SERVICE TAX
2018-TIOL-2518-CESTAT-MUM + Case Story
L and G Enterprises Vs CCE
ST - Sections 73, 75, 77, 78 of FA, 1994 - Supply of Tangible Goods Service - Just because service recipient had instructed them not to raise the invoices, it cannot be justifiable reason for not raising the invoices in respect of the supply of services and non-payment of tax when it is not disputed that payments were received from clients - in case of other clients, service tax collected but not deposited with Central government - during relevant period appellant failed to file ST-3 returns in the manner as prescribed and also suppressed the fact of provision of taxable service and value of taxable service so provided with an intention to evade payment of service tax, therefore, extended period of limitation is rightly invoked & penalty rightly imposed along with interest: CESTAT [para 9]
ST - Section 67 of FA, 1994 - Cum-tax - Benefit of Cum tax value cannot be allowed to the Appellant in view of Apex Court decision in case Amrit Agro Industries Ltd - 2007-TIOL-244-SC-CX wherein it is held that unless it is shown that the price includes the tax payable, no question of exclusion of tax element: CESTAT [para 8]
ST - Section 67 of FA, 1994 - Valuation - Additional consideration - Demand of service tax on concessional supply of HSD to appellant is not sustainable in view of LB decision in Bhayana Builders (P) Ltd. - 2013-TIOL-1331-CESTAT-DEL-LB as upheld - 2018-TIOL-66-SC-ST - penalty imposed to this extent is also not sustainable: CESTAT [para 9]
- Appeal partly allowed: MUMBAI CESTAT
Salahuddin Khan Vs CCE & ST
ST - The assessee, a proprietorship concern is engaged in providing services under the category of renting of immovable property - During the period in dispute, the issue of service tax on renting of immovable property was under challenged in the HC of Delhi - In the case of M/s Home Solution Retail India Ltd. Vs Union of India the chargeability of Service Tax on "Renting of Immovable Property" Service was struck down - Thereafter, the law was amended by substitution of Clause (zzzz) to Section 65 (105) of the Finance Act - The amended provision which was substituted by the Finance Act, 2010 dated 08th May, 2010, with retrospective effect from 01st June, 2007, the Service Tax chargeability was restored or implemented - Further, Section 80 Sub-section 2 of the Finance Act, 1994 provided that if an assessee deposited the service tax under the head of renting of immovable property services along with interest as prescribed within a period of 6 months from the date of coming in force of the amended provision, no further penal action shall be taken - However, the Revenue took a view that assessee took registration in 2008 & failed to file returns from the date of registration - Duty demand was raised - The lower authority confirmed the demand but observed that there was no malafide intention of the assessee to evade the payment of service tax - The matter was sub judice therefore, non filing of returns was understandable and deleted the penalty - On appeal by the Revenue, the Commr. (A) imposed harsh penalties - Hence, the present appeal.
Held - there is no contumacious conduct on the part of the assessee - Furthermore, assessee deposited the amount which was more than the tax demand - It is recorded in the order-in-original that assessee deposited the interest payable as well and nothing remained due with respect to the disputed period - Therefore, there is reasonable cause for not depositing of service tax and as such the assessee is entitled to the benefit under Section 80 of the Finance Act - Hence, the order challenged is set aside: CESTAT (Para 1, 2, 3, 6)
- Appeal allowed: ALLAHABAD CESTAT
Toyota Kirloskar Motor Pvt Ltd Vs CCE, C & ST
ST - Assessee, a manufacturer deals in passenger cars and receiving 'Intellectual Property Services' pertaining to 'commissioning and installation service' and 'maintenance and repair services' from their parent company situated outside India and also GTA services from M/s. Transystem Logistics International (P) Ltd. Bangalore - The department held that both the services are not output services and assessee was merely discharging applicable service tax on behalf of service providers in terms of provisions of Rule 2(1)(d)(iv) and Rule 2(d)(v)(a) of CER, 1994 - There are different views expressed by different Tribunals, however, the jurisdictional High Court of Karnataka in case of M/s. Aravind Fashions 2011-TIOL-748-HC-KAR-ST observed that in the instant case that he is the recipient of service tax, the service provided is outside the country - In law, he is treated as service provider - In other words, the liability to pay tax on services which he has received is fastened on him in law - It is to discharge this liability he is entitled to use CENVAT credit which was available with him and therefore, the Tribunal was justified in interfering with order passed by Commissioner - Similar view was held by High Court of Karnataka in case of Godavari Sugar Mills Ltd. - This case was upheld by Supreme Court - In view of said discussions appeal allowed with consequential relief: CESTAT
- Appeal allowed; BANGALORE CESTAT
Truetzschler India Pvt Ltd Vs CCE
ST - Assessee is aggrieved with impugned order upholding service tax liability on certain expenses incurred by assessee to depute employees and other incidental expenses to render taxable services of "Erection, Commissioning or Installation" - The impugned order held that in terms of section 67 all amount including such expenses will form part of the gross taxable value - The fact that these expenses are reimbursed on actual basis is admitted - The SCN specifically mentions that these are reimbursement of expenses incurred by assessee - Reimbursable expenses which are on actual basis cannot form part of a taxable value in terms of section 67 of FA, 1994 - The Madras High Court in case of M/S. Sangamitra Services Agency 2013-TIOL-606-HC-MAD-ST held that in the absence of any material to show the understanding between principal and the client, that the commission payable by principal was of inclusive, it is difficult to hold that the gross amount reimbursement/commission would nevertheless include expenditure incurred by assessee in providing the services; that all incidental charges for rendering the service would also form part of reimbursement or commission - The ratio has been a subject-matter of various decisions of Tribunal also - It is held that such expenses cannot form part of the gross value which is relatable to only services provided - In view of the legal position settled by various decisions, no merit found in impugned order confirming tax liability on such expenses: CESTAT
- Appeal allowed: CHENNAI CESTAT
CENTRAL EXCISE
Positive Packaging Industries Ltd Vs CCE
CX - Interest is chargeable on CENVAT Credit wrongly availed but not utilized up to the period of 31.03.2012 - no apparent mistake in the said order, which can be rectified through the miscellaneous application: CESTAT [para 3, 4]
- Application dismissed: MUMBAI CESTAT
Rajshree Plastiwood Vs CCE
CX - Assessee is engaged in manufacture of PVC sheet and door frame - It was noticed that assessee had availed Cenvat credit of duty paid on polythene films received from one M/s Shree Balajee Sales, a registered dealer, on the basis of invoices issued by said dealer - Revenue entertained a view that asessee had availed credit on the basis of invoices only issued by registered dealer without actually receiving the inputs - Entire case of revenue is based upon the sole fact that the goods/ inputs were described in dealer's invoice as 'polythene film' whereas the same was mentioned in assessee's material receipt advice as 'HDPE cloth' - The assessee have explained in their very first statement that such mistake was on the part of clerk responsible for making the entries and inasmuch as they were earlier purchasing HDPE cloth from the other manufacturer for packing of their final product, the store keeper maintained the same description in their records - They had also produced the invoices pertaining to the period prior to the period in question, i.e. for the year 2005-08 to substantiate their plea that earlier they were using the HDPE cloth for packing of their final product - The revenue has not advanced any evidence of purchase of HDPE cloth during the relevant period so as to establish that it was cloth which was being used for packing even subsequent to 2008 - Admittedly, assessee was also entitled to credit in respect of HDPE cloth and as such there could be no malafide motive on their part to receive the cloth in the guise of polythene film - Further, the revenue is silent about the alternate sources of procuring of packing materials - In such a scenario, denying of credit on the sole ground of difference in description of goods in invoices and the material received registered cannot be made the basis for denial of credit - Accordingly, impugned order set aside: CESTAT
- Appeals allowed: DELHI CESTAT
CCE, C & ST Vs SP Flavours Pvt Ltd
CX - Assessee is engaged in manufacture of Gutkha bearing brand name 'Shanti' 'Shanti Super' and 'Sukhi Super' - The DGCEI registered the case against assessee for evading payment of central excise duty by resorting to clandestine clearances of goods manufactured and cleared by them - In De novo order, Commissioner has considered all the material on record as per the direction of Tribunal and has rightly come to the conclusion and has rightly set aside the demand by observing that there is no material evidence on record to correlate the clandestine removal with use of electricity or labour and flow back of mandatory consideration - No other corroborative evidence is available to establish the charge of clandestine removal - Entire case is based on confessional statement of Director which itself is incorrect because the alleged demand of duty was set aside by Commissioner on the basis of evidence adduced by assessee that the said goods had already suffered payment of duty - Further, Department has failed to establish the charge of clandestine removal by any positive evidence on record and the Commissioner has rightly observed that the charge of clandestine removal has not been proved by the Revenue - No infirmity found in impugned order which is upheld: CESTAT
- Appeal dismissed: BANGALORE CESTAT
Unitech Machines Ltd Vs CCE
CX - Assessee is engaged in manufacture and export of M. V. Parts and are availing Cenvat credit of duty paid on inputs, capital goods and input services - A SCN was issued to assessee as it appeared to Revenue that the assessee is not entitled to take Cenvat credit on outward freight from factory gate to the port in case of export of goods, Cenvat credit of Insurance Policy of Staff, besides manufacturing they were also doing Job Work for M/s BHEL, Haridwar and availed Man Power Recruitment Service - Cenvat credit of GTA service on transportation for export of goods from the factory gate to the port of export is allowable as in the case of export, the port of export is the place of removal - So far the Cenvat credit of Service Tax on insurance policy of working staff and services utilized in canteen is concerned, the same are covered in favour of assessee by the ruling of Bombay High Court in case of Ultratech Cement Ltd. 2010-TIOL-745-HC-MUM-ST and also in case of Stanzen Toyotetsu India (P) Ltd 2011-TIOL-866-HC-KAR-ST - Accordingly, same is allowed - So far the credit of Service Tax on Man Power Recruitment Service availed for doing job work is concerned, the same is covered in favour of assessee by the ruling of Tribunal in case of Bentley & Remington Pvt. Ltd. - Further, in case of job work, the goods manufactured by assessee are normally taxable, but they were not subject to tax because of provisions of Notfn 214/86 as the principal manufacturer had undertaken to pay the duty, there is no case of clearance of exempted goods and accordingly provisions of Rule 6 of CCR, 2004 are not attracted - Accordingly, the disallowance of Cenvat credit is also set aside: CESTAT
-Appeal allowed: ALLAHABAD CESTAT
CUSTOMS
2018-TIOL-2519-CESTAT-MUM + Case Story
Ashoka Buildcon Ltd Vs CC
Cus - Bitumen occurs naturally in Kermanshah province of Iran, therefore, it is strange that a chemical laboratory arrogating to itself the expertise of denying Iran as a source of natural bitumen has been accorded credence in the adjudication order and with no support to subtantiate the contents thereof - Demand of differential Customs duty on 'bitumen' imported by appellant by alleging that the same is 'petroleum bitumen' and not 'natural bitumen' since none of the countries in Middle East mined or exported 'natural bitumen' is on a foundation that is shaky or do not exist - order cannot be sustained - impugned order set aside and appeals allowed: CESTAT [para 5, 6]
- Appeals allowed: MUMBAI CESTAT
2018-TIOL-2503-CESTAT-MAD
Rubfila International Ltd Vs CC
Cus - the assessee company manufactured 'Heat Resistant Latex Rubber Threads' (Threads) - While this product is not eligible for drawback, the product of 'Heat Resistant Rubber Tension Tapes' (Tapes) manufactured using the former product as inputs, is eligible for drawback - Later, the Threads were also made eligible for drawback - Thereupon, the assessee claimed drawback on Threads at the same rate as that applicable to Tapes - Later, the assessee was served SCN seeking recovery of drawback availed between a certain period on grounds that such drawback was availed by giving flase declarations that duty was paid on such items & that because the export item is manufactured using exempted inputs, the grant of drawback on export is unjustified - The Department also claimed that the assessee used only indigenously procured latex accounting for 97% of the export products by weight on which no duty was paid - Duty demands were raised with interest.
Held - the proceedings initiated by the ADG, DGCEI u/r 16 of the Drawback Rules, 1995 were subject to the outcome of the decision of the High Court of Delhi in Mangli Impex Vs. Union of India - But since such decision was stayed by the Apex Court, the matter warrants remand to the original authority till the Apex Court pronounces its verdict on the matter: CESTAT (Para 1,5)
- Case remanded: CHENNAI CESTAT
STP Ltd Vs CC
Cus - The assessee is aggrieved by rejection of refund claim filed in terms of Notfn 102/2007-Cus. - Both the authorities below have observed that assessee has not produced CA's certificate as required under the notfn - On perusal of the refund claim, it is found that assessee has enclosed relevant CA's certificate - Since the authorities below have not discussed or verified the said certificate and merely rejected finding that the certificate has not been produced, this issue requires to be remitted for verification of certificate - The second issue in appeals is that the sales invoices do not bear the endorsement as required under condition 2(b) of Notfn - The said issue stands covered by decision in case of Chowgule & Company Pvt. Ltd. 2014-TIOL-1191-CESTAT-MUM-LB as pointed out by assessee - Following the same, rejection of refund on this ground is unjustified - The very same issue in all other appeals is also held in favour of assessee - Another issue that arises in consideration is discrepancy in description of goods in Bills of Entry and sales invoice, assessee has omitted mentioning the brand name - So also the goods have been particularly mentioned with regard to their nature as to plain finish - This cannot be a ground for rejection of refund claim since the goods sold are very much clear from the invoice: CESTAT
- Appeals partly allowed: CHENNAI CESTAT
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By S Sivakumar 
