SERVICE TAX

K L Rathi Steels Ltd Vs CC & CE

CX - The assessee is engaged in manufacturing Tor steel & availed Cenvat credit on various input services - On audit, the Department noted that the assessee availed some amount of credit in contravention of Rule 4(7) of CCR, 2004 as the assessee had not paid the value of services to the service providers - The assessee reversed the credit with interest in this regard - The Department further noted that an amount of credit had been availed by the assessee in respect of services availed by the assessee's sister unit - Such credit too was reversed with interest - Further duty demands were raised by denying Cenvat credit & penalty u/r 14 of CCR 2004 r/w/s 11AC of the CEA 1944 was imposed as well.

Held: The wrong availment of credit can be attributed to the bona fide belief on part of the assessee that it was eligible to avail credit - Such credit availed was duly reflected in statutory records & was not utilized till audit objection - Such credit was also reversed immediately upon being pointed out, that too with interest - Besides, the sister unit could have availed the credit of such amount & so it cannot be presumed that the assessee indulged in any mala fide intent to avail credit - Hence the penalty imposed is unsustainable - While the duty demand & interest is confirmed, the penalty is set aside: CESTAT (Para 1,2,3,6,7)

- Appeal partly allowed: ALLAHABAD CESTAT

2018-TIOL-3058-CESTAT-MUM

K Raheja Exports Pvt Ltd Vs CCE

CX - SSI exemption - Notification 8/2003-CE - Appellants were engaged in manufacture of Plastic Containers and lids (Ch.39) under their own brand name 'K.RAHEJA' and also other branded goods 'KRMC' - appellant were availing benefit of SSI exemption on the value of clearances made by them under their own brand name but were paying duty on the clearances made under the brand name of "KRMC" - SCN issued denying the benefit of SSI exemption in respect of their own branded goods on the ground that they have availed CENVAT credit on inputs - Original authority dropped the demand but Commissioner(A) set aside the order by placing reliance on the apex court decision in Ramesh Food Products - 2005-TIOL-07-SC-CX wherein it is held that the manufacturer had the choice of choosing one of the two concessions i.e. either MODVAT or Notfn. 175/86-CE; that simultaneous availment of MODVAT credit on some products and exemption on others is not permissible; inasmuch as it was held that appellant is not entitled for exemption on his own brand goods and is liable to pay duty - appeal to CESTAT.

Held: Facts have nowhere been disputed that the assessee was maintaining separate records for inputs consumed in the manufacture of both the above products and were availing credit only on those inputs which were used for the manufacture of goods bearing brand name of other and on which CE duty was paid by them - Once assessee is maintaining separate records and is not availing credit on inputs used for production of goods cleared under exemption notification 8/2003-CE, they are eligible for exemption under the said notification - Supreme Court decision in Nebulae Health Care Ltd. - 2015-TIOL-261-SC-CX relied upon - demand is, therefore, not sustainable - impugned order set aside and appeal allowed with consequential reliefs: CESTAT [para 4, 5]

- Appeal allowed: MUMBAI CESTAT

2018-TIOL-3057-CESTAT-MUM

CCE Vs Jalna Siddhivinayak Alloys Pvt Ltd

CX - Issue is whether under the facts and circumstances the respondents have bonafidely taken CENVAT credit on inputs viz. M.SScrap which was purchased/received from Simandhar Steel Movers (India) Private Ltd., a first stage dealer at Mumbai - Commissioner dropping demand, therefore, Revenue in appeal.

Held: Case of the department is that respondents have not physically received the material because the dealer Simandhar had not received the said material from the suppliers in Gujarat; that Simandhar had issued fake and parallel invoices to the respondents; that the allegations against the respondents are based upon the investigation undertaken at the end of Simandhar Steel and the report of Sales tax authority of Gujarat - Respondents had purchased the goods for the price, which included the duty element and the same was paid by cheque; that there is no allegation that the respondents have sourced material in dispute from some other source - Under the scheme of the Act and the Rules, it would be impractical to require the assessee to go behind the records maintained by the first stage dealers - respondent were found to have acted with all diligence in their dealings with the first stage dealers - Simandhar - Held that the show cause notices are presumptive and not maintainable - No positive evidence adduced by Revenue which shows that the respondents/assessee have not received the inputs covered by the invoices in dispute and there is no allegation of the respondents having fabricated the invoices - SCNs are also hit by limitation in absence of ingredients for invoking the extended period of limitation - Revenue appeals are dismissed and impugned orders passed by the Commissioner of Central Excise, Aurangabad are upheld - Cross objections are also disposed of: CESTAT [para 10 to 12]

- Appeals dismissed: MUMBAI CESTAT

CENTRAL EXCISE

2018-TIOL-3056-CESTAT-MAD

Kochar Properties Pvt Ltd Vs CGST & CE

ST - The issue pertains to inclusibility of value of taxable services of interest accrued on security deposit paid in connection with renting of immovable property - Issue is covered in favour of assessee by the decision of Tribunal in case of K. Raheja Corporation Pvt. Ltd. - 2015-TIOL-100-CESTAT-MUM which relying on the earlier decision in Magarpatta Township Developers & Construction Co. Ltd. - 2013-TIOL-1068-CESTAT-MUM , has held that interest accrued on such security deposit cannot be added to the renting agreed upon between the parties for the purpose of levy of service tax under the category of renting of immovable property - Similar view has also been taken by Tribunal in Jain Construction - 2014-TIOL-978-CESTAT-MUM - The interest that would have accrued on such security deposit therefore cannot be made part of the value for taxable service - Hence those portions of impugned orders which have decided to the contrary cannot be sustained and are set aside - However, no interference is made with regard to the remaining service tax amounts that may have been demanded in these orders - At the same time, all the disputes being only interpretational, there cannot be any penalty and hence the penalties imposed in impugned order under FA, 1994 are set aside: CESTAT

- Appeals partly allowed: CHENNAI CESTAT

2018-TIOL-3055-CESTAT-AHM

M R and Sons Vs CC

ST - The assessee is engaged in processing of machining, drilling, shot blasting and painting on job work basis - Such activities are performed on semi-finished casting supplied by the principal, who then uses the processed goods in the manufacture of wind turbine - Such turbine is cleared under exemption - The Department sought to cover such activity of the assessee as production of goods on behalf of the client under category of 'Business Auxiliary Service' - Duty demands were raised.

Held: It must be determined where the activity in question is processing or production on behalf of the client - Considering the activity carried out by the assessee, it clearly falls under the category of production -Such activity of production of goods on behalf of a client is taxable - Hence the demands are upheld: CESTAT (Para 1,4,5)

- Appeal dismissed: AHMEDABAD CESTAT