2019-TIOL-NEWS-086, Dated: Friday, April 12, 2019

ST - The appellant company provided Advertising Agency service during the relevant period - On Department's audit conducted at appellant's premises & upon verification of documents, it noted there to be a delay in payment of service tax, ranging from 2-48 days - The Department rejected the appellant's claim of having paid service on invoice raise basis - SCNs were issued raising duty demand for the relevant years - Such duty was paid in full - However, the interest on such duty amount was paid in part only - The appellant claimed that interest claimed for more than five years was hit by limitation - Nonetheless, demand for balance amount of interest was raised u/s 75 of the Finance Act, along with penalty u/s 76 of the Finance Act - Such differential amount of interest was paid under protest - On adjudication the proposals in the SCN were confirmed - On appeal, the Commr.(A) allowed partial relief to the appellant by setting aside the penalty imposed - Later, the Tribunal dismissed the appellant's appeal, observing that appellant admitted the duty liability and interest - Thus as the duty had not been disputed before the Tribunal, the demand for interest could not be challenged - Hence the present appeal.

Held - The appellant claimed that upto 31.03.2003, the services in question were not taxable - The Commr.(A) should have considered such submissions - Besides, the Tribunal too should have considered such submissions, considering its role as final fact-finding authority - As the service itself is found to be non-taxable, then no question arises for demanding interest - However, even if the appellant succeeds before the authorities, it cannot claim refund of duty & interest which is already paid voluntarily - Hence the appellant's contentions regarding taxability of the services, must be looked into by the Commr.(A) - If it is found that the services were not taxable during the relevant period, the appellant is entitled to partial relief in respect of the differential interest remitted under protest: HC (Para 6-10,13,16,19-21)

ST - Issue involved is whether rendering of Radio Taxi service by the appellant is supply of Tangible goods service.

Held: Issue was considered by the Tribunal in appellant's own case - 2015-TIOL-2408-CESTAT-MUM and it has been concluded that the appellant is not covered under the entry ‘Supply of Tangible goods service' - contention of the AR that purusant to introduction of the Negative list, the judgment referred is not applicable does not hold merit - furthermore, Bench has examined all the statement-on-demand notices issued from time to time to the appellant which refers to the basis on which the earlier SCNs were raised - also in the orders while confirming the demand for subsequent periods, the adjudicating authorities time and again referred and relied upon the earlier order without recording reasons different from the one recorded earlier - in these circumstances Bench finds no valid reason not to follow the judgment of the Tribunal in appellant's own case referred above - consequently, impugned orders are set aside and the appeals are allowed with consequential relief: CESTAT [para 6 to 8]

ST - It cannot be said that only because Audit Party had found some credit availed as inadmissible, suppression of fact is made out - It cannot also be established that the appellant had any malafide intention to suppress its duty liability from the department - Appeal is, therefore, allowed and the impugned order is set aside: CESTAT [para 6, 7]

CX - The assessee company manufactures insulated wares of plastic such as insulated casseroles and tiffin on job work basis for M/s Milton Plastics Ltd - The assessee receives inputs under cover of appropriate duty-paying documents from M/s Milton Plastics Ltd - Upon investigation, an SCN was issued raising duty demand u/r 57I on account of credit irregularly availed during the relevant period - It was alleged that the assessee received high quality steel as inputs & which bore more duty & that the assessee availed higher Modvat credit but only consumed some part of these inputs in manufacture - It was also alleged that the shortfall of high quality steel was substituted by use of inferior quality steel - Thus it was alleged that the assessee availed excess MODVAT credit - Penalties were also imposed on the assessee - These demands were confirmed upon adjudication - On appeal, the Tribunal gave relief to the assessee, holding that the provisions of Rule 57I were ineffective upon its omission w.e.f 01.04.2000 - Hence the SCN was held to be unsustainable on jurisdictional grounds that the O-i-O was consequently in violation of principles of natural justice - Hence the Revenue's appeal.

Held - The first issue is whether demand raised under erstwhile provisions of Rule 57(1)(ii) is valid after substitution with CENVAT Rules 2002 and if proceedings could continue u/s 38A of CEA 1944 - Section 38A of the Act inserted with retrospective effect from 1994 will make the SCN valid even post 01.04.2000 - This is in view of Section 38A(c) of the Act, which holds that any amendment, repeal, super session or rescinding shall not affect any right, privilege, obligation or liability acquired, accrued or incurred under any rule so amended, repealed, superseded or rescinded - This is further qualified by providing any that investigation, legal proceedings may be continue as if the Rule had not been amended, rescinded, repealed or superseded - Besides, this provision is an amalgamation of Sections 6 & 6A of the General Clauses Act, 1897 which applies to Acts - Section 38A is specifically in relation to Rules under the Act - Hence the Tribunal order cannot be upheld - Moreover, as right to cross examination was not granted to the assessee, there is breach of principles of natural justice - Hence the matter warrands remand back to the Adjudicating authority: HC

CX - A litigant against the State should not ever doubt that the odds are stacked against him by the ganging up of the very institutions of the State - So that there is no whisper that the entire exercise is mere lip service, the Bench directs that, in the interest of justice, the Registry place the matter before a bench not comprising either of the present Division Bench Members, severally or jointly, but before an appropriate bench, with due notice, for fresh hearing and disposal of the appeal - Application allowed: CESTAT [para 3 to 5]

2019-TIOL-1027-CESTAT-DEL

Navin Fluorine International Ltd Vs CCE & ST

CX - The assessee is an EOU and is engaged in manufacturing of various kind of chemical products under brand 'Fluro' and also availing of the facility of Cenvat Credit under CCR, 2004 - The assessee availed Cenvat credit of tax paid on inputs, capital goods and input services, received and used in manufacturing process - However, such credit availed by assessee could not be utilised and hence, the assessee applied for refund of such credit accumulated in books of accounts - They filed 8 refund claims on quarterly basis - SCNs were issued to assessee proposing there in, rejection of claim on different grounds, which were replied by assessee - Subsequently, assessee sent an intimation for withdrawal of refund claims to the department, stating therein the reasons for withdrawal of claim and requested to close the proceedings related to said claims - Vide said intimation, assessee also informed the department that they shall reinstate the Cenvat credit which was debited earlier under Rule 5 of CCR, 2004, when the refund claim was made - The adjudicating authority held that the refund claims of assessee stands withdrawn - However, he further held that the recording of credit balance in GST account, will be grossly illegal and incorrect as dispute of wrong availment of credit was initiated by the department vide other SCNs, still remains to be settled - Assessee points out that the said dispute as has been pointed out by Revenue, by SCN, has been settled finally in - 2018-TIOL-3908-CESTAT-DEL by this Tribunal, wherein it have been held in favour of assessee - Accordingly, the said observation in common O-I-O is deleted: CESTAT

- Appeals allowed : DELHI CESTAT

2019-TIOL-1026-CESTAT-MUM

Lupin Ltd Vs CCE & ST

CX - Issue whether the assessee located in Jammu & Kashmir and availing exemption notification 56/2002-CE is entitled for refund of Education Cess and High Education Cess has been settled by the apex court in the case of SRD Nutrients Pvt. Ltd. - 2017-TIOL-416-SC-CX - it is held therein that once the excise duty itself is exempted from levy the appellant is entitled to refund of education cess and higher education cess which was paid along with excise duty - appeals allowed: CESTAT [para 3]

- Appeals allowed : MUMBAI CESTAT

2019-TIOL-1025-CESTAT-MUM

CCE Vs New Kamath Tobacco Co Pvt Ltd

CX - Assessment of duty on 'Unmanufactured tobacco' - Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of duty) Rules, 2010 - According to CE authorities, the existing machines had been replaced with new machines having capacity nine lines each in May 2010 and expanded in August 2012 to fifteen lines each; that each filling station is to be considered a separate line and demand for differential duty was sought to be recovered for these periods - both lower authorities did not agree with the proposal and based on the opinion furnished by the IIT, Mumbai and IIT, Roorkee, Chartered Engineer Certificate as well as physical verification report of a committee of departmental officers dropped the proceedings - Revenue in appeal before CESTAT.

Held: SCN alleges that the assessee had replaced the existing machines with new sophisticated machines, however, evidence of the procurement of the new machines is not available on record - It is also clear from the statements cited in the SCN that this aspect has not been subjected to any investigation or corroboration - though the number of pouches produced from the machine did increase substantially, the circumstances specified in rule 6(1) for determination does not appear to apply - It is also noteworthy that the said Rules do not throw light on the intent in distinguishing 'single track/single line' and 'multiple track/multiple line' packing machines, therefore, the Bench as well as the central excise authorities and the assessee are bereft of any means of interpreting the qualifying expression 'multiple' - despite the elimination of lead time in collecting the 'unmanufactured tobacco' for each pouch, it is yet only one pouch that can be filled at any single point in time - lure of revenue maximization that may have motivated the initiation of proceedings cannot support the stated intent - in absence of any evidence that the higher capacity was not merely a consequence of enhancing efficiency of existing machines, the grounds of appeal cannot sustain - Revenue appeals dismissed: CESTAT [para 9 to 13]

- Appeals dismissed : MUMBAI CESTAT

Imports of machinery, equipment etc. for Light Combat Aircraft (LCA) Programme of Ministry of Defence - Duty Exemption granted till 30.06.2019

Cus - Section 149 of the Customs Act, 1962 - Denial of request for conversion of shipping bills filed under the Duty Exemption Entitlement Certificate (DEEC) to shipping bills entitled to claim for drawback - appeal before CESTAT.

Held: General principle underlying all the decisions viz . Suzlon Energy - 2013-TIOL-1195-HC-MAD-CUS etc. as well as the Board Circulars is that the authority concerned must be satisifed that the conditions contingent upon which the privilege is claimable at the time of export should have been fulfilled in entirety at the time of export and this is to be evidenced by the record of examination of the shipping bills - as the appellant, in this case, has been unable to do so, as clearly noted by the competent authority, no reason to interfere with the denial of conversion ordered by the adjudicating authority - appeal dismissed: CESTAT [para 5, 6]

Cus - Refund claimed on the ground that goods have been imported for their unit in a SEZ - refund was denied on the ground that privilege of exemption under another law which should have been claimed before goods were cleared could not be extended in the absence of specific provision retrospectively - appeal to CESTAT.

Held: Imports were effected after 10 th February 2006 when the Special Economic Zones Act, 2005 was brought into force to govern all imports, domestic procurements and export of goods insofar as 'units' in a 'special economic zone' are concernced - Thenceforth, the 'zero rating' of duties on goods procured by 'units' in a SEZ ceased to be authorised by Chapter XA of the Customs Act, 1962 and such entitlement was attributed solely to section 26 of the SEZ Act, 2005 - Duties of customs paid on assessment under the Customs Act, 1962 had nothing to do with procurement under the SEZ Act, 2005 which is based on the principle of exclusion from duty liability attached to being 'outside customs territory' - therefore, the mutually exclusive statutory provision for exemption under the specific, exclusive and comprehensive scheme of the statute governing supplies to SEZ and clearance for home consumption under the Customs Act, 1962, though ultimately utilised in a SEZ does not entitle the appellant for recourse to section 27 of the Customs Act, 1962 - A separate system of tax neutralisation is available for such contingencies under the statute covering such zones - appeal is, therefore, dismissed: CESTAT [para 3, 4]