2018-TIOL-NEWS-019, Dated: Monday, January 22, 2018

ST - Petitioner is one of the co-owners of property and he along with other co-owners, has entered into a joint venture agreement with second respondent - The grievance of petitioner is that the second respondent has not handedover the constructed flat, as agreed to, in joint development agreement, on the alleged ground that petitioner has to pay service tax for portion of construction - Upon acting on a letter written by petitioner, the first respondent has sent an impugned reply stating that service provider, who is the second respondent is liable to pay service tax for construction service provided to the land owner on joint venture agreement, as per Section 67 (1) (iii) of FA read with 2 (A) (ii) of STR, 2006 r/w clarification given by CBEC circular No.151/2/2012-ST - Petitioner cannot be aggrieved by impugned communication, as petitioner is not the service provider, and it is the second respondent, who is liable to pay the service tax for the construction service provided to the land owner - Furthermore, the first respondent was fully justified in stating that, they have no jurisdiction to direct the builder to handover the flat keys to the petitioner. The agreement, being a private agreement between the petitioner and second respondent, petitioner has to necessarily workout his remedy in accordance with terms of contract entered into between them, upon failure to invoke common law remedy: HC - Writ Petition dismissed: MADRAS HIGH COURT

ST - In first round of litigation it is categorically recorded by Original Authority that issue involved is interpretation of relevant definition of tax entries - The non-payment of service tax by assessee is due to such difference in interpretation - Further, noting that assessee is a GOI Undertaking, he did not impose penalty under Section 78 - Reasons noted for non-payment of service tax by Original Authority in his earlier finding itself is sufficient to invoke provisions of Section 80 - In impugned order, Original Authority records that assessee did not adduce sufficient reasonable cause for failure to pay service tax - Further, assessee has fully discharged service tax with applicable interest before even the service tax liability was confirmed in first adjudication order - Assessee being a Government company creates a rebuttable presumption of nonexistence of any malafide on their part - Though Section 76 penalty is not with reference to malafide intend, this is also a penal provision for non-payment of service tax in time - Case is fit for invoking provision of Section 80 for waiver of penalty under Section 76: CESTAT - Appeal allowed : DELHI CESTAT

ST - the assessee-company is registered for providing services under 'Information Technology Software Services' - The assessee sought refund of service tax paid on specified services used for authorized operation in SEZ, under Notfn. No. 12/2013 - The refund was partly allowed, considering that refund of input service credit for Business or Management Consultancy Services and Event Management Services, for allegedly having no nexus with the services used for operations in SEZ - On appeal, the Commr.(A) simply remanded the matter -

Held - The Commr.(A) had remanded the matter directing the assessee to file requisite documents justifying its claim - The Commr.(A) had not settled the issue against the Revenue - Hence no infirmity in the O-i-A: CESTAT (Para 2,6) - Appeal Dismissed : BANGALORE CESTAT

2018-TIOL-126-HC-MAD-CX

Parry Neutraceuticals Ltd Vs DCCE

CX - Petitioner is challenging impugned communication by which, the respondent intimated the petitioner that rebate claims filed by them were incomplete and filed after a lapse of one year from the date of shipment of goods - The petitioner has not challenged the impugned proceedings on the merits of matter but challenged only on the ground that petitioner did not have an opportunity of personal hearing to put forth of their claims and to establish that their rebate claims were not barred by limitation - Since the claim applications have been returned to petitioner, there will be a direction to the petitioner to re-present their claims along with a written submission as to how their claims are within limitation and if such claims were re-submitted, the respondent shall afford an opportunity of personal hearing and consider the submissions and pass a speaking order on merits and in accordance with law: HC - Writ Petition disposed of : MADRAS HIGH COURT

2018-TIOL-125-HC-MUM-CX

CCE Vs Polycab Wires Pvt Ltd

CX - Assessee was visited with a SCN of 9th December, 2005 - That followed a SCN of 9th September, 2003, which was issued in normal period of one year and duly adjudicated by an order - The second SCN invoking the larger period alleged suppression and mis-declaration by assessee, which was also the allegation in earlier SCN and duly adjudicated - In such a factual backdrop, Commissioner (A) determined as to whether there was any suppression of facts by assessee - He disagreed with adjudicating authority and after referring to all materials on record, including RT 12 returns, he held that department could not have alleged suppression, when all the facts were disclosed in returns and the assessee specifically claimed that it was not liable to pay any duty - It is, therefore, department's obligation to investigate and for that purpose, it possessed the requisite powers - If department fails in that duty, it could not turn around and blame the assessee - Tribunal endorsed this approach because it found that the same was not vitiated by any error of law apparent on the face of record - Tribunal relied upon case of Northern Plastic Ltd. 2002-TIOL-1889-SC-CUS - When all the facts necessary to be disclosed by assessee have been disclosed and there cannot be any allegation of suppression, then, extended period of limitation cannot be invoked - Appeal raises no substantial question of law: HC - Appeal dismissed : BOMBAY HIGH COURT

2018-TIOL-124-HC-MUM-CX

Pr.CST Vs Vodafone Essar Cellular Ltd

CX - Tribunal sustained the demand which was raised within limitation but found that as far as extended period is concerned, there is no material to establish collusion, fraud, mis-statement, suppression of facts or contravention of any statutory provisions or rules made under the Act, with intent to evade payment of duty - The issue was mainly of interpretation without involving suppression of material facts with intent to evade duty - Once regular returns were filed with requisite particulars, audit was also held, then this allegation of suppression could not be said to be sustainable - The issue of limitation being a mixed question, court cannot hold that Tribunal's view is perverse - Court have not been shown any principle of law which would enable court to hold that merely because the demand is sustained on merits and Revenue is allowed to recover the amount availed of as Cenvat credit by reversing the entries within the period of limitation, means it should also be allowed to recover such dues by identical process even if it failed to raise demand within the period of limitation: HC - Appeal allowed: : BOMBAY HIGH COURT

2018-TIOL-284-CESTAT-MUM + Story

Air Carrying Corporation India Pvt Ltd Vs CCE

CX - Deposit under a wrong head also goes to the Revenue only - cannot be construed as non-payment - benefit of reduced penalty u/s 11ACof CEA, 1944 cannot be denied on the ground that interest was paid within a period of 30 days but against an incorrect accounting head - Appellant entitled to Refund of pre-deposit - CESTAT [para 6, 7] - Appeal allowed : MUMBAI CESTAT

2018-TIOL-277-CESTAT-MUM + Story

Swastik Packaging Pvt Ltd Vs CCE

CX - Rondo Trays are correctly classifiable under CH 4819.19 attracting 8% duty and not under CH 4819.12 @ nil rate as corrugation is only a shape of the compartment to keep the ampoules and vials - whole box is made of plain duplex board and only those boxes which are made of corrugated paper or paperboard can be called corrugated box - declaration allegedly filed with the department and that actually produced by the department are different since in the copies produced by the appellant the six digit chapter heading is handwritten whereas that available with the department only shows chapter 48 - appellant has tried to mislead the department as well as Tribunal - clear suppres sion on the part of the appellant - moreover, declaration by appellant as Corrugated rondo trays is misleading since packing box is not manufactured out of corrugated paper or paperboard - extended periodrightly invoked - impugned order is upheld and appeal is dismissed: CESTAT [para 4] - Appeal dismissed : MUMBAI CESTAT

2018-TIOL-276-CESTAT-MUM

Bharat Petroleum Corpn Ltd Vs CCE

CX - CENVAT - Input Service - Rule 2(l) of CCR, 2004 - Health services which are primarily for personal consumption of any employee are specifically excluded from the definition of input service - It is claimed by the appellant that the medical centre located in the factory are in terms of Rule 73(w) of the Maharashtra Factory Rules, 1963 - It is obvious that medical centre under Rule 73 (w) has to be located in the factory - From the facts on record, it is not clear that medical centre is located within the factory - no findings from the lower authorities are available in this regard - If the said medical centre is not located in the factory of if the said medical centre is primarily used by the families of the employees and not by the personnel engaged in the factory, then the credit would not be admissible - Matter is remanded to the original adjudicating authority to determine these facts and decide issue afresh: CESTAT [para 4]

CX - CENVAT - Input Service - Rule 2(l) of CCR, 2004 - Works contract construction services in respect of fireproofing work undertaken in respect of Fluidized Catalytic Cracking unit, DHDS (De-hydro De-blending unit, inside the refinery and the water proofing work undertaken in certain building in the factory premises - Revenue has claimed that the said service is hit by the mischief of clause (A) to the definition of input service. Held: Services of fireproofing and waterproofing of existing structures does not quality as construction or execution of works contract of the building or civil structure or part thereof - demand is therefore, set aside: CESTAT [para 5, 5.1]

CX - CENVAT - Input Service - Rule 2(l) of CCR, 2004 - dismantling of Sulphur Pelletizer Shed also does not amount to construction or execution of works contract of the building or civil structure or part thereof and thus would not be hit by the exclusion clause (A) of Rule 2 (l) ofCenvat Credit Rules, 2004 - Credit admissible: CESTAT [para 5.1]

CX - CENVAT - Input Service - Rule 2(l) of CCR, 2004 - Help Desk assistant used for repairs carried out at the colony adjacent to the refinery is not directly or indirectly related to manufacturing process - credit inadmissible: CESTAT [para 6]

CX - CENVAT - Input Service - Rule 2(l) of CCR, 2004 - Training given to employees about investment of salaries and pension plans - Such training has nothing to do with the manufacturing process and is mainly for personal use of consumption of employees - not an admissible input service - exclusion clause 1(C) applies: CESTAT [para 7] - Appeal partly allowed : MUMBAI CESTAT

2018-TIOL-275-CESTAT-MUM

CCE Vs Bansal Ship Breakers

CX - CENVAT - Rule 6 of CCR, 2004 - Respondents are engaged in the ship breaking activities for manufacture of various dutiable goods viz. scrap of iron & steel, M.S. Rerollable material, and certain items like remnant oil which were cleared without payment of duty - The case of the Revenue is that the said activity is trading activity, therefore, they are not entitled to CENVAT credit – Revenue in appeal against o-in-a.

Held: Identical issue has been considered by the CESTAT in the case of Arya Ship Breaking Corporation - 2017-TIOL-3608-CESTAT-MUM wherein while dismissing Revenue appeal it is held that sale of Motors, generator, engine, remnant oil etc. arise during breaking up of ship cannot be considered as trading activity since these are not purchased by the respondent but are a part of the imported ship; that rule 6 of CCR, 2004 cannot be made applicable to seek reversal of credit availed on Input services as scrap generated upon breaking up of ship (which is a manufacturing activity) is sold on payment of CE duty by utilizing credit availed on input services – following the same, impugned order is upheld and Revenue appeal is dismissed: CESTAT [para 4, 5] - Appeal dismissed : MUMBAI CESTAT

CUSTOMS SECTION

2018-TIOL-122-HC-DEL-CUS

Dr Reddy's Laboratories Ltd Vs UoI

Cus - The substantive prayer made by petitioner is for direction to respondents to process their claim under the Incremental Export Incentivization Scheme (Annual) in accordance with law - Respondents stated that application filed by petitioner has to be dealt with and examined in accordance with Section 9 of FTDR Act, 1992 - This being the position and stand of respondents, it is required and necessary that the application should be dealt with and examined on merits by passing a speaking and a reasoned order - The respondents are conscious of aforesaid position and the requirement by statute to pass a speaking and reasoned order - Said exercise must be undertaken - This is a specific direction of Court and in case a speaking and a reasoned order is not passed, appropriate directions and orders, adverse comments, including imposition of costs may be required and can be made: HC - Writ petition disposed of : DELHI HIGH COURT

2018-TIOL-121-HC-MUM-CUS

Karamshi J Nakhua Vs CC

Cus - Revocation of license - The license was suspended w.e.f. 21st December 2009, but restored on 5th March 2012 - Thereafter departmental inquiry commenced and the charge was that assessee has allegedly allowed Mr.Rajesh to use their licence for monetary consideration which violates the provisions of Regulation 12 of 2004 Regulations - Assessee has been out of business from 28th February 2013 - O-I-O proceeds on the footing that assessee has involved himself in the case of supporting those parties who indulged in fraudulent exports - On merits, comissioner relies upon the statements which have been recorded during course of investigation and holds that said Rajesh, who is admittedly not an employee had prepared certain documents with help of assessee and also taken Shipping Bills so generated to Nhava Sheva for effecting clearance and he used to also do carting of goods - Thus, an authorised person was allowed to transact business - At the same time, Commissioner holds that said Rajesh may not have done complete acts which are to be done and contemplated to be performed by CHA Agent, but assessee allowed him and thus was not vigilant in fulfilling his obligations and discharging his duties as CHA - The fraudulent acts attributable to Rajesh and the exporters do not in any manner concern CHA - Charge of negligence and non-adherence to Regulation, in the sense of failing to discharge his duties and responsibilities, has been held to be proved - Extreme penalty of revocation of CHA License along with forfeiture of security deposit was not justified - Since the charge of negligence and nonadherence to Regulations insofar as failure to fulfill and discharge responsibilities has been proved, penalty of revocation of license for a period of five years from 28th February 2013 is justified - The security deposit is also rightly forfeited: HC. - Appeal partly allowed : BOMBAY HIGH COURT

2018-TIOL-285-CESTAT-MUM + Story

Mani Prabha Impex Pvt Ltd Vs CC

Cus - Valuation of imported cut & polished diamonds - When appellant failed to challenge the valuation made by the Expert Trade Panel, there remained no scope to order for revaluation as pleaded by appellant - Action of appellant established mis-declaration of import rendering the goods liable to confiscation under Section 111 of the Customs Act, 1962 - order for confiscation and levy of penalties by the adjudicating authority does not call for interference - However, CESTAT is shocked by the misplaced sympathy of the adjudicating authority against breach of law - levy of redemption fine and penalty of Rs.5 lakhs each appears to be too low and is an incentive to wrongdoing - However, Revenue has not come in appeal against this portion of the order - Chairman of Board is requested to issue proper guidelines to the field to protect interest of the economy as customs is the guard of the nation - Appeals dismissed: CESTAT [para 7, 9] -Appeals dismissed : MUMBAI CESTAT