TIOL-DDT 2429
03.09.2014
Wednesday

YESTERDAY, DDT carried the CESTAT instruction on pre-deposit from CENVAT credit. The lingering doubt is whether the pre-deposit of penalty can be made from the CENVAT account. An appellate commissioner informed us that he has clarified to his staff and to the trade that pre-deposit of seven & a half percent can be made from CENVAT account too, as there is no bar on the same in the law.

Maybe we have to wait for the clarification from the mysterious 'Competent Authority'.

In 2010-TIOL-1863-CESTAT-MUM, the original authority had confirmed demand of duty of Rs. 57,500/- against the assessee and imposed on them equal amount of penalty. Aggrieved by the order, the assessee preferred an appeal to the Commissioner (Appeals) and also filed therein an application for waiver of pre-deposit under Section 35F of the Central Excise Act. In the said application, the appellate authority directed the appellant to pre-deposit an amount of Rs. 1.00 lakh. The appellant debited the amount in their MODVAT account and claimed that they had complied with the direction for pre-deposit under Section 35F. The appellate authority did not accept this to be 'due compliance' with Section 35F. He took the view that the above amount of Rs. 1.00 lakh should have been deposited through TR-6 challan. On this basis, the assessee's appeal came to be dismissed for non-compliance with Section 35F.

And the matter reached the CESTAT.

The Tribunal observed, "we are of the view that pre-deposit of the duty amount by way of debit in MODVAT account can be accepted as sufficient compliance with Section 35F and, therefore, the assessee need not be called upon to make any payment towards penalty through TR-6 challan. However, we are in agreement with the appellate Commissioner's view that any amount of penalty cannot be deposited through debit in MODVAT account. In the present case, debit of Rs. 57,500/- (duty) in the MODVAT account is an admitted fact and the same would suffice the purpose of Section 35F. In the circumstances, the learned Commissioner (Appeals) has to consider the assessee's appeal on merits in accordance with law. Therefore, after setting aside the impugned order, we request the Commissioner (Appeals) to dispose of the assessee's appeal against the order-in-original, on merits without insisting on any further pre-deposit."

Will the Board give a clarification or allow litigation to generate and proliferate?

CESTAT - Revenue cannot file Stay application against Appellate Commissioner's Order

IN a recent case before the Bangalore Bench of the CESTAT, the Revenue was aggrieved by the order of the Commissioner (Appeals) and filed a Stay Application under Section 35 of the Central Excise Act, 1944.

Now, Section 35 deals with Appeals to Commissioner (Appeals) and not the Tribunal. Under what authority and for what purpose should Revenue file a Stay Petition against an order of a Commissioner (Appeals).

[An aside: In a case I represented before the Tribunal, the Appellate Commissioner's order was partly in my favour and partly against. Against the adverse order, I filed an appeal and a Stay petition praying for waiver of pre-deposit and stay of recovery. Strangely, Revenue also came up with a Stay Petition seeking stay of the entire order. I requested the Tribunal to allow the Revenue's petition. The Bench laughed and advised the DR to send the officers to NACEN for training on how to file appeals.]

In the present case, the Tribunal observed,

In the entire Chapter VIA in the Act, there is no provision that an application can be filed, especially by the Revenue department, seeking stay of operation of the impugned order till disposal of appeal by the appellate authorities. Filing of such application has no legal sanctity because, neither any duty demand has been confirmed nor any penalty imposed in the adjudication order against the Revenue department. Hence, in my considered opinion, in absence of any specific provisions contained in the Central Excise statute, the department is precluded in filing the application, seeking stay of operation of the impugned order. Further, I find that the application for stay has been filed under Section 35 of the Act, which deals with filing of appeals before the Commissioner (Appeals). There is no reference in the said Section for filing the stay application before the Appellate Tribunal.

This is how the Tribunal is clogged. The irresistible urge of Revenue to file an appeal even in the rarest of rare cases when the field officers could not pass an order in favour of Revenue, results in all kinds of waste paper landing in the Tribunal.

Let us see this situation:

An AC passes an order demanding duty, imposing penalty etc. The Commissioner (A) sets aside the order of the AC. Now the jurisdictional Commissioner rushes the AC to the Tribunal with an appeal and a Stay Petition. What do they gain by the Stay petition? Assuming that the Tribunal stays the order of the Commissioner (Appeals), the Revenue has no advantage as the AC's order does not bounce back to life. It has merged with the order of the Commissioner (Appeals). So, there is no order for Revenue to recover the demand originally made by the AC.

Why then, the Stay petition? A horrible waste of time, money and paper - and then they don't even know under which Section of the Act, an appeal is to be made to the Tribunal!

Please see 2014-TIOL-1661-CESTAT-BANG.

CBEC wants AC/DC level officers - not enough willing officers?

ABOUT 25 posts at the level of AC/DC are lying vacant in the CBEC. On 4th August, the Board circulated a letter asking for names of willing officers to work in the Board, but the response, according to Joy Kumari Chander, Member (P&V) has been inadequate to fill up the vacancies. She wants the Chief Commissioners/DGs to circulate the request again. She wants the CCs to advise the junior officers that these postings would be of an invaluable experience and therefore they should be encouraged to give their willingness.

But who is interested in working in the Board, when life in the field is exciting and lucrative? And what incentive is the Government providing for the honest and hard working officers ready to work in the Board?

By the way, why should Board request willingness from officers; why can't the Board select the officers and post them in the Board. This exercise of calling for willingness is going on for the last one year. How can the Board function without 25 officers at the cutting edge level?

CBEC Member (P&V) letter D.0.No.A.35017 /15/2014-Ad.ll, Dated: September 02 2014

Village Mithirohar, Gandhidham - a new ICD

VILLAGE Mithirohar, Gandhidham in Gujarat has been appointed as an Inland Container Depot (ICD) for Unloading of imported goods and loading of export goods.

Notification No.74/2014-Customs (N.T.), Dated: September 02 2014

Nothing is safe on the Internet

A gang of hackers recently collected and traded nude pictures of female celebrities by routinely breaking into Apple's iCloud system.

Martin Garbus, a famous lawyer who has represented actors Al Pacino, Sean Connery, Robert Redford and others, said that worried clients had approached him about security issues. He told Reuters, "Nothing is safe on the internet, period - Everything on your iPhone, whether it be phone calls, message texts, pictures, is all available,"

He said he was not surprised by the hacking because he said he has seen it in the past. "There are just so many different ways that one's privacy can be invaded."

Jurisprudentiol - Thursday's cases

Central Excise

As per the provisions of sub-section 9D (2) of Central Excise Act, 1944, cross examination of witness, whose statement has been relied upon by adjudicating authority is must - Demand set aside and matter remanded: CESTAT

THE department on receipt of an information that the appellant (M/s PMS) without receiving any inputs are only receiving the invoices from the suppliers and no goods have been sent to any of the job workers as claimed and were actually procuring the cheap diesel engine parts from market for export, while showing their manufactural clearance from their factory on payment of duty by utilizing the fraudulently taken CENVAT credit initiated inquiries. The inquiries were conducted with all the 24 job workers including the 9 job workers and all of them, in their respective statements recorded under Section 14 of the Central Excise Act, 1944 admitted that they have not received any raw materials from the appellant for processing and as such, have not sent any processed or finished goods to them and their transactions with the appellant regarding job work are mere paper transactions. In adjudication, the demand of duty was confirmed and penalties imposed.

Income Tax

Whether donation would become part of corpus where Resolution of Donor Company stated that shares would be transferred to trust and gift would be towards its corpus - YES: High Court

ASSESSEE Foundation was founded with the object to establish, develop, maintain and operate hospitals, medical schools, medical colleges, nursing institutions, dispensaries, maternity homes and child welfare centres etc. It was granted registration under Section 12AA and approval under Section 80G was also accorded. Assessee filed return declaring nil income for the assessment year 2006-07. Later assessee filed a revised return declaring income. During the course of the assessment proceedings the assessee claimed that the revised return be ignored and the first return should be treated as the correct and true return. Revised computation was filed. The Assessing Officer did not agree and held that in terms of the decision of the Supreme Court in Goetze (India) Limited vs. CIT 2006-TIOL-198-SC-IT, the assessee could not have filed the revised computation and said claim could have been only made by way of a re-revised return.

The issue before the Bench is - Whether donation would become a part of the corpus where the resolution of the donor company stated that the shares would be transferred to the assessee trust and the gift would be towards corpus of the trust. And the verdict favours the assessee.

VAT

Supply and Installation of Lifts / Elevators - Whether assessable as Works Contracts or Sale Contracts - Assessing Authority held as Sale contract - Revision allowed in view of the order in case of Kone Elevator India Pvt. Ltd. Vs. State of Tamil Nadu 2014-TIOL-57-SC-CT-CB : High Court

M/S Otis Elevators Company Ltd. is a Public Ltd. Company registered under the U.P. Vat Act, 2008 and is engaged in the business of manufacturing of parts and components of lifts and elevators in offices, residential buildings, government buildings etc. Assessment proceedings were initiated in respect of the Company for the year 2010-11. For purposes of carrying out the orders for supplying of lifts, elevators, the Head Office of the Company situate in Mumbai executes works contract for supply of parts and components of lifts/elevators and to provide services for erection, commissioning and installation of the same. The standard works followed by the Revisionist Company is that it is only after entering into an agreement with the customer, that the activity of manufacturing of parts/components of lifts/elevators is carried out by the Company at its factory situate in Karnataka.

The short point which, arises in the present revision for consideration of the Court is whether the works contract entered into between the revisionist company and a customer is a sale contract or a works contract.

See our Columns Tomorrow for the judgements.

Until Tomorrow with more DDT

Have a nice day.

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