SERVICE TAX
2018-TIOL-3417-CESTAT-MUM + Case Story
Sonodyne International Pvt Ltd Vs Commissioner of CGST
ST - Notfn. 40/2012-ST - A mere maintenance of an account showing the total quantum of service tax paid by the assessee cannot be held to be availment of CENVAT credit - underlying crux of the notification is that double benefit of availment and utilization of the CENVAT credit as also for refund of the same should not be granted to an SEZ unit - lower authorities have nowhere disputed the fact that such amount of service tax reflected by them in their ST-3 returns was utilized by them - no justifiable reason to uphold the impugned order denying the refund claim - order set aside and appeal allowed with consequential relief: CESTAT [para 5 to 7]
- Appeal allowed
: MUMBAI CESTAT
Walzen Strips Pvt Ltd Vs CCCE & ST
ST - The assessee company is engaged in strapping wire rod mill products of Vishakhapatnam Steel Plant (VSP) - As per contract, it paid a consolidated rate per strap, which includes cost of strap, seal, consumables & labor involved - The assessee supplied straps from factory in Howrah to VSP under an invoice against Form C given by VSP after payment of Sales tax - The assessee paid Excise duty on which VSP availed Cenvat credit - VSP would include cost of work undertaken by the assessee in valuation of final products for paying Excise duty - The Department raised duty demands under "Production or processing of goods" which further falls within scope of Business Auxiliary Service - Duty demand was raised with interest & penalty - Such demands were upheld by the Commr.(A).
Held: The assessee's contention that mere strapping of wire rod mill products creates a new marketable product, is unacceptable - Where manufacture u/s 2(f) of CEA 1944 is taking place, all activities related to, incidental or anciliary to it will be covered under its scope - But each individual activity cannot be termed as manufacture - The activity in question is more of the nature of packing products manufactured by the assessee's client - Hence the assessee cannot claim to be excluded from the scope of BAS - However, the assessee's activities are squarely covered under the scope of Notfn No 08/2005-ST, by virtue of which it is not liable to pay service tax under BAS - Consequently, the demands for interest & penalties must be set aside too: CESTAT (Para 2,7,8)
- Assessee's appeals allowed: HYDERABAD CESTAT
Karur Vysya Bank Ltd Vs CCE
ST - Demand was confirmed on the Visa charges paid by assessee holding that the assessee is liable to pay service tax for the period 18.4.2006 to 2/2008 under reverse charge mechanism - Also, service tax demand has been confirmed on the commission received by assessee from various insurance companies - The assessee is contesting only the penalties imposed - The period is immediately after 18.4.2006 - The issue whether an assessee is liable to pay service tax under reverse charge mechanism was contentious for a long time and later settled by the decision - In such event, penalty imposed under section 78 is unwarranted and is set aside - In all the three other appeals, the penalties imposed are under sections 76 and 77 of FA, 1994 - The Tribunal in assessee's own case for a different period had set aside the penalties imposed observing that they had taken wrong interpretation of the said provision under section 65(104c) - The Tribunal in the said final order had set aside the penalty imposed under section 76 without disturbing the penalty imposed under section 77 as well as the demand and the interest thereon - Further, in another appeal, both penalties under sections 76 and 78 have been imposed - As rightly argued by assessee, both penalties cannot sustain simultaneously: CESTAT
- Appeals partly allowed: CHENNAI CESTAT
CENTRAL EXCISE
2018-TIOL-2392-HC-MAD-CX Integral Power Packs Vs CCE
CX - (1) Whether the CESTAT's impugned order rejecting the Appellant's plea on limitation is sustainable when the identical issue was decided in favour of the Appellant on limitation and thus there is hostile discrimination ? (2) Whether the CESTAT's impugned order is sustainable in the light of the decision of this Court in the case of Micro Chem Products (India) Pvt. Ltd vs. CESTAT, Chennai reported in 2017-TIOL-1274-HC-MAD-CX , wherein under similar circumstances, this Court has held that the extended period of time limit is not applicable (3) Whether the impugned order is outside the scope of Show Cause Notice when there is no allegation or foundation for sustaining the reasoning of the impugned order? (4) Whether the impugned order is correct in ignoring the submissions of the Appellant that when the decisions of the Tribunal were in favour of the Appellant and ultimately the merits of the issue was finally decided by the Supreme Court against the Appellant, the extended period cannot be invoked ?
Held: A dmittedly, in the instant case, the assessee was using the brand name of a different entity and presumed to have full knowledge that they are not entitled to the benefit of the exemption notification - if the assessee has used the brand name of another person, they are not entitled for exemption and this was not made known to the department as no declaration was filed by the assessee - the second proviso to the notification no.22/98-CE (NT) dated 4.6.1998 would stand attracted subject to fulfilment of the condition in the first proviso - thus, having not disclosed the same nor filed the declaration as provided in the first proviso to the said notification, it is, undoubtedly, a case of suppression and the department was justified in invoking the extended period of limitation - by applying the decision in the case of Grasim Industries Limited - 2005-TIOL-69-SC-CX-LB , the only conclusion that can be arrived at is to confirm the impugned decision of the Tribunal and dismiss the appeal filed by the assessee - with regard to the contention of the assessee that the legal issue attained finality only after the decision in the case of Grasim Industries Limited, it is found that such contention was never raised by the assessee at any point of time - therefore, the assessee cannot be permitted to raise such contention for the first time in this appeal, especially in the earlier round of litigation, which was challenge to levy of duty had attained finality against the assessee - the decision in the case of Micro Chem Products (India) Pvt. Limited can render no assistance to the case of the assessee - the case on hand is one pertaining to the claim for exemption - the burden is on the assessee to establish that the goods manufactured by them will come within the ambit of the exemption notification and the burden of proof is on the assessee to establish on facts that they are entitled for exemption - furthermore, the exemption notification are required to be interpreted strictly and in favour of the department and in case of any ambiguity or doubt, it will be resolved in favour of the Revenue and not in favour of the assessee - thus, the Tribunal rightly held that the extended period of limitation was invokable in the facts and circumstances of the case - however, with regard to levy of penalty, the observations of the Supreme Court in the case of Grasim Industries is applied and the penalty is deleted - in other respects, the order of the Tribunal is confirmed - in the result, the substantial questions of law framed for consideration are answered against the assessee - however, the penalty levies on the assessee is deleted : HIGH COURT [para 14, 15, 16, 18, 19]
- Appeal partly allowed: MADRAS HIGH COURT
2018-TIOL-3409-CESTAT-MAD
Bray Controls India Pvt Ltd Vs CCE
CX - The assessee filed a refund claim on the ground that the same was erroneously paid and that the export made under ARE-1 was cancelled and therefore the export duty erroneously debited in their Cenvat Account has to be refunded - Same was rejected - Assessee has only been arguing vehemently that its first ARE-1 was cancelled which fact was not brought to the notice of concerned official in time which is a condition precedent since the arguments, allegations and counter allegations howsoever strong cannot take the place of proof - This is also in addition to the fact that the goods alleged to be un-cleared was also required to be established to the situation of the authorities - The assessee thought it prudent to claim refund allegedly after resale, on 2.11.2015 nearly after five months from the date of first ARE-1 - This was done without adhering to the procedures laid down in statute because in any case, procedures required to be established that the goods remained with the assessee - As observed by lower authorities even the Range Supdt. was not informed about the so called cancelled invoice in time nor did the department have any chance to physical verification of the alleged un-cleared goods - Tribunal have not convinced about the claim of assessee which is made without following the procedures required under the statute and therefore, there is no reason to interfere with the findings arrived by the lower authorities: CESTAT
- Appeal dismissed: CHENNAI CESTAT
ITC Ltd Vs CCE
CX - The assessee company manufactured cigarettes, in course of which it also manufactured 'Slides & Inner Frames' for self consumption & on which it paid duty in excess - When the assessee claimed refund of such duty, the adjudicating authority rejected it in entirety - Later the Commr.(A) allowed part of such refund - Later, the Tribunal remanded the refund claim back to the Commr.(A) - This time, the Commr.(A) endorsed that the refund of duty paid on goods already cleared would not be hit by unjust enrichment, but nevertheless did not sanction the refund in entirety.
Held: Considering the Tribunal's directions during remand, the assessee was required to show its eligibility for refund & also prove that the burden of duty had not been passed on to the consumer - Hence the assessee deserves another chance to appear before the Commr.(A) & comply with the Tribunal's directions - The Tribunal cannot step into the shoes of the lower authorities, more so considering the Tribunal's remand order - Appeal allowed by way of remand: CESTAT (Para 1,5,6)
- Case remanded: BANGALORE CESTAT
Alumeco India Extrusion Ltd Vs CCE, C & ST
CX - The assessee company, engaged in manufacturing Aluminium extrusions, availed Cenvat credit on inputs & capital goods - During period of dispute, it imported certain inputs under advance license scheme, without payment of applicable Customs duty as per Notfn No 93/2004-Cus - On investigation, the inputs imported without payment of duty were found to be in short quantity - Duty demand was raised to recover the duty on raw material found short - The assessee approached the Settlement Commission & later paid Customs duty as per its directions - It then availed credit of such duty paid - Such availment was contested by the Department on grounds that the matter had been settled by the Commission & thus no credit could be availed on payment of duty - Duty demands were raised with interest for recovery of such credit & penalties were imposed - Such demands were upheld by the Commr.(A).
Held: It must be noted that there is no allegation of diversion of materials/inputs or of clandestine manufacture & clearance of finished goods, using the inputs found to be short - Keeping these considerations in mind as well as the facts of the case, the duty demands are unsustainable: CESTAT (Para 2,7,9)
- Assessee's appeal allowed: HYDERABAD CESTAT
CUSTOMS
UoI Vs Prime Leathers
Cus - Civil Appeals - According to DRI, on being raided, the respondents accepted their practice of exporting unfinished leather but showing them as finished goods and seeking exemption from payment of export duty - respondents also deposited Rs.70 lakh, Rs.1 crore and Rs.1 crore respectively - on the respondents filing writ petitions, the High Court directed refund of the aforesaid amounts deposited by these respondents subject to furnishing of some appropriate security - Revenue was also given opportunity to issue appropriate SCNs.
Held: When these matters are pending for the last almost 10 years and no adjudication has taken place, it may not be appropriate to interfere with the directions of the High Court to refund the amount to the respondents - insofar as M/s. Prime Leather is concerned, the amount has already been refunded and the respondent has also furnished security - in the other two appeals, the amount of Rs.1 crore each collected by the respondent shall also be refunded by the appellant to the respondent, subject to furnishing adequate solvent security - insofar as adjudication of the SCNs is concerned, the appellant to proceed with the same as per the advise of the competent authority - the appeals stand disposed of in the aforesaid terms: SUPREME COURT [para 5, 6, 7]
Appeals disposed of
Transfer Petition - The issue raised in this petition is not the same as the matter of SLP (C) Nos.28299 of 2016 and 28325 of 2016 inasmuch as in these petitions, vires of notifications and circulars are challenged - the transfer petition is, accordingly, dismissed: Supreme Court
- Transfer Petition dismissed: SUPREME COURT OF INDIA
2018-TIOL-2391-HC-KOL-CUS
Sanmarg Pvt Ltd Vs UoI
Foreign Trade (Development and Regulation) Act, 1992 [FTDR Act] - Petitioner has challenged notification no.9/2015-20 dated 3.6.2016 issued by Director General of Foreign Trade - petitioner submitting that it is carrying on business of publishing and printing a Hindi newspaper - it was obtaining newsprint from customs bonded warehouses in terms of the import policy, prior to the issuance of the impugned notification - it is not economically viable for the petitioner to import large quantity of newsprint as the petitioner would be required to do, in terms of the impugned notification.
Held: By the impugned notification, the Director General of Foreign Trade has sought to amend the existing Foreign Trade Policy - on the strength of Atul Commodities Private Limited - 2009-TIOL-24-SC-CUS , it can be said that, Director General of Foreign Trade has no jurisdiction to amend the Export and Import Policy - the impugned notification herein, has not been suggested to be clarificatory in nature - the impugned notification issued by the Director General of Foreign Trade is quashed - no further order need be passed in C.A.N. No.10268 of 2017 and W.P.No.11957(W) of 2016 are disposed of accordingly : HIGH COURT [para 16, 19]
- Writ Petition disposed of: CALCUTTA HIGH COURT
2018-TIOL-2390-HC-MAD-CUS
Sigma Mat (P) Ltd Vs Joint Secretary
Cus - Petitioner transferred Duty Free Import Authorization [DFIA] Licence to M/s.Petro Plast Industries Ltd., Chennai, who in turn imported 49.500 MT of Polypropylene granules on 29.4.2007 and paid Additional Customs Duty, Cess on CVD, Educational Cess and other Additional Duty, totaling Rs.6.16 lakh - petitioner sought refund of the duties paid by the transferee - claim of the petitioner rejected.
Held: The exporter mentioned in the Foreign Trade Policy 2007-08 is the one who exports goods manufactured from out of the imported goods and not the petitioner - under the DFIA Scheme, it is inferred that once the license is transferred to a third party legitimately, the benefits accrued under the license on the transferor terminates - the respondents have rightly rejected the claim of the petitioner - no reason found to interfere with the impugned order - there is no merit in the writ petition - in the result, the Writ Petition is dismissed : HIGH COURT [para 10, 11]
- Writ Petition dismissed: MADRAS HIGH COURT
CCE, C & ST Vs R K Exports
Cus - The assessee company imported PVC Flex Sheet Rolls and declared value - The Revenue sought to enhance the value declared by the assessees, by considering the value of contemporaneous exports of the same goods - The differential amount of duty was assessed & paid by the assessee under protest - Such demands were set aside by the Commr.(A).
Held: The bench raised a query as to whether copy of bill of entry is annexed with the Memorandum of Appeal - However, copy of bill of entry is not enclosed - The assessee also put forth several documents indicating the contract signed and the prices offered - Such documents were found to be in order by the Commr.(A) - Hence the Revenue's appeal lacks merit: CESTAT (Para 2,3,5)
- Revenue's appeal dismissed: HYDERABAD CESTAT
Vardhaman Sales Agency Vs CC, CE & ST
Cus - The assessee imported a consignment of Zinc scrap classifiable as 'Scope' - Bills of entry were filed declaring their value based on documents issued by the foreign supplier - Pre-shipment inspection certificate as also Bill of Lading were also filed - The Revenue examined the goods and found them to contain assorted belt buckles whose polish had been spoiled - Hence the Revenue opined that the assessee imported goods which could be sold for metal and would attract higher rate of duty - The value of the goods was enhanced, the goods were confiscated & option of redemption fine was given - Penalty was imposed as well u/s 112 of the Customs Act.
Held: An identical issue was resolved by the Tribunal in the assessee's own case for a previous AY wherein the charges of mis-declaration and the consequent enhancement of value were set aside - It was held therein that the Revenue put forth no evidence to show that the assessee deliberately tarnished the goods with intention to mis-declare & pay lesser duty - Hence, following such findings, the order-in-challenge is set aside: CESTAT (Para 2,4,5)
- Assessee's appeal allowed: ALLAHABAD CESTAT |
