Jurisprudentiol – Monday's cases

By Vijay Kumar

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

Transfer Pricing - Assessee applies cost plus method - Revenue for TNMM - Adjustment can be made only by working out average net profit - matter remanded: Tribunal

THE assessee is engaged in the business of sale of finished jewellery to its AEs and non-AEs. It is located in a SEZ and enjoys 100% tax holiday u/s 10A. It applies Cost Plus Method and claims GP margin of 19.37% with AEs. Revenue issues notice u/s 92CA(2). The TPO observes the assessee has not provided adequate data for proper calculation of the margin and applies TNMM method to compute arm's length price.

Central Excise

SEZ Unit - Refund of duty on inputs - SEZ status to be accorded from date of application, not date of approval; eligible for refund even if unit is not in SEZ: CESTAT

THE objectives of setting SEZ unit is to promote exports and the Government gives refund on the duty paid on inputs in respect of goods notified not only in respect of SEZ unit but also in respect of domestic units. SEZ unit can obtain goods without payment of duty but in the absence of status as SEZ approved unit they could not have got the same and hence they have obtained goods on payment of duty. Therefore, even if the refund is not strictly admissible on the ground that procedure was not followed, it is required to examine whether appellants were eligible in the normal course for the refund if the goods have been exported.

Customs

Transferee cannot be called upon to fulfil condition(v)(a) of Notification No. 203/92-Cus. - It is original licencee who has to satisfy above referred condition – Appeal allowed: CESTAT

THE facts are that the Appellants had imported in 1994 certain goods and availed the DEEC notification exemption (203/92-Cus) from payment of duty since they held a valid DEEC Import Licence as transferee . In 1999 a show cause notice was issued proposing to deny the benefit of exemption availed and granted on the grounds of an allegation made in the show cause notice that an incorrect declaration was made as regards MODVAT availment on inputs used in the manufacture of products exported while in fact such benefit was availed (condition v(a) of notification 203/92-Cus refers).

See our columns Monday for the judgements