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2023 (11) TMI 617 - MADRAS HIGH COURT Money Laundering

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Money laundering prosecution may proceed without completed predicate trial where materials show prima facie nexus with proceeds of crime.
Section 3 of the Prevention of Money Laundering Act creates an independent offence covering concealment, possession, acquisition, use, projecting, or claiming proceeds of crime as untainted, so prosecution need not await completion of trial in the scheduled offence. The Court found the registered predicate offence and the materials, including the petitioner's statements and transfers to accounts linked to the petitioner, sufficient to disclose prima facie involvement. Claims of coercion in recording statements and the defence version involved disputed facts for trial, and no recognised ground for quashing was made out. The request to quash was rejected and the prosecution was allowed to continue.

Offence of money-laundering under Section 3 of the Prevention of Money Laundering Act, 2002 - proceeds of crime - predicate offence - scope and interpretation of Section 3 of the 2002 Act - quashing of criminal proceedings under inherent jurisdiction of the High Court (Section 482 Cr.P.C.) - statement under Section 50(2) and (3) of the 2002 ActOffence of money-laundering under Section 3 of the Prevention of Money Laundering Act, 2002 - scope and interpretation of Section 3 of the 2002 Act - predicate offence - proceeds of crime - Whether prosecution under Section 3 of the 2002 Act is impermissibly premature in the absence of trial/conviction in the predicate scheduled offence and whether the petitioner's connection with proceeds of crime is negatived so as to warrant quashing. - HELD THAT: - The Court applied the authoritative exposition of Section 3 in Vijay Madanlal Choudary and others v. Union of India, observing that Section 3 is wide and captures every process or activity, direct or indirect, connected with proceeds of crime, and is not confined to the final act of integration into the formal economy. While the authorities cannot proceed on a mere notional assumption that a scheduled offence has been committed unless it is registered with the jurisdictional police or is the subject of pending enquiry/trial, the Court found on the materials and admissions that the petitioner had an acquaintance with the principal accused and that substantial sums allegedly mobilised in the predicate offence were transferred to the petitioner's accounts. The petitioner's purchases of property with cash and the absence of satisfactory explanation for the receipts were noted. The Court held that, on prima facie consideration, the petitioner's involvement is not negated and the prosecution under Section 3 is not premature in the facts of this case; therefore quashing is not warranted on that ground. [Paras 12, 13, 14, 17, 18]Prosecution under Section 3 of the 2002 Act is not prematurely instituted in the present case and the petition for quashing on that ground is dismissed.Statement under Section 50(2) and (3) of the 2002 Act - admissibility and voluntariness of statements - Admissibility of the petitioner's statement under Section 50(2) and (3) alleged to be given under coercion and whether that issue can be adjudicated in the quash petition. - HELD THAT: - The Court recorded the petitioner's contention that his statement under Section 50(2) and (3) was obtained under coercion and therefore cannot be the basis for prosecution. The High Court refrained from adjudicating the voluntariness or admissibility of that statement in a petition under Section 482 Cr.P.C., holding that such contentions concerning evidentiary admissibility and coercion are matters for the trial Court to examine and decide in the course of trial. [Paras 15]The question of voluntariness and admissibility of the statement under Section 50(2) and (3) is left to be decided by the trial Court; it is not determined in this quash petition.Quashing of criminal proceedings under inherent jurisdiction of the High Court (Section 482 Cr.P.C.) - Whether the facts and materials fall within the recognised categories for exercise of power to quash under the principles laid down in State of Haryana v. Bhajan Lal. - HELD THAT: - Applying the illustrative categories from Bhajan Lal, the Court examined whether allegations, accompanying materials, or circumstances rendered the prosecution non-maintainable, absurd, or otherwise barred. The Court found no ground - such as absence of prima facie offence, legal bar to initiation, or malicious/ mala fide institution - that would justify exercise of inherent jurisdiction to quash the complaint as against the petitioner. Consequently, the petition did not satisfy any of the Bhajan Lal categories warranting quashment. [Paras 19, 20]No ground is made out to exercise inherent jurisdiction under Section 482 Cr.P.C.; the petition to quash is dismissed.Final Conclusion: The Criminal Original Petition to quash proceedings in CC No.1 of 2017 is dismissed; the High Court finds on prima facie consideration that the petitioner's alleged involvement with proceeds of crime is not negated and leaves disputed evidentiary issues to the trial Court to decide uninfluenced by this order.

2023 (11) TMI 458 - PUNJAB & HARYANA HIGH COURT Indian Laws

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Issues: (i) Whether the delay in filing the appeal before the appellate court was liable to be condoned. (ii) Whether the accused had rebutted the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 so as to justify acquittal under Section 138 of that Act.

Issue (i): Whether the delay in filing the appeal before the appellate court was liable to be condoned.

Analysis: The complainant was not given an opportunity to oppose the application for condonation. The accused had remained absent despite service, was declared a proclaimed person, and even after conviction did not file the appeal within time or surrender. The explanation that counsel had not informed him of the decision was found unacceptable in view of his conduct and the long delay.

Conclusion: The delay ought not to have been condoned and the order condoning delay was set aside.

Issue (ii): Whether the accused had rebutted the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 so as to justify acquittal under Section 138 of that Act.

Analysis: The cheque, return memo, notice, and postal acknowledgment were proved. The accused admitted his signature and issuance of the cheque at multiple stages. Once execution of the cheque is admitted, the presumptions under Sections 118 and 139 arise in favour of the complainant. The accused was required to rebut them on a preponderance of probabilities, but his plea of a smaller loan, security cheque, and part repayment was neither consistently established nor supported by effective confrontation in cross-examination. His reply to notice was sent after the complaint had already been filed, and his statement under Section 313 of the Code of Criminal Procedure, 1973 was not substantive evidence. The appellate court's reliance on conjectures, including Sections 58 and 87 of the Negotiable Instruments Act, 1881, was held to be misplaced.

Conclusion: The accused failed to rebut the presumption of legally enforceable liability, and the acquittal was unsustainable.

Final Conclusion: The revision succeeded, the acquittal was reversed, and the conviction and sentence recorded by the trial court were restored.

Ratio Decidendi: Once execution of a cheque is admitted, the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 operate in favour of the holder, and the accused can displace them only by a probable defence shown on a preponderance of probabilities; a bare denial or an unsubstantiated version in reply or under Section 313 of the Code of Criminal Procedure, 1973 is insufficient.

Statutory presumptions in cheque dishonour cases prevail unless the accused proves a probable defence on preponderance of probabilities.
Delay in filing the appeal before the appellate court was found not fit for condonation because the complainant had no opportunity to oppose it, the accused had remained absent despite service, was declared a proclaimed person, and gave no acceptable explanation for the long delay. On the merits, once the cheque, return memo, notice, postal acknowledgment, signature and issuance were admitted, the presumptions under Sections 118 and 139 of the Negotiable Instruments Act operated in favour of the complainant. The accused failed to rebut them on a preponderance of probabilities; the plea of a smaller loan, security cheque and part repayment was not consistently proved, and a reply or statement under Section 313 CrPC was insufficient. The acquittal was therefore held unsustainable and the conviction and sentence were restored.

Presumption under Section 139 of the Negotiable Instruments Act - Presumptions under Section 118 of the Negotiable Instruments Act - Reverse onus clause - Rebuttal on preponderance of probabilities - Condonation of delay in filing appeal - Statement under Section 313 CrPC not substantive evidence - Effect of material alterationCondonation of delay in filing appeal - Application for condonation of delay in filing the criminal appeal allowed by the appellate court was liable to be set aside. - HELD THAT: - Complainant was not afforded an opportunity to oppose the condonation application. The overall conduct of the accused was examined: he absconded despite process and notice, was declared a proclaimed person, was produced later by police, and after conviction did not file the appeal within the suspended sentence period but remained at large until arrest. The accused's explanation that his previous counsel had not informed him and that he filed the appeal after obtaining the certified copy was held not to be a justifiable ground for condoning a delay of over one year. In view of these facts, the appellate court's allowance of the condonation application was unsustainable and is reversed. [Paras 15, 16, 17, 18]Order allowing condonation of delay is set aside.Presumption under Section 139 of the Negotiable Instruments Act - Presumptions under Section 118 of the Negotiable Instruments Act - Reverse onus clause - Rebuttal on preponderance of probabilities - Statement under Section 313 CrPC not substantive evidence - Effect of material alteration - Whether conviction and sentence under Section 138 NI Act recorded by the trial Court should be restored despite appellate acquittal. - HELD THAT: - The trial Court's findings that the cheque, return memo, legal notice and postal acknowledgment were proved by the complainant were accepted. The accused repeatedly admitted his signature on the cheque at various stages (suggestion to complainant, statement under Section 313 CrPC, and in his defence), thereby attracting the statutory presumption under Section 139 read with Section 118. Judicial precedents were applied to state that the presumption is rebuttable but the accused need only probabilise his defence on preponderance of probabilities. The appellate court erred in treating the accused's reply to the legal notice as a valid prior denial, because that reply was sent after the complaint was filed. Statements in reply and under Section 313 CrPC are not substantive evidence capable, by themselves, of rebutting the presumption; the accused's oral defence when he did not confront the complainant in cross-examination further undermined his case. Allegations of money lending business and of material alteration (overwriting to complete signature) were found to be irrelevant or unestablished: Section 58 was inapplicable on these facts and no case of material alteration against the accused's consent was made out. The appellate court's reliance on conjecture and misappreciation of evidence warranted reversal. Considering also the accused's conduct (abscondence and delay), no leniency was found fit on sentence. [Paras 28, 31, 41, 42, 43]Judgment of conviction and sentence passed by the trial Court is restored.Final Conclusion: Impugned appellate judgment dated 26.02.2016 allowing condonation of delay and acquitting the accused is set aside; the conviction and sentence recorded by the trial Court on 16.01.2014 under Section 138 NI Act are restored, and the accused is directed to surrender within 15 days, failing which coercive steps shall be taken.

2023 (11) TMI 421 - CESTAT KOLKATA Customs

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Issues involved: Non-appearance of Appellant, non-compliance with pre-deposit requirements, dismissal of Appeal by Commissioner (Appeals) due to non-fulfillment of pre-deposit.

The judgment by the Appellate Tribunal CESTAT KOLKATA dealt with the issue of the Appellant's non-appearance despite multiple notices and failure to comply with pre-deposit requirements. The Adjudicating Authority had enhanced the Customs Duty to Rs.3,41,984/-, and the Commissioner (Appeals) dismissed the Appeal due to non-fulfillment of pre-deposit at the time of filing the Appeal. The Tribunal had directed the Appellant to confirm their position by a certain date, but the Appellant failed to do so, showing a lack of interest in following proper procedures. The Tribunal proceeded to dispose of the Appeal on merits with the help of the Authorized Representative (AR) since the Appellant did not participate.

The Commissioner (Appeals) had found that the Appellant had filed an Appeal against the Order-in-Original, making a pre-deposit of Rs.7,500/- as required by Section 129E of the Customs Act, 1962. However, the lower authority had re-determined the duty at Rs.3,41,984.11/- and imposed a penalty of Rs.1,00,000/-. Section 129E mandates a deposit of seven and a half percent of the duty when in dispute, but the Appellant had only deposited the same percentage of the penalty, leading to non-compliance with the pre-deposit requirements. The Commissioner (Appeals) had dismissed the Appeal due to this non-fulfillment, and the Appellant's failure to provide any explanation or comply with the Tribunal's directions led to the dismissal of the Appeal by the Tribunal as well.

In conclusion, the judgment highlighted the importance of complying with pre-deposit requirements under Section 129E of the Customs Act, 1962 for entertaining Appeals. The Appellant's non-appearance, lack of interest in following procedures, and failure to fulfill pre-deposit obligations ultimately led to the dismissal of the Appeal by the Appellate Tribunal CESTAT KOLKATA.

Appeal Dismissed for Non-Compliance with Pre-Deposit Requirements Under Customs Act; Appellant Failed to Participate.
The Appellate Tribunal CESTAT KOLKATA dismissed the Appeal due to the Appellant's non-compliance with pre-deposit requirements under Section 129E of the Customs Act, 1962. Despite multiple notices, the Appellant failed to appear or deposit the required amount, which was seven and a half percent of the disputed duty, instead depositing only the penalty percentage. The Commissioner (Appeals) had previously dismissed the Appeal for similar reasons. The Tribunal emphasized the necessity of adhering to procedural requirements, leading to the dismissal of the Appeal in the absence of the Appellant's participation or compliance.

2023 (11) TMI 392 - ITAT RAIPUR Income Tax

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Issues: (i) Whether the revisionary assumption of jurisdiction under section 263 in relation to the section 43CA issue was valid; (ii) whether the approval granted under section 153D for the assessment order was mechanical and invalid; (iii) whether addition or revision could be sustained for the relevant search years in the absence of incriminating material.

Issue (i): Whether the revisionary assumption of jurisdiction under section 263 in relation to the section 43CA issue was valid.

Analysis: The record showed that the Assessing Officer had examined the sale transaction issue, but the Principal Commissioner found that the enquiry on the applicability of section 43CA was incomplete and that the material on record did not justify acceptance of the assessee's claim without further verification. The revisional authority also considered the assessee's replies and additional material, but held that the assessment order suffered from lack of proper enquiry and was therefore erroneous and prejudicial to the interests of the Revenue.

Conclusion: The revision under section 263 on the section 43CA issue was upheld and is against the assessee.

Issue (ii): Whether the approval granted under section 153D for the assessment order was mechanical and invalid.

Analysis: The assessee challenged the prior approval on the ground that it was granted without independent application of mind. The Tribunal found that this contention depended on factual verification of the assessment records and the inter se correspondence between the Assessing Officer and the approving authority. Since those facts required further examination, the issue was not finally decided on merits and was sent back for fresh adjudication.

Conclusion: The section 153D challenge was partly allowed by remand for fresh consideration.

Issue (iii): Whether addition or revision could be sustained for the relevant search years in the absence of incriminating material.

Analysis: The assessee invoked the law relating to completed and unabated assessments in search cases, contending that no addition could be made without incriminating material. The Tribunal noted that no such foundational factual finding was available from the assessment or revisional records and, in the absence of those facts, declined to accept the contention at this stage.

Conclusion: The challenge based on absence of incriminating material was rejected.

Final Conclusion: The revisional order was substantially sustained, but the challenge relating to approval under section 153D was sent back for reconsideration, resulting in a partial success for the assessee.

Ratio Decidendi: Revision under section 263 is sustainable where the assessment is found to suffer from inadequate enquiry on a material issue, while a challenge to the validity of section 153D approval may require factual verification before final determination.

Revision for inadequate enquiry under section 263 sustained, while section 153D approval challenge was remanded for factual verification.
Revision under section 263 was sustained where the assessment on the section 43CA issue was found to have been made without proper enquiry, rendering the order erroneous and prejudicial to the Revenue. The challenge to the section 153D approval was not finally decided because it depended on verification of the assessment records and correspondence to determine whether the approval was mechanical; the matter was remanded for fresh consideration. The contention that additions or revision for the search years were impermissible in the absence of incriminating material was rejected at this stage because the necessary factual foundation was not available on the record.

Revisionary jurisdiction under Section 263 - principles of natural justice - opportunity of hearing - Explanation 2 to Section 263 - adequacy of inquiry - Section 153A block assessment - incriminating material requirement for completed assessments - validity of approval under Section 153D - application of mind - audit objection / borrowed satisfactionRevisionary jurisdiction under Section 263 - principles of natural justice - opportunity of hearing - Explanation 2 to Section 263 - adequacy of inquiry - Sustainability of the Principal CIT's order under Section 263 setting aside the assessment and whether principles of natural justice were complied with. - HELD THAT: - The Tribunal examined the PCIT's satisfaction note, the notices issued under Section 263, and the multiple written submissions filed by the assessee. The PCIT recorded the assessee's replies, considered the assessment record and concluded that enquiries and verifications required in respect of applicability of section 43CA had not been adequately conducted by the AO. Applying Explanation 2 to Section 263 (w.e.f. 01/06/2015), the Tribunal held that the PCIT's invocation of revisionary jurisdiction was within law where, on consideration of the records and submissions, the PCIT formed a view that necessary inquiries were not made by the AO. The Tribunal further found that the assessee was given opportunity to file written submissions (and did so three times) and that the PCIT considered those replies; there was therefore no fatal breach of audi alteram partem rendering the order void. Consequently, the Tribunal sustained the PCIT's order insofar as it set aside the assessment and remitted the matter to the AO for fresh adjudication. [Paras 21, 23, 24]PCIT's order under Section 263 is sustained; assessment remitted to the AO for fresh adjudication after making such inquiries as necessary.Section 153A block assessment - incriminating material requirement for completed assessments - Whether additions can be made for a completed (non-abated) assessment year in absence of incriminating material found during search. - HELD THAT: - The Tribunal noted the assessee's contention that AY 2014-15 (and other earlier years) were completed prior to the search and that no incriminating material pertaining to those years was found; reliance was placed on the Supreme Court guidance in Abhisar Buildwell. The Tribunal observed that the assessment order does not on its face record the absence of incriminating material for the year and that the Tribunal cannot act as an investigator to supply missing factual material. In the absence of contemporaneous record on this point before the Tribunal, the plea that no incriminating material was found could not be sustained at this stage. [Paras 19, 20]Assessee's ground that completed/unabated assessment years cannot be reopened in absence of incriminating material is rejected for want of factual record on file; the contention is not accepted at this stage.Validity of approval under Section 153D - application of mind - Validity of the prior approval under Section 153D - whether the JCIT's approval was mechanical and therefore rendered the combined assessment void-ab-initio. - HELD THAT: - The assessee challenged the 153D approval as perfunctory, contending draft orders were placed before the approver without perusal of the assessee's later submissions. The Revenue produced material showing interactions between AO and range head, and the AO's report indicating deliberations prior to approval. Because the issue turns on verification of factual material and the manner in which the approver applied mind, the Tribunal found it appropriate in the interests of natural justice to remit the question to the AO for fresh adjudication and verification. The Tribunal permitted the assessee to press this ground before the Revenue authorities and directed fresh consideration. [Paras 14]Issue as to validity of approval under Section 153D is remitted to the file of the AO/approving authority for fresh consideration and verification.Audit objection / borrowed satisfaction - Explanation 2 to Section 263 - adequacy of inquiry - Whether initiation of Section 263 proceedings on the basis of a Revenue Audit objection (borrowed satisfaction) renders the revisional order invalid. - HELD THAT: - The Tribunal reviewed the PCIT's exercise of jurisdiction where issues had been highlighted by Revenue Audit. Applying applicable CBDT instruction and judicial precedents, the Tribunal held that mere origin of the issue in an audit objection does not preclude the PCIT from exercising revisionary powers. What is required is that the PCIT apply independent mind, consider whether adequate enquiries were made by the AO, and decide whether the AO's order is erroneous and prejudicial to revenue. On the material before it the Tribunal found that the PCIT had considered records and formed a view warranting revision; thus the 'borrowed satisfaction' challenge failed. [Paras 22, 23]Assessee's plea that Section 263 proceedings are invalid because initiated on audit objection is rejected; PCIT was entitled to examine and exercise jurisdiction after considering records.Final Conclusion: The Tribunal partly allows the appeals: it upholds the Principal CIT's exercise of revisionary jurisdiction under Section 263 (finding no fatal breach of natural justice) and restores the matter to the AO for fresh adjudication; it rejects the assessee's challenge to reopen completed years for want of proved incriminating material on record at this stage; and it remits the specific question as to validity of the Section 153D approval to the file of the AO/approving authority for fresh verification. The decision in the lead appeal applies mutatis mutandis to the remaining assessment years.

2023 (11) TMI 361 - HIMACHAL PRADESH HIGH COURT Indian Laws

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Issues: (i) Whether an offence under Section 138 of the Negotiable Instruments Act, 1881 could be compounded after conviction on the basis of a subsequent compromise between the parties; (ii) whether the compounding fee could be reduced in the facts of the case.

Issue (i): Whether an offence under Section 138 of the Negotiable Instruments Act, 1881 could be compounded after conviction on the basis of a subsequent compromise between the parties.

Analysis: The parties had amicably settled the dispute and the complainant had received the cheque amount along with additional payment in full and final settlement. Section 147 of the Negotiable Instruments Act, 1881 makes offences under the Act compoundable notwithstanding the Code of Criminal Procedure, 1973, and the settled law permits compounding even after conviction. The compromise was therefore legally acceptable and there was no impediment to setting aside the conviction.

Conclusion: The offence was validly compounded after conviction, and the conviction was liable to be set aside in favour of the accused.

Issue (ii): Whether the compounding fee could be reduced in the facts of the case.

Analysis: The applicable guidelines prescribe graded costs for delayed compounding, but they also permit reduction of such costs depending on the facts and circumstances of the case. Considering the accused's financial condition and the stage at which compounding was sought, the Court exercised discretion to reduce the compounding fee to a token amount.

Conclusion: The compounding fee was reduced and token costs were directed to be deposited.

Final Conclusion: The compromise was accepted, the conviction under Section 138 stood annulled, and the matter was closed on payment of reduced compounding costs.

Ratio Decidendi: Section 147 of the Negotiable Instruments Act, 1881 permits compounding of an offence under Section 138 even after conviction, and the court may reduce the compounding costs where the facts justify such exercise of discretion.

Post-conviction cheque dishonour compounding permits conviction annulment when settlement is complete, with discretionary reduction of delayed-compounding costs.
Section 147 of the Negotiable Instruments Act permits compounding of a Section 138 cheque dishonour offence notwithstanding the Code of Criminal Procedure, including after conviction. Where parties reach a full and final settlement and the complainant receives the cheque amount and agreed additional payment, the compromise can support annulment of the conviction. Graded costs for delayed compounding may be reduced on the facts, including the accused's financial condition and the stage of settlement. Reduced token costs may be directed for deposit.

Compounding of offence under Section 147 of the Negotiable Instruments Act - Acquittal on compromise after conviction under Section 138 of the Negotiable Instruments Act - Acceptance of compromise post-conviction in light of Damodar S. Prabhu and K. Subramanian - Judicial discretion to moderate compounding fee in accordance with guidelinesCompounding of offence under Section 147 of the Negotiable Instruments Act - Acquittal on compromise after conviction under Section 138 of the Negotiable Instruments Act - Acceptance of compromise post-conviction in light of Damodar S. Prabhu and K. Subramanian - Whether the conviction under Section 138 of the Negotiable Instruments Act can be set aside and the accused acquitted pursuant to an amicable compromise accepted under Section 147 of the Act. - HELD THAT: - The Court held that Section 147, being an enabling provision with a non-obstante clause, permits compounding of offences under the Negotiable Instruments Act even after conviction, and that the scheme of Section 320 CrPC is not strictly determinative in view of Section 147. Applying the principles in Damodar S. Prabhu and K. Subramanian, the Court accepted the parties' compromise - the complainant having received the agreed full and final settlement - and found no impediment to compounding the offence and setting aside the conviction. In consequence, the conviction recorded by this Court on 6.9.2023 was quashed and the accused was acquitted of the charge under Section 138. [Paras 3, 5, 6, 7]The Court permitted compounding under Section 147, quashed the judgment dated 6.9.2023 and acquitted the accused of the offence under Section 138.Judicial discretion to moderate compounding fee in accordance with guidelines - Graded scale of costs in K. Subramanian and power to reduce fee for special circumstances - What compounding fee should be imposed in the present case in view of the K. Subramanian guidelines and the accused's financial condition. - HELD THAT: - The Court applied the graded scheme of costs indicated in K. Subramanian while recognising the competent court's discretion to reduce the prescribed percentage in appropriate cases on recorded reasons. Considering the submission that the accused is poor and the Court's power to moderate the fee, the Court exercised its discretion to reduce the compounding fee and directed deposit of a token fee with the State Legal Services Authority within a specified period. [Paras 8, 9, 10]The petitioner was directed to deposit a token compounding fee of Rs.2,500 with the H.P. State Legal Services Authority, Shimla, within four weeks.Final Conclusion: The Court accepted the parties' compromise under Section 147 of the Negotiable Instruments Act, quashed the conviction dated 6.9.2023 and acquitted the accused of the offence under Section 138, and, exercising judicial discretion under the guidelines in K. Subramanian, imposed a reduced compounding fee of Rs.2,500 to be deposited with the State Legal Services Authority within four weeks.

2023 (11) TMI 347 - GUJARAT HIGH COURT Income Tax

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Rectification and scope of assessment material in search proceedings: assessments limited to material from searched premises; rectification denied
The text addresses whether incriminating material found during search can be used to frame assessments of persons other than the searched person and the scope for rectification under the appellate rectification provision. It explains the legal standard that documents seized must belong to the assessee rather than merely pertain to or relate to them for jurisdiction under the special search-assessment provisions, and that assessments under special search proceedings must be founded on material recovered from the searched premises only; consequence: rectification was refused where the Tribunal had examined merits. It also addresses limitation constraints on assessment and the temporal reduction of the rectification window, affecting reliance on later precedent.

Applicability of amended Section 153C - date of search as trigger for jurisdiction - Jurisdictional requirement under pre amendment Section 153C - seized documents must 'belong to' the other person - Scope of assessment under Section 153A - additions to be founded on incriminating material seized from the assessee's premises - Limitation under Section 153B - computation from conclusion of search; effect of prohibitory orders under Section 132(3) - Reopening under Section 147 - requirement of independent 'reasons to believe' and prohibition on borrowed satisfaction - Rectification jurisdiction under Section 254(2) - confined to obvious and patent mistakes apparent on record - Prohibition on revisiting merits by rectification - remedy by appeal where factual or legal errors are debatableApplicability of amended Section 153C - date of search as trigger for jurisdiction - Jurisdictional requirement under pre amendment Section 153C - seized documents must 'belong to' the other person - Rectification jurisdiction under Section 254(2) - confined to apparent mistakes - Whether proceedings under Section 153C could be sustained where search was conducted prior to 01.06.2015 but the satisfaction/notice recorded/issued after amendment expanding 'belongs to' to 'pertains to' and whether the Tribunal erred in not rectifying its order. - HELD THAT: - The Court accepted the Tribunal's conclusion that the date of search is the trigger for applying the statutory scheme under Section 153C and, therefore, for searches concluded prior to 01.06.2015 the pre amendment test ('belongs to') governs. The Tribunal examined the satisfaction notes and found they recorded that seized documents 'contain information which relates to/pertains to' the assessee and did not assert that the documents 'belonged to' the assessee. Relying on the jurisdictional High Court decisions reproduced by the Tribunal, the Court held that the widened scope introduced by the amendment could not be applied retrospectively to searches concluded before 01.06.2015 so as to change the essential jurisdictional predicate. Further, the Court held that the Revenue's Miscellaneous Applications under Section 254(2) seeking rectification did not point to any obvious and patent mistake apparent on the face of the Tribunal's order; the grievances raised required re examination of factual and legal merits and thus were not amenable to rectification but to appeal. The Court also noted that a later Supreme Court decision (relied upon by Revenue) post dated the MA order and fell outside the six month rectification window introduced by the amended Section 254(2).Tribunal's view that pre 1.6.2015 searches must satisfy the 'belongs to' test upheld; quashing of assessments based on 'pertains to/relates to' for such searches sustained; rectification under Section 254(2) refused as no mistake apparent on record.Scope of assessment under Section 153A - additions to be founded on incriminating material seized from the assessee's premises - Prohibition on use of material seized from third parties in Section 153A proceedings - Rectification jurisdiction under Section 254(2) - not a vehicle to reopen debated factual or legal conclusions - Whether assessments under Section 153A can be founded on incriminating material seized from premises of third parties (and not from the assessee's own premises), and whether the Tribunal erred in declining rectification. - HELD THAT: - The Court endorsed the Tribunal's detailed analysis of authorities (including Kabul Chawla and decisions of the jurisdictional High Court) that the object and scheme of Section 153A require that additions or disallowances for a particular assessment year must have nexus with incriminating material found in the course of search or requisition in respect of that assessee; material seized from other persons cannot be used in 153A proceedings against the searched person unless Section 153C is invoked. The Tribunal had considered precedent, facts and the law and reached a view on merits; the Revenue's Miscellaneous Applications merely challenged those merit findings and did not point to any patent mistake on the face of the record. The Court held that such disputed questions of fact and law cannot be corrected by Section 254(2) rectification and are amenable to appeal, not to rectification.Tribunal's approach that additions under Section 153A must be based on incriminating material from the assessee's own premises affirmed; rectification refused for want of a mistake apparent on record.Limitation under Section 153B - computation from conclusion of search; effect of prohibitory orders under Section 132(3) - Validity of prohibitory orders - practicability to seize and effect on limitation - Rectification jurisdiction under Section 254(2) - confined to patent mistakes - Whether assessments framed under Section 153A were time barred under Section 153B because the last panchnama/conclusion of search occurred earlier and prohibitory orders (Section 132(3)) could not be used to extend limitation where there was no justification to refrain from seizure, and whether rectification was permissible. - HELD THAT: - The Court agreed with the Tribunal's reading of Section 153B that limitation for block assessments is computed with reference to the conclusion of search as recorded in the last panchnama; Explanation (2) and the authorities make clear that a prohibitory order under Section 132(3) does not, by itself, enlarge the starting point for limitation unless justification for non seizure is demonstrated. On the facts examined by the Tribunal (including that only a limited set of pages were seized on revocation), it concluded that the prohibitory orders were not justified to prolong the search and, therefore, the assessments fell beyond the statutory period. The Revenue's contention that the Tribunal misread precedents was a merits plea not establishing an apparent mistake; rectification was therefore unavailable.Tribunal's finding that assessments under Section 153A were time barred in relevant cases (in absence of justified prohibitory orders) upheld; rectification under Section 254(2) refused.Reopening under Section 147 - requirement of independent 'reasons to believe' and prohibition on borrowed satisfaction - Use of search material for invoking Section 147 for years outside 153A scope - Rectification jurisdiction under Section 254(2) - not to substitute appellate remedy - Whether reassessments under Section 147 were valid where the 'reasons to believe' were held by the Tribunal to be borrowed (i.e., mere reproduction of investigation wing material without AO's independent application of mind), and whether the Tribunal erred in refusing rectification. - HELD THAT: - The Court accepted the Tribunal's conclusion that material discovered during search can be used to invoke Section 147 for years not covered by Section 153A, provided the statutory preconditions for Section 147/148 are satisfied. However, the Tribunal found on the record that the reasons recorded for reopening were conclusions copied from investigation material and lacked independent application of mind (borrowed satisfaction), rendering the reopening invalid. The Revenue's Miscellaneous Application did not show any obvious, patent mistake in the Tribunal's reasoning; it raised disputed questions of fact and law which must be addressed by appeal rather than rectification. The Court relied on precedent restricting Section 254(2) to patent errors and not to merits re appraisal.Tribunal's finding that the reasons for reopening under Section 147 amounted to borrowed satisfaction sustained; rectification refused as not based on an apparent mistake.Final Conclusion: The High Court upheld the Income Tax Appellate Tribunal's compartmentalised findings: (i) for searches concluded before 01.06.2015 Section 153C's pre amendment 'belongs to' test governs and assessments based on mere 'pertains to/relates to' were quashed; (ii) additions under Section 153A must be founded on incriminating material seized from the assessee's premises; (iii) limitation under Section 153B is computed from the conclusion of search and unjustified prohibitory orders cannot extend limitation; and (iv) reassessments based on borrowed satisfaction under Section 147 are unsustainable. Applications for rectification under Section 254(2) were dismissed throughout because the errors alleged were not obvious and patent but involved contested factual or legal questions which require appeal."}}

2023 (11) TMI 302 - CESTAT MUMBAI Central Excise

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Marketability of printed railway materials determines excise liability when printing gives products their essential character.
Printed forms, registers, books and similar in-house railway materials fall under Chapter 49 as products of the printing industry where printing gives them their essential character, rather than under Chapter 48. Central excise liability also requires marketability: the goods must be capable of being bought and sold, and the burden of proving this rests on the Revenue. Materials carrying railway-specific particulars and produced solely for internal use are not dutiable where marketability is not established. Consequently, duty demands, penalties and interest do not survive.

Product of the printing industry - classification under Chapter 49 as printed matter - exclusion from Chapter 48 - marketability as an essential ingredient of excisable goods - onus on Revenue to prove marketability - printing must bring the product into existence or impart substantial characterProduct of the printing industry - classification under Chapter 49 as printed matter - exclusion from Chapter 48 - printing must bring the product into existence or impart substantial character - Printed books, forms and other stationery produced in the zonal railway press are products of the printing industry and are classifiable under Chapter 49 (and not Chapter 48) for the purposes of excise. - HELD THAT: - The Tribunal's precedents establish that printed forms, tickets and similar items that are essentially printed matter remain classifiable under Chapter 49 even if left with blank portions for later completion, because the printing imparts the character and purpose to the product. Applying the ratio in Metagraphs and subsequent Tribunal decisions, printing that brings the product into existence or confers its essential quality makes the item a product of the printing industry. The impugned printed materials produced for the railway consist of pre-printed forms and documents carrying detailed information such that they fall within Chapter 49. Consequently they are not to be treated as falling under Chapter 48 as held by the lower authorities.Classification of the disputed printed products is under Chapter 49 and not Chapter 48; they are therefore not exigible to duty on classification grounds.Marketability as an essential ingredient of excisable goods - onus on Revenue to prove marketability - The printed materials produced by the zonal railway press are not marketable goods and the Revenue has failed to discharge the onus of proving marketability; accordingly they are not exigible to excise duty on the test of marketability. - HELD THAT: - Authority of the Supreme Court and Tribunal decisions confirm that marketability - the capability of being bought and sold as a distinct commodity known to commerce - is an essential ingredient for excisability. The Revenue bore the burden to prove that the printed products were marketable. The materials in question were printed expressly for the internal administrative use of the railway, bearing the railway's name and particulars, and were neither capable of being nor shown to have been bought and sold in the market. In absence of evidence from the Revenue to establish marketability, the claim that these are excisable goods fails.Printed products used exclusively in-house by the railway are not marketable; the Revenue did not prove marketability, hence the goods are not exigible to duty on this ground.Final Conclusion: Both appeals allowed. The impugned orders confirming duty, penalty and interest are set aside: the disputed printed materials are classifiable as products of the printing industry under Chapter 49 and, being not shown to be marketable, are not exigible to central excise for the stated periods.

2023 (11) TMI 284 - ITAT PUNE Income Tax

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Unexplained investment in plot purchase upheld under section 69 despite sale deed registered in subsequent year
ITAT Pune upheld addition under section 69 for unexplained investment in plot purchase. Survey at developer's premises revealed on-money payments by various purchasers including assessee. Other plot buyers disclosed similar payments under Income Declaration Scheme 2016. Tribunal rejected assessee's argument that addition should be made in subsequent year when sale deed was registered, holding that section 69 applies in the year of making unrecorded investment, not when transaction completes. Addition of Rs. 37 lakh on-money payment was confirmed as assessee failed to provide satisfactory explanation and amount was not recorded in books. Appeal dismissed.

Unexplained investment deemed income under Section 69 - On money payments treated as unexplained investment - Point of taxation: year of making the unrecorded investment - Reliance on impounded documents and survey records under Section 133AUnexplained investment deemed income under Section 69 - On money payments treated as unexplained investment - Reliance on impounded documents and survey records under Section 133A - Addition of Rs. 18,50,000 u/s 69 on account of unexplained on money paid for purchase of plot No.14 confirmed. - HELD THAT: - The Tribunal accepted the factual findings recorded from the material impounded during Survey u/s 133A at the premises of Mahalaxmi, namely: distinct on money cash book pages recording three cash receipts linked to Plot No.14 (with the name of Naresh Jethalia on cash pages), an on money ledger entry bearing the assessee's name (Nandu Wadhwa) with Naresh Jethalia's name subsequently struck out, matching particulars of plot number and area, and the registered sale deed ultimately vesting the plot in the assessee. The AO's conclusion that the assessee paid on money of Rs. 37 lakh (of which one half, Rs. 18.50 lakh, was attributable to the assessee as equal co owner) was sustained because (i) the ledgers and cash book entries, taken together with Mahalaxmi's admission of receiving on money during survey and its disclosure before the Settlement Commission, established receipt of unrecorded cash relating to the assessee's purchase; (ii) the sequence of events - on money payments in the relevant financial year, later bank cheque payments and eventual execution of sale deed - showed the on money constituted an unrecorded investment in the financial year relevant to the assessment year; and (iii) no satisfactory explanation was offered by the assessee to discharge the onus. The Tribunal rejected the submission that the addition should have been made in the year of registration, holding that Section 69 attracts tax in the year of making the unrecorded investment (the financial year in which the cash payments were made) and not in the year when the sale deed is executed. [Paras 6, 8, 9, 10, 11]The addition of Rs. 18.50 lakh u/s 69, being one half of the Rs. 37 lakh on money found paid in the year under consideration for Plot No.14, is justified and is accordingly confirmed.Final Conclusion: Tribunal dismisses the appeal and upholds the addition of Rs. 18.50 lakh made u/s 69 for Assessment Year 2011-12, finding the impounded survey records, ledger and cash book entries and the subsequent sale deed establish on money payments in the relevant year and that Section 69 applies in the year of making the unrecorded investment.

2023 (11) TMI 273 - SC Order Customs

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Supreme Court dismisses delayed Special Leave Petition; all pending applications disposed by Justices Ravikumar & Kumar.
The SC dismissed the Special Leave Petition after condoning the delay. All pending applications were disposed of. The case was presided over by Justices C. T. Ravikumar and Sanjay Kumar.

2023 (11) TMI 267 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB Insolvency and Bankruptcy

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Issues Involved:
1. Objection to the Resolution Plan by the Appellant.
2. Classification of Homebuyers as affected and unaffected.
3. Application of the doctrine of promissory estoppel.

Summary:

1. Objection to the Resolution Plan by the Appellant:
The Appellant objected to the Resolution Plan submitted by M/s Kabra Estate and Investment Consultant, which was approved by the National Company Law Tribunal, Mumbai Bench. The Appellant argued that the Resolution Plan discriminated against them by treating their claim differently from other homebuyers due to the lack of a No Objection Certificate (NOC) from LIC Housing Finance Limited (LICHFL). The Adjudicating Authority rejected the objection, stating that the Resolution Plan had been approved by the homebuyers as a class, and individual objections could not be entertained. This decision was based on the Supreme Court judgment in Jaypee Kensington Boulevard Apartments vs. NBCC (India) Limited and others, (2022) 1 SCC 401.

2. Classification of Homebuyers as affected and unaffected:
The Resolution Plan categorized homebuyers into two groups: affected and unaffected. Affected homebuyers were those who did not obtain NOC from LICHFL, while unaffected homebuyers had obtained the NOC. The Appellant contended that this classification was arbitrary and illegal. However, the Tribunal upheld the classification, referencing a similar issue addressed in the judgment of Sabari Reality Pvt. Ltd. vs. Sivana Realty Pvt. Ltd. & Ors., where the classification was deemed justified and not in violation of Section 30(2)(e) of the Insolvency and Bankruptcy Code (IBC).

3. Application of the doctrine of promissory estoppel:
The Appellant argued that the principle of promissory estoppel should apply, as the Resolution Professional (RP) had initially admitted their claim for 10 flats. They cited Supreme Court judgments in Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P. and Manuelsons Hotels (P) Ltd. v. State of Kerala to support their argument. However, the Tribunal concluded that the doctrine of promissory estoppel could not be applied to a Resolution Plan approved by the Committee of Creditors (CoC) in its commercial wisdom. The Tribunal reasoned that the Resolution Applicant had not made any promises to the creditors and that the acceptance of claims by the RP did not bind the Resolution Applicant.

Conclusion:
The Tribunal dismissed the Appeal, finding no merit in the objections raised by the Appellant. The classification of homebuyers was upheld, and the application of promissory estoppel was deemed inapplicable to the Resolution Plan. The Adjudicating Authority's decision to reject the objections to the Resolution Plan was affirmed.

Resolution applicant not bound by promissory estoppel for rejected creditor claims under Section 30(2) IBC
NCLAT Principal Bench dismissed appeal challenging resolution plan rejection. Appellant sought to invoke promissory estoppel doctrine against resolution applicant after resolution professional admitted claim for 10 flats. Tribunal held that promissory estoppel cannot be applied against resolution applicant who submits plan based on information memorandum and creditor lists. Resolution applicant made no promise to accept all creditor claims in totality. Resolution plan complied with Section 30(2) IBC and CIRP Regulations 2016 requirements. Committee of creditors approved plan in commercial wisdom. Adjudicating authority correctly rejected appellant's objections to resolution plan.

Homebuyers as a class estoppel against individual opposition to an approved resolution plan - Classification of homebuyers as affected and unaffected creditors justified - Promissory estoppel not available to bind a Resolution Applicant or to challenge a resolution plan approved by the Committee of Creditors - Commercial wisdom of the Committee of Creditors and finality of approval under the insolvency scheme - Compliance with Section 30(2) of the IBC and CIRP Regulations, 2016 as determinative of plan challengeabilityHomebuyers as a class estoppel against individual opposition to an approved resolution plan - Commercial wisdom of the Committee of Creditors - An individual homebuyer who is a constituent of the class that voted in favour of a resolution plan cannot individually oppose the plan after class approval. - HELD THAT: - The Tribunal applied the principle laid down in Jaypee Kensington Boulevard Apartments that where homebuyers as a class are deemed to have voted in favour of a resolution plan, a particular constituent of that class is estopped from opposing the plan by way of objection or appeal. The Adjudicating Authority's rejection of the appellant's objection on this ground was held to be correct. The Tribunal observed that the plan was approved by the requisite majority of homebuyers and that the statutory scheme treats the class approval as binding on individual constituents. [Paras 9]Objection by the appellant, being a constituent of the approving homebuyers' class, is barred and the Adjudicating Authority rightly rejected the IA on this ground.Classification of homebuyers as affected and unaffected creditors justified - Compliance with Section 30(2) of the IBC and CIRP Regulations, 2016 - The division of homebuyers into 'affected' and 'unaffected' categories in the resolution plan is not violative and is a permissible classification. - HELD THAT: - The Tribunal referred to and followed its prior decision in Sabari Reality Pvt. Ltd. v. Sivana Realty Pvt. Ltd. which considered whether such categorisation contravenes the Code. Applying that precedent, the Tribunal held the classification was justified and did not render the resolution plan contrary to the insolvency law. Consequently, the appellant's contention that the plan discriminated unlawfully between homebuyers was rejected. [Paras 11, 12]Classification of homebuyers into affected and unaffected groups in the resolution plan is justified and does not invalidate the plan.Promissory estoppel not available to bind a Resolution Applicant or to challenge a resolution plan approved by the Committee of Creditors - Commercial wisdom of the Committee of Creditors - The doctrine of promissory estoppel cannot be invoked to bind the Resolution Applicant or to defeat a resolution plan which complies with statutory requirements and is approved by the CoC. - HELD THAT: - Although the Resolution Professional had, by communication, admitted the appellant's claim for certain flats, the Tribunal held that acceptance of a claim in the CIRP process does not operate as a promise by a prospective Resolution Applicant that the claim will be accepted in full in the submitted plan. The Tribunal explained that a resolution plan is formulated by a Resolution Applicant in reliance on the information memorandum and admitted claims, but the plan's terms are a product of the applicant's proposal and the CoC's commercial decision. If the plan complies with Section 30(2) and the CIRP Regulations, it cannot be set aside on the basis of promissory estoppel against the Resolution Applicant. Accordingly, the appellant's reliance on promissory estoppel was rejected. [Paras 13, 14, 15]Promissory estoppel does not provide a ground to challenge the resolution plan as against the Resolution Applicant or the CoC's approved plan; the appellant's estoppel-based plea fails.Final Conclusion: The Tribunal found no merit in the appellant's objections: (i) an individual homebuyer who is part of the class that approved the resolution plan cannot oppose it; (ii) the classification of homebuyers into affected and unaffected categories was justified; and (iii) promissory estoppel could not be invoked to nullify or impede a resolution plan compliant with the Code and approved by the CoC. The appeal is dismissed.

2023 (11) TMI 266 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI Insolvency and Bankruptcy

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Issues: (i) Whether the resolution plan was liable to be rejected for allegedly barring homebuyers from pursuing rights and claims under the Real Estate (Regulation and Development) Act, 2016 in respect of future violations. (ii) Whether the increase in the sale price / MSP and the related alterations in project terms amounted to an impermissible rewriting of the original allotment contracts or demonstrated non-application of commercial wisdom by the Committee of Creditors.

Issue (i): Whether the resolution plan was liable to be rejected for allegedly barring homebuyers from pursuing rights and claims under the Real Estate (Regulation and Development) Act, 2016 in respect of future violations.

Analysis: The impugned clauses were read as operating only in respect of past acts, past claims, and claims up to the approval or effective date of the plan. The restriction on approaching the RERA forum was treated as confined to pre-resolution defaults, and not as creating a blanket embargo on future violations after the effective date. The plan was therefore not found to contravene the statutory framework merely because it superseded earlier remedies for prior defaults.

Conclusion: The objection based on alleged extinction of future RERA rights failed and the clause was upheld as relating only to past claims.

Issue (ii): Whether the increase in the sale price / MSP and the related alterations in project terms amounted to an impermissible rewriting of the original allotment contracts or demonstrated non-application of commercial wisdom by the Committee of Creditors.

Analysis: The revised pricing and altered project terms were treated as part of the restructuring mechanism under the insolvency framework. The determination of MSP was regarded as a commercial decision taken for revival of the corporate debtor, and the plan was held capable of modifying earlier contractual arrangements where necessary for implementation. No illegality was found in the fixation of a uniform MSP for the class of homebuyers.

Conclusion: The challenge to the revised pricing and the commercial decision of the Committee of Creditors failed.

Final Conclusion: The resolution plan was found to be legally sustainable, and the appeal did not disclose any ground to interfere with the order rejecting the application.

Ratio Decidendi: A resolution plan may validly supersede prior contractual arrangements and pre-resolution remedies, and objections to its commercial terms will not succeed unless a clear statutory infraction is shown; pre-approval claims can be extinguished, but future violations remain outside such extinguishment.

Resolution plan terms may supersede prior contracts and pre-resolution claims; future violations remain outside that extinguishment.
A resolution plan under the insolvency framework may lawfully supersede prior contractual arrangements and pre-resolution remedies where the clauses are confined to past acts, past claims and claims up to the approval or effective date. The restriction on pursuing RERA remedies was upheld because it did not operate as a blanket bar on future violations after the plan became effective. The revised sale price and altered project terms were treated as part of the revival exercise, and the Committee of Creditors' commercial decision to fix a uniform MSP for homebuyers was not found to be unlawful. The challenge to the plan therefore failed.

Validity of resolution plan vis-a -vis RERA rights - Extinguishment of pre-approval RERA claims by approved resolution plan - Non-impairment of future RERA claims - Compliance with Section 30(2)(e) of the IBC regarding non-violation of applicable law - Commercial wisdom of the Committee of Creditors - Modification of pre-existing contracts under a resolution plan - Powers to alter project layout subject to statutory approvalsValidity of resolution plan vis-a -vis RERA rights - Extinguishment of pre-approval RERA claims by approved resolution plan - Non-impairment of future RERA claims - Compliance with Section 30(2)(e) of the IBC regarding non-violation of applicable law - Whether clauses in the approved Resolution Plan unlawfully bar homebuyers from pursuing future claims or complaints under RERA, thereby breaching Section 30(2)(e) of the IBC. - HELD THAT: - The Tribunal examined clauses 8.6, 9.1.2 and 10.3 of the Resolution Plan and observed that clauses 8.6 and 9.1.2 expressly refer to 'past acts' and pertain to claims and breaches up to the Effective Date. Clause 10.3 similarly contemplates disposal and extinguishment of claims against the Corporate Debtor prior to the Approval date and preclusion of admission of claims pertaining to events before the Effective Date. The plan, therefore, operates to forfeit or deal with pre-existing RERA claims as part of the resolution process but does not create an embargo on fresh or future claims arising after the Effective Date. The Tribunal accepted the Adjudicating Authority's finding that forfeiture of remedies in relation to past defaults is not prejudicial where the Code overrides inconsistent provisions and the CoC's treatment of agreements is within its powers so long as the plan is viable and conforms to commercial wisdom. [Paras 10]Clauses in the Resolution Plan extinguish or bar only pre-Effective Date RERA claims; they do not preclude future RERA claims, and therefore do not constitute non-compliance with Section 30(2)(e) as contended.Powers to alter project layout subject to statutory approvals - Modification of pre-existing contracts under a resolution plan - Whether the Plan's provisions empowering alteration of layout, building plans or amenities unlawfully permit unilateral changes contrary to RERA or existing agreements. - HELD THAT: - The Tribunal considered Clauses 8.7, 8.9 and 8.20 which authorize the Resolution Applicant/Corporate Debtor to reconfigure layout, building plans, height, location, common areas and specifications. The Tribunal construed these clauses as permitting alterations subject to obtaining necessary approvals from competent authorities, a requirement expressly recorded in Clause 8.20. The Plan does not confer unfettered power to effect modifications without statutory permissions. Consequently, the clauses cannot be impugned on the ground that they permit impermissible unilateral modification in violation of RERA or other statutory requirements. [Paras 12]The provisions permitting alteration of layout and specifications are permissible insofar as modifications are to be carried out subject to requisite statutory approvals; no infirmity is found.Commercial wisdom of the Committee of Creditors - Modification of pre-existing contracts under a resolution plan - Whether fixation of a new Minimum Sale Price (MSP) by the Resolution Applicant and its approval by the CoC (thereby altering earlier contractual price commitments) is impermissible or indicative of failure to exercise commercial wisdom. - HELD THAT: - The Tribunal noted that the resolution process under the IBC contemplates revision of existing arrangements to revive the corporate debtor. The fixation of MSP (challenged by the appellants as higher than originally agreed prices) is a commercial decision taken by the CoC and, once approved by the requisite votes, is to be presumed as an exercise of commercial wisdom. Fixing MSP uniformly for a class of homebuyers and taking into account factors such as construction costs falls within the commercial domain of the CoC and the Resolution Applicant. The Tribunal found no failure in the exercise of commercial wisdom merely because the MSP differs from original promises made by the corporate debtor. [Paras 14, 15]Approval of the MSP and the modification of earlier contractual terms by the Resolution Plan are permissible exercises of commercial wisdom by the CoC; no ground to fault the Plan on these counts is found.Final Conclusion: The Adjudicating Authority did not err in rejecting IA No.2953; the challenged clauses of the Resolution Plan deal with pre-Effective Date RERA claims and do not bar future RERA remedies, the Plan's powers to alter layout are subject to statutory approvals, and the CoC's fixation of MSP and modification of prior contracts are valid commercial decisions. The appeal is dismissed.

2023 (11) TMI 259 - CESTAT MUMBAI Service Tax

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Issues involved:
The issue involved in this case is whether the electronically received data can be considered as physical goods for the purpose of determining the place of provision of services, impacting the eligibility for refund of accumulated CENVAT credit.

Summary:
The Appellant provided support services related to data development and maintenance, information technology, outsourcing, and data processing to its holding company in the United States. The Appellant filed four refund claims for accumulated CENVAT credit, asserting that they exported services to the U.S., resulting in the credit accumulation. However, the original authority denied the refund, stating that the data received by the Appellant was considered "intangible goods made physically available" in India, thus not qualifying as an export. The Appellant appealed to the Commissioner (Appeals), who upheld the original authority's decision, rejecting the appeals. The Appellant then approached the Tribunal challenging this decision.

The Appellant argued that data is electronically available, not physically, and cited a CBEC circular stating that the location of the recipient determines the place of provision of service. They contended that since their service recipient was in the U.S., their activity constituted an export of service, making them eligible for the refund. The Authorized Representative supported the original decision.

After reviewing the submissions and records, the Tribunal found that the data received electronically by the Appellant was exported to the U.S., with remuneration received in foreign exchange. Disagreeing with the original authority's characterization of data as physical goods, the Tribunal held that the services provided by the Appellant qualified as exports based on the CBIC clarification. Consequently, the Tribunal set aside all four Orders in Appeal and directed the original authority to process the refund within four weeks.

This judgment clarifies the interpretation of data as physical goods for service provision determination and affirms the eligibility of the services provided by the Appellant as exports, entitling them to the refund of accumulated CENVAT credit.

Tribunal Rules Electronically Transferred Data as Service Exports, Orders Refund of CENVAT Credit to Appellant.
The Tribunal overturned the decisions of the original authority and Commissioner (Appeals), ruling that the electronically received data by the Appellant, provided to its holding company in the U.S., should not be considered as physical goods. The Tribunal determined that the services qualified as exports, following CBIC guidelines, and directed the original authority to process the refund of accumulated CENVAT credit within four weeks. This decision affirms the Appellant's eligibility for the refund, clarifying the interpretation of data in service provision.

Export of services - place of provision of services - electronically supplied data vs intangible goods made physically available - proviso to Rule 4 (a) of Place of Provision of Service Rules 2012 - CBIC clarification on place of provision for data-driven software development services - refund of accumulated CENVAT creditElectronically supplied data vs intangible goods made physically available - place of provision of services - export of services - proviso to Rule 4 (a) of Place of Provision of Service Rules 2012 - CBIC clarification on place of provision for data-driven software development services - refund of accumulated CENVAT credit - Electronically received data is not "intangible goods made physically available"; the place of provision is the location of the recipient and the services qualify as export entitling the appellant to refund of accumulated CENVAT credit. - HELD THAT: - The original authority's conclusion that data received by the appellant constituted "intangible goods made physically available" and thereby rendered the place of provision in India is not accepted. The Tribunal notes that the appellant received data electronically and the resultant product was exported to the recipient abroad with remuneration in convertible foreign exchange. The CBIC clarification dated 04.05.2018 treats services where data and instructions are provided for software development as having the place of provision at the location of the recipient. Applying this clarification and the factual finding that data was electronically supplied to the appellant for processing for a foreign recipient, the services fall within the concept of export of services. Consequently, the appellant's claim for refund of accumulated CENVAT credit for the stated period is sustainable and the impugned appellate orders rejecting the refund are set aside.All four appeals are allowed; the impugned Orders-in-Appeal are set aside and the original authority is directed to grant the refund within four weeks.Final Conclusion: Appeals allowed. The Tribunal holds that electronically received data does not amount to "intangible goods made physically available", the place of provision is the recipient's location abroad, the services qualify as export, and the original authority is directed to grant the refund of accumulated CENVAT credit within four weeks.

2023 (11) TMI 254 - CESTAT MUMBAI Central Excise

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Valuation of excisable goods under Central Excise Act must follow proper procedural requirements under rules 8 and 11
CESTAT Mumbai held that valuation of excisable goods under Central Excise Act, 1944 must follow proper procedural requirements. The tribunal found that rules 6 and 9 of Central Excise Valuation Rules, 2000 could not be invoked as they relate to sales, leaving only rules 8 and 11 applicable. Despite SC precedent in Merino Panel Product Ltd allowing deviation from provisions cited in notices, natural justice requires facts in show cause notice to be basis for adverse action. The appellant failed to establish compliance with rule 8. The impugned order was set aside and matter remanded to original authority for fresh determination of correct duty liability, allowing appeal by way of remand.

Valuation of excisable goods: transaction value versus prescribed alternatives - Assessee liability in job-work/loan licence transactions - Applicability of Central Excise Valuation Rules, 2000 (rules 6, 8, 9, 11) to non-sale job-work clearances - Citation of incorrect source of power not vitiating exercise of statutory power - Binding effect of Board circulars on the Department under executive directionsAssessee liability in job-work/loan licence transactions - Valuation of excisable goods: transaction value versus prescribed alternatives - Liability for central excise duty rests on the job-worker (M/s Kilitch Co (Pharma) Ltd) who manufactured and cleared finished goods from its factory where raw materials were supplied free by the principal, and M/s Kilitch Drugs (India) Ltd is not to be fastened with the levy under the impugned orders. - HELD THAT: - The Tribunal found that the disputed clearances related to finished goods produced and cleared by the job-worker from its premises using materials supplied free of cost by the principal, and that the principal had not assumed responsibility for discharge of duty at any intermediate stage. The adjudication below wrongly proceeded on the premise of a 'sale' between the two entities and treated the supplier as liable; there is no finding of sale in the impugned orders. In these circumstances, for purposes of section 4 of the Central Excise Act the assessee for discharge of duty is the manufacturer/job-worker who cleared the goods. Consequently, demands and recovery proceedings that fasten liability on M/s Kilitch Drugs (India) Ltd are unsustainable and are set aside to the extent they seek to charge that entity. [Paras 12, 13]M/s Kilitch Co (Pharma) Ltd is the assessee for the disputed clearances; M/s Kilitch Drugs (India) Ltd is excluded from liability under the impugned orders.Applicability of Central Excise Valuation Rules, 2000 (rules 6, 8, 9, 11) to non-sale job-work clearances - Valuation of excisable goods: transaction value versus prescribed alternatives - Citation of incorrect source of power not vitiating exercise of statutory power - Binding effect of Board circulars on the Department under executive directions - The valuation mechanisms premised on 'sale' (and hence invocation of rules framed for transactions of sale such as rule 6 and rule 9) could not be legitimately invoked on the facts as found; only valuation routes applicable to non-sale/job-work clearances (rule 8 and rule 11) remained available, and the matter requires fresh adjudication to determine the correct assessable value in accordance with section 4 and the appropriate rules. - HELD THAT: - The Tribunal held that the lower authorities erred by treating the dispute primarily as one of valuation under the 'transaction value' paradigm without establishing that a sale had occurred or that the parties were unrelated for purposes of section 4(1)(a). Because the show cause notice and findings did not establish a sale, mechanisms in the Valuation Rules that presuppose sale (including rule 6 and rule 9) could not be invoked. While an incorrect citation of the source of power in a notice does not automatically invalidate action (subject to Merino), principles of natural justice and the contents of the show cause notice limit reliance to the facts alleged therein. The Tribunal therefore concluded that only rule 8 and rule 11 were available for valuation of such clearances and that the original authority must reassess duty liability after affording the assessee opportunity to contest relevant facts and inferences. The Tribunal also noted that where a binding Board circular prescribes methodology, the Department cannot take a stand contrary to it and that conformity with applicable circulars and rules must be examined at fresh adjudication. [Paras 3, 4, 13, 14, 16]Impugned order set aside and matter remanded to the original authority for fresh determination of assessable value and duty liability in accordance with section 4 and the applicable Valuation Rules (limited to those properly available on the facts), after giving the appellant full opportunity to contest facts and inferences.Final Conclusion: The Tribunal allowed the appeals by setting aside the impugned orders insofar as they fastened liability on M/s Kilitch Drugs (India) Ltd, held that valuation provisions premised on 'sale' could not be invoked on the recorded facts leaving only valuation routes applicable to non-sale/job-work clearances, and remanded the matter to the original authority for fresh determination of the correct assessable value and duty liability for the period June 2003 to March 2004 after affording the assessee an opportunity to be heard.

2023 (11) TMI 213 - MADRAS HIGH COURT VAT and Sales Tax

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Recovery notice issued without serving assessment order violates natural justice principles in tax evasion case
The Madras HC disposed of a writ petition challenging a recovery notice issued without serving the assessment order, violating natural justice principles. The petitioner claimed their login ID was misused by third parties to avail ineligible input tax credit and evade tax. Following a similar precedent, the court impleaded the Cyber Crime Cell as fourth respondent to investigate whether the petitioner's complaint was genuine or if they were facilitating tax evasion by allowing misuse of their login credentials or masquerading to evade tax themselves.

Misuse of login ID and fraudulent electronic filing - ineligible input tax credit - stay of revenue recovery pending criminal investigation - coordination between commercial tax authority and cyber crime investigation - attachment of assets pending investigation - impleadment of Cyber Crime Inspector for investigationMisuse of login ID and fraudulent electronic filing - ineligible input tax credit - impleadment of Cyber Crime Inspector for investigation - Direction to investigate the veracity of the petitioner's complaint of misuse of its TIN/login credentials and the consequent alleged fabrication of transactions and ineligible input tax credit. - HELD THAT: - The Court observed that the petitioner lodged a complaint with the Cyber Crime Cell and an FIR (Crime No.100 of 2017) was registered; the status of that investigation was not placed before the Court. Relying on the similarity of an earlier matter where a coordinated inquiry was directed, the Court found it appropriate to have a thorough investigation to determine whether the petitioner's login ID was misused by a third party or whether the petitioner itself perpetrated or colluded in creating fictitious transactions to avail ineligible input tax credit. For this purpose the Court suo motu impleaded the Inspector of Police, Cyber Crime Cell, Central Crime Branch, Vepery as party-respondent and directed that the Commercial Tax Department coordinate with the Cyber Crime investigation. The exercise was to be completed within eighteen months from receipt of the order. [Paras 14, 15, 16, 18]Directed a coordinated criminal and departmental investigation into the alleged misuse of login credentials and fabrication of transactions, impleading the Cyber Crime Inspector and fixing an eighteen month timeline for completion.Stay of revenue recovery pending criminal investigation - attachment of assets pending investigation - Interim treatment of recovery proceedings and assets pending completion of the investigation. - HELD THAT: - To balance the parties' interests while the inquiry proceeds, the Court ordered that all revenue recovery proceedings against the petitioner shall be kept in abeyance until the investigation is completed. Concurrently, the Court directed that the assets of the petitioner shall remain attached by the tax authorities and suitable steps for attachment be maintained. The Court further provided that if the criminal investigation establishes that the petitioner's complaint was untrue or that the petitioner facilitated the fraud, the petitioner's assets shall be brought to sale. [Paras 16, 17]Recovery proceedings stayed and existing attachments to continue pending investigation; assets liable to sale if investigation shows petitioner's complaint to be false or petitioner complicit in fraud.Final Conclusion: Writ petition disposed by directing a coordinated investigation (including the Cyber Crime Cell) into alleged misuse of the petitioner's login ID and claimed fictitious transactions; recovery proceedings are stayed and assets remain attached pending the investigation to be completed within eighteen months, and if the complaint is found false the petitioner's assets may be sold.

2023 (11) TMI 210 - KARNATAKA HIGH COURT GST

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Expatriate Salary Taxation Challenge: Interim Order Blocks Show Cause Notice, Allows Further Legal Examination of Service Supply Interpretation
HC granted ad interim order challenging a show cause notice related to taxation of expatriate salaries. The court recognized unique circumstances distinguishing the case from a prior SC precedent. Petitioner argued salary payments do not constitute taxable service supply. An interim order was issued, allowing respondents to request vacation, with pleadings to be completed within four weeks and case relisted for further proceedings.

2023 (11) TMI 182 - BOMBAY HIGH COURT Customs

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Customs clearance for lithium ion cells cannot be denied where the Standard Mark is validly placed on the package.
Regulation 6 of the Bureau of Indian Standards (Conformity Assessment) Regulations, 2018 permits the Standard Mark to be placed on the product or the package, as applicable. Customs could not insist, through a public notice, on marking only the product or reject stickers where the imported lithium ion cells bore the mark on the package. The detention was also unsupported by lawful seizure under the Customs Act, and a later show-cause notice did not change the status of the goods. On that basis, refusal of clearance was unjustified and release of the consignments was warranted.

Principles of natural justice - show cause notice under Section 124 of the Customs Act - labelling and marking requirements under BIS (Regulation 6 of Schedule II, Scheme I) - Public Notice No.136/2018 and clarificatory Public Notice No.157/2018 - detention versus seizure; powers under Section 110 and provisional release under Section 110A - confiscation and penalty procedureLabelling and marking requirements under BIS (Regulation 6 of Schedule II, Scheme I) - Public Notice No.136/2018 and clarificatory Public Notice No.157/2018 - Validity of respondents' refusal to release imported "Lithium Ion Cell" consignments on the ground that the Standard Mark was affixed on the package and not on the product itself - HELD THAT: - The Court examined Regulation 6 of Schedule II, Scheme I of the 2018 Regulations and held that the regulation permits marking of "each product or the package, as the case may be" with the Standard Mark, thereby making marking on packaging permissible. The respondents had applied Public Notice No.136/2018 in a manner that deviated from the 2018 Regulations and, in any event, the subsequent Public Notice No.157/2018 expressly deleted the sentence disallowing stickers and clarified that where the Standard Mark has not been affixed on imported goods having a BIS registration number, the mark may be affixed by an authorised representative for clearance. On these bases the Court concluded that the departmental application of PN 136 was a misapplication and that there was no legal justification to withhold clearance where the package bore the Standard Mark as required by Regulation 6. [Paras 19, 20, 21, 22, 23]Respondents' refusal to release the consignments on the stated BIS labelling ground was unlawful; Regulation 6 permits marking on the package and PN157/2018 clarifies the acceptability of stickers/affixation procedures.Detention versus seizure; powers under Section 110 and provisional release under Section 110A - show cause notice under Section 124 of the Customs Act - Legal consequence of the departmental action given that no seizure memo or physical taking over of the goods had been recorded and whether provisonal release under Section 110A was attracted - HELD THAT: - The Court found as a fact, accepted by the respondents' counsel, that no seizure memo had been issued and customs had not physically taken possession of the goods. In that factual matrix the goods were simpliciter detained rather than seized; consequently provisions applicable to seized goods, including provisional release under Section 110A, were not attracted. The mere issuance of a show cause notice under Section 124 does not alter the factual status of the goods where seizure has not occurred. [Paras 25, 26]Since there was no seizure or physical taking over, the detained goods could not be treated as seized for the purpose of Section 110A; the detention was unlawful in the absence of statutory seizure powers being exercised.Principles of natural justice - show cause notice under Section 124 of the Customs Act - confiscation and penalty procedure - Whether the earlier order-in-original directing confiscation without issuing a proper show cause notice was sustainable and the treatment of the subsequently issued show cause notice dated 1 September 2023 - HELD THAT: - Relying on established precedent that confiscation and imposition of penalty require strict compliance with the mandate to issue a show cause notice and afford an opportunity of representation and hearing, the Court had earlier quashed the impugned orders-in-original for breach of natural justice. In the present proceedings the Court noted that a show cause notice dated 1 September 2023 had been issued; it held that proceedings on that notice must be independently carried forward and afforded the petitioner an opportunity to reply. The Court directed that the show cause notice be adjudicated in accordance with law within two months from filing of the petitioner's reply, keeping all contentions open. [Paras 11, 12, 27, 29]Earlier confiscation orders were quashed for breach of natural justice; the newly issued show cause notice shall be adjudicated afresh in accordance with law within two months of the petitioner's reply.Public Notice No.136/2018 and clarificatory Public Notice No.157/2018 - labelling and marking requirements under BIS (Regulation 6 of Schedule II, Scheme I) - Whether differential treatment of identical consignments (seven released consignments versus two detained) could be justified - HELD THAT: - The Court observed that seven identical consignments were cleared for home consumption after physical examination on the same BIS compliance basis, whereas two companion consignments were detained without seizure. Given the correct legal position under Regulation 6 and PN157/2018, there was no rational basis for applying a different yardstick to the two consignments. Such differential treatment was characterised as arbitrary and unjustified. [Paras 15, 23, 24]Differential non-release of the two consignments, when seven identically situated consignments were cleared, was unjustified and arbitrary.Final Conclusion: The petition is partly allowed: the Court held that the respondents misapplied BIS labelling requirements and unlawfully detained the two consignments (which were not seized); the petitioner's prayers for clearance and detention/demurrage waiver are allowed, while the show cause notice dated 1 September 2023 shall be adjudicated in accordance with law within two months of the petitioner's reply, with all contentions kept open.

2023 (11) TMI 181 - DELHI HIGH COURT Customs

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Gold coin classification requires legal-tender status; customs authorities must reassess tariff treatment and preferential duty exemption eligibility.
Classification of imported gold coins depends on whether they are issued under government control for use as legal tender. Heading 7118 covers only such legal-tender coins; articles colloquially described as gold coins do not automatically fall within that heading. The prior Khandwala Enterprise ruling did not conclusively classify all gold coins under heading 7118, and could not be treated as settling the issue. The customs classification orders were set aside and remitted for fresh adjudication, requiring reconsideration of the applicable tariff heading, the binding explanatory notes, and eligibility for the Indo-Korean CEPA customs-duty exemption.

Classification under the Customs Tariff Act by application of the General Rules for Interpretation (GIR) - HSN Explanatory Notes as an interpretive guide with binding force in tariff classification - Preferential application of a specific tariff entry over a general one - Administrative circulars or office memoranda cannot usurp or pre-determine adjudicatory proceedings - Remand for fresh adjudication where prior order rests on misconstruction of judicial pronouncementClassification under the Customs Tariff Act by application of the General Rules for Interpretation (GIR) - Preferential application of a specific tariff entry over a general one - HSN Explanatory Notes as an interpretive guide with binding force in tariff classification - Whether the Principal Commissioner correctly interpreted Khandwala Enterprise and law in holding that the imported articles were conclusively classifiable under CTH 7118 9000 and not CTH 7114 1910. - HELD THAT: - The Court held that the Principal Commissioner erred in treating isolated observations in Paras 49-50 of Khandwala Enterprise as a conclusive, omnibus finding that every article colloquially called a "gold coin" must be classified under CTH 7118 9000. Khandwala Enterprise had distinguished between the entries 7114 (articles of goldsmiths' wares) and 7118 (coins) and, while noting that gold coins of the character contemplated by the explanatory notes fall under 7118 9000, did so in the context of coins that satisfy the characteristics in the HSN Explanatory Notes (issued under government control for use as legal tender, or coins that had been legal tender, or those struck for circulation). The Division Bench emphasised that classification must follow the GIRs, with GIR 1 and the heading terms foremost, and that where a specific entry covers an item it must be preferred to a more general entry. The court also reaffirmed the binding interpretive role of HSN Explanatory Notes but explained that those notes confine "coin" to articles issued under sovereign authority for current, past or intended use as legal tender; consequently, not every round or coin shaped article of gold falls within CTH 7118. The Principal Commissioner's failure was twofold: (a) reading Khandwala Enterprise out of context to reach a categorical conclusion, and (b) misapplying the explanatory notes by treating them as dispensing with the need to assess whether the imported articles possess the sovereign/monetary characteristics of a coin. [Paras 44, 46, 47, 50, 52]The Principal Commissioner's interpretation was incorrect; Khandwala Enterprise did not conclusively decide that all articles loosely termed "gold coins" are to be classified under CTH 7118 9000 irrespective of whether they meet the HSN explanatory note criteria for "coins."Administrative circulars or office memoranda cannot usurp or pre-determine adjudicatory proceedings - Remand for fresh adjudication where prior order rests on misconstruction of judicial pronouncement - Whether the impugned orders dated 04 September 2020 and 07 September 2020 should be upheld or set aside and what relief is appropriate. - HELD THAT: - Having found that the Principal Commissioner proceeded on an incorrect premise - namely that Khandwala Enterprise had conclusively answered the classification question against the petitioner - the Court concluded that the adjudication was vitiated. The High Court reiterated that while HSN Explanatory Notes are a binding interpretive guide, they must be applied to determine whether an article possesses the essential characteristics of a "coin" as explained in those notes. The Court further observed that the adjudicatory authority must examine the facts and evidence anew and decide classification by applying the GIRs and explanatory notes correctly, uninfluenced by any prior misreading. In these circumstances, and notwithstanding the availability of statutory appellate remedies, the Court entertained the writ and directed fresh adjudication rather than directing the petitioner to pursue only the appellate route, because the impugned orders manifested a misapprehension of law that affected the adjudicatory process. [Paras 53, 54, 55]Impugned orders dated 04.09.2020 and 07.09.2020 are set aside and the matter is remitted to the Principal Commissioner for fresh adjudication of the Show Cause Notices, to be decided afresh in light of the Court's observations and uninfluenced by the misreading of Khandwala Enterprise.Final Conclusion: Writ petition allowed. The orders dated 04.09.2020 and 07.09.2020 are set aside and the matter remitted to the Principal Commissioner for fresh decision on classification (CTH 7114 1910 v. 7118 9000) applying the GIRs and HSN Explanatory Notes correctly and uninfluenced by the misinterpretation of Khandwala Enterprise; the adjudicating authority shall re examine the facts and law and decide the Show Cause Notices afresh.

2023 (11) TMI 176 - CESTAT AHMEDABAD Customs

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Medical equipment classification turns on specific use: patient-positioning items fall under heading 9022, ordinary marker pens under heading 9608.
Goods used to position patients on X-ray or radiotherapy machines were held classifiable as accessories under heading 9022 because Chapter Note 2(b) of Chapter 90 and the HSN notes require items used solely or principally with a particular machine to follow that machine's classification. By contrast, ordinary marker pens with no proven exclusive or principal use with the medical apparatus were not accessories or parts of heading 9022 and were classifiable under heading 9608. The classification dispute therefore turned on specific use and functional linkage to the X-ray or radiotherapy equipment, resulting in a partial allowance of the appeal.

Parts and Accessories - classification under heading 9022 - classification under heading 9018 - classification under heading 9608 - Chapter note 2(b) to Chapter 90 - HSN explanatory notes on parts and accessoriesParts and Accessories - classification under heading 9022 - Chapter note 2(b) to Chapter 90 - HSN explanatory notes on parts and accessories - Whether items used for positioning patients with X-ray/radiotherapy machines are classifiable as accessories of heading 9022. - HELD THAT: - The Tribunal found as an admitted fact that the items in question (Serial Nos. 1-12 and 17-57 of bill of entry No. 4604051 dated 11.02.2004 and Serial Nos. 1-21 and 26-66 of bill of entry No. 5062153 dated 01.04.2004) are used with X ray/radiotherapy apparatus for positioning patients. Applying the HSN explanatory notes and Chapter Note 2(b) to Chapter 90, goods that are suitable for use solely or principally with a particular kind of apparatus are to be classified with that apparatus. The Tribunal held that heading 9022 specifically covers X ray/radiotherapy apparatus and that the disputed items are made for and used with those machines; by combined reading of the explanatory notes and Note 2(b) such items qualify as accessories classifiable under heading 9022. The Tribunal distinguished the Apex Court's decision in Insulation Electricals on the basis that the rival entry there (covering seats) had a specific connection, which is not present here; accordingly that decision was not held applicable. [Paras 4, 7]Items at Serial Nos. 1-12 and 17-57 of bill of entry No. 4604051 dated 11.02.2004 and Serial Nos. 1-21 and 26-66 of bill of entry No. 5062153 dated 01.04.2004 are classifiable under heading 9022.Classification under heading 9608 - classification under heading 9018 - HSN explanatory notes on parts and accessories - Whether the marker pens (specified serials) are classifiable as accessories to X ray/radiotherapy apparatus or under heading 9608. - HELD THAT: - The Tribunal observed that no specific connection was demonstrated by the appellant showing that the marker pens (Serial Nos. 13-16 of bill of entry No. 4604051 dated 11.02.2014 and Serial Nos. 22-25 of bill of entry No. 5062153 dated 01.04.2014) are exclusively usable with or principally for X ray/radiotherapy apparatus. In absence of evidence that these markers are suitable solely or principally for use with machines of heading 9022, the conditions of Note 2(b) are not satisfied. Consequently, the Tribunal found no merit in appellant's contention and accepted classification of those items under the general pen/marker heading rather than as accessories of heading 9022. [Paras 4, 6, 7]Items at Serial Nos. 13-16 of bill of entry No. 4604051 dated 11.02.2014 and Serial Nos. 22-25 of bill of entry No. 5062153 dated 01.04.2014 are classifiable under heading 9608; the appeals in respect of these items are dismissed.Final Conclusion: The appeals are partly allowed: the Tribunal upheld classification of the positioning accessories as falling under heading 9022, and dismissed the appeals in respect of the marker pens, which were held classifiable under heading 9608.

2023 (11) TMI 175 - CESTAT AHMEDABAD Customs

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Printer classification under tariff rules turns on connectivity to data-processing systems; reclassification under the alternate heading failed.
Imported printers were treated as classifiable under heading 84433250 because the relevant tariff test focused on whether the machines could connect to an automatic data processing machine or network. The goods were admitted to receive data through a USB port, and the product literature supported that connectivity, bringing them within the 844332 group under the HSN Explanatory Notes and Board clarification. Classification under heading 84433910 was therefore excluded, and the earlier coordinate Bench view on similar facts was followed. The reclassification was unsustainable, and the goods remained correctly classifiable as inkjet printers under heading 84433250.

Classification of goods under Customs Tariff Heading 8443 - capable of being connected to an automatic data processing machine - HSN Explanatory Notes on connectability - Board's circular clarifying classification of large format printers - Reclassification and appellate review of tariff headingClassification of goods under Customs Tariff Heading 8443 - capable of being connected to an automatic data processing machine - HSN Explanatory Notes on connectability - Board's circular clarifying classification of large format printers - Imported printers are correctly classifiable under CTH 8443 32 50 (Ink Jet Printers) and not under CTH 8443 39 10 (Ink Jet Printing Machinery). - HELD THAT: - The Tribunal examined the tariff heading 8443 and the double-dash entries differentiating machines capable of connection to automatic data processing machines or a network (8443 32 xx) from those not so capable (8443 39 xx). The appellant admitted that the imported machines can receive data via a USB port; product literature and the Chartered Engineer's certificate accepted that the devices receive data from outside sources. Applying the HSN Explanatory Notes' test - that the apparatus must comprise all components necessary for connection to an ADP machine or network so that connection is effected simply by attaching a cable - the machines meet the connectability criterion. The Tribunal relied on the co-ordinate Bench decision in Monotech Systems Ltd. and the Board's circular which corroborate that large-format/digital inkjet printers satisfying the HSN connectability conditions are classifiable under 8443 32 50. On this basis the impugned reclassification to 8443 39 10 was held to be erroneous and was set aside. [Paras 6, 7]Impugned order reclassifying the printers under 8443 39 10 is set aside; printers are to be classified under 8443 32 50 and the appeals are allowed.Final Conclusion: The appeals succeed: the imported printers, being capable of receiving data from automatic data processing machines (USB connectivity), qualify as Ink Jet Printers under CTH 8443 32 50; the order reclassifying them under 8443 39 10 is set aside.

2023 (11) TMI 174 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB Insolvency and Bankruptcy

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Tribunal Addresses Delayed Notice, Grants Appellant Time to Reply; Hearing Scheduled for November 30, 2023.
The Appellate Tribunal addressed the Appellant's concerns regarding delayed notice receipt and insufficient time to file a reply. The Tribunal decided to keep the Appeal pending, allowing the Appellant to file their reply on 20.11.2023, the reopening day of NCLT, Mumbai. The Bank was permitted to file a rejoinder within a week thereafter. The Adjudicating Authority was requested to schedule a hearing on 30.11.2023. The Appeal was disposed of, with the Appellant required to present a copy of the order on 20.11.2023.

Adjournment for filing reply - service of notice - liberty to file reply on re opening - time for rejoinder - direction to Adjudicating Authority to fix hearing date - disposal of appeal by order with procedural directionsAdjournment for filing reply - service of notice - liberty to file reply on re opening - time for rejoinder - direction to Adjudicating Authority to fix hearing date - Whether the appeal should be kept pending or disposed with directions permitting the appellant to file reply and the respondent to file rejoinder and directing the Adjudicating Authority to fix a hearing date. - HELD THAT: - The Appellate Tribunal recorded competing contentions about service of the appeal and recalled that the Adjudicating Authority had allowed limited time for filing a reply on 26.10.2023. Noting the length of the petition and the closure period of the Adjudicating Authority, the Tribunal declined to keep the appeal pending but exercised its discretion to dispose of the appeal by granting procedural relief. The appellant was given liberty to file its reply on the re opening day (20.11.2023) and the respondent (Central Bank of India) was permitted to file a rejoinder within one week thereafter. The Tribunal further requested the Adjudicating Authority to list the company petition on 30.11.2023 for hearing and decision in accordance with law. These directions were issued to ensure a fair opportunity to both parties without retaining the appeal as pending before the Tribunal. [Paras 7, 8]Appeal disposed of with directions allowing the appellant to file reply on 20.11.2023, the respondent to file rejoinder within one week thereafter, and the Adjudicating Authority to list the petition on 30.11.2023.Final Conclusion: The Tribunal disposed of the appeal by granting the appellant liberty to file its reply on re opening (20.11.2023), permitting the respondent a week to file rejoinder, and requesting the Adjudicating Authority to list the matter on 30.11.2023 for hearing and decision; the appeal is not retained pending before the Tribunal.

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