TMI Tax Updates - e-Newsletter
October 10, 2017

Case Laws in this Newsletter:

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

TMI SMS

• Refund of IGST paid on export of goods under Rule 96 of CGST Rules 2017

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• Budgetary support to the units located in specified states - refund of 58% of CGST or 29% of IGST paid through debit in the cash ledger

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Highlights / Catch Notes

• GST:

  No extension of last date for filing GSTR-1 for July, 2017
  Visit to Get Source

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• Income Tax:

  Though the property was once an agricultural land, its acquisition was for non-agricultural purposes, the assessee did not carry on any agricultural activity in the land and at the relevant date, viz. the date of sale, the land had ceased to be an agricultural land - HC
  Visit to Get Source

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• Income Tax:

  TDS u/s 194H - the distributor can only be termed as an agent of assessee in which event providing service to ultimate consumer through the medium of distributor cannot be said to be a sale of service by assessee to the distributor.
  Visit to Get Source

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• Income Tax:

  Revision u/s 263 - Scope of the Tribunal to examine correctness of the exercise of jurisdiction by the Commissioner is wide enough and not limited and restricted to the record as defined under clause (b) of sub-section (1) of Section 263 - HC
  Visit to Get Source

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• Income Tax:

  Application u/s 80G(5)(vi) - Since the assessee denied to have incurred any expenditure on religious activity for any particular community, therefore, assessee cannot be put to negative onus.
  Visit to Get Source

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• Income Tax:

  The trust is discretionary trust. Hence, it is liable to be assessed as per the provisions of Sec.164(1) at maximum marginal rate.
  Visit to Get Source

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• Income Tax:

  The entire R&D activities was carried on by the assessee for the benefit of its parent company and not for itself - Therefore, one of the basic conditions of Section 35(1)(iv) is not fulfilled - Expenditure not allowed
  Visit to Get Source

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• Customs:

  Refund of IGST paid on export of goods under Rule 96 of CGST Rules 2017
  Visit to Get Source

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• Customs:

  There can be no levy of anti-dumping duty in the “gap” or interregnum period between the lapse of the provisional duty and the imposition of the final duty
  Visit to Get Source

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• Indian Laws:

  Scheme of budgetary support under Goods and Service Tax Regime to the units located in specified states - refund of 58% of CGST or 29% of IGST paid through debit in the cash ledger
  Visit to Get Source

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• Central Excise:

  100% EOU - the exporter-assessee is entitled to the claim of the refund filed for the Additional Duty of Excise paid on the HSD oil for use in the manufacture of export product
  Visit to Get Source

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• Central Excise:

  Classification of rough castings (Plummer Blocks Housing for Bearing) - the castings coming out of casting moulds up to the stage of proof machining and requiring further machining before being used as machine parts would be classifiable under chapter 73
  Visit to Get Source

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Articles

• CUSTOMS AND CENTRAL EXCISE DRAWBACK – PART II
• INTRODUCTION OF VAT IN GULF COUNTRIES

Notifications

• GST - States

• F.1-11(91)-TAX/GST/2017(Part-VII)-29/2017-State Tax (Rate) - dated 26-9-2017 - Tripura SGST
  Amendments in the Notification No. 5/2017-State Tax (Rate), dated the June, 2017,

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• F.1-11(91)-TAX/GST/2017(Part-VII)-28/2011-State Tax (Rate) - dated 26-9-2017 - Tripura SGST
  Amendments in the Notification No. 2/2017-State Tax (Rate), dated the 29th June, 2017

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• F.1-11(91)-TAX/GST/2017(Part-VII)-27/2017-State Tax (Rate) - dated 26-9-2017 - Tripura SGST
  Amending Notification No.1/2017-State Tax (Rate) with related Corrigendums and Notification No.19/2017-State Tax (Rate.

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• F.1-11(91)-TAX/GST/2017(Part-IIIA) - dated 26-9-2017 - Tripura SGST
  Corrigendum - Notification No. 13/2017-State Tax (Rate), dated the 29th June, 2017,

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• KA.NI.-2-1404/XI-9(109)/17 - dated 26-9-2017 - Uttar Pradesh SGST
  Constitution of Screening Committee for Anti-Profiteering.

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• 765/2017/9(120)/XXVII(8)/2017 - dated 22-9-2017 - Uttarakhand SGST
  Amendments in the Notification No. 525/2017/9(120)/XXVII(8)/2017 Dated 29th June, 2017.

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• 764/2017/9(120)/XXVII(8)/2017 - dated 22-9-2017 - Uttarakhand SGST
  Amendment in the Notification No. 514 Dated 29.06.2017 related to the Rate of Tax on different goods.

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• 763/2017/9(120)/XXVII(8)/2017 - dated 22-9-2017 - Uttarakhand SGST
  Amendment in the Notification no. 526 Dated 29.06.2017 related to reverse charge.

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• 762/2017/9(120)/XXVII(8)/2017 - dated 22-9-2017 - Uttarakhand SGST
  Amendment in the Notification no. 530 Dated 29.06.2017 related to the Intra-State exempted supply of services.

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• 761/2017/9(120)/XXVII(8)/2017 - dated 22-9-2017 - Uttarakhand SGST
  The Uttarakhand Goods and Services Tax (Fifth Amendment) Rules, 2017

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• 760/2017/9(120)/XXVII(8)/2017 - dated 22-9-2017 - Uttarakhand SGST
  Regarding Officers for the purpose of Uttarakhand GST Act,2017 and Rules

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• 726/2017/9(120)/XXVII(8)/2017 - dated 14-9-2017 - Uttarakhand SGST
  Waiver of LATE FEE for those taxpayers, who have failed to furnish GSTR 3B for JULY 2017 by the due date.

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• 1715-F.T.-29/2017-State Tax (Rate) - dated 22-9-2017 - West Bengal SGST
  Seeks to amend notification No. 1129-F.T. [ 5/2017- State Tax(rate)] dated 28/06/2017 to give effect to GST council decisions regarding restriction of refund on corduroy fabrics.

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• 1714-F.T.-28/2017-State Tax (Rate) - dated 22-9-2017 - West Bengal SGST
  Seeks to amend notification No. 1126-F.T. [2/2017- State Tax(rate)] dated 28/06/2017 to give effect to GST council decisions regarding exemptions to goods

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• 1713-F.T.-27/2017-State Tax (Rate) - dated 22-9-2017 - West Bengal SGST
  Seeks to amend notification No. 1125-F.T. [1/2017- State Tax(rate)] dated 28/06/2017 to give effect to GST council decisions regarding goods rates.

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• 1700-F.T.-26/2017-State Tax (Rate) - dated 21-9-2017 - West Bengal SGST
  Seeks to exempt certain supplies to NPCIL under section 11(1)

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• 1685-F.T.-25/2017-State Tax (Rate) - dated 21-9-2017 - West Bengal SGST
  Seeks to amend notification No. 1136-F.T. [12/2017-State Tax (rate)] dated 28/06/2017 to exempt right to admission to the events organized under FIFA U-17 World Cup 2017.

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• 1684-F.T.-24/2017-State Tax (Rate) - dated 21-9-2017 - West Bengal SGST
  Seeks to Amend Notification No.1135-F.T. [11/2017-State Tax (rate)] dated 28/06/2017 to reduce WBGST rate on specified supplies of Works Contract Services.

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• 1665-F.T. - dated 18-9-2017 - West Bengal SGST
  Notifying section 51 of the WBGST Act, 2017 for TDS.

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• 1656-F.T. - dated 18-9-2017 - West Bengal SGST
  The West Bengal Goods and Services Tax (Seventh Amendment) Rules, 2017.

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• 11-C.T./GST - dated 18-9-2017 - West Bengal SGST
  To specify the dates of furnishing GSTR-3B for the months of August, 2017 to December, 2017

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• 1642-F.T. - dated 15-9-2017 - West Bengal SGST
  Seeks to granting exemption to a casual taxable person making taxable supplies of handicraft goods from the requirement to obtain registration.

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• 1639-F.T. - dated 14-9-2017 - West Bengal SGST
  Constitution of West Bengal Screening Committee on anti-profiteering

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• 1638-F.T. - dated 14-9-2017 - West Bengal SGST
  Appointment of member of the West Bengal Appellate Authority for Advance Ruling

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• 1637-F.T. - dated 14-9-2017 - West Bengal SGST
  Appointment of member of the West Bengal Authority for Advance Ruling

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• Indian Laws

• F. No. 10(1)/2017-DBA-II/NER - dated 5-10-2017 - Indian Law
  Scheme of budgetary support under Goods and Service Tax Regime to the units located in States of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North East including Sikkim

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• G.S.R. 1151(E) - dated 5-9-2017 - Indian Law
  Amendment in the Registration and Licensing of Industrial Undertaking (RLIU) Rules, 1952 - Publication of Draft rules

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Circulars / Instructions / Orders

• GST - States - CCT’s Ref No. A(1)/122/2017 - dated 27-9-2017
  Certain instructions on Audits – Authorization through scrutiny module – Instructions issuance – Regarding.
• GST - States - 3031/CSTUK/GST-Vidhi Section/2017-18 - dated 21-9-2017
  Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117 of the Uttarakhand Goods and Service Tax Rules 2017.
• GST - States - CCT’s Ref No. CS(1)/ 27/2017 - dated 2-8-2017
  GST Readiness of VAT dealers migrated to GST – Obtaining certain information – Web form designed – Certain instructions issued – Reg.
• Customs - Instruction No. 15/2017 - dated 9-10-2017
  Refund of IGST paid on export of goods under Rule 96 of CGST Rules 2017
• Central Excise - F. No. 275/65/2013-CX.8A - dated 9-10-2017
  Defence against Writ Petitions[PILs relating to GST- reg.

News

• No extension of last date for filing GSTR-1 for July, 2017

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• Sensex, Nifty inch up on GST relief

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• RBI Reference Rate for US $

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• The Union Minister of Finance and Corporate Affairs, Shri Arun Jaitley to leave on a one week Official Visit to USA early morning today

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Case Laws:

• Income Tax

• 2017 (10) TMI 390
  Revision u/s 263 - no source of the amount of USD 185 million - reopening of assessment initiated by AO - CIT initiating proceedings/ assuming jurisdiction/ exercising jurisdiction u/s 263 and setting aside the order passed under Section 143(3) read with Section 147 - Held that:- As deliberated on the report received from the Mauritius Revenue Authority and find ourselves to be in agreement with the Principal CIT, that independent of the aforesaid fact of non-verification of the report received from the Mauritius Revenue Authorities by the A.O, even otherwise the information received from the Mauritius Revenue Authorities was neither complete, nor explained the source and creditworthiness of the persons giving the share application money. The certificate of Mazar, Chartered accountants, Mauritius, to which our attention was drawn by the ld. A.R, in the backdrop of the fact that the latter had categorically stated as not being the Chartered accountant of EGL, as well as in the backdrop of the disclaimer forming part of his certificate, thus does not inspire much confidence and cannot be accepted without making necessary verifications of the facts mentioned therein. We are also not impressed by the contention of the ld. A.R that the CIT-5, Mumbai while transferring the case records of the assessee to the CIT-8, Mumbai, had in his letter dated 13.08.2014 advised that as no adverse report was received from the Mauritius Revenue Authority, therefore, there was no requirement of reopening the case of the assessee for the year under consideration and the preceding years. As per the mandate of Sec. 263, the requirement contemplated under the said statutory provision is the satisfaction of the CIT in whose revisional jurisdiction the case of the assessee falls, therefore, the view or advise of the CIT-5, Mumbai, who was rendered functus officio as regards the case of the assessee, thus in the present case was not binding on the CIT-8, Mumbai, to whom the case of the assessee was transferred. We thus are of the considered view that the advice of the CIT-5, Mumbai did not have any bearing on the assumption of jurisdiction by the CIT-8, Mumbai or the passing of the order of revision u/s 263 by the Principal CIT-9, Mumbai as regards revising of the reassessment order passed by the A.O under Sec. 147 r.w.s 143(3). We thus decline to accept the aforesaid contention so raised before us. Principal CIT had rightly revised the reassessment order passed by the A.O under Sec. 143(3) r.w.s 147, being of the view that the A.O had completed the reassessment without making proper enquiries with regard to the preliminary or basic facts about the source of the share application money found credited in the books of account of the assessee, as well as not considering the information which was called for by him from the Mauritius Tax Authorities. Principal CIT, remaining well within his jurisdiction had set aside the reassessment order passed by the A.O under Sec. 143(3) r.w.s 147, with a direction to adjudicate afresh the issue as regards the amount of USD 185 million, claimed to have been received by the assessee as share application money from ECHL, after making necessary verifications and affording reasonable opportunity of being heard to the assessee. We thus in the backdrop of our aforesaid observations uphold the order passed by the Principal CIT-9 under Sec. 263 of the ‘Act’. - Decided against assessee.

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• 2017 (10) TMI 389
  Interest u/s 234B and 234C not chargeable if the total income is assessed to tax under section 115J - Held that:- Interest cannot be charged under section 234B and 234C of the Act where the total income is determined under sec 115J of the Act. See Kwality Biscuits Ltd case [2006 (4) TMI 121 - SUPREME Court] - Decided against the Revenue and in favour of the assessee.

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• 2017 (10) TMI 388
  Validity of Settlement commission order - undisclosed income spent in renovation of the house property - Settlement Commission order was based on the valuation report as submitted by the registered valuer - whether Settlement Commission ought to have referred the matter to the valuation officer in the department to make an estimate and submition of report valuing the nature of work/property assigned to be valued instead of getting the valuation report from the registered valuer - Held that:- If we give emphasis on this term “obtained by it” as is referred to in Subsection 4 and thereafter look into the proceedings, it would clearly reveal that upon the application for settlement being filed by an assessee, the commission could get the property valued by a registered valuer. Under such circumstances, if the commission has got the property assessed from a registered valuer, in the opinion of this court, that by itself would not vitiate the action of the commission. What is pertinent to mention is the fact that, except for the alleged procedural lapse of not referring to the valuation officer of the Settlement Commission, petitioner has not adduced any sufficient material to hold that the valuation done by the registered valuer is without any basis. It is also not the case of the petitioner that said procedure and practice of the Settlement Commissioner in getting the valuation done by the empaneled registered valuer been adopted only in the case of the petitioner thereby to show discrimination in the procedure and practice while dealing with the case of the petitioner and that such a procedure is not normally initiated by the Settlement Commission. This court is of the opinion that no strong case has been made out by the petitioner for interfering with the finding arrived at by the Settlement Commission. This court further has no hesitation in reaching to the conclusion that, the Settlement Commission, by not making reference to the valuation officer for valuing the nature of work/property assigned to be valued and getting the valuation done by the empaneled registered valuer, has not committed any procedural lapse.

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• 2017 (10) TMI 387
  Sale of land - nature of land sold - agricultural land or “capital asset" - Assessee has a case that the Tribunal was wrong in holding that there was transfer of the property as contemplated in Section 2(47) of the Act - Held that:- Admittedly, the assessee purchased the land which was a rubber estate. The land was purchased to utilize it for the non-agricultural purpose of expansion of its factory. The rubber trees in the land were slaughter tapped which is a process that immediately precedes the cutting and removal of the rubber trees. The income returned by the assessee, is the income from slaughter tapping of rubber trees. This income was not gained from agricultural operations, but was only from exploitation of standing trees at the end of its useful life. Thereafter, the assessee had converted the land into housing plots leaving out common areas for roads and other purposes. Before that assessee would have cut and removed rubber trees. The asset was brought in as the stock-in-trade of the assessee. Thereafter, gradually the plots were sold to several people and agreements were entered into with many of the buyers for construction of villas. This, therefore, would establish beyond any doubt that though the property was once an agricultural land, its acquisition was for non-agricultural purposes, the assessee did not carry on any agricultural activity in the land and at the relevant date, viz. the date of sale, the land had ceased to be an agricultural land. If that be so, the assessee could not have claimed that the income gained from the sale of the land is from the sale of agricultural land entitling it to exemption from levy of capital gains. Assessee does not have a case that the land was not treated as stock-in-trade. Their business also included real estate development. Therefore, Tribunal was perfectly justified in its conclusion that there was transfer of the asset. - Decided against assessee.

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• 2017 (10) TMI 386
  Rejection of grant of registration u/s 12AA - trust has not yet commenced the charitable or religious activity - Held that:- This issue raised in this appeal is squarely covered by Division Bench judgment of this Court in Commissioner of Income Tax-II Vs. R.S. Bajaj Society [2014 (1) TMI 761 - ALLAHABAD HIGH COURT] as held registration under section 12AA cannot be refused, on the ground that the trust has not yet commenced the charitable or religious activity - At this stage, only the genuineness of the objects has to be tested and not the activities, which have not commenced - The enquiry of the Commissioner of Income-tax at such preliminary stage should be restricted to the genuineness of the objects - Decided against Revenue.

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• 2017 (10) TMI 385
  Depreciation claim to assessee trust - application of income under Section 11(1)(a) - Held that:- Law permits this course and there is no double deduction. See Commissioner of Income Tax Vs. Institute of Banking Personnel Selection [2003 (7) TMI 52 - BOMBAY High Court] Appeal admitted on “(B) Whether on the facts of the case and in law the Hon'ble Tribunal erred in allowing the assessee had investment of ₹ 25 lakhs with Canara Robeco Mutual Fund which was not permissible under Section 11(5)(2)(b) of the Income Tax Act, 1961? (C) Whether, on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is justified in allowing exemption under Section 11 of the Act to the Assessee Trust in spite of violation of the provisions of Section 13(1)(d) read with Section 11(5) of the Act by the AssesseeTrust in investing ₹ 50 lakhs in Fixed Deposit with Tata Motors Ltd?”

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• 2017 (10) TMI 384
  Change of principle for stock valuation - argument raised is that method adopted on opening stock should be followed in closing stock - Held that:- There is some fallacy in this argument for the reason that normally method of opening stock is same as it was for closing stock of previous year. If accounting system is to be changed obviously it has to be changed from opening stock of the year onward and that is what has been done in the case in hand. Therefore, it cannot be said that whatever method followed in opening stock that has not been followed in closing stock. Method of previous year cannot be applied otherwise there would be no case or in no circumstances accounting method can be altered and indirectly a bar will be created for Assessee for changing his method of accounting, though with development of system, new and well recognized methods in commercial circle are being introduced and adopted regularly. Revenue then contended that there is some error in mentioning of stock valuation with respect to Assessment Year in question and Previous Year and he shows that figures have been mentioned in reverse, but that being a factual mistake and can always be got rectified by moving application before appropriate authority. This does not give rise to a substantial question of law.

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• 2017 (10) TMI 383
  Sale of land - “business income” OR “capital gain” - Assessing Officer considered the profit of such sale as “business income” - Held that:- From the impugned orders, it appears that the land had been purchased by the assessee in course of his real estate business and after purchasing the said land within a period of about six months, it entered into an agreement with M/s. Karani Builders on 3.1.1997 for development, sale of land and constructed building thereon. It is also a finding arrived at by the Tribunal that in terms of the said agreement between the assessee-builder and M/s.Karani Builder, the assessee was entitled to get its share in the business apart from separate value for the land. Therefore, we are in complete agreement with the finding of the Tribunal in the present matters treating the land as “stock in trade” as established from the agreement entered into between the assessee-builder and M/s.Karani Builder. The land had been purchased by the assessee-builder who was engaged in real estate business and in terms of the agreement entered into between assessee & M/s.Karani Builders, the latter was doing construction and transfer of the property on behalf of the assessee.

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• 2017 (10) TMI 382
  Reopening of assessment - computation of cost of acquisition of land for the purpose of computing long term capital gain or loss on sale of such land - Held that:- The petitioner never challenged the order of CIT(Appeals) which was in part against the petitioner. If the petitioner was aggrieved by the directions issued by the CIT(Appeals), it ought to have challenged the same before the appropriate forum. The petitioner having accepted and acquiesced in the order cannot question the wisdom or authority of CIT(Appeals) to issue such directions. Stand of CIT(Appeals) in on one hand annulling the reassessment on the grounds of previously scrutinized claim and no failure on part of the assessee to disclose truly and fully material facts and at the same time directing the reopening of the assessment, was not in any manner incongruent. His observations or conclusions for invalidating the assessment were based on materials which were before the Assessing Officer at the time of issuing the notice for reopening. His directions were based on the materials which came before him during the appellate proceedings. By assessee's own account, correct valuation as on 1.4.1981 of the land in question would be ₹ 108.27 per sq mtr. This would have two elements. One, that the original scrutiny would no longer be valid since there was an outside alien material which had later on come on record and two, that the declaration made by the assessee in the return filed and during the previous assessment proceedings would also be under a cloud. The effect of directions that the appellate authority or the Tribunal may issue during the assessment proceedings, need not be in all cases confined to saving of limitation in terms of section 150 of the Act if the directions are specific, as in the present case which can go beyond mere saving of limitation. - Decided against assessee.

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• 2017 (10) TMI 381
  Revision u/s 263 - Tribunal upholding the validity of the revisionary order passed under section 263 - Held that:- We are of the considered view that no inquiry, as envisaged in law, was carried out, hence, question of the Commissioner taking an alternate possible view does not arise. The Assessing Officer cannot be said to have taken a plausible view, as envisaged in law, and the view taken by the Commissioner to be an alternative one. Finding of the Commissioner that the order is erroneous is not on account of his mere disagreement with the view taken by the Assessing Officer. Any inquiry, without application of mind, is nonest. The given facts warranted the Assessing Officer to have conducted complete and proper inquiry and only thereafter, assessed the income so declared by the Assessee. He ought to have considered that the Assessee had sought to revise the return by declaring an income 1872% higher than what was originally returned and that too after action for scrutinizing the return was initiated. All transactions of sale of agricultural produce were in cash. Income declared was (a) disproportionately high only with respect to the relevant year and never in the preceding or succeeding years, (b) investment of huge amount of ₹ 3.8 crore was carried out by the Assessee himself, be from whatever source and there was no reference thereof in the original return. As such, omission or wrong statement cannot be said to be bonafide. Prima facie returns, being invalid, ought to have been rejected. The case in hand being that of no inquiry, and the amplitude of the powers of the Commissioner being wide enough to pass “such order” as the circumstances of the case justify, including (a) cancelling the assessment, (b) modifying the order of assessment, (c) directing fresh assessment, as such, the Commissioner was well within his right to pass an appropriate order of remission. Scope of the Tribunal to examine correctness of the exercise of jurisdiction by the Commissioner is wide enough and not limited and restricted to the record as defined under clause (b) of sub-section (1) of Section 263 of the Act. In any case, even this definition is inclusive. It includes all records relating to any proceedings under the Act, be that of the Assessee or a third party, available at the time of examination by the Commissioner. The record need not pertain to the proceedings of the Assessee alone, be it for the relevant year or assessments pertaining to other years. It can also pertain to any other assessee. In fact, record of any proceedings under this Act available at the time of examination can be considered. Such record need not be placed by the parties. He has power to call for and examine the record of “any proceedings under this Act”. As is evident, definition of word “record”, inclusive in nature, is restricted to and confined only to the exercise of power by the Commissioner and would not relate to the amplitude of the power exercisable by the Tribunal “to pass such orders” “as it deems fit”. - Decided against assessee.

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• 2017 (10) TMI 380
  TDS u/s 194H - “cash discount” allowed to the distributor to be treated as “commission” paid/allowed by the assessee-deductor to the distributors - non deduction of tds - A.O. was of the opinion that there exists ‘principal to agent relationship’ - Proceedings u/s 201(1) as well as levy of interest u/s 201(1A) - deductibility of TDS for post-paid and non-deductibility of TDS for pre-paid services - Held that:- While giving a finding in the case on hand we have also carefully gone through the distributorship agreements. We are unable to accept the contention of the assessee that the distributor has complete right and control over the matter of providing talk-time to ultimate subscribers; distributor can of course insist upon assessee while making a request to provide talk-time through e-module etc., but the final decision has to be taken by assessee, only upon verification of consumer details which in turn has to be provided by distributor. Assessee can terminate the contract at any time by giving thirty days time without assigning any reason and distributor has to return all equipment and furniture supplied by the VESL upon termination of such contract. Other conditions such as maintaining the confidentiality and limitation of assigning rights or obligations to third party by distributor would also indicate that distributor is merely acting as an agent i.e., as a connecting link between assessee and ultimate subscriber. We therefore held that though distributor commits assessee to subscribers and exercise his authority to ensure arranging connection to subscriber, it will not alter the situation since the overall context in which such power is given to distributor has to be looked into in the circumstances of the case and the role of distributor can only be said to be a middleman between service provider on one hand (assessee herein) and ultimate consumer on the other hand. In other words the distributor can only be termed as an agent of assessee in which event providing service to ultimate consumer through the medium of distributor cannot be said to be a sale of service by assessee to the distributor. Distributor is merely a link between assessee and ultimate consumer/subscriber and distributor can at best enforce obligation on the part of assessee to provide connection/talk-time to subscriber which itself would not change the characteristic of transaction from ‘principal to agent’ to ‘principal to principal’. We therefore hold that the order passed by Assessing Officer, as confirmed by Ld CIT (A), by holding that assessee is a defaulter u/s 201(1) and consequently liable to pay interest u/s 201(1A) of the Act, subject to certain conditions as prescribed by Hon’ble Supreme Court in Hindustan Coca Cola Beverage P. Ltd (2007 (8) TMI 12 - SUPREME COURT OF INDIA ), is in accordance with law.- Decided against assessee Penalty levied by TDS Officer u/s 271C - ‘reasonable cause’ - Held that:- No doubt assessee has not specifically submitted before the Tax Authorities that non-deduction of tax at source was based on it’s understanding of provisions of section 194H of the Act, which in turn constitutes a ‘reasonable cause’. But the fact remains that by the time the assessee was under obligation to deduct tax at source for the AYs under consideration, there were judgments in favour of assessee and even after the decisions of Hon’ble Delhi High Court and Kerala High Court, Hon’ble Karnataka High Court had taken a different view of the matter which implies that non- deduction of tax was based on such understanding of relevant provisions of the Act in which event penalty is not imposable u/s 271C of the Act. We therefore set aside the order passed by AO as well as Ld CIT (A) on this aspect and hold that penalty u/s 271C is not imposable. - Decided in favour of assessee

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• 2017 (10) TMI 379
  Validity of issue of notice u/s 158 BD - issue of notice after 9 years and 9 months of completion of assessments of searched party - Held that:- In this case the Notice under section 158 BD was issued after 9 years and 9 months of completion of Block assessment in the case of searched person. Even if the time limit is considered after the rendering the decision of the Hon’ble ITAT the AO took more than 1 year four months from the date of the order of the tribunal. However the time limit has to be considered not from the date of the orders passed by the ITAT, but time limit starts from block assessment orders passed by the AO in the case of searched person. Hence the facts of the assessee’s case is squarely covered by the order of the Delhi High Court [2015 (1) TMI 705 - DELHI HIGH COURT] as well as the decision of Hon’ble High court of Punjab and Haryana cited (2010 (7) TMI 664 - Punjab and Haryana High Court ). The ld. DR did not bring any other order/ judgement to controvert the decision cited. Therefore we hold that notice issued u/s 158BD is beyond the time limit prescribed under the act and the same cannot be valid. Accordingly we quash the notice issued u/s 158BD of the Act and annul the assessment made u/s 158BD, and allow the appeal of the assessee.

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• 2017 (10) TMI 378
  Addition u/s 69 - survey u/s 133A - Held that:- It is the assessee, who has to prove the contents are false or incorrect. In this case the assessee has not discharged it’s burden. The ld. A.R further argued that the AO has not given the survey statement which was sought by them on 14/02/2011 and 21/02/2011. It is settled issue that during the pendency investigation the statements would not be supplied to the assessee and the copies will be given when the evidences are used against the assessee. This view is supported by the Hon’ble Madras High court judgement in the case of Advantage Strategic Consulting (P.) Ltd [2016 (7) TMI 939 - MADRAS HIGH COURT]. In this case neither the assessee nor the DR could inform us when the copies of statements were supplied to the assessee. Therefore, we are of the considered opinion that the case should be remitted back to the file of the A.O. to give sufficient opportunity to the assessee to prove his case of excess payment and the contents recorded in the seized material was incorrect. The assessee should produce Mr. B. Babujee and B. Srinivas with relevant evidences to prove the hand writing and explain the contents of noting in full. The A.O. is directed to supply the copies of statements recorded and the impounded material and allow the assessee to explain the case, and also examine both Mr. B. Babujee and B. Srinivas in detail and decide the issue afresh on merits. Accordingly the assessment is set aside with direction to re do the same de novo.

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• 2017 (10) TMI 377
  Foreign Travel Expenses - allowable business deduction - Held that:- We are of the opinion that each Assessment Year is a unique unit of assessment and principle of resjudicata do not apply to Income Tax Proceedings. The primary conditions of claiming the expenses, in terms of Section 37, is that the expenses have been incurred wholly and exclusively for the purpose of Business or profession. Although, the assessee has placed relevant invoices and relevant ledger extracts, however, no details of any conferences / seminars are available on record. Therefore, on the basis of material available on record, the primary condition of claiming the same, in our opinion, has remained unfulfilled. As contended that the assessee could not establish / demonstrate the same for want of time. Therefore, without delving much deeper in the issue, on the facts of the case, we restore the matter back to the file of Ld. AO to re-appreciate the evidences submitted by the assessee. The assessee, in turn, is directed to substantiate his claim in this regard failing which Ld. AO shall be at liberty to adjudicate the same on the basis of material available on record. Resultantly, this ground of revenue’s appeal stands allowed for statistical purposes. Income from sale of shares - ‘business’ or ‘capital gains’ - Held that:- Assessee is a lawyer by profession and major portion of total income consist of professional income. A perusal of Balance Sheet reveals that the assessee reflects investment in securities under the head Investments and closing investment at year end is ₹ 51.61 Lacs against which the assessee’s personal capital & unsecured loans stood at ₹ 21.12 crores & ₹ 31.80 Lacs. The other loans are car loans and loans against Fixed Deposits. A perusal of Share Income Chart placed in the paper book reveals that the assessee has transacted mostly in listed securities and the transactions are mostly delivery based transactions. The total holding period of all the scrips is 6601 days and average holding period comes to 57 Days and total number of unique trade days is 64 days. This data is nowhere controverted by the revenue before us. Moreover, latest CBDT Circular No.6/2016 which is clarificatory in nature applies to listed securities and directs AO not to disturb the stand taken by assessee provided the same is applied consistently. Hence, we find that their cannot be any straight jacket formula to distinguish the same and further there cannot be any single decisive factor to determine the same but an overall view has to be taken keeping in mind peculiar facts and circumstances of the case.

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• 2017 (10) TMI 376
  Application u/s 80G(5)(vi) - receipt of donations - religious activity or not - conducting ‘Yagh, Havan and Ram Katha’ - Held that:- Assessee institution has not incurred any expenditure of religious in nature. The spot enquiry report of the Inspector also support the claim of the assessee for grant of an approval under section 80G of the Income Tax Act. It appears that the learned CIT has not gone through all these material on record in proper perspective and the subsequent assessment order passed under section 143(3) also requires consideration by the learned CIT, Faridabad. It may also be noted here that at the time of approval under section 80G(5) the assessee shall have to explain that institution or fund is not expressed to be for benefit of any particular religious community or caste and that the institution or fund maintained regular accounts of its receipts and expenditure. Since the assessee denied to have incurred any expenditure on religious activity for any particular community, therefore, assessee cannot be put to negative onus. Considering the above discussion, we are of the view that the learned CIT, Faridabad, has not considered the issue in proper perspective. Therefore, the matter requires reconsideration at his level. We, accordingly, set aside the impugned order and restore the matter in issue to the file of the learned Commissioner of Income Tax, Faridabad, with direction to re-decide the matter in issue in accordance with law by giving reasonable sufficient opportunity of being heard to the assessee.

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• 2017 (10) TMI 375
  Income exempt to assessee having 12A registration - income brought to tax by the Assessing Officer at maximum marginal rate confirmed by CIT-A - determination of status of appellant - Held that:- The appellant had not applied 85% of the surplus amount for the purposes of trust, it had also admitted that permission was not sought for accumulation of the surplus amount u/s. 11(2) of the Act. Consequently, Assessing Officer determined the taxable income at ₹ 71,840/- on the ground that 85% of the income was not utilized for charitable purposes during the relevant Assessment Year. Hon’ble Madras High Court in the case of Anasuya Muthanna Vs. CIT (1996 (4) TMI 15 - MADRAS High Court ) held that where share of beneficiary is unknown and undeterminate, the assessee trust is subject to maximum marginal rate, In my view, appellant trust is discretionary trust. Hence, it is liable to be assessed as per the provisions of Sec.164(1). Assessing Officer’s action of charging maximum marginal rate is in order - Decided against assessee.

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• 2017 (10) TMI 374
  Return of the gold articles seized - prosecution proceedings u.s 276 & 2377 against the petitioners were dismissed by the lower court - Held that:- Considering the proceedings before the Court of Magistrate in connection with discharge on one hand and disallowing the claim for return of the gold articles confirmed by the Court of Sessions in the revision, this Court is of the view that gold ornaments seized under the procedure initiated under the Act, particularly covered under the provisions relating to search and seizure in the facts of this case cannot be treated as muddamal articles. Hence, both the Courts have rightly declined to entertain the claim of the applicant for return of the gold ornaments. Considering that the applicant has been litigating for return of gold ornaments which are seized under the procedure of the Act and which was in active consideration initially before the Court of the Magistrate and thereafter before the Sessions Court, and lastly before this Court, it would be open for the applicant to prefer an application before the Department for return of the gold ornaments under the relevant provisions of the Act. The Department shall consider such an application, as per the provisions of I.T. Act, if preferred, within a period of one month hereof. If such an application is preferred, the Department is directed to consider the same, though such an application may be beyond the period of limitation prescribed

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• 2017 (10) TMI 373
  Depreciation on goodwill - goodwill expanded at the time of amalgamation of the companies - claim denied as claim was fictitious and the goodwill has been accounted as a balancing factor in the hands of the assessee without acquisition of an intangible asset as contemplated under Section 32 of the Act - Held that:- With respect to the claim of depreciation, the decision of Supreme Court in case of Smifs Securities Ltd. [ 2012 (8) TMI 713 - SUPREME COURT] would squarely apply. There is no material referred to by the Assessing Officer to hold that the claim of depreciation was fictitious. If we read his entire expression in this respect, he seems to be suggesting that being an intangible asset acquisition thereof would not qualify for depreciation. If that be so, the view of the Assessing Officer was opposed to the decision of the Supreme Court in case of Smifs Securities Ltd. (supra). On the other hand, if the observations of the Assessing Officer can be seen as his findings that the claim itself was baseless, there was no discussion or reference to any material to enable him to come to such a conclusion. - Decided against the revenue.

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• 2017 (10) TMI 372
  Penalty u/s. 271(1)(c) - addition on account of decapitalization of interest to assessee’s Orissa Project - Held that:- It is notable that the fact of amounts borrowed for Orissa Project, interest cost on such borrowed amounts, their partial utilization in the project and its partial deployment in investment, the interest earned thereon, setting off of this interest earned from the interest incurred on borrowed funds and capitalization of remaining amount of interest to the cost of Orissa Project, stand fully and truly disclosed before the Assessing Officer, as also reflected from the books of account of the assessee. The addition of interest earned amounting to ₹ 6,11,95,775/- was made by the AO treating the same as income from other sources. The contention of the assessee before the ld. CIT(A) was also that similar disallowances were also made by the AO in A. Yrs. 2006-07 and 2007-08 against the same loan and the CIT(A) in both the case had deleted the disallowance made by AO holding that interest received on the borrowed fund exclusively for the purpose of setting up of a unit at Orissa is not taxable as interest income. Nothing is addressed by the Revenue against this contention of the assessee. In presence of all these facts and the issue being debatable at various stages, we are of the opinion that it can hardly be said that the assessee had furnished inaccurate particulars of its income. Therefore, the penalty saddled against the assessee has rightly been deleted by the ld. CIT(A). - Decided in favour of assessee.

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• 2017 (10) TMI 371
  Revision u/s 263 - Eligibility to claim deduction u/s 35(1)(iv) - expenditure relates to the business of the parent company - Held that:- From the overall reading of the agreement between the assessee and SI Group US it becomes abundantly clear that the entire R&D activity is carried on for the benefit and development of business of SI Group US and does not pertain to the assessee’s business. The assessee is permitted to use the result of the R&D product only if the SI Group US grants license which is also subject to payment of royalty. These factors clearly demonstrate that the entire R&D activities carried on by the assessee is for the business of SI Group US and not for itself. This fact is further proved from assessee’s own admission that the entire revenue expenditure relating to R&D activities was reimbursed by SI Group US. Keeping in perspective the aforesaid factual position, it is hardly believable that the revenue expenditure on R&D relates to the business of the parent company whereas, the capital expenditure on R&D relates to the Assessee. As discussed earlier, the entire R&D activities was carried on by the assessee for the benefit of its parent company and not for itself. Therefore, one of the basic conditions of Section 35(1)(iv) of the Act is not fulfilled. - Decided against assessee.

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• Customs

• 2017 (10) TMI 370
  Benefit of N/N. 16/2000 (Sl. No. 230) dated 1.3.2000 and 21/2002 (Sl. No. 276) dated 1.3.2002 - computers parts namely, shell assembly / chassis assembly - It was the case of the department that the respondents are not eligible for the exemption since the items were PPCBs, CPC and power supply unit - suppression of facts - Held that: - it is clear that the department had taken note of the issue and the details furnished by respondent on several occasions and had also examined the same. The officers had opened and inspected the goods. The officers had seen the technical write-up and basing upon such details they had examined the eligibility of the notification benefit and extended the same. The Commissioner has thereupon arrived at the conclusion that no suppression of facts can be alleged upon the respondents - appeal dismissed - decided against Revenue.

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• 2017 (10) TMI 369
  Import of restricted item - old/used digital multifunctional - Department took the view that the impugned goods are restricted for import and required valid license for import, which was not produced by the importer - Held that: - reliance placed in the case of The Commissioner of Customs, Custom House Versus M/s. City Office Equipment and others [2013 (4) TMI 655 - MADRAS HIGH COURT], where it was held that there is no restriction on free import of second hand digital multifunction print and copier machines prior to 05.06.2012 - the impugned order is modified by setting aside, the redemption fine and penalty imposed without disturbing the enhancement of value - appeal allowed in part.

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• 2017 (10) TMI 368
  Import of restricted item - old used digital multifunction print and copier machines - Department took the view that the impugned goods are restricted for import and required valid license for import, which was not produced by the importer - Held that: - reliance placed in the case of The Commissioner of Customs, Custom House Versus M/s. City Office Equipment and others [2013 (4) TMI 655 - MADRAS HIGH COURT], where it was held that there is no restriction on free import of second hand digital multifunction print and copier machines - confiscation and penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 367
  Confiscation - Diamonds - smuggling - Baggage Rules - quantum of redemption fine and penalty - Held that: - smuggling of the diamonds has not been controverted. Contumacious conduct is definitely been proved in respect of the appellant. Without doubt, imposition of redemption fine and penalty under sections 125 and 114 of the Customs Act is definitely justified - the interests of justice would be met adequately by reducing the redemption fine imposed u/s 125 to ₹ 3,50,000/- and penalty imposed u/s 114 to ₹ 1,50,000/- - appeal allowed in part.

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• 2017 (10) TMI 366
  ADD - import of CFL lamps with/without choke from China during the period August to December 2002 - N/N. 129/2001 dated 21.12.2001 - Held that: - the issue whether ADD can be levied during the interregnum period from 21.6.2002 to 9.12.2002, that is from the date of provisional ADD Notification and the imposition of final ADD by subsequent notification, now stands settled by the judgment of the Hon’ble Apex Court in the case of Commissioner of Customs Vs. G.M. Exports [2015 (9) TMI 1162 - SUPREME COURT], where it was held that there can be no levy of anti-dumping duty in the “gap” or interregnum period between the lapse of the provisional duty and the imposition of the final duty - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 365
  FSEZ - Duty Drawback - production and export of industrial wear, beach wear, jute bags - the domestic tariff area Unit which had supplied the duty paid raw materials and the three Units within the zone all belong to the same corporate entity, i.e., Kariwala Industries Limited. It is contended by the petitioner that as between different Units of the same corporate entity, there can be no sale or purchase involving receipt or payment of any consideration - The case of the Customs Authorities is that Kariwala Green Bags is a separate legal entity under the law and had submitted documents that they procured raw materials from the Domestic Tariff Area and had submitted claim for drawback - Whether there was violation of Rules 22(2) and 34 of the Rules because according to the Customs Authorities, the duty paid raw materials were brought into one unit in the Zone but finished goods were manufactured and exported from another unit in the Zone? Held that: - Kariwala Green Bags is a separate legal entity under the law and had submitted documents that they procured raw materials from the domestic tariff area Unit and had submitted claim for drawback - Manufactured products were exported abroad by Kariwala Industries and not by Kariwala Green Bags. If one looks at the proviso to Rule 34 carefully, one would find that the said proviso itself contemplates of transfer of goods from one unit to another in the same zone without payment of duty. Rule 30(15) also provides for transfer from one unit to the another in the same zone without filing of any Bill of Entry. It is clear from the records that there is no dispute with regard to the writ petitioner having procured duty paid raw materials from the Domestic Tariff Area into FSEZ or used such raw materials in the manufacture of goods within the zone. It is also the admitted fact that the finished goods were exported from the zone and export proceeds were realized in foreign currency. As such, the writ petitioner’s claim for drawback ought to have been granted treating payment for goods procured from Domestic Tariff Area in foreign currency from the current account to which the foreign currency export proceeds to Unit-III were credited, considering the same to be substantial compliance of Rule 30(8) of the said Rules. The writ petition is allowed upon setting aside the Revisional order dated 28th May, 2013 with a direction upon the concerned respondent authorities to allow the drawback claim of the writ petitioner–as applicable - decided in favor of petitioner.

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• 2017 (10) TMI 364
  Confiscation - import of stainless steel drums - differential duty was confirmed in the impugned order on the ground that the privilege of exemption allowed to packaging material in N/N. 184/76-Cus dated 2nd August 1976 was not available to the importer as the drums did not meet the criteria listed therein - eligibility of ‘stainless steel drums’ to exemption as packaging material - Held that: - With the ‘stainless steel drums’ being ineligible for exemption, they are to be subject to assessment for appropriate duty. It is the contention of Learned Counsel that the impugned order has not complied with the statutory prescriptions relating to valuation and that no consideration had been contracted with supplier of the goods for the packaging material. Consequently, it was argued that the adjudicating authority should have accorded weightage to the affidavit of the supplier instead of relying upon a pro forma invoice of M/s Imperial Container Pte Ltd to hold that no differential duty was recoverable. The impugned order has concerned itself primarily with the proposal to confiscate the ‘stainless steel drums’ and for imposition of penalty under section 111 and section 112 respectively of Customs Act, 1962. With our finding on duty liability devolving on the packaging material consequent upon ineligibility for exemption, it necessarily follows that compliance with the regime of the EXIM Policy, as prevailing then, must also be gone into. There is no dispute that the drums are made of ‘stainless steel’ and that these were not importable except through designated canalizing agency. Import by any another was permissible only against a valid licence which the importer-appellant, admittedly, was not in possession of. On behalf of the appellant, it is claimed that they had no intention of importing any goods that were not permitted under the EXIM Policy. A plain reading of section 111(d) of Customs Act, 1962 along with the provisions of the EXIM Policy, leave no doubt that the imported ‘stainless steel drums’ are liable to confiscation. The impugned order cannot be faulted to that extent - the offence of import without licence did occur in 1978-79 and necessary consequences must follow. The confiscation of goods in the impugned order is confirmed. Considering the various circumstances narrated above, the importer-appellant is permitted to redeem the goods on payment of fine of ₹ 5,00,000 within 60 days of this order. In accordance with section 125 (2) of Customs Act, 1962, the redemption is subject to payment of duty which will be determined by the Asst Commissioner of Customs, New Customs House, Mumbai in accordance with law on finalizing the ‘less charge notices.’ In the event of failure to exercise the option, the confiscation is rendered absolute and the goods to vest in the Central Government in accordance with section 126 of Customs Act, 1962. The ends of justice will be met by restricting the penalty imposed on Shri Vinod Jain and Shri Rakesh Jain to ₹ 50,000 each - appeal allowed in part.

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• 2017 (10) TMI 363
  Duty Drawback - exports of the gloves - Rule 3 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 - Rule 3(1) second proviso clause [ii] thereof - Held that: - When the import is without any cost and duty free, and in the facts of the present case, where the inner material so imported is used in the gloves exported and when the petitioner is not claiming that the inner material is produced or manufactured in India for export, the question of applicability of Rule 3(1) second proviso clause [ii] does not arise. The inner material is not being produced or manufactured by the petitioner in India. It is an imported material, which is exported as part of the gloves. The gloves otherwise is offered for taxation in India. The contention of the authorities that, the export of gloves attracts the provisions of Rule 3 of the Customs, Central Excise Duties and Service Tax Drawback Rules 1995 is misplaced - it would be appropriate to request the authorities to consider and decide the claim for duty drawback made by the petitioner in accordance with law - petition disposed off.

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• 2017 (10) TMI 362
  Absolute confiscation - Penalty - smuggling - Gold biscuits of foreign origin - case of Revenue is that the appellant Shri Abdul Khader is not able to justify the ownership of gold biscuits which was seized and absolutely confiscated has been purchased legally - whether the gold biscuits seized by the departmental authorities from P. Rasheed on 17.8.2001 is to be held as a smuggled goods or otherwise? - whether the ownership of the said gold biscuits as claimed by Shri Abdul Khader is correct or otherwise? - whether the appellant Shri Abdul Khader has proved beyond doubt that the biscuits that were procured were from legitimate source or otherwise? Held that: - the Central Forensic Science Laboratory is not giving any specific opinion as to whether the copy of the bill produced by the appellant Shri Abdul Khader before the authorities claiming to have been purchased from M/s. Chamunda Enterprises seems to be inconclusive in view of the fact that the authorities had not sent the duplicate copy of the bill to the Forensic Laboratories. It is undisputed that the Customs Authorities had recovered various documents from the premises of M/s Chamunda Enterprises when they visited their premises. In the absence of any clear-cut opinion of the Central Forensic Science Laboratory as to the genuineness of the document and also due to non-production of duplicate copy of the invoices, the said opinion being inconclusive, needs to be considered as an evidence only to the effect that it is not proved beyond doubt that document produced by the appellant as a copy of the duplicate invoice of M/s. Chamunda Enterprises. In my view, this evidence not being conclusive, other corroborative evidences needs to be considered to come to any conclusion as to whether the goods are smuggled or otherwise. Now coming to the disregarding of evidences by M/s. Chamunda Enterprises, the first appellate authority has totally misconstrued these evidences. It is seen from the record that after the affidavit of Shri Ratan Singh Rathod, Proprietor of M/s. Chamunda Enterprises was produced before the authorities, the countering parts of the Customs Preventive Authorities, Mumbai visited the premises of M/s. Chamunda Enterprises on 26.9.2001 and it is recorded in the Panchanama of the same day that Shri Ratan Singh Rathod introduced himself and was personally present stating that he was the proprietor of the said firm. In his presence, the authorities searched the office room and certain documents as listed in the annexure to the Panchanama were retrieved. The provisions of Section 123 of the Customs Act, would apply to in this case. Though there is an exception carried in said Section in respect of the gold, Shri P. Rasheed, the person who was intercepted and from whom the gold was recovered; Shri Abdul Khader the person who claimed the ownership of the gold the very next day of the seizure of the gold from Shri P. Rasheed; and Shri Mahendra Rajawat who brokered the sale for Shri Abdul Khader and Shri Ratan Singh Rawat, Proprietor of M/s. Chamunda Enterprises, all these persons have stated categorically in the affidavit as well as in their statements that the gold biscuits which were intercepted and seized by the Revenue authorities were legitimately purchased by M/s. Chamunda Enterprises. As against such a clear evidence to indicate that the purchase of gold biscuits was inland source, there is nothing on record by the Revenue to hold that onus of proving the goods were procured from indigenous sources shifted to appellants. The appellants have discharged their onus of proving that the goods were procured legitimately by them from the inland sources which has to be accepted in the facts and circumstances of this case. Confiscation and penalties set aside - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 361
  Smuggling - Benefit of the proviso to sub-section (2) of Section 120 of the Customs Act, 1962 - import of heavy melting scrap, on examination it was found to contain steel bars - Held that: - in terms of Section 120(2), the whole of the goods will become liable for confiscation only when smuggled goods cannot be separated from other goods - In the instant case, it is already on record of examination report that only certain percentage of the goods are prime goods and remaining is Heavy Melting Scrap as declared. Thus the portion of the goods which is found to be Heavy melting scrap as declared will not be liable for confiscation - redemption fine and penalty recomputed. The invoices, bills of lading and pre-shipment inspection certificates show the goods as heavy melting steel scrap. Since there is no contrary evidence, the benefit of doubt given to the importer and it was held that the importer had no knowledge or reason to believe that the imported consignment included any smuggled goods. Decided partly in favor of importer.

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• 2017 (10) TMI 360
  Urgency of repair of the ship in dry-docking in Colombo - interim modality - Confiscation of vessel - SEAMEC-I and SEAMEC-III - property of Union of India u/s 162 of CA, 1962 - demand of higher amount of Bank Guarantee - Held that: - Keeping in urgency of repair of the ship and appellant’s above undertaking to secure Revenue in the meantime till the ship returns back to India, interim modality as hereinafter stated is worked out to serve interest of justice in the extraordinary circumstance, even though Rule 41 of CESTAT (Procedure) Rules, 1982 does not expressly provide for passing such order. However, taking note of the order of Hon’ble Bombay High Court in the case of CC(I) Vs. Hind Offshore Pvt. Ltd. [2014 (3) TMI 135 - BOMBAY HIGH COURT], where the High Court has observed that permission to grant vessel to go out of India was passed in that case in exercise of inherent jurisdiction of Tribunal, we consider that following modality worked out on the facts and circumstances of the case may not be out of the jurisdiction of Tribunal. Where the appellant shows its attitude to co-operate with Revenue and it has urgency of repair of the ship in dry-docking in Colombo, above working modality has been considered proper - appeal allowed.

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• Corporate Laws

• 2017 (10) TMI 359
  Increasing of Authorized Share Capital of a Company in question called as oppressive, fraudulent, illegal and malicious - validity of removing the directorship of the Petitioner - Held that:- By no stretch of imagination, increasing of Authorized Share Capital of a Company in question can be called as oppressive, fraudulent, illegal and malicious acts of Respondents As stated supra, the impugned increasing of Authorized share capital was done in accordance with Articles of Association of the Company and extant provisions of Companies Act, 1956/2013. Moreover, the Company has offered the newly created shares to the petitioner, and he can purchase those shares so as to retain his majority shareholders status in the Company. However, he is not interested to participate in the affairs of the Company. Since, the impugned allotment of shares are made in accordance with Articles of Association of the Company duly following principles of natural justice, the petitioner, in fact is not entitled to maintain the present petition. It is true that a petition under section 397/398 can be maintained by even a person holding less than 10% of shares etc., as prescribed under section 399 of Companies Act, 1956, provided that such petitioner is deprived of his shares/not offered such new shares first to him before allotting to others etc, provide such actions are questioned in Company petition. In the instant case, the petitioner was offered new shares to him, and he did not accept it and even now the same offer is kept open to him by the respondents as stated below After perusing all the records especially with regard to conducting of meetings of Board where, the petitioner was absent, we are convinced that the petitioner was terminated his Directorship in accordance with law. We are of the view that as per Law, Managing Director of a Company should be available in the Country to take care of day-to-day affairs etc. It is relevant to point out here that the petitioner claimed that he is also promoter and Managing Director of the Company. So if he is MD of the Company, he is not expected to live in the other Country unlike a Director. The petitioner failed to make out any case so as to interfere in the case and this it is liable to be dismissed. In view of the above facts and circumstances of the case, the Petitioner has miserably failed to make out even a prima facie case, so as to invoke provisions of Sections 111, 397/398, 402, 403 of Companies Act, 1956. Therefore, we hereby dismissed the Company petition

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• 2017 (10) TMI 358
  Merger and Amalgamation of Companies - purpose of notifying scheme to the regulating authorities - purpose of notifying scheme to the regulating authoritieswhen external arrangement does not alter the rights of the stakeholders of that company, do we need to insist upon such company to call and hold meetings in respect to such scheme? - Held that:- In section 232(1), it has been said that the provisions of sub-section (3) to (6) of section 230 shall apply mutatis mutandis. For no meeting is ordered to be held with either members or creditors, giving a notice to them under sub section (3) will not arise, because their rights are not affected by this demerger/merger, but when it comes to notice to various regulating authorities under sub-section (5) of section 230, a notice has to go to all those authorities along with documents as mentioned under section 232(2), - (a) the draft of the proposed terms of the scheme drawn up and adopted by the directors of the merging company; (b) confirmation that a copy of the draft scheme has been filed with the Registrar; (c) a report adopted by the directors of the merging companies explaining effect of compromise on each class of shareholders, key managerial personnel, promoters and non-promoter shareholders laying out in particular the share exchange ratio, specifying any special valuation difficulties; (d) the report of the expert with regard to valuation, if any; (e) a supplementary accounting statement if the last annual accounts of any of the merging company relate to a financial year ending more than six months before the first meeting of the company summoned for the purposes of approving the scheme. Since the purpose of notifying scheme to the regulating authorities is not only to know about holding meeting, but also to look into as to whether various stakeholders interest is protected or not, this notice about scheme with the documents shall be sent to various authorities as stated under sub-section (5) of section 230, therefore this Bench cannot and will not exempt the transferee company form complying with sending notice to the regulating authorities and giving advertisement. Soon after compliance of above, if this Bench is satisfied with compliance under section 232(1) & (2) as mentioned above, may sanction the scheme with provisions for, in this case, for transfer of undertaking of transferor to its holding company; since allotment of shares not happening in transfer company, no provision need to be made for it; transfer of legal proceedings by or against transferor companies if any to its holding company, transfer of transferors' employees to the transferee company; a certificate over accounting treatment by the company auditor. When the statute clearly mandates all these aspects to be complied with, so as to make the transferee as party to the approval of the scheme and make this approval binding upon the holding company, the holding company shall be a party to the approval of scheme, to get such binding, the holding company shall also file an application for notifying the fact of proposal of scheme as mentioned above. Therefore we cannot go to that extent to say that no application is required to obtain for approval for Scheme because if application is not there from two parties who are separate entities entering into a Scheme, we doubt about the binding nature of this order over the two parties entered into a Scheme. Therefore, this Transferee Company shall file an application before this Bench with the power it has from its Board of Directors by notifying it to all Regulating Authorities as mentioned above.

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• 2017 (10) TMI 353
  Corporate insolvency procedures - Default in payment of debt - operational debt - Held that:- There is a 'debt' due to the appellants and there is default on the part of the respondents- 'Corporate Debtor'. However, the appellants do not come within the meaning of “Operational Creditor”. In the case of “Nikhil Mehta and Sons. v. AMR Infrastructure Ltd.”[2017 (8) TMI 1017 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] this Appellate Tribunal noticed that Nikhil Mehta & Ors. purchased flat/ shops from builder pursuant to an agreement. In terms of the said agreement, this Appellate Tribunal held the “Nikhil Mehta and Sons” as the 'Financial Creditor', as in their case the 'Financial Debt' was coming within the meaning of Section 5(8)(f) of the I & B Code. As the agreement reached between the parties pursuant to which amount has been ordered to be refunded by consumer forum is not available before us and appellants have not taken a plea that they are the 'Financial Creditor', we are not deciding such question leaving the question open for decision in case the appellants claims to be 'Financial Creditor' and moves before the Adjudicating Authority with such plea. For the reasons aforesaid, while we are not inclined to interfere with the impugned order dated 21St March, 2017 on the ground that the Appellants are not 'Operational Creditor', give liberty to the parties to decide their course of action as they may take, in accordance with law.

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• Insolvency & Bankruptcy

• 2017 (10) TMI 357
  Insolvency resolution process - petition under sections 8 and 9 of the Insolvency and Bankruptcy Code, 2016 - dispute raised after service of notice under S.138 of Negotiable Instruments Act - whether the dispute raised by the respondent/corporate debtor comes under the definition of section 5(6) of I&BC, 2016 or not? - Held that:- At an undisputed time, the respondent did not raise any challenge against the quality of goods or service. The respondent received the goods, accepted the goods without any protest and tendered payment by way of cheque. The above said conduct of the respondent shows that the dispute raised after service of notice under S.138 of Negotiable Instruments Act was raise with an ulterior motive. It is significant to note that notice under section 138 was issued by the petitioner on 15.06.2016, probably before receiving that notice the above referred letter Annexure-II-G has been issued by the respondent to the petitioner expressing respondent's inability to pay for want of realisation of money from the retailer of the respondent. In the said circumstances, the contentions taken by the respondent that the supply of goods received by them is in violation of the terms of contract is found devoid of any merit. In the above said discussions we are of the considered view that the dispute raised on the side of the respondent is not at all bona fide . Upon the above said discussions we are of a considered view is that the respondent raised the dispute in the instant case is for the sake of objection to see that petition of this nature is to be rejected. No doubts the dispute raised by the respondent does not comes under the purview of Section 5(6) of Insolvency & Bankruptcy Code, 2016. Therefore, we hold that the objections raised by the respondent are unsustainable under law. The petitioner also produced a certificate from the bank confirming that there is no payment of an unpaid debt by the respondent (Annexure-II-R at P. 083). The petitioner also complied section 9(3)(b) of Insolvency & Bankruptcy Code, 2016 (affidavit at Pg. 186). The petition being filed in compliance of sections 8 and 9 of I&BC, 2016 and petitioner succeeded in establishing existence of default it appears to us that this petition is liable to be admitted. The petitioner/operational creditor has also taken the consent of the proposed insolvency professional Mr. Anil Goel, AAA Insolvency Professional, LLPs, E-10 A, Kailash Colony, New Delhi 110048 having registration number - IBBI/IPA-001/IP-P00118/2017-18/10253 who has certified that there is no disciplinary proceedings pending against him and that he is duly empanelled with the IBBI. Therefore, we hereby appoint Mr. Anil Goel as Interim Resolution Professional. In view of the above said discussions this petition for initiating insolvency resolution process is hereby admitted. Moratorium in terms of section 14 of the Code comes into effect.

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• 2017 (10) TMI 356
  Initiation of a resolution process against the Corporate Debtor, BHEL - Insolvency and Bankruptcy Code 2016 - Held that:- As there is an existing dispute with respect to the right to withhold, and also in respect of the liability to pay interest, the insolvency resolution process against the Corporate Debtor cannot be admitted. The petition is therefore Rejected. While the Operational Creditor's petition (IB)-269(ND)/2017 is disposed off as having been Rejected, the Bench officer shall register the Show Cause notice as separate proceedings and issue notices returnable on 20th September, 2017. Service on the Managing Director of the Social Media shall be effected at the email and address of the registered office of the Social Media to be provided by Operational Creditor as well as the Bench Officer.

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• 2017 (10) TMI 355
  Corporate Insolvency Resolution Process - Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Held that:- In the case on hand, Respondent Company committed a default in repayment of the outstanding amount. The Application is complete in all respects. The material on record show that no disciplinary proceeding is pending against the proposed Interim Resolution Professional. This Application deserves to be admitted and it is accordingly admitted under Section 7 (5)(a) of the Code. This Adjudicating Authority hereby appoint Shri Ravi Kapoor, Company Secretary, as Interim Insolvency Resolution Professional’ residing at 7th Floor, 737, Fortune Tower, Sayajigunj, Vadodara-390005 and having Registration No. IBBI/IPA-002/IP-N00121/2017-18/10290 under Section 13 (1) (c) of the Code. The Interim Insolvency Resolution Professional is hereby directed to cause public announcement of the initiation of ‘Corporate Insolvency Resolution Process’ and call for submission of claims under Section 13(l)(b) read with Section 15 of the Code and Regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Moratorium under Section 13(1)(a) of the IB Code issued.

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• 2017 (10) TMI 354
  Corporate Insolvency process - Held that:- All the necessary requirements contemplated by Section 9 of the Code stands complied with. The Operational Creditor has disclosed the relevant data by placing on record the evidence by way of invoices, copy of ledger account and Evidence regarding issue and service of notice of default under Section 8 has also been filed along with compliance affidavit. In View of the above, we are satisfied that the operational creditor meets with the prescription of Section 9 of the Code and the Rules framed thereunder. The matter be referred to Insolvency and Bankruptcy Board of India for appointment of Corporate Insolvency Resolution Professional. A moratorium would also come in operation.

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• FEMA

• 2017 (10) TMI 352
  Partially dispensing with deposit of the penalty amount - order passed exercising the power under second proviso to Section 19(1) of the Foreign Exchange Management Act, 1999 - Held that:- It is relevant to state that an appeal would lie to the High Court under Section 35 of the Act on any question of law arising out of the order passed by the Appellate Tribunal. On the facts of the case, it can’t be said that the discretion exercised by the Appellate Tribunal in directing to deposit only 10% of the penalty and furnishing security (otherwise than bank guarantee) for 40% of the penalty is unreasonable or arbitrary to warrant interference. In our opinion, no question of law arises for consideration in this appeal. The appeal is devoid of merit and it is accordingly dismissed.

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• Service Tax

• 2017 (10) TMI 351
  CENVAT credit - Rent-a-Cab Service - Travel Agent Service - denial on the ground that it is for personal use of the employees - Held that: - the facts of the case which is not in dispute that both the services were used by the employees of the company for the purpose of activity related to the business activity of the bank. As regard the Rent-a-cab service it is used by the employees for meeting with the customers which is a core activity for fetching the business for the appellant. As regard the travel agent service the employees of the appellant have to travel different parts of the country in relation to the business activity of the appellant. For the purpose of traveling the travel agent service for booking the tickets is essential service for conducting the business of the appellant. The issue is relates to the period prior to 1.4.2011 when by amendment in the definition of input service, certain services were excluded - the cenvat credit in respect of Rent-a-cab service and Travel agent service is admissible - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 350
  GTA service - non-payment of service tax after 31.3.2005 - appellant case is that they bonafidely believed that being a proprietory concern they would not fall within the definition of GTA as per the amendment brought forth by N/N. 35/2004-ST dt.31.12.2004 - Abatement - Held that: - The appellant has to furnish necessary document / declaration to avail the benefit of 75% abatement in terms of notification 32/2004 - the issue whether the appellant is eligible for abatement has to be verified by the adjudicating authority for which the matter requires to be remanded. Penalties - Held that: - appellant has put forward reasonable cause for non-payment of service tax and the penalties under Section 76 and 78 are required to be waived - penalties set aside. Appeal allowed in part and part matter on remand.

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• 2017 (10) TMI 349
  Business Auxiliary Service - overriding commission - export of services or not? - levy of service tax - only dispute raised by the department is that such commission was first received by the Indian office of the appellant’s client who in turn transferred the amount in Indian rupees to the appellant. - Held that: - reliance placed in the case of Arafaath Travels Private Ltd. Versus Commissioner of Service Tax [2017 (8) TMI 554 - CESTAT CHENNAI], where it was held that even if the payment is received in India rupees such retention will have to be necessarily treated as saving of foreign exchange and by implication is akin to receipt of moneys in convertible foreign exchange - In the present case, it is undisputed that the appellants were receiving foreign currency in convertible foreign exchange. In the present case also, there is no dispute that the commission was received from abroad into India in convertible foreign currency - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 348
  Levy of service tax - Manpower Recruitment & Supply Agency Service - persons employed in subsidiary unit - Held that: - the appellant has employed certain persons in their subsidiary unit for which the department has raised the demand under the category of ‘Manpower Recruitment & Supply Agency Service’. The issue stands covered by the judgment in the case of Aravind Mills Ltd. [2014 (4) TMI 132 - GUJARAT HIGH COURT], where it was held that company is not in the business of providing recruitment or supply of manpower. Actual cost incurred by the company in terms of salary, remuneration and perquisites is only reimbursed by the group companies. There is no element of profit or finance benefit. The subsidiary companies cannot be said to be their clients. Deputation of the employees was only for and in the interest of the company - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 347
  Levy of service tax - charges / commission received for money changing activities - Held that: - as per Circular of the Board, the benefit cannot be denied to the assessee - The charges collected include Commission on DC, OBC-IBC-Others, Cheque return charges, Commission on Bank guarantees, Commission of Letter of Credit, Upfront fee, Cheque issue charges, Handling charges for gold coin, Commission on DD, TT, MT, Processing fee, Incidental charges, Locker rent, ABB charges, Exchange Profit received from FEDCO, other charges, Folio charges. Out of this, the exchange profit received from FEDCO may fall under charges received for money changing. This fact has to be verified for which the matter requires to be remanded. Penalties u/s 76 and 78 - Held that: - both penalties under Section 76 as well as Section 78 are imposed for equal amount which is highly erroneous and unjustified. The matter is remanded to the adjudicating authority to consider whether any amount / charges would fall under money changing activity and whether appellant is eligible for benefit of Circular No.92/3/2007 dt.12.3.2007 - appeal allowed by way of remand.

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• 2017 (10) TMI 346
  Reverse charge mechanism - Business Auxiliary Services - Commission paid to Foreign Agents - the period involved is 01.01.2005 to 30.04.2006 and 1.1.2005 to 28.2.2006 - Held that: - reliance placed in the case of INDIAN NATIONAL SHIPOWNERS ASSOCIATION Versus UNION OF INDIA [2008 (12) TMI 41 - BOMBAY HIGH COURT], where it was held that Before insertion of section 66A with effect from 18-4-2006, there was no authority to levy service tax on Import of service - with regard to royalty paid to foreign agents and the period involved in this case stands fully covered by the judgement whereas in ST/29/2009 few days will be beyond the period as stated in the judgement cited supra i.e from 18.04.2006 to 30.04.2006. The demand beyond the period 18.04.2006 is sustainable and for quantification of the same, the appeal (ST/29/2009) requires to be remanded to the adjudicating authority - appeal allowed in part and part matter on remand.

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• 2017 (10) TMI 345
  Benefit of N/N. 12/2003-ST dated 20.6.2003 - Valuation - includibility - cost of materials - whether in providing tyre retreading service, cost of materials are liable to deducted in terms of N/N. 12/2003-ST? - Held that: - the issue is settled by the decision in the case of an assessee is liable to pay tax only on the service component which under the State Act has been quantified at 30% - appeal allowed - decided in favor of assessee.

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• 2017 (10) TMI 344
  Reverse Charge Mechanism - Business Auxiliary Service - commission paid by the appellant to its overseas agents - demand of service tax for the period 9.7.2004 to 31.12.2006 - Held that: - the issue is decided in the case of INDIAN NATIONAL SHIPOWNERS ASSOCIATION Versus UNION OF INDIA [2008 (12) TMI 41 - BOMBAY HIGH COURT], where it was held that Before insertion of section 66A with effect from 18-4-2006, there was no authority to levy service tax on Import of service - the demand for the period prior to 18.4.2006 is not sustainable and therefore requires to be set aside. For the period post 18.4.2006, reliance placed in the case of Texyard International, Sree Angalamman Exports, Atlas Export Enterprises, M/s Kangaroo Impex Versus Commissioner Of Central Excise, Trichy [2015 (8) TMI 794 - CESTAT CHENNAI], where it was held that the demand of service tax under Business Auxiliary Service for services provided in relation to textile processors cannot be sustained. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (10) TMI 343
  SSI Exemption - use of brand name shared by three units - The Department's main plea is that the brand name Priya Polymers-South India is embossed on the bottom of the items manufactured by the appellant and this brand name belongs to other unit viz., M/s. Priya Polymers which is a partnership firm having partners Smt. Valsa and her husband Shri K. J. Jose - Held that: - the appellant and other two units on record belong to same family. There is evidence on record to prove that the brand name/inscription Priya Polymers-South India is not registered as brand name by the other unit viz., M/s. Priya Polymers though the wordings Priya Polymers are part of the brand name/inscription - Considering the Hon’ble Delhi High Court's decision in the case of CCE vs. Minimax Industries [2011 (1) TMI 782 - DELHI HIGH COURT], it appears that as per the facts on record, the said brand name Priya Polymers-South India cannot be called as an exclusive brand name of other unit viz., M/s. Priya Polymers. The facts indicate that the subject brand name can be said to belong to all the three units, which are owned by one family only - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 342
  Valuation - mutuality of interest - Refrigerators and Deep Freezers - enhancement of value - Held that: - similar matter was decided by the Tribunal in case of CCE, Bangalore vs. M/s. BPL Sanyo Utilities and Appliances Ltd. [2002 (12) TMI 137 - CEGAT, BANGALORE], whereunder it was observed that the assessee and M/s. BPL are separate legal entities and the transaction between the two is on principal to principal basis and there is no mutuality of interest between the two - appeal dismissed - decided against Revenue.

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• 2017 (10) TMI 341
  100% EOU - Refund of Additional Excise Duty (AED) - the appellant claimed refund of said AED paid as the buyer of HSD, having borne the incidence of duty - Held that: - The N/N. 22/2003-CE dated 31.3.2003 specifically exempts all goods specified in Annexure-I to this Notification (at Sl. No.9 of the Annexure-I Consumables are mentioned which cover the subject item viz., HSD oil), if brought in connection with manufacture and packaging of articles or for production or packaging or job work for export of goods or services, into export oriented undertaking - The Tribunal in the case of Toyota Kirloskar Motor Pvt. Ltd. vs. CCE, Bangalore [2007 (5) TMI 464 - CESTAT, BANGALORE] refers to CBEC Circualr No.60/01/06-CX dated 13.1.2006, which says that on export of goods, none of the duties chargeable under any Act of Parliament is payable, and holds that an exporter would be entitled to the benefit of exemption from National Calamity Contingent Duty (NCCD) under N/N. 108/95-CE dated 28.8.1995. For the present facts, following the ratio of the Tribunal s decision in Toyota Kirloskar Motor Pvt. Ltd., the appellant-assessee is also entitled to the refund of Additional Duty of Excise paid to the manufacturer-supplier by the appellant. There can be no doubt that the exporter-assessee is entitled to the claim of the refund filed for the Additional Duty of Excise paid on the HSD oil for use in the manufacture of export product - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 340
  CENVAT credit - HDPE pipes - case of Revenue is that these HDPE pipes were only optional requirement and are not essential for the functioning of the goods manufactured - Held that: - the HDPE pipes are supplied along with the FO integrated system and the excise duty is also paid on the same. Further, in the absence of HDPE pipes, the final product of the appellant is not functional - If the definition of input is analyzed as contained in rule 2(k) which include accessories of the final product cleared along with the final product, it is found that the HDPE pipes are accessories of the final products and is always cleared along with the final product as is reflected in the invoices produced by the appellant. In the case of CCE vs. Insulation Electrical (P) Ltd. [2008 (3) TMI 22 - Supreme court], the Hon’ble Supreme Court has held that the difference between the accessories and parts is that accessory is something supplementary or subordinate in nature and need not be essential for the actual functioning of the product, whereas part is an essential component of the whole without which the whole system cannot function. Appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 339
  Classification of goods - rough castings (Plummer Blocks Housing for Bearing) - whether classifiable under Chapter 84.83 of Central Excise Tariff or to be considered as castings under Chapter Heading 73? - Held that: - the castings cleared by the appellants, where the appellant has done various processes including proofing, machining, does not acquire the exact dimensions/specifications to fit into the machines of their customers and therefore, cannot be called as parts of the machines and cannot therefore, be classified under Chapter 84 of CETA - CBEC in its Circular No.225/59/96/CX. Dated 1.7.96 issued on the subject of classification of iron and steel castings refers to the decision of the Tribunal in the case of Shivaji Works Ltd. [1993 (5) TMI 98 - CEGAT, NEW DELHI] and states that the castings coming out of casting moulds up to the stage of proof machining and requiring further machining before being used as machine parts would be classifiable under chapter 73 - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 338
  Valuation - Benefit of N/N. 9/2003-CE dated 1.3.2002 - retrospective effect of notification - Held that: - the relevant N/N. 67/2003-CE dated 11.8.2003 amending the N/N. 9/2003-CE dated 1.3.2003 came into effect only from 11.8.2003. Therefore, as per computation of aggregate value of clearance of all excisable goods for home consumption manufactured by the appellant exceeds ₹ 300 lakhs for the preceding financial year. Consequently, the appellant is not entitled to the benefit of N/N. 9/2003-CE dated 1.3.2003. The Hon’ble Kerala High Court in the case of CCE & C, Cochin vs. Midas Pre-Cured Tread (P) Ltd. [2008 (6) TMI 218 - HIGH COURT OF KERALA AT ERNAKULAM] on this issue has clearly held that applicability of benefit of Notification is to be made with effect from the date on which the subject Notification comes into force. The Hon’ble Kerala High Court in this case has held that the Tribunal or even the High Court has no power to grant retrospective benefit of the Notification in the interpretation process, unless it is so provided in the Notification itself. Appeal dismissed - decided against appellant.

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• 2017 (10) TMI 337
  Liability of interest u/s 11AA of the CEA - case of appellant is that the learned Commissioner (A) has wrongly demanded the interest because when the differential duty payable was determined, Section 11AA was not in existence and hence no interest is payable on the differential duty paid by KMMCL on 30.10.1999 - Circular No.655/46/2002-CX dated 26.6.2002 - Held that: - Section 11AA was brought to the statute on 26.5.1995 and as per the proviso to the said Section as interpreted by the High Court of Gujarat in the case of GUJARAT NARMADA VALLEY FERTILIZERS CO. LTD. AND 1 Versus UNION OF INDIA AND 1 [2016 (10) TMI 276 - GUJARAT HIGH COURT] that it has retrospective application - the Hon’ble High Court has also considered the Board Circular No.655/46/2002 dated 26.8.2002 which was issued specifically in the background of Section 11AB of the Act. Neither the Circular was meant to cover Section 11AA nor the language used in Section 11AA would permit to apply such a clarification which was meant for Section 11AB of the Act - demand of interest upheld - appeal dismissed - decided against appellant.

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• 2017 (10) TMI 336
  Clandestine removal - Shortage of goods - molasses - penalty - Held that: - there is no mitigating or ameliorating factors in favor of the appellant No.1 M/s. VPPL to further reduce the penalty imposed on them. The facts on record clearly prove that there has been clearances of molasses initially of 53.520 MTs through four tankers, where no Central Excise invoices accompanied the goods. Further, there has been no reasonable explanation for the shortage of 1055.68 MTs of molasses found in the factory of the appellant-company, when compared with the stocks recorded in RG-1 Register. When it is so, the penalty imposed of ₹ 1 lakh on the appellant No.1 cannot be reduced further - penalty upheld. The penalty of ₹ 5,00,000/- has been imposed on appellant No.2, whereas he contests that day-to-day affairs were looked after by Lab In-charge. He has been only overall in-charge of the appellant-company. However, the appellant No.2 being overall in-charge cannot completely absolve himself of the responsibility of complying with the law of Central Excise in respect of payment of appropriate duty of Central Excise and following the right procedures as prescribed by the law of Central Excise - considering the fact that he has been overall in-charge and not looking after day-to-day affairs of the factory and when the appellant no.1, who are the main offenders and main noticee, have been imposed a penalty of ₹ 1 lakh, the quantum of ₹ 5,00,000/- imposed on appellant No. 2 does not seem to be proportionately appropriate. Considering the fact that the main accused has been imposed a penalty of ₹ 1 lakh, the penalty imposed on the appellant No. 2 is reduced from ₹ 5,00,000/- to ₹ 50,000/-. Appeal allowed in part.

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• 2017 (10) TMI 335
  Short payment of duty - Revenue proposed the demand of duty on the ground that since the sets were cleared for evaluation/display purpose the Central Excise duty ought to have been discharged at specific rate of duty as per the N/N. 5/99 dated 28.2.1999, No.3/2001 dated 1.3.2001 and No.6/2002 dated 1.3.2002. Held that: - the subject goods are not the standard products of the appellant but are modified / improved versions with additional facilities. These goods were stock transferred by the appellant to the branches initially for the purpose of evaluation/display as marketing strategy before commencement of their bulk commercial production. Though it is true that retail price was declared for the subject goods, the appellant admits that the goods were initially cleared for evaluation/display to the depots/branches of the appellant and finally sold to their employees at less than the retail price declared. When the subject goods are not factually meant for sale in the market in the normal course, the appellant s pleading that they have declared retail sale price, which has been the sole consideration for sale to the ultimate consumer, cannot make them entitled to the benefit of Notification No.6/2002 dated 1.3.2002 for clearance of their goods at the rate of duty at 16% under its Col. No.(i). Penalty - Held that: - considering that the subject matter is an issue of interpretation of the wordings of the Notification, the penalty imposed on the appellant is hereby dropped. Appeal allowed in part.

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• 2017 (10) TMI 334
  Non-payment of excise duty - duty on quantum of MS and HSD available in the pipeline on the date of de-bonding the tanks for storage of MS and HSD - contention of the Revenue is that the pipelines being common, the appellant should have de-bonded the MS and HSD in the pipeline also, instead, later on, when SKO and Naphtha were pumped through the same pipeline, the non-duty paid MS and HSD got cleared and mixed up with duty paid MS and HSD - Held that: - Admittedly, the quantity of MS and HSD which are subject matter of dispute have suffered duty as applicable in 2004 when the warehousing provisions were withdrawn. This has been recorded in the impugned order also - The only point is that the MS and HSD in the bonded pipeline as existing on 6.9.2002 got cleared when other petroleum products which were duty-paid were moved through the same pipeline. To that extent, the claim of the appellant that the warehouse quantity was in existence in the pipeline was not technically correct. However, equivalent quantity was only presumed to be in the pipeline as and when the MS and HSD was transmitted through the same. The present confirmation of demand of duty for pipeline quantity as on 6.9.2002 is sustainable as the said quantity has been cleared when other products were pumped through the pipeline. However, since the appellants have conceded that MS and HSD of equivalent quantity as deemed to have been bonded for the period after 6.9.2002 till the warehousing provisions were withdrawn, the duty paid latter should be adjusted against the present demand along with the interest as applicable. Penalty - Held that: - no mala fide intention to evade payment of duty on the part of the appellant. The appellant being a Public Sector Undertaking, rebuttable presumption is created regarding non-existence of malafideness. In the present, there is no such allegation or evidence to intend to evade duty - penalty u/r 25 not justified. Appeal allowed in part.

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• 2017 (10) TMI 333
  Valuation - job-work - The department was of the view that the appellants have to apply the valuation laid down in Ujjagar Prints case [1988 (11) TMI 106 - SUPREME COURT OF INDIA], and therefore cannot deduct the value of scrap from the cost of raw materials - Held that: - As per the proposition laid down in Ujagar Prints case, the appellants have to pay duty on the raw materials plus cost of conversion charges plus margin of profit. It does not say that the appellant can deduct the cost of raw materials when the scrap was returned to the principal - demand upheld. Penalty - Held that: - In the present situation, wherein there has been interpretation of the proposition laid down in the decision rendered in Ujagar Prints by the appellant, being merely a dispute of interpretation and the appellant having reduced the value of scrap returned only, the penalty imposed is unwarranted - penalty set aside. Decided partly in favor of appellant.

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• 2017 (10) TMI 332
  CENVAT credit - inputs and capital goods - It was alleged that the appellant had taken ineligible credit on the inputs purchased from M/s. Innovative Ventures Pvt. Ltd., Doddaballapur, Bangalore during the months of July 2008 and August, 2008, on which duty had not been discharged by M/s. Innovative Ventures Pvt. Ltd - reversal of credit alongwith interest - Held that: - CENVAT credit cannot be denied to the manufacturers on the ground that the supplier has not paid the duty - Board Circular No.766/82/2003-CE dated 15.12.2003 also cleared the same - reliance placed in the case of CCE, Jaipur Versus M/s. Aditya Industries and others [2014 (2) TMI 7 - CESTAT NEW DELHI] - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 331
  Period of limitation - recovery of unpaid dues of excise - mandatory penalty u/s 11AC of the CEA, 1944 read with rule 15(2) of the CCR, 2004 - Held that: - Extended period of limitation for recovery of duty of excise not paid, not levied or short paid or short levied or erroneously refunded would be available to the department only if such event was by reason of fraud, collusion, willful misstatement, suppression of facts or contravention of any of the provisions of the Act or the Rules with intent to evade payment of duty. It is under similar circumstances that the penalty under section 11AC of the Act would attach. Since October, 2005, the assessee had corresponded with the department on the issue of centralized registration along with which necessary information was furnished about the business of the assessee of compression of natural gas and distribution/sale of CNG from various daughter stations. Even the intention of availing CENVAT credit was made clear to the department as early as on 27.02.2007 - with regard to susbsequent SCN also, all information was supplied to the department - there was neither any suppression nor any contravention on the part of the assessee. Full facts were placed before the department and within its knowledge - extended period not invokable. Appeal dismissed - decided against Revenue.

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• 2017 (10) TMI 330
  CENVAT credit - inputs - H.R. Coils, Plates, SS Sheets, M.S. Channels, Angle, Beam, Bars etc., used for repair and maintenance of Capital goods installed in the factory - Held that: - there is no dispute of the fact that these items were used in the factory for repair and maintenance of the capital goods in the factory - the issue has been considered in the case of Commissioner of Central Excise, Customs And Service Tax, Visakhapatnam-I Versus Jindal Stainless Ltd [2015 (6) TMI 821 - CESTAT BANGALORE], where it was held that impugned goods were used in conjunction with certain capital goods/machinery, they become a part of the machinery as they were used for upkeep of the machinery - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 329
  CENVAT credit - service tax paid on sales commission - input services - whether sales commission paid to agents fall under the scope of sales promotion? - Held that: - a Division Bench of this Tribunal in the case of Ashapura Volclay Ltd and others Vs. C.C., Jamnagar [2017 (6) TMI 659 - CESTAT - Ahmedabad] following the principle laid down by the Larger Bench, disposed of the matters, with the liberty to approach the Tribunal after disposal of the case pending before the higher forum - Following the said judgment, the present appeal is also disposed of with the liberty to both sides to approach the Tribunal soon after the verdict of the Hon’ble High Court in the pending Appeal - appeal disposed off.

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• 2017 (10) TMI 328
  CENVAT credit - M/s Channel, Angle, Beam, Structural Steel etc. used in fabrication of capital goods within the factory - Held that: - the Principal Bench at Delhi in the case of Singhal Enterprises Pvt. Ltd [2016 (9) TMI 682 - CESTAT NEW DELHI] has held that applying the “User Test” to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit. The Appellant should establish the said use by adducing evidences - the matter is remanded to the adjudicating authority to examine the claim of the appellant on the eligibility of credit on the aforesaid items - appeal allowed by way of remand.

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• 2017 (10) TMI 327
  CENVAT credit - M/s Channel, Angle, Beam, Structural Steel etc. used in fabrication of capital goods within the factory - Held that: - the Principal Bench at Delhi in the case of Singhal Enterprises Pvt. Ltd [2016 (9) TMI 682 - CESTAT NEW DELHI] has held that applying the “User Test” to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit. The Appellant should establish the said use by adducing evidences - the matter is remanded to the adjudicating authority to examine the claim of the appellant on the eligibility of credit on the aforesaid items - appeal allowed by way of remand.

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• 2017 (10) TMI 326
  CENVAT credit - inputs - H.R. Coils, Plates, SS Sheets, M.S. Channels, Angle, Beam, Bars etc., used for repair and maintenance of Capital goods installed in the factory - Held that: - there is no dispute of the fact that these items were used in the factory for repair and maintenance of the capital goods in the factory - the issue has been considered in the case of Commissioner of Central Excise, Customs And Service Tax, Visakhapatnam-I Versus Jindal Stainless Ltd [2015 (6) TMI 821 - CESTAT BANGALORE], where it was held that impugned goods were used in conjunction with certain capital goods/machinery, they become a part of the machinery as they were used for upkeep of the machinery - credit allowed - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (10) TMI 325
  Penalty u/s 27(3) of the TNVAT ACT - reassessment - Held that: - it is seen that the petitioner has admitted their mistake that the purchases effected by them were not accounted for in the year 2014-15. However, their specific case is that the same is accounted for in the closing stock of the year 2014-15, as they intended to sell the stock during the assessment year 2015-16. Unfortunately, the petitioner did not produce their purchase ledger, stock register, balance sheet etc., before the Assessing Officer. The explanation that is said to be given now is by stating that the Assessing Officer did not call for these documents. The burden of proof is on the petitioner to prove that there was no suppression. One factor, which appears to be correct is that the petitioner has not availed any ITC on the alleged purchase suppression. This factor is a main factor to be noted to examine the conduct of the petitioner/dealer. The second respondent/appellate authority rightly observed that the petitioner did not produce any documents before the Assessing Officer or before the appellate authority - matter is remanded to the second respondent/appellate authority with a specific direction to the petitioner to produce all the records before the appellate authority - appeal allowed by way of remand.

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• 2017 (10) TMI 324
  Validity of assessment order - TNGST Act - Held that: - The Assessing Officer, in his parawise comments, has specifically stated that the petitioner has not produced documentary evidence, as they have charged market value in the sale invoices and they have not produced any evidence that they have received more amount than the sale price. Further, the petitioner did not produce the prevailing market rate for the relevant period, viz., 2003-04. This averment is reiterated in more than one place in the parawise comments - the mater is remanded to the second respondent or fresh consideration, and petitioner is at liberty to produce all necessary documents to substantiate their claims - matter on remand.

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