SERVICE TAX

2019-TIOL-06-CESTAT-DEL

CST Vs Shyam Indus Power Solutions Pvt Ltd

ST - The assessee is registered with department for various services such as erection, commissioning and installation services; construction services in respect of commercial and industrial buildings and civil structure and work contract service - They are also registered for business support services as well as under GTA services - A SCN was issued to assessee saying that they have divided their entire work into two parts of work contract service, one for supply of goods and second for construction of civil structure on which a service tax @ 4.12% has been paid under composite work contract service - The assessee was awarded contract on EPC basis by various electricity companies such as North Delhi Power Limited, Dakshin Haryana Bijli Vitran Limited and it can be seen from contract that all the contracts are composite contract for the supply of goods as well as for erection and commissioning on turnkey basis - From the perusal of Rule 3 (i) of Work Contract Rules, 2007, it is clear that for determination of value under composition scheme, the value of all goods used in or in relation to execution of work contract need to be included in serviceable value even when the goods might have been supplied under any other contract for execution of composite work contract - It is a matter of record that all the contracts are composite contracts for both supply of goods and services as both the elements are absolute pre-requisite for completion of any turnkey project - The assessee has opted for benefit of composite work contract service and has availed the benefit of Rule 3 (i) - The value of both supply and service need to be added for payment of service tax under composition scheme - The matter is no longer res-integra as it has already been decided by Tribunal in case of Jindal Water Infrastructure Ltd. - 2018-TIOL-1153-CESTAT-DEL - Appeal is accordingly allowed by way of remand: CESTAT

- Matter remanded: DELHI CESTAT

2019-TIOL-05-CESTAT-ALL

Logix Infrastructure Pvt Ltd Vs CCE & ST

ST - The assessee is provider of Residential Complex Service which was defined under FA, 1994 and w.e.f. 01.07.2012 the said definition of Individual Services does not exist on statute and w.e.f. 01.07.2012 a new concept of negative list was introduced wherein whatever has not been included in the negative list, is treated as a service - The assessee was issued with a SCN - The CBEC's letter issued by TRU dated 26.02.2010 about the scope of valuation in respect of Residential Complex Service which was introduced in year 2010, during such period when there was no provision of Section 66F dealing with bundled service on the statute - After the introduction of Section 66F on the statute, the provisions of Section 66F will prevail over any clarification or view taken by CBEC - Therefore, the components such as preferred location charges, external development charges are part and parcel and for various elements of the main service which is Residential Complex Service and therefore the entire consideration received by assessee are eligible for abatement under Notfn 26/2012-ST - Therefore, no merit found in the impugned orders, same are set aside: CESTAT

- Appeals allowed: ALLAHABAD CESTAT

2019-TIOL-11-CESTAT-MAD

Bharat Sanchar Nigam Ltd Vs CCE & ST

ST - The assessee is provider of taxable services under Telecommunication Services - Pursuant to audit, it was noticed that capital goods on which cenvat credit had been availed by assessee were normally received in stores located in two places at Trichy, however the said goods had been distributed from the Stores to 290 exchanges for installation and further utilization - It appeared that cenvat credit availed by assessee on such capital goods which had been removed from outside the premises are liable to be recovered under Rule 14 of CCR, 2004 read with proviso to Section 73 (1) of FA, 1994 - On the issue of removal of capital goods from the Stores to 290 exchanges, the issue stands squarely covered by decision in assessee's own case in BSNL - 2017-TIOL-2026-CESTAT-DEL - In the event, the demand of Rs.2,04,81,127/- in respect of cenvat credit availed on capital goods removed from the registered premises cannot sustain - Coming to the allegation of wrong credit of Rs.9,83,075/-, reason for rejection is that post offices are not registered with department and such Statements / bills/invoices raised by them do not become a valid document prescribed under Rule 9 of the Rules for availing input service credit - Just because the registration certificate has not been mentioned in TRC document issued by the Post Master, this by itself should not be a reason for denial of input service credit, especially when considering that all the other particulars required as per Rule 9 ibid have been indicated in all such documents - This omission of mentioning registration number is only a curable defect - In any case, it is also to be kept in mind that issuing authority is an authority of Department of Posts, which is Department of Govt. of India and surely, credibility has to be given to such certificates - It is also not an allegation that individual input service credits indicated in TRC documents are by themselves not ineligible or otherwise improper - The denial of credit amount of Rs.9,83,075/- on the basis of TRC document issued by Post master is unjustified - The demand to the contrary in impugned order cannot then be sustained and is therefore set aside: CESTAT

- Appeal allowed: CHENNAI CESTAT

2019-TIOL-10-CESTAT-MAD

Fast Track Pvt Ltd Vs Commissioner of GST & Central Excise

ST - The assessee was issued SCN demanding service tax under category of franchise services for period 16.06.2005 to 31.03.2007 - After due process of law, original authority confirmed the demand along with interest and also imposed penalty under Section 76 and 78 of FA, 1994 - It has to be stated that Commissioner (A) has waived the penalties imposed, invoking Section 80 and observing that there is reasonable cause for assessee for not discharging service tax liability - The definition of 'franchise' had undergone an amendment with effect from 16.06.2005 - Prior to this date, in the absence of all the four ingredients in an agreement, the transaction would not fall into the category of 'franchise' - On perusal of the agreement of assessee with vehicle owners, it is seen that Clause No. 5 does not make any obligation on the part of the vehicle owner not to cater to other customers - Thus, the driver/owner can cater to the requirements of other customers also even though they have entered into an agreement with the assessee - Thus, the fourth limb of the earlier definition has been given go-by after 16.06.2005 and hence, the argument of assessee that the issue is an interpretational one is not without force - It is also stated that with effect from 01.03.2006, the assessee has been discharging service tax on the very same services under BAS and Department has accepted the same for the past more than ten years - The demand for the extended period cannot sustain for the reason that there is no evidence to show any suppression of facts on the part of assessee - Impugned order is modified to the extent of setting aside the demand for the extended period only: CESTAT

- Appeal partly allowed: CHENNAI CESTAT

 

CENTRAL EXCISE

2019-TIOL-04-CESTAT-AHM

Essar Steel Ltd Vs CCE & ST

CX - This appeal has been filed against denial of Cenvat credit on cement and various structural articles used by assessee - At the material time, rule 57 A and rule 57Q of CER, 1944 were the relevant rules which dealt with admissibility of credit as input and as capital goods respectively - The decision in case of Vandana Global - 2010-TIOL-624-CESTAT-DEL-LB relied solely to admissibility of credit on angles, joists, beams, channels, bars and flats which go into fabrication of construction for support of capital goods - The High Court of Chhattisgarh observed that the credit on such items would be admissible - Similar logic was followed by High Court of Gujarat in case of Mudra Ports and Special Economic Zone - 2015-TIOL-1288-HC-AHM-ST while allowing credit on cement and steel used in construction of jetties - Jetty is used to provide port service and under that circumstance, it is a capital good directly used for provision of services - In this regard, observation of Apex Court in case of Jawahar Mills while interpreting the Rule 57Q of Central Excise Rules is relevant - The test necessary for determining admissibility of credit on cement and tor steel depend on the actual use the said goods are put into - The findings are similar to the findings of Tribunal in case of Ispat Industries upheld by High Court of Bombay - The SCN essentially charges that these goods are used for construction and therefore, cannot be considered as capital goods - The claim of credit needs to be tested as per the user test prescribed in decision of Apex Court in case of Jawahar Mills - The impugned order is, therefore, modified and the issue is remanded to original adjudicating authorities to examine the exact use of the goods and test the admissibility of credit in terms of the decision of Apex Court in case of Jawahar Mills: CESTAT

- Matter remanded: AHMEDABAD CESTAT

2019-TIOL-03-CESTAT-MAD

Essae Electronics Pvt Ltd Vs Goods And Service Tax and Commissioner of Central Excise

CX - Assessee is engaged in manufacture of parts of Washing Machine, Refrigerator, Coffee Maker and Weighing Machine falling and as such was availing Cenvat credit on inputs, input services and capital goods for the period May 2015 to March 2016, in accordance with the provisions of CCR, 2004 - It is the case of Revenue that assessee had availed Cenvat credit of service tax paid in respect of some of services which did not relate to nor had any nexus with the business of manufacturing of excisable goods by assessee and therefore, had failed to satisfy the definition of input service as per Rule 2 (l) of CCR, 2004 - The assessee on one hand claims that he has sending only the samples by courier whereas, in the grounds of appeal it claims that what was disputed through courier are the goods - This is quite clear from assessee's grounds of appeal - Thus there is no clarity as to whether what was sent through courier were only samplers or the manufactured goods under the guise of samples; and in any case, if the dispatch was of the goods then, it will have a different consequence - Once this factual aspect becomes clear, then the law as laid down by Courts can be applied - Matter remitted back to the file of adjudicating authority with a further direction to assessee to clarify its stand - The authority has nowhere questioned the eligibility of Credit and therefore no interfere required with the findings/directions of the appellate authority: CESTAT

- Matter remanded: CHENNAI CESTAT

2019-TIOL-09-CESTAT-AHM

Garden Silk Mills Ltd Vs CCE & ST

CX - SCN was issued to assessee and M/s SPL wherein demand of Rs. 24,15,440/- was raised against assessee and Rs.3,07,00,818/- against M/s SPL - In case of demand of Rs. 24,15,440/-, the demand was initially confirmed vide OIO against both M/s GSML and M/s SPL which in turn came to be set aside by Commissioner (A) - The Revenue however filed appeal against M/s SPL only and did not file any appeal against the assessee - Even the Tribunal order was only in respect of M/s SPL - It thus clearly appears that OIA, in as much as it relates to assessee has attained finality and the findings made therein cannot be interfered with - The Revenue by not filing an appeal against the said OIA against the assessee has not contested the findings made by Commissioner (A) and hence the demand of Rs. 24,154,40/- against the assessee cannot be allowed to be sustained - As regard the demand of Rs. 6031775.30 raised against assessee vide SCN dated 12.05.1998, the demands were set aside by Tribunal holding that in case of job work, the concept of related persons is not applicable and relevant - However, the Supreme Court remanded the case for determining the relationship, which was in turn remanded by Tribunal to the Commissioner - The Revenue's case is that the assessee and M/s SPL are related persons and has under-valued the goods manufactured by them and supplied to each other by paying excise duty on cost construction method - It is not a disputed fact that the assessee and M/s SPL have sold the similar excisable goods to other independent buyers - In such case, when the other buyers of similar goods are available, assessable value cannot be determined in terms of Section 4(1)(a) as the same is applicable only when the goods are sold only through related persons, which is not the case here - The value charged by assessee to M/s SPL matches closely with the value charged by assessee to other customers, as apparent from the SCN - Since there is no major difference between the goods sold to independent buyers and allegedly related person M/s SPL and the prices are comparable after taking into consideration the discount and other expenses, no reason found to demand duty from assessee - The discounts by assessee to M/s SPL are normal business transaction as has been upheld by Tribunal in various judgments - Thus, the demands raised against assessee does not sustain and are set aside - No reason found to uphold the demands, thus set aside the same - Consequently, the penalties, confiscation of goods, plant & machinery against the assessee company as well as the penalties on Shri Bipin Modi, director of M/s SPL and upon Shri Soli Bhesania, director of assessee are also set aside: CESTAT

- Appeals allowed: AHMEDABAD CESTAT

2019-TIOL-08-CESTAT-MAD

CCE Vs Goodwill Team Papers Ltd

CX - Assessee is the manufacturer of craft paper and laminated kraft paper - They cleared laminated kraft paper on payment of concessional rate of Excise Duty available under Notfn 4/2006-CE - Department took the view that as per the notification, paper and paper board and articles made therefrom should have been manufactured in the same factory, however that is not so in the instant case - The very issue has been addressed by Tribunal in case of ABC Paper - 2015-TIOL-784-CESTAT-DEL - In that particular case, the conversion of pulp into paper rolls was done by the assessee on job work basis and therefore benefit of Notfn 4/2006-CE was denied to assessee - However, the Tribunal has held that as the manufacturer undertaking to discharge duty liability on finished products and job work sending back paper rolls to manufacturer under job work challan without payment of duty, benefit of said exemption notification is not deniable to the manufacturer - Following the ratio of said ABC Paper decision , issue held in favour of assessee - No infirmity found in the impugned order for which reason, department appeals are dismissed: CESTAT

- Appeals dismissed: KOLKATA CESTAT

 

 

CUSTOMS

2019-TIOL-12-CESTAT-MUM + Case Story

Shivani Scientific Industries (P) Ltd Vs CC

Cus - 'Micromanipulator', can, by no stretch, be considered to be an accessory of 'microscope' - rightly classifiable under heading 9018 9099 of CTA, 1975 - goods, as presented, consist of a microscope and a micromanipulator - material fact is that in vitro fertilisation cannot be carried out without the presence of both the components - attempt to classify the goods, as presented, under heading no 9011 8000 of the First Schedule to Customs Tariff Act, 1975 suffers from inconsistency as 'microscope' cannot be an accessory of 'microscope' - Classification of the impugned goods under heading no 9011 8000 of First Schedule to the Customs Tariff Act, 1975 fails and, in the face of such failure and want of an alternative classification in the show cause notice, by application of rule 1 and rule 2 of General Interpretative Rules, the declared classification must be accepted - Impugned order set aside and Appeals allowed: CESTAT

- Appeals allowed: MUMBAI CESTAT

2019-TIOL-02-CESTAT-KOL