TaxTMI Updates e-Newsletter
Apr 12,2017

Summary order. Permission granted to withdraw the Special Leave Petition; the Special Leave Petition is dismissed as withdrawn.

Search and seizure - undisclosed income - remand to the Assessing Officer - deemed dividend - accumulated profits - unexplained investment in jewellery - CBDT Instruction No.1916 - opportunity of being heard

Search and seizure - undisclosed income - remand to the Assessing Officer - restitution of seized currency - Whether foreign currency of Rs. 7,63,340/- found at the assessee's premises should be treated as the assessee's undisclosed income or requires verification and restitution to the company. - HELD THAT: - The Tribunal noted the assessee's contention that the seized foreign currency belonged to M/s Fourways Travels Pvt. Ltd. and Indo Saudi Services (Travel) Pvt. Ltd., was accounted in the companies' books and was returned on 31.03.2011, and that RBI rules permit retention for a limited period. The Assessing Officer had added the amount as undisclosed income on a presumption that surplus currency retained by the assessee represented unaccounted income, and the CIT(A) sustained the addition observing the remand report was silent. Given these contentions and the documentary assertions that the currency was company-owned and accounted for, the Tribunal held that the matter requires examination and verification by the Assessing Officer; the Assessing Officer must consider the submissions, documents and accounting entries, give the assessee adequate opportunity of being heard and determine whether the currency forms part of the assessee's income or belongs to the companies and was restituted in accordance with law. [Paras 5]

Issue remanded to the Assessing Officer for fresh examination and verification in accordance with law.

Deemed dividend - accumulated profits - remand to the Assessing Officer - Whether the addition of Rs. 90,00,000/- (as sustained by CIT(A) in part) under the deeming provision should be sustained and, if so, whether it must be restricted to the accumulated profits of the company. - HELD THAT: - The Tribunal accepted in principle that the deeming provision attracted an addition against the assessee but observed that, as a matter of law, any deemed dividend under the provision must be restricted to the accumulated profits of the company. The Revenue did not seriously contest restricting the deeming to accumulated profits. Consequently, while upholding the applicability of the deeming provision, the Tribunal directed that the quantum of disallowance be verified and quantified by the Assessing Officer strictly limited to the company's accumulated profits as specified by the statutory provision. [Paras 6]

Addition under the deeming provision is justified in principle but is to be restricted to accumulated profits; matter remanded to the Assessing Officer for quantification accordingly.

Unexplained investment in jewellery - CBDT Instruction No.1916 - Whether the addition in respect of jewellery found during search should be confirmed in full or reduced as held by the CIT(A). - HELD THAT: - Gold, diamond and silver articles were found during search; the assessee asserted that part of the jewellery was ancestral and part acquired in the relevant year but could not satisfactorily substantiate earlier acquisitions. The Assessing Officer made an addition greater than the value recorded on search; the CIT(A), applying CBDT Instruction No.1916 and relevant authorities and having regard to social status and the explanations, accepted the assessee's alternate working and restricted the addition to a specified lesser amount. The Tribunal found no reason to interfere with the CIT(A)'s exercise of discretion and factual conclusion that only the restricted amount remained unexplained. [Paras 8, 9]

CIT(A)'s restriction of the addition in respect of jewellery is sustained; the assessee's ground is rejected and the Revenue's appeal against the restriction is dismissed.

Final Conclusion: The assessee's appeals are partly allowed: the foreign currency issue and quantification of deemed dividend are remanded to the Assessing Officer for verification and quantification (with deemed dividend to be restricted to accumulated profits); the CIT(A)'s reduction of the jewellery addition is upheld and the Revenue's appeal is dismissed.

Condonation of delay - reasonable cause for delay - pursuit of alternative remedy - reinstatement/remand for adjudication on merits - deduction under Chapter VIA (claims under 80HH, 80I and 80IA) - prejudice to revenue

Condonation of delay - reasonable cause for delay - pursuit of alternative remedy - prejudice to revenue - Whether the delay in filing the appeal before the CIT(A) against the order giving effect dated 27.03.2003 should be condoned. - HELD THAT: - The Tribunal found that the assessee pursued an appeal to the ITAT in time against the CIT(A)'s remand-direction and was under a bona fide belief that no separate appeal against the order giving effect needed to be filed until the ITAT disposed of that challenge. On receipt of the ITAT order, the assessee promptly filed the appeal before CIT(A) albeit after a prolonged interval which was explained as time taken in deciding the proper forum (CIT(A) v. High Court), preparation of papers, obtaining signatures and consultation with advisers. The Tribunal accepted that such pursuit of an alternative remedy constituted a sufficient and reasonable cause for delay and that admitting the appeal would not prejudice the revenue as the matter would be decided on merits. [Paras 6, 8, 9, 10]

Delay is condoned and the appeal is restored to the file of the CIT(A) for decision on merits.

Deduction under Chapter VIA (claims under 80HH, 80I and 80IA) - reinstatement/remand for adjudication on merits - Disposition of the claim for deduction under Chapter VIA (80HH, 80I and 80IA) by way of remand to the CIT(A) for fresh adjudication. - HELD THAT: - As the CIT(A) had dismissed the appeal on limitation without adjudicating the merits of the assessee's claim that certain corporate and common expenses were not deductible from profits of the new industrial undertakings and that certain receipts should be included for computing eligible profits, the Tribunal did not decide these substantive contentions. Having condoned the delay, the Tribunal restored the matter to the CIT(A) so that the issues concerning computation of profits eligible for deduction under the said Chapter VIA provisions may be examined and decided on their merits. [Paras 4, 10]

Matter remanded to the CIT(A) for adjudication on merits of the deduction claims under Chapter VIA (80HH, 80I and 80IA).

Final Conclusion: The Tribunal condoned the delay in filing the appeal, allowed the appeal in part for statistical purposes and restored the matter to the file of the CIT(A) with directions to decide the assessee's claim for deduction under Chapter VIA (80HH, 80I and 80IA) on merits.

Condition precedent of recording failure to disclose fully and truly all material facts for reopening under the proviso to section 147 - reopening of assessment beyond four years and validity of notice under section 148 - status of assessment completed under section 153A as a regular assessment for purposes of proviso to section 147 - application of section 50C to transfer between related parties

Condition precedent of recording failure to disclose fully and truly all material facts for reopening under the proviso to section 147 - reopening of assessment beyond four years and validity of notice under section 148 - status of assessment completed under section 153A as a regular assessment for purposes of proviso to section 147 - Validity of reassessment proceedings initiated by notice under section 148 issued beyond four years where assessment was completed under section 153A - HELD THAT: - The Tribunal found that the assessment for A.Y. 2007-08 was completed under section 153A consequent to a search that preceded the original filing of return and therefore must be treated as a regular assessment for purposes of the proviso to section 147. The proviso requires that where more than four years have elapsed a reopening can be validly initiated only if the AO records that income has escaped assessment by reason of the assessee's failure to disclose fully and truly all material facts. The notice under section 148 in this case was issued on 3.5.2013 after expiry of the four-year period, but the reasons recorded by the AO do not contain the requisite finding that the escapement of income was due to such failure of disclosure. The Tribunal held that recording of that specific finding is a condition precedent and cannot be supplied by subsequent justification or improvement of reasons; initiation without that recorded finding renders the reassessment void ab initio. Having reached this conclusion on validity, the Tribunal declined to decide the merits of the additions. [Paras 8, 11]

Reopening under section 148 is void ab initio for want of the statutory recorded finding; assessee's ground on validity is allowed.

Application of section 50C to transfer between related parties - Addition under head 'Capital Gain' by applying section 50C to the transaction with assessee's wife (merits) was not adjudicated - HELD THAT: - Although the AO and CIT(A) applied section 50C to adopt SRO value and computed escapement of income, the Tribunal did not examine or decide the merits of that addition because it set aside the reassessment as void ab initio on procedural grounds. Consequently the question whether the excess of SRO value over declared consideration (characterised by the assessee as a gift to his wife) is attractable to tax under section 50C remains unadjudicated and was not considered on merits. [Paras 11, 12]

Not adjudicated; merits to be considered only if a valid reassessment is initiated.

Final Conclusion: Reassessment proceedings reopened by notice dated 3.5.2013 are void ab initio for failure to record the statutory finding that income escaped assessment due to the assessee's failure to disclose fully and truly all material facts; validity ground allowed and merits of additions under section 50C left undecided.

Jurisdiction under section 153C of the Income Tax Act - recording of satisfaction for seized documents belonging to another person - limited scope of assessment under section 153A/153C confined to incriminating seized material - addition as unexplained cash credit under section 68 - admission of additional legal grounds by the Tribunal

Admission of additional legal grounds by the Tribunal - Admission of the assessee's additional grounds raising legal questions on the assumption of jurisdiction under section 153C and the scope of assessment under sections 153A/153C. - HELD THAT: - The Tribunal held that the additional grounds were purely legal in nature and raised questions of law and interpretation of notifications/circulars, which could be taken at any stage where the relevant facts are on record. Applying established precedents (including the principle in National Thermal Power Co. Ltd.) and exercising its discretion under the appellate rules, the Tribunal admitted the two common additional grounds relating to (i) substantive and procedural compliance with section 153C and (ii) whether additions were based on incriminating material seized during the search. The admission was limited to legal questions that did not require fresh fact-finding beyond the record before the Tribunal. [Paras 13]

Additional legal grounds admitted in the interest of justice; the Tribunal proceeded to decide the admitted legal ground concerning lack of nexus with seized incriminating material.

Jurisdiction under section 153C of the Income Tax Act - recording of satisfaction for seized documents belonging to another person - limited scope of assessment under section 153A/153C confined to incriminating seized material - addition as unexplained cash credit under section 68 - Validity of the assessments framed under section 153C and the additions made as unexplained cash credits where no incriminating material seized during the search was shown to belong to the assessee or to have bearing on the assessments. - HELD THAT: - The Tribunal examined the satisfaction note, the assessment orders and the appellate record and applied the legal requirement that: (a) the assessing officer of the searched person must record an objective satisfaction that seized books/documents/assets 'belong to' a person other than the searched person before initiating proceedings under section 153C; and (b) assessments under sections 153A/153C must be confined to incriminating material found during the search or material having a nexus to determination of the other person's total income. Relying on the consistent line of authority of the jurisdictional High Court and Tribunal (including the principles in PepsiCo/Pepsi Foods, Kabul Chawla and subsequent decisions) and on CBDT guidance, the Tribunal found that the impugned assessment(s) were completed and additions were made without any incriminating material seized or any proper recording of satisfaction linking seized material to the assessees. Consequently the additions lacked the requisite legal foundation and were unsustainable. For these reasons the Tribunal deleted the additions and allowed the appeals. [Paras 13, 14, 15]

Additions made under section 68 in the assessments completed under section 153C are deleted for lack of nexus with any incriminating seized material and for want of the statutory satisfaction; the appeals are allowed.

Final Conclusion: The Tribunal admitted the additional legal grounds and, applying settled law on the requirements of section 153C/153A (including the need for an objective satisfaction and confinement of assessments to incriminating seized material), found that the impugned additions were made without any seized incriminating material linking to the assessees; the additions were deleted and all four appeals were allowed.

Depreciation on assets acquired on demerger - revenue expenditure v. capital expenditure on brand building - disallowance under section 14A read with Rule 8D - requirement of Assessing Officer to record satisfaction under section 14A(2) and Rule 8D(1) - computation of book profits under section 115JB and treatment of 14A disallowance

Depreciation on assets acquired on demerger - Validity of disallowance of depreciation claimed by the assessee in respect of assets received on demerger. - HELD THAT: - The Tribunal noted that the dispute on depreciation of assets transferred pursuant to the demerger of Godrej Appliances Ltd. had arisen from A.Y. 2003-04 onwards and that in three earlier Tribunal orders for preceding assessment years the Tribunal had upheld disallowance of such depreciation. Respectfully following the consistent view in the assessee's own cases, the Tribunal held that the CIT(A)'s confirmation of part disallowance for A.Y. 2011-12 was correct and the assessee's ground on this point was dismissed. [Paras 5]

Assessee's claim for depreciation on assets acquired on demerger is disallowed as upheld by the lower authorities and affirmed by reference to prior Tribunal decisions.

Revenue expenditure v. capital expenditure on brand building - Whether professional fees paid for brand assessment and maintenance are revenue deductible or capital in nature. - HELD THAT: - The assessee contended that payments to Interbrand UK related to maintaining and enhancing an existing long-established brand and therefore constituted revenue expenditure. The Tribunal observed that identical claims for earlier assessment years (AYs 2008-09, 2009-10 and 2010-11) made to the same party had been allowed by the Tribunal as revenue in nature. Following those earlier Tribunal decisions in the assessee's own case, the addition made by the AO was deleted. [Paras 8]

Expenditure on brand assessment/maintenance held to be revenue in nature and the addition deleted.

Disallowance under section 14A read with Rule 8D - requirement of Assessing Officer to record satisfaction under section 14A(2) and Rule 8D(1) - computation of book profits under section 115JB and treatment of 14A disallowance - Validity of the disallowance under section 14A read with Rule 8D where the assessee had furnished its own computation and whether the AO was required to record satisfaction before applying Rule 8D; and consequent effect on computation of book profits under section 115JB. - HELD THAT: - The Tribunal examined section 14A(2) and Rule 8D(1) and applied the jurisdictional High Court's exposition that the AO may invoke the prescribed method only after recording an objective satisfaction, having regard to the assessee's accounts, that the assessee's claim about expenditure attributable to exempt income is incorrect. On facts, the assessee had filed a computation of inadmissible expenditure with the return and the assessment record did not show that the AO examined that working or recorded the requisite satisfaction. Consequently the disallowance computed under Rule 8D was held to be contrary to statutory mandate and judicial precedent and was deleted. However, the Tribunal also observed that for purposes of computing book profits under section 115JB the disallowance required in the assessee's own claim must be addressed in accordance with Tribunal precedent referred to in the order. [Paras 14, 15]

Disallowance under section 14A read with Rule 8D deleted because AO did not record statutory satisfaction; treatment for computation of book profits to follow Tribunal precedent.

Disallowance under section 14A read with Rule 8D - Department's challenge to deletion by CIT(A) of disallowance of interest expenditure under Rule 8D(2)(ii). - HELD THAT: - The CIT(A) deleted the interest-component disallowance on the basis that the assessee had substantial surplus interest-free funds to make the investments; the assessment order itself acknowledged substantial surplus funds. Since the Tribunal has deleted the overall disallowance for lack of AO satisfaction, and on the facts that surplus interest-free funds existed, the department's ground did not survive and was dismissed. [Paras 16, 17]

Department's appeal against deletion of interest-component under Rule 8D(2)(ii) dismissed; deletion upheld.

Final Conclusion: Assessee's appeal partly allowed (deletion of additions for brand expenditure and disallowance under section 14A/Rule 8D for lack of AO satisfaction) and dismissed in part (disallowance on depreciation arising from demerger upheld). Department's appeal dismissed.

Defective penalty notice and non-application of mind - penalty under section 271(1)(c) for concealment or furnishing of inaccurate particulars of income - invalid notice under section 274 r.w.s. 271 - requirement of application of mind at the notice stage - opportunity to show cause under section 274

Defective penalty notice and non-application of mind - invalid notice under section 274 r.w.s. 271 - penalty under section 271(1)(c) for concealment or furnishing of inaccurate particulars of income - Validity of the penalty proceedings initiated by the AO by issuing the notice dated 27.12.2010 and the consequent penalty order dated 26.03.2014 for A.Y. 2008-09. - HELD THAT: - The Tribunal examined whether the AO's show-cause notice under section 274 r.w.s. 271 specified the charge (concealment or furnishing inaccurate particulars) and applied mind when initiating penalty proceedings. Relying on precedent (including decisions of the Supreme Court and High Courts) and the Coordinate Bench's decision in Dr. Sarita Milind Davere, the Tribunal held that the notice was a standard printed form which did not indicate or strike out the particular charge and was thus issued without application of mind. Vagueness and ambiguity in the notice prejudiced the assessee's right to a clear opportunity to show cause. The Tribunal concluded that a notice lacking specification of the charge and reflecting non-application of mind is defective and invalid, and consequently the order imposing penalty under section 271(1)(c) is vitiated and liable to be set aside. As the defect was decisive, the Tribunal allowed the appeal on this ground and treated remaining grounds as academic. [Paras 4, 5]

Notice dated 27.12.2010 under section 274 r.w.s. 271 was defective and issued without application of mind; penalty order dated 26.03.2014 under section 271(1)(c) for A.Y. 2008-09 is invalid and cancelled.

Final Conclusion: The appeal is allowed for A.Y. 2008-09: the penalty proceedings initiated by the defective notice dated 27.12.2010 are quashed and the penalty order dated 26.03.2014 under section 271(1)(c) is set aside; other grounds rendered academic.

Recall of order dismissing appeal in limine - ownership of bank account - HUF v. individual - treatment of cash deposits as explained receipts and not unexplained investment under section 69 - setting aside addition and allowing appeal

Recall of order dismissing appeal in limine - Miscellaneous applications to recall the Tribunal's earlier order dismissing the appeals in limine were allowed. - HELD THAT: - The Tribunal considered the appellant's explanation that non-appearance was not mala fide and that adjournments/consolidation requests had led to a misunderstanding. Applying principles relevant to summary dismissals, the Bench concluded that in the interest of justice the earlier order dated 05/02/2016 dismissing the appeals in limine should be recalled and the appeals restored for adjudication. The order recalling the dismissal was accordingly passed. [Paras 3]

Both Misc. Applications (Nos.165 & 166/Ahd/2016) are allowed and the order dated 05/02/2016 is recalled.

Ownership of bank account - HUF v. individual - Account No.118 with the Commercial Co-operative Bank was held to be the account of H.K. Mistry (HUF) rather than the assessee in his individual capacity. - HELD THAT: - The Tribunal examined the material: the affidavit asserting the account belonged to HUF, the bank certificate dated 30/06/2014 showing sanction of cash credit in the name of M/s. H.K. Mistry, the fact that the HUF then had no PAN and the Karta had given his PAN for opening the account, and the evidence that the cash-credit facility was obtained for HUF business purposes and used to facilitate deposits/receipts related to Darshan Traders. On this basis the Tribunal found the authorities below erred in treating the account as belonging to the individual assessee and accepted that the account pertained to HUF. [Paras 15, 16, 18, 21]

The cash-credit Account No.118 is to be treated as belonging to H.K. Mistry (HUF) and not to the assessee individually.

Treatment of cash deposits as explained receipts and not unexplained investment under section 69 - The additions treating certain cash deposits in Account No.118 as unexplained investment under section 69 were set aside and the receipts accepted as explained (received from Darshan Traders). - HELD THAT: - The Tribunal considered the appellant's explanations and documentary material showing that deposits and cheque amounts were received from Darshan Traders (proprietor Alka Mistry) and noted that similar receipts in the assessment year 2010-11 had been partly accepted as genuine. Given the accepted source and the context of the HUF account and its use, the Tribunal concluded there was no justification to uphold the additions as unexplained investment. The Tribunal therefore set aside the orders of the authorities on this point and allowed the appeals. [Paras 19, 20, 21]

Additions made treating the specified cash deposits as unexplained investment are set aside; the amounts are held to be properly explained and the appeals are allowed on this ground.

Final Conclusion: The Tribunal recalled its prior dismissal in limine, held Account No.118 to be that of H.K. Mistry (HUF), set aside the additions treating specified cash deposits as unexplained investment under section 69 by accepting the receipts as from Darshan Traders, and allowed the appeals.

Levy of fee under section 234E - processing of TDS statements under section 200A - temporal application of statutory amendments - intimation under section 200A as an appealable order

Levy of fee under section 234E - processing of TDS statements under section 200A - temporal application of statutory amendments - Whether the levy of late filing fee under section 234E could be made by adjustment in the intimation issued under section 200A where the intimation was issued prior to the amendment to section 200A effective from 1 June 2015. - HELD THAT: - The Tribunal examined the statutory scope of section 200A as it stood prior to the amendment effective 1 June 2015 and found that section 200A permitted only specified adjustments - arithmetical errors, incorrect claims apparent from the statement, and interest computed on sums deductible - when determining sums payable or refundable in the processing of TDS statements. The amendment introduced by the Finance Act 2015 (effective 1 June 2015) expressly enabled computation of any fee in accordance with section 234E as part of the processing mechanism. The impugned intimation, however, was issued before that amendment and therefore there was no statutory basis in section 200A at that time to adjust and levy the fee under section 234E by way of intimation. As the power to raise such a demand by intimation was not then available under section 200A, the levy effected through that intimation was beyond the permissible scope and unsustainable in law. The Tribunal followed coordinate-bench precedents which reached the same conclusion and accordingly directed deletion of the fee levied by the impugned intimation. [Paras 8, 12, 14, 15]

The levy of late filing fee under section 234E, made by adjustment in the intimation under section 200A issued prior to 1 June 2015, is unsustainable and is deleted.

Final Conclusion: Appeals allowed; the demands of late filing fee under section 234E raised by intimation under section 200A (issued prior to the 1 June 2015 amendment) are deleted and the Assessing Officer is directed to give effect accordingly.

Deduction for bad debts under section 36(1)(vii) read with section 36(2)(i) - Allowance of bad debt where money lent in the ordinary course of business of banking or money lending - Taxation of interest previously taken into account as basis for bad debt deduction - Disallowance under section 14A read with Rule 8D(2)(ii) - Net interest income test for applicability of Rule 8D(2)(ii) - Rule 8D(2)(iii) - administrative disallowance (0.5% of average value of investments)

Deduction for bad debts under section 36(1)(vii) read with section 36(2)(i) - Allowance of bad debt where money lent in the ordinary course of business of banking or money lending - Taxation of interest previously taken into account as basis for bad debt deduction - Deletion of addition of Rs. 3,41,87,613 claimed as debt written off was valid and allowable under the Act. - HELD THAT: - The assessee being an RBI authorised NBFC carried on lending as its ordinary business and had written off principal and interest relating to a long standing loan. The Tribunal applied section 36(1)(vii) read with section 36(2)(i) and held that the unrealized interest had already been taken into account in computing the assessee's income in earlier years (FYs 1999 2000 and 2000 01) and thus falls within the first limb of clause (i) of sub section (2). The principal written off represented money lent in the ordinary course of the assessee's business and therefore falls within the second limb. On these concurrent legal bases the conditions for allowance of the write off were fulfilled. The Tribunal found no infirmity in the CIT(A)'s conclusion deleting the addition and upheld the deduction. [Paras 5]

Addition deleted; deduction for bad debt allowed.

Disallowance under section 14A read with Rule 8D(2)(ii) - Net interest income test for applicability of Rule 8D(2)(ii) - Rule 8D(2)(iii) - administrative disallowance (0.5% of average value of investments) - AO's additional disallowance under Rule 8D(2)(ii) was not sustainable where the assessee showed net positive interest income; CIT(A) correctly deleted the further disallowance. - HELD THAT: - The assessee's profit and loss account disclosed net interest income (interest received exceeded interest paid). The Tribunal applied the principle that Rule 8D(2)(ii) - which attributes interest expense to exempt dividend income - cannot be invoked when there is no net interest expenditure after setting off interest credited to the P&L. Consequently no part of interest debited could be disallowed under Rule 8D(2)(ii). The only disallowance accepted by the assessee and not disturbed was the administrative disallowance under Rule 8D(2)(iii) computed at 0.5% of the average value of investments. The AO's computation under Rule 8D(2)(ii) was therefore set aside. [Paras 9]

AO's additional disallowance under Rule 8D(2)(ii) deleted; CIT(A) order upheld.

Final Conclusion: Both grounds of the revenue appeal are dismissed: the claim for deduction of the bad debt write off was upheld under section 36(1)(vii)/36(2)(i), and the further disallowance under Rule 8D(2)(ii) was set aside because the assessee had net positive interest income; the CIT(A)'s order is affirmed.

Treatment of share application money as unexplained cash credit under section 68 - proof of identity, creditworthiness and genuineness of creditors - accommodation entries - onus on assessee to substantiate cash credits - role of corporate incorporation in establishing existence of a party

Treatment of share application money as unexplained cash credit under section 68 - proof of identity, creditworthiness and genuineness of creditors - accommodation entries - role of corporate incorporation in establishing existence of a party - Whether share application money received by the assessee from two private companies could be treated as unexplained cash credit under section 68 or had to be deleted because the payors were incorporated companies and amounts were received through banking channel. - HELD THAT: - The Assessing Officer examined directors of the two payor companies and recorded statements indicating that the directors were unaware of the transactions and that the entries were accommodation in nature. The CIT(A) deleted the addition relying on the fact that the payors were incorporated companies and the amounts passed through banking channels, observing that existence of incorporated companies could not be denied. The Tribunal held that mere incorporation and banking channel receipts do not discharge the assessee's onus under section 68 where the AO's inquiries and recorded statements contemporaneously indicate accommodation entries and failure to establish identity, creditworthiness and genuineness. Having considered the AO's evidentiary findings and the CIT(A)'s reliance on incorporation alone, the Tribunal found the CIT(A)'s deletion unsustainable and restored the AO's addition. [Paras 12]

Addition of share application money confirmed as unexplained cash credit; CIT(A)'s deletion set aside.

Proof of identity, creditworthiness and genuineness of creditors - onus on assessee to substantiate cash credits - accommodation entries - Whether unsecured loans shown in the assessee's books were to be treated as unexplained cash credits under section 68 or were genuine loans deserving deletion of additions made by the AO. - HELD THAT: - The AO recorded statements of directors/proprietors of various alleged lenders showing that many transactions were accommodation entries; some lenders could not be produced for verification. The CIT(A) deleted additions in respect of certain creditors on the ground that those creditors were assessed to tax in the same charge and their balance-sheets were on record. The Tribunal found that CIT(A) overlooked the AO's evidentiary material, did not itself examine lenders or their accounts, and therefore its conclusions were not supported by cogent findings. Accordingly, the Tribunal restored the AO's additions in respect of unsecured loans, while also accepting CIT(A)'s concession that a component of one lender's account represented an opening balance already subjected to assessment in an earlier year and should not be doubly added. The Tribunal therefore confirmed the additions except to the extent of that previously assessed opening balance. [Paras 13]

Additions in respect of unsecured loans confirmed except to the extent of the amount already assessed earlier, which is excluded.

Final Conclusion: Assessee's appeal dismissed; revenue's appeal partly allowed - additions made by the Assessing Officer under section 68 in respect of share application money and unsecured loans are confirmed, subject to exclusion of the amount already assessed in an earlier year.

Apportionment of common expenses between EOU and non EOU - separate books of account and acceptance thereof - additions based on surmise and conjecture - reference to TPO under transfer pricing provisions - aggregation of closely linked transactions for transfer pricing - notional interest on delayed realisation as part of sale transaction

Apportionment of common expenses between EOU and non EOU - separate books of account and acceptance thereof - additions based on surmise and conjecture - Validity of deletion by CIT(A) of additions made by AO reallocating interest on working capital, factory overheads and directors' remuneration to the 10B unit - HELD THAT: - The AO had not rejected the assessee's books of account nor shown any specific defect in the accounting or allocation of these expenses; he proceeded by inference. The CIT(A) set aside the apportionments because the assessee maintained separate books for the 10B unit and non 10B unit and no discrepancies were pointed out. The Tribunal accepted that additions founded on surmise and conjecture are impermissible and, in absence of any failure to accept the books or any contrary evidence of misallocation, there was no justification to disturb the assessee's claim. Accordingly the revenue's challenge to deletion was dismissed. [Paras 7]

Revenue appeal dismissed; deletions by CIT(A) in respect of interest on working capital, factory overheads and directors' remuneration to the 10B unit upheld.

Apportionment of common expenses between EOU and non EOU - Challenge by assessee to CIT(A)'s confirmation of apportionment of salary expenditure to the 10B unit - HELD THAT: - CIT(A) accepted AO's finding that functions of employees overlapped between EOU and non EOU and, in absence of materials from the assessee to rebut that finding, proceeded to estimate and apportion factory salaries. The Tribunal found no material placed by the assessee to controvert the AO/CIT(A) conclusion and sustained the apportionment. [Paras 12, 13]

Cross objection ground on apportionment of salaries dismissed; apportionment of Rs.17,03,108 to the 10B unit upheld.

Reference to TPO under transfer pricing provisions - aggregation of closely linked transactions for transfer pricing - notional interest on delayed realisation as part of sale transaction - Validity of ALP adjustment by TPO in respect of notional interest on receivables overdue from Associated Enterprises - HELD THAT: - The Tribunal held that the credit period/ delayed realisation is not a stand alone international transaction separable from the main sale to the AE but is an integral and closely linked part of that sale. Following coordinate authority, such follow on transactions must be aggregated with the sale for transfer pricing analysis; treating notional interest as an independent international transaction and applying lending rates leads to distortion. Since the amendment to section 92A relied upon by the assessee is not applicable to AY 2009 10, the Tribunal concluded no ALP adjustment on account of notional interest was permissible for the year under consideration. [Paras 13]

Cross objection allowed; ALP adjustment in respect of notional interest on overdue receivables from AEs set aside.

Separate books of account and acceptance thereof - Maintainability of assessee's grievance that credit for TDS was not granted by CIT(A) - HELD THAT: - The Tribunal observed that the CIT(A)'s order contains no adjudication on the claim for credit of TDS and therefore the ground in the cross objection raising non grant of TDS credit cannot be treated as addressed by the CIT(A). [Paras 14]

Ground regarding grant of credit for TDS is not maintainable before the Tribunal as CIT(A) did not adjudicate it.

Final Conclusion: The revenue's appeal is dismissed insofar as the deletions of apportionments of working capital interest, factory overheads and directors' remuneration to the 10B unit are upheld; the assessee's cross objections are partly allowed - the ALP adjustment on notional interest is set aside, the apportionment of certain salaries to the 10B unit is sustained, and the claim regarding TDS credit is found not adjudicated by the CIT(A) and therefore not maintainable.

Arm's length price - quasi-capital - shareholder activity - corporate guarantee - Comparable Uncontrolled Price (CUP) method - international transaction having a bearing on profits, income, losses or assets - tax deduction at source under section 195 / disallowance under section 40(a)(i) - section 14A read with Rule 8D - exemption of partner's share under section 10(2A) - revenue expenditure / section 37(1)

Arm's length price - quasi-capital - Comparable Uncontrolled Price (CUP) method - Characterisation and ALP of optionally convertible loans advanced to associated enterprises - HELD THAT: - The Tribunal held that the optionally convertible loans were of the genus of 'quasi capital' because the substantive reward to the lender was the option to obtain equity on materially favourable terms rather than interest simpliciter. For transfer pricing comparability the correct benchmark is a materially similar transaction (i.e. loans having comparable conversion/option rights) and not a simple commercial loan. Consequently the TPO/DRP's comparison with routine debt and imposition of interest based ALP was legally unsustainable. Applying this principle to the facts, the Tribunal deleted the ALP adjustment made on interest in respect of the optionally convertible loans.

ALP adjustment in respect of interest on optionally convertible loans deleted.

Corporate guarantee - shareholder activity - international transaction having a bearing on profits, income, losses or assets - Whether corporate guarantees issued for subsidiaries attract transfer pricing adjustment as provision of services / require guarantee fees - HELD THAT: - The Tribunal held that corporate guarantees may, in general, fall within the residual scope of 'capital financing' in the definition of international transaction, but where guarantees are given as part of shareholder activity or quasi capital support (i.e. to compensate for insufficiency of subsidiary's capital or to enable group strategy) they are conceptually distinct from arm's length services. The benefit test and OECD guidance show shareholder activities are not chargeable as intra group services. On the facts the guarantees in question were held to be shareholder/quasi capital in nature and not provision of services having an ALP consequence; accordingly the TPO/DRP benchmarking and imposition of guarantee fee was set aside.

ALP adjustment in respect of corporate guarantee commission deleted.

Arm's length price - comparable uncontrolled price (CUP) method - Product registration / liaison services benchmarking and comparables - HELD THAT: - The authorities below replaced the assessee's uncontrolled comparables by an intra group price accepted in an earlier year; the Tribunal held that an intra group transaction cannot be used as a CUP comparable. If the comparables relied upon by the assessee are inadequate, the TPO must find valid external comparables or apply an alternative method after proper FAR analysis. The Tribunal found the TPO had not undertaken proper comparable search or adjustments and remitted the matter for fresh adjudication by the DRP with directions to issue a speaking order after hearing the assessee.

ALP adjustment for liaison/product registration services remitted to DRP for fresh adjudication.

Tax deduction at source under section 195 / disallowance under section 40(a)(i) - Disallowance under section 40(a)(i) for foreign payments made without TDS - HELD THAT: - The Tribunal emphasised that disallowance under section 40(a)(i) can be invoked only where the Assessing Officer demonstrates that income embedded in the payment is taxable in India and that the assessee was obliged to deduct tax. The DRP had not independently examined taxability but deferred to the international tax wing; the Tribunal criticised that approach and remitted the matter to the DRP for de novo adjudication on merits, directing the DRP to consider coordinate bench precedents and give the assessee an opportunity of hearing.

Matters concerning disallowance under section 40(a)(i) remitted to DRP for fresh adjudication.

Section 14A r.w. Rule 8D - Computation of disallowance under section 14A and application of Rule 8D - HELD THAT: - The Tribunal found certain factual and computational errors in the AO's Rule 8D computation (for example, inclusion of investments abroad that do not yield exempt income and incorrect interest quantum). It directed the Assessing Officer to reconsider the computation with a speaking order after giving the assessee opportunity to be heard and to take into account rectification claims and the correct scope of investments yielding exempt income.

Section 14A disallowance directed to be revisited by Assessing Officer (matter restored for fresh computation/speaking order).

Exemption of partner's share under section 10(2A) - Whether assessee's share of profit from partnership (even if not shown as taxable 'total income' of firm) is exempt under section 10(2A) - HELD THAT: - Interpreting the scheme of partnership taxation and CBDT circular guidance, the Tribunal held that the partner's share in the firm's profits (the firm's income as a whole) is excluded from the partner's total income under section 10(2A). A literal reading that would bring to tax amounts not included in the firm's total income would defeat the purpose of the mechanism. On the facts, the DRP's acceptance of the assessee's claim was upheld.

Claim of exemption under section 10(2A) in respect of partner's share upheld; Assessing Officer's addition deleted.

Revenue expenditure / section 37(1) - Allowability of foreign exchange loss arising on balance sheet date as deductible business expenditure - HELD THAT: - Following Supreme Court authority and accepted accounting principles, the Tribunal held that a reasonably quantifiable adverse foreign exchange variation at year end can constitute an expenditure allowable under section 37(1) even if payment has not yet been made, provided the transaction is on revenue account. The DRP's deletion of the AO's notional loss disallowance was sustained.

Foreign exchange loss recognised at year end allowed as deduction; addition deleted.

Section 80IC / internal transfer and fair market value - Allowability of deduction under chapter incentives and AO's power to determine market value for intra unit transfers under section 80IA(8) - HELD THAT: - The Tribunal followed coordinate bench and earlier final decisions in the assessee's own cases and declined to disturb the DRP/CIT(A) order: the DRP's grant of incentive deduction was consistent with precedent and the AO's attempt to determine FMV for intra corporate transfers was not sustained. The Tribunal refused to interfere.

DRP/CIT(A) allowances under the incentive provisions confirmed; AO's grounds dismissed.

MAT credit carry forward / administrative quantification - Claim of carried forward MAT credit in assessment order - HELD THAT: - The Tribunal recalled settled principle that in the year of carry forward the assessment need only quantify the claim; entitlement to set off is considered in the year of utilisation. The assessee's plea that AO should record carry forward in the assessment order was held to be premature and dismissed.

Claim for recording carried forward MAT credit in assessment order dismissed as premature.

Final Conclusion: For AY 2009 10 and 2010 11 the Tribunal: deleted ALP adjustments in respect of interest on optionally convertible loans and corporate guarantee fees (holding such instruments to be quasi capital/shareholder activity and not comparable with routine debt or services for ALP purposes); remitted the liaison/product registration services ALP and overseas payments TDS/section 40(a)(i) issues for fresh adjudication (DRP/AO) with directions for speaking orders and hearing; upheld the exemption of partner's share under section 10(2A); confirmed allowability of year end foreign exchange loss on revenue account; directed recomputation/reconsideration where Rule 8D/section 14A or factual errors were found; and disposed of assorted Assessing Officer grounds by respectfully following coordinate bench precedent where applicable.

Characterisation of government subsidy as capital or revenue receipt - purpose test for classification of subsidy - Explanation 10 to Section 43(1) - reduction of actual cost where subsidy meets asset cost - treatment of subsidy under Package Scheme of Incentives (PSI-2007) - allowability of depreciation where subsidy is not asset-specific - reasonable adhoc disallowance of business expenditure

Characterisation of government subsidy as capital or revenue receipt - purpose test for classification of subsidy - treatment of subsidy under Package Scheme of Incentives (PSI-2007) - Nature of Industrial Promotion Subsidy (IPS) received under PSI 2007 - whether capital or revenue receipt - HELD THAT: - Tribunal held that the IPS granted to the assessee under PSI 2007 for setting up a mega project in a notified low human development district was granted with the object of encouraging dispersal of industry, ensuring regional development and generation of employment and therefore is for industrial development of the State's backward area. Applying the purpose test as expounded by the Supreme Court in Ponni Sugars, and having regard to the scheme provisions (including mandatory employment thresholds and eligibility/continuity conditions), the Tribunal concluded the subsidy is capital in nature. Reliance was placed on the Bombay High Court decision on the same PSI 2007 and on authoritative principles that if the object of the scheme is to enable setting up of a new unit or expansion (even where quantified by reference to investment), the receipt is capital. The Tribunal rejected the narrower view that form or timing alone dictates character and found that on facts the IPS was not merely an operational assistance but part of a scheme aimed at promoting investment and employment in backward areas, hence capital receipt. [Paras 9, 10, 11, 12, 14]

IPS of Rs. 11,51,75,000 granted under PSI 2007 is capital in nature and not taxable as revenue receipt for A.Y. 2011 12.

Explanation 10 to Section 43(1) - reduction of actual cost where subsidy meets asset cost - allowability of depreciation where subsidy is not asset-specific - Whether the subsidy must be reduced from actual cost of assets under Explanation 10 to section 43(1) for computing depreciation - HELD THAT: - The Tribunal followed the settled principle that Explanation 10 operates only where the subsidy has been used directly or indirectly to meet the cost of a specific asset. Where the subsidy is an incentive to encourage establishment of industry in backward areas and is not earmarked to meet any portion of the actual cost of a fixed asset, it cannot be reduced from the actual cost for depreciation purposes. Citing the Calcutta High Court/Tribunal approach and the Supreme Court precedent in P.J. Chemicals, the Tribunal found that the PSI 2007 subsidy, though quantified by reference to a percentage of eligible investment, was not asset specific and therefore did not fall within Explanation 10; accordingly the AO ought not to have reduced asset cost or disallowed depreciation on that basis. [Paras 13, 14]

Subsidy need not be deducted from the actual cost/WDV of fixed assets under Explanation 10 where it is not asset specific; the disallowance of depreciation on that ground is not sustainable.

Reasonable adhoc disallowance of business expenditure - Validity and quantum of adhoc disallowance of advertisement and sales promotion expenses - HELD THAT: - AO made a 20% adhoc disallowance on grounds of unverifiability; CIT(A) remanded for verification but ultimately matter reached Tribunal. On the material placed (ledgers, vouchers, extent of payments by cheque, TDS where applicable, and low proportion of such expenses to turnover), Tribunal regarded the AO's adhoc 20% disallowance as excessive. Balancing the revenue's concern and the evidence produced, the Tribunal exercised judicial discretion to moderate the addition and fixed a reasonable disallowance of Rs. 5,00,000, noting the assessee's co operation and supporting documents. [Paras 15, 16, 17, 18]

AO's 20% adhoc disallowance is reduced; a reasonable disallowance of Rs. 5,00,000 is sustained.

Final Conclusion: Assessee's appeal partly allowed: IPS under PSI 2007 for the mega project is capital in nature and not taxable as revenue for A.Y. 2011 12; subsidy need not be reduced from asset cost for computing depreciation under Explanation 10 where it is not asset specific; AO's adhoc 20% disallowance of marketing/advertising expenses is moderated to a fixed disallowance of Rs. 5,00,000.

Capital expenditure versus revenue expenditure (software) - classification of computer software for depreciation - consistency in assessment treatment across assessment years - disallowance under section 14A and allocation under Rule 8D - remand to Assessing Officer for record-based enquiry and fresh adjudication

Capital expenditure versus revenue expenditure (software) - classification of computer software for depreciation - Nature of software expenditure in Assessment Year 2004-05 and entitlement to depreciation. - HELD THAT: - The Tribunal examined the findings of the Commissioner (Appeals) that the software expenditure in question was capital in nature and therefore eligible for depreciation at the rate applied by the CIT(A). The Tribunal noted that the issue had previously been considered in earlier assessment years and that the CIT(A) had applied the decision in Amway India Enterprises and treated the expenditure as capital with depreciation @60%. No error in law or fact was pointed out before the Tribunal in respect of the CIT(A)'s analysis for AY 2004-05. On that basis the Tribunal sustained the CIT(A)'s conclusion that the impugned software expenditure was capital in nature and subject to depreciation as determined by the CIT(A).

Order of the CIT(A) upheld; software expenditure held to be capital expenditure for AY 2004-05 and so treated accordingly.

Classification of computer software for depreciation - consistency in assessment treatment across assessment years - Appropriate rate of depreciation for computer software and related items in Assessment Year 2005-06. - HELD THAT: - The Tribunal observed that in AY 2004-05 the CIT(A) had allowed depreciation at 60% on identical items and that the revenue had accepted that order. Applying the principle of consistency, the Tribunal directed the Assessing Officer in AY 2005-06 to grant depreciation at 60% on the items in question rather than the 25% rate applied by the AO. The Tribunal therefore corrected the AO's classification/rate for AY 2005-06 by reference to the accepted treatment in the immediately preceding year.

Assessing Officer directed to allow depreciation @60% in AY 2005-06 in conformity with earlier accepted treatment.

Disallowance under section 14A and allocation under Rule 8D - remand to Assessing Officer for record-based enquiry and fresh adjudication - Validity and computation of the disallowance under section 14A (and Rule 8D) for Assessment Year 2005-06-remanded for fresh consideration. - HELD THAT: - The Tribunal noted earlier directions in the assessee's own cases that disallowance under Rule 8D/section 14A could not be mechanically applied and required the AO to examine the assessee's accounts and underlying vouchers before forming an opinion. Following those observations and the Tribunal's prior restoration of a similar issue to the AO (with directions that the AO make enquiries and decide the matter in accordance with law), the Tribunal restored the section 14A issue in AY 2005-06 to the file of the AO. The AO is to follow the procedure and directions given in the Tribunal's earlier order, afford adequate opportunity to the assessee, and decide the disallowance afresh in accordance with law and the express provisions of section 14A and Rule 8D.

Issue remanded to the Assessing Officer for fresh adjudication following enquiry and verification in accordance with section 14A and Rule 8D; adequate opportunity to be granted to the assessee.

Final Conclusion: The Tribunal dismissed the appeal for AY 2004-05 upholding the CIT(A)'s view that the software expenditure was capital in nature; for AY 2005-06 the Tribunal directed the AO to allow depreciation at 60% following consistent treatment, and remanded the section 14A disallowance issue to the AO for fresh consideration in accordance with the Tribunal's earlier directions.

Entitlement to exemption under Notification No.21/2002-Cus subject to ash content condition - sampling of imported coal under IS 436 - validity of chemical testing where importer fails to produce a third party quality certificate - sufficiency of sampling when bill of entry is filed after unloading - possibility of heterogeneous cargo within the same vessel

Entitlement to exemption under Notification No.21/2002-Cus subject to ash content condition - validity of chemical testing where importer fails to produce a third party quality certificate - Whether the appellant was entitled to exemption under Notification No.21/2002-Cus where departmental testing showed ash content above the threshold and no CASCO certificate was produced by the importer. - HELD THAT: - The Tribunal held that entitlement to the Notification depends on the ash content of the coal. Unlike the decision relied upon by the appellant, where a CASCO certificate was produced and the Department had no prima facie reason to reject it, in the present case no such certificate was on record. In absence of a reliable third party certificate, it was necessary and lawful for the Department to subject the imported coal to chemical testing before allowing the claimed exemption. The departmental testing therefore could be relied upon for determining entitlement to the Notification. [Paras 4, 6]

Benefit of the Notification could be denied on the basis of departmental test results in absence of a CASCO certificate; the appeal in this respect fails.

Sampling of imported coal under IS 436 - sufficiency of sampling when bill of entry is filed after unloading - Whether samples were taken in accordance with IS 436 and whether the sampling and testing could be relied upon despite the bill of entry being filed 30 days after unloading. - HELD THAT: - The Tribunal recognised that certain provisions of IS 436 (such as taking samples while coal is in motion or on the conveyor) could not be followed because the bill of entry claiming the exemption was filed 30 days after unloading. Having examined the cross examination of the inspector and Chemical Examiner, the Tribunal found that samples were drawn in the presence of the importer's representative and CHA, from different lots and depths, with multiple 25 kg lots taken and mixed before reduction - conforming to the IS procedure to the extent possible under the circumstances. Given the delay in claiming exemption and the practical impossibility of adhering to the in motion sampling requirement, the sampling was held to be sufficient and the test results admissible. [Paras 4]

Sampling and testing, though not fully in strict compliance with IS 436 due to post unloading claim, were sufficiently carried out and the test results are admissible.

Possibility of heterogeneous cargo within the same vessel - Whether coal imported on the same vessel and from the same load port can legitimately show different ash content for different importers. - HELD THAT: - The Tribunal observed that a ship is a large conveyance and coal from different sources may be stowed in separate holds or parts of the vessel; coal being a solid bulk cargo does not necessarily mix during transit. Consequently, differing ash content results for lots from the same ship and load port are plausible and do not, by themselves, indicate sampling or testing error. [Paras 5]

Different ash content results for imports from the same vessel are plausible; this contention of the appellant is rejected.

Final Conclusion: The Tribunal affirmed the demand by upholding the departmental sampling and testing in the circumstances, rejected the appellant's challenges to the test results and the contention of uniform ash content across the vessel, and dismissed the appeal.

Confiscation under Section 111(f) of the Customs Act, 1962 - definition of 'importer' and its application - provisional release on bond as assuming importer status - duty demand in respect of alleged re-imported goods - penalty under Section 112 of the Customs Act, 1962

Definition of 'importer' and its application - provisional release on bond as assuming importer status - By executing the bond and seeking provisional release, the appellant M/s Cargosol assumed the position of 'importer' in relation to the seized goods. - HELD THAT: - The Customs Act definition of 'importer' includes any person who, between importation and clearance for home consumption, holds himself out to be the importer. The bond executed by M/s Cargosol expressly described the goods as belonging to the obligator(s) and admitted liability to the Government for duty, value, penalty and other lawful charges, and authorised appropriation of the security for such liabilities. By entering into that bond to obtain provisional release, the appellant stepped into the shoes of the importer and cannot disown that status for the purpose of customs liability.

M/s Cargosol is treated as the importer for the seized goods by virtue of the bond and its actions in seeking provisional release.

Confiscation under Section 111(f) of the Customs Act, 1962 - The confiscation of the undeclared goods under Section 111(f) is upheld. - HELD THAT: - The goods were not declared in the Import General Manifest (IGM) filed at Kandla and were found on board on inspection. Established authorities hold that undeclared goods not reflected in the IGM attract confiscation under Section 111(f). On the facts before the Tribunal, the confiscation order was sustained and the consequent imposition of penalties under the relevant provisions was upheld.

Confiscation under Section 111(f) is upheld and the imposition of penalties under the Customs Act is sustained in respect of the confiscated goods.

Duty demand in respect of alleged re-imported goods - The demand of customs duty against the appellant is set aside and remanded for fresh decision on the factual question whether the seized goods were subsequently imported and cleared at Mumbai and, if so, the identity and duty liability of the goods. - HELD THAT: - The show-cause notice disputed the appellants' contention that some goods were later brought to Mumbai, and alleged that goods cleared at Mumbai were not the same as those seized at Kandla. The impugned order did not address or categorically decide whether the goods were subsequently imported into India at Mumbai and whether appropriate duty was paid. Given the absence of a factual determination on re-import and identity of goods, the Tribunal set aside the demand and remitted the matter for adjudication on those factual issues and consequent duty liability.

Demand of duty is set aside and the matter remanded for factual determination regarding re-import and duty liability.

Penalty under Section 112 of the Customs Act, 1962 - The penalties imposed on certain parties were modified: the penalty on M/s Omega Shipping Agencies P. Ltd. was reduced to Rs. 5,000 and the penalty on Shri Jaikumar Parmanand Ramdasani was reduced to Rs. 5,000; penalties otherwise imposed were sustained. - HELD THAT: - The show-cause notice did not allege any knowledge or connivance on the part of M/s Omega Shipping Agencies P. Ltd. regarding misdeclaration; absence of such allegations made the earlier penalty excessive. For the same reason the individual penalty on Shri Jaikumar Parmanand Ramdasani was reduced. Penalties imposed on other respondents were addressed by the Tribunal in light of the confiscation finding and the role those parties played; where the record supported liability, the Tribunal sustained the imposition of penalty subject to the specific reductions ordered.

Penalty on M/s Omega Shipping Agencies P. Ltd. reduced to Rs. 5,000; penalty on Shri Jaikumar Parmanand Ramdasani reduced to Rs. 5,000; other penalties sustained as explained.

Final Conclusion: The Tribunal held that by executing the bond and obtaining provisional release M/s Cargosol assumed importer status and upheld confiscation of the undeclared goods under Section 111(f); however, the demand for duty was set aside and remanded for factual determination as to re-import and identity of goods, and penalties on M/s Omega Shipping Agencies P. Ltd. and Shri Jaikumar P. Ramdasani were substantially reduced while other penalties were otherwise sustained.

Maintainability of appeals to the Appellate Tribunal under Section 129A - scope of "decision" or "order" for purposes of appeal under Section 129A - tribunal's jurisdictional limits as a creature of statute - adjudication of show cause notice with opportunity of hearing - disclosure of documents and test reports relied upon in departmental adjudication

Maintainability of appeals to the Appellate Tribunal under Section 129A - scope of "decision" or "order" for purposes of appeal under Section 129A - tribunal's jurisdictional limits as a creature of statute - Appeal against a departmental communication conveying rejection of warehousing-extension which is not an adjudicatory order under Section 129A is not maintainable before the Appellate Tribunal. - HELD THAT: - The Tribunal examined whether the impugned letter of the Additional Commissioner conveying that the Commissioner had rejected the request for extension of warehousing period constituted a "decision or order" appealable under Section 129A. The Tribunal held that Section 129A permits appeals only against orders or decisions passed by specified adjudicating authorities. A mere communication of a departmental decision which is not an adjudicatory order within the scope of Section 129A does not attract the statutory right of appeal to the Tribunal. Being a creature of statute, the Tribunal must act within the bounds of Section 129A and therefore cannot entertain an appeal against the impugned letter. Consequently the appeal fails on maintainability grounds and is dismissed. [Paras 6, 7]

Appeal dismissed as not maintainable for want of a proper appealable order under Section 129A.

Adjudication of show cause notice with opportunity of hearing - disclosure of documents and test reports relied upon in departmental adjudication - Departmental proceedings arising from Show Cause Notice No.11/2016 are to be adjudicated afresh with full opportunity to the appellant, including provision of documents and test reports relied upon. - HELD THAT: - While the Tribunal dismissed the appeal as not maintainable, it noted that a fresh Show Cause Notice has been issued by the department. The Tribunal directed the department to adjudicate the SCN giving the appellant full opportunity to present its case. The direction expressly requires that the appellant be afforded sufficient opportunity of hearing and be provided with documents and test reports, if any, relied upon in the matter. The Tribunal also observed that the appellant remains at liberty to seek appropriate remedy after culmination of those proceedings, if necessary, provided any subsequent appeal falls within Section 129A. [Paras 7]

Department directed to adjudicate SCN No.11/2016 afresh, giving full opportunity to the appellant and furnishing documents and test reports relied upon; appellant at liberty to pursue remedy thereafter.

Final Conclusion: The appeal was dismissed as not maintainable because the impugned departmental communication is not an appealable order under Section 129A; separately, the Tribunal directed fresh adjudication of the Show Cause Notice with full opportunity to the appellant and disclosure of documents/test reports, leaving the appellant free to pursue appropriate remedy thereafter.

Penalty under section 114AA - penalty under section 112(a) - knowledge and intention - aiding and abetting - requirement of a reasoned order - proportionality of penalty - circumstantial inference of knowledge from connection

Penalty under section 114AA - knowledge and intention - requirement of a reasoned order - Whether penalty under Section 114AA could be sustained against the appellant - HELD THAT: - The Tribunal found that the adjudicating authority relied on statements recorded under Section 108 that disowned active participation by the proprietor of the appellant and that there was no attempt in the show cause notice or impugned order to demolish those depositions. The impugned order contains only a single paragraph (para-30 of the adjudicating order) that summarily concludes the appellant aided and abetted the main players without explaining the specific acts of omission or commission or the mens rea required under Section 114AA. Since Section 114AA requires proof that the person knowingly or intentionally implicated himself in use of false or incorrect materials, and that requirement was not satisfactorily established by reasoned findings, the penalty could not be sustained. [Paras 5]

Penalty under Section 114AA set aside for lack of proof of knowledge/intention and absence of a reasoned finding.

Penalty under section 112(a) - circumstantial inference of knowledge from connection - proportionality of penalty - Whether penalty under Section 112(a) is imposable and, if so, whether the quantum is appropriate - HELD THAT: - Noting the appellant acted as Custom House Agent across twenty consignments and was connected to the principal players, the Tribunal held that while there is no proof of active fabrication by the CHA, his association with the main player permits an inference of some level of knowledge of the modus operandi sufficient to attract penalty under Section 112(a). However, the Tribunal found the penalty of Rs. 10 lakhs to be excessive and disproportionate to the role attributed to the CHA in the notice and order, and in the interests of justice reduced the penalty to a lesser amount. [Paras 6]

Penalty under Section 112(a) upheld in principle but reduced as excessive; quantum reduced to Rs. 5,00,000.

Final Conclusion: Appeal allowed in part: penalty under Section 114AA set aside for lack of requisite proof of knowledge/intention and absence of a reasoned finding; penalty under Section 112(a) sustained but reduced to Rs. 5,00,000.

Confiscation under Section 113(d) of the Customs Act - determination of export value for DEPB eligibility under Section 14 - re-determination of export value and restriction of export-incentive credit - liability of company directors for export irregularities - finality of clearance under Section 47 vis-a -vis re-determination for incentive eligibility

Confiscation under Section 113(d) of the Customs Act - Confiscation of the exported goods under clause (d) of Section 113 was lawful on the facts found by the adjudicating authority. - HELD THAT: - The Tribunal accepted the findings that the quantity declared was misrepresented and that ARE-1 documents submitted were not authentic, undermining the appellants' plea that the clearing agent alone was responsible. Reliance on precedents including Om Prakash Bhatia and Suresh Jhunjhunwala establishes that where export declarations and supporting documents are erroneous and export value is not truly stated, the goods can be treated as prohibited for the purpose of Section 113(d) and confiscation is permissible. The inference that the exporters benefited from inflated credit and the departmental investigations and test results furnished a sufficient basis to hold the goods liable to confiscation. [Paras 4]

Confiscation under Section 113(d) upheld.

Determination of export value for DEPB eligibility under Section 14 - re-determination of export value and restriction of export-incentive credit - The re-determination of export value and consequent reduction of DEPB entitlement was legally sustainable on the material and investigations. - HELD THAT: - The Tribunal held that departmental investigations, test reports and enquiries demonstrated that declared FOB values were inflated to obtain higher DEPB credit. Citing Abhishek Exports and Om Prakash Bhatia, the Tribunal reiterated that Section 14 (as applied via the definition of export value) may be resorted to for determining true export value even where no customs duty is leviable, and that over-invoicing or incorrect declaration can render goods liable to action and justify re-determination of value. The appellants' reliance on decisions limiting re-determination where contemporaneous identical exports are available was distinguished on the facts: the present case involved erroneous declarations and forged documents, and therefore the Tribunal found no illegality in adopting a value other than the declared amount and restricting credit accordingly. [Paras 5, 7]

Re-determination of export value and reduction of DEPB credit sustained.

Liability of company directors for export irregularities - Directors of the exporting company can be proceeded against for the export irregularities. - HELD THAT: - The Tribunal affirmed that proceedings against the two directors are permissible, relying on its earlier decision in Ramesh Jain v. Commissioner of Customs (G), Mumbai, which supports personal proceedings against company officers where export fraud or irregularity is established. The facts and departmental findings justified extending liability beyond the corporate entity to its directors. [Paras 6]

Directors may be proceeded against; personal penalties upheld.

Finality of clearance under Section 47 vis-a -vis re-determination for incentive eligibility - Clearance under Section 47 does not preclude re-determination of export value for purposes of establishing eligibility for export incentives or for action where declarations are found to be incorrect. - HELD THAT: - The Tribunal distinguished the effect of a clearance order under Section 47-which concerns assessment for levy of duty and related procedural consequences-from a re-determination undertaken to establish eligibility for export incentive schemes. It held that the statutory procedure for establishing incentive entitlement is not on the same footing as an assessment for duty, and therefore prior clearance does not preclude subsequent departmental action to re-determine value where investigations disclose incorrect declarations or forged documents. [Paras 8]

Section 47 clearance does not bar re-determination for incentive-eligibility where declarations are found false.

Final Conclusion: On the facts and investigations as recorded, the Tribunal found no reason to interfere: confiscation, re-determination of export value with consequent restriction of DEPB credit, and penalties (including proceeding against directors) were upheld; the appeals are rejected.

Confiscation under Customs Act - prohibition on export of infringing copyright works - distinction between import prohibition and export - when copyright infringed - penalty for abetment/abetting infringement

Prohibition on export of infringing copyright works - distinction between import prohibition and export - confiscation under Customs Act - when copyright infringed - Export of books infringing copyright is not prohibited under the Indian Copyright Act, 1957 or the Customs law and therefore such goods are not liable for confiscation under the Customs Act. - HELD THAT: - The Tribunal examined Section 51 of the Copyright Act, 1957 which specifies circumstances in which copyright is infringed, including acts of sale, distribution and import into India. The provision expressly addresses prohibition relating to sale, trade and importation of infringing copies but contains no provision restricting or prohibiting the export of infringing copyright books. In the absence of any statutory prohibition on export either under the Copyright Act or the Customs Act (or other law), export cannot be treated as an act proscribed by law that would render the goods liable to confiscation under the Customs Act. The Tribunal further noted precedential treatment on identical facts (Sunbeam Exports) and an earlier appellate acceptance in the appellants' own matter, and applied that ratio to hold that confiscation was not sustainable where no export prohibition exists. [Paras 4]

Goods alleged to be infringing copies are not liable to confiscation for export because no prohibition on export of such goods is provided by the Copyright Act or Customs law.

Penalty for abetment/abetting infringement - confiscation under Customs Act - Penalty imposed on the appellants under Section 114(iii) of the Customs Act cannot be sustained where confiscation under the Customs Act is not attracted and where appellants were not shown to have taken part in export or attempted export. - HELD THAT: - The penalties were imposed on the basis that the goods were liable for confiscation under Section 113(d), which in turn would sustain penalty under Section 114(iii). Having held that no prohibition on export existed and that confiscation was therefore not maintainable, the legal foundation for imposing penalty fell away. The Tribunal also observed that the appellants, as directors of the seller-company, were engaged in sale within India and were not involved in export or attempt to export; thus abetment of export was not established. Consequently, the penalty based on alleged abetment of confiscable export could not be sustained. [Paras 4]

Penalty under Section 114(iii) set aside as unjustified in the absence of confiscation or demonstrated participation by the appellants in export or attempted export.

Final Conclusion: The impugned order imposing confiscation and penalty is set aside: the Tribunal holds that export of infringing copyright books is not prohibited under the Copyright Act or Customs law, the goods are not liable for confiscation and no penalty is sustainable against the appellants; the appeals are allowed.

Classification as air-conditioning machines v. heat pumps - effect of retrospective licence on confiscation for want of licence - confiscation for import without licence under Section 111(d) of the Customs Act, 1962 - confiscation for mis-declaration/prohibition under Section 111(m) of the Customs Act, 1962 - benefit of Notification No.30/88 - reduction of redemption fine and penalty imposed under Section 112(a) of the Customs Act, 1962

Effect of retrospective licence on confiscation for want of licence - confiscation for import without licence under Section 111(d) of the Customs Act, 1962 - Whether confiscation of the imported goods under Section 111(d) is sustainable where the licensing authority issued a licence after importation with retrospective effect - HELD THAT: - The Tribunal had remitted the matter to the Commissioner only to determine whether the goods imported were covered by the licence subsequently issued. The adjudicating authority's scope was therefore limited to verification of coverage under that licence. The licence, though belated, was validly issued and given retrospective effect; once a competent licensing authority has issued a licence covering the imported goods, customs cannot treat the goods as prohibited for want of licence or otherwise question the validity of that licence. In these circumstances confiscation under Section 111(d) on the ground of import without licence is not sustainable. The adjudicatory finding of confiscation under Section 111(d) is set aside. [Paras 4]

Confiscation under Section 111(d) set aside; goods are not liable to confiscation for want of licence once a retrospectively effective licence is validly issued.

Confiscation for mis-declaration/prohibition under Section 111(m) of the Customs Act, 1962 - Validity of previously upheld confiscation under Section 111(m) and its finality - HELD THAT: - The Tribunal's earlier order holding confiscation under Section 111(m) attained finality on appeal to the Supreme Court. That aspect was not reopened; the adjudicatory authorities' finding under Section 111(m) therefore remains undisturbed and operative. [Paras 4]

Confiscation under Section 111(m) remains in force as upheld by the Tribunal and finally adjudicated.

Reduction of redemption fine and penalty imposed under Section 112(a) of the Customs Act, 1962 - confiscation for import without licence under Section 111(d) of the Customs Act, 1962 - Appropriateness and quantum of redemption fine and penalty in light of the setting aside of confiscation under Section 111(d) - HELD THAT: - Because confiscation under Section 111(d) was set aside, the Tribunal found the earlier redemption fine and penalty to be excessive. Exercising appellate discretion the Tribunal reduced the redemption fine and the penalty to reflect that only the confiscation under Section 111(m) remained final. The redemption fine was reduced to a lower amount and the penalty imposed under Section 112(a) was correspondingly reduced. [Paras 4]

Redemption fine reduced (as ordered) and penalty under Section 112(a) reduced to a lower amount.

Final Conclusion: The appeal is partly allowed: confiscation under Section 111(d) set aside because the retrospectively effective licence covers the imported goods; confiscation under Section 111(m) remains final; redemption fine and penalty are reduced by the Tribunal as recorded.

Conversion of shipping bills between export promotion schemes - permissibility of amendment of shipping bill after export - Board Circular No.4/2004-Cus.-conversion only where benefit denied by DGFT/Customs due to dispute and within one month - Board Circular No.36/2010-Cus.-applicability to shipping bills filed on or after date of circular - Section 149 of the Customs Act, 1962-amendment of documents

Board Circular No.36/2010-Cus.-applicability to shipping bills filed on or after date of circular - Applicability of the Board Circular dated 23.09.2010 to shipping bills filed between October 2006 and December 2006. - HELD THAT: - The Tribunal held that para 6 of the 23.09.2010 circular restricts its application to shipping bills filed on or after the date of issuance of that circular. Since the shipping bills in question were filed between 26.10.2006 and 12.12.2006, the 2010 circular is not applicable to the present case. [Paras 6]

The 2010 circular does not apply to the shipping bills filed in October-December 2006.

Board Circular No.4/2004-Cus.-conversion only where benefit denied by DGFT/Customs due to dispute and within one month - conversion of shipping bills between export promotion schemes - permissibility of amendment of shipping bill after export - Section 149 of the Customs Act, 1962-amendment of documents - Whether the Commissioner was justified in rejecting the application to amend shipping bills from DFIA scheme to DEPB scheme under the Board Circular dated 16.01.2004. - HELD THAT: - The Tribunal found that the Commissioner verified with DGFT and recorded that no denial of benefit by DGFT or Customs had occurred and the exporters had not been deprived of DFIA benefits but had not availed DFIA by choice. The 2004 circular permits conversion only where the benefit claimed under an export promotion scheme has been denied by DGFT/MOC or Customs due to a dispute and requires that the conversion request be made within one month of such denial. The present request was made on 15.09.2007 for shipping bills filed in October-December 2006 and there was neither a dispute nor a timely application within one month of denial. Authorities cited by the respondent and followed by the Tribunal establish that belated conversion or conversion without a denial due to dispute is impermissible and that amendment is not allowed as a matter of routine after export. [Paras 6, 7]

The Commissioner rightly rejected the amendment request under the 2004 circular; the appeal is dismissed.

Final Conclusion: The appeal is dismissed: the 2010 circular is inapplicable to the shipping bills filed in late 2006, and the Commissioner correctly rejected the belated conversion request under the 2004 circular because there was no denial of benefit arising from a dispute and the request was not made within the prescribed time.

Territorial jurisdiction - Benches of the National Company Law Tribunal and Principal Bench authority - transfer of pending proceedings - Rule 64 of the National Company Law Tribunal Rules, 2016 - continuing effect of Company Law Board regulations

Territorial jurisdiction - Benches of the National Company Law Tribunal and Principal Bench authority - Whether a petition under Section 388-B of the Companies Act, 1956 must be heard only by the Principal Bench at New Delhi or by the Bench of the NCLT having territorial jurisdiction over the place where the company's registered office is situated. - HELD THAT: - The Tribunal held that territorial jurisdiction of NCLT Benches is determined by the Notification dated 1st June 2016 constituting Benches and specifying their territorial limits, and not by the location where the cause of action arose. There is no provision in the Companies Act, 2013 conferring jurisdiction on the basis of cause of action. The Benches of the NCLT can exercise jurisdiction over a company only where the company is present within the territorial limits of that Bench, i.e., where the registered office is located. Consequently, matters under Section 388-B of the Companies Act, 1956 are not an exception permitting exclusive hearing by the Principal Bench at New Delhi merely by virtue of earlier CLB practice or circulars; territorial allocation under the 2016 Notification governs which Bench should hear the petition. [Paras 12, 13, 14, 18, 19]

Petitions under Section 388-B of the Companies Act, 1956 are to be heard by the NCLT Bench having territorial jurisdiction where the company's registered office is situated, and not exclusively by the Principal Bench at New Delhi.

Transfer of pending proceedings - Rule 64 of the National Company Law Tribunal Rules, 2016 - continuing effect of Company Law Board regulations - Whether the circular/regulation of the erstwhile Company Law Board (providing that matters under Section 388-B be heard by the Principal Bench) can govern allocation of pending matters after constitution of the NCLT, or whether transfer under Section 434 read with Rule 64 and the 2016 Notification requires transfer to the territorially appropriate Bench. - HELD THAT: - The Tribunal found that Section 434(1)(a) of the Companies Act, 2013 mandates transfer of matters pending before the Company Law Board to the Tribunal and that Rule 64 of the NCLT Rules requires such cases to stand transferred to the respective Benches exercising corresponding territorial jurisdiction. A circular or regulation of the CLB under Regulation 4(1) of the CLB Regulations, 1991 cannot override the statutory mandate and the Notification issued by the Central Government under Section 419(1) of the 2013 Act. Therefore, the CLB practice of centralising Section 388-B matters at the Principal Bench cannot be given effect post-transfer; the matter must be sent to the Bench having territorial jurisdiction. [Paras 21, 22, 23, 24, 25]

The CLB circular/regulation cannot override the statutory transfer mechanism; pending proceedings under Section 388-B must be transferred to the territorially appropriate NCLT Bench in accordance with Section 434, the Notification under Section 419 and Rule 64.

Transfer of pending proceedings - direction to transfer - Whether the specific Company Petition No. 01/2015 before the Principal Bench, New Delhi should be transferred to the Chennai Bench where the appellant's registered office is situated. - HELD THAT: - Applying the statutory scheme-Notification of 1st June 2016, Section 434(1)(a) of the Companies Act, 2013 and Rule 64 of the NCLT Rules, 2016-the Tribunal concluded that the impugned order refusing transfer was incorrect. The Court observed that the transfer provision and territorial allocation require the case to be heard at the Bench having jurisdiction over the company's registered office. In consequence, the impugned order dated 6th December 2016 was set aside and the Registry was directed to transfer the petition to the Chennai Bench. The Tribunal additionally directed the Chennai Bench to ensure early disposal after notice and hearing. [Paras 4, 5, 26, 27]

The impugned order is set aside and C.P. No. 01/2015 is to be transferred to the NCLT Bench at Chennai where the registered office of the appellant company is located; the Chennai Bench to ensure early disposal.

Final Conclusion: The appeal is allowed. The impugned order of the Principal Bench, NCLT, New Delhi dated 6th December 2016 is set aside and Company Petition No. 01/2015 is directed to be transferred to the NCLT Bench at Chennai, in accordance with the territorial allocation in the 1st June 2016 Notification, Section 434(1)(a) of the Companies Act, 2013 and Rule 64 of the NCLT Rules, 2016; the Chennai Bench is to proceed to dispose of the petition expeditiously after notice and hearing.

Oppression and mismanagement - Maintainability of company petition - Aggregate holding of one-tenth - Cause of action - Limitation and accrual of right to sue - Estoppel and acquiescence - Remand for fresh consideration

Oppression and mismanagement - Maintainability of company petition - Aggregate holding of one-tenth - Cause of action - A company petition under Sections 397/398 alleging that a member's shareholding was brought down below one tenth by oppression and mismanagement cannot be dismissed as not maintainable solely because the petitioner's shareholding is below one tenth on the date of presentation of the petition. - HELD THAT: - Where a petitioner alleges that his shareholding was reduced below the required aggregate of one tenth by acts of oppression and mismanagement without notice or knowledge, the Tribunal must determine whether the petitioner in fact held one tenth of the share capital prior to the alleged acts of oppression and mismanagement. The petition cannot be summarily rejected on the ground that the petitioner's shareholding is below one tenth on the filing date if the reduction is alleged to be the result of oppression and mismanagement. The determination of whether the shareholding was brought down by oppression and mismanagement is a question of fact and law to be decided on evidence; maintainability and merits are to be considered together so that if on evidence there was no such oppression and mismanagement the petition may then be dismissed as not maintainable under Section 399 of the 1956 Act. The Tribunal below erred in dismissing the petition as not maintainable on the sole basis of the petitioner's shareholding on the date of presentation without deciding whether the requisite holding existed before the alleged acts. [Paras 28, 29, 31]

Tribunal's conclusion that the petition was not maintainable on the ground that the petitioners held less than one tenth on the date of presentation is set aside; the question whether the shareholding was reduced by oppression and mismanagement must be examined by the Tribunal.

Limitation and accrual of right to sue - Cause of action - The petition was filed within the period of limitation and was not barred by delay. - HELD THAT: - The court applied the Limitation Act, 1963 as made applicable by Section 433 of the Companies Act, 2013. The right to sue accrued on the date of the cause of action (alleged reduction of shareholding), namely 11th February 2014; the petition was filed in April 2016 and therefore fell within the applicable limitation period. The appellate court declined to dismiss the appeal on grounds of delay, acquiescence or estoppel because those contentions were not taken before the Tribunal and the Tribunal had not decided them. [Paras 20, 21, 22]

Petition held not barred by limitation; the appellate court refused to decide or uphold dismissal on delay/acquiescence/estoppel grounds which were not raised or decided below.

Remand for fresh consideration - Maintainability of company petition - The matter is remitted to the Tribunal for fresh determination of maintainability and merits together in accordance with the principles stated by the Appellate Tribunal. - HELD THAT: - Since the Tribunal did not apply the correct principle-namely to first ascertain whether the petitioner held one tenth prior to the alleged acts of oppression and mismanagement and to decide maintainability and merits together on evidence-the appellate court set aside the impugned order and remitted the case. On remand the Tribunal is directed to hear the parties, determine whether the petitioners had the requisite holding prior to the alleged oppressive conduct, and decide both maintainability and merits based on the evidence. [Paras 31, 32]

Impugned order set aside and the petition remitted to the Tribunal for fresh adjudication on maintainability and merits.

Final Conclusion: Appeal allowed; impugned order dated 6th October 2016 set aside and the matter remitted to the Tribunal for fresh determination of maintainability and merits in accordance with the principles stated; no order as to costs.

Grant of bail under Section 45 of the PMLA - offence of money-laundering under Section 3 of the PMLA - scheduled offence and "proceeds of crime" - abetment under Section 109 IPC attracting PMLA liability - prima facie satisfaction for application of Section 45(1)(ii) - overriding effect of the PMLA vis-a -vis the Code of Criminal Procedure

Grant of bail under Section 45 of the PMLA - overriding effect of the PMLA vis-a -vis the Code of Criminal Procedure - prima facie satisfaction for application of Section 45(1)(ii) - Whether the conditions of Section 45 of the PMLA must be complied with while considering a bail application under Section 439 Cr.P.C. - HELD THAT: - The Court held that Section 45 of the PMLA prescribes mandatory conditions for grant of bail in respect of offences punishable for more than three years under Part A of the Schedule and these conditions have overriding effect over the general provisions of the CrPC. Reliance was placed on the Supreme Court's reasoning that Sections 65 and 71 of the PMLA make the Act prevail over inconsistent provisions of other laws, and that High Courts must insist on compliance with Section 45 while considering applications under Section 439 Cr.P.C. The Court declined to entertain submissions that conventional CrPC bail principles could displace the specific mandate of Section 45 in the present proceedings. [Paras 21, 30, 33]

Section 45's conditions are mandatory and apply to the petitioner; the High Court must apply Section 45 while considering the bail application under Section 439 Cr.P.C.

Offence of money-laundering under Section 3 of the PMLA - scheduled offence and "proceeds of crime" - abetment under Section 109 IPC attracting PMLA liability - Whether a person charged with abetment (Section 109 IPC) of a scheduled offence may be prosecuted for money-laundering under the PMLA, even if he is not the public servant who committed the scheduled offence or did not acquire the proceeds of crime himself. - HELD THAT: - The Court explained that Section 3 of the PMLA criminalises conduct by any person who directly or indirectly assists or is involved in activities connected with the proceeds of crime (including concealment, possession, acquisition, use, or projecting them as untainted). 'Proceeds of crime' are defined with reference to property derived from a scheduled offence. The Court observed that the definition of 'criminal misconduct' under the PC Act contemplates possession of pecuniary resources by a person 'on his behalf', thereby recognising that a non-public servant can hold proceeds on behalf of a public servant. Consequently, even where the petitioner is charged as an abettor under Section 109 IPC, he can be prima facie liable under the PMLA for laundering proceeds generated by the scheduled offence committed by another. [Paras 25, 26, 27, 28, 31]

A person charged with abetment under Section 109 IPC can be prosecuted under Sections 3 and 4 of the PMLA for laundering proceeds of a scheduled offence; the PMLA does not require the accused himself to have committed the scheduled offence or to have acquired the proceeds personally.

Prima facie satisfaction for application of Section 45(1)(ii) - grant of bail under Section 45 of the PMLA - Whether, on the material before it, the Court should grant bail to the petitioner. - HELD THAT: - The learned Special Judge had arrived at a prima facie finding, on the basis of the FIR/RC and the ED complaint, that there was material to show the petitioner's involvement in laundering cash monies into LIC policies and related transactions. Having considered the investigation material and the requirement of Section 45 (as construed by the Supreme Court), this Court found no reason to take a different view of the trial court's prima facie conclusion. The Court also rejected the petitioner's reliance on precedents and writ proceedings that were factually distinguishable or outside the scope of Section 45's mandatory scheme. [Paras 29, 30, 31, 34]

Bail is refused; the petition is dismissed while leaving open the petitioner's rights before the trial court on merits.

Final Conclusion: The petition for regular bail is dismissed: the Court held that the mandatory conditions of Section 45 PMLA apply, that a person charged as an abettor under Section 109 IPC can be proceeded against under the PMLA for laundering proceeds of a scheduled offence, and that the trial court's prima facie findings justify refusal of bail; the order does not prejudice the petitioner's case at trial.

Summary order. Civil appeals dismissed for want of merit; delay condoned.

Summary order. Delay condoned; the civil appeal is dismissed for lack of merit.

Binding nature of administrative circulars - precedential effect on assessing officers - office memorandum not binding on assessing officers - assessing officer's duty to exercise powers in accordance with law - prior circulars continue to bind unless plainly inconsistent with law - supersession of earlier circulars

Binding nature of administrative circulars - office memorandum not binding on assessing officers - supersession of earlier circulars - Whether the office memorandum and the subsequent circular dated 14-10-2014 are binding on assessing officers and whether assessing officers may be directed by the Central Government to adopt a particular view. - HELD THAT: - The Court held that an office memorandum addressed to revenue counsel cannot bind statutory authorities or direct an assessing officer to adopt a particular view, because that would amount to impermissible interference with the assessing officer's statutory functions. Administrative circulars and Board instructions bind revenue authorities only to the extent they are not in conflict with statutory provisions; prior circulars continue to bind assessing officers unless they are plainly inconsistent with law. The Court observed that a later circular which purports to supersede an earlier circular cannot be treated as automatically binding on assessing officers in a manner that prevents them from independently applying the law.

Office memorandum does not bind assessing officers; circulars bind only insofar as they are consistent with law; assessing officers must not be mechanically bound by the subsequent circular dated 14-10-2014.

Assessing officer's duty to exercise powers in accordance with law - precedential effect on assessing officers - Whether assessing officers should be influenced by the revenue's office memorandum or the impugned circular when considering claims of members of the petitioners' association. - HELD THAT: - The Court directed that assessing officers should exercise their powers independently in accordance with law and should allow assessees to raise all contentions. Assessing officers should not be influenced by the office memorandum nor be precluded from considering arguments on the basis of the subsequent circular of 14-10-2014. If prior circulars exist, they remain operative unless shown to be plainly inconsistent with statutory provisions; any assessment must therefore involve independent consideration of all contentions and the applicable law.

Assessing officers shall not be influenced by the office memorandum or constrained by the impugned circular; they must permit and decide all contentions of the assessees in accordance with law.

Final Conclusion: Writ petition disposed; court clarified that administrative directions in the office memorandum cannot bind assessing officers, that circulars bind only when consistent with law, and directed assessing officers to independently consider all contentions of the assessees; all contentions in the petition are kept open and there is no order as to costs.

Unconditional bank guarantee - invocation of bank guarantee - bank's obligation on proper invocation - absence of bank's connection with underlying contract - allegation of fraud lacking particularity - special equity - interim deposit by way of replacement bank guarantee and indemnity - appointment of arbitrator to adjudicate dispute - interim injunction restraining realization

Unconditional bank guarantee - invocation of bank guarantee - bank's obligation on proper invocation - absence of bank's connection with underlying contract - allegation of fraud lacking particularity - Validity of the respondent's invocation of the unconditional bank guarantee and the bank's obligation to remit on proper invocation. - HELD THAT: - The bank guarantee being unconditional, the bank is bound to pay if it is properly invoked and is not concerned with the underlying contractual dispute between the parties. The petitioner's contention that the invocation was motivated by an oblique motive and the reference to 'fraud' were held to be unsupported by particularised material. The court observed that a claim of special equity was not made out on the record. Consequently, no general bar was recorded against invocation where the bank guarantee is unconditional and properly invoked. However, the court exercised its equitable discretion to fashion interim protective measures because of the pending dispute over liability for service tax. [Paras 2, 3, 4]

Invocation of the unconditional bank guarantee was not restrained on the ground of the underlying dispute or unparticularised allegations of fraud; the bank's obligation to remit on proper invocation stands subject to the interim directions given by the court.

Interim deposit by way of replacement bank guarantee and indemnity - special equity - indemnity bond - Conditions under which the bank shall be restrained from remitting under the invoked bank guarantee. - HELD THAT: - The court directed that if the bank has not yet remitted the amount, it shall not do so provided the petitioner furnishes, within one week, a replacement bank guarantee for the specified sum on the same terms and an indemnity bond indemnifying the respondent for any consequential payments (including penalties) arising from non-payment. The replacement bank guarantee was to be for an initial period of eight months and kept renewed until further orders; upon such furnishing, the earlier bank guarantee was to be returned to the petitioner. The court thus imposed temporary protective conditions rather than a substantive adjudication on the merits. [Paras 5]

Bank shall refrain from remitting if the petitioner furnishes the replacement bank guarantee and indemnity within the stipulated time; otherwise the bank must remit the invoked amount.

Appointment of arbitrator to adjudicate dispute - arbitration - Reference of the dispute to arbitration and appointment of an arbitrator to decide the merits. - HELD THAT: - The parties agreed to have the dispute referred to arbitration. The court appointed an arbitrator to adjudicate the dispute within four months from the date of entering reference. The arbitrator was directed to fix commensurate remuneration at the first sitting, preferably on a consolidated basis, and the parties were directed to share the arbitrator's remuneration and arbitration expenses equally. The court expressly left the merits of the dispute open for determination by the arbitrator in accordance with law. [Paras 6, 8]

Mr. J.P. Khaitan, Senior Advocate, appointed as arbitrator to decide the dispute within four months; merits to be decided by the arbitrator.

Interim injunction restraining realization - Grant of a short-term injunction restraining realization under the invoked bank guarantee. - HELD THAT: - The court granted an unconditional injunction restraining the respondent from realising the amount from the bank for a period of seven days from the date of the order. This interim relief was limited in duration and ancillary to the directions requiring furnishing of a replacement bank guarantee and indemnity. [Paras 7]

Respondent restrained from realising the amount from the bank for seven days from the date of the order.

Final Conclusion: The petition was disposed by (a) recording that an unconditional bank guarantee, if properly invoked, obliges the bank to pay and that allegations of fraud lacking particulars do not restrain invocation; (b) directing interim protection by permitting the petitioner to substitute a replacement bank guarantee and execute an indemnity to avoid immediate remittance; (c) appointing an arbitrator to decide the merits within four months; and (d) granting a seven-day injunction against realization, while leaving the substantive issues open for arbitration.

Penalty for delayed payment of service tax - payment of service tax with interest prior to issuance of show cause notice - effect of Finance Department Circular dated 3-10-2007 - proceedings under Section 73(3) of the Finance Act, 1994 - precedential effect of Tribunal and High Court decisions

Penalty for delayed payment of service tax - payment of service tax with interest prior to issuance of show cause notice - effect of Finance Department Circular dated 3-10-2007 - proceedings under Section 73(3) of the Finance Act, 1994 - Whether the assessee is liable to pay penalty for delayed payment of service tax when the assessee had discharged the entire service tax liability together with interest before issuance of the show cause notice - HELD THAT: - The Tribunal held, and this Court concurs, that where an assessee pays the service tax in full along with interest prior to issuance of the show cause notice, proceedings against the assessee are concluded, including proceedings under Section 73(3) of the Finance Act, 1994, in light of the Finance Department Circular dated 3-10-2007. The Tribunal relied on the Bangalore Bench decision which applied that Circular; that decision was upheld by the Karnataka High Court in Commissioner v. Manipal County (reported in 2014 (36) S.T.R. J188). The decisions cited by the Department did not consider the Circular dated 3-10-2007. Given the Karnataka High Court's upholding of the Tribunal view, there is no interference warranted with the Tribunal's conclusion that no penalty was leviable where tax and interest were paid before issuance of the show cause notice. [Paras 4, 5]

The assessee is not liable to pay the penalty where service tax and interest were paid in full before issuance of the show cause notice; the Tribunal's order allowing the assessee's appeal is upheld.

Final Conclusion: The appeal is dismissed; no substantial question of law arises and there is no order as to costs.

Pre-deposit requirement under Section 35F - obligation to pay 7.5% as pre-condition to entertain appeal - dismissal for non-compliance of pre-condition - restoration of appeal on payment of prescribed pre-deposit

Pre-deposit requirement under Section 35F - dismissal for non-compliance of pre-condition - Lawfulness of dismissal of the appeal for non-compliance with the pre-deposit obligation under Section 35F. - HELD THAT: - The Court recorded that Section 35F imposes an obligation on the appellant to pay 7.5% of the demand at the time of filing the appeal and that this pre-deposit is a pre-condition for the appellate authority to entertain the appeal. The appellate authority's dismissal of the appeal for non-compliance with that statutory pre-condition was held to be without error, since the obligation to pay had earlier been judicially determined. The Court therefore upheld the legal propriety of dismissal where the pre-deposit requirement remains unmet. [Paras 2]

Dismissal of the appeal for failure to remit the required pre-deposit was lawful.

Obligation to pay 7.5% as pre-condition to entertain appeal - restoration of appeal on payment of prescribed pre-deposit - Whether a discretionary opportunity should be granted to remit the prescribed pre-deposit and have the appeal restored. - HELD THAT: - Although the appellate authority correctly dismissed the appeal for non-compliance, the petitioner offered to remit the 7.5% pre-deposit. Having regard to that offer, the Court exercised its supervisory jurisdiction to grant a further opportunity. The petitioner was directed to remit the amount within four weeks, and on receipt of the sum the appellate authority was directed to restore the appeal and proceed to hear and dispose of it in accordance with law, expeditiously. [Paras 4, 5]

Petitioner permitted to remit the prescribed pre-deposit within four weeks; upon receipt the appellate authority shall restore and decide the appeal.

Final Conclusion: Writ petition disposed by upholding the appellate authority's dismissal for non-payment of the Section 35F pre-deposit but granting the petitioner one opportunity to remit 7.5% within four weeks; on payment the appeal shall be restored and heard expeditiously.

Business Auxiliary Service - Procurement of goods as inputs for the client - Pure sale transaction - Exemption of value of goods sold from taxable services under Notification No.12/2003-ST - Remand for verification of entitlement to statutory exemption

Pure sale transaction - Business Auxiliary Service - Whether transactions under contracts that do not impose any obligation to supply spares are taxable services or pure sales. - HELD THAT: - The Tribunal found that where the contracts produced do not contain any guarantee or obligation on the appellant to ensure supply of spares, the transactions must be treated as pure sale transactions. The appellants purchased spares and cleared them to clients, paying VAT on the entire value, and in the absence of any contractual undertaking to supply spares over the life of the machines there is no element of an ongoing service that would convert the sale into a taxable Business Auxiliary Service. On this basis the demand of service tax in respect of such transactions was set aside. [Paras 4, 6]

Demand of service tax in respect of transactions under contracts without any obligation to supply spares is set aside as they are pure sales.

Business Auxiliary Service - Exemption of value of goods sold from taxable services under Notification No.12/2003-ST - Remand for verification of entitlement to statutory exemption - Treatment of transactions under contracts that contain a guarantee to ensure lifetime supply of spares and the applicability of Notification No.12/2003-ST to such transactions. - HELD THAT: - The Tribunal observed that where the contract contains an express guarantee to ensure lifetime supply of spares, there is doubt about the presence of a service element, particularly in view of clauses providing for penalties or compensation on failure to perform. The appellants contend that, even if a taxable service is found, the value of goods sold is exempt under Notification No.12/2003-ST (subject to documentary proof and conditions regarding CENVAT credit). The impugned order did not address the appellant's claim under Notification No.12/2003-ST. Consequently, the Tribunal did not decide the question on merits but remitted the matter to the Commissioner (Appeals) for fresh consideration solely on the availability of the Notification No.12/2003-ST exemption in respect of those transactions. [Paras 5, 6]

Transactions under contracts containing a lifetime-spares guarantee are remitted to the Commissioner (Appeals) to decide the applicability of Notification No.12/2003-ST; the impugned order is set aside insofar as it relates to these transactions.

Final Conclusion: Appeal disposed: demands in respect of pure sale transactions (contracts without obligation to supply spares) set aside; matters where contracts impose a lifetime-spares obligation remanded to Commissioner (Appeals) to determine entitlement to exemption under Notification No.12/2003-ST.

Cenvat credit - maintenance and repair services - reliance on ST3 returns - non-production of invoices due to destruction by fire - appellate scrutiny of invoices at Commissioner (Appeals) stage - remand for fresh adjudication

Cenvat credit - non-production of invoices due to destruction by fire - reliance on ST3 returns - appellate scrutiny of invoices at Commissioner (Appeals) stage - Whether denial of Cenvat credit for non-production of invoices was justified where credit was reflected in ST3 returns, initial appellate authority had scrutinised invoices, and original invoices were subsequently destroyed in a fire - HELD THAT: - The Tribunal noted that the appellant had reflected the Cenvat credit in the ST3 returns for the period in question and that the Commissioner (Appeals) in his earlier order had scrutinised the invoices. The appellant produced evidence of a subsequent fire that destroyed stocks and records, including invoices, and placed a fire report and FIR on record. Having regard to the earlier appellate scrutiny, the contemporaneous reflection of credit in statutory returns, and the undisputed destruction of documents by fire, the Tribunal concluded that non-availability of original invoices due to such destruction could not constitute a valid ground for denying the credit. The Tribunal therefore found the adjudicating authority's confirmation of demand unsustainable and set aside the impugned order. [Paras 5, 6]

Impugned order set aside; appeal allowed and Cenvat credit not denied on account of non-production of invoices destroyed in the fire.

Final Conclusion: The Tribunal allowed the appeal, holding that where Cenvat credit was reflected in ST3 returns, earlier appellate scrutiny of invoices had occurred, and originals were shown to have been destroyed in a fire (supported by fire report and FIR), denial of credit for non-production of invoices was unwarranted; the impugned demand was set aside.

Cenvat credit - input services - mining and excavation service - classification of service - liability of recipient for service-tax classification

Cenvat credit - input services - mining and excavation service - Entitlement of the respondent to Cenvat credit of service tax paid on mining and excavation services relating to extraction of limestone from their captive mines for the period covered by the show cause notices. - HELD THAT: - The original authority held that mining and excavation services procured from the respondent's captive mines were covered by the definition of input services and the credit availed was therefore allowable. Revenue raised before this Tribunal a new contention that those services should be classified as supply of tangible goods introduced w.e.f. 15-5-2008 and that no service tax (and hence no credit) was payable for the earlier period. That plea was not agitated before the lower authority. The Tribunal applied the settled legal principle that the entitlement to Cenvat credit of the recipient cannot be varied or denied on the basis that the service-provider's classification of the service ought to have been different; variation in classification or consequent rate is not a ground to deny credit to the recipient unless there is record of re-classification or payment adjustment by the provider during the relevant period. As there is no material on record showing any such variation by the service-provider during the material time, the Revenue's new ground falls outside the scope of the adjudication concluded below and cannot be entertained to deny the credit.

The respondent is entitled to the Cenvat credit on mining and excavation services as held by the original authority; the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal upheld the original authority's allowance of Cenvat credit for mining and excavation services used in procuring limestone from captive mines for the period October, 2007 to September, 2008, and dismissed the Revenue's appeal which raised a fresh classification plea not urged below.

Assessable value - bought-out items - erection and installation - manufacture - movable versus immovable goods - central excise duty on transaction value

Assessable value - bought-out items - erection and installation - manufacture - movable versus immovable goods - central excise duty on transaction value - Inclusion of the value of bought-out items and site erection/installation activities in the assessable value of LPG bullets for levy of Central Excise duty. - HELD THAT: - The Revenue did not dispute the transaction value of Rs. 42 lakhs per LPG bullet but sought to add the value of bought-out parts and activities at site. The bought-out parts were supplied directly to the site and did not participate in the manufacture of the LPG bullets at the factory. The activities at site related solely to fitting, erection and installation to make the bullets immovable at the customer s site. The Tribunal held that such site activities do not amount to manufacture and, moreover, once erected the goods become immovable; therefore, the value of bought-out items and erection/installation cannot be added to the assessable value for charging excise duty on the transaction value of the bullets cleared from the factory. On these undisputed facts, no addition to the declared value was justified.

Demand based on inclusion of bought-out items and site erection/installation in assessable value is unsustainable; impugned order set aside and appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that bought-out parts supplied to site and activities of erection and installation do not constitute manufacture and cannot be included in the assessable value of the LPG bullets for levy of Central Excise duty; the demand was set aside.

Related person - assessable value - interconnected undertaking - scope of show cause notice - vitiation of proceedings due to defective show cause notice

Related person - assessable value - scope of show cause notice - vitiation of proceedings due to defective show cause notice - Whether the Central Distribution Centre (CDC) was a related person of the appellant and whether valuation based on CDC sale could be adopted as assessable value. - HELD THAT: - The Tribunal found that the CDC was a depot owned by National Textile Corporation (Maharashtra North) Ltd., the appellant being a unit of the same company; consequently the CDC, the appellant unit and the parent company form parts of a single entity and are not different persons. The show cause notice proceeded on the sole premise that the CDC was a related person; that factual premise is incorrect and therefore the foundational basis of the valuation dispute in the show cause notice is demolished. Because the notice did not raise alternative valuation provisions, the Tribunal declined to travel beyond the scope of the show cause notice to consider other valuation contentions. The incorrect characterization of the CDC as a related person vitiates the impugned proceedings which arose solely from that premise.

The CDC is not a related person of the appellant; the valuation based on CDC sale cannot be adopted and the proceedings based on the show cause notice are vitiated.

Final Conclusion: The impugned order is set aside and the appellant's appeal is allowed.

Interpretation of exemption notification - exemption for supplies to foreign going vessels (international bunkers) - precedential effect of earlier Tribunal and Supreme Court decisions - re quantification of duty on production of evidence - penalty not imposable for bona fide interpretative dispute

Interpretation of exemption notification - precedential effect of earlier Tribunal and Supreme Court decisions - Notification No.64/95-CE is not available to the appellant for the removals in dispute as the issue on merits stands concluded against the appellant by earlier decisions. - HELD THAT: - The Tribunal noted that the question whether Notification No.64/95-CE applied to the appellant had already been considered and decided against the appellant in their own earlier case reported in 2014 (301) ELT 554, a decision thereafter upheld by the Supreme Court. Having regard to that precedent, the Tribunal held that the exemption under the notification is not available to the appellant in the present proceedings. The court treated the earlier adjudication and its upholding as determinative of the substantive availability of the notification in these proceedings. [Paras 5]

Notification No.64/95-CE not available to the appellant; the substantive exemption claim is concluded against them.

Exemption for supplies to foreign going vessels (international bunkers) - re quantification of duty on production of evidence - Portion of the demand relating to supplies said to have been made for consumption on foreign going vessels is to be re quantified by the original adjudicating authority on production of evidence. - HELD THAT: - Although the substantive availability of Notification No.64/95-CE was concluded against the appellant, the Tribunal accepted the appellant's contention that part of the cleared quantity was supplied as international bunkers to foreign going vessels and therefore not dutiable. The appellant had not produced such evidence before the original authority, but furnished a certificate from Indian Oil Corporation indicating quantities supplied to foreign going vessels for the period June 2005 to February 2006. The Tribunal remanded the matter for re quantification of duty, directing the appellant to produce admissible evidence before the adjudicating authority, which will examine and satisfy itself whether duty free clearance is entitled on that quantity. [Paras 5]

Matter remanded to the original adjudicating authority for re quantification of duty on the basis of evidence to be produced by the appellant regarding supplies to foreign going vessels.

Penalty not imposable for bona fide interpretative dispute - interpretation of exemption notification - Penalties imposed by the adjudicating authority are set aside. - HELD THAT: - The Tribunal accepted the appellant's submission that the controversy was essentially one of construction of Notification No.64/95-CE. Having regard to the settled nature of the dispute in the appellant's earlier proceedings and to the fact that the appellant is a Government undertaking with no suppression of facts alleged, the Tribunal held that imposing penalties was not justified. The Tribunal noted that in the appellant's earlier occasion on a similar issue penalties had been set aside and, on that basis, concluded that no penalty should be imposed in the present case. [Paras 6, 7]

Penalties set aside; no penalty imposable in the present case.

Final Conclusion: The substantive claim to exemption under Notification No.64/95-CE is held unavailable to the appellant on the basis of earlier precedents; the matter is remanded to the original adjudicating authority for re quantification of duty limited to the proof of supplies to foreign going vessels for the period June 2005 to February 2006; penalties imposed are set aside.

Manufacture of goods by subcontractors - manufacture at site versus manufacture in factory - classification of fixed versus movable furniture - excisability of loose furniture - invocation of extended period of limitation - remand for fresh adjudication in view of earlier orders - penalty under Rule 173Q

Manufacture of goods by subcontractors - manufacture at site versus manufacture in factory - Whether the furniture in question was manufactured by subcontractors or at the appellant's factory and whether items fabricated and fixed at site are excisable - HELD THAT: - The Tribunal observed that the same factual and legal controversies concerning fabrication by subcontractors and whether goods were manufactured in the appellant's factory or fabricated and fixed at site have already been the subject of earlier adjudication and the Tribunal's remand. Given that identical issues arise, the Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority to decide afresh in the light of the Tribunal's order dated 12.02.2013 and the Commissioner's Order-in-Original dated 01.03.2011. The remand requires the adjudicating authority to consider the evidence collected after the earlier show-cause notice, to determine whether loose furniture was manufactured in the factory of the appellant or produced by subcontractors and whether site-fabricated and fixed items are dutiable.

Remanded to the original adjudicating authority for fresh decision in view of Tribunal order dated 12.02.2013 and Commissioner OIO dated 01.03.2011.

Classification of fixed versus movable furniture - excisability of loose furniture - Whether the furniture supplied is to be treated as fixed (non-excisable) or movable/loose (excisable) - HELD THAT: - The Tribunal noted that the question of fixed versus movable furniture and the excisability of loose furniture had been previously considered and determined in prior orders. In consequence, and because the present appeals raise identical contentions on this point, the matter is remitted for reconsideration by the adjudicating authority in conformity with the earlier Tribunal and Commissioner decisions so that the factual matrix and legal characterisation of items as fixed or loose furniture may be reexamined.

Remanded for fresh adjudication to determine classification and excisability in light of earlier orders dated 12.02.2013 and 01.03.2011.

Offloading of work to third parties - manufacture of goods by subcontractors - Whether offloading of work to entities such as Diwan Sons affects the liability for excise duty - HELD THAT: - The Tribunal recorded that offloading of work to other contractors (Diwan Sons) and related contentions mirror issues already addressed in prior adjudications. As such, resolution of this question requires reassessment by the adjudicating authority taking into account the evidence and findings recorded in the Tribunal's earlier order and the Commissioner's order, and therefore the impugned order is set aside and the issue remanded for fresh decision.

Remanded to original adjudicating authority for fresh consideration in light of the prior Tribunal and Commissioner orders.

Invocation of extended period of limitation - remand for fresh adjudication in view of earlier orders - Whether the extended period for issuance of demand could be invoked - HELD THAT: - The Tribunal held that the question concerning invocation of the extended period had been settled by its own earlier decision dated 12.02.2013. Since the present appeals raise identical issues, the Tribunal directed that the adjudicating authority reconsider the matter afresh in conformity with that decision and the Commissioner's order, effectively remitting the question for fresh adjudication rather than deciding it finally in the present order.

Remanded for fresh decision on the question of extended period, to be decided in accordance with the Tribunal's order dated 12.02.2013 and Commissioner OIO dated 01.03.2011.

Penalty under Rule 173Q - Whether penalties under Rule 173Q and personal penalties on directors should be sustained - HELD THAT: - The Tribunal noted in its earlier order that where a major portion of demand is dropped, imposition of penalties may not be warranted. In view of the present remand and the fact that identical considerations arise, the Tribunal set aside the impugned order and remanded the proceedings so that the adjudicating authority can reconsider penalty liability after reexamining the demand and separating what, if any, remains which justifies penal consequences.

Remanded to adjudicating authority to reconsider penalties in the course of fresh adjudication in conformity with earlier decisions.

Final Conclusion: The impugned order is set aside and the matters are remanded to the original adjudicating authority for fresh adjudication on the listed issues (manufacture by subcontractors, offloading to third parties, manufacture at site versus factory, classification of fixed versus movable furniture, invocation of extended limitation period, and penalty liability), to be decided in view of the Tribunal's order dated 12.02.2013 and the Commissioner's Order-in-Original dated 01.03.2011.

MRP-based valuation under Section 4A - valuation of combipack - free item in multipack not separately assessable - application of CBEC Circular No.673/64/2002-CX

MRP-based valuation under Section 4A - valuation of combipack - free item in multipack not separately assessable - Whether duty could be demanded separately on the refill supplied 'free' in a combipack where the combipack bears an MRP and duty was paid on that MRP - HELD THAT: - The Tribunal held that where dissimilar consumer items, each notified for MRP-based assessment, are sold only as a combipack and the combipack bears an MRP which has been accepted for discharge of duty, the correct basis of assessment is the declared MRP of the combipack. Reliance was placed on the Tribunal's decision in M/s Icon Household Products P. Ltd., as affirmed by the Supreme Court, and on the CBEC Circular No.673/64/2002-CX which directs that when one or more notified items in a multipack do not bear individual MRPs, the MRP printed on the multipack is to be taken for valuation under Section 4A. Applying that principle, the refill supplied free in the combipack need not be separately assessed to duty and the departmental demand for differential duty, interest and penalty was unsustainable.

Demand for differential duty, interest and penalty set aside; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal and set aside the demand, holding that assessment on the declared MRP of the combipack is determinative and the free refill in the combipack is not separately assessable to excise duty.

Process of blending - manufacture - process or treatment to enhance marketability does not amount to manufacture - transformation into a new product with distinct characteristics and usages - conformity to ISI specifications - value addition

Process of blending - manufacture - conformity to ISI specifications - process or treatment to enhance marketability does not amount to manufacture - Blending duty-paid Motor Spirit (MS) and High Speed Diesel (HSD) with small quantities of Multifunctional Additives (MFAs) to create branded MS/HSD amounts to manufacture attracting central excise duty. - HELD THAT: - The Tribunal held that blending ordinary MS/HSD with MFA in proportions of about 0.04% to 0.06% does not amount to manufacture. After blending the products continue to conform to the same ISI specifications for MS and HSD and retain the same basic characteristics and usages; only an enhancement in quality and a brand-name premium results. The court applied the legal principle that manufacture requires such transformation that a new and different article with distinct name, character and usages emerges; mere improvement in marketability or value addition is insufficient to constitute manufacture. Earlier decisions referred to in the judgment - including CCE v. Sudarshan Chemical Industries , Lakme Lever Ltd. v. CCE , Mysore Ammonia Pvt. Ltd. v. CCE , J.G. Glass v. UOI , and the line of Supreme Court authority on transformation into a new product (South Bihar Sugar Mill v. UOI , Union of India v. Delhi Cloth Mills Ltd. , Tega India Ltd. v. CCE ) - were held to be applicable and supportive of this conclusion. Distinguishing precedents where blending created an unusable intermediate without the additive (illustratively Air Control System ) the Tribunal noted that MS/HSD are usable without MFA, and blending merely improves quality; therefore the criteria of manufacture is not satisfied. The present appeal was decided on the basis of the appellant's own earlier Tribunal decision on identical facts, and the impugned demand, interest and penalty were found unsustainable. [Paras 5, 6]

The impugned order confirming duty, interest and penalty is set aside; the appeal is allowed with consequential relief, if any.

Final Conclusion: Blending small quantities of MFA with duty-paid MS/HSD to produce branded fuels does not amount to manufacture; the earlier Tribunal decision on identical facts is followed and the impugned demand, interest and penalty are set aside, allowing the appeal with consequential relief.

SSI exemption under Notification No.8/2003-CE dated 01.03.2003 - cenvat credit on inputs used in manufacture of third party branded goods - exclusion of clearances bearing third party brand names from aggregate clearances for home consumption - construction of exemption notifications on their own terms - precedential effect of Tribunal and Apex Court decisions on interpretation of exemption notifications

SSI exemption under Notification No.8/2003-CE dated 01.03.2003 - cenvat credit on inputs used in manufacture of third party branded goods - exclusion of clearances bearing third party brand names from aggregate clearances for home consumption - Appellant is entitled to claim the SSI exemption under Notification No.8/2003-CE dated 01.03.2003 despite having cleared during the relevant period goods bearing third party brand names for which duty was paid and cenvat credit availed. - HELD THAT: - Tribunal examined the scheme of the exemption notification and relied on earlier decisions of this Tribunal and the Apex Court which held that clearances bearing the brand name or trade name of third parties are to be excluded for the purpose of determining aggregate clearances for home consumption and are not entitled to the exemption. Those branded clearances, where duty has been paid, permit the manufacturer to take cenvat credit on inputs used for their manufacture, but do not displace the entitlement of the SSI unit to claim exemption in respect of its own branded clearances. Applying that principle to the facts before it, and being of the view that the appellant had not availed the benefit of both options simultaneously in respect of the same clearances, the Tribunal concluded that the appellant was rightly entitled to the benefit of Notification No.8/2003-CE dated 01.03.2003. The impugned orders denying exemption, demanding duty with interest and imposing penalty were therefore set aside. [Paras 6, 9]

Impugned orders set aside; appeal allowed and appellant held entitled to benefit of Notification No.8/2003-CE dated 01.03.2003 with consequential relief.

Final Conclusion: The Tribunal allowed the appeal, set aside the adjudicating authority's orders denying SSI exemption, and held that the appellant is entitled to the benefit of Notification No.8/2003-CE dated 01.03.2003; consequential relief to follow.

Unjust enrichment under Section 11B - bank guarantee as security - encashed bank guarantee treated as excise duty - burden of proof for passing on of duty

Encashed bank guarantee treated as excise duty - unjust enrichment under Section 11B - Whether refund of amounts encashed from a bank guarantee is governed by the principle of unjust enrichment under Section 11B. - HELD THAT: - The Tribunal accepted that a bank guarantee, while remaining as an unencashed security, is not a payment of duty. However, once the department encashes the bank guarantee towards recovery of excise liability, the encashed amount acquires the character of excise duty. Consequently, a refund of such encashed amount falls within the ambit of unjust enrichment under Section 11B. The Tribunal distinguished the decision in Oswal Agro Mill Ltd (which treats an unencashed bank guarantee as security) on the ground that the present case concerns an encashed bank guarantee and not an unencashed security; therefore Oswal Agro Mill Ltd is inapplicable. [Paras 5]

Refund of amounts encashed from a bank guarantee is subject to unjust enrichment under Section 11B; the adjudicating authority's crediting of the sanctioned amount to the consumer welfare fund is legally sustainable.

Burden of proof for passing on of duty - unjust enrichment under Section 11B - Whether the appellant discharged the burden of proving that the incidence of duty had not been passed on to another person. - HELD THAT: - The Tribunal noted that the appellant did not produce any evidence to demonstrate that the incidence of the duty, in respect of the encashed sum, was not passed on to others. The obligation to prove absence of passing on lies on the claimant seeking refund to avoid the application of unjust enrichment. In absence of such evidence, the claim cannot escape the statutory bar of unjust enrichment. [Paras 5]

Appellant failed to discharge the burden of proof that the duty incidence was not passed on; therefore the refund is rightly subject to the provisions of unjust enrichment.

Final Conclusion: The appeal is dismissed; the Tribunal upheld the orders below holding that amounts encashed from a bank guarantee are excise duty and refunds thereof are subject to unjust enrichment under Section 11B, and that the appellant failed to prove non-passing on of the duty.

Exemption for ship stores supplied to Indian Navy - scope of permission to clear goods to depots for nil-rate supply - distinguishing precedents on notification exemptions - remand for verification of export/clearance certificates (CT-2/AR3A) - setting aside of penalties in view of bona fide conduct/permissions sought

Exemption for ship stores supplied to Indian Navy - scope of permission to clear goods to depots for nil-rate supply - Whether supplies made to IOCL(W) qualified for exemption as goods supplied as stores for consumption onboard Navy vessels under Notification No. 64/95-CE. - HELD THAT: - The Tribunal examined the correspondence and permissions granted by the Revenue and found that the permissions dated 6-12-2004 and 3-3-2005 were expressly confined to clearances made to the appellant's own depots. The appellant's letter seeking inclusion of IOCL(W) was not acceded to and no permission was granted in respect of supplies to IOCL(W). Consequently the factual position was not distinguishable from the earlier Tribunal decision in Indian Oil Corporation Ltd where identical exemption provisions were interpreted against the supplier. The Tribunal therefore held that supplies to IOCL(W) did not attract the exemption as stores supplied to the Indian Navy in the absence of an express permission covering those clearances. [Paras 5, 6]

Demand of duty in respect of supplies made to IOCL(W) confirmed (exemption not allowable).

Distinguishing precedents on notification exemptions - Whether the appellant could rely on other decisions (GE India Industrial Ltd, Wartsila (I) Pvt Ltd, Leader Engineering Works) to escape liability. - HELD THAT: - The Tribunal analysed the cited decisions and held that GE India Industrial Ltd and Wartsila (I) Pvt Ltd dealt with a different entry of the notification (Sr. 21) which did not require supply of goods as ship stores and were therefore distinguishable. By contrast the principle in Leader Engineering Works, as approved by the Apex Court, applied to supplies of stores for Indian Navy and was squarely applicable to the facts of the present case. Accordingly the appellant's reliance on the GE and Wartsila decisions was rejected while the Leader Engineering Works ratio was held to govern. [Paras 6]

Precedents relied on by the appellant were distinguished; Leader Engineering Works principle applied.

Remand for verification of export/clearance certificates (CT-2/AR3A) - Verification of claims in respect of consignments allegedly cleared under CT-2/AR3A certificates and entitlement to exemption/duty relief. - HELD THAT: - The Tribunal noted that certain consignments to IOCL were claimed to have been cleared under CT-2 and AR3A certificates and that the Commissioner had not dealt with this specific contention. Given that the question of exemption/duty in respect of these consignments required factual verification, the Tribunal remanded the matter to the original adjudicating authority for verification and fresh orders confined to those consignments claimed to be covered by CT-2/AR3A. [Paras 7, 8]

Matter remanded to the original authority for verification and fresh decision regarding consignments claimed to be cleared under CT-2/AR3A.

Setting aside of penalties in view of bona fide conduct/permissions sought - Whether penalties imposed on the appellant should be sustained. - HELD THAT: - Having confirmed the duty demand (subject to the remand for CT-2/AR3A consignments), the Tribunal considered the imposition of penalties. It recorded the appellant's conduct in repeatedly seeking permissions from the Revenue and the factual findings that permissions granted related to the appellant's depots. In the exercise of discretion the Tribunal set aside the penalties imposed on the appellant. [Paras 8]

Penalties imposed are set aside.

Final Conclusion: Duty demand confirmed in respect of supplies to IOCL(W) (exemption disallowed) except for consignments claimed under CT-2/AR3A which are remanded for verification; penalties set aside and appeals disposed accordingly.

Refund of duty - payment under protest - limitation for refund under Section 11B - effect of pending appeal on limitation - maturity of refund claim - valuation governed by Rule 8 - unjust enrichment

Payment under protest - limitation for refund under Section 11B - effect of pending appeal on limitation - maturity of refund claim - unjust enrichment - Refund claim for the period 1-4-2003 to 15-9-2005 is not time barred where duty was paid under protest. - HELD THAT: - The Tribunal examined the sequence of proceedings and the nature of payments made by the respondent. Prior appellate orders and departmental appeals showed that the dispute on valuation (governed by Rule 8) remained alive and the department directed the assessee to continue paying duty on sale price while pursuing appeals. Payments made in those circumstances were treated as payments under protest. The second proviso to Section 11B excludes the one-year limitation for refund where duty has been paid under protest; the provision does not prescribe any alternative limitation period. The Tribunal relied on precedent of this Tribunal (Madura Coats Pvt. Ltd.) where payments made pending appeal and under protest were held to take the refund outside the one-year bar. On the facts, earlier related proceedings (including a refund for 1-10-2001 to 31-1-2001 decided in favour of the respondent on 20-1-2003 and subsequent appeals on valuation decided by the Tribunal) demonstrated that the respondent's payments were indeed under protest. Therefore the restriction of one year under Section 11B was inapplicable and the refund could not be rejected on limitation grounds. The Tribunal upheld the Commissioner (Appeals) order allowing the refund claim on this basis. [Paras 5]

Revenue's appeal on the ground of limitation is dismissed; the impugned order upholding the refund (on the basis that duty was paid under protest and therefore not time barred) is affirmed.

Final Conclusion: The appeal is dismissed: refund claimed for 1-4-2003 to 15-9-2005 is maintainable because duty was paid under protest and the one-year limitation under Section 11B does not apply; consequential relief shall follow.

Exemption from additional duty of excise for 100% Export Oriented Undertaking - additional duties of excise (Textiles and Textile Articles) - additional duties of excise (Goods of Special Importance) - re-computation of duty in conformity with binding Supreme Court precedent

Exemption from additional duty of excise for 100% Export Oriented Undertaking - additional duties of excise (Textiles and Textile Articles) - additional duties of excise (Goods of Special Importance) - Assessee's entitlement to exemption from additional excise duties under Notification No.55/91-CE and Notification No.127/84-CE during the currency of those notifications. - HELD THAT: - The Tribunal examined the terms of Notification No.55/91-CE (granting exemption from additional duty under the Textiles and Textile Articles enactment to goods produced in a 100% EOU) and Notification No.127/84-CE (granting exemption from additional duty under the Goods of Special Importance enactment to goods produced in a 100% EOU). It held that, while those notifications were in force, the assessee was entitled to the exemptions they conferred. The notifications were subsequently rescinded by Notification No.24/03-CE dated 31-3-2003, but for the period of their currency the exemptions applied and the Commissioner(Appeals)'s order was modified to allow those benefits.

Benefit of exemption from AED(TTA) and AED(GSI) allowed to the assessee in terms of Notification No.55/91-CE and Notification No.127/84-CE for the period those notifications were in force.

Re-computation of duty in conformity with binding Supreme Court precedent - precedential effect of Supreme Court overruling of tribunal decision - Validity of remand for re-computation of duty in accordance with this Tribunal's decision in Indoworth and the effect of the Supreme Court decision in Commissioner vs. Futura Polymers Ltd on that direction. - HELD THAT: - The Commissioner(Appeals) had remanded the matter to the adjudicating authority to re-determine duty in terms of this Tribunal's decision in Indoworth India Ltd. The Tribunal noted that the Indoworth decision has been overruled by the Supreme Court in Commissioner vs. Futura Polymers Ltd. In view of the Supreme Court ruling, the Tribunal upheld the remand for re-computation but clarified that the computation must conform to the law as laid down by the Supreme Court. Accordingly, the Commissioner(Appeals)'s direction for re-computation was sustained, subject to application of the higher court's decision.

Remand for re-computation of duty is upheld, and the re-computation must be carried out in conformity with the Supreme Court's decision in Futura Polymers Ltd rather than the earlier Tribunal precedent.

Final Conclusion: The appeal of M/s. Uniworth Textiles Ltd is partly allowed by permitting exemption from AED(TTA) and AED(GSI) during the currency of the respective notifications; the remand for re-computation of duty is upheld and must be carried out in accordance with the binding Supreme Court authority, and the Revenue's appeal is rejected.

Cenvat Credit - input service - used in or in relation to the manufacture - statutory requirement under the Factory Act - admissibility of credit for housekeeping, gardening and creche-related services

Cenvat Credit - input service - used in or in relation to the manufacture - statutory requirement under the Factory Act - Cenvat credit admissible in respect of housekeeping, gardening and nurses/ayaa services engaged for creche within factory premises. - HELD THAT: - The Tribunal found that the services in question - garden maintenance, housekeeping and deployment of nurses/ayaas for a creche - are mandatory statutory requirements for running the factory under the Factory Act. Being necessary for maintenance and operation of the factory, these services are used in or in relation to the manufacture of the final product and therefore fall within the definition of input service for the purpose of Cenvat credit. The Tribunal also noted that earlier decisions on identical services have held such credits to be admissible and, applying that reasoning, set aside the impugned order and allowed the appeal. [Paras 5]

Impugned order set aside; Cenvat credit allowed for the specified input services as they are used in or in relation to manufacture.

Final Conclusion: Appeal allowed; Cenvat credit in respect of housekeeping, gardening and creche-related nursing/ayaa services held admissible as they are statutory/essential for running the factory and hence used in or in relation to manufacture; consequential relief granted.

Reasonable classification - intelligible differentia - exemption from tax - levy of tax on sale of goods - common parlance test - value addition criterion - constitutionality under Article 14

Exemption from tax - levy of tax on sale of goods - Validity of notification exempting sale of liquor by certain licence-holders under the KVAT framework and State's power to classify dealers for exemption - HELD THAT: - The Court upheld the impugned notification as intra vires the State's power to grant exemption under the KVAT scheme. It accepted the reasoning that Section 5(1) (and comparable delegated powers) permits exemption of goods subject to conditions and restrictions specified in the notification, and that the State may, in exercise of fiscal discretion, notify exemptions applicable to particular classes of dealers. The Court relied on prior authority examining analogous delegated powers and held that exemption directed at sales of liquor by specified classes of licence-holders is a permissible classification within the legislature's taxing competence and not an excessive delegation. The impugned notification's focus on the sale of liquor by specified licence-holders, tied to conditions in the notification, was therefore held to be valid. [Paras 17, 18, 19, 41, 42]

Notification exempting sale of liquor by certain licence-holders is valid and within the State's power to grant exemptions under the taxing statute.

Reasonable classification - intelligible differentia - constitutionality under Article 14 - value addition criterion - Whether the exemption/levy regime discriminates unreasonably between dealers and thereby violates Article 14 (and related fundamental rights) - HELD THAT: - Applying the twin tests of classification, the Court found that the notification draws a distinction based on an intelligible differentia and that the differentia bears a rational nexus to the object of the legislation (to capture tax on substantial value addition and to ensure productive yield). The Court accepted that licences (CL-2, CL-9, CL-7, CL-4, CL-6A etc.) reflect different modes of sale, pricing power and potential for value addition; accordingly dealers are not similarly situated for the fiscal purpose. Reliance was placed upon authorities recognizing broader legislative latitude in fiscal classification and the acceptability of taxing or exempting particular classes so long as the classification is not palpably arbitrary. The Court held that exempting certain CL-9 holders in rural/panchayat areas while taxing urban CL-9, CL-7 (hotels/boarding houses) and other specified licence-holders is a rational fiscal classification and not discriminatory. [Paras 34, 35, 45, 46, 47]

Classification embodied in the notification is rational, not arbitrary, and does not violate Article 14; the discrimination challenge is rejected.

Common parlance test - levy of tax on sale of goods - Claim that the levy effectively taxes services or ambience (and not goods) when liquor is sold in bars/restaurants - HELD THAT: - The Court rejected the contention that the tax is aimed at services or ambience. It applied the common parlance test and noted that the taxable item remains liquor (albeit served in a different form - peg, glass - as commonly understood), and that the State did not purport to tax services or ambience. The distinction between sale of sealed bottles by retail liquor shops and sale/serving of liquor in bars/restaurants (loose/pegs) was held to be relevant to classification; thus imposing tax on sales by certain licence-holders does not amount to taxing services but addresses differing modes of sale of the goods themselves. [Paras 10, 11, 12, 13]

The levy is on the goods (liquor) as sold in different forms; the challenge that the tax targets services/ambience is unsustainable.

Final Conclusion: For the reasons recorded, the impugned orders were affirmed and the appeals dismissed; the Court found the notification and classification lawful, the discrimination challenges without merit, and rejected the contention that the levy targets services rather than goods.

Detention of goods and vehicles - release on bank guarantee - interim release pending challenge to an order - appeal against order under Section 68(5) of the Gujarat Value Added Tax Act, 2003 - entertainment of appeal without raising limitation - payment/deposit of tax as condition for relief

Detention of goods and vehicles - release on bank guarantee - payment/deposit of tax as condition for relief - Release of the detained truck and goods pending challenge to the order passed under Section 68(5) of the Gujarat Value Added Tax Act, 2003. - HELD THAT: - The court recorded that the vehicles and goods were detained for non-filing of Form 403 and that the tax liability on the imported goods had already been paid/deposited by the petitioner. Noting that the order under Section 68(5) imposing penalty is appealable and that the tax amount was deposited, the Court directed interim release of the truck and goods on furnishing a bank guarantee for the amount of penalty (as agreed by the petitioner). The release was ordered subject to preservation of the parties' rights and contentions in any appeal under Section 68(5). The order is an interim arrangement and does not decide the merits of the penalty or final assessment.

Truck and goods to be released on petitioner furnishing a bank guarantee for the penalty amount; relief ordered as an interim measure without prejudice to rights in appeal.

Appeal against order under Section 68(5) of the Gujarat Value Added Tax Act, 2003 - entertainment of appeal without raising limitation - interim release pending challenge to an order - Permission to prefer appeal against the order under Section 68(5) and the appellate authority's obligation to entertain and decide the appeal on merits notwithstanding limitation, if filed within the specified time. - HELD THAT: - Having relegated the petitioner to challenge the Section 68(5) order before the appellate authority, the Court directed that if the appeal is preferred within two weeks from the date of the order, the first appellate authority shall admit and consider it on merits without raising limitation objections, in view of the petitions having been filed before the High Court. The Court further directed that the appeal(s), once filed, should be decided in accordance with law at the earliest and preferably within three months from receipt of the appeal(s). This direction preserves substantive adjudication by the appellate forum while removing procedural impediments to filing and timely disposal.

If appeal(s) filed within two weeks, appellate authority shall entertain and decide them on merits without raising limitation; appeals to be decided preferably within three months.

Final Conclusion: Writ petitions disposed by directing interim release of the detained truck and goods on furnishing a bank guarantee for the penalty amount, and by permitting the petitioner to prefer appeals against the Section 68(5) order within two weeks which the appellate authority shall entertain and decide on merits without limitation objections, preferably within three months.

Pre-deposit for appeal - right to appeal under Section 18 of the Securitisation Act - definition of borrower - scope of proviso to Section 18 - third party appellants - status quo

Pre-deposit for appeal - third party appellants - scope of proviso to Section 18 - definition of borrower - Whether appellants who are neither borrowers nor guarantors and have not created any security for the loan can be directed to deposit fifty per cent of the debt as a condition precedent to entertain their appeal under Section 18 of the Securitisation Act. - HELD THAT: - The Court observed that Section 18 permits an appeal by any person aggrieved, and the statutory definition of 'borrower' covers those who have obtained financial assistance or have given guarantee or created mortgage or pledge. The second proviso to Section 18(1) expressly requires the borrower to deposit fifty per cent of the debt before an appeal is entertained. Read in context, the proviso applies to the borrower and cannot be construed to impose the borrower's pre-deposit obligation on third parties who are not borrowers within the statutory definition. A literal reading that would render appeals by third parties nugatory was rejected. The Court also noted the practical incongruity in the impugned order where each appellant was directed to deposit fifty per cent, which would cumulatively exceed the debt of the borrower. [Paras 14, 15, 16, 17, 18]

The impugned direction requiring each appellant (who is not a borrower) to deposit fifty per cent of the amount due from the borrower was set aside.

Right to appeal under Section 18 of the Securitisation Act - status quo - Whether the appeal before the Appellate Tribunal must be proceeded with on merits and whether any deposit should be insisted upon as a pre-condition going forward. - HELD THAT: - The Court expressly refrained from adjudicating the merits of the appellants' challenge to the measures under the Securitisation Act. It directed that the appeal may be disposed of by the Appellate Tribunal in accordance with law without insisting on any deposit from the third-party appellants. The Court clarified that interim relief or interim orders remain subject to the ordinary legal tests (strong prima facie case, balance of convenience, etc.), and that such relief may be granted or refused in accordance with law. [Paras 19, 20]

Appeal to be disposed of in accordance with law without insisting on the deposit set aside; interim relief to be considered on usual legal principles.

Final Conclusion: Writ petition allowed; the Debts Recovery Appellate Tribunal's order is set aside insofar as it required each non-borrower appellant to deposit fifty per cent of the debt. The Appellate Tribunal is to proceed with the appeal in accordance with law without insisting on such deposit, and interim relief is to be considered on usual legal tests.