Jurisprudentiol– Tuesday's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Income Tax

Compounding of offences can be done even after conviction by a court and appeal is pending: Madras High Court

This is a case where the Income Tax Department is determined to send an 83 year old woman to jail rather than accept compounding from her.

It is evident from Section 279 (2) of the Act that any offence under this Chapter may either before or after the institution of proceedings, be compounded by the Chief Commissioner or a Director General. The term 'proceedings' is not defined in the Income Tax Act. The term 'proceedings' is a term of wide amplitude and comprehensive and generally speaking means a prescribed course of action for enforcing a legal right. It is not a technical expression with a definite meaning attached to it, but one the ambit of whose meaning would be governed by statute. In the case on hand, against the conviction and sentence passed by the trial court, on the complaint preferred by the appellants, the respondent has filed an appeal and the same is pending, which is a prescribed course of action for enforcing a legal right. The said appeal is also a proceeding as contemplated under Section 279 (2) of the Act.

Customs

Warehousing – interest - goods cleared under DEPB Scheme cannot be treated as exempted goods – interest payable – High Court

The difference drawn by the Supreme Court makes it clear that under the DEEC Scheme, the clearance is allowed duty free, whereas under DEPB Scheme, the exporters are issued DEPB scrips which allow them specific amounts to be utilised for payment of Customs duty. Therefore, the importers, who use DEPB scrips , pay duty not by cash but only by way of credit. Therefore, the goods cleared under DEPB Scheme cannot be treated as exempted goods, but they can only be treated to be duty-paid goods and therefore, the interest is payable as per Section 61(2) of the Act. The debit of any amount under the DEPB Scheme is a mode of payment of duty on the imported goods and cannot be treated as exempted goods, unlike the goods under DEEC Scheme

Central Excise

Rule 6 of CCR , 2004 – common inputs – reversal of credit, before or after clearance of exempted goods, amounts to not taking any credit – Payment of 10% not required – Tribunal

The assessee took CENVAT credit on Cocoa beans and utilized the same in the manufacture of both dutiable as well as exempted products. No separate records were maintained by them. However, they reversed an amount of Rs.70 ,21,383 /- being the input credit availed on cocoa beans utilized for manufacture of exempted cocoa liquor and low moisture cocoa mass. They also paid the interest on the said amount.

See our columns Tomorrow for the judgements