TMI Tax Updates - e-Newsletter
March 15, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
The insertion of words “or assessable“ by amending Section 50C with effect from 01.10.2009 is neither a clarification nor an explanation to the already existing provision and it is only an inclusion of new class of transactions with prospective effect - HC
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Income Tax:
Additions to turnover & profit computed in reassessment - AO has no jurisdiction to go beyond the value of the closing stock declared by the assessee and accepted by the Commercial Tax Department. - HC
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Income Tax:
Excess provision claim under the heads consultancy charges - During the negotiations with the parties the provision was made on the basis of original claim made by the parties - held as ascertained liability - deduction allowed - HC
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Income Tax:
Registration u/s 12AA - Period of six months is not mandatory - The order of ITAT in holding that registration was deemed to have been granted on not passing order in the application within the stipulated period of six months cannot be sustained - HC
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Income Tax:
Difference in sale consideration in books of buyer and seller - it would be an anomaly if in the case of purchaser the sale consideration of Rs.6,48,000/- is accepted and it is not accepted in the case of the seller. - HC
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Income Tax:
Accrued interest on non-performing assets(NPA) - merely because for accounting purpose, the assessee was to follow RBI guidelines it would not mean that the assessee was not liable to show the accrued interest income - HC
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Income Tax:
Penalty u/s 271D - Loan and advances to partners - no separate identity for the partnership firm and that the partner is entitled to use the funds of the firm - No penalty in view of Sec. 273B - HC
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Income Tax:
Penalty being 300% by invoking Section 271(1)(c) - return was revised before completion of assessment - Revenue is not justified in imposing penalty under Section 271(1)(c) - HC
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Customs:
Ex-parte order rejecting the repetitive adjournments - The petitioners had no right to seek unlimited adjournments nor seek adjournment without any basis. - HC
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Corporate Law:
Honouring of Cheque even after stop payment request submitted to bank - a person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it. - HC
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Service Tax:
Refund of service tax - notification no. 41/2007 - period of limitation - On the basis of an error in the clarification issued, no benefit can be claimed by the appellant. - AT
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Service Tax:
Rent-a-cab service versus hire charges - The activity, prima facie, amounts to operation of rent-a-cab scheme by the appellant for the benefit of service recipient. - AT
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Service Tax:
Service tax on lease of aircraft - Operating Lease Agreement - transfer or right to use the aircraft - deemed sale - prima facie case in favour of assessee - AT
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Central Excise:
Valuation - there is no question for inclusion of freight charge in the assessable value even if the appellant have received the more amount towards the freight than the expenses on freight actually incurred - AT
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Central Excise:
Screening of Iron Ore - Manufacture - if no manufacturing activity has taken place, mere mention of the goods in the tariff will not make the said goods as excisable goods - AT
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Central Excise:
Cenvat credit availed on the basis of photocopies or duplicate copies of the invoices of input service provider - proportionate credit availed at various locations - credit disallowed - AT
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Central Excise:
Fraudulent rebate of Central Excise duty demanded - recovery of duty cannot be held jointly and individual duty liability is to be segregated separately against each individual. - AT
Articles
Notifications
News
Case Laws:
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Income Tax
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2013 (3) TMI 271
Provision of Section 50C invoked - sale of the property has not been registered - AO computed the long term capital gains, adopting the guideline value as the sale consideration, instead of the consideration admitted by the assessee - whether the AO is entitled to take the value of the property assessable by the authority of the State Government for the purpose of payment of stamp duty in respect of said transfer or not? - Held that:- If the Board has issued a circular clarifying the applicability of Section 50C in pursuance of the amendment made by Amendment Act 2 of 2009 that the scope of the provisions does not include transaction which are not registered with stamp duty valuation authority and executed through agreement to sell or power of attorney is only prospective in nature and cannot be applied retrospectively, failure to understand as to how the Revenue can canvass the same issue in this case which in effect is against the circular issued by the Board. The Revenue is bound by the circular issued by the Board. See State of Tamil Nadu and another Vs. India Cements Ltd. and another reported in (2011 (4) TMI 1080 - SUPREME COURT OF INDIA) wherein held that the circulars issued by the Revenue are binding on the Department and therefore, they cannot repudiate that they are inconsistent with the statutory provisions. Thus the insertion of words "or assessable" by amending Section 50C with effect from 01.10.2009 is neither a clarification nor an explanation to the already existing provision and it is only an inclusion of new class of transactions namely the transfers of properties without or before registration. However after introduction of the words "or assessable" after the words "adopted or assessed", such transfers where the value assessable by the stamp valuation authority are also brought into the ambit of Section 50C. Thus such introduction of new set of class of transfer would certainly have the prospective application only. Hence the assessee's transfer admittedly made earlier to such amendment cannot be brought under Section 50C. Revenue is not entitled to canvass the correctness of the order passed by the Tribunal, more particularly in the light of the circular issued by the Board - substantial question of law answered against the Revenue.
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2013 (3) TMI 270
Additions to turnover & profit computed in reassessment - whether the additions can be made solely based on the information received in the course of search conducted by totally ignoring the sales tax return filed by the assessee and accepted by the sales tax Authorities - Held that:- As decided in Commissioner of Income-Tax Versus Anandha Metal Corporation [2004 (7) TMI 49 - MADRAS HIGH COURT] unless and until the competent authority under the Sales Tax Act differs or varies with the closing stock of the assessee, the return accepted by the Commercial Tax Department under the TNGST Act is binding on the Income Tax Authorities and the AO, therefore, has no power to scrutinise the return submitted by the assessee to the Commercial Tax Department and accepted by the said authorities. AO has no jurisdiction to go beyond the value of the closing stock declared by the assessee and accepted by the Commercial Tax Department. In this case Tribunal, therefore, rightly found that the Department could not have made the addition merely on the basis of the statement of third parties - in favour of assessee. Insofar as the assessment year 2002-03 is concerned, no materials seemed to have been placed by the assessee viz., the sales tax returns for the said year before the authorities below . Even the Tribunal in its order has not referred to the sales tax return filed by the assessee and the order passed therein in respect of the assessment year 2002-2003. Thus the Tribunal ought not to have allowed the appeal in respect of the assessment year 2002-2003 also - matter is remitted back to the Assessing Officer to find out as to whether any sales tax return has been filed by the assessee in respect of the assessment year 2002-2003 and to pass a revised assessment order - in favour of assessee for statistical purposes..
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2013 (3) TMI 269
Entitlement for deduction in respect of donations to the Chennai Mathematical Institute - AO pointed out that the donations were paid by the two companies viz., SCTPL and SIL to the CMI and the donee also issued the receipts in favour of those two companies only - Held that:- As it is seen that the assessee requested the other two companies to make the expenditure on their behalf by way of scientific research as it was not having sufficient funds at that time. This fact is not disputed by the Revenue or disproved by them. Therefore, the payment was made by the other two companies to the CMI. Even though they made the payment and obtained receipts in their name, the fact remains that they have not claimed any deduction nor shown those expenditure in their books of accounts . On the other hand, it is only the assessee who had shown expenditure in the journal entry and claimed deduction. It is also stated that the assessee had paid the money subsequently to those two companies in the subsequent year. Therefore, the fact remains that what was paid to the CMI by the other two companies was not actually paid by them and it was paid only on behalf of the assessee. When the payment, receipt and the status of the CMI as notified under Section 35(1)(ii) by the Government of India were not disputed, failure to understand as to how the assessee can be disallowed deduction under Section 35(1)(ii). Even the said expenditure was shown in the accounts placed before the IRDA in the second half of the assessment year. Thus the assessee is the actual payer to the CMI for its scientific research and consequently entitled to deduction under Section 35(1)(ii) - in favour of assessee. Excess provision claim under the heads consultancy charges and professional fees - Held that:- It is a provision for professional fees and consultancy charges. The payment liability of such charges or fees by the assessee was certain. Though the liability was certain, only the quantum was not certain at the time of filing the return, in view of the continuous negotiations with the parties. Therefore, the assessee was left with no other option to make provision based on the original claim made by the parties. When such being the factual position, the decision reported in Commissioner of Income Tax Vs. Forbes Campbell Finance Ltd.[2012 (7) TMI 662 - MADRAS HIGH COURT] is not helpful to the Revenue in this case. Thus, question of law answered in favour of assessee. Disallowance of expenditure on setting up of a new office at Mumbai - Held that:- Unable to appreciate the contention of the Revenue as to how Mangayarkarasi case [2009 (7) TMI 17 - SUPREME COURT] can be applied to the case on hand when the facts are totally different and distinguishable and the deduction sought to be made by the assessee is not the one under Section 31 and on the other hand, as rightly contended by the assessee, the deduction was sought in respect of the expenses made towards designing and lay out as well as other temporary partition and construction made for making the office functional . When that being the factual position the decisions of this Court reported in Commissioner of Income Tax Vs.Ayesha Hospitals P.Ltd.(2006 (10) TMI 117 - MADRAS HIGH COURT), Commissioner of Income Tax Vs Sanco Trans Ltd.(2006 (1) TMI 83 - MADRAS HIGH COURT) and Thiru Arooran Sugars Ltd., Vs. Deputy Commissioner of Income Tax (2013 (2) TMI 450 - Madras High Court) wherein similar expenses made by the respective assessees therein in the leased premises and found that such expenses made by the assessee was deductible as revenue expenditure - in favour of the assessee.
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2013 (3) TMI 268
Registration granted to trust - Whether ITAT was right in holding that registration had been granted to the Trust if the application was not either accepted or rejected within a period of six months from the end of the month in which such application was filed by the applicant Trust? - Held that:- Period of six months as provided in Sub-section (2) of Section 12AA is not mandatory. Though the word shall has been used but it is well known that to ascertain whether a provision is mandatory or not, the expression 'shall' is not always decisive. It is also well known that whether a statutory provision is mandatory or directory has to be ascertained not only from the wording of the statute but also from nature and design of the Statute and the purpose which it seeks to achieve. Herein the time frame under Sub-section (2) of Section 12AA of the Act has been so provided to exclude any delay or lethargic approach in the matter of dealing with such application. Since the consequence for non-compliance with the said time frame has not been spelt out in the statute, this Court cannot hold that the said time limit is mandatory in nature nor the period of six months has been couched in negative words. When public duty is to be performed by the public authorities, the time-limit which is granted by the Statue is normally not mandatory but is directory in the absence of any clear statutory intent to the contrary. As decided in irector of Income Tax (Exemption) v. Anjuman-E-Khyrkhah-E-Aam [2010 (12) TMI 957 - MADRAS HIGH COURT] Section 12AA (1)(b)(i) and (ii) of Income Tax Act makes it clear that there is a statutory mandate imposed on the Department to pass an order in writing either registering the Trust/Institution or refusing to register the Trust/Institution. Thus the conclusion of the Tribunal in holding that registration was deemed to have been granted on not passing order in the application within the stipulated period of six months cannot be sustained and remitted the matter back to the Director of Income Tax (Exemption) to afford an opportunity of hearing to the assessee-Trust and hearing the matter afresh.
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2013 (3) TMI 267
Adoption of sale consideration - Difference in sale consideration in books of buyer and seller - In the agreement of sale dated 9.9.1999, the sale consideration was stated as Rs.6,48,000/-; whereas the sale deed was executed on 21.08.2000 stating the sale consideration as Rs.2,33,760/-. - In her return, the purchaser of the property shown that an amount of Rs.6,48,000/- was invested for purchase of the property - Held that:- As pointed out by the Tribunal, it would be an anomaly if in the case of purchaser the sale consideration of Rs.6,48,000/- is accepted and it is not accepted in the case of the seller. Referring to the recitals in the agreement of sale and that it was executed by Asiya Basheer, wife of assessee which is substantiated by the income tax returns filed by the purchaser, the AO rightly held that sale consideration was Rs.6,48,000/- which was confirmed by the CIT(Appeals) and the Tribunal. No legal infirmity warranting interference with the order of the Tribunal. The substantial question of law raised in this appeal is answered infavour of the revenue and Tax Case (Appeal) is dismissed.
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2013 (3) TMI 266
Accrued interest on non-performing assets(NPA) - whether assessable to income-tax or not? - assessee is a Non-Banking Financial Company - Whether ITAT was right in deleting the interest accrued on non performing assets from the computation of the taxable income? - Held that:- Mere characterisation of an account as a NPA would not by itself be sufficient to say that there is uncertainty as regards realizability of income or interest income thereon. Accrual of interest is a matter of fact to be decided separately for each case on the basis of examination of the facts and circumstances. The same would require an assessment of the relevant facts and circumstances of each case. Only by assessment of facts and circumstances, the Authority could arrive at a decision whether there is uncertainity of the interest accrued on NPA. Only when there is uncertainity of realizability of income or interest income then it is not chargeable to tax. The system of accounting followed only recognises it bringing the income to books. The adopted accounting policy i.e., recognising income on NPA accounts only subject to realisation does not serve as a standard category. As in the present case, Assessing Officer has not recorded findings whether there is any uncertainty in collection of income. There is nothing to indicate that the "interest income" is non-recoverable. Individual ledger accounts of the borrower are to be examined. CIT (A) and the Tribunal had not considered the matter in the light of the decision of Southern Technologies Limited(2010 (1) TMI 5 - SUPREME COURT OF INDIA) where liability of income-tax is concerned, the same was governed by the Income-tax Act and merely because for accounting purpose, the assessee was to follow RBI guidelines it would not mean that the assessee was not liable to show the accrued interest income when it had accrued to the assessee under the mercantile system and exigible to tax under the Act. RBI Directions 1998 has nothing to do with the computation or taxability of the provisions for "accrued interest" for NPA under the Income-tax Act. Thus the Orders of the Tribunal are set aside and the matters are remitted back to the Assessing Officer for consideration of the matter afresh in the light of law laid down by the Southern Technologies(supra) and above observation and pass orders.
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2013 (3) TMI 265
Penalty u/s 271D - advance has been accounted as loan and interest debited - assessee was a partner in four firms and Proprietor in Reliance Realtors - ITAT deleted the levy of penalty - Held that:- Referring to Commissioner of Income Tax v. R.M.Chdambaram Pillai [1976 (11) TMI 2 - SUPREME Court], Assistant Director of Inspection (Investigation) v. Kum.A.B.Shanti (2002 (5) TMI 4 - SUPREME COURT), Commissioner of Income Tax v. Lokhpat Film Exchange (Cinema) [2007 (1) TMI 165 - RAJASTHAN HIGH COURT] there is no separate identity for the partnership firm and that the partner is entitled to use the funds of the firm and that the assessee acted bonafide and that there was a reasonable cause within the meaning of Section 273B of the Act. No error or legal infirmity in the order of the Tribunal warranting interference. The substantial question of law raised in this appeal is answered in favour of the assessee.
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2013 (3) TMI 264
Penalty being 300% by invoking Section 271(1)(c) - as per AO assessee failed to furnish complete details from bank statement - ITAT deleted the levy - Held that:- On going through the materials placed before this Court, it is seen that the AO has subsequently found that the said deposit was made for the period commencing from 01.04.2004 to 29.03.2005. Therefore, when the AO himself has found that the said deposit was not made on a single day, it cannot be said that the assessee had failed to furnish complete particulars. The Tribunal has categorically found that in the return, the assessee had shown the income on estimate basis at Rs.1,99,440/- and such estimation of income was enhanced by the Assessing Officer and consequently, imposed penalty. Therefore, from the above facts it is clear that levy of penalty was based on the estimation of income. There cannot be any imposition of penalty based on estimation of income. As decided in Commissioner of Income Tax v. Reliance Petroproducts (P) Ltd. 2010 (3) TMI 80 - SUPREME COURT) in order to bring the case under Section 271(1)(c) there has to be concealment of particulars of the income of the assessee and the assessee must have furnished inaccurate particulars of his income. Here, it is the admitted case that the assessee filed revised profit and loss account statement showing the net profit of Rs.3,92,649/- being 5% on Rs.78,52,980/- and the same having been done before the assessment was completed, thus we fail to understand as to how the Revenue is justified in imposing penalty under Section 271(1)(c) - appeal filed by the Revenue dismissed - against the Revenue.
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Customs
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2013 (3) TMI 263
Confiscation of an imported car and penalty imposed - statement as evidence - held that:- when there is a cloud in the receipt issued on 18.11.1997, the Tribunal had rightly refused to accept the same. Insofar as the the statement given by the said Abdul Razak is concerned, it is needless to say that any statement made should be supported by materials. The Revenue cannot rely on the statement made in the absence of any substantiating documents, especially when the first respondent on the other hand proved that he is the purchaser of the said vehicle with valid documents and imported the same in this country with the support of such valid documents. Also it cannot be ignored that the said Abdul Razak though gave a statement on 22.2.2000, had however immediately retracted the same on the very next day i.e. On 23.2.2000. No doubt, after a period of four months he wanted to stick on to the earlier statement given on 22.2.2000. Such contradictions and inconsistency on the part of the Abdul Razak only shows that there is no bonafide on his part. Therefore, the Tribunal was right in rejecting those statements as inadmissible in evidence. Therefore, even though such statement made under Section 108 of the Customs Act is admissible in evidence, the authorities are not necessarily bound to accept the same as such in the absence of further materials to substantiate the contents of such statement - Decided in favor of assessee
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2013 (3) TMI 262
Ex-parte order rejecting the repetitive adjournments - Food Grade Hexane procured without payment of Central Excise duty in the manufacture of De-Oiled Cake which were purchased and subsequently exported under claim of Drawback - SCN issued demanding duty drawback amount with interest and further penalty under Section 114 and 114AA of Customs Act, 1962 - assessee contested against rejecting the application for adjournment seeked to approach the Settlement Commission - Held that:- There was no statutory duty on part of the Additional Commissioner to grant adjournment to enable the petitioners to approach the Settlement Commission. His duty was to consider the request of the petitioners on the basis of reasonableness. The petitioners had no right to seek unlimited adjournments nor seek adjournment without any basis. In fact, proviso to Section 122A of the Act provides that the adjournment shall not be granted for more than three times. On previous two occasions, the petitioners had prayed for adjournment on the ground that the Association was to approach the C.B.E. & C. for finding some solution. The third request was made on the premise that the petitioners would like to approach the Settlement Commission. In such request letter also, the petitioners did not specify any time within which they would make such an application nor did they pray for any specific adjournment date. What they conveyed to the Additional Commissioner was that they would like to approach the Settlement Commission and that a copy of such an application would be produced as soon as the same is filed. In that view of the matter, the Additional Commissioner should keep the matter in abeyance. As the request of the petitioners for time was thus open-ended it was not the statutory duty of the Additional Commissioner to accept any application for adjournment. Under the circumstances no reason to interfere by setting aside the order of the Additional Commissioner only with a view to reviving the stage of the proceedings being pending before the Additional Commissioner so as to enable the petitioners to approach the Settlement Commission. In the result, the petition is dismissed.
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Corporate Laws
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2013 (3) TMI 261
Freezing of accounts - Petitioner having business dealings with M/s.Lakshmi Ganesh Textiles (P) Ltd., Coimbatore who in the course of business transactions issued a cheque towards part payment for the purchases made from the petitioner & the said cheque was honoured and subsequently when petioner issued cheques to third parties towards the amounts payable by him, but it was dishonoured stating that the account was freezed - Held that:- It is true that when the cheque was presented by the petitioner on 05.04.2012, the same was honoured, but earlier to the said date i.e. on 02.04.2012 itself, instructions were issued by M/s.Lakshmi Ganesh Textiles (P) Ltd., for stopping the payment referring to some dispute with regard to quality and quantity of the goods supplied by the petitioner. Though the receipt of such letter was acknowledged by the 3rd respondent on 03.04.2012, as explained in the counter affidavit, it appears, they have not uploaded it in the system for stop-payment alert, and due to the same, by oversight, the cheque, which was presented by the petitioner, was honoured and the amount was credited to his account. In view of the letter dated 02.04.2012, which was received by the 3rd respondent on 03.04.2012, it is a mistaken transfer, which falls within the scope of Section 72 of the Indian Contract Act, as per which, a person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it. As the bank has paid to the petitioner by mistake, contrary to the stop-payment letter dated 02.04.2012, it is the obligation on the part of the petitioner to pay- back such amount on his own. In view of such mistaken transfer and in view of the letter dated 23.04.2012, addressed by the 3rd respondent to the 2nd respondent, where the petitioner operates his account, the account is freezed to realise the amount, which was mistakenly transferred to his account - the petitioner is not entitled for the relief sought for in this writ petition.
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Service Tax
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2013 (3) TMI 276
Cenvat Credit - input services - outdoor catering - held that:- there is no allegation against the respondents as if any amount from the employees has been recovered on account of subsidized food. In the case of CCE Nagpur vs. Indoworth (I) Ltd., this Tribunal has allowed the CENVAT credit relying on the decision of Ultratech Cement Ltd – [2010 (10) TMI 13 - BOMBAY HIGH COURT] wherein the Hon'ble High Court has held that any service taken by the assessee which has been used in their business of manufacturing, credit on the same is available to them. - Decided in favor of assessee.
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2013 (3) TMI 275
Refund of service tax - notification no. 41/2007 - period of limitation - held that:- Notification 41/07 is an exemption notification and the exemption is operationalised through a refund mechanism. The said notification prescribes the complete procedure and time limit for claiming the benefit thereunder. Therefore unless the conditions specified therein are satisfied including those relating to time limits, refund claims can not be entertained. The amendment made to the said notification vide notification 32/08 dated 18-11-08 is only prospective and can not be applied to the past refund claims for which claims have to be filed within the time limit stipulated therein. On the basis of an error in the clarification issued, no benefit can be claimed by the appellant. - Decided in favor of revenue.
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2013 (3) TMI 274
Rent-a-cab service versus hire charges - held that:- The records show that the vehicles were maintained by the appellant in accordance with the specifications laid down by the service recipient. The activity, prima facie, amounts to operation of rent-a-cab scheme by the appellant for the benefit of service recipient. For this service, the appellant was collecting rent based on the seating capacity as well as the kilometers run by each vehicle. There is nothing on record to show that the appellant was transacting a business with the other company which was of a different nature known to the trade than rent-a-cab operator's service. The decision of the Hon'ble High Court in the case of 2010 (4) TMI 283 - PUNJAB & HARYANA HIGH COURT is clearly in support of the Revenue. - Prima facie against the assessee - pre deposit ordered partly.
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2013 (3) TMI 273
Service tax on lease of aircraft - Operating Lease Agreement - transfer or right to use the aircraft - appellant submitted that, in terms of sub-clause (d) of the Article 366(29A), tax on the sale or purchase of goods included a tax on transfer or right to use any goods for any purpose for cash. - appellant clarifies that no sales tax is being paid on the said deal, on account of import of the aircraft, which is covered by exemption in terms of provisions of Section 5 of the General Sales Tax Act, 1956. Nevertheless, he submits that inasmuch as the deal is required to be considered as ‘deemed sale’ and the sales tax and service tax being mutually exclusive to each other, the confirmation of service tax against the appellants is not justified. The appellants has a good prima facie case in its favour. - stay granted.
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Central Excise
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2013 (3) TMI 260
Valuation - inclusion of Differential freight - place of removal - appellant supplying Thermit Powder and Thermit Welding equipment to Indian Railways against the supply contracts - two types of contract in the first type the price is on FOR destination price which includes element of freight & in second type there is the factory gate price plus freight on per pieces basis - duty demand with equivalent penalty - period of dispute 1992-93 to 1994-95 - Held that:- During the period of dispute the place of removal was the factory gate or the warehouse where the goods have been permitted to be stored without payment of duty. Thus in accordance with the definition of 'place of removal’, in the present case the it would be factory gate, and hence, the value of the goods would be the price for delivery at the factory gate. Therefore there is no question for inclusion of freight charge in the assessable value even if the appellant have received the more amount towards the freight than the expenses on freight actually incurred. In case where the price quoted was on FOR price, the appellant have paid duty on the FOR price without claiming any deduction. Thus there is no short payment. As decided in Baroda Electric Meters Ltd. (1997 (7) TMI 126 - SUPREME COURT OF INDIA) where freight amount charged by the manufacturer from the buyer is more than the freight charged in the expenses incurred on differential is not includible - no positive evidence to show that the appellant had deliberately suppressed the assessable value and had inflated the freight amount - in favour of assessee.
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2013 (3) TMI 259
Exemption under Notification No. 56/2002-C.E. denied - unit of the assessee is in the State of Jammu & Kashmir - dispute on Gulabari, Kewra Water and Shilajit capsules for the period from April, 2004 to March, 2008 - Held that:- So far as the Kewra water and Gulabari are concerned, it is found that while gulabari, which is nothing but rose water, is specifically covered by sub-heading No. 3303 00 20, Kewra water is specifically covered by sub-heading No. 3303 00 30 of the tariff. While the expression “aqueous solution of essential oil” in Heading 3301 is a general term, sub-heading No. 3303 00 20 and 3303 00 30 specifically cover ‘rose water’ and kewra water respectively. In terms of Rule 3(a) of the General Rules for Interpretation of the Tariff the heading which provides the most specific description is to be preferred over the heading providing a general description. Since sub-heading 3303 00 20 and 3303 00 30 specifically cover the rose water and kewra water respectively and since the goods, in question, are nothing but rose water and kewra water, the goods in question would have to be held as specifically covered by Heading No. 3303 not under heading 3301. Moreover, gulabari (rose water) and kewra water are the products commercially different from rose oil and kewra oil with different name and usages and, therefore, the process carried out by the appellant amounts to manufacture and as such, the duty had been correctly paid by the appellant in respect of these products and exemption under Notification No. 56/2002-C.E. has been correctly availed. Shilajit capsules - According to the Appellant, the formulation of shilajit capsules being manufactured is different and is not based on the formula prescribed in the standard books on ayurveda specified in the first schedule to the Drugs and Cosmetics Act. Moreover, also find that the Department does not refute, that in Sahibabad unit of the appellant, duty is being paid on the same product without availing exemption under Notification No. 3/2005. Besides the above points while the appellant’s stand is that they are entitled for refund of duty to the extent paid through PLA after exhausting the Cenvat credit in both the cases, there would be no revenue to the Government and as such, prima facie, there is no difference between the stand of the Department and the stand of the appellant. It is also not the case of the Department that the products, in question, are being used by some other manufacturers as inputs in respect of which in accordance with the provisions of Rule 12 of the Cenvat Credit Rules, 2004 those manufacturers are availing full Cenvat credit as if no part of the duty was exempt. Thus, even if the Department’s stand is accepted, it will be a revenue neutral situation. Merits in the appellant’s plea for waiver from the requirement of pre-deposit of duty demand, interest and penalty - stay applications are allowed.
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2013 (3) TMI 258
Screening of Iron Ore - Manufacture - Non payment of excise duty on Iron Ore Fines as there is a separate tariff item No. under Chapter 26 of the Central Excise Tariff for it - assessee are engaged in the manufacture of Sponge Iron from the Iron Ore - Held that:- It is not disputed that the Iron Ore Fines emerge during the process of Iron Ore, as a waste material. They are nothing but smaller pieces of Iron Ore, which are not usable for further manufacture of Sponge Iron Ore. The same cannot be held to be a product having emerged as a result of manufacture. It is well settled law that the criteria of manufacture is required to be satisfied first for holding any product as excisable. See UNION OF INDIA Versus DELHI CLOTH & GENERAL MILLS CO. LTD.[1997 (5) TMI 49 - SUPREME COURT OF INDIA] & reiterated in UOI v. Parle Products Limited [1993 (1) TMI 100 - SUPREME COURT OF INDIA] Thus if no manufacturing activity has taken place, mere mention of the goods in the tariff will not make the said goods as excisable goods. It is not the Revenue’s case that by any artificial definition, the screening of Iron Ore has been held to be process of manufacture - in favour of assessee.
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2013 (3) TMI 257
Cenvat credit availed on the basis of photocopies or duplicate copies of the invoices of input service provider - assessee submitted that duplicate copies of the invoices had been issued by the supplier as the original copies have been lost - Held that:- As the duplicate copies have not been certified or verified by the Jurisdictional Central Excise Officer the same cannot be treated as valid documents and Cenvat credit has been correctly denied. As regards photocopies of the invoices, though Rule 9(1) of Cenvat Credit Rules, does not mention that the invoice/bill or challan has to be the original, if Cenvat credit is allowed on the basis of photocopies without any check, credit can be taken more than once on the basis of the same invoices. In this case, though the appellants pleaded that original copy of the invoice was available and since on the basis of one original copy, several units of the appellant’s company have taken proportionate amount of credit and for this reason, the appellant’s unit has only the photocopy on its record, from the records it is seen that at no stage the original copy of the invoice was produced. In any case, when during the period of dispute, the facility of distribution of Service tax Cenvat credit by the head office by issuing invoices after registration as Input Service Distributor was available, there is no explanation as to why that facility has not been availed. In view of this, Cenvat credit on the basis of photocopies has been correctly disallowed - against assessee.
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2013 (3) TMI 256
Fraudulent rebate of Central Excise duty demanded - joint recovery orders - Held that:- As decided in Commissioner Versus Mahesh Harlalka [2013 (3) TMI 231 - GUJARAT HIGH COURT] recovery of duty cannot be held jointly and individual duty liability is to be segregated separately against each individual. Thus the requirement of pre-deposit of impugned demands waived and the matter remanded back to the adjudicating authority for determination of individual demand and thereafter penalty accordingly.
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CST, VAT & Sales Tax
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2013 (3) TMI 278
Penalty under Section 47(6) of the KVAT Act - Goods have reached Feroke without declaring the same at two check posts - as per petitioner the goods having already suffered penalty by Ext.P2, cannot be subjected to proceedings under Section 47(2) once again - Held that:- What is relied on by the petitioner is Ext.P1, the Forest pass to contend that what was transported from Virajpet was 20 Tones and that therefore, there was no change in the quantity transported. However, neither in Ext.P2 nor in Ext.P1, is there any mention that the consignment was accompanied by Ext.P1 forest pass. That apart, goods have reached Feroke without declaring the same at two check posts enroute. Admittedly, the value estimated was at Rs.1,37,500/- and Rs.11,100/- was levied as penalty. The value now estimated is Rs.18 Lakhs. This substantial variation in the value and also the suspicious circumstances that were pointed out, create credibility of the case of the respondents and therefore this may not be a case which is fit for interference in a proceedings under Article 226 of the Constitution of India - petitioner can file statutory appeal within three weeks from today that will be entertained by the appellate authority ignoring the delay.
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2013 (3) TMI 277
Assessment of tax - officials of the Enforcement Wing conducted a spot inspection at the petitioner's business premises - assessee contested against demand as no sufficient opportunity was given before concluding the impugned assessment proceedings - TNVAT Act - Held that:- Writ Petition allowed by setting aside the impugned proceedings dated 7.1.2013 of demanding of tax and the penalty due which was only on the basis of the single notice, notwithstanding the fact that the petitioner had always been prompt and diligent in their transactions with the Department in the past. Also the respondent erred in solely relying upon D-3 proposals of the Enforcement Wing officials without independent application of mind. Matter remanded to the respondent for fresh consideration after giving a reasonable opportunity of hearing to the petitioner-Company.
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Indian Laws
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2013 (3) TMI 272
RTI Application - Appellant had sought the copies of the relevant papers concerning the appointment of a particular judge as the President of the CESTAT - desired information denied by referring to the stay granted by the Division Bench Division Bench of the Delhi High Court against similar orders passed by the CIC in the past - Held that:- There is no doubt that, on merit, there is no reason why the desired information should not be disclosed now that the decision of the ACC has been already implemented and the matter is complete and over. The information should also be disclosed because part of the Cabinet papers, namely, the correspondence made in regard to the said appointment, has already been provided to the Appellant. In view of all this, the CPIO is directed to provide to the Appellant the copies of the file noting from the relevant file within 10 working days of receiving this order.
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