SERVICE TAX
2018-TIOL-1977-HC-MUM-ST + Case Story
M P Enterprises Vs UoI
ST - Where the amount as declared under Section 73(3) of the Act has not been paid, then the same is to be recovered, in terms of proviso to s.73(3), by issuing a notice under Section 73(1) of the Act - Till the time the SCN is adjudicated, it cannot be conclusively stated that any amount of service tax was paid by the Petitioner on the basis of forged/fabricated/bogus challans - invocation of Section 87 of the Finance Act, 1994 is premature - notice dated 30 th August 2018 ordering attachment of petitioner's account in Union Bank is quashed and set aside - However, amount which have already been received by the Revenue consequent to the notice dated 30th August, 2018, would be continued to be retained by the Respondent till the passing of an adjudication order on the show cause notice dated 8th September, 2018 - Writ Petition allowed: High Court [para 8 to 14]
- Petition allowed
: BOMBAY HIGH COURT 2018-TIOL-1976-HC-MUM-ST + Case Story
CST Vs Blue Star Ltd
ST - Service of procuring orders and passing it to overseas manufacturers/clients and receiving the payments for the same is an activity of export of service - providing repair and maintenance service during warranty period on behalf of foreign clients, on their instructions, to their buyers in India is covered by rule 3(3) of Export of Services Rules, 2005 - Refund of tax paid rightly held as allowable by CESTAT: High Court [para 4]
ST - Unjust enrichment - Assessee had clearly stated in their refund application that the refund is not hit by unjust enrichmen tas the service tax was paid out of the commissionr received by them - it was also never the case of the Revenue that there was unjust enrichment on the part of the respondent assessee; that Revenue had, at no point of time, before the first authority or appellate authorities raised the issue of unjust enrichment and, therefore, the submission by the Revenue counsel is without any basis - question as proposed does not give rise to any substantial question of law - Revenue appeal dismissed: High Court [para 5, 6]
- Appeal dismissed : BOMBAY HIGH COURT
2018-TIOL-2914-CESTAT-AHM
Jecobs Engineerings India Pvt Ltd Vs CST
ST - The assessee company provided some service and received certain amounts as reimbursements such as cost of travel, food & lodging, transport, stationery, etc. - The Revenue raised duty demands on such expenses.
Held: As per mandate of Section 67 of Finance Act 1994, service tax is leviable on gross amount charged for providing such services - Such expenses are not a liability for the service recipient and are in fact ingredients necessary to provide the service - Hence such expenses cannot be termed as reimbursements - Considering the Tribunal's decision in Adarsh Agency vs CCE the the demands are upheld albeit the penalties are set aside: CESTAT (Para 1,4)
- Appeal partly allowed : AHMEDABAD CESTAT
2018-TIOL-2913-CESTAT-AHM
Gulmohar Park Mall Pvt Ltd Vs CCE
ST - Interest and penalty - As far as demand of interest on the amounts paid consequent to retrospective amendment are concerned, the decision of Tribunal in case of Indiabulls Properties Pvt Ltd is relevant - In view of said decision, demand of interest upheld in respect of the amounts paid by the assessee on amount of retrospective amendment - The assessee have also sought to exclude the value of penalties imposed on tenants on account of breach of contract - It is apparent that the amounts received or account of breach of contract would be covered under the scope of term "any other services in relation to such renting" - The amount to be paid cannot treat as the penalty but as a condition of renting or differential rent - The taxable service also includes Services in relation to the activity of renting - Thus, the amounts recovered on account of pre mature vacation of the rented premises can be treated as amount received 'in relation to the renting of removable property' and thus would be taxable Services - The fact that assessee has paid Service Tax on his own violation after the enactment of retrospective amendment to the Finance Act has not been disputed - There is no assertion from Revenue that the amount paid by assessee has been collected from its client by assessee - In these circumstances, benefit of cum duty value has to be extended and appeal on this count is allowed - It is noticed that assessee has paid the duty immediately after the enactment of retrospective amendment - Prior to that there were genuine disputes regarding liability of Service Tax of said activity and the matter had reached to the Apex Court - In these circumstances, imposition of penalty is totally unwarranted and same is set aside: CESTAT
- Appeal partly allowed : AHMEDABAD CESTAT
2018-TIOL-2912-CESTAT-MAD
Ford Motor Pvt Ltd Vs CGST & CCE
ST - The assessee company availed Cenvat credit on various input services - On adjudication disallowed credit on certain services - On appeal, the Commr.(A) disallowed credit availed on Outdoor catering service, business auxiliary service, group insurance and furniture hire services.
Held: The period in dispute is prior to April 01, 2011 when the definition of 'input service' was much wider in ambit - Also considering the Tribunal's decisions in C.C.E. Mumbai Vs. GTC Industries Ltd and Principal Commissioner of Service Tax, Bangalore Vs. Maa Communications Bozel Ltd. and M/s. C-Cubed Solutions Pvt. Ltd. Vs. Commissioner of Service Tax, Bangalore, Service Tax-I and the findings of the Karnataka High Court in C.C.E. Bangalore Vs. Stanzen Toyetsu India (P) Ltd., the denial of credit is unjustified: CESTAT (Para 1,2,5)
- Appeals allowed : CHENNAI CESTAT
CENTRAL EXCISE
2018-TIOL-2911-CESTAT-MUM
Healthy Life Pharma Pvt Ltd Vs CCE
CX - Central Excise duty demanded on goods that were claimed to have been exported under bond on account of failure to produce proof of export - appellant contended that the goods viz. P&P medicaments were supplied to various exporters and that they were not required to comply with any such condition and the proof of completion of the export is obligated on the issuers of the CT-1 certificate; that the original demand was for Rs.16,22,786/- out of which the demand amount of Rs.13,06,125/- was dropped owing to production of proof of export; that for some more exports they are able to produce proof of export but for the others, such proof is not yet available - appeal to CESTAT.
Held: Procedure prescribes that the merchant-exporter is required to obtain CT-1 certificate from the C.EX officers concerned against which goods are supplied without payment of duty and for which bond is required to be furnished - It is merchant exporters who are required to pay the central excise duty on such goods along with interest, if any, if the same are not exported - contention of appellant that they are not responsible for failure to comply with procedure on the part of the merchant-exporter is tenable - duty liability does not sustain on appellant manufacturer - impugned orders are set aside and appeals are allowed: CESTAT [para 5, 6]
- Appeals allowed : MUMBAI CESTAT
2018-TIOL-2910-CESTAT-MUM
Mukut Tanks and Vessels Pvt Ltd Vs CCE
CX - Appellant had cleared pipes under exemption notification 47/2002-CE and the clearances were made by reversing 8% of the sale value of the goods in terms of rule 6(3)(b) of CCR, 2004 as appellant had availed credit on common inputs viz. M.S.coils - in some case, appellant had made clearances by reversing the credit - Appellant were issued SCN alleging that MS Coils/HR sheets used for manufacture of such pipes were exclusively used for manufacture of exempted final products being of specific grade and, therefore, they could not be treated as common inputs used for manufacture of dutiable or exempted goods - amount was also sought to be recovered in terms of s.11D of CEA, 1944 on the ground that the amount reversed in terms of rule 6(3)(b) of CCR, 2004 was recovered from customers - demand confirmed along with penalties etc., therefore, appeal to CESTAT.
Held: Even though the inputs have been exclusively used in manufacture of exempted goods, the assessee cannot be forced not to pay the amount in terms of rule 6(3) of CCR, 2004 and instead reverse the credit - it is seen that apart from the said input of MS Coils/HR sheets, the appellant has used common inputs i.e. welding electrodes, welding wires, flux, oxygen gas, grinding wheels etc. in the manufacture of exempted goods and in such circumstances it cannot be said that all the inputs are for exclusive use in exempted final products - rule 6(1) and rule 6(3) both, cannot be applied in such circumstances - also where the appellant has reversed the proportionate credit and also maintained separate accounts of inputs used in such exempted goods, they cannot be forced to pay the amount in terms of rule 6(3)(b) of CCR - further, in terms of retrospective amendment by Finance Act, 2010, as long as the assessee reverses the proportionate CENVAT credit, the same is considered as sufficient compliance with rule 6 - as regards demand made u/s 11D of CEA, 1944, issue is no more res integra in view of the Larger Bench decision in Unison Metals Ltd. - 2006-TIOL-1337-CESTAT-DEL-LB ; the SCN nowhere alleges that the said amount has been represented as excise duty by appellant - demands raised on all the counts is unsustainable - impugned order set aside and appeals allowed : CESTAT [para 6 to 9]
- Appeals allowed : MUMBAI CESTAT
2018-TIOL-2909-CESTAT-MUM
Karishma Overseas Vs CCE
CX -It is an admitted position that all the persons involved were aware that there was no manufacture taking place at the premises of the appellant M/s Sofina Fashion; that no duty was being paid and no goods were cleared from the said M/s Sofina Fashion but documents were generated to show payment of duty with intention of claiming fraudulent rebates - main beneficiary of the entire fraud were the three export firms (also appellants) and they used M/s Sofina Fashion as a tool for this purpose - in these circumstances, plea of leniency to the three exporters does not merit consideration - penalties upheld against the three export firms M/s Karishma Overseas, M/s Krishna Exports and M/s Sheetal Exports and their appeals are dismissed: CESTAT [para 4]
CX - CENVAT - Insofar as demand for reversal of CENVAT is concerned, the SCN clearly mentions that there was no movement of any goods to or from the registered premises of M/s Sofina Fashion and there was no generation and/or maintenance of any documents except ARE-1 - therefore, there was no operation and maintenance of CENVAT account at any stage - it is also an admitted position that M/s Sofina Fashion had filed Nil returns from September 2004 to January 2005 - in these circumstances, charge of availing or utilizing credit cannot be upheld - in absence of any wrong availment or utilization of CENVAT credit, penalty u/r 15(2) cannot also be imposed: CESTAT [para 4.1, 4.2]
- Appeals disposed of : MUMBAI CESTAT
CUSTOMS
NOTIFICATIONS
cnt82_2018
All Industry Rates of Duty Drawback in respect of Gold Jewellery, Silver Jewellery and Silver Articles amended
ctariff18_065
Exemption from Integrated Tax and Compensation Cess in respect of goods imported by EOU extended to 31.03.2019
cscaadri20-2018
Appointment of Common Adjudicating Authority by DGRI
CASE LAWS
2018-TIOL-2908-CESTAT-HYD
Mega Logistic Vs CC
Cus - Assessee is a licensed Customs House broker - The office of New Customs House, Delhi received information regarding some exporters committing frauds by over invoicing exports with an intent to avail excess drawback and SIIB, New Customs House had booked a case against these exporters - It was found during investigation that assessee was the customs broker who processed these documents - Accordingly, assessee was prohibited from operating in New Customs House, Delhi - Based on the letter of New Customs House, Delhi, the office of Principal Commissioner, Hyderabad suspended the Custom House broker licence of assessee under Regulation 19(1) of CBLR, 2013 pending further investigation and enquiry in the matter - The new Customs House, Delhi has so far not sent the offence report to the office of Principal Commissioner of Customs, Hyderabad, despite their reminders and nothing has been received from New Delhi - The suspension of licence cannot be a substitute for either revocation or imposition of penalty on assessee, although Regulation 19 does not indicate for how long the licence can be suspended - Suspension of licence of the Customs broker is no longer justified and cannot be used as a substitute for revocation of his licence or imposition of penalty on him under CBLR - This legal position is settled in case of Durga Clearing Pvt. Ltd. and On Time Logistics 2016-TIOL-2191-CESTAT-DEL - In this particular case, there is an additional factor that the application of assessee under Regulation 9(2) for renewal of licence has been acknowledged by Office of Principal Commissioner of Customs, Hyderabad and the assessee has been advised to produce the original licence to make necessary endorsement in it - Impugned order set aside: CESTAT
- Appeal allowed : HYDERABAD CESTAT
2018-TIOL-2907-CESTAT-MAD
Star Fish Trading Vs CC
Cus - After filing of shipping bills for export of various shark products, customs authorities suspected over valuation of goods for claiming undue DEPB benefit - Market enquiries indicated the possibility that transaction value declared was on higher side - Enquiries with CMFRI were made - On the basis of report from CMFRI, it appeared to department that the market prices were much lower than the transaction value declared - Accordingly, adjudicating authority has proceeded to reject the transaction value and value was re-determined - Accordingly, DEPB benefit was also restricted from claimed amount - The valuation of export goods are required to be made normally on the basis of transaction value - The Customs Valuation Rules, 2007, provided for the basis for determination of value of export goods - The transaction value stands rejected on the basis of market value of similar goods - The CBEC vide Circular 56/2002-Cus has directed that present market value shall be the basis for granting DEPB benefit - Such a situation cannot be used to reject the transaction value - The circular can only be used for calculating/restricting the DEPB benefit - The evidence gathered by department can at best raise doubt about the declared value - But such evidence cannot be used to reject the transaction value and redetermine the same - By following the earlier decision of Tribunal in case of Jayesh Bhavsar , confiscation of export goods set aside as well as penalties imposed on assessee as well as on Shri Faizul Ahamed, Proprietor: CESTAT
- Appeal allowed :CHENNAI CESTAT
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