Jurispruden tiol– Monday's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Service Tax

ST - demanding duty on activity of laying of pipeline interpreting it to be erection, commissioning and installation of a plant is totally misconceived and unacceptable - 'Erection, commissioning and installation' explained: CESTAT

The Tribunal agreed with the appellants' reading of the expressions contained in the relevant entry, namely, 'erection, commissioning or installation'. It found it elementary that 'erection' connotes construction or building of a structure and laying of pipeline does not involve erection. We find no ambiguity in the expression installation. It applies to machinery already made which are formally made ready to operate at the site. Installation implies setting up the machinery ready for use, like giving power connections or installing driver software in the case of a machine run with the aid computer software. Commissioning involves the operationalisation of the machinery after which it starts functioning regularly. In laying of long distance pipeline, earth is dug and pipes laid and jointed, and the pipes pass through sumps with boosters at intervals, if necessary. This activity will not involve erection.

Income Tax

construction of open drain for disposal of effluents – whether Revenue Expenditure or Capital Expenditure - High Court did not formulate a correct substantial question of law – matter remanded:

Since the High Court has not formulated a correct substantial question of law and since the High Court is required to take into account all the above mentioned facts and circumstances of the case, the Supreme Court set aside the impugned order and remitted the matter to the High Court for fresh consideration in accordance with law.

Central Excise

Larger Bench of Tribunal holds that Physician Samples are to be valued in terms of Rule 4 of Valuation Rules from 8th January 2005 even though P&P medicaments are notified u/s 4A of CEA'44

HOPEFULLY, this decision should put an end to the uncertainty prevailing in the matter of valuation of Physician samples. Prior to 8th January 2005 when the P & P medicaments were subject to valuation under section 4 of the CEA'44 , valuing physician samples was not an easy task. This was because since the samples are distributed free to the physicians by the medical representatives, the transaction value under Section 4(1)( a) was not applicable as there was no sale involved. Therefore the value had to be arrived as per the provisions of the Valuation Rules, 1975 (prior to 1.7.2000) and under the Central Excise Valuation (Determination of the Price of Excisable goods) Rules 2000 post 1.7.2000. Even under the Valuation rules, there arose a dispute as to whether the value has to be arrived on the basis of cost of production (Rule 6(b )(ii)/Rule 8) or on the basis of comparable price [Rule 6(b)(i)/Rule 4] of the valuation rules.

See our columns Monday for the judgements