GST - Relief to petitioners against arrest is not granted despite finding that writ petitions are maintainable, protection under Sections 41 and 41-A of Cr.P.C., may be available and there are incongruities within Section 69 and between Sections 69 and 132 of CGST Act, 2017: HC

I-T - Benefit of Section 35(1)(ii) is not limited to Universities formed with objective of carrying out scientific research activity only: HC

ST - Outsourcing some activities does not extinguish tax liability on them; holding any such view would nullify Service Tax provisions: CESTAT

2019-TIOL-1121-CESTAT-HYD + Case Story

Cairn Energy India Pvt Ltd Vs CCE & C

ST - A joint venture, Ravva Oil and Gas filed had been set up under a production-sharing contract between the Govt of India, the ONGC, Videocon Petroleum Ltd, Cairn Energy India Pvt Ltd and Ravva Oil (Singapore) Pvt Ltd, for prospecting, exploring, developing & producing petroleum from the Ravva Oil & Gas Field area - The appellant herein conducted joint operations, as part of the agreement - During the relevant period, an SCN was issued raising duty demand with interest u/s 75 of FA 1994 & EC, under Port Services - Extended limitation had been invoked to impose penalties u/s 76, 77 & 78 of the Finance Act 1994 - The Revenue claimed that the appellant had rendered such service for which it had received consideration in the form of pilotage charges - On adjudication, the demands were confirmed with interest & penalty u/s 78 of the Act - Further penalty of Rs 100/- per day was imposed till payment of the duty demanded - Penalty u/s 77 was also imposed for failing to register under Port service - Hence the present appeal by the appellant contesting the demands as well as the cross appeal by the Revenue contesting that the penalty imposed u/s 78 was far too low and that the Commissioner could not have reduced its quantum.

Held: Upto 22.06.2010, Port Services u/s 65(105)(zzl) were services provided to any person by other port or any port authorized by that port in relation to port services, in any manner - Port services were defined u/s 65(82) as any service rendered by a port to other port or any person authorized by such port of other port in any manner in relation to a vessel or goods - The settled legal position till date is that legal provisions of other Acts do not determine the taxability of port services - Hence, it must be seen whether or not the port in question is a major port or other port - Ravva Port is not a major port but is a minor one operated by the Govt of Andhra Pradesh - Hence as it classifies as 'other port' under the Finance Act, the question of authorization under the Major Ports Act does not apply - Next, it must be ascertained as to whether or not the appellant received any authorization from the Port authorities & if so, whether the same is valid authorization - In many cases, wherever the services were rendered in Major Ports, the term 'authorization' has specific meaning under the Major Ports Act & if it is not fulfilled even if the assessee was permitted to do some activities, the same was not held to be an authorization - This Act does not apply in the present case - There is nothing to show that a corresponding law in Andhra Pradesh also applies to this port - Therefore the term 'authorization' must be read in its common sense, which is permitting somebody to do some activity - The letter issued by the Port Officer at Kakinada Port is clearly an authorization - Perusal of such letter shows that the appellant was authorized to undertake pilotage activities - This satisfies the requirement of Section 65(105)(zzl) that the services must have been rendered at Port or by a person authorised by the Port - The appellant's records show that the it engaged in pilotage activities and that the consideration received were charges for the same - Merely because the appellant outsourced some of its activities does not extinguish the duty liability - Holding such a view would nullify the entire service tax provisions and anyone can escape tax net by simply outsourcing some of his work - Hence the appellant is liable to pay tax on the pilotage charges received from customers, under heading of Port Services - The duty demanded be recalculated to account for duty already paid - Interest is also payable u/s 75 of the Finance Act - The penalties also merit being re-calculated: CESTAT (Para 2,8,10-13)

- Assessee's appeal disposed of: HYDERABAD CESTAT

2019-TIOL-1120-CESTAT-CHD

Mayansh Resources Vs CST

ST - The assessee is a service provider to E.I. Dupont India Pvt. Ltd under an agreement - It was observed by audit team that the assessee was working as super distributor for one major pesticides/insecticides manufacturer and were engaged in marketing and promotion of pesticides/insecticide manufactured by their principal - The services undertaken by assessee are relating to marketing and promotion of pesticides/insecticide which are taxable service under BAS - The identical issue came up before Tribunal in case of M/s Frontier Agrotech Pvt Limited wherein it has been held that the services rendered by assessee are "Agricultural Extension Services" and are covered under negative list as per Section 66D of FA, 1944 - By following the same, it is held that assessee is not liable to pay service tax: CESTAT

- Appeal allowed: CHANDIGARH CESTAT

2019-TIOL-1119-CESTAT-DEL

RK Gupta Vs CCE

ST - The assessee is engaged in providing various services - During audit, assessee was observed to have not paid/short paid Service Tax on different services - As regards to GTA service, irrespective freight is shown separately in the invoice, the same cannot be considered as equivalent to consignment note, which is the mandatory requirement of Section 65 (50b) - Applying the ratio of case Nandganj Sihori Sugar Co. Ltd. , it is held that assessee was not rendering GTA Services and the impugned demand qua GTA services is dropped - As regards to Cleaning Service, the authorities below have already reduced the demand for cleaning - At this stage, the demand is only confined to cleaning of SELO MCL i.e cleaning of loose cement either through air slide or by transportation by means to gentry and lump - The same is very much included in definition of cleaning activity under Section 65 (24b) - Hence, the confirmation of demand under this head to that effect is accordingly, upheld - With regard to Supply of Manpower Service, no doubt the earlier word of "commercial concern" is substituted by word "person" vide an amendment dated 18th April, 2006, but still it does not extend to an individual person discharging any other service for which he need the manpower, because the word agency still continues in definition and for the explanation as above under GTA service, the Services provided by assessee cannot be categorized as supply of manpower by a manpower supply agency - Also there is no evidence that the consideration was paid separately for manpower but it is apparent that it was required for the job as was agreed to be rendered by assessee - The demand on this ground cannot be confirmed - As regards to Cargo Handling Service, for any service to be called as cargo handling service the loading, unloading, packing or unpacking should be meant only and only for transport, as it is very much evident from the definition under Section 65 (23) of the Act - Not only this, such services should be provided for freight - The definitions specifically mention that mere transportation of goods will not be cargo handling - Thus, Adjudicating Authority has rightly dropped the demand - A regards to Packaging Service, assessee was imprinting the HDPE bags, the same is sufficient to categorize the activity as packaging activity - Since the loose cement is not a marketable commodity unless and until it is packed in a bag, the activity of assessee was incidental to manufacture and as such was not a packaging service - The Department has raised a wrong levy upon the assessee - Said levy is dropped - Assessee had not declared the receipt of amount claimed to Department in their periodical ST 3 returns, the depositing was made only after the same was detected by audit party - Hence, the benefit of making payment before SCN has rightly been declined to assessee - The findings as far as imposition of interest and penalty are therefore, held to have no infirmity and thus are accordingly upheld: CESTAT

- Appeal partly allowed: DELHI CESTAT

2019-TIOL-1118-CESTAT-DEL

GP Global Industries Pvt Ltd Vs CCE & ST

CX - The revenue had information that one Shri Ambika Ispat, a manufacturer of Sponge Iron was doing large scale evasion of Central Excise duty, by clandestine removal of its finished goods, namely Sponge Iron - Further, enquiry at recipient's end of the sponge iron was made namely assessee and others - The concerned persons (s) of recipient units were summoned for enquiry and interrogated - After showing the documents recovered from Shri Ambika Ispat and the statements of various persons, including the Directors of Shri Ambika Ispat, the recipients have denied the receipt of alleged clandestine removal goods from Shri Ambika Ispat - The demand is wholly presumptive based on suspicions and/or investigation conducted at the end of so-called supplier Shri Ambika Ispat - The revenue have not found any irregularity in the affairs of these assessees, who are all registered manufacturers with the Department and have maintained regular books of accounts and filed regular returns which have been duly accepted by the Department - Further, suspicion howsoever strong cannot take the place of evidence for visiting the assessee with duty liability for alleged clandestine removal - Accordingly, the demands are presumptive and not sustainable - Accordingly, the impugned orders are set aside: CESTAT

- Appeals allowed: DELHI CESTAT

2019-TIOL-1117-CESTAT-MUM

Eurotex Industries And Exports Ltd Vs CCE

CX - Revenue has sought to demand duty on the ground that the DTA clearances of the appellant exceeded the 50% FOB value of exported goods of the Financial Year of such clearances.

Held: Notification 23/2003-CE prescribes concessional rate of duty of 50% of the duty of excise payable under section 3 subject to fulfillment of conditions as mentioned in Annexure - such conditions are necessarily required to be interpreted in the light of paragraph 6.8 of the Foreign Trade Policy - guidelines for sale of goods in DTA by EOU as mentioned in Appendix 14-I-H have also to be taken into account - EOU is entitled for DTA sales on the basis of permission granted by the Development Commissioner and which is valid for three years from the date of grant of permission - Thus there is no co-relation between the DTA sales permissions granted from time to time and actual DTA sales since it is not mandated in FTP - Once the benefit of DTA sale has been extended by the competent authority i.e. Development Commissioner, then the said benefit cannot be withdrawn - Notification 23/2003-CE has been structured so as to ensure implementation of FTP Policy in its correct perspective and the same cannot be read so as to make it contrary to the provisions of the FTP - permission of DTA sale has accrued to the appellant based upon its past export performance - if the export of the subsequent year after allowing such DTA sale is applied in order to restrict this benefit, then this would lead to a situation that the permission for DTA sale by the Development Commissioner would become redundant - in case where the EOU unit has become entitled for DTA sale in next year and in the said next year it does not export its goods, the DTA sale allowed to him cannot be refused or withdrawn - Export Promotion Council has also clarified that the DTA sale permission granted by the Development Commissioner in any financial year has got no nexus to the FOB value of export of that particular year in which DTA clearances were made - CBEC has also issued similar clarification by Circular 30/99 and 93/2000 - the term ‘during the year' is merely to determine the quantum of exports undertaken in the qualifying period and not to restrict the benefit of concession to a particular year - adjudicating authority has also rejected the alternate submission for grant of benefit under serial no. 3 of the notification on the ground that the said condition is applicable only to the unit producing goods from indigenous raw materials and not to those units producing goods from both sources viz. indigenous and imported - such ground is untenable as serial no. 3 nowhere lays down such debarring condition - it is only to be ensured that the goods cleared to DTA are made up of indigenous raw material only - Therefore, held that goods manufactured by appellant from indigenous raw materials are eligible for exemption in terms of sr. no. 3 and excess demand is not sustainable - appeal allowed: CESTAT [para4 to 14]

Limitation - Eligibility of the appellant's entitlement towards the concessional clearances has to be verified when the goods are being cleared into DTA - fact remains that the clearances were made under invoice which were countersigned by the officers and the figures of FOB value of exports as well as DTA sales were appearing in the ER-2 return and, therefore, it cannot be said that the appellant had any intention of suppressing the clearance figures - demand raised by invoking the extended period is not sustainable - impugned order is set aside and appeal allowed with consequential reliefs: CESTAT [para 15, 16]

- Appeal allowed: MUMBAI CESTAT

2019-TIOL-1116-CESTAT-MUM

S Narendra Kumar And Company Vs CCE

CX - Classification of Henna Powder cleared in unit packs of sizes 25/50/100 grams - dispute needs to be examined in terms of Section/Chapter Note, HSN Explanatory Notes and the terms of heading - From the facts as indicated on the packing of the product, it is quite evident that the same is not used for the purpose of dyeing or tanning, hence classification of the same under CETH 1404 is ruled out - it is evident that the product is a beauty or make up preparation for application on hand - in terms of section note 4 to Section VI, such beauty or make up preparations are to be classified only under the heading 3304 of the Tariff and not anywhere else in the Schedule - further, in terms of chapter note 3 to chapter 33, goods have to be classified as per the use as indicated on the packing material - It is a fact that although Henna powder in unit container could be used for colouring hair, but the packing describes the use of the product being cleared as beauty or makeup preparation for decoration of the hand - therefore, classification under heading 3305 cannot be accepted -In the case of Henna Export Corporation, Henna Powder was described to be used for the purpose of colouring hair and hence classified under heading 3305 but in the present case when the same is used as beauty or make up preparation, the same gets classified under heading 3304 - CBEC Circular 256/90/96-CX dated 30.10.1996 also supports the classification under Chapter 33 only - therefore, goods in the form and manner in which it is cleared is classifiable under heading 3304 9190 as held by Revenue - since the product gets classified under chapter 33, in terms of chapter note 5, conversion of powder into tablets, labeling or relabeling, repacking from bulk packs to retail packs etc. shall be construed as 'manufacture' - processes undertaken by appellant also amounts to manufacture - therefore, demand of duty is upheld along with interest u/s 11AB - demand is made within the normal period of limitation - there is not even a whisper or iota or mention of ingredients required for invoking the extended period of limitation, therefore, penalty imposed u/r 25 of CER r/w s.11AC is set aside - Appeal partly allowed: CESTAT [para 4.6 to 4.9, 5.2, 5.3, 6.1]

- Appeal partly allowed: MUMBAI CESTAT

2019-TIOL-1115-CESTAT-MUM

Imtiyaz Eqbal Pothiawala Vs CC

Cus -Applicant seeks specific direction to respondent Commissioner of Customs, Mumbai to comply with and give effect to Order dated 03.06.2005 passed by the Tribunal and to secure the ends of justice.

Held: It cannot be said that the Tribunal has no power to pass any order under rule 41 of the CESTAT (Procedure) Rule, 1982 for implementation of its own order -Principle of judicial discipline requires that the order of the higher appellate authority should be followed unreservedly by the subordinate authority -Board has issued clarification that if the department is unable to obtain stay against Tribunal order, refund should be granted after three months of the order - Apex Court in Ratan Melting & Wire Industries - 2008-TIOL-194-SC-CX-CB has held that Board Circulars are binding on the field formations - since in the present case, Revenue could not obtain any stay from the operation of the Tribunal order, there is no option left with them except implementation of the same - Revenue has no authority to withhold the implementation of the Tribunal order dated 03.06.2005 for last 13 years - so as also to safeguard Revenue, respondent Commissioner of Customs is directed to implement Tribunal order within fifteen days on execution of bond for seized value of the goods: CESTAT [para 5, 6]

- Application disposed of: MUMBAI CESTAT

2019-TIOL-1114-CESTAT-MUM

Prabhat Steel Traders Pvt Ltd Vs CC

Cus - Appellants imported ‘Trapezoidal roof profiles' claiming classification as ‘parts of structures' under heading 7308 9090 of CTA - Revenue held that the goods are appropriately classifiable under heading 7210 4100 of CTA, 1975 and apart from demanding differential duty also held that the goods attract anti-dumping duty imposed by notification 02/2017-Cus(ADD); valuation also disputed - demand confirmed, therefore, appeal before CESTAT.

Held:

Valuation - Section 14 of the Customs Act, 1962 - Enhancement of value to ‘minimum import price', the provenance of which is not cited, whether deliberately or by oversight, for determination of differential duty in the impugned order appears to be an opportunistic recourse without respect for law conferring the authority to assess duties of customs - Notification 38/2015-20 dated 05.02.2016 issued u/s 3 of the FTDR Act, 1992 r/w the FTP 2015-2020 by the DGFT prescribes the ‘minimum import price' but the same is intended to ensure that only goods conforming to acceptable threshold of quality is brought into the county - by no stretch can such threshold prescription be presumed to be the ‘tariff value' in section 14(2) of the Customs Act, 1962 nor can it don the mantle of ‘best judgment' mentioned in the Customs Valuation Rules, 2007 - governing Rules make no reference to empowerment of any authority outside those in the Customs Act, 1962 for its implementation - Bench, therefore, has no hesitation in holding that the recourse to ‘Minimum Import price' as the substitute for transaction value is patently bereft of legality and propriety: CESTAT [para 5, 6]

Classification - Of the two headings proposed in the SCN and the corrigendum, adjudicating authority has found heading 7210to be of better appeal - appellant had also offered an alternative heading 7216 9100 i.e. ‘angles, shapes and sections cold-formed or cold-finished from flat rolled products' -headings are structured in such a way that these are parallel descriptions of the two modes of ‘rolling' with physical properties alone varying - Bench concludes that the impugned order has not classified the impugned goods under the most appropriate heading and is not any more valid than that claimed in the bills of entry by the appellants - There is no evidence to support the claim that the goods are utilized exclusively in erection of structures but absence of material to conclude so mandates the ascertainment of fitment within the alternative classification that is sought - non-applicability of classification as claimed in the bills of entry cannot be held to be deliberate and, therefore, there is insufficient justification for confiscation and the imposition of penalties proposed in the SCN - demands set aside along with order for confiscation and penalties - classification confirmed under heading 7216 9100: CESTAT [7, 12, 13, 14, 15]

- Appeals allowed: MUMBAI CESTAT