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2007 (3) TMI 755
Issues:
1. Applicability of the Employees Provident Fund and Misc. Provision Act to a partnership firm engaged in Hire Purchase business.
2. Clubbing of three other Companies with the partnership firm for coverage under the Act.
Analysis:
Issue 1: Applicability of the Act
The petitioner, a partnership firm engaged in the Hire Purchase business, challenged the application of the Employees Provident Fund and Misc. Provision Act to their firm. The Assistant Provident Fund Commissioner, through an order, determined that the Act was applicable to the petitioner's firm and extended coverage to three other units. The petitioner contended that the Act was not applicable to them, leading to an enquiry to ascertain the Act's applicability. The Act was deemed beneficial legislation ensuring security for workmen, as highlighted by the Supreme Court in a related case.
Issue 2: Clubbing of Companies
The bone of contention was whether the partnership firm and the three other companies, separate legal entities under the Companies Act, could be considered as one unit for coverage under the Act. The petitioner argued that there was no unity or interdependence between the firm and the other companies, emphasizing separate shareholders, accounts, and legal status. However, legal precedent established that functional "integrality" was crucial in determining if units should be treated as one establishment under the Act. The Supreme Court rulings in various cases emphasized factors like unity of ownership, management, finance, labor, and employment in deciding the coverage under the Act.
Judgment
The Provident Fund Commissioner found interconnectivity among the four units, including common management and business activities, leading to a decision to club them together for coverage under the Act. The court upheld this decision, stating that the mere difference in legal structure (partnership firm vs. limited companies) was insufficient to exclude the units from the Act's coverage under Section 2A. Consequently, the writ petition challenging the order was dismissed as the impugned order was found to be legally sound, considering the factual findings presented by the Provident Fund Commissioner.
This comprehensive analysis highlights the key legal aspects and precedents considered in the judgment, emphasizing the importance of functional integrality in determining the coverage of entities under the Employees Provident Fund and Misc. Provision Act.
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2007 (3) TMI 754
The Supreme Court allowed the petitioner to withdraw the petition, resulting in the dismissal of the Special Leave Petition (SLP).
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2007 (3) TMI 753
The Supreme Court dismissed the appeal in the case with citation 2007 (3) TMI 753 - SC. Judges S.B. Sinha and Markandey Katju gave the order.
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2007 (3) TMI 752
Levy of Service Tax - Services of C&F agents - instructions contained in the Service Tax Trade Notice No. 20/2002 - HELD THAT:- The Explanation II to section 67 only clarifies the general principle that when no tax is separately collected from the client, the gross amount collected is inclusive of the tax. This principle is applied in the Central Excise cases also in the light of the CCE v. Maruti Udyog Ltd. [2002 (2) TMI 101 - SUPREME COURT] case decided by the Supreme Court. Even in respect of removal without payment of duty when the duty liability is computed the sale value is taken to be cum-duty value. The same principle has to be applied here also.
Therefore, we set aside the impugned order and remand the matter to the Original authority for re-computation of the duty liability taking the gross receipt as inclusive of service tax. It is seen that when the appellants came to know all the correct legal position, they voluntarily paid even before the issue of show-cause notice. Thus, the imposition of penalty on the appellant is not sustainable. The same is set aside.
Therefore I remand the matter to the Original authority to re-compute the tax liability and allow the appeal.
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2007 (3) TMI 751
Issues involved: Appeal against waiver of penalties under Section 76 and Section 77 of Finance Act, 1994.
Summary:
Issue 1: Waiver of penalties under Section 76 and Section 77 of Finance Act, 1994
The Revenue filed appeals against the waiver of penalties under Section 76 and Section 77 of the Finance Act, 1994. The grievance of the Revenue was that the breach of law should not go unpunished. The lower Appellate Authority had waived the penalties citing the genuine hardship faced by the Respondent due to the initial stage of implementation of the law. The Respondents had filed returns and deposited Service Tax before the show-cause notice was issued, indicating no intention to evade tax. The lower Appellate Authority considered the Respondents innocent as the implementation of the service tax law was new to them. After hearing both sides, it was decided that the order of the lower Appellate Authority should be upheld, and the Revenue's appeals were dismissed.
In conclusion, the judgment upheld the lower Appellate Authority's decision to waive penalties under Section 76 and Section 77 of the Finance Act, 1994, considering the genuine hardship faced by the Respondents in the initial stage of implementing the law.
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2007 (3) TMI 750
Murder of newly married couple - Challenged the Order Of Acquittal for the offences charged u/s 120-B, 364, 302 and 392 r/w Section 34 of the Indian Penal Code, 1860 - circumstantial evidence - recovery of the incriminating materials - benefit of doubt - sufficient time gap between the instances when the persons last seen together - HELD THAT:- It is a settled rule of criminal jurisprudence that suspicion, however grave, cannot be substituted for a proof and the courts shall take utmost precaution in finding an accused guilty only on the basis of circumstantial evidence. This Court has applied the above-mentioned general principle with reference to the principle of last seen together in Bodh Raj alias Bodha & Ors. v. State of Jammu and Kashmir [2002 (9) TMI 858 - SUPREME COURT].
We have also not found any other link in the chain of circumstances to conclusively establish that A-1 murdered D-1 or A-2 played any role in assisting him to murder D-1. Even if we believe the evidence of P.W.-11 that he saw D-1 in the company of A- 1 walking towards the beach and thereafter saw A-1 returning alone after 30 to 45 minutes, there has been a time gap of about 2 < hours when A-1 and D-1 were last seen together and when the dead body of D-1 was found at around 00.30 a.m. at the Benaulim Beach. No evidence was led by the prosecution to prove the fact that there was no possibility of any other person approaching D-1 on the beach which is a public place, during the intervening period when A-1 was last seen with the deceased and when the crime was detected.
In the absence of any other supporting material on record, it will not be possible to believe the statement of P.W.-6 that he had seen A-2 sitting in the car on the night of 27.02.1999 to establish the fact that when D-2 left the hotel she accompanied A-2. Similarly, with respect to A-1, P.W.-6 who had an opportunity to see A-1 for the first time for a very short duration to recognize him to be a person who accompanied D-2 to Hotel Seema on the night of 27.2.1999, he had only a fleeting glance of male person who came with D-2 as he was busy in settling the account with her. That apart, the dead body of D-2 was found at around 7.30 a.m. on 28.02.1999 at Vagator Beach, around 60 kms. from the beach where the dead body of D-1 was recovered and quite a long distance from Hotel Seema. Hence, there has been a considerable time gap of approximately 8 = hours when D-2 was last seen alive with the accused couple. There being a considerable time gap between the persons seen together and the proximate time of crime, the circumstance of last seen together, even if proved, cannot clinchingly fasten the guilt on the accused.
In the light of the factors that evidence regarding the recovery of the incriminating materials from the accused persons has been discarded; that there has been sufficient time gap between the instances when the accused persons were last seen together with the deceased persons; and in the absence of any other corroborative piece of evidence to complete the chain of circumstances to fasten the guilt on the accused couple, we are of the opinion that the accused have been rightly given the benefit of doubt by the courts below. We have found that the finding of the High Court that the chain of circumstances is not complete to conclusively establish that either A-1 or A-2 alone or with the common intention of each other have committed the dreadful crime of murder of newly married couple, is correct and merely suspicion, however grave, cannot replace the weight attached to the evidence. Accordingly, we order for dismissal of the appeals.
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2007 (3) TMI 749
Issues:
1. Request for information on actions taken by authorities regarding garlanding of Dr. Ambedkar's statue.
2. Appellant's dissatisfaction with CPIO's response and subsequent appeal to Appellate Authority.
3. Concern regarding non-maintenance of records by Public Authority under RTI Act.
4. Direction to provide government order on retention schedule of records and relevant register.
5. Difficulty faced by RTI applicants in submitting applications and fees to CPIOs in Defence Ministry.
6. First Appellate Authority delegating order-making function to CPIO.
Analysis:
1. The Appellant had sought information on actions taken by authorities regarding the garlanding of Dr. Ambedkar's statue. The CPIO initially requested copies of the Appellant's applications, later providing comments and clarifications. Dissatisfied, the Appellant appealed to the first Appellate Authority, who upheld the CPIO's decision, leading to a second appeal to the Central Information Commission (CIC).
2. During the hearing, the Appellant highlighted the Public Authority's failure to maintain records as required by the RTI Act. The Respondent explained the difficulty in locating old documents and mentioned the weeding out of records following retention schedules. The CIC directed the CPIO to provide the Appellant with the government order on record retention and relevant register, along with file notings related to a specific application.
3. The CIC addressed the issue of RTI applicants facing challenges in submitting applications and fees to CPIOs in the Defence Ministry. The Ministry assured improvements in receiving applications efficiently. The CIC emphasized the importance of the Ministry being sensitive to citizens' needs and enhancing infrastructure for easier application submission.
4. Notably, the CIC observed that the first Appellate Authority had delegated the order-making function to the CPIO, which was deemed impermissible. The CIC clarified that the Appellate Authority must personally hear appeals, provide an opportunity for the Appellant's input, and issue orders independently. Delegating such responsibilities was considered incorrect.
5. Ultimately, with specific directions and observations, the CIC disposed of the appeal, emphasizing the need for compliance with RTI procedures and proper handling of appeals. The CIC also mandated providing copies of the order to the involved parties free of cost, ensuring transparency and accessibility in the process.
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2007 (3) TMI 748
Issues involved: Interpretation of deduction under section 80HHC(4A) of the Income-tax Act, 1961 and treatment of interest income as business income.
Interpretation of deduction under section 80HHC(4A): The appeal raised the question of whether the Income-tax Appellate Tribunal was correct in holding that the assessee is entitled to reduce interest paid from the interest received while calculating deduction under section 80HHC(4A) read with Explanation (baa) of the Income-tax Act, 1961. The court noted that the Assessing Officer had held the income to be business income, and since this decision was not questioned thereafter, the court did not permit the reopening of this question. The only issue raised before the Income-tax Appellate Tribunal was regarding the netting of interest, and the Tribunal's finding of nexus was not challenged by the Departmental Representative. Consequently, the court found no reason to interfere with the Tribunal's order and dismissed the appeal.
Treatment of interest income as business income: Although the appellant had raised the question of whether interest from deposits could be treated as business income rather than 'Income from other sources', the court did not admit the appeal on that specific question. The court referred to a previous judgment where it was stated that if the Assessing Officer has determined interest income as business income and this decision has not been questioned subsequently, the question cannot be reopened. Since the Assessing Officer had classified the income as business income in this case and the Departmental Representative did not challenge this finding, the court upheld the decision not to reopen this issue.
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2007 (3) TMI 747
Validity Of Block assessment made u/s 158-BC - non-issuance of notice u/s 143(2) - HELD THAT:- In view of the above facts, it is clear that the department has not been able to establish that any notice u/s 143(2) was issued and served upon the assessee during the course of assessment proceedings u/s 158BC. As held in the case of Smt. Bandana Gogoi vs. CIT and Another [2007 (1) TMI 110 - GAUHATI HIGH COURT], if the block assessment is not made on the basis of return filed then requirement of issuance of notice is mandatory and in absence of issuance and service of such notice, the assessment order cannot be held to be valid.
Since in the instant case it is virtually admitted by the Revenue that no notice u/s 143(2) has been issued and served upon the assessee, the block assessment made u/s 158-BC cannot be upheld and the same is to be declared null and void. We order accordingly.
Thus, we are not required to dispose of the other grounds taken by the assessee in its appeal - In the result, assessee's appeal stands allowed.
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2007 (3) TMI 746
Claim for 100% depreciation - Automatic coal system, treating it to be a part and parcel of the boiler? - Depreciation on boiler and furnaces in clause (d) relating to the high efficiency boilers (thermal efficiency higher than 75 per cent in case of coal fired and 80 per cent in case of oil/gas fired boilers) - HELD THAT:- It has not been shown by the revenue that coal container, coal conveyer and bucket elevator, dust collecting system can individually be utilised for any other purpose. Apart from the fact that there was no other purpose for the use of this machinery in the assessee’s Company, the further fact that these were integral components of the boiler, strengthens the view that they also become eligible to 100 per cent depreciation as was allowed in the case of Cochin Refineries Ltd.[1987 (1) TMI 9 - KERALA HIGH COURT].
We are, therefore, of the view that the questions formulated in this case should be answered in favour of the assessee and against the revenue. We accordingly hold that the Tribunal did not err in extending benefit to the assessee towards depreciation at the rate of 100 per cent on the automatic coal system, treating it to be a part and parcel of the boiler, and that on these items the assessee was not required to restrict its claim to 25 per cent.
In the result both these appeals are dismissed, but with no order as to costs.
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2007 (3) TMI 745
Depreciation on the intangible asset, namely Patents and technical know-how - Payment for acquisition of marketing rights - HELD THAT:- It is admitted fact that the transaction is not a sham transaction but is acted upon. Similar finding has been given also in the appeal of revenue cited (supra). We accordingly hold that the amount of ₹ 2 crores representing distribution franchise fee paid to Ambalal Sarabhai Enterprise is in respect of commercial rights referred in Section 32(1)(ii) of the Act. Accordingly, though Ground No.1 is to be dismissed, as contended in alternate Ground No.2, the claim of assessee in respect of depreciation is allowable.
Since the amount was borrowed for acquisition of capital asset and such capital asset were not put to use prior to payment of the front end fees paid to ICICI bank, in view of the decision of Hon'ble Supreme Court in the case of Chellapalli Sugar Mills Ltd.[1974 (10) TMI 3 - SUPREME COURT], such interest has to be added to the cost of capital asset. Since the Tribunal has held that the assessee is entitled to depreciation in respect of various intangible assets and since the front end fees is to be added to the cost of such capital assets, the alternate claim made by the assessee in Ground No.4 regarding depreciation u/s 32(1) has to be allowed. Thus, though Ground No.3 is to be dismissed, Ground No.4 is allowed.
In the result, the appeal is partly allowed.
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2007 (3) TMI 744
Issues Involved:
1. Non-compliance with Supreme Court's directions regarding non-agricultural permission and tax collection.
2. Incorrect notification of land as a water body by the State Government.
3. Deliberate and willful disobedience of Supreme Court's orders by government officials.
4. Refusal to grant non-agricultural permission for specific survey numbers.
Issue-wise Detailed Analysis:
1. Non-compliance with Supreme Court's Directions:
The Supreme Court, in its judgment dated 15.10.2004, directed the Collector, Bhavnagar to grant non-agricultural permission for 76 acres 36 guntas of land in Survey No. 469/1, Bhavnagar District, after collecting the non-agricultural tax applicable at the time of the application. The Bhavnagar Municipal Corporation was also directed to consider the application for sanction within four weeks. Additionally, the court directed the collection of non-agricultural permission charges and conversion charges for lands in Survey Nos. 470/1, 471/2, 471/3, and 472 as prevalent in 1981.
2. Incorrect Notification of Land as a Water Body:
The State Government issued a notification declaring lands in RS Nos. 471/2 and 472 as a water body, allegedly in compliance with a High Court order. However, the High Court's order only mandated notification of water bodies vested in the State or local authorities, not private land. This action was contrary to the Supreme Court's judgment and directions.
3. Deliberate and Willful Disobedience by Government Officials:
Despite the Supreme Court's clear and binding directions, the government officials, including the Deputy Secretary of the Revenue Department and the Collector, Bhavnagar, failed to comply. The Collector refused to follow the judgment for survey No. 472 and also for 80 acres of survey No. 471/2. The Supreme Court noted that judgments are binding under Article 142 of the Constitution, and any attempt to ignore them undermines the authority of the Court.
4. Refusal to Grant Non-agricultural Permission:
The petitioners filed a contempt petition seeking enforcement of the Supreme Court's directions for non-agricultural permission. The respondents, instead of complying, raised new pleas and contentions regarding survey Nos. 471/2 and 472. The Supreme Court reiterated that the issues concerning these lands had been conclusively decided in favor of the petitioners in previous litigations and could not be reopened.
Conclusion and Directions:
The Supreme Court found the respondents guilty of willful and deliberate contempt of its order dated 15.10.2004. The Court directed the Revenue Department and the Collector, Bhavnagar, to issue permission for residential use for the specified survey numbers. The Court emphasized that judgments must be obeyed punctually and warned the officials against future violations. The contempt petition was allowed, and the respondents were given four weeks to comply with the Court's directions.
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2007 (3) TMI 743
Issues Involved:
1. Imposition of penalty u/s 271(1)(c) of the Income-tax Act.
2. Validity of the Assessing Officer's satisfaction regarding concealment of income.
3. Relevance of the assessee's surrender of income and its conditional nature.
4. Evaluation of evidence and its sufficiency to prove concealment of income.
Summary:
1. Imposition of Penalty u/s 271(1)(c):
The appeal by the assessee challenges the penalty of Rs. 61,288 imposed u/s 271(1)(c) of the Income-tax Act for the assessment year 1996-97. The assessee declared Rs. 2,70,510 as long-term capital gains on the sale of 7,000 shares of Nilamber Holdings Ltd. The Assessing Officer, based on investigations and statements from various parties, concluded that the transactions were sham and treated the receipts as undisclosed income, initiating penalty proceedings u/s 271(1)(c).
2. Validity of the Assessing Officer's Satisfaction:
The Tribunal agreed with the Ld. Sr. DR that the Assessing Officer recorded the requisite satisfaction in the assessment order, stating that the gains shown on the sale of shares were not genuine and the transactions were sham. These observations were deemed sufficient to show that the Assessing Officer was satisfied that the assessee concealed income or furnished inaccurate particulars.
3. Relevance of the Assessee's Surrender of Income:
The assessee contended that the surrender of income was conditional on no penalty being levied. However, the Tribunal found that the Assessing Officer did not act on the surrender but relied on independent evidence to tax the income. Therefore, the contention that the Assessing Officer could not impose a penalty after accepting the surrender was without force.
4. Evaluation of Evidence:
On the merits of the penalty, the Tribunal noted that none of the statements from the investigating wing specifically linked the assessee to the manipulative practices of the share broker firm. The assessee provided documentary evidence, including acknowledgment from the company regarding the receipt and transfer of shares. The evidence was not found to be false, and the benefit of doubt was given to the assessee. The Tribunal concluded that the assessee did not conceal income or furnish inaccurate particulars and canceled the penalty, allowing the appeal with no order as to costs.
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2007 (3) TMI 742
Issues involved: Stay and appeal regarding the levy of Service Tax on consumable inputs used in photography.
Issue 1: Interpretation of legal precedents
The appellants were using inputs for photography, and the Revenue levied Service Tax on these consumable inputs. The Commissioner (A) distinguished a previous judgment and noted a subsequent clarification by the Board, along with an Apex Court judgment. The learned Counsel argued that the latest circular and cited judgments were already considered in a detailed judgment in a similar case, where they were distinguished. It was argued that the ratio of the previous judgment should apply in this case, warranting allowance of the stay application and appeal.
Issue 2: Application of legal precedents
Upon careful consideration, the Tribunal noted that the same issue was previously considered in a similar case, where the latest Board's circular and the Apex Court judgment were examined. The Tribunal found that the issue was settled in the assessee's favor in the cited judgment. Consequently, the Tribunal decided to allow the stay application and appeal, along with any consequential relief, based on the cited judgments and the settled nature of the issue.
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2007 (3) TMI 741
Issues involved: Appeal against waiver of penalty u/s 76 and 77 of Finance Act, 1994.
Summary:
Issue 1: Revenue's appeal against waiver of penalty
The Revenue appealed against the waiver of penalties imposed u/s 76 and 77 of the Finance Act, 1994. The Revenue argued that the respondent should be equally treated under the law, emphasizing that mere payment of tax does not absolve one from penalties. Reference was made to a Larger Bench decision supporting this stance.
Issue 2: Respondent's defense against penalties
The respondent, represented by Shri P.K. Sen, contended that the levy of service tax was a new concept causing confusion. The respondent cooperated with the revenue, discharged the tax liability upon understanding the law, and filed returns for different periods. The respondent's delay in discharging the tax liability was attributed to the confusion surrounding the new levy and the Department's public relation announcements.
Judgment:
After hearing both sides, it was acknowledged that the respondent had eventually paid the tax liability albeit belatedly. The confusion surrounding the new levy and the Department's announcements were considered as mitigating factors. Section 80 of the Finance Act, 1994, provides for exoneration from penalties in case of a reasonable cause, which was supported by a cited decision. The lower appellate authority's reasoned decision to waive the penalty was upheld as it did not warrant imposition of penalties. Upholding the order of adjudication was deemed necessary to serve justice, leading to the dismissal of the Revenue's appeal.
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2007 (3) TMI 740
Issues involved: Sanction of a scheme of demerger u/s 391 to 394 of the Companies Act, 1956.
Details of the Judgment:
Issue 1: Consent of Shareholders
In Company Petitions 68 and 69 of 2007 by the transferor, 99.9% of equity shareholders gave their consents. In the case of the second transferor and the transferee, consents of equity shareholders were obtained. The Court was informed that all necessary consents were obtained, and no objections were raised. The Regional Director confirmed that all requisitions were met, and there was no objection to the scheme being sanctioned.
Issue 2: Statutory Compliances
All necessary statutory compliances were fulfilled, and there were no reasons to deny the sanction of the proposed scheme. Therefore, Company Petitions 68, 69, and 70 were made absolute in terms of the prayer clauses, except for a specific portion in one of the clauses.
Costs and Orders
The Petitioner was directed to pay costs to the Regional Director and the Official Liquidator. The filing and issuance of the drawn-up order were dispensed with, and all relevant authorities were instructed to act upon an authenticated copy of the order issued by the Court's office.
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2007 (3) TMI 739
The Supreme Court set aside the High Court's order for not framing substantial questions of law as required under the Income-tax Act. The case was remitted back to the High Court for reconsideration without expressing any opinion on the merits. The appeal was disposed of with no costs.
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2007 (3) TMI 738
Waiver of Pre-deposit - CENVAT credit - Input services - Services as provided by Customs House Agent/Shipping Agent/Port Service - Commissioner held that services utilized for clearance of final products at the Jetty would not qualify as ‘input services’ - HELD THAT:- The definition of input service fixes the meaning of that expression and such services used by the manufacturer, are required to have a nexus with the manufacture of the final product and clearance of the final product from the place of removal. Place of removal is well defined in Section 4(3)(c) and admits no extension of its meaning to the place of shipping port. The services which are enumerated in the inclusive clause, which applies both, in the context of the provider of output services as well as the manufacture, cannot be read de hors the meaning of input service under Rule 2(l).
Therefore, all the activities relating to business, which are input services used by the manufacturer in relation to the manufacture of final product and clearance of the final product from the place of removal alone would be eligible. After the final products are cleared from the place of removal, there will be no scope for subsequent use of service to be treated as input. Prima facie, therefore, services beyond the stage of manufacturing and clearance of the goods from the factory could not be input services. The Commissioner, therefore, does not appear to have committed any error in disallowing the Cenvat credit on this ground. Other items are not pressed at this stage.
Thus, we direct that there will be interim stay of the impugned order on the appellant’s depositing a further sum of ₹ 25 lakhs (Rupees Twenty-Five lakhs) within six weeks from today, failing which the appeal will stand dismissed. This application is disposed off accordingly.
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2007 (3) TMI 737
Issues involved: Departmental appeals against Order of the Commissioner regarding valuation of vessels for ship breaking.
Valuation of vessels: The appeals were related to the valuation of vessels bought for ship breaking. The Larger Bench considered the issue and concluded that any reduction in price agreed upon before the date of import would be relevant for determining the assessable value under Section 14 of the Customs Act, 1962. However, any variation in price after the date of import would not be relevant unless there are circumstances such as the goods not being as contracted or a serious breach of contract. In such cases, the new/reduced price under the revised contract would be admissible if it aligns with the value defined under Section 14 of the Customs Act and Valuation Rules.
Addendums and price reduction: The memorandum of agreement for the vessels specified the purchase price per long ton of LDT without any price variation clause. Addendums were issued after import, reducing the prices without providing reasons for the reduction. The addendums did not align with the original agreement terms, as there was no change in the LDT of the vessels and no disputes warranting arbitration. The addendums' lower prices adopted after the import date were deemed unjustifiable by the Tribunal, leading to the decision to set aside the Commissioner's order accepting the lower values and restoring the original order-in-original.
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2007 (3) TMI 736
The High Court of Delhi dismissed the writ petition as withdrawn after the Union of India decided to withdraw the impugned letter dated 01.08.2006 issued by the Joint Director DGFT following a meeting between two Ministries. The petitioner reserved the right to raise other issues later.
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