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An Exporter's Woes - Letter to Chairman CBEC - SOS (See 'DDT') EC announces poll dates between April 16 to May 13 for five-phase elections; Counting of votes to be done May 16; Chennai DRI makes biggest seizure of ketamine worth Rs 1.2 Cr ; TRAI issues guidelines for better broadband service; January exports grows by only 4.3% in rupee terms; Govt directs all airlines to collect Development Fee on behalf of DIAL at IGI Airport; Mumbai DRI busts superbike import racket; detects duty evasion in import of more than 200 bikes; |
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| Dear Member, Sending the following files: |
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TIOL COMMENTARY Service Tax – Date vs Rate; Right to be taxed the least! 'Duty becomes payable', 'duty ought to have been paid' – what do these terms mean vis-à-vis Ss11AA and 11AB of Central Excise; MIXED BUZZ Chennai DRI makes biggest seizure of ketamine worth Rs 1.2 Cr ; TRAI issues guidelines for better broadband service; January exports grows by only 4.3% in rupee terms; Govt directs all airlines to collect Development Fee on behalf of DIAL at IGI Airport; |
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2009-TIOL-04-ARA-IT.pdf + MOL story.pdf Advance Ruling Application rejected as the issue had been already decided by Commissioner (Appeals) – AAR - It is not in dispute that the same questions raised in this application are pending before the Appellate Tribunal in the appeals of Gracemac . Gracemac , after the merger has lost its legal identity and the applicant has stepped into the shoes of Gracemac . Even if the pending appeal proceedings can be pursued in the name of Gracemac , notwithstanding that its legal existence has come to an end, that does not really alter the situation. The legal and factual reality is that for all practical purposes, it is the appeal of the applicant, the applicant being the only entity who is solely interested in the appeals. It would be artificial to say that the appeals concern Gracemac but not the applicant. Be that as it may, it can reasonably be said that the same questions are pending determination before the Tribunal, whether Gracemac or the Company into which it merged is the appellant therein.:ADVANCE RULING AUTHORITY; M/s Sahara India Commercial Corporation Ltd Vs CIT, Kolkata-III (Dated: January 30, 2009 ) Income tax - Sec 127 - Centralisation of cases of Group companies - Assessee is located at Kolkata - Revenue issues order u/s 127 for transfer of case to Delhi where other Group companies cases being transferred from Lucknow - held, Section 127 does not spell out the class or classes of cases or grounds on which an order of transfer can be effected. Statute postulates compliance of two requirements – reasonable opportunity of hearing wherever it is possible to do so and recording of reasons of such transfer. Evidently, in the instant case both the requirements under the statute have been complied with. Thus, transfer depends on the facts of each case. Revenue is justified in passing the order of transfer of files from Kolkata to New Delhi - Assessee's appeal dismissed : CALCUTTA HIGH COURT; CIT Vs Suman Paper & Boards Ltd (Dated: February 3, 2009) Income Tax - Sec 80I/80IA benefits - block assessment - Assessee files return for undisclosed income but claims deduction u/s 80I - AO diallows on the ground that no deduction to be allowed against undisclosed income - Tribunal allows the benefits on the ground that the law bars deductions only against carried forward lossses and depreciation u/s 32(2) and other benefits like Sec 80I under chapter VI not to be disallowed - held, in view of the amended provisions of Section 158BB of the Act by Finance Act, 2002 with retrospective effect from 01.07.1995, there is no infirmity in the Tribunal's order - Revenue's appeal dismissed:GUJARAT HIGH COURT; CIT Vs Wolkem India Ltd (Dated: January 14, 2009) Income tax - Assessee is into mining, processing and grinding of minerals - maintains large inventories of spare parts of plant and machinery - writes off part of inventory as obsolete store and claims deduction - AO finds that the assessee has arbitrarily written off 95% of the value without considering the extent of damage and makes additions - CIT allows value of inventory written down at 10% of the cost - Tribunal agrees with the CIT(A) - held, Sec 145A allows the assessee to value its inventory as per the method of accounting regularly followed by the assessee and by doing so the assessee has made efforts to dispose off the obsolete and rusted spares at some compensatory value and the rest was written off - 10 per cent of cost is a reasonable and no fault can be found with the CIT(A) order - Revenue's appeal dismissed:RAJASTHAN HIGH COURT; 2009-TIOL-134-ITAT-DEL-TM.pdf + TM rotary story.pdf ACIT, Faridabad Vs M/s Gurshant Rotary Compressors Ltd (Dated: October 23, 2008) Income Tax – cash sales of over Rs. 1 Crore – Some evidence of sale generating extraordinary income of about 100% in hands of a loss making company required to be placed by the assessee. Mere entries of sale to justify credit of Rs.1 ,00,04,855 /- were not good enough. The claim of sale of books is shrouded by a number of suspicious circumstances pointed out by the A.O which have not been satisfactorily explained by the assessee. Having regard to cumulative effect of all the circumstances, I am inclined to hold that assessee has not been able to establish that cash of Rs.1 ,00,04,855 /-represented sale proceeds of books. I do not find any substance in the finding of CIT (Appeals) that sales should be accepted as it is recorded in the books of accounts of the assessee. Some evidence of sale generating extraordinary income of about 100% in hands of a loss making company in purchase of books from a sister concern i.e. in an item not carried in routine, was required to be placed by the assessee. Mere entries of sale to justify credit of Rs.1 ,00,04,855 /- were not good enough.:DELHI ITAT (THIRD MEMBER); Smt Karen Beebee Vs ITO, Bangalore (Dated: January 16, 2009) Income tax - Sec 54EC - assessee is a non-resident - gets 25% share in her father's property - capital gains - declares the value calculated on per sq feet rate adopted by other share-holders in the same property as on 1.4.1981 for indexation - invests the entire sum in Rural Electrification Corporation bond which is exempted u/s 54EC - AO ignores the land rate returned and takes the average rate of two rates instances furnished by Sub-Registrar for two properties from the same locality - CIT(A) agrees with the AO by holding that the definition of fair market value of a capital asset as provided in Sec 2(22B) is to be adopted - held, the AO had no valid reason to reject the rate returned by the assessee particularly when the same rate returned by other share-holders in the same property has been accepted. Then the rate adopted by the AO was pure estimation which had no legs to stand on - Assessee's appeal allowed:BANGALORE ITAT; |
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| SERVICE TAX SECTION CCE, Jalandhar Vs M/s Darmania Telecom, Gurdaspur (Dated: February 12, 2009) ST - penalty - Assessing Authority imposes nominal penalty under Ss 76 and 78 by invoking powers u/s 80 - Revisional authority hikes the penalty by exercersing his powers under Sec 84 - Tribunal sets aside the order enhancing penalty - held, penalty under Sec 78 is to be levied in case of fraud, misstatment and suppression but there was no evidence before the Revisional authority to acquire jurisdiction to do so - No question of law - Revenue's appeal dismissed:PUNJAB AND HARYANA HIGH COURT; 2009-TIOL-370-CESTAT-AHM.pdf + st credit story.pdf CCE, Vapi Vs M/s Alidhara Textool Engineers Pvt Ltd (Dated: January 16, 2009) CENVAT Credit – Service Tax paid on Erection and Commissioning at Buyer's premises – Entitled for Credit – Since the responsibility for erection and commissioning is with the appellant and the agency which has done the work has been nominated by them it can be said that they are working as a sub contractor. Therefore it cannot be said that service was provided to the buyer of the machinery and therefore this contention has to be rejected. Rules does not require that service has to be rendered at the factory of the manufacturer for the purpose of eligibility for service tax credit - The incidental process of erection and commissioning being incidental to manufacture, has to be treated as continuation of the earlier process which started in the manufacturer's premises. In this case even though the position of the machine in CKD condition gets transferred to the buyer when it is removed from the factory as per the contract, the question to be examined is whether such a service is related directly or indirectly to the manufacture of their goods in question. As already mentioned earlier, the process of erection and commissioning at the buyer's premises is incidental to the manufacture of the machine and therefore the erection and commissioning services provided also can be said to be in relation to the manufacture, since the process in this case is complete only after the erection and commissioning takes place. Rule-2(l) of CENVAT credit rules does not require that service has to be rendered at the factory of the manufacturer for the purpose of eligibility for service tax credit. Therefore the stand of the revenue that since the service was provided at the buyer's premises, credit is not admissible cannot be accepted. What has to be examined is whether the service provided is in or in relation to manufacture.:AHMEDABAD CESTAT; M/s Agarwal Color Lab Vs CCE, Raipur (Dated: December 19, 2008) ST - photography service - Revenue imposes penalty under Sec 76 - Dispute is over inclusion of photographic materials in the gross value - Appeal pending before the Commissioner(A) - Meanwhile, Commissioner hikes penalty - held, since the issue is already decided in favour of the assessee, penalty set aside:DELHI CESTAT; M/s BMS Projects Pvt Ltd Vs CCE & CC, Surat-I (Dated: January 21, 2009) ST - Revenue raises demand for providing erection, commissioning and installation service - Assessee seeks modification of Tribunal order asking for pre-deposit of Rs 25 lakh - Assessee deposits Rs 6 lakh and seeks modification on the basis of Chennai Bench of Tribunal - Modification allowed:AHMEDABAD CESTAT;
2009-TIOL-105-HC-AHM-CX.pdf + justice story.pdf CCE & CC Vs Chandubhau Shiroya (Dated: October 24, 2008) Tribunal has to pass reasoned orders - reasons are like the bricks with which the edifice of justice is built. If the bricks are not in place, or are missing, the entire edifice comes crashing down; The legal position in this regard is, by now well-settled. The giving of reasons in support of their conclusions by judicial, quasi-judicial and administrative authorities when exercising jurisdiction is imperative, in order to avoid any element of arbitrariness or unfairness which may attach to unreasoned conclusions. The Tribunal is a quasi-judicial forum and while deciding matters, it has to bear in mind that a speaking order is required to be passed as it is adjudicating upon the Order-in-Appeal made by the Commissioner (Appeals) in which the Order-in-Original has merged. As the order made by the Tribunal is an appealable one, it should be ensured that it is founded on cogent reasons. The reasons contained in an order may not be lengthy or elaborate but, at the same time, they must reflect proper application of mind and an understanding of the pros and cons of the matter, as well as the legal position, which has led the Tribunal to come to its conclusion, more so, when the conclusion arrived at by the Tribunal differs from the conclusion arrived at by the adjudicating and Appellate Authorities. The Registry is directed to transmit a copy of this order to the President of the Tribunal. :GUJARAT HIGH COURT; M/s Tamil Nadu Steel Tubes Ltd Vs CCE, Chennai (Dated: October 30, 2008) Central Excise – Modvat – Credit reversed and later restored – Interest – Compensation arises either where there is a breach of contract by one of the parties to the contract or where there is a violation of statutory provision in appropriate case. The offending party has to compensate the injured party. In the present case, the appellants have reversed MODVAT credit out of their own volition, when there was no such necessity. Later on, when the appellate authority ordered restoration of the credit, they lost no time to restore it. In this scenario, we do not think that the government should compensate the appellant by way of payment of interest. There is no legal basis for the claim of interest. ( Para 4):CHENNAI CESTAT; M/s Wire & Wire Products Vs CCE, Chennai (Dated: October 10, 2008) Central Excise – Shortage of Input – CENVAT Reversal – The appellants had availed CENVAT credit of the entire duty paid on the input received by them under cover of the relevant invoices and was duly entered in RG-23 A – Part-I. Quantities of inputs issued to the floor of the factory were also accounted. There is no allegation that any part of the input was sold as such or otherwise diverted. It is also noted that the show-cause notice itself admits that the shortage had arisen as a result of incorrect reading or loss of weight during transit. No physical stock verification of the raw material in the factory was ever done and the entire case of the department is based on records. It is practically impossible at this stage to determine with mathematical precision as to whether any quantity of input was short-received in the factory vis-à-vis the invoices. As the department did not have a consistent case against the appellants, the benefit of doubt must go in favour of the appellants. Hence, appeal allowed. ( Para 3) :CHENNAI CESTAT;
CUSTOMS SECTION NOTIFICATIONS + CIRCULARS + PUBLIC NOTICES DGFT allows duty credit scrip benefit under MLFPS on export of leather products; Import of toys from China permitted subject to conditions; Import of Marble – DGFT relaxes conditions; Guidelines for import of Rough Blocks and Slabs of agglomerated / artificial stones for the year 2008-09.; Guidelines for import of Rough Marble Blocks and Slabs for the year 2008-09.; MLFPS - Leather products and readymade garments added; Marble blocks / tiles added to high value added manufactured goods lists; VKGUY entries corrected for flower, fruit and vegetable products; DGFT adds castor oil to VKGUY products list ; CASE LAWS 2009-TIOL-367-CESTAT-AHM.pdfM/s Gokul Enterprises Vs CC, Jamnagar (Dated: November 17, 2008) Customs -Import - Classification - RBD Palm Stearin with Palm Fatty Acid distillate - RBD Palm Stearin with Palm Fatty Acid distillate is classifiable under Chapter 15119090 of Customs Tariff Act and not under 38231900. High ester value in all the samples shows that the imported goods cannot be classified as Mixed Fatty Acid or Palm Stearin under chapter 38231900 in view of the fact that it cannot contain ester at all. Only ordinary/crude palm oil contain ester and only after the process of hydrolysis/ saponification, free fatty acids are produced and after the process there would be no ester. Hence the imported goods are classifiable under Chapter 15119090 of Customs Tariff Act. - By majority order. (Para 5.1) Confiscation - Penalty - Fine - In the bill of entry, appellants had declared the item as Mixed Fatty Acid whereas on chemical test, it has been found to be other than Mixed Fatty Acid. Further, the appellants had enclosed a test of independent surveyor, wherein analysis report shows the product to contain free fatty acid 75.3% and moisture and impurities 47.9%. On the basis of test results conducted in India, the analysis report submitted by the importer has to be rejected and it can be concluded that the appellants deliberately mis-declared the description to avoid payment of duty on the basis of tariff value and also at higher rates is upheld. Therefore, confiscation is upheld. Also imposition of Rs.5 lakhs as redemption fine in lieu of confiscation is reasonable and needs no interference. Penalties imposed also are not interfered with. (Para 5.2 & 5.3):AHMEDABAD CESTAT; |
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