2018-TIOL-NEWS-004 Part2, Dated: Thursday, January 04, 2018

ST - the assessee-company operates a Call Centre - Such operations were carried out from two separate premises - The Revenue alleged that the assessee incorrectly availed Cenvat credit, and pointed out certain irregularities - The Department alleged that; a) invoices raised by the assessee during a particular period and on which credit was availed, did not carry the address of the registered premises of the assessee and instead mentioned the name and address of the assessee where the input services were received & output service was performed, b) invoices for a particular period mentioned the erstwhile name of the assessee used prior to its merger, and c) post such merger, the assessee had not been registered for two months - Thus on these three counts, the Revenue denied credit availed by the assessee for various periods - Duty demand was imposed on the assessee seeking recvery of credit so availed - Subsequently, the assessee was directed to pre-deposit 7.5% of the duty amount, u/s 35F of the Central Excise Act, 1944 - Thus the assessee sought that the Department be restrained from enforcing payment of pre-deposit. - Assessee's Appeal Partly Allowed: ALLAHABAD HIGH COURT

ST - Interest on delayed refund - Appeal is directed against impugned order whereby Commissioner (A) has rejected the interest claimed by assessee on the ground that the refund claim in service tax is to be considered as nothing more than a facilitating mechanism which is provided to the exporter to convert the unutilized credit lying in their account - Since this unutilized credit is always lying with the exporter and not with the Government, hence the refund of this unutilized credit is merely a mechanism for converting this unutilized CENVAT credit into cash - Supreme Court in case of Ranbaxy Laborites 2011-TIOL-105-SC-CX has categorically held that assessee is entitled to interest after the expiry of three months from the date of filing the refund application till the refund is finally sanctioned - Said decision of Supreme Court has been followed consistently and there is no contrary judgment to that effect - Therefore following the said ratio, impugned order is not sustainable in law: CESTAT - Appeal allowed; BANGALORE CESTAT

ST - The assessee is engaged in providing Forward Contract Service - The Department alleged that the assessee charged 'Transaction fee' from clients, in addition to brokerage charges, during the period of dispute - Since the assessee paid no service tax on such transaction charges, the Department raised duty demand with interest & penalties u/s 76 & 78 of the Act - Such demands were confirmed by the Commr.(A) -

Held - The assessee did not produce any credible evidence to show that the transaction charges cannot be included in the gross value - It also did not produce any Circular or Instruction issued by NCEDX w.r.t. the application of the stock broker to collect a specified percentage as transaction charges on their credit value from the clients and pass the same to respective stock exchanges - Moreover, from Sept. 2006 onwards, the assessee deposited service tax on transaction charges collected from clients - Therefore, collection of transaction charges would form part of the gross value u/s 67 - However, the fact that the assessee collected transaction charges was known to the Department, long before issue of SCN - The assessee also reflected the payment particulars in the Ledger Account maintained by it during the relevant period - Hence the SCN should have been issued within one year of the relevant date - But, SCN was issued in 2009, seeking recovery of tax for period between 2005-06 - Hence the demand was barred by limitation - There is also no element of suppression or mis-statement by the assessee - Therefore, duty demands set aside: CESTAT (Para 2,6,7) - Appeal Allowed: DELHI CESTAT

CENTRAL EXCISE SECTION

2018-TIOL-28-HC-MUM-CX

CCE Vs Turbhe Chemicals Pvt Ltd

CX - The present appeal was filed by the Revenue, contesting the extension of the stay granted to the assessee, by the Tribunal u/s 35C(2A) - In doing so, the Tribunal had followed the Tribunal's decision in IPCL Vs. The Commissioner of Central Excise, Vadodara - The Revenue claimed that Tribunal was not vested with the power to extend the interim stay granted beyond the period of 365 days from the date of its grant.

Held - the issue at hand is no longer res integra - Considered High Court's decisions in The Commissioner of Central Excise Vs. M/s Mahindra Navistar Automatives and Commissioner of Central Excise Vs. Crompton Greaves Ltd., holding that the Tribunal had the power to extend the interim stay granted beyond the period of 365 days from the date of its grant even in the face of Section 35C(2A) of the Act - Such power may be exercised in the interests of justice - Section 35C(2A) has a corresponding provision in Section 254(2A) of the Income Tax Act, enabling the ITAT to extend grant of stay beyond 365 days - Hence extension of stay justified: High Court (Para 1-5) - Appeal Dismissed: BOMBAY HIGH COURT

2018-TIOL-63-CESTAT-DEL

Nirmal Fab Tex Pvt Ltd Vs CCE

CX - Assessee engaged in manufacture of processed Man Made Fabric (MMF) - On physical verification, 16675 metres of grey MMF was found in excess - On the basis of investigation, SCN was issued alleging that assessee had removed the processed MMF under 22 challans to different parties and under the cover of 139 challans to the buyers, without payment of Central Excise duty - With regard to clearance of processed MMF under cover of 139 challans, in view of the fact that Director has not specifically admitted that goods were removed clandestinely from factory and the challans contained the name of consignee as 'self', it can be concluded that charges of clandestine removal cannot be levelled against assessee - Further, department has not brought any iota of evidence to prove clandestine removal of goods covered under those challans - As regard to removal of goods under cover of 22 challans, in view of the fact that the Director of the Company has admitted that the goods were removed without payment of Central Excise duty, duty demand confirmed in respect of clearance of disputed goods in respect of 22 challans is proper and justified and the impugned order cannot be interfered with at this juncture - Since the adjudicating authority has not given the option to assessee to deposit the reduced amount of penalty of 25%, the adjudicating authority is directed to quantify the amount of reduced penalty, which is required to be paid by assessee - With regard to imposition of personal penalty on Director of company, department has not specifically brought on any evidence, showing his involvement in clandestine removal of goods - Thus, provisions of Rule 26 of CER, 2002 cannot be invoked for imposition of personal penalty - Therefore, same is set aside: CESTAT - Appeal partly allowed: DELHI CESTAT

2018-TIOL-62-CESTAT-AHM

Akaaish Machatronics Ltd Vs CCE & C

CX - the assessee-company manufactured goods which were then exported - The assessee availed Cenvat credit on input goods & services - The Department alleged that the assessee incorrectly availed credit on exempted goods cleared - Duty demand with interest & penalty was raised -

Held - The issue is no longer res integra - The Tribunal in M/s Mercedes Benz India (P) Limited vs. Commissioner of Central Excise, Pune , M/s Cipla Ltd Banglore vs. Commisioner of Central Excise, Customs and Service Tax, Bangalore-I and the High Court decisions in Commissioner of Central Excise vs. Himalaya Drug Company and Commissioner of Central Excise & Customs vs. Anil Products Ltd. settled the issue in favor of the assessee - Hence demands unsustainable & set aside: CESTAT (Para 3,5) - Appeal Allowed: AHMEDABAD CESTAT

2018-TIOL-61-CESTAT-BANG

Mcdowell and Company Ltd Vs CCE

CX - Assessee engaged in manufacture of Indian Made Foreign Liquor (IMFL) and is a registered owner of several well-known brands such as 'McDowells' - They also prepared 'food flavours' which went into the manufacture of IMFL - The present appeal pertains only to said 'food flavours' - In addition, assessee, to cater to increased demand also entered into agreements with various Contract Bottling Units (CBUs) and Independent Bottling Units (IBU) for manufacture and sale of IMFL - The dispute arose about the valuation of such food flavours - First of all on limitation aspect, it appears that SCNs were issued for demands under consideration - Collection of service charges/royalty charges was not at all brought to the notice of Department - None of the declarations under the then Rule 173C or 173CC of extant CER, 1944 contained any disclosure about receipt of such charges - Further, even when asked for, assessee delayed furnishing of details of such charges and hence, invoking of extended period is justified in respect of first SCN - The second SCN is within the normal period of limitation.

Issue is an intricate mixture of question whether manufacture is involved in preparation of food flavours by assessee as well as valuation of same for payment of excise duty - Issue of manufacture is fundamental to present dispute - In absence of detailed explanation of processes involved, Tribunal is unable to entirely appreciate the same - Moreover, details were not considered by adjudicating authority and in absence of detailed discussions by adjudicating authority on processes involved, a firm view cannot be taken in the matter - In the absence of details of the processes employed by assessee on record, Tribunal is not in a position to give due consideration to all the factors and come to a judicious conclusion keeping in view the various decisions referred to by Apex Court - In this scenario, it deems necessary to remand the matter to adjudicating authority to consider in detail the process of manufacture after ascertaining the same and decide the question whether it is a process of manufacture - In the event a view is taken that the processes amount to manufacture, the adjudicating authority will re-examine the issue of valuation of such food flavour for payment of duty: CESTAT - Matter remanded: BANGALORE CESTAT

CUSTOMS SECTION

NOTIFICATION

cnt01_2018

CBEC notifies new Customs Exchange Rate effective from January 05 , 2018

CASE LAWS

2018-TIOL-67-CESTAT-CHD

Artex Textile Pvt Ltd Vs CC

Cus - Assessee imported one consignment of "Artificial Fur" against Commercial Invoice from M/s Raise World Ltd. and they filed Bill of Entry for clearance of goods through their CHA - On reasonable belief of mis-classification and mis-declaration, subject goods were withheld and samples of goods were sent to Textile Committee for live testing - As per test report, goods were found to be "100% Polyester Knitted Cut Pile Fabric" - However, assessee was allowed to redeem the goods on payment of fine and personal penalty was also imposed on assessee - Thereafter, assessee requested for permission to re-export the goods back to foreign supplier - Aforesaid request of assessee was not considered by Revenue on the ground that request had been made after adjudication proceedings were over and at the time of personal hearing during adjudication no such request was made by assessee - Matter had already been adjudicated on 01.08.2012, wherein goods were confiscated and were allowed to be redeemed on payment of fine and personal penalty was also imposed on assessee - Goods were ordered to be re-assessed @Rs.267.30 per Kg - Thereafter, assessee sought permission to re-export the goods on 18.09.2012 - Since their request for re-export of goods was not considered by adjudicating authority, assessee approached High Court - High Court in its order dated 13.08.2013 directed the department to dispose of application in accordance with law within one month - Ajudicating authority did not giving a personal hearing to assessee before deciding this request pursuant to direction given by High Court - Tribunal is not convinced by reasoning given by Commissioner (A) and feel that even if it was not expressly said so by High Court to grant personal hearing, the fact that the order was to be passed in accordance with law means that principles of natural justice were required to be followed by the adjudicating authority while deciding the request of re-export of goods - Even if assessee did not ask the adjudicating authority to grant personal hearing for request for re-export, it was incumbent on adjudicating authority to provide them an opportunity of personal hearing before deciding the matter: CESTAT - Matter remanded: CHANDIGARH CESETAT

2018-TIOL-66-CESTAT-BANG

Dr A C Mathew Vs CC

Cus - the appellant herein is one of several individuals, and a firm, all of whom allegedly attempted to clear two consignment of goods, despite expiry of the Letter of Permission - The Department further alleged that these persons over-invoices the consignment so as to derive undue benefits from financial institutions - Upon investigation, the goods were were confiscated u/s 111(m) & 111(o) of the Act, along with levy of penalty u/s 112 on the appellant - Held - The Department did not adduce evidence showing the involvement of the appellant herein in the affairs of the company - Further, as per records maintained by the Registrar of Companies, the appellant became director of the firm, much after the consignment in question was imported - The Department also failed to establish any incriminating mens rea on part of the appellant - Thus, penalty imposed on appellant dropped: CESTAT (Para 2,6) - Appeal Allowed: BANGALORE CESTAT