Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

CENVAT Credit on capital goods used initially in manufacture of exempted goods - Credit not deniable if at time of receipt, appellant had intention to use machinery for manufacture of dutiable as well as exempted final products - Matter remanded for verification of facts: CESTAT

THE appellant are engaged in manufactured of Aerated waters which are dutiable and also Maaza, a Fruit pulp based drink which is fully exempted from duty. During the period from September 2004 to August 2005, the appellant installed certain machinery in one of their plants, which was being used exclusively for manufacture of MAAZA which was fully exempt from duty. In respect of this machinery, they took capital goods Cenvat credit. Department denied the credit on the ground that the capital goods were used exclusively in the manufacture of exempted goods, in terms of Rule 6(4) of CENVAT Credit Rules, 2004.

Income Tax

Whether provisions of Sec 14A come into play only after AO first examines disallowance made by assessee itself and then AO is not satisfied with same - YES: ITAT

THE assessee is engaged in Share broking business. Upon scrutiny, the AO noticed that the assessee had claimed dividend income as exempt u/s 14A, however, no disallowance under the said section was made by the assessee. The assessee offered workings for disallowance of interest paid and expenses; The AO accepted the expenses computation but rejected the working of interest income and computed the same invoking Rule 8D and accordingly made additions. On appeal, the CIT(A) held that since the assessee had established direct nexus between the borrowings and investments and accordingly allocated interest expenditure proportionately, the interest disallowance was directed to be restricted to Rs.29,91,393/-, i.e., at the amount worked out by the assessee.

The issue before the Bench is - Whether the provisions of Sec 14A come into play only after the AO first examines the disallowance made by the assessee itself and then the AO is not satisfied with the same. YES is the answer.

Customs

A trader-importer, who paid SAD on imported goods and who discharged VAT/ST liability on subsequent sale, and who issued commercial invoices without indicating any details of duty paid would be entitled to benefit of Notification 102/2007-Cus: CESTAT

THE claims filed by the appellant seeking refund of SAD under Notification no. 102/2007-Cus dated 14.09.2007 were rejected by the lower authorities on the ground that the endorsement as required in terms of condition 2(b) of the said Notification was not made on the invoice issued for sale of goods.

A trader-importer, who paid SAD on the imported goods and who discharged VAT/ST liability on subsequent sale, and who issued commercial invoices without indicating any details of the duty paid would be entitled to the benefit of Notification 102/2007-Cus”, although they have not made an endorsement on the invoice that credit of duty is not admissible.

See our Columns Tomorrow for the judgements