2018-TIOL-422-HC-MAD-CX

Indian Additives Ltd Vs CCE

CX - CENVAT/MODVAT - Shortage of Inputs - Appellant is engaged in the manufacture of additives for lubricating oil - Various SCNs were issued to the appellant demanding duty being the modavt/cenvat credit taken on inputs which were allegedly not used in the manufacture of final products - demands confirmed:

HELD - It is clear from the records that the appellant themselves have recorded shortage of inputs [from 5.56 to 5.58%], after the receipt of the inputs to their factory -while determining the shortage, it is clear from the records that the inputs found short, were not consumed, in the manufacturing process -when the inputs were not at all used in the process of manufacture, cenvat credit is not allowable-contention of the appellant is that the shortage and loss are due to evaporation, due to reduction of viscosity and volatile nature of the inputs also - the said contentions of the appellant cannot be countenanced for the reason that there cannot be continuous shortage of inputs for every month -since liquid inputs have high viscosity and not volatile in nature, there cannot be any evaporation loss, even while heating the material in the storage tanks -moreover, the appellant has never advanced any ground of evaporation before the adjudicating authority, but only argued that the difference was due to weighment methods -the stand taken by the appellant that inputs remained in the pipeline during the process of transit, cannot be accepted, for the reason that, if the raw materials remained in the pipeline, in the continuous process, the shortage should be at one time, as in the first-in first-out, and there cannot be continuous shortage during the process of transit -further, it is seen from the material on records that on verification of physical stock and book stock for the year 2001-02, there was no shortage between the physical stock and the book stock, for more than 70% of the period, whereas, only for few months and for particular inputs, there had been differences in the physical stock and book stock -the appellant has not substantiated his contention that the shortage was due to weighment methodologies -the appellant has neither recorded the shortage in RG-23 part-1 and part-2 nor intimated the shortage to the department, instead the appellant has deliberately shown it as the consumption at the end of the month -therefore, the adjudicating authority has rightly invoked the extended period - the authorities below have rightly decided the issue and there is no infirmity in the orders passed by the respondent - all the above four Civil Miscellaneous Appeals are dismissed and the impugned orders passed by the CESTAT, Chennai are confirmed: HIGH COURT [para 18, 19, 20, 25, 26] - Civil Miscellaneous Appeals dismissed: MADRAS HIGH COURT

2018-TIOL-421-HC-KERALA-CX

Bharat Petroleum Corporation Ltd Vs UoI

CX - The challenge in the writ petition is to Ext.P13 order, in revision, for two periods, wherein provisional assessments were made - in Ext.P7, the period between 1.2.2006 and 31.7.2006 is alleged to be treated as two separate blocks; i.e. between 1.2.2006 to 31.3.2006 and 1.4.2006 to 31.7.2006 - similarly, in Ext.P11, the two block periods subjected to provisional assessment were 1.2.2007 to 31.5.2007 and 1.6.2007 to 31.7.2007 - Ext.P7 was challenged in appeal, which was confirmed as per Ext.P8 - Ext.P11 was also challenged in appeal and as per Ext.P12 order, the matter was remanded - separate revisions filed were rejected as per Ext.P13 common order - the appellant's contention is that the SCN was with respect to two separate block periods of 6 months each and the provisional assessment has to be carried out for that block period setting off the gains against the losses - in the impugned orders, the computation was made respectively of two different periods of four and two months which is against the statutory mandate is the argument :

HELD - there can never be intended a provisional assessment for a block period of six months, going by the periods stipulated in sub-rule (3) of rule 7 of the Rules; which is only the period prescribed for completion of the final assessment as per the provisional returns filed by the assessee - in such circumstances, no reason seen to interfere with the finalisation of provisional assessments on the claim raised of an assessment for a block period of six months - with reference to the SCN for the period 1.2.2006 to 31.7.2006, the O-i-O specifically finds that the loss has to be settled on a monthly basis since the assessment is on a monthly basis - the net gain found for the earlier period of two months between 1.2.2006 to 31.3.2006 was accounted in the opening stock of April 2006 and was not liable to be set off in the subsequent month was the clear finding - there was a further challenge made to O-i-O, which also stood rejected - the appellate order also notices that loss condonation in Refineries has to be worked out on a monthly basis as found in para 69 of the Petroleum Products Manual, which is in consonance with the interpretation given to Rule 7 by this Court - the revision against the appellate order also stood rejected - in such circumstances, no reason seen to interfere with the order passed for the period from 1.2.2006 to 31.7.2006 - with reference to the SCN for the period 1.2.2007 to 31.7.2007, the remand has been made since the O-i-O has been passed computing the loss for the two separate block periods - the argument of the assessee that there can be no departure from the SCN has to be accepted - even if the O-i-O was erroneous, there could have been no remand made for re-computing the set off on a monthly basis in an appeal filed by the assessee - the Department could have filed an appeal under section 35 of the CEA or could have submitted a cross appeal in the appeal filed by the assessee - there is also a provision for suo motu revision of an assessment, in the event of an opinion formed, of the assessment being prejudicial to the revenue - the Revenue having not taken up any of such remedies, there could be no order made in the appeal filed by the assessee, to its prejudice - as to the claim for set off, of the gain for the subsequent two months period, against the losses of the earlier four months period, the contention raised by the assessee is rejected - on the reasoning above, the Court is constrained to interfere with the order passed at Ext.P12, insofar as the remand having been made - Ext.P13 order in which Ext.P12 merges also would stand modified to that extent - there can be no remand of the provisional assessment as finalised for the period from 1.2.2007 to 31.7.2007 - the judgment of the Single Judge is modified to that effect -finalisation of provisional assessment at Exts.P7 and P11 orders stands confirmed - writ appeal is partly allowed : HIGH COURT [para 4, 7, 9, 10, 11, 12] - Writ Appeal partly allowed: KERALA HIGH COURT

2018-TIOL-800-CESTAT-DEL + Story

FCC Clutch India Pvt Ltd Vs CCE

CX - Section 4 of the CEA, 1944 - Transaction Value - Subsidy sanctioned by Govt. of Rajasthan under the aegis of Rajasthan Investment Promotion scheme in form of VAT 37B challans which challans used for discharge of VAT liability for subsequent period - Contention of Revenue that such VAT liability discharged cannot be considered as VAT "actually paid" for the purpose of exclusion from transaction value defined in section 4(3)(d) of the CEA, 1944 is without merit as discharge of VAT using such 37B challans are considered legal payment of taxes by the Govt. of Rajasthan - Impugned order set aside and appeal allowed: CESTAT [para 5, 6, 8] - Appeal allowed: DELHI CESTAT

2018-TIOL-799-CESTAT-DEL

JB Mangharam Food Pvt Ltd Vs CCE & ST

CX - Assessee engaged in manufacture of biscuits - If MRP of biscuits is less than Rs.100/-per Kg, then as per notfn 22/2007-CE, the biscuits are exempted from duty - For manufacturing biscuits, assessee has used sugar syrup - It is the contention of department that sugar syrup is subject to excise duty, so, the demand was raised - Identical issue has came up before the Tribunal in case of Rishi Bakers Pvt. Ltd. - Similar ratio was followed by Tribunal in a number of cases including case of Bhagwati Foods Pvt. Ltd. 2016-TIOL-2499-CESTAT-ALL - By following earlier orders, it is held that sugar syrup is not subject to excise duty.

Second issue is regarding cream - Assessee prepared the spcieal cream with specified flavour and taste which was used in manufacture of biscuits, department demanded the excise duty on cream - During course of arguments, assessee has drawn attention to the ratio laid down by Supreme Court in case of Sonic Electrochem (P) Ltd. 2002-TIOL-212-SC-CX where the test of such type of products was laid down i.e. marketability - Both the parties have agreed that in instant case, test i.e. marketability has not been examined by the lower authority in the instant case - Matter remanded to adjudicating authority to examine the test of marketability of cream: CESTAT - Appeal partly allowed: DELHI CESTAT

2018-TIOL-798-CESTAT-ALL

CC & CE Vs Simbhaoli Sugar Ltd

CX - Asssesee had procured sugar packed in bags from manufacturers of sugar in Maharashtra, Karnataka and Uttar Pradesh and stored the same in Godown which was situated outside the manufacturing premises of assessee - It appeared to Revenue that procurement of sugar by assessee from outside and storing in non-duty paid godown without recording its receipt in any statutory record was with intention to replenish and storage in stock, therefore, the said quantity of sugar was seized - Goods in question were duty paid and they were manufactured by manufacturers in Maharashtra, Karnataka and Uttar Pradesh and they were not manufactured by assessee - Further, since duty of Central Excise was discharged, they were no more excisable goods - Therefore, the Adjudicating Authority did not have any jurisdiction over them - No infirmity found in order passed by Commissioner (A) and, therefore, same is upheld: CESTAT - Appeal dismissed: ALLAHABAD CESTAT

 

 

 

CUSTOMS SECTION

2018-TIOL-78-SC-NDPS

Gulam Mohammad Malik Vs State of Gujarat

NDPS - the appellant herein was charged with offences u/s 8(c), 20(b) & 29 of the Act - The appellant contests orders passed by the Bombay High Court and the Gujarat High Court - The latter High Court sentenced the appellant with 10 years rigorous imprisonment & fine of Rs 1 lakh - His appeal against such order was dismissed - However, the High Court also dismissed the State's appeal which sought to enhance the sentence awarded - The High Court relied primarily on the confessional statement of the appellant, recorded u/s 67 of the Act, along with other evidence - The appellant contests such judgments on grounds that the confession given by him was not voluntary - He also claimed that while he knew only the Urdu language, his confession had been recorded in Hindi, hence invalidating it - Moreover, the Bombay High Court enhanced the imprisonment to 30 years and imposed a fine of Rs 3 lakhs, which too is being contested.

Held - The appellant's claims do not hold water - His statements, if not voluntary, were never retracted - He also later claimed to be able to understand the Hindi language - Besides, it is specifically stated that the statement recorded was read out to the appellant and was made clear to him, whereupon he signed it - In these circumstances, reliance placed by the Court on such statement cannot be faulted - Regarding enhancement of the sentence by the High Court, the present case is not one where the appellant should have been given maximum punishment - However, the sentence should be more than minimum - It would serve justice to award sentence of rigorous imprisonment of 16 years - The sentences awarded by both High Courts to run concurrently - Fine imposed by Gujarat High Court sustained, while fine imposed by Bombay High Court reduced to Rs 2 lakhs: Supreme Court - Appeal Partly Allowed : SUPREME COURT OF INDIA

2018-TIOL-797-CESTAT-DEL

Asian Paints Ltd Vs CC

Cus - Assessee imported bathroom fittings from China and claimed classification of such goods under CTH 84819090, which attracts Basic Customs duty of 7.5% ad-valorem - However, in RMS system, bill of entry was re-assessed under CTH 74182020, attracting Basic Customs duty of 10% ad-valorem - Commissioner (A) has upheld the classification made in bill of entry on the ground that goods imported were parts of bathroom fittings - However, the specific claim of assessee with regard to the classification of subject goods under Chapter 84819090, has not been properly addressed by Commissioner (A) in impugned order - Assessing Authority has not complied with the requirement of Section 17 (5) of Customs Act, 1962 in as much as no speaking order has been passed in changing the classification, while re-assessing the bill of entry, which is against the claim of assessee - Therefore, since both the authorities below have not specifically addressed the submissions of assessee that the goods should be classifiable under 84819090, matter remanded for passing speaking order, whether the classification made by assessee under CTH 84819090 should be adopted for assessment: CESTAT - Matter remanded: DELHI CESTAT

2018-TIOL-796-CESTAT-DEL

CC Vs Luxottica India Eyewear Pvt Ltd

Cus - Assessee engaged in import of Sun glass, frames, their spare parts and advertising material from their holding company M/s Luxottica Itlay and its affiliates/ subsidiaries - the owners of well-known eyewear brands like Ray Ban, Oakley, Vogue, Versace, Bulgari and Prada, (importer) is a wholly owned subsidiary of Luxottica Itlay (supplier) - The dispute is with reference to loading of certain value in assessable value of imported goods by assessee - Original Authority held that the first and fourth conditions mentioned are fulfilled - On the second condition regarding the payment could be direct or indirect, he relied on the decision of Supreme Court in Ferodo India Pvt.Ltd. 2008-TIOL-28-SC-CUS to interpret the term "directly" - One of the conditions for addition of value under Rule 10(1)(c) is that payment of licence fee should be "condition of the sale of the imported goods" - Relying on the terms of agreement, it was concluded that assessee accepted and acquired exclusive distributorship rights for sale of imported eyewear products with express approval of seller of those goods "Luxottica" subject to the terms and conditions - Original Authority correctly concluded that considerations to be paid by assessee is for the distribution rights and not for their imports - Original Authority observed that even if distributorship agreement was not there, assessee would have imported the goods as done prior to 2010 - Accordingly, conclusion drawn by Original Authority that it is the distribution of goods in India that is linked to the payment of licence fee and not to the import - Finally, payment made by assessee for the right to distribute or resell the imported goods should not be added to price paid or payable for such goods, if such payments are not a condition of sale for export to the country of importation of the said goods: CESTAT - Appeal dismissed: DELHI CESTAT