Jurisprudentiol – Monday's cases

By Vijay Kumar

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

Clearance of capital goods after use - Appellant calculating duty based on number of quarters that have elapsed after receipt of capital goods whereas Revenue calculating duty based on actual number of days - appellant paying duty allegedly short paid along with interest - it cannot be said that appellant had any intention to evade duty - penalty u/s 11AC set aside and appeal allowed: CESTAT

THE appellants had availed credit in respect of capital goods and cleared the same after use on 05.09.2009/16.02.2010 on payment of duty as per Notification no. 39/2007-CE(NT) dated 13.11.2007 by calculating the duty on quarter and part thereof from the date of receipt of the capital goods in the factory.

The officers of the Revenue pointed out that the appellants had short paid the duty on the capital goods. On pointing out the same, the appellants immediately paid the duty along with interest on 09.03.2010.

Two years hence, the appellants received a SCN for appropriation of the duty amount already paid and for imposition of penalty under section 11AC of the Central Excise Act.

‘Needful' was done by the adjudicating authority and the Commissioner(A) too did not find anything amiss in the penalty imposed u/s 11AC of the CEA, 1944.

Income Tax

Whether when assessee is sanctioned grant by Govt for operational purposes for period of five years, entire sum is to be treated as receipt in same year - NO: Delhi HC

THE issues before the Bench are - Whether when the assessee is sanctioned a grant by the Government for operational purposes for a period of five years, the entire sum is to be treated as receipt in the same year; Whether any fault can be found with the assessee compling with the AS-12 Accounting Standards and Whether when inventories amount is reflected in the Annual Report, any addition is warranted in the same regard. And the verdict goes in favour of the assessee.

Service Tax

Sale of goods on High Seas Sale basis - mark-up/trade margin charged by appellant to customers is subject to customs duty as part of transaction value - If that be so, there is no reason why same part of transaction value should be taken out of customs transaction and subjected to Service Tax under guise of Business Auxiliary Services - Pre-deposit waived & Stay granted: CESTAT

THE appellants are engaged in trading of various commodities such as edible oils, petroleum products, gold, silver, groceries etc. They undertake import as well as export of these items on behalf of various traders/merchants. In case of an import transaction, they undertake the imports by placing order on the foreign suppliers, opening LC and the goods are purchased on their own account and when the goods arrive in India, they sell these goods to the customers on High Seas Sale basis and they charge a mark-up ranging from 1% to 1.5% of the value of the goods. The documents for import of the items are filed by the respective customers, who declare the value inclusive of the mark-up for the purposes of customs duty assessment.

The Revenue was of the view that the applicants are rendering services of import and export to the customers and, therefore, they are liable to Service Tax under the category of "Business Auxiliary Services".

See our Columns Monday for the judgements