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2012 (5) TMI 576
The Supreme Court dismissed the special leave petition but extended the time to comply with the order of pre-deposit passed by the Customs, Excise & Service Tax Appellate Tribunal until June 30, 2012. (Case Citation: 2012 (5) TMI 576 - SC)
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2012 (5) TMI 575
Issues involved: Appeal challenging Tribunal's order under Section 35G of Central Excise Act, 1944 regarding inclusion of tooling cost in assessable value of products and imposition of penalty.
Summary:
The High Court of Allahabad heard an appeal under Section 35G of the Central Excise Act, 1944, challenging a Tribunal's order dated 28-1-2005, which allowed the appeal regarding the inclusion of tooling cost in the assessable value of products. The Assessing Officer had confirmed the duty demand, imposed penalty, and interest in an order dated 26-2-2004. The Commissioner (appeals) upheld the duty demand and interest but reduced the penalty due to the appellant's deposit of duty before the show cause notice. The Customs, Excise and Service Tax Appellate Tribunal then allowed the appeal by judgment and order dated 28-1-2005.
The Tribunal accepted the appellant's case that they did not include the tooling cost in the assessable value of products under a bona fide belief, setting aside the penalty and interest. The Tribunal noted conflicting decisions on the issue, including a Larger Bench decision in Mutual Industries Ltd. v. Collector of Central Excise, Mumbai, which held that the cost of moulds supplied free by customers should be included in the assessable value. The Tribunal also referred to a previous order in Bright Brothers Ltd. v. CCE, Mumbai-II, where a plea of bona fide belief was accepted.
The appeal raised the question of whether the Tribunal could set aside the penalty amount under Section 11AC of the Central Excise Act, 1944. The appellant's counsel argued against the Tribunal's finding that the non-inclusion of tooling cost was done bona fide, stating that the penalty was imposed by the Assessing Officer and Commissioner (appeals) for this reason. However, as the Tribunal found that the conditions for penalty under Section 11A were not fulfilled, it was within its rights to delete the penalty and interest. The appeal was dismissed, and no costs were awarded.
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2012 (5) TMI 574
Clandestine manufacture and removal of goods - scribbling pads - Held that:- The handwriting expert’s opinion was obtained on the said recovered documents. Admittedly there is no confirmed opinion of the expert. Further, there is no evidence produced by the Revenue indicating any clandestine removal by the appellant. As per various decisions of the Tribunal [some of which stands relied upon by Commissioner (Appeals)], findings of clandestine removal cannot be upheld on the basis of private documents, without being corroborated by the independent evidences reflecting upon clandestine removal. In view of the above, I find no reasons to interfere in the impugned order of Commissioner (Appeals). - Decided against Revenue.
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2012 (5) TMI 573
Issues involved: Challenge to Tribunal's order u/s 35F of Central Excise Act for not dispensing with pre-deposit; Allegation of violation of natural justice by Commissioner; Failure of Tribunal to consider all aspects of the matter on a prima facie basis.
Summary:
1. The writ petitioner challenged the Tribunal's order u/s 35F of the Central Excise Act, which required a pre-deposit for an appeal. The petitioner contended that the principal ground of appeal was not considered by the Tribunal despite being raised during arguments.
2. The petitioner, a manufacturer of plastic bags, faced allegations of excise duty evasion. The Commissioner held the petitioner liable for a substantial amount of duty and penalty. The petitioner applied for dispensing with the pre-deposit before the appeal hearing.
3. The petitioner argued that factors like prima facie case, financial hardship, and revenue interest should be considered for such applications. The respondents did not dispute this legal position.
4. The petitioner claimed that the Commissioner's order, based on a report obtained post-hearing, violated natural justice principles. This ground was raised before the Tribunal, but the Tribunal allegedly failed to consider it while assessing the appeal on a prima facie basis.
5. Considering the potential validity of the natural justice issue, the Court directed the Tribunal to reconsider the matter and issue a fresh order within four weeks from the date of depositing a copy of the Court's order.
6. The order dated March 31, 2012, by the Tribunal was set aside, and the Tribunal was instructed to review the case. The writ petition was disposed of accordingly, with no costs imposed on either party.
7. Urgent certified photocopies of the order were to be provided to the parties upon request, subject to necessary formalities.
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2012 (5) TMI 572
Classification of drawback claim - SI No. 630202 or Sl. No. 630207 - Held that:- There is no whisper about the difference between the goods falling under entries i.e. 630202 and 630207. But the Department was of the view that the goods would fall under entry 630207 which deals with other category of goods blended with cotton and man-made fibre. Justification should have been brought out clearly to show how the goods exported were of ‘other’ type of goods. In absence of any enquiry done in that regard to bring the goods to other category, there is no scope to agree with DR - goods exported does not belong to other category as is envisaged by the Entry 630207 - Decided in favour of Revenue.
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2012 (5) TMI 571
Issues Involved: Assessment of goods based on transaction value, rejection of transaction value for substandard goods, reliance on Customs Valuation Rules, evidence for increased value, comparison with contemporaneous imports.
Assessment of Goods Based on Transaction Value:
The respondent filed two bills of entry in August 2007 at ICD Tughlakabad, Delhi, with the declared value for the goods being increased by the Revenue. The Commissioner (Appeals) found that the Revenue failed to provide sufficient evidence for rejecting the transaction value and for supporting the increased value. The respondent, in opposition to the Revenue's stance, argued that the prices for off cuts goods are negotiated for each consignment, and there cannot be a standard price. The Tribunal concurred with the respondent, emphasizing that the value of substandard goods is subject to market forces, leading to substantial variations. The Tribunal noted that the declaration of goods as substandard was unchallenged by the Revenue, making it difficult to ascertain the extent of substandard nature and compare with other goods. As the Revenue did not present evidence of any additional payment to the supplier abroad, the appeals filed by the Revenue were deemed to lack merit, and thus, rejected.
Rejection of Transaction Value for Substandard Goods:
The Revenue contended that for goods described as "Off grade/substandard goods," the transaction value cannot be accepted for assessment. They invoked Rule 10 of Customs Valuation Rules, highlighting the absence of the manufacturer's price list provided by the importer. Additionally, the Revenue submitted data on contemporaneous imports from September 2007 to December 2007. In response, the respondent referenced a previous Tribunal decision where a similar appeal involving substandard goods was dismissed. The respondent argued that for items like off cuts, prices are negotiated per consignment and based on business opportunities. Ultimately, the Tribunal disagreed with the Revenue's assertion that transaction value should be routinely rejected for substandard items, emphasizing the influence of market forces on the value of such goods and the lack of evidence supporting the Revenue's position.
Reliance on Customs Valuation Rules:
The Revenue's argument centered on the application of Rule 10 of Customs Valuation Rules, which necessitates the submission of the manufacturer's price list for assessment purposes. Due to the importer's failure to produce this document, the Revenue justified the increase in value for assessment. However, the Tribunal found this argument insufficient, as the determination of value for substandard goods is influenced by market dynamics, making it challenging to establish a standard price. The absence of evidence regarding any additional payments to the supplier abroad further weakened the Revenue's case, leading to the rejection of their appeals.
Evidence for Increased Value and Comparison with Contemporaneous Imports:
The Revenue's appeal was based on the premise that the value declared by the importers should be increased for assessment due to the nature of the goods and the absence of supporting documentation like the manufacturer's price list. They also presented data on contemporaneous imports to bolster their case. In contrast, the respondent relied on the uniqueness of each consignment's pricing and the market-driven variability in the value of substandard goods. The Tribunal found the Revenue's arguments lacking in merit, particularly due to the absence of evidence regarding any additional payments made to the supplier abroad, leading to the dismissal of the Revenue's appeals.
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2012 (5) TMI 570
Issues:
The issues involved in the judgment are whether a Single Member Bench can hear and decide the appeal, the validity of penalties imposed on various individuals, and the consideration of CBI investigation report in the adjudication process.
Single Member Bench Jurisdiction:
The learned counsel raised a question regarding the jurisdiction of a Single Member Bench to hear the appeal, which was earlier heard by a Division Bench. The Single Member Bench was found to have the authority to decide the case as per Section 129C(4)(c) of the Customs Act, given that the penalty involved did not exceed the prescribed limit. The case fell within the competence of the Single Member Bench, despite previous hearings by a Division Bench.
Penalties Imposed:
The case involved detention of containers with smuggled goods, leading to penalties imposed on multiple individuals. The jurisdictional Commissioner had confiscated impugned goods, imposed penalties on several individuals, and held past consignments liable for confiscation. The appellant was also penalized, along with other individuals involved in the attempted smuggling. The appellant contested involvement in the smuggling, which was opposed by the adjudicating Commissioner.
Consideration of CBI Investigation Report:
The High Court's order for CBI investigation in the case highlighted the importance of considering the subsequent investigation report. The appellant's innocence claim and lack of reference to the CBI investigation report in the adjudication order raised concerns. The judgment emphasized the necessity for the adjudicating Commissioner to review the CBI investigation report before determining the appellant's role and penal liability. The appellant was entitled to a fair opportunity to access and defend against any new material from the CBI report in the fresh proceeding.
The judgment, pronounced on 3-5-2012, set aside the impugned order and remanded the matter to the jurisdictional Commissioner for a fresh decision, considering the CBI investigation report alongside existing evidence and facts, ensuring the appellant's right to a fair hearing and defense.
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2012 (5) TMI 569
Recovery of bank dues - Liability of guarantor - Held that:- In view of the provisions of Section 128 of the Indian Contract Act, 1872, the liability of the guarantor/surety is co-extensive with that of the debtor. Therefore, the creditor has a right to obtain a decree against the surety and the principal debtor. The surety has no right to restrain execution of the decree against him until the creditor has exhausted his remedy against the principal debtor for the reason that it is the business of the surety/guarantor to see whether the principal debtor has paid or not. The surety does not have a right to dictate terms to the creditor as how he should make the recovery and pursue his remedies against the principal debtor at his instance. - In case the property is disposed of by private treaty without adopting any other mode provided under the statutory rules etc., there may be a possibility of collusion/fraud and even when public auction is held, the possibility of collusion among the bidders cannot be ruled out. In The State of Orissa & Ors. v. Harinarayan Jaiswal & Ors., AIR 1972 SC 1816, this Court held that a highest bidder in public auction cannot have a right to get the property or any privilege, unless the authority confirms the auction sale, being fully satisfied that the property has fetched the appropriate price and there has been no collusion between the bidders.
Therefore, it becomes a legal obligation on the part of the authority that property be sold in such a manner that it may fetch the best price. Thus essential ingredients of such sale remain a correct valuation report and fixing the reserve price. In case proper valuation has not been made and the reserve price is fixed taking into consideration the inaccurate valuation report, the intending buyers may not come forward treating the property as not worth purchase by them, as a moneyed person or a big businessman may not like to involve himself in smallsales/deals. - there must be an application of mind by the authority concerned while approving/accepting the report of the approved valuer and fixing the reserve price, as the failure to do so may cause substantial injury to the borrower/guarantor and that would amount to material irregularity and ultimately vitiate the subsequent proceedings. - law requires a proper valuation report, its acceptance by the authority concerned by application of mind and then fixing the reserve price accordingly and acceptance of the auction bid taking into consideration that there was no possibility of collusion of the bidders. The authority is duty bound to decide as to whether sale of part of the property would meet the outstanding demand. Valuation is a question of fact and valuation of the property is required to be determined fairly and reasonably.
Recovery of the public dues must be made strictly in accordance with the procedure prescribed by law. The liability of a surety is co-extensive with that of principal debtor. In case there are more than one surety the liability is to be divided equally among the sureties for unpaid amount of loan. Once the sale has been confirmed it cannot be set aside unless a fundamental procedural error has occurred or sale certificate had been obtained by mis-representation or fraud. - No fundamental procedural error had been pointed out which would vitiate the order of confirmation of sale and issuance of sale certificate.
Auction sale stood vitiated and all the consequential proceedings are liable to be quashed. However, for the reasons best known to the appellants, they have neither impleaded the Bank (creditor) nor any of the legal heirs of Ganga Prasad (principal debtor). In such a fact-situation, it becomes difficult to proceed with the case any further. - The courts below have rejected the case of the appellants only on the ground of delay. Nothing had been pointed out before us as to on what basis the aforesaid judgment and orders warrant any interference. In view of the above, the appeal lacks merit and is accordingly dismissed. However, the appellants may move an application before the Collector, Banda/concerned authority, in case the excess amount had not been paid to them, for recovery of the same. If such an application is filed and the authority comes to the conclusion that excess amount had not been paid to them, it shall be refunded within a period of 3 months from the date of making the application with 9% interest. - Decided against assessee.
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2012 (5) TMI 568
Deduction made on account of 80IB(10) - Held that:- Once the matter is going back for reconciliation, then the agreements connected to the land and the details of the approval granted by the local authority permitting to develop the housing project can also be examined if deem fit. Since the Hon’ble High Court in the case of Radhe Developers India Ltd. [2009 (4) TMI 21 - GUJARAT HIGH COURT ] has given the verdict in favour of the assessee after due ascertainment of these basic facts, therefore it is appropriate first to place on record all these information and then if facts are identical consequently thereupon, the cited decision has to be followed to dispose of the issue. With these directions, we hereby allow the ground of the Revenue that too for statistical purposes only.
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2012 (5) TMI 567
Detention orders - seizure orders - goods imported into the State of U.P. by road with not accompanied by the prescribed declaration - Held that:- A perusal of the transit declaration form reveals that Kanpur was one of the important places through which the vehicle was supposed to pass while in U.P. before its exit from the State. Therefore, if the vehicle was found in Kanpur it cannot be said that it had deviated form the disclosed route. It is not necessary for the driver or the person in-charge of the vehicle or even the dealer to mention in the transit declaration form the exact road from which the vehicle would pass while crossing Kanpur. There is no such column in the transit declaration form. The authorities cannot insist that the vehicle carrying goods should pass through a particular road of the city.
In view of the above, the seizure of the goods on the ground that it had taken a different route, other than one disclosed in the transit declaration form is illegal and cannot be sustained. In the absence of any material, simply on the verbal information that the said dealer has disowned the sale, the conclusion drawn that the actual selling dealer is not available cannot be sustained. Thus the seizure of the goods in the case at hand on the ground that the dealers are nonexisting is bad in law. Revision allowed.
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2012 (5) TMI 566
Whether the rent realized by a club for the rooms and cottages let out to its members and their guests is exigible to tax under the Kerala Tax on Luxuries Act, 1976 ?
Held that:- The expression "by way of business" used in section 2(e) to the Act is not to be understood in the commercial sense of the term and that only common parlance meaning need be attributed to the expression. Therefore, in the context of the Act, the expression "business" only means that which activity one is seriously or principally concerned with. If the expression is so understood, it has to be held that letting out rooms and cottages on rent to their members or their guests, an activity carried on by the club in terms of its by laws, is a business activity of the club.
The provision of Section 4(2A) renders members of clubs also liable for tax at the rate as indicated therein and the tax liability of the members is in addition to the liability of the clubs under section 4 of the Act. Therefore, this provision will not be of any assistance to the petitioner. W.P. dismissed.
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2012 (5) TMI 565
Rejection of books of accounts - addition on estimated basis - principles of natural justice denied - Held that:- A survey was conducted at the business premises of the assessee, though the muneem (accountant) was available at the site no complete books of account were available. It also found that firing in the brick kiln was continued and about five lakh raw bricks were available, but there was no stock of finished goods.
In these circumstances, the assessing officer has made the addition on estimate basis by taking into consideration the consumption of coal, firing period, sale of the bricks, etc. The revisionist has not participated in the assessment proceedings before the assessing officer. So, the assessing officer made the addition on estimate basis but the fact remains that in the appeal proceedings, the revisionist has voluntarily participated. When it is so, the principles of natural justice has not been violated. In the instant case, the assessing officer made the addition on estimate basis and the Commissioner (Appeals) has reduced the addition on estimate basis, which was upheld by the Tribunal. No question of law is emerging from the impugned order. Appeal dismissed.
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2012 (5) TMI 564
Whether duplex board is taxable under the Uttar Pradesh Tax on Entry of Goods into Local Areas Act in view of notification dated October 31, 2011 which provides for levy of entry tax on "paper of all kind excluding newsprint"?
Held that:- Even though the definition of "paper" is of wide import which may include anything which is macerated into a pulp, dried and pressed and is used for writing, printing, drawing, decorating, covering wall or for packing purposes but board whether card board or duplex board are different meant for packing purposes only and not for use as paper, as is understood in common parlance.
As the duplex board is ordinarily a packing material though may be made out of paper, it would not be paper falling within the meaning of entry "paper of all kind".The question is answered accordingly in favour of the assessee-dealer and against the Revenue.
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2012 (5) TMI 563
Additional tax including surcharge and imposed - assessee challenged ante-dated order and it was passed without giving an opportunity of hearing to the assessee - Held that:- In view of the statement made in counter, it is clear that no notice was ever issued to the assessee communicating the date of proceedings after May 21, 2005. Therefore, the impugned order dated January 21, 2007 was passed without affording opportunity of hearing to the assessee and has been passed without any knowledge of the assessee and hence, liable to set aside on this ground.
Thus making an assessment in violation of principles of natural justice by purported order dated January 25, 2007, the assessment order deserves to be set aside and hence set aside. Consequently, the demand notice against the petitioner is also set aside. Appeal allowed.
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2012 (5) TMI 562
Compounding scheme benefit - enhancement of the addition pertaining to the sale rate of the bricks - Held that:- As after the death of sole proprietor, his son has availed of the benefit of compounding scheme, where he has shown stock of finished bricks at 30,00,000 and 15,000 raw bricks. But the assessing officer in the absence of the books of accounts enhanced the closing stock for finished and raw bricks. The assessing officer has also estimated the consumption of coal, and burning period by rejecting the books of accounts. The assessing officer has made the addition on estimate basis, which was reduced by the first appellate authority on estimate basis by giving the reasoning in his order. But the Tribunal has enhanced the addition to ₹ 39,225 in the departmental appeal again by estimating the sale but without any reason.
Needless to mention that both the lower authorities have given the reasoning for making/reducing the addition on estimate basis but the Tribunal has just repeated the order of the assessing officer and enhanced the addition pertaining to the sale rate of the bricks in the absence of any material, which is not sustainable in the eye of law. The Tribunal has not given any independent finding/reasoning for enhancing the addition where the first appellate authority has given reasoning to reduce the addition. Thus order passed by the Tribunal is not sustainable. So, the impugned order passed by the Tribunal is set aside and the order of the first appellate
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2012 (5) TMI 561
Issues involved:
The issues involved in this case are the interpretation of section 30 read with rule 41(8) of the U.P. Trade Tax Act, 1948, and the assessment of tax liability based on seized diary entries related to transactions of wheat.
Interpretation of Section 30 and Rule 41(8):
The revisionist firm, a sole proprietorship of Sri Kashmeeri Lal Agarwal, was assessed under section 30 read with rule 41(8) of the Trade Tax Act based on diary entries seized during an inspection. The Assessing Officer made a demand which was later remanded by the Tribunal. The revisionist contended that the transactions recorded in the diary were not related to the firm or Sri Santosh Kumar Agarwal, supported by an affidavit and a certificate from the Chief Goods Superintendent of Varanasi Railway Station. The revisionist argued that the assessment was made on presumption without substantial evidence, citing legal precedents. However, the Tribunal upheld the remand to the Assessing Officer for further examination, considering the need to verify the information in the seized diary and the importance of gate-pass evidence to identify the purchaser of the wheat.
Decision and Reasoning:
After hearing both parties, the Court found that the information in the seized diary regarding Sri Santosh Kumar Agarwal needed further examination. The subsequent affidavit filed by Sri Haridwari Lal was considered as a potential afterthought. The Court emphasized the importance of gate-pass evidence from the mandi samiti to establish the identity of the purchaser of the wheat. It was concluded that there was no error in the Tribunal's decision to remand the matter for examination, as no substantial evidence was presented to warrant a different outcome. Therefore, the Court sustained the Tribunal's order, discharged the interim stay on tax recovery, and directed the Assessing Officer to expedite the case within six months due to its age.
Result:
In conclusion, the revision filed under section 11(1) of the U.P. Trade Tax Act, 1948, was dismissed, upholding the Tribunal's decision to remand the matter for further investigation based on the seized diary entries and gate-pass evidence.
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2012 (5) TMI 560
Issues involved:
The judgment involves a revision filed u/s 11 of the U.P. Trade Tax Act, 1948 against the judgment and order dated February 4, 2002, passed in Appeal No. 162/97 for the assessment year 1995-96.
Manufacture and Sale of Bricks:
The assessee was engaged in the manufacture and sale of bricks. The assessing officer estimated the stock of bricks at four lacs bricks and imposed a tax of 10%. The first appellate authority deleted the addition, leading to an appeal by the Department before the Tribunal, which upheld the addition. The revisionist argued that there was no manufacturing activity during the assessment year and requested to set aside the Tribunal's order. However, the Tribunal, being the final fact-finding authority, upheld the addition based on the evidence presented by the parties and the conduct of the applicant in availing the compounding scheme.
Application of Estimated Basis:
The addition made by the assessing officer was on an estimated basis. The Tribunal relied on various legal precedents to justify the addition, emphasizing that it is a question of fact. Citing cases such as Vijay Kumar Talwar v. Commissioner of Income-tax, Delhi and Metroark Ltd. v. Commissioner of Central Excise, Calcutta, the Tribunal concluded that there was no reason to interfere with their order. The impugned order was sustained, and no question of law emerged from it. The revision was dismissed, and no costs were awarded.
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2012 (5) TMI 559
Whether the word "plant and machinery" and "tools" should be understood in popular sense not in technical sense ?
Held that:- No hesitation in rejecting the contention of Mr. Chakraborty that smoke meter and gas analyzer can be treated to be plant and machinery as because those are used by the automobile industries for keeping the automobile for checking of the pollution, because the manufacturers of automobiles used the same it should be treated as plant and machinery. We are of the view that the aforesaid two machines are not required for manufacturing automobile in any sense. The plant and machinery mentioned in that entry are essentially used for manufacturing something else.
The smoke meter and gas analyzer are used only to examine whether the engines of the automobiles conform to the norms of pollution and these instruments and/or machines are pressed into operation before the automobiles are put on sale or for use on road. Therefore, the reasoning given by the learned Tribunal and the contention of Mr. Majumder are absolutely appropriate and rational.
The machines which are used for measuring purposes will come within the fold of the aforesaid words "tools" irrespective of method of operation. Thus the contention of Mr. Chatterjee is upheld and judgment and order of the learned Tribunal is set aside and we hold that the aforesaid smoke meter and gas analyzer will come within the purview of entry 83, Schedule C of the VAT Act and attract the levy of four per cent in stead of 12.5 per cent as wrongly held by the learned Tribunal and the assessing officer.
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2012 (5) TMI 558
Whether, the Tribunal was correct in law in holding that purchase tax was leviable under section 4B of the Punjab General Sales Tax Act, 1948 on the consumables purchased on the strength of registration certificate and used in manufacturing of taxable and tax-free goods?
Whether the Tribunal was correct in law in holding that purchase tax was leviable on sugarcane under section 4(1) of the Punjab General Sales Tax Act, 1948 ?
Held that:- In the present case, the issue is relating to exigibility to purchase tax regarding consumables which were used in the manufacture of taxable and tax-free goods. Following the principles as enunciated by in Thomas Stephen & Co. Ltd.'s case[1988 (3) TMI 59 - SUPREME COURT OF INDIA] the goods would be exigible to purchase tax. Thus, the Tribunal had correctly adjudicated the issue in favour of the State.
Referring to question No. 2, the matter is no longer res integra. It stands decided against the petitioner in view of the following observations recorded by the honourable Supreme Court in Jagatjit Sugar Mills' case [1994 (10) TMI 259 - SUPREME COURT OF INDIA] stating that the purchase tax on sugarcane is levied by section 4(1), since it being an agricultural produce, and said to be sold by growers themselves, is exempt from tax on its sale under section 6.
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2012 (5) TMI 557
Waiver of pre deposit - Conversion of goods under EPCG scheme - Held that:- Substantial relief has already been granted by the Tribunal. There is waiver of most of the liability at this stage and only rupees one crore has been ordered to be deposited. Learned counsel for the petitioner has submitted that case is pending before the B.I.F.R. However it is not disputed that the industry has not been declared sick so far, as such, we find that no case for interference is made out. Ten days’ time from today is granted to deposit the aforesaid amount, in case, the appeal has not been dismissed so far due to non-compliance of the order passed by the Tribunal. Decided against assessee.
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