Jurisprudentiol – Monday's cases

By Vijay Kumar

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

When Show Cause Notice does not allege suppression, imposition of penalty u/s 11AC of the CEA, 1944 is ruled out – CESTAT

The short facts are that the assessee who is engaged in the manufacture of BOPP films and had exported some consignments had to import the same due to rejection by the consignee. They followed the provisions of Rule 16 of CER, 2002 inasmuch as the CVD paid on import was taken as Cenvat credit. These goods were later cleared to the domestic market after subjecting them to the process of slitting lengthwise/widthwise and the waste generated was also used for manufacture of finished goods.

The long and short of the story is that the entire process resulted in short payment of Central Excise duty to the extent of Rs.3.82 lakhs vis-à-vis the credit of CVD availed on the re-imported BOPP films.

When this fact was made known to the assessee they promptly agreed to the lapse and paid the amount of Rs.3.82 lakhs.

However, the Revenue viewed this as a serious affair and in a show cause notice after pointing out the violations of rule 6 and rule 16 of the CER, 2002 invoked the provisions of section 11A of the CEA, 1944 for recovery and adjustment of the amount already paid. Nonetheless, interest provisions under section 11AB, penal provisions under section 11AC of the CEA, 1944 read with rule 25 of CER, 2002 and rule 15 of the CCR, 2002 were also brought into the picture.

Income Tax

The prescription of sec.43B (Certain deductions to be only on actual payment.) can be invoked only if assessee claims deduction from taxable income. – ITAT by majority

Since the assessee has not reduced its profits by making deduction/allowance of the customs duty from the taxable profits, the provisions of sec.43B cannot be applied. The basic fact that entire amount was not claimed as deduction, was not considered by the Assessing Officer. When the amount is not claimed, there is no question of applying the prescription of sec.43B.

Customs

Offence – Bail - an order granting bail cannot be disturbed except for compelling reasons– High Court

A bail would normally be cancelled if the accused tries to interfere with the course of justice by influencing the witnesses or he evades the process of the Court by remaining absent during investigation or otherwise tries to abuse the concession of bail granted to him. But, an order granting bail cannot be disturbed except for compelling reasons and the superior Court ought to interfere only in a case where gross injustice has been done on account of grant of bail. The superior Court will not be justified in setting aside an order of bail merely because had it been the Court concerned, it would not have granted bail in the case before it. The petitioner seeking cancellation of bail or setting aside of an order granting bail must make out a strong case and must show that the order granting bail was manifestly illegal, unjust or improper.

See our columns Monday for the judgements