2018-TIOL-146-HC-AHM-GST + Case Story

RSPL Ltd Vs UoI

GST - S.140 of the CGST Act, 2017 - Transitional provisions - To bring in the element of discrimination in terms of Article 14 of the Constitution, onus is on the petitioner to establish that the persons or things treated differently form a homogeneous class - Inputs and Capital goods form different and distinct classes, therefore, question of sub-classification or artificial demarcation would not arise - capital goods and inputs used in manufacturing process have always been treated differently and distinct treatment have been given under the earlier statutes - In absence of any matching provisions pertaining to capital goods as existing in section 140(5) of the CGST Act, 2017 for inputs or input services, in a situation where the duty had been paid on purchase of capital goods prior to the appointed day but the capital goods were received on or after the appointed day, there would be no possibility of availing credit on such tax under the GST regime - Legislature has made a clear and conscious demarcation between capital goods and inputs when it comes to availing credit of the duties paid on the goods which are in transit - If the legislature, therefore, was of the opinion that in relation to capital goods in transit, duty paid before the appointed date cannot be claimed as a credit in the GST regime, such distinction is not in any manner artificial or arbitrary - Even in the earlier statute right to claim credit of duty paid would arise or accrue only upon receipt of such capital goods at the place of manufacturer - Section 140(5) of the CGST Act, 2017 in any manner does not violate Article 14 or 19(1)(g) of the Constitution - It can also not be seen as taking away an existing right to claim CENVAT Credit of the duty paid on capital goods - Petition dismissed: High Court [para 16 to 20, 25, 26]

- Petition dismissed: GUJARAT HIGH COURT

SERVICE TAX

018-TIOL-3225-CESTAT-HYD

EI DuPont India Pvt Ltd Vs Deputy Commissioner of Central Excise Customs & Service Tax

ST - The assessee had claimed refund of an amount of approximately Rs 65,000/- of service tax paid for the services rendered by various service providers in respect of garden maintained by them in their research and development area - It is the case of assessee as regards the balance amount of approximately Rs 1,05,000/-that the service tax is discharged by them on the services rendered by the service provider for erecting the barbed wire fences around the field where they were supposed to conduct trials of various hybrid seeds on such field taken on lease from National Dairy Research Institute, Karnal - As regards the eligibility to avail CENVAT credit and consequent refund of the service tax paid on gardening services, the issue is now settled in favour of assessee - Tribunal perused the permission granted by Pollution control Board to assessee and note that there is no clause which requires the assessee to maintain a green belt of approximately 33% of the area for which they have sought permission for construction of Research and Development facility - The judgement of Tribunal in case of Nhava Sheva Intl. Container Terminal (P). Ltd . - 2017-TIOL-1263-CESTAT-MUM would cover the issue in favour of assessee - The impugned order to that extent is set aside - As regards the service tax liability discharged by the service provider for fencing of the land leased out by assessee, the lower authorities were correct in coming to a conclusion that these services which were rendered by the service providers could not be correlated with the export of services of assessee - Before the Tribunal also they are unable to correlate the said services rendered with export services from assessee's premises - To that extent, both the lower authorities were correct in rejecting the refund claims filed by assessee: CESTAT

- Appeal partly allowed: HYDERABAD CESTAT

AXA Business Service Pvt Ltd Vs CCE

ST - The assessee being exporter of services, had claimed refund of unutilized input tax credit including tax paid on import of services under reverse charge mechanism - Same was partly rejected on the ground of defective documents - Rule 9(1) (e) is a specific provision which covers the case of a service recipient as the person liable to pay service tax - Admittedly, the assessee being an exporter of services had claimed refund of unutilized input tax under reverse charge mechanism which claim was rejected and the rejection has confirmed by Commissioner (A) - Even the Revenue has not raised any objection while conducting regular audit of assessee's books regularly - The ratio in case of Viki Industries (P) Ltd. - 2011-TIOL-769-CESTAT-MAD decidendi coupled with the facts that the findings are beyond SCN and that no audit objection was raised on the credit claimed, Tribunal have to hold that the Revenue authorities erred in rejecting the refund claim in entirety - For the same reason, e denial of refund is not sustainable and therefore, same is set aside: CESTAT

- Appeal allowed: BANGALORE CESTAT

CENTRAL EXCISE

2018-TIOL-3223-CESTAT-CHD

Hitachi Home and Life Solutions India Ltd Vs CCE

CX - The assessee is availing an area based exemption under Notfn 56/2002-CE - The first issue is with reference to eligibility of assessee for exemption/refund of education/higher education cess paid on goods manufactured and cleared by assessee by availing area based exemption - Both the sides agreed that issue stands settled by Supreme Court in M/s. SRD Nutrients Pvt. Limited - 2017-TIOL-416-SC-CX - As such, following the ratio of Supreme Court, assessee is eligible for such refund which is paid alongwith the excise duty once the excise duty itself was exempted - The second issue is with reference to valuation of excisable goods manufactured and cleared by assessee - The assessee considered the transaction value for their final products inclusive of outward freight up to the place of delivery of their finished goods - The impugned order records that assessee have not produced anything on record which would show that they had cleared the goods from the factory gate to a warehouse, any other premises, a depot, consignment agents premises from where such excisable goods were sold - Admittedly, the goods sold by assessee delivered at the buyers premises will not make the place of removal as buyers premises - Following the ratio of Apex court in Ispat Industries Ltd. - 2015-TIOL-238-SC-CX , there is no justification for assessee to consider the assessable value with inclusion of freight element after the goods were sold/removed from the factory - As such, the question of paying duty on such value addition to be covered by exemption under Notfn 56/2002-CE does not arise - Accordingly, the claim of assessee is not sustainable: CESTAT

- Appeals partly allowed: CHNADIGARH CESTAT

Bhavya Cements Ltd Vs CC, CE & ST

CX - The issue is regarding eligibility to avail CENVAT credit of Central Excise duty paid on MS plates, beams and channels during the period in question and these being utilized for fabrication of various machineries and also for structures - Assessee has taken a specific plea that these items were used for fabrication of machineries remains undisputed - This point of assessee was considered by this Bench in various orders and it was categorically held that items if used for fabrication of machinery in a cement plant, CENVAT credit needs to be allowed - Similar/identical issues having been already been decided by this Bench in assessee's favour, no reason found to deviate from such a view already taken - Accordingly, impugned order is set aside: CESTAT

- Appeal allowed: HYDERABAD CESTAT

Spick-N-Span Steel Wools Pvt Ltd Vs CCE

CX - SSI Exemption - Based on the close relationship between the Directors and Partners in the four companies, department viewed that they are covered by the definition of "Inter-connected undertakings" in terms of s.2(g) of the MRTP Act, 1969; that in view of the 3CD statements submitted under the Income Tax Act, all the four units had interest directly or indirectly in the business of each other; in view of the definition of "relative" as contained in clause 41 of section 2 of the Companies Act, 1956; all the four units are related persons as defined in section 4(3)(b) of the CEA, 1944 and, therefore, the clearances of all the four units should be clubbed together for determining their eligibility under the SSI exemption notification 8/2003-CE - accordingly, SCNs were issued demanding Central Excise duty and confirmed by the adjudicating authority - appeals to CESTAT.

Held: Entire case of the Revenue in the SCN and the impugned order is based on the fact that all the four units are ‘interconnected undertakings' hence related to each other and, therefore, their clearances are to be clubbed - Approach of the Revenue in the entire matter reflects poor appreciation of law - concept of ‘related person' as incorporated in Section 4 and the Valuation Rules is for the purpose of determination of the correct Assessable value in cases where the goods are being cleared through the related persons - admittance of relationship between the units is for the purpose of the said section and may have some impact on the transaction value - application of the said provision cannot be for holding that one unit is dummy of the other, for the purpose of clubbing the clearance values of the said units - It is well settled that to club the clearances of separate entities one should be shown as being the dummy of the other - since department has failed to discharge the said burden, the clubbing of the clearance values as proposed by Revenue cannot be upheld - Tribunal has in the appellants own case also held that even if the units are ‘interconnected undertakings' then also they cannot be held to be related persons u/s 4(3)(b) of the CEA, 1944, therefore, the finding of the Commissioner to the said extent also cannot be sustained - Also, Revenue has proceeded to issue four distinct SCNs individually to each of the units and the demands have been confirmed against each unit - this is recognition of the fact that each of the units exist independently and, therefore, it is not understood as to how four separate demands can be made when the entire case is for clubbing the clearance of the four different entities by treating the entire scheme from creation of the units as a facade for evading central excise duty - since there is no merit in the impugned order, same is set aside and the appeals are allowed: CESTAT [para 5.1, 6, 7, 10, 11]

- Appeals allowed: MUMBAI CESTAT

CUSTOMS

CIRCULAR/ TRADE NOTICE

dgft_trade_notice_35_2018

Procedure/documents for obtaining export authorisation for export of restricted under Schedule 2 ITC(HS) Classification of Export and Import Items 2018

cuscir40-2018

IGST Export Refunds - extension in SB005 alternate mechanism and revised processing in certain cases including disbursal of compensation Cess

cus_instruction18_2018

Representation from all India Saccharin manufacturing Association-implementation of Hon'ble Gujarat High Court order dated 07.02.2018 in Special Civil Application No. 1399 of 2018

CASE LAWS

2018-TIOL-3220-CESTAT-MUM

Alfa Ica India Ltd Vs CC

Cus - Demand of Customs duty on imports made under DEEC licence on the allegation that there is no nexus between the imported goods and exported goods - appeal to CESTAT.

Held: Impugned order has been passed only on the ground that material used for export was white base paper whereas the material imported viz. paper was having design/colour - Circular 39/97-Cus clearly prescribes that it is not necessary that the imported goods should match exactly with those used in the export product provided that the inputs are commercially known to be usable in the product exported - In a similar matter vide o-in-o dated 23.06.2004 the demand was dropped by the adjudicating authority - Bench is in agreement with the findings of the said adjudicating authority - following the same, demand is held to be not maintainable on merits - appeal is consequently allowed: CESTAT [para 5, 6]

- Appeal allowed: MUMBAI CESTAT

A S Vasan And Sons (Bombay) Vs Pr.CC

Cus - Principal Commissioner of Customs ordering continuation of suspension of Custom broker licence pending enquiry proceedings under regulation 20 of CBLR, 2013 - appeal to CESTAT.

Held: From the stage of initiation of the investigation till the issue of supsension order, substantial period was lapsed which itself establishes that there was no emergency to suspend the licence immediately - In the present case, licence was suspended almost eight months from the detection of the case of alleged evasion of Anti-dumping duty - since appellant was allowed to work as Customs broker for almost 8 months from the date of alleged offence of the import, there is no harm in allowing appellant to continue as Customs Broker till the final outcome of the proceedings being carried out under CBLR, 2013 - entire case is of interpretation of rules 25 and 26 of the Customs Tariff Rules, 1995 - in such case where grave interpretation of law is involved, it cannot be accepted that Customs broker has any malafide in proceedings - appellant cannot be thrown out of business - continuation of suspension of customs broker licence is not warranted, hence impugned order is set aside: CESTAT [para 4, 4.1, 5]

- Appeal allowed: MUMBAI CESTAT