2018-TIOL-NEWS-009, Dated: Wednesday, January 10, 2018

ST - Advance amount was received by the assessee as security/guarantee amount - It is obvious that for big contracts which are spread over years, the service provider needs to have specific performance guarantee from their customer - The assessee, in turn, has issued Bank Guarantee amount to their customer - Thus the amount is guarantee from both the sides - It became the part of consideration only when it was proportionately included in the stage wise completion of work for which invoices were raised and service tax was paid by the assessee - There is no service tax liability on advance received by the assessee - Appeal allowed: CESTAT [para 6, 7]

ST - CENVAT - Amount against supply of services by the sub contractors was retained by the assessee but the amount of service tax was paid in full to the supplier/vendor - Revenue contends that the assessee is entitled to proportionate credit - The amount was retained by the assessee in terms of understanding between the assessee and their vendors and not due to non-payment - No reason to take a different view from the adjudicating authority and hold that the credit is available to the assessee in such circumstances: CESTAT [para 8]

ST - It is not in dispute that the services (by Engineers) were rendered abroad - It is also not in dispute that the main contractor of the assessee received the consideration in foreign currency who in turn made payment to the assessee - In such case, the services rendered by the assessee falls under the Export of service which is eligible for exemption from service tax: CESTAT [para9] - Assessee appeal allowed/Revenue appeal dismissed: MUMBAI CESTAT

ST - Assessee engaged in business of air transportation - It appeared to department that assessees is providing Cargo Handling Services incidental to Freight and they are liable to pay service tax on composite charges, which comprises of freight handling charges, airway bill charges and valuation charges, which are incidental to Cargo Handling Service - The assessee's main contention is that the contract is to "transport the goods" and not to provide "Cargo Handling Services" - Assessee also points out that loading and unloading was done by independent contractors and they have themselves not neither undertaken nor performed the activity of loading or unloading - Activities of assessee herein would definitely fall within the ambit of service, namely, "Transportation of Goods by Air" introduced w.e.f 10.09.2004 - However, for the prior period (16.08.2002 to 09.09.2004), the department is seeking to bring the same activities under the fold of cargo handling service - This is not just or fair - Law is well settled that when a new entry is brought under the levy of service tax, the same activity cannot be subjected to levy under an existing entry, unless the new entry has been specifically carved out of the earlier one - This is certainly not the case here. The transportation of goods by air will firstly not be taxable under cargo handling service and secondly said activity would attract service tax levy only from 10.09.2004, and that too under "Transport of Goods by Air" - In a recent decision, in case of United Shippers Ltd. 2014-TIOL-2500-CESTAT-MUM the ratio of Jet Airways decision, 2008-TIOL-979-CESTAT-AHM was relied upon by Tribunal to hold that transport of coastal goods cannot be taxed under categories of "Cargo Handling Service" - In case of Jet Airways (India) Ltd. 2008-TIOL-979-CESTAT-AHM , the Tribunal has held that mere transportation is not covered under "Cargo Handling Service" - As such services provided by assessee cannot be brought under the ambit of Cargo Handling Services - The demand made against assessee on this score will not sustain and impugned order is set aside: CESTAT - Assessee's appeal allowed: CHENNAI CESTAT

ST - It is case of assessee that adjudicating authority having recognized the fact that amounts were paid in respect of litigation / dispute, which has taken place by issuance of SCN, has not adjusted the amounts towards confirmed demands and the interest thereof and refund the balance amount - The adjudicating authority's findings as regards the amounts paid by assessee during pendency of proceedings are incorrect - Any amounts paid by an assessee or a litigant during pendency of the appeal should be construed as an amount paid in respect of said litigation and there being finality of order of Tribunal that extended period cannot be invoked by SCN, the amount which has been deposited by assessee needs to be refunded to him after adjusting the confirmed duty liability and interest thereof - As regards the penalty imposed under Section 76 of FA, 1994, it is a fit case to invoke provisions of Section 80 of FA, 1994 and set aside the penalty as assessee having been litigating the issue for liability to pay tax as a State Government Body, has made out a case for invoking the said provisions - Accordingly, by invoking the said provisions, the penalty imposed is set aside: CESTAT - Appeal allowed: BANGALORE CESTAT

CENTRAL EXCISE SECTION

2018-TIOL-138-CESTAT-BANG

CCE, C & ST Vs Binani Zinc Ltd

CX - the assessee-company availed Cenvat credit of service tax paid on outward transportation of the goods, during a particular period - On directions by the Revenue, the assessee reversed the credit with interest -Subsequently, the assessee sought re-credit of such amount and also sought refund of the interest paid during reversal - Such claim was denied by the lower authorities as being inconsonant with law and thus non-maintainable - However, the Commr.(A) set aside such orders -

Held - The issue of credit eligibility on service tax paid on outward transportation of the goods till 31.03.2008, is already settled by the High Court decision in ABB Ltd. - Further, the issue of suo motu availment of credit is also settled in favor of the assessee, through the Tribunal decision in Sopariwala Exports Pvt. Ltd. - Moreover, where assessee is eligible to avail credit & reversed the same with interest, on instance of the Revenue, the assessee would be eligible for the refund of interest as well: CESTAT (Para 3,5.1,5.2) - Appeals Dismissed: BANGALORE CESTAT

018-TIOL-137-CESTAT-MUM

Bilt Graphics Paper Products Ltd Vs CCE

CX - Goods short received by appellant, hence debit note raised on suppliers – Department denying CENVAT credit to the said extent along with imposition of penalty and interest – appeal to CESTAT.

Held : It is apparent from the case laws relied upon by the appellant that credit can be varied only in the circumstances where the suppliers have filed refund of the excess duty paid – Appellant has submitted that the supplier of goods has not claimed any refund and even Revenue has not produced any evidence to counter this submission by appellant – in these circumstances, CENVAT credit cannot be denied – appeal is consequently allowed: CESTAT [para 4, 5] - Appeal allowed: MUMBAI CESTAT

2018-TIOL-136-CESTAT-MAD

Chemcrown Exports Ltd Vs CCE & ST

CX - the assessee-company manufactured Unit soles and Full shoe - On verification of books of accounts, the Department alleged that the assessee had availed credit on some products which had been returned to it, on the basis of some delivery challans - Since said delivery challans did not contain particulars of duty paid, but only the quantity of goods returned, the duty paid nature of the returned goods and the original invoice under which the goods said to have been returned, could not be correlated - SCN was issued raising duty demand with equal penalty -

Held - The issue at hand was settled by the Tribunal in Balmer Lawrie & Co. Ltd. Vs. CCE, Mumbai wherein it was held that in the absence of any doubt about the rejection of the goods by the buyers and receipt of the same by the manufacturer, denial of credit was not justifiable - Moreover, the receipt of the goods was in the years 2008-10, while SCN was issued in 2012 - Considering Tribunal decision in Jamna Auto Industries Ltd. Vs. CCE, Delhi no infirmity found on part of assessee: CESTAT (Para 1,3,4) - Appeal Allowed: CHENNIA CESTAT

2018-TIOL-135-CESTAT-MAD

Indian Hume Pipe Company Limited Vs CCE & ST

CX - Assessee engaged in manufacture of pre-stressed concrete (PSC) pipes - They have claimed exemption from duty in terms of Notfn 6/2002-CE - Revenue entertained a view that assessee is not eligible for said concession as condition for exemption is not fulfilled - In other words, in project for which the pipes are supplied there is no water treatment plant, as such, the exemption is not applicable - The second issue is with reference to liability of assesssee to deposit the amount collected in name of excise duty in terms of Section 11 D of CEA, 1944 - Treatment plant does not mean an elaborate establishment of machinery - There can be a situation where the water can be made fit for distribution for human consumption, by a simple process including at the place of source - Plant cannot be so strictly interpreted to refer to only an elaborate process of treatment - Thus, denial of exemption is not tenable - There is no evidence that the sales document namely invoices indicated any excise duty separately so that the buyer has paid any money representing excise duty to assessee - In absence of such situation, provisions of Section 11D cannot be attracted and impugned order is without merit: CESTAT - Appeal allowed: CHENNAI CESTAT

2018-TIOL-134-CESTAT-DEL

Daulat Ram, Cha Vs CC

Cus - M/s. Astrotech Accessories Impex, through assessee filed the Bill of Entry for imported goods declared as Rudraksha of China origin and Classification under Chapter 44 was claimed - The Bill of Entry was for warehousing the goods - During examination of goods, certain excess quantity was found - Original authority held that the products were to be classified under Chapter, 14 and confirmed a Customs duty; goods are ordered to be confiscated with the permission to redeem on payment of a fine - A penalty equal to duty was also imposed on importer - A penalty of Rs.6,00,000/- was imposed on assessee under Section 112 (a) of Customs Act, 1962 - Goods imported were described as Rudraksh - Admittedly, these are products of plant origin - However, Tribunal is not going into the dispute of correct classification as same is not before the Tribunal - The penalty imposed on assessee is solely on the ground that he tried to mislead the investigation, as well as adjudicating authority by giving vague explanation with reference to misclassification of Rudraksh - Warehoused goods will be in control of Customs authorities - Classification of product is claimed under a particular heading - As seen above, the classification is a matter of dispute, which was resolved by adjudicating authority - The nature of product for classification could be more appropriately arrived at by physical examination only - Prima facie, Rudraksh classification, as a product of the particular chapter is to be examined with reference to the nature and the manner in which it is imported, whether it is plant product, for use or worked upon product or any declared other purposes - In such situation, it will not be correct to take a penal action against assessee for filing a classification under a particular chapter - It appears that Revenue has not initiated any action for purported violation by CHA under CHALR - No justifiable reason found for imposition of penalty on assessee under Section 112 (a): CESTAT - Appeal allowed: DELHI CESTAT

2018-TIOL-133-CESTAT-DEL

CCE Vs AM Products

CX - the assessee-company manufactured Pan Masala - It filed declaration for installation of one packing machine, based on which assessee's production capacity was determined - Thereafter, the assessee sought sealing of a pouch-packing machine & then declared that it would stop production for 15 days or more - Later, the Revenue received information that the assessee tampered with the machine & was resorting to unaccounted manufacture - Search & enquiry was conducted at the assessee's premises - Raw material & finished goods were seized - Thus, the Revenue proposed confiscation of the goods, raised duty demand and imposed penalties - On adjudication, the proceedings against the assessee were dropped -

Held - The original authority filed a detailed report based on physical inspection of the machine & the premises - It was noted that the possibility of the assessee operating the machine without removing the seal were remote - Moreover, charges of clandestine removal cannot be made without supporting evidence - Herein, apart from incidental stock, only circumstantial evidence of some raw material & finished goods found, was relied on - Hence, the order of Original authority merits no interference: CESTAT (Para 1,5,6) - Appeals Dismissed: DELHI CESTAT

CUSTOMS SECTION

2018-TIOL-61-HC-MAD-CUS

Sakthi Printeck Vs Deputy Director

Cus - Both the Writ Petitions have been filed by the partners of M/s.Sakthi Printeck [who have been importing second hand printing machinery from various countries and have been clearing the same for home consumption] and seek for an identical relief to forbear the second respondent, the Senior Intelligence Officer, DRI, Ahmedabad Zonal Unit from in any way proceeding with any enquiry pursuance to the summons, dated 6.11.2017.

HELD: Essentially, the petitioner challenges the summons issued by the second respondent and a second Writ Petition for such a relief, is not maintainable after the petitioner was unsuccessful in the first round of litigation, when the Writ Petition was dismissed, as not maintainable, with the further direction to the second respondent to issue fresh summons setting out reasons, which have been done by the second respondent in the summons, dated 6.11.2017 - this is sufficient to hold that the Writ Petitions are not maintainable and liable to be dismissed - in the instant case, the exercise done by the second respondent is investigation and it does not pertain to a single consignment imported by the petitioners -by the summons, dated 6.11.2017, the petitioners have been called upon to produce documents pertaining to the imports done for the period from 2013-14 to 2016-17 -therefore, it is not a singular transaction, which is being investigated, but past transaction as well -this has been held to be permissible in the case of Commissioner of Customs (Sea), vs. CESTAT, Chennai [2009 (240) ELT 166 (Mad)] , wherein it was held that past conduct of the importer would assume significance in the course of investigation and there is power to investigate into past cases– the Division Bench of this Court in the case of South India Exports - 2003-TIOL-01-HC-MAD-CUS held that a glance at section 108 of the Customs Act, under which the summons is given, would suggest that it is a power given to any Gazetted officer of the Customs Department to summon any person during any enquiry which the officer would make in connection with the smuggling of any goods – thus, for all the above reasons, the petitioners have not made out any case for grant of any relief in these Writ Petitions - in the result, the Writ Petitions fail and they are dismissed : HIGH COURT [para 4, 12, 14, 15] - Writ Petitions dismissed : MADRAS HIGH COURT

2018-TIOL-60-HC-MAD-CUS

K G Denim Ltd Vs CBEC

Foreign Trade (Development & Regulation) Act, 1992 [FTDR Act] – Petitioner, a Domestic Tariff Unit (DTA) carrying on business of manufacturing denim fabrics, has exported the fabrics by utilising the manufacturing facility of 100% EOU at Hosur, who is termed as job worker who carries out weaving operations before the manufacture of denim fabrics at the factory of the petitioner - in W.P. No.11645 of 2003, the petitioner challenges a Public Notice dated 25.5.2000 -whether the policy Circular No.6 dated 20.5.1998 would apply to the case of the petitioner - in W.P. No.11646 of 2003, the petitioner has challenged the order passed by the 3rd respondent, dated 28.2.2003 by which the petitioner was informed that in terms of policy Circular Nos.6 and 35, they are not eligible for DEPB benefit for the exports effected through EOU - in W.P. Nos.11647 of 2003 and 11648 of 2003, the petitioner has challenged the consequential orders pursuant to the order dated 28.2.2003.

HELD - The ratio of decision of the High Court of Karnataka in the case of Karle International would very well apply to the facts of the case -the Export Import policy for the relevant year was formulated in exercise of the powers conferred under Section 5 of the FTDR Act -the policy thus has a force of law and it is a statutory policy – the benefit which flows from the statutory policy [para 7.17] is sought to be denied based upon the policy Circular Nos.6 and 35 - as held in the case of Karle International, the right conferred in the statute which in the instant case is in the nature of Export Import Policy cannot be taken away by issuing Circulars -thus, the benefit which has accrued to the petitioner by virtue of Export Import Policy cannot be denied by relying upon the impugned policy circulars -though the petitioner has challenged the amendment to Circular No.31/2000, eventually in the impugned order reference has been made to policy Circular Nos.6 and 31 -in the light of the finding that the policy circulars cannot override the statutory benefit, the rejection of the petitioner's request for being eligible for DEPB Scheme vide order dated 28.2.2003 and the consequential communications of the 4th respondent dated 20.3.2003 and 4.3.2003 are held to be unsustainable in law - it would suffice to hold that the policy Circulars cannot overide the statutory policy which is the Export Import Policy of the year 1997 framed under the provisions of FTDR Act - in the result, Writ Petition Nos.11646 to 11648 of 2003 are allowed and the impugned orders are set aside - Writ Petition No.11645 of 2003 is disposed of : HIGH COURT [para 11, 12, 13, 14] - Writ Petition Nos.11646-11648/2003 allowed / Writ Petition No.11645/2003 disposed of : MADRAS HIGH COURT

2018-TIOL-58-HC-AHM-CUS + Story

Staunch Natural Resources Pvt Ltd Vs Central Excise and Service Tax Appellate Tribunal & 3

Cus - Cause for filing application for refund arose only when the export actually failed - Interpretation that would lead to anomalous and unintended consequences must be avoided – Since the permission for export cannot be granted unless the duty is actually paid, nevertheless, the amount so deposited would be appropriated towards duty only upon exportation of the goods – refund application not time barred - Petitioner, under no circumstances, can be asked to pay export duty twice on single export of the same consignment – Refund allowed along with interest: High Court [para 18, 19, 21, 26] - Petition allowed : GUJARAT HIGH COURT

2018-TIOL-132-CESTAT-DEL

GND Cargo Movers Vs CC

Cus - Assessee is a licensed customs broker engaged in processing of clearance of import/export goods through customs - Proceedings were initiated against assessee for revocation of their licence with reference to importation of mobile phones through various bills of entries in April, 2012 - Proceedings were also initiated against importers as well as assessee under provisions of Customs Act through issue of SCN by DRI - The Madras High Court in case of A.M. Ahamed & Co. 2014-TIOL-1503-HC-MAD-CUS examined the scope of " offence report " - After noting the provisions of regulation and scope of implication of offence report, High Court concluded that SCN issued to petitioner with a copy to Commissioner should be taken as a date of receipt of offence report - Consequently, period of 90 days should commence only from that date - In the present case, SCN was issued to assessee with a copy marked to office of Commissioner as well as to the notice board of DRI and Commissioner - Following the ratio of Madras High Court, said SCN construed as offence report as present proceedings are of the same set of facts/offences alleged against assessee - Since the said SCN was dated 20.05.2013 and the proceedings under CBLR was initiated by notice dated 12.08.2016, proceedings are substantially delayed and same is in violation of Regulation 20(1) of CBLR 2013 - Following the ratio laid down by various decisions of High Courts of Tribunal, said proceedings under CBLR cannot be sustained - Accordingly, impugned order is set aside only on the ground of limitation: CESTAT - Appeal allowed: DELHI CESTAT

2018-TIOL-131-CESTAT-MUM

Fykays Engineering Pvt Ltd Vs CC

Cus - Exemption benefit under notification 21/2002-Cus denied in respect of Thermocouple Quality Wire 13% Rhodium/Platinum on the ground that the same is not platinum - Importer in appeal contending that 'Platinum' is defined by Chapter Note 4(B) of the Chapter 71 and which reads 'expression platinum means platinum, iridium, osmium, palladium, rhodium and ruthenium' and, therefore, any of such goods imported shall enjoy the duty exemption in terms of the above notification.

Held: Bench could have appreciated the stand of Revenue had the notification used the expression "notwithstanding anything contained in any other provision of law", the word "platinum" used in Sr. No. 189 of the Notification should be "platinum only" without covering other metals appearing in Chapter Note 4(B) of Chapter 71 - Therefore, in absence of any overriding clause, appellant cannot be barred to get the notification benefit - appeal allowed: CESTAT [para 5, 7] - Appeal allowed: MUMBAI CESTAT