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By Vijay Kumar

Central Excise

No discretion for reducing mandatory penalty - Penalty and interest liable even if duty is paid before issue of SCN - RINL is no more good law : Bombay HC

It is celebrations time for Revenue- the mandatory penalty and interest is once again upheld by yet another High Court. THIS should be music to the ears of Revenue as the High Court held that the decision of the Supreme Court in RINL is no more good law!

The substantial questions of law before the High Court were:

(1) Whether there is any discretion with the authorities to exempt penalty under Section 11-AC and interest under Section 11-AB of Central Excise Act, 1944, while confirming the demand for evaded excise duty?

(2) Whether such exemption can be justified merely because the evaded excise duty is paid before issuance of show cause notice by the department?”

The details of the assessee and the case are not important. The point is the respondent assessee paid the duty before issue of Show Cause Notice and the Tribunal held that no penalty and interest are payable.

Parallel invoices and clandestine removal - statements of Director and traders corroborated - charges proved - duty and penalty confirmed : CESTAT

THE appellant's factory was visited by Central Excise officers on 03.01.00. Search of the factory resulted in recovery of 15 nos. of double set/parallel central excise invoices from the drawer of the table of the excise clerk.

Sub-Section 1A inserted in Sec 5A of Excise is not clarificatory in nature - assessee could forego exemption and pay duty prior to May 13, 2005 : Tribunal

PAYMENT of duty on volition is a controversial issue that was supposedly put to rest by the Finance Act, 2005.

The Central government inserted a new sub-section 1A w.e.f 13.5.2005 which reads - "For the removal of doubts, it is hereby declared that where an exemption under sub-section (1) in respect of any excisable goods from the whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay duty of excise on such goods."

Unlike all those earlier instances where such opening words couched with uncertainties galore made appearances as an Explanation, this time, it took the form of a sub-section.

Income Tax

Fluctuation in foreign exchange rate - change in liability - Deduction for such liability to be allowed in the year of fluctuation on accrual basis : Delhi HC

THE basic issue before the High Court was whether any increase or decrease in liability on account of fluctuation in rate of exchange of foreign currency as per the exchange rate prevailing on the last date of financial year is to be allowed as deduction in the year in which fluctuation occurred or when the liability is actually paid. While the assessee wanted to take the liability into account in the year of fluctuation, the revenue thought otherwise treating the same as notional liability. The Court finally decided in favour of the assessee by holding that such liability is to be taken into account in the year of fluctuation itself on accrual basis.

See our columns tomorrow for the judgements