SERVICE TAX

2018-TIOL-3176-CESTAT-MAD

Cox And Kings Ltd Vs CCE & ST

ST - The dispute concerns the liability of service tax under category of BAS on the amounts received from Amadeus India Pvt. Ltd. as commission for using the Amadeus Software Systems for International Air ticket booking - The period in dispute is 2003-04 to 2004-05 - There is a definite requirement of assessee to use Amadeus as the only Computer Reservation Systems (CRS) of choice for all the reservations from their main office and associated offices in India - As per the agreement, the assessee have received definite pre-determined service fee/commission depending on the monthly segment contract above by them - This being so, it cannot be then argued that they are not promoting the business of Amadeus to the exclusion of the other CRS - Viewed in this light, these activities will surely then fall within the scope of BAS as defined in Section 65 (19) (2) of FA, 1994, in particular, promotion or marketing of services of the client - The matter came to light only pursuant to an audit conducted in February, 2007 - Hence, no merit found in this plea per se can be set aside on limitation - However, considering that the issue was and still is mired in litigation, sufficient cause found for setting aside the penalty imposed under Section 78 ibid - In the result, impugned order is modified only to the extent of setting aside the penalty without disturbing the demand of service tax or the interest thereon: CESTAT

- Appeal partly allowed: CHENNAI CESTAT

Honda Motorcycle And Scooters India Pvt Ltd Vs CST

ST - A SCN was issued to assessee demanding service tax along with interest and proposing penalty - The demand of Rs. 2,970/- on account of delayed payment of Service Tax due to technical problems is, prima facie, unsustainable in view of the judgement of Tribunal in case of Mangalore Ganesh Beedi - 2011-TIOL-1450-CESTAT-BANG - The penalty imposed on assessee for delayed payment of Service Tax under Rule 6(3) of CCR is also, prima facie, unsustainable in view of the judgment of Punjab & Haryana High Court in case of Sangrur Auto - 2010-TIOL-779-HC-P&H-CX - Besides, prima facie, no penalty can be imposed for non-payment of interest on delayed payment of service tax - The assessee have made out a case for full waiver of pre-deposit of demand of interest and penalty - Accordingly, the condition of pre-deposit of interest and penalty is waived and their recovery stayed: CESTAT

- Stay granted: CHANDIGARH CESTAT

2018-TIOL-3174-CESTAT-BANG

Carl Zeiss India Pvt Ltd Vs CCE & CST

ST - The assessee company is engaged in the promotion & sale of medical, microscopy and metrology products under the brand name of 'Zeiss' - The assessee also procures orders in India for such orders & delivers them to the overseas supplier for making shipment directly to customers - The assessee is also engaged in providing Maintenance & Repair services - During the period of dispute, the assessee claimed rebate u/r 5 of Export of Service Rules, 2005 on service tax paid on the commissions received for the Business Auxiliary Services provided to the customers abroad - The Department rejected such claim on grounds that the assessee did not comply with the conditions u/r 3 & 5 of the Export of Service Rules, 2005.

Held: It is seen that the assessee fulfils all the conditions laid down in Rule 3 of the Export of Service Rules, 2005, namely that service must be provided to recipient outside India for some business or commecial purposes, that such service be used outside India & that the consideration for such service be received in forex - Further considering the mandate of the the Board Circular No. 111/05/2009-ST dt. 24.02.2009 as well as the precedents relied upon by the assessee, it is seen that the denial of refund is unjustified: CESTAT (Para 2,6-9)

- Appeal allowed: BANGALORE CESTAT

CENTRAL EXCISE

2018-TIOL-2199-HC-MAD-CX

P Ganesh Vs CCE

CX - By the impugned order, the application filed by the appellant for restoration of the appeal filed by the appellant, which was dismissed for default vide final order dated 2.8.2017, was dismissed- w hether the impugned order of the Tribunal is bad in law for departing from the following principles :(i) by virtue of Article 141 of The Constitution of India, the issue must be decided strictly in accordance with law laid down by the Supreme Court, it being the last word on the subject ? And(ii) if, there is no decision of the Supreme Court on the issue, then the effort must be to decide the issue by any decision of the High Court of our country, if holding the field ? : HELD - Tribunal had not adverted to any of the contentions raised by the appellant in the application for restoration dated 9.10.2017 - placing reliance on the Supreme Court decision in the case of S.Chenniappa Mudaliar [2002-TIOL-1456-SC-IT-LB], the Supreme Court, in the case of Balaji Steel Re-Rolling Mills [2014-TIOL-92-SC-CX-LB], held that the provisions of rule 20 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 are similar to that of the provisions of rule 24 of the Income Tax Appellate Tribunal Rules, 1946 and that the Tribunal could not have dismissed the appeal filed by the appellant for want of prosecution and it ought to have decided the appeal on merits even if the appellant or its counsel was not present when the appeal was taken up for hearing - the aforementioned decision would clearly support the case of the appellant and it has to be necessarily held that the impugned order passed by the Tribunal, is unsustainable in law - the impugned order deserves to be set aside - the civil miscellaneous appeal is allowed and the substantial question of law is answered in favour of the appellant -the impugned order dated 12.2.2018 is set aside and the matter is remanded to the Tribunal for a fresh consideration with a direction to restore the appeal filed by the appellant - the dismissal of the appeal filed by the said company also requires to be restored - in the result, Final Order Nos.41388 and 41389 of 2017 in Appeal Nos.E/40812/2013 and E/40813/2013 dated 02.8.2017 are set aside and the appeals are restored to the file of the Tribunal to be heard and decided on merits : HIGH COURT [para 10, 12, 13, 14, 15, 16]

- Civil Miscellaneous Appeal allowed: MADRAS HIGH COURT

2018-TIOL-3173-CESTAT-HYD

Gajanan Road Lines Vs CCT

CX - The assessee herein is a transporter, who picks up goods from various consignors and despatches them to the consignees - Search of its premises revealed there to be eight truck loads of fans, along with consignment notes - The Department alleged that the goods did not have invoices or way bills issued by the consignors - The Department also alleged that the goods were manufactured clandestinely without payment of duty - Hence the goods were seized - Duty demands were raised with demand for EC & SHEC - Penalties were imposed on the assessee as well as the manufacturers - Such demands were confirmed by the Appellate Authority.

Held: The assessee was unable to produce invoice, way bills issued by consignors & manufacturers despite being given opportunities to submit the same - Hence penalty is imposable under Rule 26 of the CER 2002 as the assessee acquired possession of goods & were concerned with holding the goods on which duty had not been paid - Nonetheless, the quantum of penalty is reduced: CESTAT (Para 2,5,6,7)

- Assessee's appeal partly allowed: HYDERABAD CESTAT

CCE AND ST Vs Shiva Poly Plast Pvt Ltd

CX - The assessee company is engaged in manufacture of moulded plastic furniture & household goods - Its premises were searched by Excise officers, who also simultaneously searched the dealer's premises, transporters, go-down & the residential premises of the persons concerned - The Department found some stock at the premises of three dealers, none of whom were able to produce invoices - Hence the Department alleged that the assessee cleared such goods without payment of duty - The Department also noted an excess of raw materials & finished goods, as were certain shortages - Thus the Department alleged that the assessee indulged in clandestine manufacture & clearance of goods with intent to evade payment of duty - Certain material was recovered & statements were taken from persons concerned - Duty demand was raised on the assessee firm with penalties & personal penalty being imposed on the director of the firm - The goods were also directed to be confiscated - Such demands were confirmed by the Commr.(A).

Held: The Department's allegations of clandestine removal are hard to accept as the entire case is built on diary entries and loose slips, which are uncorroborated by other evidence - The Department did not contact the raw material suppliers except for one who denied having any dealings with the assessee - Hence the receipt of non-duty paid goods was never confirmed - The Department also did not put forth any evidence showing procurement of raw materials or identification of transporters or buyers - It is settled law that allegations of clandestine removal are serious enough to warrant being established using positive evidence & that the onus to do so lies on the Department - It further relied on the statements taken from 3-4 dealers out of the total 29 available - Besides, no demand can be confirmed based on entries in rough documents which are uncorroborated by further evidence - Hence the demand raised in such a manner is unsustainable - Consequently, the penalty is set aside too - Further, no demand can be raised or penalty be imposed for goods found at dealer's premises without any material showing clandestine removal - Lastly, the shortages & excesses found in the assessee’s premises are spread over a period of time & are below the permissible tolerance limit - Hence no demand can be raised in this regard: CESTAT (Para 2-6,9,10,13,14)

- Revenue's appeal dismissed: ALLAHABAD CESTAT

2018-TIOL-3171-CESTAT-AHM

Kwality Silk Mills Vs CCE & ST

CX - During the period of dispute, the issue of applicability of Excise duty on fabrics was in dispute - One issue was whether processing by job workers amounted to manufacture & if so, what was the duty payable - The assessee was paying duty based on assessment done by them - The jurisdictional High Court held thart duty in excess of value of job charges should be refunded along with 12% interest - On appeal by Revenue, the Apex Court directed that the assessee be allowed to withdraw such amount after furnishing bank guarantee for full amount - Hence the assessee was refunded some of the amount - Therefter, the matter was remanded and the refund amount was recalculated at an amount slightly lower than originally granted - The Revenue encashed 75% of the amount of Bank guarantee - The adjudicating authority treated the amount already refunded to the assessee and which was secured by bank guarantee as duty not paid - This was adjusted against the total amount refundable and arrived at a lower figure as refund admissible to the assessee - While such refund was sanctioned it was credited to the Consumer Welfare Fund, on grounds of unjust-enrichment u/s 11B of the CEA, 1944.

Held: The refund amount finally calculated is correct as there is an amount payable to the Revenue but which remained unpaid - Also considering the plethora of judgments cited, such refund cannot be credited to the Consumer Welfare Fund as there is no unjust enrichment of the assessee - The assessee is entitled to receive the interest which was granted by the High Court - However, the interest for the period for which the entire amount was refunded to them in 1983, and 75% of which was recovered from them in 1990, needs to be adjusted: CESTAT (Para 2,5,6,7)

- Appeal partly allowed: AHMEDABAD CESTAT

CUSTOMS

2018-TIOL-2208-HC-MUM-CUS + Case Story

CX/Cus/ST- s.35G of the CEA, 1944, s.130 of the Customs Act, 1962, s.83 of FA, 1994 r/s s.35G of CEA, 1944 - Tax appeals are to be filed before the bench allotted to the district where the dispute arose – Pursuant to the amendment made to the Appellate Side Rules on 27th October, 2014 by insertion of Chapter XXIVA (Tax Appeals), it was no longer the situs of the Tribunal which decided which of the benches or the principal seat of this Court to which an appeal lies but the place where the dispute arose - It is a settled position in law that the practice of the Court is the law of the Court "Cursus curiae est lex curiae" - Registry directed to send the five appeals to the respective benches of the Bombay High Court at Goa and Nagpur - There is also a greater likelihood that the dispute raised in these appeals may be resolved earlier at the benches then at the principal seat, if after admission it is kept pending here since the number of Excise and Customs Appeals pending before the benches are very small in number then those pending before the principal seat of the Bombay High Court: High Court [para 9, 11 to 15]

2018-TIOL-2198-HC-MAD-CUS

Daejung Moparts Pvt Ltd Vs ACC

Cus - The demand notice issued by the Department of Revenue, Office of the Commissioner of Customs (Export) dated 25.4.2011, is under challenge in this writ petition : HELD -No writ petition can be entertained before exhausting the remedies provided under the Customs Act, 1962 other than under exceptional circumstances - the principles in respect of exhausting the appeal remedies was formulated in an order passed by this Court on 16.7.2018 in Hyundai Motor India Limited in W.P. No.22508 of 2017 - in view of the legal principles delivered in that judgment, the writ petitioner is at liberty to redress his grievances by preferring an appeal before the competent authorities - if the writ petitioner states that he has already fulfilled the export obligations, even then, he is at liberty to pursue an application before the competent authorities for necessary action - however, in respect of the present writ petition, the relief as such sought for to quash the impugned demand notice cannot be granted - accordingly, this writ petition stands dismissed : HIGH COURT [para 8, 9, 10]

- Writ Petition dismissed: MADRAS HIGH COURT

2018-TIOL-3170-CESTAT-MAD

Sri Shipping Services Vs CCE

Cus - The assessee, who are licenced CHA were allowed to operate in Chennai Customs Port under Regulation 9(2) of CHALR, 2004 on strength of licence issued under relevant provisions of CHALR framed under Section 146 of Customs Act, 1962 - Based on information from DRI, that the officers have effected seizure of red sander wooden logs, it appeared to department that CHA failed to fulfill the obligations cast upon them under CHALR, 2004 amounting to violation of Regulations and that for such contravention of provisions, assessee is liable to be punished by way of revocation of license issued to them and ordering forfeiture of security deposited by them - On being satisfied prima facie, an order of prohibition was issued to assessee in terms of Regulation 21 of CHALR - It can be seen that in CHALR, 2004 under Regulation 22(8), an appeal can be preferred under Section 129A before the Tribunal only against a decision or order passed under Regulation 20 or under sub-regulation (7) of Regulation 22 - Both these regulations deal with order passed revocation or suspending license - The present order passed by Commissioner is an order of prohibition invoking Regulation 21 of CHALR, 2004 - Tribunal do emphathise with the situation of assessee wherein no further proceedings have been initiated by the department after a prolonged delay of more than seven years of passing of the prohibition order - The Tribunal being a creature of statute cannot entertain an appeal which is not provided as per Section 129E of Customs Act - Therefore, appeal against the prohibition order is not maintainable and is therefore dismissed.

As regards to appeal no. C/282/2011

A SCN was issued to assessee alleging failure on their part in fulfilling the obligations cast upon them under CHALR, 2004 while representing seven exporters in connection with SCN issued to such exporters who indulged in fraudulent export transactions for the year 2003 and 2004 - The allegation was that these exporters indulged in fraudulent export and attempted to export substandard quantity of readymade garments by misdeclaring the value, description and quantity for claiming ineligible drawback claim - After due process of law, the original authority ordered revocation of CHA licence and also ordered forfeiting the security deposit under Regulation 21 of CHALR, 2004 - In Necko Freight Forwarders Ltd. 2018-TIOL-196-HC-DEL-CUS, the very issue has been considered - CHALR 2004 was replaced by CBLR, 2013 - The decisions rendered in the context of CHALR 2004 would be equally applicable to the context of CBLR, 2013 - In the present case, the adjudicating authority has not complied with the time-limit prescribed for passing the order revoking the licence - The High Court of Madras in case of Sanco Trans Ltd. 2015-TIOL-1524-HC-MAD-CUS has held that time-limit is mandatory - Following the said decisions, impugned order cannot be sustained as it has not complied with the provisions of time-limit specified Regulation 20 before issuing the order of revocation of license: CESTAT

- Appeals partly allowed: CHENNAI CESTAT

CC Vs Transworld Business Corporation

Cus - The issue is regarding fulfillment of NFEP in terms of LOP issued by Development Commissioner; the LOP was revised to include the additional items, namely, garments and jewellery, in terms of Para 32.3 (b) of Appendix 14-II of Hand Book of Procedure Volume I, 2002-2007 in addition to existing LOP for the purpose of export from assessee - In LOP, vide which the dis-similar items, namely, garments and jewellery, were incorporated was deleted w.e.f. 23.06.2006 and thereafter, it was ordered that the NFE achievement could be calculated on the existing permission till the date of cancellation - The Adjudicating Authority has correctly held that the SCN is premature as the matter has not been decided by Development Commissioner, FSEZ in case of assessee - The finding of Adjudicating Authority finds support from the CBEC Circular 21/95-Cus and 122/95-Cus - In these Circulars, it has been clarified that the case of violation of Exim Policy by the 100% EOU/EPZ be fresh settled by Development Commissioner and only thereafter Customs should confirm the demand - On this account, that would avoid the situation wherein the allegation in the notice might be found unsustainable in terms of Exim Policy/Customs law and may have to be dropped by the Department itself - Impugned order upheld: CESTAT

- Appeal dismissed: KOLKATA CESTAT