SERVICE TAX

B Girijapathi Reddy And Company Vs CC, CE & ST

ST - Assessee is engaged in the activity of removal of overburden and transportation of the same in mining site of Singareni Colleries Co Ltd. (SCCL), a Govt of India Company; by an agreement with SCCL they were to carry out the work of blast hole drilling, blasting, excavation, loading, transportation, spreading, dumping of overburden by using machines at opencast mines - For purposes of transportation activities of the overburden, they imported chassis on payment of applicable customs duty, procured kit buckets, cylinders and other body building material and assembled the same at their site as tippers and dumpers and used the same for the purpose of transportation of such overburden - SCN was issued to the assessee for demand of reversal of CENVAT credit on the chassis and bodies of tippers, volvo tippers on the ground that these vehicles are motor vehicles and cannot be considered as capital goods or inputs - As regards to CENVAT credit sought to be denied on the ground that same was availed without valid documents in both the appeals, issue needs reconsideration by adjudicating authority as random sample documents produced indicate that assessee may be able to justify their contention that they are eligible for CENVAT credit - Without expressing any opinion on the merits of the issue, this portion of the order is set aside and remitted back to the adjudicating authority to reconsider the issue afresh after following the principles of natural justice - As regards CENVAT credit availed in excess of 50% of capital goods, merits found in contentions raised by assessee that this amount is included in the amount of CENVAT credit denied and upheld - To that extent the impugned order needs to be modified and CENVAT credit confirmed by adjudicating authority on this count is set aside - As regards to CENVAT credit of cess availed by assessee for both the appeals, such credit is availed on motor vehicle cess paid - On perusal of CENVAT Credit rules, it does not contemplate for availment of CENVAT credit of motor vehicle cess - Accordingly, CENVAT credit is incorrect and liable to be held as correctly confirmed by the adjudicating authority - As regards to confiscation of tippers and spare parts thereof, such confiscation is unwarranted as assessee may have entertained a bonafide belief that since the said tippers after assembly were used for rendering taxable output service, they are eligible for CENVAT credit - The provisions of Rules 15(1) of CENVAT Credit Rules does not get attracted in this case and the confiscation is set aside - As regards the penalty imposed under Rule 15, there could be a bonafide impression that any inputs or input services or capital goods used for providing output services were eligible for CENVAT credit, which was an industry norm and had to be decided by the Tribunal in case of Ganta Ramanaiah Naidu - 2010-TIOL-213-CESTAT-BANG and it was held that CENVAT credit on tippers was not eligible - In the case of Ganta Ramanaiah Naidu also the Bench set aside the penalties imposed - Following the said decision, penalties imposed in these appeals under Rule 15 of CENVAT Credit Rules set aside: CESTAT

- Appeals partly allowed: HYDERABAD CESTAT

2018-TIOL-3361-CESTAT-BANG

ST - Appeals have been filed by assessee against common impugned order, whereby Commissioner (A) has allowed the refund in respect of certain input services and denied the refund in respect of other services and remanded the matter to the lower authority for re-quantification and allowing the refund to the assessee - As far as 'Health Insurance Service' is concerned, Commissioner (A) has rejected the refund on this service on the ground that after the amendment in definition of 'input service' w.e.f 1.4.2011 certain input services have been specifically excluded and health insurance is one of the 'input service' which has been specifically excluded from 1.4.2011 - Therefore, no infirmity found in the findings of Commissioner (A) - As far as 'Services by Air Conditioned Restaurants' are concerned, assessee himself have admitted that it has been inadvertently availed and the same will be reversed - As far as input service 'Management, Repair and Maintenance' is concerned, assessee has submitted that these services are consumed for the maintenance and repair of the office premises, facility management charges and charges for housekeeping, which are required for effectively and efficiently providing the export of service - Same falls in the definition of 'input service' subject to the verification of the invoices which are enclosed by assessee along with the appeal papers - As far as 'Renting of Immovable Property' is concerned, this service has been held to be 'input service' in case of KPMG - 2013-TIOL-761-CESTAT-DEL and Nuware Systems Pvt. Ltd. - 2014-TIOL-882-CESTAT-BANG - Therefore, assessee is entitled to refund of service tax paid on 'input service' subject to verification of invoices - As far as 'Supply of Tangible Goods Services' are concerned, in view of decision rendered in case of Manhattan Associates (India) Development Centre Pvt. Ltd - 2016-TIOL-3083-CESTAT-BANG, this service also falls in definition of 'input service' and therefore, assessee is eligible for credit subject to verification of the invoices - As far as 'Event Management Service' are concerned, in view of Honda Motorcycle & Scooter (I) Pvt. Ltd. - 2016-TIOL-2127-CESTAT-CHD and Manhattan Associates (India) Development Centre Pvt. Ltd - 2016-TIOL-3083-CESTAT-BANG , this service falls in the definition of 'input service' as the said services are integral to the provision of output service - As far as 'Transportation of employees services' are concerned, assessee submits that it is an essential 'input service' as the employees have to work in shifts and had different hours and therefore, the company hires vehicles to provide pick-up and drop facilities to these employees from the residence and office or provide reimbursement of transport cost incurred by them in this regard - In view of decision in case of Hindustan Coca Cola Beverage Pvt. Ltd. - 2009-TIOL-2304-CESTAT-DEL , this service falls in the definition of 'input service' as the same is necessarily required for provision of output service.

As far as 'Business Exhibition Service' is concerned, assessee submits that they conduct business exhibition for the prospective customers and the said service are specially included in definition of 'input service' as per Rule 2(l) of CCR - As far as 'Share Valuation Service' is concerned, this service is in relation to the share valuation service received from an authorized share valuator and this fall in the definition of 'input service' - Both the authorities have rejected the refund of Rs.6,90,950/- on the ground that the invoices have not been produced, whereas the assessee submits that the invoices were submitted before the authorities but they were not examined and he undertakes to submit the invoices again before the adjudicating authority if the matter is remanded - As far as 'Telecommunication Services' and 'Courier Services' are concerned, assessee did not press for refund on these services being the amount involved is small - Keeping in view the above said findings on various input services, the matter is remanded back to the original authority to verify and examine the documents which may be produced by assessee in support of their refund claims and thereafter, decide the refund claims: CESTAT

- Matter remanded: BANGALORE CESTAT

CENTRAL EXCISE

2018-TIOL-3360-CESTAT-BANG

CX - The assessee company manufactures Control Panel Components & Transformers - It had an additional address where it undertook manufacture process - Two SCNs were issued raising demands for two periods - On adjudication, the demands with penalties were confirmed in both SCNs & later upheld by the Commr.(A).

Held - The Revenue disallowed credit on grounds that the assessee's additional premises were unregistered - However, it cannot claim ignorance about the assessee's request regarding the additional premises - The Revenue also did not produce any material to prove that the assessee did not use the additional premises for manufacture purposes - Moreover, it is seen that the assessee held centralized registration which covered the additional premises too - Hence the demands raised are unsustainable - Besides, the assessee's books were audited regularly & the Revenue was aware of all the transactions done by the assessee - Hence the SCN is beyond the normal period of limitation - Moreover, no suppression of fact can be alleged - Besides the assessee regularly filed ER-1 returns indicating amount of Cenvat credit availed - Hence the invokation of extended limitation is unwarranted, as is the duty demand raised - Consequently, the penalty be set aside as well: CESTAT (Para 4,6,7,8)

- Assessee's appeals allowed: BANGALORE CESTAT

2018-TIOL-3359-CESTAT-BANG

CX - Assessee is engaged in manufacture of parts of transformer tank and are availing cenvat credit on input and capital goods under CCR, 2004 - During audit, it was noticed that assessee has availed cenvat credit on the invoices by classifying them as capital goods which were not installed in their premises - Revenue views that assessee has availed cenvat credit on capital goods without receiving the same at their manufacturing place and instead they had installed it in a different unit situated elsewhere and availed cenvat credit and during audit, the said machinery was not available for physical verification - The assessee have informed the concerned Assistant Commissioner that due to space problem they have purchased new premises at 48 & 49, Industrial area, Tumkur for doing certain operations and have shifted the machineries - Further, at the said premises the machineries have been used only for the captive consumption of assessee and it is in the assessee's own name and it is also a fact that clearance has not happened from the job-workers premises and assessee have cleared the goods on payment of duty - The contention of the Revenue that they are huge machines and cannot be removed from one premises to other premises is not born out by any evidence whereas the assessee has produced the delivery challan for transfer of machineries from the main premises to the job-worker premises and it is returned to the main factory - Similarly the Supreme Court in case of Vikram Cement - 2006-TIOL-150-SC-CX has held that if the mines are captive mines so that they constitute one integrated unit together with the concerned cement factory, then cenvat credit on capital goods are available - The impugned order is not sustainable and the same is set aside: CESTAT

- Appeal allowed: BANGALORE CESTAT

CUSTOMS

2018-TIOL-3358-CESTAT-BANG

Cus - The assessee imported parts of helicopter & supplied the same to the Indian Navy - On such article was 'cargo sling' - The Department opined that the 'Cargo sling' is better classifiable as an accessory to helicopter & not a part thereof - Also that 'cargo sling' is classifiable under CTH 7312.1010 & so exemption under Notfn No 21/2002-Cus & Notfn No 06/2002-CE - Such findings were upheld by the Commr.(A).

Held: The adjudicating authority travelled beyond the scope of the SCN - It is seen from the assessee's submissions that the item in question is part of A90B100 which consists of other units - Hence the Department erroneously isolated a minor part of the whole assessembly & classified the same according to the metal used in manufacturing it - Hence some highly technical equipment cannot be differentiated into smaller parts & classified as per the maker of a smaller component in it - Besides, irrespective of classification, the goods in question are eligible for exemption under Notfn No 39/1996-Cus - Thus the equipment in question classifies as parts of helicopters: CESTAT (Para 1,2,4)

- Assessee's appeal allowed: BANGALORE CESTAT