TMI Tax Updates - e-Newsletter
March 16, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
TDS u/s 192 from salary - in the instant case it cannot be stated that assessee’s estimation is bonafide or honest estimation of salary income of its employees - AO had rightly passed the orders u/s. 201(1) and 201(1A) - AT
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Income Tax:
Exemption u/s 11 - Jaipur National University (JNU) doesn’t qualify as a specified person u/s 13(3) - Accordingly, the contribution to JNU will qualify as due application of income in the hands of the assessee society and the same cannot be a basis for denial of exemption under Section 11 to assessee society. - AT
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Income Tax:
TDS u/s 195 - services provided by two Belgium parties cannot be considered as technical services as there was no making available of technology by the said two non-resident parties - No TDS liability - AT
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Income Tax:
Charging of interest u/s.234C - Interest for deferment of advance tax - whether to charge interest u/s.234C only on the income disclosed in the return of income filed u/s.139 or the income disclosed in the return of income filed u/s.148? - levy of interest confirmed - AT
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Income Tax:
Study expenses incurred for the daughter of brother of the Director - she had executed a bond stating that after her higher study she would work in the company. In fact she worked in company for 32 Months after her higher study - Company had reaped the benefits and expertise to promote its business operations and maintain labour harmony - expenses allowed - AT
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Customs:
Penalties u/s 112 (a) of CA, 1962 on CHA - at the time of filing the bill of entry the appellants did not get all the required documents to fulfill the KYC norms of the importer. Such act may attract proceedings, if at all, under the regulations for licensing of a CHA - No penalty - AT
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Customs:
Absolute confiscation - foreign currency - appellant had not declared that he was carrying foreign exchange - in the absence of any prescription requiring declaration of foreign currency taken out of the country, no justification found to sustain the impugned order - AT
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Customs:
Import of Gold Findings - The notification fixing 10% rate of duty did not provide for any condition to be fulfilled. The impugned order also records clearly that there is no “actual user” condition in the notification - Adjudicating Authority cannot add additional conditions in the statutory provisions - AT
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Customs:
although the benefit of exemption Notification was not claimed by the Appellants at the time of import, but claimed at a later date, the legitimate exemption, which was otherwise available, should not have been denied - non-filing of appeal against the assessment of the Bill of Entry does not deprive the assessee the right to file refund. - AT
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Customs:
Import of drawings and designs specifications - The appellant have already discharged the Service Tax on the said receipt of drawings - there was no further requirement to file further Bill of Entry with the declared value - AT
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Service Tax:
The appellant is eligible for abated rate of duty in terms of N/N. 1/2006-ST as they reversed the entire Cenvat credit availed during the material time along with applicable interest - AT
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Service Tax:
100% EOU - Refund claim - various input services - these are minor Civil works received by the appellant for the purpose of renovation/repair and maintenance of the premises of the appellant - these services would not fall within the exclusion portion of the definition of input services - rejection of refund unjustified - AT
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Service Tax:
Imposition of penalty u/s 78 - delay in payment of tax - Financial hardship cannot be pleaded against penal action when the tax collected is not remitted to the Government and used for other expenses - penalty upheld - AT
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Service Tax:
Franchise Service - Extended period of limitation - it is submitted that since the business activities of the appellant were known to the Department, suppression of facts cannot be alleged - demand set aise - AT
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Service Tax:
Cleaning service rendered to railways, diesel locomotives, railway station premises, general manager's office, Airport Authority of India and certain colleges and schools - whether these organizations are commercial organizations or not so as to attract levy of service tax? - Held Yes - AT
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Service Tax:
Tax liability - sub-contract - the main contractor has discharged the service tax liability and the same has been informed to the department by the appellant - demand not sustainable - AT
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Service Tax:
CENVAT credit - credit was availed on input service on the strength of debit notes, letters, bills, vouchers and other documents issued by service providers - The appellant succeeds both on merits as well as on limitation - credit allowed - AT
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Service Tax:
Imposition of penalty u/s 78 of FA, 1994 - mere failure to take registration or mere non-filing of returns cannot be considered as suppression of facts - penalty waived invoking section 80 - AT
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Central Excise:
Valuation - The royalty charges paid in respect of technical knowhow would be includible in the cost, irrespective of the fact that the same are paid at the time of sale. The measure of the royalty on the basis of sale price is just a convenient mechanism to measure the royalty payable on account of transfer of technical knowhow. - AT
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Central Excise:
Waiver of interest and penalty - seeking of waiver on the ground that duty was paid prior to issuance of SCN - Since the goods were cleared clandestinely the confiscation of the goods and vehicle is also in accordance with law, waiver cannot be granted - AT
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Central Excise:
SSI exemption - use of brand name of others - it is obvious that the appellants are not the owners of the brand name, but they have merely acquired the right to produce goods under the brand name without any rights to sell the goods under the said brand name - demand confirmed - AT
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Central Excise:
SSI exemption - clubbing of clearances - merely because units set up by the family members, by clubbing of clearance, we would be doing great disservice to the spirit of entrepreneurship which is the driving force of economic growth of any community or state - AT
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Central Excise:
Inter unit transfer - clandestine removal or not - the goods though recorded in the RG-I register of unit I were found in unit II due to shortage of space in unit I and due to the monsoon season, have not been found to be untrue - there is no clandestine activity found by the Revenue calling for punitive measures - AT
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Central Excise:
SCN were issued periodically for normal period therefore there was no suppression of facts and for that reason only for every period within normal period of one year, different show cause notices were issued. Since there is no suppression of facts, the ingredient required for invoking the Section 11AC does not exist in the present case - levy of penalty waived - AT
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Central Excise:
CENVAT credit - the use of MS items for fabrication of capital goods namely Storage Tank and the credit availed by the appellant under the category of inputs is legal and proper - AT
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VAT:
Reversal of ITC u/s 19(16) of the TNVAT Act, 2006 - verification of web report of buyer and seller as per Annexure-I revealed that the Assessee had claimed certain amount as ITC, but the other end dealers have not paid VAT as per Annexure-II of the sellers - Though department has power to reject the ITC, matter remanded back for verification - HC
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VAT:
Recovery of tax dues by coercion - Unless the liability attains finality through legal process, i.e. except through procedure established by law, the respondents have not right to demand the tax - the cheque could not been given voluntarily - first respondent is directed to return the petitioner's cheque - HC
Articles
Notifications
Customs-
8/2017 - dated
15-3-2017
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ADD
Seeks to order provisional assessment on imports of "Phosphoric Acid-Technical Grade and Food Grade (including Industrial Grade)", originating in or exported from People's Republic of China by M/s. Guangxi Quinzhou Capital Success Chemical Co. Ltd. (producer or exporter) into India till the finalization of New Shipper Review initiated by DGAD, vide notification No.15/5/2016 - DGAD, dated 09.02.2017
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21/2017 - dated
15-3-2017
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Cus (NT)
Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified
Circulars / Instructions / Orders
News
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Repurchase of Government Securities through Reverse Auction for an aggregate amount of ₹ 3,500 crore (face value)
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Meeting of Trade Development and Promotion Council
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Concept Note on Trade Facilitation Agreement
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Linking FCRA accounts to MHA’s online database
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Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified
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FM: Rate of increase of Non Performing Assets (NPAs) has slowed down in the last Quarter of the Current Financial Year; Government is taking sector specific measures to deal with the problem of NPAs; Steel Sector shows sign of improvement; Multiplication of Oversight Committee under consideration.
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Generation of Employment in Manufacturing Sector
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Approval of Loan to VCIC by ADB
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Incentives to develop ease of doing Business
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Setting up of NICDIT for Industrial Corridors
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Launch of Trade Infrastructure for Export Scheme (TIES)
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RBI Reference Rate for US $
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Index Numbers of Wholesale Price in India (Base: 2004-05=100)
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Index Numbers of Wholesale Price in India (Base: 2004-05=100)
Case Laws:
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Income Tax
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2017 (3) TMI 579
TDS u/s 192 from salary - short deduction of tds - orders passed u/s. 201(1) and 201(1A) - while computing taxable salary, the assessees were deducting u/s. 80C and interest accrued on employees’ contribution to unrecognized Provident fund is also taxable under the head ‘Income from other sources’ - Held that:- In the instant case, the Assistant Commissioner of Provident Fund very categorically states that the Provident Fund of the assessees is not established as per the scheme framed under the Employees Provident Funds Act, 1952. Assessee also does not have case that its PF is established under a scheme framed under the Employees Provident Fund Act, 1952 (19 of 1952). That being the case, admittedly, the assessees’ contributions to the Provident Fund are not recognized Provident Fund u/s. 2(38) of the Act and the contributions are not entitled to deduction u/s. 80C (2)(vi) of the I.T. Act. If the contributions are not eligible for deduction u/s. 80C of the Act, there are resultant short deductions of tax u/s. 192 of the Act. Consequently, the interest accrued on the Provident Fund is also liable to be taxed as ‘Income from other sources’. Section 192(1) of the Income Tax Act makes abundantly clear that the employees are bound to deduct tax at source at the time of payment of salaries. Since admittedly, the contributions of the assessees to the Provident Fund are not a recognized Fund, the same are not eligible for deduction u/s. 80C (2) (vi) of the I.T. Act. Therefore, the estimations made by the assessees are not correct and since there were short deductions of tax, the Assessing Officer had rightly passed the orders u/s. 201(1) and 201(1A) of the I.T. Act. Also the assessees were not able to show that any of the employees of the assessee-society had filed returns and had paid tax correctly to the Government account. Therefore, the case laws relied on by the assessees cannot come to their aid. Further, the order passed by the Delhi Bench of the Tribunal in the case of DCIT vs. HCL Infosystems Ltd. (2004 (6) TMI 279 - ITAT DELHI-D) relied on by the assessees is of no help since in the instant case it cannot be stated that assessee’s estimation is bonafide or honest estimation of salary income of its employees. Admittedly, the contributions made by the assessees to the Provident Fund were not a recognized Fund and were not eligible for deduction u/s. 80C of the Act which had resulted in short deductions of tax. - Decided against assessee
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2017 (3) TMI 578
Exemption u/s 11 - educational activity huge surpluses being earned by the society - Expenditure for the benefit of persons covered u/s 13(3) - Held that:- it is clear that over the period of 11 years, it is no doubt that the assessee society has generated surplus of ₹ 50.76 Crores but at the same time, the whole of the said surplus has been plouged backed and utilised on infrastructure to the tune of ₹ 60.19 Crores (including borrowings). Even for the two years under consideration, there is surplus of ₹ 16.97 Crores and out of that, ₹ 9 crores have already been spent on the infrastructure. - given that the assessee society is generating surplus year after year is not the deciding factor to determine whether it is eligible for exemption under section 11 of the Act. And on this ground alone, the exemption claimed by the assessee society under section 11 can not be denied. - Decision in the case of Queens’s educational society [2015 (3) TMI 619 - SUPREME COURT] Expenditure for the benefit of persons covered u/s 13(3) - financial assistance provided to Jaipur National University (JNU) - Held that:- It is only now that the Finance Bill 2017 has proposed w.e.f 1 April 2018 that where such donations are made with specific directions to form part of corpus of the recipient entity, it will not be considered as application of income in the hands of the donor entity. However, the donations with no specific directions to the recipient entity continue to be eligible as application of income. - In the instant case, Jaipur National University is registered under section 12AA as a charitable entity undertaking educational activity and thus qualify as an eligible entity for receiving contributions from the assessee society. - the contribution so made is not made out of past accumulated profits. Nature of contribution to JNU - Held that:- it is clear that amount advanced by the assessee society to Jaipur National University is in accordance with its objectives of setting up of educational institutions and managing and operating them for promotion of education and spreading of systematic education to students. The contribution so made is also in consonance with the Jaipur University Act which require the assessee society to contribute and support the University in its activities, as a sponsoring body on a regular basis. Further Jaipur National University doesn’t qualify as a specified person u/s 13(3) - Accordingly, the contribution to Jaipur National University will qualify as due application of income in the hands of the assessee society and the same cannot be a basis for denial of exemption under Section 11 to assessee society. Salary paid to person specified u/s 13(3) - excessive salary - Held that:- given the qualification and the experience of these persons and the fact that these persons have managed the affairs of the society since its inception and they are closely and actively involve in management and day to affairs of the assessee society, the salary and allowances paid to them is reasonable vis-a-vis legitimate needs of the assessee society and benefit derived or accruing to the assessee society - the reasonableness has to be seen vis-a-vis legitimate needs of the assessee society and benefit derived or accruing to the assessee society and as determined by the assessee society - Claim allowed. Expenditure on foreign travel - Held that:- in no case, Section13(3) or 13(1)(c) of the Act can be invoked on account of disallowance of foreign travel expenses because even if such travel is considered to be perquisites to the persons at the helm of applicant societies affairs, the same commensurate with the fair value of the services provided by them to the assessee society particularly, keeping into consideration that their dedicated services have led to significant growth and popularity of the educational institutions run by the assessee societysociety - Claim allowed. Depreciation u/s 32 admissibility in respect of the assets on which exemption has been allowed u/s 11 - Held that:- As decided in Krishi Upaj Mandi Samiti, Jaisalmer case [2015 (3) TMI 11 - RAJASTHAN HIGH COURT] the depreciation is held admissible to the assessee society under the provisions of section 32 of the Act in respect of assets on which exemption has been allowed under section 11 of the Act. Benefit of exemption u/s 11 allowed - Decided in favor of assessee.
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2017 (3) TMI 577
Disallowance of investment as from undisclosed sources - Held that:- CIT-A in the instant case has not formed any firmed opinion that it was the assessee money invested in the mutual fund through his relatives. The ld. CIT-A has just sustained the addition on the possibility of assessee money used in the impugned investment. In our view the addition cannot sustain on the basis of surmise & conjecture. Hence, we reverse the order of Ld. CIT(A) and this ground of assessee’s appeal is allowed.
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2017 (3) TMI 576
TDS u/s 194J - non-deduction of tax on the payment of professional fees - contention of the assessee is that the payment made to the lawyers is nothing but the reimbursement of expenses - Held that:- The assessee has claimed the payment for senior counsel from its client separately. The sample bills produced before us for our consideration justify that the assessee is charging the fees from its clients for the counsels separately. Thus the amount of fees collected from the clients in the name of the senior counsel amounts to reimbursement of expenses. Accordingly the claim of the assessee is that he had no share of income out of these counsel payments and accordingly not liable for the TDS deduction. We find force in the argument of the ld AR but at the same time the gamut of the facts of the case needs verification. On this proposition the learned DR fairly did not dispute the same but prayed to restore the matter to the file of the assessing officer for the necessary verification on this aspect. Thus we deem it fit and proper to restore the matter to the file of the assessing officer for adjudication de novo - Decided in favour of assessee for statistical purposes. Unexplained investment addition u/s 69 - Held that:- On perusal of the AO order we find that the assessee has made the payment to the GGPL 2 times in the year under consideration for the purchase of the flats. The 1st payment was of ₹ 9.86 lakh which has been duly disclosed in the balance sheet but the 2nd payment for ₹ 9.50 lakh to the same party and for the same transaction has not been shown in the name of the GGPL in the balance sheet. Non-disclosure of the 2nd payment has created suspicion in the mind of the AO and in the absence of any satisfactory reply from the assessee in this regard, the AO had resorted to treat the same as unexplained investment u/s69 of the Act. There is no dispute that the payment was made to the GGPL for ₹ 9.50 lakh though bank which was disclosed in the return of the assessee. However, the pertinent issue is that the same entry is not reflecting in the balance sheet of the assessee. Therefore, in our considered view the instant issue needs to be re-examined by the AO. - Decided in favour of assessee for statistical purposes.
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2017 (3) TMI 575
Gain from the sale of flats treated as short-term capital - year in which the capital gain is to be taxed - selection of assessment year - Transfer taken place in which year? - Held that:- The assessee in the instant case has relinquished its right by executing the sale deed in favour of the assessee. Accordingly, we are of the view that the transaction has taken place, therefore, the gain is liable to the taxed in the year under consideration. As such, we find no infirmity in the order of the lower authorities. - Decided against assessee Disallowances of brokerage expenses - Held that:- The claim of brokerage expenses is not arising from the order of the AO and the Ld. CIT(A) has disregarded the claim of the assessee without referring the same to the AO. Thus from the above it is clear that the issue of brokerage has not been adjudicated by the AO. Therefore, in view of the above and in the interest of justice, we are inclined to restore this issue to the file of the AO for fresh adjudication in accordance with law. - Decided in favour of assessee by way or remand.
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2017 (3) TMI 574
Addition towards cash deposits into bank u/s. 68 - Held that:- We find that the assessee did not respond/comply to the statutory notices issued u/s. 143(2) and 142(1) of the Act before the AO and also did not offer any explanation to the show cause notice dated 22-12-2011 issued by the AO mentioning why the deposit of ₹ 18 lakhs in the bank account should not be treated as income from undisclosed source and taxed to the total income of assessee. We find that before the CIT-A the assessee did not prosecute his case properly. Before him on every date the assessee sought adjournments. Therefore, it is clear that before the CIT-A there was no proper representation by the assessee. With regard to submissions of the ld.AR of assessee referring page 20 & 21 before us, we find that this submission was not before the authorities below. In such circumstances we deem it f it and proper to remand the issue to the AO for his verification and to pass an order to that effect as per law. - Decided in favour of assessee for statistical purposes.
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2017 (3) TMI 573
Non prosecution of appeal - Held that:- As at the time of hearing neither appeared nor filed any adjournment application on behalf of assessee though notice of hearing sent to assessee through RPAD. It appears that the assessee is not interested in prosecuting the appeal. A litigant has not only to file an appeal but has to prosecute the same diligently and on failure to so prosecute the appeal can be dismissed for non prosecution, we dismiss the appeal of the assessee in limine for want of prosecution.
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2017 (3) TMI 572
TDS u/s 195 - remittances towards technical consultancy and professional services - DTAAs with USA and Canada - PE in India - Held that:- We noticed that non-resident parties have no PE in India. We find that Article 12(4)(b) of the DTAAs with USA and Canada is not applicable since the non-resident parties did not ‘make available’ any technical knowledge, and the services rendered to the assessee by the above foreign parties has not transmitted any technical knowledge. We noticed that mere provision of bio-availability services cannot be said to result in a transfer of technology as the assessee has not derived enduring benefits to utilize this knowledge on his own in further. Regarding remittance to Linkalters LLP, Belgium and Price Water House Cooper, Belgium, we observed that services rendered by the non-resident were for the purpose of due diligence in connection with the proposed acquisition outside India. The services were rendered outside India and utilized outside India. We find that the assessing officer failed to prove that the Belgium non-resident parties have made available any technical knowledge or know-how to the assessee. The assessing officer has not accepted assessee’s submission and stated remittance to the professional firm/company were chargeable for tax deduction as technical consultancy services as per section 9(i)(vii) of the act as well as Article 12 of the tax treaty with Belgium. We noticed that the assessee has contended that it was entitled to the benefit of the Most Favoured Nation (MFN) clause of the DTAA with Belgium. We also noticed that the services provided by two Belgium parties cannot be considered as technical services as there was no making available of technology by the said two non-resident parties. We have also considered the findings of the Ld. CIT(A) that because of the MFN clause, the scope of fees for technical services under the India- Canada DTAA and the India-USA DTAA was more restricted than that under India-Belgium DTAA, therefore, the language of article 12 of the aforesaid two treaties shall apply to the DTAA between India and Belgium. Thus we justify the findings of the Ld. CIT(A) that the services provided to the assessee by the above stated non-resident parties did not fall within the purview of included services/technical services and hence there was no liability on the assessee to deduct TDS u/s. 195 . - Decided in favour of assessee
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2017 (3) TMI 571
Charging of interest u/s.234C - Interest for deferment of advance tax - whether to charge interest u/s.234C only on the income disclosed in the return of income filed u/s.139 or the income disclosed in the return of income filed u/s.148? - Held that:- Sec.234C, the assessee is liable to pay simple interest @1% on the amount of shortfall from the tax difference on the returned income. It does not distinguish the income admitted by the assessee u/s.139 or Sec.148, which is a provision to bring the income escaped from the assessment from the tax net. The income admitted by the assessee in response to the notice issued u/s.148 is within the knowledge of the assessee and the assessee should have estimated the advance tax and paid the same on total income. No other exception is provided u/s.234C for charging interest. Therefore, we are of the considered opinion that the returned income includes the income admitted in response to the notice issued u/s.148 also. Therefore, we are unable to accept the contention of the assessee that the interest u/s.234C is chargeable only in respect of income returned u/s.139(1) but not the income admitted in the revised return of income. As discussed above, except in two circumstances provided in Sec.234C as per the proviso referred above, in all the remaining cases interest u/s.234C is chargeable without any exception. This view is supported in the case of MRF Ltd. v. Deputy Commissioner of Income-tax, Large Tax Payer Unit, Chennai [2016 (11) TMI 1011 - MADRAS HIGH COURT].
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2017 (3) TMI 570
Study expenses incurred for the daughter of brother of the Director - allowable business expenditure u/s 37 - Held that:- There is merit in the submissions of the assessee, as the propositions canvassed by the ld AR for the assessee are supported by the facts narrated by him. As ld AR pointed out that Miss Megha Goyal was working with the company prior to her higher study. Miss Megha Goyal had executed a bond stating that after her higher study she would work in the company. In fact she worked in company for 32 Months after her higher study. The company had reaped the benefits and expertise to promote its business operations and maintain labour harmony. The ld CIT(A) relied on certain judgments which are not applicable to the facts under consideration. Therefore, we are of the view that the addition made by the Assessing Officer and confirmed by the ld CIT(A) needs to be deleted. Accordingly, we delete the addition. - Decided in favour of assessee
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2017 (3) TMI 569
Reopening of assessment - non-service of notice - amount received as a result of sale proceeds of investments in shares of different companies - Held that:- Assessing Officer had issued the notice to the appellant at the address which was last known to him. The return for the A.Y. 2003-04 was filed at the address C-107, ABC Complex, 20 Veer Savarkar Block, Shakarpur Delhi 110092, but after sometime the return for A.Y. 2009-10 was filed at another address. Therefore, the AO rightly issued notice at the address lastly given by the assessee. During the course of hearing, the assessee was specifically asked for submission of correct address as per database of the IT department. In this regard the AR of the appellant submitted on the next day of hearing the PAN Database where the address is written as Blossom Advertisers Pvt. Ltd. Gali No. 7, Balbir Nagar, Delhi. It is clear from the above that the Assessing Officer was justified to issue the notice at the given address, and hence, the notice shall be deemed to be served on the assessee. Therefore, the contention of assessee regarding invalidity of assessment on the basis of non-service of notice u/s. 148 is rejected. AR of the assessee had filed the details of investments held as on 31.03.2002 with the submission that money in question was received as a result of sale proceeds of investment, which results that an asset held by the appellant has been converted into money at cost and hence, there will be no effect in the balance sheet and there cannot be any accommodation entry regarding sale of an asset which was already held by the assessee. It was also the contention of the assessee that once the prior investments are sold and payments realized by cheques, how such sale could be doubted without doubting the purchase of assets already held by the assessee. The ld. Authorities below have failed to examine this aspect of the case nor have given any finding on the same, particularly when the assessee had submitted the details of prior investments held by it and documentary evidences relating to their sale before the authorities below. In presence of these facts, we deem it expedient in the interest of justice to restore the matter to the file of Assessing Officer for passing the assessment de novo after verifying the alleged sale of shares with reference to their purchase. The AO shall examine the holding of investments (shares), date and cost of purchase, mode of acquisition alongwith their distinctive numbers, position of balance sheet after their sale etc. - Decided in favour of assessee for statistical purposes.
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Customs
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2017 (3) TMI 590
Whether the respondents were required to give individual intimation to the petitioner with regard to oral examination held by them, for obtaining Customs House Agents License? Held that: - the petitioner would be governed by the 2004 Regulations, wherein, under Clause (1) of Regulation 8, the respondents were required to give her an individual, albeit, advance intimation. The reason why the petitioner would be governed by the 2004 Regulations is that, she sat for the written examination, when 2004 Regulations were in vogue. Therefore, the actions taken under the said Regulations would stand saved under the 2013 Regulations. This is evident, apart from anything else, upon a bare perusal of the preface to the 2013 Regulations - giving intimation to the petitioner for oral examinations held on 05.04.2013 and 06.04.2013 via circular dated 28.03.2013 was not in order, as 2013 Regulations were notified only on 21.06.2013 - The respondents were required to send an intimation "individually" to the applicants/examinees and in this case, the petitioner herein, with regard to the oral examinations, which were supposedly held on 05.04.2013 and 06.04.2013. The fact that the said procedure was not followed, persuades to hold that the impugned order is flawed in law - petition allowed - decided in favor of petitioner.
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2017 (3) TMI 589
Penalties u/s 112 (a) of CA, 1962 - imposition on the ground that the appellants have abetted an illicit transaction by the importer during the course of import of cargo vide bill of entry No. 7346736 dated 10/07/2012 of M/s Friends & Company - Held that: - for imposition of penalty u/s 112, there should be a clear evidence to the conclusion that the appellants by their specific act or omission of any act, abetted the illegal importation of the offending goods - Admittedly, there is no evidence to this effect, recorded in the impugned order. The reason for imposition of penalty, is the appellants’ act of filing the bill of entry. Admittedly, at the time of filing the bill of entry the appellants did not get all the required documents to fulfill the KYC norms of the importer. Such act may attract proceedings, if at all, under the regulations for licensing of a CHA. For penalty under Customs Act, 1962 it is apparent that mere filing of bill of entry, without the knowledge or a role in the importation of cargo, is not sufficient - penalty set aside - appeal allowed - decided in favor of appellants.
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2017 (3) TMI 588
Absolute confiscation - foreign currency - appellant had not declared that he was carrying foreign exchange - Held that: - No evidence has been placed on record to show that declaration was necessary for carrying of foreign currency by a departing passenger or that his inability to explain the source of foreign currency would render it liable to confiscation under CA, 1962 - Customs Act, 1962 is concerned with the illegal importation into India and exportation out of the country. In the absence of any prescription requiring declaration of foreign currency taken out of the country, no justification found to sustain the impugned order - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 587
Smuggled goods - Indian 'kabar' - appellant's claim that it is nowhere established that the goods in respect of which the said SCN was issued were of foreign origin or were smuggled - Held that: - the investigation could not lay its hand on any document which could establish that the said scrap was of foreign origin or the said scrap had entered into India without payment of Customs duty - the said goods were not covered by Section 123 of the CA, 1962 where the burden of proof that the goods under question are not smuggled is on the person, dealing with such goods - the goods dealt with in the SCN were of Indian origin. Therefore, the SCN dated 23.01.2002 was not sustainable - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 586
Levy of CVD - 100% Polyester Mink Blankets - whether the impugned goods do not attract CVD as the excise duty on the like articles if manufactured in India is exempted by N/N. 30/2004-CE dated 09.07.2004 - Held that: - the same issue came up before this Tribunal in the case of M/s Monte Carlo Fashions Ltd.[2017 (2) TMI 526 - CESTAT CHANDIGARH], wherein this Tribunal held that the proviso of para 1 of exemption N/N. 30/2004-CE was substituted on 17.07.2015 vide N/N. 34/2015. Such substitution changed the scope of the condition - the impugned goods were imported by the appellant prior to 17.07.2015, therefore, the decision of M/s Monte Carlo Fashions Ltd. is squarely applicable to the facts of this case - the appellants are not liable to pay CVD - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 585
Benefit of N/N. 12/2012-Cus dated 17.3.2012 - import of “Gold Findings” - denial on the ground that the appellants sold the same as such to the domestic traders and had not used them for intended purpose - Held that: - The notification fixing 10% rate of duty did not provide for any condition to be fulfilled. The impugned order also records clearly that there is no “actual user” condition in the notification - The findings and the reasonings adopted by the Original Authority is clearly beyond the scope of provisions of the above said notification and as such, cannot be legally sustained. The Adjudicating Authority cannot add additional conditions in the statutory provisions when there is no conditions prescribed at all in the law. There is no bar on trading and neither there is a post-import condition for any specific type of use - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 584
Benefit of N/N. 76/2004-Cus dated 26.07.2004 - import of Parts of Computers - denial on the ground that the Notification applies to Central Processing Unit and not to Parts of Computers - Held that: - N/N. 6/2002-CE dated 1.3.2002 at Sr.261 is applicable to Parts of Computers used within factory of production for the manufacture of Computers of Heading 84.71 - Appellants are manufacturers of branded Computers and have used the Parts of computers imported for manufacture of Personal Computers, which have been cleared on payment of duty. Therefore, they would be eligible for exemption - although the benefit of said Notification was not claimed by the Appellants at the time of import, but claimed at a later date, the legitimate exemption, which was otherwise available, should not have been denied. In the regime of self-assessment, the scope for grievance and filing of appeal is non-existent, as non-filing of appeal against the assessment of the Bill of Entry does not deprive the assessee the right to file refund. Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 583
Demand of duty on import of designs, drawings/technical specifications - liable to service tax or customs duty - Revenue claim that the drawings/designs, specifications imported have no intrinsic value and value declared by the appellant is grossly over-valued - As per the appellant, the said valuation of ₹ 300 crores was a part of the contract entered into by the appellant awarded under global tender documents. Revenue has no jurisdiction to examine such a contract and to pick up a small part of the contract reflecting the value of various services like drawing, designs and technical engineering services to be availed by them from M/s. CIPL. Held that: - the imported drawings and designs is exempted in terms of N/N. 12/2012 Cus dated 17.3.2012 and no Customs duty is required to be paid on the same even if the said import is treated to be import of goods. The Tribunal in the case of Sahil Diamonds Pvt. Ltd. vs. CC [2009 (8) TMI 496 - CESTAT, AHMEDABAD] has held that inasmuch as the import of rough diamond were exempted from payment of duty, no penalty can be imposed upon the importer in terms of the provisions of Section 112 of the Customs Act - Identical situation is available in the present case also when the import of design and drawings is exempted in terms of N/N. 12/12-Cus, dated 17.3.2012, the charge of over-valuation of the same cannot be sustained inasmuch no valuation is required to be arrived at by the Customs. We are of the view that in such circumstances neither the goods can be confiscated nor any penalty can be imposed upon the appellants. The receipt of drawing and designs by the appellant form M/s. CIPL was admittedly part of the rendered service on which the appellant has already discharged their Service tax liability under reverse charge basis. The said payment of Service Tax stand accepted by the Revenue. When the appellant brought the said fact to the notice of the adjudicating authority, he simply dismissed it without giving any concrete finding on the same. The appellant have already discharged the Service Tax on the said receipt of drawings, we are of the view that there was no further requirement to file further Bill of Entry with the declared value. It may also be noted that while charging the service tax, the Revenue has nowhere disputed the value of design and drawings and have accepted the same value as correct value of the services. In this scenario also, the Revenue stand adopted in the present proceedings cannot be adopted. There is virtually no evidence on record, to support the Revenue's finding that the drawing and designs are having no intrinsic value. Such finding of the adjudicating authority are based upon his own assumptive surmises and conjectures and not upon any legal and valid evidence on record. Confiscation and penalties set aside - appeal allowed - decided in favor of appellant.
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Service Tax
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2017 (3) TMI 622
CENVAT credit - input services - Outdoor Catering Services - Event Management Service - Held that: - the Outdoor Catering Service (canteen services) were excluded specifically from the definition of input services only w.e.f. 01/04/2011 - A reference can be made to the decision of Hon’ble Karnataka High Court in CCE, CUS & ST, LTU, Bangalore vs. Sansera Engineering Pvt. Ltd. [2016 (5) TMI 660 - KARNATAKA HIGH COURT] where it was held that there is no specification of number of employees in order to decide the entitlement of the canteen services for credit - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 621
Abatement of duty - N/N. 1/2006-ST - mandap keeper service - eligibility of CENVAT credit, when the assessee is availing abatement of duty - Held that: - the appellant is eligible for abated rate of duty in terms of N/N. 1/2006-ST as they reversed the entire Cenvat credit availed during the material time along with applicable interest - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 620
CENVAT credit - N/N. 5/2006-CE (NT) dated 14.03.2006 - Outdoor catering service - Insurance Service - Company Secretary Service - Management Maintenance or Repair service - Erection Commissioning or Installation service - Held that: - the period involved in the three appeals is prior to 01.04.2011 when the definition of input services had a very wide ambit as it included the words 'activities relating to business' - in the appellant's own case for a different period this Tribunal has analyzed these various services and held the same to be eligible for credit - The services like outdoor Catering services, Insurance services, Company Secretary services, Management Maintenance or Repair services, as well as Erection Commissioning or Installation services has been held to be eligible for credit in various judgements - appeal allowed - decided in favor of appellants.
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2017 (3) TMI 619
100% EOU - Refund claim - various input services - Rule 5 of CCR, 2004 - N/N. 5/2006 - CE (NT) dated 14.03.2006 - Held that: - The Tribunal for different period, in the appellant's own case, has held that credit is eligible on the said services. In respect of Work Contract Services, on perusal of the invoices, it is seen that the said services are received by the appellant for minor works like fixing gypsum partition cladding, fixing of glass windows, fixing of wooden door, tower bolt etc. Therefore, these are minor Civil works received by the appellant for the purpose of renovation/repair and maintenance of the premises of the appellant. Therefore, the said services would not fall within the exclusion portion of the definition of input services - rejection of refund unjustified - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 618
Refund claim - CENVAT credit - export of output services - various input services - Held that: - The Tribunal in the appellant’s own case [2016 (6) TMI 679 - CESTAT HYDERABAD] has discussed and analyzed the eligibility of credit in respect of all most all services - rejection of refund unjustified - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 617
Imposition of penalty u/s 78 - delay in payment of tax - it is the submission of the appellant that the delay in payment of service tax is due to acute financial problem. There is no intention to evade the service tax, full amount with interest for delayed payment has been paid before the issue of show cause notice - Held that: - It is clear that the amount realised from the clients which included the tax, has been used for internal purposes by the appellant disregarding the statutory tax liability to the Government. The bonafideness of the appellant cannot be accepted in such an act. Financial hardship cannot be pleaded against penal action when the tax collected is not remitted to the Government and used for other expenses - penalty upheld - appeal dismissed - decided against appellant.
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2017 (3) TMI 616
Franchise Service - Extended period of limitation - it is submitted that since the business activities of the appellant were known to the Department, suppression of facts cannot be alleged - Held that: - relying on the Code of Ethics and Rules provided by the appellant, ld. Adjudicating authority has arrived at the conclusion that the services provided by the appellant confirmed to the definition of 'Franchise Service' for the purpose of levy of Service Tax. The consistent position of law with regard to applicability of the proviso to Section 73(1)/Section 11A ibid has been that suppression cannot be established where material facts were within the knowledge of the Revenue. Accordingly, where there is no suppression, the pre-condition for applicability of proviso to Section 73(1) cannot be said to be met and hence, extended period of limitation contemplated therein cannot be invoked - In the case in hand, since the modus operandi adopted by the appellant for selling its products were known to the Department and based on the information/documents furnished by the appellant in 2005, the show cause proceedings were initiated by the Department on 12.03.2009, seeking confirmation of service tax demand under 'Franchise Service' for the period October' 2003 to March' 2007, we are of the considered view that the proceedings are barred by limitation of time - the appeal should succeed on the ground of limitation. Whether service tax amounting to ₹ 1,60,68,000/- under 'Business Auxiliary Service' and ₹ 46,08,759/- on 'Intellectual Property Right Service' under reverse charge mechanism are required to be demanded along with interest? - Held that: - It is an admitted fact on record that the amount of ₹ 7,38,61,083/- and ₹ 23,24,00,000/-, reflected in the books of accounts of appellant as outstanding as on 10.05.2008, were towards services received from abroad from the associated companies. Since on the date of amendment of Section 67 ibid and Rule 6 ibid, such amounts were reflected under outstanding receipts, the appellant is liable to pay service tax on such amount under reverse charge mechanism as per Section 66A ibid - service tax amounting to ₹ 46,08,759/- and ₹ 1,60,68,000/- paid by the appellant and appropriated in the impugned order are in conformity with the service tax statute - Since, the appellant had delayed in making such payment, interest amount thereon are required to be paid, since the same is compensatory in character. Appeal disposed off - decided partly in favor of appellant.
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2017 (3) TMI 615
Liability of tax - cleaning service rendered to railways, diesel locomotives, railway station premises, general manager's office, Airport Authority of India and certain colleges and schools - whether these organizations are commercial organizations or not so as to attract levy of service tax? - Held that: - to decide the nature of building, whether commercial / industrial, it is necessarily, the nature and the functions of the occupant is examined - railways or airport authority as non commercial organizations only on the ground that they are public utility organizations has no legal basis. Incidentally, it may be noted that the freight revenue of railways is more than double of the activity of passenger revenue. It only shows that substantial railways is in commercial freight transport. Even, with reference to the status of the railway stations, the same cannot be considered as non commercial building or premises. Regarding ordinance factory - Held that: - the definition covers industrial building and premises thereof. Ordnance factory premises are covered by industrial building. Even otherwise clause (ii) of the definition clearly mentions factory as one of the premises covered for tax liability. The factory in the present case is not in relation to agriculture, horticulture, animal husbandry or for dairying. As such in the absence of any exclusion from the statutory definition, the appellants are liable to service tax on this account. With reference to cleaning activity of circuit house, college, hospital and school premises, we find these are not covered by the tax entry either as commercial or industrial building or as a factory building and machinery, tank or reservoir of commercial and industrial building and premises thereof. Extended period of limitation - Held that: - The conduct of the appellant regarding the disclosure of details referring to the earlier meetings with the jurisdictional officers brings out the fact that allegation of suppression or willful misstatement cannot be sustained in this case against the appellant - the appellant specifically intimated regarding their belief on non-liability of tax because of the services being rendered to Government and other non-commercial organizations - extended period not invokable. Appeal disposed off - decided partly in favor of appellant.
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2017 (3) TMI 614
Tax liability - sub-contract - whether the appellant who is a sub-contractor is liable to discharge the service tax in regard to the services which he has executed on behalf of the main contractor, when the main contractor has discharged service tax liability in respect of the very same services? - Held that: - even though appellant furnished the details of the service tax paid by the main contractor, and even though both main contractor as well as the appellant belongs to the same tax division, the adjudicating authority and Commissioner (Appeals) did not take any effort to verify the same. They have blankly upheld the demand raised in the SCN - the main contractor has discharged the service tax liability and the same has been informed to the department by the appellant - demand not sustainable - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 613
Imposition of penalty u/s 78 of FA, 1994 - non-payment of service tax on Erection commissioning and Installation services - extended period of limitation - Held that: - there no evidence of mens rea as there is intention to evade payment of service tax - mere failure to take registration or mere non-filing of returns cannot be considered as suppression of facts - penalty waived invoking section 80 - appeal dismissed - decided against Revenue.
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2017 (3) TMI 612
CENVAT credit - credit was availed on input service on the strength of debit notes, letters, bills, vouchers and other documents issued by service providers on which details like Serial No. Registration No. of service provider were not mentioned. Department entertained a view that credit is not admissible on the above documents - time limitation - Held that: - The amendment in Rule 4 (A) of Service Tax Rules, 1994 was brought forth making it mandatory to include the registration no. of the service provider in the invoices only with effect from 2011. Whereas the department has issued the SCN for the period from 2007-2011 in the year 2011 Major portion of the demand is beyond normal period. Further in the reply to SCN itself, the appellant has furnished all details with regard to the credit availed by them and also clarified the short comings in the documents. The department does not have a case that the credit is otherwise not eligible to the appellants. So also there is no case for the department that appellant has not properly accounted for the credit availed by them - The appellant succeeds both on merits as well as on limitation - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 611
Rebate claim - export of services - Held that: - The SCN states that there is no dispute with regard to the export of services and the payment of service tax on the services exported. The rebate sanctioning authority has proceeded to analyse the issue whether credit is admissible on input services which in my view exceeds the jurisdiction while conduct of proceedings for sanction of rebate - As the fact of export of services as well as the payment of service tax on the services exported is not in dispute, the rejection of rebate is unjustified - appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (3) TMI 610
Valuation - the actual profit came 13.99% against notional profit of 10% declared by them - whether the actual profit needs to be included in assessable value or the notional profit? - Held that: - department can not resort to pick and choose and has to apply law uniformity - reliance was placed in the case of Chackolas Spinning And Weaving Mills Ltd. Versus Commissioner of Central Excise, Cochin [2015 (7) TMI 892 - SUPREME COURT], where it was held that the notional profits could be taken into consideration and added while arriving at the value of captive material - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 609
Clandestine removal - evidence - Held that: - there is sufficient evidence on record to show that the appellant was clearing their final product without payment of duty under the cover of parallel invoices. The statement of Shri O P Sabharwal as also of another supervisor read with the statement of the proprietor of M/s. Asha Trading Co. do not stand agitated by the appellant and lead to the clear evidence that the appellant was indulging in clandestine activities - such parallel invoices were also recovered from the factory during the time of search. If that be so, the parallel invoices so recovered would provide the basis for the extent of evasion made by the appellant - the adjudicating authority needs to examine the entire evidence given and to arrive at the total clandestine clearance figures - appeal allowed by way of remand.
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2017 (3) TMI 608
Refund claim - abatement - whether on account of failure of the assessee to seek refund of the abatted amount instead of suo motto adjusting the same, the assessee would become liable to pay the said adjusted amount or not? - Held that: - Tribunal in the case of Rishi Steel & Alloys Pvt. Ltd. Vs. CCE Aurangabad [2005 (4) TMI 355 - CESTAT, MUMBAI] has considered the identical situation and observed that the action of the assessee to adjust the abetted amount suo motto may invite some penal action but will not result in confirmation of duty against them - the order of the original adjudicating authority lays down the correct legal position wherein he dropped the demand but since there was contravention of the provisions the penalty was rightly imposed by him along with confirmation of interest - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 607
Manufacture or not - whether the tablets of Saraswati brand and the powdered camphor which it subjected to manufacture are classifiable not under sub-heading 2914.20 of the Tariff as camphor, but under 3307.41 as preparation similar to agarbatti and dhoop? - it is apparent that appellants were engaged in the repacking of the Saraswati brand tablets thus the claim of the appellant that they were receiving pre-packed material from M/s. Camphor and Allied product Ltd cannot be upheld. Penalty of ₹ 5,00,452/- has been imposed u/s 11AC of the Act and penalty of ₹ 2, 66,315/- has been imposed u/r 173Q. It has been argued that once the penalty u/s 11AC has been imposed, no separate penalty u/r 173Q can be imposed. Perusal of orders shows that penalty of ₹ 5,00,452/- has been imposed with regard to clandestine clearance of the goods and for evasion of duty. Penalty u/r 173Q has been imposed in respect of seized goods and the duty liability thereon. Seized goods were held to be liable to duty of ₹ 2,66,315/-. Had this duty been included in the demand of duty of clandestine clearances then the penalty under Section 11AC would have been inclusive of this duty. In this case penalty u/s 173Q has been imposed in respect of goods which were seized and confiscation, we find no error in imposing penalty under the said rule. Appeal dismissed - decided against appellant.
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2017 (3) TMI 606
Valuation - whether in the valuation of such goods on basis of CAS-4 certificate, bonus/gratuity needs to be included while determining the value or not? - Held that: - in terms of CAS-4 royalty of the nature of the technical knowhow is includible in the assessable value, but royalty in the nature of brand or IPR value is not includible - consideration paid in the agreement though termed as royalty, is actually Technical knowhow fee. The same is charged on the sale price of the final product. It actually is consideration for technical knowhow. Thus in terms of CAS-1 as well as CAS-4 same is includible in the assessable value. There are some product which do not qualify as product in terms of the agreement, whether the addition if any of this royalty can be made in respect of product defined under agreement? - Held that: - Chips manufactured by the appellant are not covered by the definition of the product and thus royalty paid, if any, cannot be added for the purpose of arriving at assessable value of the chips in terms of CAS-4. The royalty charges paid in respect of technical knowhow would be includible in the cost, irrespective of the fact that the same are paid at the time of sale. The measure of the royalty on the basis of sale price is just a convenient mechanism to measure the royalty payable on account of transfer of technical knowhow. Penalty u/s 11 AC - Held that: - CAS 1 which was relevant for the said period clearly prescribed that royalty is paid in respect of technical know how is includible in the assessable value. I find that in the identical circumstances in case of Otis Elevator Co(I) Ltd(supra), [2012 (11) TMI 358 - CESTAT, MUMBAI], the Tribunal has upheld the penalty u/s 11AC. The appeal is partly allowed to the extent that revision of assessable value by inclusion of royalty in respect of product not covered by agreement is set aside - The matter is remitted to the Original adjudicating authority for re-quantification of the demand separately in each appeal - appeal allowed by way of remand.
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2017 (3) TMI 605
Waiver of interest and penalty - seeking of waiver on the ground that duty was paid prior to issuance of SCN - Held that: - reliance was placed in the decision of Hon’ble Supreme Court decision in case of Union Of India Versus Dharamendra Textile Processors [2008 (9) TMI 52 - SUPREME COURT] where it was held that penalty and interest under Section 11AC and 11AB respectively cannot be waived only because duty was paid before issuance of show cause notice - Since the goods were cleared clandestinely the confiscation of the goods and vehicle is also in accordance with law, waiver cannot be granted - appeal dismissed - decided against appellant.
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2017 (3) TMI 604
SSI exemption - Dummy unit - imposition of penalties - Held that: - demands have been raised jointly against two firms and two partners. The impugned order does not specify as to the person against whom the demands have been confirmed. Both, the Revenue as well as other appellants, have invoked this ground for setting aside the impugned order. In the case of Shiv Exim Industries [2005 (2) TMI 294 - CESTAT, NEW DELHI], it has been held that for clubbing of clearances of two units it has to be held that one unit is principal unit and other is a dummy unit floated with a view to camouflage the other. In such circumstances demands can only be confirmed against the principal unit - matter is remanded to the Commissioner to decide afresh - appeal allowed by way of remand.
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2017 (3) TMI 603
Valuation - whether the assessable value of bulk drugs cleared by the appellant to their sister unit should have been computed in terms of Rule 6 of the Valuations Rules? - Rule 6 of Central Excise Valuation Rues, 1975 - Held that: - As per above Rule 6(b)(i) when the goods are not sold by the assessee but are used or consumed by the manufacturer himself or on his behalf in the production of other article, the value should be based on the value of comparable goods produced or manufactured by the assessee or by any other assessee and in such case value cannot be should computed on the cost of production including notional profit. As per the fact of the case there is no sale of the goods in question by the appellant, therefore value of comparable goods of other manufacturer has to be accepted as comparable price - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 602
Benefit of N/N. 6/2002 - denial on the ground that the said veneered particle board is not 100% wood free - Held that: - earlier veneer laminated board was classified by the appellant under Heading 4406.30, however, w.e.f. 4.2.2004 they sought classification under 4406.90. The said change has been denied to the appellant simply on the ground that in the Order-in-Original of the Commissioner dated 24.12.2003, in an earlier proceedings the veneer particle board has been held to be classifiable under Heading 4406.30 and it has been observed that the said product is not 100% wood free - the appellants are not bound to follow the classification decided by the order dated 24.12.2003 for the subsequent period - matter on remand to decide afresh classification in the light of evidence produced by the appellant and the eligibility of notification - appeal allowed by way of remand.
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2017 (3) TMI 601
SSI exemption - use of brand name of others - misdeclaration - denial on the ground that the appellants were using brand name of someone else to manufacture the products - Held that: - while the appellants are desirous of acquiring the rights to manufacture and sell the mineral water under the trade mark, what has been assigned by the assignor is only the right to manufacture the mineral water at the Nasik plant of the assignee. It is apparent that the said deeed does not assign to right to sell the product under the said brand name. The trade mark has no value whatsoever, if one does not have any right to sell the goods. The assignment merely for the purpose of production of goods cannot be treated as sale of brand name in any manner. Thus, it is obvious that the appellants are not the owners of the brand name, but they have merely acquired the right to produce goods under the brand name without any rights to sell the goods under the said brand name - appeal dismissed - decided against appellant.
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2017 (3) TMI 600
Benefit of N/N. 217/86-CE dated 2-4-86 - denial on the ground that quantity of caustic soda that goes in the manufacture of anhydrous sodium sulphate which is further used in the manufacture of rayon yarn will not be eligible for the benefit of exemption under N/N. 217/86 dated 2-4-86 as the final product i.e anhydrous sodium sulphate was exempted under N/N. 40/85 dated 2-4-86 - Held that: - As per the provisio the exemption is not available to the input used in the manufacture of final product which are exempt whole of the duty of excise or is chargeable to Nil rate duty - In the present case the final product is anhydrous sodium sulphate which cleared under exemption N/N. 40/95-CE therefore exemption of N/N. 217/86-CE is not applicable on the caustic soda, manufactured and used in the manufacture of exempted anhydrous sodium sulphate - benefit rightly denied - appeal dismissed - decided against appellant.
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2017 (3) TMI 599
SSI exemption - clubbing of units - evasion of duty - clandestine removal - Held that: - The plea for reversal of reduced penalty, waiver of penalty and setting aside of confiscation by the first appellate authority are not supported by any grounds of appeal that press these for our interference. Owing to this, we find that these cannot be considered to have been seriously pursued or advanced by Revenue. The amount in dispute is well below that which can be pursued by Revenue in accordance with the enhanced limits under the New Litigation Policy communicated in F. No. 390/Misc./163/2010/JC dated 17th December 2015 of Central Board of Excise and Customs. These limits were also made applicable to cases that were pending after appeal. Appeal dismissed - decided against appellant.
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2017 (3) TMI 598
SSI exemption - clubbing of clearances - mutuality of interest - whether the units were, by subterfuge, splitting the clearances on record to avail the benefits of N/N. 175/86-CE, and its successor N/N. 1/93-CE, to evade duty? - Held that: - That the units are set up by members of a family will not suffice to establish common control for if were to proceed with that approach to incentivise family aggregation, we would be doing great disservice to the spirit of entrepreneurship which is the driving force of economic growth of any community or state - the grounds of appeal do not suffice to overcome the detailed findings on fact and law in the impugned order - appeal dismissed - decided against appellant.
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2017 (3) TMI 597
Refund claim - duty paid on freight charges on transport of goods from factory to the depot for the period January 2007 to December 2007 - Held that: - in case of goods sold from depot, the sale price prevailing at depot has to be considered for the purpose of valuation of goods cleared from the factory. Therefore, the price at which the appellant have paid the duty from depot is not sale price for the purpose of charging excise duty. Whether there is excess payment of duty or otherwise that can be worked out by taking into consideration the value at which duty was paid at the time of clearance and the sale value which was charged to the customer from the depot. Neither the appellant has carried out such exercise nor has the department given any light to such vital fact, for this purpose the matter is remanded to the original authority for passing a fresh order on the refund of the appellant - appeal allowed by way of remand.
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2017 (3) TMI 596
Inter unit transfer - clandestine removal or not - demand on the ground that the goods manufactured and stored without proper accounting in the stock register for being removed surreptitiously without payment of duty thereon - Held that: - The learned Commissioner have accepted the unified nature of the two units and have granted common registration number. Further, the plausible explanation given by the appellant at the time of inspection that the goods though recorded in the RG-I register of unit I were found in unit II due to shortage of space in unit I and due to the monsoon season, have not been found to be untrue. These facts have also been stated at the first instance by the responsible officers of the appellant - there is no clandestine activity found by the Revenue calling for punitive measures - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 595
Discrepancy in the stock of finished goods - short payment and non-payment of duty on the removal of the capital goods - shortage of capital goods in the factory - collection of transportation charges from their customers under the separate bill - Held that: - As regard the excess stock, we found that total value of the excess goods was ₹ 95,158/- whereas redemption fine was imposed to the tune of ₹ 55,000/- which is on very higher side therefore the redemption fine deserve to be reduced - As regard the demand of Cenvat Credit in respect of capital goods, appellant have paid 50% duty on the removal of capital goods and the same amount was availed by them therefore this issue is contentious that whether the duty against Cenvat credit of 50% should be 100% or 50%. The appellant have not contested demand and paid the same alongwith interest - Regarding the credit on measuring instrument also, the appellant have paid duty alongwith interest without contesting the same - As regard the duty of freight, it is settled in various judgments that merely because the freight amount was not separately shown in the excess invoice, deduction cannot be disallowed. The duty cannot be charged on the freight accordingly demand of ₹ 84,428/- on account of freight is not sustainable - we do not find any malafide intention of the appellant to evade excise duty short payment/ nonpayment of duty appears to be only due to inadvertence or accounting error therefore it is not the fit case for imposition of penalty under Section 11AC - appeal disposed off - decided partly in favor of appellants.
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2017 (3) TMI 594
Whether a manufacture of LPG selling the product in bulk, post 1-7-2000, to an OMC for further sale in packed form to dealers/domestic consumers and recovering ex-refinery price from the OMC as sale consideration is entitled to adopt ex-storage price(APM price) as the assessable value of the said product in bulk by ignoring the provisions of Section 4 of the Central Excise Act as amended w.e.f. 1-7-2000? - whether penalty u/s 11AC of the CEA and penalty u/r 25 of Central Excise Rules, 2002 are legal and correct? Held that: - SCN were issued periodically for normal period therefore there was no suppression of facts and for that reason only for every period within normal period of one year, different show cause notices were issued. Since there is no suppression of facts, the ingredient required for invoking the Section 11AC does not exist in the present case - appellant has made out fit case for waiver of penalties u/s 11AC and Rule 25 imposed by the Adjudicating authority - appeal disposed off - decided partly in favor of appellant.
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2017 (3) TMI 593
CENVAT credit - MS items - MS items were used for fabrication of Storage Tank for Molasses - Held that: - The said tanks fall under the definition of capital goods. Therefore, the use of MS items for fabrication of capital goods namely Storage Tank and the credit availed by the appellant under the category of inputs is legal and proper - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 592
CENVAT credit - fake invoices - non-existent and fictitious firm - interest on demand - shortage of inputs - Held that: - in the case of shortage of inputs when no firm date of removal is established by the department the demand of interest cannot be sustained. In the case on handy the appellants reverse the credit and the same has been already appropriated - the demand of interest on ₹ 8,71,399/- requires to be set aside. Fake invoices - Held that: - Though it is argued by the Ld. Counsel that they have received the goods and that department has not conducted any investigation at the end of the lorry driver/owner who transported the goods to the appellant, consider that in the case of fraudulent availment of credit, the preponderance of probabilities would be sufficient. On appreciation of the documents placed, it can safely concluded that the two invoices Nos. 59 & 60 dated 15.12.2008 are fake invoices and that appellant availed the credit without actual receipt of goods - demand of ₹ 3,70,800/- and interest upheld. Imposition of penalty - Held that: - the penalty imposed by the Commissioner (Appeals) requires to be set aside in its entirety as it is not in order with the proposal in the SCN - penalty set aside. Appeal disposed off - decided partly in favor of appellant.
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2017 (3) TMI 591
Deemed CENVAT credit - clearances made by the appellant and demand of Cenvat credit related thereto is in respect of goods manufactured before 1-5-2001 and was lying in stock as on 30-4-2001. The said stock was cleared subsequently on payment of duty on advaloram basis for the reason that the special procedure prescribed under Rule 96ZNA to 96ZND of Central Excise Rules, 1944 - Held that: - the stock of goods manufactured prior to 1-5-2001 and cleared thereafter, assessee is entitle for credit on input used as such - the appellant has rightly availed deemed Cenvat credit in respect of goods manufactured prior to 1-5-2001 and cleared thereafter on payment of duty on advolram basis - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (3) TMI 582
Reversal of ITC u/s 19(16) of the TNVAT Act, 2006 - verification of web report of buyer and seller as per Annexure-I revealed that the Assessee had claimed certain amount as ITC, but the other end dealers have not paid VAT as per Annexure-II of the sellers - Held that: - power has been vested in the department under Section 19(16) of the TNVAT Act, 2006, whereby reversal of ITC can be made by the department. Therefore, this Court cannot find fault with the proposal by way of notice for reversal issued by the department on 23.05.2016, where 15 days time was given to the petitioner and personal hearing date was also given - the impugned orders though have been passed after giving an opportunity of two weeks time to the petitioner, can be interfered with by this Court, because, the item-wise details between Annexures I and II for the alleged discrepancy since has not been submitted or furnished by the department and the petitioner is now able to collect all the details to give a suitable defence or reply to the department to satisfy themselves that there is no discrepancy between Annexures I and II, which is the very basis for reversal of ITC under Section 19(16), this Court is inclined to interfere with the impugned orders - impugned order quashed - matter remitted for reconsideration - appeal allowed by way of remand.
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2017 (3) TMI 581
Recovery of tax dues - Whether the cheque in question was obtained by the respondent by coercion or it was given voluntarily by the petitioner? - the petitioner has clearly stated that the cheque was obtained from her forcibly. Further, when the respondent sent a reply stating that it was given towards tax payment, the petitioner has again indicated that the liability itself is not established and it is in dispute and therefore, there is no scope for handing over cheque towards payment of taxes - Held that: - Unless the liability attains finality through legal process, i.e. except through procedure established by law, the respondents have not right to demand the tax - The facts and circumstances and the correspondence between the parties would go to show that the cheque could not been given voluntarily - first respondent is directed to return the petitioner's cheque dated 17.09.2016 - petition allowed - decided in favor of petitioner.
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Indian Laws
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2017 (3) TMI 580
Liquor - trade in liquor - establishment charges - Those who come forward to seek the privileges of the State to manufacture or sell the liquor have to abide by the statutory regulations and terms and conditions of the licence. The privilege is not thrust upon anyone rather it is sought by intending persons or parties by participating in auctions for settling such right or by obtaining licence for such privilege in accordance with the statutory provisions. Whether this Court need to examine the vires of Rule 4(41) of 1995 Rules, whereas in the writ petition filed by the respondents, no prayer was made to struck down Rule 4(41) of the Rules 1995? - Held that: - under the Rules of the High Court, the Bench hearing the writ petition at Indoor was not competent to pass the order, declaring Rules ultra vires. The statement in the counteraffidavit, as noted above indicates that there was some specific bench for hearing constitutional issues regarding vires of the Rules. Thus had the writ petitioner intended to challenge the vires of the rules, he had to file the writ petition for appropriate relief before the Bench having roster to decide the vires. Thus, it is clear that writ petitioner never intended to challenge the vires of the Rules, which is apparent from the reasons, as noted above. We are thus of the considered opinion that the something which writ petitioner never intended or prayed for cannot be looked into in this appeal. Establishment charges - demand - Section 28A - Held that: - Section 28A being not in existence during the relevant period for which demand has been raised, it is not necessary for us to consider the effect and consequence of Section 28A in so far as the present case is concerned. However, taking into consideration the overall circumstances, as noted above, ends of justice will be served in giving liberty to the respondent to represent against the demand notice dated 23rd March, 1989 before the State. Appeal disposed off.
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