SERVICE TAX
2018-TIOL-3867-CESTAT-MAD
Gemini Industries And Imaging Pvt Ltd Vs CCE & ST
ST - The assessee is providing services in relation to photography - Among other charges they were also collecting amounts towards Threading charges, Negative Storage charges and Lab Conformation charges from their customers - It appeared to department that the service tax liability is required to be paid in respect of these charges also - The demand in respect of Lab Confirmation charges have not been contested and are therefore upheld - Assessee has contended that the threading charges are nothing but cost of the film and the VAT has been discharged on the same - So also in respect of Negative Storage charges, assessee avers that these relate to reimbursement of electricity charges and rent recovered from the clients - It is noted that right from the initial adjudication proceedings and even at this stage assessee have not been able to produce the necessary evidence in support of these claims - This being so, the demand confirmed by original authority and upheld in the impugned order will sustain and no interference is made in respect of the same - However, coming to the matter of penalty, entire issue is one of interpretation - The penalty imposed under Section 78 is set aside: CESTAT
- Appeal partly allowed: CHENNAI CESTAT
2018-TIOL-3866-CESTAT-MAD
Habasit Lakoka Pvt Ltd Vs PR CGST & CE
ST - The assessee is engaged in manufacture of Flat Transmission Belts, Conveyor Belts and Timing Belts - They were also engaged in trading of goods - As it appeared that assessee is not eligible for credit pertaining to trading, SCN proposing to demand an amount being the amount equivalent to 6% / 7% of value of exempted service for period January 2012 to March 2016 along with interest and also proposing to impose penalties was issued - The foremost contention put forward by assessee is that the adjudicating authority and the investigating authority being the same, the proceedings are hit by violation of natural justice - Circular No.1053/2/2017-CX has stated that Central Excise officers of all ranks in Audit Commissionerate shall have powers to adjudicate SCNs - Thus, the adjudication made by Assistant Commissioner is not without jurisdiction - The demand is raised for the reason that trading is an exempted service and that the assessee have used common input services for manufacturing activity and trading activity - The assessee seems to have confused with regard to traded goods and trading activity - The traded goods cannot be considered as an exempted goods whereas the trading activity as per Rule 2(e) of CCR, 2004 is an exempted service - The assessee do not have a case that they have maintained separate accounts with regard to common input service used for trading and manufacturing activity - For this reason, the demand raised is legal and proper and requires no interference - However, assessee has been maintaining register with regard to the traded goods on bonafide belief that they are maintaining separate accounts as provided under Rule 6(2) of CCR, 2004 and has not availed credit on such goods - Considering these aspects, the penalty imposed is unwarranted and same is set aside: CESTAT
- Appeal partly allowed: CHENNAI CESTAT
2018-TIOL-3865-CESTAT-MAD
Integra Software Services Pvt Ltd Vs CGST & CE
ST - Assessee, a 100% EOU is engaged in export of services in relation to e-Publishing of books and related services for various publishers and corporate companies situated abroad - Based on scrutiny of ER-2 returns, SCNs were issued on various dates with proposals to recover ineligible Cenvat credit totaling to Rs.55,86,302/- on the grounds that input services pertaining to such credits were not used for providing output services and that such services do not fall within the meaning of "input services" as defined in Rule 2 (l) of CCR, 2004 - It was found that assessee have availed credit to the tune of Rs.1,25,707/- on photocopies of invoices - The authority below has disallowed the credit for the reason that the documents are not proper - Since the assessee have already furnished the original invoices at the time of filing the refund claim, it cannot be expected of assessee to produce the same in these proceedings before the authorities - Following the decision of M/s. Pepsico India Holding P. Ltd. - 2017-TIOL-26-CESTAT-MUM, the credit to the tune of Rs.1,25,707/- is eligible to assessee - Credit to the tune of Rs.1,12,254/- is disallowed for the reason that the assessee have not produced invoices - The assessee admit that they are not eligible for this credit, but contend that they have already reversed it before issuance of SCN and, therefore, are not liable to pay interest or penalties - In this regard, the records are not so clear as to the fact of reversal of credit by assessee - Therefore, this issue requires to be relooked by the adjudicating authority - In case, assessee have reversed the credit, the penalty on this score cannot sustain as per the decision in case of M/s. Strategic Engineering P. Ltd. - This issue is therefore, remanded - The impugned order is modified by allowing the credit of Rs.1,25,707/- + Rs.36,296/- and remanding the issue with regard to Rs.1,12,254/-: CESTAT
- Appeals partly allowed: CHENNAI CESTAT
CENTRAL EXCISE
CX - Assessee is engaged in activity of providing IT services, intellectual property right services, renting of immovable property services and transport of goods by road services and also coating services - It is coating service which is the subject of appeal and the same is subject to tax under head 'BAS' - It is the case of Revenue that assessee should have distributed the tax credit to various units situated across the country and should not have availed CENVAT credit only at Pune - Rule 7 of CENVAT Credit Rules as existing pre & post 2012 give an option to assessee concerned whether to distribute input service tax available to it amongst its other manufacturing units which are providing output services - From the reading of Rules, the option was available to assessee whether to distribute the CENVAT credit or not - In fact, attention is invited to Rule 7 as substituted w.e.f. 1.4.2016 which has made it mandatory for distribution of input services to the various units providing output services - This is evidenced by the use of words "shall distribute the Cenvat Credit" in substituted Rule 7 as CCR, 2004 w.e.f. 1.4.2016 - Therefore, the assessee was entitled to utilize CENVAT credit available at its Pune unit - The Tribunal found that entire exercise would be revenue neutral - This is so as the distribution of Cenvat Credit to the various units would result lesser service tax being paid by cash on their activity of coating as they would have utilized the cenvat credit available for distribution - Thus, making the entire exercise academic, therefore, the question is not entertained: HC
- Appeal dismissed : BOMBAY HIGH COURT
2018-TIOL-3864-CESTAT-MAD
CGST & CE Vs Mahindra And Mahindra Ltd
CX - The assessee is engaged in manufacture of motor vehicles - During scrutiny of ER-I Returns, for the months of December 2008, April 2009, June 2009 and November 2009, it was noticed that the assessee had removed 16 numbers of motor vehicles (prototypes) to their unit Nasik on returnable basis - Since there was no sale involved, department requested the assessee to redetermine the value under Rule 11 r/w Rule 8 of CEVR, 2000 and arrive at 110% of cost of production under CAS-4 - Since there is no appeal filed by assessee, the issue with regard to excisability and marketability of the prototypes does not require any further analysis - The issue that has to be looked into is only with regard to valuation of the prototypes - Only after certification by such authorities can the manufacturer of motor vehicles manufacture and market the motor vehicles - The similar model vehicles which are commercially manufactured can be said to be copies of the prototypes - It cannot be then said that these prototypes are consumed in further manufacture of motor vehicles - Thus Rule 8 of CEVR, 2000 will not apply to such a situation - The Commissioner has gone deeply into the analysis of what is prototype and the valuation to be adopted for such prototypes - He has also relied upon the O-I-O in assessee's own case, wherein the proceedings were dropped - The department having accepted the decision passed by the Commissioner as well as the decision passed in O-I-A, they cannot insist that Rule 11 r/w Rule 8 has to be applied in the present proceedings - No grounds found to interfere with the impugned order: CESTAT
- Appeal dismissed: CHENNAI CESTAT
2018-TIOL-3863-CESTAT-DEL
Miraj Pipes And Fittings Pvt Ltd Vs CCE & ST
CX - The assessee is engaged in manufacture of PVC/HDPE pipes - The Department alleged that assessee have failed to pay Central Excise duty on sales tax collected from buyers and retained by them to the extent of sales tax liability discharged through utilisation of subsidy with intent to evade payment of duty - Department in addition observed that the assessee has received wages and employment subsidy sanctioned under Rajasthan Investment Promotion Scheme 2003/10 (RIPS) under various VAT 37B Challans and have adjusted the amount therein for discharge of its liability towards sales tax - However, Department alleged the assessee to have paid short Central Excise duty for said period - The remission is in the nature of subsidy which the assessee was receiving from State Government in form of VAT 37B Challans and not from the buyers of assessee - The said remission was not only as good as cash but can also not be considered as an additional consideration - It is clear that the transaction value includes all the payments made by buyer to the assessee - However, the subsidy has been paid to it by State Government - Only the mode of payment is by way of crediting the sales tax head under VAT challan in favour of assessee - Thus, it could not be said that the amount is in nature of additional consideration - Support drawn from the case in Shree Cement Ltd. - 2018-TIOL-748-CESTAT-DEL wherein it was held that where assesses are required to remit the VAT recovered by them at the time of sale of goods manufacture and a part of such VAT is given back to them in form of subsidy in VAT 37b Challans, such Challans are as good as cash but for the limited purpose of being used for the payment of VAT in the subsequent period - The Tribunal has clarified that in terms of scheme of Government of Rajasthan payment of VAT using such Challans are the legal payments of tax - As regards to the issue of alleged mis-representation, it has already been observed that no amount of Government Exchequer as far as VAT was concerned, was retained by assessee - No question of evasion of duty at all arises - Once sales tax stands paid as per the Sales Tax Department, the Central Excise Department cannot contend and allege a short levy on the ground that some amount thereof has been remitted back to the assessee - The assessee cannot be held liable for the said wrong on part of Department - The evidence about any positive act except the allegation of using VAT Challans for discharging the VAT liability for subsequent period could not be produced on record - Discharge of liability by way of VAT 37b Challans has already been held as legally sustainable methodology of discharging tax liability for subsequent period - It is held that Department was not entitled to invoke the extended period of limitation - The demand could be confined only to the normal period of one year, the demand as such is not sustainable: CESTAT
- Appeal allowed: DELHI CESTAT
2018-TIOL-3862-CESTAT-MUM
Woodfield Systems India Pvt Ltd Vs CCE
CX - Refund - It is not in dispute that the pattern of sale adopted by the appellant is ex-factory basis and the freight amount has been reimbursed for transporting the material from the factory to the premises of the customer - in view of the principle laid down by the apex court in the case of Ispat IndustriesLtd. - 2015-TIOL-238-SC-CX., the cost of freight cannot be added to the assessable value - appeal allowed by setting aside the impugned order: CESTAT [para 5]
- Appeal allowed: MUMBAI CESTAT
CUSTOMS
2018-TIOL-2683-HC-MAD-CUS
Kalki Shipping Associates Vs CC
Cus - The petition is filed against impugned order revoking Customs Broker License given to the petitioner, imposing penalty and forfeiting security deposit - It is contended by petitioner that this writ petition is maintainable since the impugned proceedings was issued beyond the period of limitation stipulated under CBLR, 2013, both at the stage of issuing SCN as well as while passing the impugned order on receipt of the enquiry report - The SCN was issued only on 02.03.2017, based on offence report dated 27.09.2016 received at the office of respondent - Though the SCN does not say as to when such offence report was received by respondent and the very notice itself was issued only on 02.03.2017, the date of issuance of such notice has to be construed as the date of receipt of offence report, as has been held by this Court in A.M.Ahamed & Co. - 2014-TIOL-1503-HC-MAD-CUS - Going by the date of receipt of offence report and the date of issuance of SCN, it is evident that the SCN issued was beyond the period of 90 days and thus, the same is in violation of Regulation 20(1) of CBLR, 2013 - It is admitted in impugned order itself that the report of Enquiry Officer was submitted before respondent on 17.05.2017 - However, impugned order was passed admittedly, on 13.10.2017, which is clearly beyond 90 days, as required under Regulation 20(7) - Court views that issuing SCN beyond the period of 90 days is in violation of Regulation 20(1) and passing the impugned order after 90 days from the date of receipt of report is in violation of Regulation 20(7) - Therefore, this Court is fully convinced that impugned order cannot be sustained for want of jurisdiction on the very reason that same was passed beyond the period of limitation - Accordingly, impugned order is set aside: HC
- Writ petition allowed: MADRAS HIGH COURT
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