The ACIT, Circle-2, JAMNAGAR V. M/s Siyaram Metals Pvt. Ltd., JAMNAGAR

ITA 1072/RJT/2010

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 9945 (ITAT-RAJKOT)
• Duration Of Justice: 8 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 29-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MJ RANPURA
• Keywords: Principle of natural justice; Opportunity of cross examination; Additional evidence; Deemed export
• Section: 143(3); 80IB; 10B; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT [CONDUCTED THROUGH E COURT AT AHMEDABAD] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO. 1062/RJT/2010 / ASSESSMENT YEARS: 2002-03 SIYARAM METALS P.LTD. PLOT NO.12 & 14, NAGHEDI IND. JAMNAGAR. VS ACIT, CIR.2 JAMNAGAR. ./ ITA NO. 1072/RJT/2010 / ASSESSMENT YEARS: 2002-03 ACIT, CIR.2 JAMNAGAR. VS SIYARAM METALS P.LTD. PLOT NO.12 & 14, NAGHEDI IND. JAMNAGAR. ./ ITA NO. 1064 AND 1065/RJT/2010 / ASSESSMENT YEARS: 2006-07 AND 2007-08 SIYARAM METALS P.LTD. PLOT NO.12 & 14, NAGHEDI IND. JAMNAGAR. VS ACIT, CIR.2 JAMNAGAR. ./ ITA NO. 738 AND 1078/RJT/2010 / ASSESSMENT YEARS: 2006-07 AND 2007-08 ACIT, CIR.2 JAMNAGAR. VS SIYARAM METALS P.LTD. PLOT NO.12 & 14, NAGHEDI IND. JAMNAGAR. ITA NO.1062/RJT/2010 5 OTHERS SIYARAM METALS PVT. LTD., VS. ACIT, JAMNAGAR - 2 - ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI JITENDER KUMAR, CIT-DR ASSESSEE BY : SHRI M.J. RANPURA, AR / DATE OF HEARING : 30/07/2018 /DATE OF PRONOUNCEMENT : 26/09/2018 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : ASSESSEE AND REVENUE ARE IN CROSS APPEALS AGAINST ORDER OF THE LD.CIT(A) , JAMNAGAR DATED 25.1.2010, 21.5.2010 AND 24.5.2010 PASSED FOR THE A SSESSMENT YEARS 2002- 03, 2006-07 AND 2007-08 RESPECTIVELY. 2. THE ISSUES AGITATED IN ALL THESE APPEALS ARE COM MON, THEREFORE WE HEARD THEM TOGETHER AND DEEM IT APPROPRIATE TO DISP OSE OF BY THIS COMMON ORDER. FACTS ON ALL VITAL POINTS ARE COMMON , THEREFORE FOR THE FACILITY OF REFERENCE, WE TAKE FACTS FROM ASSESSMEN T ORDER MAINLY FROM A.Y.2002-03. SOLE GRIEVANCE OF THE ASSESSEE IN ALL THESE THREE YEARS RELATES TO DENIAL OF DEDUCTION UNDER SECTION 10B IN RESPECT OF FOLLOWING DEEMED EXPORT SALES: ASSTT.YEAR 2002-03 : RS.1,90,77,294/- ASSTT.YEAR 2006-07 : RS.15,10,11,158/- ASSTT.YEAR 2007-08 : RS.14,80,20,329/- 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-CO MPANY AT THE RELEVANT TIME WAS ENGAGED IN TRADING OF RECYCLED NON-FERROUS METALS, SCRAP ETC. IT USED TO IMPORT VARIOUS TYPES OF SCRAP SUCH AS MIXED METAL SCRAPS, CABLE SCRAP, TRANSFORMER SCRAP ETC. FROM INTERNATIONAL MA RKET AND EMPLOYS ITA NO.1062/RJT/2010 5 OTHERS SIYARAM METALS PVT. LTD., VS. ACIT, JAMNAGAR - 3 - VARIOUS PROCESSES BOTH MANUAL AND MECHANICAL ON THE IMPORTED GOODS. THEREAFTER, IT RE-EXPORTED THESE GOODS. IN THE ASS ESSMENT YEAR 2002-03, IT HAS FILED ITS RETURN OF INCOME ON 31.10.2002 DECLAR ING TOTAL INCOME AT RS.51,83,600/-. IT HAS CLAIMED DEDUCTION UNDER SEC TION 10B AMOUNTING TO RS.1,57,70,098/- AND DEDUCTION OF RS.22,21,542/- UNDER SECTION 80IB OF THE ACT. THE ASSESSMENT ORDER WAS PASSED UNDER SEC TION 143(3) R.W.S. 147 ON 31.3.2006 IN WHICH DEDUCTION UNDER SECTION 1 0B AND 80IB WERE PARTIALLY ALLOWED. THE AO WAS OF THE VIEW THAT EXP ORT OF SCRAP BY THE ASSESSEE DID NOT AMOUNT TO MANUFACTURE OR PRODUC TION. ULTIMATELY, THE DISPUTE TRAVELLED UPTO THE TRIBUNAL, AND THE IS SUE WAS REMITTED BACK TO THE AO FOR RE-ADJUDICATION. DURING THE PENDENCY OF PROCEEDINGS BEFORE THE AO, INVESTIGATION WAS CARRIED BY CENTRAL ECONOMIC INTELLIGENCE BUREAU AND CENTRAL EXCISE DEPARTMENT. THE DRI AUTHORITIES HAD FOUND CASE OF UNDER VALUATION OF IMPORT AND PAY MENT OF BALANCE MONEY TO THE FOREIGN EXPORTS THROUGH NON-BANKING CH ANNELS. THUS, THE AO HAS RECORDED REASON AGAIN AND ISSUED NOTICE UNDE R SECTION 148 OF THE ACT ON 25.3.2009. THE LD.AO THEREAFTER PASSED ASSE SSMENT ORDER ON 31.12.2009 UNDER SECTION 143(3) R.W.S. 147 AND 254 OF THE ACT. 4. AS FAR THE ISSUE AGITATED BY THE ASSESSEE IN THE SE THREE YEARS IS CONCERNED, IT RELATES TO DENIAL OF DEDUCTION ON SAL E MADE BY THE ASSESSEE TO OTHER EXPORT ORIENTED UNITS. THE ASSESSEE HAD M ADE SALES TO CERTAIN EXPORT ORIENTED UNITS SITUATED IN THE DOMESTIC AREA , THOUGH THESE WERE ALSO HUNDRED PERCENT EXPORT ORIENTED UNITS. THE SA LES MADE TO THESE UNITS WERE NOT CONSIDERED BY THE AO AS EXPORT OF GO ODS. ON THE OTHER HAND, THE CASE OF THE ASSESSEE IS THAT THESE SALES BE CONSTRUED AS DEEMED EXPORT AND DEDUCTION UNDER SECTION 10IB OUGHT TO BE GRANTED. THE ITA NO.1062/RJT/2010 5 OTHERS SIYARAM METALS PVT. LTD., VS. ACIT, JAMNAGAR - 4 - LD.CIT(A) HAS RELIED UPON ORDER OF THE ITAT PASSED IN THE CASE OF TATA ELEXI LTD. VS. ACIT, 115 TTJ 0423. SIMILARLY, IT RE LIED UPON THE ORDER OF ITAT IN THE CASE OF NAVAL OVERSEAS P.LTD. VS. ITO, ITA NO.3023/AHD/2004. 5. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTS ET SUBMITTED THAT ORDER OF TATA ELEXI LTD. HAS BEEN REVERSED BY THE H ONBLE KARNATAKA HIGH COURT. HE PLACED ON RECORD JUDGMENT OF HONBL E KARNATAKA HIGH COURT IN THE CASE OF PR.CIT VS. INTERNATIONAL STONE S INDIA P.LTD., ITA NO.564/2016. ACCORDING TO THE LD.COUNSEL FOR THE A SSESSEE, HONBLE COURT HAS CONSTRUED THE MEANING OF EXPRESSION DEEM ED EXPORT OF GOODS EMPLOYED IN EXIM POLICY AND THEREAFTER DECID ED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE LD.DR WAS UNABLE TO CO NTROVERT THIS CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE. 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS. WE F IND THAT IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF PR.CIT VS. M.S.INTERNATIONAL STONE INDIA P. LTD. RENDERED IN INCOME TAX APPEAL NO.564 OF 2016. THIS DECISION HA S BEEN PRONOUNCED ON 12.6.2018. THE RELEVANT DISCUSSION IN THE JUDGM ENT READS AS UNDER: 6. THE OTHER QUESTION WITH REGARD TO THE DEDUCTION ALLOWABLE TO THE RESPONDENT-ASSESSEE, M/S. INTERNATIONAL STONES INDI A PVT. LTD., IN THE PRESENT CASE, THE QUESTION AS FRAMED BY THE REVENUE IN THE MEMORANDUM OF APPEAL DESERVES TO BE REFRAMED IN THE FOLLOWING MAN NER: 'WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE RESPONDENT- ASSESSEE IS ENTITLED TO DEDUCTION U/S.10B OF THE AC T IN RESPECT OF THE 'DEEMED EXPORT' OF GOODS MADE BY IT DURING THE PERI OD IN QUESTION THROUGH A THIRD PARTY OR NOT?'. ITA NO.1062/RJT/2010 5 OTHERS SIYARAM METALS PVT. LTD., VS. ACIT, JAMNAGAR - 5 - 7. AT THE OUTSET, WE MAY NOTE THAT A SIMILAR CONTRO VERSY CAME TO BE DECIDED BY THE CO-ORDINATE BENCH OF THIS COURT IN T HE CASE OF TATA ELXSI LTD. V. ASSTT. CIT [2015] 127 DTR 327 (KAR), THE DIV ISION BENCH OF THIS COURT FOR THE PURPOSE OF S.10A OF THE ACT HELD THE ASSESSEE ENTITLED TO THE BENEFIT OF SUCH DEDUCTION IN RESPECT OF 'DEEMED EXP ORTS' MADE BY IT, WHILE THE GOODS IN QUESTION WERE SOLD BY THE ASSESS EE M/S. TATA ELXSI LTD., TO ANOTHER STP UNIT WITHIN INDIA M/S. TEXAS I NSTRUMENTS INDIA PVT. LTD., (TIIPL) FOR THE PURPOSE OF EXPORT OUTSIDE INDIA. 8. THE DIVISION BENCH OF THIS COURT DISCUSSED IN DE TAIL THE DEFINITION OF 'EXPORT TURNOVER', THE EXIM POLICY AND HELD THAT TH E PURPOSE OF GIVING THE DEDUCTION TO THE ASSESSEE U/S.10A OF THE ACT IN RESPECT OF THE EXPORT OF GOODS MADE BY IT IN TERMS OF EXIM POLICY WAS TO FET CH FOREIGN CURRENCY AGAINST SUCH EXPORTS AND IN VIEW OF THE FACT THAT E XPORT WAS SO MADE BY ANOTHER STP UNIT (TIIPL), TO WHOM THE GOODS IN QUES TION WERE SOLD BY THE ASSESSEE-M/S. TATA ELXSI LTD., THE FOREIGN CURR ENCY WAS RECEIVED AND SHARED BY BOTH THE STP UNITS, THEREFORE, THE CONDIT IONS OF S.10A WERE SATISFIED AND THE ASSESSEE - M/S. TATA ELXSI LTD., WAS ENTITLED TO DEDUCTION U/S.10A OF THE ACT. 7. AFTER TAKING NOTE OF THE JUDGMENT IN THE CASE OF TATA ELEXI (SUPRA), HONBLE COURT HAS APPRECIATED OTHER ISSUES ALSO, AN D ULTIMATELY HELD THAT SALES MADE TO OTHER EOU WOULD BE CONSIDERED TO BE IN THE AMBIT OF DEEMED EXPORT. CONCLUSION MADE BY THE HONBLE CO URT READS AS UNDER: 21. AS HELD BY THE DIVISION BENCH OF THIS COURT IN M/S. TATA ELXSI'S LTD. CASE, THE PURPOSE OF GIVING THESE DEDUCTIONS I N THESE SPECIAL PROVISIONS IS TO ENCOURAGE EXPORTS AND FETCH FOREIG N CURRENCY IN TERMS OF EXIM POLICY PROPOUNDED AND ANNOUNCED BY THE UNION O F INDIA. THE 'DEEMED EXPORT' BY THE ASSESSEE UNDERTAKING EVEN TH ROUGH A THIRD PARTY WHO HAS EXPORTED SUCH GOODS TO A FOREIGN COUNTRY AN D HAS FETCHED FOREIGN CURRENCY FOR INDIA, STILL REMAINS A 'DEEMED EXPORT' IN THE HANDS OF THE ASSESSEE UNDERTAKING ALSO. IF THE PARLIAMENT INTENDED TO PUT ANY RESTRICTIVE MEANING FOR CURTAILING THE SAID DEDUCTI ON, SUCH WORDS COULD BE EMPLOYED IN SUB-SECTION(1) ITSELF, WHICH COULD HAVE EXCLUDED 'DEEMED EXPORT' FROM THE AMBIT AND SCOPE OF WORD 'EXPORT' E MPLOYED IN SUB- SECTION(1) OF S.10B OF THE ACT. THE EXPLANATION DEFI NING 'EXPORT ITA NO.1062/RJT/2010 5 OTHERS SIYARAM METALS PVT. LTD., VS. ACIT, JAMNAGAR - 6 - TURNOVER' IN BOTH THESE PROVISIONS DOES NOT MAKE AN Y SUCH DISTINCTION BETWEEN THE 'DIRECT EXPORT' AND 'DEEMED EXPORT'. 22. FOR A HARMONIOUS READING OF THESE PROVISIONS OF THE ACT WHICH ARE UNDOUBTEDLY BENEFICIAL PROVISIONS, THE WORD 'EXPORT ' READ WITH THE BACKGROUND OF EXIM POLICY OF UNION OF INDIA WOULD C ERTAINLY INCLUDE 'DEEMED EXPORT' ALSO WITHIN THE AMBIT AND SCOPE OF THE 'EXPORT TURNOVER' AS EXPLAINED IN EXPLANATION-2 OF SUB-SECT ION (9A) OF THE SAID S.10B OF THE ACT. 23. THEREFORE, BOTH THE CONTENTIONS RAISED BY THE L EARNED COUNSEL FOR THE APPELLANT-REVENUE TO RESTRICT THE DEDUCTION IN THE HANDS OF THE RESPONDENT-ASSESSEE BY EXCLUDING THE 'DEEMED EXPORT S', DOES NOT HAVE ANY MERIT AND THE SAID CONTENTION DESERVES TO BE RE JECTED AND THE SAME IS ACCORDINGLY REJECTED. 8. RESPECTFULLY FOLLOWING JUDGMENTS OF HONBLE KARN ATAKA HIGH COURT, WE ALLOW THIS COMMON GROUND RAISED BY THE AS SESSEE IN ALL THREE YEARS. THE LD.AO SHALL GRANT DEDUCTION TO THE ASSE SSEE ON SALES MADE TO OTHER EOUS BY TREATING THEM AS DEEMED EXPORT. 9. NO OTHER ISSUES WERE ARGUED BY THE LD.COUNSEL FO R THE ASSESSEE, HENCE, APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. 10. WE NOW TAKE THE APPEALS OF THE REVENUE I.E. ITA NO.ITA NO.1072/AHD/2010 (ASSTT.YEAR 2002-03). 11. IN THIS YEAR, REVENUE HAS TAKEN SEVEN GROUNDS O F APPEAL. GRIEVANCE RELATES TO ONLY TWO ISSUES VIZ. (A) THE L D.CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF SUPPRESSIO N OF SALES AMOUNTING TO RS.15,82,45,177/-, AND (B) THE LD.CIT( A) HAS ERRED IN DELETING THE ADDITION OF RS.1,14,36,789/- ADDED ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK. AS OBSERVED EARLIER, D URING THE PENDENCY OF ASSESSMENT PROCEEDINGS, AFTER REMAND FROM THE ITAT, CENTRAL EXCISE ITA NO.1062/RJT/2010 5 OTHERS SIYARAM METALS PVT. LTD., VS. ACIT, JAMNAGAR - 7 - AUTHORITIES HAVE MADE AN INVESTIGATION AND INTIMATE D THE AO WITH A COPY OF SHOW CAUSE NOTICE SHOWING THAT THE ASSESSEE WAS INDULGED IN UNDER-INVOICING OF IMPORT TO A VERY LARGE EXTENT. THE LD.AO, BASED ON THE COPY OF SHOW CAUSE NOTICE MADE ADDITION ON ACCO UNT OF SUPPRESSION OF SALES AS WELL AS UNDER VALUATION OF CLOSING STOC K. 12. ON APPEAL, THE LD.CIT(A) HAS DELETED THIS ADDIT ION BY RECORDING THE FOLLOWING FINDING: 11. I HAVE CAREFULLY CONSIDERED THE ISSUE AND FIND THAT ALL THESE ADDITIONS AND ADJUSTMENTS HAVE BEEN MADE BY THE AO, WHICH ARE BASED ON THE ENQUIRIES BY THE DIRECTORATE OF REVENUE INTE LLIGENCE AND THE ORDER OF CUSTOMS & CENTRAL EXCISE, UNDER WHICH THESE FIND INGS WERE GIVEN. PERUSAL OF THE ORDER OF CENTRAL EXCISE SHOWS THAT T HE APPELLANT HAD RAISED VARIOUS OBJECTIONS DURING THE COURSE OF PROCEEDINGS , WHICH NOT TAKEN CARE OF. EVEN BEFORE THE AO, THE APPELLANT WANTED TO VER IFY THE DOCUMENTS, ON WHICH THE ADDITIONS WERE BEING BASED. THE APPELLANT ALSO WANTED AN OPPORTUNITY OF CROSS EXAMINATION, BUT THE SAME WAS NOT ALLOWED BY THE AO, BECAUSE AS PER HIM THIS WAS A TIME BARRING CASE AND THE ORDER WAS TO BE FRAMED WITHIN TIME. IT IS NOTICED THAT THE ASSES SMENT WAS REOPENED ON 25/03/2009 AND ORDER OF COMMISSIONER OF CENTRAL EXC ISE WAS PASSED ON 31/03/09. IN SUCH A SITUATION, THE AO HAD AMPLE TIM E TO GET THE DOCUMENTS VERIFIED AND ALSO ALLOW PROPER OPPORTUNIT Y TO THE APPELLANT SO THAT PRINCIPLE OF NATURAL JUSTICE ARE PROPERLY OBSE RVED. AFTER GOING THROUGH THE ENTIRE ASSESSMENT ORDER IT IS NOTICED T HAT THE AO HAS DEVOTED THE ENTIRE DISCUSSION TOWARDS FINDINGS IN THE ORDER OF COMMISSIONER OF CENTRAL EXCISE, WHICH ITSELF SUFFERS FROM DENIAL OF NATURAL JUSTICE. INCOME TAX PROCEEDINGS ARE SEPARATE FROM PROCEEDINGS UNDER CENTRAL EXCISE ACT AND BEFORE ARRIVING AT A CONCLUSION IT IS NECESSARY THAT SUFFICIENT OPPORTUNITY IS ALLOWED TO THE APPELLANT. IT IS NOTI CED THAT THE ASSESSMENT IN PROPER WAY WAS TAKEN UP ONLY BY ISSUE OF NOTICE DTD. 13/11/09 WHICH LEFT BARELY A MONTH'S TIME TO COMPLETE AN ASSESSMEN T IN WHICH SO MANY PAPERS REQUIRED PROPER SCRUTINY. APPELLANT IN HIS L ETTER DTD. 5-12-09 STATED THAT A PERSONAL HEARING WAS REQUESTED FOR VE RIFICATION OF ALLEGED DOCUMENT AND CROSS EXAMINATION OF WITNESS IF ANY AD DITION WAS TO BE MADE. HOWEVER, THE AO DID NOT ALLOW ANY SUCH OPPORT UNITY AND MADE ITA NO.1062/RJT/2010 5 OTHERS SIYARAM METALS PVT. LTD., VS. ACIT, JAMNAGAR - 8 - THE ADDITIONS AND ADJUSTMENTS BASED ON THE ORDER OF THE CENTRAL EXCISE AUTHORITY. THUS THE APPELLANT WAS CONDEMNED UNHEARD AND THE ORDER SUFFERS FROM DENIAL OF PRINCIPLE OF NATURAL JUSTICE . APART FROM THAT, IT IS SEEN THAT THE ORDER PASSED BY THE COMMISSIONER OF C ENTRAL EXCISE WAS CHALLENGED BEFORE THE CUSTOMS &CENTRAL EXCISE TRIBU NAL, AHMEDABAD AND VIDE ORDER DTD. 12/08/09 THE ORDER OF COMMISSIO NER OF CENTRAL EXCISE WAS SET ASIDE BECAUSE NO OPPORTUNITY OF CROSS EXAMI NATION ETC. WAS ALLOWED TO THE APPELLANT EVEN BY THE COMMISSIONER O F CENTRAL EXCISE. THIS ORDER WAS ALSO PRODUCED BEFORE THE ASSESSING O FFICER, BUT STILL THE ADDITIONS AND ADJUSTMENTS WERE MADE. SINCE THE ENTI RE ORDER OF THE AO IS BASED ON THE ORDER OF COMMISSIONER OF CENTRAL EXCIS E, AHMEDABAD, WHICH NO LONGER SUBSISTS, THE ENTIRE ADDITIONS AND ADJUST MENTS HAVE NO BASE AT ALL BECAUSE THE ENTIRE THING IS BASED ON THE FINDIN G OF CENTRAL EXCISE AUTHORITIES. IN VIEW OF THE ORDER OF CUSTOMS & CENT RAL EXCISE APPELLATE TRIBUNAL, THE AMOUNTS CONSIDERED AS UNDER INVOICING OR UNDER VALUATION OF STOCK ETC. DOES NOT SURVIVE AND, THEREFORE, ADDI TIONS MADE BY THE AO AMOUNTING TO RS.15,82,45,177 ON ACCOUNT OF SUPPRESS ED SALES, RS.L,14,36,789 ON ACCOUNT OF UNDER VALUATION OF STO CK AND ADJUSTMENT ON ACCOUNT OF UNDER INVOICING AMOUNTING TO RS.5,34,99, 909 HAS NO BASIS AND ALL THESE ADDITIONS AND ADJUSTMENTS ARE DIRECTE D TO BE DELETED. 13. THE LD.COUNSEL FOR THE ASSESSEE, AT THE VERY OU TSET SUBMITTED THAT THE ADDITION IS BEING MADE ON BASIS OF A SHOW CAUSE NOTICE ISSUED BY THE CENTRAL EXCISE TO THE ASSESSEE AS WELL AS ON THE BA SIS OF MATERIAL TRANSMITTED BY THE CENTRAL EXCISE. A LARGE NUMBER OF ASSESSEES VIZ. MERIDIAN IMPEX, RAMGOPAL MAHESHWARI AND ASSESSEE HA D CHALLENGED THE ISSUE OF SHOW CUASE NOTICE BY CENTRAL EXCISE AU THORITIES BEFORE THE CUSTOMS & SERVICE TAX APPELLATE TRIBUNAL (CESAT). THE TRIBUNAL HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE VIDE O RDER DATED 12.8.2009. ACCORDING TO THE TRIBUNAL NO OPPORTUNITIES WERE GIV EN TO THE ASSESSEE FOR REFUTING THE ALLEGATIONS MADE AGAINST THEM. TH EREFORE, THE TRIBUNAL HAS REMANDED THE ISSUE TO THE CENTRAL EXCISE AUTHOR ITIES. HE PLACED ON RECORD COPY OF THE TRIBUNALS ORDER AND SUBMITTED T HAT THERE IS NO MATERIAL WITH THE REVENUE AUTHORITIES TO SAY THAT T HE ASSESSEE WAS ITA NO.1062/RJT/2010 5 OTHERS SIYARAM METALS PVT. LTD., VS. ACIT, JAMNAGAR - 9 - INDULGED IN UNDER INVOICING OF IMPORTS. ON THE OTH ER HAND, THE LD.DR CONTENDED THAT CIT-DR HAD FILED WRITTEN SUBMISSION VIDE ORDER DATED 17.1.2016. IN THIS SUBMISSION, THE LD.CIT-DR HAS C ONTENDED THAT SINCE THE CESAT HAS SET ASIDE THE ISSUE TO THE FILE OF CE NTRAL EXCISE AUTHORITIES, THUS, THE SAME MAY BE SET ASIDE IN THE PRESENT PROC EEDINGS. IN REBUTTAL, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT ON T HE BASIS OF SHOW CAUSE NOTICE ISSUED BY THE EXCISE AUTHORITY, ADDITIONS WE RE MADE. IN THE CASE OF VRUNDAVAN CERAMICS P.LTD. THE TRIBUNAL HAS DELET ED THIS ADDITION AND THE ISSUE WENT BEFORE THE HONBLE GUJARAT HIGH COURT, AND THE HONBLE HIGH COURT IN TAX APPEAL NO.82 OF 2016 HAS UPHELD ORDER OF ITAT. HE SUBMITTED THAT THERE IS NO MATERIAL WITH THE REVENUE AUTHORITIES TO MAKE ANY ADDITION. 14. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND GONE T HROUGH THE RECORD. A PERUSAL OF THE ASSESSMENT ORDER WOULD IND ICATE THAT LD.AO HAS MADE REFERENCE TO LARGE NUMBER OF INFORMATION TRANS MITTED TO HIM BY THE CUSTOM & EXCISE AUTHORITIES. BASICALLY, IT WAS A SHOW CAUSE NOTICE ISSUED BY THE CENTRAL EXCISE AUTHORITY CONTAINING V ARIOUS INFORMATION. IN THE CASE OF AVOIDANCE OF EXCISE THIS SHOW CAUSE HAS NOT ATTAINED FINALITY. THE TRIBUNAL HAS SET ASIDE THE PROCEEDIN GS AND REMITTED BACK TO THE FILE OF AUTHORITIES. ACCORDING TO THE INFORMAT ION GIVEN TO US BY THE LD.COUNSEL FOR THE ASSESSEE AT BAR THAT NO FURTHER STEPS HAVE BEEN TAKEN. IT IS ALSO PERTINENT TO OBSERVE THAT CESAT HAS REMI TTED THE ISSUE ON 12.8.2009 I.E, MORE THAN NINE YEARS HAVE EXPIRED. WE HAVE CONFRONTED THE LD.DR WHETHER ANY STEPS HAVE BEEN TAKEN DURING THIS PERIOD OF NINE YEARS BY THE AO FOR COLLECTING ANY OTHER CONCLUSIVE MATERIAL. THE DR WAS UNABLE TO SUPPLY ANY OTHER INFORMATION. THERE FORE, WE ARE OF THE ITA NO.1062/RJT/2010 5 OTHERS SIYARAM METALS PVT. LTD., VS. ACIT, JAMNAGAR - 10 - VIEW THAT A ROVING INQUIRY CANNOT BE ALLOWED IN THE AFFAIRS OF THE ASSESSEE ENDLESSLY. IT WAS FOR THE REVENUE TO BRIN G CONCRETE MATERIAL ON THE RECORD ON WHICH ANY LIABILITY CAN BE FASTENED U PON THE ASSESSEE. THE REVENUE FAILED TO BRING ANY EVIDENCE. WE COULD APP RECIATE THE REQUEST OF THE LD.CIT-DR FOR REMITTING THE FILE TO THE AO I F AFTER THE ORDER OF THE LD.CIT(A) IN THE YEAR 2010 THE REVENUE WAS ABLE TO LAY ITS HAND ON ANY MATERIAL WHICH COULD BE PRODUCED BEFORE THE TRIBUNA L BY WAY OF ADDITIONAL EVIDENCE. IT APPEARS THAT PROCEEDINGS R EMAINED DORMANT EVEN AFTER THE ORDER OF THE LD.CIT(A) WHEN ADDITION S HAVE BEEN DELETED. NO EFFORTS HAVE BEEN MADE TO COLLECT ANY FURTHER IN FORMATION FOR JUSTIFYING THE CHALLENGE TO THE ORDER OF THE LD.CIT (A). IN SUCH SITUATION, WE CANNOT REMIT THE ISSUE TO THE FILE OF THE AO FOR RE-INVESTIGATION. WE DO NOT FIND ANY MERIT IN THESE GROUNDS OF APPEAL. THEY ARE REJECTED. 15. NOW WE DEAL WITH REVENUES APPEALS IN THE ASSTT .YEAR 2006-07 AND 2007-08 I.E. GROUND NO.1 AND 2 IN THE ASSTT.YEA R 2006-07 AND GROUND NOS.1, 2 AND 3 IN THE ASSTT.YEAR 2007-08. 16. COMMON ISSUE ACCORDING TO THE REVENUE IS THAT T HE PROCESS EMPLOYED BY THE ASSESSEE FOR SEGREGATION OF SCRAP F ROM MIXED METAL SCRAP DID NOT AMOUNT TO PRODUCTION OR MANUFACTURING OF ANY ARTICLE WITHIN THE MEANING OF SECTION 10B AND/OR SECTION 8 0IB OF THE INCOME TAX ACT, 1961, AND THEREFORE, DOES NOT ENTITLE FOR DEDUCTION UNDER THESE SECTIONS. THUS THE ISSUE IS, WHETHER DEDUCTION UN DER SECTIONS 10B/ 80IB IS ADMISSIBLE OR NOT TO THE ASSESSEE, BECAUSE ACCOR DING TO THE UNDERSTANDING OF THE REVENUE, THE ASSESSEE WAS NOT MANUFACTURING ITA NO.1062/RJT/2010 5 OTHERS SIYARAM METALS PVT. LTD., VS. ACIT, JAMNAGAR - 11 - ARTICLE OR THINGS WHICH IS ONE OF THE MANDATORY CON DITIONS FOR CLAIMING DEDUCTION UNDER THESE SECTIONS. 17. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUT SET SUBMITTED THAT THE LD.CIT(A) HAS ALLOWED THE DEDUCTION TO THE ASSE SSEE BY FOLLOWING THE ORDER OF THE ITAT PASSED IN ITA NO.305, 376, 306, 3 77, 523 & 528 IN ASSESSEES OWN CASE FOR THE ASSTT.YEARS 2002-03 TO 2004-05. HE FURTHER POINTED OUT THAT THE ISSUE TRAVELLED TO THE HONBLE GUJARAT HIGH COURT AT THE INSTANCE OF THE REVENUE, AND HONBLE COURT HAS UPHELD THE STAND OF THE ASSESSEE IN TAX APPEAL NO.2602 OF 2009. HE PLA CED ON RECORD COPY OF HONBLE HIGH COURTS JUDGMENT DATED 2.4.2014. THE HONBLE COURT HAS FORMULATED THE FOLLOWING QUESTIONS IN THE APPEA L: (1). WHETHER IN THE CIRCUMSTANCES AND THE FACTS OF THE CASE AND IN LAW, THE APPELLATE TRIBUNAL ERRED IN TREATING THE PROCES SES EMPLOYED BY THE ASSESSEE IN SEGREGATING THE METAL SCRAP FROM CABLE SCRAP AS 'MANUFACTURE OR PRODUCE' WITHIN THE MEANING OF SECTION 10B OF TH E INCOME-TAX ACT? (2). WHETHER IN THE CIRCUMSTANCES AND THE FACTS OF T HE CASE AND IN LAW, THE APPELLATE TRIBUNAL ERRED GRIEVOUSLY IN SETTING ASID E HE ISSUE RELATING TO DEEMED EXPORT (DTA SALES) TO THE FILE OF THE ASSESS ING OFFICER AND THEREBY NOT CONFIRMING THE CONCURRENT FINDINGS OF T HE ASSESSING OFFICER AND THE CIT(A)? (3). WHETHER IN THE CIRCUMSTANCES AND THE FACTS OF T HE CASE AND IN LAW, THE APPELLATE TRIBUNAL IS RIGHT IN ALLOWING DEDUCTION U /S.80IB OF THE INCOME TAX ACT, 1961? (4) WHETHER IN THE CIRCUMSTANCES AND THE FACTS OF TH E CASE AND IN LAW, THE APPELLATE TRIBUNAL IS RIGHT IN CONFIRMING THE ORDER OF THE CIT (A) IN ALLOWING DEDUCTION U/S.80HHC WITHOUT ADJUDICATING O N THE GROUND OF APPEAL TAKEN BY THE REVENUE? ITA NO.1062/RJT/2010 5 OTHERS SIYARAM METALS PVT. LTD., VS. ACIT, JAMNAGAR - 12 - 18. ON DETAILED ANALYSIS, HONBLE HIGH COURT HAS AN SWERED QUESTION NOS.1, 3 AND 4 IN FAVOUR OF THE ASSESSEE. WITH REG ARD TO QUESTION NO.2 THE HONBLE COURT HAS OBSERVED THAT THE TRIBUNAL HAS JU ST REMITTED THE ISSUE TO THE FILE OF THE AO, AND THEREFORE, ORDER OF THE TRIBUNAL DOES NOT CALL FOR ANY INTERFERENCE. WHILE DEALING WITH QUESTION NO.1, HONBLE COURT HAS EXAMINED SCOPE OF EXPRESSION MANUFACTURE IN D ETAIL. HONBLE COURT HAS HELD THAT ACTIVITIES UNDERTAKEN BY THE AS SESSEE IN SEGREGATING THE SCRAP AND CARRYING OUT PROCESS ACTIVITIES ALL T HAT WOULD AMOUNT TO MANUFACTURE OF ARTICLE OR THING WHOSE EXPORT WOULD ENTITLE IT FOR GRANT OF DEDUCTION UNDER SECTION 10B AS WELL AS WHOSE SALES WOULD ENTITLE THE ASSESSEE TO CLAIM DEDUCTION UNDER SECTION 80IB. 19. SIMILARLY, WITH REGARD TO THE ISSUE WHETHER A N EW PLEA COULD BE TAKEN UP BEFORE THE APPELLATE AUTHORITY, HONBLE CO URT HAS ANSWERED THE QUESTION NOS.3 AND 4 AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE JUDGMENT OF H ONBLE HIGH COURT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2002-0 3, 2003-04 AND 2004- 05, WE DO NOT FIND ANY MERIT IN THE GROUNDS RAISED BY THE ASSESSEE IN THESE APPEALS. THEY ARE ACCORDINGLY REJECTED. 20. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED AND THAT OF THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 26 TH SEPTEMBER, 2018. SD/- (WASEEM AHMED) ACCOUNTANT MEMBER SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED, 26/09/2018