CASE LAWS
2018-TIOL-713-HC-MUM-IT + Story
ITC CLASSIC FINANCE COMPANY Vs V NAGAPRASAD: BOMBAY HIGH COURT (Dated: April 10, 2018)
Income Tax - Writ - Sections 80G, 80M, 148 & Chapter VIA.
Keywords: Dividend income & Escaped assessment.
The Assessee has preferred the Writ Petition challenging a reopening notice issued by the AO u/s 148 for the AY 1995-96. The Assessee had filed its return for the relevant AY declaring a loss and also claimed an aggregate deduction of Rs. 1.98 Crores under Chapter VIA. In its computation of income, the Assessee had appended a note to the effect that it was eligible for deduction u/s 80M but not claimed in view of its loss return. In the course of the assessment proceeding, the Assessee explained its claim of deduction u/s 80M. Thereafter, on 27th March, 1998, the AO after applying his mind to all facts, passed an order u/s 143(3), determining the Assesse's income at Rs.50.27 Crores after allowing the Assessee's claim. This petition was admitted on 11th December, 2000 and thereby, interim relief was granted restraining the Revenue from acting further upon the disputed reopening notice.
On appeal, the CIT(A) reduced the Assessee's total income from Rs.50.26 Crores to Rs.4.06 Crores. Thereafter, the disputed notice was issued.
In Writ, the High Court held that,
Whether if the AO has issued notice u/s 148 even when the assessee has made full and true disclosure of the material facts during the regular assessment proceedings, it is a fit case of change of opinion on the AO's part - YES: HC
++ the disputed notice dated 21st July, 2000 u/s 148, seeks to reopen the assessment, completed on 27th March, 1998 u/s 143(3) in respect of AY 199596 i.e. clearly beyond a period of four years from the end of the relevant AY. Further, while completing the assessment u/s 143(3), the AO applied his mind to the claim for deduction to the extent of Rs.1.98 crores u/s 80M and granted the deduction. Thus, a view was taken/ opinion formed with regard to claim of deduction in the order dated 27th March, 1998. The disputed notice has been issued on facts which has been subject matter of consideration while passing the assessment order u/s 143(3);
++ the reasons in support of the disputed notice suggests that the Assessee had claimed excess deduction u/s 80M to the extent of Rs.11.1 lakhs. This is factually incorrect as borne out by the statement annexed to the Assessee's return of income – wherein the claim of Rs.1.98 crores under Chapter VIA consisted of Rs.11.1 lakhs u/s 80G and Rs.1.80 crores u/s 80M. The other basis is that the Assessee had failed to reduce the cost (expenditure) incurred in earning the dividend income to the extent of 5% of the gross dividend income. This is a factual matter which was a subject matter of consideration while passing the order u/s 143(3) on 27th March, 1998. Thus, there was a full and true disclosure of the material facts by the Assessee during the regular assessment proceedings of the deduction under Chapter VIA, being claimed by them. In fact, this was examined by the AO as well as by the CIT(A) while granting deduction to arrive at the total income;
++ the Assessee's claim for deduction u/s 80M was made in the return of income. The computation of income had a note appended on it, stating that though it is eligible for deduction u/s 80M, same was not being claimed as gross total income was nil. The AO passed an assessment order u/s 143(3), determining a positive income of Rs.50.26 crores, after having granted the benefit of deduction of Rs.1.98 crores as claimed u/s 80M. This was after having made enquiry during the assessment proceedings and the Assessee justifying its claim for deduction of Rs.1.98 crores to the AO as is evident from its letter dated 24th July, 1998. Thus, this is a clear case of change of opinion and the AO could not have any reason to believe that income chargeable to tax has escaped assessment.
Assessee's Writ Petition allowed
2018-TIOL-712-HC-MAD-VAT + Story
DHANVIJAY TEXTILES PVT LTD Vs ACCT: MADRAS HIGH COURT (Dated: April 2, 2018)
Tamil Nadu Value Added Tax - Writ - Section 22(4)
Keywords - Alternate remedy of appeal - Personal hearing
THE assessee, a dealer, was aggrieved by assessment orders passed for the relevant AYs. Subsequently, the High Court had directed the Assessing authority to issue fresh notice, consider the assessee's objections to it and thereafter pass fresh orders. Pursuant to such directions a pre-revision notice was served to the assessee for the relevant AYs upon which the assessee submitted its objections. After this, a fresh assessment order was passed for the relevant AYs, aggrieved by which the assessee again filed writs. However, the fresh writ petitions were dismissed. Thus, the assessee filed the present writ appeals.
On hearing the writ, the High Court held that,
Whether the High Court can dismiss a writ petition without granting personal hearing, simply because the assessee had alternative remedy of appeal to the appellate authority - NO: HC
++ considering Section 22(4) of the Tamil Nadu Value Added Tax Act, 2006, as well the relevant portions of the decisions of this court in SRC Projects Private Limited Vs. Commissioner of Commercial Taxes, Chennai and Another, Shri Mariammal Fire Works Vs. Commissioner of Commercial Taxes, Chepauk, Chennai and another, M/s. Delphi Automative Systems P Ltd., and The Assistant Commissioner (CT), Pammal Assessment Circle, Chennai, and also considering the order dismissing the earlier writ petitions, they do not indicate that the writ Court adverted to the mandatory requirement of personal hearing, contemplated u/s 22 (4) of Tamil Nadu Value Added Tax Act, 2006. But, having regard to the alternate remedy available under the statute, writ court has dismissed the writ petitions.
++ in the light of the decisions, the common order made in W.P.Nos.28238 to 28242 of 2015, is set aside. The assessment orders in TIN 33742042456/2007-08, 2008-2009, 2009-2010, 2010-2011 and 2011- 2012, respectively, are set aside. Matter is remanded to the Assistant Commissioner (CT), (FAC), Mettupalayam Circle, Mettupalayam, AO, who shall provide opportunity of personal hearing, to the appellant, on the basis of the material available on record and pass orders in accordance with law, within a period of one month from the date of receipt of a copy of this order. It is made clear that fresh materials need not be entertained.
Case Remanded
2018-TIOL-700-HC-J&K-IT + Story
DARSHAN SINGH SAMYAL Vs CIT: JAMMU AND KASHMIR HIGH COURT (Dated: March 5, 2018)
Income tax - Sections 69C, 80IB, 144 & 145(3)
Keywords - addition on surmises - discrepancy in labour expenses - method of accounting - rejection of books - unaccounted money
The Assessee, an individual, is engaged in the the proprietary business of running M/s Kashmir Super Rice Mills, M/s New Kashmir Rice Mills and M/s Kashmir Rice & Oil Mills. He filed his return declaring income of Rs. 4,77,480/- after claiming deduction u/s 80IB at Rs. 38,06,850/-. Though the AO confirmed that purchases, sale and expenses debited to profit and loss account were duly vouched and no apparent error was found in manufacturing & trading account, he however during the course of assessment proceedings, observed that M/S Kashmir Super Rice Mills was showing abnormally low expenses in respect of labour and wages and also in respect of packing material. This according to the AO was done by assesse to take the benefit of deduction u/s 80IB, so that the profits could be shown at a higher level and at the same time showing expenses at a lower level which would otherwise tantamount to unaccounted money in terms of Section 69(C). To compete the assessment on this premises of understated labour and wages, the AO issued show cause to Assessee, which remained unexplained in terms of Section 69(C). Consequently, invoking the provisions of Section 145(3), the AO framed an assessment in terms of Section 144. In response, it was submitted that the concerned mill being a new unit, was much efficient than the older ones and consequently the cost of labour and wages were lesser, resulting in lesser cost of production. Insofar as the expenditure relating to packing material was concerned, the assessee explaned that paddy was procured from farmers in bags and the old bags leftover were utilized for the Unit to pack the goods. Both these contentions were rejected by the AO by observing that the assessee had husked maximum paddy in the unit where deduction u/s 80-IB was available to him and in that process in order to build his capital, the assessee had suppressed the expenditure by actually meeting such expenditure out of the unaccounted money. Similarly as regards packing material, the explanation of assessee was not supported by any inventory and account in respect of the utilization of the old bags in M/S Kashmir Super Rice Mills. As a result, the AO passed an order determining additional sum of Rs. 8,18,551/- on account of the expenditure incurred on labour and wages and addition of Rs. 1,07,714/- made on account of the expenditure incurred outside the books of account on packing material, as unexplained expenditure treating it as income in terms of Section 69(C) and for consequential action.
On appeal, the FAA rejected the contentions of Assessee by simply extracting the order of AO without any discussion or any finding. On further appeal, the Tribunal opined that the assesse had been in the habit of recording of claim in respect of labour and wages and also packing material so that he could claim higher deduction u/s 80IB. The fact of incurring higher expenditure by M/s Kashmir Super Rice Mills could not be ruled out and direct evidence for incurring such expenditure would not be available and inference about such expenditure had to be drawn on the basis of circumstances available on record. Thus, the Tribunal confirmed that the assesse had incurred unaccounted expenditure in M/S Kashmir Super Rice Mills.
On appeal, the HC held that,
Whether differences in age of production houses, justifies lower cost of manufacturing by the new production Unit, and hence does not disentitle the producer from claiming deduction u/s 80IB - YES: HC
Whether assessments should be proceeded on abstract ideas and academic measures - NO: HC
Whether it is fair to compare the old machinaries of a production house with new ones, for purpose of extracting apt cost of production - NO: HC
Whether the cost of packing material should differ between different production units, when both are dealing with the same kind of packing material for the same good - NO: HC
++ as far as cost of production is concerned, it is seen that while discussing the production cost factor between the concerned mill and the other two Units, AO has not taken into consideration the age of the three Units which has been repeatedly pointed by the assessee. The concerned Unit is three years old new machinery while the other two are comparatively old, and hence the labour cost and wages of the older Units were higher. The derivative calculation based on which the AO had proceeded was a mere presumptions. There is no specific relevant material to substantiate the finding that the cost of per quintal in the case of concerned-Unit- M/S Kashmir Super Rice Mills is erroneous or wrong. If the AO's view is accepted then modernization and consequent reduction in cost of production will become a bane for such new enterprise. The logic of AO was counterproductive because better performance and lower cost of production is faulted. Hence, the hypothetical measure of assessment cannot be accepted. Therefore, the issue has to be considered on the basis of materials which are relevant to the determination of the cost of production of rice per quintal based on the type, age and quality of the machinery and its working capacity. A mere comparison with old machinery or Unit will not justify the assessment. When the relevant documents produced by assessee were found by the AO to be in order and duly vouched, then there is no serious error in the records produced. On the contrary, the Tribunal holds that there is a case of higher expenditure, which has been suppressed. The finding of the Tribunal, based on the surrounding circumstances and inference cannot be justified;
++ the finding of the Tribunal in this case appears to be primarily based on human probabilities, inferences from surrounding circumstances what are the human probabilities or surrounding circumstances has not been spelt out. Further, the Tribunal accepts that there is no direct evidence, hence it has to go by inferences. This reasoning cannot be accepted. Taxing statute does not proceed on vagueness, ambiguity or on human probabilities. Further, the very same AO has accepted the per quintal rate of expenditure for the assessee for the assessment year 2002-2003, 2004-2005 and 2005-2006. There cannot be any departure from this method, unless there is a new and substantial material to the contrary. There is no relevant material to justify the findings of the AO only for the present assessment year, when the authority has accepted the per quintal rate of cost of production in respect of other assessment years. Therefore, the demand and the assessment order in terms of Section 69(C) is not justified. It is an arbitrary determination based on irrelevant parameter and, therefore, on this issue, the Tribunal has proceeded on a wrong premise;
++ insofar as the issue relating to packing material is concerned, in the show cause notice it has been pointed out that the cost of packing material with regard to the assessee- Unit as well as two other Units i.e., M/S New Kashmir Rice Mills and M/s Kashmir Rice and Oil Mills differs and, therefore, there is an addition of Rs. 1,07,714/-. In the reply to the show cause notice, there is no proper explanation to this factual claim made by the Department. Assessee's claim is not supported by inventory details of the assessee-Unit to substantiate the plea that some of the bags were left out from paddy purchases and, therefore, the cost of packing material has come down. The AO was correct in this aspect as it is based on production inventory. In the absence of material and a clear explanation from the assessee, there cannot be two opinions that the cost of packing material should differ from one Unit and the other Unit, more so when it is dealing with the same kind of packing material for the same good i.e., rice. The AO was therefore justified in his demand u/s 69(C) in respect of packing material which has been rightly confirmed by the FAA and by the Tribunal.
Assessee's appeal partly allowed
2018-TIOL-563-ITAT-DEL
ACIT Vs PEPSICO INDIA HOLDINGS PVT LTD: DELHI ITAT (Dated: March 21, 2018)
Income Tax - Section 14A & Rule 8D(2)(ii).
Keywords: Dividend income - Interest expenses - Interest free fund - Investment in shares & Loan fund.
The assessee company carried on the business of manufacturing and trading of aerated and non-aerated beverage products. It filed the return for the relevant AY. In the course of the assessment proceeding, the AO noted that the assessee had earned dividend income during the relevant AY on investment in shares and securities which were not forming a part of the assessee's total income. In reply, the assessee submitted that no expenditure was incurred in respect of the exempt income. However, the AO, not being satisfied rejected the assessee's contentions and invoked the provisions of section 14 and Rule 8D. Accordingly, the AO made additions to the assessee's total income. On appeal, the CIT(A) granted partly relief to the assessee by deleting the additions made by the AO.
On appeal, the Tribunal held that,
Whether when the AO fails to prove that the assessee has incurred interest expenses for making investment and the same was also discussed by the CIT(A), the similar issue warrants ITAT's interferance - NO: ITAT
++ when the CIT(A) has granted the relief to the assessee by following AY 2006-07 by deleting the addition of Rs.5,66,61,311/- made under Rule 8D(2)(ii), no issue remains to be answered by the Bench particularly when the AO has not brought on record any material to prove if the assessee has incurred interest expenses for making investment of Rs.2,37,84,11,000/- as the assessee had sufficient interest free funds compared to the loan funds in its kitty;
++ this aspect has been discussed by the CIT(A) thoroughly. However, to verify the facts relating to AY 2006-07, the appeal is disposed of with direction to the AO to verify the factum discussed by the CIT(A) qua AY 2006-07 and if these facts as to AY 2006-07 relied on by the CIT(A), proved to be correct one, there is no scope to interfere into the findings returned by the CIT(A) otherwise AO to proceed under law. Consequently, the appeal filed by the Revenue is allowed for statistical purposes.
Case Remanded
2018-TIOL-562-ITAT-MUM
DCIT Vs STATE BANK OF INDIA: MUMBAI ITAT (Dated: March 21, 2018)
Income Tax - Sections 140A & 244A.
Keywords: Advance tax - Interest refund amount - Self-assessment tax.
The Revenue has filed the appeal challenging the order passed by the CIT(A) wherein, it was held that the assessee was entitled to interest u/s 244A in respect of excess self-assessment tax paid. The AO was directed to compute refund in a manner so that the refund granted would be first adjusted against the interest refund due and balance if any, would be adjusted against the tax refund due.
On appeal, the Tribunal held that,
Whether self-assessment tax paid u/s 140A can be covered u/s 244A(1) for purpose of claiming refund, when the same was accepted by the AO during assessment proceeding - YES: ITAT
Whether when the amount of tax demanded is already paid by the assessee, then it shall first be adjusted towards interest payable and balance left to be adjusted towards the tax component - YES: ITAT
++ the issue is squarely covered by the decision of the Bombay High Court in the case of Stock Holding Corporation of India Limited wherein it was held that assessee is entitled for interest u/s 244A(1)(b) on the excess amount paid towards self-assessment tax. The Bombay High Court also held that tax paid on self-assessment would fall u/s 244A(1)(b) i.e. a residuary clause covering refunds of amount not falling u/s 244A(1) and therefore, interest is payable u/s 244A(1)(b) on refund of excess amount paid on self-assessment tax. Therefore, respectfully following the binding decision of the Bombay High Court in the case of Stock Holding Corporation of India Ltd., we uphold the order of the CIT(A) and reject the ground of the Revenue on this issue;
++ in so far as the decision of the Supreme Court in the case of Gujarat Flouro Chemicals is concerned, we find that the Supreme Court has not laid down any ratio on the issues. The Supreme Court set aside the entire Batch of appeals to High Courts clarifying the circumstances under which the view taken in Sandvik Asia Ltd's case that assessee is entitled for interest on the interest for the inordinate delay on the part of the Revenue in granting interest refund. The Supreme Court, further clarified that only that interest provided in the statute should be allowed but not interest on interest. With these observations/clarification all the appeals were restored to the file of the High Courts to consider each case independently and take an appropriate decision. Hence, the decision of the Supreme Court in the case of Gujarat Flouro Chemicals cannot be applied to the facts of the assessee's case;
++ an identical issue came up in the case of State Bank of Saurashtra which was later merged with the assessee. The Coordinate Bench in its order dated 20.11.2017 upheld the order of the CIT(A) by following the order of the Tribunal in assessee's own case for the AY 2008-09, wherein it has been directed the AO to recompute the amount of interest u/s 244A by first adjusting the amount of refund already granted towards interest component and balance left if any to be adjusted towards the tax component. Thus, respectfully following the said decision of the Tribunal for the AY 2008-09, we hold that there is no infirmity in the order passed by the CIT(A) on this issue.
Revenue's appeal dismissed
2018-TIOL-04-AAR-GST + Story
AKANSHA HAIR AND SKIN CARE HERBAL UNIT PVT LTD: AAR (April 09, 2018)
GST - Twin test method - Medicaments are not defined under the GST Act or in the First Schedule of the Customs Tariff Act, 1975 with which the GST Act has been aligned for the purpose of classification - The methods settled by the apex court for determining whether a product is to be classified as medicaments for fixing the tariff should be followed as the only lawful course - The Apex Court has settled for a twin test method - It means how the product is understood in common parlance and whether the product has been manufactured using ingredients and formula provided in the authoritative textbooks of Ayurveda are the two parameters for such classification - Skin Care preparations viz. Rupam (Pimple Pack) and Pailab (Anti-Crack Cream) are offered for treatment or prevention of specific skin disorders and are, therefore, classifiable as Medicament under heading 3004 of the CTA, 1975 - Preparations listed as Swarnajyoti, Sunayana and Tarumitra-60 have not yet come into existence, and, therefore, no rulings are pronounced on their classification - The remaining products mentioned in the list submitted by the applicant are not offered primarily as medicaments and, therefore, not to be included under heading 3004: AAR [para 20 to 23]
Application disposed
2018-TIOL-704-HC-KAR-ST
LION SECURITY SERVICES Vs CST : KARNATAKA HIGH COURT (Dated: April 3, 2018)
ST – Petitioner, a proprietary concern is registered with department for providing taxable service of ‘Manpower Recruitment of Supply Agency Services' – Officers, on an information that the petitioner was rendering taxable services of ‘Security Agency Services' and ‘Manpower Recruitment Services' without discharge of ST liability conducted investigation – SCNs were issued and orders were issued confirming ST liability for the period April 2004 to September 2008 and October 2008 to March 2013 and imposing penalty – Petitioner has by filing the Writ Petition called in question the legality and correctness of the Order-in-Original and contended that the adjudicating authority has wrongly recorded a finding that one Sri.K.Ranganatha Adiga appeared before the adjudicating Authority and submitted that he will pay the service tax shortly and requested for dropping the penalty; that signature of the proprietor was taken forcibly by the adjudicating authority and impugned order was passed without providing an opportunity of hearing to the petitioner; that alternative remedy is no bar to invoke the extraordinary writ jurisdiction when denial of natural justice is manifest.
Held: Disputed question of fact whether the adjudicating Authority recorded a finding that personal hearing was conducted on 28.11.2016, is true or not, cannot be adjudicated by the High Court under writ jurisdiction - If the findings recorded by the adjudicating Authority are not true, it would be a case for review or an appeal which would be availed by the petitioner - These issues cannot be adjudicated upon by the High Court exercising writ jurisdiction - writ petition stands dismissed with an opportunity to the petitioner to approach the Appellate Authority for redressal of his grievance - If such an appeal is filed within a period for four weeks from today, such an appeal shall be considered by the Appellate Authority on merits without objecting to the aspect of limitation: High Court [para 6]
Petition dismissed
2018-TIOL-703-HC-MAD-ST
FIRM FOUNDATIONS & HOUSING PVT LTD Vs PR COMMISSIONER: MADRAS HIGH COURT (Dated: April 6, 2018)
ST – Petitioner is a company engaged in the business of promotion and construction of residential apartments and complexes - The projects are undertaken on a joint venture basis, the petitioner being the builder, along with land owners - Service tax liability arises in respect of the portion of the project enuring to the land owners as well as to its own account - Issue raised in the present Writ Petition concerns only the service tax liability of the builder, the petitioner herein - Case of the respondent department is that in terms of Rule 3 of Point of Taxation Rules, 2011 the assessee is required to pay service tax immediately on raising invoices and the practice adopted by the assessee i.e making payment of Service Tax only on realization basis from the clients as against the accrual basis is in contravention of Rule 3 of the Point of Taxation Rules 2011 – accordingly, service tax actually payable as per Profit and Loss account, service tax actually paid and service tax due were calculated and it appeared that the assessee are liable to pay the differential Service Tax amount of Rs.1,70,07,530/- from January 2013 to March 2015 on account of builder's portion and Rs.16,34,586/- on account of land owner's portion – against order-in-original confirming tax demand, writ petition has been filed - admitted position is that the petitioner does not raise invoices as and when a particular landmark is reached and the accrual of the consideration stagewise is occasioned automatically upon completion of the stage of construction set out in the agreement itself - case of the petitioner is that the customers have remitted, in advance, the consideration relating to several of the initial landmarks as a lump-sum and that the said amount has been offered to tax.
Held: Rule 3(a) of the Point of Taxation Rules, 2011 provides for a situation where the accrual of service is predicated upon the raising of an invoice – Rules 3(a) and (b) provide for the point of taxation to be either the point of raising of invoice (Rule 3(a)) or in a case where the service provider has received the payment even prior to the time stipulated in the invoice, upon receipt of such payment(Rule 3(b)) - In the present case, no invoice is said to have been raised - However, the petitioner confirms that it has, in fact, received lump-sum advances corresponding to several initial landmarks in the contract, even prior to the achievement of such landmarks and as per the provisions of Rule 3(b), the entire sum received thus becomes taxable upon receipt and has been offered to tax - Instead of such determination by application of the provisions of Rule 3, the respondent relies upon the P and L accounts to conclude that the amounts reflected therein have not been offered for service tax - The reporting of income in the P and L being irrelevant for the purposes of determination of service tax payable, the basis of the impugned assessment is erroneous – Respondent Revenue’s submission that since alternative remedy is available to the petitioner, therefore, the petition should be dismissed, High Court views that where the basis of the assessment is itself contrary to the provisions of the Finance Tax Act, 1994 and the Rules, High Court is inclined to interfere – Accounting Standards (AS) provides a certain methodology for the computation of income from projects that is at variance with the method set out under Rule 3 - Bench is not concerned with the method followed for the preparation of financials as the same has no impact upon the Point of Taxation Rules - Insofar as Rule 3 sets out a specific modus operandi in this regard, it assumes priority and is the only relevant factor to be taken into account in the determination of point of rendition and accrual of services for the purpose of imposition of service tax - respondent has merely adopted the income reflected in the P and L account as the receipts for the purpose of service tax which is contrary to the method set out in Rule 3 for the determination of point of taxation and the quantification thereof - Impugned order of assessment dated 21.04.2017 is set aside and the matter remitted to the file of the Respondent to be re-done de novo strictly in accordance with the provisions of Rule 3 of the Rules and in the light of the observations made in this order after affording due opportunity to the petitioner, within a period of three (3) months from date of receipt of this order – Petition allowed in above terms: High Court [para 24, 25, 29, 31, 32, 34, 35]
ST - It is a well settled position that when a statutory provision or Rule addresses a specific scenario, such rule/provision is liable to be interpreted on its own strength and context and one need look no further to alternate sources to seek clarity in regard to the issue that has been addressed by the aforesaid rule/provision: High Court [para 26]
2018-TIOL-702-HC-MAD-CUS
ACC Vs KANISHKA ENTERPRISES: MADRAS HIGH COURT (Dated: February 27, 2018)
Cus - Challenge in this writ appeal is to the order of the writ court dated 10.8.2017 made in W.P. No.19767 of 2017, by which, the writ court, disposed of the writ petition, directing the first respondent therein, namely, the first appellant herein, to provisionally release the goods in terms of the order dated 16.6.2017, after accepting the payment of duty, amounting to Rs.15.12 lakhs on the re-determined value as per SIIB report and on re-verifying the Bank Guarantee and Personal Bond filed by the respondent, within a period of 10 days from the date of receipt of a copy of that order - writ court also directed that, it is open to the second respondent therein/second appellant herein, to examine the cargo reported by the respondent, and sought to be cleared by the said bill of entry : HELD – without going into the rival submissions, with the consent of both the parties, there shall be a provisional release of goods, mentioned in Annexure No.II dated 14.9.2017 of the Deputy Director, DRI Nodal Unit, Chennai, addressed to the Commissioner of Customs, Chennai-IV, on payment of 30% of the differential duty, on the provisional assessed value of Rs.2.80 crore - apart from the above, the respondent shall submit a personal bond on the total provisionally assessed value, as per the Annexure No.II - observation of the Writ Court in Paragraph No.9 of the common order in W.M.P.No.27347 of 2017 in W.P.No.19767 of 2017 - 2017-TIOL-1791-HC-MAD-CUS and Contempt Petition No.1788 of 2017, dated 23.11.2017, filed for modification, is sustained - with the above observations, writ appeal is disposed of : HIGH COURT [para 17, 18]
Writ Appeal disposed of
2018-TIOL-701-HC-MAD-CUS
P BHASKAR NAIDU Vs CESTAT: MADRAS HIGH COURT (Dated: March 22, 2018
CUS - Challenge is made to the Final Order No.141/2012, dated 16.2.2012 passed by the CESTAT, South Zonal Bench, Chennai, rejecting the appeal preferred by the appellant, challenging the O-i-O No.6636/07, dated 31.8.2007, passed by the Commissioner of Customs (Export-seaport), Chennai imposing a penalty of Rs.6 lakhs on the appellant for the acts committed by him (for his role in the attempted export of Red Sander Wood Logs), as provided under section 114 of the Customs Act, 1962 [Act] - ( 1) Whether the appellant can be visited with penalty under section 114 of the Act on the stated cause (in the SCN) that the illegal export was attempted in the name of M/s. Archana Exports of which the appellant was the CEO ? (2) When investigation did not result in finding any involvement of the appellant and consequently the SCN itself was limited to an averment that the illegal export was attempted in the name of M/s. Archana Exports of which the appellant was the CEO, was it open to the respondents to invent new grounds when passing order in adjudication and appeal ?
HELD - As per section 114 of the Act, any person who, in relation to any goods, does not or omits to do any act which act or omission would render such goods liable to confiscation under section 113, or abets the doing or omission of such an act, shall be liable to a penalty as detailed therein - the question of mens rea is not at all relevant for being liable to confiscation and penalty - considering the voluntary statements given by the appellant to the authorities concerned, which are admissible in evidence as per law, when it is found that the appellant had suspicious and clandestine dealings with the middle men vis-a-vis the subject export and even during the interrogation unable to furnish any correct particulars as regards the middle men, who had interacted with him with reference to the subject export and on the other hand, the so called information furnished by him, being found to be not genuine, it is seen that the appellant, right from the inception, is instrumental in arranging for the re-stuffing of the prohibited goods in the place of the declared goods and in such view of the matter, the appellant cannot plead ignorance that inasmuch as the persons noted in the SCN, enroute, had changed the goods concerned, he could not be fastened with any liability - the appellant has wittingly made himself liable for the penal action under the provisions of the Act, for failing to ensure the proper and safe transit of the goods to the destination, which resulted in the intermeddling of the goods by the third parties - the appellant is liable to penal action under Section 114 of the Customs Act, 1962 - it is also noted that a criminal Court has also found the appellant to have committed serious infractions of the Act in arranging the export of the prohibited goods by mis-declaration - no reason found to interfere with the findings of the respondents 1 and 2, that the appellant is liable to penal action under section 114 of the Act - accordingly, this Court also concurs with the penalty imposed on the appellant by the CESTAT Chennai - the substantial questions of law are accordingly answered against the appellant - resultantly, the civil miscellaneous appeal is dismissed : HIGH COURT [para 10, 13, 14, 15]
Civil Miscellaneous Appeal dismissed
