TMI Tax Updates - e-Newsletter
February 4, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Recall of order u/s 254 - Rectification of mistake - It is not expected from a litigant to pick a hole here and there in an order/judgment by quoting one word or the other - AT
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Income Tax:
Whether the assessee (donor) is entitled to deduction under section 80G(2)(d) even if the conditions u/s 80G(5C)(iii) have not been fulfilled by the trust - held yes - HC
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Income Tax:
Depreciation - Whether the chlorine toners used by the assessee were gas cylinders Gas cylinders including valves and regulators were entitled to depreciation at the rate of 60% - HC
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Income Tax:
TDS u/s 194C - transporting the employees - assessee had not assigned it to a subcontractor - The assessee had merely hired the vehicles for performing its part of the contract - not liable to TDS - HC
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Income Tax:
Interest has to be disallowed under section 36(1)(iii) in case advances have no direct nexus of the funds between borrowings of the funds and diversion thereof for non-business to sister concern - HC
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Income Tax:
Application for exemption u/s 10(23C)(vi) - existence of surplus / profit - it will not cease to be one existing solely for educational purposes since the object is not one to make profit - HC
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Customs:
Where an importer has entered into a contract in good faith, at a time when goods were importable freely, without restrictions; and had no means to forseeing restrictive changes in the import policy, there is no justification for imposing a redemption fine - AT
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Customs:
Refund - import of capital goods under EPCG scheme - the depreciation of duty paid (though it was not payable) can only reflect on his profitability and it cannot be taken as a proof that he has passed on the incidence to the foreign buyer - AT
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Customs:
Unjust enrichment - Section 27(2) of the Customs Act, 1962 - the question of providing unjust enrichment would not arise in the case of refund of cash securities - AT
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Corporate Law:
Petition for restoring the name of company for continuing suit against the company - Even if the petitioner cannot be considered as a member of the company, he is certainly a creditor who can file the petition. - Name restored - HC
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Service Tax:
Business Auxiliary Service - Job Work - Activity of powder coating and chrome plating - the processes undertaken by the appellant amounts to manufacture - not liable to service tax - AT
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Service Tax:
Whether the table space provided by the Automobile dealers to financial institutions fall under Business Auxiliary service or not - scrutiny of further facts necessary to understand the transaction - larger bench - AT
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Service Tax:
Denial of benefit of Cenvat credit - Service Tax paid by way of supplementary invoice prima facie credit not to be denied - AT
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Central Excise:
Reversal of CENVAT Credit - expression on the date of such removal is referable to the rate applicable to such goods and it cannot be understood to mean that the duty should be paid at the time of removal in terms of substituted provisions - HC
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Central Excise:
Re-labelling of products - inscription of the name and other details on imported goods - Miscellaneous Chemical Products - whether amounted to manufacture - Held No - HC
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Central Excise:
allegations of clandestine removal are serious allegation and cannot be upheld on the basis of photocopies of some of the invoices, supplied by an in un-identified informer - AT
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Central Excise:
Availment of CENVAT Credit - C Only on the basis of statement of some of the transporters, the huge credit is sought to be disallowed whereas the statements are in isolation with no corroboration. - AT
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Central Excise:
Rejection of rebate claim - Rule 18 - goods not exported within 6 months - The non-compliance of a substantive condition of Notification cannot be treated as a procedural lapse to be condoned - CGOVT
Articles
Circulars / Instructions / Orders
News
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Government of India announce the sale of Three dated securities for Rs. 10,000 crore on February 7, 2014
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CCI Draws Attention of Associations of Chemists, Druggists, Stockists, Wholesellers and Manufacturers to the Anti-Competitive practices in the Pharmaceutical Industry
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Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others Palm Oil, Crude Palmolein, RBD Palmolein, Others Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Silver and Gold Notified
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RBI Reference Rate for US $ and Euro
Case Laws:
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Income Tax
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2014 (2) TMI 89
Recall of order u/s 254 of the Act - Rectification of mistake apparent from record Held that:- It is not expected from a litigant to pick a hole here and there in an order/judgment by quoting one word or the other assessee argued that picking up one word or the other from the order of the Tribunal instead of reading the complete verdict - the Tribunal has finally directed that the assessee be given one more opportunity to produce the parties before the AO for examination thus, it would be wrong on the part of the assessee to plead that the Tribunal had directed to produce three parties only - An order has to be read fully and then its intent is required to be gathered instead of harping upon a single word or sentence thus, there was no mistake, what to say an apparent mistake in the order of the Tribunal Decided against Assessee.
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2014 (2) TMI 88
Addition made u/s 68 of the Act Unexplained cash credits Onus to prove Violation made 69 of the Act - Admission of additional evidences Held that:- The AO clarified that most of the details called for had not been filed by the assessee and in spite of repeated opportunities granted to the assessee as mentioned in the assessment order - The CIT(A) had not given any opportunity or sought any remand report from the A.O. and without affording any opportunity to the A.O. he had allowed the appeal - It is evident from the copy of letters that the appellant had not furnished any confirmation before the AO Further, if any, loan is received from the banking channel, in absence of confirmation, the creditworthiness of the depositors cannot be ascertained - The Counsel from both the sides fairly accepted that the matter may be set aside to the CIT(A) for de novo the order fo the CIT(A) set aside Decided in favour of Revenue.
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2014 (2) TMI 87
Deduction u/s 80IA/80IB of the Act Held that:- The CIT(A) has ascertained the factual aspect of the case and found that there was manufacturing activity carried out by the assessee - the AO has come to the conclusion that there was no manufacturing activity carried out by the assessee and against this finding CIT(A) noted that the assessee has given evidence with regard to purchase of machinery at the factory at Silvassa, evidence in the form of number of workers employed and the entire manufacturing account - there is nothing on record brought out by the AO to disprove that no manufacturing activity actually took place at Silvassa - The assessee was able to show the Sale Tax Returns filed with Silvassa Sales Tax Office in support of his arguments. The assessee has furnished the purchase bill for machinery, evidence of supply of raw material at the factory at Silvassa, records filed with the statutory authorities, registration with the Directorate of Industries as small scale industry - the AO was directed to allow the deduction claimed by the assessee for all the four assessment years - There was no reason to interfere in the findings of the learned CIT(A) - the CIT(A) has allowed deduction under Section 80IA/80IB on the amount received against manufactured items, however, learned CIT(A) has denied deduction under Section 80IA/80IB on the ground of interest earned on fixed deposit - The assessee has not challenged the denial of deduction in respect of interest as the assessee has challenged through its cross objections only in respect of reopening of the assessment Order of the CIT(A) upheld Decided against Revenue.
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2014 (2) TMI 86
Validity of Re-Assessment order Addition made on labour charges - Held that:- From the contents of letter filed by the assessee disputing the initiation of re-assessment proceedings that the assessee, at the time of making original assessment, filed requisite details of labour charges claimed by the assessee in the profit and loss account - Assessee also filed confirmation letters to whom labour charges were paid during the financial year relevant to the assessment year under consideration - Thus, assessee made full disclosure of the labour charges paid at the time of original assessment made by AO - assessee also deducted TDS on the job-work charges carried out by Shri Dhirubhai Sambhubhai Diyora and assessee filed TDS return with the department thereby disclosing relevant information - The decision in Gujarat Power Corpn. Ltd. V/s ACIT [2012 (9) TMI 69 - Gujarat High Court] followed - where the Assessing Officer during scrutiny assessment, notices a claim of exemption, deduction or such like made by the assessee, having some prima facie doubt raises queries, asking the assessee to satisfy him with respect to such a claim and thereafter, does not make any addition in the final order of assessment, he can be stated to have formed an opinion, whether or not in the final order he gives his reasons for not making the addition. Initiation of re- assessment proceedings cannot be said to be valid - the assessment made by AO cannot be said to be valid Since the assessment order is not valid, the grounds of appeal taken by the department disputing deletion of the addition made by the AO do not require adjudication as the addition do not survive - Decided in favour of Assessee.
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2014 (2) TMI 85
Deletion made u/s 41(1) of the Act - Cessation of liability Notice issued u/s 133(6) of the Act - Held that:- The closing balance cannot be considered as remission or cessation by the party, even after three years of outstanding balance, so as to qualify as income u/s 41(1) when the assessee is paying the liability and there is nothing to indicate, even remotely, that the creditor has given up his claim - The assessee was supposed to pay Rs.8.52 lakh to the party, out of which a sum of Rs.1.45 lakh has paid either by cheque or by cash - When the position is so and the assessee is regularly making payment to such party, there can be no question of treating the closing balance as income u/s 41(1) of the Act - the amount in respect of these four parties cannot be considered as income u/s 41(1) of the Act - We, therefore, upheld the impugned order on this issue Decided against Revenue.
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2014 (2) TMI 84
Re-opening of assessment Held that:- The assessee had accepted the reasons for reopening and agreed for completion of the assessment before the assessing officer as evidenced from the observations made by the assessing officer now, he cannot re- agitate the matter once again either before the CIT(A) or before the ITAT order of the CIT(A) upheld. Claim of exemption u/s 54 of the Act Building fit for human habitation or not - Held that:- From the above report it appears that work relating to construction of lawn in front of the house was in progress - The entire work appears to be completed within 10 to 20 days - The Architect has also given certificate with regard to the completion of the building - However, there is no finding by both the authorities below as to whether the building was fit for human habitation or not - it is necessary to examine whether the construction completed within the specified period is fit for human habitation or not - Since lower authorities have not examined and recorded finding to this effect, thus,the matter needs to be reconsidered order set aside and the matter remitted back to the AO for fresh adjudication Decided in favour of Assessee.
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2014 (2) TMI 83
Adjustment to Arms length price u/s 92 of the Act - International transaction with Associated enterprises Selection of Comparables Held that:- The arithmetic mean of profit margin to cost of the remaining comparable companies chosen by the TPO after excluding the aforesaid companies is only 7.97% - The profit margin to cost of the Assessee is 14.91% which is much higher than the arithmetic mean of the comparable companies chosen by the TPO (after exclusion of some of the comparable companies chosen by the TPO for reasons set out in the earlier paragraphs) - no adjustment to ALP is called for - the addition sustained by the DRP deserves to be deleted and is accordingly directed to be deleted the arguments were made on market risk adjustments and also working capital adjustment - the arithmetic mean of the comparables is less than the margin of the assessee. Deduction u/s 10A of the Act Expenses incurred in foreign currency for travelling and internet connection charges Held that:- The decision in CIT v. Tata EIxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] followed - while computing deduction under section 10A of Act, expenditure incurred by the assessee, if excluded from the export turnover should also be excluded from the total turnover the AO is directed to reduce the expenses incurred for travelling and internet connection charges from the export turnover as well as the total turnover, while computing deduction u/s. 10A of the Act Decided in favour of Assessee.
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2014 (2) TMI 82
Penalty u/s 271(1)(c) of the Act Survey conducted u/s 133A of the Act Held that:- There cannot be any penalty on income which is declared in a return of income - When an income which is ultimately brought to tax is declared in a return of income, there can be no question of treating the Assessee as having "concealed particulars of income or furnished inaccurate particulars of income" - The starting point of determining concealment for imposing penalty is the return of income - If the return of income declares income which is ultimately brought to tax there can be no complaint by the revenue that the Assessee is guilty of "concealing particulars of income or furnishing inaccurate particulars of income". There can be no concealment or non-disclosure, as the assessee had made a complete disclosure in the IT return and offered the surrendered amount for the purposes of tax and therefore no penalty under s. 271(1)(c) could be levied - Decision to initiate penalty proceedings is taken while making assessment order - the expression 'in the course of any proceedings under this Act' cannot have the reference to survey proceedings - It necessarily follows that concealment of particulars of income or furnishing of inaccurate particular of income by the assessee has to be in the IT return filed by it - there cannot be any penalty only on surmises, conjectures and possibilities - Sec. 271(1)(c) has to be construed strictly - Unless it is found that there is actually a concealment or non-disclosure of the particulars of income, penalty cannot be imposed - There is no such concealment or non-disclosure as the assessee had made a complete disclosure in the IT return and offered the surrendered amount for the purposes of tax - Relying upon Commissioner of Income-tax Versus SAS Pharmaceuticals [2011 (4) TMI 888 - Delhi High Court] There can be no justification for imposition of penalty on the income offered in the return of income by the Assessee, because there cannot be any penalty on income which is declared in a return of income Decided in favour of Assessee.
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2014 (2) TMI 81
Deduction u/s 10B of the Act nature of business Job work OR Manufacturing process cutting and polishing of granite - Held that:- The decision given by the tribunal in the earlier assessment year of the same assessee is followed - The claim of exemption under section 10B has been decided in favour of the appellant for the Assessment Years 2006-07 & 2007-08 Further relying upon Income Tax Officer, Udaipur Versus M/s Arihant Tiles & Marbles (P) Ltd [2009 (12) TMI 1 - SUPREME COURT] - the appellant is entitled to the claim of exemption under section 10B thus, The Assessing Officer is directed to allow the claim under section 10B of the Act decided against Revenue.
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2014 (2) TMI 80
Unexplained credit - Held that:- The assessee received advance money for distribution of rights - The assessee was consistently following mercantile system of accounting, wherein advances received for distribution are treated as liabilities in the balance sheet in the year of receipt and those advances are offered as income in the year of distribution of film rights - The film was not released in the previous year, therefore, the assessee could not give rights to Shri.O.G. Krishnam Raju during the previous year and no income arose to the assessee during the previous year - This film was released in the succeeding previous year and the exhibition rights were given in favour of Shri. O.G. Krishnam Raju - Decided against Revenue.
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2014 (2) TMI 79
Depreciation on temporary structures of amul parlours Held that:- As per the agreement between the assessee and AUDA - The assessee had a limited right to use the land for the limited purpose and the limited period Relying upon the decision in Commissioner of Income tax v. Madras Auto Service (P) ltd. [1998 (8) TMI 1 - SUPREME Court] - The asset which was created belonged to somebody else and the company derived an enduring business advantage by expending the amount. In all these cases, the expenses have been looked upon as having been made for the purpose of conducting the business of the assessee more profitably or more successfully - The expenditure on such asset should be looked upon as revenue expenditure. Whether the assessee is entitled to deduction under section 80G(2)(d) even if the conditions under section 80G(5C)(iii) have not been fulfilled by the trust Held that:- The donee did not utilise the funds or transfer it to the Prime Minister Reliefs Fund as provided in subsection (5C) of section 80G - By virtue of combined reading of section 80G (5C) read with explanation 2 read with subsection( 3) of section 12, a situation would arise where if any breach of conditions contained in subsection (5C), the effect thereof would be on the donee trust not fulfilling those conditions - As provided in subsection( 3) of section 12, in terms of clause(1) of explanation 2, it would not have any effect on the deduction to which the assessee is otherwise entitled to on such donation - The tribunal has held in the impugned judgement that if the donor is also taxed (along with taxing the same amount in the hands of donee), there would be a case of double taxation Decided against Revenue.
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2014 (2) TMI 78
Reference to DVO - Held that:- As per section 55A(a) - The Assessing Officer is entitled to make the reference to the Valuation Officer in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by the Registered Valuer, if the Assessing Officer is of the opinion that the value so claimed is less than the fair market value - Relying upon the decision in Hiraben Jayantilal Shah vs. Income-tax Officer [2008 (4) TMI 292 - GUJARAT HIGH COURT] - The assessee had relied on the estimate made by the Registered Valuer for the purpose of supporting its value of the asset - Any such situation would be governed by clause (a) of section 55A of the Act and the Assessing Officer could not have resorted to clause (b) - Decided against Revenue.
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2014 (2) TMI 77
Depreciation - Whether the chlorine toners used by the assessee were gas cylinders Held that:- Gas cylinders including valves and regulators were entitled to depreciation at the rate of 60% - Any vessel that contains such gas and is used either for transportation or storage would satisfy the requirement of being a gas cylinder - Chlorine toners used by the assessee are essentially and in substance nothing but gas cylinders - The Ld. CIT(A) has rightly treated them as gas cylinders and accordingly allowed depreciation at the rate of 60% - Certificate of the experts also indicated that the same was a gas cylinder Relying upon the decision in Commissioner of Income-Tax vs. Goyal MG Gases Ltd. [2006 (1) TMI 48 - DELHI HIGH COURT] - Decided against Revenue. Depreciation on computers installed in factory premises Held that:- There cannot be universal preposition of law that computers are used only in offices and not for manufacturing activities - There may be number of ways in which installation of a computer may enhance and improve the efficiency - There is nothing on record to suggest that the computers were part of the plant and machinery - CIT(Appeals) and the Tribunal treating the same as simplicitor computers and granting depreciation at the rate prescribed under the law calls for no interference Decided against Revenue.
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2014 (2) TMI 76
Deduction under section 80P(2) - Held that:- By virtue of newly amended subsection(4) of section 80P inserted with effect from 1.4.2007 by Finance Act, 2006 - The provisions of section 80P shall not apply in relation to any cooperative bank other than a primary agricultural credit society or a primary cooperative agricultural and rural development bank - As per CBDT circular No.133 of 2007 dated 9.5.2007 - Sub-section(4) of section 80P will not apply to an assessee which is not a cooperative bank - Respondent assessee is admittedly not a credit cooperative bank but a credit cooperative society - Decided against Revenue.
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2014 (2) TMI 75
Addition u/s 68 - Held that:- The tribunal has appreciated the facts of the case correctly - the donors were not related to the assessee, they were mainly stated to be belonged to the same community and there was no occasion for the donors to give such sizable gifts to the assessee - The donors didnot have the creditworthiness to advance such huge money to assessee - Relying upon the decision in CIT v. P. Mohanakala [2007 (5) TMI 192 - SUPREME Court] - In cases where explanation offered by the assessee about the nature and source of the sums found credited in the books is not satisfactory, there is prima facie, evidence against the assessee - The burden is on the assessee to rebut the same and if he fails to rebut it, it can be held against the assessee that it was a receipt of an income nature - Even if money came by bank cheques and were credited through banking transactions by itself was not of any significance - The assessee failed to render an explanation for such sizable cash credits in the accounts - Decided against assessee.
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2014 (2) TMI 74
TDS u/s 194C - Disallowance for non-deduction of tax at source - transporting the employees of Institute of Plasma Research - Held that:- Relying upon the decision in CIT v. Prashant H. Shah [2013 (1) TMI 592 - GUJARAT HIGH COURT] - For application of section 194C(2) of the Act what was necessary was a relationship between the contractor and sub-contractor and not merely be hiring of an agency by the contractor during the course of execution of the work - In the case of assessee such vital requirement of relationship of a contractor and subcontractor between the assessee and the transporters was missing - The Revenue did not bring out any material to establish that the owner of the vehicles performed the work of transportation - The entire task of transportation of employees and the guests was to be performed by the contractor The assessee had not assigned it to a subcontractor - The assessee had merely hired the vehicles for performing its part of the contract with IPR - The work of transportation or part thereof was assigned to a subcontractor was rightly not accepted by the Tribunal - The Tribunal, was perfectly justified in holding that liability to deduct tax at source in the present case do not arise - Decided against Revenue.
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2014 (2) TMI 73
Interest paid for business purpose u/s 36(i)(iii) - Held that:- Only the assessee company and not the other two guarantors has advanced the interest-free loan to the sister-concern - No commercial expediency was involved in the advancing of interest-free loan to the sister concern - It was simply advanced to reduce the profitability of the concern as only the assessee was the only profit-making concern - Relying upon the decision in CIT v. Abhishek Industries Ltd. [2006 (8) TMI 123 - PUNJAB AND HARYANA High Court] - Interest has to be disallowed under section 36(1)(iii) in case advances have no direct nexus of the funds between borrowings of the funds and diversion thereof for non-business - Decided against assessee.
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2014 (2) TMI 72
Application for exemption u/s 10(23C)(vi) - Held that:- Relying upon the decision in Aditanar Educational Institution v. Addl. CIT [1997 (2) TMI 3 - SUPREME Court] - The applicability of section 10(22) should be evaluated or investigated every year and only if it is found that the institution exists for educational purposes in the relevant year and even if any profit results which is only incidental to the purpose of education, the income would be exempt - After meeting the expenditure, if any surplus results incidentally from the activity lawfully carried on by the educational institution, it will not cease to be one existing solely for educational purposes since the object is not one to make profit - The decisive or acid test is whether on an overall view of the matter, the object is to make profit - In evaluating or appraising the above, one should also bear in mind the distinction/ difference between the corpus, the objects and the powers of the concerned entity - Decided in favour of petitioner.
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2014 (2) TMI 71
Concealment of income - Held that:- The assessee has produced certificate from the competent authority who has issued a certificate that the distance of the impugned property is more than 8 kms. from the municipal limit of Sonepat and the District Town Planner is a competent authority to issue a certificate - The Government authority who has issued a certificate to the assessee is a competent authority to issue the certificate - Penalty cannot be levied - The Assessing Officer treated the penalty proceedings as mere continuance of the assessment proceedings and did not bother to make its penalty proceedings as self-contained one, as such penalty order is not sustainable - The Assessing Officer is duty bound to consider the entire material at the time of levying the penalty afresh, independently of the assessment proceedings to levy penalty - This has not been done by the Assessing Officer - As such, penalty cannot be sustained - Relying upon the decision in CIT v. Reliance Petroproducts P. Ltd. [2010 (3) TMI 80 - SUPREME COURT] - Mere making of a claim which was ultimately found to be unsustainable may not by itself amount to furnishing of inaccurate particulars regarding the income - Decided against Revenue.
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2014 (2) TMI 70
Disallowance made u/s 14A of the Act r.w. Rule 8D of the Rules Whether payment of interest to broking companies and NBFC excludable or not Held that:- THe CIT(A) has rendered a well-considered and well discussed decision after considering each and every aspect of the matter involved in the disallowance to be made u/s 14A of the Act by applying Rule 8-D - He has identified the common expenses which were partly attributable to the earning of exempt dividend income and accordingly has quantified the disallowance to be made out of the said expenses on proportionate basis - He has also directed the A.O. to verify the stand of the assessee of having incurred the interest expenses in relation to the activity of trading in shares and to apply the formula given in Rule 8-D for the purpose of making disallowance out of interest on such verification - He has also rightly rejected the contention of the assessee that the average value of investment in its books is nil after having found the same to be in-correct Relying upon Income-tax Officer, Ward 6(2) (2), Mumbai Versus Daga Capital Management (P.) Ltd. [2008 (10) TMI 383 - ITAT MUMBAI ] - the decision rendered by the CIT(A) on the issue is well founded and the revenue has not been able to raise any material contention to dispute this position order of the CIT(A)0 upheld Decided against Revenue.
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Customs
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2014 (2) TMI 69
Import of sandalwood - Import made without obtaining proper license - Confiscation of goods - Goods released on bank guarantee - Bank guarantee encashed - Imposition of redemption fine - Held that:- proforma invoice is dated 30.03.2006, the remittance for the value of sandalwood to be imported was also made on 30.03.2006; the customs invoice, the fumigation certificate and the Bill of lading, though issued later establish a concretised agreement for export of sandalwood prior to 07.04.2006 (when the restriction on import of sandalwood were issued by the policy circular). The agreement to import the sandalwood thus got crystallised prior to 07.04.2006 - since the import of the sandalwood was bonafide, there is no justification for imposing a redemption fine or confiscating the goods; and that existence of a concluded contract could be inferred from other circumstances, even in the absence of an irrevocable letter of credit. The material on record establishes on the basis of the relevant circumstances that an agreement between the parties for the export and import was entered into and had crystallised prior to the change in the policy - where an importer has entered into a contract in good faith, at a time when goods were importable freely, without restrictions; and had no means to forseeing restrictive changes in the import policy, there is no justification for imposing a redemption fine - Decided in favour of assessee.
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2014 (2) TMI 68
Benefit of exemption under Customs Notification No.29/97-Cus against EPCG scheme - Assessee deposited duty during pending adjudication - Tribunal granted benefit of notification - Department rejected refund claim - Unjust enrichment - Held that:- in an internationally competitive situation, the respondent could not have passed on the incidence of duty to the foreign buyer - case of capital goods captively consumed is on a different footing as compared to raw material. I also take note of the principle that exporters are to be given relief of local incidence of duties - The fact that he has accounted the depreciation of duty paid (though it was not payable) can only reflect on his profitability and it cannot be taken as a proof that he has passed on the incidence to the foreign buyer - Following decision of Design Classics Exports (P) Ltd. Vs CC Chennai [2004 (7) TMI 140 - CESTAT, CHENNAI], Golden Iron & Steel Forgings Vs CC Mumbai [2003 (2) TMI 119 - CEGAT, NEW DELHI] and Bharti Sons Vs CC Amritsar [2009 (7) TMI 1040 - CESTAT NEW DELHI] - Decided against Revenue.
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2014 (2) TMI 67
Unjust enrichment - Section 27(2) of the Customs Act, 1962 - Consumer Welfare Fund - Benefit under Project imports - Refund claim filed for refund of 2% security deposit - Circular No.89/95-Cus dated 09/08/1995 - Held that:- appellant has proved that he has not passed on the incidence of duty, refund was granted. In the said judgment there was no conclusion to say that pre-deposit of amounts would be construed as duty. In fact the Tribunal did not go into the question at all. In the case before us, the payment of cash security was made in terms of the Board's circular cited supra and the circular makes it abundantly clear that it is only a cash security and not any other payment. If that be so, the provisions of Section 27(2) which applies to duty and interest thereon, does not apply to cash securities made. Therefore, the question of providing unjust enrichment would not arise in the case of refund of cash securities - Following decision of IDMC Ltd. vs. CC, Mumbai [2013 (2) TMI 257 - CESTAT MUMBAI] - Decided in favour of assessee.
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2014 (2) TMI 66
Import of rig - whether the appellants have not fulfilled the conditions of Notification 21/2002, Sr. No. 230 which requires them to use the imported rig for construction of road only - Held that:- rig was used only for testing after overhauling and servicing, we consider that it would be unfair to hold that the conditions of Notification have been violated. Therefore, appellant have made out a prima facie case in their favour and accordingly, pre-deposit is not required. In view of the above, we waive the requirement of pre-deposit of duty and penalties and grant stay against recovery of the same during the pendency of the appeal - If they are not able to get the rig the violation of the condition of the Notification will continue and the rig will lie idle. On request, the rig has been released on bank guarantee of Rs. 19 lakhs for full value. He assured that they would keep the bank guarantee alive. We find the bank guarantee sufficient. The appellant may be allowed to use the rig during the pendency of the appeal on the condition that the bank guarantee is kept alive - Stay granted.
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2014 (2) TMI 65
Valuation of goods - Enhancement in valuation - Mis declaration of goods - Demand of differential duty - Waiver of pre deposit - Held that:- prima facie the payment of royalty/licence fee is a condition or a pre-requisite for the sale/supply of the goods and hence they form part of the transaction value in terms of the provisions of the Rules - cost of technical know-how and payment of royalty is includible in the price of the imported goods if the said payment constitutes a condition pre-requisite for supply of imported goods by the foreign supplier. On the other hand if such payment has no nexus with working of imported goods, then such payment was not includible in the price of imported goods. In the instant case as per the contract entered into by the appellant with the foreign supplier the payment made as royalty/licence fee are for the rights conferred by the supplier for exploitation of the material contained in the imported goods and the payment have to be made in advance and only thereafter, the supply of the goods was made. Therefore the payment of royalty and licence fee was a condition pre-requisite for the supply of the imported goods - appellant has not made out any prima facie case in their favour for complete waiver of pre-deposit of the dues adjudged - Conditional stay granted.
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Corporate Laws
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2014 (2) TMI 64
Petition for restoring the name of company for continuing suit against the company - earlier the petition was dismissed by the trial court on the ground that name of the company was stuck down and no suit can continue against non existing company - who can apply for restoration of name of the company - whether the petitioner is Member or Creditor of the erstwhile company - Held that:- The transfer of shares from the petitioner to Quli having been held by this Court to be collusive and the orders under which it was done having been declared to be a nullity, the petitioner never ceased to be a member of the company. Even if the petitioner cannot be considered as a member of the company, he is certainly a creditor who can file the petition. Company court has the power to order restoration of the companys name to the register of companies on the application made by the company itself or its member or creditor. Such an application can be made at any time before the expiry of 20 years from the publication of the notice for striking off the name published in the official gazette. There are only two circumstances in which the company court can exercise the power. The first is when it is satisfied that the company was, at the time of the striking off of its name from the register, carrying on business or was in operation. The second circumstance is when it appears to the company court that it is otherwise just that the name of the company be restored to the register. Obviously the petitioner is not the company itself and, therefore, he has to be either a member or creditor. It was submitted on behalf of the ROC that the petitioner is neither a member nor a creditor of the company. The respondent has received monies from the petitioner. He was entrusted with the job of finding a house for the petitioner in Delhi. The averments in the petition prima facie indicate that the property Jodhpur Gardens was purchased not in the name of the petitioner but in the name of the company. The shares held by the petitioner in the company were also taken away from him without his knowledge or consent. The settlement entered into between Quli and Singhania by which the shares were transferred to Quli was held by this Court to be collusive. These are disputes which are pending in the trial court. The company is a defendant in the trial court. If its name is not restored, it would cause injustice to the petitioner and also cause prejudice to the trial as a whole. The message sent to the society as a whole, if the name of the company is not restored to the register, would be quite disturbing. The petitioner has to be protected in the litigation pending before the trial court - Therefore, there is every reason to hold that it would be just to restore the name of the company to the register of companies. The Registrar of Companies is directed to do so - Decided in favour of Petitioner.
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Service Tax
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2014 (2) TMI 100
Demand of service tax - Recipient of GTA service - Appellant had paid the service tax to the provider of GTA service and the provider has paid to the Revenue and the appellant has availed credit of the same - Held that:- there is no dispute regarding payment of service tax by the provider of GTA service. Once the amount of service tax is accepted by the Revenue from the provider of GTA service, it cannot be again demanded from the recipient of the GTA service - Decided in favour of assessee.
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2014 (2) TMI 99
Business Auxiliary Service - Job Work - Activity of powder coating and chrome plating for various motor vehicle parts received from the manufacture on job works basis - Held that:- Appellants are undertaking the activity of powder coating and chrome plating for various motor vehicle parts and was working notification No.214/86-CE. The appellants are receiving the motor vehicle parts from principle manufacturer and after undertaking the activity of powder coating cleared to the principal manufacturer and the same goods are used in the manufacture of excisable goods cleared on payment of duty. As the processes undertaken by the appellant amounts to manufacture as per the decision relied upon by the appellant as the same is part of manufacturing process. Therefore, we find that appellants are not liable to pay service tax under the category of Business Auxiliary Service - Decided in favour of assessee.
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2014 (2) TMI 98
Classification of service - Whether the table space provided by the Automobile dealers to financial institutions fall under Business Auxiliary service or not - Held that:- no uniform principle emerges as would guide determination of whether a particular transaction involving an interface between an automobile dealer and bank or financial institution would per se amount to BAS. The identification of the transaction and its appropriate classification as the taxable BAS or otherwise must clearly depend upon a careful analysis of the relevant transactional documents. Only such scrutiny and analysis would ensure rational classification of the transaction. Where mere space is provided along with furniture for facilitating accommodation of representatives of financial institutions in the premises of an automobile dealer and consideration is received for that singular activity, such consideration may perhaps constitute a rent for the provision of space and associated amenities. Such restricted relationship/transaction may not amount to BAS. If on the other hand, the transactional documents and other evidence on record indicates a substantial activity falling within the contours of any of the integers of the definition of BAS, spelt out in Section 65 (19), then it would be legitimate to conclude that BAS is provided - The appeal stand remitted to the appropriate Bench in the West Zonal Bench of this Tribunal for adjudication on merits - Decided in favour of assessee.
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2014 (2) TMI 97
Denial of benefit of Cenvat credit - Service Tax paid by way of supplementary invoice Held that:- Rule 9(1) (f) specifies an invoice, a bill or challans issued by the provider of invoices, service documents on which credit can be availed - The supplementary invoices as also invoice are valid for the purpose of availment of credit - the provision of Rule 9(1) (b) debars taking of credit if supplementary invoices are issued by manufacturer or importer on account of duty having become recoverable, on account of any levy or short-levy by reasons of fraud, collusion, or any wilful mis-statement or suppression of facts etc. Relying upon JSW Steel Ltd. Vs. CCE, Salem [2008 (9) TMI 74 - CESTAT, CHENNAI ] Pre-deposits waived till the disposal Stay granted.
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2014 (2) TMI 96
Waiver of pre-deposit of tax - Construction of residential complex service and commercial or industrial construction service - Held that:- Demand was raised without giving consideration of abatement of 67% under Notification No.1/2006-ST - Appellant directed to make a pre deposit - Conditional stay granted.
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2014 (2) TMI 95
Waiver of pre deposit - Imposition of eqivalent amount of penalty u/s 76, 77 & 78 - Tribunal order predeposit - High Court directed to deposit Rs 1 Crore within 4 weeks - Supreme Court also dismissed application and ordered that in case the petitioner complies with the order of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) within three weeks from today, the compliance shall be treated as within time and the CESTAT shall hear the appeal on merits - Held that:- Petitioner has deposited only Rs 1 Crore - order of the Supreme Court dt.04.03.2013, which directed compliance with the order of this Tribunal dt. 26.06.2012 has not been complied with. There is therefore failure of compliance of the order of this Tribunal as mandated by the Supreme Court and consequent and failure of pre-deposit - Since the order of this Tribunal dt. 26.06.2012 directed to be complied with by the order of the Supreme Court dt. 04.03.2013 has not been complied with - Therefore decided against assessee.
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2014 (2) TMI 94
Review of order - Order to make pre deposit - Demand under Cargo Handling - Held that:- Whether the appellant was un-loading and loading to the wagons and rendered a taxable service is a matter to be determined in the substantive appeal. Since a reasoned order was passed, re-consideration of the same on the ground that the several facts mentioned in the Show Cause Notice were not considered properly by the Tribunal, is an invitation to review. There is no merit in the application as there is no jurisdictional or an error apparent on the record discernable - Since assessee failed to make pre deposit - Appeal rejected.
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2014 (2) TMI 93
Restoration of the appeal - Application for clearance from COD - Held that:- COD permission would not be required in those cases where application for clearance from COD was pending before Committee as on 17.02.2011 or permission was granted as on the date - Decided against Revenue.
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2014 (2) TMI 92
Waiver of pre-deposit - Demand of service tax - Business Support Services and Goods Transport Agency Services - Held that:- as regards the service tax liability under the category of Business Support Services, if the appellant has discharged the service tax liability from 1.5.11 when the services came into statute as liable for service tax liability, then the question of demanding the service tax for the month of April 2011 does not arise. Be that as it may, the claim of the appellant needs to be verified as to discharge of service tax liability from May 2011 to September 2011. If the said service tax liability is discharged by the appellant, the appellant has made out a case for the waiver of the pre-deposit of the amount of service tax liability in Business Support Services prior to May 2011 - As regards the service tax on the Goods Transport Agency - appellant has made out a prima facie case for the waiver of the pre-deposit of the amount of service tax liability confirmed under the head Goods Transport Agency Service - Stay granted.
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2014 (2) TMI 91
Recovery of service tax - Interest under section 75 and penalty under section 76 and 78 - Application not filed u/s 35F of the Central Excise Act - Held that:- an opportunity be granted to the appellants to file an application for waiver of pre-deposit for reasons to be made explicit by them in their application. We set aside the impugned order and remand the matter to Commissioner (A) to consider the application filed by them and for giving them an opportunity to pre-deposit the amounts in terms of the interim order - where there was no filing of application under section 35F of the Central Excise Act 1994, CESTAT has dispensed with pre-deposit. Tribunal has taken very broader view and held that party should be given opportunity for filing the application under section 35F of Central Excise Act 1994 so that their view could be considered for grant of waiver of pre-deposit - It is fit case need to be remanded back to Commissioner (appeal) for reviewing his Order-in-Appeal in view of conclusions drawn in above Tribunal order - Decided in favour of assessee.
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Central Excise
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2014 (2) TMI 63
Availment of CENVAT Credit - Credit availed without delivery of goods - Goods were charged octroi whereas the factory is situated outside the octroi limit - Held that:- demand is on the basis of statement consignor of goods that he has received only invoices from M/s Vasmin Corporation, Bhavnagar without physical receipt of M.S. Scrap and on the strength of such bogus invoices, he has passid on the CENVAT credit to the Appellant unit - M/s Star Associates being registered dealer under central excise issued invoices to the Appellant who has duly recorded the receipt of such goods in their records and made payment through banking channels. There is no such evidence that the said amount towards purchase was received back by the Appellant and in support of contention that the goods were transported, reliance was placed on Form 40 of the Sales Tax and purchase tax was paid by the supplier as seen from the ledger annexed with the appeal. Demand cannot be fastened upon the Appellant on the basis of his statement. I find that only on the sole basis of statement of proprietor of M/s Star Associate is to the effect that that they have received only invoices from M/s Vasmin Corporation cannot be made a ground to deny credit to the Appellant Unit. I also find that it is a fact that M/s Star Associates were regularly supplying goods to the Appellant unit in the past also and on no occasion it was found that they have issued invoices without actual supply. Demand is based upon the findings that the octroi receipt shows the delivery of the goods within the municipal limits of the city whereas the factory is situated outside municipal limits. Reliance is also placed upon the statement of the administrator of trucks who denied the transportation to M/s Bajrang and partner of two units who actually alleged to have received the goods without invoices. However I find that only the statement of administrator of truck and octroi receipt the receipt of goods cannot be disputed. I find that the goods were consigned by the ship breakers and no investigation was conducted at their end to ascertain the fact of delivery of goods. Hence no demand can be made against the Appellant. All the purchases were duly recorded in the statutory books of the Appellant and the goods were also found to be entered in statutory records of the Appellant. No investigation has been made at unit of M/s Bajrang which could have supported the findings of the adjudicating authority. None of the consignor of the goods has denied the clearance of goods to M/s Bajrang. There is no evidence which can show that the records maintained by the Appellant are not correct. Only on the basis of statement of some of the transporters, the huge credit is sought to be disallowed whereas the statements are in isolation with no corroboration. I therefore hold that the impugned order for disallowance of credit to the Appellant is not sustainable - Decided in favour of assessee.
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2014 (2) TMI 62
Duty demand - Demand made on the basis of photocopy of the invoices - Clandestine removal of goods - Commissioner (Appeals) held that allegations of clandestine removal cannot be upheld on the basis of the photocopies of the invoices supplied by a casual informer - Held that:- allegations of clandestine removal are serious allegation and cannot be upheld on the basis of photocopies of some of the invoices, supplied by an in un-identified informer. There is no disclosure on record to show as to from where the Revenue received the said photocopies of the invoices. Further, investigation conducted by the Department did not result in any evidence to reflect upon the clandestine manufacture and clearance of the final product. The various case lows discussed by the Commissioner (Appeals) in his impugned orders are in favour of the respondents - All the respondents have clarified in their statement that such order are only for Booking of the goods and do not relate to clearance of the goods mentioned therein. The clearance of the final product is only about percentage of such quantities shown in order Booking Forms which is dependent upon various factors. In the absence of any evidence to support revenue allegation, I am of the view that the appellant authority has correctly set aside the demand - Decided against Revenue.
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2014 (2) TMI 61
Waiver of pre-deposit - Clandestine removal of goods - Held that:- Representatives of the main appellant and the authorized signatory of the main appellant had, in their statements, indicated that there was some wrong doing in the manufacturing and clearing of Gutkha. The defences put by the ld. Counsel that such persons were not produced for cross-examination or had retracted the statement, is a question of facts which needs detailed verification. We find that the adjudicating authority has confirmed the demand by working back the quantity manufactured by the main appellant based upon the statements given by the lamination manufacturers. In our prima facie view, this could be a presumptuous way of coming to a conclusion that there was clandestine manufacture and clearance of Gutkha, in as much as we find that there are few evidences which would indicate that the other inputs which were required for manufacturing of Gutkha was also procured were unaccounted - these appellants were penalized on the ground that they had abetted the plan executed by the main appellant for clearance of the Gutkha without payment of duty - Decided against assessee.
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2014 (2) TMI 60
Re-labelling of products - inscription of the name and other details on imported goods - Miscellaneous Chemical Products - whether the operations carried on by the first respondent/assessee amounted to manufacture in terms of Note 5 to Chapter 38 of the CETA Schedule - Held that:- it is evidently clear that the inscription of the name and other details by the first respondent/assessee was a statutory requirement and cannot be said to be covered under Note 5 of Chapter 38 of CETA Schedule. All the barrels have not been tested and samples are drawn from one barrel in each consignment with a view to ensure with the quality of the product, which has been imported. Since the cap, which was used to seal the barrel had been removed while taking the samples, such barrels have to be re-capped. That apart, the Original Authority noticed that the entire activities done by the first respondent/assessee is with the knowledge of the customers and not at the back of them and the activity was not for the purpose of rendering the product marketable since the product was assured by a buyer and there was no uncertainty about its sale. Therefore, what has been done by the first respondent/assessee was totally unrelated to the sale of the product and such activity would fall outside the scope and purview of Note 5 of Chapter 38 of the CETA Schedule. Activities done by the first respondent/assessee is not in any way transform the imported product into different product, which was distinct in name, character and use and were not incidental or ancillary to the completion of the finished product and thus not covered by the definition of "manufacture" under Section 2(f) of the Central Excise Act, 1944 read with Note 5 of Chapter 38 of the CETA Schedule - Revenue has not made out any ground to interfere with the order passed by the Tribunal - Decided against Revenue.
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2014 (2) TMI 59
Reversal of CENVAT Credit - date of reversal of credit - "on the date of" versus "at the date of" - Assessee removed inputs, on which Cenvat Credit was availed and the credit was not reversed on the date of removal - Interest u/s 11AB - Commissioner (Appeals) held that the duty liability having been paid prior to the issuance of show cause notice, the question of imposing penalty or demanding interest does not arise - Held that:- expression "on the date of such removal" is referable to the rate applicable to such goods and it cannot be understood to mean that the duty should be paid at the time of removal in terms of substituted provisions. The expression "on the date of such removal" stands deleted in the new Sub Rule (4) to Rule 3 of Cenvat Credit Rules,2002 - assessee has paid the duty at the end of the month, i.e., much prior to the 5th day of the following month or in case where the removal had taken place in March before 31st March of the relevant year. In such circumstances, it cannot be said that the there has been delay in payment of duty so as to invoke Section 11AB of the Central Excise Act,1944. Even though the Tribunal has proceeded on the basis that the deposit was made prior to the issuance of show cause notice - assessee has deposited the amount before the issuance of show cause notice, yet essentially the assessee's case falls within the scope of Rule 3(4) r/w Rule 8 of the Cenvat Credit Rules, 2002 - Decided against Revenue.
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2014 (2) TMI 58
Waiver of the pre-deposit - Suppression of facts - Violation of the conditions of the Notification No.31/2007-C.E.(NT) dated 02.08.2007 - Held that:- From the series of communications sent by the Development Commissioner to the Central Excise Authorities as well as Director General of Foreign Trade, it is evident that the assessee is a 100% Exported Oriented Unit. It would be of relevance to refer to the observations contained in the various communications sent by the Development Commissioner, wherein, it has been observed that the Central Excise Authorities stand is that the DTA has not registered with the jurisdictional Central Excise and hence they cannot not be issued CT-1 Form; but the unit claims that since the DTA units involved in this transaction are garment exporters yet they are exempted from Excise registration. It is further stated that the assessee is facing difficulties in their day to day affairs due to the conditions stipulated by the Central Excise Authorities and the assessee has requested the authorities to take up their grievance with the appropriate authorities. In the communication of the Development Commissioner dated 24.10.2013 addressed to the Commissioner of Central Excise, Chennai, it has been observed by the Development Commissioner that the goods cleared into the DTA under clause 6.9(g) of the Foreign Trade Policy is used by the garment exporters meant for manufacture and exports and it is a deemed export and they are also paying for the goods in foreign exchange in terms of the said condition and the Notification 31 (2007) also provides for verification of foreign exchange remittance with reference to Bill of Lading, Form-II etc., and in view of the peculiar circumstances, request was made to the Commissioner of Central Excise that the sales effected by the assessee may be treated as deemed exports and help the assessee to reduce the hardship faced by them and the stand taken by the Central Excise negates the facility provided by the exim policy - assessee has made out a prima facie case in its favour and satisfied with the grounds raised by the assessee - Stay granted.
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2014 (2) TMI 57
Inclusion of value of deemed export - Whether value of deemed export is required to be excluded while determining FOB value of export for the purpose of computation of value of the Exim Policy Held that:- clearances made by one 100% EOU to another 100% EOU which are deemed exports are to be treated as physical exports for the purpose of entitling refund of unutilized Cenvat credit contemplated under the provisions of Rule 5 of the Cenvat Credit Rule, 2004 - Following decision of Commissioner of Central Excise v. Shilpa Copper Wire Industries [2010 (2) TMI 711 - GUJARAT HIGH COURT] - Decided against Revenue.
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2014 (2) TMI 56
Waiver of pre deposit - Imposition of penalty - Held that:- when the Tribunal itself found that it was not a case requiring the appellant no.1 company to deposit the entire duty amount but only 50% of the duty demand. It follows that ordinarily the Tribunal should not direct the appellant to deposit any amount towards penalty. We are of the view that where the Tribunal has granted a partial dispensation with predeposit, then in such cases it should not normally direct predeposit attributable to the penalty amount. In cases where the Tribunal is of the view that notwithstanding the grant of partial dispensation with predeposit, the amount of penalty or part of it should be deposited, the Tribunal shall give strong reasons to indicate why the deposit attributable to penalty amounts should be made. In fact, we have noticed that the Tribunal in its orders, while granting partial deposit, has generally not been insisting on deposit of penalty amount - we set aside the order of the Tribunal dated 29 October 2013 of CESTAT directing appellant no.1 to deposit a penalty of ₹ 5,00,000/and directing appellant no.2 to make a predeposit of ₹ 1,00,000/towards penalty. The rest of the order of the Tribunal is not disturbed. We accordingly direct the appellants to deposit the amount equal to 50% of the duty confirmed - Decided partly in favour of assessee.
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2014 (2) TMI 55
Rejection of rebate claim - Short duty paid - Abatement of duty of 12 days sought by the applicant was lesser than the mandatory continues period of 15 days required for abatement eligibility under Rule 10A of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - Held that:- Government further notes that same jurisdictional Assistant Commissioner of Central Excise, Division-I, Central Excise Commissionerate, Delhi-I issued another Show Cause Notice dated 24-11-2009, where in differential duty of Rs. 4,83,871/- (12,00,000-7,66,129/-) short paid by the applicant was demanded on the identical ground, as of ground of rejection of impugned rebate claim. This Show Cause Notice of dated 24-11-2009 was decided by jurisdictional Assistant Commissioner vide Order No. 06/2010-11 dated 30-4-2010 in the favour of applicant by dropping demand of duty on the ground that the party had rightly paid amount of Rs. 7,66,129/- on pro rata basis for the month of March, 2009 (from 13-3-2009 to 31-3-2009). Government finds that once the payment of duty pro rata basis for relevant month has been held as correct by jurisdictional Assistant Commissioner. Order dated 30-4-2010 has no relevance on impugned case of rejection of rebate claim. Government do not agree with this observation of Commissioner (Appeals). Once, the show cause notice issued for recovery of short payment of duty on the identical ground as of ground of rejection of rebate claim has been dropped by the jurisdictional authority and the same has attained its finality, as no appeal had been preferred against the said order dated 30-4-2010 by the department. As such the duty paid in respect of exported goods has been held as valid duty. Hence, the impugned orders suffer from this legal infirmity and liable to be set aside. The rebate claim of duty paid on exported goods is admissible to the applicant and same may be sanctioned in terms of Notification No. 32/2008-C.E. (N.T.), dated 28-8-2008 r/w Rule 18 of Central Excise Rules, 2002 provided the rebate claim is in order otherwise - Decided in favour of assessee.
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2014 (2) TMI 54
Rejection of rebate claim - Rule 18 - Notification No. 19/2004-C.E. (N.T.), dated September 6, 2004 - Period of limitation of 6 months - Held that:- applicant cleared the said goods for export on payment of Central Excise Duty and education cess under claim of rebate in terms of Rule 18 of Central Excise Rules, 2002 under the proper cover of invoices dated 23-12-2005 and 27-12-2005 and ARE-1s. In the said shipping bills let export date is 30-8-2006. It is therefore obvious that the said goods were actually exported after a period of six months from the date of clearance from the factory. As per Clause 2(b) of Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 the excisable goods shall be exported within 6 months from the date on which they were cleared for export from factory of manufacture. Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 provides specific condition and limitation for the purpose of granting rebate of duty paid on the exported excisable goods. The Clause 2(b) of the said notification stipulates that the excisable goods shall be exported within six months from the date on which they were cleared for export from the factory of manufacture, which has been violated by them. Moreover, they have not made any application for extension of time-limit before proper authority. They have not produced any permission granting extension of time limit from competent authority till date. The non-compliance of a substantive condition of Notification cannot be treated as a procedural lapse to be condoned - strict and plain reading of wording of the statute are to be strictly adhered to and at the same time statute as clarified in circulars is to be followed religiously - Decided against appellant.
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CST, VAT & Sales Tax
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2014 (2) TMI 102
Assessment u/s 7A of the Tamil Nadu General Sales Tax Act, 1959 - Penalty u/s 16(2) - Whether the petitioners are liable to purchase tax under Section 7A on the purchases effected from unregistered dealers who were liable to pay tax under Section 3 by virtue of such sellers having turnover in excess of the exemption limit - Held that:- As is evident from the reading of the Section 7A of the Tamil Nadu General Sales Tax Act,1959 every dealer, who in the course of his business purchases from a registered dealer or from any other person, any goods, (the sale or purchase of which is liable to tax under this Act) and in the circumstances, if no tax is payable under Sections 3 or 4 and consumes or uses such goods in or for the manufacture of other goods for sale or otherwise, Section 7A would stand attracted - Considering the fact that Section 7A of the Tamil Nadu General Sales Tax Act, 1959 is a charging section aimed at plugging the loop hole in cases where goods had not suffered tax and by reason of circumstances stated in the Section are not available for further dealing under the provisions of the Act, the contention of the assessee that the failure on the part of the seller to get himself registered and pay tax would be a circumstance, which has to be considered in favour of the assessee for the purposes to levy of tax under Section 7A of the Tamil Nadu General Sales Tax Act, 1959 cannot be accepted, as the contention, goes within the scheme under Section 7A of the Act. As is evident from the reading of the said Section penalty could be levied in respect of the assessment made under Section 16(1)(a) of the Act, only if and when the authorities satisfy that the escape from assessment is due to wilful non-disclosure of assessable turnover by the dealer. Thus unless and until the Assessing Officer is satisfied that there is wilful non-disclosure of assessable turnover, the question of levy of penalty under Section 16(2) of the Act does not arise - As is evident from the reading of the order passed by the Assessing Officer, we find there is hardly any reference to the satisfaction on the wilfulness on not reporting the turnover for assessment. Except for the singular statement in the order that the turnover had not been disclosed in the return, penalty was levied in this case. Considering the requirement as to the satisfaction to be recorded on the wilful suppression as stated under Section 16(2) of the Tamil Nadu General Sales Tax Act, 1959, we find there exists no case for levying penalty - Decided in favour of assessee.
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2014 (2) TMI 101
Exemption under Section 2(r) of the TNGST Act - Disposal of Cardamom and coffee as the agricultural produce - Exemption for agricultural produce produced within state or brought from outside - Held that:- merely because the agricultural products was brought from other State and therefore, not entitled for exemption cannot be countenanced. On the other hand, it has to be taken note as to whether it is the own produce of the assessee. In order to establish the same, the assessee at the first instance, while submitting their reply dated 28.03.1998 to the show cause notice issued under Section 34 of the Act submitted that they are agriculturists and the liability to pay tax is only on the purchaser, viz., M/s.Brooke Bond India Limited. Along with the explanation, the assessee filed documents, which have been filed before this Court, viz., the statement of details of raw coffee sold during the year 1994-95; copy of Form No.26 under the Kerala General Sales Tax Rules, 1963; copies of invoices raised by the assessee and copy of the sale invoices of M/s.Brooke Bond India Limited. These documents would show that it is their own produce and the goods,viz., coffee was brought to Tamil Nadu on stock transfer. Further more, the invoices raised from Kerala also states that it is their own estate produce and first agricultural sale despatch from the estate - Decided in favour of assessee.
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Indian Laws
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2014 (2) TMI 90
Condonation of delay - Period of limitation - Date of corrigendum order or date of original order - Held that:- By corrigendum order liability of the petitioner has substantially been changed and therefore, in facts of the case, the period of limitation should have been counted from the date of service of the corrigendum order upon the petitioner on 22-12-2010 and thus, in that situation the appellate authority should have held that the appeal was filed within 180 days from the date of receipt of the corrigendum order and therefore, it was within the extended period of limitation. Treating the appeal to be within 180 days, now the appellate authority may reconsider the prayer of condonation of delay in filing the appeal by the petitioner after giving opportunity of hearing to the petitioner. Thus, the order dated 22-11-2011 is set aside - Decided in favour of assessee.
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