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Showing 441 to 460 of 1466 Records
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2024 (6) TMI 1026
Assessment u/s 153A/153C - additions based on seized documents belonging to the relevant assessment year and transactions not recorded in the books of account - HELD THAT:- In the instant case, we find that the AO, while passing the consequent order, has nowhere in the order specified that the documents seized belong to the assessment year under appeal and the transactions, reflected in the seized documents are not recorded in the books of account of assessee.
It is no more re-integra that provisions of section 153C of the Act can be invoked only if any incriminating material seized during the course of search action pertain to that particular assessment year. [Re. CIT vs Sinhgad Technical Education Society [2017 (8) TMI 1298 - SUPREME COURT]
DR could not controvert the findings of the CIT(A), hence, we find no infirmity in the impugned order. In the result, impugned order is upheld and appeal of the Revenue is dismissed.
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2024 (6) TMI 1025
Levy of penalty u/s. 272A(1)(d) - non compliance of notice u/s. 142(1) - HELD THAT:- It is an undisputed fact that subsequently the assessee has complied with the notice issued by the AO and had furnished necessary documents. The reason given by the assessee for delay in responding to the notice dated 22.07.2019 seems plausible. There appears to be reasonable cause for the said failure.
AO after examining the details and documents furnished by the assessee accepted the returned income for the impugned assessment year. We are of considered view that penalty levied u/s. 272A(1)(d) of the Act is liable to be deleted. Appeal of the assessee is allowed.
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2024 (6) TMI 1024
Penalty u/s 271AAA - unexplained cash during the search found - AO discarded the submissions of the assessee on the ground that assessee failed to file any documentary evidence to prove his averments - HELD THAT:- On perusal of the bank statement filed by the assessee we find that approximately Rs 4,85,000/- have been withdrawals by the assessee starting from December 2009 to May 2010, which means when the last financial year i.e. 2009-10 relevant to AY 2010-11 was about to expire there was sufficient cash with the assessee till the date of search i.e 25.10.2010. The amount found during the course of search is Rs 4,06,700/- which is below the amount of withdrawals.
Therefore, we are of the view that the impugned cash cannot be treated as unexplained cash. So far as, argument of the Revenue, that no prudent person will keep a cash for such a long period. We do not find any force because admittedly, it is the case of search and even after search, department has not been able to prove that the cash withdrawals by the assessee has been utilized somewhere else and the impugned cash is generated from some other source.
As in the case of Smt. P Padmavathi [2010 (10) TMI 1154 - KARNATAKA HIGH COURT] has observed that time gap between the withdrawal and the deposit of the same in the bank account would not be a ground for treating the amount as unexplained cash. We are of the firm view that cash found was duly explained cash and hence no addition is permissible in the eyes of law. We allow the appeal of the assessee.
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2024 (6) TMI 1023
Validity of Revision u/s 263 - Alleged non-consideration of assessee's submissions by PCIT - Ex-parte dismissal of appeal without providing a proper opportunity of being heard. - whether the PCIT, vide impugned order, did justice in pursuance of the Tribunal’s order, [2022 (9) TMI 1596 - ITAT DELHI] - HELD THAT:- PCIT, who was required to do needful after rectifying the computational error pointed out in the above-mentioned Tribunal’s order, has given sufficient opportunities of being heard to the appellant/assessee as detailed in impugned order but the same were not availed by the appellant/assessee.
PCIT was not required to review the original order dated 28.03.2021 but to act as per the Tribunal’s order (supra). Since the appellant/assessee did not bring any material on the record during the set-aside proceedings to contradict the finding of the PCIT and to demonstrate any computational error in the original order passed under section 263 of the Act, therefore, it is held that the PCIT, vide impugned order, has rightly declined to interfere/rectify/revise with any of the findings mentioned in the order dated 28.03.2021 passed under section 263 of the Act. Thus, we are of the considered opinion that the impugned order was not passed ex-parte as mentioned in one of the grounds of appeal. Accordingly, in view of the above, grounds of appeal, numbered 1 to 4 are dismissed herewith.
Disallow that expenditure or work out income relatable to such expenditure, on accrual basis, which had not been claimed in the Profit & Loss account - We are of the considered opinion that the PCIT should have held one of the Tables mentioned as authentic as there is no dispute on aggregate expenditure mentioned in these tables and claimed in the Profit & Loss account. In case of dispute about the apportionment of expenses at micro levels (amongst projects), the same would have been sorted out with the help of original bills & vouchers of expenditure.
Therefore, in the interest of justice and considering all the afore-stated observations & finding in the order [2022 (9) TMI 1596 - ITAT DELHI] we are of the considered opinion that the appellant/assessee deserves reasonable opportunity of being heard to make shortcomings. In view thereof, without offering any comment on merit of the case we deem it fit to set aside the impugned order and remit the issue of the computational mistake/error referred back to the file of the PCIT to decide the case afresh.
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2024 (6) TMI 1022
Disallowance of claim u/s 80P(2)(a)(i) for interest earned from credit facilities - assessee is a State Level Federal Agriculture and Rural Development Credit Society registered under the provision of the Karnataka Co-op Societies Act, 1959 - as submitted that the assessee though has the word “bank” in its name, it is not a bank, It is further submitted that the assessee is not licensed to carry on the operations of banking as per the Banking Regulation Act - HELD THAT:- In respect of the observation of the authorities below regarding the violation of Principle of Mutuality since the facilities are extended to associate members and nominal members are concerned, the ratio by Hon’ble Supreme Court in case of Mavilayi [2021 (1) TMI 488 - SUPREME COURT] read with section 2(f) of Karnataka Co-operative Act 1959 covers the issue.
We note that, Karnataka Co-operative Societies Act, 1959 defines Members to include nominal / associate members u/s. 2(f). Considering the definition of “Member” under the Karnataka Co-operative Societies Act, the present assessee qualifies for deduction u/s. 80P(2)(a)(i) - Thus we allow the claim of the assessee u/s. 80P(2)(a)(i) of the act in respect of the interest earned by the assessee from credit facilities extended to members that includes nominal / associate members.
Disallowance of interest u/s 80P(2)(a)(i) earned by the assessee from staff loans - The arguments advanced by the Ld.AR do not support the scheme of the Act under section 80P(2)(a). What is allowable under the section has been expressly provided for therein. As per section 80P, an income which is attributable to any of the specified activities in Section 80P(2) of the Act could be only eligible for deduction. Providing loan to the employees cannot be considered as, “attributable” to the business of the assessee, as the term “attributable to the business” is much narrow term, which is directly connected to the objects of the assessee for which it has been established. We therefore hold that, the interest earned by the assessee from loan give to its employees cannot be considered for deduction under section 80P(2)(a)(i) of the Act. It has to be treated as income form other sources.
Accordingly we hold that the interest earned from the credit activities of the assessee to its members including nominal / associate is allowable u/S 80P(2)(a)(i ) of the act. We also hold that the interest earned by the assessee from loan to its employees are to be treated as Income from other sources, not eligible for deduction under the provisions of Section 80P.
Disallowance of interest u/s 80P(2)(a)(i)/(d) earned by the assessee from investments made - In the instant case, there is nothing on record to come to the conclusion that the amount which was invested in banks to earn interest was amount due to its members, and that, it was a liability. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for objects of the society, but was required to be invested as required by the Karnataka Co-operative Societies Act, 1959. Therefore they had deposited the money out of which interest was earned. The said interest is thus attributable to carrying on the business of the assessee and therefore it is liable to be deducted in terms of Section 80P(2)(d) of the Act. In fact similar view is taken in the case of CIT v. Andhra Pradesh State Co-operative Bank Ltd. [2011 (6) TMI 215 - ANDHRA PRADESH HIGH COURT]
Thus direct the A.O. to verify whether interest / dividend is received by the assessee out of investments made with Cooperative Societies. If the assessee earns interest / dividend income out of investments with co-operative society, as observed in the case of Kerala State Co-operative Agricultural and Rural Development Bank Ltd. [2023 (9) TMI 761 - SUPREME COURT] the same is entitled to deduction u/s 80P(2)(d) of the I.T. Act.
Without prejudice to the above, we make it clear that if the interest earned by assessee from the banks, the same be considered under the head “Income from other sources” and necessary relief to be granted to the assessee u/s 57 of the Act in respect of cost of funds and proportionate administrative and other expenses in accordance with law. Accordingly, the issue is restored to the file of Ld.AO for denovo consideration with the above observations.
We direct the Ld.AO to carry out necessary verification based on the evidences filed by the assessee and to compute the deduction under section 80P(2)(a)(i)/(d) in accordance with law.
Disallowance of guarantee commission u/s 43B - AR submitted that, the guarantees in the present case were extended by the Government to the assessee as a part of the executive power of the state under article 293(1) of the Constitution and section 43B contemplates that, a law must levy a tax, duty, cess or fee, and that there is no such levy in the case of a guarantee commission, thus Section 43B does not cover guarantee commission - HELD THAT:- Section 43B falls in Part-V of the Act. What is apparent is that the scheme of the Act is such that Sections 28 to 38 deal with different kinds of deductions, whereas Sections 40 to 43B spell out special provisions, laying out the mechanism for assessments and expressly prescribing conditions for disallowances. In terms of this scheme, Section 40 (which too starts with a nonobstante clause overriding Sections 30-38), deals with what cannot be deducted in computing income under the head “Profits and Gains of Business and Profession”
Each of these deductions, has its contours, depending on the expressions used, and the conditions that are to be met. It is therefore necessary to bear in mind that, specific enumeration of deductions, dependent upon fulfilment of certain conditions, that would qualify as allowable deductions, and failure by the assessee to comply with those conditions, would render the claim to be rejected.
In the present case, it is apparent that, the guarantee- commission paid has been debited to the Assessee's P&L account. Guarantee commission cannot be considered to be in the nature of any levy, cess of such type. In fact the provisions of section 43B would not be admissible to the payment Guarantee commission by the assessee to the State Government under an agreement as it does not qualify for any of the types mentioned therein. We therefore remand this issue to the Ld.AO to carry out necessary verification, based on the agreement entered into by the assessee with the state Government and to analyse if the payment of guarantee Commission is an admissible deduction under section 37(1) of the Act.
Disallowance of business loss - As per assessee he returned loss under the head profits and gains from business or profession and on account of the income from other heads exceeding the loss declared, the gross total income as declared became positive - HELD THAT:- As AR submitted that the Ld.AO, in determining the gross total income, has taken income under the head profits and gains from business and profession as nil and, he has ignored the loss of ₹ 29,48,007.In our opinion this issue needs to be verified by the Ld.AO while giving effect to the order of this Tribunal.
Addition of e-stamping income - AR submitted that the Ld.AO observed that since the Appellant renders e-stamping services and receives income from non-members, the deduction under section 80P(2)(a)(i) will not be allowable. However, no disallowance of the deduction under section 80P was made specifically as it relates to e-stamping income - HELD THAT:- Identical issue has been analysed hereinabove while considering the interest earned by the assessee from staff loan. We rely on the observations made in para 16.3 and hold that the income earned by the assessee from E stamping cannot be considered for the purpose of deduction under section 80P(2) of the act.
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2024 (6) TMI 1021
Revision u/s 263 - Depreciation claim on goodwill and other intangible assets - Pr.CIT was of the firm belief that the sixth proviso to section 32(1) squarely apply on the facts of the amalgamation and therefore, the depreciation claimed on the goodwill and Trade name by the assessee company cannot be allowed in its hands. Since this aspect was not examined and considered by AO during the course of the assessment proceedings the assessment order is “erroneous” and "prejudicial to the interest of the revenue" - HELD THAT:- We have to appreciate the facts of the case in hand in the true prospective. It has to be understood that there was no goodwill in the books of the UHEPL and only after the scheme of amalgamation when the amalgamating company UHEPL amalgamated goodwill came into existence being the difference between the consideration paid by amalgamated company i.e., assessee over and above the net assets value of the amalgamating company. The valuation of the goodwill is as per the valuation report and there is no quarrel in so far as the NAV of the amalgamating company is considered. The same has the sanction of the Hon’ble National Company Law Tribunal.
Whether the assessee is entitled to claim depreciation on goodwill has been decided in the case of CIT v. Smifs Securities Ltd [2012 (8) TMI 713 - SUPREME COURT] in which case also one company amalgamated with the assessee company and the excess consideration paid by it over value of net assets amounted to goodwill on which depreciation was claimed and was allowed.
Since the claim of depreciation has the backing of the Hon’ble Supreme Court by no stretch of imagination the assessment order can be considered as “erroneous” and "prejudicial to the interest of the revenue" in so far as this issue concerned.
If the Ld. Pr.CIT was of the firm belief that the Assessing Officer has not conducted proper enquires, in so far as the claim of depreciation or good will is concerned. Nothing prevented the Ld. Pr.CIT to conduct enquires as held by the Hon’ble Delhi High Court in the case of DG Housing Projects [2012 (3) TMI 227 - DELHI HIGH COURT].
Disallowance on account of inventory amortization - during the course of the scrutiny assessment proceedings, the assessee has admitted the inadvertent error and requested the Assessing Officer to disallow ₹.20.88 crores instead of suomoto disallowance of ₹.14.71 crores - HELD THAT:- As seen that the assessee had substantial loss and the business loss for assessment year 2009-10 amounting to ₹. 61.30 crores would have lapsed during the year under consideration. Therefore, the contention of the Ld. Pr.CIT that this error has resulted into under assessment to the tune of ₹. 6.17 crores would do no revenue loss and therefore in our considered opinion the twin conditions i.e., order should not only be “erroneous” but also "prejudicial to the interest of the revenue" is not fulfilled.
As decided in Paville Projects (P) Ltd [2023 (4) TMI 295 - SUPREME COURT] it is observed and held that in order to exercise the jurisdiction under Section 263(1) of the Income tax Act, the Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue.
Thus we are of the considered view that the assessment order dated 18.03.2021 framed by the Assessing Officer under section 143(3) r.w.s. 143(3A) of the Act is neither “erroneous” nor "prejudicial to the interest of the revenue". Decided in favour of assessee.
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2024 (6) TMI 1020
Addition u/s 36(1)(viia)(d) - contingent provision against standard assets - AO disallowed the said amount on the ground that it was a contingent unascertained liability and hence not allowable as deduction - as argued CIT(A) erred not appreciating the contention of the appellant that the provision @0.40% made on standard assets was as per the as per the NPA provisions norms and guidelines issued by Reserve Bank of India - HELD THAT:- AR filed additional evidence. Ld.AR submitted that Finance Act, 2016 has introduced section 36(1)(viia)(d) w.e.f. 01.04.2017. As per said provision, NBFC’s are allowed to make provision for bad and doubtful debts of an amount not exceeding 5% of the total income. Ld.AR submitted that both ld.CIT(A) and AO failed to consider the provisions of the Act introduced w.e.f 01.04.2017. On perusal of the assessment order and ld.CIT(A)’s order, it is observed that both these authorities have not considered the section 36(1)(viia)(d) introduced w.e.f. 01.04.2017.
Since AO and CIT(A) failed to consider the provisions of 36(1)(viia)(d) and assessee had filed additional evidence to substantiate this claim, in the interest of substantial justice, we set- aside the addition made by AO to the Assessing Officer for denovo adjudication.
Addition u/s 68 - assessee has received cash in old currency during the demonetization period - as submitted cash accepted during the demonetization period was towards the instalment of outstanding loan account of the borrower - HELD THAT:- To invoke section 68 of the Act, the AO has to prove that assessee failed to file identity of the depositors, genuineness of the transaction and creditworthiness. In this case, the assessee had submitted the names of the persons from whom cash was received during the demonetization period in the form of demonetized currency. Assessee also submitted that assessee maintains all KYC documents of all these persons. The AO had not asked the assessee to produce the said KYC Documents. Rather AO has not challenged the identity of the depositors, genuineness of the transactions and creditworthiness of the depositors. In these facts and circumstances of the case, we are of the opinion that no addition can be made u/s 68 of the Act. See M/s. Bhagur Urban Credit Co-operative Society Ltd., [2023 (1) TMI 1384 - ITAT PUNE] - Decided in favour of assessee.
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2024 (6) TMI 1019
Penalty u/s 271(1)(c) - assessee was employee and after the VRS received the salary and ex-gratia and declared the amount u/s 17(1) and claimed standard deduction u/s 16(1) - As per the revenue, if the salary plus exgratia was more than Rs. 5 lacs the assessee was not eligible to claim standard deduction u/s 16(1) - HELD THAT:- The assessee was under a bonafide impression that since regular salary income was before Rs. 5 lakhs, the assessee was entitled to such deduction. It is also a fact that assessee filed the return without the assistance of advocate or counsel. There is no presumption that everybody knows the law.
Therefore, there does not appear to be any malafide intention on the part of assessee for claiming standard deduction u/s 16(1) more so when the full facts in this regard were fully disclosed in the return and statement of income filed along with the return. Thus, we are of the considered opinion, the impugned appeal order is set aside and the impugned penalty levied by the ld. AO is quashed - Assessee appeal allowed.
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2024 (6) TMI 1018
Deduction u/s 80P(2)(a)(i) and 80P2)(d) - interest / dividend income earned from co-operative bank - HELD THAT:- As assessee has raised the contention in the grounds that interest received from certain co-operative banks is on account of compliance with Rule 28 of the Karnataka Co-operative Societies Rules, 1960, therefore, it constitutes income from business of providing credit facilities to its members and hence the same is eligible for deduction u/s 80P(2)(a)(i) of the Act. This identical contention of the assessee has also been dealt with in the case of Vasavamba Co-operative Society Ltd. [2021 (8) TMI 706 - ITAT BANGALORE] wherein had restored the matter to the AO for fresh examination because if there are statutory compulsions that the money should be invested in a particular manner to run business of the Assessee then the interest income arising from such investments have business nexus and should be considered as income derived from the business of providing credit facility to the members. This aspect requires examination by the AO.
Thus we direct the AO to examine whether interest income is earned out of investments which are in compliance under the relevant Karnataka Co-operative Societies Rules and Act. If the same is found to be out of compulsions, the interest income derived would be entitled to deduction under section 80P(2)(a)(i) of the Act.
Deduction u/s 80P(2)(a)(iii) - commission earned from Mangalore Agriculturists Souhardha Sahakari Ltd - AO disallowed the claim of deduction due to the absence of any details furnished to establish the entire facts - HELD THAT: Assessee has wrongly claimed deduction u/s 80P(2)(a)(iii) of the Act instead of claiming deduction under section 80P(2)(e) of the Act. Assessee has also not furnished the necessary documents before the AO. Consequently, the claim of deduction was not granted by the AO. In the interest of justice and equity, we are of the view that this issue needs to be examined afresh by the AO. Therefore, as regards the claim of deduction of Rs.1,71,568/- whether assessee is entitled to deduction under any of the limbs under section 80P of the Act shall be examined afresh. Assessee shall furnish necessary materials / evidences to substantiate its claim. It is ordered accordingly.
Deduction u/s 80P(2)(e) - income earned from storing the pledged agricultural produce against loans given - AO disallowed the claim of deduction due to the absence of details to establish the entire facts - HELD THAT:- Assessee had made claim for deduction under section 80P(2)(e) of the Act before the income-tax authorities. The claim of deduction was denied by the AO since complete facts were not produced before him. Before the Tribunal, assessee submits that it is entitled to deduction under section 80P(2)(a)(i) of the Act since assessee gives loans on agricultural produce to its members which is incidental to its business; hence, eligible for deduction under section 80P(2)(a)(i) of the Act. We are of the view that the issue raised in ground also requires to be adjudicated since full details were not available before the AO.
Appeal filed by the assessee is allowed partly for statistical purposes.
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2024 (6) TMI 1017
Eligibility of deduction u/s 80P(2)(d) - interest income from co-operative banks - Assessment of interest income from co-operative banks u/s 56 of the Income Tax Act - HELD THAT:- In the instant case, we notice that assessee has raised a contention before the CIT(A) that these investments with the Central District Co-operative Bank is in compliance with the requirement under the Karnataka Co-operative Societies Act, 1959, and the relevant Rules. Therefore, it was submitted that such interest income received on investments made under compulsion under the relevant Act and the Rules is entitled to deduction under section 80P(2)(a)(i) of the Act. We find that the CIT(A) has not adjudicated the contentions raised by the assessee.
As per the directions of Registrar of Karnataka Co-operative Societies filed by the assessee, we find that all primary co-operative societies are to be mandatorily made to invest 25% of total deposits as liquid fund (SLR) and 3% of the total deposits as cash reserve (CRR) with the concerned Central District Co-operative Banks to run credit facilities by a primary agricultural credit co-operative society in the State of Karnataka. The CBDT Circular No.18/2015 dated 02.11.2015 has clarified that interest income from SLR/non-SLR investment by banking company and a cooperative society shall be chargeable under the head “profit and gains of business or profession”. On identical factual situation, we find the Bangalore bench of the Tribunal in the case of M/s. Kachur Credit Co-operative Society Ltd [2023 (9) TMI 1487 - ITAT BANGALORE] wherein restore the issue to the files of the AO to examine whether interest income received from South Canara District Central Co-operative Bank Ltd., is out of compulsions and in compliance with the Karnataka State Cooperative Societies Act, 1959 and the relevant Rules. If it is so, the same interest income is to be assessed as income from business which would entail the benefit of deduction under section 80P(2)(a)(i)
We direct the AO to examine whether the interest income received on investment with Central Co-operative Bank is out of compulsions under the Karnataka Co-operative Societies Act, 1959, and the relevant Rules. If it is so, the same may be considered as ‘business income’ and entitled to deduction under section 80P(2)(a)(i) of the Act. In other words, if assessee society does not comply with the relevant provisions of the Act, and the Rules of Karnataka Co-operative Societies Act, 1959, it cannot carry on its cooperative activities, namely carry on the business of banking or providing credit facilities to its members. Therefore, if the investments are out of compulsion under the Act and relevant Rules, necessarily it is part of assessee’s business activity entailing the benefit of section 80P(2)(a)(i) of the Act - Appeals filed by the assessee are allowed for statistical purposes.
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2024 (6) TMI 1016
Dispute over moisture content in exported Iron Ore - Finalisation od assessment based on increased value - huge variation in weight due to moisture content - actual DMT of Iron Ore exported higher than what were declared in the invoices made by the appellant.
While, the appellant has been claiming the moisture content of about 8% when the goods were exported, the test analysis by CRCL at the load port arrived at the moisture content between 4.60% to 6.8%.
HELD THAT:- Since the quantity arrived at by the Revenue is on the higher side, the appellant has been granted lesser refund in these cases. On going through the Circular No. 12/2014-CUS dated 17.11.2014, it is observed that this Circular has been issued specifically to address the problems faced in respect of the valuation and assessment of Iron Ore which are subjected to various tests - the Circular specifies about the declared price in the contract and the provisions provided in the contract should be considered. In the present case, it is seen from the contract Clause 3 that moisture content is allowed to a maximum extent of 10%, this means that the consignment will not be accepted if the percentage exceeds 10%. There is no minimum moisture content specified. Apart from this, Clause 9 – Sampling and Analysis clearly specifies that the CIQ shall analyse the sample at the port of discharge and its analysis shall be final.
From the documentary evidence provided by way of invoices, it is seen that based on the moisture content arrived at by CIQ, the appellant has reduced the quantity and arrived at the DMT quantity. There is no dispute that the appellant has realised only the value shown in the total value shown in the invoices. Therefore, it is clear that the transaction value has been followed by the appellant. This also meets the requirement as specified in the Circular No. 12/2014 dated 17.11.2014. Hence on this count the Appeal stands allowed.
Export duty is on advalorem basis, which is dependent on the value of the consignment exported - the value for Export Duty has to be taken as per Transaction Value only. Admittedly, the transaction value is not doubted. Hence, even on considering this fact, the impugned order cannot be sustained.
Decision in the case of Steer Overseas Pvt Ltd., Vs Commissioner of Customs, Vijayawada [2020 (4) TMI 246 - CESTAT HYDERABAD] cited by the Learned AR is considered - In this case, the test report at the load port was obtained by Revenue from CRCL and was also obtained separately from independent agency by the appellant. These two were in variance. This case is different from the present matter. In the present case, the difference in test report is between the test report given by CRCL at load port and the test report given by CIQ at the port of discharge. Therefore, this case law has no application in the present appeal.
Since the contract itself specifies that the appellant is required to bill based on the CIQ test report, and there is no dispute that they have raised the bill and realised only as per this Clause with the transaction value and BRC provided by the appellant not being doubted, there are no reason to uphold the impugned orders.
The impugned order set aside - appeal allowed.
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2024 (6) TMI 1015
Rejection of appeal of the appellant against the final assessment order - Misinterpretation of Coastal Cargo under Chapter-XII of the Customs Act, 1962 - Classification and duty assessment of tug and bunkers under the Customs Tariff Act, 1975.
HELD THAT:- As per the facts of the case there is no dispute that the tug was brought to Alang port for breaking therefore the same is correctly classified under 8908.00.00 of the Custom Tariff Act, since the tug was brought for breaking up the same cannot be classified in different head i.e. the tug under 8908 and bunker under different heading.
The Bunker of the tug was considered by both the lower authority as the goods considering during the coastal run. However, as per the facts of the present case the tug along with the Bunker was presented for assessment. Therefore, the entire tug including the Bunker must be assessed for the purpose of breaking up hence on Bunker and other goods duty cannot be demanded separately. The whole case is based on the interpretation of coastal run only for the reason that the tug has first gone to Nhavasheva there after Fuzerah UAE then it came to Alang for clearance as tug for breaking up.
On the identical facts this Tribunal has considered the case of COLLECTOR OF CUSTOMS, AHMEDABAD VERSUS SHIPPING CORPORATION OF INDIA LTD. [1986 (12) TMI 216 - CEGAT, BOMBAY] wherein issue has been decided in favour of the assessee by holding that 'The fact that to begin with the respondents themselves had applied for conversion of the vessel as a coastal vessel cannot be held against them as estoppel once they realised their mistake in view of the High Court judgments and took remedial action in time. The point that Customs duty was demanded by the officers at this port or that is hardly material.'
From the above decision and the facts involved therein, it can be seen that the facts of the present case is also identical to above decision. Therefore, Ratio of the above decision is applicable in the present case.
The impugned order is not sustainable - Appeal allowed.
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2024 (6) TMI 1014
Assessment of Bill of entry contrary to self assessment - Rejection of appeals without deciding the issue on merits taking the recourse of Section 17(5) of the Customs Act, 1962 - N/N. 29/2010-Cus dated 27.02.2010 - HELD THAT:- In the present case, after rejection of the appellant’s claim of benefit under the above said notifications as declared in their Bills of Entry, they paid the duty under protest and preferred appeal before the learned Commissioner(Appeals). Therefore, the learned Commissioner(Appeals) ought to have decided the appeals on merits instead of rejecting the same by observing that the appellant has accepted the assessment. Further, the Hon’ble Supreme Court in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [2019 (9) TMI 802 - SUPREME COURT] has held that Revenue as well as appellant can prefer an appeal against the order of the assessment.
The impugned order is set aside and the case is remanded to the learned Commissioner (Appeals) to decide all the issues on merit, after affording an opportunity of hearing to the appellant. Since the assessment involved in the appeals is around a decade old, it is directed that the denovo proceeding be completed within three months from the date of communication of this order.
Appeal is allowed by way of remand.
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2024 (6) TMI 1013
Denial of Drawback claims, based on testing samples - cross-examination of testing personnel sought, was not granted - no samples drawn in respect of 17 Shipping Bills - 16 Shipping Bills on which samples drawn and tests carried on - Non-verification of export proceedings in respect of all the 33 consignments - Interest on the drawback - Penalties - Confiscation.
No samples drawn in respect of 17 Shipping Bills - HELD THAT:- The exports have taken place in June and July 2002. Admittedly, no samples were drawn by the Department nor any samples were tested by NTCL or NIFT. In such a case, the Department could not have relied on the Test Report of NTCL/NIFT in respect of second lot of Shipping Bills to deny the Draw Back claim. In respect of first set of 17 Shipping Bills, on this count itself, the impugned Order is set aside and the Drawback claim of Rs. 38,63,529/- allowed subject to the condition specified.
16 Shipping Bills on which samples drawn and tests carried on - HELD THAT:- As rightly pointed out by the Appellant, both the testing agencies have completed the test and also issued the Test Report in a record time of 24hrs/48hrs. This gives cause of some kind of doubt as to whether proper procedure was followed before coming to a conclusion about PMV. Secondly, though the Department itself has obtained both the certificates, the first one from NTCL and second one from NIFT, the Revenue has straightway proceeded on the assumption that only the NTCL Test Report is applicable.
Non-verification of export proceedings in respect of all the 33 consignments - HELD THAT:- It is seen from the records that the Appellant has been claiming that they have received the export proceedings in respect of all the 33 consignments. This fact has not been verified at the Adjudication level. Only for the limited purpose of verifying the BRC in respect of the 33 Consignments, the matter remanded back to the Adjudicating Authority. If on verification the fact is found to be correct, the Appellant should be granted the refund of the drawbacks in respect of both the sets of exports as per law. As the original Appellant has been substituted by the present appellant by way of the Misc. Order cited supra, the refund amount is to be granted to her.
Interest on the drawback - HELD THAT:- The Appellant has also prayed that they would be eligible for interest on the drawback which is being paid to them now since they have filed the drawback claim in 2002 itself. The Adjudicating Authority is directed to go through the statutory provisions and case laws on this issue and accordingly grant the refund of the drawback and interest, if any, as per law.
Penalties - Confiscation - HELD THAT:- Since the Appeal is being allowed, all the penalties imposed and confiscation ordered stand set aside.
Since the issue pertains to the year 2002, the Adjudicating Authority is directed to complete the proceedings within 3 months from the date of communication of this Order.
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2024 (6) TMI 1012
Rectification of mistake in the Bills of Export - conversion of Free Shipping Bills to Export Promotion Shipping Bills - Section 149 of the Customs Act, 1962 - HELD THAT:- Perusing some of the Bills of Export and Invoices, it is clear that the Appellant has mentioned the Advance License details in the Invoices and Packing lists. Due to inadvertent error, the Advance License details were not shown in the Bills of Exports. Therefore, the Commissioner (Appeals) vide his OIA dated 16/3/2011 has correctly held that is a matter of rectification of error which is permissible under Section 149 of the Customs Act, 1962. It is also observed that the Committee of Commissioner has reviewed and approved this OIA and no further Appeal was filed.
The Appellant has shown the details of Advance License numbers in their Invoices and Packing list which are part of the Export documents. Their only mistake was not to have given the details of Advance Licenses in the Bills of Export (Shipping Bills). Amending the Shipping Bills/Bills of Export by adding the Advance Licence numbers after proper verification of the document would only be a minor rectification and would not be in the nature of amendment.
The Tribunals and High Courts have been consistently holding that under Section 149, the proper officer has the power to carry out the amendment based on the documents which are available at the time of imports/exports. In this case, there is no doubt that such documents were available at the time of export itself and such Invoices and packing list were part of the documents while the goods were cleared to Nepal.
The Revenue has resorted to an indirect method to Review its decision and pursue the matter with utmost zeal, which has resulted in the issue coming before the Tribunal twice in a span of 10 years. The Commissioner (Appeals) in the impugned Order has simply ignored the factual details and two detailed Orders of her predecessors and the earlier Review Order and has felt it necessary to simply toe the line of the Revenue - Without doubt, all these actions have resulted in loss of precious time by the Tribunal, which could have easily been avoided. This also has resulted in the Appellant being put to enormous difficulty since they were not able to obtain closure reports for the Advance Licences from the DGFT though they have fulfilled the export obligations about 14 years back.
The impugned order is set aside - appeal allowed.
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2024 (6) TMI 1011
Continuation of appeal after initiation of Corporate Insolvency Resolution Process (CIRP) and Order approving the Resolution plan passed/approved by the Learned NCLT under Insolvency and Bankruptcy Code, 2016 - relief under changed circumstances - Rule 22 of CESTAT (Procedure) Rules, 1982 - HELD THAT:- Undisputedly, during the pendency of the said Appeals, pursuant to the petition filed by one M/s Elite Brilliant Limited, proceeding has been initiated under IBC, 2016. The Hon’ble NCLT vide Order dated 16.04.2019 admitting the petition appointed the Interim Resolution Professional (IRP) in the case. The Resolution Plan has been approved by the Hon’ble NCLT vide Order dated 13.01.2020. Consequent to the said Order approving the Resolution Plan, the appellant is now before this Forum.
The Mumbai bench of this Tribunal in the case of M/S. ALOK INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BELAPUR AND COMMISSIONER OF CEN. EXCISE, MUMBAI CENTRAL [2022 (10) TMI 801 - CESTAT MUMBAI] analysed in detail Rule 22 of CESTAT (Procedure) Rules, 1982 and the case laws on the issue including those cited by the Ld. Advocate for the appellant observed that aforesaid Rule 22 should be applicable the moment the successor interest with sufficient rights is appointed by NCLT to make an application for continuation of the proceeding.
As observed by the Hon’ble Supreme Court and High Courts in catena of cases that the Tribunal is a creature of the statute; it cannot travel beyond the express powers vested under the Statute or Rules framed under the statute, while deciding a statutory Appeal filed before it against the Orders of the prescribed statutory authorities mentioned under the statute. The corollary, any order passed by the Tribunal beyond the vested powers under the statute would be non est in law.
Thus, the appeal abates once the IRP is appointed and/or Resolution plan approved. Consequently, the appeals abate as per Rule 22 of CESTAT (Procedure) Rules, 1982 and this is the relief/Order could be passed as prescribed under the said Rule.
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2024 (6) TMI 1010
CENVAT Credit - taking credit commonly for both exempted goods and the taxable service - various services used for laying the pipeline which ultimately was used for supply of the CBM gas.
Demand of Rs. 11,12,41,507/- based on Rule 6(3A) of the Cenvat Credit Rules, 2004 - HELD THAT:- It has been held by the Adjudicating Authority that the Appellant was registered as service provider and was filing of their Returns towards the Cenvat taken by them. Appellants were carrying bona fide belief that no excisable goods were being manufactured by them. Therefore they neither took the Registration nor did they file any Returns. In spite of the ST-3 Returns being filed as service provider, the Department did not issue any query as to whether they were also into manufacturing of the gas. Therefore, it is held that the demand of Rs.11,12,41,500/- raised based on the alleged exempted turnover of the goods, is legally not sustainable on account of time bar in respect of the demand pertaining to extended period. The Adjudicating Authority has set aside this demand on merits in the Order-in-Original and the same is upheld.
Demand of Rs. 5,27,86,789/- for Cenvat Credit taken for services used in laying pipelines - HELD THAT:- Even if any immovable property comes into being, but if the same is used for provision of output service resulting in payment of Service Tax, the Cenvat Credit cannot be denied. Considering that the Appellant is eligible to take the Cenvat Credit. On merits, the confirmed demand of Rs.5,27,86,789/- along with interest and penalty on merits is set aside.
The Appeal filed by the Revenue stands rejected and the Appeal filed by the Assessee stands allowed.
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2024 (6) TMI 1009
Condonation of delay in filing of appeal by the Revenue - Rule 8 and Rule 8(3A) of the Cenvat Credit Rules, 2002 - matter lis pendens - HELD THAT:- It cannot be disputed that the decision in the case of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA & 2 [2014 (12) TMI 585 - GUJARAT HIGH COURT] was challenged before the Hon’ble Supreme Court in Special Leave to Appeal No. 16523/2015 and by order dated 24th September, 2015 the Hon’ble Supreme Court has stayed the judgment of the High Court of Gujarat.
The decision of this Court in M/S. GOYAL MG GASES PVT. LTD VERSUS UNION OF INDIA & OTHERS [2017 (8) TMI 1515 - CALCUTTA HIGH COURT] appears to have been rendered taking note of the decision of the High Court of Gujarat in the case of Indsur Global. When similar appeal came up before this Court on earlier occasion, the Court has set aside the order of the learned Tribunal and remanded the matter back to the Tribunal to be kept pending before the Tribunal to be taken up for decision after the judgment is rendered by the Hon’ble Supreme Court.
The order passed by the learned Tribunal is set aside and the appeal is restored to the file of the learned Tribunal and the matter shall be kept pending and taken up after the judgment of the Hon’ble Supreme Court.
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2024 (6) TMI 1008
Refund - Principles of unjust enrichment - Return of excise duty recovered from M/s Archana Industries - whether the appellant had successfully rebutted the presumption that the incidence of duty was not passed on to the buyer under section 12B of the Central Excise Act? - HELD THAT:- The appellant is not denying this fact but submitted that those amounts paid as duty had been adjusted later on in sale consideration but in the considered opinion of all the authorities and learned tribunal burden has not bee duly discharged by the appellant. Initially, the sale price and excise duty were paid by way of cheques, thereafter the appellant started receiving by way of cash - The Adjudicating Authority, while adjudicating the case of refund examined the accounts of the appellant and gave a finding of fact that the duty had been recovered from the customer by the appellant. Therefore, the appellant has not come out from the rigour of S. 12B of the Act.
The appellant has only placed reliance on the certificate issued by the CA which is contrary to the invoices, hence the same is not liable to be relied on - the ledger accounts of relevant periods were filed, which also nowhere established that this excise duty was charged but later on adjusted. Hence concurrent finding of facts cannot be interfered in this appeal. The question of law which is framed is also a question of fact, not a pure question of law on which the findings can be reversed.
The invoices that came on the record clearly indicate that the appellant collected the excise duty from the buyer and paid it to the excise department and if it is refunded to the appellant, that would be an unjust enrichment to him. Hence, the same has rightly been directed to be credited to the consumer welfare fund as contemplated under section 11B.
In the case of GAIL (INDIA) LTD. VERSUS COMMISSIONER CENTRAL EXCISE AND CUSTOMS, MANIK BAGH PALACE, INDORE (MADHYA PRADESH) [2023 (10) TMI 879 - MADHYA PRADESH HIGH COURT], this Court has disbelieved the certificate issued by the Chartered Accountant and maintained the order of the Adjudicating Authority, Appellate Authority and CEGATE rejecting the claim of refund of the amount. However, in the present case, the refund has been allowed but instead of giving it to the appellant, the Authority has directed to credit the said amount to the consumer welfare fund.
Appeal dismissed.
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2024 (6) TMI 1007
Classification of goods - intermediate goods - marketable products or not - Polyester/ cotton rove twisted yarn and Nylon/ cotton rove twisted yarn - to be classified under Sub heading No.5608.00 or under sub heading 5607.90? - demand of duty and equal penalty.
Marketability - HELD THAT:- There is a clear finding that the goods are not available in the open market. If the appellant manufactures excess of the impugned products, they would not be able to sell these products in open market as there are no buyers to purchase the same. So, also in case they have shortage of these intermediate products, they would not be able to buy it from the market as it is not available in the market. It is very much clear that the goods are not marketable - In the case of CIMMCO BIRLA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR [2015 (8) TMI 582 - SC ORDER], the Hon’ble Apex Court held that the goods would be exigible to excise duty only if it is proved that they are marketable. The burden lies on the department to demonstrate that the goods are marketable.
The Tribunal in the case of M/S. NEEDLE INDUSTRIES (INDIA) PVT. LTD. VERSUS CCE, SALEM [2017 (4) TMI 1219 - CESTAT CHENNAI] had occasion to consider a similar issue. The goods in question was Gold Potassium Cyanide solution and the issue considered was the marketability of this item. It was brought out from evidence that the said item is not only highly poisonous because of the presence of its cyanide molecule, but also unstable. The Tribunal held that the goods cannot be said to be marketable.
The intermediate goods namely polyester / nylon / cotton rove twisted yarn are not marketable items. This issue is answered in favour of the assessee.
Classification of intermediate products - HELD THAT:- The issue of marketability is decided in favour of assessee. Only if the goods are marketable, they fall into the definition of excisable goods. The levy of excise duty is attracted only for manufacture of excisable goods. As we have already held that the goods are not marketable and therefore not excisable goods, the issue of classification is of no consequence and the demand of duty cannot sustain - the demand of duty confirmed in the impugned order is set aside.
Penalty - HELD THAT:- The adjudicating authority has imposed equal penalty under Section 11 AC of the Central Excise Act, 1994. Interestingly, there is no proposal in the show cause notice to impose penalty. Moreover, the appeals arise out of the finalization of assessment. The dispute being interpretation in nature and also with regard to classification of the impugned goods, the imposition of penalty is totally unwarranted.
The impugned orders are set aside - Appeal allowed.
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