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TMI Tax Updates - e-Newsletter November 16, 2023 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy FEMA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST: Seeking correction of uploading mistake in GSTR-3B of the petitioner for the period February, 2018 - This writ petition is disposed of with liberty to the petitioner to approach the appellate authority under Section 107 of the GST Act against the impugned order - HC Visit to Get Source Income Tax: Validity of reopening of assessment u/s 147 - reason to believe - As prima-facie the information which formed the basis of re-opening itself does not fall within the meaning of the term ‘information’ under the 1st Explanation to Section 148 of the Act and hence, the re-opening is not permissible as it clearly falls within the purview of a ‘change of opinion’ which is impermissible in law. - HC Visit to Get Source Income Tax: Validity of Reopening of assessment u/s 147 - it is a well settled position of law that an individual seeking to invoke the equitable jurisdiction of a High Court must approach this Court displaying bona fides. However, in the present case, the Petitioner has unquestionably suppressed material facts in relation to the cancellation of its registration under Section 12A, 12AA and 12AB of the IT Act. - HC Visit to Get Source Income Tax: Indian resident deriving foreign income - interpretation of the expression “may be taxed” - Once the tax is payable or paid in the country of source, then country of residence is denied of the right to levy tax on such income or the said income cannot be included in return of income filed in India, would no longer apply after the insertion of provision of sub-section (3) of section 90 w.e.f. 1st April, 2004, i.e. Assessment Year 2004-05. - AT Visit to Get Source Income Tax: Additional depreciation on the plant and machinery - 50% of the additional depreciation was only claimed during the first year - the assessee is entitled for additional 50% depreciation in the assessment year which follows the assessment year in which the machinery had been bought and put to use for less than 180 days - AT Visit to Get Source Income Tax: Nature of land sold - Capital asset or rural agricultural land - Measurement of Distance - As for the distance measurement submitted by the assessee, the same is based on Google Map and that submitted by the Dy. Engineering, Road & Building Department, we fail to understand how this measurement can be treated as authentic. In our view, authority keeping records of land is the correct authority to issue certificate, and therefore, measurement certificate submitted by the assessee is also rejected. - AT Visit to Get Source Income Tax: Assessment of trust - Shirdi Sansthan of Shri Sai Baba - interest earned from such corpus funds - the assessee has not been able to adduce any evidence or letter or directions from the corpus donors that the interest derived from investment of the corpus funds would also be towards the corpus of the assessee. - AO directed to examine the facts - AT Visit to Get Source Income Tax: Addition u/s 68 - unexplained credit - CIT(A) has granted relief to the assessee without controverting and dislodging the basis and allegation of the AO - Order of CIT(A) reversed - Additions confirmed - AT Visit to Get Source Customs: Seeking release of provisionally attached Bank Account of petitioner - The respondents have failed in their duty by not defreezing the bank account after the expiry of 6 months, which they should have done suo-moto, but have failed to do so inspite of various letters written by the petitioner. - HC Visit to Get Source Customs: Confiscation of imported goods - undervaluation of goods - The golden rule being that ordinarily the transaction value has to be accepted, the rejection of transaction value has to be based only on extraordinary or special reasons and considerations. - AT Visit to Get Source Customs: Revocation of Customs Broker License - Allegation of violation of Regulation 10 not proved - However, in view of the failure of the appellants to have acted in a proactive manner in fulfillment of the obligation under sub-regulation 10(a) ibid, particularly when they have received the documents from importer through intermediary logistics operator, we find that it is justifiable to impose a penalty of Rs.10,000/- against the appellants, which would be reasonable - AT Visit to Get Source Customs: Classification of imported goods - Clear Float Glass (CFG) - the correct classification of the Clear Float Glass imported by the appellant under the impugned Bills of Entry is classifiable under CTH 7005 1090 - Benefit of exemption available - AT Visit to Get Source Customs: Classification of imported goods - Cheese Polvaromas (semi-finished) / Cheese Polvaromas (semi-finished flavour compound) - The impugned goods are classifiable under CTH 3302 1090 of the Customs Tariff Ac - AT Visit to Get Source Indian Laws: Refund of amount being the fair charges for the consignments - Failure to deliver the export goods within stipulated time frame - Export Consignment through Air - The Airline is bound by the promise held by its agent that the goods shall be delivered within one week and when the time schedule expired and the goods were, in fact, delivered after one and a half month, there was negligent delay in delivery of consignment. - The appellant would thus claim the entire amount equivalent to US $ 50070 without limiting it to Rs. 20 lakhs - SC Visit to Get Source Indian Laws: Dishonour of Cheque - Whether the learned MM in the present cases has conducted an preliminary / necessary inquiry u/s 202 of the CrPC before issuance of summons to the Accused? - HELD Yes - If the contention of the Accused is accepted that the MM has to conduct an inquiry by appreciating the terms and conditions of the Agreement entered into between the parties to ascertain if a legally enforceable debt has arisen, it would result in a full trial being conducted even before the issuance of summons. - HC Visit to Get Source Service Tax: Violation of the principles of natural justice - Refund of unutilized CENVAT credit - Issuance of Deficiency memo to be treated as Show Cause Notice (SCN) or not - the deficiency memos did not embody a preliminary view or opinion that may have been formed by the second respondent for rejecting the applications for refund - the deficiency memos did not fulfil the rudimentary requirements of an action being imbued and informed by the principles of natural justice. - HC Visit to Get Source Central Excise: Interest on irregular CENVAT Credit availed but not utilized - The appellant though have taken credit irregularly or wrongly in the books it was never utilized. So, it is not justified to attribute any motive to evade tax to the conduct of the appellant. Even irregularly availed CENVAT Credit has been reversed by the appellant on being pointed out much before the issuance of the Show Cause Notice. As such, invoking extended period is not justified in this appeal. - Demand of interest and penalty set aside - AT Visit to Get Source Central Excise: Refund claim - Export of goods - refund claims have to be filed shipping bill-wise or not - a conjoint reading of the Notification and the Form A-1 appended to the Notification, gives an unambiguous and the only understanding that there is no restriction on the number of shipping bills in a refund claim. The only condition mentioned at 2(h) being that no refund claim shall be allowed if the same is for an amount less than Rs.500/-. - AT Visit to Get Source Articles Cash cannot be considered as Goods for seizure proceedings under GST Law Cross border Payment Aggregators like Amazon (Pay) India, Google India, Razorpay, Pine Labs, PayPal, Cashfree, Paymate, etc to be directly regulated by RBI now News APEDA facilitates export of first trial shipment of banana to The Netherlands via sea Case Laws: GST 2023 (11) TMI 517 Cancellation of GST registration of petitioner - non-speaking order - requirement of valid SCN not fulfilled - violation of principles of natural justice - HELD THAT:- It is found that the fundamental defects in the procedure adopted by the respondent- authority. In the first place the notice dated 4.8.2022 was wholly non speaking. No fact allegation was made in that notice as may have allowed the petitioner any opportunity to furnish reply thereto. Mere recital of the statutory requirement without specifying the facts, may not fulfill the requirement of the valid show-cause notice. It was not made known to petitioner that his registration was proposed to be cancelled for reason of doubt as to existence of principal place of business. The notice did not propose to grant real opportunity of hearing to the petitioner inasmuch as the issuing authority fixed the date for the proceeding on the next date itself. The bar of statutory alternative remedy of appeal is waived in the peculiar facts of the present case. In face of such excessive gross fundamental defects, it is not a fit case to consider the issue of delay at this stage as may delay the enforcement of rules of natural justice, in the peculiar facts of this case. Petition disposed off. 2023 (11) TMI 516 Cancellation of registration under Central Goods and Service Tax Act - Attachment of bank account - SCN do not provide for any reasons for incurable defect - Violation of principles of natural justice - HELD THAT:- The show cause notice and order cancelling the registration clearly does not provide for any reason whatsoever for such action being taken against the petitioner and, therefore, there is an incurable defect in the order which cannot be improvised in the reply of the respondents - the order cancelling the registration ought to have contained reasons for the said cancellation of the registration and in the instant case, no such reason can be found in the order cancelling the registration - Insofar as the order cancelling the registration and show cause notice for such cancellation are concerned, the same is arbitrary and illegal. Attachment of the bank accounts - HELD THAT:- The petitioner and the respondents are at ad idem that the petitioner should avail the remedy provided by sub-rule (5) of Rule 159 of the CGST Rules - It is opined that the petitioner needs to invoke sub-rule (5) of Rule 159 of the CGST Rules to the order of attachment in question as the rule itself would permit. Thus, in the facts and circumstances of the case, the discretionary jurisdiction under Article 226 of the Constitution of India not exercised to interfere in the impugned attachment order. The impugned show cause notice dated 18th September, 2023 is quashed and set aside. The consequential order dated 5th October, 2023 cancelling the petitioner s registration also would stand quashed and set aside - petition disposed off. 2023 (11) TMI 515 Issuance of notice in the proceedings seeking reply by 14.08.2023 - grant of opportunity of personal hearing to the petitioner - principles of natural justice - HELD THAT:- Once it has been laid down by way of a principle of law that a person/assessee is not required to request for opportunity of personal hearing and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order, the fact that the petitioner may have signified 'No' in the column meant to mark the assessee's choice to avail personal hearing, would bear no legal consequence. Even otherwise in the context of an assessment order creating heavy civil liability, observing such minimal opportunity of hearing is a must. Principle of natural justice would commend to this Court to bind the authorities to always ensure to provide such opportunity of hearing. It has to be ensured that such opportunity is granted in real terms - the impugned order itself has been passed on 18.08.2023, while reply to the show-cause-notice had been entertained on 15.07.2023. The stand of the assessee may remain unclear unless minimal opportunity of hearing is first granted. Only thereafter, the explanation furnished may be rejected and demand created. The impugned order dated 18.08.2023 is set aside. The matter is remitted to the Respondent No.2/Deputy Commissioner, State Tax, Sector-9, Meerut, to issue a fresh notice to the petitioner within a period of two weeks from today - Petition allowed by way of remand. 2023 (11) TMI 514 Wrongful availment and utilization of Input Tax Credit - issuance of invoices from the non existing firms without actual supply of goods - mandatory provision of Rule 142 (1) (a) of the CGST Rules, 2017 have not been followed - HELD THAT:- It is deemed appropriate to dispose off the writ petition by requiring the petitioner to file objections to the show cause notice within a period of two weeks from today before the respondent No. 2 along with certified copy of the order of this Court. On filing of the objections within the time allowed, it is expected that the respondent No. 2 would proceed to consider the objections after giving personal hearing to the petitioner and pass appropriate orders, strictly in accordance with law within the next 15 days. 2023 (11) TMI 513 Violation of principles of natural justice - ultra vires the provisions of Section 14, 33(5) and 238 of the IBC and Section 88 of the CGST Act and SGST Act or not - alleged irregularities that had taken place prior to the period of commencement of Corporate Insolvency Resolution process against M/s.SKMPL and served on the petitioner - HELD THAT:- The right course available for the respondents is to file appropriate claim before the Official Liquidator. In case there are no funds available with the company in liquidation, in which case, it is not possible to recover the sales tax dues from the Company in liquidation, in such circumstances, a new cause of action would arise to recover the sales tax dues from the Ex.Directors of the Company in liquidation. In the present case, the issue of non-availability of the funds with the Official Liquidator for disbursement of the claims, is yet to be decided. Therefore, at present there is no cause of action arose to initiate against the Ex.Directors to recover the sales tax dues payable by the Company in liquidation. The present action taken by the respondents in passing the impugned orders of demand in the name of M/s.SKMPL, which is in liquidation and serving on the petitioner, is not sustainable - Impugned order set aside - petition allowed. 2023 (11) TMI 512 Maintainability of petition - availability of alternative remedy of appeal - neither the show cause notice nor the impugned order demonstrates calculation on the basis of which the levy is made - HELD THAT:- On perusal of impugned order and also the Notification No. 4/2018-Central Tax (Rate) issued by the Government of India, Ministry of Finance dated 25 January, 2018 which is placed on record by the learned counsel for the petitioner, it is opined that the contentions as urged by the petitioner need to be asserted and urged by taking recourse of the appellate remedy as available under section 107 of the MGST Act. It may not be possible for this Court to consider the contentions of the petitioner on examining the issues including the agreement, rates as also other relevant consideration for determination of the value of the development as undertaken by the petitioner and/or the tenements sold/allotted. All these are issues which would require examining such material and for which appropriate remedy for the petitioner would be to take recourse of the appellate remedy as available. Petition disposed off. 2023 (11) TMI 511 Cancellation of petitioner s GST registration - respondents have not permitted the petitioner to update the records to reflect its current place of business - HELD THAT:- It is considered apposite to dispose of the present petition by permitting the petitioner to file an application for revocation of cancellation of its GST registration, and also substantiate that it is carrying on its business from another premises. If the said application for revocation of cancellation of GST registration is filed within a period of two weeks from today alongwith the relevant documents, the Proper Officer shall consider the same and pass a speaking order within a period of one week from the said date, uninfluenced by the previous order(s). Petition disposed off. 2023 (11) TMI 510 Seeking correction of uploading mistake in GSTR-3B of the petitioner for the period February, 2018 - constitutional validity of Circular No. 26/26/2017-GST, dated 29.12.2017 - HELD THAT:- Considering the facts that paragraph 4 of the circular No. 26/26/2017-GST has been read down and it has been stated that the assessee can rectify the mistake in respect of the period in which it is granted. Subsequently, this is the law which has been taken note in several judgments. Question here is of disputed question of fact and this Court cannot be expected to decide the disputed question of fact within the jurisdiction under Article 226 of the Constitution of India. This writ petition is disposed of with liberty to the petitioner to approach the appellate authority under Section 107 of the GST Act against the impugned order Ext. P15. If the petitioner submits all the documents in his favour before the appellate authority, the authority will examine it in accordance with law and pass an order accordingly. 2023 (11) TMI 509 Maintainability of appeal- appeal dismissed on the ground of limitation - HELD THAT:- In the present case, it prima facie appears that the appeal was preferred after a delay of about 50 days. In view of the observation made by the Hon ble Division Bench in Kajal Dutta. Versus Assistant Commissioner of State Tax, Suri Charge Ors. [ 2023 (1) TMI 1097 - CALCUTTA HIGH COURT ], this Court is inclined to hold that the appellate authority be directed to reconsider the appeal on merits upon condoning the delay in preferring the same and upon affording reasonable opportunity of hearing to the petitioner. Accordingly, the order passed by the appellate authority being the Joint Commissioner of Revenue, Raiganj Circle, Raiganj on 15th February, 2023 is set aside - the writ petition is disposed of directing the 2nd respondent herein to reconsider the appeal preferred by the petitioner on merits upon affording reasonable opportunity of hearing to all the interested persons including the petitioner and pass a reasoned order within one month from the date of communication of this order, in accordance with law. Income Tax 2023 (11) TMI 508 Validity of reopening of assessment u/s 147 - reason to believe - scope of change of opinion - borrowed satisfaction - HELD THAT:- The admitted facts clearly indicate that the basis of which the AO issued notice alleging that there was information that suggests escapement of income was an internal audit objection. What is information is explained in Section 148 of the Act to mean any objection raised by the Comptroller and Auditor General of India . and no one else. This itself makes the re-opening of assessment in the present case impermissible. Consequently, de-hors any audit objection raised by the CAG, a view deviating from that which was already taken during the course of issuing the original assessment order is nothing but a change of opinion which is impermissible under the provisions of the Act. As prima-facie the information which formed the basis of re-opening itself does not fall within the meaning of the term information under the 1st Explanation to Section 148 of the Act and hence, the re-opening is not permissible as it clearly falls within the purview of a change of opinion which is impermissible in law. Decided in favour of assessee. 2023 (11) TMI 507 Validity of Reopening of assessment u/s 147 - expiry of limitation in relation to the issuance of the Impugned Notice - sufficiency of reasons or correctness of reason - Mandation of AO having requisite material / information to arrive at a subjective satisfaction that there was an escapement of income - whether the AO could have initiated reassessment proceedings pursuant to Section 149(1) ?- HELD THAT:- Undoubtedly, the same clarifies that deposits in bank accounts form a part of the assets of the Petitioner, and accordingly, in the considered opinion of this Court, the arguments advanced by the Petitioner qua the expiry of limitation in relation to the issuance of the Impugned Notice cannot be sustained as the income escaped assessment extends to a sum of INR 2,23,95,787 i.e., higher that the minimum threshold of INR 50,00,000 enshrined under Section 149 - Accordingly, the limitation vis- -vis the initiation of reassessment proceedings in the case herein would resultantly extend to 10 (ten) years in light of the fact that the AO had in its possession inter alia books of accounts evidencing voluntary deposits in bank accounts extending to more than INR 50,00,000. Accordingly, following Acorus Unitech Wireless Pvt. Ltd. [ 2014 (3) TMI 154 - DELHI HIGH COURT] this Court is satisfied that the AO based its opinion on tangible and concrete information in the form of the Petitioner s Trust Deed; and statement of Managing Trustee that certain identified foreign contributions received by the Petitioner were utilized for a purpose divergent to its object as disclosed in the Trust Deed, and accordingly, the wrongful application of the exemption availed under Section 11 / Section 12 of the IT Act in relation to such funds would undoubtedly result in the AO forming the subjective satisfaction that the wrong availed exemption vis- -vis foreign contributions escaped income for the purpose of assessment under the IT Act. Lastly, it is a well settled position of law that an individual seeking to invoke the equitable jurisdiction of a High Court must approach this Court displaying bona fides. However, in the present case, the Petitioner has unquestionably suppressed material facts in relation to the cancellation of its registration under Section 12A, 12AA and 12AB of the IT Act. As decided in Supreme Court in Prestige Lights Ltd. [ 2007 (8) TMI 446 - SUPREME COURT] it is well settled that a prerogative remedy is not a matter of course. In exercising extraordinary power, therefore, a writ court will indeed bear in mind the conduct of the party who is invoking such jurisdiction. If the applicant does not disclose full facts or suppresses relevant materials or is otherwise guilty of misleading the court, the court may dismiss the action without adjudicating the matter. Petitioner has failed to make out a case warranting the interference of this Court under Article 226 of the Constitution of India. 2023 (11) TMI 506 Validity of order passed u/s 144 r.w.s. 147 - personal account has been attached by the Income Tax authorities - petitioner s case that therefore none of the notices that were sent by the Assessing Officer (A.O.) was received by petitioner - Husband of assessee died who was the only other director carrying on the business entirely and company was effectively non functional - HELD THAT:- Notices that were sent to petitioner came back undelivered with the endorsement Left . The AO it appears from the impugned order, was racing against time because the matter would have got time barred and therefore passed the impugned order. We also find that the impugned order has been passed on the basis that assessee had come to One Time Settlement (OTS) on 21st October 2008 with Union Bank of India for loan taken and in the absence of complete details of the OTS the said amount was added as income of petitioner. Since petitioner/Uma Devesh Ajmera came to know about the existence of the order only on or about March 2020, the time to file appeal has also expired. It is averred in the petition that the OTS with Union Bank of India was only about Rs. 42 Lakhs and not Rs. 9.60 Crores. Therefore, in our view grave prejudice will be caused to petitioner if the impugned order is sustained. As petitioner/Uma Devesh Ajmera stated that she will fully co-operate with the Jurisdictional Assessing Officer (JAO) and provide all details to reconsider the assessment of petitioner for Assessment Year 2009-10. Statement accepted. The impugned order is quashed and set aside. JAO shall, within two weeks provide copy of all notices issued to petitioner through petitioner s advocate. Within two weeks thereafter petitioner shall reply/show cause to the notices and provide all details and documents. 2023 (11) TMI 505 Depreciation Claim of trust - purchase of assets taken by the assessee as application of Income - HELD THAT:- As decided in Rajasthan Gujarati Foundation [ 2017 (12) TMI 1067 - SUPREME COURT] full expenditure had been allowed in the year of acquisition of the assets, what he really meant was that the amount spent on acquiring those assets had been treated as 'application of income' of the Trust in the year in which the income was spent in acquiring those assets. This did not mean that in computing income from those assets in subsequent years, depreciation in respect of those assets cannot be taken into account. As there was no specific provision in this behalf in the Income-tax Act, has made amendment in Section 11(6) of the Act vide Finance Act No. 2/2014 which became effective from the Assessment Year 2015-2016. Based on that observation we allow ground no. 1 raised by the assessee. 2023 (11) TMI 504 Indian resident deriving foreign income - interpretation of the expression may be taxed - taxability of particular income in both the contracting states - addition under the head income from house property in respect of rental income received from two properties situated in Australia - whether as per Article 6 of DTAA such income is taxable in Australia and not in India? - rental income from Australian property was not included in the Indian income tax return in view of Article 6 of DTAA and in respect of the rental income, tax of 4698.16 Australian dollars was paid in the income tax return filed in Australia - HELD THAT:- The issue of interpretation of phrase may be taxed in other contracting States , as used in different Articles including Article 7 in the DTAA has been discussed in detailed by the Tribunal in Essar Oil Ltd. [ 2013 (9) TMI 126 - ITAT MUMBAI] after taking into consideration various decisions of the High Court, Supreme Court, effect of amendment in section 90(3) and notification dated 28th August 2008, issued by the Central Government. DR in addition to the judgment relied upon by the ld. AO and that of the ld. CIT(A) has also relied upon the judgment of the Bank of India Vs. ACIT [ 2020 (12) TMI 862 - ITAT MUMBAI] wherein the judgment and circular relied upon by the ld. AR of the assessee is discussed at length and even though the decision is given in the favour of the revenue by holding that as a result of the amendment w.e.f. 01.04.2004 by which section 3 to section 90 has been brought to tax in the statute from the assessment year 2004-05 there is a clear departure from the earlier position wherein the courts have interpreted the expression may be taxed in as much as now the central government which is one of the contracting state has been empowered to assign meaning to the various terms and expressions and used in the agreement. Once the tax is payable or paid in the country of source, then country of residence is denied of the right to levy tax on such income or the said income cannot be included in return of income filed in India, would no longer apply after the insertion of provision of sub-section (3) of section 90 w.e.f. 1st April, 2004, i.e. Assessment Year 2004-05. Based on these finding we see no reasons to interfere with the finding of the lower authority and therefore, we see no merits in the appeal of the assessee and the same is dismissed. 2023 (11) TMI 503 Revision u/s 263 - Disallowance of deduction claimed for Industrial Undertaking u/s. 80IA - PCIT observed that the assessee was involved for development and setting up of the motor vehicle weighbridge check post, this particular service was not covered in scope of infrastructure facilities as defined in section 80IA and that bridge and weighbridge were entirely different from each other - HELD THAT:- We find that the return of assessee was selected for scrutiny on the limited issue of claim of deduction u/s 80IA - assessee has duly furnished all the information relevant to AO and answered the various queries raised - AO was satisfied that the motor vehicle weighbridge along with toll road of 1 kilometre was integral part of the highway/toll road, thus accordingly accepted the claim of the assessee. In our view, the ld. PCIT has misconstrued the purpose for which the Government has entered into concession agreement for construction of motor vehicle weighbridge along with connecting road with the highway/toll road. The said infrastructure facilities have to be developed under Motor Vehicle Rules alongside the toll road so as to discourage unnecessary movement of heavy vehicles on the toll road and further to collect toll charges from heavy vehicles on account of damage to the toll road because of the heavy vehicles. The said motor vehicle weighbridge is constructed and connected with the toll road and the heavy vehicles are diverted to the motor vehicle weighbridge toll road and pass to the same and are charged toll charges as per Government Rules according to the weight of the vehicle and then are allowed to pass through the main highway/toll road. Motor vehicle weighbridge in, itself, is not a separate infrastructure project, rather, it is a part and parcel of the highway/toll road and is constructed for the purpose of passing and monitoring of movement of heavy vehicles on the toll road and collection of toll charges from the heavy vehicles and the said infrastructure facilities independently will be of no use, rather, it is part and parcel of the highway project. Thus the order of the Assessing Officer was not erroneous - Decided in favour of assessee. 2023 (11) TMI 502 Validity of DRP order issued without a DIN - simultaneous DIN number was generated through separate communication - HELD THAT:- A perusal of the DRP order shows that it is clear in the body of DRP order, no DIN number is mentioned nor there is any reason of not mentioning the DIN number in order of the DRP. Is such a situation, the DRP order will lose its validity. Subsequent separate communication of DIN is a superfluous exercise. As relying on Brandix Mauritius Holdings Ltd. [ 2023 (4) TMI 579 - DELHI HIGH COURT] and in terms of paragraph 4 of the circular No. 19/2019 dated 14.08.2019, we hold that the impugned DRP order is invalid and shall be deemed to have never been passed. Accordingly, we quash the impugned DRP/AO order. Further, the issue that a simultaneous DIN number was generated and communicated have been considered by Co-ordinate Bench of the Tribunal in the case of Abhimanyu Chaturvedi [ 2023 (8) TMI 378 - ITAT DELHI] which says forwarding of the intimation of generation of the DIN in ITBA is only a subsequent action and that is not part of assessment order. The manner in which the word communication is defined shows every notice, order, summons, letter and any correspondence from Tax authorities should have a DIN quoted and it is for this reason that the Intimation issued about the DIN of assessment order itself has a DIN quoted on it. The generation of DIN subsequently and generation of intimation to be sent to assessee are of no consequence for the purpose of assessment and raising the demand.- Decided in favour of assessee. 2023 (11) TMI 501 Additional depreciation on the plant and machinery - number of days asset is used - 50% of the additional depreciation was only claimed, since the plant and machinery were purchased and used less than 180 days, which was allowed by the A.O. in the AY 2014-15, therefore the assessee claimed balance 50% of the additional depreciation during this AY 2015-16 - HELD THAT:- As decided in COSMO FILMS LTD. [ 2012 (9) TMI 281 - ITAT DELHI] Law does not prohibit that balance 50% will not be allowed in succeeding year. The extra depreciation allowable u/s 32(1)(iia) in an extra incentive which has been earned and calculated in the year of acquisition but restricted for that year to 50% on account of usage. The so earned incentive must be made available in the subsequent year. The overall deduction of depreciation u/s. 32 shall definitely not exceed the total cost of plant machinery. In view of this matter, we set aside the orders of the authorities below and direct to extend the benefit. As following the decision of Rittal India (P) Ltd. [ 2016 (1) TMI 81 - KARNATAKA HIGH COURT] and also considering the amendment brought in by way of proviso to section 32(1) wherein it has been specifically stated that 50% of additional depreciation which was not allowed in the preceding assessment year shall be allowed in the subsequent assessment year, concluded that the assessee is entitled for additional 50% depreciation in the assessment year which follows the assessment year in which the machinery had been bought and put to use for less than 180 days. Decided in favour of assessee. Additional depreciation - processing of Milk and the milk products - whether assessee only engaged in the processing of Milk and not manufacturing of any item ? - HELD THAT:- The assessee is a Milk Purchaser Co.Op. Society and milk is procured from various farmers and villagers. Thereafter the said milk processed under various machines and manufactured into various milk products. Thus the activity carried out by the assessee is not only processing of milk but involved detailed technical machineries and manufacturing different kind of milk products. It is in the case of CIT Vs. Gujarat Co.op. Milk Marketing Federation Ltd [ 2014 (1) TMI 1938 - GUJARAT HIGH COURT] held that processing of Milk and the milk products amounts to manufacture and assessee is entitled for additional depreciation. End product manufactured by the assessee is not the same raw milk that is collected from the farmers and villagers. The end product are entirely distinct with that of the raw milk. Thus the assessee cannot be denied the claim of additional depreciation. Decided in favour of assessee. Depreciation on substation, DG set, Exhaust pedestal fans, street lighting, additional electrical equipment, transformers - at the rate applicable to plant machinery OR electrical fitting as treated by the A.O - HELD THAT:- It is seen from the certificate issued by the Senior General Manager (Project) of Engineering Department of the assessee company, the manufacturing units are located in remote places at Palanpur where supply of electricity was not regular and often, there is power cut in supply of electricity. It is for this reason, sub-station, DG set, and transformers are required for manufacture of milk products. Similarly, exhaust pedestal fans are required for cooling of the milks. Hence the same cannot be categorized as pure electrical items but to be treated as part and parcel of the plant and machinery for the manufacture of milk products. As in the case of CIT Vs. Starlight Silk Mills Pvt. Ltd. [ 2005 (8) TMI 40 - GUJARAT HIGH COURT] held that AC plants, electric installation and transformers form integral part of plant and machinery and eligible for depreciation. Similarly, the Co-ordinate Bench of this Tribunal in the case of Raw flints (P.) Ltd [ 1987 (1) TMI 490 - ITAT AHMEDABAD] held that electrical installations are an integral part of manufacturing process and cannot be divorced from plant and machinery . We hold that the electrical fittings are integral part of the plant and machinery and the assessee is eligible for depreciation and additional depreciation accordingly. Thus the Grounds raised by the assessee is hereby allowed. 2023 (11) TMI 500 Revision u/s 263 by CIT - assessee has not offered the reimbursement of bank guarantee commission in its annual report, therefore the claim of expenditure u/s. 37 was denied - HELD THAT:- Queries have been raised by the AO in his notice u/s. 142(1) - Thus the very same issue what was considered by the Ld. A.O. in the assessment proceedings is revised by PCIT on the ground that the payee company has not offered the income for taxation and consequently the assessee is not entitled for deduction u/s. 37 - In our considered view, the Ld. PCIT partially looking into the assessment record initiated the Revision proceedings which is factually not correct. PCIT failed to consider the reply to the notice issued u/s. 142(1) filed by the assessee wherein the assessee given the details of the Bank Guarantees issued by Madhav Infra Projects Limited with name of the Bank Guarantees, BG number, BG commission and all other details related expenses as Annexure-C. Thus both the ingredients i.e. order must be erroneous in nature; and the error must be such that it is prejudicial to the interest of Revenue are present in a given case, it is not legally permissible for a Commissioner to initiate suo motu proceeding under section 263 of the Act, the same has been upheld in case of Malabar Industrial Co. Ltd.-Vs-CIT [ 2000 (2) TMI 10 - SUPREME COURT] Assessment cannot be revised if there is no jurisdictional error in the order or if it has been passed after due application of mind or in case where PCIT has a view different from that taken by A.O. Therefore we have no hesitation in quashing the Revision order passed by the Ld. PCIT - Decided in favour of assessee. 2023 (11) TMI 499 Nature of land sold - Capital gain earned on sale of land - capital asset or rural agricultural land - Measurement of Distance - AO rejected this contention of the assessee treating the land as not qualifying in the exception provided in section 2(14)(iii) and accordingly subjected to the gain thereon to tax and thereafter applied the provisions of section 50C substituting the consideration actually received by the assessee with the stamp duty value thereon - HELD THAT:- As is evident, agricultural and situated within the jurisdiction of municipality or cantonment board or within the specified limits of such municipality or cantonment board, qualify as capital asset. The limits from the respective municipalities or cantonment boards, have been specified by the CBDT in its Notification No.SO-9447 F.No.164/3-ITA-I dated 6.1.1994. The Revenue has held the land qualifying as capital asset on the basis that the land was included in the AUDA, and are therefore within 8 kms. from the outer point of AMC. As noted that identical issue has been deal in the case of Shri Dashratbhai Gopalbhai Patel, [ 2021 (9) TMI 346 - ITAT AHMEDABAD] wherein they have held that the Development Authority cannot be equated with the Municipal Corporation, and therefore, the measurement of the Revenue Department fails. Thus distance measurement by the Revenue is not in accordance with law. As for the distance measurement submitted by the assessee, the same is based on Google Map and that submitted by the Dy. Engineering, Road Building Department, we fail to understand how this measurement can be treated as authentic. In our view, authority keeping records of land is the correct authority to issue certificate, and therefore, measurement certificate submitted by the assessee is also rejected. Since, there is no basis before us for determining the distance for the land sold by the assessee, the issue, we find, need reconsideration, and therefore the same is restored back to the AO to obtain necessary distance certificate from the appropriate authority, and thereafter adjudicate the issue in accordance with law. Appeal of the assessee is allowed for statistical purpose. Addition u/s 68 - Unexplained source of deposits in the bank account - HELD THAT:- AO has accepted explanation of source with respect to the deposits of Rs. 1.34 crores, there can be no grievance of the AO. Therefore, order of the ld.CIT(A) deleting the addition of unexplained cash deposits to this amount upheld. Balance cash deposited, we have noted that the ld.CIT(A) has accepted the explanation of the assessee giving detailed finding with respect to each deposits. CIT(A) has given a finding of fact that the amount received by the assessee from them was from the opening balance outstanding in their name which were confirmed by the said parties. With respect to the other parties CIT(A) noted with respect to such parties, the assessee has submitted relevant bank accounts proving creditworthiness of the said parties, as also their confirmation and copy of the return of income. CIT(A) also noted that the said amounts were shown to have been returned also, therefore, relying upon the decision of Aayachi Chandrakshekar Narsangi [ 2013 (12) TMI 372 - GUJARAT HIGH COURT] CIT(A) deleted the addition made. CIT(A) has given detailed finding of being satisfied with the genuineness of the credit, noting that the said parties had filed their confirmation, returned income and bank statement. As above detailed factual finding of the CIT(A), which have not been controverted by the Revenue, no reasons to interfere - Decided against revenue. 2023 (11) TMI 498 Notional addition towards rent receivable w.e.f. 28.07.2012 as per the order passed by the Court of Home Controller, Patna - assessee is co-owner of of the property which was rented to Krishna Niketan at the market rate for a period from December 2008 to November. 2038 however rental value of the property has increased considerably over a period and the assessee started pressing for the higher rent - HELD THAT:- Rent Controller vide order dated 28.07.2012 held that monthly rent would be Rs. 4,44,230/- thus deciding the issue of increase in rent in favour of the assessee. Accordingly,a revised rent agreement was executed between the assessee and the tenant fixing the rent at Rs. 4,44,230/- per month and return of income was filed accordingly. However, according to the AO rent should have been charged as per the order of Rent Controller order from the date of the order. We note that in the case of other co-owner the addition made by the AO on account of notional rent was deleted by the Ld. CIT(A). We observe that the assessee has received rental of Rs. 60,000/- per month from 30.11.2012 which has been accepted by the Ld. CIT(A) in the case of other co-owner and which has not been challenged before the tribunal. Accordingly following the same, we hold that the addition confirmed by the Ld. CIT(A) on account of notional income is not sustainable and accordingly we set aside the order of Ld. CIT(A) and direct the AO to delete the addition. The appeal of the assessee is allowed. Rectification of mistake u/s 154 - AO stated that in the assessment order section and sub-section under which the assessment was framed, was wrongly mentioned as section 143(3) r.w.s 147 instead of section 144 r.w.s 147 of the Act - As per CIT(A) assessee has complied to notice u/s 142(1) and it is an admitted fact that no notice u/s 143(2) of the Act has been issued by the AO, hence, the assessment made cannot be said to have been made u/s 144 of the Act not being as per the provision of section 154 - HELD THAT:- in the present case the assessment has been framed u/s 143(3) read with Section 147 of the Act after calling for various details from the assessee by issuing notice u/s 142(1) of the Act during the assessment proceedings. We note that notice u/s 142(1) of the Act was duly given to the assessee on 13.11.2019 which was also replied on 27.11.2019. In the said reply, the assessee submitted that capital gain has not been shown in the return of income filed by the assessee as the sale deed has been cancelled as per agreed terms and condition between the assessee and the buyer of the property. In our opinion, the assessment order has rightly been framed u/s 143(3) r.w.s 147 of the Act. In the present case we observe that the AO has resorted to the provisions of section 154 only to correct the anomaly of non issuance of mandatory notice u/s 143(2) - the provisions of Sections 144 of the Act are applicable only when the assessee does cooperate and does not furnish any details/information and then it does not require to issue any notice u/s 143(2) of the Act but the facts in the instant case are different. No infirmity in the order of Ld. CIT(A) and accordingly same is upheld by dismissing the appeal of the revenue. Validity of reassessment proceedings - No notice u/s 143(2) was served to the assessee before completing assessment proceedings - HELD THAT:- As no notice has been issued and served on the assessee. In our opinion where no notice u/s 143(2) is issued, the assessment so framed by the AO is null and void in law. The case of the assessee finds support from the decision of Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] wherein the Hon ble Apex Court has held that no assessment can be made without issuing notice u/s 143(2) and this decision has been relied on the First Appellate Authority while allowing the appeal of the assessee. Addition of Capital Gains - As sale proceeds for sale of land has not materialized as the cheque issued by the said party were not honoured and therefore sale deed became invalid and was cancelled and consequently no capital gain was shown in the return of income. Therefore even on merit the revenue has no case and Ld. CIT(A) has rightly allowed the appeal of the assessee. Addition u/s 68 - assessee failed to substantiate the loans before the First Appellate Authority resulting into confirmation of the said addition - HELD THAT:- The provisions of Section 68 of the Act are not applicable to the loans/cash credits received in earlier years and only the cash credits which have been credited in the books of account of the assessee during the year are liable to be added u/s 68, in case, the assessee failed to satisfy with three ingredients of the said section. The case of the assessee finds support from the several decisions as discussed hereinafter. In the case of ACIT vs. ATS Promoters Builders (P) Ltd [ 2014 (11) TMI 323 - ALLAHABAD HIGH COURT] has held that the provisions of section 68 are not applicable where the sum is not even credited in the books of account during the year. In the present case these loans were received in FY 2013-14 and therefore the provisions of Section 68 cannot be invoked. Accordingly we set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Accordingly the appeal of the assessee is allowed. Deduction u/s 54F and u/s 54EC - HELD THAT:- CIT(A) has held that the AO has failed to appreciate that transaction could not happen in Ay 2012-13 due to non-payment of sale consideration. Finally the Ld. CIT(A) allowed the deduction u/s 54F and 54EC by holding that there was no income from long term capital gain as the assessee realized the sale consideration during the year. After perusing the facts on record we find that the Ld. CIT(A) has taken a correct view in the matter and therefore we are inclined to uphold the same by dismissing the ground nos. 1 and 2 of the revenue s appeal. Estimation of profit - HELD THAT:- We note that the AO has not brought on record any material or evidence to substantiate that the assessee has earned income these two concerns apart from declared income from M/S kumar Enterprises and therefore, the addition was made on suspicion, surmises and conjecture which is not permissible under the law. The Ld. CIT(A) after rightly appreciating the facts of the case deleted the addition. As decided in Ashok Weaving Works [ 2015 (9) TMI 183 - ITAT AHMEDABAD] wherein it was held that unless defect is pointed out in books of assessee, no addition could be made by the AO on ad-hoc basis. 2023 (11) TMI 497 Assessment of trust - Shirdi Sansthan of Shri Sai Baba - anonymous donations received taxed as per the provisions of section 115BBC - object of trust - whether the assessee existed both for charitable and religious purposes or was it existing solely for charitable purposes? - Main object of the assessee trust had always been to carry out the activities associated with prayers, maintenance of temple and providing facilities to the devotees who come for darshan including food and propagation of the teachings of Shri Sai Baba and upon examining in detail the meaning of the term religious purpose in the context of Income-tax Act, 1961, observed that it cannot be interpreted in a narrow sense to denote furtherance of only a particular religion but the same has to be interpreted inclusively and in a broad sense - as per revenue assessee has spent a miniscule amount of its income towards purely religious purposes and thus the trust has to be acknowledged as a charitable institution as per the provisions of section 80G(5B) - HELD THAT:- It is not in doubt that Shri Sai Baba had a large number of devotees and was accorded the status of Saint upon his demise on 15th October 1918. The place i.e. Shirdi from where he left for his heavenly abode was converted into a shrine and thousands of devotees would visit his shrine to pay their respects, spread his teachings and celebrate the festivals etc. His devotees are noted to have originally started a trust namely Shirdi Sansthan of Shri Sai Baba which was registered under the Bombay Public Trusts Act, 1950. The legislative intent behind Section 115BBC(2)(a) (b) is to exclude such trusts/ institutions which inter alia exists for religious purposes and not tax the anonymous donations received by them. The Revenue erred in singling out Shri Sai Baba or Hindu Gods in an Ultra-philosophical manner to say that their worship cannot be said to be religious purpose, as neither Sai Baba nor Hinduism is a religion, but a way of life or spirituality. To put it in another way, if one chooses to subscribe to the Revenue s contention that, then it would mean that since Hinduism is not a religion, worshipping Hindu deities and maintaining temples cannot be regarded as religious purpose for the purposes of Section 115BBC of the Act. In such a scenario, the hundi collections / anonymous donations received by almost all the revered temples of India, without naming any, shall be liable to be taxed u/s 115BBC of the Act. In our considered view, such a proposition put forth by the Revenue is wholly inconceivable, fallacious and untenable. Somewhat identical issue was considered in the case of ITO Vs Sri Shirdi Sai Samaj in [ 2016 (5) TMI 1034 - ITAT BANGALORE] - In this case also, the assessee was both charitable and religious trust inter alia involved in propagating teachings preachings of Sai Baba, pooja offerings, temple worship etc. The AO taxed the hundi collections of the assessee Trust u/s 115BBC of the Act. On appeal this Tribunal is noted to have deleted the impugned addition holding that the assessee trust was existing both for charitable and religious purposes and therefore the anonymous donations received by them was not liable to tax in terms of the exclusion set out in Section 115BBC(2)(b) of the Act. Hence, we countenance the action of Ld. CIT(A) holding that the assessee was existing both for charitable and religious purposes and thus eligible to avail the benefit of exclusion set out in Section 115BBC(2)(b) of the Act. Revenue has primarily laid emphasis on the certificate held by the assessee u/s 80G of the Act to justify their stand that the assessee was only a charitable trust with no religious purpose - Academically speaking, if the objects of any trust is not solely charitable but is mixed purpose, and the Revenue is of the view that such trust cannot be registered u/s 80G of the Act, then it is up to Revenue to take appropriate action in accordance to law regarding the certificate issued u/s 80G of the Act. But, it cannot be the other way round i.e., for the Revenue to argue that because such Trust is registered u/s 80G of the Act, it would nullify the jurisdictional fact that the Trust exists for mixed purpose. For the aforesaid reasons, we also hold that the decisions in the case of Shiv Mandir Devsttan Panch Committee Sanstan [ 2012 (11) TMI 352 - ITAT NAGPUR] and Tarehati Charitable Trust [ 2018 (7) TMI 2329 - ITAT MUMBAI] relied upon by the Revenue is not relevant as they were rendered in the context of registration under Section 80G of the Act. Even otherwise, addressing the merits of this argument of the Revenue, we note that, the assessee was accorded approval by the Ld. Chief Commissioner of Income-tax, Mumbai under Section 10(23C)(v) of the Act vide order dated 17.03.2008. Undisputedly, the approval u/s 10(23C)(v) is accorded to those trusts which are wholly for public religious purposes and charitable purposes. We agree with the Ld. CIT(A) that this approval carries significant evidentiary value as it shows that the affairs of the assessee Trust had been verified by a superior authority and the assessee was found to exist for both religious and charitable purpose. On query from the Bench, the Revenue was unable to show that this approval granted u/s 10(23C)(v) of the Act has been withdrawn or rescinded by the Ld. CCIT. We further note that this approval u/s 10(23C)(v) of the Act was available on record, when the CIT(E) accorded registration u/s 80G of the Act vide order dated 25.03.2009. This supports the contention put forth by the assessee that, at that material time even the Revenue itself did not consider holding of certificate u/s 80G to be contradictory or inconsistent with certificate held u/s 10(23C)(v) of the Act. Position which emerges is that, there may be instances where a trust which is existing both for charitable and religious purpose, has incurred religious expenditure which is less than 5% of the total expenses of the Trust. In such a case, the trust may be eligible for certificate u/s 80G of the Act and at the same time would not be liable to be taxed for the anonymous donations received by virtue of Section 115BBC(2)(b) of the Act. We thus find merit in the submission of the Ld.Sr.Counsel for assessee that, the exclusion set out in Section 115BBC(2)(b) of the Act can co-exist with Section 80G of the Act. Hence, the proposition put forth by the Revenue placing reliance on 80G registration to ipso facto deny the exclusion set out in Section 115BBC(2)(b) of the Act is held to be untenable. Disallowance of accumulation of income u/s 11(2) - non-filing of Form No. 10 with Deputy Commissioner of Income Tax within stipulated time - HELD THAT:- Assessee furnished the copy of the order passed u/s 119(2)(b) of the Act by the CIT(Exemptions), Mumbai dated 16.03.2023, wherein, CIT(Exemption) has since condoned the delay in filing of Form 10 by the assessee for AY 2015-16. The Ld.Sr.Counsel accordingly prayed that, since the delay in filing the Form No. 10 has now been condoned by the competent authority, the AO may be directed to allow the benefit of exemption in relation to the accumulation of income u/s 11(2) of the Act. The Ld. CIT DR appearing for the Revenue did not dispute the same. AO is directed re-compute the total income of the assessee and allow the admissible exemption u/s 11(2) of the Act as claimed by the assessee in the return of income, since the delay in filing of Form 10 has since been condoned by the Ld. CIT(Exemptions). Ground Nos. 1 2 of the assessee s appeal therefore stands allowed. Allowability of exemption u/s 11(1)(a) - whether 15% accumulation u/s 11(1)(a) of the Act has to be calculated on gross receipt or net receipt after deduction of revenue expenditure? - HELD THAT:- We find that this issue is no longer res integra in light of the decision of the Special Bench of this Tribunal in the case of Bai SonabaiHirji Agency Trust [ 2004 (9) TMI 300 - ITAT BOMBAY-E] it is difficult to accept that outgoings which are in the nature of application of income are to be excluded. The income available to the assessee before it was applied is directed to be taken - Twenty five per cent of the above income is to be allowed as a deduction. Similar view has also been taken in ParsiZorastrianAnjuman Trust vs. CIT [ 1986 (7) TMI 69 - MADHYA PRADESH HIGH COURT] No reason whatsoever has been given by the Revenue authorities for deducting Rs. 2,17,126 in this case for purposes of s. 11(1)(a) - Thus we hold that the accumulation u/s. 11(1)(a) of the Act should be allowed in the manner as claimed by the assessee and the AO is directed to do so. Denying the benefit of exemption u/s 11(1)(d) of the Act in relation to the interest earned on corpus fund s - HELD THAT:- We find merit in the findings of the lower authorities that the interest earned on corpus funds did not constitute voluntary donation received under the instructions of the donor to be earmarked for specific purpose viz., towards the corpus of the trust. Instead, the proximate source of interest was that, it had been earned from fixed deposits made by the assessee. We are therefore in agreement with the Ld.CIT(A) that it did not qualify for exemption u/s 11(1)(d) of the Act. As rightly noted by Ld. CIT(A), the assessee s reliance upon the decisions rendered in the cases of DIT vs Shri Ram Krishna SevaAashrama CIT(E) vs Mata Amrithanandamayi Math [ 2017 (9) TMI 1232 - KERALA HIGH COURT] was misplaced wherein the donor had made a specific direction that the interest earned on corpus donation shall also be towards corpus and therefore on such unique facts the benefit of exemption u/s 11(1)(d) of the Act was allowed to that assessee. The facts involved in the present case are found to be distinguishable. Before us also, the assessee has not been able to adduce any evidence or letter or directions from the corpus donors that the interest derived from investment of the corpus funds would also be towards the corpus of the assessee.We thus hold that the Ld.CIT(A) had rightly denied the exemption claimed by the assessee u/s 11(1)(d) of the Act in relation to the interest income derived from investment of corpus funds. Assessee has claimed that the AO be directed to allow deduction for the expenses incurred out of the interest earned from such corpus funds - As assessee Trust had received corpus contributions towards various specific Funds, which in turn were invested in modes specified u/s 11(5) of the Act. It is noted from the Schedule A of the financials that, out of the corpus funds (including interest), the assessee has also spent amounts which was in excess of the interest income in question. Although this fact was discernible from the face of the accounts, we find that the lower authorities overlooked the same while seeking to tax the gross interest income from corpus funds. At the same time however, it is noted that even the assessee failed to bring the details of the amounts spent out of these funds to the attention of the lower authorities. According to us, the amount spent out of such interest income from corpus funds which are towards the objects of the Trust has to be allowed by way of application of income, while computing the assessable income of the assessee Trust. We set aside this issue back to the file of the AO with the direction to examine the details of the amount spent out of the interest from corpus funds and allow the deduction. Appeal of assessee is partly allowed and appeals of the revenue are dismissed. 2023 (11) TMI 496 TP Adjustment - determining of payment of royalty fee - applicability of CUP Method instead of TNMM - DRP has held that ALP of royalty payment could not be taken as NIL and benefit test could not be applied and directed to adopt royalty rate of 3% for benchmarking the royalty payment - AR submitted that the issue of methodology to be adopted and arbitrary selection of royalty rate of 3% without bringing any correct comparables has been considered and Coordinate bench has set aside the adjustments HELD THAT:- The Bench has given thoughtful consideration to the facts and submissions, and at the very outset has no hesitation to not sustain the submission of Ld. DR about adopting comparables as per law as the order indicate that instead of making analysis on the parameters merely following judicial precedent in the case of Federal Mogul [ 2012 (7) TMI 971 - DELHI HIGH COURT] and Climate Systems India Ltd. case [ 2009 (10) TMI 116 - DELHI HIGH COURT] the 3% royalty has been adopted. As decided in [ 2023 (7) TMI 1318 - ITAT DELHI] for A.Y. 2012-13 has observed as follows arbitrary selection of royalty rate of 3% by the Id. DRP is without brining any correct comparables on record. With regard to payment of FTS in A.Y. 2012-13, the Id. DRP agreed that the TPO failed to apply CUP correctly and is determination of ALP at Nil is incorrect. The Hon'ble High Court of Delhi in Magneti Marelli [ 2016 (11) TMI 123 - DELHI HIGH COURT] held that if segregation approach is permissible, TNMM shall apply. Decided in favour of assessee. 2023 (11) TMI 495 Reopening of assessment u/s 147 - assessee in default for non-deduction of tax while issuing FCCB to the non-resident assessee company - reasons to believe - HELD THAT:- We note that the essential condition prescribed under the Act for reopening the assessment u/s 147 of the Act AO is that he has to firstly record his reasons to believe, escapement of income . It is well settled that the reason to believe postulates a foundation based an information and belief based on reason. In the present case CIT(A) who was pleased to delete the direction of AO (TDS) to deduct the tax at source on the redemption premium. And this action of the Ld. CIT(A) has been upheld by the Tribunal (Pune) [ 2023 (1) TMI 1312 - ITAT PUNE] by holding that the income has not arisen in India in the hands of the recipient/non-resident and therefore there was no obligation on the part of the payer/M/s. Bharat Forge Ltd. to deduct tax at source on the payment of interest (redemption premium) as held by the Hon ble Supreme Court in the case of GE India Technology Cen. (P.) Ltd. [ 2010 (9) TMI 7 - SUPREME COURT] In the light of the aforesaid action of the Tribunal in the case of payer/M/s. Bharat Forge Ltd., the information given by the AO (TDS) of M/s. Bharat Forge Ltd. which was the foundation on which was the AO of assessee has re-opened the assessment of assessee is no longer existing being legally incorrect. Therefore, the material/information on which AO have re-opened the assessment having been removed, the action of AO to have issued notice of re-opening of assessment u/s 148 of the Act itself fails. We may rely on the legal Maxim Sublato Fundamento credit opus meaning in case foundation is removed, the super--structure falls. In the case of Badarinath Vs. Tamilnadu [ 2000 (9) TMI 1044 - SUPREME COURT] has held that once the basis of proceeding is gone, all consequential order and acts would fall on the ground automatically which is applicable to judicial and quasi--judicial proceedings. Decided in favour of assessee. 2023 (11) TMI 494 Addition u/s 68 - unexplained credit - absence of supporting evidences i.e. source of income of the person who provided the loan to the assessee, creditworthiness of the person cannot be verified - CIT(A) deleted addition - HELD THAT:- CIT(A) has deleted the addition by adopting a very casual approach and without dislodging and controverting the allegations of the AO based on logical analysis of the facts and circumstances of the case. CIT(A) has only considered the passport and bank statement of assessee which establish the identity of creditor. We are unable to see any evidence substantiating the financial capacity and position of lender who, as per assessee has undertaken transactions of more than Rs. 334 crore during relevant financial period we are unable to see any balance sheet or any audited or unaudited accounts of the creditor establishing his financial capacity and creditworthiness to extend interest free loan which has not been repaid till date. It is worth to mention that on being asked by the bench the ld. AR could not show us any documentary evidence or prove regarding payment of interest to the creditor and repayment of loan by the assessee to the creditor till date and he fairly accepted that the assessee has neither paid any interest on the unsecured loans nor has repaid the loan till date. Therefore, we hold that the ld. CIT(A) has granted relief to the assessee without controverting and dislodging the basis and allegation of the AO thus, we are not in agreement with the basis and conclusion drawn by the ld. CIT(A) and hence, we reverse the same by restoring the assessment order and addition made therein. Accordingly, grounds of revenue are allowed. Customs 2023 (11) TMI 493 Validity of Arbitral Award - non-availment of BCD concession - allegations of serious fraud by the Claimant thereby rendered the dispute non-arbitrable or otherwise - Arbitral Tribunal held that at the higher the allegation in the statement of Defence is a case of simple fraud and not a case of serious allegations of fraud thus held that the claims are arbitrable - time limitation. BCD concession not having been availed of by the Respondent - HELD THAT:- The Arbitral Tribunal has interpreted Clause 5.2 of the Contract as per its plain language and upon such interpretation arrived at a finding that it is apparent from the said Clause read with Clause 5.1 of the Contract that the intent of the parties was to consider BCD distinct from CVD in the Supply Contracts. The said Clause 5.2 is applicable only to BCD concession and not to CVD concession. The Arbitral Tribunal has also considered the notifications which were issued prior to the Supply Contracts and found that no concessional Customs Duty applicable on coal. Clause 5.2 of the Contract was made to cover import of coal under Notification No. 12/2012 and if concessions became available on BCD during the period of the contract to such imports, they would be applicable. In view of the interpretation of the Arbitral Tribunal on Clause 5.2 and that CVD not being covered by the said Clause, it was irrelevant as to when the said Circular had been issued i.e. prior to or during the contractual period. In any event the Arbitral Tribunal had noted that the parties chose not to lead oral evidence and having done so, there was nothing on record to show as to when the said Circular dated 03.10.2013 was issued. There is much merit in the submission of the Respondent that the Petitioner cannot now call back the Circular which according to the Petitioner was not in existence on the date of the execution of the contract. It is settled law that the Arbitral Tribunal is empowered to interpret the contract and the Court cannot interpret contracts for the Arbitrator. The interpretation and construction of a contract is primarily for the Arbitrator. The Arbitrator s view on the interpretation of the Clauses of the contract, is a possible view and hence calls for no interference under Section 34 of the Arbitration and Conciliation Act, 1996 - Arbitral Tribunal having interpreted the aforementioned clauses which this Court finds is a possible interpretation cannot be a ground of challenge under Section 34 of the Arbitration Act. Restriction upon the Respondent making its claims as per Notice of Invocation dated 31.10.2017 - HELD THAT:- The Arbitral Tribunal has correctly interpreted Section 11 of the Arbitration and Conciliation Act, 1996, as not requiring the Chief Justice or his designate to identify the disputes whilst referred them to the Arbitral Tribunal for adjudication. The Arbitral Tribunal has considered these Claim Nos. 2 to 5 to be arbitrable. The Arbitral Tribunal has appreciated that the Chief Engineer (FMC) has already rejected the Respondent s Claim Nos. 2 and 3 and hence there could be no question of the Respondent again going to the same Authority for adjudication of its claim - there are no error on the Arbitral Tribunal s part in adjudicating these claims. The Respondent had also addressed these claims on merits and the Arbitral Tribunal has after considering the Respondent s defence on these claims arrived at the finding in the impugned award. The Arbitral Tribunal has correctly accepted the contention of the Respondent that the tolerance limit of +/- 2% under Clause 8.7 of the contract cannot independently or on stand alone be applied to the diverted quantity of 80,000 MT since it is a part of the ordered quantity and the tolerance limit of +/-2% necessarily would have to be calculated on the total quantity of coal supplied to the Chandrapur TPS. There is no separate contract for 80,000 MT diverted to Khaperkheda TPS. Thus, the Respondent had made the related deduction under Clause 8.7 of the Chandrapur Contract on the basis that there was no shortage of coal supplied to Khaperkheda TPS. Liquidated Damages - Arbitral Tribunal has held that this issue will no longer arise in view of the finding there was no shortfall of supply of coal more than permissible limits under the supply contracts - HELD THAT:- The deduction effected by the Petitioner by way of liquidated damages were impermissible. I find no error in the Arbitral Tribunal holding that presuming that this issue was to be considered the Petitioner has failed to prove damages suffered as no evidence was produced in this regard. The deduction of Rs. 1.12 crores by way of liquidated damages is under Clause 15.1 of the Chandrapur Contract. There is much merit in the contention on behalf of the Respondent that the Petitioner needs to prove loss caused by alleged breach of short supply beyond permissible limits of Clause 8.7 of the Chandrapur Contract - The finding of the Arbitral Tribunal that damage/loss caused is a sine qua non for the applicability of Section 74 of the Contract Act and in view of there being no proof of any damage / loss, the Petitioner had not suffered any loss cannot be faulted. Time Limitation - HELD THAT:- The Arbitral Tribunal has upon proper appreciation of the material on record rightly held that the claims of the Respondent were within limitation. The Arbitral Tribunal has considered there were part payments made by the Petitioner to the Respondent between October and November, 2015. Thereafter the Chief Engineer (FMC) of the Petitioner had rejected the Respondent s claim vide letters dated 24.07.2015 and 10.09.2015. The balance payment could have been sought only after joint reconciliation of accounts which were completed by the parties on 24.05.2017 in relation to the Bhusawal Contract and on 22.03.2017 in relation to the Chandrapur Contract. The Notice invoking the arbitration has been issued by the Respondent/Original Claimant on 31.08.2017 - there are no merit in the challenge of the Petitioner to the findings of the Arbitral Tribunal on the issue of limitation. This apart from the settled law that a Court whilst considering a Petition filed under Section 34 of the Arbitration Act cannot re-appreciate evidence. There are no grounds raised in the Arbitration Petition which fall within the acceptable grounds of challenge to an award under Section 34 of the Arbitration and Conciliation Act, 1996. The Arbitration Petition is devoid of any merit - petition dismissed. 2023 (11) TMI 492 Seeking release of imported goods - Gold Dore Bars of Guinea - country of origin - Benefit of Sl.No 1 of Customs Notification No.96/2008-Customs, dated 13.08.2008 and also AIDC Notification No.011/2021-Cus., dated 01.02.2021 - HELD THAT:- Taking into consideration of the suggestion putforth by the learned counsel for the petitioner, this Court is of the view that, it need not labour much to resolve the controversy raised in the Writ Petitions inasmuch as the petitioner has come forward to pay 100% duty under protest. The Authority concerned is directed to consider the petitioner's request and release the goods subject to payment of 100% duty by the petitioner within a week's time from the date of payment of 100% duty made by the petitioner in accordance with law - The petitioner, after making the payment of 100% duty, is at liberty to make an appropriate application seeking release of the goods, which shall be considered by the Authority concerned. Petition disposed off. 2023 (11) TMI 491 Seeking release of provisionally attached Bank Account of petitioner - continuation for a period exceeding six months under sub-section (5) of Section 110 of the Customs Act, 1962 - HELD THAT:- The provisional attachment is dated 28th November 2022 and six months period expired on 28th May 2023. The petitioner vide various letters dated 1st July 2023, 25th September 2023 and 18th October 2023 requested for lifting the said attachment. However, the respondents have not replied to the same. There is also no extension as required under the first proviso to Section 110(5) of the Customs Act. Therefore by operation of law, provisional attachment has expired and same is required to be defreeze. It was incumbent upon the respondents and they were duty bound to respond to the letters for defreezing the bank account and more particularly since the period of 6 months had expired and there was no further extension - The respondents have failed in their duty by not defreezing the bank account after the expiry of 6 months, which they should have done suo-moto, but have failed to do so inspite of various letters written by the petitioner. Such inaction of the respondents have led to the present petition being filed before this Court. Not responding to the reminders for defreezing the account after the expiry of the statutory period of 6 months would also be contrary to the policy of the Government of ease of doing business. The provisional attachment dated 28th November 2022 has expired and is set aside - petition disposed off. 2023 (11) TMI 490 Violation of principles of natural justice - adjudication of the show cause notice took more than 11 long years - Levy of penalty under Section 114(iii) of the Customs Act, 1962 - HELD THAT:- This Court is of the considered opinion that prima facie the petitioners have been able to carve out an exception with regard to violation of principles of natural justice based on PARLE INTERNATIONAL LIMITED VERSUS UNION OF INDIA AND OTHERS [ 2020 (11) TMI 842 - BOMBAY HIGH COURT] and M/S GODREJ SARA LEE LTD. VERSUS THE EXCISE AND TAXATION OFFICERCUM- ASSESSING AUTHORITY ORS. [ 2023 (2) TMI 64 - SUPREME COURT] in as much as the adjudication of the show cause notice took more than 11 long years for which there appears to be no explanation. In fact, the writ petitions were dismissed in limine only on the ground of alternative remedy without examining the issue of violation of principles of natural justice. Review petition allowed. 2023 (11) TMI 489 Incorrect declaration of the description, value and classification of the imported goods - Replica Fire Arms - daggers and swords - rejection of declared value - import of replicas of contemporary or modern firearms would be subject to the submission of a certificate of innocuousness from the manufacturing company of the country of Export or not - Absolute Confiscation - penalty - non-application of mind - HELD THAT:- On perusal of the impugned order, it is found that the same is repetition of the order in original passed by the adjudicating authority - the learned counsel for the appellant is agreed upon that the impugned order lacks application of mind, in as much as it is verbatim the same as the order under challenge. Neither the applicability of the legal provisions particularly with reference to the Arms Act and the Rules and various notifications have been considered nor any reasoning has been given with reference thereto by the Commissioner (Appeals) though being the first appellate authority. The impugned order is therefore unsustainable and deserves to be set aside with a direction to the appellate authority to consider the appeal and decide the same giving proper and substantive reasoning in support thereof. Since the impugned order does not reflect any application of mind, it would be appropriate to remand the appeal to the Commissioner (Appeals) to discuss the issues on merit - appeal allowed by way of remand. 2023 (11) TMI 488 Refund of SAD - Rejection for the reason that the invoice did not contain the endorsement no credit of additional duty of customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 shall be admissible - HELD THAT:- The issue is settled by the decision of the Tribunal s Larger Bench in the case of Chowgule Company Pvt. Ltd. Vs CC CCE [ 2014 (8) TMI 214 - CESTAT MUMBAI (LB)] where it was held that A trader-importer, who paid SAD on the imported .good and who discharged VAT/ST liability on subsequent sale, and who issued commercial invoices without indicating any details of the duty paid, would be entitled to the benefit of exemption under Notification 102/2007-Cus., notwithstanding the fact that he made no endorsement that credit of duty is not admissible on the commercial invoices, subject to the satisfaction of the other conditions stipulated therein. Thus, the rejection of refund claim is not justified. Impugned order is set aside - Appeals are allowed. 2023 (11) TMI 487 Confiscation of imported goods - undervaluation of goods - Radiators, Cylinder Block, Crankshaft and Oil Pump - no MRP/RSP was found on certain packages and the goods entering the port meant to be cleared by the Customs authorities for home consumption - non-complaince with the provisions of Notification No. 40 (RE2000) 1997-2002, dated 24.11.2000, issued by the Ministry of Commerce and Industry - HELD THAT:- The impugned matter for assessment of the imported goods rightly and ordinarily fell within the adjudication competency of the Deputy/Assistant Commissioner. Though there is no prohibition in law for the Commissioner to undertake adjudication in the impugned case, however, as a matter of practice that is ordinarily, not resorted to. We find that no reasons as required to be adduced for the rejection of the declared value, in terms of sub-rule (2) of Rule 12 of the CVR- 2007, have been spelt out in the present adjudication undertaken by the Commissioner. Also none of the ingredients indicated in Explanation (1) of Rule 12 ibid are also indicated in the adjudication order - the re-enhancement of value for assessment purposes, undertaken when the goods were already assessed and exercise for enhancement of declared value was already undertaken at the time of assessment, is patently illegal and unjustified. Further, there is an inherent contradiction in the department s proposal with reference to assessment of the goods imported, thus while at para 11 B of the order, it is admitted that the assessed value models of MPFI and MC appeared to be acceptable, yet at the same time learned adjudicating authority has resorted to enhancement of the declared values of the said items as well. Following the law as pronounced by the Apex Court in the case of EICHER TRACTORS LTD. VERSUS COMMISSIONER OF CUSTOMS, MUMBAI [ 2000 (11) TMI 139 - SUPREME COURT] , there are no hesitation in stating that the transaction value has been rejected, arbitrarily, as the department was not able to adduce any sustainable evidence in the matter. The golden rule being that ordinarily the transaction value has to be accepted, the rejection of transaction value has to be based only on extraordinary or special reasons and considerations. The Order in Original set aside - appeal allowed. 2023 (11) TMI 486 Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - Mis-declaration of description of goods and its value in import of Button Tips - undervaluation - Violation of Regulations 10(a), 10(d), 10(f) and 10(n) of CBLR, 2018 - Timelines to be followed in the entire process of adjudication of the suspension/revocation of CB license under CBLR, 2018 by Customs authorities. Violation of Regulation 10(d) of CBLR - HELD THAT:- The appellants CB has declared the value of imported goods as given in the commercial invoices, which is the transaction value. Further, submitting the declaration form (GATT valuation declaration) in terms of Rule 11, is primarily the responsibility of the importer and in case of proper authorization being given by them, then by the agent of the importer - In the present case, it is not in dispute that there was any such mis-declaration in the GATT value declaration form or in the value particulars declared in the bill of entry as compared to the commercial invoice. Further, any exercise in re-determination of value other than the transaction value has to be adopted step-by-step on the basis Rule 3 ibid, and after rejection of transaction value as per Rule 12 ibid - there are no such evidence or fact indicating that there was a mis-declaration of value and the value was re-determined as per the above legal provisions - the conclusion arrived by the Commissioner of Customs (General) on this valuation issue in the impugned order is not supported by any evidence or factual detail, and thus the impugned order stating that the appellants have violated Regulation 10(d) ibid is also not sustainable. Violation of provision of Regulation 10(f) ibid - HELD THAT:- As the appellants had never met the importer/IEC holder, which indicated that they withheld the information contained orders, instructions or public notices relating to clearance of cargo from the importer of the goods, which led to the duty evasion in the said case . Even for an argument sake, if it is accepted that the appellants had not met the importer/IEC holder in person, it is not clear how such an act would automatically would tantamount to non-supply of information relating to Customs law procedures to the importer for compliance purpose - In the absence of any specific evidential document or factual record to state that the information contained in any specific orders, instructions or public notices issued by Customs have been withheld by the appellants, it is not feasible to sustain such a charge on the appellants and thus the conclusion arrived at by the Commissioner of Customs (General) without any basis of documents or facts, in the impugned order with respect to Regulation 10(f) ibid, is not sustainable. Violation of Regulation 10(n) of CBLR - HELD THAT:- Circular No. 9/2010-Customs dated 08.04.2010 clearly explains the provision of CBLR/CHA Regulations which require the Customs Brokers to verify the antecedents, correctness of Import Export Court (IEC) Number, identity of his client and the functioning of his client in the declared address by using reliable, independent, authentic documents, data and information. The said guidelines provide for the list of documents that is required to be verified and that are to be obtained from the client importer/exporter. it is also provided that any two documents of among such specified documents is sufficient for fulfilling the obligation prescribed under Regulation 10(n) of CBLR, 2018 - in the present case, the appellants CB had obtained the KYC documents and submitted the same to the Customs Department. Thus, there are no legal basis for upholding of the alleged violation of Regulation 10(n) ibid by the appellants in the impugned order. The Hon ble High Court of Delhi has held in the case of KUNAL TRAVELS (CARGO) VERSUS COMMISSIONER OF CUSTOMS (IMPORT GENERAL) NEW CUSTOMS HOUSE, IGI AIRPORT, NEW DELHI [ 2017 (3) TMI 1494 - DELHI HIGH COURT ], the appellants CB is not an officer of Customs who would have an expertise to identify over valuation or under valuation of goods. Timelines to be followed in the entire process of adjudication of the suspension/revocation of CB license under CBLR, 2018 by Customs authorities - HELD THAT:- In the instant case, the alleged offence in importation of goods took place in respect of Bills of Entry dated 22.08.2016 and 27.08.2016 which was reported by a SCN/offence report dated 27.09.2017 and on that basis the jurisdictional Commissioner had suspended CB license of the appellants under Regulation 16(1) of ibid, with immediate effect vide Order No. 21/2018-19 dated 30.05.2018. Simultaneously, SCN No.10/2018-19 dated 30.05.2018 was issued to the appellants for initiating inquiry proceedings against violations of CBLR, 2018 due to failure of the appellants to comply with Regulations 10(a), 10(d), 10(f) and 10(n) ibid. Upon completion of the inquiry, vide Inquiry report submitted on 14.11.2019, and having not agreed to the said report, the Commissioner of Customs (General), Mumbai, being the licensing authority under Regulations 14 of CBLR, 2018 had passed the impugned order dated 28.08.2020. The above timelines indicate that the suspension was continued during the inquiry proceedings for about 27 months. Normally, immediate suspension action prior to conduct of regular inquiry is taken considering the serious violations of CBLR, 2018 by the action of the Customs broker - the Customs broker has already suffered a lot, as they were out of his normal business for almost 5 years and 5 months as of now. It is also noted that the livelihood of Customs broker and the employees is dependent upon the functioning of Customs broker s business. The punishment suffered by being out of Customs broker business for about five years is more than sufficient to mitigate the case of violations or contraventions of CBLR, 2018. There is definitely delay in adjudication and that for the import transaction that occurred in August, 2016, the order of revocation of appellant s CB license has been passed on 28.08.2020. Revenue is unable to explain why there was such a long delay in taking action against appellants, when the information about under valuation of import through Customs APU, R I Division was received vide SCN dated 27.09.2017 - The prescribed time under CBLR for timely completion of inquiry proceedings right from the beginning i.e., issue of SCN within a period of 90 days from the date of receipt of offence report, submission of inquiry report within 90 days of issue of SCN, passing of order by the Commissioner of Customs within 90 days of receipt of inquiry report was neither followed nor given credence to. There are no merits in the impugned order passed by the learned Commissioner of Customs (General), Mumbai in revoking the license of the appellants; for forfeiture of security deposit; and for imposition of penalty, inasmuch as there is no violation of regulations 10(d), 10(f) and 10(n) ibid, and the findings in the impugned order is contrary to the facts on record - However, in view of the failure of the appellants to have acted in a proactive manner in fulfillment of the obligation under sub-regulation 10(a) ibid, particularly when they have received the documents from importer through intermediary logistics operator, we find that it is justifiable to impose a penalty of Rs.10,000/- against the appellants, which would be reasonable and would be in line with the judgement of the Hon ble Supreme Court in the case of K.M.Ganatra [ 2016 (2) TMI 478 - SUPREME COURT] , in bringing out the importance of crucial role played by a Customs Broker. Appeal allowed. 2023 (11) TMI 485 Classification of imported goods - Clear Float Glass (CFG) - to be classified under Tariff Item 7005 10 90 or under CTH 7005 2990 of the Customs Tariff Act (CTA) or not - benefit of exemption under Sl.No.934 (I) of Notification 046/2011-CUS dated 01.06.2011 - HELD THAT:- There is no dispute that the impugned goods is nonwired glass. By conjoint reading of the note 2(c) and the manufacturing process, it can be inferred that CFG would have microscopical layer of metal, namely tin, which is an absorbent layer as contemplated under the above said Chapter Note 2(c). Hence, the correct classification of the impugned goods is under CTH 7005 1090 of Customs Tariff Act - the manufacturers in India of the identical goods namely M/s. Saint-Gobain India Pvt.Ltd., M/s. Goldplus Float Glass are manufacturing and clearing CFG under CTH 70051090 of the CTA and the same has been accepted by the department. The appellant sought reply under RTI dated 17.07.2023, wherein the question was raised that it is observed that in some of the Report, no other layer other than Tin layer is found on one side of the Glass which is fluorescent is mentioned. Whether such layers are reflective or not-reflective and whether such layers are absorbent or not? The reply is given as (a) not-reflective and (b) absorbent (UV). If the same is considered then the said clarification is satisfying the Chapter Note 2(c) of Chapter 70 of the Customs Tariff Act and the said Report has not been relied upon by the adjudicating authority while adjudicating the case. Therefore, the impugned order is bad in law. As from the facts of the case, it is clear that the Clear Float Glass imported by the appellant are absorbent and having non-reflecting layer, in that circumstances, the appellant has qualified the merit classification under CTH 7005 1090, therefore, the correct classification of the Clear Float Glass imported by the appellant under the impugned Bills of Entry is classifiable under CTH 7005 1090. Consequently, the appellant is entitled for benefit of Serial No.934 (I) of Notification No.046/2011-CUS dated 01.06.2011. The impugned orders deserve no merit, hence, the same are set aside - Appeal allowed. 2023 (11) TMI 484 Valuation of imported goods - assessment of bulk liquid cargo shown in the imported documents - whether the quantity shown in the import invoices and other related import documents be considered for assessment of bulk liquid cargo or the actual quantity received in the Shore Tank after import, be the basis for determination of value as well as duty? HELD THAT:- This issue has been considered by the Hon ble Supreme Court in the case of Mangalore Refinery and Petrochemicals Ltd. [ 2015 (9) TMI 245 - SUPREME COURT] after analysing the provisions of Customs Act, their Lordships observed that the quantity of crude oil actually received into a shore tank in a port in India should be the basis for payment of customs duty. There are no merit in the impugned orders - the impugned orders are set aside - appeal allowed. 2023 (11) TMI 483 Classification of imported goods - Cheese Polvaromas (semi-finished) / Cheese Polvaromas (semi-finished flavour compound) - to be classified under CTH 3302 1090 or under CTH 2106 9060? - demand of differential duty - confusability of the impugned goods besides imposition of penalties. HELD THAT:- In this case, impugned goods are imported for use in manufacture of dry seasoning powder. The products that are classifiable under Chapter Heading 2106 mostly consist of food and edible preparations which are meant to be used either directly or after processing such as cooking, dissolving or boiling in milk or water or other liquids, for human consumption. As per the HSN Notes, the said heading i.e., 2106 excludes mixture of odoriferous substances, which can be either natural or synthetic or mixed or both, which are used as raw materials in the perfumery, food or drink industries. There is no dispute and it is an admitted fact that the impugned products cannot be directly used by the end users or consumers in any food/food preparation and they are used as industrial raw materials and mixed with other ingredients to manufacture their final product Dry Mixed Seasoning . Dry Mixed Seasoning is used by their customers as raw material in manufacture of the customers finished products. Impugned goods are not directly edible and meant to be used to impart flavour / olfactory characteristics to the products in which it is used. To be classified under CTH 2106, the product should be used as food or beverages either as such or after a minimum processing such as dissolving, boiling in water / milk or other liquids for home consumption. What is imported are not edible but merely used to impart cheese flavour. As such what is imported may be of animal origin i.e., Cheese, but, having components of synthetic aromatics, their appropriate classification is under CTH 3302 of the CTA, 1975. The impugned goods are classifiable under CTH 3302 1090 of the Customs Tariff Act and there is no merit in the appeal filed by the Department. Accordingly, the appeal is rejected. Insolvency & Bankruptcy 2023 (11) TMI 482 Liquidation of the Corporate Debtor - no resolution plan has been received in the CIRP - HELD THAT:- When no resolution plan has come up in the CIRP, Liquidation is only option which was rightly resolved by the CoC in its meeting. The Adjudicating Authority did not commit any error in allowing the Application of Resolution Professional for liquidation. So far as litigation by Suspended Director against the Bank, there was no occasion to RP to pursue the same as far as any litigation on behalf of the Company, leave of the Court was required for pursuing the said application which admittedly has not been obtained. We see no substance in the above submission of the Appellant. Appeal dismissed. 2023 (11) TMI 481 Initiation of CIRP - Application u/s 7 admitted by NCLT - Period of limitation - Date of default - bar on account of Section 10A of IBC - the impugned order challenged on the ground that as the loan recall notice dated 20.08.2020 fell within the period of Section 10A of the Code, the Application under Section 7 was barred - HELD THAT:- On looking into the date of default as mentioned in paragraph 1.3 of the impugned order, it is clear from the Table that till February 2020, admitted amount in default was Rs.10,51,94,998/-. The emphasis made by learned Counsel for the Appellant is on the notice dated 28.08.2020, which is loan recall notice. The submission of learned Counsel for the Appellant is that loan recall notice having been issued on 20.08.2020, the entire loan became due only consequent to loan recall notice, which loan recall notice having been issued on 20.08.2020, i.e., during 10A period, the application was clearly barred. Loan recall notice dated 28.08.2020 was addressed to Corporate Debtor as well as the Personal Guarantor. The contention advanced by the learned Counsel for the Financial Creditor to counter the above submission is on the basis of Clause 8.1 of the Loan Agreement - There is no dispute between the parties that there is admitted default in payment of interest for two consecutive months prior to 10A period, which is apparent from the Chart as extracted in paragraph 1.3 of the impugned order. Even if, no notice dated 28.08.2020 was issued by the Financial Creditor, the principal amount also became due on occurring of event of default as per Clause 8.1. The bar under Section 10A, does not apply when the default is committed prior to 10A period. The learned Counsel for the Respondent has rightly placed reliance on the judgment of this Tribunal in NARAYAN MANGAL VERSUS VATSALYA BUILDERS DEVELOPERS PVT. LTD [ 2023 (8) TMI 1378 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] where after noticing the Section 10A and the judgment of the Hon ble Supreme Court in Ramesh Kymal v. siemens Gamesa Renewable [ 2021 (2) TMI 394 - SUPREME COURT] where it was held that The Section 10 A provides that no application/proceedings under Section 7,9 10 is to be initiated for a default which is committed during Section 10A period. What is bar is initiation of proceedings when Corporate Debtor commits default in Section 10 A period. If the default is committed prior to Section 10A period and continues in the Section 10 A period the initiation of proceeding is not barred. Thus, the application filed by the Financial Creditor under Section 7 was not hit by Section 10A. Furthermore, it is admitted case of the parties that prior to commencement of 10A period, the default upto February 2020 was approximately Rs.10,51,94,998/-, which is much beyond the threshold provided for Section 7 Application - there are no good ground to interfere with the impugned order of the Adjudicating Authority admitting Section 7 Application - appeal dismissed. FEMA 2023 (11) TMI 480 Validity of order of forfeiture of properties u/s 7 of SAFEMA consequent to revocation of the detention order passed under COFEPOSA - as argued that as detention order passed u/s 3 of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 [COFEPOSA] has been subsequently revoked/withdrawn as such SAFEMA proceedings would become non est and untenable HELD THAT:- SAFEMA was enacted to provide for the forfeiture of illegally acquired properties of smugglers and foreign exchange manipulators and for matters connected therewith or incidental thereto as such activities were having a deleterious effect on the national economy. Section 2 provided for the application of the provisions of the Act only to the persons specified in sub-section (2) thereof. According to sub-section (2)(b) every person in respect of whom an order of detention has been made under COFEPOSA, the Act would be applicable subject to four clauses mentioned under the proviso thereto. A perusal of the above quoted provision makes it clear that apart from the four contingencies given in clauses (i) to (iv) above, every person against whom an order of detention has been passed under COFEPOSA, the provisions of SAFEMA would apply. In the present case, it is an admitted position that an order of detention under COFEPOSA was made against the appellants. The order of detention had not been revoked on the report of the Advisory Board or before the receipt of the report of Advisory Board or before making a reference to the Advisory Board. Further, it was an order of detention passed under Section 3 of COFEPOSA. Section 9 and Section 12 A of COFEPOSA had no application to the detention order. As such, clause (i) would not be applicable. Clause (ii) would also not be applicable in as much as neither the detention order was made to which provisions of Section 9 of COFEPOSA would apply nor had it been revoked before the expiry of the time on the basis of review on the report of the Advisory Board. Further, clause (iii) would also not be applicable as Section 12A of COFEPOSA had no application to the detention order.Lastly, the detention order had not been set aside by the Court of competent jurisdiction. Therefore, clause (iv) would have no application. To the contrary, in the present case against the detention order, the appellant had made a representation which had been rejected. Thereafter the said order was challenged before the High Court by way of a writ petition which had also been dismissed on merits by a detailed order upholding the detention order. The revocation however had been made on a statement given on behalf of the Union of India before this Court in order to institute a complaint under the relevant statute. The said revocation is not contemplated under Section 2(2)(b) and its proviso, and, therefore, no benefit can be extended to the appellant(s) on the said count. Therefore, in our view, the impugned judgment does not suffer from any infirmity warranting interference. The appeals lack merit and are, accordingly dismissed. Dismissal of the complaint and the withdrawal of the penalty under the Act 1962 and Act 1968 - This argument has no relevance to the applicability or non-applicability of the impugned proceedings and forfeiture under SAFEMA. They were independent proceedings under the provisions of the Act 1962 and the Act 1968. Service Tax 2023 (11) TMI 479 Levy of service tax - consideration towards bare-boat charter of offshore drilling unit to M/s Transocean Drilling Services (India) Pvt Ltd - deemed sales/high seas sale - it was held by CESTAT that A perusal of the show cause notices, as well as the impugned orders confirming the demand thereon, shows those to be based entirely on the presence of permanent establishment in India, nonpayment of tax on sale and the contractual right to resume control for failure to comply with terms of agreement and chargeability to tax of supply of tangible goods prior to 1 July 2012. HELD THAT:- There are no merit in the appeal - appeal dismissed. 2023 (11) TMI 478 Violation of the principles of natural justice - Refund of unutilized CENVAT credit - Issuance of Deficiency memo to be treated as Show Cause Notice (SCN) or not - input services having been utilized by the petitioner in connection with export of services - Broadcasting services - Business Support services - IT Software service - Management, Maintenance or Repair services. Violation of the principles of natural justice - HELD THAT:- The deficiency memos abjectly fail to meet the two foundational precepts as enunciated by the Supreme Court in Gorkha Security Services [ 2014 (8) TMI 1081 - SUPREME COURT] . As was noticed, the respondents neither called upon the petitioner to explain why the services rendered by it would not be liable to qualify as an export of services nor did it place the petitioner on notice of the second respondent proposing to take the view that the petitioner was an intermediary . More fundamentally, it is found that the deficiency memos did not embody a preliminary view or opinion that may have been formed by the second respondent for rejecting the applications for refund - the deficiency memos did not fulfil the rudimentary requirements of an action being imbued and informed by the principles of natural justice. In any event, the deficiency memo cannot be viewed as a substitute for a SCN - the observations rendered by the Gujarat High Court in New Pensla Industries v. Union of India [ 2017 (5) TMI 130 - GUJARAT HIGH COURT] agreed upon, which correctly held that a deficiency memo is not in the nature of a SCN and that it merely serves the purpose of placing a party on notice of being liable to furnish additional information and remedy any deficiency in a claim that may be laid. Examination of refund claim - HELD THAT:- It becomes pertinent to note that both the Customs as well as the Excise Acts follow an identical procedure of self-assessment. While Section 17 of the Customs Act enables an importer or an exporter, as the case may be, to self-assess and pay the duty leviable on goods, the said provision further empowers the proper officer to verify the self-assessed return that may be submitted. In terms of Section 17(4) of the said enactment, if the proper officer on verification, examination or testing of the goods comes to the conclusion that the self assessment is incorrect, it becomes entitled to reassess the duty leviable on goods. It is in extension of the aforesaid power that sub-section (5) of Section 17 speaks of reassessment and the obligation of the proper officer to pass a speaking order in support of the exercise of reassessment. The Supreme Court in ITC Limited [ 2019 (9) TMI 802 - SUPREME COURT] notwithstanding Section 27(2) employing the expression satisfied held that unless a self-assessed return is revised or doubted in exercise of powers of reassessment, best judgment assessment or where it be alleged that duty had been short levied, short paid or erroneously refunded, those powers would not be available to be exercised at the stage of considering an application for refund. Having noticed the statutory position which prevails, we turn then to the decisions which would have a bearing on the question which stands posited. Unless the self-assessed return, as submitted had been questioned, re-opened or re-assessed and the assertion of the petitioner of the services rendered by it qualifying as an export of service questioned or negatived in accordance with the procedure prescribed under the Act, its claim for refund could not have been negated - As was observed by the Supreme Court in ITC Limited, a self-assessed return also amounts to an assessment and unless it is varied or modified in accordance with the procedure prescribed under the relevant statute, the same cannot possibly be questioned in refund proceedings. As the Supreme Court had held in the decisions aforenoted, the authority while considering an application for grant of refund neither sits in appeal nor is it entitled to review an assessment deemed to have been made. In fact, the Supreme Court in ITC Limited had described refund proceedings to be akin to execution proceedings. Thus, in the absence of the self-assessed return having been questioned, reviewed or re-assessed, the claim for refund of CENVAT credit could not have been denied by the respondents. When confronted with the application for refund, all that the respondents could have possibly examined or evaluated was whether the provisions of Rule 5 read along with the various prescriptions contained in the notification dated 18 June 2012 had been complied with. The respondents, at this stage of the proceedings, could not have doubted, questioned or undertaken a merit review of the self-assessed return which had been submitted. The impugned order dated 04 October 2021 is hereby quashed and set aside - petition allowed. 2023 (11) TMI 477 Ocean freight - transportation of goods by a vessel from a place outside India up to the customs station - Constitutional Validity of N/N. 22/2014-ST dated 16.09.2014 - vires violative of Article 14 of the Constitution of India and Rule 3 of the Service Tax Rules, 1994 - vires of Rule 10 of the Place of Provision of Service Rules, 2012 and Rule 2(1)(d)(EEC) of the Service Tax Rules, 1994 - validity of Section 66B of the Act read with Rule 10 of the POPS Rules. HELD THAT:- The petitioner submits that the petitioner would be satisfied if the SCN is set aside and the matter is relegated to respondent no. 1 for issuance of a fresh show cause notice - The SCN is set aside. 2023 (11) TMI 476 Refund of unutilised credit accrued from export of services - Reverse charge mechanism - HELD THAT:- In the point of refusal of refund without initiation of preceding under Rule 14 of CENVAT Credit Rules, 2004, such a proceeding is a pre-requisite for denial of credit and it is preferred to reproduce the logic cited in the case of M/S. KEVA FRAGRANCES PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI-III [ 2022 (3) TMI 271 - CESTAT MUMBAI] , to substantiate the views taken by CESTAT, where it was held that Without denying the CENVAT Credit taken/ availed by the appellant in their book of accounts during the relevant period (quarter) by way of initiating proceedings against the appellant in terms of Rule 14, revenue could not have altered the quantum of Net CENVAT Credit availed during the said quarter, and deny the encashment of that amount of the CENVAT Credit which is due as per the Rule 5. It is now well settled principle of law that where a statute provides for a thing to be done in a particular manner, then it has to be done in that manner, and in no other manner. There are no hesitation to hold that credit as sought by the Appellant is admissible to it except for an amount of Rs.23,418/- and Rs.38,604/- in respect of which invoices were not submitted and/or Service Tax numbers were not available on the bills, in which respect also Appellant has abandoned its claim in writing through a memo filed before this Tribunal. The order passed by the Commissioner of Service Tax (Appeals)-I, Mumbai to the extent of denial of CENVAT Credit except amounts of Rs.23,418/- and Rs.38,604/-, are hereby set aside - Appeal allowed. 2023 (11) TMI 475 Classification of service - Rent a Cab Service or Transfer of right to use of Tangible Goods? - hiring of vehicles/buses by appellants to Andhra Pradesh State Road Transport Corporation (APSRTC) - HELD THAT:- On going through the judgements placed by both the parties along with various circulars, Memo, Circular issued by Commercial Taxes of Andhra Pradesh and APSRTC in relation to hiring of Vehicles - going through the terms of agreement / tender which clearly demonstrate that during the course of agreement effective control over vehicle is with APSRTC, it is found that in the light of clarification issued by Central Government in D.O.F No 344/1/2008 TRU dated 29-02- 2008, has clarified that Supply of tangible goods for use and leviable to VAT / Sales Tax as deemed Sales of Goods, is not covered under the scope of the Service and hence the present activity of Hiring of Vehicles to APSRTC cannot be covered under Rent a Cab Service , but is covered under Transfer of Right to Use , which is deemed sale and liable to Sales Tax. The activity in question provided by the Appellant, is in the nature of Transfer of Right to Use and not Rent a Cab - the impugned order set aside - appeal allowed. 2023 (11) TMI 474 Continuation/abatement of appeal - Order of NCLT approving the resolution plan has been passed - Non-payment of service tax - HELD THAT:- The Mumbai bench of this Tribunal in the case of M/s Alok Industries Ltd s case [ 2022 (10) TMI 801 - CESTAT MUMBAI] analysed in detail Rule 22 of CESTAT (Procedure) Rules, 1982 and the case laws on the issue including those cited by the Ld. Advocate for the appellant observed that aforesaid Rule 22 should be applicable the moment the successor interest with sufficient rights is appointed by NCLT to make an application for continuation of the proceeding. The Hon ble Supreme Court and High Courts in a catena of cases held that the Tribunal is a creature of the statute; it cannot travel beyond the express powers vested under the Statute or Rules framed under the statute while deciding a statutory Appeal filed before it against the Orders of the prescribed statutory authorities mentioned under the statute. The corollary, any order passed by the Tribunal beyond the vested powers under the statute would be non est in law. The view consistently expressed by this Tribunal in a series of cases that the appeal abates once the IRP is appointed and/or Resolution plan approved, agreed upon - the appeal abates as per Rule 22 of CESTAT (Procedure) Rules, 1982. 2023 (11) TMI 473 Non-payment of service tax - difference in ST-3 returns and income tax return - demand raised without examination of the books of accounts or not - invocation of provisions of sub-section (1) of Section 73 of Finance Act, 1994 - HELD THAT:- The said provision of Finance Act empowers Revenue for recovery of service tax which has not been levied or which has not been paid or which has not been short levied or which has not been short paid or which has been erroneously refunded. Therefore, the first step for Revenue is to establish that a specific amount to be demanded through show cause notice by invoking the said provision is service tax either not paid or short paid or not levied or short levied. Therefore, it is essential to establish that the value on which such service tax is calculated is the value under Section 67 and the same is derived from the consideration received by the appellant out of the activity which has to satisfy definition of service under sub-section (44) of Section 65B of Finance Act, 1994. Such type of examination of the facts and arriving at the prima facie view that the appellant had received the consideration by providing service is missing in the show cause notice. The said show cause notice dated 26.06.2020 is not sustainable in law - the impugned order set aside - appeal allowed. 2023 (11) TMI 472 CENVAT Credit - denial on the ground of incorrect description of services in the invoices raised by the service provider - Non-opening of assessment of the provision of service extended by the service provider - HELD THAT:- In the instant case the motor vehicle dealer as an agency was providing services to the Appellant and raising invoices with description of services as per the format provided to it by the Appellant through email. The contract copy filed in response to the summons issued for appearance is not in respect of M/s. Anamallais Motors Pvt. Ltd. who issued the invoices and whose proprietor Smt. A. Umadevi is the authorised insurance agent for the Appellant but Appellant claims that agreements entered with car dealers, including the copy of agreement dated 01.11.2012 signed with M/s Unic Automobile (MAH) Pvt. Ltd. (copy filed) are by and large containing same provisions. It is further noticed that the said agreement annexed to the appeal memo as Annexure-4 doesn t contain provision for payment against such services and the modalities of such payment, which Respondent-Department has linked to the number of insurance policies sold but if the same is treated as service received from the car dealers against which Service Tax liability was discharged by the car dealers and the same remained undisputed, there is no point in the denying credits to the Appellant who had availed those services to sale its car insurance policies and this being a separate transaction it is immaterial as to who received commission against generation of a car insurance policy by availing such services. The same fact is also applicable in respect of retainer/retailers who also had provided certain services to the Appellant. The issue is no more res integra that without opening assessment of the provision of service extended by the service provider, CENVAT Credits cannot be denied to the recipient who had paid the required Service Tax through the service receiver in order to avail the input services. Appeal allowed. 2023 (11) TMI 471 Rebate claim - rejection on the ground of time limitation - rejection also on the ground that there is no export of services - HELD THAT:- On perusal of the order passed by the Commissioner (Appeals) dated 29/11/2012, it is seen that the Commissioner (Appeals) has considered the issue as to whether the activity of giving investment advices to the client abroad amounts to export of services - The decision to accept the advice rests with the foreign client. The client who is abroad can opt to accept the advice given by appellant or reject the same. In such circumstances, a decision taken by a foreign client to invest in India cannot be said to be the deciding factor whether the advisory services amount to export of service or not. The taxability of an event cannot depend upon a decision taken by a foreign client. The Commissioner (Appeals) has rightly discussed the issue in detail and held that the refund is eligible to the assessee. Though the decision referred by the Commissioner (Appeals) has analysed the issues on the basis of a circular of 2009, we find that the reasoning given by the Commissioner (Appeals) is proper and does not require any interference. The sanction of refund to the assessee is legal and proper. The appeal filed by the department is without merits - Appeal of assessee allowed. Central Excise 2023 (11) TMI 470 Clandestine manufacture and clearance - SSI Exemption - threshold limit of goods cleared - appellant have disputed that except the documents retrieved from Shri Bharat Yadav who joined in July 2006, there is no tangible, corroborative and independent evidence pointing out manufacture and clearance of the finished goods - HELD THAT:- The department on the basis of two pages notebook retrieved from the personal possession of Shri Bharat Yadav containing alleged details of purchase of raw materials during June July 2006, as authentic, even though the same was later disputed by the partner of the appellant Shri Jeeva Prakash. The said notebook is enclosed at pages 127 to 130 of the appeal paper book. On going through the same we find that except some entries in a tabular form, there is no indication about description of the material and any other particulars indicating that the entries were inputs/raw materials received and used in the manufacture of finished goods. On going through the statement, it is found that though he accepted that the said two pages recovered from his possession but the entries therein were not written by them but by one Shri Anand. No further investigation was carried out by confirming the said facts from Shri Anand nor any attempt was made in this regard by issuing summons to Shri Anand. Also reading the statement of the partner Shri Jeeva Prakash dt. 19.9.2006, we find that he has categorically denied the authenticity of the said documents and also the veracity statement of Shri Bharat Yadav relating to the entries for period for the period prior to his joining the Unit in July 2006. Under these circumstance, the very basis on which the case of clandestine removal has been alleged by the Revenue against the appellant seems to rest not on any credible piece of evidence. The basis of consumption of electricity adopted unilaterally in calculating the manufacture and clearance of finished goods without verification of the same during investigation from the supervisor or the partner, or through any corroborative evidence, cannot be considered as basis for demanding duty on alleged clandestine removal of the goods. The appellants on the contrary placed the audited balance sheet for the year 2006-07 duly certified by the Chartered Accountant establishing the total turnover during the period which did not exceed Rs.100 lakhs. No contrary evidence has been produced by Revenue. There are no merit in the impugned order - the impugned orders are set aside - appeal allowed. 2023 (11) TMI 469 CENVAT Credit - CHA Service and GTA service for outward transportation in respect of export goods, upto port of export - HELD THAT:- In case of KUNTAL GRANITES LTD. VERSUS COMMISSIONER OF C. EX., BANGALORE [ 2007 (3) TMI 540 - CESTAT, BANGALORE] , Hon ble Tribunal has held that place of removal for export goods is place where export document was presented to Custom office i.e. port of export. Though the said judgment is in respect of remission of duty, the ratio of judgment is applicable to present case also. The Hon ble Gujarat High Court in the case of CENTRAL EXCISE VERSUS INDUCTOTHERM INDIA P LTD [ 2014 (3) TMI 921 - GUJARAT HIGH COURT] has held that in case of export of Cargo Handling Service, the Service Tax paid thereon is available as input services, as in such case, the place of removal is Port.Further, the judgment relied upon by the appellant has also allowed the credit of service tax paid on services received at the port. Board s Circular No. 97/8/2007-S.T. dated 23-8-2007 also recognizes the situation where the place of removal can be different from the normal place of removal and in such case, the credit of service tax paid on GTA services used for transportation of goods upto place of removal is admissible. As per Section 4(3)(c)(iii) of the Central Excise Act, 1944, place of removal includes any other place or premises from where the excisable goods are to be sold after their clearance from the factory. As per definition of sale, a transaction is recognized as sale only when a seller has realized or has a high chance of realizing payment against delivery of goods - In case of export goods, therefore, the place of removal has been held to be port of export and hence, credit of service tax paid on CHA service and GTA service used for transportation upto port of export is admissible. The Cenvat credit on the outward GTA and CHA is admissible - impugned order set aside - appeal allowed. 2023 (11) TMI 468 Recovery of wrongly availed CENVAT Credit - Scientific and Technical Consultancy Services - manufacture of drug - time limitation - HELD THAT:- The Respondent is registered with the Central Excise Department and has taken cenvat credit on capital goods as well as inputs - it is found that though the Revenue has alleged that the Respondent does not have the facility of manufacturing of Pharmaceutical Products and is only doing research and development activity for which cenvat credit on input and capital goods is not permissible under Rule 3 of Cenvat Credit Rules, 2004; Revenue in order to deny the cenvat credit has only relied upon the statement of one Senior Scientist of the Respondent but the said statement of the respondent has not been brought on record and the copy of which has not been given to the respondent even on asking by the respondent. It is also found that in the pharmaceutical industry before a drug is manufactured and supplied in the market, a lot of research has to be undergone and a number of tests are to be conducted before releasing in the market. In view of these facts, the respondent is engaged in the manufacturing of drug also - Besides this, the Ld. Commissioner has also come to the conclusion that even for conducting research and development, the respondent is registered under the service tax and is paying service tax and therefore the respondent is entitled to cenvat credit - the cenvat credit on inputs and capital goods have been rightly availed by the respondent. Time Limitation - HELD THAT:- The Ld. Commissioner has considered this issue in detail and has come to the conclusion that the entire demand is barred by limitation. There is no infirmity in the impugned order - Appeal of Revenue dismissed. 2023 (11) TMI 467 Interest on irregular CENVAT Credit availed but not utilized - availment of credit twice - availing 100% credit on capital goods in the first year itself - violation of Rule 4(2)(a) of the CENVAT Credit Rules, 2004 - invocation of extended period of time and imposition of penalty under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. Availment of capital goods credit on ineligible goods - HELD THAT:- The appellant has availed input tax credit on Factory Lighting and Pallets. A perusal of the grounds of appeal indicate that the party has argued for eligibility of the credit on these goods which were utilized in the factory either as capital goods or as inputs. The Ld. adjudicating authority has dropped the demand of CENVAT Credit availed on these goods to an extent of Rs.7,82,900/- and also held that payment of interest on this demand would not arise. As such there is no need to give any finding on this demand. Whether interest is demandable on irregular CENVAT Credit availed but not utilized? - HELD THAT:- The facts indicate that the appellant has reversed the irregularly availed CENVAT Credit. He has also reversed the interest amount on such irregularly or wrongly taken CENVAT Credit. The lower adjudicating authority has strictly and literally interpreted Rule 14 of the CENVAT Credit Rules, 2004. The words used in that Rule are taken or utilized wrongly . The Rule provides for recovery of irregularly or wrongly taken credit along with interest. However, regarding demand of interest for merely taking CENVAT Credit but not utilizing the same was considered and decided in favour of the appellant in many case laws. Reliance can be placed in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT ] where it was held that The liability to pay interest would arise only when the duty is not paid on the due date. If duty is not payable, the liability to pay interest would not arise - In the case of J.K. TYRE INDUSTRIES LTD. VERSUS ASST. COMMR. OF C. EX., MYSORE [ 2016 (11) TMI 911 - CESTAT BANGALORE ], Tribunal Large Bench has come to the conclusion that interest liability would not arise when the assessee had merely availed credit and had reversed the same before utilizing the availed credit for remittance of duty. Whether the extended period is invokable and imposition of penalty sustainable? - HELD THAT:- The Show Cause Notice was issued on 17.06.2013 but the credit reversal was done on 31.08.2012 and 15.09.2012 which is much before the issuance of the Show Cause Notice. The availment of double credit or irregular credit was reportedly caused by the mischief of one of the employees of the appellant against whom they have taken disciplinary action by terminating his services. The appellant has contended that wrongly taken credit was never utilized and so no penalty is imposable. It was also submitted that the onus is on the Department to prove the intention to evade payment for invoking extended period under Section 11A(4) or proviso to Section 11A(1) of the Central Excise Act, 1944. As their accounts were audited every year, no discrepancies of excise payment noticed by the Department, as returns were filed and submitted periodically, the penalty cannot be imposed without firm establishing an intent to evade tax. The appellant though have taken credit irregularly or wrongly in the books it was never utilized. So, it is not justified to attribute any motive to evade tax to the conduct of the appellant. Even irregularly availed CENVAT Credit has been reversed by the appellant on being pointed out much before the issuance of the Show Cause Notice. As such, invoking extended period is not justified in this appeal. Thus, the appellant succeeds on limitation also. The impugned order is upheld as far as the demand of Rs.1,87,69,233/- being the ineligible credit availed by the appellant and its appropriation. The demand of recovery of interest on such ineligible CENVAT Credit availed but not utilized, along with the penalty imposed, are set aside - Appeal allowed in part. 2023 (11) TMI 466 Continuation of appeal - Resolution Plan is approved by the Hon ble NCLT - HELD THAT:- The Mumbai bench of this Tribunal in the case of M/s Alok Industries Ltd s case [ 2022 (10) TMI 801 - CESTAT MUMBAI ] analysed in detail Rule 22 of CESTAT (Procedure) Rules, 1982 and the case laws on the issue including those cited by the Ld. Advocate for the appellant observed that aforesaid Rule 22 should be applicable the moment the successor interest with sufficient rights is appointed by NCLT to make an application for continuation of the proceeding. The Tribunal is a creature of the statute; it cannot travel beyond the express powers vested under the Statute or Rules framed under the statute while deciding a statutory Appeal filed before it against the Orders of the prescribed statutory authorities mentioned under the statute. The corollary, any order passed by the Tribunal beyond the vested powers under the statute would be non est in law. The view consistently expressed by this Tribunal in a series of cases that the appeal abates once the IRP is appointed and/or Resolution plan approved, agreed upon - the appeal abates as per Rule 22 of CESTAT (Procedure) Rules, 1982. 2023 (11) TMI 465 CENVAT Credit - common input services such as security service, commission, transport of goods by road, cleaning services etc. used for trading and manufacturing activities - Rule 6(3)(i) of Cenvat Credit Rules, 2004 - HELD THAT:- The show cause notice initially states that Rs.51,45,637/- is an amount recoverable under Rule 6(3)(i) of Cenvat Credit Rules, 2004 but when it comes to para 7 of the same show cause notice, Revenue calls upon the appellant to show cause as to why inadmissible cenvat credit availed by the appellant amounting to Rs.51,45,637/- should not be recovered. Further, the original authority has passed the order confirming the demand of cenvat credit availed of the input service credit of Rs.51,45,637/-. It is to be noted here that there was a discrepancy in the show cause notice. Initially the said amount was called as an amount recoverable and subsequently the same amount was called as inadmissible cenvat credit availed. The fact is that the show cause notice does not establish that inadmissible cenvat credit of Rs.51,45,637/- was ever availed. Hon ble Telangana High Court in the case of Tiara Advertising [ 2019 (10) TMI 27 - TELANGANA AND ANDHRA PRADESH HIGH COURT] has held that it is not Revenue which will choose the option to be exercised by the assesse out of the various options provided under Rule 6 of Cenvat Credit Rules, 2004. We also note that the appellant has undertaken to reverse cenvat credit attributable to the credit that has gone into trading. The matter needs to be remanded to the original authority with the direction to recover that quantum of cenvat credit which is part of the cenvat credit availed on common input services and which is attributable to exempted activity of trading - Appeal allowed by way of remand. 2023 (11) TMI 464 Bar in utilisation of CENVAT Credit for payment of Central Excise Duty - default in making monthly payment of duty under Rule 8 of Central Excise Rules, 2002 - Constitutional validity of Rule 8 of CER - HELD THAT:- The said Rule has been struck down by the Hon ble Gujarat High Court, Bombay High Court and P H High Court. Following the implications of the said judgment, this Tribunal in INDUS TROPICS LTD VERSUS C.C.E. S.T. -RAJKOT [ 2023 (3) TMI 950 - CESTAT AHMEDABAD] held It was held in ANDHRA CYLINDERS PVT LTD, NALIN KHARA, MANAGING DIRECTOR VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, HYDERABAD I [ 2020 (1) TMI 189 - CESTAT HYDERABAD] that What needs to be decided in this factual matrix is where there are judgments by four different High Courts holding Rule 8(3A) as ultra vires and there is no judgment of any High Court upholding it and where the appeals against these judgments have been admitted and are under consideration of the Hon'ble Apex Court, whether the ratio of these judgments bind this tribunal or otherwise. We find that the last in the series of judgments was passed by the Hon'ble High Court of Bombay in the case of THE COMMISSIONER OF CENTRAL EXCISE CUSTOMS NASHIK II COMMISSIONERATE VERSUS M/S. NASHIK FORGE PVT. LTD. [ 2018 (9) TMI 1582 - BOMBAY HIGH COURT] holding that the ratio of the judgment of the Hon'ble High Court of Madras, Gujarat and Punjab Haryana apply. The impugned order is set aside and the appeal is allowed. 2023 (11) TMI 463 Refund claim - whether the Notification No.17/2009 indicates that the refund claims have to be filed shipping bill-wise and in case, the refund claimed in a particular shipping bill is less than Rs.500/-, the subject refund is liable to be rejected? - HELD THAT:- A harmonious reading of the Notification makes it very clear that there is no restriction that a refund claim must be filed for each shipping bill and that one refund claim can be filed for more than one shipping bill. For this reason, only, necessity of giving details of each shipping bill is stressed upon in the Notification. Moreover, the table in Form A-1 provides Column for details of shipping bill/ bill of export etc. and understandably, the same needs to be given for each of the shipping bills. If the Revenue s contention was correct, there was no need to mention that the details of the refund claim should be given separately for each shipping bill. Therefore, a conjoint reading of the Notification and the Form A-1 appended to the Notification, gives an unambiguous and the only understanding that there is no restriction on the number of shipping bills in a refund claim. The only condition mentioned at 2(h) being that no refund claim shall be allowed if the same is for an amount less than Rs.500/-. Therefore, the reasoning given in the impugned order is not in tune with the wordings of the Notification. There is no prescription in the Notification that the refund claims should be filed shipping bill-wise and that the Condition No. 2(h) should be read to mean per shipping bill. Appeal allowed. CST, VAT & Sales Tax 2023 (11) TMI 462 Exemption of tax at 100% on total eligible production sold under CST Act - Application of pro-rata in the circumstances of increase of capacity and increase in investment - HELD THAT:- Respondent is claiming exemption and has been granted exemption earlier as per notification issued under Section 8(5) of the CST Act and as per the 1993 package scheme of incentives. Admittedly, there is no provision for reduction of exemption either under the 1993 package scheme of incentives or under the CST Act. This has not been referred to either by the Assessing Authority or Joint Commissioner of Sales Tax (Appeal) Aurangabad. It is also not in dispute that the notification issued under Section 8(5) of CST Act in the year 1980 is not amended / modified / withdrawn at any point of time. Therefore, the Tribunal was correct in holding that the pro-rata exemption granted was not correct and respondent was entitled to 100% exemption - Section 93 of MVAT Act also will not be applicable to the facts in hand. There are no infirmity in the order passed by the Tribunal - appeal dismissed. Indian Laws 2023 (11) TMI 461 Refund of amount being the fair charges for the consignments - Failure to deliver the export goods within stipulated time frame - Export Consignment through Air - direction for payment for compensation for loss of business and reputation - requirement to pay for value of the goods short delivered - payment for interest and well as cost of litigation - HELD THAT:- The NCDRC has not committed any illegality or perversity in recording the finding that there was delay in delivery of consignment. As a matter of fact, it is an admitted position that the consignment which was booked on 24.07.1996, was delivered after one and a half month i.e. from 03.09.1996 to 12.09.1996 - The NCDRC has rightly noted that the appellant has paid air freight which is ten times more than the sea freight only to ensure that the consignment reaches its destination within a week because sea cargo would have taken 25 to 30 days for delivery and the appellant has paid such huge freight charges for ensuring early delivery, hence, the delay in delivery of consignment has necessarily inflicted damage to the appellant which is liable to be satisfied by the respondent No.1 as provided under Section 19 and 13(3) of the Carriage by Air Act 1972. Section 186 of the Contract Act, 1872 provides that authority of an agent may be expressed or implied. Similarly, Section 188 of the Contract Act, 1872 prescribes that an agent, having an authority to do an act, has authority to do every lawful thing which is necessary in order to do such act - In the case at hand, in the absence of a plea by the respondent No.1, that the respondent no. 2 was not its agent or that he had no authority to give schedule of delivery of consignment, the onus has not been discharged. Therefore, the respondent No.1 is bound by the promise held by its agent, respondent No.2, that the goods shall be delivered within one week and when the time schedule expired and the goods were, in fact, delivered after one and a half month, there was negligent delay in delivery of consignment. The grievance of the appellant in this appeal is mainly on account of the NCDRC not allowing the entire claim for compensation by calculating the total weight of the subject consignment at 2507.5 Kg. multiplied by US $ 20 per Kg. According to the appellant, in view of Rule 22 (2) of Schedule-III of the Carriage by Air Act, 1972 (as amended by the Hague Protocol) the amount thus calculated would exceed the sum of Rs. 20 lakhs. The appellant would thus claim the entire amount equivalent to US $ 50070 without limiting it to Rs. 20 lakhs - the Order passed by the NCDRC need not be interfered with - appeal dismissed. 2023 (11) TMI 460 Dishonour of Cheque - postponement of issue of process - mandatory inquiry in terms of Section 202 of the CrPC can be conducted on the basis of pre summoning evidence or not - HELD THAT:- It is clear that in cases under Section 138 of the NI Act, the mandatory inquiry as contemplated by Section 202 of the CrPC can be conducted by taking evidence of the complainant on affidavit. The inquiry need not be necessarily conducted by taking evidence on oath. Further, documents may be examined by the Trial Court for satisfaction as to the sufficiency of grounds for proceeding under Section 202 of the CrPC. Whether the learned MM in the present cases has conducted an inquiry under Section 202 of the CrPC before issuance of summons to the Accused? - HELD THAT:- In light of the presumption under Section 139 of the NI Act, a cheque given under Section 138 of the NI Act is presumed to be in discharge of a legally enforceable debt or other liability. The aforesaid presumption is rebuttable and the accused can rebut this presumption by leading evidence in this regard. Therefore, the contention of the Accused that a legally enforceable debt has not accrued in favour of the Complainant on account of non-fulfilment of the conditions in the Agreement would have to be proved by leading evidence at the time of trial. The learned MM is not required to go into this evidence while conducting an inquiry under Section 202 of the CrPC - At the stage of issuance of summons, for the purpose of Section 202 of the CrPC read with section 145 of the NI Act, the learned MM is only required to examine whether the basic ingredients of an offence under Section 138 of the NI Act have been prima facie made out by the complainant and supported by the pre-summoning evidence led on behalf of the complainant. Upon dishonour, statutory notice under Section 138 of the NI Act had been duly issued by the Complainant to the Accused and the Accused failed to make the payment within fifteen days of the receipt of the notice - both the summoning orders issued by the learned MM in the present cases satisfy the requirements of Section 202 of the CrPC read with Section 145 of the NI Act. In both the complaint cases, the learned MM has duly conducted the necessary inquiry under Section 202 of the CrPC before issuance of summons to the Accused. If the contention of the Accused is accepted that the MM has to conduct an inquiry by appreciating the terms and conditions of the Agreement entered into between the parties to ascertain if a legally enforceable debt has arisen, it would result in a full trial being conducted even before the issuance of summons. Clearly, such an exercise would be in teeth of the directions passed by the Supreme Court in Re: Expeditious Trial of Cases Under Section 138 of NI Act 1881 ( 2021 (4) TMI 702 - SUPREME COURT ). Application allowed. 2023 (11) TMI 459 Appointment of an Arbitrator for decision on entitlement of the applicant to receive the amount claimed towards GST - Section 11(6) of the Arbitration and Conciliation Act, 1996 - HELD THAT:- Notice in this application had been given to the respondents and they have filed a reply opposing the entitlement of the applicant for GST on merits, but no pleading has been taken in reply filed by the respondents as to why an Arbitrator cannot be appointed. Admittedly, there is an Arbitration Clause 25 in the agreement between the parties providing for arbitration in the event of a dispute arising between them. The existence of dispute is clear from the pleadings of both the parties and admittedly the applicant had issued Annexure P-3 notice dt. 9th December, 2021 for appointment of arbitrator. Having regard to the fact that in the reply filed by the respondents there is no objection raised as to the appointment of Arbitrator, this application is allowed and Mr. L.N. Sharma, District Sessions Judge (retired), R/o Laxmi Niwas, near Girls Senior Secondary School, The Mall Solan, H.P. is therefore appointed as Arbitrator to adjudicate the dispute between the parties, after his disclosure in writing is obtained in terms of Section 11(8) of the Act and only after receipt thereof, shall his appointment, as an Arbitrator, come into force. Application disposed off. 2023 (11) TMI 458 Dishonour of Cheque - acquittal of the accused - rebuttal of presumption - conviction of the accused under Section 138 of the NI Act - preponderance of probabilities - HELD THAT:- It is required to be seen that whether accused has been able to probabilise his defence. Here itself, it may be noted that the accused is not required to prove his defence on the standard of proof beyond reasonable doubt and rather, is simply required to probabilise his defence. The presumption under Section 139 of the Act can be rebutted even by evidence led by the complainant; and it is not required for the defence to lead evidence to rebut presumption, as has been held by the Hon ble Supreme Court in Shiv Kumar Vs. Ram Avtar Aggarwal, [ 2020 (2) TMI 1584 - SUPREME COURT] . In order to rebut the presumption available to complainant under Section 139 of the NI Act, accused can either appear in the witness box though it is not mandatory; or he can elicit circumstances favourable to him during the cross-examination of complainant; or put forth his defence in his statement under Section 313 Cr.P.C. supported by evidence. Here itself, it may be noted that statement of accused under Section 313 Cr.P.C is not a substantive piece of evidence. If accused put forth his defence in said statement, he must support it with evidence - simply by taking the stand either in reply to the legal notice or in the statement under Section 313 CrPC that accused had taken loan of Rs. 55,000/- only and that blank cheque was given as a security, it cannot be stated that presumption in favour of the complainant stands rebutted or that the defence is probablized. It is no doubt true that when accused entered the witness box as DW1, he repeated this stand by way of his affidavit Ex.DW1/A to the effect that he had taken Rs. 55,000/- on 10.11.2008, in lieu of which accused had taken his signature on blank papers and had also taken a blank signed cheque as security. However, most importantly, when complainant-Girraj Sharma entered the witness box as CW1, this stand was not confronted by the accused to the complainant at all - There is no suggestion that complainant had taken any blank signed cheque as security from the complainant. Despite receipt of the legal notice much prior to the filing of the complaint as evident from AD card Ex.C5 and as also candidly admitted by the accused, he did not respond to the legal notice and rather gave reply much after filing of the complaint and so said factor could not have been taken into consideration. Once the signature on the cheque were admitted by the accused in so many words, not only by making positive suggestion to the complainant, but also in his statement under Section 313 CrPC and then in his defence evidence, the existence of legal liability remained not in dispute at all, in view of presumption under Section 139 of the NI Act. In the present case, the aforesaid provision was not at all attracted simply because signature on the cheque was made complete by the accused by overwriting on it. It was never the case of the accused that any material alteration was made in the cheque against his consent by the complainant or anybody else. Rather, he admitted his signature on the cheque in so many words at various stages of the trial, as already noticed - the impugned judgment of acquittal dated 26.02.2016 as passed by ld. Appellate Court is hereby set aside; and the judgment of conviction as recorded by the trial Court on 16.01.2014 is hereby restored. Having regard to the overall conduct of the accused-respondent, he does not deserve any leniency. As such, the order dated 16.01.2014 qua the quantum of sentence, as recorded by Ld. JMIC, is also hereby restored. Respondent-accused is directed to surrender before the concerned trial Court/ld. CJM Faridabad within a period of 15 days from today, failing which the concerned Court will procure his presence by taking coercive steps, in accordance with law, and send him to jail for carrying out the sentence. Appeal disposed off.
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