TMI Tax Updates - e-Newsletter
March 16, 2018

Case Laws in this Newsletter:

GST Income Tax Benami Property Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws

TMI SMS

• Refund - BRC/ FIRC for export of goods should not be insisted upon as proof of realization of export proceeds since not envisaged in the law

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• Refund of GST on export - the transitional credit pertains to taxes paid under the existing laws - cannot be treated as part of Net ITC

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Highlights / Catch Notes

• GST:

  Refund of GST - BRC / FIRC for export of goods - insistence on proof of realization of export proceeds for processing of refund claims related to export of goods has not been envisaged in the law and should not be insisted upon.
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• GST:

  Refund of GST - exports of goods and services - exporter, at his option, may file refund claim for one calendar month / quarter or by clubbing successive calendar months / quarters. The calendar month(s) / quarter(s) for which refund claim has been filed, however, cannot spread across different financial years.
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• GST:

  Refund of GST - exports of goods and services - taxes paid under existing laws - efunds of tax/duty paid under the existing law shall be disposed of in accordance with the provisions of the existing law - application under GST to be rejected.
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• GST:

  Refund of GST - exports of goods and services - Supplies to Merchant Exporters at a concessional rate of 0.05% and 0.1% - the exporter will be eligible to take credit of the tax @ 0.05% / 0.1% paid by him
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• GST:

  Refund of GST - exports of goods and services - the transitional credit pertains to duties and taxes paid under the existing laws viz., under Central Excise Act, 1944 and Chapter V of the Finance Act, 1994, the same cannot be said to have been availed during the relevant period and thus, cannot be treated as part of ‘Net ITC’.
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• GST:

  Refund of GST - exports of goods and services - once an application has been submitted afresh, pursuant to a deficiency memo, the proper officer will not serve another deficiency memo with respect to the application for the same period, unless the deficiencies pointed out in the original memo remain unrectified, either wholly or partly, or any other substantive deficiency is noticed subsequently.
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• GST:

  Refund of GST - exports of goods - Exports after specified period - the jurisdictional Commissioner may consider granting extension of time limit for export as provided in the said sub-rule on post facto basis keeping in view the facts and circumstances of each case
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• GST:

  Refund of GST - exports of goods and services - The delay in furnishing of LUT in such cases may be condoned and the facility for export under LUT may be allowed on ex post facto basis taking into account the facts and circumstances of each case.
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• GST:

  Refund of GST - exports of goods and services - refund of eligible credit on account of State tax shall be available even if the supplier of goods or services or both has availed of drawback in respect of central tax.
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• GST:

  Difficulties in filing of GST Tran-1 - transitional credit - HC directs the government to to reopen the portal within two weeks from today.
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• Income Tax:

  Disallowance of commission expenses - income from providing accommodation entries - Weightage rate of commission - the objections of the assessee that commission expenses were paid for getting purchase bills etc. need to be considered in the light of the documents seized from its premises - AT
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• Income Tax:

  Validity of assessment - in the event of non assumption of jurisdiction u/s. 143(2) of the Act to frame an assessment the act of the AO in framing an assessment order without issuing notice u/s. 143(2) cannot be saved under the provisions of section 292B or u/s 292BB of I.T. Act, 1961 - AT
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• Income Tax:

  Addition u/s 68 - share application money - To tide over its financial sickness, apparently, it sought the help of the share applicants. The identity of those share applicants was clearly revealed - O did not conduct any further enquiry except resting his conclusions on surmises - No additions - HC
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• Income Tax:

  Reopening of assessment - non independent application of mind by assessee - out sourcing of reasons to believe - Assessing Officer has issued the impugned notice without himself coming to a reasonable belief that income chargeable to tax has escaped assessment - interim stay granted to the notice - HC
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• Income Tax:

  Doctrine of mutuality - receipts by cooperative societies, from its members i.e. non-occupancy charges, transfer charges, common amenity fund charges and certain other charges, are exempt from income tax - the receipts cannot be bifurcated into two segments of receipt and costs, so as to hold the former to be outside the purview of mutuality classifying it as income of the society with commerciality - SC
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• Customs:

  Import of gold - The impugned order cannot ask for the compliance of the condition which was later on introduced in the Policy for the import / bond executed which was made earlier - appeal allowed - AT
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• Customs:

  Confiscation - foreign voyage or coastal run - furnace oil received duty free - The provisions of SEZ Act, 2005 and the Rules made thereunder is clearly not applicable to assess the duty free bunkers received and later used for costal run. - AT
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• Customs:

  Imposition of ADD - Castings for Wind Operated Electricity Generators (PUC) - While upholding the imposition of AD duty as per the final finding, we direct the DA to examine, afresh, the factual claims made by the DI on this aspect. - AT
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• Service Tax:

  SSI Exemption - determination of turnover - abatement of value - N/N. 1/2006-ST - for the purpose of determining the aggregate value for exemption under N/N. 6/2005-ST, only the net value received i.e. after the abatement under N/N. 1/2006-ST is to be considered - AT
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• Service Tax:

  Club or Association Service - the tax liability on the consideration received from the members for availing certain facilities in the club premises cannot be taxed under "Club or Association Service.” - AT
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• Service Tax:

  Supply of tangible goods services - there is a transfer of right of possession and effective control of the vessel / dredger to the appellant. This arrangement is outside the purview of service tax liability under a 'supply of tangible goods services' - AT
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• Service Tax:

  Supply of Tangible Goods service - place of provision of services - the wagon are not located during the entire period by the appellant within the territory of India so the appellant is not liable to pay service tax under the reverse charge mechanism in view of the proviso to Rule 3(iii). - AT
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• Service Tax:

  Online Information and Data Base Excess or Retrieval Service - received such service from foreign based CRS Companies - Even for the period post to 01/07/2012 there is no material change to attract service tax liability on the part of the appellant. No statutory changes or change in fact were brought in w.e.f. 01/07/2012 in order to vary the finding for this period - demand set aside - AT
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• Service Tax:

  Refund claim - unjust enrichment - the Service Tax amount in question had not been shown as “claims receivable” in the balance sheet for the relevant period keeping even the possible realization of disputed amount from Department. - AT
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• Service Tax:

  Works contract - construction activity for providing parking facility for Commonwealth Games-2010 - Such sport event and the structure created for such sport event cannot be considered as commercial or industrial venture. Though the subsequent use of the facility created should not have any implication on the question of tax liability which should be with reference to status of the facility at the time of provision of service - AT
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• Central Excise:

  CENVAT credit - input services distributor (ISD) - Since there is no allegation in the SCN as to the manner of distribution of credit as improper, it is not necessary to enter into such discussion - the disallowance of credit for the reason that appellant has not obtained ISD registration is unjustified and requires to be set aside - AT
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• Central Excise:

  CENVAT credit - common inputs used in the manufacture of both dutiable and exempted final products - The adjudicating authority has correctly analysed various issues involved and has come to a reasoned conclusion that the processes carried out by the appellant will not amount to a manufacturing process - demand with penalty sustained - AT
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• Central Excise:

  Scope of SCN - The two contentions are contradictory to each other which gives an impression that there was total confusion in the minds of people who have issued SCN. Therefore, such SCN which is unclear and confusing is not sustainable in law. - AT
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• Central Excise:

  100% EOU - CENVAT credit - During the relevant period, the formula prescribed adoption of 25% of BCD and by no stretch, it can be held that 50% of BCD was available to the assessee prior to 5.12.2008. - AT
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• Central Excise:

  Manufacture - so called activity of quality testing, branding and packing of the already manufactured goods will not be covered by note 6 of Section XVI of the Central Excise Tariff - the appellant is not engaged in the manufacturing of the goods, they are only doing trading activity of bought out goods. - AT
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• Central Excise:

  CENVAT credit - input services which belong to the buyers - Even assuming time being appellant as recipient of service but since the service was provided on behalf of buyers and for which amount of C&F agency charges collected by the appellant from the buyer service stands received by the buyer and not remained with the appellant - credit not allowed - AT
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• Central Excise:

  Method of Valuation - transaction value or MRP based value - physician samples cleared free of cost - The assessment cannot be done u/s 4A as the said goods are not marked with MRP - identical goods are different only in respect of size of packing and marking of MRP, are being assessed u/s 4A of the Central Excise Act and such comparable value after suitable adjustments can be adopted for the purpose of assessment of physician samples - AT
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• Central Excise:

  CENVAT credit - inferior quality limestone cleared to non-cement manufacturers - the respondent has obtained permission from Government of Tamil Nadu to dispose of the waste / inferior quality limestone to nearby industries. Such a disposal of waste will not make the mines non-captive mines - AT
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• Central Excise:

  Finalisation of Provisional assessment - Two different block periods of four months and two months were taken only to satisfy the six month period as prescribed under sub-Rule (3) of Rule 7 for finalisation of the provisional assessment, which period commences from the date of supply of the details - there could be no clubbing of the various months falling within the period of provisional assessment, as permitted under Rule 7(1) - HC
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Notifications

• Customs

• 20/2018 - dated 15-3-2018 - Cus (NT)
  Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver- Reg

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• 19/2018 - dated 15-3-2018 - Cus (NT)
  Exchange Rates Notification No.19/2018-Custom(NT) dated 15.3.2018

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• GST - States

• CCT/26-2/2017-18/5039 - dated 31-1-2018 - Goa SGST
  Notifies that no E-way Bill may be generated in respect of intra-State movement of any goods.

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• 38/1/2017-Fin(R&C)(47)/429 - dated 31-1-2018 - Goa SGST
  Notifies www.gst.gov.in and www.ewaybillgst.gov.in as the Common Goods and Services Tax Electronic Portal.

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• 38/1/2017-Fin(R&C)(46)/430 - dated 31-1-2018 - Goa SGST
  Waives the amount of late fee payable by any registered person for failure to furnish the return in FORM GSTR-6 by the due date.

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• 38/1/2017-Fin(R&C)(45)/431 - dated 31-1-2018 - Goa SGST
  Waives the amount of late fee payable furnish the return in FORM GSTR-5A by the due date.

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• 38/1/2017-Fin(R&C)(44)/432 - dated 31-1-2018 - Goa SGST
  Waives the amount of late fee payable furnish the return in FORM GSTR-5 by the due date.

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• 38/1/2017-Fin(R&C)(43)/433 - dated 31-1-2018 - Goa SGST
  Waives the amount of late fee payable furnish the details of outward supplies for any month/quarter in FORM GSTR-1 by the due date.

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• 38/1/2017-Fin(R&C)(42)/434 - dated 31-1-2018 - Goa SGST
  The Goa Goods Services Tax (Amendment) Rules, 2018.

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• 38/1/2017-Fin(R&C)(09/2018-Rate) - dated 24-1-2018 - Goa SGST
  Amendments in the Government notification No. 38/1/2017-Fin(R&C)(45/2017-Rate), dated the 14th November, 2017,

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• 38/1/2017-Fin(R&C)(08/2018-Rate) - dated 24-1-2018 - Goa SGST
  Exempts the state tax on intra-state supplies of goods, Old and used, petrol Liquefied petroleum gases (LPG) or compressed natural gas (CNG).

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• 38/1/2017-Fin(R&C)(07/2018-Rate) - dated 24-1-2018 - Goa SGST
  Amendments in the Government notification No. 38/1/2017-Fin(R&C)(2/2017-Rate), dated the 30th June, 2017

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• 38/1/2017-Fin(R&C)(06/2018-Rate) - dated 24-1-2018 - Goa SGST
  Amendments in the Government notification No. 38/1/2017-Fin(R&C)(1/2017-Rate), dated the 30th June, 2017.

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• 38/1/2017-Fin(R&C)(05/2018-Rate) - dated 24-1-2018 - Goa SGST
  Exempts the intra-State supply of services by way of grant of license or lease to explore or mine petroleum crude or natural gas or both.

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• 38/1/2017-Fin(R&C)(04/2018-Rate) - dated 24-1-2018 - Goa SGST
  Notifies the following classes of registered persons who supply development rights to a developer, builder, construction company or any other registered person against consideration, wholly or partly, in the form of construction service of complex, building or civil structure.

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• 38/1/2017-Fin(R&C)(03/2018-Rate) - dated 24-1-2018 - Goa SGST
  Amendments in the Government notification No. 38/1/2017-Fin(R&C)(13/2017-Rate), dated the 30th June, 2017.

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• 38/1/2017-Fin(R&C)(02/2018-Rate) - dated 24-1-2018 - Goa SGST
  Amendments in the Government notification No. 38/1/2017-Fin(R&C)(12/2017-Rate), dated the 30th June, 2017.

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• 38/1/2017-Fin(R&C)(01/2018-Rate) - dated 24-1-2018 - Goa SGST
  Amendments in the Government notification No. 38/1/2017-Fin(R&C)(11/2017-Rate), dated the 30th June, 2017.

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• 38/1/2017-Fin(R&C)(41)/320 - dated 12-1-2018 - Goa SGST
  Amendments in the Government notification No. 38/1/2017-Fin(R&C)(5)/2550, dated the 28th June, 2017.

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• 38/1/2017-Fin(R&C)(40)/321 - dated 12-1-2018 - Goa SGST
  The Goa Goods and Services Tax (Fourteenth Amendment) Rules, 2017.

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• 38/1/2017-Fin(R&C)(39)/322 - dated 12-1-2018 - Goa SGST
  Notification No. 38/1/2017-Fin(R&C)(13)/2357 dated the 13th September, 2017, published in the Extraordinary Official Gazette, Series I No. 24 dated the 14th September, 2017 (hereinafter referred to as the “said Notification”), shall be deemed to have come into force and the 1st day of February, 2018

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• 38/1/2017-Fin(R&C)(38)/323 - dated 12-1-2018 - Goa SGST
  Waives the amount of late fee payable furnish the return in FORM GSTR-4 by the due date, which is in excess of an amount of twenty five rupees for every day.

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• 38/1/2017-Fin(R&C)(37)/324 - dated 12-1-2018 - Goa SGST
  Special Procedure for filing outward supplies for suppliers whose aggregate turnover is up to 1.50 crore rupees in the preceding financial year or the current financial year –furnishing of quarterly returns - extension of time

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• 13/2018-State Tax - dated 7-3-2018 - Gujarat SGST
  Rescind the Government Notification, Finance Department No. (GHN-10)/GST-2018/S.128(7)TH dated the 23rd January, 2018, notification No. 06/2018 - State Tax.

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• 12/2018-State Tax - dated 7-3-2018 - Gujarat SGST
  The Gujarat Goods and Services Tax (Second Amendment) Rules, 2018.

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Circulars / Instructions / Orders

• GST - 37/11/2018-GST - dated 15-3-2018
  Clarifications on exports related refund issues.

News

• 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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• Exchange Rate of Foreign Currencies relating to Imported and Export Goods Notified

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• Quarterly Report on Public Debt Management for the Third Quarter (Q3) of the Financial Year (FY) 2017-18 (October-December 2017) released; During Q3 FY 2017-18, the Government issued Dated Securities worth ₹ 1,64,000 crore, lower than ₹ 1,89,000 crore in Q2 of FY 2016-17, thus leading to cumulative issuance of ₹ 5,21,000 crore (87.0% of 2017-18 RE) among others

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• 'Panama Papers' law firm shuts down operations

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• Two bills passed amid din in LS, proceedings remain paralysed

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• Rajya Sabha adjourned as opposition continues protest

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• RBI Reference Rate for US $

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• Notice of Amendments - THE FINANCE BILL, 2018

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• Banking Regulatory Powers Should Be Ownership Neutral (Urjit R. Patel, Governor, Reserve Bank of India – March 14, 2018 – Inaugural Lecture : Centre for Law & Economics, Centre for Banking & Financial Laws Gujarat National Law University, Gandhinagar)

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• Cabinet approves continuation of ongoing urea subsidy scheme beyond 12th Five Year Plan

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• Cabinet approves Agreement for the Avoidance of Double Taxation and Prevention of Fiscal Evasion between India and Iran

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Case Laws:

• GST

• 2018 (3) TMI 679
  Difficulties in filing of GST Tran-1 - transitional credit - Writ of mandamus to extend the time period for filing of GST Tran-1 - application of petitioner was not entertained on the last date i.e. 27.12.2017 and he has filed his complete application for the necessary transactional credit - Held that: - the respondents are directed to reopen the portal within two weeks from today. In the event they do not do so, they will entertain the application of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner - petition disposed off.

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• 2018 (3) TMI 678
  Seizure order passed by Proper Officer u/s 129 of UPGST Act, 2017 - Held that: - on perusal of Section 129, it is found that the petitioner can get its goods released by resorting to any of the three modes mentioned in Sub-section 1(a) to (c) thereof, meaning thereby, it can also furnish a security equivalent to the amount payable under Clause (a) or Clause (b) in such form and manner as may be prescribed including Sub-section 6 of Section 67 by virtue of Section 2 of Section 129 - it would be appropriate for the petitioners herein to approach the proper officer under the said provisions, who shall look into the matter and take such decision as is appropriate and accordance with law - petition disposed off.

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• Income Tax

• 2018 (3) TMI 677
  Benefit of Section 80HH - proof of manufacturing - Held that:- No ground to interfere with the impugned order. The special leave petition is, accordingly, dismissed. HC order confirmed [2017 (4) TMI 616 - DELHI HIGH COURT] HC has held that it was the duty and onus on the shoulder of the assessee to show that he was also engaged in manufacturing activities and the gross total income declared by it also include income from manufacturing activity and on the basis of foregoing discussion we have held that the assessee is entitled for deduction u/s 80HH and 80I on the part of income earned from manufacturing activities. As it is not possible to calculate quantum of deduction and thus we find it appropriate to send the issue for limited purposes i.e. for calculation of deduction u/s 80HH on the income earned from manufacturing activities during the relevant periods under consideration for all five assessment years.

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• 2018 (3) TMI 676
  Addition u/s 14A - Applicability of Rule 8D - whether shall be applicable retrospectively or shall be applicable from AY 2008-09? - Held that:- No ground to interfere with the impugned order. The special leave petitions are, accordingly, dismissed. HC order confirmed [2017 (2) TMI 34 - GUJARAT HIGH COURT] HC has held provision of Rule 8D shall be applicable prospectively and shall not be applicable with respect to earlier assessment years. The proposed questions of law are answered against the Revenue and in favour of assessee

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• 2018 (3) TMI 675
  Doctrine of mutuality - receipts by cooperative societies, from its members i.e. non-occupancy charges, transfer charges, common amenity fund charges and certain other charges, are exempt from income tax - Contribution to the common amenity fund - Held that:- The charges are utilised only for the common benefit of facilities and amenities to the members. Contribution to the common amenity fund taken from a member disposing property is similarly utilised for meeting sudden and regular heavy repairs to ensure continuous and proper hazard free maintenance of the properties of the society which ultimately enures to the enjoyment, benefit and safety of the members. These charges are levied on the basis of resolutions passed by the society and in consonance with its byelaws. The receipts in the present cases have indisputably been used for mutual benefit towards maintenance of the premises, repairs, infrastructure and provision of common amenities. Any difference in the contributions payable by old members and fresh inductees cannot fall foul of the law as sufficient classification exists. Membership forming a class, the identity of the individual member not being relevant, induction into membership automatically attracts the doctrine of mutuality. If the society first inducts new members who are required to contribute to the common fund for availing common facilities, and then grants only occupancy rights to them by draw of lots, the ownership remaining with the society, the receipts cannot be bifurcated into two segments of receipt and costs, so as to hold the former to be outside the purview of mutuality classifying it as income of the society with commerciality. In the exercise of the powers conferred upon the State Government under Section 79A of the Maharashtra Cooperative Societies Act, 1960 following orders are hereby issued in the larger interests of the people in the State - The rate of premium to be charged for the transfer Flat/Premises as well as the rights and share in the share capital/property of the Cooperative Housing Society by a member in favour of another, should be determined at the General Meeting of the Society. No reason to take a view different from that taken by the High Court, that the notification dated 09.08.2001 is applicable only to cooperative housing societies and has no application to a premises society which consists of non-residential premises. - Decided against revenue

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• 2018 (3) TMI 674
  Reopening of assessment - non independent application of mind by assessee - out sourcing of reasons to believe - Held that:- The very reasons recorded by AO for issuing of the impugned notice the only words added to the above letter in the recorded reasons are “In this case information received from the Office of the DIT (Investigation) Unit4, Mumbai on 23rd March, 2017 vide letter dated 22nd March, 2017”. This, of course, besides the introductory para and the concluding para where he records that he has reasons to believe that income chargeable to tax has escaped assessment. Thus, prima facie, there has been no independent application of mind on the part of the Assessing Officer to the tangible material received from the Deputy Director of Investigation. The information received has to be examined in the context of the facts on record before coming to a view that income chargeable to tax has escaped assessment on account of failure to disclose fully and truly all relevant facts. In the absence of the above, it amounts to out sourcing of reasons to believe. Assessing Officer has issued the impugned notice without himself coming to a reasonable belief that income chargeable to tax has escaped assessment. - interim stay granted.

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• 2018 (3) TMI 673
  Reopening of assessment - reasons recorded in support of the impugned notice relied upon information which the Assessing Officer had claimed to have received from some source (without declaring the source) or giving relevant portion of information received - Held that:- Without examining the other contention raised on behalf of the Petitioner, in the present facts, it would be in the interest of justice that the impugned order dated 20.11.2017 disposing of the objections is set aside and the Petitioner is given an opportunity to file his objections afresh in the context of the material now available (relied upon by the Revenue). As the Petitioner, states that they would file their fresh objections within two weeks from today. The Assessing Officer would pass fresh order after considering the fresh objections filed by the Petitioner, within a period of four weeks after filing of the objections. Thereafter the Assessing Officer will not act upon the impugned notice for a period of four weeks of communication of the order on objections, if it is adverse to the Petitioner.

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• 2018 (3) TMI 672
  Addition u/s 68 - share application money - primary burden of establishing the identity of the applicant, the genuineness of the transaction and the creditworthiness of the party - Held that:- In this case, the assessee was a sick company; it pulled out of the woods in 2010. To tide over its financial sickness, apparently, it sought the help of the share applicants. The identity of those share applicants was clearly revealed. As noted by both the lower appellate authorities, no suspicion is attached to the said share applicants; moreover, the AO did not conduct any further enquiry except resting his conclusions on surmises. - Decided in favour of assessee.

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• 2018 (3) TMI 671
  Addition of interest expenditure for its exempt unit at Baddi - assessee had wrongly proportioned the interest for the exempt unit vis-a-vis the non-exempt units - Held that:- In Control and Switchgear Ltd. (2014 (6) TMI 46 - DELHI HIGH COURT), the Court utilized the formula because the assessee could not indicate– in the facts of that case, the actual figures relatable to interest expenditure. In both the cases, the ITAT and the CIT(A) have considered the assessee’s explanations and concluded that it was in a position to indicate that the concern could in fact allocate interest-free funds that enabled it to gain substantial relief. There is no error, therefore, in the findings. So far as the grievance with respect to CIT(A)’s permitting the assessee to file a second or fresh application – Form 10CCB, the Court holds that there is no error of law per se and that the Revenue’s contention on this score could have been aired or agitated before the ITAT.

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• 2018 (3) TMI 670
  Reopening of assessment - Benefit u/s 80(IB) (10) denied - non independent application of mind by AO - Held that:- The foundation of reasons in support of the impugned notice is the audit observations which in turn rely upon the valuer's report. We find that the valuer's report itself indicates that if overhead terraces on the ninth floor and on the first floor, if included then the area of some of the flats would be in excess of 1,500 square feet each. Prima facie, the reasons recorded in support of the notice shows that the Assessing Officer has not applied his mind independently to the valuer's report and has merely relied upon the interpretation of law by the audit. This is not permissible as the reasonable belief is to be of the Assessing Officer and not a borrowed satisfaction particularly on interpretation of law. More particularly the audit objections are contrary to AO's own findings in the order for the subsequent Assessment Year 2011-12, which has not yet been disturbed. Therefore, prima facie the impugned notice dated 28 March 2017, is without jurisdiction. - interim relief is granted.

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• 2018 (3) TMI 669
  Addition on account of Production Incentive Bonus - Held that:- Question to be answered against the department in view of the judgment in the case of Commissioner of Income Tax vs. M/s. Kisan Sahkari Chini Mills Ltd. (2017 (8) TMI 131 - ALLAHABAD HIGH COURT) wherein this court has held that where incentive bonus has been paid as a reward of good attendance and efficiency to the workers, it would be deductible under section 37 of the Act and therefore the tribunal has not erred in allowing deduction in respect of the incentive bonus in the present case also. Addition of undervaluation of closing stock - Held that:- Order of the tribunal is upheld deleting the addition of the amount made on account of under valuation of closing stock in view of the fact in the case of CIT vs. Bannari Amman Sugars Ltd. (2012 (9) TMI 848 - SUPREME COURT) has held that the stock of incentive sugar has to be valued on the levy price and not on cost price. Contribution to provident fund made by the assessee, it has been recorded as a matter of fact that the contribution was made well within the grace period. Such being the case it was liable to be allowed under section 43B of the Act. Decided in favour of the assessee. Assessee as held to be entitled to the deduction on account of interest on excess levy sugar price. This question is also therefore decided in favour of the assessee Disallowance of guest house expenses - Held that:- This court in the case of Commissioner of Income Tax vs. M/s. Kisan Sahkari Chini Mills Ltd. (supra) by which the tribunal has deleted the disallowance of guest house expenses under section 37 as in view of the provisions of sub-section (4) of section 37 which stood at the relevant time all expenses incurred to the assessee on any accommodation of the nature of the guest house after 28.2.1970 were not allowable. The question is answered in favour of the department and against the assessee.

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• 2018 (3) TMI 668
  Reopening of assessment - validity of assessment - non issuing notice u/s. 143(2) - Held that:- CIT(A) has rightly held that the assumption of jurisdiction to frame an assessment or non assumption of jurisdiction to frame an assessment goes to the root of the judicial act of framing an assessment order and in the event of non assumption of jurisdiction u/s. 143(2) of the Act to frame an assessment the act of the AO in framing an assessment order without issuing notice u/s. 143(2) cannot be saved under the provisions of section 292B or under section 292BB of I.T. Act, 1961, hence, the assessment order so framed will be void ab-initio for want of assumption of jurisdiction as assessment cannot be framed based upon jurisdiction calling for the Return of income. Assessment order framed without first assuming jurisdiction u/s. 143(2) of the I.T. Act, 1961 is void ab-initio. - Decided in favour of assessee.

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• 2018 (3) TMI 667
  Disallowance of commission expenses - income from providing accommodation entries - Weightage rate of commission - Held that:- CIT(A) has restricted the rate of commission at 2% on the basis of his own knowledge without supporting any documentary evidences or relying on any documentary evidences found during the course of search. This is evident from his finding that ‘no set formula or fixed rate of commission in the business activity of providing accommodation entry was prevalent and it was on the basis of need and practice prevalent in the market’. CIT(A) has also not considered the objections of the assessee in respect of the weightage rate of commission of 5.67% computed by the AO. In view of the facts, the objections of the assessee that commission expenses were paid for getting purchase bills etc. need to be considered in the light of the documents seized from its premises. We feel it appropriate to restore the issue in dispute to the file of the Commissioner of Income-tax (Appeals) for deciding it afresh - Decided in favour of revenue for statistical purposes.

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• 2018 (3) TMI 666
  Penalty u/s 271(1)(c) - no specific allegation as to the concealment of particulars of income or furnishing of inaccurate particulars - defective notice - Held that:- AO has initiated the penalty for concealment of particulars of income or furnishing of inaccurate particulars, which is contrary to the provisions of law. Notice issued by the AO u/s. 271(1)(C) read with Section 274 of the Act is bad in law as it does not specify which limb of section 271(1)(C) of the Act, the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars. Therefore, the penalty in dispute is not sustainable in the eyes of law. Thus penalty cancelled - Decided in favour of assessee

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• 2018 (3) TMI 665
  Capital gain computation - adoption of correct sales considerations - Held that:- As in view of the provisions of Section 50C of the Act and the law on this aspect, the findings of the Ld. CIT(A) adopting the sales consideration at ₹ 25,00,000/- and then reduce the indexed cost of acquisition does not suffer any irregularity or illegality and does not warrant any interference. Disallowance of deduction of registration expenses u/s 48 - Held that:- No obligation on the part of the seller to meet the registration expenses. Except the copy of the pay order dated 2.8.2006 no document is produced before us to show that the assessee is under any legal or contractual obligation to meet the registration expenses in respect of the land sold by them. Even the pay order does not show that the same was issued at the cost of the assessee. Unless it is proved that the assessee actually incurred this expenditure, it is not possible to give a finding that the case of the assessee is covered under section 48 (i) of the Act. Since it is a fact to be verified, conveniently at the end of the learned AO, we deem it just and proper to set aside the ground No.1 of Cross Objection to the file of the AO for verification of the fact as to whether the assessee incurred this expenditure or not. Disallowance of the long term capital loss - Held that:- We uphold the conclusions reached by the learned CIT(A) that this sale transaction is within the legal framework and cannot be held as illegal. Holding so, we dismiss this ground of appeal. Membership/subscription fees paid on behalf of Mr. B.K. Modi, the Chairman, the assessee incurred the said expense and paid the amount to Clinton Global Initiative, Associated Chamber of Commerce and Industries of UP, Asia Business Council, Conference Board Inc. etc. - claim allowed as relying on assessee' own case Travelling expense incurred by the assessee - Held that:- No dispute that FBT is levied and paid in respect of the travel expenses. Learned CIT(A) recorded that it was pleaded before him that considering the FBT paid, the disallowance, if any, should be to the extent of ₹ 18,87,214/- only. However, learned CIT(A) restricted the disallowance to ₹ 5 lacs only on verification of the record. The reasons given by the learned CIT(A) is that certain bills and vouchers of small amounts are not verifiable. However, no details of the unverifiable expense are noted. Without reference to the particular expenses that remained unverifiable, we are of the considered opinion that ad hoc disallowance is not permissible. With this view of the matter, we dismiss the ground of appeal and allow the ground of Cross Objection and delete the ad hoc disallowance of ₹ 5 lacs. Enhancement of long term capital gains earned on the sale of shares of M/s Harjas Logic System Pvt. Ld - Held that:- The expression full value of the consideration for sale cannot be construed as the market value but as the price decided upon by the parties to the transaction and the Ld. AO does not have jurisdiction to substitute the consideration received with any other higher value, in the absence of any material falsifying the contention of the assessee on the aspect of actual consideration received. It is not open for the Ld. AO to adopt different standards for the shares sold merely depending upon the NAV by accepted the sale for consideration where NAV is less than the sale consideration while rejecting the sale consideration where NAV is higher. There is no denial on the submission of the assessee that if NAV of all shares is substituted for sale consideration, it would be observed that the assessee has sold investments at value higher by ₹ 3,03,64,980/-. This approach of the Ld. AO cannot be accepted and the Ld. CIT(A) rightly corrected the same Contribution made by the assessee to the International Fiscal Association is allowable u/s 37

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• 2018 (3) TMI 664
  Penalty u/s. 271(1)(c) - non specification of charge - defective notice - Held that:- We find that the notice dt. 20-03-2014 issued u/s 274 r.w.s 271 of the Act does not specify the charge of offence committed by the assessee viz whether had concealed the particulars of income or had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. - Decided in favour of assessee.

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• 2018 (3) TMI 663
  Revision u/s 263 - deemed dividend u/s 2 (22)(e) addition - search assessments completed u/s 143(3) r.w.s. 153A - Held that:- As perused the materials available on record and gone through the orders of the authorities below. In this case, the search assessments were completed u/s 143(3) r.w.s. 153A by an order dated 31.3.2005 accepting the income returned. CIT has taken up the case for revision u/s 263 with regard to the advances given by the company to the Directors who are holding substantial share in the companies. The company was having sufficient resources and the issue has to be considered as deemed dividend u/s 2 (22)(e). However, as per the decided case laws, the entries made in the regular books of accounts should not be considered in search assessments unless the assessment is incomplete. It is not permissible to revise the assessment order in the case of search assessments without referring to incriminating material in the case of completed assessments. Accordingly, we set aside the order of the Principal Commissioner of Income Tax and allow the appeals of the assessee.

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• 2018 (3) TMI 662
  Disallowance made under section 14A r/w rule 8D(2)(iii) - Held that:- Investments not giving rise to exempt income during the relevant financial year have to be excluded from the average value of investment. We direct the Assessing Officer to verify the assessee’s claim that it has not received any exempt income on the aforesaid investments and if assessee’s claim is found to be correct, the aforesaid investment should be excluded from the average value of investment for computing disallowance under rule 8D(2)(iii). Grounds raised are allowed for statistical purposes. Addition of service tax to the trading receipt by invoking provisions of section 145A - Held that:- The Tribunal, while deciding identical issue in assessee’s own case for assessment year 2007–08 followed another decision of the same Bench, wherein, it is held that since the assessee is a service provider, the provisions of section 145A cannot be made applicable as such provisions were specifically introduced for the purpose of manufacture segment of business.

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• 2018 (3) TMI 661
  Reopening of assessment - Addition u/s 68 - as per revenue assessee has opened a bank account through its Director who has operated that particular account and carried out the business of giving accommodation entries to the various parties by charging the commission - Held that:- Shri Pradeep Jindal is the director of the company. Therefore, the director of the assessee company himself has stated that he is an entry operator and from bank account of Precision Agencies Pvt. Ltd (assessee) he is providing accommodation entries. The bank account of the assessee with State Bank of India also corroborates above facts. AO has also verified the details of the return of income filed by the assessee for AY 2000-01 which is mentioned in the reasons recorded. It cannot be said that AO has not applied his mind to the information received from the Investigation Wing. Further, when the statement is given by the director of the assessee company itself, that he is engaged in providing accommodation entries, where the precise bank account of the assessee was found, where amount involved in the accommodation entries was also determined and the return of assessee was also collected by the assessee and recorded in the reasons, we are of the view that there is no infirmity committed by the AO in reopening the case of the assessee. On merits as referring to assessee's contention of cheating on the assessee by Sh. Pradeep Jindal and the bankers in view of the facts and circumstances of the case, all the appeals are set aside back to the file of the Ld. assessing officer with a direction to the assessee to first prove before the AO that there is a cheating on the assessee by Sh. Pradeep Jindal and the bankers. The assessee also is directed to produce the minutes book of the company to show the resolution of that particular date that it does not exist in the minutes book. Unless the assessee comes out with the clean hands before the Ld. assessing officer it cannot escape the taxation of the whole amount. Thereafter the Ld. assessing officer is directed to make complete examination of the bank accounts by obtaining necessary information from the bankers by issue of summons under section 131 of the Income Tax Act and identify the beneficiaries with proper documentation and evidences and they may be taxed on the above sum by application of the provisions of section 150 (1) of the Act, if possible. The assessing officer may also take into consideration the applicability of Prohibition of Benami Property Transaction Act, 1988 on such transactions and make necessary efforts to penalise the entry operator, the beneficiaries and the bankers, if found guilty. Set aside all these 5 appeals back to the file of the Ld. assessing officer to carry out necessary Inquiries as directed and then to decide about the taxability of the sum involved in the bank account of the assessee with state bank of India opened and operated by Sh. Pradeep Jindal in the name of the assessee company.

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• 2018 (3) TMI 660
  Addition towards provision for doubtful debts - CIT-A deleted the addition - before the completion of assessment proceedings, the assessee filed a revised computation of income wherein suo moto disallowance made towards provision for bad and doubtful debts was withdrawn by the assessee, on the ground that the same amount was already added back by the Ld. AO in the scrutiny assessment proceedings - Held that:- We find that the legitimate mistake committed by the assessee was sought to be withdrawn by way of revised computation of income in order to avoid double disallowance which was not considered by the Ld. AO. This has been fairly considered by the Ld. CIT(A) and Ld. CIT(A) had rightly granted relief to the assessee in this regard. We do not find any infirmity in the order of the Ld. CIT(A). Accordingly, grounds raised by the revenue are dismissed.

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• 2018 (3) TMI 659
  Levy of penalty u/s. 271(1)(c) - proof of concealment of income or for furnishing of inaccurate particulars of income - Held that:- Mere disallowance in the course of assessment does not lead to levy of penalty u/s. 271(1)(c), unless there is a finding that assessee has a concealed income or furnished inaccurate particulars. There is no indication that the disallowance/addition made by the AO falls in any of these categories stated above, as there is no discussion even about initiation of penalty proceedings. The order of AO indicates that it is a mere disallowance, consequent to survey operations conducted. The case does not fall either under the head ‘concealment of income’ or under ‘furnishing of inaccurate particulars’ so as to attract penalty under Sec.271(1)(c). As the facts indicate that there is no need for levy of penalty on mere disallowance of a certain claim made in the P&L A/c. - Decided in favour of assessee.

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• 2018 (3) TMI 658
  Reopening of assessment - validity of reasons to believe - Held that:- As nothing can be gathered from a perusal of the reasons to believe that the assessee had failed to fully and truly disclose all the material facts necessary for his assessment, therefore, the assumption of jurisdiction by the A.O after a lapse of a period of 4 years from the end of the relevant assessment year in order to disturb the concluded assessment of the assessee framed under Sec. 143(3) on 24.12.2009, cannot be sustained and is liable to be vacated. We thus finding ourselves to be in agreement with the well reasoned view taken by the CIT(A), therefore, uphold his order. - Decided in favour of assessee.

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• Benami Property

• 2018 (3) TMI 642
  Applicability of Prohibition of Benami Property Transactions Act, 1988 - trial court has rejected the counter claim on account of the same being barred by Section 4 of the Benami Transactions (Prohibition) Act, 1988 - with effect from 1.11.2016 the Benami Transactions (Prohibition) Act, 1988 was amended and the new Act is now called as the Prohibition of Benami Property Transactions Act, 1988 - it was contended that Since the new Act has now become applicable with effect from 1.11.2016 and the counter claim was filed by the appellant nos. 1 and 2 /defendant nos. 1 and 2 in May, 2017, therefore what will govern the parties is not the Benami Transactions (Prohibition) Act, 1988 but the Prohibition of Benami Property Transactions Act, 1988 Held that: - A reading of the provision of Section 2(9)(A)(b)(iv) of the Prohibition of Benami Property Transactions Act, shows that no doubt there can be a transaction, which will not be a benami transaction, if the same is entered into between sisters, but the precondition for applicability of the exception in Section 2(9)(A)(b)(iv) of the Prohibition of Benami Property Transactions Act, is that a person who claims entitlement to a property by the same falling in the exception of Section 2(9)(A)(b)(iv), is a person who is shown as a joint owner in any document, i.e. a document besides the title deeds of the property - In the present case, the only documents which are relied upon by the appellant nos. 1 and 2 /defendant nos. 1 and 2 are the two power of attorneys dated 5.12.2013, and these attorneys in no manner shows any right, title and interest of the appellant nos. 1 and 2 /defendant nos. 1 and 2 in the suit property because these attorneys are simple General Power Of Attorneys executed by the respondents/plaintiffs in favour of the appellant nos. 1 and 2 /defendant nos. 1 and 2 in order to enable the appellant nos. 1 and 2 /defendant nos. 1 and 2 to get the suit property transferred from DDA to the respondents/plaintiffs by execution of Conveyence Deed by the DDA in favour of the respondents/plaintiffs. The claim of the appellant nos. 1 and 2 /defendant nos. 1 and 2 to the suit property is a claim based upon a benami transaction, and which transaction does not fall in the exceptions contained in Section 2(9)(A)(b)(i) to (iv) of the Prohibition of Benami Property Transactions Act, 1988 - appeal dismissed.

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• Customs

• 2018 (3) TMI 656
  Principles of Natural justice - Tribunal has neither adverted to any of the contentions urged by either of the parties nor has it given reasons for concluding that the appeals are only liable to be dismissed - Held that: - the order is vitiated for non-application of mind and failure to deal with the contention of the parties. In such circumstances, the only order that can be passed in these appeals is to set aside the order impugned and remit the matter for fresh consideration by the Tribunal - appeals filed by the appellants will stand restored to the file of the Tribunal.

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• 2018 (3) TMI 655
  Imposition of ADD - Castings for Wind Operated Electricity Generators (PUC) - Import from China PR - These appeals mainly agitated on the scope of PUC and DI as well as contesting the imposition of AD duty alleging no injury to the DI - Held that: - All castings, whether or not machined, in raw, finished or sub-assembled form, or as a part of sub-assembly, or a part of an equipment/ component, meant for wind operated electricity generators are covered in the present investigation - there could be no ambiguity or possibility of confusion in understanding the scope of PUC covered in the AD investigation. Scope of the DI - locus of M/s Bradken India Pvt. Ltd. to be considered as DI - Held that:- Since, the investigation is restricted to the PUC, we are not concerned with the stature and size of L&T or Bradken India Pvt. Ltd. This has nothing to do with the examination of relevant economic parameters by the DA. Such economic parameters are examined only with reference to manufacture of PUC by L&T/ Bradken India Pvt. Ltd. The other activities and business of L&T has no bearing to the present investigation. After detailed analysis of demand, import volume, market share, price effect of imported goods, price undercutting/under selling/ price suppression/depression and also the economic parameters of DI, the DA arrived at his conclusion regarding existence of dumping and its consequence on the DI causing injury. In fact, the DI had suffered substantial loss during the material period and there were negative return on capital employed. This is clear from the analysis of the DA at para 108 of the final finding. The DI suffered losses throughout the injury period though some cash profits were made during 2013-2014 and POI. While upholding the imposition of AD duty as per the final finding, we direct the DA to examine, afresh, the factual claims made by the DI on this aspect. After due examination, the DA may issue his finding on this aspect. In case based on the factual input, the margin of dumping and thereby the injury parameters vary then the AD duty shall accordingly be fixed by the DA. The appeals filed by Indian importer and Chinese Exporters were dismissed.

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• 2018 (3) TMI 654
  Smuggling - illegal export of red Sanders wood - penalty - Held that: - In the present case the acts of the CHA could at best be charged for violation of the CHALR,2004 but in absence of evidence of their complicity in the act of attempt to illegal export of Red Sanders wood, penalty u/s 114(i) cannot be sustained. Penalty imposed on M/s Raghuvir Singh & Sons - Held that: - merely authorizing M/s Chirag Enterprises to undertake the transportation from CWC-CFS-Gandhidham to the Port area, it was within the knowledge of the Appellant that the Roofing Tiles would be replaced with Red Sander Woods by the Proprietor of M/s Chirag Enterprises, Sh. Dev Kumar Kapta at Jamadar Wadi - penalty on M/s Raghuvir Singh & Sons u/s 114(i) of Customs Act, 1962 also not sustainable. Penalty u/s 114(i) of Customs Act, 1962 on the CHA M/s Act Forwarders and M/s Raghuvir Singh & Sons - Held that: - the Sh. Dev Kumar Kapta has not been charged as a repeated Offender, to meet the ends of justice, penalty imposed on him is reduced to ₹ 5.00 lakhs - Appeals filed by M/s Act Forwarders and M/s Raghuvir Singh & Sons are allowed. Appeal allowed in part.

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• 2018 (3) TMI 653
  Confiscation - penalty - Alleging that since the respondent M/s Reliance Industries Ltd. as on the date of receipt of the duty free bunkers i.e. 246.830 MT of furnace oil from M/s Adani Enterprises Ltd. was aware of the fact that the vessel MT Sinar Agra was not meant to undertake foreign voyage but to undertake coastal run, therefore, the furnace oil received duty free, is incorrect - Held that: - when the Respondents have themselves submitted to the jurisdiction of the customs to assess the bunkers received duty free from the SEZ unit, but to be used in coastal run, then to hold that the customs authorities has no jurisdiction to demand duty on the duty free bunkers received on the respective vessels and to be used in coastal run is untenable in law. The Revenue's allegation/ attempt to establish that the Respondent was aware of the fact that the vessels would not undertake foreign voyage which though not corroborated by evidence, even otherwise also if accepted, it is immaterial and irrelevant since as on the date of clearance of bunkers from the SEZ as export, the vessels were not converted to coastal run vessels. The provisions of SEZ Act, 2005 and the Rules made thereunder is clearly not applicable to assess the duty free bunkers received and later used for costal run. Appeal allowed by way of remand.

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• 2018 (3) TMI 652
  Valuation - rejection of declared value - counterfeit goods - Held that: - there was an attempt to remove the container from the custodian without custom formalities by presenting fake documents. Further the attempt was that the goods should not be examined and should be removed to FTWZ, Khurja. The entire case was an attempt to import into India counterfeit goods and mis-declared the same to avoid its examination and clear at value lower than the required value to evade customs duty - appeal dismissed - decided against appellant.

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• 2018 (3) TMI 651
  Refund of SAD - N/N. 102/2007-Cus dated 17.9.2007 - Held that: - Tribunal in number of cases has held that such certificate is sufficient enough inasmuch as the entire purpose to stamp is to prevent mis-use of SAD credit - matter remanded to the original adjudicating authority for examining the factual position - appeal allowed by way of remand.

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• 2018 (3) TMI 650
  Penalty under the provisions of Regulation 18 read with Regulation 20(7) and 22 of CBLR, 2013 for various acts of omission and commission - Customs Brokers Licensing Regulations, 2013 - Held that: - the issue regarding right of the Revenue to file an appeal under CBLR, 2013 was specifically examined by the coordinate Bench in more than one occasions and concluded that in the presence of specific provision for CHA as well as no specific provision for the Revenue, such appeal is not contemplated or permissible under CBLR, 2013 on the part of the Revenue - appeal dismissed being not maintainable.

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• 2018 (3) TMI 649
  Import of gold - N/N. 57/2000-Cus dated 8.5.2000 - enforcement of bond for different duty liability - Penalty - Held that: - Admitted fact is that except in one case, the bond which is involved in the present case relates to the period prior to pre-amended notification - Nowhere in the pre-amended EXIM Policy or circular the condition of production of BRC by the importing /nominated agencies has been stipulated. Such stipulation apparently was brought in with effect from 1.4.2008 in the amended EXIM Policy which was later followed by the Circular dated 24.7.2008 of the Board. The impugned order cannot ask for the compliance of the condition which was later on introduced in the Policy for the import / bond executed which was made earlier - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 648
  Valuation of imported goods - rejection of declared value - Held that: - For arriving at such deductive value, the adjudicating authority has taken into account the effect of neutralization of taxes and only thereafter arrived at a conclusion that assessable value of goods viz. Vina Adela Red and White Wine should be pegged at ₹ 140 per bottle; that Mondelion Calatayud Wine should be pegged at ₹ 195 per bottle and finally Campo de Borja Crianza Red Wine should be pegged at ₹ 245 per bottle - there are merits in the Revenue’s appeal that the Commissioner (Appeals) has been peremptory in setting aside the findings and conclusions of the original authority. The portion of the impugned order setting aside rejection of declared value and enhancement of value of the imported goods cannot be sustained and is therefore set aside - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 647
  Misdeclaration of imported goods - whether under the admitted facts that the appellant imported 7140 numbers of polyester blanket vide bill of entry dated 12th August, 2015 at ICD, Sonepat, as per the bill of entry, the appellant declared the goods as polyester blankets supported by bill of lading No. YSBNF1506503 dated 6th July, 2015 supported by invoice, in container No.DFSU 7736018-40? Held that: - it is an admitted fact that the undeclared goods are very small quantity or by way of sample or by way of gift sent by the foreign supplier in the said container. That appears to be a small item by way of sample or goods in the invoice or bill of lading or another connected documents. Further, it is also admitted fact that these goods are very small in value, less than 5% of the value of the declared goods - it is not the case made out by the Revenue that the appellant have made windfall by importing item found undeclared in the facts of the present case. Absolute confiscation of undeclared goods upheld - quantum of penalty reduced - appeal allowed in part.

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• Corporate Laws

• 2018 (3) TMI 646
  Benefit of the Condonation of Delay Scheme, 2018 - Held that:- This petition can be disposed of with the direction that respondents will follow the directives contained in Sandeep Singh (2018 (3) TMI 560 - DELHI HIGH COURT). It is made clear that the directives contained therein will apply to the petitioners mutatis mutandis. The petitioners will, however, take steps both in consonance with the provisions of Section 248 (2) of the Companies Act, 2013 and under the Condonation of Delay Scheme, 2018 within a period of ten (10) days from today. In order to facilitate this exercise, operation of the impugned list, insofar as it concerns the petitioners, will remain stayed till 31.3.2018 or, till such time the respondents take requisite decision with regard to the request of the petitioners made to them in consonance with the provisions under Section 248 (2) of the Companies Act, 2013 and under the Condonation of Delay Scheme, 2018.

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• 2018 (3) TMI 645
  Validity of the Sale Agreement - Suit filed for Specific Performance of the Agreement for Sale - Whether the third defendant and other Directors obtained consent from the plaintiff before entering into the Sale Agreement dated 14.07.2005, being a major shareholder in the company? - applicability of Doctrine of Indoor Management - Held that:- This Court is of the considered view that the sale and lease of immovable properties of the third defendant company in favour of the first defendant company is not in compliance of Section 293(1)(a) of the Companies Act. No doubt, under Ex.P22-Minutes of the Board Meeting dated 24.06.2005, plant and machineries were also directed to be sold and for effecting such sale, the plaintiff in C.S.No.877 of 2005 has no objection and thus it appears that he has taken a contradictory stand. In the considered opinion of the Court, the sale of immovable properties as well as the plant and machineries either individually or collectively would fall within Section 293(1)(a) of the Companies Act and for effecting such a sale, consent/approval of the shareholders of the company is required. Contention by the first defendant/plaintiff in that since major shares are being held by Manging Director and Directors of the company, their decision to sell the land and properties would amount to consent of majority shareholders, this Court is of the view that the said submission lacks merit in the light of mandatory nature of Section 293(1)(a) of the Companies Act and that apart, in the event of holding General Body Meeting, explanatory statement under Section 173 of the Companies Act is also to be enclosed with the notice for the meeting and as such, both the provisions have not been adhered to. Also when there is a clear breach of a provision of a Statute, the Doctrine of Indoor Management cannot apply If a Statute prescribes a mandatory procedure, the same must be complied with at peril of the action being declared void for its non compliance. Third defendant and other directors did not obtain consent from the plaintiff/Thakur J. Bakshani before entering into Ex.P6/Agreement for Sale dated 14.07.2005 No doubt, then Chairman of M/s. Nova Dyeing and Printing Mills Ltd. - Jagadish A. Sadrangani and other Directors, namely the defendants 4 and 5 had interest in the third defendant company at the time of entering into Ex.P6/Agreement for Sale, but the fact remains that the statutory mandates cast upon the third defendant company/M/s. Nova Dyeing and Printing Mills Ltd. under Section 293 (1)(a) of the Companies Act, have not been adhered to/complied with de hors their interest and in the light of the findings recorded by this Court regarding Issue No.1 in both the Suits, Issue No.3 has no relevance. The findings given by this Court in respect of Issue No.1 in both the Suits, and Issue No. 2 had sustained the legal plea that the procedures contemplated under Section 293(1)(a) of the Companies Act, have not been followed/adhered to. The plaintiff, being a founder of the company, cannot question the validity of the Agreement for Sale/Ex.P6 dated 14.07.2005 and a shareholder is entitled to question the same on the ground that the mandates cast upon M/s. Nova Dyeing and Printing Mills Ltd./third defendant under Section 293(1)(a) of the Companies Act, have not been followed and the remedy, if any available at that point of time was that the approval/ratification by the General Body of the shareholders under Ex.P22 should have been obtained and admittedly, it was not done so. If the Board Meeting under Ex.P22 would amount to signing of the shareholders of the company in the General Body Meeting for the reason that majority of the shareholders represent in their capacity as Director and Managing Director respectively, is of the considered view that they are entitled to presume that as per the Doctrine of Indoor Management, everything has taken place as per law and procedure and this Court is of the considered view that it is obligatory on the part of the first defendant as per the Memorandum and Articles of Association, to exercise due diligence and it has not been done. Admittedly, in the case on hand, consent of the shareholders in the General Body Meeting has not been obtained and that by subsequent ratification also, the exercise done by the Board of Directors in that regard under Ex.P22 has not been ratified/approved. Adherence to Section 173 of the Companies Act is also mandated. In the considered opinion of the Court, the resolution passed by the company as per Section 192(4)(eee)(i) of the Companies Act requires ratification at the hands of the Registrar of Companies and it has not been done.

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• 2018 (3) TMI 644
  Oppression and mismanagement - removal of directors - personal liabilities of the Directors towards the Bank - two Managing Directors of the company, one appointed by the Tribunal below and the other one already performing the duties of the Managing Director - Held that:- We are not comfortable that the 1st respondent can be expected to look after the affairs of the 2nd respondent while also looking after the affairs of his own company which is in a competing business. We cannot think about any mechanism by which it can be ensured that 1st respondent who has now been appointed as Managing Director that he will not take care of his own company in the competing business unless he closes his business. Therefore, we are unable to uphold the Tribunal’s order in appointing as Managing Director (he was already director and continues to be). While appointing 1st respondent as Director cum Managing Director, no discussions has been made in respect of the Managing Director already performing the duties. Therefore, the Tribunal should not have appointed 1st respondent (petitioner in the company petition) as Director cum Managing Director of the 2nd respondent. As the Tribunal has held that the acts of omission and commission of appellant and the 3rd respondent have caused losses to 2nd respondent and the 1st respondent is not liable for the losses that has been suffered by the respondent company if any loss has been occurred due to non-completion of these projects will be borne by the company and not an individual. The company should have made a thorough investigation that the loss has been occurred due to inactiveness/negligence of the appellant. The company should have also convened a Board Meeting to analysis the difficulty in non-completion of projects. The sub account accounts are consolidated in the name of company. One person cannot be held responsible for the same. The company is liable to the Bank. The Board of Directors of the company should have investigated and have settled the matter internally. Therefore, the interference in the matter on this issue by the Tribunal is unwarranted.

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• Insolvency & Bankruptcy

• 2018 (3) TMI 657
  Stay of proceedings under SARFAESI Act 2002, including the auction notice - 'Moratorium’ applicability to the property of the ‘Corporate Debtor’ - Approval of resolution plan - ‘Financial Creditor’, including Appellant-State Bank of India to proceed against the ‘Personal Guarantor’ of the ‘Corporate Debtor’ - Held that:- Only institution of suits or continuation of pending suits or proceedings against the ‘Corporate Debtor’ are prohibited from proceedings, in terms of clause (b) of sub-section (1) of Section 14 of the ‘I&B Code’, transfer, encumbrance, alienation or disposal of any of its assets of the ‘Corporate Debtor’ and/ or any legal right or beneficial interest therein are prohibited. Clauses (c) & (d) of sub-section (1) of Section 14 of the ‘I&B Code’ prohibits recovery or enforcement of any security interest created by the corporate debtor in respect of its property including the property occupied by it or in the possession of the ‘Corporate Debtor’. ‘Resolution Plan’ if approved by the ‘Committee of Creditors’ under sub-section (4) of Section 30 and if the same meets the requirements as referred to in sub-section (2) of Section 30 and once approved by the ‘Adjudicating Authority’ is not only binding on the ‘Corporate Debtor’, but also on its employees, members, creditors, guarantors and other stakeholders involved in the ‘Resolution Plan’, including the ‘Personal Guarantor’. Thus we hold that the ‘Moratorium’ will not only be applicable to the property of the ‘Corporate Debtor’ but also on the ‘Personal Guarantor’. Appeal dismissed.

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• Service Tax

• 2018 (3) TMI 639
  Works contract - construction activity for providing parking facility for Commonwealth Games-2010 - appellant entered into an agreement with Municipal Corporation of Delhi (MCD) for Covering of Sunehari Nallah from Lala Lajpat Rai Marg (Behind Lodhi Road Hotel) to Dayal Singh College along Lodhi Road covering of Kushak Nallah from Jawaharlal Nehru Stadium (South Gate) to IVTH Avenue Road, Lodhi Road, Lodhi Colony, for providing parking facility for Commonwealth Games-2010 - Revenue entertained a view that the said construction activity will be covered for service tax liability under works contract service for the period 2007- 08 to 2011-12 - manpower services provided to group company of the appellant. Held that: - WCS covers only civil structures which are for commerce or industry. Admittedly, the creation of present facility by the MCD using the services of the appellant is for Commonwealth Games. It is clear that the said games were organized and conducted by the Govt. involving participation of large number of countries. Such sport event and the structure created for such sport event cannot be considered as commercial or industrial venture. Though the subsequent use of the facility created should not have any implication on the question of tax liability which should be with reference to status of the facility at the time of provision of service, we note that, even here, the clarification issued by SDMC supports the case of appellant - demand set aside. Manpower services - appellants have deputed some of their employees to their subsidiary group company - Held that: - deputing employees to group company cannot be considered as supply of manpower. The appellants categorically asserted that they continued to control the deputed employees and have only got reimbursement of actual cost for such deputation - service tax liability do not sustain. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 638
  Training in software and systems - Department took the view that these services provided would attract levy of service tax under the category of Commercial Training and Coaching (CTC) and Franchisee Service - Held that: - the cost of the books supplied by the appellant will have to be deducted for the purposes of arriving at the net tax liability. However, neither of the show cause notice have given any separate break-up of such cost of the books. The matter is remanded to the adjudicating authority to cause verification from the balance sheets and other data that may be provided by the appellant to work out such cost and to arrive at net tax liability. Penalty - Held that: - penalty not warranted and is set aside. Appeal disposed off.

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• 2018 (3) TMI 637
  Refund claim of duty paid wrongly towards reversal of cenvat credit - clearance of capital goods - Held that: - the appellant’s case is that they were not required to pay the duty at the time of clearance of old and used non-cenvatable capital goods. Admittedly, the appellants have not placed any evidence on record to show that such capital goods were purchased by them before 1991 and no cenvat credit has been availed by them. It is well established principal of law that onus to establish that capital goods were purchased after introduction of cenvat credit, is on the assessee, who is claiming the benefit. The only evidence is the affidavit which has also been proved to be wrong by the lower authorities, inasmuch as admittedly one of the capital goods stand purchased in 2003, thus negating the appellants stand. In the absence of any evidence to show that capital goods sold by the assessee were purchased prior to introduction of CENVAT credit on capital goods, I find no merits in their stand. Unjust enrichment - Held that: - Admittedly, the appellant in the present case has recovered the duty element from the purchaser of goods and as such, refund of same would be hit by the provisions of unjust enrichment. Appeal dismissed - decided against appellant.

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• 2018 (3) TMI 636
  Refund claim - unjust enrichment - Held that: - since, the amount paid towards Service Tax was debited as expense in the books of accounts, a clear inference has to be drawn that the appellant had collected the same either directly or indirectly from its customers - the Service Tax amount in question had not been shown as claims receivable in the balance sheet for the relevant period keeping even the possible realization of disputed amount from Department. Thus, the onus lies with the appellant to prove that it had suffered the incidence of duty and not passed on to any other person has not been satisfactorily discharged. It is not open to the appellant to submit contrary to fact as per accounting done by them in their statutory books. Appeal dismissed - decided against appellant.

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• 2018 (3) TMI 635
  Online Information and Data Base Excess or Retrieval Service - Revenue contended that the appellant herein received such service from foreign based CRS Companies under the main category of Computer Network Services in terms of Section 65 (105) (zh) of the Finance Act, 1994 - tax liability from 01/04/2006 to 31/03/2013 - reverse charge mechanism - Held that: - the tax liability of the appellant on reverse charge basis in terms of Section 66A has been resolved by the ratio adopted by this Tribunal in British Airways [2014 (6) TMI 626 - CESTAT NEW DELHI (LB)], where it was held that The appellant in the present case is only appointing IATA agents, dealing with them, collecting sale proceeds of the tickets sold by them and remitting the same to the head office. They are not, in fact, even using the said service directly and as such can, by no stretch of imagination held to be service recipient in India so as to pay any service tax - the tax liability of the appellant for the period prior to 01/07/2012 as confirmed by the impugned order cannot be sustained. For the period post 01/07/2012 we have examined the changed legal position. Section 66A has been made inapplicable from that date. However, the statutory provisions available in the said Section has been made applicable through different legal provisions more specifically the changed Section 68(2), Section 66B (44) explanation 3 read with explanation 4 and Section 66C read with Place of Provision of Services Rules, 2012. Even for the period post to 01/07/2012 there is no material change to attract service tax liability on the part of the appellant. No statutory changes or change in fact were brought in w.e.f. 01/07/2012 in order to vary the finding for this period. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 634
  Supply of Tangible Goods service - place of provision of services - the appellant purchased wagons, and lease them to railways for a period of 20 years - Held that: - it appears that the amendment came into existence w.e.f. 16.05.2008 in the Finance Act, 1994. But the agreement was executed in the year 1997. The identical issue has come up before the Tribunal in the case of Petronet LNG Ltd. Vs. CST, New Delhi [2013 (11) TMI 1011 - CESTAT NEW DELHI], where the moveable vessel was given on lease rent and it was held that on the long term agreements of the movable property i.e. tanker, the transactions fall within the ambit of the exclusionary clause of Section 65(105)(zzzzj) of the Act and therefore immune to the liability to Service tax. In the instant case, the wagon are not located during the entire period by the appellant within the territory of India so the appellant is not liable to pay service tax under the reverse charge mechanism in view of the proviso to Rule 3(iii). Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 633
  Supply of tangible goods services - Liability of service tax - vessels and dredgers chartered by them from foreign owners - reverse charge mechanism - interpretation of statute - exclusion clause in Section 65(105)(zzzzj) of the finance Act, 1994 - Held that: - in the present case, vessels / dredgers were transferred to the appellant with right of possession and effective control of such vessels / dredgers. The exclusion for tax liability as provided in the tax entry for supply of tangible goods is applicable to the present case. An identical dispute with reference to the very same tax entry came up before the Tribunal in Petronet LNG Ltd. Vs. Commissioner of Service Tax, New Delhi [2013 (11) TMI 1011 - CESTAT NEW DELHI] where the Tribunal elaborately examined the terms of charter agreement and various decisions of High Courts and Apex Court before arriving at the conclusion that the charter agreement, both long term and short term, conform to all substantive ingredients as would constitute the transactions as transfer of right to use goods. Therefore, the transactions fall within the exclusionary clause of section 65(105)(zzzzj) of the Act, consequently outside the purview of taxable service. In the present case, there is a transfer of right of possession and effective control of the vessel / dredger to the appellant. This arrangement is outside the purview of service tax liability under a 'supply of tangible goods services'. Demand of the service tax on customs duty and entry tax paid on imported equipment, which were reimbursed by the recipient of service - Held that: - the appellant have discharged service tax on the considerations received for such services. These reimbursable expenses are considered as expenditure to provide such services and are accordingly sought to be included in terms of Rule 5(1). Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 632
  Club or Association Service - certain service charges and amenity charges collected from their members who used the facilities available in the club either by way of restaurant, accommodation and other ancillary facilities - Held that: - There can be no service provider recipient relationship between the club and its members. As such, the tax liability on the consideration received from the members for availing certain facilities in the club premises cannot be taxed under "Club or Association Service.” Business Support Service - appellant collected fee called 'licence fee' from various bookies who are provided earmarked space in the racecourse to engage in booking on horse races - Held that: - the scope of tax entry of BSS will not cover mere renting of office space - Tribunal in the case of Royal Western India Turf Club Ltd Vs CST Mumbai [2012 (11) TMI 526 - CESTAT, MUMBAI] held that the activities of the appellants to make available space within the premises of the club by way of stall for a consideration cannot be taxed under BSS. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 631
  Cargo Handling services - appellant are consolidation freight forwarding agent dealing with import / export cargo - Held that: - none of them involve handling of cargo physically and these are activities which are mainly monitoring, managing the consolidation / de-consolidation of multiple / bulk cargo for which various charges are collected - these fees / charges are to be attributed to the cargo handling service' without identifying the presence of physical handling of cargo by the appellant - there is no evidence to identify the appellant's activities as "Cargo Handling Agent". Business Auxiliary services - incentives received from the liners based on the quantum of freight business made available to the liners - Held that: - the matter stands settled by the Tribunal decision in the case of Bax Global India Ltd Vs CST Chennai [2017 (9) TMI 1264 - CESTAT CHENNAI], where it was held that The appellant pre-books the slots even before they get an order from their exporter or other client. It is not the case that the appellants are doing on behalf of client only after they get an export order. GTA services - CENVAT credit - Held that: - the amounts have been paid before issue of show cause notice. The fact of payment of interest on delayed reversal of credit needs to be verified by the authorities below - provisions of Section 80 can be invoked to waive the penalties imposed on the appellant - penalties waived. Appeal allowed in part.

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• 2018 (3) TMI 630
  Valuation - includibility - marketing margin charged by the assessee-Appellants - The original authority held that the marketing margin charged by the assessee-Appellants from their customers is a consideration for transportation of gas and is required to be included in the gross value of taxable service - Held that: - an identical issue has come up before the Tribunal in the assessee-Appellants’ own case [2017 (9) TMI 554 - CESTAT NEW DELHI], where it was held that The activities and services by the appellants prior to actual sale, are for self and Service Tax liability on the marketing margin set aside - appeal allowed - decided in favor of appellant-assessee.

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• 2018 (3) TMI 629
  CENVAT credit - common input services which were used for trading activities as well as for providing output services - Since the credit availed on trading activity is not eligible for credit as well as for the reason that certain input services were used exclusively for trading purpose, two show cause notices dated 19.4.2012 and 12.10.2012 were issued for the period covering from April 2009 to March 2011 - Held that: - It is very much clear from the facts of the case that the appellant have been maintaining separate records for the common inputs used in trading and taxable output service. This itself brings out the bonafide belief of the appellant that they were under the impression that their activity is an exempted service and would be able to avail credit by following the procedures under Rule 6 (2) and (3). Further, they have been filing service tax returns regularly and they have been subjected to periodical audit. The appellant cannot be saddled with intention to evade payment of service tax. There is no other evidence brought out by the department to conclude that the appellant is guilty of suppression of facts with intent to evade payment of service tax so as to invoke extended period of limitation - SCN is time-barred. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 628
  SSI Exemption - determination of turnover - abatement of value - N/N. 1/2006-ST dated 01.03.2006 - Held that: - the issue arising out of the present dispute is already settled by the Tribunal in the case of Neelam Singh vs. CC, CE & ST, Allahabad [2017 (5) TMI 1390 - CESTAT ALLAHABAD], where it was held that calculating that for the purpose of determining the aggregate value for exemption under N/N. 6/2005-ST, only the net value received i.e. after the abatement under N/N. 1/2006-ST is to be considered - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (3) TMI 627
  Refund claim - unjust enrichment - Whether the doctrine of unjust enrichment in Section 11B of the Act is applicable to the facts of the case, having regard to the fact that the amount in dispute charged as excise duty in the debit side of profit and loss account constituted cost of manufacture and absorbed by sale vale depicted in credit side of that account? - matter was referred to Third Member. Held that: - The third Member has noted that a sum of ₹ 8,40,120/- had been adjusted by the department from the amount of ₹ 18,75,000/-. This amount had been paid by way of debit entries RG23A and therefore, he has come to the conclusion that if the amount of ₹ 8,40,120/- was adjusted without invoking the bar of unjust enrichment to the said amount. The department was not justified in applying the bar of unjust enrichment to the remaining amount of ₹ 10,34,880/- without there being any cogent material or evidence to support it and without the department having considered the cost structure of goods for that amount. The final decision taken by the third Member that the bar of Section 11B of the Act did not apply in the present case, is correct and justified - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 626
  Default in monthly payment of duty - Department denied CENVAT credit for the period November 2012 to December 2013 only for the reason that the assessee defaulted in payment of duty from October 2012 onwards and as the said default continued for more than 30 days, they are not eligible to utilize the disputed CENVAT credit as per the provisions of Rule 8(3A) of the Rules 2002. Held that: - it was admitted by the Department that the assessee is legally entitled to the said CENVAT credit but the default being committed for more than 30 days, the same was denied. Before the Settlement Commission the same cannot be shifted over to any other new ground to deny the CENVAT credit. No other reason can be assigned by the Settlement Commission other than what was stipulated in the show cause notice and the reports issued. Hence, this Court is of the considered opinion that no denial of CENVAT credit of ₹ 16,43,129/- for the period of November 2012 to December 2013 can be made, which otherwise the assessee is legally entitled to - petition allowed.

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• 2018 (3) TMI 625
  Finalisation of Provisional assessment - appellant's contention is that the show cause notice was with respect to two separate block periods of 6 months each and the provisional assessment has to be carried out for that block period setting off the gains against the losses - Held that: - since the returns have to be filed after the last date of a particular month and the duties with respect to that month have to be paid before the 5th or 7th of the next month. There can never be intended a provisional assessment for a block period of six months, going by the periods stipulated in sub-Rule (3); which is only the period prescribed for completion of the final assessment as per the provisional returns filed by the assessee - there is no reason to interfere with the finalisation of provisional assessments on the claim raised of an assessment for a block period of six months. Two different block periods of four months and two months were taken only to satisfy the six month period as prescribed under sub-Rule (3) of Rule 7 for finalisation of the provisional assessment, which period commences from the date of supply of the details. The assessee's contention cannot be sustained since there could be no clubbing of the various months falling within the period of provisional assessment, as permitted under Rule 7(1). There can be no remand of the provisional assessment as finalised for the period from 1.2.2007 to 31.7.2007 - appeal allowed in part.

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• 2018 (3) TMI 624
  CENVAT credit - the respondents have been supplying inferior quality limestone excavated from the mines to others, so the said mines cannot be said to be captive mines of the respondent - Held that: - The waste in the mines has to be disposed for further excavation and convenience. Further, the respondent has obtained permission from Government of Tamil Nadu to dispose of the waste / inferior quality limestone to nearby industries. Such a disposal of waste will not make the mines non-captive mines - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 623
  Clandestine removal - hank yarn allegedly cleared without accounting by the appellant to their job workers - Held that: - The adjudicating authority cannot obviously go beyond the parameters of the demand proposals made in the show cause notice. This is the law that has been laid down in plethora of decisions. Scope of SCN - Held that: - the department cannot now bring out an entirely new allegation which was not there or seek demand of the duty liability on an entirely new premise which was not featured in the show cause notice issued. Appeal allowed in part.

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• 2018 (3) TMI 622
  CENVAT credit - inputs - CR Coils, M.S. Flats, Angle, Channels etc. - Held that: - it is clear that the Commissioner (Appeals) allowed the credit on the Items-in-Question after examining the use of the materials. Hence, there is no reason to disagree with the findings of the Commissioner (Appeals) - The Tribunal in the case of Monet Ispat & Energy Limited Vs. Commissioner of Central Excise, Raipur [2016 (1) TMI 917 - CESTAT NEW DELHI] allowed the credit on the articles of Iron & Steel items - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 621
  Refund of duties paid on inputs used in the manufacture of the exported goods - primary ground for rejection is that the appellant had, despite many opportunities to do so, failed to produce documents for verification and the few sample invoices furnished by them were, on verification, found to be fictitious - Held that: - The first appellate authority appears to have given a summary disposal of the documents, furnished by appellant. Without examining those documents, it is not possible for the Tribunal to come to the conclusion that these would suffice to establish the claim for refund in accordance with the remand order of the Tribunal on the previous occasion - It is only appropriate that the first appellate authority gives its finding on the acceptability or otherwise of each of the listed evidences to determine the eligibility for refund - matter on remand.

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• 2018 (3) TMI 620
  Clandestine manufacture and removal - aerated / soft drinks - SSI exemption - use of Brand names Bisleri Club Soda - use of brand name CITRA. Clandestine removal - demand of ₹ 9.61,561/- is based on the grounds that the figures of sales indicated in the Sales Manager Report (SMR) sent by the appellants to their franchisors was more than the clearances shown in RG 1 Register - Held that: - identical issue in the case of Moon Beverages [1999 (5) TMI 597 - CESTAT NEW DELHI], where it was held that Department has not been able to establish that the assessees have surreptitiously procured such raw materials for use in the manufacture of aerated waters. This, coupled with the fact that the assessees have further explained for the difference in quantity of concentrates purchased and quantity accounted for, renders the duty demand on account of suppression of production, unsustainable - demand in the present case also set aside. SSI exemption in respect of production of clearances of Bisleri Club Soda - Held that: - the ratio of the Hon’ble Apex Court judgment s in Sri Ganganagar Bottling Co. Ltd. [2007 (8) TMI 23 - SUPREME COURT OF INDIA], is very much applicable to the present case since the facts are pari materia. In the facts of Sri Ganganagar Bottling case the brand name owners were themselves not manufacturing CITRA aerated water and therefore was alleged that the franchisee who was in fact manufacturing the same would not be eligible for SSI exemption - demand not sustained. SSI exemption - LFFL, brand owners of CITRA - Held that: - when PBPL was not within the knowledge of the fact whether LFFL had crossed the aggregate value of clearances prescribed for SSI benefit and further, when the belief that the former had not, was strengthened by way of certificates issued by the Range Superintendents, even as on 12.4.1993, the benefit of SSI exemption cannot be denied to PBPL not only for the impugned period covered by N/N. 175/86-CE but also that covered by N/N. 1/93-CE - demand set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 619
  Method of Valuation - transaction value or MRP based value - physician samples cleared free of cost - revenue is seeking to demand duty on the value arrived at on pro rata basis depending on the assessable value arrived at for clearance of the same medicines on MRP basis. Held that: - the physician samples are cleared free of cost for distribution to the physicians as samples. Other than the packing of the goods, the goods are identical in nature in respect of quality. Even the packing is similar in many cases although the physician samples would contain and indication to that effect and would not contain the MRP. The physician samples are not sold by the appellants but are cleared free cost. It is not the appellant's case that any of the Rule 4 to 10 of the Central Excise Valuation (determination of price of excisable goods) Rules 2000 are directly applicable. Since no transaction value available, the assessment cannot be done under Section 4 (1) (a) and the assessment has to be done under Section 4 (1) (b). The assessment cannot be done under Section 4A as the said goods are not marked with MRP - identical goods are different only in respect of size of packing and marking of MRP, are being assessed under Section 4A of the Central Excise Act and such comparable value after suitable adjustments can be adopted for the purpose of assessment of physician samples in terms of Rule 4 of Central Excise Valuation (determination of price of excisable goods) Rules, 2000. This does not amount to application of Section 4A of the Central Excise Act to physician samples. This is only a measure of taking an alternate value of similar goods for the purpose of Central Excise (Valuation) Rules, 2000 in terms of Rule 11 thereof. Larger Bench of the Tribunal in appellant own case BLUE CROSS LABORATORIES LTD. Versus COMMR. OF C. EX., MUMBAI [2006 (8) TMI 220 - CESTAT, MUMBAI] has held that the physician samples cannot be assessed under Rule 4 of the Central Excise (Valuation) Rules 1975, after comparing the value with the normal trade pack. Appeal dismissed - decided against appellant.

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• 2018 (3) TMI 618
  Valuation - landed cost of raw material and packing materials supplied free of cost by the buyers, which included the cost of transportation, insurance and overheads incurred on such inputs and packing materials - includibility - Section 4 (1)(b) of the CEA, 1944 read with Rule 6 of Central Excise Valuation Rules, 2000 - Held that: - in the case where the invoice value does not include the transportation cost and other charges in such case it is to be considered that the prices are inclusive of transportation, insurance and other charges - M/s Indofil Chemicals had given a certificate to the effect that the value of goods consigned by them to the Appellant includes all the incidental charges. No any contrary evidence to the above has been brought on record by the Revenue. The Revenue has not brought any evidence on record either by investigation at the supplier end or from the records of M/s Indofil Chemicals that they have not included the impugned charges in the cost of raw material - the invoice value considered by the Appellants for determining the assessable value of final product is in conformity with the Valuation Rules. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 617
  Clandestine removal - demand on the sole ground of comparison of entries made in ER-1 return with the entries made in balance sheet, without there being any other evidence on record - Held that: - the clandestine removal allegations cannot be upheld on comparison of figures appearing in balance sheet and ER-1 returns inasmuch as in the present appeal such comparison is the only reason for upholding the charges of clandestine removal, I find no valid ground for upholding the impugned order - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 616
  Provisional release of goods - confiscation - Held that: - panchnama itself reveals that goods were in the shape of castings which means the same was raw materials - confiscation set aside. Penalty - Held that: - the facts on record reveal that the appellant was doing the job work for the other principal manufacturer without following the due procedure for the same - The goods manufactured by them on job work basis were being sent to the principal manufacture, without the cover of any invoice. This act on the part of the assessee, amounts to aiding and abetting the principal manufacturer for their clandestine activity, in which scenario, a token penalty is required to be imposed on them - quantum of penalty reduced. Appeal allowed in part.

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• 2018 (3) TMI 615
  CENVAT credit - input services which belong to the buyers - C&F agency services - case of the department is that C&F agency services was not received by the appellant whereas same is rendered to the buyer directly therefore it is not input service for the appellant - Held that: - Merely because the appellant have arranged C&F service through C&F agency and billing is made by C&F agency to the appellant does not mean that the appellant is a recipient of the service - Even assuming time being appellant as recipient of service but since the service was provided on behalf of buyers and for which amount of C&F agency charges collected by the appellant from the buyer service stands received by the buyer and not remained with the appellant. Appeal dismissed - decided against appellant.

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• 2018 (3) TMI 614
  Clandestine manufacture and removal - Blowing Wrapper Cloth - demand for the period November 1981 to July 1986 - Appellant has been contesting the demand prior to 1986 on the ground that there is no evidence of manufacturing the impugned goods prior to this period - Held that: - the adjudicating authority has merely relied upon the investigation made earlier but did not give categorical finding as to what are the evidences, on the basis of which it can be said that the assessee was engaged in the processing of goods prior to February 1986. It was imperative on the part of the adjudicating authority that there is no direct evidence to show that such manufacturing was taking place. The Appellant has contended that their goods during the relevant period were entitled for exemption from payment of duty in terms of N/N. 139/77-CE dt 18.6.1977 and 78/82-CE dt 28.2.1982. This aspect has also not been considered by the Commissioner. SSI Exemption - denial on the ground that the Appellant unit was registered as SSI unit only for the product Art Silk and the said SSI registration did not cover Blowing Wrapper Cloth hence the SSI exemption is not available - Held that: - the relevant consideration for granting SSI exemption was level of investment and the turnover of the unit and not the product. This aspect ought to be addressed in favor of assessee - matter on remand. Appeal allowed by way of remand.

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• 2018 (3) TMI 613
  Manufacture - Whether the activity of quality checks, branding with CONA brand and packing of electrical parts and fittings received in loose condition amount to manufacture in light of note 6 of Section XVI of Central Excise Tariff Act and Section 2(f)(iii) of Central Excise Act and in respect of goods falling under Chapter 85.36, whether it amounts to manufacture in terms of IIIrd Schedule of Central Excise Act, 1944 w.e.f. 1-3-2003? - Held that: - The product purchased by the appellant is already complete and finished. Merely a quality test, which is nothing but by connecting with the power plug for checking whether it is working or not but by this quality test there is no transformation of the product, which is already in the fully manufactured form, therefore all the electrical goods purchased by the appellant are completely in manufactured form - this so called activity of quality testing, branding and packing of the already manufactured goods will not be covered by note 6 of Section XVI of the Central Excise Tariff - the appellant is not engaged in the manufacturing of the goods, they are only doing trading activity of bought out goods. SSI exemption - brand name - whether the appellant is owner of brand CONA and consequently entitle for SSI exemption? - Held that: - brand was transferred to the appellant by way of Assignment Deed dated 10-12-1996. Moreover, the appellant also made application to Trade Mark Registry on 20-12-1996 for ownership of CONA brand in their name which was registered in their name on 21-2-2003 but it was effective from 10-12-1996. These facts clearly establish that from 10/20-12-1996 appellant became brand owner of CONA - appellant is owner of the brand CONA and consequently entitle for the SSI exemption. Whether extended period under proviso to section 11A(i) and penalty under Section 11AC and/or redemption find are invokable/imposable? - Held that: - the entire facts regarding use of brand name CONA as well as activity of the appellant was well within the knowledge of the department. Moreover after getting convinced initial proceedings was dropped therefore it cannot be said that there was any mala fide intention or suppression of facts on the part of the appellant - extended period not invokable - penalty also set aside. Demand is neither sustainable on merit nor on limitation - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 612
  Clandestine removal - shortage of stock - Held that: - It is well settled that shortages by itself do not lead to the inevitable conclusion of clandestine removals - The Hon’ble Allahabad High Court in the case of CCE Vs. Meenakshi Castings [2011 (8) TMI 896 - ALLAHABAD HIGH COURT] has held that in the absence of any evidence of clandestine removal, adverse inferences of clandestine removal cannot be upheld on the basis of apparent shortage of stock. Inasmuch as the Revenue’s case is solely based upon the shortages detected by the visiting officers, without there being any tangible evidence of clandestine removal - penalty upheld. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 611
  100% EOU - CENVAT credit - Rule 3(7) (a) of the Cenvat Credit Rules, 2000 - Held that: - there is no dispute about the fact that during the relevant period, the percentage of BCD to be adopted in the formula was to the extent of 25% which stands raised to 50% with effect from 5.12.2008. The amending notification itself makes it clear that the same shall come into force on the date of their publication in the official gazette. It is a case where a benefit already extended to the industry stand enhanced. The entire period is before 5.12.2008 and I really fail to understand as to how the appellant could foresee the enhancement in the BCD percentage and could have availed 50% of BCD, while calculating the quantum of Cenvat credit available to them. During the relevant period, the formula prescribed adoption of 25% of BCD and by no stretch, it can be held that 50% of BCD was available to the assessee prior to 5.12.2008. Appeal dismissed - decided against appellant.

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• 2018 (3) TMI 610
  Reversal of CENVAT credit - capital goods were not received back by them within the period of 180 days - Held that: - the appellant is not contesting the demand of duty, interest and imposition of penalty. The demand of duty is of ₹ 2,59,050/- and as such I agree with the ld. Advocate that the interest payable by them would be on the said amount only. Similarly, for penalty amount, the same would be imposable equivalent to the duty confirmed against them which is again ₹ 2,59,050/- - appeal disposed off.

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• 2018 (3) TMI 609
  CENVAT credit - case of the department is that the respondents have availed Cenvat credit in respect of 800 invoices allegedly without receipt of the goods - Cenvat credit was proposed to be denied on the RTO report, Octroi report. Held that: - The RTO report in respect of only 13 invoices therefore same cannot be used to deny cenvat credit in respect of 800 invoices - RTO report alone cannot be relied upon for denial of the credit. The Octroi report also not conclusive as most of the consignments were procured locally which in any case will not find place in the Octroi records. Other than these material which are not conclusive there is nothing on record to show that the appellant have not received the inputs. Appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 608
  Remission of duty - it was alleged that the appellant did not file a remission application in terms of the provisions of Rule 21 - it was also alleged that the returns for the period was not filed within the time - time limitation - Held that: - The Revenue has taken a period of four years in issuing the show cause notice even though the fact of the fire having occurred in their factory and having destroyed the final product was brought to the notice of the Revenue. The Tribunal in the case of CCE, Daman Vs. Mayank Electro Ltd. [2007 (3) TMI 645 - CESTAT, AHMEDABAD] has observed that the fire accident having brought to the notice of the Revenue, there could be no ground for any suppression, fraud or mis-statement and as such the show cause notice having been issued by invoking the longer period of limitation was barred by limitation. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 607
  Clandestine manufacture and removal - scope of SCN - receipt of inputs not recorded in books - duplicate set of invoices - Held that: - the amounts such as ₹ 318840, ₹ 72,420 and ₹ 35,088 were the amounts which were paid along with interest before issues of show cause notices therefore under the provisions of sub section 2B of section 11A of central excise act, 1944 show cause notice was not authorized to be issued. In respect of the allegation of clandestine removal, about which revenue states that as such all entries mentioned in the four note pads were correlated and tallied with central excise invoices issued by the appellant and in next sentence revenue mentioned that it was observed that there is no corresponding central excise invoice covering despatches as shown in the said reseumed private note pads. The said two contentions are contradictory to each other which gives an impression that there was total confusion in the minds of people who have issued SCN. Therefore, such SCN which is unclear and confusing is not sustainable in law. Penalty - Held that: - since the allegations of clandestine removal are not established penalty imposed on Amarjeet Singh and Shri Mohan Singh are also set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 606
  CENVAT credit - MS plates, sheets, beams, angles etc. used in structural construction of factory buildings, workshop, work shed etc. and also for structural supports of pipelines and storage tank - Held that: - The Tribunal in the appellant’s own case M/s. Chemplast Sanmar Ltd. Versus Commissioner, LTU, Chennai [2018 (2) TMI 4 - CESTAT CHENNAI] for a period prior to 7.7.2009 which analyzed the very same issue held that when the MS items are used for structural support of capital goods applying the user test evolved by the Hon’ble Supreme court in the case of Rajasthan Spinning and Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA], observed that pipelines cannot be made functional without properly securing them and these structural supports are integral part of such plant and machinery. The disallowance of credit is unjustified - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 605
  Refund claim - N/N. 5/2006-CE(NT) r/w Rule 5 of CCR 2004 - export of services - denial of refund on the ground that these services cannot be considered as either consulting engineer’s service or design service during the relevant period - Held that: - the respondents did export taxable service, they are eligible for refund as claimed under Rule 5 - Though the respondents submitted that the original proceedings did not raise these issues, we note that sanction of refund would necessarily involve verification of documents along with required details - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 604
  CENVAT credit - common inputs used in the manufacture of both dutiable and exempted final products - Rule 6 (3) (b) of Cenvat Credit Rules 2002/2004 - main argument made by the appellant is that the traction motor and vacuum circuit motor were subjected to testing in the factory of the appellant; that the main items are part of the larger equipment cleared for the MRTS project; that the activity/ process carried out on these items amount to "manufacture" and hence for all these reasons, there has been no removal of cenvat credit availed goods as such. Held that: - The disputed items namely tractor motors and vacuum circuit breakers are, undoubtly, manufactured in the other factories of the appellants who cleared them on payment of duty to the appellant. Appellant in turn avails cenvat credit on these items - we are not able to identify any process or processes carried out by appellant which bring about lasting or permanent change in the characteristics or functionality of the impugned items. It is also not the claim of the appellant that once the process of testing and inspection is complete, the procured items would no longer be called "Traction Motor" and "Vacuum Circuit Breaker" and that they would be influenced by any other nomenclature. The adjudicating authority has correctly analysed various issues involved and has come to a reasoned conclusion that the processes carried out by the appellant will not amount to a manufacturing process. Extended period of limitation - Penalty - Held that: - It is not the case that appellant had sought any clarification from the department on whether the manner in which they intend to discharge duty liability on the impugned items was correct as per law. Appellant not only did not disclose the activities done by them on these inputs but at the same time declared the clearances of the items as "manufactured products" in the monthly returns which is tantamount to misdeclaration and suppression of facts - invocation of extended period of limitation for demand of duty liability is very much in order - penalty also upheld. Appeal dismissed - decided against appellant.

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• 2018 (3) TMI 603
  CENVAT credit - input services distributor (ISD) - credit disallowed for the reason that the appellant has not obtained ISD registration - Held that: - There is no whisper in the show cause notice alleging the manner of distribution of credit to be improper. The appellants have distributed the credit as per the law provided in Rule 7 as it stood during the relevant period. Since there is no allegation in the SCN as to the manner of distribution of credit as improper, it is not necessary to enter into such discussion - the disallowance of credit for the reason that appellant has not obtained ISD registration is unjustified and requires to be set aside Credit was also disallowed alleging that the invoices are raised in the address of the Bangalore and Pune office but credit has been availed at Hosur unit - Held that: - The definition of input services does not state that the services have to be availed within the factory - the disallowance of credit is unjustified and requires to be set aside. CENVAT credit - duty paying documents - credit availed on the basis of debit notes, which were held as not valid documents - Held that: - Department does not have a contention that the appellant has not discharged the service tax on the said services on which credit has been availed - the disallowance of credit on this ground is unjustified. CENVAT credit - duty paying documents - credit availed on the basis of photocopies - Held that: - The appellant cannot avail credit on photocopies. These are not valid documents for availing credit. Further, if such practice of availing credit on photocopies of invoices is allowed, then it will lead to false claims of credit made by assessees - credit denied. CENVAT credit of ₹ 16,21,219/- denied on various input services stating that these services are not availed in relation to the activity of manufacture - Held that: - According to appellant, all these services have an integral connection with the manufacture of finished products. That these services were consumed to carry out the activity of manufacture effectively and also to provide export of services / goods - it is found that the adjudicating authority has not made adequate discussion in this regard. Ld. counsel has submitted that they would be able to establish the nexus of the services with the output services / manufacturing activity, if they are given a further chance - matter on remand. Appeal allowed in part and part matter on remand.

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• 2018 (3) TMI 602
  Finalisation of provisional assessment - demand of differential duty - computer processing charges - consultancy and professional charges - power (factory and diesel (factory). Held that: - While the orders of the lower authorities have gone into each of the disputed areas, however, these grievances of the appellants, which are seen to have been raised even before the adjudicating authority do not appear to have given cognizance or otherwise analyzed and rejected with reasoning - the interest of justice would be served by remanding the matter to the original authority for denovo consideration in respect of these three cost areas disputed by the appellant - appeal allowed by way of remand.

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• 2018 (3) TMI 601
  CENVAT credit - Mill Plates, TMT bars, MS Angle, Channel, Joists, Mill Plate, G.C. Sheet, Chequred Plate - Rule 2 (a) readwith Rule 2 (k) readwith Rule 2 (l) of Cenvat Credit Rules, 2004 - Held that: - although production may be theorically possible without repair and maintenance but in all practically production of dutiable finished goods is not possible when repair and maintenance of plant and machinery, capital goods. For their repairs is also synomious to the world re-manufacture - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 600
  CENVAT credit - Rule 16 of Central Excise Rules, 2001 - case of the department is that since the appellant have received the goods under Rule 16 and availed the credit, only option under Rule 16 is to clear the repaired goods on payment of duty and there is no other option to clear without payment of duty - Held that: - even though the credit is allowed under Rule 16 but it is provided in Rule 16, the credit is allowed as if under Cenvat Credit Rules. As regard cenvat credit the provisions of CENVAT Credit Rule is applicable. Once Cenvat Credit Rules is applicable, appellant is allowed to clear the input under Rule 4(5)(b) if the removal is for job work to the job worker - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 599
  Clandestine removal - excess stock - confiscation - Held that: - It is seen that the excess quantum of finished goods that was sought to be subject to duty had already borne the burden of duty at the time of provisional release. Subsequent confiscation, and redemption thereof on such high fine, is not warranted in these circumstances. The excess stock was ordered to be confiscated under rule 25 of the Central Excise Rules, 2004 without identifying the specific charge leading to the confiscation. Admittedly, two of the returns, namely, for June 2015 and October 2015 had not been filed on time. The pendency of dispute does not in any way affect the responsibility of complying with the provisions of Central Excise Rules once the registration has been obtained. Having failed to do so, the penal consequences must follow - penalty for late filing of returns is reduced to ₹ 40,000/-. Appeal allowed in part.

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• 2018 (3) TMI 598
  Refund of accumulated CENVAT credit - time limitation - denial of refund on the ground that the appellant exported goods during the quarter prior to the one for which refund application pertained - Held that: - The intent of rule 5 of CCR 2004 is to enable escapement from taxes contained in the value of export goods - in the case of Commissioner of Service Tax, Mumbai-II Versus M/s WNS Global Services [2016 (10) TMI 135 - CESTAT MUMBAI], it was held that the absence of any export in any quarter would enable the carryover of the accumulated credit to the following quarter as refund can be claimed only in relation to exports that had been completed. In the present dispute the privilege of absence of export was not available - appeal dismissed - decided against appellant.

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• CST, VAT & Sales Tax

• 2018 (3) TMI 597
  Validity of assessment order - delay on the part of the appellate authority in deciding the appeal - Held that: - the writ petition is disposed of directing the appellate authority to consider and pass orders on the application for stay preferred by the petitioner in the appeal, within one month from the date of receipt of a copy of the judgment - petition disposed off.

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• 2018 (3) TMI 596
  Purchase tax - Section 3(4) of TNGST Act - Form XVII - the respondent had purchased goods against Form XVII declarations and used the same in the manufacture of goods which were sold to a place outside the State - Held that: - identical issue decided in the case of Tube Investments of India Ltd. (Formerly known as M/s. TI Diamond Chain Ltd.) Versus The State of Tamil Nadu, represented by the Commercial Tax Officer [2010 (10) TMI 938 - MADRAS HIGH COURT], where it was held that Section 3(4) of the Act will have no application since situs of the export sales of the petitioners for the purpose of said Section was the State of Tamilnadu and by virtue of the said factual position, the applicability of Section 3(4) stands excluded for the exigibility of tax - revision dismissed.

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• Wealth tax

• 2018 (3) TMI 595
  Penalty invoking Explanation-3 to Section 18(1)(c) of WT act - unaccounted assets / income unearthed in search / survey action - Held that:- The return of wealth tax filed by the assessee got triggered only due to search / survey action carried out by the department wherein unaccounted assets / income was unearthed. The assessee never filed return of wealth for the impugned AY before the search / survey action despite having taxable wealth. Therefore, in our opinion, the said return was not voluntary but only the result of the search / survey action on the part of the revenue. Hence, the reliance of the revenue on Explanation-3 to Section 18(1)(c) and the cited order of the Pune Tribunal was quite appropriate, reasonable and justified. No contrary judgment has been placed on record by the assessee. Therefore, we find no reason to interfere with the orders of lower authorities in any manner. Resultantly, the assessee’s appeal stands dismissed.

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• Indian Laws

• 2018 (3) TMI 643
  Selection process - selection of Chairpersons and the Judicial/Administrative/Technical/Expert Members for all tribunals - Held that: - All appointments to be made in pursuance to the selection made by the interim Search-cum-Selection Committee shall abide by the conditions of service as per the old Acts and the Rules - all the selections made by the aforementioned interim selection committee and the consequential appointment of all the selectees as Chairman/Judicial/Administrative members shall be for a period as has been provided in the old Acts and the Rules - petition disposed off.

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• 2018 (3) TMI 641
  Leave to appeal against the judgment 19th December, 2015 - return of security cheques - case of petitioner is that the claim of the respondent of return of the amount to the petitioner is not fortified by the Income-tax return of the petitioner - Held that: - Once the petitioner proves its case, presumption is raised under Section 139 of the Negotiable Instruments Act which the accused is required to rebut, however the standard of proof required to rebut the presumption is not beyond reasonable doubt and if by preponderance of probability the respondent is able to rebut the presumption the same is sufficient. Merely because there is a contradiction in the cash amount being received from the sale of a particular property between the evidence of the respondent and his mother cannot be a ground to discard the defence. Petition dismissed.

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• 2018 (3) TMI 640
  Service of notice - time limitation - dishonor of cheque - contention of the respondents was that the notice was required to be issued within a period of thirty days whereas the notice had been issued on the 31st day - whether Section 9 of the General Clauses Act, 1897, is applicable to the statutory notice under section 138 of the Act? - whether the day on which the information is received by the complainant from the bank that the cheque has been dishonoured is to be included or excluded while computing the 30-day period prescribed for issuing the statutory notice? Held that: - The Supreme Court in Econ Antri Limited [2013 (9) TMI 246 - SUPREME COURT] has held that the words “from” and “of” used in section 138 convey the same meaning i.e. “after” and accordingly the date on which the cause of action arises has to be excluded while calculating the period of limitation under Section 138 as well as 142 of the Act - Seen from that perspective, the date on which the petitioner received the information of the dishonour of the cheque (i.e. 23.12.2006) is to be excluded for the purposes of computing the period of 30 days available under the Act for issuance of notice. On excluding the date 23.12.2006, from considering, it is seen that the notice issued on 22.01.2007 has been issued on the 30th day, which would bring the said notice within the period prescribed. Petition allowed - decided in favor of petitioner.

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