Jurisprudentiol - Friday's cases

By Vijay Kumar

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

Revenue allegation that bond executed for storing goods in warehouse should be kept valid even after removal of goods from said warehouse and till such time goods are sold from duty free shops in airport is not within confines of the law - Revenue appeal dismissed: CESTAT

THE department has a unique and interesting case - it is of the view that the bond executed by the respondent in respect of the goods stored in Chowgule bonded warehouse should be kept valid even after the removal of the goods from the said warehouse till such time the goods are sold from the duty free shops in the airport. Inasmuch as this was not done by the respondent, a duty demand was confirmed for a sum of Rs.60,88,233/- along with interest thereon and a penalty of Rs.10,000/- was also imposed on the respondent.

Income Tax

Whether when assessee is given option to convert land into industrial unit after approval, which was obtained after long gap, profits from sale of such converted land, treated as stock-in-trade is to be treated as capital gains - YES: ITAT

THE assessee Company is engaged in the business of manufacturing of specialized chemicals and in development of real estate and was owner of certain land allotted to it by Govt of Maharastra. The land was allotted to the assessee on condition that the assessee will obtain necessary approval from land revenue authorities for using the land for industrial purpose within the stipulated time. After obtaining approval, the assessee converted the land into stock in trade and then sold the same and offered the gain as capital gain. The AO during the course of assessment proceedings observed that the assessee had converted the land after a long gap and at the relevant time the land was rural agricultural land and hence the same could not have been converted into stock in trade.

Central Excise

CENVAT - Revenue contention that applicant does not have any facility to manufacture excisable goods, hence cannot avail CENVAT - notfn 53/2003-Cus allows import of raw material by merchant exporter having supporting manufacturer - once duty on final product has been paid and accepted by Revenue, CENVAT credit cannot be denied - Pre-deposit waived & Stay granted: CESTAT

A sizeable number of cases emanating from the Central Excise Commissionerates nowadays relate not to the fact that the assessee has not paid any Central Excise duty or there is any undervaluation but that the assessee should not have paid any duty by taking CENVAT Credit. The applicant is a merchant exporter and the imported raw material was supplied to M/s Maharashtra Seamless Ltd. under rule 4(5) of the CENVAT Credit Rules and the goods were manufactured and thereafter the applicant paid duty by utilizing the CENVAT credit as well as paying from PLA.

See our Columns Tomorrow for the judgements