Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

Import of mobile phones - No basic duty or CVD on the product - SAD is refundable - even if value is enhanced higher duty is refunded - Revenue neutral - Stay granted - CESTAT by Majority

OUT of 28 consignments, in 27 consignments goods were cleared after payment of duty at the declared value. Under a customs notification, importer is eligible for refund of SAD subject to fulfilment of the conditions of the notification. In the present case also, importer was granted refund of SAD paid by them on clearances of the goods. Had value of goods been loaded to USD 55 per piece at the time of clearances of the goods, importer would have got the refund of duty payable at the enhanced value. Out of total demand of Rs.70,51,612/-, SAD portion is approximately Rs.54.18 lakhs and the balance amount of Rs.16.32 lakh pertains to NCCD and Education Cess.

Income Tax

Whether when assessee accepts loan in cash, exceeding limit u/s 269SS, and when source of funds is not withdrawal from banks, such loan may be construed as black money and same attracts penalty u/s 271D - YES: High Court

THE assessee, an individual, had filed its return of income for the AY 2007-2008 declaring total income of Rs 2,59,830/-, which was scrutinized after issuing notice u/s 143(2) and the assessment was completed u/s 143(3). By a notice, JCIT called upon the assessee to furnish extract of the ledger account of six creditors in whose names amount was due and payable. It was indicated that the assessee had accepted loan exceeding the limits specified u/s 269SS from six creditors during the FY 2006-2007. The assessee submitted his explanation. However, penalty was imposed u/s 271D equal to the loan amount taken amounting to Rs.29,47,500/-.

The issue before the Bench is - Whether when the assessee accepts loan in cash, exceeding the limit u/s 269SS, and when the source of funds is not withdrawal from banks, such loan may be construed as black money and the same attracts penalty u/s 271D. And the answer goes against the assessee.

Central Excise

Promotional products are to be valued based on rule 4 of Valuation Rules, 2000 as clarified in Board Circular dated 25/04/2005 - Demand upheld along with mandatory penalty and redemption fine - Appeal dismissed: CESTAT

THE appellants are manufacturers of cosmetics and toilet preparations such as hair dyes, shampoo, conditioners, etc. falling under Chapter 33 of the Central Excise Tariff. The cosmetic products are called 'catalogue products'. For promoting the catalogue products, articles similar to the catalogue products are issued free-of-cost along with the catalogue products and the same are called ‘promotional products'. In most of the cases the promotional products is out of pack i.e. the catalogue products and the promotional products were not issued in the same pack i.e., for example, with catalogue product of 400 ml shampoo, the appellants offered promotional pack of 90 ml. of conditioner. The package of shampoo bears a declaration that "Free - 90 ml conditioner with this pack". The package of conditioner would bear a declaration such as "Free Pack" and "Free: Not for Retail Sale."

The appellant was determining the assessable value of the promotional products under Rule 8 of the Valuation Rules, 2000 by taking into account its cost of production plus 10% notional profit.

See our Columns Tomorrow for the judgements