Central Excise - Valuation - fad with freight - Place of Removal - Revenue far removed from Reality (See 'DDT')

CVC launches prosecution against 19 CBEC officers;

CBEC Chief Commissioners' promotion-cum-transfer order; Election Commission gives nod for issue of order; Placement Committee finalises posting order;

Inflation further comes down to 3.03 per cent;

Exports continues to be on slide; further dips to 13.7% growth rate in Feb, 2009;

IAM, IIFT to launch executive education program on apparel export management;

President appoints Navin B Chawla as Chief Election Commissioner from April 21, 2009;

UN Task Force against terrorism enters into operational phase, says Secy General;

RBI further reduces repo rate and reverse repo rate by 50 basis points; expects banks to provide credit for productive purposes;

TIOL COMMENTARY

ddt 5 march.pdf

SEZ Developer - Amendment in Rule 6(6) (i) of CENVAT Credit Rules – Only Prospective;

cobweb.pdf

Tax havens under siege - Obama, G20 literally launch war against offshore bank secrecy jurisdictions;

MIXED BUZZ

mbuzz0249.pdf

CVC launches prosecution against 19 CBEC officers;

mbuzz0248.pdf

IAM, IIFT to launch executive education program on apparel export management;

mbuzz0247.pdf

UN Task Force against terrorism enters into operational phase, says Secy General;

2009-TIOL-143-ITAT-BANG.pdf + nike story.pdf

DDIT, Bangalore Vs M/s Nike Inc (Indian Liasion Office) (Dated: January 2, 2009)

Income tax - Indo-USA DTAA - Assessee is a non-resident global sports goods manufacturer - sets up Liaison Office (LO) in India - undertakes various functions of a procurement agent for purchase of exports goods on behalf of affiliate companies of its Group, located in various countries - earns only commission income from own affiliates - Revenue treats the LO as PE as treats its income as taxable under Sec 9(1)(i) - CIT(A) disagrees with the AO - held, since the LO's activities are confined only to identify manufacturers, give them technical support in meeting the technical specifications of goods to be purchased by its affiliates and never gets into any buying contract itself but act as a mere buying agent for the principal buyers, their case fits into Explanation (1)(b) of Sec 9(1)(i) and their commission income cannot be taxed in India - CIT(A) order upheld - Revenue's appeal dismissed:BANGALORE ITAT;

2009-TIOL-142-ITAT-BANG.pdf

M/s Maruthi Mercantile Pvt Ltd Vs ACIT, Bangalore (Dated: January 30, 2009)

Income Tax - Assessee company claims deduction u/s 80HHC - AO reopens assessment on the ground that foreign exchange remittances have not been received - CIT(A) agrees with the AO's order - Held, the misrepresentation of facts does indicate that the assessee has not disclosed fully and truly all-material facts relevant to the assessment and, therefore, requirement of proviso to section 147 stands satisfied - Held, proviso to section 147 does not have effect of curtailing limitation period for passing order u/s 147 as per section 153(2) because the limitation of four years applies only to the initiation of reassessment proceedings - Assessee's appeal partly allowed. :BANGALORE ITAT;

2009-TIOL-141-ITAT-BANG.pdf

ITO, Bangalore Vs M/s Maxim India Integrated Circuit Design Pvt Ltd (Dated: January 27, 2009)

Income tax - Sec 10A - Revenue denies the benefits on the ground that the existing unit was split to set up the STPI Unit - Issue is already decided in favour of the assessee's own case earlier by the Tribunal - No infirmity in CIT(A) order - Revenue's appeal dismissed:BANGALORE ITAT;

2009-TIOL-140-ITAT-DEL.pdf

Selan Exploration Technology Ltd Vs ITO, New Delhi (Dated: January 30, 2009)

Income Tax - Assessee files NIL income return - claims expenses incurred on buyback of shares - AO takes the view that such an expenditure is directly related to the capital of the assessee and the payment was made out of reserves and suplus of the assessee - CIT(A) agrees with the AO - held, in view of the Tribunal's decision in assessee's own case, the expenses are to be treated as revenue in nature

Assessee claims deduction for foreign travel expenses - Sec 37 (1) - AO disallows 50% of the expenses as no details furnished by the assessee - Assessee aruges that the foreign exchange was released by the RBI and the same was incurred for the purpose of business - CIT(A) goes with the AO - held, in the absence of specific details, it cannot be said that the expenses were incurred exclusively and wholly for the purpose of the business. However, the disallowance of 50% is on higher side because the factum of the foreign tour undertaken by the Directors cannot be doubted and a report was submitted to the AO. A disallowance of 25% is more reasonable - Assessee's appeal partly allowed:DELHI ITAT;

SERVICE TAX SECTION

2009-TIOL-387-CESTAT-DEL.pdf + idea story.pdf

M/s Idea Cellular Ltd Vs CCE, Rohtak (Dated: February 17, 2009)

Service tax – exempted and taxable service – restriction on 20% credit not applicable to Capital Goods Credit – even if the provisions of Rule 6 (3) (c) are attracted, the limit of '20% of the service tax payable' on utilization of tax credit for payment of service tax on telephone service is not applicable in respect of capital goods Cenvat credit and service tax credit in respect of 17 input services specified in Rule 6 (5).

Exempted Services: - There is no dispute about the fact that, the 'inter-connectivity services', 'roaming service and 'infrastructure use service' being provided by the Appellant to other telephone service providers were not taxable during the period of dispute. The point of dispute is as to whether these services can be treated as "exempted services" covered by Rule 2 (e) of the Cenvat Credit Rules 2004 for invoking the provisions of Rule 6 (3) (c). Thus the expression 'exempted services' covers not only the services taxable under Section 66 of the Act, which are fully exempt from service tax by some exemption notification issued under Section 93, but also those services which are not taxable under Section 66 of the Act. In view of the wordings of Rule 2 (e) of Cenvat Credit Rules 2004, the services, in question, have to be treated as 'exempted services'.

Binding nature of Board Circulars - As per Supreme Court's judgment in case of CCE , Bolpur Vs. Ratan Melting & Wire Industries reported ( 2008-TIOL-194-SC- CX -CB ) , the Board's instructions are binding on the Departmental officers unless contrary view has been expressed by Supreme Court or any High Court. In this case neither any such judgment of Hon'ble Supreme Court or High Court has been produced, nor the Department has shown as to how the Board's instructions, which are its own instructions, are contrary to statutory provisions.

Something positive, rather than mere inaction or failure on the part of an assessee has to be proved before invoking extended limitation period : The Supreme Court in cases of CCE Vs. Chemphar Drug & Limits reported in ( 2002-TIOL-266-SC- CX ) and Pushpam Pharmaceuticals Company Vs. CCE , Mumbai reported in ( 2002-TIOL-235-SC- CX ) has held that something positive, rather than mere inaction or failure on the part of an assessee has to be proved before invoking extended limitation period under proviso to Section 11A (1) of the Central Excise Act, 1944 and that since the expression - 'Suppression of facts' has been used in the company of strong words such as fraud, collusion in wilful default, it cannot be interpreted as mere omission - the act constituting 'suppression' must be deliberate. In this case neither the circumstances indicate 'suppression of facts', misstatement, fraud etc. nor any evidence in this regard has been produced. Therefore neither the demand beyond the normal limitation period of one year is sustainable nor penalty under Rule 15 (4) of Cenvat Credit Rules, 2004 read with Section 78 of the Finance Act, 1994 is attracted.:DELHI CESTAT;

2009-TIOL-386-CESTAT-AHM.pdf

CST, Daman Vs M/s Meghna Cement Depot (Dated: January 30, 2009)

ST - Penalty - Assessee provides C & F Service to a cement manufacturer - Revenue raises demand and imposes penalty under Sec 78 - Commissioner(A) quashes penalty under Sec 78 and reduces penalty under Sec 77 - held, there is no evidence with the Revenue to prove suppression - no infirmity in the Commissioner(A) order - Revenue's appeal dismissed:AHMEDABAD CESTAT;

2009-TIOL-385-CESTAT-AHM.pdf

M/s Sky Courier International Vs CST, Ahmedabad (Dated: January 20, 2009)

ST - Courier service - assessee provides domestic as well as international courier service - claims exemption for export of service - prima facie, the assessee has made a case and has also deposited 25% of the demand - stay granted:AHMEDABAD CESTAT;

CENTRAL EXCISE SECTION

2009-TIOL-31-SC-CX-LB.pdf + sc cx story.pdf

CCE, Noida Vs M/s Accurate Meters Ltd (Dated: March 3, 2009)

Central Excise – Valuation – fad with freight - freight and insurance charges, not to be part of assessable value: there were two separate contracts; one for sale of Electricity Meters which was governed by the provisions of the Sale of Goods Act, and the other governing transportation of the goods. The charges for transportation of the goods were not on actual basis. Respondent was bound to transport the goods from the factory gate to the place of the State Electricity Boards at the rates specified in the tender. Prior thereto, the State Electricity Board Authorities were to make inspection of the goods. Section 39 of the Sale of goods Act refers to the legal effect of delivery of the goods to a carrier by the seller. It is provided that where, in pursuance of a contract of sale, the seller is authorized or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer, is prima facie deemed to be a delivery of the goods to the buyer, admittedly, in the present case after appropriation of the good to the contract they were delivered to the carrier as per terms of the contract. Therefore, delivery to the carrier has to be taken as delivery to buyer. Revenue has no case that the goods are not sent to the buyer through carrier.:SUPREME COURT (LARGER BENCH);

2009-TIOL-384-CESTAT-AHM.pdf

CCE, Bhavnagar Vs M/s Shreeji Concast Ltd (Dated: October 1, 2008)

Central Excise - limitation - duty demand on Formers manufactured and used within the factory by units under compounded levy scheme - demand based on the clarification by the Board after expiry of normal period is barred by limitation.:AHMEDABAD CESTAT;

2009-TIOL-383-CESTAT-MAD.pdf

M/s Super Forgings Andsteels Ltd Vs CCE, Chennai (Dated: November 17, 2008)

Central Excise – MODVAT - Clandestine clearance – Manufacture – Bright Bars - Modvat credit has been taken on the strength of documents which did not cover movement of inputs, i.e., steel black bars and the appellants had manufactured and cleared the final products, bright bars, clandestinely without following central Excise formalities including payment of duty - Conversion of steel black bars into bright bars does not amount manufacture. In the result the charges of clandestine clearances of excisable goods without payment of duty and availment of irregular Modvat credit demanded does not survive - Hence, the impugned demands of duty , Modvat credit and penalties / interest are not sustainable. ( Para 5) :CHENNAI CESTAT;

CUSTOMS SECTION

2009-TIOL-388-CESTAT-MUM-LB.pdf + LB story.pdf

Shiv Kripa Ispat Pvt Ltd Vs CCE & CC, Nasik (Dated: January 19, 2009)

Customs and Central Excise - Whether redemption fine can be imposed when goods are not available for confiscation – Larger Bench settles the issue once and for all.

Reference to the Larger Bench –

Whether the goods can be confiscated and redemption fine imposed even if they are not available for confiscation (excluding the cases where the goods are initially seized and provisionally released) as held by the Tribunal in the case of Venus Enterprises Vs. Commissioner 2006(199) ELT 662 (Tri.- Chennai) or the same cannot be confiscated and fine in lieu of confiscation cannot be imposed as held by the CESTAT in the case of Ram Khazana Electronic ( ( 2003-TIOL-305-CESTAT-DEL ) ), Shiwalaya Spinning & Weaving Mills (P) Ltd 2002(146) ELT 610 (Tri.-Del.), Prudential Pharmaceuticals Ltd. 2001(136) ELT 1057 (Tri. -Chennai)"

Held: -

Redemption fine could not be imposed in the absence of the goods which had already been released by the Customs authorities to the importer without execution of any bond/undertaking by the latter. Conversely, where the goods are released under bond/undertaking, they could be confiscated as if the goods were available and consequently redemption fine in lieu of confiscation could also be imposed. Issue has been settled in the case of Commissioner of Customs, Amritsar Vs. Raja Impex (P) Ltd. ( 2008-TIOL-280-HC-P&H-CUS ) when the High Court, after considering the apex Court's judgment in Weston Components case ( 2002-TIOL-176-SC-CUS ) held as above. A similar view taken by the Tribunal in the case of Chinku Exports also stands upheld by the Supreme Court 2005 (184) ELT A36 (SC) as Revenue appeal was dismissed.

View taken by the Tribunal in Chinku Exports case stood affirmed by the Apex Court and consequently the similar view taken by the P&H High Court in Raja Impex case is a binding precedent while the contra decision of the Madras High Court in Venus Enterprises case ceases to be good law on the point. The Bench also emphasized that contextually the dismissal by the Apex Court of the SLP filed by M/s. Venus Enterprises did not have the effect of enhancing the precedent value of the High Court's decision in that case.

With reference to similar reference concerning Central Excise provisions, the Larger Bench held –

“It is nobody's case that a binding judicial authority on the question of imposability of fine under Section 125 of the Customs Act in lieu of confiscation of goods not available for confiscation would not be applicable where the similar question arises as to whether a fine could be imposed under Rule 25 of the Central Excise Rules, 2002 (read with Section 34 of the Central Excise Act) in lieu of confiscation of excisable goods not available for confiscation.”

Conclusion: Issue referred to Larger Bench in either of the two appeals is held against the Revenue in the light of the High Court's decision in Raja Impex case.:CHENNAI CESTAT(LARGER BENCH );