TMI Tax Updates - e-Newsletter
September 29, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
Income Tax
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The person who has received enhanced compensation and interest thereon even by an interim order passed by the Court would be assessed to tax for that enhanced compensation. - SC
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Addition on the basis of entry found in the "bahi" of third party - any entry found on loose papers in the premises of the third party without any corroborative evidence, cannot be made basis for addition in the case of the assessee
Customs
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Classification - Titanium Pipes and Fittings of various sizes and dimensions - They are only generic items - At the most, it can be brought within the ambit of accessory, but certainly not as a part or a component.
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Concessional rate of duty - import of bulk drugs - It is beyond doubt that bulk drugs are also drugs - Benefit of N/N. 21/2002-Cus allowed.
Service Tax
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Clarification regarding reflection of transitional credit arising out of payment of Service Tax on RCM basis after 30th June 2017 and by 5th/6th July 2017. - Circular
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Jurisdiction - Appellant may well have taken registration for their Miryalaguda set up. However, it is not the case that they had taken centralized registration at Miryalaguda for all their activities in various places - jurisdiction of other Commissionerate upheld
Central Excise
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Refund - quantity discount given to their wholesale dealers as an incentive, by way of credit notes - the nature of quantity discount, albeit given post clearances, was very much known to the buyers - refund to be allowed but credited to into Consumer Welfare Fund on the ground of Unjust enrichment.
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Classification of goods - RBD Palm oil stearin when used as an industrial monocarboxolic fatty acid/acid oil, sold for industrial use, would then necessitate their classification under 3823 1112
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Classification - Fairplus Herbal Face cream - Fiar plus face lotion - they have been used for therapeutic and prophylactic purposes - the goods in question merit classification under Chapter 30
Articles
Notifications
GST - States-
23/2017-State Tax (Rate) - dated
22-8-2017
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Manipur SGST
Amendments in the Notification No. 13/2017-State Tax (Rate), dated the 28th June, 2017
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22/2017-State Tax (Rate) - dated
22-8-2017
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Manipur SGST
Amendments in the Notification No. 11/2017- State Tax (Rate), dated the 28th June, 2017.
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21/2011-State Tax (Rate) - dated
22-8-2017
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Manipur SGST
Amendments in the Notification No. 12/2017-State Tax (Rate), dated the 28th June, 2017.
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20/2017-State Tax (Rate) - dated
22-8-2017
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Manipur SGST
Amendments in the Notification No. 17/2017-State Tax (Rate), dated the 28th June, 2017.
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19/2011-State Tax (Rate) - dated
18-8-2017
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Manipur SGST
Amendment in the Notification No. 01/2017-State Tax (Rate), dated the 28th June, 2017 - Tractors Parts.
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (9) TMI 1532
Tax on the enhanced amount of compensation - Income assessed for income tax - receipt of enhanced compensation and interest thereon under an interim order passed by the High Court in pending appeals relating to land acquisition matter - Held that:- See case of Commissioner of Income Tax, Faridabad v. Ghanshyam (HUF) (2009 (7) TMI 12 - SUPREME COURT) wherein the provisions of Section 45(5) of the Income Tax Act, 1961 were considered and this Court in paragraphs 53 to 56 has held that in view of the Amendment in the Income Tax Act, the person who has received enhanced compensation and interest thereon even by an interim order passed by the Court would be assessed to tax for that enhanced compensation. We allow these Civil Appeals, set aside the orders of the High Court as also the Income Tax Appellate Tribunal and hold that the respondents are liable to pay tax on the enhanced amount of compensation and interest received by them during the year in question.
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2017 (9) TMI 1531
Violation of sections 276C(2) and 277 - making false statements - error committed by the clerk of the chartered accountant - contention of the petitioner is that the tax amount is less than ₹ 25,000 and therefore an attempt to evade tax is covered by the circular - Held that:- The present appeals are from a judgment of the High Court of Karnataka [2016 (10) TMI 1113 - KARNATAKA HIGH COURT] in which the High Court has refused to quash the proceedings against the appellants. Whether the amount involved is less than ₹ 25,000 or less is irrelevant. Section 277 deals with making a false declaration. As the amount involved is small, and has already been paid with interest long ago, the Circular dated February 7, 1992 squarely applies and, therefore, no proceedings should have been filed as the amount is below ₹ 25,000. In view of this, we set aside the judgment of the High Court and quash the proceedings against the appellants.
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2017 (9) TMI 1530
Reopening of assessment - unexplained property - notice u/s 148 makes a reference of power of attorney holder - Held that:- The words “power of attorney holder” have been used taking it from the sale deed executed by the petitioner where the consideration shown is of ₹ 3,76,963/- (mentioned as ₹ 3,67,963/- in the impugned notice) as against the value of the property to be ₹ 3,90,00,000/- on DLC rate, making difference of ₹ 3,86,23,037/-. The property aforesaid was shown to be asset of the petitioner in the balance sheet and he had executed the sale deed. If the petitioner is not the owner of the property then while executing the gift deed, why he had shown himself to be the owner. It is not such a case where reasons to believe recorded by the authority is without jurisdiction so as to invoke the extra ordinary jurisdiction of this Court. Writ petition is dismissed without causing interference in the impugned order as well as in the notice under Section 148 of the Act of 1961 given by the respondents. The petitioner would, however, be at liberty to take alternative remedy
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2017 (9) TMI 1529
Applications for grant of waiver of the interest, levied under Section 234 (B) & (C) - certain subsequent developments, which have taken place during the pendency of the Writ Petitions - Held that:- If there is any reduction in the tax liability, obviously, it will also impact the quantum of interest, which is to be levied. Therefore, it would be appropriate to remand the matter back to the respondent for fresh consideration and take note of the subsequent developments in the matter, and take a fresh decision. In pure and simple terms, the petitioner's case is that, they were not in a position to anticipate whether they will be assessable under Section 115-JA /115 JB. An endeavour was required in this regard as a finding of fact had to be recorded while either accepting or rejecting the application for waiver. However, in the instant case, the Authority appears to have been solely guided by the decision, which was relied upon by the petitioner, and had taken a stand that the decision rendered by the Karnataka High Court, being a decision not by the territorial High Court, cannot be made applicable to the facts of the petitioner's case. Writ Petitions are allowed and the impugned orders are set aside and the matters are remanded to the respondent for fresh consideration.
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2017 (9) TMI 1528
Disallowance of amortization of premium paid on securities - Held that:- This issue stands covered in the favour of the Assessee by the decision in the Assessee’s own case for the AY 1996-97 [2012 (9) TMI 446 - DELHI HIGH COURT] Disallowance of depreciation on securities including loss on shifting of securities from AFS to HTM category, also stands covered against the Revenue as relied upon above case Contribution made by the Assessee to the Punjab & Sind Bank Employees Pensions Fund Trust - Held that:- Although contributions to the pension funds may not be allowable under Section 36 (1) (iv) of the Act, the same is allowable under Section 37 of the Act. See The Commissioner of Income Tax – 6, Mumbai v. M/s. Glaxo Smithkline Pharmaceuticals [2013 (3) TMI 759 - BOMBAY HIGH COURT] Addition in the Assessee's book profit computed u/s 115JB - Held that:- The order of the High Court for AY 1996-97 had remanded the issue to the AO for fresh consideration. It is pointed out that, on remand, the AO passed the order accepting the plea of the Assessee. Consequently, on this issue also, this Court also declines to frame a question.
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2017 (9) TMI 1527
Disallowance u/s 14A - expenses of VRS scheme - Held that:- As far as disallowance under section 14A of the Act is concerned, the question does not subsist as in the assessee's own case for the previous assessment year, the said aspect has been considered in favour of the assessee and the said order has become final. As far as the expenses of VRS scheme is concerned, it has been held on fact by the Tribunal that the business of the assessee has not closed down and the same is continuing. This court in the case of CIT v. Foseco India Ltd. (2013 (6) TMI 227 - BOMBAY HIGH COURT) has observed that the expenditure incurred relating to VRS scheme is available as revenue expenses. No substantial question of law.
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2017 (9) TMI 1526
Penalty u/s 271(1)(c) - interest expenses disallowance - Held that:- A.O did not issue any summons u/s 131 to these parties against whom interest expenses was claimed nor any notices u/s 133(6) were issued to these parties to seek confirmations from these parties to whom interest were claimed to have been incurred. Thus, the AO did not made any enquiry rather disallowance has been made despite assessee bringing on record details of said interest expenses incurred by the assessee. The assessee has discharged its onus as it lay under penalty provision u/s 271(1)(c) as the assessee has come out with bonafide explanation and it was for the AO to have brought on record cogent and positive material to disprove the claim of the assessee. Thus, it is a case where the assessee made a claim of expenditure which did not found favour with the AO and merely because it was not accepted by the AO does not warrant levy of penalty automatically u/s 271(1)(c) . No such positive incriminating material is brought on record to disprove the claim of the assessee by authorities below. The case of the assessee gets support from the decision of Hon’ble Supreme Court in the case of CIT v. Reliance Petroproducts Private Limited (2010 (3) TMI 80 - SUPREME COURT) as in the instant case of the assessee , the assessee made a claim of expenses which did not found favour with Revenue and merely because claim of expenses is not accepted by Revenue, the penalty u/s 271(1)(c) is not automatic. We hereby order deletion of penalty on this ground also , as levied by the AO and as confirmed by learned CIT(A). - Decided in favour of assessee.
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2017 (9) TMI 1525
Addition made on account of excess stock - Held that:- It is noticed that the assessee has submitted updated copy of day-wise stock register of gold ornaments. During the course of assessment proceedings, the Assessing Officer could not found any discrepancy in the purchases which were not entered in the books of accounts at the time of survey. The only discrepancy found was only 110.6 grams in the quantum of gold ornaments. There was the difference in the value of the stock of the gold ornaments. On that basis, the difference worked out at ₹ 8,96,921/-. CIT(A) has sustained addition to that extent. In the case of silver ornaments the difference was of ₹ 866 grams and CIT(A) has sustained addition of ₹ 2,42,648/-. With regard to the precious stones weighing 60 carats valued at ₹ 80,000, no proper explanation was submitted before the authorities below and also before us also, therefore after considering all the aspects, the order of CIT(A) on this issue is sustained. In the result appeal of revenue as well as by the assessee are dismissed. Addition under the head of ‘unrecorded debtors' - Held that:- We noticed that CIT(A) has estimated the gross profit @15% on the sales ₹ 12,51,327/- and estimated the profit. CIT(A) also reduced gross profit rate of 9.19% which was declared by the assessee. Before us, both the sides are not able to controvert the findings recorded by the CIT(A). Therefore, we are sustaining the order of CIT(A) on this issue. Thus ground No. 2 of the assesses and ground of the revenue stand dismissed. Addition on account of investments in based on impounded - Held that:- We found that assessee was not able to explain the investments of ₹ 4,00,000/- in tehu while other notings figures and in the paper were considered while working out account. The unaccounted sundry debtors as per the annexure A-6.After considering all relevant facts, we find that CIT(A) has rightly appreciated the facts on the issue. Therefore, we sustain the order of CIT(A). Addition on account of alleged excess cash - Held that:- Since both sides are not able to controvert the finding recorded by CIT(A) with respect to cash balance available with assessee’s on the day of survey, therefore, we sustain the findings recorded by CIT(A). In the result ground No. 7 of the revenue ground No. 4 of this appeal stand dismissed. Unexplained investment in the lottery - Held that:- As this investments has made by Shri Deepak Garg and has been disclosed in his personal investment. Therefore, CIT(A) has rightly deleted this addition. Therefore, we find no merit in this ground of revenue’s appeal.
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2017 (9) TMI 1524
Bogus purchases - information received from Sales Tax Department regarding suspicious suppliers - Held that:- AO added 100% of such supplies in assessee’s income. By the impugned order CIT(A) restricted the addition by estimating profit to the extent of 12% on such purchases after observing that corresponding sales effected by assessee has not been doubted by the AO. From the record found that AO did not find any inflation in purchase price or inflation in consumption or suppression of production. The goods so purchased from these suppliers were directly delivered by the representative of the suppliers at the factory itself. No octroi was payable as goods were delivered within the limits of Mumbai Municipality. I also found that assessee has shown very good GP rate on the sales affected by it during the year at 25.18% in the A.Y.2010-11 and 23.26% in the A.Y.2009-10. Thus modify both the orders of the lower authorities and direct AO to restrict the addition to the extent of 10% of such bogus purchases. - Decided partly in favour of assessee.
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2017 (9) TMI 1523
Rectification of mistake - assessing officer completed the assessment by estimating the income @8% on gross receipts before interest and remuneration to partners - AO has not assessed the income from other sources separately - Held that:- The assessing officer has already included the income from other sources in the estimation made by him. It was never brought to tax separately. The assessing officer sought to rectify the consequential order giving effect to the ITAT’s order to bring the income from other sources separately which was not the direction of the ITAT. Without a specific directions in the order, the assessing officer cannot make such rectification. Therefore, there is no mistake which required to be rectified in the consequential order passed by the assessing officer. Further, as discussed above, the assessing officer has included the income from other sources in the estimation made in the assessment, which was confirmed by the appellate authorities, hence taxing the income from other sources separately is a debatable issue which cannot be adjudicated upon u/s 154 of I.T.Act. Therefore we set aside the order of the lower authorities and allow the appeal of the assessee.
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2017 (9) TMI 1522
Penalty u/s 272A(2)(G) imposed - Held that:- CIT(A) has passed a non-speaking exparte order, which is not sustainable in the eyes of law. Therefore, in the interest of justice, we set aside the issues in dispute to the file of the Ld. CIT(A) to decide the issues in dispute afresh, in accordance with law, after giving adequate opportunity of being heard to the parties and pass a speaking order. However, the Assessee is also directed to fully cooperate with the ld. CIT(A) and produce all the documents before him to substantiate his claim and not to take any unnecessary adjournment. Appeal filed by the Assessee stands allowed for statistical purpose.
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2017 (9) TMI 1521
Selling of goods at lower rates - addition on difference in sale price for the goods sold to M/s. Hamilton Housewares Pvt. Ltd.(HHPL) - Held that:- AO/FAA had not brought on record any evidence to prove that higher price was received by the assessee than what was stated in the books of accounts. We would also like to mention that both the authorities have emphasised that by charging lesser price the assessee had helped the buyer to claim higher 80IB deduction. But,they have ignored the basic fact that deduction under that section is available only for manufactured goods. Thus,the one of the reasons for rejecting the claim of the assessee has no basis at all. Apart from the presumption,based on the relationship between HHPL and the assessee-company,there was no other material before both the revenue authorities to come to the conclusion that the sale price charged by the assessee from HHPL was not reasonable. It is a fact that the assesse had incurred negligible expenses under the heads transportation and advertisement, i.e.1.04% and 0.74% of the sales respectively. Whereas,HHPL had incurred substantial expenditure on account of those two heads. The assessee was suffering losses and it decided to charge lesser price in lieu of certain expenses incurred by the purchaser then the decision cannot be challenged by anybody. Revenue authorities are not entitled to step in to the shoes of the assessee and decide the issue as to how to run its business and which expenses to incur or not to incur. - Decided in favour of assessee. Disallowance made u/s. 14A - assessee had not earned exempt income - Held that:- As per the settled principles no disallowance u/s. 14A of the Act can be made if the assessee had not earned exempt income. In the case under consideration the AO had mentioned that the assessee had made investments. In other words, he also accepted the assessee had not claimed any exempt income against which expenditure was booked. Therefore, we are of the opinion that there was no justification for making any disallowance as per the provisions of section 14 A read with rule 8D. Reversing the order of the FAA,we decide the effective ground of appeal in favour of the assessee.
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2017 (9) TMI 1520
Disallowance of salary and advisory fees paid to the Directors u/s 40A(2)(b) - CIT-A deleted addition - Held that:- During the course of arguments, the ld. AR for the assessee contended that their salary was enhanced as the company has earned more profit during the year under assessment. But this contention is not sustainable for the reason that the salary of a person cannot be based upon losses and profits of the company but it needs to be commensurate to the nature of their work, qualification and services rendered. Despite the fact that there was not an iota of material before the ld. CIT (A) to objectively come to the conclusion that their salary / fees have been rightly increased to the tune of 250% to 300%, the addition has been deleted. We are of the considered view that AO has objectively thrashed the issue by enhancing the salary/fee of the directors by 25% to 30% and CIT (A) has erred in deleting the addition on the basis of conjectures and surmises. So, in these circumstances, we hereby allow the appeal filed by the Revenue.
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2017 (9) TMI 1519
Disallowance u/s 40(a)(ia) - Held that:- As brought to our notice that in the light of the decision in the case of Palam Gas Service vs. CIT (2017 (5) TMI 242 - SUPREME COURT) the judgment of the jurisdictional High Court in the case of Janpriya Engineering Syndicate (2015 (5) TMI 309 - ANDHRA PRADESH HIGH COURT ) is no longer a good law and hence section 40(a)(ia) is not applicable even with respect to the payments already made by the assessee. In other words, section 40(a)(ia) can be applied if the amount is “paid” or “payable” to any resident on which if the tax is deductible at source but it has not been deducted. Having regard to the binding decision of the Apex Court we are of the view the disallowance made by the A.O. u/s 40(a)(ia) of the Act is in accordance with law and therefore we partly modify the order of the Ld. CIT(A) and hold that irrespective of whether the amount is paid or payable, so long as there is default in deduction of tax at source, provisions of section 40(a)(ia) has to be invoked. - Decided in favour of revenue.
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2017 (9) TMI 1518
Penalty u/s 271(1)(c) - eligibility of notice - addition on inflated purchases and bogus sundry creditors - non-striking of the irrelevant column renders the notice issued u/s 271 - Held that:- n the assessment order, the assessing officer recorded that the penalty proceedings u/s 271(1)(c) of the Act are initiated separately. It was not mentioned whether the penalty proceedings were initiated for concealment of income or for furnishing of inaccurate particulars. In the notice issued u/s 274 r.w.s. 271 of the Act, the A.O. has not striked off the irrelevant column and made known the assessee for which reason the penalty was initiated and for which limb of the notice explanation required to be submitted. The coordinate bench in the case of Smt. Makina Annapurna Vs. ITO Ward -5(2), Visakhapatnam in ITA Nos.604 & 605/Vizag/2014 dated 2.2.2017 on identical facts held that non-striking of the irrelevant column renders the notice issued u/s 271 of the Act invalid. In the instant case, the A.O. has issued the notice without striking off the irrelevant column and in the assessment order, the A.O. did not mention for which offence the penalty was initiated. Appeal filed by the assessee is allowed.
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2017 (9) TMI 1517
Addition u/s 68 - Held that:- We find that while deciding the appeal the FAA had passed a very cryptic order without assigning any reason for arriving at the conclusion. We find that FAA had not dealt with the submissions made by assessee holding that same were irrelevant and misleading. But, he has not stated as to how the reconciliation statement filed by the assessee was irrelevant. We are of the opinion that FAA should have passed a speaking order. Therefore, in the interest of justice, we are restoring back the issue to the file of the FAA for fresh adjudication. He is directed to deal with each and every argument raised by the assessee and the documents relied upon by him. The assessee would be given a proper opportunity of hearing. First Ground of appeal is decided in favour of the assessee, in part Unexplained cash credits - AR argued that it was a case of redepositing of cash - Held that:-We find that the order passed by the FAA is not a speaking and reasoned order. In pursuance of the directions of the ITAT the assessee had filed bank statement. The FAA should have dealt with the arguments of redeposit of cash and motor car insurance claim before deciding the appeal. So, we are remitting back the issue to FAA to decide the issue afresh. The FAA would afford an effective hearing to the assessee. Second ground is partly allowed. Allowability of the loss - Held that:- We find that both the authorities have not doubted that the purchase is made by the assessee, that they had not doubted that the sale made by the assessee, that their objection is about the sale price only, that during the year the assessee had not exported any goods. The purchases were made in the initial phase of AY. and later on same was sold. If the transaction in question resulted in loss same should not be disallowed merely because purchaser was a related concern. We also agree with the assessee that if he had valued the stock at market rate it would have resulted in loss. Considering the peculiar facts and circumstances of the case, we hold that the FAA was not justified in rejecting the claim made by the AO. Sale of flat - LTCG OR STCG - period of holding - AR stated that the flat was sold within a period of three years, that it was a clear cut case of STCG - Held that:- As in the case of Anita Kanjani [2017 (2) TMI 788 - ITAT MUMBAI] the Tribunal has dealt with identical issue and has held that period of holding has to calculated from the date of holding of flat. Therefore, respectfully following the said order and reversing the order of FAA we decide Ground in favour of the assessee.
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2017 (9) TMI 1516
Penalty u/s 271(1)(c) - debiting inadmissible expenses on account of making commission payment for providing tips for purchasing shares - Held that:- In the instant case, when the Assessing Officer has not disputed the particulars of income furnished by the assessee nor has he disputed the amount on which commission is claimed to have been paid by the assessee, the disallowance on the ground of challenging the capabilities of Ms. Divya Khanna to provide tips for purchasing shares etc., is merely a subjective findings which are not sustainable. These days it is a matter of common knowledge that persons of 20 years of age are capable enough to advice and carry on such business even on their own. Moreover, when the Assessing Officer himself has allowed the commission of ₹ 5,00,000 having been paid to Mr. Sanjeev Khurana, merely disallowing the commission payment on the basis of subjective satisfaction without calling upon the assessee as to what type of advice and know-how has been provided by Ms. Divya Khanna to earn the business income on which tax has already been paid, the penalty cannot be imposed nor does it amount to furnishing of inaccurate particulars. No penalty under section 271(1)(c) to be imposed - Decided in favour of assessee.
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2017 (9) TMI 1515
Addition on the basis of an entry found in the books of third party - entry found in the "bahi" of third party - Held that:- The word "Cosmos" cannot ipso facto be interpreted to represent the name of the assessee which is "M/s. Cosmos Infra Engineering Ltd". There may be any party, company or firm with the initial name "Cosmos" and it does not show in any manner that the said entity belongs to the assessee-company only. Further, that there was no evidence that the assessee has involved into any transaction with any entity of M/s. Mahesh Mehta group. The entire addition has been made on assumption and presumption basis. CIT-A made an observation that it was not on record that as to what was the version of M/s. Mahesh Mehta group about this entry recorded in the "bahi" found at his residence. Under such circumstances when even the third party from whose premises the alleged documents were found, has not confirmed that the said entry belong to the assessee, there was no question of any assumption or belief that the entry belonged to the assessee. any entry found on loose papers in the premises of the third party without any corroborative evidence, cannot be made basis for addition in the case of the assessee. During the course of search at the premises of the assessee, no incriminating material relating to the above stated entry had been found. We, therefore, do not find any justification on the part of the lower authorities to make addition - Decided in favour of assessee.
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2017 (9) TMI 1514
TDS u/s 194C or 194I - payment made as advertisement on hoardings - Held that:- As decided in assessee's own case the assessee has entered into a contract with other parties for display of advertisement of its client and the transaction is purely in the nature of contract for the work of advertising as defined in clause VA of Explanation to section 194C of the Act.
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2017 (9) TMI 1513
Entitlement for deduction of claim under section 54EC - investment made in prescribed bonds though in different financial years i.e. immediately succeeding financial year - Held that:- Assessee is entitled to deduction where he makes investment of ₹ 50 lakhs in specified assets within a period of six months in one financial year. The issue then crops up is in case said period of six months falls within two financial years, whether the assessee can claim deduction under section 54EC to the extent of ₹ 50 lakhs in each financial year totalling to ₹ 1 crore. This issue had come up for consideration before the hon'ble Madras High Court in the case of C. Jaichander (2014 (11) TMI 54 - MADRAS HIGH COURT) and CIT v. Coromandel Indus tries Ltd. [2014 (12) TMI 852 - MADRAS HIGH COURT] wherein the hon'ble Madras High Court has laid down that the exemption granted under proviso to section 54EC(1) should be construed not transaction-wise but financial year-wise. Consequently, the assessee is entitled to exemption of ₹ 50 lakhs in each financial year aggregating to ₹ 1 crore. In this connection, it is worth mentioning that the Legislature, by the Finance (No. 2) Act, 2014 with effect from April 1, 2015 has inserted second proviso to sub-section (1) of section 54EC to remove the above ambiguity in the said provision so that the exemption is limited to ₹ 50 lakhs on account of investment in the specified bonds out of the long-term capital gains from the transfer of one or more assets during the financial year. - Decided against revenue
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2017 (9) TMI 1512
Disallowance u/s 40A(3) - Held that:- Assessee had filed copies of sale deeds of the lands with the Assessing Officer and Ld. CIT(A) and authorities below did not find any discrepancies in the said sale deeds. The genuineness of the transactions was not doubted. The authorities below has not disbelieved the fact of payments having been made. The identity of the persons to whom payments has been made has been established as the sale deeds were registered with the Revenue authorities. In the case law of Attar Singh Gurmukh Singh vs. ITO (1991 (8) TMI 5 - SUPREME Court) the Hon’ble Supreme Court of India has held that in respect of trading activities no disallowance u/s 40A(3) was warranted. CIT-A restricted disallowance u/s 40A(3) - disallowance of ₹ 1,22,23,250/- consisted of value of land to the tune of ₹ 1,16,02,500/- and the rest were on account of registration charges and other charges - Held that:- We find that the difference of ₹ 1,22,23,250/- and ₹ 1,16,02,500/- is on account of costs of registration which included stamp charges and other miscellaneous expenses, which are specifically exempt u/s 6DDA(i). The Ld. CIT(A) has also noted that the costs of stamp was deposited in cash in State Bank of India, therefore, as per Rules 6DDA(i) such payments are exempted from the provisions of Sec.40A(3) of the Act. Moreover, he has made a finding of fact that out of other expenses non of the expenses exceeded Asst. Year: 2009-10-14 ₹ 20,000/-. In view of the above, Ground No.2 of Revenue is appeal is also dismissed.
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Customs
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2017 (9) TMI 1511
Concessional rate of duty - benefit of N/N. 21/2002-Cus. - import of Glazed News Print - it emerged that the commodity was news print with surface roughness of 1.9 / 1.8 and 1.7 / 1.6 respectively. It appeared to the department that the imported consignments did not satisfy the condition of Chapter Note 4 for Chapter 48, whereby the Parker Print Surface roughness should exceed 2.5 microns - Held that: - The samples tested conformed to all specifications of news print except for the surface roughness. The imported items being Glazed News Print, it cannot be expected to have surface of Parker Print Surface roughness of more than 2.50 microns. By glazing the ordinary news print, its roughness gets reduced and therefore the specifications given with regard to standard news print cannot be applied to them of glazed newsprint - further, There is no dispute that the goods imported fall under Chapter 48. As the Chapter Notes are entitled to consideration in deciding the matter of classification of particular goods, nonetheless, when it comes to extending effective rate of duty, the intention of the legislature will certainly have to be given paramount importance and supremacy over even Chapter notes. Further, there is no dispute that the imported goods have been used as Glazed paper for the cover of the magazine published by them. The imported goods are eligible for the benefit of exemption under said entry Sl.No.154 of N/N. 21/2002-Cus. - appeal allowed - decided in favor of appellant.
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2017 (9) TMI 1510
Classification of imported goods - Titanium Pipes and Fittings of various sizes and dimensions - Appellants had sought to clear the items as parts of Bi Polar Membrane Electrolyser - Revenue claimed that goods were classified under CTH 81089090 - whether the impugned items can be considered as parts of the Membrane Electrolyser imported separately by the appellants, or otherwise? - Benefit of N/N. 21/2002-Cus. Sl. No. 285, as amended - Held that: - entry No. 285, as amended, does indicate that the exemption thereat extends to parts thereof including secondary brine purification components, jumper switches, filtering elements for hydrogen filters etc. Evidently, parts of Membrane Electrolyser will also get notification benefit - Admittedly, the imported titanium pipes and fittings are not specially designed or created to work as integral part of the Membrane Electrolyser. They are only generic items which have been obtained to complete the functioning of the imported Membrane Electrolyser. At the most, it can be brought within the ambit of accessory, but certainly not as a part or a component. The Hon’ble Apex Court in the cases of Commissioner of Central Excise, Delhi Vs. Insulation Electrical (P) Ltd. [2008 (3) TMI 22 - Supreme court] has elucidated the meaning and scope of part and held that manufacturing of "Rail Assembly Frost Seat Adjuster and Assembly Slider Seat" is classifiable as accessories to the motor vehicle under 8708.00. It can not be classified as 'parts' of seats, as claimed by the revenue - Applying the ratio laid down by the Hon’ble Apex court, we are not able to appreciate how the titanium pipes and fittings which are generic products made in standard sizes obtained from another supplier and another country can be considered as a specifically designed for the Membrane Electrolyser part which is essential and integrated with the Membrane Electrolyser separately imported. Appeal dismissed - decided against appellant.
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2017 (9) TMI 1509
Refund of SAD - N/N. 102/2007 CUS - whether the Commissioner (Appeals) have rightly held that the importer has imported sheet of Mirror of 1.8mm and sold the goods with description of 2.0mm, did not create any confusion that the goods which were imported are not the same, which were sold by the respondent? - Held that: - From the description it is evident than they have sold 2.0mm mirror and the size mentioned therein 60 x 90 mentioned matches the size in the Bill of Entry. Further, the description IMP in the invoices stand for imported. Further, in the tax invoice it is mentioned that no credit of the additional duty of customs levied under Sub-section 5 of Section 3 of the Customs Tariff Act, 1975 shall be admissible in respect of the above goods - there is no material difference in mentioning the glass imported as 1.8mm Aluminium Coated Glass Sheet Mirror as 2.0mm mirror imported at the time of resale in the tax invoice - appeal dismissed - decided against Revenue.
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2017 (9) TMI 1508
100% EOU - appellant imported capital goods under N/N. 31/81-Cus. Appellant had sought an exemption for being a 100% EOU on imported capital goods in the year 1988; that the said machinery/capital goods were installed in appellants factory and manufacture goods and cleared for export till 1992 - denial of exemption on the ground of non-fulfillment of export obligation - Held that: - there is no dispute as to the fact the appellant has not complied with the export obligation under taken by him when they imported capital goods under N/N. 13/81-Cus. The entire exercise under taken by appellant as to that they are still a EOU as on 08.08.2006, when the DGFT authorities to action of suo-moto de-bonding and de-bonded their EOU, that value of the machinery will be zero if the depreciation is applied, is nothing but a facade - the appellant has no case on merits - appeal dismissed - decided against appellant.
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2017 (9) TMI 1507
Concessional rate of duty - N/N. 16/2000-Cus dated 01.03.2000 as amended - It emerged that there was short receipt of the imported goods and hence a case was made out against the respondents that such short received quantities were not used for the intended purpose - Held that: - the total shortage of 325.491 MTS spread over five years, amount to only 1.5 % of total imported quantity. In fact if we are take into consideration only the transit loss of 123.904 MTS arrived in the at earlier paragraph, the loss would be only 0.57%. We are of the considered view, that such negligible loss percentages, that too over a five year period, are well within acceptable limits. If the department makes an allegation that a portion of the imported goods have not been used for the intended purpose, it will also have to establish that allegation and adduce proof that the goods constituting the short fall were clandestinely removed, or sold or transferred in any other manner in violation of the conditions of the import. This is a sine qua non. In the absence of any such proof or evidence the allegation of the department will have no legs to stand on. Appeal dismissed - decided against Revenue.
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2017 (9) TMI 1506
Misdeclaration of imported goods - The examination revealed that the imported consignment consisted Zinc Scrap and there was no Aluminium Scrap in the consignment imported - confiscation - redemption fine - penalty - Held that: - the appellant filed Bill of Entry on the basis of documents available with them such as contract, invoice, Bill of Lading and Pre-shipment inspection certificate and description of the goods in all the said document was Aluminium Scrap therefore, the appellant did not have any mala-fide intention to mis-declare the goods - penalty set aside. The goods have contravened the provisions of Clause (m) and Clause (l) of Section 111 of Customs Act, 1962 - redemption fine reduced from ₹ 5 lacs to ₹ 50,000/- - appeal allowed - decided partly in favor of appellant.
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2017 (9) TMI 1505
Conversion of shipping bills - whether conversion of Free Shipping Bills into DEPB shipping bills as requested by the Appellant in their respective letters, be allowable or otherwise? - Held that: - the principle relating to allowing conversion of free shipping bill into DEPB, DFRC etc. shipping bill and from one promotion scheme to another promotion scheme has been laid down by the Hon’ble Delhi High Court in the case of Terra Films Pvt. Ltd. v. C.C. [2011 (4) TMI 13 - DELHI HIGH COURT]. Their Lordships after considering the Board's Circular No.4/2004 dated 16.1.2004, observed that amendment of the shipping bill after the goods have been exported, cannot be considered as mere amendment, when the request is for conversion of free shipping bills into DEPB or for conversion of shipping bills from one export scheme to another. It is, therefore, clarified that conversion of free shipping (B) bills into Advance Licence/DEPB/DFRC shipping bills should not be allowed. As regards permitting conversion of shipping bills from one export promotion scheme to another is concerned, it is clarified that such conversion should only be allowed where the benefit of an export promotion scheme claimed by the exporter has been denied by DGFT/MOC or Customs due to any dispute. The appellants had applied for conversion of free shipping bills into DEPB Shipping Bills much after the export of goods. Also, at the time of clearance of the goods it was specifically not disclosed in the free shipping bills nor in the ARE-1 export document by declaring thereunder, specifically their intention to claim any of the export benefit i.e. benefit under DEPB scheme, therefore, the consignment was not opened for physical examination by the Customs and the export was allowed. Hence, it is difficult to appreciate the argument of the appellant that it was a question of mere amendment to the shipping bills, which is contrary to the Circular No.4/2004 dated 16.1.2004 issued by the Board and was in force during the relevant time. Appeal dismissed - decided against appellant.
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2017 (9) TMI 1504
Penalty u/s 114A - Classification of imported goods - Optical Fibre Cables - Held that: - there was surely some considerable confusion in the classification of the product - the appellants paid up the entire duty liability along with interest thereon, almost around nine months before the issue of show-cause notice, the imposition of penalty is not only unfair and unjust - penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (9) TMI 1503
Valuation of imported goods - old and used mainframe assemblies and parts/components of photocopiers - enhancement of value on the basis of second Chartered Engineer's certificate - whether the enhancement confirmed by the Commissioner on the basis of the second Chartered Engineer would sustain or not? - Held that: - there is inordinate delay in conducting inspection and also filing of the report - Even if the date of inspection is taken as 30.4.2003, as contended by the learned AR, the report is filed by the second Chartered Engineer after inspection of goods with much delay which is 18.8.2004. This is already after obtaining the report of first Chartered Engineer. When the department has not given cogent reasons for rejecting the enhancement/valuation made by the first Chartered Engineer and when there is so much delay in inspection as well as report of the second Chartered Engineer, we have to hesitate to accept the enhancement made on the basis of such report of the second Chartered Engineer - the enhancement on the basis of the second Chartered Engineer's certificate is not legal or proper. The appellant is liable to pay duty on the enhanced value on the basis of the report of the, first Chartered Engineer - Further, since the goods were not restricted items during the relevant time of import, we find that the redemption fine and penalties are unwarranted and requires to be set aside - appeal allowed - decided partly in favor of appellant.
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2017 (9) TMI 1502
Valuation of imported goods - used Mercedes Benz car, Model E230 and one used Yamaha motorcycle model FZ600 - reference to Parker's Guide - Held that: - for valuation of such used car has to be done on the basis of Parker’s Guide by giving appropriate Depreciation, Trade Discount and VAT Discount. Such a procedure has also been approved by the Tribunal in the case of Sunil Kumar Gupta Vs. Commissioner of Customs, Nava Sheva [1999 (10) TMI 557 - CEGAT, MUMBAI] - appeal allowed - decided in favor of Revenue.
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2017 (9) TMI 1501
Seizure of goods - Betel nuts - department is of the view that the respondent had not been able to satisfactorily explain the procurement of the goods - Held that: - the Customs officers merely proceeded on the basis of information collected through sources - it is well settled that the onus lies with the department to establish that the goods are of foreign origin in respect of non-notified goods. The claim of the department that the respondent failed to produce the evidence of procurement of goods is fallacious and cannot be accepted - appeal dismissed - decided against Revenue.
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2017 (9) TMI 1468
Benefit of N/N. 21/2002-Cus dated 01.03.2002 - Concessional rate of duty - import of Micronized Progesterone BP - The form of import being bulk, the Revenue contends that it should be under 80 (B) - Held that: - similar issue decided in the case of CIPLA LTD. Versus COMMISSIONER OF CUSTOMS, CHENNAI [2007 (8) TMI 131 - CESTAT, CHENNAI], where it was held that admittedly, the bulk drugs imported by the appellants were specifically mentioned in List 3 appended to Sl. No. 80(A) of Customs Notification No. 21/02 and are liable to be considered as drugs mentioned at 80(A). It is beyond doubt that bulk drugs are also drugs. They are so defined under the Drugs (Prices Control) Order, 1995 also - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2017 (9) TMI 1500
Oppression & Mismanagement - maintainability of petition preferred by appellants under Sections 241 and 242 of the Companies Act - whether the appellants qualify the condition of holding minimum 1/10th of the 'Issued Share Capital' of the 1st Respondent Company? - Proposition on behalf of the appellants on the issue of maintainability - application for 'waiver' subject to the question whether (proposed) application under Section 241 relates to 'oppression and mismanagement' Held that:- Except Mr. Ratan Naval Tata (at serial no. 22) having issued shareholding of 31.43% and Mr. Narotam S. Sekhsaria (at serial no. 44), having 17.01% shareholding capital of the company, none of the 49 member(s) are eligible to file an application under Section 241, individually having less than 10% of the shareholding. That means in the context of present case, except that the minority shareholders join together, i.e. either six in numbers or such numbers of members whose joint shareholding will come up to 10% of the issued share capital of the Company, which will be also not less than 3 to 4 members, none of the 49 shareholders can file an application under Section 241 alleging 'oppression and mismanagement'. It will remain only in the hands of major shareholders, namely Mr. Ratan Naval Tata or Mr. Narotam S. Sekhsaria, who only have right and their prerogative to file such application. One or the other minority shareholder cannot be asked or directed to form a group of 10% of the member(s) that means six person(s) in the present case, as it will be dependent on the prerogative of the other member(s). We are of the view that this is one of the exceptional and compelling circumstances, which merit the application for 'waiver' subject to the question whether (proposed) application under Section 241 relates to 'oppression and mismanagement'. Appellants have pleaded and not disputed by respondents is that the valuation of the company being in the region of at least 'Six lakhs Crores'. The interest of the appellants in the overall value of the company would be over 'one lakh crore'. Therefore, the interest of the appellants in the overall value of the company is 1/6th of the total value of the company. On the other hand, the value of the preference share holding would be only ₹ 291 crores, who do not carry voting rights other than in the exceptional circumstances found in Section 47(2) of the Companies Act 2013. The interest of the appellants to the extent of 'one lakh crores' of the overall value of the company whose valuation being in the region is about six lakhs crores, is another factor, which we have kept in our mind to answer the application for 'waiver' in favour of the appellants. Prima facie, it appears that with regard to affairs of the other Tata Group Companies, namely Tata Steel Limited, Tata Motors Limited, Tata Teleservices Limited, The Tata Power Company Limited, Air Asia (India) etc., the 1st respondent company has some control and therefore, at the stage of 'waiver' it cannot be held that the matter relates to other companies or third company. This is another exceptional factor, we have noticed in this case, which merit 'waiver' in favour of appellants to file an application under Section 241. In so far as (proposed) petition under Section 241 is concerned, the plain reading of the same will show that the allegations relate to 'oppression and mismanagement'; it cannot be stated to be a frivolous application. We find that some of the allegations as made by appellants and highlighted by the learned counsel for the 11th respondent as noticed in the preceding paragraphs, are of recent year 2016. We are not expressing any opinion with regard to merit of such allegation, but have only noticed the allegations. Taking into consideration the aforesaid facts and exceptional circumstances of the case as apparent from plain reading of the (proposed) application and as some of them relate to 'oppression and mismanagement', qua 1st respondent company and its member(s), we are of the view that the appellants have made out a case for 'waiver' to enable them to apply under Section 241. The Tribunal by impugned judgement having failed to notice the aforesaid facts and factors, as it decided the application for 'waiver' taking into consideration the prima facie case / merit of the case, the said order cannot be upheld. We, accordingly, set aside the impugned order passed by the Tribunal and grant 'waiver' to appellants to enable them to file application under Section 241. The case is remitted to the Tribunal to register the (proposed) application under Section 241, admit the same and after notice to the parties decide the application on merit uninfluenced by impugned orders preferably within three months.
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Service Tax
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2017 (9) TMI 1498
Scope of SCN - Rent-A-Cab Scheme Operator’s Service - Held that: - the SCN raised the demand of ₹ 42,21,400/- under ‘Rent-A-Cab Scheme Operator’s Service’. The original authority confirmed the demand under ‘Rent-A-Cab Scheme Operator’s Service’ and Learned Commissioner (Appeals) has held that out of the said demand ₹ 11,28,095/- was liable to be upheld under Transport of Goods by road - such finding that the appellant was required to pay service tax of ₹ 11,28,095/- on transport of goods by road is beyond the proposal in the SCN - impugned order set aside - appeal allowed - decided in favor of appellant.
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2017 (9) TMI 1497
Business Auxiliary Services - commission agent service - demand for the period 1.7.2003 to 8.7.2004 - Held that: - When the activity of the appellant is to identify the customer through their web portal and receive the sale proceeds on behalf of the merchant and pay the same to the merchant, it does have same bearing to the definition of commission agent. The appellant cannot be found fault with if they believed bonafidely that they would fall within the definition - the demand for the period 1.7.2003 to 8.7.2004 is unjustified and requires to be set aside - demand for the later period upheld. Penalty u/s 78 - Held that: - appellant has made payment of service tax along with interest even before issuance of SCN as well as of the fact that the issue was an interpretational one and during the relevant period there was much confusion as to whether the said activity would fall within the Business Auxiliary Service or under internet advertisement services, which was introduced after 1.5.2006, the penalty imposed u/s 78 is unjustified. Appeal allowed - decided partly in favor of appellant.
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2017 (9) TMI 1496
Power of remand - Refund claim - unjust enrichment - Board's Circular No.120/1/2010 dated 19.01.2010 - Held that: - Commissioner (A) has the power of remand under section 985(4) of the Finance Act 94 - reliance placed in the case of COMMISSIONER OF SERVICE TAX, DELHI Versus WORLD VISION [2009 (11) TMI 452 - CESTAT, NEW DELHI], where it was held that Sub section (4) of Section 85 corresponds to Excise section 35A(3) language of two provisions different. Section 85(5) is only about procedural aspects and not to be interpreted to restrict powers of Commissioner (Appeals) under section 85(4) - appeal dismissed - decided against Revenue.
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2017 (9) TMI 1495
Classification of services - GTA services - transportation charges - appellant is engaged in collecting bio-medical waste from these hospitals and dumping or shredding them as the case may be for which purposes they collect charges - whether this service would be taxable under GTA service? - Held that: - appellant is not providing any GTA services, but he is in the activity of disposing the bio-medical waste - on a specific query from the Bench, it was clarified that they are not issuing any consignment note of whatsoever in nature. The primary requirement for taxing under GTA services is that there should have been issuance of a consignment note by any name, in this case nothing has been brought on record to take a view that the services can be classified under GTA - appeal allowed - decided in favor of appellant.
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2017 (9) TMI 1494
Jurisdiction - Whether the appellant would fall under the jurisdiction of Guntur Commissionerate or Hyderabad Commissionerate for service tax matters? - Held that: - Appellant may well have taken registration for their Miryalaguda set up. However, it is not the case that they had taken centralized registration at Miryalaguda for all their activities in various places, including those at Krishnapuram Limestone Mines, or for that matter, at Miryalaguda for both their offices including the one at Jaggaiahpet - proceedings are not hit by jurisdiction. Classification of service - appellants herein, were engaged in transportation, excavation and loading of lime stone in the mines belonging to cement factories - cargo handling services or mining services? - Held that: - the appellant though involved in loading and unloading activities, nonetheless these are in relation to the mining activity in the Krishnapuram Mines of the service recipient - In the case of CCE&C, Bhubaneswar vs. B.K. Thakkar [2007 (10) TMI 147 - CESTAT, KOLKATA], it was held that activities of excavation, transportation and feeding of non ores to crushing plants for processing are primarily in the nature of mining and not covered under cargo handling services - the services rendered by the appellant cannot be brought under the fold of cargo handling services. Appeal allowed - decided in favor of appellant.
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2017 (9) TMI 1493
Export of services or not? - appellant was rendering Technical Knowhow agreement with a Nigerian Firm - time limitation - Held that: - It can be seen from the records, that letter dated 23.07.2010 is only informing the department as to receipt of Technical Knowhow for the financial year 2008-2009 and is absolutely silent on the services rendered during the period in question. It is also on record that the appellant being a service provider, should have indicated the said services rendered by them in the half yearly returns which it seems is not done so - on limitation, the appeal fails. Whether the demand arising from transactions not treatable as export on the solitary ground that the consideration was not received in foreign currency; is legally sustainable? - Held that: - Admittedly, the receipt in foreign currency is a condition prevalent in the law at all times, in order to consider the transaction as an export transaction - Since the appellant contends that the figure adopted is merely a provision for accounting purpose, and does not represent the actual receipt; and also that it continues to be shown as receivable in the final accounts clearly affects the levy. The impugned order admittedly failed to address the appellant s contentions on this aspect inter alia; and this leads to the inference that the principles of natural justice were indeed violated. The ends of justice would therefore be met if the matter is remitted to the lower authority to examine the facts against the corresponding legal provisions. Appeal allowed by way of remand.
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2017 (9) TMI 1492
Refund of service tax paid, which was not required to be paid - rejection on the ground of time limitation - Held that: - Since it is undisputed that appellant is not required to discharge the service tax liability under the reverse charge mechanism on these two services by virtue of N/N. 25/2012, cannot be equated as payment of duty/service tax liability, lest, it should be put through rigorous of provisions of Section 11B of the CEA, 1944 - provisions of Section 11B will not get attracted to payments made by the appellants - refund to be allowed - appeal allowed - decided in favor of appellant.
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2017 (9) TMI 1491
Levy of service tax - services provided by an authorized person to Member of a recognized association - whether the service is classifiable under Business Auxiliary Services? - Held that: - Having established that the appellant renders Business Auxiliary Services to M/s. Geojit BNP Paribas Financial Services and M/s. Geojit Comtrade Ltd. with the former being privileged for special treatment and exclusion, thereby, from taxability owing to specific provisions, and it being clear that sub-brokers in the commodities trade not enjoy the same privilege, the services rendered by appellant to M/s. Geojit Comtrade Ltd. is liable to service tax - demand upheld - appeal dismissed - decided against appellant.
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Central Excise
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2017 (9) TMI 1490
Refund claim - quantity discount given to their wholesale dealers as an incentive, by way of credit notes - whether the impugned refund claims against quantity discount given by respondent are eligible for refund? - unjust enrichment - CBEC circular No. F-354/81/2000 (TRU), dated 30.06.2000 - Held that: - as per CBEC guidelines, if the discount is declared on price and actually passed on to the buyer goods, as per common practice, it will not form part of the transaction value eg. quantity discount. However, the nature and quantum of discount should be known at the time of sale of the goods and further they should have actually been passed on to the buyers goods. The circular also takes into account the practice of year end discount, however, in such cases the transactions have to be assessed on a provisional basis - it emerges that the quantity discount was offered by respondents to all wholesale dealers, but the quantity and amount would vary from party to party and area to area as agreed, before lifting the material - the nature of quantity discount, albeit given post clearances, was very much known to the buyers of the respondent - the impugned orders upholding the claim for refund of quantity discount, on merits, is sustained. Unjust enrichment - Held that: - The ratio laid down by Apex Court in the case of CCE Madras vs. Addison & C. Ltd. [2016 (8) TMI 1071 - SUPREME COURT] was that trade discounts shall not be disallowed only because they are not payable at the time of each invoice or deducted from the invoice price and that when turn-over discount is known to the dealer at the time of clearance, assessee is entitled for filing a claim for refund, on the basis of credit notes raised by them towards turnover discounts - the impugned orders which have held that sanction of refund to respondents do not amount to unjust enrichment, cannot be sustained and required to be set aside. Appeal allowed - decided partly in favor of Revenue.
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2017 (9) TMI 1489
Classification of goods - Refined Palm oil, Refined Palm Stearin etc - whether classified under CETH 3823 1900 or under CETH 1511 9090? - Held that: - Since impugned Palm Stearin is Refined, Bleached and Deodorised (RBD) and sold for industrial use, it will then be classified under specific sub heading in 3823 11 12 - RBD Palm oil stearin when used as an industrial monocarboxolic fatty acid/acid oil, sold for industrial use, would then necessitate their classification under 3823 1112 - demand upheld. Penalty - Held that: - there was some amount of confusion which led to considerable litigation on the issue. Even in respect of imported Palm Stearin, there was a debate on classification - imposition of penalties is a overkill and is set aside. Appeal allowed - decided partly in favor of appellant.
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2017 (9) TMI 1488
Penalties - SSI exemption - clubbing of clearances - case of appellant is that Relevant documents were not made available to the appellants and the direction given by the Tribunal has not been followed - natural justice - Held that: - this is a unique and peculiar case where the appellants on record have mentioned time and again that all the documents had been burnt out during Godra Riots. When there were Riots in the city, their factory was robbed and burnt on 27.02.2007. Therefore, the appellants had made a request to the Revenue for supplying copies of relied upon documents so that they could properly represent their cases - When this is a unique case where relied upon documents are not available either with the Revenue or with the appellants, we are unable to understand how could the proceedings progress and the liability of duty of Central Excise and the penalties against the appellants be sustained. The Hon’ble Gujarat High Court in the case of CCE & C. Vapi vs Tuni Textile Mills Ltd. [2006 (1) TMI 51 - HIGH COURT GUJARAT] observes that when assessee is not provided with copies of all relied upon documents by the Revenue, the proceedings against the assessee have rightly been set aside by the Tribunal on the ground of denial of natural justice. Appeal allowed - decided in favor of appellant.
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2017 (9) TMI 1487
Classification of goods - clearance of final product Palm Stearin - It is the case of the Revenue that the appellant had improperly availed the benefit of notification by mis-declaring final product as edible palm oil while the product would as to RBD Palm Stearin falling under Chapter 38 - Benefit of N/N. 03/2006-CE dated 01.03.2006 - Held that: - appellant had in fact recorded the clearances and indicated the same in their monthly returns as to availment of benefit of notification - the appellants could have entertained a bona fide belief as to the classification of the product RBD Palm Stearin will be covered under Chapter 15, seems to be correct as during the relevant period, various decisions of the Tribunal indicated that the classification of RBD palm stearin is under Chapter 15 - the plea of limitation as raised by the appellant has to be answered in their favor. Appeal allowed - decided in favor of appellant.
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2017 (9) TMI 1486
Classification of goods - Fairplus Herbal Face cream - Fiar plus face lotion - Revenue is seeking their classification under CETA 3304.00 as cosmetic preparation for care of the skin - Claim of the assessee is that these products are Ayurvedic Medicinal preparations classifiable under CETA, 3003 - Reliance placed in the case of Commissioner of Central Excise, Mumbai IV Versus M/s. Ciens Laboratories, M/s. Time Pharma [2013 (8) TMI 467 - SUPREME COURT], where The prescription of the Apex Court is that is used in curing or treating ailments or diseases and contains curative ingredients even in small quantities is to be classified as medicaments - It is fairly well established that the products contain several ingredients which serve the purposes of curing conditions such as, dilated veins (Varicose veins), sun burn, inflammation and rashes etc. Hence, they have been used for therapeutic and prophylactic purposes. Thus, both the products satisfy the test prescribed by the Apex Court - the products in question merit classification under Chapter 30 - appeal dismissed - decided against Revenue.
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2017 (9) TMI 1485
Refund of amount paid u/r 6 of the CCR, 2004 - whether the respondent is entitled to the refund of the amount prior to the insertion of explanation in Rule 8(4) of Central Excise Rules, 2002? - Held that: - explanation was inserted in Rule 8(4) of Central Excise Rules, 2002 by Notification No.8/2007-CE (NT) dt. 01.03.2007. Therefore, the respondent is not entitled to the refund of the amount for the period from 03.01.2007 to 28.03.2007 - the respondent is not eligible to refund prior to 01.03.2007 - appeal allowed - decided in favor of Revenue.
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2017 (9) TMI 1484
Rectification of mistake - appellant submits that the Revenue filed the appeal against the portion of the refund claim of ₹ 10,40,192/-, which was paid from the Proforma Credit and Modvat Credit account and which was allowed by the Commissioner (Appeals). But the Tribunal vide Final Order had remanded the matter for the entire refund claim of ₹ 20,87,729/- - Held that: - as the Tribunal remanded the matter to the Commissioner (Appeals) in respect of Refund of ₹ 10,40,192/-, it is appropriate, that the Commissioner (Appeals) would examine the contention of the appellant as stated in the Rectification of Mistake application - ROM application allowed.
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2017 (9) TMI 1483
Penalty u/s 11AC - Clandestine removal - Held that: - there is a requirement to establish fraud, collusion, contravention of Rules with an intent to evade payment of duty etc., to invoke penal provisions u/s 11 AC of the CEA, 1944 - In any event, there is no material available on record of fraud, collusion etc. to impose penalty u/s 11 AC of the Act, 1944 - appeal allowed - decided in favor of appellant.
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2017 (9) TMI 1482
Clandestine removal - shortage of stock - pig-iron - C.I. scrap - demand on the ground that the said inputs not used in or in relation to the manufacture of finished goods - Held that: - the shortage of the goods was admitted and therefore, the demand of duty alongwith interest is justified. But there is no material of clandestine removal of goods and the penalty u/s 11 AC of the Act cannot be invoked - demand of duty alongwith interest is justified - penalty set aside - appeal allowed - decided partly in favor of appellant.
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2017 (9) TMI 1481
Input/input services used in manufacture of exempt goods - violation of Rule 6 (3) (i) of the Rules, 2004 - whether invocation of Rule 15 (2) of CCR, 2004 justified? - Held that: - there is no dispute that the appellant paid the amount alongwith interest which was appropriated by the Adjudicating Authority - there is no doubt that the appellant is required to fulfill the obligations under Rule 6 of the Rules, 2004, but it is required to establish the fraud, collusion, intention to evade payment of tax etc. in order to invoke penal provisions under Section 11AC of the Act, 1944 - there is no material on record of such ingredients as specified under Section 11AC of the Act, 1944 - appeal allowed - decided in favor of appellant.
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2017 (9) TMI 1480
Clandestine removal - burden of proof - Held that: - It is well settled law that the charge of clandestine removal, the burden lies on the department - the clandestine activities cannot be established on the basis of theoretical input-output ratio, without tangible and positive evidence. The respondent had given explanation before the Commissioner (Appeals) for such alleged different of input-output ratio. They have also submitted the process flow chart to justify the various losses - appeal dismissed - decided against Revenue.
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2017 (9) TMI 1479
100% EOU - Liability of interest - Section 11AB of the CEA, 1944 - delay in payment of duty - Held that: - there is no dispute that the appellant was required to pay duty on DTA Sales from 01.10.2003 to 15.12.2003. Out of this amount of ₹ 69,17,090/- was paid on 18.12.2003. By letter dated 24.06.2004, they requested the Customs Department to debit the balance amount of duty against their outstanding duty liability for the months of October & November, 2003 - the demand of interest u/s 11AB is linked with the determination of duty u/s 11A of the said Act. Therefore, the demand of interest with duty is justified. Penalty - Held that: - the appellant deposited the entire duty on DTA Sales. The appellant had discharged the duty liability under Rule 8 of the Central Excise Rules, 2002 on monthly basis - penalty to be set aside. Appeal allowed - decided partly in favor of appellant.
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2017 (9) TMI 1478
CENVAT credit - input services - credit was not distributed by their Head Office, for which it was utilized - Held that: - it is clearly evident that the appellant had taken the credit in 2005 and utilized the same in 2006 after the invoice date - it is clearly established that even the appellant has taken the credit before issuance of the ISD invoice which was not utilized by them. On the other hand, it is apparent on the face of the records that the credit was utilized after receipt of the ISD invoice - demand set aside - appeal allowed - decided in favor of appellant.
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2017 (9) TMI 1477
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 cash or the same can be paid from CENVAT Credit Account maintained by the appellant? - Held that: - provisions of section 35 does not specifically mentioned that amount has to be deposited only by way of cash payment - the view taken by the First Appellate Authority, that deposit u/s 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 utilisation as per Rule 3(4) of the CCR, 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 - appeal allowed by way of remand.
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2017 (9) TMI 1476
Power of remand - whether the Commissioner (Appeals) has no power of remand as the said power was taken away by the amending Section 35A of the CEA, 1944, w.e.f. 11.05.2001? - Held that: - the Order-in-Appeal dated 09.03.2011 has attained finality due to non-filing of appeal by the Revenue against that order. Therefore, Revenue is prohibited from contesting the issue in other proceedings - Since the Revenue has not preferred any appeal against the said order, the order has attained finality and there cannot be any subsequent order - appeal dismissed - decided against Revenue.
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2017 (9) TMI 1475
Penalty u/s 11AC of CEA, 1944 - short levy/non levy - captive consumption - Held that: - Section 11AC of the Act, 1944 provides penalty for short levy or non-levy of duty in certain cases, where any duty of excise has not been levied or paid by reason of fraud or collusion or any willful mis-statement or suppression of facts with an intent to evade payment of duty etc - In the present case, there is no ingredient as specified in Section 11AC for imposition of penalty. The mere failure to mention the Notification No. in ER-1 Return, cannot be treated as suppression of fact with an intent to evade payment of duty unless, there are other materials available on record - penalty not warranted - appeal allowed - decided in favor of appellant.
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2017 (9) TMI 1474
CENVAT credit - inputs - inputs used in manufacture of dutiable finished products subsequently exempted from payment of duty - Held that: - the issue is no more res integra in view of the decision of the Larger Bench of the Tribunal in the case of HMT Vs. Commr. of Central Excise, Panchkula [2008 (10) TMI 54 - CESTAT, NEW DELHI], where it has been held that when the input credit legally taken and utilized on the dutiable final product, need not be reversed on the final product becoming exempt - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (9) TMI 1473
CENVAT credit - manufacture of taxable as well as exempt goods - Rule 6 (3)(b) of the CENVAT Credit Rules, 2004 - emergence of iron ore fines in the process of manufacture of sponge iron - Held that: - appellants are using iron-ore as a raw material. The iron-ore is an non-excisable commodity. They manufacture Sponge Iron which is a dutiable commodity, and during the course of manufacture of Sponge Iron, iron-ore fines emerge. Such iron-ore fines have been held to be non-excisable commodities, inasmuch as no manufacturing process is involved and the said iron-ore fine emerges as a waste product during the process of manufacturing the Sponge Iron - reliance placed in the case of Union of India & Others Versus M/s. Hindustan Zinc Ltd. [2014 (5) TMI 253 - SUPREME COURT] - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (9) TMI 1472
Taxability - Jau Ghat (Mota Anaj) - whether it is taxable or not? - Held that: - "Jau Ghat" was exempted from tax and no tax was payable - the word ''cattle fodder' in the entry dated 31.03.1956 included grain feed, chuni, bhusi, chhilka, choker, cotton seed, gwar and oil-cake - revision allowed - decided in favor of revisionist.
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2017 (9) TMI 1471
Validity of assessment order - Form F declarations - request for consideration of Form F declarations with proof of dispatch of goods filed by the petitioner under Section 6A of the Central Sales Tax Act, 1956 - penalty u/s 12(3)(b) of the TNGST Act - Held that: - The particulars required to be furnished in Form F clearly manifest that the proof required is as to whether the goods were factually transferred to the assessee himself or his branch office or his agent and not to any third party. Any other enquiry is beyond the realm of the assessing authority. Once a declaration had been accepted and acted upon by the Revenue, unless and until on further enquiry made thereto the particulars furnished were found to be incorrect or untrue, the assessment once made based on Form F, could not be reopened. Unless the details were found to be writ with fraud, collusion or misrepresentation or suppression of material facts, on a mere change of opinion, the findings could not be disturbed under Section 16 of the Act. When the original assessment rested on the findings of enquiry with reference to the details in Form F and the finding on Form F thus remained undisturbed even in the reassessment proceedings, the reassessment order revoking the exemption granted under Section 6A of the Central Sales Tax Act could not sustained. Penalty - Held that: - It is a settled legal position that if the turnover is culled out from the books of accounts of the dealer and the conduct of the dealer is not contumacious or there is any mala fides with intent to evade payment of tax, the said provision would not stand attracted. Therefore, in the event, the second respondent proposes to rake up the issue relating to penalty, the petitioner is entitled to raise objections and the second respondent shall take note of the legal principles laid down in a catena of cases as to under what circumstances penalty is leviable. The second respondent is directed to furnish the copies of the seized documents, which have been marked as book D and E within a reasonable time on costs being remitted by the petitioner for making out such copies - the second respondent shall verify the entire records provided, afford an opportunity of personal hearing, verify the records and decide the issues - petition allowed by way of remand.
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2017 (9) TMI 1470
Validity of assessment order - discrepancy between the returns filed by the petitioner and the details in Annexure II filed by the other end dealers - non-production of the certificates to show that tax has been deducted at source - Held that: - the respondent / Assessing Officer has given due credit to the Forms R & T produced by the petitioner for the relevant assessment years and issued the certificates - issuance of the certificates alone will not suffice, since the assessment orders have to be consequently revised. Therefore, necessarily, the Assessing Officer has to pass revised assessment orders and in that regard, this Court is inclined to issue appropriate directions, by remanding the matters to the respondent, for passing fresh orders - matters are to be remanded to the respondent, this Court is of the view that an opportunity can be granted to the petitioner to raise objections to the "mismatch issue" - appeal allowed by way of remand.
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2017 (9) TMI 1469
Restoration of appeals - pre-deposit - the decision in the case of HYNOUP FOOD AND OIL INDUSTRIES LTD Versus STATE OF GUJARAT [2017 (1) TMI 1116 - GUJARAT HIGH COURT] contested, where the appeals were restored - Held that: - decision in the above case upheld - Exemption from filing certified copy of the impugned order is granted - SLP disposed off.
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Indian Laws
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2017 (9) TMI 1533
Ban the use of fireworks, sparklers and minor explosives in any form, during festivals or otherwise - Fireworks and air pollution in 2016 - Held that:- The health of the people in Delhi and in the NCR must take precedence over any commercial or other interest of the applicant or any of the permanent licensees and, therefore, a graded regulation is necessary which would eventually result in a prohibition. Taking all factors into consideration, we are of the view that the following orders and directions are required to be issued and we do so: (1) Rule 15 relating to marking on explosives and packages and Rule 84 relating to temporary shops for possession and sale of fireworks during festivals of the Explosives Rules shall be strictly enforced. This should not be construed to mean that the other Rules need not be enforced – all Rules should be enforced. But if the fireworks do not conform to the requirements of Rules 15 and 84, they cannot be sold in the NCR, including Delhi and this prohibition is absolute. (3) The directions issued and restrictions imposed in the order passed by this Court on 18th July, 2005 in Noise Pollution (V) shall continue to be in force. (4) The concerned police authorities and the District Magistrates will ensure that fireworks are not burst in silence zones that is, an area at least 100 meters away from hospitals, nursing homes, primary and district health-care centres, educational institutions, courts, religious places or any other area that may be declared as a silence zone by the concerned authorities. (5) The Delhi Police is directed to reduce the grant of temporary licences by about 50% of the number of licences granted in 2016. The number of temporary licences should be capped at 500. Similarly, the States in the NCR are restrained from granting more than 50% of the number of temporary licences granted in 2016. The area of distribution of the temporary licences is entirely for the authorities to decide. (6) The Union of India will ensure strict compliance with the Notification GSR No. 64(E) dated 27th January, 1992 regarding the ban on import of fireworks. The Union of India is at liberty to update and revise this notification in view of the passage of time and further knowledge gained over the last 25 years and issue a fresh notification, if necessary. (7) The Department of Education of the Government of NCT of Delhi and the corresponding Department in other States in the NCR shall immediately formulate a plan of action, in not more than 15 days, to reach out to children in all the schools through the school staff, volunteers and NGOs to sensitize and educate school children on the health hazards and ill-effects of breathing polluted air, including air that is polluted due to fireworks. School children should be encouraged to reduce, if not eliminate, the bursting of fireworks as a part of any festivities. (8) The Government of NCT of Delhi and other States in the NCR may consider interacting with established medical institutions for issuing advisories cautioning people about the health hazards of bursting fireworks. (9) The interim direction issued by this Court on 31st July, 2017 prohibiting the use of compounds of antimony, lithium, mercury, arsenic and lead in the manufacture of fireworks is made absolute. In addition, the use of strontium chromate in the manufacture of fireworks is prohibited. (10) Fireworks containing aluminium, sulphur, potassium and barium may be sold in Delhi and in the NCR, provided the composition already approved by PESO is maintained. It is the responsibility of PESO to ensure compliance of the standards it has formulated. (11) Since there are enough fireworks available for sale in Delhi and the NCR, the transport of fireworks into Delhi and the NCR from outside the region is prohibited and the concerned law enforcement authorities will ensure that there is no further entry of fireworks into Delhi and the NCR till further orders. In our opinion, even 50,00,000 kg of fireworks is far more than enough for Dussehra and Diwali in 2017. The permanent licensees are at liberty to exhaust their existing stock of fireworks in Delhi and the NCR and, if that is not possible, take measures to transport the stocks outside Delhi and the NCR. (12) The suspension of permanent licences as directed by the order dated 11th November, 2016 is lifted for the time being. This might require a review after Diwali depending on the ambient air quality post Diwali. However, it is made explicit that the sale of fireworks by the permanent licensees must conform to the directions given above and must be fully in compliance with the Explosives Rules. We were informed that the permanent licences were issued by PESO and therefore the responsibility is on PESO to ensure compliance. (13) While lifting the suspension on the permanent licences already granted, we put these licensees on notice for Dussehra and Diwali in 2018 that they will be permitted to possess and sell only 50% of the quantity permitted in 2017 and that this will substantially reduce over the next couple of years. The permanent licensees are at liberty to file objections to this proposed direction within 30 days from today and thereafter the objections if any will be heard and decided. If no objections are filed, this direction will become absolute without any further reference to any licensee. (14) Since there is a lack of clarity on the safety limits of various metals and constituents used in fireworks, a research study must be jointly carried out by the CPCB and the FDRC laying down appropriate standards for ambient air quality in relation to the bursting of fireworks and the release of their constituents in the air. The CPCB has assured us that it will complete the exercise by 15th September, 2017 but keeping in mind its track record subsequent to the order dated 11th November, 2016 this does not seem possible. Therefore, we grant time to the CPCB to come out with definite standards on or before 30th September, 2017. (15) In any event, a research study also needs to be conducted on the impact of bursting fireworks during Dussehra and Diwali on the health of the people. We, therefore, appoint a Committee to be chaired by the Chairperson of the CPCB and consisting of officers at the appropriate level from the National Physical Laboratory, Delhi, the Defence Institute of Physiology and Allied Sciences, Timarpur, Delhi, the Indian Institute of Technology-Kanpur, scientists from the State Pollution Control Boards, the Fire Development and Research Centre, Sivakasi and Nagpur and the National Environment Engineering Research Institute (NEERI) nominated by the Chairperson of the CPCB to submit a report in this regard preferably on or before 31st December, 2017. (16) Keeping in mind the adverse effects of air pollution, the human right to breathe clean air and the human right to health, the Central Government and other authorities should consider encouraging display fireworks through community participation rather than individual bursting of fireworks.
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2017 (9) TMI 1499
Offence committed under Section 138 NI Act - eligibility of summoning order - Held that:- The contention of the learned senior counsel for the petitioner that by putting the date on the said cheque without obtaining authority from the petitioner amounts to tampering, does not seems to be correct as in the instant case factum of the two post-dated cheques bearing Nos. 053369 & 053365 both drawn on Union Bank of India, Punjabi Bagh, New Delhi for a sum of ₹ 1,31,00,000/-(Rupees one crores thirty one lacs only) and ₹ 1,50,00,000/-(Rupees one crores fifty lacs only) respectively were issued by the petitioner in favour of the respondent/complainant in terms of the MOU dated 01.11.2013 against the balance payment of ₹ 2,81,00,000/- (Rupees two crores eighty one lacs only). In the instant case issuance of the cheques [including the present cheque No. 053369 of ₹ 1,31,00,000/-(Rupees one crores thirty one lacs only)] is not disputed by the petitioner. There is no dispute that the cheque in question belongs to the petitioner. There was an existing liability qua against the petitioner under Section 138 of NI Act and the Apex Court in the case Kusum Ingots & Alloys Ltd. vs. Pennar Peterson Securities Ltd. And Others [2000 (2) TMI 724 - SUPREME COURT OF INDIA ] has specifically stated that if the ingredients are satisfied by the complainant then the summoning order is not bad.
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