Jurisprudentiol - from Supreme Court
Apple wins Customs - Unjust Enrichment Battle
The Supreme Court last week disposed of several tax matters. DDT brings you a summary of some of the Indirect tax cases:
Legal Corner Icon — the image was hosted by the publisher and was not captured.Apple wins Customs - Unjust Enrichment Battle: Apple India Pvt. Ltd. filed a refund claim for an amount totalling to Rs. 5,22,27,424/- being the 4% on the Special Additional Duty (ADC/SAD), paid while importing goods. The adjudicating authority after considering the said claim of refund rejected the same on the grounds that the assessee has failed to prove that they had not passed on the incidence of duty to the customers or any other person and also on the ground that they have not furnished required documents in relation to refund claims.
Apple approached the Commissioner of Customs (Appeals) who held that the assessee Apple is entitled for refund and accordingly, allowed the appeal.
Aggrieved by the same, the Revenue preferred an appeal to the CESTAT. The Tribunal held that audit report shows that the burden of duty has not been passed on either directly or indirectly to the domestic customers. While coming to the conclusion, the auditors have taken into account how the price of traded goods have been arrived at and therefore, the Tribunal was of the view that no interference is called for and dismissed the appeal. - 2013-TIOL-1973-CESTAT-BANG
The aggrieved Revenue approached the High Court.The High Court found no merit in the appeal and dismissed it. -
While reporting this DDT 2434 - 10.09.2014, said, "We don't know whether the Commissioner will accept this order of the High Court or go to the Supreme Court."
The refund involved was about five crore rupees and you can't imagine revenue not appealing. So off they went to the Supreme Court. The Supreme Court on 13.03.2015, condoned the (usual) delay and dismissed the Revenue SLP. Maybe Apple is richer in India by a few crores!
CE -Assembling of CNG Kits does not amount to manufacture
: For making a CNG kit, the assessee puts the various imported and indigenously procured items in a box called CNG Kit and they also provide a diagram/blueprint manual showing as to how the CNG kit is to be fitted in a particular vehicle. It is these CNG kits, which are sold by the assessee to individual customers and also installed in the vehicles. In some cases, the assessee sells the packaged CNG kits to independent traders as well. The Commissioner was of the view that this activity of the assessee - making CNG kit out of different components either imported or indigenously procured items, amounts to manufacture and would attracted central excise duty. The duty involved was nearly five crores and the penalty 50 lakhs in addition to the mandatory equal penalty. CESTAT allowed the appeal of the assessee and set aside the order of the Commissioner. - 2014-TIOL-796-CESTAT-DEL
While reporting the above CESTAT Order, we commented, "A gaseous demand! Perhaps a refresher course on ‘manufacture' would be welcome." But ten crores of demand and you can't expect the Department to stop the litigation at the CESTAT. They took the matter in appeal to Supreme Court.
The Apex Court condoned the usual delay and dismissed the Revenue appeal on 13.3.2015.
CE -Valuation - cost of packing
: the finished products manufactured are packed in tins and plastic containers, which are then put in carton boxes and sold to the wholesale dealers for the purpose of transportation. The assessee had filed a claim of refund for Rs.1 ,22,740/- in the year 1989 claiming that the duty paid on the cost of cartons cannot be included in the assessable value of the final product i.e. paints as held by the Supreme Court in Godfrey Philips Ltd. - 2002-TIOL-384-SC-CX-LB. The Assistant Collector of Central Excise rejected the refund claim and the Commissioner (Appeals) confirmed the order. (What's New - the same old story repeated infinitely). The Tribunal allowed the assessee's appeal. Revenue does not suffer such orders and took the matter to the Supreme Court.
The Supreme Court on 9th March 2015, dismissed the Revenue appeal observing that the test is whether packing done in order to put the goods in marketable condition and whether the goods are capable of reaching the market without the type of packaging concerned.
The refund involved was Rs.1,22,740/, which is not yet received by the assessee.
Please see
CE - Clearance to EOUs - Limitation
: The assessee is engaged in the manufacturing of air-conditioning machinery and parts thereof. Some of the air-conditioning units are manufactured by utilising the parts manufactured in the same factory were sent by it to 100 per cent Export Oriented Units without payment of duty, in terms of various notifications. The plea of limitation was rejected by the Adjudicating Authority on the ground that the assessee did not disclose to the Department that the final product was supplied to 100 per cent Export Oriented Units.
The Tribunal noted that there was in fact a disclosure of the aforesaid fact in CT(3) certificate which was submitted by the respondent to the Department. It was noted that no clearance could have taken place without the knowledge of the officer as to the ultimate destination of the goods and the fact that they were cleared without payment of duty in terms of the exemption notification which was specified in the application. On that basis, the Tribunal held that proviso to Section 11(A)(1) of the Act will not get attracted and thus, the show cause notice was beyond the period limitation as specified under Section 11(A)(1) of the Act.
Going through the material on record, Supreme Court found that the Tribunal is justified in taking the aforesaid view. Thus, there is no merit in this appeal and the same, was dismissed on 09.03.2015.
The Show Cause Notice in this case was issued on 03rd September, 1992 - twenty three years ago!
Please see
CE - Rectification of Mistake - No rectification if the issue was not originally argued
: The Tribunal dismissed the ROM application of the Department with the observations that the issue raised in the rectification application was not argued at the time of hearing of the main case. This aspect could not be disputed by the senior counsel appearing for the Department. And the unrelenting Revenue took the matter in appeal to the Supreme Court.
The Supreme Court on 10.03.2015 observed that there was no error in the order passed by the Tribunal and dismissed the Revenue appeal.
Now, you know how much the Board contributes to the clogging of the justice pipeline.
Please see
CE - Demand - Suppression - Limitation -
: The appellant is engaged in the business of cutting larger steel plates into smaller size and shapes as required by the customers. The Supreme Court noted "it is abundantly clear that even as per the Department, there were certain doubts relating to excisability of the process of profile cutting. In view thereof, if the appellant also had nurtured this belief that the process carried out by him does not amount to manufacture and did not pay the excise duty, we can safely infer that this conduct of the appellant was a bona fide conduct and cannot be treated as contumacious or willful suppression. Thus, on the facts of this case, proviso to Section 11A(1) of the Act would not be attracted. The imposition of penalty upon the appellant is unwarranted."
The Supreme Court on 10th March 2015 set aside the Penalty, but duty was confirmed as uncontested.