Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

CENVAT Credit on Outward Transport - Goods sold on FOR basis - Destination is place of removal - credit entitled - drafting of adjudication orders requires training; incompetent departmental adjudication ill serves interests of State. - Strictures and Costs against Commissioner: CESTAT

THE impugned order disallowed Cenvat credit of Rs.3,19,79,457/- availed by the assessee on outward transportation charges besides confirming levy and collection of interest and penalty as specified in the order.

The assessee is a manufacturer of cement. In response to the show cause notices, assessee specifically pleaded [recorded at paragraphs G & H of the impugned order],

1. that the assessee sells its final products on FOR basis to all customers;

2. that freight charges are included in the assessable value of the final product; that excise duty was discharged on the assessable value, inclusive of freight charges;

3. that the transit risk, in transportation of the final products is borne by the assessee;

4. that property in the goods passes to the customers on delivery at the customers premises;

5. that on the basis of these transactional facts, the place of removal under Section 4 (3) (c) of the Central Excise Act, 1944 was the customers premises; and therefore availment of Cenvat credit was legitimate and un-assailable.

Income Tax

Whether when a membership card-holder of stock exchange gets shares on demutualisation of Exchange in new entity, such conversion of shares amounts to transfer and any capital gains liability arises - NO: HC

THE assessee company was engaged in business of shares and stock trading and broking. It was a member of Bombay Stock Exchange. The membership of BSE was purchased in the FY 1998-99 for total consideration of Rs.97,51,000/-. The return of income was filed on 30th November, 2006 declaring total income of Rs.1,59,42,000/-. The assessment was completed on 30th December, 2008 u/s 143(3) on a total income of Rs.1,80,24.063/-. The Assessee claimed depreciation on the value of card in AYs 2004-05 and 2005-06 aggregating to Rs.42,66,063/- which was disallowed by the AO.

The issues before the Bench are - Whether when a membership card-holder of a stock exchange gets shares on demutualisation of the exchange in the new entity, any capital gains liability arises and whether such conversion of shares amounts to transfer. And the answers go against the Revenue.

Customs

Since assessment of duty liability has to be done by Customs, notwithstanding fact that appellant did not claim benefit of exemption, same should have been extended to respondent importer: CESTAT

THESE are appeals filed by Revenue against two orders passed by Commissioner of Customs, Kandla. Vide the two orders Customs duty demands of Rs.309.45 crore & Rs.3.07 crores have been dropped by the adjudicating authority. The respondent, M/s. PSL Ltd., is a manufacturer of coated pipes and the manufacturing is undertaken in a Customs bonded/warehouse. The respondent acted as a sub-contractor to contractors, such as, L&T, Punj Lloyd Ltd. and National Petroleum Construction Co. Ltd., who were awarded contracts by ONGC for lying of pipelines, etc. in connection with the oil exploration /exploitation activities undertaken in the Bombay High. The bare pipes imported by ONGC were supplied to the respondent for coating and the coated pipes were supplied back to ONGC through the contractor and essentiality certificate for use of these pipes was also furnished and the respondent claimed the benefit of Serial No. 215, Notification No.21/2002-Cus dated 01/03/2002.

See our Columns Tomorrow for the judgements