TMI Tax Updates - e-Newsletter
July 14, 2017

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax

TMI SMS

• TDS u/s 194I on rent - the payment made by the Assessee to AAI under the LA is Rent liable to TDS

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Highlights / Catch Notes

• Income Tax:

  Income-tax (20th Amendment), Rules, 2017 - Determination of fair market value of unquoted equity shares and other than a quoted share
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• Income Tax:

  The transaction of acquisition business as a going concern is between two related parties and the seller had a substantial interest by holding 50% share. The assets were already depreciated in the hands of the seller i.e. M/s.BPL Ltd., higher values were assigned by the assessee-company in order to avoid tax liability - AO is justified in his action in restricting the allowance of depreciation on WDV at higher than 25% of the closing stock.
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• Income Tax:

  Expenses incurred on market research - revenue expenses - whether expenses not to be amortized u/s 35D(2)(a)(iii) as held by AO? - Both the conditions are not fulfilled. So, the expenses cannot be amortized by invoking the provisions contained u/s 35D
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• Income Tax:

  TDS u/s 194I - TDS on rent to AAI - the payment made by the Assessee to AAI under the LA is ‘rent’ within the meaning of Section 194-I of the Act.
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• Customs:

  Classification of imported item - Danload 6000 Electronic Preset Metering Equipment, parts thereof and configuration software - to be classified under 9032 of the First Schedule to the Customs Tariff Act, 1975
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• DGFT:

  Amendment in Chapter Notes and Import Policy and Policy Conditions of items under Chapter 98 of ITC (HS), 2017 - Schedule -1 (Import Policy) - Notification
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• Service Tax:

  Business Auxiliary Services - Subvention charges - taxability - Such subvention charges collected are part of the commission, which falls under the taxable category of ‘business auxiliary service’
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• Service Tax:

  Self adjustment of excess paid service tax - appellant already claimed the refund for excess amount adjusted against the service tax liability for the month of April, 2010 and the said refund was already sanctioned, this clearly shows that the amount which was refunded was also adjusted - demand with interest confirmed.
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• Service Tax:

  Condonation of delay in filing an appeal - the law of limitation is not intended to defeat the rights of parties except those who are adopting dilatory tactics or purposely evading the proceedings - Misplacing of papers appears to be genuine mistake and the delay also is not inordinate. - HC
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• Central Excise:

  CENVAT credit availed suo moto - second time debit made by the appellant is not duty which only happened due to inadvertent mistake of the appellant. Accordingly, no process of Section 11B is required for claiming refund.
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• Central Excise:

  CENVAT credit - duty paying invoices - job-work - department took the view that no service was rendered by BIL, hence, availment of credit of service tax component reflected in those invoices was incorrect - credit was rightly denied.
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• Central Excise:

  CENVAT credit - Broadcasting services - advertising services - the Broadcasting and advertisement have been done on behalf of the appellant and they have borne the incidence of Service Tax, the credit cannot be denied.
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• Central Excise:

  Clandestine removal - extended period of limitation - Considering the voluminous nature of evidences, we do hold that the issuance of the second show cause notice dated 7.5.2004 is legal and proper and not hit by limitation.
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• Central Excise:

  Valuation - clearance of manufactured computers after pre-loadingh with Application Software - Deduction of software cost has to be on the basis of amount equivalent to market prices of the comparable product, that the cost of operating software was not the cost of CD alone but other costs such as royalty, warranty, after-sales service etc. are to be taken into account
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Articles

• When Government fails to keep track of Notifications issued by itself, how can common people be expected to follow the same.
• An injustice made to Practicing Advocates in GST Act - They cannot become a Member of the Appellate Tribunal directly from the Bar.
• No delay when order was not served but assessee obtained certified copy of order and then filed appeal in time

Notifications

• DGFT

• 16/2015-2020 - dated 12-7-2017 - FTP
  Amendment in Chapter Notes and Import Policy and Policy Conditions of items under Chapter 98 of ITC (HS), 2017 - Schedule -1 (Import Policy)

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• GST - States

• G.O.Ms. No. 275 - dated 30-6-2017 - Andhra Pradesh SGST
  Notifying certain rules.

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• G.O.Ms. No. 268 - dated 29-6-2017 - Andhra Pradesh SGST
  Amendments in certain rules.

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• G.O.Ms. No. 259 - dated 29-6-2017 - Andhra Pradesh SGST
  Notifies that the State tax, on the intra-State supply of services.

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• G.O.Ms. No. 258 - dated 29-6-2017 - Andhra Pradesh SGST
  Section 9 (1) of the Act-Notifying the State Tax Rates for goods.

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• G.O.MS. No. 227 - dated 22-6-2017 - Andhra Pradesh SGST
  The Andhra Pradesh Goods and Services Tax Rules, 2017-

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• FTX.56/2017/035 - dated 29-6-2017 - Assam SGST
  Availabilty of Input Tax Credit on certain services under section 17.

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• FTX.56/2017/034 - dated 29-6-2017 - Assam SGST
  Eligibilty of a registered person to opt for Composition levy under section 10.

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• FTX.56/2017/033 - dated 29-6-2017 - Assam SGST
  Rate of interest under Section 50, 54 , 56.

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• FTX.56/2017/032 - dated 29-6-2017 - Assam SGST
  Mentioning the digits of Harmonised System of Nomenclatures (HSN) codes in a tax invoice issued by a registered persons.

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• FTX.56/2017/031 - dated 29-6-2017 - Assam SGST
  Seeks to bring certain sections of the SGST Act, 2017 into force w.e.f. 01-07-2017.

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• FTX.56/2017/030 (No.17/2017) - dated 29-6-2017 - Assam SGST
  Tax shall be paid by the Electronic Commerce operator for certain category of the Services under section 9(5).

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• FTX.56/2017/029 (No.16/2017) - dated 29-6-2017 - Assam SGST
  Refund for United Nation or Specified Internation organizational and Foreign Diplomatic Mission or Consular post in India or Diplomatic Agents or carrier consular officer posted therein under section 55.

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• FTX.56/2017/028 (No.15/2017) - dated 29-6-2017 - Assam SGST
  No refund for unutilized tax credit of certain supply of services under section 54(3).

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• FTX.56/2017/027 (No.14/2017) - dated 29-6-2017 - Assam SGST
  Activities not to be considered neither supply of goods nor services.

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• FTX.56/2017/026 (No.13/2017) - dated 29-6-2017 - Assam SGST
  Reverse charge for specified supply of services under section 9(3).

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• FTX.56/2017/025 (No.12/2017) - dated 29-6-2017 - Assam SGST
  Exemption for certain services under section 11(1).

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• FTX.56/2017/024 (No.11/2017) - dated 29-6-2017 - Assam SGST
  Notifying the rate of services under section 9(1).

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• FTX.56/2017/023 (No.10/2017 - dated 29-6-2017 - Assam SGST
  Exemption of intra-State supplies of second hand goods received by a registered person.

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• FTX.56/2017/022 (No. 09/2017) - dated 29-6-2017 - Assam SGST
  Exemption for tax deductor under section 11(1).

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• FTX.56/2017/021 (No. 08/2017) - dated 29-6-2017 - Assam SGST
  Exemption for reverse charge up to RS. 5000 under section 11(1).

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• FTX.56/2017/020 (No. 07/2017) - dated 29-6-2017 - Assam SGST
  Exemption for inward supply to Canteen Store Department under section 11(1).

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• FTX.56/2017/019 (No. 06/2017) - dated 29-6-2017 - Assam SGST
  Entitlement to claim refund for the purpose of Canteen Store Department under section 55.

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• FTX.56/2017/018 (No. 05/2017) - dated 29-6-2017 - Assam SGST
  No refund for unutilized tax credit of certain supply of goods under section 54(3).

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• FTX.56/2017/017 (No. 04/2017) - dated 29-6-2017 - Assam SGST
  Reverse charge on specified supply of goods under secion 9(3).

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• FTX.56/2017/016 (No. 03/2017) - dated 29-6-2017 - Assam SGST
  Notifying Concessional rate of petroleum operations for supply of goods under section 11(1).

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• FTX.56/2017/015 (No. 02/2017) - dated 29-6-2017 - Assam SGST
  Notifying the exempt intra-State supplies of goods.

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• FTX.56/2017/014 (No. 01/2017) - dated 29-6-2017 - Assam SGST
  Notifying the rate of goods under section 9(1).

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• FTX.90/2016/069 - dated 22-6-2017 - Assam SGST
  The Assam Goods and Services Tax Rules, 2017.

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• FTX.90/2016/068 - dated 22-6-2017 - Assam SGST
  Notifying jurisdiction of State Tax Officers.

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• FTX.90/2016/066 - dated 22-6-2017 - Assam SGST
  Seeks to exempt persons only engaged in making taxable supplies, total tax on which is liable to be paid on reverse charge basis.

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• FTX.90/2016/065 - dated 22-6-2017 - Assam SGST
  Notifying www.gst.gov.in as the Common Goods and Services Tax Electronic Portal.

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• FTX.90/2016/064 - dated 22-6-2017 - Assam SGST
  Seeks to bring certain sections of the SGST Act, 2017 into force w.e.f. 22.06.2017.

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• (GHN-59)GST-2017-S.99(1)-TH - dated 12-7-2017 - Gujarat SGST
  Gujarat Appellate Authority for Advance Ruling

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• (GHN-58)GST-2017-S.96(1)-TH - dated 12-7-2017 - Gujarat SGST
  Gujarat Authority for Advance Ruling

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• (GHN-57)GST-2017-S.11(1)(8)TH - dated 11-7-2017 - Gujarat SGST
  Corrigendum – Notification No. 2/2017-State Tax (Rate)

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• EST/1/jurisdiction/B. 2168 - dated 5-7-2017 - Gujarat SGST
  Delegates of Power Under sub-section(3) of section 5 of the Gujarat Goods and Service Tax Act 2017(Guj 25 of 2017)

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• 01/2017-State Tax (Rate) - dated 30-6-2017 - Gujarat SGST
  Rate of tax on supply goods section 9(1)

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• 48/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification regarding the categories of services on which tax will be payable under reverse charge mechanism under the HGST Act,2017

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• 47/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification regarding the exemptions on supply of services under the HGST Act,2017

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• 46/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification regarding the rates for supply of services under the HGST Act,2017

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• 45/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification regarding rate of interest under the HGST Act, 2017

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• 44/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification regarding HGST exemption for dealers operating under Margin Scheme/Second Hand Goods notified under section 11 (1) of the HGST Act, 2017

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• 43/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification regarding Exempting supplies to a TDS deductor by a supplier, who is not registered, under section 11 (1) of the HGST Act, 2017

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• 42/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification regarding HGST exemption from reverse charge upto ₹ 5000 per day under section 11 (1) of the HGST Act, 2017.

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• 41/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification regarding Exemption from HGST supplies by CSD to Unit Run Canteens and supplies by CSD / Unit Run Canteens to authorised customers notified under section 11 (1) and section 55 CSD

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• 40/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification regarding Refund of 50% of HGST on supplies to CSD under section 55.

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• 39/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification regarding Supplies of goods in respect of which no refund of unutilised input tax credit shall be allowed under section 54 (3)

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• 38/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification regarding Reverse charge on certain specified supplies of goods under section 9 (3) of the HGST Act,2017

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• 37/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification 2.5% concessional HGST rate for supplies to Exploration and Production notified under section 11 (1) of the HGST Act, 2017

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• 36/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification under sub-section (1) of section 11 the HGST Act notifying exemption of intra-State supplies of goods

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• 35/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification under sub-section (1) of section 9 the HGST Act notifying the rate of the state tax

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• 34/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification regarding Composition conditions under section 10(1) 164 of the HGST Act, 2017.

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• 33/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification – Regarding amendment in rules under section 164 of the HGST Act, 2017

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• 32/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification under section 4(2) of the HGST Act of 2017 for the purpose of tax administration the State shall be divided into five ranges comprising the districts.

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• 31/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification under sub-section (2) of section 4, read with clause (4) of section 2, of the HGST Act of 2017 to exercise the powers and perform the duties of adjudicating authority

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• 30/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification under section 4(2) read with clause (91) of section 2 of the HGST Act of 2017 to exercise the powers and perform the duties of proper officer in the areas

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• 29/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification regarding to bring into force certain sections of the HGST Act, 2017 w.e.f 01.07.2017

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• 28/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification regarding Omit of figure 165 of notification no. 21/ST-2, dated 22.06.2017.

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• 27/ST-2 - dated 22-6-2017 - Haryana SGST
  Exemption from Registration to the persons on reverse charge basis of the GST Act

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• 26/ST-2 - dated 22-6-2017 - Haryana SGST
  Common Portal of the GST Act

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• 24/ST–2 - dated 22-6-2017 - Haryana SGST
  Appoints the Taxation Inspectors of the GST Act

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• 23/ST–2 - dated 22-6-2017 - Haryana SGST
  Appoints the Additional Excise & Taxation Commissioners & others of the GST Act

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• 22/ST–2 - dated 22-6-2017 - Haryana SGST
  Appoints the Excise and Taxation Commissioner, Haryana to be the Commissioner of State tax of the GST Act

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• 21/ST–2 - dated 22-6-2017 - Haryana SGST
  The Provisions of sections 1, 2, 3, 4, 5, 10, 22, 23, 24, 25, 26, 27, 28, 29, 30, 139, 146, 164 and 165 of the GST Act

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• 699-782/PS/CCT - dated 12-7-2017 - Jammu & Kashmir SGST
  the "Proper Officers" for various functions under the J&K GST Act.

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• SRO-GST-11. - dated 8-7-2017 - Jammu & Kashmir SGST
  STATE TAX, ON THE INTRA-STATE SUPPLY OF SERVICES

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• SRO-GST-08. - dated 8-7-2017 - Jammu & Kashmir SGST
  EXEMPTION ON INTRA-STATE SUPPLIES OF GOODS OR SERVICES OR BOTH RECEIVED BY A REGISTERED PERSON

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• SRO-GST-07. - dated 8-7-2017 - Jammu & Kashmir SGST
  EXEMPTION TO THE SUPPLY OF GOODS BY THE CSD

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• SRO-GST-06. - dated 8-7-2017 - Jammu & Kashmir SGST
  CANTEEN STORES DEPARTMENT ENTITLEMENT

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• SRO-GST-05. - dated 8-7-2017 - Jammu & Kashmir SGST
  NO REFUND OF UNUTILIZED INPUT TAX CREDIT

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• SRO-GST-04. - dated 8-7-2017 - Jammu & Kashmir SGST
  LIST OF GOODS ON WHICH GST IS TO BE PAID ON REVERSE CHARGE BASIS.

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• SRO-GST-03. - dated 8-7-2017 - Jammu & Kashmir SGST
  LIST OF EXEMPTED GOODS USED ON OPERATIONS (INTRA-STATE SUPPLIES)

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• SRO-GST-01. - dated 8-7-2017 - Jammu & Kashmir SGST
  NOTIFICATION REGARDING THE RATE OF JAMMU AND KASHMIR GST ON ALL INTRASTATE SUPPLIES OF GOODS OR SERVICES

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• Income Tax

• 61/2017 - dated 12-7-2017 - IT
  Income-tax (20th Amendment), Rules, 2017 - Determination of fair market value of unquoted equity shares and other than a quoted share

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News

• No GST on Annual subscription/fees charged as lodging/boarding charges by educational institutions from its students for hostel accommodation;

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• Services provided by the Housing Society Resident Welfare Association (RWA) not to become expensive under GST; There is no change made to services provided by the Housing Society (RWA) to its members in the GST regime

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• DIPP to set up India’s first TISC in Punjab

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• RBI Reference Rate for US $

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• The Union Minister of State (Finance & Corporate Affairs) Shri Arjun Ram Meghwal: India has had a long history of social responsibility; Underlined the need for introducing innovations to be able to effectively contribute to social development and nation building through CSR projects

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Case Laws:

• Income Tax

• 2017 (7) TMI 432
  Deduction u/s 80IB - Ownership vs Builder - Held that:- The special leave petitions are dismissed. HC order confirmed [2012 (12) TMI 84 - MADRAS HIGH COURT]. HC has held that the provisions nowhere require that developers who are the owner of the land alone would be entitled for grant of deduction under Section 80IB(10). Therefore, assessees were entitled to the benefit u/s 80IB(10) even where the title of the lands had not passed on to the assessees and in some cases, the development permissions may also have been obtained in the name of the original land owners. The local authority, being the Corporation, had already certified about the completion of the project as per the approved plan, the fact that one of the Authorities, namely, Chennai Metropolitan Development Authority had issued a letter only on 13.6.2008, per se, cannot negative the assessee's claim for deduction. In the light of the above-said facts, Revenue's appeal is rejected. – Decided against the Revenue.

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• 2017 (7) TMI 431
  Time barred assessment u/s 158BE(1)(b) - period of limitation - time taken for special audit under section 142(2A) - Held that:- The special leave petition is accordingly dismissed. HC order confirmed [2015 (5) TMI 11 - CALCUTTA HIGH COURT]. HC has held that the audit commenced on 13th November 2000 and was concluded on 24th April, 2001. Thus 163 days were consumed in the audit. Therefore, the period of 163 days has to be excluded from the period of limitation. It is not also in dispute that the delay is of 150 days under Section 158BE2 (b). If the period of audit comprising of 163 days is to be excluded, the natural consequence will be that the assessment was within time. The defect, if any, in the proceeding which culminated into the order for audit and the submission of the audit report are mere irregularities which shall not invalidate the proceeding. - Decided in favour of revenue.

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• 2017 (7) TMI 430
  Special audit under Section 142 [2A] - Held that:- The special leave petitions are dismissed. HC order confirmed [2017 (4) TMI 360 - GUJARAT HIGH COURT] HC has held that having found that there are complex issues relating to introduction of land by the partners into the firms; revaluation of land; credit of partners in capital account equal to revalued amount of land; conversion of capital account to loan account of shareholders and issues relating to issuance of equity shares against the balances of revaluation credits at an unreasonable premium, and after having been satisfied that considering the specialized nature of business activities of the assessee, the Assessing Officer has passed an order of special audit in exercise of powers under Section 142 [2A] of the Act. Considering the scope and ambit of Section 142 [2A] of the Act, it cannot be said that in the facts and circumstances of the case, the respondent has committed any error and/or any illegality while passing the order under Section 142 [2A] of the Act. - Decided against assessee.

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• 2017 (7) TMI 429
  TDS u/s 194I - TDS on rent to AAI - Held that:- The Court is satisfied that in the present case, the payment made by the Assessee to AAI under the LA is ‘rent’ within the meaning of Section 194-I of the Act. Question (i) in the quantum appeals is, therefore, answered in the negative, i.e., in favour of the Revenue and against the Assessee. Penalty under Section 271C - non tds deduction - Held that:- The question whether in the present case the payment of royalty for the right to operate the executive lounge is in fact ‘rent’ under Section 194-I of the Act, was a debateable issue. The fact that the LA termed this payment as 'royalty' may have given rise to a reasonable doubt whether it should nevertheless to be treated as 'rent'. The Court is of the view that in the circumstances, the Assessee can take advantage of the exemption provided under Section 273 B of the Act by contending that there were bonafide reasonable grounds for the Assessee not to have deducted tax at source from the payment made to AAI under the LA. This was not a case where the Assessee could be said to have deliberately avoided making payment of tax so as to attract penalty under Section 271 C of the Act. - Decided in favour of assessee.

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• 2017 (7) TMI 428
  Disallowance u/s 14A read with Rule 8D - securities held as stock in trade - Held that:- We have observed from the perusal of audited financial statements which are placed in paper book filed with the tribunal by the assessee that the assessee has made investments in shares to the tune of ₹ 3,78,000/- (Previous Year ₹ 3,78,000/- as on 31- 03-2009) which were held as ‘Investments’ in its books of accounts as on 31- 03-2010, while investments in shares and securities as on 31-03-2010 were ₹ 12,50,94,940 which were held as stock-in-trade (previous year as on 31- 03-2009 of ₹ 8,70,06,123/-) –ref. pb/page 3-18). We have also observed that the assessee’s own funds are to the tune of ₹ 7,98,02,973/- (consisting of share capital + reserves-miscellaneous expenditure(debit)). We have observed that the Mumbai-tribunal has decided this issue in the assessee’s own case for assessment year 2012-13 wherein held that no disallowance u/s.14A r.w.r 8D of the Rules, can be made for the securities held as stock in trade. The reason behind it is not difficult to understand. Income arising from the business of an assessee is taxed under the head business and profession. So, all the expenses have to be considered while computing the business income. On the other hand, if the securities are held as investment and an assessee earns exempt income, same can be subjected to disallowance as envisaged by the provisions of section 14A. Non compliance of order u/s 144A - Disallowance of loss claimed as F & O trading loss - client code modifications undertaken in the month of March 2010 - loss stood disallowed by the AO considering the same to be sham loss being colorable device adopted by the assessee to evade taxes - as per CIT-A AO did not conducted enquiry as per directions of the Addl. CIT and disallowed the said loss merely on presumption that these transactions were sham transactions - Held that:- We are afraid that this approach of learned CIT(A) disregarding the material on record and coming to certain conclusions without any material on record is completely flawed to the extent that it has made the order of learned CIT(A) enter the arena of perversity and this order of learned CIT(A) cannot be sustained in the eyes of law and is liable to be set aside. The powers of the learned CIT(A) is co-terminus with the powers of the AO including powers to enhance assessment, after following due procedures as contemplated by law. We are of the considered view, the appellate order of the learned CIT(A) cannot be sustain in the eyes of law as it is suffering from serious flaw and is perverse as indicated, and hence we are inclined to set aside the order of learned CIT(A) and restore the matter to the file of the learned AO for fresh adjudication of the issue on merits in accordance with law and in compliance with directions issued by Addl. CIT vide orders dated 22-03-2013 passed u/s 144A of the 1961 Act.

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• 2017 (7) TMI 427
  Disallowance u/s.14A r.w.Rule 8D(2)(iii) - Held that:- Even in a case where the assessee claims that no expenditure was so incurred, the statute has provided for a presumptive expenditure which has to be disallowed by force of the statute. In a distant manner, literally speaking, it may even be considered for the purpose of convenience as a deeming provision. When such deeming provision is made on the basis of statutory presumption, the requirement of factual evidence is replaced by statutory presumption and the Assessing Officer has to follow the consequences stated in the statute. It means that even in a case where no expenditure is stated to have been incurred, the assessing authority has to apply Rule 8D. As the statutory presumption substitutes the requirement of factual evidence, the question of enquiry does not arise. Therefore, we are unable to agree with the argument of the learned A.R. - Appeal of the assessee is dismissed.

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• 2017 (7) TMI 426
  Expenditure incurred towards technical know-how - CIT(A) treating 75% of the expenditure incurred as revenue in nature and balance 25% is treated as capital in nature and entitled for depreciation - Held that:- The expenditure incurred by the assessee towards royalty to be considered as a revenue expenditure to be allowed as a revenue expenditure subject to 2% of the sales value and accordingly, this ground taken by the assessee is allowed. Disallowance u/s.14A r.w.Rule 8(2)(ii) - main contention of the A.R is expenditure incurred on earning exempted income by the assessee towards financials and interest charges includes interest and leased vehicles and bank charges and it does not pertain to earning of the exempted income - Held that:- In our opinion, there is a merit in the argument of the ld.A.R. Accordingly, if the assessee is able to prove that this expenditure are not relating to the earning of exempted income, this cannot be included in “A” in the Formula prescribed in Rule -8D(2)(ii) of Rules. Accordingly, we remit this issue to the file of AO for fresh consideration.

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• 2017 (7) TMI 425
  TPA - forward contract with the AE - forward market price to be considered as ALP - Value addition by the assessee in the process of purchase and sale of cotton bales to the AE - assessee has entered into forward contract for sale to AE as well as purchase of cotton bales from local market - Held that:- The assessee has raised this plea that the forward market price as on the date of contract between the assessee and AE has to be taken as ALP. It is pertinent to note that in support of this claim the assessee has not furnished any evidence to show the forward market price on that date. Therefore in the absence of relevant details as well as relevant record this issue cannot be entertained at this stage. Further we have already decided the issue of determination of ALP and taken a view and actual price to the non-AE during the year are relevant. The international transactions involving export to the AE and a comparable price being export to non-AE are taken into consideration. Therefore for the purpose of determining the ALP and in view of our finding on the issue above, we do not find any substance in these additional grounds of the assessee. Working capital adjustment - Held that:- We find that the assessee did not claim working capital adjustment either before the TPO or before the DRP nor the assessee has given any working in the TP study regarding working capital adjustment. The learned Authorised Representative of the assessee has submitted that the assessee raised advance from the AE and therefore an appropriate working capital adjustment has to be granted. We find that this claim of the assessee is not supported by the agreement as there is no clause for giving any advance against the purchase price payable by the assessee. Therefore if the assessee received loan or other advance which is not an advance against the export then the claim of the assessee cannot be accepted. Treatment to foreign exchange gain/loss as operating in nature - Held that:- If the foreign exchange fluctuation gain or loss is arising from the sales realization then it will be operating in nature. However, it would be considered as part of the operating revenue or cost only when such gain or loss is arising from the realization of the sale made during the year. Accordingly, the TPO/A.O. is directed to verify the relevant details and then treat the foreign exchange gain/loss as operating in nature and recompute operating profit/cost of the assessee for the purpose of determining the ALP

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• 2017 (7) TMI 424
  Addition on an account of investment in house construction - Held that:- When the property in question comes under the state PWD jurisdiction then the state PWD rates has to be applied for the purpose of computing the cost of construction on estimate basis. The DVO’s valuation of cost of construction is only an estimated valuation based on CPWD rates. Therefore the AO is directed to apply the state PWD rates for estimating the cost of construction of the house in question. As regards the self supervision charges rebate rates it is noted that the tribunal has taken a view that the rebate on account of self supervision of construction of house should be given at 10 to 15% of the cost of construction. The AO has given 6% rebate on account of self supervision. However, the assessee is demanding 10% rebate on this account. Assessee has relied upon the decision of in the case of DCIT Vs Smt. C.K. Sumathy (2010 (3) TMI 896 - ITAT CHENNAI) wherein 15% deduction was directed to be allowed for self supervision. The Jodhpur bench of the tribunal in the case of ITO Vs Dr. Anand Chhabra (2006 (11) TMI 268 - ITAT JODHPUR) has held that such supervision rebate shall be given ranging from 7% to 10%. Therefore, in view of the various decisions of the tribunal on this issue we direct the AO to allow a rebate of 10% on account of self supervision while computing the rate of cost of construction. Hence this ground of the assessee’s appeal is partly allowed. Addition on account of interest on FDR invested in the earlier years - Held that:- The assessee categorically stated before the AO that this amount of interest is already offered in the return of income as part of the interest income of ₹ 72,642/- This fact has been duly recorded by the AO in para 5.3. Despite that the AO has not accepted the explanation of the assessee. We note that as per schedule 4 of profit & loss account the assessee has shown the interest from banks at ₹ 72,642/- and further the interest of NSC at ₹ 2,641/-. Therefore, prima facie it appears that the interest received from the bank has been duly reflected as part of the interest income of ₹ 72,642/-. However, since the CIT(A) has not adjudicated this issue therefore, for the limited purpose of verification of this fact we set aside this issue to the record of AO to verify the record and particularly schedule 4 & 5 of financial statement of the assessee and then decide the issue after giving an opportunity of hearing to the assessee. Disallowance being 30% of the administrative expenses relating to the professional income - Held that:- The assessee has shown the professional receipts of ₹ 5,72,356/- against which the assessee has claimed administrative expenses of ₹ 83,339/- which is less than 15% of the professional receipts. Once the professional income and gross receipts are not in dispute then it is an impossible proposition that the professional income should be earned without any corresponding expenses. Considering the quantum of the expenses which is less than 15% of the gross receipts we find that the adhoc disallowance of 30% is exorbitant and is an extreme view. Accordingly,when the claim of the assessee is less than 15% of the gross professional receipts we restrict the disallowance for want of supporting evidence to 10% of the expenses instead of 30%. Accordingly, we modify the orders of the authorities below and direct the AO to restrict the disallowance at 10%. Rate of the gold to be applied for computing the unexplained income on account of investment in gold - Held that:- The assessee belongs to a Reddy community whether there is a custom of giving the jewellery on the occasion of wedding as well as occasion of birth of children, we are of the considered view that the rate of gold jewellery has to be applied as prevailing at the time of the marriage of the assessee as well as at the time of the birth of the sons of the assessee. Accordingly, we set aside this issue to the record of the AO for applying the rate of gold as prevailing at the time of the wedding as well as births of the children of the assessee by considering the proportionate amount of jewellery on the occasions being wedding and birth. Addition being cash found in the bank locker - Held that:- When there is no dispute that the cash was found from the locker it has to be included in the income of the assessee in the absence of any explanation. However, the assessee is entitled for telescopic adjustment of this amount against the addition of income if any in respect of Assessment Year 2011-12 and 2012-13. Appeals of the assessee are partly allowed.

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• 2017 (7) TMI 423
  Unexplained expenditure u/s.69C - bogus purchase bills - G.P. determination - Held that:- AO has made addition in respect of bogus purchases and found that notices issued to all these bogus suppliers u/s.133 (6) were returned undelivered by postal authorities and assessee also failed to produce the parties before the AO. However, the CIT(A) has not dealt with this observation of AO and without controverting AO’s finding deleted entire addition made on account of bogus purchases. From the record, we found that assessee had shown GP in the A.Y.2008-09 at 7.53% and in A.Y.2009-10 at 7.51%. However during the year under consideration, GP shown by the assessee was only 6.09% which is much lower than the GP shown in the earlier year. However, no reasons were assigned for decline of GP during the year under consideration. Thus we restrict the addition to the extent of 5% of the bogus purchase so as to fulfill the leakage in revenue - Decided partly in favour of revenue.

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• 2017 (7) TMI 422
  Agriculture income treated as 'income from other sources' - Held that:- The assessee furnished copy of the notices issued by Assessing Officer, details of agriculture income, copy of the details of agriculture income earned on selling safed musli supported by copies of the sale bills. The sale consideration of three bills were received through cheque and sale consideration of two bills were received through cash. The amount have been deposited in the bank account of the assessee. These evidences on record in the light of the remand report submitted by the Assessing Officer and finding of the ld. CIT(Appeals) while remanding the matter to the Assessing Officer accepting the agriculture income of the assessee clearly proved that assessee earned agriculture income on account of cultivating safed musli. When Assessing Officer accepted claim of the assessee and ld. CIT(Appeals) found claim of the assessee to be prima facie correct, there should not be any reason to reject the claim of the assessee. CIT(Appeals) merely going into the details of khasra girdawari and also the report of Punjab Agriculture University that safed musli is not recommended for cultivating in region of Ludhiana, rejected claim of the assessee would not have much relevance as against the evidences brought on record, particularly when Assessing Officer and Ld. CIT(Appeals) himself have accepted the claim of the assessee of earning agriculture income on account of cultivation of safed musli. Authorities below were unjustified in taking the agriculture income as 'income from other sources'. - Decided in favour of assessee.

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• 2017 (7) TMI 421
  Expenses incurred on market research - revenue expenses - whether expenses not to be amortized u/s 35D(2)(a)(iii) as held by AO? - expenses incurred in connection with extension of its undertaking - Held that:- Bare perusal of the provisions contained u/s 35D invoked by the AO to amortize expenses incurred on market research goes to prove that the expenses must be incurred before commencement of the business or after commencement of the business but where there is an extension of undertaking or setting up of a new unit. In the instant case, AO has not made out any case if the assessee has incurred the expenses after the commencement of business in connection with the extension of his undertaking or in connection with its setting up a new unit. Moreover, marketing survey are conducted by the company on ad hoc basis / on day-to-day basis to achieve the target/to enhance sale and no enduring benefit in any manner used to be there. Moreover, to invoke the provisions contained u/s 35D, such expenses are required to be incurred before the commencement of the business or after the commencement of the business in connection with extension of undertaking or in connection with its setting up of a new unit, both these conditions are not fulfilled. So, the expenses cannot be amortized by invoking the provisions contained u/s 35D and ld. CIT (A) has rightly deleted the addition - Decided in favour of assessee.

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• 2017 (7) TMI 420
  Permanent establishment of assessee in India - profit attribution to that permanent establishment - Held that:- Assessee does not have a permanent establishment in India. Therefore, the income of the assessee is not chargeable to tax with respect to sale of the hardware products in India. Income arising to the assessee from sale of software and sale of subscription is set aside to the file of the Ld. assessing officer to decide the issue in view of the decision of the Hon‘ble Delhi High Court in case of CIT versus Infra soft Ltd (2013 (11) TMI 1382 - DELHI HIGH COURT ). Income from the provision of the services such as installation, warranty services and professional fees are not fees for technical services in terms of article 12 (4) of the treaty and therefore it is not chargeable to tax in India. TDS credit - Held that:- Assessing officer is directed to grant credit of the tax deducted at source of withholding tax certificate produced by the assessee, if they are found in order. Interest chargeable u/s 234A and 234B - Held that:- Assessing officer is directed to re-compute the interest chargeable under section 234A of the income tax act after granting credit of tax deduction at source claimed by the assessee, if found in order. The Ld. and assessing officer is further directed to not to charge interest under section 234B of the income tax act on the income of the assessee which is subject to withholding tax.

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• 2017 (7) TMI 419
  Search u/s.132 - gold jewellery weighing 21456.550 grams seized - assessee asserts that it had received as gold deposits from its family members/ relative - Held that:- When the relatives/family members had come forward to file affidavit in support of deposit of gold jewellery and which were in turn supported by VDIS/Wealth Tax returns filed, prior to the date of search, it could never be considered as an after thought. In the circumstances, we are of the opinion that claim of the assessee that 15502 grams of gold represented deposits from its family members and relatives, in our opinion had to be accepted. Since Assessing Officer had accepted only 4437 grams out of it, we delete the addition for the value of the balance of 11065 grams as well. Ld. Assessing Officer is directed to give relief to the assessee to this extent. None of the lower authorities had examined the claim of the assessee that 1042 grams of gold jewellery belonged to goldsmith, whose affidavits were also filed. We are of the opinion that the correctness of claim of the assessee with regard to 1042 grams claimed to be received from the goldsmiths, requires fresh verification. Similarly, claim of the assessee that after excluding stones and converting the jewellery to 91.6% purity actual weight would only be 18302.790 grams also requires fresh look by the ld. Assessing Officer. The ld. Assessing Officer has to verify affidavits of the goldsmiths/ business associates filed by the assessee before coming to the conclusion whether the claim of source for 1042 grams of gold could be accepted. Thus, while deleting the addition for the value of gold jewellery received by the assessee from its family member/ relatives, we remit the issue regarding claim of the assessee on actual weight of jewellery found at the time of search, and source for 1042 grams claimed to have been received from business associates back to the file of the Assessing Officer for consideration afresh in accordance with law. Appeal of the assessee is allowed for statistical purposes.

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• 2017 (7) TMI 418
  Validity of reopening of assessment - no issuance of notice u/s.143(2) - whether non issue of such notice was cured by Sec. 292BB? - Held that:- There can be no quarrel that issue of notice u/s.143(2) of the Act is mandatory even in a re-assessment proceedings. Sec. 292BB of the Act can cure a case of non service of notice and not a non-issue of notice. In the case before us, as already mentioned by us, there was no issue of notice u/s.143(2) of the Act. Thus, we are of the opinion that non issue of notice u/s.143(2) of the Act invalidates the jurisdiction to make the assessment. We therefore quash the assessment done - Decided in favour of assessee.

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• 2017 (7) TMI 417
  Invoking provisions of section 50C(2) - Disallowance to cost of improvement in the property and expenses in relation to transfer - reference to DVO - Held that:- From the facts of the case it is apparent that the learned Assessing Officer and the learned Commissioner of Income Tax (Appeals) did not comply with the provisions of section 50C(2) of the Act. Further, no opportunity was given to the assessee to establish the correct market value of the land sold by him. It also appears that the assessment was done hurriedly due to paucity of time since the assessment was time barring. Therefore, in the interest of justice, we hereby remit back the entire case to the file of the learned Assessing Officer for de novo consideration. However, we also direct the assessee to promptly co-operate with the Revenue in their proceedings failing which the Revenue authorities shall be at liberty to pass appropriate orders in accordance with merit & law based on the materials on record. Appeal of the assessee is allowed for statistical purposes.

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• 2017 (7) TMI 416
  Disallowing depreciation on one of the intangible asset “Distribution Network” - slump-sale proof - Held that:- In the present case, the very fact that the seller of the business had 50% interest in the company i.e. assessee-company by virtue of holding 50% shares, and the assessee-company had failed to controvert the misgivings of the AO as to the inflation of the actual cost of the asset. These circumstances would certainly justify the AO to infer that fictitious price has been put on the asset in order to avail higher depreciation under the IT Act, perhaps with some other ulterior motive which the AO had chosen not to probe. In any event, right to use distribution network does not result in creation of any intangible asset as either the transferor company or the assesse company had paid any money to the distributors for giving them distributorship of dealing in the products of the assesseecompany. Thus AO is justified in denying depreciation claim on the intangible asset of distribution network on the inflated value of the asset. It is very ingenious attempt by the assessee-company to claim higher depreciation and avoid payment of tax in the hands of the transferor of the business by claiming to be slump sale transaction. See McDowell& Co. Ltd v. CTO (1985 (4) TMI 64 - SUPREME Court) - Decided against assessee. Addition made invoking Explanation 3 to section 43(1) - Held that:- In this case, it is undisputed fact that M/s.BPL Ltd., from whom the assessee company had acquired the assets had used the asset and claimed depreciation. Thus this condition is satisfied. (2) The main purpose of transfer of such assets directly or indirectly to the assessee-company was for reduction of liability to income-tax. In the present case, transaction of acquisition business as a going concern is between two related parties and the seller had a substantial interest by holding 50% share. The assets were already depreciated in the hands of the seller i.e. M/s.BPL Ltd., higher values were assigned by the assessee-company in order to avoid tax liability. Thus, ingredients which are necessary for invoking Explanation 3 to section 43(1) are satisfied and the AO is justified in his action in restricting the allowance of depreciation on WDV at higher than 25% of the closing stock. The findings given by us in respect of depreciation on distribution network vide para 10 equally holds good even in respect of valuation of depreciable assets. - Decided against assessee.

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• Customs

• 2017 (7) TMI 379
  Quantum of redemption fine and penalty - Valuation - enhancement of value based on local Chartered Engineers Certificate - whether there is sufficient ground for reducing the redemption fine and penalty imposed by the Commissioner? - Held that: - It is clearly shown that the appellant did not declare the correct value of the goods and the goods imported are also restricted items. In such circumstances, taking into consideration of the facts, the redemption fine and penalty imposed by the Commissioner is reasonable and does not warrant any interference - appeal dismissed - decided against appellant.

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• 2017 (7) TMI 378
  Classification of the coal imported - whether it was bituminous coal or steam coal? - Held that: - On this very issue co-ordinate Benches of the CESTAT had taken divergent views which led to the matter being referred to a Larger Bench of the Tribunal - the matters are remanded back to the adjudicating authority to reconsider the issue afresh after following the principles of natural justice - appeal allowed by way of remand.

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• 2017 (7) TMI 377
  Classification of imported item - Danload 6000 Electronic Preset Metering Equipment, parts thereof and configuration software - The proper officer of customs decided to classify the equipment under 9032 of the First Schedule to the Customs Tariff Act, 1975 while the importer sought classification under 9026 - Held that: - The First Schedule appended to the Customs Act lays down general principles for the interpretation and classification of goods for import tariff. Rule 2(b) of the Rules provide that,`the classification of goods consisting of more than one material or substance shall be according to the principles of rule 3 - the specific rule would supersede the general rule - the classification of the imported goods is in accordance with law and there is no reason for us to interfere in the matter - appeal dismissed - decided against appellant.

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• 2017 (7) TMI 376
  Refund claim - unjust enrichment - Held that: - It is abundantly clear from the records that the appellant in the present instance had been required, under the extant procedures, to deposit a certain sum of money with the customs authorities pending finalisation of the assessment. It is nobodys case that the amounts collected had been included in the duty levied before clearance of the goods on provisional assessment. To the extent that the said deposit is not included in the assessed duty, it would not have to be subject to the rigours of the hurdles that precede sanction and transfer of the refund to the applicant. It devolves upon the competent authority to examine the evidence of having borne the incidence furnished by the applicant and to render cogent findings on the non-acceptability of such evidence before ordering the credit of the claimed amount to the Fund - the first appellate authority has not done so. It would, therefore, be in the fitness of things for a re-examination of the claim by the original authority to determine if in the context of evidence furnished by the appellant, the burden of duty has indeed been passed on - appeal allowed by way of remand.

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• Corporate Laws

• 2017 (7) TMI 373
  Acquisition of the shares of the Petitioner Company, in violation of the Regulation 13 of the SEBI (Prohibition of Insider Trading) Regulation, 1992 - Prohibition of Insider Trading - Held that:- The term “person” in Regulation 13 of the SEBI Prohibition of Insider Trading Regulation, 1992 shall be construed to include a company as well and not only an individual. R1 being a company, to have acquired more than 5% shareholding in the Petitioner Company, is therefore liable to serve the declarations under the SEBI SAST Regulations, 1997 and SEBI Prohibition of Insider Trading Regulation, 1992 as well. However, R1 had failed to serve the declaration under the latter regulation which it had rectified after the Petitioner had filed the present company petition on the 19th July, 2004. The declaration so filed at a later point of time on 24th August, 2004, is in violation of the SEBI Prohibition of Insider Trading Regulation, 1992 and is not valid for the reason that the said declaration had to be filed within four working days of the receipt of intimation of allotment of shares or the acquisition of shares or voting rights, as the case may be, as per the SEBI Prohibition of Insider Trading Regulation, 1992. Thus it clearly indicates that R1 was in default for not having served the declaration under the SEBI Prohibition of Insider Trading Regulation, 1992, when its shareholding in the Company exceeded 5%. The present Company Petition is allowed. The Respondents having furnished the declaration at a later point of time are hereby barred from exercising their rights as to the shares acquired by them in the Petitioner Company in excess of 5%. The Company is hereby authorised to buyback the shares that the Respondents hold in excess of 5% of the shareholding in the Company at the rate which was prevailing on the date of presentation of the Petition or market value, whichever is higher. The Respondents are directed to hand over the share certificates and share transfer forms within 30 days of the order to the Company and in response to that the Petitioner will be liable to pay the buyback price which shall be the value of shares which was prevailing on the date of presentation of the petition or market value whichever is higher. It is clear that the power exercised by the Company Law Board and the powers exercised by the SEBI fall in different and distinct jurisdictional fields. Therefore, the present order shall not preclude the jurisdiction of SEBI as an adjudicating authority for deciding on the violation of SEBI Regulations as have been laid down in the present petition.

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• 2017 (7) TMI 372
  Maintainability of the petition - whether the petitioner was not competent u/s. 399 of the old Act to file this petition because not having requisite number of shares as mandatory on the date of filing of the petition i.e. 10-09-2014? - Held that:- The entire issue in this case revolved around the corroborative evidences and surrounding circumstances. After the exit of the Petitioner lot of water had flowed under the bridge. On number of occasions the Petitioner had expressed in different letters to various authorities his non-involvement in the affairs of the company. Once he had already exited then after lapse of number of years it is not justifiable to rake up this issue. The Petitioner undisputedly remained silent for number of years. Such an attitude has not been approved by the Hon'ble courts as held in the case of Pearson Education Inc. (2004 (7) TMI 667 - COMPANY LAW BOARD NEW DELHI). The existence of this settlement among the rival parties is a vital piece of evidence because thereafter number of steps were taken by the Rl company and other Respondents. After an inordinate delay of more than six years it is not possible for the Respondents to reverse the cycle of events. Something already done cannot be undone merely on the basis of bald claims. Certain events such as signing of balance sheet by the respective parties, submission of information before the ROC, an Arbitration judgment dated 08-07-2009 acknowledging the final settlement dated 15-10-2008 are such examples of fait accompli of the settlement. Thus the Petitioner was not holding the requisite number of shares on the date of filing of the Petition, therefore failed to accomplish the legal requirement prescribed under section 399 of the old Act. Legally, the Petitioner is not entitled to file this Petition. It is hereby held that the Petition is not maintainable, hence dismissed in-limine.

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• Service Tax

• 2017 (7) TMI 415
  Maintainability of petition - pre-deposit - delay in filing an appeal before the tribunal - Held that: - the petitioner has not complied with the pre-deposit issue. This appears to be a factual error as the demand of ₹ 14 lakhs as ordered by the first respondent was paid through banking channel. Therefore, the conclusion arrived requires interference. Whether the first respondent was justified in dismissing the appeal filed by the petitioner as being time-barred? - Held that: - the law of limitation is not intended to defeat the rights of parties except those who are adopting dilatory tactics or purposely evading the proceedings - Misplacing of papers appears to be genuine mistake and the delay also is not inordinate. The delay in filing the appeal before the first respondent is condoned - petition allowed - decided in favor of petitioner.

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• 2017 (7) TMI 414
  Refund claim - N/N. 41/2007 ST - denial on the ground that appellant did not supply ARE-1 and shipping bills (major proof of export documents) to the sanctioning authority nor to the appellate authority - Held that: - appellant states that self attested copies of ARE-1 documents were submitted with the refund claim. Further, he states that Copies of shipping bills received from Head Office were filed subsequently in reply to show cause notice. Further, Link chart of exports vis-`-vis input services availed for each ARE-1 was also filed with defence reply to the original authority - appellant had filed the documents, as required - refund allowed. Refund claim - denial on the ground that the appellant had not supplied documents evidencing payment of service tax on the specified services - Held that: - the Board has clarified that invoices/bills issued by the suppliers of taxable services are sufficient evidence that services are taxable services and refund claim should be processed based on input invoices/bills/challans showing service tax charged by the service providers-as clarified in para-4 of Circular No.106/9/2008-ST dated 11.12.2008 - refund allowed. Refund claim - denial on the ground that the appellant did not produce any evidence to establish that no Cenvat was availed - Held that: - appellant had themselves certified in writing, a copy of which is available in the appeal paper book, stating that they have not availed Cenvat credit during the period in question. The ld. counsel also states that the appellant was availing Central Excise Exemption under the provisions of Notification No. 30/2004 CE under which they were entitled to clear their goods without Central Excise duty, subject to the condition that they do not take Cenvat credit. The ld. counsel stated that the benefit of said Notification No. 30/2004 CE have never been disputed by the Revenue. Accordingly, states that this ground of rejection is not tenable - refund allowed. Refund claim - denial on the ground that the appellant did not submit any evidence that the service provider were authorized by port trust or other port to render the services - Held that: - Board Circular No. 112, clarifies that the granting of refund to exporters on taxable services that he receives and uses for export, do not require verification of registration certificate of the supplier of service. Therefore, refund should be granted, in such cases, if otherwise in order - refund allowed. Refund claim - transport of goods by rail that is the services of transporting the container from the ICD, by Container Corporation of India (Concor) to the Gateway Port - rejection on the ground that the appellant failed to certify the conditions of the services by Rail - Held that: - The appellant have taken us through the sample invoice of Concor in the appeal paper book, in which Concor have given the container number, cost of freight and the cost of handling charges. The name of the appellant is also there - this ground also is untenable, as the container number given on invoice for freight is found co-relatable with export documents - refund allowed. Refund claim - CHA services - it is alleged that appellant failed to satisfy the conditions of CHA Services as given in serial No. 13 of the notification - Held that: - The ld. counsel have taken me through the sample invoices of the CHA, on record, wherein we find that bill of lading number and date, export container number, vessel name, port of loading, port of delivery, description of export goods etc., is given - all the relevant information is available for allowing the refund of CHA Services received - refund allowed. Refund claim - Handling of export containers within the port - refund is not admissible under category of port services - Held that: - Services provided within the port for export of goods, are covered at Sl. No. (2) of the table, without any conditions. Further, he states that the registration of service providers in a different category (CHA) is not material for grant of refund in the eligible category - refund allowed. Refund claim - C & F Service - Held that: - From the bill it is evident that the services have been provided in the nature of terminal handling charges and documentation charges - these services are eligible services at the same are also provided by the CHA or C & F and also fall under the port services. Accordingly, we hold that the appellant is entitled to refund for this service. Refund claim - GTA Services - Held that: - the GRN issued by the transporter shows that the goods have been packed in container. Further, such details are co-relatable with the let export order and the invoice of the appellant - refund allowed. Appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 413
  Refund claim - commission paid under Reverse Charge Mechanism - time limitation - Held that: - as regards as the refund claim for the quarter ended June, 2008, the refund claim was filed 30.12.2008 that it is 6 months from date of the quarter ended and as per N/N. 32/2008-ST dated 18.11.2008, the time period for filing the refund claims was extended from 60 days to 6 months in N/N. 41/2007-ST, which would mean that this refund claim for the quarter ended June 2008 filed in time - As regards as other refund claims in other three appeals, they were filed within 1 year date of export is not in dispute and the period which has been prescribed for filing the export claim under the N/N. 17/2009-ST (1 year) was applicable to the refund claim for the earlier period also - refund allowed - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 412
  Rejection of refund claim - denial of CENVAT credit on the services received in respect of training of the crews - the instant case instead of testing the eligibility of Cenvat already availed by the appellant for refund under Rule 5 of the Cenvat Credit Rules, the lower authorities have gone into the question of eligibility to the Cenvat credit itself - Held that: - the eligibility to Cenvat Credit cannot be challenged without issue of show-cause notice under Cenvat Credit Rules - no show-cause notice has been issued under Cenvat Credit Rules and in these circumstances, it is not permissible to deny Cenvat Credit already availed - In the instant case, the appellant had claimed refund claim and the same needs to be examined in terms of Rule 5 of Cenvat Credit Rules read with notification issued there under. It is seen that the lower authorities has not deal with this issue. It is not open to Revenue to examine the admissibility of Cenvat Credit while adjudicating the admissibility of refund under Rule 5 read with Notification issued there under. The matter is remanded to the original adjudicating authority to decide the issue solely on the basis of Rule 5 of Cenvat Credit Rules read with notification issued there under - appeal allowed by way of remand.

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• 2017 (7) TMI 411
  CENVAT credit - Input credit distribution - denial of CENVAT credit of ₹ 11,02,153/- is only on the ground that the invoices issued by service providers did not contain valid service tax registration number and the document did not contain name of the appellant which is ISD - Held that: - findings of adjudicating authority is not is not in consonance of the decision in the case of Diya Systems (management) Pvt. Ltd [2017 (2) TMI 1075 - CESTAT BANGALORE] wherein Tribunal has very clearly held that these are rectifiable errors and the non mentioning of service tax registration does not mean that service tax liability has not been discharged by service provider - Once it is accepted that service tax liability has been discharged by service providers, the rectifiable error of non mentioning of service tax registration needs to be condoned - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 410
  CENVAT credit - renting of immovable property service - denial of credit on the ground that the credit availed of duty paid on input/tax paid on input services was in relation to the manufacturing activities and not to the renting of the said property - Held that: - in near similar circumstances, the Tribunal in Commissioner of Central Excise, Coimbatore v. Lakshmi Technology & Engineering Indus. Ltd [2011 (2) TMI 1275 - CESTAT, CHENNAI] has held that the rules permit taking of credit under a common pool and permit use of the credit from the common pool for different purposes and there is no restriction placed to the effect that credit accounts should be maintained for use for manufacture of excisable goods and for use for providing services - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 409
  Self adjustment of excess paid service tax - Rule 6 (4A) read with Rule 6(4B) (3) - Held that: - appellant already claimed the refund for excess amount adjusted against the service tax liability for the month of April, 2010 and the said refund was already sanctioned, this clearly shows that the amount which was refunded was also adjusted, accordingly there was short payment of service tax in the month of April, 2010 to that extent, therefore demand of service tax for the excess adjustment of service tax is correct. Interest - Held that: - since there is delay in payment of service tax on the due date till appropriation i.e. 22-8-2011 interest is clearly chargeable - interest upheld. Penalty u/s 76 and 77 - Held that: - the adjustment was made by the appellant due to interpretation of provision of Rule 4(A) and 4(B) - Moreover, excess paid service tax even though not adjustable the same was lying with the government exchequer therefore there is no malafide intention on the part of the appellant in doing adjustment of excess paid service tax - penalty set aside by invoking section 80. Appeal allowed - decided partly in favor of appellant.

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• 2017 (7) TMI 408
  Rectification of mistake - case of Revenue is that in the appeal filed by the Revenue, two grounds were raised and this Tribunal has considered only one ground, therefore, there is a mistake apparent on record - Held that: - in appeal papers the Revenue has not raised the issue No. 2 before this Tribunal. The said issue raised by the Revenue only in the application for rectification of mistake which is termed as misuse of due process of law. As the issue, whether the respondent is entitle for benefit of exemption N/N. 32/2004 dt. 03.12.2004 was not raised by the Revenue in their appeal, therefore, there is no mistake apparent on record deciding the appeal file by the Revenue before this Tribunal - application of rectification of mistake dismissed - decided against Revenue.

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• 2017 (7) TMI 407
  Business Auxiliary Services - Subvention charges - taxability - Held that: - the appellant had received the full commission amount from the bank for providing the business auxiliary service and that the subvention charges were debited by the bank from the appellant’s account in order to pay the same to its customers. Such subvention charges collected are part of the commission, which falls under the taxable category of ‘business auxiliary service’ - the Tribunal in the case of Commissioner of Service Tax, Mumbai Vs. J.M.D. Marketing Pvt. Ltd. [2013 (10) TMI 1446 - CESTAT MUMBAI] has held that the assessee would be liable to pay service tax on gross amount of commission received from banks for marketing of products - for computation of the service tax liability within the normal period, the matter is remanded back to the adjudicating authority for quantifying the service tax demand - appeal allowed by way of remand.

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• 2017 (7) TMI 383
  CENVAT credit - input - case of the department is that since appellant in respect of their construction services availed exemption N/N. 1/2006-ST, they are not entitled for the CENVAT credit on the input used in the manufacture of Aluminium doors and windows - Held that: - the appellant are carrying out two different activities one is manufacture and other is construction services, both have to be dealt with separately for all the purposes. As regard the manufacture activity appellant has complied with all the rules and regulation procedure such as input was received on which credit was taken the said input was used in the manufacture of doors and windows and it is cleared on the payment of duty - Cenvat credit availed on such inputs is clearly admissible. Even though if there is violation in respect of construction service the Cenvat credit which relates to manufacturing activity cannot be disputed. - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (7) TMI 406
  Valuation - clearance of manufactured computers after pre-loadingh with Application Software - misdeclaration of value - Department took the view that appellant actually preloaded the software into the computer and cleared the same; that they had made a wilful misstatement that they were deducting from the value of (of the computers) the actual cost of software; that however they had deducted more than such actual cost with the intent to evade duty of excise on the computers - time limitation - Held that: - the period between the appellant's letter dt. 25-08-2000 (referred to in the SCN) or for that matter, the date of recording of statement from Shri Ravishankar namely, on 20-06-2001, and issue of SCN is well beyond normal period of limitation. We are unable to fathom the reasoning for this inexplicable delay on the part of the department to initiate adjudication proceedings, especially when no new material or facts have been unearthed by them other than the said letter of the statement. Such delay cannot sought to be covered up by invoking suppression when there was no suppression, or while invoking misstatement, of which also we do not find any evidence. This being so, the proceedings initiated against the appellant are clearly hit by limitation and the appellant will succeed on this ground alone - the impugned order will have to be set aside on the ground of limitation proceedings being hit by limitation. On merits also, Deduction of software cost has to be on the basis of amount equivalent to market prices of the comparable product, that the cost of operating software was not the cost of CD alone but other costs such as royalty, warranty, after-sales service etc. are to be taken into account, that the intrinsic value of software is to be calculated by taking into account not only the purchase price but other costs, and that department charged that appellant overstated the value of software in undervalue the computer do not stand on firm ground. Reliance was placed in the case of Birla Corporation Ltd. Vs CCE [2005 (7) TMI 104 - SUPREME COURT OF INDIA]. Appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 405
  CENVAT credit - fake invoices - the office/godown premises for which registration was granted to M/s.S.K.Garg & Sons was not in control/possession/ under rent by the dealer at the material time and they had issued invoices without having any known office or godown to store the excisable goods - Held that: - there was fraud committed right from the day the dealer applied for his registration and false transactions were made repeatedly & systematically to defraud Revenue - the appellant had purchased 28 consignments of plates and bars from the dealer directly and one consignment from second stage dealer. The appellant did not produce any evidence as to when the goods were purchased by the dealer to ascertain whether the storage of the goods required or not and the Commissioner (Appeals) rightly held that the appellant failed to substantiate that the goods purportedly sold to the appellants by the dealers directly to second stage dealer were from stock on which duty has been paid. There is no steps were taken by the appellant to satisfy themselves about the identity and address of the dealer M/s.S.k.Garg & Sons and thus they failed to discharge statutory burden under Rules 7(2), 7(4) and 9(5) of the CCR, 2002 - it is very clear that it was the case of fraudulent availment of credit on the basis of fake invoices. Appeal dismissed - decided against appellant.

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• 2017 (7) TMI 404
  Excess goods manufactured - Surrender of income - Held that: - As the duty has been demanded from the appellant without adducing any evidence by the Revenue that the appellant has manufactured excess goods. The duty can be demanded on the manufactured goods only and not other activities. Therefore, in the absence of any evidence of excess manufactured goods, demand against the appellant is not sustainable - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 403
  Clandestine removal - AMSM was indulging in removing cotton yarn in the guise of hank yarn - time limitation - case of appellant is that that since two show cause notices were issued on identical set of facts, evidences, allegations, the subsequent show cause notice raising a demand of ₹ 32,73,025/- is barred by limitation - Held that: - the basis for demand of duty in the first show cause notice and the second show cause notice is entirely different. The department has relied upon 59 documents for issuance of the second show cause notice whereas in the first show cause notice they have relied upon 25 documents as stated earlier. All these would go to show that both the show cause notices are entirely different. We do take note of the argument put forward by the learned AR that there was a time limit prescribed under section 110 of Customs Act, 1962 for issuance of show cause notice proposing for confiscation of the goods when the goods have been seized. Thus, the first show cause notice appears to have been issued by the department to comply with this statutory time limit and confining the proposal for confiscation, imposition of fine, penalty and duty demand to such allegation only. Though the date of recording of statements may be before issuance of first show cause notice (6.6.2002), we have to consider the fact that department would require more time for investigation, follow-up action, formulation of allegations based on such statements and invoices for issuing of the second show cause notice raising the allegation of clandestine removal of goods and duty demand on this count. Considering the voluminous nature of evidences, we do hold that the issuance of the second show cause notice dated 7.5.2004 is legal and proper and not hit by limitation. Appeal dismissed - decided against appellant.

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• 2017 (7) TMI 402
  Clandestine removal - shortage of finished goods - excess of raw material and work in progress - Held that: - the quantity of 5885 Kg cannot be weighed in one go, the goods has to be weighed in parts and there should be a weighment sheet of weighment (if done physically). As the evidence of physical weighment is missing, in that circumstances, it is concluded that the goods has been weighed is only eye estimation basis. On the basis of the eye estimation, the allegation of clandestine removal of goods or excess found of goods is not sustainable - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 401
  Clandestine removal - extra filling of material in the tubes - Held that: - learned adjudicating authority has given detailed findings considering all aspects in the process of manufacturing, probability of variations in the quantity shown in the Laboratory records and Excise records and come to the conclusion that there is no case of removal of goods without payment of duty. he adjudicating authority has taken too much pain for concluding that there is no case of evasion of duty on the ground that the difference between the lab reports and Excise reports is not due to excess production and clearance of production without payment of duty but due to manner of process of manufacturing. The adjudicating authority also come to a conclusion that there is no independent evidence put forth by the department to establish any clandestine removal - Even the department accepts the different of production recorded in Excise records and Lab records but did not adduce any evidence that there is excess production and the same was cleared without payment of duty. In absence of any evidence on clandestine removal even if there is a difference between the two records of the appellants the clandestine removal cannot be concluded only on that basis - demand set aside. As regards the other 3 appeals bearing No. E/202/08, E/203/08 and No. E/762/08 these are related to refund claim of the duty paid by the appellant on the difference of quantity of Excise records and Lab records. Therefore the refund is consequential to the demand case which was decided in E/201/08 and E/167/09. All the 3 appeals deserve to be remanded to the adjudicating authority for reprocessing the refund. Appeal allowed in part - part matter on remand.

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• 2017 (7) TMI 400
  CENVAT credit - M.S. Rounds, Structure Parts, Shrinkomp, G.I. Structures, etc - Explanation to Rule 2(k) of CCR - Held that: - the items in dispute are either components of capital goods or inputs which have been used in manufacture of capital goods which are further used in the factory of the appellant for manufacture of dutiable goods like sugar and molasses etc - the appellant is entitled to CENVAT Credit on the items in dispute - appeal allowed - credit allowed - decided in favor of appellant.

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• 2017 (7) TMI 399
  CENVAT credit - duty paying invoices - it was alleged that documents did not have the requisite information as required under Rule 4A of the Service Tax Rules and there was no indication whether the distributed credit is in respect of duty paying unit or the exempted unit - Held that: - It was reported that the invoices issued by service providers on the basis of which M/s Dabur India Ltd. had taken the impugned credit and distributed to their unit at Baddi contained the details/information i.e. name & address of service provider, service tax registration number, invoice/bill number & date, name of service, value of taxable service and service tax paid/payable etc and no other discrepancy has been noticed except the following discrepancies relating to invoices of M/s Thakur ji Sons, wherein it was found that the service tax registration number is mentioned on invoices as Applied For instead of PAN based registration number. On the invoices of 18 others services providers, the discrepancy was that Service Tax registration number mentioned in invoices was not PAN based registration number. We find that these are remediable defects and denial of input credit on that basis may not be justified - Since there are technical discrepancies in relation to 18 out of 29 advertisers as brought out by the aforesaid verification report, the matter is remanded to the original adjudicating authority for fresh decision - matter on remand. CENVAT credit - Broadcasting services - advertising services - Held that: - the Dabur India Ltd. Kaushambi is the recipient of two services, namely, the service from the advertising agencies like DADBUR and broadcasting agency service by the broadcasters. The invoices of broadcasters are telescoped into the invoice of advertiser indicating service tax paid by them. The bills by the broadcasters are raised on the appellant. The amount charged by the broadcasters does not form part of the taxable value of the services provided by the advertising agency. The Service Tax charged by the advertising agency is on the commission it charges, which is mentioned in the invoices issued to M/s Dabur India Ltd. Kaushambi. We find merit in the contention of the appellant that the Broadcasting and advertisement have been done on behalf of the appellant and they have borne the incidence of Service Tax, the credit cannot be denied. Appeal allowed in part and part matter on remand.

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• 2017 (7) TMI 398
  Clandestine removal - Held that: - the assessee produced the statements by way of reconciliation of the documents and DSA, which were not refuted by the Revenue in their grounds of appeal - the said case laws cited by Revenue are not applicable in the facts and circumstances of the present case - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 397
  CENVAT credit - input services - services provided by Transenergy to the appellants under sub-lease agreement - Held that: - disputed services were provided by Transenergy to the appellants under sub-lease agreement wherein it had been agreed upon that the former shall provide these services either directly or by engaging third party service provider - the services provided by Transenergy to the appellants whether directly or through a third party service provider cannot be disallowed, so long as they are found to be eligible input services for the purpose of Rule 2 (l) of Cenvat Credit Rules, 2004. CENVAT credit - duty paying invoices - denial on the ground that invoices in particular that they do not indicate any specific service provided by Transenergy to the appellants and that there is no clarity on whether the services otherwise provided on common basis, to all the manufacturers in the sub-leased area, have been properly apportioned - Held that: - at least some of the services, though are eligible services for the purpose of availment of cenvat credit, it is not possible to permit the same in view of the defects found in the invoices - considering the Ld. Advocate s submission that these defects can be cured at this stage and that they have the exact apportioned figures in respect of each service provided to them by Transenergy, on the basis of authenticated documents given by the latter and also certified by Cost Accountant, the interests of justice would be best served if the appellants are given another opportunity to satisfy the adjudicating authority on this aspect. Appeal allowed by way of remand.

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• 2017 (7) TMI 396
  CENVAT credit - duty paying invoices - job-work - department took the view that no service was rendered by BIL, hence, availment of credit of service tax component reflected in those invoices was incorrect - Held that: - the activity performed by BIL for monitoring of production activities of the appellants cannot by any stretch of imagination be considered as an input service in or in relation to the manufacture of final products of the appellants. At the most, the billing made by BIL to the appellants can be termed as an arrangement for passing on of the costs - even in the invoices dated 28.12.2013 of BIL submitted by the Ld. Advocate during the hearing, while under the head description of service it has been mentioned as BSS however the said invoices also clearly indicates MPLS cost 2013-14-III Qtr. This aspect also shows that the whole exercise was only for the benefit of BIL and that billing was only an exercise to shift part of the MPLS cost to the appellants - appeal dismissed - decided against appellant.

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• 2017 (7) TMI 395
  Refund claim - finalization of provisional assessment - refund rejected on the ground of unjust enrichment and issue of limitation - Held that: - the Original Authority and Appellate Authority did not have advantage of said certificate for appreciation of transactions between the appellant and their customers - The certification of the transactions between the appellant and their customers is essential for understanding as to whether in the practice of accounting as stated in the said certificate dated 04/04/2017 is there any chance of higher duty incidence getting passed on to the customer and appellant be in a position to pay less excise duty to the exchequer and get enriched by the difference between the two through refund - matter remanded with a direction to re-examine the issue of unjust enrichment and decide the matter afresh on merit - appeal allowed by way of remand.

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• 2017 (7) TMI 394
  EPCG scheme - rate of duty on the capital goods/ spares pares procured indigenously - The case of the Revenue is that there is no specific Central Excise notification which provides exemption from payment of duty when cleared to unit availing EPCG scheme. The capital goods / spares parts which were originally procured duty free in terms of N/N. 22/2003-CE dated 31.03.2003 while setting up of EOU, would have to be debonded in terms of para 8(1) of the said Notification - Held that: - Para 8 of the said Notification stipulates that no such clearance or debonding of capital goods under EPCG Scheme of Chapter 5 of Foreign Trade Policy shall be allowed if the user industry has not fulfilled the positive NFE criteria at the time of clearance or debonding in terms of para 6.18 (d) of the Foreign Trade Policy. Thereafter, the procedure for such clearance and method of calculation of depreciation are mentioned in the said Notification - Admittedly, in the present case, the appellant-assessee are entitled for debonding as they have achieved positive NFE. Accordingly, debonding was permissible in terms of the said Notification. It is to be noted that Notification No.22/2003-CE is for providing exemption to goods brought into EOU. This Notification does not provide any exemption to the capital goods, spare parts etc. for supply under EPCG Scheme. We are in agreement with the original authority regarding absence of any exemption Notification covering the situation as explained above, to support the claim of the appellant-assessee for an exemption from Central Excise duty. The rates applicable to any goods should have a clear legislative provision by way of rate in the tariff or by a supporting exemption notification - no specific exemption Notification could be cited by the appellant-assessee to claim exemption for the capital gods which are being debonded to avail EPCG Scheme. In such situation, we are not able to accept the claim of the appellant-assessee. The appellant –assessee emphasised that the demand is not tenable as there is Revenue neutral situation resulting no addition to the Government revenue. We find that the concept of Revenue neutrality cannot be considered as a bar for non confirmation of tax dues, otherwise payable by the appellant –assessee. If that be so, then in many of the cases the appellant themselves can choose whether to pay duty on goods or services, when the credit is available; or to pay duty only on final product. Such discretion is not vested with tax payer. The rate of duty on the depreciated value should be on the date of debonding under EPCG Scheme. We note that when the debonding is done in terms of Notification No.22/2003-CE, then the rates of depreciation as prescribed in the Notification has been correctly applied. Valuation - Capital goods - includibility - fire control system, water storage tank etc. - Held that: - the items like cord can, fire control system, water storage tank etc. will fall within the scope of “capital goods” as understood in the trade parlance. Accordingly, the original authority allowed depreciation applicable to capital goods and dropped the demand for differential duty on this account. We are in agreement with the reasons recorded by the impugned order. EPCG scheme - the spare parts and accessories procured from domestic sources and also imported - eligibility - Held that: - On analysis of the authorisation as well as nature of items as recorded in the impugned order, we are in agreement with the findings of the original authority regarding the eligibility of these items under EPCG Scheme. In the present appeal, the Revenue could not bring out any substantial issue either in fact or in law to interfere with the finding of the original authority. Penalty u/r 25 - Held that: - It is clearly recorded that the appellant-assessee have not breached any of the provisions of Rule 25 of Central Excise Rules, 2004 as they have not removed the excisable goods in contravention of any of the Rules - penalty set aside. Appeal allowed - decided partly in favor of appellant.

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• 2017 (7) TMI 393
  Maintainability of application - Unjust enrichment - rectification application - time limitation - Held that: - in the appeal by the Revenue against order of the Commissioner (Appeals) the issue relating to undue enrichment was not a point of dispute. We have perused the review order passed by the Committee of Commissioners as well as the appeal filed by Revenue. The issue of unjust enrichment is not a point discussed in these papers. The observation of the Tribunal in the impugned final order regarding unjust enrichment is not by way of decision on a point agitated in the appeal. It is a reiteration of findings recorded by the Commissioner (Appeals). The present miscellaneous application is only with reference to unjust enrichment. The Revenue has categorically stated that they are not on the merit of the refund claim. As such, we cannot consider the impugned final order of the Tribunal as having some infirmity either by way of apparent error of record on fact or law, calling for a modification proceedings. Application dismissed being not maintainable.

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• 2017 (7) TMI 392
  Clandestine removal - manufacture of mild steel drums on job work basis - The steel drums manufactured by the appellant is meant for use by the HPCL for packaging of their final product namely asphalt. Being adjacent factory, the appellant clears the finished goods through conveyor belt to HPCL - Held that: - the MRR is prepared on quantity of drums filled with asphalt due to which there was a mismatch and the same was pointed out by appellant. With this fact without any other tangible evidence merely on the basis of difference between the MRR and GP1 quantity, the charge of clandestine removal cannot be accepted. There is a force in the argument of the Ld. Counsel that when excise duty paid by the appellant is available to the HPCL as modvat credit, there is no gain or loss either to the appellant or to the HPCL. Therefore no purpose would have been served to the appellant and/or HPCL for clandestine transaction of the drums. The exercise of payment duty of by the appellant and taking credit by the HPCL is of revenue neutrality for this reason also the demand is not sustainable. In case of revenue neutrality, demand is not sustainable. The revenue could not establish, beyond doubt the charge of clandestine removal against the appellant. Therefore the demand of duty penalty and interest confirmed against the appellant is not sustainable - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 391
  Refund claim - the respondent availed excess cenvat credit and paid less duty - Revenue is of the view that the reversal of cenvat credit is not the payment of duty, therefore, they are not entitled for refund/re-credit of the same - Held that: - during the period January’ 2007 to May’ 2007, the respondent has availed excess cenvat credit and paid less duty. If they would have taken proper CENVAT credit during the said period, they were required to pay more duty through PLA and they are entitled for more refund/re-credit. But on their realization that they have taken excess credit which they paid through PLA, in that circumstances, on the principle of balance of equity, the respondent were entitled for refund of CENVAT credit paid through PLA - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 390
  Substantial increase in installed capacity - benefit of N/N. 56/2002-CE dated 14.11.2002 - The case of the Revenue is that as the respondent has invested the capital w.e.f. 03.04.2006, whereas on the said day, the labour employment was the same, as prior to 03.04.2006 and after 03.04.2006, therefore, they have not complied with the condition of the Notification - Held that: - the understanding of the notification by the Revenue is mis-placed - the General Manager Distt. Industries Centre has issued certificate certifying that the labour has been increased more than 25% from the base labour employed, therefore, the Ld. Commissioner (A) has rightly allowed the benefit of exemption N/N. 56/2002-CE dated 14.11.2002 - Nowhere in the Notification, there is a condition that the salary bill/provident fund are required to be increased failing which, the assessee is not entitled for benefit of exemption N/N. 56/2002-CE dated 14.11.2002 - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 389
  Substantial increase in installed capacity - N/N. 56/2002-CE dated 14.11.2002 - Revenue is of the view that a certificate has not been issued by the General Manager, Distt. Industries Centre, therefore, they are not entitled to avail benefit of exemption N/N. 56/2002 ibid - Held that: - the certificate has been issued by the General Manager, Distt. Industries Centre in terms of para 3(b) (ii) of the N/N. 56/2002 ibid and only clarification to that certificate has been clarified by the Assistant Labour Commissioner. In that circumstance, it cannot be said that the respondent has not produced necessary certificate issued by the General Manager, Distt. Industries Centre, therefore, the Ld. Commissioner (A) has rightly allowed the benefit of exemption N/N. 56/2002 ibid to the respondent - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 388
  Applicability of provisions of Section 11A(2B) of the Act - in respect of a few invoices the appellant while clearing the goods, under CETH 8535, have not followed the MRP based assessment in terms of Section 4A of the Act - differential duty paid before issuance of SCN - Held that: - Section 11A(2B) provides for closure of proceedings without issue of notice where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person, chargeable with the duty, may pay the amount of duty on the basis of his own ascertainment of such duty or on the basis of duty ascertained by a Central Excise Officer before service of notice on him. There is no evidence on record to sustain the allegation of wilful misstatement, fraud or intention to evade payment of duty. Apparently, the longer period of short payment alone was considered as reason enough for non-closure of case under Section 11A(2B). This much has been recorded by the lower authorities also. We find the short payment spread over longer period by itself will not bar the closure of case, without SCN. While upholding the payment of differential duty alongwith interest by the appellant, the penal proceedings against the appellant are found to be untenable - appeal allowed - decided partly in favor of appellant.

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• 2017 (7) TMI 387
  CENVAT credit - service availed in relation to disposal of waste - services for raising the height of tailing dam - Rule 2(1) of the CCR - Held that: - the appellant/assessee cannot operate their business or manufacturing facility of dutiable / excisable goods without compliance with the directions given by State Pollution Control Board to minimise the pollution under the relevant Pollution Control laws. Compliance with the directions of the State Pollution Control Board if not done by the appellant industry, may result in prosecution of the appellant company and its key personnel under the various Pollution Control laws for violation - the cenvat credit received on the services for raising the height of tailing dam and maintenance service for pipeline work of tailing dam, used for disposal of industrial waste and polluted water in compliance with Environmental laws is an input service within the meaning of Rule 2(1) of Cenvat Credit Rules, 2004 used by the manufacturer indirectly in or in relation to the manufacture of final products and clearance of final products from the place of removal - credit allowed. Similarly, the cenvat credit on services procured for construction of secured land fill and jerofix storage pond, which are used for disposal of industrial waste and polluted water in compliance with Environmental laws is an input service received by the manufacturer indirectly in relation to the manufacture of final products - credit allowed. Appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 386
  CENVAT credit - services of maintenance of tyres used in various HEMM - denial on account of nexus - Held that: - It is an admitted fact that such heavy earth moving machineries were used for mining and procurement of ore which was further used/ subjected to process of beneficiation, for obtaining the dutiable metal, being zinc, etc. Accordingly, the said input service qualifies for credit under Rule 2(l) of the CCR, 2004 - the issue is squarely covered vide final order of this Tribunal in the appellant’s own case Hindustan Zinc Ltd. Versus CCE, Jaipur-II [2013 (11) TMI 944 - CESTAT NEW DELHI] - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 385
  Penalty - duty paying invoices - the allegation against the appellant is that Shri Vishal Arora is arranging cenvatable invoices without the goods from M/s. Aarcee Ispat Udyog Limited for Shri Pawan Goyal, a commission agent and supplied the goods to the buyers - Held that: - in the case of M/s. Aarcee Ispat Udyog Limited the charge of issue of cenvatable invoices without supply of goods has been exonerated and penalty has been dropped by Commissioner (Appeals) itself. In that circumstance, charge against the appellant is not sustainable - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 384
  CENVAT credit - steel items were used for making steel structure for erection installation of plant and machinery - Held that: - since the goods in question were excluded explicitly w.e.f. 7-7-2009 in the definition of input that itself shows that prior to the amendment the same was included in the definition of input - CENVAT credit in respect of HR sheet and M.S Plates etc is admissible to the appellant - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 382
  Input - appellant have cleared the input as such on payment of duty which was short as compared to CENVAT credit availed thereon - Held that: - it was a case where the interest was demanded under Rule 14 which prescribed demand of interest in case of wrong credit taken or utilized wrongly whereas in the present case the demand was confirmed u/s 11A. Interest u/s 11AB - Held that: - Once the demand of short payment of duty confirmed u/s 11A, interest u/s 11AB will inevitable get invoked therefore, the demand of interest is sustainable. Penalty - Held that: - demand is within the normal period and there is no intention of evasion of duty therefore penalty u/s 11 AC is not proper - penalty imposed under Section 11AC set aside. Appeal allowed - decided partly in favor of appellant.

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• 2017 (7) TMI 381
  CENVAT credit - credit availed suo moto without following refund process as prescribed under Section 11B - Held that: - suo moto credit taken by the appellant is not against the amount which was paid as duty whereas suo moto credit is taken against debit of cenvat credit due to inadvertent, which is excess to the already debited the duty amount in the previous month therefore second time debit made by the appellant is not duty which only happened due to inadvertent mistake of the appellant. Accordingly, no process of Section 11B is required for claiming refund. The appellant has rightly rectified mistake on their own by taking suo moto credit - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 380
  100% EOU - benefit of N/N. 1/95-CE dated 4-1-1995 - appellant procured some input under N/N. 1/95-CE dated 4-1-1995 and the same was used in the manufacture of goods on job work basis on the material supplied by M/s Tata Iron & Steel Co. Ltd (M/s. TISCO) and cleared the processed goods on payment of duty to M/s. TISCO - case of the department is that the clearances made to M/s. TISCO is not sale therefore the same is not permissible under DTA sale by an 100% EOU - Held that: - in the respondent's own case, the tribunal has decided the matter in favor of the respondent which was reported as Universal Ferro & Allied Chelnicals Ltd Vs. Commr. of C. Ex. Nagpur [2005 (10) TMI 539 - CESTAT MUMBAI], where it was held that The benefit of clearance at the rates applicable under N/N. 8/97 in this case as claimed by the appellants cannot be denied as there is no finding or an allegation of use of any duty free imported raw material having been utilized in the manufacture of Silicon Manganese by the appellants - appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2017 (7) TMI 375
  Sales-tax Incentives scheme - investment made by the petitioners in the fixed assets for the Unit of commissioning of the said project in two phases - quantum of investment for the eligibility certificate - mistake in publication - interpretation of statute - whether the petitioner-Company is entitled to incentives/ sales tax exemption under the Scheme on the investment/ expenditure incurred after 31st December 2005 and upto 31st December 2007 treating the Phase II project of the petitioners as a pipeline project and/or on the investment/expenditure incurred after 31st December 2005, but within a period of 18 months from the date of commencement of commercial production? Held that: - it is required to be noted that in case of Small Scale Industrial Units, Medium and Large scale Industrial Units, the assets acquired upto the period of six months or within 1 year from the date of commencement of commercial production or till the date of completion of the said Scheme ie., 31st December 2005; whichever is earlier between the two, shall be considered eligible for the purpose of Incentives. However, in the Gujarati version of the Incentive Scheme, the expression “whichever is earlier between the two” is missing in case of Industrial Units having project cost exceeding ₹ 10 Crores. The aforesaid seems to be an inadvertent mistake in publication/typing - Nobody can be permitted to take undue advantage/ disadvantage of the beneficial Scheme due to inadvertent mistake in publication. It is required to be noted that even considering Clause 3.8 of the Scheme, in case of Industrial Units having project cost exceeding ₹ 10 Crores, it is mentioned that the assets acquired within a period of 18 months form the date of commencement of production, or till the completion of the said Scheme, shall be considered eligible for the purpose of incentives. Therefore, the submissions made on behalf of the petitioners that the assets acquired upto 30th April 2007 are required to be considered eligible for the purpose of incentive; if is accepted, in that case, the words/expressions “till the completion of the said Scheme” shall be meaningless. The intention of the framers of the Scheme ie., the State Government is very clear and unambiguous ie., to consider the assets acquired maximum upto 31st December 2005 shall be considered eligible for the purpose of incentives, or the assets acquired within a period of 18 months from the date of commencement of commercial production, if the same is before 31st December 2005. Even the petitioners also understood that the assets acquired within a period of 18 months from the commencement of commercial production or till the Scheme ends on 31st December 2005 [whichever is earlier between the two] shall be considered eligible for the purpose of the incentive. It is also not the case on behalf of the petitioners in the petition that in fact they understood, considering Clause 3.8 that the assets acquired within a period of 18 months from the date of commencement of the commercial production shall also be considered eligible for incentive and therefore, they made investment subsequently. The petitioners have also not pleaded any estoppel or promissory estoppel. Under the circumstances, when the petitioners and all other Industrial Units/ Undertakings/Projects [105 in number] understood the Scheme, the manner in which the State Government had pleaded and all are treated equally and in case of all Industrial Undertakings/Projects, the assets acquired only upto 31st December 2005 are considered eligible for the purpose of incentive, the petitioners are not entitled to incentive on the assets acquired subsequently after commencement of commercial production or after 31st December 2005. The petitioners are not entitled to the incentives/Sales-tax exemption on the total expenses/investment made thereafter upto 31st December 2007 and/or upto 31st April 2007; as claimed. It is also held that they are entitled to Incentives/Sales-tax exemption on the investment made or assets acquired upto the date of commercial production upto 30th October 2005 - petition dismissed - decided against petitioner.

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• 2017 (7) TMI 374
  Whether the assessment proceedings in relation to each of the petitioner can be allowed to continue when the notification for extension of period of assessment under Section 27 (9) of the Chhattisgarh Commercial Tax Act, 1994 (for short 'the Act, 1994') has been issued after expiry of the original period of limitation as provided under Section 27 (8) of the Act, 1994? Held that: - Section 27 (8) of the Act, 1994 provides that the assessment shall be made in respect of a registered dealer and a dealer referred to in clause (b) of sub-section (6) within a period of two calender years from the end of the period for which assessment is to be made; and (ii) in respect of a dealer who has failed to apply for registration, within a period of two calender years from the commencement of proceedings under sub-section (6) - In the cases in hand all the petitioners are registered dealers, therefore, they would be covered under Clause (i) of sub-section (8). Sub-section (9) of Section 27 is relevant for decision making. Since admittedly, the notification in respect of the relevant assessment year has been issued after the expiry of original period of limitation, the assessment proceedings have lapsed and the same cannot be revived by issuing notification after the period of limitation is over. Petition allowed - decided in favor of petitioner.

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