TIOL-DDT 2474
13.11.2014
Thursday

WHILE reporting this case, we noted, "Tweet it, Whatsapp it or post it on FB for it's a victory for the Revenue. For all this, perhaps one would be using the same service provider!"

And the Revenue is celebrating the victory.

The CBEC in an instruction to all Commissioners and above, has invited the attention of the officers to the judgement of Bombay High Court in the case of M/s Bharti Airtel Ltd. vs The Commissioner of Central Excise, Pune III in Central Excise Appeal No. 73 of 2012 and 119 of 2012 (reported as 2014-TIOL-1452-HC-MUM-ST, wherein regarding the issue whether Cellular Mobile Service Provider is entitled to avail CENVAT credit on Tower Parts & Pre-fabricated buildings, the Bombay High Court has held in favour of revenue.

While relying on the decision of the Supreme Court in the case of Saraswati Sugar Mills vs CCE Delhi, 2011-TIOL-73-SC-CX, the Bombay High Court has, inter-alia, observed as under:

"It would be misconceived and absurd to accept that tower is a part of antenna. An accessory or a part of any goods would necessarily mean such accessory or part which would be utilized to make the goods a finished product or such articles which would go into the composition of another article. The towers are structures fastened to the earth on which the antennas are installed and hence cannot be considered to be an accessory or part of the antenna. The position in this regard stands fortified from the decision of the Supreme Court in the case of "Saraswati Sugar Mills vs CCE Delhi, (2011 (270) ELT 465) - 2011-TIOL-73-SC-CX". From the definition of the term ‘input' as defined in 2 (k) of the Credit rules it is clear that the Appellant is a service provider and not a manufacturer of capital goods. A close scrutiny of the definition of the term capital goods and input indicates that only those goods as used by a manufacturer would qualify for credit of the duty paid. As observed hereinabove a service provider like the appellant can avail of the credit of the duty paid only if the goods fall within the ambit of the definition of capital goods as defined under Rule 2(a)(A) of the Credit Rules. The contention of the appellant that they are entitled for the credit of the duty paid towers and PFB and printers is defeated by the very wording of the definition of input. In any case towers and PFB are in the nature of immovable goods and are non-marketable and non-excisable. If this be the position then towers and parts thereof cannot be classified as inputs so as to fall within the definition of Rule 2(k) of the credit rules. We clarify that we are not deciding any wider question but restricting our conclusion to the facts and circumstances which have fell for our consideration in these appeals.

34. We therefore find no infirmity or illegality in the findings as recorded by the tribunal in holding that the subject items are neither capital goods under Rule 2(a) nor inputs under Rule 2(k) of the Credit Rules and hence CENVAT credit of the duty paid thereon was not admissible to the appellants. The appeals are devoid of merit and accordingly stand rejected. No orders as to costs."

The Board brings the above decision of the Bombay High Court to the notice of all concerned for compliance.

CBEC Instruction in F. No. 267/60/2014-CX.8, Dated: November 11, 2014

Judgment of Larger Bench of Tribunal on Aluminum dross and skimming - Board Instructions

CBEC brings to the notice of the Principal Chief Commissioners and Chief Commissioners the judgment of CESTAT [Larger Bench] in case of M/s Hindalco Industries Ltd Vs Commissioner of Central Excise, Belapur, Mumbai - III and Nagpur 2014-TIOL-1762-CESTAT-Mum-LB.

In this case an important question of law was framed and answered.

The reference made to the Larger Bench reads was:

(a) Whether Aluminium Dross and Skimmings or similar Non-ferrous Metal Dross and Skimmings, which arise in the process of manufacture of aluminium / Non-ferrous metal products can be considered as a 'manufactured goods' and hence excisable for the period post 10.05.2008 in view of the Explanation added to Section 2(d) of the Central Excise Act, 1944?

Or

(b) Notwithstanding the Explanation to Section 2(d), Aluminium Dross Skimmings or other Non-ferrous metal dross and Skimmings cannot be considered as ‘ manufactured products' and hence, not liable to excise duty?

The Larger Bench answered the reference as:

Aluminium dross and skimmings and similar non-ferrous metal dross and skimmings which arise as a by-product in the process of manufacture of aluminium / non-ferrous metal products are manufactured goods and hence excisable w.e.f. 10.05.2008 in view of the explanation added to Section 2(d) of the Central Excise Act, 1944.

Board informs the senior officers that this is an important judgment and sets out the correct legal position in the matter.

Field officers are directed to follow the same in cases covered by similar facts.

CBEC Instruction in 17/02/2009-CX.1 (Pt), Dated: November 12, 2014

Company Law - Cost Records - Clarification

GOVERNMENT has received representations from stakeholders seeking clarifications about Rules 5(1) and 6(2) of the Companies (Cost Records and Audit) Rules, 2014 regarding maintenance of cost records and filing of notice of appointment of the Cost Auditor in Form CRA-2 in electronic mode.

Government clarifies:

1. Considering delay in availability of Form CRA-2 on the MCA website, it has been decided to extend the date of filing of the said Form without any penalty/late fee up to 31st January, 2015.

2. Form CRA-2 will be made available on the MCA website soon.

3. It is noted that some companies have filed Form 23C for appointment of Cost Auditor for the financial year 2014-15. Such companies need not file form CRA-2 afresh for the financial year 2014-15.

MoCA Circular No. 42/2014, Dated: November 12 2014

Customs - Exemption to Bunker Fuels

GOVERNMENT has exempted the following bunker fuels from the whole of the Customs Duty:

(i) IFO 180 CST;

(ii) IFO 380 CST.

The exemption is subject to the conditions:

(i) the bunker fuels are imported for use in ships or vessels which are registered under the Merchant Shipping Act, 1958 (44 of 1958) and fly the Indian flag only;

(ii) such ships or vessels carry cargo between two or more Indian ports (including an intermediate foreign port);

(iii) such ships or vessels carry either containerised export-import cargo or empty containers or both between such ports;

(iv) such ships or vessels do not file any cargo related documentation under the Customs Act, 1962 (52 of 1962) with the Customs authorities, other than an import manifest (IGM) or an export manifest (EGM), as the case may be;

(v) the Master of the vessel or his authorised agent and the importer submit a declaration-cum-undertaking stating the quantity of bunker fuels required under this notification to the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, based on a document certifying the consumption rate of fuel issued by any classification society which is a member of International Association of Classification Societies (IACS) and the distance proposed to be covered by the vessel during its voyage;

(vi) the Master of the vessel or his authorised agent and the importer submit an undertaking to the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, to pay, in the event of his failure to comply with any of the aforesaid conditions, an amount equal to the duty leviable on such goods but for the exemption contained therein, along with the applicable interest thereon.

IFO 180 CST means Intermediate Fuel Oil (IFO) with 180 centistoke (cst) viscosity.

A similar exemption is given in Central Excise also.

Both the exemption notifications are valid only for a period of six months up to 11th May 2015.

Notification No. 31/2014-Cus., Dated: November 11, 2014, and Notification No. 21/2014-CE., Dated: November 11, 2014

Writ in AP High Court against Income Tax Commissioner for helping his wife win an election

U. KALPANA is an Hon'ble Member of the AP Legislative Assembly. Her husband is an Income Tax Commissioner. The candidate who lost the election against her filed a writ in the AP High Court seeking action against the IT Commissioner for indulging in political campaign for his wife.

The CBDT is also to be made a respondent in this case.

Jurisprudentiol-Friday's cases

Service Tax

Remuneration received towards sale of JP Miles to business partners to promote business is not BAS - Pre-deposit waived: CESTAT

AGAINST a Service Tax demand of Rs.1.40 crores confirmed by the Commissioner of Service Tax, Mumbai-I, the applicant is before the CESTAT with a Stay application.

As per the agreement between the applicant and the applicant's trade partners, the applicant being an airline issued Jet Privilege (JP) miles to their business partners and to the persons utilizing the services of the business partners. Revenue is of the view that these JP Miles are being given by the business partner free of cost, therefore, in these circumstances the applicant is promoting the business of business partners.

Income Tax

Whether if loan is taken from friend and repayment of same is made in cash within same FY, it can be assumed that such loan is for business exigency and not of undisclosed income - YES: HC

THE assessee, an individual, is engaged in the business of civil construction. It had filed its return of income for AY 2006-07, in which the assessee had debited various expenses like, payment of accounting charges, etc. According to AO, the assessee had to deduct TDS u/s 194J before making payment to the payee. It was claimed by the assessee that he was a labour supervisor and consequent to the sincere and dedicated work, he was awarded labour contract by his clients. He had no resources to finance the construction and hence he resorted to take loans from friends at time of emergency, particularly on Saturdays when labour payments had to be made. He also made certain payments in cash with regard to purchase of civil construction material and for accounting purposes without deducting TDS. AO disallowed the accounting charges paid u/s 40(a)(ia) and added the entire amount u/s 68 and imposed penalty u/s 271D and 271E. On appeal, CIT(A) confirmed the order of AO.

The issues before the Bench are - Whether in case a loan was taken from friend and repayment of the same was made in cash within the same financial year, it can be assumed that such taking of loan is for business exigency and it is not a case of undisclosed income and Whether the genuineness of the transaction to meet the immediate necessity can be accepted by the Tribunal in the quantum appeal and that would amount to reasonable cause in terms of Section 273B. And the verdict goes in favour of the assessee.

Customs

Royalty paid by appellant for technical-know-how received has nothing to do with imports of raw materials & consequently, same is not includable in AV of imported goods: CESTAT

THE appellant imports parts and components from their related foreign entity M/s Atlas Copco Air Power, Belgium and other related parties for the manufacture of manufacture of various compressed air and gas equipment, construction and mining equipment, generators, industrial tools and assembly systems. They pay royalty to the related foreign supplier on the basis of various agreements in respect of technical knowhow for the manufacture and sale of equipment.

See our Columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a nice day.

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