SERVICE TAX

Oil Field Warehouse And Service Ltd Vs UoI

ST - Audit - Rule 5A of STR, 1994 not saved by s.174(2) of CGST Act, 2017 - there was no saving of Rule 5A in such manner that fresh proceedings for audit could be initiated in exercise of powers under the said Rule - Serious doubts as to whether with the aid of Rule 5A, CAG can carry out Service Tax Audit of private agencies - Ad interim relief granted - CAG not to carry out any further Service tax audit - Notice returnable on 28.11.2018: High Court [para 8, 9]

- Ad-interim relief granted: GUJARAT HIGH COURT

2018-TIOL-3159-CESTAT-HYD

M Subhas Reddy Vs CCCE & ST

ST - The assessee is a contractor engaged in drilling & blasting work in mines - He was awarded contract for extracting iron ore & conducted drilling & blasting work - For the period of dispute, the assessee claimed that such services were taxable under 'Site formation & clearance services' - Duty demands were raised with interest & penalties.

Held: Considering a technical report on the rock blasting as well as the assessee's activity, it is seen that the assessee is engaged only in drilling and blasting in the mines & the definition of site formation and clearance services is inapplicable to the present case - Hence the duty demand raised under this head is not sustainable, as is the demand for interest & the penalty imposed - Regarding drilling & blasting post 01.06.2007, the assessee did not contest the tax liability of such service - The assessee maintained that its activities are taxable under 'Mining services' - Hence the demand for the period post 01.06.2007 is upheld under 'Mining service' - However, matter is remanded to re-calculate duty payable by considering amounts received as cum tax value & interest thereof - Moreover, as the matter involves interpretation & classification, no penalty is imposable: CESTAT (Para 2,7,8,9,10)

- Assessee's appeal partly allowed: HYDERABAD CESTAT

2018-TIOL-3158-CESTAT-MUM

ST - Whether 'renting of bullock carts' during harvesting seasons for procuring sugarcane from fields can be subjected to service tax under the category of 'Supply of Tangible Goods service' has been settled by the Tribunal in favour of the assessee in the case of Bhima SSK Ltd. - 2013-TIOL-775-CESTAT-MUM - following the said decision, impugned order set aside and appeal allowed: CESTAT [para 5]

- Appeal allowed: MUMBAI CESTAT

CENTRAL EXCISE

DS Doors India Ltd Vs CCE & ST

CX - M/s DSD is a private limited company with Shri Dhan Singh Sharma, as its Managing Director and his wife and son, Mrs Kaushalya Jangir and Shri Kunal Jangir respectively, as its Directors - It is engaged in the manufacture of various articles of wood such as doors, chowkhats and furniture items - They availed SSI exemption under Notfn 8/2003-CE - M/s DSW is also a private limited company with Shri Dhan Singh Sharma, and his wife Mrs. Kaushalya Jangir as Directors and his son Shri Dinesh Jangir as Managing Director - This unit is also manufacturing the same items as DSD and is availing SSI exemption under same Notfn - Demands against assessee have been raised on the grounds that both DSD and DSW are the same, therefore their sales are to be clubbed together; the fake trading shown in the balance sheet is actual sales and the appellant has undervalued their final goods - As regards to the issue that both DSD and DSW are the same, merely on the ground that order is placed in unit 'A' and goods have been supplied by Unit 'B', it cannot be said that both units are same - Further, as both the units are having separate factories, separate registrations with various departments, in that circumstance, it cannot be held that both the units are one and the same and their clearances can be clubbed - Therefore, the issue of clubbing the clearances is not sustainable in the absence of concrete and corroborative evidences and merely on the basis of the fact that Income Tax department has clubbed their income - The SSI exemption cannot be denied on account of clubbing of clearance - As regsrds to fake trading entries shown in the balance sheet, to establish charge of clandestine removal of the goods, several factors to be brought on record such as, procurement of inputs, consumption of electricity, employment of labour, production capacity, transportation of goods and no such evidence have been brought on record - In that circumstances, the benefit of doubt goes in favour of the appellant and demand on this ground is not sustainable - As regard to undervaluation, re venue sought to include the value of hardware, labour charges and polishing charges done at the site of the buyers in assessable value - In fact, excise duty is payable at the time of clearance of goods from the factory whereas the goods are to fitted at the buyer's place with the hardware and certain labour charges are required to be paid, thereafter, it is required to be polished - In case of door frame or window frames, they are embedded to earth and they become an immovable property - As all these activities have been done at the buyer's place and are part of immovable property, in that circumstances, activity conducted at the end of buyer's place such as hardware fitting, labour charges for polishing cannot be included in assessable value of goods - Therefore, the charge of undervaluation is not sustainable against the appellants - Thus, the impugned order set aside: CESTAT

- Appeals allowed: CHANDIGARH CESTAT

2018-TIOL-3156-CESTAT-MUM

CX - CENVAT credit availed on the inputs used in the clearances of Paper & Paper board on payment of duty denied on the ground that the appellant ought to have availed the exemption in terms of notification 4/2006-CE dated 01.03.2006, in view of the provisions of section 5A(1A) of the CEA, 1944.

Held: On the very same issue, in the case of the appellant, the Tribunal for the earlier period had held 2015-TIOL-1100-CESTAT-MUM that a bare reading of s.5A of CEA, 1944 indicates that a manufacturer will not have an option to pay the duty only where the goods are exempt and the exemption granted is "absolute" - in the present case, serial no. 90 has two conditions viz. limiting exemption for goods cleared for home consumption upto first clearances of an aggregate quantity not exceeding 3500 MT and the second condition of non-availment of notification 8/2003-CE; that in view of the above mentioned two conditions it cannot be said that serial no. 90 provides 'absolute exemption' - Appellant assessee cannot be forced to pay duty as per serial no. 90 of notification 4/2006-CE and they have the option to pay duty under other serial numbers viz. 91 and 93 - Appeal of assessee allowed: CESTAT [para 3, 4]

- Appeal allowed: MUMBAI CESTAT

2018-TIOL-3155-CESTAT-MUM

CX - ROM filed by Revenue against order dated 15.12.2017 on the ground that the case being a refund matter was not taken note of while dismissing the Revenue appeal by applying the litigation policy communicated vide letter dated 17 th August 2011.

Held: Respondent pointed out that the litigation policy has been further amended vide letter dated 4 th April 2018 for withdrawal of dispute below the threshold of Rs.10 lakhs irrespective of the nature of dispute - accordingly, there is no error on record - applications dismissed: CESTAT [para 3, 4]

- Applications dismissed: MUMBAI CESTAT

CUSTOMS

NOTIFICATION

cnt87_2018

Govt notifies Customs exchange rates for export & import

CASE LAWS

2018-TIOL-3161-CESTAT-MAD

Hritik Exim Vs CC

Cus - The dispute concerns the eligibility of assessee to the duty exemption extended under Notfn 32/1997-Cus. - The assessee has complied or satisfied all the requirements, however has allegedly fallen foul of requirement that imported raw materials should have been supplied to him free of cost - There is no dispute that the assessee is job worker - The foreign supplier placed purchase order for job work of 'Human Hair Remi Single Drawn' - The said job order also instructs that the resultant product should be exported to consignee in Brazil - It is also informed that the quantity and value, buyer/buyers would be intimated to assessee on a case to case basis for a job order - It has been instructed that the importee consignee would be a party in Brazil - There is also no allegation that assessee has not complied with requirements of Customs, Rules 1996 - Once the jurisdictional Central Excise authorities also function as Customs officers, it is not necessary for assessee to write to the port of import where they intend to import the goods - In any case, even from the samples of Bills of Entry produced, assessee have made reference to the commercial invoices of foreign supplier and have also declared the price in US Dollars as shown in that invoice - The claim of Notfn 32/97-Cus. on job work has also been indicated in the Bills of Entry - Thus, all the requirements and conditionalities of notification have been complied with or satisfied by assessee - There is no dispute that assessee has not satisfied or complied with the requirements of Notfn 32/1997-Cus - After this dispute, assessee have switched over to advance authorization scheme and carrying out the very same activities of job work and export of resultant goods, without running with the Customs - It is only the words "free of cost" in the Notification that have caused them the niggles which led to this appeal - Notfns like 32/97-Cus. and schemes like advance authorization and nothing but incentives and schemes approved by Legislature and for the purposes of enhancing the export quotient of country - If intended purposes of these notfns, including the prescribed value addition etc. is complied with and there are no allegations of misuse or diversion of imported goods, larger substantive benefits of the notification should not be denied for a procedural requirement - Assessee is very much eligible for exemption benefit under Notfn 32/1997-Cus. - The impugned order cannot then sustain, same is set aside: CESTAT

- Appeal allowed: CHENNAI CESTAT

2018-TIOL-3160-CESTAT-BANG

Focus Energy Ltd Vs CC

Cus - The assessee requested to release the tug on payment of redemption fine as imposed in impugned order so that they can return the tug to the owner - The Superintendent of Customs, Cochin vide letter has rejected the request and communicated that the tug can only be released for export on payment of redemption fine, duty, interest and penalty as ordered in OIO - The assessee submitted that 'M.V.Shunter' are not the owner of the tug; it was imported on re-export basis; no foreign exchange was remitted against the other goods and that the applicants now obliged to immediately handover the said tug to the respectful owners - Request of assessee can be accepted - Revenue is directed to release the tug on payment of redemption fine, duty liability may be appropriated from the bank guarantee; the assessee shall, however, replenish the bank guarantee to that extent in adherence to this Bench Order: CESTAT

- Misc application allowed: BANGALORE CESTAT