SERVICE TAX

Merit Trac Services Pvt Ltd Vs CCE & ST

ST - Appellant carries out activities in relation to the conduct of examinations by Sikkim Manipal University, Manipal Academy for Higher Education and the National Association of Software and Service Companies (NASSCOM) - During the period from December 2007 to March 2012, appellant had not been discharging tax liability under Finance Act, 1994 on the premise that 'business auxiliary service' provided in the field of education was, owing to notification no. 14/2004-ST dated 20th September 2004, exempt from such liability - Department alleged that such activity was taxable under section 65 (105) (r) of Finance Act, 1994 as provider of 'Management or business consultancy service' - Demands confirmed, hence appeals before CESTAT.

Held:

+ For the later periods, the adjudicating authority dropped the demands in respect of services provided to and consideration received from Sikkim Manipal University and Manipal Academy of Higher Education on the reasoning that the appellant are providers of 'business auxiliary service' to such entities imparting education - Consistency in ensuring uniform tax liability precludes differential treatment for different periods - therefore, the demands pertaining to consideration received from recipients of service other than National Association of Software and Service Companies (NASSCOM) are set aside: CESTAT [para 2, 3]

+ Insofar as the demand on the services provided to NASSCOM, National Association of Software and Service Companies renders the service of certifying of potential job-seekers with the laudable objective of distancing the employer from the candidate - In the circumstances, the existence of tripartite transaction, that is so essentially a fundamental requirement for ascertaining the provision of 'business auxiliary service' is manifest enough to discard coverage under a different taxable service - Show cause notices have not invoked the applicability of any other taxable service - Without the resort to alternative classification for rejection of the proposed classification, Tribunal rejects the proposed classification under 'management or business consultancy service' for want of fitment within its description - Accordingly, the recovery of any tax on the consideration received from National Association of Software and Service Companies (NASSCOM) is beyond the pale of law and, hence, liable to be set-aside - impugned orders set aside and appeals allowed: CESTAT [para 5.1, 6]

- Appeals allowed: BANGALORE CESTAT

2019-TIOL-710-CESTAT-BANG

Karthik Motors Vs CCT

ST - The assessee is a dealer in two wheelers automobiles and also runs a service station for servicing of two wheelers automobiles - During audit of their records, it was noticed that they have received commission from various financial institutions for promoting the loan offered to customers of assessee - However, they had not paid Service Tax liability due on taxable value received in this regard by them under Section 68 of Finance Act, nor declared the same in periodical returns for period from April 2010 to March 2015 - The Department issued them a Show Cause-cum-Demand notice - It is a fact that assessee has not collected Service Tax from the service recipients - Further, the entire Service Tax along with interest was paid by assessee partly before the issue of SCN and partly before the passing of O-I-O - On the letter issued by Range Officer, assessee paid the balance interest - Further, assessee is an illiterate person, not knowing the provisions of Service Tax but he paid the Service Tax along with interest and 25% of penalty - Therefore by following the ratio of Karnataka High Court in case of Motor Worlds 2012-TIOL-418-HC-KAR-ST , assessee is not liable to pay remaining penalty - Therefore, benefit of Section 80 extended to the assessee as there was no intention to evade payment of Service Tax as per the conduct shown by assessee while paying Service Tax and the interest and 25% of penalty - Consequently, appeal allowed to that extent of dropping the balance amount of penalty: CESTAT

- Appeal allowed: BANGALORE CESTAT

2019-TIOL-709-CESTAT-MAD

Mallika Jeyabalan Vs CGST & CE

ST - The appellant providing professional training pertaining to various procedures & statutory compliances to be made in relation to import & export of goods - The training is designed in such a way that all procedures, statutory requirements, foreign trade policy of the Government, prospective industries and area of export /import are made familiar to the participants - The Department opined that the appellant's institute is not a vocational one since the participants did not immediately qualify for any sort of employment - Hence SCNs were issued, raising duty demand under Commercial Training or Coaching Service - On adjudication, the demands were confirmed with interest & levy of penalty - Such demands were sustained by the Commr.(A).

Held - The appellant's counsel correctly stated that its case would be covered under the Notification No 09/2003-ST and No 24/2004-ST, during the relevant period - Hence no tax liability can be fastened for the pre-dominant period of dispute, under the heading Commercial Training and Coaching service - Hence the matter warrants remand for calculating tax liability for such period - The adjudicating authority shall also give cum-tax benefit, if the appellant is found eligible for the same - Further, considering that the issue was mired in litigation during the entire period of dispute, no penalty can be imposed: CESTAT (Para 1,2.1,5)

- Assessee's appeal partly allowed: CHENNAI CESTAT

CENTRAL EXCISE

2019-TIOL-724-CESTAT-MAD

TTK Prestige Ltd Vs CGST & CE

CX - Appellants are engaged in manufacture of Pressure Cooker - During August 2012 to November 2014, they had cleared Induction Starter Packs (ISP) as combination package in which pressure cooker manufactured by them was packed along with Tawa manufactured and supplied by M/s. Triveni Bialetti Industries P. Ltd. on job work basis - Appellants were discharging duty u/s 4A of CEA, 1944 on the combo-package on which MRP was affixed - It is the case of the Revenue that since Tawas were being cleared without payment of duty, the same amounted to trading activity, which being an exempted service, the CENVAT credit availed on common inputs/input services without maintaining separate accounts is irregular and in contravention of CCR, 2004 - notice issued for recovery of the CENVAT credit of Rs.10,80,681/- availed on common inputs/input services - demand confirmed with penalty & interest and upheld by lower authorities, therefore, appeal before CESTAT.

Held: Inputs for manufacture of Tawa has been supplied by the appellant - duty on the Tawa has been discharged by the job worker - So also, the job work charges are paid as conversion charges to the job worker - These elements including the excise duty have gone into the assessable value of the pressure cooker which is cleared along with the free Tawa in the combo-package - This being so, the appellants have rightly availed the Credit on the inputs - The activity of supply of job worked goods to the principal manufacturer and thereafter, the clearance of the finished product, cannot be considered as a trading activity - Consequently, there is no requirement for the appellant to comply with the provision of maintaining of separate accounts as per Rule 6 of the CENVAT Credit Rules, 2004 - Credit availed on the inputs/input services used for the manufacture of Tawa is correct and proper - impugned order set aside and appeal allowed with consequential reliefs: CESTAT [para 8, 10, 11]

- Appeal allowed: CHENNAI CESTAT

2019-TIOL-708-CESTAT-DEL

Shree Jagdambay Castings Pvt Ltd Vs CGST, CCE

CX - The appellant company manufactures MS Ingots - The premises of a certain company were searched by the DGCEI during the relevant period, whereupon certain material incriminating the appellant, was recovered - Such material contained data which incriminated the appellant - Based on the same, the Department alleged that the appellant cleared MS Ingots in a clandestine manner to the other company - Hence the Department proposed duty demands with interest & penalties were imposed on the director of the appellant company - Such demands were confirmed upon adjudication - Later, the Commr.(A) rejected the appeals filed - Hence the present appeals.

Held - The appellants herein are aggrieved on account of being denied the opportunity of cross examining the witnesses whose statements were relied upon for initiating the adjudication and also for confirming the duty demanded - The appellants are also aggrieved by non-consideration of their written submissions - The Commr.(A) acknowledged that the appellant relied upon some case along with various Relied Upon Documents (RUDs) which were relevant to the adjudication proceedings pertaining to the other company - However, the Commr.(A) simply mentioned that none of those documents were relevant in the instant case & gave no reasons for such findings - From the O-i-O, it is seen that the appellant filed written submissions in reply to the SCNs - Besides, the appellants also sought access to all documents and records seized by the DGCEI as well as cross examination of relevant witnesses - Despite such requests, the adjudicating authority proceeded to decide the matter ex parte and remained silent on these submissions - Moreover, the opportunity of cross examination was denied on mere grounds that the appellant did not mention any valid reason for cross examining the witnesses & that no relevant evidence was produced which would warrant such exercise - However, the adjudicating authority overlooked the fact that the relevant documents had already been seized during the search operations - These documents were never returned to the appellant after issuing SCN, as is mandatory u/r 24A of CER 2002 - Besides, the SCN is not based on any document seized during search - None of the seized documents were found to be incriminating - Hence the reliance placed by the adjudicating authority on third party evidence is unsustainable, more so where such evidence is found to be untrustworthy - Moreover, the demands have been based upon the statements of the appellant company's director - However, such statements were subsequently retracted on grounds of having been made under coercion - Hence the reliance placed upon such statements is misplaced - Hence the present appeals warrant remand, considering that the appeal filed by the other company has also been remanded - Both matter may be taken up for disposal together: CESTAT (Para 1,7-10)

- Case remanded: DELHI CESTAT

2019-TIOL-707-CESTAT-ALL

Kuwer Industries Ltd Vs CCE

CX - The assessee is engaged in manufacture of Metalized Polyester Film - During checking of assessee's factory in the presence of their Director Shri Tarun Aggarwal and Supervisor & Authorized Signatory Shri Vinod Kumar Mishra and in the presence of two independent witnesses, physical stocks of Cenvatable inputs as also the final product were verified - Such verification resulted in shortages of raw material as also the final product - Allahabad High Court has ruled in case of Parmarth Iron Pvt. Ltd. that if Revenue chooses to rely on statements then in that event the persons whose statements are relied upon have to be made available for cross examination for evidence or statements to be considered - Supreme Court in case Bareilly Electricity Supply Co. Ltd. has ruled that if a letter or other document is produced to establish some evidence which is relevant to enquiry the writer must be produced or his affidavit in respect thereof be filed and opportunity accorded to Opposite Party who challenges this fact and that the same is in accordance with the principle of natural justice as also in accordance with procedure under order 19 of Civil Procedure Code and the Evidence Act - Delhi High Court in case of Vishnu & Co. Pvt. Ltd. has held to the effect that responsibility is on the prosecution to produce prosecution witnesses for cross examination - The statements given by Shri Vinod Kumar Mishra and other transporters cannot be relied for arriving at any decision against the assessee - Further the contention of assessee that sub Section (4) of Section 36B has not been complied with in respect of computer printouts also is tenable in law - The allegations were that the computer printouts were perused and signed by Shri Vinod Kumar Mishra and the contention of assessee was that Shri Vinod Kumar Mishra was not produced for cross examination - Therefore, the printouts are doubtful as evidence - In the absence of expert opinion by examiner of electronic evidence, the allegations that the computer was capable of repeatedly generating invoices with the same number is not established beyond doubt - For on examination of allegations in respect of clandestine removal on the criteria laid down by High Court as referred in case of Continental Cement Company the allegations of clandestine removal are not established - Assessee has submitted that there was no weighment of finished goods or inputs and the estimation was on the basis of eye estimation and the same has not been rebutted by Revenue through their submission, therefore, there was no shortage of either raw materials or finished goods - Allegations made against assessee are not sustainable: CESTAT

- Appeals allowed: ALLAHABAD CESTAT

2019-TIOL-706-CESTAT-MAD

Hindustan Motor Finance Corporation Ltd Vs CGST & CE

CX - The appellant-company manufactures motor cars of various cylinder capacities - It availed Cenvat credit of duty paid on inputs, capital goods & service tax paid on input services used in manufacture & clearance of finished goods - During the relevant period, the appellant availed credit on Courier Service, Management Consultancy Service, Clearing House Agency, Rent-a-Cab Service, GTA Service, Travel Service, Health Insurance Service, Advertisement Agency Service and Manpower Agency Service - The Revenue opined that the appellant was ineligible to avail credit on these services - Hence SCNs were issued, proposing to recover the same, u/r 14 of CCR 2004 r/w proviso to Section 11A(1) of CEA 1944, along with interest & penalty u/r 15 of CCR r/w Section 11AC of the CEA 1944 - Such demands were confirmed upon adjudication, with the exception of Advertisement & Security services, for which credit was allowed - On appeal, the Commr.(A) upheld the demand with interest on Travel Agency Services and GTA (Outward) Services, quashed the demands regarding Courier, Manpower Recruitment/Manpower Agency Services, and Clearing House Agency Services and remanded the matter regarding Rent-a-Cab, Health Insurance and Management Consultancy Services - The penalties imposed were set aside - Hence the present appeals.

Held - Regarding Travel Agency services, they were used by the appellant in relation ot manufacture & clearance of final products - Besides, the dispute pertains to period prior to 01.04.2011, when the definition of 'input service' had a wider scope, so as to include any service used by a manufacturer directly or indirectly in relation to the manufacture or clearance of final products from the place of removal - Moreover, the onus rests with the Revenue to prove that such service was used for the personal consumption of emplyees - Nothing is put forth to prove this - Hence denial of credit on Travel Agency Services is unjustified & demand raised on this count is quashed - Regarding GTA service on outward transportation of goods, it is seen that the assessee did not press this ground - Hence the O-i-A warrants no interference in this regard & the demand raised on this count is upheld: CESTAT (Para 2.1,7.1,7.3,8)

- Assessee's appeal partly allowed: CHENNAI CESTAT

CUSTOMS

NOTIFICATION

cnt21_2019

CBIC notifies Customs exchange rates for exports & imports

CASE LAWS

2019-TIOL-705-CESTAT-MAD

Excel Logistics Vs CC

Cus - For the last six hearings, assessee was not present nor was represented by any legal representative - The notice for hearing has been sent to address given by assessee in appeal Form CA-3 filed by them, which has been returned undelivered - It therefore, appears that assessee is not serious to pursue the matter - Appeal is therefore dismissed for nonprosecution: CESTAT

- Appeal dismissed: CHENNAI CESTAT