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2006 (10) TMI 163
CENVAT - Demand for interest - paying excise duty while clearing the goods from time to time as per Rule 173G - few defaults - HELD THAT:- The fact however remains, that principles of natural justice require that the petitioner ought to be issued a Show Cause Notice as to why the interest amount should not be claimed from it and after affording a hearing that liability ought to be decided. That has not been done which is clearly contrary to the judgment of the Apex Court in Madhumilan Syntex [1988 (5) TMI 38 - SUPREME COURT]. That was particularly necessary in the fact of the present case where the petitioner has chosen to follow one of the options given by the Revenue and the demand for interest was being raised after a good number of years. As far as that aspect is concerned, in our view, tlie submissions of Mr. Patil deserve to be accepted. The petitioner was entitled to at-least show cause for which he had to be given an opportunity.
Thus, we interfere with the demand Notices and quash and set aside the detention Memo. Consequently, the goods will be released The respondents may issue a show cause notice to the petitioner as to why the interest as claimed should not be recovered and then after affording a hearing and considering the defence, pass appropriate orders.
Rule is made absolute in the aforesaid terms.
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2006 (10) TMI 162
Issues:
Appeal under Section 130 of the Customs Act, 1962 against the final order of the Customs, Excise and Service Tax Appellate Tribunal; Illegal importation of Tin, Nickel, and Zinc concealed in consignments declared as Aluminum scrap; Search operations leading to seizure of metals; Discrepancies in declared quantities of goods; Application before the Settlement Commission; Confiscation of goods and imposition of penalties; Dismissal of appeals by the Tribunal; Analysis of factual aspects and evidence gathered; Justification of confiscation and penalties; Dismissal of the appeal.
Analysis:
The case involves an appeal under Section 130 of the Customs Act, 1962 against the final order of the Customs, Excise and Service Tax Appellate Tribunal regarding illegal importation of Tin, Nickel, and Zinc concealed in consignments declared as Aluminum scrap. The appellant was found to be involved in misdeclaring the contents of containers, including importing Copper scrap instead of Aluminum scrap. Search operations revealed significant discrepancies in the declared quantities of goods, leading to the seizure of metals and imposition of penalties. The appellant had also filed an application before the Settlement Commission, admitting to certain wrongdoings related to the imported goods.
The Commissioner of Customs proceeded to confiscate the goods and impose penalties, which were challenged through appeals before the Tribunal. The Tribunal, after detailed analysis of the facts and evidence, found no perversity in the impugned order or the Order-in-Original passed by the Commissioner of Customs. The Tribunal justified the confiscation and penalties imposed based on the substantial evidence gathered during the investigation. The concealment of prime metals in declared scrap consignments indicated a deliberate attempt to smuggle goods, leading to the dismissal of the appeals.
The High Court, after reviewing the Tribunal's findings, concurred with the conclusion that no substantial question of law was raised by the appellant warranting interference. The Court upheld the Tribunal's decision, emphasizing the premeditated nature of the offense, the value of the offending goods, and the amount of duty sought to be evaded as justifications for the confiscation and penalties imposed. The Court found no grounds to interfere with the Tribunal's ruling and subsequently dismissed the appeal.
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2006 (10) TMI 161
Issues:
1. Direction to Custom authorities to release material and allow demurrage cost.
2. Confiscation of goods under the Customs Act, 1962.
3. Entitlement to damages for illegal detention of goods.
Detailed Analysis:
1. The writ petition was filed seeking a direction for the release of goods lying at the Port and to allow the cost of demurrage. The petitioner had purchased hand-tools for export, which were seized by the authorities on the grounds of potential confiscation under the Customs Act, 1962. Despite the absence of a show cause notice and failure to confiscate the goods within the specified period, a show cause notice was eventually issued. The investigation revealed discrepancies in the declared FOB values of the exported goods, indicating fraudulent practices to avail export benefits. The authorities concluded that the goods were attempted to be fraudulently exported and were liable for confiscation under Section 113(i) of the Customs Act, 1962, imposing a penalty of Rs. 12,00,000 on the petitioner.
2. The Tribunal's order directed the release of the goods due to the expired period for confiscation proceedings, despite acknowledging their liability for confiscation. The petitioner appealed against the penalty order, with the Tribunal granting a stay on the penalty amount pending appeal. The petitioner claimed damages for the illegal detention of goods, citing a Supreme Court judgment. However, the court rejected the claim, noting the delay in filing the writ petition and the petitioner's contumacious conduct. As no pending confiscation proceedings existed and with the Tribunal's release order, the court directed the release of goods within two months, allowing the respondents to challenge the release based on custody grounds.
3. The court's decision emphasized the release of goods based on the Tribunal's order and the absence of ongoing confiscation proceedings. The petitioner's request for damages was denied due to the delay in approaching the court and the lack of justification for the delay. The court's directive for release within two months and the respondents' option to contest the release based on custody considerations concluded the judgment, disposing of the writ petition accordingly.
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2006 (10) TMI 160
Issues involved: Challenge to the order of the Tribunal regarding condonation of delay in filing an appeal.
Summary:
The High Court of Judicature at Madras considered a writ petition challenging the Tribunal's order in Final Order No. 738 of 2006, which upheld the decision of the second respondent to non-suit the petitioner for a delay of 25 days in filing the appeal. The Tribunal based its decision on the petitioner's failure to produce a medical certificate explaining the entire period of delay.
Upon review, the High Court found that the medical certificate provided by the petitioner indicated that the Managing Director was advised to rest from 7-11-2005 to 17-11-2005 due to viral fever. The Court opined that the literal interpretation of the certificate should not be the sole basis for non-suiting the petitioner, as recovery from an illness does not necessarily mean immediate return to work responsibilities.
The Court emphasized the principle of favoring substantial justice over technicalities, especially when authorities have the power to condone delays. It clarified that statutory limitations are meant to bring finality to matters without unnecessary prolongation. In this case, the petitioner had explained a part of the delay with a medical certificate, leading the Court to conclude that the delay should have been condoned by the second respondent.
Accordingly, the High Court set aside the orders of the respondents and directed the second respondent to accept and process the appeal, allowing for a decision on the merits following due process of law. The writ petition was allowed without costs, and the related MPS were dismissed.
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2006 (10) TMI 159
Issues:
1. Appeal under Section 130 of the Customs Act, 1962 against a Final Order by the Customs Excise and Service Tax Appellate Tribunal.
2. Involvement of an employee of Haryana Police in clandestine import of metals.
3. Examination of facts related to the case of the present appeal.
4. Involvement of the appellant in clearing, transporting, concealing, and storing offending goods.
5. Evidence from statements of witnesses and investigation of phone numbers linking the appellant to import activities and customs duty evasion.
6. Failure to specifically discuss the appellant's case in the Tribunal's order.
7. Challenge to the validity of the show cause notice and penalty imposed under Section 112 of the Customs Act.
8. Application of Section 112(b) of the Act in the case of the Appellant.
9. Imposition of penalty by the Commissioner of Customs and affirmation by the Tribunal.
Analysis:
1. The judgment involved an appeal under Section 130 of the Customs Act against a Final Order by the Customs Excise and Service Tax Appellate Tribunal. The case revolved around the clandestine import of metals, where an employee of Haryana Police was deeply involved in the illegal activities.
2. The appellant's role in the clandestine import of metals was significant, as he was responsible for clearing, transporting, concealing, and storing the offending goods. Witness statements and investigations linked the appellant to these activities, indicating his active participation in customs duty evasion.
3. Despite the Tribunal not specifically discussing the appellant's case in the order, upon review of the facts, the High Court found no prejudice caused to the Appellant. The Court concluded that the Tribunal rightly rejected the appeal based on the facts of the case.
4. The appellant challenged the validity of the show cause notice and the penalty imposed under Section 112 of the Customs Act. However, the Court rejected this contention, stating that the penalty was rightfully imposed under Section 112(b) due to the appellant's involvement in activities leading to liability for confiscation under Section 111.
5. Ultimately, the Court dismissed the appeal, stating that no substantial question of law was raised for consideration under Section 130 of the Act. The penalty imposed by the Commissioner of Customs, based on detailed facts and application of the law, was affirmed by the Tribunal, leading to the dismissal of the appeal.
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2006 (10) TMI 158
Issues: Implementation of impugned order, delay in implementation, condonation of delay, dismissal of customs Act case.
Implementation of impugned order:
The appeal pertains to an impugned order dated 1-7-2003, which the Respondents sought to be implemented. Despite reminders, the order was not implemented until December 2004, well beyond the two-week period stipulated by the Court in August 2004. The appellant's counsel argued that a certified copy of the order was not provided promptly, but it was revealed that a request for the same had been made earlier. The Court noted the appellant's inaction despite being aware of the order, leading to the dismissal of the appeal.
Delay in implementation:
The appellant failed to implement the impugned order within the specified timeline, causing the Respondents to file a petition seeking implementation. The delay persisted despite repeated reminders from the Respondents, indicating the appellant's awareness of the order. The Court highlighted the lack of satisfactory grounds for condoning the delay, ultimately resulting in the dismissal of the application.
Condonation of delay:
The appellant's application for condonation of delay was dismissed due to the absence of compelling reasons to justify the delay in implementing the order. The Court emphasized the appellant's prolonged inaction despite being aware of the order and the repeated representations made by the Respondents, leading to the dismissal of the application.
Dismissal of customs Act case:
Following the dismissal of the application for condonation of delay, the customs Act case No. 5/2004 was also dismissed by the Court. The dismissal was a direct consequence of the failure to provide satisfactory grounds for condoning the delay in implementing the impugned order, highlighting the importance of timely compliance with court directives.
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2006 (10) TMI 157
Issues Involved:
1. True and full disclosure of facts by Respondent No. 1.
2. Oral hearing before allowing the application.
3. Recording of reasons by the Compounding Authority.
Summary:
1. True and Full Disclosure of Facts:
The Union of India filed a writ petition u/s 226 and 227 of the Constitution to set aside an order by the Chief Commissioner of Customs allowing compounding of an offence. The Petitioner contended that Respondent No. 1 did not make a true and full disclosure of facts as required u/s 127-B of the Customs Act and Rule 6 of the Customs (Compounding of Offence) Rules, 2005. The Court found no merit in this contention, noting that Respondent No. 1 had admitted to committing an offence u/s 111 and 77 of the Act, punishable u/s 132 and 135(1)(a) of the Act. The Court emphasized that discrepancies in the versions provided by the applicant and the investigating agency do not necessarily indicate a failure to disclose all material facts. The Compounding Authority had the discretion to accept the application if it believed a full and true disclosure was made.
2. Oral Hearing:
The Petitioner argued that no oral hearing was given before the application was allowed. The Court held that the Rules do not mandate an oral hearing for either party when an application for compounding is allowed. The proviso to Rule 4(3) only requires a hearing if the application is intended to be rejected. The Court noted that the issues in this case were not complex enough to necessitate a personal hearing and that the Petitioner was given an opportunity to submit a report, which sufficed to meet the requirements of natural justice.
3. Recording of Reasons:
The Petitioner also contended that the Compounding Authority did not record any reasons for granting immunity from prosecution. The Court found this contention without merit, stating that the Compounding Authority had examined all aspects of the case, including the market value of the goods, the nature of the offence, and the basis for the compounding fee. The order showed an application of mind and provided reasons sufficient for judicial review.
Conclusion:
The Court dismissed the petition, emphasizing that the scope of judicial review in such cases is limited. It highlighted that discrepancies in the applicant's and investigating agency's versions do not necessarily mean a failure to disclose all material facts. The Court also noted the recent introduction of 'plea bargaining' in the Code of Criminal Procedure, 1973, and suggested that settlement procedures should be liberally construed to avoid protracted proceedings.
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2006 (10) TMI 156
Issues: Impugned order by CEGAT for pre-deposit, remand to Commissioner, compliance with s. 35F of Central Excise Act, 1944, increase in deposit amount, restoration of Writ Petition, time extension for compliance, restraining Respondents, disposal of Writ Petition and pending applications.
Analysis:
The High Court of Delhi addressed the impugned order by CEGAT regarding the pre-deposit of duty and penalty amounts, which had led to a remand to the Commissioner of Central Excise for the second time. The Court noted that the documents filed by the Petitioner before CEGAT but not before the Commissioner raised questions about the validity of the remand. The Court emphasized the importance of following s. 35F of the Central Excise Act, 1944, stating that CEGAT should have separately considered the application for waiving the pre-deposit. The Court found fault with CEGAT for remanding the matter and then imposing a condition, instead of directly deciding on the pre-deposit issue and proceeding to hear the appeal on its merits.
In response to the argument by the Respondent's counsel for an increase in the deposit amount due to the delay caused by the Petitioner, the Court declined to agree, pointing out that the Respondents had not challenged the impugned order of CEGAT. The Court then proceeded to restore the Writ Petition, granting a seven-day extension to the Petitioner to comply with the impugned order. During this period, the Respondents were prohibited from taking any distressing steps. However, the Court clarified that if the deposit was not made within the stipulated seven days, the Respondents would be free to pursue necessary actions.
Ultimately, the Court disposed of the Writ Petition and all pending applications related to the matter. This comprehensive judgment by the High Court of Delhi addressed various issues concerning the impugned order, compliance with statutory provisions, extension of time for compliance, and the overall resolution of the legal dispute between the parties involved.
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2006 (10) TMI 155
Issues:
1. Provisional assessment of imported goods
2. Discrepancy in assessed value and declared value
3. Recovery of differential amounts pending appeal
4. Invocation of bank guarantees
5. Jurisdiction of the High Court
Analysis:
1. The petitioners filed bills of entry for clearance of imported goods, declaring the value at USD 350 per MT, but the value was provisionally determined at USD 485 per MT based on import prices. Orders-in-original enhanced the value to USD 485 per MT as final assessable value.
2. The petitioners appealed against the orders, citing a previous case where a similar view was accepted by the Tribunal. They argued that recovery of differential amounts during the appeal process was unjustified as they had a strong case in their favor.
3. The High Court noted that the appeals were pending along with stay applications to halt the recovery process. The court found it impermissible to invoke bank guarantees without passing orders on the appeals or stay applications.
4. Instead of prolonging the case, the High Court directed the Commissioner of Central Excise (Appeals) to promptly decide on the stay applications or main appeals. Until a decision is made, the bank guarantees were not to be invoked, but the petitioners were instructed to maintain them.
5. The High Court disposed of the writ petitions, emphasizing the need for timely resolution by the Commissioner of Central Excise (Appeals) and ensuring the bank guarantees remain active until a final decision is reached. No costs were awarded, and the related miscellaneous petitions were dismissed.
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2006 (10) TMI 154
Issues:
1. Challenge of annual capacity of production determination.
2. Condonation of delay in filing appeals.
3. Validity of orders passed by the Commissioner and Tribunal.
4. Jurisdictional shift of Central Excise authorities.
5. Applicability of legal precedents on delay in filing appeals.
Analysis:
1. Challenge of annual capacity determination: The petitioner, a hot re-rolling mill operator, disputed the annual capacity of production fixed by the Commissioner, alleging it was erroneously set at double the actual capacity due to misclassification of the furnace type. The petitioner sought redetermination and refund of excess duty paid. The Court found merit in the petitioner's claim, noting discrepancies in the classification and directed a review of the capacity determination for both cases, emphasizing the need for a fair hearing.
2. Condonation of delay: The Court addressed the delay in filing appeals, highlighting legal precedents on condonable delays due to negligence. Despite citing cases where delays were not condoned, the Court differentiated the present case, deeming the delay non-wilful and without prejudice to the respondents. Consequently, the Court allowed the condonation of delay, emphasizing the importance of hearing the appeals on their merits.
3. Validity of orders: The Court scrutinized the orders passed by the Commissioner and the Tribunal, noting discrepancies in the determination of duty demand and the subsequent dismissal of appeals. The Court set aside the Tribunal's orders, directing a fresh hearing on the appeals to ensure justice and adherence to legal procedures.
4. Jurisdictional shift: The case involved a shift in jurisdiction from the Commissioner of Central Excise, Chennai, to the Commissioner of Central Excise, Pondicherry. This shift raised procedural complexities, impacting the determination of annual capacity and duty demands. The Court's intervention aimed to resolve these jurisdictional challenges and ensure a fair assessment of the petitioner's claims.
5. Applicability of legal precedents: The Court analyzed various legal precedents cited by the respondents regarding the condonation of delays in filing appeals. While acknowledging the precedents, the Court found the circumstances of the present case distinct, justifying the condonation of delay based on the lack of wilful delay and absence of prejudice to the respondents. This analysis underscored the Court's commitment to a fair and thorough examination of the case.
In conclusion, the High Court of Judicature at Madras granted relief to the petitioner by allowing the writ petitions, setting aside previous orders, and directing a fresh hearing on the appeals. The Court emphasized the importance of fair proceedings, adherence to legal principles, and timely resolution of the disputes to uphold justice and procedural integrity.
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2006 (10) TMI 153
Issues:
1. Supply of documents by the respondents to the petitioners.
2. Modification/clarification regarding the documents to be supplied by the department.
3. Further directions sought by the petitioners before the adjudicating authority.
4. Jurisdiction of the Court under Article 226 of the Constitution of India.
5. Dismissal of the application seeking further directions.
Analysis:
Issue 1: Supply of documents by the respondents to the petitioners
The initial order passed by the Court directed the respondents to supply the documents sought by the petitioners before proceeding further in the matter. The stay of passing the final adjudication order was vacated, and the petitioners were asked to appear before the authorities for further proceedings on a specified date. The Court emphasized the importance of ensuring that the documents had been supplied before adjudication of the dispute.
Issue 2: Modification/clarification regarding the documents to be supplied by the department
Upon an application by the Revenue, seeking modification/clarification of the order, the Court considered the request. The department contended that they may only be required to supply seized/relied upon documents and not the entire range record. The Court noted that the matter was pending consideration before the adjudicating authority and that the issue of non-availability of certain documents would be addressed by the adjudicating authority itself.
Issue 3: Further directions sought by the petitioners before the adjudicating authority
The petitioners moved an application seeking additional directions, including the supply of all documents, permission for cross-examination of witnesses, and a stay on proceedings until completion of cross-examination. The Court observed that the petitioners appeared to be interested in delaying the proceedings and seeking control over the adjudication process, which was beyond the jurisdiction of the Court under Article 226 of the Constitution of India.
Issue 4: Jurisdiction of the Court under Article 226 of the Constitution of India
The Court reiterated that the jurisdiction under Article 226 did not extend to controlling day-to-day proceedings before the Adjudicating Officer. The Court found the application to be an attempt to review the earlier order or delay the proceedings and, therefore, dismissed the application for further directions.
Issue 5: Dismissal of the application seeking further directions
After hearing the counsels for the parties, the Court concluded that comprehensive directions had already been issued, and the application seemed to be an attempt to review the earlier order or delay the proceedings. Consequently, the Court found no merit in the application and dismissed it. The counsels for the petitioners sought permission to withdraw the application, which was granted by the Court.
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2006 (10) TMI 152
Issues:
1. Restoration of a writ petition dismissed in default.
2. Challenge to a notice issued by the Assistant Collector of Customs regarding a refund claim.
Issue 1: Restoration of Writ Petition:
The writ petition in question was dismissed in default on 7-3-2006 due to the absence of the petitioner's counsel. An application was filed for restoration, citing that the matter was not noted in the list, and the counsel was not present in Delhi to seek an adjournment. An affidavit from the counsel's clerk supported this claim. The court allowed the application and restored the writ petition.
Issue 2: Challenge to Notice for Refund Claim:
The writ petition challenged a notice issued by the Assistant Collector of Customs regarding a refund claim of Rs. 1,13,293.20 along with interest. Initially, the petitioner argued that the Customs authorities had no power to demand proof that the burden of customs duty had not been passed on to be eligible for a refund. However, during the case, the Customs Act, 1962 was amended, requiring applicants to provide evidence that the duty burden had not been transferred to others. The court directed the officer to decide on the refund application. The Assistant Collector found that the petitioner failed to prove that the duty burden had not been passed on, leading to the refund amount being directed to the Consumer Welfare Fund.
The petitioner challenged this decision, claiming to have provided sufficient evidence during a personal hearing. However, the Assistant Collector rejected the refund application, stating that the petitioner failed to produce the necessary evidence as required by the Act. The court upheld the Assistant Collector's decision, emphasizing that the petitioner did not meet the evidentiary requirements under Section 27(1) and (2) of the Customs Act. Consequently, the writ petition was dismissed with no costs awarded.
In conclusion, the judgment addressed the restoration of a dismissed writ petition and the challenge to a notice related to a refund claim, emphasizing the importance of providing evidence to support refund applications under the Customs Act.
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2006 (10) TMI 151
Issues:
1. Condonation of delay in filing application under Section 130A of the Customs Act, 1962.
2. Validity of the redemption fine imposed on the Directorate of Agriculture, Government of Rajasthan.
3. Lack of reasoning in the impugned order by the Customs Excise and Gold (Control) Appellate Tribunal (CEGAT).
Analysis:
1. Condonation of Delay:
The High Court of Delhi considered an application for condonation of delay of 736 days in filing an application under Section 130A of the Customs Act, 1962. The delay was attributed to confusion regarding the appropriate remedy, initially filing an appeal under Section 130 which was deemed not maintainable. The Court, considering the bona fide confusion and interests of justice, allowed the application for condonation of delay.
2. Redemption Fine Imposition:
The case involved the Directorate of Agriculture, Government of Rajasthan, purchasing two fodder production units from a company which had violated customs duty exemption conditions. The Collector of Customs, Madras, issued an order confiscating the units and imposing a redemption fine. The CEGAT later reduced the redemption fine from Rs. 4 lakhs to Rs. 1 lakh without providing adequate reasoning. The Court noted that the case of the appellant was not considered on merits, emphasizing the need for a detailed examination of whether the purchaser had knowledge of the violations and the justification for the redemption fine.
3. Lack of Reasoning in CEGAT's Order:
The High Court highlighted the failure of the CEGAT to provide reasons for upholding the imposition of the redemption fine on the appellant while reducing the amount. Citing precedents, the Court emphasized the requirement for a reasoned order by the CEGAT. The Court held that the lack of reasoning raised a substantial question of law and set aside the impugned order, remanding the matter to the CESTAT for a rehearing of the appeal with a direction to pass a reasoned order after hearing the parties.
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2006 (10) TMI 149
Completion of an assessment proceedings whether is a sine qua non for issuance of notice under Section 11A of the Central Excise Act, 1944?
Held that:- Where provisional duty is levied in terms of Sub-Rule (1) of Rule 9B, final assessment is contemplated under Sub-Rule (5) thereof by reason of which the duty provisionally assessed shall be adjusted against the duty finally assessed and in the event, the duty provisionally assessed falls short of or is in excess of the duty finally assessed, the assessee will pay the deficiency or will be entitled to a refund, as the case may be. Ultimately, thus, the liability of the assessee would depend upon the undertaking of exercises by the assessing officer to complete the assessment proceeding as contemplated under the Rules.
On a plain reading of the provisions of the Act and the Rules framed thereunder, no doubt in our mind that the Tribunal was correct in its finding that the impugned show cause notices were illegal. Appeal dismissed.
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2006 (10) TMI 148
Whether cheap garments were being exported by grossly misdeclaring the description and heavily over-invoicing the value under the Duty Entitlement Pass Book Scheme (DEPB Scheme)?
Held that:- The Tribunal, in our opinion, should have considered the matter from another angle, namely, as to whether Respondents have violated the provisions of the Foreign Exchange Regulation or not. As regards, the finding arrived at by the Tribunal that Respondents had not over-valued the goods, inter alia, on the ground that no expert opinion regarding the value of the export goods had been adduced, the Tribunal did not advert to the materials which had been brought on records during investigation, whereupon the Commissioner relied upon.
The impugned judgment cannot be sustained, which is set aside accordingly. The appeal is allowed. The matter is remitted to the Tribunal for consideration thereof afresh.
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2006 (10) TMI 147
Whether the Kar Vivad Samadhan Scheme, 1998, is applicable in relation to a public servant?
When does a prosecution start?
Whether the offences enumerated under section 95 (iii) are excluded from immunity in terms of section 91 of the Act?
Held that:- In the instant case, resorting to any device or camouflage has not been alleged. It is also not a case that the provisions of the Indian Penal Code or the Prevention of Corruption Act cannot be said to have any application, although linked with an offence under section 136 of the Customs Act.
The High Court has not held that the offences alleged against the respondents are so inextricably connected that they cannot be separated so much so that in the event it be held that private parties cannot be proceeded with at all, the case against public servants, would invariably fail.
In this case also public interest is involved as interpretation of the provisions of the Act was in question. Yet again there cannot be any equality in illegality.
We, therefore, are of the opinion that the impugned judgment cannot be sustained. It is set aside accordingly.
The High Court, however, did not go into the merits of the matter. It proceeded on the basis that the continuation of the prosecution as against the respondents was unsustainable in law. Although prosecution as against the respondents herein may be held to be maintainable, in our opinion, they are entitled to contend that even if the materials brought on record are given face value and taken to be correct in their entirety, no case has been made out as against them.
The appeal is allowed, the impugned judgment is set aside with the aforementioned observations.
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2006 (10) TMI 146
Penalty - Rule 209A - when goods not available for confiscation - Rule 26 of Central Excise Rules, 2002 - Meaning of Any person for the purpose of penalty - held that - for imposition of penalty under Rule 209A of the Central Excise Rules, 1944, the person must have dealt with the excisable goods with knowledge that they are liable for confiscation. In a given situation, where an assessee is only issuing invoices wherein there is no movement of the goods, they cannot be visited with penalty under Rule 209A - In the eyes of law, the corporate entity being a person would be held responsible for the act of the natural persons. But in order to punish the guilty individuals, the veil of corporate entity had to be lifted to understand the correct picture. Precisely for these reasons only the provisions of Rule 209A came in to statute, in order to punish the guilty acting behind the veil of corporation/company - penalty can not imposed on corporates under rule 209 / Rule 26 of the Central Excise Rules, 2002
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2006 (10) TMI 145
Rejection of books of account – change in gross profit rate - assessee-appellant is doing business of trading in pan masala and other connected commodities. The assessee has furnished return of income showing ₹ 4,48,280 as taxable income along with the audit report. - the Assessing Officer noticed that there is fall in the gross profit rate in the business as a whole as compared to the gross profit rate shown by the assessee during the last assessment year 1991-92. The assessee has shown in the previous year gross profit rate of 4.63 per cent, by taking entire business as a whole, but this year he has shown the gross profit rate of 2.38 per cent. only. With this premise, he decided to reject the books of account and asked for explanation of the assessee about the fall in the gross profit rate - Held that - Mere deviation in the gross profit rate cannot be a ground for the rejecting the books of account, and entering the realm of estimate and guesswork. Lower gross profit rate shown in the books of account during the current year and fall in the gross profit rate was justified
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2006 (10) TMI 144
“Block period” means the period of 10 years preceding the previous year in which the search was conducted. The “previous year” further includes the period in which the search was conducted up to the date of the commencement of search - in block assessment total undisclosed income relating to block period ending up to date of search to be charged to tax – however in absence of evidence, undisclosed income is to be taken as shown in profit and loss account rather than as declared in return – in respect of genuineness of a gift, amount credited as capital of firm and not having been received as gift, no enquiry conducted as to source of amount and how it had been credited – amount can be added as unexplained investment
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2006 (10) TMI 143
Dealer in vehicles – amount received under “post warranty service contract” - credit balance in the post-warranty service scheme - plea of the assessee that the amount had not been transferred to the P/L A/c, did not make a difference on principle. If no liability accrued during the year, the amount could not be kept in suspense account. The same has to be treated as income - Considering the terms of the contract with the purchasers of the vehicle, any amount remaining credited in the account for more than three years from the date of credit has to be treated as income for the year thereafter and any refund claimed by any purchaser thereafter will be a permissible deduction during that relevant year
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9911796707
