TIOL-DDT 2596
13 05 2015
Wednesday

IN the very month of starting DDT, more than 11 years ago, I had to break a sensational Tribunal order. In DDT 15, it was reported:

In M/s Andhra Pradesh Paper Mills Ltd case, the Tribunal set aside the demand of 8% under Rule 57CC / 57AD/ Rule 6 of the CENVAT Credit Rules, 2004 by applying Orissa Extrusions case. In Orissa Extrusion case, an exemption Notification had different serial numbers and some of them had a condition that the exemption is admissible only if the assessee does not avail Modvat credit on the inputs. The Supreme Court held that the exemption in respect of the other entries is allowed even if the assessee availed credit on the inputs. This ratio was applied in Andhra Pradesh paper Mills case by the Tribunal and the demand of 8% on the sale price of exempted goods under Rule 57CC/57AD/Rule 6 was set aside.

Against the above order of the Tribunal, the department filed an appeal before the Supreme Court and the Supreme Court has decided the issue recently. While noting that the issue is squarely covered by another judgement of the Supreme Court in case of Amrit Paper 2006-TIOL-85-SC-CX, the Court allowed the appeal by revenue.

In Amrit Paper, the Supreme Court held that Orissa Extrusion was not good law. It was held "As rightly submitted by learned counsel for the respondent the provisions of Rule 57C would be rendered nugatory and redundant if the interpretation as suggested by learned counsel for the appellant is accepted. It would mean that primacy has to be given to the Notification over the statutory provisions contained in Rule 57C."

Twist in the Tale : When we carried the story in DDT 15, one of the assessees was so agitated with me that he sent me a very angry mail and cancelled his subscription to TIOL. Even the Departmental officers were angry with me for sensationalising the case; they had no clue as to the grounds on which they could appeal to the Supreme Court. They still did and they won - a few crores as duty and interest.

Please see 2015-TIOL-107-SC-CX

GST Bill referred to Select Committee

THE Rajya Sabha yesterday referred the GST Bill to a Select Committee of the Rajya Sabha consisting of 21 Members with instructions to report to the Rajya Sabha by the last day of the first week of the next Session. So until next session, let there be no noise on GST. The April 01 2016 deadline is slowly slipping away.

SIT Recommends making Tax Evasion a Crime

IN Chapter III of Second SIT report, the SIT has recommended as:

"Financial Action Task Force (FATF) on money laundering recommends 'tax crimes' to be made a predicate offence so that action can be taken under Prevention of Money Laundering Act, 2002. There are more than 25 countries in the world which have made 'tax crimes' as a predicate offence. The Government needs to seriously examine the issue and take steps to make 'tax crimes' as a predicate offence. To prevent any hardship to salaried or small tax payer, a high threshold of say, more than Rs. 50 lakh of tax evasion could be considered as being a predicate offence".

This was stated by Mr. Jayant Sinha, Minister of State in Ministry of Finance in a written reply to a question in the Rajya Sabha yesterday.

Commissioner of Central Excise to be present in Supreme Court tomorrow

IN a case before the Supreme Court, the assessee appellant submitted calculation of duty even if payable:

The Revenue Counsel told the Court that the Department has instructed him to inform the Court that it does not have the invoices on the basis of which it could be verified as to whether calculations of modvat credit claimed by the appellant is correct or not. In the aforesaid scenario it would be appropriate if the representatives of the appellant have a meeting with the concerned officials of the Revenue so that adjustable modvat credit is worked out mutually in the said meeting.

Both the parties are agreed for the meeting. The Counsel states that on 14.5.2015 a responsible officer, preferably Commissioner of Central Excise, Calcutta II, shall also be present along with necessary documents.

Former Income Tax Commissioner and wife convicted

THE Special Judge for CBI cases, Mumbai (Maharashtra) has convicted a former Commissioner of Income Tax (an IRS Officer of 1971 Batch), Mumbai and his wife under section 13(2) r/w 13(1)(e) of the Prevention of Corruption Act, 1988 and 109 of Indian Penal Code in a disproportionate assets case. The Commissioner was sentenced to undergo three years Simple Imprisonment with fine of Rs. One Lakh and his wife to undergo two years Simple Imprisonment with fine of Rs. 50,000/-.

CBI had registered a case against the Commissioner and his wife on 03.12.2001 on the allegations that the accused was found to have disproportionate assets to his known sources of income. They were also in possession of Flats at Delhi, Ahmedabad, Indore & plot in Agra; Kisan Vikas Patras amounting to Rs. 2.17 crores (approx); certain branded watches valued to Rs. Five Lakhs(approx) and Shares, FDs worth Rs. Twenty Lakhs (approx).

He had amassed assets worth Rs. 1.90 crores during the period from 1989 to 2001 which were disproportionate to his known sources of income (about 330%). After investigation, a chargesheet was filed against both the accused.

The Trial Court found both the accused guilty and convicted them. The Court also ordered the forfeiture of the Kisan Vikas Patras and the branded watches.

High Court orders CESTAT Bench at Allahabad

THE Division Bench of Allahabad High Court is learnt to have issued direction yesterday (12-5-2015) to the Union of India to make the Allahabad Bench of CESTAT functional w.e.f. 21-7-2015 and to list fresh matter before the said Bench.

Earlier on 8-4-2015, the Allahabad High Court Bench comprising of Justice Dr. Satish Chandra and Justice Arun Tandon directed the officials concerned of the Ministry of Finance to file affidavits explaining as to why the Union of India is failing to enforce Notification No. 7/2013, dated 1-11-2013 pertaining to the establishment of CESTAT Benches at Allahabad, Hyderabad and Chandigarh. The Affidavits were required to be filed by 27-4-2015 but no affidavits were filed. However, on 27-4-2015 the High Court gave final opportunity to the officials to file the affidavit positively by 12-5-2015 or otherwise to remain present in the court. In these circumstances the Allahabad High Court has ordered for the functioning of CESTAT bench at Allahabad from 21-7-2015

In a related development, the Punjab & Haryana High Court is also understood to have directed the Government to make available the building for CESTAT Bench at Chandigarh by 31st July, 2015.

As for the Hyderabad Bench, it is understood that a building has been procured but there seems to be paucity of funds. Hyderabad had three Circuit Bench sittings chaired by the President and a fourth one is scheduled in the last week of this month. Hopefully Hyderabad Bench will also function along with Allahabad and Chandigarh.

Jurisprudentiol - Recent SC Judgements

Central Excise Valuation - Sales Tax incentive not includible in assessable value till 1.7.2000 and includible after that. The respondent assessee had availed sales tax benefits in the sense that the sales tax was paid at concessional rates under the sales tax incentive scheme which was floated by the State of Rajasthan. The question arose as to whether the benefit of sales tax which was availed by the respondent would be included while fixing the value of the product for the purpose of payment of excise duty. This issue squarely stands covered by the judgment of this Court in Commissioner of Central Excise, Jaipur-II vs SuperSynotexIndia Limited - 2014-TIOL-19-SC-CX. In that case the Court has taken the view that assessee would be entitled to claim deductions towards sales tax from the assessable value of the sales tax which is retained by the assessee. The Court also pointed out that this position had changed after the amendment in Section 4w.e.f. 1.7.2000 and in arriving 'transaction value' said sales tax benefit which was retained by the assessee, would be included while fixing the 'transaction value'.

Please see Commissioner of Central Excise, Jaipur Vs National Engg Industries - 2015-TIOL-108-SC-CX

Central Excise - Appeals - Appeal to High Court or Supreme Court. Appeal filed in Supreme Court instead of High Court. Revenue allowed to file appeal in High Court within one month. Quite often we find the Department knocking at the wrong doors. They are not very clear as to whether an appeal against the CESTAT order is to be filed in the High Court or the Supreme Court. In this case, there was neither valuation or classification issue, but still the Commissioner filed the appeal in the Supreme Court in the year 2005, where it was pending for the last ten years. The Supreme Court has permitted the Department to file the appeal in the High Court within a month.

But why this dual appellate jurisdiction? Why can't all cases be made appealable to the High Court only? Perhaps they can make the orders of the Larger Bench appealable to Supreme Court and all other cases to the High Court.

Please see Commissioner of Central Excise Vs Raj Petroleum Products - 2015-TIOL-109-SC-CX

Customs - Classification - Populated Printed Circuit Boards (PPCBs) - assessee classified under Chapter Heading No.8517.90. CESTAT confirmed this after appreciating the factual matrix. No question of law arises in this mater.In this case the tax effect is only Rs.7,66,755/-. The respondent had imported module in the form of Populated Printed Circuit Boards (PPCBs) and classified the same under Chapter Heading No.8517.90. The Commissioner accepted the aforesaid classification. The respondent had paid duty of Rs.22,28,788/- in view of the aforesaid classification and the amount of Rs.7,66,755/- became refundable and that refund was sanctioned. The Department was not satisfied and took the case all the way to the Supreme Court - and failed at every stage.

The Supreme Court observed that the CESTAT order was after appreciating the factual matrix and no question of law arises in this matter.

Please see Commissioner of Customs, Bangalore Vs Modicom Network Pvt. Ltd - 2015-TIOL-110-SC-CUS

Until Tomorrow with more DDT

Have a nice day.

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