Jurisprudentiol–Monday's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Central Excise

Gold plating on Imitation jewellery does not amount to manufacture: Tribunal

THE respondent is doing job work of gold plating on the imitation jewellery supplied by the manufacturers of the jewellery. For the said purpose, they were receiving jewellery items of mild steel, copper and brass. For jewellery items in brass they were directly doing gold or dye gold plating and then lacquering as per customers' requirements. For jewellery items in mild steel and copper, they were first doing copper and/or nickel plating and then gold or dye gold plating and then lacquering as per customers requirements. Copper and nickel plating was got done from outside. For the purpose of doing gold plating they were purchasing gold from open market and the gold was cut into strips and connected to D.C power supply of electroplating bath. Several chemicals/additives were added in bath tub and the plating was carried out by reverse current method.

Income Tax

Reimbursement of expenses to non-resident parent company - Since no element of either profit or income is embedded in such expenses, assessee not liable to TDS; Provisions of Sec 40 cannot be invoked where income is computed u/s 42, a code by itself: ITAT

REIMBURSEMENT of expenses is a constant bone of contention for income tax purposes. And if it involves a non-resident, it is bound to be a long-drawn battle. However, in the latest decision the Chennai Bench of the ITAT has once again reiterated the settled judicial view that if there is no element of profit or income in the reimbursed sums, no TDS liability u/s 195 arises for the assessee. What further goes in favour of the assessee in the instant case is the well-established special status of Sec 42 which was incorporated in the I-T Act to allow special deductions to companies engaged in prospecting mineral oil. This Section is so special that an assessee which is a part of the Production Sharing Contract (PSC ), can claim deduction for both revenue as well as capital expenditures.

Central Excise

Refund claims made beyond sixty days period under Notification No 32/2005 CE are not to be treated as hit by time bar – claims filed within the time limit under Section 11B are valid – CESTAT

IMAGINE rejection of refund claim to an NGO working for welfare of the Tsunami affected areas on the ground of unjust enrichment and crediting it to the consumer welfare fund. Well, that is how the bureaucracy of a welfare state works and one has to live with it. Notification No 32/2005 CE provides exemption from central excise duty for steel and cement used for construction of houses by NGOs etc in Tsunami affected areas. But this exemption operates through refund route. The organizations should file refund claims on quarterly basis within sixty days after each quarter and then again submit a completion certificate from the District Collector and consumption certificate issued by a Chartered Engineer which is to be counter-signed by the concerned District Collector, finally, produce the evidence of duty payment to the satisfaction of the jurisdictional excise officer. And the maximum refund for each house is subject to a ceiling of Rs 9,000/- (may be equal to the amount charged by a Chartered Engineer for the certificate). The claims filed by the appellant agencies in the case we are reporting today were rejected on various grounds like claims filed after the expiry of six month period, burden of not passing on the duty not produced, proof of duty payment not produced etc. Wherever the claims were allowed by some magnanimous officers, the revenue was in appeal before the CESTAT.

Tomorrow is a holiday

See our columns Monday for the judgements