TMI Tax Updates - e-Newsletter
August 1, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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Income Tax:
Foreign exchange hedging loss - AO has failed to bring any material evidence on record to support its stand that the loss suffered by the Assessee was speculative loss - AT
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Income Tax:
Claim of partners salary u/s 40(b) against income disclosed during survey at the time of survey, assessee disclosed the entire income as business income, the AO was not justified in bifurcating the same into income from other sources and income from business or profession - AT
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Customs:
Import of accessory of medical equipments - Micropipettes, as an accessory of the Auto Analyser - held as accessory and eligible for exemption notification - HC
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Customs:
When an amount becomes refundable to an assessee upon finalization of provisional assessment by the appropriate authority, the same has to be refunded immediately and appellant was not required to file any refund claim under Section 27 of the Customs Act, 1962 - AT
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Service Tax:
Goods Transport Agency Service - abatement of 75% of the gross amount - requirements prescribed by the Boards Circular was not mandatory and it was working out modality for implementing provisions of law for denial of substantive rights, use of the same cannot be made - AT
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Service Tax:
Manufacture of goods on Job work basis - Post Job work activity being transportation of goods - Business Support Services - prima facie case is against the assessee, but since no payment received, stay granted - AT
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Central Excise:
100% EOU - procuring duty free raw materials from other 100% EOUs by following CT-3 procedure - will not make the goods manufactured in India as imported goods. - AT
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Central Excise:
Reversal of cenvat credit - furnace oil used to generate electricity - supplies made to a 100% EOU cannot be considered as exempted goods - AT
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Central Excise:
The charge of illicit removal cannot be confirmed against the appellant on this factual matrix, which indicate that the appellant to his subsequent application made on 18.05.2001 has paid the duty under the compounded levy scheme - AT
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Central Excise:
Classification of orthopaedic heating belts - classification as done by the assessee under Chapter Heading No.9021 is correct - AT
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Central Excise:
Eligibility of CENVAT Credit of SAD paid u/s 3(5) of CTA - No reason for denying the Cenvat credit of the amount of SAD/special CVD paid by the importer and mentioned in the respective dealer's invoices - AT
Articles
Notifications
News
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Change in Tariff Value of Crude Palm Oil, Rbd Palm Oil, Others Palm Oil, Crude Palmolein, Rbd Palmolein, Others Palmolein, Crude Soyabean Oil, Brass Scrap (all Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified
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Government to Launch A New Program of Financial Inclusion in Mission Mode to Provide Households with Facilities of Savings, Credit, Remittances, Insurance and Pension: FM
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Shri S S Mundra takes over as RBI Deputy Governor
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Clarification Regarding Acquisition and Transfer of Immovable Property in India by Foreign Nationals
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Index of Eight Core Industries (Base: 2004-05=100), June, 2014
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Third Bi-monthly Monetary Policy Review, 2014-15 on Tuesday, August 5, 2014
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RBI Reference Rate for US $ and Euro
Case Laws:
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Income Tax
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2014 (7) TMI 1086
Deduction u/s 80HHC - Business profits Computation - 90% reduction of gross hire charges or net hire charges as per Explanation (baa) to section 80HHC Held that:- Following the decision in ACG Associated Capsules Pvt. Ltd. V/s. Commissioner of Income-tax [2012 (2) TMI 101 - SUPREME COURT OF INDIA] - ninety percent of not the gross interest but only the net interest is liable to be included in the profits of the business of the assessee as computed under the heads "Profits and gains of business or profession" while making the computation under Section 80HHC no substantial question of law arises for consideration Decided against Revenue. Onetime payment made to forest department Capital or revenue expenses Held that:- Following the decision in Commissioner of Income Tax V/s. Dr. Prafulla R. Hede and Anr. [2014 (7) TMI 1085 - BOMBAY HIGH COURT] - The assessee was directed to pay the net present value for diversion of forest land for the purpose of mining - the expenditure so incurred to be for commercial expediency and that it should therefore not be treated as expenditure of capital nature Decided against Revenue.
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2014 (7) TMI 1085
Revision u/s 263 - Compensation paid as afforestation charges claimed as deduction nature of expenditure - Held that:- The Tribunal rightly concluded that the payment is towards the loss of forestry on the forest land that has been diverted and no forest asset for the assessee is created by making payment of net profit value The assumption on which the Commissioner of Income Tax proceeded is wholly erroneous. The Tribunal concluded that the order of the Assessing Officer was a possible view of the matter and in the given facts and circumstances, could not have been said to be erroneous and prejudicial to the interest of the revenue, requiring interference under Section 143(3) The expenditure incurred is to be for commercial expediency and that it should therefore not be treated as expenditure of capital nature no substantial question of law arises for consideration Decided against revenue.
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2014 (7) TMI 1084
Claim of deduction on expenses incurred for education of daughter Daughter joined assessee's firm and went abroad for higher education - Held that:- Assessee has not been able to bring on record anything and particularly the scheme so as to provide higher education abroad to the employees or associates CIT(A) has observed that in the firm of the assessee, there were at least 14 associate advocates and none were given an opportunity to go abroad prior for higher education - not only she was allowed to continue and stay abroad, but permitted to join any firm after completing the higher education - Thus, this was not the decision taken in the interest of the activities and profession of the firm of Advocates but for furthering the career prospects of the child/ daughter - neither of the Authorities committed any error or perversity in disallowing the deduction both the judgments relied by the assessee could not be taken into consideration as they operate in different facts and circumstances Thus, no substantial question of law arises for consideration Decided against Assessee.
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2014 (7) TMI 1067
Addition u/s 40(a)(i) r.w section 195 - Commission paid to non-resident Held that:- As per Circular No. 786 dated 07.02.2000 for non deduction of TDS, the Assessee was not required to deduct TDS u/s. 195 with regard to payment of commission to foreign agents - assessee had filed the return of income in accordance with the circular prevailing at that time Relying upon Dy. CIT v. Panchmahal Steel Ltd. [2010 (8) TMI 875 - ITAT AHMEDABAD] - there was no default on the part of the assessee not to deduct TDS in such circumstances based upon its opinion on the CBDT circulars - no disallowance can be made Decided in favour of Assessee.
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2014 (7) TMI 1066
Cryptic order passed by CIT(A) - Interest expenses disallowed u/s 40(a)(ia) Failure to deduct TDS u/s 194I - Business of software and hardware development projects from USA - CIT(A) has not considered the three ingredients of section 68 of the Act, i.e. creditworthiness, identity and genuineness of the transaction - CT(A) has also not discussed how he has satisfied regarding the genuineness and source of the share application money in investing in the assessee company - the CIT(A) has passed a cryptic order without discussing the issue in detail Relying upon CIT vs. Kanpur Coal Syndicate [1964 (4) TMI 18 - SUPREME Court] - the power of the CIT(A) is co-terminus with that of the AO - the FAA can do what the AO can do and direct him to do what he has failed to do - it was the duty of the CIT(A) to verify the source of investment of share application money - Since CIT(A) has failed to do the above exercise, the order of the CIT(A) is set aside and the matter remande for fresh adjudication Decided in favour of assessee.
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2014 (7) TMI 1065
Additional depreciation on windmill Held that:- Assessee has installed a Windmill during the year - CIT(A) while deciding the issue has given a finding that the Assessee is already engaged in the business of manufacturing of production of Pipes and Tubes and has also fulfilled all the conditions laid down for claim of additional depreciation Relying upon CIT vs. Diamines and Chemicals Ltd. [2013 (12) TMI 373 - GUJARAT HIGH COURT] - while claiming the deduction u/s 32(1)(iia) setting up Windmill has nothing to do with the power industry and what is required to be satisfied in order to claim additional depreciation is that setting up of new machinery or plant should have been acquired and installed by an Assessee who was already engaged in the business of manufacture or production of any article or thing - assessee is already engaged in the business of manufacturing and the Assessee has installed a windmill during the year and there was no reason to interfere with the order of CIT(A) Decided against Revenue. Foreign exchange hedging loss - Assessee not entered into any forward contracts - Loss notional in character Held that:- Assessee is engaged in the business of manufacturing Tubes and Pipes. From the copy of the balance sheet placed on record it is seen that the approximately 90% of the material consumed is from import purchases - assessee has availed financial facilities from its bankers for purchase of raw material - CIT(A) while allowing the appeal of the Assessee has given a finding that the dealing of Assessee in foreign exchange was in the normal course of business and to safeguard the future losses against foreign exchange rate fluctuations it had entered into hedging transaction - the loss falls under proviso (a) to Section 43(5) of the Act and the loss on account of fluctuation in the rate of foreign exchange in forward contract was not speculative transaction but is a business loss covered by Section 28 of the Act - the AO has failed to bring any material evidence on record to support its stand that the loss suffered by the Assessee was speculative loss the decision in CIT Versus M/s Woodward Governor India P. Ltd. & M/s Honda Siel Power Products Ltd. [2009 (4) TMI 4 - SUPREME COURT] there was no reason to interfere with the order of CIT(A) Decided against Revenue.
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2014 (7) TMI 1064
Confirmation of partial penalty u/s 271(1)(c) Concealment of particulars - Suppressed work in progress Late payment of PF Held that:- The assessee had disclosed the material facts before the AO and CIT(A) - When the assessee has made a particular claim in the return of income and has also furnished all the material facts, the disallowance of claim cannot automatically lead to the conclusion that there was concealment of particulars of his income by the assessee or furnishing inaccurate particulars - What is to be seen is whether the said claim made by the assessee was bona fide and whether all the material facts relevant thereto have been furnished and once it is so established, the assessee cannot be held liable for concealment penalty u/s 271(1) (c) of the Act - all the necessary facts were furnished and the fact that the addition has been substantially reduced in appeal, the addition that was sustained does not call for levy of penalty u/s 271(l)(c) thus, the penalty levied is set aside Decided in favour of Assesse.
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2014 (7) TMI 1063
Claim of bad debts - Held that:- CIT(A) was rightly of the view that the Chartered Accountant has given a certificate mentioning that all the bad debts written off are relating to trade of the Company and income referring to those has been offered for tax in earlier years and impugned debts have been written off in the year Relying upon TRF. LTD. Versus COMMISSIONER OF INCOME-TAX [2010 (2) TMI 211 - SUPREME COURT] - after the amendment of section 36(1)(vii) of the Income tax Act, 1961, with effect from April 1, 1989, in order to obtain a deduction in relation to bad debts, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable - It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee Decided against Revenue. Prior paid expenses Held that:- CIT(A) rightly of the view that the assessee rightly submitted that out of ₹ 4.8 lacs, ₹ 1,690,585/- relate to purchases of components, the same entering the stocks during the year upon the purchases made, cannot be considered as disallowable prior period expenses and there is another identical amount ₹ 90,134/- of Courrier DHL Worldwide, which amount had been in dispute was ultimately settled towards the end of the year and considered as expenditure upon settlement and payment and can be considered as occurring only during the year the order of the CIT(A) is upheld Decided against Revenue.
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2014 (7) TMI 1062
Interest expenses u/s 14A Held that:- As decided in assessees own case for the earlier assessment year, it has been held that the Assessee was having sufficient interest free funds and therefore there was no justification for presuming that any part of interest bearing loan has been utilized for the purpose of making investments - major investments made in earlier years were out of interest free unsecured loans thus, the order of the CIT(A) is upheld Decided against Revenue. Depreciation on motor car Held that:- As decided in assessees own case for the earlier assessment year, it has been held that revenue has not brought any material on record to demonstrate that the purchase of vehicle was not out of the funds of the Assessee and further the vehicle was not used for the purpose of business of the Assessee assessee contended that no depreciation has been claimed by the Directors in their individual return The order of CIT(A) is upheld Decided against Revenue.
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2014 (7) TMI 1061
Reopening of assessment u/s 147 Change of opinion Held that:- The assessee has furnished the details of the sub-contractor expenses and work expenses which had included the payment made to sub-contractors - the basic information was very much available with the AO - The onus was on the AO to further investigate - during the course of Appellate Proceedings, it cannot be judge that how all accounts and related evidences were examined by the AO during the assessment proceedings - The only thing which can be judged is that the basic information was available on record before him and on the scrutiny of the same the AO had not made any disallowance - the possibility of forming an opinion about the expenditure claimed by the assessee could not be ruled out - the AO is not entitled to change the opinion even after the reopening has been done within four years. Following the decision in GUJARAT POWER CORPORATION LTD Versus ASSISTANT COMMISSIONER OF INCOME TAX [2012 (9) TMI 69 - Gujarat High Court] -there was no evidence in possession of the AO that the assessee in fact was involved in such practice - AO had reason to believe that to verify the identity of sub-contractors and genuineness of the work, examination is required - It was not the reason to believe that an income had escaped assessment but he has reason to believe that an examination is required - There should be a definite reason so as to form a belief that some income had escaped assessment - Then only reopening is permissible it was presumptive in nature and proceeded merely to further investigate the case on the point on which an inquiry had already conducted by the AO during the course of original assessment order - Such an action of reopening cannot be approved thus, the order of the CIT(A) is upheld Decided against revenue.
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2014 (7) TMI 1060
Accrual of income Commission received - Year in which taxable - Credit notes were generated in later year - Held that:- The amount received by the assessee was not normal business discount- it was sales-performance based incentives given by the suppliers to the assessee, that the suppliers would be issuing discount notes after the accounting year was closed - It is a normal practice of the business to evaluate the performance and give some kind of incentives to the customers - principles of res-judicata do not apply to income tax proceedings and every AY is a separate unit - the assessee had paid taxes on the income earned by it along with the interest - income from the trade incentives had not accrued to it during the year under appeal that the order of the FAA does not suffer from any legal infirmity Decided against Revenue. Restriction of disallowance on expenses Held that:- For disallowing any expenditure AO has to establish that it was not incurred for carrying out the business or that the expenses were not genuine - Merely because certain expenditure was incurred in cash cannot be the basis for making any disallowance - Act does not prohibits cash payments - the AO had not invoked the provisions of section 40A(3)of the Act - entire expenditure was not incurred in cash majority of the payments were by cheques - the genuineness of the expenditure is not in doubt, thus, the order of the FAA does not require any interference from our side Decided against Revenue.
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2014 (7) TMI 1059
Disallowance u/s 14A Held that:- There is no direct correspondence between the incurring of an expenditure and the earning of income there-from including as to its time Relying upon CIT vs. Rajendra Prasad Moody [1978 (10) TMI 133 - SUPREME Court] - the disallowance having been effected by the AO only with reference to Rule 8D (2)(iii), is itself below the disallowance made thus, the order of the CIT(A) is upheld Decided against Assessee. Assessment of STCG as business income Held that:- The AO after enlisting the assessees case makes his observations with regard to the transactions entered into by the assessee - the assessee was not an investor and that the income disclosed by him as STCG is in fact business income, assessing it as such - No meaningful purpose under the circumstances would be served in restoring the matter back to the file of the assessing authority - CIT(A) have not rendered any specific decision/findings with reference to the facts and circumstances thus, the matter is remitted back to for fresh consideration Decided in favour of Assessee.
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2014 (7) TMI 1058
Claim of partners salary u/s 40(b) against income disclosed during survey Held that:- The contention of the assessee is accepted that if statement of the partner at the time of survey was to be relied for making this addition/disallowance, the statement should not be relied in part and should have been relied in full - at the time of survey, assessee disclosed the entire income as business income, the AO was not justified in bifurcating the same into income from other sources and income from business or profession thus, the order of the CIT(A) treating the disclosed income of the assessee as business income and allowing the partner's remuneration u/s. 40(b) of the Act is upheld Decided against Revenue. Unexplained expenses u/s 69C - Assessee has not claimed any expenditure for earning such job work receipt ignored Held that:- CIT(A) was rightly of the view that the AO should have made the disallowance on the basis of same evidence or material on record - no defect in the books of accounts and documents maintained by the assessee has been found by the assessee, therefore the addition made by AO was only on the basis of suspicion or bare guess which is not sustainable in law there was no infirmity in the finding of the CIT(A) Decided against Revenue. Addition of Business & Profession - Net income returned is less than the disclosure amount Held that:- CIT(A) was of the view that the amount as income from business and profession - assesseee has already shown the total of both the amounts as business income in the return of income and has also paid tax on it, there is no justification on the part of the AO for making an addition while computing the income of the assessee and the has rightly deleted by CIT(A) thus, the order of CIT(A) is upheld Decided against Revenue.
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2014 (7) TMI 1057
Allowability of deduction u/s 80P Held that:- As per CBDT Circular No. 133 of 2007 dated 9.5.2007 - Sub-section(4) of section 80P will not apply to an assessee which is not a co-operative bank - If the intention of the legislature was not to grant deduction to cooperative societies carrying on the business of providing credit facilities to its members, then this section would have been deleted relying upon CIT Vs. Jafari Momin Vikas Cooperative Credit Society Ltd [2014 (2) TMI 28 - GUJARAT HIGH COURT] the CIT(A) is justified in directing the AO to allow the deduction claimed by the assessee u/s 80P of the Act on the reason that the assessee, a cooperative credit society is not a bank for the purposes of section 80P(4) of the Act Decided against Revenue.
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2014 (7) TMI 1056
Penalty u/s 271(1)(c) Inaccurate particulars furnished Held that:- So far as it relates to levy of concealment penalty on a sum of ₹ 11,75,175/-, no concealment penalty is leviable - CIT(A) has held that since there was no taxable income or tax assessed for payment during a particular year, the question of evasion and penalty does not arise and provisions of section 271(1)(c) of the Act will be attracted in the case where assessee has positive income only and not loss - the question of levy or otherwise of the concealment penalty on the addition is restored back to the file of CIT(A) with the same directions as have been given by the Tribunal in the case of assessee for AY 1999-2000 Decided in favour of Assessee.
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2014 (7) TMI 1055
Penalty u/s 271(1)(c) - Disallowance u/s14A - Investment in shares Held that:- The entire assets of the assessee-company stand financed by borrowed capital, on which interest stands paid - The reserve and surplus is only by way of revaluation reserve created during the year, i.e., on revaluing the (fixed) assets and not in the nature of free reserves - even including the same does not increase the capital to exceed the accumulated losses - no explanation in fact have been rendered by the assessee toward the disallowance which emanates from the facts on record, the levy of penalty on the disallowance. Provision for doubtful debts u/s 36(1)(vii) r.w Explanation Held that:- There could be a case where the provision amount which stands reduced from the amount of sundry debtors in the balance-sheet as at the year-end, is not so for presentation purposes only, and in fact not carried forward to the following year in the accounts, and the debtors carried forward at the reduced, net amount so that the it is in effect and substance only a write off as decided in Vijaya Bank vs. CIT [2010 (4) TMI 46 - SUPREME COURT] - No explanation toward claim of a provision having been rendered by the assessee at any stage, thus, the penalty is confirmed Decided against Assessee. Disallowance for rent paid Held that:- The Revenues case in the penalty proceedings as not tenable - This is as a disallowance u/s. 40A(2)(a) could only be of an expenditure that is otherwise allowable, so that there could be no doubt with regard to the assessee having rented a house property, and for which rent stands paid at ₹ 10,000/- per month, having in fact also made an interest-free deposit of ₹ 100 lacs toward the same - There is no whisper in any order in the quantum proceedings, or even in the penalty proceedings, to show that the rent is excessive having regard to the annual value or the rent that the property may fetch from year to year Thus, no case for levy of penalty is made out Decided in favour of assessee.
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2014 (7) TMI 1054
Rejection of books of accounts - Principles of natural justice Held that:- The matter should go back to the file of the AO to pass a fresh order, for rejecting the books of account, the AO has not given any valid reasons as no specific defect has been pointed out in. the books of account, the AO should go through the books for determining the income on the basis of books accounts AO has to bring on record specific evidence or defect to prove falsity of books of account as no falsity has been proved in the assessment order passed by the AO revenue has to provide all the details and material on which basis the addition have been made earlier Following the decision in Hitesh S. Mehta Versus DCIT CC 23, Mumbai [2014 (7) TMI 836 - ITAT MUMBAI] - thus, the AO is directed to provide the copies of all information on which basis, the AO wanted to made additions in the hands of the assessee and the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee.
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2014 (7) TMI 1053
Payment on administrative charges Non-deduction of TDS u/s 194C Held that:- Assessee contended that a similar issue came up for consideration before the High Court wherein the Court remitted the issue back to the file of the AO - the exercise he has to do is to take into consideration the provisions under Income Tax Act pertaining to the tax deduction at source whether it is with reference to Section 40(a)(ia) or other provisions thus, the matter is remitted back Decided in favour of Assessee. Interest paid/payable on debentures TDS not deducted Held that:- The matter is remitted back to AO and directed to call for the assessee to produce copy of Form 15G/H before him - Relating to computation of surcharge and educational cess before giving credit to the tax paid u/s. 115JAA, this issue is also remitted back to the AO as the main issue has gone back to the Assessing officer for fresh examination Decided in favour of Assessee.
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Customs
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2014 (7) TMI 1070
Import of accessory of medical equipments - Denial of benefit of customs Notification No.23 of 1998 - Whether the Customs, Excise and Service Tax Appellate Tribunal is correct in holding the impugned goods, i.e, Micropipettes, as an accessory of the Auto Analyser, when the impugned goods has been imported independently, invoiced independently and also charged separately as per that invoice violating the provisions of the Accessories (Condition) Rules, 1963 - Held that:- Original Authority has not thought it fit to discuss the ruling of the Supreme Court. In any event, it is not the case of the Department that the goods imported though may be used as a general purpose Pippet, is not an accessory of a medical equipment. Once it qualifies to be an accessory of a medical equipment figuring in List 22, automatically the benefit of exemption will flow therefrom. If the finding of fact by the Commissioner (Appeals) and by the Tribunal is accepted, then the importer will have the benefit of exemption. The stand of the Department that the goods have imported independently and invoiced independently and therefore, it should not be treated as an accessory of Auto Analyser, does not merit consideration at this point of time, as we find that the Commissioner (Appeals) had taken note of the fact that the purchase order reflects the pippet as accessory of Auto Analyser - on the basis of the Customs Notification No.23 of 1998, which clearly gives exemption for accessories of medical equipments listed therein, first substantial question of law against the Revenue. Whether the Customs, Excise and Service Tax Appellate Tribunal is correct in holding the impugned goods, i.e. Micro pipettes, as an accessory of the Auto Analyser when even the manufacturer's catalogue of the impugned goods also does not mention the impugned goods as an accessory of the Auto Analyser and instead of the same, it was mentioned as a 'General Puprose pipettor for the accurate and precise sampling and dispensing of the liquid volumes' - Held that:- claim of statements made in the catalogue or brochures is not conclusive for the purpose of assessment, if the actual position is shown to be otherwise. This decision is binding on the Department. Even otherwise, in view of the finding which we have rendered in so far as the first substantial question of law placing reliance on the decision of the Supreme Court in the case of Annapurna Carbon Industries V. State of Andra Pradesh reported in [1976 (3) TMI 156 - SUPREME COURT OF INDIA], we find no justification to discredit the claim of the first respondent/importer that the goods imported is nothing but an accessory of a medical equipment - Decided against Revenue.
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2014 (7) TMI 1069
Denial of refund claim - Bar of limitation - Application u/s 27 - Whether appellant was required to file any refund claim application under Section 27(1) of the Customs Act, 1962 when on finalization of provisional assessment under Section 18 it was found that appellant has paid excess Customs duty at the time of provisional assessment as compared to duty which was finally assessed - Held that:- During the relevant period when an amount becomes refundable to an assessee upon finalization of provisional assessment by the appropriate authority, the same has to be refunded immediately and appellant was not required to file any refund claim under Section 27 of the Customs Act, 1962. Accordingly, refund claim cannot be held to be time barred as the same pertained to provisional assessments before 12.07.2006 - Following decision of Commissioner of Customs Vs Indian Oil Corporation [2012 (1) TMI 31 - DELHI HIGH COURT] - Decided in favour of assessee.
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2014 (7) TMI 1068
Cancellation of bail orders - parameters of Section 37 NDPS Act - Held that:- there must be some thing more than prima facie grounds, within the meaning of reasonable grounds as a substantial probable cause for believing that accused is not guilty of such offence, and another requirement of satisfaction of the Court is that he is not likely to commit any offence while on bail; and in the absence of showing the material the accused is not entitled to the concession of bail by virtue of rider under Section 37 of the Act; irrespective of the Qualified (not absolute) fundamental right of personal liberty as part of the fundamental rights of the individualenshrined under Article 21 of the Constitution of India; by virtue of the legal bar to say a person who waived the constitutional privilege of liberty by involved in the grave crime, in the larger interest of society cannot be given concession of individual liberty. Here, practically, Section 37 of NDPS Act is a special provision and it starts with thenon-obstante clause in showing irrespective of what is contained in Chapter XXXIII of Criminal Procedure Code, Section 37 of the Act prevails in case of conflict to override and in case of no conflict and reconcilability, to consider as additional consideration (vide section 51 of the Act). Here thecancellation of bail sought for is not by raising any subsequent or supervening circumstance or violation of conditions, to say said principle of law has no application to the facts, when the contention is the bail granted without proper consideration of Section 37 of the Act, hence to recall or cancel for Section 37 of the Act does not able the accused to the concession. It is important to note the fact that the contraband, involved in this case is a commercial quantity, which is undisputedly a psychotropic substance either in one category or the other very nearer to it. The provisions that to be kept in mind are Section 35- mensrea a reverse onus clause putting burden on accused to rebut the presumption the Court shall draw till rebutted of the culpable mental state; similarly under Section 54 regarding possession, which needless to say includes a conscious possession whether physical or constructive as suffice of awareness about a particular fact from State of mind is criteria - it is the duty of the court to recall its own order granting bail, within the parameters of law more particularly by invoking Section 482 Cr.P.C. - application is allowed under Section 482 R/W. 439(2) Cr.P.C. R/W. 37 NDPS Act by recalling the bail order and for all purposes by cancelling the bail forthwith - accused to surrender before the authorities - Decided in favour of Revenue.
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Service Tax
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2014 (7) TMI 1083
Goods Transport Agency Service - abatement of 75% of the gross amount charged from the customer under Notification No. 32/2004-S.T., dated 3-12-2004 - denial of abatement claim based on general declarations given by the GTA - discharge of the Service Tax liability on an amount of 25% of the freight paid - department did not verify the declarations - Held that:- service recipient who discharges the Service Tax liability under Goods Transport Agency services, is eligible to claim abatement of 75% of the amount of freight paid by him - assessee is engaged in manufacture of P&P medicaments and is also engaged in providing taxable service under the category of Technical Inspection & Certification Service and in the capacity of service receiver, the respondents was liable to pay the service tax on Goods Transport Service. Tribunal considered the Notification No. 32/2004-S.T., dated 3-12-2004 which provided for abatement of 75% of the gross amount charged from the customer for the purpose of calculating the liability of service tax subject to the condition that the no CENVAT Credit had been availed and benefit of Notification No. 12/2003-S.T., dated 20-6-2003 also had not been availed - requirements prescribed by the Boards Circular was not mandatory and it was working out modality for implementing provisions of law for denial of substantive rights, use of the same cannot be made - Following decision of COMMR. OF SERVICE TAX, AHMEDABAD Versus CADILA PHARMACEUTICALS LTD. [2013 (1) TMI 353 - GUJARAT HIGH COURT] - Decided in favour of assessee.
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2014 (7) TMI 1082
CENVAT Credit - cargo handling services, advertising agency service/sale of space or time for advertisement, business auxiliary service/business support service, management maintenance or repairs service for maintenance and repair of plant and machinery, general insurance services, manpower recruitment and supply agency services, technical testing and analysis service and scientific or technical consultancy services and in respect of C & F Agents service - Held that:- Services like advertisement or sales promotion, repair and maintenance, quality control, recruitment are specifically covered within the inclusive portion of the definition of input service. However, while the C & F agency service would be covered by the main definition clause - services used by the manufacturer in or in relation to clearance of the final product from the place of removal for the period upto 31-3-2008, during the period w.e.f. 1-4-2008, the C & F agency service for clearance of the goods from the place of removal would not be covered by the definition of input service, when by amendment to Rule 2(l), the scope of clearance related services for the purpose of Cenvat credit has been restricted to the services availed upto the place of removal, we are of prima facie view that the C & F services availed from the place of removal would neither be covered by the main definition part of the definition of input service nor by the inclusive part of the definition. As regards the cargo handling service, it has been explained by the appellant that this service, is required for handling the cement manufactured by them at the factorys railway siding and at various depots and the same is an important input for them. In our view, this service would be covered by the expression - activities relating to business in the inclusive portion of the definition. Similarly, general insurance service for insurance of plant and machinery is also an activity integrally connected with the manufacturing business. Appellant would be eligible for Cenvat credit in respect of cargo handling services, advertising agency service/sale of space or time for advertisement, business auxiliary service/business support service, management maintenance or repairs service for maintenance and repair of plant and machinery, general insurance services, manpower recruitment and supply agency services, technical testing and analysis service and scientific or technical consultancy services and in respect of C & F Agents service upto 31-3-2008. - Conditional stay granted.
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2014 (7) TMI 1081
Cargo Handling service - Violation of principle of natural justice - Non consideration of case laws cited - Held that:- Commissioner (Appeals), after relying on para 3.08 of the subsequent Work Order of BVFCL dated 12.11.2005, which provided for reimbursement of service tax at the rate of 10.20% adv. of the actual executed work by BVFCL, has arrived at a conclusion that service rendered by the Appellant, is taxable as Cargo Handling Services without examining the nature of the services rendered by the Appellant under various contracts vis-as-vis classification of the said services - Commissioner (Appeals) has not considered any of the case laws cited before him. We, therefore, find that the Order of the ld. Commissioner (Appeals) is non-speaking and accordingly, the same is set aside - Matter remanded back - Decided in favour of assessee.
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2014 (7) TMI 1080
Waiver of pre deposit - manufacture of goods on Job work basis - Post Job work activity being transportation of goods - Business Support Services - revenue contended raised the demand under the category of Support Services of Business or Commerce (BSS) as the Applicant had handled the goods manufactured on job-work basis in the capacity of a "Marketing and Consignment Agent of M/s TSL - Held that:- Prima facie the case has been built against the Applicant, as is clear from the impugned notices that the Applicant had received service charges, for rendering post removal activities, from M/s. Tata Steel Ltd., but failed to discharge Service Tax as required, under the category of Business Support Services. There is no merit in the argument of the Revenue that in the said conversion charges, the post removal service charges are already included therefore, the Applicant are required to discharge Service Tax, in addition to the excise duty paid on such converted material, including freight charges. - Spl. Counsel also could not place any evidence to show that the Applicants were though re-imbursed with the freight amount in addition to the conversion charges by M/s TSL, but the same is attributable towards rendering of other post removal service and not transporting of the goods from their factory to the stock yards of M/s TSL. In the result, prima facie, it could be said that the Applicant had not received any service charges in addition to conversion charges and freight charges, at actuals towards the services relating to post removal activities of the job-worked goods manufactured in the factory. Applicant could able to make out a prima facie case for total waiver of pre-deposit of dues adjudged - Stay granted
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2014 (7) TMI 1079
Classification of service - C and F service or Business Auxiliary service - Held that:- there is an agreement dated April 11, 2001 between assessee and NICL for appointment as depot operator for organizing and promoting sale of their CLP for the year 2001-02. There is no agreement between NICL and assessee for the period 2004-05. Commissioner in the order in original has observed that since show-cause notice nowhere mentions that payment was received under head of freight, loading/unloading, general expenses and incentive, services provided by assessee to NICL is business auxiliary service (BAS) with effect from July 1, 2003. For the period prior to July 1, 2003 there was no specific category of commission agent's service. Commissioner applies section 65A for determination of classification of service. When prior to July 1, 2003 BAS was not in existence, there is no reason to apply section 65A in this case. Commissioner classifies the service as C and F service for 2001-02 and under BAS with effect from July 1, 2002 though there was no proposal classifying the service under BAS in the show-cause notice and he has confirmed the entire demand. - matter remanded back - Decided in favour of assessee.
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Central Excise
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2014 (7) TMI 1074
100% EOU - procuring duty free raw materials from other 100% EOUs by following CT-3 procedure - manufacturers of texturised yarn, grey fabrics and MMF - allegation that texturised yarn rejects were cleared in DTA without obtaining permission from the Development Commissioner - eligibility of Notification No.8/97-CE and whether the goods received from other 100% EOU shall be treated as imports - Held that:- Simply by procuring such indigenously manufactured raw materials from another 100% EOU will not make them imported goods as suggested by Revenue. Relevant provisions of the EXIM Policy, considering transfer of goods from one 100% EOU to another 100% EOU as imports, are serving altogether a different purpose and will not make the goods manufactured in India as imported goods. - Decided against the revenue. Requantification of differential duty - Held that:- Revenue is right in agitating that though value of the raw material used in the manufacture of Rejects has been taken for requantification of duty on rejects but such a requantification does not represent duty demand on the raw materials. The appeal of the Revenue to the extent of requantification allowed - matter remanded back - Decided partly in favor of revenue.
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2014 (7) TMI 1073
Reversal of cenvat credit - furnace oil used to generate electricity - supply of electricity to another 100% EOU - it is argued that goods supplied to the 100% EOU cannot be treated as exempted goods for denying CENVAT Credit by virtue of Rule 6(6)(ii) of the CENVAT Credit Rules, 2004 - Held that:- The issue involved in this appeal has already been decided in favour of the assessees by this very Bench in the case of Sanghi Industries Ltd Vs CCE Rajkot (2014 (2) TMI 278 - CESTAT AHMEDABAD) - supplies made to a 100% EOU cannot be considered as exempted goods - Decided in favor of assessee.
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2014 (7) TMI 1072
Clandestine removal - Benefit of cum duty assessable value of illicit clearance - reduction in mandatory penalty u/s 11AC - Held that:- there are various entries in the worksheet attached to the show cause notice which are either overlapping or appearing twice in the said worksheet - The entire worksheet of the Revenue indicate that the productions were done in the month of May, barring few entries, they were done from 11.05.2001 which would fall under the application filed by the appellant on 18.05.2001 indicating to operate under compounded levy scheme. There is no dispute that the main appellant had discharged the Central Excise duty liability after 18.05.2001 under compounded levy scheme and paid the duty liability through PLA. - the charge of illicit removal cannot be confirmed against the appellant on this factual matrix, which indicate that the appellant to his subsequent application made on 18.05.2001 has paid the duty under the compounded levy scheme. - Decided in favor of assessee. As regards demand of duty on illicit removal of 26,534 L.Mtrs, wherein an amount of ₹ 80,663/- has been confirmed - Held that:- the purchasers of the materials M/s DCM Fabrics have clearly recorded a statement which clearly indicate that they have received this quantity of fabrics from the appellant without any duty paying documents or under cover of any invoice. - demand of duty confirmed alongwith interest and penalty - Decided partly in favor of assessee.
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2014 (7) TMI 1071
Classification of orthopaedic heating belts - Chapter Heading No.90219090 or Chapter Heading No.90189099 - extended period of limitation - Held that:- claim of the Revenue is incorrect and not supported by any of the reasoning - The reliance placed by the adjudicating authority on Chapter Note 6(i) of Chapter 90 seems to be misplaced as the said chapter note specifically talks about the preventing or correcting bodily deformities. - giving a very narrow interpretation of the phrase preventing or correcting bodily deformities needs to be visible and should be outside the body, would be an incorrect interpretation for the classification of the product like orthopaedic heating belts - the use of such product may be ascertained by the experts who are using or recommending such products. - The explanatory Notes to HSN specifically talks about as to what would get covered under Chapter Heading No.9018. - it is settled law that for classification of the product, the sub heading which is specific, should be preferred to general sub-heading - classification as done by the assessee under Chapter Heading No.9021 is correct - Decided in favor of assessee. Demand of Duty on the product Bandages - Manufacturing by Job worker - Held that:- The lower authorities have not conducted any further investigation and the packages of bandages as produced before us would indicate that the entire manufacturing activity took place in the job worker's premises. The submission of ld.Counsel that they are not doing any activity seems to be correct as the adjudicating authority has not recorded any finding to indicate that the appellant herein was undertaking further activity in his factory premises on the bandages which are received from the job worker in duly packed form. - the said product cleared from the factory premises as such cannot be subjected to any duty as Central Excise duty is on manufacture. - Decided in favor of assessee. Extended period of limitation - Held that:- It is seen from the show cause notice that the said show cause notice categorically records that the demand has been raised based upon the scrutiny of the declarations filed by the appellant from 2004 onwards. We are at loss to understand why the very same exercise, if any, was not undertaken by the Revenue authorities when the declarations were filed. In our view, on this factual ground, show cause notice invoking the extended period, is totally incorrect - Decided in favor of assessee.
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2014 (7) TMI 1052
Eligibility of CENVAT Credit of SAD paid u/s 3(5) of CTA - Whether the appellants were eligible to avail of Cenvat credit on special additional duty (SAD)/special CVD paid at four per cent, under sub-section (5) of section 3 of the Customs Tariff Act during the relevant period - Held that:- On a careful reading of the relevant show-cause notice and the order-in-original, it has been acknowledged by the Department in clear terms that the appellant had availed of Cenvat credit on the special countervailing duty on the basis of dealer's invoices wherein the said duty has been levied and paid by the respective importer. Thus, the issue of payment of SAD/special CVD at four per cent, by the importer was not a dispute either in the show-cause notice or observed in the respective orders-in-original passed by the adjudicating authority. The special additional duty (SAD)/special CVD at four per cent, levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 has been included in the list of duties under rule 3 of the Cenvat Credit Rules from March 1, 2005 by issuance of Notification No. 13/2005-CE (N.T.) - No reason for denying the Cenvat credit of the amount of SAD/special CVD paid by the importer and mentioned in the respective dealer's invoices - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2014 (7) TMI 1078
Waiver of penalty - Delay in filing reports - Held that:- The learned President, while reversing the concurrent orders imposing penalty, found that the dealer had paid the tax. He could not file the audit report and the reason assigned was that he was a sole proprietor, he is having disabled son, he was attending his disability and that is how immediately he could not comply with the requirement. It is in these circumstances the learned President of the Tribunal found that there is no deliberate or intentional act, much less the conduct of the Assessee cannot be said to be lacking in bonafides calling for imposition of penalty. In these circumstances, the discretion was exercised in favour of the Assessee in reversing the order of imposition of penalty. Such an order and which is consistent with the facts of the case, does not give rise to any substantial question of law - Decided against Revenue.
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2014 (7) TMI 1077
Estimation based on the D3 proposal - AO adopted the sales turnover as found in D3 proposal - Even though the petitioners filed their objection to the said proposal, they have not been provided an opportunity of being heard - Held that:- When the higher officer has directed the assessing officer to complete the assessment on the basis of the proposal in D3 form, the assessing officer, who is lower in rank in the hierarchy of officers, is bound by the said direction, has not independently applied his mind, but adopted the sales turnover as found in D3 proposal and also levied the penalty in the manner indicated in D3 proposal. It is well settled that the assessing officer is a quasi judicial authority and in exercising his quasi judicial function of completing the assessment, he is not bound by the instructions or directions of the higher authorities. - impugned order has been passed totally relying upon D3 proposal forwarded by the enforcement wing. Since the assessing officer acted on the basis of the direction, the impugned order is liable to be quashed. Decided in favour of assessee.
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2014 (7) TMI 1076
Penalty under Section 78(5) - Time barred declaration form found in the enclosed documents - Held that:- After analyzing the facts of the case and the arguments made by the learned counsel for the petitioner, in my view, no case is made out for any interference by this Court. In so far as issue relating to carrying out the time barred declaration form is concerned, it was simply a technical and human error on account of inadvertence and on such technicality, it cannot be said that the goods were being carried with the intention of tax evasion particularly when all other documents have been found to be proper, genuine and acceptable by the AO himself and no adverse comment was made by the AO on such supporting material. On expiry of the date, the declaration form does not become non-est but the same form can be revalidated by the learned AO and can be used for further period. Therefore, when the declaration form is complete in all respect and other documents have been found to be in order, in my opinion, no case is made out for imposition of penalty or call for any interference by this Court - Following decision of Assistant Commercial Taxes Officer vs. Mahaveer Chand Jain [2000 (3) TMI 1050 - RAJASTHAN HIGH COURT] - Decided against Revenue.
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2014 (7) TMI 1075
Penalty u/s 78(5) - tax Board deleted penalty - Held that:- in the light of the judgment of the honourable apex court in the case of State of Rajasthan v. D.P. Metals [2001 (10) TMI 881 - SUPREME COURT OF INDIA] wherein it has been held that when the declaration form and other documents were found to be in order and bill vouchers have been held to be genuine therefore, no case is made out for deviating from such findings of facts. Even otherwise, I do not find any illegality or error or perversity in the orders impugned and concurrent finding and, as such, the revision petition is liable to be dismissed. No question of law arises - Decided against Revenue.
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