TMI Tax Updates - e-Newsletter
July 7, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
Central Goods and Services Tax (Seventh Amendment) Rules, 2018 - Corresponding rules amended accordingly.
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GST:
Taxation of Rectified Spirit/ Extra Neutral Alcohol (ENA) under GST - Applicability of GST on ENA - Since the issue raised by the applicant is pending before GST Council for a decision, Advance Ruling on the issues raised in the application cannot be given at this juncture.
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Income Tax:
TDS u/s 195 - Since there is no transfer of technology or use of any technology and payment is only simply for affiliation, the above amount cannot be considered as ‘royalty’ either under the provisions of Income Tax Act or under the provisions of DTAA.
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Income Tax:
TDS u/s 194A - interest on deposits paid in excess of ₹ 10,000/- to its members - assessee is a cooperative society registered as a cooperative bank and is also registered under the Karnataka Cooperative Societies Act, 1959 - No TDS liability.
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Income Tax:
Reopening of assessment - wrong name given in the notice - curable mistake u/s 292B - mentioning the name of the assessee, a dead person, on the assessment order is a mere clerical error which is curable u/s 292B of I.T.Act.
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Income Tax:
Additions towards salary paid - at the time of assessment the assessee could not produce the person to whom the salary was given because that person was left job therefore consent of addition had been given, but this does not mean that assessee had concealed income or furnished inaccurate particulars.
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Income Tax:
Depreciation on computer software purchased separately (SAP Software) - @ 60% OR 25% - higher depreciation in initial years would ultimately lead to lower depreciation in the subsequent years and accordingly, over a period of time, the entire exercise would be revenue neutral.
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Customs:
Jurisdiction - power of fixing the value of imported goods - the Commissioner of Customs (Appeals) is also a proper officer of Customs for the purposes of valuation of imported goods
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Customs:
Concessional rate of duty - import of Crude Palmolein (Edible Grade) - When the imported goods conform to the specific description under Ch 1511 10 00 as “crude Oil” and there is no specific chapter note or HSN Explanation specifying criteria of acid value or carotenoid content for classifying the crude oil, therefore the goods imported are appropriately classifiable under Chapter 1511 10 00 of CTH.
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Service Tax:
Classification of services - The activity of letting out the studio will not come within the definition of Video Tape Production.
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Service Tax:
Technical Inspection and Certification Service - Merely because they obtained registration and paid service tax for a short period, they cannot for forced to pay service tax under a category which is not applicable to the appellant or their activity rendered by them.
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Service Tax:
Though the assessee is entitled to cenvat credit of 50% on the capital goods in the year of receipt/ balance 50% is available to them in subsequent year. Availing credit @ 100% on some invoices and not availing any credit in respect of other invoices in the same year cannot be appreciated.
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Service Tax:
Renting of immovable property services - the amounts recovered on account of pre mature vacation of the rented premises can be treated has amount received ‘in relation to the renting of removable property’ and thus would be taxable Services.
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Service Tax:
Technical testing and analysis services - clinical trial to new drugs for various manufacturing companies (sponsors) - respondent are participating in various drug trials in the capacity of trial site, in as such, their activity is not exempted vide the said Notification.
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Service Tax:
Refund claim - service tax paid under mistake of law - time limitation - Assessee's claim to refund would not be disallowed solely because it seemed barred by limitation.
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Central Excise:
No export of goods - Clandestine removal - Conditions of the notification not satisfied - The appellant has removed the goods without informing the Department. The appellant has also not registered under Rule 9 of the Central Excise Rules - Demand of duty confirmed by invoking extended period of limitation.
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Central Excise:
CENVAT Credit - emergence of iron ore fines during the process of manufacture did not amount of manufacture and hence, the provisions under Rule 6(3) (b) were not attracted.
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Central Excise:
Refund of duty paid in Cash - manufacturing of cement - different rates when manufactured using Clinker and using Limestone & Gypsum - exemption is required to be quantified excisable goods wise.
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Central Excise:
Clandestine removal - A private document without any corroborative evidence brought on record cannot be made the basis of clandestine manufacture and clearances of excisable goods
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Central Excise:
CENVAT credit availed on defective/rejected goods - duty paying documents - while returning the goods, distributors have issued credit notes in the manufacturer favour which also reflect the duty amounts - credit cannot be rejected on the ground that such documents are not proper documents.
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Central Excise:
Cenvat Credit - Exempted goods - availing credit of Education Cess and Secondary Higher Education Cess paid - Since tractors are exempted goods therefore credit of inputs (Inputs used in the manufacture of final product) is not admissible.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (7) TMI 283
Taxation of Rectified Spirit/ Extra Neutral Alcohol (ENA) under GST - Applicability of GST on ENA - Classification of manufactured goods - levy of GST - Held that:- The advance ruling sought in the application has been examined in detail and found that the issue of “Taxation of Rectified Spirit/ Extra Neutral Alcohol (ENA) under GST” is one of the agenda points placed before GST council for deliberation in the 20th meeting of the GST council held on 05.08.2017. The decision on the “applicability of GST on ENA” is pending before GST council and even in the 27th GST council meeting held on 04.05.2018 it was decided to defer the agenda point on the “applicability of GST on ENA” to the next meeting. Since the issue raised by the applicant is pending before GST Council for a decision, Advance Ruling on the issues raised in the application cannot be given at this juncture - application disposed off.
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Income Tax
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2018 (7) TMI 305
Unexplained cash deposits - assessee failure to prove credit worthiness and genuineness of the transaction for receipt of advance - Held that:- Four weeks' time, as a last opportunity, is granted to learned counsel for the petitioner to cure the defects pointed out by the Registry, failing which the Special Leave Petition shall stand dismissed without further reference to the Court.
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2018 (7) TMI 304
Monetary limit - maintainability of appeal - Held that:- SLP dismissed. Pending applications, if any, shall stand disposed of.
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2018 (7) TMI 303
N.P. estimation - rejection of books of accounts - Section 40A(3) disallowance - Held that:- The special leave petitions are dismissed.
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2018 (7) TMI 302
Validity of order of transfer a case u/s 127 - transfer of the petitioner's case from one Assessing Officer(s) to one or more Assessing Officer(s) either subordinate to the same competent authority or outside his jurisdiction - Held that:- The special leave petition is dismissed.
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2018 (7) TMI 301
Addition on account of booking of vehicles-in the bogus/fictitious names - Held that:- Delay condoned. The special leave petition is dismissed.
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2018 (7) TMI 300
Benefit of Section 80HH - proof of manufacturing activities - Held that:- Delay condoned - The special leave petition is dismissed.
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2018 (7) TMI 299
Assessment u/s 153C - non existence of satisfaction note - no presumption to be documents that ‘belonged to’ the searched person - Held that:- SLP dismissed.
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2018 (7) TMI 298
Penalty u/s 271(1)(c) - no actual concealment of income or furnishing of inaccurate particulars of income - Held that:- SLP dismissed.
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2018 (7) TMI 297
TPA - comparable selection - ALP - substantial question of law or fact - Held that:- A substantial quantum of international trade and transactions depends upon the fair and quick judicial dispensation in such cases - the appeals of the present tenor as to whether the comparables have been rightly picked up or not, Filters for arriving at the correct list of comparables have been rightly applied or not, do not in our considered opinion, give rise to any substantial question of law. The present appeals filed by the Revenue do not give rise to any substantial question of law and the suggested substantial questions of law do not meet the requirements of Section 260-A of the Act and thus the appeals filed by the Revenue are found to be devoid of merit and the same are liable to be dismissed. See Prl. Commissioner of Income Tax & Anr. –v- M/s Softbrands India Pvt. Ltd. (2018 (6) TMI 1327 - KARNATAKA HIGH COURT )
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2018 (7) TMI 296
TPA - comparable selection - ALP - substantial question of law or fact - Held that:- A substantial quantum of international trade and transactions depends upon the fair and quick judicial dispensation in such cases - the appeals of the present tenor as to whether the comparables have been rightly picked up or not, Filters for arriving at the correct list of comparables have been rightly applied or not, do not in our considered opinion, give rise to any substantial question of law. The present appeals filed by the Revenue do not give rise to any substantial question of law and the suggested substantial questions of law do not meet the requirements of Section 260-A of the Act and thus the appeals filed by the Revenue are found to be devoid of merit and the same are liable to be dismissed. See Prl. Commissioner of Income Tax & Anr. –v- M/s Softbrands India Pvt. Ltd. (2018 (6) TMI 1327 - KARNATAKA HIGH COURT) - no substantial question of law arises
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2018 (7) TMI 295
Addition on account of undisclosed income as disclosed during the course of survey u/s. 133A - assessee contended that the firm is following Project Completion Method of accounting and the income would be offered to tax as and when the final sale deeds are registered - Commissioner of Income Tax (Appeals) deleted such addition which was confirmed by the Tribunal - Held that:- Revenue only objects to the stand of the assessee on the ground that in his statement, the partner of the firm had disclosed the entire amount as the income of the current year. We have noticed that the contents of the statement, in which, while agreeing that the said sum of ₹ 26.05 crores was the undisclosed income of the assessee for the current year, he added a clarification that the same would be subject to execution of the sale deeds. We therefore find no error in the view of the Tribunal. Appeal dismissed.
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2018 (7) TMI 294
TDS u/s 195 - payment to M/s. Balanced Scorecard Collaborative inc. of USA, towards affiliation fee - AO held that the fee paid as royalty within the meaning of clause (vi)(b) of Sub-section (1) of Section 9 - transfer of technical know-how or technical knowledge - PE in India - Held that:- Assessee being management consultant, the agreement with M/s. Balanced Scorecard Collaborative inc. of USA, had this high sounding management terminology, but put it simply assessee has paid only the affiliation fee and not a fee for consultation or for technical knowledge. Since there is no transfer of technical know-how or technical knowledge or use of technical knowledge, in our opinion, the definition ‘royalty’ either under IT Act or under the DTAA does not apply to the present payment of affiliation fee. Since the M/s. Balanced Scorecard Collaborative inc. of USA, does not have any PE in India, the payment itself per se does not attract any TDS provisions. Since the payment of affiliation fee alone do not result in either providing any technical service or use of technical knowledge, both the AO and CIT(A) have erred in considering the fee as in the nature of royalty. Since there is no transfer of technology or use of any technology and payment is only simply for affiliation, the above amount cannot be considered as ‘royalty’ either under the provisions of Income Tax Act or under the provisions of DTAA. The affiliation fee cannot be considered as taxable income of non-resident so as to attract TDS provisions. - Decided in favour of assessee.
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2018 (7) TMI 293
TDS u/s 194C - disallowance made u/s.40(a)(ia) - non deduction on lorry payments - Revenue’s case therefore is that the impugned disallowance deserves to be restored as it has been wrongly deleted during the course of lower appellate proceedings - Held that:- No merit in the instant former substantive ground. We notice first of all that the assessee had merely hired the corresponding 429 lorries whose details have already been given in assessment order. There is no iota of evidence in the case file indicating the assessee firm to have delegated its liability of transportation of goods by way of any contract or sub-contract or that the payees concerned had undertaken such a liability while transporting the relevant goods. As decided in Bhail Bulk Carriers vs ITO [2012 (4) TMI 230 - ITAT MUMBAI] the payment made to the outside parties do not come or fall within the purview of section 194C, as the "carrying out any work - the appellant was not liable to deduct TDS u/s. 194C(1) for payments made to the outside parties and consequently the disallowance made u/s.40(a)(ia) by the authorities below are deleted. - Decided in favour of assessee Unexplained cash credit addition in assessee’s partners’ capital account - Held that:- various judicial precedents have settled the law that such addition has to be made in the concerned partners’ hands than in case of a firm assessee. We quote one of them CIT vs Metachem Industries (1999 (9) TMI 21 - MADHYA PRADESH HIGH COURT) in support. CIT(A) has already granted liberty to the Assessing Officer to assess the very sum in case of assessee’s individual partners’ concerned. We make it clear that there is not an argument raised before us doubting assessee explaining all the impugned money coming from its partners’ capital account only. - Decided against revenue
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2018 (7) TMI 292
TDS u/s 194A - interest on deposits paid in excess of ₹ 10,000/- to its members - assessee is a cooperative society registered as a cooperative bank and is also registered under the Karnataka Cooperative Societies Act, 1959 - Held that:- Payments made by way of interest by the assessee society to its members would attracts the deduction of tax or not. As from language used in the provisions more particularly 194A(3)(v), then it is clear that the case of assessee shall squarely fall within this provision, being specific provision, irrespective whether ₹ 10,000/- or more is paid by the assessee to its member or not and therefore in the considered opinion of the bench the other provision relied upon by the Ld. DR i.e., 194A(3)(i)(b) shall not be applicable being general in nature. It is settled proposition of law that the specific provision {i.e 194A(3)(v)} , shall override the general provision, { i.e 194A(3)(i) (b)} in case of over lapping or conflict , hence the section 194A(3)(v)} is applicable to the facts of the present case . Therefore the contention of ld DR is not correct. This case is also covered in favour of assessee by case of Vasavamba Cooperative Bank Ltd (2018 (7) TMI 229 - ITAT BANGALORE) - Decided in favour of assessee.
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2018 (7) TMI 291
Admission of additional income u/s 132(4) - assessee surrendered the additional income towards the share of Doctors fee but in the return of income, no such amount was separately shown by the assessee - Held that:- Since the assessee has admitted the entire receipts upto December 2010 and for the subsequent period and filed the return of income, we hold that no separate addition is required to be made in the hands of the assessee on account of Doctors fees. Accordingly, we set aside the orders of the lower authorities and delete the addition made by the AO. The appeal of the assessee is allowed on this ground. As evident from the ledger account, profit and loss account and the note submitted by the assessee that the assessee had admitted the sum of ₹ 16,82,445/- towards his share from the SSDH upto December 2010 which was more than the admission made by the assessee u/s 132(4) and also the share of his receipts worked out by the AO. AO has not given a finding that the assessee has received more than ₹ 16,82,445/- and not admitted by the assessee. Merely because the statement u/s 132(4) was given, the addition cannot be made in the hands of the assessee without any supporting evidence. Since the assessee has admitted the entire receipts upto December 2010 and for the subsequent period and filed the return of income, we hold that no separate addition is required to be made in the hands of the assessee on account of Doctors fees - addition made by the AO deleted - Decided in favour of assessee.
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2018 (7) TMI 290
Reopening of assessment - wrong name given in the notice - curable mistake u/s 292B - notice in the name of legal heir after assessee's death - disallowance of service tax liability u/s 43B - Held that:- Hon’ble Supreme Court’s decision in the case of Sky Light Hospitality LLP Vs. ACIT [2018 (4) TMI 529 - SUPREME COURT OF INDIA] supports the view that wrong name given in the notice is merely a clerical error which could be corrected u/s 292B of I.T.Act. In the instant case the legal heir was given sufficient opportunity and he has submitted the required information. Hence, we hold that mentioning the name of the assessee, a dead person, on the assessment order is a mere clerical error which is curable u/s 292B of I.T.Act, since the notice was issued correctly in the name of legal heir. Accordingly, we set a side the order of the Ld.CIT(A) and uphold the assessment made by the AO, on this issue and reject the objections raised by the assessee. Plain reading of the reasons recorded by the AO shows that the service tax was shown in the liabilities grouping under sundry creditors which is to be disallowed u/s 43B of I.T.Act., and not an allowable expenditure. Thus, the AO formed the belief that the income chargeable to tax, has escaped assessment and accordingly issued the notice u/s 148 of I.T.Act. Though the AO has mentioned decision of CIT Vs. Associated Pigments Ltd. [1993 (6) TMI 249 - CALCUTTA HIGH COURT] in the reasons to take the support, the AO has not relied on the decision of Associated Pigments Ltd., for forming the belief. The verification of original assessment order passed u/s 143(3) shows that the AO has not examined the issue at the time of making the assessment u/s 143(3) on 31.12.2008. AO has not examined the issue and taken a stand regarding the allowability of unpaid service tax which was grouped under the head sundry creditors. From the above, it is established that the AO has not formed any opinion at the time of original assessment, hence it cannot be called as change of opinion. We hold that there is no change of opinion in the assesseee’s case and the action of the AO in reopening the assessment is upheld. Accordingly, we set aside the order of the CIT(A) and uphold the reopening of assessment. - decided against assessee.
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2018 (7) TMI 289
Levying penalty u/s. 271(1)(c) - additions made in the assessment order u/s. 143(3) - assessee has been found to be in the habit of introduction of unaccounted cash in his books of accounts - Held that:- We note that at the time of assessment the assessee had given a consent to add the loans in their income to avoid litigation and save valuable time but which does not mean that the amount entered in the books in name of different persons are unverifiable therefore it cannot be treated as unsubstantiated cash deposit. AO has wrongly alleged in penalty order that the assessee contended the persons have genuinely advance the money for purchase of goods but due any reasons they have taken their money back which they have advanced earlier lack of their addresses it is very difficult to either present them or get their confirmations. As regard the second addition was made due to cash payment of ₹ 35,000/- it cannot be treated as concealment of income or furnishing of inaccurate particulars because the payment was made to M/s Shakurnbhary Straw Products as accepted in assessment order which is also supported by voucher. In this regard the only default was contravention of the provision of section 40A(3). Since there was no concealment of income nor furnishing of inaccurate particulars therefore penalty cannot be imposed on this point. The third addition was made by disallowing the provision of salary payable which was made for salary expenses incurred genuinely for previous year, at the time of assessment the assessee could not produce the person to whom the salary was given because that person was left job therefore consent of addition had been given, but this does not mean that assessee had concealed income or furnished inaccurate particulars. However, later, the assessee had received the confirmations from the persons to whom the amount of salary was given and produced the same before the Ld. CTI(A), which was not considered. Thus there was no concealment of income nor furnishing of inaccurate particulars on the above points because mere non-acceptance of explanation offered cannot form a basis for the satisfaction of assessing authority to the effect that the assessee has concealed particulars of his income. - Decided in favour of assessee.
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2018 (7) TMI 288
Depreciation on computer software purchased separately (SAP Software) - @ 60% OR 25% - Held that:- The computer software so installed albeit separately is a long term software having regard to the special needs of the assessee company - the issue is no longer res integra and is covered in favour of the assessee by the decision of the co-ordinate bench of the Tribunal ACIT vs. Zydus Infrastructure (P.) Ltd. [2016 (8) TMI 696 - ITAT AHMEDABAD] as held assessee is eligible for accelerated depreciation year after-year and therefore, higher depreciation in initial years would ultimately lead to lower depreciation in the subsequent years and accordingly, over a period of time, the entire exercise would be revenue neutral. Higher or lower depreciation will not lead to any change in taxable income of the 10-A unit, the entire issue is academic. - licensed software are subject to depreciation @ 60% - Decided against revenue Eligibility of foreign exchange fluctuation gains for the purposes of exemption u/s 10A - Held that:- The issue is also settled in favour of the assessee by long line of judicial precedents where a consistent view has been taken that foreign exchange gains arising out of the fluctuation in the rate of foreign exchange cannot be divested from the export business of the assessee. Once export is made, the foreign exchange gains/loss may occur due to variety of reasons at the time of remission of export sale proceeds. Foreign exchange fluctuation gains required to be taken as integral part of the business profits derived from exports. What is required to be determined is ‘profits of the business of the undertaking’ which is ostensibly wider than ‘profits & gains derived by the undertaking’. In short, the profits derived from export have been equated when business profits of the undertaking in view of the formula provided in Section 10AA(7) of the Act - Decided against revenue
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2018 (7) TMI 287
Treating the additional income declared during survey as deemed income u/s. 69 - unexplained investment - survey action u/s.133A - Held that:- AR has prayed before us that if an opportunity is afforded to the assessee, the assessee would substantiate that excess cash and stock found during survey was part of business income of the assessee. Taking into consideration entire facts of the case and in view of the prayer made by the A.R., without commenting on merits of addition, the issue is restored back to the file of Assessing Officer for re-adjudication after considering fresh evidence - decided in favour of assessee for statistical purpose. Set off of current year losses against declaration made u/s.133A - Held that:-Since, we have remitted the issue raised in ground No.1 of appeal for examination of the additional income declared during survey, we deem it appropriate to remit the ground No.2 as well. If the assessee is successful in establishing that excess cash and stock is part of regular business income, the Assessing Officer is directed to allow the benefit of set off of current year losses to the assessee Disallowance u/s.40(a)(ia) - payment of brokerage and labour contract charges without tds deduction - Held that:- Though the proviso was inserted by the Finance Act, 2012 w.e.f. 01.04.2013, the Hon'ble Delhi High Court in the case of CIT Vs. Ansal Land Mark Township (P) Ltd (2015 (9) TMI 79 - DELHI HIGH COURT) has held the proviso to be declaratory and curative in nature. The proviso is held to be applicable retrospectively w.e.f. 1st April, 2005. In the facts of the present case, we deem it appropriate to remit this issue back to the file of Assessing Officer to consider documentary evidences furnished by assessee indicating that the recipients of the brokerage/ labour contract charges have offered the amount received from assessee to tax and has paid tax thereon. AO after examining relevant documents shall decide this issue, in accordance with law - decided in favour of assessee for statistical purpose.
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2018 (7) TMI 286
Reopening of assessment - opportunity to the assessee to cross examine - Held that:- In the instant case, we find that the assessee never participated in the assessment proceedings, therefore, the question of asking and granting opportunity to cross examine does not arise. During First Appellate proceedings, the assessee made request to cross examine the witnesses whose statements were used for re-opening the assessments. Principles of natural justice demand that fair chance should be given to rebut the evidence used to make addition. An opportunity to cross examine the witnesses should be provided when the statements of witnesses are used against the assessee for re-opening assessment resulting into addition of income. Taking into consideration entire facts of the case, we deem it appropriate to restore these appeals to the file of Commissioner of Income Tax (Appeal) for allowing an opportunity to the assessee to cross examine the dealers whose statements were used by the Department for re-opening the assessments in the case of assessee. Identical grounds have been raised by the assessee in all the appeals. Accordingly, the ground No.1 raised in the appeals are allowed for statistical purpose.
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2018 (7) TMI 285
Levy of penalty u/s 271(1)(c) - disallowance under section 14A read with rule 8D(2)(iii) - Held that:- Half percentage of average value of investment being administrative expenses the assessee has filed the income and expenditure account for the year ended 31-03-2011 which clearly proves that none of the expenses are co-related to the exempt income by the lower authorities neither during assessment proceedings nor during penalty proceedings that the same relates to exempt income. We have also gone through the income and expenditure account and even now before us there is no averment that the particular expenditure is relatable to exempt income. Disallowance made by AO for non-deduction of TDS under the TDS provisions on purchase of software Revenue could not pointed out under which provision the TDS has to be deducted. The assessee made these expenses for purchase of software Programme, which has been treated by the assessee as having life of one year and hence, written off and claim the same as expenses. We are of the view that the purchase of software does not attract any TDS provision. Disallowance of business promotion expenses for non-presentation of vouchers is for the reason that the amount paid on tea, coffee etc. on clients is due to smallness of denomination of payments and bills and vouchers could not be preserved. Accordingly, in our view this has not a case of furnishing of inaccurate particulars of income because the assessee has filed all the particulars of income before the AO during the assessment proceedings or in the return of income. This may be a case of disallowance of expenses but it is not a case of furnishing of inaccurate particulars of income. It cannot be said that the assessee has concealed the income by furnishing of inaccurate particulars of income. Accordingly, we delete the penalty and allow the appeal of the assessee.
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2018 (7) TMI 284
Addition u/s 68 - joint-bank account - amount deposited in the bank account attributable / belongs to the assessee or family members - gift from the father - Held that:- In the present case, no other credit, apart from ₹ 49 lac deposited cash on 22.10.2008, has been attributed to the assessee. Further, of the said ₹ 49 lacs, ₹ 41 lacs stands distributed/gifted by the assessee’s father equally (almost) among his six daughters. Only a father would do so and, impliedly, qua his own property. The unmistakable inference that arises is that the said amount belonged to the assessee’s father. Irrespective of whether the source thereof has been satisfactorily explained by the assessee or not, and which we categorically find as not, the same cannot be deemed as the assessee’s income; the assessee having led sufficient evidence to show that the same did not belong to her, but, in all probability, to her father, with she being, in fact, one of the beneficiaries of the said sum, i.e., along with her other siblings. This, we may add, is also the sum and substance of the impugned order. The addition for ₹ 49 lacs, therefore, as in the case of the assessee’s sister needs to be deleted. With the sum of ₹ 1 lac deposited cash in the assessee’s HDFC Bank account, which does not appear to be a joint account. The source thereof is explained to be the income of the assessee’s husband, Sh. Jagwinder Singh, stated to be an agriculturist. No evidence toward the same, however, has been brought on record by the assessee at any stage. We observe that though the assessee raised this issue as well before the CIT(A), he has not adjudicated thereon. The same, therefore, cannot form the subject matter of the Revenue’s appeal before us. Not surprisingly, no arguments in its respect were urged before us
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2018 (7) TMI 231
Reopening of assessment - reopening of case beyond 4 years - whether notice is being issued with the prior approval of the JCIT, Haridwar Range, Haridwar - approval in accordance of law - Held that:- We find that there is no allegation in the reasons recorded that there is failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment u/s 147 of the Act, the notice issued u/s. 148 of the Act after a period of four years from end of assessment year in case where assessment has been framed u/s. 147/143(3) of the Act is illegal and invalid. The reasons recorded are vague and non-speaking and reflect complete non-application of mind much less independent “application of mind”. The action of the AO has been taken mechanically on the basis of information of DCIT, Central Circle, Dehradun and, not on independent application of mind and therefore, on this count also the proceedings are without jurisdiction Both the authorities have not recorded proper satisfaction / approval, before issue of notice u/s. 148 of the I.T. Act. Thereafter, the AO has mechanically issued notice u/s. 148 of the Act, on the basis of information allegedly received by him from the DCIT, Central Circle, Dehradun. We are of the considered view that proceedings initiated by invoking the provisions of section 147 of the Act by the AO and upheld by the Ld. CIT(A) are nonest in law and without jurisdiction, hence, the re-assessment is quashed. Since we have already quashed the re-assessment, the other grounds have become academic and are therefore not adjudicated and accordingly, the assessee’s appeal is allowed.
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2018 (7) TMI 230
Reopening of assessment - addition u/s. 69C as alleged unexplained expenditure - non independent application of mind by AO - Borrowed knowledge - Held that:- Mere information received from DDIT(Inv) cannot constitute valid reasons for initiating reassessment proceedings in the absence of anything to show that A.O. had independently applied his mind to arrive at a belief that the income had escaped assessment. AO has acted mechanically and without any independent application of mind. It is also evident that while alleging cash payment in dispute it is not even known or stated on which date and on what basis such sums was allegedly paid by assessee; the reasons recorded are therefore vague, highly non specific and reflect complete non-application of mind. There is no live link or direct nexus between alleged material and, inference. It is a case of investigation in the garb of action u/s 148 of the Act on the basis that proceedings have been initiated on the basis of no material much less any tangible and, relevant material and as such reasons record do not constitute valid reason to believe for initiating proceedings u/s 147 of the Act. - Decided in favour of assessee.
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Customs
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2018 (7) TMI 281
Maintainability of appeal - quantum of mandatory pre-deposit - consideration of amount deposited during investigation - Section 129E of the Customs Act, 1962 - Held that:- Appellants- Assessee has dragged the matter in the litigation about the stay application itself filed before the learned Tribunal for unduly long period and for the reasons best known to the Appellants-Assessee, the correct legal position of amendment of law with effect from 6.8.2014 as well as CBEC Instructions issued on 16.09.2014 were not brought to the notice of the learned Tribunal for making a request with regard to taking into account the deposits already made by the Assessee during the investigation and assessment period in question. The provisions of Section 130 of the Act as were applicable for the person who files an appeal in this Court requires existence of a substantial question of law for maintaining such appeal before this Court - there are no such substantial question of law to be arising in the present case, because not only the present appeal has been filed in the second round of litigation by the Appellants- Assessee, but essentially the Appeal arises out of an interlocutory order passed by the learned Tribunal initially on 20.03.2013 and again on 11.02.2016 rejecting the Miscellaneous Application filed by the Appellants-Assessee - appeal dismissed.
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2018 (7) TMI 280
Absolute Confiscation - Smuggling - Diamonds - non-notified goods - Baggage Rules - Burden to prove - Held that:- The goods in question are diamonds which are not notified goods in terms of Section 123 of the Customs Act. In these circumstances the onus to establish the smuggled nature of goods is on the Revenue. The Revenue is seeking to discharge the burden of proof regarding placed on it under Section 123 of Customs Act. The entire evidence is in the nature of appellant’s failure to explain Licit possession of diamonds recovered during the investigation. The appellant’s defense that the diamonds found in their custody were part of the diamonds imported earlier by them has been found to be deficient on account of the fact that income tax return shown nil balance as on 31/03/2011. Moreover the appellant’s claim regarding the paper sale made to M/s Aakash diamond was also found to be incorrect as the proprietor of m/s Aakash admitted to have receiving diamonds, in these circumstances the appellant’s defense that the diamonds recovered from the stock of the diamonds imported earlier totally false by relying on aforesaid evidence - It is seen that the entire investigation is in the nature where the appellants have been asked to explain the legal possession or source of the diamonds. The appellants have primarily failed to produce the necessary evidence. Similarly the Revenue has also failed to establish it’s case. While Revenue has created a doubt regarding the Licit acquisition of diamonds seized, no evidence of the same being smuggled has been produced. Section 123 of the Customs Acts puts the onus of establishing smuggled nature of goods on the Revenue, except for the notified goods. Diamonds are not notified under Section 123. In these circumstances by mere failure to explain Licit acquisition of diamonds the burden of proof under Section 123 is not discharged - It is also a fact that diamonds are freely traded in the open market. A person may acquire legally or illegally from the market. Failure to explain legal acquisition does not automatically imply that the goods are smuggled. There are no sufficient evidence has been placed to conclude that the diamonds were smuggled. The case of revenue has not been substantiated by positive evidence and hence cannot be sustained. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 279
Concessional rate of duty - N/N. 21/2002-Cus - import of 27 consignments of crude palm oil - the assessee s contention is that the imported goods are classifiable under CTH 1511 10 00 as Crude Palmolein as per description of chapter headings of Customs Tariff and as per HSN Explanatory Notes, Whereas the Revenue s contention that classification of crude palmolein should be as per 2.8 of CODEX Standard prescribed for vegetable oil and as per notification at Sl. No. 34 of 21/2002 and Board s Circular No. 85/2003, dated 24-9-2003. Held that:- It is settled law that for classification of any imported goods, the principle and guidelines laid out in General Interpretative Rules for classification should be followed and the description given in chapter sub-heading and chapter notes, section note should be the criteria. The description given in Sl. No. 34 of Notification 21/2002 specifying values is only for giving exemption to specified goods. Classification given in Circular No. 85/2003, dated 24-9- 2003 cannot be taken as criteria for classifying the goods under the Customs Tariff. There is no dispute on the fact that the goods imported are Crude Palmolein (Edible Grade). It is also not disputed in the impugned order that the appellant is a manufacturer of refined oil and the imported crude palmolein is further refined after clearance and sold for human consumption. When the imported goods conform to the specific description under Ch 1511 10 00 as crude Oil and there is no specific chapter note or HSN Explanation specifying criteria of acid value or carotenoid content for classifying the crude oil, therefore the goods imported are appropriately classifiable under Chapter 1511 10 00 of CTH and any specific description given under Sl. No. 34 of Notification 21/2002 for the purpose of exemption cannot be taken as criteria for classification of the product under Chapter Heading 1511 90 90 as Others . Tribunal s Co-ordinate Bench in the case of Gujarat Ambuja Exports v. CC, Kandla [2009 (6) TMI 662 - CESTAT, AHMEDABAD] on an identical issue of classification of import of crude palmolein, has dealt the issue in depth and discussed the Board s circular and referred to HSN Explanatory Notes and held that imported goods are classifiable under CTH 1511 10 00 and not under CTH 1511 90 90. The reliance placed on the test report which emanated long after the date of import, does not sustain in the absence of any other evidence that imported goods were refined palm oil - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 278
Jurisdiction - power of fixing the value of imported goods - main grievance of the Revenue is that the Commissioner (Appeals) of Customs is not the proper officer for fixing/assessing the value of the imported goods - Held that:- the Commissioner of Customs (Appeals) is also a proper officer of Customs for the purposes of valuation of imported goods - appeal dismissed - decided against Revenue.
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2018 (7) TMI 277
Permission to re-export of goods - mis-declaration of imported goods - rejection of declared value - case of appellant is that the samples were not sent for chemical testing for ascertaining the nature of imported consignments which is mandatory - Held that:- It is accepted fact that the imported consignments were declared to be other than waste and scrap of plastic for re-examination and test and samples were also drawn, but according to the Revenue, the samples were not sent for chemical testing for ascertaining the nature of imported consignments being plastic scrap, which is mandatory as per (vii) to Para 27 (2) of the Handbook of Procedures (Vol.1), 1992-97 (Revised Edition : March, 1996). In absence of test report from the concerned authority regarding nature of the materials to be scrap, the appeal of appellant is allowed - decided in favor of appellant.
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Service Tax
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2018 (7) TMI 276
Refund claim - service tax paid under mistake of law - time limitation - applicability of Section 11B of the Central Excise Act - Whether the provisions of Section 11B of the Central Excise Act would be applicable to claim of refund made by an Assessee when the tax has been paid under mistake of law? - Held that:- Undisputably, there was no liability on the petitioner to pay service tax. The Supreme Court of India, in the case of Union of India Vs. ITC Ltd. [1993 (7) TMI 75 - SUPREME COURT OF INDIA] has held that the Assessee's claim to refund would not be disallowed solely because it seemed barred by limitation. The provisions of section 11B of the Central Excise Act, 1944 would, therefore, not be applicable to an application seeking refund thereof. The petitioner was therefore, wholly justified in making the application for refund under a mistake of law and not under section 11B of the Central Excise Act, 1944 - Since the provisions of section 11B of the Act are not applicable to the claim of refund made by the petitioner, the limitation prescribed under the said provision would also not be applicable and the general provisions under the Limitation Act, 1963 would be applicable. The Application under Section 11B cannot be rejected on the ground that is bared by limitation, provided for under Section - The claim for return of money must be considered by the authorities - appeal allowed.
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2018 (7) TMI 275
Technical testing and analysis services - clinical trial to new drugs for various manufacturing companies (sponsors) - Benefit of N/N. 11/2007 ST dated 01.03.2007 and a subsequent N/N. 25/2012 ST dated 20.06.2012 - Department formed an opinion that respondent are participating in various drug trials in the capacity of trial site, in as such, their activity is not exempted vide the said Notification - Held that:- Perusal of both these Notifications makes it a mandate that the exemption is for such technical testing and analysis service as are provided or to be provided by a Clinical Research Organisation approved to clinical trials by the Drug Controller General of India. Thus, it becomes clear that the claimant of exemption of this Notification should be a Clinical Research Organisation. The Commissioner has held the respondent as a CRO despite the apparent fact that as per the mandatory contracts for the purpose to be entered into by the sponsor, the respondents are mentioned as trial sites. Not only this, in addition thereto, the CRO is also named in the contract itself, i.e., J.S. Icon Clinical Research India Ltd. Once two different entities are apparent from the contract itself, distinguishing the respondent to be called as mere trial site with someone else as the CRO and the exemption of the impugned Notifications is available only to the CRO, the Commissioner (Appeals) has wrongly allowed the respondents to avail the said exemption. Appeal allowed.
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2018 (7) TMI 274
Demand of Interest and penalty - activity in relation to renting of removable property for use in the course of or furtherance of business or commerce - the appellant has paid the Tax due for the period November 2008 to May 2010 on 05.07.2010, immediately after the activity was made taxable by virtue of retrospective amendment, with effect from 01.06.2007 - Held that:- As far as demand of interest on the amounts paid consequent to retrospective amendment are concerned the decision of Tribunal, in case of Indiabulls Properties Pvt Ltd [2016 (11) TMI 583 - CESTAT MUMBAI] is relevant, where the validating provisions of Section 77 (c) of the Finance Act 2010 has held that Recovery shall be made of all such amounts of service tax, interest or penalty or fine or other charges which may not have been collected or, as the case may be, would not have been refunded as if the said amendment had been in force at all material times - the demand of interest in respect of the amounts paid by the appellant on amount of retrospective amendment upheld. Exclusion of value of Penalties imposed on tenants - breach of contract - Held that:- It is apparent that the amounts received or account of breach of contract would be covered under the scope of the term any other services in relation to such renting . it is pertinent to note that the arrangement with the tenant is that if the property is rented for x period the rent is y an if the property is vacated before completion of the x period an additional amount is required to be paid. The amount to be paid cannot treat as the penalty but as a condition of renting or differential rent - the amounts recovered on account of pre mature vacation of the rented premises can be treated has amount received in relation to the renting of removable property and thus would be taxable Services. Penalties - Held that:- The appellant has paid the duty immediately after the enactment of the retrospective amendment. Prior to that they were genuine disputes regarding liability of Service Tax of the said activity and the matter had reached to Hon ble Apex Court - penalty not warranted. Appeal allowed in part.
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2018 (7) TMI 273
Time Limitation - period involved is from 9/2004 to 3/2009. The Show cause Notice is dt. 09.04.2009 - whether the appeal is time barred? - penalty - CENVAT Credit - common input services used for trading activity - Held that:- The appellant was fully aware that they are not eligible for credit on ‘trading activities’ and did not maintain separate accounts. Therefore, they are not eligible for the credit. They have suppressed the fact that input services were used for trading activity. Taking note of the amendment brought forth in the definition of exempted service w.e.f. 01.04.2011, we cannot deny the fact that there was much confusion as to whether credit can be availed in respect of trading activities. The issue was mired in litigation - also, there is no evidence bringing out any positive act of suppression on the part of the appellants to evade payment of duty - extended period cannot be invoked - For the very same reasons, the penalty relating to the demand for the normal period cannot sustain - demand for the normal period upheld. Appeal allowed in part.
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2018 (7) TMI 272
CENVAT Credit - capital goods - Rule 4(2) of CCR 2004 - Held that:- Though the assessee is entitled to cenvat credit of 50% on the capital goods in the year of receipt/ balance 50% is available to them in subsequent year. Availing credit @ 100% on some invoices and not availing any credit in respect of other invoices in the same year cannot be appreciated - the matter is remanded to the Adjudicating Authority to verify the documents eligible for availing the cenvat credit under Cenvat Credit Rules, 2004 and to pass an order in accordance with law - appeal allowed by way of remand.
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2018 (7) TMI 271
Non-payment of service tax - Job-work - demand of service tax with interest - Penalties - Held that:- the appellant had undertaken the work without receiving goods, and hence, was liable to discharge service tax as the service provided by the appellant would qualify as Business Auxiliary Service - also, the appellant had collected rent from M/s Walzen Strips Ltd. but had failed to discharge service tax on the rent collected - further, the appellant had also failed to discharge service tax on the GTA service availed by the appellant - demand of service tax along with interest is sustainable. Penalties u/s 77(1)(a) and 78 of FA - Held that:- The appellant had paid the service tax amount along with interest as pointed out during the departmental audit - also, there is no material on record to establish fraud, collusion, wilful misstatement or suppression of facts on the part of the appellant - penalties set aside. Appeal allowed in part.
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2018 (7) TMI 270
Validity of SCN - Classification of Services - Held that:- It is the settled law that the show cause notice cannot be permitted to be changed at the stage of Adjudication/Appellate proceeding, which is required to be adjudicated for the charges in the show cause notice and nothing beyond - there is no infirmity order passed by the Ld. Adjudicating Authority - appeal dismissed - decided against appellant.
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2018 (7) TMI 269
Commercial training and coaching services - clubbing the gross receipts - only allegation was that a common logo was used by both the entities - Held that:- It has not been brought on record that there was financial flow-back between the appellant and the Private Limited Company. The condition of clubbing or gross receipt has not been established in this case. All the circumstances relied upon by the Department are innocuous in the absence of evidence of sharing of profits - The appellant is running his coaching institute since, 2010 and the Private Limited Company has come into existence only on 3rd June, 2013. The Private Limited Company is separately registered with the service tax authorities and they are discharging their service tax liabilities on a regular basis which has not been disputed by the Department. The status of both the entities is independent of each other - there are no justification for clubbing the gross receipts of the appellant and the Private Limited Company - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 268
Taxability - Maintenance and repair service during the warranty period - CBEC Circular No.59/8/2003 dated 20.06.2003 - Held that:- As per the definition of maintenance and repair service, for the relevant period, the maintenance and repair carried out as per the agreement is covered. The definition also covers the cases where a person authorized by manufacturer carries out maintenance and repair service - The service rendered by the appellant during the warranty period is on behalf of the manufacturer who has authorized the appellant. Hence appellant will be covered by the second limb of the definition - demand upheld - appeal dismissed - decided against appellant.
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2018 (7) TMI 267
Valuation - reimbursement of expenses - includibility - Whether the appellant, who is acting as a clearing and forwarding agent for the principal and is discharging service ta on the commission so received by them, is liable to include the reimbursable expenses in the value of the services and to pay further service tax in respect of the same? Held that:- the issue is no more res integra and stands settled by the Hon’ble Supreme Court in the case of UOI & Others Vs. M/s. Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT OF INDIA], where it was held that only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. Demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 266
Technical Inspection and Certification Service - demand of service tax - Held that:- When services of Technical Inspection and Certification Service is rendered to any person by a Technical and Certification Agency, the same would be taxable under the category of Technical Inspection and Certification Service - In the present case, the appellant is not a Technical and Certification Agency but is a manufacturer of P&P medicaments. There is nothing in the show cause notice as to how the appellant would fit into the classification of Technical Inspection and Certification Service. Merely because they obtained registration and paid service tax for a short period, they cannot for forced to pay service tax under a category which is not applicable to the appellant or their activity rendered by them - the income received from LRL does not fall under the category of Technical Inspection and Certification Service - Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 265
Commercial Training and Coaching Services - the assessee M/s. National Maritime Academy (renamed as Indian Marine University since 2008) were rendering training on various courses to the officials of the Major Ports, Minor Ports and National Highway of India - Held that:- The courses offered by the assessee are recognized by law being courses run under approval of Government, the demand is without legal basis - demand cannot sustain - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 264
Classification of services - hire charges collected towards letting out of the studio for shooting - whether for the period upto 1.6.2007, the respondents are liable to pay service tax for letting out the studio under the category of Video Tape Production? - Held that:- The activity of letting out the studio will not come within the definition of Video Tape Production. The Board’s Circular dated 9.7.2001 referred to by the ld. AR has clarified so as to include the letting out of studio, other facilities such as lights, gadgets etc. falling under Video Tape Production services. The said Circular extends beyond the definition provided in the statute. Appeal dismissed - decided against Revenue.
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2018 (7) TMI 263
Business Auxiliary Services - job-work - scope of SCN - demand under Management, Maintenance or Repair Service - Held that:- The appellants are doing the job of surface grinding of the cylinders supplied by their customers and after completion of the job they are returned to the clients - There is no allegation raised in the SCN that the appellant’s activity would fall under Management, Maintenance or Repair Service and the demand is raised in the SCN under the head BAS. The Commissioner (Appeals) has travelled beyond the SCN to confirm the demand under Management, Maintenance or Repair Service - demand cannot sustain. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 262
Business Auxiliary Services - inclusion of amount received as ocean freight in their taxable value - Held that:- The issue whether the amount collected over and above the actual cost incurred as freight charges has been analysed by the tribunal in the case of Bax Global India Ltd. Versus Commissioner of Service Tax [2017 (9) TMI 1264 - CESTAT CHENNAI], where it was held that The Tribunal in Greenwich Meridian Logistics (I) Pvt. Ltd. Vs CST Mumbai [2016 (4) TMI 547 - CESTAT MUMBAI] held that while notional surplus was earned from purchase and sale of space however that it was not by acting for the client - the demand cannot sustain - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 261
Demand of service tax alongwith equal amount of penalty u/s 78 - case of appellant is that the demand raised is already paid, which has not been considered while raising demand - Held that:- All the supporting documents were filed before the Adjudicating Authority and have also been filed before me, but the same were not filed before the lower appellate authority. Therefore, it would be appropriate to remand the matter to the lower appellate authority to consider the grounds of appeal filed by the appellant before the Tribunal - Appeal allowed by way of remand.
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Central Excise
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2018 (7) TMI 282
No export of goods - Clandestine removal - recovery of Central Excise Duty by invoking Section 11-A of the Central Excise Act, 1944 - The principle contention of the appellant is that when the Tribunal had come to the conclusion that all the leather uppers manufactured by the appellant and sold to M/s.Metro & Metro had been exported and that there is no finding that these goods were sold in the local market, the appellant should not be made to pay duty on the goods - benefit of Notification Nos.42 of 2001 and 43 of 2001. Held that:- Conditions have been laid in the Notification to ensure that only such goods are exempted from duty which are actually exported. The authorities have to satisfy themselves of the claim for exemption and it is only after such satisfaction by the authorities that the manufacturer or processor can remove the excisable goods to a place outside the factory in order to avail the benefit of exemption from paying excise duty - In the present case, the appellant was not registered under Rule 9 of the Central Excise Rules, 2001. The appellant has also not informed the department about the clearance of the goods. Complete non-observance of procedure cannot be said to be a mere procedural lapse. The appellant has not fulfilled any of the conditions. Merely stating that they have not paid the Central Excise Duty as they felt that they would be used by M/s.Metro & Metro for export purposes would not be sufficient. It is well settled that the stringency and the mandatory nature of any notification is decided on the basis of the purpose it seeks to achieve. The purpose of Notification No.43 of 2001 dated 26.06.2001 is to ensure that excise duty should not be evaded under the garb of export sales. The appellant has removed the goods without informing the Department. The appellant has also not registered under Rule 9 of the Central Excise Rules. The contention, even if the appellant is not registered under Rule 9, still the appellant can avail exemption from paying excise duty cannot be accepted. The removal of goods came to light only after the visit of the officers to the factory and perusal of the documents - the authorities were justified in invoking Section 11-A for recovery of excise duty. The order of the Customs, Excise and Service Tax Appellate Tribunal in confirming the levy of duty by invoking extended period of limitation, does not requires any interference. Appeal dismissed - decided against appellant.
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2018 (7) TMI 260
Condonation of delay in filing SLP - Held that:- The delay is not satisfactorily explained - delay cannot be condoned - SLP dismissed on the ground of delay.
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2018 (7) TMI 259
Service of order - Section 37C (1)(a) of the Central Excise Act - case of Revenue is that the onus of proof lies on the appellant to prove that 12.05.2017 is the actual date of receipt of the Order-in-Original dated 29.02.2016 by the appellant, which the appellant have fail to discharge - Held that:- Admittedly there is no proof of delivery of the Order-in-Original on the appellant - As per Section 37C, it was mandatory on the part of Revenue to serve a copy of the order by registered post or speed post with „acknowledgment due‟ to the assessee or to its authorize agent. Admittedly there is no acknowledgement available on the record of the Revenue supporting the assumed date of service by the Department. The Revenue‟s only ground for holding the said order as having been received by the appellant is that the same was sent by the speed post and does not stand received back by the Revenue - the issue whether the dispatch of order by speed post by itself is sufficient to reflect upon the fact of receipt of the same or not was considered by the Larger bench of Tribunal in the case of Margra Industries Ltd. Vs. CC, New Delhi, [2006 (7) TMI 18 - CESTAT, NEW DELHI] in which it was held that it cannot be presumed that the dispatch of the order by speed post, in the absence of any proof of delivery, results in communication of the order. The ld. Commissioner (Appeals) is directed to hear the appellant on merits and disposed of the appeals in accordance with law - appeal allowed by way of remand.
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2018 (7) TMI 258
Utilisation of CENVAT Credit - Appellant were availing credit of Education Cess and Secondary Higher Education Cess paid on the inputs and is utilising the same towards payment of Education Cess and Secondary Higher Education Cess payable on Tractor Cess on the Tractors - Rule 6(1) of the CENVAT Credit Rules, 2002 - Held that:- Although tractors are exempted from duty but cess of Education on automobile are paid thereon. Though these cess are governed and collected under the procedure laid down in Central Excise law but they borrow their legislative authority under duty statue. Therefore, they are not included in whole duty of excise and charge of nil rate of duty as has been referred in Rule 2 (d) of Cenvat Credit Rules 2004 defining exempted goods. Therefore, it is clear that tractors is exempted goods and not dutiable. Since tractors are exempted goods therefore credit of inputs (Inputs used in the manufacture of final product) is not admissible in terms of Rule 6(1) of Cenvat Credit Rules 2002/2004 for the reason that the final product i.e. tractor are wholly exempted from payment of duties of excise. Quantification of demand for the period from September, 2006 to March, 2012 - appellant submitted that an amount of ₹ 9.20,492/- on Education Cess and Secondary Higher Education Cess was wrongly availed by the Appellant but the same was duly reversed in the month of September, 2008. But the department has not taken that into consideration - Held that:- This issue require re-consideration and verification by the ld. Commissioner (Appeals) whether the Cenvat credit amount of ₹ 9.20,492/- which according to the Appellant they have already reversed, has been taken care of while raising the demand from the Appellant. Appeal allowed by way of remand.
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2018 (7) TMI 257
CENVAT credit availed on defective/rejected goods - duty paying documents - denial of credit on the ground that the distributors/dealers invoices cannot be considered to be proper cenvatable documents in terms of the provisions of Rule 9 of the Cenvat Credit Rules - Held that:- The provisions of Rule 16 nowhere provide the documents on the basis of which credit can be availed. The only requirement is that the recipient of the damaged and returned goods has to state the particulars of such receipt in his records. Revenue is also not disputing the fact that the credit so availed by the appellant is otherwise not available to them and only objection of the Revenue is that the documents in question are not specified documents in terms of Rule 9. There is no dispute by the Revenue that while returning the goods, distributors have issued credit notes in the manufacturer favour which also reflect the duty amounts, which were originally paid by the appellant. In such a scenario, the technical objection raised by the Revenue as regards the documents not being specified under Rule 9 of Cenvat Credit Rules cannot be appreciated and upheld. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 256
Waiver of personal penalty of ₹ 5.00 Lakhs imposed u/r 26 of CER - Held that:- Inasmuch as the amount involved is less than ₹ 10.00 Lakhs, the appeals filed by the Revenue are hit by the litigation policy. - Revenue appeal dismissed. CENVAT credit - reversal of proportionate credit on the inputs used in the manufacture of exempted products - Held that:- Nothing is clear either in the original order or in the Order-in-Appeal. If the appellants have reversed the proportionate credit, there would be no further requirement to confirm the demand in terms of the provisions of Rule 6(3) of Cenvat Credit Rules - also the appellants have stated that the said goods were being exported by them in which case there would be no requirement of reversal of any amount. This fact is also not clear from the files - matter is remitted to the original adjudicating authority for examining the submissions of the appellant and to verify the records. Penalties on M/s.S.L.B. Enterprises - Held that:- Admittedly when the assessee took the credit, he was entitled to the same inasmuch as all their final products were dutiable. It is only w.e.f. 01.03.2008 that Menthol and Menthol Crystal became exempted and the dispute arose. In such a scenario no mala fide can be attributed to M/s.S.L.B. Enterprises so as to justifiably invoke penal provisions against them - penalty set aside. Appeal disposed off.
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2018 (7) TMI 255
Clandestine removal - MS Ingots - the entire case of the department is based upon the entries in the diary recovered from one Mr. S.K. Pansari (proprietor of M/s Monu Steels) and also on the statement of the said Mr. S.K. Pansari - absence of corroborative evidence - Held that:- In the impugned order nowhere it has been discussed as to how the demand to duty is sustainable in the absence of any clinching evidence of clandestine manufacture and removal of the goods. The entire demand is based upon the records recovered from Sh. S.K. Pansari proprietor of M/s. Monu Steel. There is no evidence expect the said statement and private dairy entry of 3rd party i.e. of Sh. S.K. Pansari which contains the name of the appellant. The law as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence on any corroborative evidence, is well settled. Only on the basis of statement of third party no demand could be made. Since the entire case of the Revenue is based upon the entries made in the records of M/s. Monu Steel without there being any corroborative evidence, the demand is set aside - As a result the penalty imposed on Sh. Mahesh Agarwal, Director is also set aside - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 254
CENVAT Credit - input services - Broadcasting Services - Department was of the view that the respondents are not eligible to avail Cenvat Credit on Broadcasting Services as these do not qualify as input services for the respondent and also for the reason that the invoice in respect of Broadcasting Services are raised in the name of the Advertising Agency and not the respondent - Held that:- The Department does not dispute the payment of service tax on Broadcasting Services. Duty paying invoices - proviso to Rule 9(2) of CER - Held that:- The proviso to Rule 9(2) states that in case there is any discrepancy with regard to the documents, it is for the Assistant/Deputy Commissioner to verify the accounts of the assessee and arrive at a conclusion whether credit is eligible or not. In the present case, as there is no dispute with regard to the service tax paid or the availment of services by the respondents, there are no reasons to deny the credit. Appeal dismissed - decided against Revenue.
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2018 (7) TMI 253
CENVAT Credit - structural items such as platforms, structures for capital goods and material handling system - denial of credit on the ground that the chain of structural system so erected is permanent in nature and is completely embedded to earth, and is therefore, an immovable property - CBEC Circular No. 441/7/99-CX dated 23.02.1999 - Held that:- The usage of various iron and steels items is to be analysed in light of the decision of the Hon’ble Supreme Court in the case of Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA], where it was held that Applying the "user test" on the facts in hand, we have no hesitation in holding that the steel plates and M.S. Channels, used in the fabrication of chimney would fall within the ambit of "capital goods" as contemplated in Rule 57Q. The observation of the Tribunal in the case of Dhampur Sugar Mills Ltd. Vs. Commissioner of Central Excise, Meerut [2013 (5) TMI 137 - CESTAT NEW DELHI] is applicable to the instant case, where it was held that The structural part to be used as support for Boiler had been fabricated in some other factory and had been brought to this factory where the same has been erected. Since in the facts of this case, the structural part, though supporting structure, is more like a component of the boiler, the denial of cenvat credit in respect of the same would not be correct. Credit allowed - appeal dismissed - decided against Revenue.
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2018 (7) TMI 252
Validity of SCN - Section 11A (2B) of the Central Excise Act, 1944 - shortage of stock as reflected in the statutory records i.e. Daily Stock Register - case of appellant is that the Central Excise Officers ascertained the duty liability during the stock verification conducted on 20.09.2006 of ₹ 11 lakhs and which was paid by them vide post dated cheques. Therefore, in terms of the provisions of Section 11A (2B) of the Central Excise Act, 1944, there is no requirement to issue the SCN - time limitation. Held that:- On close reading of Section 11A (1), it is seen that the Central Excise Officers are required to issue notice within one year from the relevant date on the person chargeable with duty which has not been paid. In case, there is fraud, collusion or willful misstatement, etc., the notice should be issued within five years - Sub-section (2B) of Section 11A of the Act had given an option to the assessee to 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, and to inform the Central Excise Officer in writing, who, shall not serve any notice in respect of the duty so paid. In the present case, the duty is to be paid on 20.09.2006 i.e. the date on which the shortage has been detected by the Central Excise Officers. Therefore, the findings of the adjudicating authority that the information of payment of duty was given to the department on 09.02.2007 are contrary to the evidence on record. It is on record that the Central Excise officers deposited the post dated cheques from 26.10.2006 onwards in the bank for encashment vide TR-6 challans. Hence, the finding of the adjudicating authority is not sustainable. There was no requirement to issue SCN as per provisions of Section 11A (2B) as the appellant had already paid the duty as ascertained by the officers before issuance of SCN - the impugned order is modified to the extent that the demand of ₹ 11 lakhs as deposited by the appellant before issuance of Show Cause Notice is upheld and the balance amount of demand of duty alongwith interest and penalty are set aside. Appeal allowed in part.
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2018 (7) TMI 251
Irregular availment of CENVAT Credit - inputs recived/procured from their other units on stock transfer basis - Held that:- The issue is no more resintegra and is covered by the decision of the Hon’ble Tribunal in the case of Exide Industries Ltd. vs. Commissioner of Central Excise, Haldia [2008 (1) TMI 190 - CESTAT, KOLKATA], where it was held that Definition “inputs” under Rule 57A of Central Excise Rules, 1944 read with Rule 57B and conditions laid down by Rule 57AC nowhere warranted ‘purchase’ is sine qua non. Therefore Notification No. 13/2003, dated 1-3-2003 guides to appreciate legislative intention - credit allowed - appeal dismissed - decided against Revenue.
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2018 (7) TMI 250
Valuation - abatement of transportation cost including insurance charges from the assessable value - Section 4 (1)(a) of Central Excise Act, 1944 read with Rule 5 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Held that:- The document produced before us as sample of invoices, needs verification before the same is acted upon as it has been held in the impugned order that on merit, the issue is held in favour of the appellant - appeal allowed by way of remand.
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2018 (7) TMI 249
Clandestine removal - allegation based on one monthly report prepared by the staff of the appellant company and marked as “Monthly Production Report of Hyde Road Dryer Plant” - principles of Natural Justice - Held that:- The entire case has been made on the basis of appellant’s private documents and the same are not supported by any corroborative evidence. The allegation of clandestine clearance based on the private documents and not supported by corroborative evidences cannot be sustained - In the present proceedings there is no indication of excess raw-materials and extra consumption of electricity. There is no seizure of clandestinely removed finished goods or seizure of any cash of clandestine transaction involved in such suspected clandestine clearance. A private document without any corroborative evidence brought on record cannot be made the basis of clandestine manufacture and clearances of excisable goods - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 248
Refund of duty paid in Cash - manufacturing of cement - different rates when manufactured using Clinker and using Limestone & Gypsum - N/N. 20/2008-CE dated-27/03/2008 - Held that:- The appellant’s method of computation of the annual differential refund is not acceptable. Every exemption Notification exempts excisable goods productwise mentioned therein. Therefore, exemption is required to be quantified excisable goods wise. Paragraph 4 (1), which provides for annual differential refund, does not provide for computation on a different basis. For each category, full refund equal to the duty payable on value addition has been sanctioned, both monthly and annually - The issue involves is the quantification aspect in detail - matter referred to the original adjudicating authority to look into the calculation aspect - appeal allowed by way of remand.
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2018 (7) TMI 247
Manufacture - marketability - Captive consumption - parts of railway wagons manufactured and consumed captively - assessee imported and supplied railway wagons classifiable under Chapter 86 of Central Excise Tariff Act, 1985 to the Indian Railways at Nil rate of duty - Held that:- the Tribunal in the case of Texmaco Ltd. Vs. Commr. of Central Excise, Kolkata III [2007 (7) TMI 162 - CESTAT, KOLKATA], has dealt the issue in detail and allowed the assessee’s appeal on the ground of marketability - appeal dismissed - decided against Revenue.
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2018 (7) TMI 246
Refund claim - reversal of CENVAT credit availed - Rule 6 of Cenvat Credit Rules, 2004 - rejection on the ground of time limitation - re-credit on returned goods. Held that:- Section 11B of the Act 1944 provides that any person, claiming refund of any duty of excise and interest, if any, paid on such duty, may make an application for refund of such amount to the Assistant Commissioner of Central Excise, before expiry of one year from the relevant date. Section 11B(5)(B) (f) provides that the relevant date means the date of payment of duty - In the present case, the appellant claimed the refund of the amount as debited from their RG 23A Part-I & Part-II Account as on 04.09.2010. Therefore, the appellant filed the refund claim within the stipulated period under the provisions of law. The Tribunal in the case of Mothersons Sumi Systems Limited Vs. Commissioner of Central Excise, Noida [2006 (8) TMI 75 - CESTAT, NEW DELHI] observed that anywhere any amount wrongly credited, department cannot reduce refund on the ground that it is not provided under the statutory provisions of Refund. The appellant erroneously debited the amount from their RG-23A Part-II account and on the basis of the direction of the officers who conducted the Audit. The appellant filed applications for refund/return of the amount on 20.04.2011 as per directions of the Assistant Commissioner by letter dated 29.12.2010. In such situation there is no reason to reject the refund claim. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 245
Rectification of Mistake - Held that:- In para 7, while confirming the duty demand in respect of clearances made by appellant to M/s.Anand, the Tribunal has wrongly included / mentioned the name of M/s. NHS also along with M/s. Anand - this is an error apparent on the face of record which requires rectification - rectification allowed. Rectification also sought on the ground that Shri Natarajan was not allowed to be cross-examined and therefore the statement cannot be relied - Held that:- By mistake, the Tribunal has wrongly observed that cross-examination of Shri Natarajan was not allowed - The mistake being apparent on the face of record, rectification allowed. ROM application allowed.
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2018 (7) TMI 244
Benefit of N/N. 3/2004-CE dated 8.1.2004 - Clearance of Cement - The department was of the view that appellants are not eligible for the benefit of Notification and have mis-declared the clearances in their ER-1 returns - Held that:- The goods which are exempted as per the notification does not include cement. Therefore, this contention of the appellant that cement is impliedly exempted as per notification does not hold water - When the notification per se does not grant any exemption to cement, the certificate issued by the District Collector cannot exempt the goods from payment of duty - demand of duty with Interest upheld. Penalty u/s 11AC - Held that:- The appellant was under bonafide belief that the certificate was valid for claiming exemption - the major quantity of cement supplied in the exempted category are supplies to SEZ, by oversight the returns reflected that the clearances are made to SEZ. That this was not done with an intent to evade payment of duty - penalty not warranted. Appeal allowed in part.
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2018 (7) TMI 243
Demand of Interest and penalty - wrongly availed credit was reversed immediately on being pointed out - whether the CENVAT credit availed wrongly and reversed subsequently without actually using it would attract interest or not? - Held that:- The issue is squarely covered by the decision of the jurisdictional High Court in the case of Commissioner of Central Excise, Madurai Vs. Strategic Engineering [2014 (11) TMI 89 - MADRAS HIGH COURT], where it was held that mere taking itself would not compel the assessee to pay interest as well as penalty - the appellant is not liable to pay interest or penalty - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 242
Failure to take registration and payment of duty - SSI Exemption - Department was of the view that as the value of clearances from the yard exceeded ₹ 50 lakhs for the financial year 1999 – 2000, at the time of first clearance of poles by respondents, they are not eligible for SSI exemption and is liable to pay duty - Held that:- When the contractors are independent contractors and each contractor is undertaking the process of manufacture independently, merely because the yard of TNEB is used as the premises for undertaking the process of manufacture, it cannot be said that all these manufacturers are doing their activity within a factory so as to attract condition No. (vii) of para 2 of N/N. 8/1999. The show cause notice has been issued alleging that the value of clearances effected from TNEB Yard, Samayanallur exceeded the exemption limit. When each contractor has to be considered as an independent manufacturer, the demand raised against one contractor stating that clearances effected from yard including the clearances made by other contractor is exceeding the prescribed limit cannot sustain. Appeal dismissed - decided against revenue.
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2018 (7) TMI 241
SSI Exemption - use of Brand Name of others - it was alleged that brand name of “Le Royal Meridien” which is owned by “Star Wood Hotels and Resorts Ltd.” for clearance of cakes, cookies and pastries - N/N. 8/2003-CE dated 1.3.2003 - Held that:- The appellants have entered into an agreement with Meridien SA dated 12.4.2000 by which they have acquired the brand name “Le Royal Meridien”. They have been given the exclusive right to use the brand name till the expiry of the agreement. Therefore, it cannot be said that they are using the trademark of another person. This issue was considered by the Hon’ble Supreme Court in the case of Otto Bilz (India) Pvt. Ltd. [2015 (10) TMI 2149 - SUPREME COURT], wherein the foreign brand name owner when had assigned the trademark to the Indian company under an agreement with the right to use the trademark exclusively in India, the Hon’ble Court held that the Indian company is entitled to SSI exemption. The denial of SSI exemption is without any basis - penalty imposed on Managing Director of M/s. Appu Hotels Ltd. is set aside - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 240
CENVAT Credit - inputs/capital goods - TMT bars used in the installation of the capital goods - Held that:- The decision of this Tribunal in the case of M/s Singhal Enterprises Pvt. Ltd. Vs. Commr. of Customs & Central Excise, Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI], is squarely applicable to the instant case, where it was held that applying the “User Test” to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit. In the instant case, the fixation of the said capital goods is critical for the functioning of the machineries, without which the process of manufacture cannot be carried out - Credit on such capital goods cannot be denied to the appellant - Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 239
CENVAT Credit - common input services which had been used in the manufacture of exempted goods and dutiable goods - non-maintenance of separate records - waste arising out of the course of manufacture - Rule 6 of CCR - Held that:- The liability to pay duty under Rule 6 arises only for the final products and not for the waste emerging during the process of manufacture. In the instant case, the resultant iron ore fines and coal fines are nothing but waste which cannot be used in the manufacture of sponge iron. The judgment of the Tribunal in the case of Commissioner of Central Excise, Raipur Vs. Seleno Steels Ltd. [2013 (3) TMI 258 - CESTAT NEW DELHI] is squarely applicable to the facts of this case. In this case, the Tribunal had held that emergence of iron ore fines during the process of manufacture did not amount of manufacture and hence, the provisions under Rule 6(3) (b) were not attracted. As per Rules 6 (1) and 6(2) of the Rules, credit will not be permissible on inputs or input services used for the manufacture of exempted goods or provision of exempted services. Appeal dismissed - decided against Revenue.
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2018 (7) TMI 238
Goods supplied to Ministry of Defence - N/N. 10/1997 dated 01.03.1997 - Department observed that appellant had not maintained separate accounts as per Rule 57CC(9) of the Central Excise Rules, 1944 - Held that:- The authorities below had all along construed that the appellant had violated the provisions of Rule 57CCC. This issue has not been examined. Therefore, in the interest of justice, it is necessary to examine whether the appellant, in fact, has violated the provisions of Rule 57CCC - appeal allowed by way of remand.
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2018 (7) TMI 237
Area Based Exemption - N/N. 33/99-CE dated 08.07.99 - Time limitation - The appellant contended in their appeal that the benefit of area based exemption notification cannot be taken away from the appellant on the ground of limitation as there is no provision regarding limitation in the said notification - Held that:- In the present case, the refund claim was filed after more than five years and it is covered by the decision of the Tribunal in the case of Vernepur Tea Estate [2016 (4) TMI 17 - CESTAT KOLKATA], where it was held that refund claims, filed after more than 5 to 6 years of such duty payment, are clearly time barred - appeal dismissed - decided against appellant.
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2018 (7) TMI 236
Abatement of duty for the period of closure - Rule 96ZP(2) of Central Excise Rules - It is the case of the Revenue that the assessee had opted to discharge their duty liability under Rule 96ZP(3) read with section 3A of the Act and accordingly they are not entitled to abatement of duty - Held that:- On close rending of Rule 96ZP, it is noted that Rule 96ZP (2) allowed to claim abatement of duty during the closure period - In the present case, the appellant opted to pay duty under Rule 96ZP(3) at the rate of ₹ 300/- per MT Rule 96ZP(3) did not allow abatement of duty. It is well settled that once the appellant opted to exercise the option of payment of duty under Rule 96ZP (3), they are not entitled ti retract their stand. The appellant is not entitled to abatement/proportionate reduction of duty - appeal dismissed - decided against appellant.
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2018 (7) TMI 235
Self-credit of excise duty refundable under N/N. 20/2007-CE - activity of shifting of control samples from the production floor to the sample storage room - deemed removal - whether control samples have been cleared for the purpose of N/N. 20/2007-CE? - Held that:- N/N.20/2007-CE grants exemption to all the goods manufactured and cleared from a unit located in the states of Assam, Tripura, Meghalaya, Mizoram, Manipur, Nagaland and Sikkim. Accordingly, the manufacturing unit in the state of Assam is eligible for the exemption under the said Notification. It is pertinent to note that explanation II to Rule 4(3) of the Central Excise Rules states that putting the manufactured goods for any use within the factory of production for manufacture of any other commodity i.e. captive consumption, amounts to deemed removal of goods. Accordingly, the liability of excise duty arises even where the goods manufactured are used within the factory of production. Cenvat Credit cannot be denied to the appellant assessee when the department has accepted the duty paid on control samples. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (7) TMI 234
Validity of assessment orders - rejection of books of accounts of the revisionist - it was seen that the revisionist has evaded the purchase and sale of his transaction and has evaded the payment of tax and he has further considered that since the survey was conducted in the month of August 2013, the estimate of undisclosed sales cannot be over and above of ₹ 50 lac - Held that:- The order of the Tribunal is modified to the extent that the purchase and sale at ₹ 40 lac. and 50 lac. respectively, as estimated by the first appellate authority, is correct - this Court affirmed the order passed by the first appellate authority and accordingly, the order of the Tribunal is modified. Revision allowed in part.
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2018 (7) TMI 233
Condonation of delay of 1782 days’ in filing the present revision - insufficient reason for condoning the delay - Held that:- Since the delay in filing the revision is inordinate and has not been explained sufficiently in the affidavit accompanying the delay condonation application, the delay condonation application is liable to be dismissed - Application for COD dismissed.
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2018 (7) TMI 232
Penalty u/s 67(1)(c)(d) & (i) of the Kerala Value Added Tax Act, 2003 - Held that:- The issue whether the petitioner is liable to penalty under the Act is a matter for the first respondent to consider at the first instance, after considering the objections, if any, raised by the petitioner against the proposal made in Ext. P1 notice - petition is dismissed.
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