TMI Tax Updates - e-Newsletter
November 19, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
Income Tax
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Transfer pricing adjustment - Ex consequenti, the “total cost” being the denominator in the PLI of OP/TC, has to be taken as the cost incurred by the assessee and not the FOB value of goods between third party enterprises sourced through the assessee. In other words, the tested party should be the assessee and not its AE - AT
Customs
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Import of high end luxury cars from various foreign suppliers by mis-declaring as new - Undervaluation of goods - Appellant is a subsequent purchase of the car - the contention that valuation of the car and that the car is not an old car is not acceptable - redemption fine reduced to ₹ 5 lakhs - penalties set aside - AT
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Benefit of Notification 28/97 dt. 1.4.97 under EPCG scheme - Board has categorically clarified that industries are eligible to import consumer items including Chandeliers under EPCG licence - Benefit cannot be denied - AT
Central Excise
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Claim of exemption under notification no. 6/02-CE (serial No. 57) of a formulation made from two bulk drugs - Diphenoxylate Hydrochloride with Atropine Sulphate. - if a formulation consist of more than one bulk drug, and out of those bulk drugs only one bulk drug is specified in notification the duty exemption to the formulation cannot be denied. - AT
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Demand of interest on reversal of CENVAT Credit - simply because the case was settled by Settlement Commission interest provision will not vary, Rule 14 is applicable irrespective whether it is a case settled by Settlement Commissioner or otherwise therefore on this ground Hon’ble Apex Court judgment can not be distinguished - AT
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Levy of penalty - there was no malafide intention on the part of the assessee inasmuch as the assessee has himself detected the mistake and has deposited the differential duty along with interest much before the issuance of the show-cause notice - No penalty - AT
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Levy of duty on by-product or a waste - the amendment in Section 2(d) will not change the scenario inasmuch as the manufacture of waste, refuse, scrap, etc., cannot be considered to be manufactured items in terms of Section 2(f) of the Central Excise Act. - AT
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Demand of interest and penalty on reversal of credit - manufacture of erection and installation of the furnace within the factory of the appellant - appellant has not disputed the denial of Cenvat Credit and paid the said amount admittedly and not contested - Demand of interest and penalty set aside - AT
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Benefit of CENVAT credit - credit earned in the subsequent months cannot be used for payment of duty for the previous month - Such wrong utilization invites confirmation of interest which is also required to be considered as penal in nature. - With interest penalty of ₹ 10000 imposed - AT
VAT
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Levy of tax / VAT on franchisee fees/royalty paid - The assessee shall be liable to pay tax on the royalty received from the licensee dealers, who have been transferred the right to use brand name/trade mark-'Kingfisher' packaged drinking water - HC
Articles
Notifications
Companies Law-
F.No.01/34/2013-CL-V- Part-I - dated
16-11-2015
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Co. Law
Companies (Management and Administration) Third Amendment Rules, 2015
Income Tax-
S.O. 3037(E) - dated
10-11-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Shree Navchetan Andhjan Mandal, Gujarat
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S.O. 3036(E) - dated
10-11-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Bhagyoday Charitable Trust, Gujarat
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S.O. 3035(E) - dated
10-11-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Impact India Foundation, Mumbai
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S.O. 3034(E) - dated
10-11-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Bharti Mahila Mandal, Pune, Maharashtra
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S.O. 3033(E) - dated
10-11-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Dr. Sali Medical Foundation, Pune-410503
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S.O. 3032(E) - dated
10-11-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Indian Red Cross Society, Andhra Pradesh
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S.O. 3031(E) - dated
10-11-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Prachina Bharatiya Vidya Sadha Gurukul Ashram, Orissa
VAT - Delhi-
No. F.3(23)/Fin(Rev-I)/2015-2016/dsvi/914 - dated
16-11-2015
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DVAT
Delhi Value Added Tax (Amendment) Rules, 2015
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No. F.3(22)/Fin(Rev-I)/2015-2016/dsvi/913 - dated
16-11-2015
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DVAT
Amendments in the schedules appended in Delhi Value Added Tax Act, 2004
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (11) TMI 811
Eligibility for grant of registration u/s 12AA - CIT(A) rejected the registration under Section 12AA of the Act primarily on the ground that the jurisdiction of the case does not vest with him and the proviso to Section 2(15) of the Act is applicable and the assessee society failed to furnish full details of the corpus fund - Held that:- It is undisputed fact that the appellant society filed the returns of income with the Income Tax Officer (Exemption), Rohtak. We also find from the paper book that the Deputy Commissioner of Income Tax, Rohtak, Circle – Rohtak, had issued scrutiny notice under Section 143(2) of the Act dated 22nd September, 2014 for the assessment year 2013-14. Therefore, it is the Commissioner of the Income Tax, Rohtak, who had valid jurisdiction for the appellant society. The jurisdiction of Commissioner of Income Tax is always determined with reference to the situs of the Assessing Officer. In the circumstances, the first objection raised by the CIT is rejected and it is worthwhile to mention here that the learned CIT(DR) fairly conceded before us that this objection does not hold water. Commissioner is only entitled to examine whether the objects of the institutions are charitable or not. Once the objects of the institutions are found to be charitable, the Commissioner has no option, but to grant registration. In the present case the Commissioner has not found that any objects of the trust are not charitable in nature. The objections raised by the CIT that the appellant had failed to comply with the direction of the Commissioner of Income, Rohtak to file the details of donors of corpus funds and the institution was collecting the fees from the students are not relevant considerations at the time of grant of registration under Section 12AA of the Act. These are the issues to be examined during the assessment proceedings after grant of the registration under section 12AA of the Act. Therefore, we direct the Commissioner of Income Tax, Rohtak, to grant registration to the appellant society within a period of 30 days from the date of receipt of this order. Accordingly, the grounds of appeal filed by the appellant society are allowed in full. - Decided in favour of assessee.
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2015 (11) TMI 809
Reopening of assessment - non issue of notice - Held that:- With the legal position being abundantly clear that a reassessment order cannot be passed without compliance with the mandatory requirement of notice being issued by the AO to the Assessee under Section 143(2) of the Act, the ITAT was in the present case right in concluding that the reassessment orders in question were legally unsustainable. - Decided in favour of assessee.
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2015 (11) TMI 808
Waiver of interest under Sections 234B and 234C - Held that:- As decided in UB Global Corporation Limited Vs. Chief Commissioner of Income Tax [2013 (5) TMI 126 - KARNATAKA HIGH COURT] the decision of incidence and applicability of Income Tax under the Act, need not necessarily be in the case of the assessee, but could be in any other case i.e. of any other assessee or otherwise. As long as the decision covers the field of Income Tax legislation, as may be applicable to any assessee, 'would be a circumstance for reduction of waiver of interest under Section 234 A to C as the case may be A division bench of the High Court of Gujarat in Bhaneben’s case (2004 (3) TMI 35 - GUJARAT High Court) regard being had to the facts obtaining therein over delay in filing the return of income resulting in late payment of taxes, an unavoidable circumstance - Waiver of interest can be considered. The Board, in exercise of powers conferred under clause (a) of sub-section (2) of Section 119 of the Act, has issued a Circular/Notification No. 400/234/95-IT/B dated 23-5-1996, empowering the Chief Commissioner and the Director General, Income Tax, to waive or reduce the interest chargeable under Section 234B and two other sections in the class of cases or class of incomes, specified in paragraph 2 thereof for the period and to the extent the Chief Commissioner/Director General deem fit, subject to fulfilment of the conditions enumerated therein. See Sita Holiday Resorts Ltd. Versus Chief Commissioner of Income-tax And Others [2002 (9) TMI 99 - DELHI High Court - Income Tax]. - Decided in favour of assessee.
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2015 (11) TMI 807
Transaction of shares - Capital Gain or business profits - whether the entire activity of declaring the gain made on account of sale of shares/units of mutual funds was only with the view of avail of lower rate of taxation applicable to profits made on account of capital gains? - Held that:- This issue has been dealt with by the Tribunal by recording the fact that it was not the case of revenue before the Tribunal that the respondent-assessee had converted it's stock in trade into the investment with the intention to avoid and/or reduce the tax. In the absence of any factual basis the allegation that the entire exercise was carried out as investment only to avail of the concessional rate of tax as urged by the revenue cannot be accepted. Moreover, on the issue of long term capital gains with regard to mutual funds, there are concurrent findings of facts by the CIT(A) and the Tribunal in favour of the respondent-assessee. Whether Tribunal right in holding that the mere entry in books of accounts that shares are held as investment, make the respondent individual an investor, whereas the period of holding of these scrips, the frequency, the volume and value of transactions are indicative of being trader and not an investor? - Held that:- We find that the Assessing Officer in the Assessment Order gives a table of the transaction entered during the year. From the table, it is evident that a single purchase/sale transaction which are received/delivered in multiple lots i.e. more than one lot are each considered as separate transaction. The Assessing Officer has computed each lot as a separate transaction resulting in inflated figure of 205 transactions. So far large value of transactions are concerned, one must not loose sight of the fact that large value has to be looked at in the context of the wealth of the person concerned. In this case, the respondent-assessee is engaged in a very profitable business of embroidery which has turnover of ₹ 19.28 crores and profit of ₹ 9 crores during the subject assessment year. Thus the value of the transactions for purposes of deciding the issue is to be considered from case to case and there can be no absolute value beyond which the transaction would be considered to be trading. Therefore in the facts of the present case, the view taken by the CIT(A) and Tribunal on the aforesaid facts is a plausible view. The determination of whether an assessee is carrying a trading or investment activity is to be determined on a cumulative assessment of various factors, which has in fact been done by the CIT(A) and the Tribunal. The revenue has not been able to show that the factual finding recorded by CIT(A) and the Tribunal is in any manner perverse and/or arbitrary. - Decided in favour of assessee.
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2015 (11) TMI 806
Taxability of income in India - whether income of an assessee arising from contract, in India, be treated as taxable in India as PE of an assessee exists in terms of article 5(2)(A) (B) (C) beside 5(2)(J) of DATA with USA? - Whether interest income earned in India can be treated as Business Income for taxation and can be not taxed as per DATA with USA? - review petition - Held that:- It is not in dispute that the Assessing Officer, in this case, proceeded on the basis of Article 5(2)(j). In other words, Article 5(2) (a), (b) & (c) was not in issue. Before the first appellate authority, before whom the assessee carried the matter in appeal, the finding was confirmed with reference to Article 5(2)(j), for the Assessment Year 2002-2003; whereas, in respect of other two years, which are subject matter of other two appeals, the appeals of the assessee were allowed with reference to Article 5(2)(j) and this gave rise to appeals by the Revenue and by the assessee before the Tribunal. Before the Tribunal, we notice that the issue was sought to be raised by the Revenue and the following appears to be the reasoning of the Tribunal in declining to consider the question of Permanent Establishment with reference to Article 5(2) (a), (b) & (c) The Respondent, in fact, would submit that finding of this nature does not even give rise to a substantial question of law. That is to say, according to him, the argument was raised, for the first time, before the Tribunal and there are no facts on record to back-up the plea raised under Article 5(2) (a), (b) & (c). We notice that, in fact, the Revenue did not move any application for admission of additional evidence, as is noted. As we have already noted, a review can be successfully premised in an appeal under Section 260A of the Income Tax Act only on the review petitioner establishing that there is an error apparent on the face of the record. We are unable to perceive any error apparent on the face of the record in the judgment sought to be reviewed. - Decided against revenue.
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2015 (11) TMI 805
Validity of assessment - period of limitation - whether extended period of limitation to complete the assessment is provided under Section 153 of the Income Tax Act? - Held that:- when the writ court while dismissing the writ petition by a judgment dated 13th January, 2000 directed the petitioner to reconsider the matter with regard to auditing the books of accounts under Section 142 (2A) of the Income Tax Act, no assessment proceeding could be completed without complying with the order of the Court. The Commissioner passed the order on 25th May, 2000. We are, therefore, of the opinion that the time taken by the Commissioner to decide the matter from 13th January, 2000 to 25th May, 2000 stood excluded while computing the period of limitation. The period of two months 6 days as calculated by the appellant consequently, would start from the date when the Commissioner passed the order, namely, 25th May, 2000. The assessment was completed on 16th June, 2000 within the extended period of 2 months 6 days. We are, consequently, of the opinion that assessment order was passed during the extended period of limitation as provided under Section 153(3) Explanation (1) (ii) of the Income Tax Act. - Decided in favour of the department.
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2015 (11) TMI 804
Penalty u/s 271D - whether there was ‘reasonable cause’ to accept the said loan in cash, or some bonafide reason due to which the assessee did not obtain the loan in accordance with section 269SS? - ITAT delted the penalty - Held that:- The assessee is a wholesale dealer of fast food goods, manufactured or marketed by various agencies and companies of national repute/Multi National Companies. For clearance of certain cheques, which stood issued in advance, as per market procedure, money had to be arranged to avoid prosecution under various statutes. It was also to save the reputation and goodwill. The cheques were deposited by the drawee as per his convenience. It stands established that after deposit of the amount, so borrowed in cash, the cheques issued in favour of the drawee stood cleared. Instead of availing the Cash Credit limit, for which the assessee was required to pay interest, he chose to borrow the amount from his near relation and deposit it in his account. There is nothing illegal or unusual about the same. Hence, findings of fact, cannot be said to be perverse or not borne out from the record. Statement made by the assessee cannot be said to be incorrect, for the authorities below, concurrently found the same to be plausible and correct - Decided in favour of assessee.
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2015 (11) TMI 803
Unexplained investment - addition u/s 69 - CIT(A) deleted the addition - Held that:- he batteries were never purchased by the respondentassessee on one time payment, but, it was purchased on credit basis and hence, the amount which has been added in the income of the respondent-assessee which is ₹ 12,73,429/- as unexplained investment, could not have been added by the Assessing officer. So far as, rate of net profit is concerned, Gross profit rate fixed by Assessing Officer @ 15 % which has been reduced by the Commissioner (Appeal) as a net profit @ 6 %. This is also correct because the respondent has sold the batteries on a wholesale basis. The percent of the profit is much lessor because the prices of the batteries were also fixed. This aspect of the matter has been properly appreciated by the Commissioner (Appeal) as well as by the Income Tax Appellate Tribunal. The order passed by the Income Tax Appellate Tribunal that the goods were purchased on credit basis looking to the statement of accounts, average margin of profit is 3.5 to 4.5 and hence, 6 % net profit fixed for the year 1996-97 and for the Assessment Year 1997-98 is also absolutely reasonable. - Decided against revenue.
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2015 (11) TMI 802
Entitlement to deduction under Section 80P(2)(a)(i) - ITAT allowed the claim - Whether the Tribunal is correct in holding that the assessee is not a Co-operative Bank but only a Co-operative society engaged in providing credit facilities to its members? - Held that:- If a Co-operative Bank is exclusively carrying banking business, then the income derived from the said business cannot be deducted in computing the total income of the assessee. The said income is liable for tax. A Co-operative bank as defined under the Banking Regulation Act includes the primary agricultural credit society or a primary co-operative agricultural rural development bank. The Legislature did not want to deny the said benefit to a primary agricultural credit society or a primary co- operative agricultural and rural development bank. They did not want to extend the said benefit to a co-operative bank which is exclusively carrying on banking business i.e., the purport of the amendment. If the assessee is not a Co-operative bank carrying on exclusively banking business and if it does not possess a license from the Reserve Bank of India to carry on business, then it is not a Co-operative bank. It is a Co-operative society which also carries on the business of lending money to its members which is covered under Section 80P(2)(a)(i) i.e., carrying on the business of banking for providing credit facilitates to its members. The object of the aforesaid amendment is not to exclude the benefit extended under Section 80P(i) to the society. See THE COMMISSIONER OF INCOME TAX vs. SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA, BAGALKOT [2015 (1) TMI 821 - KARNATAKA HIGH COURT ] - Decided in favour of assessee.
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2015 (11) TMI 801
Entitlement to deduction under Section 80P(2)(a)(i) - Whether Section 80P(4) is applicable only for the assessment year 2008-09 onwards inspite of the fact that the explanatory notes of the Finance Act 2006 makes it abundantly clear that this provision is applicable from assessment year 2007-08?? - Held that:- If a Co-operative Bank is exclusively carrying banking business, then the income derived from the said business cannot be deducted in computing the total income of the assessee. The said income is liable for tax. A Co-operative bank as defined under the Banking Regulation Act includes the primary agricultural credit society or a primary co-operative agricultural rural development bank. The Legislature did not want to deny the said benefit to a primary agricultural credit society or a primary co- operative agricultural and rural development bank. They did not want to extend the said benefit to a co-operative bank which is exclusively carrying on banking business i.e., the purport of the amendment. If the assessee is not a Co-operative bank carrying on exclusively banking business and if it does not possess a license from the Reserve Bank of India to carry on business, then it is not a Co-operative bank. It is a Co-operative society which also carries on the business of lending money to its members which is covered under Section 80P(2)(a)(i) i.e., carrying on the business of banking for providing credit facilitates to its members. The object of the aforesaid amendment is not to exclude the benefit extended under Section 80P(i) to the society. See THE COMMISSIONER OF INCOME TAX vs. SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA, BAGALKOT [2015 (1) TMI 821 - KARNATAKA HIGH COURT ] - Decided in favour of assessee.
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2015 (11) TMI 800
Franchise fee - whether the assessee/respondent was only receiving USD 22,500 from the Joint Venture Companies and not USD 45,000, as contended by the Revenue? - Held that:- The finding is that the assessee has received only USD 22,500 and not USD 45,000 during the period in question. Apart from this, it is also noted in paragraph 7 of the impugned order that assessee could not remit even this amount of USD 22,500 to the parent Company because of an embargo placed by the Government. Therefore, there is no factual basis for the submission made by the learned counsel for the Revenue that the assessee was, on the one hand, receiving USD 22,500 from the Joint Venture Companies and, on the other hand, was remitting USD 45,000 to its parent Company. No perversity has been pointed out in the findings of fact returned by the CIT (A) as also the Income Tax Appellate Tribunal - Decided against revenue.
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2015 (11) TMI 799
Penalty under Section 271(1)(c) - Held that:- There was no concealment of income or furnishing of inaccurate particulars of income by the assessee. From the record, it is clear, that the assessee had furnished all the particulars, but merely because the accounting method adopted by the assessee was not accepted, because of which certain tax had been levied, would not mean that the assessee had furnished wrong information or concealed any income while filing its return. As such, on merits as well as on the question of validity of the notice, we do not find any infirmity with the order of the Tribunal. - Decided in favour of assessee.
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2015 (11) TMI 798
Additions made u/s 69C - Disallowance of expenses claimed by the assessee - Held that:- Admittedly, these are estimated disallowances made out of expenses that were already claimed in the original return of income filed by the assessee. The assessee has submitted that the assessment years up to 2006-07 fall in the category of concluded assessments, i.e., assessments of those years were not pending on the date of initiation of search. Hence, in our view, the assessing officer could not have made these additions for AY 2004-05 to 2006-07 in the absence of any incriminating materials. Alternative contentions of the assessee also merits acceptance, i.e., the assessee has made additional disclosure of about 20.00 lakhs, which is more than enough to cover the above said disallowances. We accept the alternative contentions of the assessee and hence the additions made by the AO, after accepting the additional disclosure of ₹ 20.00 lakhs, would result in double assessment, since it is stated that the assessee has not capitalised the above said amount in his books of account. Accordingly, we set aside the orders of Ld CIT(A) in respect of the above said issues in all the years cited above and direct the AO to delete the disallowances, referred above. Hence the net result would be that there is no necessity to make any addition u/s 69C of the Act. Even otherwise, we notice that the assessing officer has made the additions u/s 69C of the Act without examining the claim of availability of sources out of drawings made by the assessee and his wife. Accordingly, we set aside the order of Ld CIT(A) on this issue in all the assessment years referred above and direct the AO to delete the impugned additions - Decided in favour of assessee. Suppression of professional fee receipts - Held that:- CIT(A) has rightly concluded that the assessing officer did not bring any material on record to support his case of estimation of professional receipts of earlier years. We also notice that the assessing offer has assessed the net profit on the alleged suppressed professional receipts, meaning thereby, the assessing officer has presumed that the assessee would have suppressed corresponding expenses also. Again it is only a guess work only, unsupported by any material. Similarly, the average daily collection estimated by the AO was also mere guess work. In effect, there is no material available with the AO to show that the assessee has suppressed professional receipts as well as expenses in order to substantiate the estimation made by him.Accordingly, we are of the view that the ld CIT(A) was justified in deleting the additions in all the years.- Decided in favour of assessee. Penalty u/s 271(1)(c) - Held that:- If we analyze the facts behind the additional disclosure of about ₹ 20.00 lakhs made by the assessee, we notice that he has voluntarily offered the same and no material was seized during the course of search warranting the additional disclosure. The assessee has duly disclosed the income voluntarily offered by him in the returns of income filed in response to the notices issued u/s 153A of the Act. During the course of penalty proceedings also, the assessee has offered the explanation to that effect and the said explanation was not found to be false. During the course of search proceedings, the revenue has noticed/seized all the materials available with the assessee and no incriminating material supporting the additional disclosure was found. Under these set of facts, we are of the view the tax authorities are not justified in presuming that the additional disclosure voluntarily made by the assessee shall constitute concealed income warranting penalty u/s 271(1)(c) of the Act.- Decided in favour of assessee. Penalty levied u/s 271AAA - Held that:- There is no dispute with regard to the fact that the assessee has disclosed the undisclosed income as his professional income and the same has been accepted by the assessing officer. In fact, the assessing officer has proceeded to estimate the professional income of the preceding years on the basis of the above said disclosure. Thus the assessee has complied with all the three conditions specified in sec. 271AAA(2) of the Act and accordingly, the penalty levied by the AO u/s 271AAA(1) of the Act is liable to be deleted.- Decided in favour of assessee.
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2015 (11) TMI 797
Rectification of mistake - whether violation of the provisions of section 13 are to be examined by the Assessing Officer while considering the exemption under section 11? Held that:- The powers of rectification under section 154 are restricted and as rightly pointed out by the Commissioner of Income-tax (Appeals), issues which require detailed examination and analysis cannot be undertaken under section 154 of the Act. We are of the opinion that action of the Assessing Officer in restoring the order of the Assessing Officer under section 143(3) which was also the subject-matter of appeal before the Commissioner of Income-tax (Appeals) cannot be done. Moreover, as seen from the original assessment order under section 143(3), one violation which the Assessing Officer alleges is with reference to usage of cars. However, the Assessing Officer has not quantified the extent of amount spent on behalf of the personal usage of the trustees in the order. As seen from the statement also the context in which the statements were given do indicate that the trustee has stated that the cars were utilised for the objects of the society, more particularly for transporting the dignitaries of Medical Council of India and others to the premises of the assessee-society, i.e., various colleges. In view of the clear statement of the managing trustee, we do not see any personal usage of the cars of the society. The fact that the Assessing Officer did not quantify any amount of personal use also indicate that the Assessing Officer has raised this issue without any evidence, so as to deny the exemption to the assessee. Purchase of properties in the name of family members of the managing trustee - Held that:-If the Revenue has any grievance on the issue, they should have preferred an appeal on the orders of the Commissioner of Income-tax (Appeals), but the Assessing Officer has no powers to restore the original assessment order under section 143(3) in the guise of modification under section 154, having allowed the exemption consequent to the orders of the Income-tax Appellate Tribunal. In view of this, we do not find any merit in the Revenue's appeals - Decided against assessee.
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2015 (11) TMI 796
Denial of deduction under section 80P(2)(a)(i) - Held that:- The issue raised by the assessee in these appeals has already been considered and decided by this Tribunal in the case of Asst. CIT v. Bangalore Commercial Transport Credit Co-operative Society Ltd. [2011 (4) TMI 1222 - ITAT BANGALORE ] wherein this Tribunal held that section 80P(4) is applicable only to co-operative banks and not to credit co-operative societies. The intention of the Legislature of bringing in co-operative banks into the taxation structure was mainly to bring in par with the commercial banks. Since the assessee is a co-operative society and not a co-operative bank, the provisions of section 80P(4) will not have application in the assessee's case and therefore, it is entitled to deduction under section 80P(2)(a)(i) of the Act We find that in the assessee's own case for the assessment year 2010-11 on identical facts, the issue was decided in favour of the assessee - Decided in favour of assessee.
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2015 (11) TMI 795
Levy of interest under sections 234B and 234C - contention of the learned authorised representative has been that interest under section 234C should have been computed only for a period of one month from March 16, 2007 to March 31, 2007, because the liability for tax has accrued after the date for payment of third instalment, i.e., after March 15, 2007 - Held that:- The Assessing Officer is accordingly directed to compute the interest under sections 234C and 234B following the decision of tin the case of CIT v. Smt. Premlata Jalani [2003 (7) TMI 62 - RAJASTHAN High Court] in relation to the issue of computation of interest under section 234C wherein it has been held that liability to pay tax by way of advance tax in case of capital gains arises only after the transaction has taken place and under section 234A in the light of the decision of the hon'ble Supreme Court in the case of CIT v. Pranoy Roy [2008 (9) TMI 150 - SUPREME COURT ] the Assessing Officer ought to have taken the self-assessment tax paid before the due date of filing of return - Decided in favour of assessee for statistical purposes. Also taking into consideration the decision of the hon'ble Gujarat High Court in the case of Bharatbhai B. Shah v. ITO [2013 (10) TMI 1025 - GUJARAT HIGH COURT] and decision of the learned Commissioner of Income-tax (Appeals)-5 in the case of brother of the assessee namely "Sh. Bharat Vinod Daftary"
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2015 (11) TMI 794
Computation of capital gains under section 50C - adoption of Fair market value proposed by the District Valuation Officer - Held that:- Grievance of the Revenue in this appeal that the learned Commissioner of Income-tax (Appeals) ought not to have deleted the addition inasmuch as the objections raised by the assessee were already considered by the District Valuation Officer in his report and without confronting the District Valuation Officer with the objection raised by the assessee the Commissioner of Income-tax (Appeals) should not have deleted the addition finds considerable merit. See CIT v. Prabhu Steel Industries Ltd. [2013 (7) TMI 204 - BOMBAY HIGH COURT] The interests of justice would be served, if the matter is restored to the file of the Assessing Officer with a direction that the Assessing Officer shall confront the District Valuation Officer with the objections raised by the assessee and the assessee shall also be given an opportunity of being heard on the report submitted by the District Valuation Officer. And accordingly the matter is remitted back to the file of the Assessing Officer for de novo assessment - Decided in favour of revenue for statistical purposes.
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2015 (11) TMI 793
Disallowance of payment made by the assessee to the third parties - advances written off - case of the assessee is that it has established two companies, i.e., M/s. Malar Finance Pvt. Ltd. and M/s. Malar Gautham Hotels Pvt. Ltd. for the purpose of borrowing funds from the market to expand the hospital of the assessee - Held that:- The assessee has repaid the amount in excess to the amount borrowed from the two companies, namely, M/s. Malar Finance Pvt. Ltd. and M/s. Malar Gautham Hotels Pvt. Ltd. to third parties on behalf of the two companies. We find that the assessee Malar Hospital is a different legal entity and M/s. Malar Finance Pvt. Ltd. and M/s. Malar Gautham Hotels Pvt. Ltd. are two different legal entities. The amount disallowed by the Assessing Officer is not relating to the loan borrowed from the above two companies. The Assessing Officer has disallowed only the repaid amount to third parties on behalf of the two companies. Before us, learned counsel for the assessee has not been able to explain as to why the assessee has repaid the amounts to third party on behalf of the two companies. Learned counsel for the assessee says that the payment is made by the assessee in excess to the funds borrowed and therefore, there is an arbitration between the assessee and the two sister companies. When we specifically asked about the directors of the sister concern and the director of the assessee-company, learned counsel for the assessee has fairly accepted that both are one and the same. We find that the payment made by the assessee to the third parties on behalf of the two companies, i.e., M/s. Malar Finance Pvt. Ltd. and M/s. Malar Gautham Hotels P. Ltd. were not connected with the business of the assessee. Therefore, it is neither allowable under section 36(1)(vii) nor under section 37 of the Act. In view of the above, we find that the disallowance made by the Assessing Officer and confirmed by the learned Commissioner of Income- tax (Appeals) is correct and no interference is required. - Decided against assessee.
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2015 (11) TMI 792
Entitlement to deduction on write off of bad debts as irrecoverable amount from Broker and write off of bad advances as irrecoverable amount from Broker - Held that:- The assessee’s efforts to recover the dues from the Broker Shri.Pallav Sheth were in vain and the assessee treated the irrecoverable trade debts and decided to write off the same by crediting the concerned debtor’s account. It is not in dispute that the assessee had duly offered income emanating out of this trade debts and hence the assessee is entitled for deduction u/s 36(1)(vii) read with section 36(2) of the Act.The assessee is entitled to claim deduction towards write off of bad debts and we have no hesitation in directing the Learned AO to grant deduction towards the same. Accordingly, the grounds raised by the assessee in this regard are allowed. - Decided in favour of assessee. Bad advances written off - Held that:- Since the trade advance was made during the course of its business by the assessee, any loss on account of recoverability would automatically fall under the category of trade debt / receivable and hence is allowable as business loss. The assessee is entitled to claim deduction towards write off of bad advances and we have no hesitation in directing the Learned AO to grant deduction towards the same. Accordingly, the grounds raised by the assessee in this regard are allowed. - Decided in favour of assessee.
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2015 (11) TMI 791
Entitlement to deduction u/s 80 IC - initial assessment year - Held that:- From the meaning of ‘Initial assessment year' it can be seen that whenever any undertaking or the enterprise begins its commercial manufacturing and production of articles it comes under the purview of Section 80IC of the Income Tax Act, 1961. Though, the assessee company has shown the pre-operative expenditure in respected of its Dehradun Unit & claimed that it was under trial run and there was no commercial production took place during the year, but the facts are different altogether. In fact, the assessee since the beginning of the said unit/plant was taking purchase orders from various parties and complying with the said purchase orders in the usual manner and there was no defect or complaint made by the purchasers at any point of time Delhi High Court in case of CIT vs. Nestor Pharmaceuticals (2009 (12) TMI 215 - DELHI HIGH COURT) clearly mentioned the difference between trial production and commercial production. The instance of the sale along with the documentary evidence clearly shows in the present case that, though the assessee is claiming the activity of Dehradun Unit as a trial production, the same is not at all a trial production but the commercial production from December 2003 onwards. Selling the product to particular parties continuously also shows that it is a commercial production and not of a trial production. The case laws submitted by the assessee are on different footings and was rightly distinguished by the DR. Thus, the first ground of the Revenue is sustained and the Ld. CIT(A)'s order is set aside to that effect. As relates to the second ground, the same is consequential and the AO is directed to determine the deduction u/s 80HHC of the Income Tax Act, 1961 for the A.Y 2004-05. - Decided in favour of revenue.
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2015 (11) TMI 790
Unexplained cash deposits - CIT(A) deleted the addition - Held that:- CIT(A) goes to prove that the deletion has been made merely at the instance of appellant without calling upon any cash book maintained by the assessee to prove the total expenditure made by the company in cash rather relied upon a letter dated 11.11.2008 filed by the appellant that cash book was produced before the A.O. For arguments sake, even if it is assumed that the assessee has produced cash book before the A.O., there was no hitch with Ld. CIT(A) to entertain the same again in additional evidence by calling upon the remand report from the A.O. after due verification. Since A.O. has specifically recorded the findings that cash book was not produced nor such cash book has been perused or entertained by Ld. CIT(A) in additional evidence, it is improbable on the part of Ld. CIT(A) as to how he believed the assessee's letter. So, the findings of Ld. CIT(A) deleting the addition of ₹ 7,44,000/- made by the A.O. on account of unexplained cash deposits are perverse and illegal, hence, set aside and the case is required to be restored to the file of Ld. CIT(A) for deciding the same afresh - Decided in favour of revenue for statistical purposes. Addition on account of difference in credit balance in OD account - CIT(A) deleted the addition - Held that:- CIT(A) deleted the addition on the basis of explanation furnished by the assessee which is to the effect that "cash credit account with the bank and the balance in the books has been duly reflected under the head 'secured loan', which fact is proved from the bank reconciliation account statement placed by the appellant as Annexure IV" in the submissions filed during the appellate proceedings, which were also filed before the A.O. vide their letter dated 11.11.2008. From the explanation furnished by the assessee, it is also proved that the amount of ₹ 1,05,544/- represents cheques issued but not accounted for by the bank. But the A.O. inadvertently adopted the figure as 'nil' as balance with the bank as on 31.03.2006 as against the correct figure of ₹ 11,16,341/- which stands duly reflected in the balance sheet and is stated to be open to verification. The A.O. has made addition by merely holding the explanation of the assessee as not found satisfactory' without giving any reason. So, when the assessee has duly explained the amount as secured loan and got reconciled as per bank reconciliation account placed by the appellant as Annexure IV the Ld. CIT(A) has rightly deleted the addition - Decided in favour of assessee. Addition on account of unverified sundry creditors - CIT(A) deleted the addition - Held that:- CIT(A) has proceeded to delete the addition merely on the ground that, "in the remand report, A.O. has not stated that 'these confirmations suffer from any defect or inconsistency or show that any false claim was made by the appellant.' Ld. CIT(A) has also stated in the impugned order that during the course of assessment as well as during the appellate proceedings, the assessee has submitted complete list and the addresses of sundry creditors advances received and other liabilities with regard to Concord Asia and OGT International but strangely enough when the A.O. has categorically mentioned in the remand report that details of sundry creditors, details as to advances from customers and details as to other liabilities were not available in the assessment record, it was humanely not possible for the A.O. to reach at the logical conclusion to verify the antecedents, genuineness and creditworthiness of sundry creditors, advances from the customers and to verify other liabilities. Even no such document have been taken on record by the Ld. CIT(A) in additional evidence as per law rather proceeded on the basis of conjectures and surmises that the A.O. has not given any adverse report during remand proceedings regarding the claim of the assessee. Hence, we are of the opinion that findings of Ld. CIT(A) in deleting the addition made by the A.O. are perverse and hence, set aside. The case is required to be restored to the file of Ld. CIT(A) for deciding the same afresh - Decided in favour of revenue for statistical purposes. Addition on account of unvouched imports from Concord Asia Co - CIT(A) deleted the addition - Held that:- As during the assessment proceedings, the appellant could not furnish original bills for verification as per the assessment order. Therefore, it appears that photocopies of the same were filed. The A.O. was required to examine the issue during remand proceedings are directed by Ld. CIT(A) and stated to have not pointed out anything adverse but when invoice in question for Rs.US$9396 (Rs.417685) has not seen the light of the day nor the same has been annexed with the paper book, nor the same has been entertained in additional evidence, Ld. CIT(A) has erred in proceeding with the matter in deleting the addition merely on the ground that during remand proceedings 'nothing adverse has been pointed out by the A.O.'. So, in view of the fact that in the absence of invoice in question, which has not been taken on record even in additional evidence during appellate proceedings, Ld. CIT(A) has erred in deleting the addition The case is required to be restored to the file of Ld. CIT(A) for deciding the same afresh - Decided in favour of revenue for statistical purposes. Addition on account of unvouched expenses - CIT(A) deleted the addition - Held that:- In the absence of any document on record, findings of Ld. CIT(A) in deleting the addition of ₹ 4,23,098/- are perverse and hence the same are hereby set aside. At the same time, the disallowance @ 100% of expenses made by the A.O. is not justified particularly when the expenses were incurred for business purposes. Therefore, to meet the ends of justice, disallowance @ 10% of the expenses i.e. ₹ 42,310/- will be fair and reasonable to cover the leakage, if any, on account of personal element. - Decided partly in favour of assessee.
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2015 (11) TMI 789
Rejection of books of account - trading addition - Held that:- Firstly, it is noted that while rejecting the books of account of the assessee, the show cause was issued to the assessee on 28-12-2010. Thereafter, there is entry in the order sheet by the assessee on the same date and the assessment order has also been passed on the same date which shows that the matter has not been given considered thought by the AO. It is a clear case of lack of opportunity to the assessee to submit its submissions and relevant documents. Secondly, in terms of the observations of the AO as well as submissions of the assessee, it is noted that the AO wanted to examine the fall in gross profit rate i.e. quantity wise as well as quality wise and the corresponding margins in the sales effected during the year as well as corresponding purchases made during the year besides opening stock. The assessee has mentioned that it has maintained day to day books of account which are duly supported by bills and vouchers. Further monthwise quantitative details are also maintained. It is, therefore, important that the AO should examine both quantitative as well as qualitative details as maintained by the assessee in order to determine the reasons for fall in gross profit rate as compared to past years. Thirdly, the assessee has mentioned that the gross profit has increased in absolute terms from ₹ 18,26,910/- (A.Y. 2007-08) to ₹ 41,78,691/- (A.Y. 2008-09) but there is only marginal decline in gross profit rate i.e. 0.39% on account of increase in turnover. The assessee has further stated that he was interested in volume of the profit and not in rate of profit. To our mind, this justification on stand alone basis cannot stand the test of judiciary without any corroborative evidence. What is really required to be demonstrated by the assessee as a prudent businessman is that what are the key business circumstances in context of the prevailing market conditions which led to the fall in gross profit rate. In the light of above discussions and especially the fact that the assessee has been denied a reasonable opportunity of being heard, the mater is set aside to the file of the AO to determine afresh whether the assessee has declared correct gross profit or not. Disallowance of car & conveyance, shop expenses, mobile and telephone expenses,transportation expenses - these expenses pertain to 20% of total expenses which have been incurred by the assessee - Held that:- From the perusal of the order of the AO, we do not find any specific finding which has been given while disallowing these expenses. It is thus an adhoc disallowance made by the AO which is not justified. Thus we delete the adhoc disallowance of expenses of 20% on the above heads and do not sustain the order of the ld. CIT(A) on these issues. Disallowance of salary and wages expenses it is claimed by the assessee that part of the wages expenses were shown under direct expenses which have already suffered disallowance by application of adhoc gross profit rate by the AO. The AO is directed to verify the same Addition on account of house hold expenses, the assessee has submitted detailed submission in respect of house hold withdrawal in his name as well as in the name of his wife. The AO is directed to verify the same and allow the same after due verification. Disallowance of penalty expenses, the assessee has submitted that the restoration charges have been debited to the account of the assessee and has not been claimed as expenditure in the profit and loss account. The AO is thus directed to verify the same and if the claim of the assessee is supported by the treatment done in the financial statement as claimed by the assessee, the same should be allowed. Addition u/s 68 - Held that:- Considering assessee's submission that the confirmation from Shri Ratan Chand and Smt. Rashmi Jain during the course of assessment proceedings. Further the Income Tax Returns were also filed and both the creditors are assessed to tax. Both these persons have confirmed the loan transactions made with the assessee and the transactions are duly verifiable and the creditors have been duly identified. Thus in view of these facts, the addition made u/s 68 is deleted. Hence, the order of the ld. CIT(A) is not sustainable on this point and addition sustained by the ld. CIT(A) is deleted. - Decided in favour of assessee. Non deduction of TDS on commission expenses - The assessee has taken the legal plea that in the light of decision of the Jaipur Bench in the case of ACIT vs Girdhari Lal Bagroti [2015 (11) TMI 746 - ITAT JAIPUR] no disallowance u/s 40(a)(ia) is to be made if the amount is not outstanding at the end of the year. Thus in the light of decision taken earlier we delete the addition. - Decided in favour of assessee.
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2015 (11) TMI 788
Transfer pricing adjustment - TOP held that the correct compensation model at arm’s length price, in this case, would be commission of FOB cost of goods sourced from India - Held that:- In view of the enunciation of law by the Hon’ble jurisdictional High Court in the case of Li & Fung India Pvt. Ltd. order dated 16.12.2013, there remains no doubt whatsoever that the base of “total cost” as adopted by the TPO and approved by the DRP in considering the FOB value of goods between the third party enterprises cannot be accepted. Ex consequenti, the “total cost” being the denominator in the PLI of OP/TC, has to be taken as the cost incurred by the assessee and not the FOB value of goods between third party enterprises sourced through the assessee. In other words, the tested party should be the assessee and not its AE. Thus, we hold that the assessee is entitled to cost plus form of remuneration and not a commission based remuneration. See case of Li & Fung India Pvt. Ltd. [2014 (1) TMI 501 - DELHI HIGH COURT] There is no necessity of any TP adjustment. Even further, for the current year, we note that both as per the comparables chosen by the assessee which yield a markup on 11.66% on operating cost and also the comparables chosen by the TPO, which yield 18.06% on operating cost, after making necessary working capital adjustment, indicates that the assessee’s markup of 15.36% charged on its operating cost falls well within the arm’s length price after considering the range of +/- 5% as envisaged in the Proviso to section 92C (2) of the Act. Therefore, no TP adjustment is required in assessee’s case. - Decided in favour of assessee.
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Customs
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2015 (11) TMI 764
Application for request to enforce the terms of the facility Notice No.69 of 2011 dated 20 May 2011 issued by the respondent - Held that:- Relation between the importers and the Shipping lines is purely contractual which is by virtue of a contract between these parties, the contract being a contract of carriage of goods and thus it would be outside the purview of the powers of the Customs Officer to in any manner give any directions and/or intervene in any such dispute between the shipping lines and the importer. - The petitioners' grievance is definitely contractual and thus the petitioners would not be correct in contending that the respondents are acting in breach of any statutory provisions or any rules made in that behalf affecting legal rights of the petitioners. We are not shown any statutory provisions or any rule which confers any legal right on the petitioners or the importers and the same being infringed at the hands of the respondents so as to enable us to exercise our writ jurisdiction. Various letters as addressed by the petitioners to the respondents as also specific grievance as urged in the petition and more particularly in para 3 (vi) clearly indicate that the dispute is in regard to the payment of terminal charges, security deposit etc which are completely within the purview of a private contract which the importer has with the Shipping lines. The petitioner is not remediless to seek enforcement of its legal rights under the contract with the shipping lines if they are aggrieved as such. We are therefore, certain that the reliefs as prayed for by the petitioners cannot be granted. - no reason to interfere in the present writ petition except to the extent of accepting the statement as made by Mr.Jetley on behalf of the respondents that the goods on their arrival are taken to the CFS of the choice as given by the importers/Clearing House Agents in terms of facility Notice No.69 of 2011 - Petition disposed of.
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2015 (11) TMI 763
Imposition of redemption fine - Confiscation of goods - Demand of differential duty - Short payment of duty - Settlement commission directed for confiscation of goods and imposed redemption fine - Held that:- from a reading of the entire order of the Settlement Commission that this direction is patently inconsistent with the conclusions reached by the Settlement Commission and noted above. We, therefore, are of the opinion that such a direction and with regard to imposition of fine cannot be sustained. In the facts and circumstances of the present case, therefore, to the extent noted by us, the order of the Settlement Commission is erroneous and illegal and the Settlement Commission clearly exceeded its jurisdiction in directing the appropriation - We quash and set aside the order of the Settlement Commission to the limited extent of imposition of fine and the appropriation - Decided partly in favour of assessee.
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2015 (11) TMI 762
Validity of impuned order - Waiver of pre deposit - Held that:- Tribunal did not set aside the order of the Commissioner (Appeals) to remand the matter. The Tribunal modified the pre-deposit condition imposed by the Commissioner (Appeals) and directed the Commissioner to dispose of the appeal. The order of the CESTAT, impugned in this appeal, can be treated as an order of remand only if the stay petition has been directed to be re-heard. Since the condition imposed by the Commissioner (Appeals) for the grant of stay was modified by the Tribunal, the Tribunal was obliged to direct the Commissioner (Appeals) to take up the appeal and decide on merits. - The original order of the Commissioner (Appeals) imposing a condition for the deposit of 50% of the demand was dated 8.5.2013. As against the said order, the appellant did not file an appeal before the CESTAT. Instead, the appellant went before the very same Commissioner (Appeals) and sought a modification. The Commissioner (Appeals) did not refuse to modify, after considering the merits. But, he simply refused to entertain the modification application on the ground that he had become functus officio. It was only as against this order, the appellant filed an appeal before the CESTAT. Therefore, the CESTAT was not obliged to go into this question. However, on the other question, the Tribunal took a lenient view and reduced the amount demanded by the Commissioner (Appeals) by 50%. Hence, the order of the Tribunal does not really call for any interference - however, Commissioner was not functus officio. - pre deposit amount reduced - Decided partly in favour of assessee.
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2015 (11) TMI 761
Duty drawback claim - Violation of principle of natural justice - Held that:- From a reading of the order of adjudication dated 23rd April, 2010, copy of which is at pages 26 and 27 of the paper book that the show cause notice was sent on the address mentioned and the envelope was left by the postal authority at the said place. We do not see how such an act on the part of the postal authority enabled the Deputy Commissioner of Customs to record a satisfaction that the Petitioners are duly served. - since the adjudication order violates the principles of natural justice for want of notice and hearing that it is set aside. - Decided in favour of assessee.
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2015 (11) TMI 760
Modification of order passed - whether the order passed by the Writ Court can be modified by mentioning, unless there is a typographical or clerical mistake - Held that:- The appellant/writ petitioner came up with the writ petition, initially, by making a statement, which was later on retracted by way of mentioning. The appellant/writ petitioner has no explanation for the same, except that it was a mistake. By a subsequent order, the stay granted during pendency of appeal was modified by the Writ Court and the stay was confined only to a period of one month from the date of receipt of a copy of the order, granting liberty to the appellant/writ petitioner to take recourse to the CESTAT. - The order passed by the Writ Court is just and proper, warranting no interference. - Decided against assessee.
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2015 (11) TMI 759
Detention of goods - Import of Articles of clay, metal and stones - Misdeclaration of goods - Revenue contends that the goods are antique - Held that:- In the facts and circumstances of the disputed nature of the identity of the goods imported, I am of the view this may not be proper for this Court to invoke Article 226 of the Constitution by directing the official respondent to release the goods imported by the petitioner. However, considering the fact that huge demurrage may involve in the matter, there shall be a direction to the first respondent to complete the adjudication proceedings within two months - Appeal disposed of.
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2015 (11) TMI 758
Import of high end luxury cars from various foreign suppliers by mis-declaring as new - Undervaluation of goods - Imposition of penalty under sections 112(a) and 114AA of Customs Act, 1962 - Demand of differential duty - Held that:- Appellant is a subsequent purchase of the car after importation in India and bona fide purchaser of the car. Further, we find that Appellant No.2 has contended the valuation of the car and submitted that the car is not an old car is not acceptable as the impugned order has not been challenged by Shri Sumit Walia and Shri Tarun Kumar, therefore, the said part of the order has attained finality. In these circumstances, we are not agreeing with the contentions of the ld. counsel of the Appellant No.2 that the car is new one and the value of the car is declared correctly. - car cannot be confiscated as appellant is a bona fide purchaser. We hold that the car has been confiscated for under-valuation and mis-declaration and the said part of the order has not been challenged by the importer. In these circumstances, the impugned car is liable for confiscation. We also find that the redemption fine imposed is highly excessive. Therefore, we reduce the redemption fine to ₹ 5 lakhs. On payment of such redemption fine, the car shall be released to Appellant No.2. Further we find that the appellant is the bona fide purchaser of the car and no statement of the appellant has been recorded and no role of the appellant has been discussed. Therefore, we hold that penalties under sections 112(a) and 114AA were not imposable on the appellant. In these circumstances, the appellant is entitled to take the possession of the car on payment of redemption fine of ₹ 5 lakhs. Penalty on the appellant has been dropped but the penalty on Shri G.S. Prince was imposed. Further we find that in the case of CC Vs. Vaz Forwarding Ltd.(2010 (12) TMI 503 - AHMEDABAD HIGH COURT), wherein the penalty was dropped on the CHA in absence of evidence of the knowledge of the CHA. Further, in the case of S.Y Ranade (supra), it was held that there is no evidence to prove the involvement of the CHA and an employee has suo moto acted for his personal greed and beyond the scope of his duty, therefore the employer, i.e., CHA cannot be penalised. - Appeal disposed of.
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2015 (11) TMI 757
Waiver of pre deposit - import of goods against advance licence - diversion of goods - Held that:- In this case the allegation made against the applicants is that they have imported goods (duty free) and diverted into the open market on the basis of certain statements recorded during the course of investigation and on the fact that applicants were not having any manufacturing facility of the resultant product which were required to be exported by them. We have seen that initially it was alleged that the imported goods have been diverted to Shri Sheetal Kumar Vij who was actively engaged in diversion. But after thorough investigation, it was found that Shri Sheetal Kumar Vij have no role in diversion of imported goods by the applicants and that part of the order has attained finality. - It is also submitted by the Ld. Counsel that when export obligation has been accepted by the DGFT and if the applicant is not having manufacturing facility in their factory, the goods can be manufactured on job work basis and the export obligation can be discharged in the light of the decision of Hon ble High Court of Punjab and Haryana in the case of Rakesh Nayar (2010 (1) TMI 492 - PUNJAB & HARYANA HIGH COURT) and also pleaded the financial hardship. All these evidences or the contentions shall be considered at the final hearing of the case that the retracted statement cannot be basis of confirmation or demand or the applicants are not having manufacturing facility in their factory. - applicants have failed to make out a case of complete waiver of pre deposit - partial stay granted.
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2015 (11) TMI 756
Rectification of mistake - Mis-declaration of Value of imported goods – Adjudicating authority confirmed customs duty demand along with interest thereon apart from imposing equivalent amount of penalty, as importer grossly mis-declared value of imports – Held that:- transaction values admitted in the confessional statement of the importer and the commission agent can straightway be adopted for determination of the value which escaped the assessment and for the demand of differential duty liability. The argument of the appellant that the values contained in the export declarations made before Antwerp Customs should have been taken as the basis for determination of transaction value is not tenable for the reason the actual transaction value is available in the documents retrieved which has also been admitted by the appellant. Therefore, we do not find any infirmity in the adoption of values reflected in the computer printouts and the confessional statements as the basis for demand of differential duty in respect of the 13B/Es. Partner of the importing firm has admitted that the values shown in the export declaration are the correct values for the transaction. Therefore, no fault can be found if the assessable value is redetermined on the basis of the values declared in the export declarations and the duty liability determined accordingly. Thus the differential duty liability of ₹ 63,53,349.87 in respect of the 8 B/Es specified in Annexure B to the show cause notice is clearly sustainable in law Adjudicating authority has taken wrong exchange rate for calculating differential duty which needs correction. As regard quantity taken as 22.920 MT as against actual quantity of 16.130 MT in respect of bill of entry No. 97728 dated 28/11/2006 and also wrong exchange rate therein. On going through bill of entry, it is observed that the quantity shown in the bill of entry is 16.130 MT whereas against the said bill of entry the differential duty demand was calculated on 22.920 MT which was taken on the basis of export declaration. In this matter we are of the view that under any circumstances quantity cannot be increased as against the quantity mentioned in the bill of entry for the reason that the quantity shown in the bill of entry is the quantity which is imported and cleared form custom barrier unless until there a charge of smuggling of remaining quantity. We find that there is no material on record to show or establish that as against 16.130 MT the physical quantity was cleared or imported 22.920 MT, therefore the quantity of 22.920 taken for the determination of differential duty in bill of entry 977218 dated 28/11/2006 appears to be apparent mistake. - Rectification partly allowed.
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2015 (11) TMI 755
Benefit of Notification 28/97 dt. 1.4.97 under EPCG scheme - appellant submits that they have fulfilled the export obligation - Held that:- Tribunal in their order dt. 22.1.2004 had categorically taken into consideration the Board's circular No.62/2002 dt. 26.9.2002 wherein the Tribunal directed the lower authority to consider the Board's circular whereas we find that both the adjudicating authority and the appellate authority have interpreted the Board circular only refers to Notfn 29/97 - Board has categorically clarified that industries are eligible to import consumer items including Chandeliers under EPCG licence. There is no where any mention of any notification as held by both the lower authorities. Further, we find that this issue stands settled by the Hon'ble Supreme Court in the case of Commissioner Vs Appu Hotel Ltd. (2010 (1) TMI 1163 - SUPREME COURT) where this Tribunal's order in the case of Appu Hotel Ltd. Vs CC Chennai (2008 (1) TMI 201 - CESTAT, CHENNAI) was upheld. - following the Hon'ble Supreme Court judgement, we hold that the ratio of the above decision squarely applies to the present case as in the present case appellants have imported architectural light fittings claimed under EPCG licence No04500471/1/13/10/1/01 dt. 16.2.1998 covered under Notfn 28/97 - Decided in favour of assessee.
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Service Tax
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2015 (11) TMI 787
Commissioning, Installation and Erection Services - benefit of abatement under Notification No. 18/2003-ST dated 21.08.2003, as amended by Notification No. 12/2004-ST dated 10.09.2004 - Held that:- Commissioner (Appeals) rejected the refund claim on the ground that the appellant has not brought forward any documentary or other evidence, viz. contract, purchase order etc. to show that the gross amount charged by them to their customers for the erection, commissioning or installation service includes the value, paid by the customers. The Tribunal in the case of AlidharaTexspin Engineers (2010 (8) TMI 145 - CESTAT, AHMEDABAD) has relied upon by the learned Advocate, allowed the appeal of the assessee. In the said case, the appellant produced the purchase order/ sales contracts of the buyers were inclusive of Erection, Installation and Commissioning of the textile machinery manufactured by them. In the present case, the appellant admittedly had not produced any document and therefore, the said case law would not apply to the facts of this case. - Decided against assessee.
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2015 (11) TMI 786
Denial of the rebate claim filed by them under notification No. 41/2012-ST dated 29.6.12 - Various service - Held that:- After examining the CBEC circular dated 28.2.15 and the notification 52/2011 and the notification No. 41/2012 ibid , all these services have been availed by the appellant beyond the place of removal i.e. ICD Loni. In these circumstances, I hold that appellant is entitled to claim rebate as per the notification 41/2012. With these terms, I set aside the impugned order - Decided in favour of assessee.
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2015 (11) TMI 785
Commercial or Industrial Construction Services - whether the appellant herein is liable to discharge the service tax liability under the category of Commercial or Industrial Construction Services for the period of 10-09-2004 to 29-09-2007 - Held that:- appellant had discharged the entire service tax liability before the issuance of show cause notice and has also discharged the interest thereof. We find that the having discharged the entire service tax liability and the interest thereof, the issue that arises for consideration as to whether penalties need to be imposed on appellant. In our considered view in the facts and of circumstances of this case, we find that the provisions of section 73(3) of the Finance Act 1994, would be applicable which mandates for non issuance of show cause notice by the authorities if tax and interest is paid of. In our considered view the show cause notice issued for imposition of penalties is not correct. Be that as it may, similar issue was decided by the Tribunal in the case of Manipal County Vs. Commissioner, Banglore [2009 (3) TMI 411 - CESTAT, BANGALORE] held that if demand of tax having being made good before the issuance of show cause notice, penalties need not to imposed. - Decided in favour of assessee.
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2015 (11) TMI 784
Demand of service tax - Bar of limitation - whether the appeal filed before learned Commissioner (Appeals) was beyond the period prescribed under Finance Act, 1994 or not and if yes, the Commissioner (Appeals) is having the power to condone the delay or not - Held that:- appellant is required to file the appeal before learned Commissioner (Appeals) within a period of 2 months and the period can be extended for further one month on being satisfied and the learned Commissioner (Appeals) has reasons for causing delay is satisfactory. Beyond the said period, the learned Commissioner (Appeals) have no power to condone the delay. Admittedly, in this case, the appeal has been filed after one year and six months. Therefore, learned Commissioner has rightly dismissed the appeal as time barred as held by the Honble High Court of Delhi in the case of Agrawal Construction vs. CE, Nagpur [2014 (12) TMI 418 - BOMBAY HIGH COURT]. In these terms, I do not find any infirmity in the impugned order, same is upheld - Decided in favour of assessee.
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2015 (11) TMI 783
Demand of interest - Bar of limitation - Imposition of penalty - Held that:- Appellant did not obtain registration during the relevant period. Secondly it has been correctly observed by the first appellate authority in para 6 of the Order-in-Appeal dated 8.10.2012 that appellant also did not file return within 6 months from the date when Finance Bill, 2003 received assent from the President of India i.e. 13.5.2003. This fact was known to the department only when audit was done by the officer of the department after appellant obtained registration. In view of the factual matrix extended period has been correctly invoked and demand is not time barred. Interest demanded from the appellant is payable as a demand issued within a reasonable period. - However, penalty imposed is set aside - Decided partly in favour of assessee.
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2015 (11) TMI 782
Penalty u/s 76 & 77 - whether penalties imposed upon the appellant under Section 76 & 77 of the Finance Act, 1994 are justified when appellant has paid the entire differential service tax along with interest before issue of Show Cause Notice - Held that:- Recipient of the services informed appellant that rate of duty on Works Contract Services as per Notification No.32/2007-ST dt.22.5.2007 was 2%. It is not brought out by the Revenue that appellant was aware of the fact that service tax of 4% as per Notification No.7/2008-ST dt.1.3.2008 was required to be paid and deliberately paid tax at 2%. Proper ST-3 returns were filed by the appellant showing rate of service tax as 2% which in effect was 4%. Appellant disclosed the correct value of services provided in the returns. Appellant also wrote to the service recipient on 16.10.2009 to pay the differential service tax, but subsequently paid the same suo-moto on 19.10.2009 and intimated the department. Even if appellant came to know of a Show Cause Notice being issued then also the fact remains that the entire differential service tax was paid along with interest. Even otherwise also from the returns filed Revenue would have given appellant a demand. As no penalty under Section 78 was imposed by the Adjudicating authority appellant s conduct of paying entire differential service tax along with interest, before the issue of Show Cause Notice or on the date of Show Cause Notice, will have to be appreciated. - Decided in favour of assessee.
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2015 (11) TMI 781
Waiver of pre deposit - Penalty u/s 78 - transportation of raw materials - Held that:- The charges in respect of loading and un-loading of the materials and internal transportation, are shown separately in the agreement. In case of M/s Balmer Lawrie & Co. Ltd. (2013 (11) TMI 712 - CESTAT MUMBAI), it has been held that when cargo handling charges and transportation charges are shown separately in the bills raised, then service tax liability is required to be discharged only on cargo handling services and that question of leviability of service tax on the entire amount is un-sustainable. Similarly, in case of M/s Jai Jawan Coal Carriers Pvt. Ltd. (2014 (6) TMI 393 - CESTAT NEW DELHI), it has been held by CESTAT, New Delhi, that when activity of loading of materials into trucks and its subsequent un-loading is clearly identified from the transportation of materials within the factory, then service tax would not be chargeable on the amount charged towards transportation of materials. In view of the above case laws, the Appellant has made out a prima-facie case for complete waiver of the confirmed dues. - there will be stay on recovery of the confirmed dues, interest and penalty till the disposal of this appeal. - Stay granted.
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2015 (11) TMI 780
Business Auxiliary Services - commission received by them from parent company - export of services - Held that:- Any commission received from rendering services in India to the principals situated abroad, will be export of services more so if the agent is rendering the services of ascertaining potential customers under the territory, informing about market conditions and competitor activities, identifying customers, contacting customers and selling over etc. All these activities are undertaken by the respondent in the case in hand. Since the issue is now squarely settled by the decision of the Tribunal [2014 (10) TMI 200 - CESTAT NEW DELHI (LB)], we hold that the impugned order is correct and legal and does not suffer from any infirmity. - Decided against Revenue.
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2015 (11) TMI 779
CENVAT Credit - Various output service - Held that:- Assessee is a manufacturer of microscopes and accessories and was sending finished products to its buyers, domestic as well as overseas through courier services and the assesee availed cenvat credit paid on such courier charges and utilized the same for payment of service tax on its output services like GTA, Repair &. Maintenance and Erection, Commissioning or Installation services for which the appellant was also registered under provisions of the Finance Act, 1994. Courier services were utilized for dispatch of excisable goods to its buyers as well as for dispatch of accessories for the purpose of repair which was its output service. - where sale of excisable goods is on FOR destination basis, at the door step of customers and transportation charges were incurred for such transaction, freight charges involved in such transaction is an input service eligible for credit under Rule 2 (l) of the Cenvat Credit Rules, 2004. This decision therefore covers the issue in favour of the assessee in so far as the assessee availed cenvat credit on courier services for its export as well as domestic sales. In so far as availment of service tax credit incurred on courier charges for remittance of service tax on the assessee's output services of Maintenance, or Repair and Erection, Commissioning or Installation services, for the reasons alike, since the courier and Goods Transport Agency services are input services for rendition of output services, cenvat credit is equally admissible. - Decided in favour of assessee.
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2015 (11) TMI 778
Non-payment of service tax - advertising agency services - whether the service tax on an amount received as 'incentive discount' is sustainable or otherwise - penalty under Section 78 - Held that:- The said incentive discount is received by the appellant-assessee from the media companies which pertains to business promotion expenses of the Media Cos. We find strong force in the submission made by the learned Counsel that the issue is squarely settled in favour of the appellant-assessee by our final order dated 27.08.2014 (2014 (11) TMI 545 - CESTAT MUMBAI) - Tribunal in the case of P. Gautam & Co. v. CST [2011 (9) TMI 392 - CESTAT, AHMEDABAD] and followed in the case of Grey Worldwide (I) Pvt. Ltd. V. CST [2014 (9) TMI 180 - CESTAT MUMBAI]. Accordingly, the impugned order which confirms the demand against the assessee-appellant is unsustainable and liable to be set aside - Decided in favour of assessee.
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Central Excise
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2015 (11) TMI 810
Benefit of excise duty under Notification No.8 /95 dated 9.2.95 - Subject product is combination of streptomycin and penicillin - held that:- even if one of the bulk drugs mentioned at serial no.1 is included in the formulation that would satisfy the definition of 'formulations' contained at serial no.2 - As per the definition of 'Formulation', even if the formulation is processed out of or containing one bulk product the condition of Notification stands satisfied. We, therefore, do not find any error in the order passed by the Tribunal. - Decided in favour of assessee.
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2015 (11) TMI 777
Disallowance of CENVAT Credit - denial of credit on the ground that goods removed / cleared free of cost - the value of inputs received by them was subsequently adjusted/reduced by way of issuance of debit notes - Held that:- The assertion in the show cause notice and the conclusion in the orders passed by the authorities below do not refer to any probative material or evidence to support Revenue s assertion that the appellant availed cenvat credit on those inputs which resulted in the manufacture of final goods, some of which were returned to the appellant and are covered by the debit notes. Thus, Revenue failed to establish its assertion that the appellant had availed cenvat credit, an assertion which is clearly and categorically denied by the appellant and on which aspect no finding whatsoever stands recorded either by the primary authority or by the lower appellate authority. Thus the enquiry on the second aspect as to any correlation between the debit notes and invoices under which the goods were supplied to third parties by the appellant is an enquiry which is non sequitor. - burden of establishing availment of cenvat credit is on Revenue since it is Revenue s assertion that appellant had availed cenvat credit of those inputs which were used in the manufacture of final goods some of which were returned and on which debit notes were issued. Since Revenue failed to establish availment of cenvat credit by bringing on record evidence support to claim, reference to RG-23 register or any other probative material, it must be held to have been failed to shift the onus to the appellant to prove that it had not availed cenvat credit. - Decided in favour of assessee.
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2015 (11) TMI 776
SSI exemption under Notification No.8/03 dt.1.3.2003 - Penalty u/s 11AC - Invocation of extended period of limitation - Suppression of facts - Held that:- It is fact on record that investigation was conducted on 14.03.2005 wherein it was found that turnover of the appellant exceeded from the exemption limit during the period 2003-04. It is also a fact that if the appellant has taken registration they were entitled for cenvat credit on the inputs and the credit was available with them more than the duty payable. Therefore, by suppressing the facts, the appellant was not going to get any gain. In the circumstances, I find that it was only a mistake of the appellant of not paying duty during the relevant period. Accordingly, I hold that the charge of suppression against the appellant is not sustainable. As the charge of suppression is not sustainable, consequently, mandatory penalty under section 11AC is not imposable on them. With these terms, I set aside penalty equal to the duty - Decided in favour of assessee.
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2015 (11) TMI 775
Claim of exemption under notification no. 6/02-CE (serial No. 57) of a formulation made from two bulk drugs - Diphenoxylate Hydrochloride with Atropine Sulphate. Serial No. 57 of the notification no. 6/02-CE covers “formulation manufactured from bulk drugs specified in list-2” - Held that:- The Commissioner (Appeals) has held that since both Diphenoxylate Hydrochloride and Atropine Sulphate are active ingredients and since Atropine Sulphate is mentioned in list-2, the formulation would be eligible for exemption as for this purpose the ratio of the two constituent bulk drugs is not relevant. Since, in the present case both the constituents bulk drugs - Diphenoxylate Hydrochloride and Atropine Sulphate are the active ingredients, in our view the Commissioner (Appeals) s order that their ratio in the formulation is not material is correct. In terms of the Apex Court judgment in the case of CCE Varodara vs Allembic Chemical Works (2015 (11) TMI 810 - SUPREME COURT) if a formulation consist of more than one bulk drug, and out of those bulk drugs only one bulk drug is specified in notification the duty exemption to the formulation cannot be denied. On going through this judgment of the Apex Court, we are of the view that the judgment of the Apex Court is squarely applicable to the facts of this case. We, therefore, do not find any infirmity in the impugned order. - Decided against Revenue.
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2015 (11) TMI 774
Demand of interest on reversal of CENVAT Credit - Invocation of extended period of limitation - Interest u/s 11AB - Penalty u/s 11AC - Held that:- The availment of inadmissible credit was never disclosed by the appellant to the department before the audit therefore department was not in position to ascertain whether the credit taken by the appellant is correct or wrong. In view of this position it can be conveniently concluded that there is clear suppression of fact on the part of the appellant and therefore extended period was rightly invoked. Hence the demand of Cenvat credit is held to be sustained. As regard the demand of interest under Rule 14 read with Section 11AB. - simply because the case was settled by Settlement Commission interest provision will not vary, Rule 14 is applicable irrespective whether it is a case settled by Settlement Commissioner or otherwise therefore on this ground Hon’ble Apex Court judgment can not be distinguished. I therefore held that the interest is chargeable from the date of taking credit in the Cenvat account of the appellant. As regard imposition of penalty under Section 11AC, as I held above extended period is rightly invoked and demand was also rightly confirmed by invoking proviso to Section 11A(1) the provision of Section 11AC would unavoidably attract and accordingly penalty under Section 11AC is sustainable. Even as per Hon’ble Supreme Court judgment in the case of Dharamendra Textile processor[2008 (9) TMI 52 - SUPREME COURT] penalty under Section 11AC neither can be waived nor can be reduced as it is in nature of mandatory penalty. Therefore, I do not find any infirmity in the impugned order - Decided against assessee.
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2015 (11) TMI 773
Levy of penalty - Denial of exemption claim - duty demand u/s 11A - SSI Exemption - Notification No.8/2003 dt. 01/03/2003 - Held that:- Revenue has not challenged the reasoning advanced by Commissioner(Appeals) and has not rebutted the said findings. The appellate authority has set aside the penalty on the respondent on the ground that as per their letter dt. 10/01/2007, it was the respondent himself who disclosed all the facts and subsequently deposited the duty. As per the order of the appellate authority, Revenue has not placed any evidence on record to indicate that it was as a result of investigations that the assessee’s lapse came on record. In the present appeal also, the Revenue has not referred to any evidence to show such an action on the part of the Revenue. The assessee having deposited the entire duty along with interest prior to the issuance of the show-cause notice, cannot be said to have not paid the said duty by way of any malafide intention. In fact in such a scenario, the provisions of Section 11(2) provide that no show-cause notice should be issued to the assessee. As such, I find no infirmity in the view of the Commissioner(Appeals). - there was no malafide intention on the part of the assessee inasmuch as the assessee has himself detected the mistake and has deposited the differential duty along with interest much before the issuance of the show-cause notice, the imposition of penalty of ₹ 10,000/- in terms of the provisions of Rule 25 of Central Excise Rules, which stands upheld by the Commissioner(Appeals) is not justified. - Decided in favour of assessee.
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2015 (11) TMI 772
Disallowance of Cenvat credit - bright bars - benefit of credit is sought to be denied on the ground that on the end of the supplier these goods were not excisable goods - Held that:- processing of round bars into Bright bars would not amount to manufacture, the Department by Trade Notice No. 18/2003 dated 14/08/2003 had clarified that the process of making bright bars from wire rods amounts to manufacture. Duty was being collected upon bright bars and credit was being availed on such goods. A further trade notice dated 16/06/2004 was issued as clarification to trade notice No. 18/2003 stating that there is no process of manufacture. The demand is raised for the period after 16.6.2004. It is discussed by the Commissioner (Appeals) that the issue was contentious and involved interpretation and therefore protective demands were issued during that time. It is seen that the cases were kept pending in the call books after issuance of show cause notices. Thereafter the matter has been adjudicated and order passed. This goes to show that the Department itself was under much confusion as to whether excise duty is to be collected or not on bright bars. - impugned order is set aside. - Decided in favour of assessee.
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2015 (11) TMI 771
Levy of duty on by-product or a waste - Lower authorities have referred to an addition of Explanation in the provision of Section 2(d) of the Central Excise Act laying down that if for the purpose of this clause, goods include any article, material or substance which is capable of being bought and sold for a consideration and in such case shall be deemed to be marketable - Held that:- Only difference in the facts of the present case and the decisions relied upon by the learned advocate is the addition of Explanation to Section 2(d) of the Central Excise Act, w.e.f 10.5.2008. However, I find that the Board’s Circular No.904/24/09-CX dated 28.10.2009 strongly relied upon by the lower authorities stands struck down by the Hon'ble Allahabad High Court in the case of Balrampur Chini Mills Ltd. vs. UOI reported as [2013 (1) TMI 525 - ALLAHABAD HIGH COURT]. Further, vide a recent decision, the Hon'ble Bombay High Court in the case of Hindalco Industries Ltd.: [2014 (12) TMI 657 - BOMBAY HIGH COURT] has set aside the Larger Bench decision of the Tribunal reported as [2014 (11) TMI 385 - CESTAT MUMBAI (LB)] and has observed that the amendment in Section 2(d) will not change the scenario inasmuch as the manufacture of waste, refuse, scrap, etc., cannot be considered to be manufactured items in terms of Section 2(f) of the Central Excise Act. - amendment in Section 2(d) has not changed the scenario. Accordingly, the law declared in the above decisions of the Hon'ble Supreme Court and the Hon'ble Bombay High Court would apply, read with the decisions of the Hon'ble Allahabad High Court. The impugned orders are accordingly set aside - Decided in favour of assessee.
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2015 (11) TMI 770
Denial of CENVAT Credit - Capital goods - Credit availed on the basis of photocopy invoice - Held that:- Appellants have subsequently produced the original invoice, and the lower authorities were bound to take note of. Further, the Commissioner (A) has observed that the appellants have only produced computer generated worksheet of details of stock of input available on the relevant date and have not produced any evidence to show that such inputs were lying in stock on the date of registration by the appellant. I find that all these facts are verifiable and would be available from the accounts maintained by the assessee. The lower authorities instead of rejecting the appeal on such technical grounds could have called for the relevant records, maintained by the appellant during the course of their regular business. As such, I am of the view that the matter needs to go back to the original adjudicating authority for undertaking the above verifications. I order accordingly and direct the appellant to produce all the relevant documents before the lower authorities to substantiate his claim. - Decided in favour of assessee.
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2015 (11) TMI 769
Rebate claim - Additional Duties of Excise - Revenue's case is that since no Additional Duties of Excise (T&TA) is leviable on the final product and, therefore, there is no question of availing credit relating to Additional Duties of Excise (T&TA) on the inputs and further since no input credit could have been availed no question of refund under Rule 5 - Held that:- issue is squarely covered in favour of the respondent by the decision of the hon ble High Court of Bombay [2009 (6) TMI 977 - BOMBAY HIGH COURT] in the respondent s own case. Respectfully following the hon ble Bombay High Court s decision - Decided against Revenue.
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2015 (11) TMI 768
CENVAT Credit - outdoor catering services - Imposition of penalty - Held that:- The original authority has in principle held that outdoor catering service as input service however credit attributed to the service charges recovered from the employee was disallowed. As regard the denial of the credit attributed on service charges recovered from the employee in case of outdoor catering service is covered by the Honble Bombay High Court judgment in case of Commissioner of C. Ex. Nagpur Vs. Ultratech Cement Ltd[2010 (10) TMI 13 - BOMBAY HIGH COURT ]. In view of this judgment, I upheld the demand confirmed by the original authority and upheld by the Ld. Commissioner(Appeals). As regard the penalty, since initially dispute was admissibility of the outdoor catering service which original authority itself has allowed, only dispute remains that service charges recovered from employee and service tax paid thereof is cenvatable or otherwise. It was also observed that appellant paid the amount confirmed by the original authority alongwith interest and as per the submission of Ld. Counsel they are not contesting the demand and interest. In view of this position I find that no malafide is proved against appellant therefore penalty should not have been imposed. - Decided partly in favour of assessee.
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2015 (11) TMI 767
Demand of interest and penalty on reversal of credit - manufacture of erection and installation of the furnace within the factory of the appellant - Revenue denied the Cenvat credit only on the ground that no duty was paid on the furnace either by the appellant or contractor i.e. M/s. Bharat Gears Ltd, therefore credit for input used for manufacture of erection and installation of the furnace is not admissible - Held that:- Input on which Cenvat credit was availed were indeed used in manufacture of erection and installation of the furnace, in terms of Notification No. 67/95 CE dated 16/3/95 input includes in the goods used in the manufacture of capital goods and if such capital goods used within the factory for manufacture of dutiable goods the furnace was exempted under Notification No. 67/95 but input used in manufacture of such furnace is clearly covered under the definition of input therefore the credit on the input used in the manufacture of furnace is admissible. However appellant has not disputed the denial of Cenvat Credit and paid the said amount admittedly and not contested. In view of the my above observations Cenvat Credit was otherwise admissible, penalty should not have not been imposed therefore said aside the penalty. As regard the interest demanded by the Ld. Commissioner (Appeals) in his order, I find that the adjudicating authority in his order explicitly dropped the demand of interest against which Revenue has not filed any appeal before the Commissioner(Appeals) therefore the said portion related to interest of the order attained finality and since no appeal made by the Revenue Ld. Commissioner(Appeals) should not have passed any order in respect of interest, for this reason the interest demanded by the Commissioner(Appeals) in his order is hereby dropped. It is made clear that since the appellant have not contested demand of Cenvat Credit which was paid by them suo- moto without contest the same stand confirmed. - Decided partly in favour of assessee.
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2015 (11) TMI 766
Remission of duty - Duty demand - Held that:- Consequent to the remission application, the jurisdictional Central Excise officer raised the demand of duty on the goods destroyed in the fire. The Commissioner (Appeals) set-aside the demand of duty following the Tribunal order. The instant appeal is filed against the order of the Commissioner (Appeals). I find that the Tribunal allowed the remission application which is further upheld by the Hon'ble Gujarat High Court [2015 (10) TMI 1295 - GUJARAT HIGH COURT]. So, the demand of duty can not survive. Accordingly, I find no reason to interfere in the order of the Commissioner (Appeals). - Decided against Revenue.
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2015 (11) TMI 765
Benefit of CENVAT credit -credit earned in the subsequent months cannot be used for payment of duty for the previous month - Held that:- Appellants have been utilizing excess credit for a period spread from June 2007 to April 2008 and such mis-utilization was for a number of months during the said period. As such, the appellants plea that such wrong utilization had occurred on account of the accountant being new cannot be appreciated. However, I also find force in the appellants contention that they do not gain anything by such early utilization of the credit inasmuch as the credit, as utilized would, not be available to them in the next subsequent month. Such wrong utilization invites confirmation of interest which is also required to be considered as penal in nature. However, admittedly, there has been contravention of law by the appellant repeatedly which in my view would invite some penal action against them. As such extending the benefit of doubt and after taking note of the fact that they were having sufficient balance in their PLA during the months of default and keeping in mind that appellant has already paid interest to the extent of ₹ 7,176/-, I impose a penalty of ₹ 10,000 - no reasons to confirm the demand. - Decided partly in favour of assessee.
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CST, VAT & Sales Tax
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2015 (11) TMI 754
Levy of tax / VAT on franchisee fees/royalty paid - Levy of tax on manufacture of Beer and Packaged drinking water - whether there is complete transfer of right to use the said property (being brand name/trade name) in favour of the manufacturer (CBUs) or not - Held that:- only when there is transfer of right to use the brand name/trade mark belonging to the assessee, without any restriction, then alone it could be a case of transfer of right to use the intangible goods, which would be the brand name/trade mark. However, if no such right to use is given to the manufacturer, it would not amount to transfer of right. - In the case of manufacture of beer, the amount paid towards 'brand franchise fees' is to the assessee, and admittedly the assessee, has not transferred any right to the manufacturer of beer to exploit the brand name for its own use. The manufacturers (CBUs) do not get effective control of the brand name for full commercial exploitation. As such, it cannot be considered as 'sale' of intangible goods by the assessee, which would be subject to Sales Tax under the KST Act. It is also noteworthy that, for the amount received by the assessee as 'brand franchise fees' from the CBUs, admittedly, the assessee is paying Service Tax, as the same is covered as Intellectual Property Service under sub-Section 55(b) of Section 65 of the Finance Act, 1994. - levy of tax, penalty and interest, in the case of manufacture of beer, on the amount received by the assessee as 'brand franchise fees' from CBUs for the assessment years in question, cannot be justified in law. Since it is not disputed that under the agreement, the trade mark-'Kingfisher' is transferred to the licensee dealers, with a right to use the trade mark and exploit the same for commercial use, which was on payment of royalty to the assessee, the same would amount to transfer of right to use the intangible goods, being the trade mark-'Kingfisher', which would thus be subject to tax under KST Act. It is not disputed that in case of drinking water-'Kingfisher', the effective control over the brand name is transferred to the licensees to use and exploit the brand name for commercial use, which would amount to transfer of right to use goods, liable to tax under the KST Act. As such, the finding recorded by the First Appellate Authority in this regard, is confirmed and the order of the Tribunal with regard to this issue, is set aside. - Decided partly in favour of Revenue.
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