Jurisprudentiol-Tuesday's cases

By Vijay Kumar

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

Fraudulent exports under claim of export incentives - CHA is required to obtain an authorization from his client for job of clearance of import and export cargo and that he is also required to ensure proper conduct of his employee in transaction of business as Agent -No error in order of Commission revoking CHA licence: CESTAT

ON the basis of an intelligence received by the officers of Dock Intelligence Unit (Preventive) to the effect that a firm by the name of M/s Brij Spinners of Ludhiana, was involved in fraudulent exports under claim of export incentives, three export containers were intercepted. It was found that in one case, ARE-1 copy was tampered. All the three containers declared to contain acrylic blankets were opened and examined and gross mis-declarations in respect of description, quantity as well as value, were found. It revealed that the shipping bill in respect of the above export consignments, were filed by M/s S.C. Ghosh & Company (India) Pvt. Ltd. The Commissioner found that the CHA had violated the provisions of Regulation 13 (a) and that of Regulation 19 (8) of the CHALR, 2004, therefore, revoked the licence and forfeited the security deposit of the CHA.

Income Tax

Whether when sale price at which shares of company were sold to foreign party, can be bifurcated to attribute part of it to non-compete fee when no such clause is present in agreement -NO: HC

THE assessee, an HUF, had filed its return of income and certain amount was declared as business income source. A substantial part was declared as LTCG, during the examination of which it was found that there was a Private Limited Company and which was incorporated by Mandhana family on 10 September 1988. Subsequently, that company entered into a JV with Borememann, a German Company and issued fresh 8,00,000 shares and made the foreign company 50% partner. The name of the company underwent a change and it became Mandhana Bormemann Industries Ltd. in the year 1996. Thereafter, there was an arrangement, as between this company namely Mandhana Bormemann Industries Pvt. Ltd. and a Dutch company by name Paxar BV.

The issues before the Bench are -Whether when the sale price at which shares of the company were sold to a foreign party, can be bifurcated to attribute a part of it to non-compete fee when no such clause is present in the agreement and Whether such income can be brought to tax as business income or long term capital gains. And the verdict goes against the Revenue.

Central Excise

Remand order by Tribunal restored provisional assessment resorted to earlier by setting aside final assessment order and it is in pursuance of said remand order, Dy. Commr passed re-assessment order and confirmed duty liability -no infirmity in order -Appeal dismissed: CESTAT

THE appellant sought to classify Modified Vapour Absorption Chillers (MVAC) manufactured by them under CETH 8418 as heat pump other than air-conditioning machines and claimed the benefit of notification 155/86-CE and duty liability was discharged accordingly during 1991-92 and 92-93. The assessments were kept provisional.

See our Columns Tomorrow for the judgements