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2023 (5) TMI 1203 - ITAT MUMBAI
Validity of order passed u/s 92CA(3) - period of limitation - Whether TP order in this case has been passed by the TPO after the time limit prescribed u/s 92CA(3A) r.w.s. 153? - HELD THAT:- As in the present case the TPO has passed the order only on 30.01.2014 which was after the limitation period as prescribed u/s 92CA(3). We note the similar view has been taken by the Tribunal in the following cases Tata Power Solar Systems Ltd [2022 (3) TMI 1510 - ITAT BANGALORE], M/s.Swiss Re Global Business Solutions India Pvt. Ltd. [2022 (1) TMI 1033 - ITAT BANGALORE], ECL Finance Ltd. [2021 (9) TMI 1399 - ITAT MUMBAI] & M/s. Unisys India Pvt. Ltd. [2022 (6) TMI 1378 - ITAT BANGALORE].
Since the impugned order passed by the TPO u/s 92CA of the Act is beyond the period of limitation it is held to be bad in law. Therefore the addition in respect of TP adjustments stands quashed.
Non-grant of Foreign Tax Credit under India-Singapore Treaty - HELD THAT:- Since issue requires factual verification the same is restored back to the file of the AO for de novo consideration. AO is directed to compute foreign tax credit that is due to the assessee in accordance to the law after affording a reasonable opportunity of hearing to the assessee. Assessee has claimed credit of tax deducted at source while computing the tax liability for the year, which also requires verification at the end of the AO and the AO to verify the same and grant credit of tax in accordance to the law after hearing the assessee. Ground allowed for statistical purposes.
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2023 (5) TMI 1202 - CALCUTTA HIGH COURT
Violation of import conditions - goods (Raw Petroleum Coke) imported by the respondent admittedly having sulphur content in excess of 7% conform to Indian Standard 17049 or not - prohibited/restricted goods - order for provisional release when the import conditions prescribed for the Raw Petroleum Coke (RPC) under ITC HS 27131100 are required to be complied with by the importer in respect of the goods they are importing (i.e. RPC) and not for the goods they are manufacturing (CPC) by using imported RPC - HELD THAT:- According to the respondent the product imported by them being used in the Calcination Plant, the restriction on the sulphur content in terms of the BIS standard, will not be applicable. The learned Tribunal while considering the correctness of the order passed by the Commissioner after setting out the arguments placed before it by both sides has recorded the submissions of the revenue that the goods should not be provisionally released as admittedly the sulphur content is more than four per cent and the same cannot be used by Aluminium Manufacturing Industry. The learned Tribunal has not rendered a specific finding on this submission, takes note of the fact that the respondent importer is a calciner and they would use the imported product as feed stock for making CPC from RDC for their customer with sulphur content ranging 0.8% to 3.5%.
Whether there was a violation of the license condition can be examined by taking note that the product that will be manufactured by the respondent importer or should the importer satisfy that the import effected by them is in accordance with license condition? - HELD THAT:- Since the product is a prohibited item the test would be to examine whether the imported product satisfy the license condition rather to examine whether the import was justified based on the end product that would be produced. The Commissioner of Customs, (Appeals) as well as the learned Tribunal has proceeded based upon the ultimate end product which is being manufactured by the respondent. Thus in our view, it would be an incorrect manner of examining as to whether the import was provided and whether it satisfies the conditions of licence. Furthermore, the Tribunal opined that no harm will be caused by provisionally releasing the goods - such a finding cannot be accepted as the question would be as to whether when admittedly the sulphur content is in excess of 7% will it conform to ISI 7049 as mentioned in the licence and if it does not conform to the said standard, is there a violation of the conditions of import? Furthermore, the goods being prohibited item, there is a mandatory requirement to comply with the policy condition and the Tribunal was required to examine as to whether there has been any violation of the stipulations under the policy. Before considering as to whether the goods have to be provisionally released when admittedly the sulphur content is more than 7%. Therefore, this question, which is a mixed question of fact and law is required to be decided by the Tribunal before approving the order passed by the Commissioner of Customs (Appeals) granting provisional release.
The matter requires to be reconsidered by the Tribunal - Appeal allowed by way of remand.
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2023 (5) TMI 1201 - CESTAT CHENNAI
Classification of export goods - Ilmenite upgraded (processed) - to be classified under Tariff Item 2614 00 20 (as beneficiated/processed Ilmenite) or under Customs Tariff Act 2614 00 10 (as unprocessed Ilmenite)? - HELD THAT:- As per the definition beneficiation is done for three purposes. Any processes done for the above three purposes carried out on the mined sand would be known as “beneficiation”. From the flow chart which has been noticed above it can be seen that the various processes undertaken on the raw sand by the appellants achieves the purpose of regulating the size, removing unwanted impurities and also improving quality or SI grade of Ilmenite - it is difficult to agree with the view of the Department that to obtain beneficiated Ilmenite processes like roasting and chemical treatment is mandatory. Without furnishing any evidence to establish the said contention, the processes undertaken by the appellant would result in beneficiated Ilmenite.
Though the original authority had discussed and held in Para 18 that the goods are not upgraded Ilmenite, however, has held in the operative part of the order that goods which are upgraded ilmenite has to be classified under CTH 26140010. The Commissioner (Appeals) held that the goods are unprocessed and has to be classified under 26140010. From the facts discussed and on the basis of the documents, it is concluded that such processes result in beneficiated Ilmenite.
Thus, the goods which are upgraded/processed Ilmenite are classifiable under 2614 00 20. The impugned order is set aside - appeal allowed.
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2023 (5) TMI 1200 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Section 7 application admitted - the Adjudicating Authority passed an order on 06.01.2023 closing the right of the Appellant to file reply and the orders were reserved - Respondent submits that the order of the High Court was not even before the Adjudicating Authority when order was passed on 28.02.2023, therefore, there is no error in the order admitting application under Section 7 - HELD THAT:- From the sequence of events which has been brought on the record it does appear that reply was filed by the Corporate Debtor on 29.11.2022 which continued to be under scrutiny as per DMS, as noted in order dated 06.01.2023. Learned counsel for the Appellant submits that there are certain minor defects in the reply which Appellant was always ready to rectify. It is submitted that the High Court has passed the order on 22.02.2023 when the Appellant directly approached the High Court in a Writ Petition. Their being statutory need, the Appellant should have filed appeal, if any, against the order dated 06.01.2223 of the Adjudicating Authority, before this Tribunal.
The ends of justice be served in directing the Adjudicating Authority to consider the reply which was filed by the Appellant on 29.11.2022, especially when the Financial Creditor has already filed it rejoinder. The Adjudicating Authority passed the impugned order without taking into consideration the reply which has already filed on 29.11.2022 but laying in defect.
Let the Section 7 application be listed before the Adjudicating Authority on 03.07.2023, on which date the Adjudicating Authority may consider the application as well as reply and rejoinder and take decision in accordance with law, as early as possible.
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2023 (5) TMI 1199 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Maintainability of Section 9 application - it is argued that entire Operational Debt having been paid by the Corporate Debtor, there is no useful purpose in continuing the Section 9 proceeding any further - impleadment of Respondent as Corporate Debtor - Appellant submits that the Section 9 application was filed for Safeguard Duty reserving right to claim future interest or penalties or delay charges - HELD THAT:- Admittedly, the levy by the Custom Department is by Assessment Order dated 04.10.2022 by which finalization of duty on the bill of entry was made. In the Safeguard Duty, on the date when application was filed, interest could not have included as the amount of interest has been crystalized only subsequently when provisional assessment has been finalized by letter dated 04.10.2022 - The claim of interest levied by order dated 04.10.2022 cannot be said to be included in the debt as claimed by the Applicant under Section 9.
The impugned order records that Appellant has deposited on 14.11.2022, entire claim amount of Rs.16,41,96,213.38/- Principal amount and applicable GST making a total amount of Rs.18.68,55.290.82/-. On deposit of the aforesaid amount, thus, the debt as was claimed in the application stood paid. The order further notice that submission was made on behalf of the learned senior counsel for the Appellant that in view of the aforesaid deposit, the application should be rejected, which was opposed by learned counsel for the Respondent stating that interest is also to be paid by the Corporate Debtor - Operational Debt as was claimed in the application under Section 9 which is apparent from Part IV of the Application which clearly states that the Operational Debt was only Rs.17,24,06,024/- and Applicant has reserved its right to claim further interest, penalties or delayed charges, etc. - On payment of entire Operational Debt as was claimed in the application, there was no occasion to continue the Section 9 application any further.
It is open for the Appellant to challenge the levy of interest, if they are so aggrieved to liability of interest which ultimately will come on them as per the supply agreement. Appellant cannot get away from liability of interest by saying that it has requested the Operational Creditor to challenge the levy of interest since if the liability of the interest is of the Appellant as per the Supply Agreement, it was open for the Appellant to take such recourse in accordance with law challenging the levy of interest.
Section 9 application which was filed by the Operational Creditor, the entire Operational Debt having been paid by the Corporate Debtor, there is no useful purpose in continuing the Section 9 proceeding any further. The Adjudicating Authority ought to have closed the matter and the observation that the parties are permitted to settle the matter amicably within one week, was uncalled for.
Appeal deserves to be allowed closing the application under Section 9 filed by the Operational Creditor - Appeal allowed.
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2023 (5) TMI 1198 - DELHI HIGH COURT
Money Laundering - proceeds of crime - criminal conspiracy to cause loss to the exchequer and banks by indulging in illegal foreign exchange transactions on the basis of forged/ fabricated documents - Hawala transactions - It has been submitted that the petitioner is neither named as an accused in the FIR in the predicate offence nor was ever summoned during investigation nor charge-sheeted in the predicate offence.
HELD THAT:- The jurisprudence regarding bail is by now very well settled that rule has always been bail and its exception jail. It has also been stated time and again that such a principle has to be followed strictly. Right to bail is also essential for the reason that it provides the accused with an opportunity of securing fair trial. The right to bail is linked to Article 21 of the Constitution of India, which confers right to live with freedom and dignity. However, while protecting the right of an individual of freedom and liberty the court also has to consider the right of the society at large as well as the prosecuting agency. This is the reason that the gravity of the offence is required to be taken into account. The gravity of the offence is gathered from the attendant facts and circumstances of the case. It is a settled proposition that economic offences fall within the category of 'grave offences' - The money laundering not only is a threat to the financial health of the country but it may also adversely impact its integrity and sovereignty. Moreover, the act of money laundering can even lead to the collapse of the economic system.
Whether the person whose role has been found later knew that the money which he has been dealing with is a proceed of crime? - HELD THAT:- The court understands that this is very difficult for the department to find direct evidence regarding this. But at the same time, despite the twin conditions, the court cannot return any finding merely on the basis of inferences and presumptions.
It is a settled proposition that at the stage of bail, the court is only required to see a prima facie case and is not required to look into the test of guilt. The court is required to maintain a delicate balance between the judgment of acquittal and conviction and an order granting bail before commencement of trial. It is also a settled proposition that the court cannot meticulously examine the evidence and cannot hold a mini trial at this stage. The court is only required to examine the case on the basis of broad probabilities - the department has opposed the bail on the ground that if the petitioner is released on bail, he may tamper with the prosecution evidence. However, it is matter of record that the entire evidence in the present case is in form of the documentary evidence and thus complaint has already been filed. The petitioner also cannot be stated to be at flight risk. He has roots in the society and even this ground has not been considered by the department.
It is pertinent to mention here that in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT] it has been inter alia held that the Court is at the stage of considering the application for the grant of bail is expected to consider the question from the angle as to whether the accused possessed the requisite mens rea. It was further held that the Court is not required to record a positive finding that the accused have not committed an offence under the Act - the jurisprudence of the bail positively lays down that a liberty of a person should not ordinarily been interfered with unless there exist cogent grounds. Despite, the twin conditions, it is not necessary that at the stage of bail, the Court has to come to the conclusion that the petitioner is not guilty for such an offence. The Court is at the stage of has to examine the case on the scale of broad probabilities. The Court at this stage is required to record an objective finding on the basis of material available on record and no other purpose.
A bare perusal of the Section 2 (u) of the Prevention of Money Laundering Act, 2005 which provides for the definition of “proceeds of crime” indicates that it is the property derived or obtained, directly or indirectly which relates to criminal activity relating to a scheduled offence. Similarly in order to be punished under Section 3 of PMLA, It is necessary that person dealing with the “Proceed of crime” must have some knowledge that it is tainted money - the serious medical conditions of the petitioner as stated herein has not improved and he has been under regular treatment and has already undergone two procedures. The applicant has also been stated to undergo further procedures and/or surgeries as and when advised. It has been stated that the petitioner is suffering from numbness of limbs which is a precursor to possible paralysis which requires urgent medical attention. Thus, taking into account the facts and circumstances, the petitioner is admitted to bail on furnishing a personal bond in the sum of Rs. 25,00,000/- with two sureties of the like amount to the satisfaction of the trial court, subject to the conditions imposed.
Bail application allowed.
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2023 (5) TMI 1197 - ALLAHABAD HIGH COURT
Seeking grant of Anticipatory bail - Money Laundering - predicate offence - allegation against the applicant is that he was also involved in the conspiracy and he had taken seven cheques to deposit in the account of co-accused Kapil Kumar - HELD THAT:- Non appearance of the applicant right from dismissal of Special Leave Petition on 25.09.2018 till date cannot be justified on the ground of transfer of file as the applicant had full knowledge of pendency of the case and he had challenged the proceedings by filing applications under Section 482 Cr.P.C. and by filing S.L.P. Spread of covid-19 pandemic also does not justify non-appearance of applicant four five years.
As such, without making any further observations, this court is of the considered opinion that the aforesaid conduct of the applicant disentitles him to grant pre-arrest bail by this court - the application for anticipatory bail is hereby dismissed.
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2023 (5) TMI 1196 - ANDHRA PRADESH HIGH COURT
Money Laundering - seeking release of attached petitioner’s properties - it is the specific contention of the petitioner that the property was purchased by him along with another person and thereafter the said property was converted into plots and so many plots was purchased by the third parties - HELD THAT:- It is evident that interest of a co-owner and that of the third party bona fide purchasers of the plots are involved in attached property No.4. The petitioner has offered fixed deposit of Rs.10,00,000/-, which is the value estimated by the competent authority in the Provisional Attachment Order. Therefore, the alternative prayer sought in the writ petition appears to be just and reasonable.
The writ petition is allowed-in-part granting alternative relief sought by the petitioner. The respondent is directed to release the attached property No.4 i.e. Ac.6-00 situated at Survey No.376/2, Alamur Village, Ananthapur, subject to the petitioner furnishing security in the form of a fixed deposit for Rs.10,00,000/-.
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2023 (5) TMI 1195 - CESTAT NEW DELHI
Short payment of service tax - subsequent adjustment with excess tax paid - appellant submits that the mistake of short or excess payment has occurred due to the newly introduced Works Contract Service - Rule 6 (4A) of STR, 2004 - HELD THAT:- On going through the records of the case and the reconciliation statements submitted by the appellant, it is clear that the appellant has certainly short paid service tax in initial months of April, August and September and excess paid in the months of May, June and July. On reconciliation they have paid the service tax liability along with interest and reflected the same in the returns for the period October 2007 to March 2008. We find that the adjudicating authority simply goes by the show cause notice and bases his confirmation of service Tax on the appellants on the entries made in the ST-3 returns, referring to Rule 6(3) of STR.
The Adjudicating authority has not considered the submissions of the appellant and the reconciliation statements submitted thereof; the Adjudicating authority did not discuss the submissions made by the appellants and the Chartered Accountants Certificate. He proceeds only on the premise that the appellant has violated the provision of Rule 6 (3) of STR, 1994 - it is found that the adjudicating authority did not counter or negate the claims and submissions of the appellants. Not even a single piece of evidence has been adduced to show that the appellants have in fact violated the provisions of Rule 6 (3) of STR, 1994. Except for making a bald averment that the appellants have violated the provisions of Rule 6 (3) of STR, 1994, no other discussion is made to show as to how the conclusions were drawn.
The appellant can adjust the service tax excess paid against his service tax liability for the succeeding month or quarter; sub-Rule 4A of Rule 6 of STR starts with a non-obstante clause and, therefore, the procedure prescribed for the earlier rules, if any, are not applicable in the instant case; the appellant is eligible to avail the provisions of Rule 6 (4A) of STR, 1994. The fact that the appellant has made good the service tax short paid by them, along with interest, is not refuted either in the SCN or the impugned order. Therefore, there is considerable force in the submissions of the appellant.
The Tribunal in the case of M/S. SCHWING STETTER (INDIA) PVT. LTD. VERSUS CCE, LTU, CHENNAI [2016 (6) TMI 239 - CESTAT CHENNAI] has observed that the excess amount paid in the month of May, 2011 adjusted by the appellants in the subsequent months tax liability is absolutely in order. Therefore, invoking Section 73(1) for a non-existing 'short-payment' is not sustainable. Accordingly, the impugned order is set aside.
Tribunal in the case of DELL INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, BANGALORE [2015 (12) TMI 1555 - CESTAT BANGALORE] has observed that when the assessee paid excess amount of tax to the exchequer, law of the land is very clear under Article 265 of the Constitution of India, which says that “No tax shall be levied or collected except by authority of law.” If Revenue becomes very rigid on strict compliance of the procedure every time and all the time, there could be situations where such rigidness and strictness on the part of the Revenue could become contrary to the provisions of the Article 265 of the Constitution of India.
The impugned order cannot be sustained and is liable to be set aside - Appeal allowed.
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2023 (5) TMI 1194 - CESTAT CHENNAI
Refund of service tax paid - Custom House Agents - Technical Testing and Analysis Agencies - denial on the ground of time limitation - denial also on the ground that the conditions set out in the N/N. 17/2009-ST dated 07.07.2009 have not been fulfilled by the appellant.
Time Limitation - HELD THAT:- As per para 2(f) the notification No.17/2009, the refund has to be filed within a period of one year. In these appeals, it is seen that the refund claim for different quarters has been entirely rejected by the authorities below. It is submitted by the Ld. Counsel that a few shipping bills may be beyond the time limit. The authorities below ought to have considered the refund claims in regard to shipping bills which are within the time limit of one year. The entire claim for a quarter cannot be rejected merely because few of the shipping bills pertaining to that quarter is beyond the period of one year. The invoices which are filed within the period of one year ought to have been considered for the different quarters - This issue is therefore required to be remanded to the adjudicating authority who is directed to look into the matter as to the shipping bills which are within the time limit of one year.
Rejection of refund claim on input services availed for testing and analysis - HELD THAT:- The authorities below have held that testing is done for raw material and therefore it cannot be said that these services have nexus with the finished products which are exported. Even if the services are used for testing of raw materials such services have nexus with the manufacturing of finished products and therefore eligible for credit/refund. Further, the period involved is prior to 01.04.2011 when the definition of “input services” had a wide ambit as it included the words “activities relating to business”. It is also to be stated that there is no condition attached to the notification with regard to refund claim in regard to testing and analysis services. The rejection of refund claim on the ground.
Rejection of refund claim for the reason that the invoices are issued by the service provider in the address of their Head office at Guindy whereas the input services have been availed by the manufacturing unit at Pallavaram - HELD THAT:- The appellants furnished the address of their Head office to the service provider as it happened to be the Head office. The service provider mentioned such address in the invoices and also for the reason that they received payment from the Head office of the appellant. The Department does not dispute that the appellant has received the services as per the invoices. When there is no dispute with regard to the services availed and the service tax paid, it is opined that rejection of refund is without any basis.
The issue with regard to rejection on the ground of time-bar has to be remanded to the adjudicating authority for de novo consideration. In such de novo adjudication, the adjudicating authority shall take into consideration the discussions and view expressed above by us in regard to issue of testing and analysis services and the issue of invoices mentioning the address of the Guindy unit - The appeals are allowed by way of remand to the adjudicating authority.
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2023 (5) TMI 1193 - CESTAT CHENNAI
Levy of Service Tax - business auxiliary service - Tea, an agricultural produce or not - eligibility for exemption in terms of N/N. 13/2003-S.T. dated 20.06.2003, as amended by N/N. 08/2004-S.T. dated 09.07.2004 - denial of benefit on the ground that Black Tea is manufactured by the appellant after multiple processes wherein green tea leaf is converted into Black Tea, which would fall under Chapter 9 of the CETA, 1985 and that the same would no longer remain an agricultural produce of green leaf tea.
HELD THAT:- The meaning of 'agricultural produce', as extracted in the above paragraphs per Notification No. 08/2004 ibid. undoubtedly covers, inter alia, Tea, but, as specified therein, does not include manufactured products such as sugar, edible oils, processed food and processed tobacco. Therefore, the activity of manufacture is limited to products such as sugar, edible oils, processed food and processed tobacco and nothing beyond that - the production of Black Tea involves processes for which there is no bar in the said Notification. Further, the said Notification does not distinguish between Tea or Green Tea or Black Tea, and it is also well understood that there is no alteration to the essential characteristic other than, perhaps, making it marketable as either Green Tea or Black Tea.
Even the processes involved in converting Green Tea into Black Tea does not alter the basic characteristic of the Tea as such and the same could not be considered as a non-agricultural product under any stretch of imagination.
The demand raised against the appellant is not sustainable, for which reason the impugned order is set aside - Appeal allowed.
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2023 (5) TMI 1192 - ALLAHABAD HIGH COURT
Maintainability of appeal - appeal dismissed for non-compliance of the mandatory requirement of Section 35-F of the Act with respect to pre-deposit to maintain the statutory appeal - HELD THAT:- While there is no dispute that the right of appeal claimed by the appellant before the Tribunal was conditional inasmuch as such appeal may be maintained only upon making pre-deposit prescribed by the statute, at present, learned counsel for the appellant prays for some time to make the pre-deposit to maintain the appeal before the Tribunal.
Undisputedly, the appellant is a statutory board constituted by the Government of U.P. In such circumstance, upon query made, Sri Amit Mahajan, learned counsel for the revenue fairly states, if the present appellant were to make good the deposit within a period of one month from today, the revenue would have no objection to the impugned order being set aside so as to allow the appellant to press its appeal on merits.
In view of such statement made, no useful purpose would be served in seeking to decide the legal issues being raised - Appeal disposed off.
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2023 (5) TMI 1191 - JAMMU & KASHMIR HIGH COURT
Rejection of petitioner’s claim for benefit of budgetary support - rejection on the ground that the benefit thereunder can only be allowed on goods manufactured under an 8-digit HSN code and cleared prior to 01.07.2017 - respondents rejected the claim of the petitioner on the ground that the goods manufactured by the petitioner under the Exemption Notification were different from those manufactured during the operation of the new Scheme - HELD THAT:- The goods covered under the generic head of the Tariff item HSN code 3808 under Chapter 38 are further classified under sub-heads and sub-items with 6-digit HSN code and 8-digit HSN code. Thus, HSN Code 3808 is the broad classification of different goods enumerated in the Table of the different goods/items with 6-digit and 8-digit HSN codes - Under the broad category of 4-digit Tariff Item HSN Code 3808 under Chapter 38, all such goods with 8-digit HSN code falling under it would be eligible for the exemption from excise duty in the manner provided under the Exemption Notification. Thus, if the petitioner’s unit manufactured any of the items with 8-digit code mentioned in the sub-items or sub-heads under the broad Tariff Item 3808, exemption could be sought under the aforesaid Notification in respect of the item with 8-digit HSN code.
This classification structure would indicate that Tariff item HSN code 3808 is the umbrella covering all the sub-heads and sub-items under which these items with 6-digit and 8-digit HSN codes are categorised. But, there is no tariff rate mentioned against the broad items of 6-digit items like insecticides, or rodenticides, or fungicides etc. mentioned under the broad Tariff Head of 4-digit HSN code 3808. The different items under the aforesaid broad items with 6-digit HSN code (like insecticides) are further categorised with 8-digit HSN code items like Aluminium phosphite (3808 91 11), Calcium cyanide (3808 91 12), D.D.V.P. (Dimethyl-dichloro-vinyl-phosphate, 3808 91 13), Diagonal (3808 91 21) etc. and tariff rates are shown against each of these sub-items with 8-digit HSN code.
Upon introduction of the new GST regime, all the notifications issued earlier under the Central Excise Act,including the Exemption Notification were rescinded. However, the Government of India took a policy decision to provide budgetary support to the existing eligible manufacturing units operating in the States of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North Eastern States including Sikkim under different Industrial Promotion Schemes of the Government of India, for the residual period for which each of the units is eligible, and introduced and notified a new scheme on 5.10.2017 vide Notification dated 05.10.2017 - Under the new Scheme, all units which were eligible under the erstwhile schemes and were in operation through notifications issued by the Department of Revenue in the Ministry of Finance, including Exemption Notification for the State (now UT) of Jammu & Kashmir were considered eligible. Under this new Scheme, the benefit is limited to the tax which accrues to the Central Government under Central Goods and Service Act, 2017 and Integrated Goods and Services Act, 2017, after devolution of the Central tax or the Integrated tax to the States, in terms of Article 270 of the Constitution.
The new Scheme provides certain benefit by way of budgetary support to such units which were being granted excise duty exemption under earlier tax regime prior to introduction of GST regime. However, such budgetary support is conditional and not a blanket support.
If the petitioner’s unit is eligible, is it entitled to the benefit of budgetary support? - whether the petitioner’s unit fulfils the conditions for the benefit of budgetary support? - HELD THAT:- The eligible unit must be manufacturing the “specified goods” - “Specified goods” has been defined under para 4.2 of the Scheme notification, as to mean the goods specified under exemption notifications, which were eligible for exemption under the said notifications, and which were being manufactured and cleared by the eligible unit by availing the benefit of excise duty exemption from the premises under Central Excise with a registration number, as it existed prior to migration to GST etc.
In order to qualify for the budgetary support, the eligible unit must fulfil the following:
(i) continue to manufacture the item covered by HSN 3808 which was manufactured earlier and,
(ii) the manufacturing unit must have availed the benefit of the excise duty exemption under the Exemption Notification and,
(iii) the said item must have been cleared by the manufacturing unit by availing the excise duty exemption upto 01.07.2017.
Consequently, if the unit had not been manufacturing the item and had not been availing excise duty exemption under the Exemption Notification by clearing the same, the unit cannot avail the benefit of budgetary support in respect of the said item under the new Scheme.
The unit must manufacture only the “specified goods” to avail the budgetary support and the “specified goods” has been defined under Para of 4.2 of the Scheme as those goods which were being manufactured and cleared by the eligible unit by availing the benefit of excise duty exemption. Thus, the specified good in respect of which the budgetary support is sought, not only, must have been manufactured by the unit and cleared by the unit by availing the benefit of excise duty exemption. Thus, manufacturing the item and availing the benefit of excise duty exemption in respect of the said good by clearing it by the unit when the Exemption Notification was in operation are condition precedents for availing budgetary support under the new Scheme, when the unit continues to produce the same good. As a corollary, if the unit had not been manufacturing the particular item covered under Chapter 38, and had not been availing the benefit of excise duty exemption by clearing it, the unit cannot seek budgetary support in respect of the item under the new Scheme - merely producing an item which is covered under the broad Tariff of 3808 will not suffice. The unit must have availed excise duty exemption by clearing it from the unit in respect of the said good to come within the meaning of “specified goods”.
What is important to be noted is that the budgetary support is to be given with reference to the “specified goods” only. What can further be noted is that under the definition of “specified goods”, it does not stop by merely the item being mentioned in the Exemption Notification. There are other conditions for the item being qualified as “specified good”, i.e., the good must find mention in the Exemption Notification and it must not only have been manufactured by the unit when the Exemption notification was in operation, excise duty must have been also availed in respect of the said good by clearing it from the unit. Only, when these conditions are fulfilled, such good will qualify to be a “specified good” under the new Scheme to avail budgetary support - only such goods having the attributes of being manufactured earlier and in addition, having the benefit of excise duty availed earlier which fell under the broad Tariff Head of 3808 under Chapter 38 of the Excise and Tariff Act under the early Exemption Notification, would qualify for getting the benefit of budgetary support under the Scheme. It would not suffice as contended by the petitioner that any good being manufactured now, which fall within the category of Tariff Head of 3808 would qualify for availing the budgetary support. More is required of such good to be qualified for getting the budgetary support.
If the provisions of the Scheme Notification are given the meaning as sought to be done by the petitioner, every unit which was eligible to avail exemption under any specified notification and started manufacturing new items after 01.07.2017 would claim to be eligible for budgetary support under the new Scheme, which would result in the creation of uneven playing field in respect of new units which start production/clearance of similar products but would not be entitled for the benefit of budgetary support - the respondents have clearly mentioned that goods under Tariff Headings 38089113, 38089199, 38089290, 38089340, 38089350, 38089390, 38089910 and 38089990 manufactured after 01.07.2017, were not manufactured/cleared by the petitioner prior to 01.07.2017 and as such there is no question of availing excise duty exemption prior to 01.07.2017 in respect of these goods. As these goods were not manufactured earlier and consequently, no exemption of excise duty was availed in respect of these goods, these goods are not eligible for budgetary support.
The decision taken by the respondents does not suffer from any illegality or arbitrariness which would warrant interference - Petition dismissed.
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2023 (5) TMI 1190 - JAMMU AND KASHMIR AND LADAKH HIGH COURT
Scope of the supply order placed by the PSU on the manufacturer - impact of the Central excise exemption scheme - area-based exemptions - Refund of Excise Duty under MODVAT Scheme - special conditions of the purchase orders placed by the SICOP, challenged - It was pleaded that since the SSI Units, which had been earlier placed the supply orders and the writ petitioners formed a single class and, therefore, there could not have been different terms and conditions of supply incorporated in the supply orders placed with the writ petitioners - HELD THAT:- The plea of discrimination raised by the writ petitioners is predicated on the ground that in the supply orders issued by SICOP for purchase of AAC/ACSR conductors with the local manufacturers as well as two outside manufacturers, there was no condition akin to Clause 13(v). Specific mention is made of the supply order placed with M/s Jaldara Conductors Pvt. Ltd, Jaipur, and supply order placed with M/S Ashok Transmission Wire Pvt. Ltd, Jaipur, both dated 23rd August, 1986. The writ petitioners also invited our attention to certain supply orders made by SICOP to the local manufacturers in the year 1986 and 1987 to hammer the point that clause similar to Clause 13(v) providing for transfer of benefit under MODVAT scheme to the purchaser(s) was not incorporated in the supply orders issued to such local SSI units. The plea is refuted by the respondents - From the reading of pleadings of both the sides, it clearly transpires that there is no dispute with regard to the fact that the supply orders issued by appellant No. 2 directly to M/S Jaldara Conductors Pvt. Ltd, Jaipur, and M/S Ashok Transmission Wire Pvt. Ltd, Jaipur, dated 23rd August, 1986, did not contain any condition, as is contained in Clause 13(v) of the supply order dated 12th January, 1987 and Class (ii) of purchase orders issued by SICOP in favour of the writ petitioners. These supply orders were directly between appellant No. 2 and the units outside the State. From the reading of these two supply orders, it becomes abundantly clear that these were issued after initiating the process of tenders and receiving offers from the intending suppliers. The rates to be charged for different items of goods like AAC/ACSR and the terms and conditions of the supply were those which were mutually settled between the parties.
The supply orders in question issued in favour of the writ petitioners and the supply orders issued in favour of local SSI units and some outside units are not issued simultaneously but pertain to different point of time. In the instant case, the supplies from the writ petitioners were procured by the appellants through SICOP. In the supply order issued by the appellants in favour of SICOP, it was clearly mentioned that the SSI units, who would enter into arrangement with SICOP for supply of AAC/ACSR conductors, would transfer the benefit, if any, received by them under MODVAT scheme - The writ petitioners were aware and entered into contract with their eyes wide open. The SICOP framed the supply order after discussion with the writ petitioners and after having regard to all commercial aspects of the transaction.
The writ petitioners accepted the supply orders and made the supplies strictly as per the terms and conditions laid down in the supply orders. However, later on, it seems finding that the appellants had directly placed certain orders with outside units without imposing such conduction, the writ petitioners made representation to the respondents. The representation made by the writ petitioners came under active consideration of the respondents, who, after weighing all pros and cons of the matter, concluded that it was not possible to revoke the condition which was included in the supply orders in consultation with the writ petitioners and more particularly when 80% of the supplies had already been made by the writ petitioners - it is very difficult to say that the writ petitioners herein and the local as well outside manufacturers, who were also given supply orders by the appellants for procurement of certain items, form a single class. Each contractual transaction is independent transaction between two parties. The relationship of two contracting parties is governed by the terms and conditions of the contract. Even in the case of Government, it is very unwise to expect that the State would enter into contracts for supply of various items with various persons by having same and identical terms and conditions.
Clause 13(v) of the supply order issued by the appellants in favour of SICOP and Clause (ii) of the special conditions of the supply orders issued by SICOP in favour of the writ petitioners and we find that these clauses incorporated in the supply orders were only as a bargain to seek some discount or concession from the suppliers in lieu of placing bulk supply orders with them without even inviting tenders and making the writ petitioners to compete with outside manufacturing units. The transfer of benefit of refund of excise duty by the writ petitioners to the Purchasing Department i.e., the appellants herein, was part of a bargain struck between the two parties under which one party i.e. SICOP, was to issue the supply orders for procurement of AAC/ACSR conductors in favour of the writ petitioners and the other party i.e. the writ petitioners herein, were to make supplies on the mutually agreed/settled rates of the items with a further benefit to the Purchasing Department in the shape of transfer of benefit of refund of excise duty available to the writ petitioners under MODVAT scheme.
There are nothing wrong or unholy in the arrangement. The legal position in this regard is well settled. Unless the Court finds a condition in the contract entered into between the two parties unconscionable, it would be loath to interfere in the matter. The impugned condition is found neither unconscionable nor in violation of any statutory provision. Rather this Court has found this condition a result of negotiations between two contracting parties which ultimately resulted into a concluded contract coming into existence between them. Comparing this contract with other contracts executed at different points of time and even between different parties would not be justified. The plea of discrimination raised by the writ petitioners is thus not supported by any legal or fact situation obtaining in the instant case. The Writ Court has not considered all these aspects and has, without any justification, held Clause 13(v) discriminatory in nature.
Clause 13(v) is contained in the supply order issued by the appellants in favour of SICOP and, therefore, there was no privity of contract between appellants and the writ petitioners giving them any cause of action or locus to challenge the said Clause. The Clause (ii) of the special conditions of the supply order which the SICOP issued in favour of the writ petitioners has not been considered, discussed or dealt with by the Writ Court - Clause (ii) of the special conditions is similar and akin to Clause 13(v) and in view of discussion, there are no fault found with Clause 13(v), so is the position with Clause (ii).
The writ petitioners have not been able to make out any case of discrimination between them and the outside manufacturers/local SSI units and, therefore, the decision of the Writ Court cannot be upheld - Appeal allowed.
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2023 (5) TMI 1189 - KARNATAKA HIGH COURT
Production of C-Forms - Seeking return of amount recovered consequent to such communication in excess of 30% of the demand along with interest - whether this Court must dispose of the petition with only orders on the petitioner’s grievance as against the communications dated 27.10.2020 in order to enable effective and complete adjudication?
HELD THAT:- If the law does not prohibit multiple assessments under circumstances and such circumstances could include the subsequent production of statutory C-forms, the petitioner should not be exposed to the travails of multiple proceedings. This Court must also consider the fact that the department has realised the entire demand as way back as in the month of November 2020.
If the petitioner is permitted to produce the Statutory C-Forms and the fourth respondent is 1 Sri Hema Kumar K, learned Additional Government Advocate also submits that the amount is realised only after the lapse of the appeal period as against the order dated 18.11.2020. directed to reconsider assessment the petitioner’s grievance not just against the realisation of the demand but also framing of assessment, there would complete adjudication. As such, the petitions must be disposed of quashing the orders dated 18.09.2020 by the fourth respondent with liberty to both the parties and authorities to place a certified copy of this order before the fifth respondent for disposal of the appeals in Nos. 357087702 and 327087703 consequent to this order.
The petitions are disposed of quashing the fourth respondent’s orders dated 18.09.2020 and consequentially, the assessment proceedings are restored to the fourth respondent for reframing with due opportunity to the petitioner to file Statutory C-Forms.
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2023 (5) TMI 1188 - CESTAT CHANDIGARH
Grant of interest on delayed payment of refund under Section 11BB of Central Excise Act - HELD THAT:- The appellant is entitled to interest on the delayed refund in view of the judgement of the Hon’ble Apex Court in the case of Ranbaxy Laboratories Ltd. vs. UOI cited [2011 (10) TMI 16 - SUPREME COURT] wherein the Hon’ble Apex Court has held that liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made.
The appellant has filed the refund claim on 28.10.2010 which was finally sanctioned on 31.08.2020 but no interest was granted - Further, as per Section 11BB of the Act, the interest is payable after the expiry of 3 months from the date of receipt of application. Therefore, in this case, the appellant is entitled to interest on delayed payment from 27.01.2011 to till date of credit to the account of the appellant at the rate of 6% as per the statute.
The original authority is directed to compute the amount of interest and pay the same within the period of 2 months from the date of receipt of this order - Appeal allowed.
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2023 (5) TMI 1187 - CESTAT CHENNAI
Wrong availment of input tax credit of amount paid on fully exempted goods as per Sl. No. 90 of Notification No. 04/2006-C.E. dated 01.03.2006, as amended - main contention of the Department is that payment of duty at concessional rate without availing exemption for their first clearances of 3,500 M.T. is violative of the provisions of Explanation to sub-section (1A) of Section 5A of the Central Excise Act, 1944.
Whether the principal manufacturer is eligible to avail exemption as per Notification No. 04/2006-C.E. dated 01.03.2006 under Sl. No. 91 and clear the goods on concessional payment of duty? - whether it is mandatory to avail ‘nil’ rate of duty as provided under Sl. No. 90 and consequently, whether the appellant herein is eligible for availment of CENVAT Credit of the duty paid by the principal manufacturer?
HELD THAT:- In the case of M/S. KOVAI MARUTHI PAPER AND BOARDS, M/S. SARASWATHI UDYOG INDIA LTD, SHRI RAM CARTONS, M/S. SRIVARI PACKAGING INDUSTRIES VERSUS CCE, SALEM AND CCE, SALEM VERSUS M/S. SARASWATHI UDYOG INDIA LTD., M/S. KOVAI MARUTHI PAPER AND BOARDS [2018 (5) TMI 474 - CESTAT CHENNAI], the Chennai Bench of the Tribunal had examined whether the principal manufacturers should compulsorily avail the exemption under Sl. No. 90 of the said Notification which prescribes ‘nil’ rate of duty. The Tribunal had followed the decision in the case of BALKRISHNA PAPER MILLS LTD, LAXMI BOARD AND PAPER MILLS LTD, COMMISSIONER OF CENTRAL EXCISE, THANE-I VERSUS COMMISSIONER OF CENTRAL EXCISE, THANE –I AND LAXMI BOARD AND PAPER MILLS LTD [2015 (11) TMI 210 - CESTAT MUMBAI] wherein it was held that an assessee cannot be forced to avail the ‘nil’ rate of duty provided under Sl. No. 90 of the Notification.
The Tribunal in the case of M/S. SRIPATHI PAPER & BOARDS VERSUS CCE & ST, TIRUNELVELI [2018 (9) TMI 891 - CESTAT CHENNAI] had occasion to analyse a similar issue, wherein it was decided that The first condition is that the exemption is available for the clearance of first 3500 MTs and the second condition is that the exemption is not applicable to a manufacturer who avails exemption under Notification No. 8/2003-CE dated 01.03.2003. The ‘nil’ rate of tax is therefore available subject to the satisfaction of both the above conditions and appeal allowed.
The impugned order set aside - appeal allowed.
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2023 (5) TMI 1186 - ITAT DELHI
Determination of commission income of the proven accommodation entry operator - CIT(A) restricted the rate of commission to 1.04% as against 2% computed by the AO - HELD THAT:- As per the explanation and submissions of the assessee, whole of the expenses incurred in earning commission income shall be allowed and accordingly the net rate of commission earned by the assessee i.e. 0.47% is the best which can be applied on the turnover of the accommodation entries after elimination of circular transactions. Thus the maximum addition which can be made in the hands of the assessee on account of commission earned on turnover of the accommodation entries worked out accordingly.
Estimating the correct value of the property and expenses incurred thereon - Receipt of the valuation report of the DVO after 6 months after the reference - assessee owns 50% of the property - HELD THAT:- CIT(A) concurrently considered the provisions of Section 56(2)(vi ib) and Section 50C, report of the DVO and the stamp duty valuation (circle rates). CIT(A) held that the value as per the stamp duty valuation authority shall be taken as full value of the consideration and since the payment made by the assessee is as per the stamp value authorities determination, no addition is called for.
Addition made on account of cost of construction CIT(A) held that there was no difference between the value in the cost of construction declared by the assessee and the value as considered by the AO, can be attributed owing to the variance being less than 10% of the accepted norms of variation. Having gone through the facts, we find no reason to interfere with the decision of the ld. CIT(A) who accepted the value of the land as per the circle rate and value of the construction within the acceptable range of variation.
Protective Addition - As substantive addition has already been completed in the case of Sh. Naresh Kumar Jain and hence, no protective addition can be confirmed at this juncture in the case of the assessee.
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2023 (5) TMI 1185 - ALLAHABAD HIGH COURT
Seeking grant of bail - irregular availment of input Tax Credit / ITC - suppression of actual sales in their monthly GSTR-3B returns - case of applicant is that the applicant is neither owner nor proprietor of firm, whereas his mother Smt. Anusuiya Mishra is the proprietor of the firm - HELD THAT:- It is an admitted fact that the applicant is neither proprietor nor owner of the firm, whereas his mother Smt. Anusuiya Mishra is the proprietor of the firm. No charge-sheet or complaint has been filed by the Department against Smt. Anusuiya Mishra. The investigation of the Department was completed and there is no evidence or material that the applicant had not co-operated with the investigation or tampering the evidence or witnesses. The investigation was completed and charge-sheet/complaint has already been filed and there is no chance of tampering of evidence or influence of witnesses. The maximum punishment under Section 132(1)(a) of the Act, 2017 is five years which is triable by Magistrate. There is no criminal history of the applicant. The applicant is having fixed place of residence and there is no chance of his absconding.
Considering the complicity of accused, severity of punishment as well as totality of facts and circumstances, at this stage, without commenting on the merits of the case, it is found to be a fit case for bail - The bail application is allowed.
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2023 (5) TMI 1184 - JAMMU AND KASHMIR AND LADAKH HIGH COURT
Interest on the delayed disbursal of amount of Budgetary Support already sanctioned - Budgetary Support Scheme - HELD THAT:- Circular dated 10.1.2019 stated that the claims under the Scheme are required to be disposed of within two weeks.
True it is, that, in terms of Circular dated 10.01.2019, the claims under the Scheme are required to be disposed of within two weeks. It is not the case of the petitioner that the claims for release of payment under the Scheme were not considered or disposed of by the respondents within the stipulated time frame. The amount payable to the petitioner under the Scheme was duly sanctioned in favour of the petitioner. However, the said amount could not be disbursed due to non availability of requisite funds from DIPP. It is also not in dispute that that the benefit envisaged under the Scheme is in the nature of concession/incentive granted by the Government in favour of eligible industries, so as to provide them necessary cushion to face the financial hardship that may have visited such units/industries due to withdrawal of area based exemption notifications issued under the Central Excise Act. Such being the nature of concession given, no unit could lay a claim to the payment of amount under the Scheme as a matter of right - True it is, that the claims submitted under the Scheme are required to be disposed of within a period of two weeks, but, there is no complaint by the petitioner that his claim was not considered or disposed of by the respondents within the stipulated period. Sanction for release of amount was granted in time, but, disbursement of the amount took sometime. It is also not the case of the petitioner that there was deliberate delay on the part of the respondents to release the benefit.
Admittedly, the funds at the disposal of Commissionerate were far less than the claims received and, therefore, the amount though sanctioned in favour of the petitioner could not be released till the requisite funds were made available to the Commissionerate by the DIPP. In these circumstances, it is difficult for us to say that the amount payable to the petitioner under the Scheme was illegally, arbitrarily or without any reason withheld by the respondents.
The petitioner are no entitled to interest on the amount disabused to it under the Scheme for the following reasons:
(i) That having regard to the nature of Scheme, the benefit under the Scheme is not claimable by the eligible industrial units as a matter of right. The benefit envisaged is in the nature of concession/incentive extended by the Government of India to enable the industrial units to tide over the financial hardship to which they may have been exposed with the withdrawal of area-based exemptions under the Central Excise Act;
(ii) That the respondents had a valid reason not to disburse the amount sanctioned immediately. The Commissionerate was facing acute shortage of funds and the funds placed at its disposal by DIPP were not sufficient enough to meet even the claim of the petitioner. The amount was disbursed immediately when the funds became available; and,
(iii) That there is no provision in the Scheme which provides for payment of interest in case of any delay in actual release of the benefit envisaged under the Scheme. Unless, it is pleaded and demonstrated that the amount payable under the Scheme was unauthorisedly and, without any reason, withheld by the respondents, it would be difficult for this Court to penalize the respondents by directing them to pay interest.
Petition dismissed.
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