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SERVICE TAX
2018-TIOL-1776-CESTAT-BANG + Case Story
Tiger Service Bureau Vs CCE
ST - Assessee is a registered service provider under category of "Security Agency Service" - During audit, it was observed that assessee had failed to pay service tax for period from 2008-09 to June 2009 - Assessee has collected the service tax but has not deposited the same in Government Treasury for a fairly long period of time and on being pointed out by the Department, they discharged the service tax; interest was paid after the issue of SCN but before adjudication – appeal before CESTAT seeking waiver of penalties.
Held: Ground raised by assessee that they had financial difficulties, on account of which the assessee could not pay service tax, is not a valid ground as they have collected the service tax from their customers - Further, Tribunal in case of Triton Communication Pvt. Ltd. - 2005-TIOL-1640-CESTAT-BANG has held that financial crisis is not a reasonable cause for failure to pay tax - By following the ratio of said decision, no infirmity found in the impugned order, which is upheld: CESTAT [para 6, 7] - Appeal dismissed: BANGALORE CESTAT
2018-TIOL-1772-CESTAT-MAD
Shreyas Stocks Pvt Ltd Vs CGST
ST - Assessee is registered with Service Tax department for rendering taxable service under category of "Stock Broking Service" - During audit, it was noticed that in addition to brokerage charges assessee had collected transaction charges from their customers on value of purchase and sale of securities from April 2004 to June 2007 - Hence, a SCN was issued to assessee interalia proposing to demand service tax with interest thereof and also imposition of penalties under various provisions of law - It cannot be nobody's case that transaction charges are charged by assessee on clients - It is evident that these charges are required to be paid by clients only to the stock exchange for transactions in shares or stocks that they may have entered into on their own or through the stock brokers like assessee - Merely because the assessee is collecting said charges from their clients and remitting the same to concerned stock exchange cannot be a reason for considering such amounts as received by them for "services rendered by them" - In case of First Securities Pvt. Ltd. 2007-TIOL-2302-CESTAT-BANG Tribunal has held that handling charges collected from investors and the amounts collected towards transaction charges cannot be equated to brokerage or commission for purchase of securities - Same ratio has been relied in LSE Securities Ltd. 2012-TIOL-593-CESTAT-DEL - Following the ratio laid down by Tribunal in said cases, impugned order set aside.
Prayer for amendment of cause title as also the address for communication of department needs to be amended in accordance with change of address/jurisdiction of department - Miscellaneous application for change of cause title as well as change of address is therefore allowed: CESTAT - Appeal allowed: CHENNAI CESTAT
2018-TIOL-1768-CESTAT-MAD
Tamilnadu Tourism Development Corporation Ltd Vs CST
ST - Assessee organized the trade fair which is titled as 'Tourist and Industrial Fair' - Lower authorities confirmed the service tax liability on rental income in respect of exhibitors / stalls inside the fair - It is clear that large number of stalls / pavilions were put up by Government departments like Ministry of Health, Family Welfare, Civil Supplies and Agriculture - As claimed by assessee, these pavilions / stalls are not in furtherance in business or commerce of Government - These are basically for propagation of public policy and also for increasing the awareness of public in various vital areas like health, family welfare, civil supplies and agriculture - These are essentially sovereign governmental activities - As such, income attributable to such stalls and pavilions accruing to assessee cannot be covered by tax entry 'Business Exhibition Service' - Admittedly, there were various pavilions and stalls put up by commercial entities which promoted their service or product to the public - These are squarely covered by tax entry - Assessee also claimed certain income as attributable to providing space for parking for visitors which is not covered by said tax entry - Similarly, certain amusement facilities provided inside the trade fair, though by private parties, cannot be brought under category 'Business Exhibition Service' - These are more than in a nature of amusement and entertainment - These aspects have not been examined with required analysis by lower authorities - Some of these aspects have not been argued in correct perspective by assessee also - As such, impugned order as it stands cannot be sustained, same is set aside - Matter remanded to original authority for a fresh consideration.
The demand was contested on limitation also - There is a case of bonafide belief on the part of assessee who is Government of Tamilnadu undertaking regarding non-taxability of the activity - In fact, original authority himself waived the penalty invoking the provisions of section 80, with this reason - As such, a case for misrepresentation or suppression of facts cannot be sustained against assessee during denovo decision: CESTAT - Matter remanded: CHENNAI CESTAT
CENTRAL EXCISE
2018-TIOL-1771-CESTAT-BANG
Macurex Sensors Pvt Ltd Vs CCT
CX- The Assessee is engaged in the manufacture of goods falling under Chapter 85 of CETA, 1985 - During audit for the disputed period, the assessee had availed CENVAT Credit of service tax paid for services of transportation provided to the assessee’s employees to and from their workplace - The CCR Rules excluded services provided by way of renting of a motor vehicle, insofar as they relate to a motor vehicle which is not a capital goods from the definition of input service - According to the Department the service did not fall within the ambit of input service as per Rule 2(l) of the CCR, 2004 and the assessee had to reverse the credit availed - The lower authorities rules in favour of the assessee with respect to eligibility of CENVAT credit - However, Commr.(A) allowed the appeal of the Revenue.
Held - With regard to amendment in the definition of input service after 1.4.2011, following the ratio in Marvel Vinyls Ltd case, the assessee is eligible to Cenvat credit as the BMTC buses hired for transportation of employees are capital goods - Therefore, renting of motor vehicle which is a capital goods in the hands of service provider will not be covered under the ambit of input service - The order-in-appeal is set aside : CESTAT (Para 2, 6, 7) - Appeal Allowed: BANGALORE CESTAT
2018-TIOL-1770-CESTAT-MAD
CCE Vs Kamachi Sponge And Power Corporation Ltd
CX - Assessee engaged in manufacture of sponge iron - It appeared to department that assessee have manufactured and cleared goods without accounting and have resorted to suppression of facts with an intention to evade payment of duty - SCN was issued to assessee proposing to demand duty alongwith interest and also proposing to impose penalty - The main ground raised in appeal filed by Revenue is that the assessee have maintained two sets of invoices in order to remove finished products without payment of duty - It is brought out from records that other than four numbers of invoices, no other double set of invoices were unearthed during investigation - The statement of buyers whose name is mentioned in double set of invoices were recorded by department - All of them have stated that they have no idea about such invoices and that they have received only duty paid goods - The department has not ventured to verify and find out whether the quantity covered in alleged second set of invoices were actually raised in factory of recipients - Further no verification has been done with accounts of such buyers - The Commissioner (A) has thus observed that there is no corroborative evidence brought on record to show the receipt of unaccounted goods from the assessee and for clearances to their sister unit - It is also noted by the first appellate authority that there is no supporting evidence in the form of electricity consumption, input-output ratio, installed capacity, procurement of unaccounted raw material and labour charges placed on record to substantiate the allegation of clandestine clearance of 1153.900 Metric Tonnes sponge iron, which is not a small quantity - The allegation of clandestine clearance is a very serious charge, the department has to adduce cogent evidence to prove the same - The Commissioner (A) has rightly followed the decision in case of ESSVEE POLYMERS (P) LTD. 2004-TIOL-81-CESTAT-MAD, S.T. TEXTURISER 2006-TIOL-574-CESTAT-MUM and GANGA PARAMESWARI SPINNERS PVT. LTD. - The entire case is built on mere suspicions of officers without any documentary evidence - There is no ground to interfere with impugned order: CESTAT - Appeal dismissed: CHENNAI CESTAT
2018-TIOL-1769-CESTAT-MAD
Raja Magnetics Ltd Vs CCE
CX - Assessee had received CR coils/sheets for conversion into "Electrical stampings and Laminations" on job work basis and discharged duty on aggregate value of total landed cost of raw materials including inward freight charges - However, based on contract between them and with other customers the conversion cost was determined as inclusive of fabrication cost, tool Amortization cost and packing charges as reduced by value of scrap - Department took the view that during the period 2004-05, assessee had retained scrap which value was required to be added to the assessable value - Supreme Court in case of General Engineering Works 2005-TIOL-187-SC-CX had laid down the ratio in respect of a situation where waste and scrap arising out of manufacturing process were not retained by the job work but sold of by them - Assessee has contended that said judgment has been made in respect of old Valuation Rules, which were in force prior to 01.07.2000, will not be applicable to their case - Such contention cannot be appreciated - True, Rule 6 of Valuation Rules introduced on 01.07.2000 has amplified the earlier Rule 6 and as also added an Explanation thereto, however, even in new Rules, there is no provision for non-inclusion of value of scrap where job worker has retained the scrap or sold it of - It is also not the case that the entire value of landed cost plus rate charges plus job work charges have been fully included in value on which duty has been paid by assessee - There definitely is a depression in value adopted by assessee proportionate to value of scrap - On merits, no case found for assessee - Coming to limitation, assessee relying on Campco Chocolate Factory 2010-TIOL-1646-CESTAT-BANG, contends that the decision taken on similar issue in respect of their group company led to them having a bonafide belief that the value of scrap is not required to be added to assessable value - However, this contention will not help their case as said decision pertains not to the assessee themselves but to another company in their group, situated in another city and having a different Central Excise Registration number - Hence, assessee's plea on limitation also fail: CESTAT - Appeal dismissed: CHENNAI CESTAT
CUSTOMS
2018-TIOL-1767-CESTAT-CHD
Regal Alloys Pvt Ltd Vs CC
Cus - Assessee imported Heavy Melting Scrap and filed bills of entry - Such scrap was purchased by assessee from one M/s. Padamshree Globe Tradelink Pvt. Limited on high sea sale basis - The bills of entries were filed under claim of exemption under Notfn 12/2012, at declared price as Rs. 380 per MT - On examination, it was found that same also contained re-rollable materials, apart from Heavy Melting scrap - As such, a view was entertained that inasmuch as, re-rollable material has been imported along with scrap, the benefit of exemption notification is not available and the same has to pay duty, in terms of Notfn 12/2012.
Member (J) observed that the consignment was purchased by assessee on high sea sale basis and all the documents describe the goods as Heavy Melting scrap - Assessee have placed on record the invoices, packing list as also the preshipment inspection certificate issued by Geo Chem as also the bill of lading, describing the goods as Heavy Melting scrap - In such a scenario, to attribute any motive to assessee to mis-declare the goods is neither warranted nor justified, inasmuch as assessee would not be knowing the contents of containers - As such, any imposition of penalty upon them is not justifiable - As regards to confiscation of goods, entire documents show the consignment to be a Heavy Melting scrap, presence of re-rollable material will not convert the consignment from Heavy Melting scrap to re-rollable materials - Confiscation of the goods is not called for.
Member (T) observed that question of whether the goods were correctly declared or mis-declared is purely a finding of fact depending on what was declared in bill of entry and what was actually found on examination of goods before their clearance - As the goods have been mis-declared in respect of their description which has a direct bearing on the rate of duty and value, the same are correctly held liable for confiscation under Section 111 (m) of Customs Act, 1962 - Redemption fine in these cases is on higher side, the same is therefore reduced - The detection of goods of different description on examination is sufficient for purpose unless there was a condition was prescribed by law to ascertain end use or a provisional bond was taken for chemical testing by assessing officer - As for penalty, since the goods are held liable to confiscation, penalty is justified on importer - However, as quantum of penalty is on higher side, same is reduced.
As there were contrary views and difference of opinion between the Members, matter placed before the Third Member who on perusal of record and on going through the Final Order of this Tribunal in case of Kuber Casting Pvt. Ltd. found that in similar circumstances, Tribunal has held that if goods booked for importation are heavy melting scrap and on receipt of goods, it is found that some quantity of rerollable scrap is received then it does not amount to misdeclaration - Therefore, agrees with the opinion of Member (J).
In view of majority order, all the three impugned orders are set aside: CESTAT by Majority - Appeals allowed: CHANDIGARH CESTAT
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