2018-TIOL-566-CESTAT-MAD

ST - the assessee, a partnership firm, was served an SCN alleging short payment of tax under Business Auxiliary Service, for not including reimbursable expenses when discharging service tax - The original authority dropped proceedings on grounds that the assessee was a pure agent - When the partnership was dissolved, one of the partners was served an SCN u/s 84 of the Finance Act - Thereafter, duty demand was raised with interest & penalty u/s 78 of the Finance Act -

Held - The issue at hand is whether or not reimbursable expenses are includible in the taxable value - The O-i-O raising the duty demand states that such reimbursable expenses were incurred while providing service & so is includable in the taxable value and only expenses incurred by pure agent have to be excluded - The facts make it clear that the amount in question is reimbursable expenses - Such issue stands settled by the decisions in Intercontinental Consultants and Technocrats Pvt. Ltd. Vs. Union of India & Commissioner of Service Tax, Chennai Vs. Sangamitra Services Agency - Following the same, duty demand set aside: CESTAT (Para 1,2,6,7) - Appeal allowed : CHENNAI CESTAT

2018-TIOL-565-CESTAT-MAD

ST - the assessee is registered for providing Business Auxiliary service - On audit, it was found that the assessee issued debit notes & received an amount towards reimbursement expenses spent on behalf of their clients - The Department alleged that the assessee did not pay service tax on such reimbursement expenses - Duty demand was raised with interest & penalties - Later, the Commr.(A) partly allowed the assessee's appeal by setting aside penalty imposed u/s 76.

Held - Considered decision of the Madras High Court in Commissioner of Service Tax Vs. Sangamitra Services Agency - Following the same, the duty demand is unsustainable: CESTAT (Para 1,5) - Appeal allowed : CHENNAI CESTAT

2018-TIOL-564-CESTAT-DEL

ST - Appellant is engaged in construction activities in pursuance of contracts with clients - the dispute, covering the period October, 2005 to March, 2007,relates to claim of the appellant for abated taxable value applying either notification no.15/2004-ST or notification no.12/2003-ST - appellant submitting that work executed by them involves sale/supply of materials and as such, they should have either been granted abatement or exclusion of value of sold materials - Original Authority rejecting these claims holding that the services rendered by the appellant are more in the nature of finishing services and cannot be considered as "civil construction services" - appeal to CESTAT.

HELD: Services rendered by the appellants are part of construction activities involving supply of goods as well as provision of service - the rejection of the abatements in value or exclusion of materials sold is on different ground - since these services are composite in nature and covered by the works contract service, the tax liability cannot be confirmed prior to 1.6.2007 -it is only after the introduction of section 65(105)(zzzza) of the Finance Act, 1994 for works contract activities w.e.f. 1.6.2007, the tax liability, if any, will arise on such contract - impugned order is not sustainable, the same is set aside- appeal is allowed : CESTAT [para 5, 6] - Appeal allowed : DELHI CESTAT

CENTRAL EXCISE SECTION

2018-TIOL-569-CESTAT-ALL

Dharampal Satyapal Ltd Vs CCE

CX - Whether assessee who were manufacturer of Pan Masala and operating under compounded levy scheme are entitled to abatement for closure of a part of their factory or some of the machines and not all machines during a particular month - The view taken by courts below is directly in conflict with proviso 4 to Rule 9 of PMPM Rules read with Section 3A (2) clause B read with proviso which provides for a charging of duty on proportionate basis, in case of alteration of annual production capacity and further it is noted that the 4th proviso of Rule 9 of PMPM Rules specifically provides that duty shall be recalculated pro rata on the basis of number of days in that month during which a machine was in operation due to addition or not in operation due to discontinuation and the said proviso specifically provides that an assessee will not be considered to have discharged the duty liability unless the differential duty is paid by 5th of the following month if any additional duty is payable due to alteration and further provides that if any excess is paid upon recalculating the same shall be refunded to manufacturer by the 20th of following month - Thus, statute has provided specific provision for adjustment of duty - Accordingly, assessee is entitled to rebate/refund of the excess duty paid during the period of closure of their packing machine during the month of July, 2009 as admittedly the said machine remain uninstalled for a continuous period of more than 15 days as required under the Rules - Assessee shall be entitled to interest on the amount of refund/ rebate from 20.09.2009 as they have made application for refund only on 07.09.2009: CESTAT - Appeal allowed : ALLAHABAD CESTAT

2018-TIOL-568-CESTAT-AHM

CX - the issue at hand involves the Cenvat credit eligibility on the service tax paid on sales commission -

Held - There are divergent views on the subject, considering the decisions in C.C.E. vs. Cadila Healthcare Ltd. and Astik Dyestuff Pvt. Ltd. vs. C.C.E. & Cus. - Considering that the matter is pending final disposal by the Gujarat High Court, in the matter of Astik Dyestuff Pvt. Ltd. , no opinion could appropriately be expressed on merits - Matter remanded pending final disposal by the High Court - No recovery of duty in the interim period: CESTAT (Para 2) - Case Remanded : AHMEDABAD CESTAT

2018-TIOL-567-CESTAT-CHD

CX - Assessee is manufacturer of electronic weighbridges and parts of weighing machinery and availing SSI exemption under Notfn 8/2003-CE and paying CX duty at full rate after crossing the aggregate exemption limit for clearances made for home consumption for the year 2004-05 - Assessee was procuring the orders for complete weighbridge and clearing the same in unassembled/ disassembled condition - Therefore, SCNs were issued to assessee to demand duty on electronic weighbridge cleared by assessee in CKD and SKD condition - Some parts are manufactured by assessee, some parts are imported and some parts are taken to site for erection and commissioning of the same in terms of the order placed upon assessee by different customers - Moreover, some activities namely, cutting, punching, welding drilling and bending are undertaken by job worker on steel items - Relying on the judicial pronouncement as held by Tribunal in case of Ashbee Systems Pvt.Ltd. 2017-TIOL-1539-CESTAT-DEL that electronic weighbridge cannot be treated as goods which is capable of being brought to the market as bought and sold as such, therefore, assessees are not liable to pay duty on weighbridges as whole - Moreover, assessees are paying duty on parts and activity of erection and commissioning at site of the buyer undertaken by job worker therefore, assessees are not manufacturing complete weighbridge - Consequently, the impugned order is set aside: CESTAT - Appeal allowed : CHANDIGARH CESTAT

2018-TIOL-563-CESTAT-MUM + Story

CX - Table Diaries manufactured by appellant for Life Insurance Corporation of India with logo of LIC are not traded by the insurance giant - Goods cannot be called as ‘branded goods' in view of Board Circular No. 71/71/94-CX dated 27 October 1994 - SSI exemption under notification 8/2003-CE available - impugned order set aside and appeal allowed: CESTAT [para 6] - Appeal allowed : MUMBAI CESTAT

CUSTOMS SECTION

2018-TIOL-289-HC-MUM-CUS

Shantai Industries Ltd Vs UoI

Cus - the assessees herein, part of the same group of companies, were aggrieved by communications sent by the DRI to their bankers - The assessees are engaged in exporting fabrics and readymade garments - A consignment exported by one company in the group was examined - Its premises were searched and some persons were arrested - They were later released on furnishing deposit as required by the DRI - The premises of the assessees & other related entities were also searched - Statements were also recorded and the assessees willingly complied with the proceedings - However, the assessees were subsequently informed by the bankers that they had received communications from the DRI, directing that their debit balance be frozen - This severely impacted the business operations of the assessees - Hence the present writs.

Held - The DRI put forward nothing to justify such communications to the assessee's banker, except reiterating their bald allegations of huge fraud of public revenue, by availing duty drawback - There is a difference between wrongful availment of duty drawback and its fraudulent utilisation - It cannot be said with finality that investigations point towards wrongful or fraudulent availment of duty drawback - Based on mere allegations alone & without any serious and real apprehensions, the Revenue could not have taken the drastic measure of freezing the bank accounts - Hence such action is unjustified & uncalled for - Besides, no SCN was issued to the assessees, nor were their objections sought & considered before taking such extreme measures - Further, the Revenue's claim that duty drawback or refund is the only sum which would be credited in the account, and that there were no genuine sale proceeds which would be brought and credited in this account, is not backed with any evidence or prima facie material, such as an SCN - The freezing of bank accounts cannot continue till the pendency of investigations - Therefore, assessees directed to submit relevant material w.r.t. the export consignment in question - Further, the assessees directed to file a declaration upon receiving any amount as proceeds from export or upon making a withdrawal - DRI to continue investigations and issue SCN to assessees - Banking operations between the assessees and the bankers to be not affected by this order: High Court (Para 3-7,11,12) - Writ Petitions Allowed : BOMBAY HIGH COURT

KK Milk Fresh India Ltd Vs CC

Cus - The main appellant imported various machines for dairy plant and filed bills of entry for the clearance - these imports were assessed and cleared under EPCG scheme with zero customs duty - the officers of DRI conducted certain verifications in July, 2015 in the factory premises of the main appellant - on completion of enquiry, SCN dated 30.12.2015 was issued to both the appellants proposing confiscation of goods seized, demanding differential customs duty and proposing penalties under various sections of Customs Act, 1962 [Act] - the first main allegation against the appellants is that they have mis-classified the goods imported in order to avail ineligible exemption from payment of additional duty of customs (CVD) in terms of S.No.245 of notification no.12/2012-CE dated 17.3.2012 - the second main allegation is that the goods imported were actually second-hand/old and used machinery and, as such, were not eligible for zero duty EPCG scheme exemption under notification nos.22/2013-CUS dated 18.4.2013 and 16/2015-CUS dated 1.4.2015 -appeal to CESTAT.

HELD - That the goods were used and old is an admitted fact - the appellants have not contested the finding of the original authority regarding the goods being not new - as such, it is clear that the appellants are not eligible for import under EPCG scheme - the declared value of the appellant was admitted - the said declared value submitted by invoices is for the imported goods - it is not up to the appellant now to take an alternate view to vary the declared value and insist on the adjudicating authority to reject their own declared assessable value - with regard to the correct classification and consequent availability of exemption under notification No.12/2012-CE for CV duty, after due consideration of the HSN explanatory notes, actual nature of the imported goods and applying the General Interpretation Rules, the original authority has rightly come to the conclusion that the classification of goods declared under heading 8434 is not correct and these were to be classified under various different headings like 8421, 8413, 8419,8418 -on careful consideration of the finding, the Bench has no reason to interfere with the same -the grounds of appeal also do not bring out any factual or legal factors to persuade the Bench to do so - no merit found in the claim of the appellants regarding non-adherence of statutory provisions by the original authority before admitting evidences and report of examination -there is no basis for such claim - the Bench is satisfied that the quantum of redemption fines are reasonable and adequate - considering that the overall duty involved is more than Rs.21 crores and the deliberate acts involved in such importation have been established in the investigation, no reason found to interfere with the quantum of penalties - no merit found in these appeals - accordingly, the same are dismissed : CESTAT [para 8, 9, 10, 11, 12, 13] - Appeals dismissed : DELHI CESTAT

2018-TIOL-561-CESTAT-DEL

Cus - Appellant, a subsidiary of M/s.Reebok International Ltd., England[RIL], regularly imports various sports goods from their parent -such goods bear the brand name ‘Reebok' -DRI investigated the allegation that the appellant was importing goods from RIL, but were not including certain costs pertaining to advertising and promotions in the assessable value of the goods at the time of import- SCN issued - vide, impugned order, the adjudicating authority rejected the assessable value of goods declared by the appellantand confirmed the demand of differential duty along with interest and imposed mandatory penalty- appeal to CESTAT.

HELD: Crux of the dispute is whether such expenditure incurred by the appellant in terms of the agreement will incur the mischief of Rule 10(1) (e) of the Customs Valuation Rules, 2007 -in terms of this agreement, the appellant will have to necessarily spend 6 per cent of the invoice value on advertisement and promotion -it is an obligation of the appellant to its principal for import of goods -in addition to para 4.13.4, further conditions are mentioned in clause 4.9 - these stipulations leads the Bench to conclude that RIL is controlling every aspect of such promotion - RIL is the owner of the brand name ‘Reebok' and it is obvious that such promotion, and advertising is towards promotion of their brand as a whole and not only in respect of goods being imported by the appellant -therefore, it is evident that the appellant is carrying out such brand promotion on behalf of RIL and such expenses were made on behalf of RIL -hence, the Bench concludes that advertising and promotion expenses have been incurred as a condition of sale and on behalf of seller and may be considered as satisfying the obligation of the seller - it cannot be concluded that the expenditure has been incurred by the appellant on their own account - the ground of time bar raised by the appellant is also not justified -in the declaration made by the appellant before Special Valuation Branch, the Distribution Agreement with the clause relating to the expenditure on advertising has not been produced -the lower Authorities have held that this amounts to suppression of facts and the Bench agrees with the observation in this regard - in the result, no reason found to interfere with the impugned order - appeal is rejected : CESTAT [para 7, 8, 9, 11, 12] - Appeal rejected : DELHI CESTAT