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SERVICE TAX
2018-TIOL-1905-CESTAT-MUM + Case Story
CCE & ST Vs shriram Transport Finance Company Ltd
ST - Banking and Other Financial Services - Consideration received from lessees and hire-purchasers.
Held: Interest income is exempt if such is entirely attributable to the business of lending from deposits - If income is to be attributed to lending from borrowings there is an interest cost that is abated in computation of assessable value to give effect to exclusion of interest - There is, therefore, a distinction between the interest earned by a bank and the disaggregation of equated monthly instalments earned by a financial institution engaged in financial leasing and hire-purchase - equated monthly instalment contains within it, the interest cost, the principal recovered and other administrative costs attributable to each hire-purchase or financial lease transaction - it is only after Service Tax (Determination of Value) Rules, 2006 was enacted that this disaggregation of interest was acknowledged by the abatement notification - it was only from 1st March 2006 that ten percent of the income 'described' as interest was attributed to income other than borrowing and, hence, includible in assessable value of the financial institutions - recovery of tax on interest for the period prior to 01st March 2006 is without authority of law as there is a presumption of attributing the entire amount to interest - demand for the period prior to 01st March 2006 is set aside and the demand for the period thereafter, not suffering from the handicap of invoking the extended period is sustained with consequent penalty - Appeal disposed of: CESTAT [para 13 to 23] - Appeal disposed of: MUMBAI CESTAT
2018-TIOL-1898-CESTAT-MUM + Case Story
Radiowani Vs CST
ST - Appellant produce radio spots - appellant undertakes the conceptualization, the script preparation, identification of voice, actual recording, editing and ultimate development of the entire as a package ready for broadcast and it is for this entire range of activities that the compensation is made by the client - 'sound recording' is part of activity but it does not make for whole of the activity or the entirety of the activity - Nor can the consideration be disaggregated to value the sound recording undertaken in pursuance of the contract - activity of the appellant is clearly not that of sound recording per se - There is no proposal to tax the activity as provision of ‘advertising agency service’ and the appellant is not required to choose between alternate classification as that is the responsibility of the tax collector - Fitment within an alternative classification suffices to erase the proposal in the notice but cannot crystallize liability unless the alternative was also proposed in the notice - Levy under Finance Act, 1994 is not on the persona but on the activity - mere registration or even the operation of sound recording studio does not, by itself, bring the appellant within the fold of taxation - impugned order set aside and appeal allowed: CESTAT [para 5 to 9] - Appeal allowed: MUMBAI CESTAT
2018-TIOL-1897-CESTAT-MUM + Case Story
Hindustan Aeronautics Ltd Vs CCE
ST - Notfn. 12/2003-ST speaks of 'value' of materials and not 'cost' of materials - no reason to demand service tax on 10% profit at which material is sold by appellant: CESTAT [para 4] - Appeal allowed: MUMBAI CESTAT
2018-TIOL-1896-CESTAT-HYD
Praveen Engineering Works Vs CCE, C & ST
ST - The assessee was engaged in cutting, straightening and bending steel wire rod coils for various steel traders - It received wire rods as per the purchase order & charged service charges for such activity from traders - Duty demand was raised with penalty as the Department opined that activity of cutting, straightening and bending did not amount to manufacture & that it would fall under the category of Business Auxiliary Service (BAS).
Held - The activities undertaken by the assessee are covered under BAS - Therefore, the assessee is liable to pay tax on the same - Further, the penalty imposed u/s 78 is upheld but penalty imposed u/s 76 is deleted, considering the decision of the Gujarat HC in Raval Trading Company - Besides, considering relevant portions of Section 78, penalties under both sections need not be imposed: CESTAT (Para 3, 7, 8) - Appeal dismissed: HYDERABAD CESTAT
2018-TIOL-1895-CESTAT-AHM
Kunverji Commodities Brokers Pvt Ltd Vs CST
ST - Revenue is in appeal challenging the impugned order on the ground that Commissioner (A) has wrongly dropped the levy of Service Tax on turnover charges paid by assesse to Stock Exchanges which was collected from clients - However, assessee is in appeal against confirmation of demand by Commissioner (A) on Computer Linkage Charges (CTCL) paid to Stock exchanges and collected from the sub brokers - As far as issue relating to levy of service tax on turnover charges is concerned, Tribunal following the judgment in - 2018-TIOL-967-CESTAT-AHM decided the issue in favour of assessee - Hence, on the said issue Revenue's Appeal is devoid of merit - On the issue of inclusion of Computer Linkage Charges collected from the sub broker and paid to the Commodity Exchange in the value of Forward Contract Service Charges, said issue is no more res-integra, in view of the principle laid down by Supreme Court in Intercontinental Consultants and Technocrats Pvt. Ltd. - 2018-TIOL-76-SC-ST - Revenue's appeal is dismissed: CESTAT - Assessee's appeal allowed: AHMEDABAD CESTAT
2018-TIOL-1894-CESTAT-AHM
Radhekrushna Construction Vs CCE
ST - Whether the assessee being sub-contractors are entitled to refund of service tax paid on Construction Services used in construction of building for institute of Kidney Disease & Research Center, when the original contract awarded to main contractor, M/s Malini Constructions - Both the sub-contractor as well as main contractor engaged in providing works contract service during relevant period for carrying out the construction work would be eligible to exemption - The Notfn was withdrawn for period 01.04.2015 to 29.02.2016, but, subsequently it was restored for said period by virtue of Section 102 of FA, 2016, consequently, assessee became eligible to refund of service tax paid during said period - Commissioner (A) upheld the rejection of refund claim on the ground that the assessee had not established the fact that they had provided works contract service to main contractor i.e. M/s Malini Constructions during the relevant period - The assessee have vehemently argued that during the relevant period as a sub-contractor, they have provided works contract service, i.e. along with service they also supplied materials in carrying out the construction of building meant for institute of Kidney Disease & Research Canter, hence, eligible to refund of service tax paid during relevant period - Thus, the fact remains to be scrutinized is whether the assessee had provided 'works contract service' to M/s Malini Constructions and accordingly, eligible to claim refund of service tax paid during said period - Assessee produced the ledger account and communication from principal contractor claiming that they had provided works contract service to principle contractor during said period - These evidences have not been placed before Adjudicating Authority - Matter remanded to adjudicating authority to ascertain the claim of assessee: CESTAT - Matter remanded: AHMEDABAD CESTAT
CENTRAL EXCISE
2018-TIOL-1893-CESTAT-BANG
Trident Powercraft Pvt Ltd Vs CCE
CX - Assessee engaged in manufacture of alternators and sent iron and steel sheets and coils directly to job worker who availed credit and processed and made semi-finished stampings and some scrap was generated in process, which was cleared to assessee on payment of duty and thereafter, assessee also cleared the scrap on payment of duty which is higher than the one he claimed as CENVAT credit - During audit by Department, objection was raised that assessee had availed CENVAT credit on scrap of iron and steel based on documents which were not consigned to them and it also observed that there were no supporting documents evidencing the receipt of such goods into the factory - Entire transaction is revenue neutral as the duty has been paid on removal of scrap on which the credit was availed - In case of PSL Holdings Ltd., it was held by Tribunal that utilisation of credit for payment of duty which was not required to be paid, credit was effectively reversed and Revenue cannot once again ask for reversal of credit - In present case also, assessee has availed CENVAT credit on scrap received from job workers based on duty paid document and while at the time of clearance of same, assessee paid duty at the time of clearance which can be treated as reversal - Similarly, it has been held by Tribunal in various cases that if the credit is reversed, then the entire transaction is revenue neutral and demanding reversal of CENVAT credit on technical ground is not tenable under law - Impugned order denying the CENVAT credit on scrap as irregular is not sustainable in law and therefore, same is set aside: CESTAT - Assessee's appeal allowed: BANGALORE CESTAT
2018-TIOL-1892-CESTAT-CHD
Luminous Power Technologies Pvt Ltd Vs CCE & ST
CX - M/s. Luminous Electronics Pvt. Limited (LEPL) amalgamated with M/s. Luminous Power Technologies Pvt. Limited (LPT) under scheme of amalgamation - M/s. LEPL had stopped production by the time of amalgamation was affected, surrendered their CX registration and shifted the plant and machinery to another unit - M/s. LPT also opted for exemption under Notfn 50/2003-CE - M/s. LPT was issued with a letter taking the view that claim for area based exemption from 27.03.2010 to 26.03.2020 was incorrect and exemption was available only upto 24.11.2013 subsequent to amalgamation - Only issue arises is that whether M/s. LPT has set-up a new manufacturing unit or continued with the manufacturing activity as has been undertaken by M/s. LEPL - It is clear that M/s. LEPL had stopped the production before amalgamation and also plant and machinery were shifted to another place and Central Excise registration was also surrendered - M/s. LPT has started a new unit with new plant and machinery for manufacturing of new products - A similar issue came up before Tribunal in case of Wipro Enterprises Ltd - Facts of this case are on better footing than the case of Wipro Enterprises Limited wherein the unit was a manufacturing unit and the same unit has started new manufacturing line in same premises and Tribunal held that the new unit is entitled for exemption from the date of start of commercial production - Admittedly, in this case, M/s. LPT started a new unit for manufacturing of mobile batteries, mobile chargers and accessories by installing new plant and machinery - Therefore, M/s. LPT is entitled for exemption under Notfn 50/2003-CE from 27.03.2010 to 26.03.2020 - With these terms, impugned order is set-aside: CESTAT - Appeal allowed: CHANDIGARH CESTAT
2018-TIOL-1891-CESTAT-CHD
CCE Vs Vertex Customer Services India Pvt Ltd
CX- The assessee is a 100% EOU registered under the Software Technology Park Scheme - They provided services to non-resident recipient without payment of service tax as they were not in a position to utilize the Cenvat Credit - They filed refund claim which was rejected by the revenue on grounds that the period of refund under the scheme was prior to amendment in Rule 5 of CCR, 2004 vide Notification No.04/2006-CE (NT) issued in March, 2006 - The Commr. (A) allowed the refund.
Held - The assessee who has exported the services and providing taxable service for the period prior to March, 2006 is entitled to claim refund of Cenvat credit remains unutilized in their Cenvat Credit Account - Following the ratio laid down by the Tribunal in WNS Global Services Pvt. Ltd case, affirmed by the HC of Bombay in WNS Global Service Pvt. Ltd :CESTAT (Para 2, 5) - Appeal Dismissed: CHANDIGARH CESTAT
CUSTOMS
2018-TIOL-1890-CESTAT-CHD Kudos Chemie Ltd Vs CC
Cus - Assessee had exported Caffeine (Anhydrous) under two shipping bills - The goods were rejected by buyer on quality parameters and were therefore, returned to assessee - The assessee failed to re-export these goods within stipulated period - The Anti-Smuggling staff of Department visited the factory of assessee and conducted search of factory but the impugned goods could not be recovered - Department issued a SCN, which was adjudicated resulting in confirmation of demand and appropriation of the same from amount already deposited by assessee - Interest under Section 28AB of Customs Act, 1962 was also demanded - Besides, the adjudicating authority imposed redemption fine in lieu of confiscation of goods which were not available for confiscation and also imposed penalty - Assessee is not contesting their duty liability and only challenging the confiscation of goods and personal penalty - Admittedly, the goods were not found in factory - It is clear from statement of Sh. Vijay Mahendra that assessee had already disposed off the goods when officers visited the factory - On being asked by bench, assessee has not been able to specify the date when goods were cleared or diverted by them - The assessee after disposing off goods did not inform the Department at any stage till the Department went to their factory and detected that the goods had already been diverted - The duty was also paid at the instance of Department - There was a deliberate intent to take wrongful advantage of Notfn 158/95-Customs - Therefore, assessee never intended to re-export the goods and just wanted to divert the goods, which is not the purpose for which the Notification has granted exemption - It is evident that assessee mis-utilized the provisions of said Notfn - Accordingly, goods were rightly held to be liable to confiscation under Section 111(o) of Customs Act, 1962 and penalty - However, having regard to totality of facts and circumstances of case, redemption fine and penalty are excessive, quantum of redemption fine reduced to Rs. 4 lakhs and of personal penalty to Rs. 6 lakhs: CESTAT - Appeal partly allowed: CHANDIGARH CESTAT
2018-TIOL-1889-CESTAT-HYD
CC Vs Ruchi Infrastructure Ltd
Cus - Issue is regarding assessment of Bill of Entries wherein differential duty is confirmed against assessee - Aggrieved by such assessment, appeal was filed before first appellate authority who after following due process of law agreed with contentions as raised by assessee and set aside the demand of differential duty - Revenue submits that it is in error to hold that the goods which were imported were Crude Palm Olein and not Palm Oil as held by Adjudicating Authority - It can be seen from findings of first appellate authority, that the entire issue was considered holistically and also applied the law as has been settled by higher courts in case of the quantum of quantity that needs to be assessed - In grounds of appeal, revenue authorities are seeking to re-classify the products which could not be done so without issuance the SCN, is correctly recorded by first appellate authority - Impugned order is correct and legal and does not require any interference: CESTAT - Appeal rejected: HYDERABAD CESTAT
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By Vijay Kumar 
