Recent Supreme Court judgements
09 10 2015
Friday
'READY Mix Concrete' (RMC) vs Concrete Mix (CM) - Not Same: Concrete Mix (CM) manufactured at the site of construction for use in construction work at such site, is exempted from excise duty. And this was exempted since 1994. Ready Mix Concrete (RMC) is not so exempted. But is there a difference between the two? In 2002, the Commissioner held that these were two different items and what the assessee in that case manufactured at the site was RMC and not CM and so duty was payable. This decision of the Commissioner was upheld by the CESTAT in 2005 (2005-TIOL-1281-CESTAT-BANG), against which the assessee, L&T is in appeal before the Supreme Court.
The Supreme Court this week dismissed the assessee's appeal and held: the assessee was producing RMC and the exemption notification exempts only CM and the two products are different. Even if there is a doubt, which was even accepted by the assessee, since we are dealing with the exemption notification it has to be strict interpretation and in case of doubt, benefit has to be given to the Revenue.
Please see Larsen and Tourbo Ltd Vs Commissioner of Central Excise, Hyderabad - 2015-TIOL-236-SC-CX
Central Excise - Valuation - whether, by virtue of a transit insurance policy in the name of the manufacturer, excise duty is liable to be recovered on freight charges incurred for transportation of goods from the factory gate to the buyer's premises, treating the buyer's premises as the place of removal. No:
The question of including the cost of transport in the assessable value is as old as excise valuation itself. The Revenue always wanted a share in the transport charges. Any number of Court Orders or discourses could not convince them that excise is a duty on manufacture and transport is an entirely different activity and cannot be a part of manufacture. Just because a manufacturer is also in the business of transporting goods, the cost of transport should not be added to the value.
During the hearing of the famous case, Bombay Tyre International (2002-TIOL-374-SC-CX-LB), the legendary lawyer for the assessee, Mr. Nani Palkhiwala propounded three principles as forming the essential characteristics of a duty of excise. They were:
1. Excise is a tax on manufacture or production and not on anything else.
2. Uniformity of incidence is a basic characteristic of excise.
3. Exclusion of the post manufacturing expenses and post manufacturing profits is necessarily involved in the first principle and helps to achieve the second.
But for some reason the Government wants excise duty on transport - by legislation or litigation or both.
Supreme Court decided a case on 7th October in which the issue involved was whether, by virtue of a transit insurance policy in the name of the manufacturer, excise duty is liable to be recovered on freight charges incurred for transportation of goods from the factory gate to the buyer's premises, treating the buyer's premises as the place of removal.
The Commissioner even relied on the statement of a manager of the Company to hold that there was no transfer in the right to property on the goods at the factory gate.
The Supreme Court observed, "in the present case all prices were "ex-works", like the facts in Escorts JCB's case. Goods were cleared from the factory on payment of the appropriate sales tax by the assessee itself, thereby indicating that it had sold the goods manufactured by it at the factory gate. Sales were made against Letters of Credit and bank discounting facilities, sometimes in advance. Invoices were prepared only at the factory directly in the name of the customer in which the name of the Insurance Company as well as the number of the transit Insurance Policy were mentioned. Above all, excise invoices were prepared at the time of the goods leaving the factory in the name and address of the customers of the respondent. When the goods were handed over to the transporter, the respondent had no right to the disposal of the goods nor did it reserve such rights inasmuch as title had already passed to its customer."
Please see Breaking News and Commissioner of Customs and Central Excise, Nagpur Vs Ispat Industries - 2015-TIOL-238-SC-CX
Customs: Import of computer software in CD ROMs: Tribunal held that value was fair and when the goods are wholly exempt from customs duty, there could be no motive in mis-declaration of value. These are questions of fact - No substantial question of Law.
The Department issued notice alleging overvaluation of imported goods and evasion of Duty on import of computer software. Before the decision, opinion from the Electronics and Computer Software Export Promotion Council was sought, which gave the opinion that the goods were computer software and value which was declared appeared to be fair in the international market for the titles of such goods. In spite of this opinion, the Commissioner confirmed the demand. Revenue conceded before the Tribunal that the assessee was eligible for exemption.
On valuation, the Tribunal held that the declaration of the price in the Bill of Entry was correct and it was not a case of showing excessive value. Tribunal also observed that when the goods are wholly exempt from customs duty, there could be no motive in mis-declaration of value.
Against this, the Revenue is in appeal before the Supreme Court!
The Supreme Court observed, "These are all questions of fact and when we find that the decision of the Tribunal is based upon the opinion of the expert body which had examined the goods in question as well as the price declared, we do not find any reason to interfere with the order of the Tribunal as no substantial question of law arises for consideration."
Please see Breaking News and Commissioner of Customs Vs Contessa Commercial Co. Ltd - 2015-TIOL-237-SC-CUS
CESTAT - Uttarakhand Appeals to be filed in Delhi, not Allahabad
BY Notification No. 01/2015, dated 14.08.2015, Regional Bench of CESTAT was constituted at Allahabad with jurisdiction over the appeals arising from the State of Uttar Pradesh.
Now the CESTAT clarifies that appeals from the State of Uttarakhand shall be filed in CESTAT, Delhi and not Allahabad. Cases pertaining State of Uttarakhand transferred to Allahabad Bench are being re-transferred to CESTAT, Delhi.
What will be the jurisdiction of Hyderabad Bench of CESTAT? By Letter dated 13.11.2013, the Revenue Department informed the CESTAT that as per the cabinet decision, the jurisdiction of the CESTAT Bench at Hyderabad would be the State of Andhra Pradesh. After this, in June 2014, the State of Andhra Pradesh was bifurcated into the States of Andhra Pradesh and Telangana. So, will the Hyderabad Bench have jurisdiction over the State of Telangana?
CESTAT Circular in F.No.08/MISC/MIN/2008-CR., Dated: October 07, 2015
GST - RNR Not to Exceed 20% - CBEC Member
CBEC Member VS Krishnan told a CII Global Tax Summit yesterday that t he Empowered Committee is working with think tank NIPFP on the Revenue Neutral Rate, based on a fresh set of data. He assured the industry that the rate should not exceed 20%. He is also reported to have said:
Drafting of the GST law has already been done and it would be given to the Empowered Committee for their inputs. Thereafter, it would be put in the public domain for comments. In addition, the draft Place of Supply rules will also be made public for comments.
A lot of ground work needs to be done on GST by Industry Associations. Industry needs to identify challenges in the transitional provisions to the new GST legislation as well as suggest solutions to the problems.
We need to create a state level GST secretariat in which senior officials from centre and state should come together for interactions in institutionalised arrangements. A lot of hand holding is required for the successful implementation of GST.
There is undue revenue pessimism about GST. But on the contrary, revenue is expected to boom under GST.
On the issue of delay in refund of service tax, Mr Krishnan mentioned that this is being looked into and CBEC will come out with the developments very shortly.
Going by indications, we are going to export all the Central Excise confusion and litigation into the GST.
Invest in India, but we don't answer questions
THE Authority for Advance Ruling Chairman, Justice VS Sirpurkar said that over 500 applications are pending before the AAR. He said, "The interesting aspect is that about 90 per cent of these applications are from foreign companies that are keen to invest in India and had approached AAR to get some certainty on the tax treatment of their proposed transactions."
He said:
At least in 30 applications before me this question is asked. What have you (tax department) been doing? If there are 30-40 applications by foreign companies who are prepared to pour in money, you don't even answer that if they are required to maintain their accounts as per Indian Companies Law.
Tax officials should come prepared before the Authority for Advance Rulings (AAR) and not seek frequent adjournments, which leads to delay in adjudication of the cases.
Central Board of Direct Taxes Chairperson Ms. Anita Kapur said that she would instruct her officers to refrain from seeking frequent adjournments.
She also said that senior officials of the tax department have been asked to appear before AAR so that the legal issues could be well explained and matters disposed of quickly.
And while on that, the CBEC is yet to have a full time Chairman. Mr. Najib Shah is only an acting Chairman.
Asia Europe Customs Meet
THE CBEC Chairman, Najib Shah addressing the participating delegates after inaugurating the 11th Asia-Europe Meeting of Customs Directors General-Commissioners, at Dona Paula near Panaji, Goa yesterday. WCO Secretary General Mr. Kunio Mikuriya is also seen.
Please also see a bored Customs officer standing behind the dignitaries on the Stage. This is a protocol officer whose only job is stand there like a decoration to the stage. He is not there for security (he hardly knows anything about that); his only reason to be standing during the entire proceedings is perhaps to add a little colour(white!) to the stage. When will we get rid of such archaic humiliating protocol?
Until Monday with more DDT
Have a nice weekend.
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