Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

Modvat - Bought out items exported as such along with machinery for setting up a plant in Vietnam - No Credit: SC

INPUTS/Capital Goods - Bought out items exported as such along with the machinery manufactured by the assessee for setting up a sugar plant in Vietnam. No duty paid on the sugar plant; To avail the MODVAT credit, the input on which excise duty is paid must be used in the manufacture of the final product in the factory of the assessee. The machinery purchased by the appellant had not even been tested or was not even unwrapped in the factory of the appellant. In case of such an admitted fact, it cannot be said that the machinery so purchased from others was used by the appellant in the manufacture of the sugar plant. In the instant case, the appellant had only acted as a trader or as an exporter in relation to the machinery purchased by it, which had been exported and used for setting up a sugar plant in a foreign country. In any case, it cannot be said to have manufactured that plant in its factory. Tribunal is correct in denying Modvat Credit.

Income Tax

Whether when company in question is a company in which assessee has controlling stake, loan given to assessee or partnership firm in which assessee is having controlling interest, is to be treated as deemed dividend - Sahara Chief loses battle against Revenue: HC

THE issues before the Bench are - Whether AO has rightly disallowed interest expenditure on loan observing that by making investment of borrowed interest bearing funds for non productive purpose, assessee diverted his income and adopted a colourable device to reduce tax liability; Whether the rent-free accommodation provided to the assessee is perquisite even though the assessee was doing official work from there and Whether when the company in question is a company in which assessee has been controlling its affairs and possessing a block of majority shares, loan given to assessee or the partnership firm in which assessee is having controlling interest, is to be treated as deemed dividend. And the assessee loses the battle.

Service Tax

Order passed in remand proceeding - No precedent for Commissioner to have passed strictures against Tribunal nor any authority for such brazen insubordination to appellate jurisdiction and without comprehension of limitation of his jurisdiction and limits of his authority - Order quashed: CESTAT

COMMISSIONER has wholly misconceived the limits of his jurisdiction pursuant to the specific order of remand passed by this Tribunal, vide the judgment dated 6.5.2011 and has tried to overreach and trench into the domain of this appellate authority. The impugned adjudication order is also wholly bereft of independent analysis and determination of the issues raised. There is neither any analysis nor discussion on the elaborate written submissions filed by the assessee on 28.7.2011 nor of the precedents referred to or cited during the course of personal hearing. The approach towards this critical quasi-judicial function is laconic, casual, flippant and wholly negligent. No speaking order was passed recording independent reasons, despite the direction in the judgment of this Tribunal in para 12 of the earlier judgment, to do so.

See our Columns Tomorrow for the judgements