On mere pendency of proceedings before Higher Authority, Department cannot deny refund
On mere pendency of proceedings before Higher Authority, Department cannot deny refund and interest on delayed refund to the Assessee
National Leather Cloth Mfg. Co. Vs. The Union of India & Others[2015 (1) TMI 944 – BOMBAY HIGH COURT]
National Leather Cloth Mfg. Co. (the Petitioner) was engaged in the manufacture of Excisable goods falling under Chapter 39, 56 and 59 of the First Schedule to the Central Excise Tariff Act, 1985. During the period January 1995 to March 1997, the Petitioner had utilized the Cenvat credit for Duty to be paid under the Additional Duties of Excise (Textile and Textile Articles) Act, 1978 of Rs. 41,01,467/- on Inputs.
The Department had taken a view that the Cenvat credit was wrongly utilized. The Petitioners deposited the above sum during the month of April and May 1997.
A Show Cause Notice was issued to the Petitioner which was adjudicated by the Commissioner of Central Excise, Mumbai and confirmed the demand of Rs. 41,01,467/- and imposed equal penalty.
Later, the Hon'ble Tribunal quashed and set aside the Order on March 12, 2004 on the ground of limitation and also set aside the penalty. Subsequently, the Petitioner filed refund application in terms of the order of the Hon'ble Tribunal but the same was rejected by the Deputy Commissioner of Central Excise on August
31, 2004. The matter again travelled to the Hon'ble Tribunal and on November 14, 2013, the Hon'ble Tribunal passed an Order and set aside the Commissioner (Appeals) Order dated May 26, 2005 and directed the authority to implement the Order of the Tribunal within 90 days of receipt.
Accordingly, refund was granted to the Petitioner of an amount Rs. 41,01,467/-, however, no interest was granted on refund amount.
The Petitioners approached to the ld. Commissioner (Appeals) who passed an Order dated August 12, 2014 and directed to pay the interest at the rate of 6% to the Petitioners from May 4, 2004 till the actual date of payment of refund of Rs.41,01,467/-.
The Petitioner was aggrieved and dissatisfied with the fact that despite such Order, the interest amount has not been paid by the Department.Being aggrieved, the petitioner filed an appeal before the Hon'ble High Court of Bombay.
The Hon'ble High Court of Bombay noted that the Department had preferred an appeal to this Court against the Order of sanctioning of refund passed by the Hon'ble Tribunal dated November 14, 2013 and further the Department had preferred another appeal to the Hon'ble Tribunal against the order of ld. Commissioner (Appeals) passed on August 12, 2014 for payment of interest on refund.
Accordingly, the Hon'ble High Court held that the law provides that in the event, amount is not paid within a specified time, then, the Department will have to pay interest, unless and until, the Department had received any preventive or prohibitory order and direction. Mere pendency of the proceeding before the Tribunal and the Court in the given facts and circumstances, would not enable the Department to deny the claim of interest.
The Department cannot refuse to release the interest to the Petitioners.
Limitation period of 1 year in respect of SAD refund claim arising out of the Order of the Court will be computed from the date of the Order and not from the date of payment of Customs duty Dev International Vs. Commissioner of Customs (Import), Mumbai [2015-TIOL-155-CESTAT-MUM] Dev International (the Appellant) imported certain goods (impugned […]
Date to Compute Limitation period of 1 year in respect of SAD refund claim arising out of Court Order
Limitation period of 1 year in respect of SAD refund claim arising out of the Order of the Court will be computed from the date of the Order and not from the date of payment of Customs duty
Dev International Vs. Commissioner of Customs (Import), Mumbai [2015-TIOL-155-CESTAT-MUM]
Dev International (the Appellant) imported certain goods (impugned goods) and filed two Bills of Entry, both dated July 17,2008 wherein 4% SAD, amounting to Rs.1,11,556.90 was paid. The impugned goods were detained by Central Intelligence Unit (CIU) for investigation. The Appellant approached the Hon'ble High Court of Bombay, which directed release of the impugned goods on provisional basis vide order dated March 17, 2010 and the same were released against P.D. Bond vide letter dated March 19,2010 issued by the Assistant Commissioner of Customs, CIU.
Thereafter, the Appellant sold impugned goods and filed refund claim on September 15, 2010 in terms of the Notification No. 102/2007-Customs dated September 14, 2007 (the Notification) in respect of 4% SAD.
Relying on the Circular No. 06/2008-Customs dated April 28, 2008, the refund claim filed by the Appellant was rejected as the same was filed after 1 year from the date of payment of Customs duty. Later the Commissioner (Appeals) also upheld the rejection of the refund claim.
Being aggrieved, the Appellant preferred an appeal before the Hon'ble CESTAT, Mumbai.
The Hon'ble CESTAT, Mumbai held the following:
- In the instant case, Bills of Entry were filed on July 17,2008 and Customs duty was paid on July 18,2008. At that time
there was no time-limit provided in the Notificationand the same was inserted vide Notification No. 93/2008-Customs dated August 1, 2008 (the Notification 93);
- The Hon'ble High Court of Delhi in case of Sony India Pvt. Ltd.[2014-TIOL-532-HC-DEL-CUS],has held that the amendment by the Notification 93 cannot be made applicable retrospectively;
- In the present case, it is beyond the control of the Appellant to file the refund claim within 1 year from the date of paymentfor the reason that the impugned goods were detained by the CIU and released after direction of the Hon'ble High Court on March 17, 2010. It is also a settled legal position that, wherever any relief arises out of the order of the Court, the period of litigation is excluded for the purpose of computation of limitation;
- In terms of Section 27(1B)(b) of the Customs Act, 1962, the Customs duty becomes refundable as a consequence of any judgment by Court, 1 (One) year shall be computed from the date of such judgment.
Therefore, the Hon'ble Tribunal decided the matter in favour of the Appellant and held that since the refund claim which arises only after the Order by the Hon'ble High Court and was filed within one year from the date of the Order of the Hon'ble High Court, the same was filed within time.
The Petitioner claimed that impugned sale was effected by transfer of documents of title before the goods had crossed the Customs frontiers of India and hence declared impugned sale as a sale in the course of import/ high sea sales and claimed exemption under Section 5(2) of the Central Sales Tax Act, 1956 (the CST Act) on the turnover of Rs.1,14,86,342/- and Rs.4,05,09,427/- respectively.
Assessee had to pay CST as Sale wasn't a High Seas Sale since bill of entry included his name as Importer instead of buyer's name
Assessee had to pay Central Sales Tax as Sale wasn't a High Seas Sale since bill of entry included his name as Importer instead of buyer's name
Vellanki Frame Works Vs. Commercial Tax Officer, Visakhapatnam [(2015) 53 taxmann.com 382 (Andhra Pradesh)]
Vellanki Frame Works (Petitioner) was carrying on business in the State of Andhra Pradesh.The Petitioner vide a quadri-partite Agreement between Indus Tropics Ltd. (Indus), the Petitioner, M/s. Radha Industries, Lucknow, U.P. (the Purchaser or Radha) and M/s. World Best Trading Co. (L.L.C.), Dubai (U.A.E) (the WBT), sold the goods to Radha (impugned sale). Pursuant to the quadri-partite Agreement dated January 21,2005 and another High Sea Agreement dated December 12,2005, Indus purchased the goods and sold them to the Petitioner, who purchased the same from Indus as the agent of Radha, and
transferred the documents on high seas sale basis in favour of Radha. In turn,Radha agreed to pay the Petitioner, commission of 2% plus bank charges while the Petitioner paid the entire amount to Indus without retaining a penny as commission.
The Petitioner claimed that impugned sale was effected by transfer of documents of title before the goods had crossed the Customs frontiers of India and hence declared impugned saleas a sale in the course of import/ high sea sales and claimed exemption under Section 5(2) of the Central Sales Tax Act, 1956 (the CST Act) on the turnover of Rs.1,14,86,342/- and Rs.4,05,09,427/- respectively.
The Departmentvide assessment orders dated January 20,2010 and May 18,2010 for the assessment years 2005-06 and 2006-07, denied the benefit of aforesaid exemption, treating the transaction as an inter-state sale falling under Section 3(a) of the CST Act.Being aggrieved, the Petitioner filed twoWrit Petitions before the Hon'ble High Court of Andhra Pradesh.
The Hon'ble High Court of Andhra Pradesh held the following:
- For a sale to be one in the course of import it has to be either one which has occasioned the import or has been affected by a transfer of documents of title to the goods before the goods have crossed the Customs frontiers of India;
- Crossing the Customs frontiers means crossing the limits of the area of the Customs station in which the imported goods or exported goods are ordinarily kept before clearance by Customs Authorities in terms of Section 2(ab) of the CST Act read with Section 2(12) and (13) of the Customs Act, 1962 ("the Customs Act");
- In terms of Section 2(23) of the Customs Act, import means bringing into India from a place outside India. Further, in terms of Section 2(26) of the Customs Act, importer also include any owner or any person who holds himself out to be the importer;
- The person who holds himself out to be the importer of the goods must furnish proof of being the importer before the goods are cleared for home consumption. Since, the name of the Petitioner has been reflected in the bill of entry for ex-bond (home consumption) and not that of Radha, so the Petitioner is an importer in the instant case;
- Further, in terms of Section 2(25) of the Customs Act, imported goods means, any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption.In the instance case, impugned sale was made after the goods were cleared for home consumption, hence liable to Central Sales tax;
- Furthermore, to regulate and control on imports, the Customs Act enjoins certain liabilities on the carriers as they are required to bring in the imported cargo into the country for unloadingonly after furnishing detailed information to Customs in Import General Manifest (IGM).IGM interalia reflect the name of the importer. Hence, impugned sale is not a high seas sale;
- Either the clearing house agent or the importer can clear the imported goods for home consumption. As evident from the bill of entry, the goods were imported in the name of the Petitioner and cleared with the assistance of the customs house agent.Hence, the goods were not cleared by Radha imply that the goods were imported by the Petitioner on high seas sale but subsequent impugned sale to Radha could only have been effected after the goods had been cleared for home consumption.
- As the bill of entry records the Petitioner's name as the importer and it was he who was assessed to Customs duty and not Radha, make it ample clear that impugned sale is not a high seas sale. Impugned sale could only have been effected after the Petitioner was assessed to Customs duty and he had cleared the goods for home consumption.
Thus, the Hon'ble High Court rejected the contention of the Petitioner and held that the sale made by the Petitioner to Radha was not in course of import/high sea sales but was an inter-state sale, liable to Central Sales tax.
Thirumalai Ready Mix Concrete Vs. State of Puducherry [(2015) 53 taxmann.com 90 (Madras)] The Appellant is a manufacturer of ready mix cement concrete and also provides men and materials to lay concrete mixture on area specified by purchaser. For the Assessment Year 2003-04, the Appellant claimed exemption treating the transaction as a Works contract under […]
Providing men and materials for laying concrete mixture is to be treated as 'Works Contract' and not as 'Sale'
Thirumalai Ready Mix Concrete Vs. State of Puducherry [(2015) 53 taxmann.com 90 (Madras)]
The Appellant is a manufacturer of ready mix cement concrete and also provides men and materials to lay concrete mixture on area specified by purchaser. For the Assessment Year 2003-04, the Appellant claimed exemption treating the transaction as a Works contract under Notification G. O. Ms. No. 50/90/F6, dated December 10, 1990.
The assessment made was revised by the Department stating that supply and pumping of ready mix concrete was not Works contract and entire turnover was liable to assessed to tax at 3 per cent.
The Appellant contended that the transaction is a Works contract and produced the copies of the Agreement executed between the dealer and the purchaser (the Agreement). However, the Assessing Officer rejected the contention of the Appellant by taking the view that the Appellant could not produce the invoice copy showing price of the material and labour charges separately and completed the assessment by treating
the transaction as 'Sale'. Thereafter, the Assistant Commissioner also agreed with the view of the Assessing Officer and rejected the appeal filed by the Appellant.
On appeal being filed to the Hon'ble Sales Tax Appellate Tribunal, Puducherry, the Hon'ble Tribunal relying upon the decisions of the Apex Court in Builders Association of India Vs. Union of India[(1989) 73 STC 370 (SC)] and Gannon Dunkerly & Co. Vs. State of Rajasthan [(1993) 88 STC 204 (SC)], after scrutiny of invoices and in view of the Agreement came to the conclusion that since the Agreement did not use the word 'Works contract', the transaction is to be treated as 'Sale'. Being aggrieved, the Appellant preferred an appeal before the Hon'ble High Court of Madras.
The Hon'ble Madras High Court in view of the nature of the work executed, the Agreement and the responsibility cast upon the Appellant on the quality, held the following:
- In terms of the Agreement, the nature of works entrusted to the Appellant is not restricted to supply of ready mix concrete mixture only. The Appellant was to provide men and materials in laying concrete mixture on the area specified by the purchaser.
- The supply had to be done through staff of the Appellant and that the Appellant was responsible for quality of the concrete and the laying also.
- In the event of any leakage arising therefrom in future, the responsibility was cast upon the Appellant to compensate the same.
- The Tribunal's view that on the mere absence of the word 'Works contract' in the Agreement, the transactions have to be treated as 'Sale' is not justifiable ground.
Therefore, the Hon'ble High Court allowed the appeal in favour of the Appellant and held that the present transaction is a composite Works contract involving men and labour.
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