Jurisprudentiol - Tuesday's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Foreign Trade Policy

FTP - Refund of Terminal Excise Duty - Clearance to EOU - Deemed export entitled for refund of TED: HC

SUPPLIES made to EOUs in terms of para 8.2(b) are entitled to be regarded as deemed exports. The benefits for deemed exports include inter alia refund of TED. The authorities in this case appear to have proceeded to make an order adverse to the petitioner and proceeded to hold that the petitioner was disentitled to the benefit of refund in view of some clarification given by the Policy Interpretation Committee, in its meeting of 04.12.2012 to the effect that "refund of CENVAT credit provisions are available under Excise rules and CENVAT rules which should be availed of rather than claiming refund". This reasoning appears to have prevailed with the Policy Relaxation Committee as well in this case. The Court is unable to comprehend the rationale of the decision. Neither of the authorities dispute that the petitioner supplied goods to the EOU at the relevant time. Its entitlement, therefore, was defined in terms of the existing policy, i.e. refund in terms of paras 8.2, 8.3, 8.4 and 8.5 of the 2009 policy. That a subsequent amendment was made to the existing regime which in effect liberalized the position further and exempted payment of TED altogether cannot surely be a reason for denying the scheme for refund of payment already made.

Income Tax

Whether mere filing of application for settlement adversely affects powers of Assessing Officer in any manner - NO: High Court

THE assessee is an individual. It had challenged an order passed by SETCOM, which rejected the assessee's application that the assessment for the period 01.04.1986 to 07.04.1987 was time barred. On 07.08.1997, search and seizure operations were conducted at the residential and business premises in respect of assessee, his wife and other relatives. Several articles and documents were seized. The last panchnama was drawn on 26.09.1997. Upon receipt of notice, assessee filed a return for the period 01.04.1986 to 07.04.1987. After considering this, the Income Tax Authorities were of the opinion that the accounts indicated had sufficient complexities warranting an audit u/s 142(2)A. A special auditor submitted the audit report on 14.02.2000. It was contended during the pendency of these proceedings that SETCOM by its order had entertained the application made to it. The order was a speaking one and made after submissions of the parties and was drawn up by the departmental authorities. Whilst the SETCOM's proceedings were pending, an order u/s 245 D (4) was contemplated and heard. Assessee had contended that the entire proceedings had to be closed since the block assessment had become time barred on 29.02.2000. It was submitted that by virtue of the then existing Section 158BE, which mandated that assessment were to be completed within a time bound manner which was to expire on 29.02.2000 (the period having been extended by virtue of special audit conducted u/s 142). In the absence of any order by SETCOM admitting the matter or proceeding further, AO had the lost authority to pass any orders. Consequently, the Commission itself did not possess jurisdiction. After hearing counsel for the parties, SETCOM rejected the assessee's argument.

THE issues before the Bench are - Whether mere filing of an application for settlement would adversely affect the powers of the Assessing Officer in any manner; Whether the SETCOM is allowed to review its own order and Whether the remedy provided under section 245C, as a machinery provision for effecting settlement of tax disputes, is only in the nature of a option open to the assessee who desired to settle his tax matters. And the matter goes against the assessee.

Central Excise

CENVAT - Transfer of credit on sale of factory - Condition of transfer of liability is applicable when there is a change in site of factory resulting from sale, merger, amalgamation or transfer to a joint venture - in the present case, factory has not been shifted to anywhere but only the ownership has been changed - condition of transfer of liability is not applicable to transfer of ownership- Matter remanded: CESTAT

THE appellant sold their unit to Exide on 16.02.1998/29.04.1998 with a condition that any liability towards excise duties shall be borne by the appellant. The appellant filed an application for transfer of credit lying in their MODVAT credit account attributable to inputs and capital goods, unutilized by them, to Exide. The said credit was denied by the lower authorities and, therefore, the appellant is before the CESTAT.

It is submitted that as per Rule 57F(20) and Rule 57S(5) of the CER, 1944, on there being change of ownership, the MODVAT credit attributable to inputs can be transferred to the buyer of the unit irrespective of the clause that liabilities towards Central Excise payments are transferred or not.

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