Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

MODVAT/CENVAT Credit on inputs and capital goods used in mines. Inputs eligible; Capital Goods used outside not entitled – Supreme Court

IN so far as the MODVAT/CENVAT credit on inputs (explosives, lubricating oils etc.) is concerned, the issue is squarely covered by the decision of this Court in the case of Vikram Cement Vs. CCE (2006-TIOL-04-SC-CX-LB) Therefore, the appeals, where credit on inputs is concerned, are allowed; As regards the MODVAT/CENVAT credit on capital goods, if the mines are captive mines so that they constitute one integrated unit together with the concerned cement factory, MODVAT/CENVAT credit on capital goods will be available to the assessee.; If the mines are not captive mines but they supply to various other cement companies of different assessees, and it is found that the said goods were being used in the lime stone mines outside the factory of the assessee, MODVAT/CENVAT credit on capital goods used in such mines will not be available to the concerned assessee under the appropriate MODVAT/CENVAT Rules.

Income Tax

Sec 4 - assessee following project completion method is out of purview of revised AS-7 - AO cannot ignore it and apply percentage completion method particularly when it has been accepted for earlier years: ITAT

THE issue before the Tribunal is - Whether an assessee who is following project completion method and has constructed the residential complex on his own is out of the purview of revised (Accounting Standard) AS-7 which is applicable in the case of construction contracts and recognizes percentage completion method and hence the AO was not correct in ignoring project completion method and applying percentage completion method particularly when the method applied by the assessee has been accepted in earlier years. And the answer is YES.

Service Tax

Revenue files appeal in ST7 against a manufacturer taking CENVAT Credit – Appeal should have been filed under Central Excise Act – Non Existent Commissioner in Committee of Commissioners – Appeal not maintainable - CESTAT

IN view of the fact that appeal has been filed in form meant for service tax appeal and in respect of a manufacturer who had availed CENVAT credit and it should have been filed under Central Excise Act and during the relevant time there was no Commissionerate at Valsad at all, the appeal becomes not maintainable under the law and accordingly the same is rejected.

See our columns Tomorrow for the judgements