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By Vijay Kumar

Central Excise

Export packing to be considered as manufacture - Cenvat Credit refund eligible: CESTAT

THE impugned order has upheld rejection of two refund claims totalling above Rs.12 Lakhs being the accumulated CENVAT credit pertaining to the last quarter of 2004 and the first quarter of 2005 in the account of M/s. Bala Handlooms Export Company (BHEC), Chennai. These two appeals have been filed by BHEC. The appellant generally procures yarn and gets it bleached, dyed, converted into fabrics and embroidered through job workers. Occasionally they also purchase fabrics of Chapter Heading 5406. These and the job worked goods are exported. As per the impugned order, the refund in question relates to credit of duty paid on purchased fabrics of CSH 5406 which were exported. The lower authorities have denied the refund of credit under Rule 5 of CENVAT Credit Rules (CCR) on the ground that the appellants had not undertaken any process of manufacture on the fabrics (inputs) received.

The original authority rejected the plea of the appellants that their case was similar to the one dealt with by the Tribunal in CCE Vs. Weston Electronics and following the ruling of the Apex Court’s decision in the case of CCE Vs. Maharashtra Fur Fabrics Ltd in rejecting the appellant’s claim. In that judgment, while dealing with a dispute on processes amounting to manufacture to which fabrics were subjected to, the Apex Court interpreted the said Notification, that the import of the specific expressions had to be kept in mind to decide what were the other processes. Thus understood, processes akin to the specified processes alone fell within the meaning of ‘any other processes’ in the proviso.

Doctrine of unjust enrichment has no application to deposits made Under Protest during pendency of dispute – Tribunal allows appeal with consequential relief

THE assessee had a dispute with the department regarding the benefit of an exemption notification. They ultimately succeeded in their claim before the Tribunal & the Revenue did not appeal further.

However, during the pendency of the proceedings, the appellant deposited the duty amount due as per the direction of the Revenue. This, he did under a TR6 challan, but Under Protest.

Consequent upon the issue having settled in his favour, he filed a refund claim to get back the amount of Rs.2,66,579/- paid by him under protest.

The appellant’s refund claim was sanctioned by the lower authority but ordered to be transferred to the Consumer Welfare Fund on the ground of unjust enrichment citing the SC decision in Sahakari Khand Udyog Mandal Ltd. [2005-TIOL-48-SC-CX-LB].

The Commissioner (Appeals) too did not find anything amiss with this order & hence the appellant is before the Tribunal.

Customs

Import of second-hand Sailboat – Tribunal allows importer to sail smoothly on rough seas

BOATING is catching on in a big way in Mumbai. If the Mumbai International Boat Show that was recently held is any indication, we may soon see the finest & the most expensive yachts being bought & boating becoming a popular pastime among the upwardly mobile.

With incomes reaching six digit figures quite easily, VC fund managers, CEOs, entrepreneurs, professionals are looking for recreational options beyond malls, multiplexes or holiday resorts & they have found it in leisure boating.

Worldwide, boating is a popular hobby & recreational option in coastal cities & soon Mumbai, Goa, Cochin & Alibaug will join the bandwagon. In the south of France, boating related activities contribute nearly 40 per cent of the region’s income.

Today, Mumbai’s boat market has a huge range beginning with small kayaks that cost Rs.20k to yachts that cost many crores – you can buy sail boats, kayaks, ski boats, motor boats, luxury yachts and much much more from the world’s leading international boat makers such as Azimut, Ferretti, Jeanneau, Larson & Princess – all through dealers in Mumbai. As for parking your boat, for an annual fee of Rs.6000/- the Mumbai Port Trust will give you a parking slot at the Gateway of India, and ensure that the boat is safe while it is parked there – unlike the regular vehicle parking slots which have a board prominently displaying – “Parking at Owner’s risk”.

As someone said, people driving a Porsche or a Maybach on potholed roads are not fools to waste a sprawling coastline.

Income Tax

Rebate given by Coop society to members is allowable deduction: ITAT

Interest liability not accrued in the Assessment year cannot be allowed as deduction.

It cannot be said that there was any liability on the part of the assessee till such time the Delhi High Court passed a decree which was only on 28.1.2000 after the end of the Accounting Year. The same cannot be claimed as a deduction in the aforesaid A.Ys.

Disallowance of the claim of the assessee for deduction on account of rebate given to members.

The nature of rebate is such that it cannot be said to be an appropriation of profits. It is more in the nature of commission or incentive and is an allowable deduction while computing income. The rebate allowed to the members goes to increase the purchase price of the assessee and consequently will also reduce its profits. It is only after taking into account such rebate that true profits of the Assessee can be arrived at.

Ex-gratia to employees -

remanded: The assessee claimed a sum of Rs. 1,13,80,021/- on account of exgratia payment to the employees. it was pointed out that in A.Y. 1996-97 the CIT (A) allowed similar claim of the assessee holding that it was in the nature of bonus and should be allowed on the basis of the actual payment, subject to the provisions of Ss.43 B of the Act. So the Tribunal remanded the matter to the AO for a fresh consideration for a decision, in accordance with the decision of the CIT (A) in the A.Y. 1996-97.

See our columns tomorrow for the judgements