Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

Manufacture and clearance of ‘sterilized atraumatic needled sutures' – Suture consisting of a curved metallic needle with a piece of thread firmly attached to its wider end is a surgical appliance, classifiable under Chapter 90.18 – Matter Remanded - CESTAT

WHEN Range Officer certifies from time to time that impugned goods are exempted from payment of duty by virtue of certain Notification, it cannot be said that appellant had acted with intent to evade payment of duty – Matter remanded to Commissioner to consider eligibility of exemption under S. No. 267 of Notification 6/02-CE based on documentary evidence produced and also to consider plea of limitation for demand covered by first show cause notice based on documentary evidence adduced – Matter pertaining to penalty on Managing Director also remanded.

Income Tax

Sec 271B - Whether penalty is imposable even when assessee is under bona fide belief that its income is tax exempt? - NO, says ITAT

BEFORE the AO, it was submitted that operations of the assessee were based on the principle of mutuality, which envisages number of persons getting together to constitute funds for a stated common purpose and the excess funds which are not required for that purpose shall be retained for similar application in subsequent years. Thus, the surplus contribution retained was not regarded as taxable profit of the mutual concern. The AO did not agree with the submission of the assessee and levied penalty. CIT( A) affirmed the view of the AO.

The issue before the Tribunal is - Whether penalty is leviable even when assessee is under bona fide belief that its income is tax exempt. NO, says the Tribunal.

Central Excise

Since biris are not fit for human consumption, duty has to be necessarily remitted in terms of Rule 21 of CER, 2002 – stand by department that the appellant did not take proper care of the stock to avoid destruction of biris by insects is not legally proper – Appeal allowed with consequential relief: CESTAT

FOR the department, receiving an application for remission of duty is an anathema. Strange it may seem but the field formations fail to understand that no prudent and honest manufacturer would like to suffer losses of his finished goods and file frivolous applications seeking remission of duty as made available under the Central Excise law. After all, the goods have been either lost or destroyed by natural causes or by unavoidable accident OR for that matter have been found as unfit for consumption or for marketing. Both are separate situations but the Department finds it useful to read one into another and deny the claim for remission.

See our columns Tomorrow for the judgements