Jurisprudentiol-Friday's cases

By Vijay Kumar

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

Goods cleared from factory but not exported - Fraudulent records created to show export - For recovery of duty on goods which were cleared without payment of duty but not exported, there is no time-bar as such clearances are covered by the bond which was executed: CESTAT

THE appellants are a 100% EOU. They "exported" polyester dyed and grey fabrics under 6 ARE-1 all dated 9.4.2002. They submitted proof of export in the form of (photo) copies of the relevant documents.

On perusal of the said proof of export, it was revealed that while the goods were cleared from the factory on 9.4.2002, the (14) shipping bills claimed to be related thereto were noted between 5.9.2002 to 18.9.2002 at Calcutta Custom House. On enquiry, the CHA whose seals appeared on the shipping bills categorically denied having dealt with the said documents or the goods. They also found that seals marks on the S/Bs were not identical to their seals. The enquiries at the port also revealed that the goods claimed to have been cleared under the said six ARE-1s were never presented at the port.

Income Tax

Whether expenditure incurred on refurbishing of existing assets to achieve international standards is to be construed as revenue in nature - YES: High Court

THE assessee is a Public Limited Company carrying on the business of hotel. The AO disallowed a sum towards expenditure incurred under repairs and Maintenance of the hotel building. On appeal, CIT(A) dismissed the assessee's contentions. On further appeal, Tribunal held that the details of expenditure incurred for the repairs/renovation/ refurbishing of building, plant and machinery along with interior decoration expenses which in no way suggest that an item of enduring benefit had come into being requiring necessary maintenance of records for the life of the asset so installed requiring determination of scrap value, if any, at the end of their term. The target was therefore only the customers who were used to certain basic amenities when booking a room in a star rated international chain of hotels. Ambience and luxury were related terms which cannot be assigned a life or duration for a business house to capitalize for a term to claim depreciation.

The issue before the Bench is - Whether expenditure incurred on refurbishing of existing assets to achieve international standards is to be construed as revenue in nature. And the verdict favours the assessee.

Service Tax

Department has to first fix the classification of a particular activity and only then proceed to work out the demand of service tax which is due - classification under which charge of non-payment is made in the show cause has not been specified - Matter remanded: CESTAT

THE appellant is engaged in the activity of constructing and maintaining sewage treatment plants, effluent treatment plants and water treatment plants. It was detected by the department that the appellant had not paid service tax on the above activities undertaken by them as well as on Goods Transport Agency Service.

Against a total demand of Rs.31.82crores the appellant has deposited Rs.92 lakhs and is before the CESTAT seeking a stay in the matter.

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