Jurisprudentiol - Monday's cases

By Vijay Kumar

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

Classification of ‘softserve' served at restaurants/outlets commonly and popularly known as McDonalds - to be classified under tariff sub-heading 2105.00 as 'ice-cream'.:SC

THE short question of law for consideration in these appeals, filed by the revenue, under Section 35L of the Central Excise Act, 1944 is whether ‘soft serve' served at the restaurants/outlets commonly and popularly known as McDonalds, is classifiable under heading 21.05 (as claimed by the revenue) or under heading 04.04 or 2108.91 (as claimed by the assessee) of the Central Excise and Tariff Act.

In the absence of a technical or scientific meaning or definition of the term “ice-cream” or ‘soft serve', the Tribunal should have examined the issue at hand on the touchstone of the common parlance test.

Held: ‘softserve' is to be classified as “ice-cream” under heading 21.05 of the Act.

Income Tax

Whether when subsidiary receives share application money from non-resident parent in form of cash and capital goods and also imports certain consumables, waiver of payment obligations amounts to income receipt u/s 41(1) even if assessee transfers entire sum to capital reserve account - NO: HC

THE issues before the Bench are - Whether when the subsidiary receives share application money from the non-resident parent in the form of cash and capital goods and also imports certain consumables, waiver of payment obligations amounts to income receipt u/s 41(1) even if the assessee transfers the entire amount to the capital reserve account and Whether if the assessee claims depreciation on the capital goods, it is to be added back if the sum is treated as capital receipt. And the verdict partly favours the assessee.

Service Tax & Central Excise

Appropriation of amounts towards alleged Service tax dues said to be payable by petitioner from amount due to petitioner as export duty rebate in respect of manufactured goods cannot be sustained in eye of law when fact is that their appeals against Service Tax dues were pending before CESTAT: HC

THE appropriation of the amounts, to the extent of Rs.18,32,782/-, towards the alleged service tax dues said to be payable by the petitioner, from the amount of Rs.47,00,094/- said to be due to the petitioner as export duty rebate, cannot be sustained in the eye of law. The petitioner ought to have been given a reasonable opportunity of hearing before the second respondent had appropriated the said amount towards the alleged excise duty liability of the petitioner. Even though an appeal had been preferred by the petitioner before the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench at Chennai, in Appeal No.ST/217/2010, along with the stay petition, the second respondent had appropriated the amount of Rs.18,32,782/- from the export duty rebate, which was refundable to the petitioner, arbitrarily.

Legal Corner Icon — the image was hosted by the publisher and was not captured.See our columns Monday for the judgements