9911796707
TMI Blog2015 (10) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... orted has an element of customs duty paid on such goods. The component of customs duty is reduced to the extent of the usage by the Assessee of the DEPB scrips. The reduced customs duty is embedded in the resale price of the imported goods. Thus, the use of the DEPB scrips is for the purpose of the Assessee selling the imported goods. 'Usage' in this context has to be seen as a use that affects the price of the goods although it may not be used tangibly in the goods themselves. There is no warrant to limit the understanding of the word “use” to an actual direct tangible or physical use in the imported goods. The usage by the Assessees, who are registered dealers, of the DEPB scrips purchased by them from another registered dealer after paying the input tax for reducing the incidence of customs duty should be held to constitute use of such DEPB scrip for the purposes of sale of the imported commodity. The DEPB scrip has contributed, if not directly then indirectly, to the price of the imported commodity sold by the Assessees in the market. There could be any number of intangibles that have an impact on the value of the final product like advertisement costs in respect of which in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to pay penalty under the Delhi Value Added Tax Act, 2004 (DVAT Act)? 4. Both the Appellants, who are registered dealers under the DVAT Act, are engaged in the business of import and sales of goods. While NFIPL is engaged in import of sale of ferrous and non-ferrous metals, JPL is engaged in the trading of imported chemicals, plastic dana and raw materials. 5. Both the Appellants purchased DEPB scrips from registered dealers on payment of value added tax ( VAT ) under the DVAT Act in the course of their regular business activity. They used the DEPB scrips for payment of customs duty on the imports made by them. Both Appellants thereafter sold the imported material in the local market after charging output VAT. The Appellants adjusted the input tax paid by them on the purchase of the DEPB scrips against the output tax liability and the balance net tax in terms of Section 11 of the DVAT Act was deposited by them. 6. As far as JPL was concerned, pursuant to an audit conducted for 2007-2008, the officials of the Department of Trade and Taxes (DTT) were of the view that the DEPB scrips could not be treated as capital goods and could not have been taken to have been 'used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of Section 9 of the DVAT Act. It should be recalled that the periods with which these appeals are concerned are 2007-08 and 2008-09. 13. Up to 31st March 2010, Section 9 (1) read as under: 9. Tax credit. (1) Subject to sub-section (2) of this section and such conditions, restrictions and limitations as may be prescribed, a dealer who is registered or is required to be registered under this Act shall be entitled to a tax credit in respect of the turnover of purchases occurring during the tax period where the purchase arises in the course of his activities as a dealer and the goods are to be used by him directly or indirectly for the purpose of making (a) sales which are liable to tax under section 3 of this Act; or (b) sales which are not liable to tax under section 7 of this Act. Explanation.- Sales which are not liable to tax under section 7 of this Act involve exports from Delhi whether to other States or Union territories or to foreign countries. 14. With effect from 1st April 2010, Section 9(1) stood amended by the Delhi Value Added (Amendment) Act, 2009 (Delhi Act 1 of 2010) as under: (a) in sub-section (1), for the words where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the usage by the Assessee of the DEPB scrips. The reduced customs duty is embedded in the resale price of the imported goods. Thus, the use of the DEPB scrips is for the purpose of the Assessee selling the imported goods. 'Usage' in this context has to be seen as a use that affects the price of the goods although it may not be used tangibly in the goods themselves. There is no warrant to limit the understanding of the word use to an actual direct tangible or physical use in the imported goods. 20. It is possible in this context to draw an analogy with CENVAT or MODVAT credit, the purpose of which, like VAT, was to mitigate the cascading effect of multiple taxes at various stages of the trade in goods. In Oil Natural Gas Corporation Limited v. Commissioner of Central Excise, Sales Tax Custom, Raigad 2013 (32) STR 31 (Bom.) the facts were that the Appellant set up a plant to make economic use of the crude oil and associated natural gas extracted from the oil wells. This resulted in production of lighter hydro carbons, natural gas and other downstream products. The crude oil was exempted from payment of excise duty, which was therefore, an exempted commodity. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly sold. 22. In Coca Cola India Pvt. Ltd. v. Commissioner of Central Excise Pune-III 2009 (15) STR 657 (Bom.) it was held in the context of CENVAT credit that service tax paid on advertisement sales promotion and market research was admissible as credit for payment of excise duty on the soft drink concentrate particularly when such expenses formed part of the price of the final product on which excise duty was paid. In para 13 of the said judgement it was held in order to avoid the cascading effect the benefit of CENVAT credit on input stage goods and services must be ordinarily allowed as long as a connection between the input stage goods and services is established. Conceptually as well as a matter of policy, any input service that forms a part of the value of the final product should be eligible for the benefit of CENVAT credit. 23. Other decisions which hold likewise include Deepak Fertilisers and Chemicals Corporation Ltd. v. CCE, Belapur 2013 (32) S.T.R. 532 (Bom.) and National Aluminium Co. Ltd. v. Deputy Commissioner of Commercial Taxes (2012) 56 VST 68 (Orissa). In the latter decision, the Orissa High Court was considering the question: Whether coal, alum, caustic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke advertisement costs in respect of which input service tax credit may have been availed of, as was in the case of Coca Cola India Pvt. Ltd. (supra). All that is to be shown is that such input tax paid goods have contributed to the sale of the final product in some way directly or indirectly. 25. The Court also rejects the other contention of the DTT that input tax credit cannot be availed of unless the Assessees are themselves dealing in DEPB scrips. In other words, in order to avail of the input tax credit in the present case it is not necessary that the Assessees have to be dealers in the same commodity, i.e. the DEPB scrips which were used in payment of customs duty on the imported goods in which they were dealing. Such an interpretation will negate the object of introducing the system of value added taxes, i.e. to reduce the cascading effect of multiple taxes at various stages. As long as it is shown that use of the DEPB scrip has impacted the cost of the product that is sold, either directly or indirectly, the credit of the input tax paid on the DEPB scrip cannot be denied to the Assessees. 26. For the aforementioned reasons, the question framed is answered in the affi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
