Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

Refund - if claimant himself has treated refund amount due as "expenditure" and not as "claims receivable", claimant cannot said to have passed test of unjust enrichment: CESTAT

THERE was a dispute between the department and HPCL regarding the dutiability of HSD/Naptha captively used in the generation of electricity which was consumed within the refinery. The department was of the view that the appellant was not eligible for the benefit of captive consumption Notification No. 67/95-CE as electricity was not excisable. While duty of Rs.2.33 Crore was paid after clearance of the goods, an amount of Rs.5.17crores was paid on monthly basis. These duty payments pertained to the period December, 1998 to June 2001.

The original authority confirmed these duty demands but the Tribunal set aside the orders in the year 2005. Revenue challenged this order and the Bombay High Court dismissed the appeal in February, 2008. Thereafter, the appellant filed the refund claim on 19-5-2008.

On 24-12-2008, the jurisdictional AC, CEX wrote to the appellant to furnish evidence that the incidence of duty was not passed on and was borne by the claimant himself. The appellant replied that the principle of unjust enrichment would not apply as the goods were under the Administered Price Mechanism (APM) and the price had no nexus to the cost of production.

Income Tax

Whether when assessee makes payment of Rs 20,000/- and above by crossed cheque but fails to add word a/c payee only, such expenditure warrants disallowance u/s 40A(3)(a) - YES: HC

THE assessee's return of income was taken for scrutiny. The assessing officer disallowed 20% of the total payment during the year under consideration otherwise than by account payee cheque in violation of provisions of section 40A(3)(a) of the Income Tax Act, 1961.

The issues before the Bench are - Whether when the assessee makes a payment of Rs 20,000/- and above by crossed cheque but fails to add the word a/c payee only, such expenditure warrants disallowance u/s 40A(3)(a) and Whether the banks are under directive from the RBI not to deposit the cheque amount in favour of any person other than the drawee of the cheque. And the answers go against the assessee.

Customs

It is well settled that the date of entry inwards is date recorded as such in Customs Register and since in present case, application for date of entry inwards as also grant of entry inwards was on 01/03/2001, therefore, rate of duty that would apply is rate prevalent on 01/03/2001 - demand upheld and appeal dismissed: CESTAT

MV Gretke Oldenroff carrying imported goods, namely, Canadian Whole Desi Chick Peas (pulses) arrived in Mumbai Port at 2300 hrs on 28/02/2001. However, as per the public notice 20/2001 issued by the Commissioner of Customs (Import), Mumbai "no entry inwards to the vessels shall be permitted on 28/02/2001". In the present case, the appellant/importer had filed bills of entry No. 3117 & 3119 dated 22/02/2001. Since the vessels arrived on 28/02/2001 at 2300 hrs, no entry inwards was granted to the appellant. Inasmuch as no entry inward was granted, the appellant could not unload the goods.

On 01/03/2001, the rate of import duty on the imported goods went upto from 0% to 5% adv. and consequently the Customs have demanded the duty @5% adv.

The lower appellate authority upheld the demand of differential duty of Rs.30,62,808/- against the appellant by treating the relevant date for determination of duty as on 01/03/2001.

See our Columns Tomorrow for the judgements