Jurisprudentiol– Tomorrow's cases
Legal Corner Icon — the image was hosted by the publisher and was not captured.Central Excise
Common input purchased in bulk to reduce cost and CENVAT credit taken – when assessee embarked on manufacturing exempted goods, they reversed corresponding amount of CENVAT credit – Tribunal's order allowing appeal upheld by High Court, so Revenue appeal does not survive: Tribunal
WHEN it comes to the provisions of Rule 6 of the Cenvat Credit Rules, it is an oft commented cliché – that the drafters of law do not take into account the predicament faced by the manufacturers in maintaining separate accounts of for receipt, consumption and inventory of inputs used for the manufacture of dutiable and exempted final products.
The Tribunal had an occasion to comment on this scenario in the case of Philips India Ltd. [] while dismissing the Revenue appeal and holding that it is grossly unjust to ask the respondents to pay a huge amount of Rs.1.09 crores under rule 57AD of CER, 1944 as against the inadmissible credit of Rs.87,569/-. The Bench noted – that the wordings of the cited rule and the cited circulars do not deal with a situation when it is not possible to segregate the inputs, whereas such a situation has been dealt with by the Hon'ble Supreme Court's decision in the case of Chandrapur Magnet [].
Income Tax
Exchange loss - fluctuation in dollar rates - Since assessee was paid advance by non-resident holding company without any obligation, it is not accrued liability - deduction cannot be allowed for notional loss: ITAT
THE exchange loss due to fluctuation in dollar rates has largely become a settled issue after the Apex Court giving the final verdict in the Woodward Governor Pvt Ltd case in favour of the assessee. But does it mean that all types of exchange loss are allowable deductions. NO is the latest ruling of the ITAT. A notional loss is not an allowable deduction. Unlike in the Woodward Governor case where the exchange loss was an accrued liability, the AO's finding in this case was that there was no accrued liability and the assessee fails to rebut this finding by any evidence. Thus, the claim of the assessee is disallowed.
Service Tax
CENVAT Credit - Rent-a-Cab Service to employees – whether can be treated as Input Service – Argument that transportation of anything other than goods stood impliedly excluded from “input services” not made before Bench in Cable Corporation case – Matter referred to Division Bench
THIS appeal is headed for a long and tortuous journey. For one, it is a Revenue appeal and concerns the CENVAT Credit taken of service tax paid on the Rent-a-Cab service to employees, consultant and other persons. Secondly, although the amount involved in the present appeal is less than Rs.50,000 /- the appeal was admitted by the Member(Technical) who constituted the Single Member Bench on the ground that the issue was of a recurring nature.
Until tomorrow with more DDT
Have a nice Day.
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