2018-TIOL-NEWS-010 Part 2, Dated: Thursday, January 11, 2018

ST - Assessee engaged in manufacture of MET Coke of various grades and Coking Coal and are availing credit of duty paid on inputs, capital goods and service tax on input services under provisions of CCR, 2004 - From December 2013 onwards, assessee has discontinued payment of service tax in cash and started utilizing the cenvat credit for payment of service tax on GTA - The Range Officer had informed the assessee that they were not eligible to utilize the cenvat credit for payment of GTA services as service recipient - As per the explanation to Rule 3 of CCR, 2004, it has been specifically incorporated w.e.f. 01.07.2012 that cenvat credit cannot be used for payment of service tax on GTA as service recipient and if there is a violation of this rule, then, the assessee attracts penal action under Rule 15 of CCR, 2004 for payment of GTA services as service recipient - But despite that, assessee utilized the credit for payment - Further, Commissioner (A) has come to the conclusion that assessee has deliberately violated the rule which calls for penal action and on the other hand by considering the financial difficulties, he has reduced the penalty to 25% without any legal reasoning and provisions of law - Further, there is a clear violation of rule inspite of knowledge on the part of assessee - Therefore, reduction of penalty to the extent of 25% of wrongly utilized cenvat credit is not sustainable in law and therefore, set aside the impugned order reducing the penalty to 25% and restore the O-I-O which imposed penalty under provisions of Rule 15(1) of CCR, 2004 and under section 78 of FA, 1994 read with section 11AC of CEA, 1944 for improper utilization of cenvat credit amount: CESTAT

ST - Assessee is an organisation engaged in renting out of shops - They have provided the services of immovable property which are primarily used for commercial purposes and period involved is 01/06/2007 to 31/12/2009 - Since the service tax was not paid by assessee, SCN was issued - Demand confirmed alongwith interest and penalty - Considering the fact that liability under renting of immovable property service was challenged and same is still pending before apex court, in these circumstances, assessee had a bona fide belief that they are not liable to pay service tax, but thereafter they paid the same - Therefore, assessee is entitled for benefit of Section 80 of FA, 1994 and by resorting to Section 80, penalty under Sections 77 and 78 waived - But as far as interest liability is concerned, assessee is liable to pay interest as per the provisions contained in Section 75 of FA, 1994 - Penalties are set aside and interest liability is confirmed: CESTAT - Appeal partly allowed: BANGALORE CESTAT

CENTRAL EXCISE SECTION

2018-TIOL-70-HC-MAD-CX

Data Field India Pvt Ltd Vs CCE

CX - Petitioner is a 100% Export Oriented Unit (EOU), engaged in the manufacture of telephone cords -the Development Commissioner, after verifying the documents submitted by the petitioner, granted permission for the Domestic Tariff Area (DTA) sales for a total value of Rs.204.34 lakhs on the total ex-factory value of production of Rs.552.59 lakhs for the year 1997-98 – petitioner submitted that they have paid a total of Rs.74.35 lakhs in terms of notification no.2/95-CE dated 4.1.1995 – petitioner further submitted that they are not liable to pay SCD and ACD, which amount to Rs.41.58 lakhs and that the said amount is liable to be refunded to them – while so, the respondent issued a SCN dated 24.4.2002 alleging irregularity in the availment of concession under the DTA sales by furnishing inflated exports – petitioner before High Court seeking to prohibit the respondent from proceeding with the said SCN.

HELD:Essentially, the impugned SCN is sought to be challenged on technical grounds without meeting the allegation as pointed out in the impugned SCN – however strong the case of the petitioner would be on legal grounds, while examining the applicability of the same, it is essential and necessary to go into the factual matrix -the allegation against the petitioner being one of irregularity in the availment of concession under the DTA sales furnishing inflated export sales, is purely a factual issue, which has to be agitated by the petitioner before the Adjudicating Authority - whether or not there has been inflation and whether the respondent was justified in arriving at the actual Net Foreign Exchange Profit at 3.95% is correct or otherwise, has to be thrashed out before the Adjudicating Authority - after the factual scenario becomes clear, then only a situation arises for applying the legal principle - the allegation against the petitioner is one of wilful mis-statement of relevant facts by an act of fraud with an apparent intention to evade payment of duty,therefore, the decision in Norton Intec Rubbers (P) Ltd. [ 2003-TIOL-818-HC-MAD-CX is distinguishable on facts - a Writ of Prohibition cannot be issued to prohibit the respondent from proceeding with the adjudication of the SCN dated 24.4.2002 - in the result, the writ petition is dismissed as not maintainable/premature – Petitioner to submit reply to SCN and the adjudicating authority to follow principles of natural justice and conclude adjudication process expeditiously : HIGH COURT [para 17, 18, 28, 29, 30, 31] - Writ Petition dismissed : MADRAS HIGH COURT

2018-TIOL-157-CESTAT-MAD

Bannari Amman Sugars Ltd Vs CCE Vs CCE & ST

CX - the assessee-company availed Cenvat credit of service tax paid on Construction of Canteen, Storing Shed and Rest Shed within the factory premises, during 2010-13 - The Revenue denied credit on grounds that these services were excluded from the purview of 'input services', w.e.f. 01.04.2011 - The Revenue also denied credit on 'Association Service' -

Held - Considering Tribunal decision in Maruti Suzuki India Ltd. Vs Commissioner of Central Excise, Delhi-III Construction services were held to be credit-eligible - Construction of Canteen, Storing Shed and Rest Shed were part of the factory, and were required to be provided by the manufacturer for the welfare of employees - Considering Tribunal decision in Commissioner of Central Excise, Chennai Vs Mirra & Mirra Industries , issue settled in favor of assessee - Further, denial of credit for Association service is hit by limitation - No mala fide can be alleged to justify extended limitation - Hence orders in question set aside: CESTAT (Para 2,3,4) - Appeal Allowed: CHENNAI CESTAT

2018-TIOL-156-CESTAT-ALL

Pole Unit (U P Power Corporation Ltd) Vs CCE & ST

CX - Whether the assessee who had deposited tax, as their claim for being exempt under Notfn 74/93-CE , was not accepted by the Department and subsequently when the matter came to be settled by Supreme Court and assessee applied for refund, whether the same can be rejected on the ground of limitation - Assessee have deposited the duty under protest - In view of the exemption notification being held applicable in favour of assessee, subsequently by Supreme Court order, the amount of duty deposited acquired the character of revenue deposit - Further, there is no limitation for refund of Revenue deposit - Accordingly, the appeal is allowed with consequential benefits to assessee and the impugned order is set aside - Adjudicating Authority is directed to grant the refund within a period of 45 days along with interest: CESTAT - Appeal allowed: ALLAHABAD CESTAT

2018-TIOL-155-CESTAT-ALL

Rathi Steel and Power Ltd Vs CCE & ST

CX - Assessee reversed the Cenvat credit but no SCN was issued for reversal of Cenvat credit and on relising that they have correctly taken the Cenvat credit, assessee filed refund claim in time - To reject the refund claim filed by assessee, no SCN was issued - For adjudication of a refund claim, if some refund claim is not maintainable, Adjudicating Authority is required to issue SCN giving reasons for rejection of refund claim - In this case, said exercise has not been done - Therefore, the refund claim cannot be rejected on these grounds itself.

On merits, registered dealer has certified the name of manufacturer/supplier who has supplied the goods to the registered dealer and to that effect a certificate has been issued - In that circumstances mere name of supplier/ manufacturer mentioned wrongly by registered dealer against which invoices were issued, Cenvat credit cannot be denied, where the assessee has received the goods and paid duty thereon - Therefore, on that ground assessee is entitled to avail Cenvat credit.

With regard to insurance claim, it is a fact on record that insurance company reimbursed the value of capital goods lost in fire - The insurance company never reimbursed the duty or tax payable on those goods - It is a fact on record that no duty part has been reimbursed by insurance company - In that circumstances, Cenvat credit on the goods lost in fire is not required to be reversed by assessee - Therefore, for the wrong reversal for Cenvat credit, assessee is entitled for refund claim.

With regard to Cenvat credit on invoices in name of head office, it is a fact on record that although assessee is having two factories but the another factory has been closed long back and, therefore, the only one factory was entitled to claim credit which is assessee's factory - In that circumstances, assessee is entitled to avail Cenvat credit as the invoices meant for their factory only - Therefore, for said wrong reversal of Cenvat credit, assessee is entitled for refund of the same: CESTAT - Appeal allowed: ALLAHABAD CESTAT

CUSTOMS SECTION

CIRCULAR

cuscir01_2018

Guidelines for the sale of seized/ confiscated gold

CASE LAWS

2018-TIOL-71-HC-DEL-CUS

Outokumpu Oyj Vs UoI

Cus – Petitioner is a manufacturer of CRS Steel in Finland and exports the CRS Steel including sheets of 1250 mm and above in thickness to India - petitioner submits that vide impugned notification [notification no.52/2017-Customs (ADD) dated 24.10.2017], anti-circumvention duty has been imposed on CRS Steel above 1250 mm in an indirect manner vide the impugned note [below the table, specifying anti-dumping duty at the rate worked out as percentage of landed value of import] in the notification by putting conditions which are wholly impracticable and incapable of being met - petitioner submits that imposition of anti circumvention duty is contrary to law – petitioner before High Court praying for (i) striking down Rule 25 of theCustoms Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Custom Goods and for Determination of Injuries) Rule 1995 [Anti Dumping Rules] to be ultravires to Section 9A of the Customs Tariff Act, 1975 [Tariff Act] (ii) quashing the impugned findings dated 18.8.2017 issued by respondent no.2 (iii) restricting the respondents from acting upon the impugned notification.

HELD - There are a plethora of decisions of this Court repeatedly refusing to entertain the writ petitions impugning anti-dumping notification -the petitioner's challenge to vires is a misconception -the petitioner seeks consort and relies on the said Rule [Rule 25 of the Anti-Dumping Rules] - the submission made is that sub-section (1A) to section 9A of the Tariff Act permits imposition of anti circumvention duty only when circumvention takes place either by altering the designation or name or composition of articles or by import of an article in an unassembled or dissembled form or changing country or its origin for export -this is not correct - the section permits imposition of anti-circumvention duty also when imports take place into India in any other manner, whereby, the anti dumping duty so imposed is rendered ineffective – this Court does not think there is any ground or reason mentioned in the writ petition which would justify a challenge to the vires of Rule 25 of the Anti-Dumping Rules on the pretext that it violates and is ultra vires to section 9A (1A) of the Tariff Act and stipulates imposition of anti-circumvention duty beyond the scope and the ambit of the main enactment -the petitioner, in fact, relies upon Rule 25 in support of his contention raised and urged before this Court in the writ petition - interpretation of the Rule and its applicability to a particular case and factual matrix, must be distinguished from the challenge to the vires of the Rule - review provided under Article 226 of the Constitution is an extraordinary remedy and the High Courts do not, as a matter of discretion, entertain Writ Petitions when an equally efficacious remedy is available -following the decision of the Supreme Court in the case of Union of India versus T.R. Verma [AIR 1957 SC 882], the Writ Courts, in the absence of exceptional circumstances, have refused to entertain writ petitions and to proceed with judicial review where the invoker has failed to exhaust or take recourse to alternative remedies –a Writ can be entertained where the authority or tribunal lacks subject matter jurisdiction or has assumed jurisdiction in the absence of jurisdictional fact, for these are treated as pre-requisite for assuming jurisdiction at the inception - it is necessary to keep in mind the distinction between lack of jurisdiction and an alleged error in exercise of jurisdiction, i.e. a wrong or erroneous order -in the context of the present case, and the submissions and counter to the same, it can, safely and without hesitation, be held that challenge is not to the lack of jurisdiction at the time of initiation but to purported failure to correctly apply the law and exercise jurisdiction -these issues can be appropriately and properly dealt with in the appellate proceedings -no special ground or reason is made out for the petitioner to ignore and to not adhere to and exercise the Statutory Appellate right – in view of the above, this Court is not inclined to entertain the present writ petition and leave it open to the petitioner to invoke the statutory remedy by way of appeal before the Appellate Tribunal : HIGH COURT [para 8, 10, 12, 13, 14, 15, 17, 19, 20, 23] - Writ Petition dismissed : DELHI HIGH COURT

2018-TIOL-159-CESTAT-DEL

Havells India Ltd Vs CCE & ST

Cus - Appellants, engaged in the manufacture of electrical switches and other electrical products, imported inner and outer plates for the said switches during the period from 16.6.2006 to 25.7.2012 claiming exemption from customs duty in terms of sl.no.112 of notification no.25/99-Cus dated 28.2.1999 - the condition for the said exemption is prescribed in the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules 1996 [1996 Rules] -the officers of DRI conducted certain verifications in August, 2012 and held a view that the imported plates were not parts of switches and hence were not entitled for the said exemption - SCN dated 20.11.2012 was issued by DRI demanding customs duty for the period from 14.11.2007 to 25.7.2012 under section 28 of the Customs Act, 1962 - the case was settled by the Settlement Commission on an application filed by the appellant - on 13.12.2013, another SCN demanding customs duty, covering the period 16.06.2006 to 13.11.2007, was issued invoking rule 8 of the 1996 Rules - demand confirmed, penalty imposed, goods confiscated - appeal to CESTAT.

HELD: The assessment done by the Customs Officers at the time of import is varied by invoking rule 8 of 1996 Rules by central excise officers, in whose jurisdiction the appellant's unit is falling - such dual jurisdiction of two officers having assessment powers and power to demand differential duty upon re-assessment, is legally unsustainable -it would appear that two separate proceedings were initiated against the appellant, one under section 28 of the Customs Act for the permissible period of 5 years and another subsequent one invoking rule 8 of the 1996 Rules for the period beyond 5 years on the ground that rule 8 did not provide for any time limit - such dual approach by the revenue is not legally sustainable -it is not open to the Revenue to resort to rule 8 of the 1996 Rules to demand and recover customs duty for earlier period, beyond five years -the Karnataka High Court, in the case of Molex India Ltd. - 2015-TIOL-190-HC-KAR-CUS , held that the Dy. Commissioner of Central Excise was not appointed as customs officer and has no jurisdiction to issue SCN -the impugned order is not legally sustainable on more than one ground -accordingly, the same is set aside and the appeal is allowed : CESTAT [para 5, 7, 9, 12, 14] - Appeal allowed: DELHI CESTAT

2018-TIOL-158-CESTAT-DEL

Budget Logistics Pvt Ltd Vs CC

Cus - DRI officers intercepted the goods before filing any document in respect of imported goods by concerned persons - Since none of the assessee had signed any document for purpose of obtaining a licence or for the purpose of importing the goods, it cannot be said that any fraudulent practice was adopted by assessee for illegal importation of goods, which were liable for confiscation - Thus, it is obvious that provisions of sub-section (d) of Section 111 of Customs Act, 1962 do not get attracted for confiscation of goods - For goods being liable to confiscation under Section 111(m) ibid, those must be mis-declared in entry made by importer in Bill of Entry - Since the goods were intercepted by Officers of DRI from Linehaul Express/ the Airlines Courier, and admittedly, no bill of entry was filed or any entry was made by any of assessee, provisions of Section 111(m) cannot be invoked for confiscation of goods - The facts are also not under dispute that impugned goods were never cleared or given out of charge by Customs authorities - Therefore, there was no occasion for assessee to deal with the goods in any manner as envisaged under various provisions of Section 111 - Further, documents seized by DRI officers, prove the fact that goods were sent from Hong Kong in name of M/s Abee Logistics, who were responsible for making the declaration in bill of entry - Since the assessee is no way concerned with goods or making any declaration in respect of imported goods, provisions of Section 112(a) and 114AA ibid cannot be invoked against them for imposition of penalties - No merit found in impugned order, so far as, it imposed penalties on assessee: CESTAT - Appeals allowed: DELHI CESTAT