Jurisprudentiol - Friday's cases

By Vijay Kumar

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

Accepting defective compressors outside the warranty period with certain fixed repair charges and replacing them at the option of the customer with any other repaired compressor does not tantamount to sale so as to attract Sales tax: High Court

THE Applicant is the Additional Commissioner of Sales Tax, VAT-III, Mumbai. The Respondent is engaged in the business of manufacturing and selling compressors of various models and capacities used in air-conditioners. They are also engaged in accepting defective compressors outside the warranty period with certain fixed repair charges and replacing them at the option of the customer with any other repaired compressor, off the shelf.

When a customer has a defective compressor outside the warranty period, he approaches the Respondent with the same for repairs. At such time, the customer is informed about the repairing charges and the amount of time it would take for repairing the defective compressor which is normally about 60 days. The customer is then given an option by the Respondent either (i) to wait for 60 days to receive back his defective compressor after repairs; or (ii) to take a repaired compressor of the same capacity, size and model off the shelf of the Respondent, after paying the repair charges.

Income Tax

Income tax - Whether when assessee commits to supply certain product more than its plant capacity and finally resorts to purchases from sister concern and a third party to meet its obligation, any disallowance of part of sale price on ground of being excessive is warranted - NO: ITAT

THE issues before the Bench are - Whether when assessee commits to supply certain product more than its plant capacity and finally resorts to purchases from sister concern and a third party to meet its obligation, any disallowance of part of sale price on ground of being excessive is warranted and Whether AO is justified in rejecting books of account without pointing out any defects in the books maintained by the assessee.

Central Excise

Cutting and slitting of jumbo rolls of self-adhesive rolls does not amount to manufacture u/s 2(f) of the CEA, 1944 - if the legislature wanted to connote this activity as manufacture it would have included CETH 4811 and 8546 in the Third Schedule or added a chapter note in the respective chapters of the CE Tariff - no merit in Revenue appeal, hence dismissed: CESTAT

THE CCE, Belapur dropped a jumbo duty demand by holding that cutting and slitting of jumbo rolls or log rolls of self-adhesive rolls of Chapter 48 and 85 would not amount to 'manufacture'.

Aggrieved of this jumbo largesse, the Committee of Chief Commissioners directed filing of appeal before the CESTAT.

In the appeal memorandum it is mentioned that by undertaking the process of cutting and slitting there are changes in the dimensions of the product both in terms of width and length so as to make it suitable for use as adhesive tapes by the users. Therefore, a new commodity has emerged which has a distinctive name, character and use and, therefore, the process amounts to 'manufacture'.

See our Columns Tomorrow for the judgements