Jurisprudentiol - Tuesday's cases

By Vijay Kumar

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

Appeal against orders of Tribunal - Show Cause Notice issued by Vizag Customs - Appellate Order passed by Appellate Commissioner at Hyderabad - Next Appeal passed by CEGAT, Chennai - Appeal lies to AP HC and not Madras HC

IT was contended that the appellant was a licensed bonded warehouse in Visakhapatnam and the licences having been granted by the Commissioner of Customs, Visakhapatnam; the fraud committed by the appellant was detected at Visakhapatnam; the show cause notice was issued by the customs authorities at Visakhapatnam and the show cause notice was adjudicated and order in original was passed by the Assistant Commissioner of Customs, Visakhapatnam. Aggrieved by this, the appellant preferred appeal before the Commissioner of Customs and Central Excise (Appeals), Hyderabad, who by order dated 10.11.1998, dismissed the appeal. Thereafter, show cause notice was issued to the appellant by the Commissioner of Customs, Visakhapatnam. This was adjudicated and order in original was passed by the Commissioner, Visakhapatnam. The appellant filed appeal as against the said order before the Tribunal and the Tribunal passed an interim order, dated 11.11.1999. As against the said order, the appellant initially filed a writ petition before this Court in W.P.No.16490 of 2000, withdrawing the writ petition on the ground that they proposed to move the High Court of Andhra Pradesh and the writ petition was dismissed by this Court on 13.10.2000. Thereafter, the appellant moved the High Court of Andhra Pradesh and the writ petition was dismissed and the order passed by the Tribunal was confirmed. Therefore, it is contended that the present appeal which has been filed under Section 130 of the Customs Act is not maintainable before this Court as the cause of action for filing the appeal does not arise within the jurisdiction of this Court as the situs of the Assessing Officer will determine the jurisdiction and not the situs of the Tribunal in this regard. The counsel appearing for the Revenue in support of his submission relied upon the decision of the Supreme Court in the case of Ambica Industries vs. Commissioner of Central Excise, reported in (2007-TIOL-97-SC-CX);

Income Tax

Whether where assessee's intention is to earn long-term income from investment made out of own funds and Revenue has accepted same in preceding years, gains from same investment can be treated as business income - NO: ITAT

ASSESSEE is partner in a firm of Indenting Agent and Director in a pharmaceutical company and is also deriving income from dealing in shares and mutual funds. Assessee offered Long-term capital gains and short term capital gains on shares and securities through Portfolio Management Services and through transactions done himself. Assessee also declared income from speculation on shares as his business income. AO assessed the entire income declared by the assessee under the head "capital gains" as income under the head "profits and gains of business or profession". CIT (A) confirmed the order of AO.

Assessee contended that in preceding assessment year, the ITAT in assessee's own case held that the very nature of PMS is such that investments made by assessee cannot be said to be scheme of trading of shares and stocks and therefore, the profit is to be assessed under the head "capital gains".

The issues before the Bench are - Whether the gain arising to the assessee on sale and purchase of shares through PMS is to be considered as business income - Whether where the intention of the assessee was with long term goal of earning income from the investment and investment was made out of own funds and the revenue has accepted the investment in the preceding years, the gain on the same cannot be considered as business income. And the verdict goes against the Revenue.

Central Excise

Activity of sieving and packing is not notified as manufacturing activity in respect of goods falling under Chapter 25 of CETA, 1985 - hence it cannot be said that appellant manufactured exempted goods - since appellant has taken credit of 4% SAD on the imported inputs LBU 30, LBU 60, they are required to reverse the same treating these inputs as having been cleared as such - appeal allowed with consequential relief: CESTAT

THE assessee is a manufacturer of boric acid which is cleared on payment of Central Excise duty. The appellant procured two inputs namely LBU 30 and LBU60 which are required for manufacturing of boric acid. Prior to March 2006, both the inputs were exempted from payment of all duties. With effect from March 2006 these inputs were required to pay 4% SAD on the import of the said inputs. The appellant paid SAD @ 4% and took the CENVAT credit of the said duty. These inputs namely LBU 30 and LBU 60 were also cleared after sieving and repacking into local market without reversing any credit or on payment of any duty.

Since the assessee was manufacturing dutiable and exempted goods but was not maintaining separate accounts of inputs used for the aforesaid goods, demand notices were issued invoking rule 6(2) of CCR, 2004 asking the assessee to pay 5%/10% of the value of the 'exempted' goods.

During the course of investigation, the assessee paid the "amounts" and the same was appropriated in the adjudication proceedings. Against these orders of the CCE, Thane-I, the assessee is in appeal.

However, in another case, the Commissioner(A) held that the goods which are called as exempted goods are not exempted goods as the inputs LBU 30 and LBU 60 have been cleared as such without any manufacturing activity and, therefore, the assessee is required to reverse only the quantum of 4% SAD availed by them as credit.

See our Columns Tomorrow for the judgements