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Showing 401 to 420 of 16027 Records

2014 (12) TMI 1036

Clandestine removal of goods - manufacture of the fireworks - Search at the alleged secret office of the assessee - presumption regarding documents/computer recovered - department rejected the request for cross examination on the ground that the said persons being employee of M/s Hingora could have been compromising parties. - Held that:- The veracity of the statements needs to be always checked and cross checked before relying upon such statement. M/s. Hingora were well within their rights to ask for cross examination of these employees to bring on record that the statements tendered by these employees could not be relied upon for making allegation against the Appellants. In our considered opinion, due to non-granting of the cross examination of above said persons, no reliance can be placed upon these statements and thus the statement of these persons cannot stand test of the law. - Decision of of Hon’ble Apex Court in the case of Shalimar Rubber Industries v. Collr. of C.E., Cochin [2002 (11) TMI 91 - SUPREME COURT OF INDIA] followed.
Records were not recovered from regular business premises. Some of these records related to production were said to be tallying with the records seized from the factory. However in the show cause notice there is nothing stated that the details of goods found were tallying with the details of the clearances on payment of duty or otherwise and to whom. We find that the entire case of the revenue is based upon the dispatch details found from the files and data recovered from the secret office. However except these evidences there is virtually no other evidence to reflect upon the clandestine production and removal by M/s Hingora.
Alleged dispatch details and the parallel invoices said to be found from the secret office contained the name of the parties to whom the goods were cleared as well as other details. However no evidence is appearing on record that the officers investigated such recipients, inspite of their details appearing in all such alleged clearance records. In such case, it has to be held that the said evidence is uncorroborated.
In all clandestine removals, it has been now well laid that the crux of the issue in respect of clandestine removal is that Revenue cannot proceed solely on the basis of a seized private notebook maintained by a worker unless the entries are corroborated by various other pieces of evidences in as much as that Revenue has to show that appellants have purchased the inputs from market and utilised the same and that the same has been sold to particular persons through invoices or otherwise and the money has flowed back as capital. In this particular case, admittedly the only piece of evidence is a notebook seized from the premises of the appellant. It was brought to the notice of the seizing officers that it was maintained by the Accountant who was very much present during the time of investigation. It was the duty of the investigating officers to have sought explanation from the said Accountant with regard to the entries made therein. Non-examination of the Accountant has rendered the document inadmissible in evidence.
Appellants have also brought to the notice of the Revenue that fireworks are required to be insured mandatorily while removing the same and various authorities are required to be informed and permission obtained. Revenue has not examined this point in the correct perspective. The danger of removal and penal consequence of non-insurance is a serious matter and the Commissioner ought to have relied on same evidence to show as to how they could manufacture and remove such controlled explosive commodity without proper protection and insurance. Merely to give finding that such clandestine removal is done secretly and stealthily and they do not follow the law is not acceptable in the peculiar facts and circumstances of this case. There is no other corroborative evidence with regard to the sale and purchase by particular persons and there is no evidence of removal through any transporter and the transporters have not been examined and statements recorded. Each link in the aspect of production and clandestine removal is required to be proved and since this has not been done, the demands are required to be set aside for lack of evidence in the matter.
For bringing the charges of clandestine removal the evidences decided by various case laws as above. However in the present case in absence of any tangible evidence which would indicate that there was clandestine manufacture and clearance of the goods by M/s Hingora Industries we hold that the charges of clandestine removal against M/s Hingora Industries are not sustainable. Thus, in the peculiar facts and circumstances of this case, we hold that the impugned order which confirms the demand against M/s Hingora Industries and imposes penalty on them is not sustainable and is liable to be set aside and we do so. There is no sustainable demand, consequential penalties on various other appellants, who are in appeal before us, would also automatically be set aside - Decided in favour of assessee.
2014 (12) TMI 1035

Availing CENVAT credit on scrap - industrial scrap versus bazaar scrap - allegation that they have availed CENVAT credit on bazaar scrap procured under the guise of ship breaking scrap - The allegation is that the duty-paid scrap was diverted and the dealer supplied bazaar scrap using the duty-paying documents on the strength of which the appellant took the credit. - Interest u/s 11AB - Penalty u/s 11AC and Rule 26 - Onus to prove - Held that:- Appellant did not place orders for the purchase of scrap directly on the manufacturer of scrap or dealer. The orders were placed through brokers such as Al-Karim Scrap Traders Pvt. Ltd., Singh & Sons, Maruti Trading Company and so on. These brokers, who placed the order for the scrap from the dealers and who supervised the supply of scarp, in their statements have confirmed that the supply of scrap made was of bazaar scrap and not from the duty paid scrap obtained from manufacturers. Further, it is a fact on record that the scrap received was not of the required quality and hence debit notes were issued to the suppliers (dealers) for supply of inferior quality scrap. Besides, the officials of the appellant-firm also corroborated the fact that what was received and used by the appellant was bazaar scrap and not industrially generated scrap. In these circumstances, the appellant could not be held to have satisfied/complied with the requirements of Rule 7(2) of CENVAT Credit Rules 2001/2002.
Sub-rule (4) of Rule 7 of CENVAT Credit Rules, 2002 makes it abundantly clear that the onus of proving admissibility of CENVAT credit lies on the person availing the credit. In Besco Ltd. vs. Commissioner of Central Excise [2000 (8) TMI 217 - CEGAT, KOLKATA] the Tribunal dealt with a situation where bazaar scrap was supplied and the same was shown to be purchased from dealers registered with the department who had issued the invoices without actually supplying the material. This Tribunal held that the department cannot be expected to go to the source from where the appellant ought to have procured the bazaar scrap and as long as the department can corroborate by evidences to show that mala fide nature of transactions, the same is sufficient. In the present case, from the statement of the brokers, it is evident that what was supplied by the registered dealers were scrap procured from bazaar and not duty paid scrap. Therefore, the onus shifts to the appellant to prove that the scrap purchased is duty paid scrap which the appellant has not discharged at all.
Rule 7(4) of the CENVAT Credit Rules, 2002, as it stood at the relevant time, placed the onus to prove the eligibility to avail CENVAT credit on the person taking the credit. Once the Revenue discharges the burden that the particulars declared in the documents on the strength of which credit had been availed are not genuine or are fake, then the onus is on the assessee to prove that they have availed the credit correctly and are entitled for the credit. That onus cannot be countenanced on the ground of hardship or inconvenience. It is also on record that M/s. Simandhar Steel Movers (India) Pvt. Ltd., who was the main dealer from whom the appellant procured the scrap, did not participate in the appeal proceedings at all which also shows that the scrap supplied by them to the appellant is not duty paid. As regards the scrap procured from other dealers, through brokers, it is seen from the statements of brokers and also the transporters that the scrap was sourced from not the manufacturers but from various traders.
Confirmation of demand of CENVAT credit fraudulently taken to the extent of ₹ 1,62,39,751/- along with interest thereon is clearly sustainable in law. The appellant is also liable to penalty for an equivalent amount under Rule 13 of the CENVAT Credit Rules, 2002 read with Section11AC of the Central Excise Act, 1944. - Decided against the assessee.
As regards the confiscation of bazaar scrap seized, valued at ₹ 10,14,98,444/- from M/s. ISSAL, the said goods are not excisable at all. Therefore, the question of their confiscation and imposition of redemption fine in lieu of confiscation does not arise at all. - Decided in favor of assessee.
Levy of personal penalty on dealers - Held that:- Penalty can be imposed under Rule 26 only when notices had knowledge that the goods are liable to confiscation. In the present case, the goods supplied by the dealers are bazaar scrap which is not excisable and, therefore, the question of confiscation of such bazaar scrap would not arise at all. What the dealers have done is that they have supplied non-CENVATable scrap along with CENVAT documents. Penalty for issuing fake/bogus CENVAT document was provided for in the statute only in 2007. Since in the present case, the period is 2001-02, in the absence of specific provision in law for imposition of penalty for issue of fake/bogus documents, penalties imposed on the dealers and brokers will not sustain. Accordingly, we set aside the penalties imposed on the dealers and brokers.
2014 (12) TMI 1034

Manufacturing activity or not - Levy of duty on water resistant bonding agent - The appellants' claim is that since the manufacturing process undertaken by them is only of diluting the inputs and repacking the same, their activities do not amount to manufacture and hence, no excise duty is payable on their final product namely, Sika Latex and Sika Latex Power - Revenue, on the other hand, is claiming that the final product of the appellant is the ‘water resistant bonding agent', which is used as an additive to cement mortar/concrete to improve the adhesive and water resistant property of such cement mortar/concrete, while their inputs are “Styrofan D 623 AP” and “Apcotex TSN 100”, which are aqueous polymer dispersion used in the modification of hydraulic setting system - Held that:- The inputs are aqueous polymer and dispersion which are being processed to make it suitable as water resistant bonding agent. In our view, Revenue has discharged the burden from the literature of the final product as also that of inputs, the process being carried out leads to transformation of inputs into a final product having distinctive name, character or use.
Inputs are not being sold by their manufacturer as water resistant bonding agent at all but as a product which manufacture after experiment can be used for diverse applications. In our view, Revenue has discharged the burden that final products are new products with distinctive name, character or use. - maintenance of elaborate records and conduct of quality test ipso facto dos not mean that the process amounts to manufacture, however, it is to be noted that if the process is very simple of dilution, then there is no need to keep elaborate records and there will be no need to conduct quality test for each batch (it can be concentration test only). - in the facts and circumstances of the case, the product having distinct name, character and use comes into existence from the inputs. The final product is a water resistant bonding agent while the inputs are understood as aqueous polymer dispersion used in the modification of hydraulic setting system. Name of inputs or process of transformation is a trade secret and is not known to trade or users. - Decided against the assessee.
Computation of liability that the value to be taken as cum duty, we find force in the argument and we remand the matter back to the adjudicating authority to re-compute the duty liability considering the selling price as cum duty price. Keeping in view the nature of dispute, we set aside the penalty imposed. - Matter remanded back - Decided partly in favour of assessee.
2014 (12) TMI 1033

Non following the procedure for sending the goods for Job work and receiving the goods back after processing - use of private challans - voilcation of rule 57 F(6) (i) rule 57F(4), Rule 57F(6)(ii), 57F(7), Rule 9(1), rule 53, rule 173F, rule 173G(4) indicating that goods cleared for job work have to be accompanied by proper job work challans - Confiscation of goods - Penalty u/s 11AC - Held that:- Detailed procedure has been laid for job work or clearance of inputs/ partially processed inputs, reversal of credit on clearance and availment of credit on receipt back of goods to the factory. Admittedly these procedures have not been followed and further no duty has been paid/reversed by the respondents towards removals for job works in contravention of rule 57F(6) (1). There is clear admittance by the Director of the company that they have not followed the procedure and removals have effected without following laid down procedure, it is evident that benefit of job work could not be extended only based on verification report of Assistant Commissioner that goods have come back to the factory, knowingly well that private Challans have been used and no records have been maintained. In absence of maintains of records in the factory, and non-intimation to the Central Excise authorities no co-relation was possible. - Decided in favor of revenue.
Regarding demand of duty on clearance of castings without following job work procedure, I do not find force in revenue s appeal as they have already accepted that all goods have came back. Once revenue itself is satisfied, no question of demanding duty arises. Of course, for violation of job work procedure and non-reversal of 10% of the value, penal provisions are attracted. However I do not agree with revenue for imposition to equal penalty considering that appellants were not aware about correct procedures. No mens-rea has been imputed manifesting their intention to defraud the revenue knowingly, thus equivalent penalty is not justifiable. - From the facts as brought on record it is observed that a very casual approach has been adopted by the appellant. Accordingly, I consider that penalty has to be imposed on appellants to ensure that the legal provisions are not ignored rendering these provisions as redundant.
Regarding other issue of dropping demand and not imposing any fine and penalty on seized goods, I find that non-recording of goods in excise records has been manifested and admitted by the partner. For non-accountal, no lenient view could be taken. Goods were rightly liable for confiscation and redemption fine and penalty imposable. Commissioner (Appeals) was not right in dropping demands and penalties on this account. Departmental appeal is liable to be accepted.
Non-recording of goods in excise records has been manifested and admitted by the partner. For non-accountal, no lenient view could be taken. Goods were rightly liable for confiscation and redemption fine and penalty imposable. Commissioner (Appeals) was not right in dropping demands and penalties on this account. - Penalty imposed on Director - Decided partly in favour of Revenue.
2014 (12) TMI 1032

Clandestine removal of goods - Lack of evidences - Cross examination opportunity not given - Held that:- Even though the Commissioner has concluded that there was such removal of huge quantity of finished products, there is no discussion or evidence available to show excess consumption of raw materials, electricity, etc. No statement of people concerned with production has been recorded. The whole case is based on loose sheets recovered from the house of Shri Manoj Mitulal. These sheets belong to Shri Sohanraj Mehta according to the Revenue. However, no statement has been recorded from Shri Manoj Mitulal at all. He was not made available for cross examination also. The whole case depends upon the interpretation of loose sheets and the version of Shri Sohanraj Mehta which was changed several times during the period and unless the cross-examination of the persons was allowed, the appellants could not defend the case properly.
What is required to be proved by the department is preponderance of probability and therefore we need to examine whether on the basis of evidence collected and investigations done, a case has been made out against the appellant or not and we are not required to examine what are the omissions in the investigation. We find that in the impugned order there is no mention of surprise visits of the officers and the supervision/control exercised by the department and how the assessee could produce excess quantity in spite of such intense supervision. - Matter remanded back - Decided in favour of assessee.
2014 (12) TMI 1031

Denial of refund claim - Notification No. 225/1986-C.E., dated 3-4-1986 - held that:- Though the appellants were taking up the matter with their jurisdictional Central Excise authorities by repeated correspondence, but it is seen that no refund claim was filed by the appellant with the department. As such, the said letter of the Assistant Commissioner cannot be held to be an appealable order and Commissioner (Appeals) was not within his powers to entertain the appeal filed against the letter addressed by the Assistant Commissioner to the appellant. Otherwise also without there being any refund application by the appellants, the lower authorities could not have decided the refund claim either by rejecting the same or by accepting the same. - Decided against assesse.
2014 (12) TMI 1030

Exemption in respect of zinc sulphate (agricultural grade) that is used in manufacture of Fertilizer - scope of the term Fertilizer - Notification No. 4/2006-C.E., dated 1-3-2006 - Held that:- Dispute was the subject matter of the earlier decision of the Tribunal, though in the context of the different Notification No. 81/75. In the case of Punjab Micronutrient Ltd. v. C.C.E. - [1990 (4) TMI 122 - CEGAT, NEW DELHI] as also in the case of C.C.E. v. India Phosphate and Carbonate - [1997 (12) TMI 208 - CEGAT, NEW DELHI], it stand held that classification of fertilizer under a particular tariff heading is not a pre-requisite condition for extending the benefit of exemption Notification. Inasmuch as the zinc is essential for growth and development, the same has to be considered as fertilizer.
It is seen that at the time of the decision of the Tribunal in referred case, there was no Explanation attached to the Notification No. 81/75 which was under consideration. However, the Explanation was subsequently included in the said Notification, which is identical to the Explanation as available in the present Notification No. 4/2006. It is further seen that neither in the earlier Notification No. 81/75 nor in the present Notification No. 4/2006, there is any requirement of the fertilizer to be classified under Chapter 31 also. The only requirement in the present Notification which was also introduced in the previous Notification by way of including Explanation is to explain the meaning of fertilizer. It stands mentioned in the Explanation that fertilizer shall have the meaning assigned to it under Fertilizer (Control) Order, 1985. Both the decisions referred to by the ld. Advocate have taken note of the fact that zinc sulphate is included in the Fertilizer (Control) Order, 1985. As such, the said condition of Notification also stands fulfilled by the assessee. - Decided in favour of assesse.
2014 (12) TMI 1029

Seizure of goods - Non accounting of goods - Intention to remove goods without payment of duty - Held that:- Appellant, during adjudication, had taken stand that the goods were not fully manufactured inasmuch as the process of lime mixing was to be done - There is no test conducted by any expert so as to conclude as to whether the lime mixing has already done or not. As such only fact of excess goods, which are also disputed by the appellant to be not fully finished, read with the statement, cannot held to be confiscable, in the absence of any evidence to show that they were either in the process of being removed clandestinely or were meant for clandestine removal. Accordingly, I set aside the impugned order - Decided in favour of assessee.
2014 (12) TMI 1028

Waiver of pre deposit - Classification of product - Classification of Aswini Homeo Arnica Hair Oil - Classification as oil or medicament - Held that:- Product manufactured by the appellants is a medicament and they have a drug licence issued by the appropriate statutory authority who has recognized it as a drug. Further he also submits that no evidence has been brought out by the Revenue to take the stand that it is not recognized as a medicament but used as hair oil - product manufactured by assesse contains 4 homeopathic medicaments as ingredients namely Arnica Mount, Cantharis, Pilocarpin and Cinchona. Drugs help in preventing hair fall and dandruff. He also produced a sample bottle of the drug. On going through the label we find that it has been stated that the oil prevents hair fall and dandruff. Further it also states that it has to be applied to the scalp and left overnight. Learned counsel also submitted that it does not have any perfume added. - two facts mentioned namely, absence of perfume and the advice that it should be used for massaging the scalp and left overnight. And the fact that there is no advice that it can be used as hair oil would go in favour of the appellant. The common understanding of the hair oil is somewhat different. In our opinion this is what makes the item before us as distinct product. Therefore the claim of the appellant that it is only a medicament and is not meant to be hair oil has substance - appellant has made out a prima facie case for waiver - Stay granted.
2014 (12) TMI 1027

Waiver of pre deposit - Manufacturing activity - activity of cutting fabrics, cutting quilts manufactured of the fabrics - Held that:- Activity of cutting fabrics and wadding according to the sizes required cannot be said to amounting to manufacture since activity does not result in any new product with distinct name, character and use. The fabrics and wadding so cut are sent to job worker who manufactures quilts and after the quilt is received, the appellants undertake inspection, packing and sale. Inspection, packing and sale of quilt cannot be considered as manufacture. Further as submitted by the appellants, they do not have even any machinery for manufacturing quilt fabrics at all. Prima facie, we find that the appellant has a case in their favour, Therefore, in our opinion, the matter can be heard without insisting on any redeposit. However, in view of the fact that Commissioner has rejected the appeal after asking them to pay the entire amount of duty along with penalty which in our opinion was not required, we are constrained to remand the matter to the learned Commissioner - Matter remanded back - Decided in favour of assessee.
2014 (12) TMI 1026

Valuation of goods - Section 4A - Discharge of excise duty liability on Retail Sale Price (RSP) basis - Held that:- issue is no longer res integra. Since in the instant case, the goods are not meant for retail sale, the question of valuation of the same under Section 4A would not arise at all. This is the view taken by the Tribunal in the appellant’s own case [2008 (8) TMI 77 - CESTAT NEW DELHI] and Geoffery Manners & Co. Ltd. [2006 (8) TMI 56 - CESTAT, MUMBAI] - Decided in favour of assesse.
2014 (12) TMI 1025

Classification and rate of tax on 'Dates' and 'Date Syrups' - Validity of clarification issued in Clarification No.40/2003 dated 27.01.2003 – Clarification is prospective or retrospective - Held that:- Section 28 A of TNGST Act empowers the Commissioner to issue Circulars and Clarifications concerning the rate of tax under the Act - The impugned clarification does not withdraw the clarification dated 13.8.2002, but states that earlier clarification is modified to the effect that 'Wet Dates' of foreign origin whether imported directly from other countries or purchased from other States are liable to be taxed at 2% in Entry 9 of Eleventh Schedule of TNGST Act - The modification on the impugned clarification was made without notice to the petitioner - Based on which notices were issued proposing to demand tax at 20% - the AO received the petitioner's objection as well as the request for waiver and called upon the petitioner to explain as to why tax should not be levied at 20% on first sale of imported 'Wet Dates' as per Entry 9 of Eleventh Schedule for the year 2002-03 - Similar notices were issued to all the three companies.
In MOHAN BREWERIES AND DISTILLERIES LIMITED v. COMMERCIAL TAX OFFICER, PORUR ASSESSMENT CIRCLE, CHENNAI AND OTHERS [2004 (9) TMI 617 - MADRAS HIGH COURT] the Court examined the scope of the Circular issued u/s 28-A of the TNGST Act and held that the circular is binding on the authorities and even if the authorities want to withdraw the same, it could be done prospectively - the first ground for rejecting the petitioner's objection is held to be contrary to the decision which examined the very power of the first respondent to issue clarifications/circulars in exercise of power under section 28-A of the TNGST Act.
Whether the impugned clarification dated 27.1.2003, is in consonance with Entry 9 of Eleventh Schedule of TNGST Act – Held that:- The petitioner's commodity being 'Wet Dates', falling within Part-D Entry 11 (2) of the First Schedule to the Act - Apart from that there were three other conditions to be fulfilled - It should have a foreign marking, it should not be sold in Indian brand name or trade mark and it should not be an item which had undergone any form of reprocessing, reassembling, re-constitution or repacking in India - Thus, going by the clarification issued by the first respondent, which is undoubtedly statutory, the commodities purchased by the petitioner by way of Inter-State sale could not be termed as imported goods.
The clarification is beyond the scope of Entry 9 of the Eleventh Schedule - The clarification states that foreign goods whether imported directly from other countries or purchased from other States, the expression purchase from other States is conspicuously absent in Entry 9 of Eleventh Schedule - Therefore, by virtue of clarification, the respondent cannot add any expression or phraseology, which is not contained in the Statute - Therefore, the impugned clarification has to be necessarily held to be bad in law – the Clarification cannot be given retrospective effect, which is precisely what the respondents have done in the case of the petitioners - Therefore, such retrospective application of the clarification was also illegal – thus, the impugned clarification is illegal, unsustainable and contrary to the settled legal principles as stated above and accordingly, the same is quashed –Decided in favour of petitioner.
2014 (12) TMI 1024

Resale of the used motor vehicle - Claim of Exemption on sale of motor cars or other capital assets u/s 6(3) of the Delhi Value Added Tax Act, 2004 (DVAT) - motor cars to be treated as plant or not - Held that:- Section 9(9) of the DVAT Act is not applicable and appellant dealers were/are not entitled to input tax credit on motor vehicles. Once this is clear, we can appreciate the legislative mandate in granting exemption in respect of sale price paid in respect of capital goods provided the conditions mentioned section 6(3) of the DVAT Act are satisfied. - In the cases of the appellants, if these conditions are satisfied then the sale price received by the appellant dealers on sale of used motor vehicles would not be included in the turnover for it would be exempt from tax under Section 6(3) of the DVAT Act. Therefore, in view of the accepted and admitted facts, section 6(3) of DVAT Act would be applicable and the benefit cannot be denied.
Scope of the plant under DVAT - Held that:- the word ‘plant’ has not been defined in the DVAT Act and in ordinary sense it includes whatever apparatus is used by a business man for carrying on his business but not his stock-in-trade which he buys or makes for sale - the word ‘plant’ or ‘machinery’ is not restricted only to mechanical processes or apparatus – the same has been decided by the Supreme Court in the case of Scientific Engineering House Pvt. Ltd. vs. CIT [1985 (11) TMI 1 - SUPREME Court] wherein it has been held that Plant will include any article or object fixed or movable, live or dead, used by a businessman for carrying on his business and it is not necessarily confined to an apparatus which is used for mechanical operations or processes or is employed in mechanical or industrial business. However, in order to qualify as plant, the article must have some degree of durability – exemption allowed - Decided in favour of appellant dealers.
2014 (12) TMI 1023

Recovery of Debts - Whether provisions of SICA would prevail over the RDDB Act – Company failed to repay loan installments - Difference of opinion regarding - Decision of larger bench of Apex Court - The High Court set aside the Order passed by the Debt Recovery Appellate Tribunal, Delhi (DRAT) and held that in view of the bar contained in Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) no recovery proceedings could be effected against M/s. Arihant Threads Ltd. - Held that:- sub-section (1) of Section 22 may be divided into two parts. In one part, it provides that "no proceedings" be instituted for the winding up of the industrial company or for execution, distress or the like against any of the properties of such industrial company, and in the second part it provides that "no suit" for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advances granted to the industrial company, "shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority."
“Application for recovery" cannot specifically be described as proceedings for execution, distress or the like against any of the properties, but it is certainly a proceeding which results in and in fact had resulted in the execution and distress against the property of the Company and is therefore liable to be construed as a proceeding for the execution, distress or the like against any of the properties of the industrial company - such a construction would be within the intendment of Parliament wherever the proceedings for recovery of a debt which has been secured by a mortgage or pledge of the property of the borrower are instituted - Surely, there is no purpose in construing that Parliament intended that such an application for recovery by summary procedure should lie or be proceeded with, but only its execution be interdicted or inhibited especially - the proceedings by way of an application for recovery according to a summary procedure as provided under the RDDB Act are not referred to in Section 22 simply because the RDDB Act had not then been enacted.
The Court found a harmonious scheme in relation to the proceedings for reconstruction of the company under the SICA, which includes the reconstruction of debts and even the sale or lease of the sick company's properties for the purpose, which may or may not be a part of the security executed by the sick company in favour of a bank or a financial institution on the one hand, and the provisions of the RDDB Act, which deal with recovery of debts due to banks or financial institutions, if necessary by enforcing the security charged with the bank or financial institution, on the other.
The purpose of the two enactments is entirely different. As observed earlier, the purpose of one is to provide ameliorative measures for reconstruction of sick companies, and the purpose of the other is to provide for speedy recovery of debts of banks and financial institutions. Both the Acts are "special" in this sense. However, with reference to the specific purpose of reconstruction of sick companies, the SICA must be held to be a special law, though it may be considered to be a general law in relation to the recovery of debts. Whereas, the RDDB Act may be considered to be a special law in relation to the recovery of debts and the SICA may be considered to be a general law in this regard. For this purpose we rely on the decision in LIC v. D.J. Bahadur [1980 (11) TMI 157 - SUPREME COURT OF INDIA]. - Normally the latter of the two would prevail on the principle that the Legislature was aware that it had enacted the earlier Act and yet chose to enact the subsequent Act with a non-obstante clause. In this case, however, the express intendment of Parliament in the non-obstante clause of the RDDB Act does not permit us to take that view. Though the RDDB Act is the later enactment, sub-section (2) of Section 34 specifically provides that the provisions of the Act or the rules thereunder shall be in addition to, and not in derogation of, the other laws mentioned therein including SICA.
The term "not in derogation" clearly expresses the intention of Parliament not to detract from or abrogate the provisions of SICA in any way. This, in effect must mean that Parliament intended the proceedings under SICA for reconstruction of a sick company to go on and for that purpose further intended that all other proceedings against the company and its properties should be stayed pending the process of reconstruction. While the term "proceedings" under Section 22 did not originally include the RDDB Act, which was not there in existence. Section 22 covers proceedings under the RDDB Act.
The provisions of SICA, in particular Section 22, shall prevail over the provision for the recovery of debts in the RDDB Act.
2014 (12) TMI 1022

Validity of notice for reopening of assessment u/s 148 - Notices are beyond a period of four years from the end of the relevant AY – Held that:- In terms of Section 32 of the Act the depreciation is allowed on a block of assets and unless the same is sold it continues to be reflected in the block of assets as the items are not individualized - the AO is not required to examine the stand of the petitioners in detail - where an efficacious alternate remedy is available, we would not normally as a matter of self-restraint exercise our extra ordinary jurisdiction under Article 226 of the Constitution of India – as held in Commissioner of Income Tax & others Versus Chhabil Dass Agarwal [2013 (8) TMI 458 - SUPREME COURT] - where in issuing the notice the Authority has acted contrary to the statutory provision or in defiance of the judicial procedure, the Court would interdict such a proceeding notwithstanding an alternate remedy - the impugned reopening notices have been issued in breach of the first Proviso to Section 147 of the Act which inter alia provides that in the absence of a failure to make and disclose true, full and complete disclosure, the AO has no jurisdiction to issue notice for reopening after the end of four years from the end of the relevant AY - there has been no failure to disclose truly and fully all material information at the time of original assessment proceedings.
2014 (12) TMI 1021

Applicability of section 55A - Whether the Tribunal was right in holding that the provisions of Section 55A would apply only to computation of income under the head Capital Gains – Held that:- Following the decision in as the similar matter has been decided in Smt. Amiya Bala Paul v. Commissioner of Income Tax, [2003 (7) TMI 4 - SUPREME Court] wherein it has been held that besides S.55A having expressly set out the circumstances under and the purposes for which a reference could be made to a Valuation Officer, there is no question of the AO invoking the general powers of enquiry to make a reference in different circumstances and for other purposes – thus, the provisions of Section 55A would apply only to computation of income under the head Capital Gains – Decided against revenue.
2014 (12) TMI 1020

Cinecasting/distribution of movies u/s 194C - Whether the Tribunal was right in law in holding that cinecasting/distribution of movies would be outside the purview of section 194C requiring tax deduction at source – Held that:- The Tribunal is justified in coming to the conclusion that the exhibition of film in the theatre has not been described in the Explanation, therefore, there is no case of the revenue, by which it can be held that the assessee was required to deduct tax at source from the payments made by it to the distributor of films - The Tribunal has rightly considered the agreement/arrangement between the parties and in detail discussed the same - as the distributor gets his share because he has acquired rights of the distribution of the films in the particular area and as no work is carried out by the distributor for which the payment is made - the Tribunal has rightly reversed the findings given by CIT(A) which was not borne out from the facts of the case and we confirm the decision of the Tribunal being correct interpretation of the provisions of I.T. Act – thus, the Tribunal was right in law in holding that cinecasting/distribution of movies would be outside the purview of section 194C of the Income Tax Act, 1961 requiring tax deduction at source – Decided against revenue.
2014 (12) TMI 1019

Charge of interest u/s 234B and 234C – Determination of income u/s 115J – Held that:- Following the decision in Jtc. IT., Mumbai Versus M/s Rolta India Ltd. [2011 (1) TMI 5 - SUPREME COURT OF INDIA] wherein it has been held that it is clear from reading Sections 115JA and 115JB that the question whether a company which is liable to pay tax under either provision does not assume importance because specific provision(s) is made in the section saying that all other provisions of the Act shall apply to the MAT Company (Section 115JA(4) and Section 115JB(5)) - amendments have been made in the relevant Finance Acts providing for payment of advance tax under Sections 115JA and 115JB - so far as interest leviable u/s 234B is concerned, the section is clear that it applies to all companies - the prerequisite condition for applicability of Section 234B is that assessee is liable to pay tax u/s 208 and the expression "assessed tax" is defined to mean the tax on the total income determined u/s 143(1) or u/s 143(3) as reduced by the amount of tax deducted or collected at source - there is no exclusion of Section 115J/115JA in the levy of interest u/s 234B - the expression "assessed tax" is defined to mean the tax assessed on regular assessment which means the tax determined on the application of Section 115J/115JA in the regular assessment – Decided in favour of revenue.
2014 (12) TMI 1018

Estimation of washing loss - possibility of washing loss during the production of salt - Onus discharged by assessee or not - Held that:- The Tribunal was rightly of the view that the assessee submitted additional evidence - additional evidence is in support of grounds of appeal of the assessee of which basic facts and material is on record – it is admitted in the interest of justice - due to peculiar and technicality of the process of production of salt possibility of washing loss could not be ruled out - it cannot be said that the loss shown by the assessee is supported by a cogent documentary evidence - In the absence of such supporting material, loss is to be estimated - taking into consideration the loss of the previous i.e. 5% loss, which has been accepted by the CIT(A) - but, the Tribunal currently came to the conclusion that the assessee did not even try to discharge its onus - The law of evidence mandate that if the best evidence is not placed before the Court, an adverse inference can be drawn as against the person who ought to have produced – relying upon CIT Vs. Krishnaveni Ammal [1983 (1) TMI 3 - MADRAS High Court] - the ends of justice and fair play demand that when the assessee produces additional evidence, opportunity should be given to the AO in rebuttal or otherwise and such order could not have been passed behind back of the AO in violation of the principles of natural justice – thus, the order of the Tribunal is upheld – Decided against assessee.
2014 (12) TMI 1017

Valuation of WIP - WIP was value of actual sales of moulds and not the cost of moulds or not - Restriction of addition of ₹ 20,97,008/- to R.4,14,403/- on unaccounted sales – Facts and material properly appreciated or not – Held that:- CIT(A) rightly was of the view that the value of the mould could have been taken at Nil - these moulds have not been accounted for in stock - There is no reason to assume that the mould had been valued at Nil - these mould have also not been accounted for in the books of accounts of the appellant - the appellant has not accounted for these moulds in the books of accounts - no material could be produced to show that ₹ 45,06,566/- mentioned in the WIP was value of actual sales of moulds and not the cost of moulds which was transferred from WIP – Decided against revenue.
The assessee stated that the moulds of ₹ 4,14,403/- was defective and had no realizable value - the CIT(A) has held that the auditor of the assessee has denied to have received any information about moulds having Nil value - the CIT(A) opined that there is no plausible reason to value the moulds at Nil and the quantity of these moulds were not accounted for in the books of account - there is no plausible reasons for valuing these moulds at Nil - Since these moulds are also not accounted for in stock it stands to reason that these moulds have been sold outside books of accounts - the addition made by the AO on account of unaccounted sales is reduced from ₹ 20,97,008/- to ₹ 4,14,403/- revenue could not point out any specific mistake in the findings of the CIT(A) - No material has been brought to show that any error in the findings of the CIT(A) and to show that the moulds of ₹ 4,14,403/- were defective and their realizable value was Nil –thus, the order of the CIT(A) is upheld – Decided against assessee.