Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

Exemption under Notfn. 21/2002-Cus – Imported waste paper allegedly not used for manufacture of Newsprint – Extended period cannot be invoked because there may not be an intention to evade payment of duty when the appellant is eligible for the benefit of such duty as CENVAT Credit – CESTAT

THE department alleged that the appellant had not satisfied the conditions annexed to the notification in the sense that the waste paper was not used for manufacture of newsprint and, therefore, demanded duty of Rs.45,72,898/-. The same was confirmed along with imposition of equivalent penalty and a penalty of Rs.5 lakhs on the Managing Director. A redemption fine of Rs.40 lakhs was also imposed on the goods already cleared by the appellants.

Income Tax

Income tax – Transfer Pricing – CIT invokes powers u/s 263 as AO fails to probe international transactions with AEs – Case is to be transferred to TPO for more than Rs 5 Cr international transactions but if it is less, AO can take cognizance and investigate – CIT order sustainable: ITAT

THE Assessee is in the business of exports and local trading of various products, including readymade garments. It files return of income but the AO issues a notice u/s 143(2). Assessee replies to the show cause notice and the assessment order is passed. But the CIT invokes powers u/s 263 on finding that the AO has failed to investigate the assessees international transactions with its overseas Associated Enterprise (AE) and also in allowing various commissions and brokerages.

Central Excise

Deemed credit on yarn/fibre under Notification 6/2002-CE(NT) is admissible to the non-composite mills procuring grey fabric – Delhi HC

THE respondent assessee is manufacturer of processed fabrics from the grey fabrics procured from the market. Revenue sought to deny the deemed credit on yarn / fibre under Notification 6/2002 CE(NT) dated 1 st March 2002 to the respondent on the ground that grey fabric is not referred to in the table of inputs specified in the Notification. The CESTAT had allowed the deemed credit to the respondents and the revenue was in appeal before the High Court with the question of law whether the Tribunal was right in allowing deemed credit in respect of the fibre/yarn used in the grey fabric which was an indirect input in the assessees final product-processed fabric.

See our columns tomorrow for the judgements