2018-TIOL-NEWS-011, Dated: Friday, January 12, 2018

ST - Petitioner challenges an O-I-O, whereby the respondent classified the services rendered by petitioner as “Works Contract Services” for the period from 01.04.2010 to 30.06.2012, upheld the invocation of extended period of time under proviso to Section 73(1) of the Act, confirmed the demand of service tax as proposed in SCN, demanded interest and imposed penalties - Impugned demand is for period from 01.04.2010 to 30.06.2012, and for subsequent period i.e., from July, 2012 to September, 2013 an order was passed, which was challenged by petitioner on the ground that it is in violation of principles of natural justice, as they were not heard in the matter - Therefore, petitioner instead of filing an appeal, filed an application for rectification of mistake - This application was rejected and same was challenged in a writ petition - This Court after considering the submissions on either side, disposed of the writ petition vide 2016-TIOL-1266-HC-MAD-ST - On remand, respondent has issued a SCN and fixed the personal hearing - However, before orders could be passed, Commissioner has been transferred and new Commissioner is yet to take charge - In the meantime, for earlier period, present writ petitions are entertained - The grounds raised by petitioner in earlier round of litigation is identical to grounds raised herein and one more additional point is with regard to retrospective effect of Finance Act, 2017 - So far as the demand for period October, 2013 is concerned, court is informed by petitioner, that the same has been dropped by O-I-O dated 14.11.2017.

Court views that the issue, viz., the demand of service tax for the period from 01.04.2010 to 30.06.2012, also requires to be re-done - Since the remand, which was ordered by this Court for the period from July 2012 to September, 2013 is yet to attain finality and for the subsequent period, the demand has been dropped by a speaking order, the impugned issue requires re-consideration: HC- Matter remanded : MADRAS HIGH COURT

ST - the assessee-company provides Consulting Engineers services, Erection, Commissioning and Installation services, Management Maintenance or Repair services, BAS, IPR, BSS, ITSS and Transportation of Goods by Road service - The assessee availed Cenvat credit on capital goods & input services - The assessee paid tax under RCM on payments made towards receipt of technical know-how services from the service providers located abroad, under IPR services - The Revenue alleged that the assessee wrongly availed benefit under Notfn. No. 17/2004, w.r.t. R&D cess payable for IPR service - The Revenue alleged that the assessee availed benefit before payment of Cess, which led to short-payment of tax - Duty demand was raised, along with interest & penalty - The same was upheld by the Commr.(A) -

Held - Although service tax was paid by the assessee, there was delay in payment - Further, although assessee claimed to have paid interest the same is contested by the Revenue - Moreover, since there is no suppression of fact involved, penalties u/s 77 & 78 are unwarranted - So is invokation of extended limitation, since there was no mala fide intent of assessee to evade payment of duty - Matter remanded to determine payment of interest: CESTAT (Para 2,2.1,7) - Case Remanded: BANGALORE CESTAT

ST - Appeal filed against impugned order whereby Commissioner (A) has denied the CENVAT credit used for providing services to Special Economic Zone and as also denied the credit on C & F Agent on the ground that it has been entirely used for trading activity - Assessee had not maintained separate accounts of input service meant for consumption in relation to taxable and exempted services provided by them - Issue has been considered by Tribunal in cases of Tata Consulting Engineers Ltd. 2013-TIOL-727-CESTAT-MUM and Sobha Developers Ltd. 2011-TIOL-1170-CESTAT-BANG wherein it has been consistently held that there is no need to reverse any CENVAT credit of input and input services used in relation to providing of services to SEZ Unit/Developer of SEZ - Therefore, by following the ratio of said decisions, denial of CENVAT credit is set aside - As regards to trading activities carried out by assessee, CENVAT credit of service tax has been denied in respect of C & F Agent service - Issue has been settled by decisions in M/s. FL Smidth Pvt. Ltd. 2014-TIOL-2186-HC-MAD-CX and M/s. Ruchika Global Interlinks 2017-TIOL-1235-HC-MAD-ST wherein it is clearly held that for trading activity, assessee is not entitled to the CENVAT credit of service tax - Therefore, by following the ratios of said decisions, CENVAT credit of service tax paid on trading activity carried out by assessee is denied - As far as demand of interest and penalty is concerned, assessee has not paid or short-paid the service tax by reason of collusion, wilful misstatement, suppression of fact or contravention of the provisions of Rule with intend to evade payment of service tax and they have been filing the returns regularly - No penalty is imposable on assessee under Section 78 of FA, 1994 because the condition for imposing penalty under Section 78 is not present in this case and it was an interpretational issue and therefore, penalty under Section 78 is dropped: CESTAT - Appeal partly allowed: BANGALORE CESTAT

ST - Issue relates to demand of service tax under BAS on commission paid to foreign agents - The period involved is 9.7.2004 to 31.12.2006 - The provision for payment of service tax under reverse charge mechanism was brought into Finance Act by introducing Section 66A with effect from 18.4.2006 - The decision in case of Indian National Ship Owners Association 2008-TIOL-633-HC-MUM-ST wherein it was held that the section would be operative with effect from 18.4.2006 only was maintained by the Apex Court - Therefore the demand prior to 18.4.2006 is unsustainable - The issue stands covered by these judgement since the assessee is manufacturer of artificial and synthetic staple fibre yarn - Following the same, demand beyond 18.4.2006 is also not sustainable - Impugned order is set aside: CESTAT - Appeal allowed: CHENNAI CESTAT

Gokul Foods Pvt Ltd Vs CCE

CX - Assessee is manufacturer of biscuits - During manufacture of biscuit, sugar syrup is prepared to be used in making of biscuits - It appeared to Revenue that sugar syrup was classifiable under Tariff Item No. 17029090 - Prior to 03.05.2007 the final products manufactured by assessee were attracting Central Excise Duty @ 8% ad-valorem, therefore intermediate products were exempted from payment of Duty in term of Notfn 67/1995-CE - However, w.e.f. 03.05.2007 all goods manufactured by assessee bearing MRP less than Rs. 100/- per kg were exempted under Notfn 22/2007-CE and therefore, benefit of Notfn 67/1995-CE of 'sugar syrup' as on intermediate product became inapplicable - Therefore, assessee was issued various SCNs demanding duty on intermediate product on sugar syrup, captively consumed, in manufacture of biscuits - Sugar syrup coming into existence during manufacture of biscuits and captively consumed, does not attract Central Excise duty for the reason that there is no evidence that same is marketable - Assessee shall be entitled for consequential benefit in accordance with law: CESTAT - Appeals allowed: ALLAHABAD CESTAT

2018-TIOL-168-CESTAT-ALL

Jaypee Palace Hotel Vs CCE

CX - Assessee engaged in providing services of mandap keeper, health club and fitness centre, beauty treatment, dry cleaner, internet cafi, outdoor catering and transportation of goods by road and convention services - A case has been made out against assessee that they are availing Cenvat credit of inputs/input services, therefore, they are not entitled to avail abatement of 40% on Mandap Keeper and shamiana on hiring of tent services - In that circumstances, abatement availed by assessee was denied - It was also held that as per Rule 6 (5) for specified services, availment of Cenvat credit is restricted to 20%, whereas assessee is availing Cenvat credit on all services on full amount - Claim of assessee is that they have not availed Cenvat credit on input/input services used for services provided by them which falls under Mandap Keeper service - As they have not availed the Cenvat credit, they have been availing 40% abatement of gross value for payments of service tax under Notfn 10/2004 w.e.f. 10/09/2004, and after March 2006, they have not provided this service for the period post March 2006 - The fact whether post March 2006, assessee has availed Cenvat credit on input/input services pertains to Mandap keeper service is required to be ascertained by Adjudicating Authority, therefore, the matter needs examination.

For the specified services mentioned in Rule 6 (5) of CCR, 2004 the contention of assessee is that they have not availed full Cenvat credit but availed Cenvat credit on other services which are not specified in Rule 6 (5) of the Rules - In that circumstances, assessee has availed only 20% of Cenvat credit on services, which falls under Rule 6 (5) of the Rules - This fact is also to be ascertained by Adjudicating Authority from the records of assessee - In that circumstances also, matter needs examination - Cenvat credit also denied on manpower recruitment service on the premise that same do not qualify as input service as per Rule 2 (l) of CCR, 2004 - In case of Ultratech Cement Ltd. 2010-TIOL-745-HC-MUM-ST , High Court of Bombay held that in service provided by assessee in case of output service, assessee is entitled to avail Cenvat credit - Admittedly, service impugned has been availed by assessee being a output service provider - Therefore, assessee is entitled to avail cenvat credit: CESTAT - Appeal partly allowed: ALLAHABAD CESTAT

2018-TIOL-167-CESTAT-DEL

Bion Plastics Vs CCE

CX - the assessee-company manufactured plastic caps and bottles & availed area-based exemption under Notfn. No. 50/2003 - Such benefit was denied by the Department, which went on to raise duty demands with interest & penalties, for two different periods - The assessee purchased an existing unit, already availing area-based exemption, but chose to use only the land and building of the old unit - They installed fresh machines & manufactured a different & new commodity which was not been made by the original unit - The Notfn. extends the benefit to new units started in the specified areas for a period of ten years from the date of commercial production - The units are required to be installed and commissioned prior to 31.3.2010 - The Revenue claimed that the assessee, by installing new machines in the land and building of original unit, had set up a new unit after the cut-off date - The assessee claimed that the area-based exemption will be available to any unit inspite of changing ownership as well as changing the products -

Held - After the purchase of unit by the assessee, what remained of the old unit was nothing but the land and building - The unit which existed at the time of claiming of exemption benefit no longer existed - Apart from change in ownership, the entire unit was replaced with new machines, so as to manufacture completely new products - The unit as it exists now has to be considered as a new unit and cannot be the same unit under new ownership - Further, this is not a case where additional plant and machinery was added to an existing unit so as to manufacture new product - The unit in the present form has come into existence only on 28.3.12. i.e. after the cut off 31.3.2010 - Hence the benefit of Notfn. No. 50/2003 cannot be extended to the assessee - Hence the orders in question merit being upheld: CESTAT (Para 1,5,6,7) - Appeals Dismissed: DELHI CESTAT

2018-TIOL-166-CESTAT-MAD

Chennai Petroleum Corporation Ltd Vs CCE

CX - the assessee-company manufactures various petroleum products - The assessee cleared goods to M/s IOCL, their holding company, upon payment of duty - The Revenue claimed that the assessee had not paid duty at the correct value - The assessee adopted the value of of M/s. IOCL's sale price to independent buyers, when discharging duty - Such value was lower than the price shown in the transaction while clearing the goods to M/s IOCL - The Revenue claimed that the latter price be adopted - Thus, differential duty demand was raised, with equivalent amount of penalty under Rule 25 of the CER, 2002 -

Held - In the assessee's own case, the Tribunal held that when the excisable goods were not sold except through an inter-connected undertaking, the value should be determined as per Rule 10(a) r/w Rule 9 of Valuation Rules - It also held there to be no legal sanction to demand duty from the assessee where the price charged by them from M/s IOCL was higher than the price quoted by M/s IOCL - The Revenue's appeal against this decision was set aside & so such question of law was left open - Following the Tribunal order in the assessee's own case, the order in question is unsustainable & warrants being set aside: CESTAT (Para 1,5,6,7) - Appeal Allowed: CHENNAI CESTAT

2018-TIOL-165-CESTAT-AHM

Alembic Ltd Vs CCE & ST

CX - Pursuant to a classification dispute, the assessee-company was directed to execute a bond & bank guarantee on the differential duty, pending final assessment - On final assessment, the bank guarantee was encashed and duty demand for balance amount was raised - Since the assessee did not pay the same despite adjudication by the Tribunal, the Revenue adjusted such unpaid amount against the assessee's rebate claim - The assessee's appeal against such action was rejected by the Commr.(A) -

Held - Considering relevant findings of the Commr.(A), the assessee failed to establish that the amount so appropriated was not due to be paid to the Revenue - Hence the O-i-A in question merits no interference: CESTAT (Para 2,6) - Appeal Dismissed: AHMEDABAD CESTAT

CUSTOMS SECTION

2018-TIOL-74-HC-MUM-CUS + Story

Mydream Properties Pvt Ltd Vs CC

Cus - Section 129E of the Customs Act, 1962 - Redemption of confiscated goods - Petitioner making mandatory payment of pre-deposit of duty/penalty as mandated u/s 129E of the Customs Act, 1962 - However, by a Miscellaneous application they sought a stay regarding deposit of redemption fine and/or praying for dispensing with the requirement of deposit of redemption fine - CESTAT by its order dated 18.04.2016 dismissed the application on the ground that there is no statutory provision for stay of the impugned order or for waiver of pre-deposit of any amount - Appeal filed before Bombay High Court.

Held: Tribunal is clothed with express power under Rule 41 of Procedure Rules to make such order as it is necessary to secure the ends of justice - Appellate Tribunal can permit redemption of confiscated goods subject to deposit of a part of redemption fine and subject to furnishing of security, bank guarantee etc. for the balance amount - It all depends upon the facts and circumstances of the individual case - Where the Tribunal is dealing with such an application for grant of interim relief, the power to grant interim relief cannot be exercised in a routine manner or as a matter of course as the Tribunal is dealing with taxation and revenue laws and as public exchequer is involved - It is obvious that only when a strong prima facie case is made out that the Tribunal can grant appropriate interim relief - Tribunal can always impose conditions for balancing the interests of the revenue and the assessee and for ensuring that that the amount of demand is secured in some form - Order quashed and set aside and matter remanded for expeditious disposal: High Court [para 7, 8, 9, 12, 13] -Appeal partly allowed : BOMBAY HIGH COURT

2018-TIOL-179-CESTAT-MUM + Story

My Little Footsteps Family Solution Pvt Ltd Vs CC

Cus - Paragraph 9.12 of Foreign Trade Policy 2004-09 - An ‘equipment' does not go out of the fold of definition of capital goods - ‘old and used reconditioned Brunswick bowling equipment' has its independent existence to serve its purpose - second hand capital goods in questio is also permitted to be imported - plea made by the Revenue that the equipment was not installed for rendering service dismissed since being without any evidence on record - Import licence not required - Appeal allowed: CESTAT [para 2, 4] - Appeal allowed : MUMBAI CESTAT

2018-TIOL-164-CESTAT-HYD

Trimax Sands Pvt Ltd Vs CC

Cus - Assessee is a manufacturer and exporter of processed Ilmenite - Issue in short is classification of goods, whether under 26140010 or under 26140020 - The former entry relates to Ilmenite, unprocessed and latter entry to Ilmenite, upgraded (beneficiated ilmenite) - The issue hinges on the point whether the processes employed by assessee amount to beneficiation so as to hold classification under 26140020 - Recourse to documents of Ministry of Mines, Government of India would be valuable - It is seen from the same Indian Minerals Book as well as license given by Department of Atomic Energy for operating mines, that all the operations are subject to strict control of these Departments of Government of India - Therefore, it is apt to refer to such documents to decide the meaning of the word 'beneficiated' - Rule 3(d) of Mineral Conservation and Development Rules, 1988 define "beneficiation" - Revenue has contended in grounds of appeal that this definition does not apply because the goods in question is a minor mineral to which the said Rules do not apply by virtue of exclusion clause in Rule 2(iv) of chapter 1 of Rules - In terms of Rule 70 of Mineral Concession Rules, sand used for metallurgical process will not be treated as a minor mineral - In the present case the sand being used for metallurgical process is not therefore a minor mineral and does not fall under the exclusion clause 2(iv) of the Mineral Conservation and Development Rules - In any case, Ilmenite is the goods in question here and not the sand - Ilmenite is rare earth mineral - Even the Press Information Bureau of Ministry of Mines note dated 12.08.2015 fixing royalty rates, refers to Ilmenite as a major mineral - Hence, contrary to the reasoning of Revenue, the definition of beneficiation as given in Rule 3(d) of the Rules does apply - Assessee has produced a letter from National Metallurgical Laboratory certifying that the process undertaken by them is a beneficiation process - Further, assessee has obtained a license from the Department of Atomic Energy Government of India for their operations - This Department has also endorsed the Scheme of mining undertaken by them, which refers to their process as mineral beneficiation - In view of all the authentic documentary evidence, the process undertaken is one of beneficiation.

Assessee filed refund applications claiming the benefit by considering the export duty as 5% instead of duty at 10% already paid by them in respect of shipping bills whose details along with other details are mentioned in the chart submitted at the time of hearing - Same were rejected by lower authority - In a recent judgment in case of Kent RO System Pvt. Ltd. , the Delhi High Court rejected the ground that bill of entry had not been challenged before filing of refund claim - The Court referred to the judgment in case of Aman Medical Products and observed that the amounts could not have been lawfully collected in the first place - Judgments in cases of M/s Nikhil Refineries Ltd. 2017-TIOL-502-CESTAT-HYD , Ruchi Infrastructure Ltd. 2008-TIOL-402-CESTAT-BANG and Kamdhenu Global Ltd. 2016-TIOL-2829-CESTAT-HYD have clearly held the issue in favor of party - Assessee is entitled to the refunds claimed by them: CESTAT - Assessee's appeal allowed: HYDERABAD CESTAT

2018-TIOL-163-CESTAT-AHM

CC Vs Vidres India Ceramics Pvt Ltd

Cus - the assessee-company imported Ceramic Colours, Glass Frit and Mica, on which 4% SAD was paid at time of import - On sale these goods, refund of 4% SAD was claimed under Notfn. No. 102/2007 - Such refund was sanctioned by the Adjudicating Authority and the same upheld by the Commr.(A) - The Revenue opposed such refund on grounds that further processing of the goods had changed their original character -

Held - The Revenue relied on a letter written by the assessee to the Dy. Commr. of Customs, explaining the entire process - A perusal revealed that the assessee would simply unpack the bulk packs and transfer the goods into smaller packs - No goods were mixed with the imported goods during re-packing process - Hence, the character of impugned goods had not been changed: CESTAT (Para 2,7) - Appeal Dismissed: AHMEDABAD CESTAT