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2014 (12) TMI 956

Restoration of appeal - Appeal dismissed for non compliance of pre deposit order - whether an interlocutory order passed would revive after restoration of the appeal earlier dismissed for default or otherwise - Held that:- The relevant principle is reiterated in the decision of the Delhi High Court in Radhey Bai v. Savithri Sharma - [1975 (2) TMI 112 - DELHI HIGH COURT]. There is unvarying judicial authority for this principle, spelt out in the judgment of the Delhi High Court. Accordingly, in the circumstances and in the right of the settled legal position we declare that the interim order dated 23-2-2012 directing waiver of pre-deposit of the balance adjudicated liability on condition of the deposit of ₹ 40 lakhs (the amount having already been deposited as noticed by the judgment of Punjab & Haryana High Court) has revived and shall be operative during pendency of the appeal. In this view of the matter this application is infructous and dismissed.
2014 (12) TMI 955

Maintainability of condonation application - Condonation of delay in filing the Sales Tax Application – Whether if the Application filed under the proviso to section 61(1) is filed beyond 90 days, can this Court take recourse to section 5 of the Limitation Act, 1963 - Held that:- In The Commissioner of Sales Tax, Maharashtra State, Mumbai vs. N.H. Polymers [2007 (11) TMI 563 - BOMBAY HIGH COURT] wherein it has been already held that the Court has no power to condone the delay in filing of these Applications - it is not possible to agree that the period of 90 days provided in the proviso for approaching the Court against the refusal of the Tribunal to refer any question of law is not a rule or provision of limitation - 90 days is a period provided for both sub section (1) substantively and the proviso - this period or stipulation of time or provision of limitation binds the parties – the contention cannot be accepted because it is not the word "only" referred by the Division Bench but a conjoint and combined reading of the legal provisions referred enables to hold that application of section 5 of the Limitation Ac, 1963 is excluded.
The legislative intent to exclude the applicability of section 5 of the Limitation Act, 1963 has to be found out with reference to the nature of the power which is invoked and which is requested to be exercised, whether a party or person has absolute right to invoke it and equally whether the Court can exercise it and all this has to be examined with reference to the provisions of the special law - It is not that an express exclusion must be found in the section which is being construed or interpreted namely, section 61 of the Bombay Sales Tax Act, 1959 - It is possible to arrive at the conclusion and which has been arrived by the Division Bench by a combined or conjoint reading of the legal provisions as ultimately the statute must be read as a whole - Its provisions have to be read together and harmoniously so as to discern the legislative intent – thus, the Court have no power to condone the delay in filing of the Sales Tax Applications - The Notices of Motion are therefore dismissed – Decided against petitioner.
2014 (12) TMI 954

Validity of assessment order under Tamil Nadu Value Added Tax Act, 2006 – Company named Nokia India Private Ltd. engaged in the manufacturer of Mobile Phones, parts and accessories - Maintainability of the Writ Petition – Held that:- The assessee need not be relegated to avail the alternate remedy as it has been held that necessity to avail the alternative remedy may not arise and it is not a bar to exercise the jurisdiction under Article 226 of the Constitution of India - in Union of India vs. Tantia Construction Private Limited [2011 (4) TMI 1276 - SUPREME COURT] it has been held that the presence of an alternative remedy is not an absolute bar in entertaining a writ petition - the rule of exclusion of writ jurisdiction by availability of an alternative remedy, is a rule of discretion and not one of compulsion and there could be contingencies in which the jurisdiction under article 226 of the Constitution of India could be exercised in spite of availability of an alternative remedy - the question to be decided is relating to the jurisdiction, manner of exercise of power by the AO and the correctness and propriety of the decision making process and whether principles of natural justice was adhered - Therefore, the Writ Petitions are maintainable and cannot be rejected solely on the ground that as against the assessment orders, the statute provides for alternate remedy – Decided in favour of assessee.
Best judgment u/s 27(1)(c) –Whether the assessment orders are best judgement assessments while made u/s 27(1)(a) - Held that:- The AO has invoked his power u/s 27(1)(a) - the assessment is not a best judgement assessment as the AO has not rejected the accounts - the power u/s 27(1)(a) has been invoked for reopening the assessments as certain defects were pointed out during the course of audit - Therefore, it cannot be stated that merely because Section 27(1)(a) of the TNVAT Act has been referred to in the impugned assessments, they are best judgment assessments – in Commissioner Of Sales-Tax, Madhya Pradesh Versus HM Esufali HM Abdulali [1973 (4) TMI 49 - SUPREME Court] it has been held that what is true of the assessment must also be true of re-assessment because re-assessment is nothing but a fresh assessment - the contention of the assessee cannot be accepted that going by the language of section 27(1)(a), the assessment are best judgment assessments, but revision of assessments in contra distinction with best judgment assessments u/s 22(4) – Decided against assessee.
Correctness of the assessment orders and the decision making process – Held that:- The AO stated that at the time of audit, the omission was disclosed - however, the AO has failed to advert to the specific stand of the assessee that the discrepancy was noticed prior to the audit by the Dept and they suo motu disclosed the same to the audit and during the course of the audit, they had paid the entire tax along with interest - this is a very relevant factor, which should have weighed in the minds of the AO, that on the date when the audit completed the inspection, the entire tax liability along with interest have been paid – assessee is being taxed twice - the equal addition being in the nature of penalty, it does not automatically follow that in every case of non-disclosure, equal addition is warranted - there is absolutely no justification for equal addition.
Imposition of tax on capital assets – Assessee contended that the same was exported and not taxable – Held that:- Though the AO while detailing the value of assets sold, has failed to advert into the effect of the export documents produced by the assessee - this should have been examined by the assessing officer to test the correctness of the stand taken by the dealer that they were export sales, zero rated and not liable to tax - Non-furnishing of state-wise break up details to the audit officials is of non-consequence why finalising the assessment - The assessing authority being a quasi-judicial authority should adjudicate the case independently with due application of mind - the assessing authority abdicated his power and was purely guided by the opinion of the inspecting team, which obliviously were officers superior in rank to the AO – the AO should redo the assessment with regards to the tax on sale of assets as the documents produced by the dealer have not been examined by the AO - as such, the consideration is not manifest in the assessment order - the dealer is entitled to reasonable opportunity to produce all records in support of their claim - therefore, the tax levied on the sale of assets is set aside and the matter is remanded for fresh consideration of the assessing officer after affording an opportunity of personal hearing to the petitioner/dealer.
Non-payment of tax on the sale of asset to M/s. NSNPL – Held that:- The test applied by the AO to hold that the transfer is not a transfer of a business as a whole is incorrect - unless that issue has been addressed and a fact finding exercise made, the AO could not have straightaway held that the transfer was only partial and not the whole business - the effect of the assessment under the Income Tax Act with respect to this very transaction treating the same as a slump sale should have also been gone into, as it cannot be stated that the facts which were taken note of during the assessment under the Income Tax Act is wholly irrelevant while considering whether the sale was covered under Explanation III to 2(41) - the decision making process was incorrect - Therefore, the finding with regard to the non-payment of tax on sale of assets to NSNPL calls for interference and accordingly, it is set aside and the matter is remitted back to the AO to make thorough enquiry into the contentions raised by the assessee by applying proper test and to see whether the transaction would fall within the scope Explanation III to Sub Section (2) of Section 41 of TNVAT Act.
Disallowance of sales returns – Held that:- There is no discussion or finding as to why there has been disallowance of sales returns stating sales return disallowed and the rate of tax imposed is 12.5% - Thus, such disallowance was without assessing reasons - Therefore, the imposition of tax on disallowance of sales return has to be necessarily set aside and remanded to the AO to issue notice to the assessee/dealer and after hearing their objection decide the issue afresh.
Incorrect rate of tax adopted by the assessee as regards the sale of accessories and spare parts of the mobile phones or not – Held that:- The AO while considering the objections filed, held that the products sold as accessories along with mobile phones does not come under the category of Information Technology products - Parts and accessories of cellular telephone (mobile phone) specifically finds place vide Entry 13-A(f) under Part C of the First Schedule of the TNVAT Act and they have to be taxed at 14.5% and the proviso to Section 3(2) of VAT Act is not applicable. -The finding rendered by the assessing officer is perfectly justified, inasmuch as the headphones and accessories sold by the petitioner along with mobile phone falls under specific Entry 13-A(f) under Part C of the First Schedule and liable to tax at 14.5% - a specific entry would prevail over a general entry - The products/goods such as headsets of mobile phones, memory card, wireless car kit for mobiles and components and accessories of mobile phones are therefore taxable at the rate of 14.5% and this cannot be classified as information technology products – the finding rendered by the AO with regard to parts and accessories of mobile phones were being made in specific Entry 13-A(f) of Part C of the First Schedule of the TNVAT Act is valid and proper.
Imposition of penalty – and whether the imposition of penalty was justified on the entire tax demand u/s 27(3) - Held that:- The AO has not brought out the willfulness in the manner it has to be established - circulars issued by the Commissioner under the erstwhile TNGST Act are saved in terms of Section 88(3)(i) of the TNVAT Act, in so far as they are not inconsistent with the provisions of TNVAT Act or the rules made thereunder until they are repealed or amended – the AO should have borne in mind the guidelines issued in the circular which as on date is a statutory circular and deemed to be valid and binding on the AO - the reasons assigned in this order wile deleting equal addition on the probable suppression of scrap sales would come to the aid of the petitioner to justify deletion of penalty - there is no justification spelt out in the impugned assessment order to impose penalty on the entire tax demanded - the penalty imposed is deleted – Decided partly in favour of petitioner.
2014 (12) TMI 953

Denial of area based exemption - manpower recruitment agency or manufacturer of goods - benefit of notification No.214/86-CE was deniable to it not being a job worker - Since appellant failed to file the required declaration to claim area based exemption, department was deprived of examining whether the appellant was entitled to the exemption before its first clearance was made. That resulted in denial of benefits of notification No.50/2003-CE dated 10/06/2003 to it - whether the appellant was a mere service provider to HUL or a "manufacturer" under section 2(f) (ii) of the Act read with in terms of chapter Note 6 of Chapter 34 of Central Excise Tariff Act 1985
Held that:- Primary object of the Notification No. 50/2003-CE, dated 10.06.2003 is to grant duty exemption to manufacturing units situated in the area specified therein subject to fulfillment of conditions prescribed therein read with the Board Circular No.908-CX, dated 23.12.2009 as well as Circular No.757/73/2003-CX, dated 22.10.2003 [F.No.201/54/2003-CX-6]. It is not in dispute that the appellant was situated in the specified area of Himachal Pradesh and entitled to the exemption benefit granted by the notification read with the Board circulars. However relying on the copy of agreement dated 01.09.1977 and Board Circulars, the appellant bona fide believed that it was a mere service provider and not a manufacturer for the reasons mentioned hereinbefore as urged by it and failed to file necessary declaration for consideration of its exemption status by the Authority.
Registration of the appellant under Finance Act, 1994 and its existence in the specified area of Himachal Pradesh, as well as its activity carried out as job worker of HUL was well known to Record. Appellant bona fide believed that it was not manufacturer and not liable to excise duty and if held to be manufacturer, it is entitled to the exemption by Notification No. 50/2003 read with the Board circulars aforesaid. There is nothing on record to show that either appellant or HUL suppressed any fact to the authority. Record also reveals that appellant has not acted mala fide. It is primarily entitled to the benefit of exemption notification aforesaid. It only failed to file necessary declaration under bonafide belief as stated above. Non filing declaration is not suppression of fact. So also there is nothing on record to appreciate that appellant had any intention to evade duty. Therefore, appellant acting bona fide is not debarred it to file the same before the authority to re-examine its eligibility to the exemption, otherwise that would defeat object of the area based exemption - Matter remanded back - Decided in favour of assessee.
2014 (12) TMI 952

CENVAT Credit - goods become exempt after availing credit - export of goods - Applicability of Rule 6 and 11 of the Cenvat Credit Rules, 2004 - Exemption to Menthol Crystals BP/USP and Menthol BP/USP - Held that:- In terms of Rule 6 (1) of the Cenvat Credit Rules, 2004, Cenvat credit shall not be allowed on such quantity of input or input services, which is used in the manufacture of exempted goods except in these circumstances mentioned in sub-Rule (2). In terms of sub-Rule (2) of Rule 6 ibid, when a manufacturer avails of Cenvat credit in respect of any input or input services and manufactures such final products which are chargeable to duty as well as the exempted goods, then the manufacturer shall either maintain separate account and inventory for the receipt, consumption of the inputs/input services meant for use in the manufacture of dutiable final product and exempted final product and take Cenvat credit only in respect of inputs/input services used in or in relation to manufacture of dutiable final product, or if does not maintain such account and inventory, in accordance with the provisions of sub-Rule (3) of Rule 6, he shall pay an amount either equal to 10%/5% of the sale price of the exempted final product or equal to the Cenvat credit involved on the inputs/input services used in or in relation to manufacture of exempted final products, to be calculated as per the provisions of this sub-Rule.
From a plain reading of the above sub-Rule (3) of Rule 11, it is clear that this rule applies, if - (a) one or more duty paid inputs in respect of which Cenvat credit has been taken, have been used in or in relation to manufacture of a final product which up to a certain date was dutiable and (b) that final product has become fully exempt from duty whether on option basis or absolutely from a particular date. - if any stock of Cenvat credit availed inputs is lying in stock or is in process or is contained in the final products lying in the stock as on the date of exemption, the Cenvat credit involved in respect of such inputs lying in stock or in process or contained in final product lying in the stock would be required to be paid by the manufacturer, which he can do by deducting that amount from the Cenvat credit balance, if any, lying in his credit and the credit balance, if still left, shall lapse and the same cannot be utilized for payment of duty on any final product whether cleared for home consumption or for export or for payment of service tax on any output service whether provided in India or exported. Thus, in accordance with the provisions of this sub-rule, the balance credit shall lapse and cannot be utilized for any purpose whether for payment of duty on the domestic clearances or for payment of duty on the goods cleared for export.
Provisions of sub-rule (1) of Rule 6 of the Cenvat credit Rule, 2004 are subject to the provision of sub-rule (6) of this rule and in the circumstances enumerated in various clauses of Rule 6(6), the provisions of sub-rule (1), (2) and (3) of Rule 6 are not applicable. The thrust of the Revenue s case is that the word ‘excisable goods’ in sub-Rule (6) of Rule 6 of the Cenvat Credit Rules, 2002 should be read as ‘dutiable goods’ and accordingly, the provisions of this sub-rule would not be applicable to the fully exempted finished products which have been exported out of India, and the Cenvat credit in respect of the same would not be admissible in accordance with the provisions of sub-Rule (1) of Rule 6. In other words, the contention of the Revenue is that when some finished products which are fully exempt from duty are exported out of India under bond/LUT, under Rule 19 of the Central Excise Rule, 2002, the provisions of sub-Rule (6) of Rule 6 would not be applicable and accordingly, the provision of sub-Rule (1), (2), (3) of Rule 6 would become applicable and, therefore, the Cenvat credit in respect of inputs used in or in relation to manufacture of such final product would not be admissible in accordance with the provisions of sub-Rule (1).
Neither the provisions of Rule 11 (3) of Cenvat Credit Rules, 2004, nor the provisions of Rule 6 (1) ibid are applicable to this case. As regards the Department s plea that the respondent cannot take cash refund of accumulated Cenvat credit under Rule 5 of Cenvat Credit Rules, 2004 as well as rebate of duty paid out of the same credit, since in this case, under Rule 5 of Cenvat credit Rules, 2004, prohibition is on claiming input duty drawback under Customs and Central Excise duties Drawback Rules, 1995 or the equivalent benefit of input duty rebate under Rule 18 of the Central Excise Rules and in this case, neither the input duty drawback under the Drawback Rules nor the input duty rebate under Rule 18 of the Central Excise Rules, 2002 has been claimed, this plea is not valid.
None of the present show cause notices, which are the subject matter of present appeals, either this allegation has been made or any evidence in this regard has been discussed. In the three show cause notices which culminated in the order-in-original No. 20-22/D-I/2009 dated 31/03/09 passed by the Commissioner, there is not even a whisper of this allegation. Even in the written submissions wherein this plea has been made, no evidence in support of this allegation has been disclosed. In any case, such an evidence is yet to be evaluated, as the show cause notices issued to M/s Ambika International, M/s Fine Aromatics, M/s Jay Ambey Aromatics and M/s Shiva Mint Industries and also to the respondent have not been adjudicated. - present matter cannot be decided on the basis of allegations made in the subsequent show cause notice dated 07/03/13 issued to the respondent and the show cause notices dated 29/10/12 and 04/10/12 issued to the respondent suppliers M/s Ambika International, M/s Fine Aromatics, M/s Jay Ambey Aromatics and M/s Shiva Mint Industries. Those Show Cause Notices have to be adjudicated by the Commissioner independently and can’t be referred to or introduced in the present proceedings. Accordingly, we have laid down the law, based upon the allegations made in the present Show Cause Notice, as the subsequent notices are not the subject matter of the present appeals. - Decided against Revenue.
2014 (12) TMI 951

Denial of rebate claim - Failure to produce relevant Bank Realization Certificates - respondent themselves requested for cancellation of the rebate claims - Rebate claims were rejected by the original authority holding that their original claims being no more live for consideration, as the claims filed on 22.10.2012 were barred by limitation of time as stipulated under Section 11B - Commissioner (Appeals allowed the appeals with consequential benefits - Held that:- Commissioner (Appeals) has observed that mere cancellation request by the applicant party cannot be treated as closure of rebate claim. Government notes that mere cancellation request for the reasons of non-realization of export proceeds cannot be the reason for rejection, if such export proceeds are realized subsequently within prescribed statutory time limit or extended time granted by the RBI. On perusal of documents submitted by the respondent it is observed that he has submitted the impugned BRCs after stipulated time limit. Further, they could not produce any extension of time limit granted by RBI. Under such circumstances, Government holds that the appellate authority is correct that mere cancellation request of the respondent cannot be treated as closure of rebate claim, provided the BRCs are submitted within the extended time limit by the RBI. Otherwise, if no such extension is granted, then rebate claims would be treated as time barred as contested by the revenue. Under such circumstances, in the interest of justice, Government is of the opinion that cases may be remanded back to decide the same afresh. The respondents are required to submit formal extension of time limit by the RBI within 90 days of receipt of this order. - Matter remanded back - Decided partly in favour of Revenue.
2014 (12) TMI 950

Rebate claim - amount of excess duty paid then prescribed rate of duty - Rule 18 of the Central Excise Rules, 2002 read with Notification No. 19/2004-CE(NT) dated 06 09.2004 - manufacturers had paid duty on said exported goods @ 10% under Notification No. 2/08-CE dated 01-03-2008 - original authority after following due process of law, held that duty was required to be paid on exported goods at the effective rate of duty @ 4% in terms of Notification No. 4/2006-CE dated 01.03.2006 as amended and sanctioned the rebate claims to the extent of duty payable @ 4% - rejection of rebate claim on free samples - Held that:- Notification No. 4/2006-CE dated 1.03.06 when issued, originally did not prescribed any concessional rate of duty to medicaments of chapter Heading 3004 and a concessional rate of duty @8% was prescribed by amending the said notification vide notification no. 4/2008-CE dated 01.03.2008 and the same was further reduced to 4% vide amending the said notification vide notification no. 58/2008-CE dated 7.12.08. Further Notification No. 4/06-CE-was amended vide Notification No. 4/11-CE dated 01.03.2011 and the effective rate of duty was enhanced to 5%. On the other hand, the tariff rate of duty for the Chapter heading 3004 was 16% adv.
There is no merit in the contentions of applicants that they are eligible to claim rebate of duty paid @10% i.e. General Tariff Rate of Duty ignoring the effective rate of duty @4% or 5% in terms of exemption notification No.4/06-CE dated 1.03.06 as amended. As such Government is of considered view that rebate is admissible only to the extent of duty paid at the effective rate of duty i.e. 4% or 5% in terms of Notification No.4/06-CE dated 1.03.06 as amended, as applicable on the relevant on the transaction value of exported goods determined under section 4 of Central Excise Act, 1944. - no foreign remittances was to be received by the applicant, they were not eligible for rebate of duty on (free trade samples). As per foreign trade policy, the exporter is allowed to send the free trade samples, but the admissibility of the rebate claim is to be decided as per relevant provisions of Central Excise Act. No commercial value is mentioned on the export documents and the market value as per records become nil. Since the market price of export goods at the time of exportation is nil, the rebate claim becomes inadmissible in terms of condition No.2(e) of Notification No. 19/2004-CE(NT) dated 6.9.2004.
Amount paid in excess of duty payable on one's own volition cannot be retained by Government and it has to be returned to manufacturer/applicant in the manner in which it was paid. Accordingly, such excess paid amount/duty which is required to be returned to the applicants. Government modifies the order of Commissioner, (Appeals) to the extent discussed above. As such the excess paid amount may be recredited in manufacturer's cenvat credit account - Decided partly in favour of assessee.
2014 (12) TMI 949

Rebate claims - Notification No. 19/2004-CE(NT) dated 6.9.2004 does not specify automobile cess as duty for the purpose of granting rebate - non-fulfillment, of condition 2(b) of Notification No. 19/2004-CE(NT) dated 6.9.2004 - Held that:- Under sub-section (3) it was further envisaged that the pro visions of the Central Excise Act, 1944 and the rules made thereunder, including those relating to refunds and exemptions from duties and imposition of penalty shall, as far as may be, apply in relation to the levy and collection of the Education Cess as they apply in relation to the levy and collection of the duties of excise on such goods under the Central Excise Rules.
Surcharge is collected as part of levy under three different enactments goes to show that scheme of levy of Education cess was by way or collecting special funds for the purpose of Government project towards providing and financing universalised quality of basic education by enhancing the burden of Central Excise Duty, Customs Duty, and Service Tax by way of charging surcharge to be collected for the purpose of Union. But, it was made clear that in respect of all the three taxes, the surcharge collected along with the tax will bear the same character of respective taxes to which surcharge was appended and was to be governed by the respective enactments under which Education Cess in the form of surcharge is levied & collected.
Section 91 also stipulates that these shall be levied and collected as surcharge, a cess to be called Education Cess. In respect of these taxes the surcharge collected along with tax will bear the same character of respective taxes to which surcharge was appended and was to be governed by respective enactments under which Education cess in the form of surcharge is levied and collected. Government notes that the automobile cess is not levied and collected as surcharge and also there are no parallel provisions with reference to automobile cess as contained in Section 91, 92 & 93 of Finance Act 2004 Moreover the automobile cess is levied and collected in terms of Notification No. SO. 247(E) dated 22.3.90 and not under Central Excise Act 1944. In view of these circumstances the ratio of said Rajasthan High Court judgement [2007 (7) TMI 308 - HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR] cannot be made applicable to, the present case, as the same is case specific relating to rebate of education cess. Therefore the rebate of Automobile Cess levied and collected under Automobile Cess Rules 1984 and SO No.247(E) dated 22.3.1990 is not admissible under Rule 18 of Central Excise Rules 2002 read with Notification No. 19/04-CE (NT) dated 69.04.
As regards, the issue of violation of provision of contention No.2(b) of Notification No.19/04-CE(NT) Government notes that applicant has claimed to have exported the goods within six months of their clearance from Hosur Unit for export under ARE-1. The applicant further stated that they have two units in Mysore and Hosur, that they clear the goods from the Mysore unit to the Hosur unit after the payment of excise duties; that at the time of clearance from Mysore factory, they are not acquainted as to which goods would be exported or sold to the local market by the Hosur Unit; that at the time of clearance from Mysore unit, there is no ARE-1 prepared but the goods are merely transferred to the Hosur unit and that ARE-Is are prepared when the goods are exported from Hosur unit. The applicant has further relied upon provisions contained in part-I of Chapter 8 of Supplementary Instruction, 2005 which relate to Notification No.19/2004-CE (NT) dated 6.9.2004.
Since the goods are exported from Hosur unit on ARE-1/Invoice, the said goods are cleared for export on the date of preparation of ARE-1 at Hosur unit. Since the goods are exported within six months of their clearance from Hosur unit (date of ARE-1/invoices), the allegation of violation of condition 2(b) of the Notification No.19/2004-CE(NT) does not survive and hence, rebate claims cannot be disallowed on this count. - Decided in favour of assessee.
2014 (12) TMI 948

Rebate claim - discrepancies in the declared gross weight and net weight in there ARE-1s - shipping Bill was not appended with the rebate claim - appellant did not file Bank realization certificate along with rebate claim - Arrival of FOB value after deduction of freight/insurance/commission - held that:- Government finds that rule 5 only provides for exclusion of cost of transportation in case of goods sold for delivery at a place other than the place of removal. Government notes that there is no mention whatsoever regarding exclusion of commission from FOB value to arrive at transaction value. As such; this- contentiorG of theapplicant_departraeatis C rary to legal position and hence not tenable. There are specific provision in Section 4(3)(d) of the Central Excise Act 1944 and there is logical inference from DGFT's Policy Circular No.51(RE-2008)2004-09 dated 6.1.2009 regarding inclusion of commission in transaction value. As such Government finds no infirmity in finding of Commissioner (Appeals) that rebate is admissible on FOB value (which is arrived at by including commission and excluding freight) in absence of any substantive counter argument of applicant department. Accordingly, the rebate is admissible on such transaction value.
On perusal of sample AREs-1 No.614 dated 11.7.12 and ARE-1 N6.757 dated 29.7.12 and relevant shipping bill No.1157499 dated 1.8.12 and 1142621 dated 2.8.12, Government observes that goods covered vide said two sample- AREs-1 have been cleared under physical supervision of central excise authorities and ultimately exported along with goods covered vide 18 other AREs-1, vide above mentioned two shipping bills, as evident from endorsement of custom authorities on part B of said ARE-1. There is no finding of original authority regarding correlation between excise documents and export documents except ambiguity in weight, which has been explained by the respondent as mentioned in para (11) above. Under such circumstances, keeping in mind whole fact of the case, Government finds force in argument of the respondent regarding ambiguity in net weight/gross weight. As such export of duty paid goods stands established. Under such circumstances, Government finds that rebate is admissible for the reasons of substantial compliance of export of duty paid goods.
Rebate/drawback etc. are export-oriented schemes. A merely technical interpretation of procedures etc. is to be best avoided, if the substantive fact of export having been made is not in doubt,' a liberal interpretation is to be given in case of any technical lapse. Once a view is taken that the party would have been entitled to the benefit of the notification had they met with the requirement of the concerned rule, the proper course was to permit them to do so rather than denying to them the benefit on the technical grounds that the time when they could have done so, had elapsed.
In fact, as regards rebate specifically, it is now a title law that the procedural infraction of Notifications, circulars, etc. are to be condoned if exports have really taken place, and the law is settled now that substantive benefit cannot be denied for procedural lapses. Procedure has been prescribed to facilitate verification of substantive requirement. The core aspect or fundamental requirement for rebate is its manufacture and subsequent export. As long as this requirement is met other procedural deviations can be condoned. This view of condoning procedural infractions in favour of actual export having been established has been taken by tribunal / Govt. of India in a catena of orders, including Birla VXL Ltd. [1997 (7) TMI 383 - CEGAT, NEW DELHI], Alfa Garments [1995 (3) TMI 281 - CEGAT, NEW DELHI], T.I. Cycles [1983 (5) TMI 138 - CEGAT, BOMBAY], Atma Tube Products [1998 (5) TMI 98 - CEGAT, NEW DELHI], Creative Mobus [2003 (7) TMI 682 - GOVERNMENT OF INDIA], Ikea Trading India Ltd. [2003 (7) TMI 99 - GOVERNMENT OF INDIA] and a host of other decisions on this issue. - No infirmity in impugned order - Decided against Revenue.
2014 (12) TMI 947

Duty liability to be discharged by the Job worker or Principle supplier (the appellant) - manufacture of steel racks and trolleys - Imposition of penalty under Rule 173Q - Held that:- Work order dated 8-10-1993 placed by the appellant to M/s. Bonafide Industrial Works besides quoting rate of the job work on per kg. basis, also mentions the conditions, one of which is that all the workers employed by the job worker for this contract would be covered under ESI and PF Scheme as per Labour Laws in force. Thus, in respect of the workers, employed by the job worker, it is the job worker who is responsible for providing the benefits under ESI and PF Scheme to the workers employed by him. It is also not disputed that M/s. Bonafide Industrial Works were doing similar job work for other clients. There is no evidence on record to indicate that M/s. Bonafide Industrial Works is a dummy unit floated by the appellant or is an agent of the appellant. When the transactions between the appellant and the job worker M/s. Bonafide Industrial Works are on principal to principal basis in the sense that both are independent entities and the job worker cannot be said to be a hired labour, working under the control of the Appellant, it is the job worker who has to be treated as manufacturer and not the appellant and, therefore, there would not be any duty liability on the appellant. Just because the raw materials and drawings and designs of the racks and trolleys to be fabricated were supplied by them, the appellant would not become the manufacturer. - Decided in favour of assessee.
2014 (12) TMI 946

Waiver of pre deposit - CENVAT Credit - benefit of Notification No. 6/2006-C.E., dated 1-3-2006 - Held that:- Appellant has not availed any Cenvat Credit on any of the inputs which have been used in the manufacture of either the bulkers or the duty paid on the chassis and therefore, the appellant would be entitled for the benefit of exemption under the said Notification vide Serial No. 39. We further observe that under Serial No. 87 of the notification, goods manufactured in the factory and used in the same factory for building a body or fabrication or mounting or fitting of structure or equipment on a chassis falling under Heading 8706 is exempt from duty, subject to the condition that no credit on the chassis has been taken. This condition is also satisfied by the appellant. Therefore, there would not be any duty liability on the appellant on the bulkers manufactured and captively consumed in the manufacture of motor vehicle falling under Chapter 8704. Therefore, prima facie we are of the considered view that the appellant is eligible for the exemption. Consequently, the duty demand confirmed against the appellant is not sustainable in law. Thus appellants have made out a strong case for grant of stay. Therefore, we grant unconditional waiver from pre-deposit of dues adjudged against the appellants and stay recovery thereof during the pendency of the appeals. - Stay granted.
2014 (12) TMI 945

Valuation of goods - Job work - addition of value of scrap - duty liability has been discharged on the price at which the job-worked goods were sold by the principal manufacturer - Held that:- Appellant has discharged the duty on the sale price of M/s SAIL, which was the principal manufacturer. Therefore, the provision of sub-rule (i) of Rule 10A is clearly attracted. Only in a case where the sub-rule (i) & (ii) are not attracted, the transaction can be covered to sub-rule (iii) of Rule 10(A) - As regards the transaction pertaining to M/s KEC International and M/s RPG Transmission Ltd., the demand pertained to the period April, 2007 to December, 2010, whereas the show-cause notice has been issued only on 27.7.2011. Therefore, the demand for the period April, 2007 to June, 2010 would be clearly time barred and the demand cannot be sustained in law. We further see that the appellant has discharged the duty liability on the scrap, which has been generated and the transaction could have been undertaken under Rule 4(5)(a) of the Cenvat Credit Rules. If the appellant had followed the said procedure instead of paying duty, the question of inclusion or exclusion of value of the scrap would not have arisen at all. In these circumstances, the question of addition to value of scrap, is not sustainable. - Decided in favour of assessee.
2014 (12) TMI 944

Denial of refund claim - Unjust enrichment - Held that:- In the order dated 31-8-2010 while sanctioning the refund, the jurisdictional Assistant Commissioner has clearly recorded that the documents governing the transactions for the period January to March, 2009 had been verified by the jurisdictional Range Officer, who had returned the refund claim with the remarks that the appellant had paid excess duty to the extent of ₹ 30,90,857/-. Further, vide letter dated 13-8-2010, the jurisdictional Range Officer has also reported that unjust enrichment clause is not involved, inasmuch as the appellant has borne the incidence of duty and the said duty incidence had not been passed on to any other person. In view of the verification done by the jurisdictional Range Officer, it is not understandable how the Revenue can take a plea that the appellant has not crossed the bar of unjust enrichment. There is no evidence adduced or forthcoming from the Revenue showing that the appellant has passed on the incidence of duty to their buyers. In fact all the invoices for the transaction issued from factory as also from the depot were verified by the Range Officer, who after verification has reported that the appellant has borne the incidence of duty and has not passed on the incidence to any other person. In view of this clear finding recorded by the jurisdictional Ranger Officer, the appellant was rightly entitled for the benefit of refund. - Decided in favour of assesse.
2014 (12) TMI 943

Time limit for availing Cenvat Credit after the receipt of Inputs - credit availed after one year - Demand of interest on credit wrongly taken - Held that:- As per the Cenvat Credit Rules credit of the duty paid on inputs/input services has to be taken immediately on receipt of the input/input services. Though the rule does not lay down any time limit, it is a settled position in law that a reasonable time limit has to be read into the law. In Central Excise matters, the normal period of limitation, both for demand of duty and also for claiming of refund is one year. Therefore, it is reasonable to read into the law a time limit of one year from the date of receipt of inputs for taking of the credit. Inasmuch as the appellant has not done this, the denial of Cenvat credit cannot be faulted.
Secondly, it is noted that the appellant was availing the benefit of Notification No. 6/2002 wherein the final products manufactured by the appellant was cleared without payment of duty up to a quantity of 3500 MT. To be eligible for the credit, the final products should be dutiable. The denial of credit to the extent of ₹ 9,63,922/- has been made on the ground that the credit pertains to inputs which have gone into the manufacture of exempted final products. Therefore, the denial of credit, in these circumstances, by the lower authorities cannot be faulted. Consequently, the appellant would be liable to pay interest on the Cenvat credit wrongly taken.
Appellant took credit on 30-5-2006 and intimated the department accordingly. Therefore, it cannot be said that the appellant suppressed the fact of taking of any credit so as to attract mandatory penal provisions under Section 11AC. Therefore, the imposition of equivalent amount of penalty under Section 11AC read with Rule 15 of the Cenvat Credit Rules, 2004 is not warranted and accordingly I set aside the same. - I uphold the denial of Cenvat credit to the extent of ₹ 9,63,922/- along with interest thereon under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944. However, I set aside the penalty of equivalent amount under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 - Decided partly in favour of assesse.
2014 (12) TMI 942

Detention order passed under Section 3(1) (i) & 3(1) (iii) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 - Attempt to smuggle red sanders - Commission of an offence under Section 132, 135(a), 135(b) and 135(c) of the Customs Act, 1962 - Held that:- There was unexplained delay in passing of the detention order. After the alleged seizure of red sanders from the possession and custody of the detenue on 28/29.09.2013 and conduct of investigation, the complaint was filed under Section 132 and 135 of the Customs Act on 28.11.2013. Thus, the investigation was complete by the said date. - detention order was passed after a delay of about 8 months, which has defeated the purpose of the detention as it was to prevent the detenue from acting in a prejudicial manner by indulging in the prohibited trade. Thus, the live link had already broken by the time the detention order was passed belatedly on 25.07.2014
After the detenue was granted bail on 25.02.2014. Although the Central Screening Committee had considered the proposal for preventive detention, and approved it on 12.02.2014, the Detaining Authority filed for cancellation of bail rather than passing the detention order to prevent the detenue from carrying out such prejudicial activities. Further, there are no valid reasons disclosed by the respondents as to why the detention order was passed only on 25.07.2014, i.e. after about 5 months of grant of bail when the proposal was approved by the Central Screening Committee on 12.02.2014.
The Detaining Authority even delayed the execution of the detention order passed on 25.07.2014. The detenue was served with the same only on 13.08.2014 i.e. after about 19 days. It is evident from the facts of the case that the detenue had been available all along; rather he even attended the hearing in the prosecution case on 04.08.2014, when he could have been served with the detention order. The respondents have not disclosed that any attempt was made to serve the detention order soon after it had been made. It is not the respondents case that the detenue was avoiding service of the detention order. In fact, the same was served upon him at his residence. - The purpose of a detention order is preventive in nature and not punitive. Therefore, there must be strict compliance of the procedural safeguards in every case of preventive detention.
Detenue appeared in the Court of CMM, Jaipur on 04.08.2014. There is absolutely no explanation offered as to why the detention order was not served upon him on the next date. The respondents have themselves tendered in Court a time chart showing the chronological sequence of events in respect of the detenue. In this chronological chart at sl. No.108, it is disclosed that on 01.08.2014, a letter was written by SA to DGP Rajasthan with a copy to the Ministry, informing that if the detention order has not been executed till then, the same could be executed against the detenue on 04.08.2014 when he had to appear before the CMM, Jaipur. In this background, the failure of the respondents to serve the detenue with the detention order on 04.08.2014 is, in our view, fatal.
The service of GoD and the RuD is a constitutional right and communication of the same has to be made within the prescribed period to enable the detenue to make a representation. Only in cases where there are exceptional circumstances does the law permit extension from the prescribed period of 5 days upto 15 days. In the present case, the so called exceptional circumstances furnished by the respondent have been set out herein above. In our view, the same cannot, under any circumstance, be classified as "exceptional circumstances". Admittedly, the detaining authority was informed of the execution of the detention order on 14.08.2014. Merely because the ADJ (COFEPOSA) was then on Kolkata for attending a hearing before the Advisory Board in another matter cannot be an excuse for the detaining authority in not taking steps for service of the GoD and the RuD upon the detenue at the earliest and positively within the period of 5 days. It is not the respondents case that apart from the ADJ (COFEPOSA), there are no other officers working in the office of the detaining authority. The failure of the executing authority to intimate the sponsoring authority of the detention of the detenue on 13.08.2014 cannot be cited as an excuse to defeat the fundamental rights of the detenue.
With regard to delay in furnishing of the Hindi translation of the RuD is concerned, we may observe that the respondents have pointed out that on earlier occasions, the detenue had addressed letters in English and even stated that he can read, write and understand English language. Thus, it appears that there is a real controversy as to, whether or not the detenue bonafidely required translations of the GoD and the RuD to be able to make an effective representation. We do not propose to get into this aspect in the light of the aforesaid discussion, since the detention cannot be sustained on account of serious infirmities - firstly, on account of passing of the detention order; secondly, on account of delay in execution of the detention order, and; thirdly, on account of delay in service of the GoD and the RuD upon the detenue post the detention. - Decided in favour of assesse.
2014 (12) TMI 941

Waiver of pre-deposit - Penalty u/s 112 - Discharge of duty liability on quantity of fuel remained in the air craft as unused - Held that:- Fuel that was procured in India and present in the aircraft at the time of its departure from Kolkata Airport for foreign trip, ought to be deducted from the total quantity of fuel found at the time of its return, from the foreign trip. In principle, there is no dispute, as the Commissioner has recorded it in the impugned order. The grievance of the appellant is that even though all the records were produced before the Ld. Commissioner alongwith the C.A. certificate, no finding has been recorded on the same, before confirming the demand. The Commissioner has confirmed the demand only on the ground that they could not produce invoices of fuel procured in India and also the fact that they could not show that they have not claimed rebate/ draw back against the exports. The work sheets and C.A. Certificate produced by the Appellant need to be considered/examined and from the finding of the Commissioner, we do not see any such discussion. Accordingly, in our opinion, the appeal need to be remitted to the adjudicating authority for deciding the issue afresh. Also, we find that the Revenue has also filed Appeal against the same order of the Ld. Commissioner. This Tribunal has consistently, in similar situation, remanded the case, where both the Revenue and the assesse are in appeal against the same order. In the result, the impugned order is set aside and the Appeals are remitted, with the consent of both sides, to the adjudicating authority, for deciding the issue afresh, after taking into consideration all evidences that have been produced by the appellant company before us as well as placed earlier during the course of adjudication proceedings; and also the grounds raised by the Revenue in their Appeal. - Decided in favour of assessee.
2014 (12) TMI 940

Denial of refund claim - Unjust enrichment - Availment of the benefit of customs duty under Notification No. 64/88-Cus., dated 1-3-1988 - Confiscation of goods - redemption fine - Held that:- there is no finding recorded by the Revenue that the assessee has passed on the burden of duty to anybody else. In view of the facts admitted in the impugned order, I find that the appellant has used the machinery for their own use. Secondly, on the ground of non-filing of the requisite original document, these are only meant for verification of the refund claim. From the order of the learned Commissioner of July, 2009, it is admitted fact by the Revenue that the appellant had deposited ₹ 5,23,039/- in pursuance to rejection of his claim for exemption under Notification No. 64/88-Cus., which was finally allowed by the said order in July, 2009 and adjustment of duty, etc. was done from the amount of the said deposit. It is also observed in the order in favour of the appellant that “balance amount to be refunded to importer on the basis of application to be made by the importer to the proper officer”. In the facts and circumstances, there is nothing else to verify in law except the doctrine of unjust enrichment, which I hold is not applicable under law and facts and circumstances of the case. - Decided in favour of assessee.
2014 (12) TMI 939

Personal penalty u/s 112 - allegation of abetting the importation of contraband goods - contravention of the provisions of Section 111(a), (f) and (j) of the Customs Act, 1962 - Held that:- The role of Shri Kashyap J. Badekha is limited by introducing importer to Shri Arif Patel for clearance of the goods and to help the importer to get IEC. He has nothing to do with the import of contraband goods. We further find that the role of Shri Arif Patel was only for the clearance of the goods and for the clearance of the earlier consignment, nothing has been proved against the appellant, that he was having no knowledge of the modus operandi of the importation of the contraband goods by replacing aluminium scrap. Further, in this case the container was intercepted at Bombay port itself and it was opened and the appellant came to know about the container with contraband goods only after examination. In these circumstances, the appellant was not having any knowledge of importation of contraband goods by the importer. As per Section 112A of the Customs Act, 1962, the penalty can be imposed on the person who act of aiding and abetting the importation of contraband goods. As discussed above, there was no role of the appellant in aiding and abetting the importation of contraband goods. Therefore, penalties under Section 112(a) of the Act are not imposable on the appellants. - Decided in favour of appellant.
2014 (12) TMI 938

Rectification of mistake - Revocation of CHA license - Fraudulent export under Buy Back System were affected - Availment of excess ineligible Drawback - Held that:- appellant has not disputed that the clearance of the impugned goods has been conducted by Shri Sumit V. Ghatkamble. It is also an admitted fact that Shri Sumit V. Ghatkamble was not having a customs pass. When a person is not having a customs pass and is a trainee employee as contended by the appellant, in that situation, the clearance were conducted by Shri Sumit V. Ghatkamble was within the knowledge of the appellant. These facts are also admitted by Shri Sumit V. Ghatkamble. It is also an admitted fact that the work has been brought by one Shri Mahesh Pande to Shri Sumit V. Ghatkamble to whom the appellant has allowed to use their CHA licence for some consideration. Therefore, the observation made by the adjudicating authority in the impugned order that “I find that no such permission has been obtained and that Shri Sumit V. Ghatkamble was not holding customs pass in the name of charged CHA while undertaking customs clearance of the subject export goods under the ten shipping bills of M/s. Leevon Overseas. Therefore, the charge under Article 12 has been proved against the appellant is beyond doubt” is not correct.
The appellant has authorization from the exporter for undertaking the transactions. He has also obtained all the documents required for filing of the shipping bills and other export documents. The check-list has been prepared by the appellant’s own employee and preliminary verification of the existence of the exporter has also been undertaken, it does not mean that the CHA licence has been sub-let. The examination of the goods is a function to be undertaken by the Customs Officer. Merely because thee CHA or its employee was absent during the examination, it does not mean that the CHA licence has been sub-let. Following the precedent decision we set aside the impugned order revoking the CHA licence No. 11/499 - Decided in favour of appellant.
2014 (12) TMI 937

Transfer u/s 32A(5) - Investment allowance granted earlier u/s 155(4A) withdrawn by AO - Whether the scheme of arrangement/reconstruction can be regarded as amalgamation and protected under sub-section (6) to Section 32A - Held that:- The word “transfer” and its purport was examined in the Commissioner of Income Tax, Lucknow versus Narang Dairy Products, Lucknow, [1996 (2) TMI 6 - SUPREME Court] - the transaction may not be a “transfer” as defined u/s 2(47), the definition section is an inclusive one and does not exclude the contextual or the ordinary meaning of the word, “transfer” - the contention of assessee cannot be accepted that the scheme of arrangement or reconstruction did not result in transfer of the 9 units of the assessee to the three newly formed companies - The three companies were in fact separate juristic entities in law - The expression “otherwise transfer” cannot be given a narrow meaning to exclude all transfers as a result of merger, amalgamation, etc.
Amalgamation as a term can include transfer of one or more undertakings to another company without really blending of one or more existing companies into the transferee/amalgamated company - all assets of the transferor/amalgamating company need not be transferred to the new or other company - The purpose and objective behind sub-section (6) to Section 32A is to facilitate reconstruction and amalgamation and not to obstruct genuine transactions of such nature - The emphasis in sub-section (6) to Section 32A is on sale or transfer of the ship, aircraft, machinery or plant, subject matter of investment allowance in connection with amalgamation or reconstruction - There is also reference to reserves - The emphasis in sub-section (6) is not upon the blending or merger of the existing company, which has availed of benefit under Section 32A into another or new company - At the same time, appropriate and required conditions have been incorporated in sub-section (6) to Section 32A to ensure that there is no abuse of the conditions applicable to the amalgamating company, both with regard to the reserve and the time stipulation on sale or “otherwise transfer” of assets is applied and adhered to - Violation would cause and result in negative and penal consequences.
9 out of 13 undertakings of the assessee were taken over by the three new companies, while the earlier company, i.e. continues to exist - Revenue contended that in case assessee had ceased to exist and had merged, conditions mentioned in Section 2(1B) of the Act would be satisfied - it is a matter of not selecting a correct taxable event, possibly due to inability and lack of foresight in comprehending the objection that could be raised - This would not be in consonance with the object, aim and purpose behind Sub-Section (6) to Section 32A - the principle of updating construction is premised on the doctrine that Acts are always speaking and are intended to apply over a period of time - There is, therefore, need to interpret and construct them with reference to contemporary understanding - The construction should be continuously updated to allow for changes, after the Act was written - This would be an intention of the Legislature, as it is not expected that the Legislature will intervene every now and then, when the Act is intended to apply over a long time - The Act is a living Act and not a relic - Therefore, it may not be true and correct that the language of statute must always be understood in the sense it was understood when it was passed.
When purposive interpretation is applied for the benefit of the assessee, it is equally important to ensure that the assessee complies and does not negate the purpose of the Legislation, be it in the form of conditions stipulated in Section 2(1B) and specific stipulations of Section 32A sub-section (6) - the assessee should be able to show and establish that the liabilities associated with the plant, machinery, ship or aircraft were transferred to the amalgamated company by virtue of amalgamation (Clause (ii) of Section 2(1B) of the Act) as also the condition that the shareholders not holding less than nine-tenth in value of the shares (Clause (iii) of Section 2(1B) of the Act) was satisfied - the stipulations of sub-section (6) to Section 32A must be met and satisfied - As these aspects have not been examined, the matter is to be remitted back to the Tribunal for examination of the aspects - there was transfer within the meaning of Section 32A(5) of the Act – Decided partly in favour of revenue.