Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 20, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Central Excise
CST, VAT & Sales Tax
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Interest income had not been derived from export of article or things or computer software - the assessee was not entitled to deduction u/s 10B in respect of interest income - AT
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Order u/s 158BC r.w. section 254 – the period of time stipulated u/s 158BC being not less than 15 days therefore, the notice allowing the assessee to file the return within 15 days is contrary to the mandatory condition as provided u/s.158BC - AT
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Levy of penalty u/s 271(1)(c) – Limitation period u/s 275(1)(a) -hile deciding the question of limitation as mentioned in the section, penalty order passed by the AO was within the time-limit envisaged by the Act - AT
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Penalty u/s 271D – Sufficient cause as provided u/s 273B – It was a widespread, even if erroneous, belief that the provisions of Section 269 SS do not apply to the credit cooperative societies - no penalty - AT
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Determination of income – In case of industrial, commercial and scientific experience, if services are being rendered simply as an advisory or consultancy, then it cannot be termed as “royalty” - AT
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Nature of payment – capital or revenue - Whether the royalty paid and the technical guidance fee paid in terms of the Technical Collaboration Agreement are in the capital field or in the revenue field - running royalty is allowed as revenue expenditure - AT
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Penalty u/s 271(1)(c) - aggrieved person - filing appeal on behalf of company - since he was neither the director nor the authorized signatory at time of filing of appeal, appeal cannot be maintained - AT
Central Excise
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Valuation - sale from depot - Tribunal had erroneously proceeded on the basis that the price based on which, benefit claimed is the prevailing price at the depot on the date of which goods are cleared from the factory. - HC
VAT
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Purchase of DEPB against C Forms - any defalcation or violation of the declaration, at the hands of the purchasing dealer, who issued the 'C' Form; would be liable to be proceeded against only against that purchasing dealer and not against the selling dealer - HC
Case Laws:
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Income Tax
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2014 (9) TMI 610
Exemption of interest income earned u/s 10B – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that, the assessee is a 100% Export Oriented Unit (EOU) registered under Software Technology Park Scheme for the development and export of computer software - The assessee had earned interest income and had also claimed deduction u/s 10B in respect of interest income - the interest income was derived from the business activity of the eligible unit and that it had consistently offered such income as Profit and gains of business and profession - The AO did not accept the contentions raised - deduction u/s 10B was allowable in respect of profit and gains derived from a 100% export oriented undertaking from the export of article or things or computer software - interest income had not been derived from export of article or things or computer software - the assessee was not entitled to deduction u/s 10B in respect of interest income - CIT (A) also rejected the claim of the assessee of netting of interest against the interest paid – the order of the CIT(A) is upheld – Decided against assessee. Assessability of interest under income from other sources – Held that:- As decided in assessee’s own case for the earlier assessment year, the Tribunal has rightly directed the AO to allow the expenses incurred for earning interest income - the assessee itself submitted that the interest had been earned from surplus funds generated which had been deposited in sort term deposits with banks - since the interest had been earned from the surplus funds, the AO assessing the interest income as income from other sources is justified - while computing the interest income as income from other sources all expenses incurred for earning of interest income have to be deducted - This aspect has not been examined either by the AO or by the CIT (A) – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of assessee. Determination of the Arm’s Length Price based on LIBOR – Held that:- The LIBOR has to be accepted as the basic rate for bench marking the interest to the AE’s - The assessee has adopted the interest rate of 250 basis point above the LIBOR for making the TP adjustment - CIT (A) has followed the RBI circular as per which all-in-cost ceiling of 350 basis point over the LIBOR has been prescribed in respect of loans of maturity period for more than 5 years - CIT (A) held that the arm’s length interest rate would be at LIBOR + 350 basis point. We however note that 350 basis point in the ceiling provided in the RBI circular - CIT(A) has just referred and followed the decision of the Tribunal - the issue has been decided by CIT(A) in accordance with the order of the Tribunal in assessee’s own case for immediate preceding assessment year – the order of the CIT(A) upheld – Decided against assessee.
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2014 (9) TMI 609
Order u/s 158BC r.w. section 254 – Validity of assessment on jurisdiction – Time period to made reply by assessee as per the provisions - Held that:- Notice issued by the AO u/s.158BC requiring the assessee to furnish the return in the prescribed Form No.2B within 15 days from the service of notice - the time period to be allowed for furnishing the return of income is not less than 15 days which means the time period must be more than 15 days but not more than 45 days - there is a clear difference between the time period allowed for furnishing the return within 15 days and not less than 15 days, which means more than 15 days with a rider of 45 days – relying upon Assistant Commissioner of Income Tax & Anr. Versus M/s. Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT OF INDIA] - when the subsequent notice was issued then the alleged defective notice did not cause any prejudice to the assessee – thus, the period of time stipulated u/s 158BC being not less than 15 days therefore, the notice allowing the assessee to file the return within 15 days is contrary to the mandatory condition as provided u/s.158BC – the notice is invalid in view of the decisions of Supreme Court in Assistant Commissioner of Income Tax & Anr. Versus M/s. Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT OF INDIA] – also, the assessment framed by the AO based on the invalid notice is void and liable to be set aside – Decided in favour of assessee. Admission of additional ground - Taxes paid should be refunded or not - Held that:- The additional ground even though stated to be legal ground, could not be admitted as it involves examination of facts - assessee himself has declared incomes in the block assessment - whether assessee has paid taxes or not require examination as nothing is available on record nor assessee placed any submissions in this regard whether taxes have been paid by him or collected by the Revenue – relying upon CIT vs Shelly Products and another [2003 (5) TMI 4 - SUPREME Court] - admitted tax should not be refunded – Decided against assessee.
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2014 (9) TMI 608
Levy of penalty u/s 271(1)(c) – Time limit for passing order expired or not – Limitation period u/s 275(1)(a) - Concealment of facts and furnishing of inaccurate particulars or not – Held that:- The AO had made certain additions to the income of the assessee, while finalsing the assessment, that the appeal filed by the assessee was dismissed by the FAA, that the assessee itself withdrew the quantum appeal filed before the Tribunal, that the AO levied penalty u/s 271(1)(c) of the Act - no one has a vested and substantive right in the procedure and limitation has to be considered as a part of the procedural law as distinct from substantive law, that the law of procedure may be said to be that branch of the law which governs the process of litigation, that it is the law of actions, all the residue is substantive law and relates not to the process of litigation, but to its purposes and subject-matter - as far as provisions of sections 115, 143, 115(o) are concerned, it is suffice to say that they all deal with substantive law and determine the rights of the assessee - A perusal of chapter XXI reveal that section 271 is a substantive provision whereas section 274 provides the procedure to be followed in giving effect to the said substantive charging provision and section 275 creates a bar of limitation against the imposition of penalty - while deciding the question of limitation as mentioned in the section, penalty order passed by the AO was within the time-limit envisaged by the Act - the FAA has reduced the penalty from 200% to 100% - thus, the order of the CIT(A) is upheld – Decided against assessee.
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2014 (9) TMI 607
Rejection of books of accounts u/s 145(3) – Difference in cost of construction of building of marriage palace – Held that:- The AO raised four objections while rejecting the books of account starting with earth filling expenses are not debited, fuel/diesel expenses are not debited, labour expenses appears to be on the lower side as proportionate to the material purchased and as per valuation report, the construction cost if estimated at ₹ 1,24,53,238/- as against declared by the assessee at ₹ 36,29,948/- during the year, there was a difference of ₹ 88,23,290/- and why the same should not be added to the income of the assessee as unexplained investment while rejecting the books of account u/s 145(3) of the Act - having not pointed out any defect in the same, the AO was not justified in sustaining the addition of ₹ 12,74,574/- on account of earth filling, which in fact, has been deleted by the ld. CIT(A) – assessee submitted that all the expenses and details were submitted before the AO and no specific defect has been pointed out on this account as well In the absence of any specific defect on this account, books of account cannot be rejected - relying upon Commissioner Of Income-Tax Versus Sheikhar Chand And Sons [1990 (5) TMI 24 - ALLAHABAD High Court] - the AO was not justified in rejecting the books of account and the CIT(A) was not justified in confirming the action of the AO with regard to invocation of provisions of section 145(3) of the Act – Decided in favour of assessee. Reference made to DVO – Held that:- Since, the order of the CIT(A) with regard to invoking the provisions of section 145(3) of the Act is set aside, therefore, the AO was not justified in referring the matter to the DVO. Following the decision in Sargam Cinema vs. CIT [2009 (10) TMI 569 - Supreme Court of India] - no addition could have been made by the AO and no addition could have been sustained by the CIT(A) – Decided in favour of assessee. The AO has got the valuation report of the building done from the DVO and the report was submitted to the assessee and the assessee got the valuation done from the registered valuer Mr. Manikant Garg in view of the DVO’s valuation, who pointed out the defect in the DVO’s report and the assessee submitted that the detailed report will be submitted in due course - But the AO did not provide any time since the assessment was time barring – it was prepared during the appellate proceedings, which has rightly been admitted by the CIT(A) and there was no defect in the same - CIT(A) is not justified in confirming the addition of ₹ 24,68,661 – Decided in favour of assessee.
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2014 (9) TMI 606
Penalty u/s 271D – Sufficient cause as provided u/s 273B – Deposits accepted in contravention to section 269SS/269T or not - Whether the assessee was prevented by sufficient cause within the meaning of S. 273B or not - Held that:- section 273 B comes into play when the assessee has committed a lapse but the assessee can demonstrate that there was reasonable cause for having committed that lapse - The facts relating to the factors leading to a lapse can only be known to the persons committing that lapse are best in the knowledge of person committing the lapse, and, therefore, the onus on him to elaborate the same - the explanation of the assessee deserves to be accepted - It was a widespread, even if erroneous, belief that the provisions of Section 269 SS do not apply to the credit cooperative societies, and it is also evident from the fact that even the CBDT has taken notice of imposition of resultant penalties in large number of cases, and issued a circular highlighting that these penalties should not be imposed indiscriminately and without considering the scheme of Section 273B - Such a widespread belief, by itself, can be viewed as a reasonable cause for assessee's bonafide belief – thus, the AO is directed to delete the penalties of the assessee – Decided in favour of assessee.
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2014 (9) TMI 605
Determination of income – Royalty under Article–12(3), Indo-Thailand Tax DTAA - Whether the payment received by the assessee in lieu of services rendered to GEMFSl is taxable as “royalty” under Article–12(3) or not – Held that:- The royalty payment received as consideration for information concerning industrial, commercial, scientific experience alludes to the concept of knowhow - There is an element of imparting of knowhow to the other, so that the other person can use or has right to use such knowhow - In case of industrial, commercial and scientific experience, if services are being rendered simply as an advisory or consultancy, then it cannot be termed as “royalty”, because the advisor or consultant is not imparting his skill or experience to other, but rendering his services from his own knowhow and experience - All that he imparts is a conclusion or solution that draws from his own experience. The thin line distinction which is to be taken into consideration while rendering the services on account of information concerning industrial, commercial and scientific experience is, whether there is any imparting of knowhow or not - If there is no “alienation” or the “use of” or the “right to use of” any knowhow i.e., there is no imparting or transfer of any knowledge, experience or skill or knowhow, then it cannot be termed as “royalty” - The services may have been rendered by a person from own knowledge and experience but such a knowledge and experience has not been imparted to the other person as the person retains the experience and knowledge or knowhow with himself, which are required to perform the services to its clients - it cannot be held that such services are in nature of “royalty” - if the services have been rendered de–hors the imparting of knowhow or transfer of any knowledge, experience or skill, then such services will not fall within the ambit of Article–12 - Since neither the AO nor the DRP has examined the nature of service rendered by the assessee from this angle therefore, the matter should be restored back to the file of the AO to examine the nature of services – Decided in favour of assessee.
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2014 (9) TMI 604
Allocation of certain expenses – Allocation of interest and finance charges - Advertisement and Publicity expenses Held that:- When the company's name and products are being advertised or published, or the expenditure is for the purpose of the company as a whole, as for publishing financial results; in the register of Indian manufacturers, ITEZ, etc., there is no rationale for segregating the same unit wise - the company, toward this, apart from making a bald statement that the product/s advertised is not manufactured at the 80-IC unit, has made no specific case on the said lines at any stage, other than the expenditure on placement, which we have clarified to be unit specific, the balance impugned expenditure would stand to be allocated on some reasonable basis, as 'turnover'. Legal and professional charges – Held that:- The nature of the expenditure classified as 'others' being not specified, though listed under different units, it is not possible for us to express any opinion in its respect, so that the allocability of the same, as in the case of other expenses listed above, would stand to be determined upon stating their nature and purpose - The matter require restoration for the purpose of verification of indeterminate expenditure, and allocation, as appropriate, i.e., either to the specific unit or on the basis of turnover, to the file of the A.O. Audit Expenses – Held that:- The assessee operates through different production units, the common expenditure at the entity or the corporate level is necessarily required to be allocated to the different operating units to determine the income attributable thereto, on some reasonable basis - The turnover stands regularly followed, across the length and breadth of the country, as a reasonable basis for allocation among different functional units – relying upon Consolidated Coffee Ltd. Versus State Of Karnataka [2000 (11) TMI 136 - SUPREME Court] - The assessee has also not suggested any more appropriate parameter for allocating the common expenditure, incurred for the purpose of more than one unit or all the units or as a company as whole, so that there was no reason not to uphold the allocation based on this parameter, representing the volume of activity at a particular unit. Interest attributable to capital work-in-progress disallowed – Held that:- The assessee's case is unimpeachable in-as-much as, rather than witnessing an outlay on CWIP, there has been, on the contrary, a decline at 31.03.2009, the relevant year-end, the addition for the year - the capital and reserves have also witnessed an increase during the current year – Decided against revenue. Adjustment u/s 145A – Held that:- Section 145A being mandatory in its application - irrespective and notwithstanding the method of accounting being regularly followed by the assessee in computing the business income assessable to tax u/s.28, section 145A, to the extent applicable, would have to be given effect to – the order of the CIT(A) is upheld – Decided against revenue. Prior paid expenses disallowed – Held that:- There is no correlation whatsoever between the income booked by the assessee, which stands to be assessed u/s.28 r/w s.5, and the expenditure, similarly claimed - No material or evidence in this respect stands led by the assessee at any stage, there is no basis to hold that the expenses had crystallized during the current year - there is nothing to evidence even the delayed receipt of claim by the creditor, i.e., during the current year, which though would be of little moment in-as-much as the expenditure would stand incurred only on the basis of the underlying contracts and, in any case, could be provided for on the basis of the best assessment as on the date of finalization of the accounts for the relevant year – Decided in favour of revenue.
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2014 (9) TMI 603
Addition made - No details of assets and liabilities – Held that:- When an assessee files his return for the first time, the onus is always on him to prove the figures of assets shown in the balance sheet, both opening as well as closing - The argument that opening figures should be deemed to be explained, does not stand in such a scenario - The figures of the opening assets and liabilities are deemed to be explained in next year onwards and not when the return is filed for the first time. In such a case, it is always for the assessee to substantiate the opening figures taken in the balance sheet – As decided in assessee’s own case for the earlier assessment year, it has been held that the matter requires fresh adjudication – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of assessee. Low household expenses – Held that:- CIT(A) has restricted addition by considering the assessee’s household expenses at a meager sum - such an estimate per month towards household expenses is more than reasonable – Decided in favour of assessee. Treatment of salary income as income from other sources – Held that:- In order to claim a particular amount under the head ‘Salary’, it is the first essential ingredient to declare the name of employer - This basic requirement is lacking – the amount was shown by the assessee as her income and in the absence of any details of employer forthcoming, the order of the CIT(A) is upheld – Decided against assessee.
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2014 (9) TMI 602
Addition u/s 68 – Unexplained credits - Held that:- In the first round of appeal the FAA had confirmed certain additions made by the AO and the Tribunal deleted addition in respect of one of the creditors - the assessee chose not to produce the parties before the AO during original assessment proceedings, remand proceedings, appellate proceedings before the FAA as well as during set-aside proceedings - So, now giving him one more chance will amount to allowing premium to an assessee who does not follow the directions of the Tribunal - Matter was remanded by to the AO to produce parties and evidences and even in the second round he chose not to produce parties - principles of natural justice cannot be stretched to an extent that they become unworkable and assessees start taking undue advantage of those principles - If a person who has been forewarned about consequences of travelling without a ticket, boards the train then he cannot avoid the ensuing results of his act - In the cases of cash credits primary onus is on the assessee to prove the three basic ingredients-identity and creditworthiness of the creditor and genuineness of the transaction - the assessee has not proved any of the three thing - Except giving the name of the alleged creditors he has not proved any of the three imperative factors - Documents called for by the AO were the evidences that could have tilted the scales of the weighing machine, if furnished, in favour of the assessee - all the evidences and circumstances are totally against the assessee and he has put himself in an indefensible position by not providing the evidences to the AO. From the date of receipt of loan till date of hearing, the assessee has not produced the basic documents - it is not clear as to whether the bank accounts of the creditors were the NRI accounts or not - FAA has mentioned that it was not explained to him as how and when these advances were made or whether the money was sent through bank channels - The finding of fact given by the FAA has not been challenged by the assessee by filing an application u/s.154 of the Act before him - Thus, it becomes a final finding - It is also a fact that for a period of eight years the advances received by the assessee from both the creditors were not returned, as observed by the FAA - The assessee has not disclosed as to what happened to the loans/deposits received by him after that period - the documents furnished by the assessee do not prove the creditworthiness of the creditors as well as the genuineness of the transaction and the assessee has discharged the initial burden of proof - the order of the FAA does not suffer from any legal or factual infirmity – Decided against assessee.
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2014 (9) TMI 601
Transfer pricing adjustment – Payment of royalty – Payment made on product not specifically mentioned in agreement – Held that:- The contract as amended under the seventh amendment authorize payment of royalty for certain products as well as minor variations - The wording "and includes variations thereof from design changes or minor model changes" puts the issue beyond debate - the TPO has erred in coming to such a conclusion on facts - Change in type of fuel used or changing the start mechanism, or change in the crank shaft, etc. would be versions of variants of the same products - These are not new products - Even if the product is a result of design change then also the clause authorized payment of royalty - in the definition given in the collaboration agreement, "Product" means "a model of portable generator" and includes variation thereof from design changes and minor model changes made by Honda – the approvals in a way would support the contentions of the assessee that the payment of royalty in question is governed by the agreement - It is nobodies case that illegal or unauthorized payments of royalty and consequent remittances of foreign exchange has been made by the assessee company. The conclusions drawn by the TPO that the assessee is not required to pay any royalty on the products is against the terms of the agreement - the AO cannot sit in the arm chair of the businessman and determine as to what expenditure is necessary to be incurred by the businessman for the purpose of his business - the arguments of the assessee that similar payments were made by the assessee for the last few years and that the TPO as well as the AO have accepted the genuineness of the payments and have approved the claim that the payments were at arm's length assume significance - as the TPO has accepted that MAM followed by the assessee and approved the arm's length price of royalty rate determined by the asseesee, with respect to royalty paid on the products, the claim of the assessee on the payments of royalty on the variants of the products is to be allowed as per the aspects are concerned – Decided in favour of assessee. Nature of payment – capital or revenue - Whether the royalty paid and the technical guidance fee paid in terms of the Technical Collaboration Agreement are in the capital field or in the revenue field – Held that:- Following the decision in M/s Hero MotoCorp Limited Versus Additional Commissioner of Income tax [2013 (9) TMI 796 - ITAT DELHI] - the assessee company made the lump sum payment and also the running royalty - The running royalty was calculated as a percentage of sales - The lump sum payment was treated as capital expenditure by the assessee company and the running royalty was treated as revenue expenditure - the running royalty is allowed as revenue expenditure – Decided in favour of assessee. Payment of export commission u/s 40(a)(i) – Held that:- Following the decision in M/s Hero MotoCorp Limited Versus Additional Commissioner of Income tax [2013 (9) TMI 796 - ITAT DELHI] –export commission was neither royalty nor fee for technical services and, therefore, the assessee was not required to deduct tax at source on the payment of export fee - once the assessee was not required to deduct the tax at source, it cannot be said that the assessee failed to deduct tax at source so as to apply Section 40(a)(ia) - the export agreement was for the benefit or the assessee and not detrimental to the assessee - the finding of the AO that the expenditure incurred by the assessee by way of export agreement was not incurred for the purpose of business of the assessee cannot be upheld - the export commission paid by the assessee was for the purpose of assessee's business – Decided in favour of assessee.
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2014 (9) TMI 600
Penalty u/s 271(1)(c) - aggrieved person - filing appeal on behalf of company - revenue contended that Shri R.Subba Rao was neither a Director nor a Managing director of the assessee company on that date, he is not a person authorised either to file the return of income of the assessee company on that date as per S.140 of the Act - Held that:- a person who is Managing Director or Director, as the case may be, of the company, on the date of filing of the appeal before the Tribunal is only auhorised to sign and verify the appeal filed before the Tribunal in the case of a company. In the present case, Shri R.Subba Rao was neither Managing director nor Director of the assessee company as on 15th day of September, 2011 when the present appeal was filed in the case of the assessee -company. In our considered opinion, he, therefore, is not an authorized person to sign and verify the present appeal filed in the case of the appellant company. Even if Shri Subba Rao can be said to be an aggrieved assessee having become liable to pay the tax/penalty in his individual capacity, he can exercise the right to file the appeal before the Tribunal in his individual capacity in accordance with law, but he cannot file an appeal in the name of the assessee company, since he is not authorised to do so, as held by us after analyising the relevant provisions of law - Appeal is not maintainable - Decided against assessee.
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Customs
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2014 (9) TMI 621
Denial of refund claim - Bill of Entry was assessed and duty was paid accordingly. - Later on, the appellant realised that they are entitled for exemption under Notification No. 11/97, they were not required to pay duty, they filed refund claim - difference of opinion - Majority decision - Held that:- There was an exemption notification covering the said medicines which was neither brought to the notice of the assessing officer nor claimed by the appellant and the assessing officer assessed the duty without extending the benefit of the said exemption notification. The appellant did not challenge the assessment order nor applied for any reassessment and filed the refund claim without challenging the assessment order. Accidental slip or omission in assessing bill of entry - Held that:- Valuation, classification and rate of duty are very important aspects of assessment and the decision taken during assessment proceedings cannot be considered as accidental slip or omission on the part of the proper officer. Accidental slip or omission will be taking British Pound instead of US$ or like. Mistake in the digits relating to value or rate of duty. In fact, while filing the Bill of Entry invariably the importer or the CHA indicates the value as per the Customs Act, indicates the tariff heading as also the exemptioin notification. The proper officer scrutinizes and checks the claim and thereafter assess the Bill of Entry. The decisioni of the Hon’ble Single Member in the case of G.S. Metalica [2007 (8) TMI 507 - CESTAT, MUMBAI] is, therefore, per incuriam and cannot be applied in other cases. In the case of Shri Hari Chemicals Export Ltd. [2005 (12) TMI 95 - SUPREME COURT OF INDIA], the issue before the Hon’ble Supreme Court was whether merely a wrong mention of statutory provisions can lead to denial of benefit. - in the said case, there was a mistake in mentioning the Rule 56A and Rule 57A and in it is in those circumstances, the Hon’ble Supreme Court has taken the said view. In the present case, there is no such mistake. Another case of quoted is that of Bennet Coleman & Co. Ltd. (2008 (7) TMI 204 - CESTAT BANGLORE). In the said case, there was introduction of additional Duty with effect from 1.3.2006 and during the initial period, there was some confusion regarding applicability of SAD on certain items and the appellant paid the additional duty but immediately (on 10.4.2006) applied for the refund of the same and in those circumstances this tribunal distinguished the case from that of Priya Blue Industries Ltd. (2004 (9) TMI 105 - SUPREME COURT OF INDIA). Sec. 154 of the Customs Act cannot be invoked in the present situation where the assessment was made without extending the benefit of exemption notification and same cannot be called arithmetical, clerical or error arising from accidental slip or omission. - Decided against assessee.
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Central Excise
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2014 (9) TMI 617
Denial of Modvat / CENVAT Credit - Endorsement of invoice - transfer of goods in transit - Invoices not in the name of manufacturer - Held that:- Thus, the goods were transferred to the respondent-assessee by the first purchaser in transit by making an endorsement on the invoices received by him, which was the document of title in the goods and is a normal mode of transacting the goods in transit. It is also not in dispute that the subsequent purchasers of the inputs using the same in the manufacturer of goods can avail the Modvat credit and it need not be availed by purchaser at the fist instance, as the first purchaser need not be a manufacturer by himself. That is even clear from reading of Rule 57G, which was in force at the relevant time. There is no dispute about the fact that the assessee has furnished the declaration required by him under subrule (1) of Rule 57G of Central Excise Rules. Endorsed invoices issued by the manufacturer evidence payment of duty on such inputs. Therefore, the only controversy, which emanates from combined reading of the order of the Assessing Officer namely; Assistant Commissioner, Central Excise, goes to show that the impediment felt by the revenue in allowing the respondent assessee to avail the Modvat credit was about the first dealer having sold the goods in transit by endorsing invoices before or without receiving the goods at its premises, before issuing invoices in favour of the respondent-assessee and the invoices issued by the manufacturer were endorsed evidencing the transfer of goods in transit, which carried with it proof of payment of duty on such inputs. on the basis of the endorsed invoices issued by the intermediatory purchaser and the invoices issued by the manufacturer, the assessee shall be entitled to claim the credit on the goods, on which the manufacturer has paid the duty - Following decision of UNION OF INDIA Vs. RAJASTHAN SPINNING & WEAVING MILLS LTD [2004 (6) TMI 45 - HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR] - Decided in favour of assessee.
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2014 (9) TMI 616
Condonation of delay - question of law - maintainability of appeal - Held that:- The learned Single Bench rejected the writ application on the ground of existence of the alternative remedy of appeal, with liberty to the appellant to file an appeal. We are not inclined to reject the appeal on the technical ground that it involves no substantial question of law, since the Single Bench rejected the writ application on the ground of existence of alternative remedy of appeal. The appeal is, therefore, entertained. Condonation of delay - Held that:- Tribunal lost sight of the fact that the appellant was required to explain the delay from the last date of limitation till the date of filing of the appeal. If the appellant had 90 days to file the appeal from the date of receipt of the order sought to be challenged, the appellant need not have done anything at all for the first few days. The appellant could very well have become active only towards the end. In that view of the matter, the decision to dismiss the application for condonation of delay on the ground of a minor discrepancy in the date of receipt of the order sought to be appealed against, is not only unduly harsh, but also not sustainable in law. It is well settled that delay is to be explained from the last date of limitation onwards. What transpires during the entire period from the time when the order is received and the time when appeal becomes barred by limitation is not required to be explained. The appellant has only to show that, there was sufficient cause for not filing the appeal on the last day of limitation and thereafter explain the delay. The impugned order cannot be sustained and the same is set aside. - delay condoned - Decided in favour of assessee.
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2014 (9) TMI 615
Refund of export duty - original claim was filing before wrong authority - transfer of case - Held that:- It appears that now the authority to adjudicate upon refund application is transferred to the authority mentioned in paragraph 4, the petitioner need not submit fresh application for refund and whatever application and supporting documents have been produced before the earlier authority, the same may be transferred to the authority mentioned in paragraph 4 within the period of 1 (one) week from today so that the adjudication can be completed by the said authority on considering the same. Decided in favour of assessee.
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2014 (9) TMI 614
Valuation - sale from depot - Whether the Tribunal is correct in holding that the lower sale price for goods cleared at Depot on subsequent day will constitute the basis for assessment? - Refund - whether the assessee is entitled to refund of excess duty remitted by them on the basis of the prevailing price on the same day or the subsequent day or on the later date - Held that:- it is the duty of the assessee to ascertain the price prevailing on the factory as well as in the depot and to quote prevailing lower price beneficial to the assessee and as the choice is given to the assessee, the price quoted by the assessee shall be the final price and shall be the price for assessment. The case relied on by the Tribunal in the present case in the impugned order is one such case, wherein, the price adopted by the assessee therein was the price prevailing in the depot on the same day in which, the goods are cleared from the factory. However, the Tribunal had erroneously proceeded on the basis that the price based on which, benefit claimed is the prevailing price at the depot on the date of which goods are cleared from the factory. In fact, the price quoted by the assessee is the price at the related date than the date on which the goods are cleared. Following decision of Camphor & Allied Products Ltd. v. Commissioner of Central Excise, Lucknow, reported in [2000 (8) TMI 466 - CEGAT, NEW DELHI] - Decided in favour of Revenue.
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2014 (9) TMI 613
Condonation of delay - Held that:- In the cases of appeals preferred by the petitioner, plea was taken that one Mr. Bittu left the company on 29th October, 2008, without informing that he received the copy of the order which is sought to be challenged by the petitioner. The Tribunal has considered the fact of each of the appeals and given cogent reasons for holding that the petitioner failed to show sufficient cause for condonation of delay - Tribunal has rightly considered the facts and rightly reached to the conclusion that the cause shown by the petitioner appears to be only afterthought and there is no sufficient cause for condonation of delay - Condonation denied.
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2014 (9) TMI 612
Review petition - Rebate under Rule 18 of the Central Excise Rules, 2002 - Simultaneous benefit of rebate on finished goods and inputs used in manufacturing of such goods on export - Whether, the word “or” used in Rule 18 should be read as “and” because under Rule 18 of the Central Excise Rules, 2002 - Held that:- It is settled proposition of law that an application of review would lie only when the order suffers from an error apparent on the face of record and permitting the same to continue would lead to failure of justice. The Supreme Court in Inderchand Jain (dead) through LRS v. Motilal (dead) through LRS [2009 (7) TMI 1029 - SUPREME COURT], held that an application of review would lie only when the order suffers from an error apparent on the face of record and permitting the same to continue would lead to failure of justice. First thing that would be seen to entertain a review petition is that an order of which review is sought, suffers from an error apparent on the face of record and permitting the order to stand would lead to failure of justice. In the absence of any such order, finality attached to the order cannot be disturbed. The power of review can also be exercised by the court in the event of discovery of new and important matter or evidence which, after the exercise of due diligence was not within knowledge of the party or could not be produced by him at the time when the order was made. Review court does not sit in appeal over its own order. Rehearing of matter in the guise of review is impermissible in law - Decided against assessee.
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2014 (9) TMI 611
Restoration of appeal - Held that:- petitioner deserves one last opportunity to present its case before the Tribunal. We do notice that, in the past, the petitioner may not have persuaded the appeal with as much care as it should have been. However, by awarding some cost, the petitioner, in our opinion, should be given an opportunity to pursue the appeal on merits. Appeal restored.
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CST, VAT & Sales Tax
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2014 (9) TMI 620
Re-opening of the assessments - Duty Entitlement Pass Book - inter-State sales of such "entitlements" at concessional rate by virtue of the 'C' Forms issued by the outside purchasing dealer - Held that:- re-opening effected under the various notices and also the order passed in one of the cases are to be set aside for reason of the same being illegal and directly conflicting with the decision of the Hon'ble Supreme Court. If DEPB involves sale of goods, necessarily inter-State sale could be effected on the strength of 'C' Forms, if the purchasing dealer intends it inter alia for sale or for purposes of manufacture. Even if resale of DEPB entitlements are not effected and the purchasing dealer imports goods for purposes of manufacture, then again the very same principle would apply. In any event, any defalcation or violation of the declaration, at the hands of the purchasing dealer, who issued the 'C' Form; would be liable to be proceeded against only against that purchasing dealer and not against the selling dealer; in the absence of any collusion being found against the selling dealer within the State. - Decided in favour of assessee.
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2014 (9) TMI 619
Jurisdiction to levy tax - exemption under Section 3 of the Central Sales Tax Act - Alternative remedy - Held that:- petitioner is required to establish that the goods purchased by him outside the State of U.P. is actually being utilized towards the works contract - Petitioner relies upon the decisions given in his own case wherein it has been held that the goods brought into the State of U.P. was in pursuance of a works contract and, therefore, was exempted under Section 3 of the Central Sales Tax Act. The said decision passed in a previous assessment years cannot be considered in the present assessment year, inasmuch as the goods purchased in the assessment year in question and brought into the State of U.P. is required to be established by evidence and proved that it was used and utilized towards the works contract. Consequently, reliance on a decision in its own case for the previous assessment year cannot form the basis for claiming exemption in the present assessment year. writ petition is dismissed on the ground of alternative remedy. - Decided against assessee.
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2014 (9) TMI 618
Levy of penalty under Section 27(2)(iii) - What is the procedure to be followed by the assessing officer when D3 proposal is rejected and whether the assessing officer can straight away refer to the proposal and confirm the revision or whether the assessing officer has to deal with the assessment on merits - Held that:- Assessing authority referred the averments made in the show cause notice and thereafter, it has proceeded to refer the deviation proposal (D3) given by the first respondent and proceeded to assess the petitioner and also levy penalty. Even in the D3 proposal, the second respondent while rejecting has directed the assessing officer to pass final orders based on the findings given in the rejection order. Therefore, if the assessing officer proposes to rely upon the findings recorded by the second respondent in the D3 proposal then, such material should have been made available to the petitioner prior to finalising the assessment and providing an opportunity to rebut the same. The same has not been furnished to the petitioner except for referring to such order in the impugned order of revision of assessment. Therefore, there is a total violation of principles of natural justice in these cases. That apart, no opportunity of personal hearing was afforded to the petitioner. Matter remanded back - Decided in favour of assessee.
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