2018-TIOL-NEWS-092 Part 2, Dated: Friday, April 20, 2018

ST - The issue posing for consideration is whether the show cause notice proposing to reject VCES declaration issued after a period 30 days from the date of filing of VCES declaration, is sustainable or not - The Tribunal in case of Siddhi Vinayaka Enterprises Pvt. Ltd. 2016-TIOL-1325-CESTAT-DEL relied upon Board's Circular No. 169/4/2013-ST and held that the SCN issued after a period of 30 days is non-est - Following the same, SCN issued after a period of 30 days of declaration filed under VCES is unsustainable - Impugned order set aside: CESTAT - Appeal allowed: CHENNAI CESTAT

ST - Assessee is a civil contractor engaged in providing various construction services - Proceedings were initiated against assessee to demand and recover service tax due to denial of Works Contract Scheme for payment of service tax by assessee and with reference to denial of cenvat credit for availing notification no.1/06 and tax liability as the value of the materials transferred during the execution of works contract - Services rendered by assessee are of composite in nature involving transfer of goods as well as provision of service - The same is not in dispute - As such, tax liability on such contracts will arise only w.e.f. 1.6.2007 as per the ratio laid down by Supreme Court in Larsen & Toubro Ltd. 2015-TIOL-187-SC-ST - The Apex Court held that there is no machinery provision to collect tax on such composite services prior to 1.6.2007 - The next issue for consideration is whether the assessee discharged service tax correctly by availing the composition scheme as per 2007 Rules - Assessee discharged service tax at the composition rates w.e.f. 1.6.2007 and claimed to have filed regular returns indicating the availment of such scheme by them - Tribunal in ABL Infrastructure Pvt. Ltd. 2015-TIOL-360-CESTAT-MUM held that the fact of service tax payment as reflected in ST-3 returns filed after 1.6.2007 is sufficient enough to fulfil the conditions under Rule 3 of Works Contract Composition Scheme Rules, 2007 - The tax liability fixed on an ongoing contract can arise only w.e.f. 1.6.2007 and the assessee can avail the composition scheme when such tax liability arises - Considering the question of interpretation and judicial pronouncements, which came much after the impugned order, penalties imposed on assessee set aside - Interest wherever applicable on delayed payment of service tax is statutorily requirement and has to be complied by assessee: CESTAT - Appeals partly allowed: DELHI CESTAT

CX - Rule 6 of CCR, 2004 – Trading - General practice amongst the masses to not consider trading as an 'exempted service' till amendment was made in the CCR – it cannot be said that assessee had malafide intention to avail undue benefit - Prior to 01.04.2011, there was confusion whether the trading activity can be treated as exempted service to invoke the provision of rule 6 of Cenvat Credit Rules on the said trading activity - when the legislators felt that the cenvat credit in respect of input service attributable to trading activity cannot be allowed, keeping in mind to bring the trading activity under the purview of rule 6, the definition of exempted service was amended - This development clearly shows that there was a serious interpretation in respect of rule 6(3) of CCR, 2004 and to remove the doubts, amendments, effective 01.04.2011, were incorporated – this issue was involved in various cases, therefore, it cannot be said that appellant alone was involved in availing credit on common input service and had malafide intention of not reversing credit - Appellant have been declaring the availment of cenvat credit on common input service in their ST-3 return and have recorded in their books of account the manufacturing activity as well as trading activity – in absence of any malafide intention and suppression of fact, extended period of demand cannot be invoked - demand is set aside on the ground of limitation itself – Appeal allowed: CESTAT [para 4] -Appeal allowed : DELHI CESTAT

2018-TIOL-1265-CESTAT-DEL

Commercial Engineers and Body Builders Company Pvt Ltd Vs CCE

CX - Dispute pertains to assessee' two units wherein they are engaged in business of building body over chassis manufactured and supplied by M/s Tata Motors Ltd. - The issue involved in both the appeals is in respect of duty paid chassis received from M/s Tata Motors by one of the two units - After availing the Cenvat Credit of duty paid by M/s Tata Motors, chassis were diverted to other unit for carrying out body building - The other unit returned the chassis after building the body on payment of duty without including the value of chassis - The original unit subsequently paid duty on value of vehicle including the chassis as well as the body while returning the same to M/s Tata Motors - Revenue views that the second unit, where the body has been built is required to pay the duty by including value of chassis - The differential duty involved has been demanded from both units in respect of chassis which has been returned to the other unit after body building - From records, it is seen that at the time of transfer of chassis to the second unit for activity of body building, the Cenvat Credit of duty on chassis has not been transferred - Since the second unit has not taken the credit of duty paid on the chassis, second unit is allowed to discharge duty without including the value of chassis - Such duty has already been paid - Consequently, the demand for differential duty raised against two units cannot be sustained.

The assessee has also raised the argument that this is a case of revenue neutral situation - If the differential duty is paid by body building unit, the same will be available as Cenvat Credit to the unit which has sent the chassis - Since both the units belong to M/s Commercial Engineers Body Building Company Pvt. Ltd., this is a classic case of revenue neutrality - In case of Arayan Polyplast 2004-TIOL-110-SC-CX-LB and Narmada Chematur Pharmaceuticals Ltd. 2004-TIOL-113-SC-CX-LB it is held that the case of clearance of goods from one unit to another of the same company is one of Revenue Neutrality - As there is no liability on the part of either unit to pay differential duty, the liability to payment of interest also does not arise: CESTAT - Appeals allowed: DELHI CESTAT

2018-TIOL-1264-CESTAT-BANG

Infinite Resources Vs CCE

CX - Assessee in terms of provisions of Rule 5 of CCR, 2004 r/w Notfn 27/2012-CE(NT) , filed the refund claims for various period on the ground that inputs used in manufacture of agricultural machinery parts have been entirely exported and assessee is unable to utilize the accumulated cenvat credit - Issue is squarely covered in favour of assessee by decision of High Court of Karnataka in case of ANZ International Ltd. wherein the High Court has held that an EOU manufacturing exempted goods is entitled to take CENVAT Credit of duty paid on inputs and can claim refund when such credit is unusable - This decision of Karnataka High Court was challenged by Revenue before the Supreme Court and Supreme Court dismissed the SLP - Further, in case of Jobelle , it was observed by Tribunal that Government's policy is not to export duties and therefore export of exempted goods under bond is proper and there is no illegality in it - Therefore by following the ratios of said decisions, impugned order is not sustainable in law and same is set aside: CESTAT - Appeals allowed: BANGALORE CESTAT