Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

Overvaluation of CD ROMs exported by Merchant Exporter under DEPB - FOB price of goods exported is within 150% of value of goods declared by manufacturer supplier - As per guidelines of CBEC, no market enquiry requires to be caused if FOB value is not more than 150% of AR 4 value - CESTAT

THE appellant is a merchant manufacturer and was engaged in the business of export of dyes, chemicals and polished diamonds. The appellants purchased CD ROMs at a price of Rs.600/- to Rs.615/- per piece and exported through Kandla Port. On an investigation conducted by DRI, show cause notice was issued seeking to re-determine the value of the CD ROMs exported on the ground that the value, which was declared, was excessive.

Income Tax

Whether for purpose of claiming Sec 10A benefits it is necessary for SEZ Unit to undertake some manufacturing within the SEZ - YES, rules ITAT

ASSESSEE is a pvt. Ltd. company engaged in the business of manufacturing and export of studded diamond and gold jewellery. The assessee filed its return of income declaring total income of Rs. 67,07,218/- and claimed deduction u/s 10A to the extent of Rs. 4,83,99,550/- and deduction u/s 80HHC of Rs. 16,82,502/-. During the course of assessment proceedings, the assessee was focussed on payment of labour charges of Rs. 1,88,71,966/- during the year as against only Rs. 3,30,221/- incurred in the immediately preceding year. The AO, therefore, estimated the ineligible portion of the export turnover relatable to job work activities on proportionate basis at 15,15,99,085/- being 44.35% of Rs. 34,18,24,319/- of export turnover was generated from the ineligible activities outside the SEZ. Accordingly, the claim of deduction u/s 10A worked out to Rs. 68,82,598/- was denied on the ground that the same was derived from such activities which were not carried out inside the location.

Service Tax

Charges for pipes, measuring equipment etc, at time of providing new gas connection - Prima facie liable to tax - Pre-deposit ordered: CESTAT

IN the present case, the customer never has a right of possession since it would never become his own property at all. At any given point of time, the appellant can take re-possession and at no time, the customer would become the owner or can claim right of possession. In the case where an item is rented, the customer has right of possession so long as he keeps paying the rent. In the absence of any payment of rent for the meter and the equipment, there is no consideration in this case for right of possession by the customer and therefore the customer cannot even claim the right of possession also. Prima facie, the conclusion is that the appellants have provided the service and are liable to Service Tax, which has been demanded.

See our columns Tomorrow for the judgements