SERVICE TAX

2019-TIOL-239-CESTAT-HYD  

Genting Lanco India Pvt Ltd Vs CCT

ST - SCNs were issued to assessee for demand of service tax liability under category of "management, maintenance and repair services", on the ground that assessee had been operating and generating electricity for M/s Lanco Kondapalli Power Plant Ltd. - Assessee has entered into an agreement with M/s Lanco Kondapalli Power Plant Ltd for operation and maintenance of the power plant, vide which it was guaranteed 24x7 power, subject to periodical maintenance and was paid consideration as per the agreement - Assessee discharges tax liability on the portion received as maintenance and repair services but has claimed that no tax is payable on operating part of contract - The issue is no more res integra - The Tribunal in case of GVK power and infrastructure Ltd - 2018-TIOL-788-CESTAT-Hyderabad has settled the issue - Since the issue is now settled in favour of assessee by the decision of this Bench, no reason found to deviate from such a view already taken - Accordingly, impugned order is unsustainable and same is set aside: CESTAT

- Assessee's appeal allowed: HYDERABAD CESTAT

 

CENTRAL EXCISE

2019-TIOL-238-CESTAT-DEL  

Econ Antri Ltd Vs CGST CE AND CC

CX - The assessee is engaged in manufacture of railway sleeper of cement concrete and are availing cenvat facility of duty/service tax paid on inputs and input services under CCR, 2004 - The demand of cenvat credit on the goods used for repair of capital goods and the demand of cenvat credit paid on Work Contract Service has already been dropped vide the Order under challenge - The Department has not preferred any appeal qua the said dropping - Resultantly, the dropping of both the said demands is hereby upheld - The irregularly availed cenvat credit paid on vehicle insurance premium and health insurance premium has admittedly been reversed - It is also an admission that the same was reversed by assessee on his own that too prior the impugned SCN - Assessee submits that the same was claimed under bonafide inadvertent mistake - Relying upon the order in case of Hindustan Steel Ltd. - 2002-TIOL-148-SC-CT-LB and keeping in view that there is no such evidence on record by Department which might prove a positive act on the part of assessee that the credit was availed by him with the malafide intention of causing loss to Revenue - In absence thereof, penalties qua the reversal of wrongly availed cenvat credit are held to have rightly been dropped - Now, coming to the issue of short payment of Central Excise duty on price escalation bills raised, from the 13 escalation bills, it stands clear that there is a calculation error in arriving to the said amount - Since the duty is payable on price escalation and the assessee could not have produced any document proving that railway authorities had finalised the amount of those 13 bills, it is held that the order under challenge has rightly confirmed the said demand - Apparently, assessee has failed to prove that Bills on which amount has been calculated were merely the proposal amount - As there are no two set of bills on record, it is held that demand has rightly been confirmed under this Head.

Finally, coming to the issue of short payment of Central Excise duty on extra considerations under the guise of freight, it is observed that the price of sleepers, freight, material, wages and taxes are all given by railways as per the contract - The said sleepers are required to be loaded in wagons/ road vehicles - The freight expenses incurred for purpose by assessee are to be reimbursed by the railways at agreed upon rate - It is held that the element of freight is not to be included in normal value of goods - The authorities below have rightly relied upon the decision of Associated Strips Ltd. - Findings to that effect are also upheld - However, as far as the imposition of interest and confirmation thereof is concerned, though the assessee has taken the plea that the interest amount has been paid and has not been reversed - For this limited purpose, matter is hereby remanded back: CESTAT

- Appeal partly allowed: DELHI CESTAT

2019-TIOL-237-CESTAT-MAD  

CCE Vs Kishen Constructions

CX - Assessee was undertaking the activity of manufacture of RCC / PSC Poles to M/s. Tamilnadu Electricity Board (TNEB) on contract basis in yard situated within the premises of TNEB - The allegation in SCN is that assessee did not obtain Central Excise registration for manufacture of PSC/RCC poles at TNEB Yard and failed to pay excise duty since the aggregate value of clearances of PSC/RCC poles effected by different contractors at the yard had crossed SSI exemption limit of Rs.50 lakhs - When the contractors are independent contractors and each contractor is undertaking the process of manufacture independently, merely because the yard of TNEB is used as the premises for undertaking the process of manufacture, it cannot be said that all these manufacturers are doing their activity within a factory so as to attract condition No. (vii) of para 2 of Notfn 8/1999 - Each contractor being independent manufacturer will be eligible for SSI benefit - When each contractor has to be considered as an independent manufacturer, the demand raised against one contractor stating that clearances effected from yard including the clearances made by other contractor is exceeding the prescribed limit cannot sustain - No merit found in the appeal filed by department: CESTAT

- Appeal dismissed: CHENNAI CESTAT

2019-TIOL-236-CESTAT-AHM

India Medtronic Pvt Ltd Vs CCE & ST

CX - Appeal is directed against impugned order whereby the matter of refund was remanded to Adjudicating Authority to verify the facts on the basis of various books of accounts that whether the assessee have passed on the incidence of refund to any other person or otherwise - There is no dispute that the amount of Rs. 38 lakhs was paid by assessee as duty under the head ‘Excise duty’ which on the adjudication was appropriated against the confirmed demand - Therefore, it cannot be said that amount of Rs. 38 lakhs deposited by assessee is not towards duty but only as a pre deposit - Even if it is considered that the amount paid is not duty, the only mechanism provided in Central Excise Act for refund is under section 11B of CEA, 1944 - This issue has been considered by division bench of Tribunal - Therefore, no need to discuss the issue again, as such, the issue is decided by Tribunal in case of Petronet LNG. Ltd. - In view of said judgment, it can be seen that the core issue decided is duty or deposit, the refund is governed by section 11B of CEA, 1944 - Accordingly, the issue of unjust enrichment has to be dealt with before sanctioning of any refund - Following the judgment, provision of unjust enrichment is applicable in the case of assessee’s refund - Hence, the order passed by Commissioner (A) is upheld: CESTAT

- Appeal dismissed: AHMEDABAD CESTAT

 

 

CUSTOMS

CIRCULAR CORRIGENDUM

Income-tax Deduction from Salaries during the Financial Year 2018-19 under Section 192 of the Income-tax Act, 1961

CASE LAWS

2019-TIOL-180-HC-DEL-CUS

Gauri Global Exports & Trading Vs DRI

Cus - DRI submits that 'No Objection' was issued by Department - The respondents are directed to pass appropriate orders for provisional release of goods within a week and indicate it directly to the petitioner - All rights and remedies of the parties are kept open - 'No Objection' has been provided currently in respect of eight consignments; likewise seizure of the goods was resorted to in these cases - However, the petition pertains to nine Bills of Entry - The orders to be passed will cover all the nine Bills of Entry: HC

- Writ petitions disposed of: DELHI HIGH COURT

2019-TIOL-179-HC-AHM-CUS

CC Vs Pooja Metal Industries

Cus - Clearance of inputs "as such" - What was imported was brass scrap - brass scrap was segregated into brass and foundry and non foundry scrap - brass and foundry items came to be used for the manufacture of brass articles for which purpose the scrap had been imported - non foundry scrap obtained as a result of such segregation came to be cleared in DTA - such non foundry scrap can by no means be said to be articles imported as such inasmuch as it was brass scrap which was imported for the purpose of manufacture of brass articles - The non foundry waste derived as a result of segregation cannot be used for the purpose of manufacture of brass articles and hence, cannot be said to be articles imported "as such", since the essential character of the scrap, viz. brass is absent - Tribunal was therefore, wholly justified in holding that the segregated scrap, if cleared, cannot be considered to be clearance of inputs "as such" - segregation of the mixed imported scrap is a part of the manufacturing of brass articles from the imported mixed brass scrap and therefore, the demand of customs duty on the clearance of segregated non-foundry scrap in DTA considering the same as imported scrap and clearance "as such" is unsustainable in law - question of charging customs duty on such goods by considering them to be articles imported "as such" would not arise - Circular No.62/2001-Cus dated 12.11.2001 would, therefore, have no applicability to the facts of this case - Tribunal, did not commit any error in placing reliance upon Circular No.1029/2016-CX dated 10th May, 2016 - Tribunal order is, therefore, unexceptionable: High Court [para 5, 6, 7]

Cus - Notification 52/2003-Cus - Waste and scrap arising in the course of production or manufacture of finished goods are also exempt from the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 and the additional duty, if any, leviable thereon under section 3 of the said Customs Tariff Act - segregated waste has arisen in the course of production/manufacture of the finished goods viz. brass articles - Commissioner of Customs has recorded that the segregated waste had in fact been cleared on payment of duty after being duly permitted by the Development Commissioner in accordance with the provisions of the EXIM Policy - The requirements of clause (3) of Notification 52/2003-Cus dated 31st March, 2003 are, therefore, wholly satisfied - there does not appear to be any legal infirmity in the view adopted by the Tribunal - Revenue appeals dismissed: High Court [para 11, 12]

Appeals dismissed: GUJARAT HIGH COURT 

2019-TIOL-178-HC-DEL-CUS

CC Vs Shiva Khurana

Cus - Penalty on CHA - Tribunal deleting penalty of Rs.50 lakhs imposed on CHA - Revenue appeal before High Court.

Held: If one interprets Regulation 13(o) of CHALR, 2004 reasonably in the light of what the CHA is expected to do, in the normal course, the duty cast is merely to satisfy itself as to whether the importer or exporter in fact is reflected in the list of the authorized exporters or importers and possesses the Importer Exporter Code (IEC) Number - As to whether in reality, such exporters in the given case exist or have shifted or are irregular in their dealings in any manner (in relation to the particular transaction of export), can hardly be the subject matter of "due diligence" expected of such agent unless there are any factors which ought to have alerted it to make further inquiry - There is nothing in the Regulations nor in the Customs Act which can cast such a higher responsibility as are sought to be urged by the Revenue - in the absence of any indication that the CHA concerned was complicit in the facts of a particular case, it cannot ordinarily be held liable - no merit in appeal - CESTAT order affirmed and Revenue appeal dismissed: High Court [para 7, 10]

- Appeal dismissed: DELHI HIGH COURT

2019-TIOL-177-HC-AHM-CUS

CC Vs Monarch Overseas

Cus - Clearance of inputs "as such" - What was imported was brass scrap - brass scrap was segregated into brass and foundry and non foundry scrap - brass and foundry items came to be used for the manufacture of brass articles for which purpose the scrap had been imported - non foundry scrap obtained as a result of such segregation came to be cleared in DTA - such non foundry scrap can by no means be said to be articles imported as such inasmuch as it was brass scrap which was imported for the purpose of manufacture of brass articles - The non foundry waste derived as a result of segregation cannot be used for the purpose of manufacture of brass articles and hence, cannot be said to be articles imported "as such", since the essential character of the scrap, viz. brass is absent - Tribunal was therefore, wholly justified in holding that the segregated scrap, if cleared, cannot be considered to be clearance of inputs "as such" - segregation of the mixed imported scrap is a part of the manufacturing of brass articles from the imported mixed brass scrap and therefore, the demand of customs duty on the clearance of segregated non-foundry scrap in DTA considering the same as imported scrap and clearance "as such" is unsustainable in law - question of charging customs duty on such goods by considering them to be articles imported "as such" would not arise - Circular No.62/2001-Cus dated 12.11.2001 would, therefore, have no applicability to the facts of this case - Tribunal, did not commit any error in placing reliance upon Circular No. 1029/2016-CX dated 10th May, 2016 - Tribunal order is, therefore, unexceptionable: High Court [para 5, 6, 7]

Cus - Notification 52/2003-Cus - Waste and scrap arising in the course of production or manufacture of finished goods are also exempt from the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 and the additional duty, if any, leviable thereon under section 3 of the said Customs Tariff Act - segregated waste has arisen in the course of production/manufacture of the finished goods viz. brass articles - Commissioner of Customs has recorded that the segregated waste had in fact been cleared on payment of duty after being duly permitted by the Development Commissioner in accordance with the provisions of the EXIM Policy - The requirements of clause (3) of Notification 52/2003-Cus dated 31st March, 2003 are, therefore, wholly satisfied - there does not appear to be any legal infirmity in the view adopted by the Tribunal - Revenue appeals dismissed: High Court [para 11, 12]

- Appeals dismissed: GUJARAT HIGH COURT

2019-TIOL-176-HC-DEL-CUS

CC Vs Jyotsna Chikersal

Cus - Settlement Commission - Seizure of gold bars - section 123 of the Customs Act, 1962 - jurisdiction of the Commission to settle cases involving goods referred to in Section 123(2) is excluded - jurisdiction of the Commission is barred on account of the third proviso to Section 127B(1) in cases involving or concerning smuggling of gold or watches - impugned order cannot be sustained, hence set aside - matter is remitted to the Adjudicating Officer concerned - Revenue Petition allowed: High Court [para 8 to 11]

- Petition allowed: DELHI HIGH COURT

2019-TIOL-235-CESTAT-KOL

Deys Export International Vs CC

Cus - Assessee has imported the readymade garments declaring the goods claiming classification thereof under specific tariff heading and the goods were duly examined and found to be as per the declaration and appropriate duty also was paid and goods were allowed to be cleared - The SCN was issued to importer alleging suppression on the ground that assessee has not declared the full description of readymade garment - The import was made in year 2004 - The assessee filed the bill of entry along with the invoices and related documents claiming appropriate tariff heading as per their appreciation - The same was not disputed by Customs department at the time of importation of goods - Further, the goods were examined and samples were also drawn, which is evident from examination report on bills of entry - As the goods were examined before clearance and the same was found as per the declaration, no allegation of suppression of fact can be made against the assessee - It is also a fact that department has not appealed against assessment order which was done at the time of clearance of goods by filing the bills of entry - As no appeal was filed against assessed bill of entry, same cannot be reopened after period of more than three years - The views are fortified in view of Supreme Court decision in case of Vittesse Export Import - 2007-TIOL-2352-CESTAT-MUM and Priya Blue Industries Ltd. - 2004-TIOL-78-SC-CUS - Accordingly, impugned order is set aside: CESTAT

- Appeal allowed: KOLKATA CESTAT

2019-TIOL-234-CESTAT-MUM  

Varroc Engineering Pvt Ltd Vs CC

Cus - Appellant is a manufacturer of dashboards for motorcycles and the imported LCD is used in the manufacturing of the said dashboards - Issue is whether Liquid Crystal Devices (LCD) cut to special shapes are covered under heading 9013 as claimed by the Appellant or under heading 8714 as per the department.

Held: Only reason advanced by Revenue for including the goods under Chapter Heading 8714 is that LCDs were to be used in the motorcycles - Bench finds that tariff entry 8714 does not pertain to LCD but parts and accessories of vehicles of heading 8711 to 8713 and it nowhere includes LCD or the dash board of Motorcycle specifically - Supreme Court in the case of Secure Meters Ltd. - 2015-TIOL-100-SC-CUS has held that LCDs imported by the said Appellant are classifiable under chapter heading 9013.80 i.e. devices, appliances and instruments and not under 9028.90 which provides for the parts and accessories of electricity meters - in view thereof, LCDs imported by the appellant are correctly classifiable under heading 9013 - appeal allowed: CESTAT [para 8 to 10]

- Appeal allowed: MUMBAI CESTAT

2019-TIOL-233-CESTAT-ALL

Kenda Farben India Pvt Ltd Vs CC

Cus - The assessee had imported 'PRODOTTO NW 775058' - Revenue entertained a view that said item was restricted for import and cannot be permitted to be cleared - Proceedings were initiated against them which stand adjudicated by Commissioner vide his impugned order allowing the reexport of goods subject to payment of redemption fine - In addition, he also imposed penalty in terms of Section 112 (a)(i) of Customs Act, 1962 - The Adjudicating Authority has imposed redemption find of Rs.60,000 - Apart from the fact that such fine is much more than the value of the goods and without assessing the margin of profit, it a settled law that where the goods are allowed to be re-exported, the redemption find cannot be imposed - This stands so held in the case of SDS Ramcides Crop Science Pvt. Ltd. - 2017-TIOL-3682-CESTAT-MAD - As such, there was no justification for imposition of redemption fine - As regards to penalty, the importer while filing bill of entry had given the correct description of goods along with the correct Tariff Item - It is not the Revenue's case that assessee had tried to import the restricted items by mis-declaring their description or there was any mala-fide on their part - The value of the goods is only to the extent of 40,000 and the same were imported by the assessee for use in manufacture of their final product and not for the trading purpose so as to earn profit - Imposition of penalty upon them is not justified - The redemption fine and penalty is set aside and re-export of the goods allowed: CESTAT

- Appeal allowed: ALLAHABAD CESTAT