2018-TIOL-NEWS-028, Dated: Friday, February 02, 2018

ST - Domestic tax should not be carried outside the country - Destination of the services rendered by the appellant being undoubtedly the location of overseas clients, it necessarily follows that the domestic tax should not be carried outside the country - This requires refund of such tax, which in the present case, is represented by accumulated CENVAT credit - In the absence of any other provision, the appellant has no option but to rely upon rule 5 of the CENVAT Credit Rules, 2004 to get such tax, which should not have been collected or should have been refunded owing to the primary provision of section 51 of Special Economic Zone Act, 2005, reimbursed – under Section 51 of Special Economic Zones Act, 2005 the provisions therein shall prevail notwithstanding anything contained in any other law - Therefore, in determining whether a unit in Special Economic Zone has performed an activity amounting to exports, the provisions of Service Tax Rules, 1994 cannot be applied - Impugned order set aside and appeal allowed with consequential relief: CESTAT [para 5 to 9]

ST - Precedent - decisions of the Advance Rulings Authority are not binding on the Tribunal and they do not constitute a valid precedent: CESTAT [para 4] - Appeal allowed: MUMBAI ITAT

ST - Assessee had been promoting and marketing the services of various financial institutions against receipt of remuneration as commission which was paid to them as a percentage of loan amount sanctioned - As said service was liable to be classified under BAS and assessee had not registered with the Department as a service provider, action was initiated by DGCEI and demand notice was issued - Assessee paid the service tax along with interest during investigation and before the issue of SCN - Assessee entertained a bona fide belief that their activities are not liable to service tax during the period in dispute and it is only on 06/11/2006, Board clarified the issue - Further, there are decisions which are in favour of assessee wherein it has been held that there cannot be a suppression with intent to evade tax when the assessee entertained a bona fide belief on the basis of certain decisions in favour of assessee - Therefore by following the ratio of decision in case of Roshan Motors Ltd 2009-TIOL-76-CESTAT-DEL , impugned order imposing penalty is not sustainable in law and therefore penalty dropped: CESTAT - Appeal allowed" BANGALORE CESTAT

ST - Refund arose as a consequence of earlier O-I-A passed by earlier Commissioner (A) laying down that non-registration of the premises cannot be adopted as a ground for denial of credit - The said order of Commissioner (A) was never put to challenge by the Revenue before any higher appellate authority and as such attained finality - The refund was sanctioned by original adjudicating authority as a consequence of said O-I-A - Commissioner (A) vide his present impugned order accepted the Revenue's stand and set aside the order of lower authorities - It was neither available nor permissible to Commissioner (A) to challenge the same legal issue for the second time - This only reflects upon the non-application of mind of Commissioner (A) and legal knowledge - Issue is no more res Integra and stands decided by Madras High Court in case of SCIO inspire Consulting Services (India) Pvt. Ltd. holding that refund claim made by assessee cannot be rejected on the ground that they were not registered with concerned authorities during period of dispute - As the issue stands finally decided by High Court, no reason found to uphold the impugned order of Commissioner (A) and same is accordingly set aside: CESTAT - Appeal allowed : CHENNAI CESTAT

CENTRAL EXCISE SECTION

2018-TIOL-407-CESTAT-BANG

Keery Ingredients India Pvt Ltd Vs CCE, C & ST

CX - Assessee is holder of Central Excise Registration and manufacturer of Food Flavors - During the course of audit by Department, it was observed that assessee had availed ST credit in respect of services rendered at their Creative Lab (R & D) - It appeared that assessee had taken ISD certificate and passed on service tax credit in respect of services relating to rent and maintenance at Creative Club (R & D) Division, to their unit at Hoody which availed credit based on ISD invoices - It appeared that M/s. Creative Club (R&D) Division were carrying out Research and Development activities by developing new food flavors and sending new developed samples to their customers - Therefore, it appeared that services rendered at M/s. Eco Space Campus were not used directly or indirectly, in or in relation to manufacture and clearance of final products by assessee and hence they were not eligible for availment of credit - Hence, SCN was issued for recovering the credit along with interest and penalty - Assessee submitted that impugned order is not sustainable in law as same has been passed by ignoring the binding judicial precedent on same issue - They further submitted that issue is no more res integra and has been settled in favour of assessee wherein it has been held that credit distributed through ISD invoices cannot be denied solely on the ground of R & D Centre being located away from the factory - I ssue is squarely covered in favour of assessee wherein it has been held that services utilized in respect of R & D Centre is clearly a part of the production and therefore, assessee is entitled to CENVAT credit on the service tax paid on rent and maintenance service with regard to the R & D Centre: CESTAT - Appeal allowed: BANGALORE CESTAT

2018-TIOL-406-CESTAT-CHD

H P Agro Industries Corporation Vs CCE

CX - Assessee who manufacture pesticides, were working under small scale scheme during financial year 2006-07 - From their quarterly returns, it was found that assessee had paid CX duty @ 9.6% instead of tariff rate of duty of 16% throughout the financial year - Since the benefit of Notfn 8/03-CE is admissible provided the manufacturer does not avail the credit on inputs and since the assessee had availed the Cenvat credit right from 1.4.2006 during the financial year 2006-07, but paid excise duty @ 9.6% instead of 16% tariff rate of duty, Department confirmed the demand of duty along with interest - Penalty of equivalent amount was also imposed under Section 11AC of CEA, 1944.

As per Member (J)

Tariff rate applicable was @ 16% and after availment of 60% concession, 9.6% of the tariff rate, the duty was paid at the balance rate - Said demands stands confirmed raising demand of 40% - Whatever credit was availed stand utilized by them for payment of 60% of duty - However, if any balance credit is available the same stands reversed by assessee which leads to a situation where entire credit so availed by assessee stand either utilized for payment of 40% tariff rate or stands reversed and is not available with assessee - It can be concluded that no credit stands availed by them so as to benefit them at any point of time - It will amount to Revenue neutral situation as credit availed by assessee would become nil and as such the condition of Notfn 8/03-CE, stands fulfilled by assessee - Instead of raising differential duty, at full rate of duty, Revenue should have extended the benefit of Notfn.8/03-CE to the assessee - As such, confirmation of duty against assessee along with confirmation of interest and imposition of penalty is not warranted.

As per Member (T)

Admittedly, assessee have availed Cenvat credit on inputs and utilized the same for payment of duty - Therefore, condition 2(iii) is not fulfilled - Hence, without fulfilling the condition mentioned in para 2(iii) of the notification, which is clearly spelt out, the benefit of notification is not available to assessee - In number of judicial pronouncements, Apex Court has held that the assessee is required to fulfil the conditions of notification in strict sense if it wants to avail the benefit of exemption notification - Once it is found that the conditions have not been fulfilled, obvious consequence would be that the assessee was not entitled to the benefit of notfn 8/03-CE - Hence, there is no infirmity in order of lower authorities in denying the benefit of notification and confirming the demand and interest.

As there are contrary views and difference of opinion between the Members, therefore, the matter be placed before the President to appoint the Third Member for resolving the issues: CESTAT - Case deferred: CHANDIGARH CESTAT

2018-TIOL-405-CESTAT-DEL

Universal Polychem India Pvt Ltd Vs CCE

CX - Charge of clandestine removal has been made against assessee on the basis of investigation conducted in their factories wherein certain excess/shortage of finished goods and excess of raw material was found and a formula was derived on the basis of input/output norms and it has been alleged that they have manufactured goods clandestinely and cleared thereof without payment of duty - No evidence has been brought on record to ascertain the fact that how the goods have been produced by way of consumption of electricity, number of work hours, production capacity of the machines and no efforts has been made to ascertain the fact that how the goods were transported and where the goods were sold - In case of plastic industry, there are burning losses and wastages, the same has not been considered by the authorities below - Moreover, there are certain calculation errors while drafting the SCN, but no heed has been given by authorities below to consider the same - In that circumstances, the impugned orders have no merit, hence, the same are set aside: CESTAT - Appeals allowed: DELHI CESTAT

CUSTOMS SECTION

2018-TIOL-404-CESTAT-DEL

CC Vs Subros Ltd

Cus - Assessee engaged in manufacture of parts and accessories of automotive air conditioning system - For such manufacture, they have imported various goods one of which is "resistor blower" - Revenue entertained a view that it should be classified under CTH 84159000 as "parts of other airconditioning machine etc" while assessee claimed classification under heading 85334090 as "other variable resistors under the main heading electrical resistors" - Commissioner (A) held that resistor blower are classifiable under chapter 85 only - Impugned order examined the classification in detail - Regarding reliance placed by Revenue on opinion given by Department of Electronics and Information Technology, opinion stated that product containing number of resistors network cannot be classified as a resistor - Applying the principles for classification as explained by HSN said opinion is not relevant - HSN explains the scope of resistor falling under CTH 8533 - HSN note states that converter consisting of number of resistor with necessary switching arrangement still continue to be classified under 8533 - Switching or terminal arrangement for keeping in required combination of resistor into the circuit are also considered for classification under 8533 only - Regarding the second part of opinion by Depart of Electronics, fact is not contested that the present resistor are used in automobile only - Impugned order relied on Section Note 2(a) of Section 16 and Rule 3(a) of Tariff Classification General Rules of Interpretation for arriving at a finding - Application of Note 2(b) can be resorted to only after examining and exhausting Note 2(a) - Note 2(a) has relevance and impugned order correctly following the said Section Note alongwith explanation given under HSN to classify the resistor under Chapter 85 - No infirmity found in such finding: CESTAT - Appeal dismissed: DELHI CESTAT

2018-TIOL-403-CESTAT-CHD

S M Steel Traders Vs CC

Cus - Assessee is importer of waste and scrap and filed bill of entry declaring the description of the goods as 'Re-Rollable Steel Scrap', which was the correct description - However, in IGM filed by shipping line, the goods were described as heavy melting scrap - Goods in question were seized with an option to assessee to redeem the same on payment of redemption fine and penalties - Member (Judicial) held that in view of high see purchase and declaration in bills of entry, redemption fine and penalty should be reduced to 10% of the fine and penalties imposed by original adjudicating authority while Member (Technical) held that amount of redemption fine and penalty imposed by original adjudicating authority and upheld by the first appellate authority warrant no interference, in view of admitted abetment by importer and excess goods detected and gross mis-declaration of 85% of the goods and excess goods detected.

In view of difference of opinion emerging between the Members on the issue of redemption fine and penalty on assessee, the registrar is directed to place the matter before President for nominating the third Member for resolving the issue: CESTAT - Case deferred: CHANDIGARH CESTAT