Jurisprudentiol – Monday's cases

By Vijay Kumar

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

When a product has not been manufactured by an assessee, duty liability does not arise as per section 3 of Central Excise Act, 1944 - issue of classification of impugned spare parts does not arise at all – Revenue appeal rejected: CESTAT

THE brief facts of the case are that respondent assessee is a manufacturer of machinery items. During the course of manufacture, they purchased certain spare parts which were required to be supplied along with machines. These spare parts were bought by the respondent from the market and no credit of duty was taken by them and the same were cleared along with the machinery after making the payment of excise duty. Incidentally, the assessable value also included the cost of spare parts too.

Income Tax

Whether a premeditated transaction which earns tax-free income and enables assessee to square off profits against losses is permissible if same is conducted within four corners of law - YES, says High Court

THE issue before the HC is - Whether a premeditated transaction by virtue of which an assessee earns tax free income and squares off profits with losses is permissible if it is within the four corners of law. YES is the High Court's verdict.

Customs

Goods destroyed by fire inSEZ- Destruction took place in a deemed Foreign Territory - No Customs Duty Payable: – CESTAT

SEZis a fiction created and in that fiction if there is contravention of provisions ofSEZRules, the fiction itself provides for taking action. Once the action to theSEZunits or the loss of goods by fire is not covered by Rule 8 ofSEZRules 2003, the deemed fiction ofSEZbeing a foreign territory comes into picture. As already considered earlier, duty becomes payable only when the goods are cleared intoDTAor failure in terms of provisions of Rule 8 ofSEZRules 2003. Once the event is not covered by these provisions at all, we have to hold that goods are still in foreign territory which is the status ofSEZand it is a deemed fictional status. As observed by Hon'ble Supreme Court, the fiction has to be given full effect to unless there is a valid reason supported by law to do otherwise. Therefore the goods which have been destroyed have to be held to have been destroyed in the deemed foreign territory and if that is so no customs duty can be demanded.

See our columns Monday for the judgements