2018-TIOL-NEWS-014 Part 2, Dated: Tuesday, January 16, 2018

ST - Assessees are in appeal against impugned orders demanding service tax under category of "renting of immovable property" - In SCN, it has been recorded that building, which has been rented out by assessee to each tenant, received rent in name of four owners separately and all the assessees are co-owners of joint property and the documents relating to property were already supplied to investigating team and the same has been recorded in SCN - On perusal of said documents, it is found that although assessees are co-owners of property but they are receiving rent separately in their account and paying property tax on said property separately - In that circumstance, rent received by assessee is to be accounted in their accounts separately and not at a whole - If rent received by assessee is taken into consideration separately in that circumstance, the total amount of rent received by each assessee remains the whole under threshold limit as per notfn 6/2005-ST - Same view was taken by Tribunal in case of Laxmi Chaurasia, Deoram Vishrambhai Patel 2015-TIOL-1936-CESTAT-MUM and in case of Anil Saini 2017-TIOL-1234-CESTAT-CHD , wherein it has been held that if rent is received by co-owners separately, in that circumstance, all the recipient of rent are to be assessed separately - Admittedly, assessees are receiving rent separately, therefore, they are to be assessed separately and if the total rent received by each of assessee is taken into consideration, the total rent received falls within the threshold limit of exemption under Notfn 6/2005-ST - Impugned orders are set aside: CESTAT

ST - Assessee is registered under category of C&F Agency, Manpower Recruitment Agency and GTA - During audit, it was observed that assessee had been availing irregular cenvat credit of input services on invoices where registration number of service provider is not shown and on invoices issued to address the different from the registered premises - SCN was issued for denial of said credit and recovery thereof along with interest under Rule 14 of CCR, 2004 r/w proviso to Section 73(1) of the Act along with proposals for imposition of penalty under Section 78 of FA, 1994 read with Rule 15(3) of CCR, 2004 - Disallowance of cenvat credit was wrongly demanded by Commissioner because assessee had paid 100% service tax to the service provider and thereafter availed cenvat credit therefore asking the assessee to pay tcenvat credit is wrong and not sustainable in law - The Commissioner has not considered the factum of payment of 100% service tax on the services received by the assessee from service provider - Further, question of payment of interest under Section 75 and penalty under Rule 15(3) is not justified as assessee have not committed any default - Therefore, service tax has already been paid and demanding the same again is wrong and illegal and therefore the impugned order is not sustainable in law and the same is set aside: CESTAT - Appeal allowed: BANGALORE CESTAT

2018-TIOL-217-CESTAT-MAD

Irbaz Shoe Company Vs CCE

CX - Assessee had supplied leather shoe uppers manufactured by them to M/s. Metro & Metro for use in manufacture of export shoes and they were under the bonafide belief that they were not required to pay any duty as final products to be manufactured by M/s. Metro & Metro were to be exported - The assessee was issued with a SCN proposing to demand duty by invoking extended period on the said 70,840 pairs of shoe uppers cleared by them after allowing the SSI exemption of Rs. One crore, on the ground that the same were cleared for home consumption and not for export - Apart from the main contention that assessee was not aware that they are liable to pay duty, there is no valid defense put forward by assessee - But taking into consideration that the goods have been entirely exported, penalties imposed under section 11AC is unwarranted - Therefore, impugned order modified by setting aside the penalty imposed under section 11AC without disturbing the duty demand or the interest thereon: CESTAT - Appeal partly allowed: CHENNAI CESTAT

2018-TIOL-216-CESTAT-KOL

CCE Vs IB Ghosh Pvt Ltd

CX - Assessee engaged in manufacture of parts of lifts - The dispute relates to improper valuation of excisable goods cleared by assessee by not including the value of all items - Assessee claimed that they need not pay duty on bought out items for which they are only acting as traders - They are claiming most of the electrical parts like motors are purchased by them and supplied to the clients and the value of these items cannot be added to manufactured items - However, on detailed perusal of SCN, details of investigation revealed that assessee had received various items from their suppliers on which they undertook further processing, amounting to manufacture before clearance to the clients - Even otherwise, original authority simply relied on earlier proceedings and arrived at a conclusion - SCN dated 30/05/2090 did not examine the issue of bought out items, nature of activities carried out by assessee in any great detail - In other words, dispute presently being examined are not exactly the same as examined in earlier proceedings - Impugned order has not examined these issues in required details and as such, same is not sustainable - Accordingly, matter remanded to original authority for a fresh consideration: CESTAT - Matter remanded: KOLKATA CESTAT

2018-TIOL-215-CESTAT-DEL

HPL Electric And Power Pvt Ltd Vs CCE

CX - Assessee engaged in manufacture of electronic energy meters and is availing cenvat credit on various inputs and input services - Issue relates to denial of input service credit on Commission paid to agents engaged for sale promotion/ liaison f with the buyer, Transport and Refreshment charges for the manpower employed and Charges for design and development of final products - As regards to commission paid, at the relevant time Rule 2(l) of CCR, 2004, input services includes the sales promotion as well as activities relating to business - The Commission was paid for sales promotion as well as to activities relating to business - The payment to Commission agent is not in dispute as well as services rendered by them not questioned - When it is so, as per Rule 2(l), the appeal is allowed.

As regards to design development of electronic meters, Research and Development activity agreement and payment is not disputed - It is not necessary for every manufacturer to use every design - Sometimes, designs fail and needs further research to compete in the market - In instant case, payment has been made for Research and development which is essentially an activity relating to manufacture of goods and promoting of business - Claim of cenvat credit is allowable.

As regards to Transport and Refreshment charges, it appears that services were not provided by assessee but by contractor - In contract, there is no reference pertaining to transportation /refreshment - When it is so, no reason found to interfere with impugned order - Same is sustained - Claim on this ground is rejected: CESTAT - Appeal partly rejected: DELHI CESTAT

CUSTOMS SECTION

2018-TIOL-212-CESTAT-KOL

Shree Luxmi Steels Vs CC

Cus - Assessee carried on business of import of defective tinplate and misprinted sheets amongst others - The Assessing Officer reassessed the Bills of Entry in respect of importation of defective tinplates, misprinted sheets and enhanced the value of goods and had not passed a speaking order on reassessment within the stipulated period under provisions of Section 17(5) of Customs Act, 1962 - Karnataka High Court in case of Woodstruck Furniture Pvt.Ltd. 2011-TIOL-1055-HC-KERALA-CUS observed that appeal lies from assessment order even if it is not a speaking order, cannot be a reason to depart from procedure prescribed in section 17(5) of the Act, 1962 - Assessee filed the appeals before Commissioner(A) without the speaking order, as required to be passed under section 17(5) of the Act - On proper analysis of case laws cited, it is clear that assessee should have filed the appeal after obtaining speaking order against the Bills of Entry under provisions of Customs Act, 1962 - Therefore, appeals filed before Commissioner(A) are liable to be dismissed - But, in this case, Commissioner(A) dismissed the appeals on different reasonings - Following the decision of Karataka High Court in case of Woodstruck Furniture Pvt.Ltd. the assessing officer would pass the speaking order as required under section 17(5) of the Customs Act, 1962 forthwith and thereafter the assessee is at liberty to challenge the re-assessment made by assessing officer in Bills of Entry by filing appeals within the stipulated period computed from the date of communication of such speaking order: CESTAT - Appeals disposed of: KOLKATA CESTAT