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2010 (3) TMI 1070
Issues involved: Denial of Cenvat credit on capital goods installed in a separate unit owned by the appellant.
Summary:
Issue 1: The appellants availed Cenvat credit on capital goods installed in a separate unit, leading to a show cause notice demanding the credit back. The original authority upheld the demand, which was further confirmed by the Commissioner (Appeals).
Details: The appellants argued that the capital goods were installed in their own unit, and the goods manufactured from these capital goods were consumed in their own unit. They cited a Tribunal decision in a similar case and highlighted that there was no revenue loss. The Revenue contended that the unit should have been registered, as per the Cenvat Credit Rules.
Judgment: The Commissioner (Appeals) upheld the denial of credit, stating that the capital goods installed in a different unit cannot be availed in the registered unit. However, the Tribunal found that the denial of Cenvat credit was incorrect based on the precedent set by a previous case. The Tribunal set aside the impugned order and allowed the appeal, following the decision in the case of Pooja Forge Ltd.
Key Takeaways:
- Appellants availed Cenvat credit on capital goods installed in a separate unit.
- Original authority and Commissioner (Appeals) upheld the denial of credit.
- Tribunal overturned the decision based on precedent and allowed the appeal.
- Precedent case: Pooja Forge Ltd. vs. CCE [2006 (196) ELT 18(T)].
- Denial of Cenvat credit deemed incorrect, and the impugned order was set aside.
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2010 (3) TMI 1069
Whether the Hon’ble CEGAT is correct in extending the deemed credit benefit to a unit availing of the exemption in terms of N/N. 1/93-C.E., dated 28-2-93 even after crossing the value of clearance of ₹ 75 lakhs when a unit pays full rate of duty?
Held that: - similar issue decided in the case of Sood Steel Industrial (P) Ltd. v. Commissioner of Central Excise [2009 (4) TMI 62 - HIMACHAL PRADESH HIGH COURT], wherein the Division Bench of Himachal Pradesh High Court has held that the manufacturer would be entitled to claim excess amount from payment of duty upto ₹ 75 lacs and thereafter upto ₹ 2 crores and they are entitled to avail the deemed credit without production of documents - appeal dismissed - decided against Revenue.
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2010 (3) TMI 1068
Issues Involved:
1. Validity of the conclusion by the Tribunal regarding duty demand based on licenses acquired from the open market.
2. Tribunal's conclusion on the authenticity of the licenses despite their submission for cancellation.
3. Liability of the respondent to pay duty under Section 28 of the Customs Act, 1962.
4. Tribunal's conclusion on the acquisition of licenses from the open market despite the original holders' denial.
5. Application of the principle of holder in due course by the Tribunal.
Issue-wise Detailed Analysis:
1. Validity of the Conclusion by the Tribunal Regarding Duty Demand Based on Licenses Acquired from the Open Market:
The Tribunal found that M/s H. Kumar Gems Inc. had purchased twenty-two Special Import Licenses from Ms. Sunita Goel, who received them through a chain of brokers. The Tribunal noted that these licenses were validly issued and presented at the time of clearance, with no cancellation endorsement. The Tribunal concluded that the licenses were procured in good faith from the market, and the Revenue's case lacked substantial evidence to prove the licenses were canceled, as the key witness did not appear for cross-examination.
2. Tribunal's Conclusion on the Authenticity of the Licenses Despite Their Submission for Cancellation:
The Tribunal recorded that the Revenue's case relied on a letter by Shri Sohan Chand, which did not disclose the cancellation date of the licenses. The Tribunal emphasized that the letter alone, without cross-examination of its author, did not constitute valid evidence. Other Foreign Trade Officers admitted to issuing the licenses, and there was no indication of cancellation on the licenses. The Tribunal held that the bonafide purchaser could not be deprived of benefits due to the absence of cancellation endorsement.
3. Liability of the Respondent to Pay Duty Under Section 28 of the Customs Act, 1962:
The Tribunal found no suppression or willful misstatement by the respondent, who procured the licenses in good faith. The Tribunal concluded that the demand for duty was barred by limitation as the extended period under Section 28(1) of the Customs Act was not applicable. The Tribunal held that the respondent was a victim of circumstances due to the DGFT's failure to follow proper cancellation procedures.
4. Tribunal's Conclusion on the Acquisition of Licenses from the Open Market Despite the Original Holders' Denial:
The Tribunal noted that the transfer letters bore all necessary details and were verified by banks. The Tribunal observed that the customs authorities did not verify the genuineness of the bank's signature verification stamps. The Tribunal concluded that any dispute over the title of the licenses was a matter between individuals, and customs authorities had no jurisdiction over such disputes when valid licenses were produced for clearance.
5. Application of the Principle of Holder in Due Course by the Tribunal:
The Tribunal applied the principle of holder in due course, stating that the respondent acquired the licenses for valuable consideration without knowledge of any defect in the title. The Tribunal held that the respondent was entitled to the benefits of the licenses, as they were valid and transferable in the market. The Tribunal emphasized that the customs authorities could not deny the benefit of the notification based on alleged defects in the transfer letters.
Conclusion:
The Tribunal's findings were based on the evidence that the licenses were valid and acquired in good faith. The Tribunal held that the demand for duty was barred by limitation and that the customs authorities had no jurisdiction over disputes regarding the title of the licenses. The High Court dismissed the appeals, finding no substantial question of law and upholding the Tribunal's order.
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2010 (3) TMI 1067
Issues Involved:
1. Admissibility and sufficiency of evidence under Section 108 of the Customs Act.
2. Procedural compliance and natural justice.
3. Onus of proof and burden of establishing smuggling activities.
4. Perverse findings by the Tribunal.
5. Correctness of the confiscation and penalty imposed.
Issue-wise Detailed Analysis:
1. Admissibility and Sufficiency of Evidence under Section 108 of the Customs Act:
The appellant contended that the statements of four witnesses recorded under Section 108 of the Customs Act adequately implicated the respondent. The statements are considered admissible evidence as per the Act. The Supreme Court's judgment in Bhana Khalpa Bhai Patel vs. Assistant Collector of Cus., Bulsar, was cited to support the admissibility of such evidence. The respondent's failure to appear for cross-examination was highlighted, emphasizing that the statements made under Section 108 were sufficient to establish the respondent's culpability.
2. Procedural Compliance and Natural Justice:
The respondent argued that the prescribed procedure was not followed, and he was not allowed to cross-examine the witnesses. The court observed that the respondent was issued multiple summonses (five times) but failed to appear. The court noted that the principles of natural justice were observed, as the respondent was informed of all the materials against him and given opportunities to defend himself. The court emphasized that the respondent's persistent disobedience to the summons weighed against him, and his failure to appear for cross-examination was his own fault.
3. Onus of Proof and Burden of Establishing Smuggling Activities:
The court referred to the Supreme Court's judgment in Collector of Customs, Madras vs. D. Bhoormull, which stated that the burden of proving that goods are smuggled lies with the department. However, the law does not require proof with mathematical precision; a prudent man's estimate of the probabilities of the case is sufficient. The court found that the department had adequately discharged its burden by providing sufficient evidence and establishing a high degree of probability that the goods were meant for smuggling.
4. Perverse Findings by the Tribunal:
The court criticized the Tribunal for its perfunctory approach and sweeping observations that there was no material to connect the respondent with the illegal export of goods. The Tribunal's findings were deemed perverse, as they ignored the detailed examination and concurrent findings of the first authority and the Commissioner of Appeals. The court emphasized that the High Court could interfere with the Tribunal's findings if they were found to be perverse based on the materials on record.
5. Correctness of the Confiscation and Penalty Imposed:
The first authority and the Commissioner of Appeals had found that the respondent was the consignor and consignee of the goods and was attempting to smuggle them to Nepal. The goods were intercepted in Raxaul, a town notorious for smuggling activities, at an unearthly hour, which further supported the suspicion of smuggling. The court agreed with the findings of the first authority and the Commissioner of Appeals that the respondent was liable under the Act. The confiscation of goods, the Thela, and the motorcycle, along with the imposition of a cash penalty of one lakh rupees on the respondent, were upheld.
Conclusion:
The appeal was allowed, the order of the Tribunal was set aside, and the order of the Commissioner (Appeals) was restored. The court found that the department had adequately discharged its burden of proof, and the respondent's failure to appear for cross-examination and disobedience to summonses weighed against him. The confiscation and penalty imposed were deemed appropriate, and the Tribunal's findings were considered perverse. No orders as to costs were made.
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2010 (3) TMI 1066
Issues involved: Denial of benefit of Notification No. 64/95-CE u/s Rule 16(b) of Central Excise Rules for IC Engine supplied to Indian Navy.
In this case, the Appellants were engaged in the manufacture of IC Engine and had cleared the IC Engine to the Indian Navy under Notification No. 64/95-CE. A Show Cause Notice was issued for denial of the notification benefit as the engine was first cleared to their other factory before being supplied to the Indian Navy. The Adjudicating Authority initially dropped the demand, but the Revenue filed an appeal. The Commissioner (Appeal) then denied the benefit of the Notification, leading to the Appellant filing an Appeal against this decision.
The Appellant contended that the IC Engine in question was supplied to the Indian Navy as ship stores, meeting the criteria of the Notification. They argued that the engine was first cleared to their Kolkata unit for testing as required by the Indian Navy before being supplied as ship stores, and provided communications from the Indian Navy confirming the receipt of the engine as ship store. The Revenue, on the other hand, argued that since the engine was not directly supplied by the Ranchi factory to the Indian Navy, the benefit should be denied, citing a Supreme Court decision in support.
The Tribunal found that while one engine was directly supplied to the Indian Navy and the benefit was granted without objection, the dispute arose regarding the second engine, which was first cleared to the Kolkata factory for testing before being supplied to the Indian Navy. The Tribunal noted that the Appellant had two factories, one for IC Engine manufacture and the other for ship building, and that the engine in question was indeed supplied to the Indian Navy as ship stores. The Tribunal distinguished the case cited by the Revenue, emphasizing that in the present case, the engine was ultimately supplied to the Indian Navy as ship stores, even though it was transferred to another unit for testing as a technical requirement. The Tribunal held that the denial of the benefit of the Notification was not sustainable, set aside the impugned Order, and restored the original Authority's decision, thereby allowing the Appeal.
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2010 (3) TMI 1065
Issues:
1. Conviction and sentencing under Sec.132 and 135(1)(i) of the Customs Act.
2. Appeal against the conviction and sentence.
3. Assailing the sentence based on various grounds.
Analysis:
1. The revision petitioner was found carrying 18 gold pieces of foreign origin upon arrival at Thiruvananthapuram Airport. The gold was valued at Rs. 7,24,140 and seized under Ext.P3 mahazar. The petitioner confessed to the offense, leading to prosecution under Sec.132 and 135(1)(i) of the Customs Act. After trial, the Chief Judicial Magistrate convicted the petitioner, sentencing him to rigorous imprisonment and a fine. The petitioner's appeal to the Sessions Judge was dismissed, prompting the filing of a revision petition challenging the conviction and sentence.
2. The revision petitioner, through his counsel, contested the severity of the sentence rather than the conviction itself. It was argued that given the petitioner's age, time already spent in custody, confiscation of the gold, penalty imposed by Customs authorities, and changes in import regulations, a more lenient sentence was warranted. Considering these factors, the High Court reduced the sentence to time already served in custody under Cofe posa and pretrial imprisonment, along with a fine of Rs. 1 lakh. In case of default in paying the fine, the petitioner would undergo additional rigorous imprisonment for one year.
3. The High Court allowed the revision petition in part, confirming the conviction while modifying the sentence. The revised sentence aimed to balance the interests of justice with the circumstances of the case, taking into account the mitigating factors presented by the petitioner's counsel. The petitioner was granted a two-month period to pay the fine, failing which the default sentence would apply. This judgment illustrates the court's discretion in sentencing, considering both legal provisions and individual circumstances to achieve a fair and just outcome.
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2010 (3) TMI 1064
Liability of interest on final assessment - Levy of sales tax on bags - Held that: - it is well settled law that assessee cannot predict the final assessment when he files his return bonafidely paying tax, which is due according to the assessee. If assessee does not pay tax, at the time of filing the return on the items, raising bonafide question about the levying of tax thereon before the assessing authority, he cannot be held liable to pay interest from the date of return but shall be liable to pay interest subsequent the date of assessment holding the assessee liable to pay tax - the petitioner shall be liable to pay interest subsequent to the period of assessment order and not for the period prior to the assessment order - petition allowed - decided partly in favor of petitioner.
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2010 (3) TMI 1063
Penalty u/s 11AC of the CEA - Whether the provisions of section 11AC are applicable to cases where show cause notice is issued subsequent to the enforcement of provisions of section 11AC i.e. 28.9.1996 even though the period of dispute is prior to 28.9.1996?
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2010 (3) TMI 1062
The Supreme Court dismissed a civil appeal due to delay, but kept the question of law open. (Citation: 2010 (3) TMI 1062 - SC)
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2010 (3) TMI 1061
Refund of customs duty (CVD) paid on Exempted Goods – N/N. 10/2003 CE as amended by N/N. 43/2006 - the decision in the case of Hero Cycles Limited Versus Union of India [2009 (6) TMI 4 - BOMBAY HIGH COURT] contested - Held that: - SLP dismissed.
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2010 (3) TMI 1060
Issues Involved:
1. Determination of annual value u/s 23(1)(a) of the Income-tax Act, 1961.
2. Applicability of Municipal rateable value for determining annual value.
Summary:
1. Determination of Annual Value u/s 23(1)(a):
The primary issue in this appeal concerns the action of the Assessing Officer (AO) in determining the annual value u/s 23(1)(a) of the Income-tax Act, 1961. The assessee, owner of commercial premises, let out the property to M/s. Reliance Industries Ltd. for a monthly rent of Rs. 30,000, along with an interest-free security deposit of Rs. 5,25,00,000. The AO, after considering comparable cases and rejecting the applicability of certain Supreme Court decisions, determined the fair rent u/s 23(1)(a) at Rs. 88 per sq. ft., resulting in an annual value of Rs. 85,72,608. After allowing a deduction for repairs u/s 24(a), the income from house property was confirmed at Rs. 60,00,826.
2. Applicability of Municipal Rateable Value:
The assessee argued that the fair rent u/s 23(1)(a) should be based on the Municipal rateable value, relying on various judicial precedents, including the Supreme Court's decisions in Sultan Brothers P. Ltd. v. CIT and Dewan Dolat Rai Kapoor v. New Delhi Municipal Committee. The Tribunal noted that prior to the amendment in 1976, section 23 envisaged the sum for which the property might reasonably be expected to let from year to year, which was interpreted as the Municipal value. The Tribunal cited the decision in Parkpaper Industries Pvt. Ltd. vs. ITO, which supported the view that the Municipal valuation should be the basis for determining the annual value.
The Tribunal further referenced the Bombay High Court's decision in Smt. Smitaben N. Ambani vs. CWT, which held that the Municipal rateable value should be adopted for valuing property under Rule 1BB of the Wealth-tax Act, as the definition was similar to section 23(1)(a) of the Income-tax Act. The Tribunal concluded that the annual value u/s 23(1)(a) cannot exceed the Municipal valuation.
Conclusion:
The Tribunal set aside the order of the CIT(A) and remitted the matter back to the AO to verify the rateable value fixed by the Municipal Authorities. If the Municipal rateable value is less than Rs. 3,60,000, then the actual rent received should be taxed. Otherwise, the matter should be decided in accordance with the law. The appeal was allowed for statistical purposes.
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2010 (3) TMI 1059
Whether the appellant be permitted to raise the construction upto the height of 30 ft. at the same place where it has cluster of constructions which is being used as a non-residential staff quarters?
Whether if such a construction is permitted, whether it would, by any means, hamper the preservation or protection of the monument?
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2010 (3) TMI 1058
Validity of promotions based on the Resolution of the Executive Council of the University - Promotions to different grades of non-teaching staff of the University - Criteria of "Seniority-cum- Efficiency" - Word "approval" - expression "approval of the State Government" and not "prior approval of the State Government".
HELD THAT:- Since the words used are "with the approval of the State Government", the Executive Council of the University could determine the terms and conditions of service of the non-teaching staff and obtain the approval of the State Government subsequently and in case the State Government did not grant approval subsequently, any action taken on the basis of the decision of the Executive Council of the University would be invalid and not otherwise.
We, therefore, hold that promotions to different grades of non-teaching staff made by the University on the basis of the principles laid down in the Resolution of the Executive Council of the University adopted on 26.06.1995 are valid as the Resolution has been approved by the State Government on 10.10.2002. This appeal is without any merit and is dismissed with no order as to costs.
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2010 (3) TMI 1057
Issues Involved:
1. Whether the cadre review for the Indian Administrative Service (IAS) cadre in Uttar Pradesh was due in 2003.
2. Whether the cadre review conducted in 2005 should have retrospective effect from 2003.
3. The impact of delay in cadre review on the promotion opportunities of State Civil Service (SCS) officers to the IAS.
4. The legal interpretation of the term "ordinarily" in Rule 4(2) of the Indian Administrative Service (Cadre) Rules, 1954.
Issue-wise Detailed Analysis:
1. Whether the cadre review for the Indian Administrative Service (IAS) cadre in Uttar Pradesh was due in 2003:
The respondents, members of the State Civil Service (SCS) of Uttar Pradesh, contended that the cadre review was due in 2003. The Central Government, through several letters, reiterated that the cadre review was due on 30th April 2003, in line with Rule 4(2) of the Indian Administrative Service (Cadre) Rules, 1954. The State Government of Uttar Pradesh initially argued that the cadre review was due in 2005 but later admitted that it was indeed due in 2003. The court acknowledged this agreement between the Central and State Governments, affirming that the cadre review was due in 2003.
2. Whether the cadre review conducted in 2005 should have retrospective effect from 2003:
The appellants argued that the notification dated 25th August 2005, which re-fixed the cadre strength, explicitly stated that it would come into force on the date of its publication, thus making it prospective. The court noted that the statutory duty to undertake cadre review every five years is ordinarily mandatory, subject to exceptions justified by specific circumstances. The court held that the delay in conducting the cadre review was due to the inaction of the Uttar Pradesh Government and not justified by any acceptable ground. Consequently, the court supported the High Court's direction to consider the cadre review as if it took place in 2003, to mitigate the hardship caused by the delay.
3. The impact of delay in cadre review on the promotion opportunities of State Civil Service (SCS) officers to the IAS:
The respondents argued that the delay in the cadre review deprived them of their promotion opportunities to the IAS. The court emphasized that the right to be considered for promotion is a fundamental right under Article 16 of the Constitution, flowing from the guarantee of equality under Article 14. The delay in the cadre review prevented eligible SCS officers from being fairly considered for promotion, thus violating their legitimate expectations. The court recognized that the respondents' chances of promotion were adversely affected by the government's inaction.
4. The legal interpretation of the term "ordinarily" in Rule 4(2) of the Indian Administrative Service (Cadre) Rules, 1954:
The appellants contended that the term "ordinarily" in Rule 4(2) qualified the statutory mandate for a cadre review every five years, implying flexibility. The court, however, interpreted "ordinarily" in the context of promotional opportunities, emphasizing that it should fulfill the statutory intent. The court held that the term "ordinarily" does not promote a cast-iron rule but must be construed to ensure timely cadre reviews, barring justifiable exceptions. The court cited previous judgments to support the view that the term "ordinarily" does not alter the mandatory nature of the provision.
Conclusion:
The Supreme Court upheld the High Court's direction to consider the cadre review as if it took place in 2003, recognizing the delay caused by the Uttar Pradesh Government's inaction. The court emphasized the fundamental right to be considered for promotion and interpreted the term "ordinarily" to ensure timely cadre reviews, barring unjustifiable delays. The appeals filed by the Union of India were disposed of with a modification, reiterating the High Court's directions under Article 142 of the Constitution, ensuring fairness and mitigating the hardship caused to the respondents.
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2010 (3) TMI 1056
Issues:
- Benefit of Rule 57AD(2) of the Central Excise Rules, 1944 and Rule 6(2) of the Cenvat Credit Rules extended to fuels including furnace oil.
- Availability of Cenvat credit for duty paid on inputs used in job work.
- Applicability of Rule 57C to job workers claiming Modvat credit.
- Dismissal of appeal against Tribunal's Larger Bench decision in Sterlite Industries case.
- Entitlement to re-credit of Cenvat credit without raising unjust enrichment plea.
Analysis:
1. Benefit of Rule 57AD(2) and Rule 6(2) for fuels including furnace oil:
The appeal by the Revenue contested the extension of benefits under Rule 57AD(2) and Rule 6(2) to fuels like furnace oil. The respondent claimed re-credit of Cenvat credit reversed earlier, asserting entitlement to Cenvat credit for duty paid on furnace oil used in job work. The Tribunal referred to the Larger Bench decision in Sterlite Industries case, emphasizing the availability of Cenvat credit for such inputs.
2. Availability of Cenvat credit for duty paid on inputs in job work:
The Tribunal, following the Apex Court's ruling in Escorts Ltd case, held that job workers could avail Modvat credit for duty paid on inputs used in manufacturing final products cleared without duty payment. This decision was based on the premise that Rule 57C did not apply to job workers claiming Modvat credit, as the job-worked goods were not considered "exempted" under Rule 57C.
3. Applicability of Rule 57C to job workers claiming Modvat credit:
The Tribunal clarified that Rule 57C did not restrict job workers from claiming Modvat credit on inputs used in job-worked goods. The Larger Bench's decision in Sterlite Industries case, upheld by the High Court, affirmed this position, allowing job workers to avail such credits without being subject to Rule 57C restrictions.
4. Dismissal of appeal against Tribunal's Larger Bench decision:
The High Court's dismissal of the department's appeal against the Tribunal's decision in Sterlite Industries case confirmed the validity of the Larger Bench's ruling. This dismissal, based on the absence of a legal question, solidified the position that job workers could claim Cenvat credit for duty paid on inputs used in job work.
5. Entitlement to re-credit of Cenvat credit without unjust enrichment plea:
In line with the Tribunal's Larger Bench decision, the respondent was deemed entitled to re-credit the Cenvat credit in question without the appellant raising the plea of unjust enrichment. The appeal was ultimately dismissed, affirming the respondent's right to the Cenvat credit re-claim without unjust enrichment considerations.
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2010 (3) TMI 1055
Issues Involved:
1. Rejection of plaint under Order VII, Rule 11, CPC.
2. Jurisdiction of Civil Court under Section 18 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
3. Allegations of fraud and collusion.
4. Limitation period for filing the suit.
5. Suppression of facts and unclean hands.
6. Competence of the Debts Recovery Tribunal (DRT) to decide the issues.
7. Impact of criminal proceedings and custody of title deeds with CBI.
Detailed Analysis:
1. Rejection of plaint under Order VII, Rule 11, CPC:
The first defendant (Punjab National Bank) and the 10th defendant (auction purchaser) filed applications seeking rejection of the plaint under Order VII, Rule 11, CPC. The court examined whether the plaint disclosed a cause of action and whether it fell under any of the categories enumerated in Clauses (a) to (d) of Rule 11 of Order VII, CPC.
2. Jurisdiction of Civil Court under Section 18 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993:
The primary question was whether the averments in the plaint were sufficient to overcome the bar of jurisdiction under Section 18. The court acknowledged that fraud vitiates all solemn acts and that the jurisdiction of Civil Courts is not barred when serious allegations of fraud are made. However, the court also noted that it has a duty to see if such allegations of fraud are thrown just for the purpose of maintaining a suit and ousting the jurisdiction of the Tribunal.
3. Allegations of fraud and collusion:
The plaintiffs alleged that the defendants 4 and 5 (borrowers) perpetrated fraud and collusion with the officials of the banks. However, the court found that the allegations of collusion between defendants 4 and 5 and the officials of the banks were made in such general and vague terms that no credibility could be attached to them. The court emphasized that parties pleading fraud must set forth full particulars, and general allegations are insufficient.
4. Limitation period for filing the suit:
The court noted that the plaintiffs had admitted in the writ petitions filed in March 2005 that they had knowledge of the proceedings initiated by the first defendant-bank before the DRT. Yet, they chose to file the present suit only in August 2009. Therefore, the suit was barred by limitation even on admitted facts.
5. Suppression of facts and unclean hands:
The plaintiffs completely suppressed in the plaint the fact that they had filed writ petitions in 2005. This suppression was made to enable them to take a stand that they were not aware of the proceedings before the DRT. The court held that the plaintiffs came to court with unclean hands and were guilty of abuse of the process of court.
6. Competence of the Debts Recovery Tribunal (DRT) to decide the issues:
The court stated that the DRT is competent to decide questions relating to non-execution of documents or letters of guarantee. The plaintiffs, who were made parties to the original application before the DRT, ought to have agitated all these issues before the Tribunal. The court cited the Apex Court's decision in Authorised Officer, Indian Overseas Bank vs. Ashok Saw Mill, which clarified that the Tribunal has the power to set aside a transaction, including sale, and to restore possession to the borrower in appropriate cases.
7. Impact of criminal proceedings and custody of title deeds with CBI:
The plaintiffs argued that the original title deeds were with the CBI, and therefore, no valid equitable mortgage was created. However, the court found that the charge sheet filed by the CBI did not allege that the signatures of the plaintiffs were forged. The court concluded that the custody of the documents with the CBI could not save the plaintiffs from their liability, and the criminal case initiated by the CBI did not negate the validity of the mortgage.
Conclusion:
The court allowed the applications for rejection of the plaint, holding that the suit was an abuse of the process of law. The plaint was rejected for being barred by limitation, for suppression of material facts, and for attempting to oust the jurisdiction of the DRT by making unsubstantiated allegations of fraud and collusion. The court emphasized the need for judicial forums to be vigilant against frivolous and cantankerous litigations that delay justice and tarnish the judicial system's reputation.
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2010 (3) TMI 1054
Issues Involved:
1. Disallowance of belated payments of PF and ESIC.
2. Exclusion of excise and sales tax from total turnover for deduction u/s 80HHC.
3. Netting of interest for deduction u/s 80-IB.
4. Deduction u/s 80HHC for foreign exchange gains.
5. Deduction u/s 80HHC on profit and gains as reduced by deduction u/s 80-IB or 80-IA.
6. Deduction u/s 80-IB on the amount of profit of DEPB.
7. Disallowance of expenses for product development, repair & maintenance, and preliminary expenses.
Summary:
1. Disallowance of belated payments of PF and ESIC:
The CIT(A) deleted the disallowance made by the Assessing Officer on account of belated payments of PF and ESIC amounting to Rs. 24,034/-. The Tribunal found that the payments were made within the due date of filing returns and followed the decision of the Hon'ble Delhi High Court in the case of P.M. Electronics Ltd., which considered the Supreme Court's decision in Vinay Cement. Thus, the Tribunal dismissed this issue of the Revenue's appeal.
2. Exclusion of excise and sales tax from total turnover for deduction u/s 80HHC:
The CIT(A) directed the Assessing Officer to exclude excise and sales tax while computing the deduction u/s 80HHC. The Tribunal found this issue covered by the Supreme Court's decision in CIT vs. Lakshmi Machine Works, which held that excise duty and sales tax do not form part of the "total turnover" under section 80HHC(3). Consequently, the Tribunal dismissed this issue of the Revenue's appeal.
3. Netting of interest for deduction u/s 80-IB:
The CIT(A) allowed the netting of interest for deduction u/s 80-IB. The Tribunal upheld this decision, referencing the Delhi High Court's decision in CIT v. Shri Ram Honda Power Equip and the Delhi Tribunal's Special Bench decision in Lalson Enterprise v. DCIT. Thus, this issue of the Revenue's appeal was dismissed.
4. Deduction u/s 80HHC for foreign exchange gains:
The CIT(A) included gains on cancellation of forward cover contracts within the term "profits from business" while computing deduction u/s 80HHC. The Tribunal agreed, noting that such gains are derived from export sales and are part of export profits, referencing the Tribunal's decision in ACIT v. M/s. Mitsu Ltd. Consequently, this issue of the Revenue's appeal was dismissed.
5. Deduction u/s 80HHC on profit and gains as reduced by deduction u/s 80-IB or 80-IA:
The Tribunal followed the Special Bench decision in ACIT v. Hindustan Mint & Agro Products (P) Ltd., which held that deduction u/s 80HHC is to be allowed on profits as reduced by deductions u/s 80-IB/80-IA. Thus, the Tribunal set aside the CIT(A)'s order and restored the AO's order, allowing this issue of the Revenue's appeal.
6. Deduction u/s 80-IB on the amount of profit of DEPB:
The Tribunal followed the Supreme Court's decision in Liberty India v. CIT, which held that DEPB benefits do not fall within the expression "profits derived from industrial undertaking" u/s 80-IB. Therefore, the Tribunal allowed this issue of the Revenue's appeal.
7. Disallowance of expenses for product development, repair & maintenance, and preliminary expenses:
The CIT(A) allowed depreciation on product development and design charges and repair & maintenance of furniture, treating them as capital in nature. The Tribunal found no reason to interfere with this finding. For preliminary and pre-operative expenses, the CIT(A) found that the expenses did not fall within the scope of Section 35D. Thus, these grounds of the assessee's CO were dismissed.
Conclusion:
The Revenue's appeal was partly allowed, and the assessee's CO was dismissed.
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2010 (3) TMI 1053
Issues: Appeal against order of Commissioner (Appeals) setting aside demand of export duty on consignment declared as finished leather but found otherwise by Central Leather Research Institute.
Analysis:
1. Factual Background: The respondents exported goods declared as finished leather, but a test by CLRI revealed otherwise, leading to a demand for export duty by the Department.
2. Procedural Irregularities: The Commissioner (Appeals) considered the lack of proper procedure in drawing samples and the vagueness of the test report, ultimately accepting the respondents' declaration regarding the goods.
3. Legal Considerations: The Tribunal noted that samples were not drawn following correct procedure, no test bond was taken, and the assessment was not provisional as claimed by the Department. Show cause notices for demanding duty were issued after the six-month period from the relevant date.
4. Decision: The Tribunal upheld the order of the Commissioner (Appeals), rejecting the Department's appeal due to the lack of valid reasons to interfere with the lower authority's decision.
In conclusion, the Tribunal dismissed the Department's appeal, emphasizing the importance of following proper procedures in determining export duty liability and highlighting the significance of timely issuance of show cause notices within the statutory period. The judgment underscores the necessity of adherence to legal requirements and procedural fairness in customs matters to ensure the integrity of duty assessments and avoid undue delays or disputes.
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2010 (3) TMI 1052
Issues:
1. Liability to pay differential duty under Rule 10A of Central Excise Valuation Rules or Section 4 of Central Excise Act.
Analysis:
The judgment pertains to two stay petitions filed for the waiver of pre-deposit of duty and penalty amounts in two separate appeals. The duty and penalty amounts were confirmed against the appellant, a job worker, for not discharging duty liability based on the value of finished goods cleared. The appellant had followed a duty calculation formula from a Supreme Court case, leading to a differential duty for the period November 2007 to September 2008.
The appellant argued that the duty was demanded under Rule 10A of the Central Excise Valuation Rules, contending that the rule applies only when raw materials are entirely supplied by the principal manufacturer. They claimed to have purchased additional raw materials independently for body building on chassis, which they considered as manufacturing activity under the Central Excise Tariff Act. The appellant asserted that the assessable value was determined by adding the price of body and chassis, and the sale to the principal manufacturer constituted a transfer of possession, on which sales tax was paid.
On the contrary, the Jt. CDR relied on a Final Order and a circular to support the demand for assessable value based on the value at which the principal manufacturer sells goods to customers. The Tribunal acknowledged the contentious issue and the cited decision favoring the Revenue. Consequently, the Tribunal directed the appellant to pre-deposit the entire confirmed duty amount within twelve weeks and stay the recovery of the balance penalty and interest pending appeal disposal.
In conclusion, the Tribunal's decision focused on the interpretation of relevant provisions concerning differential duty calculation under Rule 10A versus Section 4. The appellant's arguments regarding the manufacturing process, assessable value determination, and tax payments were considered against the Revenue's position supported by legal precedents. The order highlighted the need for detailed consideration of the law and directed pre-deposit pending appeal resolution, balancing the interests of both parties.
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2010 (3) TMI 1051
Issues:
Appeal against demand confirmation and penalty imposition for denial of credit on duty paid inputs containing alcohol used in final product manufacturing.
Analysis:
The Appellant challenged the order confirming a demand of Rs. 4,49,41,419.00 and imposing penalties on the firm and Managing Director. The dispute arose from the denial of credit on duty paid inputs, specifically Fruit Flavour syrup containing alcohol supplied by M/s. Quest International (India) Ltd. The Revenue contended that since the final product, Polybion Vitamin B Complex Syrup, also contained alcohol, it was not excisable, and thus, the Appellants were not entitled to credit for duty paid on such inputs. The Appellant argued that they received inputs along with a certificate of analysis from the supplier, showing no alcohol content, and used these inputs in manufacturing excisable goods on which appropriate excise duty was paid. They cited a Tribunal decision in a similar case in their favor. The Revenue maintained that the B-Complex Syrup containing alcohol falls outside central excise duty, leading to the incorrect availment of input duty credit. They referenced a Settlement Commission decision involving a similar situation where the mistake was admitted and credit reversed.
The Tribunal noted that the supplier, M/s. Quest International (India) Ltd., paid central excise duty on the Fruit Flavour Mix supplied to the Appellants for manufacturing their final product. The Appellants availed credit on duty paid inputs used in goods cleared with central excise duty payment. Referring to the Tribunal's decision in a related case involving M/s. Savera Pharmaceuticals Pvt. Ltd., where a similar demand was set aside, the Tribunal ruled in favor of the Appellants. The Tribunal distinguished the Settlement Commission's decision as based on party concessions, not setting a precedent. As the issue was already addressed in the M/s. Savera Pharmaceuticals case, the Tribunal set aside the impugned order and allowed the Appeal.
This judgment highlights the importance of proper documentation and adherence to excise duty regulations in claiming input credits. It emphasizes the significance of precedent set by Tribunal decisions and the limitations of decisions based on party concessions, ensuring consistency and fairness in tax disputes.
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