TMI Tax Updates - e-Newsletter
January 22, 2013

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. Goods sold from branded outlets are Excisable – Hon’ble SC

   By: CA.Ankit Gulgulia

News

1. CCI Issues Cease And Desist Order Against Northern India Motion Pictures Association

2. New President and Vice-President of the Institute of Company Secretaries of India

3. Global crude oil price of Indian Basket Declines on 18.01.2013 to US$ 108.92/bbl

Highlights / Catch Notes

Income Tax

• Tax deduction u/s 80IB(11) denied for profits from potato trading claimed by assessee.

  Case-Laws - AT : Deduction u/s 80IB(11) - no deduction could be allowed on the profits earned on potato trading claimed by the assessee. - AT
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• Revised Tax Return for 2005-06 Deemed Valid; Section 143(1)(a) Intimation Not an Assessment Order.

  Case-Laws - HC : Refund claim - the intimation u/s 143(1)(a) cannot be treated to be an order of assessment - for A.Y. 2005- 06 revised return filed on 26.9.2006 was thus validly filed within limitation. - HC
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• Assessing Officer Directed to Allow Depreciation on Machinery Leased Without Commercial Expediency Based on Written Down Value.

  Case-Laws - HC : Depreciation On Plant & Machinery - Assessee had let out the machinery - Without any commercial expediency - AO directed to allow depreciation on the WDV of P&M - HC
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• High Court Sides with Assessee on Inventory Devaluation Provisions; Separate Profit and Loss Reflection Allowed.

  Case-Laws - HC : Disallowances of provision - Devaluation - Inventory of work in progress and finished goods - Devaluation amount was reflected separately in the P & L only because of the presentation. - In favour of assessee - HC
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• Court Rules on Limitations of Presumptions in Undisclosed Income Cases u/s 292C and Section 132(4A.

  Case-Laws - HC : Undisclosed income - the plea relating to presumption available u/s 292C in respect of documents etc. seized u/s 132(4A) being available to the revenue, yet the revenue is unable to derive any benefit therefrom - HC
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• Section 10B allows offsetting losses from a Section 10B unit against income from other sources, despite implied restrictions.

  Case-Laws - AT : Setting off of loss of Sec.10B unit from the income under other heads - there is intrinsic material in Section 10B to indicate that such a prohibition was not within the contemplation of the Legislature. - AT
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• Court Rules Depreciation Allowed on Capitalized Technical Know-How Payments Without TDS Deduction u/s 40(a)(i.

  Case-Laws - HC : Disallowance u/s 40(a)(i) - Payments made for technical know-how which had been capitalized, no TDS has been deducted thereon - no reason to disallow depreciation on such capitalized amount - HC
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Customs

• Court Directs Revenue Authorities to Consider Amendment of Bills of Entry Requested Before Assessment by Petitioner.

  Case-Laws - HC : Amendment of the Bills of Entry - The amendment was sought for even prior to assessment by the appropriate officer. - Revenue directed to consider the petitioner's claim for amendment - HC
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• Petitioner Eligible to Request Provisional Release of Non-Prohibited Goods.

  Case-Laws - HC : Plea for provisional release of the goods - if the goods are not prohibited goods, which admittedly appears to be so, the petitioner has a right to seek provisional release of the goods. - HC
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• Assessee Eligible for Duty Remission on Goods Lost in Fire Pre-Clearance for Home Consumption.

  Case-Laws - AT : Remission of duty – the assessee are entitled to 'remission of duty' paid on the goods lost or destroyed by fire at any time before physical clearance of the goods for home consumption. - AT
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Corporate Law

• Secured Creditors Treated Equally in Winding Up: No Distinction Among Different Secured Creditors in Company Law.

  Case-Laws - HC : Winding up - the words used 'debts due to secured creditors….' mean that the law does not draw any distinction between the secured creditors. - HC
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Service Tax

• No Service Tax on Works Contracts Before June 1, 2007; Predeposit of Dues Waived u/s 65(105)(zzzza).

  Case-Laws - AT : Works Contract Service - Section 65(105)(zzzza)- prior to 1.6.2007 no service tax was payable on such contracts. - predeposit of dues waived - AT
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• Appellants Overcharged Importers on Airfreight; Failed to Prove Case for Waiver of Excess Charges.

  Case-Laws - AT : Cargo handling services - Amount collected from the importers as airfreight charges which were in excess of the actual freight charges - appellants have not made out a prima facie case for total waiver. - AT
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• Appellant Can Use Cenvat Credit to Pay Service Tax for Commissions to Overseas Agents Under Reverse Charge.

  Case-Laws - AT : Utilisation of Cenvat credit for payment under Reverse charge - the appellant is entitled to utilise the Cenvat credit for discharge of Service Tax for the commission paid to the overseas agents. - AT
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Central Excise

• Assessee's Appeal Succeeds: No Payment of 10% Required for SEZ Goods Due to Cenvat Credit Account Issues.

  Case-Laws - AT : Cenvat Credit - Non preparation of separate accounts - demand to pay 10% of the price (excluding taxes) of the goods cleared to the SEZ developer - appeal of assessee allowed. - AT
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• Duty Refund for Jammu & Kashmir Units Doesn't Require Specific Khasra Numbers Under Exemption Notification No. 56/2002-C.E.

  Case-Laws - AT : Refund of the duty paid through PLA - J & K - Exemption Notification No. 56/2002-C.E – it is not the condition of the Notification that the unit must also be located in the Khasra numbers mentioned against the each industrial area. - AT
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• Penalties u/r 25 or Section 11AC not applicable for late fortnightly duty liability disclosed in RT-12/ER-1.

  Case-Laws - AT : Non-payment of duty - In this case is simply failure to discharge fortnightly duty liability by due date on two occasions and this non-payment had been disclosed in the RT-12/ER-1 returns. Thus, penalty on the respondent under Rule 25 or Section 11AC would not be attracted. - AT
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VAT

• High Court Rules Synthetic Wire Fabric as Textile under West Bengal Sales Tax Acts of 1994 and 1941.

  Case-Laws - HC : West Bengal Sales Tax Act, 1994 - West Bengal Finance (Sales Tax) Act, 1941 - Classification - Synthetic Wire Fabric - it is textile items. - HC
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Case Laws:

• Income Tax

• 2013 (1) TMI 459
  Deduction u/s 80IB(11) - Gross profit earned on trading of potatoes – Held that:- As decided in assessee’s own case Section 80IB(11) provides for deduction in respect of the cases of Industrial Undertaking deriving profit from business of setting up and operating cold chain facility for agricultural produce. However, in the above provisions, no such deduction is permissible in respect of potato trading. Therefore, no deduction could be allowed on the profits earned on potato trading claimed by the assessee. In favour of revenue Interest on Loan - Loan has been separately taken for own stock of potato, therefore, the interest pertaining to business of trading in potato and business of Cold Storage are required to be separately considered for both activities of business – Held that:- Following the decision in assessee’s own case that If deduction u/s. 80IB(11) is not allowable on potato trading u/s. 80IB, then the interest paid on CC limit for potato trading may be allowed as deduction. We are of the view that the matter requires reconsideration at the level of the A.O. The assessee is able to prove prima facie that bank has granted cash credit limit for trading activities of potatoes, on which the assessee paid interest. If any interest is paid by the assessee in respect of capital borrowed for the purpose of business, the interest paid thereon shall be allowable as deduction. Remand back to AO Deduction u/s 80IB(11) on interest income – Held that:- Where deduction u/s 80IB(11) has not been allowed in respect of profit on trading of potato. Therefore, there is no question of allowing deduction u/s 80IB(11) on interest income. In favour of revenue Disallowance u/s 40(a)(ia) – TDS not deducted on payment made to contractors u/s 194C - payment to each of the contractor was more than Rs.50,000 – Held that:- The payments were made to different labourers as the CIT(A) has rightly held that no evidence is furnished in support of the contention. Following the decision in case of Merilyn Shipping & Transports (2012 (4) TMI 290 - ITAT VISAKHAPATNAM) that because without prejudice to the grounds as mentioned above section 40a(ia) is applicable only in the cases where the amount is payable on the last day of previous year. alternate submission of the assessee that on identical set of facts the issue has been sent back to the file of A.O. Remand back to AO

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• 2013 (1) TMI 458
  Penalty u/s 271(1)(c) – Concealment of income - Initiation of penalty proceeding - Assessee contended that the penalty proceedings had been initiated by the A.O. without recording his 'satisfaction' in the assessment order in respect of the alleged concealment and furnishing of inaccurate particulars of income Held that:- Following the decision in case of PEAREY LAL AND SONS (EP) LTD. (2008 (9) TMI 142 - PUNJAB AND HARYANA HIGH COURT) A plain reading of the aforesaid provision clearly spells out that wherever an A.O. during the course of assessment or reassessment proceedings records a direction for initiation of penalty proceedings under Clause (c) of sub-section (1) of Section 271, the same shall be deemed to be satisfaction recorded by the A.O. for initiation of penalty proceedings – Remand back to Tribunal

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• 2013 (1) TMI 457
  Addition u/s 43B - Employer's contribution to P.F. and E.S.I - Paid by the assessee before the filing of the return – Held that:- Following the decision in case of Alom Extrusions Limited (2009 (11) TMI 27 - SUPREME COURT) that that the amendment by Finance Act, 2003, whereby second proviso to Section 43B was deleted, to be curative in nature and was operative from 1.4.1988 (when first proviso came to be inserted). Once that was so, the appellant was entitled to deduction on account of contributions made to ESI and PF fund before the filing of the income tax return. In favour of assessee

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• 2013 (1) TMI 456
  Refund claim - Whether an intimation u/s 143(1)(a) would constitute assessment - Petitioner had omitted to claim the credit in original return of income u/s 139(1) on 26.7.2005 for the A.Y. 2005-06 - Intimation regarding processing of return forwarded to assessee u/s 143(1)(a) on 8.12.2005 – Assessee filed a revised return for claiming refund on 26.9.2006 u/s 139(5) Held that:- Following the decision in case of Rajesh Jhaveri Stock Brokers P. Limited (2007 (5) TMI 197 - SUPREME COURT) that the expressions “intimation” and “assessment order” have been used at different places. The contextual difference between the two expressions has to be understood in the context the expressions are used. Assessment is used as meaning sometimes “the computation of income”, sometimes “the determination of the amount of tax payable” and sometimes “the whole procedure laid down in the Act for imposing liability upon the tax payer”. In the scheme of things, the intimation u/s 143(1)(a) cannot be treated to be an order of assessment There was no regular assessment framed in the present case. Therefore, the assessee for A.Y. 2005- 06 could file the revised return after complying with the provisions of Sec. 139(5) up to 31.3.2007. The revised return filed on 26.9.2006 was thus validly filed within limitation. Consequently, the claim of the petitioner-assessee for the refund of the additional tax deposited is valid and justified – In favour of assessee

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• 2013 (1) TMI 455
  Depreciation On Plant & Machinery - Assessee had let out the machinery - Without any commercial expediency - Asset not been used for its business purposes - The amount of lease was not increased in spite of providing additional machinery - Held that:- Once it was held that the purchase of the machinery and letting out the same was not in doubt, the depreciation could not be disallowed for the years subsequent to the assessment year 1994-95. Since depreciation on plant and machinery had been allowed in the earlier assessment year and these assets were used for the purpose of assessee's business, for the assessment year under reference. Directing the AO to allow depreciation on the WDV of P&M – In favour of assessee

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• 2013 (1) TMI 454
  Disallowances of provision - Devaluation of stock - Inventory of work in progress and finished goods - The treatment followed by the company was that while determining the manufacturing/trading account valuation of inventory was carried and the realisable value determined - The amount of depreciation/impairment of the finished goods and work in progress had to be reflected separately as per the Accounting Standards – The amount of devaluation has been reflected in the Schedule by reducing the difference between the opening and closing stock and taking the balance to the P & L – Held that:- As concluded from the facts of the case the debit had to be made to the P & L an extra-ordinary item arising out of the devaluation/depreciation of the inventory. Devaluation amount was reflected separately in the P & L only because of the presentation. Tribunal following its earlier order dated 7.11.2008 in the case of the assessee for the A.Ys 2000-01 and 2001-02 passed in ITA Nos.3952 and 2558. The revenue fairly submitted that no appeal had been filed against the aforesaid order of the Tribunal. no question of law much less substantial question of law - In favour of assessee

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• 2013 (1) TMI 453
  Interest levied u/s 234B - claim of the assessee of exemption u/s 9(1)(i) was rejected - DR relied on amendment to sec 209 inserted by the Finance Act, 2012 - Held that:- The aforesaid proviso inserted by the Finance Act, 2012 is prospective in nature with no retrospective effect. The proviso was brought into operation w.e.f. 1.4.2012 whereas the AY involved are 2005-06 and 2006-07, therefore not in agreement with the DR because the said proviso is not retrospective in nature. The language used in section 209(1) is regarding payment of advance tax in the financial year, therefore, the proviso is not attracted for the impugned assessment year. As decided in DIT v. Jacabs Civil Incorporated/Mitsubishi Corpn. [2010 (8) TMI 37 - DELHI HIGH COURT] that since the assessee is not liable for advance tax, therefore, cannot be charged interest for failure to pay advance tax. Also see CIT v. Sedco Forex International Drilling Co. Ltd. [2003 (10) TMI 40 - UTTARANCHAL HIGH COURT] - in favour of assessee.

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• 2013 (1) TMI 452
  Depreciation u/s 32 – Moulds and moulding tools – Higher rate of depreciation @ 40% - Held that:- For the purpose of considering the relief of depreciation @ 40%, in the interest of justice, the matter should be remitted back to the A.O. for the purpose of finding out whether recognition has been granted to the said unit as a separate unit. If the unit established is a separate unit, then, as held in the decision in Amco Batteries Limited (1989 (4) TMI 6 - KARNATAKA HIGH COURT), the assessee will be entitled to claim depreciation @ 40%. Remand back to AO

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• 2013 (1) TMI 451
  Undisclosed income - Presumption as to assets, books of account u/s 292C – During search, certain documents and material were found and the same were seized vide a Panchnama - Any documents/Books of accounts found from the possession of the assessee belongs to such persons and contents of such documents are true - Difference in physical stock in compare to the books of account - entries found noted on the front side as well as on the back-side - no description of the nature of entries made therein - whether the entries reflect purchases effected by the assessee or sales effected by the assessee - document is unsigned - the nature and ownership of entries found in the seized document - dumb document - corroborative evidence Held that:- document was a dumb document inasmuch as it does not contain any intelligible narration in support of the inference drawn by the Assessing Officer that it reflected sales carried out by the assessee outside the regular books of account. Revenue was unable to demonstrate that the entries where there were no names of purchasers should have been added to the undisclosed income of the assessee alone particularly when the document related to entries concerning other purchasers mentioned therein as well. On the basis of documents which were seized from the possession of Assessee’s, son of the partner of the firm did not disclose any material to establish that undisclosed income, as deleted by the Tribunal, had arisen in this case. Thus, the plea relating to presumption available u/s 292C in respect of documents etc. seized u/s 132(4A) being available to the revenue, yet the revenue is unable to derive any benefit therefrom - In favour of assessee

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• 2013 (1) TMI 450
  Cash Credit u/s 68 - Creditworthiness and genuineness of the transaction - Amount received by the assessee-company from share-holders/share-applicants, prior to the commencement of its business operations would be a capital receipt or income from undisclosed sources u/s 68 - Total investment in the share capital was Rs. 1.49 Crore and unsecured loans stood at Rs. 13.,50 lakhs - Tribunal held that share capital or loans before the commencement of commercial operations were of capital nature Held that:- Following the decision in case of Power Drugs Ltd. (2011 (7) TMI 235 - PUNJAB AND HARYANA HIGH COURT) unequivocal terms held that the primary onus was on the assessee was to establish the identity, creditworthiness and genuineness of the transaction in order to escape from the provisions of section 68 The statutory requirement for treating any amount as income of the assessee u/s 68 is where the assessee fails to justify and establishes the genuineness of the entry in the books of account - In favour of revenue

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• 2013 (1) TMI 449
  Setting off of loss of Sec.10B unit from the income under other heads - The assessee is an Export Oriented Unit (EOU) u/s 10B - The Revenue stand is that the same cannot be set off as it is section 10B unit, which is all together a separate entity - Held that:- Following the decision in case of Patni Computers system Ltd that there is no provision in Section 10B by which a prohibition has been introduced by the Legislature in setting off of a loss which is sustained from one source falling under the head of profits and gains of business against income from any other source under the same head. On the other hand, there is intrinsic material in Section 10B to indicate that such a prohibition was not within the contemplation of the Legislature. Remand back in favour of assessee

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• 2013 (1) TMI 448
  Addition on account of late payment of PF – Held that:- Following the decision in case of Alom Extrusions Limited (2009 (11) TMI 27 - SUPREME COURT) wherein it has been held that Second Proviso to Section 43B omitted by F.A, 2003 with effect from 1.4.2004 was clarificatory in nature and was to operate retrospectively. Once that is so, in the present case, the respondent-assessee was entitled to deduction in respect of employer and employee's contribution to ESI and Provident Fund as the same had been deposited prior to the filing of the return u/s 139(1) – In favour of assessee Disallowed claim for depreciation u/s 40(a)(i) - Payments made for technical know-how which had been capitalized, no TDS has been deducted thereon - Revenue disallow depreciation of such know-how – Held that:- Revenue was unable to substantiate that in the absence of any requirement of law for making deduction of tax out of the expenditure on technical know-how which was capitalized and no amount was claimed as revenue expenditure, the deduction could be disallowed u/s 40(a)(i). There was also no reason to disallow depreciation on such capitalized amount as the aforesaid provision does not deal with deduction of depreciation - In favour of assessee

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• Customs

• 2013 (1) TMI 447
  Writ of Mandamus - seeking amendment of the Bills of Entry as requested by the petitioner company in their letter dated 19.10.2012 - Held that:- As the supplier sent the revised invoice for the correct quantity as per packing list bearing the same date & on receipt of the clarification from the supplier and the revised invoice, petitioner submitted a letter dated 19.10.2012 to the first respondent to amend the three Bills of Entry to show the correct quantity of silk fabrics imported. Pleading that the error was realised by the petitioner and have taken corrective action immediately, they sought for amendment of the Bills of Entry. The amendment was sought for even prior to assessment by the appropriate officer. The issue whether the amendment of the Bills of Entry can be granted or not is for the authority to decide. The petitioner has made a request for amendment and that has to be considered on merits either way in such view of the matter, the first respondent is directed to consider the petitioner's claim for amendment of the Bills of Entry as per the request letter dated 19.10.2012. Plea for provisional release of the goods - if the goods are not prohibited goods, which admittedly appears to be so, the petitioner has a right to seek provisional release of the goods. Petitioner is entitled to give a request along with a copy of this order and the authority will consider and pass appropriate orders for provisional release of the goods in terms of the relevant provisions of the Customs Act.

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• 2013 (1) TMI 446
  Remission of duty – Whether remission of duty can granted - where goods destroyed in bonded warehouse - and out of charge order was given before fire took place - Physical clearance for home consumption - Bonding bill of entry - Ex-bond bill of entry for ex-bonding the goods – Held that:- Yes, following the decision in case of MOUNT SHIVALIK BREWERIES LTD. (2003 (1) TMI 120 - HIGH COURT OF DELHI) that sub-section (1), with which we are concerned herein provides for 'remission of duty', where goods are lost or destroyed at any time 'before clearance of goods' for home consumption. Unlike sub-section (2), this subsection does not use the expression 'before an order for clearance of goods' for home consumption has been made. Obviously, there is a distinction between 'an order for clearance for home consumption' and 'clearance for home consumption', inasmuch as in our opinion, the latter expression postulates actual clearance of the goods for home consumption from the Customs custody after an order for clearance for home consumption is made. Therefore, the assessee are entitled to 'remission of duty' paid on the goods lost or destroyed by fire at any time before physical clearance of the goods for home consumption. In favour of assessee Double benefit of duty – Remission of duty – Goods lost by fire - Insurance of goods - Goods were insured by a 'comprehensive insurance policy', therefore, the assessee shall get the 'double benefit of duty' both from the bonded warehouse and from the department – Held that:- Following the decision in case JINDAL VIJAYANAGAR STEEL LTD. (2005 (11) TMI 151 - CESTAT, BANGALORE) had clearly spelt out that if the goods are insured, it does not disentitle the assessees from the claim of refund of duty and interest paid thereon. In favour of assessee

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• Corporate Laws

• 2013 (1) TMI 445
  Winding up - Whether only the secured creditors having the first charge should be taken into consideration while determining ratio contemplated under sections 529 and 529A and not the secured creditors having the second charge - Held that:- No classification of secured creditors on basis of charge as Section 529(1) provides for, 'the respective rights of secured and unsecured creditors……'. It does not classify the secured creditors on the basis of the first chargeholder or the second chargeholder or so on. Similarly, in proviso to clause (c) of sub-section (1) of section 529, the words used are, 'security of every secured creditor….' Meaning thereby the law does not make any distinction between these secured creditors on the basis of their holding charge being the first charge or the second charge or so on. Similar is the position so far as section 529A is concerned as clause (b) of sub-section (1) of section 529A states that the words used 'debts due to secured creditors….' mean that the law does not draw any distinction between the secured creditors. Thus law does not make any distinction between secured creditors on basis of their holding charge being first charge or second charge or so on for purpose of sections 529 and 529A.

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• Service Tax

• 2013 (1) TMI 464
  Works Contract Service - Section 65(105)(zzzza)- Whether Rule 3(3) of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 will apply to a situation where an assessee is wanting to switch over to a new scheme - business of supply and installation of electrical transmission towers - Erection and Commissioning - Section 65(105)(zzd) - Revenue argued that new scheme applicable only in respect of a new contract commencing after 1.6.2007 and for old contract for which they were paying service tax under "Erectioning and Commissioning", they cannot avail the benefit of the new scheme - Held that:- It would appear that Rule 3(3) of the said Rules prohibits switching from works contract scheme to the other applicable entries during the currency of the contract. Following the decision in case of ABB Ltd. (2010 (12) TMI 147 - CESTAT, BANGALORE) to the effect that prior to 1.6.2007 no service tax was payable on such contracts. Keeping these aspects in view, we grant waiver of predeposit of dues. In favour of assessee

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• 2013 (1) TMI 463
  Waiver of pre-deposit - Cargo handling services - Business Auxiliary Service - Assessee have engaged their counterparts in the foreign countries for getting the goods lifted from the suppliers' premises, undertaking consolidation and dispatching the goods to India - Raised bills on the importers under different heads like airfreight charges, AC charges, collect fee, AC delivery/courier/break bulk charges, AC-CAF charges, AC-Delivery order charges - Amount collected from the importers as airfreight charges which were in excess of the actual freight charges - Held that:- The submissions on behalf of the assessee that the differential amount is a profit made in freight appears, prima facie, not acceptable. They have not rebutted the finding of fact that they have acted as console agents. Therefore, the appellants have not made out a prima facie case for total waiver.

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• 2013 (1) TMI 462
  Waiver of pre-deposit - Stay of recovery - Banking and Other Financial Services - CENVAT Credit denied - Invoices did not indicate registration number of the service provider - Invoices were addressed to the Mumbai Head Office which did not have input service distributor registration - Held that:- It is not in dispute that BOFS covered by the invoices raised on the appellant's Head Office was actually used by the appellant in the manufacture and clearance of their final products. The tax-paid nature of BOFS is also not in dispute. The department has no case that any part of BOFS covered by any given invoice was diverted by the Head Office. Prima facie, the entire quantum of BOFS covered by each invoice in question was used by the appellant. On these facts, the substantive benefit of CENVAT credit is prima facie admissible to the appellant. Waiver of pre-deposit and stay of recovery allowed

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• 2013 (1) TMI 461
  Dispatch of Order under section 37C - Whether dispatch by speed post would suffice the purpose of dispatch by registered post with acknowledgment due - The order-in-original served on the assessee as early as in September, 2008 - Copy of the order-in-original was received by the assessee on 6/1/2010 - Appeal against that order was filed with the Commissioner (Appeals) on 5/2/2010 - Waiver of Pre-deposit – Delay in filling of appeal – Held that:- This question was answered in the affirmative, but this can hardly come to support the department's case before us inasmuch as the question which we have already answered in favour of the appellant is whether speed post would serve the purpose of registered post with acknowledgment due. This question has no parallel with the question concerned in the income tax case. Remand this case to the Commissioner (Appeals) with a request to consider the assessee's appeal filed against the order-in-original to have been filed within time and then to proceed to dispose it of on merits in accordance with law and the principles of natural justice. Appeal allowed and remands back to decide the case on basis of merits. In favour of assessee

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• 2013 (1) TMI 460
  Utilisation of Cenvat credit for payment under Reverse charge - Whether Cenvat credit can be utilized for discharge of Service Tax liability in respect of overseas commission agent - Reverse charge u/s 68(2) on import of service - Rule 2(1)(d)(iv) - Rule 3(4)(e) of Cenvat Credit Rules, 2004 - Rule 2(p) of Cenvat Credit Rules – Rule 2(r) of Cenvat Credit Rules - Assessee engaged in manufacturer of acrylic fibre, acrylic top etc. - from April, 2007 to September 2008 - Held that:- Following the decision in case of M/s. Shree Rajasthan Syntex Ltd.(2011 (8) TMI 265 - CESTAT, NEW DELHI) that it is not in dispute that as recipient of service from GTA, the appellant is liable to pay service tax by virtue of notification u/s 68(2). If the appellant is the person liable to pay service tax, he would be deemed to be provider of taxable service by fiction of law and, therefore, the service provided by him will be deemed to be output service under Rule 2(p) of the Rules. Therefore, the appellant is entitled to utilise the Cenvat credit for discharge of Service Tax for the commission paid to the overseas agents. In favour of assessee

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• Central Excise

• 2013 (1) TMI 444
  Non preparation of separate accounts been maintained in respect of inputs or input services clearing identical goods to buyers in the DTA, on payment of duty - demand to pay 10% of the price (excluding taxes) of the goods cleared to the SEZ developer - Held that:- As decided in Sujana Metal Products Ltd. Vs. CCE, Hyderabad [2011 (9) TMI 724 - CESTAT, BANGALORE] supplies to SEZ from DTA units were exports and hence not to be considered as exempted goods for purposes of Rule 6 of the CCR 2004. The appellant cannot be required to honour the impugned demand as they were clearing only dutiable products to the DTA and hence there was no question of maintenance of separate accounts in respect of inputs or input services and no question of applicability of Rule 6(3) of the CCR 2004 - appeal of assessee allowed.

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• 2013 (1) TMI 443
  Demand - Captive consumption - Penalty u/s 11AC - Whether the 'wet starch', which is an intermediate product, emerges during the course of manufacture of final product 'Sago', which is exempted from payment of duty is liable to excise duty or not - Held that:- Following the decision in case of SHRI VARALAKSHMI CO. (2008 (8) TMI 661 - CESTAT, NEW DELHI) affirmed by the Hon'ble apex court. The issue is no longer 'res integra', therefore, the appellants are not liable to pay duty on 'wet starch' captively consumed in the manufacture of final product - 'Sago', which is exempted from duty Penalties are imposed u/s 11AC on account of non-payment of duty in time. The appellants were pursuing with the Ministry for making the product exempted from duty, therefore, the ingredients of Section 11 AC i.e., fraud, collusion, willful mis-statement, suppression of facts all contravention of the provisions of the Act and Rules thereunder with intent to evade duty are missing, therefore, penalty u/s 11AC is not imposable - In favour of assessee

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• 2013 (1) TMI 442
  Short payment of excise duty – Mandatory minimum penalty - Intention to evade duty - Compounded levy scheme u/s 3A of the Central Excise Act, 1944 - Penalty upon the respondent under Rule 96ZO(3) - Under the scheme the respondent was required to pay a sum of duty amounting to Rs. 5.50 lacs in two equal installments in a month – Held that:- Following the decision in case of BANSAL ALLOYS & METALS PVT. LTD. (2010 (11) TMI 83 - PUNJAB & HARYANA HIGH COURT) that the aforesaid rule to the extent of providing mandatory minimum penalty without any mens rea and without any element of discretion is excessive and unreasonable restriction on fundamental rights and is arbitrary. On the basis of overall facts and circumstances of the case which did not indicate the intention to evade payment of excise duty was justified in reducing the penalty. In favour of assessee

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• 2013 (1) TMI 441
  Committee of Disputes – Request for permission to file appellate proceedings was declined by the Committee of Disputes – Held that:- Following the decision in case of Gas Authority of India Ltd that If the contention of the Revenue is accepted, then in all case in which the Committee of Disputes had declined permission to prefer appeal/legal proceedings, during the period from 1994 onwards, can now be reopened. The matters which have been considered and decided by the Committee of Disputes and permission specifically denied cannot be reopened in the manner suggested and submitted. The matter is remitted back to the concerned Divisional Bench for deciding the matter in terms of the noted order of High court

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• 2013 (1) TMI 440
  Refund of the duty paid through PLA - Respondents are the manufacturers located in the State of J & K - Exemption Notification No. 56/2002-C.E – Exemption denied on the ground that unit is not located in the Khasra number specified against those industrial areas in the notification – Held that:- The exemption under this notification is available in respect of the eligible goods cleared by the units located in the industrial areas, growth centres etc. specified in this notification and it is not the condition of the Notification that the unit must also be located in the Khasra numbers mentioned against the each industrial area. In favour of assessee

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• 2013 (1) TMI 439
  Non-payment of duty - Penalty under Rule 25 read with Section 11AC – Penalty would be attracted under Rule 27 - Assessee manufacture paper and paper board - Rule 8 of Central Excise Rules, 2001/2002 – Financial hardship of the assessee for failure to discharge the fortnightly duty liability by the due date - Held that:- In this case is simply failure to discharge fortnightly duty liability by due date on two occasions and this non-payment had been disclosed in the RT-12/ER-1 returns. Thus, penalty on the respondent under Rule 25 or Section 11AC would not be attracted. Penalty would be attracted under Rule 27 for each default in discharge of duty liability by the due date. The Commissioner (Appeals)’s order totally waiving the penalty is set aside, but instead of restoring the orders of the original adjudicating authority regarding penalty, the penalty of Rs. 5,000/- for each instance of default is imposed on the Respondent under Rule 27 of the Central Excise Rules. Decision against assessee

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• CST, VAT & Sales Tax

• 2013 (1) TMI 465
  West Bengal Sales Tax Act, 1994 - West Bengal Finance (Sales Tax) Act, 1941 - Classification - Synthetic Wire Fabric - Whether the synthetic wire fabric can be treated to be textile fabrics of all varieties mentioned in Serial No. 81 - The petitioner is a manufacturer of Synthetic Wire Fabric industries it is woven fabric of nylon polyester monofilament yarn - Held that:- The textile is a general term whereas cloth is the species namely products thereof. In this case this characteristics and attributes are satisfied. Tribunal has not found that it is not a pliable. It is recorded that it is pliable but not lustrous like a silk. Artificial silk is one of the items of the textile fabrics in case if it is claimed exclusively as an artificial silk then obviously the element lustrous may be a relevant but we have already held it is textile items. Petitioner’s product as being an item as mentioned in Entry 81 - In favour of assessee

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