TIOL-DDT 2597
14 05 2015
Thursday

WE bring you the highlights of some recent Supreme Court judgements - now that there is an exclusive tax bench several old cases are being decided.

Central Excise - Valuation - Reduction in contract price after clearance - Since duty has been paid on the basis of the original price in the purchase order, the difference between the said rate and the reduced rate has to be refunded. You have an agreement to sell your products at a particular price. After clearances, if for some reason the price is revised upwards retrospectively and the buyer pays you the differential price, you are required to pay duty and interest from the day when the consignment was originally cleared, even if you get the differential price two years later.

What happens if the price is reduced retrospectively? The Department will not give you a refund. It is always heads they win and tails you lose, as it happened in this case too.

The Supreme Court has now ordered refund with 9% interest from 2002 - for 13 years.

The Department should realise that rejecting a refund claim is not always a pro-revenue order

Please see HPL Socomac Ltd Vs Commissioner of Central Excise, Gurgaon- 2015-TIOL-117-SC-CX

Customs - Classification - Continuous Ambulatory Peritoneal Dialysis Fluid (CAPD fluid) is medical equipment which attracts nil rate of custom duty.: Not only this position was conceded to by Departmental representative before the Tribunal, even otherwise the aforesaid item is specifically included as medical equipment in Chapter Heading 90. The Department seems to be in appeal before the Supreme Court on a simple classification issue which can be understood just by looking at the tariff entries. Further the issue was conceded by the Departmental representative before the Tribunal. The Supreme Court found the appeals devoid of any merits and dismissed them.

Interestingly, the Supreme Court added, The amount which was deposited by the respondent was not to be refunded.

Please see Commissioner of Customs, Delhi Vs Baxter(I) Pvt Ltd - 2015-TIOL-113-SC-CUS

Central Excise - Exemption - supply of nutritious food (product) falling under sub-heading 1901.10 to the Government of Rajasthan under the World Food Programme project. It is not in dispute that in terms of paras 9.10 and 9.26 of the Exim Policy when the food products are supplied to the weaker sections of the society free of cost, there is no excise duty payable thereon. The only requirement is that there has to be certificates produced from the concerned authorities that goods were in fact distributed free of cost to the weaker sections under the aforesaid programme which is duly approved by the State Government. Tribunal has taken note of and discussed those certificates in the impugned order and on the basis of which a finding of fact is arrived at that the assessee had in fact distributed the goods free of cost to the economically weaker sections of the society. In these circumstance, the respondent could not be fastened with any liability to pay the excise duty. Supreme Court dismissed theRevenue Appeal.

Please see Commissioner of Central Excise, Jaipur-I Vs JVS Foods Pvt Ltd - 2015-TIOL-116-SC-CX

Central Excise - Valuation - cost of bought out items not to be added - The Department wanted to add the value of Handle assembly, Ball valve assembly, overflow assembly, Syphon assembly, Outlet flange assembly and Flush pipe assembly, while arriving at the valuation of the flushing cisterns manufactured by the assessee.

It is an admitted position that the fittings are not manufactured by the assessee.

It is also an admitted position that the assessee supplied the same to only those buyers who asked for them and in such a situation the assessee buys the aforesaid components from the market and supply to the buyers at their option.

Tribunal has rightly declined to add the value of the aforesaid components which are not the part of flushing cistern manufactured by the assessee.

Please see Commissioner of Central Excise, Trichy Vs Neycer India Ltd - 2015-TIOL-115-SC-CX

Customs - Project Imports - appeal - Tribunal remands the case to the Commissioner - revenue in appeal to Supreme Court against Tribunal order - Remand order confirmed - Appeal Dismissed. The Supreme Court declined to decide the issue as it found that the Tribunal hasrightly remitted these issues back to the Commissioner fordecision. The Supreme Court directed the Commissioner to decide the issue as early as possible.

Please see Commissioner of Customs (General) Mumbai Vs Reliance Industries Ltd - 2015-TIOL-112-SC-CUS

Central Excise - SSI Exemption - Surname of the Director, not a brand name of another person: It is not in dispute that the assessee is an SSI unit. It was denied exemption from excise duty admissible under Notification No.1/93-CE dated 28.2.1993 on the ground that it was using branded name of another person and therefore in terms of para 4 of the said Notification it was not entitled to the exemption. The finding of fact as recorded by the Tribunal in the impugned judgment is that the assessee was not using the branded name of another person and the name used was the surname of the Director of the assessee, viz., 'PETHE'. This finding of fact clearly means that the case does not fall within the mischief of para 4 of the aforesaid Notification No.1/93.

The Revenue took this SSI unit to the Supreme Court for using the name of its director. And the case was in the Supreme Court for ten years.

Please see Commissioner of Central Excise, Pune II Vs Pethe Brake Motors Pvt Ltd - 2015-TIOL-114-SC-CX

Black Money - A MeduVada Bill

SPEAKING in the Lok Sabha on the Bill, Dr. Shashi Tharoor, the Congress MP said, “The fact is, our good Finance Minister once upon a time used to enjoy good South Indian food. He has given us a meduvada Bill - a Bill with a big hole in the middle of it. Like the meduvada, we are seeing the lack of means of obtaining information about those whom we want to actually prosecute. There is a big hole in the middle of the Bill. You can announce jail, you can announce fine but you cannot fine or jail unknown people. Do you have the names of people or do you have the means of getting them?"

He added, "What this Bill is doing for the Government is like modern dating. It offers short term gratification without long term commitment or long term consequences."

Problem is not foreign : He made some more interesting observations: this Bill rests on the premise that foreign assets and foreign accounts are the principal problem in black money. They are not. We actually have no real idea of the scale of the problem. The Ministry of Finance says that there is no official estimate. They are right. We have all heard a number of figures advanced during this debate. The most objective source the US based Global Financial Integrity came up with a report saying that in the entire period from 1948 to 2008, there was 213 billion dollars lost which is about Rs.20 lakh crore. The hon. Member from Andhra Pradesh mentioned a more recent report of Rs.28 lakh crore. But you are still ending up not with Rs.15 lakh per Indian but under Rs.25,000 per Indian. So, first of all the scale of the problem is much smaller than the people assume. More importantly, the domestic black money is a much bigger figure and is a much larger problem.

Please also see today's CobWeb

Tax crimes to be 'predicate offence'

YESTERDAY DDT reported that the Task Force had recommended 'tax crimes' to be made a predicate offence so that action can be taken under Prevention of Money Laundering Act, 2002.

Many people asked me what a predicate offence was.

Article 6, paragraph 2 (a), of the UN Organized Crime Convention requires that the provisions concerning money-laundering are applicable to the “widest range of predicate offences”, including the offences established by the Convention itself and the Protocols to which the State has become a party, as well as all “serious crime"(art. 6, para. 2 (b)) as defined bythe Convention.

A "predicate offence" is an offence whose proceeds may become the subject of any of the money-laundering offences established under the Convention. Many States already have laws on money-laundering, but there are many variations in the definition of predicate offences. Some States limit the predicate offences to drug trafficking, or to drug trafficking and a few other crimes. Other States have an exhaustive list of predicate offences set forth in their legislation. Still other States define predicate offences generically as including all crimes, or all serious crimes, or all crimes subject to a defined penalty threshold.

The united Nations Convention against Transnational Organized Crime defines it: "Predicate offence" shall mean any offence as a result of which proceeds have been generated that may become the subject of an offence as defined in article 6 of this Convention.

Article 7 of the Organized Crime Convention requires States parties to take these measures.

They must:

1. Establish a regulatory and supervisory regime for banks and non-bank financial institutions, emphasizing requirements of customer identification, record-keeping and the reporting of suspicious transactions

2.  Develop the capacity of administrative, regulatory, law enforcement and other authorities to cooperate and exchange information with each other

3. Promote global, regional, sub-regional and bilateral cooperation among judicial, law enforcement and financial regulatory authorities

4. Use as a guideline the relevant initiatives of regional, interregional and multilateral organizations against money-laundering

They are also required:

1.  To consider implementing measures to detect and monitor movements of cash and negotiable instruments across their borders, such as reporting requirements for substantial cross-border cash transfers

2.  To promote cooperation among the national authorities established to combat money-laundering

Gold Seized by DRI is fake

A report from Ahmedabad says that 52 gold bars seized by DRI last month turned out to be made of copper and lead. The DRI had arrested former Army Major Saurabh Saharan and one Surender Singh Dagar from an Ahmedabad hotel and they are still in jail. Now that the gold has turned out to be copper, they may soon get bail.

But why should anyone go around with gold looking copper bars good to be seized by the DRI?

It seems the accused claim that the bars were dummy ones and were brought as samples to show customers how original gold bar would look like. However, DRI does not buy the logic behind the argument and their investigation is on.

No pictures of 'Leaders' in Govt Ads - Supreme Court

THE SC has directed that advertisements issued by the Government should not carry the pictures of politicians or other functionaries. The Court held in a judgement delivered yesterday, "The legitimate and permissible object of an advertisement can always be achieved without publication of the photograph of any particular functionary either in the State of a political party. There should be an exception only in the case of the President, Prime Minister and Chief Justice of the country who may themselves decide the question."

But why the Chief Justice?

The Court of course gave an exception- Advertisements issued to commemorate the anniversaries of acknowledged personalities like the father of the nation would of course carry the photograph of the departed leader.

No ads for Centenary of High Court: The Supreme Court observed, “Advertisement issued on certain other occasions, for instance, to mark the centenary year of the Patna High Court does not serve any purpose and must be avoided. Institutions need not be glorified. They must earn glory by contribution and work. (Also see 2015-TIOL-119-SC-MISC)

Until Tomorrow with more DDT

Have a nice day.

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