TaxTMI Updates e-Newsletter
Jun 24,2026

Classification of processed tobacco - Manufacture test under GST tariff classification - processed only by sprinkling jaggery water and without addition of flavours or other materials - Unmanufactured tobacco - enhanced compensation cess-HELD THAT: - The Court held that the controversy was covered by the earlier Division Bench of this Court in [2026 (4) TMI 1271 - MADRAS HIGH COURT] relying on Pachiappa Chettiar V. State of Madras [1961 (9) TMI 48 - MADRAS HIGH COURT]ruling relied on in the order extracted in the judgment. Applying the settled test of manufacture, the Court accepted that where the assessee confines its activity to the limited process already recognised in that precedent, no new product having a distinct name, character or use comes into existence. Since the issue in the present writ petition was identical, the departmental reclassification of the product as manufactured tobacco and the consequential demand, interest and penalty could not stand. [Paras 3]

The impugned order was set aside, and it was held that so long as the petitioner's activity remains confined to the process approved in Pachiappa Chettiar's case, its product would fall under CETH 2401 20 90.

Final Conclusion: Following the earlier Division Bench decision on an identical issue, the Court allowed the writ petition and set aside the reclassification order. It held that, so long as the petitioner confines itself to the approved limited process, the product remains classifiable as unmanufactured tobacco under CETH 2401 20 90.

Composite show cause notice for multiple financial years - Separate notice requirement for each assessment year - HELD THAT: - The Court held that the challenge to the consolidated show cause notice had merit because the Division Bench decisions of this Court in Joint Commissioner (Intelligence & Enforcement) v. M/s. Lakshmi Mobiles Accessories [2025 (2) TMI 666 - KERALA HIGH COURT] and Tharayil Medicals (M/s.), Thrissur v. Deputy Commissioner [2025 (4) TMI 1152 - KERALA HIGH COURT],already laid down that a composite notice covering multiple assessment years is not legally sustainable. Applying that principle, the impugned notice was liable to be quashed, while preserving the respondents' liberty to issue separate notices for the relevant years. The Court also directed exclusion of the period between issuance of the impugned notice and receipt of the certified copy of the judgment for computing limitation in fresh proceedings. [Paras 2]

The consolidated show cause notice was quashed, with liberty to issue separate notices for the relevant assessment years and with corresponding exclusion of time for limitation.

Final Conclusion: The writ petition was disposed of by quashing the consolidated show cause notice issued for multiple financial years on the ground that such composite notice was legally unsustainable. Liberty was reserved to the respondents to initiate fresh proceedings by issuing separate notices for the relevant assessment years, with exclusion of the intervening period for limitation.

Penalty u/s 271(1)(c) - estimated bogus purchases addition - Concealment penalty on estimated income - addition in respect of bogus purchases was restricted to 12.5%

HELD THAT: - The Court held that the controversy was covered by its decision in Colo Colour Pvt. Ltd. [2025 (9) TMI 1041 - BOMBAY HIGH COURT] which laid down that penalty cannot be imposed where the addition is sustained purely on estimate or on guesswork. Since, in the quantum proceedings, only 12.5% of the alleged bogus purchases had been sustained on estimation, the Tribunal was justified in holding that such estimated addition could not support levy of penalty for furnishing inaccurate particulars of income. [Paras 10, 11]

The deletion of penalty was upheld, and no substantial question of law arose.

Final Conclusion: The Court upheld the Tribunal's deletion of penalty, holding that where the addition in respect of alleged bogus purchases survives only on an estimated basis, penalty under Section 271(1)(c) is not leviable. The Revenue's appeal was accordingly dismissed for absence of any substantial question of law.

Genuineness of the alleged bogus purchases - estimation of income - HELD THAT:- The appeal was admitted on the questions whether deletion of the addition relating to alleged bogus purchases was justified and whether such purchases, if found non-genuine, ought to have been disallowed in entirety; the remaining proposed questions were treated as subsumed. The above Appeal is admitted on questions (a) and (d) reproduced earlier. Questions (b) and (c) are subsumed in questions (a) and (d).

Interim application seeking amendment of the writ petition to challenge the vires of Section 147-A - Revenue being aggrieved by the decision rendered by this Court in Hexaware Technologies Limited [2024 (5) TMI 302 - BOMBAY HIGH COURT] as well as in a whole batch of matters which followed the said decision, filed SLPs before the Hon’ble Supreme Court - HELD THAT:- Hon’ble Supreme Court disposed of all the SLPs filed by the Revenue and passed four separate Orders and remanded the matters back to the High Courts for de novo consideration, especially taking into account the amendment introduced by the Legislature, namely the insertion of Section 147-A in the I.T. Act, w.e.f. 1st April 2026, having retrospective effect.

The Interim Application seeking amendment of the writ petition to challenge the vires of Section 147-A of the Income Tax Act, 1961, was allowed, with time granted to carry out and serve the amendment.

Characterisation of receipts under the India-Germany DTAA - Independent personal services - Fees for technical services - Specific treaty provision prevailing over general provision

Independent personal services under Article 14 - Characterisation of market support and business development receipts - Article 14 prevailing over Article 12 - Receipts from PI Industries Ltd. and Sajjan India Ltd. for market support, business development, managerial and consultancy services rendered by the assessee in his individual capacity taxable only under Article 14 of the India-Germany DTAA OR fees for technical services under Article 12 - HELD THAT: - The Tribunal found that the assessee, a tax resident of Germany, had rendered services through his personal expertise, market experience and business knowledge, and had no fixed base in India while his stay in India did not exceed the prescribed threshold. On the material on record, the services were essentially directed towards identifying customers, developing business opportunities, supporting overseas marketing, and assisting expansion in the German market. Such activities were held to fall within independent professional services or other independent activities of a similar character under Article 14. The Tribunal further held that Article 14 is the specific treaty provision governing income of an individual from independent professional activities, whereas Article 12 is the general provision on fees for technical services; accordingly, once the income falls within Article 14 and its conditions are satisfied, it cannot be taxed under Article 12 by recharacterising the services. Since the assessee had no fixed base in India and did not exceed the stay threshold, the receipts were held taxable only in Germany. [Paras 5]

The additions on account of receipts from PI Industries Ltd. and Sajjan India Ltd. for A.Y. 2018-19 were directed to be deleted.

Application of earlier year's treaty finding - Verification of year of taxability - HELD THAT: - The Tribunal recorded that the facts relating to the additions in A.Y. 2019-20 were substantially similar to those in the preceding year. It, therefore, applied its finding mutatis mutandis that the receipts in question were not taxable in India in terms of Article 14 of the India-Germany DTAA, and directed deletion of the addition relating to Sajjan India Limited. As regards receipts from PI Industries Limited and Tagros Chemicals India Ltd., the Tribunal additionally directed the Assessing Officer to verify, on the basis of TDS certificates and supporting evidence, the assessee's contention that those payments pertained to A.Y. 2017-18 and to grant relief in accordance with law; however, it made it clear that in any event the receipts could not be held taxable in India in view of its treaty conclusion. [Paras 6, 7]

Grounds on merits for A.Y. 2019-20 were allowed, subject to factual verification of the claimed year of receipt in respect of the receipts from PI Industries Limited and Tagros Chemicals India Ltd.

Final Conclusion: The Tribunal held that the receipts earned by the assessee, a German tax resident individual, from the Indian companies were income from independent personal services covered by Article 14 of the India-Germany DTAA and were not taxable in India in the absence of a fixed base or the prescribed period of stay. The additions for A.Y. 2018-19 were deleted, and for A.Y. 2019-20 the merits were decided in the same manner, with a further direction to verify the assessee's claim regarding the year to which certain receipts pertained.

TDS on Google AdWords advertising payments - Section 194C versus Section 194J - Human intervention test - Advertising contract vis-a-vis fees for technical services - Payments made for advertisement under the Google AdWords program held to be covered by the provision relating to advertising contracts or by the provision relating to fees for technical services - HELD THAT: - The Tribunal held that for a payment to fall within fees for technical services, the service rendered must be managerial, technical or consultancy in nature, and the mere use of a sophisticated automated platform does not by itself amount to rendering technical services.

On the facts, the Google AdWords platform was found to be a standard automated self-service facility in which the advertiser selects keywords, budgets and ad content, while the matching, auction and display processes are carried out automatically through packaged algorithms.

Revenue did not establish by relevant evidence that the services availed by the assessee involved the kind of direct human intervention necessary to characterise the payment as technical services.

Tribunal further held that advertising is specifically covered u/s 194C, and once the statute creates a specific entry for advertising contracts, the Revenue cannot shift such payments to the more general provision in Section 194J merely because the advertising medium is digital or technologically advanced. It also observed that the later reduction of TDS rate for fees for technical services, other than professional services, reflected the legislative intent to reduce disputes arising from the overlap between Sections 194C and 194J, which also supported the assessee's case. [Paras 11, 12, 13, 14]

The assessee was not liable to be treated as in default for short deduction of tax, since TDS deducted at the rate applicable to advertising contracts was held to be correct.

Final Conclusion: The Tribunal upheld the appellate order deleting the demand under Sections 201(1) and 201(1A). It held that payments for Google AdWords constituted advertising payments covered by Section 194C, and not fees for technical services under Section 194J, and accordingly dismissed the Revenue's appeal.

Set off of excess application of income by charitable trust - Computation of trust income on commercial principles - no specific claim in the earlier year's return - Prospective operation of restriction on carry forward of excess application

Adjustment of excess application of income incurred by the assessee trust in earlier years against its income of the year under consideration denied merely because no specific carry forward claim had been made in the returns of those earlier years - HELD THAT: - The Tribunal held that, prior to the amendment made by the Finance Act, 2021, the settled legal position was that excess application incurred for charitable purposes could be adjusted against the income of subsequent years while computing application u/s 11. Such entitlement does not arise from a statutory carry forward mechanism comparable to business loss provisions, but from the interpretation of section 11 itself and the principle that trust income is to be computed on commercial principles.

Since the actual incurring of the capital expenditure for charitable purposes in the earlier years was not disputed, the claim could not be rejected solely on the ground that the assessee had not specifically made a carry forward claim in the returns for those years.

Tribunal further held that the restriction introduced by insertion of Explanation 5 to section 11(1) by the Finance Act, 2021 is prospective and had no application to AY 2017-18. However, as the exact quantification and availability of the earlier years' excess application was not conclusively borne out from the record before it, the matter required only limited factual verification. [Paras 11, 12, 13]

The assessee was held principally entitled to claim adjustment of earlier years' excess application against the income of the relevant year, and the matter was restored to the Assessing Officer only for limited verification of the factual correctness and availability of that claim.

Final Conclusion: The Tribunal held that for AY 2017-18 the assessee trust could not be denied set off of excess application of earlier years merely for want of a specific claim in those years' returns, and that the later statutory restriction was prospective. The matter was remitted to the Assessing Officer only for limited factual verification of the quantum and availability of the claim, while the additional ground under section 11(2) was left open as academic.

Penalty u/s 270A - underreporting of income in consequence of misreporting- non-disclosure of capital gains on redemption of mutual funds

HELD THAT: - The Tribunal held that the admitted difference between the returned income and the assessed income constituted underreporting of income within section 270A. It further found that the omission was not a mere computational or clerical mistake, since the assessee had failed to record the receipts arising from redemption of mutual funds, which had a direct bearing on total income.

That failure squarely attracted the concept of misreporting contemplated by section 270A(9)(e). The decision relied upon by the assessee in Price Waterhouse Coopers P.Ltd [2012 (9) TMI 775 - SUPREME COURT] was held inapplicable, because that case concerned a human error despite disclosure of the relevant particulars, whereas in the present case the income from redemption of mutual funds itself was not disclosed in the return. [Paras 8, 9]

The penalty was rightly levied and its confirmation by the Commissioner (Appeals) was upheld.

Final Conclusion: The Tribunal dismissed the appeal and sustained the penalty under section 270A. It held that non-disclosure of receipts from redemption of mutual funds, resulting in unreported capital gains, amounted to underreporting in consequence of misreporting of income.

Cost-to-cost reimbursement without profit element - Fees for technical services under reimbursement arrangements - Transfer pricing adjustment on interest for delayed realization of invoices - Advance pricing agreement and prevailing LIBOR

Reimbursements towards IT infrastructure and software support, salary of seconded employees, and travel expenses paid to group entities - Cost-to-cost reimbursement without profit element - Fees for technical services under reimbursement arrangements - liable to withholding tax - HELD THAT: - The Tribunal held that the impugned payments were pure reimbursements made on cost-to-cost basis to group affiliates, without any profit element. As regards IT infrastructure and common software facility, the expenditure represented allocation of common system costs incurred by the parent company for group use and not consideration for rendition of technical services. As regards salary reimbursement, the seconded employees were working in the assessee's business functions in India, did not render specialised technical services on behalf of the overseas entities, and the assessee had already deducted tax on the salary component under the head salaries.

As regards travel expenditure, the record showed reimbursement of travel and lodging costs incurred for the assessee's employees, with supporting invoices, and such payments did not amount to managerial, technical or consultancy services. On these findings, the Tribunal concluded that no sum chargeable to tax arose in the hands of the non-resident recipients and therefore no withholding obligation arose under section 40(a)(i). [Paras 9]

The corporate tax disallowances on IT cost and software reimbursement, salary reimbursement, and travel reimbursement were deleted.

Transfer pricing adjustment on interest for delayed realization of invoices - Advance pricing agreement and prevailing LIBOR - HELD THAT: - The Tribunal found that the advance pricing agreement applicable to the assessee did not prescribe a particular date for adopting the prevailing LIBOR for computing the effective interest rate. Since the assessee had adopted the rate available in the public domain and offered the additional income in good faith, the conclusion of the Transfer Pricing Officer that the six months' USD LIBOR adopted by the assessee was incorrect was held to be unjust, unfair and unreasonable. [Paras 12]

The transfer pricing adjustment on interest on receivables was set aside and the ground was allowed.

Final Conclusion: The Tribunal allowed the appeal for A.Y. 2020-21. It deleted the disallowances made on reimbursement of IT and software cost, salary cost and travel expenses to overseas group entities, and also set aside the transfer pricing adjustment on interest for delayed realization of invoices; the consequential grounds were left open.

Addition for unexplained money despite non-mention of specific deeming provision - Unexplained cash found in search - Unexplained gold bullion

Unexplained money - Omission to cite specific section - Addition towards cash and gold bullion found in search - AO did not refer to a specific provision between sections 69 and 69D - HELD THAT: - The Tribunal held that the assessment order had clearly recorded the factual basis and reasoning for treating the cash and value of the gold bars as unexplained money and bullion of the assessee. On that footing, mere non-reference to a specific deeming provision did not vitiate the addition. The decision in CIT v. B.C. Srinivas Setty [1981 (2) TMI 1 - Supreme Court] and the other cases cited by the assessee were held to arise on different facts and were not found applicable. [Paras 12]

The legal challenge to the addition on the ground of absence of reference to a specific section was rejected.

Unexplained cash found in search - Affidavit without supporting evidence - Cash found in search was explained only to the extent supported by the cash book extracts of the three proprietary concerns - HELD THAT: - The Tribunal found that, at the time of search, the assessee had explained the cash only by reference to three proprietary concerns and the cash book extracts of those concerns showed availability of cash to a limited extent. The later stand that the cash belonged to nine family members was supported only by affidavits and PAN details, without any further material to establish actual cash availability with those persons. The Tribunal treated such affidavits as self-serving documents and not conclusive evidence of source. Since contemporaneous cash book extracts existed for the three proprietary concerns, the explanation was accepted to that extent alone, while the balance remained unexplained. [Paras 13]

The addition on account of cash was directed to be deleted to the extent of the cash balance shown in the three proprietary concerns, and was otherwise sustained.

Unexplained gold bullion - Recorded in books without proof of purchase - Gold bars found in search remained unexplained where the assessee failed to produce purchase bills or establish the source of income for their acquisition, despite claiming that they had been purchased in earlier financial years and recorded in the books - HELD THAT: - The Tribunal held that the assessee had initially failed to explain the source of the gold bars and had admitted them as undisclosed income. The subsequent explanation that the gold bars were purchased in earlier financial years and recorded in the books was not accepted because no purchase bills were produced and no material was filed to establish the source of funds for such purchases. In the absence of proof of acquisition and source, mere assertion of earlier recording in the books was insufficient. [Paras 14]

The addition towards the value of the gold bars was sustained in full.

Final Conclusion: The Tribunal partly allowed the appeal. The legal objection to the additions was rejected; the addition for cash found in search was sustained except to the extent explained by contemporaneous cash book extracts of the three proprietary concerns, while the addition for the gold bars was upheld in full.

Share premium valuation u/s 56(2)(viib) - Assessee's option to adopt DCF method under Rule 11UA - Assessing Officer's inability to substitute NAV for DCF valuation - Disallowance under section 14A in absence of exempt income - Prospective operation of Finance Act, 2022 amendment to section 14A

Share premium valuation u/s 56(2)(viib) - DCF valuation of unquoted equity shares - Assessing Officer substituting NAV method - Addition on share premium received on issue of shares sustained where the assessee had valued the shares under the DCF method in accordance with Rule 11UA - HELD THAT: - The Tribunal held that Rule 11UA confers the choice of valuation method on the assessee, and once the assessee adopts the DCF method in accordance with the Rule, the Assessing Officer may examine the valuation report and its assumptions but cannot discard that method and replace it with the NAV method of his own choice. The Tribunal further noted that the shares had been subscribed by an independent investor, the investor had directly responded to notices issued by the Assessing Officer, and thus the identity, creditworthiness and genuineness of the transaction stood established. It also noticed that in the intervening assessment year, on identical facts, the Assessing Officer had accepted the DCF-based valuation. On that reasoning, the addition made under section 56(2)(viib) for both years was held unsustainable. [Paras 29, 30, 31, 32, 36]

The addition under section 56(2)(viib) on account of share premium was deleted for both assessment years.

Disallowance u/s 14A -Absence of exempt income - Prospective amendment by Finance Act, 2022 - HELD THAT: - The Tribunal found it undisputed that the assessee had not earned any exempt income during the relevant year. Following the legal position that, in the absence of exempt income, no disallowance under section 14A can be made, it held that the disallowance was not justified. The Tribunal also noted that the amendment introduced by the Finance Act, 2022 to provide for disallowance notwithstanding non-receipt of exempt income had been held to be prospective, and therefore had no application to assessment year 2018-19. [Paras 45, 46]

The disallowance under section 14A read with Rule 8D was directed to be deleted.

Final Conclusion: The Tribunal allowed both appeals. It held that the addition under section 56(2)(viib) could not survive once the assessee had adopted the DCF method in accordance with Rule 11UA and the Assessing Officer had merely substituted the NAV method, and it further deleted the section 14A disallowance for assessment year 2018-19 since no exempt income had been earned and the later amendment was only prospective.

Deduction u/s 80P for credit co-operative society - Clerical error in return of income - Wrong mention of deduction clause in return - AO observed that assessee society has claimed deduction u/s 80P(2)(c) and therefore assessee is not eligible for deduction u/s 80P(2)(a)

HELD THAT: - Tribunal found that the assessee had in fact claimed deduction u/s 80P in the return and that the admissibility of the claim was also certified in the tax audit report.

Disallowance was made only because of an incorrect selection of the relevant clause in the return, and not because the assessee failed to satisfy the substantive conditions for deduction as a credit co-operative society providing credit facilities to its members.

Tribunal also noted that the same deduction had been consistently allowed to the assessee in preceding as well as subsequent assessment years on identical facts.

A mere wrong mention of the provision does not disentitle an assessee to an otherwise allowable deduction. The appellate order was also found to contain discussion unrelated to the controversy, without any finding rejecting the assessee's factual submissions. [Paras 7, 8, 9, 10]

The assessee was held entitled to deduction u/s 80P(2)(a)(i), and the AO was directed to allow the claim.

Final Conclusion: The Tribunal allowed the appeal and held that the assessee could not be denied deduction under section 80P(2)(a)(i) merely because of an inadvertent wrong mention of the relevant clause in the return of income. The claim was directed to be allowed as it was otherwise duly made and substantively admissible.

Territorial jurisdiction of Assessing Officer - Validity of notice u/s 143(2) issued by non-jurisdictional officer - CBDT notification governing jurisdiction - AO at Patna territorial jurisdiction to issue notice u/s 143(2) and frame the assessments for the assessee, whose business address and return particulars were at Kolkata

HELD THAT: - The Tribunal held that jurisdiction of income-tax authorities has to be exercised in accordance with the directions and notification issued by the Board u/s 120, and concurrent jurisdiction can be assumed only where such jurisdiction is specifically conferred.

On the facts found, the assessee carried on business at Kolkata, had disclosed only the Kolkata address while applying for PAN, had filed returns mentioning the Kolkata address, and no branch at Patna was shown. The departmental communication linking the PAN to Patna did not confer jurisdiction contrary to the CBDT notification, and the later admission by NSDL that the PAN had been tagged to Patna due to digitisation error reinforced that the correct jurisdiction lay at Kolkata.

Following UV Realters Private Limited [2022 (7) TMI 1311 - DELHI HIGH COURT] and M/s. Boast Traders Pvt. Ltd. [2020 (6) TMI 585 - ITAT KOLKATA], the Tribunal held that a notice issued by an officer not vested with territorial jurisdiction is bad in law, and the consequential assessment is without jurisdiction. [Paras 14, 17, 18]

Ground No. 2 was allowed, and the notices issued from Patna and the assessment orders for both years were quashed as without jurisdiction.

Final Conclusion: The Tribunal held that the Patna Assessing Officers had no territorial jurisdiction over the assessee and that the notices under section 143(2) as well as the consequential assessments for assessment years 2014-15 and 2015-16 were void. The appeals were accordingly allowed and the assessment orders were quashed.

Revision u/s 263 - Erroneous and prejudicial assessment - Adequacy of enquiry by AO - Section 13 violation in charitable trust transactions with specified persons

Revision of the assessment on the ground that the AO had failed to examine the trust's advance to a specified person and the consequent alleged violation of section 13 - HELD THAT: - The Tribunal found from the assessment record that the Assessing Officer had specifically called for details regarding the payment made by the trust to the trustee towards proposed purchase of flats, including supporting documents, permissions and valuation particulars, and that the assessee had furnished replies and documents in response to those queries. On that basis, the Tribunal held that the assessment had been completed after full and proper enquiry into the impugned transaction, and the case was therefore not one of lack of enquiry so as to justify revision.

The principle applied was that where the AO has made necessary enquiries and taken a view on the material placed before him, the assessment cannot be treated as erroneous and prejudicial to the interests of the Revenue merely because the revisional authority seeks a further or different examination.

Relying on CIT vs. Chandan Magraj Parmar [2021 (11) TMI 711 - BOMBAY HIGH COURT] and distinguishing CIT vs. Ballarpur Industries Ltd. [2017 (8) TMI 530 - BOMBAY HIGH COURT] on facts, the Tribunal held that the conditions for invoking section 263 were absent. [Paras 7, 8, 12, 13]

The order under section 263 was quashed, as the assessment was held to be neither erroneous nor prejudicial to the interests of the Revenue.

Final Conclusion: The Tribunal held that the Assessing Officer had made specific and adequate enquiry into the trust's advance to the specified person before completing the assessment. As the foundation for revision under section 263 was absent, the revisional order was set aside and the assessee's appeal was allowed.

Condonation of delay in first appeal - New claim before appellate authority - BSNL Voluntary Retirement Scheme compensation - Retrenchment compensation exemption

Condonation of delay in first appeal - Sufficient cause based on professional advice - Substantial justice over procedural delay - HELD THAT: - The Tribunal held that the assessees had furnished an elaborate explanation for the delay and had acted on professional advice while filing their returns. In such circumstances, the delay was supported by sufficient cause, and the appellate authority ought to have preferred substantial justice over a procedural objection based on delay. [Paras 8]

The dismissal of the appeals on the ground of delay was held to be unsustainable.

BSNL Voluntary Retirement Scheme compensation - Retrenchment compensation exemption - Capital receipt exempt from tax - whether Compensation received by BSNL employees under the BSNL Voluntary Retirement Scheme, 2019 was entitled to exemption as retrenchment compensation under section 10(10B), and could not be denied merely because the claim had not been made in the return of income? - HELD THAT: - Following its earlier decision on identical facts [2026 (4) TMI 1111 - ITAT PUNE] Tribunal held that the amount received under the BSNL Voluntary Retirement Scheme, 2019 was in the nature of retrenchment compensation and fell under section 10(10B), not section 10(10C). It also noted that even the appellate authority in some cases had accepted the allowability of the claim on merits, but denied relief only because the exemption had not been claimed in the return. In the absence of any contrary decision of the jurisdictional High Court, the Tribunal followed the consistent view already taken in identical BSNL matters and directed the assessees to file revised computations before the jurisdictional Assessing Officers for consequential relief and refund after verification. [Paras 9, 13, 14]

The impugned amounts were held exempt from tax under section 10(10B), and the contrary findings of the Commissioner (Appeals) were set aside.

Final Conclusion: The Tribunal held that the delay in filing the appeals before the Commissioner (Appeals) deserved to be condoned and that the assessees' fresh claim could not be rejected merely because it had not been made in the return. Following its earlier decisions on identical BSNL cases, it further held that compensation received under the BSNL Voluntary Retirement Scheme, 2019 was exempt under section 10(10B), and allowed all the appeals with consequential directions for verification and refund.

Penalty u/s 271D - cash loan accepted u/s 269SS - Third-party statement relied upon without cross-examination - Corroborative evidence for levy of penalty

HELD THAT: - The Tribunal held that the penalty rested solely on the statement of the alleged lender recorded in search proceedings at a third party's premises, while the assessee consistently denied having taken any cash loan. Despite repeated requests, the Assessing Officer did not furnish the relevant incriminating material, the statement relied upon, or the related assessment details of the alleged lender, and no opportunity of cross-examination was given. In the absence of any independent incriminating or corroborative evidence showing that the assessee had in fact accepted a cash loan, the allegation remained based on surmises and conjectures.

Tribunal also relied on the principle that loose sheets and random entries by themselves have no evidentiary value against a third person unless supported by relevant admissible material and surrounding circumstances. On these facts, invocation of section 269SS and consequential penalty under section 271D were held to be erroneous. [Paras 9, 10, 11, 12, 13]

The penalty under section 271D was deleted and the order confirming it was reversed.

Final Conclusion: The Tribunal held that penalty for alleged acceptance of cash loan could not be sustained on the basis of an untested third-party statement and loose papers, without corroborative material or opportunity of cross-examination. The assessee's appeal was accordingly allowed and the penalty under section 271D was deleted.

Re-export of illegally imported municipal solid waste to country of origin - Disposal of imported municipal solid waste within India - Detention and demurrage liability after adverse customs adjudication - Authorised carrier's responsibility for re-export of hazardous goods - Waste Colonialism - Public policy - Environmental compensation - entitlement to a waiver of rental and container detention charges - effective statutory remedy of appeal available against the Orders-in-Original under Section 128

Validity of confiscation and re-export orders for misdeclared waste paper consignments - Writ challenge after acceptance of adjudication order -HELD THAT: - The Court found that no substantial challenge had been advanced against the adjudication orders. The materials showed that the petitioners had accepted the findings during adjudication, sought leniency, paid the penalties imposed and did not question the factual findings of misdeclaration. An effective statutory appeal was available, but was not availed. On examining the record, the Court also found that detailed show-cause notices had been issued, adequate opportunity had been granted and the adjudicating authority had reached the conclusion of deliberate misdeclaration on the basis of the materials before it. No infirmity, procedural irregularity or jurisdictional error warranting interference in writ jurisdiction was made out. [Paras 61, 62, 63, 64, 65]

The challenge to the adjudication orders was rejected and the orders were held valid.

Re-export of municipal solid waste to country of origin - Interpretation of re-export under hazardous waste regime - Basel Convention obligations in illegal traffic of waste - HELD THAT: - The Court held that Rule 15(2) uses the expression re-export, which necessarily signifies return of the waste to the country from which it originated or was exported to India, and not export to any third country chosen by the importer. The domestic Rules were interpreted consistently with India's obligations under the Basel Convention, which requires return of illegally trafficked waste to the State of export and does not contemplate diversion to a third country for the importer's convenience.

The phenomenon, often described as "waste colonialism", refers to the practice whereby developed countries, either directly or through unscrupulous exporters, seek to shift the burden of disposal of hazardous, toxic or other undesirable waste to developing nations, thereby externalising the environmental and social costs associated with such waste. Such practices not only undermine environmental justice but also pose a serious threat to the ecological security and public health of the receiving countries. Above all, it is a direct affront on the very sovereignty of the country and as such rightly terms as 'colonialism'.

In the case of consignments found to contain municipal solid waste imported under the guise of waste paper, responsibility had to remain with the exporter and the State of export. Permitting shipment to Dubai would be contrary to the statutory scheme and the Convention's objective of preventing transboundary dumping of waste. [Paras 75, 76, 77, 78, 79]

The prayer to re-export the consignments to Dubai was held legally untenable and rejected.

Entitlement to seek permission for disposal of the goods within India - HELD THAT: - The Court held that the statutory scheme regulating transboundary movement of hazardous and other waste is intended to prevent India from becoming a destination for disposal of waste generated elsewhere. Disposal of the impugned consignments through cement kilns, waste-to-energy facilities or other domestic modes would be inconsistent with that object. The Office Memorandum relied upon by the petitioners was construed as applying only to permissible contaminants exceeding threshold limits, and not to municipal solid waste and other expressly prohibited contaminants. Any interpretation permitting domestic disposal of such prohibited waste would run contrary to Rule 15(2), India's treaty obligations and public policy. [Paras 81, 82, 83, 84, 85]

The alternative prayer for disposal of the consignments within India was rejected.

Container Freight Station charges after adverse adjudication - Invalidity of waiver certificates where importer is found guilty - HELD THAT: - Applying the binding Division Bench ruling in K. Streamship Agencies Pvt. Ltd. [2024 (8) TMI 31 - MADRAS HIGH COURT], the Court held that waiver certificates can operate only where adjudication ends in favour of the importer without imposition of duty, fine or penalty. Where the importer is found guilty of misdeclaration or import of prohibited goods, demurrage and detention charges remain payable, and any waiver certificate issued in such a case is invalid. Since adjudication had ended against the petitioners, the Container Freight Stations were entitled to raise their claims. At the same time, the Court held that non-payment of such charges could not justify continued retention of municipal waste in India, and recovery had to be pursued separately in accordance with law. [Paras 87, 88]

The petitioners were held liable to pay the Container Freight Station charges, but re-export could not be obstructed on account of disputes over such charges.

Shipping liner detention charges after adverse adjudication - Authorised carrier's responsibility for re-export of hazardous goods - HELD THAT: - The Court held that the same legal position governing waiver of demurrage and detention charges applied to the shipping liner as well, and the liability for such charges fell on the petitioners after adverse adjudication. The earlier waiver direction could not survive once adjudication had gone against the importers. However, the liner's Memo offering substantial waiver on receipt of a consolidated payment was recorded. The Court further held that, under the Sea Cargo Manifest and Transhipment Regulations, 2018, the authorised carrier bears responsibility for re-export of hazardous goods ordered to be sent back to the exporting country. The petitioners were correspondingly bound to pay the agreed amount and the freight charges necessary for transporting the goods back to the ports of origin. [Paras 90, 91, 92, 93, 94]

The petitioners were held liable to pay the agreed sum to the liner together with freight charges, and non-payment could not be used to retain the waste in India.

Final Conclusion: The writ petitions were dismissed on merits. The Court upheld the confiscation and re-export orders, directed re-export only to the respective ports of origin within the time granted, held the petitioners liable for the Container Freight Station and shipping line charges subject to the liner's recorded concession, and directed that disputes over charges should not obstruct removal of the waste from India.

Smuggling - Validity of Seizure of areca nuts and the truck under Section 110 - Reason to believe - Judicial review of customs seizure - liability to be released on necessary verification and suitable conditions - Conveyance seized along with goods

Seizure of areca nuts - Reason to believe under customs seizure - Suspicion of foreign origin goods - HELD THAT: - From an analysis of the statutory provision of section 110 of the Act and the principles of law laid down by the Hon’ble Supreme Court in the case of Ruksana Begum Choudhury [2024 (6) TMI 787 - GAUHATI HIGH COURT] and State of Gujarat Vs. Mohanlal J. Porwal [1987 (3) TMI 111 - SUPREME COURT] - it is clear that the merit of the exercise of power u/s 110 of the Act by the proper officer, is to be scrutinized on the basis of the materials that were before him at the time of the seizure. It would not be correct to say that the merit of the said seizure made by the proper officer u/s 110 of the Act, can be seen on the basis of the materials subsequently submitted. That would not be the spirit of section 110 of the Act. At the stage of confiscation proceeding, of course, the petitioner would be at full liberty to submit all his materials to defeat the prospect of confiscation.

As has been seen from the case laws of the Hon’ble Supreme Court, the satisfaction of the criteria of the ‘reason to believe’ for the purpose of Section 110 of the Act has to be seen in the circumstances prevailing at the time of the seizure and through the experienced eye of the Customs officer.

The Court held that the validity of seizure under Section 110 has to be examined on the basis of the material available to the proper officer at the time of seizure, and not on the basis of documents produced subsequently. On the materials recorded in the seizure documents and the affidavit of the customs authorities, the officer had formed the requisite belief on objective circumstances, namely absence of supporting transport documents at interception, the quantity and value of the areca nuts, the driver's conduct in assaulting customs personnel and absconding, and the stated smuggling pattern in the region. Applying the principles noticed in the decision Indru Ramchand Bharvani [1988 (7) TMI 78 - SUPREME COURT] on reason to believe, the Court held that sufficiency of such material was not open to appellate reappraisal in judicial review once relevant and germane material existed. The petitioner's reliance on decisions under the Income-tax Act was held inapposite, and subsequent documents filed by the petitioner were held not determinative of the legality of the initial seizure. The Court further observed that if confiscation proceedings are initiated, the petitioner must be given notice and hearing and would be at liberty to produce all supporting documents in such proceedings. [Paras 36, 37, 38, 40, 41]

The prayer for release of the seized areca nuts was rejected, while preserving the petitioner's right to contest any confiscation proceedings under Section 124.

Release of seized vehicle - Conveyance seized along with goods - HELD THAT: - While upholding the seizure of the areca nuts, the Court separately considered the position of the vehicle, noting that the petitioner itself claimed that the vehicle belonged to the pro forma respondent, who had not appeared in the proceedings. In that view, the Court held that, notwithstanding the validity of the seizure of the goods, the vehicle should be released to its owner upon necessary verification and on suitable conditions, including furnishing of an appropriate bond. [Paras 42, 43, 44]

The vehicle was ordered to be released in favour of its purported owner, subject to verification and conditions.

Final Conclusion: The Court upheld the seizure of the areca nuts under Section 110 of the Customs Act, holding that the customs officer had the requisite reason to believe on the materials available at the time of seizure. The writ petition for release of the goods was therefore dismissed, but the seized vehicle was directed to be released to its purported owner on verification and suitable conditions.

Residual penalty under Section 117 of the Customs Act - Penalty on Customs Broker for breach of due diligence obligations - Penalty on Customs Broker in absence of evidence of fraudulent export - HELD THAT: - The Tribunal held that Section 117 is a residual penal provision which applies only where no express penalty is provided elsewhere for the contravention or failure. Since the appellant, as a Customs Broker, was governed by the Customs Broker Licensing Regulations, 2018, and those Regulations themselves provide for penal consequences for contraventions, the condition for invoking Section 117 was not satisfied. The Tribunal further found that no evidence had been brought on record to show the appellant's involvement in any fraudulent export activity, and the penalty had in fact been imposed only on the alleged breach of the Regulations. In the absence of material showing such involvement, and with no action shown to have been taken under the said Regulations, the penalty under Section 117 was held to be unsustainable. [Paras 5, 6]

The penalty upheld under Section 117 against the appellant was set aside.

Final Conclusion: The Tribunal held that Section 117, being a residual penalty provision, was not invocable for the alleged breach attributed to the Customs Broker when the governing Regulations themselves provided for penal consequences. In the absence of evidence linking the appellant to fraudulent export activity, the penalty was unsustainable and the appeals were allowed.

Refusal to register petition for non-removal of defects - Procedural defects vis-a-vis adjudication on merits - Opportunity to cure defects despite procedural default - Abuse of process - Right to pursue judicial remedy - HELD THAT: - There was a change of vakalath and a new counsel was introduced by the Appellant, and after that only, he could get the information about the dismissal of the Company Petition under Rule 28(4) of the NCLT Rules, 2016, by the order of 31.10.2025, and only thereafter he could get the Appeal filed by the newly inducted counsel, which was preferred with a delay of 20 days.

The Appellate Tribunal held that, notwithstanding the appellant's lack of diligence in filing, refiling and curing defects, the order refusing registration under Rule 28(4) was procedural in character. It reasoned that procedural lapses in presentation of the company petition should not, by themselves, foreclose access to judicial remedies. In the wider interest of effective dispensation of justice on merits, the appellant was therefore permitted a final opportunity to rectify the defects, while the cost imposed by the Tribunal below was preserved as a cautionary measure and made a condition for such indulgence. [Paras 12]

The impugned order was set aside, the appellant was granted seven days to cure the defects subject to deposit of the cost, and failure to do so would result in automatic dismissal under Rule 28(4).

Final Conclusion: The appeal was allowed on the limited principle that procedural non-removal of defects should not, in the circumstances, shut out adjudication on merits. A final opportunity to rectify the defects was granted, but the cost imposed was maintained and made a precondition for such rectification.

Jurisdiction and authority to issue the show cause notices under the provisions of the FERA, after its repeal - Repeal and savings under FEMA - Specific empowerment of adjudicating officer - Jurisdictional defect - HELD THAT: - The Court held that the controversy stood concluded by the earlier co-ordinate Bench decision in First Global Stockbroking Private Limited & Ors. v. R.M. Ramchandani & Ors [2022 (11) TMI 1233 - BOMBAY HIGH COURT], which had examined Sections 49(3) to 49(5) of FEMA, the relevant notifications and the repeal-and-savings scheme, and had categorically ruled that Mr. A.K. Bal was not empowered under Section 50 of FERA to act as an adjudicating officer for issuing notices under the repealed enactment. Since the present notices were admittedly issued by the same officer, and no stay of that judgment had been granted by the Supreme Court, and no distinguishing feature was shown, the Court followed that binding co-ordinate Bench view and held that the notices could not be sustained. [Paras 12, 13, 14]

The show-cause notices were held to be without jurisdiction and were quashed.

Final Conclusion: Following the earlier co-ordinate Bench ruling, the Court held that the officer who issued the impugned FERA show-cause notices lacked legal authority to do so after repeal of FERA. The writ petition was allowed and the impugned notices were quashed.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Lapse of declaration for delayed payment - Penalty for delayed payment under amnesty scheme - Entitlement to the benefit of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 despite payment of the amount stated in Form SVLDRS-3 after the stipulated date - Strict Interpretation of Exemption and Beneficial Provisions - Lapsed Declaration - No Ambiguity in Statutory Language

Voluntary disclosure under SVLDRS - Strict compliance with payment timeline -HELD THAT: - The law is clear and settled that when the words in statute are clear, plain and unambiguous and only one meaning can be inferred, the courts are bound to give effect to the said meaning irrespective of consequences as was held by Hon’ble Supreme Court in the case of Kanai Lal Sur Vs Paramnidhi Sadhukhan [1957 (9) TMI 45 - SUPREME COURT].It was clarified that if words used in the statue are capable of one construction only then it would not be open to the courts to adopt any other hypothetical construction even on the ground that such construction is more consistent with the alleged object and policy of the act. In applying the rule of plain meaning any hardship and inconvenience cannot be the basis to alter the meaning to the language employed by the legislation. The Hon’ble Supreme Court in the recent judgment dated 30.07.2018 in the case of Commissioner of Customs (Import) Mumbai Vs. Dilip Kumar and Company and Others [2018 (7) TMI 1826 - SUPREME COURT (LB)], has held that the benefit of ambiguity, if any, in the statute cannot be extended in favour of assessee when it is the case of exemption notification or the legislations beneficial to the assessee.

The Tribunal held that Section 127(5) of the Scheme clearly requires the declarant to pay the amount indicated in Form SVLDRS-3 within 30 days, and further provides that failure to do so results in the declaration being treated as lapsed. Since the admitted position was that the extended last date expired on 30.06.2020 and the payment was made only thereafter, the payment was not in accordance with the Scheme. The provision being clear and unambiguous, the benefit of the amnesty scheme could not be extended on equitable or purposive considerations once the statutory time condition stood breached. [Paras 5, 6, 7]

The benefit of the Scheme was held to have lapsed, and the confirmation of service tax demand with applicable interest was sustained.

Penalty for delayed discharge of declared tax liability - Absence of mala fide during COVID period - penalty imposed in consequence of non-payment within the stipulated time - HELD THAT: - While upholding the lapse of the Scheme benefit and the resulting tax and interest liability, the Tribunal found that the delay occurred during the COVID pandemic and that there was no mala fide intent on the appellant's part in not making the payment within time, particularly when the appellant had voluntarily approached under the amnesty scheme. On that basis, the Tribunal declined to sustain the penalty. [Paras 7]

The penalty alone was set aside.

Final Conclusion: The Tribunal held that the appellant's declaration under the Sabka Vishwas Scheme lapsed on account of failure to make payment within the statutorily prescribed time, and therefore sustained the service tax demand and interest. The penalty, however, was set aside in view of the COVID period and absence of mala fide, and the appeal was partly allowed to that extent.

Indivisible works contract - Bifurcation of goods and service elements in works contracts - Abatement of value of goods in construction service -Mutual exclusivity of service tax and sales tax - Fiscal federalism - No tax on indivisible works contracts prior to statutory levy - benefit of Notification No. 12/2003

Taxability of Composite works contracts - Commercial or Industrial Construction Services -HELD THAT: - The Tribunal held that the Commissioner's view treating works contracts as taxable under the existing construction service entry prior to 01.06.2007 could not stand in view of the law declared in Commissioner of C.Ex. & Cus. Kerala Vs. Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT]. Since the Finance Act, 1994 was held not to contain the charge and machinery to levy service tax on indivisible composite works contracts for that period, no service tax demand could survive for the period before 01.06.2007. [Paras 4]

The demand for the period prior to 01.06.2007 was set aside.

Notification No. 12/2003 - Value of materials - Mutual exclusivity of service tax and sales tax - entitlement to abatement of the cost of materials under Notification No. 12/2003. - HELD THAT: - Following Shobha Developers Ltd. Vs. Commissioner of C.Ex. & Service Tax, Bangalore [2009 (9) TMI 342 - CESTAT, BANGALORE], the Tribunal held that service tax and sales tax operate in mutually exclusive fields, and service tax could not be levied on the value of materials on which State VAT or sales tax had already been paid. On that principle, the benefit of abatement on the cost of materials under Notification No. 12/2003 could not be denied for the post-01.06.2007 period. [Paras 4]

The demand relatable to the value of materials for the post-01.06.2007 period was held unsustainable.

Final Conclusion: The Tribunal set aside the impugned order in entirety. It held that no service tax demand could be sustained on composite works contracts prior to 01.06.2007, and that for the subsequent period the appellant was entitled to exclusion of the value of materials under Notification No. 12/2003.

Cenvat credit on NPCI e-statements - Documentary validity for input service credit by banking company - Substantial compliance - Admissibility of cenvat credit on the basis of NPCI documents - HELD THAT: - The Tribunal found that the dispute stood covered by its earlier decision in the respondent's own case [2024 (8) TMI 265 - CESTAT BANGALORE], where, after considering the same objection regarding non-compliance with Rule 9 requirements, credit on NPCI e-statements had been held admissible. Following that decision and the precedent noticed therein, the Tribunal held that there was no reason to take a different view, particularly when the Department had also accepted the position in similar matters. [Paras 5, 6]

The Revenue's challenge to the admissibility of cenvat credit on the basis of NPCI documents was rejected.

Final Conclusion: Following its earlier order in the respondent's own case on the same issue, the Tribunal upheld the admissibility of cenvat credit availed on the basis of NPCI documents for the disputed input service. The Revenue's appeal was accordingly rejected.

Captive consumption valuation under CAS-4 - Notional transfer price in inter-unit clearances - Extended period in periodical show cause notices - Revenue neutrality

Captive consumption valuation under CAS-4 - Notional transfer price in inter-unit clearances - HELD THAT: - The Tribunal held that the controversy stood covered by its earlier decisions in the respondent's own case in Hindalco Industries Ltd.[2023 (8) TMI 1676 - CESTAT KOLKATA]. It accepted that the transfer price linked to London Metal Exchange prices was maintained only for internal profitability assessment and accounting purposes and had no relation to the actual cost of production. CAS-4, on the other hand, was based on actual landed cost of inputs, fabrication cost and other manufacturing costs, and Rule 8 required valuation on that basis with the prescribed addition. The Department could not substitute this statutory costing method by adopting an internal notional price. [Paras 7, 8]

The issue was decided in favour of the respondent and the valuation adopted on CAS-4 basis was upheld.

Extended period in periodical show cause notices - Disclosure in ER-1 returns - HELD THAT: - The extended period of limitation cannot be invoked in terms of the decision of the Hon’ble Apex Court in the case of Nizam Sugar Factory v. CCE, AP, [2006 (4) TMI 127 - SUPREME COURT].

The Tribunal held that, the dispute being periodical in nature, the extended period could not be invoked. It further recorded that the respondent had disclosed the relevant particulars in ER-1 returns, and therefore the allegation necessary to support invocation of the longer limitation period could not be sustained. On that reasoning, the finding of limitation recorded by the appellate authority was affirmed. [Paras 9, 10]

The plea of extended limitation was rejected.

Revenue neutrality - Inter-unit CENVAT credit availability - HELD THAT: - The Tribunal found that any differential duty confirmed on the clearances would be available as CENVAT credit to the recipient units of the respondent and the situation was therefore revenue neutral. It accepted that, in such a case, suppression or intent to evade could not be alleged for sustaining the demand on that basis. The finding of revenue neutrality was thus treated as an additional ground against the demand. [Paras 9]

The demand was held unsustainable on the ground of revenue neutrality as well.

Final Conclusion: The Tribunal upheld the appellate order and rejected the Revenue's appeal. It held that inter-unit clearances were correctly valued on CAS-4 based actual cost, that the extended period was not invocable, and that the demand was also revenue neutral.

Manufacture under Section 2(f) - Activity of melting and converting imported gold or silver bullion into bars, coins and other specified items on job-work basis -Classification of gold bars as primary gold - Exemption for gold and silver coins bearing brand name - Extended period of limitation and wilful suppression - Applicability of Rule 12AA to precious metal articles - Entitlement to exemption under Notification No. 12/2012-CE - definition of "primary gold" - demand against gold /silver bars of 10 /20 /50 grams and gold /silver coins sold

Whether the activity carried out by the Appellant amounts to manufacture ? - HELD THAT: - The Tribunal held that the authorities cited by the appellant related to other goods and did not govern manufacture of gold articles. Applying the test stated in Brakes India Ltd. [1997 (3) TMI 120 - SUPREME COURT], it found that once the process results in a product having its own character and use, the activity answers the description of manufacture. It also relied on the special excise regime framed for gold and articles of jewellery, including separate procedures and rules governing registration, valuation, stock, returns and job work, to conclude that such activity was treated distinctly under the excise law. [Paras 26, 36]

The finding that the appellant's activity amounted to manufacture was upheld.

Extended period of limitation - Wilful suppression - Penalty - HELD THAT: - Following Continental Foundation Jt. Venture Vs. Commr. Of C. Ex., Chandigarh-I [2007 (8) TMI 11 - SUPREME COURT] and Densons Pultretaknik Vs. Commissioner of Central Excise [2003 (1) TMI 115 - SUPREME COURT], the Tribunal held that invocation of the extended period requires deliberate suppression or wilful misstatement with intent to evade duty. The dispute in the present case turned on classification and interpretation of the excise provisions governing the gold industry, all transactions were accounted for, and excise duty had not been collected from customers. In those circumstances, the ingredients necessary for invoking the larger period were absent, and the same reasoning also negatived the basis for penalty. [Paras 27, 28, 29, 36]

The demand raised by invoking the extended period and the penalties imposed were held unsustainable.

Classification of the Gold/Silver Coins, Bars, Medal Medallions, and gift items -Exemption under Notification No. 12/2012-CE - HELD THAT: - The Tribunal held that the definition of primary gold in the exemption entry has both a main part and an inclusive part, and the inclusive part specifically mentions bars. It found that the adjudicating authority had erred in considering only the unfinished or semi-finished aspect while ignoring the express inclusion of bars. Reading the exemption entry with the definition under the Gold Control Act and Chapter Note 10 to Chapter 71, the Tribunal concluded that articles of goldsmiths' or silversmiths' wares refer to articles manufactured or sold by such persons, not material used in the manufacturing process. Accordingly, the imported bullion as well as the bars sold by the appellant fell under Heading 7108, and being primary gold converted with the aid of power from any form of gold, were entitled to exemption under Notification No. 12/2012-CE. The Tribunal also noted the support of M/s Senco Gold Limited Vs. Commissioner of Central Excise, Kolkata [2024 (7) TMI 183 - CESTAT KOLKATA] on this aspect. [Paras 30, 31, 36]

Classification of the gold bars under Heading 7114 was set aside; they were held classifiable under Heading 7108 and exempt from duty.

Whether the benefit of Notification No. 05/2006-CE dated 01.03.2006 as amended by Notification No. 12/2012-CE dated 17.03.2012 can be extended, if the activity is considered as manufacture ? - HELD THAT: - The Tribunal noted that a separate heading exists for coins, but, following the decisions in N.C. Jewellers Vs. Principal Commr. of Cus., ACC, (Imports), New Delhi [2022 (7) TMI 618 - CESTAT NEW DELHI] and Abans Jewels Pvt Ltd Vs. Pr. Commr. of Customs, ACC (Imports), New Delhi [2022 (4) TMI 1370 - CESTAT NEW DELHI], it accepted classification of the appellant's gold and silver coins under Heading 7114 as adopted in the impugned order. It nevertheless held that Entry 200 of Notification No. 12/2012-CE specifically granted nil rate to gold coins of the requisite purity and silver coins of the requisite purity, bearing a brand name, when manufactured from duty-paid gold or silver. Since the coins in question were made from imported precious metal on which applicable customs or excise duty had been paid, and no cenvat credit had been availed even after the later amendment, the duty demand on coins was unsustainable. [Paras 32, 33, 36]

The duty demand on gold and silver coins was set aside as exempt, though their classification under Heading 7114 was maintained.

Classification of medals, medallions and gift items - Articles of goldsmiths' or silversmiths' wares - Normal period demand - HELD THAT: - Referring to the HSN guidance for Heading 7118, the Tribunal observed that medals, even if struck like coins, ordinarily fall under Headings 7113, 7114, 7117 or 8306. Accepting the adjudicating authority's classification under Heading 7114, it held that, under Entry 200 of Notification No. 12/2012-CE, such goods fell within articles of goldsmiths' or silversmiths' wares chargeable at 1%. Since the extended period was not available, the surviving liability had to be worked out only for the normal period. [Paras 34, 36, 37]

Duty at 1% on medals, medallions and gift items was upheld only for the normal period, and the matter was remanded for quantification.

Rule 12AA - Job work liability for precious metal articles - HELD THAT: - The Tribunal held that Explanation 1 to Rule 12AA confines its operation to job work resulting ultimately in manufacture of articles of jewellery falling under Heading 7113. As none of the appellant's goods were classifiable under Heading 7113, the statutory precondition for applying that rule was absent. [Paras 35]

Rule 12AA was held inapplicable.

Final Conclusion: The Tribunal upheld the finding that the appellant's activity amounted to manufacture, but held that the extended period and penalties were not invocable. The duty demands on gold and silver bars and on gold and silver coins were set aside on classification and exemption grounds, while medals, medallions and gift items remained dutiable at 1% for the normal period only, with remand limited to quantification.

Transaction value - Inclusion of reimbursed Central Sales Tax under incentive scheme - Sale tax actually payable or paid - third-party consideration - Reimbursed Central Sales Tax received by the manufacturer from the State Government under an incentive scheme - HELD THAT: - The Tribunal held that the controversy was no longer res integra. Following the ratio of the decisions in CCE, Mumbai Vs. Welspun Corporation Ltd.[2017 (5) TMI 177 - CESTAT MUMBAI], Honda Motorcycles and Scooters Pvt. Ltd. [2019 (4) TMI 748 - CESTAT NEW DELHI], Honda Motorcycles and Scooters Pvt. Ltd, Rama Cyclinders & Anr. Vs. CCE [2018 (4) TMI 1160 - CESTAT NEW DELHI], Harit Polytech Pvt. Ltd.[2023 (7) TMI 1547 - CESTAT, DELHI]; [2023 (3) TMI 1120 - CESTAT NEW DELHI], Jaypee Bela Plant.[2018 (12) TMI 1776 - CESTAT NEW DELHI],it held that reimbursement of sales tax under an incentive scheme cannot be treated as sales tax not actually payable or paid so as to justify its inclusion in the transaction value under Section 4(3)(d) of the Central Excise Act, 1944. On that basis, the demands founded on inclusion of the reimbursed CST in assessable value were unsustainable. [Paras 8, 9]

The reimbursed CST was held not includable in transaction value, and the impugned orders were set aside.

Final Conclusion: The Tribunal held that CST reimbursed by the State Government under the incentive scheme could not be added to the transaction value. The demands for both periods were therefore set aside and the appeals were allowed with consequential relief.

Patent illegality - Ignoring vital evidence in arbitral award - GST component in non-tendered works - Reappreciation of evidence - difference between the two figures - Goods and Services Tax [GST] component - Scope of interference in an arbitral award - Statutory reimbursement of the 18% GST - Whether the figure attributed to non-tendered items included GST ? - HELD THAT: - It is not necessary for this Court to examine the record to ascertain as to the exact amount of GST that may have been included in the figure of Rs. 9,65,91,596/-. As that is the question that is required to be addressed by the Arbitral Tribunal. Suffice it to state that there is evidence on record, including RA bills and certain extracts provided by the parties, which clearly establish that the said amount of Rs. 9,65,91,596/- includes an element of GST. Therefore, computing GST at 18% on the said amount is ex facie erroneous.

The Court held that, in proceedings under Sections 34 and 37 of the Arbitration and Conciliation Act, interference is limited, but an award is vulnerable on the ground of patent illegality if it is founded on no evidence or if vital evidence is ignored, as explained in Delhi Airport Metro Express (P) Ltd. vs. DMRC [2021 (9) TMI 1479 - SUPREME COURT] and Ssangyong Engineering and Construction Co. Ltd. vs. National Highways Authority of India (NHAI) [2019 (5) TMI 1879 - SUPREME COURT]. Applying that test, the Court found that the arbitrator had proceeded only on the 21st and final bill to conclude that the amount shown for non-tendered items was exclusive of GST, without considering other material on record. The tabular statement relied upon by NCBS and the RA bills on record showed that at least some invoices for non-tendered items expressly included GST at 18%, and even URC's own material reflected GST on such items. Once there was clear evidence that the aggregate figure for non-tendered items included a GST element to some extent, computation of 18% GST on the entire figure was ex facie erroneous. At the same time, the Court did not accept NCBS's further contention as conclusively established that the whole differential claimed by it represented GST already included in that figure. The defect identified was the arbitrator's failure to consider relevant and vital evidence, not a final adjudication by the Court of the exact GST component embedded in the amount. [Paras 61, 62, 63, 64, 65]

The award was set aside in part to the extent it proceeded on the basis that the value of non-tendered items exclusive of GST was the full amount adopted by the arbitrator; consequential GST and interest would require recomputation, and URC was left free to re-agitate its claim for the differential amount and consequential reliefs, if so advised.

Final Conclusion: The appeal was partly allowed by setting aside the arbitral award only insofar as it treated the value of non-tendered works as wholly exclusive of GST and awarded consequential GST and interest on that basis. The remainder of the controversy was left open, with liberty to URC to pursue its claim for the differential amount and consequential sums afresh, if so advised.