Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

Export of Basmati Rice - DGFT notification only requires that grain of rice to be exported should conform to specification of average length and ratio of length to breadth - holding that sample has failed ad-mixture content as per Agmark norms is not condition warranted by notification - appeals allowed: CESTAT

THE appellants had filed shipping bills for export of basmati rice/pusa basmati rice. The said consignments were examined by the officers of dock examination and representative samples were drawn and forwarded to Chief Chemist, Regional Agmark Laboratory, Mumbai to ascertain whether the samples meet specifications of the basmati rice as the appellant had sought the benefit of DGFT Notification No.55(RE-2008)/2004-2009, dt.05.11.2008 as amended by the Notification No.57/2009/14, dt.17.08.2010.

The report of the Chief Chemist, Regional Agmark Laboratory, Mumbai indicated that the average length of the grain and the ratio of the length to breadth of the grains of sample sent was within limit as indicated in DGFT notification, but it failed in the admixture i.e. mixture of basmati rice and non-basmati rice.

Income Tax

Whether reassessment of escaped income without any express finding or direction can be made under explanation (2) to Section 153(3) - YES: HC

THE AO held that the closing stock could not be valued without taking into account the work in progress, the cost of labour and office expenses and added the said amount to the income of the assessee. Assessee contended that in case the closing stock is revalued, the opening stock is also required to be revalued. AO rejected the claim of assessee stating that the assessee has been following wrong method of accounting in respect of closing stock and if it is allowed to adjust the difference in opening stock, the profit & loss account would not reflect the true picture of the profit during the year because all along these years the assessee has been unilaterally suppressing its value of work-in-progress and thereby the profit of the year.

The issues before the Bench are - Whether reassessment of the escaped income without any express finding or direction can be made under explanation (2) to Section 153(3) and Whether when the opening stock value is increased, the closing stock will necessarily be enhanced in the preceding year. And the verdict goes in favour of the Revenue.

Central Excise

Pre-deposit - against total outstanding dues of 5.90 Crores, pre-deposit of Rs. 8,53,502/- would meet ends of justice - said amount ordered as pre-deposit is around 1.44% of total dues and 3.32% of total duty confirmed and would not result in any undue hardship to Applicant: CESTAT

THIS is a Revenue appeal filed in the year 2006.

The department found tobacco products stored in various godowns outside the factory and alleged that the goods have been clandestinely manufactured and cleared by the respondents. Actually, the godowns were originally sealed by the sales tax officers and were found to be stored with the goods bearing the brand name of the respondents.

Statements of the company were recorded and they informed that the said godowns do not belong to them as they do not have any other storing place except the factory premises. When asked about the goods lying in the godowns, they submitted that the goods might have been stolen from their manufacturing units in small quantities clandestinely and might have been stored there.

See our Columns Tomorrow for the judgements