Customs, Excise and Service Tax Appellate Tribunal

Salzer Electronics Ltd vs. The Commissioner of Customs

MANU/CC/0048/2024

16.02.2024

Customs

Expert opinion cannot be used as a conclusive proof and is only corroborative in nature

The issue that arises for consideration is whether the imported goods viz. '14 sets of Plastic Injection Moulds' are eligible for the benefit of Notification No.22/2013 dated 18th April, 2013. The Department has denied the benefit of exemption from duty alleging that the goods are used / second hand goods.

As per para 5.1 (e) of FTP, the second hand goods are not permitted to be imported under EPCG scheme. From the records, it is seen that the goods were examined by a Chartered Engineer who has reported that the goods are 'used' and 'not new'.

The goods have been imported after 1½ years of placing the purchase order. The learned counsel submitted that due to certain market constraints, their import was delayed. The report given by the Chartered Engineer that the goods appear to be used is not supported by any scientific or technical basis. The expert opinion cannot be used as a conclusive proof and is only corroborative in nature. Unless the expert gives an appropriate reason for his opinion, the same cannot be blanketly accepted in evidence. Such report cannot be given precedence over other evidence. In the present case, the moulds do have the etching of the word 'SALZER'. The expert in his report has not mentioned this for reasons best known to him.

Though opinion of an expert does help Court to arrive at a satisfactory conclusion; but this not mean that an expert opinion has to be accepted invariably in all situations. This would amount to delegation of judicial function. The report does not state the facts on which the Chartered Engineer made the conclusion that the moulds are used, second hand moulds. The expert is not to expected to give his impressions but has to state the facts on which he draws the opinion. The reliance placed by the adjudicating authority and Commissioner (Appeals) solely on the expert opinion cannot be accepted.

As per the records such as date and description in purchase order, drawings and the photographs, the contention of the appellant that the goods imported are new is probable and acceptable. The overseas supplier has issued a certificate stating that the goods are new. The said certificate though produced before the authorities, was not considered at all. There are no grounds to deny the benefit of exemption of Notification No.22/2013 dated 18th April, 2013. So also, there is no legal basis for enhancement of the value. The duty demand, confiscation or redemption fine and the penalties cannot sustain. The impugned order is set aside. Appeal is allowed.

Tags : Notification Exemption Entitlement

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Supreme Court

Chatrapal vs The State Of Uttar Pradesh (Neutral Citation: 2024 INSC 115)

MANU/SC/0113/2024

15.02.2024

Service

When the finding of guilt recorded by the Inquiry Officer is based on perverse finding the same can always be interfered

The District Judge placed the appellant under suspension vide order and initiated a departmental inquiry. The Inquiry Officer vide memorandum served the charge sheet on the Appellant on the charges firstly, the appellant vide communication had used inappropriate, derogatory and objectionable language and made false allegations against the officers including the District Judge as well as against the Presiding Officer of Court and secondly, the Appellant communicated letters and representations to the Registrar General of High Court and other officials of the State Government including the then Chief Minister without routing the same through proper channel.

The Inquiry Officer, upon completion of enquiry, recorded in his report that the charges levelled against the appellant are duly established. The District Judge accepted the inquiry report and vide order dismissed the appellant which was challenged in appeal before the High Court and the same was dismissed vide order while affirming the order passed by the Disciplinary Authority imposing punishment of dismissal. Being aggrieved by the order passed by the Administrative Judge of the High Court, the appellant filed the Writ Petition before the High Court which attained the same fate as that of the appeal. Hence, the present appeal.

With regard to the allegation that the appellant made false allegations of discrimination on caste basis, it is significant to notice that the appellant himself has not made any such allegation in his letter. Another charge against the appellant concerns directly sending the representations to the High Court and Hon’ble Chief Minister/Minister without routing the same through proper channel. In this regard, it is suffice to observe that Class-IV employee, when in financial hardship, may represent directly to the superior but that by itself cannot amount to major misconduct for which punishment of termination from service should be imposed. Even otherwise, the appellant has cited examples of other employees of the District Court, Bareilly who have sent representations directly to the superiors, but no action has been taken against them.

It is trite law that ordinarily the findings recorded by the Inquiry Officer should not be interfered by the appellate authority or by the writ court. However, when the finding of guilt recorded by the Inquiry Officer is based on perverse finding the same can always be interfered.

In view of facts that, the Appellant is a Class-IV employee against whom charge no. 1 was found proved on the basis of perverse finding and charge no. 2 is only about sending the representation to the High Court directly without availing the proper channel, present Court deem it appropriate to set-aside the impugned judgment of the High Court as well as the order whereby the appellant was terminated from service. Consequently, the Appellant is reinstated in service with all consequential benefits. Appeal allowed.

Tags : Termination Charges Proof

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Customs, Excise and Service Tax Appellate Tribunal

Police Commissioner vs. Lakhani Piraji Vanjara

MANU/CS/0073/2024

15.02.2024

Service Tax

Security service provided by the police department to various agencies and consideration received by them is not liable to service tax under security agency service

The issue involved is that the service of security escort/ detecting agency provided by the Police Commissioner, Surat and consideration received their against is liable to service tax or otherwise. Against the common order, assessee the police Commissioner filed Appeal contesting the demand of service tax.

The assessee submits that the issue of levy of service tax on the police department for various service such as escort service, detecting agency service provided to various agencies and consideration received here against is not liable to service tax.

The issue is no longer res-integra as in the various judgments including the judgments cited by the assessee, it is categorically held that security service provided by the police department to various agencies and consideration their against received by them is not liable to service tax under security agency service. Therefore, the issue is no longer res-integra. Therefore, the demand is set aside, consequently no penalty can be imposed as sought in the Revenue's appeal. Accordingly, the impugned order is set aside. Appeal of Assessee is allowed and appeal of revenue is dismissed.

Tags : Demand Confirmation Legality

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Supreme Court

Rajesh Viren Shah Vs. Redington (India) Limited (Neutral Citation: 2024 INSC 111)

MANU/SC/0108/2024

14.02.2024

Banking

Director who has resigned from the position cannot be held liable for negotiable instruments issued or for the business conducted after his resignation

The Appellants in both the appeals were Directors in the Respondent- Company and had resigned from such Directorship on 9th December, 2013 and 12th March, 2014 respectively. The Appellants, were arrayed as Accused in a complaint filed under Section 138 of the Negotiable Instruments Act, 1881.

In present case question raised is whether a Director who has resigned from such position and which fact stands recorded in the books as per the relevant Rules and statutory provisions, can be held liable for certain negotiable instruments, failing realization?

The position of law as to the liability that can be fastened upon a Director for non-realisation of a cheque is no longer res integra. Section 141 of the N.I. Act, states that every person who at the time of the offence was responsible for the affairs/conduct of the business of the company, shall be held liable and proceeded against under Section 138 of the N.I. Act, with exception thereto being that such an act, if done without his knowledge or after him having taken all necessary precautions, would not be held liable. However, if it is proved that any act of a company is proved to have been done with the connivance or consent or may be attributable to (i) a director; (ii) a manager; (iii) a secretary; or (iv) any other officer - they shall be deemed to be guilty of that offence and shall be proceeded against accordingly.

In cases involving negotiable instruments that interference would not be called for, in the absence of "some unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of process of Court.

The complainant has not placed any materials on record indicating complicity of the present Appellant(s) in the alleged crime. Particularly, when the Appellant(s) had no role in the issuance of the instrument, which is evident from Form 32 issued much prior to the date on which the cheque was drawn and presented for realisation. The veracity of Form-32 has neither been disputed by the Respondent nor has the act of resignation simpliciter been questioned. As such, the basis on which liability is sought to be fastened upon the instant Appellant(s) is rendered questionable.

The record reveals the resignations to have taken place on 9th December 2013 and 12th March 2014. The cheques regarding which the dispute has travelled up the courts have been issued on 22nd March 2014. The latter is clearly, after the Appellant(s) have severed their ties with the Respondent- Company and, therefore, can in no way be responsible for the conduct of business at the relevant time. Therefore, they ought to be then entitled to be discharged from prosecution. Accordingly, all criminal proceedings pertaining to the instant Appellants arising out of the complaints filed by the Respondent herein are quashed. Appeal allowed.

Tags : Director Resignation Liability

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Customs, Excise and Service Tax Appellate Tribunal

Commissioner of Central Tax, GST &Service Tax vs. Telecom Network Solutions Pvt Ltd

MANU/CN/0029/2024

14.02.2024

Excise

Transfer of ownership takes place at the factory gate, when the goods are delivered

The Respondent is engaged in the manufacture of "M.S. Fabricated Hot Dip Galvanized Steel Structures (Tower)". During the course of Audit, it was observed by the Audit party that, the Respondent charged freight from their buyers but did include the same in the transaction value in terms of Section 4(3)(d) of the Central Excise Act, 1944 .

Accordingly, Show Cause Notice covering period up to October, 2015 demanding Central Excise duty amounting to Rs.20,90,082 has been issued. For the further period i.e. November, 2015 to June, 2017 statement of demand dated 30.11.2017 has been issued demanding central excise duty amounting to Rs.51,81,676 alongwith applicable interest and also proposal to impose penalty under the provisions of Rule 25 of Central Excise Rules, 20023 read with Section 11AC of the Act. The Adjudicating Authority vide Order-in-Original confirmed the demand as proposed in the show cause notice and imposed penalty of Rs.51,81,676 under the provisions of Rule 25 of the Rules readwith Section 11AC of the Act.

Being aggrieved, the assessee filed appeal before the first Appellate Authority and the learned Commissioner (Appeals) allowed the appeal before him by setting aside the Order-in- Original. Being aggrieved by the impugned Order-in-Appeal, the Revenue has filed the present appeal before the Tribunal.

As per Rule 5 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000- wherein excisable value of goods are sold in the circumstances specified in clause (a) of sub-section (1) of Section (4) of the Act, except the circumstances in which the excisable value of goods are sold for delivery at a place other than the place of removal, then the value of such excisable value shall be deemed to be the transaction value, excluding the cost of transportation from the place of removal up to the place of delivery of such excisable goods.

The Respondent had arranged for the transport of goods to buyer's addresses and the freight charges were mentioned separately in the invoices. The goods after manufacturing in the plant of the Respondent were subject to pre-delivery inspection by the buyer and were ascertained in favour of the particular buyer before the delivery. In the invoices, the Respondent have charged sales tax and have reflected freight separately in most of the cases. Transfer of ownership takes place at the factory gate when the goods are delivered. Accordingly, there is no reason to interfere with the impugned Order-in-Appeal passed by the learned Commissioner (Appeals) and the same is sustained. The appeal filed by the Appellant Revenue is rejected.

Tags : Demand Confirmation Legality

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Income Tax Appellate Tribunal

Meyer Organics Private Limited, Mumbai vs. Dy. Commissioner of Income Tax

MANU/IU/0088/2024

12.02.2024

Direct Taxation

Penalty cannot be levied on assessee for bona fide mistakes which were corrected by filing the revised computation during the assessment proceedings

The present appeal has been filed by the assessee challenging the impugned order passed under Section 250 of the Income Tax Act, 1961by the learned Commissioner of Income Tax (Appeals), which in turn arose from the order passed under Section 271(1)(c) of the Act, for the assessment year 2011-12.The only grievance of the assessee is against the levy of penalty under Section 271(1)(c) of the Act.

It is not a case wherein the assessee has disputed the discrepancies pointed out by the AO during the scrutiny proceedings. Further, once the aforesaid discrepancies were pointed out, the assessee accepted its mistake and filed the revised computation of income, and paid the tax difference of Rs. 22,59,394. It is undisputed that the assessee has not further challenged the aforesaid additions made by the AO in the present case.

Further, the fact that the donation given was stated in the Tax Audit Report and the deduction under Section 80G of the Act was also computed by the tax auditor, however even then the assessee failed to claim a deduction under Section 80G of the Act supports the claim of the assessee that the mistakes were sheer inadvertent human error. The assessee made bona fide mistakes in the computation of its total income while filing its original return of income, which were corrected by the assessee by filing the revised computation during the assessment proceedings.

Thus, in view of the aforesaid findings, present is not a fit case for the levy of penalty under Section 271(1)(c) of the Act. Accordingly, the ground raised in the present appeal is allowed and the AO is directed to delete the penalty. Appeal allowed.

Tags : Penalty Imposition Legality

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