TIOL-DDT 2076 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17063"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2013.jpg" alt="DDT in Limca Book of Records" width="175" height="120" hspace="5" border="0" align="right"></a></font></strong></font></strong></font></strong></font></strong></font><font size="3">TIOL-DDT 2076</font><br> </strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>02.04.2013<br> Tuesday</strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Exemption under area-based Notifications No. 49/2003-CE and 50/2003-CE– ‘Adjacent means' - Board clarifies</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>VIDE</strong> circular No. 960/03/2012-CX dated 17.02.2012 Board had clarified that expansion of an eligible unit by acquiring an adjacent plot of land and installing new plant and Machinery on such land, is akin to expansion by way of installing new plant and machinery<strong> inside</strong> the existing plot/premises and that in such cases, the exemption should continue to be available for the residual period of exemption.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Representations have been received from the Trade seeking further clarifications as to whether the term ' adjacent' used in the said clarification would also include a plot which is not immediately adjoining the existing plot but at some distance away from the existing plot. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, now it is clarified that the clarification in para 5 of the circular N. 60/03/2012-CX dated 17.02.2012 is meant for the units which undertake expansion by acquiring the adjoining plot with at least one common boundary with the existing plot and merge it with the existing plot/premises to make it one unit. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Installing of new plant and machinery in a plot which is away from the existing plot is not akin to the situation mentioned in para 5 of the said circular. Installation of plant and machinery on such a plot would tantamount to setting up another unit by the manufacturer, the eligibility of exemption of which is independent of the eligibility of exemption to the existing unit. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">‘Common Boundary' is the deciding factor for the exemption! </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2012/excircular960.htm" target="_blank">Circular No. 960/03/2012-CX</a>, <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2013/excircular968.htm" target="_blank">968/02/2013-CX., Dated: April 1, 2013 </a></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Since duty has been wrongly deposited in PLA of closed unit, bar of unjust enrichment does not apply</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant was having two registered units, Unit no. 1 and Unit No. 2. Unit No. 2 was closed down and the registration certificate was surrendered on 19.06.2006. However, Unit No.1 continued to function. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 22.12.2011, the appellant wrongly deposited an amount in the PLA of Unit No. 2. Realizing their mistake, they made a fresh deposit in the account of Unit No. 1 and filed a refund claim. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Both the lower authorities rejected their refund claim on the premise that the refund is hit by unjust enrichment. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench observed - </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><font color="#663399">"4. In this case, when a unit has been closed in the year 2006 and there is no activity going on, if any payment is made in that account, the question of bar of unjust enrichment does not arise at all. Both the lower authorities have not examined the provisions of law. They merely relied on the decision of Sahakarikhand Udyog Mandal Ltd. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2005/2005-TIOL-48-SC-CX-LB.htm" target="_blank"><font size="1">(2005-TIOL-48-SC-CX-LB)</font></a></strong>. In fact, in this case the facts of Sahakarikhand Udyog Mandal Ltd. are not relevant at all. In the present case, the duty has been paid wrongly in the PLA of a closed down unit which was not required to be paid, therefore, bar of unjust enrichment is not applicable. In these terms, the impugned order is set aside and the appeal is allowed with consequential relief. </font></em></font></p> <p align="justify"><font color="#663399"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. The adjudicating authority is directed to sanction the refund claim within 7 days of receipt of this order."</font></em></font></p> </blockquote> <p><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hope the amount has been refunded by now.</font></em></strong></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(See <font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2013-TIOL-538-CESTAT-MUM.htm" target="_blank">2013-TIOL-538-CESTAT-MUM</a></font>) </font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Bright Young Lawyers Delight - SC</font></strong></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> the concluding para of the Novartis Patent judgement delivered yesterday, the Supreme Court observed, </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Every counsel presented the issues under consideration from a different angle and every counsel who addressed the Court had something important and valuable to contribute to the debate. It was also acknowledged that the illuminating addresses of the counsel were the result of the hard work and painstaking research by the respective teams of young advocates working for each senior advocate. <font color="#FF0000"><strong>The presence of those bright young ladies and gentlemen in the court room added vibrancy to the proceedings and was a source of constant delight to us.</strong></font>"</font></em></p> </blockquote> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600"> - Wednesday's cases</font></strong></font></strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"><font color="#663399"><strong>Service Tax</strong></font></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Onsite services rendered abroad - CENVAT credit refund ineligible prior to 27/02/2010 as the same does not constitute exports as defined in Rule 3(2) of Export of Services Rules, 2005 – appellant's subsidiaries located outside India are independent entities and they are not their agents: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>M/s</strong>. Tech Mahindra Ltd. is engaged interalia in the business of “Information Technology Software Services” as defined in Section 65 (105) (zzzze) of the Finance Act, 1994 and they are providing these services mainly to their overseas customers. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These services are exported by M/s. TML to their overseas customers in two ways, i.e. by entering into a direct contract with its overseas customers or by entering into a contract with the overseas customers through its subsidiaries/branches located outside India. There are two components, namely, Offshore Software Development services provided by it from India and onsite Software Development Services provided by the subsidiaries located outside India. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">M/s. TML are availing CENVAT Credit of tax paid on input services used in providing the output services. Since they are mainly exporting these services on a regular basis, they are not able to utilize the CENVAT Credit availed by them. Hence, in terms of Rule 5 of the CENVAT Credit Rules, 2004 read with the Notification No. 05/2006-CE(NT) dated 14/03/2006, they have been filing refund claims of the un-utilized CENVAT Credit from time to time. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether when reassessment proceedings are cancelled because of incorrect reasons recorded by AO, nothing prevents Revenue for initiating re-assessment again if it has adequate materials on record - YES: Bombay HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE</strong>, an individual has filed a ROI for A.Y. 2006-07 declaring an income of Rs.1 ,05,275 /-. A notice was issued u/s 148 seeking to reopen the assessment on basis that the assessee had not filed its ROI for AY 2006-07. Further it was also observed that there were accommodation entries passed in the books of the assessee and its firm. During reassessment, the AO had passed an order of assessment, determining the total income of the Petitioner at Rs.40 ,11,390 /-. On appeal, CIT (A) had allowed the appeal and held that the reassessment proceedings were cancelled only because of the incorrect statement recorded by the AO and shall be free to initiate reassessment again if adequate material was available on the record. On further appeal before Tribunal, the issue was pending. Subsequently, a fresh notice was issued to the Petitioner seeking to reopen the assessment on the basis that there was a huge sum payable by the assessee to M/s. Pratik Sales Corporation in respect of current year transactions. These transactions were merely accommodation entries. Thus the assessment was reopened u/s 148. The assessee had filed objections to the reopening of the assessment which have been disposed of by the AO. It was contended by the assessee that the fresh notice had been issued on the same ground as the earlier notice. It was also argued that since the assessment proceedings were dropped on the earlier occasion by the CIT( A) and the Revenue was in appeal before the Tribunal, a fresh notice u/s 148 could not be issued. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Condition 5(3) of Handling of Cargo in Customs Areas Regulations, 2009 is not required to be satisfied by appellant as they are working on behalf of JNPT - appeal allowed: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants maintain and operate the Container Freight Station (CFS) and Buffer Yard (BY) belonging to the JNPT. The appellants received imported and export goods at the CFS and BY and are kept in their custody till the goods are cleared for shipment, home consumption or are warehoused or transported. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By exercising the power u/s 45(1) of the Customs Act, 1962, the Commissioner of Customs, JNPT issued Notification No.16/2005 dated 31.12.2005 notifying the JNPT and the appellants to be the Custodian and Co-Custodian respectively of the imported goods received at the CFS, JNPT until the goods are cleared for home consumption or warehoused or transshipped in accordance with the provisions of Chapter VIII of the Customs Act, 1952. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Tomorrow for the judgements</font></strong></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">HAVE A NICE DAY. </font></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p> </body> </html>