2018-TIOL-NEWS-079, Dated: Thursday, April 05, 2018

ST - A student, only by filling of prospectus, does not become entitled to get coaching from the Appellant - prospectus is only for the purpose of screening of students by way of Admission Screening Examination - sale of prospectus cannot be considered as part of 'Commercial Training or Coaching Services' - Demand set aside and appeals allowed: CESTAT [para 4] - Appeals allowed : MUMBAI CESTAT

ST - the assessee filed application for refund of service tax, claiming to have erroneously paid tax for a particular period - Such application was dismissed, for having been filed after expiry of the one-year limitation period - The same was upheld by the Commr.(A) -

Held - The assessee submitted a date chart to show that the refund application had been filed within limitation - Examining the same, the service tax had mistakenly been deposited before the wrong jurisdiction - Thereafter, although the assessee sought that such payment be adjusted to the correct jurisdiction, the Department neither replied to the assessee's applications, nor directed it to approach the correct jurisdiction - Thus, for lapses on part of the Department, the assessee cannot be held at fault and deprived of its legitimate claim - Hence the refund claim cannot be said to be barred by limitation: CESTAT (Para 2,3,6) - Appeal Allowed : DELHI CESTAT

ST - Assessee engaged in providing various taxable service under categories of "Online Information and Data Retrieval service" , 'maintenance or repair service', 'internet telecommunication service', 'erection and commissioning and installation service' - Proceedings were initiated against them for short payment of Service Tax - Concept of reverse charge has been examined and upheld for service imported by assessee - Mere non mentioning of legal provision will not vitiate the proceedings when the gist of the provisions is available in allegation and discussions recorded in impugned order - Admittedly, the basis for confirmation has been brought out and Commissioner who adjudicated the case is competent to confirm the tax liability under reverse charge - Tribunal do not find that technical objection of assessee can stand legal scrutiny - As such, appeal by assessee on these grounds is not sustainable - Regarding the revenue neutrality, said concept can be a valid ground for claiming bonafide of assessee against imposition of penalty - Revenue neutrality per se cannot be a ground for non payment of any tax which is otherwise payable - If the view of assessee is accepted then the basis of CCR, 2004 will became redundant - In a Value Added Tax system, the flow of tax credit is inbuilt and tax payer cannot claim that he need not pay the tax as the same in any case will be available as a credit to him or to the recipient of goods/services - This will be against very basis of Value Added Tax system - Accordingly, no merit found in appeal filed by assessee: CESTAT - Appeal dismissed : DELHI CESTAT

ST - Assessee engaged in providing Information Technology Software Service and Business Auxiliary Services - They filed refund claims seeking refund of unutilized CENVAT credit paid on input services used for the services exported by them under Rule 5 of CCR, 2004 r/w Notfn 27/2012 - As far as rejection of refund on input services on Management, Maintenance or Repair Service and Management or Business Consultant's service, is wrong and not sustainable - These two services have been held to be eligible input services as per the decisions in ISMT Ltd. 2010-TIOL-27-CESTAT-MUM , Castrol India Ltd. 2012-TIOL-2024-CESTAT-AHM and Kijiji (India) Pvt. Ltd. 2012-TIOL-1854-CESTAT-MUM - Moreover, in assessee's own case, this Tribunal has already held them as eligible input services - Further, submission of certificate issued by STPI authority is not required for claiming the refund under Business Auxiliary Services and the STPI have also clarified the same vide its communication dated 1.11.2017 - Therefore, Commissioner (A)'s order is not sustainable in law and therefore, same is set aside to this extent vide which he has directed the party to submit the SOFTEX duly certified by STPI authorities - With these modifications, both the appeals are allowed and the lower authorities will quantify the refund amount after verifying the documents and thereafter, sanction the eligible amount of refund: CESTAT - Appeals allowed : BANGALORE CESTAT

CX - Refund of Interest - Since duty is paid before finalization of provisional assessment, no interest is payable - amount which is not payable cannot be retained by the Government without authority of law - Refund has arisen only after finalization of assessment and before finalization of the assessment there was no ground for the Appellant to file refund as the same would have been held premature - provisional assessment was finalized on 28.12.2006 and the instant claim was filed on 20.04.2007 which is well within six months of the finalisation of the assessment, hence the claim cannot be considered to be time barred - interest was paid by the appellant on their own and the same, not being the part of the price of the goods, question of passing of incidence of the same does not arise - impugned order set aside and appeal allowed: CESTAT [para 4 to 6] - Appeal allowed : MUMBAI CESTAT

CX - Issue is whether the appellant is liable to pay in terms of rule 6(3)(b) of CCR, 2004 an amount equal to 8% of selling price of fabricated items/pipes sold without payment of duty against CT-2 certificates; whether extended period of limitation is available to the department. Held: Issue herein is squarely covered in favour of appellant assessee by the decision in SRF Ltd. - 2003-TIOL-313-CESTAT-DEL where it is held that clearance under Chapter X or under bond is not the same thing as clearance of goods wholly exempt or that the goods chargeable to Nil rate of duty and, therefore, provisions of rule 57C of CER, 1944 are not applicable -facts and circumstances are similar as here also appellant assessee have cleared under Chapter X procedure or on the basis of CT-2 certificates - it is also an admitted fact that goods manufactured by appellant are not exempt or chargeable to nil rate of duty and apparently the goods have been cleared under exemption provided to the buyer of the goods under particular notification being a manufacturer exporter - following the Tribunal ruling (supra) which has been maintained by Supreme Court, appeal is allowed with consequential benefits: CESTAT [para 5, 6] - Appeal allowed : MUMBAI CESTAT

CX - Rule 7(4) of CER 2002 r/w s.11AA of the CEA, 1944 - Following finalization of provisional assessment for 2011-12 by the original authority, demand confirmed of differential duty of Rs.39,90,83,784/- along with interest of Rs.32,26,069/-- appeal to CESTAT - Issue is the applicability of the date from which the interest liability sets in, whether from the date of original invoice or from the date of supplementary bill - The disputed interest liability pertains to this difference of perception – appeal to CESTAT. Held: Appellant has discharged the differential duty liability by raising supplementary in voices and the finalization of provisional assessment was merely a confirmation of the differential duty leviable and this is apparent from the order of the original authority – A plain reading of this provision of rule 7(4) of CERdoes not confer jurisdiction to demand interest from the date of invoice - Bombay High Court in the case of CEAT Ltd. - 2015-TIOL-397-HC-MUM-CX , and which decision is affirmed by the Supreme Court, has held that if the interest was to be recovered and was indeed payable on the date on which the Assessee made payment of differential duty and prior to finalization of the assessment, then the Rule would have specifically said so – no merit in the orders of the lower authorities, hence set aside and appeal is allowed: CESTAT [para5 to 7] - Appeal allowed : MUMBAI CESTAT

CX - Appellant had taken over the factory that was being operated by another entity till 2008-09 and the credit of Rs.5,53,364/- taken twice on certain invoices for procurement of capital goods during December 2008 to April 2009 by the erstwhile operator was reversed upon directions by the jurisdictional authorities – lower authorities confirmed/appropriated the duty demand and imposed penalty –appeal to CESTAT against penalty imposition. Held: Supreme Court in Uniworth Textiles - 2013-TIOL-13-SC-CUS has held that bonafides are crucial to determine the scope of imposition of penalty – it is seen from the submissions of the appellant that sufficient credit existed in their account even after expunging the wrongly availed credit – imposition of penalty is, therefore, not based on justifiable grounds – appeal allowed: CESTAT [para 4, 5] - Appeal allowed : MUMBAI CESTAT

CX - Valuation -Section 4 of the CEA, 1944 - Whether the sales tax amount payable under the deferred payment scheme shall form part of the assessable value or not?. Held: As the issue is pending before the apex court in the case of Balkrishna Industries, without the final verdict of the Supreme Court, the present appeal cannot be decided - matter is remanded to adjudicating authority to pass order on the basis of the outcome of the judgment in the cited case - Appeal of department allowed by way of remand: CESTAT [para 4, 5] - Matter remanded : MUMBAI CESTAT

CX - Valuation - Section 4 of the CEA, 1944 - Appellant has received advances from some of the customers and gave 3% to 4% as discount - department is of the view that the notional interest will have to be added to the assessable value of the goods - appeal to CESTAT.

Held: Following ratio laid down by the Supreme Court in the case of ISPL Industries Ltd - 2003-TIOL-98-SC-CX , Bench finds no reason to interfere with the impugned order and the findings recorded therein, the same is sustained - appeal is dismissed: CESTAT [para 5, 6] - Appeal dismissed : MUMBAI CESTAT

CUSTOMS SECTION

2018-TIOL-602-HC-MAD-CUS

Sri Krishna Logistics Vs CC

Customs Brokers Licensing Regulation, 2013 [CBLR] –Petitioner before High Court against the issuance of an Order of Prohibition of the petitioner's Customs Broker's Licence under the provisions of Regulation 23 of CBLR :

HELD - the impugned order has been passed prohibiting the petitioner from working in any section of the Chennai Customs Station under the jurisdiction of Chennai Customs Zone as the petitioner had failed to discharge their obligations as Customs Broker as required under Regulation 11 of the CBLR – the Order of Prohibition was passed against the petitioner under Regulation 23 of the CBLR and on a perusal of Regulation 23, it is clear that 90 days period prescribed under Regulation 22(1) of the Customs House Agent Licensing Regulations, 2004 [CHALR] does not find a place - that apart, Regulation 23 of the CBLR has not been considered by the Division Bench of this Court [in the case of Santon Shipping Services – 2017-TIOL-2388-HC-MAD-CUS ] for the reason that the issue in that Appeal was only in respect of Regulation 22(1) of the CHALR and not with regard to the Regulations under CBLR - therefore, the ratio laid down by the Division Bench in the above case is not applicable to the present case - the respondent has given cogent reasons for passing the Order of Prohibition under Regulation 23 - when alternative remedy by way of an Appeal is available to the petitioner, they cannot circumvent the filing of the Appeal by filing the present Writ Petition, unless in exceptional circumstances like violation of principles of natural justice - since there is no violation of principles of natural justice, the petitioner should exhaust the alternative remedy by way of an Appeal under section 129 A(1)(a) of the Customs Act - accordingly, the Writ Petition is rejected : HIGH COURT [para 7, 11, 12, 13, 14, 15] - Writ Petition rejected : MADRAS HIGH COURT

2018-TIOL-590-HC-MUM-CUS

CC Vs Anjeny Loys Pvt Ltd

Cus - The assessee filed a bill of entry for import of goods stated to be not for human consumption, un cleaned and unsorted - As the goods were declared not for human consumption, they were ordered for first check examination and the samples were forwarded to a laboratory - Intelligence was gathered which indicated that assessee had imported the goods in a container from USA - The suspicion was that the consignment may contain goods fit for human consumption, which has not been declared while filing the bill of entry in order to evade higher custom duty and a mandatory no objection certificate of FSSAI - Tribunal relied upon the findings in report of laboratory and chosen by Revenue officials themselves - The laboratory on examination of the same certified that the goods are an animal feed and not for human consumption - It is in these circumstances that consistent with the declaration of assessee, the Tribunal concluded that factually the FSSAI certificate would not be necessary - In the light of the fact that consignment has not been misdeclared, there was no scope for any confiscation - Further, Tribunal posed a specific query to the Departmental Representative whether there was any prohibition for import of the goods for industrial use but to be consumed as animal feed, he could not point out anything beyond stating that they are not fit for human consumption - This definitely was not the answer to the query of Tribunal - Such a finding and conclusion cannot be termed as perverse or inconsistent, leave alone to materials placed on record or any provision of law: HC - Appeal dismissed : BOMBAY HIGH COURT

2018-TIOL-589-HC-KERALA-CUS

Mohammed Bilal Vs Asst Commissioner Central Tax & Central Excise

Cus - The petitioner is a C&F Agent for M/s. ICL - On account of said service provided to ICL, he derived income under handling charges, hiring charges, service charges and transportation charges - Whether the petitioner has to include transportation charges for levy of tax - If a decision was rendered on erroneous question of law and statutory appeal is available, the Court cannot interfere with the decision - It is to be noted that the author of impugned order is Shri Ravi Varma Raja, who conducted an audit of records of the petitioner - Said officer also directed the petitioner to include "transportation of goods by road" in existing registration certificate and to pay service charges on income derived from such transportation - Though, that direction may not have found place in order impugned, nevertheless, it would indicate that adjudication was not independent of direction - If an officer passed an order in a capacity on an issue, he must eschew himself from sitting on same issue in different capacity - Pre-disposed mind itself is sufficient to hold that decision-making process is erred as author of the order already directed the petitioner to include transportation of goods charges way back in year 2010 itself - Court is of the view that impugned order has to be set aside for reconsideration - Reconsideration should be independently de hors direction in Ext.P1 dated 21/4/2010 - Appropriate decision shall be taken after adverting to all the contentions on merits: HC - Writ petition allowed : KERALA HIGH COURT