TMI Tax Updates - e-Newsletter
March 17, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Income-tax (5th Amendment) Rules, 2016) - Rules in respect of fund manager regime under section 9A of the Income-tax Act, 1961 - Notification
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Income Tax:
Addition u/s 68 - merely because the bank statement an ITR of the lender were not submitted, in spite of submitting balance sheet and profit and loss account of the company, confirmation stating its PAN and also transactions are through account payee cheques and in absence of any inquiry, we are of the view that no addition can be made in the hands of the assessee - AT
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Income Tax:
Penalty u/s 271C - non deduction of tds u/s 194LA - there was no mala fide intention on the part of the assessee for non-deduction of TDS since it had recovered the TDS from the concerned as soon as the violation of law was brought into assessee’s notice - AT
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Income Tax:
Agricultural lands in terms of Sec 2(14) - Though the circumstance that the land is classified as Agricultural in the revenue records and the Village Panchayat President, Navallur, has certified that the land is away from municipality, other circumstances proves otherwise - Held as not an agriculture land - AT
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Income Tax:
The assessee had a dividend income (income from other sources). Thus the assessee fell within the purview of the exception carved out in the explanation to Section 73 and that consequently the assessee would not be deemed to be carrying on a speculation business for the purpose of Sec. 73(1). - AT
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Income Tax:
Addition made on inflation of purchases of raw material u/s. 69 - CIT(A) has wrongly relied on the input output consumption ratio - addition deleted - AT
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Customs:
Rejection of refund claim - Period of limitation - Once the appellant has been given acknowledgement unless until this held to be fake or forged, the said acknowledgement has to be accepted as proof of filing the refund claim. - AT
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Service Tax:
Validity of Tribunal's order waiving the penalty - the question of applicability of section 80 w.e.f. 14-5-2015 has not been examined by the Tribunal at all. There is rather no reference to Section 80 of the Finance Act, 1994. As the Tribunal's order is cryptic and the reasons are wholly unsatisfactory, needs to be quashed and set aside - HC
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Central Excise:
Differential duty demand - demand arose on account of the fact that the appellant cleared the goods from its depot at a price higher than the price at which the duty was paid at the time of clearance from the factory - demand confirmed - AT
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Central Excise:
SSI Exemption - The notification as amended was very clear and unambiguous. In the era of self assessment, it is the responsibility of the assessee to correctly determine the duty as per law. It is seen that the appellant failed to do so in this case - AT
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Central Excise:
Denial of Cenvat credit on capital goods - stock taking was done by way of eye estimation - the allegation of shortage of raw materials, does not stand. - demand set aside - AT
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Central Excise:
Refund claim - duty liability subsequent to clearance of their products - unjust enrichment - when duty is paid after clearance of goods, on insistence of anti-evasion branch, burden of duty is not passed on to the customers - refund allowed - AT
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Central Excise:
Differential duty - as the appellant was clearing the goods on payment of duty and subsequently on their own revised the price and discharged the differential duty there seems to be no violation of any provisions - Demand on interest confirmed - But, no penalty be levied - AT
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Central Excise:
MRP based valuation - removal of goods without packing - It is not the packaging that determines the applicability of mandate of affixing the 'retail sale price' but the product itself. Consequences of non-conforming packaging are not escapement from the mandate but the enforcement of penal detriment - appellant is eligible for the abatement - AT
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Central Excise:
The duty can be demanded from a manufacturer of the goods as it is a factum record that the impugned goods have been fabricated on job work basis by the contractors, therefore, as per the Central Excise provision, the appellant cannot be the manufacturer of the said goods. - AT
Articles
Notifications
Central Excise-
22/2016 - dated
15-3-2016
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CE (NT)
Seeks to amend Notification No. 20/2016-Central Excise (N.T.) dated 01.03.2016 [Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable and Other Goods) Rules, 2016] so as to notify 16.03.2016 as the date from which the said rules will be effective. Further the requirement of submission of security for availing the benefit under the said notification is being done away with.
Customs-
09/2016 - dated
15-3-2016
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ADD
Seeks to levy definitive anti-dumping duty on imports of all kinds of plastic processing machines or injection moulding machines, also known as injection presses, having clamping force equal to or more than 40 tonnes, and equal to or less than 3200 tonnes, used for processing or moulding of plastic materials originating in, or exported from Chinese Taipei, Philippines, Malaysia or Vietnam for a period of five years.
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39/2016 - dated
15-3-2016
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Cus (NT)
Seeks to amend Notification No. 32/2016-Cus (N.T.) dated 01.03.2016 [Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2016] so as to notify 16.03.2016 as the date from which the said rules will be effective. Further the requirement of submission of security for availing the benefit under the said notification is being done away with
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38/2016 - dated
15-3-2016
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Cus (NT)
Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver
Income Tax-
14/2016 - dated
15-3-2016
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IT
Income-tax (5th Amendment) Rules, 2016) - Rules in respect of offshore fund manager regime under section 9A of the Income-tax Act, 1961
Circulars / Instructions / Orders
News
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‘Make in India’ Programme
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Applications from Foreign Companies for Setting up of Industrial Units
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Impact of ‘make In India’ Programme
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FDI in E-Commerce
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Development of Domestic Version of Ease of Doing Business Index
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RBI Reference Rate for US $
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Dumping of Low Grade Steel in The Country
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Rules in respect of Fund Manager Regime under Section 9A of the Income-tax Act, 1961
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Change in Tariff value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold And Silver Notified
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RFP for Creative agency for Startups
Case Laws:
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Income Tax
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2016 (3) TMI 506
Validity of assessment u/s 153A(1)(b) - Held that:- In the present case, it is an admitted fact that the search u/s 132 of the Act took place on 31.07.2008 and as per provisions contained in Section 153A(1)(b) of the Act, the assessment was to be framed for the six assessment years i.e. the assessment year 2004-05 to assessment year 2009-10. However, the AO framed the assessment for the assessment year 2003-04 also which was outside, the purview of the provisions contained in the aforesaid referred to Section 153A(1)(b) of the Act. Therefore, the assessment order passed for the assessment year 2003-04 is held invalid. Since we have held the assessment itself as invalid, therefore, we do not see any merit in the appeal of the department. Moreover, the tax effect involved in the departmental appeal is less than ₹ 10,00,000/-, therefore, the department ought not to have filed the appeal as per the Circular No. 21 of 2015 dated 10.12.2015 issued by the CBDT. - Decided against revenue
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2016 (3) TMI 505
Addition under Section 68 - bank statement and ITR of the lender were not submitted - Held that:- On going through order of ld AO. we found that merely because the assessee could not file the bank account statements and income Tax returns of lender company, the addition has been made. When assessee has submitted the confirmation of the company which is having PAN and assessed to income tax the account also shows the receipts by the cheques and in subsequent years, loans of this company was accepted by AO. On submission of confirmation by the assessee ld AO did not make any further inquiry u/s 131 of 133 (6) of the act which he did in subsequent years and satisfied himself about the identity, creditworthiness and genuineness of the transaction which could also have been done in this year too. But Ld AO did not do so. Further the provisions of section 68 does not prescribe the specified documents which and assessee is required to lay down before AO to prove identity, creditworthiness and genuineness of amount credited in the books of accounts , it is left upon assessee to satisfy the assessing officer with the substantial evidence/ documents for discharging his onus. Therefore merely because the bank statement an ITR of the lender were not submitted, in spite of submitting balance sheet and profit and loss account of the company, confirmation stating its PAN and also transactions are through account payee cheques and in absence of any inquiry, we are of the view that no addition can be made in the hands of the assessee under Section 68 of the Act of this amount. - Decided in favour of assessee
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2016 (3) TMI 504
Penalty u/s 271(1)(c) - inaccurate particulars of income - contract awarded to the assessee was not for civil construction, erection and plant and machinery and therefore the claim u/s 44BBB of the Act was incorrect and also the fees for supervision of erection, testing and commissioning of material were taxable u/s 44D on gross basis @20% u/s 115A - Held that:- The claim of the assessee has not been accepted because of legal interpretation of provision of statute and resulted into confirmation of additions. Admittedly assessee has placed on record the contract awarded to it of Orissa Hydro Power Corporation Ltd which was also for engineering, designing, supervision, commissioning etc. Therefore it cannot be said that claim of the assessee u/s 44BBB is false or malafide. Merely the claim of the assessee was rejected holding that this contract entered in to by the assessee does not satisfy the conditions u/s 44BBB of the Act, assessee cannot be said to have furnished inaccurate particulars of income. It is simply a matter of interpretation of that contract. It is established principle that merely because of the claim of the assessee did not find favour of the assessing authority , it cannot attract a provision of penalty u/s 271(1)(c) of the Act. Furthermore at the time of filing of return the assessee has put a note along with computation of income which fully disclosed the content of the agreement as well the contention of the assessee. In the note it is contended that the assessee satisfied the conditions laid down u/s 44BBB of the Act. Therefore there is adequate disclosure made by the assessee putting forth its contention. Therefore at the most claim of the assessee can be said to be incorrect but not false. See CIT V Reliance Petro products Private Limited [2010 (3) TMI 80 - SUPREME COURT ] wherein held a mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee.- Decided in favour of assessee
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2016 (3) TMI 502
Validity of reopening of assessment - non service of notice under section 143(2) - Held that:- CIT(Appeals) as well as the Tribunal had annulled the assessment proceedings on the ground that no notice under section 143(2) of the Act was ever issued. This issue is now squarely covered by the judgement of Supreme Court in case of Assistant Commissioner of Income-tax and another v. Hotel Blue Moon reported in (2010 (2) TMI 1 - SUPREME COURT OF INDIA). Though this judgement was rendered in the background of block assessment, nevertheless, it was observed that for any assessment under section 143(3) of the Act, notice under section 143(2) within the time limit would be essential. It was held that omission on part of the assessing authority to issue notice under section 143(2) cannot be a procedural irregularity and is not curable and dispensable. When notice under section 143(2) was not issued at all and the question is not of one of the date of service of notice within time prescribed or otherwise, the Government in our opinion committed no error. - Decided against revenue
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2016 (3) TMI 501
Income accrued and arisen in India - whether the services rendered by the assessee could be termed FIS as per the provisions of Article 12 of the DTAA? - Held that:- Services rendered by the assessee cannot be taxed u/s.9(1)(vii)of the Act as unless the services were rendered and utilised in India the income could not be taxed in India Perusal of the contracts, entered into by the assessee with JTPCL,reveal that the services provided by it under the contracts did not in any way make available technical knowledge and experience skill or know-how to the Indian Compnay. It had supplied the equipments to Indian company outside India,so the payments made by JTPCL to the assessee would not constitute FIS, as per Article 12 of the Treaty. Services mentioned in Examples 4 and 7 of the MoU are more or less similar to the services rendered by the assessee.We have also taken note of Article 12 (5)of the Treaty which stipulates that FIS would not include the amounts if same are inextricably and essentially linked to the sale of property. In the case under consideration, in our opinion, the services provided by the assessee were linked inextricably and essentially to the start-up services and sale of equipment to JTPCL. Therefore, the payment received by it cannot be treated as FIS. In our opinion,payment received by the assessee under the contract constituted business profit within the meaning of article 7 of the Tax-treaty. As per article 7(1) of the treaty business profit of an assessee can be taxed in India only if it has a PE in India. In the case under consideration the assessee is not having PE in India whether fixed or otherwise. Considering the above, we are of the opinion that the order of the FAA cannot be sustained. So, reversing his order,we decide effective ground of appeal in favour of the assessee.
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2016 (3) TMI 500
Addition of expenditure towards payment of NPV - allowance u/s 37(1) - revenue v/s capital expenditure - Held that:- Considering a decision of the Hon'ble ITAT, Kolkata Bench in the case of ACIT vs M/s. Ghanashyam Mishra [2014 (1) TMI 1581 - ITAT KOLKATA] for A.Y.2005-06 and 2006-07 order dated 27.01.2014 wherein in respect of an identical payment made by an assessee engaged in the business of mining this Tribunal had allowed the deduction holding that the same as revenue expenditure. - Decided in favour of assessee Addition of amount utilized for starting a new project - Held that:- The facts of the assessee's case are identical to the decision rendered by the Hon'ble Bombay High Court in the case of CIT-5 vs M/s. Essar Oil Ltd [2008 (10) TMI 649 - BOMBAY HIGH COURT]. In the aforesaid decision the Hon'ble Bombay High Court took a view that the expenditure of a similar nature was revenue expenditure. The assessee in that case was in the business of operation of rigs for extraction of oil. The assessee explored the chances of development in the field of oil exploration for which it had to submit tenders and incur expenditure in that regard. The assessee was not a successful bidder. The expenditure in question was disallowed by the revenue by treating them as capital expenditure. The Hon'ble Bombay High Court upheld the order of Tribunal holding that the expenditure was revenue expenditure. In our view the facts of the aforesaid case are identical to the case of the assessee. - Decided in favour of assessee Addition of bad debts written off' although it does not qualify the provisions of Sections 36(2) read with Section 36(1)(vii) - Held that:- We are of the view that the amount in question was admittedly connected with the business of the assessee and the sum in question was spent by the assessee for the purpose of business. The assessee could neither get refund of the aforesaid sums nor the services for which the aforesaid payments were made. We are therefore of the view that the CIT(A) rightly treated these expenditure as one incurred for the purpose of business of the assessee and allowable as deduction u/s 37(1) of the Act. We do not find any ground to interfere in the order of CIT(A).- Decided in favour of assessee Addition on or period' expenses - Held that:- The sum of ₹ 2,00,000/- was incurred as consultation charges paid as advance in the financial year 2004-05 for implementation of ERP and in the financial year 2005-06 was implemented and advance payment adjusted as part of software expenses. The accrual of expenditure was therefore rightly shown in A.Y.2006-07 by the assessee and also a sum of ₹ 3,474/- was treated as allowable in A.Y.2006-07, when the sum in question was ultimately settled.- Decided in favour of assessee
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2016 (3) TMI 499
Levy of fees under section 234E - intimation issued under section 200A in respect of processing of TDS - Held that:- We find that the issue in all these appeals is now squarely covered in favour of the assessee by the decision of ITAT Amritsar Bench in the case of Sibia Healthcare Private Limited vs. DCIT [2015 (6) TMI 437 - ITAT AMRITSAR] adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. As intimation under section 200A, raising a demand or directing a refund to the tax deductor, can only be passed within one year from the end of the financial year within which the related TDS statement is filed, and as the related TDS statement was filed on 19th February 2014, such a levy could only have been made at best within 31st March 2015. That time has already elapsed and the defect is thus not curable even at this stage. In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234E is unsustainable in law. We, therefore, delete the impugned levy of fee under section 234E of the Act. - Decided in favour of assessee.
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2016 (3) TMI 498
Deduction u/s 80IC rejected - claim of the assessee rejected on the ground that the assessee has established the unit at Baddi by reconstruction of the existing unit - Held that:- The assessee has furnished the details of employees, electricity bills and water bills issued by The Himachal Pradesh State Industrial Development Corporation Ltd. The assessee has also furnished the letter issued by the Deputy Director of Industries, Baddi, Dist. Solan (H.P) allocating the undertaking of the assessee as Micro/small/Medium scale Enterprise for manufacturing of Additives We have earlier noticed that the assessee qualifies under the category of “Substantial Expansion” of the unit and hence we are of the view that the provisions of sec. 80IC(4) shall not come in the way of the assessee in claiming deduction u/s 80IC of the Act. - Decided in favour of assessee
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2016 (3) TMI 497
Additions pertaining to excess stock found during the course of search - Held that:- We notice that the assessee has been claiming that that the excess stock found during the course of search does not belong to it and the said contentions have been rejected by the tax authorities for want of documentary evidences. Now, the assessee has filed certain additional evidences, in the form of affidavits claimed to have been obtained from the original owners of the stocks, to substantiate its claim. Since the assessee has obtained the affidavits only recently, in the interest of natural justice, we are of the view that the assessee’s prayer for admission of the additional evidences should be accepted. Accordingly, we admit the additional evidences and since they require proper examination, we set aside the order of the ld. CIT(A) in respect of the additions covered by the affidavits given by M/s Innovative Information Technology Pvt. Ltd, Shri Rajiv Jain and Shri Faisal Hamid and restore the same to the file of the AO with a direction to examine these three additions afresh and take appropriate decision in accordance with law. - Decided in favour of assessee by way of remand Disallowance of electricity expenses, Municipal Expenses, rent expenses and telephone expenses - Held that:- With regard to the assessee herein, it was stated that it is occupying maximum space, meaning thereby most of the expenses stated above have been incurred for the purpose of business of the assessee. We notice that the 6 5512/M/2010 tax authorities have allocated the expenses in equal proportions and accordingly disallowed 75% of the amount claimed by the assessee. There should not be any doubt that the admissibility of the expense should be examined from the point of view of the assessee by considering the level of its business activities. Under these set of facts, we are of the view that the disallowance worked out at 75% of the expenses is on the higher side. Since all the four concerns share common building, we are of the view that some disallowance is called for. Since it is claimed that the assessee is occupying more space and its business activities are more, we are of the view that the disallowance should be restricted to 25% of the expenditure claim. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to restrict the disallowance to 25% of the expenses claimed under the four heads, referred supra. - Decided partly in favour of assessee
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2016 (3) TMI 496
Penalty u/s 271C - non deduction of tds u/s 194LA - Held that:- The assessee had paid compensation to the land owners but has not deducted the tax u/s 194LA of the Act from such payments as the assessee was under bona fide belief that he was not under any obligation to deduct the tax u/s 194LA of the Act. The omission on the part of the assessee was inadvertent and there was no mala fide intention. For non-deduction of TDS and delay in filing the TDS, the assessee had paid interest of ₹ 33,480/- and also paid interest of ₹ 54,923/- determined to be payable u/s 201(1A) of the Act by ITO(TDS), Valsad. Thus, there is no loss to the Revenue. Therefore, there is no mala fide intention on assessee’s part, in 1st lapse on its part, as it seems that there is no loss to the Revenue. See CIT vs. Cadbury India Limited [2011 (3) TMI 239 - DELHI HIGH COURT ] wherein the Hon’ble High Court held that “penalty u/s 271C for non-deduction of TDS not leviable if there was no “mala fide intention” or “deliberate defiance” of law”. It was also observed by the Hon’ble Delhi High Court in the aforesaid judgment that the levy of penalty u/s 271C is not automatic. Therefore, in the present case, there was no mala fide intention on the part of the assessee for non-deduction of TDS since it had recovered the TDS from the concerned as soon as the violation of law was brought into assessee’s notice, as discussed above. - Decided in favour of assessee
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2016 (3) TMI 495
Levy of fee under section 234E in the order u/s 200A - Held that:- The adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234 E is unsustainable in law. We, therefore, uphold the grievance of the assessee and delete the impugned levy of fee under section 234E of the Act. - Decided in favour of assessee
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2016 (3) TMI 494
Disallowance on account of sundry creditors - Held that:- No further transaction on account of internal dispute and settlement of claim of the party, the very same amount is appearing in the party's ledger account as closing credit balance as on 31/03/2011. Thus, this being an old account showing opening credit balance in the previous year and there being no other transaction, the same old balance as on 31/03/2011 is carried forward as on 01/04/2011 in the books of account of assessee. Thus, there is no credit/liability of the assessee in the previous year relevant to A.Y.2011-12." Whereas, in page No.6 of appellate order, the CIT(A) came to the conclusion that no evidence whatsoever has been produced before him by the assessee in support of the claim made. In this regard the stand of the assessee has been that he has submitted a paper book duly indexed containing total 89 pages and has categorically submitted that in the normal provisions of the Act, so there was no justification of making impugned addition on account of old credit balance of the creditor concerned for the year under consideration. CIT(A) was not justified in upholding the impugned addition made by the Assessing Officer - Decided in favour of assessee Disallowance on account of interest - Held that:- In the present case, the assessee has paid interest only to three parties as stated above. The same is not on account of any sharafi borrowing but it is a trading liability crystallized during the course of business and has been accepted in the past as well as claimed by the assessee. The assessee has also complied with TDS provisions. The Assessing Officer, while disallowing interest, has not established nexus between interest free creditors-liability and alleged advance given to the aforesaid parties. Therefore, the Authorized Representative for the assessee submitted that the disallowance in question was not justified. Taking into consideration all facts and circumstances of the case and submissions of the ld. Authorized Representative, deem it proper to set aside the order of the CIT(A) on this issue and restore this matter back to the file of the CIT(A) for deciding this issue afresh in the light of aforesaid submissions of the ld. Authorized Representative.- Decided in favour of assessee for statistical purposes.
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2016 (3) TMI 493
Levy of fee u/s 234E in the order u/s 200A - Held that:- The adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234 E is unsustainable in law. We, therefore, uphold the grievance of the assessee and delete the impugned levy of fee under section 234E of the Act. - Decided in favour of assessee
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2016 (3) TMI 492
Additional evidences - relevancy of admission of additional evidences - determination of withholding tax under section 195 - DTAA - Held that:- We are of the consdiered view that the additional evidences i.e. Tax Residency Certificate issued by the tax authorities of USA certifying that GX Technology Corporation is resident of USA for the purposes of taxation and Certificate dated 31.1.2006 issued by GX Technologies Corporation certifying that it is resident of USA in terms of Article 4 of the India US Double Taxation Avoidance Agreement (DTAA) and does not have Permanent Establishment in India in terms of Article 5 of the DTAA are very much essential evidences for deciding the issue in dipsute which require thorough examination at the level of the Assessing Officer. Therefore, in the interest of justice, as agreed by both the parties, we accept the Application for admission of additional evidences filed by the assessee u/R 29 of the ITAT, Rules, 1963 and send back the issue in dispute to the file of the Assessing Officer for examination and verifying the aforesaid additional evidences and then decide the addition in dispute afresh, in accordance with law, after giving full opportunity to the assessee of being heard. - Decided in favour of assessee for statistical purposes.
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2016 (3) TMI 491
Agricultural lands in terms of Sec 2(14) - treatment to land sold - Held that:- In the present case, the purchaser of the property was a company by name M/s. Menakur Infrastructure Private Limited which is a registered company under the Companies Act, 1956, incorporated on 04/08/2004 vide registration No.U45204TN2004PTC053884 with an intention to develop housing projects, Information Technology Buildings and family housing construction in and around Chennai. The property sold is situated in Navalur which is a suburb in Chennai, it is situated in Kanchipuram Districtt, Tamil Nadu, located south of the city of Chennai, along the Old Mahabalipuram Road. Navalur is located between Sholinganallur and Siruseri and is around 6 kms. from Sholinganallur and comes under Thirporur taluk. The place was once a village but with the advent of Information Technology Companies and the rapid development of the Old Mahabalipuram, it has become a bustling suburban. The property sold by the assessee is in the midst of development activities being carried out by builders in promoting housing/ Information Technology corridors, and no agricultural activities were being carried out either by the assesse nor by others in that area, the property is described as a mango grove as per the copy of the sale deed/patta, chitta adangal produced. An overall view is to be taken in deciding whether the land was an agricultural land, we would come to a conclusion that the property cannot be considered as Agricultural land. Though the circumstance that the land is classified as Agricultural in the revenue records and the Village Panchayat President, Navallur, has certified that the land is away from municipality. In our view the other circumstances pointed out above outweighs all of the circumstances in favour of the Revenue and on the basis of those circumstances, we are inclined to conclude that the property was not an agricultural land. - Decided in favour of revenue
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2016 (3) TMI 490
Investment portfolio - treated as capital gains OR business income - Held that:- We find that the assessee has consistently been in the subsequent assessment years also has given the same treatment to the shares kept in investment portfolio. The very intention of the assessee at the time of purchase was decipherable from the act and conduct of the assessee. The assessee has maintained two portfolios. The profits/loss incurred in respect of trading portfolio has been treated as business income whereas in respect of investment portfolio, the assessee has returned the income/loss as capital gains/loss. Even subsequently, the long term capital loss claimed by the assessee in respect of the same scripts has been accepted by the AO in assessment order for A.Y. 2011-12. Though the assessee had made the investments by using borrowed funds also but that itself cannot be a sole ground to treat the assessee as a trader in respect of the scripts which had been kept in the investment portfolio, especially when the assessee has clearly bifurcated the investment portfolio and trading portfolio and has consistently maintained the same. In view of the above, the profit on share transactions relating to investment portfolio of the assessee is ordered to be treated as capital gains and not as business income of the assessee. Appeal of the assessee is therefore allowed. - Decided in favour of assessee Applacablity of provision of section 73 - whether assessee would deemed to be carrying on a speculation business for the purpose of Sec. 73(1)? - Held that:- In order to determine whether the exception that is carved out by the explanation applies, the legislature has first mandated a computation of the gross total income of the Company. The words "consists mainly" are indicative of the fact that the legislature had in its contemplation that the gross total income consists predominantly of income from the four heads that are referred to therein. Obviously, in computing the gross total income the normal provisions of the Act must be applied and it is only thereafter, that it has to be determined as to whether the gross total income so computed consists mainly of income which is chargeable under the heads referred to in the explanation. Consequently, in the present case the gross total income of the assessee was required to be computed inter alia by computing the income under the head of profits and gains of business or profession as well. Both the income from service charges and the loss in share trading would have to be taken into account in computing the income under that head, both being sources under the same head. The assessee had a dividend income (income from other sources). Thus the assessee fell within the purview of the exception carved out in the explanation to Section 73 and that consequently the assessee would not be deemed to be carrying on a speculation business for the purpose of Sec. 73(1).See CIT vs HSBC Securities & Capital Markets India (P) Ltd [2012 (6) TMI 715 - BOMBAY HIGH COURT] - Decided in favour of assessee
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2016 (3) TMI 489
Addition made on inflation of purchases of raw material u/s. 69 - Held that:- As decided in assessee's own case CIT(A) has adopted the norms prescribed under the standard input and output ratio of consumption but the assessee-company has clearly demonstrated that it would be better of had it imported the raw material as per the input output norms. The assessee-company has claimed that it has consumed less than what is prescribed under the input output norms. The CIT(A) has wrongly relied on the input output consumption ratio thus we delete the addition and allow this issue of the assessee's appeal - Decided in favour of assessee
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Customs
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2016 (3) TMI 472
Revision petition - Setting aside of judgment of conviction and order of sentence - Commission of offences under Section 135(1)(a) of the Customs Act, 1962 - import / possession of gold - Held that:- there are several lacunae in the prosecution case. The statement of the petitioners recorded under Section 108 of the Customs Act cannot be said to be voluntary and, therefore, cannot be used against them in evidence. It has also been observed that the confessional statement of co-accused/petitioner cannot be read against the petitioner as the same was shown to be not voluntary and that there was nothing incriminating against the petitioner in the alleged confessional statement of petitioner. The non-examination of public independent witnesses is also a loophole in the case of the prosecution. Another lacuna in the case of prosecution is non-examination of goldsmith who allegedly gave the purity certificate of gold and in the absence of his examination, contents of purity certificate cannot be held to be duly proved. Therefore, the judgment of conviction and order of sentence passed by the learned Trial Court are set aside. - Decided in favour of petitioner
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2016 (3) TMI 471
Modification of Sentence order - Held guilty for committing offences 21(c) & 23(c) read with Section 28 of the NDPS Act - Appellant has already undergone substantive sentence awarded to her and is unable to pay the huge fine being a foreign national and in custody for the last more than nine years. - Held that:- by taking into consideration Section 30 of Cr.P.C. and the judgment of Shahejadkhan Mahebubkhan Pathan vs. State of Gujarat [2012 (10) TMI 518 - SUPREME COURT], the sentence order is modified to the extent that default sentence for non-payment of fine ₹ 1 lac each shall be SI for one month each instead of three months each. Other terms and conditions of the sentence order are left undisturbed. - Decided partly in favour of appellant
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2016 (3) TMI 470
Writ petition - Grant of refund claim of duty and interest - No violation of conditions of the Notification No.44/2002 dated 19.04.2002 - Held that:- without going into the merits or with regard to the pendency of the appeal before the Customs, Excise and Service Tax Appellate Tribunal, Chennai, the refund claim made by the petitioner shall be directed to be considered by the 1st respondent within a reasonable time. - Petition disposed of
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2016 (3) TMI 469
Imposition of Redemption fine and penalty - Section 112(a) and 114A of the Customs Act, 1962 - Import of second hand car by misdeclaring it as new car - Held that:- appellant has purchased the car after clearance from the Customs as bona fide purchaser of the car. Therefore, the imported car is liable to be confiscation but as the redemption fine imposed is excessively high, it is to be reduced followed by the case of M/s. Buhariwala Logistics And Shri Vishvas Uday Singh Laad Versus C.C. (Import & General) , New Delhi [2015 (11) TMI 758 - CESTAT NEW DELHI] . Also, as the appellant is a bona fide purchaser of the car and no statement of the appellant was recorded and having no role in illegal importation of the car, the penalty under various provisions of the Customs Act namely, 112 (a), 114 AA & 114A is not imposable. Decided in favour of appellant
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2016 (3) TMI 468
Basis of valuation - Unacceptable by Revenue - Revenue contended that it has not given an opportunity of hearing by the Commissioner (Appeals) and also the basis of valuation is incorrect because it is based on Chartered Engineer’s certificate which did not contain all the relevant details as per the C.B.E. & C. circular but for the same it did not issued show cause notice to the respondent - Held that:- any enhancement of value will be to the disadvantage of the respondent who was never given a show cause notice regarding valuation in the first place. In the absence of show cause notice it is not possible to dispute at a later stage that the valuation adopted by the primary adjudicating authority as upheld by the Commissioner (Appeals) is incorrect particularly when the basis of valuation is not arbitrary or unreasonable. In the absence of the Chartered Engineer’s certificate in the prescribed format, valuation was made on the basis of material available. Also for no opportunity of hearing was given to Revenue by the Commissioner (Appeals) do not sustain because the principles of natural justice were given a go-by the Revenue at the time of primary adjudication order inasmuch as Revenue did not issue show cause notice to the respondent. Therefore, Revenue cannot cry foul on that score at a later stage when it itself violated the principles of natural justice. - Decided against the revenue
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2016 (3) TMI 467
Rejection of refund claim - Period of limitation - Appellant submitted and acknowledged refund claim on 30.9.2010 and thereafter they made correspondence with the department and recasted refund was again submitted on 15/2/2012 - Revenue contended that in the register there is no entry in the name of the importer towards filing the claim on 30/9/2010, therfore refund claim filed by the importer is time- barred - Held that:- from the copy of acknowledgement no doubt can be raised that the said acknowledgement is fake or forged. Even in the Adjudication order as well as in the Commissioner (Appeals) order there is no charge of any wrong doing or forgery as regard the acknowledgement of the filing of refund claim with the Custom department.Also, I do not agree with the lower authorities' contention that as general practice file number is mentioned on the acknowledgement. Once the appellant has been given acknowledgement unless until this held to be fake or forged, the said acknowledgement has to be accepted as proof of filing the refund claim. Therefore, acknowledgement submitted by the appellant should be taken as proof of filing refund claim and if that is so, it is well within stipulated time period and should not be rejected as time barred. - Matter remanded back
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Corporate Laws
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2016 (3) TMI 466
Inspection of the statutory records of the concerned companies in which shares held - Held that:- The appellants will have the right to inspect the statutory records of FKIPL and KIPL. The information so derived will be placed before the CLB. The CLB will, thereafter, ascertain as to the manner and the forum before which the appellants wish to use the information. In case the CLB, on receipt of such information, if inclined to injunct the appellants from using the information, it would first deal with the submission of the appellants that it would have no jurisdiction to prevent them from using the information, so derived, before a forum which is not subordinate to it. In this context, the CLB will, inter alia, keep in mind the fact that, if, information derived discloses a cognizable offence, whether it would have the jurisdiction to prevent its use, by the appellants, while exercising powers under Section 402 and 403 of the 1956 Act.
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2016 (3) TMI 465
Scheme of Amalgamation - Held that:- Official Liquidator report confirms that the affairs of the Transferor Company are not conducted in a manner prejudicial to the interest of its members or to the public interest. Having heard Mr. Navin K Pahwa, learned Counsel for the petitioner Company, Mr. Kshitij Amin, learned Central Government Standing Counsel for Mr. Devang Vyas, learned Assistant Solicitor General of India for the Regional Director and upon perusal of the report of the Official Liquidator and the Regional Director and having considered the Scheme of Amalgamation together with the relevant documents on record, this Court finds it appropriate to grant sanction to the present Scheme of Amalgamation. It is, however, directed that the petitioner shall preserve its books of accounts, papers and records and shall not dispose of the records without the prior permission of the Central Government under Section 396A of the Companies Act, 1956. 11 The cost of this petition is determined at ₹ 7,500/payable to Shri Devang Vyas, learned Assistant Solicitor General of India and the Official Liquidator, respectively.
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Service Tax
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2016 (3) TMI 488
Writ petition - Seeking a writ of mandamus - Assessment of correct liability of Service tax - Held that:- the matter is still under investigation and the process to issue a notice for making an assessment under the Act is under contemplation. Also there is no assessment order against the petitioner. Therefore, the petitioner cannot be forced to pay the amount as per the statement recorded. - Writ petition disposed of
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2016 (3) TMI 487
Applicability of Section 35F of the Central Excise Act, 1944 - Waiver of pre-deposit - Appeals pending on the date of amendment before CESTAT - Held that:- in the absence of any saving clause qua the provision as it stood prior to the amendment, there is as of date no provision in the CE Act which mandates pre-deposit in appeals pending before the CESTAT prior to 6th August 2014, the Appellant has a statable case on the strength of the decision of the Constitution Bench of the Supreme Court in Kolhapur Canesugar Works Ltd. Vs. UOI, [2000 (2) TMI 823 - Supreme Court of India]. - Decided in favour of appellant
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2016 (3) TMI 486
Validity of Tribunal's order - Not considered various points - Held that:- as the Tribunal did not considered various points raised by the appellant including whether Commissioner of service tax had the jurisdiction to impose penalty under Section 78 of the Central Excise Act, 1944 for a period prior to 13th May 2005? Whether there was deliberate intent on the part of the Appellant to evade tax? Whether there is any fraud, collusion, wilful misstatement, suppression of facts or contravention of any of the provisions of the Act and Rules made thereunder etc. Therefore, the Tribunal's order is the most unsatisfactory and an unreasoned order and liable to be quashed and set aside. - Decided in favour of appellant
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2016 (3) TMI 485
Validity of Tribunal's order waiving the penalty - Scope of section 80 w.e.f. 14-5-2015 - Penalty imposed under Section 78 of the Finance Act, 1994 - Failure to pay Service tax - Service tax was not leviable at the time of execution of agreement but subsequently leviable during the time of subsistence and implementation of contract - Held that:- the Tribunal omitted from considering the fact that though the contract was executed prior to 10 September 2004, the same was a continuing contract and obligation. The work continued. Also the Tribunal omitted the fact that there was an inspection of the premises in the year 2007 and that is how the assessee was called upon to pay the tax which was not paid till then. After that, an order-in-original was about to be passed on a show cause notice, but that was avoided by payment of the tax and discharge of the liability. Whether such an act absolves an assessee from payment of penalty and specifically with the aid of Section 80 of the Finance Act, 1994 which was on the statute book till its amendment by Finance Act, 2015 with effect from 14 May 2015, is the question which has not been examined by the Tribunal at all. There is rather no reference to Section 80 of the Finance Act, 1994. As the Tribunal's order is cryptic and the reasons are wholly unsatisfactory, needs to be quashed and set aside. - matter restored before tribunal - Decided in favour of the revenue
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2016 (3) TMI 484
Availment of input service credit - Whether CENVAT credit can be claimed or not in terms of the options provided or after discharging the liability in full - Held that:- Revenue is not put to loss as the tax liability has been discharged in full so, We should not undertake an academic exercise. In the light of various observations and findings rendered on the interpretation of the Rule 2A and Section 67 of the Finance Act, 1994, a scrutiny thereof can be undertaken in an appropriate case meaning thereby that the exercise of satisfying ourselves whether these findings and conclusions are sustainable in the light of the language of the rule and the substantive provision, is something which need not detain us in this case. By clarifying that all such issues raised and the substantial questions of law, can be gone into in appropriate case where Revenue has sustained any loss or there is evasion of tax. Appeal disposed of
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Central Excise
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2016 (3) TMI 483
Commissioner determining duty liability for the period 1999-2000 under Rule 97ZP(1) with liability for period 1997-98 and 1998-99 was determined under Rule 96ZP(3) - Held that:- The appellant had given the notice about closure to the factory but in that notice dated 01.06.1998 intimating about closure of the mill from 30.05.1998 there was no mention about opting out of the provision of Rule 96ZP(3). Hon’ble Supreme Court in the case of Venus Castings (P) Ltd. (2000 (4) TMI 37 - SUPREME COURT OF INDIA ) and Supreme Steels and General Mills (2001 (10) TMI 90 - SUPREME COURT OF INDIA ) has in effect held that the manufacturer cannot opt twice during one financial year and the opting out of Rule 96ZP(3) would be applicable from the beginning of the next financial year. As find Revenue's contention that the Commissioner was not right in extending the provisions of Rule 96ZP(1) for the period 1999-2000 when there was no such request from the respondent to opt out of scheme under Rule 96ZP(3) sustainable. Notice of closure cannot be read to be an option to opt out of Rule 96ZP(3). Incidentally in the wake of the Finance (No.2) Act, 2009 (by virtue of section 111 thereof) (The Hon’ble High Court of Uttarakhand in the case of Kukreti Steels Ltd. Vs. CCE Meerut-1 - 2015 (9) TMI 205 - UTTARAKHAND HIGH COURT ) held that there is no dispute that Rule 96ZO was introduced / enacted vide notification NO. G.S.R. 448(E), dated 1st August 1997. Perusal of sub-section (3) of Section 111 of Finance (No.2) Act, 2009 would reveal that any action taken or anything done on purported to have been taken or done at any time during the period of commencement on or from 1st August 1997 and ending with the day the Finance (no.2) Bill, 2009 receives the assent of the President shall be deemed to be and to have always been for all purposes, as validly and effectively taken or done as if the amendments made by sub-section (1) had been in force at all material times and notwithstanding anything contained in any judgment, decree or order of any Court, Tribunal or other authority. Thus allow the Revenue's appeal in as much as the impugned order is modified to the extent that the duty liability for the period 1999-2000 is ordered to be fixed under the said Rule 96ZP(3).
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2016 (3) TMI 482
Admissibility of cenvat credit - denial of credit by observing that transmission towers, being permanently fixed/ embedded to earth and hence being immovable property, cannot be considered to be goods - Held that:- Commissioner (Appeals) has set-aside the penalty on the ground that there was no allegation of suppression against the assessee and there was also no intention to evade duty, as the appellant being a Government Undertaking. It is not the Revenue s case that they have challenged the said part of impugned order of Commissioner (Appeals). As such, the findings of the appellate authority on the point of absence of malafide have attained finality. I agree with the ld. Advocate that in the case of absence of any intention to evade payment of duty, the extended period would not get invoked. Inasmuch as the demand in the present case stands raised by invoking the longer period of limitation, I find no justifiable reason to uphold the impugned order. However, as ld. DR has referred to the fact that part of the extended period may fall within the limitation period, remand the matter to the original adjudicating authority for examining the said aspect alongwith the appellant s plea that the credit was taken only in April 2010 and not subsequently. The appeal is disposed of in the above manner.
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2016 (3) TMI 481
Differential duty demand - demand arose on account of the fact that the appellant cleared the goods from its depot at a price higher than the price at which the duty was paid at the time of clearance from the factory - Held that:- We find that the SCN clearly brings out the difference in prices between the goods sold from the depot and the value shows in the invoices at the time of the paying duty in the factory. We find that the value determined as per the chart enclosed with the SCN (in terms of which the differential duty has been worked out) is in conformity with the provisions of Rule 7 of the Central Excise Valuation Rules. The provisions of the said Rules 5 & 7 are so unambiguous that there was no scope for the appellant to entertain any reasonable belief regarding the value at which the duty was payable. A reasonable belief is the belief of a reasonable person operating in an appropriate environment. It is not a hallucinatory belief. Therefore, we are not persuaded that the appellant had a reasonable belief in this regard. - Decided against assessee
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2016 (3) TMI 480
SSI Exemption - Value in the first clearance as computed in the first paragraph of Notification No. 08/2001 - Held that:- Clearance "upto" ₹ 1 crore beginning with 01/05/2001 in the remaining part of the financial year shall be exempted from excise duty. The use of word "upto" in the classification clearly points to the fact that it can be less than ₹ 1 crore. The said clarification also states that clearances of garments already effected upto 30/04/2001 shall be taken into account for computing "full or partially" exemption limit of ₹ 1 crore under Notification No. 08/2001-CE. In these circumstances, there is no doubt left as to how the first clearances are to be calculated. In the instant case the appellants took registration on 29/05/2001 and therefore, it is not possible for the revenue to know what was their clearance during the month of April 2001. The notification as amended was very clear and unambiguous. In the era of self assessment, it is the responsibility of the assessee to correctly determine the duty as per law. It is seen that the appellant failed to do so in this case. The appeal filed by the appellant is dismissed.
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2016 (3) TMI 479
Denial of Cenvat credit on capital goods - Held that:- Following the ruling of Honourable Gujarat High Court and Bombay High Court in the cases of M/s Nish Fibres & M/s Maharashtra Electrosmelt Ltd. (2009 (12) TMI 415 - Gujarat HIGH COURT ) as the appellant have withdrawn the claim of the depreciation, which is an admitted fact, set aside the denial of Cenvat credit along with the penalty imposed under Rule 15 read with Section 11 AC of the Act. Reversal of Cenvat credit on the stock of raw materials found short - Held that:- On perusal of record, find that the Panchanama is silent on the method of stock taking. It does not disclose the mode of physical verification. Under such circumstances, the contention of the appellant that the stock taking was done by way of eye estimation, is held tenable. Further find that the said objection have not been dealt with in the order-in-original or in the impugned order in appeal. Thus hold that the allegation of shortage of raw materials, does not stand. Thus, set aside the demand in respect to shortage of raw material along with penalty under Rule 15 read with section 11 AC on the appellant company as well as the penalty on the authorized signatory, Mr. Vipin Bajaj under Rule 26 of the Central Excise Rules. - Decided in favour of assessee
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2016 (3) TMI 478
Confiscation of packing material kept in unregistered premises - case of the appellant that no credit was taken on any of the packing materials; due records have been kept - Commissioner (Appeals) held that confiscation is not sustainable, however, he upheld the penalty - Held that:- We find the said confiscation is in respect of packing materials which were kept in the unregistered premises opposite to the appellants unit. We find that Rule 25 talks about contravention relating to excisale goods and contravention of Rules with intent to evade payment of duty. In the present case, packing materials are not excisable goods on which duty is liable to be paid by the appellant and hence we find that the lower authorities are in error for imposing penalty without specifying the nature of violation which will attract such penalty. Chewing tobacco of 399 bags kept in duty paid godown of the appellant - confiscation of these chewing tobacco on the ground that the same were not mentioned in the stock register and no document was produced in this regard - Held that:- The appellants have submitted that out of these 399 bags, 165 bags were duly entered on page 107-109 of the stock register of duty paid godown, the same were received under proper invoices and bills. The said stock register was maintained in the nearby office. The remaining 234 bags were received back from the market and were unfit for consumption. We find that the appellant categorical assertion regarding availability of stock records for a part of the goods in their office records kept nearby and remaining goods being returned as unfit for consumption has not been duly considered by the lower authority. The contentions were rejected by the Commissioner (Appeals) as an afterthought. We find that the appellants have filed documents regarding 165 bags and regarding the remaining, we find that in the absence of allegation of non payment or clandestine clearance of such goods from the factory premises, order of confiscation and penalty under Rule 25 is not sustainable. No evidence was attributed for any clandestine or unaccounted clearance of these goods from the appellant’s unit. Seizure of 203 bags of chewing tobacco from the premises of M/s.Kushboo Impex Pvt.Ltd - Held that:- The appellants plea is that identical goods were also manufactured by M/s.Shakti Packers and Shri Singhal in his statement dated 4.8.2004 did indicate that the same items might have been received from the M/s.Shakti Packers. We find that no cross verification was made on that and further no notice has been issued to M/s.Kushboo Impex from whose premises and custody the goods have been seized. Even the ownership of the goods have not been examined categorically. If the goods were sold by the appellant to M/s.Kushboo Impex from whom the said goods were seized then M/s.Kushboo Impex will necessarily be a party to the proceedings. The case on this issue will fail both on legal and factual basis. Seizure of 127 bags of chewing tobacco from the premises of M/s.R.P.Agencies - Held that:- We find that no notice has been serviced to M/s.R.P.Agencies, though, the goods were seized from their premises and custody. In fact the proceedings for confiscation of goods, if any, in the above two issues is to be directed against the owner of the said goods. The appellants only were served notice for confiscation of these goods not to the parties from whom the seizure was made. We find that the impugned order suffers from serious legal infirmity. The main point being that there has been no determination or demand of central excise duty from the appellant in the proceedings.
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2016 (3) TMI 477
Refund claim - duty liability subsequent to clearance of their products - whether sanctioning of the refund will lead to unjust enrichment? - Held that:- Hon'ble High Court in the case of Commissioner of Central Excise, Chandigarh vs. Modi Oil & General Mills (2007 (1) TMI 31 - HIGH COURT , PUNJAB & HARYANA ) had held that any amount paid subsequent to clearance of the goods, the question of unjust enrichment will not apply The appeal can be disposed of only on the point whether the appellant had discharged the duty liability subsequent to clearance of their products. It is very much clear that the payment of differential duty was made after clearance of the goods and amount was paid on insistence by the Preventive Officers on 8.11.2006. Subsequently, on adjudication, the said demand has been set aside by the adjudicating authority. On a specific query from the bench, learned Counsel submits that the Revenue has not preferred any appeal against such dropping of the demand by the adjudicating authority. If that be so, the denial of refund of an amount paid subsequent to clearance of the goods, seems to be inappropriate on the face of the judgment by Hon'ble Bombay High Court in the case of Rockett Engg. Corporation Ltd. (2014 (3) TMI 754 - BOMBAY HIGH COURT ), wherein it has been held that when duty is paid after clearance of goods, on insistence of anti-evasion branch, burden of duty is not passed on to the customers - Decided in favour of assessee
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2016 (3) TMI 476
Differential duty paid on account of revision of cost in respect of captively consumed goods and transferred to their sister unit - whether subject to interest or not and penalty should be imposed or not? - Held that:- We find that the demand of interest under Section 11AB is correctly confirmed by the adjudicating authority and upheld by the first appellate authority as interest liability arises on the differential Central Excise duty paid due to revision of the cost of the goods. This law is settled and does not require any revisit. Penalty is imposed under Rule 25 of the Central Excise Rules, 2002. In our considered view this provision cannot be brought into play as in the case in hand the appellant had been filing the price list with the authorities for the clearance of the intermediate product to their own sister concern and discharging Central Excise duty on the cost of production as per the provisions during the material period. The differential duty has arisen due to revision in the cost not done at the time of clearance of the goods to their sister concern. We find strong force in the contentions raised by the learned Counsel that the issue is of revenue neutrality as duty paid on clearance of the goods to their sister concern is cenvatable. We find strong force in the contentions raised by the learned Counsel that the issue is revenue neutral as any amount paid as central excise on parts and components, cleared to their sister concern, the recipient unit would take the CENVAT credit of the Central Excise duty paid as final products manufactured are dutiable. The provisions of Rule 25 of the Central Excise Rules does not get attracted as the said Rule provide for imposition of penalty only if there is a violation of the provisions of Rules. In the case in hand, we have already recorded that as the appellant was clearing the goods on payment of duty and subsequently on their own revised the price and discharged the differential duty there seems to be no violation of any provisions. Penalty imposed on the appellant is unwarranted. - Decided in favour of assessee in part
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2016 (3) TMI 475
MRP based valuation - removal of goods without packing - Eligibility for abatement - short payment of excise duty while clearing 'spare parts' to their own unit in the Domestic Tariff Area - MRP-based assessment - assessee computed additional duty on maximum Retail Price adjusted for abatement and did not pay Special Additional Duty at 4% - refund of special additional duty exists for availment upon production of proof of such trade - Held that:- It is not the packaging that determines the applicability of mandate of affixing the 'retail sale price' but the product itself. Consequences of non-conforming packaging are not escapement from the mandate but the enforcement of penal detriment. The reasoning in the impugned order that bulk packaging will render the tractor parts outside the pale of 'retail selling price' is flawed as the primary responsibility under Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 is to penalize non-compliance and to determine the 'retail selling price' as per the Rules instead of opting for an opportunity to collect more duty through an inapplicable provision. Being parts of tractors, the goods cannot but find their way through commercial channels to an end-consumer who is an individual. The form of packing cannot alter this reality. By and large, manufacturers do not sell directly to retailers; they, too, with such an interpretation of applicability of 'retail selling price' prescription could claim that their packing is intended only for the intermediaries in the channel. That would run counter to the avowed objective of the law relating to affixing of details on retail packing. The channel is, therefore, not relevant and only the product is. Upon sales of such notified products to institutions who are the deemed final consumers, escapement from 'maximum retail price' assessment even if the goods do have such labeling is an option. This facilitation is a consequence of such institutions absorbing the product as an input for the service rendered by them to the final consumers or for manufacture of a final product. Tractor parts are not amenable to sale in such manner. It is the produce of the appellant that will alone satisfy the consumer need. The produce of the appellant cannot be cleared in any manner other than in accordance with the prescriptions in the Packaged Commodity Rules, 2007. No evidence has been put forth that it has been cleared otherwise by the appellant. The assessment by the appellant is, therefore, not liable to be faulted. The appellant is, thereby, eligible for the abatement. The computation and payment of duty by the appellant has been appropriate and in accordance with law. No action for recovery of any further amount lies. - Decided in favour of assessee
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2016 (3) TMI 474
Clandestine removal of capital assets from the factory - duty demand - Whether a demand can be demanded from the appellant as manufacturer of the capital goods found in their factory at the time of visit? - Held that:- The demands proposed to be raised by Revenue on the basis of the assumption and presumption without having any cogent evidence in support of their allegation. Moreover, Income Tax Department has investigated the matter thoroughly and by way of investigation, it was revealed that transactions between the dummy units and the appellants are non-existent, therefore, the question of procurement of raw materials/capital assets in the factory of the appellant does not arise. Consequently, the allegation of clandestine removal of these capital goods also does not arise. With these observations, we set aside the demand With regard to demand on account of capital goods manufactured by the appellant through labour contractors, we find that there was agreement between the contractors and the appellant wherein, the appellant were required to provide raw materials and electricity and the contractors have fabricated the capital goods at the site of the appellant and the appellant has paid job work charges to the contractors. As per agreement between the parties, the appellant has appointed labour contractors on job work basis to fabricate the impugned capital goods. We also note that the duty can be demanded from a manufacturer of the goods as it is a factum record that the impugned goods have been fabricated on job work basis by the contractors, therefore, as per the Central Excise provision, the appellant cannot be the manufacturer of the said goods. In that case, the duty is to be demanded from the contractor and not from the appellants. Therefore, we hold that the demand is not sustainable - Decided in favour of assessee
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2016 (3) TMI 473
Demand of interest and penalty - reversal of Irregularly availed cenvat credit - Held that:- In the present case, since taking of credit is a mere book entry and the same has not been utilized by the appellant, the question of compensating the Government does not arise because there is no loss of Revenue to the Government exchequer. With regard to the payment of interest for late reversal of cenvat credit. The Hon'ble Karnataka High Court in the case of CCE & ST, LTU, Bangalore- vs Bill Gorge (P) Ltd. reported in (2011 (4) TMI 969 - KARNATAKA HIGH COURT ) has held that the credit taken if not utilized for payment of Central Excise duty, the same bears the character of a mere book entry and the interest liability cannot be confirmed against the assessee. Thus demand of interest is not proper and justified in the present case, because the cenvat credit taken by the appellant irregularly has not been utilized for clearance of final product. Section 11A of the Central Excise Act, 1944, was substituted w.e.f. 08.04.2011 by section 63 of the Finance Act, 2011. The effect of substitution is that sub-section (6) was inserted in section 11A. Since, the period involved in the case in hand is from December, 2010 to March 2011, the provisions of sub-rule (6), inserted subsequently, will not have any application for imposition of penalty. Further, the provisions of Rule 15(1) of the Cenvat Credit Rules, 2004 have not been invoked in the SCN for imposition of penalty. Thus, the penalty confirmed by both the authorities below is outside the scope and purview of SCN. - Decided in favour of assessee
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Indian Laws
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2016 (3) TMI 503
Copy of the documents lying in 42 gunny bags seized by Surat Police demanded - Payment of requisite fees - Held that:- Once the statement, under the instruction of the officer, was made before this Court by the learned Senior Counsel appearing for the respondent No.1 and the same is also reiterated today during the course of hearing, respondent No.1 shall provide the copy of the documents lying in 42 gunny bags to the applicant on payment of requisite fees. As and when such application is given by the applicant to the respondent No.1, the respondent No.1 shall provide the certified copies of required and necessary documents to the applicant so as to enable him to defend the pending trial against him. It is clarified that before submitting the application for demanding required and necessary documents, the applicant or his counsel is permitted to inspect the documents lying in 42 gunny bags which are in the custody of respondent No.1. After the receipt of the application from the applicant, the respondent No.1 shall provide the certified copies of the documents asked for, which are lying in 42 gunny bags, to the applicant within a period of 4 weeks. It is further clarified that this order is passed in the facts and circumstances of the present case and with a view to see that the fair opportunity is provided to the applicant to defend his case before the learned Sessions Court in the pending trial and this order shall not be treated as precedent.Rule is made absolute to the aforesaid extent.
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