TMI Tax Updates - e-Newsletter
August 9, 2018
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Highlights / Catch Notes
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GST:
THE GOODS AND SERVICES TAX (COMPENSATION TO STATES) AMENDMENT BILL, 2018
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GST:
THE UNION TERRITORY GOODS AND SERVICES TAX (AMENDMENT) BILL, 2018
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GST:
THE INTEGRATED GOODS AND SERVICES TAX (AMENDMENT) BILL, 2018 (IGST Amendment Bill, 2018) - As introduced in the Lok Sabha as on 7-8-2018
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GST:
THE CENTRAL GOODS AND SERVICES TAX (AMENDMENT) BILL, 2018 (GST Amendment Bill, 2018) as introduced in the Lok Sabha as on 7-8-2018
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Income Tax:
Transfer pricing adjustment - Shifting of the testing parties in the same breath is not permissible. - all the three persons stand in the same footing, as such, the same treatment has to be given to them equally.
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Income Tax:
Establishment of Permanent Establishment (PE) in India - Onus is heavily upon the revenue to establish that that assessee’s activity had crossed the threshold period of 12 months and hence constitutes PE in India in terms of Article 5(2)(g) so as to tax the receipts in India as per Article 7.
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Customs:
Warehoused goods - Relinquishment of rights - There is no prohibition on the owner of the goods to exercise the right to relinquish the title of goods after the expiration of warehousing period or after expiration of the extended period.
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Customs:
Indo-Sri Lankan Free Trade Agreement (ISFTA) - Since all the remaining COOs have been recertified and found as being in order by the Sri Lankan authorities, the impugned order rejecting the impugned COOs, denying the benefit of exemption under N/N. 26/2000-Cus. in respect of the impugned goods, cannot sustain - demand set aside.
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Customs:
The Customs officers have no jurisdiction on the appellant to seize the goods in S.E.Z. area therefore seizure of the goods in question is set aside.
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State GST:
SIB MANAGEMENT SYSTEM for search and seizure operations under GST
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Indian Laws:
DRI busted Foreign Currency Smuggling Racket involving Foreign Nationals; Foreign Currencies worth ₹ 6.14 crore seized
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PMLA:
Offence under PMLA - provisional attachment orders - defaulters are happy if the attachment would continue against the mortgaged properties despite of passing the decrees by the DRT in favor of banks and against borrowers. By this mean, the attachment-orders amounting to interference with the judicial system.
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Service Tax:
Classification of services - The method of charging or invoicing does not in itself determine whether the service provided is a single service or multiple services. Single price normally suggests a single supply though not decisive.
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Service Tax:
Classification of services - preparation of Electoral Photo Identity Card (EPIC) - Assessee cannot be said to have rendered any photographic services to an individual or to the person who had entered into the contract with the petitioner.
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Service Tax:
Levy of Service tax - royalty paid to M/s Unisys Corporation, USA - whether taxable under Intellectual Property Right Service or not? - Revenue failed to prove the IPR services. - Demand set aside.
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Service Tax:
Penalty u/s 78 of FA - apart from a mere sentence that there is prima facie case of suppression of facts and intention to evade payment of service tax, there is no evidence discussed in the impugned order as to what is the suppression on the part of the appellant. - No penalty.
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Service Tax:
Extended period of limitation - The appellant has disclosed the entire information in their Annual Accounts and at the time of filing of ST-3 returns. The Commissioner reasoning that as the appellant have not sought classification from the department, extended period would be invokable, cannot be appreciated - demand barred by limitation.
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Central Excise:
CENVAT Credit - cables and capacitator - The cables laid down by the assessee as also the other capital goods laid down en-route the grid and the factory premises for the purpose of transmission of electricity have to be held as cenvatable
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Central Excise:
Manufacture - assembling of different segment and components of CTC machine - CTC machine when installed at the buyers site by rooting it to ground, would be immovable property and thus become non-excisable.
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Central Excise:
Pre-deposit - utilization of CENVAT Credit account for payment of pre-deposit - payments made from Cenvat Credit Account are considered as due payments for considering as deposit under Section 35F(ii) and (iii) of Central Excise Act, 1944.
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Central Excise:
CENVAT Credit - Renovation of Union room - denial of credit on renovation work undertaken in recreation room for separate union room along with interest is upheld
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Central Excise:
Time limitation for availing CENVAT Credit - the credit can be taken immediately on receipt of the inputs. There is no bar provided in the Cenvat Credit Rules that within how much period credit should be taken.
Articles
Notifications
Companies Law-
File No. 1/21/2013-CL.V - dated
7-8-2018
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Co. Law
Central Government appoints the 7th day of August, 2018 as the date on which the provisions of section 10 of the Companies (Amendment) Act, 2017 shall come into force
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File No. 1/21/2013-CL-V - dated
7-8-2018
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Co. Law
Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2018
Customs-
58/2018 - dated
7-8-2018
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Cus
seeks to further amend notification No. 82/2017-customs dated 27th October 2017, to increase Ad-valorem component of BCD from 10% to 20% on 328 tariff lines of carpets, apparels and other textile products
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57/2018 - dated
7-8-2018
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Cus
Seeks to prescribe effective rate of customs duty on Screw or SIM socket/other mechanical items (metal) for cellular mobile phone
DGFT-
24/2015-2020 - dated
8-8-2018
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FTP
Amendment in Para 2.05 of Foreign Trade Policy 2015-2020
GST - States-
G.O. Ms. No. 95 - dated
26-7-2018
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Tamil Nadu SGST
Exemption from state tax on handicrafts goods
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G.O.Ms. No. 132 - dated
16-7-2018
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Telangana SGST
Goods or the class of goods after its seizure be disposed by the proper officer.
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G.O.Ms. No. 131 - dated
16-7-2018
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Telangana SGST
The Telangana Goods and Services Tax (Fifth Amendment) Rules, 2018.
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KA.NI.-2-1346/XI-9(42)/17 - dated
20-7-2018
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Uttar Pradesh SGST
The Uttar Pradesh Goods and Services Tax (Eighteenth Amendment) Rules, 2018.
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KA.NI.-2-1311/XI-9(42)/17 - dated
16-7-2018
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Uttar Pradesh SGST
The Uttar Pradesh Goods and Services Tax (Seventeenth Amendment) Rules, 2018.
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KA.NI.-2-1303/XI-9(47)/17 - dated
12-7-2018
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Uttar Pradesh SGST
Amendment in the Notification No.KA.NI-2-854/XI-9(47)/17-U.P.Act-1-2017-Order-(21)-2017 dated 30-06-2017.
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KA.NI.-2-1300/XI-9(47)/17 - dated
12-7-2018
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Uttar Pradesh SGST
Goods or the class of goods after its seizure be disposed by the proper officer.
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1081-F.T.-31/2018-State Tax - dated
6-8-2018
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West Bengal SGST
Seeks to lay down the special procedure for completing migration of taxpayers who received provisional IDs but could not complete the migration process.
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1080-F.T.-22/2018-State Tax (Rate) - dated
6-8-2018
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West Bengal SGST
Amendment in this Department Notification No.1132-F.T. [8/2017 - State Tax (Rate)], dated the 28th June, 2017
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2018 (8) TMI 445
Benefit of Section 92B - international transaction granted benefit of Section 92B - LIBOR rate plus 2% on account of interest free loans provided by the appellant to its associated enterprises - Held that:- SLP dismissed.
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2018 (8) TMI 444
Additions made u/s. 68 - undisclosed income of the assessee - share application did not have the means to make investment - Tribunal deleted the addition - HC held no direct or indirect relation between the assessee company and the share applicants - Held that:- SLP dismissed.
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2018 (8) TMI 443
Admission of additional documents - Held that:- Considering the grounds raised and the facts and circumstances of the case and also taking note of the fact that the authorised representative of the appellant has filed an application before the Tribunal, for considering the documents placed, this Court is of the opinion that it is a fit and proper case where the matter is to be remanded for fresh consideration before the Tribunal to be taken up along with the application filed by the authorised representative of the appellant
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2018 (8) TMI 442
Transfer pricing adjustment - addition on account of the International Transaction in the nature of interest on loans granted to Associated Enterprises of the assessee - tested party - Held that:- This issue is covered in favour of the assessee and against the Revenue by the decision of Co-ordinate Bench of Tribunal in assessee’s own case for A.Y. 2009-10 [2017 (11) TMI 639 - ITAT DELHI] wherein held there is an inherent inconsistency in the view taken by the TPO because, if at all the ALP interest in so far as the assessee is concerned is the interest rate expected by an Indian lender, then irrespective of the fact of Nor Pearl Knitweard Limited, Bangladesh obtained loan at Bangladesh at any rate less than this expected rate, he should not have accepted. The tested party in the case of Nor Pearl Knitwear Limited, Bangladesh and in the case of other two concerns is the assessee only. In respect of the same tested party the TPO cannot adopt two different yardsticks. Shifting of the testing parties in the same breath is not permissible. We, therefore, in this set of circumstances agree with the Ld. AR that since loans or advances in case of the two other concerns also in foreign currency, and all the three persons stand in the same footing, as such, the same treatment has to be given to them equally. With this view of the matter, we direct the AO to re-compute the ALP of the interest at 6% in respect of House of Pearl Fashions Limited, USA AND Multination Textile Group Limited, Maritius also. - Decided in favour of the assessee
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2018 (8) TMI 441
TDS on payment of Salaries & Travel cost - payment made to employees of the assessee company or whether the same were made as fee for Technical services - Held that:- Assessee drew our attention to copies of Form No. 16 and details of the employees placed in the paper book, which have not been examined by the authorities below. We, therefore, think it proper to send the matter back to the Assessing Officer for verification of the payments made whether they were made to employees of the assessee company or whether the same were made as fee for Technical services and also whether TDS has been correctly deducted on payment Salaries & Travel cost and decide the issue afresh in accordance with law. Disallowance u/s. 37(1) - AO/DRP have disallowed these expenditures being not relating to business purpose of assessee - Held that:- As AR requested to send back this issue also to the Assessing Officer for verification because the ld. DRP did not consider the vouchers placed before them. He placed evidences before the DRP to establish that the expenditure were incurred wholly and exclusively for the purpose of business, we restore this matter to the file of the Assessing Officer on this issue also for verification and decision afresh in accordance with law. Needless to say, the assessee shall be given reasonable opportunity of being heard. The assessee is also directed to adduce all the documentary evidences in support of its claim before the Assessing Officer. Accordingly, the relevant ground is allowed for statistical purposes. Not given due credit of tax paid/deducted - Held that:- Assessing Officer is directed to verify the contention of the assessee and to give due credit of tax paid/deducted to the assessee.
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2018 (8) TMI 440
Deferment of the payment of the taxes - project completion method application on the assessee - method of accounting - Accounting standards - Held that:- Referring to amendment brought in statute with retrospective effect w.e.f. 1.4.2017 by way of insertion of Section 43CB for the purpose of computation of income from construction and service contract it is crystal clear that before the insertion of this section there was no legal obligation on the part of the assessee to follow percentage completion method only. Before insertion of this section person engaged in construction and service contracts were free to follow either the project completion/ Completed project method or percentage completion method in accordance with the provisions of Section 145 of the Act. In the instant appeal assessee even though not directly involved in the construction activity and it is merely gave its land for development and it was agreed between the assessee company and the developer that 32% of the saleable area shall be given to the assessee. The 54 assessee is consistently followed completed project contract/percentage completion method as recognized its revenue at the time of execution of getting the sale deed registered and before that it has to be consistently showing the advance from sale of flats as the liability in the balance sheet. A.O was not justified in applying the percentage completion method on the assessee merely on the basis that it was followed by the developer JSM DPL and arbitrarily making addition to the income ignored the fact that project completion method/ completed contract method of accounting has been consistently adopted by the assessee and even have been accepted by the revenue authority for the A.Y. 2010-11 and A.Y. 2011-12. We therefore set aside the findings of Ld.CIT(A) and delete the addition of ₹ 16,12,34,754/- for Assessment Year 2012-13. - Decided in favour of assessee
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2018 (8) TMI 439
Reopening of assessment - order passed u/s 127 transferring the jurisdiction over the assessee to ITO, Ward-4, Bharatpur on or before the issuance of notice u/s 148 to them - Held that:- Revenue has not disputed the said fact and has not brought on record any order passed u/s 127 transferring the jurisdiction over the assessee to ITO, Ward-4, Bharatpur on or before the issuance of notice u/s 148 to them. Where the ITO Ward 4, Bharatpur was ceased of the information of the impunged property being disposed off, the correct course of action would have been to pass on the said information to the jurisdiction Assessing officer having jurisdiction over the respective assessee and it is for the jurisdictional Assessing officer to issue notice u/s 148 to the respective assessee and bringing the capital gains to tax in their individual hands to the extent of respective share in the property. Alternatively, all the cases could have been centralized by the Revenue by passing an order u/s 127. In the instant case, none of this has happened. It is therefore a case where the ITO Ward 4, Bharatpur has proceeded ahead and issued notice u/s 148 of the Act to the respective assessee when the jurisdiction over the respective assessees doesn’t lie with him and lies with other Assessing officers at Delhi and Allahabad, a fact not disputed by the Revenue. In absence of valid jurisdiction, the issuance of notice u/s 148 by ITO Ward 4, Bharatpur is bad in law and the consequent proceedings u/s 147 are vitiated and are liable to be quashed - notice issued u/s 148 by the ITO Ward 4, Bharatpur was without jurisdiction and the consequent assessment order passed u/s 147 r/w 144 is bad in law - Decided in favour of assessee.
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2018 (8) TMI 438
Establishment of PE in India u/s 5(2)(g) - assessee s activity under the contract as constitute installation PE in India - Threshold period of 12 months - Held that:- Any activity which may be related or incidental but was not carried out at the site in the source country would clearly not be construed as a PE. Albeit, preparatory work at the site itself can be counted for the purpose of determining of duration of PE. In the present case there is no such allegation or material on record that any kind of preparatory work had started at the installation sites prior to 4th of Jan 2008. The period from which it can be reckoned that enterprise has started to perform the activities in connection with installation project or site etc. is when the actual purpose of the business activity had started. The performance of the activities in the present case can only be reckoned from 4th January, 2008 (even though ld. Counsel stated that first mobilisation of vessel/barge was 23rd February, 2008); and not before that as the preparatory work if any, was for tendering purpose and to get the contract. As the date of completion, the Contract provides the completion date of 1st August, 2008, whereas as per the material placed on record and also the payment schedule etc., points out that all the activities connected with the project including the receiving of the payments was before 30th September 2008 and even the completion certificate mentions 30th September 2008. Though certain formalities for final completion certificate may have exceeded one or two months but still it will not make the continuity of the activity where it has been brought on record that the last barge sailed out or was decommissioned from India on 25th September, 2008 and the entire payments were received on or before that date. Onus is heavily upon the revenue to establish that that assessee s activity had crossed the threshold period of 12 months and hence constitutes PE in India in terms of Article 5(2)(g) so as to tax the receipts in India as per Article 7. Threshold period of 12 months have not exceeded in the present case and consequently no PE can be said to have been established in Article 5(2)(g) . Accordingly, we hold that no income of the assessee on the Contract executed by assessee in India can be held to be taxable in terms of Article 7. Thus grounds raised by the assessee on this score is allowed.
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2018 (8) TMI 437
Deemed dividend u/s. 2(22)(e) - whether the loans and advances received by the HUF could be treated as deemed dividend within the meaning of Sec. 2(22)(e) - Held that:- The assessee-recipient of money is neither the registered nor the beneficial shareholder of the payer company, i. e. Portescap. Ostensibly, the common registered as well as beneficial shareholder of assessee-company and Portescap is Kollmorgen and not the assessee-company. Assessee has correctly placed reliance on the judgment of the Hon'ble Madras High Court in the case of M/s. Ennore Cargo Container Terminal P. Ltd. (2017 (4) TMI 615 - MADRAS HIGH COURT), which has been rendered in a somewhat identical situation. - Decided against the revenue.
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Customs
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2018 (8) TMI 434
Refund of deposits made by respondents - Revenue has not proceeded with the adjudication of the said show cause notices - Held that:- When these matters are pending for the last almost 10 years and no adjudication has taken place, it may not be appropriate to interfere with the directions of the High Court to refund the amount to the respondents - Insofar as adjudication of the show cause notices is concerned, it is left open to the appellant to proceed with the same as per the advise of the competent authority - petition disposed off.
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2018 (8) TMI 433
Warehoused goods - Relinquishment of rights - Extension of warehousing period - N/N. 53/97-Cus dated 03.06.1997 - Held that:- The respondents have relinquished the title of the goods after the amendment has come into force on 14.05.2003; however, during this time, the issue was quite alive and the appellants are entitled to make use of the amended provisions. It is also the matter of fact in this case that the SCN is given much more lately after the relinquishment of the title of the goods by the appellants - Hon’ble High Court of Karnataka in the case of i2 Technologies Software Pvt. Ltd [2007 (8) TMI 49 - HIGH COURT, BANGALORE] has held that owner of any warehoused goods has right to relinquish the title of the goods at any time before an order for clearance of goods for home consumption has been made. There is no prohibition on the owner of the goods to exercise the right to relinquish the title of goods after the expiration of warehousing period or after expiration of the extended period. In this case, the SCN itself has been issued much later than the date of relinquishment of the title of goods by the appellants. No duty can be chargeable from the appellants - The case should go back to the adjudicating authority to quantify rent, interest, other charges and penalties, if any, payable by the appellant while holding that no duty shall be paid by the appellants. Appeal allowed by way of remand.
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2018 (8) TMI 432
Mis-declaration of imported goods - import of Poultry Dry Mix with full exemption from Customs duties under Indo-Sri Lankan Free Trade Agreement (ISFTA) with Sri Lanka - violation of Rule 7 of the Customs Tariff (Determination of Origin of Goods under the Free Trade Agreement between the Democratic Socialistic Republic of Sri Lanka and Republic of India) Rules, 2000 - Department took the view that 25 consignments imported and cleared by producing the other COOs appear to have been obtained by suppression of facts and collusion between the importer and M/s.Ocean Feeds Pvt. Ltd. Sri Lanka, imported in violation of condition laid down under Rule 7 of the ISFTA Rules - Confiscation - penalty. Held that:- From the exchange of correspondence between the DRI and Sri Lankan Customs, it is but evident that the former harboured a view that total value of materials etc. originating from third countries had exceeded 65% of the FOB value of the products - Rule 13 of these Customs Tariff Rules lays down identical provisions for cooperation between the contracting parties including the manner of addressing the problems arising from circumvention including facilitation of joint plant visits and contacts by representatives of both contracting parties upon request and on a case-by-case basis - N/N. 26/2000-Cus.dt. 1.3.2000 lists out the goods exempted and the quantum of corresponding exemption from customs duty, provided the importer is able to prove that the goods in respect of which exemption is claimed are of the origin of Sri Lanka as per the conditionalities contained in N/N. 19/2000-Cus. (NT). Thus, there is no lack of clarity in respect of meaning of goods not wholly produced or obtained from the contracting parties , as per the provisions of the ISFTA and the related Customs notifications. In particular, the total value of the materials, parts etc. originating from countries other than the contracting parties (India and Sri Lanka) or of undetermined origin, cannot exceed 65%. This is what primarily certified in the Certificates of Origin issued by the competent Sri Lankan authorities. All the very issues and allegations that have been raised in the impugned SCN were also flagged to the Sri Lankan authorities, in particular, the Sri Lankan Customs and the Department of Commerce (Sri Lanka). Both these authorities from Sri Lanka have unequivocally clarified and reiterated in all their letters that except for the two COOs (6523 and 6661), the product complied with the Rules of Origin criteria set out in the ISFTA in respect of the remaining COOs and a categorical emphasis has been made that there is no necessity to cancel the other COOs. It is also relevant to note that at the initial stage, the two COOs (6523 and 6661) had been withdrawn by Suguna Poultry which was apparently deemed as sufficient action in the matter by the Sri Lankan Customs. Only after insistence by the DRI were these two COOs were cancelled by the Sri Lankan authorities - the Ld. Advocate is correct in his assertion that the discrepancies in respect of the two COOs (6523 and 6661) were only related to the addition of ingredient Mycosorb (Containers IALU 2245133 and IALU 2249967 - related COO 6523) and ingredient L-Threonine (Container JPLU 8223708 - related COO 6661). Since all the remaining COOs have been recertified and found as being in order by the Sri Lankan authorities, the impugned order rejecting the impugned COOs, denying the benefit of exemption under N/N. 26/2000-Cus. in respect of the impugned goods, demanding differential duty with interest and imposing penalty under Section 112 (a) of the Customs Act, 1962, cannot sustain and therefore will have to be set aside. Imposition of penalty under Section 114 and 114AA of the Act is found to be without merit and is therefore dismissed. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 431
Jurisdiction of Customs officer to seize the goods - SEZ units / SEZ area - Held that:- The appellants are located in Special Economic Zone and having a license to import the impugned goods - reliance placed in the case of MORGAN TECTRONICS LTD. VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [2014 (9) TMI 985 - CESTAT NEW DELHI], where it was held that in terms of the Section 53(1) of the SEZ Act, 2005, the SEZ is deemed to be territory outside the Customs Territory of India, and the goods imported were meant for the unit in SEZ Noida. The Customs officers have no jurisdiction on the appellant to seize the goods in S.E.Z. area therefore seizure of the goods in question is set aside - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 430
Refund claim - provisional transactional value - the Assessable value quoted in the Shipping Bill has been drastically reduced - rejection of refund on the ground that refund claimed by them without challenging the assessment is not maintainable - Held that:- The value declared by the appellant in the case in hand is a provisional transaction value as the invoice indicates that is a provisional invoice. Provisions of the Section 16 mandate for determination of rate of duty in respect of export goods and Section 18 of the Customs Act, talks about provisional assessment of duty in the case of exports and imports. Provisions of Section 16 has to be given a play by reading to Section 14, which would indicate that value of export of goods shall be the transaction value of those goods which means the price actually paid or payable for the goods when exported from India and place of exportation. Since in the case in hand, the price payable by the purchaser was not final and was lowered, subsequently and accepted by Reserve Bank of India. The reduced price of the export goods has been correctly accepted by the First Appellate Authority as the price payable or paid for the consignment exported by the shipping bill dated 22.08.2008 - the First Appellate Authority was correct in coming to such a conclusion. The shipping bill dated 22.08.2008 is not yet finalized by the assessing officer. The shipping bill needs to be finalized by the assessing officer - the issue of finalization of the shipping bill remitted to the assessing officer, who shall do so in accordance with the law and shall also consider the documentation entered with Reserve Bank of India by the respondent and consequent to the finalization of the shipping bill shall refund the differential duty paid. Appeal allowed by way of remand.
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2018 (8) TMI 429
Duty free import of the imported consignment of spinal needle - N/N. 21/2000/CUS Sl. No 370 and 6/2006 CE - benefit of notification denied on the ground that these are available only for the assistive devises, rehabilitation(aid), and other goods for the disabled persons, as in the instant case the goods imported are spinal needle in bulk for use of patients in spinal anesthesia, (for conducting cesarean operation of pregnant women and also during some other operation like Inguinal hernia). Held that:- This issue is no longer res-integra and is decided in the case of Becton Dickinson India Pvt Ltd vs. Commissioner of Customs and Excise Delhi-III [2015 (6) TMI 335 - CESTAT NEW DELHI], where the Hon’ble Tribunal has allowed the benefit to the imported item which is quite similar to the one imported by the appellant. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 428
Import of restricted item - old and used tyres - Confiscation - enhancement of value - Held that:- The import was required to be made with a license which could not be produced by the appellant before the Customs Authorities - Inasmuch as, the appellant has admittedly not produced required license, confiscation of goods and imposition of penalty is upheld. Undervaluation - Held that:- Since the invoice has not been rebutted by producing any evidence on record, the values declared by the appellant in the said Bills of Entry are correct assessable values and the same cannot be changed merely on the opinion of the Chartered Engineer. Appeal allowed in part.
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2018 (8) TMI 427
Penalty u/s 112 of CA - restriction imposed by N/N. 64(RE-08)/04/09 dated 24/11/2008 on the imported consignment of S S Seamless Tube imported by the appellant-importer - Held that:- The issue is of import of the S S Seamless Tubes during the intervening period when the import restriction was imposed on their import which was subsequently lifted by issue of another Notification - also the Bills of Entry has been filed in this case for warehousing only Ex-bond Bill of Entry for clearance of imported goods were affected only when the restriction imposed was withdrawn by the issue of another circular. Hon ble Apex Court in the case of Collector of Central Excise, Shilliong vs. Wood Craft Products Ltd. [1995 (3) TMI 93 - SUPREME COURT OF INDIA], wherein it is held that the amendments which are treated as clarificatory has to be taken that it was also there all the time - Going by the case of Wood Craft Products, there is no hesitation in holding that the impugned order of Commissioner imposing redemption fine on the goods imported by the appellant is contrary to the provisions Customs law read with DGFT circular of, and therefore, the same is set aside. Appeal dismissed - decided against revenue.
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Corporate Laws
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2018 (8) TMI 436
Disqualification of directors - retrospective effect of new amendment act 2013 - striking off the name of the company from the Registrar of Companies on the premise that the company has not been carrying on any business for a period of two financial years - Held that:- a) When the New Act 2013 came into effect from 1.4.2014, the second respondent herein has wrongly given retrospective effect and erroneously disqualified the petitioner-directors from 1.11.2016 itself before the deadline commenced wrongly fixing the first financial year from 1.4.2013 to 31.3.2014. (b) By virtue of the new Section 164(2)(a) of the 2013 Act using the expression for any continuous period of three financial years and in the light of Section 2(41) defining financial year as well as their own General Circular No.08/14 dated 4.4.2014, the first financial year would be from 1.4.2014 to 31.3.2015, the second financial year would be from 1.4.2015 to 31.3.2016 and the third financial year would be from 1.4.2016 to 31.3.2017, whereas the second respondent clearly admitted in paras 15 and 22 of the counter affidavit that the default of filing statutory returns for the financial years commenced from 2013-14, 2014-15 and 2015-16 i.e., one year before the Act 2013 came into force. This is the basic incurable legal infirmity that vitiates the entire impugned proceedings. (c) By virtue of the first proviso to Section 96(1) of the 2013 Act, Annual General Meeting for the year ending on 31.3.2017 can be held within six months from the closing of financial year i.e., 30.9.2017, additionally in the light of Section 164(2)(a) referring to annual return and financial statement , the time limit to file annual return under Section 92(4) of 2013 Act is sixty days from Annual General Meeting or the last date on which Annual General Meeting ought to have been held, hence, the time limit to file balance sheet under Section 137(1) of the 2013 Act is again thirty days from Annual General Meeting. In view of these legal position, the disqualification could get triggered off only on or after 30.10.2017 only, if any company fails to file annual forms for three financial years. Importantly, it is to be borne in mind that even beyond that time limit, additional time limit of 270 days was available by virtue of the then first proviso to Section 403. (d) Although there is no statute or provision expressly spelling out the observance of the principles of natural justice against disqualification of directors, as the legal right of the petitioners to continue as director in other company or reappointed in any other company, which are scrupulously following the provisions of the Companies Act, have been deprived of, the principles of natural justice should have been adhered to by issuing proper notice to all the directors. (e) When the disqualification clause was not attracted to the directors of private companies under the old Act of 1956, the same cannot be allowed to take a retrospective effect under the new Act, when the provision of Section 164(2)(a) came into force only from 1.4.2014. This is also for one more reason that the failure to file the annual returns has been adequately taken care of by the penal provision under Section 92, making it clear that every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both. Again under Section 137, the failure to file the financial statement visits punishment with imprisonment for a term which may extend to six months or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both. Further, under Section 441(4), the default in filing returns or accounts compoundable by Tribunal or Regional Director or by any officer authorized by the Central Government. (f) Although the petitioners have not challenged the provision of Section 164(2)(a), as the respondents have not followed the principles of natural justice, extinguishing the corporate life of the directors to the extent of disqualifying them to hold the directorship in the other companies, the said provision is liable to be read down, hence, Section 164(2)(a) is read down to the extent it disqualifies the directors in other companies which are scrupulously following the requirements of law, making it clear that no directors in other companies can be disqualified without prior notice. (g) However, it is made clear beyond any pale of doubt that the mischief of removal of the names of the companies by the Registrar of Companies and the disqualification of the directors in the defaulting company will go together, as it is inseparable, and the Registrar of Companies need not give fresh notice to the directors for their disqualification from the dormant company, if there is a failure to file the financial statement or annual return for any continuous period of three financial years as per Section 164(2)(a). The impugned orders are set aside and the writ petitions shall stand allowed. Consequently, all the connected writ miscellaneous petitions are closed.
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2018 (8) TMI 435
Winding up petition - invalid advertisement of the winding up application published in the newspapers - Held that:- In the present case, it is a fact that when the company (presently in liquidation) failed to deposit ₹ 50,00,000/- as directed by the Division Bench on September 04, 2015 the petitioning creditor caused the advertisement of the winding up application being published in newspapers stating that application would be heard by the Court on October 14, 2015. However, when the company (presently in liquidation) was registered with the BIFR, by the order dated March 22, 2016 a learned Single Judge of this Court adjourned the hearing of the winding up application sine die. Until the company (presently in liquidation) filed the said application the winding up application did not appear before this Court. Even in the said application the company (present in liquidation) claimed the advertisement of the winding up application published in the newspapers on September 14, 2015 to be invalid advertisement.
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Insolvency & Bankruptcy
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2018 (8) TMI 446
Corporate insolvency process - application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 - pre-existing dispute - Held that:- The defense put up is not a mere sham or illusory and coupled in addition with the proceedings before the criminal court pending ever since 2012 clearly establishes that the dispute is of such a nature as between the parties which cannot be decided in a summary manner. In this connection, this Tribunal is also fortified by the decision of Hon'ble NCLAT rendered in A.D. Electro Steel Co. Pvt. Ltd. v. Anil Steel in Company Appeal (AT) (Insolvency) [2017 (11) TMI 890 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] in which it has been held that reply to a notice under Section 138 of Negotiable Instruments Act, 1881 prior to the filing of application can be considered as a pre-existing dispute. Application dismissed.
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PMLA
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2018 (8) TMI 426
Offence under PMLA - provisional attachment orders - properties mortgaged with the Appellant Bank acquired by the alleged accused/mortgagor much prior to the date of crime - Held that:- There is no denial that all the properties in the subject matter of the Appeal, are mortgaged with the Appellant Bank were acquired by the alleged accused/mortgagor much prior to the date of crime. It is also the stand of the ED that the banks are the victim parties. They are entitled to recover the amount, most are public sector banks. It is a public money and accused/borrowers are liable to face trial in criminal complaint. The trial may take number of years. The main accused is absconding. He has left India. Non performing assets (NPA) are choking the banking system and the system is already struggling for some time and banking conditions are deteriorating day by day. It is submitted that such order would create a chaos in banking industries and would be against the interest of nation as a whole ad would also be against the public policy. Hundreds of borrowers have taken the loans against the securities and mortgaged properties and are not returning the legal debts. They are simply adopting all sort of tactics by raising defense that their properties are attached by ED. Even they have stopped paying the installments due by raising the plea that why should pay debts once the attachment orders are passed. By way attachment, their properties are also safe so as the due amount. They are happy if the attachment would continue against the mortgaged properties despite of passing the decrees by the DRT in favor of banks and against borrowers. By this mean, the attachment-orders amounting to interference with the judicial system as the Adjudicating authority in many cases has ignored judgments of the Supreme Court, Full bench of Madras High Court and many High Courts and even of this tribunal. At present, total outstanding as per Recovery Certificate is ₹ 4687,04,04,315.29 (Rupees Four Thousand Six Hundred Eighty Seven Crore Four Lakh Four Thousand Three Hundred Fifteen and Paisa Twenty Nine only). What a big tragedy, despite of having a full knowledge about the amount due, Jatin R. Mehta has left the country without any hindrance by making a fool of everyone of this country and we are unable to do anything. As been informed that he has run away from this country leaving the debt of more than ₹ 4687 Crores. It is a matter of surprising and shocking as many banks are Public Sector Banks. It is a public money. One hand, middle class (who are law abiding citizen) are suffering from starvation and small children are dying due to shortage of meal, on the other hand the person like Jatin R. Mehta has cheated the banks and all citizen of this country whose hard earned money is ₹ 4687 Crore swindled by this villain of our society. The condition of the Public Sector Banks is become very bad. It is a matter of fact and it proves that he has flanted the law and guilty of fleece and fly. Jatin R. Mehta, Mehul Chokshi and Nirav Modi have scammed and have shamed to this country. This tribunal is hopeful that the ED and other authorities must take necessary steps and stringent action against him who is enjoying the lavish life in foreign countries by cheating the huge amount of the poor people of this country. This tribunal expects that the ED must take similar actions as taken in the case of other accused persons who have run away from this country by issuance of Red-Corner-Notice and initiate the extradition proceedings forthwith (if already not taken). Thus the impugned order dated 16th November, 2016 be set-aside, consequently the provisional attachment does not to survive. The same is also quashed.
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Service Tax
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2018 (8) TMI 425
Classification of services - preparation of Electoral Photo Identity Card (EPIC) - whether the service would come under the head Photography seervices or otherwise? - Clarification by a letter No. 334/4/2006-TRU dated February 28, 2006. Whether preparation of EPIC by the petitioner attracts Service Tax? Held that:- Clarification 334/4/2006-TRU dated February 28, 2006 had noted that, often services provided consist of more than one service. In such situation, it had opined that, the guiding principle would be to identify the essential features of the transaction. The department had issued another clarification by Circular No. 334/1/2008-TRU dated February 29, 2008. It had noted Section 65A of the Finance Act, 2008. It had opined that, a supply which comprises with a single supply for an economic point of view should not be artificially split. The method of charging or invoicing does not in itself determine whether the service provided is a single service or multiple services. Single price normally suggests a single supply though not decisive. The real nature and substance of the transaction and not merely the form of the transaction should be the guiding factor for deciding the classification. The department had issued a third Circular bearing No. 104/7/2008-S.T. dated August 6, 2008. It had opined that, both the form and substance of the transactions are to be taken into account. The guiding principle is to identify the essential features of the transaction. The subject contracts cannot be said to limit itself to photography. Preparation of a photograph or photography is not the sole purpose of the contracts. The end product is EPIC. Such end product involves a photograph of a voter. The photograph of the voter incorporated in EPIC is not a standalone product - the contract for EPIC cannot be divided into separate compartments to say that, photography or photograph is a separate compartment. It is indivisible. The contracts in question are for preparation of EPIC. The petitioner cannot be said to have rendered any photographic services to an individual or to the person who had entered into the contract with the petitioner. In CMC Limited [2007 (7) TMI 17 - CESTAT, BANGALORE], CESTAT, South Zonal Bench, Bangalore has held that, issue of EPIC cannot be considered to be falling within the definition of “photography” and “photography studio or agency” in terms of Sections 65(78) and 65(79) of the Finance Act, 1994. The petitioner not having rendered any service of photography is not liable to pay Service Tax - petition allowed - decided in favor of petitioner.
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2018 (8) TMI 424
Levy of Service tax - royalty paid to M/s Unisys Corporation, USA - whether taxable under Intellectual Property Right Service or not? - Held that:- Identical issue decided in the case of TATA CONSULTANCY SERVICES LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI [2015 (11) TMI 236 - CESTAT MUMBAI], where it was held that the technical know-how received by the appellant and the royalty payment made by the appellant to Unisys is nowhere established to result from the use of any Intellectual Property Right and is not taxable under the head - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 423
Penalty u/s 78 of FA - payment of substantial amount prior to issuance of SCN, on being pointed out - appellant's case is that in the Manpower Supply Recruitment Services, there is much problem of receiving the payments in due time and therefore, the appellants could not discharge the service tax within time - Held that:- apart from a mere sentence that there is prima facie case of suppression of facts and intention to evade payment of service tax, there is no evidence discussed in the impugned order as to what is the suppression on the part of the appellant. Similar set of facts decided in the case of SHRIDHAR CASTINGS PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, NAGPUR [2015 (7) TMI 33 - CESTAT MUMBAI], where it was held that penalty in such cases should be set aside by referring Section 73(3) of the Finance Act, 1994, which provides for closure of all proceedings in a case where service tax liability along with interest is discharged by the appellant on his own or on being pointed out by the department - penalty is not warranted. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 422
Penalty u/s 78 - the penalty of ₹ 11,12,040/- approximately stand imposed upon both the said respondents - Held that:- It can be seen that the penalty of ₹ 11,12,040/- approximately stand imposed upon both the said respondents. In the absence of use of the "Each", it has to be held that the said penalty is not individually imposed upon both the respondents but as a collective penal action against them, thus leading us to conclude that 50% is on Shri Subhash Rajani and 50% on Smt. Nimmi Rajani. If that be so, the Revenue's appeal would be covered by the Litigation Policy. Also appreciating the fact that such imposition of penalties by the Adjudicating Authority jointly on both the respondents is not justified and has been correctly set aside by Commissioner (Appeals). The same should have been specifically imposed by the Adjudicating Authority on each individual separately. Appeal dismissed - decided against Revenue.
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2018 (8) TMI 421
Reverse Charge Mechanism - ‘Consulting Engineer’s Service’ in the form of technical assistance from the foreign company/Establishment who has no office or establishment in India - Rule 2 (1)(iv) of the Service Tax Rule, 1994 - Held that:- Demand of Service Tax before enactment of Section 66 (A) of Finance Act, 1994 is legally not sustainable and therefore, the demand of Service Tax before 18/04/2006 is not recoverable - reliance placed in the judgments of the Hon’ble Bombay High Court in case of Indian National Shipowners Association [2008 (12) TMI 41 - BOMBAY HIGH COURT], where it was held that Before insertion of section 66A with effect from 18-4-2006, there was no authority to levy service tax on Import of service. Explanation below section 65(105) did not give any authority to levy service tax on import of services - demand of Service Tax prior to 18/04/2006 is not sustainable. Classification of the services - Consulting Engineer’s Service or erection, commissioning or installation services? - Held that:- On the plain reading of all the contracts the appellant has entered with the Foreign Companies/Establishments it can be seen that these contracts undertake to provide technical assistance in the form of handing over the technical specifications, suppliers installations diagrams and relevant data for processing of various process for installation of weapons and equipments in the warships which are being manufactured by the Appellant - the technical assistance contracts which the appellant has signed with foreign establishments, it is found that the terms of contract perfectly fits into the definition of consulting engineer service and therefore the Revenue has rightly classified the service under Consulting Engineering service. The demand of Service Tax prior to 18/04/2006 is not sustainable - the right classification for the type of services availed by the appellant is under the Consulting Engineer’s Service - matter remanded back to original adjudicating authority for limited purpose of re-calculating the Service Tax for the period after 16/04/2008 - appeal allowed by way of remand.
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2018 (8) TMI 420
Penalty - Advertising Agency Services for the period 2007-08 to 2010- 11 - Held that:- The demand was not required to be confirmed under the ‘Advertising Agency Services’, inasmuch as no such service was being rendered by the appellant. If at all, the service tax liability would fall under the category of “Sale of Advertising Space”, for which there is no allegation or proposal in the show cause notice - also, there was lot of confusion in the field leading to many such cases being made out against other appellant similarly situate, thus making the dispute reach the Tribunal - there is no reason to impose penalty, and the penalty is set aside. Penalty - Renting of Immovable Property Service - the appellant has paid the entire service tax on the said account along with interest and is only challenging the imposition of penalty - Held that:- Admittedly, during the relevant period there was lot of confusion in the field, as regards the taxability of the rental income and renting of immovable property and the issue was subject to matter of litigation at various levels, with interim stays operating - there could be a bonafide belief on the part of the assessee not to pay the service tax on the said Count - penalty set aside. CENVAT Credit - inputs commonly used for providing taxable services as also exempted services - Rule 6 (3) of Cenvat Credit Rules - Held that:- During the period 2008-09 to 2010-11, the appellant availed full Cenvat Credit in respect of inputs Service Tax paid on input services covered within the scope of Rule 6(5) of the Credit Rules as tax paid services were not used exclusively for exempted services. From 2008-09 to 2010-11, the appellant availed full Cenvat credit in respect of input services covered within the scope of Rule 6(5) of the Cenvat Credit Rules. A total credit of ₹ 22,59,164/- was availed by the appellant in respect of services covered under Rule 6 (5) - The Cenvat credit in respect of services covered under Rule 6 (5) shall be allowable without restriction of 20%. Time limitation - the show cause notice stands issued on 11.12.2012 for the period from 2007-08 to 2010-11 and some of the periods is even behind 5 year - Held that:- The appellant has disclosed the entire information in their Annual Accounts and at the time of filing of ST-3 returns. The Commissioner reasoning that as the appellant have not sought classification from the department, extended period would be invokable, cannot be appreciated - demand barred by limitation. Appeal disposed off.
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2018 (8) TMI 419
Refund of excess service tax paid - Denial on the ground of time bar - case of appellant is that as the service tax was illegally collected by revenue and was not required to be paid, limitation prescribed under Section 11B of the Act would not be applicable - Held that:- Every refund claim arises on the ground that the same is not payable. If the amounts claimed to be refunded were otherwise required to be paid, the refund claim would not arise - If all the refund claims which are not payable to the revenue, are allowed without examining the limitation aspect, the provisions of Section 11B, which provide a period of one year for claiming such refund, would become redundant. Reference can be made to the Hon’ble Supreme Court’s decision in the case of M/s Porcelain Electrical Manufacturing Co. Vs Collector of Central Excise, New Delhi [1994 (11) TMI 145 - SUPREME COURT OF INDIA], wherein it was observed that the revenue authorities are bound by the provisions of the Act and cannot exercise the extraordinary jurisdiction, as available to the High Courts in terms of the Article 226 of the Constitution - Tribunal being a creature of the Act cannot go beyond the provisions of the Act and cannot extend the period of limitation for claiming the refund - Inasmuch as the refund claim admittedly stands filed after a period of one year from the relevant date, the lower authorities have rightly rejected the same as barred by limitation. Appeal dismissed - decided against appellant.
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2018 (8) TMI 418
Manpower recruitment and supply service - demand on the ground that the appellant had received taxable value from M/s MESCO Steels Ltd. for the period from 2006-07 to 2010-11 and had not discharged the tax liability - Held that:- The appellant had submitted a letter to the office of the Commissioner (Appeals) informing them of the deposit of ₹ 7,29,700/- through various challans. The copies of such challans have also been produced before this Tribunal - Matter to the Commissioner (Appeals) to verify and appropriate the deposited amount. Penalty u/s 78 - Held that:- There is no material on record to establish fraud, collusion, willful misstatement or suppression of facts on the part of the appellant - penalty under Section 78 of the Finance Act is unwarranted. Appeal allowed in part and part matter on remand.
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Central Excise
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2018 (8) TMI 417
Time limitation for availing CENVAT Credit - Held that:- During the relevant period as per the provision of Rule 4(1), it was merely provided that the Cenvat Credit in respect of inputs may be taken immediately on receipt of the inputs in the factory. However, there is no time limit prescribed for taking the credit. If we draw the interpretation of the term ‘may be taken immediately’, it is a facility provided to the assessee that he needs not to wait for use of the material and removal of the finished goods on payment of duty for taking the credit, therefore, the intention of this provision is that after receipt of the inputs even though it is lying in the factory, not used in the manufacture of final product and final product was not cleared on payment of duty, the credit can be taken immediately on receipt of the inputs. There is no bar provided in the Cenvat Credit Rules that within how much period credit should be taken. The Ld. Counsel invited out attention to the goods receipt note which bears the detail of transport such as Lorry Receipt number etc. Since these records were not before the Adjudicating Authority, he did not verify regarding receipt of the inputs. Ld. Commissioner gravely erred for the reason that if at all he wanted to see the LRs, he could have called for from the appellant which he failed to do so. Accordingly, Ld. Commissioner has grossly violated the principles of natural justice. Moreover, outcome of the verification report was not brought to the notice of the appellant. If this exercise would have been done by the Ld. Commissioner, the case could have been finally decided. Since the additional records such as LRs were produced before this tribunal and not before the Adjudicating authority, to this extent, the matter needs to be remanded. Appeal allowed by way of remand.
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2018 (8) TMI 416
Clandestine removal - MS Ingots - consumption of electricity in excess - Held that:- Since the drop of demand qua excess electricity consumption has not been objected on the part of the Department, there is no appeal filed otherwise. And that the same has been dropped while relying upon the decision of Hon’ble Supreme Court in the case of R.A. Casting Pvt. Ltd. [2008 (6) TMI 197 - CESTAT NEW DELHI], the order under challenge is upheld to the said extent. With respect to the remaining part of the levy, the case of Revenue is based upon the statement of the representative of M/s. Monu Steels i.e. the third party evidence. The law i.e. as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established - the Commissioner (Appeals) has committed an error while relying upon third party evidence to confirm the demand qua serious charge of clandestine removal - demand set aside - Since the demand has been set aside, the question of imposition of any penalty on any of the Directors of the companies is not at all arise. Appeal disposed off.
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2018 (8) TMI 415
Rectification of Mistake - the applicant prays that the appeal be allowed with consequential relief - Held that:- As the appeal has been allowed by this Tribunal, therefore, the order is rectified as “To sum up, the entire show cause notice is not sustainable. Therefore, the impugned Order-in-Original dated 25 July, 2006 is set aside and the appeal is allowed with consequential relief, if any.” - ROM application allowed.
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2018 (8) TMI 414
SSI Exemption - N/N. 8/2003- CE dated 01.03.2003 - CENVAT Credit - it was alleged that appellant have availed credit of duty and Service Tax paid on Input and Input Services and also availed the exemption benefit during the same period simultaneously - Held that:- On close reading of Paragraph 2(iii) of the Notification it is clear that the manufacturers shall not avail the credit of duty on inputs under Rule 3 or Rule 11 of the Cenvat Credit Rules paid on inputs used in the manufacture of specified goods cleared for home consumption. Thus, the Submission of the Learned Counsel that the restriction is on inputs used in the manufacture of specified goods and no input service and capital goods is justified - the denial of the CENVAT Credit on inputs is justified. Penalty - Held that:- It is a case of interpretation of the Notification and therefore, imposition of penalty is not warranted. The demand of CENVAT Credit on input along with interest is upheld - demand of CENVAT Credit on Input Service and penalty are set aside - appeal allowed in part.
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2018 (8) TMI 413
Provisional Assessment - want of data on cost of transportation, which is requirement of Rule 5 of the said Rules - Held that:- After ordering Provisional Assessment for want of data on cost of transportation subsequently Revenue cannot change its stand and order finalization of assessment by invoking the said Rule 7 - the impugned Order-in-Appeal is not sustainable. The issue is required to go back to the Original Authority for re-calculation of duty - appeal allowed by way of remand.
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2018 (8) TMI 412
CENVAT Credit - GTA services for outward transportation of their final product from their factory to the depot of their sister concerns or the factory of their sister concern - Held that:- Hon’ble Supreme Court in the case of CCE & ST vs. Ultra Tech Cement Ltd. [2018 (2) TMI 117 - SUPREME COURT OF INDIA], reversing the earlier precedent orders and laying down that in the case of sales made to the buyers, at their destination, the CENVAT Credit of Service Tax paid on GTA Services would not be available to the assessee. Inasmuch as the above decision of the Hon’ble Supreme Court were not before the authorities below, the matters may be remanded for re-consideration, matter remanded for re-consideration - appeal allowed by way of remand.
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2018 (8) TMI 411
CENVAT Credit - various input services - Cooking and providing Food - Cleaning and washing for worker’s Canteen - other services used to provide food in the Canteen - Professional Fee paid for selection of Manager - Shifting burnt blade with ash to area outside factory premises - Renovation of Union room - Held that:- Appellant are required to maintain the Canteen under Section 46 of the Factories Act, 1948 - reliance placed in the case of Easun MR Tap Changers Pvt. Ltd. Vs. C.C.E & ST [2016 (9) TMI 363 - CESTAT CHENNAI], where it was held that anteen is an integral part of the factory and clean maintenance of the factory including its precincts are a statutory requirement under Section 11 of the Factories Act, 1948. Therefore, this service has to be treated as a service used by the manufacturer in or in relation to the manufacture of final product as without complying with the said provisions of the Factories Act, 1948, manufacturing operations are not possible - credit allowed. Professional Fee paid for selection of Manager - Held that:- Issue decided in the case of JAYPEE SIDHI CEMENT PLANT VERSUS C.C.E & S.T., JABALPUR [2016 (7) TMI 348 - CESTAT NEW DELHI], where it was held that the posting of Doctors and Nursing staff is at the behest of the appellant in order to comply with statutory obligation under the Factories Act, 1948 and Mines Act 1952, the same cannot be considered as the procurement from personal consumption of the workers - credit allowed. Shifting burnt blade with ash to area outside factory premises - Held that:- Issue is covered by the decisions of the Tribunal in the cases of Godrej & Boyce Manufacturing Company Limited Vs. CCE Chennai [2016 (9) TMI 538 - CESTAT CHENNAI], where it was held that credit on same is to be allowed - credit allowed. Renovation of Union room - Held that:- The renovation of Union room is not covered within the inclusive clause of definition. It cannot be said that the said service was used in or in relation to the manufacture of the final product - denial of credit on renovation work undertaken in recreation room for separate union room along with interest is upheld - demand upheld. Appeal allowed in part.
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2018 (8) TMI 410
CENVAT Credit - iron & steel items - during the period 01/04/2006 to 31/03/2010 - Held that:- In an identical issue, in the case of Bajaj Hindustan, [2018 (2) TMI 1097 - CESTAT, ALLAHABAD], this Bench has decided the issue in favour of the assessee, where the same very items used for fabrication of capital goods as also as structurals were held to be cenvatable. Time Limitation - Held that:- The demand to be barred by limitation, inasmuch as in the absence of any positive evidence to reflect upon mala fide of the assessee longer period is not available to the Revenue to raise the demand - demand barred by limitation. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 409
SSI Exemption - clubbing of clearances - whether two units Prakash Ispat Udyog Pvt. Ltd. which is a private limited company and M/s Sarawati Steels a partnership firm are dummy of each other and their value of clearances are required to be clubbed for the purposes of small scale exemption N/N. 08/03-CE dated 01/03/2003? Held that:- There is no allegation much less any evidence on record to show that the clearance of one unit was being done under the guise of the name of the other unit. Admittedly family members can float separate units for the manufacture of their various products and as long as they are independent and self-sufficient units, their clearances cannot be clubbed, inasmuch as small scale exemption Notification is independently available to each and every unit. Only in case where either of the two units are not fully equipped to manufacture the final product independently or there is financially intertwining between the two units, it has to be held that the two units are actually one and the same and the clearances are being bifurcated in the name of the two units - Appeal dismissed - decided against Revenue.
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2018 (8) TMI 408
CENVAT Credit denied in respect of cables and capacitator - denial on the ground that the same are installed outside the factory premises and as such cannot be treated as capital goods - Held that:- In the case of Parry Engineering & Electronics P. Ltd. vs. CCE & ST, Ahmedabad [2016 (1) TMI 546 - CESTAT AHMEDABAD], Larger Bench of the Tribunal has held that the Windmills installed outside the factory premises, at far of places, are cenvatable capital goods. The cables laid down by the assessee as also the other capital goods laid down en-route the grid and the factory premises for the purpose of transmission of electricity have to be held as cenvatable - Inasmuch as the assessee’s appeal stands allowed nothing survives in the Revenue’s appeal which is only in the context of interest and penalty - appeal dismissed - decided against Revenue.
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2018 (8) TMI 407
Refund of accumulated CENVAT Credit - rectified spirit - case of Revenue is that rectified spirit was non-dutiable product and since appellant was not manufacturing any dutiable final product, the said Cenvat credit was not admissible to them - Held that:- The appellants were manufacturing excisable commodity and therefore they were entitled to avail Cenvat credit which was reversed by the Central Excise officers - refund of credit allowed - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 406
CENVAT Credit - inputs - iron and steel items like sheet, section, angles channels guarder plates etc. - denial of credit on the ground that the same have been used as supporting structurals - Held that:- This Bench in their own case DHAMPUR SUGAR MILLS LTD., AMIT SHARMA, DGM (COMML.) VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT-II (NOW HAPUR) [2018 (4) TMI 1080 - CESTAT ALLAHABAD] wherein the Cenvat Credit in respect of identical items was allowed - credit cannot be denied - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 405
Clandestine removal - shortage of goods - Held that:- It is a settled law that mere shortages by themselves do not lead to the inevitable conclusion of clearance of goods in a clandestine manner, unless such allegations are corroborated with admissible and positive evidences - the adjudicating authority is required to examine the said aspect again - matter on remand. CENVAT Credit - inputs - various steel items like Shape, Section, Angle, Rod, Plates, HR Coil, Channel, Joist, etc. used for fabrication of structure, shades and other civil work - Held that:- As such for examination of the assessee’s claim of use of said item in the fabrication of capital goods as also for examining the applicability of the said decision of Hon’ble Gujarat High Court in the case of M/s Mundra Ports & Special Economic Zone Ltd. [2015 (5) TMI 663 - GUJARAT HIGH COURT], it is fit to remand the matter to Original Adjudicating Authority - matter on remand. Appeal allowed by way of remand.
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2018 (8) TMI 404
CENVAT Credit - inputs used in manufacture of exempted as well as dutiable biscuits - the proportionate credit on exempted biscuits reversed - Held that:- There is no dispute about the reversal of Cenvat credit relatable to inputs which stand utilized in the manufacture of exempted final products - It stands held in number of decisions of the higher courts that such reversal of credit would lead to a situation as if no credit was ever availed. Inasmuch as the appellant have admittedly reversed the credit, there are no reasons to uphold the impugned orders directing them to pay 10% of the value of the exempted product - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 403
Manufacture - whether assembling of different segment and components of CTC machine amounts to manufacture or otherwise? - Held that:- CTC machine when installed at the buyers site by rooting it to ground, would be immovable property and thus become non-excisable - reliance was placed in the case of M/s Triveni Engineering & Industries Ltd. Vs. CCEx. [2000 (8) TMI 86 - SUPREME COURT OF INDIA], the installation of turbo alternator on the platform specially constructed on the land cannot be created as a common base, therefore, such alternator would be immovable property as such, it cannot be excisable goods falling within the meaning of heading 8502 of the Central Excise Tariff Act, 1985. Demand set aside - appeal dismissed - decided against Revenue.
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2018 (8) TMI 402
Time limitation - Business Auxiliary Service - Zinc Coating or galvanization - Job-work - since the principal-manufacturer not discharging any duty, appellant, being job-worker is called upon to pay the duty - Held that:- Undisputedly the appellant was registered under the Service Tax and was discharging service tax liability accordingly. In such a scenario, it cannot be said that the Revenue was not aware of the appellants' activities - When the appellant approached the Service Tax Department for registration, it disclosed every activity undertaken by them and if the Revenue was of the view that the process undertaken by the appellant is not covered under the category of 'Business Auxiliary Service' and amounts to manufacture, they were under an obligation to advice accordingly. Further, the central excise duty stands confirmed against them without taking into account the service tax deposited by them which accordingly to the Revenue itself was not required to be paid - there are no reasons to invoke the extended period of limitation, in the absence of any positive evidence to reflect upon the appellant's mala fide and accordingly the demand is set aside on the plea of limitation. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 401
Whether the respondent is entitled to avail the benefit of N/N. 67/95 for use of ‘fuel oil’ and ‘lean gas produced in the refinery and captively consumed as fuel oil for generation for electricity, used for manufacture of various petroleum products, namely, SKO, LPG and NAPTHA? Held that:- The issue involved in this appeal is also no longer res-integra and is settled that if the Cenvat Credit attributable to input in the exempted products are either reversed or paid back the benefit of exemption Notification No. 67/95 dated 16/3/1995 can’t be denied in view of a judgment in the case of GODAVARI SUGAR MILLS LTD. VERSUS COMMISSIONER OF C. EX., BELGAUM [2006 (11) TMI 497 - CESTAT, BANGALORE]. Appeal dismissed - decided against Revenue.
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2018 (8) TMI 400
Finalization of provisional duty - Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998 - N/N. 42/98-CE (NT), dated 10.12.1998 - Held that:- It is a fact that the ACD Rules were held ultra vires by the Madras High Court in the case of BEAUTY DYERS VERSUS UNION OF INDIA [2001 (12) TMI 95 - HIGH COURT OF JUDICATURE AT MADRAS], and, therefore, findings recorded by the Commissioner against the assessee become irrelevant. It is not in dispute that the ACD Rules have been struck down by High Court as ultra vires. The rules, therefore, should be held to have been suffering from the vice of illegality and unconstitutionality right from the date on which they were made. If that be so, the appellant cannot be held to have been lawfully working under the Compounded Levy Scheme. It will follow that determination of ACD by the Commissioner and the procedural laid down for the matters such as determination of duty, liability, collection of duty, abatement of duty, etc. were all futile exercise. It would suffice to say that order or ld. Commissioner (Appeals) inconsequential. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 399
Whether cenvat credit on capital goods is allowable or eligible – (a) only after the production from those capital goods commences or, (b) on the day the said goods are installed in the factory premises, or, (c ) on the day the goods are received in the factory premises for intended production of dutiable final products? Held that:- CENVAT credit has to be determined on capital goods on the date of receipt i.e. as and when, goods are received in the factory of production alongwith evidence of duty paying documents - It also stands clarified by Board Circular vide Circular F.No.B-4/7/2000-TRU, dated 03.04.2000 laying down that credit can be taken as and when capital goods are received in the factory but not yet installed. Penalty - Sub-Rule (1) of Rule 15 of the Cenvat Credit Rules - Held that:- The sub-rule of Rule 15 has not been indicated in the Show Cause Notice. From the four Sub-Rule in Rule 15 of the Cenvat Credit Rules, no Sub-Rule have been specifically mentioned in the Show Cause Notice - the demand of penalty is not maintainable under provisions of Rule 15 which is a general Rule. Appeal dismissed - decided against Revenue.
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2018 (8) TMI 398
CENVAT Credit - GTA Services - credit for the period prior to 01.04.2008 - benefit of Circular No. 97/8/2007-ST dated 23.08.2007 - Held that:- This issue has been settled by the decision of the Hon’ble Karnataka High Court in the case of Commr. v. ABB Ltd. [2011 (3) TMI 248 - KARNATAKA HIGH COURT], where it has been held that the benefit of Circular No. 97/8/2007-ST dated 23.08.2007 was valid till 01.04.2008 - the credit availed by the appellant prior to 01.04.2008, is eligible - appeal allowed in part.
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2018 (8) TMI 397
Waiver of penalty u/s 11AC of the Central Excise Act, 1944 - Held that:- Since extended period of limitation has not been invoked the question of invoking penalty does not arise as extended period and penalty is co-terminus with each other - the decision of the Hon’ble Supreme Court in the case of Nizam Sugar Factory [2006 (4) TMI 127 - SUPREME COURT OF INDIA], is squarely applicable to the facts of present case - penalty rightly waived - appeal dismissed - decided against Revenue.
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2018 (8) TMI 396
Pre-deposit - utilization of CENVAT Credit account for payment of pre-deposit - whether mandatory deposit of seven and half percent as per Section 35F(i) of the Central Excise Act, 1944, is required to be paid in case or the same can be paid from Cenvat Credit Account maintained by the appellant? Held that:- In Section 35F, it is not specifically mentioned that amount has to be deposited only by way of cash payment - As per procedure followed by CESTAT Registry at Kolkata, payments made from Cenvat Credit Account are considered as due payments for considering as deposit under Section 35F(ii) and (iii) of Central Excise Act, 1944. The view taken by the First Appellate Authority, that deposit under Section 35F(i) cannot be made from Cenvat Credit Account, is not the correct appreciation of law so long as the CENVAT Credit is permissible for utilization as per Rule 3(4) of the Cenvat Credit Rules, 2004 - appeal filed by the appellant is allowed by way of remand to the Ld. Commissioner (Appeals) to decide the appeal on merits without insisting on any further pre-deposit.
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2018 (8) TMI 395
Power of Remand - the Commissioner (Appeals) remanded the matter to the adjudicating authority for fresh adjudication - Held that:- The Commissioner (Appeals) did not have the power to remand the matter w.e.f. 11.05.2001 - period from 2004-05 to 2005-06 is involved in present case - The appeal filed by the appellant Revenue is allowed by way of remand to the Commissioner (Appeals).
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2018 (8) TMI 394
Penalty u/r 25 of CER, 2002 - Contravention of Rule 8(3A) of Rules, 2002 - Held that:- Rule 25 of the Rules 2002 provides confiscation and imposition of penalty. Any person contravenes any of the provisions of Rule or Notification issued under this Rule with intent to evade payment of duty is liable to penalty - there is no justification for imposition of penalty under the said provision of Rule 25. In any event, there is contravention of Rules. Therefore, a general penalty of ₹ 5,000/- may be imposed under Rule 27 of the Rules, 2002. The penalty imposed under Rule 25 is set aside and a penalty of ₹ 5,000.00 is imposed under Rule 27 of the Rules, 2002 - appeal disposed off.
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