Jurisprudentiol- Tomorrow's casesLegal Corner Icon — the image was hosted by the publisher and was not captured.

By Vijay Kumar

Central Excise

Capital goods and inputs destroyed in fire - No requirement of reversal of Cenvat credit : Tribunal

CENVAT credit Rules, 2004 has already seen ten amendments this year. Notable amongst them are the amending notifications 26/2007-CE(N.T) dated 11.05.2007, 33/2007 CE(NT) dated 07.09.2007 & 39/2007-CE(N.T) dated 13.11.2007.

While the first notification inserts a sub-rule (5B) in rule 3 & prescribes payment of an amount equivalent to Cenvat credit availed while writing off the value of inputs/capital goods, the second attempts to make the Supplementary Instruction, paragraph 2.4 to Chapter 18, Part-I [reversal of Cenvat credit taken on inputs contained in finished goods on which duty remission has been granted under rule 21] a legal requirement by inserting a sub-rule (5C) in rule 3 of the Cenvat Credit Rules, 2004. The last mentioned notification lays down the manner in which used Cenvatted Capital goods are to be removed from the factory.

Considering the amendments that have been made this year to "settle once & for all pending Cenvat issues", the decision being reported may prompt the Central Government to go in for one more amendment to the Cenvat Credit Rules, 2004 towards the close of the year.

Service Tax

Input services used for windmills for generation of electricity - away from factory - not eligible for credit - As electricity is not excisable, no credit even if used at windmills - CESTAT

The appellant has a manufacturing unit at Jamnagar. They had set up windmills at a place Kurunga, about 100 Kms. away from their factory. While setting up of the windmills, they have availed the services for the purpose of installation, erection and commissioning of windmills. The electricity generated at the windmills is fed to grid of Gujarat Electricity Board on the basis of an agreement and the appellant receives equal quantity of electricity fed by them from the Gujarat Electricity Board at the factory site. Whatever quantity of electricity is used in excess of what they produced is charged to them. The appellant claimed the service tax paid on the services availed at the windmill station.

Income Tax

Exemption to charitable trusts cannot be denied if part of income was used for religious purposes: ITAT

THE appellant filed return of income on 26.10.03 declaring nil income. The assessment was framed u/s 143(3) on 5.1.96 at a total income of Rs.4,99,580/-. It was held that since the appellant trust is not registered u/s 12A of the Act, the benefit of exemption u/s 11 cannot be given. Subsequent to the passing of the assessment order, the appellant society had been granted registration u/s 12A vide order dated 4.11.96 w.e.f. 1.4.1988. The assessee, therefore, requested for rectification of the order and for claim of exemption u/s 11 of the Act. The rectification application was rejected and the order refusing rectification u/s 154 was confirmed by CIT(A). On further appeal before the Tribunal, the Tribunal held that the subsequent order of registration had rendered the AO's finding that there was no registration, a mistake apparent from record. The Tribunal set aside the matter to the AO to examine the case in light of the requirement of Sections 11, 12 & 13 and to determine eligibility for exemption and pass fresh order as per law.

See our columns tomorrow for the judgements