Income Tax Appellate Tribunal - Ahmedabad
Elctro Ferro Alloys Pvt.Ltd,, ... vs Assessee on 20 April, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
'B' BENCH - AHMEDABAD
(BEFORE SHRI MUKUL KR. SHRAWAT, JM AND SHRI A. MOHAN ALANKAMONY, AM)
M. A. No.137/Ahd/2011
(In ITA No.4526/Ahd/2007 AY: 2003-04)
Electro Ferro Alloys Pvt. Ltd., Vs The Income Tax Officer,
208, Aditya Building, Ward 4 (1), Ahmedabad
Mithakali Six Roads,
Ellisbridge, Ahmedabad
PA No. AAACE 6380 L
(Applicant) (Respondent)
Applicant by Shri S. N. Soparkar
with Shri Jaimin Gandhi, AR
Respondent by Shri P. L. Kureel, Sr. DR
Date of hearing: 20-04-2012
Date of pronouncement: 20-04-2012
ORDER
PER A. MOHAN ALANKAMONY: This Misc. Application is filed by the assessee seeking rectification of the order of the Tribunal dated 25-03-2011 in ITA No.4526/Ahd/2007 for AY 2003-04.
2. The mistakes apparent on record on the order of the Tribunal are elaborately presented by the applicant and the same read as under:
"The Honorable Bench in para 15.1 on pq.60-61 has highlighted five disputed areas.
1)The point no. 5 being "Whether there is any case for holding that Silvassa unit was a result of splitting of Ahmedabad unit" has never been taken up by A.O., nor by CIT (A) during Remand Report proceeding, nor by A.O. in his reply to the Remand Report and not even by CIT(A) in his MA No.137/Ahd/2011 2 (In ITA No.4526/Ahd/2007- AY: 2003-04 Electro Ferro Alloys Pvt. Ltd. Vs ITO, W-4(1), Ahmedabad Order. The counsel for the assessee had pointed out that this argument is not available to the Id. DR because this is neither the case of the A.O. nor the case of CIT(A). It was also pointed out even before the CIT(A) during the stage of remand proceeding no such contention was raised.
Alternatively it was argued that on merits this contention has no basis. The Honorable Bench has, while dealing with this contention, held in favour of assessee based on merit. The fact that this argument is not available to Id DR in absence of such a contention by Id AO or the CIT(A) has not been recorded.
2) In para 15.3 while dealing with the concept of the existence of the laboratory at the Silvassa unit the Honorable Tribunal has given various findings against the assessee. It is the case of assessee that finding given by Honorable Tribunal, suffers from various factual inaccuracies. Here attached table below points out in detail the errors in the order of the Honorable Tribunal which requires to be corrected.
Sr. Issue/findings of Reply
No. Honorable Tribunal
1. The learned AR a) Silvassa unit was closed in 2005,
submitted "Survey was where as survey was conducted in 2006;
carried out at a time long after the plant had been dismantled
when Silvassa unit was and possession of the premise was
not functioning at full handed over to landlord long before the
gear" Page 34 Para survey.
11.1
2 "No certificate of any a) No testing records for Moly ore
testing of Molybdenum were asked by A.O., Remand
Ore which is basic raw Report or CIT(A).
material required for b) During the course of hearing no
making FMA is such certificate was required to be
produced before us." produced by Honorable Bench.
Page 62 c) When Molybdenum Ore
Concentrate arrived at Silvassa samples were drawn and the same was analyzed for Moly % by lab in charge and compared with the analysis given in the imported documents. Further small charges were taken and analyzed. This document was called "Job Work Order Instruction" see pg no. 746 & 790. This document is an internal document signed by production in charge Mr. Kalpen Desai giving instructions to job MA No.137/Ahd/2011 3 (In ITA No.4526/Ahd/2007- AY: 2003-04 Electro Ferro Alloys Pvt. Ltd. Vs ITO, W-4(1), Ahmedabad worker. It is clearly mentioned Moly % 0 59.5% in the Moly Ore on pg. no. 746 and Moly % -
58.29% in the Mol8y ore on pg.
790.Thus from the imported documents and job work order instruction shows clearly that the test on Moly Ore Concentrate were done and that it was checked and verified with imported document results for Moly %.
3 No contemporary and a) Silvassa unit was closed in 2005, basic record of where as survey was done in laboratory testing 2006, therefore no records were carried out at Silvassa found / available as the premises was produced before and unit did not exist. (us)" pg. 62 b) Such records have never been asked by A. O. during or after survey, during Remand Report or by CIT(A).
c) During course of hearing no such record was required to be produced by Honorable Bench.
4 "We are unable to a) During the course of hearing no persuade ourselves to such queries were raised. believe that any kind of b) The very fact that 1788 excise laboratory testing could invoices are permanent record be done of commercial bearing name of the party, full samples without there address, time of removal of being a primary record goods for onward dispatch and containing details of the date is proof enough. Each samples on which test invoice shows % of Molybdenum was done. To whom the content as analyzed in our product whose sample laboratory at Silvassa and pro- was tested was sold; rata extra amount charged over who carried out the 60% Moly content which is as per testing; who signed the norms. Unless the material is testing report and analyzed the same cannot be whether it was written. See page 656 - 661 with dispatched and whether transporter L/R also attached any official copy of such gives date, name of the customer report is available pg. and address. The invoices are MA No.137/Ahd/2011 4 (In ITA No.4526/Ahd/2007- AY: 2003-04 Electro Ferro Alloys Pvt. Ltd. Vs ITO, W-4(1), Ahmedabad 62-63 signed by Mr. Kalpen Desai production in charge Silvassa / Daman the testing was done by production chemist Mr. Jayesh Patel.
c) See page 744 - 745 - Resume of Mr. Jayesh Patel lab in charge and his P. F. till 16-01-2006.
When he left the company.
d) See page 239 where more than 100 such excise invoices were submitted to A. O. during assessment on 28-2-06.
e) See page 225 note submitted on 14-12-2005 just before survey on 17-1-2006 "Once the Roasted Molybdenum Concentrate lot arrives into Silvassa plant, we have a full time chemist who immediately takes it up for analysis. A fully equipped lab has been established in Silvassa Plant to analyze various elements."
f) Central Excise Dept authorities have regularly audited records of assessee (Pg. 731) and also visited assessee's plant regularly )(Pg 327). The amount of excise duty payable depends on amount of invoice. This in turn depends on Moly % of the product being sold. The higher the Moly %, the higher the central excise duty payable. The fact that central excise dept has audited and confirmed that the value of the billing is correct implies that the Moly % billed matches with the actual content; when can be arrived at only after lab analysis. 5 "In one case a report of a) Kindly see page 404 dated 06- 2002 was shown to us 09-02 (during Silvassa plant in in the Paper Book but it operation) note that joint was a letter received sampling and analysis was from the client to the conducted between Essar Steel MA No.137/Ahd/2011 5 (In ITA No.4526/Ahd/2007- AY: 2003-04 Electro Ferro Alloys Pvt. Ltd. Vs ITO, W-4(1), Ahmedabad assessee. Laboratory and Electro Ferro Allloys Pvt. testing report means the Ltd. for Ferro Molybdenum and testing done and report the same was carried out at prepared in-house." Pg assessee's Silvassa plant. It is 63 also written that sampling, preparation and analysis was carried out as per IS (Indian Standard) norms. This is a report made at Silvassa - as tested and analyzed at Silvassa plant. It is not a letter written by client to us.
b) We also bring to your kind attention the letter written by Materials Manager - Mukand Ltd. Pg. 402 (after survey) "We have beenregularl8y purchasing Ferro Moly lumps from you for th4e last 2 years and have purchased more than 85 MT from you. Typically each lot varies from around 2 Mt to 5 Mt. The last lot is inspected and dispatched from your Daman plant was 4 MT Ferro Moly lumps on 20-01-06. We send our representative to your plant either in Silvassa in 2004-05 and later to your Daman factory. He comes and witnesses the crushing of Ferro Mplybdenum slabs in a jaw crusher to Ferro Molybdenum lumps as per our specifications and free from slag. The material is sieved to met our size specification of 10
- 100 mm. A representative sample is drawn from the heap of Ferro Molybdenum offered for inspection and analyzed in laboratory." It clearly says that samples were drawn & analyzed jointly in lab at Silvasa / Daman in presence of their representative. The material was packed, sealed & dispatched;
MA No.137/Ahd/2011 6(In ITA No.4526/Ahd/2007- AY: 2003-04 Electro Ferro Alloys Pvt. Ltd. Vs ITO, W-4(1), Ahmedabad this also proves that the material was being analyzed in our own laboratory at Silvassa.
c) Further please see for clients & customers visits on Pg. 412 -
415, where clients have clearly written that the products were checked in their presence in our laboratory dispatch. The parties have also remained present during testing etc. 6 "It should also indicate a) In this regard we request you to the process employed see our submission to CIT(A) for testing and the page No.653 -654 which is temperature achieved method of testing of Ferro for determining the Molybdenum by chemical method percentage of contents." which is in short represented Pg. 63 here:
"1-2 gm (only) material is taken dissolved in acid thereafter it is Neutralized by NaoH / Ammonia then filtered. The filtrate is heated to 250°c on hot plate and thereafter certain chemicals are added and the mixture is heated to about 500°c in furnace." No melting - no pollution - very small quantities (We had all equipments at Silvassa / Daman including weighing scales - furnace - hot plate, Glassware, chemicals etc.)."
7 "Not only there was a) During the course of hearing absence of no explanation was sought on contemporary and basis such so called "inherent record there is inherent contradiction." In fact there is contradiction in the facts no contradiction. Lab testing presented by the was done to find out the assessee in the sense percentage of various that on one hand, it was components in the material. vehemently argued and There is no melting involved. supported with Manufacturing process certificates that melting involves a chemical exothermic of molybdenum and iron reaction which melts all the raw MA No.137/Ahd/2011 7 (In ITA No.4526/Ahd/2007- AY: 2003-04 Electro Ferro Alloys Pvt. Ltd. Vs ITO, W-4(1), Ahmedabad has to be got done at materials (pg 319 submitted to Ahmedabad due to A. O. on 16-3-06). prohibition imposed by b) Thus you will observe that no local authorities to melting is required for lab carryout such melting in analysis of Moly %. The metallurgical process at sample is extremely small and Silvassa and on the procedure is neither harmful other hand, it was nor polluting. argued that such c) Ferro Molybdenum process in fact and manufacturing method involves indeed was carried out melting of ore and this is at Silvassa in the form prohibited at Silvassa / Daman of metallurgical by pollution department and laboratory testing. We thus done by the Job Worker at are not convinced that Ahmedabad. This has no such process in the connection with lab testing by form of laboratory chemical method done at testing could be carried Silvassa / Daman. The lab out against the express testing procedure does not prohibition imposed by involve any melting and hence the authorities unless differs from manufacturing assessee could show process. Please refer pg. the basis records of No.853 where Pollution Control laboratory testing Committee has clearly supported by the mentioned in point No.(ii) "The affidavits of concerned applicant shall not carry out officials that such any melting activity." Hence testing was indeed manufacturing is banned. But done at Silvassa, even lab testing is allowed.
though it was illegal. We
cannot accept one
proposition that melting
could not be carried out
at Silvassa due to
restrictions imposed by
the local authorities." Pg
63
8 "In spite of repeated a) During the course of submission
questions by the to A.O. we had placed following
department to show the records:
equipment with which
such testing was carried Sr. Particulars Page No.
out at Silvassa No.
1 Details of Lab 275-276-285
assessee remained
Equipment sent
silent. Any laboratory 2 Proof of Chemicals 748-749-750
test or existence of sent
MA No.137/Ahd/2011 8
(In ITA No.4526/Ahd/2007- AY: 2003-04 Electro Ferro Alloys Pvt. Ltd. Vs ITO, W-4(1), Ahmedabad laboratory at Silvassa 3 A O had examined the 476 could not be established supplied of Laboratory equipment by issuing by the assessee". Pg. notice u/s 133 who 63-64 gave his reply 4 The Remand Report 945-946-947 has verified the lab equipment and the chemicals being sent under 133 5 Also CIT(A) Order A. Y. 24 point 13 2003-04 confirms testing All these aspects were highlighted during the course of hearing of th4e appeal but apparently, the same is lost sight of.
9 As per 15.6 (5) The Hon'ble Tribunal has In fact the assessee did not refer to referred to the argument retraction of the statement in relation to of the DR in following lab testing at all. In fact the Ld. DR was terms: factually wrong assuming that various employees have admitted during the "On the basis of course of survey that "no laboratory statement, the ld. AO existed at Silvassa. No testing was and ld. DR have carried out at Silvassa and only crushing, strongly argued that no grinding and sieving was done at laboratory existed at Silvassa." Silvassa. No testing was carried out at Silvassa The correct facts are during the course of and only crushing, survey employees specifically stat4e that grinding and sieving Laboratory existed at Silvassa and all was done at Silvassa. testing was carried out at Silvassa.
The assessee has
sought to retract this a) The statement of Mr. Adarsh
statement by filing Jhaveri (on the day of survey) in
affidavits of those his answer 14, 15 and 18, 20 has
employees and referred said that Silvassa / Daman
to several decisions for receives imported raw material, it
the proposition that decides certain ratios in which raw
statement recorded material is to be melted, the plant
during the course of has strict quality control that the
survey cannot be relied plant checks the quality
upon unless supported chemically before dispatching
by other evidences." mat4rials to the customers
according to customers
specifications the material after MA No.137/Ahd/2011 9 (In ITA No.4526/Ahd/2007- AY: 2003-04 Electro Ferro Alloys Pvt. Ltd. Vs ITO, W-4(1), Ahmedabad packing is chemically checked for quality i. e. chemically and size.
He also says the trial batches for quality checks are done for determining the ratios in which materials are to be used i.e. Job Work instruction.
Again in answer - 18 he says that the unit Silvassa / Daman carries out quality check. Please kindly go through his answers 14, 15 & 18 which give details. In reply No.20 last sentence"In Silvassa unit, there was a full fledged chemical lab." Is self explanatory.
b) Mr. Yogesh Modi, Accountant has also talked about testing at Silvassa given on page. 421 during survey A-4 "At Daman, samples are being taken from material, for testing from the drums. After further technical process (trials for job - work instructions) is done, material is sent to Ahmedabad."
c) Mr. Kalpen Desai, Works In Charge u/s 131 page 939, Ans. 10 "gives details of testing talks about taking trial batches and tested by lab in charge Mr. Jayesh Patel who would also test the material to compare with the certificate of contents sent by the supplier. He talks about trial batches and job work order."
d) Mr. Rajkumar Sinh, Worker of Silvassa Unit in response to summons u/s. 131 for Remand Report on page 446 Ans. 5. says "when trucks with Moly ore come to our plant we take small trial MA No.137/Ahd/2011 10 (In ITA No.4526/Ahd/2007- AY: 2003-04 Electro Ferro Alloys Pvt. Ltd. Vs ITO, W-4(1), Ahmedabad batches repeatedly etc. Thereafter the samples are tested & dispatched according to order."
e) Mr. Sanjoy Pramanik, Assistant Plant Incharge, Silvassa. In response to summons issue U/S 131 Remand Report page 441a Ans-1o "talks about the Chemist Mr. Jayesh Patel, Laboratory In charge and trial batches being taken. He also says that Mr. Jayesh Patel tested raw materials as well as trial batch final product after conducting analysis. Further the job work order was sent Ahmedabad and instruction and guidance was given regularly."
f) Also in the affidavits of Mr, Kalpen Desai of page 589 and Mr, Sachidanand Jha on page 308 2nd last para have talked about testing and Laboratory."
When the authorities knew about the existence of the laboratory from the statements of Mr. Adarsh Jhaveri and from the statement of Mr. Yogesh Modi during survey, why was no question raised about laboratory during the survey? How has the dept arrived at the conclusion "No Laboratory at Silvassa / Daman"? In fact Silvassa unit was closed during the survey and they could not have seen it operational. While as in Daman they saw but did not record. Also no lab was found at Ahmedabad unit. The Ahmedabad unit was still running when survey was conducted on 17-1-06. The ITAT order on page 62 (6th last line) acknowledges that Moly % was being analyzed by assessee. As the survey team on 17-1-06 did not find any lab in the Ahmedabad unit; it is established that the Moly % was analyzed after crushing at assessee's Silvassa unit.
During survey on 17-01-06 when 6 IT officials visited Daman, they have already seen the material crushing, grinding, sieving, size reduction and size separation operations with help of machinery into lumps, chips and powder and all 6 officials saw every activity, but they have not mentioned in their report. Therefore we immediately brought to their attention vide our letter dated 01-02-06 on page 229-231.
Also note that when 2543 Kgs. of Ferro Molybdenum slabs were unloaded during survey on 17-01-06 which was dispatched on 16-01-06 from MA No.137/Ahd/2011 11 (In ITA No.4526/Ahd/2007- AY: 2003-04 Electro Ferro Alloys Pvt. Ltd. Vs ITO, W-4(1), Ahmedabad Ahmedabad. All the 6 officers have seen the same and they have also seen the same being unloaded by our own workers without outside help or any other extra payments. They have also seen the slabs being brought in and recorded in the excise ledger. This has been given on page No. 489- 490 LR on pg. 931. And was brought to their notice vide letter dated 1-02- 06, immediately after the survey was done.
Similar is the case during Remand Report where IT official - Mr. V. Sivaraman visited Daman unit on 02-01-2007 and saw our processes and lab and met lab chemist and employees but! did not report the same in the Remand Report. We immediately wrote letter that the representative of the AO in the Remand Report has not written about the Laboratory on pg.447. (This was of course after the survey, during remand report proceeding.)"
The learned AR respectfully submitted that the Tribunal may accept the prayer of the applicant as stated above and rectify the order of the Tribunal. The learned DR stoutly opposed to the submission of the learned AR and contended that any modification in the order of the Tribunal will amount to review of the order of the Tribunal and the same is not permissible under law.
3. We have heard the rival submissions and perused the materials presented before us. It is apparent from the submissions of the learned AR as claimed by the learned DR that modification sought by the applicant in the instant case will amount to review of our order which is barred by law. The Tribunal elaborately considering the facts of the case has arrived at several findings which if now altered will amount to review of its order. Therefore, we are of the considered view that the Misc. Application of the assessee deserves to be dismissed. It is ordered accordingly.MA No.137/Ahd/2011 12
(In ITA No.4526/Ahd/2007- AY: 2003-04 Electro Ferro Alloys Pvt. Ltd. Vs ITO, W-4(1), Ahmedabad
4. In the result, the Misc. Application filed by the assessee is dismissed.
Order pronounced in the open Court on 20-04-2012.
Sd/- Sd/-
(MUKUL KR. SHRAWAT) (A. MOHAN ALANKAMONY)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Deka/--
Lakshmikant Deka/
Copy of the order forwarded to:
1. The Appellant
2. The Respondent
3. The CIT concerned
4. The CIT(A) concerned
5. The DR, ITAT, Ahmedabad
6. Guard File
BY ORDER
Dy. Registrar, ITAT, Ahmedabad