 148 can also be accepted and acted upon provided further proceedings in relation to such assessments are pending in the statutory hierarchy of adjudication in terms of the provisions of the I. T. Act. We direct the Assessing Officer to consider the claim of deduction u/s 80P of the I. T. Act as expeditiously as possible. - Appeals filed by the assessee are allowed for statistical purposes.
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2018 (7) TMI 368
Licence fees received from tenants - income from business or income from house property - Held that:- Referring to assessee’s own case, we set aside the order of CIT(A) and direct the Assessing Officer to treat the licence fee derived from tenants as income from business. Disallowance of interest paid on loan against property - Held that:- On perusal of the record and hearing both the parties, we note that a similar issue was decided by the CIT(A) in favour of assessee in assessee’s own case for Assessment Year 2011-12 and the Department has accepted the said view taken by the CIT(A). Accordingly, we follow the rule of consistency and delete the disallowance made on account of interest - Assessee appeal allowed.
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2018 (7) TMI 367
Benefit of deduction u/s 80P(2) - assessee were doing the business of banking and therefore in view of the insertion of the provisions of section 80P(4) the assessee were not entitled to the deduction u/s 80P - Held that:- We find that an identical issue was considered in the case of ITO v. The Chengala Service Co-operative Bank Limited [2018 (4) TMI 339 - ITAT COCHIN] as held that the assessee's in these cases are primary agricultural credit societies, registered as such under the Kerala Co-operative Societies Act. In the case of Chirakkal Service Co-operative Bank Limited & Ors. (2016 (4) TMI 826 - KERALA HIGH COURT) had categorically held that when a primary agricultural credit Society is registered as such under the Kerala Co-operative Societies Act, 1969, such society is entitled to the benefit of deduction u/s 80P(2) of the Income-tax Act. - Decided in favour of assessee.
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2018 (7) TMI 366
Revision u/s 263 - addition u/s 68 - Held that:- CIT has not stated anything against the propositions of law laid down by the Hon’ble Bombay High Court in the case of CIT vs. Gagandeep Infrastructure (P) Ltd. (2017 (3) TMI 1263 - BOMBAY HIGH COURT) and the judgment in the case of CIT v. M/s. Orchid Industries Pvt. Ltd. [2017 (7) TMI 613 - BOMBAY HIGH COURT] and the judgment in the case of Pr. CIT v. Veedhata Tower Pvt. Ltd. [2018 (4) TMI 1004 - BOMBAY HIGH COURT] where in it is held that the amendment to the proviso to Section 68 is not retrospective and thus cannot be applied for the assessment years prior to the assessment year 2013-14. We make it clear that the Assessing Officer, should not while framing fresh assessment order consequent to the order passed u/s 263 of the Act, take a view that the ld. CIT in the impugned order u/s 263 has concluded that the amendment to Section 68 of the Act is retrospective in nature. He is directed to follow the ratio of the judgment in the case of Rajmandir Estates Pvt. Ltd.(2016 (5) TMI 801 - CALCUTTA HIGH COURT) and the judgement of the Hon’ble Bombay High Court and Tribunals on this issue and decide the issue in accordance with law - Appeal of the assessee dismissed.
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2018 (7) TMI 365
Disallowance on account of labour charges, misc. expenses and site expenses - Held that:- The assessee could not provide any satisfactory explanation regarding alleged the double claim of deduction on account of labour charges and also not provided any explanation in respect of other additions made on account of misc. expenses and site expenses. As observed from the record that the assessee claimed the expenses on self made vouchers and failed to substantiate its claim with material evidences. CIT-A was correct in restricting the disallowance to ₹ 2,00,000/-. We uphold the same and it is justified. Ground no. 1 raised by the assessee is dismissed. Addition on account of unexplained money - Held that:- It is noticed that the AO only doubted the creditworthiness of the said loan creditors by observing that all the creditors and donors have only normal balances in their bank accounts and said amount were deposited prior to giving the amount to the assessee. It is also noticed from the assessment order that the AO held that the loan creditors and donors have shown hypothetical income like misc. receipts. We find from record that the loan creditors were appeared before the AO under 131 proceedings and they have stated that they have vegetable and foria business since last 7-8 years. In respect of gift of ₹ 50,000/- we find that the AO did not make any adverse remark in respect of her capital account. In our opinion, the assessee has proved the identity, creditworthiness and genuineness of transaction of loan creditors and donor. The assessee also filed relevant documents in support of the transaction regarding identity, creditworthiness and genuineness of transaction before the AO/CIT-A. Therefore, addition made by the AO and confirmed by the CIT-A on this issue stands deleted. Addition made on account of sundry creditor - Held that:- Taking into consideration the submissions of the ld.AR and in the interest of justice, we deem it fit and proper to remand the issue to the file of AO for the same. The AO shall consider the issue afresh. The assessee is at liberty to file necessary details in respect of his claim and contention. The assessee is also directed to co-operate with the AO in the assessment proceedings for speedy disposal of the case as the A.Y involved in this appeal is very old i.e A.Y 2007-08. Ground of assessee’s appeal is allowed for statistical purpose.
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2018 (7) TMI 364
Disallowance made u/s 40A(3) - payment for purchase was exceeding ₹ 20,000/- - Held that:- The payment made by the assessee retail vendor to the Principal, Government of West Bengal through its wholesale agent. The relationship between the assessee (authorized retailer) and Government of West Bengal (the supplier) acting under West Bengal Excise Rules through its Authorised Wholesaler Licensee (Agent), both defacto and dejure , is one of ‘Principal’ and ‘Agent’. We hold that the assessee retail vendor had made payment to the said agent (wholsesale licensee) would fall under the exception provided in Rule 6DD(k) of the Rules. We hold from the aforesaid findings that the assessee’s case falls under the exceptions provided in Rule 6DD(b) and Rule 6DD(k) of the Rules. We have no hesitation in deleting the disallowance made u/s 40A(3) of the Act in all the years under appeal. There could be no disallowance u/s 40A(3) of the Act in the facts and circumstances of the case and accordingly we direct the ld AO to delete the same - Decided in favour of assessee.
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2018 (7) TMI 363
Penalty u/s. 271(1)(c) - whether the assessee was guilty of having concealed particulars of income or having furnished inaccurate particulars of income? - Held that:- The show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. We are of the view that imposition of penalty cannot be sustained. The plea of assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled - Decided in favour of assessee.
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2018 (7) TMI 362
Reopening of assessment - Addition to prior period income - Held that:- AO has mentioned that this information was available in the Form 3CD report which had been filed for the assessee. In reply to a query raised by the AO, the assessee, in its submission dated 06.10.2008 in paragraph 6, had submitted before the AO that prior period expenses had not been claimed by the assessee company in its return of income and as the profit / loss for the year had been considered only before the claim of previous year expenses, no disallowance was needed in the assessment proceedings. Sales Tax Deferment also disclosed in the computation of income of the assessee which was filed along with return of income. As much evident that all this information was before the AO at the time of the original assessment proceedings. There was no fresh tangible material which had come in possession of the AO with regard to the prior period income so as to warrant initiation of reassessment proceedings in the case of the assessee. We hold that the reassessment was based on a mere change of opinion by the AO which, under law, he was not entitled to do. Admittedly, the reopening is within 4 years, however, the issue is squarely covered in favour of the assessee by the judgment of the Hon’ble Apex Court in the case of CIT vs. Kelvinator of India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA). Reopening was bad in law in view of no tangible material having come in possession of the AO subsequent to the original assessment proceedings and relating to the prior period income. Thus, it is a case of mere change of opinion by the AO which amounts to review of his earlier order and the same cannot be upheld. Therefore, the order of the CIT (A) is set aside and the reassessment proceedings u/s 147/148 of the Act are quashed as being void ab initio - Decided in favour of assessee.
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2018 (7) TMI 361
Addition u/s. 68 - availing accommodation entries for unsecured loans - Held that:- In the case under consideration the assessee had filed all the necessary details like affidavits and the confirmations of the lenders along with the bank details and the returns of income tax. The AO had not made any comments about these documentary evidences. Secondly, the case before us is about accommodation entries and not about bogus purchases. We find that in the cases of Vikram Mukti Lal Vora (2017 (5) TMI 1270 - ITAT MUMBAI), the Tribunal has dealt with the identical issue, that that in that matter issue of accommodation entries by the group concerns of BLJ was deliberated upon. The Tribunal, in the similar circumstances, had upheld the order of the FAA who had deleted the addition made by the AO under the head addition on account of accommodation entries. Considering the above, we decide the first effective ground against the AO. Addition on account of interest paid by the assessee on the loans received by it from RS and GV - Held that:- As we have decided the first effective ground of appeal against the AO and the interest issue is directly linked with the loan transactions. So, we hold that there is need to interfere with the order of the FAA. Second effective ground of appeal is decided against the AO. Validity of reassessment proceedings - validity of reasons to believe - Held that:- A perusal of the reasons reveal that the AO has no where alleged that there was failure on part of the assessee to disclose fully and truly the material facts necessary for completing the assessment. In our humble opinion, the allegation of not disclosing the material facts fully and truly has to be proved i. e. as to how the assessee did not disclose the material facts. Mere repetition of the language of the section is not sufficient. It has to be proved as to how and which material facts were not disclosed. AO has not whispered anything about the failure of the assessee. - Decided in favour of assessee
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2018 (7) TMI 360
Treatment to License Fee - as income from business or income from house property - Held that:- Lease rent received by the assessee is assessable as income from business in the hands of the assessee and the related expenditure has to be allowed in the hands of the assessee. See M/s Bhuvan Leasing & Infrastructure Pvt. Ltd. [2015 (6) TMI 1160 - ITAT MUMBAI] - decided in favour of assessee
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2018 (7) TMI 359
Addition on account of sundry creditors and Expenses Payable - assessee has adopted cash system of accounting for receipts and sub commission and other expenses were accounted on mercantile basis - Held that:- The earlier years expenses are allowed during the year under consideration and if the earlier years receipts are excluded from the income of the year under consideration, the whole exercise would be revenue neutral. There is no dispute that the receipts shown by the assessee are matching with Form No. 26AS filed by the deductor of TDS. In our considered opinion, income statement of the assessee does not give any distorted figure. In any case, the expenditure incurred by the assessee for earning income has to be allowed. In any case, legitimate expenses incurred by the assessee in earning income has to be allowed and once the income has been accepted as such, and taxed accordingly, the matching expenditure has to be allowed. TDS u/s 194C - payment to hotel - non deduction of tds - addition u/s 40(a)(ia) - Held that:- The facilities/amenities made available by a hotel to its customers do not constitute “work” within the meaning of section 194C of the Act, therefore, we do not find any reason to interfere with the finding of the CIT(A). Our view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of The East India Hotels Ltd & Anr. Vs. CBDT [2009 (3) TMI 8 - BOMBAY HIGH COURT] Addition on account of capital gains - Held that:- As in case the capital gains in the hands of the assessee is enhanced, then the consequential capital gains in the hands of the co-owner has to be reduced and since both of them are taxed at the highest rate of tax, the exercise would be tax neutral. The CIT(A), correctly directed the AO to delete the addition Addition on account of personal expenses - Held that:- Since the AO has made adhoc disallowance and since the first appellate authority, in his wisdom, has directed the AO to restrict the disallowance to 50% of the total disallowance, we do not find any reason to interfere with the findings of the CIT(A) - Revenue appeal dismissed.
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2018 (7) TMI 358
Denying the benefit of claim of deduction u/s 80P(2)(a)(i) - assessee was doing the business of banking, and therefore, in view of insertion of provisions of section 80P(4) - Held that:- We find that an identical issue was considered in the case of ITO v. The Chengala Service Co-operative Bank Limited [2018 (4) TMI 339 - ITAT COCHIN] held that when a primary agricultural credit Society is registered as such under the Kerala Co-operative Societies Act, 1969, such society is entitled to the benefit of deduction u/s 80P(2) of the Income-tax Act. Assessing Officer was not competent and did not possess the jurisdiction to resolve / decide the issue as to whether the assessee was a 'Primary Agricultural Credit Society' or a 'Co-operative bank', within the meaning assigned to it under the provisions of the Banking Regulation Act and to take a contrary view especially in view of the Explanation provided after the clause (ccvi) of section 5 r.w.s Section 56 of the Banking Regulation Act. - Decided in favour of assessee.
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2018 (7) TMI 357
Denying the claim of deduction u/s 80P(2)(a)(i) - assessee was doing the business of banking, and therefore, in view of insertion of provisions of section 80P(4) - Held that:- We find that an identical issue was considered in the case of ITO v. The Chengala Service Co-operative Bank Limited [2018 (4) TMI 339 - ITAT COCHIN] held that when a primary agricultural credit Society is registered as such under the Kerala Co-operative Societies Act, 1969, such society is entitled to the benefit of deduction u/s 80P(2) of the Income-tax Act. Assessing Officer was not competent and did not possess the jurisdiction to resolve / decide the issue as to whether the assessee was a 'Primary Agricultural Credit Society' or a 'Co-operative bank', within the meaning assigned to it under the provisions of the Banking Regulation Act and to take a contrary view especially in view of the Explanation provided after the clause (ccvi) of section 5 r.w.s Section 56 of the Banking Regulation Act. - Decided in favour of assessee.
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2018 (7) TMI 356
Disallowance u/s 14A - Held that:- The issue is squarely covered by the decision of Hon’ble Delhi High court in the case of Cheminvest Ltd. vs. CIT (2015 (9) TMI 238 - DELHI HIGH COURT), wherein the disallowance is to be restricted to the extent of exempt income only. We restrict the disallowance to the extent of exempt income of ₹ 10.75 only. This issue of the assessee’s appeal is partly allowed. Disallowing the interest expenses - Held that:- NMW has not revised TDS return till 16-08-2014. NMW is revised the TDS return only when the Revenue pointed out to the assessee to reconcile the gross receipts with TDS return. Accordingly, we are of the view that entire reversal of interest is an afterthought to reduce the taxable income of the assessee and this is not done bonafide. Even now before us, the assessee could not substantiate that NMW was facing financial hardship. Assessee relied on the case of CIT vs. Neon solutions Pvt. Ltd (2016 (4) TMI 1162 - BOMBAY HIGH COURT), but we find that in the case before Hon’ble Bombay High court the board resolution for waiver of interest on debentures was passed on 31-05-2004 and approved by board for waiver of interest for 6 years and including AY 2007-08 and 2009-10. But in the present case before us, the reduction was done after almost 2 years i.e. on 31-07-2012 for the AY 2012-13. Hence, the facts are entirely different and distinguishable. - Decided against assessee.
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2018 (7) TMI 355
Penalty u/s 271(1)(c) - concealed the particulars of his income or furnished inaccurate particulars of such income - non striking-off of the irrelevant limb in notice - Held that:- Assessing Officer in his assessment order dated 28.11.2011 initiated the penalty on account of furnishing the inaccurate particulars whereas the penalty has been levied on account of concealment of income by virtue of order dated 19.04.2012 which is not justifiable in accordance with law. - Decided in favour of assessee.
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2018 (7) TMI 354
Eligibility to deduction u/s 10A - profit derived by the activities performed by third party/freelancers abroad on which the assessee has no control supervision - work outsourced - Held that:- Assessee hired the services of freelancers on internet for the work of Transcription, Summarization, Translation, Editing, Proofreading, Data entry which is much related to the business of the assessee. The assessee out- sourced job works activity from freelancers for its main object of business activities. The object of the assessee company covered the job work services of the out-source company freelancers to its object. The assessee company was engaged in the business of Transcription, Summarization, Translation, Editing, Proofreading, Data entry which is an IT enabled service. If the out- source work is connected to the object of the company then in the said circumstances, the out-source work cannot be said separately to the object of the company and the exemption u/s 10A of the Act is not required to be denied only on this basis. However the income from other source of company such as interest income etc., has been assessed separately which were not claimed u/s 10A of the Act. No doubt this type of income nowhere covered the claim u/s 10A of the Act. The provision of Section 10A of the Act nowhere bar the claim if the work out-sourced. - Decided in favour of assessee.
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2018 (7) TMI 353
Disallowance on account of PMS Fees under the Head of Capital Gains on sale of shares - Held that:- Tribunal observed that same issue had been predominantly decided in Devendra Motilal Kothari (2010 (3) TMI 794 - ITAT MUMBAI ) and Pradeep Kumar Harlalka (2011 (8) TMI 479 - ITAT MUMBAI) against assessee after making thorough analysis of issue and, dealing with all aspects now raised by assessee and therefore, it thought as not proper to revisit all relevant facts and legal position in the above case with a view to test the correctness of above orders. On that reasons, the Tribunal sustained the disallowance made by the AO. - Decided against assessee
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2018 (7) TMI 306
Validity of notice issued u/s.148 - denial of natural justice - AO issued notice merely on the basis of information received from third party and without applying his mind on the issue of concealment of income - Held that:- AO as well as the CIT(A) have made the aforesaid addition of ₹ 26,58,213/- at the back of the assessee without providing copies of statement/affidavits of the parties and without providing the benefit of cross examination of the parties to the assessee. The application of the assessee addressed to the CIT(A)-I, dated 16-12-2016, evidences the fact of seeking cross examination and copies of statements/affidavits of the parties. Thus revenue authorities have not followed due procedure before making reassessment u/s.147 of the Act and therefore, violated the principles of natural justice. Coming to the merits also, the assessee has produced copies of bills, transport receipts, delivery challans, bank statements, etc. establishing the trail of goods. Further, the books of account have also not been rejected u/s.145(3) of the Act. - Decided in favour of assessee
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Customs
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2018 (7) TMI 352
Legality of Supplementary notice dated May 18, 2017 and an addendum issued thereto dated September 22, 2017 - Held that:- A considerable period of time has elapsed since the issuance of the supplementary notice with the addendum thereto. The show cause notice proceedings are being considered at the appropriate level. The petitioner has participated in such proceedings. At this stage, therefore, it would be inappropriate to stay the proceedings before the authorities. It would also be inappropriate to direct, that, no effect be given to the final order that, may be passed in such proceedings. The issues raised in the writ petition are such that, an opportunity should be afforded to the respondents to file affidavits.
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2018 (7) TMI 351
Extension of period of issuance of SCN - Mis-declaration of imported goods - Confiscation - a Show Cause Notice dated 08.05.2018 was issued but the investigation could not be completed within the period of six months w.e.f. the date of seizure i.e. 15.11.2017 - Held that:- Since the appellant herein is an authorised courier agent, the procedure summarised in Chapter 17 of CBEC’s Customs manual perusal thereof shows that in case of postal import including import through courier, the postal parcel as received by the postal service has to be handed over to the Customs alongwith such documents as are mentioned in Rule 8.1(b). In case, the Customs officer doubts any mis-declaration, he may require the postal authority/ courier to detain the same with him - thus, the role of the courier/ the appellant herein is important till the stage of finalisation of the adjudication and even beyond the stage of final adjudication. The matter is still at the stage of investigation. No doubt, it is apparent that Shri Balvinder Singh, proprietor of one of the importers has admitted the intentional mis-declaration on his part vide his initial statement dated 22.11.2017. It is after his statement that the statement of the proprietors of remaining two importers was recorded who tried to shirk their responsibility on the ground of handing over of KYC and other documents to the appellant on their behalf also but through M/s BS Imports. Accordingly, to finally conclude the investigation, the subsequent statement of Shri Balvinder Singh is important - His unavailability on account of being hospitalised, to my opinion is a sufficient cause of delay in not concluding the investigation within the span of six months is required under Section 110 of the Customs Act. The Commissioner Customs has rightly invoked Section 124 of the Act while considering the absence of Shri Balvinder Singh as a sufficient cause for permitting the extension of six months, beyond the period of six months expiring from the date of seizure - appeal dismissed - decided against appellant.
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2018 (7) TMI 350
Refund of SAD - N/N. 102/2007-CUS dated 14.09.2007 - The rice bran which the assessee has imported has been processed to extract rice bran oil and the de-oiled rice bran is separately sold by the appellant - whether the rice bran and the extracted rice bran oil are one and same commodity to avail benefit of notification? Held that:- Notification No. 102/2007-CUS exempts goods falling within First Schedule of Customs Tariff Act, when imported into India for subsequent sale from the whole of Additional Duty of Customs leviable therein under Sub-Section (v) of Section 3 of Customs Tariff Act - As may be seen in para 2 (d) of the notification, the importer shall sell the imported goods after paying appropriate sales tax or VAT as the case may be. In this case the imported goods were not sold. Imported goods were processed into two different distinctive commodities and they were sold separately - The bran which is imported is a distinct commodity than the bran oil and the de-oiled bran and accordingly, the market prices of these three commodities are also different. This case has far more similarities to the case of the Proflex Systems Vs. Commissioner of Customs, Ahmedabad [2014 (5) TMI 123 - CESTAT AHMEDABAD] in which corrugated sheets were imported but they were sold as Proflex Roofs after making some changes. It is a well settled position that the exemption notification is an exception to the general rule and has to be strictly construed. The rice bran which the assessee has imported has been processed to extract rice bran oil and the de-oiled rice bran is separately sold by the appellant. Goods which were imported were not sold but were processed. Therefore, the exemption under Notification No.102/2007-CUS and the consequential SAD refund do not apply in the present case - refund not allowed - appeal dismissed - decided against appellant.
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2018 (7) TMI 349
Classification of imported goods - MTS Heavy Melting Scrap - Adjudicating authority held that the importer had mis-declared the goods as heavy melting scrap instead of used ship anchoring chains and ordered confiscation of the imported goods - N/N. 21/2002 (SI. No. 200) - whether the goods are to classified under CTH 73151220 or under CTH 72044900? - Held that:- A reference to the inspection report at the originating end clearly tells us that the goods are in the nature of scrap/second hand/defective and that such goods are to be considered as scrap as per the Internationally accepted parameters for such classification. It is noteworthy that the inspection agency at the Port of Export is one of the agencies recognized by DGFT for such classification. Secondly, such a classification report cannot be completely ignored. The goods imported which have been declared as melting scrap, have been held to be otherwise by the customs authorities mainly in view of the goods were in running length. But in the light of the opinion of various agencies including that of the certification agency at the Port of Export we are of the view that the imported goods are required to be considered as metallic scrap as per the internationally accepted parameters for such classification. there are no justification to disregard such evidences and order reclassification under 7315 as second hand goods - Confiscation not justified - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 348
Classification of coal imported by the appellant/assessee - whether Steam Coal or Bituminous Coal? - Held that:- Regarding the issue of classification of coal, different Benches of CESTAT rendered conflicting decisions. The channai Bench as well as Ahmedabad Bench held that coal imported would fall under steam coal attracting nil rate of duty. It was also followed by the Mumbai Bench. On the other hand, the Bangalore Bench of CESTAT held that the coal imported would be bituminous coal attracting duty @ 5%. Thus, in view of the conflicting decisions, the matter was referred to the Larger Bench and vide order dated 16.1.2017, the issue was taken up for consideration by the Larger Bench - Taking note of the fact that the decision rendered by the Bangalore Bench in the case of M/s. Maruti Ispat and Energy Pvt. Ltd. [2014 (10) TMI 944 - SUPREME COURT OF INDIA] was appealed before the Hon'ble Apex Court, the Larger Bench directed that the matter being subjudice before the Hon'ble Apex Court, the assessees were granted opportunity to come again before the Tribunal after the verdict from the Hon'ble Apex Court. The department has not filed any appeal against the above Larger Bench decision. Pursuant to the Larger Bench, which has given liberty to the appellants to await the outcome of the Hon'ble Apex Court's decision, various Benches of CESTAT as in the case of CESTAT, Hyderabad as well as CESTAT, Ahmedabad have already disposed the appeals applying the Larger Bench decision, as stated supra. The CESTAT, Hyderabad has remanded the matter directing the adjudicating authorities to conduct denovo proceedings after the outcome of the decision of the Hon'ble Apex Court. The appeals require to be remanded to the adjudicating authority for denovo consideration basing upon the outcome of the decision of the Hon'ble Apex Court in Maruti Ispat and Energy Pvt. Ltd., as laid down by the Larger Bench of the Tribunal - appeal allowed by way of remand.
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2018 (7) TMI 347
Refund of SAD - N/N. 102/2007-Cus. Dated 14.9.207 - rejection on the ground that the appellant has not furnished Chartered Accountant's certificate so as to correlate the payment of VAT with the refund claim of the appellant, the sales invoices do not contain endorsement as required under 2(b) of the conditions stated in the notification, description of the goods given in the Bills of Entry does not match with the description of goods in the sales invoices and also on the ground that the CHA inadvertently had stated the goods as 9200 sq. mt. instead of 9200 rolls. Rejection on the ground that the appellant has not produced the Chartered Accountant's certificate as required under the notification - Held that:- Since the authorities below have not discussed or verified the said Chartered Accountant's certificate and merely rejected finding that the certificate has not been produced, we are of the considered opinion that this issue requires to be remitted for verification of the Chartered Accountant's certificate - matter on remand. Rejection on the ground that the sales invoices do not bear the endorsement as required under condition 2(b) of the Notification - Held that:- The said issue stands covered by the decision in the case of Chowgule Company Pvt. Ltd. [2014 (8) TMI 214 - CESTAT MUMBAI (LB)], where it was held that Since the object and purpose of the condition is achieved by non-specification of the duty element the mere non-making of the endorsement could not have undermined the purpose of the exemption - the rejection of refund on this ground is unjustified. Rejection on the ground that the description of the goods given in the Bills of Entry does not match with the description of goods in the sales invoices - Held that:- So also the goods have been particularly mentioned with regard to their nature as to plain finish. This cannot be a ground for rejection of refund claim since the goods sold are very much clear from the invoice. Refund has been rejected for the reason that the units of the goods is mentioned wrongly as 9200 rolls instead of 9200 square feet - Held that:- This was only an inadvertent error and the same cannot be a reason for rejecting the refund - refund cannot be rejected on this ground. Appeal allowed in part and part matter on remand.
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2018 (7) TMI 346
Classification of imported goods - Other woven fabrics of polyester staple fibre - the Department issued show cause notices dated 02.09.2010 contending that the imported fabrics were “Polyester made with filament yarn” classifiable under CTH 5407 69 00 of the First Schedule to the Customs Tariff Act, 1985 - Held that:- There were contradictions in the findings, the matter requires reconsideration - appellants are allowed by way of remand to the Adjudicating Authority.
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2018 (7) TMI 345
Smuggling - Karbonn Mobile - seizure was made prior to clearance - case of appellant is that the Revenue failed to discharge its burden of proof that the seized goods were in the process, to be illegally smuggled into Nepal - Held that:- The provision of Foreign Trade Policy shall be read with the provisions of Indo Nepal Treaty and in case of any conflict, the provision of Indo Nepal Treaty shall prevail - It is seen from the impugned Order that there was a mis-declaration by the appellant no. 1 regarding the origin of the goods as well as that the goods have been manufactured by them, before the Customs authority. In any event, the appellant have not denied the mis-declaration of the goods. Therefore, confiscation of the Mobile consignment and imposition of redemption fine and penalty on the appellant no. 1 is justified - there is no reason to impose penalty on Shri Ram Bharosi Gupta, appellant no. 2 as Authorised Signatory of the appellant no. 1 company. Appeal allowed in part.
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2018 (7) TMI 344
Redemption Fine - Smuggling - Truck owner - case of appellant is that the owner of the Truck herein, had no knowledge of the loading of the smuggled goods - it was also contended that SCN does not indicate the proper Section for confiscation of the goods - Held that:- Sub Section (2) of Section 115 provides any conveyance used as a means of transport in the smuggling of any goods or in the carriage of any smuggled goods shall be liable to confiscation, unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance - In the present case, the appellant herein, the owner of the seized truck failed to prove, that she and her agent the Driver, had no knowledge of the transporting of the smuggled goods. Hence, the confiscation of the seized truck is justified - redemption fine also upheld - appeal dismissed - decided against appellant.
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2018 (7) TMI 343
Smuggling - Recodex Cough Syrup were attempted to export to Bangladesh illegally - Confiscation - Redemption Fine - Penalty - Held that:- Shri Satya Ranjan Saha of Universal Drug Centre had given contradictory statement. Once he stated that he had no knowledge of the offending goods. Subsequently, he has claimed the ownership of the goods. Thus, there is no reliability on the statement of Shri Satya Ranjan Saha. Similarly, Shri Nilanjan Dutta had claimed the provisional release of the goods without any proper evidence. It appears from the record that Shri Nilanjan Dutta had sent his representative at Kolkata, Shri Tamal Sengupta to book the seized consignment from Kolkata and payment was made by Shri Satya Ranjan Saha. Therefore, there is a clear evidence of involvement of both the appellants in attempting to export of the goods. However, the quantum of fine and penalties are excessive and thus the quantum of redemption Fine and penalty reduced - appeal allowed in part.
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2018 (7) TMI 342
Smuggling - Rice - Phensedyl Cough Linctus (PCL) - Held that:- The appellant is silent about the allegation as to why he has issued the challan on consignment of 360 bags of Rice to a non-existent Firm of 2014 consignee. Therefore, the submission of the appellant cannot be accepted - appeal dismissed - decided against appellant.
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Corporate Laws
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2018 (7) TMI 397
Condonation of Delay Scheme, 2018 - question of getting the accounts audited and placing the same before AGM - Held that:- It shows that after the present impugned order dated 19th January, 2018 was passed, the auditors appointed have submitted audit report and schedule of AGM had been given. The appellants appear to have taken up the issue relating to the auditor’s report in the NCLT in view of which order dated 26th March, 2018 has now been passed by the Principle Bench of the NCLT. There is typing error in last Para of the order regarding activation. I need not enter into that part. Fact remains that in view of these subsequent developments in the litigation, when the auditors appointed have taken steps in terms of the impugned order dated 19th January, 2018 and the steps taken by them have further been questioned before the Principle Bench of NCLT, Delhi and the learned NCLT is seized with the further developments which have taken place in this prolonged litigation, I do not think it would be appropriate for me to interfere in the impugned order and deal with the question whether or not at all the independent auditor should or should not have been appointed. I do not find it just to interfere in the discretion exercised by NCLT.
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2018 (7) TMI 396
Maintainability of appeal - appeal over the rejection of application filled by someone else - Held that:- The appellant was not party in the Company Petition nor the applicant whose application has been rejected. We find that there is no case made out for this Appellate Tribunal to directly entertain the appeal of this appellant and decide the issues which are being raised. It is for the appellant to move appropriate forum for appropriate relief if he is aggrieved. The appellant cannot file the appeal over the rejection of application which was application filed by somebody else. He cannot maintain appeal from order of rejection of an application to which he was not party, nor the company petition in which it was filed. The appellant says that the Company Secretary cannot appear for the company. The Company Secretary says that the company is represented by the 3 Directors respondent nos. 2 to 4 who are marked as disqualified but on filling of returns their case is under reconsideration. The Company Secretary however accepts that he has not filed memo for Respondent no.1. We are not entering into this controversy.
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2018 (7) TMI 395
Approval of the Scheme of Arrangement - Held that:- Upon considering the approval accorded by the members and creditors of the Petitioner Companies to the proposed Scheme and the affidavits filed by the Regional Director and Official Liquidator whereby no objections have been raised to the proposed Scheme, there appears to be no impediment to grant sanction to the Scheme. However the Companies shall remain bound by the undertaking filed by each one of them. Consequently, sanction is hereby granted to the Scheme under sections 230 to 232 of the Companies Act, 1956. The Petitioners shall however remain bound to comply with the statutory requirements in accordance with law. Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this court to the scheme will not come in the way of action being taken, albeit, in accordance with law, against the concerned persons, directors and officials of the petitioners. While approving the scheme as above, we further clarify that this order should not be construed as an order in any way granting exemption from payment of stamp duty, taxes including VAT/GST or other charges, if any, and payment in accordance with law or in respect to any permission/compliance with any other requirement which may be specifically required under any law.
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Insolvency & Bankruptcy
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2018 (7) TMI 394
Corporate insolvency process - Held that:- The liability of the Principal Borrower and the Guarantor is co-extensive and that the Beneficiary of a Guarantee is not required to exhaust its remedies against the Principal borrower before proceeding against the guarantors This petition is admitted and Mr. Sethurathnam Ravi, 505-A, 5th Floor, Rectangle 1, District Centre, Saket, New Delhi-110017, email id - [email protected], Registration No. IBBI/IPA-001/IP-P00372/2017-18/10629 is appointed as an Interim Resolution Professional. In pursuance of Section 13(2) of the Code, we direct that Interim Insolvency Resolution Professional shall immediately make public announcement with regard to admission of this application under Section 7 of the Code
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2018 (7) TMI 393
Corporate Insolvency Resolution Process - claim to the extent of principal amount barred by limitation - Held that:- As per Annexure II (I) and (Annexure-II)(5), the respondent admits its liability limiting to the principal amount. Thus, it appears to us that the claim to the extent of principal amount is not barred by limitation as alleged by the respondent. The contention of the respondent that the claim of the applicant is barred by limitation is therefore found not sustainable under law. Whether the claim of compound interest with monthly rest at three times of the bank rate notified by the Reserve Bank as per section 16 read with section 15 of the MSMED Act,2006 is liable to pay by the respondent? - Held that:- The total amount here in this case demanded by the applicant is ₹ 4,50,75,953.08 (Rupees Four Crores Fifty Lakh Seventy Five Thousand Nine Hundred Fifty Three and Eight Paise only). The liability to pay the amount as claimed by the applicant is in dispute by the respondents. So also application of SSI Act and MSMED Act in respect of calculation of the interest claimed by the applicant is also seriously in dispute in the case in hand. The principal amount due is only ₹ 22,74,897.65. The amount of interest claimed comes to ₹ 4,28,01,055.43 (Four Crore twenty-eight lakh one thousand fifty-five and paise forty-three only) as per the calculation of the operational creditor and he calculated the interest at the prevailing rate charged by the State Bank of India which includes compound interest and penal interest. Admittedly, there is no contractual liability to pay interest by the corporate debtor. If it is allowed it amounts to allowing interest more than 18 multiple of the principal amount which according to us is substantially unfair. No hesitation in coming to a conclusion that the dispute raised by the Corporate Debtor/Respondent is bona fide and it requires further investigation. Moreover, it appears to us that the claim for interest which is exceeding more than 18 times of the principal amount cannot be claimed by the applicant as a legitimate claim as against a corporate debtor in a proceedings of this nature, especially, from a Central Government undertaking who is willing to settle the applicant’s claims without interest. It is significant to note here that all the financial creditors’ claim was settled by the respondent upon wavier of claim of interest but the applicant, despite notice, not submitted its claim before the respondent but filed the application before this Tribunal. In the light of above-said discussion, this application is liable to be rejected.
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2018 (7) TMI 392
Corporate insolvency process - dispute existing - Held that:- In the present case, the discussion made in the preceding paragraphs clearly shows that there is dispute existing in fact and it is not spurious, hypothetical or illusory. Therefore, the petition is to be rejected under Section 9(5)(ii) of the Code. It is also to be stated that in view of the discussion made in the preceding paragraphs, there is a merit in the contention of the learned counsel for the respondent that the amount involved in default is less than ₹1.00 lac and consequently in view of Section 4(1) of the Code, the pre-requisite condition for insolvency resolution process is not satisfied. The petition is therefore, rejected.
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PMLA
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2018 (7) TMI 341
Offence under PMLA - attachment orders - property obtained from the proceeds of crime - Held that:- In the facts of the present case the property in question was granted on lease by IDCO, a 100% public sector undertaking of the State of Odisha to Defendant No. 1 and had reverted back to the corporation on account of non compliance by M/s Ignis Technology Solutions Pvt. Ltd. of the conditions of allotment. The adjudicating authority did not appreciate that even in the rejoinder filed to the reply of defendant No. 1. There was no denial of the fact that the present property mentioned at serial no. 2 of the schedule of property was the property of IDCO and the payment of ₹ 1,00,00,000/- (Rupees One Crore only) was made much before the disbursement of the first installment of loan by United Bank of India and hence, the amount of ₹ 1,00,00,000/- (Rupees One Crore only) was not out of the “proceeds of crime”. There is nothing to show or suggest as to how the provisional allotment dated May, 18, 2009 for ₹ 1,00,00,000/- ( Rupees One Crore only) and its payment on 24.12.2009 which is even much before the application for loan made by M/s Ignis Technology Solution Pvt. Ltd. to the Bank could be the outcome of proceeds of crime justifying provisional attachment and confirmation. The reasoning of the adjudicating authority is perverse and contrary to law and reads as follows; “However, the properties in the name of D-1 in whose name loan has been sanctioned and subsequently misused”. However, the payment being made out of loan provided to Ignis which has been misutilised is tainted property and cannot be treated as a clean asset”. Thus, in view of aforesaid facts and circumstances, both i.e. provisional attachment order as well as confirmation /impugned order dated 01.06.2017 are set-aside with regard to present appellant only in relation to Property No. 2 attached.
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2018 (7) TMI 340
Offence under PMLA - whether the properties mortgaged with the Respondent no. 5 Bank are ‘proceeds of crime” as defined u/s 2(1)(u) of PMLA - whether the PMLA has priority over SARFEASI and RDDB & FI Act - Held that:- In the present case, the SARFAESI Act, RDDB Act and PMLA are special Acts. The SARFAESI Act and RDDB Act are enacted earlier to PMLA. The RDDB Act and PMLA have non-obstante clause. Recently in 2016 the Parliament has amended the twin legislations viz. (i) the SARFAESI Act, 2002 and (ii) the DRT Act, 1993 (after amendment titled as the Recovery of Debts and Bankruptcy Act, 1993) by the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 and its provisions have been given effect from 01.09.2016. The Parliament in its wisdom has not excluded the application of the amended provisions to the proceedings under PMLA. The Respondent no. 5 Bank has the right to property under the Constitution of India. The property of the Respondent no. 5 Bank cannot be attached or confiscated if there is no illegality in the title of the Respondent no. 5 and there is no charge of money laundering against the Respondent no. 5. The mortgaged of property is the transfer under the Transfer of Property Act. Even the appellant is not denying the fact that the Bank is a victim party who is also innocent and is entitled to recover the loan amount. It is also not disputed by the Respondent no. 5 that the properties in dispute are mortgaged with Bank and it has to go to the Bank ultimately. I do not agree with the argument in this regard in view of amendments in the two statutes. Even otherwise the trial would take number of years. The public money cannot be stalled otherwise Banking system would collapse. That the definition of "proceeds of crime” as per Section 2(u) of the PML Act comprises of the property which is derived or obtained as a result of criminal activity. In the present case, all the properties have been mortgaged with the Respondent no. 5 Bank much prior to the date of alleged offence which shows that no ‘proceeds of crime” are involved in acquiring of these properties and hence the same cannot be attached. The Adjudicating Authority has failed to consider that the ED has attached the properties without examining the case of the bank. The evidence on record suggests that the properties were acquired by the borrower/guarantors much before the alleged date of crime. No money disbursed by the Bank from its loan account, has been invested in acquiring these properties. Furthermore, the Respondent no. 5 Bank had created charge over the property prior to the date of the crime. The Bank has already filed the suit for recovery and has also taken the action under SARFAESI Act. The Adjudicating Authority failed to appreciate that depriving the Respondent no. 5 Bank from its funds/property, without any allegations or involvement of the Bank in the alleged fraud, would be legally unjustified. In the facts of the present case, the mortgaged properties are not purchased from the proceed of crime. Those were purchased prior to FIR against borrower/accused and even prior to execution of mortgaged deed agreement. The question of proceed of crime qua those properties does not arise. Even the stand of the respondent in almost in all the cases where it was found that the attached properties are mortgaged properties which were not purchased from proceeds of crime, the Banks are victim parties and are innocent parties who are entitled to recover the loan amount from the said mortgaged properties, but the banks be allowed to dispose the properties after the trial and final out-come of criminal complaints filed against the borrowers under schedule offence and prosecution complaint. The said argument cannot be accepted in view of settled law and new amendment in sub-section 8 of section 8 of the Act. Thus, the stand earlier taken by the appellant is wholly vague and without any substance. The provisional attachment order thus apparently bad and against the scheme of the Act. If the Special Court passes the order to release the property of the victim and innocent party is mortgaged, property could be disposed of for the purpose of adjustment of the amount due from the borrowers. The Respondent no. 5 is an innocent party who is not involved in the money laundering directly or indirectly or assist any party and the mortgaged property is also not purchased from the proceeds of crime then the question of provisional attachment order and confirmation thereof does not arise and the victims/innocent party i.e. innocent party would be entitled to disposed of the said property. The appeal filed by the appellant is dismissed accordingly. As far as respondent no.5 is concerned, the properties mentioned at Serial No. 1, 2 and 3, as mentioned in Schedule-A of the provisional attachment order, are the properties outside the purview of Prevention of Money Laundering Act, 2002 (PMLA). The same are governed exclusively under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFESI‟ Act). In view of peculiar facts of this matter, the only remedy left with the respondent no. 5 to approach to Special Court under the amended proviso of Sub-Section 8 of Section8 of the PML Act as prima facie I am of the view that the case of the respondent no. 5 covers the same. Till that time, all partiesto the appeal shall maintain status quo with regard to attachment of properties in relation to mortgaged with the respondent no. 5 by the borrowers. The appellant despite knowledge of the fact that the respondent no.5 had taken possession of the properties in question prior to the order of attachment passed by him, has not dealt with the impact of the action of the respondent No.5 under the SARFAESI Act while passing the impugned order. The said order has been passed without hearing the respondent No. 5 and thereby has violated the principles of natural justice. The prescribed period of 180 days provided under Section 5 has already been expired. The appellant has failed to proceed strictly in accordance with the provisions of the PMLA and has passed the impugned order in an undue haste and by committing patent illegalities, resulting in grave prejudice to the said Respondent , who is a Statutory Corporation constituted under the State Bank of India Act, 1955. The appeal filed by the appellant is dismissed accordingly.
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Service Tax
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2018 (7) TMI 339
CENVAT Credit - common input services used in taxable as well as exempted services - non-maintenance of separate records on input service - Rule 6 (2) of the Cenvat Credit Rules, 2004 - Held that:- The law remains settled in this regard wherein it has been held in various pronouncement of this Tribunal that the Cenvat credit on input services going into the trading of goods is not available as per the provisions of Cenvat Credit Rules, 2004. Insertion of trading activity under Rule 2 (e) of the Cenvat Credit Rules, 2004 w.e.f. 01/03/2011 by Notification No. 3/2001 – CE (NT) dated 01/03/2011 - demand period pertains to April 2008 to December 2012 - retrospective or prospective effect of amendment - Held that:- The retrospective applicability of the explanation, which has been inserted under Rule 2 (e) of the Cenvat Credit Rules, 2004 becomes applicable retrospectively as same is being considered as an explanation to the already existing provisions. The Cenvat credit on the common input services going into both taxable services as well as exempted services will not be available so far as trading of goods are concerned - denial of credit justified. Another contention of appellant is that the total amount of Cenvat credit taken on common input services from April 2008 to December 2012 comes to an amount of ₹ 6,45,782/- only while a demand has been raised for an amount of ₹ 2,96,86,162/- - Held that:- The statute does not have any intention under Rule 6 (3) of the Cenvat Credit Rules, 2004 of earning any profit out of wrongly availed credit by an assessee - as per the existing law the Department is right in recovering back the input service credits which are only attributable to the exempted services including ‘trading activity’. Since, the amount of such common input credit is already available, the Department should recover back the input service credits which have gone only into exempted services. Since the above-mentioned amount of ₹ 6,45,782/- is attributable to both exempted as well as taxable services, therefore, this order-in-original is remanded back to re-adjudicate the matter only with regard to the apportionment of above- mentioned common input service credit between exempted and taxable service and confirm the amount which have gone into use of exempted services. Penalty u/s 78 - Held that:- Since the ingredients such as fraud, collusion, suppression of facts etc. are not present in the matter as all the facts were known to the Department and its Range office, the penalty is not imposable under Section 78 of the Finance Act, 1994. Decided against assessee - matter remanded for the purpose of re-quantification of demand.
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2018 (7) TMI 338
CENVAT credit - input services - Commercial or Industrial Construction Services - Work Contract Services - whether the availment of credit post 1st April 2011 against the input services which where received prior 1st April, 2011 will be hit by the amendment in input service definition w.e.f. 1st April 2011 or not? Held that:- With effect from 1st April, 2011 the definition of input services has been redefined and the services received in construction of a building or a civil structure or a part thereof has been specifically excluded from the category of the input service. The peculiar fact of the present case is that the input services were received in the year 2005 - the appellant has rightly availed the credit on construction activity being done by the appellant prior the amendment in the definition of input service. Also the said amendment cannot be made applicable retrospectively. Extended period of limitation - Held that:- It was for the first time in 2014 that a fixed limit of 6 months was introduced which has now been enhanced to one year for availing the credit of input services. The said amendment/ incorporation in Cenvat Credit Rules also cannot take a retrospective effect. In the absence of any fixed time limit, the availment of Cenvat Credit on permissible input services cannot be held beyond limitation (the construction services being permissible input prior 1.04.2011). The impugned order has wrongly confirmed the demand holding the impugned service to be excluded by virtue of amendment of 1st April 2011 and by ignoring the fact that the cenvat credit as has been availed by the appellant had accrued to him much prior the said date i.e. 1st April 2011 - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 337
CENVAT credit - input services - whether the service of getting its premises painted is an input service as defined in Rule 2(1) of Cenvat Credit Rules, 2004 for which the appellant was entitled to take the credit? - Held that:- Any service which is not per se for construction of building but is merely for renovation/ modernisation/ maintenance works, the same is very much inclusive in the definition of input services and as such are eligible for credit under this rule. Onus of proof - Held that:- Since the Department has come up with the plea of service of the appellant as one being under the category of Work Service Contract, the entire burden was on the Department to prove the same. Burden thereof cannot be shifted upon the appellant - The Adjudicating Authority is held to have miserably failed to appreciate the proper evidence on record. Not only this, they have also failed to properly interpret the provision of law. As a result, the Order under challenge is held to not to be sustainable. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 336
Demand of service tax with interest and penalty - inclusion of service tax amount in the amount shown in the Profit and loss account - case of Revenue is that the appellant is not entitled to the benefit of calculation of the amounts shown in the Profit and Loss accounts being taken as cum-tax amounts as they have not produced any ledgers or other evidence to substantiate their claims - Held that:- A plain reading of the Profit and Loss statement shows that the service tax receipts shown therein are inclusive of the service tax - I do not agree with the learned Commissioner (Appeals) that any additional evidence in the form of ledgers or invoices is required to prove that the value shown in the Profit and Loss statements is inclusive of the service tax element because the very statement says so. In fact it is that very statement which forms the basis for the show cause notice - the assessees are eligible for calculation of the differential tax reckoning the amounts shown in the Profit and Loss statements as inclusive of service tax. The demand of differential duty gets reduced correspondingly and so does any mandatory penalty imposed on them - it is a fit case to remand these cases to the original authority and do so. The Original Authority is directed to recalculate the differential duty payable and penalty, taking the amounts shown in the Profit and Loss statements as service charges and also the corresponding service tax indicated therein - appeal allowed by way of remand.
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2018 (7) TMI 335
Condonation of delay in filing appeal - case of appellant is that the pendency of the same issue before various judicial forums delayed the filing of the present appeal - Held that:- When the assessee-appellant could get into litigation by instructing its Counsel to file appeals after appeals up to the High Court, it cannot be assumed that it did not think of filing appeal even on merits nor that the assessee could plead ignorant when it comes to the filing of appeal on merits instead agitating before various forums. - Evidently, the delay in the case on hand is inordinate and the explanation sought to be offered is not satisfactory or convincing. Having pursued appeals on the validity of declaration under VCES, nothing prevented the appellant who kept on filing appeals under VCES to file an appeal even on merits and this approach is nothing but elective and also indicates that the order impugned has been now appealed to this forum was at that stage accepted by them. The application seeking condonation of delay is rejected - appeal dismissed.
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2018 (7) TMI 334
Services rendered to SEZ unit - Benefit of N/N. 4/2004-ST dated 31.03.2004 - denial on the ground that the services are not consumed within SEZ - whether the appellants are eligible for the service tax exemption under the N/N. 4/2004 for the services rendered to SEZ unit? - Held that:- The intention of the notification as well as Section 26 of the SEZ Act, is to exempt the taxes/duties payable on goods and services provided to SEZ unit/developer, the supply of goods and services to SEZ being deemed exports. Therefore, taking into consideration the impact of Section 51 of the SEZ Act which provides for overriding effect over any other law, the benefit of tax exemption cannot be denied by giving a restrictive interpretation to N/N. 4/2004. The notification which superseded N/N. 4/2004 has categorically stated that whether or not the taxable services are provided inside the SEZ’ the exemption is available. Even if the event is held outside, since the services were for advertisement of product of SEZ, the services provided is to be considered as consumed within SEZ. It also needs to be mentioned that for availing the services, the SEZ has to get these services approved by the Development Commissioner - Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 333
Business Auxiliary Services - freight charges collected by the appellant - according to the Department, these are nothing but charges for the transportation of cargo from the customer's premises to the desired destinations or vice versa as per the directions of the customers and would be taxable under BAS for the period 1.7.2003 to 30.4.2006 and would fall under the category of BSS with effect from 1.5.2006 - Held that:- The issue whether the said charges collected by the appellant would fall under BAS has been decided in the case of M/S. SKYLIFT CARGO (P) LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI AND (VICE-VERSA) [2018 (2) TMI 320 - CESTAT CHENNAI], where it was held in favor of the assessee noting that mere sale and purchase of cargo space and earning profit in the process is not a taxable activity and that commission earned by the assessee while acting on behalf of the exporter and mark-up value was of freight charges are not to be considered as commission - demand set aside. For the period from 1.5.2006 - Scope of SCN - Business Support Services - Held that:- It is seen that the Commissioner has confirmed the demand under BAS. It is found that the Commissioner has travelled beyond the scope of the show cause notice. For this reason, the demand cannot sustain - demand of service tax on freight charges under BAS is unjustified and requires to be set aside. Services provided to SEZ Unit - benefit of N/N. 4/2004 - Held that:- Even if the event is held outside, since the services were for advertisement of product of SEZ, the services provided is to be considered as consumed within SEZ - benefit of notification allowed. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 332
Benefit of SSI Exemption - Irregular availment of CENVAT credit - Principles of natural justice - Held that:- The Commissioner (Appeals) by the impugned order observed that the appellants were not entitled to receive the benefit of small scale exemption without refuting the figures as mentioned in the adjudication order - It appears that the Commissioner (Appeals) passed the order without examining the records at length and therefore, such an order cannot sustain in the eye of law - Apparently, the adjudicating authority had given the detailed finding with examination of records and documents which has not been refuted by the department and such order is to be restored. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 331
Classification of services - restoration and reconditioning of various equipments for power stations - Department took the view that the assessee is required to discharge duty liability not only in respect of the services provided by them on their own account but also that provided on behalf of M/s. Quality Engineering - Management, Maintenance or Repair Service - Held that:- The services provided by the assessee contended to related to generation, transmission and distribution of power. We then find merit in the plea of the Ld. Counsel that such services would be exempted from tax liability by virtue of N/N. 45/2010-ST - for the limited purpose of verifying whether all these disputed services rendered by the assessee satisfy and fall within the exemption ambit of N/N. 45/2010-ST, the matter is being remanded to the adjudicating authority - appeal allowed by way of remand.
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2018 (7) TMI 330
Rectification of Mistake - case of appellant is that the Tribunal while passing the Final Order had not considered the case laws relied upon by the Respondents - Held that:- The Tribunal rejected the findings of the Commissioner (Appeals) that they were under bona fide belief of not to pay the Service Tax on GTA Service. In such situation, the Tribunal observed that none of the case laws cited by the respondent is relevant in the present case - there is no error in the order of the Tribunal on this issue. The next contention of the Ld. Counsel is that the final order was pronounced on 11.10.2017 in the open court in the absence of the respondent - Held that:- The Registry of the Tribunal had fixed notice in respect of pronouncement of the order. In any event, it cannot be construed as error in the order of the Tribunal - there is no error. ROM Application dismissed.
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2018 (7) TMI 329
Rectification of mistake - case of appellant is that their appeal was in respect of refund claim of service tax under different Heads viz. Goods Transport Agency, Technical Testing and Inspection Service, Business Auxiliary Service and Courier Service, whereas in the Tribunal's case M/s LGW Limited, Versus Commissioner of Central Excise, Kolkata-I [2017 (9) TMI 1674 - CESTAT KOLKATA], it has been mentioned that the rejection of refund claim of service tax paid on only "Technical Testing Service". Held that:- Since the mistake is apparent on the face of record, the same is hereby rectified and in the case M/s LGW Limited, Versus Commissioner of Central Excise, Kolkata-I [2017 (9) TMI 1674 - CESTAT KOLKATA], it may be read as "The appellant is engaged in the business of exporting of raw cotton and other cotton related goods. The appellant filed this appeal against rejection of refund claim on Service Tax paid erroneously on "Goods Transport Agency", "Technical Testing and Inspection Service" “Business Auxiliary Service” and "Courier Service". ROM Application allowed.
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Central Excise
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2018 (7) TMI 328
Attachment of Bank Property - penalty u/r 209A of the Central Excise Rules 1944 - petitioner retired from the firm but penalty was levied on the petitioner as a partner of M/s. Mukesh Dye Works - Held that:- Once that order is set aside and in which it included a personal penalty of ₹ 2 lakhs, we do not see how the Department can pursue that demand by attaching the bank account of the petitioner. More so, the petitioner's retirement from the firm with effect from 27th April 1990 is undisputed. Therefore, the request to the petitioner to pay a sum which is of ₹ 2 lakhs, but as a penalty under the order in original which was set aside does not arise at all. All that the petitioner is liable to pay is the balance sum stated before us by Mr. Dharmadhikari - petition disposed off.
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2018 (7) TMI 327
Power of Tribunal to review - service of order - Held that:- Going by the statement on oath made by the petitioner that there was no service of notice before the Tribunal of hearing of dated 10.08.2015, we are prepared to grant one more opportunity to the petitioner to appear before the Tribunal and to argue his case. It is not even the case of the department that the petitioner was recalcitrant and chronic defaulter - the order of the Tribunal dated 10.08.2015 is set aside only qua the petitioner.
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2018 (7) TMI 326
Clandestine removal - MS Ingots - third party evidences - entire case of the department is based upon the entries in the diary recovered from one Mr. S.K. Pansari (proprietor of M/s Monu Steels) and also on the statement of the said Mr. S.K. Pansari - no corroborative evidence - penalty u/r 26 - Held that:- In the impugned order nowhere it has been discussed as to how the demand of duty is sustainable in the absence of any clinching evidence of clandestine manufacture and removal of the goods. The entire demand is based upon the records recovered from Sh. S.K. Pansari proprietor of M/s Monu Steel. There is no evidence expect the said statement and private dairy entry of 3rd party i.e. of Sh. S.K. Pansari which contains the name of the appellant. The law as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence on any corroborative evidence, is well settled. Only on the basis of statement of third party no demand can be made. Recently, this tribunal in the case of Arora (CG) Energy & Steel P. Ltd., Vs. CCE & ST Raipur [2018 (6) TMI 1484 - CESTAT NEW DELHI] has set aside the demand since the entire case of the Revenue is based upon the entries made in the records of M/s. Monu Steel without there being any corroborative evidence. The penalty imposed on Sh.Sapan Khetan, Director is also set aside. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 325
CENVAT credit - denial of credit on the ground that ‘Sugar Cess’ is a duty of excise - Rule 3 of the Cenvat Credit Rules, 2004 - Held that:- It is settled that Sugar Cess is a tax and not a fee and the ld. Commissioner (Appeals) has erred in holding that sugar cess is not a tax. Credit cannot be denied - Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 324
Principles of natural justice - CENVAT Credit - input services - the clauses of agreement were not properly read by the authorities below - Held that:- Clause 6 of the proposal/ agreement makes it clear that the agreement was not only for design, fabrication and supply, but also for erection of the Building. Therefore before passing the orders, the authorities have to go through the agreement completely. Justice should not be done but also seen to be done - In any of the orders there are no discussion regarding clause 6 of the proposal/ agreement, which is also one of relevant clauses of the said proposal/ agreement. An agreement has to be read as a whole for arriving at any conclusion. Matter remanded to the adjudication authority for denovo-adjudication after taking into consideration the relevant materials including clause 6 p- appeal allowed by way of remand.
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2018 (7) TMI 323
Penalty u/r 15(2) of the CENVAT Credit Rules - When pointed out, the appellant had reversed the credit along with interest even before the show cause notice was issued to them - suppression of facts or not - Held that:- Penalty is imposable not just when input credit is taken or utilised wrongly but it is imposable when such taking or utilising the CENVAT credit is by reason of (a) fraud, or (b) collusion, or (c) any wilful mis-statement, or (d) suppression of facts, or (e) contravention of any provisions of the Act or Rules with an intent to evade payment of duty. Other cases of wrong availment of CENVAT credit are covered by Rule 15(1) of CENVAT Credit Rules, 2004. It is not in dispute that the credit has been taken wrongly by the appellant. Now the other elements required to fasten the penalty are not evident from the show cause notice - It is a well settled position that suppression of facts must be a positive act. In this case the assessee is not required to show individual items on which he has taken credit in his ER-1s. When something was not required to be declared, he could not have been expected to declare it. This cannot be called a suppression of the fact because there was nothing required to be declared - The other elements such as fraud, collusion, wilful mis-statement are not alleged in the show cause notice. There is no case to impose penalty under Rule 15(2) of the CENVAT Credit Rules r/w Sec.11 AC of the Act - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 322
Refund of Central Excise Duty - area based exemption to units situated in North-East Area - N/N. 33/99-CE dated-08/07/1999 - rejection of refund on the ground of non-fulfilling of condition of enhanced installed capacity of 25% - Held that:- Identical issue decided in the case of Commr. of Central Excise, Shillong Vs. Hindustan Coca Cola Beverages [2004 (2) TMI 493 - CESTAT, KOLKATA], where it was held that overall increase of 25% in installed capacity is the requirement of N/N. 32/99 and 33/99, and there is no requirement that all the Sections of the manufacturing unit should be individually increased by 25%. The eligibility of exemption Notification stands settled in favour of the appellant - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 321
Penalty u/s 11AC - fraudulent availment of CENVAT credit - fake invoices without actual receipt of goods - paper transactions - Held that:- It is evident from the record that the Assessee reversed the credit availed on the basis of the invoices issued by the two supplier companies. It was found that the credit was availed on the basis of the invoices without actual receipt of the goods. Apparently, fact of reversal of credit is linked with non-receipt of the inputs and no other conclusion can be drawn - the Order of the Commissioner (Appeals) regarding the setting aside of the penalties cannot be sustained. The Tribunal in the identical situation in the case of M/s. Steel Centre [2017 (9) TMI 1251 - CESTAT KOLKATA] upheld the demand of CENVAT Credit along with interest and imposition of penalty on the assessee and reduced the penalties on the co-noticees. Penalty imposed on M/s. Bindawala Cables & Conductors Limited is upheld subject to the option of payment of 25% of duty within 30 days under Section 11AC would be allowed - Penalty imposed on Shri Bhagwandas Bindawala is set aside - Penalties imposed on M/s. Bindawala Electricals Industries Ltd. and M/s. Kritika Wires Pvt. Ltd. are reduced to ₹ 2 Lakhs each. Appeal disposed off.
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2018 (7) TMI 320
Clandestine removal - no evidence produced by Revenue to establish the charge - penalty - Held that:- The department has not subsequently brought out any evidence regarding method and mode adopted by it for physical stock taking of the subject goods available in the factory of the appellants. Since the department has solely relied upon the submissions to arrive at the conclusion, that there was shortage of the impugned goods in the factory, averment made therein cannot be legally sustained for initiation of proceedings against the appellant for raising the demand and for imposition of penalty. The department has not brought out any tangible evidence to prove that the appellants had the intention to remove goods in clandestine manner. No doubt that the investigation conducted do suggest a strong suspicion about clandestine activities but a suspicion howsoever grave cannot take the place of proof of clandestine clearance like seizure of clandestinely removed goods, seizure of cash admitted by the concerned persons to be sale proceeds of the illicitly removed goods, excess procurement of raw materials, excess power utilization, confirmation by some of the transporters and recipients to indicate that such clandestine cleared goods have been transported/received by them. In the absence of any of these positive evidences and non-extending the opportunity of cross-examination the case of clandestine clearances of Iron and Steel products by the appellants is not established - demand do not sustain. Penalty - Held that:- Once on merit the case has been decided in favour of the appellants, then penalties cannot be imposed upon them under the various provisions of Central Excise Act, 1944 and the rules made thereunder - penalties set aside. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 319
Reversal of CENVAT Credit - clearance of inputs as such - input services - Held that:- As per Rules 6(1) and 6(2) of the Rules, credit will not be permissible on inputs or input services used for the manufacture of exempted goods or provision of exempted services - the clearance of inputs as such as mentioned in Rule 3(5) of the Cenvat Credit Rules, 2004 is to be treated as clearance of the goods from factory on payment of duty and the question of reversal of the credit taken on various inputs services cannot arise. The credit of ₹ 26,468/- was availed towards repairing services, insurance, maintenance and repair of vehicles, and Rent A Cab Service had been reversed and the Ld. Adjudicating Authority had dropped the proceedings for recovery of this cenvat credit amounting to ₹ 26,468/- but has imposed penalty of equal amount under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 78 of the Finance Act, 1994 - The CBEC instructions No.96/85/2015-CX.I dated 07.12.2015, in paragraph B.26, it has been observed that there is no provision in the present Rule 3(5) and accordingly there is no such necessity of amending Rule 3(5) for incorporating reversal of credit taken on inputs services. The appellant is not required to reverse the credit on input services that was taken along with duty paid on such inputs - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 318
Clandestine removal - irregular maintenance of stock record - Contention of the department is that the appellant did not have the capacity to produce goods which allegedly were found in excess - Held that:- The appellant had stated before the adjudicating authority that the alleged excess production of 827MT of MS Ingots was nothing but the accumulated production of preceding months which were not accounted for properly. However, the appellant has failed to produce any evidence to support their statement. It had been observed by the adjudicating authority that the bank transactions, as indicated by the bank statement, had recorded the purchase of raw material and sale of finished goods, however, the transactions could not be verified against the relevant statutory register due to the negligence on the part of the appellant in not maintaining proper records, which contravenes the provisions under Rule 10 of the Central Excise Rules, 2002 - demand upheld. Penalty u/r 26 - Held that:- It has been stated that he had no knowledge of the alleged irregularity. In any event, the appellant No. 2 had deposited the duty suo moto during the investigation - the Revenue has failed to establish, beyond reasonable doubt, that the appellant No. 2 has contravened any of the provisions under Rule 26 of the Rules - penalty not justified. Appeal allowed in part.
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2018 (7) TMI 317
Excise Duty as well as education cess was collected but not deposited to Government - contravention of provisions of Section 11D and 11DD of Central Excise Act, 1944 - reversal of credit was done - Board Circular No.870/08/2008-CX dated 16.05.2008 - Held that:- The reversal of amount was done by the respondent Belgharia Unit from where the Bogies and Couplers were collected without payment of duty by the respondent. There is no dispute about the reversal of 8% or 10% - it is also observed that the amounts were duly debited by TEXMACO Belgharia in terms of Rule 6(3) of Cenvat Credit Rules and it was not alleged that TEXMACO Belgharia raised appeal for recovery of said amount separately from where was recovered through the bill has been paid. The Tribunal in the respondent assessee’s case M/S. TEXMACO LTD. VERSUS COMMR. OF CENTRAL EXCISE, KOLKATA-III [2016 (5) TMI 896 - CESTAT KOLKATA] by relying upon the Larger Bench decision in the case of Unison Metals Ltd. vs. Commissioner of Central Excise, Ahmedabad-1 [2006 (10) TMI 171 - CESTAT, NEW DELHI] and the CBEC Circular No.870/8/2008-CX (supra) have discussed the issue in details and allowed the assessees appeal. Education cess not at all paid to the Government - Held that:- The allegation regarding Education Cess amounting to ₹ 4,93,532/- not at all paid to Govt. has further been verified and it is observed that the same relates to some supplementary claim for which claim was once raised and disputed by Railways and those were paid by their supplier i.e. Belghoria Unit prior to April, 2005 - demand do not sustain. Appeal dismissed - decided against Revenue.
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2018 (7) TMI 316
CENVAT Credit - inputs/capital goods - angles, channels, HR coils, plates, etc. - Held that:- The judgment of Tribunal in the case of Vandana Global Ltd. [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] had held that the definition of ‘inputs’ does not include cement, angles - However, this judgment of the Tribunal has been disapproved by the Hon’ble Calcutta High Court in the case of Surya Alloy Industries Ltd. v. Union of India [2014 (9) TMI 406 - CALCUTTA HIGH COURT] - credit cannot be denied - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 315
CENVAT Credit - trading activity - common input services used for manufacture of finished products as well as trading activities - demand to the extent of 10% / 8% / 6% of traded goods for the disputed period, on the ground that the appellants have not filed declaration as contemplated in Rule 6 (3A) - time limitation - Held that:- The issue has been settled in the case of DALMIA BHARAT SUGAR AND INDUSTRIES LTD., DALMIA CHINI MILLS VERSUS C.C.E. CUS. & S. TAX, NEW DELHI [2017 (1) TMI 231 - CESTAT NEW DELHI], where it was held that the Commissioner is not justified in insisting that appellant reverse cenvat credit in terms of Rule 6(3)(i) of Cenvat Credit Rules - demand do not sustain. Time Limitation - Held that:- The appellants had been reversing the credit availed on common input services and informed the department whenever the details were asked for. Thus the department was fully aware that the appellants were conducting trading activity - the demand raised invoking the extended period is without any factual or legal basis. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 314
Valuation - quantification of duty based on consumption of Potassium Chlorate - case of appellant is that value arrived for the clearance on the basis of consumption of Potassium Chlorate is not correct and that the ratio of 5 kgs of Potassium Chlorate per 100 match units has to be adopted, instead of 4 kgs of Potassium Chlorate - Held that:- It was seen that during the period from February 2009 to October 2009, the appellant company had utilized 4606 kgs. of Potassium Chlorate and manufactured 123754 units of matches. From this it was arrived that the appellants have manufactured 100 units of matches with 4 kgs of Potassium Chlorate. The average value of matches per bundle was arrived on such calculations - there is no error in such quantification of demand, though the appellant seeks the same to be modified and to be calculated adopting 5 kgs. of Potassium Chlorate per 100 units. Demand of duty on same goods for second time - Redemption fine - goods provisionally released to the appellants and later cleared on payment of duty - Held that:- Instead of confirming the duty demand on the seized goods and appropriating the duty already paid by the appellant has again passed order confirming the duty in this regard, which in our view cannot sustain - redemption fine is also unwarranted and requires to be set aside - confirmation of duty demand of ₹ 32,202/- requires to be set aside, and has to be reconsidered - matter on remand. Appeal allowed in part and part matter on remand.
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2018 (7) TMI 313
CENVAT Credit - Rule 6 of Cenvat Credit Rules, 2004 - whether press mud, bio-compost, bio-fertiliser and wormi compost are to be considered as exempted products? - Held that:- The Tribunal has held in the case of Commissioner of Central Excise & Service Tax, Patna vs. Riga Sugar Company Ltd. [2016 (5) TMI 1444 - CESTAT KOLKATA] that waste product will not fall under the purview of exempted product and accordingly the provisions of Rule 6(3) are not applicable - the appellant was not liable to pay the amount as contemplated under Rule 6 (3) of the Cenvat Credit Rules, 2004. Demand for the month of March, 2015 - Held that:- The effect of amendment of Rule 6 ibid is that the benefit of claim of non-application of Rule 6, shall not be available to the waste/by-product, if the same are cleared from the factory on receipt of consideration - In this case, since the appellant had removed Bio-compost, Bio-Fertiliser, Wormi Compost and Press Mud upon receipt of consideration from the buyers, it is squarely covered under the Explanation appended to Rule 6 w.e.f. 01.03.2015, the appellant is liable to pay amount as contemplated under Rule 6 (3) ibid - the matter is remanded to the Adjudicating Authority to segregate the demand for the month of March, 2015 - For rest of the period the appeal is allowed. Appeal allowed by way of remand.
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2018 (7) TMI 312
Penalty u/s 11AC - no suppression of facts - more than one SCN on same issue, however, the facts were all disclosed in first SCN - whether the non-mentioning of same facts in subsequent SCN, which were mentioned in first SCN would amount to suppression of facts? - Held that:- The principles as laid down in the cases of Nizam Sugar Factory v. Collector of Central Excise, A.P. [2006 (4) TMI 127 - SUPREME COURT OF INDIA] is squarely applicable to the facts of the present case, where it was held that When the first SCN was issued all the relevant facts were in the knowledge of the authorities. Later on, while issuing the second and third show cause notices the same/similar facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities. Since an earlier show cause notice dated 30.09.2013 was issued for the earlier period in respect of the same subject matter, it cannot be said that there was any suppression. As there is no suppression, penalty under section 11AC cannot be imposed. Appeal dismissed - decided against Revenue.
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2018 (7) TMI 311
100% EOU - Permission to remove capital goods procured / imported to their job work unit - The department was of the view that these items being machineries and not moulds, jigs, tool, fixtures cannot be removed from the EOU - Held that:- Pursuant to the letter of appellant dt.2.4.2004 requesting permission for removal of capital goods for job work purposes, the Deputy Commissioner vide letter dt.5/5/2004 has granted permission to remove the capital goods as per notification 52/2003 - Since the appellant has removed the capitals as per the permission given, the department cannot later allege violation of provision of notification 52/2003 - demand on this ground do not sustain. Removal of capital goods which were locally procured without permission - Held that:- Even if the appellant had reversed the credit, the appellant would be eligible to avail the credit of the Excise Duty paid on the capital goods when they are brought back to the EOU. Thus the entire exercise being revenue neutral one and since there is no allegation of diversion of capital goods, the demand on this count do not sustain. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 310
CENVAT Credit - inputs - M.S.Angle, M.S.Channel, M.S.Beam, M.S.Joist etc. - Held that:- On the identical situation, the Tribunal in the appellant’s own case M/s. OCL India Limited Vs. Commissioner of Central Excise, Customs and Service Tax [2018 (1) TMI 155 - CESTAT KOLKATA] has allowed the appeal of the assessee - credit allowed - appeal dismissed - decided against Revenue.
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2018 (7) TMI 309
CENVAT Credit - capital goods - Angles, Joists, Channels, Mill Plate, Steel Hot Strip etc. - appellant contended that these items were used for repairing and maintenance of machinery, which was used within the factory of production for manufacture of final product - Held that:- The Tribunal in the case of Commissioner of Central Excise Panchkula Vs. Shahbad Co-operative Sugar Mills Limited [2014 (3) TMI 309 - CESTAT NEW DELHI] dismissed the appeal filed by the Revenue and held that items of articles of Iron & Steel used for repairing, maintenance of Plant & Machinery are eligible for Cenvat Credit. It is also noted that there was a dispute on the eligibility of the Cenvat Credit on these items which were referred to the Larger Bench of the Tribunal for decision. In such situation, the findings of the lower authorities that there was a suppression of facts with intent to evade payment of duty cannot be accepted. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 308
Demand of duty - pre-mix (a commodity used for the manufacture of mosquito coils) - intermediate goods - revenue neutral situation - extended period of limitation - Held that:- If the appellant had paid duty while clearing the pre-mix powder to their sister units, the same would be eligible for Cenvat Credit to their sister units at Guwahati. The entire exercise would be revenue neutral one - The Hon. Apex Court in the case of Nirlon Ltd. vs. CCE, Mumbai [2015 (5) TMI 101 - SUPREME COURT] has observed that there can be no malafide or intent to evade payment of duty when the entire exercise is revenue neutral - The pre-mix powder having been cleared to their sister units, the entire exercise being revenue neutral one, the demand of duty invoking the extended period cannot sustain. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 307
SSI exemption - crossing of threshold limit - The department has proceeded to deny the SSI exemption alleging that in the very same factory goods were cleared by two manufacturers and therefore as per clause (vi) of para 2 of the Notification No. 8/2003-CE, the exemption benefit is not available to the appellant - Held that:- It is not disputed that the appellant M/s. Sun Pack, Proprietor Shri S. Chandrasekar has started the manufacturing operations in the factory only with effect from 10.11.2006. It is also seen that they have cleared goods worth ₹ 66,60,401.92 during the period from 10.11.2006 to 31.3.2007. Thus the aggregate value of clearances for the appellant has not exceeded the SSI exemption limit. The factory having been taken on lease by the appellant, he has to be considered as an independent manufacturer. Further, the earlier manufacturer Shri D. Kalaiarasan has cleared the goods on payment of excise duty and has not availed any exemption benefit. Only because the earlier manufacturer was not availing exemption benefit, the appellant cannot be compelled to pay excise duty even though the clearances are below the SSI limit. There is no case that both the manufacturers were clearing goods from the same factory during the relevant period. Thus, clause (vi) of para 2 of the Notification is not attracted in the present case. Demand of duty do not sustain - appeal allowed - decided in favor of appellant.
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