2018-TIOL-NEWS-224, Dated: Monday, September 24, 2018

ST - The assessee company provided consulting engineer service - It claimed refund of unused credit u/r 5 of CCR 2004 - Such refund was denied on grounds that assessee did not file declaration before export & that the accumulated credit pertained to period prior to its registration - Also rejected on grounds that ST-3 returns were filed belatedly - Such denial of credit was sustained by the Commr.(A).

Held: The Adjudicating authority had dropped three grounds of rejection of refund and had denied refund on one ground only - The Appellate authority however sustained the rejection on all the grounds - Hence the rejection of refund on grounds which have been dropped cannot be sustained - Nonetheless, the refund cannot be denied on grounds that the unit had not been registered at the time of availment - This stands settled by the High Court in Commissioner of Service Tax, Chennai Vs. Ecare India Pvt. Ltd. - Hence the O-i-A is set aside: CESTAT (Para 1,6,6.1,7)

ST - Assessee have company owned show rooms and workshops at Chennai and Delhi and registered with the department under category of "Authorized Service Station Service" and BAS - Pursuant to investigations, it appeared that both the show rooms of assessee advised their customers to approach the HDFC Chubbs or UIIC for taking insurance policies for their vehicles - Department took the view that this activity is in nature of promoting and marketing of insurance products and services provided by HDFC Chubb and would therefore fall under category of BAS as in Section 65 (19) of FA, 1994 - Perusal of agreement reveals that it is not the case that assessee had provided their updated customer data base for a onetime fee - On the other hand, HDFC Chubb became entitled to access to the customer data base of assessee and Referral Fee was paid only as and when the former could generate and realize fresh car insurance policies - Based on that information, assessee may not have actively promoted the insurance policies of HDFC Chubb - But in restricting their data base access only to HDFC Chubb, that too on real time basis and they enabled the latter to have access to a pool of new vehicle buyers who would obviously also need first time car insurance - The assessee have therefore promoted the business of HDFC Chubb and for which services they were given agreed upon payment for every car insured by HDFC Chubb - Transactional documents and other evidences on record indicate a substantial activity falling within the contours of definition of BAS in Section 65 (19) of FA, 1994 - No infirmity found with that portion of impugned order confirming / upholding the tax liabilities with interest - However on the matter of penalty, the issue per se was mired in confusion and litigation - Assessee had a reasonable cause for their failure to discharge tax liability and given the benefit of doubt - In the event, penalties confirmed / upheld against assessee cannot sustain: CESTAT

ST - Assessee is a publisher of newspapers 'The Hindu, Business Line' and magazines such as 'Front Line' and 'Sports Star' and also engaged in providing various other services - During audit, it was observed that assessee had conducted various competitive programmes for kids and students in field of painting and quiz competition - They had received sponsorship from various sponsors for conducting the programme and collected service tax for sponsorship services provided by them - The demand arises out of basic allegation that the assessee has wrongly paid service tax on sponsorship service when actually service recipient ought to have paid - Generally, it is the output service provider who has to pay the service tax and in some cases like sponsorship services, the Service Tax Rules provide that the liability to pay service tax is upon the service recipient - For the mere same reason, it is alleged that the credit has been wrongly availed on various input services used for providing sponsorship services - In adjudication order, it is brought out that assessee has declared the credit of service tax paid on input services in their ST-3 returns - Thus, the credit availed as well as the service tax paid has been correctly reflected in their ST-3 returns - Other than this allegation of wrongly paying service tax on sponsorship service, no evidence found of positive act of suppression of fact with intent to evade payment of service tax on the part of assessee - There is no iota of evidence to establish that there was any willful intention on the part of assessee to evade payment of service tax by suppression of facts - Demand raised for the extended period cannot sustain: CESTAT

ST - Assessee is engaged in number of services, inter alia broadcasting service and video tape production service - As per the agreement STAR L appointed and engaged the assessee as their exclusive sales agent for solicitation of advertising, related air time and programme sponsorship on the television channel from advertisers, collection and remittance of advertisement fees - For these activities, assessee was paid commission by STAR L - Department took the view that assessee is required to discharge service tax liability on these commission amounts under category of BAS as defined in Section 65 (19) of FA, 1994 - The services in question are nothing but solicitation of advertising, related air time for which assessee receive a commission, hence the activity would fall within the fold of BAS - However, notwithstanding the contentions put forth by revenue that the conditionalities of Rule 3 of Export of Services Rules, 2005 are not fully satisfied since services are provided only within India, this controversy has now been fully settled by the case laws of higher appellate forums which have consistently held that if other requirements of Rule 3 are satisfied and the only niggle is that the services have been provided in India, this should be considered as 'Export of Service', notwithstanding the Board's circulars - Impugned services provided by assessee to STAR L will have to be treated as 'Export of Service' and hence there would be no tax liability on the same - This being so, demand with interest thereon cannot sustain and is set aside - In respect of remaining demand alleged to be ineligible credit taken, these relate to Mediclaim and Accident Insurance Policy taken for the employees - The issue is amply covered by Tribunal decision in Stanzen Toyotetsu India (P) Ltd. 2011-TIOL-866-HC-KAR-ST where the Karnataka High Court held that credit on Group Insurance Policy taken by assessee has to be construed as activities relating to business and hence credit is to that extent is permissible - This being so, the demand with interest and also penalty of equal amount imposed will also not sustain and are set aside: CESTAT

2018-TIOL-2896-CESTAT-HYD

CCT Vs Southern Rocks And Minerals Pvt Ltd

CX - Assessee is a 100% EOU and eligible for refund of CENVAT credit under Rule 5 of CENVAT Credit Rules r/w Notfn 27/2012-CE - The assessee filed the refund claim on 31.03.2016 - Later, they reversed the claim on 24.06.2016 for the period April, 2012 to March, 2015 being the accumulated credit under Rule 5 of CENVAT Credit Rules - The simple question to be decided is whether the first appellate authority was correct in reversing the decision of lower authority and sanctioning refund of CENVAT credit - Refund of CENVAT credit is available as per Rule 5 of CCR, 2004 subject to conditions which may be entitled by the Board - The notification which is issued by Government or the Board is a subordinate Legislation - Hence, powers of framing rules or issuing notifications are given to the Government which is answerable to the Parliament - It is also well known that if the Parliament feels that the notifications required amendment, they direct the Government to do so - The first appellate authority has erred in holding that Rule 5 of CENVAT Credit Rules does not prescribe any conditions or restrictions - In fact, it does delegate the power of deciding these conditions to the Board - The first appellate authority or any other Quasi Judicial Authority has no right to amend or modify the conditions of the notifications even if it is his opinion that the conditions or notifications are unreasonable or are not conducive to promote the exports from India - Unfortunately the first appellate authority took this position and decided to relax the conditions laid down in the notification - The first appellate authority has clearly erred in sanctioning the refund taking a larger view of what is good to promote exports and such perceived "equity" has no place in interpretation of a fiscal statute and the notification must be strictly construed - Therefore, impugned order set aside: CESTAT

- Appeal allowed: HYDERABAD CESTAT

2018-TIOL-2895-CESTAT-HYD

Mahindra And Mahindra Ltd Vs CC, CE & ST

CX - Assessee is manufacturer of motor vehicles and parts thereof - Amongst other models, they manufacture "Mahindra Bolero Camper" and its variants - The core issue that comes up for dispute in all appeals concerns the correct classification of impugned vehicle for purpose of Central Excise Tariff Act, whether under CETH 8703.33.99 as vehicle meant for transportation of passengers as maintained by Revenue or whether under CETH 8704.21.90, as a vehicle for transportation of goods as contended by assessee - Applying the tests laid down by Tribunal as also the common parlance test, it is found that the impugned vehicles are not "principally designed" for transportation of passengers but on the other hand, primarily designed for transportation of goods - They cannot also be considered as a 'station wagon' as contemplated in Heading 87.03 - The impugned vehicles will then necessarily have to fall within the ambit of CETH 8704 for classification purposes - Revenue have made another contention that by common parlance, the vehicle is only known as a "passenger vehicle" - But, other than making such an assertion, no evidence has been brought forth to prove that the impugned vehicle is used predominantly for transport of passengers and not of goods - On the other hand, as already noted, the vehicle has been registered "as a goods vehicle" by Road Transport Authorities which is an accurate reflection of what the vehicle is also understood to be in common parlance - The impugned orders in all these appeals cannot sustain and set aside: CESTAT

- Appeals allowed: HYDERABAD CESTAT

2018-TIOL-2894-CESTAT-AHM

Philips Carbon Black Ltd Vs CCE & ST

CX - The assessee company is engaged in the manufacture of Carbon black - It availed Cenvat credit on the Carbon Black Feed Stock used as inputs - From the process of manufacture, Lean Gas emerges as a by-product - Such gas is heated which in turn is used to generate electricity - Such electricity is partly used in the manufacture process and part is sold - The Department claimed that Carbon Black Feed Stock is common input used to manufacture dutiable final products such as Carbon Black and Electricity & that the latter has no rate of duty prescribed - Hence the Department raised demand under Rule 6 of CCR in respect of sale of electricity.

Held: A similar issue stands settled in favor of the assessee in its own case for a relevant AY wherein demands raised in similar circumstances had been set aside - Following such findings, the duty demands are set aside: CESTAT (Para 1,5)

- Appeal allowed: AHMEDABAD CESTAT

CUSTOMS

2018-TIOL-1970-HC-DEL-CUS + Case Story

Jindal Poly Film Ltd Vs Designated Authority

Cus - Anti-dumping - Termination order passed u/r 14 of Customs Tariff (Anti Dumping) Rules, 1995 is appealable u/s 9C of the CTA, 1975 before CESTAT - If required and necessary the petitioner may file an application under Section 14 of the Limitation Act, 1963 before the Appellate Tribunal for exclusion of time spent in the High Court: High Court [para 27, 35, 36, 37, 42]

- Petition disposed of: DELHI HIGH COURT

2018-TIOL-1958-HC-MAD-CUS

Joe And Company Vs CC

Cus - Petitioner imported cement from Pakistan and availed exemption of CVD under notification no.4/2006-CE dated 1.3.2006 - SCN issued for denial of the exemption, recovery of duty with interest and proposing penalty - demand confirmed, penalty imposed - Petition filed.

Held: The appellate authority has rejected the petitioner's appeal on the technical ground of limitation - in this case, there are materials, which should have been considered by the authority, which are now available before the Court - consideration of these material evidences may change the cause of the order - non- consideration will cause grave hardship and irreparable hardship to the petitioner - impugned orders set aside - the matter is remitted back to the original authority for fresh consideration on the basis of the material evidences produced by the petitioner - writ petition is disposed of with the above observations : HIGH COURT [para 3, 7, 9, 10]

- Writ Petition disposed of: MADRAS HIGH COURT

2018-TIOL-1957-HC-MAD-CUS

Sri Lakshmi Saraswathi Spintex Ltd Vs DGFT

FOREIGN Trade (Development and Regulation) Act, 1992 [FTDR Act] - Whether the petitioner is required to pay a sum of Rs.22.56 lakhs, being the compensation fee for being entitled for extension of time to complete the export obligation in terms of the advance authorisation permission dated 23.8.2012:

Held: Since the application for extension of time having not been rejected and order has been passed granting extension of time on 19.1.2018, which was interfered only with regard to the date of extension, now the respondent Department cannot go back on what they have said in their order dated 19.1.2018 under the pretext of demanding higher composition fee - the impugned order demanding additional sum of composition fee over and above the amount already remitted by the petitioner is without jurisdiction and illegal - the writ petition is allowed and the impugned order is set aside and the respondent is directed to take note of the payment effected by the petitioner, namely Rs.41,027/- vide communication 27.12.2017 and not demand any further amount and pass orders granting extension of time prospectively by six months from the date on which the order is to be passed by the second respondent and received by the petitioner : HIGH COURT [para 9, 10]

- Writ Petition allowed: MADRAS HIGH COURT

2018-TIOL-2893-CESTAT-BANG

CC Vs Mangalore Refinery And Petrochemiclas Ltd

Cus - Assessee filed the Bill of Entry showing import of Tri Ethyl Aluminium packed in two Alkyl Tainers from the supplier - The importer vide letter submitted that the said B/E was filed inadvertently and they wanted to re-export the Alkyl Tainers after the same are made empty - There is no mala fide intention on the part of importer who himself move an application under the provisions of Section 149 of Customs Act for amendment of B/E - Further, original authority had already allowed the amendment of B/E under provision of Section 149 of Customs Act, 1962 and also extended the benefit of exemption Notfn 104/94 Custom - Further, Commissioner (A) has rightly observed that there is no revenue loss and it was only a procedural infraction which was corrected by Additional Commissioner under Section 149 of Customs Act, 1962 - Further, the Commissioner (A) has also observed that the importer is entitle to the exemption from duty in support re-usable, durable Tainers to be re-exported as held by Additional Commissioner and not challenged by Department before the Commissioner - The Commissioner (A) has relied upon the decision in case of Videocon International Ltd., wherein it is held that penalty not imposable for bona fide error, negligence or lapses if there is no revenue implication - A censure should be given to assessee to be more careful in future - Further, the importer as well as the CHA was warned to be careful in future and not to commit these kinds of mistakes - Commissioner (A) has also relied upon the decision of Supreme Court in case of Hindustan Steels Ltd. 2002-TIOL-148-SC-CT-LB - No infirmity found in impugned order: CESTAT

- Appeal dismissed: BANGALORE CESTAT

2018-TIOL-2892-CESTAT-ALL

Gujarat Sidhee Cement Ltd Vs CC

Cus - The assessee company imported some quantity of coal - The Department noted there to be shortage of some quantity - The assessee claimed exemption from duty under Notfn No 46/2006-Cus - Such exemption is available subject to the condition that the imported goods must be used in entirety in the manufacture of final products - While the assessee explained the loss as being loss in transit, the Department denied such exemption to the assessee.

Held: An identical issue involving the same assessee was settled by the Tribunal for a previous period, wherein such exemption claimed was denied to the assessee on account of a clear violation of the provisions of Notfn No 46/2006-Cus - Following such precedent, the assessee cannot be allowed exemption: CESTAT (Para 2,3)

- Appeals dismissed: ALLAHABAD CESTAT