TMI Tax Updates - e-Newsletter
March 10, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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Income Tax:
The expenditure incurred by the assessee towards royalty and fee for technical assistance in pursuance of the licence agreement were revenue expenditure and not capital in nature - HC
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Income Tax:
Allowable expenditure u/s 37(1) - commission payment - it was only required to see if the expenditure claimed to have been borne by the assessee was genuine. If the answer on this issue were in favour of the assessee, then it would be of little consequence how the recipient has dealt with the money received by him from the assessee - HC
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Income Tax:
Benefit of exemption from capital gains u/s 54F - in the instant case the assessee having got 15 flats along with his two sons will not disentitle him from getting the benefit u/s 54-F only on the ground that all the 15 flats are not in the same Block, particularly in the light of the admitted factual position that all the 15 flats are located at the same address - HC
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Income Tax:
Reopening of assessment - opinion given by the District Valuation Officer is not per se information for the purpose of section 147 - Thus solely on the basis of the DVO’s report, the Assessing Officer is not justified in reopening the assessment, which was, as such, scrutiny assessment u/s 143(3) - HC
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Income Tax:
Carbon receipts - accrual of income - as neither the carbon receipts were sold and/or transferred in favour of foreign companies in the year under consideration, the same cannot be included as receipt / income in the year under consideration. - HC
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Income Tax:
Validity of notice u/s 158BC - The words 'not less than fifteen days' have to be interpreted correctly. In that view of the matter, since the Assessing Officer asked the assessee to file the return within fifteen days of the service of the notice, the notice issued by the Assessing Officer is invalid. - HC
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Income Tax:
Additions made on the basis of the reevaluation of the assesses’s property - the valuation by the banker, who provided credit could well be different from the valuation report for the transaction given that the assessee had purchased the property long ago - HC
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Income Tax:
Addition u/s 41 - proof of ceasation of liability - the burden of the Revenue to summon such creditors or transporters for establishing that the liability has ceased could not be shifted upon the assessee - no addition - HC
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Income Tax:
Amount received on account of forfeiture of share application money by way of issue of share warrants - capital receipts OR revenue receipt - It is capital receipt and not revenue receipt as it was not earned from regular business activities carried on by the assessee - AT
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Income Tax:
Revision u/s 263 - claim of TDS - In the absence of any demonstrable loss of revenue, interference in exercise of power u/s 263 cannot be justified - AT
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Income Tax:
Income from sale of the scrips - systematic purchase and sale transactions in shares - The profits/gains arising in the hands of the assessee company from the sale of the scrips had rightly been reflected in the return of income under the head ‘Capital gain’, viz. LTCG and STCG - AT
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Customs:
Customs law expects a CHA to be trustful to Customs. Non-disclosure of material facts and conspiracy against Customs brings him to the fold of law in view of both oral and documentary evidence came up against appellant - AT
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Customs:
Amendment to bill of entry to claim exemption Benefit of N/N. 94/1996-Cus dated 16th December 1996 - re-imported goods - lower authority to consider amendment of the bill of entry - AT
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Customs:
Condonation of delay - Refund claim of SAD - Law cannot come to the assistance of the indolent especially when there is no provision for condonation of such delay - delay not condoned - AT
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Service Tax:
CENVAT credit - the credit of the service tax paid on the insurance premium, is eligible for credit, for the reason that it has direct nexus with the output services of the appellant who are engaged in financing activities - AT
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Service Tax:
Refund of unutilized CENVAT credit availed on various input services - section 11B - time limitation - refund claim can be filed within one year from last date of quarter of receipt of the input remittance - AT
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Service Tax:
Commercial training or coaching services - fee not realized as per the fee structure and the fee is settled in between the institute and students after allowing incentives - demand of service tax based on standard fee structure cannot be sustained - AT
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Service Tax:
Time limit applicable to file refund claim in terms of N/N. 41/2007-ST dated 06/10/2007 - There is no provision to extend the said time limit - AT
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Service Tax:
Failure to pay service tax under the Reverse charge mechanism - once the penalty is not imposed or is set aside, the longer period of limitation cannot be invoked inasmuch as ingredients for both are same - the demand to be barred by limitation and accordingly, set aside - AT
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Service Tax:
Refund claim - The adjudicating authority has no jurisdiction to condone the delay and / or grant refund if the refund application is not made within the period of one year. No power of condonation of delay are vested with adjudicating authority - HC
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Central Excise:
CENVAT credit - failure to reverse the Additional Duty of Customs (SAD @4%) on removal of inputs as such - Revenue could not establish that there was intention to pay less amount as compared to require amount because the exercise was revenue neutral - demand set aside - AT
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Central Excise:
Exemption from duty on Footwear - benefit of N/N. 5/2006-CE - MRP was not embossed on footwear - provisions of Standards of Weights and Measures Act and the Rules made thereunder have no relevance for complying with the conditions of this exemption notification - AT
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Central Excise:
Classification of goods - tents made of cotton - classified under Chapter sub-heading No. 630600 of CETA, 1985 or not? - Held Yes - goods were rightfully attracting 4% duty as provided by the said exemption under N/N. 29/04-CE - AT
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Central Excise:
SSI Exemption - clubbing of clearances of related persons - when the units have separate registration with the Central Excise Department/Income-Tax Authorites, permission to do job work on behalf of other undertaking, factors like one supervisor working for both the units and one unit have certain financial dealings for the other unit cannot be a basis for clubbing of clearances of two units - AT
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Central Excise:
Interest liability u/s 11AA of the CEA, 1944 - Section 11AA could have been invoked only when the sum determined u/s 11A(2) has not been paid within three months from the date of the determination. Once this is not the case, then, interest as claimed and by taking recourse to the above provision, was not recoverable - HC
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Central Excise:
Clandestine manufacture and removal - on the basis of consumption of energy required for manufacture of unit quantity of goods quantum of manufacture of goods cannot be arrived at and such conclusion of manufacture shall be treated as presumptive - the confirmation of demand on the basis of consumption of Gas does not survive. - AT
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Central Excise:
Valuation - agreement with dealers for sales promotion - advertisement expenses - the advertisement expenses recovered from the dealers would not be includible in the assessable value - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (3) TMI 399
Scope of rectification of mistake - Apex Court dismissed the petition against the decision of HC [2015 (7) TMI 1082 - MADRAS HIGH COURT]. - It is trite law that a person is estopped in pursuing parallel proceedings before two authorities for the same relief. Therefore, the Tribunal was correct in declining to interfere with its earlier order and dismissing the application, as there was no scope for rectifying any mistake, since there was no mistake apparent from the record, as envisaged under section 154(1A). Substantial question of law is answered in favour of the respondent-Revenue and against the appellant-assessee.
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2017 (3) TMI 398
Interest Payable By Government - expression, "regular assessment" occurring in section 214 - Held that:- As in section 214, "regular assessment" has been used in no other sense than the first order of assessment passed under section 143 or section 144. If any consequential order has to be passed by the Income-tax Officer to give effect to an order passed by the higher authority, that consequential order cannot be treated as the "regular assessment" nor can the date of the consequential order be treated as the date of the regular assessment.- This case is squarely covered by the proposition laid down by this Court in Modi Industries Ltd. Etc. Etc. vs. Commissioner of Income Tax (1995 (9) TMI 324 - SUPREME Court) against the revenue.
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2017 (3) TMI 397
Addition u/s 68 - Held that:- Tribunal in the instant case had examined the evidence on record, the most material being the conclusion drawn by the Assessing Officer after having been required to examine the issue and submit his report before the CIT (Appeals). The Assessing Officer himself having accepted the identity of the creditors, the genuineness of the transactions and the creditworthiness of the creditors in his remand report, it is no longer open to the department to contend otherwise. - Decided in favour of the assessee and against the revenue.
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2017 (3) TMI 396
Allowable business expenditure - payment of royalty paid to M/s Hongo Japan - Held that:- The expenditure incurred by the assessee towards royalty and fee for technical assistance in pursuance of the licence agreement entered between the assessee and the company M/s Hongo Japan were revenue expenditure and not capital in nature in view of the fact, upon termination of the licence agreement, all rights created in favour of the assessee under the licence agreement stood extinguished and no benefit was passed on to or retained with the assessee. This court in the case of CIT versus Kanpur Cigarettes (P) Ltd. [2005 (3) TMI 61 - ALLAHABAD High Court ] has in respect of a similar clause in the licence agreement held that nature of expenditure is revenue and not capital. The facts of the existing case in material part is similar to those in the case of Kanpur Cigarettes (supra). - Decided in favour of the assessee
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2017 (3) TMI 395
Allowable expenditure under section 37(1) - commission payment - ITAT disallowed claim - Held that:- We may observe that in view what has been held in the case of DCIT Vs. Super Tannery (India) Ltd. (2004 (8) TMI 43 - ALLAHABAD High Court) it cannot be said that such an expenditure if found to have been actually incurred is not allowable. The finding of the Tribunal to the contrary is clearly unsustainable. Tribunal also appears to have chosen to read certain parts of the statement given by the Sheikh Safat Ahmad in isolation and not in entirety of the facts and circumstances of the case. In so far as the finding of such payment having been made for the business purposes or it is genuine we find that the Tribunal has not considered the entire material in light of the particular facts of the case but has got swayed by certain inconsistencies and deficiencies noted by making a microscopic examination of the statement of Sheikh Shafat Ahmad as if it (Tribunal) were examining the case of that person whereas in the instant appeal it was only required to see if the expenditure claimed to have been borne by the assessee was genuine. If the answer on this issue were in favour of the assessee, then it would be of little consequence (in these proceedings) how Sheikh Shafat Ahmad has dealt with the money received by him from the assessee. We set aside and the matter is remitted to the Tribunal to decide the appeal afresh after affording opportunity of hearing to the parties.
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2017 (3) TMI 394
Benefit under Section 54-F - qualify as 'a residential house' occurring in Section 54-F - Held that:- No hesitation in holding that in the instant case the assessee having got 15 flats along with his two sons will not disentitle him from getting the benefit under Section 54-F of the IT Act only on the ground that all the 15 flats are not in the same Block, particularly in the light of the admitted factual position that all the 15 flats are located at the same address. As a sequitur, we are unable to persuade ourselves that the 15 flats, even if they are located in different blocks would not disentitle the assessee from getting the benefit of Section 54-F of IT Act. No hesitation in holding that the order of ITAT which has been called in question before us is correct, there is no infirmity in the said order, does not call for any interference and we are of the view that the said order deserves to be confirmed. Once it is in the same location/address, the question of whether it is in the same block or in different blocks does not arise for consideration. To our mind, as long as all the flats are in the same address/location even if they are located in separate blocks or towers it does not alter the position. In the instant case, after all, all the flats are a product of one development agreement of the same piece of land being said land. Therefore, we make it abundantly clear that even if flats/apartments are in different blocks and different towers as long as they are in same address/location it does not disentitle the assessee from getting the benefit of Section 54-F of IT Act. Therefore, the sole and sheet anchor submission of counsel for Revenue that the 15 flats in the instant case are located in the different blocks does not impress us. We are unable to persuade ourselves that this will disentitle the assessee from getting the benefit of Section 54-F as all the flats are in the same location/address and all flats are by products of one development agreement with the same builder. The logic behind our view is that the assessee, irrespective of whether it is one flat or many flats, gets proportionate undivided share in land only for the same piece of land. Therefore, assessee does not buy more than one property in that sense of the matter. Flats, apartments are completely based on co-ownership. Thus we conclude that the assessee is entitled to the benefit of Section 54-F of IT Act. - Decided in favour of assessee.
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2017 (3) TMI 393
Reopening of assessment - scrutiny assessment u/s 143(3) sought to be reopened by AO solely relying upon the DVO’s report - Held that:- Nothing is on record that except the DVO’s report there was any further inquiry and /or material available with the Assessing Officer to form an independent opinion that the income chargeable to tax has escaped the assessment for the Assessment Year 2005-06. As held by Hon’ble the Supreme Court in the case of Dhariya Construction Co. (2010 (2) TMI 612 - Supreme Court of India) opinion given by the District Valuation Officer is not per se information for the purpose of reopening an assessment under Section 147 of the Act. Thus solely on the basis of the DVO’s report, the Assessing Officer is not justified in reopening the assessment, which was, as such, scrutiny assessment under Section 143(3) of the Act. - Decide n favour of assessee
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2017 (3) TMI 392
Carbon receipts - accrual of income - treatment as capital receipt or revenue receipt - Held that:- carbon receipts were neither sold nor transferred by the assessee during the year under consideration and therefore, the same cannot be said to have been included in the income of the assessee in the year under consideration. It cannot be said that the learned CIT(A) as well as the learned Tribunal have committed any error in deleting the addition and holding that as neither the carbon receipts were sold and/or transferred in favour of foreign companies in the year under consideration, the same cannot be included as receipt / income in the year under consideration. See Commissioner of Income Tax Versus M/s Excel Industries Ltd. and Mafatlal Industries P. Ltd. [2013 (10) TMI 324 - SUPREME COURT ] - Decided in favour of assessee.
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2017 (3) TMI 391
Validity of notice u/s 158BC - AO asked the assessee to file the return within fifteen days of the service of the notice - Held that:- While block assessment is to be made, the Assessing Officer is having knowledge about the statutory provision and while issuing notice he should have mentioned in it about his source of power and should have referred to time which is required to be given for the purpose of filing of return under section 158BC of the Act. The words mentioned in the notice are `within fifteen days’ whereas the provision mandates the time of “not less than fifteen days”. In view of the decisions more particularly New India Industries Ltd. (1995 (1) TMI 66 - SUPREME Court), we are of the opinion, fifteen days means, clear fifteen days which is the requirement under law. In that view of the matter, we are of the view that the notice which was issued by the authority asking the assessee to file the return within fifteen days is not in accordance with the provisions of the Income-tax Act and therefore it is invalid. In our view, the authority who is issuing the notice must be aware of the Act and must construe the provision strictly. The words `not less than fifteen days’ have to be interpreted correctly. In that view of the matter, since the Assessing Officer asked the assessee to file the return within fifteen days of the service of the notice, the notice issued by the Assessing Officer is invalid. We are, therefore, of the opinion that the Tribunal has rightly cancelled the order of the Assessing Officer. The questions referred to us are, therefore, answered in favour of the assessee and against the revenue.
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2017 (3) TMI 390
Penalty under Section 271(1)(c) - claim made under Section 57 - Held that:- Assessee, having realised that the expenditure claimed towards travelling under Section 57 of the Act was not tenable, offered the amounts expended to be added to her income and, accordingly, paid the requisite tax and interest upon the same. In our opinion, this was not a case, where, the Assessee could be said to have either concealed particulars or furnished inaccurate particulars of her income. It was, essentially, a case, where, an untenable claim for deduction of travel expenditure under Section 57 of the Act had been made and that too based on the advise of a professional, i.e., an Accountant. - Decided against revenue
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2017 (3) TMI 389
Additions made on the basis of the reevaluation of the assesses’s property - assessment u/s 153A - AO referred the issue to the District Valuation Officer (DVO) - whether AO was justified in re-valuing the property based upon the replies to the queries by the assessee’s banker? - Held that:- The sale and the consideration received were reported by the assessee in the return filed. The transaction took place on 29.06.2007. The dispute vis-a-vis the transaction value is a matter as yet undertermined. The orders of the adjudicating authorities – most importantly that of the AO, nowhere discloses what was the fresh document or material seized which made him suspect the valuation of the property which ultimately led him to send queries to the assessee’s banker and also refer the matter to the DVO. No infirmity with the ITAT order which essentially held that the valuation by the banker, who provided credit could well be different from the valuation report for the transaction given that the assessee had purchased the property long ago. In other words, the absence of any material seized during the search proceeding could not have justified afresh examination of the valuation issue. No substantial question of law arises. - Decided against revenue.
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2017 (3) TMI 388
Disallowance u/s. 40[a] (ia) - whether the amendment to Section 40 [a](ia) is clarificatory and not to be treated retrospectively w.e.f 1st April 2005 ? - Held that:- Question whether explanation to Section 40[a](ia) of the Act is having retrospective effect or not - is squarely covered by the decision of Division Bench of this Court in Tax Appeal No. 412 of 2013 and other allied matters, by which it is held that the amendment made under Section 40 [a](ia) of the Act, brought out by the Finance Act 2010 w.e.f 1st April 2010 is having retrospective effect. See CIT-Ahmedabad IV Versus Omprakash R. Chaudhary [2015 (2) TMI 150 - GUJARAT HIGH COURT] Thus cannot be said that the learned Tribunal has committed any error in deleting the addition made on account of disallowance made under Section 40 [a](ia) of the Act. - Decided in favour of assessee.
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2017 (3) TMI 387
Addition u/s 41 - proof of ceasation of liability - Held that:- Tribunal has clearly recorded the evidence and findings of facts in favour of the respondent-assessee that the assessee has produced the documentary evidence in the form of ledger accounts and proof of payments made through Bank channel and PAN numbers also. In our opinion that prima facie, ought to have satisfied the learned Assessing Authority, about the existences of the transporters and genuineness of the transact ion undertaken by the respondent-assessee in the relevant period. The learned Tribunal has found that the summons issued by the Assessing Authority under Sections 131 and 133(6) of the Act could not be even served upon these transporter's, for which the explanation given by the assessee was that the mining activity having reduced after the particular period, such transporters had left the place in question and therefore they were not traceable. In our opinion, burden of the Revenue to summon such creditors or transporters for establishing that the liability has ceased could not be shifted upon the respondent - assessee. We do not find any material brought on record by the Assessing Authority to establish that such transporters could be actually brought before the Assessing Authority and upon their cross examination, their transactions were found to be fake or incorrect. On the contrary, the documentary evidence which was brought on record by the assessee perused the learned Tribunal, who had returned the a foresaid findings of facts in favour of the respondent-assessee. These findings of the facts appear to be just and proper and correct. - Decided against revenue
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2017 (3) TMI 386
Addition of bogus purchases - denial of natural justice - Held that:- We find that in this case additions have been made on the basis of a statement of suppliers that they were only providing accommodation bills. Despite request assessee has not been granted an opportunity to cross examine the suppliers. Moreover, no adverse inference has been drawn as regards the sales made by the assessee. In several cases higher courts have held that in such cases in absence of any infirmity found in the sales made purchase cannot be disallowed. As regards violation of the principles of natural justice by denying the opportunity to the assessee to cross examine the person on whose basis/statement additions was made Hon’ble jurisdictional High Court in the case of H R Mehta (2016 (7) TMI 273 - BOMBAY HIGH COURT ) has expounded that revenue was not justified in making additions at the time of reassessment without having first giving the assessee an opportunity to cross examine the Deponent understatement relied upon by the assessing officer. Further the decision from the Hon’ble Apex Court in the case of Kishanchand Chillaram (1980 (9) TMI 3 - SUPREME Court ) relied upon by Ld. CIT-A is also germane here. In the background of aforesaid discussion and precedent we find that the additions in this case are not justified. Hence we set aside the order's of authorities below and delete the addition. - Decided in favour of assessee
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2017 (3) TMI 385
Amount received on account of forfeiture of share application money by way of issue of share warrants - capital receipts OR revenue receipt - Held that:- Commissioner of Income Tax(A) has allowed assessee’s appeal in a right perspective by treating the amount of ₹ 94.80 lacs received as share application money for issuing of share warrants as capital receipt and not revenue receipt as it was not earned from regular business activities carried on by the assessee. We, therefore, find no reason to interfere with the order of ld. Commissioner of Income Tax(A) and uphold the same. See DCIT (OSD), Ahmedabad vs. Brijlaxmi Leasing and Finance Ltd.[2008 (2) TMI 516 - ITAT AHMEDABAD-B] - Decided against revenue
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2017 (3) TMI 384
Unexplained Money u/s.69A - whether the CIT(A) was justified in confirming the additions of ₹ 20,13,530/- made by the AO towards unexplained cash deposits? - Held that:- As based on the AIR information, the AO found cash deposits to the tune of ₹ 20,13,530/- with Kotak Mahendra Bank for acquiring bonds/debentures in the Financial Year relevant to Assessment Year 2008-09. We find that the CIT(A) has examined the issue in perspective. The order of CIT(A) appears reasoned and plausible. In the absence of any rebuttal from the assessee, we are not inclined to interfere with the findings of the CIT(A). - Decided against assessee.
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2017 (3) TMI 383
Revision u/s 263 - claim of TDS - Held that:- We note the facts marshaled on behalf of the assessee that the income towards differential amount of ₹ 16,03,521/- noticed by the Commissioner has been already offered for taxation in the year prior to the impugned AY 2006-07. The TDS has been claimed in the current assessment year as per certificate issued by the deductor as per its books of accounts. This has given rise to the mismatch in the figures of job-work. However, the impugned income has not escaped assessment at all. On the contrary, the income has been offered prior to the year in which it is sought to be taxed by the Commissioner. These facts could not be rebutted on behalf of the revenue at any stage of the proceedings before us. Clearly, the return of income filed by the assessee in not offering the job work charges in the assessment year 2006-07 when the income has already been offered in the earlier assessment year cannot be said to be erroneous by any stretch of imagination. Consequently, the assessment order passed u/s 143(3) of the Act cannot be said to be suffering from any ‘error’ on this score. Thus, one of the two conditions, as noted above, is clearly not satisfied. The order u/s 263 is, therefore, liable to be struck down on this score alone. In the absence of any demonstrable loss of revenue, interference in exercise of power under Section 263 cannot be justified. - Decided in favour of assessee
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2017 (3) TMI 382
Income from sale of the scrips - LTCG and STCG or business income - Period of holding - Held that:- We as, independent of the concession allowed by the aforesaid CBDT Circular No. 6/2016 (supra), which as observed by us at length hereinabove would not be available to the assessee as regards the profit/gain on sale of scrips which were held by the assessee for a period of less than 12 months, are however of the considered view that the conduct of the assessee company, nature of purchase/sale transactions of the shares as can be deciphered from the records, holding period of the shares, volume of transactions, treatment of the scrips by the assessee in its books of account, nature of business of the assessee company, source of purchase of shares and last but not the least, the very fact that the A.O. while framing ‘regular assessment’ under Sec. 143(3) in the hands of the assessee for the immediately preceding year, viz. A.Y. 2006-07, had accepted that the shares as claimed by the assessee were in the nature of ‘Investments’, and had assessed the loss on the sale of shares under the head ‘Capital gain’ by making a specific mention in the body of the assessment order that the ‘Short term capital loss’ of ₹ 8,35,225/- shown by the assessee on sale of shares shall be C/forward to the succeeding years. We thus in the totality of the aforesaid facts, are thus of the considered view that the conduct of the assessee duly goes to fortify and substantiate its claim , and as such the profit/gain on sale of the shares had rightly been reflected by the assessee company in its return of income under the head ‘Capital gain’. The profits/gains arising in the hands of the assessee company from the sale of the scrips had rightly been reflected in the return of income under the head ‘Capital gain’, viz. LTCG and STCG and the view of the A.O. which thereafter had been sustained by the CIT(A) that the assessee had been carrying out systematic purchase and sale transactions in shares, and thus was liable to be assessed as ‘business activity’ cannot be sustained and is thus vacated. We in the backdrop of our aforesaid observations are of the considered view that the assessee had rightly reflected the income arising in its hands from sale of shares under the head ‘Capital gain’. Disallowance u/s 14A - Held that:- We are of the considered view that the CIT(A) had rightly relied on the judgment of the Hon’ble Bombay High Court in the case of Godrej Boyce Company Ltd., Vs. DCIT (2010 (8) TMI 77 - BOMBAY HIGH COURT), and as such had correctly sustained the disallowance of ₹ 78,848/- u/s 14A in the hands of the assessee company. We find no infirmity in the order of the CIT(A)
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2017 (3) TMI 381
Addition for the cash found in search - unexplained cash - Held that:- We find that the assessee submitted a statement of availability of agricultural income at ₹ 1,28,191/- ( 4,40,016- 3,11,825) prepared after date of search i.e. 13.11.2007, by recording certain entries remained to be recorded after September 2007. However, this cannot be relied as no evidence of un-recorded entries was found during search. In view of this matter, were are of the considered view that cash of ₹ 1,25,000/- can be treated as explained out of seized cash of ₹ 2 lacs. Accordingly, the addition to that extent of ₹ 1,25,000/- is deleted and balance addition of ₹ 75,000/- is confirmed. Thus, the ground No. 1 and 2 of appeal is partly allowed in favour of the assessee.
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Customs
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2017 (3) TMI 407
Imposition of penalty u/s 114 (i) and 114AA of the CA, 1962 - Smuggling - red sanders - The Custom House Agent and Freight Forwarders had also hand in glove with the smuggling racket who were also conscious of the smuggling activity in respect of the offending goods - Held that: - The appellant did not inform the investigating authority about the modus operandi of the racket. Appellant was quite aware that a 20 feet container could conveniently carry logs of large size. Still he kept quite when the declared goods of yarn does not require such a huge and long container. That rules out transport of yarn. Appellant also did not disclose identity of Rajesh Gupta nor cooperated with the investigation to unearth the smuggling racket. Daniel Raj, the appellant was Managing Partner of CHA M/s. Jay Yess Agency. He in his statement dated 2.12.2011 admitted that the document given by T. Mariappan in respect of the attempted export was submitted by him to customs. When he was CHA, he was expected to be aware about the existence of Excise Range IVE. He did not inform the Customs or Excise authorities about forgery and fabrication of documents accompanying the offending goods. He also did not inform about use of false seal used to seal the container. This proved his ulterior motive for personal gain perpetuating the offence of attempt to export red sander - A person acting on the advice of another runs in risk if he does not ascertain veracity of the advice. Doctrine of Caveat Emptor makes the appellant liable under law. Customs law expects a CHA to be trustful to Customs. Non-disclosure of material facts and conspiracy against Customs brings him to the fold of law in view of both oral and documentary evidence came up against appellant. Appellant's conscious knowledge and intimacy to the smuggling surfaced with echoed evidence. Conduct of the appellant showed his hand in glove with the smuggling racket to act to the detriment of Customs. Accordingly, appellant's plea of innocence fails. He deceived Customs. His deception caused peril to the interest of Revenue. Penalty upheld - appeal dismissed - decided against appellant.
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2017 (3) TMI 406
Valuation of imported goods - lining material - NIDB data was used by Customs to be representative data for Revenue to disturb the value declared by the appellant - Held that: - NIDB data is not substitute of evidence. Therefore, fair adjudication is expectation of law confronting the materials supporting the NIDB data for rebuttal by the appellant - appeal allowed by way of remand.
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2017 (3) TMI 405
Imposition of penalty u/s 114 (i) - Smuggling - attempt to export red sanders, in the container meant for export of Natural Slate Stones - Held that: - Appellant has played an important part in the entire operation by unauthorizedly handling customs documents and customs related work and stepping into the shoes of a CHA by handling the entire customs related work - It is difficult to conceive that in the normal course, a person handling the CHA work and present during examination would not be able to make out the difference between the “Natural Slate Stones”, (declared cargo) and red sanders logs (cargo actually attempted to be exported) - the appellant is certainly not master mind and/or actual beneficiary of the attempted illegal export. Nonetheless, without the appellant’s role, such attempted export of red sanders logs would have been possible - The appellant has committed acts of commission and omission which make him liable to penalty imposed u/s 114 (i) of the act. Appeal dismissed - decided against appellant.
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2017 (3) TMI 404
Condonation of delay - Refund claim - SAD - N/N. 102/2007-Cus. dt. 14.9.2007 as amended by N/N. 98/2008-Cus. dt. 1.8.2008 - rejection on the ground that refund claim has been filed beyond the prescribed period permitted in the said notification - Held that: - Notification says that “importer shall file a claim for refund of the said additional duty of customs paid on the imported goods with the jurisdictional customs officer before the expiry of one year from the date of payment of the said additional duty of customs” - There is no provision for condonation of this prescribed period anywhere in the N/N. 102/2007-Cus. or in any of the amendments made thereto. Nor is there any such provision for condonation of delay in filing the refund claim available anywhere in the CEA, 1944 or the Rules made thereunder - Law cannot come to the assistance of the indolent especially when there is no provision for condonation of such delay - delay not condoned - appeal dismissed - decided against appellant.
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2017 (3) TMI 403
Quantum of redemption fine and penalty - the appellant imported certain consignments of scrap and declared the goods as Heavy Melting Scrap - Held that: - As the goods found were not as per the declared quantity, but the same were used as melting scrap, therefore, the redemption fine and penalty imposed by the Commissioner (Appeals) are on higher side - redemption fine and penalty reduced - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 402
Amendment to bill of entry to claim exemption Benefit of N/N. 94/1996-Cus dated 16th December 1996 - re-imported goods - the respondent applied for refund of this amount as they claimed to be eligible for the benefit of ‘nil’ rate of duty - Revenue took the stand that, in the absence of a challenge to the assessment, refund application cannot be entertained - Held that: - It is seen from section 149 of the Customs Act, 1962 that amendment of a document can be accorded on the discretion of the ‘proper officer’. In this particular dispute, the first appellate authority has effectively directed the lower authority to consider amendment of the bill of entry. This was an option that was always available to the respondent - It is only upon re-assessment, if allowed by the lower authority, that any consequential benefit would arise - appeal dismissed - decided against appellant.
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Service Tax
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2017 (3) TMI 426
CENVAT credit - insurance premium - denial on the ground that the insurance is for the benefit of the customers and because the premium though paid by the respondent is collected from the customers and paid to the insurance company the respondent is acting as a pure agent - Held that: - On perusal of the master policy which is furnished as part of the records, it is found that in one such master policy more than 20,000 members have been enrolled - the intention is to secure the loans advanced by the respondent - the credit of the service tax paid on the insurance premium, is eligible for credit, for the reason that it has direct nexus with the output services of the appellant who are engaged in financing activities - appeal dismissed - decided against Revenue.
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2017 (3) TMI 425
Refund of unutilized CENVAT credit availed on various input services - section 11B - time limitation - Held that: - the relevant date is receipt of input remittance. Notification restricts number of claims that can be filed in a quarter to one, hence, even in determination of last date commencing with the date of receipt of inward remittance, due regard must be had to the last date of quarter as a practical unavoidability. Therefore, refund claim can be filed within one year from last date of quarter of receipt of the input remittance - appeal dismissed - decided against Revenue.
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2017 (3) TMI 424
Refund claim - time limitation - Section 11B of the CEA r/w Section 83 of Chapter V of FA, 1994 - Held that: - refund application was made on 19.08.2016 i.e. after a period of almost two years and six months. As per Section 11B of the CEA, 1944 r/w Section 83 of Chapter V of FA, 1994, the refund application is required to be made within a period of one year from the relevant date described u/s 11B of the CEA. The adjudicating authority has no jurisdiction to condone the delay and / or grant refund if the refund application is not made within the period of one year. No power of condonation of delay are vested with adjudicating authority - it cannot be said that adjudicating authority has committed any error in rejecting the refund claim - petition dismissed - decided against petitioner.
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2017 (3) TMI 423
Commercial training or coaching services - fee not realized as per the fee structure and the fee is settled in between the institute and students after allowing incentives - Held that: - department has filed to prove that Apex Institute collected ₹ 1,57,83,000/- in the year 2010-11 - the calculation of taxable value and Service Tax liability was on the basis of forms recovered and the standard fee structure informed by the Manager of the institute and it was not on the basis of either fee receipt or books of account or bank statement. Therefore, impugned SCN is presumptive in nature - appeal allowed - decided in favor of assessee.
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2017 (3) TMI 422
Time limit applicable to file refund claim in terms of N/N. 41/2007-ST dated 06/10/2007 - the Original Authority rejected the claim on the question of time bar as the claim has been filed after six months of the relevant date - Held that: - the condition of time limit specified in the said notification to claim the exemption by way of filing a claim has to be adhered to by the respondent. There is no provision to extend the said time limit. There is no reason to bring in the provisions of Section 11B, in the absence of any such link or reference in the said notification - appeal allowed - decided in favor of Revenue.
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2017 (3) TMI 421
Refund claim - time bar - Section 11B of the CEA read with Section 83 of the FA, 1994 - services related to maintenance of Railway Track - appellant claim that the amount has been paid as Service Tax, when there was no requirement of making such payment to the Government - Held that: - The CESTAT is a creature of the statute. The same statute under Section 11B, governs grant of refund of any amount paid as Service Tax. The refund presently has been claimed for an amount of ₹ 8,19,311/-, which has been paid by the appellants as service tax. Consequently, the same can be paid only by way of satisfying Section 11B including that of time limit. The Refund claim in the present case has been filed beyond the time limit specified in Section 11B and consequently, has been rightly rejected in the impugned order - appeal dismissed - decided against appellant.
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2017 (3) TMI 420
Reverse charge mechanism - service of foreign agents - commission - demand for the period prior to 18.04.2006 in dispute - penalty - extended period - Held that: - during the relevant period, there was admittedly a lot of confusion in the field and law was not clear either to the assessee or to the Revenue itself and lot of litigation was going on legal issue of payment of tax on reverse charge basis. The Tribunal in the case of Royal Travels vs CCE, Vadodara [2010 (9) TMI 104 - CESTAT AHMEDABAD] has observed that once the penalty is not imposed or is set aside, the longer period of limitation cannot be invoked inasmuch as ingredients for both are same - the demand to be barred by limitation and accordingly, set aside - appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (3) TMI 419
Valuation - Transportation charges - whether the assessee is required to pay Central Excise duty on the amount of Transportation charges incurred under the provisions of Section 11A(1) of Central Excise Act, 1994 - Held that: - transportation charges are deductible, if the same are shown separately as provided u/r 5 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - in the present case, it is evident that transportation charges are shown separately by the respondent-assessee - appeal dismissed - decided against Revenue.
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2017 (3) TMI 418
CENVAT credit - failure to reverse the Additional Duty of Customs (SAD @4%) on removal of inputs as such - when such components/inputs were cleared as such the Cenvat credit in respect of other components of input duty reversed but the component related 4% of Additional Duty of Customs (SAD) was not reversed - applicability of Sub section (2B) of Section 11A of Central Excise Act, 1944 - Held that: - Sub section (2B) of Section 11A is not invokable in the present case for the reason that Revenue could not establish that there was intention to pay less amount as compared to require amount because the exercise was revenue neutral - there was no need for issue of SCN in respect of said issue i.e. the demand of ₹ 2,93,33,114/- - the question of imposition of penalty of said allowed violation does not arise. Whether removal of inputs as such by the manufacturer can be treated as trading activity? - demand - Held that: - clearance of inputs as such on which cenvat credit was availed does not amount to trading and in the present case allegations are made based on the presumption that such activity as trading. Therefore, that part of the Cause Notice is not sustainable. Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 417
Manufacture - whether assembling of computers amounts to manufacture? - Held that: - it is very clearly established that there was no computer manufacturing going on at the business premises of appellants - the Original Authority has in the impugned Order-in-Original has stated that "On summing-up of the cases of sale of computer system/computer sets sold", also implies that manufacture is not taking place - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 416
Claim of exemption on Footwear - benefit of N/N. 5/2006-CE - MRP not embossed on footwear - Section 4A of the Act - appellant contends that they are not required to emboss any M.R.P. on the Footwear as their products are sold to the Government department - benefit of notification also rejected on the basis of the statement of the Manager-Kamal Kumar who stated that they are not registered with the Central Excise Department. Held that: - the said observation and or statement of the Manager, Mr. Kamal Kumar, given at the time of search on the spot in the factory, is only a general statement and does not relate to the period in question particularly. On such vague statement, no conclusive averment can be said to be made so as to deny the exemption of N/N. 5/2006- CE - Further, it is admitted fact that the appellant has manufactured and cleared their product only to the Government Organization like-NCC & CISF etc. at the rate contract which is less than ₹ 250/- per pair, and reliance was placed in the case of Shri Suresh Kumar and others Versus Commissioner of Central Excise, Kanpur[2015 (6) TMI 733 - CESTAT NEW DELHI], where it was held that the provisions of Standards of Weights and Measures Act and the Rules made thereunder have no relevance for complying with the conditions of this exemption notification - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 415
Classification of goods - tents made of cotton - classified under Chapter sub-heading No. 630600 of CETA, 1985 or not? - benefit of N/N. 29/04-CE dated 09.07.2004 - Held that: - there is no dispute that the goods cleared by the respondent-assessee are falling under Chapter 63. There is also no dispute that said N/N. 29/04-CE dated 09.07.2004 provides exemption to all the goods falling under Chapter 61, 62 & 63 exempt goods of sub Heading No. 6307.10. There is no dispute that the tents cleared and referred by the said SCN did not contain any textile materials other than cotton - Therefore, the description of the goods covered by the said SCN matches with the entry in the said notification stating to be “cotton, not containing any other textile material" - goods were rightfully attracting 4% duty as provided by the said exemption under N/N. 29/04-CE dated 09.07.2004 - appeal dismissed - decided against Revenue.
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2017 (3) TMI 414
Penalty u/r 173Q - Held that: - in the first round of litigation there was no penalty imposed under Rule, 173Q against which no appeal was filed by the Revenue therefore in the impugned order imposition of penalty under Section 173Q is incorrect therefore same is dropped. Imposition of penalty on partners - appellant claim that penalties on partners are unwarranted as the issue involved is of interpretation of SSI exemption and quantification of duty - Held that: - the appellant were required to pay duty after the limit of SSI exemption but they have not discharged duty and goods were cleared clandestinely therefore the partners who are solely responsible for activity of the partnership firm are liable for penalty. However taking into consideration overall facts of the case we find that the partners deserve for some leniency accordingly we reduce personal penalty imposed on the partners from ₹ 2 Lacs each to ₹ 1 Lac each. Appeal disposed off - decided partly in favor of appellant.
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2017 (3) TMI 413
SSI Exemption - clubbing of clearances of related persons - extended period of limitation - Whether the clearances made by the respondents M/s.S.k.Sacks Pvt.Ltd. and M/s.A.S.Processors can be clubbed together and the benefit of SSI exemption be denied to them not in the facts and circumstances of the case? - Held that: - As both the units are private limited company and registration with the Central Excise and under the Companies Act, therefore, relying on the CBEC circular No.6/92 dated 29.5.1992, we hold that both companies are separate units and clearances of both the units cannot be clubbed together - when the units have separate registration with the Central Excise Department/Income-Tax Authorites, permission to do job work on behalf of other undertaking, factors like one supervisor working for both the units and one unit have certain financial dealings for the other unit cannot be a basis for clubbing of clearances of two units. M/s. S.K. Sacks Pvt. Ltd. and M/s A.S. Processors are two Private Limited companies separately registered with Excise Authorities, Income Tax, State Sales Tax Department and even under Factories Act. Further it is not a case where the allegation of the revenue was that M/s. A.s. Processors is a dummy unit - it emerges that the department has not brought on record sufficient evidence to sustain the charge of financial flow back from one unit to other and whatever the facts the department has brought on record are normal commercial transactions and cannot be termed as a case of financial flow back in any case - clubbing of clearances of two private limited companies i.e. M/s S.K. Sacks Pvt. Ltd., and M/s. A.S. Processors (P) Ltd., Amritsar is not sustainable. Whether the extended period of limitation is invokable or not? - Held that: - it is clear that the said is private limited company does not own any other factory in their own name, therefore, there is nothing wrong in the said declaration and the said declaration cannot be the basis for invoking the extended period of limitation. As all the facts were in the knowledge of the department, therefore, the show cause notice cannot be issued by invoking the extended period of limitation - the extended period of limitation is not invokable. Appeal dismissed - decided against Revenue.
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2017 (3) TMI 412
Interest - section 11AA of the CEA, 1944 - petitioners contends that they were called upon by the Range Superintendent to pay interest allegedly payable under Section 11AA amounting to ₹ 5,98,025.66/. The petitioners pointed out that on receipt of the communication from the Range Superintendent, entire sum of duty was paid. Once that was paid, Section 11AA has no application and to the facts and circumstances of the present case - Held that: - Section 11AA could have been invoked only when the sum determined under Subsection (2) of Section 11A has not been paid within three months from the date of the determination. Once this is not the case, then, interest as claimed and by taking recourse to the above provision, was not recoverable - As per the general law and prevailing then, the proceedings for recovery of interest for wrongful withholding of the sum is independent of the action under the Central Excise Act, 1944. There is no provision in the Central Excise Act, 1944 and then prevailing, enabling recovery of such interest. For all these reasons, we hold that the demand for interest in terms of the Central Excise Act, 1944 was not tenable - petition allowed - decided in favor of petitioner.
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2017 (3) TMI 411
Natural justice - appellant contends that that at the time of hearing of the appeal before the learned Tribunal, number of submissions were raised and numbers of decisions were cited, however they have not been dealt with and / or considered by the learned Tribunal. It is the case of the appellant-assessee that even subsequently when the ROM was filed pointing out the aforesaid, again the same have not been dealt with and / or considered by the learned Tribunal - Held that: - keeping in view, the impugned judgment and order passed by the learned Tribunal and even the RMO filed by the appellant, we are of the opinion that the decisions relied upon by the appellant have not been considered at all by the learned Tribunal. Some of the submissions which were raised are also not dealt with by the learned Tribunal - Under the circumstance, the matter is required to be remanded to the learned Tribunal to consider the appeal afresh in accordance with law and on merits and after dealing with all the submissions which may be raised and after dealing with the decisions cited at the bar - appeal allowed by way of remand.
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2017 (3) TMI 410
Sealing of machinery - seizure of raw materials and other materials - prayer for release of raw materials and de-sealing of machinery - Held that: - a period of more than six months has passed since the goods in question have been seized and the two machines in question have been sealed. Therefore, in the light of the provisions of sub-section (2) of section 110 of the Customs Act, since no notice under sub-section (1) thereof has been given in respect of the sealed machines, and no order extending the period of six months has been passed, continuation of the sealing of the machines in question, is clearly without any authority of law - the sealing of machinery not justified. Insofar as the release of raw materials is concerned, by virtue of the provisions of section 110A of the Customs Act, the respondent authorities are duly empowered to release the goods pending adjudication on taking a bond from the owner in proper form with such security and conditions as the adjudicating authority may require - The deponent has submitted that he is willing to execute such bond as may be required for release of the raw materials - there should be no impediment in releasing the raw materials subject to the petitioner executing the requisite bond. Petition allowed - decided in favor of petitioner.
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2017 (3) TMI 409
Valuation - enhancement of assessable value - matter on adjudication - whether the assessee can be called upon to pay duty when the assessment has not been finalized and the matter is still on adjudication? - Held that: - the Commissioner had no jurisdiction to call upon the assessee for adoption of any other prices, till such time, assessable value through said pricelist was finalized by the Divisional Assistant Commissioner. So far as undervaluation charges are concerned, the Jurisdictional Commissioner did not have jurisdiction to demand duty till such time the price lists were finalized and if aggrieved Appeal was not filed before Commissioner (Appeals) and such appeal was not decided by Commissioner (Appeals). So far as the allegation of short levy on production arrived at on the basis of Gas consumption is concerned, we find that the ruling by Hon’ble Supreme Court in the case of Commissioner of Central Excise, Meerut-I Versus R.A. Castings Pvt. Ltd. [2010 (9) TMI 669 - ALLAHABAD HIGH COURT], is squarely applicable in the present case wherein it was ruled that on the basis of consumption of energy required for manufacture of unit quantity of goods quantum of manufacture of goods cannot be arrived at and such conclusion of manufacture shall be treated as presumptive - the confirmation of demand on the basis of consumption of Gas does not survive. Demand set aside - penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 408
Valuation - agreement with dealers for sales promotion - advertisement expenses - few dealres cannot arrange the advertisements and request the assessee to organize the advertisement of the products in their area, the assessee fulfills the same - whether the advertisement expenses initially incurred by the assessee and which were recovered from the dealers would be includible in the assessable value or not? - Held that: - the said issue came up before this Tribunal in the assessee's own case for the earlier period [2015 (8) TMI 101 - CESTAT NEW DELHI], wherein this Tribunal held that The clauses of requiring the dealers to vigorously promote, develop and maintain sales of the product and parts to the satisfaction of and in the manner required by the appellant cannot be treated as the clause which gives an enforceable legal right to the appellant to insist on incurring of certain quantum of expenses on advertisement by the dealers. For this reason also, the advertisement expenses recovered from the dealers would not be includible in the assessable value - demand of duty with interest and penalty set aside - appeal allowed - decided in favor of assessee.
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CST, VAT & Sales Tax
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2017 (3) TMI 401
Legality and validity of suo motu revisional order passed by the Joint Commissioner - the assessee has been deprived of his right to object to the levy of higher rate of tax of 12.5% on the sale of second hand Tippers - Held that: - once all the orders passed by the authorities below were set aside by the learned Tribunal, the learned Tribunal ought to have directed the assessing authority to pass fresh orders in accordance with law. Not having done that, even though the records were sent back to the assessing authority under the impugned order, we are of the opinion that the assessee as well as the purchaser of the second hand Tippers have been deprived of their legal rights to raise their contentions before the assessing authority, even though the orders of the lower authorities were set at naught and matter was sent back by the Tribunal to square one, in the absence of any further directions by the learned Tribunal, this difficulty has arisen - matter will now stand restored back to the assessing authority and the assessing authority will be required to undertake the assessment procedure afresh - petition allowed by way of remand.
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2017 (3) TMI 400
Natural justice - validity of assessment order - petitioner's claim that no personal hearing was given and that objections could not be filed within 15 days from the date of receipt of a copy of the pre-assessment notice - Held that: - Circular, cannot whittle down the width and amplitude of what the statute provides for. Therefore, the circular will have to be read in consonance with the provisions of the statute, if it is to be sustained. Non-provision of personal hearing impregnates the impugned order with illegality - the impugned order is set aside - petition allowed - decided in favor of petitioner.
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