RECENT UPDATES IN DIRECT & INDIRECT TAXES AND IN OTHER AREAS OF
PROFESSIONAL INTEREST – 23th November, 2015
CA Gopal Kumar Kedia
Ex – ITAT Member
G. K. Kedia & Co.
Chartered Accountants
Email : gopal@gkkedia.com
INCOME TAX
ITO Vs Shri Mahalingeshwar Credit Souhard Sahakari Niyamit
Whether assessee a co-operative society is entitled to claim deduction under section
80P(2)(a)(i). - Revenue's appeal is dismissed : PANAJI ITAT
M R Pattabhiram (HUF) Vs ACWT
Whether the land sold by the assessee is an urban land within the meaning of Section 2(14) of
the Wealth Tax Act and is exigible to wealth-tax where the land was not situated within the limits
of a Municipality. - Assessee's appeals partly allowed : BANGALORE ITAT
Smt. Meenakshi Devi Avaru Vs Gift Tax Officer
Whether the order of CGT(A) is null and void when order is beyond the period of limitation
imposed u/s 16A(3) of the GT Act, 1958 - YES : ITAT - Assessee's appeal allowed :
BANGALORE ITAT
Shri Manohar H Kakwani Vs ITO
Whether the amount received by the assessee towards compensation on sale of TDR can be
subjected to LTCG when there is no cost of acquisition to the assessee for acquiring such
rights. - Assessee's appeal partly allowed : MUMBAI ITAT
CIT Vs Amar Nath
Whether on existence of a 'reasonable cause' to accept the loan in cash, can assessee be
allowed not to obtain the loan in accordance with section 269SS - YES: HC - Revenue's appeal
dismissed : HIMACHAL PRADESH HIGH COURT
CIT Vs Shree Ram Print-N-Pack
Whether the assessee is entitled to claim deduction u/s 81C(4) when it places sufficient
documentary evidence in support of his claim to the effect that prior to its purchase, the
imported machines has never put to use in India though assessee purchased machinery 7
months after its import - YES : HC - Revenue's appeal dismissed : HIMACHAL PRADESH HIGH
COURT
The Gurdaspur Co-Operative Sugar Mill Ltd Vs CIT
Whether a case can be remanded to decide it in view of the latest judgement of the Supreme
Court on the issue of denying deduction to the assessee from the marketing of agriculture
produce being sugarcane of its grower members u/s 80P(2)(a)(iii) of the Act - YES : HC - Case
Remanded : PUNJAB AND HARYANA HIGH COURT
ITO Vs Metro Diary Ltd
Whether passing of title in the goods is important and determinative factor for the question
whether franchisee was acting as agent or acting on a principal to principal basis of the
Assessee - YES: ITAT - Revenue's appeal dismissed : KOLKATA ITAT
A2z Maintenance and Engineering Services Ltd Vs CIT
Whether assumption of jurisdiction by CIT under sec. 263 is justified where the Assessing
Officer made inquiries on the issue which were replied by the assessee by submitting its stand
along with contract wise detailed working and the Assessing Officer considered the issue and
applied his mind towards - Whether order passed under sec. 263 is justified where in response
to the show cause notice under sec. 263, the assessee filed detailed written submissions along
with a Paper Book and the CIT has only considered arguments of the counsel of the assessee
in regard to assessee's letters and after reproducing the contents of these letters, the CIT
jumped to record his conclusion without any deliberation on the detailed written submissions
and Paper Book of the assessee - Whether order passed by CIT is sustainable in law where CIT
directed the Assessing Officer to make a fresh assessment order on the aspect of deferred
revenue by holding the assessment order as erroneous and prejudicial to the interest of revenue
on this aspect but the CIT had not drawn any conclusion that the assessment order passed by
the Assessing Officer is not in accordance with the provisions of the Act and thus, the same is
unsustainable in law and CIT had not made any inquiry in regard to the allegations raised by
him in the show cause notice issued by him under sec. 263. - Assessee's Appeal allowed :
DELHI ITAT
Adani Port and Special Economic Zone Ltd Vs ADDL CIT
Whether the provision of section 263 cannot be invoked to correct each and every type of
mistake or error committed by the AO, it is only when an order is erroneous that the section will
be attracted - Whether, where two views are possible and ITO has taken one view with which
CIT does not agree, order of the A.O cannot be considered as erroneous order prejudicial to the
interest of Revenue unless the view taken by the A.O is unsustainable in law - Whether, if a
query is raised during the assessment proceedings and responded to by the Assessee, the
mere fact that it is not dealt with in the assessment order would not lead to conclusion that no
mind has been applied to it - Assessee's appeal allowed : AHMEDABAD ITAT
ITO Vs Bharat Agro Industries
Whether addition u/s 69 can be made when the AO has duly accepted that the bank accounts
are forming part of books of accounts - Whether the machinery repair and maintenance
expenses incurred by the assessee at Rs.12,98,213/- are revenue in nature when the majority
of the expenses which have been incurred regularly round the year are less than Rs.10,000/and in very few cases has exceeded Rs.20,000/. - Revenue's appeal dismissed : AHMEDABAD
ITAT
Hannover Milano Fairs India Pvt. Ltd Vs DCIT
Whether merely because some addition has been made and such addition has become final, it
does not necessarily follow that penalty is leviable, as where inadmissible claim is made due to
inadvertent and bonafide mistakes, penalty for concealment cannot be warranted - YES: ITAT
Whether in order to defend levy of penalty for concealment, mere claim of assessee that an
issue is debatable and two views are possible in law and facts is also enough - NO: ITAT Assessee's appeal dismissed : MUMBAI ITAT
DCIT Vs Rama Capital And Fiscal Services Ltd
Whether reopening of assessment is done on the basis of change of opinion, when the AO has
not brought a new material or any tangible material to reopen the case - YES: ITAT
Whether such reopening of assessment is bad in law -YES: ITAT - Revenue's appeal dismissed
: MUMBAI ITAT
CIT Vs Zebian Real Estate Pvt. Ltd
Whether Assessee is not required to deduct tax at source u/s 194H of the Act when the
payment is for transfer of the right in the land purchased - YES: HC - Revenue's appeal
dismissed : DELHI HIGH COURT
CIT Vs Vrindavan Farms (P) Ltd
Whether addition u/s 68 can be made when assessee produced sufficient documentation to
discharged its initial onus of showing the genuineness and creditworthiness of the share
applicants but Revenue failed to undertake inquiry and investigation before coming to a
conclusion on the issue of creditworthiness - NO : HC - Revenue's appeal dismissed : DELHI
HIGH COURT
PR CIT Vs Mcdonalds India (P) Ltd
Whether a case is to be dismissed where allegation of claiming higher expenditure and remitting
higher amount outside India is made when infact assessee could not remit any money to the
parent Company because of an embargo placed by the Government - YES : HC - Revenue's
appeal dismissed : DELHI HIGH COURT
PR CIT Vs Deep Industries Ltd
Whether where two views are possible in respect of an issue and the AO has adopted the
plausible one, the same does not warrant exercise of powers u/s 263 - YES: HC Whether where
the ITO has exercised the quasijudicial power vested in him in accordance with law and arrived
at a conclusion, such a conclusion cannot be termed as erroneous simply because the CIT does
not feel satisfied with the same - YES: HC
Whether mere opinion of the CIT that assessment order made by AO is prejudicial to the
interest of Revenue is by itself enough to vest him with the power of suo motu revision, in case
there is absence of any error of law in the said order - NO: HC - Revenue's appeal dismissed :
GUJARAT HIGH COURT
Varshaben Sanatbhai Patel Vs ITO
Whether the basic requirement for assumption of jurisdiction u/s 147 of the Act for reopening the
assessment is not satisfied when substratum for reopening the assessment is not laid in the
reasons recorded - YES: HC - Assessee's appeal allowed : GUJARAT HIGH COURT
Southern Agrifurnace Industries (P) Ltd Vs DCIT
Whether the Department needs to consider the representation of the assessee, before passing
the final orders on merit - YES: HC - Appeal disposed of : MADRAS HIGH COURT
Lalitha Jewellery Mart Pvt. Ltd Vs CIT
Whether the assessee is required to file an appeal before the ITAT in case he is aggreived by
the order of CIT(A), where there is an alternative remedy available to him to file appeal before
the ITAT and without exhausting the same, he has come before jurisdictional High Court - YES:
HC - Case disposed of : MADRAS HIGH COURT
CIT Vs Roshan Lal Lodha
Whether the statement recorded under Section 133-A has no evidentiary value and any
admission made during such statement cannot be made basis of addition - YES: HC Revenue's appeal dismissed : RAJASTHAN HIGH COURT
PR. CIT Vs R Srinivas
Whether benefit of section 54F can be denied when sale proceeds has been utilized within 3
years for purchase of land and construction of residential house though the amount could not be
deposited in the Capital Gains Accounts Scheme - NO : HC - Revenue's appeal dismissed :
KARNATKA HIGH COURT
JBF Industries Ltd Vs Addl.CIT
Whether the "electric fittings" should considered as "plant & machinery" and depreciation should
be allowed @ 15% to the said plant & machinery as claimed by the assessee - YES: ITAT
Whether when it is under doubt that the assessee used internal cash accruals for funding
certain projects and the availability of its own funds could be proved to the AO by showing the
balance sheet of the assessee, addition can be made without clarifying the doubt aroused - NO:
ITAT
Whether when the AO has once held that the case was of finance by ignoring the lease
agreement, can he be denied to refer to the very same lease agreement to decide about the
ownership - NO: ITAT - Assessee's appeal partly allowed : MUMBAI ITAT
DCIT Vs Shri Hemendra C Daftary
Whether merely because the suppliers have not appeared before the AO or the CIT(A), it
cannot be concluded that the purchases were not actually made by assessee - YES: ITAT
Whether when it is found that the assessee has furnished the relevant details, but the assessing
officer has made the disallowance without finding fault with those details, can the disallowance
made sustain - NO: ITAT
Whether a disallowance in respect of sundry creditors, can be made that the assessee could not
furnish the confirmation letters from those creditors only for want of time - NO: ITAT - Revenue's
appeal dismissed : MUMBAI ITAT
JCIT Vs Jagadamba Tea Co Pvt. Ltd
Whether expenses incurred for payment of casual workers for uprooting, leveling and cutting
jungle and weeding out unnecessary things are in the nature of revenue expenditure and cannot
be held to be capital in nature - YES: ITAT
Whether no addition can be made by the AO on estimate basis without giving any basis or
finding for the same - YES:ITAT - Revenue's appeal partly allowed : KOLKATA ITAT
CIT Vs Lemon Tree Hotels Ltd
Whether expenditure incurred in connection with issue of debentures or obtaining loan should
be considered as revenue expenditure – YES : HC - Revenue's appeal dismissed : DELHI
HIGH COURT
Shri Prakash Chand Vijay Vs ACIT
Whether when assessee claims Sec 54F benefits for three plots of land, located at different
places, such a claim amounts to furnishing of inaccurate particulars, warranting penalty u/s
271(1)(c) - YES: ITAT - Assessee's appeal dismissed : JAIPUR ITAT
Petronet LNG Ltd Vs DCIT
Whether the CIT(A) was justified in dismissing the appeal of the assessee by rejecting the
application for condonation of delay in filing of the appeal by 47 months when the assessee
could not demonstrate that, it was prevented by sufficient cause, in filing this appeal within the
time stipulated under the Act. - Assessee's Appeal dismissed : DELHI ITAT
JM Financial Consultants Pvt. Ltd Vs DCIT
Whether AO can proceed to apply Rule 8D for purpose of disallowance 14A, without satisfying
mandatory requirement of Section 14 A (2) r/w Rule 8D - NO: ITAT
Whether once details of expenses are made available alongwith entire accounts of assessee,
AO has to record his satisfaction with reasoning before making disallowance under Section 14A
–YES: ITAT
Whether strategic investment for purpose of earning tax-free income can be considered for
making disallowance u/s 14A - NO: ITAT - Assessee's appeal partly allowed : MUMBAI ITAT
ACIT Vs People Interactive India Pvt. Ltd
Whether discount on issue of Employees Stock option is allowable as deduction in computing
the income under the head 'Profit and gains of Business or Profession'. - Revenue's appeal
dismissed : MUMBAI ITAT
DCIT Vs MN Dastur & Co Pvt. Ltd
Whether Tribunal needs to maintain the rule of consistency when an identical issue has been
considered and decided by the coordinate bench of the tribunal in the assessee's own case YES: ITAT
Whether quantum of disallowance worked out as per Rule 8D can't exceed the actual
expenditure debited by the assessee in the profit and loss account, which has a nexus for
earning exempt income - YES: ITAT - Revenue's appeal dismissed : BANGALORE ITAT
ACIT Vs Southern Avenue Inn Pvt. Ltd
Whether proviso to sec 36(1)(iii) is not applicable and the addition of interest amount treating
the same as capital in nature is not justified when expenditure has been incurred for some
repairs and replacement works which include replacement of flooring and lift and such
replacements is for the smooth conduct of the existing business and not for the extension
thereof - YES: ITAT - Revenue's appeal dismissed : KOLKATA ITAT
ACIT Vs MKU Pvt. Ltd
Whether in case of assessee manufacturing ‘ballestic helmets' and ‘ bullet proof jackets', when
only a part of manufacturing activities was got done from outside agency and that too under
direct control and supervision of assessee , its claim for exemption under section 10B was
allowable - YES: ITAT
Whether in order to earn dividend income, investment made by assessee in shares of domestic
companies out of its own surplus funds called for any disallowance u/s 14A - NO: ITAT
Whether payment of bonus made by assessee in time was to be allowed as deduction – YES:
ITAT - Revenue's appeal dismissed : LUCKNOW ITAT
Rain Cements Ltd Vs DCIT
Whether the discount of the debentures is to be spread over the period of holding of debentures
or can be claimed in the year in which the expenditure was incurred in entirety - Whether
revenue expenditure was deductible in the year in which the expenditure was incurred
irrespective of its benefit being spread over on long period of time - Assessee's appeal
dismissed : HYDERABAD ITAT
Plasticon Technologies Pvt. Ltd Vs ITO
Whether the CIT was right in directing the A.O. to re-do the assessment in case the A.O. in the
original assessment, has not made any enquiries as to the genuineness of the purchase figure
or to the validity of the assessee's separate debit of transport expenditure under the Head
"Direct Expenses" - YES: ITAT - Assessee's appeal partly allowed : HYDERABAD ITAT
SRSR Advisory Services Pvt. Ltd Vs ACIT
Whether the reopening of assessment on the basis of the so called statement is warranted
when there being no nexus or live-link with the reasons recorded and the 'formation of belief' to
come to a conclusion that there was escapement of income and also the assessment has been
reopened beyond the period of 4 years when there is no failure on the part of the assessee to
fully and truly disclose all material facts in the original assessment? Whether the expenditure
can be disallowed on adhoc basis. - Assessee's Appeal Allowed : HYDERABAD ITAT
West Bengal Infrastructure Development Finance Corporation Vs ACIT
Whether in the absence of a revised return of income filed by the assessee making claim for
deduction on account of interest expenses the deduction can be allowed – Whether the
assessee need not recognize the interest income on NPS where the assessee is a State
Industrial Investment Corporation within the meaning of Explanation (f) of section 43D and due
to uncertainty in collection there was no accrual of income – Whether the accrual of interest
income on the deposits with the Pay & Accounts office of the Government would arise to the
assessee from the year in which the quantum of interest receivable for the previous year got
finalised and crystallised only upon sanction of the State – Whether deduction has to be allowed
when there is a write off the interest amount in question in the debtors account – Whether the
deduction in respect of provision for bad and doubtful debts is available under section
36(1)(viia)(c) to assessee which is a public sector company engaged in business of providing
long term finance for industrial and agricultural development and for development of
infrastructure facilities in India – Whether the charging of interest u/s.234C should be with
reference to the tax on total income declared in a revised computation of income filed and not
on the tax payable on the total income declared in the original return of income – Whether the
disallowance under Sec.14A can be in excess of the tax free income earned by the Assessee
during the previous year – Whether the disallowance of expenses u/s.35D which is to be
allowed over a period of 10 years can be disallowed in the 7th year. - Assessee's Appeals
allowed : KOLKATA ITAT
Great Offshore Ltd Vs DCIT
Whether where the scheme of demerger is approved by the High Court after the close of F.Y, is
it possible for the company formed as a result of such demerger to have estimated its income
and pay advance tax on the same - NO: ITAT
Whether where it is not possible for the assessee to have anticipated the events during the year
which took place after the close of year, no default can be attributed on the part of assessee for
non-payment of advance tax and consequently no interest u/s 234B can be charged on the
same - YES: ITAT
Whether rejection of the system of apportionment of common overheads expenses adopted by
the assessee by invokation of Section 115JV can be sustained, where the similar system of
apportionment was accepted by the AO during earlier years - NO: ITAT - Assessee's appeal
allowed : MUMBAI ITAT
CIT Vs Ittina Properties Pvt. Ltd
Whether merely because the accounting method adopted by the assessee was not accepted,
because of which certain tax had been levied, would not mean that the assessee had furnished
wrong information or concealed any income while filing its return - YES: HC - Revenue's appeal
dismissed : KARNATAKA HIGH COURT
CIT Vs J Ram and Sons
Whether in case an assessee purchases several items from a third party, for which only part
payment has been mentioned in the books of accounts, therefore, AO has the liberty to added
income as unexplained investment u/s 69 – NO : HC - Revenue's appeal dismissed :
JHARKHAND HIGH COURT
CIT Vs Merchem Ltd
Whether in respect of any sum received from employees to which provisions of Section 2(24)(x)
apply, an assessee would be entitled to get deduction only when said sum is credited in
employee's account in relevant fund on or before due date prescribed under Explanation 1 to
Section 36(1)(va) - Yes: HC
Whether Section 36(1)(va) and Section 43B operate in different fields i.e. former takes care of
employee's contribution whereas latter takes care of employer's contribution - YES: HC
Whether an assessee is entitled to get benefit of deduction u/s 43B (b) as provided under
proviso thereto only with regard to portion of amount paid in capacity of employer to contributory
fund - YES: HC - Revenue's appeal allowed : KERALA HIGH COURT
CIT Vs E D Benny
Whether admission of fresh or new evidences filed by an assessee before the CIT(A), after
satisfying the precondition under Rule 46A(3) for according opportunity to the AO to crossexamine such evidences & witnesses of assessee, can be said as sustainable - YES: HC
Whether such admission of the additional evidence and adjudication of the appeals himself by
the CIT(A) after obtaining remand report from the AO, rather than remanding the same to the
AO, can be faulted - NO: HC
Whether an appellate authority is bound to remand every such case to the AO, where additional
evidence are produced & admitted - NO: HC - Revenue's appeal dismissed : KERALA HIGH
COURT
Manas Sewa Samiti Vs CCIT
Whether exemption u/s 10(23C)(vi) can be denied to a Society running only educational
institution on mere pretext that it is making profit. - Case remanded : ALLAHABAD HIGH
COURT
Shanthi Hatcheries Vs DGIT
Whether it is settled that only assessees falling within the jurisdiction of the High Court whose
order has been reversed by the Apex Court, can claim waiver of interest during the relevant
accounting period - NO: HC - Case remanded : MADRAS HIGH COURT
Bose Chandra Ebenezer Vs CIT
Whether even if the appellate proceedings before CIT(A) are pending, the Revenue in that case
has the authority to initiate garnishee proceedings and issue notice u/s 226(3) - NO: HC Assessee's appeal allowed : MADRAS HIGH COURT
DCIT Vs Lodha Crown Build Mart Pvt. Ltd
Whether when the payment of lease premium paid towards acquiring rights and use of land is
not covered under definition of rent u/s 194I, assessee is not required to deduct TDS on such
payment - YES: ITAT - Revenue's appeal dismissed : MUMBAI ITAT
DCIT Vs Ideal Broadcasting India Pvt. Ltd
Whether when AO made addition by passing a slip shod and cryptic order, CIT(A) granted relief
to assessee without providing due opportunity to AO to comment upon, examine and verify the
stand of assessee supported by various documents and evidence, in that case it is better to
remand the case as the proceedings were not conducted properly neither at the assessment
stage nor at first appellate stage - YES: ITAT - Case remanded : DELHI ITAT
ACIT Vs Hari Orgochem Pvt. Ltd
Whether fees for services of the employees cannot be treated as excessive, when no material
was brought on record to show that the consideration for services received by the assessee was
so excessive as to warrant any disallowance out of the same - YES: ITAT
Whether if the expenditure is not related to the exempt income, the AO is not empowered to
make disallowance u/s.14A by applying Rule 8D - YES: ITAT
Whether disallowance as made by the AO cannot be sustained, when such disallowance is on
account of interest expenditure and administrative expenses and on both the counts, the AO
has failed to record his finding - YES: ITAT - Revenue's Appeal partly allowed : AHMEDABAD
ITAT
Cascade Holdings Pvt. Ltd Vs ACIT
Whether the fact that interest liabilities constitutes ascertained liability is linked to the issue of
rejection of books of accounts as the books of account is the basis for computation of book
profits u/s 115JA - NO: ITAT - Assessee's appeal partly allowed : MUMBAI ITAT
Beena Jain Vs CIT
Whether order passed by CIT under sec. 263 is justified where CIT did not provided opportunity
of being heard to the assessee and the show cause notice issued under sec.263 did not contain
the ground relating to rejection of books of accounts and lower net profit - Whether order passed
by CIT is sustainable where CIT issued notice by pointing out five issues but in in the impugned
order passed under sec. 263, the CIT directed the AO to make inquiry not only on four points
but also enhanced the scope of inquiry for estimation of net profit which were not mentioned in
the notice under sec. 263 - Whether provisions of section 263 can be invoked where all the
details were available before the AO at the time of assessment and AO has verified the same at
the time of assessment and AO has dealt with and verified all the details in respect of the issues
raised in the notice issued by the CIT under sec.263 and the view taken by the AO was a
possible view. - Assessee's Appeal allowed : DELHI ITAT
SERVICE TAX
Ambejogai Peoples Co-Operative Bank Ltd Vs CCE
ST – Notfn. 29/2004-ST - Overdraft facility, cash credit facility, discounting of bills etc. are not
‘exempted service' as defined under rule 2(e) of CCR, 2004 – Revenue alleging that the output
services being partially exempted appellants were required to either maintain separate accounts
or pay an amount of @ 6% under Rule 6(3) on the exempted portion of the service – appellant
disagreeing with Revenue view but reversing entire common input service along with interest
and contending that this amounts to non-availment of credit and, therefore, the provisions of
Rule 6(3) of CCR, 2004 are not attracted - Matter remanded for verification of quantum of
reversal: CESTAT - Matter remanded : MUMBAI CESTAT
Amit Pandey Physics Classes Vs CCE & ST
ST - Assessee is registered under category of "Commercial Coaching and Training Institute" as
a proprietory firm and realized some amount in financial years 2007-08 and 2008-09
respectively but did not declare in their ST-3 returns nor paid the ST - When tax is not paid on
due date, ST which is determined by CE Officer in terms of legal provisions is total ST which is
payable - If some amount of tax is paid before issuance of SCN, it does not mean that it is not to
be assessed or determined under an order - However, same may be appropriated under the
order - Assessee was aware of obligations under ST law because initially he had taken
registration from department but had surrendered the same - No merit in appeal and same is
dismissed: CESTAT - Appeal dismissed : ALLAHABAD CESTAT
Northern Coal Fields Vs CC & CE
ST - Goods Transport Agency service - Assessee engaged in mining and sale of coal Transporter does not issue consignment note or any other document showing quantity,
distance, weight and transport charges payable and they do not transport coal or any other
goods outside mining area - Since there is no issuance of consignment note by transporters
who provided services to assessee, there is no rendition of GTA service legitimizing levy and
collection of tax under that category - Assessee is not liable to ST, interest and penalty under
category of GTA - Appeal allowed: CESTAT - Appeal allowed : ALLAHABAD CESTAT
Tata Steel Ltd Vs CST
ST - Appellant borrowing, by way of 'syndicated loans' for international acquisition and capital
expansion, from various overseas banks - Arrangement fee paid to various banks abroad is
taxable under reverse charge under 'Banking & Other Financial services' from 18.04.2006:
CESTAT by Majority - Appeal partly allowed : MUMBAI CESTAT
Beekay Engineering Corporation Vs CCE
ST - Demand confirmed alongwith interest and penalties on the ground that assessee is not
eligible for 67% abatement under Notfn 15/2004-ST because it had taken cenvat credit paid on
various input services - Assessee contends that it has reversed proportionate cenvat credit and
interest - As per Hello Minerals Water (P) Ltd., reversal of modvat credit amounted to non taking
of credit inputs - Appeal allowed: CESTAT - Appeal allowed : DELHI CESTAT
Reliance Industries Ltd Vs CCE
ST - Notfn. 4/2004-ST, 9/2009-ST - Refund - Provisions of s. 26 of SEZ Act, 2005 are conferred
with a primacy that cannot be denied, diluted or denigrated owing to delay in devising a
facilitative mechanism that was agreeable to Revenue - notification 9/2009-ST is, undoubtedly,
the operational procedure put in place for implementing the provision in the SEZ Act, 2005
granting exemption of service tax for authorized operations - notifications 4/2004-ST & 9/2009ST, in conjunction, have given effect to the statutory promise by devising two methods for
availing the exemption - by upfront exemption when the service is rendered within the
geographical boundaries of the Special Economic Zone and by the refund route where the
physical performance of service is not within the boundaries but is intended for the authorized
operation of the developer or unit - services provided by M/s NSDL are for authorized
operations in a SEZ - Refund of service tax paid by M/s NSDL is admissible to appellant in
terms of Notification 9/2009-ST - Appeal allowed: CESTAT
CESTAT
- Appeal allowed : MUMBAI
Ishikawajima Harima Heavy Industries Co Ltd Vs CCE
ST - Appellant executing a turnkey project as per agreement entered with Petronet LNG Ltd. for
providing design, engineering, procurement, construction and commissioning of two storage
tanks - ST demand made and confirmed under Consulting Engineers Service - appellant in
appeal before CESTAT contending that work undertaken by them was done prior to 01.06.2007
and was not taxable under any other services except "Works Contract" which came into effect
from 01.06.2007. Held: In view of the apex Court decision in Larsen and Toubro - the order
confirming the tax demand is incorrect - Order set aside and appeal allowed with consequential
relief: CESTAT - Appeal allowed : MUMBAI CESTAT
CCE Vs Chandrashekhar Exports
ST - Refund - Notfn. 41/2007-ST - Appellant had filed refund claim on 31.03.2009 of ST paid on
services received and utilized for the goods exported during January 2008 to March 2008 claim rejected by original authority on the ground that the same is beyond the period of six
months as mandated in the notification inasmuch as it ought to have ben filed by 30.09.2008 Commissioner (A) held that delay in filing of refund claim is a procedural lapse which can be
condoned - Revenue in appeal. Held: Commr(A) has correctly recorded that it is a settled
principle that Rules and Notifications are issued from time to time to supplement the provisions
of main Act and grant of relief of refund of service tax paid on services used in export of goods
has to be sanctioned when conditions prescribed in the main Act are fulfilled - Impugned order
is correct and legal and does not require any interference - Revenue appeal rejected: CESTAT Appeal rejected : MUMBAI CESTAT
Tumkar Minerals Pvt. Ltd Vs CCE
ST - Refund - Notfn. 41/2007-ST - Education cess paid on service tax by the service providers
is also to be refunded to appellants when the export of goods is not in dispute - Appeals allowed
with consequential relief: CESTAT- Appeals allowed : MUMBAI CESTAT
Jai Somnath Transport Vs CST
ST - Tour Operator Service - Revenue is confusing the words "Tourist permit" and "Tourist
vehicle" and reading the word 'permit' to mean the same as Tourist permit - To be covered
under the definition of Tour Operator prior to 10.09.2004 the vehicle must be a tourist vehicle
under the Motor Vehicles Act, 1988 and the proper authority to decide whether a vehicle is a
contract marriage equipped with certain specifications as per Rule 128 of Central Motor Vehicle
Rules, is the Regional Transport Office (RTO), who govern the administration of the Motor
Vehicles Act - Dy. RTO, Thane has categorically stated that the vehicles operated by the
appellants cannot be considered as Tourist vehicles in terms of Section 2(43) of Motor Vehicles
Act - Revenue has not challenged that the vehicles are not Tourist vehicles - therefore, pre
10.09.2004 the activity undertaken by the appellants is not leviable to tax under the "Tour
Operator Service" - Post 10.09.2004 any person who is engaged in the business of planning,
scheduling, organizing or arranging tours is a Tourist Operator - second part of the definition,
which requires the vehicle to be a tourist vehicle is not satisfied - Post 10.09.2004 the two parts
of the definition are independent and for the activity to be taxable, either part may be satisfied from the agreements, it is evident that the appellants have only planned for providing vehicles of
a specific capacity with a particular schedule - activity of the appellant is not covered by the
definition of 'Tour Operator' for the period post 10.09.2004 - In the case of General Travels the
demand is confirmed on the ground that the tours were organized for picnics etc. - Therefore,
this activity (post 10.09.2004) will fall under the ambit of planning, scheduling etc. in terms of the
first part of the definition irrespective of the fact that the vehicle is not a tourist vehicle, however,
penalties set aside by applying section 80 of FA, 1994 as there was confusion on taxability of
service - Appeals of parties viz. Jai Somnath Transport, D.C.Gupta & Sons, S.K.Travels,
Lawrence Travels, Moharir Travels, Ideal Travels, Buthello & Sons, Buthello Travels allowed Appeal of General Travels partly allowed - Revenue appeals dismissed: CESTAT - Appeals
allowed/Partly allowed/Revenue appeals dismissed : MUMBAI CESTAT
Volkswagen India Pvt. Ltd Vs CCE
ST - Refund - Notification 11/2005-ST - Relevant date for refund in the case of rebate is from
the date of payment of service tax on the taxable services exported and not from the date when
consideration was received by FIRC - Appeal allowed: CESTAT - Appeal allowed : MUMBAI
CESTAT
Affinity Express India Pvt. Ltd Vs CCE
ST - Appellant engaged in providing taxable services and filing refund claim for period January
to March 2009 under rule 5 of CCR, 2004 r/w notification 5/2006-CE(NT) on the ground that
they were not in a position to utilize the input service credit availed - refund allowed of Rs.4.94
lakhs but rejected to the extent of Rs.21.23 lakhs on various grounds - Commissioner(A)
upholding the rejection - appeal to CESTAT. Held: Assessee does not become entitled to refund
merely on accumulation but he has to first make an attempt to utilize the said credit for payment
of service tax/excise duty and only then he qualifies for refund - it is, therefore, difficult to
ascribe any particular date as the relevant date to compute the period of limitation as envisaged
u/s 11B of CEA, 1944 - no time limit will, therefore, apply for refund claim u/r 5 of CCR - prior to
crystallization of right to refund, no limitation can start running - Appeal allowed: CESTAT
ST - Refund claim on embroidery software service. Held: It is evident from the nature of the
agreement that the said activity is in the nature of service - for the past period the same activity
was accepted by the Department as service - merely because the assessee has inadvertently
indicated the said turnover in the return against the column for final product instead of output
service that will not disentitle them from refund - Appeal allowed: CESTAT
ST - Refund on account of challenge to eligibility of certain services like Transport service
charges, Xerox services, courier services, meal coupons. Held: These services are essential
and are in fact used for provision of output services - when the assesse claimed CENVAT credit
on these services as input services, same was not challenged - It is a settled principle that there
cannot be different yardsticks in allowing credit and granting refund - Appellant has rightly
claimed refund of CENVAT credit availed on the subject services - Appeal allowed: CESTAT Appeal allowed : MUMBAI CESTAT
Tulip Mines Pvt. Ltd Vs CCE, C & ST
ST – Refund - Notification No. 41/2007-ST dated 6.10.2007 – Admissibility of refund in r/o GTA
service used by the appellant in relation to export of goods - there is no dispute on fact of export
of the goods by the appellant nor there is any dispute that GTA services had been used in the
export of the said goods - The only dispute centres around the fact that the relevant invoice
numbers were not mentioned in the lorry receipts and also in the corresponding shipping bills broad principle is that service tax should not be exported along with services – Case remitted to
the original authority for verification of the claim of the Appellant on the use of GTA service in
the export of goods by establishing a link between the lorry receipt and the export invoices and
also the export invoices and shipping bills – appeal allowed by way of remand: CESTAT Matter remanded : KOLKATA CESTAT
Valencia Construction Pvt. Ltd Vs CCE, C & ST
ST - section 73(3) of FA, 1994 - Amount of tax paid along with interest before issuance of SCN When the show cause notice itself should not have been issued there is no question of imposing
any penalty - Penalties imposed u/ss 76, 77, 78 set aside & appeal allowed: CESTAT - Appeal
allowed : MUMBAI CESTAT
Anandram Developers Pvt. Ltd Vs CESTAT
Service Tax - Appeal against the order of Tribunal dismissing the appeal for non-payment of
pre-deposit of Rs 40 lakhs.
Held: Once it is found that the parameters for deciding the application for a pre-deposit condition
have been properly applied, no question of law arises for consideration - The appeal arisen out
of the conditional order dated 27.08.2014 is liable to be dismissed. Once it is liable to be
dismissed, the consequential order passed by the Tribunal cannot also be found fault with However, appellant allowed further time to make pre-deposit and contest the issue on merits Appeal disposed of : MADRAS HIGH COURT
Southern Properties & Promoters Vs CCE
Service Tax - Construction of Complex service - Demand of Service Tax on flats handed over to
the landowner under joint venture agreement - Appeal against the order of Tribunal directing
pre-deposit.
Held: Appeal not maintainable in view of the specific admission by the appellant before the
Adjudicating Authority that the services rendered by the appellant would fall under Section
65(105)(zzzh) of the Finance Act, 1994 - The language of Section 65(105)(zzzh) and the nature
of the services provided by the appellant is construction of flat to the land owner and the transfer
of land is only for the purpose of providing such taxable service - If there is no monetary
consideration in the transaction, then Section 65 of the Finance Act, 1994 provides for various
methods for valuation. Hence, it is for the appellant to establish that his plea that the value of
the land should be taken into consideration is a matter for the Tribunal to decide on merits at the
time of hearing of the appeal - No reason to entertain the appeal - Appeal dismissed - Appeal
dismissed : MADRAS HIGH COURT
Maharashtra Chamber Of Housing Industry Vs CCE, C & ST
ST – Appellant is an association of Housing Industry and conducts exhibitions for benefit of
builders etc. who are members as well as non-members and charges an amount as fees – No
tax liability arises on the amount received from members but on fees collected from nonmembers ST liability under BAS arises – ST Demand of Rs.4.18 lakhs confirmed along with
interest but no cause for imposition of penalty by invoking s. 80 of FA, 1994 as tax was
introduced during the material period – as question of limitation was not raised before lower
authorities, same cannot be gone into at the stage of second appeal – Appeal disposed of:
CESTAT - Appeal disposed of : MUMBAI CESTAT
Mr. Trilok Chand Sharma Vs CST
ST - Assessee provided BAS to LICHFL - It is thus liable to remit ST for having provided BAS Since ST is an indirect tax, assessee is entitled to recover component of tax suffered by it from
service recipient, LICHFL - Since LICHFL could have taken credit and therefore remitted its ST
liability less the ST reimbursed by LICHFL to assessee, State in any event suffers no loss of
revenue if assessee fails to remit ST on BAS, since LICHFL has remitted ST on whole of
consideration received by it for having provided BOFS and this subsumes ST liability of
assessee - Entitlement of LICHFL to avail CENVAT credit depends upon provisions of Rules,
whether credit could be taken and conditions upon which CENVAT credit may be availed under
Rules - Tax liability of assessee for normal period of limitation comes to Rs.65,000/Accordingly, assessee is directed to pre-deposit this amount along with proportionate interest:
CESTAT - Pre deposit ordered : DELHI CESTAT
CENTRAL EXCISE
Sumeet Silk Mills Vs CCE & ST
CX - Central Excise officers during visit of assessee's factory recovered three Files containing
various documents - Representatives of assessee-company in their statements accepted
clandestine removal of goods on basis of said documents - CE officers visited assessee's
factory on 10.07.2003 and copies of invoices were produced by 04.08.2008 before
Commissioner (A) - Such invoices cannot be accepted at this belated stage - Assessee have
not submitted any reconciliation of demand of duty in respect of said invoices - The shrinkage
as claimed on basis of sample invoices, assessee has not produced any authentic basis for
shrinkage - They had paid duty during investigation and adjudicating authority should have
extended the benefit to pay reduced penalty of 25% of duty within stipulated period Adjudicating authority shall re-quantify the demand of duty by extending the benefit of cum-duty
price: CESTAT - Appeal disposed of : AHMEDABAD CESTAT
Salts And Chemicals Pvt. Ltd Vs CCE
CX - Clandestine clearance - Allegation of clandestine removal rests on discrepancy in figures
of Opening Balance (OB) and Closing Balance (CB) of Stock mentioned in monthly ER-1
Returns relating to manufacture and production of only three items - There is no discrepancy
noticed by Department in Daily Stock Accounts in recording OB & CB of Stock in relation to said
items - However, while recording figures in ER-1 Returns, there could be possibility of writing
error in entering data relating to OB and CB of said items due to switching over from manual
system of maintenance of records to computerized system - Except said errors in recording CB
& OB in respective ER-1 Returns, Department has not adduced any other evidence in support
of clandestine removal - Appeal allowed: CESTAT - Appeal allowed : KOLKATA CESTAT
Zenith Birla (India) Ltd Vs CCE
CX - Pre-deposit - s.35F of CEA, 1944 - AR wants more pre-deposit, says what is already paid
during investigation is not to be taken cognizance of while computing the pre-deposit amount of
7.5% u/s 35F - Tribunal disagrees and holds that it cannot go beyond the mandate of statute Amount deposited by appellants needs to be considered as compliance of the provisions of
s.35F of the CEA, 1944 - SCN discharged and Registry directed to take on record the appeal
and list same for disposal in due course: CESTAT - SCN discharged/Application Disposed of :
MUMBAI CESTAT
CCE Vs Shrushthi Plastics (P) Ltd
Central Excise - Simultaneous availment of Small Scale exemption under Notification No 8/99
CE and also MODVAT credit in respect of inputs used in the manufacture of branded goods
cleared on payment of duty - On appeal by the assessee, matter remanded by the High Court to
the Tribunal for fresh decision.
Held: The ratio of the apex court decision in case of Nebulae Health Care Ltd squarely applies
to the case wherein the Supreme Court after distinguishing their own case in the case of
Ramesh Foods upheld this Tribunal's order. In the present case, appellants have rightly paid
excise duty on the goods bearing the brand name of "HLL" and accordingly filed declaration to
avail Modvat credit on the inputs used in the manufacture of branded goods belonging to
another person which is outside the scope of SSI exemption under Notfn 8/99. - The
respondents are eligible for Modvat credit on the inputs used in the manufacture of goods
bearing the brand name of "HLL" - No infirmity in the order passed by the lower authority Revenue's appeal is rejected. - Appeal rejected : CHENNAI CESTAT
Hindustan Coca-Cola Beverages Pvt. Ltd Vs CCE
CENVAT – Rule 2(l) of CCR, 2004 - Eligibility of cenvat credit on the manpower services for
maintenance of garden within the factory - Issue no longer res integra - service received by the
appellant has to be treated as service necessary for compliance with the statutory provisions
subject to which the manufacturing activity had been permitted - service, in question, is
therefore covered by the definition of 'input service – Credit admissible – Order set aside and
appeals allowed: CESTAT - Appeals allowed : DELHI CESTAT
Hindustan Petroleum Corporation Ltd Vs UoI
Central Excise - Amendment to Section 35F of the Central Excise Act, 1944 vide Finance Act,
2014 - Writ Petitions filed under Article 226 and 227 of the Constitution of India praying to hold
that the Sec 35F of the Central Excise Act, 1944 as amended by the Finance Act, 2014 with
effect from 06.08.2014 which provides for mandatory pre-deposit of 7.5% for first appeal and
10% for second appeal of the total tax demanded as illegal and violative of articles 14, 19(1)(g)
and 265 of the Constitution of India. - Petitions dismissed : KARNATKA HIGH COURT
CC Vs Honda Siel Power Products Ltd
Central Excise - Exemption under Notification No 6/2002 CE for IC Engines used in the
manufacture of PD Pumps - Respondent cleared IC Engines manufactured by them along with
bought out pumps from Mahindra Engineering Works - Exemption to IC Engines denied by
revenue on the ground that process of putting together Engine and Pump is a carton does not
amount to manufacture - Revenue in appeal against the order of the Tribunal allowing the
benefit.
Held: The Tribunal has completely ignored the findings of fact based on relevant material
recorded by the Adjudicating Authority. The dispute was with regard to payment of duty on such
I.C. Engines which were merely put in a carton along with bought out Pump manufactured by
M/s. MEW. The packing of bought out Mahindra pump with the I.C. Engine manufactured by the
respondent assessee contained two buyers' manual, one pertain to their own I.C. Engine and
other pertain to Mahindra Pumps purchased from M/s. MEW. These manuals separately
provided the description and the functioning of I.C. Engine. These facts clearly indicate that the
I.C. Engines were not used by assessee within the factory of production for the manufacture of
the P.D. Pump sets in question.
The finding recorded by the Tribunal in the impugned order that by putting together a Pump and
Engine and a platform the assessee had produced a new item viz. “P.D. Pump” is wholly
baseless and also without consideration to the findings of fact based on relevant material and
evidences recorded by the Adjudicating Authority. Merely putting together one bought out item
with own manufactured item in a carton does not involve any process amounting to manufacture
under Section 2(f) of the Act.
The impugned order of the Tribunal cannot be sustained and, consequently, deserve to be set
aside and the case deserve to be remitted back to the Tribunal for de novo consideration of the
facts of the case, the findings recorded by the Adjudicating Authority in the order in original and
the evidences referred therein after which a reasoned decision shall be rendered by the
Tribunal. Appeal allowed by way of remand : ALLAHABAD HIGH COURT
John Deere (I) Pvt. Ltd Vs CCE
CX - Appellant, a DTA unit, after being allowed conversion into EOU carried over the balance
amount of CENVAT credit and utilized the same for discharge of duty on goods cleared to DTA Revenue of the view that the credit could not have been allowed to be carried forward - SCN
issued for reversal of credit and demand confirmed - appeal to CESTAT. Held: Issue involved is
regarding application of Rule 11 of the CCR, 2004 for refusing the unutilized CENVAT credit
from being carried forward when appellant converted themselves from DTA to EOU - sub-rule
11(3) of CCR, 2004 will apply only in the situation where final products are exempted Undisputed fact is that the final products manufactured by appellant in EOU and cleared for
export are not dutiable, but the very same final products when cleared into DTA becomes
dutiable hence the provisions of Section 5A of the CEA, 1944 which are sought to be applied by
the adjudicating authority and the AR will not apply as the said provision are in respect of the
goods which are fully exempted from payment of duty - Holistic reading of the provisions of Rule
11(3) of CCR, 2004 would indicate that it will apply only in the case when final products are
totally exempted - impugned order is unsustainable and liable to be set aside - Appeal allowed:
CESTAT - Appeal allowed : MUMBAI CESTAT
Handy Wires Pvt. Ltd Vs CCE
CX - Valuation - s.4 of CEA, 1944 - First principle of valuation is the transaction value and only
in the absence of transaction value, valuation rules should be made applicable - when for the
same goods, transaction value is available i.e. transaction value at which the goods are sold to
independent buyers, then there is no scope of any notional value such as valuation in terms of
rule 8 of Valuation Rules - appellant have correctly valued their goods sold to their three
interconnected undertakings, therefore, order is not sustainable - Order confirming duty demand
on the ground that appellant is required to discharge excise duty under Rule 8 and 9 of Central
Excise Valuation Rules, 2000 i.e. 110% of cost of production or manufacture of said goods
supplied to all the three related entities is set aside and appeal is allowed with consequential
relief: CESTAT - Appeal allowed : MUMBAI CESTAT
Crompton Greaves Ltd Vs CCE
CX - Appellant is a manufacturer of electric motors and generators - Duty demands raised on
the ground of non-submission of proof of export documents within six months in r/o exports
through merchant exporters; non-production of re-warehousing certificate in r/o goods cleared to
EOUs; wrong availment of CENVAT credit on capital goods - appeal to CESTAT. Held: On the
issue of non-production of proof of exports, the whole issue has been treated in a very careless
and shoddy manner - Commissioner has concluded on the basis of a random check that the
evidence submitted by appellant is not reliable - the logic behind the conclusion without a 100%
check of all ARE-1s is not understood - Matter remanded to adjudicating authority for a fresh
examination. As regards non-receipt of re-warehousing certificates, Revenue has not been able
to explain as to how rule 20(3) of CER is not applicable inasmuch as the responsibility for
payment of duty on the goods that are removed from the factory of production to a warehouse
shall be on the consignee - in absence of any verification, demand of duty cannot be sustained matter remanded. On the third count of denial of CENVAT credit on capital goods, both the
lower authorities have not cared to examine the nature of the goods and analyse whether the
credit can be allowed - matter remanded: CESTAT
CX - Refund - Amount of Rs.25.06 lakhs got debited by the department without even caring to
consider the proof of exports submitted by the appellant - This is total travesty of justice and
needs to be rectified by Revenue - the time limitation for determining the refund will start from
the date of finalization of the issue of demand of duty - refund is, therefore, not hit by time bar Appeal relating to refund to be decided only after the appeal relating to demand of duty is
decided - Matter remanded: CESTAT - Matter remanded : MUMBAI CESTAT
Tribhuvan Tobacco Products Vs CCE
CX - Pre-deposit - Clandestine manufacture and removal of Khaini - A foundational fact that
would have to be shown to exist by the Department for attracting the deeming fiction under Rule
18(2) of the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity
Determination and Collection of Duty) Rules, 2010 is that the goods were found to have been
"manufactured in or cleared from" the premises searched - CESTAT will have to address itself
to the central issue of whether the evidence on record demonstrates that the Appellant could be
said to have been party to the clandestine manufacture and removal of chewing tobacco using
the machines found at the premises - Appeal to be heard without insisting for any pre-deposit:
High Court - Appeal disposed of : DELHI HIGH COURT
Virat Overseas Pvt. Ltd Vs CCE
CX - Assessee engaged in manufacture of pan masala and declared three brands of pan
masala with weights 4 gms, 2 gms and 2 gms respectively having different MRP - Goods were
chargeable to duty under Section 4A of CEA, 1944 - Goods contained in pouches were cleared
by assessee after payment of duty on MRP less the abatement - MRP was declared on
pouches - It has not been shown how excess weight in pouches would affect declared MRP on
basis of which duty was paid - Charge of clandestine removal does not even sustain for reason
that there is no evidence to show that any amount was received by assessee over and above
the declared MRP - Commissioner (A) does not explain why assessment should not be done in
terms of Section 4A - In these circumstances, benefit must go to assessee: CESTAT - Appeal
allowed : ALLAHABAD CESTAT
CCE Vs DSM Sugar
CX - Remission of duty - Assessee engaged in manufacture of sugar - Due to heat in month of
May, molasses started oozing out from tank - Range Officer in his report to Assistant
Commissioner found that all necessary precautionary devices in concerned tank were there and
there was no proof of negligence or mischief - Oozing out is a natural phenomenon and,
therefore, case is well covered under Rule 21 - Revenue has not been able to show from any
technical document that assessee should have stored 10% less of total capacity of tank and has
not even verified either quantity stored in tank or quantity oozed out - Revenue's appeal is
simply based on survey report of insurance company which excluded 10% of quantity stored
while sanctioning insured value - Even if insurance company did not consider the quantity which
had oozed out, there is no denying the fact that same had occurred due to a natural
phenomenon - Therefore, no case is made out for denial of remission: CESTAT - Appeal
dismissed : ALLAHABAD CESTAT
Anabond Ltd Vs CCE
Central Excise - CENVAT credit - used capital goods cleared without payment of duty by the
appellant to the their own unit located at SEZ - The adjudicating authority confirmed the denial
and demand for reversal of Cenvat credit; imposed equal penalty; and also appropriated the
amount already paid - Commissioner (Appeals) upheld the demand and set aside the penalty
imposed under Rule 15(1) of CCR, 2004; now agitated by the Party and Revenue respectively,
on the corresponding portions.
Held: The appellants cleared inputs and capital goods by following the procedure laid down
under Notification 58/2003 - On identical issue the Tribunal in the case of M/s. Wabco TVS
(India) Ltd. rejected the Revenue appeal and held that the clearance of goods to their own unit
at SEZ does not require reversal of the cenvat credit - there is no specific recovery mechanism
of credit on the inputs and capital goods cleared during the relevant period, which was
introduced only w.e.f. 01.02.2013 - This issue was specifically dealt by the Tribunal at Mumbai
in the case of Ispat Metallics Industries Ltd. - following these Tribunal decisions, the appellants
are not liable to reverse Cenvat credit availed on the capital goods cleared to their own unit at
SEZ; and the question of penalty does not arise - Accordingly, the assessee's appeal is allowed
and the Revenue appeal is rejected. - Appeals disposed of : CHENNAI CESTAT
Padmavati Pulp and Paper Mills Vs CCE
CX - Appellants are engaged in the manufacture of craft paper and were clearing the goods
under sr. no. 93 of Notfn. 4/2006-CE on payment of duty - Revenue contention is that goods are
covered under sr. no. 90 of the said notification which prescribes Nil rate of duty and, therefore,
assessee cannot pay duty on the initial clearance of 3500 MT of craft paper – Cenvat credit
denied - assessee have filed appeal against the order – Revenue appeal against imposition of
reduced penalty and relating to recovery of interest. Held : A bare reading of s.5A of CEA, 1944
indicates that a manufacturer will not have an option to pay the duty only where the goods are
exempt and the exemption granted is "absolute" - in the present case, serial no. 90 has two
conditions viz. limiting exemption for goods cleared for home consumption upto first clearances
of an aggregate quantity not exceeding 3500 MT and the second condition of non-availment of
notification 8/2003-CE - in view of the above mentioned two conditions it cannot be said that
serial no. 90 provides ‘absolute exemption' - Appellant assessee cannot be forced to pay duty
@ Nil rate as per serial no. 90 of notification 4/2006-CE and they have the option to pay duty
under other serial numbers viz. 91 and 93 - Appeal of assessee allowed and Revenue appeal
dismissed: CESTAT - Assessee appeal allowed/Revenue appeal dismissed : MUMBAI CESTAT
Sigma Diagnostics (I) P Ltd Vs UoI
Central Excise - Appeal against the order of Tribunal dismissing the appeal for non-prosecution
- Petitioner seeks restoration on the ground that they do not contest the liability but only want to
avail benefit of reduced penalty under Section 11AC.
Held: Considering the fact that the petitioners do not desire to contest the appeals on merits and
only seek to avail of the benefit of option of reduced penalty under section 11AC of the Central
Excise Act and rule 26 of the Central Excise Rules as the case may be, the appeals are
restored to the file of the Tribunal for the purpose of considering the limited question as to
whether the petitioners are entitled to the benefit of option of reduced penalty under section
11AC of the Central Excise Act and rule 26 of the Central Excise Rules, as the case may be. Matter remanded : GUJARAT HIGH COURT
Jsw Steel Ltd Vs CCE
CX - Blast furnace gases released during manufacture of steel cleared under exemption to
neighbouring cement unit for a price - whether rule 6(3) of CCR, 2004 can be applied for
recovery of amount as common inputs used - Credit of that quantity of raw materials shall be
allowed which is required for manufacture of the intended quantity of final products, irrespective
of the fact that certain by-products emerge as technical necessity - it cannot be said that any
inputs have been used for the manufacture of the by-product which are cleared under
exemption - no cause for invoking rule 6(3) of CCR, 2004 for recovery of any amount equivalent
to a certain percentage of the value of blast furnace gases sold - Appeal allowed: CESTAT Appeal allowed : MUMBAI CESTAT
I G Petrochemicals Ltd Vs CCE
CX - Assessee is a 100% EOU and clearing a part of the manufactured goods into DTA Revenue contention is that the Transaction value between assessee and customers will be the
AV whereas assessee stand is that value for assessment purpose will be the CIF value of
similar goods being imported into India and the said CIF values are available.
Held: Tribunal in the case of Morarjee Brembana has held that sale price charged to customer
in India of the goods under assessment cannot be considered as a price in the course of
International Trade - this decision has been upheld by the Supreme Court - in view of the same,
appeal filed by the assessee is allowed and the Revenue appeal is dismissed: CESTAT Assessee appeal allowed/Revenue appeal dismissed : MUMBAI CESTAT
CUSTOMS
Lohia Travels And Cargo Vs CC
Cus - Revocation of licence - Assessee, being a CHA, filed a Bill of Entry on behalf of one
importer and goods were described as Cookware sets - On physical examination, consignment
was found to be containing fire crackers concealed alongwith declared goods - There is a delay
of three months in Inquiry report after the time limit prescribed under said Regulation - There is
also a delay in issuing impugned order of revocation which is beyond ninety days of submission
of inquiry report - On the one hand, original authority finds that inquiry report, which is a
verbatim reproduction of SCN under Customs Act and as such he is not taking cognizance of
said report; on the other hand, he finds no infirmity in report - Tribunal is not able to appreciate
such contradiction in original authority's finding - It is not clear, if inquiry report was not given
cognizance, then on what material records the original authority can proceed and decide the
case resulting in revocation of license of assessee- Impugned order of original authority is
issued in violation of provisions of CHALR, 2004 /CBLR, 2013 and is not legally sustainable:
CESTAT - Appeal allowed : DELHI CESTAT
Goversons Sanjeev Grover Vs CC
Cus - Enhancement of value has been done merely on basis of statements of indenters who too
spoke about value of the said goods in Malaysia - Said enhancement of value in absence of any
inculpatory statement of assessee and without support of value of any contemporaneous
imports of identical / similar goods is totally unsustainable particularly when impugned goods
came from UAE and not from Malaysia - When allegation of undervaluation is not sustainable,
question of RF and penalty simply does not arise: CESTAT - Appeals allowed : DELHI CESTAT
Poddar Pigments Ltd Vs CCE
Cus - Refund - Assessee contends that provisional assessment was made on 25.10.2005 and
11.07.2006 which was well before amendment in section 18 of Customs Act, 1962 incorporating
doctrine of unjust enrichment as said amendment was w.e.f. 13.07.2006 - Even for refund claim
made after finalisation of assessment, Section 11B of CEA, 1944 is required to be complied with
- Doctrine of unjust enrichment is applicable even in case of captive consumption of raw
material - Burden to establish that burden of duty has not been passed on to any other person
squarely rests on assessee - That burden cannot be deemed to have been discharged merely
by saying that price of final products reduced after import of impugned goods because price of
final product does not depend solely on price of impugned goods - Appeal dismissed: CESTAT Appeal dismissed : DELHI CESTAT
R R Kobler Overseas Pvt. Ltd Vs CC
Cus - Assessee, a 100% EOU exported leather pouches - Said leather pouches were
reimported duty free for repair under Notfn 158/95-Cus - Goods were re-imported within a
period of three years from the date of export - No dispute that goods were re-exported within
one year of date of re-importation but not within six months - Assessee did not seek any
permission to re-export goods beyond period of 6 months - Therefore, no basis for
Commissioner of Customs to allow such export during extended period beyond six months - As
no such extension was sought, obviously none was (or could be) granted by Commissioner - If
benefit of said exemption notfn is allowed as a matter of course when export took place after a
period of six months even when Commissioner had not extended period of export, said
condition will be rendered otiose - Condition No. II of said exemption notfn was not complied
with, benefit of same cannot be allowed to assessee: CESTAT - Appeal dismissed : DELHI
CESTAT
Sevenways Shipping Services Vs CC
Customs - CHALR 2004 - based on intelligence by DRI, it was alleged that appellant was
involved in certain illegal baggage clearances at Chennai Seaport; that the subject container
contained goods belonged to several persons whereas the baggage declaration was filed in the
name of one single passenger in order to mislead and thereby evade applicable duty, fine and
penalty - Statements were recorded from authorized signatory and after due investigations, the
CHA licence was suspended under Regulation 20 (2) of CHALR on the grounds that the CHA
failed to discharge their duties and responsibilities as a CHA as per CHALR and that CHA failed
to inform the department on the clearance of baggage of his clients while filing the bills and fulfil
their obligations in terms of Regulation 13 of CHALR - suspension was further continued vide
impugned order, agitated herein.
Held: High Court of Madras in the case of CC Vs CESTAT Chennai dismissed the Revenue's
C.M.A. and upheld this Tribunal's order revoking the suspension on identical case - ratio of the
Madras HC ruling squarely applicable to the instant case - In spite of definite time limit of 9
months prescribed by Board circular dt. 8.4.2010 for completion of the proceedings, in the
present case, even after 2 1/2 years the proceedings are not completed - suspension of CHA
licence is liable to be set aside and the appellants are allowed to perform their duties as CHA impugned order set aside; adjudicating authority is at liberty to continue the proceedings under
Regulation 22 of CHALR. Appeal allowed : CHENNAI CESTAT
DGFT Vs Kanak Exports
EXIM Policy 2002-2007 - So-called targets achieved were only on paper through fraudulent
means and, therefore, it cannot be said that any vested right accrued in favour of these
exporters - decision reflected in the notifications dated April 21 and 23, 2004, did not take away
any vested right of these exporters and amendments were necessitated by over-whelming
public interest/ considerations to prevent the misuse of the Scheme -Even when impugned
Notification issued under Section 5 could not be retrospective in nature, such retrospectivity
have not deprived the writ petitioners/exporters of their right inasmuch as no right had accrued
in favour of such persons under the Scheme - This Court, or for that matter the High Court in
exercise of its writ jurisdiction, cannot come to the aid of such petitioners/exporters who, without
making actual exports, play with the provisions of the Scheme and try to take undue advantage
thereof - Direction of the Bombay High Court granting these exporters benefit of the Scheme for
the past period is set aside: Supreme Court - SUPREME COURT OF INDIA
Shivam Newsprint Agency Vs CC
Cus - Proprietor of assessees paid differential duty when he was not even the importer on paper
also shows their involvement in modus operandi to evade customs duty on import of newsprint He was sole purchaser of entire quantity of impugned newsprint imported and as he has been
dealing in newsprint for a considerable period of time, he was fully aware that impugned
newsprint was imported at concessional rate of duty on actual user condition - Contention of
assessee that penalty imposed is beyond SCN because there was no allegation of abetment
against them, is factually not correct in-as-much-as SCN brings out their role and required them
to show cause as to why they should not be penalised under Section 112 of Customs Act, 1962
- Impugned goods were imported at behest of proprietor of assessees - Assessees are clearly
liable to penalty which is neither excessive nor arbitrary and therefore, same does not warrant
any appellate intervention: CESTAT - Appeals dismissed : DELHI CESTAT
Super Spinning Mills Ltd Vs CC & CE
Customs - EPCG Licence issued on 17.05.1995 - Goods cleared on 15.03.1995 on payment of
duty under provisional assessment, pending issuance of EPCG Licence - Benefit of the scheme
denied by invoking condition No 6 of the Licence as per which the benefit is admissible to goods
already shipped only if goods have not already been cleared from the Customs and Customs
Duty has not been paid.
Held: By stipulating in condition No.6, that the validity of the licence commenced even from the
date on which the goods had been shipped or goods had arrived, the Director General of
Foreign Trade had actually extended the benefit to the assessee. To put it differently, the
assessee was entitled, even as per condition No.6 of annexure A of the licence, to place an
order, to have the goods shipped and also to receive the goods at the port even before the date
of actual issue of licence. All that condition No.6 requires is that the licensee should not clear
the goods and should not pay customs duty.
In the case on hand, the appellant was forced to get the goods cleared from the Customs on
15.3.1995, as otherwise, they had to incur demurrage, without knowing the proposed date of
issue of licence. The decision to grant licence for the import of the very same machinery at
concessional rate had been taken by the Committee atleast one month before the date of
clearance of the goods. The meeting in which the Committee decided to issue a licence took
place on 13.2.1995 and the assessee cleared the machinery from the Customs on 15.3.1995.
But, the DGFT issued the licence on 17.5.1995, despite the fact that nearly three months have
passed by that time from the date of the decision. Therefore, the provisional clearance of goods
on 15.3.1995 cannot be held against the assessee, especially when the very licence issued to
the assessee had only two kinds of limitation, one in the form of a period of validity and another
in the form of total CIF value of the import - Question of law answered in favour of the appellant.
- Appeal allowed : MADRAS HIGH COURT
Surpass Freight Forwarders Vs CC
Customs - Custom Broker Licensing Regulation (CBLR), 2013 – License revoked in adjudication
on the ground that the appellant had aided and abetted in commitment of breach of law using
various IECs of others and there were undervaluation of the goods imported; acted under
improper authorization without knowing who was the real IEC holder; failed to exercise due
diligence; acted in violation of conditions of the licensing regulation; and caused prejudice to
customs – same agitated herein.
Held: When customs failed to adhere to the limitation, it lost its remedy under Regulation 20 of
CBLR 2013 - against the allegation of the commitment of the offence by appellant, it was issued
notice under Customs Act, 1962; but no result of that proceeding is on record nor either side
informed
Consequent upon the allegation made by DRI as to the commitment of the offence made by
appellant, prohibitory order was issued on 29.10.2013 by the Commissioner of Customs,
Mumbai - The appellant filed response on 8.11.2013, and also filed reply to the offence report
dated 7.10.2013 on 22.11.2013 before the Commissioner of Customs, Chennai, who failed to
proceed against the appellant in terms of Regulation 20 within the stipulated time - When that
Regulation is mandatory and requires the public authority to act publicly to pass public order
and he fails to do so within the time prescribed, recourse to that provision is no more available
to him on the expiry of the period so stipulated - when the mandatory requirement of the
Regulation was paid scant regard, the appellant is correct to plead that he is entitled to the
benefit of the principles relating to limitation laid down by the Madras HC judgment dated
2.7.2015 in the case of Commissioner of Customs Vs. A.M. Ahmed & Co. in W.A. No. 371 of
2015 and M.P. No. 1 of 2015 - when the offence report came to record on 7.10.2013, revocation
of licence was made on 19.1.2015 and that too without a notice issued within the period
stipulated by Regulation 20 of CBLR 2013 - Although action under the Custom Broker Licensing
Regulation, 2013 is without prejudice to the consequence under Customs Act, 1962, violation of
principles of natural justice by a belated action of the authority made its order fatal – impugned
order set aside. - Appeal allowed : CHENNAI CESTAT
Gem Granites Vs CCE
Customs - Application for modification of pre-deposit dismissed by the Commissioner (Appeals)
on the ground of functus officio - Appeal against the order of Tribunal modifying the pre-deposit
to Rs 1 crore.
Held: Contention that the Tribunal should not have imposed condition of pre-deposit when the
order in appeal was set aside - Contention is not correct as the Tribunal did not set aside the
order and remanded the matter, but only modified the amount of pre-deposit - Considering the
fact that the Commissioner (Appeals) dismissed the modification application on the ground of
functus officio even before the expiry of time available for making pre-deposit and also
considering the amount of Rs 60 lakhs already deposited, appellant is directed to deposit
another Rs 15 lakhs and thereafter the Commissioner (Appeals) to take up the appeal on
merits. - Appeal disposed of : MADRAS HIGH COURT
CC Vs CESTAT
Customs - CHA Licence - Appeal by revenue against the order of Tribunal setting aside the
order of continuous suspension under Regulation 20(3).
Held: The procedure for revoking the licence is separately prescribed under Regulation 22.
Under sub-regulation (1) of Regulation 22, a notice should be issued within 90 days from the
date of receipt of offence report, indicating the grounds on which it was proposed to suspend or
revoke the licence - The Tribunal was right, though on a different ground, in coming to the
conclusion that it arrived at - The question of law raised by the appellant viz., whether the
CESTAT's final order was correct when the Department has substantially complied with the
Regulation 22(1) of CHALR, 2004 by way of issuing with Order of Suspension wherein the
violations of the provisions of CHALR 2004 were elaborately brought out, by giving an
opportunity of personal hearing when the Customs Broker attended the same and submitted his
averments, and finally by issuing with a detailed order passed by the Commissioner (Import)
continuing the suspension already made, is answered against the Revenue. - Appeal dismissed
: MADRAS HIGH COURT
Jay Mahalaxmi Enterprises Vs CC
Cus - First appellate authority ordered for pre-deposits - Tribunal dismissed the appeal for noncompliance without going into merits of case - As per Arjun Industries Limited, modification
application filed by main assessee is allowed - Assessee should deposit an amount of Rs.
7,50,000/-: CESTAT - Application allowed : AHMEDABAD CESTAT