TaxTMI Updates e-Newsletter
May 18,2018

Seizure and penalty under Section 129(3) of the UPGST Act - Effect of production of E-way bill after interception but before seizure - Interception versus detention - requirement to record time of verification and orders - Non-seizure where goods are accompanied by invoice charging IGST and belong to a registered dealer

Effect of production of E-way bill after interception but before seizure - Seizure and penalty under Section 129(3) of the UPGST Act - Interception versus detention - requirement to record time of verification and orders - Non-seizure where goods are accompanied by invoice charging IGST and belong to a registered dealer - Validity of the seizure order dated 5.5.2018 and consequential order under Section 129(3) where the E-way bill was generated after interception but before the seizure/penalty orders and where verification/ orders omitted recording time - HELD THAT: - The Court found that the vehicle was intercepted at 1:30 a.m. on 5.5.2018 and that the petitioner generated the E-way bill on 5.5.2018 at 11:55 a.m., producing it to the officer later that day. The verification records (Part-A and Part-B) did not record the time of verification, and the seizure order and the consequential order under Section 129(3) were dated 5.5.2018 without stating the time. The Court accepted the submission that once the E-way bill and accompanying documents established that the goods belonged to a registered dealer and IGST had been charged, there was no justification for detention, seizure or imposition of penalty. The omission to record time in the verification and the issuance of seizure/penalty orders dated the same day (and before the date indicated in the interception memo for physical verification) indicated that no lawful detention or proper verification preceded the seizure. Applying the principle that production of the E-way bill before seizure precludes detention and penalty in such circumstances, and having regard to the corroborating fact of the invoice charging IGST, the Court concluded the impugned orders were without jurisdiction and arbitrary.

Seizure order dated 5.5.2018 and consequential order under Section 129(3) dated 5.5.2018 quashed; respondent directed to immediately release the goods and vehicle in favour of the petitioner.

Final Conclusion: Writ petition allowed; seizure and penalty orders of 5.5.2018 quashed and immediate release of the goods and vehicle directed.

Summary order. Special Leave Petition dismissed; delay condoned; pending applications, if any, disposed of.

Summary order. Delay condoned; no interference with the impugned orders; special leave petitions dismissed; pending applications disposed of.

Requirement of satisfaction under section 151(2) for issuance of notice under section 148 - Competent authority to record satisfaction - Satisfaction recorded by Joint Commissioner is sufficient - Higher authority's concurrence does not cure absence of required satisfaction - Distinguishing precedent on mandatory administrative satisfaction

Requirement of satisfaction under section 151(2) for issuance of notice under section 148 - Competent authority to record satisfaction - Satisfaction recorded by Joint Commissioner is sufficient - Distinguishing precedent on mandatory administrative satisfaction - Whether the requirement of subsection (2) of section 151 was satisfied before issuance of notice under section 148. - HELD THAT: - The Court found that the printed approval proforma contained a specific entry asking whether the Addl. Commissioner was satisfied with the reasons recorded by the Assessing Officer that it was a fit case for issuance of notice under section 148. The Joint Commissioner (Addl. Commissioner) had handwritten his satisfaction in response to that entry and signed and dated it. Subsection (2) of section 151 requires that, where specified, no notice under section 148 shall be issued by an Assessing Officer below the rank of Joint Commissioner unless the Joint Commissioner is satisfied on the reasons recorded by the AO. The Court held that this statutory requirement was fulfilled because the Joint Commissioner himself had recorded his satisfaction on the reasons furnished. The Court emphasized the well settled proposition that duties cast on a particular administrative officer must be performed by that officer, and that satisfaction reached by a higher authority will not, as a rule, suffice where the statute mandates action by the designated officer. However, in the present case there was no deficiency: the Joint Commissioner had in fact applied his mind and recorded satisfaction. The judgments relied upon by the appellant (Anirudhsinhji Karansinhji Jadeja and the Delhi High Court decision in SPL's Siddhartha Ltd) were distinguished because in those cases the designated authority had not recorded satisfaction and the matter had been decided only by a higher official who alone recorded satisfaction. Here the Joint Commissioner had independently expressed satisfaction, and the subsequent similar endorsement by the Commissioner did not vitiate the proceedings.

The requirement of subsection (2) of section 151 was satisfied by the Joint Commissioner's recorded satisfaction on the reasons furnished by the AO; the reopening notice under section 148 was valid.

Final Conclusion: Tax Appeal and Civil Application dismissed; the Tribunal's conclusion that the statutory requirement of satisfaction under section 151(2) was complied with is upheld.

Survey surrender and double addition - offer/surrender under mistake - reliance on statement recorded at the back and right to cross-examination - explanation to Section 37(1) - penal/penalty character of municipal/commercial charges - exemption under Section 54 of the Act

Survey surrender and double addition - offer/surrender under mistake - Deletion of addition of Rs. 17,98,122/- alleged cash not recorded during survey - HELD THAT: - The assessee had included the receipts for 1-7 February 2009 in the books after the survey and the same formed part of income returned. The Tribunal found that the primary dispute was non recording of receipts for that period, and that post survey inclusion of the identical amount in the cash book and return precludes a further addition as that would amount to double addition. Differences in names and some amounts were held not decisive given the nature of medical receipts and the reconciliation furnished by the assessee. Accordingly the addition was deleted. [Paras 5]

Addition of Rs. 17,98,122/- deleted.

Offer/surrender under mistake - Deletion of addition of Rs. 3,99,951/- on account of stock difference found at survey - HELD THAT: - The survey team misconstrued the trial balance figure (which represented opening stock) as the stock of the day. The assessee had offered the amount at the survey under that mistaken belief but later pointed out the error. The Tribunal held that an amount offered or surrendered under a mistake of fact cannot sustain an addition and therefore deleted the addition. [Paras 7]

Addition of Rs. 3,99,951/- deleted.

Reliance on statement recorded at the back and right to cross-examination - Remand to AO to allow cross examination and reconsideration of disallowance of business promotion expenses - HELD THAT: - The AO relied on a statement recorded from a supplier (Mr. Hardeep Bisht) taken at the back of the assessee and, despite directions, did not permit cross examination of that witness in remand proceedings. The Tribunal held that an adverse inference cannot be drawn solely from such a statement where the assessee was not afforded a proper opportunity to cross examine; cross examination is material to appreciation of that evidence. In view of the absence of cross examination and lack of other adverse material, the Tribunal remitted the issue to the AO with a direction to allow cross examination and give the assessee adequate opportunity before relying on the statement. [Paras 9]

Issue remitted to the AO for permitting cross examination of the witness and fresh examination with adequate opportunity to the assessee.

Explanation to Section 37(1) - penal/penalty character of municipal/commercial charges - Deletion of disallowance of electricity charges treated as penal under Explanation to Section 37(1) - HELD THAT: - The payment was made to municipal authorities in respect of electricity charges levied for commercial use of premises (commercial tariff) because the assessee was practising the profession in a residential property that was treated as commercial by the municipality. The Tribunal held such charges to be not of penal/penalty character within the meaning of the Explanation to Section 37(1) and thus allowable as business expenditure. [Paras 12]

Disallowance of Rs. 5,14,867/- deleted.

Opening balance difference and year of assessment - Upheld direction of CIT(A) to the AO to verify and allow proportionate relief in respect of sundry creditors difference - HELD THAT: - The AO had added amounts relating largely to opening balance differences in respect of balances with M/s Inter Medics. The CIT(A) directed verification and proportionate relief because the material showed that most of the discrepancy related to opening balance and could not be taxed in the year under consideration. The Tribunal agreed that addition to the extent of opening balance difference could not be sustained for the year and upheld the appellate direction to the AO for verification and adjustment. [Paras 13]

Order of the CIT(A) directing AO to verify opening balance and allow proportionate relief upheld.

Exemption under Section 54 of the Act - Assessee entitled to exemption under Section 54 for capital gain on sale of first floor and 'barsati' floor - HELD THAT: - The sole dispute was whether the portion sold constituted a residential property. Documentary evidence (lease/lease agrement, purchase deed and other records) showed that the building was constructed with shop on ground floor and residential portion on first and barsati floors; ground floor had been sold earlier and the assessee sold only the first floor and barsati floor. The Tribunal found the AO's reliance on an inspector's photographs and later inspection (more than three years after sale) misplaced and that subsequent change of use by the purchaser does not disentitle the seller. The Tribunal held that use at time of sale is not the determinative criterion under Section 54 and, following precedents, directed allowance of the exemption. [Paras 15]

Assessee entitled to exemption under Section 54; AO directed to allow deduction.

Final Conclusion: The Tribunal partly allowed the appeal: deletions were directed in respect of the cash and stock additions and the electricity charges disallowance; the CIT(A)'s direction to verify sundry creditors was upheld; the business promotion disallowance was remitted to the AO to permit cross examination and fresh consideration; and the assessee was held entitled to exemption under Section 54 for the capital gain on sale of the residential portion.

Electronic filing of appeals - maintainability of appeal - transition period relief - substantial justice over technicalities - condonation of delay in e-filing

Electronic filing of appeals - maintainability of appeal - transition period relief - substantial justice over technicalities - Whether the appeal filed manually in Form No.35 after 01.03.2016 but within the statutory time-limit is maintainable despite CBDT notification mandating electronic filing. - HELD THAT: - The Tribunal found it is an undisputed fact that CBDT had mandated electronic filing of appeals by notification dated 01.03.2016 and extended the electronic-filing due date to 15.06.2016. The assessee, however, filed the appeal manually on 29.04.2016 and contended it was unaware of the notification. Considering the transitional nature of the change and that the appeal was filed within the time prescribed by the Act, the Tribunal applied the principle that substantial justice must prevail over technicalities. It held that during a transition period strict application of a new technical requirement should not defeat a timely-filed appeal, and therefore dismissal on the ground of non-electronic filing was not warranted. [Paras 6, 7]

The Tribunal allowed the challenge to the dismissal and held the appeal should not be treated as void ab initio for having been filed manually during the transition period.

Condonation of delay in e-filing - electronic filing of appeals - Whether the matter should be remitted to the Commissioner (Appeals) for admission and adjudication on merits, with directions regarding electronic filing and condonation. - HELD THAT: - Having concluded that the appeal ought not to have been dismissed purely on the ground of manual filing during the transition period, the Tribunal directed that the file be set aside to the Commissioner (Appeals). The assessee was to be permitted to re-file the appeal electronically and the Commissioner (Appeals) was directed to condone any delay in such electronic filing. The Tribunal further directed the Commissioner (Appeals) to admit the appeal and decide the substantive issues on merits, rather than permitting the technical defect to preclude adjudication. [Paras 7, 8]

Remitted to the Commissioner (Appeals) with directions to admit the appeal, condone delay in electronic filing and decide the issues on merits.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes, set aside the CIT(A)'s order dismissing the manually-filed appeal, directed the assessee to file the appeal electronically with condonation of any delay, and remitted the matter to the CIT(A) for admission and decision on merits.

Order of assessment - limitation under section 153B(1)(a) - communication of order by dispatch - assessment under section 153A

Order of assessment - limitation under section 153B(1)(a) - communication of order by dispatch - assessment under section 153A - Whether the assessment orders issued in pursuance of the search dated 28.5.2014 for assessment years 2009-2010 to 2015-2016 were time barred as they were dispatched after the limitation period prescribed under section 153B(1)(a). - HELD THAT: - The Tribunal examined section 153B(1)(a) and held that the legislature uses the expression 'order of assessment', which requires communication to the assessee to become effective. Merely preparing and signing an assessment order does not suffice; the order must be issued/communicated within the statutory period to be a valid 'order of assessment'. The last authorisation under section 132 was executed on 28.5.2014; the twenty one month period from the end of the financial year 2014 15 expired on 31.12.2016. The impugned orders, though dated 30.12.2016, were dispatched only on 7.1.2017 and thus were not communicated within the prescribed period. The Tribunal relied on precedent (including B J N Hotels Ltd. and related High Court authorities) holding that absence of dispatch within the limitation period renders the orders barred by limitation and followed the view favourable to the assessee in presence of divergent High Court decisions. [Paras 11, 12, 15, 16, 17]

The assessment orders for the years 2009-2010 to 2015-2016 were barred by limitation and are set aside.

Final Conclusion: Appeals allowed: assessment orders for assessment years 2009-2010 to 2015-2016 set aside as time barred; stay applications dismissed as infructuous.

Deductibility under section 48(i) of the Income tax Act - expenditure incurred wholly and exclusively in connection with such transfer - full value of consideration (real and effective consideration) - payments to remove encumbrances / to acquire beneficial interest - beneficial interest in property affecting computation of capital gains

Deductibility under section 48(i) of the Income tax Act - payments to remove encumbrances / to acquire beneficial interest - full value of consideration (real and effective consideration) - Whether payments of Rs. 35 lakhs and Rs. 50 lakhs made to M/s. Kwality Frozen Foods Pvt. Ltd. and M/s. Magnum Holdings Pvt. Ltd. were deductible from the sale consideration under section 48(i) for computation of long term capital gains - HELD THAT: - The Tribunal examined the documentary record, agreements creating beneficial interests in 1991, and the remand report in which the Assessing Officer confirmed that those companies had paid consideration for acquiring beneficial interest. Applying the principle that the "full value of consideration" must reflect the real and effective consideration and that amounts absolutely necessary to effect a transfer (including payments to remove encumbrances or to settle competing beneficial rights) fall within expenditure deductible under clause (i) of section 48, the Bench found the CIT(A)'s conclusion to be a balanced appreciation of facts and law. Reliance was placed on comparable decisions of the Bombay High Court holding that payments necessary to remove encumbrances or to enable the transfer are deductible in computing capital gains. The Assessing Officer's doubt about genuineness of unregistered agreements was considered but, on verification in remand proceedings and on the materials before the appellate authority, the Tribunal found no illegality in allowing the deduction. Consequently, the net sale consideration was to be reduced by the amounts paid to those two companies and capital gain computed accordingly. [Paras 6, 8]

Payments aggregating to Rs. 85 lakhs paid to the two companies were allowable under section 48(i) and the CIT(A)'s direction to compute long term capital gain on a net sale consideration of Rs. 65,00,000/- is affirmed; Revenue's appeal dismissed.

Final Conclusion: The Tribunal dismisses the Revenue's appeal and affirms the CIT(A)'s order upholding deduction of payments made to the two companies under section 48(i) for computing long term capital gains in Assessment Year 2010 11.

Non-allowance of salary and interest payable to partners where assessment is made to the best of the Assessing Officer's judgment - Construction of section 184(5) in relation to assessments made after rejection of books under section 145(3) - Distinction between assessments completed under section 144 and assessments under section 143 made by estimating income under the procedure of section 144 - Rejection of books of account and estimation of income on turnover

Construction of section 184(5) in relation to assessments made after rejection of books under section 145(3) - Rejection of books of account and estimation of income - Whether deduction for salary and interest paid to partners is barred by section 184(5) where the Assessing Officer estimated income after rejecting books of account under section 145(3) by applying the method prescribed in section 144. - HELD THAT: - The Tribunal held that section 184(5) disallows partner remuneration only where there is a failure as contemplated by section 144 leading to an assessment made under that provision. In the present case the Assessing Officer rejected the books of account and estimated income by applying a percentage to turnover invoking the methodology of section 144 but the assessment was made under section 143 having applied the provisions of section 145(3). Because the facts did not amount to an assessment made under section 144 itself, section 184(5)'s prohibition did not apply. The Bench followed the Tribunal's earlier decision in M/s. Agarwal Transport Corporation where, under similar facts, deduction for salary and interest paid to partners was allowed after estimation of income. Applying that reasoning, the Tribunal set aside the orders of the lower authorities and directed the Assessing Officer to allow deduction for salary and interest to partners from the estimated income, subject to the income not falling below the returned income. [Paras 8, 10, 11]

Orders of the authorities confirming disallowance under section 184(5) set aside; Assessing Officer directed to allow deduction for salary and interest paid to partners from the estimated income determined after rejection of books.

Final Conclusion: Appeal allowed; deduction for salary and interest paid to partners to be permitted from the income estimated after rejection of books under section 145(3), since section 184(5) does not apply where assessment is not made under section 144.

Deduction under section 43B - Disallowance under section 14A read with Rule 8D(2)(ii) and Rule 8D(2)(iii) - Attribution of interest expenditure to exempt income - Exclusion of investments chargeable under DTAA and income deductible under section 80P(2)(d) from Rule 8D computation - Remand for verification and recomputation

Deduction under section 43B - Validity of disallowance u/s 43B of the Act for statutory dues outstanding as on 01.04.2008 but paid during FY 2008-09. - HELD THAT: - Ld.CIT(A) accepted the assessee's case on the basis of tax-auditor certified dates of payment and earlier Tribunal and High Court decisions in the assessee's own case for preceding years. Revenue failed to rebut the factual findings or produce evidence to distinguish the year under consideration from prior years. In these circumstances the Tribunal found no reason to interfere with the factual and legal conclusion recorded by Ld.CIT(A) that the disallowance u/s 43B was incorrect and should be deleted. [Paras 5, 6, 7]

Disallowance under section 43B deleted; Revenue's ground in this regard dismissed.

Disallowance under section 14A read with Rule 8D(2)(ii) and Rule 8D(2)(iii) - Attribution of interest expenditure to exempt income - Exclusion of investments chargeable under DTAA and income deductible under section 80P(2)(d) from Rule 8D computation - Remand for verification and recomputation - Validity and extent of disallowance under section 14A read with Rule 8D(2)(ii) and Rule 8D(2)(iii), including treatment of specific investments and the need for recomputation by the AO. - HELD THAT: - Ld.CIT(A) examined the audited records, sanction letters, auditors' certificate on end-use of borrowed funds (in conformity with RBI guidelines), and precedents. He concluded that interest-bearing borrowings were not shown to have been used for investments yielding exempt income and accordingly deleted the disallowance under Rule 8D(2)(ii). He also held that investments in the OMIFCO joint venture (taxable under DTAA) and investments in other Co-operative Societies whose income is deductible u/s 80P(2)(d) should be excluded from the computation under Rule 8D(2)(iii), but noted an increase in other exempt-category investments and directed the AO to recompute the disallowance after excluding the specified investments and after verifying the total amount of exempt income. Revenue failed to establish on record that interest-bearing funds were utilized for the impugned investments or to fault the auditors' certificate. The Tribunal agreed with Ld.CIT(A)'s appreciation of evidence, upheld deletion of the AO's disallowance under Rule 8D(2)(ii), and sustained Ld.CIT(A)'s direction that the AO recompute the disallowance under Rule 8D(2)(iii) excluding the specified investments and determining the permissible cap in light of total exempt income. [Paras 8, 9, 11, 12]

Deletion of disallowance under Rule 8D(2)(ii) upheld; investments chargeable under DTAA and those qualifying for deduction under section 80P(2)(d) to be excluded from Rule 8D(2)(iii) computation; matter remitted to AO to recompute disallowance under Rule 8D(2)(iii) after exclusions and verification of total exempt income.

Final Conclusion: Revenue's appeal is dismissed. Assessee's appeal is partly allowed as indicated: deletion of disallowance under section 43B and deletion/adjustment of the disallowance under section 14A read with Rule 8D, with a limited remand to the AO to recompute the Rule 8D(2)(iii) disallowance after excluding specified investments and verifying total exempt income.

Disallowance under section 14A - Computation mechanism under Rule 8D - Application of Rule 8D(2)(iii) to dividend-bearing investments only - Deduction of amounts already disallowed from Rule 8D computation - Cap by total indirect expenses - Disallowance under section 14A while computing book profits under section 115JB - Clause (f) of section 115JB-treatment of expenditure for exempt income

Disallowance under section 14A - Computation mechanism under Rule 8D - Application of Rule 8D(2)(iii) to dividend-bearing investments only - Deduction of amounts already disallowed from Rule 8D computation - Cap by total indirect expenses - Validity and quantum of disallowance under section 14A read with Rule 8D in the assessee's normal computation of income. - HELD THAT: - The Tribunal held that the assessee's partial disallowance in the return and separate disallowance of direct expenses (STT) precluded a fresh disallowance under Rule 8D(2)(i) for the same item, and directed deletion of the duplicate disallowance. The Tribunal found the assessee's ad hoc internal workings for common indirect expenses to be improper and invoked the computation mechanism of Rule 8D. It held that, for the third limb under Rule 8D(2)(iii), only investments that actually yielded dividend income are to be considered. While recomputing the disallowance under Rule 8D(2)(iii), the amount already disallowed by the assessee should be reduced from the computed figure, and in no event can the disallowance under the third limb exceed the total indirect expenses debited to profit and loss account. The AO was directed to recompute disallowance as 0.5% of dividend-bearing investments, reduced by the amount already disallowed by the assessee, subject to the ceiling of total indirect expenses debited in the profit and loss account. [Paras 4]

Assessee's appeal allowed for statistical purposes by deleting the duplicate Rule 8D(2)(i) disallowance and directing recomputation under Rule 8D(2)(iii) as indicated, with reduction for amounts already disallowed and cap at total indirect expenses.

Disallowance under section 14A while computing book profits under section 115JB - Clause (f) of section 115JB-treatment of expenditure for exempt income - Whether disallowance under section 14A computed by applying Rule 8D can be made while computing book profits under section 115JB. - HELD THAT: - The Tribunal followed the Special Bench decision cited (ACIT vs Vireet Investment Pvt. Ltd.) and held that the computation mechanism of Rule 8D cannot be resorted to while computing book profits under section 115JB. Instead, any disallowance for expenditure in relation to exempt income must be determined having regard to the books of account on a rational basis in terms of clause (f) of section 115JB. Accordingly the disallowance already made by the assessee in the return should be carried into computation of book profits under section 115JB, and the AO was directed to act accordingly. [Paras 6]

Revenue's appeal partly allowed by holding that Rule 8D cannot be applied for computing book profits under section 115JB; AO to make disallowance for book profits based on books (clause (f) of section 115JB) and give effect to the assessee's already made disallowance.

Final Conclusion: For Asst Year 2010-11 the Tribunal directed deletion of the duplicated Rule 8D(2)(i) disallowance and remand to the AO to recompute the Rule 8D(2)(iii) disallowance limited to dividend-yielding investments, reduced by amounts already disallowed and capped by total indirect expenses; and held that Rule 8D cannot be used to compute disallowance for book profits under section 115JB, directing AO to incorporate the assessee's already made disallowance in the book profit computation in terms of clause (f) of section 115JB.

Deduction under section 43B for deferred/converted sales tax - Effect of CBDT Circulars No.496/1987 and No.674/1993 on sales tax deferment schemes - Explanation 3C to section 43B: conversion of interest into loan not deemed actual payment

Deduction under section 43B for deferred/converted sales tax - Effect of CBDT Circulars No.496/1987 and No.674/1993 on sales tax deferment schemes - Assessee entitled to deduction under section 43B in respect of sales tax collected but not remitted where the liability has been converted into a loan or treated as discharged pursuant to State enactment and/or Government order consistent with CBDT circulars. - HELD THAT: - The assessee produced the eligibility certificate under the West Bengal Sales Tax Act, 1954 showing deferment of payment of sales tax for seven years from 21.05.1992 and relied on CBDT Circular No.496 (25.09.1987). The Tribunal noted the relevant provision of the State Act (section 8H) and observed that CBDT Circular No.496 permitted treatment as discharged where the State law amended the Sales Tax Act on specified lines. Further, CBDT Circular No.674 (29.12.1993) clarified that Government Orders converting deferred sales tax into loans and making appropriate entries in Government accounts achieve the same statutory effect as an amendment. In view of these binding Board circulars and the evidence that the sales tax liability was converted into loan/treated under the State Act, the assessee was held to have complied with section 43B and entitled to deduction of the disputed amount. [Paras 5]

Disallowance of the sales tax amount was set aside and deduction under section 43B allowed.

Explanation 3C to section 43B: conversion of interest into loan not deemed actual payment - Unpaid interest converted into loan is not 'actually paid' for the purposes of deduction under section 43B. - HELD THAT: - The assessee's unpaid interest to IDBI was rescheduled/converted into a fresh loan. While the assessee contended constructive payment by virtue of conversion, Explanation 3C to section 43B expressly declares that interest which has been converted into a loan shall not be deemed to have been actually paid. On that statutory footing, the Tribunal found the CIT(A) correctly upheld the disallowance of the claimed deduction for unpaid interest. [Paras 8]

Disallowance of the unpaid interest was upheld and the claim under section 43B rejected.

Final Conclusion: Appeal partly allowed: deduction under section 43B granted in respect of the sales tax amount converted/treated as loan under State law and consistent with CBDT Circulars; disallowance of deduction for unpaid interest converted into loan upheld under Explanation 3C to section 43B; other grounds not pressed or general.

Validity of notice under section 143(2) when issued on or before filing of return - Validity of reassessment under section 147 where notice under section 143(2) is invalid - Admission of additional grounds of appeal

Admission of additional grounds of appeal - Additional grounds of appeal filed by the assessee were admitted for adjudication. - HELD THAT: - The assessee filed an application dated 19th September, 2017 seeking admission of three additional grounds contending illegality in the reassessment proceedings. The Revenue did not oppose admission and the Tribunal, noting that the grounds were legal in nature and did not require fresh facts, admitted the additional grounds for disposal of the appeal. [Paras 4, 6]

Additional grounds of appeal were admitted for hearing.

Validity of notice under section 143(2) when issued on or before filing of return - Validity of reassessment under section 147 where notice under section 143(2) is invalid - The reassessment order passed under section 147 read with section 143(3) was quashed because the notice under section 143(2) was invalidly issued on the same day the return (or response treating original return as response) was filed. - HELD THAT: - The assessee filed a reply to the notice under section 148 on 26.11.2013 and requested that the original return filed under section 139(1) be treated as the return in response to the section 148 notice. On the same date the Assessing Officer issued a notice under section 143(2). Applying the principle in Director of Income Tax v. Society for Worldwide Interbank Financial Telecommunications (supra) and consistent tribunal practice, the Tribunal held that a notice under section 143(2) issued when the return has been filed (or is filed the same day) is invalid because the scheme of section 143(2) requires the AO to examine the return before issuing the notice. Since the section 143(2) notice was invalid, the subsequent framing of assessment under section 147/143(3) was vitiated. Consequently the reassessment proceedings and the additions made thereunder were quashed. The Tribunal therefore set aside the orders of the authorities below and deleted the impugned addition, observing that other contentions need not be decided in view of this finding. [Paras 5, 8]

Reassessment order quashed; addition deleted and appeal allowed.

Final Conclusion: The Tribunal admitted the additional grounds and, applying the precedent that a notice under section 143(2) issued on or before the filing of the return is invalid, quashed the reassessment proceedings under section 147/143(3) and deleted the addition; the assessee's appeal is allowed for A.Y. 2006-2007.

Allowability of sundry balances written off as business loss under section 36(1)(vii)/section 37 - application of section 43B to statutory/non-refundable deposits/license fees - allowability of society maintenance charges incurred by developer pending formation and handover to society - provision for legal expenses as deductible business expenditure

Allowability of sundry balances written off as business loss under section 36(1)(vii)/section 37 - Sundry balances written off (advances, deposits and sundry debtors) are allowable as business expenditure where they arise out of business exigencies of a construction AOP and become irrecoverable. - HELD THAT: - The AOP was formed for the limited business of redevelopment and held flats as trading stock until sale. Advances and deposits given to obtain connections/approvals and amounts due from flat buyers arose in the ordinary course of the construction business and were not capital in nature. Where such business-related advances/deposits/debts become irrecoverable and are written off, they fall within the scope of section 36(1)(vii) or section 37 and are allowable even if not routed through the profit and loss account in an earlier year. The Tribunal disagreed with the CIT(A)'s conclusion that such items were capital and affirmed that they are business exigencies and allowable in the year of writing off; directed the AO to give effect to this view. [Paras 8]

Disallowance of Rs. 77,96,174/- reversed and amounts allowed as business expenses; AO directed to give effect.

Application of section 43B to statutory/non-refundable deposits/license fees - Whether the provided non refundable deposit/license fee payable to the municipal authority is exigible to the cash payment requirement of section 43B could not be conclusively determined on the record and requires fresh examination by the AO. - HELD THAT: - The assessee treated a provision for a non refundable basement deposit payable to the municipal corporation as a business expenditure and transferred the liability to a partner for future payment. The lower authorities treated the deposit as a statutory payment governed by section 43B and disallowed it since not paid by the due date. The Tribunal found the factual nature of the payment unclear on the record and held that the matter merits detailed verification by the AO to determine whether section 43B applies or whether the claim can be allowed (including on payment to the partner); accordingly the issue is restored for fresh adjudication after affording the assessee an opportunity of being heard. [Paras 14]

Issue restored to the file of the AO for fresh examination and decision as per law after giving opportunity to the assessee; ground allowed for statistical purposes.

Allowability of society maintenance charges incurred by developer pending formation and handover to society - Whether society maintenance charges debited by the developer are allowable depends on factual verification and documents, and therefore the matter is remitted to the AO for fresh decision. - HELD THAT: - The assessee, acting as caretaker until formation of the society, charged maintenance expenses net of interest on a corpus fund to profit and loss. The AO and CIT(A) disallowed the claim on the view that maintenance charges are to be borne by buyers after handing over. The assessee produced minutes and a certificate indicating contribution towards corpus and settlement with the society. The Tribunal considered these documents material and held that their veracity and effect require examination by the AO; accordingly the issue is remitted for fresh adjudication after affording the assessee a hearing. [Paras 18]

Issue remitted to the AO for fresh verification and decision as per law after giving opportunity to the assessee; ground allowed for statistical purposes.

Provision for legal expenses as deductible business expenditure - Provision for prospective legal expenses for society formation and conveyance could not be allowed on the record and is remitted to the AO for verification and fresh decision. - HELD THAT: - The assessee created a provision for legal expenses purportedly to meet liabilities relating to formation of the society and conveyance; the AO and CIT(A) disallowed it as an unsubstantiated, uncrystallised liability with no bills or clear payee. The assessee produced society minutes and certificates suggesting settlement, but the Tribunal held that these documents require verification at the AO level to determine whether the provision is deductible. The matter is therefore restored to the AO to decide afresh after affording opportunity to the assessee. [Paras 21]

Issue restored to the AO for fresh examination and decision as per law after giving opportunity to the assessee; ground allowed for statistical purposes.

Final Conclusion: Appeal partly allowed: disallowance of sundry balances written off (Rs. 77,96,174/-) reversed and allowed as business expenditure; remaining grounds (license deposit/license fee under section 43B, society maintenance charges, and provision for legal expenses) are remitted to the AO for fresh consideration and decision after affording the assessee a reasonable opportunity of being heard.

Reopening finalized assessments only on basis of incriminating material found during search under section 153A - Scope of assessment powers under section 153A vis-a -vis normal scrutiny under section 143(3) - Ad hoc disallowance of business promotion and entertainment expenses without verification - Consistency with coordinate bench decisions

Reopening finalized assessments only on basis of incriminating material found during search under section 153A - Scope of assessment powers under section 153A vis-a -vis normal scrutiny under section 143(3) - Validity of additions made under proceedings initiated by section 153A in respect of an assessment year for which the assessment had attained finality on the date of search in absence of any incriminating material found during the search - HELD THAT: - The Tribunal noted that the return for the year was filed and processed and that the statutory period for issuing a notice under section 143(2) had expired before the date of search, so the assessment had attained finality on the date of search. The bench rejected the CIT(A)'s conclusion that absence of a prior section 143(3) scrutiny permitted the AO to exercise powers co-extensive with normal scrutiny to make additions even where no incriminating material was found. Applying the principle that section 153A permits reopening of years that had attained finality only when incriminating material is discovered in the search (and following the Bombay High Court in CIT v. Gurinder Singh Bawa and related authority), the Tribunal held that additions not based on such incriminating material cannot be sustained. [Paras 9, 10]

Additions for AY 2009-10 made under section 153A are deleted as they are not based on incriminating material found during the search.

Ad hoc disallowance of business promotion and entertainment expenses without verification - Consistency with coordinate bench decisions - Sustenance of a 10% ad hoc disallowance of entertainment and business promotion expenses estimated for want of verification - HELD THAT: - The Tribunal observed that a coordinate bench in the assessee's earlier year had deleted a similar addition where the disallowance was founded on presumptions and surmises rather than verification. Applying the need for verifiable material and in the interest of consistency with the coordinate bench decision in the assessee's own case, the Tribunal held that the ad hoc 10% disallowance could not be sustained and directed the AO to delete the addition. [Paras 15, 16]

The ad hoc disallowance of Rs. 2,03,597/- for AY 2010-11 is deleted and the appeal is allowed to that extent.

Final Conclusion: Both appeals are partly allowed: for AY 2009-10 the additions made under section 153A are deleted for lack of incriminating material; for AY 2010-11 the ad hoc 10% disallowance of entertainment and business promotion expenses is deleted, consistent with the coordinate bench decision.

Penalty under section 271(1)(c) for concealment or inaccurate particulars - Bonafide and inadvertent mistake - Percentage completion method and apportionment of work-in-progress - Tax neutrality of reclassification between current year cost of construction and WIP

Penalty under section 271(1)(c) for concealment or inaccurate particulars - Bonafide and inadvertent mistake - Percentage completion method and apportionment of work-in-progress - Tax neutrality of reclassification between current year cost of construction and WIP - Whether the excess claim of cost of construction out of WIP resulting in a higher loss and lower closing WIP amounted to concealment of income or filing of inaccurate particulars attracting penalty under section 271(1)(c) - HELD THAT: - The Tribunal noted that the assessee follows the percentage completion method and, for AY 2011-12, disclosed sales at the proportionate amount but the auditors had claimed the full construction cost in the profit and loss account, producing an excessive current year claim and an admitted inadvertent mistake. The assessee filed a revised computation during assessment, admitting the error, and the AO restricted the current year cost and carried forward the balance as WIP to be claimed in subsequent years. The Tribunal applied the settled principle that a bona fide inadvertent mistake does not attract penalty under section 271(1)(c), and that mere claiming of expenditure (or its reclassification between current year cost and WIP) which is subsequently rectified and is tax neutral does not establish concealment or inaccurate particulars. Relying on the reasoning of the first appellate authority and precedents to the effect that penalty is not warranted where the mistake is bonafide and the Revenue suffers no loss due to reclassification, the Tribunal found no infirmity in deletion of the penalty and declined to interfere. [Paras 6, 10]

The Tribunal upheld the deletion of penalty imposed under section 271(1)(c), dismissing the Revenue's appeal.

Final Conclusion: The appeal is dismissed; the order of the Commissioner (Appeals) deleting the penalty under section 271(1)(c) is upheld on the ground that the excess claim arose from a bona fide inadvertent auditor's error and the adjustment is tax neutral.

Valuation enhancement based on contemporaneous imports - violation of principles of natural justice - remand for fresh adjudication - provisional clearance pending investigation

Valuation enhancement based on contemporaneous imports - Enhancement of assessable value to US$ 2200 PMT by relying on Bills of Entry from an earlier period was not sustained without fresh adjudication. - HELD THAT: - The Tribunal found that the adjudicating authority and the Commissioner (Appeals) failed to properly consider the alternative contemporaneous invoices placed by the appellant showing value at US$ 1350 PMT and instead relied on Bills of Entry from February-March 1998 to enhance value for imports of May-June 1998. In view of the materials placed by the appellant and the difference in periods relied upon by the revenue, the adjudication on valuation was not held to have been done in a proper manner. The matter therefore requires fresh consideration of the appellant's submissions and documents rather than an affirmance of the enhancement on the basis of the earlier Bills of Entry. [Paras 5]

Enhancement set aside and matter remanded for fresh adjudication of value after considering the appellant's invoices and submissions.

Violation of principles of natural justice - Failure to furnish copies of the Bills of Entry relied upon to the appellant constituted a breach of natural justice requiring remand. - HELD THAT: - The Tribunal recorded that the revenue's sole reliance on certain contemporaneous Bills of Entry was not accompanied by provision of those copies to the appellant. This omission deprived the appellant of an opportunity to meet the case based on those documents. Consequently, the adjudicating process was vitiated for want of compliance with principles of natural justice and the matter could not be permitted to stand without granting the appellant an opportunity of personal hearing and consideration of the materials he had filed. [Paras 3, 5]

Proceedings set aside on grounds of breach of natural justice and remitted to the adjudicating authority to grant hearing and decide afresh.

Final Conclusion: Appeal allowed by way of remand; impugned orders set aside and the matter remitted to the adjudicating authority to pass a fresh order after considering the appellant's submissions and documents and after granting personal hearing, to be completed within three months of receipt of this order.

Classification of imported goods as Stainless Steel Scrap - distinction between scrap and serviceable articles - requirement of expert opinion for technical classification - penalty under Section 112(a) of the Customs Act, 1962 - reliance on end use certificate

Classification of imported goods as Stainless Steel Scrap - distinction between scrap and serviceable articles - requirement of expert opinion for technical classification - reliance on end use certificate - Whether the imported consignment was to be treated as Stainless Steel Scrap (grade 304) or as serviceable articles capable of use without melting - HELD THAT: - The Tribunal found no dispute that the major part of the consignment qualified as Stainless Steel Scrap Grade 304 while a minor portion (less than 25% by eye estimate) appeared to be serviceable articles. The Court held that the critical criterion is whether items in forms such as pipes or strips are capable of being used as such or only for melting, and that this is a technical question not amenable to reliable determination by mere eye estimate. Given that independent expert opinions and certifications from entities such as a Chartered Engineer, the National Environment Agency (Singapore) and GEOCHEM had confirmed the goods to be SS Scrap, the matter ought to have been decided on those expert findings rather than on the personal view or visual assessment of Customs officers. The Tribunal therefore treated the expert confirmations and the end use certificate as determinative on classification.

Classification held in favour of the importer: the goods are to be treated as Stainless Steel Scrap (Grade 304) and the technical question required reliance on expert opinion and the end use certificate rather than eye estimate.

Penalty under Section 112(a) of the Customs Act, 1962 - requirement of expert opinion for technical classification - Whether the penalty imposed under Section 112(a) was justified - HELD THAT: - Because the adjudicating authority proceeded on a visual assessment and rejected the importer's expert certifications, the Tribunal found the imposition of penalty unsustainable. The Tribunal emphasised that the technical classification dispute should have been resolved on the basis of the expert reports and the end use clearance, and not on the basis of Customs' personal view. In view of the accepted major classification as SS Scrap and the reliance that should have been placed on expert opinion and documentary certifications, the penalty could not be sustained.

Penalty under Section 112(a) set aside; the adjudicating order imposing the penalty is quashed.

Final Conclusion: The adjudicating authority's order is set aside; the appeal is allowed and the penalty imposed under Section 112(a) is quashed, with consequential relief, the classification to be accepted in light of expert certifications and the end use certificate.

Leviability of Education Cess on imported goods cleared by debiting DEPB Passbook - Duty exemption/remission scheme and duty exemption passbook scheme - Application of Customs Act provisions to levy and collection of Education Cess - Principle that Education Cess is not chargeable where customs duty is exempted

Leviability of Education Cess on imported goods cleared by debiting DEPB Passbook - Principle that Education Cess is not chargeable where customs duty is exempted - Duty exemption/remission scheme and duty exemption passbook scheme - Education Cess is not chargeable where imported goods are cleared by debiting duty in DEPB Passbook under Notification No. 45/2002-Cus. - HELD THAT: - The Tribunal applied the established principle, as followed by several High Courts and affirmed by the Supreme Court in related cases, that the duty exemption/remission and duty exemption passbook schemes (DEPB) operate to grant an exemption in favour of the importer. Where customs duty is exempted in this manner, there is no collection of customs duty from the assessee; consequently the education cess, which is leviable only as an additional charge on customs duty actually levied and collected, does not arise. The Tribunal noted and followed the reasoning of the jurisdictional Bombay High Court in Reliance Industries Ltd., which endorsed the view taken by the Gujarat High Court and other courts that, given the exemption under the DEPB scheme, education cess is not leviable. Conflicting authority of the Madras High Court in TANFAC Industries Ltd. was considered and distinguished in light of subsequent decisions including DCW and Gujarat Ambuja/Pasupati, and the Tribunal concluded that the later and higher judicial pronouncements settle the issue in favour of the assessee. [Paras 4, 5]

Impugned order set aside; appeal allowed and Education Cess held not chargeable on imports under DEPB (Notification No. 45/2002-Cus).

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order and held that Education Cess is not chargeable where imports are cleared by debiting duty in the DEPB Passbook under Notification No. 45/2002-Cus.

Extension of time - period of limitation under sub-section (3) to section 421 of the Companies Act, 2013 - Registrar's power to extend time under sub-rule (3) to rule 26 of the NCLAT Rules, 2016 - proviso to sub-section (3) to section 421 - presentation within period of limitation - Rules cannot override the Act

Registrar's power to extend time under sub-rule (3) to rule 26 of the NCLAT Rules, 2016 - period of limitation under sub-section (3) to section 421 of the Companies Act, 2013 - Rules cannot override the Act - Whether the time given for curing defects under sub-rule (2) to rule 26 could be extended under sub-rule (3) to rule 26 so as to validate presentation of the appeal beyond the 45-day limitation prescribed by sub-section (3) to section 421 of the Act. - HELD THAT: - The appeal was initially presented within the statutory limitation but, after scrutiny, defects were called for curing and the corrected presentation occurred after the 45-day period prescribed by sub-section (3) to section 421. Although sub-rule (3) to rule 26 authorises the Registrar to extend the time for compliance under sub-rule (2), that power is limited and cannot operate to subvert the statutory limitation fixed by the Act. The proviso to sub-section (3) to section 421 permits extension of the filing period for a further period not exceeding 45 days, but the power to grant such extension is vested in the Appellate Tribunal and not in the Registrar. Consequently, the Registrar cannot extend the time for compliance so as to validate presentation beyond the 45-day statutory period; the question of further extension therefore falls to the Appellate Tribunal. [Paras 5, 6, 7, 8, 9]

The time for compliance under sub-rule (2) to rule 26 could not be extended by the Registrar under sub-rule (3) so as to validate presentation beyond the 45-day period; the matter is to be placed before the Appellate Tribunal for appropriate orders.

Extension of time - proviso to sub-section (3) to section 421 - application for condonation of delay - What relief should be granted in respect of the application seeking condonation of delay in presenting the appeal after curing defects. - HELD THAT: - Since the Registrar lacks power to extend time beyond the statutory 45-day limitation, the application for extension/condonation could not be allowed by the Registry. The appropriate course is to place the matter before the Appellate Tribunal which alone can consider invoking the proviso to sub-section (3) to section 421 to extend the filing period. The Registry therefore disposed of the miscellaneous application by directing placement before the Appellate Tribunal for its orders. [Paras 9, 10]

M.A. No.68/2018 disposed of; file to be placed before the Appellate Tribunal for appropriate orders regarding extension/condonation.

Final Conclusion: Application for extension of time under the Rules was refused by the Registry insofar as it would operate beyond the statutory 45-day limitation; the Registry disposed of the miscellaneous application and directed that the matter be placed before the Appellate Tribunal for consideration of any extension under the proviso to sub-section (3) to section 421 of the Companies Act, 2013.

Liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016 - appointment of liquidator under Section 34 of the Insolvency and Bankruptcy Code, 2016 - authority of the Committee of Creditors to accept or reject resolution plans - initiation of liquidation where no viable resolution plan is received within the CIRP period - duties of liquidator and public announcement and claims procedure under IBBI (Liquidation Process) Regulations, 2016

Initiation of liquidation where no viable resolution plan is received within the CIRP period - authority of the Committee of Creditors to accept or reject resolution plans - Whether the Adjudicating Authority should order liquidation of the corporate debtor where no viable resolution plan acceptable to the Committee of Creditors was received within the statutory CIRP period. - HELD THAT: - The Tribunal found that despite multiple CoC meetings, public announcement for claims and repeated opportunities, no resolution plan satisfying the Committee of Creditors under Section 30 was received within the CIRP period. The CoC at its 7th meeting unanimously resolved not to seek an extension beyond 180 days and to seek initiation of liquidation. In view of Section 33(1)(a) of the Code, and the material on record showing absence of any viable resolution plan, the Tribunal held that initiation of liquidation was the only available course in law. The corporate debtor's submissions seeking further time or alleging possible future plans were considered but rejected as there was no substance or timely proposal before the CoC, and the power to accept any plan vests with the CoC. [Paras 11, 13]

Ordered initiation of liquidation of the corporate debtor under Section 33 of the IBC, 2016.

Appointment of liquidator under Section 34 of the Insolvency and Bankruptcy Code, 2016 - duties of liquidator and public announcement and claims procedure under IBBI (Liquidation Process) Regulations, 2016 - Appointment of the liquidator and directions governing the liquidator's duties and the claims/publication process on commencement of liquidation. - HELD THAT: - Exercising powers under Sections 33 and 34 of the Code and Rules 12 and 13 of the IBBI (Liquidation Process) Regulations, 2016, the Tribunal appointed the existing Resolution Professional as liquidator. The liquidator was directed to submit a preliminary report within 75 days from the liquidation commencement date and to make the prescribed public announcement in Form B, calling for stakeholder claims within thirty days. The liquidator's governance by the Liquidation Process Regulations, requirement to submit reports to the Adjudicating Authority, and vesting of management powers in the liquidator were recorded as conditions of appointment. [Paras 14]

Dr. K.V. Srinivas appointed as liquidator with directions to follow the IBBI (Liquidation Process) Regulations, make the required public announcement, call for claims, and submit the preliminary report within 75 days.

Role and accountability of the Resolution Professional - limits of raising allegations of bias after statutory period - Whether the allegations by the corporate debtor that the Resolution Professional was biased and should be replaced warranted any relief. - HELD THAT: - The Tribunal examined the corporate debtor's allegations of bias against the Resolution Professional and noted that the RP had conducted CoC meetings, issued public announcements and taken steps to obtain resolution plans. The corporate debtor had been given ample opportunity to pursue resolution options and the record showed no viable plan. The Tribunal observed that complaints against the RP could be pursued before IBBI, but the allegations did not warrant interference with the insolvency process at this stage. Consequently the contentions seeking replacement of the RP or setting aside the RP's actions were held to be untenable and not maintainable. [Paras 12]

Allegations against the Resolution Professional rejected; no substitution or relief granted on that ground.

Final disposal of interim applications consequent to liquidation order - Disposition of pending applications filed in the proceedings after the order for liquidation is passed. - HELD THAT: - In view of the initiation of liquidation and appointment of the liquidator, the Tribunal disposed of CA Nos. 49, 56 & 57 of 2018 as no further interlocutory reliefs were maintainable in the continuation of CIRP which has now been terminated and liquidation commenced. The Tribunal posted the matter for submission of the preliminary report by the liquidator on the appointed date. [Paras 14]

CA Nos. 49, 56 & 57 of 2018 disposed of.

Final Conclusion: The Tribunal, finding no viable resolution plan acceptable to the Committee of Creditors within the CIRP period and noting the CoC's unanimous resolution for liquidation, ordered liquidation of the corporate debtor under Sections 33 and 34 of the IBC, 2016; appointed the existing RP as liquidator with directions to follow the Liquidation Process Regulations, make the prescribed public announcement, call for claims and submit a preliminary report, and disposed of the connected applications.

Financial creditor - financial debt - disbursed against the consideration for the time value of money - maintainability of an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - onus of proof on the financial creditor - compliance with Rule 4 / Form 1 (Part IV) - particulars of dates and amounts of disbursement

Financial creditor - financial debt - disbursed against the consideration for the time value of money - Applicant does not qualify as a "financial creditor" for the purpose of maintaining the Section 7 application. - HELD THAT: - The Code confines initiation under Section 7 to a "financial creditor" who is owed a "financial debt", which the Tribunal construed as a debt disbursed against consideration for the time value of money. The applicant relied on ledger entries and bank statements and asserted continued financial assistance since 2011, but failed to segregate or particularise disbursements, dates and amounts, or to show that alleged disbursements were made for consideration for the time value of money. In the absence of such particulars and supporting documentary evidence, and having regard to the respondent's specific denial that the entries represent loans rather than sale/purchase transactions, the applicant did not discharge the onus of proving that a "financial debt" existed such that the applicant could be a "financial creditor." The Tribunal noted also the possibility that earlier disbursements, if any, could be time-barred unless duly acknowledged, reinforcing the necessity for precise evidence of dates and amounts of disbursement. [Paras 13, 14, 15, 16, 18]

Application under Section 7 cannot be maintained because the applicant failed to establish that it is a "financial creditor" owed a "financial debt" disbursed for the time value of money.

Maintainability of an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - onus of proof on the financial creditor - compliance with Rule 4 / Form 1 (Part IV) - particulars of dates and amounts of disbursement - The Section 7 petition was rejected for non-compliance with the Code and Rules and failure to prove disbursements and default as required by Form 1. - HELD THAT: - Section 7(2) requires the application to be made in the form and manner prescribed; Rule 4 and Part IV of Form 1 mandate furnishing dates of disbursement and amounts. Despite these mandatory requirements, the applicant did not supply the necessary dates and particulars of alleged loans and disbursements, providing only ledger and bank statements and bald assertions. Given the respondent's dispute and the statutory format demanding particulars, the Tribunal held that mere pleadings and unsupported account extracts were insufficient to establish disbursement and default. Accordingly, for lack of requisite documentary particulars and proof, the petition was held to have failed and was rejected. [Paras 16, 17, 18, 19]

The Section 7 petition is rejected for non-compliance with statutory/formal requirements and for failure to prove the alleged disbursements and default.

Final Conclusion: The Section 7 application under the Insolvency and Bankruptcy Code, 2016 was dismissed: the applicant failed to prove it was a "financial creditor" owed a "financial debt" disbursed for the time value of money and did not comply with the documentary/particulars requirement of Rule 4 / Form 1; the Tribunal's observations are not to be treated as an expression on the merits in other fora.

Provisional attachment under the Prevention of Money Laundering Act - requirement of written reasons to believe and notice before provisional attachment - attachment of third party property and possession of proceeds of crime - adjudicating authority's duty to examine nexus between property value and proceeds of crime - violation of principles of natural justice and Articles 14 and 21

Provisional attachment under the Prevention of Money Laundering Act - requirement of written reasons to believe and notice before provisional attachment - violation of principles of natural justice and Articles 14 and 21 - Validity of the provisional attachment of the appellant's flat and compliance with procedural and constitutional requirements - HELD THAT: - The Tribunal concluded that the provisional attachment of the appellant's property was not validly made. The Adjudicating Authority proceeded on the basis of allegations in the complaint without independent reasons to believe recorded in writing and without issuing prior notice or recording the appellant's statement before attachment. That procedure treated complaint allegations as conclusive and failed to afford the appellant the opportunity to rebut, contrary to the statutory scheme and principles of natural justice. The Tribunal also found that the Adjudicating Authority accepted material showing that payments for the property were made by the appellant's husband and that the appellant had not received or utilised proceeds of crime to acquire the property; yet the attachment was continued on mere apprehension that some payments might have been from the son. Given those omissions and the lack of a reasoned nexus between the property and proceeds of crime, the provisional attachment infringed the appellant's rights under Articles 14 and 21. [Paras 38, 39, 41, 42, 43]

The impugned order confirming the provisional attachment of the appellant's property is set aside and the property is released forthwith.

Final Conclusion: The appeal is allowed insofar as it concerns the appellant's property; the confirmation of provisional attachment is quashed and the property is released. The order does not affect other appeals pending before the Tribunal.

Provisional attachment under the PMLA - reason to believe requirement in Section 5(1) of the PMLA - proceeds of crime nexus under Section 2(u) of the PMLA - notice and opportunity under Section 8(1) of the PMLA - attachment of third party property - principles of natural justice in attachment proceedings - prior charge sheet / report under Section 173 CrPC as proviso precondition

Provisional attachment under the PMLA - reason to believe requirement in Section 5(1) of the PMLA - notice and opportunity under Section 8(1) of the PMLA - attachment of third party property - principles of natural justice in attachment proceedings - proceeds of crime nexus under Section 2(u) of the PMLA - Validity of the provisional attachment of the appellant's immovable property - HELD THAT: - The Adjudicating Authority's confirmation of the provisional attachment was quashed in respect of the appellant because the attachment rested solely on the son's statement that a sum had been spent on renovation of the father's house without establishing a direct relation between the property's value and proceeds of crime as required by Section 2(u). The authority failed to give the appellant notice or an opportunity to be heard, did not record the appellant's statement, and did not display consideration of the explanations or documentary evidence (earlier purchase deeds, tax assessment, long possession and tax payments) showing the property pre dated the alleged scheduled offences. The second proviso to Section 5(1), which permits attachment without a charge sheet only where reasons for belief are recorded, was not properly applied: the reasons to believe were not communicated nor a sufficient basis shown to connect the entire property to proceeds of crime. The issuance of a mechanical/stereotyped notice under Section 8(1) that presupposed guilt and omitted disclosure of reasons violated principles of natural justice and Article 14/21 protections. For these reasons the provisional attachment as against the appellant was set aside and the property ordered released forthwith. [Paras 41, 43, 44, 45, 46]

Impugned order confirming provisional attachment quashed as to the appellant; provisional attachment of the appellant's property set aside and property released.

Proceeds of crime nexus under Section 2(u) of the PMLA - prior charge sheet / report under Section 173 CrPC as proviso precondition - Effect of future conviction on recovery of amounts allegedly used in renovation - HELD THAT: - The Tribunal made a prospective direction: if, after trial and disposal of the pending writ proceedings, the appellant's son is held guilty and it is established that Rs.10 lakhs spent on renovation constituted proceeds of crime, the respondent would be entitled to attach that sum. This preserves the authority's power to recover proven proceeds while protecting the appellant's title to the property in the absence of prima facie nexus at the time of provisional attachment. [Paras 46, 47]

Property released now; respondent may attach Rs.10 lakhs in future if son is convicted and it is established that that amount was proceeds of crime.

Final Conclusion: The appeal is allowed: the Adjudicating Authority's confirmation of provisional attachment is set aside insofar as it affects the appellant, the attached property is released forthwith, and a direction is retained authorising attachment of the specific sum allegedly used for renovation if that sum is later established as proceeds of crime after conviction.

Classification as Business Auxiliary Service - Service Tax liability - Limitation under Section 73 - normal period - Remand for requantification

Classification as Business Auxiliary Service - Service Tax liability - Activity of the respondent is classifiable as 'Business Auxiliary Service' and liable to service tax. - HELD THAT: - The tribunal found that the facilitation fee charged by the respondent for arranging stops at emporia/shops falls within the expanded definition of Business Auxiliary Service (effective 10.9.04) and is therefore taxable. The tribunal's conclusion took into account that the respondent had been paying service tax under various categories and that related litigation existed on whether its activities fell within 'tour operators'. On these facts the tribunal sustained the demand of service tax insofar as it related to the applicable period within limitation. [Paras 12]

Classification as Business Auxiliary Service upheld and service tax liability sustained for the period within the normal limitation.

Limitation under Section 73 - normal period - Demand for service tax beyond the normal limitation period under Section 73 is time barred and must be set aside. - HELD THAT: - The tribunal examined the show cause notice and the grounds invoked for invoking extended limitation under Section 73, noting that the only reasons cited were failure to take registration and to file ST-3 returns. Having regard to the respondent's prior payment of service tax under other categories, repeated departmental and statutory (CAG) audits, and its status as a State undertaking, the tribunal found no positive evidence of deliberate concealment or suppression warranting invocation of extended limitation. Consequently, demands beyond the normal period were held to be barred by limitation. [Paras 11]

Demand restricted to the normal period under Section 73; demands beyond that period set aside.

Remand for requantification - Matter remanded to the original adjudicating authority for requantification of the demand falling within the normal limitation period. - HELD THAT: - Having sustained liability only within the normal limitation period and set aside demands beyond it, the tribunal directed remand to the original adjudicating authority to quantify the payable service tax for the period that survives limitation. The remand is for computation/verification of the demand limited to the time barred window identified by the tribunal. [Paras 12]

Remitted to the original authority for requantification of the demand within the normal period.

Final Conclusion: The High Court agreed with the tribunal: the appellant's activity is taxable as Business Auxiliary Service, demands beyond the normal limitation under Section 73 are time barred, and the matter is remanded for requantification of the demand surviving limitation; the appeal is dismissed.

Commercial or Industrial Construction Service - composite contracts - Works Contract Service - extended period of limitation - suppression of facts with intent to evade - penalty under Section 77

Commercial or Industrial Construction Service - composite contracts - Demand of service tax for the period prior to 1/6/2007 under Commercial or Industrial Construction Service. - HELD THAT: - The Tribunal held that the contracts were composite in nature and, following the legal principle applied by the Court, the demand for service tax prior to 1/6/2007 cannot be sustained. On this determinative legal basis the impugned demands for the pre-1/6/2007 period are set aside.

Demand prior to 1/6/2007 set aside.

Works Contract Service - extended period of limitation - suppression of facts with intent to evade - Liability and time-bar for service tax under Works Contract Service for the period from 1/6/2007 onwards. - HELD THAT: - The Tribunal found that on merits the appellants are liable to pay service tax under Works Contract Service for the period after 1/6/2007. However, the demand raised by invoking the extended period was set aside because the Department failed to establish wilful suppression or intent to evade; appellants had bona fide belief that contracts with public sector and government agencies were not leviable and had cooperated by furnishing details. Consequently the extended-period demands were rejected while demands for the normal period were sustained. For the same reasons the penalties relating to the normal period were also set aside.

Liability for post-1/6/2007 period sustained for the normal limitation period; demands raised by invoking the extended period set aside; penalties for the normal period set aside.

Cleaning Service - penalty - Demand and penalty in respect of cleaning services. - HELD THAT: - The appellant conceded liability for the cleaning services demand. The Tribunal therefore sustained the demand for cleaning services but set aside the penalty on the same grounds applied to other penalties-absence of wilful suppression and the cooperative conduct of the appellant.

Demand for cleaning services sustained; penalty in respect of cleaning services set aside.

Penalty under Section 77 - Extent of penalties to be sustained or set aside. - HELD THAT: - Examining the imposition of penalties, the Tribunal held that penalties except those imposed under Section 77 are to be set aside in view of the lack of evidence of wilful suppression and the appellants' bona fide belief and cooperation. The order preserves only the penalty imposed under Section 77.

All penalties except that imposed under Section 77 are set aside; penalty under Section 77 is sustained.

Final Conclusion: Appeals disposed by modifying the impugned orders: demands prior to 1/6/2007 set aside; extended-period demands from 1/6/2007 set aside on limitation; demands for the normal period and the cleaning-service demand sustained; all penalties except the one under Section 77 set aside.

Taxability of designs and drawings - treatment of imported designs as goods - design services - intellectual property service - mutual exclusivity of taxation of goods and services - simultaneous levy under customs and service tax

Taxability of designs and drawings - treatment of imported designs as goods - design services - simultaneous levy under customs and service tax - mutual exclusivity of taxation of goods and services - Whether drawings and designs, which were imported and assessed under the Customs Act, could be separately taxed as 'design services' under the Finance Act, 1994 - HELD THAT: - The Tribunal examined if the impugned order properly widened the scope of 'design services' to cover drawings and designs that were part of imports and had been assessed under the Customs Act on filing of bills of entry. Reliance was placed on earlier decisions treating drawings and designs included in import contracts as goods and assessed under Customs, as well as on authorities holding that taxation of goods and taxation of services are distinct and mutually conceived levies. The Tribunal referred to precedents, including the reasoning in Associated Cement Companies Ltd and subsequent Tribunal and Supreme Court pronouncements, which underscore that the same activity should not be taxed both as goods and as services where it has been treated as goods for customs purposes. The Tribunal rejected the Revenue's attempt to classify the transferred technical know-how and imported designs as a taxable 'design service' when they had been treated and assessed as goods on import, and found the alternate view urged by the Revenue untenable in the face of consistent authorities distinguishing goods from services for levy purposes. On that basis the impugned demand founded on characterising the imported designs/know-how as service was unsustainable.

Impugned demand set aside; appeals allowed.

Final Conclusion: The Tribunal held that drawings and designs imported and assessed under the Customs Act cannot be taxed afresh as 'design services' under the Finance Act, 1994; the order confirming service-tax demand was set aside and the appeals were allowed.

Intellectual property service - temporary transfer or permitting use of intellectual property right - enforceability of intellectual property right under Indian law - reverse charge liability as recipient of service

Intellectual property service - enforceability of intellectual property right under Indian law - reverse charge liability as recipient of service - Liability of the appellant to pay service tax on receipt of alleged 'intellectual property service' from an overseas provider on reverse charge basis. - HELD THAT: - The Tribunal held that the taxable category of 'intellectual property service' contemplates the transfer or permitting of use of an intellectual property right that is recognised and enforceable under the laws applicable in India. Mere transfer of technical know how or a contractual right enforceable only between the parties does not constitute an intellectual property right for the purposes of the taxable service. Reliance was placed on earlier Tribunal decisions and Board Circulars which clarify that only IPRs recognised by Indian law (such as patents, trademarks, designs, etc., excluding copyright) fall within the taxable definition. In the absence of any allegation or evidence that the overseas supplier's right was an intellectual property right enforceable under Indian law, the impugned demand under reverse charge could not be sustained.

Demand confirmed by the Commissioner for service tax on the appellant as recipient of 'intellectual property service' is set aside; the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that where the supplier's right is not an intellectual property right enforceable under Indian law, receipt of technical know how does not attract service tax under the 'intellectual property service' entry and the reverse charge demand cannot be sustained.

Taxability of imported services - place of rendering of service - business auxiliary services in relation to exports - management consultancy service - advisory vs executory distinction - club and association service vs stock exchange service - technical inspection and certification for exported goods - banking and other financial services - factual veracity and adjudication on records - remand for fresh consideration of fact-intensive claims

Business auxiliary services in relation to exports - taxability of imported services - Levy of service tax on commission paid to overseas agents engaged for promotion of products exported abroad. - HELD THAT: - The Tribunal found that the services rendered by agents located abroad were utilised in relation to goods after arrival in the foreign market and therefore were not taxable as imported services. The decision rests on the principle that services undeniably rendered by a foreign service provider in relation to goods sold abroad are outside the legislative intent to tax import of services and that taxing and then reimbursing such tax would be contrary to export-promotion objectives. Applying that principle to the facts, the demand under this head was set aside. [Paras 8]

Demand set aside; services not liable to service tax.

Management consultancy service - advisory vs executory distinction - Imposition of service tax as recipient of management consultancy services for pre-inspection quality training and processes for US FDA approval. - HELD THAT: - On the material before it and by reference to the nature of the services availed to secure regulatory approval abroad, the Tribunal held that these were executory/operational services connected with export approvals rather than advisory management consultancy within the taxable ambit. Consequently the demand under this head could not be sustained. [Paras 9]

Demand set aside; appellant not a recipient of taxable management consultancy service.

Club and association service vs stock exchange service - Charge of service tax as recipient of 'club and association service' for fees paid for membership/listing on overseas stock exchanges. - HELD THAT: - The Tribunal observed that the payments related to listing/membership of overseas stock exchanges and that where a specific taxable classification (stock exchange service) exists and the Revenue could not establish the activity fell within the scope of a different taxable service, it was not permissible to tax the same activity under another head. On that basis the demand under 'club and association service' was not sustainble. [Paras 9]

Demand set aside; payments are not taxable as club and association service.

Technical inspection and certification for exported goods - place of rendering of service - Levy of service tax on charges paid to statutory authorities abroad for technical inspection and certification in respect of exported goods. - HELD THAT: - The Tribunal held that charges paid to foreign statutory authorities for activities connected with export of goods, being rendered abroad, do not attract service tax. The nature and place of rendition of those services disentitle them from classification as taxable technical inspection and certification services under the impugned demand. [Paras 9]

Demand set aside; such charges are not liable to service tax.

Banking and other financial services - factual veracity and adjudication on records - remand for fresh consideration of fact-intensive claims - Levy of service tax on banking and financial services (including charges relating to external commercial borrowings and realization of export proceeds) paid to entities outside India. - HELD THAT: - The Tribunal found that the factual matrix and particulars relating to commissions and other charges paid to overseas banks were not placed before the original authority and that these are questions of fact requiring scrutiny of documents and evidence at the original adjudicatory level. Accordingly the Tribunal did not decide the taxability on merits but directed that the original authority reconsider the demand afresh after the appellant places both legal submissions and factual documents for adjudication in accordance with law. [Paras 10, 11]

Issue remanded for fresh decision by the original authority; demand not finally adjudicated.

Final Conclusion: The appeal is allowed in part: demands confirmed by the original authority are set aside insofar as they relate to business auxiliary services, management consultancy, club and association services, and technical inspection and certification charges paid to entities abroad; the demand insofar as banking and other financial services is remanded to the original authority for fresh adjudication on facts and law. Appeal disposed.

Classification as advertising service - scope of advertising agency: service connected with the making, preparation, display or exhibition of advertisement - service tax liability - binding effect of earlier Tribunal decision / judicial discipline

Classification as advertising service - scope of advertising agency: service connected with the making, preparation, display or exhibition of advertisement - binding effect of earlier Tribunal decision / judicial discipline - Whether the appellant's activity of collecting advertising material from clients and forwarding it to newspapers is classifiable as an advertising service / activity of an advertising agency and subject to service tax, having regard to an earlier Tribunal decision in the appellant's favour. - HELD THAT: - The Tribunal found that the material facts in the present period are the same as those decided by the Tribunal earlier and that no new facts have been brought on record. The earlier order construed "advertising agency" as covering persons engaged in providing services connected with the making, preparation, display or exhibition of advertisement; on the admitted facts the appellant did not undertake any making, preparation, display or exhibition and only collected advertisements and forwarded them to newspapers. Given identity of facts and absence of fresh material, the earlier reasoned decision applies by way of judicial discipline. Consequently the activity does not fall within the scope of advertising agency/service liable to service tax under the reasoning adopted earlier, and the impugned order requiring payment of service tax cannot be sustained. The Tribunal allowed consequential relief in accordance with law. [Paras 4, 5]

The impugned order is set aside and the appeal is allowed; the appellant's activity is not classifiable as an advertising agency/service for the period under appeal and consequential relief is permissible.

Final Conclusion: The Tribunal applied its earlier reasoned decision to identical facts, held that mere collection and forwarding of advertisements to newspapers does not constitute provision of services of an advertising agency, set aside the impugned order and allowed the appeal with consequential relief.

Penalty under Section 78 of the Finance Act, 1994 - Intention to evade tax - Declaration in books of account and non-suppression - Bona fide dispute on levy as defence to penalty - Waiver of penalty in cases of bona fide litigation

Penalty under Section 78 of the Finance Act, 1994 - Intention to evade tax - Declaration in books of account and non-suppression - Bona fide dispute on levy as defence to penalty - Waiver of penalty in cases of bona fide litigation - Imposability of penalty under Section 78 where service tax and interest were paid and the validity of levy was under bona fide litigation. - HELD THAT: - The appellants had recorded the transactions in their books of account and either paid service tax and interest before the search or before issuance of show cause notices. The levy of service tax on construction of residential complexes was the subject of widespread litigation (Maharashtra Chamber of Housing Industry) and a High Court decision in 2012; the matter was further pending before the Supreme Court. Given that the value was not suppressed and the levy was under bona fide dispute, the appellants did not exhibit mala fide intention to evade payment of service tax. The Tribunal has consistently waived penalty in identical circumstances and, on that footing, the penalty under Section 78 was held not to be imposable and was set aside. [Paras 4]

Penalty under Section 78 set aside; appeals allowed.

Final Conclusion: Where tax liability was recorded and paid (tax and interest) and the levy itself was the subject of bona fide litigation, the Tribunal set aside the penalty under Section 78 of the Finance Act, 1994 and allowed the appeals.

Requirement of reconciliation between ST-3 returns and books of account - double taxation arising from levy on accrued amounts and subsequent debtor entries - taxability of sale of scrap - onus of production of documentary evidence for verification - remand for fresh adjudication and verification of facts

Requirement of reconciliation between ST-3 returns and books of account - onus of production of documentary evidence for verification - Whether the mismatch between value declared in ST-3 returns and profit and loss account can be the basis for confirming demand without documentary reconciliation - HELD THAT: - The Tribunal found a discrepancy between figures disclosed in the ST-3 returns and those appearing in the profit and loss account. It held that to determine the correct tax liability a proper reconciliation must be undertaken on the basis of documentary evidence produced by the appellant. The adjudicating authority had not carried out such verification and therefore could not sustain the demand merely on the basis of the mismatch. Accordingly the matter requires remand for verification of records and reconciliation before any final demand is confirmed.

Remanded to the adjudicating authority for fresh adjudication after documentary reconciliation of ST-3 returns with books of account.

Double taxation arising from levy on accrued amounts and subsequent debtor entries - onus of production of documentary evidence for verification - Whether creation of a debtor entry for amounts deducted by the service recipient (claimed to be PF deductions) results in a fresh tax liability where service tax was already discharged earlier - HELD THAT: - The Tribunal recorded the appellant's contention that amounts deducted by the service recipient as provident fund were subsequently challenged and entered as debtors, and that service tax had been paid on the original receipts. If tax was already discharged on those amounts, treating the subsequent debtor entry as fresh taxable receipt would amount to double taxation. The Tribunal observed that the lower authorities did not verify whether service tax had already been paid on those amounts and therefore the question of liability on the debtor entry cannot be finally determined without documentary verification of the facts.

Remanded to the adjudicating authority to verify from books and documents whether the amounts in question had already suffered service tax and to pass fresh orders accordingly.

Taxability of sale of scrap - onus of production of documentary evidence for verification - Whether amounts attributable to sale of scrap formed part of taxable service value - HELD THAT: - The Tribunal accepted the appellant's submission that sale of scrap is not a service and therefore not liable to service tax. However, it observed that the authorities had not examined the books of account to segregate the part of the debtor or receipts attributable to sale of scrap. Consequently, the Tribunal directed verification of the accounts to identify and exclude non-taxable scrap sales from the value of taxable services.

Remanded to the adjudicating authority to verify accounts and exclude proceeds of scrap sale from taxable value if established from documentary evidence.

Final Conclusion: Impugned order set aside; appeal allowed by way of remand - matter restored to the adjudicating authority to verify documentary evidence, reconcile ST-3 returns with books, and decide afresh on the issues of debtor entries (PF deductions) and exclusion of scrap sales from taxable value.

Condonation of delay - Limitation under Section 85(3A) - Time-barred appeal - Remand for decision on merits

Limitation under Section 85(3A) - Condonation of delay - Time-barred appeal - The appeal before the Commissioner (Appeals) was incorrectly held to be time-barred. - HELD THAT: - The Tribunal examined the dates recorded in the impugned order: receipt of the order-in-original on 3.3.2015 and filing of the appeal on 2.6.2015. Under sub section (3A) of Section 85 the normal period for filing an appeal is two months from receipt of the order and there is an additional condonable period of one month. Counting from 3.3.2015 the three month period therefore expired on 3.6.2015. The appeal filed on 2.6.2015 was within the three month period and thus fell within the condonable period. The Commissioner (Appeals) wrongly concluded there was a delay of 31 days and that the appeal lay beyond the period available for condonation.

Impugned order holding the appeal time barred is set aside and the finding of limitation is rejected.

Remand for decision on merits - Whether the matter should be remanded for adjudication on merits. - HELD THAT: - Having found the appeal was filed within the condonable period and that the Commissioner (Appeals) did not decide the matter on merits, the Tribunal directed that the appeal be returned to the Commissioner (Appeals) for determination on merits. The Tribunal expressly refrained from addressing substantive issues, leaving those to be considered afresh by the Commissioner (Appeals).

Matter is remanded to the Commissioner (Appeals) for decision on merits without any adjudication on limitation.

Final Conclusion: The Tribunal set aside the Commissioner (Appeals) order which had dismissed the appeal as time barred, held the appeal was within the condonable period under Section 85(3A), and remanded the matter to the Commissioner (Appeals) for fresh adjudication on merits.

Date of filing of refund claim - electronic filing via ACES portal - limitation for refund claims under Section 11B - reckoning of one-year period from end of quarter

Date of filing of refund claim - electronic filing via ACES portal - Date of filing of the refund claim electronically through the ACES portal is to be reckoned as the date of filing of the refund claim. - HELD THAT: - The Tribunal found no merit in the Revenue's contention that the date of filing should be the date when the physical copy with supporting documents was filed. The Revenue itself permits electronic filing through the ACES portal; where the claim was validly filed online and there was no provision to file supporting documents online, insisting that the physical submission date alone determine filing would be inconsistent. Therefore the date of electronic submission on ACES must be taken as the date of filing of the refund claim.

Electronic filing through ACES constitutes the date of filing of the refund claim.

Limitation for refund claims under Section 11B - reckoning of one-year period from end of quarter - The one-year limitation for refund claims under Section 11B is to be computed from the end of the quarter to which the refund pertains, and not from the date of invoice or date of receipt of FIRC; on that basis the refund was filed within time. - HELD THAT: - Relying on the Larger Bench decision in CCE&ST, Bengaluru-I v. Span Infotech India Pvt. Ltd., the Tribunal held that the one-year period for filing refund claims is to be reckoned from the end of the quarter. Applying that principle, the appellant's claim-filed electronically within the prescribed one-year period counted from the quarter end-cannot be treated as time-barred. Consequently, the Revenue's reliance on invoice date or FIRC date for limitation was rejected.

The refund claim was filed within the one-year period reckoned from the end of the relevant quarter and is not time-barred.

Final Conclusion: The impugned order rejecting the refund as time-barred is set aside; the appeal is allowed and the refund claim is held to have been filed in time.

Limitation for review under Section 84(5) of the Finance Act, 1994 - time barred review orders

Limitation for review under Section 84(5) of the Finance Act, 1994 - time barred review orders - Validity of the Commissioner's review order dated 28/06/2007 in view of the two year bar prescribed by Section 84(5) of the Finance Act, 1994 - HELD THAT: - The Tribunal found that Section 84(5) prescribes a two year period within which an order under the review provision can be passed from the date of the order sought to be reviewed. The Order in Original was passed on 11/05/2005 while the impugned review order was passed on 28/06/2007, which is beyond the two year period. Since the statutory time limit was not complied with, the review order is legally unsustainable. The Tribunal expressly declined to enter upon the merits of the service tax liability and allowed the appeal solely on the ground of temporal bar to the review.

The review order dated 28/06/2007 is time barred and set aside; the appeal is allowed on this ground without deciding the merits.

Final Conclusion: The appeal is allowed solely on the ground that the Commissioner's review order was passed after the two year period prescribed by Section 84(5) and is therefore invalid; the matter is disposed of without adjudication on the merits.

Penalty under Section 76 of the Finance Act, 1994 - payment of service tax and interest prior to issuance of show-cause notice - bar on issuance of show-cause notice where tax and interest paid under Section 73(3)

Penalty under Section 76 of the Finance Act, 1994 - payment of service tax and interest prior to issuance of show-cause notice - Section 73(3) of the Finance Act, 1994 - Validity of imposition of penalty under Section 76 where service tax and interest were paid before issuance of the show-cause notice - HELD THAT: - The appellant had paid the service tax and the interest for delayed payment prior to issuance of the show-cause notice. The Tribunal applied the principle from the judgment of the Hon'ble Karnataka High Court which holds that once service tax and interest are paid and the information furnished to authorities, authorities are not entitled to serve a notice under the relevant provision and consequently cannot initiate proceedings for recovery of penalty under Section 76. Relying on that decision and the factual admission that both tax and interest were paid before the show-cause notice, the Tribunal concluded that imposition of penalty under Section 76 was not justified.

Order imposing penalty under Section 76 of the Finance Act, 1994 is set aside; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal and set aside the penalty under Section 76 since the service tax and interest for the period October 2002 to November 2005 had been paid prior to issuance of the show-cause notice, applying the legal bar on initiating penalty proceedings in such circumstances.

Maintainability of condonation application before the Tribunal - condonation of delay in filing appeal before lower appellate authority - inordinate delay and requirement of condonation before the appellate Tribunal - pre-deposit under Section 35F

Maintainability of condonation application before the Tribunal - condonation of delay in filing appeal before lower appellate authority - The condonation application filed before the Tribunal to excuse a 26 day delay in filing the appeal before the Commissioner (Appeals) is not maintainable. - HELD THAT: - The Tribunal observed that the delay of 26 days occurred in filing the appeal before the Commissioner (Appeals) and, consequently, any application for condonation of that delay falls to be considered by the Commissioner (Appeals) and not by this Tribunal. The COD application before the Tribunal sought relief for a defect that arose and remained unremedied at the lower appellate stage; therefore the Tribunal held it lacked jurisdiction to condone that prior delay and dismissed the COD application. [Paras 5]

COD application dismissed as not maintainable before the Tribunal.

Inordinate delay and requirement of condonation before the appellate Tribunal - pre-deposit under Section 35F - The appeal before the Tribunal is dismissed for want of prosecution because the appellant failed to seek condonation for an inordinate delay in filing the appeal to the Tribunal and had not complied with the mandatory pre-deposit requirement at the lower stage. - HELD THAT: - The Tribunal noted that the Commissioner (Appeals) had dismissed the earlier appeal at the threshold for non-compliance with the pre-deposit under Section 35F. Separately, the Tribunal found that the appellant had also delayed in instituting the present appeal to the Tribunal by around nine months and had not moved for condonation of that delay. In view of the inordinate delay before the Tribunal and absence of any application to condone it, the Tribunal declined to admit or proceed with the appeal and dismissed it. [Paras 5]

Appeal dismissed for inordinate delay and non-compliance with condonation requirements; earlier dismissal at threshold for non-deposit noted.

Final Conclusion: The Tribunal dismissed the condonation application as not maintainable before it and, having found an inordinate delay in prosecuting the appeal to the Tribunal without any condonation application, dismissed the appeal; the Commissioner (Appeals)'s threshold dismissal for failure to make the mandatory pre-deposit under Section 35F was recorded.

CENVAT credit on service tax paid for insurance premium - input service for employees' safety and welfare - nexus between input service and manufacturing activity - workmen's compensation as statutory liability under labour law - exclusion under Rule 2(l) of the CENVAT Credit Rules, 2004

CENVAT credit on service tax paid for insurance premium - input service for employees' safety and welfare - nexus between input service and manufacturing activity - workmen's compensation as statutory liability under labour law - Entitlement to CENVAT credit of Service Tax paid on insurance premium for workmen's compensation. - HELD THAT: - The Tribunal held that the specific exclusion contained in Rule 2(l) of the CENVAT Credit Rules, 2004 does not extend to insurance taken to meet obligations for the safety and compensation of workmen arising under labour laws. Insurance service procured to protect workmen who are exposed to risk in the course of manufacture has a direct nexus with the appellant's manufacturing activity, particularly where the manufacturing process (explosives) inherently involves heightened risk to employees. Applying this principle and following the Tribunal's decision in FIEM Industries Ltd. Vs. CCE, Chennai-III (reported in the decision relied upon by the Tribunal), the Service Tax paid on such insurance premium is admissible as CENVAT credit.

Claim for CENVAT credit on Service Tax paid on insurance premium for workmen's compensation allowed.

Final Conclusion: The appeal is allowed and the appellant is held entitled to CENVAT credit of Service Tax paid on insurance premium taken to meet statutory workmen's compensation liabilities, the Tribunal following its earlier precedent.

Reliance on retracted statements - Hearsay evidence and non-production of intermediary - Use of statement of co-accused as substantive evidence - Ownership transfer record as evidence of title - Opportunity for and waiver of cross-examination - Penalty under rule 26(1) of the Central Excise Rules, 2002

Reliance on retracted statements - Hearsay evidence and non-production of intermediary - Use of statement of co-accused as substantive evidence - Whether the penalty imposed on the appellant under rule 26(1) could be sustained on the basis of the main noticee's statements which were retracted and which implicated the appellant through an unproduced intermediary ('Javed'). - HELD THAT: - The Tribunal found that the Revenue's case against the appellant rested primarily on the main noticee's statement that the appellant supplied money and machines via one Shri Javed. The identity of Shri Javed could not be ascertained and Revenue failed to produce him. The main noticee subsequently retracted his statements by notarised affidavits and a letter. In those circumstances the assertion that the appellant financed purchase of D.G. sets and supplied packing machines through an intermediary remains hearsay. The Tribunal held that Revenue has failed to prove these allegations and therefore could not sustain the penalty on that basis. The Tribunal treated the reliance on the retracted and uncorroborated statement as insufficient to establish liability. [Paras 4]

Allegations based on the main noticee's retracted statements and the unproduced intermediary are not proved; the penalty cannot be sustained on that basis.

Ownership transfer record as evidence of title - Opportunity for and waiver of cross-examination - Penalty under rule 26(1) of the Central Excise Rules, 2002 - Whether the penalty could be sustained on the basis that the Mahindra jeep used in clandestine activity was owned by the appellant at the material time. - HELD THAT: - The Tribunal examined Motor Vehicle Department records which showed that the vehicle (MH12 BG3268) was transferred to the main noticee on 23.03.2009 and that the main noticee was the registered owner since that date; earlier records showed the appellant as previous owner. The appellant had produced a contemporaneous letter from the Motor Vehicle Department dated 18.11.2009 indicating the main noticee as owner, and the Revenue did not contradict that letter. The Tribunal also noted the appellant's consistent plea, including before the High Court, that the vehicle had been sold to the main noticee prior to the alleged evasion. There was no material showing clandestine removal of goods by use of that jeep; statements only indicated use for transporting men. The Tribunal further recorded that an opportunity for cross-examination had been fixed but the appellant did not avail it, and found no prejudice arising that would salvage the Revenue's case given the documentary ownership records and lack of contrary evidence. [Paras 4]

Documentary records showing transfer of the vehicle to the main noticee and absence of evidence of clandestine use by the appellant negate the allegation of ownership at the material time; penalty cannot be sustained on that ground.

Final Conclusion: Both strands of the Revenue's case-(i) that the appellant supplied money and machines through an unproduced intermediary based on retracted statements, and (ii) that the appellant owned the vehicle used in the alleged clandestine removals-were found unproved. Consequent upon these findings, the appeal is allowed and the penalty imposed on the appellant under rule 26(1) is set aside.

Principles of natural justice - right to personal hearing - failure to consider written submissions - non-speaking adjudication - remand for fresh adjudication after affording opportunity

Principles of natural justice - right to personal hearing - failure to consider written submissions - remand for fresh adjudication after affording opportunity - Whether the Order in Original was passed in violation of principles of natural justice by not granting personal hearing and by not considering the appellant's written submissions, and the appropriate relief. - HELD THAT: - The Tribunal found that the adjudicating authority's order records that the appellants did not attend personal hearing and that there was no written communication, whereas the appellants had filed written submissions dated 7.11.2000 and sought adjournment for the hearing fixed before the successor adjudicating authority. The Order in Original does not record the request for adjournment, nor does it deal with the specific claim that the earlier written submissions were not considered. Commissioner (Appeals) also failed to give any findings on the denial of the principles of natural justice. In these circumstances the Tribunal concluded that the impugned order was passed without considering the defence raised in the written submissions and without granting personal hearing, amounting to a gross violation of principles of natural justice, and that the matter requires fresh consideration after affording the appellants due opportunity to defend their case. [Paras 4, 5]

Impugned Order in Original set aside and matter remitted to the original adjudicating authority for fresh adjudication after affording the appellants an opportunity of personal hearing and consideration of their written submissions.

Final Conclusion: The appeal is allowed by way of remand; the Order in Original is set aside and the matter is remitted for fresh adjudication after granting the appellants due opportunity to be heard and for their written submissions to be considered.

Cenvat credit - job work - endorsement on Bill of Entry - receipt and use of inputs - direct supply from port to job worker - customs endorsement - entitlement to credit on endorsed import document

Cenvat credit - endorsement on Bill of Entry - receipt and use of inputs - direct supply from port to job worker - customs endorsement - Entitlement of the job worker to avail cenvat credit on imported inputs where the Bill of Entry is in the name of the principal but endorsed in favour of the job worker and inputs are directly supplied from port to the job worker. - HELD THAT: - The Tribunal noted that the sole controversy was whether an endorsed Bill of Entry in the name of the importer but endorsed to the job worker suffices to permit cenvat credit to the job worker. It was not disputed that the inputs were received in the appellant's factory and used in manufacture of final products cleared on payment of duty to the principal. In cases of job work where inputs are directly supplied from the port to the job worker, endorsement of the Bill of Entry is the appropriate and available mechanism. The presence of endorsements signed by Customs on some Bills of Entry further supports the validity of the endorsements. Reliance placed on earlier decisions treating similar facts as covered was accepted. Applying these considerations, denial of credit merely because the Bill of Entry originally bore the importer's name was not justified where endorsement and actual receipt and use by the job worker were established. [Paras 4]

Impugned order set aside and the appellant entitled to cenvat credit on the endorsed Bills of Entry, with consequential relief in accordance with law.

Final Conclusion: The appeal is allowed; the appellant may avail cenvat credit on the imported inputs supplied directly to the job worker on the strength of endorsed Bills of Entry (some bearing Customs endorsement), and the impugned denial is set aside with consequential relief.

CENVAT credit on input services - maintenance of separate accounts for inputs and input services - Applicability of Rule 6(3)(c) of the CENVAT Credit Rules as alternative to Rule 6(3)(b) - Provider of output service - restriction of utilization to 20% of service tax payable - Liability to pay 10% of value of exempted goods for not maintaining separate accounts

CENVAT credit on input services - maintenance of separate accounts for inputs and input services - Applicability of Rule 6(3)(c) of the CENVAT Credit Rules as alternative to Rule 6(3)(b) - Provider of output service - restriction of utilization to 20% of service tax payable - Whether Rule 6(3)(b) applies and a payment equal to 10% of the value of exempted goods can be demanded where the assessee maintained separate accounts for inputs but availed CENVAT credit on input services without maintaining separate records for input services, or whether Rule 6(3)(c) applies to the assessee who is also a registered service provider. - HELD THAT: - The Tribunal found it to be an admitted fact that the appellant maintained separate accounts for inputs as required under Rule 6(2) but had availed credit on input services and had not maintained separate accounts for input services. The adjudicating authorities imposed demand under Rule 6(3)(b) (payment of 10% of value of exempted goods) without explaining why Rule 6(3)(c) would not govern the case. Rule 6(3)(c) specifically addresses providers of output service and restricts utilization of credit to an amount not exceeding twenty per cent of the service tax payable on taxable output service. The appellant was both a manufacturer and a registered service provider and produced ST-3 returns showing compliance with utilisation limited to 20% as required under Rule 6(3)(c). In these circumstances, the Tribunal held that the condition for applying Rule 6(3)(b) was not made out and the demand under Rule 6(3)(b) could not be sustained; the Commissioner(Appeals) and adjudicating authority had not given reasons to displace the applicability of Rule 6(3)(c). [Paras 6, 7]

Impugned order insofar as it applied Rule 6(3)(b) and demanded payment of 10% of the price of exempted goods is set aside; Rule 6(3)(c) is applicable and the appeal is allowed.

Final Conclusion: The appeal is allowed: the demand under Rule 6(3)(b) is quashed and the Tribunal holds that Rule 6(3)(c) governs the appellant (being also a provider of output service) who complied with the restriction of utilising credit to 20% as reflected in ST-3 returns.

Cenvat credit - availment and reversal - Obsolescence provisions and write-off of inputs - Recovery mechanism under Rule 3(5B) and Notification 3/2013 - Levy of interest and penalty for wrongly availed cenvat credit

Cenvat credit - availment and reversal - Obsolescence provisions and write-off of inputs - Recovery mechanism under Rule 3(5B) and Notification 3/2013 - Sustainability of demand for cenvat credit reversed/provisioned on account of obsolescence where no statutory recovery mechanism existed at the relevant time - HELD THAT: - The Tribunal found that the appellant had made book provisions/write offs for obsolete raw materials for the calendar years 2007-2011 and had, in part, reversed cenvat credit during audit. The determinative legal principle applied was that, during the period in dispute, there was no statutory recovery mechanism to recover cenvat credit wrongly taken under the provisions embodied in Rule 3(5B)

Demand of cenvat credit relating to inputs for which write off/provision was made is not sustainable and is set aside.

Levy of interest and penalty for wrongly availed cenvat credit - Recovery mechanism under Rule 3(5B) and Notification 3/2013 - Liability to pay interest and imposition of penalty in respect of the disallowed cenvat credit demanded - HELD THAT: - Having held that the substantive demand of cenvat credit could not be sustained because no recovery mechanism existed at the relevant time, the Tribunal further concluded that the ancillary imposition of interest and penalty could not stand. The Tribunal accepted the appellant's reliance on earlier decisions and the legal effect of Notification 3/2013, and, on the same reasoning that precluded recovery of the credit, dropped the demand of interest and the penalty imposed. [Paras 5]

Demand of interest and penalty in respect of the contested cenvat credit is dropped.

Final Conclusion: The appeal is partly allowed: the demand of cenvat credit relating to inputs written off/provisioned is set aside, and the corresponding demand of interest and penalty is dropped, having regard to the absence of a recovery mechanism prior to Notification 3/2013 (01.03.2013).

Exemption under Notification No. 64/1995-CE for goods supplied as ship stores to the Indian Navy - conclusive effect of end-use / certificate issued by the Indian Navy - long life of goods not a ground to deny ship-stores exemption - reliance on precedent decisions and Board Circular No. 89/1988-CX.6

Exemption under Notification No. 64/1995-CE for goods supplied as ship stores to the Indian Navy - conclusive effect of end-use / certificate issued by the Indian Navy - long life of goods not a ground to deny ship-stores exemption - Whether electric motors supplied to the Indian Navy, accompanied by a certificate from the Navy, are entitled to exemption under Notification No. 64/1995-CE despite their long useful life - HELD THAT: - The Tribunal examined the Revenue's contention that electric motors, having long life and not being consumables, cannot be treated as ship 'stores' and therefore are not eligible for the notification benefit even when a certificate from the Indian Navy is produced. The Tribunal held that this contention is foreclosed by earlier tribunal decisions which treated durable items supplied to the Navy as stores where an end use certificate was produced, and by Board Circular No. 89/1988 CX.6. The Tribunal further relied upon the Supreme Court's observation in Commissioner of Central Excise, Surat v. Essar Steel India Limited that once an end use certificate is issued by the Indian Navy, doubts entertained by Customs/Revenue cannot prevail. Applying these precedents, the Tribunal concluded that the long life of the goods is not a valid ground to deny the exemption when the Navy has issued the requisite certificate of supply as ship stores. [Paras 2, 3, 4]

Benefit of the notification extended to the electric motors supplied to the Indian Navy on production of the Navy's certificate; Revenue's denial set aside and appeals allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeals, holding that electric motors supplied to the Indian Navy with the requisite Navy certificate qualify for exemption under Notification No. 64/1995-CE; the Revenue's denial based on the goods' long life was rejected, and the impugned orders were set aside with consequential relief.

Liability for reversal of CENVAT credit where job-worker accounts for and pays duty on scrap - Quantification of scrap generated in job-work and evidentiary burden to displace job-worker's accounts - Reliance on binding precedents of the Tribunal and High Court on principal's liability for duty on scrap

Liability for reversal of CENVAT credit where job-worker accounts for and pays duty on scrap - Quantification of scrap generated in job-work and evidentiary burden to displace job-worker's accounts - Whether the Commissioner was correct in dropping proceedings for reversal of CENVAT credit and imposition of penalty where the job-worker had accounted for and paid central excise duty on scrap and there was no evidence that the job-worker's quantification was incorrect. - HELD THAT: - The Tribunal found that the Revenue's challenge rested on an assertion that the Commissioner had not critically examined or worked out the correct quantum of scrap generated and had relied on the job-worker's accounts. The record, however, showed that the job-worker had accounted for and discharged excise duty on the scrap. There was no material on record demonstrating that the job-worker's quantification was incorrect; the Revenue's case relied largely on general statements by the job-worker's plant manager, which did not establish error in the accounts. The impugned order also relied upon earlier Tribunal and High Court precedents which hold that where the job-worker has discharged duty on scrap, liability cannot be fastened on the principal manufacturer/supplier. The Tribunal noted that these precedents were not challenged by the Revenue in the grounds of appeal and that the Commissioner had applied the ratio of those decisions. Having found no evidence to displace the job-worker's accounting and given the binding precedent relied upon, the Tribunal concluded there was no basis to fasten liability on the principal. [Paras 4, 5, 6]

Proceedings for reversal of CENVAT credit and imposition of penalty were rightly dropped; Revenue's appeal dismissed.

Final Conclusion: The appeal by the Revenue is dismissed: in absence of evidence showing the job-worker's quantification of scrap to be incorrect and given that the job-worker accounted for and paid duty on the scrap, liability to reverse CENVAT credit could not be fastened on the principal, and the Commissioner was right to drop the proceedings.

Admissibility of CENVAT credit on input services used for taxable output services - nexus between input services and manufacture/clearance of final products - treatment of services rendered in warranty period for input credit - temporary motor vehicle registration obtained prior to clearance as an input service - technical infirmity in invoice address not to vitiate CENVAT credit where the service was received and utilized - penalty not warranted where disputed credit has been reversed before issuance of show-cause notice - remand for verification of supporting documents for claimed CENVAT credit

Admissibility of CENVAT credit on input services used for taxable output services - nexus between input services and manufacture/clearance of final products - Denial of CENVAT credit on invoices issued by Bosch Rexroth and Siskon Engineering - HELD THAT: - The tribunal found that the authorities below denied credit on the ground that no evidence showed repairs and maintenance charges formed part of transaction value or sales warranty. The appellant, however, had furnished detailed tabulated statements, sample input invoices and output invoices showing service tax discharged on output services. The authorities did not examine these documents. The tribunal concluded that the credit was availed because the inputs were used for providing taxable output services on which the appellant was registered and had discharged service tax; therefore denial was not justified and the credit cannot be rejected without considering the documentary proof and the nexus with taxable output services. The tribunal relied on earlier decisions cited by the appellant in support of this principle and allowed the claim accordingly. [Paras 6]

Credit availed on invoices of Bosch Rexroth and Siskon Engineering wrongly denied; allowed.

Treatment of services rendered in warranty period for input credit - admissibility of CENVAT credit on contractual repair services - Denial of CENVAT credit on invoices issued by Ajax Engineering Pvt. Ltd. - HELD THAT: - The tribunal recorded that the appellant produced the agreement (renewed) and sample invoices showing that repairs were undertaken under an agreement valid beyond 01/04/2009. The authorities below ignored the agreement and erroneously concluded the contract had lapsed. Having considered the produced documents, the tribunal held that the denial of credit on invoices of Ajax Engineering was incorrect because the record established the contractual basis for the services and their continuity; accordingly the credit was wrongly denied. [Paras 6]

Credit availed on invoices of Ajax Engineering Pvt. Ltd. wrongly denied; allowed.

Temporary motor vehicle registration obtained prior to clearance as an input service - technical infirmity in invoice address not to vitiate CENVAT credit where the service was received and utilized - distribution of common input service credit by ISD to manufacturing unit - Denial of CENVAT credit in respect of services from Jayalakshmi Enterprises and invoices not addressed to registered premises (including distribution by Yeshwanthpur office) - HELD THAT: - The tribunal observed that temporary registration from RTO is necessary to effect clearance under Motor Vehicles Acts and Rules and that obtaining such registration (even in the name of the buyer) related to manufacturing/clearance activity and therefore fell within definition of input service. On the denial for invoices not addressed to the registered premises, the tribunal noted that the appellant had only one manufacturing unit and that the Yeshwanthpur office (holding ISD registration) had distributed the common input service credit to the factory after excluding 10% for trading activities; receipt and utilisation of services were not in dispute. The tribunal treated the invoice address defect as a technical lapse which could not defeat entitlement to credit and held that credit under this head was admissible, relying on cited precedents. [Paras 6]

Credits relating to Jayalakshmi Enterprises and invoices distributed by Yeshwanthpur office wrongly denied; allowed.

Penalty not warranted where disputed credit has been reversed before issuance of show-cause notice - Imposition of penalty in respect of CENVAT credit already reversed/paid prior to issuance of show-cause notice (M/s. Gomti Incinco and M/s. Saleh Ahmed) - HELD THAT: - The tribunal noted that the CENVAT credit in question had been reversed/paid with interest before the show-cause notice was issued. In those circumstances, the tribunal held that imposing penalty was not warranted, and therefore the penalty imposed in respect of such amounts should not stand. [Paras 6]

Penalty in respect of amounts reversed/paid before show-cause notice is not warranted; penalty set aside.

Remand for verification of supporting documents for claimed CENVAT credit - Verification of documents supporting claimed CENVAT credit of specified amounts - HELD THAT: - Although several credits were held to have been wrongly denied, the tribunal directed limited remand for verification of documents relating to CENVAT credit claimed to the extent of Rs. 4,62,870 (first show-cause notice) and Rs. 33,063 (second show-cause notice). The remand was for the original authority to verify the documents which the appellant may submit in support of those specific claims. The tribunal allowed the appeals subject to such verification, thereby remanding only for factual/documentary verification and not for fresh adjudication of legal principles already decided. [Paras 7]

Matter remanded to original authority for verification of documents concerning the specified CENVAT credit claims; appeals allowed subject to such verification.

Final Conclusion: The appeals are allowed in part: the Tribunal held that several denials of CENVAT credit were unjustified (Bosch Rexroth, Siskon, Ajax Engineering, Jayalakshmi Enterprises and credits distributed by the ISD), set aside corresponding penalties where credit had been reversed prior to show-cause notice, and remanded limited claims for documentary verification by the original authority (specified amounts), directing verification of the appellant's supporting documents.

CENVAT credit on inputs used in factory - definition of 'inputs' for CENVAT credit - capital goods versus inputs distinction - allowability of credit for goods used in the factory premises

CENVAT credit on inputs used in factory - capital goods versus inputs distinction - definition of 'inputs' for CENVAT credit - Whether CENVAT credit on graphite bush, racks and table stand was permissible where lower authorities denied credit treating them as not being capital goods - HELD THAT: - The Tribunal found that the graphite bush was used in VMC machines as part of the hydraulic clamping system and functioned as a lubricant for moving parts, while the racks and table stand were used for storage of inputs/parts on the assembly line. These items were used within the appellant's factory. Applying the definition of 'inputs' prevailing in the period June and July 2013, credit was permissible on any goods used in the factory of manufacture. It was undisputed that the appellant was a manufacturer. The Tribunal relied on earlier decisions in Geltec Pvt. Ltd. v. Commissioner of Central Excise, Bangalore and Banco Products (India) Ltd v. Commissioner of Central Excise, Vadodara in support of allowing credit. For these reasons the impugned denial of CENVAT credit was held unsustainable. [Paras 3, 4]

Denial of CENVAT credit set aside; credit allowed and appeal allowed.

Final Conclusion: The appellate order denying CENVAT credit on the specified items was set aside and the appeal allowed, on the view that those goods qualified as inputs used in the factory during June and July 2013 and thus were eligible for credit.