2018-TIOL-NEWS-207 Part 2, Dated: Monday, September 03, 2018

ST - The assessee were engaged in providing air cargo agents services to various airlines approved by IATA - Essentially, they were not providing any service for transportation or holding of cargo from the place of customer to the place of lifting of cargo by the Airlines i.e. Air Cargo Complex - The customers were managing the same themselves - It collected the bill amount from the customers and forwarded the bill amount to the concerned Airlines after deducting their commission portion as per the rate decided - The Revenue took a view that the activity undertaken by the assessee is taxable under BAS - Duty demand was raised - The Adjudicating Authority confirmed the demand - On appeal, the Commr. (A) confirmed the demand but set aside penalty u/s 76,77,78 of the Act - Hence, the present appeal.

HELD - With regard to claiming benefit under Notification No. 13/2003, only commission agent involved in purchase and sale of goods are exempted under this notification - That is not the case at hand - Therefore, notification is not applicable - The assessee were providing services to the airlines as against their contention that services were provided to shipper or exporter - Blank Airway bills which were supplied by the airways, were issued on behalf of the respective Airlines to the customer - They were receiving payment on behalf of airlines and acting as agent of the Airlines - After deducting their commission and the airway bill charges, PCS charges and due agent charges, balance amount was being transferred to the Airlines - Further, the demand which relates to beyond the normal period is set aside - Hence, the order challenged is upheld : CESTAT (para 2, 4, 5)

ST - The Revenue and assessee are in cross appeals - The assessee was engaged in execution, management, maintenance and repair of traffic signals poles or lights and installation or commissioning of surveillance cameras and such at road- intersections - These activities were carried out in the form of turnkey contracts for Rajasthan Government in connection with provision of traffic signals in different parts of the States - Duty demand was raised against three assessees - On appeal, the Commr. (Appeals) demanded service tax for the period in dispute under the category of erection, commissioning or installation service - In addition, u/s 65 (105) (zzzza), the demand of service tax was ordered under WCS - Further, it allowed the benefit of payments of service tax under WCS Composition Scheme, 2007.

HELD - Following the principle laid down by the Apex Court in the case of Larsen & Toubro, wherein it is held that such composite works contracts were liable to payment of service tax only under WCS only w.e.f. 01.06.2007 - Therefore, the demand prior to 01.06.2007 is deleted -The Revenue has challenged the benefit under Rule 3(3) of Composition Rules which is set aside - The assessee is liable for benefit on grounds that the requirement of exercising of an option is procedural in nature and has been complied with delay - This follows from the SC decision of CCE, New Delhi vs. Hari Chand Shri Gopal - Hence, the order under challenge is set aside and penalty is waived u/s 80 for those assessees who have paid duty in part or in full : CESTAT (para 2, 8, 9,10, 11)

CENTRAL EXCISE

2018-TIOL-351-SC-CX-LB

CCE Vs Samsung India Electronics Pvt Ltd

CX - The assessee company is the Indian arm of a company located abroad & is an electronics major - During the period of dispute, the Department claimed that the assessee provided customer care services to customers on behalf of its Korean parent company - The assessee is also engaged in identifying prospective customers & communicating to them the features of the foreign company - The assessee received a commission in forex from the foreign client, in exchange for such services - The assessee claimed to have exported such services as they had been provided on behalf of the foreign client and with the intention of expanding the market avenues of the foreign client - The assessee also claimed that the services of business support & maintenance & repair performed in India on behalf of client located abroad would classify as export of service - Hence in such circumstances, the Tribunal held that the assessee was not liable to pay service tax.

Held - Delay condoned & exemption from filing certified copy of Tribunal's judgment, is allowed - Matter be tagged with Civil Appeal No.5307/2015: SC

- Revenue's appeal admitted: SUPREME COURT OF INDIA

2018-TIOL-2704-CESTAT-KOL

CCE Vs Indo Thai Flexible Tubes

CX - The assessee is engaged in the manufacture of Stainless Steel House Assemble, S.S.Bellow classifiable under Chapter 83 of the Central Excise Tariff Act, 1985 – Whereas the Revenue took a view that items on which assessee has taken Cenvat credit were classifiable under Chapter 72&73 – In addition to this, SCN was issued on the ground that inputs were not used for manufacturing of finished goods.

HELD – The assessee availed Cenvat credit on M.S. Round, G.I Steel Tubes & Pipes, M.S.Pipes, Black Pipes during the period in dispute - In view of the decision of HC of Gujarat, Mumbai & Karnataka in case of CCE&CUS vs Creative Enterprises, CCE vs. Ajinkya Enterprises & CCE vs. Vishal Precision Steel Tubes & Strips Pvt Ltd respectively – No question of reversal of credit arises – Hence, the order challenged is set aside : CESTAT (para 1,5,6)

- Appeal dismissed: KOLKATA CESTAT

2018-TIOL-2703-CESTAT-HYD

CC, CE & ST Vs Devidutt Textiles Ltd

CX - Based on intelligence that assessee, who is manufacturer of man made fabrics evading duty, searche was conducted by Central Excise Officers at their factory premises as well as the premises of two of their Distributors M/s Rahul Textiles and M/s Ashish Textiles and a few residential premises of concerned persons - This resulted in, allegedly, discovery of non-duty paid goods with distributors as well as excess and shortages of fabrics in factory of assessees - During investigation, they also uncovered a truck carrying goods from the factory of assessee was still on the road and had to reach the distributors - They intercepted the truck and found goods in excess of what was declared in Central Excise invoices - The truck along with the goods was also seized - Duty along with interest and penalty was proposed to be charged on the fabric so produced and unaccounted for on the basis of the statement and accounts of the folding contractor - As far as duty alongwith interest and penalty on account of allegedly unaccounted fabrics manufactured and cleared based on the statements of contractor and documents recovered from their premises is concerned, the fact that during cross examination, the labour contractor himself said that he gets paid twice for the fabric, once at the grey stage and once at finished stage further dilutes the evidence to substantiate the allegation of clandestine removal of fabric - Therefore, duty demanded on this account and the interest and penalty thereon are not sustainable.

As far as duty on goods allegedly cleared to M/s Ashish Textiles and Rahul Textiles, without payment of duty is concerned, these are proposed to be charged on the ground that the distributors had stocks of goods without payment of excise duty - Once the charge that the fabric was cleared without payment of duty to the distributors and held by them is dropped, the demand of duty on the factory for the same fabrics does not sustain.

Confiscation of excess goods found in factory valued at Rs. 411065/-, it was proposed in SCN to confiscate the excess stock found in factory valued at Rs. 411065/- - Commissioner had in his O-I-O dropped the demand on this ground on account of his finding that measurements were taken approximately based on a passing remark in O-I-O, ignoring the mahazar which recorded the stocks of the fabric and which found the evidence - The mahazar being a document drawn up at the time should be accepted along with the contention of assessee that the excess and shortages of the fabrics need to be set off against each other in view of the fact that grey products supposed to have been issued for production were still lying in stock - As a result, excess quantities of fabric as recorded are liable for confiscation: CESTAT

- Appeal partly allowed: HYDERABAD CESTAT

Cus - The appellants represent three courier companies - the Department intercepted 20 packages at the railway station which had been booked by three courier service providers - Examination of the packages revealed foreign goods such as silver articles & bullion, branded cellphones, batteries, piston rings & chemicals - Such goods were seized u/s 110 of the Act - Upon writ petitions being filed by the courier companies, orders directing provisional release of the goods were obtained - However the goods were not released on grounds that they could be handed over only to their actual owners - Thereafter SCN was issued followed by an O-i-O confiscating all the goods & imposing penalties on the appellants.

Held - The other goods like piston rings and chemicals were packaged such as to conceal the cellphones & the silver - Besides, the foreign marks on the goods classify them as being of foreign origin and which were smuggled into India - Besides, the consignments had no valid covering documents to provide details of the consignor - Hence such O-i-O merits no interference: CESTAT (Para 2,3,7,8)

Cus - Assessee had imported steel scrap and used it to manufacture products which they then sold - Of the total amount, CVD and SAD portion of differential duty has already been taken as CENVAT credit - They have claimed refund of BCD portion - They have not produced any evidence to substantiate that this portion was not included in cost of their final products and thereby the burden has not been passed on to consumers - Thus, they have failed in discharging their burden of proving that the unjust enrichment does not apply to their case - In the four opportunities given to them for personal hearing, none appeared nor have they produced any documents to show that the doctrine of unjust enrichment does not apply to their case - However, as may be seen from Sec.27(2) of Customs Act, where the refund is liable to be sanctioned but the person claiming the refund has not been able to prove that he has not passed on the burden of duty to their customers, such amount should be sanctioned and credited to the consumer welfare fund - If person claiming the refund can show that the burden of duty has not been passed on to customers, it should be given to such person - Therefore the O-I-A is modified to that extent that the refund of the amount is sanctioned and ordered to be credited to the consumer welfare fund: CESTAT