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By Vijay Kumar

Central Excise

SSI exemption – misdeclarations that brand name belonged to the assessee when it actually belonged to their foreign collaborator – extended period invocable ; Price to be treated as cum duty : Supreme Court

BOTH Revenue and the assessee are in appeal before the Supreme Court against the Tribunal's order – and both lost!

The Assessee is engaged in the manufacture of photographic chemicals. During the period from March, 1988 to February, 1992 assessee cleared its products under the brand name " Tetenal " without payment of duty, claiming the benefit of exemption under Notification No. 175/86-CE dated 1.3.86. From the result of investigation conducted by the officers of Central Excise, it was found that the brand name " Tetenal " belonged to M/s Tetenal Vertribs GmBH , Germany and that the assessee was not eligible for the benefit of exemption Notification as they had cleared their product affixed with the brand name of another person. It further appeared to the department that the assessee had mis -stated and suppressed facts with intent to evade payment of duty on the goods. The department, therefore, by show cause notice dated 24.6.1992 called upon the assessee to pay central excise duty of Rs.32 ,25,465 /- on the goods cleared during the period and also to show cause why penalty should not be imposed on them.

The Collector (as he then was) vide his order dated 5.11.1992 dropped the proceedings. The Revenue filed an appeal before the Tribunal. The Tribunal by its order dated 21.3.2000 held that the assessee was not entitled to the benefit of the Notification and consequently remanded the matter to the adjudicating authority for fresh decision on the question whether the demand of duty was within the time prescribed under the Act.

Turnover tax if not paid to State Government cannot be allowed as deduction from Assessable Value – A seven-year wait for Revenue to win before Tribunal

The respondents were filing declaration under Rule 173C of the Central Excise Rules, 1944 & claiming deduction in respect of turnover tax. The jurisdictional Superintendent enquired whether turnover tax has been actually paid to the relevant authorities or not and to provide evidence to that effect but the respondents did not furnish the relevant information. So, they were issued a demand notice amounting to Rs.33.07 lakhs in respect of the deduction of turnover tax claimed by them from the price for which they could not produce evidence of having paid the same to the relevant authority.

MRP valuation applies to industrial consumers who buy retail packages - Bad phraseology should not defeat the intent of rule-making authority: Bombay High Court.

OFFICERS from the Directorate General of Central Excise Intelligence, Mumbai Zonal Unit, seized goods (switch gear) from M/ s.Total Logistics India Private Limited, a stockist of the petitioners, L&T .

The petitioners aggrieved by the seizure, preferred a petition before the High Court and the High Court directed the petitioners to make an application to the Commissioner who considering the provisions of the Standards of Weights & Measures Act, and The standards of Weights and Measures (Packaged Commodity) Rules 1977, was to decide whether the provisions of the said Act and rules are applicable to the seized goods.

The Commissioner on hearing the parties, was pleased, by order of 6th July, 2007 to hold that the seized goods packages under reference are indeed intended for retail sale and therefore, have to comply with the requirement of the provisions of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977.

Income Tax

Provision for performance warranty - allowable deduction; Writing off of sums under 'preliminary and deferred revenue expenses' due to change in accounting method allowable even if it leads to reduction in net profit for computation of book profits u/s 115JB : ITAT

THE Tribunal was confronted with a question of allowability of deduction of provision made for performance warranty and adjustment/ addition that can be made in computation of book profits. The assessee had made a provision for performance warranty as it had to take care of and rectify at its own cost any defect/error arising in its work within a period of 12 months of completion of the work. It held it to be an allowable deduction. Similarly it held that writing off of the balance amount under the head of 'preliminary and deferred revenue expenses' as a result of change in accounting standard by the assessee was justified even if it led to reduction in the net profit in P&L a/c in computation of book profits u/s 115JB as there was nothing to stop a Co. in changing its accounting standard as long as it is a recognised system of accounting by the ICAI and therefore the amount could not be added back to the profits for the purposes of computation u/s 115JB . Moreover only those additions for the purpose of book profit can be made which are laid out in clause (a) to (f) of explanation to Sec.115JB . Thus on the issues in front of it, the Tribunal held in favour of the assessee.

See our columns tomorrow for the judgements