TMI Tax Updates - e-Newsletter
December 26, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
Income Tax
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IDS - Post Demonetization
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The cost of shuttering materials should be treated as revenue expenditure in the hands of the assessee - AT
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Deduction under section 80JJA for bio-fertilizer business - the allegation of the AO that the assessee is doing the business in the land belonging to his father without sharing the profit with his other brother and sisters has no base. The reasons for holding that there was no business were not correct. - AT
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Penalty u/s 271(1)(c) - undervaluation of value of closing stock of diamond by applying average rates - the closing stock of this assessment year would become the opening stock of the next year and ultimately it has got no effect on the taxes payable to Revenue - No penalty - AT
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Disallowance u/s 40A(3) - splitting the payments in excess of ₹ 20,000 - Genuine and bona fide transactions are not taken out of the sweep of the section - addition/disallowance confirmed - AT
Corporate Law
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Security market fraud - Creating artificial impression with a view to mislead the investors in India either directly or indirectly is a serious offence - SAT
Service Tax
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Rejection of refund claim - CENVAT Credit - export of services under Business Auxiliary Services in respect of the goods located in India - since recipient of services is situated outside India, refund allowed - AT
Central Excise
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Manufacture - Micro Spray Water Cooling System - the structure assembled at site is firmly embedded/attached to the concrete pillar and becomes immovable during assembling and cannot be considered as marketable goods attracting central excise duty - AT
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Restoration of registration certificate of Respondent - original RC was with the department as Respondent was not to be benefitted in any way by withholding the original RC and benefit of doubt is given to the Respondent. - AT
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CENVAT credit - invoices not in the name of the appellant but it is in the name of the directors and the employees of the company - if the same has been booked as expenditure in the books of appellant, credit is admissible. - AT
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Refund claim - unjust enrichment - excise duty was paid on the price without deduction of discount - appellant have substantially established that the incidence of excess paid duty has not been passed on to any other person - refund allowed - AT
Articles
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (12) TMI 1247
Deduction u/s.57(iii)and set off of interest income earned on ICD’s from pre-operative expenditure - Held that:- From the facts of the case it is evident that out of the bank loan of ₹ 4500.96 crores the unutilized portion of ₹ 1,555 crores was placed in fixed deposit with the bank by the assessee. Therefore, the source of the FD is directly linked to the bank loan obtained by the assessee wherein there is a cost, being the proportional interest payable to the bank. Section 57(iii) of the Act makes it amply clear that any expenditure incurred for the purpose of earning income which is taxable under the head “Income from other source” has to be allowed as deduction. In the above case, for the interest income earned by the assessee there is a direct link to the proportional interest paid by the assessee. Therefore, as per section 57(iii) of the Act, the assessee would be entitled to the benefit of deduction with respect to the proportional interest expenditure incurred by the assessee towards earning interest income. Following the decision of the Hon’ble jurisdictional High Court in the case of VGR Foundation [2007 (6) TMI 158 - MADRAS HIGH COURT ] has held that the assessee is entitled to set off the interest income earned on ICDs from the pre-operative expenditure because the share application money received by the assessee company do not fall under the category of borrowed fund and is inextricably linked with the business of the assessee. Interest received from ICDs the source of which are from share application money which is interest free has to be set off against the pre-operative expenses of the assessee because they are inextricably linked to the setting up of the business of the assessee. Disallowance under section 14A - Held that:- We find merit in the order of the learned Commissioner of Income Tax (Appeals) on this issue. If investments are made in “growth mutual funds” yielding only capital gain/loss which is taxable income under the head ‘Capital Gain”, then the provisions of section 14A will not be applicable because provisions of Section 14A deals with expenditure incurred in relation to income not includible in total income, needless to mention that expenditure incurred in such situation will go to add to the cost of asset wherein provisions of Section 14A of the Act will not be applicable. Since the learned Commissioner of Income Tax (Appeals) has only remitted back the matter to the file of the learned Assessing Officer for verifying the mode of investment and decide according to the above ratio laid down, we do not find it necessary to interfere with his order on this issue also.
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2016 (12) TMI 1246
Disallowance u/s 14A - Held that:- It is seen that the assessee has claimed that expenditure amounting to ₹ 31,154/- had been incurred in relation to earning of exempt income. The Assessing Officer did not bring any evidence on record to relate the expenditure incurred with the amount of exempt income on one hand and relate the exempt income to the investments yielding exempt income on the other. He simply proceeded to calculate the disallowance under Rule 8D. In the absence of such evidence, it was patently wrong on the part of the Assessing Officer to compute disallowance u/s 14A of the Act by mechanically applying Rule 8D. The Assessing Officer has adopted the formula for estimating expenditure on the basis of investments but the justification for calculating the average investment is missing. Disallowance u/s 14A was made without due deliberation and analysis by the Assessing Officer and the Ld. CIT (A) was also patently wrong in confirming the disallowance. We, therefore, restore the issue to the file of the Assessing Officer for calculating the quantum of disallowance afresh after considering all the aspects as envisaged in section 14A and Rule 8D after giving due opportunity to the assessee to represent its case. The grounds pertaining to the issue of disallowance u/s 14A are accordingly allowed for statistical purposes.
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2016 (12) TMI 1245
Reopning of assessment - deduction u/s 10A calculation - Held that:- The issue of interest on FDR forming part of the net profit and calculation for the purpose of section 10A of the Act was very much before the AO which was furnished vide written submission dated 24.10.2008 in reply to the questionnaire dated 19.8.2008 which is placed at page 37 of the paper book and the AO after considering all these information and documents filed before him during the assessment proceedings reduced the amount of deduction u/s 10A to ₹ 8,50,06,151/- as against ₹ 11,57,73,763/- claimed by the assessee. In our opinion, reopening of the assessment on the basis of interest on FDR stating that the same to have escaped the assessment u/s 147 r.w.s 148 of the Act is not correct as the material was already before the AO at the time of framing the original assessment and therefore, we are in agreement with the argument of the ld. AR that the reopening of assessment on the basis of material which was already before the AO is nothing but a mere change of opinion which is not permissible under the Income Tax Act. - Decided in favour of assessee
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2016 (12) TMI 1244
Addition on account of alleged unexplained expenditure under section 69C - Held that:- In this entire assessment order, the AO himself has pointed out time and again different persons, who are alleged, to have made cash payments. Even on that count, the additions cannot be sustained in the hands of the assessee. In our considerate view, there being no evidence to support the Revenue’s case that a huge figure, whatever be its quantum , over and above the figure booked in the records and accounts changed hands between the parties, no addition could therefore be made u/s. 69C of the Act to the income of the assessee. - Decided in favour of assessee
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2016 (12) TMI 1243
Revision u/s 263 - set off of the unabsorbed depreciation - Held that:- It is not in dispute that the assessment order passed by the Assessing Officer on 29.03.2014. Subsequently, the application u/s.154 of the Act filed in which the claim of the assessee regarding set off of the unabsorbed depreciation of ₹ 18,16,28,888/- was allowed. However, this order is erroneous and prejudicial in the interest of the revenue is not understoodable. Firstly this claim was declined by the Assessing Officer by virtue of order dated 29.03.2014. Subsequently, the same was allowed by the Assessing Officer on application u/s.154 of the Act moved by the assessee. This claim has also not been wrongly allowed by the Assessing Officer. The issue regarding set off of unabsorbed depreciation against the addition made u/s.68 of the Act has rightly been allowed by the Assessing Officer, in view of the law settled in CIT vs. Virmani Industries Pvt. Ltd. (1995 (10) TMI 1 - SUPREME Court ). Thus when the claim has been justifiably allowed by the Assessing Officer then the same cannot be treated as a ground to invoked the provision u/s.263 of the Act because the order is not erroneous and prejudicial in the interest of revenue. - Decided in favour of assessee
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2016 (12) TMI 1242
Revision u/s 263 - non deduction of tds u/s 194C - addition of contract payments under section 40(a)(ia) of the Act on which the assessee did not deduct any tax at source - Held that:- AO has considered the issue of non deduction of Tax at source on the payment to sub-contractors and other defects in the books of account such as non maintenance of proper record bills and vouchers and ultimately assessing the income at the rate of 8% which in our opinion takes care of all other issues like agricultural income and loan from wife. The case of the assessee also covered by the decision in the case of Malabar Industries Co.Ltd (2000 (2) TMI 10 - SUPREME Court) in which it has been held that when the AO has taken a plausible view which is in favour of the assessee and the CIT cannot take recourse of the revisionary powers u/s 263 to disturb the already completed assessment. From the facts as discussed above, we find that the case of the assessee squarely covered by the ratio laid down in the aforesaid decision. Therefore, we respectfully following the said decision set aside the order of Commissioner passed u/s 263 of the Act. - Decided in favour of assessee
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2016 (12) TMI 1241
Penalty levied u/s 271(1)(c) - undervaluation of value of closing stock of diamond by applying average rates - assessee applied rates based on value of grade/variety of diamonds in stock by applying cost or market value which ever is lower of the relevant grade/variety of diamond - Held that:- Keeping in view the facts and circumstances of the case, average rate cannot be applied in the manner as applied by Revenue and no cogent adverse material has been brought on record by the Revenue to disprove the basis of valuation adopted by the assessee for valuing stock of diamond based on variety/grade of diamond. No enquiries or examinations have been conducted by the Revenue to value the closing stock of diamonds based on grades/variety of diamond , and merely applied the average rates knowing well that there are as many 6000-8000 grades/varieties of diamond wherein price of diamond substantially varies from one grade to the other, hence, the additions as made by the AO in quantum itself are not prima-facie not sustainable. In any case, the assessee did not file second appeal with the Tribunal with respect to quantum assessment and accepted the appellate order of learned CIT(A) partly allowing the appeal in quantum assessment, owing to the reason that the partner of the assessee Mr Sameer Jhaveri was not well and ultimately expired on 08-05-2009 and the wife of the said Mr. Sameer Jhaveri was not interested in persuing the business as well litigation with the Revenue. In any case , the closing stock of this assessment year would become the opening stock of the next year and ultimately it has got no effect on the taxes payable to Revenue and revenue effect is tax neutral as there is no loss to the Revenue. The penalty levied by the A.O. and as confirmed/sustained by learned CIT(A) is not sustainable in the eyes of law keeping in view peculiar facts and circumstances of the case and the bonafide explanations submitted by the assessee - Decided in favour of assessee
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2016 (12) TMI 1240
Disallowance u/s 40A(3) - splitting the payments in excess of ₹ 20,000 - expenditure paid in cash - Held that:- We are of the considered view that not only a bare perusal of the circular No. 1 of 2009, dt. 27th March, 2009 reveals that the same is an explanatory note as regards extension of the rigors of Sec. 40A(3) even to the cases where there is an attempt on the part of an assessee to circumvent the said statutory provision by splitting the payments in excess of ₹ 20,000/-(supra), into several cash payments, each below ₹ 20,000/-, and the interpretation arrived at by the Ld. A.R by digressing from the issue addressed by the aforesaid circular and rather divorcing certain terms from the text and reading the same in isolation, cannot be accepted. We are of the considered view that the interpretation pressed into service by the Ld. A.R to support his contention that genuine transactions would not fall within the gamut of Sec. 40A(3) not only fails for the aforesaid fallacious methodology of interpretation so adopted, but rather a perusal of the judgment of the Hon‟ble Supreme Court in the case of : Attar Singh Gurmukh Singh (1991 (8) TMI 5 - SUPREME Court ) interpreting the scope of Sec. 40A(3), had held -“Genuine and bona fide transactions are not taken out of the sweep of the section.”, therefore the aforesaid contention of the assessee would thus fail on the said count too. Thus in light of our aforesaid observations, the ground no.1 of the appeal is dismissed and the order of the CIT(A) to the extent sustaining the addition/disallowance of ₹ 13,11,455/- is upheld. - Decided against assessee Disallowance of loss on sale of fenders - Held that:- In the present case, now when the assessee had reflected the fenders as a capital asset in its "books of accounts", but however had claimed that the same were purchased as a tradable commodity in the normal course of its business of supplier of stores to ships, therefore a very heavy onus was cast on the assessee to irrebutably substantiate his contention, all the more when the said claim was found to be in absolute contradiction of the facts as emerged from its "books of accounts", and therein prove that the fenders were purchased as a tradable commodity in the course of its normal business as that of supplier of stores and were to be supplied pursuant to an order placed upon it by a customer, but by way of an inadvertent mistake had been reflected as a capital asset in the "Books of account". We however find that the assessee except for repeatedly raising an unsubstantiated claim had however absolutely failed to place on record any material which could go to fortify its contention. The assessee had neither before the lower authorities, nor before us, placed on record copy of any such order or correspondence pertaining to placement of any such order for supply of fenders by the customer. Thus the state of affairs prevailing in the case do not inspire much confidence, as a result whereof we are unable to subscribe to the hollow claim so raised by the assessee.Thus we are of the considered view that the regular and systematic purchase of fenders by the assessee in itself goes to dislodge the claim of the assessee that the same were purchased in the course of its normal business and were to be supplied pursuant to orders placed upon it by a customer. - Decided against assessee
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2016 (12) TMI 1239
Deduction under section 80JJA for bio-fertilizer business - AO held that there was no such business activity and entire sales proceeds was treated as income under section 68 - Held that:- From the perusal of the orders of lower authorities we find that various reports were called for by the AO to check whether the business of the assessee was into existence or not. We find that the contradictory reports were submitted from the inspector of the ward of the ITO having jurisdiction on the assessee and the inspector from Bhubaneswar Income Tax office. As per the report of inspector of the ITO there was not business but as per the inspector from Bhubaneswar Income Tax office, the business was there but it was negligible in volume. The AR in support of his claim has submitted various reports and certificates about the existence of the business which are placed on record. From the above fact we are inclined to hold that there was business in the existence. We also find support from the consistent claim of deduction under section 80JJA of the Act from the last several years. The question of the disallowance of deduction or non- existence of the business has never been raised in the earlier years. The allegation of the AO that the assessee being chartered accountant has not taken permission from the institute of chartered accountant has no connection in the income tax proceedings. Similarly the allegation of the AO that the assessee is doing the business in the land belonging to his father without sharing the profit with his other brother and sisters has no base. The reasons for holding that there was no business were not correct. - Decided in favour of assessee
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2016 (12) TMI 1238
Levy of penalty u/s 271(1)(c) - additional income on account of on-money on sale of plots - Held that:- The assessee had offered additional income on account of on-money on sale of plots. The Assessing Officer had accepted the same and had initiated penalty proceedings under section 271(1)(c) of the Act. The CIT(A) during the course of appellate proceedings relating to section 271(1)(c) of the Act issued enhancement notice to the assessee. Thereafter, he had gone through the seized documents and elaborately referred to them and even reproduced the scanned copies of such documents and comes to conclusion that loans were received from Ratanlal Bafna, but still upholds the penalty levied under section 271(1)(c) of the Act. Once the finding of CIT(A) is that these are loans received from Bafna and are not on-money received on sale of plots, then in cases where penalty proceedings have been initiated on a different footing and the CIT(A) reverses the same and holds the same to be loans received by the assessee, there is change in opinion and basis for levy of penalty for concealment varies. In such circumstances, there is no merit in levy of penalty under section 271(1)(c) of the Act and there is no merit at all in levying the penalty @ 150%. Accordingly, we allow the claim of assessee even on merits.
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2016 (12) TMI 1237
Addition on work in progress - addition based on loose paper found - Held that:- There is merit in the contentions of the assessee that the noting made in the loose sheet does not represent actual amount of work in progress, but the same represents estimate made, which would facilitate raising of bills to clients. Hence the explanation of the assessee that the noting made in the loose sheet would include gross profit as well as the value of pending bills, in our view, sounds reasonable. The tax authorities have taken the view that the assessee has not retracted from the statement given during the course of survey. However we notice that the assessee did not think of retraction, since it has explained the nature of noting made in the loose paper and has taken a stand that the partner has made admission without properly understanding the noting made in the loose paper, i.e., according to the assessee, the loose paper was incorrectly interpreted by the partner of the firm at the time of survey. A loose paper found at the time of survey operation, particularly when the contents of the loose paper were not corroborated with any other credible material. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the addition - Decided in favour of assessee Addition of unexplained investment made in the renovation and on purchase of furniture and fixture - Held that:- It is an undisputed fact that the noting made in the loose sheet contained expenses incurred in the month of October, 2006 and they were incorporated by the assessee only after the date of survey. It is also a fact that the survey officials have found cash shortage to the tune of ₹ 21,59,599/-. Normally cash shortage would represent the expenditure incurred/investment made outside the books of accounts. Under these set of facts, we are of the view that the assessee may be given credit to the extent of cash shortage amount of ₹ 21,59,599/-, since it may not be proper to ignore the fact of cash shortage, i.e., the expenses have been incurred to the extent of ₹ 21,59,599/- by drawing cash from the books of the assessee, but they have not been accounted on the date of survey. Accordingly we modify the order passed by Ld CIT(A) on this issue and direct the AO to give credit to the extent of ₹ 21,59,599/-. Accordingly the remaining addition of ₹ 3,13,401/- is hereby confirmed. Disallowance of expenses incurred on Shuttering materials treating the same as Capital expenditure - Held that:- The period for which benefit would be derived from usage of an asset would depend upon the nature of usage. In the instant case, it is seen that the assessee is undertaking contracts for construction of multi storoyed buildings, meaning thereby, these materials would be used again and again for construction of each of the floor. Hence there is merit in the contentions of the assessee that these materials would generally be useful for one project or for about one year only. Thus the longevity of these materials does not long last in the hands of the assessee, in view of the nature of business carried on by it. Hence, we are of the view that the cost of shuttering materials should be treated as revenue expenditure in the hands of the assessee. Accordingly we find merit in the contentions of the assessee that the cost of shuttering materials should be treated as revenue expenditure, in the facts and circumstances of the case. Addition on alleged sale of scrap - Held that:- A.R contended that the Ld CIT(A) has enhanced the amount of actual scrap sales without brining any supporting material, i.e., on the basis of presumptions. On the contrary, the Ld D.R supported the order passed by Ld CIT(A). However, we find merit in the contentions of the assessee, since the Ld CIT(A) has made enhancement purely on presumptions without any material. Accordingly we set aside the enhancement made by Ld CIT(A)
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2016 (12) TMI 1236
Penalty under section 271(1)(c) - disclosure of additional income towards withdrawal of exemption u/s 10AA - Held that:- The assessee disclosed additional income for ₹ 7.88 corers from assessment year 2006-07 to 2008-09 towards withdrawal of exemption u/s 10AA in respect of SEZ at Chennai but while framing the assessment the during the course of assessment proceedings the AO allowed the deduction u/s 10AA of the Act and also no discrepancy was pointed out while initiating the penalty u/s 271(1)© and even observed in the penalty order that the penalty was imposed for mere admission of assessee during the course of search action and also that the addtiuonal income was disclosed in the return filed in response to notice u/s 153C of gthe Act. In view of the facts we are of the considered opinion that the order of the ld.CIT(A) sustaining and upholding the penalty is wrong. We accordingly set aside the order of CIT(A) by allowing the appeal of the assessee and the AO is directed to delete the penalty. Levying penalty u/s 271(1)(c)instead of section 271AAA - Held that:- As search action u/s 132 of the Act was initiated after 1.6.2007,penalty u/s 271(1) (c) of the Act could not be imposed by virtue of insertion of new provisions on the statute book for levy of penalty in the case of search under section 271AAA of the Act w.e.f. AY 2007-08 and therefore the penalty as imposed by the AO and confirmed by the ld.CIT(A) has to be deleted.
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Customs
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2016 (12) TMI 1248
Detention of goods - demand of detention and demurrage charges - import of defective/secondary cold rolled sheets/coils from South Korea - goods detained for inspection - whether goods were hot rolled steel or cold rolled steel, in dispute - thickness of product also in dispute - Held that: - The inspection report, as submitted by the Chartered Engineer clearly opined that the goods imported by the petitioner were cold rolled sheets/coils, as claimed by the petitioner in the bills of entry. There was some issue raised regarding thickness of part of the consignments which, according to the Chartered Engineer, was only to the extent of about 10%. As the requirement of DRI, Ludhiana for 100% examination of the consignments before release had been satisfied, the same should have been released. Minor variation of thickness in about 10% of the consignments could be expected for the reason that the material was defective/secondary cold rolled sheets/coils. Detention and demurrage charges - Held that: - once it is found that detention of goods was not on account of any fault of the petitioner, rather, found to be illegal action on the port of DRI and customs, the petitioner cannot be burdened for detention and demurrage charges and the liability has to be put on customs department, who shall be at liberty to seek waiver thereof. The Authority, as constituted under the 1963 Act, is only meant to fix the rates to be charged by the port authorities. Under Section 53 of he 1963 Act, the Board can deal with only such cases which seek waiver of charges. In the case in hand, the direction of the Government is as a matter of policy, which is applicable uniformly in all cases, where detention of goods is by customs and the certificate is issued. It is not in dispute that in the case in hand, the certificate has been issued, hence, in terms of Regulation 6(l) of the 2009 Regulations, which are binding on the Port Trust, customs can waive off the demurrage charges. Malafide of respondent No.7-Santokh Singh Senior Intelligence Officer and respondent No. 8-Roopesh Kumar, Intelligence Officer, DRI - Held that: - This court is not going into much detail on this aspect, but it can safely be opined that the action was not bonafide, if not strictly mala fide. Things could have been taken in right perspective with positive attitude ensuring that neither the revenue suffers any loss nor the importer on account of merely delay of clearance of goods. The instructions issued by the department, time and again, were blatantly violated. The stand taken by the petitioner was vindicated when finally the goods were found to be cold rolled steel. It was never the case of the department that the goods imported were prohibited. The only issue raised about these being hot rolled or cold rolled steel or its thickness could be taken care of without any delay. Payment of detention charges of Shipping Line - Held that: - No doubt, the 2009 Regulations are not applicable on the Shipping Line, however, once it is found that detention of goods for inordinate period was not on account of any fault on the part of the petitioner, he is not liable to be burdened with that cost. It is only the DRI and customs, who should bear the cost, demanded by the Shipping Line. Petitions allowed - The amount of customs duty having already been paid by the petitioners, the respondents are directed to release the goods. The Port Trust cannot charge any demurrage in view of Regulation 6(l) of the 2009 Regulations, customs having issued the detention certificate. The detention charges demanded by the Shipping Line shall be borne by DRI and/or customs. However, they shall be entitled to get the same waived off or reduce from the Shipping Line. The petitioners shall be entitled to cost of Rs. 50,000/- each to be paid by the department, however, with liberty to recover from the guilty officer/official(s) - decided in favor of petitioner.
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2016 (12) TMI 1209
Project import - denial of benefit on the ground that appellant have not submitted the re-conciliation statement in respect of setting up the project as required under clause 7 of the Regulations - Held that: - as regard the Rule 7 requirement of filing of re-conciliation statements, the same was inserted w.e.f. 7/1/1992 in the Project Import Regulations, 1986 therefore the requirement of Rule 7 per say cannot be made applicable - even though Rule 7 is not applicable but otherwise also the appellant is require to submit the documents which establish that the goods imported under Project Import Regulations has been used for setting up project as declared by the appellant at the time of import of the goods - appellant is granted one more opportunity to submit their documents as required by the department, therefore matter needs to be remanded - appeal allowed by way of remand.
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2016 (12) TMI 1208
Whether the appellant is entitled for interest on delayed sanction of refund of SAD under N/N. 102/07-Cus DATED 14/9/2007? - Held that: - the very same issue has been considered by the Hon’ble High Court of Madras in the case of Ksj Metal Impex (P) Ltd [2013 (6) TMI 148 - MADRAS HIGH COURT] where it was held that the appeallant is entitled for the refund of interest on delayed sanction of refund under Notification No. 102/07-Cus. As regard the Circular No. 06/2008 relied upon, Hon'ble High court has held the said circular as ultra virus - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 1207
Release of confiscated vessel - MV Seamec II - MV Seamec III - permission to take “MV Seamec III” out of the country for undertaking a project to offset heavy expenditure incurred to maintain the vessel in idle condition - release of vessel on same terms as offered earlier - Held that: - We do not wish to deprive the appellant of an opportunity to deploy an asset for performance but safeguard of public revenue is our paramount concern. Undoubtedly, the retention of the vessel in idle condition does not serve anybody’s interest and may well accelerate its deterioration - the plea of the appellant for release on terms similar to that on the earlier occasion may not be appropriate. The appellant to execute bank guarantee of ₹ 3,00,00,000/- in addition to existing bank guarantee of ₹ 8.12 corers for MV Seamec - II to approximate the redemption fine of ₹ 12,00,00,000/-, the interest of justice will be advanced by allowing the MV Seamec - III to be taken out for commercial purpose and dry docking for a period of six months upon execution of bank guarantee of ₹ 7,00,00,000/- in favour of Commissioner of Customs, Mumbai and bond for value of the vessel - appeal allowed - decided partly in favor of appellant.
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2016 (12) TMI 1206
Valuation - enhancement of value of imported goods - principles of natural justice - Held that: - On a perusal of the order-in-original we find that it is replete with assumptions and presumptions which render the conclusions shaky. We also observe that both the lower authorities have not taken into consideration the decisions of this Tribunal which restrict the inclusion of royalty and technical know-how in assessable value to appropriate situations in accordance with the terms of the agreement relating to these fees. In the matter of goods imported for trading as such, it would appear that both the lower authorities have proceeded to enhance the declared value without any elaboration as to the manner or rationale for computation. It would also appear that it is the alleged relationship between exporter and appellant, and not misgivings about the declared value, that prompted the enhancement A remand to the original authority would entail a reopening of the entire investigation which would not be equitable given the lapse of time since the proceedings were initiated - appeal allowed by way of remand.
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2016 (12) TMI 1205
Whether the first appellate authority has erred in coming to such a conclusion in enhancement of the value holding the supplier and the respondent-assessee as related person is wrong? - Held that: - it can be seen from the findings of the first appellate authority that there is no equity participation to the tune as had been recorded by the adjudicating authority. There is absolutely nothing on the record that findings of the first appellate authority were erroneous, we agree with the findings recorded by the first appellate authority that just because there is an equity participation in the importer-respondent company, it cannot be held that importer and supplier are related person - appeal rejected - decided against Revenue-appellant.
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2016 (12) TMI 1204
Valuation - rejection of value based on contemporaneous imports - Rule 8 - Held that: - The reliance placed for enhancing the value seems to be incorrect as the prices of the same product during May, 2004 may not be the same in January, 2005 - Secondly, for rejecting the declared price reliance was placed on the imports made in May, 2004 while arriving at the conclusion of under valuation, the adjudicating authority as well as the first appellate authority relied upon imports during January, 2005 to March, 2005. This would indicate for rejecting the transaction value during January, 2005 there was no data available as the data was relied upon in the Order-in-Original was of April, 2005 was not indicated to the importer - Thirdly, on perusal of details of contemporaneous imports as relied upon by the adjudicating authority to enhance the value from $2.4/Kg to $3.18/Kg., is also on wrong footing as the details lack the quantity of imports, the country of origin and manufacturer of the goods - the same cannot be held as contemporaneous imports to reject the value declared by the appellant-importer - appeal allowed - decided in favor of appellant-assessee.
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Corporate Laws
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2016 (12) TMI 1202
Security market fraud - Order passed by the Whole Time Member of SEBI - persons connected to the Indian Securities Market debarred from rendering services in connection with instruments defined as securities under Section 2(h) of the Securities Contracts (Regulation) Act, 1956 for a period of 10 years and prohibited from accessing the capital market directly or indirectly for a period of 10 years - Held that:- Whether the Loan Agreement/ Pledge Agreement were validly entered into or not, proceedings could be initiated against AP if the very act of AP in subscribing to the GDRs through his connected entities constituted fraud on the investors in India. In such a case, the entities which issued the GDRs viz. Overseas Depository Banks or the entities who were parties to the Loan Agreement/ Pledge Agreement are not required to be impleaded as parties to the proceedings initiated against AP for committing fraud on the investors in India. Therefore, the argument of the appellants that without impleading the Overseas Depository Banks/ parties to Loan Agreement & Pledge Agreement as parties to the proceedings initiated against the appellants, no order could be passed against the appellants cannot be accepted. instead of ensuring that the foreign investors subscribe to the GDRs of Asahi, AP as Managing Director of PAN Asia planned to subscribe to the GDRs of Asahi through Vintage and in fact as Managing Director of Vintage took loan of 5.98 Million USD from Euram Bank for subscribing to the GDRs of Asahi and made Asahi to pledge to the Euram Bank the GDR subscription amount of 5.98 Million USD as security for the loan taken by Vintage. Similar modus operandi was adopted in case of other issuer companies. Thus, the investors in India were made to believe that in the global market the issuer companies have acquired high reputation in terms of investment potential and hence the foreign investors have fully subscribed to the GDRs, when in fact, the GDRs were subscribed by AP through Vintage which was wholly owned by AP. In other words, PAN Asia as a Lead Manager and AP as Managing Director of PAN Asia attempted to mislead the investors in India that the GDRs have been subscribed by foreign investors when in fact the GDRs were subscribed by AP through Vintage. Any attempt to mislead the investors in India constitutes fraud on the investors under the PFUTP Regulations. Fact that the appellants had not informed the Stock Exchanges about the GDRs being fully subscribed cannot be a ground for the appellants to avoid action being taken for misleading the investors in India, because, under the PFUTP Regulations, action can be taken even against a person who has caused the investors in India to believe in something which is not true. In the present case, it is apparent that prior to the issuance of GDRs, AP as Managing Director of PAN Asia had designed a plan to subscribe to the GDRs of Asahi and in implementation of that plan AP took loan of 5.98 Million USD as Managing Director of Vintage specifically for subscribing (take down) GDRs of Asahi and in fact on issuance GDRs, 5.98 Million USD was transferred to the account of Asahi with Euram Bank as GDR subscription amount. Thus, AP as Managing Director of PAN Asia was the root cause in creating artificial impression that the GDRs have been subscribed by foreign investors when in fact GDRs were purchased by AP through Vintage. Such an act is clearly prohibited under the PFUTP Regulations. Findings recorded in the impugned order that the names of initial subscribers exist only in fiction and that the appellants have artificially sought to create an impression that the GDRs were initially subscribed by foreign investors other than Vintage cannot be faulted. Decision of SEBI that the appellants attempted to committed fraud on the investors in India by introducing fictitious initial subscribers cannot be faulted.. Creating artificial impression with a view to mislead the investors in India either directly or indirectly is a serious offence and in the present case, since AP holding 100% shares of PAN Asia has committed fraud on the investors in India in relation to GDRs of several issuer companies, we see no reason to interfere with the debarment order passed against the appellants.
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Service Tax
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2016 (12) TMI 1235
Demand of tax with interest and penalty u/s 77 and 78 - default in payment of service tax - GTA service - Held that: - the service tax liability and interest upheld - appellant having paid 25% of the service tax liability, as penalties under Section 78, the requirement of Section 78 stands discharged and no further amount requires to be paid u/s 78 as penalty. As regards the penalties u/s 77 - a lenient view needs to be taken, as appellant may be due to financial trouble in the partnership was unable to handle business and may not have obtained the registration or filed the returns; invoking the provisions of Section 80 of the Finance Act, 1994, the penalties imposed u/s 77 of the Finance Act, 1994. Appeal disposed off - decided partly in favor of appellant.
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2016 (12) TMI 1234
Rejection of refund claim - Rule 5 of the CENVAT Credit Rules, 2004 - export of services under Business Auxiliary Services - denial on the ground of limitation as also that services are rendered to a person situated abroad in respect of the goods located in India - whether the services are taxable in India or not? - Held that: - the issue is no more res integra, Hon'ble High Court of Bombay in the case of Commissioner of Service Tax, Mumbai-II Vs. SGS India Pvt. Ltd. [2014 (5) TMI 105 - BOMBAY HIGH COURT], has held that if services were rendered to such foreign clients located abroad, then, the act can be termed as ‘export of service’ - Service Tax is a value added tax which in turn is destination based consumption tax in the sense that it taxes non-commercial activities and is not a charge on the business, but on the consumer, then, it is leviable only on services provided within the country. Appeal rejected - decided against Revenue.
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2016 (12) TMI 1233
Refund claim - quantification of refund amount - Rule 5 of the Cenvat Credit Rules, 2004 read with N/N. 27/2012-CE(NT) dated 18/6/2012 - quantum made on the basis of export turnover of April 2012 to June, 2012 - Held that: - services related to invoice dated 6/4/2012 was already considered as export of service in the quarter January to March, 2012, therefore the same can neither be taken in total turnover nor in export turnover for the period April to June, 2012 - refund should be allowed of 30,17,233/-. Time bar - Held that: - since the respondent has not claimed the refund related to invoice dated 6/4/2012 in the quarter April to June, 2012 there is no question of refund getting time bar. The respondent is correctly entitle for the refund of ₹ 30,56,748/- but the total turnover and export turnover applied by the Adjudicating authority as well as the Commissioner(Appeals) was wrong - appeal allowed partly in favor of appellant.
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2016 (12) TMI 1232
Rectification of mistake - there is error apparent on the face of the record in the form of non-existence of the submission made in respect of non-availability of the tax on the ground that the goods were manufactured - Held that: - any exemption from service tax is irrelevant in the context of inclusion of service tax in the amounts billed to the principals as job-work charges - no error on face of record - application of ROM dismissed.
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2016 (12) TMI 1231
Rectification of mistake - authorizing Chartered Accountant to appear before Tribunal without revoking earlier incumbent - Held that: - the Ld. Counsel wants to argue the entire case by taking through the entire case records, as also assailing the orders of Adjudicating Authority and First Appellate Authority to put forth his point that there is an error apparent on face of the record - this would be reviewing own order, an action impermissible under the statute. It is settled law that in the guise of application for rectification of mistake, entire appeal cannot be re-argued, vide this application, applicant wants to do the same, which is declined - application for ROM dismissed.
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Central Excise
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2016 (12) TMI 1230
Waiver of penalty - sought relief on the ground that once the proceedings are concluded against main noticee, the proceedings against the second noticee should also be deemed to be concluded - Section 11A(2) of the Central Excise Act, 1944 - Held that: - section 11A(2) says that if the person on whom notice was served, has paid the duty in full together with, interest and penalty under sub-section (1A), the proceedings in respect of such person and other persons to whom notice are served under sub-section (1) shall, without prejudice to the provisions of section 9, 9A and 9AA, be deemed to be conclusive as to the matters stated therein - the penalty imposed on the second appellant is set aside - appeal allowed.
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2016 (12) TMI 1229
Demand - Reversal of Cenvat credit - Shortage of stock - Penalty - Held that: - stock verification was not done properly can only be considered as an after-thought and is rejected. Appellant has therefore, correctly paid duty with respect to shortages found and are correctly liable to penalty. So far as reversal of Cenvat Credit on goods cleared as such is concerned, the Appellant is of the view that inputs were in the form of rods and after receipt some of the inputs were found to be defective - To a specific query from the Bench whether any processes were carried on the inputs before selling them as waste and scrap, ld.Consultant appearing for the Appellant could not bring any evidence on record to suggest that any process was done on the inputs before the same were sold - The argument of the Appellant that inputs on receipt were found defective and were cleared as waste and scrap is not tenable because even if the defective inputs are sold as scrap then also the actual Cenvat Crdit taken at the time of receipt of these inputs was required to be reversed - Appeal dismissed - decided against the assessee.
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2016 (12) TMI 1228
Refund - Provisional assessment - Unjust enrichment - Held that: - As per the provisional assessment and finalization thereof it was found that excess paid duty arose for the reason that the value applied on the clearances of the goods from the factory is higher than the actual sale value charged from the depot - There is no evidence which shows that this excess paid amount was otherwise collected either from the same buyer or from any other person. In this position, I find that the lower authorities have wrongly credited the amount of excess paid duty into consumer welfare fund - Appeal disposed of by way of remand.
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2016 (12) TMI 1227
Cenvat credit - Garden Maintenance Service, Car Rental Service and Canteen Service - Held that: - If the appellants are covered by the mandatory provisions of Factories Act to provide canteen services to the employee and do not recover the costs from employees and if they are covered by the provisions of Pollution Control Law, as claimed, to maintain garden, then the credit would be admissible to them - Appeal allowed by way of remand.
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2016 (12) TMI 1226
Confiscation - Redemption fine - Notification No.68/63 - Penalty - Held that: - The Rule 26 provides power to penalize any person who acquire possession or any way concerned in transporting, removing, depositing, keeping, selling, purchasing or any other manner dealing with any excisable goods which he has reason to believe that the vehicles are liable to confiscation under the Act or these rules - Appeal dismissed - decided against the assessee.
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2016 (12) TMI 1225
CENVAT credit - authenticity of CBEC Circular No. 97 (8)/2007-ST DATED 23/08/2007 - whether appellant will be eligible to CENVAT Credit on transportation services from the factory to the point of delivery of the customers? - Held that: - Jurisdictional Kolkata High Court in the case of CCE, Kolkata Vs. Vesuvious India Ltd. [2013 (12) TMI 1025 - CALCUTTA HIGH COURT] has upheld the authenticity of CBEC Circular No. 97 (8)/2007-ST DATED 23/08/2007. It is observed from para 8.2 of the said circular dated 23/8/2007 that one of the conditions for availing such credit is that seller has to bear the risk of loss or damage to the goods during transit - as per contract appellant is not responsible for any damage during transit and unloading of goods. The conditions prescribed by CBEC for availing CENVAT credit on transportation services beyond the factory are not satisfied - the contract between appellant and the customers is not on FOR destination basis - credit not allowed - appeal disposed off - decided in favor of Revenue.
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2016 (12) TMI 1224
CENVAT credit - denial on the ground of discrepancies on CENVATable invoices - input services - invoices not in the name of the appellant but it is in the name of the directors and the employees of the company - Held that: - credit should be allowed for the reason that all these expenditure were incurred by the appellant company and the same is not under dispute, therefore even though the invoices are not in the name of the company but in the name of the directors/employees and the same has been booked as expenditure in the books of appellant, credit is admissible. Cenvatable bills/invoices were not available - Held that: - appellant submitted that now they are in possession of most of the invoices which can be produced before the authority for verification - matter on remand. Services not considered as input services - Held that: - services involved are of construction of foundation in the factory, construction of security cabin, construction of scrap yard, shifting of machines, services are directly related to activity of the manufacturing unit and the same are clearly included in the inclusion part of the definition of the input services, credit admissible - As regard the services of civil works, these services are not related to the factory but is related to the staff quarters, therefore, cannot be treated as input service - As regard the air fair and cleaning services, it is related to the business activity of the appellant company, credit admissible. Service tax registration number not mentioned in invoice - Held that: - merely non mention of the registration number on the invoice, Cenvat credit cannot be denied particularly when there is no dispute that the invoices was raised to the appellant, services were received by the appellant. Denial of Cenvat credit on the bank charges - Held that: - in the Cenvat Credit Rules, relaxation is specifically provided that for banking services, even if there are no invoices but from any documents of the bank if it is established the payment of service tax, credit must be allowed. Credit allowed - Appeal allowed by way of remand.
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2016 (12) TMI 1223
Refund claim - time bar - refunf claimed for amount paid initially through CENVAT credit, which was denied and subsequently amount paid in cash - Held that: - refund arises only as consequential to the High Court order dated 29/3/2012, therefore as per the sub clause (ec) of clause (b) of Section 11(B)(1) of Central Excise Act, 1944 the relevant date is the date of the order of the High Court - In the present case, Hon’ble High Court order was passed on 29/3/2012, the refund claim was filed on 7/3/2013, accordingly refund was filed within one year - the issue whether appellant is required to pay duty from Cenvat credit account or PLA was not settled before the High Court order dated 29/3/2012 therefore there was no occasion for appellant to file any refund claim - claim filed within stipulated time. The matter remanded to the original adjudicating authority with the observation that refund claim is not time bar - appeal allowed by way of refund.
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2016 (12) TMI 1222
Refund claim - unjust enrichment - excise duty was paid on the price without deduction of discount - Held that: - in case of duty shown to have been collected from particular person then it cannot be presumed the same could have been collected from any other person unless positive evidence is brought on record - The appellant have substantially established that the incidence of excess paid duty has not been passed on to any other person and department could not bring any material contrary to the evidence produced by the appellant - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 1221
Manufacture - Micro Spray Water Cooling System - whether ‘Micro Spray Water Cooling System’, firmly fixed to the ground, fabricated and installed by the appellant will attract central excise duty as goods manufactured at site? - Held that: - From the photographs of the assembled structure brought to the notice of the bench and the method of construction, it is observed that after assembling of the pipes, nozzles, joints etc. the resultant product gets embedded/ attached to the concrete structure and is not removable by simple activities of unbolting of nuts and bolts. Theoretical possibility of dismantling such structure will result into breaking of plastic pipes and parts - the structure assembled at site is firmly embedded/attached to the concrete pillar and becomes immovable during assembling and cannot be considered as marketable goods attracting central excise duty - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 1220
Furnance Oil - earlier claimed as feedstock as per N/N. 5/19998-CE dt 2/6/1998 - Appellant has now taken alternative additional grounds that 40% of the FO was actually used as feed Stock and for the remaining quantity of FO also either 5% or 8% duty rate of duty will be applicable as per Sr No. 15 of the table to Notification No. 5/98-CE & 5/99-CE - is the contention of appellant justified? - Held that: - It is observed from the case records that both Sr No. 14 & 15 of the table annexed to N/N. 5/99-CE are subject to certain conditions. Further the quantities claimed to be used as feed stock or for other purposes also needs verification. Onus of claiming an exemption notification is on the assessee to satisfy that all the conditions of an exemption notification, including the quantities claimed to be entitled to exemption - matter remanded to Adjudicating authority - appeal allowed by way of remand.
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2016 (12) TMI 1219
Benefit of notification no. 14/2002-CE dated 1st March 2002 - interpretation of statute - payment of duty on inputs to avail exemption - Held that: - The Hon’ble Supreme Court in Leisure Sports and Leisure Apparels [2016 (8) TMI 128 - SUPREME COURT] held that A reading of the Budget Explanatory Note makes it clear that those who did not want to avail MODVAT facility were allowed to clear the goods without payment of any excise duty - the contention of Revenue that assesses are not entitled to the exemption in notification no. 14/2002-CE does not find sustenance - demand of duty along with interest, as well as imposition of penalty also set aside - appeal allowed - decided against Revenue.
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2016 (12) TMI 1218
Cenvat credit - Penalty - Rule-15 (1) of the Cenvat Credit Rules 2004 - Held that: - It is the case of the appellant that on 7 items, out of 13 disputed items, credit has already been allowed by subsequent orders dt 30/7/14 & 31/12/2015 passed by Jurisdictional Joint Commissioner & Additional Commissioner which have been accepted by the department - Appellant has also produced a Chartered Engineer’s certificate dt 16/05/16 before the bench explaining the use of each item. It is a case of interpretation of the provisions of CCR & appellant had a view on admissibility of Cenvat Credit, it is opined that this is not a fit case where imposition of penalty under Rule 15(1) is justified - Appeal allowed by way of remand.
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2016 (12) TMI 1217
Cenvat credit - whether the appellant will be eligible to take cenvat credit on documents of the manufacturer when consignee (appellant) is directly receiving the inputs along with the documents but there is an intermediate buyer - Held that: - it is clear that such persons who are taking part in transit sale need not get themselves registered as per provisions of Rule 57G of the Central Excise Rules, 1994 - there is no dispute that both the duty paid inputs and the documents indicating payment of duty were received by the appellant and used in the manufacture of finished goods. It is now a well accepted legal proposition that minor procedural lapses cannot be made as a basis for denying credit to the manufacturer - Appeal allowed - decided in favor of the assessee
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2016 (12) TMI 1216
CENVAT credit - denial on the ground that cenvat credit taking documents were in the name of headquarter of the appellant - whether services for which credit is taken are used in Hooghly unit? - Held that: - Ld. Consultant has countered to the submissions made by the Ld. AR and argued that reconciliation of services being used in the appellant's Hooghly unit can be even done now. It was his case that it should be possible to demonstrate before the Adjudicating Authority that service credit taken is only with respect to services utilized in appellant’s Hooghly unit. In the interest of justice the matter is required to be remanded back to the Adjudicating Authority - appeal allowed by way of remand.
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2016 (12) TMI 1215
Restoration of registration certificate of Respondent - amendment in the registration certificate by adding the address of manufacturer’s Premises-II of the Respondent - Whether the RC was lying with the HQ Anti-Evasion or with the Respondent herein? - Held that: - Under the existing factual matrix Adjudicating authority under Order-in-Original dated 10/9/2009 was justified in extending the benefit of doubt that original RC was seized by the officers of HQ Anti evasion and restored the RC of the Respondent and also ordered for suitable amendments. We also hold the original RC was with the department as Respondent was not to be benefitted in any way by withholding the original RC and benefit of doubt is given to the Respondent. Reasoning given by the first appellate authority in para 10 of Order-in-Appeal dated 11/5/2011 is thus logical and do not require any interference. So far as payment of interest on refund due under Section 11BB of the Central Excise Act 1944 is concerned, it is true that as per CBEC Circular No. 842/19/2006-CX dated 8/12/2006 and 682/73/2002-CX dated 19/02/02 it has been opined that refunds under Notification No. 33/99-CE dated 8/7/1999 are not refunds under Section 11B of the Central Excise Act, 1944. However, Jurisdictional Guwahati High Court on the same issue while deciding the case Amalgamated Plantations (P) Ltd. Vs. Union of India [2013 (11) TMI 589 - GAUHATI HIGH COURT] held that Section 11B of the Central Excise Act, 1944 does not exclude claim of refund made in terms of the notification dated 8-7-1999. Petitioners would, therefore, be entitled to interest under Section 11BB of the Central Excise Act, 1944 on the excise duty refunded to them - assessee entitiled to interest. Appeal dismissed - decided against Revenue.
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2016 (12) TMI 1214
Demand u/r 14 of CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 - manufacture of pig iron falling under Chapter 72 - in the course of manufacture of the pig iron, bolder slag comes into existence at the bottom of the furnace which is not liable to excise duty. That first appellate authority in para 5 of Order-in-Appeal dated 5/12/2012 has held that amount with respect to exempted goods (boulder slag) is payable under Rule 6 of the CENVAT Credit Rules, 2004. It is the case of the appellant that the raw material on which the CENVAT Credit is used are not for the manufacture of boulder slag and no amount under Rule 6 of the CENVAT Credit Rules, 2004 is payable. Held that: - Appellant is the manufacturer of pig iron and is taking CENVAT Credit on the raw materials used for the manufacture of pig iron. All the inputs utilised in the manufacture of pig iron and boulder slag is only waste in the manufacture of pig iron. The CENVAT Credit is, therefore, not taken specifically for the manufacture of boulder slag. It has been held by the Court that wastes like sugarcane coming into existence in the manufacture of sugar cannot be held to be excisable for the purpose of payment of amounts under Rule 6 of the CENVAT Credit Rules. Accordingly, appeal filed by the Appellant is allowed by setting aside Order-in-Appeal dated 5/12/2012 by holding that the materials are not used in the manufacture of exempted boulder slag but are only used in the manufacture of pig iron - appeal allowed - decided in favor of appellant.
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2016 (12) TMI 1213
Imposition of penalty - irregular availment of credit - credit reversed before issuance of SCN - rebate claim - Held that: - The appellant is not agitating the issue on admissibility of CENVAT Credit taken in respect to certain inputs. It is the case of the appellant that penalty cannot be imposed upon them as the inputs were used in the manufacture of finished goods exported under bond. However, Ld. Advocate appearing for the appellant could not correlate the fact that inputs used in the manufacture of finished goods exported under bond. It is observed from Order-in-Appeal dated 31/3/2014 passed by the first appellate authority that reasons have been given by upholding equivalent penalty imposed upon the appellant. Under the self-assessment procedure greater trust and responsibility is placed on the assessee to appropriately follow Central Excise procedures and discharge duty. Irregularity in taking CENVAT Credit could be detected only during the course of audit undertaken by the Department. Accordingly, it is held that imposition of equivalent penalty was correctly upheld against the appellant. On merits the appeal filed by the appellant is rejected. However, it is observed from Order-in-Original No. 29/DKN/2012-13 dated 19/2/2013 that adjudicating authority has not given option of 25% of reduced penalty to the appellant under Section 11AC of the Central Excise Act, 1944. Accordingly, appellant is extended the option of 25% reduced penalty imposed under Rule 15 (2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944, provided the above amount of reduced penalty is paid within one month from the date of receipt of this order. Appeal disposed off - decided partly in favor of appellant.
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2016 (12) TMI 1212
Clandestine removal - process loss - appellant is the manufacturer of M. S. Bars by hot rolling of M. S. Ingots. That hot rolling leads to generation of mill scale waste which is normally 1 to 3% of the weight of the finished product. That appellant has claimed such a loss due to mill scale generation as 10%. It is the case of the Learned AR That generation of 10% mill scale, against a normal generation of 1-3% of mill scale, is not justified at all and the material to the extent of 8% excess claim has been used for manufacture of M.S. Bars which have been clearly / removed clandestinely - whether mill scale generation of 10% claimed by the appellant is justified? Held that: - It is observed from the case records that no scientific literature / data has been relied upon by the Revenue as to what should be a normal range for generation of mill scale in a hot rolling process. No experiment has been done by the Revenue in support of their case that mill scale generation should be in the range of 1 to 3% only. There is no variation in the raw material stock and also no seizure of clandestinely removed finished goods. On the contrary Respondent has intimated to the Project Management Cell UNDP/GEP Project (Steel), GOI, Ministry of Steel that they are incurring 10% loss. In the absence of any evidence to the contrary it cannot be said that mill scale generation will always be 1 to 3% in the hot rolling processes. It has thus been rightly observed by the first appellate authority in Para 6 of the OIA dt 10/6/13 that onus to prove clandestine manufacture & clearances of finished goods lies with the department. Clandestine removal cannot be upheld on the basis of presumptions, assumptions & surmises - appeal rejected - decided against Revenue.
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2016 (12) TMI 1211
CENVAT credit - closure of factory - cenvat credit and finished goods transferred to Dharuhara unit - removal of scrap and discard of capital goods - manufacture of Industrial Gases namely, Nitrogen and Oxygen - Held that: - I find that the additional documents, with regard to scrap and discard of capital goods, produced before the Tribunal was not produced before the authorities below. Since the documents have to be verified at the original stage, I am of the view that the matter can be remanded to the Original Authority for verification of the documents/ records - If the original authority is satisfied that records/documents are proper, then he should allow the cenvat benefit and drop the duty demand. The submissions of the appellant that cylinder valves were procured during the period 2007-2008 on which cenvat credit has not been taken, is not appreciated at this juncture for the reason that no documents were produced to show that the valves cleared during the disputed period were procured prior to 2007-2008 and no Modvat/ Cenvat credit has been taken by the appellant. Since interest is compensatory in character, and in view of the fact that there is no loss of Revenue, I am of the opinion that confirmation of interest of ₹ 2,26,704/- and penalty of ₹ 500/- is not proper and justified. Thus, appeal filed against such demand is allowed and the impugned order is set aside. As regards the issue of passing the cenvat credit to the customers under cenvatable invoices issued by the dealer, I find that the appellant is registered under Central Excise Department both as a manufacturer as well as a first stage dealer. Since, the invoices were issued by the first stage dealer to the buyesr of the goods, and the said goods are not co-relatable with the goods manufactured by the appellant as a manufacturer, in my opinion, credit cannot be disallowed on the cenvatable invoices issued under the dealer registration certification. Appeal disposed off - matter on remand.
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2016 (12) TMI 1210
Whether the appellant have taken Cenvat credit rightly of ₹ 1,76,812/- on inputs namely new insulating oil (transformer oil) under the fact that the invoice was addressed to its head office and not to the factory address? - Held that: - it is not in dispute that the appellant have not received the inputs-transformer oil, the credit of which has been disputed. The learned Commissioner (Appeals) have also accepted the receipt of the input, but have only observed that it appears that the input have been received in the head office and not in the factory. There is no allegation of the revenue that the head office is a separate manufacturing unit. Accordingly I hold that the appellant is entitled to Cenvat credit of ₹ 1,76,812/- under the facts and circumstances - appeal allowed - decided in favor of appellant-assessee.
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CST, VAT & Sales Tax
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2016 (12) TMI 1203
Validity of order of assessment - Orissa Entry Tax Act - escapement of assessment of tax for the tax period from 1.4.2008 to 31.7.2015 - petitioner claim that no tax under the heading of “Odisha Entry Tax” has been evaded by it for the period in question, but the authorities without appreciating the defence statement filed by it, has passed order on the same date i.e. on 6.11.2015 putting liability of penalty on the petitioner - Held that: - Under the Taxation Rule the assessee is required to furnish self assessment and the authority is required to assess the same and there is no provision provided under the Act to communicate in case of acceptance of the assessment. Although under the provision of Orissa Value Added Act under Section 38 read with Section 7(10) each and every return in relation to any tax period furnished by a registered dealer shall be subject to scrutiny by the assessing authority to verify the correctness of the calculation, application of correct rate of tax and interest etc. and in case of any mistake, detected in course of scrutiny, the assessing authority shall serve a notice in the prescribed form as we find even from the provision of section 7 or subsection (11) and as such, if the authorities have not issued any notice under Section 7(11), then the assessment made by the registered dealer under the provisions of Section 9 will be said to be accepted. Whether the the order impugned of demand has been passed mechanically and without consideration of the second proviso to Rule 3(4) of the Rules? - Held that: - the second proviso stipulates a provision of relaxation in making payment of tax liability where declaration in Form E16 from the buying manufacturer is furnished. The contention of the petitioner is that while passing the order, the assessing authority has not appreciated the second proviso to Rule 3(4) of the Rules, 1999, but we are not in agreement with the said contention for the reason that the petitioner nowhere, has stated as to whether it has given declaration in Form E16 so as to avail the benefit as provided under the second proviso to Rule 3(4) of the Rules, 1999, which is the condition stipulated in the said statutory provision. Prior to 1.7.2012 reassessment for the period of five years was provided under the statute, but after 1.7.2012 the period of five years has been extended to seven years. Petition disposed off - petitioner free to approach appellate forum if he so wishes.
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Indian Laws
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2016 (12) TMI 1201
Exercise of the power conferred by Section 14 of SARFAESI Act - sale the land - Held that:- When the status of the party being a borrower and the property being a secured asset is questioned, this Court is of the opinion that the bar under Section 34 of the SARFAESI Act would not apply at all. A third party to a loan transaction who is actually in possession would be left with no remedy if the jurisdiction of the civil Court is held to be barred and no separate remedy is provided to him under the SARFAESI Act, as Section 17 thereof cannot be invoked by him. As the petitioner was protected by the interim order granted by this Court and the sale held by the 1st respondent company has not been confirmed pursuant thereto, the petitioner shall continue to have the benefit of the said interim order for a period of six weeks from today. In the meanwhile, it would be open to him to seek appropriate interim relief from the civil Court. We make it clear that we have not ventured into the merits of the matter and all issues are left open for adjudication by the civil Court. Subject to the above, the writ petition is dismissed leaving it open to the petitioner to approach the competent civil Court.
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