2019-TIOL-NEWS-065, Dated: Monday, March 18, 2019

ST - Reading clauses of the agreement in isolation is not justified - agreement will have to be read as a whole - Once the matter is approached in a holistic manner, no perversity is found in the order of Tribunal: High Court

ST - Franchise service - sub-clause (zze) of clause (105) of section 65 of the Finance Act, 1994 - Recovery of licence fees from the company controlled and dealer controlled outlets where the respondents are supplying pumps, storage tanks, pipes, etc. - Clause 10 of the agreement nowhere grants representational rights to the dealers - no perversity or error of law apparent on the face of the record in the impugned order - Revenue appeal dismissed: High Court [para 6, 7]

ST - Assessee was using railways for most of the clearances of its final product i.e. cement and clinker and opted for the said scheme introduced by Railway in year 1992 i.e. "Own Your Wagon Scheme" - In accordance of scheme, irrespective the ownership of wagons could vest in producers, but wagons were to be placed at the disposal of Railways - Not only this, those were to be merged in general pool of Railways - Also responsibility of day-to-day operation and maintenance would be that of Railways - Based on said scheme, assessee entered into an agreement with the Railways in respect of 125 wagons, which were to be leased to Railways for a period of 20 years - First rack of 42 wagons thereof was commencing from 20th January, 1997 - The perusal of the agreement shows that the rolling stock for purpose of said lease agreement was 125 BCNA wagons and that the lease period shall had to be reckoned from the commencement date, the 10th day of receipt of last Wagon of the rack by the Railways from the assessee - It is abundantly clear that not only the right of possession but the effective control upon railway wagons was meant to be transferred from assessee to the Railways - Resultantly, the transaction comes out of the ambit of supply of tangible goods service - The order under challenge has absolutely been silent qua this aspect - Commissioner has jumped-over upon clause 29 A of Article 366 of Constitution denying the impugned transaction to be a deemed sale and has confirmed the liability under the supply of tangible goods service - The observation of Commissioner is held to have been restricted to definition of service only without applying the definition of specific service under which the demand has been confirmed - Tribunal in case of assessee themselves vide Final Order dated 1st February 2018 has set aside the similar demand based on the ratio laid down in Petronet LNG 2013-TIOL-1700-CESTAT-DEL - The order under challenge is held to have not appreciated the entire facts and circumstances and has ignored the relevant legal provisions, as such, is not sustainable - The same is set aside: CESTAT

ST - M/s. Biocon Ltd. (SEZ Unit) and (SEZ Developer) filed two applications claiming refund being service tax paid on specified services used for authorized operations in SEZ under Notification No.12/2013 and the period was from July 2015 to September 2015 and October 2015 to December 2015 - The claims were partly rejected on the ground that the claimant had sought refund on Event Management Services, Management or Business Consultant Service, Sitting Services, Stock Exchange Service, Insurance Service, Subscription Fee, Business Auxiliary Service, Membership and Photography service - Initially when the refunds were filed, these impugned services were not approved by UAC and when the objections were raised by Revenue, thereafter, assessee vide its various letters sought approval from UAC and finally UAC approved various input services except Event Management and Photography services- Further, when the impugned order was passed by Commissioner (A), at that time necessary approval was not accorded by UAC but subsequently, UAC approved various input services vide letter dated 10.4.2018, which is placed on record - Since all the input services except Event Management and Photography services have been approved by UAC, though subsequently, therefore, the assessee is entitled to seek refund on these input services which have been approved - Consequently, the impugned order is set aside on these services except Event Management and Photography services on which refund is denied and for rest of the services, the refund is allowed: CESTAT

ST - The appellant company provides Business Auxiliary Services - It entered into agreement with M/s IBM World Trade Corporation, USA whereupon the assessee was appointed as IBM's business partner in India, for marketing selected IBM products in India - The appellant received commission in convertible foreign exchange as consideration for its activities - As per the agreement, the appellant also agreed to identify customers in India, who were entitled to zero or concessional duties on import of computer systems and peripherals - IBM USA appointed M/s Tata IBM for this work, whereupon M/s Tata IBM received a fee equal to the difference in prices at which products were invoiced by IBM after adjusting insurance & freight and the normal price at which M/s Tata IBM is entitled to buy such products from IBM - The services provided by IBM India apparently were provided & consumed within India - It appeared to the Department that the appellant failed to pay service tax on such fee/commission received from IBM USA - Hence SCNs were issued, raising duty demand with interest & penalty & the same were confirmed upon adjudication - Hence the present appeals.

Held - The appellant admittedly provided service to foreign company located abroad - The parent company has no commercial establishment or office in India - Besides, the services provided by the appellant are in relation to provision of service recipient, i.e., IBM WTC - The appellant satisfies all conditions as per the Export of Service Rules 2005 - The Rules do not contain any condition that services performed in India do not qualify as export of service - Further, the sales commission was received in India in convertible foreign exchange - Hence the appellant fulfils all conditions under Rule 3(1)(iii) of the Export of Service rules - Moreover, the Commissioner gave no findings on the BTO services (being Business Process Outsourcing and call centre services), though the SCN was issued on such BTO service too - It is seen that such service too qualifies as export of service - This follows from the Tribunal's decision in Microsoft Corporation (I) Pvt. Ltd. Vs. CST - Thus, the demands raised warrant being set aside: CESTAT (Para 2,6.1,6.2,6.3)

2019-TIOL-795-CESTAT-MAD

Spic Ltd Vs CCE

CX - Assessee manufacture carbon dioxide (CO2) as a by product which is cleared to Tuticorin Alkalies Chemicals and Fertilisers Ltd., a related person - The goods were also sold to independent buyer, M/s.SICGIL - Department took the view that the sales price to TAC was much lower than the price adopted for independent buyer SICGIL - Hence the price offered to TAC being related person cannot be accepted as assessable value - Assessee submits that volume of sale between TAC and SICGIL are approximately in the ratio of 96 : 4; that TAC is a bulk buyer; that requirement of SICGIL is very low; that the carbon dioxide was sold to SICGIL only after further purification - They further submits that the very issue in their own case, for an earlier period, has been decided in their favour by Tribunal in Final Order dt. 19.12.2016 - Following the same ratio, impugned order cannot sustain: CESTAT

- Appeal allowed : CHENNAI CESTAT

2019-TIOL-794-CESTAT-AHM

Transasia Bio Medicals Ltd Vs CCE & ST

CX - The assessee have unit at SEEPZ, Andheri, Mumbai - The input cleared by SEEPZ Andheri Unit received by assessee in their DTA Unit located at Vapi - The assessee carried out repacking, relabeling and conversion from bulk pack to small pack in respect of the goods received from SEEPZ Andheri Unit - In respect of repacked/ relabeled goods, contention of department is that it is manufactured goods and liable for duty, non-accountal of such goods leads to confiscation of the goods - There is a parallel proceedings in respect of same goods by the jurisdictional authority of SEEPZ Andheri Unit as well as in the present cases - As regard, the case related to SEEPZ Andheri Unit, the appeal of SEEPZ Andheri Unit is pending before the Mumbai Tribunal - Since the entire case has been initiated on the removal of goods from the SEEPZ Andheri Unit, unless until that case is decided, deciding the present appeals will be pre-mature - In the present case a proper hearing by adjudicating authority was not conducted, the request of cross examination of the witness was also rejected, therefore, there is a violation of principles of natural justice on the part of adjudicating authority - All these matters should go back to the adjudicating authority for deciding fresh only after the outcome of the case of SEEPZ Andheri Unit by the Mumbai Tribunal: CESTAT

- Matter remanded : AHMEDABAD CESTAT

2019-TIOL-793-CESTAT-BANG

India Sugars And Refineries Ltd Vs CCT

CX - The assessee is engaged in manufacture of sugar and molasses and are availing CENVAT facilities on input, capital goods and service tax on input services - During audit, it was noticed that assessee has availed ineligible CENVAT credit on structural items i.e. MS channel, MS beams, angels and coils - Therefore a SCN was issued to assessee for disallowing and demanding CENVAT credit under rule 14 along with interest and penalty under Rule 15(2) of CCR, 2004 - The SCN was issued to assessee seeking the details of impugned items used, the assessee vide their letter furnished the details wherein they have given the usage of various items used in the maintenance and repairs of the plant - In the SCN itself, the use is admitted by Department - The only ground on which original authority has rejected the CENVAT credit is that the impugned goods are not used for repair and maintenance and have been used for fabrication of structures - In assessee's own case for earlier period, Tribunal has allowed the appeal of assessee holding that the CENVAT credit is admissible for goods which have been used for repair and maintenance of plant and machinery - In case of Renuka Sugars Ltd. 2017-TIOL-2260-CESTAT-BANG , Tribunal has considered various decisions and has come to the conclusion that various items like angles, channels and beams are eligible for CENVAT credit if they are used for repair and maintenance of building or even for fabrication of structures - Karnataka High Court in case of Alfred Albert india Ltd. 2010-TIOL-427-HC-KAR held that inputs used for repair and maintenance of plant and machinery is eligible for credit - Therefore by following the ratios of said decisions, the impugned order is not sustainable in law: CESTAT

- Appeal allowed : BANGALORE CESTAT

Cus - The assessee is aggrieved by revocation of their licence and forfeiture of security deposit consequent upon certain irregularities in 'baggage declaration' filed within the jurisdiction of Commissioner of Customs, Chennai that is claimed to have occurred before they commenced operations there - Another grievance of theirs is that the action has been initiated while M/s Mysore Business Associates, which was in existence earlier, had ceased its operations at Chennai - Revocation of licence that has ceased to exist is an empty exercise - However, it is noted that the licence issued to assessee was same as the successor licence held by M/s Mysore Business Associates and it is the contention of revenue that formal conclusion of proceedings against M/s Mysore Business Associates in time would have imperiled the issue of licence that stands revoked by impugned order - It is not in dispute that Shri M S Diwakar, proprietor of licence issued to M/s Mysore Business Associates, had, thereafter, re-constituted it as a partnership which, in terms of regulation 16 of CHALR, 2004, been permitted to continue the operations - Licensing authority would have been influenced by an adverse finding against a proprietary concern whose proprietor subsequently sought issue of fresh licence as a partnership firm - Nevertheless, the fundamental principles of natural justice prescribes that the entity proposed to be imposed with detriment should be placed on notice of jurisdiction, and the alleged deviation from prescribed Rules of Conduct along with sufficient evidence of such misdemeanor - It is seen from SCN leading to present proceedings that the charges are specific to four consignments of unaccompanied baggage and, though based on connection between M/s Mysore Business Associates and assessee, is conspicuously silent on discretion to withhold a licence on the ground of proved misconduct and the provision within the Regulation that permits a successor licence to be proceeded against for alleged misdemeanor under the erstwhile licence - Even if it be prejudicial to the proper functioning of a custom house to permit a licence to operate under a different garb even after committing of an offence, the relation between the action initiated and the present proceedings should have been made amply clear along with the intent to take it to its logical conclusion - Tribunal find marked lack of such forthrightness on detailed articulation of intent in SCN - It would, therefore, appear that revocation of the licence of assessee is based solely on the commonality of individual, Shri MS Diwakar, to the two licences - This does not appear to be adequately evidenced in SCN nor do Tribunal find an elaboration on this in the impugned order - Therefore, Tribunal donot propose to go into the merits of submissions in view of failure to comply with the principles of natural justice, that is an inalienable ingredient, in revoking customs broker licences that are a source of livelihood: CESTAT