2018-TIOL-NEWS-101, Dated: Tuesday, May 01, 2018

ST - Banking and Other Financial Services - Service per se is not exempted, but only a part of the taxable value is exempted by notification 29/2004-ST - Rule 6(3)(i) of CCR, 2004 does not apply – Impugned order set aside and appeal allowed: CESTAT [para 4, 5] - Appeal allowed : MUMBAI CESTAT

ST - Appellants are 'Air Travel Agent' and providing service of air travel ticket booking – during audit, it was noticed that apart from their regular business they had earned income by way of ‘incentive' from M/s.Amadeus and M/s.ABACUS for the use of their software in their business – as it appeared that the appellant had not discharged ST liability on the above said incentive received, SCN issued demanding ST – demand confirmed, penalty proposal dropped – appeal to CESTAT.

HELD: A mere non-disclosure of fact cannot make a guilty mind of the assessees so as to justifiably invoking the longer period – in the present case, there is no evidence of any malafide on the part of the assessee - the said issue was the subject matter of litigation pending at various levels - as such, it cannot be held that the appellant was guilty of any suppression or mis-statement etc., so as to invoke the larger period of limitation - accordingly, the major part of the demand, being beyond the normal period of one year, is barred by limitation - however, a part of the demand would fall within the limitation period for which the matter is remanded to the original adjudicating authority for re-quantification of the demand - since no justifiable reasons found to impose penalty upon the appellant, the same is accordingly set aside - appeal is allowed by way of remand, in above terms : CESTAT [para 5.1, 5.2, 5.3, 6] - Matter remanded : CHENNAI CESTAT

ST - Appellant entered into agreements with various software companies for undertaking various software related services - department took the view that appellants are only supplying man power to TCS in Special Economic Zones and other similar organizations as per the requirements and that the appellants are not engaged in development of any software on their own - various SCNs issued proposing that activities of the appellants are liable to be classified under "Man Power Supply or Recruitment Agency w.e.f. 16.6.2005 and also proposing demands of ST liability under that category - demands confirmed, penalties imposed - appeal to CESTAT.

HELD - Even as per the facts, the appellants were only providing manpower, albeit those having software technology skills, to organizations like TCS, Infosys etc. but the information technology development was not done by the appellant themselves nor was it contracted to them - on the other hand, such software or IT development was done only by TCS, Infosys etc., by utilizing the man power supplied by the appellant and as per their requirements, allocation and control - viewed in this light, no reason found to deviate from the conclusions and decision taken by this Tribunal, in the appellant's own case - 2010-TIOL-835-CESTAT-MAD , for an earlier period - the activities of the appellant will definitely fall only within the scope of "Man Power Supply or Recruitment Agency Service" - the appellants are, therefore, liable for discharging tax liability on the value of taxable services in respect of these services - however, there is merit in the appellant's contention in respect of services provided to SEZ units - as per the overriding effect of section 26 & 51 of the SEZ Act 2005 read with rule 10 of SEZ Rules 2005, they would be eligible for exemption from payment of ST and also for the exemption extended in notification no.4/2004-ST dated 31.3.2004 - the adjudicating authority has not considered this claim of the appellant on the ground that sufficient documents have not been produced by the appellants - the Bench considers it proper to remand this issue to consider the appellant's submissions in this regard - merit found in the argument of the appellant that the demand raised on TDS by way of a second SCN is hit by time bar - hence part of the impugned order confirming the ST demand of Rs.10.52 lakhs with interest and imposition of penalties in respect of TDS portion, for the period April 2007 to March 2008, is set aside - the issue in dispute is with regard to classification of the activities of the appellant and, therefore, an interpretational issue - penalties imposed are unwarranted and set aside: CESTAT

(i) the activities of the appellant will definitely fall only within the scope of "Man Power Supply or Recruitment Agency Service" - appellants are, therefore, liable for discharging tax liability on the value of taxable services in respect of these services;

(ii) demand of Rs.10.52 lakhs related to demand on TDS portion for the period April 2007 to March 2008 in the SCN in respect of SCN dated 22.4.2009 is set aside;

(iii) demand in respect of services provided to SEZ units directed to be revisited in the de novo adjudication;

(iv) the net liability as arrived at in such de novo adjudication, with interest liability thereon, will be payable by the appellant;

Appeal is disposed of accordingly[para 6.8, 6.9, 6.10, 6.11, 6.12] - Appeal disposed of : CHENNAI CESTAT

CX - CENVAT - Contention of the Revenue that the Inputs should first come to the factory is baseless for the reason that there is no purpose of bringing the inputs in the factory - as the final product is manufactured at site, obviously the input has to go to the site and be used in the manufacture of final products - compliance of CENVAT Credit Rules have been scrupulously made- value of the inputs so supplied directly has been included in the total value of the goods manufactured at site, therefore, there is no reason to deny CENVAT credit - Impugned order upheld and Revenue appeal dismissed: CESTAT [para 4] - Appeal partly allowed : CHANDIGARH CESTAT

2018-TIOL-1374-CESTAT-CHD

Maruti Suzuki India Ltd Vs CCE

CX - Assessee is in appeal against impugned order wherein cenvat credit availed on Pandal Shamiana has been denied to assessee on the premise that Pandal Shamiana used for Vishwkarma Pooja for organizing Olympiad competition and Deepotsav is not related to their manufacturing activity in terms of Rule 2 (l) of CCR, 2004, therefore, they are not entitled to avail cenvat credit - As regards to Vishwkarma Pooja, same is organised by workers for worship of their plant and machinery to be used in manufacturing activity and it is customary in all manufacturing entities, workers organise a function of Vishwkarma Pooja, therefore, said activity is directly related to manufacturing activity of assessee and on said activity, assessee is entitled to avail cenvat credit - As regards to Deepotsav, same has been organised by assessee to avoid any hurdles by employees during course of manufacturing - Said Deepotsav have no nexus with activity of manufacturing - Therefore, on said activity, assessee is not entitled to avail cenvat credit - As regards to Olympiad competition, same organised by outside agency and no participations of assessee shows that there is no nexus with manufacturing activity of assessee - Further, contention of assessee is that same may be treated as advertisement expenditure but no such documentary evidence was produced by assessee before authorities below - In that circumstances, assessee is not entitled to avail cenvat credit on said service - Assessee is entitled to avail cenvat credit on services of Pandal Shaminana used for Vishwkarma Pooja - For rest of services, the cenvat credit is denied - As adjudicating authority itself has dropped the charges against assessee, therefore, penalty is also not imposable: CESTAT - Appeal partly allowed : CHANDIGARH CESTAT

2018-TIOL-1373-CESTAT-CHD

CCE & ST Vs Pioneer Pesticides Pvt Ltd

CX - the assessee company cleared excisable goods upon which it paid Education Cess (EC) - It later claimed refund of such cess paid, and the same was granted - The Commr.(A) upheld such grant of refund - The Department contested the same on grounds that the assessee had also availed area-based exemption & so was ineligible to claim refund - It also claimed that cess is not exempted & so ineligible for refund -

Held - Considering the relevant findings of the Apex Court in SRD Nutrients Pvt. Limited vs. CCE, Guwahati , the Court allowed refund of EC as excise duty itself was exempted - Also regarding the Department's claim that the assessee did not file a specific claim for refund of cess, the Notfn. simply states that the manufacturer eligible for such exemption would file a statement containing total duty paid and payment of duty by utilising Cenvat credit & category of goods - Hence granting refund of EC is upheld: CESTAT (Para 2,3) - Appeal Dismissed : CHANDIGARH CESTAT

2018-TIOL-1372-CESTAT-KOL

CCE Vs Ramsarup Utpadak

CX - Revenue is in appeal against sanction of rebate of duty by Adjudicating Authority - Assessee raised a preliminary objection that appeal is not maintainable in view of Clause (b) of provisio to Section 35 (1) of CEA, 1944 - Issue is covered by decision of Larger Bench of Tribunal in case of Sai Wardha Power Ltd. 2015-TIOL-2823-CESTAT-MUM-LB wherein it is held that in respect of rebate on goods supplied from DTA to SEZ within India, appeals would not lie to Appellate Tribunal under clause (b) of proviso to Section 35(1) of Central Excise Act - Appeal filed by Revenue is dismissed as not maintainable: CESTAT - Appeal dismissed : KOLKATA CESTAT

Cus - Mis-declaration of goods - For failure of fulfilling certain obligation, penalty under Section 112 (a) has been imposed on assessee - However, under the Regulation itself, no action has been initiated - The penal provisions under Section 112(a) are much more comprehensive and serious compared to violation of obligations of CHA under the Regulation - The violation of abetting an offence has to be established by evidence of deliberate act or omission by CHA - The basis of penalty under Section 112 (a) has not been brought out in impugned proceedings with any clarity - No justification found in proceedings under Customs Act for penalty when no action has been taken for violation of Regulation under CHALR, 2004 - Accordingly, penalty imposed on assessee is set aside: CESTAT - Appeal allowed : DELHI CESTAT

Cus - Assessee engaged in manufacture of Narrow woven fabric braided cord which is excisable and liable to duty - They had imported filament yarn on which additional duty of custom equivalent to duty of excise under Section 3(1) of CTA, 1962 was paid at the concessional rate of duty at 8% adveloram in terms of notfn 29/2005- CE as amended - Whether the assessee is entitled to benefit of Notfn 29/2004 -CE as amended from time to time for payment of additional duty of custom equivalent to excise duty - Tribunal in case of SRF Polymers Ltd. 2018-TIOL-599-CESTAT-MAD had analysed the very same issue - Following the said decision, assessee is not eligible for benefit of Notfn 29/2004 - The impugned order calls for no interference: CESTAT - Appeal dismissed : CHENNAI CESTAT