TMI Tax Updates - e-Newsletter
March 19, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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Income Tax:
Interest on delay in releasing the cash seized treating as unexplained cash - the petitioner is entitled to be paid interest @ 12% - HC
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Income Tax:
Inclusion of Excise Duty in valuation of closing stock - AO was right in adding the excise duty in the valuation of the closing stock - HC
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Income Tax:
Validity of Reopening of assessment - failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) had been issued. - HC
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Income Tax:
TDS - The Principal or the Manager had no authority or occasion to deduct TDS for the alleged income tax dues for the assessment year 1998-99 from the current salary. - HC
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Income Tax:
Profit on purchase and sale of gold bonds - Except one transaction of purchase and sale, there is no other transaction during the previous year - held as investment in nature - HC
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Customs:
Drawback claims -there is no provision in Drawback Schedule Notification to make difference between primary or secondary constituent inputs/material to consider drawback on final products as one to one co-relation is essentially not required. - CGOVT
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Customs:
Refund became due on final assessment is to be made without the claim being submitted by the assessee and that the provisions of unjust enrichment are not applicable. - AT
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Central Excise:
Mandatory penalty u/s 11AC - Tribunal had no discretion to reduce the amount of penalty as specified under section 11 AC. - HC
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Central Excise:
Cenvat Credit - Non mainteance of separate accounts - assessee is liable to pay 8% on the price of the exempted final products viz., PD Pumps cleared from factory - HC
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Central Excise:
Cenvat Credit - Input - use of cement for treatment of effluent generated during manufacture of zinc, lead and sulphuric acid has to be taken as used in the manufacture of those final products - AT
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Central Excise:
Benefit of Exemption Notification No. 30/2004-C.E. denied - assessee written to the authorities indicating that the amount of credit which was carried forward by them has to be treated as lapsed - benefit of exemption notification not to be denied. - AT
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VAT:
Seizure orders - The transporter who is not the owner of the seized goods has no right or interest in them therefore, refusal of the authorities to release the said goods without security does not infringe any legal right of the transporter - HC
Articles
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2013 (3) TMI 333
Interest on delay in releasing the cash seized treating as unexplained cash - Tribunal held that the cash found from the possession of the assessee actually belonged to M/s. S. K. Industries Pvt. Ltd. & not unexplained thus resulted in a nil tax demand - Held that:- As decided in G.L. Jain v. CIT & Ors., [2012 (9) TMI 93 - DELHI HIGH COURT] relying on Sandvik Asia Ltd. v. CIT & Ors. (2006 (1) TMI 55 - SUPREME COURT) and the judgment of Ajay Gupta v. CIT (2007 (4) TMI 42 - HIGH COURT, NEW DELHI) directed that it would be reasonable and equitable to order interest to be paid at the rate of 12% on the cash seized paid from the day next following the day on which the assessment was completed till the amount was actually released to the petitioner, in respect of the period beyond the date on which the assessment was completed. Thus the petitioner is entitled to be paid interest @ 12% in respect of the amount of Rs.6,33,800/- for the period from 27.12.2006 to 24.05.2011 and a writ of mandamus directing the payment of the interest is accordingly issued.
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2013 (3) TMI 332
Inclusion of Excise Duty in valuation of closing stock - Whether the Tribunal was right in directing inclusion when assessee as it is a small Scale Unit and is not liable to pay the Excise Duty on the first clearance upto Rs.100 lacs in the financial year? - Held that:- As decided Chainrup Sampatram Versus Commissioner of Income Tax, (1953 (10) TMI 2 - SUPREME COURT) the closing stock has to be valued at the option of the assessee, at cost or market price, whichever is lower and it is wrong to assume that the valuation of the closing stock at the market rate has, for its object the bringing into charge any appreciation in the value of such stock. The true purpose of crediting the value of unsold stock is to balance the cost of those goods entered on the other side of the account at the time of their purchase, so that the cancelling out of the entries relating to the same stock from both sides of the account would leave only the transactions on which there have been actual sales in the course of the year showing the profit or loss actually realized on the year's trading. It has been consistently laid down that the opening stock and closing stock should be maintained in the same manner either at the cost price or at the sale price. The assessee has not come out with the case that in the opening stock, the excise duty was not included. The explanation furnished by the assessee is that since in the subsequent assessment year, the turnover was less than one crore of rupees and as such, the goods were not liable to excise duty, therefore, in the closing stock of the relevant assessment year, the excise dutyhas not been added, is not legally tenable. The method of valuation of closing stock cannot be changed midway. Each year being self contained unit and taxes of a particular year being payable with reference to the income of that year, as computed in the terms of the Act. The method adopted by the assessee has been found to be such that the income cannot properly be deduced therefrom. Therefore, The Assessing Authority was right in adding the excise duty in the valuation of the closing stock - against assessee.
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2013 (3) TMI 331
Validity of Reopening of assessment - Tribunal quashed the reassessment proceeding u/s 148 on the ground that the notice issued u/s 147 was invalid as the time available for issuing notice u/s 143(2) had not expired - Held that:- As decided in ACIT Versus Rajesh Jhaveri Stock Brokers P. Limited [2007 (5) TMI 197 - SUPREME COURT] failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) had been issued. Thus the order of the Tribunal holding that the notice under Section 147 of the Act dated 4th July, 2006 is invalid is legally not correct as on a query put by the Court, the assessee accepts if the recourse to Section 143(3) would have been barred by time, there would have been no restriction to initiate the reassessment proceeding under Section 147. There is nothing on the plain language of Section 143 which may suggest that the recourse to Section 147 can be had only when the period of limitation to complete assessment proceeding has expired or the Assessing Authority should wait for the expiry of the said period. The said argument is ridiculous and not acceptable. The ambit and scope of reassessment proceeding is limited and restricted and if the Assessing Authority in its wisdom proceeds to assess the income with the help of limited power, it does not lie in the mouth of the assessee to say that the Assessing Authority should have exercised wider jurisdiction i.e. the regular assessment proceeding instead - matter remanded back to the Tribunal to rehear and re-decide the appeals on merits on other issues.
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2013 (3) TMI 330
Taxability of sale of land - ITAT deleted the addition as not taxable in the instant assessment year - Held that:- Stand and approach adopted by the Tribunal is acceptable as there was no evidence of any confirmed transaction in the year in question. As such, the addition could not have been made on the ground that the transaction had been concluded. No agreement has been signed in this year. The possession has also not been delivered in this year. The twin conditions of execution of written agreement and handing over of the possession have to be cumulatively satisfied in order to bring the case within the ambit of section 2(47)(v) read with section 53A of the Transfer of Property Act. None of these conditions are satisfied. Therefore, it is held that the property has not been transferred in this year - no question of law arises for consideration - in favour of assessee. Profits from the sale of lands - whether taxable under the head profits and gains of business or profession OR capital gain - Held that:- Tribunal returned a finding that in the present case, the land was purchased and was shown as an asset in the balance sheet and that the land had also been used for agricultural purposes. As the land had been held for a long period of time, the same having been purchased in 1994-96 there was no evidence that borrowed capital had been used for the purchase, thus Tribunal concluded that the land was held as an asset and, therefore, the assessee had appropriately offered it for taxation under the head ‘capital gains’. No substantial question of law arises for consideration - in favour of assessee.
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2013 (3) TMI 329
Re opening of assessment - non-eligibility of deduction u/s 80IA - Held that:- As decided in assessees own case in NTPC LTD. Versus DCIT & OTHERS [2013 (1) TMI 219 - DELHI HIGH COURT] the entire process of generation of electricity, both by the gas turbine unit and the steam turbine unit, has been explained by the petitioner in great detail in the assessment proceedings which has been taken notice of by the AO. Also in this case it was not as if it was a fact or a figure hidden in some books of accounts which the AO could have, with due diligence, discovered but had not done so. Therefore, this is not a case where the assessee/ petitioner can be said to have failed to disclose fully and truly all material facts necessary for assessment. Petitioner had paid tax on the generation income by grossing up the rate of tax instead of grossing up the income. The rate of grossed up tax is 62.60162% as against the normal rate of 38.50% [35% tax + 10% surcharge] - By virtue of either method, the total tax payable by NTPC, as per the assessment order would come to same. Therefore, this is a clear case where no income has escaped assessment - in favour of assessee.
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2013 (3) TMI 328
Deduction of TDS twoards Arrears of income tax and interest from assessee's salary on the basis of communication received by the ITO(TDS) - Held that:- There appears to be no dispute that there is no order by the Income Tax Department directing the Management of the Institution or anybody else to deduct the tax from the salary of the petitioner towards arrears of salary received by him earlier.- This is clear from the counter affidavit of Smt. Shashi Mathur, Income Tax Officer, (TDS), who wrote communication dated 17th February, 2009 to the Commissioner of Income Tax, Allahabad. The inquiry was conducted against non deduction of tax by the DDO of Sadanand, Vidyayala Cheolaha, Fatehpur. - ITO TDS is not empowered to take any remedial measures against the individual tax payers. It was against the tax deducting authority and not against the petitioner. In this case, no demand was raised by the ITO (TDS), has been stated in para-19 of the counter affidavit. She has clarified that it was merely a correct calculation of relief under Section 89(1) to enlighten the DDO. Thus, it is crystal clear that it is not the case of the Income Tax Department that any tax is payable by the petitioner for the assessment year in question. Income Tax Department has not issued any order for deduction of tax from the salary of the petitioner. This being position, the college authorities and the D.I.O.S., Fatehpur were not justified in making any deduction from the salary of the petitioner on the pretext that the petitioner has not paid the tax on his arrears of salary. As decided in Jagran Prakashan Ltd. versus Deputy Commissioner of Income -Tax (TDS) (2012 (5) TMI 488 - ALLAHABAD HIGH COURT) considering Section 201(1) there is no occasion to treat the deductor as an assessee in default unless the assessee has not paid the tax directly. As the case of the department is that the petitioner in no manner, is an assessee in default. Thus, in view of the stand taken by the department that there is nothing against the petitioner in the said communication and it is against the DDO, the action of the College Management is wholly arbitrary and illegal. The Principal or the Manager had no authority or occasion to take any step to deduct the sum of Rs. 1,37,868/- for the alleged income tax dues for the assessment year 1998-99 from the current salary.
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2013 (3) TMI 327
Profit on purchase and sale of gold bonds - whether be treated as the investment? - Held that:- The Tribunal recorded a finding that the intention of the assessee was not to trade in gold bonds taking into consideration the audited accounts of the company and the annexures attached to the balance sheets. It also considered the resolution passed by the company about investment. The finding recorded by the Tribunal that it was not a case of trade in buying and selling of gold bonds. Except one transaction of purchase and sale, there is no other transaction during the previous year - the finding recorded by the Tribunal is essentially a finding of fact - against the revenue.
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2013 (3) TMI 326
Deduction towards provision for bad debts under sec. 36(1)(viia)- Broken period interest - Depreciation on value of securities - Entertainment expenses - Forward exchange contract - Exemption u/s.10 - Deduction u/s.80M - Disallowance u/s.35D - Interest u/s.201(1A) Held that:- the assessee has complied with the requirements of sec. 36(1)(viia) as interpreted by the Hon’ble Supreme Court in the case of Vijaya Bank (2010 (4) TMI 46 - SUPREME COURT). Thus the impugned order on this score is upheld and addition was deleted similar view has been taken in all the appeals. Securities are current assets of the assessee, the broken period interest expenditure or income has to be allowed as deduction, Tribunal relied on the judgement of the Hon’ble jurisdictional High Court in American Express International Banking Corpn. Vs. CIT (2002 (9) TMI 96 - BOMBAY HIGH COURT ) Similar view has been taken in all the appeals. The excess over the cost price would not be considered for valuing the closing stock. It is only when such security is sold that the profit would stand reflected accordingly. In view of these reasons, we are satisfied that depreciation on account of fall in value of securities held by the assessee as stock in trade, was liable to be considered at the market value, being less than its cost price, as reflected by the assessee. - Decided ini favor of revenue. Entertainment expenses - Held that:- According to the Tribunal “it would be reasonable to estimate 40 percent of the total expenses as not in the nature of entertainment expenses”. Nothing has been brought to our notice to demonstrate that the said order has been modified or set aside by the Hon’ble High Court. Respectfully following the precedent, we hold that 40% of total expenses be considered as not in the nature of entertainment expenses. The AO is directed to work out the amount of disallowance accordingly. Similar view has been taken in all the appeals. Set off and carry forward of losses - Disallowance of provision for loss on forward exchange contract where the assessee booked a loss on forward foreign exchange contracts which were unmatured on the date of balance-sheet - held that:- matter restored to the file of AO for deciding it afresh on the touchstone of the prescription given by the Special Bench in the aforenoted order. Needless to say the assessee would be allowed a reasonable opportunity of being heard. Similar view has been taken in all the appeals. As against disallowance of exemption u/s.10 in which the assessee claimed interest received on tax free securities amounting to exempt u/s.10(15)(iv)(a, we set aside the impugned order and direct the AO to compute disallowance u/s.14A in accordance with the ratio laid down by the Hon’ble jurisdictional High Court in the aforenoted case of Godrej & Boyce Ltd (2010 (8) TMI 77 - BOMBAY HIGH COURT). The ld. A.R. has contended before us that it was having sufficient interest-free funds at its disposal which were invested in securities earning exempt income and hence no disallowance of interest was called for. The AO, while computing disallowance u/s.14A, will also examine this contention of the assessee as per law. Similar view has been taken in all the appeals. deduction u/s.80M. -Divided income - The AO came to hold that deduction should be allowed u/s.80M at 60% of the income from dividend, presumably considering 40% towards expenses. - held that:- it would be just and fair if the impugned order is set aside on his issue and the matter is restored to the file of AO for reducing the direct expenses from the amount of gross dividend for the purpose of deduction u/s.80M. Disallowance u/s.35D. - No permission has been granted by the COD to prosecute this ground. In the absence of any approval given by COD, this ground was dismissed. - held that:- We order accordingly and direct him to decide this question afresh as per law after allowing a reasonable opportunity of being heard to the assessee. - Decided in favor of assessee. Interest u/s.201(1A) - held that:- before charging any interest u/s.201(1A) the assessee should be deemed to be in default in respect of such tax. Treating a person as assessee in default is subject matter of provisions u/s. 201(1), which aspect is decided by the AO (TDS). - The AO, while framing assessment u/s.143(3) of the Act, cannot charge interest u/s.201(1A). - Decided in favor of assessee. In the result, all the appeals are partly allowed for statistical purposes.
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Customs
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2013 (3) TMI 325
Drawback claims - Drawback claims rate schedule and supporting documents were not submitted - Dolomite & Iron Ore which are the main ingredients for the manufacture of the exported goods has been procured without payment of duty - Limit in filing the claim - Held that:- Drawback claims filed by the applicant appeared admissible as the respondent satisfies the provision of Rule 13. - The respondent had also claimed the drawback at all Industry rate as per Drawback Schedule and it was also established that the Triplicate copy of the Shipping Bill for export of goods under a claim for DBK shall be deemed to be a claim for drawback filed. - Also there is no provision in Drawback Schedule Notification to make difference between primary or secondary constituent inputs/material to consider drawback on final products as one to one co-relation is essentially not required. As per Rule 13 the date on which customs officer makes an order permitting clearance and loading of goods for exportation, itself is a claim of drawback and it does not prescribe any time-limit for filing drawback claim as contended by department. Revision application by the revenue rejected being devoid of merit. - Decided in favor of assessee.
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2013 (3) TMI 324
Bill of Entry was provisionally assessed - Benefit of exemption under the Notification No. 36/96-Cus., dated 27-3-1996 - Cash refund - Unjust enrichment - Held that :- The assessee was eligible for the exemption excess amount paid by the assessee consequent to finalization of provisional assessment was required to be suo motu refunded without the claim being submitted by the assessee and, therefore, did not attract the provision of unjust enrichment. In the case of Hindustan Zinc Ltd. (2009 (2) TMI 100 - CESTAT AHMEDABAD) also, it has been held by the Larger Bench of the Tribunal that refund claim for the period prior to 13-7-2006 which became due on final assessment is to be made without the claim being submitted by the assessee and that the provisions of unjust enrichment are not applicable. Finally the appeal by the department is rejected
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Corporate Laws
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2013 (3) TMI 323
Stand-alone petition under Section 247(1A) of the Companies Act - Can an independent petition u/s 247(1A) may be carried before CLB for an order of investigation thereunder in the absence of the word “other” before the word “proceedings” in the relevant expression? - Held that:- The expression “in the course of any proceedings before it” would, loosely, imply “during any proceedings”. If Section 247(1A) is read as giving the CLB unfettered authority in all circumstances to declare by an order that the affairs of a company ought to be investigated as regards the matters specified in such provision, it would result in the expression “in course of any proceedings before it” being rendered otiose. That would be impermissible by any rule of construction. The authority under Section 247(1A) of the Act can, doubtless, be exercised suo motu by the CLB. But the caveat that the expression “in the course of any proceedings before it” introduces in the provision, mandates that the suo motu authority be exercised only during the pendency of any proceedings before the CLB. If the appropriate interpretation of Section 247(1A) of the Act is that the authority to direct an investigation thereunder may be exercised by the CLB suo motu or at the instance of any other person, in the absence of any express provision making a distinction between the two situations, the expression “in the course of the proceedings before it” would apply to either, and, as a corollary, it would carry the same meaning in either case. Though the word “any” in the relevant expression would exclude any limitation or qualification, such word cannot be read in isolation of the words “in course of” appearing in the same cluster of words. The words “in course of” govern the words “any proceedings” and imply that the nature of the proceedings would be irrelevant as long as the authority is invoked or exercised in course of such proceedings. The extent of exercise of the authority will, however, be guided by the nature of the pending proceedings. There are lesser reasons for discerning that Section 247(1A) of the Act does not contemplate a stand-alone petition for invoking the authority prescribed thereunder. In several provisions, or clusters of provisions, in the Act which are capable of being directly invoked without reference to any other, the circumstances giving the right to apply thereunder are generally specified. Since Section 247(1A) of the Act was not meant to be directly invoked – or such provision being taken recourse to only for the purpose of an investigation being directed thereunder – it does specify who may apply thereunder or who may be heard in course thereof. In the absence of the guidelines in the provision itself as to when and how the authority thereunder may be invoked or exercised – the two inevitable questions on the bounds of authority in any judicial or quasi-judicial jurisdiction, where limitlessness may not be presumed unless expressly specified or by unavoidable implication – the answers to the questions have necessarily to be found in the expression “in the course of the proceedings before it” in Section 247(1A). The clue to when such power may be exercised is in the understanding of the expression to imply “during any pending proceedings”, which, in turn, will bring the scope of the pending proceedings into play to provide a key to how the authority may be exercised. Section 247(1A) of the Act provides for wide inquisitorial powers being exercised by the CLB. The order sought were only in furtherance of the investigation under Section 247(1A) of the Act. That is not to suggest that Section 247(1A) of the Act could have been invoked only on the strength of a prayer under Section 237(b) of the Act being carried in the same petition, but that is an altogether different matter. The appeal and the application are allowed.
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Service Tax
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2013 (3) TMI 335
Cleaning services rendered to Child Trust Hospital - outdoor catering services - Cenvat credit with abatement under Notification No. 1/2006-S.T. ( 50% abatement ) - Extended period of limitation - Held that:- since they are filing returns regularly and their unit is audited periodically, the Department is aware about the fact of the services rendered by them. Thus it can be safely concluded that there is no suppression of facts with an intent to evade payment of tax in the instant case. - Thus, the demand in the instant case is partly hit by limitation of time and the period w.e.f 1-10-2007 alone will survive as it is within a period of one year from the relevant date. Regarding Cleaning services provided to non commercial organization - held that:- the appellant is right in not paying Service tax on the cleaning service imparted to Child Trust Hospital, which is not a commercial building. - Ministry’s Circular Nos. 96/7/2007-S.T., dated 23-8-2007 and No. 107/01/2009-S.T., dated 28-1-2009 to demand Service Tax not applicable in the instant case. - Demand set aside - Decided in favor of assessee. Regarding benefit of abatement availed alongwith Cenvat Credit - outdoor catering - held that:- appellant had not fulfilled the conditions stipulated to avail the benefit of abatement - the appellant had to pay Service tax in full without availing the benefit of abatement towards outdoor catering services for the surviving demand period w.e.f. 1-10-2007. - Decided against the assessee.
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2013 (3) TMI 334
Pre-deposit of Service tax and Penalty - Short payment of Service Tax - Declared less value shown in their Profit & Loss periodical ST-3 returns - Differential Duty with interest - Export of service - Held that:- It is seen that the appellants had produced documentary evidences showing services provided to foreign company and receiving the payment in foreign currency. - Admittedly, the commission earned on foreign services is not liable to Service Tax, as held by Board’s Circular No. 111/5/2009-S.T., dated 24-2-2009. Commissioner (Appeals)’s reasoning that the commission has not been separately shown in Profit & Loss account, cannot be held to be a valid reason to reject the appellant’s plea of the commission having been earned from the services provided by them to a foreign client. - Demand set aside - Decided in favor of assessee.
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Central Excise
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2013 (3) TMI 338
Whether the appellate Tribunal could reduce the penalty amount, which is less than the amount of penalty specified under section 11 AC of the Central Excise Act, 1944 - Mandatory penalty u/s 11AC - Held that:- The decision in Dharamendra Textile [2008 (9) TMI 52 - SUPREME COURT] must be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under Sub-section (2) of Section 11A. That is what Dharamendra Textile decides. From the proposition as laid down in above cases, it can be concluded that the quantum of the penalty equal to the duty determined as contemplated by Section 11AC is mandatory and there is no discretion in the adjudicating authority or the Tribunal to impose different amount of penalty. In a case where penalty is leviable under section 11AC on fulfilment of the conditions as enumerated in Section 11AC, the penalty equal to the amount of duty determined is mandatory and there is no discretion in the Tribunal to reduce the said penalty. However, as laid down by the apex Court in Union of India Vs. Rajasthan Spinning and Weaving Mills (2009 (5) TMI 15 - SUPREME COURT OF INDIA), the penalty under section 11AC can be imposed only when conditions mentioned in Section 11AC exist. The authorities have no discretion in fixing the quantum of penalty and penalty equal to the duty must be imposed once section 11Ac is made applicable. The question of law is answered in favour of the revenue as the appellate Tribunal had no discretion to reduce the amount of penalty as specified under section 11 AC.
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2013 (3) TMI 322
Whether the assessee is liable to pay 8% on the price of the exempted final products viz., PD Pumps cleared from factory or 8% on the price of CI casting which was captively consumed by the assessee for the manufacture of those exempted goods viz., PD pumps - Held that:- FAA has given a factual finding that the final product is not the CI castings alone and on the other hand, it is also the monobloc pumps which are exempted from payment of duty. It is also the finding of the first appellate authority that the assessee used various common inputs in both dutiable and exempted final products. Therefore, when further finding of not maintaining separate account is not disputed by the assessee, automatically, Rule 57CC(9) comes into operation. Assessee reliance on Texmo Industries Texmo Industries Vs. Commissioner of Central Excise, Coimbatore case [2006 (12) TMI 8 - CESTAT, NEW DELHI] is not acceptable as perusal of the facts of that case shows that it was in respect of an exemption notification and the application of Rule 57A of the Central Excise Rules, thus unable to find any similarity on the facts of that case with the present one. Likewise, the other decisions relied show that they are distinguishable on facts and the decision of the Apex Court in the case of Ballarpur Industries Ltd., was not placed before the Court. At any event, relied on the subsequent decision in Commissioner of Central Excise, Nagpur Vs. Ballarpur Industries Ltd.(2007 (8) TMI 10 - SUPREME COURT OF INDIA) wherein held that on even on stock transfer, Modvat is required to be reversed - allow the appeal filed by the Revenue by answering the questions of law in favour of the Revenue and against the assessee. Consequently the connected C.M.P. is closed. No costs.
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2013 (3) TMI 321
Direction to deposit Rs 1 Crore as against the recovery of Central Excise duty of Rs. 7,74,09,518 and equal amount of penalty - assessee contested that there was no evidence whatsoever regarding the suppression of production and clandestine removal, photocopy of which original was not shown to the appellant and hence it could not be taken into consideration for imposition of excise duty - Held that:- The CESAT has recorded finding that there is prima facie finding of suppression of production and clandestine removal. The balance sheets thus will not reflect the true and correct financial position of the company. The Tribunal was lenient enough in directing the appellant to deposit only Rs. 1 crore and waiving the remaining amount of Excise duty and penalty, which together with would amount to about Rs. 16 crores. Therefore, do not find any substantial question of law for consideration and interference in this appeal. The Central Excise Appeal is accordingly dismissed in-limine. And the appellant company is allowed sixty days time from today to deposit the amount.
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2013 (3) TMI 320
Cenvat Credit - Input - Cement used for treatment of toxic effluent generated during the manufacture of final product to meet the pollution control obligation - whether or not this amounts to use for or in relation to the manufacture of final product ? - Held that:- As decided in Collector of Central Excise, Calcutta-II v. Eastend Paper Industries Ltd. (1989 (8) TMI 81 - SUPREME COURT OF INDIA) any particular process so integrally connected with the ultimate production of goods that, but for that process, manufacture or processing of goods would be commercially inexpedient, articles required in that process, would fall within the expression in the manufacture of goods”. The expression “in the manufacture” takes in within its compass, all processes which are directly related to the actual production. It is too late in the day to take the view that the treatment of effluents from a plant is not an essential and integral part of the process of manufacture in the plant. The emphasis that has rightly been laid in recent years upon the environment and pollution control requires that all plants which emit effluents should be so equipped as to rid the effluents of dangerous properties. The apparatus used for such treatment of effluents in a plant manufacturing a particular end-product is part and parcel of the manufacturing process of that end-product. The ammonia used in the treatment of effluents from the urea plant of the appellants has, therefore, to be held to be used in the manufacture of urea and the raw naphtha used in the manufacture of such ammonia to be entitled to the said exemption. From the above enunciation of law it is clear that use of cement for treatment of effluent generated during manufacture of zinc, lead and sulphuric acid has to be taken as used in the manufacture of those final products. Thus appellant has been able to make out a prima facie case for waiver of condition of pre-deposit. Stay application allowed - in favour of assessee.
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2013 (3) TMI 319
Non providing of copies of documents seized from the appellants - as per the assessee they are deprived of natural justice to lead their defence - in spite of repeated prayer to provide copies of challans by the appellants the authorities provided blank challans to the appellant which were without signature of the appellants - Held that:- As in the case of CCE, Kolkata-II v. Giriraj Industries (2007 (11) TMI 112 - CESTAT KOLKATA) affirmed by the Calcutta HC in [2008 (8) TMI 773 - CALCUTTA HIGH COURT], where negligence of investigation has come to record. If investigating authority fails to provide copies of seized documents and if the documents provided was altogether different from the seized documents that deprives the litigant from the course of natural justice. Not only injury is caused to interest of justice but negligent officers make the investigation result fatal. Once the material used against the appellants could not see the light of the day and 8 years have already been passed there may not serve any useful purpose, if the matter is remanded back for redoing adjudication. Being guided by the decision of Orissa Bridge & Construction Corpn. Ltd. v. CCE, Bhubaneswar [2008 (8) TMI 585 - SUPREME COURT OF INDIA] litigation should be brought to an end allowing the appeal. Consequently, all the three appeals are allowed.
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2013 (3) TMI 318
Molasses captively consumed - demand confirmed after taking into higher price of A grade molasses treating the same as comparable goods - Held that:- Agreeing with the contention of the Revenue that for captively consumed the value of comparable goods is taken into consideration but in the present case there is no evidence to show that the molasses which is captively consumed is of A grade. Further, as found in the grounds of appeal, the revenue also submitted at least the lower price of the comparable goods are to be taken for the purpose of assessment. As found from the chart produced by the revenue showing the lowest price of the goods @ Rs. 600/- PMT whereas the applicants are paying duty on the price @ Rs. 850/- PMT no infirmity in the impugned order whereby Commissioner (Appeals) set aside the confirmation of demand in respect of molasses captively consumed by the respondents - appeal of revenue dismissed.
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2013 (3) TMI 317
Benefit of Notification No. 30/2004-C.E. denied - no balance of inputs/semi-finished products/finished products with the assessee - liability of duty on the finished goods cleared by them by availing the benefit of the said notification confirmed with interest on the said amount and penalties - Held that:- It is an admitted fact that the appellant had only carried forward the closing balance in the monthly returns filed with the departmental authorities and there was no utilization of the said amount in any of the months, as the appellant need not have to discharge duty finished goods, after availment of notification No. 30/2004-C.E. It is to be noted that there is no dispute as to the fact that from 10th March, 2005, when the assessee-appellant opted for the availment of exemption provided under Notification No. 30/2004-C.E., he has not availed any Cenvat credit on the inputs which were procured, for manufacture of final products. The above said condition is only to dissuade an assessee, to avail double benefit i.e. to avail Cenvat credit and also to claim benefit of exemption of payment of excise duty given in the notification. As the Adjudicating Authority’s findings on this point only states that the appellant had availed Cenvat credit prior to exercise of option to benefit of Notification No. 30/2004-C.E., had been lying idle in their Cenvat credit and had to be reversed prior to or on claiming benefit of Notification No. 30/2004-C.E. The basic point which is missed by the Adjudicating Authority in the entire exercise, is that if there are no inputs/semi-finished goods lying in stock as on 10th March, 2005, when the assessee exercised an option, the Cenvat credit could not be utilized for any other purpose and has to be considered as lapsed as per the provision of Cenvat credit rules, which were in force during the period. Also take note that the appellant, as per direction in the stay order, has specifically written to the authorities indicating that the amount of credit which was carried forward by them has to be treated as lapsed while exercising the option for exemption under Notification No. 30/2004-C.E., dated 9-7-2004. If that be so, no reason to deny the benefit of Notification No. 30/2004-C.E. from the date they exercised the option - in favour of assessee.
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CST, VAT & Sales Tax
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2013 (3) TMI 337
Seizure orders - Transit Declaration Form of goods by mistake have been described as cotton fabric instead of cotton coated fabric and the Tin number of the Kolkata dealer differs slightly - transporter asked for release of goods as show cause notice has been issued to driver of the vehicle - revision application - Held that:- In reality the notice and the order is required to be served upon the dealer but as on spot the dealer is not to be found, it is permitted to be served upon the person incharge of the vehicle/goods with the intention that he will inform the dealer who would appear and contest the proceedings or allow them to be persued by the person incharge. Thus, by mere service of the show cause notice upon the person incharge of the vehicle or the order of the seizure upon him would again not make him the "person aggrieved" to ask for the release of the goods or for waving the security demanded unless the transporter produces an authority of the owner of the goods to get them released on his behalf. The transporter who is not the owner of the seized goods has no right or interest in them therefore, refusal of the authorities to release the said goods without security does not infringe any legal right of the transporter so as to give him a right to challenge the order. The transporter is not a person who has wrongly been deprived of any entitlement of legal right or who has suffered adversely in legal sense on the seizure of goods or on refusal to release them without security. The transporter is not a person aggrieved who can raise any grievance either against the seizure of the goods or against refusal to release the same without security. He at best can only complaint about the confinement of his vehicle in which the seized goods were loaded and were being carried. The vehicle is not the subject matter of seizure and the transporter can always ask the authorities to allow the vehicle to go without insisting for the release of the goods. No case law submitted by transporter is acceptable as does not help him to substantiate his plea that he is a person aggrieved entitle to release of the goods. It is important to note that the transporter has not specifically challenged the order of the tribunal dated 7.2.2013. A challenge to the order of seizure dated 4.12.2012 directly in revision is not acceptable. The relief to release the seized goods without any security does not involve any question of law as the condition for release of the goods is dependent upon the discretion of the authority concerned. Therefore, no relief in this regard is permissible in exercise of revisional power under Section 58 of the Act - revision as such fails and is dismissed.
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2013 (3) TMI 336
Provisional registration certificate cancelled - assessee seeking condonation of delay for filling revision against cancellation after six years six months and ten days - Held that:- The revisional authority noted that after issuance of the provisional registration certificate, which was valid up to 18.02.2004 in spite of repeated opportunities being given, the petitioner did not appear for verification of the documents, and as such, the provisional registration certificate was cancelled on 16.02.2004. The said order having been challenged after long lapse of time without there being any proper reason for condonation of delay, the revisional authority rightly declined to interfere in it. When the provisional certificate was itself valid up to 18.02.2004, it was for the petitioner to have enquired about the progress in the matter of grant of permanent certificate and it cannot be as sumed that the petitioner was not having knowledge that his provisional registration certificate has been cancelled which itself was about to lapse after two days. No indulgence of this Court in the order passed by the revisional authority, in this petition under Article 226/227 of the Constitution of India required .
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