Motion animation files get tax sop

LEGAL DIGEST

The Supreme Court ruled last week that "motion capture animation files" were exempt from Customs duty as they came under the category of "information technology software."

The assessing authority denied the exemption. The dispute was taken to the Customs, Excise & Gold (Control) Appellate Tribunal. It accepted the argument Pentamedia Graphics Ltd and explained that under the 1999 notification, any data which was capable of being manipulated by an automatic data processing machine would be covered by the term "information technology software".

The commissioner of Customs, Chennai, appealed to the Supreme Court. The court upheld the tribunal's ruling.

No interest on lapsed life insurance

The Supreme Court has ruled that the Life Insurance Corporation is not liable to pay interest on a reduced sum on a lapsed life insurance policy, treating it as a paid-up policy. The court overruled the Kerala and National Consumer Commission judgments in LIC versus S Sindhu case.

Sindhu's husband twice defaulted in the payment of premium. The policy was revived before his death. The LIC paid the "paid-up value" calculated according to Condition (4) of the policy, without bonus. Sindhu's widow demanded interest on the amount, which was allowed by the commission. The LIC appealed to the Supreme Court.

"When what is paid by the LIC is not refund of premiums, the question of treating the amount as refund of premiums and then directing payment of interest thereon from the respective dates of payment of premiums does not arise. That would amount to treating the premiums paid in respect of a policy which lapsed by default, as fixed deposits repayable with a hefty rate of interest. Surely, the intention is not to reward defaulting policy holders," the Court observed.

Cement tiles to get excise relief

The Supreme Court has set aside the order of CEGAT and allowed the company's appeal in the excise case, Indcom Structurals (P) Ltd versus Commissioner of Central Excise.

Indcom manufactures cement tiles using cement, sand, blue metal and gravel along with pigment. These are in the form of tiles used for constructing a floor or wall.

The company claimed exemption from central excise under a 1990 notification stating that cement tiles in question were floor itself and not floor coverings, which attracted levy.

The authorities, however, issued a show-cause notice to the company. The assistant collector visited the factory and studied the manufacturing process. He recommended the grant of benefit to the company. The dispute went to CEGAT, which by a majority judgment, upheld the view of the authorities.

Setting aside that view, the Supreme Court said, "The objection of the revenue that the cement tiles manufactured by the assessee-company are covered under the expression "floor coverings in rolls or in the form of tiles" was misconceived.

The court held that as per the trade understanding and usages, cement tiles, the subject-matter of the present case, is a form of floor itself and, therefore, entitled to the benefit of exemption.