Jurisprudentiol - Tuesday's cases

By Vijay Kumar

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

Differential duty paid before finalization of provisional assessment - harmonious reading of rule 7(4), 8(1) and 8(3) of CER, 2002 would lead one to conclude that appellants are required to pay interest - fact that they have paid duty before formal finalization order issued by AC/DC will not make any difference to said position - Appeals dismissed: CESTAT

THE appellants are manufacturers of Tyres, Tubes & Flaps and these are transferred to various distribution centers, sales depots and C & F agencies to be sold in the replacement market. At the time of clearance from the factory, appellants are not able to precisely determine the value of the goods as they grant various discounts, abatements etc. Therefore, they are clearing the goods on provisional assessment basis under Rule 7 of the Central Excise Rules, 2002. After completion of the financial year they get their accounts audited and they are submitting certificate from CA/Cost Accountant giving the details of the sales value, various discounts given etc. Along with these details, they also calculate the value (and hence differential duty amount) on which they are required to pay the excise duty. They submit these details to the Divisional Dy./Assistant Commissioner for finalization of the provisional assessment for the previous year. While furnishing these details to the Deputy/Assistant Commissioner they also pay the differential duty without waiting for formal order of Deputy/Assistant Commissioner. Order of finalization of the assessment is issued by the Deputy/Assistant Commissioner after few weeks/months (which is after payment of differential duty).

The issue in dispute is whether they are liable to pay interest on the differential duty that would commence from the month succeeding the date on which the duty was due and payable in relation to the goods cleared till the date of payment of differential duty.

Income Tax

Whether when assessee is into warehousing business, income earned as rental, interest on FDs and loans given to staff is also eligible for exemption u/s 10(29) - NO: Madras HC

THE assessee a Government of Tamil Nadu sponsored undertaking, was formed originally under the Agricultural Produce (Development and Warehousing) Corporations Act, 1956. The said Act was repealed and in its place, the Warehousing Corporations Act, 1962 was framed. With the repealing of the 1956 Act, by the Warehousing Corporations Act, 1962, the Corporation continued its existence as a statutory Corporation constituted under the above-said Act. Under Chapter III of the Central Act, State Warehousing Corporations were established and they were public body corporate. The functions of the State Corporation were almost on similar lines as that of the Central Warehousing Corporation. The assessee is an authority constituted under law to satisfy one of the requirements of Section 10(29) of the Income Tax Act, 1961. The State Warehousing Corporation arranges facilities for acquiring and building godowns, providing warehousing facilities, storage and transport of agricultural produce, seeds, manures, fertilizers, agricultural implements and notified commodities to and from warehouses, apart from acting as an agent of the Central Warehousing Corporation or of the Government for the purposes of the purchase, sale, storage and distribution, of agricultural produce, seeds, manures, fertilizers, agricultural implements and notified commodities.

The issues before the Bench are - Whether income earned by the assessee not the one derived from the letting of godowns for the stated purpose of storage, processing or facilitating of marketing of commodities and having no direct nexus to the activities, is eligible for exemption under Section 10(29) of the Act; Whether income incidental to the storage, processing or facilitating of marketing of commodities would qualify for exemption under the provisions of the Income Tax Act and Whether income from house property, from bank receipts, income on loans and advances made to the members of the staff, interest on bank deposits, dividend income, supervision charges, fumigation service charges, weigh bridge receipt, income from sale of tender forms and interest collected on belated refund of advances would be eligible for exemption under Section 10(29). And the verdict goes against the assessee.

Customs

Anti Dumping Duty - Refund when Original Assessment Order not challenged: Refund of Anti Dumping Duty is covered by Section 9AA of Customs Tariff Act which is complete code - Section 27 not applicable always: HC

THE scheme of anti-dumping duty under the CTA also provides for refund claims. The mechanism for refund of the duty imposed provisionally under Section 9A(2) pending determination in accordance with Section 9A, is indicated in Section 9A(2)(b). The mechanism for refund of duty imposed under Section 9A(1) after final determination, if the importer can show that he has paid a duty in excess of the actual margin of dumping for the imported article, is indicated in Section 9AA. The Central Government is empowered to make rules to provide the manner in which the application for a refund claim can be made under Section 9AA under Section 9AA(2). This being the case, the mechanism for refund in the Customs Act under Section 27, for claim of refund per se, does not apply. The applicability of Section 9A(8) to incorporate Section 27 of the Customs Act, would be after the final determination of applicability of anti-dumping duty under Section 9A(1), only - as far as may be - applicable keeping in mind Section 9AA. This is because, Section 9AA appears to be a complete code for refund claims after final determination, given that the Central Government is empowered to make rules regarding the manner and the time within which claims for refund may be made, under Section 9AA(2) of the CTA. Thus, Section 9A(8) would operate to incorporate Section 27 of the Customs Act only as far as may be applicable, in absence of rules on limitation, until they are made/alongside the rules once made.

See our Columns Tomorrow for the judgements