Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 6, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Highlights / Catch Notes
Income Tax
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Time limit for Completion of assessment u/s 153 scrutiny assessment u/s 143(3) - it is a question of fact based on appreciation of evidence produced before the appellate authorities - decided against revenue - HC
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TDS on Compulsory acquisition u/s 194LA price was neither fixed by the statute nor by the principles stated but was agreed by the mutual negotiation - Tribunal has rightly held that there was no compulsory acquisition - Section 194 LA was not applicable - HC
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Indexed cost of acquisition - capital asset acquired under a gift or will - it is not possible to accept the contention of Revenue that the fiction contained in Explanation 1(i)(b) to section 2(42A) of the Act cannot be applied in determining the indexed cost of acquisition under section 48 - AT
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CIT is justified in holding the payment on net present value as afforestation charges in respect of the mining lessees already obtained has been decided and is treated as revenue expenditure - AT
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Expenses incurred on temporary repairs and maintenance on leased premises are in the nature of revenue - AT
Customs
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Power of Tribunal - Commissioner (A) gave 15 days time to Adjudicating Authority to pass re-adjudication order - period is inadequate for the authority below since he is occupied with several adjudication assignments. - AT
Service Tax
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Levy of penalty - payment of service tax and interest before issuance of SCN - Sub-section 3 of section 73 of the Act, prohibits initiation of proceedings for recovery of penalty - HC
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Penalty under Sections 77 and 78 - delayed payment of service tax - The statutory levies cannot be obviated for so long merely because the computer was down - levy of penalty confirmed - AT
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SCN was issued to demand under the category of Transport of goods by air service - demand was confirmed under the category of Cargo handling service - demand set aside - AT
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Advertisement Agency Service - appellants are not undertaking any activity connected with the making, preparation, display etc and the appellants are only collecting the advertising and the same is forwarded to various newspapers for publication - demand set aside - AT
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Valuation - Retreading of tyres - in the case of retreading of tyres where the invoices are showing deemed sale of certain percentage of material the benefit of Notification No. 12/2003 is not available. - AT
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Import of services - the exporter of helium cannot be held to be a storage and warehouse keeper as he has no control over the tanks. - demand set aside - AT
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Waiver of pre-deposit - Passive Telecom Infra Services - Services is more appropriately classifiable under Business Support Service where the present demand is in the Business Auxiliary Service - stay granted - AT
Central Excise
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Valuation - excisable goods cleared by M/s. RIL to their own units situated elsewhere in the country - value needs to be determined in the case of captive consumption - AT
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Valuation - sale through depots - Revenue cannot pick only those matters where the goods were sold at higher rates from the depot and ignore the clearances which were ultimately sold at a lower value, though the duty was paid at the higher assessable value - AT
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Extended period of limitation - non payment of duty on crossing the SSI exemption limit - Bonafide belief - the appellant did not submit details sought by the department and continued to drag the issue by prolonged correspondence - demand and penalty confirmed - AT
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Deemed Manufacture - affixing labels and MRPs - no additional excise duty liability accrues as the additional customs duty (CVD) liability has been discharged on the MRP affixed and the entire exercise is revenue neutral. - demand set aside - AT
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Reversal of credit on Clearance of capital goods manufactured captively - manufacture of Plaster of Paris Moulds for captive consumption and claimed exemption under Notification No.67/95-CE - provisions of Rule 3(5A) would not be applicable - stay granted - AT
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Enhancement in rate of duty on Cigarette - the tariff rate of duty on cigarettes levied vide amendments in the Finance Act, 2012, shall be applicable from the date of enactment of the said Finance Act, i.e. 28.5.2012 and not from 17.3.2012 - AT
VAT
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Determination of sale price - Inclusion of mandi fees payable by the purchaser to the market Committee - it would remain outside the sale price - HC
Case Laws:
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Income Tax
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2014 (8) TMI 152
Claim of deduction u/s 80IB(10) Failure to satisfy various condition Held that:- CBDT has issued a notification dated 3/8/10, whereby it is now notified that any scheme approved under Regulation 33(10) of DCR for Greater Mumbai 1991, and by the SRE for Slum Rehabilitation would be valid for the purpose of Clause- a and b of section 80 IB (10) of the Act - the amended provisions of law will not apply and so long as per the plans approved by the concerned authorities, the built up area of each flat is less than 1000 sq.ft. the deduction u/s 80IB(10) of the Act cannot be denied to the Assessee on the ground that two flats as per approved plan lying adjacent to each other have been combined into one flat and owned by one owner or jointly with some of the members of his family - the rejection of the claim of the assessee for deduction u/s 80 IB(10) on this account cannot be sustained - the rejection of the claim of the assessee for deduction u/s 80 IB(10) cannot be sustained Decided partly in favour of Assessee.
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2014 (8) TMI 123
Disallowance u/s 40A(8) borrowings were taken for the purpose of payment of tax - Held that:- Following the decision in Hindustan Cocoa Products Ltd. v/s Commissioner of Income Tax, reported in [1998 (11) TMI 115 - BOMBAY High Court] - the benefit of section 80V would be available to the Assessee if the borrowings were taken for the purpose of payment of tax - the deposits were primarily taken for the payment of taxes Decided against Revenue. Interpretation of Rule 6D Re-computation of disallowance expenditure incurred by the Assessee in connection with the travel of an employee - Held that:- Following the decision in Commissioner of Income Tax v/s AOROW India Ltd., reported in [1997 (7) TMI 92 - BOMBAY High Court] - the Assessee had incurred certain expenditure in connection with the travel of its employees including hotel expenses and allowance ITO computed the disallowance out of expenditure u/s 37(3) of the Act r.w Rule 6D - the ITO took into account the total expenditure incurred by each employee in each trip undertaken by him - CIT (A) held that the disallowance under Rule 6D should be worked out by taking into consideration all the trips undertaken by the employee during the year together and not on the basis of each trip Decided in favour of Revenue.
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2014 (8) TMI 122
Notice u/s 133(6) requiring Sub Registrars to furnish information in respect of transactions relating to immovable property of a value between ₹ 5,00,000/- and ₹ 30,00,000/- Held that:- A meeting had taken place when both the Income Tax Department as well as the registering authorities of the State had agreed to work together to resolve the dispute the Court directed the Chief Commissioner of Income Tax, Lucknow and the Inspector General (Stamps and Registration) to hold a further meeting so that the Court could be apprised whether the dispute has been resolved - the dispute has been resolved at the meeting which was held on 17 July 2014. The meeting concluded with the resolution that the SROs shall provide the information called for by the Income Tax Department, as agreed above. However, this shall be without prejudice to the legality of applicability of penal provisions for non-furnishing of information u/s 133(6) in the case of SROs. Thus, the position has been agreed between the Registering Department of the State and the Income Tax Department of the Union Government, no further directions are sought in these proceedings.
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2014 (8) TMI 121
Time limit for Completion of assessment u/s 153 scrutiny assessment u/s 143(3) - Held that:- The FAA held that no evidence was produced by the department to indicate that the assessment order was made on 26.12.2008 and it was dispatched along with the notice of demand on or before 31.12.2008 to the assessee - the appellate authority has found that the acknowledgement slip pasted at the back of the notice bore the date of receipt as 12.1.2009 - the FAA as well as the second appellate authority came to the conclusion that the assessment order was passed after the period of limitation - The question as to whether the assessment order was passed within the period of limitation or not is a question of fact based on appreciation of evidence produced before the appellate authorities no substantial question of law arises for consideration Decided against Revenue.
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2014 (8) TMI 120
Admission of appeal Whether the Tribunal committed any error of law apparent on the face of the record or acted perversely in directing the AO - Held that:- The Appeal does not raise any substantial question of law - The Tribunal was called upon to decide the matter afresh and denovo - If the earlier orders passed by the Tribunal and the Court were set aside by the Supreme Court and the matter was remitted for denovo consideration to the Tribunal, then, there was no reason to hold as to how the Supreme Court's order and in the given facts and circumstances could be seen as restricted only to one aspect - If the Appeal was to be reheard again, the Tribunal did not commit any error in deciding all aspects of the matter and which were subject matter of the Appeal - when an opportunity has to be given in terms of the Supreme Court's order to the Assessee, then, it could not be held that as to how the Tribunal committed any error of law apparent on the face of the record or acted perversely in directing the AO to examine the aspect Decided against Revenue.
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2014 (8) TMI 119
Share capital and reserves - Investment in tax free securities/ investments represented in assessees own funds or not Held that:- Following the decision in The Commissioner of Income Tax Versus Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - HIGH COURT BOMBAY] - the Assessee's own funds and other non-interest bearing funds were more than the investment in the tax-free securities - the Assessee's capital, profit reserves, surplus and current account deposits were higher than the investment in the tax-free securities - the investment made by the Assessee would be out of the interest-free funds available with the Assessee - the Tribunal had erred in dismissing the Appeal Decided against Revenue. Broken period interest Allowable as deduction or not Held that:- There was no infirmity in the orders passed by the CIT (A) or the Tribunal Tribunal have merely followed the judgment of the Court in the case of American Express International Banking Corporation v/s Commissioner of Income Tax [2002 (9) TMI 96 - BOMBAY High Court] no substantial question of law arises for consideration Decided against Revneue.
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2014 (8) TMI 118
Valuation made by assessee not accepted - Whether the rates fixed by the State P.W.D. or the Central P.W.D. should be adopted Held that:- Construction is in the temple city of Kumbakonam, which is not a Metropolitan town - the State P.W.D was authorised to give valuation for all constructions in the State of Tamil Nadu - the assessee's property is in the State of Tamil Nadu - There cannot be a different yardstick adopted for valuation within the State Relying upon T.M.P.N.Murugesan -vs- Commissioner of Income-tax [2014 (8) TMI 57 - MADRAS HIGH COURT] - Revenue should give credence to the valuation of the State P.W.D. in relation to the value of construction either on the side of the assessee or on the side of the Department - there is no specific notification or circular indicating that CPWD rate alone should be adopted in arriving at the cost of construction, the Tribunal is justified in adopting the valuation of the State P.W.D. rates for the purpose of determining the cost of construction Decided against Revenue.
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2014 (8) TMI 117
Reopening of assessment u/s 147 r.w 148 - Details of interest payment to relatives in the Return of income not considered Held that:- Tribunal was of the view that the assessee did furnish the relevant information asked for by the AO - the reasonableness of the interest was explained - there was no failure on the part of the assessee to disclose all the facts truly and correctly and held that the reassessment proceedings, initiated after a period of 4 years, required to be quashed and set aside revenue is not in a position to demonstrate how the findings recorded by the Tribunal is arbitrary or perverse thus, when the initiation of the reassessment proceedings itself is found to be illegal and beyond the scope of the relevant provisions of the Act, Tribunal has rightly held that there is no illegality committed by the assessee in paying interest at the rate of 24% to the related parties Decided against Revenue.
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2014 (8) TMI 116
Reopening of assessment u/s 148 Carry forward of losses Held that:- When the case was reopened looking into certain discrepancy the action of the AO is correct because the aseessee filed revised return of AY 2003-04 wherein the losses of earlier years were not claimed - The revised return was filed and when the AO concluded that the losses were not carry forward in the revised return as well, that the finding of such a claim having been given up, has been rendered - there was no satisfactory explanation given for the losses claimed in the earlier years and except for AY 2002-03 the Tribunal did not commit any error of law apparent on the face of the record, or perversity in dismissing the assessee's appeal and upholding the concurrent view - it is the claim and which was based on the carry forward of the past losses, it is held to have been given up thus, no substantial question of law arises for consideration Decided against Assessee.
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2014 (8) TMI 115
Penalty u/s 271(1)(c) Voluntary donations received from different persons Failure to substantiate claim - Tribunal was of the view that it is not necessary that the voluntary contribution should be made with a specific direction to treat as corpus - on part of the donation, which is considered as income u/s 12 of the Act, penalty u/s 271(1)(c) is not leviable as the assessee has truly and fully disclosed all the facts in its Return of Income Relying upon CIT Vs. Reliance Petro Products Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] - Assessee was under bona fide belief that he was legally entitled to treat ₹ 1,08,80,765 as corpus donation and when the CIT(A) accepted the contention on behalf of the assessee to the extent of ₹ 60,25,000 as corpus donation and with respect to ₹ 38,07,354, out of the amount, was considered as income u/s 12 of the Act, Tribunal has rightly cancelled the penalty imposed on the assessee u/s 271(1)(c) of the Act the order of the Tribunal is upheld for deleting / canceling the penalty imposed u/s 271(1)(c) of the Act Decided against Revenue.
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2014 (8) TMI 114
TDS on Compulsory acquisition u/s 194LA Land acquired by agreement - Whether the land acquired by agreement by the Assessee under the Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 is compulsory acquisition within the meaning of section 194 LA or not Held that:- There is a purchase of the whole or any part of any statutory undertaking under any enactment in that behalf prescribing the terms on which the purchase is to be effected, the provisions of the Land Compensation Act 1961 as to compulsory acquisitions of land are excluded u/s 36(1) and the transfer of industries to public ownership did not amount to a compulsory purchase or sale - in a case of compulsory acquisition, the seller has no option - He can neither refuse to sell his land nor can he negotiate the price - The price is fixed by the statute itself. The property was not acquired under the LA-Act but under the Nivesh-Act - the seller had no option but to sell the property to the Assessee - the property was not acquired under the LA-Act and it was acquired only by agreement - after the mutual agreement between the parties, the price was stated in a notification by the Assessee, does not make it a compulsory acquisition thus, in case of compulsory acquisition the seller has neither option to opt out of the acquisition nor can he negotiate the price - price was neither fixed by the statute nor by the principles stated but was agreed by the mutual negotiation - Tribunal has rightly held that there was no compulsory acquisition - Section 194 LA was not applicable Decided against Revenue.
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2014 (8) TMI 113
TDS on Labour Charges paid u/s 194C Held that:- The assessee has furnished party-wise details before the AO - labour charges have been paid to 113 parties - assessee has also given the details in respect of those parties where no tax was deducted at source - AO has disallowed labour charges of which no tax was deducted at source in a summary manner without giving any specific finding or pointing out how the provisions of Sec. 194C apply on these payments which also included purchase of material the issue needs re-verification thus, the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee. Deduction u/s 80P(2)(vi) Held that:- The decision relied upon does not apply to the Appellate authorities thus, the matter is remitted back to the AO for examination of the claim of the assessee as per the provisions of law and in particular Sec. 80P(2)(vi) of the Act Decided in favour of assessee.
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2014 (8) TMI 112
Income treated as STCG and LTCG instead of business income Sale of shares - Held that:- The assessee has entered into 85 transactions which means roughly 1.16 transactions in every 5 days or 6.98 transactions per month - this cannot be considered to be that the assessee was engaged in high frequency transactions relying upon CIT v/s Madan Gopal Radhey Lal, [1968 (9) TMI 14 - SUPREME Court] - there is no reference to the utilization of borrowed capital for the purchase of shares - The claim of the Revenue that the holding period is less than a month does not hold any water because the legislature itself has made distinction between the STCG and LTCG holding - If the shares are held for less than 12 months, the gains will be treated as STCG - Except in one scrip, which is Master Trust, there is no evidence on record to show that the assessee has been churning same shares the order of the CIT(A) is upheld Decided against Revenue.
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2014 (8) TMI 111
Indexed cost of acquisition - Property inheritance as per Explanation-(iii) to section-48 Held that:- The cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of assets incurred or borne by previous owner or the assessee as the case may be Following the decision in DCIT vs. Manjula J. Shah [2009 (10) TMI 646 - ITAT MUMBAI] - when the Legislature by introducing the deeming fiction seeks to tax the gains arising on transfer of a capital asset acquired under a gift or will and the capital gains under section 48 of the Act has to be computed by applying the deemed fiction, it is not possible to accept the contention of Revenue that the fiction contained in Explanation 1(i)(b) to section 2(42A) of the Act cannot be applied in determining the indexed cost of acquisition under section 48 of the Act Decided against Revenue.
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2014 (8) TMI 110
Rectification of order Mistake apparent on record Held that:- Even though copy of a letter purporting to file additional grounds has been furnished - copy of the letter furnished as evidence of the claim, does not bear any authentic stamp/seal with the signature of the recipient of the Registry of the Tribunal, with whom it might have been filed, and secondly and more importantly, it does not contain the enclosure, viz. the additional grounds sought to be raised - evidence furnished cannot be taken as clinching to support the version of the applicant - The position also corroborated by the contentions of the counsel for the assessee during the course of these rectification proceedings, the contention of the Revenue of having raised any additional grounds during the course of appeal proceedings before the Tribunal or any mistake in the order of the Tribunal on account of non-consideration of grounds, is devoid of merit. The assessee has to share 15% of the gross maintenance receipts collected during the year with the owner of the building i.e. Deep Corporation Pvt. Ltd and taking into account the stipulation made in the agreement it is a diversion of income at source and not an expenditure in the hands of the assessee - the order of the CIT(A) in deleting the disallowance made by the AO in invoking the provisions of section 40a(ia) Decided Partly in favour of Revenue.
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2014 (8) TMI 109
Ex-parte order passed - Principles of natural justice Opportunity of being heard Held that:- CIT(A) is required to allow proper and sufficient opportunity of being heard to the assessee - order passed by the CIT(A) is not in accordance with the relevant provisions of the Act as contained in section 250 of the Act thus, the matter is remitted back to the CIT(A) for fresh adjudication Decided in favour of Assessee.
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2014 (8) TMI 108
Estimation of net profit at 4.25 of turnover AO estimated the same at 20% - Held that:- An estimate, assuming existence of grounds for the exercise of that power by the assessing authority has to be an honest and fair estimate, taking into account all the relevant material, which the AO is in fact obliged to gather, shorn of arbitrariness and capriciousness relying upon Brij Bhushan Lal, Parduman Kumar vs. CIT [1978 (10) TMI 2 - SUPREME Court] - AOs estimate suffers from the malice of arbitrariness, and there was no basis in law to support the same thus, the order of the CIT(A) is upheld Decided against Revenue.
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2014 (8) TMI 107
Interest expenses u/s 14A r.w. Rule 8D Held that:- Assessee had earned tax free income in the form of dividend which is exempt from tax - the interest free funds available with the Assessee are in excess of investments Relying upon CIT vs. Amod Stamping P. Ltd.[2014 (7) TMI 753 - GUJARAT HIGH COURT] - when Assessee was having interest free funds far in excess of investment it can be said that the investments are made out of interest free funds - when interest income was more than the interest expenditure than the AO was not justified to invoke the provisions of Section 14A read with Rule 8D of the Act - disallowance of Rs. one lac on account of administrative expenses which has been upheld by CIT(A) and against which Assessee is not an appeal, no disallowance on account of interest u/s 14A read with Rule 8D is called for Decided in favour of Assessee.
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2014 (8) TMI 106
Rejection of comparables and selection of fresh comparables - Rejection of economic and comparability analysis - Rejection of Business Activity profile - Comparables selected by Assessing Officer/TPO - The assessee is a wholly owned subsdiary of Tecnimont ICB Pvt. Ltd. and engaged in the execution of computer software and information technology enabled services, engineering design under the software development park scheme of Govt. of India - the TPO has not undertaken the exercise of comparing the actual functions and business profile of the assessee with the comparables selected by the assessee but the rejection of the comparables selected by the assessee is based only on the ground of BPO and KPO services Relying upon Maersk Global Centres (India) (P.) Ltd. Versus Assistant Commissioner of Income-tax [2014 (3) TMI 891 - ITAT MUMBAI] - the classification of Information Technology Enabled Services (ITES) into low-end BPO services and high-end KPO services for comparability analysis is not just and proper, and, therefore, the action of the TPO in rejecting the comparables by applying the criteria of BPO and KPO is not sustainable. The assessee has used the segmental data for determining the arm's length price and taken the mean profit of each comparable only from the segmental data/results - the objection of using multiple year data ceased to exist - once the criteria adopted by the TPO for rejecting the comparable of the set of companies selected by the assessee is not found proper then the comparability has to be analysed on the basis of real nature of the business activities of the assessee as well as the comparables and further where the segmental data are used then the only business activity of the particular segment of comparable has to be compared with the business activity of the assessee. The business profile of the six comparables selected by the assessee and particularity the segment of engineering design services are similar to that of the assessee's services provided to the AEs, therefore, when the International transaction of the assessee company in respect of the services provided to the AEs are similar to the business profile of the comparables and a particular segment of the comparable then the rejection of the comparables selected by the assessee is not proper and justified. Margin of comparable companies as documented in the transfer pricing study of EDTICB plus the companies adopted by the learned TPO Held that:- The assessee also filed the computation which shows that the assessee's operating profit by using PLI as OP/OC from the international transaction is 24.17% which is more than the arithmetic mean/ALP based on the set of eleven comparables including the assessee's as well as the TPO's selected companies - even after accepting the comparable companies selected by the assessee, the TPO has power u/s 92 CA(3) to gather and consider all relevant materials and information apart from the evidence, information and documents provided by assessee as required under section 92 D(3) of Income-tax Act to determine the ALP in relation to the international transaction - under the provisions of transfer pricing the TPO is not precluded from carrying out fresh search for gathering more relevant information for the purpose of determining the ALP - large size of comparable would give better and adequate representation of uncontrolled price in turn a proper and more realistic price can be determined to compare with the price of international transaction - assessee's international transactions are at arm's length and, therefore, no adjustment is called for Decided partly in favour of Assessee.
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2014 (8) TMI 105
Claim of exemption u/s 10B - Under-pricing of sales to sister concern Held that:- In the case of sister concern M/s. Ramacanta Velingkar Minerals and on facts, it has been held that no under invoicing or underpricing has been done by the assessee of its sales made to sister concern AO applied the rates of processed fine ore with ROM and wrongly concluded the rates were not properly charged - The price of Rom varies between ₹ 360 to ₹ 575 for per tonne whereas the assessee has charged ₹ 450 tonne which shows that assessee has sold the ore at the market rate - CIT(A) is justified in his action Relying upon CIT(A) Vs. Calcutta Discount [1973 (4) TMI 6 - SUPREME Court] - when one trader transfers his goods to another trader at a price less than the market price, the taxing authority cannot take into consideration the market price of these goods, ignoring the real price fetch. Also in Marghbhai K. Patel & Co. Vs. CIT [1976 (2) TMI 15 - GUJARAT High Court] it has been held that the taxing authorities has no right to substitute the market price or average price in place of agreed price - unless it has been shown that the transaction in question was a sham one or unless the value shown was not the value in the books of account or unless it was not the value in the books of account or unless it was not bona fide transaction, it is not open to the taxing authorities to disregard the figures of the transactions shown in the books of account and disallow a part of price paid to partners in respect of purchases made by them thus, the order of the CIT(A) is upheld Decided against Revenue. Afforestation Expenses Capital in nature or not Held that:- The assessee has paid the 'compensation' for use of forest area for mining - Forest area/land used by assessee is a capital asset and anything paid for acquiring a capital asset is capital expenditure and not a revenue expenditure - the assessee has not acquired any capital asset but assessee has paid the amount of compensation for carrying out mining activities and the assessee has paid compensation as charges for degrading the forest land and the expenditure is incurred wholly and exclusively for the purpose of mining business and same has been treated as revenue expenditure by CIT(A) relying upon Deputy Commissioner of Income Tax vs. Timblo Pvt. Ltd. in Tax [2014 (7) TMI 1086 - BOMBAY HIGH COURT] CIT is justified in holding the payment on net present value as afforestation charges in respect of the mining lessees already obtained has been decided and is treated as revenue expenditure Decided against Revenue. Contribution towards construction of bridge Held that:- The assessee has paid by way of contribution for construction and development of roads between sugarcane producing centre and sugar factory of the assessee - the close proximity existed between construction of the road and running of factory - assessee has made contribution to the Govt. for construction of the bridge - The bridge was owned by the State Government and it is used by general public as well as mining companies and truck owners - The construction of the bridge is not a statutory obligation but it is a duty of the State Government the AO himself has treated this expenditure as capital expenditure the expenditure is in revenue nature and is allowed Decided in favour of Assessee.
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2014 (8) TMI 104
Expenses incurred on temporary repairs and maintenance on leased premises treated as capital expenses Held that:- The expenditure incurred by the assessee was in order to meet these business requirements - renovation expenses were in connection with modifying the cabins, cubicles, laying good marbles, painting and other related expenditure - repair / renovation work carried out at the premises which were not owned by the assessee but were taken on lease - The expenditure incurred has not created any capital asset nor it has given the benefit of enduring nature - None of the expenditure entails any structural change or extension or improvement of the building, therefore, Explanation 1 to section 32(1) will not be applicable. The nature of expenditure incurred by the assessee on the premises taken on rent was in the nature of revenue since no new asset has been created and the changes were made by the assessee for efficiently carrying on its business and the items on which expenditure was made could not be reused on vacation of premises - it cannot be said that the expenditure incurred by the assessee on repair and renovation was in the nature of capital - The premises belonged to the directors of the company who had more than 50 percent share. Whether on the basis of explanation-1 to Section 32(1) it can be said that despite being expenditure in the nature of revenue the assessee will only be entitled for depreciation Held that:- Sub-section (1A) and subsequent omission of Sub-section (1A) and insertion of explanation-1 after the second proviso to Section 32(1)(iii) are brought to the statute only for the reason that in a case where capital expenditure is incurred by the assessee in respect of building not owned by him in that case there was no provision in the Act for grant of depreciation or any other deduction and to meet such hardship faced by such assessee, the benefit of depreciation was provided - The pre-condition to invoke the provision of explanation-1 after the second proviso to Section 32(1)(iii) is that expenditure itself should be capital in nature - If the expenditure by its nature itself is not capital in nature and its nature is revenue then provisions of explanation-1 after second proviso to section 32(1)(iii) will not be applicable at all - It has already been pointed out that the nature of expenditure incurred by the assessee in respect of renovation, or extension or improvement to the building not belonging to assessee are in the nature of revenue - even on the basis of explanation1 after the second proviso to Section 32(1)(iii), the assessee cannot be denied for the deduction of impugned expenses which are revenue in nature Decided in favour of Assessee.
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Customs
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2014 (8) TMI 128
Power of Tribunal - Commissioner (A) gave 15 days time to Adjudicating Authority to pass re-adjudication order - Held that:- period is inadequate for the authority below since he is occupied with several adjudication assignments. Therefore, the embargo of 15 days imposed by ld. commissioner (Appeals) is lifted in this case and ld. Adjudicating Authority shall dispose the matter within three months from the receipt of this order issuing notice of hearing to the respondent. On hearing the defence both on fact and law, the authority shall pass appropriate order - Decided against Revenue.
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2014 (8) TMI 127
Denial of the benefit of Exemption No.21/2002 dt.1.3.2000 - Import of "Electrical Steel Sheets in Coils-Seconds" - Confiscation of goods - Redemption fine - Misdeclaration of goods - Held that:- appellant had not refuted the finding of the Adjudicating authority. Therefore, the contention of the appellant that they were under bonafide belief, cannot be accepted. In view of that, we do not find any reason to interfere with the order of the adjudicating authority - Decided against assessee.
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2014 (8) TMI 126
Penalty u/s 114 - lack of knowledge of contraband article - Whether penalty under Section 114(i) of the Customs Act, 1962 is imposable upon the appellant - Held that:- appellant was well aware of the fact the Red Sanders wood was loaded on to the Vessel MSV Ramban at Veraval which was subsequently towed to Gulf countries and also that he was aware of the fact that taking out Red Sanders wood from a port in India to a place outside India was not permitted. He was also aware that such wood was not to be declared to the Customs. The statements of the appellant recorded by the investigation were never retracted but have also been corroborated by the other statements. In the case of smuggling and clandestine activities under the Customs Act it is difficult to expect that other documentary evidences will be created by the persons involved and in such cases only corroborative statements have to be relied upon. In view of the above observations, appellant does not have a case and penalty was correctly imposed by the adjudicating authority - decided against assessee.
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2014 (8) TMI 125
Restoration and/ or recalling and/ or modifying and / or varying of the Tribunal's Order - non-compliance with the direction of predeposit - Bar of limitation - Held that:- both the Applicants have been represented though a common Advocate and made a common plea that they have already deposited an amount of ₹ 7,71,153/- and made a fair offer to deposit ₹ 22.00 lakhs. Consequently, the Applicants were directed to pre-deposit the said amount. Therefore, it is not correct to say that the present Applicant, Shri Ajay Kumar Kedia, has not been directed along with the Appellant-Company, M/s Computech International to deposit the offered amount - present miscellaneous application is nothing, but seeking rectification of the order of this Bench dated 26.09.2012. The time limit for such rectification is six moths from the date of communication of this order as prescribed under Section 129B (2) of the Customs Act, 1962. In the present case, the Applicant had filed the miscellaneous application after around 15 months from the date of the order, hence, it is also barred by limitation - Decided against assessee.
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2014 (8) TMI 124
Confiscation of goods - import of goods declared as used photocopier parts - Under valuation of goods - Redemption fine - Commissioner (Appeals) set aside the fine and penalty - Held that:- Since the goods were old and used parts of photocopiers they were liable to confiscation under section 111 (d) of the Customs Act read with section 3(3) FT (D&R) Act 1993. To that extent, I uphold the order of the adjudicating authority. However, the redemption fine imposed by the adjudicating authority is reduced to ₹ 40,000/- (Rupees Forty thousand only) and penalty is reduced to ₹ 20,000 - Decided partly in favour of Revenue.
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Service Tax
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2014 (8) TMI 151
Levy of penalty - payment of service tax and interest before issuance of SCN - Manpower recruitment and supply agency - Tribunal deleted penalty - Held that:- It is true that as per Sub-section (4), penalty may still attach if there is non-payment of Service Tax by reason of fraud, collusion, wilful mis-statement, suppression of facts or contravention of provisions of the statute with intent to evade payment of Service Tax - Since the recipient company had claimed Cenvat credit on the service tax remitted by the assessee, eventually no liability was incurred by the service recipient and amount of service tax remitted by the assessee was also reimbursed by the recipient - where an assessee has paid both the service ax and interest before issuance of a show cause notice under the Act, sub-section 3 of section 73 of the Act, prohibits initiation of proceedings for recovery of penalty - When there is a finding of fact that this was not a case of non-payment of Service Tax with intent to evade the payment of the same, question of applying Sub-section (4) of Section 73 of the Finance Act, 1994 and resultantly exclusion of application of Sub-section (3) thereof, would not arise - Decided against Revenue.
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2014 (8) TMI 150
Denial of refund of duty and interest - Petitioner filed application claiming refund of service tax wrongly paid by their collecting agent on services provided to them - Competent authority rejected refund claim and addressed an communication instead of passing an order - Whether competent authority was obliged to hear petitioner and consider its claim on its own merits and in accordance with law - Held that:- exercise contemplated by law is quasi judicial in nature, we are of the opinion that such communication cannot be sustained. In the given facts and circumstances the Competent Authority was obliged to hear the petitioner and consider its claim on its own merits and in accordance with law. Thereafter it was expected that the Competent Authority should pass a reasoned order and duly communicate it to the petitioner. - It is such an exercise that is contemplated in the given facts and circumstances. Since we have found that the same has not been undertaken, the communication cannot be sustained. It is accordingly quashed and set aside - Decided in favour of assessee.
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2014 (8) TMI 149
Valuation of services - exclusion of cost of the study material from the taxable quantum of services - Notification No. 12/2003-ST, dated June 20, 2003 - Held that:- Order of the Tribunal to exclude the cost of such material from the quantification of the service tax provided by the assessee have been rightly allowed. The study material supplied by Bulls Eye is quanti fiable separately. The condition in the circular relates to the services of reading material and textbooks provided by the assessee-institute and not books purchased from another supplier. Such goods can be quantified by the price paid. Therefore, the amount of such goods have been rightly excluded in terms of Notification No. 12/2003-ST, dated June 20, 2003 - No substantial question of law arises - Decided against Revenue.
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2014 (8) TMI 148
Penalty under Sections 77 and 78 - delayed payment of service tax - Dry cleaning service - Held that:- While it is admitted that in the order portion the original adjudicating authority has referred to section 80 for not imposing penalty under Section 76, on holistic reading of order-in-original as well as order-in-appeal it is abundantly clear that having imposed penalty under Section 78, penalty under Section 76 was not imposed as it would tantamount to imposing double penalty. There is even a whisper to the effect that Section 80 ibid has even been considered for the purpose of not imposing penalty under Section 76. Thus, a mere mention of Section 80 in the order portion is nothing more than an inadvertence of no consequence. Reasons for delayed payment of service tax - Held that:- The statutory levies cannot be obviated for so long merely because the computer was down. Further, even if the computer was down, the appellant could have filed the return manually and paid service tax by computing the same manually. Further even if their untenable argument is considered for a moment, being aware that they had not paid service tax due and not filed statutory ST-3 returns for so long, if their bonafides were above board, they should/ would have atleast informed the department about it. It was only when the raid was conducted and they were caught, that they admitted their violations. It is pertinent to note that the appellants have not claimed that they were not aware of their liability. Thus the ingredients for invoking the provisions of Section 78 are conspicuously present in this case and penalty of ₹ 1000/- imposed under Section 77 is also obviously imposable - Decided against assessee.
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2014 (8) TMI 147
Taxability of Break Bulk Fees - Scope of show cause notice - SCN was issued to demand under the category of Transport of goods by air service - demand was confirmed under the category of Cargo handling service - Held that:- The appellants were not put to notice regarding confirming the demand under the category of cargo handling service whereas in the show cause notice the demand was on the ground that the appellants were providing transportation of goods by air service. In these circumstances, we have no hesitation to say that the impugned order is beyond the scope of show cause notice. - Demand set aside - Decided in favor of assessee.
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2014 (8) TMI 146
Advertisement Agency Service - activity in respect of making, preparation, display or exhibition etc of advertisement - Held that:- In the adjudication order dated 15.6.2011 there is a specific finding that the appellant was not engaged in making, preparation, display or exhibition of advertisement. The Commissioner (Appeals) in the impugned order also held that the appellants are engaged in collecting advertisement from Mulay Group of Companies and forwarding the same to the desired newspaper. Hence this activity shows that the appellants are engaged in the activity which is connected with the activity of advertisement published. As per Section 65 (3) of the Finance Act, 1994 advertisement agency means "any person engaged in providing any service connected with the making, preparation, display or exhibition of advertisement and includes on advertising consultant". A reading of the definition of "advertising agency" shows that a person should be engaged in providing any service connected with the making, preparation, display or exhibition of advertisement. The admitted fact is that the appellants are not undertaking any activity connected with the making, preparation, display etc and the appellants are only collecting the advertising and the same is forwarded to various newspapers for publication. decided in favour of assessee.
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2014 (8) TMI 145
Valuation - Retreading of tyres - Management Maintenance & Repairs Service - Commissioner (Appeals) held that the cost of the rubber used for retreading of tyres is not to be taken into consideration while arriving at the assessable value for the purpose of service tax in view of Notification No. 12/2003-ST - Whether the respondents are entitled for the benefit of Notification No. 12/2003-ST - Held that:- as per the provisions of the Notification, there is a specific condition that there should be documentary proof specifically showing the value of material sold. In the present case, the respondents were clearing the goods under the consolidated invoice and uniformly charging taking 60% towards the value of the material and 40% towards service. There is no separate invoice regarding the actual sale of goods and material - in the case of retreading of tyres where the invoices are showing deemed sale of certain percentage of material the benefit of Notification No. 12/2003 is not available. The Tribunal further held that the material used for repairs of tyres cannot be considered as spare - order whereby the Commissioner (Appeals) allowed the benefit of Notification No. 12/2003-ST is set aside and the order passed by the adjudicating authority in this regard is restored - Following decision of Ador Fontech Ltd. [2014 (7) TMI 1008 - CESTAT MUMBAI] - Decided in favour of Revenue.
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2014 (8) TMI 144
Import of services - receipt of storage and warehousing service from the foreign service provider - possession and effective control of the tank - reverse charge - ection 66A of the Finance Act read with Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 - Held that:- admitted facts are that the appellants are importing helium in the tanks. As the helium is to be stored at extremely low temperature i.e. 269 0 C hence the same is imported and transported in vacuum insulated tanks. Admittedly, the appellants are paying rent in respect of the insulated tanks in which helium is imported. The appellants are paying rentals calculated from the date of bill of lading ex-Dubai till the date of bill of lading ex-Mumbai towards the shipment of empty container from Mumbai towards the shipment of empty container from Mumbai to New York. - the exporter has no control over the tanks. Circular dated 1.8.2002 clarified regarding the scope of warehousing service. - It has been clarified that mere renting of space cannot be said to be in the nature of service provided for storage and warehousing of goods. Essential test is whether the storage keeper provides for security of goods, stacking, loading/unloading of the goods in the storage area. - the exporter of helium cannot be held to be a storage and warehouse keeper as he has no control over the tanks. - demand set aside - decided in favor of assessee.
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2014 (8) TMI 143
Payment of service tax under wrong accounting code - Port Services and Renting of immovable properties services - Held that:- since the appellant is claiming that they have discharged/paying the amount of service tax liability under the head Renting of Immovable Property and tries to justify with random challans produced before us, we are of the view that issue needs reconsideration by the adjudicating authority. - matter remanded back for verification.
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2014 (8) TMI 142
Waiver of pre-deposit - Passive Telecom Infra Services - Held that:- Tribunal in the case of B.S.N.L. Vs. Commissioner of Central Excise, Jaipur-I [2012 (7) TMI 505 - CESTAT, NEW DELHI] held that Passive Telecom Infrastructure Services is more appropriately classifiable under Business Support Service where the present demand is in the Business Auxiliary Service and applicants are paying appropriate service tax after the introduction of business support service w.e.f. 1.5.2006. In view of this, we find that amount of ₹ 95,00,000/- deposited is sufficient for hearing of the appeal against the demand of International Inbound Roaming, Inter Usage Charges, Passive Telecom Infra Services and Credit availed on Customs Cess. Supply of Sim card - Held that:- sale of Sim Cards are not sale of goods but services and service tax is leviable as on supply of Sim Cards. Hence, the demand in respect of supply of Sim Cards is rightly made. - the applicants are directed to deposit 50% of the amount in respect of the supply of Sim Cards - stay granted partly.
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Central Excise
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2014 (8) TMI 153
Clearance cement in bags without affixing MRP to contractors engaged in construction activity - Exemption under Sl. No. 1C of the Notification No. 4/2006-C.E. dated 1.3.2006 - mis-declaration of the category of consumers - demand of differential duty - Held that:- it was appropriate for the Commissioner to consider the purchase orders and declaration filed by the appellant and record a finding and thereafter come to a conclusion. Besides, the appellant relied upon several decisions on the very same issue. Even though those decisions were not before the Commissioner, the same should be considered before a conclusion is arrived at. Even though this was not an issue in the show-cause notice and proposed demand of differential duty at Tariff rate, there is no finding as to what is the rate of duty and no quantification on this ground also. Besides, the appellant claims before us that they have deposited an amount of ₹ 42 lakhs towards differential duty during the cement bags were cleared after affixing MRP. Matter remanded back - Decided in favour of assessee.
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2014 (8) TMI 138
Utilization of ineligible CENVAT Credit - default in terms of Rule 8(3A) - Interest - Penalty u/s 11AC - excise duty beyond the permissible period of time of 30 days - Utilization of credit after permissible period - Held that:- If the duty liability is not discharged by the due date and the default continues for period of 30 days from the due date, the appellant is prohibited from utilizing the CENVAT Credit for the purpose of payment of duty in respect of the subsequent clearances. In view of this legal provision, the appellant could not have utilized CENVAT Credit to the extent confirmed in the impugned order. Therefore, the appellant has not made out a case for waiver of pre-deposit as prayed in the stay petition. Accordingly, we direct the appellant to make a pre-deposit of ₹ 55,04,474/- in cash within a period of four weeks and report compliance by 24.7.2014. On such payment in cash, the appellant would also be entitled to take equivalent credit in their CENVAT Credit account. On such compliance, the pre-deposit of balance of dues adjudged shall stand waived and recovery thereof stayed during the pendency of the appeal - Conditional stay granted.
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2014 (8) TMI 137
Demand of differential duty - Determination of correct assessable value - excisable goods cleared by M/s. RIL to their own units situated elsewhere in the country - clearances made to assessee's own unit by determining value based on the assessable value of the same products cleared to independent buyers - Held that:- application of Rule 4 is being disputed by the Revenue not on the ground that the said rule is inapplicable to the present case but on the ground that a more specific provision in Rule 8 is available to enable determination of the assessable value. As discussed above, the provisions of Rule 8, in our view, are not applicable to the present case and therefore the value determined by the assessee under Rule 4 deserves acceptance. Even if both the rules, i.e. Rule 4 and Rule 8, were applicable, it would only be logical to read and apply the various rules in the Central Excise Valuation Rules in a sequential manner. Though the Central Excise Valuation Rules, 2000 do not specifically prescribe such sequential application of various rules, the same, in our view, is the only reasonable way to read these rules. Any other interpretation would only lead to confusion and chaos. Since the applicability of Rule 4 is not really in dispute, there was no need to look further and regardless of the applicability or otherwise of Rule 8, the assessable value should have been determined in terms of Rule 4 of the Valuation Rules. Since the issue of valuation of the goods which are cleared for captive consumption to assessee s own units is now settled by the Gangotri Electrocastings Ltd. Vs. CCE & ST, Patna (2012 (7) TMI 321 - CESTAT, KOLKATA) and Ferro Alloys Corporation Ltd. Vs. CCE & ST, Bhubaneshwar-I (2011 (12) TMI 438 - CESTAT KOLKATA); therefore, impugned order is unsustainable and is liable to be set aside - On perusal of the said judgment / order, we find that their Lordships was disposing a writ petition filed by the petitioner therein, for declaring Rule 8 of the Central Excise Valuation (Determination of price of excisable goods) Rules, 2000 as ultra vires of Section 4, Section 37 of the Central Excise Act, 1944 and also ultra vires of Article 14 and 19(1)(g) and Articles 265 and 300-A of the Constitution of India. The said writ petition was dismissed by their Lordships stating the obvious that the said rules were as per the provisions of the Central Excise Act, 1944 and value needs to be determined in the case of captive consumption in accordance with those rules - Decided in favour of assessee.
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2014 (8) TMI 136
Waiver of pre-deposit of penalty - contravention of the provisions of Central Excise Act and the Rules - Held that:- On perusal of the records, it is observed that there is no dispute as to the discharge of differential duty liability and interest thereof by the appellant, before the issuance of show cause notice. The appellant is disputing only the penalty imposed by the Adjudicating Authority - The adjudicating authority has imposed a penalty under Rule 25 of the Central Excise Rule 2002 without recording any findings or reasonings for such imposition of penalty under the said rule. Penalty imposed on the appellant under Rule 25 is uncalled for and is incorrect appreciation of the law - for the imposition of penalty under Rule 25 in a given circumstance, requirement of Section 11AC as to mis-statement etc., needs to be satisfied. As the Adjudicating Authority has himself recorded that there is no intention of evade duty, visiting the appellant with penalty is totally uncalled for - Following decision of Saurashtra Cements Ltd (2010 (9) TMI 422 - GUJARAT HIGH COURT], Harsh Silk Industries (2013 (6) TMI 83 - GUJARAT HIGH COURT) and Mahalaxmi Profiles [2012 (9) TMI 706 - ANDHRA PRADESH HIGH COURT] - Decided in favour of assessee.
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2014 (8) TMI 135
Extended period of limitation - Manufacture - Whether activity of repacking/relabelling of spare parts amounts to manufacture - Held that:- while the parts became liable to duty on the basis of MRP, the activity of repacking/relabelling did not become manufacture at the same time and retrospective amendment was brought about for this purpose. Even though retrospective amendment was brought about in the year 2011 itself, the department has issued the show-cause notice beyond the normal period. Demand has to be within the period prescribed under Section 11A. In this case it cannot be said that appellants had suppressed the facts or deliberately mis-declared to evade payment of duty and in our opinion no case has been made out for invoking extended period. In the absence of case for invoking extended period, the demand for the period beyond the normal period of limitation cannot be sustained. Since the issue falls within a narrow compass and the issue is no longer res integra, we do not consider it appropriate to postpone the matter for final hearing and grant stay at this stage - relied upon the decision in the case of J.K. Spinning and Weaving Mills Ltd. and another Vs. Union of India and others [1987 (10) TMI 51 - SUPREME COURT OF INDIA] - Decided in favour of assessee.
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2014 (8) TMI 134
Valuation - sale through depots - manufacturing and sale of hot rolled coils, cold rolled coils and various other products - Rule 7 of the Central Excise (Valuation) Rules, 2002 - Revenue has only taken into account the clearances made from the Depots where goods are sold at higher value and have not taken those clearances from depots where the goods were cleared at lower value. - Held that:- It is the entire clearances which have to be taken into account and the assessee's liability has to be arrived at accordingly. The Revenue cannot pick only those matters where the goods were sold at higher rates from the depot and ignore the clearances which were ultimately sold at a lower value, though the duty was paid at the higher assessable value. As such, by following the ratio of the above decisions, we set-aside the impugned order and remand the matter to the Commissioner for re-examining the above aspects and also the aspect of limitation - Decided in favour of assessee.
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2014 (8) TMI 133
Extended period of limitation - non payment of duty on crossing the SSI exemption limit - Bonafide belief - manufacturer of bakery products such as biscuits and cakes and also manufactures ice-creams - Held that:- bona fide belief is not a blind belief and bona fide belief has to be formed after consulting experts in the field or after seeking clarification from the department - department has clearly directed the appellant that the appellant's products are excisable and excise duty liability requires to be discharged. In spite of this direction, the appellant chose to dispute this and contended that they are not liable to pay duty as biscuits and other bakery products cannot be treated as excisable products. Thus, despite receipt of the directions from the department, the appellant failed to discharge excise duty liability. Further, the appellant did not submit details sought by the department and continued to drag the issue by prolonged correspondence. In view of the above, suppression of information on the part of the appellant is clearly established - show cause notice is well within the time period of five years and accordingly the demand and interest thereon is sustainable and consequently penalty under Section 11A is also sustainable - Following decision of Commissioner of Central Excise vs. Mehta & Co. [2011 (2) TMI 2 - SUPREME COURT OF INDIA] - Decided against assessee.
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2014 (8) TMI 132
Deemed Manufacture - affixing labels and MRPs on the individual packages of cosmetics and toilet products - department is of the view that the activity of affixing labels and declaring MRPs amounts to manufacture' as the products are notified under the 3 rd Schedule to the Central Excise Tariff Act and therefore, the activity of labelling and affixing MRP amounts to manufacture - Held that:- The excise duty demand on imported goods contained in packages of above 10 grams or 10 ml. is not sustainable in law as the activity of labeling/affixing MRP is a statutory requirement before goods are allowed to be cleared for home consumption and therefore, the import is complete only after these activities are undertaken. Further no additional excise duty liability accrues as the additional customs duty (CVD) liability has been discharged on the MRP affixed and the entire exercise is revenue neutral. As regards the goods contained in packages of 10 grams of 10 ml. or less, the activity of labelling/re-labelling would amount to "manufacture" as there is no statutory requirement of undertaking the said activity before their import can be allowed. However, the appellant would be eligible to take cenvat credit of the CVD paid on such goods. Further, as the entire activity was undertaken with the knowledge and permission of the Customs authorities, the allegation of suppression of facts does not sustain and the duty demand is sustainable only for the normal period of limitation. Since the issue relates to interpretation of law, there is no warrant for imposition of any penalties. Thus the matter is remanded back to the adjudicating authority only for the limited purpose of re-computation of duty demand for the normal period and allowing cenvat credit of the CVD paid on the imported goods, subject to the appellant producing the necessary documentary evidence in this regard. - Decided partly in favour of assessee.
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2014 (8) TMI 131
Manufacture activity or not - activity of filling up of duty paid resin into duty paid plastic container - resin chamber falling under CETH 8421 21 90 and 8421 21 10 - Held that:- the resin is filled into a plastic container and the emerging product HP resin chamber is part of the water filter and as a distinct identity character and use. - therefore, prima facie case is against the assessee. Product is marketable or not - Held that:- In the absence of a sale of the product and in the absence of any evidence of marketability of the product, in terms of definition of goods and in terms of requirements of Section 3 for charging Central Excise duty, whether the Department has a case or not, in our opinion, requires further consideration. Further it was also submitted that the product is exempt from payment of duty under Notification No.25/2008-CE also requires consideration by the Commissioner. Since the amount involved is small, the learned counsel submitted that he has no objection to deposit this amount if the matter is being remand for fresh consideration - assessee directed to make pre-deposit of duty - matter remanded back for fresh decision.
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2014 (8) TMI 130
Waiver of pre-deposit of duty - manufacture of Plaster of Paris Moulds for captive consumption and claimed exemption under Notification No.67/95-CE, dated 16.03.1995 - these goods were repeatedly used and then it was cleared as waste and scrap of POP moulds - Held that:- applicant used duty paid input, input and credit etc., in the manufacture of POP moulds, which was captively used in the manufacture of final product. It appears that POP moulds cannot be treated as duty paid capital goods and prima facie, Rule 3(5A) of Cenvat Credit Rules, 2004 would not apply - Following decision of applicant's own case [2014 (1) TMI 1419 - CESTAT NEW DELHI] - Stay granted.
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2014 (8) TMI 129
Enhancement in rate of duty on Cigarette - Amendment to proposal of Finance Bill 2012 after being introduced - Retrospective or prospective - penalty under Rule 25 of Central Excise Rules, 2002 - Held that:- It is significant to note that the PCTA does not provide for recovery of any dues when the rates are amended upwards subsequent to the introduction of the bill. Therefore, prima facie, it can be viewed that any amendment resulting in increase in the rate of excise duty will not have any retrospective effect - Board has reviewed the clarification given earlier vide Circular No. 981/5/2014-CX dated 11.2.2014 after consulting the Ministry of Law & Justice and as per the revised clarification given in para 9 of the said circular "the tariff rate of duty on cigarettes levied vide amendments in the Finance Act, 2012, shall be applicable from the date of enactment of the said Finance Act, i.e. 28.5.2012 and not from 17.3.2012 - appellant has made out a prima facie case for grant of stay - Stay granted.
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CST, VAT & Sales Tax
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2014 (8) TMI 141
Re opening of assessment - Jurisdiction of Additional Commissioner - Tangible basis for reopening of assessment - Taxability of containers made of plastic @ 8% at the point of sale by a manufacturer or importer by virtue of a notification dated 5 February 2003 - Held that:- It is clear that the notification dated 5 February 2003 refers to plastic buckets, plastic basins, plastic soap case, plastic plates and "other wares and containers made of plastic", amongst other things. The notification does not qualify the expression "containers made of plastic" by the words 'non disposable'. Merely because the notification does not use the expression "disposable containers made of plastic" would not furnish any ground to the Additional Commissioner to permit a reopening of assessment. The Assessing Authority had duly applied its mind to the business activities of the petitioner and as the assessment order would indicate, the authority was conscious of the position that the petitioner manufactures disposable containers. In this view of the matter, there was absolutely no tangible material before the Assistant Commissioner to issue an authorization and the initiation of proceedings would have to be held as being contrary to law. Tax administration must be based on the principles of certainty and stability. Certainty and stability ensure objective, fair and accountable decision making procedures which are fundamental requirements of equality before law under Article 14 of the Constitution. Uncertainty produces chaos and renders the decision making process whimsical and arbitrary. This negates the fundamental right under Article 14 which is a guarantee against non arbitrariness. The precepts of Article 14 can and should be used not only to test the validity of legislative or administrative action but also to enhance that interpretation of the law which will render its administration and implementation fair. The proviso to sub-section (2) of Section 21 lifts the bar of time. But it cannot be construed to confer an unguided or subjective power to the Commissioner to authorise reopening of concluded assessments. The interests of the revenue have to be protected, but the guiding principle is whether the requirements of sub-section (1) are attracted. For that to happen, there must be tangible material. Tangible material ensures that the power is not exercised arbitrarily but for valid reasons contemplated by the statute. - Decided in favour of assessee.
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2014 (8) TMI 140
Disallowance of tax credit - To avoid demand of purchase tax assessee created bogus purchase bills from registered dealers and availed tax credit on the sales tax shown to have been paid by them - Commissioner dismissed appeal for non compliance of pre deposit condition - Tribunal partly allowed appeal by setting aside credit and tax and remanded the matter related to penalty back - Held that:- order under challenge before the Tribunal was one passed by the appellate Commissioner dismissing the appeals of the appellant for want of pre-deposit. The Commissioner insisted that the appellant must deposit ₹ 23,00,400/- by way of pre-deposit. Scope of the appeal before the Tribunal was whether such condition imposed by the Commissioner was correct in law or not. If the Tribunal was of the opinion that the condition was validly imposed, it could have dismissed the appeals of the appellant. If on the other hand, the Tribunal, looking to the facts and circumstances of the case, was of the opinion that any lesser amount or no payment by way of pre-deposit was necessary, it could have provided so. If the appellant had fulfilled such modified condition of pre-deposit, the appellant's appeal would be ripe for hearing before the Commissioner. Under no circumstances, the Tribunal could have bypassed such first appellate authority and directly heard the appeals on merits of the order passed by the Assessing Officer. Firstly, in terms section 73(4) of the VAT Act, no appeal would lie before the Commissioner against an order of assessment unless such appeal is accompanied by satisfactory proof of payment of tax in respect of which the appeal has been preferred. Proviso to sub-section (4) to section 73 enables the appellate authority, for reasons to be recorded in writing, to entertain such appeal without payment of tax and penalty or on proof of payment of smaller some as may be considered reasonable or the appellant furnishing security for such amount as the appellate authority may direct. In terms of section 73(4) of the VAT Act, thus unless and until either the appellant pays the entire amount confirmed in the order appealed against or the appellate authority for the reasons to be recorded in writing relaxes such requirement in the manner noted above, it would not be possible for the appellate authority to entertain such appeal. The Tribunal simply had to decide whether the condition imposed by the Commissioner was proper and if not what further relaxation could be granted to the appellant. In the process, the Tribunal could not have examined the order of the Assessing Officer on merits as the first appellate authority. During the pendency of appeals before the Tribunal and thereafter before this Court, the appellant has deposited a total sum of approximately ₹ 42 lacs. This is far in excess of the pre-deposit amount suggested by the Commissioner.- Matter remanded back to Commissioner - Decided in favour of assessee.
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2014 (8) TMI 139
Determination of sale price - Inclusion of mandi fees payable by the purchaser to the market Committee and not the seller albeit accounted for through him under Rule 59 of the Rajasthan Agricultural Produce Marketing Rules, 1963 (hereinafter 'the 1963 Rules') promulgated under Rajasthan Agricultural Produce Marketing Act, 1962 - Held that:- Sub-rule (2) of Rule 59 of the 1963 Rules thus categorically states that market fees shall be paid by the purchaser. What follows is only a mode for collection of mandi fee. In my considered opinion the mode of collection of mandi fee cannot alter its very character and be considered as a levy on the seller. Mandi fee is to be paid by the purchaser under the Rules of 1963 to the Mandi Samiti for the infrastructure created by it for facilitating a transaction i.e. it is a charge independent of the privity of contract between the seller to the purchaser and not a part of the consideration paid to the seller by the buyer. The market fee charged by the Mandi Samiti is not a levy on the seller and thus cannot constitute statutory levy within the meaning of Section 2(36) of the RVAT Act, 2003 liable to be included in the sale price. Further in case of M/s. George Oakes (P.) Ltd. v. State of Madras [1961 (4) TMI 78 - SUPREME COURT OF INDIA] a Constitution bench of the Hon'ble Supreme Court has observed that where in law tax is on the buyer and the dealer a mere collecting agency, it would remain outside the sale price. - No Substantial question of law arises - Decided against Revenue.
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