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2013 (12) TMI 1486
Issues involved: Application seeking waiver of pre-deposit of Cenvat credit and penalty imposed under Rule 15 of the Cenvat Credit Rules, 2004.
Summary:
Issue 1: Classification of Cathode and Anode as 'inputs' or 'capital goods'
The Applicant availed Cenvat credit on Pre-baked Anode, Cathode Carbon Block falling under Chapter 85 of the Central Excise Tariff Act, 1985. The contention was whether these items should be considered as 'inputs' or 'capital goods'. The ld. Advocate argued that previous judgments considered these items as 'inputs' even after the new definition of 'Capital Goods'. He also highlighted that in other Commissionerates, these items were treated as 'inputs' allowing Cenvat credit. The Revenue argued that since the remnant of cathode and anode were cleared as 'used carbon blocks' and duty was discharged, they should be treated as 'capital goods'. The Tribunal found the issue debatable, considering the definition of 'capital goods' and 'inputs'. The Applicant was granted total waiver of pre-deposit of dues adjudged, with recovery stayed during the Appeal, based on a strong prima facie case on merits.
End of Summary
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2013 (12) TMI 1485
Undisclosed capital introduction and unaccounted profit of the business - unaccounted deposits made in Indian Bank, Bankura - undisclosed receipt as well as undisclosed income of the assessee - CIT(A) deleted the addition - Held that:- Perusal of the seized material in BDM/18, when compared to the audited balancesheet, as also the reconciliation of the balance-sheet show that in the audited balance-sheet, there is no land and building whereas in the seized BDM/18, there is an item of land and building. Admittedly, if there is a land and building, such an asset cannot be hidden. Further, even the search did not unearth any such land and building. Further perusal of the reconciliation shows that the cash and bank balance show an amount of ₹ 1,18,774/-, as per the seized BDM/18 and as per the audited balance-sheet is ₹ 15,88,517.60. Here, the Revenue has not been able to identify any bank account, which is having a balance of ₹ 1,13,774.43 as shown in BDM/18. Further, the sundry debtors show an amount of ₹ 13,119/- as per BDM/18 whereas as per the audited balance-sheet, the figure is ₹ 11,36,148/-, which is a higher figure in the audited balance-sheet. On the liabilities side, the sundry creditors shown, as per BDM/18, is ₹ 1,95,965.43 whereas as per the audited balance-sheet, the figure is ₹ 35,84,244.42, which is again a higher figure and this includes an amount of ₹ 28,48,604/- in respect of Dutta Automobiles, which are on the basis of contemporaneous document and evidence. There is also a loan from Union Bank, which is shown in the audited balance-sheet at ₹ 4,01,437/- but does not find place in BDM/18. All these figures, which have been extracted and explained earlier, clearly show that BDM/18 is clearly not a true and fair document for the purpose of making an addition much less a presumption of undisclosed income. CIT(A) on the issue is on the right footing and does not call for any interference. - Decided in favour of assessee.
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2013 (12) TMI 1484
Denial of CENVAT Credit - GTA Service - Tribunal followed the decision of ABB Limited Vs. Commissioner of Central Excise reported in [2011 (3) TMI 248 - KARNATAKA HIGH COURT] - Revenue contends that against the decision of the Karnataka High Court in the case of M/s ABB Limited (Supra), the revenue is before the Hon'ble Supreme Court - Held that:- it is required to be noted that apart from the fact that nothing is on record that the decision of the Karnataka High Court in the case of M/s. ABB Limited (Supra) has been stayed or not. There is a binding decision of the Division Bench of this Court in the case of Parth Poly Wooven Pvt Ltd (Supra) and nothing has been pointed out whether against the decision of the Division Bench in the case of Parth Poly Wooven Pvt Ltd (supra), the department has approached the Hon'ble Supreme Court or not. It is not in dispute that as such the controversy in question is as such covered against the revenue by the decision of this Court in the case of Part Poly Wooven Pvt Ltd (2011 (4) TMI 975 - GUJARAT HIGH COURT). - No question of law much less any substantial question of law arise in the present appeal. - Decided against Revenue.
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2013 (12) TMI 1483
Eligibility for deduction u/s 43B - payments of PF and ESIC paid beyond the due dates of the respective Acts, including the grace period - Held that:- Considering the fact that it was the case of employees contribution which was not deposited within the prescribed period under the PF Act and ESI Act, the said question / issue is to be held in favour of revenue and against the assessee in view of the decision of this Court in COMMISSIONER OF INCOME TAX II Versus GUJARAT STATE ROAD TRANSPORT CORPORATION [2014 (1) TMI 502 - GUJARAT HIGH COURT] wherein it has been held that if the assessee has not deposited employees contribution towards PF and ESIC Act, the assessee shall not be entitled to the deductions in the same year. - Decided in favour of the revenue.
Excise duty and sales - whether will not be included in the total turnover while calculating the deduction u/s. 80HHC of the even after insertion of Section 145A - Held that:- The said question is squarely covered by the decision of the Hon’ble Supreme Court in the case of Lakshmi Machine Works (2007 (4) TMI 202 - SUPREME Court) and in the case of Shiva Tex Yarn Limited (2012 (9) TMI 658 - SUPREME COURT), wherein held tax under the Act is upon income, profits and gains. It is not a tax on gross receipts. Under Section 2(24) of the Act the word "income" includes profits and gains. The charge is not on gross receipts but on profits and gains. The charge is not on gross receipts but on profits and gains properly so-called.Income from rent, commission etc. cannot be considered as part of business profits and, therefore, they cannot be held as part of the turnover also.Tribunal was right in holding that the excise duty and sales will not be included in the total turnover while calculating the deduction u/s. 80HHC of the even after insertion of Section 145 A - Decided against the revenue.
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2013 (12) TMI 1482
Imposition of penalty - Whether the CESTAT, Bangalore was correct to set aside the penalty imposed on the party - Held that:- In order to impose penalty, there must be an order of confiscation. Learned Tribunal has correctly held so. Accordingly we dismiss the appeal, as we do not find any element of law involved to admit the appeal - Decided against Revenue.
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2013 (12) TMI 1481
Confiscation - Import of hazardous chemicals - Held that:- Tribunal, on appreciating the facts has found that the provision of Section 111(d) of the Customs Act, 1962 read with Rule 3(2) and 3(3) of Foreign Trade (Development and Regulation) Act, 1992, has no manner of application. - Therefore, the alleged admission cannot be accepted to change the law. Hence, there is no element of law involved in the appeal. - Decided against Revenue.
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2013 (12) TMI 1480
Disallowance u/s. 40(A)(2b) - ITAT deleted addition - Held that:- So far as the disallowance made under section 40A(2)(b) of the Act on the ground of motor bus rent is concerned, it appears that the AO disallowed 5% of the total payments towards motor bus rent by observing that the assessee has failed to reconcile the difference in payments as per tax audit report and as submitted during the assessment proceedings and had also not produced any comparative prices. The learned CIT(A) deleted the said disallowances by observing that the AO has not made out any case for excessive or unreasonable payments to the related purpose towards the motor bus rent. The learned CIT(A) also observed that no comparative prices for similar transport services was cited by the AO and therefore, was not justified in making ad-hoc disallowance of 5% under section 40A(2)(b) of the Act and therefore, the CIT(A) as such rightly deleted the disallowances made under section 40A(2)(b) of the Act. Considering the provisions of Section 40A(2)(b) of the Act and the Evidence Act, if the AO was of the opinion that the payment for which disallowance is claimed, is excessive or unreasonable. In that case, it was for the AO to assess fair market price and give comparative instances for payment for similar transport service. In absence of such comparative cases brought on record, as rightly observed by the ITAT it was not open for the AO to make disallowance under section 40A(2)(b) of the Act. We are in complete agreement with the view taken by the ITAT and the observations made by the learned ITAT while deleting disallowances made by the AO under section 40A(2) (b) of the Act on motor bus rent. No error has been committed by the learned ITAT which calls for interference of this Court. - Decided in favour of assessee.
Disallowance made under section 40(a)(ia) i.e. with respect to retrospective operation of the amendment in Section 40(a)(ia) by Finance Act, 2010 - Held that:- The said question is squarely covered against the revenue by decision of the Division Bench of this Court in Commissioner of Income Tax -Ahmedabad IV Versus Omprakash R. Chaudhary [2015 (2) TMI 150 - GUJARAT HIGH COURT] wherein held that the amendment in section 40(a)(ia) of the Act by Finance Act, 2010 would apply retrospectively.- Decided in favour of assessee.
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2013 (12) TMI 1479
Denial of CENVAT Credit - Held that:- Tribunal after analyzing the fact found that the issue involved herein is squarely covered by the judgment of the Gujarat High Court in the case of CCE & C, Vadodhara-I v. Chloritech Industries [2008 (7) TMI 278 - GUJARAT HIGH COURT]. It is not the case before us that the aforesaid judgment of the Gujarat High Court has no application in this case. The only point argued by the learned Counsel for the appellant that the Hon’ble Supreme Court has decided otherwise. - nothing is to be decided in this appeal. - Decided against Revenue.
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2013 (12) TMI 1478
Validity of Tribunal's order - omission of Section 3A of the Central Excise Act, 1944 with effect from 11-5-2001 and also the omission of Rules 96ZO and 96ZP of the Central Excise Rules, 1944, with effect from 1-3-2001 - Held that:- provisions of Section 38A of the Central Excise Act, 1944, inserted by Section 131 of the Finance Act, 2001, are applicable in respect of the obligations and liabilities incurred under Rules 96ZO and 96ZP before they were omitted by Rule 7 of the Central Excise (Third Amendment) Rules, 2001, notwithstanding the omission of Section 3A with effect from 11-5-2001 by the Finance Act. - there is no challenge to the validity of the Finance (No. 2) Act, 2009 (Act No. 33 of 2009) the relief sought for in the Civil Miscellaneous Appeal cannot be granted. - Decided against assessee.
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2013 (12) TMI 1477
Recovery of sales tax dues of the company in liquidation. - priority to be observed in the matter of payment of debts in the case of winding up - state act versus central act - Held that:- When the law is one made with reference to entries in the concurrent list, where both Parliament and the State Legislature are sovereign powers in the matter of making laws, again in view of article 254 of the Constitution unless it be a law made by the State, which is reserved for the assent of the President and the assent is received, the State law, would otherwise if it is repugnant to the law made by Parliament, must make way whether the Parliamentary legislation is before or after the legislation made by the State.
We are also not impressed by the contention of the appellant with reference to section 537 of the Companies Act. It is true that sub-section (2) of section 537 provides that nothing in that section applies to any proceedings for the recovery of any tax or impost or any dues payable to the Govern ment. It is true, under section 537(2), when the company is being wound up the embargo in sub-section (1) of section 537 is not made applicable for proceedings for recovery of tax payable to the Government. In the facts of this case, we must notice that there is no case for the appellants that recovery proceedings commenced by the State proceeded beyond the stage of attachment.
The sale held by the company court is for the benefit of all the creditors. The manner in which sale proceeds is to be shared among the various creditors is indicated in the provisions contained in the Companies Act. They include sections 529A and 530 of the Act. The priority itself is to be decided by the company court under section 446(2)(d). If the State is allowed to proceed against the property, despite the sale held as free of encumbrances, the result would be that the sale would become vulnerable and it would also be against what had been held out to the auction purchaser under the aegis of the company court that the sale is being held free of encumbrances. Having regard to the provisions contained in sections 529A and 530, the intention is clear that the law of the land is that the claim of the State must with regard to the amounts due as taxes be subject to the amounts due to the secured creditors and workers.
If the sale is held free of encumbrances and if the State is allowed to pursue its claim as against the property, it would naturally bring the sale under a cloud and there would be no end to the litigation which would in the ultimate analysis be not only against the interests of persons whose interests are sought to be secured by the Companies Act on the basis of priority, but against the scheme of the Companies Act. On this reasoning we find that the impugned order does not suffer from infirmity. - Decided against the revenue.
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2013 (12) TMI 1476
Whether CESTAT is correct in holding that the GTA service utilized by the assessee as recipient, is input service for providing the output service i.e., ‘authorized service station’? - Correctness of tribunal order [2009 (3) TMI 155 - CESTAT, BANGLORE] - Held that:- the learned Tribunal has given correct interpretation and this is one possible interpretation and we cannot substitute by another one. Thus, we do not find any element of law involved for admission of this appeal. - Decided against the revenue.
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2013 (12) TMI 1475
Penalty u/s 15HB & Section 15A(a) of SEBI Act, 1992 - Charges of trading as sub-broker with out registration - Non compliance of summons - Held that:- Charges of trading as sub-broker with out registration - Firstly appellant had commenced trading on behalf of her clients admittedly w.e.f. 15th December, 2006 i.e. prior to making application for registration as sub-broker on 18.12.2006 which was not even permitted under 1992 Rules. Secondly, 1992 Rules have been rescinded by notification dated 07.09.2006 w.e.f. 07.09.2006. Therefore, appellant who had applied for registration as sub-broker on 18.12.2006 could not have carried on trade as sub-broker neither under SEBI (Stock-Broker and Sub-Broker) Regulations, 1992 (“1992 Regulations” for short) nor under 1992 Rules which was rescinded w.e.f. 07.09.2006. Therefore, the decision of AO that the appellant had traded as sub-broker in violation of Regulation 11(1) of 1992 Regulations which prohibits trading in securities without being registered as sub-broker, cannot be faulted.
Non compliance of summons - First ground of AO that the appellant failed to furnish copy of income tax returns for Assessment Year 2006-2007 is contrary to facts on record, because, from appellant’s letter dated 07.09.2009 , it is seen that the appellant had forwarded the income tax return for Assessment Year 2006-2007 along with letter dated 07.09.2009. No grievance was made at any time by the investigating authority that the letter dated 07.09.2009 was received without income tax return for Assessment Year 2006-2007. Also it is evident that certain documents which were specifically sought through the summonses have not been furnished. Counsel for appellant could not demonstrate that all the documents were in fact furnished by the appellant. In these circumstances, finding of AO that the appellant failed to furnish documents inspite of serving summonses cannot be faulted. - However since AO has erroneously held that the appellant has failed to furnish income tax return for Assessment Year 2006-2007, in our opinion, it would be just and proper to sustain penalty under Section 15A (a) to the extent of ₹ 1 lac. - Decided partly in favour of the appellant.
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2013 (12) TMI 1474
Denial of CENVAT Credit - input service had no nexus with the manufacture of goods and the document was incomplete - Held that:- what exactly was suppressed by the assessee in this case is not known. The requirement of submission of the documents on the basis of which credit has been taken is no longer in the Statute book. Therefore, the appellant was not required to produce the documents on the basis of which credit has been taken. Hon’ble Supreme Court has already taken a view to the effect that to invoke suppression facts, suppression of facts should be such that they should be ones which are required to be declared in accordance with Statute before the Statutory Authorities. When a document on the basis of which credit was taken is not required to be produced, how suppression of facts can be invoked and on what basis defies imagination. In any case, I find considerable force in the arguments advanced by the learned counsel that before a decision in the case of Cadila Healthcare (2013 (1) TMI 304 - GUJARAT HIGH COURT ) by Hon’ble Gujarat High Court was rendered, there was a view prevailing that credit is admissible in respect of service rendered by commission agent. In fact, there is a Circular issued by the Board where such a view has been taken. Under these circumstances, extended period could not have been invoked in this case. - impugned order is set aside - No deficiency in the bill/invoice, I have to take a view that Cenvat credit has been taken correctly. - Decided in favour of assessee.
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2013 (12) TMI 1473
Waiver of pre dpeosit - services of liaisoning and monitoring of movement of coal to the plants of cement manufacturing companies - Assessee applied for surrender of license - Rejection of request - Classification under Business Auxiliary service or clearing and forwarding service - held that:- Where an assessee has a good prima facie case, and the disputed duty and/or penalty has apparently been charged wrongfully, the requirement of pre-deposit of the disputed tax and/or penalty is liable to be waived, since pre-deposit of tax not payable by an assessee, would in itself was hardship to that assessee, as held by this Court in a Bongaigaon Refinery & Petrochem Ltd. v. Collector of Central Excise (A), Cal. reported in [1992 (4) TMI 56 - HIGH COURT AT CALCUTTA]. - Where there is a very good prima facie case, pre-deposit would have to be waived altogether. Where the appellant has an arguable case, pre-deposit might be waived on such conditions as would protect the interest of Revenue. In fact, the Commissioner (Appeals), was conscious of his duty to consider the prima facie case and accordingly recorded a finding that the service rendered was covered under the definition of business auxiliary service. The Commissioner (Appeals), however, did not consider whether the purported demand was barred by limitation.
Commissioner (Appeals) has cursorily considered the merits of the case. The learned Tribunal has not at all considered the question of limitation. Admittedly, the demand was not raised within one year but almost after five years by invoking the extended period of limitation. The justification of such invocation has not at all been considered. - The Commissioner (Appeals) has not at all considered whether there was any fraud, misrepresentation or suppression with intent to defraud revenue to justify the invocation of the extended period of limitation. - Moreover, after the writ petition was filed the appeal has been dismissed on 9th April, 2012 without any further notice to the petitioner and without opportunity to the petitioner to make pre-deposit - The impugned order cannot be sustained and the same is set aside and quashed - Decided in favour of assessee.
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2013 (12) TMI 1472
Validity of Ttribunal's order - Whether the first respondent has violated principles of natural justice in not serving the notice of hearing in terms of Rule 18 of Customs Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 - Held that:- Since the appellant has not made its appearance in [2015 (2) TMI 749 - CESTAT CHENNAI], the Tribunal has erroneously stated that it has considered the rival submissions. Therefore, it is quite clear that for giving sufficient opportunity to the appellant, the impugned Final Order passed by the Customs, Excise and Service Tax Appellate Tribunal, Chennai, is liable to be set aside and the matter is liable to be remitted to the file of the Appellate Tribunal. - Decided in favour of assessee.
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2013 (12) TMI 1471
Waiver of pre deposit - Bar of limitation - Held that:- Tribunal has satisfied that prima facie case has been made out with regard to the period of limitation. Therefore, technically undue hardship has been established. Accordingly, the learned Tribunal granted part relief and made an order of waiver of pre-deposit to the extent of 50% of the tax component and interest thereon and also made a full waiver of the component of penalty. - Tribunal has observed that the question of limitation has to be gone into at the hearing of the appeal, we think, at this stage, it will be true hardship for the appellant to pay the interest component. - Tribunal slightly by waiving full interest component also. However, the rest of the order will remain as it is. This waiver of interest component fully will be applicable provided the appellant executes a bond covering the 50% interest component within a period of seven days from the date of receipt of a copy of this order. This bond shall be executed by the appellant in favour of the Commissioner of Central Excise, Hyderabad-II, binding itself to pay the interest amount fully. - Appeal disposed of.
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2013 (12) TMI 1470
Denial of MODVAT Credit - Goods destroyed in fire accident - Held that:- issue involved in the present appeal is purely a question of fact. As the appellant miserably failed to establish their case factually before the Original Authority or the First Appellate Authority or the Customs, Excise and Service Tax Appellate Tribunal, cannot now be permitted to canvass the question of fact which has become final. Hence, no question of law arises for consideration and the appeal fails. - Decided against assessee.
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2013 (12) TMI 1469
Waiver of pre deposit - Denial of CENVAT Credit - event management service - Held that:- While there is no dispute that the function had been organized at a temple and the finding of the Commissioner (Appeals) in the impugned order is that the function might have been attended by the dealers and retailers in which the CMD and higher officers might have been interacted with them, the Cenvat credit is sought to be denied only on the ground that it is a religious function because the function has been organized in the temple. I am of the prima facie view that ground for denying Cenvat credit is not correct, as just because the function was organized at the temple, it would not become a religious function when there is no evidence that it was only for their employees and no dealers or retailers had been invited. - Stay granted.
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2013 (12) TMI 1468
Benefit of Exemption Notification No.6/2006 – Duty free Naphtha used for the purpose other than manufacture of fertilizers – Maintainability of appeal - Section 35L - Held that:- this is not a fit case where court should entertain appeals under Section 35L of the Act - appellant, seeks withdrawal of the appeals to challenge the impugned order under Section 35G of the Act before the High Court - Appeal withdrawn.
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2013 (12) TMI 1467
Benefit of exemption Notification 8/97 - whether the appellant is entitled to claim exemption under Notification No. 8/97 or he is bound to pay Central Excise duty equallent to customs duty as per Notification No. 13/98, dated 2-6-1998 - Held that:- no mention has been made in the common order with regard to the period mentioned in CMA No. 2 of 2011. Since no finding has been given in the common order with regard to the period mentioned CMA No. 2 of 2011, it is needless to say that the final order passed by the Appellate Tribunal is liable to be set aside and the matter is liable to be remitted to its file. Since the final order in question does not mention anything about the period mentioned in CMA No. 2 of 2011, this Court is of the view that question of jurisdiction raised on the side of the second respondent cannot be decided. Further, since the matter is liable to be remitted to the file of the Appellate Tribunal, the common substantial question of law settled in these proceedings need not be decided. - Decided in favour of assessee.
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