SERVICE TAX

Life Line Life Care Ltd Vs CCE

ST - Business Support Services - Clause 104(c) of section 65 of the Finance Act, 1994 - Field care plan incentive deposit - No justification on the part of the department in alleging that appellant had promoted the business of the unemployed persons who joined the Appellant as Sales Officers - Even though the FC deposit of Rs.2000/- was collected from the prospective sales officers, it was refunded later to them irrespective of enrolment of further 25 persons as sales officers or otherwise - No contrary evidence is placed by the Revenue to rebut the plea of the appellant that the deposits were refunded to the sales officers, which is supported by Chartered Accountant's certificate - reasoning given by the Commissioner that the appellant has provided necessary support to the business of the recruited Sales Officers is a fallacious one and is to be discarded at the first reading itself - impugned order confirming the service tax demand of Rs.1,58,06,132/- and imposing penalties is set aside and appeal is allowed: CESTAT

- Appeal allowed: MUMBAI CESTAT

2018-TIOL-3623-CESTAT-HYD

ST - The assessee is a SEZ unit and they have filed refund claims under various exemption notifications - The officers verified the claims and found defects and issued defect memos asking them to rectify the defects - In response, assessee submitted some documents - Still, it was found that the defects were not fully removed and therefore SCNs were issued to assessee asking them as to why the refund should not be denied for non fulfillment of conditions - It is not in dispute that assessee has not able to fulfilled all the conditions for claiming the refund inasmuch as he has not provided the documentary evidence before Original Authority as well as the First Appellate Authority to fully justify their refund claim and hence part of their refund claims were rejected - Tribunal do not agree with the grounds of appeal which seek to draw a distinction between procedural requirements and substantial requirement of a notification as the legal position has been laid down by Supreme Court's Constitution Bench in case of M/s Dilip Kumar and Company - 2018-TIOL-302-SC-CUS-CB that the exemption notification must be strictly interpreted against the person claiming the benefit of same and any benefit of doubt should go to the Revenue - On the other hand, assessee claims that they had fulfilled the conditions of notification and were only not able to justify the same by way of documentation early and they now have all the necessary documents to justify their claims - Considering that the assessee is an exporter claiming benefit of the exemption notifications, this is a fit case to be remitted back to the Original Authority to examine the additional documents provided by assessee and decide the refund claims on merit: CESTAT

- Matter remanded: HYDERABAD CESTAT

2018-TIOL-3622-CESTAT-ALL

ST - The assessee company is a leading provider of Broadcasting Services - During the period of dispute, it received services from certain providers not having office in India - The Revenue alleged that the provisions of Section 66A of the Finance Act 1994 r/w Rule 3 of the Taxation of Services (Provided from outside India and Received in India) Rules, 2006 were applicable and that the assessee was required to pay service tax under reverse charge, under 'Business Support Service' - The Revenue further alleged that the assessee did not disclose the fact that it received such services & so invoked extended limitation and also imposed equivalent amount of penalty.

Held: As the assessee is entitled to avail Cenvat credit of service tax paid, there cannot be said to be any mala fide intent to evade payment of duty - Hence extended limitation is not invokable & so the demand not covered under normal period must be set aside - The demand raised for permitting use of Copyright in Cinematographic Films and Sound Recording Service, is sustained - The demand raised under Information Technology Software Service is sustained as it is raised only for that period during which such tax entry was introduced - The demand raised under Management, Maintenance or Repair Service is set aside for the period prior to 01.03.2008 - The demand raised under Promoting a Brand of Goods, Services, business Entity service merits being set aside, as it seeks to tax the activity of inviting a person to a TV talk show - As there is no intention to evade payment of duty, the equivalent penalty merits being set aside as well: CESTAT (Para 2,6)

- Assessee's appeal allowed: ALLAHABAD CESTAT

2018-TIOL-3621-CESTAT-MAD

Sakthi Engineering Constructions Vs CCE

ST - The assessee is engaged in providing construction services - On verification of records, it was noticed that assessee had not registered themselves with department in order to file ST-3 returns periodically for the services rendered under category of Commercial or Industrial Construction Service for the period from April 2005 to September, 2008 and were not discharging service tax - SCN was issued proposing to recover the service tax along with interest and also for imposing penalties - The individual dying units formed various associations viz. M/s. Andipalayam CETP, M/s. Veerapandi CETP and M/s. Mannarval CETP - These associations were formed to construct the CETPs, who awarded the contract to main contractor M/s. Enkem Engineers (P) Ltd. who sub-contracted to assessee and also undertook directly - Thus, the demand has not been raised on the society / association - The service tax demand is on the assessee who is a contractor - Further, the ETP cannot be considered as non-commercial one, since the ultimate beneficiary is the dyeing units who are the polluters - The Court has directed to set up ETP basing on the principle 'polluter pays' - The factories have pooled their funds to construct these ETP - Of course, they have been granted subsidy by Government and also exemption in excise duty and customs duty - But no exemption of service tax has been granted - Therefore, contention that CETP is not installed for commercial purpose and therefore would not fall within Commercial or Industrial Construction Service is not tenable - The demand prior to 1.6.2007 is set aside and the demand for period from 1.6.2007 to 30.9.2008 is sustainable - The appellant is liable to pay service tax for this period along with interest - As regards to limitation, since the assessee has not taken registration or paid the service tax even after being pointed out by department, it is seen that the adjudicating authority has confirmed the demand for extended period also, which does not require interference - However, with regard to the penalty imposed, issue as to whether the said construction would fall within the category of commercial purpose being interpretational in nature, the argument of assessee that the penalties are unwarranted is not without substance - The assessee contend that they were under bonafide belief that the said services are in public interest and of non-commercial nature - The issue being interpretational one, penalty imposed is set aside: CESTAT

- Appeal partly allowed: CHENNAI CESTAT

CENTRAL EXCISE

2018-TIOL-3626-CESTAT-HYD

CX - Application for rectification of mistake was preferred to bring to the knowledge of Bench that the assessee had argued and prayed for setting aside the demands on grounds of limitation, which was not considered by Bench while passing the final order - The issue that needs limited attention of Bench is whether the demand for differential duty for period September 2008 to March 2009 is hit by limitation or otherwise - On perusal of monthly returns, it is found that assessee had indicated in returns for September 2008 onwards that he is seeking the change in classification of final products of crude palm stearin from CETA 3823 1900 to 1515 9090 - By a letter dated 03.12.2008, Superintendent of Central Excise, Kakinada noted the change in classification sought in ER-1 return for September and October 2008 and directed the assessee to reclassify the product under 3823 1111 or 3823 11 12 or 3823 11 19 as the case may be and pay the differential duty - To this letter, assessee replied by his letter indicating therein why they changed the classification and justified that they are eligible for the benefit of nil duty under chapter 15.11 for the benefit of notification - No other correspondence was entered by department subsequent to these two letters and directly a SCN was issued on 08.03.2012 demanding the differential duty for relevant period i.e. September 2008 to March 2009 by invoking extended period - Such invocation of extended period is unsustainable as department was aware and have sought clarification and got the same on the change of classification that affected the duty liability, secondly there is no dispute as to the fact that assessee was indicating in monthly returns that clearances were under nil rate of duty by availing the benefit of notification - This would mean that there is no suppression of fact with intent to evade duty - The ratio of order of Bench in case of Krishnapatnam Oils & Fats Pvt. Ltd. and Acalmar Oils & Fats Limited - 2017-TIOL-4412-CESTAT-HYD would directly apply in the case in hand in respect of the claims made that the demands are hit by limitation - The appeal needs to be allowed on the ground of limitation: CESTAT

- Appeal allowed: HYDERABAD CESTAT

2018-TIOL-3625-CESTAT-DEL

CX - The assessee-company is engaged in manufacturing refined vegetable oil by processing crude oil - Fatty acids, wax & gums emerged as by-products from the process - During period of dispute, refined vegetable oil was neither exempt nor attracting nil rate of duty - The issue at hand pertains to taxability of fatty acids, wax and gums arising as by-products.

Held: The Revenue's contention that a product is capable of being sold for consideration cannot be treated as waste, is a presumption which cannot be accepted - Admittedly, in chemical & metallurgical industries, processing of raw materials with intent to create some final product through chemical reactions, also result in the emergence of some by-product at the final stage or intermediate stage - Whether or not a product will fetch some value is not a determinative factor to decide whether a product is manfactured final product, by-product, waste or refuse - No general guidelines can be laid down to determine when a product can be treated as waste or by-product - In the present case, the products under consideration are clearly not in the nature of by products emerging during the course of manufacture - In the process of refining vegetable oil, all the unwanted components are removed, such as gums, waxes and fatty acid with odour - This cannot be termed as manufacture of gums, waxes and fatty acid with odour - The process of manufacture is for rice bran oil - Thus the incidental products of gums, waxes and fatty acid with odour are merely waste products & cannot be treated as manufactured excisable goods - Hence they would be covered within the scope of Notfn No 89/95-CE & the assessee is entitled to exemption under this notification: CESTAT (Para 2,10-12)

- Assessees' appeals allowed: DELHI CESTAT

2018-TIOL-3624-CESTAT-ALL

CX - The assessee company, engaged in manufacturing Detergent Cake/Powder, Acid Slurry & Spent Sulphuric Acid, operatres several manufacturing units - On verification of records by the Revenue, it appeared that the assessee wrongly availed & utilized Cenvat credit on input services based on invoices issued by the ISD - The Revenue contested such availment on grounds that it violated the provisions of Rule 7 & 7A of CCR, 2004 r/w Rule 4A(2) of Service Tax Rules, 1994 - The Revenue also disallowed credit availed on certain capital goods on grounds that such goods did not classify as capital goods.

Held: It is found that the credit was denied to the assessee mechanically & without application of mind - Relevant invoices were available with the assessee at time of inspection - The assessee provided those invoices, based on which the ISD issued invoices to the assessee - Such invoices are found to be in order & contain the requisite details - Such fact is acknowledged in the SCN as well as the O-i-O - Besides, no time limit is prescribed for availment or distribution of credit - Not having enclosures along with ISD invoice during audit does not disentitle assessee from taking credit - In case of any deficiency, an assessee deserves an opportunity to rectify the same - Moreover, Circular No. 345/2/2000/TRU enables availment of credit any time after receiving inputs or input services along with duty-paying documents - Hence denial of credit is unjustified: CESTAT (Para 2,7)

- Assessee's appeal allowed: ALLAHABAD CESTAT