Jurisprudentiol - Monday's cases

By Vijay Kumar

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

When an issue is not subject matter of the SCN first issued and was not agitated before lower authorities, it has to be held that Revenue has no justification in agitating an issue before CESTAT which was not agitated before lower authorities - no merit in Revenue appeal: CESTAT

The respondent filed a bill of entry seeking classification of the imported Palm Kernal Acid Oil under CTH 38231900.

Samples were drawn and sent to Chemical Examiner and based on the reports received a SCN was issued for classifying the imported goods under CTH 15132910 and this was upheld by the Assistant Commissioner.

The lower appellate authority decided the classification of the imported goods under CTH 38231900 and allowed the appeal of the respondent.

As this order was not honoured, the respondent approached the Gujarat High Court and the High Court disposed of the petition by ordering the release of the goods subject to certain conditions but without expressing any opinion on the merits of the classification and suggested to the Department to request the Tribunal to give an early hearing in the matter of the appeal filed by them.

Income Tax

Whether trading addition on account of low Gross Profit is justifiable where assessee is engaged in jobwork and GP rate depended on nature of jobwork assigned only by Principal - NO: ITAT

THE assessee company derives income from the business of job work of manufacturing of alloys, steel casting as in past. The assessee had declared Gross Profit at 22.57% as against gross profit of 26.37% for the preceding year. The A.O. gave reasonable opportunity of being heard on this issue as GP declined compared to preceding year. AO observed that the assessee was not maintaining the stock register of raw materials required for its manufacturing activities, due to which the valuation of closing stock was not verifiable in quantum as well as in valuation. After applying Section 145(3), trading addition was made on account of low Gross Profit. In appeal, CIT(A) confirmed the addition.

The issues before the bench are - Whether trading addition on account of low Gross Profit is justifiable where the assessee is engaged in the job work and the GP rate depended on the nature of job work assigned only by the Principal and whether addition on account of freight and octroi expenses is justified where the expenditure was claimed by the assessee on purchase of consumable and store material. And the answer favours the assessee.

Central Excise

Fly Ash whether dutiable from 01.03.2011 - Apex Court in Ahmedabad Electricity Co. had held that ‘fly ash' is non-excisable and which decision was relied by Commr(A) - no case made by Revenue for stay of order: CESTAT

VIDE an o-in-a dated 19/08/2013, the Commissioner(A), Nagpur held that the fly ash generated in the respondent's power plant situated at Chandrapur is not excisable and accordingly not dutiable. Consequently, a demand of excise duty of Rs.6,61,885/- along with interest thereon and also imposing penalties have been set aside.

Revenue is in appeal before the CESTAT against this order and in their appeal memorandum has taken the plea that an excise levy of 1% was introduced on fly ash under Chapter 26 with effect from 01/03/2011 and since the demand pertains to the period 01/03/2011 to 28/02/2012, the demand is sustainable.

See our Columns Monday for the judgements