Jurisprudentiol - Thursday's cases

By Vijay Kumar

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

Preventive Detention order cannot be quashed merely because order remained unexecuted for long period: SC by majority

IF a preventive detention order is to be quashed or declared illegal merely on the ground that the order remained unexecuted for a long period without examining the reasons for such non-execution, the legislative intention contained in provisions such as Section 7(b) of the COFEPOSA Act would be rendered wholly nugatory.

Income Tax

Whether when assessee, an SSI with value of plant worth less than Rs 1 Cr, excludes costs of spares, Revenue is justified to take aggregate value of all equipments to deny assessee benefits of Sec 80IB - NO: ITAT

THE issues before the Bench are - Whether when the assessee, claiming to be a small scale unit, with value of plant and machinery under Rs 1 crore, had excluded the cost of equipments such as tools, jigs, dies, moulds and spare parts for maintenance and the cost of consumable stores while determining value of its plant and machinery, the Revenue is justified to take the aggregate value of plant and machinery of the business as a whole to disqualify the assessee as a small scale unit and make a disallowance of the deduction claimed under section 80IB and Whether when the assessee had paid royalty to its AE for knowhow imparted to the assessee at the rate of 5 per cent of the net ex-factory selling price, which was a small fraction of the assessee's turnover, the Revenue is justified to disallow the royalty payment. And the verdict partly goes in favour of the assessee.

Central Excise

Applicant issuing duty paying invoices without supplying goods - consignee taking CENVAT credit and proceedings for recovery initiated for recovery thereof settled by Settlement Commission on payment of duty & penalty - contention that penalty not imposable in such circumstance against applicant is prima facie not sustainable - Pre-deposit ordered: CESTAT

AGAINST an o-in-o passed by the CCE, Thane-II imposing a penalty of Rs.25 lakhs under Rule 26(2)(i) of the CER, 2002, the applicant is before the CESTAT with a Stay application. The penalty is imposed on the ground that the applicants issued duty paying invoices without supplying the goods to M/s Arrow Engineers and M/s Arrow Engineers availed credit without receipt of the inputs. Incidentally, against the proceedings initiated against M/s Arrow Engineers for recovery of the CENVAT credit allegedly fraudulently availed, the assessee M/s Arrow Engineers approached the Settlement Commission and settled the dispute by payment of appropriate duty and penalties.

See our Columns Thursday for the judgements