Jurisprudentiol – Monday's cases

By Vijay Kumar

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

CENVAT - Rule 6 of CCR, 2004 - Rule 6(5) of CCR, 2004 excludes "Consulting Engineer's services" from purview of rule 6(1) of CCR when used in or in relation to manufacture of dutiable as well as exempted goods - prima facie applicants have made out case in favour - Pre-deposit of Rs.157 Crores waived and Stay granted: CESTAT

THE applicants are engaged in the manufacture of motor vehicles and motor vehicle parts under Chapter 87 of the CETA, 1985. The applicants are having an Engineering Research Centre (ERC) situated in their premises where R&D activities are being undertaken. The applicants are availing CENVAT credit on input services utilized and consumed in the R&D activities in ERC. In respect of Prototypes manufactured in ERC the applicants are claiming exemption from payment of duty under Notification no. 167/71-CE dated 11.09.1971.

Income Tax

Whether no penalty u/s 271E is warranted when assessee reimburses money in cash to its Director who has issued cheque from his account to pay rental for company's premises - YES: ITAT

AO observed that assessee-company made a repayment of loan of Rs. 2 lakh in cash to one of the Directors of assessee company, in contravention of the provisions of Section 269T. Assessee contended that there was no loan given by the Director. There was a current account in the name of Director who from time to time made payment for and on behalf of assessee as assessee did not have its bank account. Payment of Rs. 2.00 lacs was towards part reimbursement of expenses. It could not be treated as loan within the meaning of Section 269SS and 269T. AO observed that assessee was having substantial funds in the form of sales of Rs. 10 lacs and could not be deposited in its bank account then repayment/reimbursement could be made by cheque of the director. Any amount spent by any director on behalf of the assessee company was an unsecured loan in the hands of assessee-company and its repayment in cash was a clear violation of the provisions of Section 269T.

Service Tax

When entire order which got issued was not relatable to matter under dispute, notwithstanding reference numbers in preamble of same, it has to be held as if entire order was mistake - ROM application allowed, earlier order withdrawn and fresh order passed: CESTAT

AN order was passed by the CESTAT but the dictation, which was given in another case, got copied as order in this particular appeal, which got signed by both the Members and was issued. Anyways, the fact of the matter is that the appeal was allowed with consequential relief to the appellants.

So, the appellant doesn't mind even if anything else appears in the order - he, obviously, is and should be concerned about the last paragraph of the order.

See our Columns Monday for the judgements