Jurisprudentiol - Monday's cases

By Vijay Kumar

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

Refund of unutilized credit is only permissible in case of export of goods and not for any other reason - Refund in cases of closure of factory is not provided under statute - Appeal dismissed: CESTAT

THE appellants were manufacturing Aluminium Alloys and Zinc Alloys at their Khopoli factory. They sold their assets i.e. land and building etc. vide Sale Deed dated 28.12.2010 and also sold the stock of unutilized raw material and finished goods. The Central Excise registration was surrendered to the department on 03.01.2011. At that time there was a credit balance of Rs.35,49,815/- in the CENVAT account.

This amount, the appellant claimed as refund u/r 5 of the CCR, 2004.

The adjudicating authority rejected the refund by holding that Rule 5 does not provide any legal basis to grant cash refund of unutilized credit on account of closure of factory except in cases where the same is attributable to inputs which have gone into final products which are exported.

Income Tax

Whether mere fact that broker through whom assessee had purchased shares was banned by SEBI much after transactions of assessee had taken place, there is any merit in AO's opinion to treat same as not genuine - NO: ITAT

THE assessee company is in the business of manufacture and sale of drilling, mining, construction tools and accessories. It declared total income of Rs.2,18,460 and claimed exemption of long term capital gain to the extent of Rs.24,87,000. Assessee had purchased 20,000 shares of AIC for a consideration of Rs.1,00,400 through a broker M/s. V.K. Singhania & Co., Kolkata. The share certificates in physical form were submitted to the said AIC for transfer and received back. These shares subsequently, dematerialized through the depository service of HDFC Bank. This was subsequently sold through M/s. Ahilya Commercials P. Ltd., Kolkata for a sum of Rs.25,87,400/-.

The issue before the Bench is - Whether mere fact that the broker through whom the assessee had purchased shares was banned by the SEBI much after the transactions of the assessee had taken place, there is any merit in the AO's opinion to treat the same as not genuine. And the answer goes against the Revenue.

Settlement/Customs/MODVAT/CENVAT

MODVAT/CENVAT credit taken on basis of certificate issued by DRI valid: HC

SETTLEMENT Commission directed that in respect of the Countervailing duty paid by the assessee, the Directorate of Revenue Intelligence (DRI) would issue a certificate of proof of payment made by the assessee, so as to enable the assessee to claim the benefit of MODVAT credit in accordance with law.

Department contended that the certificate issued by the Directorate of Revenue Intelligence (DRI) cannot be taken into consideration, inasmuch as the certificate is required to be issued by the Superintendent of Central Excise under Rule 57E(4) of the Central Excise Rules. The High Court found the submission of the department as patently erroneous. The Settlement Commission in its order has given a categorical finding that as the consequence of their order, the assessees are entitled to a certificate of payment of Countervailing duty from the Jurisdictional Commissioner or the DRI who are duty bound to issue such certificate. Consequently, the certificates issued by the DRI in consequence of the order of the Settlement Commission is perfectly legal.

See our Columns Monday for the judgements