Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

Printing of laminated and unlaminated poly films - Whether amounts to manufacture - Matter referred to Third Member for deciding quantum of pre-deposit.: CESTAT

THE appellants are engaged in the printing of unlaminated poly films and printing laminated poly films and printing of unlaminated calendars on job work basis. As per the Revenue, the said activity of printing as also of printing and lamination amounts to manufacture and as such, the appellants were required to pay the duty on the same.

The appellant contended that as per various decisions of the Tribunal, the process of printing on film does not amount to manufacture. In the alternative, even if the printing is held to be amounting to manufacture, the final product would fall under Chapter 49, as a product of printing industry, which attract nil rate of duty.

Member (J) held that the issue as to whether the process of printing as well as on lamination of printed poly film amounts to manufacture or not has to be considered in the light of different judgements on the issue. However, prima facie it is to be viewed that even if the printing amounts to manufacture, the final product which emerges would be printing under Printing Industries Act, thus classifiable under Chapter 49 which attract nil rate of duty. Taking into consideration that a part of the demand would be within the limitation period and considering that the appellant has already deposited an amount of Rs.40 lakhs, the offer to further deposit of amount of Rs.20 lakhs as fair offer.

Income Tax

Whether when assessee enters into an MoU with a non-resident consignment agent to reimburse all such costs that are incurred to complete exports sales, such expenses can be allowed as business expenditure - YES: ITAT

THE assessee company is engaged in the business of manufacturing, food processing and infotech. During assessment, the AO noticed that assessee had claimed certain expenses as “USA office expenses”. When the AO asked the assessee to justify its claim with supporting evidence, in response, the assessee submitted that M/s Global Reliance Inc. deducted the business expenses amounting to USD 343347/- equivalent to Rs.1,51,07,247/- in the course of export sales of the goods on behalf of the assessee in the relevant year. The assessee also enclosed the certificates from M/s Global Reliance Inc. and a certificate in respect of selling and administrative expenses claimed to have been verified by the CPA in the USA. The AO pointed out that in reality the assessee did not maintain any office in the USA.

The issue before the Bench is - Whether when the assessee enters into an MoU with a non-resident consignment agent to reimburse all such costs that are incurred to complete the exports sales, such expenses can be allowed as business expenditure. And the answer goes in favour of the assessee.

Service Tax

Commercial or Industrial Construction Service - Clause (c) & (d) of Sec 65 (25b) do not specify that they should be undertaken in respect of new building only - finishing services, restoration or similar services provided, whether in respect of ‘new' building or 'old' building would attract ST liability - Penalties rightly imposed: CESTAT by Majority

THE applicant had undertaken interior work at 9th floor, State Bank Bhavan, Nariman Point, Mumbai .

As far as knowledge of the department is concerned, the Service Tax Law and Excise Law are two different laws and are implemented by two different set of officers having their own jurisdictions and enforcing the respective laws. The appellant has not shown any evidence whatsoever that the jurisdictional Service Tax officials were informed about the activities of the appellant and, therefore, they were fully aware about them. The jurisdictional Central Excise officials may be aware of the ongoing litigation but there is no evidence to indicate that the Service Tax officials were aware of appellant's activities. On the contrary, the appellant would be knowing the same and should have approached the Service Tax official for registration and inform of all the facts relating to their activities.

See our Columns Tomorrow for the judgements