2018-TIOL-NEWS-011 Part 2, Dated: Friday, January 12, 2018

ST - Assessee has collected service tax and did not pay the same in Government treasury - During course of audit, it was pointed out and assessee paid service tax immediately - Thereafter, a show-cause notice was issued by invoking extended period of limitation to demand service tax along with interest and appropriation thereof and to impose various penalties under Finance Act, 1994 - In this case audit took place in the month of February and March 2011 and immediately on pointing out by audit, the assessee paid entire amount of service tax along with interest and even excess amount of service tax was paid by assessee - Further, it has been explained by assessee that why they could not pay service tax in time as they were regularly paying their service tax liability for the last four to five years - Observations made by Commissioner (A) are acceptable but as the assessee is not disputing their service tax liability along with interest - Same has been accepted by assessee - Further, excess amount paid by assessee has been refunded; in that circumstance, the provisions of Section 73(3) of the Act are invokable, therefore, no penalty is imposable on assessee - Demands proposed in SCN are confirmed along with interest and penalties as proposed in SCN against assessee are dropped: CESTAT - Appeal partly allowed: DELHI CESTAT

ST - Assessee engaged in providing taxable services under category of " consulting engineering services " - They had not paid service tax for period from 1/2004 to 6/2007 but on being pointed out by department, assessee paid service tax with interest much before the issue of SCN - Commissioner (A) has given the benefit of reducing penalty to 25% under second proviso to Section 78(1) of FA, 1994 - Further, Commissioner (A) has given the benefit by relying upon decision of High Court of Kerala in case of Oriental Steel Trunks Agrico Industries wherein High Court has upheld the decision of Tribunal waiving of penalty by taking into account the voluntary payment of service tax with interest before issue of SCN - Further, there is no legal infirmity in impugned order passed by Commissioner (A) reducing the penalty under section 78 on the basis of judgment of High Court of Kerala: CESTAT - Appeal dismissed: BANGALORE CESTAT

Krishna Cylinders Vs CCE

CX - Assessee engaged in manufacture of LPG domestic gas cylinders for and on behalf of IOCL and HPCL - The said buyers of assessee were providing them LPG valves to be used in gas cylinders, free of cost - Revenue entertained a view that value of said valves is to be added in value of domestic gas cylinders in which case the assessable value of cylinder would go high - Demand confirmed along with interest and imposing penalty - Issue is no more res integra and stands settled by various decisions of Supreme Court followed by Tribunal and as such the benefit has to be extended, subject to verification of records - One such reference can be made to decision of Formica India Division 2002-TIOL-599-SC-CX - As such, credit of duty paid on valves used in cylinders is required to be extended to assessee and the duty on final product would get reduced by that amount - For said purpose, matter remanded to adjudicating authority for verification of documents, for the purpose of extending credit to assessee - One such reference can be made to Maruti Udyog Limited 2002-TIOL-34-SC-CX-LB - As the matter is being remanded, adjudicating authority would also examine such aspect and would re-quantify assessee's duty liability by extending the benefit of cum-duty, subject to verification of records and by treating the entire consideration as cum-duty.

As regards penalty, duty demand stands raised by invoking longer period of limitation - Assessee is under bonafide belief that value of valves supplied by oil companies free of cost, is not required to be taken into consideration - There is no malafide on the part of assessee pointed out by Revenue - The dispute relates to bonafide interpretation of the provisions of law - In such a scenario, no penalty is imposable on assessee: CESTAT - Appeal partly allowed: CHANDIGARH CESTAT

2018-TIOL-176-CESTAT-AHM

Freshcap Investment Pvt Ltd Vs CCE & ST

CX - Interest on delayed refund - It is undisputed that clearance effected by assessee to 100% EOU to be considered as deemed export, the matter was decided in favour of assessee - Undisputedly, the assessee had filed refund claim on 24.9.2008 - Judgment of Apex Court in case of Ranbaxy Laboratories Limited 2011-TIOL-105-SC-CX would directly apply in the case in hand - The law has now been settled by the Apex Court which stating that in setting aside the liability arises on the Revenue after three months from the date of filing of the refund claim - The said law needs to be followed by lower authorities - Following the law as laid down by the Apex Court in said case, assessee is eligible to interest as per the provisions of Section 11BB of CEA, 1944 on the amount which has been sanctioned to them by the lower authorities - The said interest needs to be calculated as per law settled by Apex Court: CESTAT - Appeal allowed: AHMEDABAD CESTAT

CUSTOMS SECTION

NOTIFICATION

ctariff18_003

CBEC substitutes word 'Dharamtar' port as Dhamra, Dharamtar, Dighi in several notifications

CASE LAWS

2018-TIOL-79-HC-DEL-NDPS

Customs Vs Juarah

NDPS Act - The respondent herein is an Afghan national, who was arrested for offences punishable u/s 21, 23 & 29 of the Narcotic Drugs & Psychotropic Substances Act, 1985 - Based on certain information, the respondent & another person were apprehended & questioned - They claimed to be feeling uneasy & body search revealed an unusually stiff abdomen - Medical examination at Safdarjung Hospital revealed capsule-shaped objects in their bowels - The duo were made to eject them, upon which 55 capsules weighing 382. 58 gm and 58 capsules weighing 586.67 gms were recovered - The capsules contained some powdery substance, which on testing, was found to be Heroin - Thereupon, after completing investigation, the prosecution filed the complaint u/s 21, 23, 28 and 29 of the Act - After trial, the Sessions Court acquitted the respondents of all charges, on grounds that the investigating agency failed to comply with the provisions of Section 50 of the Act & Section 103 of the Customs Act - The Court also held that the statements of the respondents u/s 67 of the Act were not as per the legal requirements - Hence the Department's appeal.

Held - Considered Apex Court's decision in Vijaysinh Chandubha Jadeja v. State of Gujarat, w.r.t. dealing with the effect of non-compliance and the requirement of strict compliance of the provisions of Section 50 of the Act - Also considered provisions of Section 50 of the Act - Apparently, the notices served to the respondents were not in conformity with Section 50 - They were merely an enquiry by the empowered officer - In these notices, the respondents were not informed of their legal rights to be searched before the Magistrate or Gazetted officer - Since the respondents were not conversant in English & only understood their native language, i.e., Persian - Thus the notice had been translated to Persian - However, the prosecution witness who translated the notice, admitted to not knowing the Persian word for 'Gazetted Officer' & 'Magistrate' - Thus, the meaning of these two words was not conveyed to the respondents in their vernacular language -Thus, l ooked from any angle, the very purpose of notice u/s 50 was defeated - Further, considered the scope of Section 103 of the Customs Act - When the respondents allegedly ejected the capsules, the Department claimed to have filed an application before the Magistrate, seeking that the respondents remain in hospital till final ejection of capsules - Thereupon, the Magistrate supposedly permitted the same, directing the Department to file medial reports on the following day - However, the Department was unable to provide either a certified copy of such application or a copy of the Magistrate's order - The Department admitted that the Magistrate had merely directed that the respondents be taken to hospital for medical examination - Such deposition falsifies the Department's claims that the respondent's stay in the hospital, or the recovery of contraband, had been with the Court's permission - Therefore, the alleged recovery of narcotic drug from the respondents contravened the safeguards provided in Section 50 of the NDPS Act as well as Section 103 of the Customs Act - Thus, the same could not be used as evidence of proof of unlawful possession of the contraband against the respondents - It was also revealed that the respondents were not informed of their right to remain silent - This contravenes the mandate of various judgments of the Apex Court, such as those in D.K. Basu v. State of West Bengal and U.O.I vs Bal Mukund & Ors. - In light of the present facts, the respondent's statements could not be considered voluntary & their conviction could not be based merely on these statements - Trial Court order suffers from no infirmity: High Court (Para 1-5,19-26) - Appeal Dismissed: DELHI HIGH COURT

2018-TIOL-174-CESTAT-MAD

P Perichi Gounder Memorial Charitable Trust Vs CC

Cus - The assessee is a charitable trust and filed Bill of Entry for import and clearance of used dialysis machine with supplies and accessories - They did not have any import license - The goods were examined and customs raised objection for clearance of the goods as the item imported will fall under entry B1110 and is prohibited for import - Original authority as well as appellate authority upheld such view and ordered confiscation of imported dialysis machine - Permission to re-export was granted by redemption on payment of fine under Section 125 of Customs Act, 1962 and a penalty under Section 112 (a) of the Act - Claim of assessee is that the goods should be allowed to be redeemed for use with redemption fine and penalty - They heavily rely on similar clearances of other importers - Admittedly, used Critical Care Medical Equipment for reuse are put under prohibited category of import - This dispute boils down to the fact that whether the dialysis machine imported by assessee will fall under life saving equipment as defined under para-3 (9) of the Notfn of Ministry of Environment, Forest and Climate Change - No expert opinion was taken in present case - However it proceeds to hold that equipment is the life saving equipment - It would be advisable and proper to obtain expert opinion instead of presuming or inferring the scope of the equipment - As such, it is necessary to take an expert opinion before contesting scope of prohibition and also possibility of redeeming such goods for home consumption - The practice followed in respect of other consignments of similar goods is also to be examined: CESTAT - Matter remanded: CHENNAI CESTAT

2018-TIOL-173-CESTAT-MAD

R Ravi Vs CC

Cus - The Bill of Entry was filed for clearance of the goods declared as "General Brand Split Type Air Conditioners both Indoor and Outdoor Unit - During examination of the container, it was found to contain 161 packages consisting of 60 sets of 'General Brand Split Air Conditioner' as against the declared quantity of 80 sets, 1 no. of 55" Samsung Smart Television and 40 Nos. of 40" Sony Bravia LED Televisions - Search was conducted in office and residential premises of importer-assessee and the premises of Customs broker - Department seized the goods alleging that assessee had undervalued the goods and not declared the televisions other than declared goods and thus confiscated the goods under Section 111(d), 111(i) and 111(m) of the Customs Act - Only on verification and examination it was revealed that apart from the declared goods there were 41 nos. of undeclared goods also stuffed in the container - A letter has been produced by assessee in which it is stated that it was due to mistake at the end of supplier while loading - This submission cannot be accepted in toto - However, assessee intends to re-export the undeclared goods - The redemption fine is to be imposed for the limited purpose of re-export of the goods - The impugned order is modified only to the extent of reducing the redemption fine imposed in regard to undeclared goods to Rs.3,00,000/- and reducing the penalty to Rs. 5,00,000/-: CESTAT - Appeal partly allowed: CHENNAI CESTAT