ST - Assessee was receiving services of Bandwidth Charges and was required to pay service tax under reverse charge mechanism - They were also providing "Web Hosting Service" for which they were required to pay service tax - They were issued with SCN wherein there were proposals to appropriate service tax amounting to Rs.6,25,269/- and interest of Rs.2,04,843/- deposited by assessee on Bandwidth Service Charges - Further, there were proposal to appropriate Rs.9,38,083/- - Service tax and interest on the same amounting to Rs.4,63,867/- deposited by assessee on "Web Hosting Services" and there was proposal to appropriate said amount against the demand of service tax of Rs.17,35,326/- - Further, there was a proposal of imposition of penalty on assessee under Section 78 of FA, 1994 - Demand on "Web Hosting Service" remains to Rs.9,38,083/- which was paid by them before issuance of SCN along with appropriate interest - Further, reverse charge service tax on Bandwidth Charges was also paid by them along with interest before issuance of SCN - Revenue did not have authority to issue SCN in terms of provisions of Sub-section (3) of Section 73 of FA, 1994 - Therefore, question of proposal of imposition of penalty under Section 78 does not arise: CESTAT - Appeal allowed : ALLAHABAD CESTAT

ST - Assessee was engaged in construction of flats, commercial spaces and sale thereof - The assessee completed two residential projects namely "Orange County" & "Olive County" - With effect from 01.07.2010 the services of construction of flats and commercials became taxable - The assessee procured completion certificate from Certified Architect, Shri Vishal Sharma in respect of 'Orange County' project in June, 2010 and in respect of 'Olive County' project in October, 2011 - It was alleged that the assessee did not pay service tax on sale of residential flat(s) constructed and sold by them w.e.f. November, 2011 in respect of 'Olive County' and with effect from July, 2010 in respect of 'Orange County' project in the backdrop of completion certificate obtained from an Architect - The provisions of law are that if the transaction has taken place in respect of sale of flat or any other property after issue of completion certificate then it is to be treated as sale of immovable property and there is no element of service tax involved in the same - Admittedly entire consideration which was subject matter of proceedings was received after issue of completion certificate - Thus, impugned order set aside and it is directed that the amount deposited/made by assessee during the course of investigation be refunded to them: CESTAT - Appeals allowed : ALLAHABAD CESTAT

ST - Assessee is registered as C & F Agent - On verification of their ST-3 returns, Revenue found that they were not paying service tax on gross amount of remuneration or commission received from their principals or clients - Demand of service tax along with interest was confirmed and penalty under Section 78 was also imposed - Issue of whether reimbursement of expenses by service provider on behalf of the service recipient will be included in taxable value is no longer res Integra in view of judgment of Larger Bench in case of Sri Bhagavathy Traders 2011-TIOL-1155-CESTAT-BANG-LB where Tribunal has held that the claim for reimbursement towards rent for premises, telephone charges and stationery charges amounts to a claim by service provider that they can render such services in vacuum - What are costs for inputs services and inputs used in rendering services cannot be treated as reimbursable costs - There is no justification or legal authority to artificially split the cost towards providing services partly as cost of services and the rest as reimbursable expenses - However, Commissioner (A) has given a finding that assessee has not produced any proof regarding reimbursable expenses received is actual - In their written submissions, assessee have confirmed that in the present case, it is not in dispute that various charges which were alleged by Revenue to be includible in taxable value of C & F service were reimbursed by principals on the basis of actuals - Since the actual expenses made require verification as correctly pointed out revenue, the matter is remanded back to the adjudicating authority to examine the matter afresh in the light of documentation submitted by assessee to show reimbursement on actuals and keeping in view the findings of Larger Bench: CESTAT - Matter remanded : BANGALORE CESTAT

CENTRAL EXCISE

CX - The assessee is engaged in the manufacture of various goods including "Warp Knit Fabric" - It classified the product under CETH 6005 and claimed the benefit of exemption under Notification No. 30/2004 - As the assessee manufactured various other excisable goods by availing Cenvat credit, it reversed an amount equal to 6% of the value of the exempted Warp Knit Fabric during the period in dispute - The Revenue took a view that the subject goods would be classifiable under CETH 39269099 as an article of plastic - Duty demand was raised under CETH 3926 & the benefit of the exemption was denied - Both the authorities below upheld the duty demand along with penalties - Hence, the present appeal by one of the assessee's.

Held - The CETH 6005 specifically covers Warp Knit Fabric - A reading of the Section Note 1(g) and (h) of Section XI as well as the complementary note in Chapter 39, it is clear that the width of the tapes will determine the classification of the goods made out of such tapes - Whilst the width of the tape is less than 5mm, the fabrics made out of such tapes will merit classification under Chapter 60 as a textile material, however, if the strips are of the width more than 5mm, such goods will be considered as an article of plastic falling under Chapter 39 - In the present case, the width is less than 5mm, therefore, the classification of Warp Knit Fabrics made will be under CETH 6005 and not under CETH 3926 - By following the ratio of M/s Flora Agrotech vs. Commissioner & Commissioner vs. Sunpac, the subject goods are to be classified under CETH 6005 & eligible to exemption as per the Notification No. 30/2004 - With respect to condition of reversal of Cenvat credit, assessee has carried out reversal in terms of Rule 6(3)(1) of CCR - Therefore, the assessee is entitled to benefit of the Notification - Hence, the order challenged is set aside: CESTAT (Para 2, 11, 12, 13, 14, 15) - Appeal allowed : DELHI CESTAT

CX - This is second round of litigation and as per earlier order, adjudicating authority was directed to compare the audited records of assessee with loose papers recovered during course of investigation but no comparison thereof was conducted by adjudicating authority in impugned order - Assessee contends that they had done trading activity and to that effect they have produced purchase invoices and sale invoices, the same has not examined by adjudicating authority properly and in haste concluded that assessee has undervalued the goods - Moreover, no statements of buyers could obtain to allege under valuation of goods - Charge of under valuation is not sustainable against assessee - There is a demand of Rs.2,61,95,174/- alleging that assessee engaged in activity of clandestine removal of goods dispatched - In the remand proceedings, adjudicating authority was directed to cross examine the witnesses whose statements have been relied upon - Despite the directions, adjudicating authority chose not to give cross examination of witnesses on the ground that they have never retracted their statements recorded during the course of investigation - In view of judicial pronouncements, charging of clandestine removal is not sustainable in the absence of any corroborative evidence except the statements - Moreover, the statements of witnesses are to be tested in terms of Section 90 of CEA, 1944 which specifies that first examinationin in chief is required to be conducted on all the witnesses and thereafter the adjudicating authority has to confirm with the statements recorded is correct and over cross examination of the same to the assessee, as held by Tribunal in case of Kuber Tobacco India Ltd. 2016-TIOL-769-CESTAT-DEL , which has been affirmed by Punjab & Haryana High Court in case of Jindal Drugs pvt. Ltd. 2016-TIOL-1230-HC-P&H-CX and Ambika International 2016-TIOL-1238-HC-P&H-CX - Therefore, in the absence of any cross examination or corroborative evidence, charge of clandestine removal of goods is not sustainable against assessee: CESTAT - Appeals allowed : CHANDIGARH CESTAT

2018-TIOL-2338-CESTAT-MAD

Saint Gobain Glass India Ltd Vs CCE

CX - The assessee are engaged in manufacture of float glass, mirror - On audit, it was observed from the records that they had purchased raw materials like soda ash, furnace oil, dunnage foam, thermocole and manufactured float glass, mirror and cleared them paying excise duty - In addition, the assessee purchased consumables like dunnage foam, thermo cole, BOPP tape etc. which are used by crate manufacturers for the manufacture of crates - It availed Cenvat credit, however, it was noticed that assessee cleared the consumables on returnable gate passes independent crate manufacturers - Futhermore, it had not reversed the credit taken - Duty demand was raised & confirmed along-with interest penalties - Hence, the present appeal.

Held - A similar issue has been deliberated by the Tribunal in the case of Southern Lubrication Pvt Ltd wherein the ratio laid down in International Auto Ltd vs. Commissioner was upheld - Even if the assessee reversed the credit, they would be able to take credit of the duty paid when the finished crates are returned by the job worker as these are cleared on payment of duty - In addition, the situation is a revenue neutral one - Other than this procedural error, the Revenue has not been able to establish any violation on the part of the assessee involving revenue implication - Hence, the order challenged as well the demand is set aside : CESTAT (Para 1, 5, 6, 7) - Appeal allowed : CHENNAI CESTAT

CUSTOMS

2018-TIOL-1487-HC-DEL-CUS + Case Story

Cus - Nodal ministeries recommendation to the Finance Ministry cannot be elevated to a right entitling the Court to issue a mandamus or any direction of that nature requiring the Central Government to pass an order under Section 25(2) of the Act: High Court [para 9, 10]

Cus - Import of Garlic - Section 25(2) of the Customs Act, 1962 - Vide Notification No. 11/2003  dated 15.01.2003, the pre-existing rate of customs duty which was 30% was increased to 100% - Petitioner had imported and cleared 3000 mt of Garlic out of 5000 mt which it had contracted for and for which special licences were issued - Balance 2000 mt had arrived at port on 15.01.2003 but the Bill of Entry could not be filed due to certain documentary formalities - Customs authorities insisting that the petitioner pays 100% duty - Customs authorities turned down petitioner's request and omitted to grant relief to the petitioner with respect to its request for an order under Section 25(2) of the Customs Act, 1962 - Petitioner submitted that the Nodal Ministries concerned, i.e. the Department of Agriculture, Department of Consumer Affairs as well as the Ministry of Commerce, had unanimously recommended to the Ministry of Finance that the old rates of customs duty of 30% ought to apply to the concerned consignment of imported garlic; that these Ministries highlighted that it would be unfair and unjust to subject the petitioner to a higher rate of duty, given that it imported the products for distribution to the general public.

Held: Nodal ministeries recommendation to the Finance Ministry cannot be elevated to a right entitling the Court to issue a mandamus or any direction of that nature requiring the Central Government to pass an order under Section 25(2) of the Act - Explanation given by the Central Government is that the purpose for which the restricted or special licences were issued, was defeated for two reasons - firstly, that the price in the retail market continued to remain high despite the authorisation to import; the authorization to import was based upon the assessment of shortage of the item in the market at that stage; secondly, the import licences were sold and traded at unjustified premium and these had the consequences of driving up the garlic prices - DGFT had, therefore, removed the item from restricted category and placed it in OGL category and the Finance Ministry also responded by increasing the rate of duty to 100% - Court is of the opinion that it would not be appropriate to direct the Central Government, at this stage, and after this lapse of time to consider the petitioner's case on the ground of special or exceptional circumstances - Petitioners case does not constitute and fall in the "exceptional circumstances" category - the law prevailing i.e. the rate of duty as on the date of import applies to imports made on 15.01.2003 - Interim order vacated and petition dismissed: High Court [para 9, 10, 12, 13, 14] - Petition dismissed : DELHI HIGH COURT

2018-TIOL-2337-CESTAT-MAD

Itema Weaving India Pvt Ltd Vs CC

Cus - the assessee company is a subsidiary of a Swiss-based firm - It imported shuttle-less looms & spares from its group companies - The assessee had an agreement with the group countries covering such imports - The group companies are related to the assessee in terms of Rule 2(2)(vi) of the Customs Valauation Rules 2007 - While the invoice values were initially accepted by the Asst. Commr. of SVB, the Commr.(A) later denied the discount of 25% extended to the assessee by its group companies, in respect of spares imported for re-selling and also for warranty replacements.

Held - Considering the agreement between the assessee and the foreign supplier, it is seen that the assessee is an 'exclusive commercial agent' of the group companies - Hence the 25% discount given to them is reasonanable & cannot be termed as abnormal - Hence the O-i-A in question warrants being set aside: CESTAT (Para 1,6,7) - Appeal allowed : CHENNAI CESTAT

2018-TIOL-2336-CESTAT-KOL

Jhunjhunwala Vanaspati Ltd Vs CC

Cus - the assessee imported Crude Palm Oil on which it claimed concessional rate of duty - Eligibility for concession is conditional upon acid value of the oil exceeding 2% & beta carotene content ranging from 500 mg per kg to 2500 mg per kg - As the beta carotene test reports were not yet received, the goods were provisionally cleared - On receipt of report, the duty libility was determined - However, the Commr.(A) later rejected the claim for concessional rate on grounds that the oil was not crude palm oil.

Held - In the transformation process from crude to refined palm oil 'beta carotene' is eliminated - Nonetheless, it is is a marker of the imported goods being crude oil - It is also apparent from the scheme of taxation that value addition by refining in India is incentivized by concessional rate restricted only to crude palm oil - Hence the findings of the Commr.(A) to the effect that the goods are not crude palm oil, are not sustainable - Considering that the assessee had laid claim to eligibility for the concessional rate of duty, it was not its responsibility to draw samples & to send it promptly for testing to ascertain the correctness of the declaration of intimation - This is the responsibility of the AO & having failed to do so, it cannot transfer the liability of ascertainment to the assessee and based on results of an invalid test, fasten the duty liability on the importer - Hence the O-i-A is set aside: CESTAT (Para 1,4,5) - Appeal allowed : KOLKATA CESTAT