Jurisprudentiol – Friday's cases

By Vijay Kumar

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

Construction of compound wall is an input service as it is an integral part of factory – compound wall is necessary to run factory as any goods lying outside factory beyond compound wall will be deemed as removed without paying Central Excise duty: CESTAT

THE respondents are engaged in manufacturing of cotton fabrics and were availing facility of CENVAT credit of duty paid on ‘input service' as well as on capital goods. They availed credit of Service Tax of Rs.9,78,547/- on the basis of construction of ‘compound wall'.

Revenue took a view that construction of compound wall was not falling under the definition of ‘input service' as the respondents have not used the service for providing any output service. So also, the said service is not used by the respondents directly or indirectly in or in relation to the manufacture of final products and for the clearances of final products, the department alleged in the show-cause notice.

Income Tax

Sec 35(2AB) - it is a beneficial provision but limited only to capital expenditure - Assessee's writ dismissed: Delhi High Court

FROM the guidelines and the provisions of the Act, it is clear that the approval to in-house research and development center would, as a normal rule, be considered from the first of April of the year in which the application was made in Form 3CK. In the present case, the application in Form 3CK was made on 21.08.2008 and, therefore, in terms of these guidelines, the approval would normally have been granted from 01.04.2008. However, in view of the guideline prescribed in clause (vi) of para 6, a beneficial provision has been made so as to extend the approval of an in-house research and development centre to the previous year, but limited only to capital expenditure (excluding any capital expenditure on land and buildings)

Customs

Confusion in notification 40/2006-Cus and paragraph 4.55.3 of the FTP – matter arguable – appellant should be allowed to get their goods released provisionally -at same time revenue has to be safeguarded – appellant directed to execute a Bank Guarantee for duty amount leviable and Bond for same amount – early hearing allowed: CESTAT

THE appellants imported various types of ball bearings and filed Bill of Entry on 27.4.2009. The appellants claimed benefit of duty free clearance of the goods under Customs Notification no. 40/2006-Cus dated 1.5.2006 under Duty Free Import Authorization scheme. The appellants also produced 2 DFIA licences in this regard. The claim for exemption under Notification has been denied by the lower authorities on the ground that the imported materials have to be of the same quality, technical characteristics and specification as materials used in the resultant products specified in para 4.55.3 of the Handbook of procedures of the Foreign Trade Policy.

See our columns Tomorrow for the judgements