2019-TIOL-NEWS-021, Dated: Thursday, January 24, 2019

SERVICE TAX

2019-TIOL-203-HC-CHHATTISGARH-ST

CCE, C & ST Vs Chhattisgarh State Industrial Development Corporation Ltd

ST - The respondent (CSIDC) is engaged in rendering taxable service to the lessees within the industrial area near Raipur, however, it did not obtain registration under Section 65 of Chapter V of FA, 1944 - During audit of M/s G.R. Sponge & Power Limited, Raipur, it was observed that the respondent had charged and collected an amount from said factory towards the maintenance charges and street light charges without getting itself registered with Service Tax Department nor paying any service tax - A SCN was issued - The Tribunal has passed the impugned orde confirming the demand of service tax along with interest pertaining to the normal period and dropping the demand of service tax pertaining to extended period invoked under Section 73 of the Act, 1944 - The Tribunal also set aside the penalty under Section 78 of the Act, 1944 - The issue as to what would amount to wilful mis-statement or supression of fact has been dealt with by Supreme Court in Uniworth Textiles Ltd. 2013-TIOL-13-SC-CUS wherein it has been held that mere non payment of duties is not equivalent to collusion or wilful mis-statement or supression of facts, otherwise there would be no situation for which ordinary limitation period would apply - The explanation putforth by CSIDC that it was under bona fide impression that being an entity under the control of Government it was not liable to pay service tax appears to be reasonable explanation, therefore, mere non registration under Section 65 or non payment of service tax on the maintenance charges collected from industries would not amount to wilful supression or mis-statement of fact, hence, the Tribunal has rightly held that present is a case where the Revenue is not entitled to invoke the extended period of limitation - The additional question of law framed at the time of final hearing is about maintainability of cross-objection filed by respondent by virtue of Section 35G(9) of the Act, 1944, which provides for appeal to the High Court against an order passed in appeal by the Appellate Tribunal - Cross-objection filed by respondent is maintainable, however, at the time of hearing of appeal respondent failed to persuade to frame any other question of law touching upon its liability to pay service tax on the ground that the Corporation having providing services in the sovereign capacity, it is not liable to pay service tax - Even otherwise court have already dealt with circular issued by CBDT holding that the maintenance services and other services provided by respondent to the industries within its industrial area, on payment of charges/ fees, is liable to pay service tax - The appeal as well as the cross-appeal/ cross-objection fail on merits: HC

- Appeals dismissed : CHHATTISGARH HIGH COURT

2019-TIOL-279-CESTAT-DEL

CCE & ST Vs Sand Dunes Construction Pvt Ltd

ST - The assessee was engaged in providing 'Construction of Complex Service' including residential complex - The Department, while scrutinizing the records of assessee noticed that the assessee has charged various amounts by way of deposits from the buyers/ clients in respect of residential complex constructed by them - The Department was of the view that amounts collected by assessee for providing the maintenance/repair of residential complex will be liable for payment of Service Tax under category of 'Management, Maintenance or Repair Service' (MMR) falling under Section 65 (64) of FA, 1994 - The limited point for decision is whether the security deposits collected by assessee is to be taken as consideration for the providing of 'Maintenance of Immovable Property Service' - The lower Authority has recorded that such security deposits have been recovered from the prospective buyers and the same are to be used by assessee in maintaining the complex until the Resident Welfare Association is formed - Thereafter the deposit is transferred to the account of Welfare Association - The lower authority has held that what has been collected by assessee is only a security deposit and is not in the form of consideration flowing to the assessee - Identical issue stands decided by Tribunal in case of Kumar Beheray Rathi - 2013-TIOL-1806-CESTAT-MUM - No reason found to interfere with the impugned order: CESTAT

- Appeal rejected: DELHI CESTAT

2019-TIOL-278-CESTAT-KOL

CCE Vs Maithan Ceramic Ltd

ST - Revenue is in appeal against order of Commissioner (A), which has allowed the assessee's appeal for availing of Cenvat Credit of Service Tax paid on GTA Services for outward transportation of goods manufactured, taken as credit by assessee for the period prior to 01.04.2008 - The Commissioner (A) has relied upon the decision of High Court of Karnataka in case of A.B.B. Ltd. - 2011-TIOL-395-HC-KAR-ST - There is no dispute with regard to place of removal and accordingly the decision of Apex Court is squarely applicable to the facts of the present case - By respectfully following the decision of Supreme Court in The Andhra Sugars Ltd. - 2018-TIOL-45-SC-CX , the appeal filed by the Revenue is rejected: CESTAT

- Appeal rejected: KOLKATA CESTAT

CENTRAL EXCISE

2019-TIOL-205-HC-KOL-CX

Kosmos Healthcare Pvt Ltd Vs CCE

CX - The assessee exported gift boxes - Each gift box contained four items - Two items were brought from the open market and two items were manufactured by assessee - Court have been unable to follow the reasons which have been advanced thereafter namely “when the export has been made and rebate has been claimed, in this situation assessee is not entitled for double benefit as per section 2(k) of CCR, 2004” - There are no reasons to support the finding of Tribunal under quotation - But on that basis the claim of assessee has been denied by Tribunal dismissing the appeal - Appeal admitted on the ground that there is substantial point of law involved - Nonetheless considering the fact that some factual issues are also involved, matter remanded to the Tribunal: HC

- Matter remanded : CALCUTTA HIGH COURT

2019-TIOL-204-HC-AHM-CX

CCE & C Vs Essar Oil Ltd

CX - The applicant has submitted that tax appeal was filed by Rajkot Department, but has now been handed over to Jamnagar Department, whereas the respondent-M/s Essar Oil Ltd. has been merged/taken over by M/s Nayara Energy Ltd. and therefore the name of respondent is also required to be amended accordingly - Considering the averments made in memorandum of application, application is allowed in terms of relief prayed for in application - The cause title of the tax appeal be amended accordingly: HC

- Application allowed : GUJARAT HIGH COURT

2019-TIOL-277-CESTAT-AHM

Beri Mercurio Ltd Vs CSE & ST

CX - Assessee received mercury and after certain purification process, the same is cleared by them - A SCN was issued to them alleging that they are engaged in repacking of mercury - It was argued that repacking of mercury amounts to manufacture in terms of note 10 of Chapter 28 of Central Excise Tariff Act - While there is a charge that goods were repacked from bulk to smaller packing but there is no charge that there was any labeling or relabeling done - In absence of the change of labeling or relabeling simply repacking from bulk to small containers, as charged in SCN would not amount of manufacture - The demand itself does not survive: CESTAT

- Appeals allowed: AHMEDABAD CESTAT

2019-TIOL-276-CESTAT-KOL

Shyam Dri Power Ltd Vs CCE, C & ST

CX - The assessee is engaged in manufacture of various Iron and Steel products - During period of dispute, assessee supplied goods such as TMT Bars to various SEZ developers without payment of duty - Since they were availing benefit of cenvat credit in terms of CCR, 2004, they were required to maintain separate account of inputs or should have followed the procedure prescribed in Rule 6 (3A) - The department took the view that the clearances made without payment of duty to SEZ Developers are not covered by exclusion enumerated under Clause (i) to Clause (vii) to Rule 6 (6) - The identical dispute has been considered by Bangalore Bench of Tribunal in case of Sujana Metal Products Ltd. - 2011-TIOL-1173-CESTAT-BANG - In said case, the Tribunal has observed that the amendment carried out is to be considered as retrospective - The decision of Tribunal has been upheld by Andhra Pradesh High Court - By following the said decision, demand is not justified and the same is accordingly set aside: CESTAT

- Appeals allowed: KOLKATA CESTAT

2019-TIOL-275-CESTAT-HYD

Worldwide Diamond Manufacturers Pvt Ltd Vs CC, CE & ST

CX - The assessee manufactured and cleared 60 diamond impregnated scaifes T2, manufactured in their unit, in DTA against payment in foreign exchange in terms of Para 9.10(b) of EXIM Policy - The goods were removed on submission of provisional duty bond - The assessment was finalized and they were requested to pay full Central Excise duty and charges of sales tax, insurance and freight are sought to be added to assessable value for the purpose of calculating duty denying the benefit of Exemption Notfn 2/95-CE .

THE assessee is a 100% EOU and excise duty is chargeable on products manufactured in 100% EOU in terms of proviso to Sec. 3 (1) of Central Excise Act at the rates equal to custom duties leviable on similar products if they are imported into India - However, when the goods manufactured by them are exported, Exemption Notfn 125/84 fully exempts the goods from payment of excise duty - On the other hand, if goods are sold in DTA, such sales are covered by EXIM Policy and Notfn 2/95 gives exemption of 50% of excise duty leviable on such goods - The EXIM Policy has created a further category of sales within India which get counted towards fulfilment of export performance in Para 9.10(b) - The clearances in question are under this Para being supplies effected in DTA against payment in foreign exchange - It is also not in dispute that assessee had obtained necessary permission for such clearances - These clearances are, however, not covered by either notification - As a creation of law, the Tribunal cannot go beyond the scope of law itself nor modify it - As far as exemption under Notfn 2/95-CE is concerned, the Supreme Court of India has in case of Virlon Textile Mills Ltd - 2007-TIOL-69-SC-CX held that this exemption notification will be applicable even when the goods are exported against foreign exchange to DTA - The ratio of judgment of Apex Court extending the benefit of Notfn 2/1995-CE to clearances under Para 9.9(b) applies squarely to the present case and therefore assessee is entitled to benefit of Exemption Notfn 2/95-CE: CESTAT

- Appeal disposed of: HYDERABAD CESTAT

CUSTOMS

NOTIFICATION

cnt06_2019

CBIC notifies Presidential Awards for 46 officers including 3 for Risk of Life

OFFICE MEMORANDUM

F. No. 15021/40/2016-Dir (ICD)

International Customs Day (ICD) celebration in 2019

CASE LAWS

2019-TIOL-202-HC-DEL-CUS

Pr.CC Vs Madhav Sikka

Cus - Whether the Tribunal was justified in remanding the matter for adjudication to concerned official to first decide the issue of jurisdiction after the appeal pending in Supreme Court against the judgment in case of Mangli Impex Limited 2016-TIOL-877-HC-DEL-CUS is decided - In identical circumstances, where a similar issue was sought to be urged, this Court had passed an order in a batch of appeals - Following the same, impugned order is set aside and matters are remitted to Tribunal, which shall proceed to examine and decide the merits of appeals - The assessee's right to contend that SCN issued in this case were legally untenable, in view of decision of this Court in Mangli Impex are kept intact - In other words, the Tribunal may hear the parties on merits of the case as well as with respect to the issue of jurisdiction, if necessary, on account of Mangli Impex and record separate findings: HC

- Appeals partly allowed : DELHI HIGH COURT

2019-TIOL-201-HC-AHM-CUS + Case Story

Proflex Systems Vs CC

Cus - Refund of ‘SAD' - Notification 102/2007-Cus - Single Member Bench rejecting appeal and in the matter of ROM filed dismissing the same on the ground that issues not raised during the arguments could not be allowed under the garb of rectification of order - Division Bench in the matter of similar appeals made against the same o-in-a remanded the matter for verification of claims made by appellant and computing the eligible refund in respect of sale, as such, of imported coils - to maintain parity, the anomaly having arisen in two different judgments of the Tribunal on identical facts, on account of the appeals being bifurcated on the basis of pecuniary jurisdiction, needs to be rectified - technical plea that such an issue was not raised before the Single Member Bench of the Tribunal would not come in the way of the Court in rendering substantial justice - matter restored to the file of the adjudicating authority to ascertain the quantum of “as such sale” of the imported material sold in coil or sheet form, which alone can be considered for refund of 4% SAD paid at the time of import - Appeal allowed: High Court [para 14 to 16]

- Appeal allowed: GUJARAT HIGH COURT

2019-TIOL-274-CESTAT-MAD

KMK Shipping And Clearing Pvt Ltd Vs CC

Cus - Assessee is a Customs Broker with a licence valid up to 13.04.2026 - They were also permitted to transact business in Mumbai Customs Zone - A case was detected of undeclared goods of high value concealed in declared goods by an importer vide Bill-of-Entry which had been filed through assessee - A SCN was issued proposing revocation of Customs Broker's licence, forfeiture of security amount deposited by them and imposition of penalty under Regulation 18 read with Regulation 20 of CBLR, 2013 - The starting point of proceedings inter alia for imposition of penalty is issue of a Notice within a period of ninety days from the date of receipt of an offence report, which requires the Customs Broker to submit within thirty days a written statement of defence to the Deputy Commissioner or Assistant Commissioner nominated by the said Commissioner of Customs - The ninety-day period prescribed for submission of the report by the Inquiry Officer has indeed been exceeded, possibly because of the first appointed Inquiry Officer going on medical leave for forty five days, necessitating the appointment of a second Inquiry Officer - Nonetheless, when the prescribed periods are to be considered as mandatory, the concerned Custom House/Commissioner, in such an eventuality, should have immediately taken corrective action and possibly not waited so long for appointment of another Inquiry Officer - The entire proceedings have been vitiated by non-adherence to the time-limit for submission of Inquiry Report prescribed in Regulation 20(5) ibid - Once this is so, the impugned Order, which is a resultant of such Inquiry Report, also gets vitiated and is set aside: CESTAT

- Appeal allowed: CHENNAI CESTAT

2019-TIOL-273-CESTAT-MAD

Symbio Generics Vs CC

Cus - The issue is with regard to rejection of refund claim on the ground of being time-barred - The assessee has filed the refund on 24.5.2012 while the due date for filing the refund claim is 26.5.2012 - The letter dated 12.11.2012 issued by Deputy Commissioner of Customs (Refunds) indicates that the Sea Cargo Commissionerate has received the refund claim on 24.5.2012 - They have also assigned number to the refund claim - The Sea Cargo Commissionerate has slept over the refund claim for almost six months without rejecting or returning the same to the assessee for want of jurisdiction - The department having slept over the refund claim for almost six months and thereafter rejecting the same alleging that it is time-barred is unjustified - Assessee has filed the refund claim within the due date before the department - When it has been transferred to correct Commissionerate (Air Cargo Commissionerate), the Assistant Commissioner of Customs (Refunds) ought to have considered the same on merits - Therefore, the impugned order is set aside and the matter is remanded to Assistant Commissioner (Refunds), Air Cargo Commissionerate for processing the refund as per law within a period of four weeks: CESTAT

- Matter remanded: CHENNAI CESTAT