Royalty paid by the Assessee at 12% on the sale value of the manufactured goods is not required to be loaded on the invoice price of the imported raw material Ortiker India P. Ltd. Vs. Commissioner of Customs (I),Mumbai [2014 (12) TMI 809 - CESTAT Mumbai] Ortiker India P. Ltd. (the Appellant or the Company) […]
Royalty paid on sale value of manufactured goods is not required to be loaded on invoice price of imported raw material
Royalty paid by the Assessee at 12% on the sale value of the manufactured goods is not required to be loaded on the invoice price of the imported raw material
Ortiker India P. Ltd. Vs. Commissioner of Customs (I),Mumbai [2014 (12) TMI 809 – CESTAT Mumbai]
Ortiker India P. Ltd. (the Appellant or the Company) imported clamps from the related supplier outside India. The transactions were examined on arms length basis and the SVB branch vide order dated February 6, 2009 held that the transaction value has not been influenced by related person. Thereafter,vide Order dated February 2, 2012, the value of imported goods was loaded to the extent of declared invoice value by 8.5% for the year 2010-11 and 18.86% for the year 2011-12 upto November 30, 2011 in the case of imports made from the related supplier and thus all provisional assessments were made final during the year 2010 to November 30, 2011 in terms of Section 28(4) of the Customs Act, 1962. This Order was challenged before the Commissioner (Appeals), wherein it was held that for the entire periodthe loading of 12% on the invoice value is required to be done. Being aggrieved, the Appellant preferred an appeal before the Hon'ble CESTAT, Mumbai.
The Appellant contended that initially the Company was in the activity of trading of clamps and in May-June 2009, the Appellant started manufacturing activity. For that, the Appellant entered into an Agreement (the Agreement) with their foreign supplier according to which the Appellant was required to make the payment at 12% on the net invoice value of the product manufactured and sold with the trade-mark, as the Appellant was given license to use the trade-mark. Consequently, the Appellant imported capital goods and raw material for manufacturing activity and raw material and finished goods for trading purpose. It was further submitted that the Appellant was paying royalty for manufacturing of finished product and not on trading activity. Furthermore, there is no pre-condition of sale of the imported goods to pay royalty as per the Agreement which is required in terms of the Rule 10(1)(c) of Customs Valuation Rules, 2007 (the Customs Valuation Rules).
On the other hand, the Department contended that being a related person, the value has to be determined as per Rule 3 of the Customs Valuation Rules and since the condition of Rule 3(b) thereof is not satisfied, the value of royalty paid by the Appellant is to be added in the invoice value.
The CESTAT Mumbai observed as under:
- No royalty or value of any amount over and above the invoice price has been paid by the Appellant for finished goods and capital goods to the related supplier, and there is no finding of the Adjudicating Authority that the price of the said goods have been influenced being a related person.
- The Appellant are required to pay the licence fee at 12% on the net invoice amount of all products manufactured and sold with the trade-mark which clearly means that the licence fee is being paid by the Appellant for use of the trade-mark for manufactured goods.
- There was no condition of sale that the Appellant is required to pay this royalty on the imported goods.
Therefore, in the light of the Agreement,the Hon'ble Tribunal allowed the appeal in favour of the Appellant and held that royalty paid by the Appellant at 12% on the sale value of the manufactured goods is not required to be loaded on the invoice price of imported raw materials, capital goods and finished goods.
Universal Paper Mills Ltd. Vs. Commissioner of Central Excise, Haldia Commissionerate [(2014) 51 taxmann.com 329 (Calcutta)] In the instant case, proceeding was initiated against Universal Paper Mills Ltd. (the Appellant) in respect of the goods cleared during the period August 1997 to December 2000 and April 2001 to June 2001 which were confirmed vide the […]
In condonation plea, Tribunal can only seek explanation of delay beyond due date of filing appeal
Universal Paper Mills Ltd. Vs. Commissioner of Central Excise, Haldia Commissionerate [(2014) 51 taxmann.com 329 (Calcutta)]
In the instant case, proceeding was initiated against Universal Paper Mills Ltd. (the Appellant) in respect of the goods cleared during the period August 1997 to December 2000 and April 2001 to June 2001 which were confirmed vide the Order-in-Original dated May 31, 2007.Being aggrieved the Appellant filed an appeal before the Ld. Commissioner (Appeals) along with Stay application. The Ld. Commissioner (Appeals) ordered pre-deposit of 10% of duty and penalty.
The Appellant against the order of pre deposit filed an appeal before the Hon'ble CESTAT, Kolkata which was dismissed. Further, due to non-compliance of the pre-deposit amount, the case was dismissed by the Ld. Commissioner (Appeals) vide Order dated October 12, 2009 (the Impugned Order).
The Impugned Order came to the knowledge of the Appellant in the second week of April, 2010, which was received by somebody else on behalf of the Appellant on October 29, 2009. The Appellant filed an appeal before the Hon'ble CESTAT, Kolkata along with a Stay application on May 26, 2010 seeking condonation of delay of about 117 days in filing of appeal. The Appellant submitted that since a group of shareholders had usurped the factory of the Appellant in the beginning of January, 2010 and as such, the office bearers were not in a position to take steps to prefer an appeal which led to delay.
The Hon'ble Tribunal denied condonation on ground that the Appellant could not explain what transpired during original period of limitation from October 29, 2009 to January 29, 2010.Being aggrieved, the Appellant filed an appeal before the Hon'ble High Court of Calcutta arguing that for seeking condonation of delay, Tribunal could not ask what transpired between time-limit allowed. The Tribunal can only seek explanation of delay from January 30, 2010 to May 26, 2010.
The Hon'ble High Court of Calcutta held that Tribunal had made a mistake while rejecting the application for condonation of delay on the ground that there was no explanation of the steps initiated by the Appellant between time-limit allowed as the Appellant was required to explain the delay from January 29, 2010 onwards and not from October 29, 2009 onwards. It
was further held by the Hon'ble High Court that reasons advanced by the Appellant for delay should be bona fide/ sufficient to warrant condonation of delay in filing the appeal and the delay need not be explained date-wise. Hence, matter was remanded back to consider explanation of delay only from January 29, 2010 onwards.
Excise duty exemption cannot be denied merely because the certificates were in the name of intermediary through whom the material was supplied for approved projects Commissioner of Central Excise, Jaipur Vs. KamdhenuIspat Ltd. [(2014) 51 taxmann.com 227 (New Delhi - CESTAT)] KamdhenuIspat Ltd.(the Assessee)is a manufacturer of mild stone CTD Bars. For the period from […]
Excise duty exemption cannot be denied merely because the certificates were in the name of intermediary
Excise duty exemption cannot be denied merely because the certificates were in the name of intermediary through whom the material was supplied for approved projects
Commissioner of Central Excise, Jaipur Vs. KamdhenuIspat Ltd. [(2014) 51 taxmann.com 227 (New Delhi – CESTAT)]
KamdhenuIspat Ltd.(the Assessee)is a manufacturer of mild stone CTD Bars. For the period from April 2003 to June 2004, the Assessee supplied the CTD Bars for use in certain Projects financed by Asian Development Bank (ADB) and being implemented by Rajasthan Urban Infrastructure Development Project, Jaipur (RUIDP).
The Assessee also submitted certificates issued by project Director, RUIDP, Jaipur, countersigned by Additional Chief Secretary (Finance) Govt. of Rajasthan, certifying that the material mentioned in the certificate is required for use of the projects, and that the project have been financed by ADB through loan, duly approved by Govt. of India for urban infrastructure development of six major cities of the state of Rajasthan.
Accordingly, the Assessee availed exemption from Excise duty under Notification No. 108/95-CE dated August 28, 1995 ("the Exemption Notification").
However, the Adjudicating Authority denied the benefit of the Exemption Notification on the premise that the Assessee's name is not mentioned as supplier of the material in the certificates and the goods have not been supplied directly to the ADB financed Projects. Thus, demand was confirmed against the Assessee along with interest and penalty.
Being aggrieved, the Appellant preferred an appeal before the Commissioner (Appeals) where the matter was decided in favour of the Assessee. Thereafter, aggrieved by the Order of the Commissioner (Appeals), the Revenue preferred an appeal before the Hon'ble CESTAT, Delhi.
The Hon'ble CESTAT, Delhi relying upon the decision of the Hon'ble High Court of Madras in case of CCE Vs. Caterpillar India (P.) Ltd.[2013(297) ELT 8],held that since it is not denied that the Assessee have supplied the material to the persons mentioned in the certificates and there is no allegation of diversion of the material supplied for any other purpose, the benefit of the Exemption Notification cannot be denied on supply of products to projects funded by ADB even if routed via intermediary..
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Excise duty exemption cannot be denied merely because th... Excise duty exemption cannot be denied merely because the certificates were in the name of intermediary through whom the material was supplied for ap... | |||||||
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In my today's article I will discuss about the House Rent allowance (HRA). Now the catch here is that you an employee might trust your employer for allowing you the HRA, but at the same time you should know the right way of treatment of HRA in your Income Statement while you are filing your Income Tax Return.
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