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Central Excise
Assessee not challenging order on merits but on limitation and fails before Tribunal – Demand of Rs 28 lakhs confirmed along with penalty and interest
THE issue is straightforward, simple & clear as gin but will certainly give you a high.
The assessee was captively consuming rectified spirit for manufacturing country liquor. Since they were availing modvat/cenvat credit on common inputs & manufacturing dutiable & exempted final products, they were paying 8% of the price of rectified spirit captively consumed in compliance with the requirement of Rule 57CC of the CER, 1944.
The department observed that the price of rectified spirit cleared for captive consumption was less than the price of the same goods cleared for home consumption and as such, the assessee was reversing lesser amount than required inasmuch as they had reduced the price of rectified spirit for captive consumption from Rs.7/- per litre to Rs.5/- per litre by passing a resolution on 2.8.1996. Furthermore, the price for home consumption was raised to Rs.7/- per litre by resolution dated 23.7.96.
On being pointed out by the department, the assessee paid differential amount of duty of Rs.28.00 lakhs for clearances effected during the period 1.9.1996 to 8.5.2000. Thereafter, Show Cause Notice proposing confirmation of the duty amount already paid and proposing interest and penalty was issued.
The ritual followed & needful was done in the form of confirmation of demand and imposition of penalty to the tune of Rs.27.77 lakhs & not to forget, interest.
Before the Tribunal, the assessee bared their soul - they do not wish to challenge the demand on merits but only on the ground of limitation & also challenge imposition of interest & penalty. As to what made them take such a stand is really surprising!
Income Tax
Carried forward unabsorbed depreciation equivalent to current depreciation could be set off : Bombay HC
It is clear from the order dated 9.6.2006 that the set off was granted in order to pass on to the petitioners the benefit that they had obtained under the order passed by an appellate authority in a statutory appeal. In our view, the said order was not an order passed under Section 154 of the Income Tax Act 1961. The power to pass such an order was in fact inherent in section 143 or section 144. In the circumstances, the limitation as contained in section 154(7) of the Act would not apply to the passing of such an order. Similarly, in our view, the findings that the allowability of unabsorbed depreciation against income from other sources is debatable in nature, cannot be sustained..”
In the net result, the petition is allowed with a clarification that the petitioners will not have a right to set off in respect of the unabsorbed investment allowance of Rs.31,58,423.
Service Tax
Input Service - Assessee manufactures Tractors, 3-wheeler and M.Vs parts - Repair and Maintenance Services incurred on Motor Vehicles provided to employees and officers prima facie entitled as Cenvat Credit: Tribunal
DECIDING the fate of entitlement or otherwise of Cenvat Credit on a variety of “input services” is now becoming as exciting as ever.
Just take a look at wherefrom it all began –
++ Service tax credit available on Mobile phones - Board Circular dated 20.06.2003 cannot be pressed into service in the context of the new Cenvat Credit Rules, 2004 - no stipulation in rule 4(1) or 4(7) expressly prohibiting such credit availment. Indian Rayon Industries Ltd. vs. CCE , Bhavnagar .
++ Service Tax - Cenvat credit of service tax paid on input services - Credit of service tax on construction on services in relation to advertisement - Setting up of circles/gardens away from the factory for the purpose of putting signboard cannot be considered as relating to activity in relation to advertisement Mobile services - In view of the settled decision appeal allowed. [Tribunal decision in the case of Indian Rayon Industries Ltd. relied upon] Excel Crop Care Ltd. vs. CCE , Ahmedabad
++Service tax - CENVAT - Outdoor Catering Service - Appellants claim cenvat credit on outdoor catering services provided in the company canteen claiming that it indirectly assists manufacturing activities - No prima facie case for complete waiver of amounts - Tribunal orders pre-deposit. Bajaj Electricals
++Service Tax paid on Repairs & maintenance of Civil construction viz. residential colony for factory employees eligible for Cenvat Credit - Manikgarh Cement vs. CCE , Nagpur
++ Canteen/Catering services provided to employees may be obligatory as per the Factories Act, 1948 but it cannot automatically lead to the conclusion that the same relates to business activity – Credit not available - Tribunal. CCE , Nasik vs. Mahindra Sona, Ace Glass Containers Ltd., Jindal Saw Ltd. 2008-TIOL-199-CESTAT-Mum
++ ST paid by Outdoor Caterers for running Canteen Services in a factory is an Input Service - Credit available – Bajaj Electricals, Victor Gaskets, Bosch Chassis [decision contrary to Mahindra Sona case]
The present case concerns the entitlement or otherwise of credit of Service Tax paid on Mobile phones & also Repair & Maintenance Services. The total cenvat credit involved is Rs.3.38 lakhs.
Happy festivals
Today is Vikram Samvatsar, Chaitra Sukladi, Gudi Padava, Ugadi, Cheti Chand, Navreh and Sajibu Cheiraoba – Have a nice celebration
Until tomorrow with more DDT
Have a nice day.
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