TMI Tax Updates - e-Newsletter
August 12, 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:
Rectification of order - AO enhanced the assessment by making additions in regard to claim of expenditure pertaining to electricity bills of the residence of the directors of the company, which cannot be said to be a mistake apparent from record and order u/s 154 of the Act is not sustainable on debatable issue - AT
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Income Tax:
Additions u/s 68 - cash credit -AO doubted the creditworthiness or the genuineness of the transaction on the basis of mere presumption and suspicion without properly appreciating the evidences on record - AT
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Income Tax:
Undisclosed income - notings in the loose slips – document is a dumb document which cannot be a basis for making addition in regard to investment in purchase of land out of income from undisclosed sources u/s 69 - AT
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Income Tax:
Cancellation of registration u/s 12AA(3) – Object of general public utility Charitable or not u/s 2(15) – Haridwar Development Authority Mayapur - registration restored - AT
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Customs:
Rejection of request for reassessment of Bill of Entry - Error in Invoices - amendment in Bill of entry is required to be allowed although goods have been given out of charge - AT
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Customs:
Exemption from Antidumping Duty against a Transferable DFIA license - tribunal cannot even sit in appeal over correctness or otherwise of a Customs Notification. If the Appellant is aggrieved by the correctness of the Customs Notification the remedy lies elsewhere - AT
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Customs:
SAD - Re-import of goods cleared outside India - Whether goods which have been re-imported and cleared availing the benefit of Notification No.94/96-Cus have to be held as having suffered additional customs duty leviable under Section 3 of Central Tariff Act - held yes - AT
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Service Tax:
CENVAT Credit - credit on the basis of Invoice whereas service provider as paid the service tax belated - there is no requirement that the service tax should have been deposited by the service provider before the availment of the credit - AT
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Service Tax:
Business Auxiliary services - Commission agent - they were out-rightly purchasing and selling the goods - allegation made by the Revenue is only a bald allegation without support of the evidence - AT
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Service Tax:
Refund - Unjust enrichment - GTA services - tax was paid at the rate of 12.36% instead of correct prevailing rate of 10.30% - service tax is a part of the freight and therefore burden of service tax has been passed on to the customer and the doctrine of unjust enrichment could be applicable - AT
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Service Tax:
Valuation - Photography services - inclusion of cost of material - Longer limitation period under proviso to Section 73 (1) would not be invokable and, as such, the demand is time barred - AT
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Central Excise:
CENVAT Credit - transfer of ownership / sale to another without removal of capital goods goods - would be construed as removal within the meaning of Rule 3(4) of the CENVAT Credit Rules,2004 and CENVAT Credit on the capital goods availed by the transferor is liable to be recovered - AT
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Central Excise:
CENVAT Credit - packing material - reversal @ 8% under Rule 6(3)(b) - it cannot be said that appellant has reversed the entire credit with respect to packing material used in the manufacture of dutiable and exempted final products - appeal dismissed - AT
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Central Excise:
Rejection of remission application - ground adduced for rejection of remission application is that the godown of the appellant situated in 1 st floor of the appellant's premises was not part of the registered premises - remission allowed - AT
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Central Excise:
CENVAT Credit - duty paying documents - extra copy, Xerox/photo copies - in order to claim the benefit under the law, substantial compliance is not enough and the procedures prescribed in the statute should be mandatorily followed - credit denied - AT
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Central Excise:
Rebate claim - Clearance of goods to SEZ unit - the applicant claimed rebate on the duty paid as input credit in the raw materials which is prima facie covered by Rule 18 of the said Rules - AT
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Central Excise:
Denial of refund claim - price variation clause - Unjust enrichment - Failure to produce certificate from the buyer of the less receipt of payment - appellant has failed to prove that they are entitled for refund claim. - AT
Articles
Notifications
Customs-
F. No.437/88/2014-Cus IV - dated
11-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority - M/s Kalpena Industries Ltd., 2B Pretoria Street, Kolkata.
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F. No.437/59/2014-Cus IV - dated
11-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority - M/s Sarin Technologies India Pvt. Ltd., A-704, Tanvi’s Diamoda Industrial Premises Co-op. Society Ltd., Novelty Silk Mill Compound, S.V.Road, Dahisar (E) Mumbai
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69/2014 - dated
8-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority - M/s Leo Timber (P) Ltd., Khasra No.50/16, Assam Timber Market, Nangloi, Delhi-110041
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68/2014 - dated
8-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority - M/s Jay Jalaram Saw Mill, Jasodanagar Highway Crossroad, PO-Vatva GIDC, Vatva, Ahmedabad- 382445
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67/2014 - dated
8-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority - M/s Synergy Fertichem Private Limited, situated at Synergy House, Gorwa Subhanpura Road, Vododara, Gujarat
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66/2014 - dated
8-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority – M/s Crayon Color Private Limited, Krishna Complex, First Floor, 5/6 Lati Plot, Morbi, Gujarat
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65/2014 - dated
8-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority - Shree Krishna Exports, CC 1180-A, 1st Floor, Bharat Diamond Bourse, Bandra Kurla Complex, Bandra (E), Mumbai-400051
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64/2014 - dated
8-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority - M/s VISTEON Automotive Systems India Private Ltd., Keelakaranai Village, Malrosapuram Post, Chengalputtu, Chennai
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63/2014 - dated
8-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority - M/s Gupta Wood Products, RZ-5, Khasra No.74/1/28, Rajdhani Park, Rohtak Road, Nangloi, Delhi- 110041
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62/2014 - dated
8-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority - M/s ICOMM Tele Ltd., ICOMM House, Plot No. 31, Phase-I, Kamalapuri Colony, Srinagar Colony, Banjara Hills, Hyderabad-500073
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61/2014 - dated
8-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority - M/s Lemon GOC, 135A, Ground Floor, Mitra Hills, Near Oldage Home, Nizampet, Hyderabad
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60/2014 - dated
8-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority - M/s Om Tex, situated at 47, Madhu Nagar Society, Surat
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59/2014 - dated
8-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority - M/s Thakur Impex, Block, 2473 & 2474, Kohinoor Textile Market, Ring Road, Surat-395002
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58/2014 - dated
8-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority - M/s Kiran Global Chem Limited, New No: 42, New Avadi Road, Kilpauk, Chennai
SEZ-
S.O. 1993(E) - dated
30-7-2014
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SEZ
Rescinds the sector specific Special Economic Zone for “Automobile and Automobiles Components” at Waluj Industrial area within village limit of Pandhapur Waladgaon and Kamalapur, Taluka Gangapur, District Aurangabad in the State of Maharashtra
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2014 (8) TMI 314
Depreciation on cost of additions to the machinery – Held that:- There was merit in the contention of the assessee that for the assessee’s inability to produce the original invoices in respect of machinery/assets added during the year, there is a reasonable cause for the assessee for not producing the same at the relevant point of time before the AO - the assessee is in a position to produce invoices, copies of duly certified by the AO are also furnished and a cursory glance at those invoices clear reveal the relevant machinery/assets having been acquired during the previous year – thus, the matter is remitted back to the AO for fresh determination – Decided in favour of Assessee. Addition of unproved gifts u/s 68 – Held that:- The assessees have claimed to have received huge amounts of money gifts from friends, relatives, medical representatives and so on, on the occasion of inauguration of their hospital, they could not furnish either the details of such persons who gave the gifts, nor any other details or documentary evidence to substantiate their claim - the onus of establishing the identity of the donors, their creditworthiness and the genuineness of the gifts claimed - Explanation of the assessee of having received the gifts also needs to be viewed in the backdrop of the need for the assessees to explain the sources for the amounts of capital introduced by them in the firm, M/s. Prem Sharma Cardiac Care Centre, Warangal - the assessees are in medical profession with a standing that they could establish a hospital of their own, the amounts of gifts may be treated as unexplained income of the assessees from their profession, instead as unexplained credits liable for addition under S.68 of the Act - order of the CIT(A) is set aside – Decided in favour of Assessee.
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2014 (8) TMI 313
Nature of Expenses towards ROC fees and stamp duty incurred for increasing authorized share capital - Held that:- CIT(A) confirmed the view taken by the AO – relying upon Punjab State Industrial Development Corporation Ltd. V/s. CIT [1996 (12) TMI 6 - SUPREME Court] - expenditure incurred for enhancement of capital was held to be of capital nature - CIT(A) upheld the disallowance made by the AO – thus, the matter is remitted back to the AO for determination of the the eligibility and quantum of admissible deduction u/s 35D of the Act – Decided in favour of assessee. Addition u/s 68 – Unsecured loan and share application money is disbelieved – Held that:- Assessee has not only established the identity of the share-holders who have made the investments, but also filed confirmation letters from them, who have explained sources for the investments made – assessee is a corporate entity and has discharged the onus on it, having identified the source from which it has received the share application money, and also attempted to explain their sources as well - there is no justification for any addition in that behalf in the assessment of the assessee-company. CIT(A) has accepted the evidences for accepting the sources for the share application money from two individuals, namely, GVK Raju and G.Uma, but has sustained the addition made by the AO, with respect to unsecured loans under S.68 of the Act - CIT(A) have accepted the genuineness of the transactions, identity of the parties and credit-worthiness of the three parties, while deciding issue of contribution to share capital, is not justified in arriving at contrary conclusions, by proceeding to examine the source of the source - the additions confirmed by the CIT(A) u/s 68 towards unsecured loans from these two individuals is deleted – Decided partly in favour of Assessee.
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2014 (8) TMI 312
Reduction of estimation on the offshore contracts - Adoption of domestic tax rate as against higher rate – estimation of income under Rule 10 of the Income Tax Rules in case of non residents - Held that:- The burden of proof of India operations in the case of a non-resident were generally lie on the Revenue as it was contended that no part of the offshore contract was executed in India - following the decision in Pirelli Cavi E. Sistemi Telecom SPA. (India Project Office) Hyderabad Versus ACIT, Circle 3(2), Hyderabad [2014 (6) TMI 368 - ITAT HYDERABAD] - CIT(A) elaborately discussed the legal principles and arrived at a correct conclusions that India Project Office is liable under the Income Tax and the DTAA between India and Italy only to the extent of profit attributable to the business operations carried out by the permanent establishment in India - This position does not change even if all the three contracts signed by the parent company are treated to be single or composite contract - The cables are manufactured outside India and procurement of cables outside India fall beyond purview and jurisdiction of the provisions of Income Tax Act. The offshore contract is only for procurement of cables that too outside India and the training provided in India is incidental to the contract No.1 i.e., offshore contract and further as there is no profit earned on training, no part of the income can be attributable to the PE - when under an offshore contract, equipment was found transferred outside India, necessarily taxable income also accrued outside India - no portion of such income was taxable in India – thus, the order of the CIT(A) in restriction of the addition to 1% of the total contract is set aside – Decided in favour of Assessee.
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2014 (8) TMI 311
Notice u/s 154 not served – Rectification of order - Assessment enhanced but opportunity of being heard not given – Held that:- The original assessment of the assessee company was completed u/s 143(3) of the Act - relying upon Commissioner of Income-Tax Versus Hero Cycles Pvt. Limited And Others [1997 (8) TMI 6 - SUPREME Court] - rectification u/s 154 of the Act can only be made when glaring mistake of the fact and law has been committed in the impugned order and it is apparent from record - the rectification is not permissible if the question is debatable and the point which was examined on fact or in law cannot be dealt with as mistake apparent from record - the AO completed assessment u/s 143(3) of the Act without objecting to the claim of the assessee company pertaining to the electricity expenses for residence of the directors of the company. Also in Maharana Mills (P.) Ltd. vs Income-tax Officer [1959 (4) TMI 7 - SUPREME Court] - the object of providing the issue of notice in section 154 of the Act is that no order should be passed to the detriment of assessee without affording due opportunity of hearing to him and this provision is applicable where the assessment is enhanced by making certain disallowances or additions - the AO completed assessment u/s 143(3) of the Act and subsequently picked up the case again u/s 154 of the Act on debatable issue on the basis of 3CD Report of the auditor which was also before him at the time of original assessment - the AO passed order u/s 154 of the Act on the back of the assessee without affording due opportunity of hearing and the AO enhanced the assessment by making additions in regard to claim of expenditure pertaining to electricity bills of the residence of the directors of the company, which cannot be said to be a mistake apparent from record and order u/s 154 of the Act is not sustainable on debatable issue which was also under examination and verification by the AO during original assessment proceedings - the order passed by the AO u/s 154 of the Act is outside the ambit of section 154 of the Act – Decided in favour of Assessee.
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2014 (8) TMI 310
Additions u/s 68 - cash credit - share applicatio nmoney - Admission of additional evidence under Rule 46A – Held that:- The moot question is whether the time allowed to the assessee to produce the evidence in support of share application and share premium can be said to be sufficient time as envisaged by Rule 46A(1)(d) - The time of only five days cannot be said to be a sufficient time to produce necessary evidence - within those short period of five days, the assessee furnished the details/evidences which were available with him - If the AO was not satisfied with those details/evidences produced by the assessee, he should have allowed further opportunity to the assessee to produce further evidence in this regard but no further opportunity was allowed by the AO - CIT(A) rightly admitted the additional evidence – Decided against Revenue. Addition of unexplained credit - Whether the assessee has been able to discharge the onus of proving the credit in the form of share capital/share premium – Held that:- The assessee has produced the copy of share application form submitted by those companies before the AO - Copy of the share application form shows the name and address of the company who applied for shares, number of shares applied, amount, date and cheque number by which payment is made, name of the bank on which cheque was drawn and the permanent account number of the company - No discrepancy in any of these details is pointed out - all the shareholder companies are assessed to income tax and the acknowledgements of filing of their income tax returns by those companies were furnished - the creditworthiness of these companies cannot be disputed - each company is assessed to income tax and the shares were allotted to each company on the basis of the share application form - the genuineness of the transaction is also duly established - The AO doubted the creditworthiness or the genuineness of the transaction on the basis of mere presumption and suspicion without properly appreciating the evidences on record – Relying upon CIT, Orissa Vs. Orissa Corporation P. Ltd. - [1986 (3) TMI 3 - SUPREME Court] – Decided against Revenue.
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2014 (8) TMI 309
Undisclosed income - Seized documents were dumb in nature or not – Held that:- The addition was made by the AO based on the loose paper cannot be considered as conclusive evidence - except relying , the notings in the loose slips, no attempt has been made to corroborate the notings with independent evidence - The parties to the 'transaction particularly the vendor has not examined - In every transaction there is a circle concerning two parties - It is not known whether the vendor has disclosed the consideration as noted in the diary - merely on the basis of presumption and some corroborated notings additions cannot be made – Relying upon COMMISSIONER OF INCOME TAX (CELTRAL) -I. NEW DELHI Versus ANIL BHALLA [2010 (2) TMI 7 - DELHI HIGH COURT] - the AO made addition on the basis of Annexure A-1 on his own whims, surmises and conjectures and also by converting and moulding the contents of the impounded document to gather support for his baseless findings - the Annexure A-1 stand alone cannot be used as a basis of making addition without the company of any other supportive material and evidence - the AO made addition without any basis and justified reason which was rightly deleted by the CIT(A) by holding that the document is a dumb document which cannot be a basis for making addition in regard to investment in purchase of land out of income from undisclosed sources u/s 69 of the Act – Decided against Revenue.
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2014 (8) TMI 308
Reopening of assessment u/s 147 / 148 – Held that:- The assessment is being reopened on going through the return of income and the documents filed alongwith the return of income - the assessee had given the note along with the return of income that the amount received under a non-compete agreement is not chargeable to tax - The assessment was completed under Section 143(1) and was reopened without any fresh material - Identical is the situation in the case of the assessee - The assessee had also given the note in the computation of income pointing out why the perquisites from the rent free accommodation is not chargeable to tax - No fresh material is brought by the Revenue on record but the assessment has been reopened on the basis of return of income and the documents submitted alongwith the return of income - Following the decision in THE COMMISSIONER OF INCOME TAX-V Versus ORIENT CRAFT LTD. [2013 (1) TMI 177 - DELHI HIGH COURT] and Commissioner of Income Tax-XVI Versus Shri Atul Kumar Swami [2014 (3) TMI 759 - DELHI HIGH COURT] - reopening of assessment is not valid – Decided in favour of assessee. Penalty u/s 271(1)(c) – Held that:- In the computation of income itself, the assessee has disclosed all the relevant facts - he has given the reason why the perquisite value of such rent free accommodation is not chargeable - Merely because this claim of the assessee is not accepted by the AO and perquisite value of the rent free accommodation was charged to tax, it cannot be said that the assessee concealed income or furnished any inaccurate particulars – Relying upon CIT Vs. Reliance Petro products Pvt.Ltd. [2010 (3) TMI 80 - SUPREME COURT] – the penalty levied u/s 271(1)(c) of the Act is set aside – Decided in favour of Assessee.
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2014 (8) TMI 307
Cash deposits u/s 69C – Source of transaction not furnished – Held that:- The assessee stated that the amounts referred to in AIR were duly recorded in the books of account by means of cash deposits - When the books of account were produced before the AO, it was incumbent upon him to verify the veracity of the assessee’s contention as put forth before him - CIT(A) sustained the addition by basing his opinion on similar addition made for the preceding year, without verifying the assessee’s contention – thus, the matter is to be remitted back to the AO for fresh adjudication – Decided in favour of Assessee. Valuation of contract – Held that:- Assessee stated that it was following project completion method, the entire income emanating from such contract was duly offered for taxation in the immediately succeeding year - CIT(A) observed that only the profit element from the contract should have been charged to tax - proportionate net profit worked out on the basis of the contract receipts during the year vis-a-vis the total value of the contract and restricted the addition - the action of the AO in taxing the gross sum has no legs to stand on, because tax is levied on the ‘income’ and not on the ‘receipt’ - the substantial part of the contract was completed by the assessee during the year, in view of which it also received a sum – thus, the Percentage completion method is correctly applicable – order of the CIT(A) is upheld – Decided against Revenue.
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2014 (8) TMI 306
Assessment u/s 153A - Additions on account of Deposits in bank account in the name of relatives – deposit into NRE accounts - Held that:- The compilation contained the statement of the assessee recorded at the time of search, the summary of the NRE accounts, the names and addresses of the NRI holding the bank accounts, their passport numbers, their respective declarations and their relationship with the assessee. On the basis of all those evidences, one thing has emerged undisputedly that the accounts seized at the time of search were NRE accounts - a non-resident external account can be funded only with foreign currency inward remittance through FCNR procedure - The foreign currency non-resident account “FCNR” can be funded through foreign remittance inward held by nonresident - the assessee’s stand was that the purpose of having all those accounts was to issue pre-signed cheques for charity - the assessee and his brother had no connection with those bank accounts; hence, they have not derived any benefits from those accounts – revenue has not established any nexus of those accounts with the business activity of the assessee - CIT(A) was right in holding that the addition was merely on a conjecture that the bank accounts belonged to “poor and gullible” relatives of the assessee – Decided against Revenue.
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2014 (8) TMI 305
Cancellation of registration u/s 12AA(3) – Object of general public utility Charitable or not u/s 2(15) – Held that:- The main object of the assessee is development of the area as per the mandate of U.P. Urban Planning & Development Act, 1973 - The activity undertaken by the Authority comes within the object of general public utility but it cannot be concluded that it involves the carrying on of any activity in the nature of trade, commerce or business - Unless the activity undertaken by the assessee comes within the ambit of trade, commerce or business, the proviso would not get attract - assessee-Authority has been created with the object of general public utility which is a charitable object within the meaning of section 2(15) and the proviso to section 2(15) is not applicable because assessee-Authority is not carrying out activity with any profit motive but the predominant object is welfare of people at large – thus, the registration is to be restored - Decided in favour of Assessee. Rejection of application of condonation of delay – Held that:- The delay can be condoned by the Commissioner in case of Trust or institution - there is a provision for condoning the delay in making the registration u/s 12A - The proviso (i) to Section 12A(1)(a) contained a provision for condonation of delay - if an application for registration of the trust is made after the specified period, the Commissioner may register the trust or institution from the date of creation of the trust or the establishment of the institution if he is satisfied, for reasons to be recorded, that the person was prevented from making the application before the expiry of the period for sufficient reasons - original application u/s 12AA was filed on 28-11-2003 with the Commissioner, Dehradun, which had been rejected and thereafter in view of the changed legal position i.e. order dated 20-1-2009, u/s 12AA granting registration by the Commissioner - there was reasonable cause for delay in filing the application which should have been condoned instead of adopting a technical view as taken by CBDT – Decided in favour of Assessee.
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Customs
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2014 (8) TMI 318
Rejection of request for reassessment of Bill of Entry - Error in Invoices - Revision in CENVAT Credit - Held that:- The fact that the appellant has paid the excess duty is not in dispute as the price of the impugned item was 0.04 CHF which was invoiced wrongly by the supplier as 4.04 CHF and the appellant has also received the excess amount paid to the supplier by way of Credit Note. The purchase order as well as the invoice were available at the time of filing the Bill of entry. In these circumstances, as per the CBEC Manual, amendment in Bill of entry is required to be allowed although goods have been given out of charge. Therefore, we do not find any merit in the impugned order and the same is set aside - Decided in favour of assessee. Time limit of implementing order of the tribunal - Difference in opinion - Held that:- Ld. member Ashok Jindal directed the authority to implement this order within 30 days of its communication - Ld. member P K Jain is of the view that directing the lower authority to implement the order in a particular time frame at the time of issuing order itself is not appropriate. Such a direction of the Tribunal would be affecting the normal working of the Custom House and also put avoidable and uncalled pressure on officers dealing with the subject.
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2014 (8) TMI 317
Waiver of predeposit of duty - Classification of goods - Technical grade pesticides - Classification under Chapter 29 or Chapter 38 - Held that:- Technical grade pesticides in bulk form are covered under Heading 38.08. On perusal of the records, we find from the invoice that the goods in question are technical grade pesticides in bulk form which is covered by the decision of the Hon'ble Supreme Court. In view of that, the applicants failed to make out a prima facie case for waiver of predeposit of entire dues - Following decision of Pesticides Mfg. & Formulators Association of India[2002 (10) TMI 95 - SUPREME COURT OF INDIA] - Conditional stay granted.
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2014 (8) TMI 316
Exemption from Antidumping Duty against a Transferable DFIA license - duty free clearance under Notification No.98/2009-CUS dated 11.09.2009, including exemption from levy of anti dumping duty - whether any subsequent amendment in Foreign Trade Policy and corresponding amendment in customs notification would necessarily amount to amendment to the licence by taking away the benefits promised thereunder, unilaterally - Challenge to the validity of notification - Held that:- in exercise of the powers conferred under section 5 of the FTDR Act, the Policy can be amended however any oppressive amendment to the Policy is applicable only prospectively. - However, in the instant case, the lower authority has taken the impugned decision on the basis of the amended Customs Notification, which is against the grant of exemption. There may be force in the argument of the appellant regarding the fact that the purpose of Notification issued by the Central Government through Ministry of Finance was only to give effect to the amendment in the FTP by Central Government through Ministry of Commerce, however it is not for us to look into this aspect. The Respondent lower authority as well as this Tribunal are creature of Statute, and cannot take any decision contrary to the same, on considerations of equity or justice. We cannot even sit in appeal over correctness or otherwise of a Customs Notification. If the Appellant is aggrieved by the correctness of the Customs Notification the remedy lies elsewhere, and we surely have no jurisdiction to entertain any such challenge directly or indirectly - appeal dismissed - Decided against assessee.
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2014 (8) TMI 315
SAD - Re-import of goods cleared outside India - Whether goods which have been re-imported and cleared availing the benefit of Notification No.94/96-Cus have to be held as having suffered additional customs duty leviable under Section 3 of Central Tariff Act and therefore are leviable to SAD leviable under Section 3A of Customs Tariff Act or not - Held that:- It is evident from the body of the Notification No.94/96-Cus that though exemption is issued under Notification No.25 of the Customs Act, 1962 but it exempts Basic Customs Duty under first schedule to the Customs Tariff Act, Additional Duty (CVD) leviable under Section 3 of the Customs Tariff Act and Special Duty of Customs under Section 68(1) of the Finance Act, 1996. It will not be correct, as held by first appellate authority that duty exempted under Notification No.94/96-Cus represents only Basic Customs Duty but will represent both the Basic Customs Duty and Additional Duty of Customs (CVD). What is required to be paid, as per Sr.No.2A of the Table to Notification No.94/96-Cus will also represent CVD though the measure would be equivalent to the Central Excise duty leviable on the re-imported goods at the time of import. The additional duty of Customs (CVD) is thus not wholly exempted under Notification No.94/96-Cus. Revenue neutrality - Held that:- Even if SAD is paid by the appellant, the same will be available as refund to the appellant if the imported goods are sold as such on payment of sales tax. In the event of the re-imported goods are brought to the appellant’s premises, then also CENVAT Credit is admissible. The demand of duty upon the appellant is thus not sustainable on revenue neutrality - Decided in favour of assessee.
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Service Tax
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2014 (8) TMI 346
Waiver of predeposit of penalty - Reverse charge mechanism - Reimbursement of air fare expenses - Held that:- Applicant has not disclosed the nature of payment in their returns. So the Revenue was not aware of the reimbursement expenses. The period of dispute relates to 2006-07 to 2010-11. It is seen that non-payment of tax was discovered by the audit party during examination of the records. In view of that, prima facie, Applicant is liable to pay penalty - Conditional stay granted.
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2014 (8) TMI 345
Suo moto adjustment of excess payment in subsequent year - Rule 6 of service tax Rules, 1994 - Held that:- Adjustment of excess amount paid in the month of April 2009 was mainly denied on the ground that appellant had not produced the evidence to show that the excess payment was made on account of delayed receipt of details of payments towards taxable services. It is accepted that appellant has Centralized Registration and they have taken a definite stand in their reply to SCN that excess payment was due to a belated receipt of the details of payments from their other offices - appellant should be given an opportunity to produce the evidence before the adjudicating authority in the interest of justice - Matter remanded back - Decided in favour of assessee.
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2014 (8) TMI 344
Waiver of pre deposit - Business Auxiliary Services and Cargo Handling Services - appellant had bagged the Urea and distributed the same under the Essential Commodity Act - Held that:- Appellant has filed Bills of Entry and discharged appropriate assessed customs duty as importer - appellant has bagged the said fertilizer in bags as per the directions of the Govt. of India as Urea is controlled item - it is also brought to our knowledge that in the said import, there is sale of Urea from the Government of India, which is very clear from facts that appellant has paid for imported Urea to Government of India - amount, if paid to the Government of India for further conducting activities of bagging and distribution of the said Urea, prima facie, it seems that there is purchase of Urea and sale, which is again as per the Government of India's directions - prima facie, appellant has made out a case for unconditional waiver.- Stay granted.
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2014 (8) TMI 343
Denial of CENVAT Credit - credit on the basis of Invoice whereas service provider as paid the service tax belated - Held that:- Service providers have deposited service tax with the Revenue, though belatedly. In such a scenario, the technical objection of the invoices raised by the service provider being not in accordance with the provisions of Rule 9 would not survive - It is seen that the invoices were raised on 7.3.2007 and the service tax credit was availed on 31.3.2007 only after making payment to the service provider - In terms of the provision of Rule 4(7) of the Cenvat Credit Rules 2004, the Cenvat credit in respect of input service shall be allowed, on or after the day on which payment is made of the value of input service and the service tax paid or payable as is indicted in the invoice. As such, for the purpose of availing Cenvat credit, there is no requirement that the service tax should have been deposited by the service provider before the availment of the credit. If the service provider has not deposited the service tax with the department on due date, to Revenue's remedy lies at the end of the service provider for recovery of the service tax along with interest - Decided in favour of assessee.
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2014 (8) TMI 342
Denial of CENVAT Credit - Credit on the strength of debit notes - Held that:- appellant has not received the services and it is also not in dispute that the service tax has not been paid on these services. Further, all the requirements to avail Cenvat credit are entered in the debit note and further debit note has been rectified by issuing invoice. - Following decision of THE SUPREME INDUSTRIES LTD. Versus COMMISSIONER OF CENTRAL EXCISE LTU, MUMBAI [2014 (2) TMI 159 - CESTAT MUMBAI] - Decided in favour of assessee.
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2014 (8) TMI 341
Business Auxiliary services - Commission agent - Whether the respondent is to be considered as dealer or as Commission agent - Held that:- Revenue has reiterated the ground that in as much as the respondent was earning out of the concerned deals, it is to be considered as Commission agent. However, in majority of the deals Revenue has accepted that they were out-rightly purchasing and selling the goods but have contended that in some cases they have acted as commission agent. However, there is virtually no evidence on record to show that the respondent acted as commission agent. The allegation made by the Revenue is only a bald allegation without support of the evidence - Decided against Revenue.
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2014 (8) TMI 340
Civil Construction Service - Penalty u/s 77 & 78 - Bar of limitation - Held that:- appellants are not disputing the duty or interest amount and in fact they had paid the same and also paid the penalty imposed under Section 77 of the Finance Act, 1994. They are only disputing the penalty imposed under Section 78 of the Finance Act, 1994. There was a delay of one day in filing the appeal. The delay is condoned. Since the matter has not been examined by the Commissioner (Appeals) on merits, the impugned order is set aside and the matter is remanded back to the Commissioner (Appeals) - Decided in favour of assessee.
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2014 (8) TMI 339
Denial of refund claim - Unjust enrichment - GTA services - tax was paid at the rate of 12.36% instead of correct prevailing rate of 10.30% - Whether the doctrine of unjust enrichment would be applicable in the facts and circumstances of the case - Held that:- Goods were being sold on FOR basis. Freight was not being separately collected or shown in the invoices and freight (including service tax thereon) forms part of the sale price. Obviously, appellants have recovered the freight charges from the customers though indirectly. Further service tax on basic freight amount would be part of the over all freight charges and would therefore be part of the sale price - as per the analysis by the Commissioner and as per my analysis above, the burden of service tax has been passed on to the customer and therefore doctrine of unjust enrichment would be applicable. Another case cited is that of U.T. Ltd. (2007 (8) TMI 192 - CESTAT, NEW DELHI), in the said case Tribunal has asked Commissioner (Appeals) to verify whether the appellant in that case had collected amount more than the contracted amount as evident from the ledger, the invoice and the contract. In view of the fact that amount collected was not more than the contract amount Tribunal allowed the appeal. the sale price include all components including the basic freight cost and service tax on the basic freight cost. Thus service tax is a part of the freight and therefore burden of service tax has been passed on to the customer and the doctrine of unjust enrichment could be applicable - refund denied.
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2014 (8) TMI 338
Maintainability of appeal before CESTAT - Admission of appeal where the value is less than prescribed monetary limit - Applicability of proviso under Section 35C of the Central Excise Act, 1944 - Held that:- for the issue of service tax, proviso under Section 35C of the Central Excise Act, 1944 are not applicable - Decision in the case of Asiatic Enterprises [2006 (9) TMI 485 - CESTAT, KOLKATA] followed - Decided in favour of assessee.
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2014 (8) TMI 337
Valuation - Photography services - inclusion of cost of material - Invocation of extended period of limitation - Penalty u/s 78 - Held that:- respondent were liable to pay service tax on the gross amount charged and the exclusion from the assessable value of the value of paper and other consumables and chemicals used for providing photography service was not permissible - period of demand is from September 2003 to March 2005 and the show cause notice invoking extended period under proviso to Section 73 (1) of the Finance Act, 1994 has been issued only on 23/03/07 and the same would survive only if the conditions for imposing proviso to Section 73 (1) exists. When on a particular issue during a particular period there was divergence of views on account of conflicting judgments of the Tribunal or High Courts and the assessee had paid tax in accordance with one group of judgments in his favour, he would have to be treated on having acted in bonafide belief and longer limitation period for recovery of short paid tax cannot be invoked - longer limitation period under proviso to Section 73 (1) would not be invokable and, as such, the demand is time barred - penalty under Section 78 also would not be imposable - Decided against Revenue.
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Central Excise
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2014 (8) TMI 333
Withdrawal of registration - Assessee applied for single registration to cover both the units namely Distillery and Sugar Unit - Superintendent of Central Excise visited the premises of the assessee and after necessary verification has granted the single registration vide letter dated 16.03.2001 - But later on withdrew it - Held that:- Tribunal observed that both the units of the assessee are working in the same factory premises as per the approved revised plan. Both the units have been allotted a common PAN by the Income-tax Department for the purpose of joint assessment. Similarly, both the units filed the trade tax returns in the common name of M/s. Shravasti Kisan Sahkari Chini Mills Ltd. The management and staff are common for both the units. The Rule-174(3) is applicable where there are more than one premises, meaning thereby different premises. In the instant case, the premises is common, so the said rule is not applicable - Decided against Revenue.
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2014 (8) TMI 332
CENVAT Credit - transfer of ownership / sale to another without removal of capital goods goods - contravention of Rules 3(5B),2(a)(A) and 3(5) of the Central Credit Rules, 2004 - another unit / purchaser is situated within the same premises - Held that:- once the ownership and control of the equipments, machineries are transferred to another legal entity, even if it is situated in the same factory premises, it would be construed as removal within the meaning of Rule 3(4) of the CENVAT Credit Rules,2004 and CENVAT Credit on the capital goods availed by the transferor is liable to be recovered. - Decision in the case of Associated Cement’s [2007 (12) TMI 210 - KARNATAKA HIGH COURT] followed. However, it is difficult to hold at this stage, without ascertaining the disputed facts that after sale of the capital equipments, machinery etc. by the Appellant to M/s. JKETL, the control has also been divested in favour of M/s. JKETL on the face of a stiff argument in this regard by the Ld. Adv. for the Appellant. It is not is dispute that the Appellant have all along been claiming that they are the de facto manufacturer of the Lime from the Lime sludge. We observe that there is no detailed finding recorded on this aspect by the Ld. Commissioner. Also, there is a dispute about transfer/use of the land in favour of the Appellant - matter remanded back for ascertaining the facts and to apply the ratio of Associated Cements case - however penalty set aside - Decided partly in favour of assessee.
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2014 (8) TMI 331
CENVAT Credit - packing material - reversal @ 8% under Rule 6(3)(b) of CENVAT Credit Rules, 2001 & 2002 - Non maintenance of seperate accounts - Whether appellant maintained separate accounts of common inputs used in the manufacture of dutiable and exempted final products - Invocation of extended period of limitation - Held that:- there is nothing on record that the entire CENVAT Credit with respect to common packing material, used for manufacturing dutiable and exempted final products has been reversed by the appellant. In the absence of such data it cannot be said that appellant has reversed the entire credit with respect to packing material used in the manufacture of dutiable and exempted final products. There is also no indication from the records to establish that appellant was maintaining separate accounts at all with respect to dutiable and finished excisable goods. On merits appellant has no case. Further, the issue was detected first by the Revenue during Audit, therefore, extended period will be applicable in these proceedings - Decided against assessee.
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2014 (8) TMI 330
Waiver of pre deposit - Availment of CENVAT Credit - outdoor catering service - Held that:- appellant has followed the law as laid down by Hon'ble High Court of Mumbai in the case of Ultratech Cement Ltd [2010 (10) TMI 13 - BOMBAY HIGH COURT] and has reversed the amount of Service tax credit availed by them on the amount collected from their employees - Accordingly, the applications for waiver of pre-deposit of amounts involved are allowed and recovery thereof stayed till the disposal of appeals - Stay granted.
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2014 (8) TMI 329
Waiver of pre deposit - Availment of CENVAT Credit - outdoor catering service - Held that:- appellant has followed the law as laid down by Hon'ble High Court of Mumbai in the case of Ultratech Cement Ltd [2010 (10) TMI 13 - BOMBAY HIGH COURT] and has reversed the amount of Service tax credit availed by them on the amount collected from their employees - Accordingly, the applications for waiver of pre-deposit of amounts involved are allowed and recovery thereof stayed till the disposal of appeals - Stay granted.
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2014 (8) TMI 328
CENVAT credit - details of the services utilized and the nature of utilization not given to authorities - Held that:- Commissioner (Appeals) can hear the appeal on merits without insisting on pre-deposit in view of the decisions cited above. However we make it clear that appellants should cooperate with the Commissioner (Appeals) and produce all the evidences regarding utilization of the credit before him before appearing for the appeal - Matter remanded back - Decided in favour of assessee.
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2014 (8) TMI 327
Benefit of modvat credit - Tribunal has remanded the matter back to the adjudicating authority with a direction to re-quantify the duty for a period of six months after allowing the benefit of modvat credit - Held that:- The fact that show-cause notice has been issued on 09.07.1998 can be verified from the first page and the last page of the show-cause notice itself. Therefore, it is very strange and also not understandable how the Revenue has come to the conclusion that the show-cause has been issued on 19.06.1998. Therefore, the ground taken by the Revenue to file the appeal is totally frivolous and on this ground itself the demand is not sustainable. I further find that in the remand proceedings, there was a clear-cut direction to the adjudicating authority to re-quantify the duty for a period of six months prior to the date of show-cause notice after allowing the benefit of modvat credit. The Tribunal's order has been accepted by the Revenue as no appeal has been filed by the Revenue against the said order. Therefore, the question of demanding differential duty for which the respondent has not shown any proof, is not sustainable because the issue has become final in the earlier round of litigation, hence the appeal filed by the Revenue has no merit - Decided against Revenue.
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2014 (8) TMI 326
CENVAT Credit - Non maintenance of separate accounts - clearance of Bagasse - Held that:- not withstanding the amendment to Section 2(d) by adding explanation to this Section, the Bagasse arising in the course of manufacture of sugar cannot be treated as excisable goods, it continues to remain waste and it does not become a manufactured final product for the purpose of Rule 6 of Cenvat Credit Rules, 2004 - in respect of clearances of Bagasse no amount would be payable under rule 6(3) of the Cenvat Credit Rules, 2004, that in this regard, Hon'ble High Court quashed the Board's Circular No.105/24/09-Ex dated 28.10.2009; and that in view of this, the impugned order is not sustainable - Following decision of of Balrampur Chini Mills Ltd. reported in [2013 (1) TMI 525 - ALLAHABAD HIGH COURT] - Decided in favour of assessee.
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2014 (8) TMI 325
Rejection of remission application - ground adduced for rejection of remission application is that the godown of the appellant situated in 1 st floor of the appellant's premises was not part of the registered premises - Held that:- The remission of duty arises when duty is “payable” and when the goods gets destroyed or become unfit for consumption. In the present case, there is no dispute that the appellant has not paid any duty on the finished goods stored in the godown in the 1 st floor and therefore, they are rightly entitled for the remission of the duty payable. From the records, it is seen that as early as in September 2003 the appellant had intimated to the department that their godown is in the 1 st floor and the department had never objected to the storage of non-duty paid finished goods in the said godown. Even on 11 April 2005 when the department wrote to the appellant, they were only asked to reverse the Cenvat Credit taken on the inputs contained in the finished goods. There was no demand of duty on the finished goods stored in the godown, which also shows that the department has always been treating the godown in the 1 st floor as part of the approved premises. In these circumstances, the stand taken by the department for denial of remission stating that the godown in the 1 st floor was not part of the approved premises is contrary to the facts obtaining on records. Therefore, the appellant is rightly entitled for the remission of duty of the excise duty payable on the finished goods stored in the godown - Following decision of Sportking India Ltd. (2002 (7) TMI 136 - CEGAT, NEW DELHI) - Decided in favour of assessee.
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2014 (8) TMI 324
CENVAT Credit - duty paying documents - extra copy, Xerox/photo copies - documents on the strength of which credit has been taken were not specified under Central Excise Rules, 1944 - Held that:- CENVAT Credit scheme adopted and operationalized in India is based on the Tax Credit Method which relies upon sanctity of the documents. That is why certain documents have been prescribed statutorily for availing of the credit. If those documents are not submitted, there is no vested right accruing to the assessee for taking the credit. The argument that credit can be taken even when there are procedural infraction is not acceptable for the reason that a 5 Member Bench of the Hon'ble Apex Court in the case of Hari Chand Sri Gopal - [2010 (11) TMI 13 - SUPREME COURT OF INDIA] and Indian Oil Corporation Ltd. [2013 (5) TMI 675 - SUPREME COURT OF INDIA] held that in order to claim the benefit under the law, substantial compliance is not enough and the procedures prescribed in the statute should be mandatorily followed. This ratio laid down by the Hon'ble Apex Court prevails over the case laws - Decided against assessee.
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2014 (8) TMI 323
Waiver of predeposit of duty - rebate claim - Clearance of goods to SEZ unit - appellants reversed cenvat credit on the materials cleared to the SEZ unit - appellants claimed of reabte of duty which was sanctioned by the adjudicating authority under Rule 18 - commissioner (A) set aside the order - Held that:- Rule 18 provides that rebate of duty paid on such excisable goods or duty paid on clearance in the manufacture of processing of such goods. In the instant case, the applicant claimed rebate on the duty paid as input credit in the raw materials which is prima facie covered by Rule 18 of the said Rules. Accordingly, predeposit of duty is waived and its recovery is stayed till disposal of appeals - Stay granted.
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2014 (8) TMI 322
Extended Period of limitation - commissioner set asides demands - Held that:- There is no challenge by the Revenue with respect to the dropping of duty demands on account of time bar. Since there is no challenge in this regard, the finding of the lower appellate authority has to be upheld with respect to time bar. Therefore, we find no merit in the appeal filed by the Revenue - Decided against Revenue.
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2014 (8) TMI 321
Denial of refund claim - price variation clause - Unjust enrichment - Failure to produce certificate from the buyer of the less receipt of payment - appellant paid duty on the provisional price which were later on finalized and it was found that the appellant has paid duty on provisional price is highly excessive and have received less payment from the customer - Assessee claims that they are entitled for refund claim of the excess duty paid by them at the time of clearance of the goods provisionally - Held that:- On perusal of the record, in this case the fact on record that the final price of the cable is not known. In the absence of final prices, the appellant has failed to prove that they are entitled for refund claim. Therefore, I do not find any infirmity in the impugned order, the same is upheld - Decided against assessee.
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2014 (8) TMI 320
Cenvat Credit - Clearance of bagasse and press-mud - exempted goods - Held that:- Bagasse and press mud are waste products arising during the course of manufacture of sugar, which cannot be considered as excisable goods or final products and, therefore, the question of invoking the provisions of Rule 6 (3) of the CENVAT Credit Rules, 2004 does not arise at all. Following the Balarampur Chini Mills Ltd. vs. Union of India [2013 (1) TMI 525 - ALLAHABAD HIGH COURT], this Tribunal also, in the case of Commissioner of Central Excise, Pune – II vs. DY Patil SSK Ltd. & Ors. [2014 (4) TMI 52 - CESTAT MUMBAI] had set aside the demands on such waste products arising during the course of manufacture of sugar. The ratio of these decisions applies squarely to the facts of the present case - Decided in favour of assessee.
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2014 (8) TMI 319
Recall of order - non compliance of pre deposit order - Valuation of goods - Department has taken a view that duty should have been paid as per the provision of Rule 8 of Central Excise (Valuation) Rules - Held that:- appellants have the detailed worksheet showing the price charged to independent buyers during the relevant time and as per the Tribunals Larger Bench decision in the case Ispat Industries Ltd.: [2007 (2) TMI 5 - CESTAT, MUMBAI], the procedure followed by the appellants is correct - Commissioners need not have required the appellants to make any pre-deposit for hearing the appeal - matter remanded back - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2014 (8) TMI 336
Detention of goods - No valid transit pass produced - Held that:- Without going into the correctness or otherwise of the order impugned in this writ petition, the respondents are directed to release the goods detained, to the petitioner forthwith, on condition that the petitioner pays the tax amount to be assessed by the authority as contemplated under the Act. Insofar as the compounding fee is concerned, if the authority fixes the compounding fee viz., one time of the tax, the petitioner is directed to produce bank guarantee for the 50% of such amount to be assessed by the authority. If the authority fixes compounding fee, viz., two times of the tax, the petitioner is directed to produce bank guarantee for 50% of such amount and for the remaining 50% of such amount, the petitioner shall produce personal bond. It is made clear that the petitioner company has to subject themselves to the adjudication proceedings that may be initiated by the respondents. - Decided conditionally in favour of assessee.
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2014 (8) TMI 335
Central Sales - C Form - Assessment order passed without considering that declaration C is already filed - Held that:- The fact remains that the petitioner has produced the ''C" forms pertaining to the assessment year 2007-08 and the same has not been produced for the assessment year 2008-09. The further fact remains that if the petitioner is given an opportunity to produce the Declaration Form in Form-C and also if its reply dated 19.05.2014 is considered, then, they will be able to substantiate their claim that they are not liable to pay any tax - as the Declaration Form in Form-C is now readily available with the petitioner and also the contention of the petitioner that if the same is allowed to be produced before the respondent, then, they will be able to substantiate that they are not liable to pay any tax at all and also the fact that the assessee can be permitted to produce the Declaration Form in Form-C, within five years from the assessment year, with sufficient reasons, I am inclined to set aside the impugned assessment orders and the matter is remitted back to the respondent only to the limited extent to decide the matter afresh after taking into consideration the reply of the petitioner dated 19.05.2014 along with Form-C, if it is within time - Matter remanded back - Decided in favour of assessee.
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2014 (8) TMI 334
Detention of goods - discrepancies in the stock - Assessee contends that they are not the owners of the goods but are transporter only - Held that:- without going into the correctness or otherwise of the order impugned in this writ petition, the respondents are directed to release the goods detained, to the petitioner forthwith, on condition that the petitioner pays a sum of ₹ 2,38,590/- as contemplated under the Act. It is made clear that the petitioner has to subject himself to the adjudication proceedings that may be initiated by the respondents. Accordingly the writ petition is disposed of. - Decided partly in favour of assessee.
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