Jurisprudentiol - Thursday's cases

By Vijay Kumar

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

Customs - Import of 6+ years old tyres - Hazardous Waste - Goods ordered to be re-exported: HC

AS per the United Nations Environmental Programme vis-a-vis Basel Convention regarding Pneumatic tyres, the lifetime of an original tyre casing must not exceed seven years. All the imported used tyres in these cases are 6+ years old and as per the reports available on record, these tyres cannot be made use of until and unless they are re-treaded and even after re-treading, they cannot be made use of for quite a long time. Therefore, naturally, these old tyres will shortly be a hazardous waste in our country. The respondents/importers are directed to send back the imports to the countries of origin at their own cost and expenditure immediately. The appellants are directed to take all steps necessary in this regard.

Income Tax

Income tax - Whether application of Sec 69B remains dormant, unless AO is able to discharge initial burden of assessee having 'expended' an amount which is not fully recorded in his books of account - YES: HC

THE assessee, Mr. Dinesh Jain has residential and business premises in which a search operation u/s 132 was conducted. The materials seized during the search revealed investment in various properties by the assessee. There was a commercial property in Gurgaon purchased for Rs.17,55,000 which was fetching a rent of Rs 7.02 lakhs per annum. The AO was of the view that a property, which was fetching such a substantial rental income, could not have been acquired for Rs 17.55 lakhs, which showed disproportionally high in comparison with the amount invested. He therefore took the view that the assessee must have invested more than what was disclosed in the sale document which attracted the provisions of Section 69B. The assessee denied investing anything over and above the amount declared in the document. The AO however calculated the "net annualised maintainable rent" of the property at Rs.6,63,000 and multiplying the same by 12.5, arrived at the value of the property at Rs.82,87,500.

Central Excise

CENVAT - Removal of used capital goods - Interpretation by Commissioner (A) that provisions of payment of 2.5% of the CENVAT credit for each quarter is brought into statute w.e.f. 13.11.07 and can be considered only for period from 13.11.07 to 18.03.09 is totally incorrect: CESTAT

REMOVAL of used cenvatted capital goods had always been a contentious issue under the CENVAT Credit Rules. Coupled with the fact that there was no rule in the CCR catering to such removals during the period 01.03.2003 to 12.11.2007, things were really bad for a manufacturer notwithstanding the decision in Madura Coats Pvt. Ltd. (2005-TIOL-891-CESTAT-Bang). Alongside came the Larger Bench decision in Modernova Plastyles Pvt. Ltd. (2008-TIOL-1771-CESTAT-Mum-LB) , which distinguished every available judgment and came to a conclusion that the term "as such" also includes "used capital goods" and hence removal of used capital goods is to be made after reversal of CENVAT credit. This made matters worse for a manufacturer and the Revenue officers jumped in glee.

See our columns Tomorrow for the judgements