TaxTMI Updates e-Newsletter
Oct 13,2018

Composite supply of works contract - works contract services - water treatment and water supply - construction, erection, commissioning, installation of pipeline, conduit or plant for water supply - applicability of Notification No. 11/2017-Central Tax (Rate) - HSN 9954

Composite supply of works contract - water treatment and water supply - HSN 9954 - applicability of Notification No. 11/2017-Central Tax (Rate) - Classification of the turnkey contract for design, construction, supply and commissioning of mini piped water supply schemes (solar powered pumps and iron removal treatment plants) and the GST rate/HSN applicable - HELD THAT: - The Authority found that the contract awarded by the Public Health Engineering Department was for supply of water after removal of excess iron and required the applicant to perform a sequence of activities - drilling tube wells, civil plinth work, erection/assembly of prefabricated steel staging and GI enclosures, assembly and interconnection of solar panels and treatment plant, pipe laying and house to house connections - such that the overall transaction constitutes a composite supply in the nature of a works contract. The activities fall within the scope of construction, erection, commissioning, installation and completion of a pipeline/conduit/plant for water supply and water treatment. Accordingly, the Authority applied the Entry at Sr. No. 3, Heading 9954 of Notification No. 11/2017 Central Tax (Rate) (as amended), which covers composite supply of works contract for pipeline/conduit/plant for water supply or water treatment, and concluded that the contract attracts the tax rate specified therein.

The contract is classifiable under Heading 9954 as composite works contract for water treatment/supply and attracts GST at 12% (6% CGST + 6% SGST); HSN reference: 9954.

Final Conclusion: The Advance Ruling holds that the turnkey composite contract for extraction, treatment (iron removal) and supply of drinking water using solar powered systems is a composite works contract covered by Heading 9954 under Notification No. 11/2017 and is taxable at an overall GST rate of 12% (6% CGST + 6% SGST) with effect from 1st July 2017.

Exemption under Entry No. 72 of Notification No. 12/2017 - Services under a training programme - Composite supply of goods and services - Supply of goods vs supply of services - Total expenditure borne by Government - Build, Own, Operate and Transfer (BOOT) model

Exemption under Entry No. 72 of Notification No. 12/2017 - Services under a training programme - Composite supply of goods and services - Supply of goods vs supply of services - Total expenditure borne by Government - Applicability of Entry No. 72 of Notification No. 12/2017 to the supplies made by the applicant under the ICT @ School Project - HELD THAT: - Entry No. 72 grants nil rate only where all three concomitant conditions are satisfied: (i) services are provided to the Central/State/UT administration; (ii) services are provided under any training programme; and (iii) the total expenditure on such training programme is borne by the Central/State/UT administration. The Authority examined the contract obligations and records and found that the applicant's contract with DE(S&HS) envisages procurement, supply and installation of computer hardware, software and allied accessories, site preparation, maintenance for the contract period and deployment of faculty-in addition to imparting training. The contract therefore contemplates a composite transaction comprising identifiable goods (hardware, software, site works) and services (maintenance, supply of faculty, training), with distinct components and separately attributable value. The Authority held that such composite supply is not merely a provision of services under a training programme. Further, the terms (including future transfer of title of goods at nominal consideration) fall within the scope of supply of goods as per the statutory scheme, so the contract cannot be treated as services-only for the purpose of Entry No. 72. Although the source of funding (third prerequisite) is satisfied, the other essential conditions-primarily that the supply be services under a training programme without an attributable supply of goods-are not met. Applying the clear language of the exemption entry, the Authority concluded that all conditions for exemption are not fulfilled and the exemption cannot be allowed. [Paras 5]

Entry No. 72 of Notification No. 12/2017 does not apply to the supplies made by the applicant under the ICT @ School Project; the contract constitutes a composite supply including goods and therefore is not eligible for the nil rate exemption.

Final Conclusion: The Advance Ruling answers the question in the negative: the supplies under the ICT @ School Project are not covered by Entry No. 72 of Notification No. 12/2017 since the contract results in a composite supply including goods and the conditions of the exemption entry are not all satisfied.

Classification of goods - parts suitable for use solely or principally with the machines - HSN Note (II) to Section XVI - parts which in themselves constitute an article - filtering or purifying machinery and apparatus for liquids - tariff heading 8421 21 90 - applicability of GST rate

Classification of goods - parts suitable for use solely or principally with the machines - HSN Note (II) to Section XVI - parts which in themselves constitute an article - filtering or purifying machinery and apparatus for liquids - tariff heading 8421 21 90 - Classification of the Reactor used in hand pumps for water disinfection - HELD THAT: - The Reactor, though capable of being retrofitted to a hand pump, performs a function - purifying water - that is entirely distinct from the primary function of a hand pump, which is withdrawal and delivery of water. A hand pump operates without the Reactor, and the Reactor has an independent existence and multiple applications (motorized pipelines, overhead tanks, swimming pools, sewage treatment etc.). Under HSN Note (II) to Section XVI, parts that are suitable solely or principally for use with a machine are classifiable with that machine, except where the item in itself constitutes an article covered by the Section; such articles are to be classifiable in their own appropriate heading even if designed to work as part of a specific machine. The Reactor is a filtering/purifying apparatus for liquids and thus falls within the scope of Heading 8421, specifically the sub-heading for filtering or purifying water. It is not an accessory limited to hand pumps and therefore does not qualify as a part of heading 8413.

The Reactors are classifiable under Tariff Heading 8421 21 90.

Applicability of GST rate - filtering or purifying machinery and apparatus for liquids - tariff heading 8421 21 90 - GST rate applicable on the Reactor - HELD THAT: - Having classified the Reactor under Heading 8421 21 90 (filtering or purifying machinery and apparatus for water), the applicable GST rates follow from the entry for that tariff heading. The tariff specifies the GST treatment for filtering or purifying machinery for water under 8421 21 90.

Taxable at CGST 9% and SGST 9% (i.e., applicable GST @ 9% CGST and 9% SGST).

Final Conclusion: The Advance Ruling holds that the Reactor used for water disinfection is an independent filtering/purifying apparatus classifiable under Tariff Heading 8421 21 90, and it is subject to GST at the rate of 9% CGST and 9% SGST.

National Skill Development Programme implemented by NSDC - education services provided by a training partner approved by NSDC - GST exemption under Notification No. 12/2017-Central Tax (Rate), Entry 69 - services in relation to government implemented schemes - distinction between being a service provider to NSDC and being a service recipient approved by NSDC

National Skill Development Programme implemented by NSDC - education services provided by a training partner approved by NSDC - Whether educational courses approved by NSDC and offered by the applicant are to be construed as being in relation to the National Skill Development Programme implemented by NSDC - HELD THAT: - The authority examined the functions and mandate of NSDC and the wording of Entry 69 of Notification No.12/2017. It held that the phrase 'National Skill Development Programme implemented by NSDC' denotes programmes/schemes actually implemented by the Government or implemented through NSDC as an implementing agency (examples: PMKVY, SANKALP, UDAAN), i.e., activities for which NSDC is executing government programmes or schemes. Mere approval or certification of courses by NSDC, or being an NSDC approved training partner, does not by itself mean the courses are provided 'in relation to' a National Skill Development Programme implemented by NSDC. Where the applicant is a recipient of NSDC's approval/certification (and not providing services to NSDC in implementation of a government scheme), the condition for exemption under Entry 69 is not satisfied.

Answered in the negative.

Exceptional/conditional approval by NSDC - National Skill Development Programme implemented by NSDC - Whether courses conditionally or exceptionally approved by NSDC (for which QP/NOS are not yet defined) are to be treated as in relation to the National Skill Development Programme implemented by NSDC - HELD THAT: - The authority noted NSDC's practice of granting conditional/exceptional approvals where QP/NOS are undeclared, but reiterated the statutory test under Entry 69: services must be 'in relation to' a National Skill Development Programme implemented by NSDC. Conditional approval on SDMS, reporting of such courses to NSDC and alignment aspirations do not convert those courses into schemes actually implemented by NSDC. Therefore conditional or exceptional approvals do not satisfy the requirement for the Entry 69 exemption.

Answered in the negative.

Modified/upgraded versions of NSDC approved courses - alignment with QP/NOS - National Skill Development Programme implemented by NSDC - Whether modified or upgraded versions of NSDC approved courses, pending fresh approval by NSDC, are to be treated as in relation to the National Skill Development Programme implemented by NSDC - HELD THAT: - The authority observed that post approval modifications, even if aligned to QP/NOS and reported to NSDC, do not alter the legal character of the service unless the modified course is demonstrably part of a scheme/programme implemented by NSDC. The determinative requirement under Entry 69 is that services are provided in relation to a programme implemented by NSDC; unilateral upgrades by the applicant, without NSDC implementation or an NSDC implemented scheme linkage, do not meet that test.

Answered in the negative.

GST exemption under Notification No. 12/2017-Central Tax (Rate), Entry 69 - services in relation to government implemented schemes - Whether the applicant is eligible for GST exemption under Entry 69 of Notification No.12/2017 for the NSDC approved, conditionally approved or modified courses - HELD THAT: - Applying the interpretation above, the authority concluded that exemption under Entry 69 is available only when the training partner provides services in relation to National Skill Development Programme(s) actually implemented by NSDC (or analogous government schemes implemented through NSDC). Because the applicant's courses, approvals, conditional approvals and modifications do not amount to services provided in relation to NSDC implemented programmes (the applicant is a recipient of approvals rather than a service provider to NSDC for implementation of a government scheme), the statutory conditions for Entry 69 are not fulfilled and exemption cannot be granted on that basis.

No, in view of answers to Questions 1-3.

Recipient class of educational services - GST exemption under Notification No. 12/2017-Central Tax (Rate), Entry 69 - Whether the GST exemption under Entry 69 would be available if NSDC related courses are offered to corporate or business institutions - HELD THAT: - The authority noted that Entry 69 does not expressly limit exemption by class of recipient; however, the primary legal requirement remains that services be 'in relation to' NSDC implemented programmes. Since the applicant's services were held not to be in relation to NSDC implemented programmes, the question of recipient constitution did not enable exemption. Consequently, offering courses to corporates does not alter eligibility where the core requirement under Entry 69 is unmet.

No, in view of answers above.

Education courses imparted by business partners on behalf of the applicant - services in relation to National Skill Development Programme implemented by NSDC - Whether NSDC approved courses actually imparted by the applicant's business partners on the applicant's behalf should be considered as offered by the applicant for the purpose of Entry 69 exemption - HELD THAT: - The authority treated this question as ancillary to the primary findings. Having held that the applicant's courses are not services 'in relation to' NSDC implemented programmes, the authority declined to decide the contractor/sub contractor characterisation as it was rendered not relevant by the negative conclusions on Questions 1-3. Thus no positive finding was made on whether courses delivered by business partners would be treated as offered by the applicant for Entry 69 purposes.

Not answered as not relevant in view of answers to earlier questions; exemption not available.

GST exemption under Notification No. 12/2017-Central Tax (Rate), Entry 69 - Whether, if courses imparted by business partners were treated as offered by the applicant, the applicant would be entitled to Entry 69 exemption - HELD THAT: - Because the authority had already concluded that the applicant's courses are not 'in relation to' programmes implemented by NSDC, it found no basis to grant exemption even if those courses were treated as offered by the applicant through business partners. The determinative legal requirement is the connection to NSDC implemented schemes, which is absent.

No, in view of answers to preceding questions.

Final Conclusion: The Authority construed Entry 69 of Notification No.12/2017 CT narrowly: exemption applies only where services are provided by an NSDC approved partner in relation to National Skill Development Programme(s) actually implemented by NSDC (eg. government schemes implemented through NSDC). The applicant's NSDC approvals, conditional approvals or course modifications - and courses delivered via business partners - do not, by themselves, make the services 'in relation to' an NSDC implemented programme; accordingly the applicant is not entitled to the claimed GST exemption under Entry 69.

Opportunity of hearing / right to be heard - speaking order - administrative reconsideration / remand for fresh decision - alleged non-payment of tax under the Central Goods and Services Tax Act, 2017 and consequent administrative action

Opportunity of hearing / right to be heard - speaking order - administrative reconsideration / remand for fresh decision - alleged non-payment of tax under the Central Goods and Services Tax Act, 2017 and consequent administrative action - Directions to permit the petitioners to file a reply and to require the fourth respondent to consider the reply and pass a speaking order afresh within a specified timeframe; matter remanded for administrative reconsideration. - HELD THAT: - The Court, on hearing counsel for the parties and with no objection from respondents' counsel, disposed of the writ petition by directing a procedural course. The petitioners are to furnish their reply to the letter dated 1.8.2018 within ten days. Upon receipt, the fourth respondent is directed to consider the reply in the light of documents relied upon by the petitioners and to pass a speaking order within fifteen days thereafter. The direction constitutes a remand for fresh administrative consideration of the claim of non-payment of GST and the consequential withholding of gate-passes by the Mandi Samiti. The Court explicitly refrained from examining the merits of the dispute, leaving substantive adjudication to the competent authority in the exercise of its statutory functions.

Petition disposed by directing the petitioners to file a reply within ten days and directing the fourth respondent to consider it and pass a speaking order within fifteen days; merits not adjudicated.

Final Conclusion: Writ petition disposed by remanding the matter to the fourth respondent for fresh consideration on receipt of the petitioners' reply within prescribed timelines; the High Court did not decide the substantive merits.

Repeal of taxation statute and transitional application - remedy under successor tax regime - writ relief where statutory regime repealed - direction to appropriate authority for fresh consideration

Writ relief where statutory regime repealed - repeal of taxation statute and transitional application - Writ petition challenging an order passed under a statute which has been repealed was allowed, without adjudicating merits of the underlying tax liability. - HELD THAT: - The Court recorded that the impugned order was passed under the U.P. Entertainment and Betting Tax Act, 1979, which was repealed with effect from 01.07.2017 by the GST Act. Rather than adjudicating the substantive merits of the grievance arising under the repealed enactment, the Court permitted the petitioner relief by allowing the writ petition and declined to decide the tax liability or correctness of the impugned order. The Court limited its intervention to permitting the petitioner to seek appropriate relief under the successor regime, thereby recognizing that the repeal and substitution of the statutory scheme affects the available remedy and process.

Writ petition allowed; substantive merits of the impugned order not adjudicated.

Remedy under successor tax regime - direction to appropriate authority for fresh consideration - Petitioner was permitted to approach the appropriate authority under the GST regime for fresh consideration and passage of orders in accordance with law. - HELD THAT: - The Court left it open to the petitioner to invoke the procedural and substantive remedy available under the Goods and Services Tax framework and directed that the appropriate authority under the GST should consider and decide any such representation or application in accordance with law. The Court thereby remitted the controversy of enforcement or assessment to the competent authority under the successor statute rather than retaining the matter for judicial determination.

Matter remitted for fresh consideration by the appropriate GST authority in accordance with law.

Final Conclusion: The writ petition was allowed; the court did not decide the merits of the order issued under the repealed U.P. Entertainment and Betting Tax Act, 1979, and permitted the petitioner to seek appropriate relief before the competent authority under the GST regime, with the order copy to be communicated to the respondent's standing counsel for compliance.

Deductibility of hedging premium - speculative transaction - matching/mercantile system of accounting and amortisation of expenditure - tax deduction at source under section 195 and non-deduction certificates under section 195(3) - non-deduction under section 40(a)(ia) - allocation of tax-holiday deduction under section 80IB among manufacturing units - apportionment by excisable value - treatment of gains on transfer of investments as capital gains - deductibility of abnormal losses (shortages and damages) - disallowance under section 14A and applicability of Rule 8D prior to AY 2008-09

Speculative transaction - deductibility of hedging premium - Whether the hedging contracts and the premium/charges payable to banks constituted speculative transactions attracting section 43(5), thereby rendering the loss non-deductible. - HELD THAT: - The contracts with the banks were entered to hedge foreign exchange risk on an external commercial borrowing and to have the banks service interest to the lender; they were not contracts for purchase or sale of a commodity to be settled otherwise than by actual delivery. The essential ingredient of a speculative transaction under section 43(5) - a purchase/sale contract settled otherwise than by delivery - is absent. The Tribunal accepted the first appellate authority's conclusion that the transactions were hedging arrangements and not speculative transactions and accordingly not hit by section 43(5). [Paras 4]

Hedging premium and related contracts are not speculative transactions under section 43(5); the disallowance on that ground is reversed.

Tax deduction at source under section 195 and non-deduction certificates under section 195(3) - non-deduction under section 40(a)(ia) - Whether the interest component paid (or arranged to be paid by banks) and the hedging premium were non-deductible under section 40(a)(ia) for failure to deduct tax at source under section 195. - HELD THAT: - On the interest component, the assessee produced evidence (remand report) showing tax was deducted at source in respect of the interest-like component, and the first appellate authority's deletion of that addition was upheld. As to the premium component, the banks had certificates under section 195(3) authorising receipt of 'any sum not being interest or dividend' without deduction of tax at source provided such sums were received by the branches on their own account; the hedging premium fell within that description. Where a valid certificate under section 195(3) is in place, the Revenue cannot insist on TDS, and therefore section 40(a)(ia) does not apply to disallow the premium. The Tribunal applied these findings to both assessment years. [Paras 5, 9, 23]

Interest component allowed as deduction (TDS shown to have been deducted); hedging premium allowed as deduction as banks held section 195(3) certificates so section 40(a)(ia) is not attracted.

Matching/mercantile system of accounting and amortisation of expenditure - deductibility of hedging premium - Whether the hedging premium payable at maturity should be allowed as deduction only on actual payment/maturity or may be amortised and allowed proportionately in earlier years under mercantile accounting. - HELD THAT: - The hedging remuneration was fixed for the five-year period of the contracts and the assessee had spread (amortised) the premium over that period, claiming the proportionate part each year. Under the mercantile system, expenditure is deductible when the liability is incurred; the liability to pay the premium arose year to year even though actual payment was scheduled at maturity. Treating the full amount as deductible only at maturity would lead to double allowance in the final year because proportionate deductions had already been allowed in earlier years and those assessments had attained finality. The Tribunal relied on the principle that revenue expenditure is allowable in the year it is incurred and that spreading is permissible where liability accrues year-to-year, thus permitting proportionate deduction. [Paras 6, 7]

Proportionate part of the hedging premium is allowable as deduction in the year under consideration under mercantile accounting; not restricted to deduction only at maturity.

Allocation of tax-holiday deduction under section 80IB among manufacturing units - apportionment by excisable value - Whether deduction under section 80IB claimed by Unit Nos. 2 and 3 can include income attributable to manufacturing activity carried out by Unit No. 1 (which is not eligible), and if not, how the non-eligible portion is to be determined. - HELD THAT: - Unit No.1 (manufacturing heaters) was not eligible for section 80IB, while Units 2 and 3 used Unit 1's output as inputs and issued composite invoices; Unit 1 did not separately bill. The Tribunal held that income attributable to goods manufactured in Unit 1 cannot be allowed deduction under section 80IB merely because Units 2 and 3 made the ultimate sale. In absence of any other rational basis to segregate Unit 1's income from Units 2 and 3, the Tribunal directed apportionment of profit by reference to the excisable value of goods transferred from Unit 1 relative to the excisable values of the concerned units' outputs: first compute profit of Unit 2, then apportion to Unit 1 in the ratio of excisable value of Unit 1's goods to the total excisable value (Units 1 and 2), and repeat similarly for Unit 3. [Paras 12, 13, 24]

Deduction under section 80IB cannot include income of non-eligible Unit 1; Assessing Officer directed to apportion income using the ratio of excisable values as specified.

Treatment of gains on transfer of investments as capital gains - Whether profit on sale of mutual funds received on amalgamation is to be treated as business income or as short-term capital gain. - HELD THAT: - Mutual funds transferred on amalgamation from Karamchand Appliances Pvt. Ltd. were shown as 'Investments' by the transferor and continued to be shown as 'Investments' by the assessee; there were no frequent transactions and the assessee did not treat them as stock-in-trade. The first appellate authority had treated the profit as short-term capital gain for the earlier year and that view was not successfully challenged by the Department. Given the facts, the Tribunal upheld the treatment of the profit as short-term capital gain. [Paras 14, 15]

Profit on sale of the mutual funds is short-term capital gain and not business income.

Deductibility of abnormal losses (shortages and damages) - Whether deductions claimed for shortages and damages amounting to an abnormal loss are deductible. - HELD THAT: - The assessee's turnover exceeded the amount of shortages and damages and there was no double deduction. Considering the quantum relative to overall turnover and characterisation as abnormal loss, the first appellate authority's deletion of the Assessing Officer's disallowance was held to be justified. [Paras 16, 17, 25]

Deduction for shortages and damages allowed; deletion of the Assessing Officer's disallowance upheld.

Disallowance under section 14A and applicability of Rule 8D prior to AY 2008-09 - Whether Rule 8D is applicable for computing disallowance under section 14A for AY 2007-08 and whether the disallowance should be restricted to 1% of dividend income. - HELD THAT: - Rule 8D cannot be applied for years prior to AY 2008-09 as held by the Supreme Court. The first appellate authority had restricted disallowance to 1% of dividend income for the preceding year and the Tribunal, finding no facts warranting departure, upheld that approach for AY 2007-08. The result was upheld in favour of the assessee for the year under consideration. [Paras 18, 19]

Rule 8D not applicable to AY 2007-08; disallowance under section 14A restricted to 1% of dividend income as per preceding-year approach.

Application of prior year decisions to subsequent assessments - Whether the findings on hedging premium, interest, section 40(a)(ia) and other contested items in AY 2007-08 apply to AY 2008-09. - HELD THAT: - The facts and legal questions for AY 2008-09 were materially identical to those decided for AY 2007-08. Certificates under section 195(3) were also available for the subsequent year. The Tribunal therefore applied its reasoning from AY 2007-08 to AY 2008-09, allowing the deductions and dismissing the Revenue's grounds, while directing recomputation where apportionment under section 80IB was required. [Paras 21, 22, 23, 24, 25]

The Tribunal applied the conclusions reached for AY 2007-08 to AY 2008-09: deductions for interest and premium allowed and section 40(a)(ia) not attracted; section 80IB apportionment to be recomputed; damages/shorages deletion sustained.

Final Conclusion: For AY 2007-08 the Tribunal: held hedging contracts were not speculative; allowed proportionate deduction of hedging premium under mercantile accounting; sustained deletion of interest addition as TDS was accounted for; held section 40(a)(ia) inapplicable where banks held section 195(3) certificates; directed apportionment of non-eligible income of Unit 1 for section 80IB by excisable-value ratio; treated mutual fund gain as short-term capital gain; allowed deduction for damages/shortages; and restricted section 14A disallowance to 1% of dividend income. For AY 2008-09 the Tribunal applied the same conclusions, allowed the deductions contested by the Revenue and directed recomputation where necessary.

Arm's length price - transfer pricing study - comparability of comparable enterprises - Most Appropriate Method (TNMM) - remand for fresh determination of ALP - onus on the assessee to establish ALP - non pressing of grounds

Arm's length price - transfer pricing study - comparability of comparable enterprises - Most Appropriate Method (TNMM) - onus on the assessee to establish ALP - Determination of ALP for bareboat charter rentals and ship management services and validity of comparables selected by TPO/DRP/AO - HELD THAT: - The Tribunal examined the assessee's factual position - the company engaged in leasing and sub leasing of two vessels, paid significant bareboat rentals and ship management fees to associated enterprises and recorded substantial operating losses. The lower authorities had applied TNMM using a set of comparables and arrived at downward adjustments. The Tribunal found that neither the comparables relied upon by the TPO nor those advanced by the assessee were demonstrably functionally and asset wise comparable to the assessee's leasing and sub leasing activities. Given the absence of contrary evidentiary materials from the revenue disputing the assessee's submission on functional divergence, and the parties' inability to demonstrate correct, functionally comparable benchmarks on record, the Tribunal concluded that the issue of selection of appropriate comparables and computation of the PLI requires fresh verification. In the interest of justice the Tribunal set aside the transfer pricing adjustments for both assessment years insofar as determination of ALP is concerned and remitted the matter to the TPO/AO for a fresh, proper transfer pricing study and ALP determination after giving the assessee opportunity to be heard. [Paras 6]

Orders of the lower authorities on determination of ALP are set aside and remitted to the TPO/AO for fresh transfer pricing study and re determination of ALP.

Service tax - procedural requirement before DRP - non representation of ground before DRP - Claim for deduction/consideration of service tax paid to Government treasury for A.Y.2012-13 - HELD THAT: - The Tribunal noted that the service tax contention was not raised before the Dispute Resolution Panel and was not taken as an additional ground before the DRP. Having not been ventilated at the DRP stage, the Tribunal declined to entertain the ground raised for the first time before it and dismissed the plea. [Paras 6]

The assessee's appeal on the service tax ground for A.Y.2012-13 is dismissed as not raised before the DRP.

Non pressing of grounds - Other grounds in the appeal which the assessee did not press - HELD THAT: - The Tribunal recorded that the assessee did not press other grounds enumerated in the appeal memo or revised grounds and did not make submissions in respect thereof. Accordingly, those grounds were treated as not pressed and dismissed. [Paras 7]

All other grounds for A.Y.2012-13 and A.Y.2013-14 are dismissed as not pressed.

Final Conclusion: Appeals are allowed in part for statistical purpose: transfer pricing adjustments relating to determination of ALP for A.Y.2012-13 and A.Y.2013-14 are set aside and remitted to the TPO/AO for fresh transfer pricing study and ALP determination after affording opportunity to the assessee; the service tax ground for A.Y.2012-13 is dismissed for not having been raised before the DRP; other unpressed grounds are dismissed.

Cost of acquisition - indexed cost of acquisition - inheritance of mortgaged property - discharge of mortgage as acquisition of mortgagee's interest - computation of long-term capital gains - Section 48 read with Section 55(2) - cost of acquisition on discharge of mortgage

Inheritance of mortgaged property - discharge of mortgage as acquisition of mortgagee's interest - cost of acquisition - Section 48 read with Section 55(2) - cost of acquisition on discharge of mortgage - Whether the amount applied to discharge the mortgage on a property inherited by the assessee can be treated as part of the cost of acquisition for computing long-term capital gains. - HELD THAT: - The Tribunal found that the assessee inherited the testator's interest in a mortgaged property and, by payment or by virtue of the purchaser's payment to the bank to clear the mortgage, acquired the mortgagee's interest. Relying on the reasoning approved by the Hon'ble Supreme Court in R.M. Arunachalam affirming the Gujarat High Court in CIT v. Daksha Ramanlal, the payment made for clearing the mortgage is to be regarded as cost of acquisition under Section 48 read with Section 55(2). The Tribunal held that the assessee could not inherit greater rights than the mortgagor had; consequently the heir's extinguishment or purchase of the mortgagee's interest amounts to acquisition of that interest and must be included in the cost base for computing capital gains. The CIT(A)'s contrary view, that the debt was the liability of another heir and therefore the discharge could not be treated as cost of acquisition, was rejected as inconsistent with the binding precedents which treat such payments as acquisition cost when the heir acquires the mortgagee's interest. [Paras 5]

Amount applied to discharge the mortgage on the inherited property is to be treated as part of the cost of acquisition and deducted in computing long-term capital gains.

Indexed cost of acquisition - computation of long-term capital gains - cost of acquisition - Whether indexation benefit for computing indexed cost of acquisition is to be reckoned from the year the previous owner acquired the asset (the father's acquisition) when the asset is inherited. - HELD THAT: - The Tribunal applied the explanatory provisions treating the period for which the previous owner held the asset as included in the period the assessee is deemed to have held it. Citing decisions including the Bombay High Court in CIT v. Manjula J. Shah and other High Court authorities, the Tribunal held that for the purpose of indexation the cost inflation index must be taken from the first year the asset was held by the previous owner rather than from the year the heir first held the asset. Consequently, the assessee is entitled to indexation from the date the father acquired the property, which, together with allowing the mortgage discharge as part of cost, eliminates any taxable capital gain in the facts of the case. [Paras 6]

Indexation for computing indexed cost of acquisition is to be taken from the year the previous owner first held the asset; the assessee is entitled to indexation based on the father's acquisition date.

Final Conclusion: The Tribunal allowed the appeal: the amount used to discharge the mortgage on the inherited flat is to be treated as part of the cost of acquisition and indexation is to be reckoned from the previous owner's acquisition date, resulting in no taxable long-term capital gain on the facts before the Tribunal.

Colourable device - genuineness of transaction - intra-group transactions - short term capital loss - set-off and carry forward of capital loss - commercial rationale - fiscal nullity - assessment of capital gains

Colourable device - genuineness of transaction - intra-group transactions - short term capital loss - set-off and carry forward of capital loss - commercial rationale - fiscal nullity - Whether the losses of Rs. 34,96,09,895/- on sale of shares of RPG group companies could be ignored as a colourable device and treated as fiscal nullity, or ought to be accepted for assessment and allowed to be set off and carried forward. - HELD THAT: - The Tribunal upheld the factual findings of the CIT(A) that the assessee's purchase and sale transactions during FY 2009-10 related to eight RPG group securities and that identical documentary evidence supported all transactions. The AO accepted as genuine intra group transactions that produced gains but disbelieved only those that produced losses; no material was produced to show the corresponding entries were not recorded by the counterparties or that consideration actually paid differed from books. The Tribunal found it unreasonable to infer a colourable device where (i) both gains and losses arose from intra group dealings under identical circumstances, (ii) the scale of loss was vastly disproportionate to any tax benefit available in the year of assessment, and (iii) almost 88% of the loss was never set off in later years and lapsed after demerger, undermining the hypothesis of tax avoidance motive. Reliance by the AO on precedents where the revenue established a scheme to create matching artificial losses (Killick Nixon Ltd., McDowell & Co. Ltd.) was held distinguishable on facts. Applying the principle that the full value of consideration is the price actually bargained and in absence of tangible material to impugn the transactions, the Tribunal found no justification to treat the transactions as fiscal nullity and agreed with CIT(A)'s direction to assess the loss and allow set off/carry forward as permissible. [Paras 6, 8, 10]

Loss of Rs. 34,96,09,895/- accepted as genuine; set off and carry forward to be allowed as directed by the CIT(A); AO's denial of loss as a colourable device rejected.

Final Conclusion: The revenue's appeal is dismissed; the order of the CIT(A) is upheld directing assessment of the short term capital loss and its allowance for set off and carry forward as permissible under law.

Deduction under section 35(1)(ii) - weighted deduction at 175% - recognition/approval of institution for purposes of section 35(1)(ii) at time of payment - Explanation to section 35(1)(ii) - subsequent withdrawal of approval not to deny deduction - statement recorded during survey insufficient to sustain disallowance - right to cross-examination where adverse statement affects claim

Deduction under section 35(1)(ii) - weighted deduction at 175% - recognition/approval of institution for purposes of section 35(1)(ii) at time of payment - Explanation to section 35(1)(ii) - subsequent withdrawal of approval not to deny deduction - Assessee entitled to weighted deduction claimed for donation where the recipient institution enjoyed statutory approval as on date of donation despite subsequent cancellation of that approval. - HELD THAT: - The Tribunal found that M/s. Herbicure Healthcare Bio-Herbal Research Foundation had the requisite approval/recognition for the purposes of clause (ii) of sub section (1) of section 35 at the time the assessee made the donation and produced the notification and renewal documents and bank receipts evidencing transfer and receipt. The statutory Explanation to section 35(1)(ii) expressly provides that deduction shall not be denied merely because approval was withdrawn subsequent to payment. Reliance on precedent and coordinate bench decisions affirmed that a retrospective cancellation of approval cannot defeat a valid claim where approval existed when payment was made. The AO's reliance on cancellation notifications issued later could not be countenanced and the Commissioner (Appeals) was correct in deleting the addition.

Addition disallowing the weighted deduction was deleted and the claim allowed.

Statement recorded during survey insufficient to sustain disallowance - right to cross-examination where adverse statement affects claim - AO could not sustain disallowance solely on the basis of statements recorded during survey without affording opportunity for cross examination and without independent evidence showing reimbursement of the donation. - HELD THAT: - The Tribunal observed that the sole basis for addition was a general statement recorded on oath during a survey at the recipient institution. Such survey statements, without corroborative material, cannot be the sole foundation for disallowance. Where an adverse statement of a third party affects an assessee, the assessing authority must summon the declarant and afford the assessee an opportunity to cross examine; failure to do so renders reliance on that statement impermissible. The subsequent confirmation by the institution that it received the donation and did not refund it removed the suspicion raised by the earlier survey statement. Consequently the addition could not be sustained.

Disallowance based solely on survey statements set aside; AO erred in not allowing cross examination and in relying exclusively on such statements.

Final Conclusion: The Tribunal dismissed the revenue's appeal for AY 2013-14, upholding the Commissioner (Appeals) order deleting the disallowance and allowing the weighted deduction claimed by the assessee.

Allowability of borrowing costs as part of inventory - deduction of interest as business expenditure - genuineness of transaction / sham transaction - precedential effect of the tribunal's own earlier orders

Allowability of borrowing costs as part of inventory - deduction of interest as business expenditure - genuineness of transaction / sham transaction - precedential effect of the tribunal's own earlier orders - Interest of Rs. 95,17,500/- debited to inventories/project work-in-progress in the return for AY 2012-13 is allowable as a business deduction. - HELD THAT: - The tribunal held that the payments made/payable by the assessee to the two erstwhile JV partners for relinquishment of their rights in the 50-acre MIDC allotment were held to be genuine in the tribunal's earlier common orders for preceding assessment years. The assessee was engaged in development of an IT Park and the project remained under construction in the year under consideration; the acquisition cost and related financing formed part of the carrying cost of inventories/project work-in-progress. The borrowings and the corresponding interest were principally for working capital and for acquiring the JV partners' interests, and the assessee consistently debited such interest to inventory. Applying and following the tribunal's prior findings in the assessee's own case that the underlying payments were genuine, the interest attributable to those borrowings could not be disallowed as arising from a sham transaction. For these reasons the disallowance made by the AO and confirmed by the CIT(A) was set aside and the interest debited to inventories was allowed as deductible business expenditure. [Paras 6, 7]

Disallowance deleted; interest of Rs. 95,17,500/- attributable to borrowings in respect of payments to the two erstwhile JV partners is allowed as deduction while computing business income for AY 2012-13.

Final Conclusion: Appeal allowed; the Tribunal, following its earlier orders in the assessee's own case, held the payments to the erstwhile JV partners to be genuine and allowed the interest debited to inventories as a business deduction for AY 2012-13.

Compensatory nature of payments versus penal character of statutory imposts - deductibility under section 37(1) (Explanation not attracted where payment is compensatory) - allowability of interest on delayed deposit of TDS as business expenditure under section 37(1) - remand for fresh consideration on admission of fresh evidence - scope of disallowance under section 14A read with Rule 8D - computation limited to investments yielding exempt income

Compensatory nature of payments versus penal character of statutory imposts - deductibility under section 37(1) (Explanation not attracted where payment is compensatory) - Deletion of addition in respect of railway 'punitive charges' of Rs. 6,55,30,392/- - HELD THAT: - The Tribunal upheld the CIT(A)'s deletion of the addition. It accepted that the so-called 'punitive charges' imposed by Railways for overloading of wagons are, on the material, compensatory/additional freight charges arising from lack of weightment infrastructure rather than penalties for breach of law. Having regard to authoritative decisions and a co-ordinate Bench ruling (Taurian Iron & Steel and related authorities), the payments were held to be commercial in nature and not expenditures incurred for an offence; consequently the Explanation to section 37(1) did not apply and the AO's disallowance was unsustainable. [Paras 5, 6]

Addition deleted; ground no.1 of revenue dismissed.

Allowability of interest on delayed deposit of TDS as business expenditure under section 37(1) - Deletion of addition/disallowance relating to interest on belated deposit of TDS of Rs. 77,176/- - HELD THAT: - The Tribunal agreed with the CIT(A) that interest on delayed payment of TDS is allowable under section 37(1). Relying on prior coordinate-bench reasoning and Supreme Court authorities recognizing interest on delayed statutory payments (eg. sales tax) as compensatory, the Tribunal held the principles extend to interest on delayed TDS (which represents tax of the payee) and the AO's disallowance was incorrect. [Paras 9, 10]

Addition/disallowance deleted; ground no.2 of revenue dismissed.

Remand for fresh consideration on admission of fresh evidence - Deletion of addition for undisclosed interest from CESC Ltd where CIT(A) accepted fresh evidence without seeking remand report - HELD THAT: - The Tribunal examined the factual matrix and found that the interest in question was paid/credited by CESC in March and adjusted in a subsequent electricity bill, producing an apparent claim across two assessment years. Noting the factual dispute and the need for verification, the Tribunal set aside the CIT(A)'s deletion (i.e., restored the AO's addition) and remitted the matter to the AO to reconsider the issue afresh after taking into account the assessee's submissions and evidence. [Paras 14, 15]

Matter remanded to AO for fresh consideration; grounds nos.3 & 4 allowed for statistical purposes.

Scope of disallowance under section 14A read with Rule 8D - computation limited to investments yielding exempt income - Validity of disallowance under section 14A r.w. rule 8D(2)(iii) of Rs. 63,31,460/- and direction to AO to recompute in terms of investments yielding exempt income - HELD THAT: - Applying and following the Calcutta High Court decision in REI Agro Ltd and the coordinate-bench reasoning, the Tribunal held that disallowance under section 14A read with Rule 8D must relate only to investments which have actually yielded exempt income. The AO's computation treating the entire corpus of investments (rather than the subset giving rise to exempt income) and failing to record requisite satisfaction was flawed. The CIT(A)'s direction to verify details and recompute in relation to investments yielding exempt income was upheld. [Paras 16, 17, 19, 20]

AO directed to recompute disallowance under Rule 8D(2)(iii) in accordance with holdings limiting scope to investments yielding exempt income; ground no.5 of revenue dismissed.

Procedural/general grounds requiring no adjudication - General ground raised by the revenue - HELD THAT: - The Tribunal recorded that the general ground did not require separate adjudication. [Paras 21]

General ground dismissed.

Final Conclusion: The revenue appeal is partly allowed for statistical purposes: additions relating to railway punitive charges and interest on delayed TDS are deleted; the CIT(A)'s deletion of the undisclosed interest from CESC is set aside and the issue is remanded to the AO for fresh consideration; the CIT(A)'s direction on recomputation under section 14A/Rule 8D(2)(iii) is upheld; the general ground is dismissed.

Prohibition on reopening assessments by virtue of the second proviso to section 12A(2) - retrospective application of registration under section 12AA and scope of the first proviso to section 12A(2) - directory nature of the audit-report requirement under section 12A(1)(b) - validity of reassessment under section 147/148 where exemption conditions under section 12A are not initially complied with

Prohibition on reopening assessments by virtue of the second proviso to section 12A(2) - validity of reassessment under section 147/148 - Whether reopening proceedings under section 147/148 for Assessment Year 2012-13 were barred by the second proviso to section 12A(2) in view of registration granted under section 12AA effective from Assessment Year 2013-14. - HELD THAT: - The Tribunal accepted that registration under section 12AA was granted effective from 01-04-2012 and applicable from Assessment Year 2013-14. The second proviso to section 12A(2) was intended to bar initiation of action under section 147 merely because a trust/institution was not registered for a preceding assessment year once registration is granted for a subsequent assessment year. The Revenue conceded that reopening was not defended on the sole ground of absence of registration but contended reopening was justified because the assessee had not complied with conditions of section 12A(1)(b). The Tribunal held that the proviso's bar on reopening for the preceding year applies notwithstanding other contentions, and that the Assessing Officer could not rely on absence of registration to reopen; since registration for the subsequent year had been granted, the second proviso precluded resort to section 147/148 to make the income of the preceding year taxable merely for non-registration. Applying this principle, the reassessment for AY 2012-13 was held invalid and set aside. [Paras 9, 11]

Reopening for AY 2012-13 under section 147/148 was barred by the second proviso to section 12A(2); reassessment set aside and addition deleted.

Directory nature of the audit-report requirement under section 12A(1)(b) - effect of delayed filing of return on eligibility for sections 11 and 12 - Whether the assessee's failure to file the return of income and the auditor's report within the original time blocked entitlement to exemption under sections 11 and 12 for Assessment Year 2012-13. - HELD THAT: - The Tribunal examined the conditions in section 12A(1)(a) and (b). It observed that the statute does not prescribe a specific due date for filing a return for the purpose of entitlement to exemption, and that the return in the present case was filed in response to the notice under section 148, thereby satisfying the return-filing requirement. As to the audit-report requirement of section 12A(1)(b), the Tribunal followed precedent and CBDT guidance treating the audit-report filing as a procedural directory requirement that can be cured by producing the report at a later stage on showing sufficient cause. Consequently, non-filing within the original period did not ipso facto disqualify the assessee from claiming exemption under sections 11 and 12; the CIT(A)'s reliance on non-compliance with section 12A(1)(b) as a ground to uphold reassessment was held unsustainable. [Paras 10, 11]

Delayed filing of the return (filed in response to section 148 notice) and the directory nature of the audit-report requirement did not bar the assessee from claiming exemption; the Revenue's contention based on non-compliance with section 12A(1)(b) was rejected.

Final Conclusion: The Tribunal allowed the appeal: the reassessment framed for Assessment Year 2012-13 under section 147/148 was invalidated as barred by the second proviso to section 12A(2) in view of registration granted for Assessment Year 2013-14, and the Revenue's alternative contention that non-compliance with section 12A(1)(b) justified reopening was rejected because the return was filed in response to the section 148 notice and the audit-report requirement is directory; accordingly the addition was deleted.

Penalty under Section 114(i) of the Customs Act, 1962 for omissions rendering goods liable for confiscation - Liability of company for acts of its director and booking agents - Requirement of evidence to establish active involvement or omission attracting penalty - Use of recovered material (rubber stamps, unaccounted cash) as corroborative evidence of complicity - Role of statements and admissions in sustaining adjudicatory findings

Penalty under Section 114(i) of the Customs Act, 1962 for omissions rendering goods liable for confiscation - Requirement of evidence to establish active involvement or omission attracting penalty - Whether the penalty imposed on M/s ICS Cargo under Section 114(i) was justified - HELD THAT: - The Adjudicating Authority imposed penalty on M/s ICS Cargo treating the firm as employer of the mastermind and holding it liable for omissions that rendered the goods liable for confiscation. The Tribunal found that the material relied upon, including statements of the mastermind, did not implicate M/s ICS Cargo in any omission or active role in stuffing or arranging the illegal export. In absence of evidence showing that the appellant committed or omitted an act which rendered the goods liable for confiscation, the imposition of penalty under Section 114(i) could not be sustained. [Paras 6]

Penalty imposed on M/s ICS Cargo set aside; appeal allowed.

Penalty under Section 114(i) of the Customs Act, 1962 for omissions rendering goods liable for confiscation - Liability of company for acts of its director and booking agents - Role of statements and admissions in sustaining adjudicatory findings - Whether the penalties imposed on Shri P. Praveen Kumar and M/s Dattar Shipping and Logistics Pvt. Ltd. under Section 114(i) were sustainable - HELD THAT: - The Adjudicating Authority's findings (noted in paragraph Nos. 30 and 37 of the OIO) show that Shri P. Praveen Kumar masterminded and advised various persons in effecting illegal export of red sander wood logs and, being director of M/s Dattar Shipping and Logistics, used the company to procure empty containers and facilitate the exports. The Tribunal found these findings of complicity and the documentary and testimonial material adequate to attract penalty under Section 114(i), and held that the penalty on both the individual and the company did not call for interference. [Paras 7]

Appeals of Shri P. Praveen Kumar and M/s Dattar Shipping and Logistics rejected; penalties sustained.

Penalty under Section 114(i) of the Customs Act, 1962 for omissions rendering goods liable for confiscation - Use of recovered material as corroborative evidence of complicity - Role of statements and admissions in sustaining adjudicatory findings - Whether the penalty imposed on Shri K. Pydi Raju under Section 114(i) was justified - HELD THAT: - The Adjudicating Authority found that Shri K. Pydi Raju acted as a facilitator, prepared forged export documents, arranged transport and received monetary consideration from the mastermind; further, unaccounted cash recovered during searches was regarded as corroborative of his involvement. The Tribunal upheld the Authority's conclusion that these materials established complicity and sustained the penalty. [Paras 8]

Appeal of Shri K. Pydi Raju rejected; penalty sustained.

Penalty under Section 114(i) of the Customs Act, 1962 for omissions rendering goods liable for confiscation - Use of recovered material (rubber stamps) as corroborative evidence of complicity - Requirement of evidence to establish active involvement or omission attracting penalty - Whether the penalty imposed on Shri K. Somasekhar under Section 114(i) was justified - HELD THAT: - The Adjudicating Authority recorded recovery of various rubber stamps of customs officers from Shri K. Somasekhar's residence and his admission regarding their presence; the Authority concluded there was no lawful explanation for possession of such stamps and inferred malafide intention and participation in fabricating documents for illegal export. The Tribunal agreed that the recovery and admissions constituted adequate corroboration of involvement and sustained the penalty imposed under Section 114(i). [Paras 9]

Appeal of Shri K. Somasekhar rejected; penalty sustained.

Final Conclusion: The Tribunal allowed the appeal of M/s ICS Cargo and set aside the penalty, while rejecting the appeals of Shri P. Praveen Kumar, M/s Dattar Shipping and Logistics Pvt. Ltd., Shri K. Pydi Raju and Shri K. Somasekhar, thereby sustaining the penalties imposed on those four appellants under Section 114(i) of the Customs Act, 1962.

Applicability of Plastic Waste (Management and Handling) Rules, 2011 to exports by 100% EOU - Violation of Rule 5(d) and Rule 5(g) of the Plastic Waste (Management and Handling) Rules, 2011 - Biodegradable plastic / Poly lactic acid (PLA) packaging as excluded from prohibited plastic - Re testing direction by first appellate authority and duty of adjudicating authority to comply - Confiscation and redemption fine/penalty in export consignments

Violation of Rule 5(d) and Rule 5(g) of the Plastic Waste (Management and Handling) Rules, 2011 - Biodegradable plastic / Poly lactic acid (PLA) packaging as excluded from prohibited plastic - Export goods packed in material found to be Poly Lactic Acid / co polymer (biodegradable) do not constitute violation of Rules 5(d) and 5(g) of the Plastic Waste (Management and Handling) Rules, 2011. - HELD THAT: - The record contains multiple laboratory reports, including from CIPET and the Customs laboratory, indicating that the packaging material contains Poly Lactic Acid / co polymer lactic acid which is starch based and biodegradable. The earlier test reports which merely recorded the presence of a plastic layer without specifying non biodegradable composition were held to be unclear. Given the conclusive identification of the plastic layer as PLA (a biodegradable material), the statutory prohibition envisaged by Rules 5(d) and 5(g) - directed at non biodegradable/plastic waste - is not attracted. The Tribunal held that, on these facts, the goods could not be treated as contravening the cited Rules and therefore were not liable to confiscation on that ground.

Finding of violation of Rules 5(d) and 5(g) set aside insofar as the packaging is PLA/biodegradable; export not in breach of those Rules.

Re testing direction by first appellate authority and duty of adjudicating authority to comply - Adjudicating authority was bound to implement the Commissioner (Appeals)'s direction for appropriate re testing and could not reopen the core question contrary to that direction. - HELD THAT: - The Commissioner (Appeals) had remanded the matter for re testing by an appropriate laboratory expressly to determine whether the plastic present was biodegradable PLA. The subsequent definitive report from the Customs laboratory (Kandla) established that the plastic layer was PLA / co polymer lactic acid. The adjudicating authority nevertheless persisted in upholding the earlier view that the Rules were violated irrespective of the plastic's nature. The Tribunal held that such course was in defiance of the appellate direction: once re testing confirmed biodegradable composition, the mandated consequence was that Rules 5(d) and 5(g) would not apply.

Adjudicating authority's refusal to give effect to the remand direction and its reiteration of the original finding was incorrect; the remit required acceptance of re test results.

Applicability of Plastic Waste (Management and Handling) Rules, 2011 to exports by 100% EOU - Confiscation and redemption fine/penalty in export consignments - Supreme Court precedent recognizing exemption for 100% EOUs exporting goods (not cleared for domestic market) reinforces that the Plastic Waste Rules do not apply to such exported consignments; accordingly confiscation and allied penalties are not sustainable. - HELD THAT: - The Tribunal relied on the Supreme Court's decisions (including the appellant's earlier matter and Baba Global / related orders) which granted parity and directed that 100% EOUs exporting pan masala, gutkha and similar products and not releasing them in the domestic market are to be exempted from the operation of the 2011 Rules. That principle, together with the factual finding that the packing material was biodegradable PLA, led to the conclusion that confiscation, redemption fine and the penalties imposed could not be sustained in respect of the exported consignments.

Supreme Court precedent applies; confiscation, redemption fine and penalties in respect of the export consignments are not maintainable.

Final Conclusion: The Tribunal set aside the impugned order: on re testing the packaging was found to be Poly Lactic Acid / co polymer (biodegradable), the adjudicating authority erred in disregarding the remand direction, and Supreme Court precedents support exemption of 100% EOUs exporting goods; accordingly the consignments are not liable to confiscation and the appeals are allowed.

Refund of additional duty of customs - time bar/limitation period imposed by notification - applicability of Section 27 to additional duty (SAD) cases - subordinate legislation cannot create substantive limitation - reading down of notification imposing limitation

Refund of additional duty of customs - time bar/limitation period imposed by notification - applicability of Section 27 to additional duty (SAD) cases - subordinate legislation cannot create substantive limitation - reading down of notification imposing limitation - Whether the refund claim for additional duty of customs was barred by the one year limitation introduced by the notification, or whether the notification imposing the limitation must be read down and the refund allowed. - HELD THAT: - The Tribunal found that Notification No. 102/2007 as amended by Notification No. 93/2008 exempts additional duty of customs when goods are imported for subsequent sale and that the appellants filed the refund claim within one year from the date of subsequent sale. Relying on the decision of the High Court of Delhi in Sony India Pvt. Ltd. v. CC, New Delhi, the Tribunal accepted that the one year limitation introduced by the subordinate notification could not, by itself, impose a substantive period of limitation where the parent enactment (Section 27) did not make such a limitation applicable to SAD cases. The Tribunal noted the principle that essential legislative policy matters, including limitation periods affecting substantive rights, cannot be prescribed by subordinate legislation and that the amending notification must be read down to the extent it purports to impose such a limitation. Applying that ratio, the Tribunal concluded that the time limitation under the notification did not operate to bar the appellants' refund claim and that the impugned rejection on limitation grounds was unsustainable.

The impugned order rejecting the refund on limitation grounds is set aside; the appeal is allowed and the refund claim is to be granted in accordance with the foregoing reasoning.

Final Conclusion: The Tribunal, following the High Court of Delhi's ratio in Sony India Pvt. Ltd., held that the notification could not impose a substantive one year limitation on refunds of additional duty (SAD) by subordinate legislation; the impugned order is set aside and the appellants' refund claim is allowed with consequential relief.

Mis-declaration of imported goods - denial of exemption under the Advance Authorization Scheme - confiscation of imported goods - appropriation of duty collected on provisional release - maintenance of administrative adjudication on sampling and laboratory test evidence

Mis-declaration of imported goods - denial of exemption under the Advance Authorization Scheme - Validity of denial of benefit of Notification No.93/2004-Cus (Advance Authorization Scheme) on the ground of alleged mis-declaration of imported goods. - HELD THAT: - The appellants declared the consignment as '304 Solid S.S. Melting Scrap' claiming exemption under Notification No.93/2004-Cus. On examination representative samples were drawn and tested at the Central Revenue Control Laboratory, which showed that drums contained Nickel Oxide (41.1% Ni) and the mixed lot comprised various materials including Nickel Briquette and stainless steel scraps of different grades. The Commissioner adjudicated that the imported goods were not as declared and denied the exemption. The Tribunal considered the appellant's contention that the foreign supplier had blended materials and that the packing/listing omissions were bona fide, but found no material or legal ground to displace the adjudicatory finding based on sample testing. The Tribunal thus sustained the conclusion that the consignment was not in accordance with the declaration and that exemption could not be allowed. [Paras 5]

Denial of exemption under Notification No.93/2004-Cus upheld.

Confiscation of imported goods - appropriation of duty collected on provisional release - Validity of confiscation, imposition of fine in lieu of confiscation, and appropriation of duty collected at provisional release. - HELD THAT: - Following the finding of mis-declaration and denial of exemption, the Original Authority ordered confiscation of the imported goods, imposed a fine in lieu of confiscation, and appropriated the duty collected at provisional release. The Tribunal examined the appellant's submissions challenging these sanctions but found no arguable error in the authority's adjudication. There being no persuasive ground to overturn the factual and legal conclusions drawn from the laboratory report and related proceedings, the Tribunal declined to interfere with the penalties and appropriation ordered by the Commissioner. [Paras 5, 6]

Confiscation, fine in lieu of confiscation, and appropriation of duty affirmed.

Final Conclusion: The appeal is dismissed; the impugned adjudication denying exemption, ordering confiscation (with fine in lieu thereof) and appropriating duty collected on provisional release is upheld.

Classification of imported goods - pre-shipment inspection certificate - intended use of import consignment for melting - valuation redetermination - confiscation and redemption fine - restoration of self-assessed duty

Classification of imported goods - pre-shipment inspection certificate - intended use of import consignment for melting - Whether the Original authority's change of classification of the imported consignment from heavy melting scrap to chapter sub-headings 7208/7209 was sustainable. - HELD THAT: - The Tribunal noted that the consignment was described as Heavy Melting Scrap in the country of export and that the Pre-shipment Inspection Certificate corroborated that description. The Original authority had accepted that the imported goods were intended to be consumed for melting. In view of the export description, the inspection certificate and the accepted intended use, the Tribunal found no basis for altering the classification claimed by the importer. Consequently the classification change effected by the Original authority was held to be unsustainable. [Paras 5]

The classification altered by the Original authority is set aside and the original classification as heavy melting scrap is restored.

Valuation redetermination - classification of imported goods - restoration of self-assessed duty - Whether the matter should be remanded to the Original authority for re-determination of value following the change in classification. - HELD THAT: - Revenue contended that because classification was changed the value should have been enhanced and sought remand for re-determination. The Tribunal held that once the change of classification is not sustainable and the original classification is restored, there is no basis for redetermination of value linked to the impugned classification. Accordingly, the consequence urged by revenue - remand for valuation - did not arise. [Paras 5]

The prayer for remand to re-determine value is rejected and no re-determination of value is ordered.

Confiscation and redemption fine - restoration of self-assessed duty - Whether the confiscation of the goods, the redemption fine and the additional duty/fine imposed in the impugned order should be sustained. - HELD THAT: - The impugned order confiscated the goods, imposed a redemption fine and altered duty liability by changing classification. Having set aside the classification change and restored the self-assessed classification and rate of duty, the Tribunal found no merit in the confiscation, redemption fine and other penalties imposed consequent to the unsustained classification. The Tribunal therefore set aside the impugned order and restored duty as declared by the importer. [Paras 5]

The confiscation, redemption fine and consequential alteration of duty are set aside; self-assessed classification, rate of duty and duty payable are restored.

Final Conclusion: The appeal of the importer is allowed and the appeal filed by revenue is dismissed; the Original authority's order is set aside, classification and duty as per self-assessment are restored and no remand for valuation is ordered.

Interest on delayed payment of service tax - limitation for recovery of interest - applicability of limitation for principal to interest (ratio in T.V.S. Whirlpool) - extended period for recovery in case of fraud, collusion or willful mis-statement - time-bar

Interest on delayed payment of service tax - limitation for recovery of interest - applicability of limitation for principal to interest (ratio in T.V.S. Whirlpool) - extended period for recovery in case of fraud, collusion or willful mis-statement - Demand of interest on delayed payment of service tax whether sustainable or time-barred. - HELD THAT: - The service tax statute does not itself prescribe a time limit for demanding interest on delayed payments. The Supreme Court in T.V.S. Whirlpool held that where no separate limitation for interest exists, the period of limitation applicable to the principal amount applies equally to the claim for interest. The Tribunal has followed that ratio in earlier decisions. In the present case, the Department's show cause notice contains no allegation or evidence of fraud, collusion, willful mis-statement or similar factors that would invoke the extended period for recovery. Absent such elements and given the governing ratio that limitation for the principal applies to interest, the Department's demand for interest is time-barred and cannot be sustained.

Demand of interest on the delayed payment of service tax is set aside as time-barred in the absence of any allegation or proof justifying invocation of the extended period.

Final Conclusion: The appeal is allowed and the impugned order insofar as it demands interest on delayed payment of service tax is set aside for being time-barred; no remand is made.

Limitation period for demand of interest - requirement of intimation before issuing show cause notice under Section 73(3) - application of principle that limitation for principal applies equally to interest - absence of mens rea or suppression disentitling revenue to extended demand

Limitation period for demand of interest - application of principle that limitation for principal applies equally to interest - Demand of interest for the period 01.06.2008 to 30.09.2011 is time-barred and cannot be confirmed. - HELD THAT: - The Tribunal applied the principle that the period of limitation applicable to a claim for the principal amount should also apply to the claim for interest thereon. On the material produced it was found that the assessee had paid the principal liability by instalments and thereafter the balance was paid; there was no evidence of suppression or mis-statement with intent to evade tax. In these circumstances the extended period for demanding interest could not be invoked and the demand of interest issued by show cause notice dated 24.08.2016 was held to be barred by limitation. [Paras 6]

Demand of interest for 01.06.2008 to 30.09.2011 disallowed as time barred; interest confirmed by lower authorities set aside.

Requirement of intimation before issuing show cause notice under Section 73(3) - absence of mens rea or suppression disentitling revenue to extended demand - Revenue failed to comply with the requirement to intimate interest liability before issuing the show cause notice, and there was no material showing concealment or intent to evade tax. - HELD THAT: - The Tribunal observed that after receipt of the assessee's intimation of payments the department ought to have determined and communicated the interest payable and, only upon non-payment, issue a show cause notice within the statutory window. There is no record that any such intimation was sent. Further, the record lacks any ingredient of suppression or mala fide conduct by the assessee that would disentitle it to benefit of the normal limitation rules. In view of these procedural omissions and absence of culpable conduct, confirmation of interest was not justified. [Paras 5]

Show cause notice issued without prior intimation was procedurally defective and the interest demand could not be sustained.

Final Conclusion: Impugned order confirming interest is set aside; appeal allowed and consequential relief, if any, granted in favour of the appellant.

Commercial training or coaching services - intellectual property rights services - CENVAT credit-procedural non-compliance versus substantive entitlement - burden of proof on Revenue for classification and value - precedential effect of Tribunal's earlier decision in appellant's own case

Commercial training or coaching services - precedential effect of Tribunal's earlier decision in appellant's own case - Service tax demand under the category 'commercial training or coaching service' set aside. - HELD THAT: - The Tribunal held that the question was squarely covered by its earlier decision in the appellant's own case for an earlier period and that there was no change in facts or law for the present periods. The Appellant provided training as an approved institute under the Insurance Regulatory and Development Authority Regulations and issued course-completion certificates which carried recognition under the Insurance Act/Regulations; such certificates fell within the exclusion for institutes issuing certificates or diplomas recognized by law and therefore outside the ambit of 'commercial training or coaching'. The Revenue did not demonstrate that the earlier Tribunal decision had been appealed successfully or stayed by a higher forum, and no contrary evidence was produced to displace the precedent. For these reasons the demand in this category was quashed. [Paras 2, 4, 10]

Demand under 'commercial training or coaching service' set aside in favour of the appellant.

Intellectual property rights services - burden of proof on Revenue for classification and value - Service tax demand asserted as import/receipt of 'intellectual property rights services' set aside for want of consideration and proof. - HELD THAT: - The Tribunal found that the onus lay on the Revenue to establish that a taxable IPR service was received and to prove the consideration attributable to such service. The agreement and record showed that IPR was licensed free of charge and that payments made to the foreign supplier pertained to a sale/transfer of modules or were otherwise not established as consideration for IPR services chargeable as such. Absent evidence of consideration for a service falling within the IPR definition, the Department failed to make out its case for levy of service tax under that category. [Paras 3, 10]

Demand under 'intellectual property rights services' quashed for lack of consideration and failure of the Revenue to prove taxable service.

CENVAT credit-procedural non-compliance versus substantive entitlement - Denial of CENVAT credit was held to be incorrect and credit was allowed. - HELD THAT: - The Tribunal recorded that denial of credit was founded on procedural defects (invoices bearing the earlier name or address and credits claimed for non-registered branches), whereas the Department did not dispute that the services were received and used by the appellant. The name change resulted from High Court permission and vendors continued to issue invoices in the earlier name; all particulars required under the Cenvat Credit Rules were present. Applying the settled principle that substantive benefit of credit cannot be denied merely for procedural lapses, the Tribunal held the Commissioner erred in denying the CENVAT credit. [Paras 4, 10]

Cenvat credit wrongly denied; credit allowed in favour of the appellant.

Final Conclusion: The appeal is allowed: service tax demands under 'commercial training or coaching services' and 'intellectual property rights services' are set aside, CENVAT credit denial is reversed and penalties are vacated; the Tribunal left the question of limitation open while granting relief on merits.

Interpretation of levy of service tax on Renting of Immovable Property Service - taxability of rent received after 01.06.2007 for period prior to 01.06.2007 - abatement for property tax paid - penalty under Section 78 of the Finance Act, 1994

Abatement for property tax paid - Claim for abatement of property tax paid for the period 2008-09 remanded to the adjudicating authority for fresh consideration. - HELD THAT: - The appellants pleaded that property tax paid for 2008-09 should have been allowed as abatement but the adjudicating authority did not consider this plea despite evidence. The Tribunal found that this contention requires verification and fresh consideration by the adjudicating authority and therefore remanded the issue for re-examination. [Paras 5, 7]

Remanded to adjudicating authority to consider and decide the claim for abatement of property tax paid for 2008-09.

Taxability of rent received after 01.06.2007 for period prior to 01.06.2007 - Question whether rent dues relating to periods prior to 01.06.2007 but received in 2011-12 were rightly included in the demand remanded for verification. - HELD THAT: - The appellants contended that amounts received in 2011-12 which related to rent for periods prior to 01.06.2007 could not be subjected to service tax. The Tribunal observed that inclusion of such receipts in the demand requires factual and legal verification by the adjudicating authority and accordingly remanded the matter for fresh consideration. [Paras 2, 5, 7]

Remanded to adjudicating authority to verify whether rents relating to periods prior to 01.06.2007 but received later were wrongly included in the demand.

Interpretation of levy of service tax on Renting of Immovable Property Service - penalty under Section 78 of the Finance Act, 1994 - Validity of penalty under Section 78 in respect of Renting of Immovable Property Service set aside. - HELD THAT: - The Tribunal noted that the question whether renting of immovable property attracts service tax was an interpretational issue then sub judice before the Supreme Court and litigated in various fora, including by tenants. Given the contentious and unsettled nature of the legal position during the relevant period, imposition of penalty under Section 78 was held unsustainable. Consequently the Tribunal quashed the penalty imposed by the authorities. [Paras 6, 7]

Penalty imposed under Section 78 of the Finance Act, 1994 is set aside.

Final Conclusion: The appeal is partly allowed and partly remanded: the penalty under Section 78 is set aside; the matters of abatement of property tax for 2008-09 and inclusion of pre-01.06.2007 rent receipts are remitted to the adjudicating authority for fresh consideration, with consequential reliefs, if any.

Rebate of service tax on services received by an exporter and used for export - scope of services used beyond the place of removal - interpretation and retrospective effect of legislative amendment - deeming provision validating past actions as if amended notification had been in force

Rebate of service tax on services received by an exporter and used for export - scope of services used beyond the place of removal - Refund of service tax paid on Custom House Agent (CHA) services used in connection with export where services were rendered beyond the place of removal - HELD THAT: - The Tribunal examined the claim for refund of service tax paid on CHA services utilised for export of goods and rejected Revenue's contention that refund is not allowable because CHA expenses were incurred beyond the place of removal (Krishnapattinam/Chennai Port). The Tribunal found that the question is no longer res integra in view of earlier decisions of the Tribunal and that the statutory amendment effected subsequently has finally resolved the controversy. Having regard to the amendment and the judicial position, the adjudicating authority's sanction of refund was restored and the Commissioner (Appeals) order setting aside that sanction was held to be incorrect.

Order-in-Original sanctioning the refund is upheld and the appeal is allowed.

Interpretation and retrospective effect of legislative amendment - deeming provision validating past actions as if amended notification had been in force - Effect of the amendment made by the Finance Act, 2016 (Tenth Schedule) to the notification granting rebate and its retrospective operation for claims falling within the specified period - HELD THAT: - The Tribunal relied on the Finance Act, 2016 amendment which substituted the Explanation to the notification so as to treat taxable services used beyond the factory or place of production as qualifying for rebate, and which contained a deeming clause declaring the amendment to operate retrospectively for the period specified. The amendment was treated as having removed the legal impediment urged by Revenue and as validating prior actions; consequently, rebates denied earlier but covered by the retrospective amendment fall within the entitlement recognised by the statute. The Tribunal applied that retrospective deeming and allowed the appellant's claim.

Retrospective amendment is applicable and validates entitlement to rebate for the period in question; the impugned appellate order is set aside.

Final Conclusion: The Commissioner (Appeals) order setting aside the refund sanction was quashed; the Order in Original granting refund of service tax on CHA services for January 2014 to October 2014 is restored in view of Tribunal precedents and the retrospective amendment effected by the Finance Act, 2016.

Renting of Immovable Property Service - Explanation 1 to Section 65(105)(zzz) - exclusion of buildings used for accommodation including hotels - license to run, conduct and operate - consideration linked to turnover - predominance test - limitation - delay in issuance of SCN despite prior disclosures

Renting of Immovable Property Service - Explanation 1 to Section 65(105)(zzz) - exclusion of buildings used for accommodation including hotels - license to run, conduct and operate - consideration linked to turnover - License fee received by the appellant for permitting IHCL to run, conduct and operate the hotel does not constitute "Renting of Immovable Property Service" taxable under the Finance Act, 1994. - HELD THAT: - The agreement between the appellant and IHCL granted a licence to run, conduct and operate the hotel together with related facilities and business appurtenant thereto, not a simple grant of possession of immovable property for fixed rent. The consideration was a percentage of annual sales (dynamic and linked to turnover) rather than a fixed rent, and the arrangement encompassed employees, goodwill and other business paraphernalia. On a true construction of the exclusion in Explanation 1 (sub-clause (d)) to the definition of immovable property, buildings used for accommodation including hotels fall outside the taxable ambit of "renting of immovable property". The Tribunal's reasoning in earlier decisions involving similar IHCL license agreements (including Jai Mahal Hotels and subsequent consistent authorities) supports that such licence arrangements are business contracts outside the renting entry. Applying that analysis, the licence fee here is not within the taxable entry of renting of immovable property. [Paras 5]

Transaction held not to be liable to service tax as "Renting of Immovable Property Service"; demand set aside on merits.

Limitation - delay in issuance of SCN despite prior disclosures - Proceedings are time-barred because requisite information and copies of the agreement were furnished to the department in 2005-2006 but the SCN was issued only in 2014. - HELD THAT: - Verifications and requests for information were initiated in November 2005 and the erstwhile owner (SIHL) supplied the requested details, including copies of the agreement, by letters dated 15.12.2005 and 26.06.2006. Despite those disclosures, the department delayed issuing the show cause notice until 17.03.2014. Given the prior supply of material information, the impugned proceedings are hit by limitation. [Paras 5, 6]

Proceedings held time-barred; demand and consequential penalties cannot be sustained.

Final Conclusion: Appeal allowed: the licence arrangement to run and operate the hotel was not a taxable "Renting of Immovable Property Service" and, in any event, the proceedings were barred by limitation; the impugned demand and penalties are set aside with consequential relief as per law.

Taxation of services provided from outside India and received in India - Commercial training or coaching services - Rule 3(2) of the Taxation of Service (Provided from outside India and received in India) Rules, 2006 - Reverse charge - Cenvat credit and Revenue neutrality - Penalty under Sections 76 and 78 (penal provisions) - Section 80 - mitigation of penalty where duty paid

Commercial training or coaching services - Rule 3(2) of the Taxation of Service (Provided from outside India and received in India) Rules, 2006 - Taxation of services provided from outside India and received in India - Liability to service tax on training services performed wholly outside India classified as Commercial training or coaching services under Section 65(105)(zzc). - HELD THAT: - The Tribunal found that services falling under Section 65(105)(zzc) are governed by Rule 3(2) of the Taxation of Service (Provided from outside India and received in India) Rules, 2006, which makes such services taxable only when performed in India. It was not in dispute that the training in question was performed entirely outside India. Applying the Rule, the Tribunal held there could be no service tax liability on the training provided abroad and accordingly allowed the appeal on this count. [Paras 6]

No service tax is leviable on the training services performed wholly outside India; appeal allowed on this point.

Penalty under Sections 76 and 78 (penal provisions) - Section 80 - mitigation of penalty where duty paid - Cenvat credit and Revenue neutrality - Reverse charge - Validity of penalties imposed under Sections 76 and 78 in respect of services for which tax was paid and Cenvat credit availed, and whether mitigation under Section 80 is appropriate. - HELD THAT: - The appellant did not contest liability on merit for the services in serial numbers 1 and 2 and had paid the tax and availed Cenvat credit; the Cenvat credit claimed was not challenged by the Department. The Tribunal noted the appellant's bona fide position and that the situation rendered the demand revenue neutral. In exercise of powers under Section 80 of the Finance Act, 1994, the Tribunal set aside the penalties imposed under Sections 76 and 78 in respect of those items. [Paras 7]

Penalties under Sections 76 and 78 set aside under Section 80; appeal partly allowed to that extent.

Final Conclusion: The appeal is allowed insofar as service tax was demanded on commercial training performed wholly outside India (no tax liability). Penalties under Sections 76 and 78 in respect of the admitted/paid items are set aside under Section 80; the appeal is otherwise partly allowed.

Pre-deposit requirement under Section 35F - computation of pre-deposit for second appeal inclusive of first appeal deposit - refund of excess pre-deposit - binding effect of High Court precedent on pre-deposit computation - administrative clarification on refund procedure

Pre-deposit requirement under Section 35F - computation of pre-deposit for second appeal inclusive of first appeal deposit - binding effect of High Court precedent on pre-deposit computation - Appellant was liable to pre-deposit only 10% of the disputed demand for filing the appeal before the Tribunal, the amount being inclusive of the 7.5% pre-deposit earlier made for the first appeal. - HELD THAT: - The Tribunal applied the legal principle that, for filing a second appeal under Section 35F, the total pre-deposit required is 10% of the disputed demand and that this 10% is inclusive of any 7.5% pre-deposit already deposited for the first appeal. The Tribunal relied on the Delhi High Court decision in M/s Santani Sales Organization v. CESTAT, which directed that the 10% deposit for filing the second appeal would not be in addition to the 7.5% earlier deposited. Applying that ratio to the facts, the appellant's aggregate pre-deposit of 17.5% exceeded the statutory requirement of 10%, and therefore the impugned order upholding recovery based on the excess deposit was unsustainable.

Impugned order set aside insofar as it treated the Tribunal pre-deposit as additional to the earlier deposit; only 10% in aggregate was required.

Refund of excess pre-deposit - administrative clarification on refund procedure - Refund of the excess pre-deposit (the 7.5% paid earlier) was permissible and the original authority correctly allowed the refund. - HELD THAT: - The Tribunal observed that the original authority had correctly granted refund of the excess 7.5% pre-deposit once it was established that the aggregate pre-deposit requirement was 10%. The Tribunal also noted the Board's circular clarifying that refund of pre-deposit need not be processed under the refund provisions of Section 11B of the Central Excise Act, supporting administrative facilitation of such refunds. On this basis, the recovery order directing recovery of the refunded amount was found to be unjustified.

Refund of the excess pre-deposit upheld; recovery ordered by the appellate authority set aside.

Final Conclusion: Appeal allowed; impugned order set aside insofar as it failed to recognise that the 10% pre-deposit for Tribunal appeal is inclusive of the 7.5% deposited for the first appeal and insofar as it ordered recovery of the excess pre-deposit; consequential relief granted.

Penalty under service tax - reverse charge mechanism - bona fide belief - payment with interest as mitigating factor - absence of mala fide

Penalty under service tax - reverse charge mechanism - bona fide belief - payment with interest as mitigating factor - absence of mala fide - Validity of penalty imposed for failure to discharge service tax liability on reverse charge basis for services received - HELD THAT: - The Tribunal accepted that the appellant was liable to discharge service tax on reverse charge for Security Agency Services and Legal Consultancy Services received. However, the appellant held a bona fide belief regarding its liability, had reflected receipt of those services in statutory records which were audited, and upon audit objection immediately discharged the tax liability along with interest. The payment of interest was treated as having a penal character and, viewed with the other circumstances, demonstrated absence of mala fide. In these circumstances the imposition of penalty by the Commissioner(Appeals) was not warranted and the original adjudicating authority's order (which had confirmed tax but not imposed penalty) was to be restored. [Paras 4]

Penalty imposed by Commissioner(Appeals) set aside; appeal allowed and original adjudicating authority's order restored.

Final Conclusion: The Tribunal allowed the appeal, set aside the penalty imposed by Commissioner(Appeals) and restored the adjudicating authority's order on the ground that the appellant had a bona fide belief, had disclosed the transactions in statutory records, and had discharged the tax with interest on audit detection, showing absence of mala fide.

Maintenance or repair - reconditioning - service tax - extended period of limitation - disclosure in statutory returns / absence of malafide

Maintenance or repair - reconditioning - service tax - Re-conditioning of old and worn out sugar mills rollers is taxable under the category of maintenance or repair only with effect from 16.06.2005 and not for the earlier period. - HELD THAT: - The Tribunal applied the contemporaneous clarification of the Ministry and the earlier decision in M/s. Jagat Machinery Pvt. Ltd., holding that reconditioning of rollers attracts service tax only from 16.06.2005 when reconditioning was expressly brought within the taxable scope of maintenance or repair. The present activity of re-shelling/re-conditioning falls within the same factual and legal matrix as in Jagat Machinery and the ratio of that decision is held fully applicable. Consequently, activities carried out prior to 16.06.2005 do not fall within the taxable ambit of the maintenance or repair service-entry relied upon by the Department. [Paras 6]

Demand of service tax for the period prior to 16.06.2005 is not sustainable.

Extended period of limitation - disclosure in statutory returns / absence of malafide - Extended period of limitation under the proviso cannot be invoked where the assessee had disclosed the relevant activity in statutory returns and no malafide is shown. - HELD THAT: - The Tribunal examined the limitation plea and noted that the appellant, being an excisable unit, had reflected excisable and non-excisable items including the re-conditioned shells in returns filed with the Central Excise Authorities. On that basis the Tribunal concluded that the relevant facts were placed before the Department and no mala fide or suppression could be attributed to the appellant to warrant invocation of the extended period. The decision in Jagat Machinery on limitation was followed, and the adjudicating authority's invocation of extended limitation was set aside. [Paras 7]

Invocation of extended period of limitation is not justified; demand is time-barred.

Final Conclusion: Impugned orders confirming service tax demand, interest and penalty are set aside; the appeal is allowed both on merits (taxability prior to 16.06.2005) and on limitation grounds.

Manufacturing activity - job work - service tax liability for management, maintenance or repair services - exemption under Notification No.214/1986-CE - use of principal's plant and machinery

Manufacturing activity - job work - service tax liability for management, maintenance or repair services - exemption under Notification No.214/1986-CE - use of principal's plant and machinery - The activity performed by the appellants-operation and maintenance of the principal's plant to produce crumb rubber modified bitumen-was a manufacturing activity and not a taxable management, maintenance or repair service. - HELD THAT: - The appellants were engaged to operate and maintain the Indian Oil Corporation's plant within the refinery premises for production of crumb rubber modified bitumen. The Tribunal accepted that the process amounted to manufacture and observed that where job work is carried out within the premises of the principal, the exemption mechanism under Notification No.214/1986-CE (permitting removal without payment of duty when the job worker's premises are away from the principal) is inapplicable; non-availment of that notification therefore does not convert the activity into a taxable service. The Tribunal relied on its precedents holding that where an activity is a manufacturing activity carried out using the principal's plant and machinery, no service tax liability for maintenance/operation arises (citing M/s Jubilant Industries Ltd. and M/s CMS (I) Operations & Maintenance Co. P. Ltd.). Applying that principle, the operation and maintenance performed by the appellants constituted manufacture/job work and not a management/maintenance/repair service chargeable to service tax. [Paras 4, 5]

Impugned order confirming service tax demand set aside; appeal allowed with consequential relief.

Final Conclusion: The Tribunal held that the appellant's operation of the principal's plant within the principal's premises amounted to manufacture/job work and not a taxable management, maintenance or repair service; the service tax demand was therefore set aside and the appeal allowed.

Valuation of taxable services - inclusion of cost of parts and consumables in service value - maintenance and repair services - taxability of incentives from principal - business auxiliary services

Maintenance and repair services - inclusion of cost of parts and consumables in service value - valuation of taxable services - Cost of spare parts, lubricants and similar items used during repair/maintenance are not required to be added to the value of the maintenance and repair services for the purpose of service tax. - HELD THAT: - The Tribunal examined demands raised on the appellant by treating separately billed spare parts, accessories and lubricants used in the course of maintenance and repair as part of the value of taxable services. Relying upon its earlier decisions, the Bench held that the value of parts consumed or supplied in the course of repair does not represent the value of the service so as to attract addition to the taxable service value. The Tribunal therefore concluded that the show-cause proceedings and confirmed demand on this basis were not sustainable and should be set aside. [Paras 3, 4]

The addition of the cost of spare parts and consumables to the value of repair/maintenance services is not warranted; the demand on this ground is set aside.

Taxability of incentives from principal - business auxiliary services - valuation of taxable services - Incentives, discounts or awards received by the dealer from the principal for achieving targeted sales do not form part of the value of services as 'business auxiliary services' and are not exigible to service tax on that basis. - HELD THAT: - Revenue treated incentives paid by the principal as consideration for 'business auxiliary services' provided by the appellant and confirmed service tax demands accordingly. The Tribunal, following precedent, adjudged that such incentives paid by the principal on achievement of sales targets do not constitute taxable consideration for business auxiliary services rendered by the dealer. Consequently, the demands confirmed on this ground were found unsustainable and directed to be set aside. [Paras 3, 4]

Incentives/awards from the principal for achieving targeted sales are not includible in the value of services as business auxiliary services; the demand on this ground is set aside.

Final Conclusion: Both the additions-(a) inclusion of cost of spare parts/consumables in the value of maintenance and repair services, and (b) inclusion of incentives from the principal as consideration for business auxiliary services-were held not sustainable. The impugned order is set aside and the appeal is allowed.

Leviability of service tax on construction services - Definition of residential complex service as applicable at time of transaction - Exemption for construction of road, drainage and sewer lines - Welfare housing schemes and taxability of units not intended for sale - Remand for fresh consideration with opportunity of hearing

Leviability of service tax on construction services - Welfare housing schemes and taxability of units not intended for sale - Definition of residential complex service as applicable at time of transaction - Exemption for construction of road, drainage and sewer lines - Whether the demands of service tax and penalties confirmed by the Original Authority require fresh adjudication in view of this Tribunal's earlier decision and the definitions/exemptions applicable at the time of the transactions. - HELD THAT: - The Tribunal observed that part of the confirmed demand relates to construction of residential units under a welfare scheme (Manyawar Kashiram Yojna) where the units were not for sale but intended to be made available to the weaker sections; reliance was placed on this Tribunal's earlier final order in Commissioner of Customs, C. EX. & S.T., Allahabad vs. Ganesh Yadav. Other portions of the demand concern (i) construction of a residential complex on land owned by the builder where sale was effected prior to 31.03.2010 - i.e., before the Explanation was inserted to the definition of residential complex service - and (ii) construction of road, drainage and sewer lines which fall under exemption. In view of these distinctions and the need to apply the definition and exemptions as they stood at the time of the transactions, the Tribunal considered it appropriate to remit the matter to the Original Authority for a reasoned re-examination of leviability, taking into account the said decision of this Tribunal, the definition of residential complex service applicable during the transactions, and the exemption for construction of road, drainage and sewer lines. The appellant is to be afforded an opportunity of hearing. All other issues were kept open for determination by the Authority. [Paras 3]

Impugned order set aside and matter remanded to the Original Authority to pass a reasoned order in terms of the directions; appellant to be heard; all issues kept open.

Final Conclusion: The appeal is allowed by way of remand: the impugned order is set aside and the matter is remitted to the Original Authority for fresh, reasoned adjudication in accordance with the Tribunal's directions; the stay petition is disposed of.

Maintenance and Repair Services - service tax liability - classification of fabrication, repair and maintenance of boilers and turbines as immovable property - applicability of levy from 01.07.2003 vis-a -vis 16.06.2005 - treatment of receipts for services rendered prior to an amendment but received thereafter - threshold exemption under Notification No.6/2005-ST w.e.f. 01.04.2005 - extended period of limitation - penalties under the Finance Act, 1994

Classification of fabrication, repair and maintenance of boilers and turbines as immovable property - applicability of levy from 01.07.2003 vis-a -vis 16.06.2005 - Remand for fresh adjudication on whether the work on boilers and turbines constituted services in respect of immovable property and the consequential date from which service tax was leviable. - HELD THAT: - The Tribunal observed that the Commissioner (Appeals) did not examine the appellant's primary contention that the fabrication and repair work on boilers and turbines amounted to services in relation to immovable property, which would affect the date from which service tax was leviable. Because this determinative factual-legal classification and the related temporal issue were not dealt with, the impugned order was set aside and the matter remanded to the Commissioner (Appeals) for a considered finding on both the nature of the works and the correct date of levy.

Impugned order set aside; matter remanded to Commissioner (Appeals) for fresh decision on classification and date of levy.

Maintenance and Repair Services - whether the contract was a pure maintenance contract - Remand for determination whether the contract with U.P. Rajya Vidyut Utpadan Nigam Ltd. Kasimpur amounted to a pure maintenance contract. - HELD THAT: - The Tribunal noted that the appellate authority had not addressed the appellant's assertion that the contract was a pure maintenance contract; this factual and legal question bears on the applicability of service tax and was therefore left for fresh adjudication by the Commissioner (Appeals).

Impugned order set aside; issue remanded to Commissioner (Appeals) to decide afresh whether the contract was purely for maintenance.

Treatment of receipts for services rendered prior to an amendment but received thereafter - applicability of levy - Remand to determine whether service tax was payable on services rendered prior to 16.06.2005 when payment was received after 16.06.2005. - HELD THAT: - The Tribunal recorded that the appellate authority did not consider the appellant's contention regarding temporal attribution of tax liability where services were performed before, but payment was received after, the relevant date. The point requires fresh consideration in light of applicable law and facts and is therefore remitted.

Impugned order set aside; Commissioner (Appeals) directed to decide afresh on taxability of receipts received after 16.06.2005 for services rendered earlier.

Threshold exemption under Notification No.6/2005-ST w.e.f. 01.04.2005 - entitlement to basic exemption - Remand for fresh decision on entitlement to the basic exemption up to the threshold limit for the year 2005-06 under Notification No.6/2005-ST. - HELD THAT: - The Tribunal observed that the Commissioner (Appeals) did not address the appellant's claim for exemption under the stated notification effective from 01.04.2005. Given its potential impact on liability for 2005-06, the matter is remitted for specific findings on eligibility and application of the notification.

Impugned order set aside; remitted to Commissioner (Appeals) to decide entitlement to exemption under Notification No.6/2005-ST for 2005-06.

Extended period of limitation - Remand to examine whether the extended period of limitation could be invoked. - HELD THAT: - The Tribunal found that the appellate authority had not considered the appellant's plea regarding invocation of the extended period of limitation. As this is a decisive procedural bar affecting the sustainment of demand, the issue is remitted for fresh adjudication by the Commissioner (Appeals).

Impugned order set aside; Commissioner (Appeals) to decide afresh on the applicability of the extended period of limitation.

Penalties under the Finance Act, 1994 - Remand to decide whether penalties under the Finance Act, 1994 should be imposed. - HELD THAT: - The Tribunal recorded that penalties were imposed but the appellate authority did not address the appellant's challenge to such imposition. Since penalties are consequential on findings of liability and may involve separate considerations, the matter was remitted for a reasoned decision on imposition or relief from penalties.

Impugned order set aside; penalty question remanded to Commissioner (Appeals) for fresh decision.

Final Conclusion: The impugned order is set aside and the matter is remanded to the Commissioner (Appeals) for fresh and reasoned adjudication on each of the legal issues raised by the appellant, including classification of works, date of levy, contract characterisation, taxability of post-amendment receipts, entitlement to Notification No.6/2005-ST exemption for 2005-06, applicability of the extended limitation period, and imposition of penalties.

Notional interest - assessable value - renting of immovable property services - influence on price/rent - evidence requirement for addition of notional advantage - rate of interest for valuation - scope of Section 67 with regard to valuation

Notional interest - assessable value - renting of immovable property services - Notional interest on interest-free security deposits cannot be added to the rent received for the purpose of levy of service tax on renting of immovable property in the absence of evidence that such deposits influenced the rent. - HELD THAT: - The Tribunal applied the principle that value of notional advantage, such as notional interest, does not form part of the actual consideration charged for the taxable service unless there is evidence that the interest-free deposit influenced the agreed price. The Tribunal relied on its earlier decision in Murli Realtors Pvt. Ltd. which, referring to precedents including J.K. Investors , Intercontinental Consultants and Technocrats Pvt. Ltd. , and ISPL Industries Ltd. , held that Section 67 permits determination of the value only as the gross amount charged and does not authorize addition of notional advantages without proof that fixation of price was influenced. Applying that principle to the facts, the Tribunal found no evidence on record to demonstrate that the security deposits influenced the rent, and therefore the notional interest could not be included in the assessable value.

The addition of notional interest to the rent as part of assessable value is not sustainable in the absence of evidence that the deposit influenced the rent; the demand on this ground is untenable.

Evidence requirement for addition of notional advantage - influence on price/rent - Revenue must produce evidence to show that interest-free deposits influenced the price/rent before notional interest can be added to assessable value. - HELD THAT: - The Tribunal reiterated that there is no presumption that an interest-free advance or deposit has influenced the fixation of price; the onus lies on the revenue to demonstrate, by evidence, that such deposits resulted in lowering of the price charged. Where there is no differential pricing or other proof indicating influence on price, notional interest cannot be added. On the facts, the revenue adduced no evidence to show such influence.

In absence of evidence that the deposit affected the rent, the claim that notional interest forms part of assessable value is rejected.

Rate of interest for valuation - assessable value - Adoption of an arbitrary rate of interest for computing notional interest is impermissible for valuation purposes. - HELD THAT: - The Tribunal observed that selecting an arbitrary rate (e.g., 18% per annum in the adjudication) which does not correspond to bank or market rates militates against sound valuation. Absent any statutory provision fixing such a rate, or evidence justifying its adoption, use of an arbitrary rate to compute notional interest is not permissible.

The use of an arbitrary interest rate for computing notional interest is unjustified and cannot support augmentation of the assessable value.

Final Conclusion: Impugned order confirmed by the Commissioner is set aside; appeal allowed and appellant is entitled to consequential relief as per law.

Input tax credit on fuel - admissibility of input credit where final product is exempt - credit on goods cleared on job work basis - binding force of Supreme Court decisions despite referral to Larger Bench - recovery of duty, interest and penalty where binding precedent applies

Input tax credit on fuel - admissibility of input credit where final product is exempt - credit on goods cleared on job work basis - Credit of input duty on fuel not admissible in the facts of the present case in view of binding Supreme Court precedent. - HELD THAT: - The Court held that the controversy raised in the appeal is squarely covered by the Supreme Court's decision in Commissioner of C. Ex. v. Gujarat Narmada Fertilizers Co. Ltd., and consequently the claim for input credit on fuel (including in relation to goods processed/cleared on job work basis where the final product is exempt) must be decided in accordance with that precedent. No further discussion was warranted in view of the binding nature of the Supreme Court's ruling as applied to the facts of the case, and the Tribunal's confirmation of duty was sustained on that basis. [Paras 2, 4]

Claim for input credit on fuel rejected and duty confirmed in accordance with the Supreme Court precedent.

Binding force of Supreme Court decisions despite referral to Larger Bench - Reference of a Supreme Court decision to a Larger Bench does not dilute its binding effect until overruled. - HELD THAT: - The Court observed that though the Supreme Court's decision in Gujarat Narmada Fertilizers Co. Ltd. had been referred to a Larger Bench, that reference did not diminish the existing binding force of the decision. The Court relied also on the Supreme Court's decision in Maruti Suzuki Ltd. to support that position and noted authoritative confirmation by a Division Bench of this Court. Accordingly, the earlier Supreme Court ruling remains applicable and determinative. [Paras 3]

The earlier Supreme Court decision remains binding notwithstanding its reference to a Larger Bench.

Recovery of duty, interest and penalty where binding precedent applies - Imposition and recovery of duty, interest and penalty upheld where the liability is governed by binding Supreme Court precedent. - HELD THAT: - The Court accepted that the Tribunal had confirmed duty, interest and penalty. Given that the substantive legal question is answered against the appellant by controlling Supreme Court authority, the recovery of duty, interest and penalty was not found to be impermissible. The pendency of reconsideration before a Larger Bench did not render the levy of penalty or interest unjustified where the settled precedent applied. [Paras 2]

Recovery of duty, interest and penalty sustained in accordance with binding precedent.

Final Conclusion: Tax Appeal dismissed and connected civil application rejected, the Tribunal's order confirming duty, interest and penalty being upheld as governed by existing Supreme Court precedents.

Exemption as 'concrete mix' manufactured at the site for use in construction - distinction between Ready Mix Concrete and site mixed concrete based on manner of manufacture - relevance of Indian Standards (IS 456 / IS 4926) to classification and exemption - interpretation of tariff description and sub headings in relation to exemption entries - invocation of extended period of limitation in central excise demands - penalty under Rule 26 of the Central Excise Rules, 2002

Exemption as 'concrete mix' manufactured at the site for use in construction - distinction between Ready Mix Concrete and site mixed concrete based on manner of manufacture - Whether the product manufactured by the appellant, described by the revenue as Ready Mix Concrete (RMC), was exempt as 'concrete mix' manufactured at site under the exemption notification. - HELD THAT: - The Tribunal examined the exemption entry in Notification 12/2012 and the tariff descriptions for heading 38.24 as they stood during the relevant period and found that the description and chapter under the exemption notification remained identical to those examined by the Hon'ble Supreme Court in the appellant's earlier case. The Apex Court's decision treated the distinguishing feature between RMC and conventional concrete mix as the manner of manufacture (automated RMC versus conventional/manual site mixing) and concluded that RMC did not fall within the exemption. The Tribunal noted that the tariff description for 'concrete ready to use known as "ready mix concrete"' continued to be separately described and that there was no material change in the tariff description or in the exemption notification to alter the applicability of the Apex Court's reasoning. Consequently, the appellant's contention that tariff amendments or changes in IS specifications removed the distinction was rejected on the ground that the Apex Court's conclusion was founded on the manufacturing process distinction and that the notification/tariff language remained unchanged.

Appeal on the core question of exemption fails; RMC manufactured by the appellant does not qualify for exemption as site manufactured 'concrete mix' under the notification.

Relevance of Indian Standards (IS 456 / IS 4926) to classification and exemption - distinction between Ready Mix Concrete and site mixed concrete based on manner of manufacture - Whether subsequent changes in Indian Standards (IS 456:2000/2013 et al.) alter the applicability of the Supreme Court decision which distinguished RMC from site mixed concrete. - HELD THAT: - The Tribunal observed that the Supreme Court's reasoning in the earlier L&T decision hinged on the process of manufacture as the distinguishing criterion and that the Court's findings did not rely on IS specifications. Therefore, any subsequent amendments to IS standards, even if they contemplate automated batching for certain projects, did not remove or undermine the Apex Court's process based distinction. The Tribunal held that changes in IS specifications could not be used to distinguish or displace the Supreme Court's conclusion where the tariff description and notification remained unchanged and the Court had based its decision on the manner of manufacture.

Changes in IS specifications do not alter the applicability of the Apex Court decision; the distinction based on manner of manufacture remains determinative.

Invocation of extended period of limitation in central excise demands - Whether demand of excise duty by invoking the extended period of limitation was justified in the facts of the case. - HELD THAT: - The Tribunal considered precedents addressing invocation of extended limitation where there existed bona fide divergent views and conflicting judicial decisions on the question of exemption. Noting earlier favorable decisions to assessees and judicial divergence on the classification/exemption issue, the Tribunal found that there was scope for reasonable doubt in the minds of the assessees about the view to be taken. Applying the principle that extended limitation requires wilful suppression or misstatement with intent to evade duty, and relying on decisions which have held that genuine disputes preclude extended period invocation, the Tribunal concluded that the extended period could not be invoked in respect of the appellant's demands beyond the normal limitation period.

Demand raised beyond the normal period of limitation was set aside; extended period invocation not sustained.

Penalty under Rule 26 of the Central Excise Rules, 2002 - Whether penalty could be imposed on the Project Manager under Rule 26 of the Central Excise Rules, 2002 in respect of the disputed exemption/assessment. - HELD THAT: - The Tribunal noted that the controversy involved interpretation of law and classification which had engendered divergent judicial views. Where the issue is one of interpretation and there is a reasonable basis for the assessees' claim, imposition of penalty is not justified. The Tribunal concluded that in view of the interpretative nature of the dispute and the existence of conflicting decisions and reasonable doubt, penalties could not be sustained against the Project Manager.

Penalty imposed on the Project Manager under Rule 26 is set aside; appeal by the Project Manager allowed.

Final Conclusion: The Tribunal rejected the appellants' claim that Ready Mix Concrete manufactured at site qualified for exemption as 'concrete mix' under the notification, holding the Supreme Court's process based distinction and the unchanged tariff/notification language to be determinative; however, demands raised beyond the normal period of limitation were set aside and penalties (including on the Project Manager under Rule 26) were quashed, resulting in a partly allowed appeal.

CENVAT credit admissibility - reliance on third party transporter statement - proof of receipt by consignee - consignment note and toll receipts versus accounting and statutory records - discharge of burden under Rule 9(3) - use of extraneous transaction evidence against purchaser

CENVAT credit admissibility - proof of receipt by consignee - consignment note and toll receipts versus accounting and statutory records - use of extraneous transaction evidence against purchaser - Validity of denial of CENVAT credit of Rs. 5,28,118/- availed on seven invoices and whether credit could be denied when appellant produced factory records, payments, and no discrepancies were found on inspection. - HELD THAT: - The Tribunal found that the denial of CENVAT credit rested solely on a single statement of a transporter relating to one consignment between the manufacturer and the first stage dealer, a transaction that was not between the manufacturer and the appellant. The appellant had contemporaneous records showing receipt of inputs in RG 23A registers, material receipt reports, payment by cheques recorded in ledgers of both parties, cleared finished goods on payment of duty, and no discrepancy observed on inspection. The Tribunal held that absence of consignment notes or toll receipts alone did not establish non receipt, particularly where service tax on transportation had been paid and other documentary evidence of receipt existed. Evidence of an unrelated transaction between manufacturer and dealer could not be used to negate the appellant's independent records and evidence of receipt. Relying on these determinative factual findings, the Tribunal concluded there was no admissible basis to hold that the appellant availed credit without receipt of inputs and set aside the order denying credit. [Paras 5]

Impugned order disallowing CENVAT credit set aside and appeal allowed; credit upheld.

Reliance on third party transporter statement - discharge of burden under Rule 9(3) - Whether the single transporter statement concerning movement between manufacturer and first stage dealer could be used to impugn the appellant's entitlement to credit and whether the appellant had discharged the onus imposed by law. - HELD THAT: - The Tribunal held that the transporter's statement about a transaction not involving the appellant was not material to disprove receipt by the appellant. The appellant had identified the supplier, maintained statutory records, entered receipts in Cenvat registers, produced payment evidence, and had an exculpatory statement from its authorized signatory. On these facts the burden under the relevant rule stood discharged and the isolated third party statement could not be the basis to deny credit. Given the factual finding that no tangible adverse evidence was found in respect of supply from the dealer to the appellant, the transporter's statement was insufficient to impugn entitlement. [Paras 5]

Transporter's statement held irrelevant to deny appellant's credit; appellant treated as having discharged applicable burden and credit allowed.

Final Conclusion: The appeal was allowed and the order denying CENVAT credit for the consignments in April 2007 was set aside, the Tribunal holding that the isolated transporter statement about a manufacturer-dealer movement could not negate the appellant's contemporaneous records, payments and inspection findings showing receipt and use of inputs.

Related person - definition of relative under Section 6 of the Companies Act, 1956 - adoption of comparable price under Rule 11 of the Central Excise (Valuation Determination of Price of Excisable Goods) Rules, 2000 - assessable value to be based on price to same class of buyers - quantity discount as recognised trade practice

Related person - definition of relative under Section 6 of the Companies Act, 1956 - The allegation that the appellant (a proprietorship) and M/s. Tubas Wire and Conductors Pvt. Limited (a private limited company) are related persons as charged in the show cause notice. - HELD THAT: - The show cause notice relied on an asserted family connection and on the wording of Section 6 / Schedule IA of the Companies Act, 1956 to classify M/s. Tubas as a "relative" of the proprietor. The Tribunal examined the statutory definition in Section 6 and Schedule IA and observed that only specified relationships listed therein qualify as "relative." A proprietorship and a private limited company do not fall within those specified categories. The foundational allegation in the show cause notice therefore fails on its own terms because the statutory definition relied upon does not encompass the factual situation pleaded by Revenue. [Paras 5]

The claim that the two concerns are "related persons" under the cited provision is without merit and cannot sustain the demand.

Adoption of comparable price under Rule 11 of the Central Excise (Valuation Determination of Price of Excisable Goods) Rules, 2000 - assessable value to be based on price to same class of buyers - quantity discount as recognised trade practice - Whether, even if the parties were related, the assessable value could be correctly determined by adopting the price of goods sold to independent buyers without regard to class and quantity differences. - HELD THAT: - Relying on the authority cited (SACI Allied Products Ltd.), the Tribunal held that where related-party pricing is in issue, Rule 11 permits adoption of a comparable price only from sales to the same class of buyers. The Tribunal noted that M/s. Tubas purchased a substantial proportion of the appellant's production (large-quantity purchases) and enjoyed quantity-related discounts. Therefore, any comparable price must relate to independent buyers of a similar class and purchasing similar quantities. The price adopted by Revenue did not relate to such a comparable class of buyer or comparable quantity and thus the valuation under Rule 11 was incorrectly applied. [Paras 5]

The assessment by adopting prices not tied to the same class of buyers (and not reflecting comparable quantities/discounts) is unsustainable.

Final Conclusion: The appeal is allowed: the formulation of the parties as "related persons" under the statute is unfounded, and in any event the assessable value could not be sustained because Revenue did not adopt a comparable price from the same class of buyers purchasing similar quantities; the demand and penalty are set aside.

Manufacture versus job work - burden of proof to establish clandestine manufacture - requirement of panchanama/mahazar and contemporaneous evidence at inspection - proof of presence of machinery, labour and stock to sustain a finding of manufacture - weight of statements and effect of cross-examination of job workers

Manufacture versus job work - requirement of panchanama/mahazar and contemporaneous evidence at inspection - burden of proof to establish clandestine manufacture - weight of statements and effect of cross-examination of job workers - Whether the appellant carried out manufacture of scaffoldings/propping equipments or procured finished goods from independent job workers, and whether the department established liability for central excise duty. - HELD THAT: - The Tribunal examined the material relied upon by the department and the defence. No panchanama/mahazar was drawn at the time of inspection and there is no contemporaneous record of machinery, raw materials, finished goods or engagement of labour at the appellants' premises; these lacunae weaken any inference of manufacture on the premises. The department's reliance on sales to construction companies and banking transactions alone does not establish manufacture by the appellant. The appellant produced affidavits, delivery challans and evidence locating several listed job workers; six traced job workers admitted to having done job work and their admissions in cross-examination supported the appellants' case that goods were manufactured by job workers. Infirmities in notarised affidavits were addressed by oral statements recorded under summons. The adjudicating authority's conclusion rested on a cryptic statement of the proprietor and general suspicions, without sufficient independent evidence of machinery, manufacturing activity or workforce. Where the department alleges clandestine manufacture, the onus to prove presence of manufacturing activity lies on the department; that onus was not discharged here. In these circumstances the Tribunal found the stronger probability to be that the appellant procured goods from job workers and the demand for excise duty based on assumed manufacture could not be sustained. [Paras 5, 6]

The adjudicating order confirming the demand and imposing penalty is set aside; the appeal is allowed.

Final Conclusion: The Tribunal held that the department failed to prove that the appellant carried out manufacture at the premises; in absence of panchanama/mahazar, machinery, labour or other contemporaneous evidence and having regard to admissions of job workers, the demand for excise duty was unsustainable and the impugned order was set aside.

Admissibility of computer printouts and electronic data under Section 36B of the Central Excise Act - Requirement of procedural safeguards for admissibility of electronic evidence - Standards of proof for clandestine manufacture and clearance - Admissibility of statements recorded under Section 14 and right to cross-examination (Section 9D consideration) - Undervaluation of excisable goods and liability for differential duty

Admissibility of computer printouts and electronic data under Section 36B of the Central Excise Act - Requirement of procedural safeguards for admissibility of electronic evidence - Data retrieved from pen drives and computer printouts were inadmissible evidence as the procedure mandated by Section 36B of the Central Excise Act was not followed. - HELD THAT: - The Tribunal examined Section 36B and noted that subsections (2), (3) and (4) prescribe conditions and certification procedures for treating computer printouts as admissible documents. In the present case the procedural requirements under those subsections were not complied with for the pen drives recovered from a private person; no certificate or proof was produced to satisfy the statutory conditions. Consequently, the data retrieved from the pen drives and certain invoices based solely on that data could not be admitted as evidence and could not form the basis of demand. [Paras 8]

Pen drive data and the computer printouts relied upon by Revenue are inadmissible under Section 36B and cannot sustain the show cause notice.

Standards of proof for clandestine manufacture and clearance - Admissibility of statements recorded under Section 14 and right to cross-examination (Section 9D consideration) - Revenue failed to prove clandestine manufacture and clandestine removal; demands founded on such alleged clandestine clearances were set aside. - HELD THAT: - The Tribunal applied settled criteria for establishing clandestine manufacture and clearance (including tangible evidence of unaccounted raw material, discovery of finished goods outside factory, transportation records, receipts of sale proceeds, corroborative statements and links between recovered documents and factory activities). In this case no stock variation or incriminating documents were found at the factory; supply chains, raw material procurement and electricity/production corroboration were not shown; statements relied upon were not put to cross-examination as required and thus could not be relied upon. Given the absence of the necessary corroborative elements and the inadmissibility of the pen drive data, Revenue did not discharge the burden to establish clandestine clearances and related duty demands were unsustainable. [Paras 9, 10]

Demands based on alleged clandestine removals are not proved and are set aside; no penalty is imposable on co-appellants on that score.

Undervaluation of excisable goods and liability for differential duty - Demand arising from undervaluation was sustained to the extent conceded by the appellants and duty with interest was confirmed; penalty was reduced. - HELD THAT: - The appellants conceded part of the undervaluation liability. Independent examination of the invoices showed instances where higher priced records in the recovered material corresponded to the same party and quantity as lower value taxable invoices, establishing differential value. On this basis the Tribunal held that undervaluation was proved to the extent admitted by the appellants and is liable to duty with interest. Having regard to payment already made during investigation, the Tribunal exercised its discretion to reduce penalty to 25% of the duty confirmed. [Paras 11]

Demand for duty on undervaluation is confirmed (to the extent conceded) with interest; penalty reduced to 25% in view of payments made.

Final Conclusion: The appeals are disposed of by confirming duty and interest in respect of the admitted undervaluation and reducing penalty, while setting aside the remaining demands and penalties because the pen drive data was inadmissible under Section 36B and Revenue failed to prove clandestine manufacture or clandestine removals for the period March 2011 to 20.06.2013.

Taxability of captively consumed intermediate goods - classification of intermediate product under Tariff Item No. 17029090 - marketability of intermediate products - applicability of exemption notification regime displacing intermediate product exemption

Taxability of captively consumed intermediate goods - classification of intermediate product under Tariff Item No. 17029090 - marketability of intermediate products - Sugar syrup produced and captively consumed in the manufacture of biscuits does not attract Central Excise duty. - HELD THAT: - The Tribunal considered earlier final orders of this Bench in M/s Bhagwati Food Pvt. Ltd. and the Coordinate Bench decision in Rishi Bakers Pvt. Ltd. and applied the same reasoning. There was no evidence on record to establish that the sugar syrup, as it comes into existence in the appellants' factory, is classifiable under Tariff Item No. 17029090. Equally, there was no evidence to demonstrate that the sugar syrup in the form produced is marketable. In the absence of proof of classification or marketability, the intermediate product could not be held liable to Central Excise duty even though changes in exemption notifications had altered the general intermediate-product exemption framework. On these findings, the Tribunal concluded that the sugar syrup captively consumed during biscuit manufacture is not exigible to excise duty and the appeals succeed.

All eight appeals are allowed and the appellants are entitled to consequential relief.

Final Conclusion: The Tribunal allowed the appeals, holding that sugar syrup produced and captively consumed in the manufacture of biscuits is not liable to Central Excise duty for the periods stated, on the ground that there is no evidence of its classification under the impugned tariff item or of its marketability; consequential relief granted.

Cenvat credit - availability of Cenvat credit upon subsequent payment of differential duty by the manufacturer - requirement of supplementary invoice for availing credit of differential duty - revenue loss as determinant for denial of credit

Cenvat credit - availability of Cenvat credit upon subsequent payment of differential duty by the manufacturer - revenue loss as determinant for denial of credit - Entitlement of the appellant to Cenvat credit for inputs where the original manufacturer subsequently paid the differential duty for the disputed period. - HELD THAT: - The original adjudicating authority had allowed the appellant benefit of credit after making enquiries of the jurisdictional Range Officer who confirmed that the manufacturer had discharged the differential duty for the period in dispute. The Assistant Commissioner, Central Excise Range, Bilaspur, also confirmed by letter dated 18.11.2013 that M/s Ind Synergy Ltd. had deposited the differential amounts for the relevant years. In these circumstances, and on the material before the Tribunal, there is no revenue loss to the Department. The Tribunal accepted the factual finding that the manufacturer paid the differential duty and held that rejection of the appellant's claim was therefore not sustainable in law. [Paras 5]

Appellant entitled to the Cenvat credit as the manufacturer paid the differential duty and there was no revenue loss; impugned order set aside.

Requirement of supplementary invoice for availing credit of differential duty - Cenvat credit - Whether issuance of a supplementary invoice by the manufacturer was necessary for the appellant to avail Cenvat credit of the differential duty. - HELD THAT: - The Tribunal found that once the manufacturer had paid the differential duty for the disputed period, there was no legal necessity for issuance of supplementary invoices to permit the appellant to avail the Cenvat credit of the differential amount. This conclusion follows the factual finding of payment by the manufacturer and the absence of any consequential revenue loss; accordingly, the requirement of a supplementary invoice was held not to be obligatory in the present case. [Paras 5]

No necessity for supplementary invoice where manufacturer has paid the differential duty; credit admissible.

Final Conclusion: The appeal is allowed; the impugned order setting aside the original order is set aside and the appellant's claim for Cenvat credit for the disputed periods is upheld with consequential relief if any.

Refund of duty paid under provisional assessment - appropriation of sanctioned refund against outstanding interest - maintainability of cross-objections before Commissioner (Appeals) - refund by credit to RG-23A Part-II versus cash refund - use of credit balance for future duty payment

Maintainability of cross-objections before Commissioner (Appeals) - Cross objections filed by the assessee before Commissioner (Appeals) were maintainable. - HELD THAT: - The Tribunal noted that the authority relied on a Tribunal decision which has subsequently been overruled by the Karnataka High Court in Southern Auto Products v. Commissioner of C. Ex., and therefore the Commissioner (Appeals) was incorrect in holding the assessee's cross objections non-maintainable. The appellate forum may entertain cross objections under the circumstances identified in the judgment, and the assessee was entitled to have its cross objections considered. [Paras 4]

Cross objections are maintainable and the Commissioner (Appeals) erred in rejecting them as non-maintainable.

Appropriation of sanctioned refund against outstanding interest - Adjustment of the sanctioned refund against outstanding interest was not proper as a matter of contention between the parties and was accepted by the Commissioner (Appeals). - HELD THAT: - The record shows that both Revenue and the appellant before the Commissioner (Appeals) took the common position that the sanctioned refund could not be adjusted against outstanding interest amounts. The Commissioner (Appeals) upheld that position and allowed the Revenue's appeal on this point. Since that view has been accepted at the appellate stage, there remains no further grievance for the assessee on the question of appropriation. [Paras 1, 2, 3, 5]

The adjustment/appropriation of the sanctioned refund against outstanding interest is not proper, and the Commissioner (Appeals) correctly accepted that position.

Refund by credit to RG-23A Part-II versus cash refund - use of credit balance for future duty payment - Sanctioned refunds for duties originally paid from the credit account must be refunded to the credit account (RG-23A Part-II) and not in cash. - HELD THAT: - The Tribunal accepted the appellant's concession that the duties were originally paid out of the credit account and that the appellant remained able to utilise the credited amount for future duty payments. The Court reasoned that where duties have been discharged from a credit ledger, the corresponding refund should be restored to that ledger rather than paid in cash. Therefore, there was no merit in the assessee's plea for a cash refund of the amount sanctioned on finalization of provisional assessments. [Paras 6]

Refund must be credited to the RG-23A Part-II (credit account) and not paid in cash.

Final Conclusion: Cross objections were maintainable; the Commissioner (Appeals) correctly held that appropriation of the sanctioned refund against outstanding interest was improper; and the sanctioned refund, being of duties originally paid from the credit account, must be restored to the credit ledger (RG-23A Part-II) and not disbursed in cash.

Cenvat credit admissibility - shortage of input stock and clandestine clearance - credit on structural iron and steel items - credit on purchased inputs where no manufacturing undertaken - application of precedent in favour of assessee

Shortage of input stock and clandestine clearance - Cenvat credit admissibility - Demand based on alleged shortfall of inputs (HR coils, GP coils and Zinc) and its clearance without payment of duty cannot be sustained. - HELD THAT: - The visiting officers reported shortfall of inputs and concluded clandestine clearance. The assessee offered a plausible explanation that coils had been issued for slitting and slitted coils existed in the factory, and that Zinc was held in tanks and consumption was adjusted in accounts. The Tribunal applied precedent favouring the assessees that demand cannot rest solely on detected shortages where plausible explanations exist and physical forms (such as slitted coils or zinc in tanks) were not taken into account by the visiting officers, relying on the reasoning in Commissioner of Central Excise, Kanpur v. Minakshi Castings and Puran Sons Alloys P. Ltd. v. Commissioner of Central Excise, Jaipur . On that basis the demand founded only on the alleged shortage was held unsustainable.

Demand on account of alleged shortage of inputs set aside.

Credit on structural iron and steel items - Cenvat credit admissibility - Cenvat credit availed on iron and steel items (round plates, angles, channels, sheets, rods) is allowable to the appellant. - HELD THAT: - Revenue made a bald allegation that such iron and steel items are not Cenvatable but did not examine their actual use in the factory. The appellant contended these were used as structures and relied on a larger Bench decision disallowing credit. The Tribunal observed that even accepting Revenue's contention, the larger Bench decision in Vandana Global Ltd. v. CCE, Raipur is not authoritative in view of subsequent High Court decisions, and the issue is covered in favour of the assessee by decisions such as Mundara Ports and Special Economic Zone (Gujarat High Court) and India Cements Ltd. (Madras High Court). On that basis, and given the lack of inquiry into actual use, the appellant was held entitled to the credit.

Cenvat credit of Rs. 23,67,477/- allowed.

Credit on purchased inputs where no manufacturing undertaken - Cenvat credit admissibility - Denial of Cenvat credit on pipes purchased from other manufacturers on the ground that no manufacturing activity was undertaken by the appellant is not sustainable; credit is allowable. - HELD THAT: - Revenue denied credit on purchased pipes because the appellant allegedly undertook no manufacturing. The Tribunal applied its majority view that even if no manufacturing activity is carried out by the assessee, where goods are cleared finally on payment of duty the assessee remains entitled to Cenvat credit of duty paid on raw materials. The decision references the Tribunal's majority ruling in Asian Colour Coated Ispat Ltd. v. CCE and the Bombay High Court decision in CCE v. Ajitya Enterprises as supporting authorities. Accordingly, the demand founded on denial of such credit was held unjustified and set aside.

Denial of credit on purchased pipes (major part of demand) set aside and credit allowed.

Final Conclusion: Impugned order confirming demands and imposing penalties is set aside; appeal allowed and the appellant is entitled to the impugned Cenvat credits with consequential relief as applicable.

Entitlement to refund of education and higher education cess where excise duty is exempted - inclusion of outward freight in assessable value for FOR sales - place of removal under Section 4 of the Central Excise Act, 1944 - binding effect of Supreme Court precedent on admissibility of refund and valuation

Entitlement to refund of education and higher education cess where excise duty is exempted - binding effect of Supreme Court precedent on admissibility of refund - Assessee's entitlement to refund of education and higher education cess paid along with excise duty which was exempted under Notification No. 56/2002-CE dated 14/11/2002. - HELD THAT: - Both parties accepted that the question of refundability is governed by the ratio of the Hon'ble Supreme Court in M/s. SRD Nutrients Pvt. Limited vs. CCE, Guwahati . Applying that precedent, the Tribunal held that where excise duty itself is held to be exempted, the cess paid along with that duty is refundable. The Tribunal followed the Apex Court's decision as determinative and allowed the appellants' claims on this issue. [Paras 2]

Claim for refund of education and higher education cess allowed in terms of the Supreme Court ratio.

Place of removal under Section 4 of the Central Excise Act, 1944 - inclusion of outward freight in assessable value for FOR sales - binding effect of Supreme Court precedent on valuation - Whether the appellants could include outward freight in the transaction/assessable value where goods were sold on FOR basis and delivered at buyers' premises, for the purpose of relief under Notification No. 56/2002-CE. - HELD THAT: - The Tribunal examined the statutory concept of 'place of removal' under Section 4 and applied the Hon'ble Supreme Court's reasoning in CCE, Nagpur v. Ispat Industries Ltd. , which holds that the buyer's premises cannot be treated as the manufacturer's 'place of removal' and that places of removal refer to premises referable to the manufacturer (factory, depot, consignment agent, etc.). The appellants failed to produce evidence showing clearance to a manufacturer's depot or premises from which sales occurred. Relying on Ispat Industries, the Tribunal concluded that inclusion of outward freight in the assessable value (on the basis that delivery to buyer constituted place of removal) was not justified, and consequently such freight could not be considered for computing entitlement under the exemption notification. [Paras 4, 5]

Inclusion of outward freight in the assessable value is not permissible on the facts found; claims relying on such inclusion for exemption/ refund under the notification are not sustainable.

Final Conclusion: Appeals allowed in part: refund of education and higher education cess granted in accordance with the Supreme Court precedent; claims premised on inclusion of outward freight in assessable value denied and appeals on that ground dismissed.

Rectification of mistake - mistake apparent on record - classification of goods - Central Excise Tariff classification - reliance on earlier Tribunal decision

Rectification of mistake - mistake apparent on record - classification of goods - Application for rectification of an apparent mistake in the Tribunal's order recording that the correct classification was the applicant's contention instead of being the Tribunal's decision, and correction of the product classification referenced in paragraph 3. - HELD THAT: - The Tribunal found that its order dated 19.03.2018 erroneously recorded that it was the applicant's contention that the correct classification was Chapter heading No. 3808.10, whereas the record actually reflected the Tribunal's decision. The misstatement in paragraph 3 was identified as a mistake apparent on the face of the record. The Tribunal further noted that paragraph 3 should correctly state the Tribunal's reliance on the earlier decision in Bahar Agrochem & Feeds Pvt. Limited vs. CCE, Pune-2012 (277) ELT 382 (Tri.-Mumbai), holding the product's classification as Chapter heading No. 3808.20. On this basis the Tribunal exercised its power to rectify the clerical or apparent error and directed amendment of paragraph 3 to reflect the correct classification and precedent relied upon. [Paras 3]

Application for rectification of mistake allowed; paragraph 3 of the impugned order is amended to record that the Tribunal held, with reliance on the cited Tribunal decision, that the correct classification is 3808.20.

Final Conclusion: The application for rectification is allowed and the impugned order is modified by correcting paragraph 3 to record the Tribunal's decision and to state that the correct classification is 3808.20, as per the relied-upon earlier Tribunal decision.

Provider of output service entitlement to Cenvat credit of Krishi Kalyan Cess under Rule 3(1)(a) of the Cenvat Credit Rules, 2004 - permissible utilisation of Cenvat credit of Krishi Kalyan Cess only for payment of Krishi Kalyan Cess on taxable services - prohibition on utilisation of Krishi Kalyan Cess credit for payment of excise duty or service tax

Provider of output service entitlement to Cenvat credit of Krishi Kalyan Cess under Rule 3(1)(a) of the Cenvat Credit Rules, 2004 - Appellant, being both manufacturer and provider of renting of immovable property service, is entitled to take Cenvat credit of Krishi Kalyan Cess. - HELD THAT: - The Tribunal found that the appellant functions as a provider of output service (renting of immovable property) and, therefore, falls within the scope of the provision permitting a provider of output service to take Cenvat credit of Krishi Kalyan Cess. The entitlement is based on the rule that a provider of output service shall be allowed to take such credit; applied to the undisputed facts, the appellant was entitled to the credit of Krishi Kalyan Cess that it had availed on input services. [Paras 4]

Entitlement to Cenvat credit of Krishi Kalyan Cess upheld and the appellant is entitled to the credit claimed.

Permissible utilisation of Cenvat credit of Krishi Kalyan Cess only for payment of Krishi Kalyan Cess on taxable services - prohibition on utilisation of Krishi Kalyan Cess credit for payment of excise duty or service tax - The credit of Krishi Kalyan Cess availed by the appellant could be utilized only for payment of Krishi Kalyan Cess on taxable services and not for payment of excise duty or service tax; appellant complied with this restriction. - HELD THAT: - The Tribunal applied the provision that allows utilisation of Krishi Kalyan Cess credit solely for payment of Krishi Kalyan Cess on taxable services (Clause (d) of Rule 3(7)). It noted that the appellant had utilized the credit only towards the Krishi Kalyan Cess liability on its renting of immovable property service and had not applied the credit towards excise duty or service tax. Consequently, the required restriction on utilisation was satisfied and the credit application was permissible. The Tribunal clarified that such credit cannot be used for excise duty or service tax payments. [Paras 4]

Utilisation permitted only for Krishi Kalyan Cess on taxable services; appellant's utilisation complied with the rule and the restriction against use for excise duty or service tax was affirmed.

Final Conclusion: Impugned order set aside; appeal allowed as appellant was entitled to the Cenvat credit of Krishi Kalyan Cess and its utilisation was in conformity with the restriction that such credit be used only for payment of Krishi Kalyan Cess on taxable services.

Cenvat credit - Product Recall Insurance Policy - input service - post-removal activity - cost of the final product - judicial discipline and stare decisis between co-ordinate authorities

Cenvat credit - Product Recall Insurance Policy - input service - post-removal activity - cost of the final product - Eligibility of Cenvat credit in respect of Service Tax paid on Product Recall Insurance Policy taken by the appellant. - HELD THAT: - The Tribunal found that the Product Recall Insurance Policy was procured as a pre-condition of sale and was pre-determined before supply of the goods; without the policy the goods could not be sold. Being taken prior to removal and forming a condition of sale, the expense cannot be characterised as a post-removal activity. Once procurement of the policy is an antecedent condition for supply, the cost of the policy becomes part of the cost of the final product incurred during manufacture. The Tribunal further held that the product recall cover falls within the ambit of input service (including services of a security nature) and, therefore, credit cannot be denied. The Tribunal noted that a co-ordinate Commissioner (Appeals) in Orbit Bearing India Pvt. Ltd. had applied the same reasoning and allowed credit, and that the impugned Commissioner (Appeals) erred in rejecting that view as non-binding without addressing its merits. Applying principles of judicial discipline between co-ordinate authorities and the legal characterisation above, the Tribunal concluded that the Service Tax paid on the Product Recall Insurance Policy is admissible as Cenvat credit. [Paras 4, 5, 6]

Service Tax paid on the Product Recall Insurance Policy is eligible for Cenvat credit; impugned orders set aside and appeals allowed.

Final Conclusion: The Tribunal allowed the appeals and directed that Service Tax paid on Product Recall Insurance Policy, being a pre-supply cost forming part of the cost of the final product and falling within input service, is admissible as Cenvat credit.

Rectification of Mistake - maintainability of review/rectification application - remand for de-novo adjudication - no conclusive finding - limitation - Cenvat Credit

Rectification of Mistake - maintainability of review/rectification application - no conclusive finding - Application for rectification of mistake (Review/ROM) against the Tribunal's order dismissed as not maintainable. - HELD THAT: - The applicant sought rectification of an alleged mistake in the Tribunal's order dated 15.11.2017 on the ground that certain decisions and issues (including limitation and Cenvat credit) were not considered. The Tribunal had, however, remanded the matter to the adjudicating authority by order dated 24.11.2017 and did not record any conclusive findings on the merits. Where a tribunal's order remands issues for de-novo adjudication and does not decide them finally, there is no operative error in need of rectification. In that factual position the application for rectification cannot be maintained because the matters complained of remain open for fresh adjudication and were not conclusively adjudicated by the Tribunal. [Paras 4, 5]

Application for rectification dismissed as not maintainable.

Remand for de-novo adjudication - limitation - Cenvat Credit - Issues of limitation and denial of Cenvat credit remanded for fresh consideration by the adjudicating authority. - HELD THAT: - The Tribunal remanded the dispute to the adjudicating authority for de-novo adjudication, leaving issues relating to limitation and whether Cenvat credit was rightly denied by the supplier open for fresh decision. Because no conclusive findings were recorded by the Tribunal on these points, they were left to be examined afresh by the adjudicating authority and are not amenable to rectification in the present application. [Paras 4]

Limitation and Cenvat credit issues remain open and are remitted to the adjudicating authority for de-novo adjudication.

Final Conclusion: The application for rectification of mistake is dismissed because the Tribunal's order remitted the matter for de-novo adjudication and did not record any conclusive finding; issues of limitation and denial of Cenvat credit stand remanded to the adjudicating authority for fresh consideration.

Infringement of registered trade mark - Passing off and prior user - Concurrent registration and Section 28(3) of the Trade Marks Act - Disclaimer in label registration - Likelihood of confusion - global appreciation test

Infringement of registered trade mark - Concurrent registration and Section 28(3) of the Trade Marks Act - Continuation of interim injunction qua infringement of the respondent's registered mark - HELD THAT: - The Court held that the respondent/plaintiff is not entitled to an ad interim injunction in respect of infringement of its registered mark because the appellant/defendant also holds registrations in Class 30 for similar marks. Section 28(3) was applied to observe that where two or more persons are registered proprietors of identical or nearly resembling marks the exclusive right as between them is not conferred merely by registration and each has concurrent rights against third parties. The High Court concluded that prima facie the appellant's Class 30 registrations for its mark raise a self-standing statutory claim which precludes granting an injunction on the ground of infringement without further trial evidence on reputation and prior user. [Paras 36, 37, 38, 44]

Order granting interim injunction insofar as infringement of the registered mark is concerned is set aside.

Passing off and prior user - Disclaimer in label registration - Likelihood of confusion - global appreciation test - Whether the appellant should be restrained from passing off its dhall products as those of the respondent - HELD THAT: - On the question of passing off the Court found that, on the materials before it, there is a prima facie case that the appellant, having shifted packaging from "SREE GOLD" to prominently display "GOLD WINNER", may cause confusion with the respondent's dhall mark. The Court noted the respondent's prior registration (05.09.2003) and its pleaded user in dhall, the disclaimer in the respondent's label being limited to the device and descriptive words and not to the words "GOLD WINNER". Applying the principles that govern likelihood of confusion and the global appreciation test, and having regard to the public interest in avoiding consumer confusion, the Court continued protective relief in the form of a limited injunction against passing off for a finite period to prevent immediate deception, while leaving substantive rights to be adjudicated at trial. [Paras 41, 43, 44, 48]

Appellant restrained from passing off its dhall products as those of the respondent under the trademark "GOLD WINNER" for one year from the date of the impugned order; remainder of the interim order confirmed.

Final Conclusion: The appeal is partly allowed: the interim injunction insofar as infringement of the registered mark is set aside, but the appellant is restrained for one year from passing off its dhall products as those of the respondent under the mark "GOLD WINNER"; other aspects of the impugned order are confirmed.

Compounding of offence - Section 138 of the Negotiable Instruments Act - Section 147 of the Negotiable Instruments Act - vicarious liability - Acquittal consequent to compounding

Compounding of offence - Section 138 of the Negotiable Instruments Act - Section 147 of the Negotiable Instruments Act - Acquittal consequent to compounding - Whether the conviction and sentence of the revision petitioner under Section 138 of the Negotiable Instruments Act should be set aside and he should be acquitted in view of a compromise and payment made to the complainant and the parties' memo of compromise. - HELD THAT: - The Court examined the nature of the offence under Section 138 and accepted the established principle that cheque dishonour cases are essentially private disputes where the primary interest of the complainant is recovery of money rather than penal retribution. Relying on the reasoning in Damodar S. Prabhu and the ancillary commentary cited, the Court observed that compounding is permissible in offences of a private nature and that Section 147 of the Negotiable Instruments Act empowers the Court to compound an offence under Section 138. The petitioner produced evidence of payment by demand draft to the complainant and a joint memo of compromise/compounding dated 26.09.2018 in which the complainant acknowledged receipt of the payment, consented to compounding the offence as against the petitioner alone, and disclaimed any further claim against him. In the circumstances, and having regard to the settled principle that the complainant's primary interest is monetary recovery and that the compounding was effected between the parties concerned, the Court held it appropriate to set aside the conviction and sentence of the petitioner and acquit him. The Court limited the benefit to the revision petitioner alone, noting that the compromise relates solely to his liability and does not affect other accused. [Paras 8, 9, 10, 11]

The conviction and sentence of the revision petitioner under Section 138 of the Negotiable Instruments Act are set aside and the petitioner (fifth accused) is acquitted in view of the compromise and payment; the order operates in favour of the petitioner alone.

Final Conclusion: The criminal revision is allowed insofar as it concerns the revision petitioner (fifth accused); his conviction and sentence under Section 138 are set aside and he is acquitted pursuant to the compounding effected between him and the complainant, the benefit being confined to him alone.

Prosecution under Section 138 of the Negotiable Instruments Act - Only the drawer of the cheque can be prosecuted - Signature on the cheque as determinative of drawer - Proprietorship account and authorised signatory - Quashing of criminal proceedings

Prosecution under Section 138 of the Negotiable Instruments Act - Only the drawer of the cheque can be prosecuted - Signature on the cheque as determinative of drawer - Proprietorship account and authorised signatory - Quashing of criminal proceedings - Criminal proceedings under Section 138 of the Negotiable Instruments Act against the petitioner are not maintainable because she is not the drawer or signatory of the cheque. - HELD THAT: - The Court applied the settled principle that only the drawer of a cheque who has signed it can be prosecuted under Section 138 of the Negotiable Instruments Act. The Apex Court decision in Aparna A. Shah (2013(8) SCC 71) was followed to the effect that proceedings under Section 138 cannot be used as an arm twisting device to recover a debt from a person who has not signed the cheque and is not the drawer. On the material before the Court the cheque was issued from the current account of the proprietorship concern CANNAN CITY and was signed by P. David Rajan as its proprietor/authorised signatory; the petitioner did not sign the cheque and is not the drawer. Although the complainant may have other remedies against the petitioner, a prosecution under Section 138 is not maintainable against a person who is not the drawer or signatory of the cheque. Applying these principles, the Court concluded that the petitioner cannot be implicated under the Negotiable Instruments Act and that the criminal proceedings insofar as they are directed against her must be quashed. [Paras 6, 7, 8, 9, 10]

The criminal proceedings in C.C.No.35 of 2014 under Section 138 of the Negotiable Instruments Act are quashed as against the petitioner.

Final Conclusion: The High Court allowed the quash petition and set aside the criminal proceedings under Section 138 of the Negotiable Instruments Act insofar as they are directed against the petitioner, on the ground that she is not the drawer or signatory of the cheque.

Mandatory time limit for filing written statement in commercial suits - Prohibition on extending time beyond 120 days for written statement - Amendments by the Commercial Courts, Commercial Division & Commercial Appellate Division of High Courts Act, 2015 prevail over conflicting provisions - High Court powers under Article 227 cannot be used to override statutory bar; Article 226 not available to extend time in face of clear statutory mandate - Statutory interpretation - plain and grammatical meaning governs where wording is clear

Mandatory time limit for filing written statement in commercial suits - Prohibition on extending time beyond 120 days for written statement - Amendments by the Commercial Courts Act, 2015 prevail - Whether the Commercial Court had power to take on record a written statement presented after 120 days from service of summons in a suit governed by the amendments made by the Commercial Courts Act, 2015. - HELD THAT: - The Court held that the Schedule to the Commercial Courts Act, 2015 substantively amended Order V and Order VIII CPC in their application to commercial disputes of specified value, substituting the proviso to Rule 1 of Order VIII to permit filing beyond thirty days but only up to one hundred twenty days and expressly providing that on expiry of 120 days the defendant shall forfeit the right to file a written statement and the Court shall not allow it to be taken on record. Simultaneously a proviso was added to Order VIII Rule 10 prohibiting any Court from making an order to extend the time under Rule 1. Reading these amendments together, the legislature clearly and unambiguously placed a ceiling on the time for filing written statements in commercial suits and removed judicial power to extend beyond 120 days. The Court applied the plain grammatical rule of statutory interpretation, observing that where wording is clear there is no room to override the statutory mandate or to import a directory construction. Prior precedents holding pre-amendment time-limits to be directory (e.g., Salem Advocate Bar Assn.) do not apply to the amended scheme. Consequently the Commercial Court correctly refused to take on record a written statement filed after the 120-day period.

Order rejecting the application to condone delay and refusing to take the belated written statement on record was justified and is upheld; the time limit is mandatory and courts cannot permit filing after 120 days in suits governed by the 2015 amendments.

Final Conclusion: The petition is dismissed. The Commercial Court rightly declined to take on record the written statement filed after the statutory 120-day ceiling prescribed by the Commercial Courts Act, 2015; the defendant remains free to pursue its pending application under Order VII Rule 11 which the Court did not decide.