Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

Iron Ore Fines and Coke Breeze obtained on screening of Iron Ore and Coke whether result of manufacturing activity – rule 6(3)(b) of CCR , 2004 whether applicable – Matter remanded for final decision on merits – CESTAT

FOR the purpose of manufacturing of Pig Iron, the appellants purchase Iron Ore and Metallurgical Coke. Before using these as basic inputs the appellants are screening the raw materials and during the process of screening, iron ore fines and coke breeze are generated. Both these products are cleared without payment of duty.

It is the stand of the Department that the aforesaid activity is ‘manufacture' and since Iron Ore Fines/Coke breeze are exempted goods, rule 6(3)(b) of the CCR , 2004 comes into operation and since no separate accounts were maintained by the appellant they are required to pay an amount of 10% of the value of the ‘exempted products'.

Income Tax

Transfer Pricing - assessee is subsidiary of tax resident of USA - royalty payment - TPO reduces quantum of royalty paid on even deals going bad and being written off - TPO cannot go beyond limitation prescribed in terms of methods to be followed for determining ALP u/s 92C : ITAT

DETERMINING Arm's Length Price (ALP) is the essence of Transfer Pricing regulations. And it is too tricky a business for both the Revenue as well as the assessee. Can the Transfer Pricing Officer ( TPO ) adopt any method other than the ones enumerated in the Act to determine the ALP for an international transaction between two related parties? And its answer is NO. The TPO is bound to follow only the methods prescribed in Sec 92C as provided in Rule 10B of the IT Rules. The TPO cannot go beyond the four walls erected by the Act, says the latest decision of the Tribunal.

Customs

Vehicles having special cavities for concealing smuggled goods can be confiscated if they are found in Customs area – when no owners are forthcoming for said vehicles, the Revenue could have confiscated and disposed same – it is not Tribunal's concern to advise department – CESTAT

“FROM the submissions made in the appeal by the department itself, the conclusion that emerges is that there is no owner for this seized vehicle. Therefore, the department could have taken steps to issue notices to the owners and if there was no response, the vehicles could have been disposed of. Any way, it is not our concern to advise the department. We do not find any justification to set aside the Commissioner order as regards the confiscation of vehicles. In the result, we find that the stay applications were to be rejected. In fact, we do not find any reason to keep the appeals pending, in view of the observations made by us. Accordingly, we reject the appeals also.“

See our columns Tomorrow for the judgements