SERVICE TAX

2018-TIOL-2051-HC-MUM-ST + Case Story

CST Vs Shreenath Motors Pvt Ltd

ST - It is not as though the confirmation of demand would ipso facto lead to penalty - In fact, Section 80 of the Finance Act, 1994 provides for non imposition of penalty, if there is a reasonable cause and which is available in ample measure in the present facts - no fault can be found in the Tribunal order holding that penalties are not imposable although demand of service tax of Rs.20,72,830/- is confirmed for providing Business Auxiliary Service viz. direct selling agent for banks and Financial Institutions that provide loans to purchasers of vehicles and receiving commission - Revenue appeal dismissed: High Court [para 9 to 11]

- Appeal dismissed: BOMBAY HIGH COURT

2018-TIOL-3012-CESTAT-MAD

AVM Studios Vs CST

ST - At a rented accommodation a studio was run, meant for production of videos - The assessee's were registered with the Department under the category of "Renting of Immovable Property" - However, the Revenue took a view that assessee was providing services under the category of "Video Production Agency" - Duty demand was raised - The adjudicating authority confirmed the demands along with interest and imposition of penalty.

Held: The services provided by assessee is covered by the definition of video production agency u/s 65(120) FA Act, 1994 & CBEC circular F.No.b-II/I/2000-TRU - It relates to the persons who are associated with process relatable to video recording - In the present case, assessee rented out their premises and in no way provided their services to the tenant for recording of the video and in other activities connected with the recording - Therefore, the service of giving the studio on rent would fall under the category of "Renting of Immovable Property Service" - The assessee have been correctly discharging the service tax liability under this category - Hence, the order-in-appeal is set aside : CESTAT (para 2, 5, 6, 7, 8)

- Appeal Allowed CHENNAI CESTAT

AFL Management Pvt Ltd Vs CST ST

ST - The assessee company is engaged as financial consultant, dealer/DSA for several banks, for soliciting availing of loans for purchasing used cars - It provided services classifiable as Business Auxiliary Services - The Department claimed that the assessee did not pay service tax on the commission/brokerage amounts received from the banks - Duty demand was raised u/s 73 of the Finance Act 1994 by invoking extended period of 5 years - Interest u/s 75 was also demanded and penalties u/s 75A, 76, 77 & 78 were imposed.

Held: As duty demanded is already paid with interest, the penalties u/s 76 & 78 are in contest - As duty & interest stood paid before issue of SCN, the same need not have been issued - Besides no penalty is imposable - Besides, penalties u/s 76 & 78 are unsustainable as the present case only involves delayed payment of duty, which at most attracts levy of interest: CESTAT (Para 1,4)

- Appeal partly allowed: AHMEDABAD CESTAT

2018-TIOL-3010-CESTAT-ALL

Amroon Foods Pvt Ltd Vs CCE

ST - The assessee company is engaged in exporting frozen meat - It engaged agents in foreign countries for securing clearance of the meat exported and for delivering the same to the consignees - The agents also collect the consideration amount of the goods - The issue at hand is whether such service is classifiable as "Clearing and Forwarding Agent Service" or as "Business Auxiliary Service" - The assessee is not liable to pay service tax u/s 66A of the FA 1994 in respect of CFA service in terms of provisions of said Taxation of Services (Provided from Outside India and Received in India) Rules, 2006.

Held - There is no responsibility on the foreign agenct to promote sale of goods exported by the assessee - The activities of the agents do not in any manner fall within the scope of Business Auxiliary Service - Hence their activities are correctly classifiable as CFA service: CESTAT (Para 2,4)

- Appeal allowed: ALLAHABAD CESTAT

ABN Amro Bank Nv Vs CCE, C & ST

ST - The assessee filed the present application seeking amendment of Cause Title and Communication address & also sought early hearing of appeal.

Held: The change in cause title is permitted - Also considering that the appeal is about 6 years old and involves a considerable amount, the appeal merits being heard without further delay - Date of hearing fixed for Feb 20 2018: CESTAT (Para 1-6)

- Application allowed: ALLAHABAD CESTAT

Zenith Bangalore Rollers Pvt Ltd Vs CST

ST - Assessee is engaged in the activity of re-rubberisation of rollers for various industries including printing industry - The department was of the view that the said activity does not amount to manufacture within the meaning of section 2(f) of CEA, 1944 - That the activity would be taxable under category of Management, Maintenance or Repair Service' in view of the specific mentioning of 'repair including reconditioning or restoration or servicing of any goods' with effect from 16.6.2005 - The issue stands covered by decision of Tribunal in assessee's own case for a different unit as reported in - 2016-TIOL-129-CESTAT-BANG - Said activity is entitled for benefit of exemption under Notfn 14/2004 which inter alia exempts taxable service provided in relation to printing from the whole of service tax - Demand is not legally sustainable and same is set aside: CESTAT

- Appeal allowed: CHENNAI CESTAT

Yokogawa Ia Technologies India Pvt Ltd Vs CCT

ST - The assessee exports Information Technology Software Services to clients located abroad - It claimed refund of unutilized refund u/r 5 of CCR 2004 r/w Notfn No.5/2006-CE(NT) - Subsequently, the Adjudicating authority sanctioned part of the refund amount claimed.

Held: The refund is correctly allowed as the assessee satisfied the requirements of Rule 4(7) & Rule 9 of CCR - The refund was rejected based on mere technicalities even after conceding that the assessee was eligible for refund - It is a clear position that a substantive benefit cannot be denied based on mere procedural infractions - Hence the order denying refund is set aside: CESTAT (Para 2,6)

- Appeal allowed: BANGALORE CESTAT

CENTRAL EXCISE

Trela Footwear Export Pvt Ltd Vs CCE & ST

CX - The premises of the assessee company engaged in manufacturing footwear, were raided by DGCEI officials - The stock found was seized and certain documents and electronic records were also taken - Based on such loose sheets, statements were taken from persons named therein - They revealed to have received consignments from the assessee based on post-dated cheques & without raising invoices - Such 'kaccha parchies' were recovered showing sales made by the assessee - Hence the Department alleged that the assessee indulged in unaccounted production of goodsd and their clandestine removal - Duty demands were raised with interest & penalties were imposed.

Held: The entire case of the Revenue is based on data taken from pen drives recovered from the premises of a company which is a third party - Whether or not such evidence is valid depends on the status of the company from whose premises it was recovered - It may be noted that during the visit by DGCEI officers to the assessee's premises, no discrepancy in stock of raw material or inputs was noted - None of the incriminating documents relied on by the Revenue were recovered from the assessee's premises - Pen drives recovered from the premises of an independent trader is not proper evidence to allege clandestine removal - It is also seen that the pen drives seized were different from those pen drives from which the data had been recovered - The Revenue did not establish the factum of clandestine manufacture by the assessee - Procurement of raw material or packaging material in assessee's factory was not looked into - Statements were not taken of assessee's employees & there is no evidence of actual clearance of goods - No transporter was contacted - Besides, the assessee submitted CA certificate mentioning that assessee's factory is incapable of such huge production capacity - No excisable goods were found during the visit - Hence clandestine removal be upheld as the Revenue failed to put forth any cogent evidence - Duty demands & penalties, including personal penalties, are set aside - Also the goods seized & confiscated from the premises of the third party cannot be upheld without showing that the goods were cleared by the assessee - Penalties imposed on them are set aside: CESTAT (Para 3-7,11-19)

- Appeals allowed: ALLAHABAD CESTAT

2018-TIOL-3003-CESTAT-KOL

21st Century Ferro Alloys Pvt Ltd Vs CCE, C & ST

CX - The assessee company is engaged in manufacturing Pig Iron - The assessee availed benefit of SSI exemption under Notfn No 08/2003-CE - Duty demand was raised with interest & equivalent penalty on grounds that assessee availed Cenvat credit on inputs goods & services - Such levies were confirmed by the Commr.(A).

Held - The contravention of the provisions of the Notfn ipso facto denies the benefit of Cenvat credit - Besides, the provision clearly states that no credit can be allowed on inputs used in capital goods - Hence denial of credit on this ground is justified - However, as the present case revolves around interpretation of the Notfn, no penalty can be imposed - Hence duty demand with interest is upheld while penalty is set aside: CESTAT (Para 1,5)

- Assessee's appeals partly allowed: KOLKATA CESTAT

Hindustan Coca Cola Beverages Pvt Ltd Vs CCE, C & ST

CX - Assessee is manufacturer of aerated water under brand names of Coca-Cola, Fanta, Limca, Thums up and Sprite - In addition, they also sources these products from their sister unit and also other franchisee bottlers to cover to the market demands - The assessee have opted to avail CENVAT credit on common input services and reverse the CENVAT credit under Rule 6(3A) in respect of exempted goods and services - They were issued a SCN alleging that they have not reversed the CENVAT credit fully in terms of Rule 6 (3A) and therefore they are liable to pay an amount towards CENVAT credit attributable to the exempted services as provided in Rule 6(3A) read with Rule 14 of CENVAT Credit Rules read with proviso to Section 11A(4) of the Central Excise Act - An assessee is procuring bottlers from their sister units on excise invoices issued in their name along with stock transfer challans - Thereafter, assessee is selling goods to their customers - When specifically asked by Bench, assessee said that he is not sure how the money got transferred to the sister units and said that it will probably be through account adjustment by their head office; otherwise the sister units will keep spending money to produce bottles and assessee keeps earning selling them - Thus, no element of trading is missing when assessee procures bottlers from their sister units and sells them - As far as CENVAT credit rules is concerned, this can be considered as no different from selling bottles procured from other units - Therefore, this amounts to trading activity - Accordingly, assessee is required to reverse CENVAT credit as per Rule 6(3A) of CCR, 2004 including value of these bottles procured from the sister units and sold in the market - Rule 6 of CCR, 2004 itself gives several options for assessee to choose from and they chose this option - If this did not suit them, they could have taken another option - Short payment made by assessee came to light only during the verification of the course by Departmental officers - The assessee profited by not reversing the CENVAT credit correctly in terms of the option they choose and thereby gained CENVAT credit and to that extent evaded payment of duty which they would have had to pay in cash - There is no reason to interfere with impugned order: CESTAT

- Appeal rejected: HYDERABAD CESTAT

CUSTOMS

2018-TIOL-2050-HC-MAD-CUS + Case Story

CC Vs Volvo India Pvt Ltd )

Cus - Clerical error/accidental slip or omission, can be corrected at any time - On making of such correction u/s 154 of the Act, the consequential return of amount of duty of customs, would be available to an importer - no manifest illegality or irregularity in the CESTAT order - Civil Miscellaneous appeal filed by Revenue dismissed: High Court [para 10, 11, 13]

- Appeal dismissed: MADRAS HIGH COURT

2018-TIOL-3006-CESTAT-BANG

Crystalonics Displays Pvt Ltd Vs CC  

Cus - The assessee imported goods declared as "indicator panels incorporating Liquid Crystal Devices (LCDs)" - These were sold to industries engaged in manufacturing telephone, billing machines & weighing machines - The consignments imported had been classified under Chapter Heading 8531 2000 - However the Revenue classified the goods under CTH 9033 0000 on grounds that the goods were LCD modules having other small components - The assessee paid the differential duty under protest - Subsequently, the Commr.(A) upheld the classification favored by the Revenue.

Held - The commercial catalogue submitted by the importers does not describe the goods as 'indicator panel' but instead 'LCD module' - The Commr.(A) rightly held that any product is rightly classified by the name and commercial use - The assessee did not show any relationship between the nomenclature of the imported goods and what is actually marketed - Hence the goods classify as LCD Module - It is settled law that the HSN explanatory notes can be relied upon for the purpose of classification of the product not only for Customs Tariff but also for Central Excise Tariff - Also, the imported goods are not apparatus in themselves and are only parts to be fitted with instruments - Such instruments perform functions like measuring, checking, calculating - LCD Modules are used to display the results of function carried out by the machines - Hence the goods in question are parts & not complete appliances - This is substantiated by a write-up given by the importer - Hence they are not parts falling under CTH 85319000 - Being component parts used in machines & appliances most of which are classifiable under Chapter 90, the imported goods are appropriately classifiable under CTH 9033 0000 - Hence the classification favored by the Revenue is correct and the Order-in-Appeal warrants no interference: CESTAT (Para 1,5-9)

- Appeal dismissed: BANGALORE CESTAT

2018-TIOL-3005-CESTAT-BANG

Chayagraphics India Pvt Ltd Vs CC

Cus - Assessee is engaged in import and manufacture of medical equipments in Bangalore - They had imported an accessory for X-ray/MRI equipment and its software - A Bill of Entry was filed at ACC, Bangalore classifying the impugned goods under heading 9022 14 90 seeking exemption under Notfn 21/2007 and Notfn 6/2006 in respect of basic Customs duty and additional duty respectively - The software was classified under 85238020 as Information Technology Software chargeable to nil rate of duty - On the basis of assessment order, they deposited a fine and penalty in addition to payment of duty - Whether the impugned software is IT software or a software tailor-made to a particular machine and as to whether the software is eligible for exemption under Notfn 7/2007 - Assessee themselves have classified the software along with machine - The assessee have put forth submissions that a series of letters were written by them justifying the classification of software under CTH 8523 8020 and requested for speaking order - On going through the series of letters in a short span it appears that the assessee's contentions are justified as there are no other justifiable reasons which make the assessee change their stand overnight on the issue of classification - Going by the terminology used in manual it gives an understanding that the software is manufactured of functioning independently and can be loaded on any computers - This fulfills the requisite conditions of Chapter Notes 8523 for software under 8523 - The certificates issued by Radiologists or in-charge of radiologist centres/hospitals also pointed out to this effect that the QPC X software is a image processing software with additional facilities of QPC, the data base of the computer system and the CD can be loaded to any computer - Moreover two different Commissioner (A) in respect of Bill of Entry No. dated 21.04.2009 and dated 19.03.2008, have given a findings that the software is correctly classified under CTH 8523 8020 holding that the invoice separately identifies that the software has 500-0112 QPC CR Scan and reviewed with 500-0112 CD/DVD Creator Software, 500-0112 Work list Query Software Module - This is not be construed as a customer built software - No justification found for interfering with opinion expressed by two Commissioner (A) in classifying the product under 8523 8020 - Coming to the other issues of changing classification, imposition of redemption fine and penalty without observing to the principles of natural justice and without issuing a speaking order is bad in law: CESTAT

- Assessee's appeal allowed: BANGALORE CESTAT

Vijay Mining And Infra Corp Pvt Ltd Vs CTO

- Case remanded: KARNATAKA HIGH COURT