1. ISSUES:

1.1 Whether invoices allegedly retrieved from a third party's mobile phone are admissible where the procedure and authentication required by section 138 C of the Customs Act, 1962 has not been complied with.

1.2 Whether a statement recorded under Section 108 of the Customs Act, 1962 without issuance of a summons is legally admissible and can be relied upon against an importing entity.

1.3 Whether a demand of differential customs duty in respect of multiple Bills of Entry can be confirmed on the basis of four invoices allegedly relating to four consignments, without comparison of goods or material basis for re-valuation across all contested imports.

1.4 Whether the adjudicating authority followed the Customs Valuation Rules sequence (Rules 4 to 9) when rejecting declared transaction value and whether contemporaneous imports or the deductive method submitted by the importer were wrongly disregarded.

1.5 Whether penalties under Sections 112(b), 114A and 114AA of the Customs Act, 1962 (and confiscation/redemption fine) are sustainable where the foundational documentary evidence is defective.

1.6 Whether penalty under Section 112(b) is sustainable against an individual where there is no allegation or material that he dealt in smuggled goods and the allegedly incriminating invoices cannot be authenticated.

2. RULINGS / HOLDINGS:

2.1 The invoices allegedly retrieved from the mobile phone are inadmissible: "the four invoices cannot be relied upon as documentary evidence in this proceedings" because authentication under section 138 C of the Customs Act, 1962 was not complied with and no certificate or name of the person who decrypted the data is on record.

2.2 The statement recorded under Section 108 without summons cannot be relied upon against the importer; reliance on such a statement, coupled with unauthenticated documents, is insufficient to sustain demand.

2.3 The confirmation of differential customs duty for 165 Bills of Entry on the basis of four invoices is legally impermissible and "not sustainable" because there was no comparison of goods and no material basis for re-valuation across the broader set of imports.

2.4 The adjudicating authority failed to follow the statutory valuation sequence: "under the Customs Valuation Rules, if the transaction value is rejected, the sequence of Rules 4 to 9 must be scrupulously followed," and contemporaneous import data and the importer's deductive method, which were not disputed, must be accepted.

2.5 All penalties and confiscation/redemption fine imposed under Sections 112(b), 114A and 114AA are set aside because the necessary ingredients for imposing those penalties are not established by admissible evidence.

2.6 The penalty under Section 112(b) imposed on the individual is set aside since there is no material showing dealing in smuggled goods and the invoices alleged to have been recovered from his phone "cannot be relied upon as a documentary evidence in this proceedings."

3. RATIONALE:

3.1 Statutory authentication for digital evidence: Section 138 C of the Customs Act, 1962 requires authentication procedures for electronic data retrieved from devices; absence of a certificate, name of the decrypting person, signatures of officers/witnesses, and use of an unapproved private lab undermine admissibility and chain-of-custody.

3.2 Statements under Section 108: Procedural safeguards (such as summons) and proper recording are prerequisites for admissibility and weight of statements; a statement obtained without required procedural formalities cannot substitute for authenticated documentary proof.

3.3 Valuation framework: The Customs Valuation Rules prescribe a mandatory sequence (Rules 4-9) where transaction value is rejected; contemporaneous imports and values produced by the importer (including deductive method) are relevant and, if undisputed, must be accepted rather than adopting an arbitrary across-the-board re-valuation.

3.4 Requirements for comparative re-valuation: Re-determination of assessable value across multiple consignments requires material basis involving comparison of "similarity, nature, or quality of the goods" (e.g., thickness, quality of steel); confirming duties for many Bills of Entry based solely on invoices relating to four consignments lacks legal foundation.

3.5 Penalty jurisprudence: Imposition of penalties under Sections 112(b), 114A and 114AA requires establishment of statutory ingredients by admissible evidence; where foundational evidence is invalidated, penalties and measures such as confiscation/redemption fine cannot be sustained.

3.6 No dissenting or concurring opinion was recorded; the decision rests on procedural inadmissibility of digital evidence, failure to follow the Valuation Rules sequence, and absence of material to support penalties or broadened re-assessment.

1. ISSUES PRESENTED and CONSIDERED

1.1 Whether an operational debt was due and payable such that a Section 9 petition under the Insolvency and Bankruptcy Code could be admitted.

1.2 Whether a pre-existing dispute existed between the parties in relation to the claimed operational debt so as to bar initiation of CIRP under Section 9, applying the established test for pre-existing disputes.

1.3 Whether contemporaneous communications and commercial conduct (including WhatsApp chats, purchase orders, warranty communications and an indemnity bond) constitute sufficient evidence of a genuine pre-existing dispute requiring rejection of a Section 9 application.

1.4 Whether the Adjudicating Authority erred in treating certain documents (communications, warranty draft, indemnity bond) as grounds for rejecting the Section 9 petition.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Whether an operational debt was due and payable

- Relevant legal framework and precedents: Admission of a Section 9 petition requires existence of debt and default; Section 8(2) notice/reply and Section 9 enquiry focus on whether debt has crystallised.

- Court's interpretation and reasoning: The Tribunal framed the short point as whether an operational debt was due and payable and whether any pre-existing dispute existed in terms of the test laid down by the leading authority on pre-existing disputes. The Tribunal emphasized that crystallisation of claim is sine qua non for Section 9 admission.

- Key evidence and findings: Communications showed repeated complaints about defective batteries, acknowledgements, assurances to replace, and contemporaneous messages admitting large quantum of defective batteries. The Corporate Debtor expressly denied crystallisation of the claim in its reply to the demand notice and maintained that replacement liabilities and other obligations remained outstanding.

- Application of law to facts: Given ongoing complaints, admissions of defects, unresolved replacement obligations and denial of indebtedness in the respondent's reply, the Tribunal found that the claimed operational debt had not crystallised at the relevant time.

- Treatment of competing arguments: The Operational Creditor argued invoices, delivery confirmations and ledger entries established a legally enforceable debt and pointed to an email seeking current invoices as an admission; the Corporate Debtor pointed to repeated defect communications, warranty/indemnity obligations and denial of debt. The Tribunal treated the email seeking invoices as not amounting to unconditional admission where other communications and denials showed unresolved obligations.

- Conclusion: The Tribunal concluded that the debt had not crystallised and thus the requirement for admission under Section 9 was not satisfied in light of pre-existing, unresolved issues impacting liability.

Issue 2 - Whether there existed a genuine pre-existing dispute that warrants rejection of Section 9 (application of the Mobilox test)

- Relevant legal framework and precedents: The Tribunal applied the established test that a pre-existing dispute must be "truly existing in fact" and not "spurious, hypothetical or illusory," and that the Adjudicating Authority must determine whether a plausible contention requiring further investigation exists rather than conduct a full merits trial.

- Court's interpretation and reasoning: The Tribunal held that the enquiry is limited to whether a dispute exists that warrants adjudication by an appropriate forum and is not a patently feeble argument. The Tribunal examined contemporaneous communications, warranty terms and indemnity bond to see if disputes were articulated prior to demand notice.

- Key evidence and findings: The record contained extensive WhatsApp exchanges from May 2022 onwards documenting complaints about batteries (burning, short-circuiting, fire-related cases), acknowledgements/apologies by supplier representatives, promises to replace, subsequent complaints that replacements were also defective, an indemnity bond accepting liability for repairs/replacement and warranty communications predating the demand notice. Also noted was the Corporate Debtor's reply to the demand notice explicitly denying crystallisation of claim and asserting replacement and other sums due from the Operational Creditor.

- Application of law to facts: Applying the test, the Tribunal found these communications and documents collectively constituted a plausible and genuine dispute requiring investigation; they were not mere routine correspondence or patently feeble defences. The indemnity bond and warranty proposal, being contemporaneous and uncontroverted as executed, strengthened the conclusion of a pre-existing dispute.

- Treatment of competing arguments: The Operational Creditor characterized the disputes as moonshine, contending the purchase of fresh orders (including a high-value order) showed absence of dispute and relied on an email dated 16.08.2022 as admission. The Tribunal rejected that characterization, finding the commercial conduct (including fresh orders) did not negate contemporaneous complaints and that the 16.08.2022 communication could not be read as an unqualified admission where other messages and the reply to the demand notice evidenced denial and unresolved liabilities. The Operational Creditor's argument that warranty was unsigned and indemnity bond signed under coercion were noted but the Tribunal held those contentions raised issues needing deeper investigation beyond summary IBC proceedings.

- Conclusion: The Tribunal concluded there was a genuine pre-existing dispute prior to the demand notice and at the time of the Section 9 filing; therefore the Section 9 application was liable to be rejected under the applicable test for pre-existing disputes.

Issue 3 - Whether WhatsApp communications, warranty proposal/draft and indemnity bond can be treated as evidentiary basis for pre-existing dispute

- Relevant legal framework and precedents: Adjudicating Authority may rely on documentary record and contemporaneous communications to determine whether a plausible dispute exists; Section 9 proceedings do not require full trial of contractual disputes.

- Court's interpretation and reasoning: The Tribunal held that contemporaneous chat messages, emails and signed documents that manifest disagreement, admissions of defects, refusal to accept replacement as adequate and an indemnity undertaking are legitimate materials to determine existence of a dispute for purposes of Section 9.

- Key evidence and findings: WhatsApp messages recorded repeated defect complaints and supplier acknowledgements; warranty proposal asserted warranty terms and was relied upon by purchaser to place orders; indemnity bond (signed and stamped) set out express obligations to remedy or buy back defective batteries within a specified period and to indemnify against fire-related losses.

- Application of law to facts: The Tribunal held these materials were not routine "after-sales" notes but went to the root of the contractual performance and liabilities, and therefore constituted evidence of a genuine pre-existing dispute that could not be resolved in a Section 9 summary process.

- Treatment of competing arguments: Supplier's contention that warranty was only a draft and indemnity bond signed under duress were noted; Tribunal observed such defenses implicate factual disputes requiring fuller adjudication and are inappropriate to displace the prima facie effect of the contemporaneous records in summary IBC proceedings.

- Conclusion: The Tribunal treated WhatsApp communications, warranty correspondence and the indemnity bond as sufficient to establish a pre-existing dispute for purposes of rejecting the Section 9 application.

Issue 4 - Whether the Adjudicating Authority erred in rejecting the Section 9 petition

- Relevant legal framework and precedents: Standard of appellate interference on factual/contemporaneous record and application of the Mobilox test without conducting final merits adjudication in Section 9 proceedings.

- Court's interpretation and reasoning: The Tribunal reviewed the impugned order's findings, the record of communications and documents and concluded the Adjudicating Authority properly applied the relevant test and did not err in holding the defence not patently feeble.

- Key evidence and findings: The impugned order noted substantial quality issues communicated from May 2022, assurances of rectification and replacement, and execution of indemnity bond; the Tribunal found these findings supported by the record and not amenable to reversal on appeal.

- Treatment of competing arguments: The Tribunal considered arguments that the adjudicating authority misread routine correspondence or overlooked admissions, but found reliance on contemporaneous record and the denial in the reply to demand notice justified the rejection. Allegations of later coercion or that documents were drafts raised questions for trial and not fit for summary disposition under IBC.

- Conclusion: The Tribunal upheld the Adjudicating Authority's rejection of the Section 9 petition as justified on the record and consistent with the applicable legal test.

3. SIGNIFICANT HOLDINGS

- Verbatim crucial legal reasoning preserved:

"It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the 'existence' of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the 'dispute' is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application."

- Core principles established or reaffirmed:

• A pre-existing dispute must be "truly existing in fact" and not a spurious, hypothetical or illusory defence; the adjudicating authority's role is to determine whether a plausible contention requiring further investigation exists rather than adjudicate merits.

• Contemporaneous communications (including informal messages), warranty terms and executed indemnity instruments can constitute sufficient evidence of a pre-existing dispute in Section 9 proceedings.

• Denial of debt and assertions that replacement obligations or other liabilities remain outstanding can prevent crystallisation of the claimed operational debt for the purpose of initiating CIRP under Section 9.

- Final determinations on each issue:

• The claimed operational debt was not shown to be crystallised at the relevant time in view of contemporaneous disputes and denials.

• There existed a genuine pre-existing dispute prior to the demand notice and at the time of filing the Section 9 application; the dispute warranted further adjudication and was not patently feeble.

• WhatsApp communications, warranty correspondence and the indemnity bond collectively constituted sufficient evidence of the pre-existing dispute.

• The Adjudicating Authority did not err in rejecting the Section 9 petition; the appellate forum declined to interfere with the impugned order.

1. ISSUES:

1.1 Whether services rendered by a person who is not "a port or other port or any person authorized by such port or other port" prior to 01.07.2010 fall within the definition of "Port Service".

1.2 Whether the services in question are classifiable as "Cargo Handling Service" and whether "handling of export cargo" is excluded from service tax liability under Section 65(23) of the Finance Act, 1994.

1.3 Whether reversal of inadmissible CENVAT Credit that has been voluntarily reversed by the assessee attracts penalty where suppression of facts with intent to evade tax is not established.

1.4 Whether demand issued after the normal limitation period can be sustained by invoking the "extended period of limitation" in the absence of suppression with intent to evade payment of service tax.

1.5 Whether interest is payable on irregularly availed CENVAT Credit from date of availment to date of reversal where credit has been subsequently reversed.

2. RULINGS / HOLDINGS:

2.1 On Issue 1.1 - The demand of service tax confirmed under the category of "Port Service" for the period prior to 01.07.2010 is not sustainable because, prior to that date, "Port Service means any service rendered by a port or other port or any person authorized by such port or other port, in any manner, in relation to a vessel or goods".

2.2 On Issue 1.2 - The services in question are appropriately classifiable under "Cargo Handling Service" as defined under Section 65(23), and "handling of export cargo has been specifically excluded from the purview of service tax as defined under Section 65(23)"; accordingly the demand under "Port Service" is set aside.

2.3 On Issue 1.3 - No penalty is imposable for the irregular CENVAT Credit of Rs.1,81,251/- because suppression of facts with intention to avail irregular credit has not been established and the assessee accepted and reversed the inadmissible credit.

2.4 On Issue 1.4 - Demands confirmed by invoking the extended period of limitation are not sustainable where the Show Cause Notice was issued after the normal period but no suppression with intent to evade tax is established and documents had been produced during the earlier audit; the demand is set aside on the ground of limitation.

2.5 On Issue 1.5 - The assessee is liable to pay interest on the inadmissible CENVAT Credit "from the date of availment till the date of reversal", if not already paid; however, no penalty is imposed for the inadvertent availment.

3. RATIONALE:

3.1 The court applied the statutory definitions and temporal scope of taxable services, noting that the pre-01.07.2010 definition of "Port Service" was restrictive and limited liability to services rendered by a port or persons authorized by the port; the post-01.07.2010 amendment expanded that scope.

3.2 The court treated classification under Section 65(23) ("Cargo Handling Service") as determinative for the facts, observing that statutory exclusion for "handling of export cargo" removes the services from service tax liability for the relevant period.

3.3 The court relied on binding higher-court precedent interpreting the temporal effect of the expanded definition of "Port Service" and followed the principle that an amendment expanding taxable scope cannot be applied retrospectively to periods before the amendment.

3.4 Concerning limitation and penalties, the court applied the established principle that invocation of the extended period requires a finding of "suppression of facts with intention to evade payment of service tax"; absent such suppression and where records were produced during audit, extended limitation and penalty are not sustainable.

3.5 On CENVAT mechanics, the court recognized the obligation to reverse inadmissible input credit and to pay interest for the period the credit was held, but reaffirmed that penalty requires culpability and is not warranted where reversal was voluntary and no intent to evade is shown.

1. ISSUES:

1. Whether the buyer and seller are "related" for valuation purposes under Section 4(3)(b) of the Central Excise Act where the entities are "inter-connected undertakings".

2. Whether valuation of goods cleared to such buyer must be determined under Rule 9 read with Rule 8 (i.e., "110% of the cost of production") or under Rule 10(b) in conjunction with Section 4(1)(a) ("transaction value").

3. Whether determination of "cost of production" for application of Rule 8 may be equated to the sale price to the related/inter-connected buyer in the absence of a CAS-4 certificate.

4. Whether the "cum-duty" / "cum-tax-price" principle under Section 4(4)(d)(ii) must be taken into account in valuation and computation of duty.

5. Whether the "extended period" of limitation and consequent "penalty under Section 11AC" are invocable where demand arises from audit and no allegation of suppression with intent to evade duty is made.

6. Whether penalty under Rule 26(1) can be imposed on persons in charge (e.g., managerial personnel) without evidence satisfying both ingredients of the Rule (knowledge that goods are liable for confiscation and dealing with goods in the specified manner) and where no confiscation is recorded.

7. Whether appropriation of amounts paid under protest and imposition of interest under Sections 11AA/11AB is sustainable where the foundational duty demand is held unsustainable.

8. The scope of officer's duty to scrutinize self-assessed returns and the effect of such duty on limitation and invocation of extended period.

2. RULINGS / HOLDINGS:

2.1 On relatedness: The entities, though "inter-connected undertakings", are not ipso facto "related" for the purposes of Section 4(3)(b) unless the relationship falls within sub-clauses (ii), (iii) or (iv) of Section 4(3)(b) or the buyer is a holding company or subsidiary; mere common managerial control does not make them "related".

2.2 On applicable valuation rule: Valuation of the goods cleared to the inter-connected undertaking must be determined under Rule 10(b) and Section 4(1)(a) (i.e., "transaction value") where the conditions of Rule 10(a)/Rule 9 are not satisfied; Rule 9/Rule 8 (and the "110% of the cost of production" method) apply only when the buyer is related as per clauses (ii), (iii) or (iv) or is a holding/subsidiary.

2.3 On Revenue's method of computation: The adoption of the sale value to the buyer as the "cost of production" without a CAS-4 certificate is legally invalid; valuation cannot be re-determined by equating present sale value to cost of production in the absence of the prescribed costing methodology.

2.4 On cum-duty / cum-tax-price: The "cum-tax-price" / "cum-duty" benefit under Section 4(4)(d)(ii) must be taken into account when assessing value; failure to do so renders the demand unsustainable.

2.5 On extended period and Section 11AC penalty: The "extended period" of limitation and consequential "penalty under Section 11AC" cannot be invoked where the show cause notice does not allege suppression with intent to evade payment of duty and the matter involves a bona fide question of interpretation discovered on audit.

2.6 On Rule 26(1) penalties: Penalty under Rule 26(1) requires satisfaction of both ingredients-knowledge that goods are liable for confiscation and that the person dealt with the goods in the manner specified-and is not sustainable where there is no evidence of such knowledge/dealing and no confiscation has been recorded.

2.7 On appropriation and interest: Appropriation of amounts paid under protest is not legally sustainable where the underlying demand is held invalid, and amounts paid under protest are liable to refund subject to applicable law on interest under Sections 11AA/11AB.

2.8 On officer scrutiny and limitation: The officer's duty to scrutinize self-assessed returns and to call for documents is operative; reliance on audit alone to trigger extended limitation is insufficient where statutory scrutiny opportunities existed and no intent to evade is alleged.

3. RATIONALE:

3.1 Statutory framework applied: The court applied Section 4(1)(a) and Section 4(3)(b) of the Central Excise Act, 1944 together with the definitions and Explanations (including the definition of "inter-connected undertakings"), and Rules 8, 9 and 10 of the Central Excise Valuation Rules, 2000; the distinction between sub-clauses (ii),(iii),(iv) of Section 4(3)(b) and the notion of "inter-connected undertakings" under the Explanation was central to the analysis.

3.2 Interpretation of Rules 8-10: Rule 9 applies only where sales are to or through persons related under sub-clauses (ii), (iii) or (iv) of Section 4(3)(b); where those conditions (or Rule 10(a)'s holding/subsidiary condition) are absent, Rule 10(b) requires valuation "as if they are not related persons" and Section 4(1)(a) transaction value governs.

3.3 Precedential and administrative support: The conclusion aligns with prior tribunal authority and administrative clarification that "inter-connected undertakings" are not automatically to be treated as "related" for the purpose of rejecting transaction value, and a Board clarification supports that where clauses (ii)/(iii)/(iv) do not exist and buyer is not holding/subsidiary, they "will not be considered related".

3.4 On costing procedure: The statutory scheme contemplates cost of production to be established by prescribed means (e.g., CAS-4 certificate) for application of Rule 8; re-characterising present sale price as cost of production without the prescribed certificate is "not provided" by the Rules and is legally impermissible.

3.5 On cum-tax principle: Section 4(4)(d)(ii)'s "price-cum-duty" concept requires recognition of cum-duty/cum-tax adjustments in valuation; failure to apply the "cum-duty benefit" distorts assessable value.

3.6 On limitation and penalties: Invocation of the "extended period" under Section 11A(4) and imposition of "penalty under Section 11AC" requires specific allegations and evidence of suppression with intent to evade; audit-discovered interpretational issues and revenue-neutral transactions do not justify extended limitation or penalty.

3.7 On Rule 26(1) mechanics: Application of Rule 26(1) is conditional on both requisite mental element (knowledge/reason to believe goods liable for confiscation) and physical dealing as specified; absent evidence of either (and absent confiscation), penalty cannot be sustained.

3.8 No dissent or concurring opinion recorded; outcome follows the statutory text, rule construction and consistent tribunal authority favoring valuation under Rule 10(b) where statutory preconditions for Rule 9 are unmet, and restricting extended limitation and punitive measures where no intent to evade is shown.

ISSUES:

Whether excess transit insurance charges collected from dealers are includible in the assessable value of excisable goods under the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.Whether the valuation of excisable goods should be governed by Rule 5 and Rule 6 of the Central Excise Valuation Rules, 2000, in respect of excess transit insurance collected.Whether the place of removal and transfer of title at the factory gate excludes transit insurance charges from assessable value under Section 4(1)(a) of the Central Excise Act.Whether excess transit insurance collected constitutes a part of the consideration for sale or is merely a profit on which excise duty is not leviable.Whether invocation of the extended period of limitation is justified in the absence of suppression of facts by the assessee.Whether interest and penalty can be imposed when the underlying demand is not sustainable.

RULINGS / HOLDINGS:

The excess transit insurance charges collected from dealers are not includible in the assessable value of excisable goods as they are not connected with the sale of goods or manufacture activity.The valuation of excisable goods in respect of excess transit insurance is not governed by Rule 5 and Rule 6 of the Central Excise Valuation Rules, 2000, as the excess charges are independent of the transaction value.Since the sale and transfer of title occur at the factory gate, and the dealer bears transportation costs thereafter, the excess transit insurance does not form part of the transaction value under Section 4(1)(a) of the Central Excise Act.The excess transit insurance collected is merely a profit and no excise duty is leviable on such profit, consistent with binding judicial precedents.The extended period of limitation cannot be invoked as there is no suppression of facts by the assessee and the demand arose from data furnished by the assessee itself.When the demand is unsustainable, the imposition of interest and penalty is not justified.

RATIONALE:

The Court applied the statutory framework under Section 4(1)(a) of the Central Excise Act, which defines assessable value as the transaction value at the time and place of removal, and the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.The Court relied extensively on the terms of the dealership agreement establishing that the place of removal and transfer of title is at the factory gate, thereby excluding post-removal charges like transit insurance from assessable value.Judicial precedents were cited to establish that excess charges collected post-sale which constitute profits are not subject to excise duty, reinforcing the interpretation of assessable value.The Court noted the absence of suppression or concealment by the assessee, precluding invocation of extended limitation period, consistent with established principles regarding limitation under excise law.The Court upheld the principle that interest and penalty cannot be imposed when the foundational demand is not sustainable, aligning with procedural fairness doctrines.

ISSUES:

Whether the imported goods "Unit Assy - BCM" and "Unit Assy - I.B.U." are classifiable under CTH 9032 8910 as "Automatic Regulating or Controlling Instruments and Apparatus" or under CTH 8537 1000 as "Programmable Controllers."Whether the impugned goods qualify as "Programmable Logic Controllers" or "Programmable Process Controllers" for classification purposes.Whether the impugned goods are eligible for exemption under Notification No. 152/2009, Sl. No. 953, attracting 0% Basic Customs Duty (BCD).

RULINGS / HOLDINGS:

The impugned goods are classifiable under CTH 9032 8910 as "Automatic Regulating or Controlling Instruments and Apparatus" and not under CTH 8537 1000 as "Programmable Controllers."The goods qualify as "Programmable Process Controllers" rather than "Programmable Logic Controllers," as they perform continuous monitoring and regulatory functions by comparing input signals with desired values and automatically controlling various automotive body electronics without human interface.The exemption under Notification No. 152/2009, Sl. No. 953 applies, and the demand for differential duty is rightly dropped.

RATIONALE:

The Court applied the legal framework established by the Board's Circular No. 49/3/97-CX dated 09.05.1997, which differentiates between "Programmable Logic Controllers" (PLCs) and "Programmable Process Controllers" (PPCs), emphasizing that PPCs continuously monitor and regulate variables such as flow, pressure, temperature, or electrical quantities to maintain desired values.The impugned goods' functions, including automatic control of vehicle body electronics (e.g., automatic wiper control, cabin climate control, automatic headlights) without human intervention, align with the definition of "Automatic Regulating or Controlling Instruments and Apparatus" under Chapter 90, heading 9032.The Court relied on the detailed functional description in the impugned order, which highlighted that the goods perform regulatory functions by continuously comparing inputs with desired levels and generating output signals, consistent with PPC characteristics rather than PLCs.The Court noted that the impugned goods are "multi-faceted electronic components" that act as a "power distribution centre" and communicate with other electronic control units, further supporting classification under CTH 9032.The decision follows binding precedent affirming the applicability of the Board's Circular and the distinction between PLCs and PPCs, rejecting the argument that the goods are merely "Programmable Controllers" under CTH 8537.No dissent or doctrinal shift was noted; the Court affirmed the impugned order's reasoning and classification approach.

1. ISSUES:

1. Whether the appointment of a Mediator/Local Commissioner to conduct an on'site inspection and facilitate removal of materials, plants and equipment is appropriate where parties agree that "there is no dispute with respect to the title of the land" and "there is also no dispute with respect to the plants and equipments installed therein".

2. Whether non'impleadment of a lessee occupying the premises requires interference with an order appointing a Mediator/Local Commissioner or with interim directions affecting possession and removal of goods.

3. Whether interim directions restraining removal/demolition and prescribing deposit of rent should be continued, modified or set aside pending determination of entitlement to rent and possession.

4. Whether an occupying lessee is entitled to a reasonable period to vacate where bulky/fragile inventory (notably glass) requires careful removal and seasonal conditions (monsoon) make immediate vacatur impracticable.

5. What procedure should govern disbursement/apportionment of rent deposited with the court/Pay & Accounts Officer and interim enforcement measures for breach of undertakings (including contempt and eviction by police force).

2. RULINGS / HOLDINGS:

1. The order appointing a Mediator/Local Commissioner and authorising on'site inspection and supervised removal is not interfered with where the parties are "at ad idem" that title belongs to the owner and dispute is limited to quantum/measurement of building, and where "on the spot inspection may be carried out by way of appointment of a Mediator/Local Commissioner".

2. Non'impleadment of the occupying lessee did not, in the view of the Court, warrant setting aside the impugned order; the Court maintained the impugned directions but preserved interim protections for the occupant by directing that "Plants and Equipment may not be removed and demolition be carried on the subject land" (interim direction previously issued by the Court).

3. The earlier interim direction requiring the lessee to deposit outstanding rental was affirmed in substance: the lessee must continue to deposit rent in accordance with the prior direction, specifically to "deposit the rent w.e.f August, 2024 @ Rs. 10,00,000/- p.m." (as allocated between occupants) and continue monthly deposits pending final determination.

4. The occupying lessee was granted additional time to vacate until 15.09.2025 on the grounds of the volume and fragile character of the goods and prevailing monsoon conditions, subject to continued payment obligations and the undertaking given to the Court; failure to comply will expose the occupant to prosecution for contempt and eviction by police force.

5. Directions for handling deposited rent were issued: the Pay & Accounts Officer shall release amounts to the Resolution Professional on application after due verification; the Resolution Professional is directed to deposit the said amount in an escrow account and "shall immediately file an application before the Ld. Tribunal for obtaining an order of disbursement of the amount of rent to the party concerned or as per their entitlement".

6. The appointment of a named Mediator/Local Commissioner for on'site inspection, videography and reporting was confirmed with the Mediator's "honorarium" fixed at "Rs.1.0 lac" and incidental expenses to be borne by the applicant seeking removal.

3. RATIONALE:

1. The Court's decision rests on the factual admissions and common ground recorded before the Tribunal that title to the land rests with the owner and that plants and equipment inside the building are not disputed; those concessions made appointment of an independent fact'finding mechanism appropriate to resolve measurement/quantum and identify property belonging to each stakeholder.

2. The Court applied interlocutory principles balancing the rights of an occupying lessee against the owner's title and the resolution process: interim preservation of goods ("Plants and Equipment may not be removed") and the requirement of continuing rent deposits were used to protect competing entitlements while permitting a supervised fact'finding and removal process.

3. Practical considerations (volume/fragility of material; monsoon season) were treated as legitimate grounds to extend vacatur timelines; the extension was conditional on continued compliance with deposit obligations and undertakings enforceable by contempt and eviction, reflecting the Court's reliance on enforceable undertakings to secure interim relief.

4. The procedural mechanism ordered for rent disbursement-release by the Pay & Accounts Officer after verification, deposit by the Resolution Professional into an escrow account, and an application to the Tribunal for disbursement "as per their entitlement"-implements an administrative route to protect competing claims to interim funds pending judicial determination.

5. No differing, concurring or dissenting opinion is recorded; no doctrinal shift is indicated beyond the application of standard interlocutory balancing and fact'finding by appointment of a Mediator/Local Commissioner.

ISSUES:

Whether interest at 18% per annum on delayed lease rent payments during the Corporate Insolvency Resolution Process (CIRP) period can be claimed when the Lease Deed does not provide for interest.Whether unilaterally raised invoices including interest can override the terms of a written Lease Deed lacking an interest clause.Whether payment of interest included in invoices or conduct of parties can establish mutual consent to pay interest despite absence of express contractual provision.Whether lease rent payable during the CIRP period can be treated as CIRP cost.

RULINGS / HOLDINGS:

The claim for interest at 18% per annum on delayed lease rent payments during the CIRP period was rejected because the Lease Deed dated 16.03.2016 did not contain any provision for payment of interest, and unilaterally generated invoices including interest without mutual consent cannot override the bi-partite agreement.The Adjudicating Authority correctly treated the lease rent payable from 25.09.2019 during the CIRP period as CIRP cost, a part of which was allowed.Invoices raised unilaterally by one party, even if including interest, do not create binding obligations to pay interest in the absence of evidence of mutual consent or conduct demonstrating acceptance of such terms by the other party.Acceptance of interest claims requires proof of payment of interest or conduct amounting to acceptance; mere inclusion of interest in invoices is insufficient.

RATIONALE:

The Court applied the principle that "If in terms of any agreement interest is payable to the Operational or Financial Creditor then the debt will include interest," but where no such provision exists, only the principal amount constitutes the debt.Reliance was placed on precedents establishing that a written contract need not be signed by both parties but must show mutual consent, which was absent here regarding interest.Unilateral invoices including interest cannot recast or override the terms of a written bi-partite agreement without mutual consent or conduct evidencing acceptance.The Court distinguished prior cases where interest was accepted and paid by the Corporate Debtor, emphasizing that in the present case, no such payment or acceptance was shown.The decision aligns with the legal framework under the Insolvency and Bankruptcy Code (IBC), where CIRP costs include lease rent during the moratorium but do not automatically include interest absent contractual basis.No doctrinal shift or dissent was noted; the judgment reaffirms established principles regarding contractual obligations and claims during CIRP.

1. ISSUES:

1.1 Whether cenvat credit availed by the recipient on goods classified in the supplier's invoices under the phrase "central excise tariff heading 8705" is allowable as "capital goods" within the meaning of Rule 2(a)(A)(i) of the Cenvat Credit Rules, 2004.

1.2 Whether the classification indicated by the supplier/manufacturer in its invoice may be re-determined at the recipient's end for purposes of cenvat credit entitlement.

1.3 Whether invocation of the extended period of limitation under the "proviso to Section 73(1)" is sustainable in the absence of evidence of a "positive act of wilful misstatement or suppression of facts with intent to evade payment of duty".

2. RULINGS / HOLDINGS:

2.1 On classification and entitlement: When goods falling under "central excise tariff heading 8705" were not covered under the definition of "capital goods" in Rule 2(a)(A)(i) of the Cenvat Credit Rules, 2004 during the relevant period, cenvat credit taken on the basis of supplier invoices classifying the goods under tariff heading 8705 was not allowable; invoices indicating the tariff heading and duty discharged at the manufacturer's end "cannot be discarded at the customer's end" for determining entitlement to cenvat credit.

2.2 On re-determination of supplier classification: The classification of goods by the supplier/manufacturer in its invoice is final for the recipient and the recipient cannot re-determine the classification at its end to avail cenvat credit under a different heading; the recipient would have needed to have the supplier rectify/endorse the invoices if it contested classification.

2.3 On limitation and extended period: Invocation of the extended period under the "proviso to Section 73(1)" was unsustainable where the record did not disclose any "positive act of wilful misstatement or suppression of facts with intent to evade payment of duty"; consequently the demand, interest and penalty founded on the extended period are barred by limitation.

3. RATIONALE:

3.1 Statutory framework applied: The Court applied the definition of "capital goods" in Rule 2(a)(A)(i) of the Cenvat Credit Rules, 2004, Rule 3(1) permitting cenvat credit on specified duties paid on capital goods, and Rule 9(1) which makes an invoice issued by a manufacturer a foundational document for taking cenvat credit; where the invoice specifies a tariff heading and duty paid, that classification is material to entitlement.

3.2 Precedential principle applied: The Court followed the authoritative principle that classification effected at the supplier/manufacturer end in an invoice is determinative and "shall be treated and/or considered" as such at the recipient's end, and therefore a recipient cannot unilaterally change classification to claim credit; the opinion also noted that, if contested, the appropriate course is to have the supplier rectify or endorse the invoice.

3.3 Limitation doctrine applied: The Court held that the proviso to Section 73(1) requires the Revenue to demonstrate ingredients justifying extended limitation, specifically evidence of a deliberate or positive act of concealment; absence of any allegation or evidence of a "positive act of wilful misstatement or suppression of facts with intent to evade payment of duty" precludes invocation of the extended period and renders demands time-barred, with consequential denial of interest and penalty.

3.4 Outcome and consequential relief: On the merits the recipient was not entitled to credit where supplier invoices classified the goods under tariff heading 8705 (not "capital goods"); however, because the extended period was improperly invoked without requisite positive acts of concealment, the demand, interest and penalty were set aside as barred by limitation and the recipient was granted consequential relief in law.

ISSUES:

Whether refund of excise duty is permissible for a period of non-production of notified goods caused by seizure and sealing of manufacturing machines by departmental officers.Interpretation of the phrase "permanently ceases to work in respect of all the machines installed in the factory" under Rule 16 of the Pan-Masala Packaging Machines (PMPM) Rules, 2008.Applicability of Rule 10 and Rule 16 of the PMPM Rules, 2008 regarding duty abatement for temporary or permanent cessation of production.Whether abatement or refund is available for non-production periods less than 15 continuous days.Whether non-production caused by departmental intervention can be equated with manufacturer's voluntary closure or cessation under the PMPM Rules.

RULINGS / HOLDINGS:

Refund of excise duty is allowable for the period when notified goods were not produced due to seizure and sealing of all pouch packaging machines by DGCEI officers, as the non-production was not attributable to the manufacturer's volition.The phrase "permanently ceases to work in respect of all the machines installed in the factory" in Rule 16 of the PMPM Rules should be read with "broad and comprehensive meaning" and covers situations including temporary cessation caused by external factors, not strictly limited to permanent closure or surrender of registration.Rule 10 applies only where the manufacturer plans temporary closure with continuous non-production of 15 days or more; Rule 16 applies to permanent cessation; however, neither rule contemplates situations where production is halted due to departmental seizure.Duty abatement is not available if non-production is for less than 15 continuous days as per proviso to Section 3A of the Central Excise Act, 1944 and Rule 10 of the PMPM Rules; however, this limitation does not apply where non-production results from departmental actions beyond manufacturer's control.Demanding excise duty for periods of non-production caused by seizure and sealing of machines by the department is "not legally tenable."

RATIONALE:

The Tribunal relied on statutory provisions under the Central Excise Act, 1944, specifically Section 3A and the Pan-Masala Packaging Machines (capacity determination and collection of duty) Rules, 2008 (Rules 10 and 16), which regulate duty calculation and abatement for non-production.Precedent was drawn from the Tribunal's earlier decision in a similar case involving factory closure due to a government notification banning plastic pouches, where refund was allowed despite reopening of the factory, emphasizing that reopening does not negate entitlement under Rule 16.The Tribunal distinguished cases cited by the Department, noting those involved manufacturer-initiated closures or proportionate duty calculations on commencement of production, unlike the present case where production stoppage was involuntary due to seizure.The Tribunal interpreted "permanently ceases to work" flexibly to include extraordinary circumstances causing cessation, rejecting a narrow interpretation requiring surrender of registration or absolute permanent closure.The decision reflects a doctrinal approach that duty liability should not be imposed where production interruption is caused by government enforcement actions, ensuring fairness and preventing unjust penalization of manufacturers.

The Appellate Tribunal (ITAT Patna), in an appeal against the CIT(A) order for AY 2019-20, addressed the issue of variation in stock amounting to Rs.18,15,887/- discovered during a survey. The Assessing Officer had applied a Gross Profit (GP) rate of 35.13%, based on the assessee's GP rate for AY 2018-19, which the CIT(A) upheld. The Tribunal noted the assessee's non-cooperation and reviewed GP rates for the preceding four years (AY 2015-16 to 2018-19), averaging approximately 26%, with the assessee declaring 28.34% for the impugned year. Emphasizing "in the interest of justice," the Tribunal held that the GP rate for stock shortage should be fixed at 30%, directing the Assessing Officer to recompute the addition accordingly. The appeal was thus "partly allowed."

ISSUES:

Whether interest earned from investments in co-operative banks is eligible for deduction under section 80P(2)(d) of the Income-tax Act, 1961.Whether the order passed by the Assessing Officer allowing deduction under section 80P(2)(d) is erroneous and prejudicial to the interests of the revenue, justifying revision under section 263 of the Income-tax Act.

RULINGS / HOLDINGS:

The interest earned from investment in co-operative banks qualifies for deduction under section 80P(2)(d) of the Income-tax Act, consistent with judicial precedents including the High Court of Gujarat and the Hon'ble Supreme Court decisions.A difference of opinion between the Assessing Officer and the Principal Commissioner of Income-tax does not render the assessment order "erroneous and prejudicial to the interests of the revenue" unless the view taken by the Assessing Officer is unsustainable in law; hence, revision under section 263 is not justified in this case.

RATIONALE:

The Court applied the statutory framework of section 80P of the Income-tax Act, 1961, which provides deductions to co-operative societies on income earned from specified sources, including interest from investments in co-operative banks under section 80P(2)(d).Precedents relied upon include the Hon'ble Supreme Court judgments in Kerala State Co-operative Agricultural and Rural Development Bank Ltd. v. Assessing Officer and PCIT v. Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Limited, which clarify the scope of deduction under section 80P and the definition of co-operative banks.The Court referenced the principle from Malabar Industrial Co. Ltd. v. CIT that "every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue," emphasizing that revision under section 263 requires the assessment order to be both erroneous and unsustainable in law.This judgment reflects a doctrinal adherence to the limits on the scope of revisionary powers under section 263, underscoring that mere differences in opinion do not suffice to invalidate an assessment order.

ISSUES:

Whether the order passed under section 263 of the Income Tax Act is valid when the Assessing Officer has not been provided an opportunity of being heard on the issue for which the assessment is set aside.Whether the Principal Commissioner of Income Tax (PCIT) has jurisdiction under the Faceless Assessment Scheme to revise an assessment completed under section 143(3) read with section 144B of the Act.Whether disallowance of deduction under section 80G of the Act on donations made as part of Corporate Social Responsibility (CSR) expenditure is justified.Whether CSR expenditure, being a statutory obligation under section 135 of the Companies Act, 2013, qualifies as a "donation" under section 80G of the Income Tax Act.Whether the restriction on claiming deductions under Chapter VI-A applies to section 80G deductions for an assessee opting for taxation under section 115BAA for the relevant assessment year.Whether the assessment order passed under section 143(3) read with section 144B of the Act is erroneous and prejudicial to the interest of revenue when the Assessing Officer accepted the claim of deduction under section 80G after due inquiry.

RULINGS / HOLDINGS:

The order passed under section 263 without providing an opportunity of being heard on the issue is erroneous and without jurisdiction.The PCIT does not have jurisdiction under the Faceless Assessment Scheme to revise an assessment completed under section 143(3) read with section 144B of the Act by the Faceless Assessing Officer unless the PCIT has jurisdiction under the Faceless regime.Disallowance of deduction under section 80G on donations made as part of CSR expenditure is not justified where the donations fulfill all prescribed conditions under section 80G of the Act.CSR expenditure, despite being a statutory obligation under section 135 of the Companies Act, 2013, does not ipso facto disentitle the assessee from claiming deduction under section 80G of the Act if all other statutory requirements are met.For AY 2020-21, the restriction on claiming deductions under Chapter VI-A for an assessee opting for taxation under section 115BAA did not apply to section 80G deductions, as the relevant amendment was effective only from AY 2021-22.The assessment order passed under section 143(3) read with section 144B of the Act is neither erroneous nor prejudicial to the interest of revenue when the Assessing Officer has examined the return and submissions and passed the order after due notice and reply.

RATIONALE:

The Court applied the statutory provisions of sections 263, 143(3), 144B, 115BAA, and 80G of the Income Tax Act, along with the Companies Act, 2013 (section 135), and relevant amendments effective from AY 2021-22.The Court relied on judicial precedents from various Benches of the Income Tax Appellate Tribunal which held that statutory CSR contributions do not lose their character as donations under section 80G if all conditions are met, and that Explanation 2 to section 37(1) barring CSR expenditure as a business deduction does not affect section 80G deductions.The Court noted that the Assessing Officer had applied mind and conducted due inquiry under sections 143(2) and 142(1) before allowing the deduction, and mere difference of opinion by the PCIT does not render the assessment order erroneous.The Court emphasized that the restriction on deductions under Chapter VI-A for companies opting for concessional tax rates under section 115BAA was not applicable for the relevant assessment year, as the amendment barring such deductions was effective only from AY 2021-22 onwards.The Court held that the assumption of jurisdiction under section 263 requires the assessment order to be "erroneous and prejudicial to the interest of the revenue" and that the AO's order allowing the deduction was a plausible view supported by judicial precedents, hence not warranting revision.

ISSUES:

Whether the approval granted by the Joint Commissioner of Income Tax (JCIT) under section 153D of the Income Tax Act was accorded mechanically without application of mind, thereby vitiating the assessment order.Whether additions to income can be made in assessments under section 153A of the Act in the absence of incriminating material found during search and seizure operations.Whether estimation or extrapolation of income is permissible in search assessments under section 153A of the Act.Whether additions based on statements of third parties are valid in assessments under section 153A when incriminating material is found.Whether expenditure incurred can be allowed as deduction against additions made under section 69C of the Act for unexplained expenditure.

RULINGS / HOLDINGS:

On the issue of mechanical approval under section 153D, the Court held that the approval should not be given "mechanically, without application of mind," and where such mechanical approval is found, it "would vitiate the assessment order itself." However, in the present case, no evidence was produced to show mechanical approval, and a mere covering letter forwarding approval was insufficient to establish non-application of mind. Therefore, the approval was presumed to be lawful and bona fide.Regarding additions in absence of incriminating material, the Court clarified that under section 153A, additions can only be made based on incriminating material found during search and seizure operations. However, once some incriminating evidence is found, the Assessing Officer is empowered to make all other additions irrespective of whether the additions are directly based on the seized incriminating material or not, as per the Supreme Court ruling in PCIT vs. Abhisar Buildwell P. Ltd.The Court upheld the permissibility of estimation or extrapolation of income in search assessments, relying on the judgment in CIT vs. Hotel Meriya, which recognizes that "the assessing officer is authorised and empowered to make block assessment in a judicious manner on the basis of the materials disclosed during search." The Court emphasized that uniform concealment of income during the block period can be presumed based on consistent practices revealed during search.The Court rejected the contention that additions based solely on statements of third parties are invalid where incriminating material is found, affirming the principle that once jurisdiction under section 153A is assumed and incriminating material is found, the AO may assess total income taking into account all material available.Regarding expenditure deduction against additions under section 69C, the Court held that the proviso to section 69C "expressly prohibits the allowance of expenditure as a deduction in case of addition made on account of unexplained expenditure," and therefore no expenditure deduction is allowable in such cases.

RATIONALE:

The Court applied statutory provisions of the Income Tax Act, particularly sections 132, 153A, 153D, and 69C, alongside binding precedents including Supreme Court decisions in Rajesh Kumar vs. DCIT, Sahara India (Firm) vs. CIT, and PCIT vs. Abhisar Buildwell P. Ltd.The Court distinguished the facts of the present case from other decisions where mechanical approval was found, noting the absence of material to prove non-application of mind and reliance on the decision of the Hon'ble Bombay High Court in Chhagan Chandrakant Bhujbal vs. ITO, which emphasized that mechanical approval cannot be presumed merely on timing or location differences.The Court reaffirmed the principle that in block assessments under section 153A, additions must be grounded on incriminating material found during search, but once such material exists, the AO's jurisdiction extends to assess total income including other undisclosed income.The Court recognized the legislative intent behind allowing estimation in block assessments, acknowledging practical difficulties in obtaining documentary evidence for every concealment, as elucidated in CIT vs. Hotel Meriya.The Court noted the statutory prohibition on allowance of expenditure against additions under section 69C to prevent unjustified deductions for unexplained expenditure.No dissenting or concurring opinions were recorded in this judgment.

ISSUES:

Validity and jurisdiction of order passed by CPC under section 143(1) of the Income Tax Act.Eligibility of deduction under section 80P(2)(d) of the Income Tax Act on interest income earned by a cooperative society from fixed deposits with cooperative banks.Justification of charging interest under sections 234B and 234C of the Income Tax Act.Effect of non-compliance by the assessee during appellate proceedings on the merits of the appeal.

RULINGS / HOLDINGS:

The order passed by CPC and confirmed by JCIT(A) is not invalid or bad in law merely because the assessee failed to produce supporting evidence or respond to notices; "Mere claiming that the CPC erred in making the adjustments does not give an edge to the appellant."The assessee is not eligible to claim deduction under section 80P of the Act on interest income earned from fixed deposits with a non-cooperative bank (Bank of Baroda), but is eligible to claim deduction on interest income earned from fixed deposits with a cooperative bank (Ahmedabad District Cooperative Bank), as per settled judicial precedents.The charging of interest under sections 234B and 234C was not specifically upheld or overturned in the judgment, but the appeal was partly allowed on the deduction issue.Non-compliance by the assessee during appellate proceedings, despite multiple notices and opportunities, justifies dismissal of grounds raised without supporting evidence; "Opportunity of being heard is central to any adjudication process but that does not absolve the appellant from non-submission of evidences."

RATIONALE:

The legal framework applied includes section 143(1) (processing of return), section 80P(2)(d) (deduction available to cooperative societies on income from cooperative banks), and appellate provisions under the Income Tax Act.The court relied heavily on recent authoritative judicial precedents from the jurisdictional High Court affirming that interest income earned by a cooperative society from fixed deposits with a cooperative bank is eligible for deduction under section 80P(2)(d) of the Act.The court emphasized procedural compliance and the principle that appellate proceedings require active participation and submission of evidence by the appellant to challenge the validity of the order passed by CPC.The judgment reflects no doctrinal shift but reinforces settled principles regarding the scope of deduction under section 80P(2)(d) and the necessity of procedural adherence in appellate proceedings.

ISSUES:

Whether the adjustment made under Section 143(1) of the Income Tax Act, disallowing exemption claimed under Section 10(23AAA), was lawful and proper.Whether the appellate authority erred in confirming the adjustment without considering alternate exemption claims under Sections 10(25) or 10(38) read with Section 2(38) of the Act.Whether the appellate authority was empowered to adjudicate on alternate legal pleas raised for exemption not claimed in the original return of income.Whether the income was chargeable as "Gross Income" instead of "Net Income" under Section 143(1) of the Act.Whether deduction under Section 57 of the Income Tax Act was rightly disallowed.

RULINGS / HOLDINGS:

The adjustment made under Section 143(1) disallowing exemption under Section 10(23AAA) was procedurally in accordance with law, as the Centralized Processing Centre issued intimation under Section 143(1)(a) proposing the adjustment.The appellate authority erred in not examining the alternate exemption claims under Sections 10(25) or 10(38) read with Section 2(38) of the Act, despite being empowered to do so and the assessee raising such claims at the appellate stage.Appellate authorities are vested with the power to adjudicate on alternative legal pleas raised by the assessee even if such claims were not made in the return of income.The question of charging "Gross Income" instead of "Net Income" and disallowance of deduction under Section 57 were not specifically addressed in the appellate order and thus remain open for consideration.

RATIONALE:

The legal framework applied includes Section 143(1) of the Income Tax Act governing processing and adjustment of returns, and Sections 10(23AAA), 10(25), 10(38), and 2(38) relating to exemptions available to trusts and other entities.Precedent and established legal principle recognize that appellate authorities have jurisdiction to consider alternate claims for exemption raised at the appellate stage, even if omitted in the original return, ensuring substantive justice.The appellate authority's refusal to consider alternate exemptions was a procedural error, as the limited scope of adjustment under Section 143(1) does not restrict the appellate authority's broader adjudicatory powers.The matter was remanded to the Jurisdictional Assessing Officer for fresh examination of alternate exemption claims after providing an opportunity to the assessee to present evidence, without expressing any opinion on the merits.

ISSUES:

Validity of reopening assessment under section 147 read with section 148 of the Income Tax Act, 1961 based on seized ledger recovered during search under section 132.Admissibility and evidentiary value of seized electronic ledger entries (Tally data) reflecting cash and cheque payments for land purchase.Whether unexplained cash payments recorded in seized material constitute unexplained investment under section 69 of the Income Tax Act.Whether denial of opportunity to cross-examine the person in possession of seized material violates principles of natural justice and affects validity of assessment.Whether addition under section 69 can be deleted on account of prior declaration and taxation of the undisclosed income under the Income Declaration Scheme (IDS), 2016.

RULINGS / HOLDINGS:

Reopening of assessment under section 147 read with section 148 was valid as the Assessing Officer had "reasonable belief" supported by tangible, verifiable and corroborated material recovered during search, justifying the reopening.The seized electronic ledger (Tally data) containing detailed narration of cheque and cash payments bearing the assessee's name and matching bank statements and registered sale deed was held to have substantial evidentiary value and was not a casual or generic document nor prepared for educational purposes.The unexplained cash payments of Rs.5.30 crore recorded in the seized ledger but not reflected in the assessee's books constituted unexplained investment under section 69 and were correctly added to income by the Assessing Officer.Denial of opportunity to cross-examine the CFO or author of the ledger did not violate principles of natural justice as the assessee was supplied with the seized material, given opportunity to rebut the entries, and failed to demonstrate any specific prejudice caused by such denial.The addition under section 69 was deleted by the Commissioner of Income Tax (Appeals) on the ground that the assessee had already declared and paid tax on the undisclosed income under IDS, 2016, and taxing the same amount again would result in double taxation, contrary to binding CBDT Circular No. 27/2016 dated 14.07.2016.

RATIONALE:

The Court applied the statutory framework under sections 132 (search and seizure), 143(3), 147, 148, and 151 of the Income Tax Act, 1961, and section 69 relating to unexplained investments.The reopening was upheld based on the Assessing Officer's recorded reasons and sanction, supported by tangible evidence recovered from a party connected to the transaction, consistent with settled law on reasonable belief for reopening assessments.The evidentiary weight of electronic data retrieved during search was affirmed, rejecting the assessee's claim that the ledger was for educational purposes, following principles that contemporaneous electronic records bearing direct links to the assessee's transactions are admissible and reliable.The Court relied on precedent and authoritative rulings, including the principle that denial of cross-examination does not automatically vitiate proceedings absent demonstrated prejudice, as elaborated in the Calcutta High Court decision on natural justice and audi alteram partem principles.The deletion of addition was grounded on the binding CBDT Circular No. 27/2016, which prohibits reopening or reassessment of income declared and taxed under IDS to avoid double taxation, reflecting a doctrinal adherence to the principle against double jeopardy in tax assessments.The appellate authority's power to admit official records such as IDS declaration forms, even if not produced before the Assessing Officer, was recognized as co-terminous with the AO's powers, and such documents do not require further investigation to be relied upon.

ISSUES:

Whether a Bank Guarantee described as a "continuing guarantee" that was not revoked during its currency can be enforced after its stated expiry date without a written claim lodged within the validity period.Whether the failure to lodge a written claim within the validity period of the Bank Guarantee precludes enforcement of the guarantee thereafter.Whether a personal guarantee by a Bank survives the completion of a Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016.Whether a writ petition under Article 226 of the Constitution is maintainable to enforce a Bank Guarantee against a Bank considered a "State" under Article 12 of the Constitution.

RULINGS / HOLDINGS:

The Bank Guarantee, although described as a "continuing guarantee," includes a clause that limits the Bank's liability to claims lodged in writing on or before the expiry date, and since no such claim was lodged within the validity period, the guarantee cannot be enforced thereafter.The absence of a written claim within the validity period of the Bank Guarantee "precludes the enforcement of the guarantee" and the Bank is "released and discharged from all liabilities" under the guarantee.The argument that a personal guarantee survives the CIRP does not apply because the guarantee had expired prior to the CIRP, and no timely claim was made during its currency.Although ordinarily writ petitions are not entertained for enforcement of contracts such as Bank Guarantees, even if the Bank is considered a "State" under Article 12, no relief can be granted where the contractual conditions for enforcement are not met.

RATIONALE:

The Court applied the contractual interpretation of the Bank Guarantee document, emphasizing the non obstante clause which restricts the Bank's liability to claims made in writing within the guarantee's validity period.The Court relied on the principle that a Bank Guarantee is a contract and must be enforced according to its terms, including limitation periods for claims.The Court noted that the claim was rejected during the CIRP due to limitation and was not challenged, reinforcing that limitation bars belated claims.The Court rejected the submission that personal guarantees survive CIRP where the guarantee itself had expired prior to CIRP initiation.The Court acknowledged the unusual nature of entertaining a writ petition for enforcement of a Bank Guarantee but found no basis to grant relief given the contractual and limitation bar.

ISSUES:

Whether the declared retail sale price of imported goods is liable to be rejected and re-determined under Rule 6 of the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 read with Section 4A of the Central Excise Act, 1944.Whether the duty exemption claimed under Notification No. 98/2009-Cus dated 11.09.2009 for goods imported against Duty Free Import Authorisation (DFIA) scrips is admissible.Whether the demand of differential duty under Section 28 of the Customs Act, 1962 along with interest is sustainable.Whether the imported goods are liable to confiscation under Sections 111(d), 111(m), and/or 111(o) of the Customs Act, 1962.Whether penalties under Sections 112(a), 112(b), 114A, and 114AA of the Customs Act, 1962 are imposable on the appellant and the Director.Whether statements recorded under Section 108 of the Customs Act are admissible as evidence without compliance with Section 138B of the Customs Act.Whether the imported lacquers were mis-utilized by importing goods meant for wood application instead of leather industry inputs under DFIA scrips.

RULINGS / HOLDINGS:

The declared retail sale price could not be rejected or re-determined as there was no statutory machinery prescribed under the Customs Tariff Act to determine retail sale price for imported goods, and the department failed to demonstrate that the declared price was incorrect; thus, rejection under Rule 6 was not justified.The duty exemption under Notification No. 98/2009-Cus is admissible as the imported lacquers were "capable of being used in the leather industry as well as in the wood industry," and the appellant was entitled to benefit under the DFIA scheme despite the original exporters being leather exporters.The demand of differential duty and interest under Section 28 of the Customs Act is unsustainable due to the incorrect rejection of declared retail sale price and the admissibility of duty exemption under DFIA.The goods are not liable to confiscation under Sections 111(d), 111(m), and/or 111(o) of the Customs Act, as the confiscation was based on statements recorded under Section 108 which were inadmissible without compliance with Section 138B.Penalties imposed under Sections 112(a), 112(b), 114A, and 114AA of the Customs Act are not sustainable as there was no mis-declaration of retail sale price or mis-utilization of DFIA scrips proven against the appellant or the Director.Statements recorded under Section 108 of the Customs Act cannot be relied upon as evidence unless the person making the statement is examined as a witness before the adjudicating authority and the authority forms an opinion to admit such statements in the interests of justice, as mandated by Section 138B; failure to follow this procedure renders such statements inadmissible.The allegation of mis-utilisation of DFIA scrips by importing lacquers meant for wood application instead of leather inputs is rejected based on expert test reports and policy circulars clarifying that alternative inputs capable of being used in export products are permissible under the DFIA scheme.

RATIONALE:

The Court applied the statutory framework under the Central Excise Act, 1944 (Section 4A), Customs Act, 1962 (Sections 12, 14, 28, 111, 112, 114A, 114AA, 138B), and the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008, along with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.The Court relied on precedents establishing that retail sale price determination machinery under the Central Excise Rules does not automatically apply to customs valuation for CVD, and that differential duty demands cannot be raised without prescribed statutory procedure.The Court considered expert chemical test reports and DGFT policy circulars clarifying the flexibility in use of alternative inputs under the DFIA scheme, rejecting narrow interpretations limiting usage only to leather industry.The Court emphasized the mandatory procedural safeguards under Section 138B of the Customs Act for admissibility of statements recorded during inquiry, requiring examination of the witness before the adjudicating authority and an opportunity for cross-examination, to prevent reliance on potentially coerced statements.The Court noted a doctrinal consistency with prior Tribunal decisions affirming that duty exemption under DFIA must be allowed if imported inputs are capable of being used in export products, even if originally issued to exporters of different but related products.The Court rejected the Principal Commissioner's findings where they conflicted with statutory provisions and established case law, setting aside the order imposing duty demands, confiscation, and penalties.

ISSUES:

Whether the observations made by the Tribunal regarding non-cooperation of the suspended directors with the Insolvency Resolution Professional (IRP)/Resolution Professional (RP) and Liquidator are justified.Whether the suspended directors were duly served with notices, summons, and warrants issued by the Adjudicating Authority during the Corporate Insolvency Resolution Process (CIRP) and liquidation proceedings.Whether the appellants were denied the opportunity of being heard, thereby violating the principles of natural justice.Whether the appellants can be considered "aggrieved persons" under Section 61 of the Insolvency and Bankruptcy Code (IBC) to maintain the appeal.Whether the observations recorded by the Tribunal in the impugned order can be interfered with or set aside.

RULINGS / HOLDINGS:

The Tribunal's observation that the suspended directors "have not been cooperating with the IRP/RP and with the Liquidator to provide any statutory books and accounts" and that despite issuance of private notice, summons, and warrants "no one appeared and provided any details" is supported by the record and is justified.The appellants were duly served with notices and communications on their email and postal addresses as per the Ministry of Corporate Affairs (MCA) database, and failure to update their addresses does not absolve them of service; hence, service was effective.The appellants were not denied the opportunity of being heard, and the issuance of coercive process against them demonstrates that the principles of natural justice were not violated.The appellants' claim to be aggrieved persons under Section 61 of the IBC is not sustained, as the appeal appears to be filed primarily to defend criminal prosecution initiated against them rather than genuine grievance against the Tribunal's observations.The observations recorded in paragraph 7(ii) of the impugned order are factual narrations based on material on record and cannot be interfered with or set aside.

RATIONALE:

The Court applied the provisions of the Insolvency and Bankruptcy Code, 2016, including Section 9 (initiation of CIRP), Section 19 (powers of the Adjudicating Authority to summon persons), Section 60(5) (time limit for completion of CIRP and liquidation), Section 61 (appeal to the Appellate Tribunal), and Section 70 (prosecution of officers for non-cooperation).The Court relied on the MCA records to determine the correctness of service of notices and communications to the appellants and emphasized the legal obligation of directors to update their addresses under Rule 12 of the Companies (Appointment and Qualification of Directors) Rules, 2014.The Court noted that the appellants failed to appear despite multiple notices, summons, and coercive processes, and that the Resolution Professional had filed complaints under Section 70 of the IBC leading to criminal prosecution, which is pending adjudication.The Court distinguished the reliance on the Supreme Court decision in Uma Nath Pandey and Ors. v. State of U.P. and Anr., holding that no violation of natural justice occurred as the appellants were given adequate opportunity and process.The Court affirmed that the observations in the impugned order are "narration of facts" necessary for deciding whether to continue liquidation proceedings or order dissolution, and thus are not subject to interference absent any error or illegality.