SOLUTION TO 3RD & 4TH BIT
3) a
Decision of the Case: The Supreme Court held duty has to be paid on the “transaction value”. Section 4(1)(a) of the Central Excise Act, 1944 defines transaction value as under “in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value
If any of the ingredients in the above definition is missing then the price shall not be considered as the sole consideration as transaction value.
Supreme Court opined that this is a case of extra commercial consideration in fixing of price, and artificially depressing it.Full commercial cost of manufacturing and selling was not reflected in the price as it was deliberately kept below the cost of production. Thus, price could not be considered as the sole consideration for sale. No prudent business person would continuously suffer huge loss only to penetrate market; they are expected to act with discretion to seek reasonable income, preserve capital and, in general, avoid speculative investments. It is immaterial that the cars were not sold to related persons.
In view of the above resorting to best judgment assessment was proper
CCEx., Mumbai v. Fiat India Pvt. Ltd. 2012 (283) E.L.T. 161 (S.C.)
b) (i)
Decision of the Case: The Hon’ble High Court of Karnataka, distinguishing the landmark judgment by Supreme Court in the case of Mafatlal Industries v. UOI 1997 (89) E.L.T.247 (S.C.) relating to refund of duty/tax, held that service tax paid mistakenly under construction service although actually exempt, is payment made without authority of law. Mere payment of amount would not make it ‘service tax’ payable by the respondents. When once there is lack of authority to collect such service tax from the respondent, it would not give authority to Department to retain such amount and validate it. In view of the above, it was held that refund of an amount mistakenly paid as service tax could not be rejected on ground of limitation under section 11B of the Central Excise Act, 1944
CCE (A) v. KVR Construction 2012 (26) STR 195 (Kar.)
(ii)
Decision of the Case: The Supreme Court observed that reading the agreement between the parties as a whole and harmonizing various provisions thereof, it can be inferred that service provider (contractor) accepted liability to pay service tax, since it arose out of discharge of their obligations under contract. With regard to the submission of shifting of tax liability, Supreme Court held that service tax is indirect tax which may be passed on. Thus, assessee can contract to shift their liability. Finance Act, 1994 is relevant only between assessee and tax authorities; it is irrelevant to 123 determine rights and liabilities between service provider and recipient as agreed in contract between them. There is nothing in law to prevent them from entering into agreement regarding burden of tax arising under contract between them.
Note: In present context, liability to pay service tax does not lie on service recipient under clearing and forwarding agent’s services. However, the principle derived in the above judgment that ‘service tax liability can be shifted by one party on to the other by way of contractual clause’ still holds good.
Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran 2012 (26) S.T.R. 289 (S.C.)
(c)
Decision of the Case: The Supreme Court stated that it was a settled proposition in a fiscal or taxation law that while ascertaining the scope or expressions used in a particular entry, the opinion of the expert in the field of trade, who deals in those goods, should not be ignored, rather it should be given due importance. The Supreme Court on referring to the case of Collector of Customs v. SwastikWoollens (P) Ltd. 1988 (37) E.L.T. 474 (S.C.), held that when no statutory definition was provided in respect of an item in the Customs Act or the Central Excise Act, the trade understanding, i.e.the understanding in the opinion of those who deal with the goods in question was the safest guide.
Thus, the Supreme Court concluded that the imported goods were covered under the exemption notification.
Commissioner of Customs (Import), Mumbai v. Konkan Synthetic Fibres 2012 (278)
E.L.T. 37 (S.C.)
4)
Decision of the Case: The Supreme Court held that the process of manufacture would not be complete if a product is not saleable as it would not be marketable. Thus, the duty of excise would not be leviable on it. The Supreme Court was of the opinion that the process of testing the customized F&S machines was inextricably connected with the manufacturing process, in as much as, until this process is carried out in terms of the afore-extracted covenant in the purchase order, the manufacturing process is not complete; the machines are not fit for sale and hence, not marketable at the factory gate. The Court was, therefore, of the opinion that the manufacturing process in the present case gets completed on testing of the said machines.
Hence, the afore-stated goods viz. the flexible plastic films used for testing the F&S machines are inputs used in relation to the manufacture of the final product and would be eligible for CENVAT credit under rule 57A of the erstwhile Central Excise Rules, 1944 [now rule 2(k) of the CENVAT Credit Rules, 2004].
Flex Engineering Ltd. v. Commissioner of Central Excise, U.P. 2012 (276) E.L.T. 153
(S.C.)
(b) (i)
Decision of the Case: The Karnataka High Court held that the authorities had no authority to initiate proceedings for recovery of penalty under section 76 of the Act when the tax payer paid service tax along with interest for delayed payments promptly. As per section 73(3), no notice shall be served against persons who had paid tax with interest; the authorities can initiate proceedings against defaulters who had not paid tax and not to harass persons who had paid tax with interest on their own. If the notices were issued contrary to this section, the person who had issued notice should be punishable and not the person to whom it was issued.
CCE & ST v. Adecco Flexione Workforce Solutions Ltd. 2012 (26) S.T.R 3 (Kar)
(ii)
Decision of the Case: The Andhra Pradesh High Court held that the petitioner was religious and charitable institution and was running guest houses by whatever name called, whether it was a shelter for pilgrims or any other name for a considerable time and thus was liable to get itself registered under ‘Short term accommodation service’ and pay service tax on the same.
Note: In the new regime, this case would be relevant in context of short accommodation service.
Tirumala Tirupati Devasthanams, Tirupati V. Superintendent of Customs, Central
Excise, Service Tax (2012-TIOL-97-HC-AP-ST)
(c)
Decision of the Case: The Supreme Court held that in the instant case, the contract for supply of crude sunflower seed oil @ US $ 435 CIF/ metric ton was entered into on 26th June 2001. It could not be performed on time because of which extension of time for shipment was agreed between the contracting parties. It is true that the commodity involved had volatile fluctuations in its price in the international market, but having delayed the shipment; the supplier did not increasethe price of the commodity even after the increase in its price in the international market. There was no allegation of the supplier and importer being in collusion. Thus, the appeal was allowed in the favour of the respondent- assessee.
Commissionerof Cus., Vishakhapatnam v. Aggarwal Industries Ltd. 2011 E.L.T. 641
(S.C.)
7th bit a
(i) Allowable. Finished goods are destroyed in fire during the process of fire due to spontaneous combustion & not due to negligible of the assessee. case: Shankar sugar mills 71 ELT 753 (Tri)
(ii) Allowable.Remission of duty is grantable though the assessee has received insurence claim for fire accident.But the assessee should file an affidavit before settlement,that in the event of setttlement by Insurence Company he would remit the benifit of duty paid back to the Department. case: Tulsyan Nec ltd 2007 ELT 753 (Tri)
(ii) Rule 27 of the Central Excise Rules,2002 stipulates that where no other penality is provided in the rules therein or in the Act,a breach of these rules shall be punishible with a penality which may extend to rs 5,000 & with confiscation of these goods in respect of which the offence is committed.
7th bit (b)
(i) all the records prepared or maintained by the assessee for accounting of transections in regard to,
1) providing of any services,whether taxable or not
2) receipt or procurement of input services & payment for such input services
3) receipt,purchase,manufacture,storage,sale,or delivery,as the case may be,in regard of inputs & capital goods
4) other activities such as manufacture & sale of goods,if any.
(ii) all the financial records maintained by him in the normal course of business.
(ii) objectives:
1. reduce the complaince costs of filing the return.
2. encourage the compliance with return filing obligation & vat payment through levy of penalities,in case,there is late payment of vat or late filing of returns.and
3. ensure the efficient processing of data filled in the returns.
(c)
1 inspect the goods
2 seperate damaged or deteriorated goods from the rest
3 sort the goods or change the containers for the presservation,sale,export or disposal of the goods
4 deals with the goods & their containers in such manner as may be necessary to prevent loss,deterioration or damage to the goods
5 show the goods for sale
6 take sample of the goods without entry for home consumption,if the proper officer permits,without payment of duty on such samples.
2nd bit
(a)
(I) The said statement is not valid.with effect from 01.03.2012 vide Notifications Nos 24-29 CE(NT) all dated 05.12.2011,the export procedures for nepal as been amended.The procedures prescribed for export under claim for rebate(Rule18 of Central Excise Rules,2002)vide Notification No.19/2004 CE (NT) dated 06.09.2004 & export without payment of duty under bond (Rule 19 of Central Excise Rules,2002) vide Notifications Nos 42 to 44/2001CE (NT) all dated 26.06.2001 would apply to nepal as well.This has been done inview of the revised treaty between India & Nepal.
(ii) The said statement is not valid.Rule 5 of Central Excise (remaval of goods at concessional rate of duty for manufacture of excisable goods ) Rules ,2001 has been amended vide Notifications No.13/2012 CE(NT) dated 17.03.2012 to inter alia,provided that manufacturer,receiving goods at concessional rate of duty ,has to submit a quarterly return instead of monthly return.
(iii) The following assessees have been exempted from such submission of FORM-ER4:
1) An asseessee who pays less than 1.00 crore of excise duty during the financial year to which ER-4 relates.
2) Indian Oridance Factories,Department of Defence Production & Ministry of Defence.
(b) (i) As per Rule 7 of the Point of taxation Rules,2011. (P.O.T SHALL BE 31.09.2012) of Apte & Apte Ltd.
(ii) The objective of bringing certain services with in the perview of 'declared service' under section 66E of Finance Act,1994.with effect from 01.07.2012
services fall within the scope of declared services.
1. renting of immovable property;
2. construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of certificate of completion by a competent authority;
3. temporary transfer or permitting the use or enjoyment of any intellectual property right;
4. development, design, programming, customization, adaptation, up gradation, enhancement, implementation of information technology software;
5. agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;
6. transfer of goods by way of hiring, leasing, licensing or any such manner without transfer of right to use such goods;
7. activities in relation to delivery of goods on hire purchase or any system of payment by instalments;
8. service portion in execution of a works contract;
9. service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as part of the activity.
(c)
(i) service charges paid to canalizing agent cannot be treated as buying commission u/s 10(1),as he is neither an agent of the importer,nor does he represent the importer abroad.hence inculdible in assessable value.case: Hyderabad Ind ltd .ELT 593
(ii) where there is no requirement in the contract for independent inspection,and the inspection is carried out by foreign supplier on his own and is not required for the purpose of fulfilling the condition of the contract,then such charges incurred on inspection are not includible in assessable value. case: Bombay Dyeing & Mfg.(1997) 90 ELT 276(SC)
6th bit.
(b)
1) the place of provision of service is where the immovable property is located Rule 5 of Place of Provision Services Rules,2012)
2) it's place of provision shall be the location in the taxable territory where the greatest proportion of the service is provided.Rule 7 of Place of Provision Services Rules,2012)
3) place where the passenger embarks on the conveyance for a continous journey.Rule 11 of Place of Provision Services Rules,2012)
6th bit
(c) As per section 28BA,
Where ,during the pendency of any proceedings u/s 28 or 28B.
- for protecting the interest of revenue
- the officer may,with the previous approval of the commissioner,by order in writing,
- attach provisionally any property belonging to the person on whom notice is served u/s 28 or 28B.
Every such provisional attachment shall cease to have effect after the expiry of 6 months from the date of the order made under sub-section(1). chief commissioner may extend the aforesaod period but the total period of extension shall not exceed two years.
NOTE: SOLUTIONS TO OTHER PARTS I WILL PROVIDE VERY SHORTLY WITH IN 1 DAY OR MORE.
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