SERVICE TAX SECTION

2018-TIOL-964-CESTAT-MUM + Story

ST - VCES, 2013 - Discharge certificate in form VCES-3 is a proper document to avail CENVAT credit - Once the Commissioner(A) held that the discharge certificate is an admissible document under rule 9 of CCR, 2004 to avail CENVAT credit, he could not have taken the stand that assessee should have taken credit on the basis of Challan itself vide which tax was deposited without waiting for discharge certificate and since some of the challans have been issued six months prior to availment of credit, credit is hit by limitation - Commissioner(A) has gone beyond the allegations leveled in the show-cause notice, impugned order is therefore set aside and appeal is allowed with consequential relief: CESTAT [para 4.1, 4.2] - Appeal allowed: MUMBAI CESTAT

2018-TIOL-958-CESTAT-MAD

ST - Assessee engaged in execution of works contract services and are registered under said category w.e.f. 1.6.2007 - Department views that such services fall under category of Commercial or Industrial Construction Services and therefore subject to levy of service tax w.e.f. 9/2004 - Apex Court in case of Larsen & Toubro Ltd 2015-TIOL-187-SC-ST has held that works contract services are not subject to levy of service tax prior to 1.6.2007 - According to assessee, the contract executed by them are composite contracts in which the labour element and the goods element cannot be bifurcated - The demand is raised for period from 10.9.2004 to 30.9.2007 under category of 'Construction of residential complex' and 'Commercial or Industrial Construction Services' - Assessee had undertaken works on a turnkey project basis - A statement recorded from Shri Sathak Ansari, s/o. Shakul Hameed, who is the Director of assessee company shows that the project for Chennai Citi Centre is a turn key project - In such case, it is essentially works contract services - Further that the project was completed prior to 1.6.2007 - Thus, decision laid in Larsen & Toubro judgement would squarely apply to the demand raised prior to 1.6.2007 and same is set aside - If the construction activities have been completed prior to 1.6.2007 and charges/consideration is received after 1.6.2007, the said amount received after 1.6.2007 would not be subject to levy of service tax as held by Tribunal in case of M/s. G.K.Shetty Buildings Pvt. Ltd. and in case of M/s. Consolidated Construction Consortium Ltd - However, whether said decision is applicable to the amount received by assessee after 1.6.2007 requires verification - For this limited purpose, matter remanded to the adjudicating authority who shall verify, whether, the amount received after 1.6.2007 is in respect of construction services completed prior to 1.6.2007: CESTAT - Appeal partly allowed: CHENNAI CESTAT

2018-TIOL-957-CESTAT-BANG

ST - Assessee engaged in manufacture of various electrical equipments such as transformers, circuit breakers, machinery and parts thereof - They also execute turnkey contracts for supply, erection, installation and commissioning of power transmission and distribution systems - Department issued a SCN alleging that assessee had undertaken erection, commissioning or installation services of plant and machinery or equipment and therefore liable to service tax under said category - Issue is no more res integra and has been settled by Supreme Court in case of L&T Ltd. 2015-TIOL-187-SC-ST wherein the apex court has held that prior to 01/062007, there was no charging section to specifically levy service tax on WCS, or mechanism to tax service tax element derived from gross amount charged for works contract less value of property in goods transferred in execution of works contract - Apex court in case of Sobha Developers Ltd. 2017-TIOL-29-SC-ST has held that the decision of L&T Ltd. does not require reconsideration - Further, Tribunal in assessee's own case 2010-TIOL-1462-CESTAT-BANG has allowed the appeal of assessee by discussing all the sub-contracts in main contract which form part of composite contract - Tribunal in said decision has allowed the appeal of assessee and set aside the impugned order - Department challenged this decision of Tribunal and appeal of Department was disposed of along with other appeals in case of L&T Ltd . - Subsequently, Tribunal followed the decision in assessee's own case for the subsequent period - Impugned orders not sustainable in law: CESTAT - Appeal allowed: BANGALORE CESTAT

CENTRAL EXCISE SECTION

2018-TIOL-522-HC-MAD-CX

CX - Assessee is manufacturer of iron and steel re-rolled products - On the introduction of compounded levy scheme, Annual Capacity of Production (ACP) of unit was fixed as 14708.430 MT - Later, assessee changed some of the parameters of machinery for manufacturing of final products and requested the department to refix their ACP as per the revised parameters - The assessee was directed to discharge the duty liability as redetermined observing the procedures prescribed under Rule 96ZP of CER, 1944 up to 31.03.2000 and thereafter on advalorem - Having regard to the fact that the subject matter is pending on the file of Supreme Court, instant civil miscellaneous appeal is disposed of, giving liberty to the revenue, to take appropriate decision, if so warrants, after the outcome of decision, in the reference made: HC - Appeal disposed of : MADRAS HIGH COURT

2018-TIOL-521-HC-MAD-CX

CX - Record of proceedings shows that appeal has been admitted and notice has been ordered on 18.11.2010 - Notice taken by appellant has been returned in year 2010, with postal endorsement "No such Company in the address, Returned to the sender" - As per registry's note, second batta with petition is due on service to sole respondent -More than 7 years have lapsed, since the return of notice - Perusal of material on record discloses that the lis is for refund of claim of Rs.2,28,907/- to respondent - In view of the instruction of Ministry of Finance, dated 30.12.2016, appeal is dismissed: HC - Appeal dismissed : MADRAS HIGH COURT

2018-TIOL-970-CESTAT-MUM + Story

CCE Vs Krishna Processors and Industries Pvt Ltd

CX - CENVAT - Partnership firm converted into private limited company - there is no requirement under rule 10 of the CENVAT Credit Rules, 2004 that the assessee can transfer credit only to the extent that corresponds to the quantum of inputs available with them – credit that is lying in the account is permitted to be transferred along with inputs and capital goods in stock at the factory to the new location – order of Commissioner(A) upheld and Revenue appeal rejected: CESTAT [para 5] - Appeal rejected : MUMBAI CESTAT

CX - Recovery of dues - Appellant is not successor of business of M/s Raj &Yash Alloys nor is the ownership of business been transferred to them -Appellant being auction purchaser had purchased the assets of one M/s Raj &Yash Alloys Pvt Ltd. from M/s EDC Ltd. (Govt. Of Goa Financial Corporation) who had taken over the possession of said assets u/s 29 of the State Financial Corporation Act, 1951 due to failure to repay loan -Issue iswhether demands confirmed against M/s Raj &Yash Alloys can be recovered from appellant.

Held: No recovery can be ordered from Appellant in terms of law laid down by the judgment of the High Court in Tata Metaliks - 2008-TIOL-140-HC-MUM-CX - Since Bench has held that the dues are not recoverable from Appellant, therefore,it is not inclined to go into the merits of the case - demand against the Appellant is set aside and the appeal is allowed with consequential reliefs: CESTAT [para 6, 7] - Appeal allowed: MUMBAI CESTAT

2018-TIOL-962-CESTAT-ALL

CX - Issue arises for considration is whether the assessee has rightly availed Cenvat credit on Welding Electrodes, Paint & Thinner, Flexible Rolls and Water Treatment Chemicals under Rule 2(k) of CCR, 2004 and commission paid to agents whether covered under definition of 'input service' under Rule 2(l) of CCR, 2004 - Assessee have submitted before lower authorities chart showing use of each item involved and Commissioner (A) taking into account the submissions of assessee and evidence available on record, referring and relying on number of Tribunal judgments allowed the Cenvat credit on Welding Electrodes, Paint & Thinner, Flexible Rolls and Water Treatment Chemicals - The issue is covered by Tribunal judgment in case of U.G. Sugar & Indus. Ltd. 2016-TIOL-2891-CESTAT-ALL wherein it has been held that Cenvat credit on Capital goods, Welding electrodes, winding wire, MS wire, MS angle, CAF jointing sheets and asbestos packings used as capital goods in sugar factory eligible to credit under Rules 2 and 3 of CCR, 2004 - High Court of Chhattisgarh in matter of Associated Cement Company Ltd. confirmed the Order of Tribunal wherein it has been held that structural items-Angle, Channel, Plates and Rods required to make machines function without any vibration or movement, cannot be said to be used in construction of buildings but linked with machinery used in production of final product, therefore the Cenvat Credit is admissible - As regards to Cenvat Credit on Welding Electrodes, Paint & Thinner, Flexible Rolls & Water Treatment chemicals, the Commissioner (A) has rightly held that scope of definition of 'input', w.e.f. 1.4.2011, is wide enough to encompass all goods used in factory by manufacturer, unless covered by the exclusion clause of the definition - Since, said items are not covered by exclusion clause under Rule 2(k), the Cenvat Credit on the same is admissible - As regards to Cenvat Credit of service tax on commission paid to agents is concerned, assessee made a submission that agents procures Orders for which commission is charged, therefore there is nexus in procurement of Orders and manufacture & clearance of sugar - By taking into account the evidence available on record, impugned order upheld - Appeal of Revenue being without any merits is dismissed: CESTAT - Appeal dismissed: ALLAHABAD CESTAT

2018-TIOL-961-CESTAT-ALL

CX - Assessee is manufacturer of high pressure laminates and compact laminates located in state of Uttrakhand and are availing benefit of area based exemption Notfn 50/2003-CE - On the basis of investigation, Revenue entertained a doubt about misuse of said area based exemption by assessee in as much as they are also manufacturing various resins namely, Melamine Formaldehyde Resin (MFR) and Phenolic Formaldehyde Resin (PFR), which are further used in manufacture of various Laminated Boards - An identical issue come up before Tribunal in case of M/s Balaji Action Buildwell 2016-TIOL-36-CESTAT-DEL wherein Tribunal hold that on intermediate products emerges in manufacturing process of particle boards, assessee is not required to pay duty - Said order has been followed by Tribunal in case of M/s Shirdi Industries Ltd. 2017-TIOL-2338-CESTAT-All and M/s Greenlam Industries Ltd. - Therefore, following the precedent decisions of Tribunal, impugned orders are not sustainable in eyes of law: CESTAT - Appeals allowed: ALLAHABAD CESTAT

2018-TIOL-960-CESTAT-ALL

CX - Assessee opened an "Electro Magnetic Compatibility (EMC) and Durability Test Lab (testing lab) at Chennai from where they started providing product testing & certification service and concept manufacturing services to various customers - During 2006-07, in this testing facility, assessee procured various equipments on payment of appropriate excise duty - CENVAT credit taken on said items was sought to be denied because the classification of items in question do not figure under any of headings figuring in definition of 'capital goods' under Rule 2(a) of CCR, 2004 - Assessee has taken Cenvat credit as capital goods on goods in question - Although they do not qualify as capital goods as per Rule 2(a), but in alternate it is the claim of assessee that these goods be treated as inputs in terms of rule 2(k)(ii) of CCR, 2004 - The question raised by Commissioner in impugned order is that assessee has not shown these goods as inputs or they have added value of said goods in value of taxable service provided by them - In fact terminology of rule 2(k)(ii) is very clear and that does not bar or give qualification on adding value of said goods in taxable service - Therefore, said reasoning of Commissioner in impugned order is not convincing - In view of decision in case of GTL Infrastructure Ltd. 2014-TIOL-1768-CESTAT-MUM , assessee has correctly availed Cenvat Credit on goods in question and same may be treated as input for providing output service: CESTAT - Appeal allowed: ALLAHBAD CESTAT

2018-TIOL-959-CESTAT-MAD

CX - Assessee engaged in manufacture of 'Electronic Circuit and Safety Equipment' - The dispute in present appeal relates to certain software separately supplied, to be loaded in computer of customer, who procured electronic circuit and safety equipment from assessee - The software now in dispute is developed by assessee for specific use of customer - This is mostly a time and attendance management software which gives access to controlling manger to know the entry/exit of various persons who entered through access controller - While the software as firmware supplied by assessee has to suffer duty as applicable to the device, the same cannot be extended to software supplied separately to get details from device - Admittedly, the access control device can work without this software - The data which is captured by such device is retrieved and used by client using the present software - Lower authorities have inter-mixed the embedded software with the customized software supplied latter for monitoring and data retrieval from the device - It is clear that a devise should suffer Central Excise duty along with essential operating software which is part and parcel of the same - However, the software which is supplied separately for loading in the computer of client linked to devise for retrieval and monitoring of data cannot be considered as part and parcel of said access control device: CESTAT - Appeal allowed: CHENNAI CESTAT