SERVICE TAX

2019-TIOL-128-HC-MUM-ST

ST - Petitioner carries on the activities of re-treading of motor vehicle tyres and is registered for the purpose of payment of service tax under the category "management, maintenance or repair services" - Petitioner also pays the sales tax/VAT on the portion of gross receipts representing the value of goods and materials sold by way of consumption in carrying out the activity of re-treading of motor vehicle tyres in terms of Goa Value Added Tax Act (GVAT) - For the period between October 2006 and October 2010, the Petitioner was served with demand notices requiring them to show cause as to why the value of deemed sale in terms GVAT should not be added to the gross amount of value of taxable service and service tax levied thereon - Petitioner urged that deemed sale value could not be exigible to service tax as sales tax and service tax were mutually exclusive taxes and the Central Government did not have the power to tax that portion of the value attributable to sale of goods, whether deemed or actual – demand was confirmed but the matter was remanded to the Commissioner in Writ Petition No. 233 of 2016 for fresh adjudication – demand once again confirmed in denovo proceedings and petition filed against the same - Commissioner has quoted the CESTAT's order dated 4 February 2014 relating to the period June 2005 to September 2005 and on the said basis, confirmed the demands in the show cause notices issued to the Petitioner.

Held: Petitioner, by instituting Civil Appeal(s) 6375-6376 of 2014 had questioned the CESTAT's order dated 4 February 2014 before the Apex Court and vide its Judgment and Order dated 18 January 2017, in case of Safety Retreading Co. (P) Ltd. ( 2017-TIOL-28-SC-ST ) appeals instituted by the Petitioner were allowed the and the CESTAT's order dated 4 February 2014 was set aside – inasmuch as the reasoning in the order dated 4 February 2014 was expressly disapproved - As a result, the very foundation of the impugned order dated 14 October 2016 collapses and the impugned order is required to be set aside on this ground alone – Impugned order set aside: High Court [para 12, 13, 25]

ST - Notification 12/2003-ST - Petitioner was claiming benefits of the exemption under Notification No. 12/2003-ST dated 20 June 2003 – Benefit was denied by the Commissioner on the ground that the Petitioner had failed to comply with the terms and conditions, subject to which such exemption could be availed; that the exemption under Notification dated 20 June 2003 is available only in cases where the sale of such goods is evidenced and the sale value is quantified and shown separately in the invoice - Petitioner had produced on record documentary proof that sale/deemed sale component corresponding to 70% of the gross value, the Petitioner was in fact assessed to and levied sale tax/VAT to the local Sale Tax/VAT Authorities - Petitioner had produced documentary proof by way of Cost Accountant's Certificate, clearly indicating the details and value of the goods and materials which formed the subject matter of sale/deemed sale - the Petitioner had also produced on record documentary proof that sale/deemed sale component corresponding to 70% of the gross value, the Petitioner was in fact assessed to and levied sale tax/VAT to the local Sale Tax/VAT Authorities - Petitioner also adduced documentary proof regarding payment of such local sales tax/VAT to the State Authorities and which fact is not disputed - In such circumstances, therefore, there was absolutely no justification on the part of the Commissioner in denying the Petitioner the benefit of exemption dated 20 June 2003: High Court [para 21]

ST – For the period of disputes between April 2009 to March 2010, April 2008 to September 2008, April 2010 to July 2011, August 2011 to March 2012, October 2008 to March 2009, October 2007 to March 2008, October 2006 to September 2007, the respondent department on the basis of reasoning now recorded in the impugned order dated 14 October 2016, had required the Petitioner to pay service tax, interest and penalty on the basis of the gross receipts, without giving the Petitioner benefit of the Notification 12/2003-ST dated 20 June 2003 - Petitioner had instituted appeals before the CESTAT which were allowed by the CESTAT vide Judgment and Order dated 13 December 2017, relying entirely upon the decision of the Apex Court in Safety Retreading Co. (P) Ltd. ( 2017-TIOL-28-SC-ST ) – This Judgment and Order dated 13 December 2017 made by the CESTAT for the aforesaid period has not been questioned by the Department – Bench agrees that this is an additional circumstance for allowing the present Petition: High Court [para 23]

- Petition allowed : BOMBAY HIGH COURT

2019-TIOL-127-HC-MUM-ST

ST - VCES, 2013 - Substantial question of law that arises for consideration is whether the CESTAT was right in holding the Appeal as not maintainable in the Tribunal - Designated Authority rejected the VCES declaration filed by the Appellant by an order dated 6 January 2014 in view of the Circular dated 8 August 2013 issued by the Central Board of Excise and Customs - Appeal presented to the Commissioner (Appeals), together with an application for condonation of delay came to be rejected by the Appellate Authority holding that the same is not maintainable as well as on consideration of merits - The Appellant preferred an appeal to the CESTAT and the same has been dismissed holding that the same is not maintainable - appeal before High Court.

Held: In view of the judgments in the case of Narasimha Mills Private Ltd . 2015-TIOL-1504-HC-MAD-ST and M/s. Barnala Builders and Property Consultant 2013-TIOL-1016-HC-P&H-ST , Bench is of the considered opinion that an appeal under Section 85 of the Act, 1994 would lie against an order of rejection of a declaration passed by the Designated Authority under Section 106(2) of the Act, 1994 - For a valid declaration, two of the essential conditions that are to be satisfied are that the proceedings for either declaration or recovery of the tax dues should not be pending on 1 March 2013, and secondly, that the tax should not have been deposited before the said date - Sadguru Construction Co. vs. Union of India [ 2014-TIOL-630-HC-AHM-ST ] refers - In the instant matter, both the conditions are fulfilled - It would, therefore, be for the Appellate Authority to consider the Judgment and take a decision in the Appeal - Order passed by the CESTAT is quashed and matter remitted for taking a decision in accordance with the provisions of law and on its own merits - Appeal allowed: High Court [para 4 to 7]

- Matter remanded : BOMBAY HIGH COURT

2019-TIOL-170-CESTAT-HYD + Case Story

Obulapuram Mining Company Pvt Ltd Vs CCE, C & ST

ST - Once an Order-in-Appeal has been passed, the original order ceases to exist as it merges with the Order-in-Appeal and, therefore, no portion of that original order can be revised in revision proceedings - appropriation of the amount of Rs.38,27,626/- confirmed in revisionary proceedings while granting refund is incorrect and same is payable to the appellant - claims filed beyond one year from the date of the let export order have been correctly rejected - discrepancy in the name of the port in the invoice and the shipping bill - no reason to assume that those pertain to the export of the goods in the correspondence of the shipping bill, refund rightly rejected - Appeal disposed of: CESTAT [para 10 to 14]

- Appeals disposed of: HYDERABAD CESTAT

2019-TIOL-169-CESTAT-HYD

Livewell Estates Pvt Ltd Vs CCT

ST - The assessee is registered with Service Tax under category of 'Renting of Immovable Property Service' and 'Construction of Residential Complex Service' - Assessee gave its building on lease to M/s Chermas Exquisite Limited vide lease deed - Consequent to audit of assessee's books of accounts in 2013, SCN was issued proposing to demand interest for the period 01.06.2008 to 30.09.2011 - The original authority confirmed the demand of interest and appropriated an amount which was paid by assessee - In this case, without intimating to assessee that he is liable to pay interest and they should pay the same, the Officers proceeded to issue SCN straightaway - Section 73(3) contemplates non issue of SCN in the event of an assessee paying full amount of service tax with interest - When the section and provisos are read together, a letter should have been written to assessee to pay interest and if they fail to pay the interest, SCN should have been issued - There is no evidence on record to show that any such letter was written by the Revenue - As regards question of time bar, SCN was issued on 24.08.2016 demanding interest for the period from 1.6.2008 to 30.09.2011 - There is no ingredient of mis-statement or suppression of facts with an intent to evade payment of service tax - The issue is squarely covered in favour of assessee laying down that the period of limitation would apply to the demand of interest - No justification found for confirmation of interest amount - Impugned order is set aside: CESTAT

- Appeal allowed: HYDERABAD CESTAT

2019-TIOL-168-CESTAT-MAD

Texcel International Pvt Ltd Vs CGST & CE

ST- Assessee was engaged in providing services under Renting of Immovable Property - Based on intelligence that they were not discharging the appropriate service tax, SCN was issued.

Held: Assessee has mainly contested the quantification of demand - The Department has adjusted the advance received by assessee in 2007-08 in the said year itself though the rent for entire period in 2007-08 was received by assessee without any default - The intention of security deposit is to adjust the same when there is default in payment of rent - Such default has happened only from October, 2009 to March, 2010 - In that case, Department cannot demand service tax on the advance received by assessee for the period 2007-08 - This would make the assessee pay a higher amount of interest - Matter is remanded to the adjudicating authority for re-quantification in the manner - Coming to the penalties imposed, Commissioner (A) has waived the penalty up to March, 2010 - The issue whether renting of immovable property is liable to service tax was under litigation in the case of M/s. Homes Solution Retail India Ltd.- 2009-TIOL-196-HC-DEL-ST before Delhi High Court - The tenants had also filed litigations - The matter is still pending before the Supreme Court - Considering these aspects, the penalty imposed under Section 78(1) of the Act cannot sustain - Matter is remanded back to the adjudicating authority for the purpose of re-quantification: CESTAT

- Matter remanded: CHENNAI CESTAT

2019-TIOL-167-CESTAT-MAD

Universal Aviation Services Pvt Ltd Vs CGST & CE

ST - Assessee is engaged in providing manpower supply service, security service and cleaning service mainly to the airlines industry - During audit, it was noticed that assessee had collected service tax but had not remitted the same to Government Account - It was also noticed that they had delayed the payment of service tax for earlier period from October 2007 to March 2008 - SCNs were issued to assessee demanding service tax along with interest and also for imposing penalty - Assessee has confined his arguments to penalties imposed under sections 76 and 78 of FA, 1994 - It is seen from records that their clients include M/s. Indian Airlines and M/s. Kingfisher Airlines - The assessee in their reply to SCN has stated that they were undergoing much financial crisis due to non-receipt of amounts from airlines - The facts indicate strongly that the non-payment was due to financial difficulties - It is also brought out that assessee was burdened with payment of wages to manpower supplied even though delayed amount / no amount was received from airlines - The amounts received from customers were always less than the amounts to be spent by them and the difference was to be arranged through loan - The secured loans increased from 11.62 crores in April 2008 to 12.46 crores in March 2009 and unsecured loans increased from Rs.76.67 lakhs to Rs.97.78 lakhs; that sundry debtors have gone up from 4.43 crores to 7.56 crores during the same period - They furnished documents to establish these facts - Thus the delay / non-payment of service tax cannot be said, is an act of suppression of facts with intent to evade payment of tax - In fact, the demand has been raised on the basis of figures furnished by assessee and department has no allegation of any deliberate act done to evade payment of tax - For these reasons, the ingredients for imposing penalty under section 78 are not attracted - Since the assessee has put forward reasonable cause for delay in payment / non-payment of service tax, this is a fit case for invoking provisions of section 80 of Act ibid - However, no interference is required with penalties imposed under section 77 of the Act ibid: CESTAT

- Appeals partly allowed: CHENNAI CESTAT

 

CENTRAL EXCISE

2019-TIOL-126-HC-MUM-CX

Mohit Ispat Ltd Vs CC, CE & ST

CX - Assessee, a manufacturer of mild steel ingots (Ch. 72) had opted for payment of Central Excise duty based on the annual production capacity under the provisions of Section 3A of the CEA, 1944, read with the provisions of Rule 96ZO(3) of the CER, 1944 - There is no dispute that the Assessee failed to pay the entire excise duty as determined as per the prescribed formula - Revenue issued two show cause notices to the Assessee demanding the amount of excise duty short paid, along with interest at the rate of 18 % per annum from the date till the date of actual payment - Commissioner confirmed the demand with interest and further imposed penalty upon the Assessee - CESTAT confirmed the demand with interest but set aside the penalty imposed by the CCE and, therefore, appeal before High Court.

Held: Counsel for the Revenue agrees that the issue relating to levy of interest will have to be decided in favour of the Assessee by taking into consideration the ruling of the Apex Court in the case of Shree Bhagwati Steel Rolling Mills ( 2015-TIOL-283-SC-CX ) where it is held that Rule 96 ZO of the Central Excise Rules, framed in pursuance of the powers conferred under Section 3A of the said Act, to the extent such rule provides for levy of interest, is ultra vires the parent Act - Commissioner of Central Excise was obviously not right in demanding the interest from the Assessee and that the CESTAT was also not right in confirming the demand for interest. To that extent, the impugned judgment and order warrants interference: High Court [para 5, 17, 18, 20]

From the contentions recorded by the Commissioner as well as the CESTAT it appears that the Assessee's main contention was in relation to abatement as per Rule 96ZO(2) of the said Rules, as then applicable - CESTAT, in paragraph 5.2 of its order dated 8 October 2015, has very clearly recorded that the production capacity worked out by the Authorities was not being challenged by the Assessee in the appeal before the CESTAT - Since, there was no express challenge to the determination of the annual production capacity, the second substantial question of law really does not arise or even if it was to arise, cannot be decided in favour of the Assessee: High Court [para 20, 22]

Assessee's main contention was that they were eligible for abatement in terms of Section 3A(3) of the said Act, Rule 96ZO(2) of the said Rules, as then applicable on account of alleged power cuts/power outages during the relevant period - Rule 96ZO(2) provides that where a manufacturer does not produce the ingots and billets of non-alloy steel during any continuous period of not less than seven days and wishes to claim abatement under sub-section (3) of Section 3A of the said Act, the abatement will be allowed by an order passed by the Commissioner of Central Excise of such amount as may be specified in such order, subject to fulfillment of conditions - Admittedly, in the present case, there is no material on record to establish that the Assessee had indeed fulfilled the aforesaid conditions prescribed in Rule 96ZO(2) of the said Rules - In fact, there is nothing on record to indicate that such abatement was claimed by the Assessee by following the procedure prescribed under Rule 96ZO(2) of the said Rules - In such circumstances, even the third substantial question of law will have to be answered against the Assessee: High Court [para 24 to 26]

- Appeal partly allowed : BOMBAY HIGH COURT

2019-TIOL-166-CESTAT-MAD

Ramco Cements Ltd Vs CGST & CE

CX - The assessee is a manufacturer of PPC Cement - A SCN was issued alleging that assessee had availed CENVAT Credit on ineligible input services as per Annexure thereto and therefore, proposing to deny credit and recover the same under Rule 14 of CCR, 2004 r/w Section 11A (1) of CEA, 1944 along with applicable interest and penalty - In the assessee's own case, the adjudicating authority himself has allowed for a later period the CENVAT Credit availed on BIS Certification Fees, Manpower Services and Clearing and Forwarding charges - The Revenue having accepted and allowed the availment of CENVAT Credit, cannot change its stand for any reasons and for different period - Therefore, the denial of CENVAT Credit on three services is unsustainable - With regard to clearing and forwarding services, however, the credit is allowable only up to the place of removal i.e., the factory gate of assessee in terms of dictum of Apex Court in case of M/s. UltraTech Cement Ltd. - 2018-TIOL-42-SC-CX and therefore the denial, if any, beyond the factory gate is held to be in order - With regard to Tangible Goods Services, it is the case of Revenue that mandatory Service Tax Registration Number has not been mentioned in the invoice and therefore, that invoice was not a valid document under Rule 9 of CCR, 2004 read with Rule 4A of Service Tax Rules, 2004 as against which the assessee claimed that it was only a procedural lapse and that a substantive right could not be denied just for the reason of procedural lapses - This issue has also been laid to rest by decisions of various courts following the decision of High Court of Karnataka in case of M/s. mPortal India Wireless Solutions P. Ltd. - 2011-TIOL-928-HC-KAR-ST - Going therefore by the ratio decidendi, the denial of CENVAT Credit on this service is also not in accordance with law for which reason same is set aside: CESTAT

- Appeal allowed: CHENNAI CESTAT

2019-TIOL-165-CESTAT-BANG

Lakshmi Enterprises Vs CCT

CX - The assessee is a SSI unit and only for about four months during period of two years, they were under excise and they have been paying excise after crossing the exemption limit - They admits its mistake of non-inclusion of cylinder charges and paid the duty on same much before the issue of SCN - Further, as far as CENVAT credit is concerned, assessee has brought on record various letters written by assessee to Excise authorities regarding intimation of crossing exemption limit and availing CENVAT credit on stocks of inputs and Department has also visited their factory but the said report has not been made available to assessee - The Commissioner (A) has observed that assessee has declared the stock of inputs and the RO had caused necessary verification after the assessee cross the exemption limit, the allegation that the credit is irregular cannot be sustained - Once the allegation of irregular credit is not sustained then the confirmation of duty is not tenable in law - Assessee have maintained proper records which were shown to the Department and all the questions of Department were answered by assessee with documentary evidence of records - The finding of Commissioner (A) that assessee has irregularly availed CENVAT credit is not sustainable in law: CESTAT

- Appeal allowed: BANGALORE CESTAT

2019-TIOL-164-CESTAT-HYD

Nagarjuna Agrichem Ltd Vs CCE, C & ST

CX - The assessee is manufacturer of fertilizers which they also export - They have taken credit of input services in terms of Rule 3 of CCR, 2004 and have utilized the credit for payment of duty - This credit was sought to be disallowed on the ground that input services were not used by assessee either directly or indirectly in or in relation to manufacture of final products and clearance of final products up to the place of removal as required in Rule 2(l) of CCR, 2004 - CBEC had issued circular No. 999/6/15-CX holding that "in case of clearance of goods for export by Manufacturer Exporter the transfer of property can be set to have taken place at the port with the shipping bill is filed by the Manufacturer Exporter and place of removal would be this Port/ICD/CFS; Needless to say, eligibility to CENVAT credit shall be determined accordingly" - This circular of CBEC is binding on the Department which was not considered by Commissioner (A) in his order - Therefore, O-I-A is set aside to this extent - As far as the services of ISO Certification is concerned, certification is essential component of manufacturer ensuring quality of product and manufacturer reassuring their customer about it - Hence, it can be treated as services incurred in or in relation to the manufacture of final product - No reason found to deviate from earlier order of this Bench holding that the service tax paid on input services up to the point of export is allowable, in view of CBEC Circular: CESTAT

- Appeal allowed: HYDERABAD CESTAT

 

 

 

CUSTOMS

NOTIFICATIONS

ctariffadd19_003

Definitive Anti-dumping duty imposed on exports of Jute Products originating from Bangladesh and Nepal by Janata Jute Mills Ltd., M/s. Aman Jute Fibrous Ltd. (Producer) and M/s IB Jute Corporation

ctariffadd19_002

Notifications Nos.30/2018 - Customs(ADD) and 31/2018 - Customs (ADD) providing provisional assessment of jute goods exported from Bangladesh and Nepal by specified parties till the final findings of New Shipper Review were received, rescinded

CASE LAWS

2019-TIOL-163-CESTAT-ALL

Richi Rich Agro Foods Pvt Ltd Vs CC

Cus - Whether the rice being exported by assessee was Basmati Rice - The size of grains were more than the size prescribed by DGFT (6.61mm length & L/B more than 3.5 mm) which is in consonance with law - Policy Circular No. 11/(RE-2012)/2009-14 issued by DGFT categorically states that since export of non-basmati rice has been made free from 9.09.2011, it has been decided to withdraw with immediate effect both policy circular, namely, Policy Circular No. 33(RE-2008) 2004-09 and Policy Circular No. 28/2009-14 - Taking judicial notice of development of law i.e. the goods (rice) were made freely exportable & looking at the peculiar facts of the present case, it deems fit to set aside the impugned order: CESTAT

- Appeal allowed: ALLAHABAD CESTAT

2019-TIOL-162-CESTAT-AHM

Saurashtra Chemicals Ltd Vs CC

Cus - The assessee had imported consignment of "Weak Coking Coal" - The Bill of Entry was provisionally assessed after drawing the sample and exemption from CVD under Notfn 19/1994-Cus for want of chemical test result and original document and thereafter clearance was allowed on payment of concessional rate BVD at the rate of 5% ad-valorem - Issue to resolve is; whether the goods imported by assessee is weak coking coal having Ash content below 12% and consequently eligible for exemption under notfn 19/94-cus - It is very clear that the coal imported by assessee is weak coking coal having Ash content much below 12% - It is also observed that the entire agreement for import of coal is in respect of weak coking coal and not for the coal other than weak coking coal - When the notification does not prescribe any "end use" condition, the finding of Commissioner (A) that the exemption should be based on "end use" of the imported coal is absurd and without authority of law - Though the assessee's product is weak coking coal and exemption is granted for coking coal, this does not make any difference for the reason that coking is a genus term in which all type of coking coal covered such as prime/hard coking coal, semi-hard coking coal, medium coking coal, soft coking coal, semi-soft coking coal and weak coking coal, the only criteria is that Ash content should be less than 12% which is not under dispute even as per the report of CRCL, New Delhi, therefore, the assessee is eligible for exemption notfn 19/94-Cus - This identical issue has been considered in case of Adani Export Ltd- 2009-TIOL-1753-CESTAT-AHM - Hence the demand is not sustainable, same is set aside: CESTAT

- Appeal allowed: AHMEDABAD CESTAT