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2014 (11) TMI 869
Cenvat credit - short payment by utilizing more credit than the credit available - Held that:- During the period of dispute, the appellant were also availing capital goods Cenvat credit in addition to the input duty Cenvat credit goods. While the account of input duty Cenvat credit was being maintained in RG-23A Pt. I and Pt. II register, the account of the capital goods Cenvat credit was being maintained in RG-23C I and II register. From the chart given in para 6 of the impugned order, it is seen that while in case of Unit - I, the total Cenvat credit including the capital goods Cenvat credit available as on 15/08/2000 and 31/08/2000 was ₹ 1,11,09,202/- and ₹ 1,28,68,887/- respectively, the utilization of Cenvat credit for payment of duty on these dates was ₹ 9,67,124/- and ₹ 33,00,407/- respectively and Cenvat credit available was much more than the amount which was utilized for payment of duty and as such it cannot be said that there was short payment of duty. Just because the debit entry of the duty paid was made in RG-23A Pt. II register, it cannot be inferred that the appellant had short paid the duty. Similarly, in respect of Unit - II, the total Cenvat credit including capital goods Cenvat credit available as on 15/08/2000 and 31/08/2000 was ₹ 55,11,200/- and ₹ 48,92,898/- respectively while the utilization of the credit for payment of duty was ₹ 41,77,000/- and ₹ 39,66,325/- and thus the total credit available on both the dates was much more than the credit utilized for duty payment. In this unit also the debit entry for the full amount was made only in RG-23A Pt. II register and from this, it cannot be concluded that the duty had been short paid. The impugned order, therefore, is not sustainable - Decided in favour of assessee.
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2014 (11) TMI 868
Waiver of pre deposit - Cenvat Credit - suppression or wilfull mis-statement of facts - Invocation of extended period of limitation - Held that:- Show Cause Notice admits that the appellants had been regularly filing the ER-1 returns showing all the details. The adjudicating authority has held that the noticee was required to declare material facts instead of taking a plea that it was not required to declare or submit details of goods on which Cenvat Credit was taken. The adjudicating authority does not quote any provision of law under which they were required to declare the material facts; the adjudicating authority does not elaborate as to what material facts were required to be declared and under which provision of law. It is a fact that the description of goods on which Cenvat credit is taken is not required to be declared in the ER-1 returns. They mentioned every detail required to be mentioned in the ER-1 returns. The adjudicating authority has equated suppression with non-declaration of something not even required to be declared as per law. prima facie the appellants have a fairly good case atleast for non-invokability of the extended period as a consequence of which the impugned demand would be hit by time bar. The appellants have also contended that the impugned credit is admissible on merit also but without going into a detailed analysis of the appellant’s contentions on merit, at this stage, we find that on the ground of time-bar alone, a goods case is made out for waiver of pre-deposit. - Stay granted.
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2014 (11) TMI 867
Clandestine removal of goods - Benefit of Notification No. 214/86-C.E., dated 1-3-1986 - committee appointed by the adjudicating authority to verify the transactions in respect of the dispatches made by the Bhandup unit and the receipts at Nasik unit - Held that:- Committee constituted for verification of the transactions consisted of four members; however, the report dated 21-10-2003 submitted by the committee is signed only by one person, which is rather unusual. Further we observe that the said report is signed by the Superintendent (Adjudication) whose role is to assist the adjudicating authority in the conduct of adjudication proceedings. The verification should have been done by some other officer(s) who is not associated with the adjudication process so as to impart an element of neutrality and impartiality. Be that as it may, we further observe that a copy of the verification report was not furnished to the investigating agency for their comments/rebuttal. As per the settled principles of adjudication as also the guidelines prescribed in the adjudication manual, when any new fact comes up for consideration, the party likely to be adversely affected by the same should be given an opportunity to rebut the new findings/facts. Unfortunately, this has not been done in the present case. Thus there is a clear violation of the principle of natural justice and therefore, on this ground alone, the impugned order is liable to be set aside - Matter remanded back - Decided in favour of Revenue.
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2014 (11) TMI 866
Validity of order passed by the CESTAT - Matter not decided on merits - Held that:- CESTAT has not at all decided the present dispute on merits. Since the CESTAT has not decided the present matter on merits, this Court is of the view to set aside the order passed by the CESTAT in [2005 (8) TMI 478 - CESTAT, CHENNAI] and to remit the matter to the file of the CESTAT. Since the matter is liable to be remitted to file of the CESTAT, the substantial questions of law raised on the side of the appellant need not be decided and altogether the present Civil Miscellaneous Appeal is liable to be allowed. - Decided in favour of assessee.
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2014 (11) TMI 865
CENVAT Credit - Capital goods - Clearance of goods to sister concern - evenue contended that assessee have calculated depreciated value applying depreciation at the rate of 25% as provided under the Income Tax Act and have therefore paid less amount of duty than they would have paid. - as per the department the depreciated value of the goods were required to be done in accordance with Board s Circular No. 643/34/2002-CX dated 1.7.2002 - Held that:- In the show cause notice dated 16-7-2003, it has been specifically mentioned that as per Circular issued in the year 2002, the appellant/assessee is liable to pay the tax mentioned therein. But as rightly pointed out on the side of the appellant/assessee, the Tribunal has not considered the said Circular whereas the Tribunal has remitted the matter to its original authority and also given necessary direction to apply the Circular issued in the year 1988. Further the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai has not at all considered the relevant provisions of law. - Tribunal to decide the matter afresh.
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2014 (11) TMI 864
Duty demand - Difference in loss - appellant is receiving lubricating oil from M/s. IOBL, Kolkata either on payment of duty or without payment of duty under bond - assessee were repacking the same into small packs to be sold in the market under their own brand and style - Allahabad High Court dismissed the appeal of the Revenue against the decision of the CESTAT NEW DELHI [2014 (6) TMI 618 - CESTAT NEW DELHI] holding that no substantial question of law arises - Where Tribunal in its impugned order had held that difference on account of loss or shortage of lubricating oil were to the tune of 0.44% to 1.78%, whereas tolerance range is 1.4% to 1%. There is no evidence of clandestine removal in absence of which no duty can be demanded on the waste or loss.
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2014 (11) TMI 863
Imports from China not through prescribed point of entry into India - Confiscation orders and penalty - 3,21,264 pieces of “Z” MAGNETISM FOR MEN DEODORANT BODY SPRAY” confiscated - Madhya Pradesh High Court admitted the appeal against the dcisioni [2013 (3) TMI 166 - CESTAT NEW DELHI] on the following substantial questions of law : -
Whether the confiscation of goods under Section 111(d) and imposition of penalty under Section 112(a) by the Appellate Tribunal on the ground of violation of condition of the Drugs & Cosmetics Act is correct in view of the fact that the goods were found to be fit for imports after testing by the Drugs Controller?
Whether the confiscation of goods and imposition of redemption fine/penalties were justified in view of the fact that the goods were warehoused in the Customs Bonded warehouse?
Whether the Tribunal is correct in denying the exemption provided under Sl. No. 1 of Schedule "D" of Drugs & Cosmetics Rules, 1945, on the ground that the term "Substance" does not include cosmetic hence the provisions of point of entry under Rule 133 of Drugs & Cosmetics Rules, 1945 applies?
Whether the Tribunal is correct in holding that the Nhava Sheva port is not the point of entry despite the facts that imported goods entered India through Nhava Sheva port, though cleared from ICD, Pithampur?
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2014 (11) TMI 862
Manufacture of turpentine oil and rosin – assessee claimed nil rate of duty on the ground that the same are manufactured without the aid of power and also demands are time-barred - Bombay high Court admitted the appeal of the Revenue against the decision of Tribunal [2011 (12) TMI 137 - CESTAT, MUMBAI] on the following substantial questions of law :-
Whether in the facts and circumstances of the case and in law, the Tribunal is justified in setting aside the demand for extended period of limitation ?
Whether in the facts and circumstances of the case and in law, the Tribunal is justified in holding that there is no suppression in view of the fact that there was a flow chart submitted by the Respondent way back in the year 2003 and 2004 when the said communication is after the visit of the officers of the Revenue?
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2014 (11) TMI 861
CENVAT Credit - Bar of limitation - Bombay High Court dismissed the appeal filed by the Revenue against the order of CESTAT MUMBAI [2010 (3) TMI 536 - CESTAT, MUMBAI] holding that Tribunal perused the show cause notice in its entirety and in the context of legal position invoked. In the teeth of the provision invoked, found that the facts and circumstances would show that it was inapplicable. This was not the case of any fraud, willful mis-statement, collusion or suppression of fact or contravention of provisions of the Excise Act or Rules made thereunder with intention to evade payment of duty. The findings of fact would go to show that immediately on department bringing to the notice of the Assessee the lapse or default, the demand of duty was complied and the Assessee made the requisite entries. In such circumstances, the proceedings in pursuance of show cause notice ought not to have been pursued further. However, that was done and on unsustainable ground and invoking inapplicable provisions. In such Circumstances, the findings of fact do not give rise to any substantial question of law.
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2014 (11) TMI 860
CENVAT Credit - Penalty u/s 11AC - Bombay High Court admitted the appeal of the Revenue filed against the decision of CESTAT MUMBAI [2005 (4) TMI 202 - CESTAT, MUMBAI] on the following substantial questions of law:-
Whether in the facts and circumstances of the case the Tribunal is right in holding that the penalty levied upon the respondents by the Adjudication Authority for availing Modvat Credit on full quantity shown in the invoices when in fact quantity of inputs received in factory was short and thus huge amount of ₹ 9,33,428/ credit was wrongly availed of by the Respondent?
Whether in the facts and circumstances of the case the Adjudicating Authority was wrong in confirming the demand and imposing equal penalty upon the respondent under Section 11AC of the Central Excise Act, 1944 and imposing the penalty under Rule 25 and 27 of the Central Excise (No. 2) Rules 2001, particularly when it is on record the shortage of quantity was large?
Whether the Tribunal was right in ignoring the decisions of the CESTAT in the matter of M/s. Bombay Dyeing & Mfg. Co. Ltd. reported at [1999 (5) TMI 210 - CEGAT, MUMBAI] which case is directly applicable in the present case. The Bombay Dyeing’s decision clearly lays down that the inputs received on weighing are less that what is actually supplied. The assessee is liable to penalty for such short supply?
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2014 (11) TMI 859
Exemption under Notification No.28/97 Cus. dt. 1.4.97 - Penalty u/s 11A - Suppression of facts - Held that:- Appellant imported machinery under EPCG licence subject to the condition that the said machinery would be used in their factory for manufacture of the final product. There is no dispute that the machineries were installed in a textile showroom cum shop of the appellant's sister concern at Chennai, without any intimation to the department, and in gross violation of condition of the Exemption Notification. It is apparent that the appellant deliberately suppressed the fact of installation of the machineries at their showroom with an intention to evade payment of appropriate Customs duty on the imported machinery and it would liable to be confiscated under Section 111 (o) of the Customs Act, 1962. - Appellant installed the machineries in their show room without utilizing in the factory premises, is a clear case of misrepresentation and penalty of Section 114A of the said Act is imposable - Decided against assessee.
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2014 (11) TMI 858
Interest on investment in shares deleted - Notional interest attributable to investment in shares - Whether the Tribunal was right in confirming the order passed by the CIT(A) deleting the interest attributable to investment in shares – Held that:- The Tribunal was justified in granting benefit of the earlier years’ orders to the assessee, which are final - the AO decided the issue against the assessee following earlier years’ or in similar circumstances - the issue involved was never carried in appeal before the Court and therefore, the earlier years’ orders, on which the Appellate Tribunal placed reliance, had become final – Decided against revenue.
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2014 (11) TMI 857
Duty drawback claim - conversion of Shipping Bills for Duty Free Goods into Shipping Bill - Held that:- situation is not covered by any of the sub-clauses, namely (a), (b) or (c) above. In view of this position, the matter cannot be decided by the Single Member Bench and must be heard by the Division Bench - the matter may be placed before the Division Bench in the normal course..
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2014 (11) TMI 856
Refund of SAD - Notification no. 102/2007 dated 14.09.2007 - Whether to avail the benefit of Notification no. 102/07, the condition 2(b) of the Notification is mandatory for compliance being a trader who cleared the goods on the strength of commercial invoices - Held that:- A trader-importer, who paid SAD on the imported goods and who discharged VAT/ST liability on subsequent sale, and who issued commercial invoices without indicating any details of the duty paid would be entitled to the benefit of Notification 102/2007-Cus”, although they have not made an endorsement on the invoice that credit of duty is not admissible. Therefore, following the decision of the larger bench of the Tribunal, I hold that as the appellants have cleared the imported goods on payment of CST/VAT being a trader under the cover of commercial invoice, therefore they are entitled for refund claim as they have satisfied the condition of Notification 102/07 dated 14.09.2007 - Decided in favour of assessee.
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2014 (11) TMI 855
Revocation of CHA License - Forfeiture of security deposit - contraventions of Regulations 13(a), (d) and (e) of the CHALR, 2004 - Held that:- In the enquiry report it has been clearly stated that the charges of contravention of Regulations 13(a) and 13(d) of are held to be “not proved”. The charge of contravention of only Regulation 13(e) regarding exercising due diligence is proved. There is no bar in the licensing authority, the Commissioner of Customs, taking a view different from those contained in the enquiry officer's report as held by the hon'ble Bombay High Court in the case of Delta Logistics vs. Union of India 2012 (286) ELT 517. However, if the licensing authority wants to take a different view, the appellant should be put to notice as to why the enquiry officer's report is being differed with, which has not been done in the instant case. The appellant should have been given a reasonable opportunity of submitting their defence against the charges made. Further, in the present order, the Commissioner of Customs, Pune has merely borrowed the “mind” of Commissioner of Customs, Mumbai who had revoked the licence without making any independent examination of the issues involved. - Decided in favour of appellant.
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2014 (11) TMI 854
Validity of Search and seizure - information in possession of the officer - High Court has quashed the search and seizure conducted on 16.2.2000 in the factory premises of assessee – Held that:- The reasons cannot be accepted – it cannot be comprehended as to how an Advocate Commissioner was appointed to take inventory of the goods in respect of which the restraint order was passed by the revenue under the Act - it is difficult to appreciate how the denial in the counter affidavit filed by the revenue could be treated as an admission by implication to come to a conclusion that no reason was ascribed for search and seizure and action taken u/s 132 of the Act was illegal - The relevant confidential file, if required and necessary could have been called for and examined - Revenue in the counter affidavit was not required to elucidate and reproduce the information and details that formed the foundation.
The terms used are ‘reason to believe’. - Whether the competent authority had formed the opinion on the basis of any acceptable material or not, as is clear as crystal, the High Court has not even remotely tried to see the reasons – reasons can be recorded on the file and the Court can scrutinize the file and find out whether the authority has appropriately recorded the reasons for forming of an opinion that there are reasons to believe to conduct search and seizure - the High Court has totally misdirected itself in quashing the search and seizure on the basis of the principles of non-traverse - the High Court would have been well advised to peruse the file to see whether reasons have been recorded or not and whether the same meet the requirement of law – thus, the order of the High Court is set aside and the matter is remitted back for fresh disposal – Decided in favour of revenue.
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2014 (11) TMI 853
Penalty u/s 271(1)(c) deleted – Bonafide of assessee’s contentions - Whether the assessee's action disclosing certain particulars in the form of notes to “statement of income” and making wrong claim on the basis of such notes, amounts to furnishing of inaccurate particulars of income – Held that:- The Tribunal rightly observed that the assessee still had furnished detailed notes in respect of the claim with the computation of the income - the assessee was under bonaifde belief that the waiver of the sales tax was not liable to tax in view of the same being capital receipt in nature - the assessee had not concealed any particulars of the income and the conduct of the assessee was not deliberate, in defiance of relevant provisions of law - It is quite clear that the assessee had not concealed the particulars of its income - The necessary particulars had been furnished in more than one way - there is no substance in the arguments of the revenue that explanation (1) of Section 271 is attracted – reference made to Commissioner of Income Tax, Ahmedabad Vs. Reliance Petroproducts Pvt. Ltd., [2010 (3) TMI 80 - SUPREME COURT] there was no error in the orders passed by the Tribunal maintaining deletion of the penalty as was imposed by the AO - the act of the assessee was bonafide even though the assessee may have failed to substantiate its claim that the amount was capital receipt – Decided against revenue.
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2014 (11) TMI 852
Stay application – stay of demand of ₹ 53.71 Crores – Held that:- The parameters for disposing of an application for stay pending disposal of Appeal before the Appellate Authority under the Act are fairly settled as decided in KEC International Limited v/s. B. R. Balakrishnan [2001 (3) TMI 32 - BOMBAY High Court] - the manner in which the AO has disposed of the application for stay by order dated 30th May, 2014 is in complete breach of the directions of the Court - besides in any event the tests applied to dispose of the stay application by the order dated 30th May, 2014 are not at all germane to disposing of the stay application - though there was substance in the assessee's claim of Charitable purposes, keeping in view the fact that the Petitioner's registration u/s 12A of the Act has been cancelled – assessee is not entitled to the benefit of exemption u/s 11 of the Act for the subject AY 2011-12 - unconditional grant of stay of the demand till the disposal of the appeal by the CIT(A) would not be warranted.
However where the issue is not concluded one way or the other by a decision of a higher forum, then the Authority considering the stay application would have to prima facie consider on the face of the impugned order, the likelihood of the applicant succeeding in appeal - This need not be detailed examination but a first look examination and on that basis it is for the authority to exercise his discretion in law and grant such stay depending upon likelihood of success in appeal - At this stage various other factors such as financial hardship, balance of convenience etc. would enter into consideration to decide the terms of the stay of demand, if any – assessee is directed to deposit 10% of the amount of ₹ 53.71 Crores as pre-deposit, there would be a complete stay of recovery of balance demand raised u/s 156 of the Act for the Assessment Year 2011-12, till the disposal of the case – Partial stay granted.
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2014 (11) TMI 851
Proceedings u/s 153C – restriction on allowance of deduction of expenditure towards advertisement and brand building expenses - Held that:- The Tribunal noticed that revenue has not been able to substantiate the findings of the AO - none of the documents contained any incriminating evidence/material – the AO has not observed or held that the expenditure was not incurred by the assessee - It has been accepted that the expenditure in fact was incurred - the expenditure incurred on advertisement/brand building was in respect of Joie Agarbatti and incense sticks - The expenditure was not incurred for brand building/advertisement of tobacco products etc., in respect of which royalty payments were received - Reasonableness and whether the assessee was wise and prudent in incurring the expenditure, is not within the domain of examination by the assessing officer, unless permitted and allowed under the statute.
Expenses can be disallowed u/s 37(1) of the Act, if it is held that it was not wholly and exclusively for business and not by adopting subjective standard of reasonableness - Section 40A(2) of the Act has not been invoked and there is no provision which stipulates that advertisement and brand building expenses could be restricted or partly allowed – there was no need to examine the question as to whether any document belonging to the assessee was found during the course of search and whether Section 153C of the Act was rightly invoked – Decided against revenue.
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2014 (11) TMI 850
Entitlement for deduction u/s 32AB - Whether the Tribunal was justified in holding that the assessee was entitled to deduction u/s 32AB – Held that:- As per section 32AB, it is required to be debited within six months from the end of the financial year or/and on 30th SEPTEMBER of the next financial year – revenue was not in a position to show that the amount was not debited on 30th SEPTEMBER from the account of the assessee – Decided against revenue.
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