Black Money: Tightening of 'Loose' | simply inTAXicating

2017-TIOL-2121-HC-AHM-CX

COMMISSIONER OF CGST AND CENTRAL EXCISE Vs ADANI GAS PVT LTD : GUJARAT HIGH COURT (Dated: October 5, 2017)

CX - the assessee manufactures CNG at three locations which are designated as 'mother stations' - CNG is then sold/distributed through different locations called 'daughter booster stations' - The assessee sought to avail Cenvat credit on the machinery installed in the daughter booster stations, and contended that the CNG had to be re-pressurized at the daughter booster stations, thus becoming eligible to avail credit - The Tribunal rejected the assessee's logic that all inputs or capital goods used till the sale of the manufactured goods, would be eligible to Cenvat Credit - The Tribunal reasoned that doing so would mean re-writing the definition of 'input' and 'capital goods', which was not in consonance with the principles of statutory interpretation - It also pointed that no provision in the CCR, 2004 permitted the different interpretation of 'input' and 'capital goods', as doing so would cause chaos in the administration on Cenvat scheme - Hence the assessee was held to be ineligible to avail credit of duty paid on dispensers, mobile cascades, stationary cascades, compressors and spare parts installed & used at their daughter booster stations.

Held - Considering the decision in Tax Appeal No. 792 of 2017, involving similar issue, the decision of the Tribunal had been upheld - Following such precedent, the present appeal merits being dismissed: High Court (Para 1,2,3)

Appeal dismissed

CX - the assessee is engaged in the manufacture of CNG at three locations viz. designated as mother stations, which are sold/distributed through different locations known as daughter stations/daughter booster stations - The issue pertains to Cenvat eligibility of capital goods/inputs/input services at the mother stations, when the capital goods/inputs/input services were utilized in distribution/sale of CNG at the daughter stations - The revenue alleged incorrect availment of credit on various input services between August 2006 to May 2007 - Duty demands with equal amount of penalty, with personal penalty were imposed, under Rule 15(2) of CCR, 2004 r/w Rule 25 of CER, 2002 - The capital goods & inputs were proposed to be confiscated, with option of redemption fine - The Tribunal held that the demands on capital goods & inputs was beyond limitation, and so directed the recalculation of demand amounts for normal periods of limitation - Further the credit eligibility of input services be examined by considering the input service invoices furnished - The equivalent penalty and confiscation of goods were set aside, as was the duty demand on input services and personal penalty.

Held - Extended period of limitation for recovery of duty of excise not paid, not levied or short paid or short levied or erroneously refunded could be invoked by the department, only where there was fraud, collusion, willful misstatement, suppression of facts or contravention of any of the provisions of the Act or the Rules, with intent to evade payment of duty - Likewise, penalty u/s 11AC was invokable only in such circumstances - Since in the present case, none of these factors were established by the department, the Tribunal held there to be no suppression of facts or contravention of provisions and so the Tribunal order warranted no interference: High Court (Para 1-7)

Appeal dismissed

PR COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX AND CENTRAL EXCISE Vs BHAVANI CERAMIC PVT LTD : GUJARAT HIGH COURT (Dated: September 28, 2017)

CX - the assessee is engaged in the manufacture of Sodium Silicate - On audit, the revenue alleged shortage of some quantity of finished goods - On the same being pointed out, the assessee paid the entire amount of duty - Later duty demand with interest & equal amount of penalty was imposed - The amount already paid was appropriated - The Commr.(A) allowed the assessee's appeal - Subsequently, the Tribunal noted that the shortage quantity was determined by the audit party on the premise that the assessee got Sodium Silicate manufactured on job work basis where the input-output ratio was 2.5 kgs. of sodium silicate manufactured by using 1 kg of soda ash, and that the Commr.(A) rejected the revenue's contention of suppression of production of goods and their clearing without payment of duty - The Tribunal upheld the findings of the Commr.(A) as as the input-output ratio adopted for demanding duty, was neither adopted before the period in question nor thereafter - Hence, no credence could be assigned to such formula.

Held - the issue at hand was resolved after proper consideration of all facts and evidences. Hence no substantial question of law arose: High Court (Para 1-4)

Appeal dismissed

AAFLOAT TEXTILES INDIA LTD Vs CCE : BOMBAY HIGH COURT (Dated: Dated: October 5, 2017)

CX - the assessee company is engaged in manufacture of Partially Oriented Yarn (POY) - The assessee made a reference application to the Board of Financial Reconstruction (BIFR), who pursuantly declared the assessee as a sick company - The assessee's factory as closed since 2004 - The assessee was scrutinized for not having paid National Calamity Contingent Duty ("NCCD") leviable on Polyester Filament Yarn (POY) - Duty demand for recovery of NCCD along with penalty was imposed, along with personal penalty upon the General Manager of the assessee company - The demand was upheld by the Commr.(A) - Subsequently, the Tribunal also dismissed the assessee's application for stay on O-i-A and waiver of pre-deposit & and granted liberty to the assessee to deposit NCCD with penalties - Meanwhile the BIFR recommended the winding up of the assesse company, due to which the assessee failed to pay the pre-deposit amount - Consequently, the assessee's appeal was dismissed by the Tribunal as was the application for restoration of appeal.

Held - The Tribunal had held that the assessee had not complied with its orders - It appeared that the assessees were prolonging the proceedings, as was also noticed by the Tribunal, despite giving ample opportunities to comply with the orders - The appeal was dismissed in March 2007 but the assessees filed the application for restoration of appeal in April 2013 i.e. over six years later - Moreover the assessees failed to justify such delay - The assessee could not feign ignorance of the dismissal of their appeal for non-compliance - Hence the Tribunal order warrants no interference: High Court (Para 2,7)

Appeal dismissed

2017-TIOL-2117-HC-MUM-CX

CX - the assessees were engaged in the export of sugar - The revenue sought to impose duty on the quantity of sugar fixed from time to time for the purpose of export - The revenue also alleged that the Export Agency had sold the Export quota in India and that Additional Excise Duty was payable on such sale - Moreover, the revenue held that the Export Certificate issued to the assessee by the Export Agency, did not grant any exemption from levy of excise duty on sugar diverted to domestic tariff area instead of being exported - On appeal, the Tribunal decided the abovementioned issues in favor of the assessees - Further, it held that the condition precedent prescribed under Rule 5 of the Sugar Export Promotion Rules, 1973, relied on by revenue, was inapplicable as it was not referred to in the SCN or in the impugned order, and so was not liable to pay any duty imposed under these Rules.

Held - Revenue's appeals admitted: High Court (Para 1,2)

Case Deferred

2017-TIOL-2116-HC-MUM-CUS

Cus - the appellant was working as sub broker of Polyester Filament Yarn, who received commission on per kg basis from the seller, upon sale of such yarn - The appellant was introduced to a person engaged in importing Polyester Filament Yarn, and was assured commission for selling the Polyester yarn imported by him - Later, four SCNs were issued to the appellant w.r.t. its dealings with some consignments - Subsequently, penalty u/s 112(b) was imposed - On appeal, the appellant was directed to pre-deposit 10% of the penalty amount - The appellant's application for modification of such order was dismissed by the Tribunal - Since such pre-deposit could not be complied with, the assessee's appeal before the Tribunal was dismissed.

Held - the Tribunal recorded a finding that the appellant had played some role in diversion of imported yarn on which the duty was payable, and only then passed the order to pre-deposit 10% of the total penalty imposed - The Tribunal had considered the accounts which were submitted by the appellant and which comprised of balance sheet for the period ending 31st July 2015 and upon considering the same have found that the direction to deposit amount of 10% with penalties imposed upon the appellant was most reasonable - Considering that the balance sheets of the appellant, it could not be said that the appellant was facing financial hardship - Moreover, the balance sheet for the period ending 31st July 2015 was belatedly tendered by the appellant on 30th July 2015, when the impugned order was passed and not tendered on 25th May 2015, when the order was passed by the Tribunal to make pre-deposit - Hence the Tribunal order warrants no interference: High Court (Para 2,5)

Appeal Dismissed