Jurisprudentiol-Monday's cases

By Vijay Kumar

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

Reversal of CENVAT Credit on inputs lying in stock and contained in finished goods when finished goods become exempt - Prior to 01.03.2007, there is no such requirement - Larger Bench decision in Ashok Iron and Steel to be preferred to two member Bench decision in Albert David case: HC

THE appellant is a manufacturer of agricultural tractors. For manufacture of tractors, the appellant buys raw materials, parts/components (inputs) on payment of duty. The final product, namely, tractors, was exigible to excise duty. Therefore, the appellant took credit on the duties paid on the inputs under Rule 3 of the Cenvat Credit Rules.

On and from 9.7.2004, tractors falling under Tariff item 8701 were exempted from excise duty vide Sl.No.295 of Notification No.23/2004-CE, dated 9.7.2004.

Commissioner of Central Excise issued a show cause notice alleging that the appellant has not reversed the CENVAT credit taken on inputs/components lying in stock as on 9.7.2004, and on inputs/components contained in the closing stock of finished tractors lying in stock as on 9.7.2004 and confirmed the demand with interest and penalty. The appeal filed by the assessee was dismissed by the Tribunal vide 2007-TIOL-1355-CESTAT-MAD. The assessee is in appeal before the High Court challenging the order of Tribunal.

Income Tax

Whether Revenue can resort to reopening of assessment merely on ground that Customs had seized assessee's goods and levied penalty - NO: HC

THE assessee is an individual, who had received a notice u/s 148, issued beyond the period of four years from the end of the relevant AY. Consequently, the first proviso to Section 147 would be applicable. Assessee's counsel had submitted that the re-assessment proceedings were bad in law inasmuch as the conditions stipulated in the first proviso to Section 147 of the said Act had not been fulfilled. In essence, it was submitted that there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment. It was also submitted that apart from there being no such failure on the part of the assessee, there was not even any allegation with regard to such failure in the reasons which were supplied to the assessee subsequent to the issuance of the said notice.

The issue before the Bench is - Whether Revenue can resort to reopening of assessment merely on ground that Customs had seized assessee's goods and levied penalty. And the verdict goes against the Revenue.

Service Tax

Under section 85 (3A) of the FA, 1994 Commissioner (A) does not have authority to condone delay beyond 90 days, that being the outer limit as per said provision - Petition rejected: HC

THE question of law before the High Court is -

"Whether in the wake of outer limit of period of three months, giving right to the appellant for filing appeal under section 85 (3A) of the Service Tax - Chapter V of Finance Act, 1994, the appellate court would be empowered to entertain an appeal or condone the delay beyond the outer limit of three months or 90 days, provided by the said Act?

See our Columns Monday for the judgements