SERVICE TAX

2019-TIOL-211-CESTAT-DEL

ST - The assessee-company is registered for providing Air Travel Agent, Tour travel agent service & business auxiliary service - The Revenue noted that the assessee issued tickets for various air lines on the amount of basic fare & for this they used CRS system of M/s Galileo India, Amadeus India and Calleo Distribution to encourage their business - For using this system, these companies paid incentive aginst the segment books - The Department raised duty demand seeking to tax such incentive amount - Such demand was confirmed by the Commr.(A) and by the Tribunal after it - Later, the Supreme Court remanded the matter for fresh verification, regarding the issue of extended limitation.

Held: The assessee admitted to have received services from these companies, but did not reflect them in their annual returns - It is clear that prior to 2012, the assessee did not seek any clarification from the Department regarding incentive fee received regularly as the assessee's income - These circumstances show there to be confusion from 2012 onwards regarding benefits being allowed to extend any benefit to the assessee - In the era of self-assessment, the onus lies upon the assessee to declare the income received & discharge the respective tax liability - Moreover, the authorities relied upon by the assessee are inapplicable to the present case - The reliance placed upon the notification is clearly an after-thought - Such activities clearly amount to wilful suppression of material facts - Hence the extended period of limitation has correctly been invoked: CESTAT (Para 2,7,8)

- Assessee's appeal dismissed: DELHI CESTAT

ST - The assessee-company is a local authority & is a wing of the UP Jal Nigam - It carried out some projects for the Noida Authority for developing housing projects, laying water lines, sewer lines, constructing roads, drains & culverts, as per its agreements with the Noida Authority - The assessee received CENTAGE charges @ 4.4% of the actual cost of the project to administer their administrative expenses - The assessee claimed that by virtue of its status a Govt body, its activities would not attract levy of service tax -Duty demands were raised.

Held: The Tribunal in Commissioner of Customs, Central Excise & Service Tax, Allahabad vs. Ganesh Yadav held that flats constructed for welfare of economically weak sections of society cannot be intended to be for commerce or industry - Hence it was held that such activity cannot be taxed either under Works Contract Service or Construction of residential complex service - It was also observed that the exclusion clause provides that construction classifiable under the category of 'Residential Complex Service' did not include a complex which is constructed by a person directly engaging any other person for designing or planning of the lay out and the construction of such complex is intended for personal use as residence by such person and personal use have been further explained as including or permitting the complex for use as residence by another person on rent or without consideration - Hence the demand raised in the present case is unsustainable - Moreover, the demand raised beyond the normal period of limitation is time barred, since the assessee had been served an SCN raising duty demand under a different heading - Besides, since all facts were known to the Revenue, no mala fide intent can be attributed to the assessee: CESTAT (Para 2,6,7)

- Assessee's appeal allowed: ALLAHABAD CESTAT

ST - The assessee has obtained Service Tax Registration Certificate under category of banking and financial services - A SCN was issued demanding service tax along with interest - The only issue under consideration is the penalties imposed by Commissioner in O-I-O - Firstly, it needs to be considered whether penalties can be imposed simultaneously under section 76 and 78 - There have been different views by different High Courts in this regard - However, the order of Tribunal in case of BCCI - 2014-TIOL-1774-CESTAT-MUM , which was upheld by Supreme Court, puts the matter to rest - It is now a settled law that for the period prior to 10.05.2008 simultaneous penalties can be imposed under section 76 and 78 in view of the judgment of Supreme Court - The second issue to be decided is whether penalty imposed under section 78 is in excess of the demand and Tribunal found it so - Section 78, as it stood during the period, provided for a penalty equal to the amount of service tax levied or paid or short levied or short paid - There is a mandatory penalty and this cannot be either increased or reduced - Commissioner has while confirming the demand of Rs.79,090/- imposed penalty of Rs.1,00,000/- under section 78 which is in excess of the duty confirmed, this penalty is reduced to Rs.79,090/-: CESTAT

- Appeal partly allowed: HYDERABAD CESTAT

 

CENTRAL EXCISE

2019-TIOL-159-HC-DEL-CX

Sdl Auto Pvt Ltd Vs CCE

CX - Whether the Settlement Commission can after holding that the applicant has failed to make full and disclosure of his duty liability and the manner in which such liability was derived, act as an adjudicating authority to decide the show cause notice issued by the Central Excise Officer and determine the demand raised? - Prayer in WP (C) 10013/2016 and WP (C) 8939/2015 is that the order of the Settlement Commission should be set aside and quashed and the matter may be remitted to the adjudicating authority to pass an appropriate order in accordance with law - the prayer in WP (C) 7277/2015 is that the matter should be remitted to the Settlement Commission for fresh adjudication.

HELD - A reading of the impugned orders would show that the Settlement Commission did not accept the claim of the three petitioners that they had made "full and true" disclosure of the duty liability -it had also opined on the petitioners' failure to disclose the manner in which the said duty liability was derived -two essential pre-conditions for invoking jurisdiction of the Settlement Commission were, therefore, not satisfied -in the given facts, the Settlement Commission should have rejected the settlement applications and referred the case to the Central Excise Officer to decide the show cause notices issued to the parties on merits -however, notwithstanding the failure and non-satisfaction of the jurisdictional pre-conditions, the Settlement Commission proceeded to act as an adjudicating authority and has decided the show cause notice -this would be beyond the scope and power of the Settlement Commission, for the Settlement Commission is not an adjudicatory authority substituting the Central Excise Officer -the Settlement Commission must function under the four corners of the powers conferred under Chapter-V of the Central Excise Act, 1944 [Act] -the Settlement Commission, after expressing and recording the finding on the failure of the petitioners to make "full and true" disclosure of the duty liability and the manner in which it was derived, should have rejected the settlement applications -the petitioners should have been relegated to suffer and undergo adjudication mechanism and procedure as per the provisions of the Act- the petitioner in WP (C) 7277/2015 had submitted that the matter should be remanded to the Settlement Commission - once the Settlement Commission had concluded that the petitioner had not made "full and true" disclosure of the evaded duty and the manner in which the duty was derived, this Court should relegate the petitioner to the normal procedure - this Court is primarily concerned with the evidence and reasoning recorded by the Settlement Commission in the case of the petitioner in WP (C) 7277/2015 - the findings recorded by the Settlement Commission are elaborate and detailed - case for remand to the Settlement Commission is not made out - therefore, no merit found in the prayer for remand made by the petitioner in WP (C) 7277/2015 - the writ petitions are partly allowed, quashing the impugned orders passed by the Settlement Commission to the extent they "adjudicate" and confirm the demand raised in the show cause notice - the impugned orders, to the extent they hold that the petitioners had not made full and true disclosure of their duty liability and the manner in which it was derived, is not disturbed -legal consequences as postulated in law would follow - proceedings pursuant to the show cause notice before the Central Excise Officer would commence: HIGH COURT [para45, 46, 47, 48]

- Writ Petitions partly allowed: DELHI HIGH COURT

CX - The assessee is engaged in manufacture of Heat Exchanger, they are getting the fabrication done through fabricator namely A.B. Engineering & M/s. Sai Balaji Engineering Services within their factory it is a part of overall manufacturing activity of Heat exchanger - The department issued the SCN proposing denial of Cenvat Credit only on the ground that service in question does not fall under definition of inputs services provided under Rule 2(l) of CCR, 2004 - The service in question is a fabrication and the fabricated item are used in manufacture of final product namely Heat Exchanger - Therefore, the fabrication services directly used in manufacture of final product, if credit is denied on the fabrication service which is used in manufacture, then probably not a single service can be allowed fall under definition of inputs service - The adjudicating authority almost left the original issue raised in SCN and went on deciding the entire SCN on the other issues like discrepancy in document, the service Tax payment by service provider, the service provider is outside the factory these are not the charges in SCN, therefore SCN has clearly travelled beyond the scope of SCN, therefore, whether such charges are right or wrong the adjudicating authority has no jurisdiction to deal with the issue which was not raised in the SCN - However, it is clear that the services was provided within factory of assessee - Even service is provided outside the factory but it is used in the manufacturing of the final product, even then the credit is admissible - The adjudicating authority has allowed the credit in respect of same service received from Sai Balaji Engineering in principle - He held that the service is covered under the definition of the inputs services in such a case in case of A.B. Engineering he should not have taken a different stand - Assessee is legally entitled for Cenvat Credit on the fabrication service: CESTAT

- Appeal allowed: AHMEDABAD CESTAT

CX - The issue involved is regarding the refund application filed by assessee in terms of Section 11B of CEA, 1944 r/w Rule 5 of CCR, 2004 - Assessee has filed the refund application and submitted the hard copy of same alongwith relevant documents in Divisional office for refund of CENVAT credit, accumulated due to clearance for final products under LUT, for export without payment of duty - As per department, limitation date of filing appeal shall to be 30.06.2015, which is the date on which all the documents the assessee had submitted to the Department - Commr. (A) has decided the issue on the basis of ratio laid down in case of Deepak Spinner Ltd. - 2014-TIOL-63-CESTAT-DEL - Also the Tribunal has held that similar view was held in the case of Global Food Industries - 2010-TIOL-337-CESTAT-AHM - It is held in these judgments that the time limit as prescribed under Section 11 B is not applicable in the case of refund of unutilised Cenvat credit under Rule 5 of CCR, 2004 - Thus, the time limit as prescribed in section 11B shall not be applicable in the case at hand - As far as availing of Draw Back by assessee is concerned, there is no bar in availing the drawback pertaining to portion of Customs or Excise duty, on which the said facility has not been availed - The Rule 5 of CCR does not debar an assessee to claim drawback of Customs duty as per Drawback Rule even if the benefit of Cenvat Credit is availed or vice versa - If the rate indicated is the same, for AIR with Cenvat facility and without Cenvat facility, it shall mean the rate in AIR pertains to Customs portion only - In such a situation, the question of taking double benefit does not arise - In this regard, CBEC Circular 83/2000/CUS is referred which supports the said view that there is no double benefit available to the manufacturer where only Customs portion of industry rate of Drawback is claimed by allowing the benefit of Cenvat Credit refund - It is apparent from the record that there was a huge accumulation of Cenvat Credit at the time of filing of refund under Rule 5 even after adjustment - Other minor issues regarding valuation of Weigh and Calculation of Cenvat Credit for refund has duly been rectified subject to appropriate verification and subsequent adjustment by Adjudicating Authority - The Commissioner (A) has decided the issue relying on the decision in case of Deepak Spiner Ltd which is again based on the High court of MP in case of STI India - 2008-TIOL-810-HC-MP-CX - T he impugned order is correct and legal: CESTAT

- Appeal dismissed: KOLKATA CESTAT

CX - The assessee by their letter dated 04.11.2015 insisted for refund bringing on record Board circular and ruling of Court holding that once an order is set aside and matter is remanded back for re-adjudication, the amount paid by assessee has to be refunded back - Thereafter, Department issued SCN to deny the refund claim to which assessee filed reply in February, 2016 - The SCN was adjudicated considering reply and vide O-I-O, the refund was denied on the ground that demand has been set aside solely on the ground of violations of principles of natural justice and not on merits - The assessee and the other connected party M/s JSL Stainless Limited are directed to file their submissions/ representation before respondent adjudicating authority on or before 15.10.2018 - Thereafter, Commissioner shall fix the date of hearing - The hearing shall be held on day-to-day basis and the parties/ assessee will not ask for adjournment and co-operate in the adjudication process - The Commissioner is expected to pass the re-adjudication order within a period of three months i.e. on or before 25.01.2019 - If assessee is found to be entitled for refund pursuant to adjudication order, the same shall be granted forthwith - The respondent Commissioner shall file the compliance report before this Tribunal and/or progress report otherwise, in the month of January, 2019 on or before 31.01.2019 - The final order(s) passed earlier stand modified accordingly - The three SCNs were issued by two different Commissionerate two by CCE, Delhi on assessee and the other by CCE, Rohtak (Haryana) on JSL - Accordingly, revenue is directed to get the status report as to why the implementation of order is pending till date inspite of this Tribunal's categorical order - But from the status report referred to supra, it is evident that non-compliance by the Commissioner was not deliberate but due to reorganisation of field formation, on account of GST implementation w.e.f. 01.07.2017: CESTAT

- Appeal disposed of: DELHI CESTAT

 

 

 

 

CUSTOMS

2019-TIOL-158-HC-DEL-CUS

Vinayaga Marine Petro Ltd Vs UoI

Foreign Trade (Development and Regulation) Act, 1992 [FT Act] - Petitioners are engaged in import and trading of various items including mild steel items - on 5.2.2016, notification no.38/2015-2020 [notification] was issued by the DGFT by way of trade notice fixing Minimum Import Price [MIP] by amending Import Policy conditions against Codes under Chapter 72 of the ITC (HS)-2012, Schedule-I - this notification was subsequently published in the Gazette of India on 11.2.2016 - petitioners have challenged the stipulation at paragraph no.2 of the notification to the effect that import/shipments under Letter of Credit [LoC] already entered into before the date of the notification i.e. 5.2.2016 shall be exempted from MIP condition subject to paragraph 1.05 (b) of the Foreign Trade Policy, 2015-2020 -as per the petitioners, the date of notification should be read as 11.2.2016 -in support of the said contention, the petitioners submitted that the respondents could not have imposed duties and restrictions retrospectively by way of subordinate legislation -further, the DGFT is not authorized to issue any notification, as this power under the FT Act vests exclusively with the Central Government.

HELD - In terms of the various decisions, the notification, though made public by way of trade notice on 5.2.2016 fixing MIP against 173 HS Codes under Chapter-72 of the ITC (HS)-2012, Schedule-I (Import Policy) would be effective and applicable from 11.2.2016 -the notification published in the Official Gazette on 11.2.2016 was in force on the date of ‘import' of goods by the petitioners as the ‘import' was post publication in the Official Gazette on 11.2.2016 -this Court would not be giving retrospective effect to the notification when this Court holds that it would apply to all 'imports' on or after 11.2.2016 -in fact, this Court would be following the ratio and mandate in Asian Food Industries - 2006-TIOL-147-SC-CUS and Mangalore Refinery and Petrochemicals Limited - 2015-TIOL-199-SC-CUS - consequently, the argument that the respondents have given retrospective effect to the notification, which can be only prospective, falters and is rejected -paragraph 2 of the notification refers to the 'date of the notification' and not the date on which it was published in the Official Gazette -in the present case, the LoCs were opened between 5.2.2016 till 11.2.2016, when the notification was uploaded on the web-site of the Respondents on 5.2.2016 and was published in the Official Gazette on 11.2.2016 -no doubt, paragraph 2 refers to paragraph 1.05 of the FTP 2015-2020, but in the context that the importers would comply with the conditions stated therein, i.e., the condition for registration -conditions regarding opening of LoCs before 5.2.2016 would over-ride and prevail over paragraph 1.05(b) of the FTP 2015-2020, as provided and stated in the clause itself -expression "unless otherwise stipulated" in paragraph 1.05(b) would apply as paragraph 2 of the notification stipulates to the contrary -the factual position in the present writ petitions is identical in facts in the case of M/s.Agri Trade India Services (P) Ltd. decided by the Supreme Court in Asian Food Industries (supra), in favour of the Revenue.[para 14, 21, 25]

Conclusions :-

Notification dated 5.2.2016 would be effective and applicable to 'imports' made on or after 11.2.2016, i.e., the date on which it was published in the Official Gazette -it would not apply to any 'imports' as made on 10.2.2016 or before.

In terms of paragraph 2 of the notification effective from date of publication in the Official Gazette on 11.2.2016, an exemption has been granted for import/shipments under the irrevocable LoCs entered into before the date of the notification, i.e., 5.2.2016 - for the purpose of paragraph 2 of the notification, the date of publication in the Official Gazette is not prescribed and is not relevant -the date 5.2.2016 is a valid date in respect of shipments/imports made under the irrevocable LoCs for this was the date on which the decision of the Central Government to impose MIP was put on the web-site and made known to public, though it was not gazetted. [para 26]

Whether the Gazette Notification quoted above is invalid as it was not an order of the Central Government under Section 3 read with Section 5 of the FT Act .

Held: Website of the Ministry of Commerce and Industry, Department of Commerce, states that Director General of Foreign Trade is an agent of the Central Government and attached office to it - On plain reading of the notification, it is apparent that the notification was issued by the Central Government, for the Notification states that Central Government hereby amends the import policy -the decision taken to amend and issue the notification was of the Central Government -the notification is a notification of the Central Government under section 3 read with section 5 of the FT Act as stated in the notification itself -it is not a notification published by Director General of Foreign Trade as a delegatee of the Central Government performing any act traceable to delegation under sub-section (3) to section 6 of the FT Act - this being the position, the second contention of the petitioners is rejected -the writ petitions are dismissed: High Court[para27, 28, 31, 32]

- Writ Petitions dismissed: DELHI HIGH COURT

Cus - The assessee is engaged in business of mining and export of iron ore - They imported a second hand Ocean Going Deck Barge named "Pyaree Amma" classifying the same under chapter heading 8901.1040 of Customs Tariff Act and claimed benefit of Exemption Notfn 21/2002-Cus - The department sought to classify goods under 8905.9090 of Customs Tariff Act and charge it to duty applicable since exemption notfn 21/2002-Cus is not applicable to the goods falling under 8905 - The capacity of vessel has been mentioned in International Merchant Marine Registry of Belize as gross tonnage tons and net tonnage - Thus, it is evident that there was capacity of about 1407 tons in the vessel in question - Being a Pontoon, it has no navigability on its own - It has two cranes and a diesel genset - There are holds in deck level in form of hoppers constructed to hold homogenous cargoes on the vessel - Thus, it is a Pontoon with some carrying capacity and also with two cranes and is not navigable on its own but can be towed - Thus, pontoons which by definition are not navigable on their own but need to be towed fitted with lifting and handling machines such as present one are classifiable under chapter heading 8905.9090 - No infirmity found in the impugned order classifying pontoons in question under 8905.9090: CESTAT

- Appeal rejected: HYDERABAD CESTAT

Cus - The assessee has imported goods and filed a bill of entry claiming nil rate of basic customs duty under customs Notfn 24/2005 - On receiving information that they have actually imported LCD TVs but mis-declared them as LCD Monitors and Tuner Boards, matter was investigated and a SCN was issued proposing to re-classify the imported goods as LCD TVs under CTH 85287219 and recover appropriate duties - Insofar as classification of goods is concerned, no doubt that the goods in question were LCD TVs in partly disassembled condition inasmuch as the TV tuner boards were kept separately - Unfinished and semi-finished goods in such a disassembled stage are classifiable as LCD TVs of 42" & 47" size - Tribunal also considered the arguments of assessee that in the case of another importer, the first appellate authority had classified similar goods separately as Monitors and Tuner Cards - However, the order of first appellate authority, if any, is not binding on the Tribunal and such decision, if made, cannot alter the classification of goods in question - nsofar as the confiscation of goods in question is concerned, it is evident that assessee had declared the goods as per the invoice, packing list and purchase orders as LCD Monitors and TV tuners with remotes separately - Simply claiming the classification as such in their bill of entry does not amount to mis-declaration of the nature of the goods - Therefore, the charge of the mis-declaration of the goods is not sustained and consequently confiscation of the goods is set aside - Consequently, the penalties imposed on the importer and others in the impugned order also set aside - Classification of the goods and demand of duty and interest if any in the impugned order is upheld and confiscation of goods, penalty include the personal penalties are set aside: CESTAT

- Appeals disposed of: HYDERABAD CESTAT