Jurisprudentiol - Thursday's cases

By Vijay Kumar

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

Windmill Doors are used with tower on which wind operated electricity generators are installed - revenue is not denying benefit of notification 3/2001-CE & 6/2002-CE in respect of tower, hence doors which are a part of tower are also entitled for exemption - Order set aside and appeal allowed: CESTAT

THE appellants are engaged in the manufacture of current transformers, voltage transformers, windmill door, electrical boxes, etc. During the period June 2001 to May 2005 they claimed the benefit of notification No. 3/2001-CE & 6/2002-CE in respect of windmill doors.

Income Tax

Whether normal rule of valuation of stock-in-trade that they are valued at cost or market price whichever is less at end of year can be applied to derivative contracts also - YES: ITAT

THE issues before the Bench are - Whether an assessee trading in derivative contracts can treat the same as regular stock in trade; Whether the normal rule of valuation of stock-in-trade that they are valued at cost or market price whichever is less at the end of the year can be applied to derivative contracts; Whether the ordinary principle of commercial accounting requires that while anticipated loss is taken into account, anticipated profit in the shape of appreciated value of the closing stock is not brought into account; Whether "mark to market loss" arising on such contracts can be allowed, even though when there is no actual loss and Whether derivative contracts are not purely contingent in nature rather loss or profit is somewhat ascertainable in view of constant watch on daily market value. Answers to all these questions were answered in favour of the assessee.

Customs

Since there has been no seizure of vessel or confiscation of goods, demand of duty u/s 125(2) of Customs Act, 1962 is not sustainable in law - Pre-deposit waived and stay granted: CESTAT

THE appellant had imported a vessel "Smit Lynx - Salvage Tug" in February 2011 for undertaking salvage operations of the grounded Panamanian Flag Vessel "MSC Chitra" by Bareboat Charterer M/s. MSC Mediterranean Shipping Company SA on behalf of their Principal M/s. Smit Salvage B.V., Netherland and M/s. Smit Singapore Pte. Ltd., Singapore. The appellant did not file proper IGM and Bill of Entry for home consumption in respect of the said vessel. Investigation conducted revealed that the appellant had converted the status of the vessel from foreign to coastal on 04/02/2011 by filing a manual Bill of Entry No.51 dated 02/02/2011 for clearance of provisions and bunker fuel on the vessel and paid customs duty accordingly. The said vessel after remaining in Indian waters for about 1 1/2 months was exported back on 26/03/2011.

See our Columns Thursday for the judgements