TMI Tax Updates - e-Newsletter
May 17, 2023

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy FEMA Service Tax Central Excise

Articles

1. How is GST treated in relation to employee notice pay recovery?

   By: Ishita Ramani

2. REPORTING ENTITY UNDER PREVENTION OF MONEY LAUNDERING ACT, 2002

   By: DR.MARIAPPAN GOVINDARAJAN

3. No Service Tax liability when the construction of flat is for the personal use of the service recipient

   By: Bimal jain

4. LIBERAL INTERPRETATION IN TAXATION

   By: Dr. Sanjiv Agarwal

News

1. Income Tax Department conducts searches in West Bengal and Assam

2. Sh. Goyal meets Mr. Dombrovskis on the side-lines of India-EU TTC Ministerial Meeting

3. Sh. Goyal emphasises India’s 10x+ growth potential in the next 25 years

4. India and EU affirm commitment to work together on WTO reforms

5. Auction for Sale (re-issue) of (i) ‘7.06% GS 2028’, (ii) ‘7.26% GS 2033’ and (iii) ‘7.36% GS 2052’

Notifications

Central Excise

1. 22/2023 - dated 15-5-2023 - CE

Special Additional Excise Duty on production of Petroleum Crude and export of Aviation Turbine Fuel - reduction in SAED - Seeks to amend No. 18/2022-Central Excise, dated the 19th July, 2022.

Companies Law

2. G.S.R. 367(E) - dated 15-5-2023 - Co. Law

Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2023

Customs

3. 34/2023 - dated 15-5-2023 - Cus (NT)

Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver

GST - States

4. 597-F.T. - dated 12-4-2023 - West Bengal SGST

Seeks to rationalise late fee for the non-filers of GSTR-9 for the FY 2022-23.

5. 596-F.T. - dated 12-4-2023 - West Bengal SGST

Seeks to allow furnishing returns for the assessees who have been assessed under sub-section (1) of section 62 of the Act or filed appeals against such assessment orders.

6. 595-F.T. - dated 12-4-2023 - West Bengal SGST

Seeks to allow filing an application for revocation of cancellation of R.C. whose registration has been cancelled under clause (b) or clause (c) of sub-section (2) of section 29 on or before the 31st day of December, 2022, and who has failed to apply for revocation of cancellation of such registration within the time period specified in section 30.

7. 594-F.T. - dated 12-4-2023 - West Bengal SGST

Seeks to waive late fee for the non-filers of GSTR-4 from July, 2017 to the F.Y.2021-22.

SEBI

8. SEBI/LAD-NRO/GN/2023/129 - dated 15-5-2023 - SEBI

Securities and Exchange Board of India (Employees' Service) (Amendment) Regulations, 2023

Circulars / Instructions / Orders

RBI

1. RBI/2023-24/25 - dated 4-5-2023

Amendment to the Master Direction (MD) on KYC – Instructions on Wire Transfer

Highlights / Catch Notes

GST

• Court Orders 200% Pre-Deposit or Bank Guarantee for Goods Detained Over Wrongful Input Tax Credit Passing.

  Case-Laws - HC : Release of detained goods alongwith vehicle - wrongful passing of input tax credit by supplier - petitioner is directed to pre-deposit 200% of the maximum penalty after adjusting the amount already deposited. In the alternative, the petitioner can be directed to furnish Bank Guarantee in terms of Section 129(c) of the respective GST enactments and the Rules made thereunder. - HC
  Visit to Get Source

  ---

Income Tax

• Pr.CIT's Revision u/s 263 Lacks Evidence of AO's Negligence; No Inquiry Conducted to Justify Revision.

  Case-Laws - AT : Revision u/s 263 - the expectations of the Revisional Commissioner are purportedly not met - One cannot possibly say that the AO had sleepwalked on the issues involved. Noticeably, the Pr.CIT himself has not entered into any minimal inquiry on the issues himself, if so considered expedient and there is not even prima facie demonstration of fallacy in the action of the AO which rendered the order erroneous and which also simultaneously caused prejudice to the revenue. - AT
  Visit to Get Source

  ---

• Assessee can use Rs. 1.76 crores seized cash for self-assessment tax, but not for advance tax.

  Case-Laws - AT : Interest u/s 234 B - Advance tax - Adjustment / Credit for cash as seized - there is no prohibition to adjust the seized cash with self assessment tax. What is prohibited is only adjustment of seized cash with the advance tax. Hence, we hold that the assessee is entitled for adjustment of seized cash of Rs. 1.76 crores with self assessment tax payable by the assessee in the return of income. - AT
  Visit to Get Source

  ---

• Interest to Partner Allowed u/s 40(b)(iv); Partnership Deed Valid, Appeal by Assessee Successful.

  Case-Laws - AT : Liability of interest paid to the related parties u/s 40(b)(iv) - Interest paid to partner of the firm - as per clause-8 of the original partnership deed, the interest is allowable and it is not the case here that the partnership deed ceased to exist. Appeal filed by the Assessee stands allowed. - AT
  Visit to Get Source

  ---

• Tribunal Confirms Depreciation Value Based on Bank Arrangement in Bank of Thanjavur Amalgamation Case.

  Case-Laws - AT : Cost of acquisition / Actual cost - Depreciation on assets taken over in pursuant to amalgamation - Value to be taken as "value fixed in pursuant to arrangement between the assessee’s bank and amalgamated bank" or WDV of amalgamating company - There is no error in the findings given by the Tribunal in upholding the action of the AO in allowing depreciation on assets taken over in pursuant to amalgamation of Bank of Thanjavur Ltd., with assessee’s bank - AT
  Visit to Get Source

  ---

Customs

• High Court Missteps in Evaluating Amended Customs Notification; No Bad Faith or Improper Motives Found; Domestic Impact Considered.

  Case-Laws - SC : Validity of withdrawal of a customs notification - the High Court, by the impugned judgment, erred in judging the merits of the reasons which led the executive government to issue the Amended Notification. No mala fides or oblique considerations were pleaded or urged; the exercise of power was in line with the provisions of the Act. The indigenous angle, i.e. availability of equipment, cannot be characterized as an irrelevant factor or consideration, since grant of exemption to a class of goods, which are similar to those manufactured within the country, and its likely adverse impact on such manufacturers or producers, is germane and relevant. - SC
  Visit to Get Source

  ---

• Seized Gold Disposal Requires Show Cause Notice Under Customs Act Section 110(1D); Applications Go to Commissioner (Appeals).

  Case-Laws - HC : Disposal of the seized goods - Non-issuance of SCN - Conclusion of proceedings under Section 110(1D) of the Customs Act, without issuance of SCN - There are no merit in the contention that no notice is required to be served - In respect of seized gold, the proper officer is required to make an application before the Commissioner (Appeals) having jurisdiction instead of the Magistrate as required under Sub-section (1B) to Section 110 of the Customs Act. - Although the authority before whom an application is to be made was substituted, there was no amendment in the procedure to be followed. - HC
  Visit to Get Source

  ---

• Import Classification of Motor Vehicle Parts Under Review for Heading 8708; Predominant Use Test Applied.

  Case-Laws - AT : Classification of imported goods - imported goods used as components in manufacture of motor vehicle - to be classified under the heading of 8708 as parts of the motor vehicle or not - The test of predominant use is incorporated in the set of test to be exercise before classification. - AT
  Visit to Get Source

  ---

• Commissioner (Appeals) enhanced penalty without following Section 128(3) procedure; order unsustainable due to lack of due process.

  Case-Laws - AT : Levy of penalty - The original authority did not impose any penalty whereas learned Commissioner (Appeals) has enhanced penalty to Rs.8,40,467/- and such enhancement of penalty was done without following the procedure laid down in Section 128(3) - reasonable opportunity of showing cause against proposed order of enhancing penalty not provided - The impugned order is not sustainable - AT
  Visit to Get Source

  ---

• Customs Valuation Rules: Arbitrary Valuation by Revenue Authorities Deemed Illegal, Appellant's Declaration Upheld as Correct.

  Case-Laws - AT : Valuation of imported goods - No comparable goods, quantity, same country for contemporaneous imports were brought on record. Even as per explanation to Rule 9 of the Customs Valuation Rules itself discards the price of the goods exported to a country other than India hence any arbitrary value adopted by the revenue in this case is absolutely illegal. - The Appellant has rightly declared the goods - AT
  Visit to Get Source

  ---

• Customs Broker's License Revocation Overturned: Appellant Not Liable for Exporter's Incorrect Address, Regulation 10(n) Violation Unfounded.

  Case-Laws - AT : Revocation of Customs Broker License - the appellant has collected the documents such as IEC, GSTIN etc. submitted by the exporter S S Impex, Hyderabad before processing their shipping bills. Later if they were not found to be existing in the said addresses, the appellant cannot be held responsible for their non existence at the address specified - the allegation against the appellant in the impugned order that they have violated Regulation 10 (n) is not sustainable. - AT
  Visit to Get Source

  ---

• Anti-Dumping Duty Modified: Aluminum Products Clad with Compatible Non-Clad Foil Excluded from Levy. Customs Notification Amended.

  Case-Laws - AT : Levy of Anti-Dumping Duty - certain flat rolled products of aluminium - clad with compatible non-clad aluminium foil has to be excluded from the product under consideration and, accordingly, the customs notification dated 06.12.2021 is modified to exclude clad with compatible non-clad aluminium foil from the scope of product under consideration. - The Anti-Dumping Appeal is, accordingly, allowed to the extent indicated above. - AT
  Visit to Get Source

  ---

FEMA

• High Court Rejects Petitioner's Request for FCRA Penalty Refund After SBI Account Opening Delay Explained as Unsatisfactory.

  Case-Laws - HC : FCRA registration - Delay of opening of an “FCRA bank account” with the State Bank of India - there was a delay in the opening of the said FCRA bank account and the delay has not been convincingly explained by the Petitioner. Further, the penalty amount has been deposited with Respondent No. 1-MHA, therefore the prayer for refund is not tenable and is accordingly rejected. - HC
  Visit to Get Source

  ---

Service Tax

• Hostel and Education Services Bundled; Education Services Exempt from Service Tax u/s 66D of Finance Act.

  Case-Laws - AT : Naturally bundled service - The hostel service and education services are naturally bundled in the ordinary course of business and it is the education service that gives the essential character to such bundle. Education services by way of pre-school education and education up to higher secondary school or equivalent are enumerated in the negative list of services enumerated in section 66D of the Finance Act. Thus, it cannot be subjected to levy of service tax - AT
  Visit to Get Source

  ---

• Exemption Granted: Printing on PVC Films Considered Production, Not Manufacturing, Qualifies for Service Tax Exemption.

  Case-Laws - AT : Exemption from service tax - Job work - printing of PVC film/ sheets - Manufacturing activity vs Processing of goods - It is to be seen that the activity of production of goods is different from the activity of manufacture. The notification not only covers the activity of production of goods but also any activity incidental or ancillary to production of goods. In this circumstances the activity of printing on PVC done by the appellant can be considered to be activity of production of goods. - AT
  Visit to Get Source

  ---

Central Excise

• Broker Penalized u/r 26 for Aiding Improper CENVAT Credit Claims Without Goods Movement or Production.

  Case-Laws - AT : Levy of penalty personal penalty on Broker u/r 26 of CER - abetment in availment of inadmissible CENVAT Credit - From the statements it has been proved beyond any doubt that the brokers were instrumental in availing of ineligible Cenvat credit by the assessee for payment of central excise duty without manufacturing/ removing any excisable goods and also for passing on the said Cenvat credit to their customers on the basis of the invoices only without supplying any goods to them. - Levy of penalty confirmed - AT
  Visit to Get Source

  ---

• Show Cause Notice in Valuation Cases Must Be Clear; No Duty Confirmation for Unmentioned Secondary Freight Deductions.

  Case-Laws - AT : Valuation - scope of show cause notice (SCN) - It has been held in several cases that the SCN is not an empty formality and the same needs to be clear and unambiguous. It is not open for the Department just to seek a demand on the basis of figures supplied by the appellant by mistake - In the instant case, there was no whisper of seeking denial of deduction on secondary freight and to that extent, there is no ambiguity in the SCN and it is not open for the Department to claim confirmation of duty on account of secondary freight at this juncture. - AT
  Visit to Get Source

  ---

• CENVAT Credit Retained: Ownership Change Doesn't Trigger Reversal u/r 3(5A) If Goods Stay in Use On-Site.

  Case-Laws - AT : CENVAT Credit - removal of capital goods as such or not - the law is settled that even though the ownership of the capital goods has been changed but the capital goods remained installed and used within the factory premises of the assessee, the Cenvat credit cannot be demanded under Rule 3(5A) of Cenvat Credit Rules, 2004. - AT
  Visit to Get Source

  ---

Case Laws:

• GST

• 2023 (5) TMI 644
  Release of detained goods alongwith vehicle - wrongful passing of input tax credit by supplier, from whom the petitioner has purchased the goods - Requirement to comply with mandatory pre-deposit - HELD THAT:- Once the order is stayed, the respondents can release the goods subject to such other safeguards that may be imposed by the appellate authorities under the respective Acts - The very purpose of fixing the mandatory pre-deposit is to do away with the procedure of granting stay after hearing, which was delaying the disposal of the appeal earlier. The provisions are inspired from amended Section 35F of the Central Excise Act, 1944 and Section 129E of the Customs Act, 1962 in 2014 as the cases were not getting disposed - It is for this reason, mandatory pre-deposit was made so that the interest of the revenue can be safeguarded as the appeal would take longer time for final disposal. Although the Officer who detained the goods has become functus officio , once there is a mandatory pre-deposit, the order has no force and all further recovery proceedings will be subject to the final outcome of the appeal. There can be a direction to the petitioner to deposit the maximum penalty of 200% of the tax to safeguard the interest of the revenue - petitioner is directed to pre-deposit 200% of the maximum penalty after adjusting the amount already deposited. In the alternative, the petitioner can be directed to furnish Bank Guarantee in terms of Section 129(c) of the respective GST enactments and the Rules made thereunder. Petition disposed off.

  ---

• 2023 (5) TMI 643
  Seeking release of goods alongwith conveyance - absence of E-way bill - different destination was indicated in the invoice from what was mentioned by the driver - HELD THAT:- It is directed that the goods of the petitioner as well as vehicle bearing registration KA 14C 3377, shall be released provided the petitioner complies with the conditions imposed - petition disposed off.

  ---

• 2023 (5) TMI 642
  Relevant date for filing of appeal - whether, order against which appeal has been filed is not uploaded on common portal, and a self certified copy of the said decision is submitted within 7 days, the said date of submission shall be considered as the date of filing of the appeal? - HELD THAT:- In the present case, since the uploaded copy was already part of the appeal, it would amount to substantial compliance of Rule 108 of the Haryana Goods and Service Tax Rules, 2017 and the Joint Commissioner would not dismiss the appeal by the impugned order (Annexure P-1) on the ground that the appellant had not submitted the certified copy of the order impugned therein. Since this fact has been further clarified by the notification dated 25.01 2023 (Annexure P-15), the writ petition is being allowed and the order (Annexure P-I) is set aside and matter is being remanded back to the competent authority to pass a fresh order on merits without going into the question of filing of certified copy delayed.

  ---

• Income Tax

• 2023 (5) TMI 641
  Validity of Reopening of assessment - order passed u/s 148A(d) as it stood amended - Period of limitation to issue notice issued under Section 148A(b) - validity of notices issued by the Income Tax Department (Department) u/s 148 in light of the amendment by the Finance Act 2021, which introduced the new amended provisions i.e., Sections 147 to 151 with effect from 1st April, 2021 - HC held notice u/s 148 pertaining to AY 2015-16 was issued on 30th March 2021, i.e., prior to 1st April 2021. Also, it was beyond the period of six years after the expiry of the AY in question, thus notice is hereby quashed - HELD THAT:- We are not inclined to interfere with the judgment(s) and order(s) passed by the High Court. The Special Leave Petitions are dismissed.

  ---

• 2023 (5) TMI 640
  Reopening of assessment - Validity of approval granted by the CIT u/s 151 - earlier Revision u/s 263 dropped - Subsequently Reopening of assessment u/s 147 initiated - HC held to grant or not to grant approval under Section 151 of the said Act to re-open an assessment is coupled with a duty and the Commissioner was duty bound to apply his mind to the proposal put up to him for approval in the light of the material relied upon by the AO. Such power cannot be exercised casually, in a routine and perfunctory manner. We have to observe that if only the PCIT had read the file, he would not have been satisfied with the reasons. Petition allowed - HELD THAT:- We are not inclined to interfere with the judgment and order impugned in this petition. SLP dismissed.

  ---

• 2023 (5) TMI 639
  Reopening of assessment u/s 147 - reopening beyond period of four years - change of opinion - HELD THAT:- In the peculiar facts and circumstances of the present case and considering the fact that a similar Special Leave Petition in Assistant Commissioner of Income Tax, Circle 6 (2) (1), Mumbai Ors. vs. CEAT Ltd. [ 2023 (1) TMI 73 - SC ORDER] having found that all the conditions required for re-assessment of the assessment of four years are not satisfied, we see no reason to interfere with the impugned judgment and order passed by the High Court in exercise of powers under Article 136 of the Constitution of India. The Special Leave Petition stands dismissed.

  ---

• 2023 (5) TMI 638
  TP adjustment - adjustment of Corporate Guarantee - write off of loss on account of investment made in equity shares of one of its subsidiary - write off of investment for the purpose of computing book profit u/s. 115JB - ITAT justified to remit back the issue of disallowance out of provision for doubtful loans and disallowance out of bad debts provision claimed in MAT to the file of the Assessing Officer for verification - asper HC no question of law arises - HELD THAT:- As gone through order passed by the High Court, no interference of this Court is called for. SLP dismissed.

  ---

• 2023 (5) TMI 637
  Validity of Reopening of assessment - shorter period of three days to the petitioner to submit a response - HELD THAT:- Respondent cannot but accept that the minimum timeframe that is required to be given to the assessee to respond is seven (7) clear days under clause (b) of Section 148A of the Act. This aspect of the matter has been dealt with in the judgment rendered in Indus Valley Partners India Pvt. Ltd. case [ 2023 (2) TMI 1136 - DELHI HIGH COURT] Accordingly, the impugned notices and order are set aside.

  ---

• 2023 (5) TMI 636
  Revision u/s 263 - suspicious transactions of Long Term Capital Gains - As per CIT AO did not make proper verification of the propriety of LTCG transactions and unsecured loans received during the year - HELD THAT:- AO in the instant case, has arrived at a conclusion after collecting requisite evidences of external nature and in the absence of any adverse material per se, came to a conclusion which is plausible for a reasonable person instructed in law. The object of revisional power is not to impinge upon the powers of the Assessing Officer to frame the assessment and interfere therewith in all cases merely on account of some inadequacy in manner and extent of enquiry. As regards additions to bulding account, the case of assessee are two fold (i) no opportunity was given to assessee in clear violation of mandate of opportunity expressly provided under Section 263 of the Act and thus this issue could not be raked up at the first place (ii) the increase in capital is only Rs.14.40 lakh as against 78.46 lakh alleged by the Pr.CIT. The Pr.CIT was acted casually. All primary details were duly provided as called for. In the absence of any perceptible error in the action of the AO pointed out in the revisional order, the explanation offered on behalf of the assessee appears plausible. AO in the instant case, has specifically examined both the issues raised by the Pr.CIT albeit not probably in the manner in which the Pr.CIT would have liked but this cannot be the sacrosanct ground for assumption of jurisdiction under Section 263 of the Act. The Assessing Officer did raise the questions on points in issue and there appears to be active application of mind by the AO although, did not meet the expectation of the Pr.CIT. Thus one cannot possibly say that the AO had sleepwalked on the issues involved. Noticeably, the Pr.CIT himself has not entered into any minimal inquiry on the issues himself, if so considered expedient and there is not even prima facie demonstration of fallacy in the action of the AO which rendered the order erroneous and which also simultaneously caused prejudice to the revenue. Merely because the expectations of the Revisional Commissioner are purportedly not met, it should not, in our opinion, necessarily trigger revisional action under Section 263 of the Act in every case. Appeal of assessee allowed.

  ---

• 2023 (5) TMI 635
  Deduction u/s 80IA - electricity generated from windmills - whether the notional loss or unabsorbed depreciation of the wind power unit of earlier years can be adjusted against the profit of the eligible undertaking? - HELD THAT:- We following the decision of Hercules Hoists Ltd [ 2017 (6) TMI 1125 - BOMBAY HIGH COURT] are of the view that AO was not justified in denying the claim of deduction u/s 80IA of the Act. We, therefore, direct the AO to allow the claim of deduction u/s 80IA of the Act. Thus, the ground of the assessee is allowed. Computation of book profit u/s 115JB - Inclusion/exclusion of interest subsidy received for working of the book profits - HELD THAT:- As relying on case of Indogulf Cropsciences Ltd [ 2022 (10) TMI 564 - ITAT DELHI] we hold that since the interest receipt under TUFS Scheme is capital in nature, it needs to be excluded while working out the book profits u/s 115JB of the Act. The ground of the assessee is allowed.

  ---

• 2023 (5) TMI 634
  Protective assessment - Addition u/s 68 - bogus share capital and premium credited in the companies controlled by the assessee - addition commission expenses on such bogus transaction - AR submitted that the source of share capital has already been suffered to tax in the hands of the other parties in the VSV Scheme, thus, the addition based on protective basis does not survive - CIT(A) deleting the impugned protective addition - HELD THAT:- The concept of protective assessment is not defined in the provisions of the Act. However, the same has been used by the revenue authority as a precautionary tool where there is some income accrued or arise, but the AO is not sure who is liable to pay tax on such income, the AO may proceed to assess such income on protective and substantive basis. The concept of protective or substantive assessment only be applied where it is established beyond doubt that some income has been accrued or arisen in a particular assessment year but there is some uncertainty about the person who is liable to tax. It cannot be applied in cases where it cannot be established beyond that the income has accrued or arises. In holding so, we draw support and guidance from the order of coordinate bench of this tribunal in case of ITO ward 10(1) Ahmedabad vs. Ketan B Thakkar HUF [ 2015 (5) TMI 711 - ITAT AHMEDABAD] As under the provision of section 68 of the Act, it is not the case that it has been established beyond that the certain income accrued or arisen in a particular assessment year but there is uncertainty regarding the person liable to tax. Indeed, the provision of section 68 of the Act triggered when any sum credited in the books of an assessee and that assessee fails explain the nature and source of such credit then same can be deemed to be the income of that assessee in whose books the sum was credited. Thus, to assess deemed income under section 68 of the Act, there is no ambiguity regarding who should be liable to pay tax. Therefore, in our considered opinion the concept of protective assessment cannot be applied in the given facts and circumstances. CIT(A) during the appellate proceedings found that the substantive addition made in the hands of M/s GTC Oilfield Services Pvt. Ltd. was deleted since the investor party has surrendered the income under VSV Scheme. Thus, once the amount has been taxed in the hands of the investing party, the same should not brought to tax again tax in the hands of receiving party in the form of share capital and premium. No infirmity in the order of the learned CIT(A) regarding the issue of deleting the protective assessment. Assessment u/s 153A - Claim of exempted long-term capital - AO held the entire claim of exempted capital gain by the assessee on account of sale of impugned share as fictitious and added the same to the total income of the assessee as income from unexplained sources - HELD THAT:- The word assess in Section 153A/153C of the Act is relatable to abated proceedings (i.e. those pending on the date of search) and the word reassess to the completed assessment proceedings. The Hon ble Gujarat High Court in the case of Saumya Construction Pvt. Ltd [ 2016 (7) TMI 911 - GUJARAT HIGH COURT] held there cannot be any addition of regular items shown in the books of accounts until and unless there were certain materials of incriminating nature found during search. The word incriminating has not been defined under the Act, but it refers to that materials/ documents/ information which were collected during the search proceedings and not produced in the original assessment proceeding. Simultaneously, these documents had bearing on the total income of the assessee. Now coming to the case, we note that addition was made based statement of some unconnected person and action of the SEBI on the group concern of the company the shares of which has been sold by the assessee without referring to incriminating document found from the premises of the assessee. DR has not brought anything on record contrary to the finding of the learned CIT (A). Accordingly, we hold that there cannot be any addition of the regular items which were disclosed by the assessee in the regular books of accounts. Thus we hold that there cannot be any addition to the total income of the assessee of the regular items as made by the AO in the present case. Accordingly, we do not find any infirmity in the order of the learned CIT (A). Hence, we uphold the same. Decided against revenue. Addition u/s 68 - The income generated by the assessee cannot be held bogus only based on the modus operandi, generalisation, and preponderance of human probabilities. In order to hold income earned by the assessee as bogus, specific evidence has to be brought on record by the Revenue to prove that the assessee was involved in the collusion with the entry operator/ stock brokers for such an arrangements. In simple words, there were not brought any evidence from independent enquiry to corroborate the allegation. As relying on Smt. Krishna Devi case [ 2021 (1) TMI 1008 - DELHI HIGH COURT] we hold that in absence of any specific finding against the assessee, the assessee cannot be held to be guilty. Hence, we don t find any reason to interfere in the order of the Ld. CIT-A. Hence, the ground of appeal of the Revenue is hereby dismissed.

  ---

• 2023 (5) TMI 633
  Exemption u/s.10(23C)(iiiab) - government grants are around 68% for the year under consideration - HELD THAT:- Since assessee is substantially financed and it is an educational institution, the assessee is eligible for exemption u/s.10(23C)(iiiab). Therefore, we allow the appeal of the assessee.

  ---

• 2023 (5) TMI 632
  Penalty u/s. 271(1)(c) - addition on account of interest on the balance standing in the foreign bank account of the Assessee - AO was of the view that the interest income has to be assessed on accrual basis in the relevant assessment years, wherein, the interest income accrued, thus added the interest income on accrual basis in assessment year 1998-99 and assessment years 2004-05 to 2011-12. HELD THAT:- While deciding quantum appeals of the Assessee, contesting the addition of interest income on accrual basis, the Tribunal in assessment years 2006-07 to 2009-10 ( 2022 (8) TMI 950 - ITAT DEHRADUN] has deleted the additions made by the AO. In fact, Commissioner (Appeals) himself has deleted identical addition while deciding Assessee s appeal for the assessment year 2009-10. As while deciding quantum appeals, the additions on account of interest income have been deleted, concluded that penalty imposed u/s. 271(1)(c) of the Act is unsustainable. Decided in favour of assessee.

  ---

• 2023 (5) TMI 631
  Deduction u/s 80P(2)(a)(i) - whether the assessee is a Credit Co-operative Society and cannot be denied of the benefit of deduction u/s 80P? - as per AR the assessee Credit Society has derived interest on the reserve fund and the same should have been allowed - HELD THAT:- As per the Gujarat Co-operative Societies Act, 1961 more particularly that of Section 71, a society may invest or deposit its funds in the State Bank of India in consonance with the provisions of reserve fund as provided in Section 67 of the said Act. The decision quoted by the Ld. AR in case of Karnataka State Co-operative Apex Bank [ 2001 (8) TMI 9 - SUPREME COURT] the fixed deposit or rather government securities coming out of reserve fund which cannot be easily encashed and which could be utilised only when the contingencies mentioned arose, was taken into account while citing question of law i.e. wherein case of assessee being cooperative society, any income recorded in sub-section 2 there shall be in accordance with and sub-section to the provisions of Section i.e. Section 80P, the same is specified in sub-section 2 in computing the total income of the assessee, therefore, whether the Tribunal was right in law in holding that the interest income arising from the investments made out of reserve fund is exempt under Section 80P(2)(a)(i) of the Act. The component of reserve fund has not been verified by the AO as well as by the CIT(A). Therefore, it will be appropriate to remand back this issue to the file of the AO to verify the same and if the same is coming under the threshold of Section 67 of the Gujarat Co-operative Societies Act, 1961 related to reserve fund and the interest derived from State bank of India and State Bank of Bikaner Jaipur, then in the light of decision of Hon ble Apex court, the Assessing Officer to adjudicate the same in accordance with law. Ground no.1 is partly allowed for statistical purpose. Claim of proportionate expenditure - HELD THAT:- It is not disputed that the assessee derived interest income and the assessee must have incurred expenditure for earning the same interest income. The proximity of earning the interest income is rightly claimed in respect of expenditure spent on earning that interest income. The decision in the case of Totagars Co-operative Sale Society Limited [ 2015 (4) TMI 829 - KARNATAKA HIGH COURT] as well as the decision of Upkar Retail Pvt. Ltd [ 2018 (6) TMI 1035 - ITAT AHMEDABAD] is also applicable and the most favoured view should be taken into account as per the decision of the Hon ble Supreme Court in the case of CIT vs. Vegetable Products Limited [ 1973 (1) TMI 1 - SUPREME COURT] Therefore, ground no.2 is allowed.

  ---

• 2023 (5) TMI 630
  Interest u/s 234 B - Advance tax - Adjustment / Credit for cash as seized at the time of search - AO stated that the existing liability does not include advance tax payable and observed that by applying the provisions of Explanation 2 to section 132B of the Act, the assessee s plea has been rightly rejected by the AO - HELD THAT:- Seized cash of Rs. 1.76 crores was not given credit by the ld AO in the assessment framed u/s 143(3) of the Act dated 31.03.2016. It is not in dispute that the assessee had indeed made a claim for adjustment of seized cashwith his self assessment tax payable by the assessee along with return of income on 31.08.2015 itself. This was conveniently ignored by the lower authorities. From the bare reading of provisions of section 132B of the Act together with Explanation 2 thereon, there is no prohibition to adjust the seized cash with self assessment tax. What is prohibited is only adjustment of seized cash with the advance tax. Hence, we hold that the assessee is entitled for adjustment of seized cash of Rs. 1.76 crores with self assessment tax payable by the assessee in the return of income. Our view is further fortified by the decision of ACIT Vs. Narendra N. Thacker [ 2015 (11) TMI 62 - ITAT KOLKATA] and in case of Spaze Towers (P) Ltd [ 2016 (11) TMI 1401 - PUNJAB AND HARYANA HIGH COURT] Ground raised by the assessee is hereby allowed.

  ---

• 2023 (5) TMI 629
  Revision u/s 263 - Correct penalty provisions for addition u/s 69A - As per CIT AO erred in initiating penalty proceedings u/s 270A instead u/s 271AAC as addition made in the assessment was on account of unexplained money u/s 69A r.w.s.115BBE which attracts penalty u/s 271AAC and not u/s 270A - HELD THAT:- The law is very well settled that penalty proceedings and the assessment proceedings are completely distinct and separate even though the penalty proceeding emanates out of the quantum assessment proceedings. We hold that the Ld. PCIT had invoked his revisionary jurisdiction u/s 263 of the Act and had sought to revise only the initiation of penalty proceedings under the wrong section, forgetting the fact that there was no such penalty order that was even passed by the ld AO. In any case, the penalty order could not be passed beyond 30.06.2020. Hence, the revisionary jurisdiction initiated u/s 263 by the Ld PCIT deserves to be quashed on this count itself. In any case, we find that the law is very well settled that penalty proceedings and assessment proceedings are distinct and separate. Moreover, in our considered opinion, the Ld PCIT by invoking his revision jurisdiction u/s 263 of the Act cannot direct the ld AO to initiate any penalty proceedings. This aspect is no longer res integra in view of the order of the Rakesh Nain [ 2015 (12) TMI 979 - PUNJAB AND HARYANA HIGH COURT] . When the power of the Ld PCIT in the revision order u/s 263 of the Act is curtailed to even direct the ld AO to initiate penalty proceedings, obviously the Ld PCIT could not have any power, as authorized by law, in directing the ld. AO to initiate penalty proceedings under the correct section. The assessee s case stand in a much better footing than the facts of the case that prevailed before the Hon ble Jurisdictional High Court referred supra. Appeal of the assessee is allowed.

  ---

• 2023 (5) TMI 628
  Unexplained cash deposit during demonetization period - As submitted that the assessee is a housewife and her husband practice as a Registered Clerk with the Hon ble Calcutta High Court and is a Cancer Patient and undergoing medical treatment since 2005 and assessee being housewife kept small savings for the purpose of medical treatment of her ailing husband and when the scheme of demonetization was announced, she deposited her past savings in the bank, which were on account of three-dhan and this should not be treated as unexplained investment. HELD THAT:- We notice that so far as the cash deposit of Rs.6,10,000/- made during the period 14.12.2016 to 16.12.2016, there is a cash withdrawn of Rs.9,00,000/- on 13.12.2016 and for the lack of specific finding by the ld. AO as to whether the deposits between 14.12.2016 to 16.12.2016 were in old currency or new currency, we give the benefit of doubt to the assessee and hold that the source of cash deposit of Rs.6,10,000/- between 14.12.2016 to 16.12.2016 was the cash withdrawal made on 13.12.2016 and thus the addition for unexplained cash deposit u/s 69 is uncalled for on the said sum of Rs.6,10,000/-. So far as the remaining amount of Rs.9,31,000/-, considering the fact that the assessee is a housewife and she had kept certain savings for the purpose of treatment of her ailing husband undergoing Cancer Patient. We accept that assessee was having stridhan to the tune of Rs.2,00,000/- as on 01.04.2016 and further allow the benefit of the minimum non-taxable limit for A.Y. 2017-18 at Rs.2,50,000/- and give further relief of Rs.4,50,000/- as explained cash and accordingly sustain the addition at Rs.4,81,000/- u/s 69 of the Act and partly allow the appeal of the assessee.

  ---

• 2023 (5) TMI 627
  Non granting credit of TDS available in the erstwhile PAN of the amalgamating company - HELD THAT:- As the order of the Hon ble Jurisdictional High Court approving the amalgamation is 21.01.2017 and subsequent to that, assessee ought to have made necessary arrangements and should have informed the customers of both the erstwhile companies to deduct the tax under new PAN but still some of the customers of the erstwhile Haldia Petrochemicals Limited have deposited TDS under the old PAN. Considering the fact that the claim of the assessee is valid and credit of the tax deducted at source has to be given to the assessee, we direct the ld. Assessing Officer to carry out the necessary verification process at the earliest and after being satisfied about TDS claim of the assessee to grant the credit within four months from the date of receiving this order and also direct the assessee not to delay the aforesaid proceedings by taking adjournment unless otherwise required for reasonable cause for filing of necessary details. Appeal of the assessee is allowed for statistical purposes.

  ---

• 2023 (5) TMI 626
  Delayed employees contribution of PF / ESI within the prescribed due date as per Section 36(1)(va) - adjustment as envisaged u/s 143(1)(a)(iv) - HELD THAT:- As relying on case of Emson Tools Mfg. Corp [ 2023 (4) TMI 626 - ITAT CHANDIGARH] CIT(A) was justified in sustaining the adjustment u/s 143(1)(a) by means of disallowance made for late deposit of employees share of PF/ESI contribution to the relevant funds beyond the date prescribed under the respective Acts. Appeal of the assessee is dismissed.

  ---

• 2023 (5) TMI 625
  Disallowance being half of depreciation and director remuneration claimed - business of the assessee suspended during the year under consideration - machinery were used for less than 180 days - whether temporary lull in the business would disentitle the assessee to claim depreciation and other expenses for full year? - HELD THAT:- As relying on M/S. CHENNAI PETROLEUM CORPORATION LTD. [ 2013 (8) TMI 525 - MADRAS HIGH COURT] and M/S ISHWAR BUILDERS PVT. LTD VERSUS THE DY. C.I.T CIRCLE 12 (2) NEW DELHI [ 2019 (12) TMI 613 - ITAT DELHI ] there is no requirement of disallowing part of director s remuneration and depreciation when the business was stopped due to temporary lull. Accordingly, we set aside the order passed by CIT(A) on the above said two issues and direct the AO to delete the disallowances. Disallowance sustained by the CIT(A) made out of various expenses - We notice that the assessee did not controvert the finding of the AO that some of the vouchers are supported by self made vouchers. Accordingly, we do not find any reason to interfere with the decision rendered by Ld CIT(A) on this issue. Appeal of the assessee is partly allowed.

  ---

• 2023 (5) TMI 624
  Liability of interest paid to the related parties u/s 40(b)(iv) - Interest paid to partner of the firm - AO by holding that since the interest has been paid @ 15% as against allowable rate of interest of 12% as per section 40(b)(iv) the amount exceeding 12% simple interest per annum is not allowable, proposed to add the excess payment of 3%, HELD THAT:- It is a fact that prior to issuance of show cause notice the Assessee could not furnish the amended partnership deed by which clause-8 of the original partnership deed itself has been substituted and word partner has also been included and provision for entitlement to the interest @ 15% per annum or such other rate as may be decided by the partners, on the amount standing to the credit of the Loan accounts of the partners has also been made. Therefore, prima facie, the genuineness of such deed of partnership is doubtful and even otherwise, the said partnership Deed is neither registered either by the Notary Public or by the Registration Authority, hence, prima facie, we also are not confident to consider the same as genuine and therefore, are not relying upon the same. Coming to the original partnership deed no doubt as per clause-7 of the same, no interest on capital is allowable to the partners. However, clause 8 clearly specifies that if further funds are required over and above the capital contributed by the partners, the same can be arranged/borrowed from the individuals, banks, finance companies or other persons. Clause-8 further specifies that any interest on such funds borrowed for the purpose of the partnership business shall be treated as expenditure of the partnership firm, meaning thereby there is no restricted clause with regard to the quantum of interest payable on such funds over and above the capital borrowed for the purpose of partnership business and the same shall be treated as expenditure of the partnership firm. The connotation individuals/other persons used in clause 8 of the original partnership deed in any sense cannot exclude the partners because the partners are also individual (s) and/or other person(s) and therefore, the interpretation to the persons mentioned in clause-8 cannot oust the partners, who are collectively working for the partnership firm, but having individual status/personality, thus we are in agreement with the Ld. AR that there was no ambiguity in clause 8 of the original partnership deed, therefore did not require Amend the same. Hence, considering clause-8 of the original partnership deed, we are inclined to allow the claim of the Assessee and consequently, the addition made by the Assessing Officer on account of disallowance of interest expenditure is deleted. Provisions of section 40(b)(iv) prescribes that any payment of interest to any partner which is authorised by, and is in accordance with, the terms of the partnership deed and relates to any period falling after the date of such partnership deed, in so far as such amount exceeds the amount calculated at the rate of twelve per cent simple interest per annum, shall not be deducted in computing the income chargeable under the head profits and gains of business or profession As already held that as per clause-8 of the original partnership deed, the interest is allowable and it is not the case here that the partnership deed ceased to exist. Appeal filed by the Assessee stands allowed.

  ---

• 2023 (5) TMI 623
  Disallowance u/s 40A(3) - payments being made in cash and higher than Rs.20,000/- - suppliers did not maintain books of account - AO proposed 10% of totally payment as disallowed on account of unverified payment - HELD THAT:- We find ourselves in agreement with the submission of assessee that disallowance u/s 40A(3) has not been found from the books of accounts of the assessee. Rather the plea is that the suppliers have not maintained proper books of accounts. Hence, it could not be co-related. We note that the disallowance u/s 40A(3) in this case has not been made on the basis of anything found from the assessee s books. Rather this case has been made out that the suppliers did not maintain books of account and same could not be traced. We also rely upon the ITAT order in assessee s own case for AY 2007-08 referred above. Suppliers are small type of butchers living in various locations and are illiterate as noted by the Tribunal. Instead of money receipts, assessee was using slip system, which in such areas is not uncommon. The recipients of such type of slips do not preserve such slips and this is not uncommon phenomenon. In our considered opinion, the disallowance made u/s 40A(3) is not reasonable and hence, we set-aside the orders of the authorities below and deleted the addition. Appeal of the assessee stands allowed.

  ---

• 2023 (5) TMI 622
  Rectification of mistake - provision of bad debts and settled against provision for doubtful debts - AO did not grant deduction of the bad debts so written off on the ground the assessee was not able to prove that the debt bad become bad during the year - assessee submitted that based on the Supreme Court decision of TRF Limited [ 2010 (2) TMI 211 - SUPREME COURT] the assessee was entitled to deduction of the same without having to prove that the debt has become bad - contention of the Ld. AR that the Tribunal has not considered the decision of Hon ble Apex Court in the case of TRF Limited. HELD THAT:- It appears that there is a mistake apparent on record. Therefore, we recall the order [ 2022 (10) TMI 274 - ITAT AHMEDABAD] passed by the Tribunal to the extent of Ground No.3 only. The Registry is directed to place the appeal for hearing on 17.04.2023 to the extent of Ground No.3. Issue notice to both the parties accordingly. Hence, the present Miscellaneous Application is allowed.

  ---

• 2023 (5) TMI 621
  Cost of acquisition / Actual cost - Depreciation on assets taken over from Bank of Thanjavur Ltd., in pursuant to amalgamation of Bank with assessee s bank approved by Reserve Bank of India - Value to be taken as value fixed in pursuant to arrangement between the assessee s bank and amalgamated bank or WDV of amalgamating company - CIT(A) decided the issue in favor of Assessee - ITAT has decided the issue in favor revenue. - HC[ 2022 (8) TMI 1377 - MADRAS HIGH COURT] has remanded back the case to ITAT for reconsideration - HELD THAT:- Assessee, during the course of hearing fairly agreed that the Bank of Thanjavur Ltd., cease to exist consequent upon amalgamation and thus, the findings recorded by the Tribunal in light of provisions of Explanation-7 to Sec.43(1) of the Act, is in accordance with law and the Bank does not want to continue the litigation. There is no error in the findings given by the Tribunal in upholding the action of the AO in allowing depreciation on assets taken over in pursuant to amalgamation of Bank of Thanjavur Ltd., with assessee s bank and thus, we are of the considered view that the decision rendered by the Tribunal in their order does not call for any interference and thus, we reverse the findings of the Ld.CIT(A) and restore the order of the AO on the issue of depreciation on assets taken over from the Bank of Thanjavur Ltd. in pursuant to amalgamation. Decided in favour of Revenue.

  ---

• Customs

• 2023 (5) TMI 620
  Validity of withdrawal of a customs notification - Notification No 86 of 2003 amended by fresh notification dated November 11, 2003 Notification No 164 of 2003 - ultra vires Section 25(1) of the Customs Act 1962 or not - payment of customs duty at 39.2% on the value of the Imported Machine - the amended notification was set aside on the ground that no intelligible differentia existed for granting concession on one type of machinery and withdrawing concession to other types of machinery - HELD THAT:- The court, however, did not strike down the withdrawal notification, but recorded that the government failed to consider the impact of the withdrawal, on newspaper publishers, and how that would affect the exercise of freedom of speech. Therefore, the court required the executive to review the matter, after considering all relevant factors. In Dai-Ichi Karkaria [ 2000 (4) TMI 42 - SUPREME COURT ], a customs notification which reduced exemption from 75% to 25% for a particular period (30-12-1986 to 10-9-1987) was held unjustified because the executive had not taken into account all the relevant factors while issuing the impugned notifications reducing the exemption to 25% for the aforesaid period and failed to discharge its statutory obligation while issuing the impugned notifications. Justifications offered, to say the least, is far too naive to be accepted. In Bannari Amman Sugars Ltd. [ 2004 (11) TMI 320 - SUPREME COURT ], the court held that there is no vested right as to tax-holding is acquired by a person who is granted concession. If any concession has been given it can be withdrawn at any time and no time-limit should be insisted upon before it was withdrawn. This court also held that promissory estoppel can be invoked only if on the basis of representation made by the Government, the industry was established to avail benefit of exemption. The decision in Mahabir Vegetable Oils (P) Ltd. v. State of Haryana [ 2006 (3) TMI 234 - SUPREME COURT ] is along the same lines as MRF Ltd. [ 2006 (9) TMI 278 - SUPREME COURT] , which is that benefits once granted, cannot be divested by a retrospective statute or notification. These decisions, in this court s opinion stand on a different footing, because they primarily concern exercise of statutory power, i.e. withdrawal, in a manner that has an extremely prejudicial or unreasonable impact, which is retrospective in effect. This court is of the opinion, that the High Court, by the impugned judgment, erred in judging the merits of the reasons which led the executive government to issue the Amended Notification. No mala fides or oblique considerations were pleaded or urged; the exercise of power was in line with the provisions of the Act. The indigenous angle, i.e. availability of equipment, cannot be characterized as an irrelevant factor or consideration, since grant of exemption to a class of goods, which are similar to those manufactured within the country, and its likely adverse impact on such manufacturers or producers, is germane and relevant. Appeal allowed.

  ---

• 2023 (5) TMI 619
  Disposal of the seized goods - Non-issuance of SCN - Conclusion of proceedings under Section 110(1D) of the Customs Act, without issuance of SCN - violation of principles of natural justice or not - HELD THAT:- With the introduction of Sub-section (1D) in Section 110 of the Customs Act, Commissioner (Appeals) was specified as the concerned authority in respect of seized gold in any form. The proper officer is now required to make an application to the Commissioner (Appeals) having jurisdiction instead of the Magistrate under Sub-section (1B) in respect of gold in any form, which is seized under Section 110(1) of the Customs Act. In ISHWAR PARASRAM PUNJABI VERSUS UNION OF INDIA [ 1989 (10) TMI 62 - HIGH COURT OF DELHI ], this Court had, inter alia, considered the question whether notice of proceeding under Section 110(1B) of the Customs Act was required to be issued to the owner or the persons from whom the goods were seized. In that case, the Court had rejected the Revenue s contention that no notice of proceedings under sub-section (1B) was required to be issued as neither Sub-section (1B) nor Sub-section (1C) of Section 110 of the Customs Act mandated issuance of any such notice to be served to the owner or the person from whom the goods are seized. In PRADEEP KHANDELWAL VERSUS COMMISSIONER OF CUSTOMS (APPEALS) ANR. [ 2022 (4) TMI 1529 - DELHI HIGH COURT] , this Court held that In an exercise of this nature, the law would oblige adherence to principals of natural justice [i.e. notice and participation in the exercise] especially given the fact that there is no express exclusion in the Act. There are no merit in the contention that no notice is required to be served of the proceedings under Section 110(1D) of the Customs Act. As noted above, Sub-section (1D) of Section 110 of the Customs Act was introduced to substitute the authority before whom an application for certifying the correctness of the inventory; taking photographs of the seized goods; and drawing representative samples is required to be made. In respect of seized gold, the proper officer is required to make an application before the Commissioner (Appeals) having jurisdiction instead of the Magistrate as required under Sub-section (1B) to Section 110 of the Customs Act. Although the authority before whom an application is to be made was substituted, there was no amendment in the procedure to be followed. Thus, the decision in the case of Ishwar Parasram Punjabi v. Union of India applies equally to proceedings under Section 110(1D) of the Customs Act. Although the petitioner is entitled to insist that the proceedings under Section 110(1D) of the Customs Act be conducted de novo as directed by the Court in the case of Pradeep Khandelwal v. Commissioner of Customs (Appeals) Anr. no such orders are warranted in this case as the goods in question have already been sold. Petition disposed off.

  ---

• 2023 (5) TMI 618
  Classification of imported goods - imported goods used as components in manufacture of motor vehicle - to be classified under the heading of 8708 as parts of the motor vehicle or not - HELD THAT:- The matter involving identical dispute in respect of same appellant had been decided by the Tribunal in SUZUKI MOROTS GUJARAT PRIVATE LIMITED VERSUS C.C. -AHMEDABAD [ 2022 (6) TMI 1089 - CESTAT AHMEDABAD ] where it was held that lower authorities have not examined the legal aspects properly to come to conclusion for correct classification of the goods in question. Hence in our considered view the matter needs to be remitted back to the Commissioner (Appeals). Learned AR is relied on the two decision of Hon ble Apex Court in OK. PLAY (INDIA) LTD. VERSUS COMMISSIONER OF C. EX., DELHI-III, GURGAON [ 2005 (2) TMI 114 - SUPREME COURT ] and M/S CAST METAL INDUSTRIES (P) LTD. VERSUS COMMR. OF CENTRAL EXCISE-IV, KOLKATA [ 2015 (11) TMI 833 - SUPREME COURT ]. The crux of both the decisions of Hon ble Apex Court is that the functional utility, design shape and predominant use have to be taken into account while classifications of goods. The test of predominant use is incorporated in the set of test to be exercise before classification. In view of above, there are no conflict in the decision of Hon ble Apex Court cited by the Learned AR and the decision of the Tribunal in the appellant s own case. The matter remanded to the Commissioner (Appeals) to decide in identical manner as the earlier remand order - appeal allowed by way of remand.

  ---

• 2023 (5) TMI 617
  Absolute Confiscation - Gold - enhancement of penalty - appeal filed by the appellant rejected stating that appellant did not pay the mandatory pre-deposit - Section 128A(3)(a) of the Customs Act, 1962 - HELD THAT:- The original authority has set aside customs duty demanded and therefore, there was no customs duty demand in the original order if the goods were not redeemed. The goods were not redeemed. Accordingly, there was no need for any pre-deposit by the appellant for filing appeal before the Commissioner (Appeals). Therefore, to that extent finding of learned Commissioner (Appeals) in the impugned order is erroneous. The original authority did not impose any penalty whereas learned Commissioner (Appeals) has enhanced penalty to Rs.8,40,467/- and such enhancement of penalty was done without following the procedure laid down in first proviso of sub-section (3) of Section 128 of the Customs Act, 1962 which requires learned Commissioner (Appeals) to put the appellant before him on notice and give him a reasonable opportunity of showing cause against proposed order of enhancing penalty. The impugned order is not sustainable - the matter is remanded to Commissioner (Appeals) for deciding afresh both the appeals filed by the appellant and Revenue by following the proper procedure - appeal is allowed by way of remand.

  ---

• 2023 (5) TMI 616
  Valuation of imported goods - Chips of Sodium Isethionate /Chips of Sodium Isethionate HEBE - appellant related to the overseas suppliers in terms of Rule 2(2) of the Customs Valuation (Determination of Price of Import Goods) Rules 1988 or not - price of goods affected by such relation or not - mis-declaration of imported items found to be soap noodles - rejection of declared value - enhancement of unit price - redetermination of value - HELD THAT:- First of all SLI 80 is neither used nor is usable in manufacture of Dove Bathing Bar/ Soap. It is all together a different product than Chips of Sodium Isethionate (CSI) which was imported by Appellant. The Appellant has produced the list of ingredients used for manufacture of CSI/ Dove Noodles which are Sodium Isethionate, Zinc oxide, Dove Cocount Fatty Acid, Vegetable Stearic acid, Vegetable Soap base, CAPS Triglyceride Route, Sodium Chloride, Coated Titanium Dioxide, EHDP 60% Solution, Tetra Sodium EDTA Low Formadehyde and in support of same the appellant had produced the specimen copies of Bills of material of Unilever Manneheim, Bill of material pertaining to PT - thus it is very clear that SLI 80 is not usable for manufacture of CSI. Further from the Flow Chart submitted by M/s Galaxy it also appeared that M/s Galaxy were manufacturing SLI 80 as a final product and not intermediary product for manufacture of some other product in continuous process. SLI 80 is altogether different product having different use. Hence being not at all comparable/similar or identical goods there is no ground to make the export value of SLI- 80 as basis to reject the declared value of CSI. The appellant since very long was declaring the goods on the basis of transfer pricing and such method is accepted valuation method under all financial and taxation laws in case where the goods are bought from related person, only in a particular case where there is any doubt that such transfer pricing can be rejected. The procedure adopted for arriving at assessable value is nowhere to be found in Customs Valuation Rules. The Appellant has been consistently since last 15 years declaring the value of imported material bases upon cost of raw material, manufacturing cost and margin of profit/ mark up. These prices were revised every quarter depending on the change in cost of raw materials or cost of manufacture/mark up and the value was always found to be correct. The description in Bills of Entry was based upon the export invoices, Bill of Lading, Country of origin certificate, transfer pricing certificates and none of them was found to be doubtful. No new evidence was unearthed by the revenue which can doubt or dispel the genuineness of above documents. No comparable goods, quantity, same country for contemporaneous imports were brought on record. Even as per explanation to Rule 9 of the Customs Valuation Rules itself discards the price of the goods exported to a country other than India hence any arbitrary value adopted by the revenue in this case is absolutely illegal. In such case transaction value mentioned in Bill of Entry cannot be discarded as held by the Hon ble Apex Court in case of CENTURY METAL RECYCLING PVT. LTD. AND ANOTHER VERSUS UNION OF INDIA AND OTHERS [ 2019 (5) TMI 1152 - SUPREME COURT] , COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, NOIDA VERSUS M/S. SANJIVANI NON-FERROUS TRADING PVT. LTD. [ 2018 (12) TMI 738 - SUPREME COURT ] and COMMISSIONER OF CUSTOMS, CALCUTTA VERSUS SOUTH INDIA TELEVISION (P) LTD. [ 2007 (7) TMI 9 - SUPREME COURT ] - the method of valuation to enhance the value of the product in question i.e Chips of Sodium Isethionate (CSI) is wholly erroneous and has no basis and hence is not sustainable. The Appellant has rightly declared the goods and undervaluation is not sustainable, the duty demand is not sustainable - Appeal allowed.

  ---

• 2023 (5) TMI 615
  Classification of imported goods - operation Theatre Lights - to be classified under Chapter Heading 9405 or under Chapter Heading 9018.00? - HELD THAT:- In respect of the same product the Tribunal in the case of CCE, DELHI VERSUS M/S COGNATE INDIA [ 2016 (9) TMI 888 - CESTAT NEW DELHI ] has held that we are in agreement with the lower authority that these lamps are specially designed and made to be used only in operation theatres. We also found that the reliance placed by the Commissioner (Appeals) on the observation of Hon ble Supreme Court in the case of M/s Metagraph (P) Ltd. vs. CCE [1996 (11) TMI 68 - SUPREME COURT OF INDIA] is appropriate. Therefore, they are appropriately classified under CETH 9018.00. The issue has been decided by the Coordinate bench - Respectively following the decision of coordinate bench, appeal filed by Revenue is dismissed.

  ---

• 2023 (5) TMI 614
  Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - Shipping Bills were exported with a malafide intention - goods highly undervalued as no genuine exporter can continue exporting goods without getting money from foreign buyers - allegation of the Department is that the Appellant has transferred all the works related to clearance of under-invoiced Raw Human Hair to Mr. Arup Ghosh who misused the license to clear the consignments of Raw Human Hair through Air Cargo Complex, Kolkata. HELD THAT:- The Customs Brokers play an important role in the Customs administration and have to fulfill their responsibilities and obligations under the law. The law in question in this case is Regulation 10(n) of CBLR, 2018. The allegation against the appellant is based on a report received from the CGST authorities of Telengana. Their report indicate that the exporter S S Impex , Hyderabad were not available at the address declared in the IE Code and GSTIN - physical verification of the business premises is not an obligation cast upon the CB, under Rule 10(n) of CBLR, 2018. The Tribunal has examined the scope of these obligations in the case of M/S Anax Air Services Pvt Limited vs Commissioner of Customs, (Airport and General), New Delhi [ 2022 (1) TMI 115 - CESTAT NEW DELHI] where it was held that the Registrations are issued by the officers based on online applications. They are not mandated to ensure that the exporter(s) exist and are functioning from these premises but the Customs Broker is so mandated by Regulation 10(n) of the CBLR, 2018 which obligation does not get obliterated or diluted by the fact that officers of various departments have issued these documents - the Tribunal in the above said Order further examined the reliability of these documents issued by various Government agencies and analyzed the scope of the Custom Broker in relying on these documents to fulfill their obligations under CBLR 2018. The ratio of the above said order of the Tribunal is squarely applicable in this case. In the present case also, the appellant has collected the documents such as IEC, GSTIN etc. submitted by the exporter S S Impex, Hyderabad before processing their shipping bills. Later if they were not found to be existing in the said addresses, the appellant cannot be held responsible for their non existence at the address specified, as held by the Tribunal, New Delhi in the case of Anax Air Services - the allegation against the appellant in the impugned order that they have violated Regulation 10 (n) is not sustainable. The Ld. Principal Commissioner was not correct in holding that the appellant Customs Broker has violated Regulations 1(4) ,10(d),10(m),10(n and13(12) of CBLR , 2018 - Appeal allowed.

  ---

• 2023 (5) TMI 613
  Levy of Anti-Dumping Duty - certain flat rolled products of aluminium - seeking to grant exclusion to clad with compatible non-clad aluminium foil from the scope of the product on which anti-dumping duty has been imposed - Inclusion of clad with compatible non-clad aluminium foil in the product scope holding that the domestic industry can manufacture cladded coil - applicability of customs notification dated 06.12.2021 - period of April 2019 to March 2020 - HELD THAT:- The radiator is a safety critical item which ensures engine cooling of a vehicle. During movement of the vehicle at high speeds, the radiator should not fall apart. Therefore, the brazing operation should ensure that the fin perfectly join with the tubes, header plate and end plate - Since the customs notification 16.05.2017 already excluded several articles including clad with compatible non-clad aluminium foil, the appellant had requested the designated authority to provide detailed descriptions of the said exclusions mentioned in the said customs notification rather than merely referring the customs notification number for excluding the products. It needs to be noted that the Manual of Standard Operating Practices for Trade Remedy Investigations issued by the Directorate General of Trade Remedies, Department of Commerce, Government of India provides in Article 3.10 that mere competence without any production or merchant sales may not be sufficient, to include an item in the definition of the product under consideration - thus, an item which has not been sold by the domestic industry in commercial quantities should not be included in the scope of the product under consideration by the domestic industry. What, however, transpires is that the domestic industry could not demonstrate that it had made any commercial supplies of clad with compatible non-clad aluminium foil during the period of investigation and that clad with compatible non-clad aluminium foil cannot be considered as flat rolled products of aluminium since the cladded coil is made of several surface layers of flat rolled products of aluminium that are metallurgically bonded to high strength aluminium alloy core. It is not possible to hold that clad with compatible non-clad aluminium foil should not be excluded from the scope of product under consideration as has been contended by learned counsel for some of the respondents for the reason that the imported article is a like article under investigation or that Hindalco has the capability and has produced and sold clad with compatible non-clad aluminium foil - clad with compatible non-clad aluminium foil has to be excluded from the product under consideration and, accordingly, the customs notification dated 06.12.2021 is modified to exclude clad with compatible non-clad aluminium foil from the scope of product under consideration. Appeal disposed off.

  ---

• Insolvency & Bankruptcy

• 2023 (5) TMI 612
  Initiation of CIRP - Period of limitation - NCLT rejected the application - Corporate Guarantor who had guaranteed the obligation of the Borrower - The Adjudicating Authority observed that on the one hand the facility agent and the trustee participated in the proceedings before BIFR and at the same time they were pursuing the foreign suit - seeking exclusion of period during the pendency of the reference till 01.12.2016 when the SICA was repealed - HELD THAT:- There is no dispute raised regarding the liability of the Corporate Debtor towards the Financial Creditors and the guarantee by the Respondent. The account of the Borrower was declared as NPA in 2011 but the proceedings were initiated by the Financial Creditors against the Guarantor after issuance of loan acceleration notice dated 03.02.2012 issue to Borrower recalling the entire outstanding loan amount with interest and by invocation of the corporate guarantee given by the Respondent, vide invocation notice dated 21.02.2012, calling upon the Respondent to pay the entire outstanding amount due. However, no payment was made by the Respondent and hence the date of default cannot be taken to be a date of NPA of the Borrower but the date of default has to be taken when the guarantee invocation notice dated 21.02.2012 was given. While the foreign suit was pending the Respondent filed a reference with the BIFR on 06.11.2012 which was registered on 07.12.2012 and the Respondent was restrained from disposing of or alienating in any manner any fixed assets without the consent of the BIFR. Neither the foreign suit was contested by the Respondent mentioning the pendency of the reference nor mentioned about the foreign suit in the reference. The foreign suit was decreed on 08.04.2014. The Facility Agent also filed an application for intervention before the BIFR for their impleadment but the said application was not decided. It has also been held in the case of Hyderabad Abrasives Minerals [ 2002 (12) TMI 497 - HIGH COURT OF ANDHRA PRADESH ] that the benefit of exclusion of period for computing the limitation period, spent while the Company was before BIFR shall be applicable even to those creditors who did not approach BIFR. However, in the present case, the Appellant made an effort to become a party by filing a Miscellaneous Application before the BIFR but the said application was not decided though the Respondent filed the reply also to the said application - In the present case, on referring to the dates then date of invocation of guarantee is 21.02.2012. Form A Case No. 74 of 2012 (reference) is 06.11.2012, the reference was registered on 07.12.2012 and the SICA was repealed w.e.f. 01.12.2016 vide notification dated 25.11.2016, therefore, the limitation would start running from 01.12.2016 and shall go up to 01.12.2019. The application under Section 7 has admittedly been filed on 30.08.2019 which is prior to the expiry of period of limitation. It has been held in the case of Gouri Prasad Goenka Vs. Punjab National Bank [ 2020 (5) TMI 65 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] and a Judgment of Delhi of Delhi High Court rendered in the case of IFCI FACTORS LIMITED VERSUS RAMSARUP INDUSTRIES LIMITED ORS. [ 2019 (8) TMI 1866 - DELHI HIGH COURT] that the period shall start running from the date of repeal of SICA. The order under challenge is patently illegal - Appeal allowed.

  ---

• 2023 (5) TMI 611
  Revival of dismissed application - Seeking direction to revoke decision of approving the resolution plan submitted by Respondent No. 6 - to accept the resolution plan submitted by the Appellant - HELD THAT:- The Judgment relied upon by the Appellant in the case of M/S. VEDANTA LIMITED VERSUS CA VIKASH GAUTAMCHAND JAIN ANR [ 2022 (8) TMI 1375 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI] is not applicable because the facts of the said case are altogether different from the facts of the present case as in the case of M/s Vedanta Limited an appeal was filed by the Unsuccessful Resolution Applicant who had filed an application to set aside the communication issued by the RP rejecting his prayer to allow it to submit a revised resolution plan and since the Appellant in the said case could not appear, therefore, order was passed rejecting the application. However, subsequently, the Appellant in the said application filed another application for revival of the application I.A No. 406 of 2022 but the said application was also dismissed - In this background, order was passed by this Tribunal that since the application for approval of the resolution plan is under consideration before the Adjudicating Authority, therefore, the appeal filed by the Appellant in the said case was not required to be entertained and the end of justice be served giving liberty to the Appellant to raise his objections regarding the approval of the resolution plan which may be heard by the Adjudicating Authority while considering the application for approval of the resolution plan. However, in the present case, the Appellant has raised all the issues available to it for the purpose of revoking the decision of the CoC to approve the resolution plan submitted by the Respondent No. 6 and has also made a prayer that resolution plan submitted by the Appellant be accepted. The said application has been thoroughly discussed both on the issue of facts and law and ultimately the same has been dismissed by a detailed order. There are no merit in the present appeal - appeal dismissed.

  ---

• FEMA

• 2023 (5) TMI 610
  FCRA registration - Delay of opening of an FCRA bank account with the State Bank of India - Petitioner faced difficulties in uploading the FCRA annual return under Form FC-4 under Rule 17 of the Foreign Contribution (Regulation) Rules, 2011 for F.Y 2019-2020, due to the fact that the bank account details were being sought as of 31st March, 2020 - HELD THAT:- Admittedly, in the present case, the FCRA account in the SBI was opened by the Petitioner only on 4th October, 2021, which was much beyond the deadline fixed initially i.e. 31st March 2021, and even after the expiry of the extended period till 30th June 2021 vide notification dated 18th May 2021. Petitioner has now opened the said FCRA bank account in SBI Sansad Marg Branch, Parliament Street-New Delhi, and has deposited the penalty and also uploaded the annual return for the F.Y 2019-2020, the relief sought for in this petition has become infructuous. Moreover, none of the cases which have been decided by this Court including WNS Cares Foundation v. Union of India [ 2023 (1) TMI 944 - DELHI HIGH COURT] and Shree Swaminaryan Mandir v. Union of India [ 2023 (4) TMI 974 - DELHI HIGH COURT] would be applicable in the facts of the present case. In the facts of the present case, there was a delay in the opening of the said FCRA bank account and the delay has not been convincingly explained by the Petitioner. Further, the penalty amount has been deposited with Respondent No. 1-MHA, therefore the prayer for refund is not tenable and is accordingly rejected. FCRA FC-4 annual return for the F.Y 2019-2020 which has been uploaded, shall be taken as valid without any payment of further penalties by the Petitioner.

  ---

• Service Tax

• 2023 (5) TMI 609
  Naturally bundled service - Education service - hostel fees received by the appellant from the students during the period 01.04.2013 to 10.07.2014 - education services - services are naturally bundled in the ordinary course of business or not - exempted under Serial No. 9 of the Notification dated 20.06.2012 or not - HELD THAT:- A perusal of the provisions of section 66F of the Finance Act would indicate that if there are various elements of service which are naturally bundled in the ordinary course of business, the taxability of such bundled services shall be based on the service which gives the essential character to such bundle. Explanation to section 66F of the Finance Act defines what a bundled service would be. It provides that for a service to be a bundled service , an element of provision of one service needs to be combined with an element of provision of any other service or services. In other words, there should be a nexus between the two services. The appellant has a boarding school and it receives hostel fees from students in addition to the tuition fee and other charges. However, students who are day scholars and who do not opt to pay the hostel facility are not required to pay the hostel fees. The hostel facility cannot be provided without the provision of education services by a boarding school as it is not the case of the department and it cannot be that students who are not receiving education services can also avail hostel services - There is, therefore, a nexus between the two services. It cannot, therefore, be doubted that the hostel services and education services provided by a boarding school are naturally bundled in the ordinary course of business, and the education service is the service which gives the essential character to such bundle. Section 66D of the Finance Act provides for the negative list of services and it includes service by way of pre-school education and education up to higher secondary school or equivalent. Thus, education service would be covered within the purview of negative list contained in section 66D of the Finance Act. It would, therefore, not be taxable. The hostel service and education services are naturally bundled in the ordinary course of business and it is the education service that gives the essential character to such bundle. Education services by way of pre-school education and education up to higher secondary school or equivalent are enumerated in the negative list of services enumerated in section 66D of the Finance Act. Thus, it cannot be subjected to levy of service tax - it may not be necessary to examine the remaining contentions advanced by the learned counsel for the appellant regarding the exemption granted under serial no. 18 of the notification dated 20.06.2012. The impugned order dated 17.01.2017 passed by the Commissioner cannot be sustained and is set aside - Appeal allowed.

  ---

• 2023 (5) TMI 608
  Refund of Excess Tax deposited - rejection on the ground that the amount claimed as refund is not substantiated - rejection also on the ground of unjust enrichment - HELD THAT:- It is clear that the amount received during the refund period was against agreement number 172 which is mentioned on the backside of the work order number 100. It is also noted that the nature of work indicated in the Work order tallies with VAT-41. It is also clear that the appellants have not provided any other services during the refund period as is evident from the Form 16A/26AS which reflects only three entries for the quarter ending 31.12.2012 - As far as the authenticity of these ST-3 returns filed for the period 01.10.2012 to 31.03.2013 is concerned, the appellant has submitted that they had filed the returns electronically through ACES on 20.10.2013, which was rejected. A copy of the ST3 returns downloaded from the system was submitted along with the refund claim. It is seen that the figures of gross receipt, tax payable and tax deposited as shown in the ST3 returns tallies with the refund application, along with all other details. It is also noted that the difference in the registration number of the appellant has been explained satisfactorily by the learned counsel. Unjust Enrichment - HELD THAT:- Rajasthan Housing Board has also deducted the service tax payable by them by reverse charge mechanism in the bills raised by the appellant. Therefore, it is the appellant who has borne the incidence of tax and refund cannot be denied to any person who has borne the incidence of tax. Therefore, there is no unjust enrichment in this case. Impugned order is set aside - refund allowed - appeal allowed.

  ---

• 2023 (5) TMI 607
  Levy of Service Tax - training fee and other service charges received by the appellant in respect of BAS rendered by it for promoting the business of units, who were receiving the services - applicability of N/N. 13/2003-ST, dated 20.6.2003 - HELD THAT:- Principles of natural justice requires that a show cause notice must analyze the transactional documents in the light of the relevant statutory provisions and frame allegations against an assessee. Until and unless the show cause notice explains as to how the activity of an assessee falls within the scope of the relevant service tax provisions, allegations in the notice become futile. Mere bald allegations in a notice are not enough to sustain the demand against the appellant. The impugned order has confirmed the demand of service tax on the income of Rs.64,21,843/- by observing that the contention of the appellant that it is covered under other litigation is factually incorrect. However, the impugned order has no finding as to how these charges are actually covered under the scope of BAS. A perusal of the nature of activities to which the said income pertains shows that they are service charges for the year 2004-05, received on account of Head Office, Bhopal; Emporium, Bhopal; Emporium, Jabalpur, Emporium, Rewa;Civil Department, Bhopal; Indore, Jabalpur and Gwalior. Further, bifurcation of the said income is between service charges received from Emporium division and service charges received by the civil department. Reliance placed on the decision of the Supreme Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] , where in it was held that composite contracts involving supply of goods coupled with provision of labour/services are covered under the scope of works contract services as defined in section 65(105)(zzzza) of the Finance Act, 1994 only with effect from 01.06 2007. Thus, where the period of dispute is prior to the introduction of the statutory provision of works contract service, the impugned order cannot be upheld - appeal allowed.

  ---

• 2023 (5) TMI 606
  Exemption from service tax - Job work - printing of PVC film/ sheets - Manufacturing activity vs Processing of goods -Business Auxiliary Service or printing activity - printing of PVC film/ sheets amounts to manufacture under Section 2 (f) of Central Excise Act, 1944 - applicability of N/N. 14/2004-ST - Extended period of limitation - HELD THAT:- The N/N. 14/2004-ST exempts production of goods on behalf of client and any service incidental or ancillary to production of goods. In the instant case, it is not in dispute that the appellants are printing on PVC material supplied by their clients. Printing may or may not amount to manufacture, but it cannot be denied the activity of printing is an activity of production. In these circumstances benefit of Notification No. 14/2004-ST, as amended cannot be denied to the appellant. It is notice that the impugned order holds that the activity of printing does not amount to manufacture and therefore, the appellants are not entitled to benefit of Notification No. 14/2004-ST. It is to be seen that the activity of production of goods is different from the activity of manufacture. The notification not only covers the activity of production of goods but also any activity incidental or ancillary to production of goods. In this circumstances the activity of printing on PVC done by the appellant can be considered to be activity of production of goods. The appeal is allowed.

  ---

• 2023 (5) TMI 605
  Levy of Service Tax - Business Auxiliary Service - liability for the period prior to 01.07.2003 - time limitation - levy of interest and penalty. Whether the appellant is liable to pay service tax under Section 65 (19) of the Finance Act, 1994 as Business Auxiliary Service during the impugned period or not? - HELD THAT:- The appellant has affected the sales on behalf of third party and received commission which is covered as commission agent in terms of the Notification No.13/2003-ST dated 20.06.2003 - following the decision of Brindco Sales Ltd. [ 2015 (9) TMI 1280 - CESTAT NEW DELHI ], it is held that the appellant was not liable to pay service tax under the category of Business Auxiliary Service as commission agent during the period 01.07.2003 to 08.07.2004 - issue is answered in favour of the appellant. Whether for the period prior to 01.07.2003, the appellant was liable to pay service tax under Business Auxiliary Service or not? - HELD THAT:- It is fact on record that prior to 01.07.2003, Business Auxiliary Service was not in the statutory book, therefore, the question of demanding service tax for the period prior to 01.07.2003, does not arise - for the period prior to 01.07.2003, the appellant was not liable to pay service tax. Therefore, the said issue is answered in favour of the appellant. Whether the demands raised against the appellant are barred by limitation or not? - HELD THAT:- It is fact on record that the audit took place on 2nd February, 2005 and 6th October, 2005 for the period 2003- 04 and 2004-05 respectively (impugned period) and a show-cause notice has been issued to the appellant on 26.09.2008 as it is not a case of suppression of facts by the appellant and all the facts are in the knowledge of the Department, therefore, we hold that all the demands are barred by limitation as the show-cause notice has been issued by invoking extended period of limitation - the said issue is also answered in favour of the appellant. Whether in the facts and circumstances of the case, the appellant is liable to pay interest on the impugned demand and is to be penalized or not? - HELD THAT:- As the demand is not sustainable against the appellant, therefore, the appellant is not required to pay any interest and no penalties were imposable on the appellant - no service tax is payable by the appellant for the impugned period against the impugned show-cause notice. Therefore, no interest and penalty is leviable on the appellant. Appeal allowed.

  ---

• 2023 (5) TMI 604
  Non-payment of Service Tax - Rent-a-cab services - Failure on the part of appellant to provide necessary documents - period from 2002-03 to 2004-05 - SCN dated 22.10.2007 was issued for demanding service tax for the period from 2002-03 to 2004-05 - HELD THAT:- In this case, no investigation was conducted at the end of the appellant. Only on the basis of information furnished by the Public Vehicles Department, Kolkata and information collected from yellow pages, web sites etc. and scrutiny of income tax records of the appellants, the demands have been raised, which is not sustainable in law as held by this Tribunal in the case of M/S LUIT DEVELOPERS PRIVATE LIMITED VERSUS COMMISSIONER OF CGST CENTRAL EXCISE, DIBRUGARH [ 2022 (3) TMI 50 - CESTAT KOLKATA] . Therefore, the demand against the appellant is not sustainable. Moreover, the appellant has produced the salary bills of the drivers and a Certificate from the Chartered Accountant to this effect certifying that the appellant is engaged in plying metered taxies not rent a cab and the appellant was operating the same through drivers himself. In that circumstances also, the demands are not sustainable. There are no merit in the impugned order and the same is set aside - appeal allowed.

  ---

• Central Excise

• 2023 (5) TMI 603
  Reversal of CENVAT Credit - common input, i.e., furnace oil used in the manufacture of exempted goods - it was held that there are no error of law in the impugned order. That apart, the impugned order of the Tribunal is based on findings of fact. HELD THAT:- There are no good ground to interfere with the impugned judgment and order passed by the High Court. Accordingly, the Special Leave Petitions are dismissed.

  ---

• 2023 (5) TMI 602
  Levy of penalty personal penalty on Broker u/r 26 of CER - Abetment in availment of inadmissible CENVAT Credit - credit availed without any manufacturing activity and without removing any finished excisable goods - suppression of facts and wilful misstatement - HELD THAT:- The rule has two parts; first part is not relevant for our purpose as the show cause notice has been issued to the appellants herein for abetting in making the invoices on the basis of which the assessee has taken ineligible Cenvat credit. So far as the argument of learned counsel, that no such allegation of abetment has been made in the show cause notice, is concerned, we find same to be not correct as a specific allegation of abetment has been made against the appellants in the show cause - It needs to be seen whether their actions made them liable for penalty under Rule 26(2) ibid. The said clause clearly mentions that any person who issues or abets in making an excise duty invoice without delivery of goods specified therein or issues any other document or abets in making such document on the basis of which the user of said invoice or document is likely to take or has taken any ineligible benefit under the Act or the rules made thereunder like claiming of CENVAT credit under the CENVAT Credit Rules, 2004 or refund, shall be liable to a penalty not exceeding the amount of such benefit or five thousand rupees, whichever is greater. From the perusal of the evidences collected in the form of documents and statement of concerned persons it is clear that the assessee was not in existence at the premises declared in their Central Excise Registration certificate but they managed to obtain the registration on the basis of forged documents for manufacturing Polyester Grey Fabric . They neither purchased any polyester yarn nor ever manufactured any polyester grey fabric. The broker i.e. Mr. Sajjan Tibrewal managed to purchase polyester yarn from the yarn mills in the name of the assessee and supplied invoices to the assessee without accompanying the goods on the basis of which the assessee managed to avail inadmissible Cenvat credit - the cheques were deposited by him with a banking company M/s. Advance Finstock P. Ltd., Malegaon, who after taking commission @0.05%, were issuing cheques in the name of the assessee, the photocopies of which were also found in the records of the assessee. From the statements it has been proved beyond any doubt that the brokers were instrumental in availing of ineligible Cenvat credit by the assessee for payment of central excise duty without manufacturing/ removing any excisable goods and also for passing on the said Cenvat credit to their customers on the basis of the invoices only without supplying any goods to them. This has been established through the ER-1 returns also. Involvement of appellant Sajjan Tibrewal in the fraud has been proved beyond doubt as it has been corroborated by other statements also. He knowingly involved in the fraud as he himself admitted in his statement about his role, retraction of which was much belatedly and was rightly held by the authorities below as afterthought. No doubt there is a complete network in order to defraud the government exchequer - A careful scrutiny of all the statements placed on record, be it the assessee or the transporter or brokers etc. completed the chain of events and proved it beyond any doubt that the appellant Sajjan Tibrewal abetted in making the invoices on the basis of which the assessee has availed ineligible Cenvat Credit without setting up any factory for manufacturing polyester yarn. Penalty on appellant Mr. Pankaj Hari Pansari - HELD THAT:- Nowhere it has come in any of the statements that he knowingly given the delivery of yarn received by him to some other persons unrelated to the assessee. His fault was that he did not ensure that the persons who took the delivery of polyester yarn are from the assessee company only and delivered the yarn to the persons whose names and phone numbers have been informed to him in the name of the persons of the assessee, by someone from the yarn company only from time to time and he did not keep the detailed information of those persons who used to take delivery of yarn for the assessee. Unlike appellant Sajjan Mohanlal Tibrewal, Mr. Pankaj Pansari nowhere made any admissions - the department has failed to make any case against the appellant Mr. Pankaj Pansari beyond reasonable doubt. The Appeals are dismissed so far as imposing penalty against the appellant Mr. Sajjan Mohanlal Tibrewal is concerned and the same is set aside qua the appellant Pankaj Hari Pansari by allowing his appeal. Appeal allowed.

  ---

• 2023 (5) TMI 601
  Denial of CENVAT Credit - Input Services - Civil Construction and Maintenance Services - period 2005-06-2009-10 and April, 2010 to March 2011 - HELD THAT:- During the relevant period, the definition of input service was very wide and it include any service received in or in relation to setting up, moderanisation, renovation or repair of the factory premises. Further, this input services involved in the present appeals have been held to be input services in the decisions relied upon by the appellant - reliance can be placed in COMMISSIONER OF C. EX., DELHI-III VERSUS MADHUSUDAN AUTO LTD. [ 2015 (2) TMI 1235 - CESTAT NEW DELHI] and COMMISSIONER CENTRAL EXCISE COMMISSIONERATE, DELHI-III VERSUS M/S BELLSONICA AUTO COMPONENTS INDIA P. LTD. [ 2015 (7) TMI 930 - PUNJAB HARYANA HIGH COURT] . The Hon ble High Court of Punjab and Haryana in the case of Commissioner of Central Excise, Delhi-III vs. Bellsonica Auto Components India P. Ltd. has considered this issue and has held that the construction services and other services which are necessary for the renting of the business falls in the definition of input service as provided under Rule 2(l) of Cenvat Credit Rules, 2004. Since the issue is squarely covered by the decision of jurisdictional High Court of Punjab and Haryana, hence, by following the ratio of the same, the impugned order is not sustainable in law and therefore, the same are set-aside by allowing both the appeals of the appellant - Appeal allowed.

  ---

• 2023 (5) TMI 600
  Valuation - scope of show cause notice (SCN) - clearance of PP Medicaments - Deduction claim - it is contended that Octroi charges and Additional Sales Tax to be calculated on an equalized basis rather than on actual basis - secondary freight - HELD THAT:- The language and the tenor of the SCN are very clear to seek denial of deduction claimed on account of Octroi and Additional Sales Tax. Though, the word PME is used in both SCNs, in the SCN in respect of Appeal No. E/1226/2012, denial of deductions on account of Octroi and Additional Sales Tax are mentioned after the word PME not once but twice. Moreover, in the said SCN in Para 5, the deductions have been clearly mentioned to be on account of Octroi and Additional Sales Tax etc. without use of word PME . It was further found that in the SCN relating to the other Appeal No. E/1226/2012 word PME followed by Octroi charges and Additional Sales Tax in brackets was mentioned only once and term etc. is also used once. Notwithstanding the mere mention of the words PME and etc. in one or two places, the gist of the SCNs was to deny the deduction on account of Octroi and Additional Sales Tax for the reason that the same are claimed on an equalized basis, even though paid on some non-excisable goods. The SCN needs to be understood in that perspective alone. It has been held in several cases that the SCN is not an empty formality and the same needs to be clear and unambiguous. It is not open for the Department just to seek a demand on the basis of figures supplied by the appellant by mistake - In the instant case, there was no whisper of seeking denial of deduction on secondary freight and to that extent, there is no ambiguity in the SCN and it is not open for the Department to claim confirmation of duty on account of secondary freight at this juncture. Thus, Tribunal has clearly stated that the deduction on account of Octroi and Additional Sales Tax are permissible and the remand to the Original Authority to allow the deductions on the lines indicated in the order - appeal allowed.

  ---

• 2023 (5) TMI 599
  CENVAT Credit - removal of capital goods as such or not - change in ownership / sale of capital goods without removal of such goods from the factory premises - Revenue treated the same as removal of capital goods as the ownership of capital goods is changed and accordingly held that, the appellant is liable to pay duty under Rule 3(5A) of Cenvat Credit Rules, 2004 - extended period of limitation - levy of personal penalty - HELD THAT:- There is no dispute in the fact that even though the Lime Kiln plant was sold to M/s. JK Envirotech Limited but the same remains situated within the factory premises of the appellant. Therefore, there is no physical removal of the capital goods from the factory premises of the appellant. From the plain reading of sub Rule (5A) of Rule 3 of Cenvat Credit Rules, 2004, it is clear that the assessee is required to pay duty on the use of capital goods only when it is removed from the factory of the assessee - In the present case, since the plant was remained installed in the factory of the appellant and moreover the same was undisputedly used for conversion of lime sludge into lime and the said lime was used in the manufacture of the final product of the appellant. The demand in terms of sub-Rule (5A) of Rule 3 of Cenvat Credit Rules, 2004 is not legal and correct. In the present case, first the capital goods was not removed from the factory consequently the same was exclusively used in or in relation to manufacture of final product of the appellant. Therefore, in this position, Rule 3(5A) has no application. The Revenue s only contention is that since the capital goods were sold by the appellant to M/s. JK Envirotech Limited and the ownership of the same stood transferred to M/s. JK Envirotech Limited the appellant is not entitled for Cenvat credit in terms of Rule 3(5A) of Cenvat Credit Rules - It is made clear that, for the purpose of taking Cenvat credit and even for manufacture of finished goods, ownership has no criteria. The only requirement is that the capital goods should be used in the manufacture of final product within the factory of the appellant which is not disputed in the present case. This issue has been examined time and again by this Tribunal in various judgments. In the case of M/S. L.G. BALAKRISHNAN AND BROS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, TRICHY [ 2016 (6) TMI 829 - CESTAT CHENNAI] where it was held that when there is no removal of goods under cover of invoice, as provided under rule 9, there is nothing in Rule 3 (5) to invoke the deeming fiction as insisted by the department. In the case of CCE ST, Raipur vs. Bhilai Steel Plan case [ 2017 (7) TMI 1120 - CHHATTISGARH HIGH COURT ], the Hon ble Chhattisgarh high court held that It is accordingly held, even on assimilation of facts that removal in the case in hand does not include any fiscal removal of goods from one place to other. In view of the above judgments, the law is settled that even though the ownership of the capital goods has been changed but the capital goods remained installed and used within the factory premises of the assessee, the Cenvat credit cannot be demanded under Rule 3(5A) of Cenvat Credit Rules, 2004. Following the above decisions coupled with the observations, it is opined that the demand of Cenvat credit of capital goods in the present case made under Rule 3(5A) is not sustainable. Demand of Cenvat credit in respect of input service used in relation to the activity of conversion of lime sludge into lime by M/s. JK Envirotech Limited - HELD THAT:- Even though the input service was used in the processing related to conversion of lime sludge into lime but the same was directly connected to manufacture of final product of the appellant. Undisputedly the billing of said services are in the name of the appellant therefore, the condition prescribed under Rule 2(l) which defines input service scrupulously fulfilled inasmuch as the input service was purchased by the appellant and the same was used in or in relation to manufacture of the final product of the appellant. In case of Cenvat on service, the location is not criteria for allowing credit - the demand on the same is not sustainable. Extended period of limitation - HELD THAT:- The appellant and categorically informed the department about entire fact of availing credit on capital goods and despite the same was sold/ billed to M/s. J.K Envirotech, hence there is no suppression of fact on the part of the appellant, accordingly the demand for extended period is not sustainable also on time bar. Personal penalty imposed on Shri Surendra Behani, General Manager - HELD THAT:- Since the appeals are being allowed on merit, the personal penalty imposed on Shri Surendra Behani, General Manager is also not sustainable. Appeal allowed - decided in favour of appellant.

  ---

• 2023 (5) TMI 598
  Levy of Excise duty on process loss - loss arising out of job-work - job worker has returned the equal quantity of the goods for the reason that there is an addition of paper which was used for insulation purpose - HELD THAT:- Even though the job worker has returned the equal quantity of the goods for the reason that there is an addition of paper which was used for insulation purpose. As regard the process loss it is an invisible loss which arises during the course of job work, hence, the same cannot be charged to the duty. The issue is no longer res integra as per the decision of this Tribunal in the appellants own case VOLTAMP TRANSFORMERS LTD VERSUS C.C.E. S.T. -VADODARA-II [ 2021 (11) TMI 597 - CESTAT AHMEDABAD ] where it was held that issue decided in the case of M/S VOLTAMP TRANSFORMER LTD. VERSUS CCE VADODARA [ 2013 (11) TMI 1215 - CESTAT AHMEDABAD ] where it was held that There is also no binding clause in Rule 4(5)(a) of CENVAT Credit Rules, 2004 that any loss of inputs by generation of waste and scrap has to be compensated by reversing equivalent credit taken on the virgin metal, demand if any on waste and scrap has to be raised against the manufacturer job worker and not upon the raw material supplier. The impugned order is not sustainable - Appeal allowed.

  ---