January 2017 Newsletter

CENTRAL EXCISE

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Transfer of ownership of captive power plant installed within the factory shall not be deemed as removal. The term “removal” contemplates physical removal. Precedent referred J.K. cotton and spinning weaving mills Ltd. 1987(10) TMI 51 SCCCE Vs Bhilai Steel Plant – 2017 (1) TMI 293 CESTAT New Delhi.

In case of export of final products, the place of removal would be the port of shipment and not the factory gate and therefore, the manufacturer would be entitled to cenvat credit towards cargo handling as input service under CCR, 2004. –Impex Ferro Tech Ltd. Vs CCE – 2017 (1) TMI 591.

Cenvat credit availed on Capital Goods cannot be denied when the final products manufactured out of Capital goods are exempted later – CCE&ST Vs Gokul Foods Pvt. Ltd. – 2017 (1) TMI 801.

When the sale of goods is partly at factory gate and partly through consignment agents by stock transferring the goods on payment of duty, Rule 7 of Central Excise (Valuation) Rules is not applicable – Steel & Metal Tubes (I) Ltd. Vs CCE – 2017 (1) TMI 874.

Rule 7 of Central Excise (Valuation) rules is not applicable when the sale of goods is partly at factory gate and partly through consignment agents by stock transferring the goods on payment of duty. It  is only applicable in case of total goods transfer to depot. – Steel & Metal Tubes (I) Ltd. Vs CCE – 2017 (1) TMI 874.

When the goods are cleared to independent dealer as well as to sister concern and the sister concern consumes it for the manufacture of their product, Rule 9 of Valuation Rules is not applicable but Rule 8 is applicable– HH Interior and Auto Components Ltd., Shri. Parvesh Soni, Shri. Rajeev Kumar Rai Vs CCE – 2017 (1) TMI 1229.

Capital goods when fixed to the earth using support structures cannot be considered to be immovable property and credit cannot be disallowed – Hariom Concast & Steels Pvt Ltd Vs CCEC&S – 2017 (1) TMI 1180

Capital goods when fixed to the earth using support structures cannot be considered to be immovable property and credit cannot be disallowed – Hariom Concast & Steels Pvt Ltd Vs CCEC&S – 2017 (1) TMI 1180.

TRANSFER PRICING

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Rendering software development services as a captive service provider and development and sale of software product are altogether different activities and cannot be treated as interchangeable – Comverse Network Systems India (P) Ltd. Vs ACIT, 2017 (1) TMI 1215.

 

 

AMP expenditure adjustment- Where AMP expenditure is incurred by AE, parent company cannot claim adjustment for the same. Economic ownership of Company in Indonesia vests with AE. The AE is in different tax jurisdiction subject to the Indonesia law and the parent company cannot claim the benefit of the AE’s business or may claim beneficial ownership treating the A.E as virtual non entities –  TVS Motor Company Ltd. Vs ACIT 2017 (1) TMI 1086.

The incurring of high advertisement and marketing expenses by the assessee does not affect the determination of ALP under the RPM. It is natural that these expenses can have bearing on the gross profits. The higher or lower APM Expenses spent cannot affect the amount of gross profit and the resultant ALP under the RPM – Bose Corporation India (P) Ltd. Vs ACIT, 2017 (1) TMI 1050.

CUSTOMS

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The Single Window Interface for Facilitation of Trade (SWIFT) has been extended to Exports- Circular No. 1/2017-Customs dated 04.01.2017.

The import conditions of Point of Sale (PoS) terminal devices and cells/ batteries containing alkaline or other non-acid electrolytes have been relaxed.- Circular No. 03/2017-Cus dated 16.01.2017.

The jurisdiction of the Customs authorities (would include the Director of Revenue Intelligence) to investigate into violations of terms of advance licences, as already held by the Hon’ble SC in Sheshank Sea Foods Pvt. Ltd. vs. Union of India, [1996 (88) ELT 626 (SC)]- Charminar Export Vs JD,FT., 2017 (1) TMI 748 – (Mad)

Distinguishing of terms “Seizure” and “Detention” as per usage in the act- Seizure is an act of taking possession of a property, pursuance of an legal authority or process, In instant case detention of goods is carried out by the respondents, as it were, by way of an administrative practice. Due to approved usage, detention of goods is also backed by legal authority and/or legal process. Even after repeated requests from petitioner, the goods were not released for re-export, hence detention was held illegal. Ordered for release by submitting bond. Applicability of fine or penalty left open to appropriate forum for adjudication. – M/s. J.K. Exim Vs The Principal Commissioner of Customs, 2017 (1) TMI 1351 (Mad)

Period of limitation for filing refund claim of SAD specified under Notification No.102/2007-Cus not unconstitutional since the statute book always specified the power to refund under section 27 of the Customs Act, 1962. Merely because a condition is imposed to file a refund application and which is in the nature of a time-bar or limitation that cannot be held to be onerous, excessive and therefore ultravires Article 14 of the Constitution. – M/s. CMS Info Systems Limited Vs UOI, 2017 (1) TMI 786 (Bom).

 

 

 

 

Since Section 18 of the Customs Act was itself introduced post 13.07.2006, unjust enrichment is not applicable to the refunds in regard to assessments finalised prior to 13/07/2006.- Creative Industries Hyderabad Pvt Ltd Vs CCE, Customs & ST, 2017 (1) TMI 694 – (Hyd Tri)

SERVICE TAX

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A person who enables a potential customer to connect with persons providing services by way of renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes is not an “Aggregator” as per Rule 2(aa) of ST Rules,1994 – Notification no.02/2017 dated 12th Jan 2017

Refund of Unutilised CENVAT Credit u/r 5 of CCR 2004 – The relevant date is from date of invoice and not from the date of realisation/date of export of services – CENVAT Credit on invoices addressed to unregistered premises cannot be denied –Deloitte &Touche Assurance and Enterprise Risk Services India Pvt Ltd., and 2 others Vs CC, CE & ST, Hyderabad-IV, 2017 (1) TMI 237

No penalty is imposable when the issue is revenue neutral in nature; Revenue neutral can be established only on the basis of data – SKF (India) Ltd. Vs Commissioner of Central Excise, Pune I, 2017 (1) TMI 1026

If the Court finds that in exceptional cases such as, the authority has passed the order without jurisdiction or has exercised the power in excess of the jurisdiction or by over-stepping or crossing the limit of jurisdiction or that there is failure of justice, or it has resulted in gross injustice, then the Writ jurisdiction under Article 226 of the Constitution can be invoked – Practice Strategic Communication India P. Ltd. Vs C.S.T., Domlur, 2017 (1) TMI 6

FOREIGN TRADE POLICY

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The adjudicating authority cannot demand the whole amount executed under bond along with interest for failing to fulfil the conditions of the EPCG license. The demand is confined only to the extent to Duty saved Value along with the interest; No penalty is malafide intention is absent – Nancy Crafts Vs C.C. New Delhi (ICD TKD), 2017 (1) TMI 1170

Compelling a particular Industry in SEZ by imposing condition for mandatory 100% physical export out of India vide a policy is not valid when the Act and Rules does not prohibit to sell the goods of SEZ to DTA by fulfilling the conditions – IMPERIAL OVERSEAS PRIVATE LIMITED Vs UNION OF INDIA AND 2, 2017 (2) TMI 7