TMI Tax Updates - e-Newsletter
February 4, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
TMI SMS
Highlights / Catch Notes
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Income Tax:
Disallowance of loss - Merely because in a particular year, the loss was higher, that would not empower AO to reject the books of accounts, unless some specific defect is pointed out in it's maintenance - HC
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Income Tax:
Addition on the basis of statements made u/s 132 (4) during the course of search - once there is a clear admission, voluntarily made, on the part of the assessee, that would constitute a good piece of evidence at the hands of the Revenue. - HC
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Income Tax:
Unexplained Cash Credit - in case of capital contributed by a shareholder, the identity of the shareholder is only required to be proved - HC
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Income Tax:
Undisclosed sale - As the hundies were fake as such neither there was any actual sale nor actual profit was derived by the company on its sale as such addition of the so called profit was not justified. - HC
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Income Tax:
Bad debts versus Provisions for bad and doubtful debts - provisions of Sections 36(1)(vii) and 36(1)(viia) are distinct and independent items of deduction and operate in their respective fields - SC
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Customs:
Return of a sum of Rs.2 crores collected under coercion during the search conducted at the branch office - no tax could be collected from the assessee, without an appropriate assessment order being passed - HC
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FEMA:
It cannot be stated that mere denial of the request for cross-examination has led to breach of principles of natural justice and thus, warranting an intercession by this court under Article 226 of the Constitution of India. - HC
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Service Tax:
Rate of Service Tax - where the services of the CA's were rendered and invoices were issued before 01.04.2012, but the payment was received after the said date, the rate of tax will be 10% and not 12% - HC
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Service Tax:
CENVAT Credit - A reading of the amendment made to Rule 6 under Section 73 of the Finance Act, 2010, shows that the amendment procedure of the CENVAT Credit under Rule 6 was to have retrospective effect from September, 2004 - HC
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Service Tax:
Rate of service tax on Works Contract Service - the rate of tax applicable on the date on which the services were rendered would be the one that would be relevant and not the rate of tax on the date on which payments were received. - HC
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Central Excise:
Levy of interest for delayed payment of cess - there is nothing in the language of Section 15(4) of the OID Act from which it can be inferred that it authorises the Central Government to charge interest on the delayed payment of cess. - HC
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Central Excise:
Reversal of Cenvat Credit – Rule 5B - Written off input or capital goods – Reduction of the value of such spares for income-tax purpose, cannot be equated with writing off of the physical stock - HC
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Central Excise:
Assessable / Transaction Value – inclusion of Cost of Pre Delivery Inspection (PDI) and Free after sales services - circulars, is contrary to Section 4(3)(d), liable to be quashed and set aside - HC
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Central Excise:
CENVAT credit - assessee paid duty treating the activity as manufacture - revenue states no manufacturing activity and denied credit - in either event, no duty liability arose on the part of the appellant - HC
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Central Excise:
Change of ownership – Area-based exemption - Circular No. 960/03/2012-CX dated 17th February, 2012 - the petitioner would be entitled for the exemption. - HC
Articles
Notifications
Circulars / Instructions / Orders
Case Laws:
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Income Tax
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2013 (2) TMI 54
Disallowance made u/s.40(a)(ia) - CIT(A) deleted the addition - Held that:- Assessee had to make deduction before 31st March of the year in question and as long as such amounts were deposited before last date of filing of the return, requirements of law would be fulfilled. It was on this basis that tribunal was of the opinion that the assessee committed no wrong and was therefore, entitled to seek deduction of Rs.32,94,149/- from the income which amount the assesee had deducted from payments of contractors and had also deposited with Revenue before the last date of filing of the return - in favour of assessee.
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2013 (2) TMI 50
Disallowance of loss - average loss rate at 1.883% instead of the loss declared at 5.29% invoking sec 145(3) - Tribunal deleted the addition - Held that:- As no specific defect has been pointed out by AO as to why the books of accounts is liable to be rejected and therefore, the question of invoking the provision of Section 145(3) does not arise. And if the books of accounts cannot be rejected, there is no question of not accepting the loss declared by the assessee. In a business, sometimes the business runs in profit and sometimes runs in loss. Merely because in a particular year, the loss was higher, that would not empower AO to reject the books of accounts, unless some specific defect is pointed out in it's maintenance - in favour of assessee.
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2013 (2) TMI 49
Penalties u/s 271(1)(c) - deduction claimed u/s 80-IB was ultimately allowed at a lower level - Held that:- Mere making of a claim which is ultimately held not to be sustainable in law, would not amount to furnishing inaccurate particulars regarding the income of an assessee. In the present appeals it is only that the claims of deduction under Section 80IB have been downscaled. This, by itself, would not mean that it is a case of furnishing inaccurate particulars of income. See CIT v. Reliance Petroproducts (P) Ltd [2010 (3) TMI 80 - SUPREME COURT] - in favour of assessee.
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2013 (2) TMI 48
Addition on the basis of statements made u/s 132 (4) during the course of search - ITAT reversed the decision of CIT(A) and sustained the addition made by AO - Held that:- In the present case no material has been produced by the appellant/assessee to show that the admission made by him was incorrect in any way. On the other hand, it is the assessee who is insisting that it is for the department to corroborate the statement of admission made by him and until and unless the department corroborates the same, the statement cannot be relied upon. We are afraid that is not the correct position of law. The admission once made can certainly be retracted, if the circumstances permit, and it can also be shown to have been made under some mistake or to be otherwise incorrect. But, the onus would be on the maker of that admission. In this case it is the appellant/assessee who has admitted and surrendered a sum of Rs.1.75 crores as his undisclosed income. It was incumbent upon him to show that he had made a mistake in making that admission and that the said admission was incorrect. He had access to all the documents which has been seized in as much as the copies had been supplied to him. However, he did not produce anything to establish that the admission was incorrect in any way. That being the position, the appellant/assessee cannot resile from his earlier statement made on 10-11.11.2005 and 21.11.2005. Although, appellant submitted that the letter dated 09.01.2006 was not an afterthought in as much as the ground for the same had been made in the statement recorded on 21.11.2005. We do not agree with this submission of the learned counsel for the appellant. The reason being that there is no mention of any documents in the letter dated 09.01.2006. As decided in statements recorded u/s 132 (4) are clearly relevant and admissible and they can be used as evidence. In fact, once there is a clear admission, voluntarily made, on the part of the assessee, that would constitute a good piece of evidence at the hands of the Revenue. See Pullangode Rubber Products Co. Ltd. Vs. State of Kerala [1971 (9) TMI 64 - SUPREME COURT]. Thus issues raised pertain merely to appreciation of evidence, which the Tribunal has appreciated correctly - against assessee.
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2013 (2) TMI 47
Exemption u/s 80P(2) - denial as AO determined assessee's status as AOP - assessee as a cooperative society carrying on business of banking thus ITAT allowed the claim - Held that:- As decided in Commissioner of Income Tax, Ghaziabad v. Ghaziabad Zila Sahkari Bank [2013 (1) TMI 553 - ALLAHABAD HIGH COURT] & [2013 (1) TMI 552 - ALLAHABAD HIGH COURT] the cooperative banks who are carrying on banking business are entitled for deduction under Section 80P(2)(a)(i)
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2013 (2) TMI 46
Unexplained Cash Credit - failure to prove genuineness of transactions and creditworthiness of the shareholders - Held that:- As decided in CIT Versus Steller Investment Ltd [2000 (7) TMI 76 - SUPREME COURT] in case of capital contributed by a shareholder, the identity of the shareholder is only required to be proved - in favour of assessee.
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2013 (2) TMI 45
Undisclosed purchases of Gold and Silver ornaments - assessee did not file its return of income voluntarily but filed the same in response to notice issued u/s 148 - ITAT deleted the addition - Held that:- CIT(A) had accepted the explanation given by the assessee as in the sales tax assessment, the assessee had disclosed the purchases for the relevant assessment year to the extent of Rs. 3,12,817/- and for the previous years it was disclosed at Rs. 12,32,997/-. Thus, no adverse inference can be drawn that the assessee had made purchases worth Rs. 12,32,997/- during the assessment year in question, which finding has been upheld by the Tribunal. The findings recorded by the CIT(A) as upheld by the Tribunal, are based on appreciation of evidence and material on record and do not suffer from any legal infirmity. The order of the Tribunal does not give rise to any substantial question of law - in favour of assessee.
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2013 (2) TMI 44
Bogus share application money - ITAT deleted the addition - Held that:- Five companies subscribing the equity shares were identified and they had submitted their bank statements, cash extracts and returns filing receipts. As such identity of the share applicant companies and purchase of share had been proved by the assessee, thus as decided in CIT Versus Steller Investment Ltd [2000 (7) TMI 76 - SUPREME COURT] in case of capital contributed by a shareholder, the identity of the shareholder is only required to be proved - in favour of assessee.
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2013 (2) TMI 43
Undisclosed sale - ITAT deleted the addition on the ground that these were accommodation hundies while these were genuine sales - Held that:- This Court upheld the findings of the Tribunal that there was practice in the assessee company for raising temporary finance by raising fake hundies. As the hundies were fake as such neither there was any actual sale nor actual profit was derived by the company on its sale as such addition of the so called profit was not justified.
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2013 (2) TMI 42
Allocation of interest expenditure between two business of assessee - Whether the Tribunal was right in law in restoring the issue of allocation of interest expenditure and financial charges with the direction to the A.O. to follow the decision of the Special Bench of the Tribunal – Question to be decide - how the principal business of a company is to be ascertained - what is the principal business of a company Held that:- The general proposition that while remanding issues for fresh consideration by the A.O., the Tribunal should be very cautious in issuing directions, even if it is only for the guidance of the A.O. The direction should not give rise to a situation where the assessing authority is likely to feel incommoded by it The A.O. need not be confined to those guidelines only and can travel much beyond them, if the inquiry justifies it and can take into account all the attendant and relevant facts and circumstances of the case, without being confined to those guidelines – In favour of revenue
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2013 (2) TMI 41
Addition made u/s 2(24)(x) read with Section 36(1)(va) – Delay in payment of employees' contribution to PF – Disallowance u/s 43B read with section 36(1)(iv) – Delay in payment of employer's contribution of PF & ESI – Held that:- Following the decision in case of Alom Extrusions Limited (2009 (11) TMI 27 - SUPREME COURT) wherein it has been held that Second Proviso to Section 43B omitted by F.A, 2003 with effect from 1.4.2004 was clarificatory in nature and was to operate retrospectively. Once that is so, the respondent-assessee was entitled to deduction in respect of employer and employee's contribution to ESI and Provident Fund as the same had been deposited prior to the filing of the return u/s 139(1). In favour of assessee
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2013 (2) TMI 40
Bad debts versus Provisions for bad and doubtful debts - whether deduction of the bad and doubtful debts actually written off in view of Section 36(1)(vii) limits the deduction allowable under the proviso to the excess over the credit balance made under clause (viia) of Section 36(1) Held that:- Following the decision in case of Catholic Syrian Bank Ltd.(2012 (2) TMI 262 - SUPREME COURT OF INDIA) 36(1)(vii), that the assessee would be entitled to general deduction upon an account having become bad debt and being written off as irrecoverable in the accounts of the assessee for the previous year, while the proviso will operate in cases under clause (viia) to limit deduction to the extent of difference between the debt or part thereof written off in the previous year and credit balance in the provision for bad and doubtful debts account made under clause (viia). The proviso to Section 36(1)(vii) will relate to cases covered under Section 36(1)(viia) and has to be read with Section 36(2)(v) of the Act. Thus, the proviso would not permit benefit of double deduction, operating with reference to rural loans. Therefore, we hold that provisions of Sections 36(1)(vii) and 36(1)(viia) are distinct and independent items of deduction and operate in their respective fields Decided in favor of assessee.
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Customs
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2013 (2) TMI 53
Refund of Custom Duty - Assessable value - Ship for breaking – Cost of freight and insurance - Rule 10 of Customs Valuation (Determination of Price of imported Goods) Rules, 2007 – Section 130E of the Customs Act – Issue relating to rate of duty or the value of the goods - Held that:- Following the decision in case of NAVIN CHEMICALS MFG. & TRADING CO. LTD. (1993 (9) TMI 107 - SUPREME COURT OF INDIA) that the Supreme Court had the occasion to interpret the expression 'the determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment'. Therefore, appeal is dismissed only on the ground of maintainability without entering into the merits
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2013 (2) TMI 38
Writ of Mandamus - directing the department to return a sum of ₹ 2 crores collected under coercion during the search conducted at the branch office - Held that:- Perusal of the records available,it can be concluded that the collection of ₹ 2 crores by the Department, from the petitioner company, during the search conducted cannot be held to be valid in the eye of law as even though it has been stated, that a sum of ₹ 2 crores had been collected from the petitioner company, volunatiry, in respect of its Service Tax liability, it has not been shown that the petitioner was liable to pay Service Tax to the respondent department, relating to the works being carried on by it, during the course of its business. It is a well settled position in law that no tax could be collected from the assessee, without an appropriate assessment order being passed by the authority concerned and by following the procedures established by law. As in the present case no such procedures had been followed by the respondent department this Court finds it appropriate to direct the respondents to return the sum of ₹ 2 crores, collected from the petitioner within a period of ten days from the date of receipt of a copy of this order - writ petition allowed - in favour of assessee.
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Corporate Laws
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2013 (2) TMI 36
Cheque issued by the Client (the borrower) in a Factoring Agreement - Whether is towards liability or security? - Petitioner Company approached Respondent No.2 IFCI Factors Limited to grant it domestic factoring facilities who by an Agreement dated 18.02.2010 allowed it to the maximum pre-payment amount of Rs.5 crores. M/s. Koutons Retails India Limited (Koutons) was approved as debtor in terms of Clause 4 (i) of the Agreement & cheques for this sum of Rs. 3 crores issued by the debtors (Koutons) were dishonoured - Held that:- The tanner of the Agreement was that the amount was advanced by Respondent No.2 to the Petitioners, thus, the amount was borrowed by the Petitioners and it was at Petitioners’ behest and on their undertaking that cheques issued by the Petitioners’ debtor i.e. Koutons were accepted on the condition that it will be honoured on presentation. It was the term of the factoring agreement that in case the Petitioners’ debtor was unable to pay, the Petitioners would pay the amount (which obviously had been received by Petitioner No.1 from Respondent No.2). A personal guarantee for payment of all the amounts payable by the obligatee in respect of purchase of receivables was also given by Petitioner No.2 (Alok Aggarwal). Petitioner No.2 on behalf of Petitioner No.1 also undertook the payment of the outstanding pre-payments or for values of reassigned. He, further, undertook to keep sufficient balance in the account and to honour the cheques on presentation. Thus, factoring agreement along with undertaking and the Bond of guarantee clearly indicates that the cheques had not been given by the Petitioners as security but towards the liability which was co-extensive with that of the debtor. See Shree Bhagwati Apparels India Limited & Ors. v. M/s. Bibby Financial Services India Pvt. Ltd. [2013 (2) TMI 28 - PUNJAB AND HARYANA HIGH COURT] Thus a cheque issued towards debt which is due but whose only payment is postponed would attract Section 138 of the N.I. Act.
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FEMA
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2013 (2) TMI 39
Breach of principles of natural justice - non providing of cross-examine of the persons whose statements have been supplied - petitioners were charged with contravention of the provisions of Section 42 of the FEMA - Held that:- Neither the provisions of FEMA i.e., Section 16 which requires a reasonable opportunity to be given to the party against whom a complaint is instituted or the Adjudication Rules, in particular Rule 4 (5), oblige the adjudicating authority to grant as of right the opportunity to the noticees to cross-examine the persons who may have given statements explaining a transaction. The provisions of Section 16 of the FEMA and Rule 4 of the Adjudication Rules do not explicitly advert to this aspect, therefore, much would depend on the discretion of the adjudicating authority as he progress with the enquiry. See M/s. Kanungo and Company Vs. Collector of Customs and Others [1972 (2) TMI 35 - SUPREME COURT OF INDIA] On a fair reading of the statute and the Rules suggests that there is no duty of disclosure of all the documents in possession of the Adjudicating Authority before forming an opinion that an inquiry is required to be held into the alleged contraventions by a noticee. Even the principles of natural justice and concept of fairness do not require the statute and the Rules to be so read. Any other interpretation may result in defeat of the very object of the Act. Concept of fairness is not a one way street. The principles of natural justice are not intended to operate as roadblocks to obstruct statutory inquiries. Duty of adequate disclosure is only an additional procedural safeguard in order to ensure the attainment of the fairness and it has its own limitations. The extent of its applicability depends upon the statutory framework.Thus at this stage, it cannot be stated that mere denial of the request for cross-examination has led to breach of principles of natural justice and thus, warranting an intercession by this court under Article 226 of the Constitution of India.
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Service Tax
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2013 (2) TMI 55
Rate of Service Tax on Chartered Accountant and other services - Determination of rate of Service tax where services were provided before 1.4.2012 and payment is received on or after 1.4.2012 – Increase in rate of service tax w.e.f. 1.4.2012 from 10% to 12%. – Circular no. 154 and 158 states that rate of service tax will be 12% - Amendment to Point of Taxation Rules, 2011 - Constitutional validity. New Rule 7 with effect from 01.04.2012 does not provide for the determination of point of taxation in respect of services rendered by chartered accountants. Both the circulars which are impugned in the present writ petition proceed on the erroneous basis that Rule 7 inserted w.e.f. 01.04.2012 covers the services rendered by chartered accountants. Circular No.154 when it states that invoices issued on or before 31.3.2012 shall continue to be governed by Rule 7 as it stood before 01.04.2012 is erroneous because on and from 01.04.2012, the old Rule 7 was no longer in existence, having been replaced by new Rule 7. Circular No.158, insofar as it states that in the case of the eight specified services (which includes the services of chartered accountants), if the payment is received or made, as the case may be, on or after 01.04.2012, the service tax needs to be paid at 12% is again without any statutory basis. The new Rule 7 does not cover the services which were earlier referred to in Clause (c) of Rule 7 (including services of chartered accountants) as it existed up to 31.3.2012. The circular seems to have overlooked this crucial aspect. In the present case rule 4 is applicable - where the services of the chartered accountants were actually rendered before 01.04.2012 and the invoices were also issued before that date, but the payment was received after the said date, the rate of tax will be 10% and not 12%. The circulars have to be in conformity with the Act and the Rules and if they are not, they cannot be allowed to govern the controversy. – Thus circulars are quashed as being contrary to the Finance Act, 1994 and the Point of Taxation Rules, 2011 as Circular which is contrary to the Act and the Rules cannot be enforced [Commissioner of Central Excise, Bolpur vs Ratan Melting & Wire Industries - 2008 (10) TMI 5 - SUPREME COURT OF INDIA] – Decided in favor of assessee.
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2013 (2) TMI 52
Applicability of the rate of service tax on Works Contract Service defined u/s 65(105)(zzzza) - service tax employing the higher rate of tax of 4% and education cess on the said service tax element - assessee challenged the impugned instruction dated 28.04.2008 as per which the rate of service tax is to be determined based on the date of receipt of payment and not on the date of rendition of service - case of the petitioner is that the said services were rendered prior to 01.03.2008 - Held that:- The instruction dated 28.04.2008 clarified that the rate of 4% is applicable for the Works Contract Service where the payment for the service is received on or after 1.3.2008. The taxable event, in so far as service tax is concerned, is the rendition of the service. That being the position, the taxable events in the present writ petition had admittedly occurred prior to 01.03.2008. At that point of time the rate of service tax applicable in respect of the services in question was 2% and not 4%, which came into effect only on or after 01.03.2008. Thus it is not receipt of payment which is the taxable event but the rendition of service. It should also be mentioned that at that point of time neither was Rule 5B of the Service Tax Rules, 1994 in effect nor was Section 67A of the Finance Act, 1994 inasmuch as the latter provision was inserted in 2012 which came in effect from 28.02.2012. Furthermore, even Rule 4(a)(i) of the Point of Taxation Rules, 2011 was not applicable to the facts of the present case in as much as those rules also came into effect much later in 2011. As decided in Commissioner of Service Tax Vs. Consulting Engineering Services (I) Pvt. Ltd. [2013 (1) TMI 434 - DELHI HIGH COURT] wherein held that in the absence of any rules, we would have to examine as to what is the taxable event. In that context we had held that the taxable event as per the Finance Act, 1994 was the providing or rendition of the taxable services. This is exactly what the Supreme Court had held in Association of Leasing & Financial Service Companies (2010 (10) TMI 4 - SUPREME COURT OF INDIA). Therefore, the rate of tax applicable on the date on which the services were rendered would be the one that would be relevant and not the rate of tax on the date on which payments were received. The instruction dated 28.04.2008 which is contrary to the law declared by the Supreme Court in Commissioner of Central Central Excise, Bolpur Vs. Ratan Melting & Wire Industries [2008 (10) TMI 5 - SUPREME COURT OF INDIA] is clearly invalid - writ petitions allowed in favour of assessee.
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2013 (2) TMI 51
Non deposit of service tax - Held that:- The liability to pay service tax was to be determined on the gross amount charged by the appellant from its client for services rendered in connection with security and, that having been done, there is no scope of interference. In the event, tax determined is paid within a period of one month from today, no penalty shall be levied, inasmuch as, appellant was genuinely confused having regard to imposition of obligation upon it to pay the minimum wages to the personnel hired by it.
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2013 (2) TMI 35
Applicability of Amendment to Rule 6 of the CENVAT Credit Rules, 2004 vide Finance Act, 2010 - whether Appellate Tribunal was correct in in applying it for the period from 10th September 2004 to 31st March 2008 whereas the period is dispute being April 2008 to December 2008 - Held that:- A reading of the amendment made to Rule 6 under Section 73 of the Finance Act, 2010, shows that the amendment procedure of the CENVAT Credit under Rule 6 was to have retrospective effect from September, 2004. The said amendment is provided for by insertion under Rule 6(6). Thus the said Rule covers the case of the assessees in whose cases there existed a dispute relating to adjustment of credit on inputs or input services used in or in relation to exempted final products and the period of dispute related to the period beginning from 10th September, 2004 to 31st March 2008. In such cases, as per Section 73(2) of the Finance Act, 2010, the assessee has to make an application to the Commissioner of Central Excise along with documentary evidence and a certificate from the Chartered Accountant or a Cost Accountant, certifying the amount of input credit attributable to the inputs used in or in relation to the manufacture of exempted goods within a period of six months from the date on which the Finance Bill, 2010 received the assent of the President. Thus, the Finance Act, effective from 08.05.2010 to 07.11.2010 - the six months period, expired on 07.11.2010. The period covered in this appeal is from April, 2008 to December, 2008. Admittedly, the Revenue did not raise any question as regards the non-compliance of Sub Rule (3A) of Rule 6 of the CENVAT Credit Rules before the Tribunal. The only question that was raised before the Tribunal being on the entitlement of the assessee on the reversal of credit attributable to the inputs used in the manufacture of exempted products,no justification to grant the relief sought for in the appeal. For the purpose of this case, it is not necessary at all for us to consider Section 73(2) of the Finance Act, 2010 at all. Consequently, the order of the Tribunal is confirmed.
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Central Excise
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2013 (2) TMI 37
Levy of interest for delayed payment of cess - Whether in the absence of levy provisions under the Oil Industry (Development) Act, 1974,(OID) the Revenue can apply the provisions of Section 11-AB of the Central Excise and Salt Act, 1944 and demand interest? - Held that:- As decided in Khemka & Co.'s case (1975 (2) TMI 91 - SUPREME COURT OF INDIA) the provision in the State Act imposing penalty for non-payment of income-tax within the prescribed time is not attracted to impose penalty on dealers under the Central Act in respect of tax and penalty payable under the Central Act. There is no lack of sanction for payment of tax. Any dealer who would not comply with the provisions for payment of tax, would be subjected to recovery proceedings under the Public Demands Recovery Act. A penalty is a statutory liability. The Central Act contains specific provisions for penalty. Those are the only provisions for penalty available against the dealers under the Central Act. Each State Sales Tax Act contains provisions for penalties. It is rightly said that those provisions cannot apply to dealers under the Central Act because the Central Act makes similar provisions. The Central Act is a self-contained code which by charging section creates liablity for tax and which by other sections creates a liability for penalty and impose penalty. Section 9(2) of the Central Act creates the State authorities as agencies to carry out the assessment, reassessment, collection and enforcement of tax and penalty by a dealer under the Act. Thus respectfully follow the decisions of in Khemka & Co.'s case (supra) and India Carbon's case 1997 (7) TMI 566 - SUPREME COURT OF INDIA) hold that interest can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax makes a substantive provision in this behalf. Since the provisions of the OID Act do not contain any provision for levy of interest on delayed payments of cess, the respondents are not entitled to demand that the petitioner pays interest on the alleged delayed payments of cess. Also in complete agreement with the decision in Devi Dass Gopal Krishan's case (2000 (12) TMI 108 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH) there is nothing in the language of Section 15(4) of the OID Act from which it can be inferred that it authorises the Central Government to charge interest on the delayed payment of cess. Section 11AA & AB was inserted in the 1944 Act with effect from 26.5.1995 by amending Act No. 22 of 1995. However, no corresponding amendment was made in Section 15(4) of the OID Act so as to empower the Central Government to charge interest in the case of default in the payment of cess.Therefore, Section 11AA/11AB of the 1944 Act cannot be invoked by the respondents for charging interest on the delayed payment of cess by the petitioner - in favour of assessee.
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2013 (2) TMI 34
CENVAT Credit – Rule 6 of CCR, 2002 - Maintence of separate account – Reversal of CENVAT Credit - Clearance of such final product under notification No.29/2004 and 30/2004 - Assessee receives either total or conditional/partial exemption from payment of duties - Assessee utilized duty paid inputs for production of exempt as well as non-exempt final products – Department argued that reversal of credit must be before utilization of the input - the assessee is not entitled to retain Cenvat Credit on the inputs used in manufacturing of final product, which is exempt from payment of duty Held that:- Manufacturing not intending to maintain separate accounts had to follow the procedure provided in Rule 6(3), sub-rule (a) or (b) as the case may be. In cases falling under Rule 6(3)(a), there was only requirement of payment of amount of CENVAT credit attributable to inputs used in or in relation to manufacture of the final product at the time of clearance from the factory. It was only under subrule (3)(b) which does not cover the cases falling under Rule 6(3)(a) that the manufacturer had to pay a flat rate of duty. In all cases falling under Rule 6(3)(a) the only requirement was that the manufacturer should pay an amount equivalent to Cenvat Credit attributable to inputs used in the manufacture of such exempted final product The exempt product manufactured by the assessee fell in sub-clause (vi) of Rule 6(3)(a). The assessee was therefore entitled to avail Cenvat Credit on the duty paid on the final product as long as in respect of inputs used in manufacturing of exempt goods, he followed the procedure laid down in Rule 6(3)(a). The contention of the Revenue that such reversal of the credit must happen before utilisation of inputs in the manufacture of exempt goods, would not stand in view of the retrospective amendment in Rule 6, which, as noted above, by virtue of introduction of sub-rule (7) permitted the assessee to pay the Cenvat Credit at the time of or even after clearance of the goods. In favour of assessee
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2013 (2) TMI 32
Reversal of Cenvat Credit – Rule 5B of the CCR, 2004 - Written off input or capital goods or any provision thereof – Whether writing off certain inputs either partially or fully in its books of accounts for the income-tax purpose, also required to reverse CENVAT credit taken on such inputs – Rule 57A – Circulars dated 22-2-1995 and 16-7-2002 Held that:- There is significant difference in the accounting approach for the income-tax purpose and the approach for stock maintenance for the purpose of manufacturing activities relevant for the question of excise. Merely because the value of goods diminished in the books of accounts of the assessee would not by itself permit the Department to insist on reversal of the credit particularly when such goods were still available in the factory in usable condition Reduction of the value of such spares (inputs) for income-tax purpose, cannot be equated with writing off of the physical stock. The accounts maintained by the manufacturer for the income-tax purpose stand on an entirely different footing and would have to follow the accounting standards prescribed under the law. If under such accounting principles, the assessee is entitled to diminish the value of a certain stock held over a period longer than the specified period, the same has no correlation with the availability of physical stock insofar as the manufacturing activity is concerned In absence of such statutory provisions, merely on the strength of the Board's circulars, it would not be open for the Department to enforce reversal of CENVAT credit. In favour of assessee
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2013 (2) TMI 31
Removal of Input - CENVAT credit under rule 57A – Rule 57F - Assessee is engaged in the manufacturing activity of “P.D. Pumps” - Department argue that assessee did not carry out any manufacturing activity on the PD pumps purchased exclusively from its sister concern before clearance - therefore, required to reverse such credit – Assessee contended that they had carried out manufacturing activity on the pump sets purchased by it and on the value addition had also paid excise duty – Assessee paid duty when they cleared final output and such duty was more than the credit taken Held that:- Following the decision in case of RICO AUTO INDUSTRIES LTD. (2006 (12) TMI 326 - CESTAT, NEW DELHI) that the rule contemplated removal of inputs in respect of which a credit of duty had been allowed where they are not used in relation to manufacture of final products with a condition that on their removal, the excise duty shall be paid to the tune of the credit availed under Rule 57A for such inputs. Even if were to be held that no process was undertaken on these goods, then obviously there was no liability to petitioner pay excise duty on the footing that these goods were manufactured by the appellant, because if they were already brought as inputs from other manufacturer and no further process was undertaken, they would obviously be not liable for payment of excise duty on the ground that manufacturing process was undertaken. Therefore, in either event, no duty liability arose on the part of the appellant In favour of assessee
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2013 (2) TMI 30
Change of ownership – Area-based exemption - Circular No. 960/03/2012-CX dated 17th February, 2012 - Petitioner company took over the business as a going concern with effect from 1-7-2011 - Wish to continue to avail exemption under Central Excise Notification No. 50/2003-CE dated 10-6-2003 – Held that:- Petitioner has already exercised his option in writing to avail of the benefit of exemption Notification before effecting the first clearance, as mentioned therein, the petitioner would be entitled for the exemption. In favour of assessee
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