2018-TIOL-3876-CESTAT-MUM + Case Story

ETC Networks Ltd Vs CC, CE & ST

ST – Event organized by M/s. Concerto in UK cannot be construed as ‘having provided operational assistance in marketing' of the channel of the appellant so as to be classifiable under BSS and attract tax on reverse charge - service rendered by M/s. Concerto is correctly classifiable under Event Management Service and since the entire service is performed outside India, hence is not taxable – demand set aside and appeal allowed with consequential relief: CESTAT [para 9]

- Appeal allowed: MUMBAI CESTAT

2018-TIOL-3875-CESTAT-MAD

Sundaram Industries Ltd Vs Commissioner of GST & Central Excise

ST - The assessee was engaged in providing clearing & forwarding services and they provided services to M/s. Project Management Inc. USA for the goods manufactured and exported by them - The department was of the view that they were liable to pay service tax under reverse charge mechanism as per Section 66A of FA, 1994 - It is seen that the assessee have provided clearing and forwarding services to service recipient who is situated outside India - The Tribunal in case of Bnazrum Agro Export Pvt. Ltd. 2018-TIOL-1532-CESTAT-MAD , had occasion to analyse the very same issue and it was held that the said activities having been performed outside India will not be exigible to service tax - The Tribunal had relied upon various decisions to reach such conclusion - Following the same, the demand cannot sustain: CESTAT

- Appeal allowed: CHENNAI CESTAT

2018-TIOL-3874-CESTAT-MAD

Turbo Energy Ltd Vs CGST & CE

ST - The assessee is engaged in manufacture of turbo chargers and parts thereof - During scrutiny of records, it appeared to department that assessee had rendered Man Power Recruitment or Supply Agency Service, however had not discharged service tax liability thereon - Department took the view that service tax is required to be paid on such activity under MRSA, hence SCN was issued - The scope of service tax liability in respect of the activity of staff to subsidiary/group companies is no longer res integra - The High Court in case of Arvind Mills Ltd. 2014-TIOL-441-HC-AHM-ST , has held that subsidiary companies cannot be said to be client of holding company and the deputation of employees was only for and in the interest of the company; there is no relation of agency and client - Respectfully following the ratio, no infirmity found in the decision of Commissioner (A) setting aside the demand in respect of employees deputed by the assessee to the group companies - As regards to another appeal, Commissioner (A) has held that service tax is liable to be paid in respect of employees deputed to Lapross Engineering Ltd., however, he has set aside the demand on time-bar - A SCN has very much been issued and the adjudication thereof has culminated in confirmation of demand - At such a later stage, if LAA finds that demand is time-barred, he should only set aside the demand on that ground but cannot advise assessee concerned to discharge the disputed amount through Section 73 (3) ibid - Tribunal is not able to find any fault with the finding of Commissioner (A) that the said demand is time-barred as assessee had been audited on more than one occasion earlier, that portion of the order set aside which opines that the disputed demand could be settled under Section 73 (3) ibid: CESTAT

- Assessee's appeal allowed: CHENNAI CESTAT

2018-TIOL-3870-CESTAT-DEL

W M Logistics India Pvt Ltd Vs CCE C & ST

ST - The assessee is a 100% subsidiary of WM Logistics LLC, USA - As per the agreement with their parent company, they provided product development support services for collection and disposal activities of WML, USA - They were registered for providing taxable services including 'Information Technology Software Service' - The dispute pertains to the claim for refund filed byassessee for the period April, 2016 to September 2016, for refund of accumulated Cenvat credit in terms of Rule 5 of CCR, 2004 r/w the relevant Notfn 27/2012–CE (NT) - In respect of the refund claims filed by the assessee for the quarter April 2016 to September 2016, the only objection recorded by lower authorities is that the documentary evidence for export of services has not been satisfactorily submitted - The STPI authorities have vide their letter dated 28/12/2016 that the Softex Form is required to be submitted as per the RBI guidelines to evidence the export of goods/services through data communication links - The assessee is not registered with STPI authorities and hence could not submit such forms but have claimed that the Softex Form is not a requirement for export of services through internet - It has been submitted that Softex Forms are requirement only in the case of software export in media form - To this effect they have relied on the decision of Tribunal in case of Mobile Iron India Software Pvt. Ltd. - In the said case also one of the grounds for rejection of refund was non-production of Softex returns from STPI authorities - The Tribunal has concluded that the insistence to furnish Softex returns from STP authorities is not as per the law laid down in the relevant field - In the present case also, the assessee has claimed to have exported Information Technology Software Service - The fact of export of such software and the receipt of the foreign exchange therefore is sufficiently evidenced from the invoices, the FIRCs and the Chartered Accountant's certificate certifying the total turnover - The assessee is entitled to refund in terms of Rule 5 of Cenvat Credit Rules: CESTAT

- Appeal allowed: DELHI CESTAT

2018-TIOL-3873-CESTAT-MAD

Godrej Consumer Products Ltd Vs Commissioner of GST & Central Excise

CX - The assessee is engaged in manufacture of mosquito repellent coil and are availing CENVAT credit on inputs, capital goods and input services used in manufacture of finished goods and also on the input services distributed by their Head Office as Input Service Distributor (ISD) - Proviso to Rule 3(4) clearly shows that the units who avail credit of duty or service tax if availing the area based exemptions shall utilize the credit only for payment of duty on final products in respect of which exemption under the respective notifications has been availed - It is an undisputed fact that various services were availed in the name of Head Office of the company which were used commonly by all manufacturing units including the units availing area based exemption - The department views that only the proportionate credit attributable to such area based exemption units should be utilized for discharge of duty on final products cleared on availing the exemption as per the notification - Interestingly, SCN is not issued to such units who have availed area based exemptions - The assessee situated in Puducherry has availed credit on ISD invoices issued by their Head Office - Prior to 1.4.2012, there was no restriction as to how much credit can be distributed to each unit - During relevant period, Rule 7 did not lay down any manner of distribution based on pro-rata basis - Only with effect from 1.4.2012, Rule 7 has been amended to include that the distribution of credit shall be on pro-rata basis - The decision in case of ECOF Industries P. Ltd. also has laid down that there are no restriction under the said Rules limiting the distribution of service tax credit - The assessee has availed credit on ISD invoices distributed by their Head Office - To such availment or utilization of credit by assessee, the proviso to Rule 3(4) does not apply at all - The demand raised alleging that assessee has violated provisions of Rule 2(l) r/w proviso to Rule 3(4) cannot sustain - The demand of Rs.1,86,113/- has been raised alleging that assessee has availed credit on membership fee of Bombay Gymkhana Club Ltd. and that these are not eligible input services - Such membership fee paid by assessee does not have any nexus with their manufacturing activity - The demand raised on this ground is therefore upheld without any interference - T he impugned order is set aside except to the extent of upholding disallowance of credit of service tax paid on membership fee: CESTAT

- Appeals partly allowed: CHENNAI CESTAT

2018-TIOL-3872-CESTAT-MAD

J K Tyre And Industries Ltd Vs Commissioner of GST & Central Excise

CX - Assessee is engaged in manufacture of tyres, tubes and flaps - The issue arises for consideration is; whether the assessee is eligible for adjusting excess paid duty towards the short paid as well as whether they are eligible for refund of excess amount after such adjustment - In Toyota Kirloskar Auto Parts 2012-TIOL-10-HC-KAR-CX , the High Court of Karnataka had occasion to analyse the issue and has held that such adjustment is permissible - Similarly, the said decision was followed by Tribunal in assessee's own case in 2018-TIOL-2856-CESTAT-BANG - The Tribunal also relied upon the decision in case of Indian Telephone Industries to observe that excess paid duty of provisional assessment is required to be adjusted towards the duty short paid upon finalization of such provisional assessment - The appeal filed by department against sanctioned refund by the authorities below in assessee's own case was dismissed by Tribunal holding that the test of unjust enrichment is not required to be carried out prior to adjustment of excess duty paid - Following the said decisions in assessee's own case, since the issue stands settled in favour of assessee the order directing to credit the sanctioned refund to the Consumer Welfare Fund is not in accordance in law and same is set aside: CESTAT

- Appeal allowed: CHENNAI CESTAT

2018-TIOL-3871-CESTAT-MAD

NCR Corporation India Pvt Ltd Vs CCE

CX - The assessee is manufacturer of Automatic Teller Machines (ATMs) - The dispute revolves around the contract entered into between assessee and State Bank of India and their associates- As per agreement entered into by assessee with banks, the latter were required to make payment for warranty services half-yearly in arrears - Further, after expiry of the warranty service period of two years, the banks were required to make payments to assessee towards "Second Line Maintenance" (annual maintenance contract) for three years - The Department took the view that the said charges, though being recovered separately, are required to be included in assessable value of the ATMs in terms of Section 4 of CEA, 1944 - It is evident that while the transaction value would bring within its scope not the price actually paid but that which is actually payable - Amongst the other ingredients, charges towards warranty in connection with sale, whether payable at the time of sale or at any other time will form part of transaction value - Only then will the transaction value become assessable value for levy of Central Excise Duty - It is clearly evident that it is mandatory for buyers of ATMs to also accept the warranty agreement and pay warranty charges for the first two years and second line maintenance charges for the next three - Although the amounts become payable only later, this would still come within the scope of definition of the type of warranty charges that would be required to be incorporated into "transaction value" for purposes of Section 4(3)(d) of the Act - Both the appeals fail on merits and no infirmity found in the demand of differential Central Excise Duty relating to two impugned Orders - However, in respect of another appeal which relates to a subsequent period, the penalty of Rs. 10,000/- imposed under Rule 25 of CER, 2002 is unjustified and therefore, same is set aside: CESTAT

- Appeal partly allowed: CHENNAI CESTAT

CUSTOMS

2018-TIOL-3869-CESTAT-DEL

Him Logistics Pvt Ltd Vs CC

Cus - Assessee, M/s Balaji Overseas is the importer, Mr. Kshitij Sharma is partner of M/s Balaji Overseas and M/s Him Logistics are the forwarding agents who have liaisoed between M/s Balaji Overseas and CHA – KVS Cargo - As per the SCN, it has been alleged that Balaji Overseas have indulged in evasion of custom duty by resorting to mis declaration of goods under import - Accordingly, the goods were seized under reasonable belief that the same are liable to confiscation under provisions of Customs Act, 1962 - Statements of Mr. Kshitij Sharma, Partner of M/s Balaji Overseas was recorded wherein he allegedly admitted the mis-declaration regarding import of goods/food supplements - So far the contention of assessee that the statement of Kshitiz Sharma has got no evidentiary value in view of the retraction made, it is stated that such ground was not raised before the adjudicating authority - Mr Kshitiz Sharma did not complain of any ill treatment or coercion when he was produced before CMM - Further Mr. Sharma did not inform about the retraction of his statement to the authority before whom he recorded the statement - Subsequent retraction cannot take away the effect of statement recorded under section 108 of the Act, if the retraction of confession is not addressed to the officer before whom the statement was given - It was only during bail proceedings he stated that the statements were obtained under duress and threat - Reliance is placed on the ruling of High Court in case of Khandelwal Foods Products - Admittedly Mr Kshitiz Sharma had been importing food supplements in the past - This fact is evident from several bills of entry filed in name of Kshitiz International - So far valuation as adopted by revenue is concerned, the undeclared/mis-declared goods, being of Chinese origin and manufacture, are not similar or identical to the goods manufactured in USA and imported from USA - Thus, the valuation done by revenue under rule 3, 4 and 5 is erroneous and the same is set aside - The valuation of goods in question being food supplements, not containing beef has to be done under rule 7 of the Valuation Rules - The absolute confiscation of food supplements containing beef is upheld - The confiscation of food supplements not containing beef is also upheld but are redeemable on payment of duty However confiscation of A4 copy paper is set aside - As no redemption fine has been imposed by Commissioner, the order of appropriation of bank guarantee furnished towards redemption fine is bad and accordingly the same is set aside - We further direct that the said bank guarantee already encashed, shall be adjustable with the amount of customs duty payable, balance if any, with penalty.

M/s Balaji Overseas is liable to penalty under Section 112(a) read with Section 114AA of Customs Act - However, such penalty is restricted to 100% of duty sought to be evaded - So for the penalty on partner Mr Kshitiz Sharma is concerned, same is set aside in view of penalty confirmed on the firm - So far penalty on M/s Him Logistics under Section 112 of the Act is concerned, they have not done any act of omission or commission attracting the provisions of section 112 of the Customs Act - Accordingly, the penalty on them is set aside: CESTAT

- Appeals partly allowed: DELHI CESTAT

2018-TIOL-3868-CESTAT-AHM

Saffire Clothing Company Pvt Ltd Vs CC

Cus - The assessee is having factory at kandla SEZ at Gandhidham for manufacturing of made ups and ready to wear garment - The goods were intercepted in the bus of assessee at check post - It is clear that the goods were intended to be taken out from SEZ premises, however the goods were not cleared out of SEZ, therefore, no liable to duty at that stage - However, since, there was attempt of clandestine removal, the goods were correctly liable for confiscation - Hence, the confiscation of goods and consequential redemption fine is upheld - Since, at the stage of confiscation duty is not chargeable, and the goods were within the SEZ premises, penalty attributed to said duty is also set aside - As regard, confiscation of the goods at the premises of Maruti Trading Company and Ashok Industries, as per reconciliation provided by assessee, the goods shown to have purchased by both the units are well within the duty paid goods cleared by assessee - Moreover, there is no evidence of movement of goods without payment of duty from SEZ to M/s. Maruti Trading Company and Ashok Industries - - The goods were seized from premises of Maruti Trading Company and Ashok Industries, therefore, the confiscation and redemption fine against the assessee is illegal and incorrect - In this position, neither the goods found in premises of M/s Maruti Trading Company and Ashok Industries was liable to confiscation nor it is attract duty as same was not proved to have been cleared clandestinely from the premises of assessee therefore, the demand on the goods seized from the Maruti Trading Company and Ashok Industries is set aside - As regard, the penalty on employees, majority of demand is set aside, moreover the employees are not beneficiary against any offence committed, therefore, the employees are not liable for penalty: CESTAT

- Appeals partly allowed: AHMEDABAD CESTAT