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By Vijay Kumar

Central Excise

CESTAT Principal Bench decides the same appeal twice - with diagonally opposite findings

HOW effectively the justice delivery system is working in this country? How efficiently the officers of the revenue department are following up their cases in legal fora? How ethically the assessees are disclosing the full facts before the learned judges and winning cases fairly? If you want the obvious answers to these questions, please read this story.

Netizens may recall the Delhi CESTAT order (2006-TIOL-1024-CESTAT-DEL) wherein the appellant had imported certain CD ROMs containing US cook book, Cinderella Story etc and various other information and claimed exemption under the Customs Notification No. 11/97 Cus dated 1.4.97 by declaring them as Multimedia Application Software on CD ROM But the Commissioner (Customs) adjudicated the case by denying the exemption as the CD ROMs cannot be considered as information technology software and confiscated the goods vide Order In Original No. 21/Adj/RSS/2004 Dated 05.08.2004

The importer filed appeal against the Order In Original with the New Delhi Bench ( Court No II) of the CESTAT. The appeal Nos were Appeal No. 818-819 of 2004 (One by the Company and the other by the CMD of the Company). When the matter came up before the CESTAT, none appeared on behalf of the importer and the CESTAT considered the issue on merits and held that the CDs in question do not qualify for the exemption under the said Notification and upheld the confiscation and the penalties vide Final Orders No FINAL ORDER NO. 187-188/06-Cus Dated : 31.05.2006

But, the Department also took the matter before the CESTAT on the ground that the penalty imposed was too meager when compared to the duty evasion of Rs 39 lakhs and prayed for enhancement of the penalty. The appeal of the Revenue was decided by the CESTAT on 17.5.2007 and this time, the appellant represented their case before the CESTAT through an advocate and prayed that they are eligible for the exemption under the Notification. The CESTAT vide final orders Nos 254-256/07-CUS-17.5.2007 held that the importer is eligible for the exemption and set aside the Order In Original of the Commissioner (Customs)! The appeal numbers in this second CESTAT order were mentioned as Customs Appeal Nos. 818-819 of 2004 and 838 of 2005.

Doctrine of merger - Tribunal shows sympathy to Revenue appeal - matter remanded to Commissioner(A) for hearing afresh

AT long last, there is something for the Revenue to cheer about. They have found someone who understands their quandary. Yes, we are talking about the much maligned (of course, in department circles) 'Doctrine of Merger' which always sees the Revenue slipping thousands of cases from their grip.

The problem lies (sorry, lay) with the Review provisions contained in the Central Excise & Customs Act. Long back, the Tribunal in the case of Balaji Automobiles [2005-TIOL-899-CESTAT-MUM]had while calling the Review provisions 'an imbalanced one' observed -

"8. Before parting with the case, we observe that under Section 129A(3), the period for filing appeal has been specified as "three months" whereas the time limit under Section 129D has been specified as "six months, but not beyond one year" for review and a further period of three months for filing the appeal to the Tribunal after such review. In view of the fact that the power of review earlier exercised by the Board has now been given to the Committee of Chief Commissioners, there is a need for harmonizing the time limits prescribed under Section 129A(3) and under Section 129D to ensure that the Department does not lose its chance for pursuing an appeal as it has happened in this case.

9. The Registry is directed to send a copy of this order to the Member (Legal and Judicial) in the Board, who may consider initiating necessary steps to bring such harmonization in the time limits prescribed under two different sections in the Customs Act, 1962."

Income Tax

Payments made to foreign Shipping Cos under time charter agreements- exigible to tax - Assessee liable to TDS while remitting such payments :- ITAT

THE assessee is a Tamil Nadu Government Undertaking. It is engaged in the business of transport of coal from various ports in India on behalf of the Tamil Nadu State Electricity Board, Chennai. For the transportation of coal, the assessee charters vessels from India as well as from Foreign Shipping Companies (hereinafter called FSC). For this purpose the assessee entered into standard time chartered agreements with various FSC. While remitting the charter payments to the FSC, the assessee did not make deduction in respect of withholding tax. In the opinion of the Assessing Officer (AO) the assessee was liable to deduct tax at source while remitting the payments to FSC. As the tax was not deducted at source, the AO passed orders under sections 201(1) and 201(1A) of the Income-tax Act, 1961. The Commissioner (Appeals) confirmed the orders of the AO for the assessment years 2002-2003 and 2004-2005. However, for the assessment year 2003-2004, the Commissioner(Appeals) allowed the appeal.

The issue raised in appeal relates to the question whether on the facts and in the circumstances of the case the assessee was liable to deduct tax at source while remitting payments to various shipping companies under time charter agreements.

See our columns Monday for the judgements