SERVICE TAX

2018-TIOL-3088-CESTAT-BANG + Case Story

Praxair India Ltd Vs CCE & ST

ST - 'Management, Maintenance or Repair Service' - If it were the case of the appellant that the service rendered was to themselves, there was no need whatsoever for M/s. UML to pay the appellants for O&M charges in terms of the agreement - Demand upheld: CESTAT [para 5.1.2, 5.1.5]

ST - Banking and Other Financial Services - CBEC vide letter F.No.B-11/1/2001-TRU dt.9.7.2001 clarified that agreements entered before 16.7.2001 will not be liable to service tax provided the property/goods have also been received by the lessee prior to 16.7.2001 - There is incontrovertible evidence that the plant was installed in the premises of M/s. UML before 16.7.2001 - Appellant's case is that of a equipment lease rather than financial lease - in view of the Board Circular, the appellants cannot be charged to pay service tax under the heading 'Banking and Other Financial Services' for leasing of the plant to M/s. UML - Demand set aside: CESTAT [para 5.2]

ST - Storage and Warehousing services - No warehousing activities are involved as the appellants have built an oxygen tank in the premises of their customers and have leased the same to the customers - appellants are not concerned with the receipt, storage and clearance of the goods stored in the tanks and do not maintain any accounts for that matter in this regard - demand is unsustainable: CESTAT [para 5.3]

ST - Penalties are set aside as the issue relates to interpretation of the provisions of service tax: CESTAT [para 6]

- Appeal partly allowed: BANGALORE CESTAT

2018-TIOL-3081-CESTAT-MUM

Nagpur Power And Industrial Ltd Vs Assistant Commissioner, Customs, Central Excise And Service Tax

ST - Appellant challenging only penalty but because of the fact that tax liability was discharged, under the belief that pre-deposit was not required, it was not paid - Commissioner(A) rejected appeal for non-payment of pre-deposit - appeal to CESTAT.

Held: In case of non-payment of pre-deposit, appeal should not have been admitted or else rejected but dismissal of appeal without consideration of its merit requires re-adjudication since pre-deposit of 10% of penalty amount has already been paid before CESTAT - matter remanded to Commissioner(A) for disposal of merits: CESTAT [para 6]

- Matter remanded: MUMBAI CESTAT

2018-TIOL-3080-CESTAT-MUM

Rachna Construction Company (NAG) Pvt Ltd Vs Commissioner of GST & Central Excise

ST - Condonation of Delay in filing appeal - appeal filed before CESTAT with one month and 8 days delay from the prescribed period of three months - condonation sought on the ground that person looking after tax and legal matters quit his job and did not inform management about immediate requirement of filing appeal within stipulated period; that since payment of tax and interest was made much before issue of SCN, lenient consideration be given.

Held: A distinction must be made between a case where the delay is inordinate and a case where the delay is of few days - Where the delay is inordinate, the consideration of prejudice to the opposite party will be a relevant factor calling for a more cautious approach but in the latter case where the delay is of few days, no such consideration may arise and such a case deserves a liberal approach - delay of 38 days in filing appeal is condoned and appeal is admitted for hearing: CESTAT [para 5, 6]

- Application allowed: MUMBAI CESTAT

2018-TIOL-3079-CESTAT-MAD

Coimbatore Earthmovers Hiring Division Vs CC, CE & ST

ST - Assessee is engaged in providing taxable services namely BAS in the nature of civil works like unloading of coal, clinker and paper from wagons using excavators for M/s.ACC Ltd, Coimbatore, M/s. ITC Ltd and Madras Cements Ltd, - It was noticed that assessee had short paid service tax - SCN was issued proposing to demand service tax alongwith interest and for imposing penalties - After due process of law, original authority confirmed the demand alongwith interest and imposed penalty u/s.78 of FA, 1994, besides penalty u/s.77 of FA, 1994 - The assessee is contesting only the penalty imposed - They have taken registration for BAS in 2006 and failed to discharge service tax liability for the period 2007-08 and 2008-09, though the service tax was collected by them - The assessee has furnished the details of the payments which shows that the assessee has paid up the service tax component on or before 8/8/2009 - Sub-section (3) of Section 73 states that no notice shall be served in case the assessee pays service tax on his own voilition or on being pointed out by the department - The facts reveal that the default was only for a short period - Assessee had filed service tax returns disclosing their liability - It is very much clear that the non-payment of service tax was not by fraud, collusion or suppression of facts with intention to evade payment of service tax - When the demand or the service tax liability for the disputed period is paid by assessee alongwith interest and ST-3 returns having been filed accompanied by late fee, the department ought not to have issued SCN, as provided in Section 73 (3) of Act ibid, the ingredients of sub-section (4) of the same section 73 cannot be alleged - Penalty imposed u/s.78 is unjustified and requires to be set aside - In the result, impugned order is modified to the extent of setting aside the penalty imposed u/s.78 of FA, 1994, without disturbing the demand of service tax or the interest thereon or the penalty imposed u/s.77 of the Act: CESTAT

- Appeal partly allowed: CHENNAI CESTAT

CENTRAL EXCISE

Neyeer India Ltd Vs AAIFC

CE - Petitioner questioning the validity and/or correctness of the order dated 24.8.2012 passed by the first respondent by which he allowed the appeal filed by the Commissioner of Central Excise, Cuddalore by setting aside the order dated 6.10.2008 passed by the third respondent herein in Case No.29/1992:

Held: it is evident from the impugned order that the petitioner company had the wherewithal to pay a major portion of the principal amount towards Excise Duty, which they have collected from their customers long back - the petitioner company was declared as a sick industry more than two decades back - however, several attempts made to rehabilitate the petitioner company has failed - even though the draft rehabilitation scheme formulated on 6.10.2008 provides for waiver of interest or penalty, such a clause incorporated in the waiver scheme will not bind the Central Excise Department especially when the Central Excise Act does not provide for waiver of interest for the excise duty payable - the decision rendered by the Division Bench of the Andhra Pradesh High Court in the case of Andhra Cements Limited - 2017-TIOL-885-HC-AP-CX would squarely apply to the facts of the present case - the petitioner company had settled a major portion of the payment towards Excise Duty levy made by the Central Excise Department and only the balance amount stood payable by the petitioner company - further, the amount payable by the petitioner is a statutory payment payable to the Central Excise Department, which cannot be exempted - the first respondent has considered the claim made by the petitioner and rightly rejected it by assigning reasons, which needs no interference by this Court - in the result, the writ petition fails and it is dismissed : HIGH COURT [para 16, 18, 19, 20]

- Writ Petition dismissed: MADRAS HIGH COURT

2018-TIOL-3078-CESTAT-ALL

CCE & ST Vs Dvs Steels And Alloys Pvt Ltd

CX - The assessee company is engaged in the manufacture of MS Ingots - Its factory was visited by Excise officers who conducted checks & verifications - The stock taking of the finished goods & raw materials resulted in shortages being detected in inputs & finished goods - Statements of the firm's director were taken wherein he accepted the shortages & was unable to provide any explanations for such discrepancies - The Department alleged clandestine manufacture & removal of goods & raised duty demands with equivalent penalty along with personal penalty on the director - On appeal, the Commr.(A) set aside the demands raised in respect of input shortage & also set aside the penalty imposed on the director - The remaining demands were upheld & the remaining penalty was reduced on grounds that assessee deposited duty before issue of SCN - Hence the appeals by both the assessee as well as the Revenue.

Held: The Commr.(A) noted that the weighment of raw materials was done on eye estimation basis without there being any actual weighment - It is settled principle that weighments based on eye-estimation cannot be made basis for raising demand - Hence the Commr.(A)'s findings in this regard cannot be faulted - Regarding duty raised for alleged shortage of finished goods, the Commr.(A) noted that the assessee could not produce evidence to rebut the charges of clandestine removal - Such findings are faulty, considering that the stock of finished goods was also verified on eye-estimation basis without there being any inventories or weighment slips to show that the stock was actually weighed - There is nothing to suggest the method adopted by the officers for weighment of the ingots - Hence the charges of clandestine removal remain uncorroborated - Such allegations must be backed by positive & tangible evidence, the onus of which lies on the Revenue to discharge - No independent investigations were made by the Revenue - Hence the findings of the Commr.(A) in this regard must be quashed: CESTAT (Para 2,3,4,6-10)

- Revenue's appeals dismissed: ALLAHABAD CESTAT

2018-TIOL-3077-CESTAT-MAD

CCE & ST Vs Unique Multifilm Virudhunagar Pvt Ltd

CX - The issue at hand is whether Rule 3(1) if the CCR 2004 is applicable on goods received from 100% EoUs - Also whether the assessee can avail Cenvat credit of the entire amount of Education Cess and Higher Education Cess - Such availment was denied by the Revenue but later granted by the Commr.(A).

Held: The issue is no longer res integra - Considering relevant portions of the Tribunal's decision in Tyche Industries Ltd. Vs. CCE the issues stand settled in favor of the assessee: CESTAT (Para 2,5,6)

- Revenue's appeal dismissed: CHENNAI CESTAT

2018-TIOL-3076-CESTAT-MUM

Trimurti Plast Containers Pvt Ltd Vs CCE

CX -Tribunal vide order dated 17.11.2017 - 2018-TIOL-928-CESTAT-MUM , while allowing Revenue appeal, had held that refund in respect of accumulated CENVAT credit under rule 5 of CCR, 2004 is allowed only in respect of export goods which are taken outside India and not when supply is made to 100% EOU -Miscellaneous application filed by assessee for rectification of mistake in this order on the ground that the Revenue appeal could not have been proceeded with on the ground of monetary limit (duty involved is less than Rs.10 lakhs), as per instructions dated 17.12.2015 of CBEC.

Held : Representatives of Revenue as well as assessee were present before the Tribunal and in their presence the order dated 17.11.2017 was dictated and pronounced in open court - since entire order was dictated in presence of both sides, it cannot be said that some of the arguments placed by respondent therein was not considered by Tribunal - Further as per instructions dated 17.12.2017, in paragraph 2 it is clarified that monetary limits would not be considered in case of refund issue and issues which are recurring in nature - both sides agree that on identical set of facts, proceedings have been initiated by department in rejecting the refund application filed for earlier period - since issue is of recurring nature, monetary limit prescribed cannot be considered for rejection of appeal filed by Revenue - ROM application is, therefore, dismissed: CESTAT [para 3, 4]

- Application dismissed: MUMBAI CESTAT

CUSTOMS

Mohan Lal Vs State Of Punjab

Narcotic Drugs and Psychotropic Substances Act, 1985 [NDPS Act] - Appellant assails his conviction under section 18 of the NDPS Act, sentencing him to rigorous imprisonment for 10 years and a fine of Rs.1 lakh, with a default stipulation - whether in a criminal prosecution, it will be in consonance with the principles of justice, fair play and a fair investigation, if the informant and the investigating officer were to be the same person - in such a case, is it necessary for the accused to demonstrate prejudice, especially under laws such as NDPS Act, carrying a reverse burden of proof : HELD – the presence of a private person in a police vehicle while on patrol duty, the individual being an illiterate, but having signed the consent memo were surely matters for investigation - a plain reading of section 55 of the NDPS Act makes it manifest that it is the duty of the police officer to deposit the seized material in the police station malkhana - the stringent provisions of the NDPS Act, such as section 37, the minimum sentence of ten years, absence of any provision for remission, do not dispense with the requirement of the prosecution to establish a prima facie case beyond reasonable doubt after investigation, only after which the burden of proof shall shift to the accused - the case of the prosecution cannot be allowed to rest on a preponderance of probabilities - if an informant police official in a criminal prosecution, especially when carrying a reverse burden of proof, makes the allegations, is himself asked to investigate, serious doubts will naturally arise with regard to his fairness and impartiality - a fair investigation, which is but the very foundation of fair trial, necessarily postulates that the informant and the investigator must not be the same person - justice must not only be done, but must appear to be done also - any possibility of bias or a predetermined conclusion has to be excluded - this requirement is all the more imperative in laws carrying a reverse burden of proof - resultantly, the appeal succeeds and is allowed - the prosecution is held to be vitiated because of the infraction of the constitutional guarantee of a fair investigation - the appellant is directed to be set at liberty forthwith unless wanted in any other case : SUPREME COURT [para 7, 8, 10, 14, 25, 26]

- Appeal allowed: SUPREME COURT OF INDIA

2018-TIOL-2125-HC-DEL-CUS

Shashi Cables Ltd Vs DGFT

Foreign Trade (Development and Regulation) Act, 1992 [FTDR Act] - By the impugned order dated 23.2.2016, the Policy Relaxation Committee [PRC] of the Directorate General of Foreign Trade rejected the petitioner's application for the second extension of validity of the Duty Free Import Authorisation [DFIA] on the ground that the petitioner was unable to establish a case of genuine hardship - by the impugned order dated 6.9.2016, the PRC rejected the petitioners application of review of the impugned decision dated 23.2.2016 and, by the impugned order dated 6.7.2017, the Director General of Foreign Trade [DGFT] rejected the petitioner's request:

Held: the petitioner had sought extension of the DFIA on the ground of commercial expediency - the PRC was of the view that since the petitioner had not set up a case of genuine hardship, it was not entitled to any relaxation in terms of paragraph 2.58 of the Foreign Trade Policy - this Court is unable to accept that the said decision is arbitrary, unreasonable or otherwise falls foul of Article 14 of the Constitution of India - this Court finds no infirmity with the decision of the PRC exercising its discretion and rejecting the petitioner's request for further extension - the DGFT noted that the petitioner had secured a DFIA which was valid for a period longer than those issued to other exporters - the DGFT was also of the view that the petitioner had not provided any reasons which indicated any genuine hardship - this Court finds no fault with the aforesaid decision - even if the reasoning indicated by the DGFT is ignored, there is no denying the fact that the petitioner had not made out a case of genuine hardship - the petition is, accordingly, dismissed: HIGH COURT [para 18, 19, 21, 22, 23, 24, 26]

- Writ Petition dismissed: DELHI HIGH COURT

2018-TIOL-2124-HC-MAD-CUS

Usha International Ltd Vs ACC

Cus - Writ petitions seeking direction to respondents to reassess the Bills of Entry [B/E] filed by the respective writ petitioners under section 149 and 154 read with section 17 of the Customs Act, 1962 [Act] - petitioners contending that the consignment of wall fans were wrongly assessed to 10% advalorem [SH 8414 51 10] instead of 7.5% [8414 51 90] at the time of clearance based on the declarations made by them before the assessing officers:

Held - In the light of the decisions cited by the petitioners, these writ petitions are to be partly allowed by directing the respondents to consider amendment to the subject B/E - the respondents shall give an opportunity to the petitioners to establish their case for re-classification of the imported wall fans on the strength of existing documents on the date of the import as per the proviso to section 149 of the Act - in sum, the above writ petitions are partly allowed with a direction to the 1st respondent or any other officer authorised under the Act (i) to pass a speaking order in respect of assessment made in the 23 and 9 B/E of the respective petitioner under section 17 read with proviso to sections 149 and 154 of the Act after giving adequate opportunity to the petitioners to establish the classification of imported wall fan under SH 8414 51 90 following the principle of natural justice (ii) refund if any, will be subject to the petitioner satisfying the test of unjust enrichment : HIGH COURT [para 22, 23, 26]

- Writ Petitions partly allowed: MADRAS HIGH COURT

Mittal Pigments Pvt Ltd Vs CC

Cus - Allegation of department is that the invoice prices were undervalued, so the department has enhanced the value of the imports and also imposed penalties on the appellants - appeals before the CESTAT.

Held: When all the parties retracted their earlier statement, then the same cannot be relied upon - amount paid under threat and duress cannot also be accepted as acceptance of guilt on the part of the appellants - report of Belgium Customs is regarding Nickel Silver scrap but none of the imported consignments is of nickel silver scrap, so the said reports cannot be relied upon - indenting agents have no knowledge of the trade transaction and their role is merely to bring buyer and seller together in the high seas sale for a commission - SCN is based merely on suspicion without having actual facts - scrap is always cheaper than prime metal and sale price on high seas could also be cheaper than the sale by the exporter - Charge of under-invoicing has to be supported by evidence of prices of contemporaneous imports of similar/identical goods - it is for the department to prove that the apparent is not real - in the instant case, department has not brought any corroborative evidence to support its contention - allegation against the appellants is totally assumptive and presumptive without any corroborative evidence, hence impugned order is set aside and appeals are allowed: CESTAT [para 10, 11, 13, 14]

- Appeals allowed: MUMBAI CESTAT

2018-TIOL-3074-CESTAT-MUM

Tej Overseas Vs CC

Cus - Whether Appellant overvalued the export goods and consequently obtained advance licence and whether they are liable to pay redemption fine on imports made by Madhu Overseas and consequent penalty for charge of overvaluation.

Held: Commissioner has in paragraph 17 of the impugned order analysed the overall facts and circumstances and come to a conclusion that there is overvaluation which findings the Bench does not wish to interfere - However, as regards imposition of redemption fine, it is an admitted fact that the goods are not available - in such a situation, redemption fine should not have been imposed as held by the Larger Bench in the case of Shiv Kripa Ispat Udyog - 2009-TIOL-388-CESTAT-MUM-LB - therefore, redemption fine is not sustainable: CESTAT [para 6]

Cus - duty demand from appellant - appellant is not the importer of the goods - they are the transferor of licence to M/s Madhu Overseas - Duty cannot be confirmed against transferor of the licence as the statute permits to demand duty only from importer - Section 28 was amended from 28.05.2012 according to which the transferor was also made liable for payment of duty as transferor of licences - however, since the present case pertains to the period 1995 during which provision there was no provision to recover duty from the transferor of licence - duty demand and consequent penalty and interest confirmed against appellant is also set aside: CESTAT [para 6]

Cus - Penalty u/s 114(i) of the Customs Act, 1962 - Penalty imposed is in relation to overvaluation of export goods - appellant have transferred only two licences wherein the duty involvement is Rs.2,83,400/- - fifteen licences have been surrendered without use thereof - taking into consideration overall facts and circumstances, penalty imposed of Rs.25 lakhs is very harsh and is hence reduced to Rs.10 lakhs - Appeal is partly allowed: CESTAT [para 7, 8]

- Appeal is partly allowed: MUMBAI CESTAT