Indirect Taxes

1. Commissioner of Central Excise vs. B.O.C. India Limited [2007 (81) RLT 570 (Del)]

The Revenue filed an Appeal against the order dated 4th December, 2003 passed by the CESTAT before the Hon’ble Delhi High Court. The assessee used nitrogen and liquid gases as inputs in its manufacturing process. It appeared that because of the nature of the gas, some of it evaporated in the atmosphere. A Show Cause Notice was issued to the assessee as to why MODVAT credit should not be disallowed in respect of the gas which got evaporated in the atmosphere. The Assistant Commissioner held that the Nitrogen/liquid argon which got evaporated cannot be said to have been used in the manufacture of the goods. He hence adjudicated against the assessee. Being aggrieved by the order of the Assistant Commissioner, the assessee preferred an Appeal to the Commissioner (Appeals). The Commissioner (Appeals) held that evaporation did not amount to waste and therefore the disallowance under Rule 57D of the Central Excise Rules, 1944 was incorrect. The Revenue preferred an Appeal before the Hon’ble CESTAT, and the Hon’ble CESTAT upheld the order of the Commissioner (Appeals). The Hon’ble High Court on the Revenue’s Appeal clearly held that ‘there was a clear distinction between waste, refuse or by product arising during the manufacture of the final product. The loss of nitrogen/ liquid argon due to evaporation could not be considered as waste or refuse or even a by-product arising during the manufacture of the final product. Evaporation was a natural consequence of the manufacturing activity carried out by the assessee. Therefore the provisions of Rule 57D were not applicable and the Revenue’s Appeal was dismissed as no substantial question of law arose.

2. Mahindra & Mahindra Limited vs. Commissioner of Central Excise, Mumbai [2007 (81) RLT 608 (CESTAT-Mum)]

In the present case the issue involved was that the appellants who were manufacturers had availed the benefit under Notification No 6/2000 dated 1st March, 2000. The Lower Authorities have rejected the Refund Claim on the ground that the Appellants had filed the claim beyond the time prescribed under the said Notification. The Lower Authorities held that the appellants had not fulfilled the conditions of the Notification and as such refund was not due to them. The appellants contended that the lower authorities should have followed the provisions of section 11B of the Central Excise Act, 1944 and the conditions of the Notification cannot have precedence over the conditions of the Notification. The Hon’ble CESTAT placing reliance on the Supreme Court’s decision rendered in the case of Mihir Textiles Limited vs. Collector of Customs, Bombay reported in [1997 (20) RLT 243 (S.C.)], that as the appellants had not complied with the conditions in the Notification, their Refund claim was time barred. The appeal was hence dismissed.

3. Savitri Concast Limited vs. CCE Jaipur [2007 (81) RLT 614 (CESTAT-Del)]

In the present case the appellant sought an interim stay of order of the Commissioner dated 8th February, 2007 made under section 14A of the Central Excise Act, 1944 directing special audit of the accounts of the Appellant’s factory. The Hon’ble CESTAT relying on the decision rendered by the Apex Court in the case of Rajesh Kumar and Ors. vs. Deputy Commissioner of Income Tax & Ors reported in [(2006) 287 ITR 91 (S.C.)] in the context of the provisions of section 142 (2A) of the Income-tax Act, 1961, held that admittedly the appellant was not put to notice about the direction issued under Section 14A. Moreover in the impugned order, beyond repeating the language of section 14A by stating that the value was not correctly declared or determined by the appellant, no particulars were given about either the declaration, or determination of value etc. which was required for the Commissioner to form an opinion. As such the Hon’ble CESTAT held that the appellants had made out a prima facie case for interim stay of the impugned order. The impugned order was hence stayed during the pendency of the Appeal.

4. Manaksia Limited vs. CCE, Kolkata-IV [2007 (81) RLT 620 (CESTAT-Kol)]

In the present case the appellants received capital goods on payment of duty and took credit of the same. Subsequently they supplied the same to M/s Continental Technologies ( P) Limited which was an EOU without payment of duty or reversal of credit against CT-3 Certificate validly issued under Notification No. 22/2003-CE dated 31st March, 2003. The Department raised a demand on the ground that the appellants were required to reverse the credit of duty. It was held by the Hon’ble CESTAT that the appellants were not required to reverse the credit as the EOU would have taken credit of the same and a liberal approach was required. As such the demand and penalty was set aside and the appeal was allowed.

5. Sunil Kumar & Brothers & Ors vs. CC, Nhava Sheva [2007 (81) RLT 642 (CESTAT)-Del]

In the present case, the appeal related to valuation of ‘ Chinese Cassia Broken Grade-III’ imported into India. The Department tried to enhance the assessable value on the basis of ‘ledger price’ to main European ports. Rule 8 of Customs Valuation Rules specifically forbids adopting price “for the export to country other than India” for the purposes of valuation. The Hon’ble CESTAT hence held that the basis adopted by the Department was contrary to specific legal provision. There was no reason shown also by the Department to reject the transaction value. The appeal was allowed.