Jurisprudentiol - Friday's cases

By Vijay Kumar

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

CENVAT - Removal of inputs as such - Appellant not reversing the CENVAT credit at the time of removal - interest demanded - since assessee has paid duty in terms of rule 8 of the CER, 2002 it cannot be said that there has been delay in payment of duty so as to invoke Section 11AB of the CEA, 1944 - Revenue appeal rejected: HC

DURING the period from April 2003 to March 2004, the assessee removed CENVATTED inputs as such, but the credit was not reversed on the date of removal. This led to a SCN being issued to the assessee demanding interest of Rs.67,349/- u/s 11AB of the CEA, 1944.

Since the allegation in the SCN was confirmed the assessee preferred an appeal before the Commissioner (Appeals) and he held that the duty liability having been paid prior to the issuance of SCN, the question of imposing penalty or demanding interest does not arise. As against this order, the Department preferred appeal to the Tribunal and this appeal was dismissed on the ground that there is no enabling provision in the Statute for recovering interest.

So, now the Revenue is in appeal before the High Court.

Income Tax

Whether Sec 40A(3) mandates assessee not to make payment in cash in excess of Rs 20,000 even at cost of delay and loss to its business - NO: ITAT

THE assessee is involved in the business of distribution of mobile and recharge vouchers of Tata Teleservices Limited (Company) acting as their authorized channel partners. The assessee would make payment to the company for purchase of recharge vouchers. The assessee made such payment through account payee cheques till 22nd August 2005, when a circular was issued by the Company not only to the assessee but to all other distributors in the State stating that the distributors will pay only through demand draft drawn on nationalized bank or through bank deposit slips and where the distributor had a bank account with cooperative bank, the payment should be made in cash. Since the assessee had a bank account with cooperative bank, it was required to deposit cash at the company's office at Surat. During scrutiny assessment the AO observed that had made a total payment of Rs. 33,10,194/ during the year under consideration to the Company by cash on different dates and such payment exceeded Rs. 20,000/ each. The AO issued a notice to the assessee that such payments would be hit by section 40A(3) and therefore cannot be allowed as expenditure.

The issue before the Bench is - Whether section 40A(3) mandates assessee not to make payment in cash in excess of Rs 20,000/- even at the cost of delay and loss to its business. And the answer goes in favour of the assessee.

Customs

Refund - Claim of an individual, whose amounts are retained without authority of law, to seek refund or restitution cannot be rejected merely on the application of Section 27 of Customs Act, 1962 - Writ Petition allowed: High Court

THE petitioner imported a consignment of Palm Fatty Acid Distillate from Malaysia and Sri Lanka and landed them at ICD, Tughlakabad. Alleging undervaluation, the DRI conducted raids at the petitioner's factory and premises on 21.11.2006 and drew samples. Provisional release of the goods was sought by the petitioner and in the meantime they had deposited a total amount of Rs. 47,14,188/- through demand drafts on 12.11.2007. Suffice to say that a SCN was issued demanding duty of Rs.73,92,399/- and this was confirmed by the adjudicating authority.

The CESTAT held in the appellant's favour on 06.07.2011 holding that there was no evidence to show that the importer/petitioner had undervalued the goods.

A claim was filed seeking refund of the amounts deposited.

See our Columns Tomorrow for the judgements.