CASE LAWS
2017-TIOL-1509-HC-MAD-CX
CCE Vs JSW STEELS LTD: MADRAS HIGH COURT (Dated: July 19, 2017)
CX– The core issue, in these appeals, veers around the objection raised by the revenue to the availment of cenvat credit by the assessee based on documents, (i.e. TR-6 Challan / supplementary invoice), which are adverted to by the revenue as "ineligible documents" – ( i) Whether the Tribunal was right in holding that the ST credit taken by M/s.JSW Steel Ltd., Salem on the basis of supplementary invoices/bills/challans issued by the service provider ? (ii) Whether in view of the suppression, detection of evasion of ST and registration of offence case against the respondent, the Tribunal was right in law to allow the availment of credit under Cenvat Credit Rules 2004 ? (iii) Whether the violation of rule 4A of Service Tax Rules, 1994 [STR] entitles the respondent to avail credit under Cenvat Credit Rules, 2004 [CCR] ?
HELD - Clause (b) of sub-rule (1) to Rule 9 of the CCR enables availment of cenvat credit against supplementary invoices, issued by a manufacturer or importer of inputs or capital goods - there is no reference, whatsoever, to input service provider - therefore, the assessee is right in taking up the stand that clause (b) of sub-rule (1) of rule 9 of CCR has no application to invoice or challan issued by a service provider - it is clear, on a plain reading of rule 9(1) of CCR, that the Explanation appended to clause (b) of sub-rule (1) of rule 9 only seeks to clarify that supplementary invoice would also include a challan or any other similar document, which evidences payment of "additional amount of additional duty" leviable under section 3 of the Customs Tariff Act, issued by a manufacturer, importer of inputs or capital goods - therefore, the documents included in clauses (e), (f) and (g) of sub-rule (1) of rule 9 of CCR, would not be governed by the Explanation, as is sought to be argued by the revenue - thus, the assessee has correctly availed the cenvat credit, based on the invoice / TR 6 challan – furthermore, since the Court has come to the conclusion that rule 9(1)(b) of CCR would have no application to the facts obtaining in the instant case, the exception carved out in clause (b) of sub-Rule (1) to rule 9 of CCR, which prohibits availment of credit in a case of additional amount of duty becoming payable on account of fraud, collusion or any wilful misstatement or suppression of facts, etc., will not be applicable to the assessee - the Tribunal via the impugned common judgment has come to the same conclusion - therefore, insofar as question nos.(i) and (ii) are concerned, they will have to be answered in favour of the assessee and against the revenue - insofar as question no.(iii) is concerned, which pertains to the alleged violation of rule 4A of the STR (as it then obtained), in the two O-i-O, there is no discussion with regard to the same – consequently, it appears that there was no discussion on this aspect before the Tribunal - at the stage of hearing, no arguments were advanced based on rule 4A of the STR - therefore, the question of law no.(iii) does not emanate either from O-i-O or from the order of the Tribunal and hence, strictly need not be answered – having said so, it is noticed that rule 4A of the STR, inter alia, at the relevant time, required the provider of taxable service, to issue, not later than fourteen days from the date of provisioning of taxable service, an invoice, bill or challan - a bare perusal of the rule would show that the obligation, in that behalf, essentially rests on the service provider - the Rule does not advert to any consequences, in case issuance of invoice, bill or challan is delayed - the period provided appears to be directory and not mandatory - the delay, in this case, has been broadly explained by the assessee - the delay involved cannot be categorised as an inordinate period of delay, as was sought to be conveyed by the revenue - in these circumstances, question of law no.(iii), if at all, would have to be answered in favour of the assessee and against the revenue - accordingly, both the appeals filed by the revenue are dismissed - the impugned judgment of the Tribunal is sustained : HIGH COURT [para 13.5, 13.6, 13.7, 13.8, 14, 15, 15.1, 15.2, 15.3, 15.4, 15.5, 15.6, 15.7, 15.8, 16]
Appeals of Revenue dismissed
2017-TIOL-1508-HC-MAD-CUS
AKBAR KNITTING COMPANY Vs CC: MADRAS HIGH COURT(Dated: June 8, 2017)
Cus - (i) When the liability to pay interest on the duty that becomes payable in view of non fulfilment of the export obligations arises in terms of the bond or undertaking executed by the assessee, is it open to the Department to slap the liability to pay interest under the statutory prescription? (ii) Whether the liability to pay interest on the duty that becomes leviable on account of non fulfillment of the obligations arising out of the bond or undertaking, which is contractual in nature, can be collected by invoking the statutory prescription? (iii) When the import was made by the assesse prior to the introduction of section 28AA with effect from 26.5.1995, whether the Tribunal was right in allowing the demand for interest under the statutory provisions?
HELD - The provisions for payment of interest, where duty was not paid or short levied, was brought on to the statute book i.e. Customs Act, for the first time on 20.8.1996, with the insertion of section 28AB - the record shows that goods were imported by the assessee under two advance licences on 8.2.1995, which is the date, clearly, prior to the insertion of section 28AB - this is a case, where section 28AB, if at all, would have given the right to the revenue to demand interest, provided the imports had been made after the section was brought on to the statute book - because of the failure to fulfill the export obligation by the assessee, the assessee's case would have, if at all, fallen within the ambit of section 28AB, which, inter alia, imposes a liability on an assessee to pay interest, where any duty has not been levied or paid, or has been short-levied or short-paid or erroneously refunded - therefore, section 28AB would not be applicable in the instant case - therefore, the assessee could not have been called upon to pay interest by the customs authorities, by taking recourse to the provisions of the Act, as it obtained at the relevant time i.e., in and about, February, 1995 - the Tribunal has misread the ratio of the judgment rendered by the Supreme Court in Rexnord Electronics and Controls Ltd. - 2008-TIOL-35-SC-CUS - the said judgment would not further the cause of the revenue, in the instant case, as a matter of fact, if at all, it dilutes the tenability of the stand taken by the revenue - the judgment, clearly, hold that the liability to pay interest, emanating from a bond, falls in the realm of a contractual bargain and the authority, which can enforce the bond, if at all, would be the licensing authority i.e. DGFT - the same view applies to the judgement rendered by the Bombay High Court in Pratibha Syntex Ltd. [ 2003 (157) ELT 141(BOM.)] - a perusal of the judgment in the case of Fal Industries Ltd. [2014 (306) ELT 58], cited by the revenue, would show that, the single Judge has observed that, for failure to fulfill the export obligation in terms of the license, the customs authorities have no power to demand interest - this Court need not say anything further - the judgment is clearly distinguishable from the facts and circumstances, which obtain in the present case - the impugned Judgment and Order of the Tribunal deserves to be set aside - it is ordered accordingly - the questions of law framed are answered in favour of the assessee and against the Revenue - the appeal is disposed of in the aforesaid terms : HIGH COURT [para 6.3, 7, 9, 10.1, 12, 12.1, 12.4, 13.1, 14]
Appeal disposed of
2017-TIOL-1507-HC-KOL-CUS
STEEL AUTHORITY OF INDIA LTD Vs UoI: CALCUTTA HIGH COURT (Dated: July 28, 2017)
Cus –The petitioner had exported prime mild steel concast billets by shipping bill bearing no.5318141 dated 12.7.2006 - the petitioner being entitled to a duty drawback of Rs.36.10 lakhs had lodged its claim - the same has been denied at the revisional stage - hence, the writ petition.
HELD - The claim for duty drawback was lodged in respect of the shipping bill - the claim was adjudicated upon electronically - it is an admitted fact that, apart from the data being available electronically, the department did not serve any notice or any information to the petitioners in hard form - the respondents have also failed to substantiate that the petitioners had access to the electronic data at that material point of time and, therefore, were aware of the queries made - the petitioners, however, lodged a supplementary claim immediately upon coming to know of the decision of the authorities to scroll the subject shipping bill as zero drawback and sent it to history - such conduct also establishes that, the authorities have not adjudicated upon the merits of the claim for duty drawback - in such circumstances, it would be appropriate to accept the reasoning and finding of the appellate authority, set aside the impugned order passed on revision and request the authorities to adjudicate upon the claim for duty drawback, in accordance with law, by treating the claim to be made within the period of limitation – Writ petition disposed of: HIGH COURT [para 7, 8, 9]
Writ Petition disposed of
2017-TIOL-1506-HC-MUM-CUS
CC Vs HYUNDAI HEAVY INDUSTRIES COMPANY LTD: BOMBAY HIGH COURT (Dated: July 13, 2017)
Cus–(a) Whether the CESTAT was correct in holding that the order of confiscation under section 111(j) of the Customs Act, 1962 was not legal on the ground that the importers had obtained the permissions for conversion of the vessels and the port clearance without obtaining an order permitting clearance of goods for home consumption under section 47 of the Customs Act, 1962? (b) Whether CESTAT was correct in holding that clearance of the goods on the basis of the port clearance permissions was proper despite the fact that Bills of Entry were filed by importers for home consumption under section 46 of the Customs Act, 1962 for clearance of such goods wherein permissions were statutorily to obtained for clearance of the goods as per the provisions of section 47 of the Customs Act, 1962? (c) Whether the CESTAT was correct in treating the goods imported only as foreign vessels, requiring permissions for conversion and port clearance instead of treating them also as imported cargo whereas the importers had imported vessels and had filed Bills of Entry for clearance of the vessels as goods as required under section 46 of the Customs Act, 1962 for the clearance of which the compliance of the provisions of section 47 was a statutory requirement? (d) Whether the CESTAT was correct in holding that the confiscation under section 111(j) is not applicable since the section 111(j) deals with permission for removal of the goods while section 47 of the Customs Act, 1962 relates to permission for clearance and nowhere in the Act the terms 'removal' and 'clearance' have been defined ? (e) Whether the CESTAT was correct in holding that the confiscation under section 111(j) was not correct since the importers had the pay orders ready for payment of duty whereas, as per section 47 of the Customs Act, 1962, the importer on filing the Bills of Entry can clear the goods only after the payment of import duty as assessed thereon and any charges payable under the Act? Additional question of law : Having regard to facts and circumstances of the case, whether the order of the Tribunal is sustainable in law having been passed after six months of conclusion of hearing of Appeal.
HELD – The bills of entries were filed in all cases, after the vessels, barges etc. had first entered in Bombay Port -the bills were noted and thereafter presented for assessment -orders for examination were given -the goods were examined -the examination reports did not find any mis-declaration of the goods, as declared on the bills– the respondents, clearing agent (shipping agent), has completed the formality and obtained the permissions for conversion of vessels as imported into vessels for coastal run, which was allowed as also port clearance, under the provisions of section 42 of the Customs Act -the concerned officers at the relevant time, keeping in mind the provisions of law and considering the documents, which were placed on record, granted the requisite permissions and the clearances -the submission that, this was a case of misrepresentation and/or stated fraud, but there was no reason for the appellant not to initiate and/or take action and/or to take the proceedings, by recalling and revoking those permissions -having not done so, the action initiated on the basis of mere allegations on facts in the SCN against the respondents is unsupportable and untenable -the burden is upon the department to prove the misrepresentation -there is nothing on record to show that the appellant has taken or initiated any proceedings against the concerned officers -the SCNs are silent about the same – the CESTAT has considered the issue of "port clearance" and its procedure, as prescribed under section 42 (2)(d) read with section 111(j) of the Customs Act -it is noted that the fact of grant of port clearances, which includes the safeguard and security required for the Custom House were never recalled -the goods were permitted to be removed from the customs area, by the concerned officers - the CESTAT has noted that the "removal" and "clearance" cannot be equated to clear the goods for home consumption under section 47 of the Customs Act -the permissions to clear the goods would not be in violation of section 111(j), which is applicable to "removals" and not to the "clearance" –this Court also endorses these reasons - this is not a case that respondents deliberately, by breaching the basic provisions of law, had removed unaccounted goods, without written permissions - the duties were paid even prior to SCNs - every technical breach cannot be treated, as breach for penalty or confiscation [Hindustan Steel Ltd. – 2002-TIOL-148-SC-CT-LB] -the goods were released after port clearances and due permissions -the vessels left the port/Custom's area after due permission, under section 42 of the Customs Act –all the vessels were subsequently cleared for home consumption also -therefore, the penalty and the confiscation order is rightly set aside by the CESTAT - it is settled that, mere non-payment of duties, even if any, cannot be treated and read for meaning "collusion" or "willful misstatement" or "suppression of facts" [Uniworth Textiles Ltd. – 2013-TIOL-13-SC-CUS] - the respondents have paid even the same, after due declaration -therefore, in the present case, the Department /revenue failed to discharge its burden, as required under the law -there is no case made out of any "willful" or intent to evade duty to bring in the case of "fraud" and "collusion" -there is no case of stated "misstatement" or "suppressing of fact" -the impugned order, therefore, needs no interference, even on the ground of stated delayed decision - having once recorded the above reasons, the written submissions, based around the action of SCN and the related proceedings, even by recording the statement of concerned officers and/or of the tespondents, are of no assistance to interfere with the findings so arrived at by the CESTAT -there is no case of perversity and/or illegality -the oral evidence, cannot override the written permissions/clearances, on record
In sum, the appeal is dismissed – the CESTAT order is maintained - the questions of law (a) to (e) are answered in the positive, in favour of assessee and against the revenue -the additional question is answered in the positive accordingly - interim order dated 18.7.2007 stands vacated : HIGH COURT [para 22, 23, 26, 27, 28, 30, 31, 32]
Appeal of Revenue dismissed
2017-TIOL-1505-HC-KAR-ST
TRADE WORTH CHITS PVT LTD Vs ADDL CST: KARNATAKA HIGH COURT (Dated: July 18, 2017)
ST - The writ petitions are directed against the impugned SCNs dated 8.10.2015 and 7.10.2015 issued by the respondent-Additional Commissioner of Service Tax - the issue is with regard to imposition of ST on the chit fund business of the petitioners - petitioners submitting that in the recent decision of the Supreme Court in the case of Margadarshi Chit Funds (P) Ltd. etc. - 2017-TIOL-240-SC-ST, the Supreme Court has decided the said issue and has held that the chit fund business is neither ‘cash managment' nor ‘fund management' and, therefore, chit fund business was not covered by sub-clause (v) of sub-section 12 of section 65 even after its amendment by Finance Act, 2007 - the petitioners also submitted that, even at the time of issuing the impugned SCN on 8.10.2015, the matter was covered in favour of the assesses by the decision of the Delhi High Court in the cases of Delhi Chit Fund Association [2013 (30) STR 347 (Del.)] against which the SLP was dismissed by the Supreme Court on 7.1.2014 [2015 (38) STR J202 (SC)] and the review petition filed by the UOI also came to be dismissed on 16.10.2014
HELD - Writ petitions are premature -if during the course of time, the aforesaid legal position has emerged, the assessees can very well bring these judgments to the notice of respondent No.1-Additional Commissioner of Service Tax along with the representation and objections to the said SCNs impugned in the present writ petitions and the said respondent-Authority shall consider the said legal position and relevant provisions of the Act and pass appropriate orders in accordance with law and decide whether the 'chit fund business' is 'cash management' or 'fund management' or falls in taxable services in other clauses of section 65(12) of the Finance Act or not - the petitions are accordingly disposed of : HIGH COURT [para 7, 8]
Writ Petitions disposed of
2017-TIOL-1504-HC-MUM-CUS + Story
CJ SHAH AND COMPANY Vs UoI: BOMBAY HIGH COURT (Dated: August 4, 2017)
Cus - Parties cannot be remedyless - Law is settled that the Revenue Department/Authorities are not required to issue a demand beyond 5 years period under Section 28 of the Customs Act - Petitioner's voluntary deposit, in no way, can bring the said amount within the purview of 5 years period so prescribed - Order of Settlement Commission quashed to the extent as prayed by petitioner and CCESC directed to consider the prayer of the petitioner - Writ Petition allowed: High Court [para 14 to 18]
Petition allowed
