SERVICE TAX

CIRCULAR

sercir211

Applicability of Service Tax on Asian Development Bank (ADB) and International Finance Corporation (IFC)

CASE LAWS

2019-TIOL-26-SC-ST-LB

CST Vs Vanni Kapoor

ST - The assessee contests duty demanded on account of construction of residential flat - Such duty had been demanded u/s 65(105)(zzzh) of the Finance Act 1994 as well as Explanation to Section 65(105)(zzzzu) - The assessee contested such demand on grounds that the Explanation to Section 65(105)(zzzzu) had been declared ultra vires by the Delhi High Court in Suresh Kumar Bansal & Ors. v. UOI & Ors. - Later, the High Court found that the assessee was entitled for relief - It directed the Revenue to process the assessee's claims after considering remittances & payments made to the builder, as well as after considering the relevant invoices raised and bank accounts statements - It directed that statements of the builders be taken as well.

Held - Notice issued - Matter be tagged with Civil Appeal No.11109 of 2016: SC

- Notice issued : SUPREME COURT OF INDIA

ST - The issue involved is that whether the assessee is entitled for CENVAT credit on services namely; renting of immovable property related to Head Office, Chartered Accountants Servcie, Repairs and Maintenance, Advertisement-Membership and Travelling Services - Except the CENVAT credit on various general insurance, the credit on all other services have been allowed - Assessee has fairly agreed that those general insurance services are not admissible to them, hence, they are not contesting the same - As regard the demand of interest, assessee have not utilized the credit as they have maintained the credit balance approx. Rs. 40 lakhs during the relevant period - In terms of amended rule 14 of CCR, 2004 w.e.f 01.04.2012, the interest is chargeable only in case the assessee avail and utilize the credit - Therefore, even though the wrong credit was availed but if it is not utilized, interest is not chargeable - Therefore, the demand of interest is set aside - As regard submission on waiver of penalty, SCN was issued for normal period and major amount of CENVAT credit under dispute was allowed - There is no suppression of fact or malafide intention on part of assessee - Moreover, even though services on which assessee have conceded the demand, the issue appears to be debatable - Therefore, assessee is not liable for any penalt, thus the penalty imposed under Rule 25 is set aside: CESTAT

- Appeals partly allowed: AHMEDABAD CESTAT

 

 

CENTRAL EXCISE

CX - The assessee is a joint venture between an Indian company M/s Annapurna Electronics and Services Ltd and Spanish company M/s Earcanal, Spain - They manufacture roll bond evaporator panels which are parts of refrigerators and assessee has four units - The entire demands stem from the question of valuation of goods in the Malkapur unit of assessee - The assessee submitted a cost sheet which had some elements of cost missing and when department asked them to get a cost accountant's report, the cost accountant's report gave the same total value as the cost sheet even after adding these elements and therefore, the department felt it was manipulated and retrofitted to show a lower value - The department appointed another cost accountant, who gave a different cost report which forms the basis for SCN - The assessee argues that they have been denied the principles of natural justice in not being provided with copy of the same - It is not open for the department to add additional documents which, in this case the Commissioner has correctly not done - Therefore, no infirmity found in the department not providing them with the copy of the report of the Director (Cost) as it was not a relied upon document in the SCN - As far as the report by M/s SSZ is concerned, it was also not relied upon document but it was used as defence by assessee before the adjudicating authority and for the reasons recorded therein, he did not agree with the same.

As far as concept of revenue neutrality is concerned, it has to be carefully considered in each case, and there cannot be a blanket application of this concept so as to nullify the provisions of the Act itself - Simply because another company or another unit of their own assessee gets or would have got credit of Modvat/CENVAT it does not mean that tax liability on the assessee vanishes - Tribunal agrees with the department on relying solely on the report of the cost accountant appointed by them - However, it is the submission of assessee that even going by this report, they have not short paid duty if the values of all clearances made by them during the relevant period are taken into consideration because according to the report of M/s DPA, they have excess paid duty on some commodities and short paid duty on other - It is evident such a difference will occur when there was differences in the way they fixed costs are apportioned among different products - If this was the case where the goods were sold and not transferred to their own sister units, it needed to be examined whether in respect of each invoice where they have paid excess duty there was an element of unjust enrichment - If so, the assessee would not have been entitled to refund of the duty - In this case, assessee had cleared the goods to their sister units and therefore the question of unjust enrichment does not arise - The demand in respect of their Malkapur unit does not survive as far as the question of under-valuation is concerned - The demands in respect of Jeedimetla and Balanagar units follow from the demand in Malkapur unit and hence will not survive either.

As far as credit on rejected material is concerned, there is nothing on record to show that the material had not entered the factory of manufacturer or have not been taken into production process - The credit on sales returns and credit of inputs used in job work have already been paid by assessee and hence, need not be considered - The demand on the Malkapur unit of assessee does not survive because it has not taken into account fully the cost audit report of department itself inasmuch as they have not taken the amount of duty paid in excess on some invoices but have selectively taken the duty short paid on other invoices - Consequently, demands in the case of Jeedimetla and Balanagar units also do not survive - Since, the demands are liable to set aside the interest and penalties also do not survive: CESTAT

- Appeals allowed: CHENNAI CESTAT

CX - The main assessee is a manufacturer of fine chemicals, availing CENVAT credit of duty paid on inputs, utilizing the same for discharge of duty liability on finished goods cleared - During investigation, it was noticed that Benzo manufacturing unit had put up a dealer and had passed on ineligible CENVAT credit to Benzo dealer and Benzo dealer has in turn passed on the CENVAT credit to main assessee by only issuing the invoices and materials were not supplied - It is the case in SCN that main assessee availed CENVAT credit without receipt of material and hence they issue SCN for reversing of same along with interest and also sought to impose penalties on individual who is the Director of main assessee and M/s Benzo Petro International Ltd for such activity - The dealer had issued invoices in which the dealer has specifically mentioned the transporter as Padmashri Road Lines and vehicle registration number is also mentioned along with LR/ Consignment note - It is seen further from documents available on record that assessee had shown the receipt of this material in stock records maintained by them as inputs and said materials were sampled for analysis - It is also seen from the records that main assessee while filing monthly returns has shown the clearances of finished goods manufactured out of goods received from the dealers - In the absence of anything to discredit consignment note of Padmashri Road Lines which carried the material from Vadodara to Hyderabad, it is difficult to accept the revenue's view point that the main assessee had availed CENVAT credit only on documents - This view is fortified by decision of Tribunal in case of Dhakad Metal Corporation - 2015-TIOL-1520-CESTAT-AHM and GS Alloy Castings Ltd - 2015-TIOL-2728-CESTAT-BANG wherein similar issue cropped up - The ratio of said decisions would cover the issue in favour of assessee - Accordingly, demands are not sustainable against the main assessee - Consequently, the interest liability and the penalty are set aside - Penalties imposed on other two assessees also are unwarranted and are set aside: CESTAT

- Appeals allowed: HYDERABAD CESTAT

CX - The assessee is engaged in manufacture of Poly Propylene Glasses and was availing the benefit of exemption notfn 08/2003-CE - They were also engaged in trading of Rope, Disposable Caps and P.P. Glasses manufactured by others - Allegations of clandestine removal were made against the assessee on the basis of electricity consumption, the project report furnished to bank for procurement of loan, capacity of machine installed in factory, statements of Director as also the other workers of the factory - The observations of Adjudicating Authority is that the buyers reflected in some of invoices were found to be non-existing - Same cannot be adopted as a reason for arriving at findings of clandestine removal inasmuch as such sales were effected on the basis of Central Excise invoices - If the buyers subsequently could not be traced by Revenue, the same will not be indicative of clandestine activity of assessee, inasmuch as such sales were made under cover of Central Excise invoices and on payment of duty - No discrepancy found in the stock of raw materials or final product was detected by officers at the time of search of assessee's factory - It is well settled law that the onus to prove the clandestine removal is upon the Revenue and is required to be discharged by production of sufficient and positive evidence - There is no evidence at all produced by Revenue to show that the assessee had clandestinely manufactured and cleared their final product - As such, impugned order is unsustainable, same is accordingly set aside: CESTAT

- Appeals allowed: ALLAHABAD CESTAT

 

 

 

CUSTOMS

NOTIFICATION

dgft18not055

Amendment in policy condition of Nicotinic Acid & Nicotinamide (Niacinamide/ niacin) under HS Code 29362920 of ITC (HS) 2017, Schedule - I (Import Policy).

CASE LAWS

Cus - The assessee has imported one used Vehicle RHD, Hummer H-3 - The declared price of car is 8000 US$ and Bill of Entry shows the year of manufacture 2008 and the country of Origin South Africa - A SCN was issued - The import of car is not prohibited - The Adjudicating Authority ordering for absolute confiscation has not given justified findings for absolute confiscation - In this regard, it is found from several Tribunal's decisions and High Court's decisions where the goods are not prohibited, absolute confiscation is not warranted - Tribunal rely on the decision in case of Yakub Ebrahim Yuseph wherein it is held that absolute confiscation of such goods which are not prohibited is not warranted - Said view is also supported by High Court of Calcutta in its decision in case of India Sales International - 2009-TIOL-545-HC-KOL-CUS - Accordingly, the order of absolute confiscation ordered by adjudicating authority is modified into an order of confiscation with an option for redemption of vehicle on payment of redemption fine and appropriate customs duty on such clearance - The order of absolute confiscation modified to confiscation with an option to redeem the vehicle on payment of appropriate redemption fine and customs duty and uphold the penalty imposed on assessee under Section 112 (a) of Customs Act and remit the matter to adjudicating Authority only for the purpose of determining redemption fine under Section 125 - Since the seized goods are lying for more than a year, the Adjudicating Authority is directed to pass the Denevo Order within one month: CESTAT

- Appeal disposed of: KOLKATA CESTAT

Cus - The third appellant is the owner of a company, which shared its office premises with a Customs Broker Licensing Firm - The second appellant is a G-card holder with such Customs broker firm & the first appellant is a F-card holder with such firm - The broker firm was engaged in clearance of import & export consignments - It also cleared some consignments for another firm - After the goods had left the ICD, the Customs Department alleged that they had been mis-declared & duty had been evaded - Hence the adjudicating authority later held that the appellants failed to discharge their obligation as Customs broker by omitting to verify the credentials of the importer - Hence penalties were imposed on all appellants u/s 112 of the Act along with penalty u/s 114AA of the Act.

Held: Considering the provisions of the CBLR 2013, it is seen that the responsibilites of the Customs brokers come to an end once the goods are examined by the Department and orders for 'out of charge' are issued & upon which the goods are cleared from the Customs - In the present case, the goods were cleared from the ICD after completion of formalities - There is nothing to explain how the Department overlooked such misdeclaration during examination of the goods - It is not free from doubt as to whether the goods cleared were not those as declared by the importer - Thus in such circumstances, no penalty can be imposed on the appellants: CESTAT (Para 2,5)

- Assessees' appeals allowed: ALLAHABAD CESTAT