TaxTMI Updates e-Newsletter
Feb 21,2026

Bail - Custodial interrogation - Investigation complete - Medical grounds for bail - Deposit of disputed tax - Conditions of bail - incriminating physical and digital evidences were recovered disclosing tax evasion - Offence u/s 132 of the Central Goods and Services Tax Act, 2017 - HELD THAT:-The prayer for bail is being made on the ground that the investigation is complete and there is no requirement of custodial interrogation. Reliance in this regard is place on Ratnambar Kaushik Vs. Union of India [2022 (12) TMI 263 - SUPREME COURT] wherein, the bail application was allowed by Hon’ble Supreme Court. It was observed that even if it was taken note that the alleged evasion of tax by the petitioner is to the extent as provided under Section 132(1)(l)(i), the punishment provided is, imprisonment which may extend to five years and fine.

Presently, the petitioner is under treatment at RIMS at Ranchi. It is further submitted that the petitioner has been diagnosed in MRI Compression of nerve roots of spine and he has been advised neuro surgery. Relevant document has been filed along with the interlocutory application. MRI of cervical and spine screening was done in which there has been found to be diffusion in the nerve.

Argument on behalf of the Petitioner appears to be persuasive. Under the circumstances, the above-named petitioner is directed to be released on bail on furnishing bail bond of Rs. 1,00,000/-(One Lakh) with two sureties of the like amount each to the satisfaction of the Court below, subject to condition that both the sureties shall be income tax payee and the petitioner will also submit his Passport before the trial court while furnishing the bail bonds.

Alternative statutory remedy - Maintainability of writ petition in presence of alternative remedy - No pre-deposit where only interest on refund is claimed - Exercise of discretion to grant procedural liberty and protection against limitation where tribunal functionality caused bona fide delay - HELD THAT:- Since filing is accepted and admittedly, the order impugned in this petition, is appealable before the tribunal, we decline to entertain this petition. Furthermore, in this case, since the petitioner is only seeking interest on the refund already allowed, there will be no question of the petitioner being required to make any pre-deposit for entertainment of its appeal.

Accordingly, we decline to entertain this petition but leave it open to the petitioner to institute an appeal before the tribunal by raising all contentions as reflected in the memo of this petition.

At this stage, the learned counsel for the petitioner states that the appeal will be filed within four weeks of the uploading of this order. If the appeal is indeed filed within four weeks, then, the tribunal should dispose of such appeal on merits without adverting to the issue of limitation. This is because the petitioner was bona fide pursuing this petition and there was genuine confusion regards the functionality of the tribunal.

With the above liberty, this petition is disposed of.

Principles of natural justice - personal hearing - order u/s 74 of the GST Act, 2017 - quashment of order for breach of natural justice - fresh opportunity of hearing and pass a reasoned order - HELD THAT:- From perusal of records, it appears that a show cause notice was issued to the petitioner on 23.07.2024 and the date of personal hearing was fixed on 23.12.2024. The petitioner did not appear in terms of the said show cause notice and thereafter an original order under Section 74 was passed on 20.01.2025. It further appears from the record that no further notice was given to the petitioner with regard to the hearing that was to be taken place on 20.01.2025 on which date the impugned order was passed.

This matter is covered by the judgment of the Coordinate Bench of this Bench at Allahabad in Shubham Steel Traders v. State of U.P. [2024 (2) TMI 1180 - ALLAHABAD HIGH COURT]

Thus, we are of the view that the original order passed under Section 74 of the GST Act, 2017 is in violation of the principle of natural justice and, accordingly non est in law.

Validity of service through the common GST portal after cancellation of registration - effective service u/s 169 of the CGST Act - right to personal hearing u/s 75(4) of the CGST Act - audi alteram partem in fiscal adjudication - HELD THAT:- Learned counsel for the revenue does not dispute that Show Cause Notice dated 16.08.2024 was presumably served only by uploading the same on the GST portal and not by any other mode.

Consequently, the law laid down in the judgment passed in Writ Petition (M/B) titled as ‘M/s Nulife Medical Store vs. Commissioner, State Goods and Service Tax, Commissionerate, Dehradun & another’, wherein it has been held that once the registration has been cancelled, the assessee cannot be expected to check the GST portal and service must be effected through alternative mode.

Accordingly, the impugned order dated 16.08.2024, passed by respondent No. 2-Assistant Commissioner, State Tax, Sector-1, Vikas Nagar, Dehradun, Uttarakhand is hereby quashed. The Revenue is granted liberty to issue a fresh notice to the petitioner and, thereafter, adjudicate the matter in accordance with law. Needless to say that the petitioner shall be granted an opportunity of personal hearing in terms of Section 75(4) of the GST Act, if so desired by the petitioner.

The writ petition stands disposed of accordingly.

Ex parte assessment - duplication of demand - excess claim of input tax credit - under-declaration of tax in returns - remand for fresh adjudication on merits - deposit as condition for fresh adjudication - treating a subsequent order as an addendum to a show cause notice - suspension of recovery/abeyance subject to compliance - attachment of bank account and debit from electronic cash ledger - HELD THAT:- On a perusal of the impugned order, it appears that the same has been passed by State Tax Officer, and not State Tax Commissioner as mentioned and as arrayed by the petitioner in the writ petition.

Considering the above facts and circumstances of the case, the case is remitted to the State Tax Officer to pass a fresh order on merits subject to the petitioner depositing 10% of the disputed tax confirmed vide order dated 28.10.2025 in response to the Show Cause Notice in DRC-01 dated 10.06.2025, on all the heads provided excess claim of ITC vide item no.2 in the impugned order, in cash or from the Petitioner's Electronic Cash Register, within a period of thirty (30) days from the date of receipt of a copy of this order.

Within such time, the petitioner shall also file a reply to the Show Cause Notice in DRC-01 dated 10.06.2025 together with requisite documents to substantiate the case by treating the impugned order dated 28.05.2025 as an addendum to the Show Cause Notice in DRC-01 dated 10.06.2025.

Since the petitioner’s Bank account has already been attached, the respondent is permitted to debit 5% each towards the CGST and TNGST from the petitioner’s Electronic Cash Ledger.

In case the Petitioner fails to comply with any of the stipulations, the 1st Respondent is at liberty to proceed against the Petitioner to recover the tax in accordance with law as if this Writ Petition was dismissed in limine today.

Post-decisional hearing - remand for reconsideration - adverse presumption for non-production of documents - non-production of a Chartered Accountant's certificate (without UDIN) - abeyance of appellate order - reconsideration in accordance with law - requirement of GSTR-9C under Rule 80(3) - HELD THAT:- Since the petitioner had not been able to file the Chartered Accountant’s certificate in proper format which appears to be a significant document for arriving at a just conclusion by the Appellate Authority, therefore the order passed by the Appellate Authority cannot be faulted on that ground.

However since it is the petitioner’s case that the petitioner is now in possession of a proper certificate from the Chartered Accountant and that the petitioner can justify the difference in GSTR-1 and GSTR-3B and also that the petitioner had cured the mistake that occurred in filing Form GSTR-1 for the month of March (Financial Year 2017-18) while filing the annual return as well the monthly return for the month of March for the same Financial Year, this Court is of the view that the petitioner should be given a post decisional hearing by the Appellate Authority.

In such view of the matter, liberty is granted to the petitioner to approach the Appellate Authority with all relevant documents including the certificate of the Chartered Accountant within a period of two weeks from date. If the petitioner approaches the Appellate Authority in terms of this order, the Appellate Authority shall reconsider the petitioner’s case in the light of the documents produced and submissions made by the petitioner in accordance with law.

However, if the Appellate Authority does not find any merit in the petitioner’s case, the Appellate Authority shall give reasons for not accepting the petitioner’s case and in such case, the appellate order impugned herein shall remain intact. The reasons given by the Appellate Authority for not agreeing with the petitioner or for not accepting his case shall in such a situation also be treated to be a part of the original appellate order.

The writ petition is disposed by upholding that the Appellate Authority was entitled to rely on the absence of a properly formatted CA certificate at the time of its decision.

Liquidated damages - Supply - Consideration - Section 142(2)(a) - upward price revision in contracts entered into prior to appointed day - Mere flow of money - Doctrine of separability / arbitration agreement distinct from underlying contract - Supplementary invoice / debit note for price revision - Reverse charge liability for services of an arbitral tribunal - Time of supply for reverse charge -

Doctrine of Separability - HELD THAT:- As per the doctrine of Separability, the arbitration agreement is distinct in law and in existence from the underlying substantive contract in which it is embedded. It is considered to be autonomous and juridically independent from the substantive contract. The effect of this doctrine is that the arbitration agreement will ordinarily remain valid and binding, notwithstanding the invalidity, illegality, termination or repudiation of the underlying contract. The substantive contract contains the commercial terms of the contract between the parties, which stipulate the rights and obligations of the parties whereas the arbitration clause is the agreement between the parties regarding the mode of dispute resolution.

Concept of Liquidated Damages. - In a contract, when the parties to the agreement decide to pay a stipulated amount, if there is non-performance of the contract on the part of any of the parties, such damages are called Liquidated Damages. These damages are agreed upon by the parties concerned when they enter into the contract, i.e. before the execution of the contract itself. Further, this amount is fixed, and no changes can be made after it is signed.

Liquidated Damages in a contract is a provision that determines the sum to be paid as damages for the party’s breach. With these damages, one benefit is that there is no need to prove the actual loss. This is because the clause specifies the estimation of damages in advance.

A liquidated damage clause should not be "de hors" (outside of) the contract. It is a rather contractual provision, meaning it is a part of the agreed-upon terms and conditions of the contract. Liquidated damages are meant to be a genuine pre-estimated amount of compensation for a breach of contract, and it is typically included within the contract itself. Liquidated damages clauses are essentially clauses within a contract that specify a fixed sum of money or a formula for calculating damages in the event of a breach of contract.

It is clear from the legal provision that Liquidated Damage is a compensation for a breach of contract by a party for which another party suffers any loss or damage. This compensation is included within the contract itself.

Liquidated Damage or for that matter the taxability of liquidated damage has been a matter of discussion in the GST era since long.

Section 142(2)(a) provides that when the price of any goods or services is revised upwards after the implementation of GST in pursuance of a contract entered into during the legacy tax regime, the person who provided such goods or services shall issue a supplementary invoice/debit note and such supplementary invoice/debit note shall be deemed to have been issued in respect of an outward supply made under the CGST Act. In brief, the following elements should come together for such price revision to be deemed as a supply under GST – there should be an upward price revision; and such price revision should be in pursuance of a contract entered into prior to the appointed day, i.e. 01.07.2017.

In the matter under consideration, there is no doubt that the contract was entered prior to 01.07.2017, since a mere perusal of the facts indicate that the Letters of Intent were issued in November 1995 and the contracts were signed in January 1996. Now, it becomes apposite to examine whether the contracts contains any provision for upward price revisions and whether the amounts received by the applicant in compliance with the Arbitration Award are in pursuance of such provisions of the contract, if extant.

On perusal of the Contract Agreements, it is seen that three clauses 34, 35, and 36 deal with “Alterations, Additions, and Omissions”, “Extra Items”, and “Price Adjustment” respectively. These clauses are relevant to our discussion to determine whether the amounts in the Arbitration Award stem from upward price revisions pursuant to the provisions in the contract.

From the above, it is clear that the Contract Agreement contains clear and unequivocal terms governing any additional work to be done, and any adjustment in the contract price which may result from such additional work. In the light of these terms, as well as the law on Liquidated Damages and their tax treatment in GST as detailed above, we now proceed to examine each item of the arbitration award to arrive at its taxability under the GST regime.

It is already noted that the amounts awarded by the Arbitration Tribunal under different heads for the three packages can be categorised broadly under twelve heads. Those heads and the amount for each head have been mentioned in the table in Paragraph no. 4.2. Now we will discuss the nature of amount awarded to the applicant head-wise and find out in the light of Circular no. 178/10/2022-GST Dated 03.08.2022 whether the said amounts are received as compensation or consideration.

Here in our case the applicant is the recipient of supply of arbitration service supplier being the Arbitration Tribunal formed for this purpose. So clause (a) will be applicable here and the time of supply will be the date on which payment for arbitration fees is debited from the bank account of the applicant.

The value of supply in this case will be the amount of fees paid to the arbitrators. The applicant being recipient of service is liable to pay tax as above under reverse charge.

However, the amount awarded as the cost of arbitration will not come under the purview of GST. This is an amount to be paid to the applicant by THDC India Limited as part of compensation in respect of the expense of arbitration that the applicant had to bear. There is no supply of service between the two. This amount is not paid as consideration of any supply. It is a mere flow of money between the two parties as compensation of a part of the expenses incurred for arbitration and the origin of the said transaction is the order of the arbitration tribunal, not any kind of supply. Tax on reverse charge is payable only when the payment of fees is made to the arbitration tribunal.

Whether claims allowed by the Arbitral Tribunal vide the Arbitration Awards be termed as supply or not? - HELD THAT:- The claims allowed for extra expenditure due to change in the methodology for excavation of control gate shafts, claims allowed due to payment of price adjustment on extra items, claims allowed for deduction or deletion from final bill, for extra expenditure incurred for excavation of compressors and receiver’s room at the end wall of machine hall, for payment of cost of materials for work of pre-stressed anchor in the blind holes, for extra expenditure for backfilling the behind walls of TRT outlet and claims allowed as refund of rebate wrongfully recovered or deducted and rebate wrongfully deducted from price adjustment are to be considered as supply.

On the other hand, the claims allowed for extra expenditure incurred in purchasing boulder, aggregates and sand from private agencies, for operating private quarries, for cost difference for actual use of higher grade of cement, claims allowed as reimbursement of expenditure for shifting of infrastructure facility are not considered as supply.

Whether claims allowed by the Arbitration Tribunal vide the Arbitration Awards be termed as liquidated damages or not? - HELD THAT:-The claims allowed for extra expenditure incurred in purchasing boulder, aggregates and sand from private agencies, claims allowed for operating private quarries, claims allowed for cost difference for actual use of higher grade of cement and claims allowed as reimbursement of expenditure for shifting of infrastructure facility do not fall in any of the provisions of the contract. Except these claims the rest of the claims allowed by the Arbitration Tribunal vide the Arbitration Awards can be termed as liquidated damages.

Tobacco leaves - cured tobacco - retention of character after curing, grading or butting - tariff item 240110 (tobacco, not stemmed or stripped) - distinction between "not stemmed or stripped" and "partly or wholly stemmed or stripped" - concessional GST rate for tobacco leaves (2.5% CGST + 2.5% SGST) - classification under GST tariff versus Customs Tariff Act - reverse charge/forward charge does not alter applicable rate - HELD THAT:- The applicant intends to purchase tobacco leaves either directly at the field from the farmers or from the marketplace. He will not undertake any kind of processing of the leaves except piling up the same till he gets orders from ultimate users or other traders.

As a common practice of tobacco market the farmers harvest the tobacco leaves, cure them and bring them to the local market after grading and bundling the leaves. The bundled tobacco leaves are taken to a market, where it is displayed in baskets. Farmers wait for government graders or buyers to assess their tobacco and place bids. Sometimes the farmers may also sell their cured and graded leaves directly to buyers, such as through a contract system with tobacco companies. Since green tobacco leaves contain huge amount of moisture, it is normal practice among the farmers to cure them first and then bring them to the local market after grading and bundling and butting (if required) of the leaves. It is those cured and bundled leaves that are sold as tobacco leaves in the market.

In the present application for Advance Ruling there is no reference to cut tobacco leaves. The tobacco leaves referred to in the application are cured or graded or butted. In none of the situations the tobacco leaves are cut. If the tobacco leaves are cut they cease to be leaves. We are of the opinion that the citation of the Revenue is not properly placed and we are not inclined to accept the view given by the Revenue.

Since the rate of tax of goods under GST regime has reference to the HSN code of the corresponding entries of the Customs Tariff Act, 1975 we should look at and understand the matter with reference to the related entries of both the GST Act and the Customs Tariff Act, 1975 simultaneously. The GST Act has reference to tobacco or tobacco products in Schedule I, II and in Schedule III of Notification no. 1/2017-Central Tax (Rate) Dated 28.06.2017, as amended by Notification no. 9/2025-Central Tax (Rate) Dated 19.09.2025 and further amended by Notification no. 19/2025-Central Tax (Rate) Dated 31.12.2025.

We observe that the Customs Tariff Act, 1975 distinguishes between ‘tobacco, not stemmed or stripped’ from ‘tobacco, partly or wholly stemmed or stripped’. The Tariff sub heading of the former is 240110 while the latter is 240120. In our considered view, ‘tobacco, not stemmed or stripped’ retains the basic character of tobacco leaves as such. We also find that the sub-heading 240110 “tobacco, not stemmed or stripped” contains further tariff items like “Flue cured virginia tobacco, sun cured country (natu) tobacco, sun cured virginia tobacco” etc. Therefore, we find that the tariff itself takes cognisance of the fact that curing does not take away the essential character from tobacco leaves.

From the discussion, it is seen that it is during and after the process of stemming or stripping the tobacco leaf loses its character of leaf as such. After the removal of mid rib of the leaf during the stemming or stripping process it ceases to be leaf as such. The Customs Tariff Act 1975 has also confirmed the point by providing different Tariff item number to ‘tobacco (which includes tobacco leaf), not stemmed or stripped’ and ‘tobacco, partly or wholly stemmed or stripped’. We will restrict our discussion to tariff heading number 2401 because the subject of the ruling is limited to this only.

In our considered view, sun cured tobacco leaves do not lose the character of tobacco leaves as such. These leaves are kept exposed to full sunlight and the natural sap and moisture of the leaves are removed. In case of grading of tobacco leaves the characteristic features of the leaves are retained. It is only a physical process to segregate the cured tobacco leaves into grades according to the width, colour, length, texture of the leaves etc.

Similarly in case of butting, the butts of tobacco leaves are removed only to avoid damage at the time of packing and transportation to market. In our considered view, this does not interfere with the characteristics of tobacco leaves.

Applicable rate of GST on tobacco leaves sold to other traders by the applicant as they are purchased from farmers after sun curing in the fields, without undertaking any processing except the storage or stocking of the leaves? - HELD THAT:- Tobacco leaves purchased from farmers after sun cured in the fields, without undertaking any processing except the storage or stocking of the leaves by the applicant will be covered by Tariff item no. 240110 and it will come under Entry no. 162 of Schedule I of Notification no. 1/2017- Central Tax (Rate) Dated 28.06.2017, as amended by Notification no. 9/2025-Central Tax (Rate) Dated 19.09.2025. So supply of the above noted goods will be taxed @ 2.5% CGST + 2.5% SGST.

Applicable rate of GST if the applicant segregates the tobacco into grades depending on their size (width), colour/ shade, length, texture of the leaf etc. and sells such graded tobacco leaf? - HELD THAT:- Tobacco leaves, even after being graded as mentioned in the question i.e. graded according to width, colour, length and texture of the leaves, remain tobacco leaves as such and is covered by Tariff item no. 240110.

So supply of the above noted goods will be taxed @ 2.5% CGST + 2.5% SGST vide Entry no. 162 of Schedule I of Notification no. 1/2017-Central Tax (Rate) Dated 28.06.2017, as amended by Notification no. 9/2025-Central Tax (Rate) Dated 19.09.2025.

Applicable rate of GST if the tobacco leaves sold to other traders after removing butts to avoid damage to leaves during transportation? - HELD THAT:- At this stage the tough, stem-like edge or butt of the tobacco leaf is removed to leave only the pliable lamina of the leaf. The tobacco leaf does not lose its character as tobacco leaf.

So it is covered by Tariff item no. 240110 and accordingly to be taxed @ 2.5% CGST + 2.5% SGST vide Entry no. 162 of Schedule I of Notification no. 1/2017-Central Tax (Rate) Dated 28.06.2017, as amended by Notification no. 9/2025 - Central Tax (Rate) Dated 19.09.2025.

Classification of goods - Heading 8415 - parts of air-conditioning machines - Heading 8414 - industrial fans and blowers - classification of parts of machines under Section XVI notes - HELD THAT:- We have noted that the product described as a “Condenser Fan” is designed for use in heavy-duty bus rooftop and engine applications. It consists of an electric motor that drives aerodynamic blades housed in a protective shroud, creating high-volume axial airflow. Its primary function is to force hot air away from the condenser coil or radiator.

Note 2 (b) to Section XVI provides that parts which are goods included in any heading of Chapter 84 or 85 are classified in that heading; other parts suitable for use solely or principally with a particular kind of machine are to be classified with that machine.

The “Condenser Fan” and “Blower” manufactured and supplied by the applicant, when supplied as a component of or for use with air-conditioning machines such as bus rooftop air-conditioning systems, is classifiable under Heading 8415 90 (Parts of air-conditioning machines). Even the applicant himself has described its application is specific to rooftop bus air-conditioning systems for expelling hot air from the condenser section as well as engine compartment in certain heavy vehicles.

Even they have emphasised that blower is designed for forced air circulation in automotive and off-highway vehicle HVAC (Heating, Ventilation, and Air Conditioning) systems and is primarily intended for integration into HVAC systems across a wide range of vehicle segments which make it well-suited for automotive OEMs and Tier-1 suppliers involved in producing climate control systems for passenger and commercial vehicles.

Advance Ruling: The products in question, insofar as they are supplied as components for air conditioning machines, are classifiable as parts of air conditioning machines under Heading 8415 90 and not under Heading 8414.

Classification of goods - essential character - printed matter - frames classified with pictures - mass-produced reproductions versus works of art - rules for interpretation of the First Schedule to the Customs Tariff - HSN classification - HELD THAT:- We observe that the chapter heading 4911 covers all printed matter (including photographs and printed pictures) of this Chapter but not more particularly covered by any of the preceding headings of the Chapter. It is also mentioned that for the purposes of Chapter 49, the term “printed” also means reproduced by means of a duplicating machine, produced under the control of an automatic data processing machine, embossed, photographed, photocopied, thermocopied or typewritten. Further, in chapter note it is mentioned that framed pictures and photographs, frames which are of a kind and of a value normal to the pictures or photographs are regarded as forming part of the picture or photograph and the whole is classified in this heading; in other cases, the frames fall to be classified under their appropriate heading as articles of wood, metal, etc. So, the applicant item is UV printed Acrylic Photo frame wherein photo is printed by UV printers on acrylic sheet. So, this item is will cover under the chapter heading 49119990.

In this regard, we observed that HSN code for a photo frame clock can vary, but 91059990 is a HSN code used for “PHOTO FRAME CLOCK”. The exact code depends on the specific features and materials of the product. So, the HSN code for UV printed Acrylic Wall Clock is 91059990.

Classification of goods - essential character - HSN classification - MDF keychain with printed photo and the applicant used HSN 442199 (other articles of wood) for classification for this item. In this item, the applicant provides keychain of wood and photo is printed on wooden part. The applicant has asked whether they are classifying this item correctly in HSN 442199 (other articles of wood).

We have gone through the relevant chapter Headings 442199 as well as the Chapter Notes pertaining to these headings detailed in para 14 above and find that heading 442199 is used for articles made by wood. The applicant item is MDF keychain with printed photo and it is made by wood. In this regard, we observed that the applicant has correctly classified MDF keychain with printed photo under HSN code 442199, but the 8 digit classification is 44219990.

The classification of UV Printed Acrylic Photo frame under HSN 39269099 is not correct and the correct classification is 49119990.

Addition u/s 68 - unsecured loan - assessee had received share capital with share premium from Nine parties on the basis of the share valuation report prepared as per Rule 11A - CIT(A) deleted addition - HELD THAT:- We are of the considered view that assessee had sufficiently discharged the burden and in the absence of any evidence to the contrary at this stage the findings of ld. CIT(A) in regard to deletion of additions deserves no interference.

In regard to AY: 2015-16 the assessee had received share capital from 11 investors for which assessee claims they were existing shareholders or close relatives only. The share premium was determined as per Rule 11A and before the AO copy of ITR of shareholder copy of bank statement of shareholder and copy of financial statements were filed. However, AO was not satisfied with regard to 6 of the investor and made addition Assessee filed additional evidence only and the copy of ITR and bank statement including source of each payment which have been relied by ld. CIT(A) to make deletion.

Addition u/s 56(2)(viib) - shares of companies were transferred to related parties @ Rs. 24 per share including face value of Rs. 10 and premium of Rs. 14 and assessee had claimed that value of share was determined as per Rule 11(UA) of the Act at Rs. 19.48 per share - AO only considered book value of Rs. 19 and allowed the premium only to the extent of Rs. 9 per share - CIT(A) deleted addition - HELD THAT:- AO did not consider the fact that assessee had considered fair market value of immovable property while calculating the value per share as prescribed in Section 56(2)(viib) of the Act. The value of land as on 31.03.2014 was Rs. 6,82,80,000/- whereas original purchase price as per books as on 31.03.2009 was Rs. 289,96,986/-. Thus, this appreciation of Rs. 896,83,013/- was considered to value the shares at Rs. 24. We find that ld. CIT(A) has duly appreciated these aspects to benefit the assessee.

AO has challenged the relief given by the ld. First Appellate Authority by relying additional evidences and CIT(A) had called for remand report from the AO, then in spite of repeated reminders reflecting in the order of ld. CIT(A), the assessing officer had not responded on the additional evidences which have been relied by ld. CIT(A) to give relief to the assessee. Thus, the grounds as raised in the appeal of department have no legs to stand.

Levy of penalty u/s 271(1)(c) - disallowance of provision of expenditure - HELD THAT:- We consider it appropriate case where the impugned order of CIT(A) needs to be quashed here.

Ends of justice require that the merits of the ground of penalty order being on the basis of ambiguous show cause notice needs to be sustained. As it is a trite law that the penalty notice should be categorically as to which limb assessee is show caused and penalty is proposed to be levied.

Reliance in this regard can be placed on the decision of Gragerious Projects Pvt. Ltd.[2024 (11) TMI 1108 - DELHI HIGH COURT] and SSA’s Emerald Meadows [2016 (8) TMI 1145 - SC ORDER].

Validity of reopening of assessment - Scope of new regime - Period of limitation - extended due date for issuance of notice u/s 148 - HELD THAT:- In view of the observation of the Hon’ble Supreme Court in the case of Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] the extended due date for issuance of notice u/s 148 of the Act expired on 17-06-2022 and since, the notice is u/s 148 of the Act was issued on 27-07-2022 the said notice is to be treated as time barred by limitation and consequentially reassessment proceedings would be liable to be quashed as void ab initio.

Thus, we hold that the notice issued u/s 148 of the Act on 27-07-2022 is time barred by limitation. Accordingly the legal issue raised by the assessee is allowed.

Addition u/s 69A - cash found from the bank lockers of the assessee during search u/s 132 as unexplained - AR has argued that since the locker had not been operated during the relevant financial year, no addition could be made in respect of the case found therein in the year under consideration AND with regard to locker in the name of assessee’s wife, as argued that since the locker was not in assessee’s name, no addition could be made in his hands as no material has been brought on record to establish the assessee’s ownership, possession or control over - HELD THAT:- With regard to the locker No. 883 held jointly by the assessee and his wife, it has been demonstrated that the same was last operated on 29.02.2020. As such we are of the considered view that no addition could be made in the year under consideration in respect of cash found therein.

With regard to locker no. 85, held in the sole name of the assessee’s wife, we are inclined to accept the arguments made by the Ld. AR that no addition was called for in assessee’s hands as presumption U/S 132(4A) could not be invoked in his case and also no evidence or material has been brought on record to prove that the cash lying therein belonged to him.

Addition made u/s 69A on account of cash found in these two lockers. Assessee appeal allowed.

Penalty u/s 271(1)(c) - estimation of income on bogus purchases - AO made the addition on account of bogus purchases on an estimated basis of 20% which was further reduced by the Tribunal to 15% - HELD THAT:- The entire addition for the year under consideration has been made solely on the basis of estimates.

We find that in case of Krishi Tyre Retreading and Rubber Industries, [2014 (2) TMI 21 - RAJASTHAN HIGH COURT] held that where an addition is made purely on an estimate basis, no penalty u/s 271(1)(c) of the Act is leviable.

Similar view has been expressed in Sangrur Vanaspati Mills Ltd. [2008 (2) TMI 285 - PUNJAB AND HARYANA HIGH COURT] wherein held that when the addition has been made on the basis of estimate and not on any concrete evidence of concealment, penalty u/s 271(1)(c) of the Act is not leviable.

Penalty u/s 271(1)(c) cannot be levied merely on the basis of an estimated addition. Assessee appeal allowed.

TDS u/s 194I - Disallowance u/s. 40(a)(ia) - non-deduction of tax at source on alleged rent expenses - HELD THAT:- As details mentioned by the Auditor in the Tax Audit Report of the assessee are basically the details mentioned in the Tax Audit Report of M/s. Prime Accessories and inadvertently the figures have been repeated in the Tax Audit Report of the assessee even though no such payment of rent mentioned in the Tax Audit Report has been made by the assessee.

In absence of any such payment of rent having been made by the assessee, section 40(a)(ia) for non-deduction of tax at source cannot be invoked. Appeal of the assessee is allowed.

Penalty proceedings u/s 272A(1)(d) - failure to comply with notice u/s 142(1) - whether assessee has established reasonable cause within the meaning of section 273B so as to warrant deletion of the penalty? - HELD THAT:- It is a settled principle that penalty under section 272A(1)(d) is not automatic. Section 273B clearly provides that no penalty shall be imposed if the assessee proves that there was reasonable cause for the failure. The expression “reasonable cause” must receive a liberal construction so as to advance substantial justice. Penalty provisions are intended to ensure compliance and not to punish venial or technical breaches where absence of mala fides is evident.

In the present case, the material on record indicates that the non-compliance was not deliberate or contumacious. The explanation of the assessee regarding change in personnel, multiplicity of notices, technical issues in email registration, and change of office premises constitutes a plausible and bona fide explanation. There is nothing on record to show that the assessee derived any advantage from such non-compliance or that there was any conscious disregard of statutory obligation.

It is also relevant that despite multiple notices, the AO has levied penalty only for one instance, which itself indicates that the overall conduct of the assessee was not found to be entirely non-cooperative.

Assessee has demonstrated reasonable cause within the meaning of section 273B for the failure to comply with the notice. The default, in our considered view, is procedural and does not warrant imposition of penalty.

Appeal of the assessee is allowed.

Reopening of assessment u/s 148 of the new regime - requirement to supply the materials forming the basis of reopening - AR placed on record a screenshot of the ITBA portal showing that only the notice was issued without any annexures/information being attached thereto - HELD THAT:- In the present case, admittedly, no material was supplied to the assessee, notwithstanding the fact that, there was material available with the AO. It is clear from the assessment order that, only the gist of information was shared by the AO by way of reasons recorded along with the notice u/s 148A(b) of the Act.

It is an admitted legal position that the materials forming the basis of reopening have to be supplied in terms of the new provisions of the Act, failing which, the assessee is precluded from filing an effective response. This position stands fortified by the directions of Union of India vs. Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT]

This Tribunal is, therefore, of the opinion that the notice issued u/s 148 of the Act under the new regime is bad in law, as the order passed u/s 148A(d) was passed without providing proper opportunity to the assessee to represent its case, in accordance with law. Decided in favour of assessee.

Revision u/s 263 - Inadequacy of enquiry OR lack of enquiry -Disallowance of Year-end Provisions - HELD THAT:- Where the facts of the case warrant an enquiry, failure to conduct such enquiry renders the assessment order erroneous insofar as it is prejudicial to the interests of the Revenue. Explanation 2 to section 263 specifically deems an assessment order to be erroneous and prejudicial where the Assessing Officer has not made enquiries which ought to have been made in the facts and circumstances of the case.

In the present case, PCIT has also noticed that, in assessment year 2021-22, the assessee itself has disallowed the entire amount of similar year-end provisions u/s 37(1) of the Act instead of restricting the disallowance to 30 per cent under section 40(a)(ia) of the Act. The return of income for AY 2021-22 was due on 30/11/2021 whereas the impugned assessment has been completed on 27/05/2022, and therefore, the facts of AY 2021-22 were available before the ld AO while making scrutiny of the present assessment year. This circumstance, by itself, warranted a deeper examination by the Assessing Officer in the year under consideration, which was admittedly not undertaken.

The reliance placed by the assessee on the decision of the Tribunal in Bank of America National Association [2022 (8) TMI 1608 - ITAT MUMBAI] is of no assistance, as in that case the Assessing Officer had consciously followed the settled position in earlier years and the assessment records reflected application of mind. In the present case, no such conscious examination or adoption of a view is discernible from the record.

Thus, we hold that the AO failed to conduct the enquiry which he ought to have conducted in respect of the allowability of year-end provisions. Consequently, the assessment order suffers from the vice of lack of enquiry and squarely falls within the mischief of Explanation 2 to section 263 - PCIT was, therefore, justified in holding the assessment order to be erroneous insofar as it was prejudicial to the interests of the Revenue on this issue.

Deduction of Education Cess - Scope of Revisional Direction - After considering the submissions of the assessee, PCIT, in paragraph 15.2 of the impugned order, did not set aside the assessment on this issue nor did he record any finding that the assessment order was erroneous and prejudicial to the interests of the Revenue. The ld PCIT merely directed the AO to verify the assessee's contention regarding filing of Form No. 69 and to take action in accordance with law.

Thus, PCIT has not exercised revisional jurisdiction to revise or set aside the assessment on the issue of education cess. The direction issued is in the nature of a consequential verification, leaving the assessment order intact on this aspect. In these circumstances, no live grievance survives for adjudication before us on this issue.

Disallowance u/s 40(a)(ia) in respect of target discount, consistency discount and cash discount - relationship between OEM and dealers - nature of payment as "commission" u/s 194H - AO was duty-bound to conduct a detailed, year-specific enquiry into the dealership agreements, the incentive schemes, their actual mode of operation, and the nature of services rendered by the dealers, before arriving at a conclusion on the applicability of section 194H and the consequential disallowance under section 40(a)(ia). The complete absence of such enquiry vitiates the assessment.

Having regard to the magnitude of the amounts involved and the prima facie nature of the payments, the failure of the Assessing Officer to make enquiries which were clearly warranted has resulted in an assessment order that is not only erroneous but also prejudicial to the interests of the Revenue.

Disallowance of expenditure incurred on Jigs and Fixtures - first purchase of Dies and Moulds and Jigs and Fixtures was capitalized by the assessee and depreciation was claimed thereof - replacement expenditure - In the instant case the first purchase expenditure of these items was treated by the assessee as capital expenditure and thereafter if their value got obsolete then effect of should have been allowed under the computation of the block of asset. In our opinion, the Assessing Officer in the capacity of investigator was not required to remain silent on the submission and merely accept the submission of the assessee for the reason in earlier year same was admitted by the Ld. CIT(A). Admittedly, no inquiry whatsoever kind was carried out by the Assessing Officer for verification of claim deduction under the provisions of the Act.

In view of aforesaid discussion on all the four issues of taking action under section 263 of the Act, we find that even no basic enquiry of verification of quantum of claim of the assessee or whether the claim on merit is identical to earlier years where the assessee has been allowed relief by the appellate authority, the case of assessee squarely falls under the Explanation-2 of the section 263 of the Act, accordingly, the assessment order is deemed to erroneous in so far as prejudicial to the interest of Revenue. Appeal of the assessee is dismissed.

Addition u/s 69C r.w.s 115BBE - assessee has no explanation to offer for the bogus purchases - CIT(A) deleted addition - HELD THAT:- When the sales are not doubted and the complete details are furnished and no fault found therein, only because the party from whom the purchases were made was not filing income tax returns or had not furnished a reply, it cannot be held that the purchases had not been made by the assessee. It is clear that the assessee has replied to the notices of the AO.

AO has not discussed what the reply of the assessee was and how it was not acceptable to him. Therefore, his order is also a non-speaking order and even while we accept the fact that the order of the ld. CIT(A) was not a speaking order, it is evident that all the material that was placed before him was duly considered by him before coming to the conclusion that no addition could be made only because of the non-filing of a reply or of the failure to furnish the return. We, therefore, see no merit in the appeal filed by the Revenue on this ground.

Disallowance because of late deposit of TDS u/s 37(1) - We note that in the case of Lachmandas Mathura [1997 (12) TMI 16 - SUPREME COURT] after referring to judgments of Triveni Engineering Works Limited [1983 (10) TMI 49 - ALLAHABAD HIGH COURT] has held that interest on arrears of tax is compensatory in nature and not penal. In the circumstances, there does not appear to be any reason to sustain the disallowance made on account of Explanation 1 to sub section 1 of section 37 of the Income Tax Act and therefore, the same is deleted.

Appeal of the Revenue is dismissed.

Classification of goods under the Import Tariff Schedule - specific tariff entry preferred over general or residuary entry - Rule 3(a) of General Rules for the Interpretation of Import Tariff Schedule - natural justice - right to be heard / duty to disclose material evidence - reliance on third party test report and duty to furnish report to affected party - HELD THAT:- We find that more or less a similar issue involving identical set of facts wherein also the Adjudicating Authority relying on the test report of CIPET in respect of another Importer attempted reclassification, was decided by this Bench in the case of Arun Industries Vs Commissioner of Customs [2025 (12) TMI 1153 - CESTAT CHENNAI], wherein, this Bench has set aside the reclassification and the demand raised therein by the Department.

Following the ratio in the above cases, we find that the impugned order is not sustainable primarily, the same is passed by violating the principles of natural justice. Even on merit, the impugned order deserves to be set aside as the demand of duty upheld therein lack merit.

Disciplinary proceedings under the Customs Brokers Licensing Regulations, 2013 - administrative discretion in disciplinary action - judicial review versus appellate substitution of discretion - liability of employer for wrongful acts of employee - presumption and shifting onus of proof in employer-employee misconduct - proportionality of revocation of licence as a drastic penal measure - statutory timelines: directory versus mandatory effect -HELD THAT:- Proceedings under the CBLR are disciplinary in nature, intended to ensure statutory compliance and maintain discipline within the Customs area. The Original Authority, being a Commissioner of adequate seniority, is presumed to possess the requisite legal expertise and institutional competence to appreciate the complexities of the dispute. Where the Commissioner exercises discretionary jurisdiction for this purpose, the Tribunal ought not to interfere or substitute its own discretion in the absence of cogent reasons warranting such interference.

We find that the issue of fraud relates to one of the employees of the CHA firm. The question whether the CHA-employer can be held liable for the mischief of its employees, was examined by this Bench in the case of M/s. Sanco Trans Ltd. Vs Commissioner of Customs [2026 (1) TMI 533 - CESTAT CHENNAI]

We are of the considered view that the discretion exercised by the Ld. Adjudicating Authority is reasonable and in consonance with law. Revocation of a Customs Broker licence is a drastic penal measure under the CBLR, 2013. It has serious civil consequences affecting not only the licence holder but also the persons employed under him and his right to carry on trade under Article 19(1)(g) of the Constitution of India. The decision hence needs to be finely balanced. The impugned order reflects due application of mind, satisfies the test of proportionality, and does not suffer from arbitrariness, perversity, or violation of principles of natural justice. It cannot be said to be so unreasonable or shocking as to warrant interference by exercising appellate jurisdiction. Accordingly, no interference is called for.

We accordingly uphold the impugned order and dismiss the appeal. The cross-objection filed by the respondent is also disposed of accordingly.

Classification of goods - Antennas imported for base stations are classifiable as parts of a base station under CTI 8517 70 90 Or as machines/equipment for reception, conversion and transmission of data under CTI 8517 62 90/8517 60 90 - precedent of the Tribunal in Reliance Jio Infocomm -HELD THAT:-In Reliance Jio Infocomm [2019 (11) TMI 451 - CESTAT MUMBAI], the division bench of the Tribunal in the context of classification of antenna imported for base transmission station, after considering the scope of the competing entries and its applicability to imported goods in question, recorded the following finding: “51. In the result, the correct classification of the, Antenna for base station is under sub-heading 85177090 as “parts”. Since, the main issue of classification has been addressed, the other ancillary/alternative submission/issues on the eligibility of various exemption notifications issued in support of the classification of the said goods, becomes more of academic, hence not analysed. Consequently, the Revenue’s Appeals are being devoid of merit accordingly rejected.”

This decision was followed by the Chennai Bench of the Tribunal in Reliance Jio Infocomm [2022 (2) TMI 967 - CESTAT CHENNAI]

For the reasons recorded in the decision of the Mumbai Bench of the Tribunal in Reliance Jio Inforcomm, it has to be held that the appellant was justified in classifying the antennas for base station under CTI 8517 70 90 as part of the base station.

The impugned orders classifying the antennas under CTI 8517 60 90 cannot, therefore, be sustained and are set aside. All the three appeals are, accordingly, allowed.

Classification of goods - imported viewing cards/smart cards - Chapter Note 5(b) definition of "smart cards" - Section Note 2(b) to Section XVI rule for classification of parts - self-assessment and finality of clearance under section 17 and section 47 - extended period of limitation u/s 28(4) (collusion, wilful mis-statement or suppression of facts) - relevancy and admissibility of statements recorded u/s 108 as governed by section 138B - confiscation liability u/s 111(m) - penalty for short-levy or non-levy (section 114A) and managerial penalties (section 112) - penalty for use of false or incorrect material (section 114AA) - redemption fine in lieu of confiscation (section 125) - HELD THAT:- In this case, the assessment was modified by an SCN issued by the DRI under section 28(4) of the Act invoking extended period of limitation. The SCN states that ‘receiving intelligence that Videocon was mis-classifying the goods’ DRI investigated the matter. However, as discussed above, all Bills of Entry are filed by almost all importers across the country in the ICES of the Customs which are accessible by the Customs officers and presumably by DRI. DRI can check in a few minutes on the ICES as to which importer had imported what goods and classifying under which CTI, etc. We find it surprising that this information which is so easily accessible by DRI is said in the SCN to be ‘intelligence received’ by DRI. It is somewhat like a stockbroker with access to the stock exchange website saying that he had gathered intelligence that a particular stock was being sold on a day at a particular price; he can simply check the price on the website.

In this case, Videocon, the importer, classified the goods under CTI 8523 52 90 as part its self-assessment (under section 17) and the goods were examined (in many Bills of Entry) and cleared by the proper officer of customs for home consumption. The ADG, DRI who issued the SCN and the ADG(Adj), DRI who passed the impugned order, classified the goods under CTI 8529 90 90 (under section 28). Thus, there are two different views regarding classification of the imported goods - one of Videocon (which has not been changed or modified by the proper officer under section 17) and another of the ADG DRI who issued the SCN and the ADG(Adj.) who passed the impugned order. This is not a case where the classification of the goods was already decided in previous Bills of Entry under one CTI by the proper officer re-assessing duty or in an appeal by the Commissioner (Appeals) or this Tribunal or by any Court and thereafter, Videocon filed Bills of Entry with another CTI thereafter to evade duty.

Therefore, the ‘mis-classification of the goods to evade’ by the Videocon alleged in the SCN and affirmed in the impugned order is not correct. Videocon classified the goods in the Bills of Entry as per it’s understanding and view and the proper officer also cleared the goods accordingly and in many cases after the goods were examined. The details of all Bills of Entry including the classification were in the Customs ICES and presumably DRI had full access to them. After examining these Bills of Entry, DRI felt that they should have been classified under a different CTI.

To sum up: -

Although the SCN states that DRI started investigation on receiving intelligence that Videocon was mis-classifying the goods, we find that all information regarding every Bill of Entry filed, the details of classification of the goods during self-assessment and examination by the proper officers and the dates of clearance of goods were available on the ICES. It is a simple case where DRI looked at the Bills of Entry which were already cleared by the proper officer and entertained a belief that the goods deserve to be classified differently.

The assessment of the Bill of Entry comes to an end when an order is issued by the proper officer clearing them for home consumption under section 47. Once it is issued, the goods cease to be imported goods or dutiable goods and there can be no more assessment of duty on the goods.

However, the assessment already done can be modified through one of the five methods, if applicable-

(i) an appeal to the Commissioner (Appeals) under section 128;

(ii) through an SCN issued under section 28;

(iii) when finalising the assessment under section 18 if the goods were released on provisional assessment;

(iv) by the importer by amending the documents under section 149;and

(v) by the officer under section 154 to correct clerical or arithmetical errors.

Classification of goods is a part of assessment and it can be done by either the importer self-assessing the Bill of Entry or by the proper officer re-assessing it or by anyone modifying the assessment under any of the five methods indicated above.

Classification is a matter of opinion of the person. There is no obligation under the law on the importer to either to anticipate what view DRI or any Customs officer may take in hindsight about the classification of the goods which were already cleared or to file bills of entry conforming to such anticipated classification. However, if the classification was already settled earlier through re-assessment or in any appeal, the importer has to follow judicial discipline and file Bills of Entry accordingly. Likewise, if the classification is decided by the Commissioner (Appeals), this Tribunal or any court against the Revenue, the proper officer re-assessing the goods or any adjudicating authority or appellate authority passing orders has to follow the decision of the higher judicial authority.

None of the statements recorded under section 108 of the Act and relied upon in the SCN are relevant to this case because the ADG (Adj.) did not admit them as evidence after following the procedure prescribed under section 138B.

The viewing cards/smart cards imported by Videocon deserve to be classified under CTI 8523 52 90 and not under CTI85299090 as held in the impugned order.

There were also no grounds to invoke extended period of limitation under section 28(4) in the facts of the case.

The demand, consequently, is set aside, both on merits and on limitation.

Since the demand has been set aside, the order holding the imported goods liable to confiscation under section 111(m) needs to be set aside. Even otherwise, classification of goods during self-assessment of a Bill of Entry without anticipating what classification DRI may find correct in hind sight conforming to such anticipated classification cannot be a ground to hold goods liable to confiscation under section 111(m).

Consequently all penalties on all the appellants need to be set aside.

Revenue’s appeal to impose redemption fine and to impose penalties under section 114AA on Videocon, Dhoot, Kanthalia and Mathur deserve to be dismissed.

The Tribunal set aside the adjudicating authority's re classification of the imported viewing/smart cards to CTI 8529 90 90 and held they are classifiable under CTI 8523 52 90; investigational statements not admitted under section 138B were excluded.

Recovery of drawback under Rule 16/16A - valuation of exported goods in drawback proceedings - admissibility of statements u/s 108 without section 138B - status of Bank Realisation Certificates (BRCs) - confiscation u/s 113 - definition of "export goods" - penalty u/s 114 - penalty u/s 114AA - HELD THAT:- In this case, no appeal has been filed against the assessment of the Shipping Bills under section 128. Notice under section 28 will not apply because no duty was short paid or not paid. Section 18 will not apply because the Shipping Bills were not provisionally assessed. There is no request by the exporter nor any authorization by the officer for amendment and therefore, section 149 will also not apply. Since the issue is not regarding clerical errors by the proper officer, section 154 will also not apply. Therefore, the values in the Shipping Bills could not have been changed in these proceedings to recover drawback under Rule 16/16A of the Drawback Rules. Learned authorized representative has not placed any other provision in the Act under which the values could have been changed in the facts of the case.

Once the goods have been exported after processing and assessment of the Shipping Bill, the assessment can only be modified through one of the five methods available in the Act viz., an appeal to Commissioner (Appeals) under section 128, a demand of duty through a notice under section 28, finalization of provisional assessment under section 18, amendment of documents under section 149 or correction of errors under section 154. Each of these methods has limitations and will not apply in every case. The shipping bills disputed in this appeal were not modified through any of these methods.

The proceedings to recover the drawback under Rules 16/16A of the Drawback Rules are in the nature of execution proceedings and they cannot be used to modify the value or any other parameter in the Shipping Bills.

Since the BRCs have been issued by the bank in respect of the invoices and they were not modified or withdrawn by the bank, it must be accepted that the remittances have been received as per the invoices. Therefore, no recovery of drawback under Rules 16/16A can be done in this case.

Goods which have already been exported are not ‘export goods’ and hence they cannot be confiscated under section 113.

Consequently, no penalty can be imposed under section 114; and Penalty imposed under section 114AA cannot be sustained in the facts of the case.

The appeal is allowed and the impugned order dated 22.10.2019 is set aside with consequential relief, if any, to the appellant.

Amendment of bill of entry u/s 149 - refund u/s 27 - self-assessment and modification of assessment order - correction of clerical errors u/s 154 - entitlement to exemption/concessional duty on imported inputs used in manufacture - reassessment and appeal u/s 128 - HELD THAT:- Consequently the goods have been self-assessed without the benefit of exemptions and cleared under the RMS procedure.

The appellant notwithstanding the appeals filed before this Tribunal had also filed applications before the adjudicating authority for amendment of the impugned Bills of entry under Section 149 of the Custom Act, 1962. We find that this issue of amendment under section 149 of the Custom Act, 1962 has been decided in catena of decisions, cited (supra) and the Hon'ble Supreme Court in the case of M/s. ITC Vs. CCE, Kolkata [2019 (9) TMI 802 - SUPREME COURT (LB)] and UOI Vs. Sony India Pvt. Ltd. [2023 (4) TMI 1086 - SC ORDER]

We find that in view of the above judgements/decisions rejection of refund claims was not proper and tenable. Hence, the impugned orders rejecting the refund claims are not sustainable and are liable to be set aside.

As regards amendment to the bills of entries it was informed during the hearing that the applications submitted by the appellant to the respondent have not been considered till date.

Thus, matter has to be remitted back to Adjudicating authority to consider the applications filed by the appellant for amendment of bills of entry under Section 149 of the Customs Act, 1962 as per the conditions prescribed therein and to examine their eligibility to the exemption under Notification No. 25/2002-Cus dated 01.03.2002 as amended vide Notification No. 08/2004-Cus dated 08.06.2004 in respect of 24 (twenty four) bills of entries in Appeal No. C/21467/ 2017 and in 3(three) bills of entry in Appeal No. 21467/2017, the eligibility of exemption from BCD vide Notification No 12/2012-Cus dated 17.03.2012 (Sl. No 431-I), from Additional duty of customs (CVD) vide Notification No 12-2012-CE dated 17.03.2012 (Sl. No 263-U) and SAD vide Notification No 21/2012-Cus dated 17.03.2012 (Sl. No-1), as claimed by the appellant, in the light of the decisions cited, supra.

We find that the rejection of refund claims inter alia on the ground of not challenging the assessment needs to be re-considered after the decision on the amendment of the impugned bills of entry. Hence the impugned orders upholding the rejection of the refund claims in the facts and circumstances are liable to be set aside and have to be remitted to the adjudicating authority.

The appeals are disposed of by setting aside the impugned orders rejecting the refund claims and remitting the matters to the adjudicating authority to consider the appellants' applications for amendment of the bills of entry (and corrections) in accordance with law

Duty drawback admissibility for export of unlocked/tested mobile phones - liability of customs broker for assisting in wrong declarations - effect of invalidation of administrative circular on recovery proceedings - remand for fresh consideration of penalties in absence of circular - HELD THAT:- The setting aside of the relied upon circular by the Hon'ble High Court of Delhi in re AIMS Retail Services Pvt Ltd [2025 (2) TMI 596 - DELHI HIGH COURT], and its consequent confirmation by the Hon'ble Supreme Court, erased the pillar on which the proceedings were initiated against the appellant herein. These are cases in which the drawback had been sanctioned and the impugned order directed recovery under the Customs and Central Excise Duties Drawback Rules, 2017. In the light of the decisions cited supra, the impugned order ought to be reconsidered by the original authority insofar as denial of drawback solely on the basis of the circular was concerned.

Accordingly, we set aside the impugned order and remand the matter back to the original authority for a fresh decision on the consequence of penalties to be fastened on the appellant herein in the absence of impugned circular and to decide on the charge that the appellant herein had enabled the exporter to claim ineligible drawback

Consequently, the appeal is allowed by way of remand.

Fraudulent preference u/s 531 - transactions void against the liquidator u/s 531A - not at arm's-length / related party transaction - void ab initio - custodia legis and rights of the Official Liquidator u/s 456 - limitation and effect of Section 458A on computing limitation - remedial power to take possession and effect public auction for creditors' realization- HELD THAT:- Section 531 provides that any transfer of property whether movable or immovable etc., by the Company within 6 months before the commencement of its winding-up which, had it been made, shall be in the event of Company being wound up, be deemed a fraudulent preference of its creditors and be invalid accordingly.

Section 531 is not in the respect of void transactions which are mentioned in Section 531A. The transactions in Section 531 are a distinct category other than the transactions made in Section 531A. The void transactions under Section 531 are void from the very inception that is void ab initio. Whereas under Section 531A, the transactions are to be made in good faith for valuable consideration but if they are not in the ordinary course of its business and made within a period of one year before the presentation of the petition for winding up would be void against the liquidator.

Merely mentioning Section 531A in the application filed by the official liquidator i.e., CA No. 826/2011, it would not change the nature of the transaction which was void ab initio. Under Section 531 of the Companies Act, as the transfer of the valuable assets of the company was effected within less than two months before the filing of the winding up petition and it was a fraud on its creditors, therefore, void ab initio.

Considering the aforesaid facts, we are of the considered view that the lease deed was nothing but fraudulent and dishonest act on behalf of the ex-management of the Company in liquidation to transfer the valuable property of several crores against the interest of the company, its shareholders, creditors, workmen and members and therefore, it is a void transaction from the very inception. The application filed by the official liquidator was to take possession of the property and put the same for auction for making payment of the creditors. The said application has been rejected only on the ground of limitation as the transaction was said to be covered under Section 531A.

We, therefore, hold that the view taken by the learned Single Judge is erroneous one and cannot be sustained. The transaction between the Company in liquidation and the KIAMS is not at arm's length but to a related party and that too against the interest of the Company, its creditors, shareholders etc., valuable properties of several crores has been sought to be given for pittance to the related party just before presentation of the winding up petition. The lease deed is nothing but sham, bogus and fraudulent transaction in transferring the valuable assets in favour of the KIAMS, a related party.

The appeal is allowed.

Bar u/s 10A of the Insolvency and Bankruptcy Code (moratorium on CIRP initiation) - novation of loan by restructuring agreements - scope of adjudicating authority at admission u/s 7 (limited to existence of financial debt and default) - pre-implementation conditions preventing crystallisation of restructuring - commercial wisdom of the Committee of Creditors non-justiciable - withdrawal/settlement u/s 12A and Regulation 30A - refund of deposit furnished as condition of interim stay -

Bar under Section 10A, IBC -admission of the Section 7 application - HELD THAT:- In our considered view, the plea of bar under Section 10A, IBC is a non-starter. In the backdrop of outbreak of COVID-19 pandemic, as an ameliorative measure, Section 10A was incorporated in the IBC. The provision barred initiation of CIRP against a corporate debtor in the event the default arose on or after 25.03.2020, for a period of 6 months or such period not exceeding one year as may be notified. It may be noted that by notification the government extended the embargo till 24.03.2021.[Notification S.O. 4638(E) dated December 22, 2020, Ministry of Corporate Affairs.] Explanation to the Section, however, clarified that the bar will not apply to any default committed before 25.03.2020.

In the Section 7 application, 2nd Respondent’s case is that the Corporate Debtor had defaulted under the common loan agreement dated 19.06.2013 on 31.03.2018, much prior to the commencement of the Section 10A bar.

We are in wholesome agreement with the NCLAT’s finding that the restructuring proposals had not fructified into valid agreements novating the original contract. - The pre-conditions had not been complied with and even the subsequent tariff order dated 31.05.2021 did not provide adequate leverage to persuade the lenders to accept the restructuring proposals in their meeting convened on 11.11.2021 pursuant to High Court’s direction vide order dated 07.10.2021. In such view of the matter, the date of default would relate to 31.03.2018 as per the Section 7 application, and the proceeding cannot be held to be barred in light of the Explanation to Section 10A, IBC.

Validity of CIRP Admission - HELD THAT:- Receipt of various sums of money would not amount to acceptance of the restructuring proposals, thereby novating the earlier loan agreement. Neither would such part payments constitute full satisfaction of the existing debt so as to render the Section 7 application inadmissible.

On the legal score, one must bear in mind the scope and purpose for which IBC was promulgated. The main objective of its enactment was to create a complete code for easy, prompt and seamless resolution of insolvency process and thereby ensure that the net worth of the corporate debtor is not dissipated and the entity is salvaged from corporate death through a viable resolution plan accepted by its CoC. The Code prescribes whenever a corporate debtor defaults on a debt that is due and payable, an insolvency process may be initiated.

Once a corporate debtor demonstrates a dispute regarding the existence of the debt, the insolvency process stands aborted vis-à-vis the operational creditor. But when the financial creditor initiates the insolvency process for the purposes of admission, the Adjudicating Authority is only to ascertain the existence of a default from the records of the information utility or the evidence furnished by the financial creditor within fourteen days from the receipt of such application. At this stage, neither is a corporate debtor entitled nor is the Adjudicating Authority required to examine any dispute regarding the existence of such debt.

The Code restricts the scope of enquiry for admission of an insolvency process by a financial creditor merely to the existence of default of a debt due and payable and nothing more. The legislative intent behind such prompt and summary intervention is “to ensure revival and continuation of the corporate debtor by protecting the corporate debtor from its own management and from a corporate death by liquidation.”

In Vidarbha (supra), this Court had taken note of an award passed by APTEL [Appellate Tribunal for Electricity.] in favour of the corporate debtor which far exceeded the claim of the financial creditor, and held in the setting of such facts, initiation of CIRP was unwarranted.

In the present case, Appellant’s contention regarding Corporate Debtor’s viability is highly dubious. Though the Corporate Debtor strenuously demonstrates its commercial viability, the NCLAT has noted that the extent of outstanding liability as on 02.01.2024 was Rs. 3103.31 crore, which far exceeds the bills raised on WBSEDCL to the tune of Rs. 906 crore and EBITDA of Rs. 20 crore per month during the CIRP.

Thus, we are of the opinion the admission of the Section 7 application was lawful and does not call for interference.

Settlement Proposals - HELD THAT:- Notwithstanding the stated statutory scheme and merely as a concessionary measure, this Court stalled the CIRP vide order dated 12.09.2025 subject to the Appellant depositing Rs. 25 crore and furnishing a bank guarantee of Rs. 100 crore. At this stage, DVC intervened and vehemently opposed delay in final approval of its resolution plan. Having considered these concerns of the successful Resolution Applicant, we are in agreement with the Respondents that any further direction to stall the CIRP on the plea of further settlement proposals at the behest of the Appellant would be prejudicial to the interest of a swift and timely resolution of insolvency process.

Thus, the appeal is dismissed and the stay on CIRP vide order dated 12.09.2025 is vacated.

Clean Environment Cess - levy includes assessment and collection - incorporation by reference - rule-making power versus notification power - intra vires challenge to notification u/s 83(7) - harmonious construction of statutory provisions - HELD THAT:- It is true that Section 84(3) of the Finance Act, 2010 obliges the Central Government to place the Notifications issued under Section 83(7) as well as the rules made under Section 84 before both the Houses of Parliament. In other words, the laying procedure has to be adopted in both cases. But, on that score, we cannot treat the rule making power under Section 84 and the power to notify under Section 83(7) on the same footing. This is because while Section 84 deals with rule making power, Section 83(7) embodies the well known legislative device of incorporation by reference. The manner of exercising the power under Section 83(7) is different from the scope of the power under Section 84 of the Act. The fact that it is the Central Government that has the power to notify as well as the power to make rules would not by itself immunize the impugned notification from challenge. The impugned notification has been issued under Section 83(7) and not under Section 84 of the Act. The respondents have to justify that the Central Government had the power to issue the impugned notification under Section 83(7) of the Act.

It is true that Section 84 is widely worded. It is also residuary in character as the Central Government is empowered to lay down rules in respect of any other matters relating to Section 82(6) of the Act. On the other hand, Section 83(7) talks only about levy and exemption. Section 83(6) states that the manner of assessment, collection and any other matter relating to Cess shall be such as may be prescribed by rules. Rules belong to the realm of subordinate legislation and do not carry the same degree of immunity which is enjoyed by a statute passed by a competent legislature. Subordinate legislation may be questioned on the ground that it does not conform to the statute under which it is made. Whenever a rule is challenged as ultra vires, courts enquire if the impugned rule is within the scope of the authority conferred on the rule-maker by the parent statute. Therefore, the lawmakers invariably couch the empowering provision in rather wide terms. Otherwise, the rule may be assailed on the ground that it is beyond the scope of the rule makers' authority.

Chapter VII of the Finance Act, 2010 enabled the Central Government to adopt the notification route under Section 83(7) or the rule making route under Section 84 of the Act to deal with cases of non-payment or short-payment of CEC. The Central Government thus had the option of making detailed rules relating to assessment and collection of Clean Environment Cess. The other option was to extend the applicability of already existing statutory provisions of the Central Excise Act to assessment and recovery of CEC. Dealing this subject matter through the medium of rules would have entailed laying down an elaborate procedure. But instead the Central Government chose to borrow wholesale the procedure already laid down in the Central Excise Act. It is not for the writ court to question the wisdom of the Central Government. What we have to see is whether the impugned notification will fall within the sweep of Section 83(7) of the Act. Once we hold that the expression “levy” would include assessment and collection also, the conclusion can only be that the impugned notification is intra vires the parent Act.

Writ petition stands dismissed.

Taxability - Cargo handling service - Providing services prior to July 2012 without obtaining registration or discharging service tax - mere transportation of goods - extended period of limitation under proviso to Section 73(1) - suppression of facts with intent to evade payment of tax - essential character / predominant service - HELD THAT:- Given our findings aforesaid that Revenue having neither preferred an appeal or filed appropriate cross-objections as per statutory procedure, cannot now contend that the activity undertaken by the Appellant is covered under the “means” clause of the Section 65(23), we find that it is not necessary for us to address the contentions to the contrary on this aspect, advanced by the appellant. Furthermore, given our elucidation of what constitutes cargo handling service under section 65 (23) (b) and our considered view that to attract clause (b) of section 65(23), packing is the principal/main/primary element in the conjoint activity of packing together with transportation, as well as in the absence of any evidence, or finding, that the appellant is engaged in the activity of packing, a further enquiry as to whether or not the Lignite transported by the appellant can be considered to be ‘cargo’ is an exercise in superfluity and thus, we refrain from embarking on such an expedition. We also find that the decisions relied on by the Ld. A.R has been rightly distinguished by the appellants, as elaborated in the appellant’s written submissions.

We are of the considered view that the finding of the Adjudicating Authority that the Appellant is rendering ‘cargo handling services’ as covered under Section 65 (23) (b) of the Finance Act, 1994, and the consequent confirmation of demand, interest and penalties, are wholly untenable and are liable to be set aside. In as much as we have found the first issue in favour of the appellant on merits, we find it unnecessary to address the alternate contention of the appellant that the services provided by the Appellant are classifiable under ‘transport of goods by rail’ and that resultantly the services provided by the appellant would be even otherwise exempt during the impugned period, for more reasons than one. First, in the absence of the said services rendered by the appellant being subjected to any other live demand under any other service category for the said period, the non-recurring nature of the dispute, renders the examination of the said alternate plea academic. Second, it is the categorical averment of the appellant in its written submissions that after the period of present dispute which is only upto June 2012, the Appellant, from July 2012 onwards has started paying service tax under the category of ‘Other Taxable Services’. The Appellant has not shown that there has been any dispute raised by the Revenue thereafter.

While raising the aforesaid alternate contention, the Appellant has also not put forth that the service rendered by it prior to the disputed period, during the period of dispute and post, has changed in any drastic manner and has on the contrary contended that it has remained the same. Third, chapter V of the Finance Act 1994 has been omitted, save as otherwise provided in the CGST Act, 2017 after the advent of GST Regime. Last, if a lis can be conclusively decided on narrow points that arise in a particular proceeding, it is the discretion of this Tribunal to decide the matter only on such points, without dealing with all other arguments that are raised in the alternate.

Extended period of limitation under proviso to Section 73(1) - We find that the appellant has furnished cogent reasons in its reply substantiating its bonafide belief that Service tax is not payable on the services rendered by the Appellant, premised on the multi modal nature of its transportation of lignite, which according to the appellant was predominantly using rail service on which the levy was kept in abeyance by notification No.33/2009-ST dated 01-09-2009 till 01-072012. It is a settled law that when the Appellant is under a bona fide belief that tax is not payable, extended period cannot be invoked.

Admittedly another SCN No. 25/2014(C) dated 23.04.2014 was issued by the Commissioner of Central Excise, Puducherry on the same activities, however, containing a proposal to confirm the demand of tax under a different category, that is, ‘Business Auxiliary Service’. This would amply indicate that the Department itself was unclear as to the classification of the activities undertaken by the Appellant and hence the issuance of two show cause notices proposing classification under different categories, extended period cannot be invoked.

Thus, the Ld. Adjudicating Authority has egregiously erred in invoking the extended period of limitation and the demand for the period beyond the normal period is therefore in any event unsustainable, being barred by limitation.

Given our aforesaid findings we are of the firm opinion that the demand of Service Tax is unsustainable and resultantly, the question of demanding interest or imposing penalties does not arise and the findings of the Ld. Adjudicating Authority on these aspects are also liable to be set aside.

The Appeal is allowed with consequential relief(s) in law, if any.

Commercial Training or Coaching Services - service tax liability on grants-in-aid - sovereign function / absence of service provider-recipient nexus - extended period of limitation for recovery - suppression with intent to evade payment of tax - penalty u/s 77 of the Finance Act, 1994 - HELD THAT:- As along as the appellant is rendering Commercial Computer Training he is liable to service tax. It is an admitted fact that the Appellant had carried out the Computer training besides undertaking maintenance of computer and peripheral as per the agreement entered by the Appellant with CPI, Karnataka and considering the definition of ‘Commercial Training or Coaching Center’, the activities carried out by the appellant squarely falls under the said category and appellant is liable to pay service tax.

Invoking the extended period of limitation - HELD THAT:- We find no explanation is given by the Commissioner on the above facts submitted by the appellant. We also find that the entire facts were known to the Department and there is no evidence to substantiate that the Appellant made any attempt to suppress relevant facts. Moreover, appellant is a Public Sector Unit under Karnataka Government and there is no allegation that they have made any attempt to evade service tax willfully or by fraud. In the absence of any such allegation, confirming the demand by invoking the extended period of limitation is unsustainable.

Accordingly, the demand of service tax for the activity carried out by the appellant under the category of ‘Commercial Training or Coaching Center’ is upheld only for the normal period and penalty under Section 77 is set aside with consequential relief, if any, in accordance with law.

Manufacturing and selling of household insecticide, house-care products, shoe care products etc. - Business Support Services - service tax demand - principal manufacturer excise duty - penalty - extended period of limitation - HELD THAT:- We find that the identical issue has been dealt with by this Tribunal in the case of M/s Winsor Fashion Private Limited [2024 (3) TMI 238 - CESTAT KOLKATA] and M/s. Neo Plast Private Limited v. CCE & ST, Guwahati [2024 (3) TMI 238 - CESTAT KOLKATA], held that the activities undertaken by Winsor Fashion and Neo Plat, for GCPL, which are similarly placed compared to the Appellant, amount to manufacture and therefore no demand of service tax is sustainable. This is for the reason that the manufactured goods have suffered excise duty at the end of the principal. Therefore, the instant issue of demand of service under the head “Business Support Services” on the manufacturing activity carried out by the appellant for GCPL is not sustainable.

Therefore, we find that as the issue is more res-integra in view of the above decision of the Tribunal in the case of M/s Winsor Fashion Private Limited (supra) and Colortek, we hold that the demand of service tax is not sustainable against the appellant. Accordingly, no penalty is imposable on the appellant.

Thus, we set aside the impugned order and allow the appeal with consequential relief, if any.

Taxability of non-monetary consideration - consideration in non-monetary form u/s 67(1)(ii) of the Finance Act, 1994 - inclusion of reimbursed expenses in assessable value - service tax liability on free accommodation provided by service recipient - precedential effect of earlier Bench decision - penalty linked to substantive demand - HELD THAT:- We find that this order is emanating from the periodical show cause notice which has been issued subsequent to the show cause notice for which the demand has already been set aside by this Bench vide order dated 10.05.2024. Thus, we find that issue is no longer res-integra and therefore the demand for the subsequent period will also not sustain on similar grounds. Accordingly, the impugned order is set aside. Since the order has been set aside on merit itself, the penalty will also not sustain.

Appeal allowed.

Sale of space or time for advertisements - renting of immovable property services - taxability of amounts shown in balance sheet/Income Tax Return - taxability of fees, fines, penalties and forfeited amounts - display of advertisement on assessee's property by non advertising agency not taxable as sale of space/time - HELD THAT:- We find that the issue is no longer res integra has submitted by learned counsel for the appellant we find that this Bench vide Final Order [2024 (3) TMI 1103 - CESTAT NEW DELHI], [2024 (3) TMI 858 - CESTAT NEW DELHI] and [2024 (3) TMI 1513 - CESTAT NEW DELHI].

Appeal is allowed with consequential relief if any as per law.

Exemption for works contract services related to water supply - benefit of Mega Exemption Notification to sub-contractors - remand for verification of contracts and supporting evidence - penalty not leviable in absence of case by revenue - HELD THAT:-The case is made on the basis of 26AS statement; several decisions are in favour of the appellant; work is rendered to Government authorities and, therefore, extended period cannot be invoked and penalties cannot be imposed.

We find that on merits the appellant have a strong case and the learned Commissioner AR has conceded the same. We are of the considered opinion that under the circumstances revenue has not made any case for imposition of penalties. We are inclined to remand the case to Adjudicating Authority to extend the benefit after verifying the contract and /or other evidence that may be submitted by the appellant in order to show their eligibility to the exporter.

In the result, we allow the appeal by way of remand to the Adjudicating Authority in above terms. Penalties imposed are, however, set aside. The Adjudication in remand shall be completed within six weeks of receipt of this order, as far as it may be possible.

Cenvat credit admissibility under Cenvat Credit Rules, 2004 for inputs used in or in relation to manufacture - rejection of inputs after commencement of the manufacturing process does not disentitle credit - stage-wise process/segregation as part of the manufacture or process in relation to manufacture - credit not to be denied on account of inputs becoming waste, refuse or by-product during manufacture - HELD THAT:- Admittedly, in this case the coal was put into the feeder pipe for further processing of manufacturing of aluminium ingots etc. when it was found having low grade Gross Caloric Value (GCV) and the same was moved, it does not mean that such coal has not been used in the process of manufacture. It is an admitted fact that initially the coal was used in the process of manufacture. In that circumstances, the cenvat credit on the coal in question, which has been removed being found having low Gross Caloric Value, the cenvat credit cannot be denied to the appellant in terms of Cenvat Credit Rules, 2004. Therefore, the appellant is entitled to take the cenvat credit on all the goods used in the manufacture of final products. Admittedly, the coal in question was used in the manufacture of excisable goods, therefore, the cenvat credit cannot be denied.

Thus, we hold that no demand, by denying the cenvat credit on the coal rejects, is sustainable.

Therefore, the impugned order is set aside and the appeal is allowed with consequential relief, if any.

Inter unit stock transfer - transaction value - proviso to Rule 3(5A) of the Cenvat Credit Rules, 2004 - sale between units of the same legal entity - Form F as indicium of non sale - reversal of Cenvat credit on transfer of capital goods -Whether the demand of delay on the transaction value can be confirmed by invoking Rule 3(5A) of Cenvat Credit Rules, 2004 when the transaction is merely an inter unit stock transfer and there is no transaction value in absence of any sale between the two units of the appellant. - HELD THAT:- We find that the short issue emerges in this case whether the demand of delay on the transaction value can be confirmed by invoking Rule 3(5A) of Cenvat Credit Rules, 2004 when the transaction is merely an inter unit stock transfer and there is no transaction value in absence of any sale between the two units of the appellant.

The said issue has been examined by this Tribunal in the case M/s RSPL Limited (Dhar Unit-III) [2021 (7) TMI 197 - CESTAT NEW DELHI].

Further, similar view has been taken by this Tribunal in the case of Commissioner of Central Excise & Service Tax, Ghaziabad Vs. M/s RSPL Ltd. (supra), wherein this Tribunal again has observed as under : “4. The facts of the case has not been disputed by the Revenue that the respondent had transferred inputs from their one unit to their another unit. In that circumstances, as no sale has taken place, therefore, the provisions of Rule 6 (3) (b) of the Rules is not applicable to the facts of this case.

5. In that circumstances, I do not find any infirmity in the impugned order, the same is dismissed. The Cross Objections filed by the respondent are also disposed in the above terms.”

In view of the decisions, which are applicable to the facts and circumstances of this case, we hold that the impugned demand by invoking the provisions of Rule 3(5A) of Cenvat Credit Rules, 2004, are not sustainable against the appellant.

In view of this, we set aside the impugned order and allow the appeal with consequential relief, if any.

Cenvat Credit - Clean Energy Cess - Eligibility for credit under Cenvat Credit Rules, 2004 - Rule 3 of Cenvat Credit Rules, 2004 - Statutory construction of enabling rules - Treatment of cess as duty of excise u/s 83(3) of the Finance Act, 2010 - Rule-making power u/s 37 of the Central Excise Act and Section 94 of the Finance Act - HELD THAT:- We find that the CCR is not a generic rule providing for credit of each and every type of taxes for utilising the same in an unfiltered way towards discharge of any type of duty and under all circumstances. The entire scheme of taking of credit and utilisation thereof is regulated in accordance with the rules framed under CCR, which has been framed by the Government in exercise of powers conferred by Section 37 of Central Excise Act and Section 94 of Finance Act.

In terms of Section 94(2) (eee) of Finance Act, the Government is empowered to make rules in relation to matters dealing with credit of service tax paid on services consumed or duties paid or deemed to have been paid on goods used for providing a taxable service. Therefore, the eligibility for taking credit in respect of a particular type of tax or cess has to be examined in the context of the provisions of CCR. We also find that when the plain reading itself does not allow taking of any credit in respect of CEC therefore, we cannot, as a creature of Statute, go beyond the scope of the rules which is consistent with present Act.

We also find that similar issue was considered by this Bench in the case of Deccan Cements Ltd., and others including the case of the appellant themselves in[2019 (7) TMI 764 - CESTAT HYDERABAD], whereby, the Tribunal after going through the scheme of CCR, Statutory provisions, wherein, interalia, the case of Shree Renuka Sugars [2014 (1) TMI 1469 - KARNATAKA HIGH COURT] referred by the appellant was also considered and thereafter held that the Rule 3 of CCR does not provide for taking of Cenvat Credit of CEC. Moreover, in the case of Shree Renuka Sugars Ltd., supra, the cess was sugar cess governed by different statute and provisions and hence the facts are also distinguished.

Therefore, respectfully following the decision of this Bench in the case of Deccan Cements Ltd., and others, we find that the appeal has no merit and accordingly, the appeal is dismissed.

Entitlement to the benefit of Notification No.25/1999-Cus - imported parts declared as parts of relays - Classification under Chapter 85.36 vs Chapter 90.32 - Principal function / essential character test for tariff classification - HSN Explanatory Notes - Heading 9032 distinction between regulation/control and protective tripping - Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - procedural compliance and Rule 8 - HELD THAT:- The relays are designed for protection of a system and the control functions incorporated in the numerical relays mentioned above makes it further clear that such functions are incorporated for the purpose of tripping the faulty system so as to protect the system from further damages. More or less similar explanation can be located in the HSN notes for Chapter 85.36 in emphasizing its role mentioned.

A plain reading of the Explanatory Note relevant to Chapter 9032, it is clear that automatic regulator of electrical quantities and instruments or apparatus are for automatically controlling for non-electrical quantities, the operation of which depends on an electrical phenomenon, which vary according to the factor controlled, and are designed to bring this factor to and maintain it at a desired value, stabilized against disturbances, by constantly or periodically measuring its actual value. In the present case, the IEDs are designed to trip the circuit protecting from damages to the electrical distribution system and does not control the parameter in any manner, to stabilize or maintain the desired value of current or voltage at a particular level against any fluctuations or disturbances.

As already referred; the control mechanism is incorporated for the purpose of enhanced security in tripping the circuit rather than controlling the parameters or transmission of electricity in any manner. The authorities below had observed that the IED contains a series of relays which is only a passive component and by performing various inter-linked functional sets like programmable logic controllers, self-adoptive, self-monitoring and self-testing, ability to communicate between different parts of the automation systems computing various quantities etc. be called as a multifunctional multi-device automation equipment and covered under Chapter sub-heading 9032. The Presence of number of relays in a circuit cannot be considered as a controller. This can be better understood reading the Circular No.51/2004-Cus. dated 01.01.2024 in extending benefits of Sl.No.112 of Notification No.25/1999-Cus dated 28.02.1999 to Lever combination of switches.

Thus, we do not find merit in the said observation of the learned Commissioner (Appeals). Even though the IED consists of a series of relays which carries out multiple functions but are basically designed for protection of system and in absence of any feature for controlling the parameters except tripping the faulty system in transmission/ distribution of electricity, it cannot be considered to fall under Chapter sub-heading 9032.

In absence of allegation under any other classification of the finished goods, it is to be inferred that the ‘relays’ manufactured by the appellant and cleared declaring the finished goods falling under Chapter heading 85364900 in their invoices as various types of relays viz. “ABB make transfer protection relay type REL670”, be accepted as ‘relay’ only. Also from the records, we find that the Central Excise authorities had not disputed the classification of the manufactured finished goods as ‘relays’ having its classification under Chapter sub-heading 85364900 at any point of time. Consequently, the appellant are entitled to the benefit of Notification No.25/1999-Cus as amended on the ‘parts of relays’ and used in the manufacture relays during the relevant period. Since we hold on merit that the appellant are entitled to the benefit of Notification No.25/1999-Cus dated 28.02.1999 as amended for the imported parts, analysis of ancillary issues like recovery of duty foregone, limitation etc. becomes academic; hence, not delved into.

The Tribunal held that the finished devices are relays whose principal function is protection and therefore the imported parts qualify as "parts of relays" under Sl. No.112 of Notification No.25/1999; the appeals allowing benefit were directed to be given and the related request dated 24.09.2012 remanded for fresh decision consistent with these findings.

Quashing of criminal proceedings - lack of the essential ingredients of cheating or criminal breach of trust - Criminalisation of civil disputes - Essential mens rea for cheating - Distinction between breach of contract and cheating - Abuse of process of law - Offences under Sections 406 and 420 IPC - HELD THAT:- No evidence to indicate that the petitioners had dishonest or fraudulent intentions at the time the agreement took place to supply poultry feed. A dispute arose between the parties when the opposite party claimed that a huge amount was found due in his ledger. The opposite party no. 2 claimed almost Rs. 40 lakhs in dues for the supply of poultry feed. It was further alleged that the petitioner had not paid the same amount for about one year, giving false assurances.

It is an admitted fact that their business transactions continued for a long period and the petitioner made regular payments time to time to the opposite party. Even if there are dues or business transactions or non-payment of dues amount by no stretch of imagination, they can be called dishonest inducements. It was purely business transactions of a civil nature.

It is not the case of the opposite party in the present case that he was deceived by fraudulent or dishonest inducement from the beginning of the transaction; rather, it is an admitted fact that the petitioner had made regular payments from time to time.

The complaint indicates that there was no fraudulent or dishonest inducement or deception by intentional practiced by the petitioner right from the beginning of the transaction. If subsequent payment has not been made, that will not tantamount to deception, fraudulent or dishonest inducement, nor would it amount to deception by intentional means right from the beginning of the transaction. Therefore, the case under Sections 406/420/ of IPC in the facts of this case has not been made out. The petitioner was not deceived nor induced to enter into the business transaction. That is neither his case in the complaint, nor was the opposite party no. 2 dishonestly or fraudulently induced into delivering the poultry feed. They shared a business transaction since 2012, and it continued till 2016. The breach of contract or business transaction cannot be called cheating in the facts of this case.

A similar view was also expressed in the case of Hari Prasad Chamaria vs. Bishun Kumar Surekha and Ors [1973 (9) TMI 113 - SUPREME COURT] wherein the Hon’ble Apex Court was dealing with a case of quashing of FIR under Section 420 IPC, where the appellant had entered into a business transaction and, in good faith, paid a large amount to the respondents for starting the business. The respondents neither started the business in their own names nor refused to render accounts, nor was the money refunded by that appellant. The question before the Hon’ble Apex Court arose whether in such circumstances the respondents could be held criminally liable under Section 420 IPC. The Hon’ble Apex Court, negating the plea of the appellant, observed that even assuming prima facie all the allegations in the complaint to be true, they merely amount to a breach of contract and could not give rise to criminal prosecution.

Thus, this Court finds ingredient of the offences alleged by the opposite party no.2 is missing. Merely because payment has not been made or accounts have not been settled, it does not constitute offences punishable under Sections 406/420 of the Indian Penal Code. The disputes between the parties are purely civil in nature, and criminal proceedings in a civil case should not be allowed to be continued any further against the present petitioner; it would be an abuse of process of law. To secure the end of justice, the proceeding deserves to be quashed.

The revisional petition is allowed.