TIOL-DDT 2434 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><s><strong><font size="2"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=20079"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2014_1.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="250" height="123" hspace="5" border="0" align="right"></a></font></strong></font></strong></font></strong></font></strong></font></strong></s><strong><font color="#663399" size="3">TIOL-DDT 2434</font><br> 10.09.2014 <br> Wednesday</strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Acceptance </em>of CESTAT/Court Orders by Commissioner - Concurrence of CC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> terms of paragraph 1 of Board's Instruction vide <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2011/cxinstruct03.htm" target="_blank">F.No.390/Misc/163/2010-JC</a></strong> dated 17.08.2011, appeals shall not be filed by the Department in the Tribunal/High Court and the Supreme Court in cases where the amount involved is below the prescribed threshold monetary limit even though such orders are against revenue, except the types of cases mentioned in paragraph 3. In terms of paragraph 3 (ii) of Board's Circular No. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2010/excircular935.htm" target="_blank">935/25/2010-CX</a></strong> dated 21.09.2010, all orders which are against revenue but found acceptable to the Commissioners will be put up to the jurisdictional Chief Commissioner for concurrence. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A doubt has arisen whether in the cases which are against the revenue and below the threshold limit, concurrence of the Chief Commissioner is required or not. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Chief Commissioner, Jawaharlal Nehru Custom House, Mumbai clarifies: </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Where, it is decided by the Commissioner not to file appeal solely on the ground of below the threshold monetary limit, concurrence of the Chief Commissioner is not required. However, concurrence of the Chief Commissioner will be required in the cases which are against the revenue and it is proposed by the Commissioner to accept the order on <strong>merit</strong>, even if they are below the threshold monetary limit . </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This means that if the Commissioner writes on the file that he accepts the order of the CESTAT/High Court as he is prevented from filing an appeal because of the monetary limit - then he is the final authority; he need not consult the Chief Commissioner. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Should he make the mistake of writing that the order is acceptable because of the low monetary value and <strong>also on merits</strong>, the Chief Commissioner comes into picture. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This concept of accepting the order of the Tribunal/High Court is repugnant to judicial discipline. The Commissioner has no choice of accepting or rejecting an order by a higher forum like the Tribunal or High Court; if he is aggrieved, he can file an appeal. At best, He may not accept the orders of his subordinates and the Commissioner (Appeals). DRs routinely submit before the Tribunal that the Department has not accepted the order of the Tribunal or the High Court, because they have filed an appeal. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2014/standing_order_14_011.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chief Commissioner, Jawaharlal Nehru Custom House, Mumbai Standing Order No. 11/2014, Dated: September 01 2014. </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Apple Wins <br> Unjust enrichment - Rebuttable Presumption </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> is not about Apple's new iPhone 6 which was released yesterday, not about the Apple Watch coming soon. In technology Apple may be a leader, but that kind of technology does not work with Indian Customs. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Apple India Pvt. Ltd. filed a refund claim for an amount totalling to Rs. 5,22,27,424/- being the 4% on the Special Additional Duty (ADC/SAD), paid while importing goods. The adjudicating authority after considering the said claim of refund rejected the same on the grounds that the assessee has failed to prove that they had not passed on the incidence of duty to the customers or any other person and also on the ground that they have not furnished required documents in relation to refund claims. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Apple approached the Commissioner of Customs (Appeals) who held that the assessee Apple is entitled for refund and accordingly, allowed the appeal. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Aggrieved by the same, the Revenue preferred an appeal to the CESTAT. The Tribunal held that audit report shows that the burden of duty has not been passed on either directly or indirectly to the domestic customers. While coming to the conclusion, the auditors have taken into account how the price of traded goods have been arrived at and therefore, the Tribunal was of the view that no interference is called for and dismissed the appeal. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue is aggrieved and is before the High Court. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court observed, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Section 28 D of the Act states that there arise a presumption that the incidence of duty has been passed on to the customers. It also states that every person who has paid the duty on any goods under this Act shall, unless the contrary is proved by him, be deemed to have passed on the full incidence of such duty to the buyer of such goods. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Therefore, it is clear that it is rebuttable presumption. To rebut such presumption, the assessee has produced auditor report required to claim the refund of special additional duty. The auditor has unequivocally stated in his report that the burden has not been passed on directly or indirectly and in coming to such conclusion, they have taken into account how the price of the traded goods has been arrived for this purpose. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Therefore, such presumption stands rebutted. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court found no merit in the appeal and dismissed it. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Apple India is richer by over Rs. 5 Crores, but this amount is pending for more than five years and it seems that subsequent refund claims have also been kept pending in view of the pending appeal. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We don't know whether the Commissioner will accept this order of the High Court or go to the Supreme Court. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue officers should remember that delayed refunds cost the government interest. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this order of the High Court today. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTYwNjg=" target="_blank"><font size="1">2014-TIOL-1544-HC-KAR-CUS</font></a></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Cadre Restructuring - Two LTU Audit Commissionerates </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has informed the CCs and DGs that LTU Audit Commissionerates (one each for Delhi and Mumbai LTUs) will cater to the Audit needs of the other three LTUs also through Audit Circles in these LTUs. Mumbai LTU Audit will cater to the Audit needs of Chennai LTU through Audit Circle in Chennai. Similarly, Delhi LTU Audit Commissionerates will attend to Audit work of LTUs at Kolkata and Bangalore through Audit Circles at Kolkata and Bangalore. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board seems to be unaware of the fact that the Delhi High Court has quashed the Audit powers of the Department. What, then are these Audit Commissionerates going to do? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has also informed that the zonal Chief Commissioners have to depute Superintendents and Inspectors to the Directorates as per a list circulated by the Board. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For example the Lucknow CC has to give 6 Superintendents and 12 Inspectors to DGRI, 11 Superintendents and 22 Inspectors to DGCEI and 2 Superintendents and 4 Inspectors to DG, NACEN. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The period of posting to Directorate (HQs./Zonal/Regional/Sub-Regional Units) of the officers from CCOs on local rotational transfer basis will be for a minimum period of 2 years initially. Further, salary of the officers from CCOs posted to Directorates will continue to be drawn from the budgetary head of the concerned CCO. Officers from CCOs posted to different Directorates will not be entitled to any<strong> special pay/deputation allowance</strong>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">LTU, Chennai is going to be a very crowded place with 90 Superintendents and 134 Inspectors! All other LTUs will be equally overstaffed. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/cadre_estructiong_cbec.pdf" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC F.No.A-11019/08/2013-Ad.IV, Dated: September 09 2014. </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Cadre Review Promotions in Jeopardy? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AT</strong> least it seems so for the Inspectors and Superintendents in the CBEC. It is heard that the Chandigarh CAT has restrained the Department from giving reservation in promotion till they undertake the exercise mandated by the Supreme Court. And that may take years! </font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600"> – Thursday's cases</font></strong></font></strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"><strong><font color="#663399">Service Tax </font></strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Notional interest on interest free security deposit cannot be added to rent agreed upon between parties for purpose of levy of service tax on renting of immovable property - Appeals allowed: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants are lessors of immovable property. They have leased out their premises on long-time lease ranging from 5 to 10 years. For the services rendered they are receiving lease rentals on a monthly basis. In addition to these rentals, they are also taking interest free security deposits from the lessees. These security deposits vary from six months' rent to one year's rent. The security deposits are taken to secure default in payment of rentals, default in payment of utility charges, if any, and damage caused to the property other than the usual wear and tear. These deposits are returned to the lessee at the end of the lease period. The lease agreements also provide for increase in the lease rental once in three years by 15% of the rent agreed upon. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The department was of the view that the taking of interest free security deposit has suppressed the lease rentals and, therefore, notional interest @ 18% of the deposit should be added to the rent received and service tax should be demanded on the notional interest on the security deposit </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether when Assessee Company is mainly engaged in earning profits from purchase and sale of shares, dividend income is merely incidental to holding of such stocks and thus, is chargeable to tax as income from other sources - YES: HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee concern is in the business of purchase and sale of shares and also derives income from dividend, commission and interest. For the AY 1992-93, assessee had filed a return showing nil income. It had showed income from dividend, commission and interest under the head "profits & gains from business or profession". AO had not accepted the submission of assessee and while passing an order u/s 143(3), it was held that the income disclosed by assessee from dividend, commission and interest was liable to be assessed under the head "Income from other sources" and not under the head "profit & gains from business or profession". On appeal, CIT(A), found that since the assessee had been purchasing shares and debentures and was also selling the same, the income derived in the form of interest, dividend, debentures and shares was liable to be assessed as business income and, therefore, such income was liable to be assessed under the head "profits & gains from business or profession". The CIT(A), accordingly, allowed the appeal and deleted the addition so made by AO. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Bench is - Whether when the assessee company is mainly engaged in earning profits from purchase and sale of shares, dividend income is merely incidental to holding of such stocks and thus, is chargeable to tax as income from other sources u/s 56(2). And the verdict goes in favour of the assessee. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Respondents in adjudication proceedings prayed that if it is held that they are treated as two separate units and are denied benefit of notfn. 67/95-CE, in that case, if duty is paid by one unit same should be allowed as CENVAT Credit to another unit - Adjudicating authority allowing credit and this order was upheld by Commr(A) - no infirmity in order - Revenue Appeal dismissed: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>respondents are having two units and are manufacturers of White Zinc Oxide. Till August 1998, Respondent No.2 used to do certain processes and clear the same to the Respondent No.1 on payment of Central Excise duty. Respondent No. 1 took the credit of the duty paid and carried out further processes and cleared the same on payment of duty. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Vide letter dated 20.7.1998, the CCE, Pune-II pointed out to the respondents that two units cannot be treated as separate identities for the purpose of Central Excise Law as well as the Cost Accountant's reports and, therefore, the transaction between two units are to be considered as two wings of the same factory. On this basis the Respondent No.2 filed two classification declarations and claimed the benefit of Notification No. 67/95-CE for clearances between two units and cleared the goods without payment of duty. </font></p> <p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Tomorrow for the judgements </font></strong></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more<strong> DDT</strong> </font></p> <p><strong><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day. </font></strong></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@tiol.in"><strong>vijaywrite@tiol.in </strong></a></font></p> </body> </html>