SERVICE TAX
2018-TIOL-3785-CESTAT-MUM
Gunnebo India Pvt Ltd Vs CST
ST - Appellants are engaged in manufacture of Safe, Lockers, Vaults etc. and also providing maintenance or repair services, erection, commissioning or installation services, Business Auxiliary services etc. for which they were registered with the CE department - investigation revealed that appellant had received services from foreign company and had allegedly availed inadmissible credit on input services used for trading activities - SCN issued for recovery/appropriation of service tax of Rs.94,53,475/- and credit amounting to Rs.1,61,56514/- availed and utilized during the period from 2008-09 and 2012-13 - demand confirmed with penalty and interest, hence appeal to CESTAT.
Held: Appellant had accepted their tax liability in respect of services received from foreign company and paid the entire amount along with interest and later availed CENVAT credit of the tax paid - since analysing the issue about proper classification of the said services received would become more of academic exercise, hence order does not merit interference and is upheld - as for the second issue of availment of inadmissible credit on various input services used for trading activity, issue is no more res integra - Tribunal in the case of Aksh Optifiber Ltd. - 2017-TIOL-3966-CESTAT-DEL has observed that since w.e.f 01.04.2011, pursuant to amendment of definition of “exempted service”, trading itself is not a taxable service or activity subject to excise duty, assessee is not entitled to avail proportionate credit on various input services attributable to trading activity - larger period of limitation has also been correctly invoked - impugned order is upheld and appeal is dismissed: CESTAT [para 7 to 12]
- Appeal dismissed: MUMBAI CESTAT
2018-TIOL-3784-CESTAT-MUM
CCGST Vs Mahindra And Mahindra Financial Services Ltd
ST - CENVAT - Rule 2(l) of CCR, 2004 - Medical Insurance Service, whether an input service.
Held : Disputed period with regard to denial of CENVAT credit is prior to 01.04.2011 when the definition of Input Services included “activities relating to business” - When employees are at work in the factory, if an accident happens, the employer is liable to pay compensation and a prudent businessman will be interested in taking an accident insurance policy for his worker to cover the business risk and it cannot be considered that such insurance is not in relation to the manufacturing activity - medical insurance in relation to employees is, therefore, within the broad definition of ‘Input Service' given in rule 2(l) of CCR, 2004 - definition of ‘Input service' post amendment contains exclusion clause and the said exclusion specifically excludes the life insurance/health insurance - need for exclusion would arise only when such services are otherwise covered by the definition earlier i.e. before amendment - Credit on Medical Insurance service was rightly held to be eligible by Commissioner(A) - Revenue appeal rejected: CESTAT [para 3, 10]
- Appeal rejected: MUMBAI CESTAT
2018-TIOL-3783-CESTAT-MUM
Nagpur Nagrik Sahakari Bank Ltd Vs CCE & ST
ST - Appellant is a banking and financial company and during the period October 2005 to March 2008 had availed CENVAT credit which the Audit party pointed out as inadmisible - consequently, the credit was reversed on 30.09.2008 - SCN issued on 08.07.2010 and the demand was confirmed along with imposition of penalty and interest, which order was upheld by Commissioner (A) - appeal filed before CESTAT contending that no penalty was imposable as the appellant was a cooperative bank and no personal benefit accrued to any person; that since the entire amount was reversed much before issue of SCN and the credit taken was not utilised no interest is payable; that the impugned order should be set aside.
Held: Interest is usually payable when the amount due is not paid back or amount deposited as tax is taken away erroneously - In the instant case, the duty paid against which CENVAT credit was noted in the books of account was all along lying with the government treasury and it was neither utilized by way of adjustment against duty demand nor taken as a refund erroneously for which the appellant can be punished with imposition of interest for the amount which had never come to its account for utilization - appeal is allowed and the order upholding interest and penalty is set aside: CESTAT [para 8, 9]
- Appeal allowed : MUMBAI CESTAT
CENTRAL EXCISE
2018-TIOL-2626-HC-MUM-CX
Exide Industries Ltd Vs Commissioner of CGST
CX - Case of the department is that the assessee has shown to have purchased raw material viz. lead ingots from the supplier in Jammu and Kashmir whereas the goods in fact had never been received; that assessee had claimed bogus CENVAT credit on such purchases - Tribunal examined the assessees contentions that there were valid reasons for discrepancy in the vehicle numbers; that there could have been have been breakdown of the vehicles which had supposedly transported the goods from J&K to the assessees factory and rejected the said plea by observing that there could be breakdown in isolated cases but it was highly improbable that all vehicles would suffer a breakdown - inasmuch as the CENVAT credit was held as inadmissible - appeal to High Court.
Held: Excise Authorities and the Tribunal have concurrently come to the conclusion that the goods in question were never received by the assessee in its factory and therefore, the assessee's claim of having consumed the same was not genuine; that these findings are pure findings of facts and no question of law arises - Appeal dismissed: High Court [para 4]
- Appeal dismissed : BOMBAY HIGH COURT
2018-TIOL-2625-HC-MUM-CX
Vivilon Textile Industries Pvt Ltd Vs CCE & C
CX - Adjudicating authority confirmed the demand of recovery of duty with interest and penalty and also imposed a personal penalty of Rs. 4 Lacs on the director of the company - in appeal, by a common judgment the CESTAT dismissed both the appeals - the judgment runs into one and half pages and contains in all six paragraphs - paragraph 5 is the only portion in which the Tribunal discussed the controversy and came to its final conclusion of dismissing the appeals - appeal by appellants before the High Court.
Held : Tribunal's consideration of issues presented before it leaves the Bench dissatisfied - Tribunal was required to give proper reasons for its ultimate conclusions - Tribunal's order is rather cryptic and does not bring out the full controversy, the arguments raised by both sides and Tribunal's conclusions on said contentions - Unreasoned orders leave the appellate Court the onerous task of finding out the facts and law from the sources outside of the judgment impugned before it - Tribunal is expected to examine all contentions of law as well as of facts - High Court in further appeal would entertain only substantial questions of law - not a one-off incident - judgment of the Tribunal sometimes tends to be rather brief devoid of necessary analysis - impugned order of Tribunal set aside and appeals before Tribunal are revived for fresh hearing - Matter remanded: High Court [para 4 to 6]
-Appeals disposed of : BOMBAY HIGH COURT
2018-TIOL-3792-CESTAT-MUM + Case Story
Sti Sanoh India Ltd Vs CCE & ST
CX - CENVAT - Input Service - Rule 2(l) of CCR, 2004 - Since only 6.09% of the total area of the leased premises was used as depot/trading premises and the rest of the area of 93.91% was used for manufacturing activity, credit of the tax paid on Renting of Immovable property was deniable only to the extent of the area used for trading purpose - there was no need to go into the ratio of trading activity towards manufacturing turnover - Matter remanded for recomputing the demand amount and interest - details regarding the availment of CENVAT Credit on input services were recorded in the statutory records and shown in the monthly returns - therefore, penalty imposable would be only 50% of the revised demand amount in view of proviso to s.11AC of the CEA, 1944 as prevailing during the material time: CESTAT [para 5, 6]
- Matter remanded: MUMBAI CESTAT
2018-TIOL-3782-CESTAT-MUM
Santogen Exports Ltd Vs CCE
CX - Appeal dismissed by Tribunal for failure to comply with the requirement of pre-deposit prescribed in s.35F of the CEA, 1944 -Appellant had approached the Bombay High Court which was disinclined to consider the plea against the decision of the Tribunal and dismissed the same - appellant now seeking restoration of appeal on the ground that they had gathered funds sufficient to make pre-deposit and following which the present application has been preferred - AR submitting that since the appeal had been dismissed by the High Court, the present compliance with pre-deposit prescribed in law, without specific liberty from the High Court to seek normal appellate remedy is beyond the competence of the Tribual to consider.
Held: Applicant has deigned to initiate efforts to comply upon exhausting the recourse to High Court which they found to be shut against them - It is a settled convention that a litigant cannot subject judicial mechanism to a test of chance and subject themselves to rule of law when the toss is against them - Denying them the right to appeal would, therefore, not be a manifest miscarriage of justice - It is settled by the decision in Vishnu Dyeing & Printing Mills (P) Ltd. [WP no. 13706 of 2004 dated 18 October 2004] that Tribunal should not venture into a matter already disposed of, finally and categorically by the High Court -no justification for restoration of the appeal that had been dismissed for non-compliance - Application dismissed: CESTAT [para 6]
- Application dismissed: MUMBAI CESTAT
2018-TIOL-3781-CESTAT-MUM
General Manager Vs CCE
CX - Tribunal had by its order dated 29.03.2007 - 2007-TIOL-1458-CESTAT-MUM held that since the entire CE duty has been deposited before issuance of SCN, no malafide can be attributed on the part of the appellant and, therefore, imposition of penalty is not warranted - said order was put to challenge by the Revenue before the Bombay High Court who vide their order dated 27.03.2012 set aside the order and remanded the matter for denovo consideration in the light of the Supreme Court decision in UOI vs. Rajasthan Spinning & Weaving Mills - 2009-TIOL-63-SC-CX .
Held: Upon examination in the light of the declaration of law by the Supreme Court (supra), it is observed that the appellant is a State Corporation and was manufacturing various items for their captive use; that as the said goods were being captively consumed and were not sold there could be a bonafide belief that the same would not attract duty of excise - Revenue has also not produced any evidence to show that the said non-payment of duty was with a malafide intention - in such scenario, imposition of penalty is neither justified nor warranted - penalty imposed u/s 11AC of the CEA, 1944 is set aside - as for interest, appellant is under a legal obligation to pay the same from the date when the duty became payable till the date it was paid - interest amount to be calculated by the adjudicating authority under intimation to the appellant who would deposit the same - appeal disposed of: CESTAT [para 5 to 7]
- Appeal disposed of: MUMBAI CESTAT
2018-TIOL-3780-CESTAT-MUM
CCE Vs Vishal Structurals Pvt Ltd
CX - Revenue has filed an application for Rectification of Mistake in the order dated 06.10.2017 - 2017-TIOL-4036-CESTAT-MUM wherein the Bench had, in the matter of appeal filed by the Revenue against the Order-in-appeal passed by the Commissioner(A), remanded the matter to the adjudicating authority.
Held: Such order appears to be a typographical error and in exercise of powers vested under section 35C(2) such mistake can be rectified by the Appellate Tribunal itself and the CESTAT Procedure Rules empowers the successor in office to make such rectification - Applicant Revenue has sought for a recall of the order, however, since rectification would suffice the remedy sought in the ROM application, recalling of order is uncalled for - wording "adjudicating authority" found in para 6 of the order passed on 06.10.2017 is deemed to be meant as "Commissioner(Appeals)" and a formal amendment is permissible u/s 35C(2) under which the ROM application is filed - ROM is accordingly allowed: CESTAT [para 3, 4, 6]
- Application allowed: MUMBAI CESTAT
CUSTOMS
2018-TIOL-2624-HC-MUM-CUS
Mahesh P Patel Vs CC
Cus - Penalty - Section 112 of the Customs Act, 1962 - Question of law is whether in the facts and circumstances of the case the Tribunal was justified in upholding the penalty of Rs.5 lakhs imposed on the appellant Chartered Accountant.
Held: Against the appellant, only allegation was that he had issued certificates of Export Performance Certificate and Solvency Certificate in the name of M/s Spectrum Fabrics without full verification and this in turn, enabled the importer to obtain advance licence and which were utilized for making duty free import of goods and which were in breach of the condition of license diverted into local market - Insofar as the appellant-assessee is concerned, his involvement even as per the show cause notice was confined to issuing certificates without full verification - Commissioner held that the assessee had certified that he (the assessee) had verified the books of accounts which in fact he had not done - Even according to the show cause notice and the ultimate conclusions confirmed by the Commissioner in his penalty order, the role of the assessee ends with issuing the certificates - There is no allegation that the assessee was either part of or aware of impending fraud which the importer intended to perpetrate - Whatever be the fault of assessee in exercising the due diligence in issuing the relevant certificates, even according to the department as emerges from the show cause notice and the order of the Commissioner, no role was played by him insofar as the imports and illegal diversion of the imported goods to local market are concerned - it cannot be stated that the assessee either had done or committed to do any act which would render the goods liable to confiscation under Section 111 of the Act - Tribunal in the impugned judgment erroneously expanded the findings of the Commissioner by observing that the role prescribed by the adjudicating authority to the assessee was of knowingly being involved in facilitating the importer to commit the fraud - This was neither the allegations contained in the show cause notice nor were the findings of the Commissioner - In fact the allegations and the findings clearly were that the assessee had acted without due care and issued the certificates without full verification - impugned order of the Tribunal upholding the penalty imposed by the adjudicating authority is set aside and the question of law is answered in favour of appellant: High Court [para 5, 9, 10, 11]
- Appeal disposed of : BOMBAY HIGH COURT
2018-TIOL-3779-CESTAT-MUM
CC Vs Wockardt Ltd
Cus - Respondent imported goods and claimed benefit of notfn. 52/2003-Cus but which was denied by the original authority on the ground that the re-import had taken place after the stipulated period of one year - Commissioner(A) relied upon the Board Circular 60/99 according to which the period of one year for re-import can be relaxed and also the decision in Kar Mobiles Ltd. - 2006-TIOL-1995-CESTAT-BANG upheld by the Supreme Court - Revenue in appeal.
Held : Order passed by Commissioner(A) is a reasoned one and passed by relying upon the decision in Kar Mobiles Ltd. (supra) - no infirmity in the impugned order - Revenue appeal dismissed: CESTAT [para 4, 4.1]
- Appeal dismissed: MUMBAI CESTAT
