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SERVICE TAX
2018-TIOL-1920-CESTAT-MAD + Case Story
CGST & CE Vs J Ray Mcdermott Engineering Pvt Ltd
ST - Assessee engaged in provision of Engineering Design Services to its group entities and is a 100% EOU under STPI - They provide BPO services to customers outside India and are also registered with Service Tax Department w.e.f. 30.1.2008 - They filed refund claim for period April 2007 to March 2008 for refund of unutilized credit under Rule 5 of CCR, 2004 - Commissioner (A) has allowed the issue with regard to availment of credit before registration observing that it is merely a technical lapse - The issue whether assessee is eligible to avail credit before registration has been settled by decision in case of mPortal India wireless Solutions P. Ltd. 2011-TIOL-928-HC-KAR-ST - Following the said decision, there is no merit in appeal filed by department, same is dismissed: CESTAT - Appeal dismissed: CHENNAI CESTAT 2018-TIOL-1913-CESTAT-MUM
Fcb Ulka Advertising Pvt Ltd Vs CCE
ST - Advertising Agency Service - SCN was issued to the appellant for providing certain services to their subsidiary company and receipts of an amount equivalent to 75% of the total revenue received by their subsidiary company is taken as consideration - demand confirmed with interest and penalty, hence appeal to CESTAT.
Held: Demand raised in the year 2010 is for the period 2005-06 and 2006-07 - Entire period falls outside the normal period of limitation - appellant have claimed that it was a revenue neutral situation inasmuch as entire tax paid by appellant was available as credit to subsidiary - moreover, the entire value on which service tax is demanded had already suffered tax at the hands of subsidiary - also during the material time, there were Circulars of CBEC B-11/1/98-TRU dated 7 October 1998 and DGST Letter V/DGST/Misc-7/98 dated 11.02.1999 which mandated that if the main contractor had paid service tax, no tax need to be paid by sub-contractor - it can be reasonably concluded that there was no intention to evade payment of tax as they bonafidely believed that they were not liable to service tax - demand set aside on the ground of limitation - appeal allowed: CESTAT [para 4] - Appeal allowed: MUMBAI CESTAT
2018-TIOL-1912-CESTAT-MAD
CGST & CE Vs Ford Business Services Centre Pvt Ltd
ST - Assessee had filed refund claim under Rule 5 of CCR, 2004 for the period April 2007 to January 2008 claiming refund of unutilized CENVAT credit availed on various input services - The assessee was exporting their output services without payment of service tax - Original authority rejected the refund claim observing that since output service namely 'information technology software services' were not taxable during relevant period, assessee is not eligible to avail credit - Commissioner (A) vide order impugned, set aside the rejection of refund - The issue whether assessee is eligible for refund when the services are exported are not taxable has been analyzed by Tribunal in case of Sutherland Global Services P. Ltd. - The Tribunal relied upon the decision in case of Zenta Pvt. Ltd. 2012-TIOL-624-CESTAT-MUM as well as the decision in case of Drish Shoes Ltd. 2010-TIOL-350-HC-HP-CX - Similar view was taken in case of Presidential Process MGMT. Services (I) P. Ltd. 2016-TIOL-287-CESTAT-MUM - Rejection of refund claim is without legal basis: CESTAT - Appeal dismissed: CHENNAI CESTAT
2018-TIOL-1911-CESTAT-HYD
Gateway East India Pvt Ltd Vs CCE, C & ST
ST - Assessee is contesting imposition of equivalent amount of penalty under storage and warehousing services for tax paid by them - Demand of tax has arisen on the ground that assessee had charged demurrage charges on containers in which cargo was received and was held up in CFS area beyond the free stipulated period wherein the container can be kept freely - It is the case of Revenue that this amount needs to be charged under storage and warehousing services - Assessee on being pointed out has discharged service tax liability and had paid differential amount and interest was paid before the adjudication was taken up - There is no reason for them to not to pay the tax; also that they could have entertained a bonafide belief that the amount charged by them could be covered under cargo handling services for which tax liability was discharged - Provisions of Section 80 can be invoked and the penalty can be set aside - As regards excess utilisation of CENVAT credit during the relevant period in excess of 20% of CENVAT credit, it is undisputed that assessee has discharged the entire amount which was demanded by Revenue prior to issuance of SCN and the interest liability was discharged before the adjudication took place - Utilisation of CENVAT credit in excess of 20% could be a procedural infraction but definitely not an evasion of tax which is the requirement for imposition of equivalent amount of penalty - Accordingly invoking the provisions of Section 80, penalties set aside - Revenue's appeal is rejected and assessee's appeal is allowed: CESTAT - Assessee's appeal allowed: HYDERABAD CESTAT
CENTRAL EXCISE
2018-TIOL-1910-CESTAT-AHM
Alpha Nippon Innovative Ltd Vs CCE
CX - Assessee had availed credit of duty paid by manufacturer M/s Faraday Shop on inputs, namely, 'hydraulic cylinders' and 'hydraulic power pack' without receiving said inputs in their factory premises, but raised invoices with marginal value addition in favour of M/s Electrotherm (India) Ltd., who ultimately availed the credit on amount of duty paid by assessee, on receiving the inputs directly from the factory of input manufacturer M/s Faraday Shop, but on the invoices issued by assessee - Both sides have fairly accepted that appropriate duty has been paid on 'hydraulic cylinders' and 'hydraulic power pack, by M/s Faraday Shop and the said inputs were received and utilized by M/s Electrotherm (India) Ltd., accordingly, credit is admissible to them - However, the credit availed by assessee was Rs. 26,56,195/- whereas the cenvat credit availed by M/s Electrotherm (India) Ltd. was Rs. 34,26,154/- -Attributing to said difference in back drop of admissibility of credit to M/s Electrotherm (India) Ltd, assessee submitted that it is not due to the amount of duty paid on enhanced value of inputs by M/s Alpha Nippon Innovative Ltd. but due to error in computation of demand against M/s Electrotherm (India) Ltd. - In the result, demand against assessee cannot be sustained, as they had availed the credit on inputs and passed on the same to their customer M/s Electrotherm (India) Ltd., albeit with little value addition, on which assessee fairly admits that credit is inadmissible as no manufacturing activity is carried out on inputs by assessee - Only after ascertaining the eligibility of amount of credit by M/s Electrotherm (India) Ltd., on the amount of duty paid by M/s Faraday Shop, the other issues viz. imposition of penalty on assessee and other assessees for violation of Rules for irregular availing and passing of credit it to M/s Electrotherm (India) Ltd. and interest, if any, be considered - Consequently, matter remanded to adjudicating authority to decide the issues: CESTAT - Matter remanded: AHMEDABAD CESTAT
2018-TIOL-1909-CESTAT-MAD
Hanil Lear India Pvt Ltd Vs CCE
CX - Assessee is manufacturer of Automotive Interiors and paid an amount of Rs.36,02,550/- as being towards service tax liability on reverse charge basis - It however appeared that assessee had received the services only prior to 10.9.2004 - As per Section 3(1) of Service Tax Credit Rules, 2002, an output service provider shall be allowed to take credit of service tax paid on such input services which fall in same category of taxable services as that of output service, for which invoice/bill is issued on or after 16th day of August 2002 - Department took the view that the credit taken by assessee of Rs.36,02,550/- was erroneous - Hence SCN was issued to assessee inter alia, proposing recovery of said credit amount availed by assessee along with interest thereon and imposition of penalty - Assessee has been at pains to emphasize that availment of credits totally amounting to Rs.36,02,550/- has been kept informed to department in their E.R.1 returns and also accompanying T.R. 6 challan copies - The period involved in notice is March 2005 & March 2006 - However, SCN has been issued only on 5.3.2008 - Tribunal is not able to find any ingredients which can justify the invocation of extended period of limitation for which reason proceedings are ab initio hit by limitation - The impugned order cannot sustain, same is set aside: CESTAT - Appeal allowed: CHENNAI CESTAT
2018-TIOL-1908-CESTAT-DEL
CCE Vs Kamdhenu Ispat Ltd
CX - During search at the premises of assessee, three laptops, three CPUs and three pen drives along with the other documents were seized - A case of clandestine removal and under valuation was made out against assessee - Entire case has been made on the basis of data retrieved from laptops, CPUs, Pen drives seized from the secret office in Gurgaon - The data was retrieved by GEQD, Hyderabad - The data was submitted along with detailed report dated 25/02/2009 by the GEQD - Adjudicating Authority has doubted the veracity of retrieved data - He has come to the conclusion that these Laptops & other devices were possibly manipulated in office of investigating agency i.e. DGCEI, the investigating agency - From the record, it is found that the concerned official of GEQD has not been examined by Adjudicating Authority - Since the entire case is based on data retrieved by GEQD, issue needs to be re adjudicated after examining the concerned official of GEQD in a personal hearing in presence of assessee or his representative for purpose of arriving at the proper conclusion on veracity of data retrieved - Due opportunity of cross examination is also required to be extended after examination of such officials by Adjudicating Authority: CESTAT - Matter remanded: DELHI CESTAT
CUSTOMS
CIRCULAR
cuscir20-2018
New health warnings to come into force from 1st September in respect of Cigarettes and Tobacco Products - Customs authorities to ensure compliance in respect of import consignments/disposal of seized, confiscated tobacco products
NOTIFICATIONS
ctariff18_049
Artemia (ch.5) and specified goods of chapters 7, 8, 28, 38, 72 & 73 imported from the United States of America to face higher Customs duty from 4th August 2018
ctariff18_048
Exercising emergency powers u/s 8A of CTA, 1975, Central government increases import duties on goods falling under Chapters 7, 8, 28, 38, 72 & 73
2018-TIOL-1907-CESTAT-BANG
MRF Ltd Vs CC
Cus - Assessee imported Rubber Anti Oxidant and Bills of Entry were assessed at 10% ad valorem - The assessee later understood that in terms of Notfn 52/2011-Cus. the duty payable was 5% only - Thereafter they filed refund claim of excess duty paid - Same was rejected on the ground that assessee cannot claim the refund directly without challenging assessment order in view of Apex Court decision in case of Priya Blue Industries ltd. 2004-TIOL-78-SC-CUS - There is no lis between Department and assessee in claiming the benefit of Notfn 52/2011 - Both the authorities below rejected the refund claim relying upon Priya Blue and Flock (India) Ltd. 2002-TIOL-208-SC-CX and have failed to distinguish the issue involved in Priya Blue and Flock (India) case - In present case, in an identical issue, the Division Bench of Tribunal in case of Bennet Colman and Co. 2008-TIOL-1341-CESTAT-BANG has considered both the decisions of apex court in case of Priya Blue and Flock (India) Ltd. and had distinguished the same and has relied upon the decision of the apex court in case of Shree Hari Chemicals 2005-TIOL-160-SC-CX - By following the ratios of decisions rendered by Tribunal in case of Bennet Coleman & Co. and Delhi High Court decision in case of Aman Medical Products pvt. Ltd. 2009-TIOL-566-HC-DEL-CUS and Madras High Court decision in case of Micromax Informatics Ltd. 2017-TIOL-1302-HC-MAD-CUS and Division Bench of Tribunal in case of Hyamatic Agro Equipments Pvt. Ltd. 2017-TIOL-3108-CESTAT-DEL, impugned order is not sustainable and same is set aside by remanding the case back to the original authority to consider the refund claim after considering the law declared by the Tribunal and High Court: CESTAT - Matter remanded: BANGALORE CESTAT
2018-TIOL-1906-CESTAT-AHM
Essar Project India Ltd Vs CC
Cus - Issue arises for consideration is; whether the assessee is required to discharge interest for period from 13.02.2007 to 23.10.2007 on the duty free imported goods to SEZ on its clearance to DTA on payment of duty as assessed under section 30 of SEZ Act, 2005 - Analyzing the provisions, particularly Sec. 30 of SEZ Act, it is clear that on clearance/removal of goods from SEZ to DTA, applicable duties of Customs as levied under CTA, 1975 are required to be paid and the rate of duty and tariff valuation, if any applicable would be the rate as in force on the date of its removal or payment of duty as the case may be - Nowhere under the said provision there is any mention of payment of interest on clearance of goods from SEZ to DTA - The Supreme Court in Indian Carbon Ltd.’s case 2002-TIOL-2656-SC-CT relying the ratio laid down by Constitution Bench in case of J.K.Synthetics Ltd. - Thus, under SEZ Act and Rules made thereunder, there is no substantive provision for charging interest - Interest on customs duty determined and paid in accordance with Section 30 of SEZ Act, 2005 has been demanded and confirmed under Section 47 of Customs Act, 1962 - It is clear that in the event, bill of entry is returned to importer after assessment by proper officer, duty shall be required to be paid and in the event he fails to pay the duty within the specified period then interest would be leviable on amount of duty for delayed period - It is not in dispute that bill of entry was filed on 23.10.2007 and after assessment, within five days, i.e. on 24.10.2007, the duty was paid - Thus, there was no delay in discharging the duty after assessment under Section 47 of Customs Act, 1962 - The Revenue’s attempt to levy interest from the date of initial import by SEZ developer i.e. as on 13.02.2007 is not supported by Provisions contained either under SEZ Act or Rules made thereunder nor under the Customs Act, 1962 - Therefore, interest cannot be levied for period 13.02.2007 to 23.10.2007 - Consequently, impugned order is set aside: CESTAT - Appeal allowed: AHMEDABAD CESTAT
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