TMI Tax Updates - e-Newsletter
July 14, 2018

Case Laws in this Newsletter:

GST Income Tax Customs Service Tax Central Excise

Highlights / Catch Notes

GST

• Levy of GST - Job-work - beer - GST is payable by the Brand owner (UBL) on ‘Surplus Profit” transferred by the CBU to brand owner out of the manufacturing activity and the supply of service to the CBUs is classified under Service Code (Tariff) 999799 and liable to pay GST at 18%
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Income Tax

• Unexplained jewellery - addition u/s 69C or 69A - acquisition of jewellery is as “streedhan” on marriage or other occasions and same could not be said to be unexplained jewellery. The basis that assessees have not filed wealth tax returns cannot be a ground to make an addition.
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• Exemption u/s 11 - Once, these donations are not corpus donations, then, automatically all receipts including corpus donations shall be treated as receipts of the trust and income wherefrom shall be computed in normal commercial practices by deducting all expenses.
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• Levy of penalty - the assessee agreed to such addition in the proceedings under section 263 of the Act, cannot be the ground for not levying the penalty.
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• Entitled for benefit of mutuality - Co-operative society - There is no deference between the transaction of members and nominal members and only when the transactions are with non-members, the principles of mutuality can be invoked or denied - A nominal member cannot be treated as a non-member.
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• TDS u/s 194J - Just because the person administering the society is also referred to as director, provisions of Section 194J cannot be attracted to the payment of honorarium made to the director of assessee-society.
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Customs

• Validity of SCN - Jurisdiction - proper officer - authorization u/s 2(34) - Additional Director of Directorate of Revenue Intelligence is not entitled to invoke Section 124 of the Customs Act, 1962.
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Indian Laws

• Major Steps taken for Reducing Tax Litigations - For income tax matters, litigation from Department’s side will get reduced by 41%, for Indirect Tax Matters (Central), litigation from Department’s side will get reduced by 18%.
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Service Tax

• Refund of service tax paid - since the refund applications were filed by the appellant within the prescribed statutory time limit, documents in support of such claim submitted later-on should not be considered as the date of filing of fresh application for the purpose of consideration of the limitation period.
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• Extended period of limitation - Section 73(3) - when audit was conducted there was enough time for issue of demand notice without invocation of extended period. The charges of suppression etc cannot be invoked in this case
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Central Excise

• Transfer of capital goods to sister unit (transfer of business) - Rule 3 (5) of the Cenvat Credit Rules, 2004 - The conditionalities of Rule 10 given in sub-rule (3) have also been complied with. Hence appellants have not fallen foul of Rule 10 of the CCR and are very much eligible to transfer the credit amount along with capital goods so transferred.
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• Refund of excess duty paid - unjust enrichment - the label/laminate produced by the appellant shows that the MRP is inclusive of all taxes. Thus, the appellant could not establish that the excess duty paid by them during the relevant period has not been recovered from the customers - refund was rightly rejected.
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Articles

• IMPLEMENTATION OF E-WAY BILL

Notifications

• Customs

• 62/2018 - dated 13-7-2018 - Cus (NT)
  Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver- Reg.

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• GST - States

• 23/2018-State Tax - dated 13-6-2018 - Arunachal Pradesh SGST
  State Government hereby notifies the goods or the class of goods.

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• 22/2018-State Tax - dated 13-6-2018 - Arunachal Pradesh SGST
  The Arunachal Pradesh Goods and Services Tax (Fifth Amendment) Rules, 2018.

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• 21/2018-State Tax - dated 28-5-2018 - Arunachal Pradesh SGST
  Notifies the National Academy of Customs, Indirect Taxes and Narcotics, Department of Revenue, Ministry of Finance, Government of India, as the authority to conduct the examination as per the said sub-rule.

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• 11/2018-State Tax (Rate) - dated 28-5-2018 - Arunachal Pradesh SGST
  Amendments in the notification of the Government of Arunachal Pradesh, Department of Tax & Excise, No.4/2017-State Tax (Rate), dated the 28th June, 2017.

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• 20/2018-State Tax - dated 14-5-2018 - Arunachal Pradesh SGST
  Waives the late fee payable FORM GSTR-3B.

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• S.O. 205 - dated 6-7-2018 - Bihar SGST
  The Bihar Goods and Services Tax (Seventh Amendment) Rules, 2018

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• S.O. 204-12/2018-State Tax (Rate) - dated 29-6-2018 - Bihar SGST
  Amendment in the Commercial Taxes Department Notification No.8/2017- State Tax (Rate) dated the 29th June, 2017

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• F-10-28/2018/CT/V (44)-26/2018-State Tax - dated 14-6-2018 - Chhattisgarh SGST
  Chhattisgarh Goods and Services Tax (Fifth Amendment) Rules, 2018.

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Circulars / Instructions / Orders

• RBI - RBI/2018-19/14 - dated 12-7-2018
  Incorporation of Name of the Purchaser on the Face of the Demand Draft
• DGFT - 21/2015-2020 - dated 12-7-2018
  Enlistment under Appendix 2E of Agricultural and Processed Food Products Export Development Authority (APEDA) Authorized to issue Certificate of Origin (Non-Preferential) - reg.

News

• Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified New Delhi, 13th July, 2018

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• INDIA’S FOREIGN TRADE: June 2018

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• India a Key Player in Generic Medicines – Suresh Prabhu

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• Framing of Income-tax rules relating to Significant Economic Presence as per Section 9(1)(i) of the Income-tax Act, 1961, Comments and suggestions

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• Proposal for construction of break water harbour in Konkan

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• Commerce Minister Meets World Bank Team

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• Competition Commission of India (CCI) issues order against All India Chess Federation (AICF) for abuse of dominant position and imposition of unreasonable vertical restraints on chess players and organisation of chess events; Imposes penalty of ₹ 6.92 lakhs on AICF for the Anti-Competitive conduct

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Case Laws:

• GST

• 2018 (7) TMI 835
  Levy of GST - Job-work - Sale of beer bearing brand/s owned by M/s United Breweries Limited (Brand Owner/UBL) manufactured by Contract Brewing Units (CBUs) out of the raw materials, packaging materials and other input materials procured by it and accounted by it - supply of services or not?. Whether the CBUs are supplying any service to the applicant by undertaking to manufacture beer according to their specifications thereby rendering them liable to pay GST on the profit earned by them by virtue of supply of service to the applicant? - Held that:- In the realm of undertaking any manufacturing activity under an agreement, the manufacturer would supply service to the other registered person only in the event of the said registered person supplying goods to the manufacturer to work upon them. In other words the manufacturer would not be purchasing and accounting the goods in their account books - Notification 11/2017 Central Tax (Rate) dated 28.06.2017, at serial number 26, also requires that Heading 9988 is applicable when the physical inputs are owned by person other than the manufacturer. Further Heading 9989 also provides for classification of other manufacturing services apart from those under Heading 9988. There are four groups of services under heading 9989, ranging from group 99891 to 99894. The manufacturing activity undertaken by the CBUs does not appear in any of the services listed in the aforesaid groups from 99891 to 99894 - Therefore it is evident that the manufacturing activity carried out by the CBUs does not fall under the Heading 9989. The agreement between the applicant and the CBUs indicate that the CBUs shall engage in purchase and handling of the raw materials. It is agreed upon between the applicant and the CBUs that the purchase and quality of the raw material shall be supervised by the applicant. Nevertheless the purchase is made and accounted in their books by the applicant - the ownership of the raw material required to manufacture beer rests with the manufacturer and not with the applicant. Therefore the applicant had not supplied any goods used in the manufacturing activity undertaken by the CBUs. Consequently the manufacturing activity undertaken by the CBUs does not qualify classification under Heading 9988 - The CBUs are not engaged in supply of service to the applicant and therefore there does not arise any liability to pay GST on the amount retained by the CBUs as their profit. Whether GST is payable by the Brand owner on the Surplus Profit transferred by the CBU to the Brand Owner out of such manufacturing activity? - Held that:- Since it is beyond doubt that the applicant is engaged in supply of service and the service does not find mention at any other entry in the Classification table it has to be placed in the residual entry. The applicable rate of Central Tax is as at serial number 35 of the Notification - we answer the second question in the affirmative that the applicant is engaged in supply of service classified under Service Code (Tariff) 999799 and liable to pay GST at 18% ( CGST-9%, SGST-9%) on the amount received from the CBUs. Ruling:- The CBUs are not engaged in supply of service to the applicant and therefore there does not arise any liability to pay GST on the amount retained by the CBUs as their profit. GST is payable by the Brand owner (UBL) on Surplus Profit transferred by the CBU to brand owner out of the manufacturing activity and the supply of service to the CBUs is classified under Service Code (Tariff) 999799 and liable to pay GST at 18% ( CGST-9%, SGST-9%) on the amount received from the CBUs.

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• 2018 (7) TMI 758
  Payment of tax and penalty for release of detained goods - the 1st respondent insisted that the petitioner ought to have paid the amount shown in Ext.P4 either in cash or through demand draft to the 1st respondent - Held that:- The Court declares that the 1st respondent's insistence that the petitioner should pay the amount either in cash or through demand draft cannot be sustained. As is further evident from Ext.P7, the petitioner is a dealer registered under the CGST - the petitioner's paying the penalty under Ext.P5 receipt to the portal of GST is eminently sustainable. The 1st respondent authority is directed release the goods, after receiving Ext.P5 receipt - petition disposed off.

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• Income Tax

• 2018 (7) TMI 834
  Addition u/s 68 - identity of the person who has put in the money - Held that:- In the present case, there was no plausible explanation that was furnished by the assessee. At any rate, the identities of the alleged share applicants could not be established and the documents of the alleged share applicants carried by the assessee before the Assessing Officer did not reveal the investments that the assessee claimed such alleged applicants had made in the assessee. In the light of such findings of the Assessing Officer which withstood scrutiny before final fact-finding body that is the Appellate Tribunal, it scarcely lies in the mouth of the assessee to question the propriety of the Assessing Officer having found the explanation furnished by the assessee to be unsatisfactory. Thus particularly since the Assessing Officer found on facts that there was no plausible explanation justifying the cash credits and the Appellate Tribunal accepted the same, no substantial question of law is raised - decided against assessee

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• 2018 (7) TMI 833
  Addition made towards share capital u/s 68 - Addition only on reliance of the revenue from the remand report of the ld AO is the statements recorded from two directors of the assessee company in the course of proceedings of group company i.e. KTPL. - Held that:- These statements were subsequently retracted and the same were taken due cognizance by this tribunal while disposing off the appeal in the case of KTPL for Asst Year 2014-15 All the three ingredients of section 68 of the Act were duly satisfied in the instant case. We hold that the authorities below erred in making an addition u/s 68 of the Act towards share capital and share premium in these peculiar facts and circumstances of the case. Since the addition made towards share capital and share premium is directed to be deleted on these peculiar facts, the other legal issues raised by the assessee in its grounds are not required to be adjudicated and we refrain to give our opinion on the same and those issues are left open. Accordingly, the grounds raised by the assessee are allowed.

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• 2018 (7) TMI 832
  Penalty u/s. 271(1)(c) - set off of losses and depreciation - Held that:- It seems the mistake has happened in earlier year and assessee bonafidely claimed during the year even though advance tax to a larger amount was paid, which was claimed as refund. Since the mistake, in my opinion is bonafide and further the set off of losses and depreciation can also be modified on the basis of record u/s. 154, the facts does not lead to levy of penalty u/s. 271(1)(c) and the same does not come within the concept of ‘concealment of income’ or ‘furnishing of inaccurate particulars’ during the year. For the mistake committed in AY. 2011-12 which AO has not modified in that year, no penalty can be levied during this year for the reason that the computation of income relied on claim made in AY. 2011-12. The penalty laid u/s. 271(1)(c) of the Act is therefore deleted. - Decided in favour of assessee.

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• 2018 (7) TMI 831
  E-fiiling of appeal - mandation of filling appeal electronically - delay in filing appeal - manuals appeals have been filed before Ld. first appellate authority within the prescribed time limit - Held that:- The assessee is directed to e-file the aforesaid appeals within a period of 10 days from the date of receipt of this order, consequent to which delay in e-filing shall stand condoned.Thereafter, Ld. CIT(A) is directed to consider the appeals on merits as agitated by the assessee. See SHRI GURINDER SINGH DHILLON VERSUS INCOME TAX OFFICER, WARD – 15 (4) , NEW DELHI. [2017 (4) TMI 1359 - ITAT DELHI ]

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• 2018 (7) TMI 830
  Addition on account of Long Term Capital Gain on sale of property - non refer the valuation to DVO for determination of the fair market value - AO as well as the DVO rejected the plea of the assessee to value the fair market value of the property on the date of sale - request of the assessee to ascertain the fair market value of the property on the date of sale denied - Held that:- We do not countenance such action of the AO/DVO. There is no estoppel against law. Since the AO has referred to the DVO, the valuation report on the basis of which the assessee had valued the property as on 01.04.1981 at ₹ 1,64,65,457/- then, in all fairness assessee’s request for determination by DVO the fair market value of the property on the date of sale should have been considered in the light of the fact that the property in question was in dilapidated condition encroached by trespassers and defaulting tenants and shopkeepers resulted in discounted sale of the property on as is where is basis. Therefore, in the interest of natural justice and fair play the AO being a quasi juridical authority should have referred not only the value of the property as on 01.04.1981 but also the fair market value as on the date of sale. As relying on the decision of the Hon’ble High Court in Sumit Kr. Agarwal [2014 (6) TMI 13 - CALCUTTA HIGH COURT] we set aside the order of the DVO/AO and remand the matter back to the AO with a direction to refer the valuation to DVO for determination of the fair market value as on the date of sale of the property as well as on 01.04.1981’after giving opportunity to the assessee and thereafter to compute LTCG in accordance to law - Appeal of assessee is allowed for statistical purposes.

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• 2018 (7) TMI 829
  Rejecting the application for registration under section 12A r.w.s. 12AA - applicant has not filed requisite details as well as MoA for verification, so as to establish the nature and genuineness of the activities of the society - Held that:- When the applicant is running the school for girls and imparting training to the girls in handicrafts without charging any fee, activities of the societies appear to be are charitable and genuine in nature. Not only this, the Ld. CIT(E) has granted registration as well as approval to the assessee u/s 12AA and Section 80G respectively for AY 2016-17. The Co-ordinate Bench of Tribunal in assessee’s own case bearing in the case of The Managing Committee vs. CIT(E) [2017 (9) TMI 1678 - ITAT DELHI] directed the Ld.CIT(E) to grant registration u/s 12AA and to accord approval u/s 80G of the Act. We hereby direct the Ld. CIT(E) to grant registration and to accord approval to the applicant u/s 12AA and Section 80G of the Act respectively, on furnishing the requisite details required u/s 12AA of the Act, after providing an opportunity of being heard to the assessee. Consequently, both appeals filed by the Assessee are allowed.

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• 2018 (7) TMI 828
  Denying the claim of deduction u/s 80P(2)(a)(i) - assessee was doing the business of banking, - Held that:- The assessee is entitled to deduction u/s 80P(2) of the I.T.Act - see The Chirakkal Service Co-operative Bank Ltd. and Others [2016 (4) TMI 826 - KERALA HIGH COURT] held that the assessee was entitled to the benefit of deduction u/s 80P(2) as held that the primary agricultural credit societies, registered as such under the KCS Act; and classified so, under that Act, including the appellants are entitled to such exemption. - Decided in favour of assessee.

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• 2018 (7) TMI 827
  Assessment u/s 153A - Held that:- There was no incriminating material found during the search proceedings and there was no investigation made by the Assessing Officer. Thus, the ratio laid down by the decision of the Hon'ble Apex Court in the case of Lovely Export (2008 (1) TMI 575 - SUPREME COURT OF INDIA) will be applicable in the present case. Addition u/s 68 - Held that:- Assessing Officer made enquiries but only part details were provided by the parties and since the part bank statement of the party revealed typical accommodation entry transactions. During Assessment Proceedings, all the evidences like ITR, Bank Statements, copy of PAN Card, names and addresses of the directors and audited balance sheet of the share applicant were submitted by the share applicant directly in response to notice u/s 133(6). Thus, the Assessing Officer as well as the CIT (A) has not at all considered all the documents which was provided by the Assessing Officer as well as before the CIT(A). Therefore, it will be pertinent to remand back this matter to the file of the Assessing Officer to take congnizance of the documents filed by the Assessee. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice.

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• 2018 (7) TMI 826
  Unexplained jewellery - addition u/s 69C or 69A - jewellery belongs to the assessees having received as “streedhan” - Held that:- DR has relied on the statement recorded of Sh. R. K. Mittal u/s 132(4) of the Act. It is however not denied that there was no surrender made by any of the assessees. Further even as per the statement of Sh. R.K. Mittal (husband of Radha Mittal) disclosure was made of Rs. .79 lacs in the hands of Radha Mittal, Rs. .79 lacs in the hands of Ruchie Mittal and ₹ 1.31 crores in the hands of R.K. Mittal husband of Radha Mittal. Contrary to the above additions were made on account of unexplained jewellery u/s 69A of the Act in the hands of assessees and no addition has been made in the hands of R.K. Mittal. In absence of any surrender made by the assessees u/s 132(4) of the Act, no obligation was imposed upon them to offer the impugned sums as income. Also judgments u/s 69C of the Act are distinguishable on the facts of the assessees. These judgments essentially relate to cash seized which were held to be unexplained which is not the case of the assessee. In the case of Karun Dutt Singh v. CIT [2017 (9) TMI 47 - KERALA HIGH COURT ] it was noted that AO made addition to assessee’s income in respect of gold ornaments recovered from him after rejecting explanation that it belonged to his employer company since Director of employer company denied to have given ornaments to assessee for sale or as samples. There is no denial in the instant case either by the assesses or R.K.Mittal or any other person. The consistent explanation has been that acquisition of jewellery is as “streedhan” on marriage or other occasions and same could not be said to be unexplained jewellery. The basis that assessees have not filed wealth tax returns cannot be a ground to make an addition in view of the judgment of Roshan Di Hatti v. CIT (1977 (3) TMI 3 - SUPREME COURT). Having regard to the foregoing we hold that additions were made in the hands of assessee are not in accordance with law and therefore the same are deleted - Decided in favour of assessee

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• 2018 (7) TMI 825
  Validity of assessment against non existent entity - curable defect - Held that:- assessment framed by the Assessing Officer on a non-existent company is a nullity in the eyes of law and void and the provisions of section 292 B cannot rescue the department. Therefore, the order is unsustainable and accordingly the same is quashed. The additional ground raised by the assessee is accordingly allowed. Since the assessee succeeds on this legal ground, therefore, the various other grounds raised by the assessee in appeal are not adjudicated being academic in nature.

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• 2018 (7) TMI 824
  Addition u/s 69 - undisclosed sales consideration - sale of property - Held that:- The statement of the Vendor cannot be believed in view of the documentary evidence in the form of lease deed between the Assessee and the tenants after the transfer of the property in favour of the Assessee - Since no actual investment was made by the Assessee but he merely acknowledged liability to return security deposit to the tenants, no addition u/s. 69 can be made as the condition precedent for invoking those provisions are that the Assessee should have made an investment in the sense there ought to have been an outflow of funds from the Assessee, which condition is not fulfilled in the present case. The CIT(A) was therefore correct in deleting the addition made by the AO. We find no ground to interfere with the order of the CIT(A) and hence ground No.2 raised by the Revenue is dismissed. Consideration received towards fixtures and furniture - We are of the view that the documentary evidence in the form of confirmation by M/s. Stone Art and M/s. IQCP India Pvt. Ltd., the tenants of the property that whatever furniture and fixtures exist in the property it is their own and not provided by the Vendor, has to be believed. The statement of the vendor has been denied by the Assessee in his statement. In such circumstances, the claim of the Vendor, which is the only basis of the impugned addition, cannot be believed. There are no other circumstances, which can compel us to take a view different from the view taken by the CIT(A). Consequently, Gr.No.3 raised by the Revenue is dismissed. Cash over and above the sale consideration stated in the registered document has been denied - Held that:- The basis on which the impugned addition was made by the AO and sustained by the CIT(A) is the statement of the Vendor and the circumstance that the value of the property as per the Registering Authorities for the purpose of stamp duty and registration was much higher than the value stated in the sale deed and therefore there was a probability of the statement of the Vendor being true and further circumstance that the Vendor has offered the sum in question as income in her return of income filed for the relevant assessment year. The learned counsel for the Assessee has brought to our notice a decision of the Hon’ble Gujarat High Court in the case of Prl.CIT Vs. Vivek Prahaladbhai Patel (2015 (12) TMI 1287 - GUJARAT HIGH COURT) wherein the Hon’ble Allahabad High Court on identical set of facts held that addition cannot be sustained. - Decided in favour of assessee

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• 2018 (7) TMI 823
  Validity of assessment - assessment against non-existent company - Held that:- Such assessment is a nullity in the eyes of law. Therefore, the same is quashed. The ground raised by the assessee is accordingly allowed. SEE CIT vs. Dimension Apparels (P.) Ltd. [2014 (11) TMI 181 - DELHI HIGH COURT]

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• 2018 (7) TMI 822
  Reference matter to the TPO for determining the ALP of the international transaction u/s 153 (1) - period of limitation - Held that:- Since the facts of the instant case are identical to the facts of the case decided by the Tribunal in the case of Calance Software Pvt. Ltd. (2018 (3) TMI 1310 - ITAT DELHI) and since the time limit for issue of the order by the Assessing Officer in case of the TPO reference u/s 153 (1) of the IT Act expired on 31.12.2009, therefore, we hold that impugned assessment order is bad in law and is barred by limitation. Ground raised by the assessee is accordingly allowed.

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• 2018 (7) TMI 821
  Reopening of assessment - Benefit u/s. 10(38) denied - Held that:- Assessee has furnished the information with reference to purchase of shares [though in cash] which was accepted by the AO in the re-opening proceedings in the AY. 2006-07, and evidence of subsequent sale during the year, receipt of sale consideration through bank accounts and further there is no dispute with reference to the sale of shares through the stock exchange as confirmed by the NSDL (in the communication to the AO extracted above) we are of the opinion that Revenue has failed to establish that the transactions are bogus. Since assessee’s claim for exemption in Long Term Capital Gain is supported by the documents including the transaction in DMAT account and sales through the stock exchange, the claim u/s. 10(38) of the Act cannot be denied, based on the assumptions and presumptions which are not supported by any evidence. In view of that the grounds raised by assessee on merits are allowed. AO is directed to treat the gains as such and allow the benefit u/s. 10(38). Since we have considered the issue on merits, the contentions raised on reopening of assessment becomes academic. Moreover, Ld.CIT(A) has considered this aspect elaborately and has held that there is same information. Since the assessment has not been done u/s. 143(3) earlier and only return has been accepted u/s. 143(1), in our view the AO has correctly initiated the reopening proceedings. The statement relied was u/s 131 so the question of initiation of proceedings u/s 153C also does not arise. To that extent, the order of CIT(A) is confirmed. The contentions of assessee on reopening are not considered valid. However, as Revenue failed to establish that the transactions undertaken by assessee are bogus on merits, we agree with the contentions of assessee that the transactions are undertaken in the normal course and assessee is entitled for the deductions / exemptions so claimed. Appeal of assessee is partly allowed.

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• 2018 (7) TMI 820
  Unexplained cash credits - presumption u/s. 292C against assessee - proof of the identity and creditworthiness of the company - Held that:- It is to be noted that the companies being enquired have invested in assessee-company in the Financial Year 2012-13 and how the statements of Shri Monohar Lal Nangalia and the so called statement of Shri Satish Shah, dt. 14-02- 2008 are relevant has not been explained either by the AO or by the CIT-DR. As seen from the assessment order, except relying on the report received from DDIT, there is no further evidence available with AO to hold that such companies are bogus. It is also true that the report from DDIT was received on 28-03-2016 and assessment has been completed on 30-03-2016 and there is no evidence placed on record that assessee was confronted with the above report, even though para 4.5 of the assessment order indicates that assessee was given a final show cause notice. The date on which it was given and the contents of the same were not placed on record in the paper book. It seems that assessee has appeared on 30-03-2016 the date on which assessment has been finalized, explaining all the evidences. Considering that the so called enquiry report is inconclusive and reliance on the so called statements of Shri Monohar Lal Nangalia taken in 2008 and 2014 have not been linked with the present investments of the above five companies, we are unable to rely on the evidence now placed on record by the Revenue in the form of Paper Book, that too without any prayer for admission of additional evidence. Surprisingly, Revenue has raised a ground that Ld. CIT(A) has violated Rule 46A, but when it came to their turn Revenue placed some unconnected statements which are not before AO or confronted to assessee at any point of time, before us to justify the stand of AO. It is also to be noted that this information has not been furnished to assessee either during the assessment proceedings or during the appellate proceedings. Therefore, no reliance can be placed on that. As pointed out by the Ld. Counsel, the provisions of Section 292C does not help the Revenue and the principles laid down by the Hon'ble Supreme Court in the case of CIT Vs. Sunita Dhadda (2018 (3) TMI 1610 - SUPREME COURT OF INDIA) will certainly apply to the facts of the case. - decided against revenue

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• 2018 (7) TMI 819
  Late filing fee under Section 234E - delay in furnishing the TDS statement to the Department - Held that:- There cannot be levy of late fee u/s. 234E for the period prior to 01/06/2015, we are inclined to delete the levy of late fee u/s. 234E of the Act in all the cases. See Little Servants of Divine Providence Charitable Trust vs. ITO(TDS) reported in 2016 (9) TMI 960 – ITAT, Cochin) and Fatheraj Singhvi & Ors. Vs. Union of India [2016 (9) TMI 964 - KARNATAKA HIGH COURT]

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• 2018 (7) TMI 818
  Deemed dividend addition u/s 2(22)(e)- assessee company is a shareholder having more than 10% voting rights in the lending company - lending company has accumulated profits in excess of ₹ 1,51,00,000/- drawn by the assessee company - whether the lending company, being a NBFC duly registered with RBI, has its substantial part of business as lending activity, so as to be outside the ambit of provisions of section 2(22)(e)? - Held that:- Clause (ii) of section 2(22) provides that the term dividend shall not include any advance or loan made to a shareholder by a company in the ordinary course of business where the lending of money is substantial part of the business of the company. We find that this issue has been dealt at length on facts and figures by the ld CITA and we are not inclined to interfere with the said findings , more so, when the ld DR was not able to controvert the findings of the ld CITA. We also find that the ld CITA had granted relief to the assessee by placing reliance on the co-ordinate bench decision of this tribunal in Tanuj Holdings Pvt Ltd supra (2016 (2) TMI 426 - ITAT KOLKATA) and by relying on the decision of the Hon’ble Bombay High Court in the case of Parle Plastics Ltd [2010 (9) TMI 726 - BOMBAY HIGH COURT] - Decided against revenue

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• 2018 (7) TMI 817
  Disallowance u/s.14A - assessee did not raise this particular ground in the statement of grounds of appeal before the Ld.CIT(A) and thus prays for reappraisal of the said ground - Held that:- As gone through the materials available on record including the orders passed by the authorities below. We find merit in the plea of the assessee towards inadvertence for omitting to raise a specific ground for adjudication before CIT(A) despite detailed presentation of facts in ‘statement of facts’. In the facts and circumstances of the case, we consider it just and proper and in the interest of justice to set aside the issue in dispute and restore the matter to the file of the ld.CIT(A) to decide the issue afresh Disallowance of interest expense @ 6% (18% - 12%) out of interest payment - whether the interest received by the assessee @ 12% which is reasonable and not the estimated rate of interest @18% notionally as done by the ld.CIT(A) - Held that:- We find that the AO has not made any enquiry as to the prevailing market rate of interest independently and only on surmises and conjectures without any basis the order of disallowance of 6% interest as made excessive. We therefore set aside the order of disallowing interest expense of ₹ 12,330/-. Thus, ground of appeal preferred by the assessee is allowed. Disallowance of depreciation on Car - rate claimed by the assessee can only be considered had it been a commercial vehicle and used in the business of hiring and thus 50% of the depreciation was allowed by the AO and excess depreciation denied - Held that:- We find merit in the plea of the assessee towards inadvertence for omitting to raise a specific ground for adjudication before CIT(A) despite detailed presentation of facts in ‘statement of facts’. In the facts and circumstances of the case, we consider it fair and proper and in the interest of justice to set aside the order passed by the authorities below on the issue in dispute and restore the matter to the file of the ld.CIT(A) to decide the issue afresh upon giving a proper opportunity of hearing to the assessee and further taking into consideration of the entire evidence already available on record as well as other documentary evidence which the assessee may choose to file in support of the claim on the issue. Thus, the said ground preferred by the assessee is allowed for statistical purposes. Disallowance of interest expenses/salary being excess u/s.40A(2)(b) - Held that:- We have found justification in the submission made by the Ld.AR particularly when no deliberation has been made by the ld.AO while deviating from his earlier stand taken by Revenue in accepting the rate in regard to payment of salary and performance of these employees in the earlier assessment year. We, therefore, do not justify the orders passed by the authorities below and delete such addition. Disallowance of insurance expenses - Held that:- The assessee is following mercantile system of accounting and the assessee was given ample opportunities to substantiate their claim. The issue is not of commercial expediency/business purpose but the expenses shown by the assessee were incurred for insurance for the period falling in next year and have not approved. Since it has not approved and it pertains to subsequent year, it is not allowable and we find no infirmity in the order passed by the Ld. CIT(A) in confirming the disallowance made by him. Addition made u/s.37 - disallowance of commission expenses/payment made to agents - Held that:- We find that the justification given by the Ld.CIT(A) in deleting the addition made by the Ld.AO on commission expenses incurred by the assessee is just and proper relying on observation made in the judgement of CIT vs. Associated Electrical Agencies (2003 (12) TMI 36 - MADRAS HIGH COURT) where it was held that if the assessee which carries on a business finds that it is commercially expedient to incur certain expenditure directly or indirectly, it would be open to such an assessee to do so notwithstanding the fact that a formal deed does not proceed the incurring of such expenditure. Addition u/s.40A(2)(b) on account of excess interest payment - Held that:- he rate of interest will definitely be lesser in respect of the partners since the partners have interest in profits and even the partners may agree to forgo the capital interest also. On this premise, the payment of 18% interest to the parties lending unsecured loans have reasonably given by the Ld. CIT(A) and disallowance made by the AO has been deleted. The reasons for allowing the interest @ 18% as assigned by the Ld. CIT(A) is, according to us, justiciable so far as the interest of the business is concerned. Addition on account of interest of late payment of Excise duty - Held that:- It is well settled that interest on belated payment of excise duty is compensatory in nature and is not in the nature of penalty or offence in terms of Explanation 1 to Section 37 of the Act. Thus, we find merit in the plea of the assessee for the claim of interest amount as business expenditure and we therefore delete the addition.

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• 2018 (7) TMI 816
  Validity of initiation of proceedings under section 148 - Whether the Joint/Addl. Commissioner is satisfied on the reasons recorded by the ITO/IAC/(A) that it is a fit case for the issue a notice u/s 148? - approval in accordance of law - approval has been granted by observing thus: “Yes” - Held that:- Sections 147 and 148 of the IT Act, it is trite, are charter to the Revenue to reopen completed assessments. Section 151 of the Act provides a safe-guard that the sword of section 147 of the Act may not be used unless the competent statutory officer is satisfied that the AO has good and adequate reasons to invoke the reopening provisions. As per the mandate of section 151 (2) of the Act, the Competent Authority has to examine the reasons, material or grounds on which the reopening is sought to be based and to judge as to whether they are sufficient and adequate to the formation of the necessary belief of escapement of income from taxation on the part of the AO. It is if and only if the Competent Authority, after applying his mind, is of the opinion that the AO’s belief is well reasoned and bonfide, that he will accord his sanction thereon. See case of Shri Ghanshyam [2018 (7) TMI 143 - ITAT AGRA] - Decided in favour of assessee.

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• 2018 (7) TMI 815
  Addition towards Bad and Doubtful Debts written back - deduction made by the assessee bank in the computation under the normal provisions of the Act as well as in the computation of book profits u/s 115JB - Held that:- CIT-A not bothered to examine the details with the relevant evidences and records and the relief was granted on the ground that the AO had not made proper verification of the same and non-application of mind on the part of the AO. Hence it is clear that both the authorities below had not given any finding on facts of the issue in their respective orders - we give one more chance to the ld AO, to examine the veracity of the claims made by the assessee. If it is found that in the year of making provisions, the assessee had duly disallowed the same in the computation of income both under normal provisions as well as u/s 115JB of the Act, then in the year of writing back of those provisions , i.e the years under consideration, the same should not be taxed again. This aspect requires factual verification by the ld AO. Disallowance of Prior Period Expenditure - Held that:- We find that the assessee had given proper explanation that the bills payable to Deloitte together with its quantum got settled and crystallized only during the year under appeal and accordingly the same becomes the expenditure of the year for the purpose of income tax. It is not the case of the revenue that the assessee had also made a claim of this expenditure in the earlier year. It is not in dispute that the said payment of ₹ 94.26 lakhs is wholly and exclusively incurred by the assessee for the purpose of its business. In these circumstances, the subject mentioned expenditure though categorized as prior period expenditure to be in consonance with Accounting Standard – 5 issued by ICAI, cannot be deprived of the deduction from its total income - CITA had rightly deleted the disallowance Disallowance u/s 14A of the Act read with Rule 8D of the Rules - Held that:- Hon’ble Supreme Court in the case of Maxopp Investment Ltd vs CIT (2018 (3) TMI 805 - SUPREME COURT OF INDIA) had held that provisions of section 14A of the Act are applicable even for investments held as stock in trade. Hence this issue is now settled and provisions of section 14A of the Act are to be applied in the instant case. We find that this tribunal in the case of REI Agro Ltd [2013 (9) TMI 156 - ITAT KOLKATA] had held that only those investments which had yielded dividend income need to be considered while working out the disallowance under third limb of Rule 8D(2) of the Rules. Hence we direct the ld AO to rework the disallowance accordingly for Asst Years 2010-11 and 2011-12 under normal provisions of the Act. With regard to disallowance u/s 14A of the Act while computing the book profits u/s 115JB of the Act , we find that the same is squarely covered by the decision of Hon’ble Calcutta High Court in the case of CIT vs Jayshree Tea & Industries Ltd [2014 (11) TMI 1169 - CALCUTTA HIGH COURT] held computation of the amount of expenditure relatable to exempted income of the assessee must be made since the assessee has not claimed such expenditure to be Nil. Such computation must be made by applying clause (f) of Explanation 1 u/s 115JB of the Act. We remand the matter for such computation to be made by the learned Tribunal.

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• 2018 (7) TMI 814
  Disallowance of Contribution of Gratuity Fund - Held that:- We find lot of force in the argument of the ld. AR that the actual settlement of gratuity to retired employees during the year in the sum of ₹ 16,95,886/- is to be treated as deduction. Accordingly, we direct the AO to grant deduction of ₹ 16,95,886/- towards actual payment of gratuity made to retired employees. Accordingly, ground nos. 1 to 4 raised by the assessee are partly allowed. Disallowance on account of Contribution to Provident Fund - whether the assessee, being an employees of co-operative bank, would fall within the ambit of applicability of provisions of Employees’ Provident Fund and Miscellaneous Provision Act, 1952? - Held that:- We find no finding is recorded by the ld. AO in this regard. Without such finding, it cannot be decided that whether the provisions of section 2(24)(x) and 40A(9) of the Act could be invoked on the assessee. Accordingly, we deem it fit and appropriate, to remand this issue to the file of the AO for de novo adjudication in the light of directions contained herein above. Accordingly, ground nos. 5 to 9 of the assessee appeal for assessment year 2011-12 and ground nos. 1 to 5 for assessment year 2012-13 are allowed for statistical purposes. Disallowance of Contribution to Employees Pension Fund paid to Aviva Life Insurance Ltd. - allowable business expenditure - Held that:- The payment of insurance premium paid by the assessee was made on behalf of its employee. Hence it squarely falls as an expenditure incurred for the welfare of its employees. It is not in dispute that the proceeds of the insurance policy does not fall back on the assessee and that the assessee would have no control over those funds and the said funds cannot be utilized by the assessee for its business purposes. In other words, the said funds exclusively belongs only to the employees. In this scenario, the payment made towards insurance premium would have to be construed as an expenditure incurred wholly and exclusively for the purpose of business and squarely allowable u/s 37(1) Disallowance of Interest paid on Members’ Welfare Funds - Held that:- We find that the assessee had made specific earmarked investment in fixed deposits maintained for members’ welfare fund and had derived interest income thereon at the average rate of 11.34% which has been duly offered to tax. In any case, the members’ welfare fund has been utilized for the purpose of business which is not in dispute and the said funds were also deployed by way of earmarked investment in fixed deposit deriving taxable interest income. This fact has not been verified by the ld. AO as no finding to this effect is available in the record. Hence we deem it fit and appropriate, to remand this issue to the file of ld. AO for de novo adjudication, uninfluenced by earlier decision taken either by him or by the CIT(A) in this regard Disallowance of Interest paid on Staff Provident Fund - Held that:- We find that the assessee had made specific earmarked investment in fixed deposits maintained for staff provident fund to the tune of ₹ 1,98,93,000/- and had derived interest income thereon at the average rate of 9.57% which has been duly offered to tax. In any case, the staff provident fund has been utilized for the purpose of business which is not in dispute and the said funds were also deployed by way of earmarked investment in fixed deposits deriving taxable interest income. This fact has not been verified by the AO as no finding to this effect is available in the record. Hence we deem it fit and appropriate, to remand this issue to the file of ld. AO for de novo adjudication Appeals of the assessee are allowed for statistical purposes.

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• 2018 (7) TMI 813
  Eligible for exemption u/s 11 - loans and advances given to two trade unions - violation of section 13(1)(c ) r.w.s 13(3) - Held that:- When the bench pose a specific question about continuation of violation referred to u/s 13(1)(c) for subsequent years, the ld. AR for the assessee fairly accepted that such violation is perpetuated in subsequent years, however tried to argued that violations brought out by the AO shall not be reason for denial of exemption, when the assessee continued to carry out its activities in accordance with its objects. We find that, the assessee failed to negate observation of the lower authorities in the light of provisions of section 13(1)(c) of the Act. Therefore, consistent with the view taken by the Coordinate bench, we are of the considered view that the assessee is not eligible for exemption u/s 11 of the Act, and hence we are inclined to upheld finding of the ld. CIT(A) and reject ground of the assessee for all asst. years. Taxation of corpus donations - Held that:- On perusal of facts, we find that the AO as well as the ld. CIT(A) gave categorical findings that the assessee failed to file any evidences to prove that these donation are corpus donations. Once, these donations are not corpus donations, then, automatically all receipts including corpus donations shall be treated as receipts of the trust and income wherefrom shall be computed in normal commercial practices by deducting all expenses. The CIT(A) after considering relevant facts has rightly treated corpus donation as part of gross receipts to determine income. We do not find any error in the order of the ld. CIT(A). Hence, we are inclined to uphold the CIT(A) order and reject ground taken by the assessee for all years. Addition towards expenditure in the assessment - Held that:- There is no cause of grievance for the assessee insofar this issue is concerned. But, fact remains that, the AO has said in para 2 of his order that the amount of expenditure is taxable. Once, exemption is denied, income shall be computed under normal accounting principles by considering all income and expenses to determine profit/loss, but at no stretch of imagination expenditure shall be treated as income, unless such expenses is unexplained or such expenses has not be substantiated with evidences. In this case, there are no findings from the AO on these aspects. Therefore, we are of the considered view that no addition can be made towards expenditure incurred for objects of the trust. Denial of credit for TDS - Held that:- The assessee claims that the AO did not allowed credit for TDS amounting to ₹ 1,25,032/-. But, on perusal of orders of the ld. AO as well as the Ld. CIT(A), we find that facts with regard to claim of TDS is not emanating from orders of lower authorities. However, if the assessee able to prove the claim with necessary TDS certificates and corresponding income is already considered in books, then the AO is directed to allow credit for TDS. Hence, the matter is set aside to the file of the AO to cause necessary enquiries and allow credit for TDS. Carry forward and set off of loss of earlier years - Held that:- AO denied benefit of exemption u/s 11 and computed income under normal commercial principles. Once, benefit of exemption is denied and income is considered under normal commercial principles, then the benefit of carry forward and set off of losses shall be allowed, provided all other conditions of carry forward and set off of losses as provided under section 72 are satisfied. Therefore, we set aside the issue to the file of the AO to cause necessary enquiries and allow the benefit accordingly. Additions towards loans and advances given to two trade unions, i.e. Engineering Mazdoor Sabha(EMS) and Mumbai Mazdoor Sabha(MMS) - Held that:- As gathered during assessment and violations of section 13(1)(c) brought out by the AO may be a good reason for rejection of exemption, but loans and advances being current assets cannot be treated as income of the assessee. The ld. CIT(A) after considering relevant facts has rightly deleted additions towards loan and advances. We do not find any error in the order of the ld. CIT(A) and hence, we are inclined to upheld findings of the CIT(A) and reject grounds of revenue for all assessment years. Additions towards purchase car in the name of trustee and repairs and also other expenses - Held that:- Once, exemption is denied, income shall be computed under normal accounting principles by considering all income and expenses to determine profit/loss, but at no stretch of imagination expenditure shall be treated as income, unless such expenses is unexplained within the provisions of section 69C or such expenses has not be substantiated with evidences. In this case, there is no finding from the AO on these aspects. Therefore, we are of the considered view that no addition can be made towards expenditure incurred for objects of the trust, purchase of car being capital in nature and treated as such in books and amount paid to Shankar Gadam of M/s Mahalaxmi Enterprises.

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• 2018 (7) TMI 812
  Penalty order passed under s.271(1)(c) - not mentioning the specific charge in the notice issued u/s 274 - assessee has claimed exemption u/s 54G though ineligible - Held that:- There is no ambiguity that there was no specific charge mentioned by the AO in the notice issued u/s 274 of the Act whether it was levied on account of concealment of income or furnishing inaccurate particulars of income. But on perusal of the penalty order we note that the penalty was levied on account of furnishing inaccurate particulars of income. Therefore, we are of the view that the lower authorities was conscious while levying the penalty in the order u/s 271(1)(c) of the Act. Therefore, the penalty proceedings cannot be held invalid merely on the ground that the notice does not specify the specific charge for levying the penalty. Not mentioning the specific charge in the notice issued u/s 274 of the Act cannot vitiate the penalty proceedings u/s 271(1)(c) of the Act. See SNITA TRANSPORT (P.) LTD. VERSUS. ASSISTANT COMMISSIONER OF INCOME-TAX [2012 (12) TMI 981 - HIGH COURT OF GUJARAT] In the case on hand, the assessee was well aware of all the provisions of Act and accordingly, he has rightly claimed the deduction u/s 54EC of the Act. The assessee in the instant case has claimed the deduction u/s. 54G of the Act against the transfer of agriculture land, which was not notified for the purpose of Section 54G of the Act. Thus the deduction claimed under section 54G of the Act is contrary to the provisions of law. In the given facts & circumstances the assessee cannot take the shelter of the ignorance of the provisions of law. Similarly, the assessee agreed to such addition in the proceedings under section 263 of the Act, cannot be the ground for not levying the penalty. Thus the assessee was guilty of furnishing the inaccurate particulars of income. Therefore, we do not find any infirmity in the order of lower authorities. - decided in favour of revenue

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• 2018 (7) TMI 811
  Validity of the assessment framed u/s 143(3) - notices issued u/s 143(2) of the Act much before the service of notice u/s 148 - Held that:- Since the notice u/s 143(2) of the Act was issued prior to the furnishing of return by the assessee in response to the notice u/s 148. Therefore, the notice issued u/s 143(2) of the Act was not valid and the reassessment framed on the basis of said notice deserves to be quashed. We, therefore, quash the reassessment framed by the AO. Rectification order - Held that:- It is noticed that the same has been filed against the order passed by the AO u/s 154 of the Act on 28.09.2012 which was subsequent to the assessment completed u/s 143(3) of the Act on 15.10.2010. Since, we have already quashed the said assessment order dated 15.10.2010, therefore, the subsequent order for rectification u/s 154 of the Act passed on 28.09.2012 is also quashed. - Decided in favour of assessee.

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• 2018 (7) TMI 810
  Entitled to a deduction u/s 54F - assessee having neither disclosed the capital gains in the return of income nor claimed any deduction u/s 54F of the Act, the assessee is not entitled to get any deduction u/s 54F - Held that:- AO having now concluded that the assessee having neither disclosed the capital gains in the return of income nor claimed any deduction u/s 54F the assessee is not entitled to get any deduction u/s 54F, in the same way he should not have added the capital gains to the income of the assessee since there was no disclosure of the same in the return of income. At any rate, the first appellate authority ought to have considered the issue on merits since the decision of the Supreme Court in the case of Goetze (India) Ltd (2006 (3) TMI 75 - SUPREME COURT ) would not debar the first appellate authority to consider the fresh claim, if any, so as to arrive at the correct taxable income. Hon’ble Madras High Court, in the case of CIT vs. Indian Express (Madurai) Pvt Ltd (1982 (11) TMI 47 - MADRAS HIGH COURT) observed that unlike a law suit in civil appeals, in tax litigation, it cannot be treated as a “lis” between two rival parties but the job of the Assessing Officer is to arrive at the correct taxable income Merely on account of fact that the assessee has not claimed exemption, the same could not have been denied. We therefore set-aside the orders passed by the A.O. and direct the A.O. to allow the claim of deduction u/s 54F of the Act.- Decided in favour of assessee.

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• 2018 (7) TMI 809
  Condoned the delay of one day in filing the assessee’s objection before the DRP - Held that:- The Hon’ble High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh High Court in the case of M/s.Rain Cements Limited v. DCIT [2016 (9) TMI 601 - ANDHRA PRADESH HIGH COURT] had condoned the delay of one day in filing the assessee’s objection before the DRP and directed the DRP to consider the issue on merits. Both the parties had requested us to give direction to condone the delay in filing the objections. In the interest of justice and equity and to avoid protracted litigation, we condone the delay of one day in filing the assessee’s objection before the DRP. Therefore, the order of the DRP dated 05.08.2016 is set aside. The DRP is directed to take up Form No.35A filed by the assessee along with annexures and evidences for the consideration of the same on merits. The DRP shall provide adequate opportunity of hearing to both the parties and shall comply with the procedure prescribed u/s 144C of the I.T.Act and shall pass direction as expediously as possible.

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• 2018 (7) TMI 808
  Entitled for benefit of mutuality - distinction between ordinary members and nominal members and all the members are having equal rights - Held that:- In this case, even a nominal member is also admitted to the membership as per clause-9 and he has all the rights of any other member. The ordinary members are those members who are available at the time of registration and that cannot be considered as a restriction because at the time of formation of any society or an organization, only few members join at the time of incorporation whereas the by-laws permit admission of further members in the course of its activity, be it a business or not business. There is no deference between the transaction of members and nominal members and only when the transactions are with non-members, the principles of mutuality can be invoked or denied. A nominal member cannot be treated as a non-member and so the transactions of nominal members cannot be treated as transactions of non-members. Distinction sought to be made by the AO and CIT(A) is arbitrary and artificial. Therefore, we agree that assessee is covered by the principle of mutuality and its income will be exempt on that concept Disallowance of honorarium - TDS u/s 194J - Held that:- The director referred to therein is not equivalent to the ‘director’ of the assessee-society. The director, manager or managing agent in relation to a company have the meaning respectively assigned to them in the Companies Act, 1956. A company is different from a co-operative society as they are defined U/s. 2(17) and 2(19) separately. Just because the person administering the society is also referred to as director, provisions of Section 194J cannot be attracted to the payment of honorarium made to the director of assessee-society. In view of that, we are of the opinion that there is no violation U/s. 194J so as to attract disallowance U/s. 40(a)(ia). Since assessee has adduced the evidence to the respective person have paid/filing returns of income and AO has not initiated any proceedings U/s. 201 for violation of TDS provisions under any other provisions of the Act, the disallowance U/s. 40(a)(ia) cannot be sustained. Interest on bank deposits - Held that:- The nature of interest is to be examined before coming to a conclusion. Only in the event of interest earned on deposits is from the ‘surplus funds’ not used regularly in the business, the amounts can be assessed under the head ‘other sources’. Just because assessee the earned interest on deposits, it cannot be straight away categorized as income from other sources. These aspects are not examined by the AO, however, since assessee itself is getting exemption on the principle of mutuality, this issue becomes academic. We are not giving any clear direction or finding on the issue. However, AO is advised to examine this aspect, if at all at any point of time, principle of mutuality is not allowed to assessee by any of the orders of the higher judicial forum. Since the principles of mutuality are applicable to the society, we consider that income cannot be brought to tax on the activities of the Society. Grounds are considered allowed.

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• 2018 (7) TMI 807
  Treatment to entertainment tax subsidy - capital receipt - nature of receipt - Held that:- SLP dismissed.

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• 2018 (7) TMI 806
  Grant of immunity from prosecution - orders of settlement commission - full and true disclosure of all material facts - Held that:- SLP dismissed.

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• 2018 (7) TMI 805
  Validity of order of transfer a case u/s 127 - in all 48 companies of the group were involved, all of whom have their head offices in Delhi and out of which, 40 companies were filing returns in Delhi - reason as to why case of the petitioner or any other case of the aforesaid group of companies requires to be transferred outside New Delhi to NOIDA - Held that:- SLP dismissed.

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• 2018 (7) TMI 804
  Benefit of deduction u/s 10AA - modernization of existing unit or new undertaking - not the case of reconstruction of existing business but a totally new undertaking has started functioning - Held that:- SLP dismissed.

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• 2018 (7) TMI 803
  Addition u/s 68 - unexplained cash credit - non discharge the burden of proof - Held that:- SLP dismissed.

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• 2018 (7) TMI 802
  Benefit of Section 80HH - duty and onus on the shoulder of the assessee to show that he was also engaged in manufacturing activities - Held that:- SLP dismissed.

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• 2018 (7) TMI 801
  Reopening of assessment - validity of reasons to believe - escaped assessment which was based on a report of the Directorate of Income-Tax (Investigation)- non independent application of mind - Held that:- SLP dismissed.

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• 2018 (7) TMI 799
  Unexplained cash credit - addition u/s 68 - entries on the basis of cash books were written and maintained systematically - Held that:- SLP dismissed. No substantial question of law.

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• 2018 (7) TMI 798
  Restrict the determination of the ALP to transactions with the AE rather than on the entire turnover of the Company - separate figures of international transaction - Held that:- SLP dismmissed.

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• 2018 (7) TMI 797
  Treatment of foreign exchange fluctuations and brand expenses - allowable revenue expenses - Held that:- SLP dismissed.

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• Customs

• 2018 (7) TMI 796
  Imposition of Safeguard Duty - N/N. 71/2009 dated 19.6.2009 - Held that:- There are no reason to interfere with the impugned judgment - The Special Leave Petition is accordingly dismissed.

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• 2018 (7) TMI 795
  No steps taken for service on respondent Nos. 1 to 4 - Last opportunity is granted to take steps for service of the said respondents within two weeks, failing which the petitions shall stand dismissed for non-prosecution.

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• 2018 (7) TMI 794
  Validity of SCN - Jurisdiction - proper officer - authorization u/s 2(34) - power of Additional Director of Directorate of Revenue Intelligence to invoke the provisions of Section 124 of the Customs Act, 1962 - whether the Additional Director of Directorate of Revenue Intelligence has the jurisdiction to invoke Section 124 of the Act of 1962 or not? Held that:- Section 2(34) of the Act of 1962 defines a proper officer. A proper officer, in relation to any function to be performed under the Act of 1962 means the officer of Customs who is assigned those functions by the Board or the Principal Commissioner of Customs or Commissioner of Customs. Section 4 of the Act of 1962 empowers the Board to appoint persons as officers of Customs. It allows the Board to authorize a Principle Chief Commissioner or Chief Commissioner of Customs or a Joint or Assistant or Deputy Commissioner of Customs to appoint officers of Customs below the rank of Assistant Commissioner of Customs. Section 6 of the Act of 1962 allows the Central Government to entrust the functions of the Board or any officer of the Customs on any officer of the Central or State Government or a local authority, either conditionally or unconditionally. Section 152 of the Act of 1962 allows the Central Government to delegate the powers exercisable by the Board, Commissioner of Customs, Joint or Assistant Commissioner of Customs on the persons specified therein. Section 2(34) of the Act of 1962 mandates that, an officer of the Customs must be duly authorised, either by the Board or the Commissioner of Customs to discharge a function under the Act of 1962. In absence of such authorization by the Board or the Commissioner of Customs under the Act of 1962, no officer can discharge any function under the Act of 1962 which he is not authorised to discharge. An appointee under Section 4 of the Act of 1962 requires an authorization under Section 2(34) to be considered as proper officer to discharge the functions of a Customs Officer. An employee other than of Customs, entrusted with the discharge of functions under the Act of 1962 would also require an authorization under Section 2(34) to be considered as a proper officer entitled to discharge functions under the Act of 1962 - The notification No. 31/97- Customs (N.T.) dated July 7, 1997 and notification No. 17/2002, Customs (N.T.) dated March 7, 2002 are exercise of powers under Section 4 of the Act of 1962. It is not an exercise of power under Section 2(34) of the Act of 1962. The personnel of Directorate of Revenue Intelligence named in such notifications have not been authorised to discharge any functions under the Act of 1962 by a conferment of authorization by the Board or the Commissioner of Customs exercising powers under Section 2(34) of the Act of 1962. The circular No. 4/99-Cus. dated February 15, 1999 is also not an exercise of powers under Section 2(34) of the Act of 1962. There is no notification on record authorizing an Additional Director of Directorate of Revenue Intelligence, under Section 2(34) of the Act of 1962 to discharge the functions of a proper officer under Section 124 of the Act of 1962. An authorization under Section 2(34) of the Act of 1962 is sine quo non for any officer of Customs or any officer entrusted under Section 6 of the Act of 1962. As the scheme of the Act of 1962 stands, an officer of Customs has to be authorised under Section 2(34) of the Act of 1962 to discharge the functions entrusted. An officer other than a Customs officer, entrusted under Section 6 of the Act of 1962, needs an authorization under Section 2(34) to be considered as proper officer authorized to discharge the functions of a Customs officer under the Act of 1962. Additional Director of Directorate of Revenue Intelligence is not entitled to invoke Section 124 of the Customs Act, 1962. The impugned show-cause notices are quashed as being without jurisdiction.

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• 2018 (7) TMI 793
  Release of confiscated goods on payment of redemption fine - steel wires - goods were proposed to be re-exported by Revenue, after payment of Redemption fine - it was alleged that the goods do not meet the Bureau of Indian Standards - import of prohibited goods - Held that:- It is not dispute that the steel wires which were imported did not have the BIS certification required as per the Steel and Steel Products (Quality Control)Order, 2016. It is also not in dispute that in view of the general note 2(a)of Schedule-I of the import policy framed under Foreign Trade and Development Regulations Act, 1992, mandatory BIS standards prescribed for products manufactured in India also apply to imported goods. In other words, goods which do not meet the mandatory BIS requirements cannot be imported into India. Therefore, imported goods are liable for confiscation. As per Section 125 of the Customs Act, whenever goods are confiscated the adjudicating authority has to give an option of redemption to the importer in all cases except in respect of prohibited goods where the adjudicating authority may or may not give the option of redemption. In this case, the adjudicating authority has given the option of redemption with an additional condition that the goods after redemption should be re exported. Jurisdiction - whether after giving option of redemption, the adjudicating authority can also add an extra condition that the goods should be re-exported? - Held that:- Section 125 states that it does not confer upon the Authority passing the Order any power to impose any conditions while allowing redemption of goods - The scope of Section 125 of the Act is limited by the words in which it is framed and it is not open to the adjudicating authority or the Tribunal(who are creatures of the statute) to stretch, modify or restrict the scope of this Section; they are bound by it. The condition in the Order-in-Original that the goods should be re-exported after redemption is liable to be set aside - appeal allowed.

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• 2018 (7) TMI 792
  Import of Hazardous waste - lubricate oil - re-export of goods - imposition of redemption fine and penalty - cross-examination of the chemical examiner, CRCL denied - principles of natural justice - Held that:- No reply has been received till date from CRCL and without affording cross examination of chemical examiner impugned order has been passed which is in gross violation of principle of natural justice - Moreover, when the adjudicating authority, itself is in doubt with regard to the chemical examiner’s report, in that circumstances, it would be in the interest of justice to grant cross examination to chemical examiner, CRCL to the appellant. After granting cross examination to chemical examiner, the adjudicating authority shall pass an appropriate order in accordance with law - appeal allowed by way of remand.

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• 2018 (7) TMI 791
  DEEC Advance License Scheme - N/N. 203/92-Cus dated 19.5.1992 - it was alleged that the appellants have violated the conditions of notification by availing input stage credit on the inputs used for the export products - Held that:- A coordinate bench of the tribunal in the case of Polynova Industries [2009 (1) TMI 732 - CESTAT MUMBAI], while dealing with identical circumstances placed reliance in the case of Shasun Drugs & Chemicals v. CESTAT, Chennai [2004 (11) TMI 119 - HIGH COURT OF JUDICATURE AT MADRAS] and held that reversal of credit done partly before and partly after the cut-off date 31-1-97 prescribed by the Amnesty Scheme is in accordance with the scheme. In the case of appellant, in many cases of exports no credit was availed. In all cases where the credit was availed the same was reversed long before the cutoff date. Except in few cases interest too was paid before the deadline. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 790
  Absolute Confiscation - penalty - Smuggling - Diamonds - Baggage Rules - Held that:- Even though, the advocates have disputed that only on the basis of oral evidences, the allegation of act of smuggling involving the appellants cannot be confirmed. However, they could not produce any contrary evidences nor request for cross examination of these witnesses was made. Therefore, the findings of the Ld. Commissioner on the basis of oral evidences which remain unchallenged and not retracted cannot be assailed and admissible evidence - confiscation upheld. The appellant Sh. Pradeep Bhai Jagda and Sh. Karsan Naran Keshwala are actively involved in the smuggling of the rough diamonds seized by the customs on 04.03.2012. consequnelty, imposition of penalty on them under Section 112(a) and (b), respectively sustainable however, the quantum of penalty reduced. Appeal allowed in part.

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• Service Tax

• 2018 (7) TMI 789
  Benefit of Rule 6(5) of the Cenvat Credit Rules 2004 - Insertion of sub-rule 3AA in Cenvat Credit (Third amendment) Rules, 2016 with effect from 01.04.2016 - Held that:- Sub-rule 3AA says that manufacturer or a provider of output service who failed to exercise the option provided under sub-rule (3) is supposed to be given a chance by the competent authority to follow the procedure and pay the amount referred in clause 2 of sub-rule 3. In view of non-extension of benefit provided under Rule 6(5) to the appellant by the adjudicating authority to the appellant which would require production and scrutinisation of documentary evidence. It is a fit case which should be remanded to the original adjudicating authority for fresh adjudication - appeal allowed by way of remand.

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• 2018 (7) TMI 788
  Valuation - inclusion of reimbursable amounts in assessable value - support services business or commerce - ‘customs house agent’ service - Held that:- It does not offer any justifications on the manner in which the amounts claimed to be reimbursable expenses, and not related to the registered services, conformed to the definition of taxable service. Except to point out that the show cause notice had adequately covered the charges, the grounds of appeal appear to give the impression that the impugned order is bereft of a finding on merit. It is in that context that this appeal needs disposal. In the absence of any justifiable challenge on merit in the grounds of appeal, we are also unable to fill the gaps in the review order. Nor are we required to. Appeal dismissed - decided against Revenue.

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• 2018 (7) TMI 787
  Penalty u/s 78 of FA - case of appellant is that the entire amount of service tax along with interest had been paid on being pointed out - intent to evade duty - Held that:- There is no dispute of the fact that the appellant had failed to discharge the service tax during the period 2008 to 2011, even though against the contract they supplied various equipment to M/s. Grasim Industries Ltd. and the said service is taxable under the category of supply of tangible goods for use services. Further, the appellant had not disclosed the provision of the said service to their clients against the respective contracts to the department nor registered with the Service Tax department. There is no reason to waive the penalty imposed u/s 78 of the Finance Act, 1994 - However, the appellant is eligible to discharge 25% of the penalty imposed under Section 78 of the Finance Act, 1994 subject to fulfilment of the conditions laid down therein - appeal allowed in part.

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• 2018 (7) TMI 786
  Refund of service tax paid - export of services - rejection on the ground that the refund was filed beyond statutory time limit - Section 11B of the Central Excise Act, 1944 - Held that:- It is an admitted fact on record that the refund applications in respect of the period in dispute were filed by the appellants within one year from the relevant date. However, the relied upon documents in support of such refund claim applications were filed by the appellant after the limitation period prescribed under the Notification dated 18.06.2012 read with Section 11B ibid - On perusal of the statutory provisions, it reveals that the statute mandates filing of refund applications within the stipulated time frame. In the present case, since the refund applications were filed by the appellant within the prescribed statutory time limit, documents in support of such claim submitted later-on should not be considered as the date of filing of fresh application for the purpose of consideration of the limitation period. Refund allowed - appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 785
  Benefit of N/N. 15/2004-ST - inclusion of value of free supplies used in providing the output Services - The case of the department is that the appellant have misused the benefit of N/N. 15/2004-ST by not including the value of free supplies used in providing the output Services - CENVAT Credit availed - Held that:- Before availing the CENVAT Credit the issue was remained in their favour in terms of larger bench judgment in the case of Bhayana Builders [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)], however, the appellant had availed the CENVAT Credit paid on the Service Tax, since availed the CENVAT Credit even though the judgment of Bhayana Builders was in their favour on the point of inclusion of free supply material. But since they availed the credit they were no longer entitled for the exemption N/N. 15/2004-ST. Penalty - Held that:- There is no question of any malafide intention on the part of the Appellant. Hence, penalties imposed under Section 76 and 78 are clearly not sustainable in terms of Section 80 of the finance Act, 1994 - penalties set aside. Appeal allowed in part.

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• 2018 (7) TMI 784
  Refund of Service tax paid - GTA Services - rejection on the ground that the appellant fall under the scope of Clause 3(b) of said Notification - Held that:- This issue has been considered by the Tribunal in the Bharat Heavy Electrical Ltd’s case [2017 (4) TMI 700 - CESTAT NEW DELHI], where it was held that It is not in dispute that the service tax was paid by the appellant and such services have been used for export of the goods by the appellant, the rebate is required to be paid to the appellants - refund allowed - appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 783
  Penalty u/s 78 - service tax and interest was paid by the appellant even before issuance of show-cause notice on being pointed out by the audit party - invocation of Section 73(3) of FA - Held that:- The entire proceedings were initiated after payment of entire sums due to the Government in form of service tax and interest, show-cause notice has been issued nine months after - In the present case when the appellant has paid the entire amount, issuance of show-cause notice for imposition of penalty would not have been called for. In this case when audit was conducted there was enough time for issue of demand notice without invocation of extended period. The charges of suppression etc cannot be invoked in this case - If all the documentary evidences were available and made available to the audit party at the relevant time there cannot be any justification for holding malafide and issuing notice under Section 73(4) of the Act. Penalty not imposable - appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 782
  CENVAT credit - various input services - denial on account of nexus - Held that:- The assessee is an exporter of taxable service and no output service has been provided by it to the service recipient located within the country. As such, it cannot be said that the disputed services have no nexus with the output service provided by the assessee. Since output service in question, was exported by the assessee, denial of CENVAT Credit benefit on the disputed input service, used/utilized therein, cannot be sustained in the eyes of law - credit allowed. CENVAT Credit - denial on the ground that the invoices do not reflect the address of the registered office of the assessee - Held that:- Since there is no mention or stipulation in the said statutory provision that the services have to be received in the registered premises only and not in other premises of the service receiver, the said plea taken by Revenue cannot be considered as proper for disallowing the legitimate CENVAT Credit to the assessee - credit allowed. Appeal dismissed - decided against Revenue.

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• 2018 (7) TMI 761
  CENVAT Credit - Manpower supply services - recipient of services - tax was discharged by service provider - The Department was of the view that the appellant is not eligible to avail credit of the entire 100% and also was of the view that they have not discharged the 75% liability to the Government - Held that:- It is clear that on some wrong notion, the service provider has discharged 100% service tax, on which the appellant has availed credit. The very same issue has come up for analysation before the Bench at Ahmedabad and in the case of M/s. Gurudev Dyestuff (India) Pvt. Ltd. [2018 (2) TMI 1399 - CESTAT AHMEDABAD], where the Tribunal has held that the appellant would be eligible for entire credit - credit allowed - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (7) TMI 781
  Review of Order - Held that:- There are no reason to interfere with the impugned order - The Special Leave Petitions are accordingly dismissed.

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• 2018 (7) TMI 780
  CENVAT Credit - Base oil - receipt of shorter quantity of base oil - Held that:- There is no merit in the present Special Leave Petition. The Special Leave Petition is accordingly dismissed.

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• 2018 (7) TMI 779
  Transfer of capital goods to sister unit (transfer of business) - whether the transfer would constitute 'removal of capital goods as such' or not? - Rule 3 (5) of the Cenvat Credit Rules, 2004 - Held that:- True, Rule 3 (5) of CCR does require the manufacturer of final products to pay amount equal to credit availed in respect of the inputs or capital goods removed. However, the impugned removals are not in the nature of removal of goods for sale or to other buyers or stock transfer etc. On the other hand, these capital goods have been removed only on account of closing down of the existing unit at Coimbatore and its shifting to the Hindupur. Rule 10 is a special provision within the same CCR 2004 specifically given for such situations. Hence by the maxim of Generalia Specialibus Non Derogent, the provisions of Rule 10 will take precedence and override the general provisions in respect of removal of capital goods found in Rule 3 (5) ibid - the provisions of Rule 10 alone will have direct bearing in respect of these removals. The conditionalities of Rule 10 given in sub-rule (3) have also been complied with. Hence appellants have not fallen foul of Rule 10 of the CCR and are very much eligible to transfer the credit amount along with capital goods so transferred. The Hon’ble High Court of Karnataka in the case of CCE Bangalore-II Vs Solectron Centum Electronics Ltd. [2014 (10) TMI 596 - KARNATAKA HIGH COURT] has held that prior to 13.11.2007 there was no duty payable in respect of capital goods which was used before it is removed. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 778
  Clandestine manufacture and removal - area based exemption - N/N. 50/2003-CE dt. 10.06.2003 - non-filing/late filing of declaration regarding first clearances - Extended period of limitation - Held that:- The legal position with regard to acceptance of belated declaration for the purpose of availing exemption under N/N. 50/2003-CE dt. 10.06.2003 is already settled and filing of late declaration can not deprive them of the benefit of exemption in this regard especially since they have been found to be eligible for the said notification as evident from the fact that post 19.09.2004, benefit of notification is already being allowed to them by the Department. In a similar situation in the case of Indica Industries Pvt Ltd [2016 (11) TMI 696 - CESTAT NEW DELHI], wherein the assessee was otherwise eligible for benefit of N/N. 50/2003-CE, but did not give the prescribed declaration for their new unit (unit-III), this Tribunal took the following view that The department has been intimated about the existence of the unit, nature of products manufactured and the exemption claimed under Notification No. 50/2003-C.E., the same can be considered as adequate compliance of the condition of the notification. Extended period of limitation - case of Revenue is that the appellants would not have filed the declaration had the officers not visited the factory of the appellants - Held that:- This is a presumptuous ground and cannot be said to be sufficient basis for alleging suppression - there was no suppression because the appellants had admittedly filed a late declaration and this Tribunal has taken a consistently benign view of belated filing of declaration in such cases. Besides, there is no dispute that the unit at plot no. 12 was also eligible for the same exemption - the intention to evade duty on the part of the appellants has not been clearly established - extended period cannot be invoked. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 777
  CENVAT/MODVAT Credit - common inputs used in manufacture of exempted final products, some of which was reversed on proportionate basis, remaining part of Modvat credit was reversed after many years - Rule 57CC of Central Excise Rules, 1944 - period involved is 01.09.1996 to 31.03.1999 - in respect of one item, such reversal was made only in April, 2002. Held that:- At the relevant time, the entitlement of the appellants to reverse the credit to the extent of common inputs used in the manufacture of exempted final products was in doubt. However, subsequently Rule 57CCC was inserted in the Central Excise Rules, 1944 through Finance Act, 2010 for reversal of actual credit by the manufacturer availing the credit of specified duty in respect of inputs used for manufacture of final product, which are not chargeable to duty or chargeable to nil rate of duty by payment of amount equivalent to amount of credit attributable to inputs used in the manufacture of such final products - said amendment was retrospective in nature and covers the impugned period in this appeal. It has not been disputed by the Revenue that the appellants have reversed the credit taken in respect of inputs, though admittedly, one reversal of ₹ 34,827/- was made in April, 2002 and the other reversals were made before the issuance of show cause notice - the demand on account of disputed Modvat credit, which has already been reversed by the appellants, is liable to be set aside. In view of Rule 57CCC and statutory scheme introduced in Finance Act, 2010, the appellants are liable to pay an interest @24% per annum for the intervening period from the date of clearance of goods till the date of reversal of the said Modvat credit. The demand of interest is confirmed for the intervening period from the date of clearance of goods till the date of reversal of Modvat credit - demand of disputed Modvat credit and the penalty are dropped - appeal allowed in part.

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• 2018 (7) TMI 776
  Application for early hearing - the issue involved in the present case is covered by the judgement of Hon’ble Supreme Court in the case of SRD Nutrients Pvt Ltd. Vs. Commissioner of Central Excise, Guwahati [2017 (11) TMI 655 - SUPREME COURT OF INDIA] - Held that:- The early hearing application is allowed - Appeal to be listed for regular hearing on 03.07.2018.

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• 2018 (7) TMI 775
  CENVAT Credit - duty paying documents - denial on the ground that the bills of entry against which the appellant has taken the Cenvat credit are not in the name of the appellant - Held that:- Admittedly, the facts are not dispute that the appellant has received the inputs and used the same in the manufacture of final products which have been cleared on payment of duty. Moreover, the appellant is a job worker and the bills of entry are in the name of principal manufacturer who had transferred the goods to the appellant - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 774
  CENVAT credit - registered dealer - invocation of Rule 14 of CER - Held that:- Rule 14 of the Cenvat Credit Rules, 2004 deals with the provisions for recovery of wrongly availed CENVAT Credit. The said statutory provisions mandate that where the CENVAT Credit has been taken or utilized wrongly, the same along with interest shall be recovered from the manufacturer or provider of the output service. On reading of the said statutory provisions, it transpires that proceedings can only be initiated against the manufacturer or the service provider - In this case, the appellant No.1 is not confirming to either of the persons/entity mentioned in the said rule - provisions of Rule 14 ibid cannot be invoked for denial of CENVAT Credit to the appellants. Confiscation u/s 119 of the Customs Act, 1962 - redemption fine - Held that:- It is not the case of Revenue that the appellant had used any other goods to conceal the offending goods i.e. “scrap in pressed bundle or loose scraps”. Thus, confiscation of goods under Section 119 ibid is not proper and justified - redemption fine also not warranted. Penalty u/r 26 of CER - Held that:- The provisions of Rule 26 of the Central Excise Rules, 2002 are applicable in case of both the appellants herein for imposition of penalty inasmuch as wrong invoices were issued by them, facilitating of availment of ineligible Cenvat benefit to the buyer of the goods - however, considering the fact that the buyer M/s. TFCWRL has not availed any credit based on the invoices issued by the appellants, the quantum of penalty is reduced. Appeal allowed in part.

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• 2018 (7) TMI 773
  CENVAT Credit - inputs - Pig Lead Ingots - Manufacture - CENVAT Credit denied on the ground that the processes do not amount to manufacture - whether the appellant are entitled to credit of duty paid by M/s Gravita Metal on the inputs, namely, Pig Lead Ingots? - Held that:- The issue is no more res-integra and covered by the judgment of Hon’ble Gujarat High Court in the case of Nahar Granites [2014 (5) TMI 57 - GUJARAT HIGH COURT], where it was held that A manufacturer would be entitled to avail the cenvat credit in respect of the inputs used for the manufacture of a final product or in providing taxable service of the excise duty specified in First Schedule to the Excise Tariff Act - appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 772
  CENVAT Credit - value based exemption availed - contention of the department is that since the appellant was availing value based exemption, therefore, the credit lying in balance as on 31/03/2010 would lapse in accordance with Rule 11(2) of CENVAT Credit Rules, 2004 - whether the appellant had correctly availed CENVAT Credit of ₹ 5,30,300/- lying in balance as on 31/03/2010 and also credit of ₹ 5,74,902/- availed during the Financial Year 2010-11? - Time limitation - Held that:- As the appellant had been availing benefit of exemption Notification, which was value based, accordingly, the credit of ₹ 5,30,300/-, lying as on 31.3.2010 would lapse and is inadmissible to the appellant in the year 2010-11. In Clause- 2(d)(iii) of the Notification 08/2003, a specific condition has been prescribed that manufacturer cannot avail CENVAT Credit on inputs used in the manufacture of specified goods up to the aggregate value of first clearance not exceeding ₹ 150.00 Lakhs. Therefore, non-compliance of the same would result in inadmissibility of the credit, on the inputs even though the appellant had complied with the Rule 6(3) of CENVAT Credit Rules, 2004 - it is found that the department while denying the said credit adjusted the amount paid under Rule 6(3) of CENVAT Credit Rules. Thus, the appellant are not entitled to CENVAT Credit both the amounts i.e. ₹ 5,30,300/- and also 5,74,902/-. Time limitation - Held that:- The department is fully aware of the fact that the appellants are availing benefit of SSI exemption Notification for clearance of the goods manufactured on their on behalf and also manufacturing branded goods for others. All these facts are reflected in their monthly Returns filed from time to time - Therefore, SCN issued on 09/9/2014 for recovery of the excess credit inadmissible availed in 2010-11 is barred by limitation. Appeal is allowed on the ground of limitation.

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• 2018 (7) TMI 771
  Refund of excess duty paid - unjust enrichment - it was alleged that the appellant could not produce sufficient evidence to establish that the burden of excise duty claimed as refund, has not been passed on to others - Whether the appellant had passed on the burden to the customers of the amount claimed by them as refund? Held that:- From the labels/laminates produced by the appellant it indicates that the MRP is inclusive taxes. Even if the MRP remained same before and after the clearances of the excess duty paid, it is not clear whether the burden of duty is not included in the MRP or other wise - This issue has been considered by Division of this Tribunal involving similar circumstances in Sh. Baidyanath Ayurved Bhavan case [2008 (8) TMI 324 - CESTAT, MUMBAI], where the Tribunal has considered the fact that even though on the labels, it was clearly mentioned that the price does not include Central Excise duty, but observed that the appellant could not establish that the burden of duty had not been passed on to others. In the present case, on the contrary, the label/laminate produced by the appellant shows that the MRP is inclusive of all taxes. Thus, the appellant could not establish that the excess duty paid by them during the relevant period has not been recovered from the customers, by not including the same in the MRP of the goods. The copies of balance sheet produced, also do not show that the amount was considered as receiveables from the department - refund rightly rejected. Appeal dismissed - decided against appellant.

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• 2018 (7) TMI 770
  100% EOU - CENVAT credit - furnace oil used in generation of steam, part of which transferred to unit-II - whether CENVAT Credit availed on the furnace oil used in generation of steam, attributable to the portion transferred to unit-II, is admissible to credit at unit-I or otherwise? - Held that:- There are conflicting views on the subject on the admissibility of CENVAT Credit availed on furnace oil used in generation of steam in one Unit, when a portion of it transferred to another unit situated in the same plot - However, the ratio laid down in Sintax Industries’s case[2013 (6) TMI 178 - GUJARAT HIGH COURT], followed, where it was held that proportionate Cenvat Credit on furnace oil, to the extent wheeled out is not admissible - the appellant are not eligible to proportionate credit availed on furnace oil, attributable to generation of steam, wheeled out to their unit-II, instead of being captively consumed in Unit-I - CENVAT Credit not allowed. Extended period of limitation - Held that:- Extended period of limitation cannot be invoked in the present case for the simple reason that there are conflicting views available on the subject and also all the facts have been disclosed by the appellant to the department through their ER-2 Returns filed with the department. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 769
  CENVAT Credit - various input services - Management Consultancy Services - Business Exhibition service - Management consultancy and Tax consultancy Service - Insurance for finished goods and Inputs - Insurance of employees family members - Lease for cars - Architecture and Construction services - Training service - Pandal and Shamiana service. Management Consultancy Services - various services under this head - Held that:- On going through the nature of services availed by the assessee such as advertisement services, market research, coaching and training, finance and legal services, procurement of inputs etc., these services found to be an inclusive part of the definition of input service, after amendment as on 01.04.2011 - as regards Consulting Service, these services are input services under activities relating to business, finance, audit, accounts and quality control, Cenvat credit on the aforesaid services cannot be denied - credit allowed. Business Exhibition service - Held that:- Prior to March 2011, the assessee is entitled to avail Cenvat credit on input services which have been availed by them in the course of their business of manufacturing excisable goods as per the decision of Hon’ble Bombay High Court in the case of CCE, Nagpur vs. Ultra Tech Cement Limited [2010 (10) TMI 13 - BOMBAY HIGH COURT] - the assessee is entitled to avail Cenvat credit of ₹ 7,19,438/-. Management consultancy and Tax consultancy - Held that:- The said services availed by the assessee are legal in nature and the same form inclusive part of definition of input service in terms of Rule 2(l) of Cenvat Credit Rules, 2004 - Credit allowed. Insurance for finished goods and Inputs - Held that:- Assessee has opted insurance for their finished goods and inputs. Until and unless the goods are insured, in the event of any unforeseen accident wherein the finished goods or inputs destroyed before clearance from the place of removal, the said activity is attributable to the manufacturing activity of the assessee - credit allowed. Insurance of employees family members - extended period of limitation invoked for denial of credit - Held that:- Extended period of limitation is not invokable for denial of Cenvat credit on insurance of family members of the employees - As there is no quantification of the said amount before us, therefore, for the said limited purpose of quantification of the amount of disallowance of Cenvat credit on Insurance of family members of the employees of the assessee, the matter need re-examination at the end of the adjudicating authority - matter on remand. Lease for cars - Held that:- The car has been taken by the assessee for official purposes to be used by the employees of the assessee. As the said activity relates to business of manufacturing, therefore, the assessee is entitled to avail Cenvat credit - credit allowed. Architecture and Construction services - Held that:- With regard to architecture and construction services availed by the assessee for setting up of factory, we find that the said issue has been settled by the decision of the Hon’ble Punjab and Haryana High Court in the case of Bellsonica Auto Components India Pvt. Limited [2015 (7) TMI 930 - PUNJAB & HARYANA HIGH COURT], where it was held that the input services used in relation to setting up, modernization, renovation or repairs of a factory will be allowed as credit, even if they are assumed as not an activity relating to business as long as they are associated directly or indirectly in relation to manufacture of final products and transportation of final products upto the place of removal - credit allowed. Training service - the adjudicating authority, on merits has not disputed that assessee is not entitled to avail Cenvat credit but technically it has been held that there is no service tax component shown in the invoices and the assessee has not paid the service tax, consequently they are not entitled to avail Cenvat credit - Held that:- As it is evident from the invoice that assessee has paid the service tax, therefore, we hold that assessee is entitled to avail Cenvat credit on training service to the tune of ₹ 19,158/- - credit allowed. Pandal and Shamiana service - denial on account of nexus - Held that:- The said service has been availed by the assessee for organising Diwali function in the factory for the employee and in terms of decision of the Hon'ble High Court of Karnataka in the case of Toyota Kirloskar Motor Private Limited vs. CCE [2011 (3) TMI 1373 - KARNATAKA HIGH COURT] wherein the Hon'ble High Court has held that for any such type of function organised by the assessee, in the factory premises, for enjoyment of the employees, they are entitled to avail Cenvat credit - credit allowed. Penalties - Held that:- As, on merits the assessee is entitled to avail Cenvat credit, therefore, no penalty is imposable on the assessee in the facts and circumstances of the case - penalties are set aside. Appeal allowed by way of remand.

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• 2018 (7) TMI 768
  CENVAT Credit - input services - Rent-a-Cab service for transporting the employees from various pick up points to the manufacturing facility for the period after 2011 - Held that:- With effect from 01.04.2011, Cenvat Credit Rules, 2004, have been amended to provide for specific exclusion in respect of rent-a-cab service from the definition of input service. The exclusion clause has got three limbs categorized as (A), (B) and (C). The phrase specifically “for personal consumption” appearing in (C) is not linked to clause (A) and (B). In the present case the services sought to be denied are part of limb (B). The exclusion clause is provided in the statute is with reference to the specific definition clause only. Something which may be covered has got to be excluded by way of exclusion. In view of the exclusion clause the arguments with regard to the coverage, the services under the definition clause first part would not be correct - While deciding the matter the bench did not make any distinction between the services covered under clauses (B) and (C). Such interpretation which has been done ignoring the specific provisions in law cannot be but per incurium and hence cannot be binding precedence. Accordingly, the submissions made cannot be a reason for allowing the credit in respect of rent-a-cab service in the present case. Penalty - Held that:- The adjudicating authority holds that there is no mens rea and penalties under Rule 25 have not been imposed. I am not in a position to uphold any penalties imposed under the said Rule - penalties imposed under Rule 15 also could not sustain as The matter is in respect of bare interpretation - penalties set aside. Appeal dismissed - decided against appellant.

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• 2018 (7) TMI 767
  CENVAT Credit - input services - services provided by the over-seas commission agent including the services of sales promotion by the appellant - Held that:- From the agreement produced by the appellant which has been made between M/s. MAZER-the foreign commission agents and the appellant clearly placed the responsibility to undertake activities to promote the sale and other business objective of the company on the said commission agents - It is wide evident that the services provided by M/s MASER are inclusive of services of sales promotion. Since the activities undertaken by over-seas commission agents are inclusive of activities of sales promotion, admissibility of credit cannot be disputed - reliance placed in the case of Monarch Catalyst Pvt. Ltd. v. CCE [2016 (2) TMI 64 - CESTAT MUMBAI], where it was held that the appellant is entitled to avail cenvat credit in respect of commission paid to the commission agent based abroad. Since matter is being allowed on merits, the issue of limitation is not entered in this case - appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 766
  Valuation - enhancement of value - related party transaction - Held that:- The bulk of the clearances are exported and therefore does not provide comparable transaction value for ascertaining undervaluation in clearances to M/s Ornet Dyestuff Industries - No justification has been adduced in the show cause notice for enhancement of the value and, consequently, the demand by the jurisdictional authorities is not based on law - appeal dismissed - decided against Revenue.

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• 2018 (7) TMI 765
  SSI Exemption - aggregate value of clearances for the purpose of SSI exemption limit - addition of clearances of EOU Unit - Held that:- The export clearances other than made to Nepal and Bhutan, cannot be added to the value of home consumption clearances, for the purposes for determining aggregate value of clearance - It is not disputed that, the Hosur unit of the appellant was an EOU and thus that units' clearances then cannot be added to the appellant's Manali unit for such purposes. Extended period of limitation - Held that:- The ground invoked in the SCN for invoking the extended period of limitation is not at all convincing. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 764
  CENVAT Credit - common inputs used in manufacture of dutiable as well as exempt goods - exempted goods i.e. Vanaspati/Refined Vegetable oil - no separate inventory and account of inputs used in the manufacture of dutiable and exempted final products had been maintained - Rule 57CC of the Central Excise Rules, 1944 - extended period of limitation - Held that:- Appellant have reversed the Modvat credit on proportionate basis in respect of the said inputs used in the manufacture of exempted final product. It is not disputed that the appellant have also paid the interest on the reversed credit @24% per annum. At the relevant time, the entitlement of the appellants to reverse the credit to the extent of common inputs used in the manufacture of exempted final products was in doubt. However, subsequently Rule 57CCC was inserted in the Central Excise Rules, 1944 through Finance Act, 2010 for reversal of actual credit by the manufacturer availing the credit of specified duty in respect of inputs used for manufacture of final product, which are not chargeable to duty or chargeable to nil rate of duty by payment of amount equivalent to amount of credit attributable to inputs used in the manufacture of such final products - the said amendment was retrospective in nature and covers the impugned period in this appeal. Since the appellant have reversed Cenvat credit attributable to the common inputs used for manufacture of exempted final products and paid interest @24% per annum, the appellant has made met the requirement of scheme of retrospective amendment of Section 69(2) of the Finance Act, 2010 - the demand of 8% of the value of exempted goods is not sustainable and is accordingly set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 763
  Rectification of Mistake - Held that:- In the order dt.17.8.2017, at fourth line, after the word factory, it should be read as ‘Marine Insurance Charges, GTA for Export Service and Effluent Treatment Service’ and at seventh line the case laws, namely, VFC Industries Pvt. Ltd. vs CCE Vadodara Order No. A/10953/2017 in relation to Marine Insurance, Indian Farmers Fertilizers Co-op. Ltd. vs Commr. of Trade Tax, Lucknow 2015 (315) ELT 210 (All.) in relation to Effluent Treatment Plant Service and GTA Service for Export of the goods the case is covered in the case of Anar Chemicals Pvt. Ltd. vs CCE Ahmedabad 2011 (24) STR 32 (Tri.Amd), be added - order is rectified accordingly - ROM Application allowed.

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• 2018 (7) TMI 762
  Clandestine removal - The main allegation levelled against the appellant is that they cleared cheese/cone yarn in the guise of hank yarn and thus evaded payment of duty - statements of buyers relied upon - Held that:- The procedure contemplated for removal for the purpose of conversion is self contained. The consequence of not adhering to the procedure is laid down in 156 B. The department has no case that any action was taken against appellant for not complying the procedure. To get the yarn converted into hank the appellant dispatches the dutiable cheese yarn without payment of duty under cover of statutory Form AR 3A with permission of concerned Range Officer and the yarn will get re-warehoused with the job worker concerned under the control of the jurisdictional Range Officer who records the fact of such re-warehousing. After conversion, the hank yarn is returned to the appellants who receives them under cover of statutory documents under intimation to the Range Officer in Form D3. Thus the removal for conversion and receipt of converted hank yarn is intimated to, and acknowledged by the department - the department cannot give a go by of such documents by relying on the statement of Range Officer that he was merely endorsing upon the document without physically verifying whether yarn was received by appellants after conversion. The evidences including the ARA-3s and D3s indicate the strong probability that appellant has send yarn for conversion. Another reason for rejection of these documents of conversion is that the vehicle numbers noted there in are fictitious. The Ld.Counsel has pointed out that out of the 400 AR-3As, only 14 numbers have incorrect vehicle number. Out of these, 8 documents were prepared by them. He has submitted that it happened only due to error in noting the vehicle number. We find no reason not to accept this contention of the appellant. Out of 400 AR3-As, when the vehicle numbers mentioned only in 14 documents showed variation or incorrectness. The strong inference that can be made is that it was merely human error. This cannot in our view, be a ground to reject all 400 documents as bogus. The main evidence relied is the statement of buyers of yarn from the appellant. The Partner/director of M/s. Peeyelyes International and Sansons Exports, M/s.JaisarSpintex (P) Limited, M/s. Peeyelcee Tex Exports (P) Limited and M/s. Anitha Traders had stated that they purchased only cone/cheese yarn and that they use only minimum quantity of hank yarn etc. Out of these Sh.A.Chandrasekar, Partner of Anitha Traders has stated in cross examination that they purchased hank yarn from appellant. Surprisingly, although documents recovered from Sh. Muthu Industries (sizing Mill run by and for Peeyelyes International) was heavily used by department for investigation as well as to base the allegations in the SCN, it is seen that no statement was obtained from any person connected with M/s.Muthu Industries. The department has failed to establish that the appellant has not cleared hank yarn. The evidences, such as AR3-As and related documents, alongwith the deposition of job workers made during cross examination strongly indicate that during the disputed period appellant, though did not have reeling machine, was sending cone yarn for conversion into hank yarn and clearing the same without payment of duty. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 760
  Recovery of CENVAT Credit - Cotton Yarn - it was alleged that since cotton yarn attracted nil rate of duty, the appellants are not eligible to avail credit - various notifications issued for levy and deletion of duty on Cotton Yarn during the relevant period - Held that:- Though there were parallel notifications wherein one of the notification prescribed duty at the rate of 4% on cotton yarn, there was another N/N. 58/2008 dated 7.12.2008 which prescribed nil rate of duty. Thus, on the same date there were two notifications one of which prescribed nil rate of duty and the other prescribed 4% duty. The appellant can opt for a notification which is beneficial to him and the appellant herein has chosen to pay duty at the rate of 4% and claim rebate - denial of credit not justified - appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 759
  Clandestine removal - SS Flats, MS & AS Ingots/Billets - fake invoices - penalty u/r 26 (2) of CER on Director - Held that:- It is not dispute that M/s.HSAL had issued cenvatable invoices to M/s.NSPF without the corresponding goods. Also, it is fairly admitted by the appellant that the main assessee M/s.NSPF has paid duty and penalty when the supplier admitted that they had supplied the goods after procuring the same from open market. Shri Dinesh Goel was looking after day to day affairs of M/s.NSPF and all business transactions and accounts was done directly by him. It is inconceivable that with such a crucial role in the running of the company, Shri Dinesh Goel had no knowledge about fraudulent invoices without supply of the goods mentioned therein - Besides, the clear-cut admission by M/s.HSAL leaves no doubt that M/s.NSPF had engaged in commission of fraudulent availment of Cenvat credit. Penalty u/s 26(2) of CER on Director - Held that:- The issue of imposition of penalty under Rule 26 (2) prior to 1.3.2007 was examined by Hon’ble Punjab and High Court in the case of V.K.Enterprises [2011 (3) TMI 133 - PUNJAB AND HARYANA HIGH COURT] and ratio of the said judgment is applicable to the present case - In the said case, while upholding penalty on dealer for issuing invoices while not delivering the goods for the period prior to 1.3.2007, the Hon’ble High Court held that the person who receives the invoices without the receipt of goods mentioned in those invoices and avails Cenvat credit of the duty paid on goods mentioned in the purported invoices, without receiving the duty paid goods, is liable to pay penalty as he has taken credit in respect of goods which have been rendered liable to confiscation by their clandestine diversion - the penalty under Rule 26 is imposable on the Director for his role - however, the quantum of penalty is reduced. Appeal allowed in part.

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