Jurisprudentiol – Monday's cases

By Vijay Kumar

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

Excess amount collected from dealer over and above actual amount incurred towards Road Delivery Charges (RDC) is liable to be added to the assessable value and charged to duty – however, excess RDC is to be treated as cum-duty price – CESTAT

THE case of the department is that as per the definition of transaction value under new Section 4 of Central Excise Act, 1944 each transaction is separate and independent. Excess recovery of freight would result in under-valuation of the goods and it is on this ground that differential duty has been demanded. Since the assessment is to be made on each transaction, the appellants cannot adjust excess recovery of freight in one transaction against the short recovery of freight in another transaction.

Income Tax

Transfer Pricing - Assessee is part of MNC Group - extends interest-free loan to non-resident AEs - Revenue for levy of tax on notional interest income - Interest-free loan between two related parties is a case of transfer of profit from India which is not permissible u/s 92: ITAT

IT is settled law that a company can provide interest-free loan to its subsidiaries out of commercial expediency. But, does the same logic or the legal ratio of various judicial pronouncements apply to international transactions? Can an MNC which has multiple associated enterprises (AEs) situated in various parts of the world, claim similar exemption like a domestic company? Or, arm's length price (ALP) is to be attributed to such cross-border transactions? In this instant case the Tribunal has held that the Chapter X of the Income Tax Act contains special provisions which govern all international transactions. As per Sec 92 of the Act, ALP is to be computed for all cross-border transactions, and an MNC cannot escape its tax liability by arguing that its interest-free loan was actually capital contribution to its AEs.

Customs

Denial of Drawback on ground that investigations are pending - when an alternative remedy is effectively and efficaciously available, no writ is maintainable – Petitioner directed to Appellate Authority:– High Court

WHEN an appeal remedy is statutorily provided, it is the obligation on the part of the petitioner to prefer such an appeal, before approaching this court. Though the respondent has indicated in his order itself that an appeal would lie against the order impugned, without exhausting the appeal remedy, the petitioner has challenged the impugned proceedings before this court. Therefore, when an alternative remedy is effectively and efficaciously available to the petitioner, it is appropriate for them to exhaust such remedy as provided under the Rules. Accordingly, the petitioner is directed to prefer an appeal to the appellate authority against the order impugned in this petition.

See our columns Monday for the judgements