2020-TIOL-NEWS-023 Part 2, Dated: Monday, January 27, 2020

2020-TIOL-NEWS-023 Part 2 | Monday January 27, 2020

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DIRECT TAX


	2020-TIOL-145-ITAT-RANCHI Grasim Industries Ltd Vs ASSTT CIT Whether without pointing out any expense for non-business purpose based on evidence, adhoc disallowance of staff welfare, club expenses, community development, HRD training and magazine expenses can be made - NO : ITAT - Assessee's appeal allowed: RANCHI ITAT 2020-TIOL-144-ITAT-DEL Hindon River Mills Ltd Vs DCIT Whether brought forward unabsorbed depreciation can be set off against income from house property and income from other sources, where the brought forward unabsorbed depreciation pertains to the current AY - YES: ITAT - Assessee's appeal allowed: DELHI ITAT 2020-TIOL-143-ITAT-DEL Robin Bartholomew Vs DCWT Whether if assessee has already exercised option of exemption for one self occupied residential property then this option cannot be changed to allow exemption in respect of another property - YES : ITAT - Assessee's appeal partly allowed: DELHI ITAT 2020-TIOL-142-ITAT-MUM Shri Bikaner Highway Ltd Vs ITO Whether interest income earned, which is inextricably linked to the setting up of plant, is required to be capitalized against the pre-operative expenses & so cannot be treated as Income from Other Sources - YES: ITAT Whether in such cases, the test is whether activities are taken up for setting up of business and funds which are generated are extricable in setting up of the plant - YES: ITAT - Assessee's appeal allowed: MUMBAI ITAT 2020-TIOL-141-ITAT-MUM ACIT Vs TPL Plastech Ltd Whether where the ground of issuing reopening notice stands already allowed, the reassessment notice & consequent proceedings in absence of any tangible material is impermissible - YES: ITAT - Revenue's appeal dismissed: MUMBAI ITAT

INDIRECT TAX

SERVICE TAX

2020-TIOL-183-CESTAT-BANG

Jaaacsons Enterprises Vs CCE & ST

ST - M/s. Indian Potash Ltd. imports fertilizer at New Mangalore Port Trust and M/s. Aspinwall & Co. has been engaged as the CHA for clearing the goods - M/s. Aspinwall & Co. was also entrusted with the activity of putting the fertilizer into 50 Kg packs for Indian markets - The activity of filing up of the bags is sub-contracted to various sub-contractors by M/s. Aspinwall & Co - The labourers of the sub-contractors fill the bags with 50 Kg fertilizer - These bags filled with 50 Kg. fertilizer are then lined up and kept in the godown - The work of stitching of the filled up bag is sub-contracted to the appellant - The labourers of the appellant stitch the mouth of the filled up bags using their own stitching machines, sometimes the thread is supplied by M/s. Aspinwall & Co. and in other cases the appellant procured the threads from the market - Department issued SCN alleging that the activity of stitching undertaken by the appellant was a taxable service under the category of packaging activity and, therefore, they were liable to pay service tax for the period from 16/06/2005 to 31/12/2006 - service tax demand was also raised for the period 01/01/2007 to 31/03/2009 - all the demands were confirmed along with imposition of interest and penalties, hence appeals before CESTAT - counsel for the appellant submitted that the appellant was a proprietorship concern and N. Chandra Mohan was the proprietor of the appellant; that during the pendency of this appeal before the Tribunal, the proprietor N. Chandra Mohan had died on 31/08/2019 and the death certificate issued by the Chief Registrar of Births and Deaths Corporation of City of Mangalore has been produced on record; that the late N. Chandra Mohan is survived by his wife and three children but none of them are continuing with the business which has since been closed after his death and, therefore, in terms of Rule 22 of CESTAT (Procedure) Rules, 1982, the present appeals and the demand proceedings abate; decision of the Supreme Court in the case of Shabina Abraham - 2015-TIOL-159-SC-CX is relied upon.

Held: In view of Rule 22 of CESTAT (Procedure) Rules, 1982 and the apex court decision (cited supra), on the death of the sole proprietor N. Chandra Mohan, the present appeals and the demand and recovery proceedings against the appellant abate - Appeals disposed of: CESTAT [para 5]

- Appeals disposed of: BANGALORE CESTAT

2020-TIOL-182-CESTAT-HYD

RK Electric Automation Ltd Vs CCT

ST - The assessee-company manufactures electric panel boards and also provided Erection, Commissioning and Installation Service and Works Contract Service - The assessee is registered with the Department for the same - The assessee also availed Cenvat credit - SCN was issued proposing to deny cenvat credit u/r 6(3) of CCR 2004 and to recover the same u/r 14 of CCR 2004 r/w proviso to Section 73(1) of the Finance Act 1994 - The amount already debited by the assessee was also appropriated against the demand - Demand for interest was raised as well and penalty u/r 15(3) of CCR r/w Section 78 of the Finance Act 1994 was also imposed - On adjudication, the duty demands were confirmed - On appeal, the Commr.(A) sustained the duty demand and interest while quashing the penalty - The assessee claimed to not have received SCN in terms of Rule 6(3A) and no personal hearing was conducting.

Held: It is not in dispute that the assessee wrongly availed Cenvat Credit and has been pointed out for reversing the same - The entire amount has been reversed by the assessee the same has been confirmed and appropriated in the demand by the original authority - The penalty was quashed by the Commr.(A) - The Department has not contested waiver of the penalty - The interest is evidently and explicitly payable under Rule 6(3A) clause (e) read with Rule 14 of CCR 2004 - The interest has indeed been demanded under Rule 14 of CCR 2004 - Merely because they have also not mentioned Rule 6(3A) in the Show Cause Notice, it does not vitiate the entire demand of interest - The Commr.(A) gave the assessee adequate opportunity to explain as to why they are not liable to be paid interest - Hence the O-i-A warrants no interference with: CESTAT

- Assessee's appeal dismissed: HYDERABAD CESTAT

CENTRAL EXCISE

2020-TIOL-185-CESTAT-AHM

Cebon Apparels Pvt Ltd Vs CCE & ST

CX- Vide impugned order, the Commissioner has confirmed the demand of duty with interest on the Readymade Garments exported by the appellant during the period of March, 2011 to February, 2013 on the ground that the appellant did not follow the procedure of notification no. 42/2001-CE (NT) dated 26.6.2001 by preparing ARE-1 as provided in Annexure-14 Part-7 of CBEC manual -an equal amount of penalty was also imposed under section 11AC of CEA read with rule 25 of Central Excise Rules, 2002 - appeal to CESTAT.

Held: The Government has prescribed a simplified procedure particularly for those units who are not clearing their goods for home consumption but entire production is exported - in this regard, various circulars were issued from time to time - as regards the readymade garments, a specific Circular no. 705/21/2003-CX dated 8.4.2003 was issued and according to which, the appellant was supposed to follow the simplified procedure as prescribed in the said circular, that means the appellant was not required to follow the procedure as prescribed under the said notification - therefore, the demand only on the basis that the appellant have not followed the procedure prescribed under the said notification will not sustain - in the present case, there is no much dispute raised as regard export of goods - it is found that the appellant by Miscellaneous Application submitted some vital documents which were obtained under RTI, after the Adjudication Order was passed - those documents were not considered while passing the Adjudication Order - since the veracity of these documents needs to be verified on factual background, which can be done by the Adjudicating Authority, therefore, the matter needs to be remanded to the Adjudicating Authority - it is made clear that even though the appellant have not followed the procedure prescribed under the said notification, but on the basis of all the evidences and documents, if it is established that the goods have been exported, demand of Excise Duty on export clearances will not sustain - the impugned order is thus set aside and the appeal allowed by way of remand to the Adjudicating Authority for passing a fresh order : CESTAT [para 6, 8, 9]

- Matter remanded: AHMEDABAD CESTAT

2020-TIOL-184-CESTAT-CHD

Indian Oil Corporation Ltd Vs CCE & ST

CX - CENVAT - any items which is covered by the list of the items mentioned in Rule 2(a) of the Cenvat Credit Rules, except for office equipment or office appliances, and is used in any manner in the factory of the manufacturer of the final products, would be covered by the definition of the capital goods and accordingly would be eligible for Cenvat Credit - There is absolutely no requirement that the capital goods at the time of receipt must be owned by manufacturer or that the same would cease to be capital goods, if they are installed in the factory and become fixed to earth - Just because after being installed in the factory, the capital goods put together become a plant which is a fixed to earth structure, the Cenvat Credit cannot be denied on the basis that the plant which is fixed to earth structure, is not excisable - This preposition of the Department is, in fact absurd, as there is not such condition in Rule 2(a) for capital goods - For capital goods Cenvat Credit, the items must be among those mentioned in this Rule and should have been used in the factory of the manufacturer and how the items are not used relevant - The words used in Rule 2(a) are "used in the factory of manufacturer of the final product" not "used in the manufacture of final product" - Therefore, once any item received in the factory is "capital goods" in terms of Rule 2(a) of the Cenvat Credit Rules, and is used in the factory, the manufacturer would be entitled to Cenvat Credit of excise duty paid in respect of the same - Reading the impugned orders give an impression that the same has been passed without any application of mind - impugned orders are not sustainable, hence set aside - appeals allowed with consequential relief: CESTAT [para 7, 8]

- Appeals allowed: CHANDIGARH CESTAT

CUSTOMS

2020-TIOL-181-CESTAT-KOL

JD Impex Vs CC

Cus - CHA Licence of the appellants have been revoked under Regulation 20(1) of CHALR, 2004 [now Regulation 18 of CBLR, 2013] and the full amount of security deposit of the appellants CHA has been ordered to be forfeited under Regulation 20(1) of CHALR, 2004 [now regulation 18 of CBLR, 2013] - Tribunal had set aside the order of revocation of licence on the ground that the time limit provided under Regulation 20 of CBLR, 2013 was not followed by the authority below but the order of confiscation of security amount was upheld - Revenue preferred an appeal and the High Court set aside the order and remanded the matter.

Held: Allegation against the appellant is of violation of Regulation 11(a), 11(d), 11(e), 11(m), 11(n) & 17(9) of CBLR, 2013 - Entire work of import clearance was undertaken by one Dattatray S. Weling and it is alleged that said Weling is a third party to whom the CHA had lent out their licence against commission - Letter under F. No. S/6- 48/2010-Admn signed on 18.10.19 by the Deputy Commissioner of Customs, Customs Broker Section, Mumbai-I, has been produced on behalf of the appellant wherefrom it is evident that as per Customs record also Sri Dattatray S. Weling was holding 'G' category pass with Cardex No. W-16 for the Customs Broker M/s. JD Impex - respondent Customs authority could not dispute such verification letter dated 18.10.19 produced by the appellant - Dattatray S. Weling was 'G' card holder of appellant M/s. JD Impex and since his fulfilment of obligations under Regulation 11 of CBLR, 2013 is deemed to discharge of obligation by CB, M/s. JD Impex, there cannot be any violation of any of the sub-regulations of Regulation 11 of CBLR, 2013 on the part of the CB/ appellant in the present case - Accordingly, Bench finds that there was no violation of Regulation 11 of CBLR, 2013 on the part of the appellant/ CB in the present case and hence, the impugned order revoking their CB Licence No. J-36(PAN No. AAJFJ2496C) under Regulation 20(1) of CHALR, 2004 [now Regulation 18 of CBLR, 2013] and forfeiture of their security deposit, is liable to be quashed with consequential relief in favour of the appellant CB - Ordered accordingly: CESTAT [para 6, 8, 9]

- Appeal allowed: KOLKATA CESTAT

2020-TIOL-180-CESTAT-DEL

Isolloyd Engineering Technologies Ltd Vs CC

Cus - Request for conversion of fourteen shipping bills from free shipping bills under scheme Code 00 to Export Promotion Capital Goods Scheme (EPCG) under scheme Code 11 was denied in terms of Circular No. 36/2010 dated 23.09.2010, hence the appellant is before the CESTAT - AR submitted that the Commissioner is bound by the Circular 36/2010-Customs dated 23.09.2010 issued by the CBEC; that the documents referred to by the appellant for proving that the exported goods were in fact produced by the imported machine were not sufficient to support the claim of the appellant.

Held: Sanctity of such Circulars was examined by the Supreme Court in the case of Bengal Iron Corporation Versus Commercial Tax Officer and it was observed that understanding of the Government, whether in favour or against the assessee, is nothing more than its understanding and opinion; that it is doubtful whether such clarifications and circulars bind the quasi-judicial functioning of the authorities under the Act; that while acting in quasi-judicial capacity, the authorities are bound by law and not by any administrative instructions, opinions, clarifications or circulars - identical issue had come up for consideration before the coordinate bench of this Tribunal in case of M/s Indian Oil Corporation Limited - 2019-TIOL-3426-CESTAT-MAD and where it is held that that the request for conversion of the shipping bill cannot be disallowed by pressing into the application of time limit prescribed by the Board in its circular dated 23.9.2010 - resultantly, impugned order cannot be sustained and is set aside - appeal is allowed by way of remand to the original adjudicating authority for conversion of free shipping bills to EPCG shipping bill - Appellant is directed to provide all the documents so as to prove their claim for exports made under free shipping bill required for conversion thereof to DEEC scheme as the customs have accepted that their documents are not available for carrying out such exercise which is required to be completed within three months: CESTAT [para 6 to 8]

- Matter remanded: DELHI CESTAT

HIGH LIGHTS (SISTER PORTAL)

TII

TP - DRP is not vested with jurisdiction to benchmark fresh transaction other than one already considered by TPO during benchmarking: ITAT

I-T - Once AO initiates fresh penalty proceedings subsequent to order giving effect to MAP resolution, penalty levied previously which is deleted by FAA, becomes infructuous: ITAT

TP - If expenditure incurred for AMP is not for brand promotion of AE, no TP adjustment is warranted on account of incidental creation of marketing inta ngibles for its foreign AE : ITAT

TIOLCORPLAWS

Companies Act - Even though person objecting scheme does not hold minimum threshold limit of shares or outstanding debt still Tribunal has duty to look into issue so as to see whether scheme as whole is just, fair and reasonable: NCLAT

SARFAESI: During pending litigation, auction sale of two properties of borrower is coercive process undertaken by lender bank in hasty manner if sale notice is served for less than 30 clear days and properties are sold for less amount than value at which borrower seek right of redemption and settle the account on its own: HC

NEWS FLASH

Bank Unions resolve to go on strike from Jan 31

Govt decides to offload 100 % equity in Air India

Gadkari says three expressways costing Rs 3 lakh crore to be ready in 3 years

Kolkata DRI seizes 10 kg smuggled gold + 429 kg silver + Rs 20 lakh IC; arrests two persons

TIOL wishes All Netizens a very Happy Republic Day & also International Customs Day!

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