ISSUES:

Whether penalty under section 112(a)(ii) of the Customs Act can be imposed on a customs broker for acts or omissions rendering imported goods liable to confiscation under section 111.Whether penalty under section 114AA of the Customs Act can be imposed on a customs broker for knowingly or intentionally making, signing, or using false or incorrect declarations or documents.Whether a customs broker can be held liable for misclassification or misdeclaration of imported goods when Bills of Entry are filed based on import documents provided by the importer.Whether the customs broker's failure to verify classification in import documents, including certificates of origin and product catalogues, amounts to "active and willful involvement" in misdeclaration.Whether the customs broker's liability is affected by the existence of prior correct classification of identical consignments by another customs broker.

RULINGS / HOLDINGS:

Penalty under section 112(a)(ii) cannot be sustained against the customs broker where the Bills of Entry described the goods as "Water Flow Meters" consistent with import documents, and there was no evidence that the broker was aware of or deliberately ignored prior correct classifications; the broker "cannot be held responsible for any alleged mis-declaration."Penalty under section 114AA cannot be imposed on the customs broker in the absence of evidence that the broker "knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document, which is false or incorrect in any material particular."The customs broker's obligation to scrutinize import documents does not extend to questioning or verifying classification when the documents provided by the importer describe the goods, and the broker was not shown to have acted in "active and willful involvement" in misdeclaration.The existence of prior correct classification by another customs broker does not automatically impose liability on the present broker without proof of knowledge or willful omission.Penalties under sections 112(a)(ii) and 114AA of the Customs Act imposed on the customs broker are set aside.

RATIONALE:

The Court applied the statutory provisions of the Customs Act, 1962, specifically sections 111 (confiscation), 112(a)(ii) (penalty for acts or omissions rendering goods liable to confiscation), and 114AA (penalty for knowingly or intentionally making false or incorrect declarations).The Court emphasized that section 112(a)(ii) penalty requires an act or omission by the person that renders goods liable to confiscation or abets such act, and section 114AA requires knowledge or intention in making false declarations.The Court rejected the department's contention of "active and willful involvement" by the customs broker due to lack of evidence that the broker was aware of or deliberately suppressed material facts.The Court noted the absence of any mandatory obligation on the customs broker to verify classification beyond the import documents provided by the importer, especially when the description of goods was consistent.No doctrinal shift or dissenting opinion was expressed; the decision reaffirmed established principles regarding the scope of customs broker liability under the Customs Act.

ISSUES:

Whether penalty under Section 112(b) of the Customs Act, 1962 can be imposed on a person who is neither owner nor claimant of seized smuggled goods but found in possession thereof.Whether a statement recorded under Section 108 of the Customs Act, 1962, if retracted, can form the basis for penalty or conviction without corroborative evidence.Whether denial of opportunity for cross-examination under Section 138B of the Customs Act, 1962 violates principles of natural justice in penalty proceedings.Whether the burden of proving lawful importation under Section 123 of the Customs Act, 1962 lies on the person found in possession of the seized goods.Whether the quantum of penalty imposed under Section 112(b) of the Customs Act, 1962 is justified given the facts and circumstances of the case.

RULINGS / HOLDINGS:

Penalty under Section 112(b) is sustainable against a person found in possession of smuggled goods who fails to prove lawful importation as required under Section 123 of the Customs Act, 1962; ownership or claimant status is not a prerequisite for imposition of penalty.A statement recorded under Section 108, even if retracted, is admissible and can form the sole basis for penalty or conviction if it is voluntary and truthful; corroboration by other evidence is desirable but not mandatory for each detail.Denial of cross-examination under Section 138B without justification violates principles of natural justice; penalty imposed without such compliance is unsustainable and requires remand for de-novo consideration.The burden to prove lawful importation of seized goods lies on the person in possession, and failure to discharge this burden justifies confiscation and penalty under relevant provisions.The quantum of penalty imposed (Rs. 10,00,000/-) is justified considering the value of smuggled goods (over Rs. 3 crore), the appellant's admitted involvement in repeated offences, and the nature of the contravention.

RATIONALE:

The Court applied statutory provisions of the Customs Act, 1962, particularly Sections 108, 111(b), 111(d), 112(b), 119, 123, 135, and 138B, alongside established Supreme Court precedents on admissibility and evidentiary value of confessional statements under Section 108.Precedents such as K I Pavunny and related Supreme Court rulings were relied upon to affirm that voluntary confessional statements under Section 108 form substantive evidence and may be used as sole basis for penalty or conviction if found truthful.The Court emphasized that the burden of proof for lawful importation under Section 123 rests on the possessor of the seized goods, and absence of such proof leads to presumption of smuggling and confiscation.The Court recognized the necessity of compliance with Section 138B for cross-examination to uphold natural justice, setting aside penalty where such procedure was not followed and remanding for fresh adjudication.The decision reaffirmed the principle that in smuggling cases, evidence must be evaluated on the basis of probability and circumstantial evidence due to the secretive nature of the offence, and that the prosecution need not prove every link with mathematical precision.

1. Whether the show cause notices (SCNs) were valid and specific in alleging service tax liability under the correct service categories, including Commercial or Industrial Construction Service (CICS), Construction of Complex Service (CCS), and Works Contract Service (WCS).

2. Whether the value of free of cost materials supplied by the service recipient should be included in the taxable value of services.

3. Classification of composite contracts executed by the appellant prior to and after 1st June 2007 under the appropriate taxable service category for service tax purposes.

4. Whether the extended period of limitation for service tax demand is invokable in absence of willful suppression or intent to evade tax.

1. The SCNs were held to be vague and non-specific as they did not segregate the quantum of service tax liability under each service category (CICS, CCS, WCS), thus failing to provide the appellant proper opportunity to meet the allegations; such SCNs are liable to be rejected.

2. Following the Apex Court ruling in Bhayana Builders and CBIC circulars, the value of free of cost materials supplied by the service recipient cannot be included in the taxable value of services; hence, tax demand on such value is unsustainable.

3. The appellant's composite contracts prior to 1st June 2007 cannot be classified as taxable under Commercial or Industrial Construction Service; post 1st June 2007, such composite contracts are liable to be classified under Works Contract Service only, and demand under any other category cannot be sustained.

4. Extended period of limitation cannot be invoked absent willful suppression or intent to evade tax; mere failure to correctly declare or assess service tax does not amount to willful suppression.

The Court applied the statutory framework under the Finance Act, 1994, particularly definitions under Section 65(105) for taxable services and valuation provisions under Section 67. It relied on precedent from the Apex Court including the landmark Larsen & Toubro Ltd. judgment clarifying classification of composite contracts and the Bhayana Builders ruling on valuation of free materials.

The Court emphasized that the show cause notice is foundational and must specify allegations clearly to afford a fair opportunity, citing the Apex Court decision in Brindavan Beverages Pvt. Ltd.

Regarding valuation, the Court referred to CBIC circulars and prior CESTAT decisions that exclude free materials from taxable value, consistent with principles under Section 12(2)(b) of the CGST Act.

The Court noted the absence of any attempt by the department to segregate non-service elements from composite contracts, reinforcing the correct classification under WCS post 1.6.2007.

On limitation, the Court applied settled legal principles that extended period applies only where there is willful suppression or evasion, referencing authoritative Supreme Court decisions in Cosmic Dye Chemical and Anand Nishikawa Co. Ltd.

ISSUES:

Whether Cenvat Credit is admissible on Sugar Cess and the Education Cess and Secondary and Higher Education Cess levied thereon under the Sugar Cess Act, 1982 and related provisions'Whether wrongly availed Cenvat Credit on Sugar Cess can be recovered along with interest under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A and Section 11AA of the Central Excise Act, 1944'Whether penalty under Rule 15(1) of Cenvat Credit Rules, 2004 read with Section 11AC(1)(a) of the Central Excise Act, 1944 is imposable for wrongful availment of Cenvat Credit on Sugar Cess?

RULINGS / HOLDINGS:

The Cenvat Credit on Sugar Cess is admissible as Sugar Cess is characterized as a "duty of excise" under Section 3 of the Sugar Cess Act, 1982, which is levied and collected as a duty of excise under the Central Excise Act, 1944; therefore, the appellant is entitled to Cenvat Credit on Sugar Cess and the Education Cess and Secondary and Higher Education Cess thereon as per Rule 3 of Cenvat Credit Rules, 2004.The recovery of Cenvat Credit and interest under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A and Section 11AA of the Central Excise Act, 1944 is not sustainable where the credit was correctly availed in accordance with the law recognizing Sugar Cess as duty of excise.Penalty under Rule 15(1) of Cenvat Credit Rules, 2004 read with Section 11AC(1)(a) of the Central Excise Act, 1944 cannot be imposed absent any "fraud/collusion/willful mis-statement/suppression of facts/contravention of any of the provisions of this Act, Rules made there under with intent to evade payment of duty"; mere irregularity or erroneous availment without such intent does not attract penalty.

RATIONALE:

The Court applied the legal framework established under the Sugar Cess Act, 1982 and the Central Excise Act, 1944, interpreting Section 3 of the Sugar Cess Act as levying a duty of excise, which is integrated with the Central Excise Act and its rules, including the Cenvat Credit Rules, 2004.The Court relied extensively on the binding precedent set by the Hon'ble Karnataka High Court in Shree Renuka Sugars Limited (2014), which held that Sugar Cess is a duty of excise and that Cenvat Credit Rules apply accordingly; this was reinforced by the Division Bench of the Tribunal in the appellant's own case.The Court distinguished the nature of Education Cess and Secondary and Higher Education Cess, referencing the Supreme Court judgment in Unicorn Industries vs. Union of India, clarifying that Education Cess is not a duty of excise, but the Sugar Cess itself is a duty of excise, thus credit on the latter is admissible.The Court noted that penalty provisions under Section 11AC(1)(a) require an element of intent to evade duty, which was absent in the instant case, supported by Circular No. 883/3/2009-CX clarifying non-levy of Cess on sugar manufactured from raw sugar on which Cess was already paid.The Court rejected the Revenue's contention that Sugar Cess is not covered under Rule 3 of Cenvat Credit Rules, 2004, emphasizing the statutory integration of the Sugar Cess Act with Central Excise Act provisions and the consequential entitlement to credit.The Court recognized that payment of Sugar Cess through Cenvat Credit is a valid mode of discharge of liability, consistent with the self-contained scheme of Cenvat Credit Rules and Supreme Court precedent in Jayaswal Neco Limited.

The Supreme Court, through Hon'ble Justices Manoj Misra and Ujjal Bhuyan, dismissed the petition due to an unexplained delay of 488 days in filing. The Court held that "there is no sufficient explanation" for the delay, and accordingly, the petition was dismissed "on the ground of delay." All pending applications were disposed of.

ISSUES:

Whether additions under section 68 of the Income Tax Act can be made in respect of unexplained cash and cheque deposits when the assessee has opted for presumptive taxation under section 44AD and does not maintain books of account'Whether the unexplained difference between bank deposits and declared gross receipts can be treated as income and added to the taxable income under section 68'Whether the assessee is entitled to claim deduction under section 80C of the Income Tax Act based on submitted LIC premium receipts'Whether the provisions of section 68 can be invoked in the absence of maintained books of account?

RULINGS / HOLDINGS:

On the issue of additions under section 68, the Court held that "the provisions of section 68 cannot be invoked where the assessee has filed return of income under the provisions of section 44AD of the Act without maintain books of account."The Court found that "maintenance of books by the assessee is sine qua non for making addition u/s. 68 of the Act" and since the assessee did not maintain books, additions under section 68 were not justified.The unexplained deposits of Rs. 14,51,660/- were to be treated as business receipts, and profit @ 8% thereon was to be computed on a presumptive basis under section 44AD.Regarding the deduction under section 80C, the Court allowed the claim of Rs. 1 lakh as the assessee had submitted valid receipts for LIC premium payments and no fault was found in the documentation by the assessing officer.

RATIONALE:

The Court relied on the statutory framework of sections 44AD and 68 of the Income Tax Act, emphasizing that section 68 additions require the existence of books of account where the cash credit is recorded.The Court referred to the decision of the Hon'ble High Court of Gauhati in Anand Ram Raitani vs. CIT, which held that "existence of books of account is a condition precedent for invoking the provisions of section 68."The Tribunal's precedents were cited, including Madhu Raitani and Shri Kokkarne Prabhakara, which held that where income is declared under section 44AD without maintaining books, section 68 is not applicable.The Court distinguished between bank passbooks and books of account, noting that bank passbooks alone cannot be considered as books of account for the purpose of section 68.The Court applied the principle that the burden of proof under section 68 arises only after the existence of books of account is established, which was not the case here.The Court also emphasized that the assessing officer had granted relief for redeposits and only added unexplained amounts unsupported by documentary evidence, which the assessee failed to provide.On the deduction under section 80C, the Court applied the principle that valid documentary evidence such as premium receipts entitles the assessee to claim the deduction, and denial without fault in documents is unjustified.

ISSUES:

Whether goods manufactured as woven fabrics, bags, sacks, and flexible intermediate bulk containers (FIBC) made from polypropylene (PP), high-density polyethylene (HDPE), and linear low-density polyethylene (LLDPE) granules are correctly classifiable under Chapter Headings 54, 60, and 63 of the Central Excise Tariff Act, 1985, or should be classified under Chapter Heading 39 as contended by the department.Whether the classification of such goods under Textile & Textile Articles (Section XI of CETA) by the respondents amounts to willful misclassification and evasion of Central Excise Duty.Whether the adjudicating authority erred in dropping the demand for duty, interest, and penalty proposed by the department under section 11A(1) of the Central Excise Act, 1944.Whether the orders of higher adjudicating authorities and appellate tribunals on the classification issue are binding on subordinate authorities and must be followed in the present appeals.

RULINGS / HOLDINGS:

Goods manufactured from plastic granules (PP, HDPE, LLDPE) including woven fabrics, bags, sacks, and FIBC are correctly classifiable under Chapter Headings 54, 60, and 63 of the Central Excise Tariff Act, 1985, and do not merit classification under Chapter Heading 39, as the manufacturing process does not involve textile fibre or yarn but plastic extrusion and weaving of plastic tapes.The respondents' classification of goods under Textile & Textile Articles was found to be a misclassification; however, the department's demand for duty was rightly dropped by the adjudicating authority based on binding precedents and judicial discipline.The adjudicating authority committed no error in dropping the demand and penalty, as it followed the Final Order of the Tribunal and earlier decisions which had attained finality, including affirmation by the Hon'ble Apex Court.Orders of higher adjudicating authorities and appellate tribunals are binding on subordinate authorities, and judicial discipline requires adherence to such orders, as supported by the Supreme Court ruling directing the department to give effect to binding appellate decisions.

RATIONALE:

The Tribunal applied the legal framework under the Central Excise Tariff Act, 1985, specifically the classification provisions, and relied on prior decisions including the Tribunal's Final Order dated 01.11.2022 and the Supreme Court's affirmation in 2023.Technical evidence from the Central Revenue Control Laboratory confirmed the plastic composition of the goods, distinguishing them from textile fibres, thus supporting classification under plastic goods headings rather than textile headings.The Tribunal emphasized the principle of judicial discipline, citing the Supreme Court decision in Union of India vs. Kamlakshi Finance Corporation Ltd., mandating subordinate authorities to follow binding appellate orders.No dissent or doctrinal shift was noted; the decision reaffirmed settled law and binding precedents on classification and adherence to judicial hierarchy.

ISSUES:

Whether wind energy projects that did not avail the benefit of accelerated depreciation under the Income Tax Act, 1961 are entitled to approach the State Electricity Regulatory Commission for determination of tariff on a case-to-case basis despite having executed Power Purchase Agreements (PPAs) specifying a tariff applicable to projects availing accelerated depreciation.Whether a distribution licensee, being a State instrumentality, can bind power producers to a fixed tariff in PPAs contrary to the statutory tariff orders and policy directives promoting renewable energy.Whether the tariff stipulated in a PPA is inviolable and beyond review by the Appropriate Commission under the Electricity Act, 2003.The legal effect of the option available under the Income Tax Act, 1961 to power producers to avail or not avail accelerated depreciation at the time of filing income tax returns, vis-à-vis the timing and binding nature of tariff fixation in PPAs.

RULINGS / HOLDINGS:

The Court held that wind energy projects which did not avail the benefit of accelerated depreciation under the Income Tax Act, 1961 are entitled to approach the State Electricity Regulatory Commission for project-wise determination of tariff on a case-to-case basis, notwithstanding the existence of PPAs specifying a tariff applicable only to projects availing accelerated depreciation.It was held that a distribution licensee, as an instrumentality of the State, cannot advance purely commercial considerations to bind power producers to a tariff contrary to statutory tariff orders and State policy objectives promoting renewable energy, and thus cannot unilaterally fix a binding price in PPAs that overrides the statutory scheme.The Court reaffirmed that the tariff stipulated in a PPA is not sacrosanct or inviolable and is subject to determination and review by the Appropriate Commission under the Electricity Act, 2003, consistent with public interest and changed circumstances.The option under the Income Tax Act, 1961 to avail or not avail accelerated depreciation is to be exercised at the time of filing the return of income for the relevant assessment year, and this statutory discretion cannot be curtailed or preempted by the PPA executed prior to such exercise.Since the distribution licensee failed to secure any written commitment from the power producers that they would avail accelerated depreciation, it cannot bind them to the tariff applicable only to such projects; the tariff fixed in the PPA is conditional and dependent on the exercise of the statutory option by the power producer.

RATIONALE:

The Court applied the statutory framework under the Electricity Act, 2003, specifically Sections 61, 62, 64, and 86, which empower the Appropriate Commission to determine and regulate tariff for electricity generation and procurement, ensuring that tariff fixation is a statutory function rather than a matter of private contractual agreement.The Court relied on the Income Tax Act, 1961 and Income Tax Rules, 1962 provisions governing accelerated depreciation, emphasizing that the option to avail such benefit is exercisable only at the time of filing income tax returns for the relevant assessment year, thus creating a temporal limitation on when the tariff applicable to a project can be conclusively fixed.Precedents were considered, including the decision distinguishing the earlier judgment concerning solar energy projects where the timing of commissioning and tariff orders differed, and the principle that tariff in a PPA is not inviolable but subject to statutory review, as affirmed in the case involving hydropower projects seeking tariff redetermination.The Court highlighted the policy objectives enshrined in the National Electricity Policy and the State's Wind Power Policies, which mandate promotion and incentivization of renewable energy projects, requiring State instrumentalities to act in furtherance of these policies rather than purely commercial interests.The Court noted the absence of any written commitment from the power producers to avail accelerated depreciation and held that without such commitment, the distribution licensee cannot impose a tariff applicable only to projects availing that benefit, as it would be contrary to the statutory and policy framework.

ISSUES:

Whether a corrigendum issued to a Show Cause Notice (SCN) that substantially enlarges the scope and content of the original notice is sustainable in law when issued beyond the prescribed limitation period.Whether omission or incorrect reference to the specific statutory provision in the original demand notice invalidates the proceedings under the Customs Act.Determination of the applicable limitation period for issuing a demand notice under Section 28 of the Customs Act in the context of export duty demands.Whether adjudication can be initiated based on the original notice or only after issuance and receipt of the corrigendum that specifies the relevant statutory provision and details.

RULINGS / HOLDINGS:

The corrigendum issued on 11.04.2013, which "substantially changed the content of original notice" and was received by the appellant on 05.08.2013, is considered part and parcel of the notice; however, issuance of such a corrigendum beyond the one-year limitation period prescribed under Section 28 of the Customs Act renders the demand time-barred and unsustainable in law.Omission or incorrect reference to the specific provision in the original demand notice does not automatically invalidate proceedings if sufficient details regarding the amount of duty demanded, goods involved, and reasons for demand are provided; however, in this case, the original notice lacked reference to any provision, making it vague and not taxable.The limitation period under Section 28 of the Customs Act is strictly one year from the relevant date for issuing demand notices; since the corrigendum was issued and received nearly five years after the relevant export date, the demand is barred by limitation.Adjudication was initiated only after issuance and receipt of the corrigendum; no adjudication had taken place prior, and the original notice did not form a valid basis for initiation, thus the adjudication process commenced outside the limitation period and is invalid.

RATIONALE:

The Court applied the limitation provision under Section 28 of the Customs Act, which restricts the period for raising a demand to one year from the relevant date, emphasizing strict adherence to limitation timelines.Reliance was placed on judicial precedents holding that a corrigendum or revised notice that materially alters the original SCN and is issued beyond the limitation period cannot sustain proceedings or orders.The Court distinguished between cases where a wrong provision is mentioned but the claim is valid and cases where the original notice is vague and lacks any statutory foundation, holding the latter as invalid.The judgment reaffirmed that the date of service of the corrigendum is the effective date for limitation calculation when the corrigendum significantly changes the original notice, thereby preventing belated initiation of proceedings.

ISSUES:

Whether penalty under Section 114A of the Customs Act, 1962 is mandatorily leviable in addition to penalty under Section 112(a) when duty demand is confirmed under Section 28(8) due to willful suppression of facts.Whether the Adjudicating Authority was correct in not imposing penalty under Section 114A despite confirming duty demand and penalty under Section 112(a).

RULINGS / HOLDINGS:

The penalty under Section 114A is a statutory penalty that is "shall also be liable to pay a penalty equal to the duty or interest so determined" and is automatic upon finding willful mis-statement or suppression of facts leading to duty short-levy or non-levy.The Adjudicating Authority erred in not imposing penalty under Section 114A since the duty demand was confirmed under Section 28(8) on account of willful suppression of facts; therefore, penalty under Section 114A is mandatorily leviable and non-discretionary.The appeal by the Revenue succeeds in modifying the impugned order to impose penalty under Section 114A equal to the duty or interest determined.

RATIONALE:

The Court applied the statutory framework of Section 114A of the Customs Act, 1962, which prescribes penalty for short-levy or non-levy of duty arising from collusion or willful mis-statement or suppression of facts, with penalty equal to the duty or interest determined under Section 28(8).The Court relied on Supreme Court precedents including UOI vs Rajasthan Spinning and Weaving Mills and UOI vs Dharmendra Textile Processors, which held that when a statute uses the term "shall be leviable," the penalty is mandatory and the adjudicating authority has no discretion regarding quantum or imposition.The Court emphasized that the purpose of Section 114A penalty is deterrence against blameworthy conduct to prevent dishonest advantage or unjust gain.The Court noted that no penalty under Section 112 or Section 114 shall be levied if penalty under Section 114A is levied, confirming the mutually exclusive nature of these penalties.

ISSUES:

Whether the demand of differential duty on imported spares/components on the basis of Maximum Retail Price (MRP) is sustainable under the Customs Tariff Act and related statutes.Whether the imported packages were required to have Retail Sale Price (RSP)/MRP labels under the Standards of Weights and Measures (Packaged Commodity) Rules, 1977, and the Legal Metrology Act, 2009.Whether the activity of packing and repacking of imported goods amounts to "manufacture" for the purpose of excise and customs duty assessment.Whether the extended period of limitation for demand of duty can be invoked on the ground of suppression, fraud, or misstatement by the importer.

RULINGS / HOLDINGS:

The demand confirmed on the MRP basis in the impugned order is not sustainable because the imported packages were not intended for retail sales to ultimate consumers, but rather for industrial or institutional consumers, and thus the requirement of affixing MRP under Rule 6 of the Standards of Weights & Measures (Packaged Commodity) Rules, 1977, does not apply.The imported goods were exempt from the requirement of RSP/MRP labeling under the Legal Metrology Act, 2009, as the packages were not intended for retail sales, did not contain quantities less than 25 kgs or litres, and were marked "for industrial use only," consistent with the exclusion clause under Rule 34.The activity of packing and repacking post-importation amounts to "manufacture" under excise law, and since excise duty was discharged on the repacked goods, additional customs duty on MRP basis is not sustainable.The extended period of limitation under the proviso to Section 28 of the Customs Act cannot be invoked as there was no "fraud, collusion or any willful misstatement or suppression of facts" by the importer; the Department was aware of the activities and had previously adjudicated related demands.

RATIONALE:

The Court applied Rule 3, Rule 6, Rule 34, and Rule 2(p) of the Standards of Weights & Measures (Packaged Commodity) Rules, 1977, which restrict the requirement of MRP labeling to packages intended for retail sales to ultimate consumers, excluding industrial or institutional consumers.The Legal Metrology Act, 2009, as a consumer protection legislation, was interpreted in line with judicial precedent to apply only to individual consumers or groups of individuals purchasing retail packaged goods, excluding industrial/institutional consumers.Precedents including EWAC Alloys Ltd. v. Union of India and Commissioner of Customs, Chennai Vs M/s. Acer India Pvt. Ltd. were relied upon to support the principle that sales to industrial consumers do not attract MRP-based assessment under customs or excise law.The Court noted that the packages imported contained quantities exceeding 25 kgs, invoking Rule 2A(3) of the Packaged Commodity Rules, which exempts such packages from MRP labeling requirements.The extended limitation period under Section 28 of the Customs Act requires proof of fraud, collusion, willful misstatement, or suppression of facts, which was not established; the importer acted in good faith and had prior adjudications on related issues.The Court recognized that the issue was primarily one of statutory interpretation and that the Revenue's invocation of extended limitation was not justified in the absence of new evidence or suppression.

ISSUES:

Whether Rule 6(b)(ii) of the Valuation Rules, 1975, permitting loading of "notional profit" on excisable goods not sold but used or consumed in manufacture, applies to raw materials supplied free of cost between sister units.Whether the activity carried out by the appellant unit qualifies as job-work under Central Excise law, thereby excluding the applicability of Rule 6(b)(ii).Whether imported raw materials supplied free of cost and used as inputs can be treated as "excisable goods" under Rule 6(b) for valuation purposes.

RULINGS / HOLDINGS:

The Court held that Rule 6(b)(ii) applies where excisable goods are not sold but used or consumed captive in manufacture; however, in the present case, the raw materials supplied free of cost were not excisable goods and thus Rule 6(b) is inapplicable.The appellant failed to establish that its unit was a job worker to the sister unit as per prescribed procedures, and therefore the claim of job work was rejected by the authorities and upheld by the Court.The Court found no evidence that imported raw materials underwent any process to become excisable goods before transfer; hence, such raw materials cannot be treated as excisable goods under Rule 6(b) for valuation, making the loading of notional profit unjustified.Consequently, the impugned order demanding differential duty by invoking Rule 6(b)(ii) and loading notional profit is "clearly unwarranted and hence, unsustainable."

RATIONALE:

The Court applied Section 4 of the Central Excise Act, 1944 read with Rule 6(b)(ii) of the Valuation Rules, 1975, which mandates valuation based on cost of production including profits where excisable goods are not sold but consumed captive.The Court emphasized the statutory requirement that excisable goods must be "used or consumed by the assessee or on his behalf" and that the goods must be excisable to invoke Rule 6(b).The Court relied on the absence of evidence that the raw materials supplied free of cost were excisable goods or that the appellant unit was a job worker under the statutory job work notification and procedures, rejecting the appellant's contention.The Court noted that the imported raw materials did not undergo any process to become excisable goods prior to transfer, and thus the valuation provisions for excisable goods under Rule 6(b) do not apply.No doctrinal shift or dissent was recorded; the decision reaffirms the strict interpretation of valuation rules and the necessity of compliance with job work procedures for exemption from profit loading.

ISSUES:

Whether input tax credit (ITC) allowable under section 22(17) of the West Bengal Value Added Tax Act, 2003 can be carried forward and adjusted in subsequent years.Whether failure to consider affidavits filed by the petitioner regarding carried forward ITC constitutes an error warranting interference.Whether the revisional authority and tribunal erred in rejecting the claim for refund or adjustment of excess refundable ITC without proper verification or comment on the petitioner's computation.Whether the matter should be remanded to the assessing officer to grant ITC credit and pass a revised assessment order.

RULINGS / HOLDINGS:

The net tax credit allowable under section 22(17) of the Act was held to be Rs. 36,36,100.00/- and the petitioners are entitled to the benefit of this credit; "technicalities should not stand in the way."The affidavits filed by the petitioners stating the carried forward ITC amount were not considered by the authorities, which was an omission requiring rectification.The revisional authority and tribunal failed to comment on or cross-verify the petitioner's computation of excess refundable ITC amounting to Rs. 33,33,349.48/- and thus erred in rejecting the claim without proper consideration.The matter is remanded to the assessing officer with directions to give credit to the sum of Rs. 36,36,100.00/- as allowed by the revisional authority and to pass an appropriate revised assessment order expeditiously.

RATIONALE:

The Court applied the statutory provisions of section 22(17) of the West Bengal Value Added Tax Act, 2003, governing input tax credit and its carry forward.The Court recognized the limitation of time for rectifying returns but emphasized that excess refundable ITC claims supported by affidavits and computations must be duly considered and verified rather than dismissed on technical grounds.The Court noted that neither the revisional authority nor the tribunal engaged with the petitioner's detailed computation or affidavits, indicating a lack of proper adjudication on the merits.The decision to remand was made "considering the peculiar facts and circumstances of the case" and expressly stated "not to be treated as a precedent," reflecting a cautious approach without doctrinal shift.

The Allahabad High Court, through Hon'ble Ajay Bhanot, J., quashed the impugned orders rejecting the petitioner's refund claim of excess CGST due to a technical error wherein the refund amount was mistakenly filed under the IGST head instead of the CGST head in form GST RFD 01. The appellate authority had held the petitioner ineligible under Section 77(1) of the CGST Act, 2017, citing lack of evidence and incorrect filing. The Court emphasized that "citation of a wrong provision or typographical error in the forms submitted... cannot be the basis for rejecting the substantive claims" and that the claim must be adjudicated on merits. Further, the appellate authority's adverse finding that the petitioner failed to adduce evidence was made without notice or opportunity of hearing, violating principles of natural justice. Accordingly, the Court allowed the writ petition, quashed the impugned orders dated 29.12.2023 and 03.12.2024, and remitted the matter for fresh adjudication by the competent authority in light of these observations.

The Supreme Court, through Hon'ble Justices Manoj Misra and Ujjal Bhuyan, dismissed the special leave petition both on the grounds of delay and merits. The order was rendered following hearing of counsel, including Mr. N Venkataraman, A.S.G., and other advocates.

The Supreme Court, through Hon'ble Justices Pankaj Mithal and Prasanna B. Varale, dismissed the petition due to a delay of 233 days in filing. After hearing counsel, the Court stated it was "not inclined to condone the delay or even to entertain the special leave petition on merits." Consequently, the petition was dismissed both on grounds of delay and merits, and all pending applications were disposed of.

The Supreme Court, with Hon'ble Justices Pamidighantam Sri Narasimha and Atul S. Chandurkar presiding, after hearing counsel, issued the following order: "Delay condoned," and dismissed the Special Leave Petition. All pending applications, if any, were disposed of.

ISSUES:

Whether the valuation of shares fixed by the valuer as on 15.10.2019 can be considered "crystalized" for the purpose of payment to the minority shareholder.Whether interest at the rate of 12% per annum is payable from the expiry of 8 months from the valuation date or only from the date of the impugned order dated 29.07.2024.Whether receipt of dividends by the shareholder precludes entitlement to interest on the share price amount due.Whether the order dated 24.06.2013 directing payment of share value and interest is final and binding and can be reviewed after a lapse of several years.Whether delay caused by the majority shareholders in accepting the valuation report affects the entitlement to interest by the minority shareholder.

RULINGS / HOLDINGS:

The valuation report dated 15.10.2019 by the valuer fixing the share price range between Rs.225 to Rs.263/- per share was held to have "crystalized" the value of shares for payment purposes, and the NCLT rightly directed payment at the minimum rate of Rs.225/- per share.The appellants are liable to pay interest at 12% per annum "with effect from expiry of 8 months from 15.10.2019" as per the order dated 24.06.2013, and not from the date of the impugned order dated 29.07.2024.The receipt of dividends by the respondent shareholder does not bar entitlement to interest on the share price amount; dividends represent statutory rights and do not affect the right to interest on delayed payment of share value.The order dated 24.06.2013 directing payment and interest has become "final and binding" and cannot be reviewed or modified after 12 years, especially as the appellants did not challenge it within the prescribed time.The delay in payment caused by the appellants' objections and failure to accept the valuation report has no effect on the respondent's right to interest, as the appellants have been enjoying the benefits of the investment.

RATIONALE:

The Court applied the directions contained in the order dated 24.06.2013 under Sections 397/398 of the Companies Act, 1956, which mandated valuation and payment of shares with interest if payment was delayed beyond six months.The Court relied on the principle that once a valuation report is accepted or not validly challenged, the share price is considered "crystalized" and enforceable for payment purposes.The Court rejected the argument that dividends received negate the entitlement to interest, emphasizing that dividends are a statutory entitlement for shareholders and separate from the right to interest on delayed payment.The Court referred to equitable principles under Section 144 of the Civil Procedure Code and inherent jurisdiction to ensure justice, recognizing that the majority shareholders utilized the funds and must refund with interest.The judgment reaffirmed that final orders on valuation and payment cannot be reopened or reviewed after a long lapse of time, especially when no timely challenge was made, thereby upholding the sanctity of finality in judicial decisions.The Court noted the delay caused by the appellants in raising objections to the valuation report and held that such delay cannot prejudice the respondent's right to receive interest as compensation for the use of funds.

ISSUES:

Whether the agreement to sell the company's sole immovable property entered into with a prospective purchaser and subsequent assignment of rights are valid in light of an interim order restraining creation of third-party interest.Whether the National Company Law Tribunal (NCLT) was justified in directing majority shareholders to purchase the property without notice to the prospective purchaser or assignee.Whether the actions of the appellants in negotiating and accepting payments from the prospective purchaser violated the undertaking given before the NCLT.Whether Section 242(2)(f) of the Companies Act, 2013 applies to modification or termination of agreements in the present circumstances, requiring notice and consent of the concerned party.Whether the revival and modification of the One Time Settlement (OTS) by the Bank and the subsequent deposit of amounts by majority shareholders align with the interests of the company and comply with procedural requirements.

RULINGS / HOLDINGS:

The agreement to sell and the assignment of rights executed without the permission of the NCLT, in violation of the interim order dated 28.02.2023 restraining creation of third-party interest, are invalid and do not confer any vested rights on the prospective purchaser or assignee.The NCLT was justified in directing the majority shareholders to purchase the property without giving notice to the prospective purchaser or assignee, as the latter failed to obtain necessary permission from the Tribunal and acted contrary to the stay order.The appellants' negotiation with the prospective purchaser and acceptance of Rs. 7 crores payment to the Bank without leave of the Tribunal constituted a breach of the undertaking and the interim order, thus disentitling them from claiming equities in their favor.Section 242(2)(f) of the Companies Act, 2013 is not applicable since no agreement between the company and any other person was placed before the NCLT for modification, termination, or setting aside, and the tripartite agreement was subject to NCLT's approval which was never sought.The revival of the OTS by the Bank and the deposit of Rs. 15.75 crores by the majority shareholders, along with the infusion of Rs. 1 crore into the company, is in the larger interest of the company and shareholders, and upsetting this arrangement would be detrimental.

RATIONALE:

The Court relied on the interim order dated 28.02.2023 passed by the NCLT which expressly restrained creation of any third-party interest on the company's sole immovable asset, thereby rendering any unauthorized sale or assignment void.The legal framework includes the provisions of the Insolvency and Bankruptcy Code and the Companies Act, 2013, specifically Section 242(2)(f), which governs modification or termination of agreements requiring due notice and consent, interpreted strictly to require tribunal involvement and party participation.The Court emphasized adherence to procedural safeguards and the importance of protecting the interests of the company and its majority shareholders in closely held companies, especially regarding disposal of sole assets.The Court noted the appellants' failure to seek necessary permissions from the NCLT before entering into agreements and accepting payments, constituting a breach of undertaking and contempt of the interim order.The decision reflects a doctrinal emphasis on upholding interim orders and preventing unilateral actions that could prejudice the company's interests or circumvent tribunal authority.

ISSUES:

Whether the principal employer can be treated as a debtor under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016) on the basis of minutes of meeting and indemnity bond with the sub-contractor, thereby substituting itself in place of the original contractors.Whether there existed a pre-existing dispute between the sub-contractor and the principal employer regarding the operational debt claimed under Section 9 of the IBC, 2016.Whether payments made by the principal employer on behalf of the contractors create a privity of contract or liability on the principal employer towards the sub-contractor.Whether the application under Section 9 of the IBC, 2016 is maintainable against the principal employer in absence of direct contractual relationship and in presence of a pre-existing dispute.

RULINGS / HOLDINGS:

The principal employer cannot be treated as a debtor to the sub-contractor merely because it facilitated settlement discussions and made payments on behalf of the contractors; "mere facilitation of the dispute cannot create a right in favour of the applicant to file this present application against the respondent as it debtor."There was no privity of contract between the sub-contractor and the principal employer, and the principal employer did not assume liability of the contractors; hence, the principal employer is not liable to pay the operational debt claimed by the sub-contractor.The minutes of meeting and indemnity bond explicitly state that "all other terms and conditions of the work orders issued by GDCL/VNCPL to the applicant shall remain unaltered," and do not identify the principal employer as the payer, thereby negating any novation or substitution of liability.The existence of unresolved reconciliation of accounts and counterclaims between the sub-contractor and contractors constitutes a "pre-existing dispute," which bars admission of the Section 9 application as per the Supreme Court ruling in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd.Payments made by the principal employer on behalf of contractors were made "to facilitate the respondent" and do not establish contractual liability or privity of contract between the principal employer and the sub-contractor.The application under Section 9 of the IBC, 2016 against the principal employer is not maintainable and is therefore dismissed.

RATIONALE:

The Court applied the contractual framework between the principal employer and contractors, and between contractors and sub-contractor, emphasizing clauses 11.4 and 11.11 of the General Conditions of Contract which clarify that sub-contractors have no direct claim against the employer and that payments by the employer on behalf of contractors do not create contractual obligations.The Court relied on the principle that "mere facilitation" or payments made on behalf of a party do not amount to novation or substitution of contractual liability, referencing the Supreme Court judgment in Essar Oil Ltd. v. Hindustan Shipyard Ltd., which held that payments made by the principal employer on behalf of contractors do not create privity of contract with sub-contractors.The Court recognized the existence of a pre-existing dispute due to pending reconciliation of accounts and counterclaims, consistent with the Supreme Court's directive in Mobilox Innovations Pvt. Ltd. that applications under Section 9 cannot be admitted where disputes exist requiring detailed inquiry.The indemnity bond and minutes of meeting were interpreted strictly, noting that they did not alter the contractual relationship or create new obligations on the principal employer towards the sub-contractor.The Court noted that summary proceedings under Section 9 of the IBC, 2016 require clear evidence of operational debt and absence of dispute, which was lacking due to the ongoing reconciliation and counterclaims.There was no dissenting or concurring opinion recorded in the judgment.