From our Legal Corner – Tomorrow's cases

By Vijay Kumar

FEMA

Adani Exports gets short-term relief from SC in Rs 13.5 Cr FEMA case - matter remanded - HC was not justified in going into merits of case while dealing with a writ regarding pre-deposit : SC

ON the basis of the alleged violation of certain provisions of the Customs Act, notices were issued to certain noticees primarily on the ground of mis-declaration as to the description and narration of the goods imported and on the ground of over-invoicing so far as valuation is concerned and consequentially misusing foreign exchange. Show-cause notices were issued by the adjudicating authority and on consideration of the submissions and replies filed, the orders in original were passed by the Commissioner of Customs. The orders passed by the original authority were challenged by the respondents before CESTAT. Notices were also issued under Foreign Exchange Management Act, 1999. The Additional Director General passed orders in terms of the Foreign Exchange Regulation Act, 1973. The order was passed after considering the replies and submissions in response to the show-cause notices. The adjudicating authority found the noticees guilty of the charges and in terms of the powers conferred under Section 50 of the Regulation Act read with Section 49(3) and 49(4) of the Management Act imposed the penalties:

Supreme Court

School Girls watching 'Alladin' without tickets - It is irrational that as against a tax liability of Rs 3006, penalty of Rs 4,39,000 was to be imposed : Supreme Court

HERE is a Bollywood thriller:

The appellant is an exhibitor of cinematograph films. On 3.2.1996 cinema hall of the appellant was inspected by the Commercial Tax Inspectors. At that time a movie "Alladdin" was being shown in the morning show. At the time of inspection, 878 viewers were found watching the movie without tickets. It was found that the daily collection register maintained by the appellant was not properly maintained. The inspectors put their signatures after drawing a line in the register so that no entry can be made thereafter. Alleging that the appellant admitted 878 viewers without tickets, a show cause notice was issued under Section 10 of the Rajasthan Entertainment and Advertisement Tax Act, 1957 prima facie being of the view that offence under Sections 6(1) and 6(2) of the Entertainment Act has been committed. The appellant submitted its reply and stated that girl students of a school had gone to watch the movie which was meant for children and in any event there was no scope for imposition of penalty of Rs.500/- in respect of each viewer.

The appellant preferred an appeal against the said order before the Rajasthan Taxation Board, Ajmer pleading that the total cost of the tickets was Rs.3006/- and penalty of Rs.4,39,000/- at the rate of Rs.500/- per viewer was unconscionable. The Taxation Board found that the penalty that was imposed was not imposable at the rate of Rs.500/- per viewer and the maximum penalty imposable was Rs.500/-.

Central Excise

Appellant manufacturing medicament containing Alcohol but discharging Central Excise duty by availing Cenvat credit on FFM which contains 44% Ethyl Alcohol - no cause for reversal of Cenvat credit - Tribunal

CAN you travel in an airplane by buying a Shatabdi ticket or vice versa & when caught argue that both almost cost the same?

Coming to the "complex" case, the premier Central Excise investigating agency stumbled upon an interesting fact when they visited a Central Excise assessee & that was that they were clearing a product called "Fruit Flavour Mix (FFM)" and which actually contained 44% Ethyl Alcohol. The officers concluded that the assessee ought not to have paid any Central Excise duty on FFM since it contained alcohol.

Not to leave things half done, their quest took them to the recipient of this FFM. The logic - if the supplied material contains Ethyl alcohol, the product manufactured out of this raw material may also retain the alcoholic content.

See our columns tomorrow for the judgements