Supreme Court

Commissioner of Central Excise, Belapur Vs. Jindal Drugs Ltd. (Neutral Citation: 2024 INSC 354)

MANU/SC/0362/2024

30.04.2024

Excise

Process of labelling or re-labelling amounts to manufacture

Present is an appeal by the revenue under Section 35L(1)(b) of the Central Excise Act, 1944 (Central Excise Act) against the order passed by the Customs, Excise and Service Tax Appellate Tribunal('CESTAT').

By the impugned order, CESTAT held that as per Note 3 to Chapter 18 of the Central Excise Tariff Act, 1985 ('the Central Excise Tariff Act'), the activity of labelling amounted to manufacture and hence, the activity of the Respondent fell within the ambit of the definition of manufacture as per the said Note. Therefore, the Respondent was eligible for availing the CENVAT credit of the duty paid by its Jammu unit and was also eligible for rebate on the duty paid by it while exporting its goods. CESTAT further held that, there was no suppression by the Respondent and, therefore, the extended period of limitation was not available to the department (revenue).The core issue to be considered is whether the activity of labelling carried out by the Respondent amounts to manufacture?

The word 'manufacture' includes any process which is incidental or ancillary to the completion of a manufacture product; any process which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act as amounting to manufacture; or any process which in relation to the goods specified in the Third Schedule involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer.

Therefore, Note 3, post amendment, as it exists today contemplates three different processes; if any of the three processes are satisfied, the same would amount to manufacture. The three processes are:(i) labelling or re-labelling of containers; or(ii) repacking from bulk packs to retail packs; or(iii) the adoption of any other treatment to render the product marketable to the consumer.

Any one of the processes indicated in Note 3 to Chapter 18 of the Central Excise Tariff Act would come within the ambit of the definition of 'manufacture' under Section 2(f)(ii) of the Central Excise Act. There is no factual dispute as to the activity carried out by the Respondent at its Taloja unit. Whether the goods are brought from the Jammu unit or are imported, those are relabelled on both sides of the packs containing the goods at the Taloja unit of the Respondent and thereafter, introduced in the market or sent for export. In terms of Note 3 to Chapter 18, this process of re-labelling amounts to 'manufacture'. The view taken by CESTAT is the correct one and no case for interference is made out. The impugned order of CESTAT is affirmed. Appeal dismissed.

Tags : Activity CENVAT credit Eligibility

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High Court of Bombay

Sagar Maruti Suryawanshi Vs. State of Maharashtra and Ors. (Neutral Citation: 2024:BHC-AS:19729-DB)

MANU/MH/2766/2024

29.04.2024

Criminal

Writ of habeas corpus can be issued only if detention is illegal

By present writ petition filed under Article 226 of the Constitution of India, 1950, the Petitioner seeks a declaration that his detention beyond twenty four hours is illegal and hence, he is entitled to be released in connection with First Information Report registered with Pimpri Police Station, Pune. The Petitioner has also raised the challenge to the order passed by the learned Judge of the Special Court, Pune remanding the Petitioner to police custody.

Once it is found that the order of remand has been passed within twenty four hours of the Petitioner's arrest, the requirement of Section 167 of the Code of Criminal Procedure, 1973 (CrPC) stands satisfied.

Coming to the production of the Petitioner initially before the learned Judicial Magistrate, First Class and thereafter before the learned Judge of the Special Court and yet again before the learned Judicial Magistrate, First Class only to be finally produced before the learned Judge of the Special court, it is to be noted that all these events have transpired within twenty hours of the Petitioner's arrest. On this basis, it cannot be said that though offence under Sections 3 and 4 of the Act of 1999 had been registered vide FIR, the Petitioner was produced before the learned Judicial Magistrate, First Class who had no jurisdiction to issue the remand order.

It is also to be noted that even otherwise under Section 57 of the CrPC, time that is necessary for undertaking the journey from the place of arrest to the Magistrate's Court is liable to be excluded while determining the period of twenty four hours. There is no substance in the grievance of the Petitioner that he was illegally detained without a valid order authorizing his detention as required under Section 167 of the CrPC.

The question of issuance of writ of habeas corpus would arise only in the event of the Petitioner's detention being found to be illegal as held in V. Senthil Balaji vs. The State represented by Deputy Director and Ors. Present Court does not find any case made out to exercise extraordinary jurisdiction under Article 226 of the Constitution of India. It would be open for the Petitioner to challenge the order of remand passed by the learned Judge of the Special Court by availing appropriate remedy. Petition dismissed.

Tags : Arrest Detention Legality

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High Court of Delhi

Satpal Singh Sarna & Ors vs. Satya Prakash Bansal (Neutral Citation: 2024:DHC:3323)

MANU/DE/3107/2024

29.04.2024

Tenancy

Court would intervene only where the view taken and reasoning advanced by the Rent Controller suffers the vice of perversity

By way of present petition brought under proviso to Section 25B(8) of the Delhi Rent Control Act, the landlords have assailed order of the learned Rent Controller, whereby the eviction petition under Section 14(1)(e) of the Act filed by the petitioners was dismissed after full dress trial.

Scope of proceedings under proviso to Section 25B(8) of the Act is extremely limited and does not permit the High Court to venture into re-appreciation of evidence. But where the view taken and reasoning advanced by the Rent Controller suffers the vice of perversity, this court cannot, but intervene.

It is trite that, mere assertion on the part of the tenant would not be sufficient to rebut the strong presumption in landlord's favour that his requirement of the occupation of the tenanted premises is real and genuine; in this regard, the tenant has to submit the necessary pleadings as well as cogent evidence to prove his plea.

Even where the landlord permanently residing abroad desires to occasionally visit India, she or he cannot be deprived of her or his right to claim stay in her or his own house and in such case, the tenant cannot claim better right. In the case of S.P. Kapoor vs Kamal Mahavir Prasad Murarka, this court held that where the landlord is permanently settled out of Delhi but during his visits to Delhi wants to stay in his own premises, which are under occupation of a tenant, bona fide of his desire and requirement cannot be a suspect.

The reasoning advanced by the learned Rent Controller is completely perverse and calls for intervention of this court under proviso to Section 25B(8) of the Act. On account of complete absence of specific pleadings from the side of Respondent, complete absence of affirmative evidence coupled with no effective cross examination, Present Court find no reason to suspect genuineness of requirement of subject premises as set up by the Petitioners. The impugned order is set aside. Consequently, the eviction petition is allowed and the petitioners are held entitled to recover possession of the subject premises.

Tags : Tenancy Rent Controller Delhi Rent Control Act Section 25B(8)

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Supreme Court

Commissioner of Trade and Taxes Vs. FEMC Pratibha Joint Venture (Neutral Citation: 2024 INSC 364)

MANU/SC/0371/2024

01.05.2024

Sales Tax/VAT

Department must adhere to the timeline for refund stipulated under Section 38(3) of the Delhi Value Added Tax Act

The issue for consideration is whether the timeline for refund under Section 38(3) of the Delhi Value Added Tax Act, 2004 must be mandatorily followed while recovering dues under the Act by adjusting them against the refund amount.

The Respondent is a joint venture engaged in the execution of works contracts for the Delhi Metro Rail Corporation and makes purchases for this purpose. It claimed refund of excess tax credit. The Appellant did not pay the refund even until 2022, pursuant to which the Respondent sent a letter for the consideration of their refund. The Value Added Tax Officer passed an adjustment order to adjust the Respondent's claims for refund against dues under default notices. The Respondent then filed a writ petition before the High Court for quashing the adjustment order and the default notices. High Court quashed the adjustment order and directed refund. The present appeal is restricted to the issue of quashing the adjustment order.

The language of Section 38(3) of Act, is mandatory and the department must adhere to the timeline stipulated therein to fulfil the object of the provision, which is to ensure that refunds are processed and issued in a timely manner.

In the present case, Section 38(3)(a)(ii) of Act, is relevant as both the refunds in the present case pertain to quarter tax periods. Therefore, as per Section 38(3)(a)(ii) of Act, the refund should have been processed within two months from when the returns were filed. It is therefore evident that the default notices were issued after the period within which the refund should have been processed. Sub-section (2) only permits adjusting amounts towards recovery that are "due under the Act".

By the time when the refund should have been processed as per the provisions of the Act, the dues under the default notices had not crystallised and the Respondent was not liable to pay the same at the time. The Appellant-department is therefore not justified in retaining the refund amount beyond the stipulated period and then adjusting the refund amount against the amounts due under default notices that were issued subsequent to the refund period. The impugned judgment directing the refund of amounts along with interest as provided under Section 42 of the Act is affirmed. Appeal dismissed.

Tags : Refund Direction Legality

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Income Tax Appellate Tribunal

Income Tax Officervs. Saket Group Of Aawas Nirman

MANU/IU/0253/2024

01.05.2024

Direct Taxation

Interest received on fixed deposits with the bank is business income

The assessee is a partnership firm and is carrying on the business of builders and developers. The learned CIT(A), vide impugned order, allowed the ground raised by the assessee on this issue by following the decision of the Hon'ble jurisdictional High Court in CIT v/s Lok Holdings, and held that, interest received on fixed deposits is a business income of the assessee. Accordingly, the addition of Rs.6,70,740 made by the AO was directed to be deleted. Being aggrieved, the Revenue is in appeal. The only grievance of the Revenue is against treating the interest received on fixed deposits as business income of the assessee instead of income from other sources.

For computing the remuneration payable to the partners, which is within the allowable limits as per section 40(b) of the Act, "book profit" means the net profit as shown in the Profit and Loss account computed in the manner laid down in Chapter-IV-D of the Act, which deals with computation of profits and gains of business or profession. Therefore, only receipt which is in the nature of business income can form part of the book profit to compute the remuneration payable to the partners.

In support of its plea that interest received on fixed deposits with the banks is in the nature of business income, the assessee has placed reliance upon the decision of the High Court in Lok Holdings. While deciding the issue in favour of the taxpayer, High Court held that, interest earned on surplus funds deposited with the bank is assessable as business income and not as income from other sources.

Since in the present case also, the assessee earned interest from the deposit of surplus funds of its construction business, present Tribunal is of the considered view that the ratio of the aforesaid decision of the High Court is squarely applicable to the facts of the present case. Accordingly, there is no infirmity in the impugned order in treating the interest received on fixed deposits with the bank as business income and considering the same for the purpose of computation of book profit for calculating the remuneration paid to the partners. The appeal by the Revenue is dismissed.

Tags : Addition Deletion Legality

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Customs, Excise and Service Tax Appellate Tribunal

Hindustan Unilever Ltd vs. Commissioner of Customs (Export)

MANU/CM/0097/2024

01.05.2024

Customs

When the goods are liable for confiscation, imposition of redemption fine and penalty under Sections 125 and 112(a) of Customs Act are automatic

The Appellant had filed the Bill of Entry before the Customs authorities for clearance of the imported goods namely, "Dove AP Original Whitening, Dove AP Silk Dry Whitening, Dove AP GF Cucumber and Dove AP Grapefruit Anti-perspirants". The appellant had claimed the classification of these goods under Tariff Item 3307 20 00.

On the basis of change in the Retail Sale Price (RSP), the Department concluded that the Appellant had mis-declared the RSP in order to evade payment of Additional Duty of Customs (CVD). After due process of law, the Additional Commissioner of Customs had adjudicated the matter, holding that CVD amount shall be charged on the MRP pasted on the package of goods i.e. Rs.185 per Pcs; confiscated the imported goods under Section 111(m) of the Customs Act, 1962 with the option to the Appellant to redeem the same on payment of redemption fine of Rs.5,00,000 under Section 125 and also imposed penalty of Rs.1,00,000on the appellant under Section 112(a) of Act. Appeal filed by the Appellant against the adjudication order was upheld confirming the demand.

It is an admitted fact on record that, the Appellant had declared the RSP in the B/E at Rs. 170 for the imported goods and on pointing out such defect by the Department that the RSP should have been Rs.185, they had paid the differential amount of CVD along with interest and fine and penalty and thereafter, the subject goods were cleared for home consumption. The Appellant, in this case had paid for the entire liability towards duty interest and penalties suo motto, which is evident from the records that such payments were not made under protest. Though, the Appellant's submission is convincing that there was un- intentional mistake in declaring the lower RSP in the B/E, but the statutory provisions have been designed in the way that there is no escape route to avoid confiscation of goods, which do not correspond in respect of the value declared in the Bill of Entry.

When the goods are liable for confiscation, imposition of redemption fine and penalty under Section 125 and Section 112(a) respectively are automatic and thus, present Tribunal do not find any infirmity in the orders passed by the lower authorities in ordering for confirmation of the redemption fine and penalties on the appellant. The Hon'ble Supreme Court, in the case of Pine Chemical Suppliers, by upholding the order passed by the Tribunal, has held that mis-declaration of the goods imported by the appellants rendered the same liable to confiscation under Section 111(m) and attracted Section 112 for imposition of penalty for improper importation thereof. There are no merits in the appeal filed by the Appellant. Appeal dismissed.

Tags : Demand Penalty Legality

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