2018-TIOL-2284-CESTAT-BANG

Pragathi Automation Pvt Ltd Vs CST

ST- On audit, it was observed that assessee availed 75% abatement for the purpose of paying service tax on GTA services as per Notification No.32/2004-ST - In addition the Revenue took a view that the assessee paid service tax without availing abatement the period preceding and succeeding the period in dispute - Moreover, the assessee paid service tax on behalf of GTAs without having such declaration or endorsement on the consignment note to the effect that they have not availed CENVAT credit - An SCN was issued and adjudged wherein the order-in-original was upheld - Hence, the present appeal.

Held - Before the omission of Explanation to Rule 2(p) of the CCR by Notification No.21/2006-CE by Notification No.21/2006-CE, GTA services were deemed to be output service, therefore, there was no bar on the utilization of CENVAT credit for payment of service tax - Following the decision of the Tribunal in the case of CCE vs. Flowserve Microfinish Valves Pvt. Ltd. it is held that mere absence of endorsement on the invoices does not make the assessee ineligible for the availment of the substantial benefit i.e., abatement - Therefore, the issue needs to be verified with available documents - Hence, the matter is remanded to the limited extent of calculation and refund of excess duty paid and re-credit of CENVAT credit debited : CESTAT (Para 1, 3, 5) -Matter remanded : BANGALORE CESTAT

2018-TIOL-2283-CESTAT-MAD

Premier Garment Processing Vs CST

ST - The assessee was providing bed rolls to upper class railway passengers of Southern Railways as per contracts awarded to them by the latter - The Revenue opined that the activity would be in the nature of a customer care service provider on behalf of the Railways - These services would fall within the ambit of BAS during the period in dispute - An SCN was issued demanding duty with interest with a direction to the assessee to deposit amount of tax liability - The Commr. (A) dismissed the appeals for non-compliance of predeposit - The assessee approached the HC wherein the Tribunal was directed to take up the appeals and stay applications and dispose the same on merits - Subsequently, the stay applications in these appeals were heard and disposed off granting waiver of predeposit - The issue in the present appeal is whether performance of services like, supply of bed rolls to passengers travelling in A/c III Tiers and in other higher classes and charges collected by assessee from railways, will fall under the mischief of "Customer Care Service" provided to the Railways as taxable under "Business Auxiliary Service".

Held - No definition of "Customer Care" has been given in Section 65 (19) or for that matter anywhere else in the Finance Act, 1994. As per the Oxford Dictionary, 'Customer Care' is defined as "assistance and support provided by a company to those people who buy or use its products or services". Customer Care service is also often explained as "provision of service to customers, before, during and after a purchase", as the process of looking after customers to best ensure their satisfaction with the business and its goods and services - A reading of vision and mission statement of the Railways customer focused and to care for customers who are none other than their passengers - Railways are indubitably the "client" of the appellant since they perform the said customer care service on behalf of the railways - In the event, the activities carried out by the assessee will definitely come within the scope of "Customer Care Services" provided on behalf of the client" and hence will be exigible to service tax under "Business Auxiliary Service" as defined under Section 65 (19) of the Finance Act, 1994 - although department sought to bring this services under BSS, the Tribunal took the view that such services are more appropriately classifiable under 'Business Auxiliary Service' under the category of 'Customer Care Services provided on behalf of the client' - This follows from the decision of RC Goel Vs CCE , therefore, the order challenged is upheld : CESTAT (Para 1, 6, 7, 8) - Appeals dismissed : CHENNAI CESTAT

2018-TIOL-2282-CESTAT-MAD

CCE Vs Madras Cements Ltd

ST - Assessee is engaged in manufacture of cement and clinker and availing the facility of CENVAT credit of inputs / capital goods, input services - They constructed a new cement plant and the construction activity of project commenced in March 2007 - On verification of ST-3 returns for period October 2007 to September 2008, it was noticed that the assessee had availed input service tax credit in relation to construction of guest house, residential complex, school building, service of vehicle maintenance and repair and insurance service for vehicles which according to the department was not eligible for credit as per definition of input services contained in Rule 2(l) of CCR, 2004 - Commercial production would be inexpedient if there is disruption in manufacturing activity due to non-availability of workers - The residential colony having been provided by assessee to ensure the availability of workers on required time, such activity falls within the category of activities relating to business - After 1.4.2011, the legislature has deleted the services of settling up of factory and also activities relating to business - The services of motor vehicle repair and maintenance as well as vehicle insurance has been excluded - The period being prior to 1.4.2011, the services of construction of residential colony and repair and maintenance of vehicle as well as insurance services are eligible for credit - Assessee is eligible for credit in respect of construction service used for setting up of residential colony in factory premises - However, the very same view cannot be applied in case of guest house and school constructed by assessee inside the factory premises as the construction of school for providing education to the children of employees of the factory will fall wholly as a welfare activity and it has no nexus or relation to the activity of manufacture - Similarly, the use of a guest house is a mere facility to visitors of the factory and cannot be considered as activity relating to business of assessee - The disallowance of credit in respect of construction service of guest house and school is legal and proper: CESTAT - Both Assessee's and revenue's appeals dismissed : CHENNAI CESTAT

 

CENTRAL EXCISE

2018-TIOL-1447-HC-MAD-CX + Case Story

Amman Match Company Vs ACGST & CE

CX - Natural Justice - Provision of s.33A of CEA, 1944 shall not be read to give a meaning that it excludes personal hearing to those who did not ask for it - provision, if read as a whole and cogently, compels the adjudicating authority to adhere to the principles of natural justice by affording personal hearing - Impugned order passed within two days from the date of lapse of the time granted in the show cause notice is certainly in violation of principles of natural justice and, therefore, it is liable to be set aside -Impugned o-in-o is set aside and matter is remanded for consideration afresh - Writ Petition allowed: High Court [para 12, 14]

CX - Master Circular issued by the Central Board of Excise & Customs makes personal hearing mandatory and is binding on all the quasi judicial authorities - They cannot disobey or ignore the circular, as it has the binding force on them: High Court [para 11, 13]

CX - When an order is passed in violation of principles of natural justice, a Writ Petition under Article 226 of the Constitution of India can be entertained; the availability of alternative remedy is not a bar for entertaining the Writ Petition - Writ Petition is maintainable: High Court [para 23, 24] - Petition allowed: MADRAS HIGH COURT

2018-TIOL-2281-CESTAT-MAD

Supreme Petrochem Ltd Vs CCE

CX - The assessee imported goods declared as "Product Screen Separator Drive" (second hand machinery) - It declared value of goods to the authorities based on invoice C&F value - However, the Revenue found that the goods declared were under valued - A SCN was issued demanding differential duty along with confiscation of the goods and imposition of penalties under Section 112 (a) of the Customs Act, 1962 - However, the Settlement Commission held that the assessee deposited the entire differential duty liability - Therefore, no further liability would arise against them and they were granted immunity from confiscation, penalty and prosecution - It availed credit of CVD and SAD which was denied by the authorities below on grounds that the supplementary invoices under which the said duties were paid were raised on account of suppression, mis-statement, fraud - The credit was disallowed in terms of Rule 9 (1) (b) of CCR, 2004.

Held - In the present case, the imports were made by the assessee from their related person located in Korea - However, the value of goods was not reflected in the invoices - It was only packing and logistics cost, which was raised in the invoices placed before the Customs for the purpose of assessment and calculation of customs duty - Therefore, it can be concluded that the modus operandi was adopted by the assessee with the malafide intention to evade payment of customs duty in respect of the value of the second hand capital goods - Thereafter, the assessee approached the Settlement Commission with intent of suppression, mis-statement, fraud and collusion - Therefore, the assessee is not eligible to avail credit : CESTAT (Para 1, 5, 6, 7) - Appeal dismissed : CHENNAI CESTAT

2018-TIOL-2280-CESTAT-MUM

Parason Machinery (I) Pvt Ltd Vs CCE

CX - Tax paid on Sales Commission under BAS was allowed as CENVAT credit by Commissioner(A) by treating the same as Input Service and in Revenue appeal, the Tribunal relied upon its decision in Birla Corporation 2013-TIOL-2483-CESTAT-DEL where it is held that the service of commission agents (BAS) is covered by the term ‘advertisement or sales promotion' and accordingly an “Input service” as defined in rule 2(l) of CCR, 2004; however, the CESTAT in its - 2017-TIOL-4154-CESTAT-MUM dated 23.10.2017 concluded that the appeal is allowed - ROM filed by assessee contending that there is an apparent error in the order inasmuch as since the detailed findings in the order are in its favour, the department appeal should have been dismissed and not allowed.

Held: Clerical errors have occurred in the Tribunal's - 2017-TIOL-4154-CESTAT-MUM dated 23.10.2017 and, therefore, are corrected - in last line of para 3, the words ‘appeal is allowed' be read as ‘appeals are dismissed' - ROM allowed: CESTAT [para 3, 4] - Application allowed : MUMBAI CESTAT

2018-TIOL-2279-CESTAT-MUM

CCE Vs Mahindra Engineering and Chemicals Products Ltd

CX - Respondents were manufacturing ‘components' of Cable Jointing Kits which were being used by them captively for further manufacture of ‘Cable Jointing Kits' which were exempted from payment of excise duty - Duty on ‘components' was paid by respondent on cost construction basis in terms of rule 8 of the Valuation Rules, 2000 - based on finalized balance sheet, it was seen that the assessee had short-paid duty in some cases and also in excess - Revenue raised duty demand for the short paid duty - original authority confirmed the demand but the Commissioner(A) accepted the assessees stand that duty short paid is required to be adjusted against excess payments since the entire assessments are to be treated as provisional; that since facts were in the knowledge of the department and hence major demand is time barred; that the original authority had travelled beyond the SCN which only related to adjustments between short and excess payment - Revenue in appeal before CESTAT.

Held: Admittedly, the SCN was for denial of adjustment of shortage and excess and never questioned the valuation aspects and as such, Bench agrees with the Commissioner(A) that the original adjudicating authority had gone beyond the SCN, which is not permissible - as regards adjustment of short paid duty towards that paid in excess, matter is no longer res integra in view of the Majority order in Hindustan Zinc Ltd. - 2015-TIOL-2427-CESTAT-DEL - being a majority decision, it has to be considered as a Larger Bench decision and a binding precedent - no infirmity in the impugned order of Commissioner(A), hence Revenue appeal is rejected: CESTAT [para 5, 5.1, 5.4] - Appeal rejected : MUMBAI CESTAT

 

 

CUSTOMS

2018-TIOL-2278-CESTAT-MUM

CC Vs Atlas Mercantile Pvt Ltd

Cus - Respondent engaged in import of synthetic polyester fabrics classified the same under heading 5407.61 (woven fabrics containing 85% or more by weight of non-texturised polyester filament yarn) and goods were assessed and cleared accordingly - subsequently, intelligence was gathered that a number of importers misdeclared and imported polyester fabrics by mis-declaring the technical characteristics that the fabrics were made out of non-texturised yarn whereas the same were made out of texturized yarn and which attracted higher rates of import duties - demand issued and confirmed but matter remanded by Tribunal and in remand original authority again confirming the demand but Commissioner(A) held that in the absence of any conclusive test report, free from any doubt, the benefit of doubt has to be extended to the importer - Revenue in appeal before CESTAT.

Held: Admittedly, the initial report of the Textile Committee was in favour of the assessee and based upon the same, the imported consignments were cleared - It is only thereafter that the remnant samples were sent to the Chief Chemist who adopted a diametrically opposite view - Appellate authority has also gone into the details of the test conducted by the Dy. Chief Chemist and observed that it is nowhere shown in the said test reports that the examiner has taken into account the effect of various processes under which the fabric is subjected to; that even if there are two contrary reports, the one which is in favour of the assessee has to be adopted and the benefit of doubt has to be extended - An identical matter had come before the Tribunal in the matter of one of the importers Shri Lakshmi Cotsyn Ltd . - 2011-TIOL-207-CESTAT-DEL and it was held that where the first report of Textile Committee was in favour of the assessee and the subsequent retest by the Chief Chemist was against them, relief was granted to the importers - following the same, no merit in the Revenue's appeal - Appeal rejected: CESTAT [para 9, 11, 12] - Appeal rejected : MUMBAI CESTAT

2018-TIOL-2277-CESTAT-BANG

Such Silk International Ltd Vs CCE, C & ST

Cus - The assessee established a factory being a 100% EOU to manufacture and export of Silk Ties and Silk Fabric - In terms of the LOP granted on 06.10.1997, the assessee were permitted to set up the EOU for manufacture and export of the items produced by assessee - During the period in dispute the assessee imported capital goods which were duty free - Simultaneously, it imported duty free raw-material but it could not fulfill the complete obligations - Duty demand was raised on the capital goods & raw material - Hence, the present appeal.

Held - It is important to note that the Notification No. 52/2003 came into existence on 31.03.2003 where the condition for exemption from the duty of the capital goods was removed and after the date, the capital goods are also subjected to Customs duty - In the instant case, the capital goods were installed in the factory and were used primarily for the export of the goods - Therefore, the claim of the assessee pertaining to the capital goods where duty is not leviable is allowed - With respect to duty on raw materials, the assessee is liable to duly make payment - Hence, the order challenged is modified : CESTAT (Para 2, 5) - Appeal partly allowed : BANGALORE CESTAT

Cipla Ltd Vs Assistant Commissioner (CT)