Jurisprudentiol - Friday's cases

By Vijay Kumar

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

It is absurd and irrational to suggest that such a huge sum is paid to the consulting engineers for developing only prototypes and these services are not “in relation to” the manufacture of commercial vehicles - Appeal allowed: CESTAT

THE appellants are engaged in the manufacture of motor vehicles and motor vehicle parts under Chapter 87 of the CETA, 1985. They are having an Engineering Research Centre (ERC) situated in their premises where R&D activities are being undertaken. The ERC has also been recognized as a Technical Institute by the Department of Scientific and Industrial Research, New Delhi vide letter dated 29/04/2008. The appellants are availing CENVAT credit on input services utilized and consumed in the R&D activities in ERC. In respect of Prototypes manufactured in ERC the appellants are claiming exemption from payment of duty under Notification no. 167/71-CE dated 11.09.1971.

Income Tax

Whether when a cement manufacturer is also engaged in mining operation to source its key raw material, mining activity tends to lose its independent identity so as to be ineligible for Sec 80HH benefits - YES: AP High Court

THE assessee, a company, had been carrying on business of manufacturing cement, and such manufacturing unit was situated in a backward area in the State of Andhra Pradesh. The assessee had also a mine having deposit of large quantity of lime. Hence, the assessee also carried on mining operation of the lime and the same was used as a raw material in manufacturing cement.

The issue before the Bench is - Whether when a cement manufacturer is also engaged in mining operation to source its key raw material, the mining activity tends to lose its independent identity so as to be ineligible for Sec 80HH benefits. And the question is answered against the assessee.

Service Tax

Applicants are financing the vehicles manufactured by them by way of loan -interest on the loan is not liable to service tax as per the provisions of the Finance Act, 1994 - prima facie strong case in favour - pre-deposit of Rs.205crores waived: CESTAT

CRORES is the order of the day and that too hundreds of them!

A total Service Tax demand of Rs.379.80 Crores is confirmed against the applicant along with interest and penalties.

The demand inter alia comprises of the following -

+ Rs.170crores - repair and maintenance of vehicles manufactured by the applicants during the warranty period.

+ Rs.205crores - providing banking and financial services.

+ Rs.1.72crores - providing service of authorized service station.

See our Columns tomorrow for the judgements