Jurisprudentiol – Friday's cases

By Vijay Kumar

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

Cenvatted capital goods taken re-possession by finance company as assessee defaulted in re-payment of loan - confiscation of machines was proposed u/s 9 of the CEA, 1944 whereas original authority confiscated same u/r 173Q of CER, 1944, u/r 25 of CER and imposed redemption fine which quantum was reduced by Commr(A) - under Rule 25, manufacturer, purchaser and registered dealer are covered and the appellants are neither a purchaser, manufacturer or registered dealer – proceedings initiated are not covered under Central Excise Rules – appeal allowed: CESTAT

M/s ELECTRONIC Leasing & Finance Ltd. (ELFL) are doing the business of financing and leasing. The respondents had sold machinery to M/s Jaina Cast Ltd. (JCL), a Central Excise assessee on hire-purchase basis. The buyer took CENVAT credit of excise duty paid on the machinery and utilized it for payment of duty on excisable goods manufactured by them. However, since the buyer JCL defaulted in paying the amounts to EFLF, they took possession of the equipment and machinery as per the terms of hire-purchase agreement.

Income Tax

Income tax - Whether when new housing project is carried out on a piece of land where few buildings stand constructed, new project is to be construed as extension of existing buildings, and thus cannot be allowed benefits of Sec 80IB(10) - Benefits available: Bombay HC

THE issues before the HC are - Whether for the purpose of Sec 80IB(10), an approval granted by the local authority to a building plan is to be construed as an approval for a 'housing project'; Whether when the expression 'housing project' in not defined in the Act, it is to carry the common meanng of the term; Whether when a new housing project is carried out on a piece of land where a few buildings stand constructed in the past, the new project is to be treated as an extension of the existing buildings, and thus cannot be allowed benefits of Sec 80IB(10); Whether the size of the plot of land in Sec 80IB(10) is to be construed as the size of the housing project and Whether the size of the plot of land specified in Sec 80IB(10) as one acre is to be taken as a vacant plot ...

Service Tax

Policy of Government not to burden the exports comes to rescue of assessee - Tribunal allows CENVAT Credit on CHA Service, as there was no exemption for services used in export of goods prior to 7.7.2009.

THE question before the Tribunal was whether the appellant is entitled for CENVAT Credit of service tax paid on CHA Service. The said service was used for export of goods. Before the Tribunal, the appellants cited a number of judgements wherein the benefit of CENVAT Credit had been extended to the CHA service by holding that the place of removal in case of goods exported is the port of shipment. However, the Tribunal did not find that the said case laws are well founded. However, in this case the Tribunal finally allowed the CENVAT Credit by holding that: “It is the undisputed policy of the Government not to burden the export goods with domestic taxes as has been noted in various decisions of the Tribunal. The reasons are obvious. We do not want to make domestically produced goods, when exported to the foreign market, to become uncompetitive”.

See our columns Tomorrow for the judgements