Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 22, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Customs
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40/2018 - dated
20-8-2018
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ADD
Seeks to amend Notification No. 8/2018-Customs (ADD) dated 15th March, 2018
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39/2018 - dated
20-8-2018
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ADD
Seeks to amend Notification No. 26/2013-Customs (ADD) dated 28th October, 2013, concerning imports of 'Paracetamol' originating in or exported from China PR
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59/2018 - dated
21-8-2018
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Cus
Seeks to exempt BCD & IGST on goods imported for donation for relief & rehabilitation of the people of Kerala affected by the floods upto 31.12.2018
DGFT
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26/2015-2020 - dated
21-8-2018
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FTP
Export policy of Beach Sand Minerals (BSM) in Chapter 26 of Schedule 2 of ITC(HS) Classification of Export and Import Items 2018 - regarding
GST - States
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SRO 318 - dated
24-7-2018
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Jammu & Kashmir SGST
Amendment in Rules 125, 129, 130, 131, 132 & 133 of Jammu and Kashmir Goods and Services Tax Rules, 2017
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SRO 303 - dated
10-7-2018
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Jammu & Kashmir SGST
Amendment In Rules 58, 138C & 142 and insertion of form GST ENR-02 in Jammu and Kashmir Goods and Services Tax Rules, 2017
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I-J / 2018 - dated
10-8-2018
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Karnataka SGST
Seeks to prescribe the due dates for furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of more than ₹ 1.5 crores for the months from July, 2018 to March, 2019
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(14/2018) No. FD 47 CSL 2017 - dated
10-8-2018
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Karnataka SGST
Seeks to prescribe the due dates for quarterly furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of upto ₹ 1.5 crores for the period from July, 2018 to March, 2019
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(1-K/2018) No. KGST.CR.01/2017-18 - dated
10-8-2018
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Karnataka SGST
Seeks to prescribe the due dates for filing FORM GSTR-3B for the months from July, 2018 to March, 2019
Indian Laws
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S.O. 3995(E) - dated
16-8-2018
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Indian Law
Central Government appoints the 1st day of September, 2018, as the date on which the provisions of the Negotiable Instruments (Amendment) Act, 2018 shall come into force
VAT - Delhi
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F.3(754)/Policy/VAT/2017/1939 - dated
3-8-2018
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DVAT
Notified for general information that the Declaration ‘C’ Forms are declared to be obsolete and invalid for all purposes from the date of issue of the form i.e. 20.10.2014
Highlights / Catch Notes
GST
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Extension of last date for filing GST returns by taxpayers in Kerala, Mahe and Kodagu extended
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Extension of Last Date for filing GSTR-3B for July, 2018 extended till 24th August, 2018 for all class of taxpayers
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Detention of goods with vehicle - incomplete e-way bill - What are the documents to be carried along with the goods? - The language and the legislative intent clear, courts, in the name of discretion, cannot do violence to the statutory mandate. Discretion smooths the edges, but does not cut corners - there are no interpretative ambiguity or legislative crevasses to be filled in.
Income Tax
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Validity of assessment passed u/s 153A r.w.s. 143(3) - Notice u/s 143(2) is not required for assessment u/s 153A - However, the due date for issue of notice u/s.143(2) - the assessment is undisputedly a non-abated assessment. Therefore, the additions, if any have to be made only with the support of any incriminating material.
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Benefit of DTAA - Article 13(6) can be pressed into service only in the case when the existence of PE of non-resident is not in dispute. In this case the assessee has contended before the lower authorities that it does not have any PE in India and under these facts and circumstances the provisions of Article 13(6) cannot be invoked in the case when the receipt is found as royalty.
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Levy of interest u/s 234B - when a duty is cast on the payer to deduct tax at source, on failure of the payer to do so, no interest can be imposed on the payee under Section 234B of the Act.
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Genuineness of commission expenses - AO concluded that no such agent services were required by the Government departments and did not find any genuineness in alleged commission expenses - The findings of the AO are not correct - Claim of deduction allowed.
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Set off of brought forward losses - deduction u/s 80IA - the assessee has carried forward the losses till exhausting the 10 years tax holiday period and claimed the loss in the impugned assessment year which is against the provisions of law.
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Determination of cost of construction account at CPWD rate - AO directed to allow the rate difference of 15% and supervision charges to the extent of 10% in cost of construction determined by the DVO and recompute the investments subject to minimum of the cost of construction admitted by the assessee.
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Deduction u/s 54 - LTCG - purchase of new residential house - no provision is made by the statue that the assessee should utilize the amount which he obtained by way of sale consideration for the purpose of meeting the cost of the new asset. - Deduction allowed.
Customs
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Compensation fee for extension of time to complete the export obligation - DEEC licence - the impugned order demanding additional sum of composition fee over and above the amount already remitted by the petitioner is without jurisdiction and illegal
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Benefit of exemption form customs duty on imports for medical purpose - discarding of record must not be based on supposition but on hard facts. The data of patients furnished indicates that 40% of the patients have been accorded free treatment and, in the absence of contrary evidence, there is no ground to hold that appellant had failed to fulfill this condition.
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Change in Classification of imported goods - MIGLITOL - The arbitrary change of classification without notice to the appellant in respect of the impugned consignments is bad in law
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Imposition of penalties - It is the appellants who themselves have detected the consignment and intimated to the Custom Department that the consignment is carrying some suspicious goods, therefore, it was 100% examined - penalty u/s 114 is not imposable.
Indian Laws
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Cross-examination of persons swearing to the affidavits should not be allowed unless absolutely necessary, as the truth will emerge on a reading of the affidavits filed by both parties.
Service Tax
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Valuation - commission received by the distributors - whether the appellant being distributors of Amway India Enterprise Pvt. Ltd. is liable to pay the service tax on the gross amount of commission received by the distributors? - Held Yes
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Advertising Agency Service - renting of hoardings - When the category of service concerns and involves creativity and even specifically seeks to include “advertising consultant”, it would be too farfetched to bring in renting of hoardings within the scope of such service.
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Business Auxiliary Services - For booking of cargo space they receive a small incentive over and above the freight charges from the shipping liners. - in such activity of booking of cargo spaces, the assessee is not rendering any service either to the shipping line or to the customers and the activity cannot be taxed under Business Auxiliary Services.
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CENVAT Credit - assessee was not registered during the relevant period - They become eligible at the time after taking the registration by the Service Providers and payment of Service Tax. Therefore, the appellant at the most is liable for interest liability from the date the Cenvat Credit taken till the Service Tax paid by the Service Providers, however, for this reason, Cenvat Credit cannot be denied
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CENVAT Credit - inputs - The Angles and Panels used in the storage tanks, which ultimately used for providing storage and warehousing service, are eligible to credit - The Rheobuild 821 is also used for mixing with cement for construction of structures, hence, admissible to credit - credit allowed.
Central Excise
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Excisability/marketability - Captive consumption - cream - Department has not been able to bring any evidence of marketability of creams so manufactured by the appellant - the cream captively produced and consumed in the factory is not marketable as there is no evidence to that effect
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CENVAT credit - Capital goods - the video control cabinet being an accessory of injection moulding machine which falls under 8477 and the same is covered by serial no. 2, the credit on video control cabinet is admissible
Case Laws:
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GST
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2018 (8) TMI 1142
Detention of goods with vehicle - incomplete e-way bill - What are the documents to be carried along with the goods? - Held that:- Under Rule 2 (1) of the Rules, the person in charge of a conveyance must carry-(a) the invoice or bill of supply or delivery challan; and (b) a copy of the e-way bill or the e-way bill number, either physically or mapped to an RFID, Radio-frequency identification (RFID) uses electromagnetic fields to automatically identify and track tags attached to objects. The tags contain electronically-stored information embedded on to the conveyance - Here, Garuda did not fill Part B of the e-way bill. It cited technical difficulties as the reason. On interception and after detention, it fulfilled that requirement. It has also pleaded that it approached the officials about the difficulties it faced, but was only advised that it must try again. Tried again, it succeeded; but by then, the authorities detained the goods. At least, thus goes the allegation. Garuda contends that its failure, if any, is trivial, technical. Can the Court exercise its discretion to dilute the statutory rigour? - Held that:- Judicial Power is never exercised for the purpose of giving effect to the will of the judge; always for the purpose of giving effect to the will of the legislature; or, in other words, to the will of the law - The language and the legislative intent clear, courts, in the name of discretion, cannot do violence to the statutory mandate. Discretion smooths the edges, but does not cut corners - there are no interpretative ambiguity or legislative crevasses to be filled in. Garuda can have the provisional release of the goods, pending further adjudication under Section 129(1) of the Act, only if it complies with the statutory mandate. If it provides a bank guarantee for the tax and the penalty, besides executing a bond for the value of goods, as directed under Rule 140 of the KSGST Rules, the authorities will provisionally release the goods. Once the petitioner provides the bank guarantee for the tax and penalty and bond for the value of goods, under Rule 140 of the Rules, it will have the goods provisionally released - petition disposed off.
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2018 (8) TMI 1141
Detention of goods with vehicles - e-way bill did not contain the details of the vehicle used for the transport - Held that:- The respondent authorities directed to release the petitioner's goods and vehicle on his "furnishing Bank Guarantee for tax and penalty found due and a bond for the value of goods in the form as prescribed under Rule 140(1) of the CGST Rules - appeal disposed off.
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2018 (8) TMI 1140
Constituting Appellate Tribunal under GST - Doctrine of separation of powers and independence of judiciary - Vires of Sections 109 and 110 of the Central Goods and Service Tax Act, 2017 - Held that:- Since the vires of Sections 109 and 110 of the Central Goods and Service Tax Act, 2017 and Tamil Nadu Goods and Service Tax Act, 2017, constituting Appellate Tribunal and the qualification, appointment and condition of services of its members is under challenge, notice be also issued to the learned Attorney General of India, through the Additional Solicitor General of India returnable six weeks hence.
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Income Tax
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2018 (8) TMI 1143
Reassessment u/s 147 - determination of cost of construction account. - assessee filed objections stating that the cost of construction estimated by the DVO was very high and furnished the valuation report from the independent approved valuer - huge difference between the two valuation reports Held that:- The DVO has valued the property on the basis of CPWD rates and CPWD rates include the profit element of the contractor. Therefore, the CPWD rates cannot be applied mutatis mutandis to the constructions made in the local areas. There is a difference between the CPWD rates and state PWD rates. This Tribunal in the case of Padmini Priya Property Developers and Builders (2018 (4) TMI 259 - ITAT VISAKHAPATNAM) has considered similar facts and circumstances and allowed deduction of 15% towards the rate variation for CPWD rates and local rates and further reduction of 10% towards self-supervision from the value estimated by the DVO AO directed to allow the rate difference of 15% and supervision charges to the extent of 10% in cost of construction determined by the DVO and recompute the investments subject to minimum of the cost of construction admitted by the assessee.
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2018 (8) TMI 1139
Estimation of income - allegation of suppressed production and sale of bagasse - ascertaining sugarcane loss - Addition on the basis of examining and comparing the production of bagasse in another sugar factory - Held that:- Upon examining the material on record, we do find that the addition has been made simply on account of recoveries made by another sugar factory. The assessee on the other hand states that it did produce the material before the Assessing officer to show what recoveries had been made and that everything was duly recorded in the books of account. The matter requires reconsideration. - Matter remanded back to tribunal.
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2018 (8) TMI 1138
Withdrawal of appeal due to low tax effect - Held that:- Dismissed as withdrawn with liberty as prayed for. It is, however, clarified that withdrawal of the appeal by the revenue shall not be taken to be affirmation of order of the Tribunal on merits
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2018 (8) TMI 1137
Levy of penalty 271(1)(c) - concealment of income - failure to correctly compute arm’s length price of international transactions between the respondent-assessee and its holding company - question of bona fides of the explanation of the respondent-assessee and whether exclusion of the internal comparable was after due diligence. Held that:- The Tribunal has duly applied its mind to the relevant aspect of good faith and due diligence. The Tribunal has held that the respondent-assessee had been able to discharge the onus placed upon them in terms of Explanation 7 to Section 271(1)(c) of the Act and show that their stand and stance in not taking into consideration the internal transaction was in good faith and they had acted with due diligence. These findings of the Tribunal in the present case are factual and clearly plausible and reasonable. No penalty - Decided against the revenue.
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2018 (8) TMI 1136
Disallowance of unpaid operational charges - assessee has filed the copy of ledger account of the said expenses debited to the profit and loss account, but the same have not been verified either by the AO or by the ld. CIT(A) so as to ascertain as to why ONGC has paid lesser amount as compared to the bills raised by the assessee. - The AO has also observed that some payment might have related for the previous year, but it has been debited to the current year s profit and loss account. The assessee has not furnished any bill-wise reconciliation statement clarifying as to for how much amount the bills were raised and how much was actually received by the assessee from ONGC. It was also not explained, if there was any agreement with ONGC for payments lesser than the bill amounts. Matter remanded back to the file of AO for verification.
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2018 (8) TMI 1135
Existence of permanent establishment in India (PE) - DRP observed that in the absence of a permanent establishment the action of the AO proposing to attribute 32% of total receipts from supply of software as taxable business profits is not correct. - Held that:- the issue is covered in favour of the assessee as decided by the Tribunal in [2013 (9) TMI 374 - ITAT MUMBAI] - Decided in favor of assessee.
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2018 (8) TMI 1134
Disallowance made by the AO u/s. 37 being interest paid on late payment of TDS - Held that:- It is noticed that when the matter came up for hearing, none appeared on behalf of the assessee-appellant despite notice having been sent by Registered Post (AD on record). Previously, the appeal was fixed for hearing on 21/05/2018 and assessee did not present. It thus appears that the assessee is not interested to proceed with the matter. - Appeal dismissed - Decided against the assessee.
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2018 (8) TMI 1133
Transfer pricing - working capital adjustment - Rule 10B(1)(e)(iii) - The assessee carried out the working capital adjustment at 5.39% but the TPO did not accept the same by observing that the exact details of the debtors, inventories and the creditors is not available and that according to the OECD guidelines of 2010, working capital benefit cannot be given automatically, but can be given only in a situation, where there is a greater chance of increasing the comparability levels of the assessee - Held that:- The DRP has merely confirmed the order of the TPO without discussing as to why the assessee’s contentions cannot be accepted. Therefore, we deem it fit and proper to set aside the issue to the file of the DRP for reconsideration of the issue in accordance with Rules and precedents on the issue. Selection of comparable - Non-allocation of unallocated research and development expenses while computing the segmental profit of Suven Life Sciences Ltd. - Held that:- assessee is into simple drug testing, whereas Suven Life Science is undertaking not only drug discovery, but is also involved in development of new drugs. Therefore, these activities are clearly functionally distinguishable. - these differences cannot be overlooked nor can there be adjustment made for these differences. Therefore, we direct the AO to exclude this company from the list of comparables. Decided partly in favor of assessee.
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2018 (8) TMI 1132
Validity of assessment passed u/s 153A r.w.s. 143(3) - no notice u/s.143(2) was issued - Ld.CIT(A) erred in holding that no notice u/s.143(2) was required to be served on the appellant for the purpose of completing the asst. u/s.153A - Period of limitation u/s 153B - Held that:- HC in [2011 (7) TMI 252 - DELHI HIGH COURT] has held that, issue of notice u/s.143(2) of the Act is not mandatory in a case of the assessment made u/s.153A of the Act, therefore this issue is decided against the assessee. Validity of additions made u/s 153A - Held that:- Considering the undisputed position in this regard, we are of the opinion that this is a case where both the additions are made without having support of any incriminating material and therefore, they constitute the additions to be made in the regular assessment only. Regarding the regular assessment, it is a fact that the same is an unabated assessment in this case. - The due date for issue of notice u/s.143(2) expired in November, 2003. - the assessment is undisputedly a non-abated assessment. Therefore, the additions, if any have to be made only with the support of any incriminating material.
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2018 (8) TMI 1131
Exemption u/s 11 - commercial activity or not - Charitable Trust (AOP) and is engaged in running of a hospital and giving medical relief. - Held that:- The issue has already been decided in favor of assessee in [2015 (4) TMI 801 - ITAT PUNE] - CIT(A) has followed the principles of judicial discipline in compliance with the order of the Tribunal in assessee’s own case. - Decided against the revenue.
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2018 (8) TMI 1130
Levy of penalty u/s 271(1)(c) - AO has levied the penalty on the disallowance of expenditure claimed by assessee - However, the AO for AY 2009-10 has levied the penalty only on the item of interest and finance charges - Held that:- In view of the above facts and circumstances of the present case and the case laws of Hon’ble Supreme Court in Price Waterhouse Coopers (P.) Ltd. [2012 (9) TMI 775 - SUPREME COURT] and Reliance Petroproducts Pvt. Ltd [2010 (3) TMI 80 - SUPREME COURT], we are of the view that there is a complete disclosure in the present regarding all the facts relating to expenditure on repairs and maintenance, depreciation and expenditure on interest and financials and hence, there is no question of concealment of particulars of income by the assessee. Hence, we delete the penalty. Decided in favor of assessee.
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2018 (8) TMI 1129
Validity of direction of the Dispute Resolution Panel (DRP) u/s 144C - Levy of interest u/s 234B - Failure to deduct tax (TDS) on part of person making payment to assessee - subscription revenue received by the Appellant - whether in the nature of Royalty - The AO further observed that though it has been held that assessee is having a PE in India, but the income is not computed as provided under Article 13(6) of the India-UK treaty as the assessee has disputed the existence of PE itself. - providing services through its server located at Geneva. Held that:- ITAT in earlier decision has decided that, that subscription charges received by the assessee from its customers in India is in the nature of royalty. The ITAT, further held that once the receipt in question has been decided as royalty in nature then there is no need to go into the question of assessee having PE in India and applying Article 13(6) of the India-UK Tax Treaty to determine the income attributable in India. The facts remained unchanged. The assessee failed to bring on record any evidence to prove that the finding of facts recorded by the ITAT for earlier year is incorrect. Therefore considering the facts and circumstances and also respectfully following the decision of the ITAT in assessee’s own case for earlier years, we are of the considered view that subscription charges received by the assessee from the customers in India is in the nature of royalty. Article 13(6) can be pressed into service only in the case when the existence of PE of non-resident is not in dispute. In this case the assessee has contended before the lower authorities that it does not have any PE in India and under these facts and circumstances the provisions of Article 13(6) cannot be invoked in the case when the receipt is found as royalty. Levy of interest u/s 234B - Held that:- when a duty is cast on the payer to deduct tax at source, on failure of the payer to do so, no interest can be imposed on the payee under Section 234B of the Act. The appeals filed by Revenue as well as the assessee are dismissed.
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2018 (8) TMI 1128
Additions u/s 2(24)(x) - delayed payment of employee contribution to PF - Addition towards interest expenses on account of diversion of borrowed funds for non-business consideration. - Genuineness of commission expenses - Held that:- The ld. CIT(A) has referred to more than 10 case laws in which it has been held that disallowance under section 36(15A) cannot be made if the amount has been deposited before the due date of filing of return. - The Ld. Departmental Representative failed to controvert the contentions against the findings of Ld.CIT(A). - No addition can be made - Decided against the revenue. Regarding interest expenses - Held that:- the assessee has taken loans by way of cash credit limit from bank, term loan from bank and other loans from Chola Mandalam DBF Finance and these loans have been taken for the specific business purposes. Nowhere during the course of assessment proceedings as well as proceedings before the first appellate authority and before us the revenue has been able to bring any evidence on records to prove that the interest bearing founds have been diverted to interest free advances. Further, from perusal of the list of alleged loans and advances, we find that they have been given in connection to the business of the assessee and are for the business exigencies which do not call for any addition for disallowance of interest expenditure. - No additions - Decided against the revenue. Payment of commission - unreasonable expenses - genuineness - Held that:- payment of commission paid to Capt. Hanif has been paid under written agreement, alleged commission has been offered to tax by Capt. Hanif who is assessed to tax @30%, tax has been duly deducted at source, payment of commission has been made through account payee cheque and the purpose of making the payment is also well established from the agreement as well as the nature of payment which is for procuring the helicopter on hire by a political party. - Claim of expenses cannot be denied - Decided against the revenue.
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2018 (8) TMI 1127
Genuineness of commission expenses - AO concluded that no such agent services were required by the Government departments and did not find any genuineness in alleged commission expenses and disallowed the same, adding it back to the income of the assessee. - CIT(A) allowed partial relief only. Held that:- The alleged commission expenditure has been paid by the assessee to promote its products by way of marketing and educating the farmers for the benefits of using fertilizer and pesticides so that these farmers come to the office locations of MARKFED and MPSAIDCL which are scattered across various parts of the state of Madhya Pradesh and to buy these products. The basic purpose of making such payment is to promote the sale of these two nodal agencies which in turn will make the sale to the farmers. As the demand from the farmers increases then the MARKFED/ MPSAIDCL purchases more goods from the assessee firm. There is a corresponding increase in the sales vis-ŕ-vis the commission expenses, so much so that the turnover has increased to ₹ 6.98 crores (approx) as against ₹ 2.38 crores (approx) in the preceeding year and the fact is also worth noting that salary expenditure has not increased in the proportion of increase in sales and the credit for this increase in sales directly goes to the efforts put in by the commission agents to advertise and educate the farmers which in turn have created the demand of the products sold on consignment basis by the assessee to these two nodal agencies. Entire claim of commission expenses allowed - Decided in favor of assessee.
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2018 (8) TMI 1126
Claim of set off of brought forward losses - deduction u/s 80IA - The AO was of the view that having positive income from the assessment year 2005-06 to the assessment year 2011-12 the assessee ought to have claimed the set off losses in the immediately subsequent assessment year and it is incorrect to claim the set off of losses after completion of tax holiday period. The income of the assessee is required to be computed each year independently after setting off of losses of earlier years in the subsequent assessment years. If the losses could not allowed to be set off the losses are allowed to be carried forward for the 7 consecutive assessment years from the end of the assessment year in which the loss was incurred. There is no special provisions to allow the carry forward of losses in the case of 80IA as held by the Ld.CIT(A). In the instant case, the assessee has carried forward the losses till exhausting the 10 years tax holiday period and claimed the loss in the impugned assessment year which is against the provisions of law. As held by Hon’ble Special Bench in the case of Goldmine Shares [2008 (4) TMI 405 - ITAT AHMEDABAD], the losses incurred in 2003-04 and 2004-05 required to be set off against 2005-06 and in subsequent assessment years. Having not claimed the set off losses in the A.Y.2005-06, the assessee is disentitled to claim the set off of such losses in the impugned assessment year. Decided in favor of revenue.
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2018 (8) TMI 1125
Revision u/s 263 - PCIT observed that assessee has made irregular adjustments - deduction of interest expenses - capitalization of interest expenses in the cost of construction - Held that:- After considering the reply of the assessee the assessing officer disallowed net of the interest received - The assessing officer has adopted one of the courses permissible in law. Hence, the order may be prejudicial to the interest of revenue but not erroneous. Therefore, the twin condition as enunciated under section 263 is not fulfilled. - Decided in favor of assessee.
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2018 (8) TMI 1124
Deduction u/s 54 - purchase of new residential house - AO disallowed the claim by observing that the assessee has not utilized capital gains for purchase of new residential house contending that the new residential house has been purchased out of own sources i.e. savings from saving bank account and bank loans. - Held that:- the assessee is entitled to exemption under section 54 even though for the construction of the new house, the amount that was received by way of sale of his old property as such was not utilized. It was held by the Kerala High Court [1999 (9) TMI 955 - KERALA HIGH COURT] that no provision is made by the statue that the assessee should utilize the amount which he obtained by way of sale consideration for the purpose of meeting the cost of the new asset. Entitlement of exemption under section 54 relates to the cost of acquisition of a new estate in the nature of house property for the purpose of his own residence within the specified period. - assessee has met with all the conditions stipulated under section 54(1) - Deduction allowed - Decided in favor of assessee.
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Customs
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2018 (8) TMI 1123
Compensation fee for extension of time to complete the export obligation - DEEC licence - Whether the petitioner is required to pay a sum of ₹ 12,43,872/-, being the compensation fee for being entitled for extension of time to complete the export obligation in terms of the advance authorisation permission dated 04.07.2012? Held that:- The extension of time was directed to be granted prospectively for 6 months from the date of issuance of the order to be passed by the second respondent. Now the present impugned order has been passed on 28.03.2018 on a totally different ground stating that the petitioner should pay a total sum of ₹ 12,43,872/-. Unfortunately, the respondent Department has lost sight of the fact that the initial application for extension of time remained undisposed of and was kept pending though the petitioner had remitted the composition fee as early as on 08.10.2014, being a sum of ₹ 22,212/- and once again the very same amount was remitted by the petitioner on 20.12.2017. Therefore, at this juncture, directing the petitioner to remit composition fee till the period 30.09.2018 is wholly illegal and without jurisdiction. Since the application for extension of time having not been rejected and order has been passed granting extension of time on 19.01.2018, which was interfered only with regard to the date of extension, now the respondent Department cannot go back on what they have said in their order dated 19.01.2018 under the pretext of demanding higher composition fee - the impugned order demanding additional sum of composition fee over and above the amount already remitted by the petitioner is without jurisdiction and illegal - Petition allowed.
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2018 (8) TMI 1122
100% EOU - appellant was unable to produce any document evidencing payment of legitimate Customs Duty on the said Granite Slabs, tiles, strips in order to establish the legal sale transaction - Held that:- The officers of the Preventive visited the premises of the appellant on 24.10.2005 and found 40 Granite Slabs of different size and the appellant could not produce any bill showing that he has purchased the same from M/s. Alpha Rich Granites (P) Ltd., a 100% EOU - the Commissioner (Appeals) has considered all the evidences of the appellant, and came to the conclusion that Mr. Sreedhar has failed to comply with the obligations cast on him and thus has rendered the goods liable for confiscation and himself to penal action - demand of duty upheld. Penalty - Held that:- The Department has not been able to establish aiding and abetting on the part of the appellant so as to justify the imposition of penalty of ₹ 10,000/- on the appellant - Penalty set aside. Appeal allowed in part.
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2018 (8) TMI 1121
Benefit of exemption N/N. 64/88-Cus dated 1st March 1988 - import of Theratron-Phoenix Cobalt-60 (electro therapeutic apparatus) - correctness on the part of the adjudicating authority to disentitle the appellant from the privilege of notification no 64/88-Cus dated 1st March 1988 - Held that:- This is an incorrect finding. The appellant had, at the time of import in February 1991, cleared the said equipment upon presentation of all documents that qualified them to the benefit of the exemption; alleged subsequent failure to comply with post-importation conditions may lead to confiscation for non-compliance without calling into question the eligibility at the time of import. Indeed, there is no allegation of non-eligibility at the point of import and this finding is without sustenance. Confiscation - failure to produce the installation certificate - Held that:- Notification do not specify any time limit within which the installation certificate was to be furnished. In paragraph 4(b), the importer is required, at the time of import, to undertake to produce the prescribed certificate within such time as specified by the Assistant Collector of Customs and in paragraph 4(c) it is enjoined that the importer shall furnish the same - It was only in the show cause notice issued more than eight years after the import that this certificate was called for. The appellant did plead before the original authority that it would be well nigh impossible to secure such a certificate after this lapse of time. Moreover, with the Director General of Health Service having withdrawn the duty exemption certificate , there was a disclaimer of being obliged to issue such a certificate. The consequence of such withdrawal is an aspect that is moot to the eligibility for import with the privileges under the notification - eligibility at the time of import is clearly distinguishable from the obligation to fulfil post- importation condition with the attendant detriment of confiscation. The certification sought for by the adjudicating authority is clearly not applicable to importer and the non-production thereof is no ground for confiscation or denial of privileges of exemption. Whether appellant was derelict in extending free treatment as prescribed or was charging unreasonable rates? - Held that:- No effort has been made by the adjudicating authority towards ascertainment of compliance of this condition and the rates charged by the appellant were not only not subjected to the test of reasonableness but, more importantly, are entirely unknown. There is no onus on the appellant to negate that which is not alleged in the notice and failure to establish reasonableness of rates cannot be held against the appellant - it is apparent that discarding of record must not be based on supposition but on hard facts. The data of patients furnished indicates that 40% of the patients have been accorded free treatment and, in the absence of contrary evidence, there is no ground to hold that appellant had failed to fulfill this condition. In the absence of evidence of non-compliance on the part of the appellant who had furnished claims of compliance, the confiscation of goods, imposition of penalty and recovery of duty is without authority of law - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 1120
Change in Classification of imported goods - MIGLITOL - the department took the view that both the goods require to be correctly classified under CTH 3003 9090 under the broad heading of “Medicaments” - case of appellant is that when the department has been consistently assessing the impugned goods earlier under CTH 2942 0090, they cannot summarily change the classification to CTH 3003 9090 - Held that:- Even in a case where the department has sufficient reasons or grounds to change the established classification, natural justice demands that the affected importer should be put to notice as to the intention of the department and the reasons there for. This has not been done in the present case - on this very ground, without going into the merits, the summary change in classification in the instant case is unjustified and cannot be sustained. The Hon’ble High Court of Madras, the jurisdictional High Court for this forum in Bush Boake Allen (I) Ltd. Vs. UOI [1995 (1) TMI 78 - HIGH COURT OF JUDICATURE AT MADRAS] held that classification is not reversible unless there is change in the circumstances. The arbitrary change of classification without notice to the appellant in respect of the impugned consignments is bad in law and the impugned order upholding the same cannot then sustain - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 1119
Imposition of penalties - whether the appellants were having knowledge of the contents of consignment which was to be exported by the exporter or not? - Held that:- The appellants were having no knowledge of the contents of the consignment to be exported. It is the appellants who themselves have detected the consignment and intimated to the Custom Department that the consignment is carrying some suspicious goods, therefore, it was 100% examined - penalty u/s 114 is not imposable. No proceedings were initiated against the custom broker. In that circumstances, as Revenue itself is of the view that the appellants are not to be punished under CBLR. Therefore, no penalty can be imposed on the appellant under Section 114 of the Customs Act, 1962. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 1118
Implementation of CESTAT Order - enhancement of value - SONY TV SETS - SONY PANELS - Held that:- In respect of goods namely SONY television sets, and SONY panels the Tribunal has set aside the confiscation of the goods and enhancement of value of the assessable value. SAMSUNG television set - Held that:- Confiscation was upheld and allowed to be re-exported on payment of redemption fine of ₹ 5 Lakhs. The enhancement of value of SAMSUNG television sets was also set aside. The Ld. Respondent Commissioner is directed to implement the order and release the goods without insisting of PD Bond and/or Bank Guarantee and in terms of the said orders within 10 days from receipt of this order and report compliance on 10 August, 2018.
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2018 (8) TMI 1117
Application for early hearing - Held that:- The revenue involved is more than 8 crores and the issue is covered by the case of Boskalis Redging India Pvt. Ltd Vs. Commr. Of Cus., Bhubaneshwar [1997 (11) TMI 376 - CEGAT, KOLKATA] - early hearing application is allowed.
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PMLA
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2018 (8) TMI 1116
Provisional attachment of properties - Proceedings against Vijay Mallya - Bonafide purchaser of property - invoking provision of Section 2(1)(u) of PMLA, 2002 - during the course of investigation, various properties held/owned/acquired by Shri Vijay Mallya, including those through various companies and/or special purpose vehicle, which were controlled directly or indirectly by him, through dummy Directors appointed by him were identified, which included the subject property held in the name of M/s United Breweries (Holdings) Ltd. It is argued on behalf of the appellant that once the entire payment of the purchase consideration was made, the Appellant became owner of the said Property and had acquired proprietary rights and title a ‘claimant’ to the said Property in terms of the Proviso to Section 8(2), Prevention of Money Laundering Act, 2002 being interested/aggrieved party. Held that:- It appears from the material that the Appellant has executed Agreements to Sell, Construction Agreements and has also paid the full purchase consideration. Furthermore, all these documents were executed much prior to the registration of ECIR and FIR in the captioned Original Complaint. The Appellant has paid sufficient Stamp Duty on the Agreements to Sell and the Construction Agreements. It is not a civil dispute. It is also a matter of fact and it has come on record that the entire amount has already been paid. In the present case, the appellant definitely is a claimant and the flats were attached without any notice and hearing of the appellant nor any opportunity was given to raise his stand. It is not even the case of the Respondent that the Appellant has committed any offence under Section 3 or is in any manner involved in the commission of the same. The Appellant is the purchaser of the subject property, for which he paid the complete consideration through duly documented legal banking channels, even prior to the date of registration of the FIR or the ECIR. This tribunal is only to determine whether the subject Property falls within the ambit of the Act or to whether the subject Property is involved in money laundering. Thus, there is no force in submission of the respondent no. 1 this tribunal has no jurisdiction to even cannot consider the said issue and these proceedings should not continue till disposal of the said proceedings where the prayer for execution of sale deed is pending. From the entire gamut of the matter, it is evident that the appellant was the claimant in the flats. By making the entire payment, the appellant is become stake-holder as the amount paid by the appellant was not proceed of crime. The appellant is also not involved in the money laundering. The question of link and nexus in the criminal activities directly or indirectly does not arise. Orders of attachment set aside. However, it is clarified that this tribunal has decided the appeal pertaining to the order passed on the attachment of flats allegedly purchased by the appellant. The finding shall have no bearing with regard to merit of other proceedings pending against the accused parties including extradition proceedings.
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Service Tax
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2018 (8) TMI 1114
Valuation - commission received by the distributors - whether the appellant being distributors of Amway India Enterprise Pvt. Ltd. is liable to pay the service tax on the gross amount of commission received by the distributors? Held that:- Issue covered by the decision in the case of Charanjeet Singh Khanuja Vs. CST, Indore/ Lucknow/ Jaipur/ Ludhiyana [2015 (6) TMI 585 - CESTAT NEW DELHI], wherein the principle was laid down that which commission will attract the service tax and which will not, since the demand made on the consolidated amount, for the purpose of verification and re-quantification, the matter was remanded to the adjudicating authority. Matter remanded to the adjudicating authority to pass a fresh order on the line of observation made in the case of Charanjeet Singh Khanuja - appeal allowed by way of remand.
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2018 (8) TMI 1113
Valuation - Photography Service - deduction of cost of goods used/consumed in the Photography Service - N/N. 12/2003 ST dated 20.06.2003 - Held that:- The issue is covered by the decision in the case of Shilpa Color Lab V. CCE [2006 (10) TMI 35 - CESTAT,BANGALORE], where it was held that Service tax is only imposable in the amount charge for services not other than services - appeal dismissed - decided against Revenue.
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2018 (8) TMI 1112
Commercial concern or not? - Works contract service - Industrial and commercial construction - service tax on the value of FoC (Free of Charge) materials supplied by the contactees - argument of the Revenue that in the instant case the Maharaja Agarsen Hospital, the said hospital, if they are providing service for consideration, they cease to be for charitable purpose and it amounts to commercial purpose - Held that:- The said contention has got no merits in view of the ruling of Hon’ble Supreme Court (Const. Bench) in Surat Art & Silk Manufacturers Association [1979 (11) TMI 1 - SUPREME COURT], where it was held that even if a charitable institution charges some amount and/or even if they have some surplus from the operations, that will not render the institution as not for charitable purpose, or a non-profit organisation - the learned Commissioner rightly granted the rebate for the material component under the admitted facts and circumstances. Penalty - works contract service - Held that:- It is apparent that that service tax was in arrears due to financial crunch being faced by the appellant assessee. During the relevant period, several employees had left due to its bad financial position, resulting into non-compliance of their tax obligations - penalty set aside by invoking section 80. The appellant shall be liable to deposit the interest on the tax amount for delayed payment, if not deposited so far. Appeal allowed in part.
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2018 (8) TMI 1111
Commercial Training and Coaching Service - scope of vocational training - courses through Digital Magic Animation Academy (DMAA) in Drawing, Clay Modelling, Matte Printing, Animation and Visual Effects, Still Motion Photography and Acting - N/N. 24/2004-ST dt. 10.09.2004 - Held that:- As per N/N. 24/2004, service tax leviable under Commercial Training and Coaching Services are exempted for Vocational Training Institute which provides vocational training or coaching that imparts skills to enable the trainee to seek employment or undertake self-employment directly after training or coaching. From the facts on record, it is but obvious that the courses offered by the appellant satisfied the requirements of Notification 24/2004 dt. 10.09.2004. The relevant brochure has also been adduced to show that the trainees who have been provided vocational training were able to secure jobs subsequently. - The Apprentices Act, 1961 cannot be applied to the period of dispute since the concerned Notification 03/2010 was issued subsequently. Video Tape Production Services - Held that:- Ihere is some confusion with respect to the quantum of demand. While the adjudicating authority has confirmed the service tax liability of ₹ 16,29,611/- based on Annexure-II to the Show Cause Notice, another Annexure-A of the same Notice had given a reduction of ₹ 1,68,991/- on account of input credit and indicated the net tax liability proposed as ₹ 14,60,620/- - matter remanded for reconsideration - penalty on this issue will be revised as per the re-quantification. Other penalties set aside. Appeal allowed in part and part matter on remand.
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2018 (8) TMI 1110
Advertising Agency Service - renting of hoardings - Held that:- It is evident that the appellant was only renting out the hoardings which were either owned by them or leased to them, to various advertising agencies. There is no allegation that appellant had themselves made prepared displayed or exhibited any advertisings on their own. There is no dispute that the advisements which may have appeared on the hoardings are those that were prepared by the concerned advertising agencies and certainly not by the appellants. The appellants have only rented out these hoardings to the concerned advertising agency. The definition of “Advertising Agencies” in Section 65 (3) ibid does include the phrase “any service connected with”. Discernably, this phrase has to be read in keeping with the principle of ejusdem generis. Where a law lists specific class of persons or things and then refers to that in general, the general statements only apply to the same kind of persons or things specifically listed out - When the category of service concerns and involves creativity and even specifically seeks to include “advertising consultant”, it would be too farfetched to bring in renting of hoardings within the scope of such service. The activities of the appellant cannot be brought within the fold of “Advertising Agency Services” for the purpose of Section 65 (3) ibid - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 1109
Classification of services - Hiring of backhoe/pay loader siding including mechanical unloading - Hiring of pay-loader for loading or coal wagon at different siding of M/s Western Coal Ltd - Removal of all types of material by hiring of equipment such as HEMM, tippers, loading, transportation and dumping at specified places - whether classified under Transport of Goods by Road Service or otherwise? - Held that:- From the record of the appeal, it appears that the matter under consideration is no longer res integra in view of the Hon’ble Supreme Court decision in case of Commissioner Central Excise & Service Tax, Raipur V/s Singh Transporters [2017 (7) TMI 494 - SUPREME COURT] wherein the Hon’ble Supreme Court has held that the activity undertaken by the assessee of transporting of the coal from the pithead of the mines to railway sidings within the mining area is more appropriately classifiable under service head of Transport of Goods by Road Service - appeal dismissed - decided against Revenue.
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2018 (8) TMI 1108
Business Auxiliary Services - services related to freight forwarding - the assessee made booking of space for the cargo and thus procured cargo space from the shipping lines at specified agreed rates - whether the service would fall under Business Auxiliary services or otherwise? - Held that:- By booking a space for cargo and making available the same to the clients/actual user of space, they charged the mark up on the amount paid to the shipping lines’ - For booking of cargo space they receive a small incentive over and above the freight charges from the shipping liners. The very same activity has been considered by the Tribunal in the case of Phoenix International Freight Services Pvt. Ltd. [2016 (9) TMI 585 - CESTAT MUMBAI], where it was held that in such activity of booking of cargo spaces, the assessee is not rendering any service either to the shipping line or to the customers and the activity cannot be taxed under Business Auxiliary Services. The demand cannot sustain - appeal dismissed - decided against Revenue.
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2018 (8) TMI 1107
Benefit of abatement - N/N. 1/2006-ST dated 1st March, 2006 - Construction services - inclusion of free of cost material - Held that:- The inclusion of free of cost material while rendering the construction service is no more res-integra in view of judgment of Hon’ble Supreme Court in the case of CST vs. Bhayana Builders (P) Ltd. [2018 (2) TMI 1325 - SUPREME COURT OF INDIA], where it was held that The value of the goods/materials cannot be added for the purpose of notification dated September 10, 2004, as amended by notification dated March 01, 2005 - appeal dismissed - decided against Revenue.
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2018 (8) TMI 1106
Valuation - inclusion of value of loading agreement into the value of mining agreement - Revenue has been of the view that the appellants are not paying service tax properly as the service value of both loading agreements and transportation agreement need to be included into the mining services value. Held that:- The matter is no-longer res-integra in view of the decision of Hon’ble Supreme Court in Singh Transporters [2017 (7) TMI 494 - SUPREME COURT] for the demand period between 01/04/2012 to 31/06/2012, wherein the service akin to the one provided by the appellants to M/s South Eastern Coal Fields Ltd. have been found by Hon’ble Supreme Court to be rightly classifiable under transport of goods by road service - demand set aside. So far as the demand from 01/07/2012 to 31/03/2013 is concerned, same has also been decided by this Tribunal in its final decision in the case of M/s H.N. Coal Transport Pvt. Ltd. and others vs. CCE & ST, Raipur [2018 (8) TMI 173 - CESTAT NEW DELHI] in the similar cases, where it was held that wherein this Tribunal has found that since the service provided by the appellants within mining area has already been classified by Hon’ble Supreme Court in Singh Transporters case even in the post negative regime w.e.f. 01/07/2012 the appellants are entitled for abatement on the value of services provided by them and since the service tax has already been paid by the service recipient after availment of the abatement and, therefore, no service tax liability remains with the appellant - demand set aside. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 1105
Classification of services - goods transport service provided by the appellant to M/s SECL - whether the services would fall within the scope of “Mining Service” or under the “Transport of Goods by Road Service”? - Held that:- The activity undertaken by them is purely of transportation of the coal and it is in no way related to mining of the coal - The matter is no longer res Integra as it has already been decided by the Hon’ble Supreme Court in CCE & ST, Raipur V/s Singh Transporters [2017 (7) TMI 494 - SUPREME COURT], where it was held that a mine is not to be understood necessarily in respect of pit-heads of the mining area or the excavation or drilling underground, as may be, but also to the peripheral area on the surface - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 1104
Courier Agency service - whether the appellant being a service provider is liable to pay service tax on transfer of cash from one branch to another branch and subsequently to their clients, under the category of Courier Agency service? - Held that:- The transfer of money in cash by a Courier Agency does not fall under the definition of Courier Agency service and the definition cover only the delivery of documents and goods. The issue has been considered by the Hon'ble Gujarat High Court in the case of CCE, Surat vs. Patel Vishnubhai Kantilal & Company [2013 (2) TMI 156 - GUJARAT HIGH COURT], where it was held that when there is actual transportation of the cash by a person as envisaged under Clause (33) of Section 65 of the Act, such transaction would attract the provisions of Clause (33) of Section 65 of the Act and would amount to taxable service as defined under Clause (105)(f) of Section 65 of the Act. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 1103
Levy of tax on state police - Security Agency Services - appellant was engaged in providing the Services to private persons or companies for activities, like Escort of Cash, etc to the public/Private Sector Banks, Security to individuals, Securities for Cricket Matches and other functions organized etc. - Held that:- The issue is no longer Res-Integra in the light of the judgment in the case of Deputy Commissioner of Police Jodhpur Vs. C.C.E & S.T, Jaipur-II [2016 (12) TMI 289 - CESTAT NEW DELHI], where it was held that police department, which is an agency of the State Govt., cannot be considered to be a person engaged in the business of running security services - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 1102
CENVAT Credit - denial on the ground that though the Service Providers of the respondent were not registered during April 2004, to August 2004, however, in fact the Service Providers obtained the registration on 27.09.2004 and discharged the Service Tax - Held that:- In this fact the respondent is not eligible for such Cenvat Credit at the time of receipt of the invoices. They become eligible at the time after taking the registration by the Service Providers and payment of Service Tax. Therefore, the appellant at the most is liable for interest liability from the date the Cenvat Credit taken till the Service Tax paid by the Service Providers, however, for this reason, Cenvat Credit cannot be denied - Credit allowed. CENVAT Credit - denial on the grounds that it is only name of the appellant - Held that:- Since, all the Offices address which mentioned in the invoices belonging to the same respondent. The respondents have received the service and used by them, therefore, merely because the respondent address is not mentioned, credit cannot be denied - Credit allowed. Adjustment of CENVAT Credit in terms of Rule 6(3) of Service Tax Rule, 1994 - Held that:- The respondent are eligible to avail the re-credit of ₹ 17,97,248/- under Rule 6(3) of Cenvat Credit Rule, 1994 that the same subject to verification of original document by the Lower Authority that the same are falling within the conditions stipulated in Rule 6(3) of Service Tax Rules,1994 - Matter on remand. Demand of service tax - demand on the ground that period of Service Provision is prior to 10.09.2004, during which the rate of Service Tax was 8% which was enhanced to 10.02% w.e.f 10.09.2004 - Held that:- The rate of Service Tax will be applicable as per the period of provision of service and not from the date of invoices or receipt of payment , therefore, Ld. Commissioner (Appeals) has rightly set aside demand of ₹ 1,23,914/- which is upheld. Appeal disposed off.
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2018 (8) TMI 1101
Utilization of CENVAT Credit - Whether the appellant is entitled to discharge the service tax on reverse charge mechanism in respect of GTA services by utilizing Cenvat credit? Held that:- As per Rule 2(r), the person liable to pay service tax is a deemed service provider - In the present case, the appellant is paying service tax on reverse charge mechanism of GTA service. Since, statutorily, the appellant is required to pay service tax, therefore, he is deemed service provider. Consequently, the GTA service for the appellant, is a deemed output service. Accordingly, they are entitled for utilization of Cenvat credit for payment of service tax on GTA. After insertion of the bar, i.e. from 01.07.2012, the appellant was not entitled to utilize Cenvat credit for payment of service tax in respect of GTA service. However, prior to this date, utilization of credit is correct. Appeal allowed in part.
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2018 (8) TMI 1100
Refund claim - time limitation - whether limitation u/s 11B shall apply in case refund claim is filed by the appellant under Rule 5 of CCR read with N/N. 05/2006-CE (NT) dated 14.03.2006? - Held that:- The period of one year will be reckoned not from the date of receipt of foreign exchange but from end of the quarter in which the foreign exchange is received - the period of one year shall be computed from the end of the quarter wherein foreign exchange/FIRCs received - appeal allowed by way of remand.
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2018 (8) TMI 1099
Works Contract Service - Commercial and Industrial Construction Service - The case of the department is that this deduction is not permissible on the entire amount for which the billing was done, the service tax is required to be paid - Held that:- The works contract service during the relevant period was not taxable in terms of the Hon’ble Supreme Court’s Judgement in the case of Larson & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT], the works contract service came under the ambit of service tax w.e.f. 01.06.2007. Thus, during the relevant period, the service itself was not taxable - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 1098
CENVAT Credit - inputs - AFFF Concentrate - Industrial Paint/Thinner/Primer and Grease - Safety Vests - Angles - Channels - Coils - Barbed Tapes - Rheoduild 821 etc. Industrial paints - Held that:- These are used for corrosion control of the steel structures and physical barrier between the steel substrate and corrosive elements such as atmosphere. Therefore, continuously having nexus in providing the output service - credit allowed. Industrial lubricants - Held that:- These are used for lubricating marine loading arms which are part of capital goods for handling and loading of petroleum products, therefore, it has also nexus with the output services provided by the appellant - credit allowed. AFFF Concentrate - Held that:- The same is used for prevention of accidents by fire or explosion on such premises of Rule 16 of Inflammable Liquids Substance Regulations, 1953. Accordingly, used for provided output service - credit allowed. Rheobuild 821 - Angles and Panels used for structure of storage tanks - Held that:- The Angles and Panels used in the storage tanks, which ultimately used for providing storage and warehousing service, are eligible to credit - The Rheobuild 821 is also used for mixing with cement for construction of structures, hence, admissible to credit - credit allowed. Safety Work Vest - Coil - Barbed Tapes - Held that:- The appellant-assessee has not pressed denial of credit in respect of Safety Work Vest and Coil and Barbed Tapes involving total credit of ₹ 2,271/- and 10,665/- - credit not allowed. Appeal allowed in part.
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Central Excise
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2018 (8) TMI 1097
Monetary amount involved in the appeal - Held that:- The appellant did not dispute the fact that the amount involved in the present appeal is ₹ 10,00,000/- - As the amount involved is less than the limit prescribed in the Circular issued by the Central Board of Indirect Taxes & Customs (Judicial Cell) dated 11.07.2018, the present appeal be dismissed as not maintainable. Appeal dismissed as not maintainable.
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2018 (8) TMI 1096
Short payment of duty - payment made on provisional basis - applicability of Rule 8 of Central Excise Valuation Rules, 2000 - appellants has contended that the Department has only looked a short payment of duty whereas the excess payment of ₹ 23,00,126/- was ignored - Held that:- The issue is covered by the decision in the case of Anglo French Textiles Vs. CCE [2017 (9) TMI 1178 - CESTAT CHENNAI], where it was held that the goods are cleared to the sister unit and the appellant is eligible for credit on the duty paid, the entire exercise is a revenue neutral situation. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 1095
CENVAT Credit - denial on the premise that the dealer M/s. S.K. Garg & Sons who has supplied the goods to the appellant is non-existence and he has merely issued invoice not the goods - Held that:- In the matter in hand no investigation conducted at the end of manufacturer/supplier or the transporter to reveal the truth whether manufacturer/supplier has supplied the goods in question to M/s. S.K. Garg & Sons or the transporter has transported the goods to the premises of the appellants which is vital evidence to reveal the truth. Further, M/s. S.K. Garg & Sons was registered dealer during the impugned period and all the ER-1 returns were filed by M/s. S.K. Garg & Sons which were accepted by the department. In the absence of any corroborative evidence to show that the appellant have not received the goods, it cannot be alleged against the appellant that they have received the invoices and not the goods merely on the ground that there was no storage facility specifically when the landlord made a statement that the godown was let out to the dealer - In the absence of any investigation at the end of manufacturer/supplier or the transporter, the Cenvat credit cannot be denied to the appellant. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 1094
CENVAT Credit - unutilized balance of Cenvat Credit lying in the credit account - N/N. 30/2004 dated 09.07.2014 - Held that:- In the present case the appellant has opted for exemption as per the N/N. 30/2004-CE where the exemption is conditional. As per Rule 11 (3)(ii) CCR, Cenvat Credit balance will lapse only if the product is exempted absolutely under Section 5A of Central Excise Act. But since the Notification No. 30/2004-CE dated 09.07.2004 is a conditional notification, hence only Rule 11 (3)(i) of CCR would apply which does not mandate any such lapsing. Reliance placed in the case of Jansons Textile Processors vs. Commissioner, Central Excise & ST Salem [2018 (7) TMI 850 - CESTAT CHENNAI], where it was held that in sub rule 3 (i) ibid, the assessee has to ‘opt‛ for the exemption whereas in sub-rule 3 (ii) ibid, there is no such option available to the assessee and the absolute exemption that may have been brought forth under Section 5A ibid would apply unilaterally to the related final product manufactured by the assessee. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 1093
CENVAT Credit - various input services - Business Support Service - Outdoor Catering Service - Commercial or Industrial Construction Service - Courier Service (Outward) - Custom House Agent Service - Transport of Goods by Road - Manpower Supply Agency Service - Management, Maintenance or Repair Service - Architects Service - Telephone Service. Business Support Service - Held that:- The Business Support Service has been used for logistic support services like verification of goods, receipt of goods etc., which is covered in the definition of ‘input service’ at the given time - the input service credit in business support service is admissible to the appellant - Credit allowed. Outdoor Catering Service - Held that:- The same has been held to be admissible service for the purpose of input service credit in the light of decision of Hon’ble Bombay High Court in the case of CCE, Nagpur vs. Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT] - Credit allowed. Commercial or Industrial Construction Service used for the construction of the factory - Held that:- The issue is no longer res integra and has been decided in the favour of the assessee in the case of CCE, Delhi-III vs. Bellsonica Auto Components India P. Ltd [2015 (7) TMI 930 - PUNJAB & HARYANA HIGH COURT], where it was held that the services in question had been used for brining into existence an immovable property and not for the manufacture of the final product. The said services cannot be said to be remotely connected to the final product - credit allowed. Courier Service - Held that:- Courier Service was admittedly taken for transportation of goods for sale to customers. The amount has been paid as service tax to its vendors for providing the taxable service of ‘Courier Services’ for the purposes of transportation of finished goods (spare parts) to its distributors/dealers - the amount of input credit availed before 01.04.2008 is admissible to the appellant as the same is linked with the activity of business or manufacture - However, the input service in relation to outward transportation beyond the place of removal is not included in the definition of ‘input service’ after 01.04.2008 - credit allowed in part. Custom House Agent Service - the same is denied on the ground that the service was availed beyond the place of removal - Held that:- The port was the place of removal in case of exports - reliance placed in the case of CCE vs. Dynamic Industries [2014 (8) TMI 713 - GUJARAT HIGH COURT], where the issue was decided in favor of assessee - credit allowed. Transport of goods by road - Held that:- The same pertains to the period prior to 01.04.2008 (prior to the amendment in 2008), hence, the same is admissible to the appellant - credit allowed. Manpower Recruitment and Supply Service - Held that:- It is an admitted fact that the amount was paid by the appellant as service tax to the vendors for providing recruitment services for supply of manpower on temporary basis. It is not disputed that the said manpower was essential for the purpose of carrying the operations of the business of the appellant - credit allowed. Management, Maintenance and Repair Service - Held that:- The same has been used in relation to maintenance/repair of capital goods and equipment in the factory of the appellant. Since the manufacturing activity service of the appellant cannot take place without the repair/maintenance of equipment and capital machinery, the input service credit is admissible to the appellant - credit allowed. Penalty - Held that:- It is purely a question of interpretation of law - the issue was finally settled at the level of Hon’ble Apex Court, the penalty for this period is not justified. Accordingly, no penalty is imposable on the appellant. Appeal allowed in part.
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2018 (8) TMI 1092
Rectification of mistake - it was contended that all the materials were not considered by the Tribunal while passing the order - Held that:- Even though certain material was not mentioned in the order, the same stands considered. Therefore, merely because certain case laws relied upon by the appellant and circulars are not mentioned in the order, it does not mean the same was not considered - there are no mistake apparent on record - ROM Application dismissed.
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2018 (8) TMI 1091
Valuation - includibility - investment subsidy against Entitlement Certificate sanctioned under the above policy - Held that:- The issue of liability of payment of excise duty on the subsidy amounts has been decided in favour of the appellant in the case of GREENLAM INDUSTRIES LTD [2018 (4) TMI 1552 - CESTAT NEW DELHI], where it was held that there is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans. There can be no liability for payment of excise duty on the VAT subsidy amount - penalty also set aside - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 1090
Valuation - duties and taxes like royalty, stowing excise duty and other statutory levies - Held that:- The issue involved in the present appeals is sub judice before the Hon’ble Supreme Court in Mineral Area Development Vs.. Steel Authority of India [2011 (3) TMI 1554 - SUPREME COURT] - we grant liberty to the appellant to come again after having final verdict from the Supreme Court (supra), within a prescribed time.
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2018 (8) TMI 1089
Classification of goods - BIOSTAR - whether the goods manufactured by the appellant that is BIOSTAR, is classifiable as Plant Growth Regulators under Chapter Heading No.38089340 of first schedule Central Excise Tariff Act,1985 or the same is classifiable as Plant Growth promoter (fertilizer)? Held that:- The product is highly of Chemical in nature. The classification can be decided only after proper Chemical test. On query from the bench, both sides referred to test report of Chemical Examiners which states as ‘Literature available in Laboratory and the ingredients used in the manufacture suggests it is a synthetic formulation for plant use’ - From this report it is not clear that as per the nature of the product and ingredient exist own the product is Plant Growth Regulator or Bio Plant Promoter. The Department should seek for a clear report from the Chemical Examiner that as per composition of the product in report already given by the Chemical Examiner, whether the product is a Plant Growth Regulator as claimed by the department as the Bio Plant Promoter (Fetilizer), as per the claim of the appellant - appeal allowed by way of remand.
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2018 (8) TMI 1088
Area Based Exemption - suppression of facts - case of Revenue is that since the Respondent was aware of the fact that the VIP Industries, Haridwar Unit was availing area based exemption, they continued to clear the goods after carrying out job work, without payment of duty, thus, there has been suppression of fact on the part of the respondent - Held that:- There was a bonafide mistake on their part, in as much as, the raw materials had been received against job work challans, which was earlier carried out in the same manner for the Nasik Unit, hence, there was little scope to change the procedure and clear the job worked goods, on payment of duty, to Haridwar Unit - The Ld. Adjudicating authority has rightly appreciated evidences on record and observed that there has been no suppression of fact nor any misdeclaration on the part of the respondent in not discharging duty during the period April 2006 to July 2010. Appeal dismissed - decided against Revenue.
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2018 (8) TMI 1087
Excisability/marketability - cream prepared to be used in making of cream biscuits - Captive consumption - Held that:- This Tribunal in BHAGWATI FOODS PVT. LTD. VERSUS C.C.E. & S.T., KANPUR [2016 (9) TMI 678 - CESTAT ALLAHABAD], held that, there was no evidence to prove that the sugar syrup in question, in the form in which it comes into existence in the appellants’ factory, is marketable. The cream which is produced captively is having unique flavour, colour and taste and the cream biscuits manufactured by different manufacturers have different flavours and taste. The Department has not been able to bring any evidence of marketability of creams so manufactured by the appellant - the cream captively produced and consumed in the factory is not marketable as there is no evidence to that effect - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 1086
Rectification of mistake - it was contended that judgments in the case of CCE vs. Pooja Forge Limited [2007 (11) TMI 316 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH] and CCE, Coimbatore vs. Habasit lakoka (P) Limited [2011 (2) TMI 1345 - MADRAS HIGH COURT], relied upon by the appellant at the time of hearing, have not been considered by this Tribunal - Held that:- This Tribunal has recorded the submissions of ld. Advocate relating to these judgments and thereafter passed a well reasoned order - Once the Tribunal has recorded the judgements relied upon by the appellant, it is not necessary that each and every judgment is discussed in the findings and the judgments are deemed to have been considered by this Tribunal. There is no error apparent in the order - ROM application dismissed.
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2018 (8) TMI 1085
Rectification of mistake - transfer of credit on Capital goods - Held that:- This Tribunal has passed the order only on the concession made by ld. Counsel that the appellant will reverse the credit taken by Lambha Unit and will avail by Odhav Unit, but at the relevant time the Lambha Unit was not in operation. Therefore, the explanation given by ld. Counsel was not factually correct - ROM Application allowed.
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2018 (8) TMI 1084
Rectification of mistake - Held that:- The Tribunal in the order dated 31.07.2017 disposed of a bunch of appeals on the ground that the issue involved is Cenvat credit of Sales Commission agent whereas, the issue involved in these four appeals is of Sales Promotion Marketing Expenses, Selling Expenses and Marketing Literature Expenses, Clearing and Forwarding Agent and CHA services and hence, these appeals could not have been disposed of - ROM Application allowed.
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2018 (8) TMI 1083
Levy of Excise duty - Waste and scrap - whether on the waste and scrap cleared by the appellant, arising out of capital goods, on which credit is availed or otherwise and whether, it is liable for excise duty in terms of Rule 3 (5) of Cenvat Credit Rules? - Held that:- The appellant has not produced documentary evidence to establish the various facts before the original Adjudicating Authority. However, the documents were submitted before the Commissioner (Appeal) and the Commissioner (Appeal) has not considered the same in its right perspective - matter requires reconsideration. Appeal allowed by way of remand.
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2018 (8) TMI 1082
Valuation - includibility - The case of the department is that the discount shown in the invoice is towards freight, therefore the same is not deductible from the assessable value - Held that:- The appellant have admittedly shown the amount of discount in the sale invoice and the same has been passed on to the customer. In this fact, the deduction of discount is permissible in terms of Section 4 of Central Excise Act, 1944 - no duty can be demanded on such discounted amount - demand set aside. MODVAT/CENVAT credit - Capital goods - video control cabinet for injection moulding machine - Held that:- Even as per the use there is no dispute that it is used an accessory to injection moulding machine, therefore, even though the said goods is excluded in serial No. 2 of table annexed to the definition of capital goods, but it is included in the serial No. 5 as component parts and accessories of the machine falling under serial No. 1 to 4 irrespective of any chapter heading. Therefore, the video control cabinet being an accessory of injection moulding machine which falls under 8477 and the same is covered by serial no. 2, the credit on video control cabinet is admissible - credit allowed. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 1081
Exemption under N/N. 202/88- CE dated 20.05.1988 - The case of the department is that they have purchased the raw material i.e. scrap from the ship breaking unit who have cleared the goods under exemption. Therefore, the final product is not exempted under the said notification - Held that:- It is a trite law that if the material is purchased from the market, it should be considered as deemed duty paid only unless proved otherwise. There is a factual error in the show cause notice itself that there is an allegation that they have purchased the material from the ship breaking unit which is incorrect on the face of the record. Since the adjudicating authority has not considered this fact, the matter needs to be reconsidered. Appeal allowed by way of remand.
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2018 (8) TMI 1080
Refund of education cess and secondary higher education cess - area based exemption - N/N. 39/01-CE dated 31.07.2001 - Held that:- The issue has been finally settled by the Hon’ble Supreme Court in the case of SRD Nutrients Pvt. Vs. Commissioner of Central Excise Guwahati [2017 (11) TMI 655 - SUPREME COURT OF INDIA], where it was held that the appellants were entitled to refund of Education Cess and Higher Education Cess which was paid along with excise duty once the excise duty itself was exempted from levy - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 1079
Valuation - inclusion of charges of repairing for which the appellant is raising debit notes - Department has demanded duty on the amount of debit notes which is for repairing of old and used engine on the ground that it is an additional consideration - Held that:- The debit notes raised by the appellant is in respect of the engines supplied more than 3 years back and subsequently they have received the said engine as defective only for repair for which debit note was raised. This activity is limited to repair of old and used engines, which has nothing to do with the manufacturing of the engine which was supplied long back. Therefore, the debit note is for repair which cannot be treated as additional consideration towards the sale of the engine which was made long back. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 1078
Whether the restriction for refund under Notification No. 39/2001-CE dated 31.07.2001 imposed vide Notification No. 16/2008-CE dated 27.03.2008 and Notification No. 33/2008-CE dated 10.06.2008 is applicable or otherwise? - Held that:- The very same issue is pending before the Hon’ble Supreme Court, therefore, it is not proper for this Tribunal to pass any order at this stage. If the appellant is entitled for the refund of basic duty, whether they are also entitled for refund of education cess? - Held that:- Since it is refund of the amount of basic duty, the same also may be decided along with the issue of Notification No. 16/2008-CE dated 27.03.2008 and Notification No. 33/2008-CE dated 10.06.2008 as and when it is finally decided by the Hon’ble Supreme Court. Appeal allowed by way of remand.
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2018 (8) TMI 1077
SSI Exemption - crossing of threshold exemption - denial on the ground that in the financial year 2007-2008, the appellant have crossed the threshold aggregate clearance value of ₹ 4 Crores - Held that:- Merely by making payment of excise duty on 31.03.2007 it cannot be said that the goods on which such duty was paid where the clearances of on or before 31.03.2007. Undisputedly, the physically goods were cleared on or after 01.04.2007, therefore, these clearances should be taken in the year 2007-2008. Accordingly, the aggregate value needs to be calculated. However, the appellants heavily made a submission that there are certain bought out items which were cleared as such, the value of sale of those bought out goods should not be added in the aggregate value of clearance for the purpose of SSI exemption. The Adjudicating Authority though given finding in respect of the clearances of 9,32,665/- and 1,19,044/- towards export, but, no specific finding was given in respect of the goods, namely, Spray Drayer valued at ₹ 19,00,000/- cleared vide invoice No. 117 dated 03.03.2008. To ascertain whether this value represent the correct value, it is necessary to find that whether the spray dryer supplied by the appellant is a manufactured goods or it is clearance of bought out goods as such. This aspect needs verification by the adjudicating authority. Appeal allowed by remand.
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2018 (8) TMI 1076
Penalty on partner of firm - Clandestine removal - Held that:- The jurisdictional High Court in the case of Pravin N Shah [2012 (7) TMI 850 - GUJARAT HIGH COURT] held that the since the Partnership firm is penalised, separate penalty is not imposable on partner of the firm because partner is not a separate legal entity and cannot be equate with employee of the firm. No specific rule is attributed to partner. The separate penalty on the partner of the Partnership firm is not imposable - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 1075
By-product, Baggase - explanation I to Rule 6 of CCR, 2004 - N/N. 6/2015-CE(NT) dt. 1.3.2015 - case of Revenue is that bagasse being not an excisable goods and cleared from the factory, against consideration, therefore, would come within the scope of Rule 6 of the CCR, 2004 - Held that:- There is no hesitation to hold that even after amendment to Rule 6 of CCR, 2004, ‘bagasse’ which emerges as a waste/by-product, accordingly, falls outside the scope of the Rule, 6 of the Cenvat Credit Rules, 2004 - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (8) TMI 1074
Imposition of pre-condition to grant the stay - Held that:- Unless the appellate authority volunteers to offer security, Section 55(4) cannot be invoked. In other words, there ought to be a specific reason mentioned why the appellant should meet the pre-condition of depositing any part of the disputed tax - matter remanded to the appellate authority for its consideration of the stay petition, afresh - appeal allowed by way of remand.
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Indian Laws
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2018 (8) TMI 1115
Jurisdiction - National Stock Exchange byelaws - place of arbitration proceedings - rejection of arbitral reward - Held that:- Once courts in Mumbai have exclusive jurisdiction thanks to the agreement dated 03.07.2008, read with the National Stock Exchange bye-laws, it is clear that it is the Mumbai courts and the Mumbai courts alone, before which a Section 34 application can be filed. The arbitration that was conducted at Delhi was only at a convenient venue earmarked by the National Stock Exchange, which is evident on a reading of bye-law 4(a)(iv) read with (xiv) contained in Chapter XI. An application for setting aside an arbitral award will not ordinarily require anything beyond the record that was before the Arbitrator. However, if there are matters not contained in such record, and are relevant to the determination of issues arising under Section 34(2)(a), they may be brought to the notice of the Court by way of affidavits filed by both parties. Cross-examination of persons swearing to the affidavits should not be allowed unless absolutely necessary, as the truth will emerge on a reading of the affidavits filed by both parties. Appeal allowed - decided in favor of appellant.
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