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SERVICE TAX
2019-TIOL-855-CESTAT-MAD
Indusind Bank Ltd Vs CST
ST - The assessee provides banking and other financial services - Upon audit during the relevant period, it was observed that the assessee received amounts on account of dealer commission & on which service tax had not been paid - The Department opined that such amount was taxable as Business Auxiliary Service - Duty demands were raised with interest & penalty - Such O-i-O was later upheld by the Commr.(A) - Hence the present appeal.
Held: It is quite usual for consumer stores such as electrical appliance dealers, to arrange loan facilities for the customer, by engaging in tie ups with financers & banks - Such stores point the customer in the direction of the bank with which the store has tied up, where the customer intends to avail a loan - The customer approaches the bank & avails loan - The amount is given directly to the store & the goods purchases are hypothecated with the bank - Thus it cannot be said that the bank is promoting the interests of the store, since such arrangement merely facilitates the buyer to obtain a loan and the bank is only rendering the activity of disbursing such loan - Hence it cannot be said that the discount received by the appellant is consideration for some service - Thus the activity does not fall under Business Auxiliary Service: CESTAT (Para 2-3.2,12.1-13)
- Assessee's appeal allowed: CEHNNAI CESTAT
2019-TIOL-854-CESTAT-MAD
International Seaport Dredging Ltd Vs CST
ST - The appellant company provides dredging & land reclamation services - During the relevant period, the Department studies various contracts entered into by the appellant and noted that the appellants had vivisected total value received into various heads of equipment leasing, manpower supply and had not discharged service tax with interest on Dredging Services, Site Formation Services, Scientific and Technical Consultancy Services, Management, Maintenance and Repair Services, Consultancy Insurance Services, Management Consultancy Services & Man Power supply service - Hence duty demands were raised with interest for various periods & penalties u/s 76 & 77 of the Finance Act 1994 were imposed.
ST - Dredging Corporation of India & Dharti Dredging & Construction Ltd & Gangavaram Port - The appellant merely leased out the vessel, which remained under the complete supervision of the DCI - The crew manning the vessels, although supplied by the appellant, had no say in the dredging activity - The duty demand cannot be be raised for dredging activity, merely because the appellant billed the DCI for wear and tear of the vessel occurring due to dredging activity - Such activity is in fact taxable under Supply of Tangible Goods service - Hence the demand raised under Dredging Service must be quashed: CESTAT (Para 4.1)
ST - Hazira Port - Service tax was imposed on Dredging services w.e.f. 16.06.2005 - The appellant completed providing such service on 30.03.2005 and received payment for it on 09.06.2005 - Hence no service tax is leviable on the dredging work - Moreover, the agreement shows that the work contracted was supply of man power and equipment for maintainence of Geo-bag bund and foreshore protection - Besides, the appellant also paid service tax under Manpower Supply Service - Hence the demand raised under Site Formation Service is untenable: CESTAT (Para 4.1)
ST - Dhamra Port - Matter warrants remand to determine whether there were indeed three separate contracts for dredging, reclamation and soil stabilization or on the other hand, whether appellants were entrusted with a composite work for all the three related works - The same is not clear from the SCN or from the O-i-O: CESTAT (Para 4.1)
ST - Import of Management & Consultancy Service, Maintenance & Repair & Manpower supply service - The appellant claimed to have discharged service tax on these services - Hence the matter warrants remand to determine the veracity of such claim - The issue of penalties is also remanded: CESTAT
- Assessee's appeal partly allowed: CHENNAI CESTAT
CENTRAL EXCISE
2019-TIOL-861-CESTAT-BANG + Case story
Vijayanagar Sugars Pvt Ltd Vs CCE
CX - During the relevant period, the applicants herein received letters from the jurisdictional Central Excise authorities, directing payment of duty demands raised with interest - The letters also payment of penalty imposed - Against such demands raised, appeals had been filed before the Tribunal and were pending disposal - The Tribunal had not granted indefinite stay on the recovery of such demands & the initial period of stay had expired & had not been extended - Hence the present applications were filed u/s 35F of the Central Excise Act 1944 r/w Section 35C(2A) of the Act and Rule 41 of the CESTAT (Procedure) Rules 1982.
CX - It is seen that the letters seeking recovery of duty demand were motivated by the judgment of the Apex Court in Asian Resurfacing of Road Agency Pvt Ltd & Anr v. Central Bureau of Investigation, which in the eyes of the Revenue made the applicants liable to face recovery proceedings in absence of a stay order - It appears that the Department omitted to consider the relevant portion of the Apex Court's judgment advising that a judgment be read as a whole - It is also seen that the Department was drawn to that portion of the judgment directing end of operation of stay in respect of pending cases - Had the Department's officials not selectively culled certain expressions in the judgment, the present situation could have been avoided: CESTAT (Para 4,5)
CX - The issue in the cited case pertained to delay caused from challenge to framing of charges under the Prevention of Corruption Act 1988 - The ambit of the Apex Court's judgment is restricted to one aspect of appeals, namely, trial courts - The CESTAT is not a trial court - The stay ordered by the Tribunal pertains to recovery of amounts no covered by the pre-deposit determined - The appeal had reached the Tribunal when proceedings before the lower authorities had concluded - Hence the facts of the present case are entirely different from those in Asian Resurfacing of Road Agency Pvt Ltd - The letters issued by the officials were not intended to be covered in this judgment: CESTAT (Para 6,7)
CX - Such action of the Department cannot be given approval, since the officials chose to intervene in matters that were pending disposal before the Tribunal - Hence they strayed into the exercise of the Tribunal's powers - As per mandate of the amended provisions of Section 35C of the CEA, 1944, the power vests with the Tribunal decide upon the continuation of stay on operation of the order in challenge - Hence the proper course of action available to the Department was to approach the Tribunal & seek vacation of stay - In absence of an order to such effect, the stay order will continue to operate till disposal of the appeals: CESTAT (Para 9)
- Assessees' applications allowed
: MUMBAI CESTAT
2019-TIOL-853-CESTAT-AHM
Associated Power Structure Vs CCE & ST
CX - The assessee is engaged in manufacture of Galvanized Tower, Windmill Tower and Tower Parts and structure - They are also undertaking the job work on behalf of M/s Suzlon Energy Ltd. (SEL) for production of Galvanized tower and tower parts on their behalf on which assessee is exempted from payment of duty under Notfn 12/12-CE and its previous Notfn - The case of the department is that since, the assessee have availed cenvat credit on certain inputs which were used exclusively in manufacture of exempted goods manufactured on job work basis, they are not entitled for cenvat credit on inputs used exclusively for exempted goods - The assessee have opted for rule 6(3)(i) according to which they have paid 6%/ 8% of value of exempted goods, thereafter no further demand can be made as there is no provision that once a payment is made under Rule 6(3) (i) then further cenvat credit is required to be reversed - Some of the inputs are common which were used in the manufacture of dutiable final product as well as exempted goods, therefore, the explanation II is not applicable - Moreover, the explanation II is applicable only with reference to Rule 6(2), however the assessee have not opted for said Rule and they have opted for sub Rule (3) of Rule 6 wherein unambiguous provision for payment of 6% / 8% of value of exempted goods is provided - It is apparent that there is no exclusive input which were used in only exempted goods, for this reason also the demand applying Rule 6 (1) and (2) will not sustain - The assessee has correctly followed the provision of Rule 6(3)(i) - Since various consumables inputs were used in manufacture of exempted goods well as dutiable goods, the option of payment of 8% / 10% was held correct - As regard the limitation, the department was well aware about the entire working of assessee as with reference to payment of 6% / 8% the assessee was issued SCN disputing the valuation, therefore, there is no suppression of fact on the part of assessee - Accordingly, the demand for the extended period beyond normal period is also not sustainable - After payment of 6% / 8% in terms of Rule 6(3)(i), no demand for cenvat credit will sustain - Accordingly, the impugned order is set aside: CESTAT
- Appeal allowed: AHMEDABAD CESTAT
2019-TIOL-852-CESTAT-AHM
Welspun Ltd Vs CCE & ST
CX - The assessee established its unit in Kutch and commenced the commercial production with investment in plant and machinery of Rs. 170,31,59,153/- which was increased subsequently to Rs. 465,68,57,552/- as on 31.12.2005 - The assessee complied with all the conditions mentioned in said notification for availing benefit of exemption from Central Excise duty on clearance of final product - If interpretation of department is accepted than in other words it restrict the investment to be made after 31.12.2005 which is not the object of whole scheme of industrialization in the Kutch district - The intention of Government's this scheme was that the more and more industry with maximum investment are setup, the exemption is provided only for 5 years - It is not the case that by increasing the investment, assessee is getting exemption for more than 5 years - Irrespective of huge investment the assessee is entitled for exemption only up to the 5 years from the commencement of commercial production - Therefore, the intention of notification is very clear that if the initial civil work and installation of the Plant and machinery is completed and commercial production in such unit started before 31.12.2005, the exemption for 5 years irrespective of any of the amount of value or quantity is available - The assessee right from the beginning declared the final product i.e. bed sheets and terry towels they have not started production of any new product after 31.12.2005, therefore, the assessee cannot be denied the exemption on product declared and the same were being manufactured throughout the period of exemption - Since the assessee have strictly followed the conditions of notfn 39/2001-CE particularly completion of civil work and plant and machinery and commencement of commercial production before 31.12.2005, the exemption for 5 years is available - Admittedly the unit was fully exempted prior to 31.12.2005 by assessee subsequently by way of backward integration installed new machines at the processing, spinning and weaving section and not in the cutting and sewing sections which did not result in capacity expansion - As regard the limitation, since the casewas decided in favour of assesse on merit itself, Tribunal is not going to address the issue of limitation - The assessee is entitled for exemption under Notfn 39/2001-CE despite the fact that they have installed additional machineries for manufacture at intermediary stage as the overall capacity of final product does not increase - Accordingly, the impugned order is modified to the above extent, the appeal is allowed with consequential relief: CESTAT
- Appeal allowed: AHMEDABAD CESTAT
2019-TIOL-851-CESTAT-DEL
Varun Enterprises Vs CCE & ST
CX - The assessee is engaged in manufacture of refined lead ingots, lead ingots and litharge by using raw materials such as old and used batteries procured from 'Kabadies' - The issue involved is regarding the clandestine removal of goods by assessee - The entire case is made out on the basis of voluntary statement of assessee and entries made in note pads and pocket diaries - The statements of transporters have not confirmed the transportation of alleged goods - These statements in itself do not indicate that assessee is engaged in clandestine removal of goods - Reliance is placed on the decision in case of M/s Continental Cement Company - 2014-TIOL-1527-HC-ALL-CX , M/s Mittal Pigment Pvt. Ltd. - 2016-TIOL-2759-CESTAT-DEL and M/s Arya Fibres - 2014-TIOL-15-CESTAT-AHM wherein it is held that there must be clinching evidence for establishing the clandestine clearance and same cannot be based on assumption and presumption only - No such investigations have been conducted by Department to make a foolproof case for clandestine removal of goods as alleged in two SCNs - Regarding the seizure case, only the excess stock has been found in the factory but the same was not removed and was lying there itself - This in itself will lead into inference that such and intention to remove the goods in a clandestine manner - It is also on record that Department has allowed the provisional release of seized goods on bank guarantee and Bond - These provisionally released seized goods have been released subject to their entry in statutory records - In such a situation there could not be any scope of clearance of seized goods without payment of duty - So far as the second SCN is concerned, same has been issued by and made answerable to Principal Commissioner of Indore and however, the adjudication was done by Additional Commissioner without any indication that the Adjudicating Authority has changed during course of adjudication proceedings - This in itself would have been reason to drop the demand raised by SCN - However, the assessee has not raised this plea in appeal and therefore, same is ignored and do not take cognizance of that - Appeal filed by Revenue deserve to be dismissed : CESTAT
- Assessee's appeal allowed: DELHI CESTAT
CUSTOMS
NOTIFICATIONS
cnt25_2019 CBIC notifies new format for Shipping Bill & Bill of Exports
ctariff19_009 Amendment to Notification No.52/2003-Customs dated 31.03.2003 for extending exemption from IGST and compensation cess to EOUs on imports till 31.03.2020
ctariff19_008
Seeks to extend the exemption from Integrated Tax and Compensation Cess upto 31.03.2020 on goods imported against AA/EPCG authorizations.
ctariffadd19_014
Seeks to impose anti-dumping duty on 'Acetone', originating in or exported from European Union, Singapore, South Africa and United States of America
CASE LAWS
2019-TIOL-850-CESTAT-KOL
CC Vs Satyanarayan Impex Pvt Ltd
Cus - The respondent-assessees exported Mica products through Air Cargo Complex at Kolkata - As per the Export Tariff, cess is levied on certain items exported - For Mica products, Cess @ 3.5% is payable - Upon audit, it was noted that the assessees did not pay Cess on such export - Hence SCNs were issued, raising demand for Cess, as per provisions of Section 28(1) of the Customs Act, 1962 - It may be noted that such SCNs were issued within a period of 5 years from the date of export and it was alleged that such non-payment of cess was on account of collusion, wilful mis-statement & suppression of facts - On adjudication, the demands were confirmed - On appeal, the Commr.(A) quashed the demands raised - Hence the Revenue's appeals.
Held: The assessees exported Mica products through Air Cargo Complex - As per Second Schedule of the Export Tariffm Mica products attract 3.5% export cess - Admittedly, in the shipping bills filed by the assessees & self assessed u/s 17 of the Customs Act, such cess was not levied or paid - Perusal of the SCNs issued within five year period reveals that the only reason cited for alleging suppression & wilful mis-statement is that the exporters did not pay export cess on self-assessed shipping bills, where such cess was otherwise payable - This alone does not constitute proper justification for invoking extended limitation u/s 28 - Such view was also taken by the Commr.(A), who also relied on several precedent cases which hold that to allege suppression, something more substantial must be established, apart from mere non-payment of tax which is otherwise payable - In the present case, no such evidence is cited by the Revenue - Thus the O-i-A warrants no interference: CESTAT (Para 2,3,8,9)
- Revenue's appeals dismissed: KOLKATA CESTAT
2019-TIOL-849-CESTAT-MAD
TVS Electronics Ltd Vs CC
Cus - Assessee had filed an application for claim of refund of SAD - On perusal of documents, original authority found certain discrepancies with respect to description of goods as imported and as indicated in subsequent sale invoices - For these reasons, the amount was disallowed - The assessee had submitted various explanations and clarifications with respect to discrepancies of goods as imported in subsequent sale invoices - The contentions raised by assessee had not been clearly gone into by original authority - Even at the appellate stage, Commissioner (A) has found force in assessee's contention, however, no further verification of assessee's contention has been caused - Therefore, matter is remanded to the original authority to enable the assessee to explain the discrepancies in description of the goods imported: CESTAT
- Matter remanded: CHENNAI CESTAT |
