I-T - Transfer of going concern would not amount to 'reconstruction' of business and hence, would not affect continued benefit availed by concern u/s 10A: HC

2019-TIOL-1136-CESTAT-DEL

Skylark Hi Tech Solutions Pvt Ltd Vs CCE

ST - The assessee is engaged in providing security agency service, manpower supply service and management - They have got themselves registered with Service Tax department - During investigation, it has transpired that since 2009- 10 to 2011-12, the value of taxable service declared by assessee under ST 3 returns was much less than what was declared in balance sheet and books of accounts of firm for various financial years - A SCN was issued to assessee which was adjudicated wherein the Service Tax amount was confirmed under section 73(1) of FA, 1994 - An equal amount of penalty has also been imposed under section 78 of Finance Act - The assessee have not contested that figures given in balance sheet which they have submitted before investigating agency are not factually correct - Rather, it has been confessed by CMD and other officials of assessee that the figures given in ST 3 returns are manipulated and does not reflect the correct value of services provided by them - The assessee has mainly contested that their liability is to be determined on receipt basis and not on the basis of gross figures reflected in balance sheet - On the question whether the service tax is correctly been calculated on receipt basis before 30.06.2011, Tribunal agrees with the arguments advanced by assessee - However, this fact can only be checked at the level of original adjudicating authority and therefore, for the purpose of determining financial year wise receipt of Service tax value prior to 1.7.2011 and even upto 30.06.2011, the adjudicating authority need to examine the balance sheet and other statement of accounts to re-determine the financial year wise receipts as claimed by assessee and to re-determine, the demand of service tax for particular financial year - With regard to claim of assessee that cum-duty-benefit should have been provided to them, assessee have been collecting service tax on the value which is given by them on the invoices and which have been taken in balance sheet - However, since all the details are not available, adjudicating authority is directed to examine the assessee's claim in this regard - As regards, the assessee's claim that they have paid an excess service tax in ST-3 return for 2009-10, no reason found why the same should not be adjusted against their demand for the years 2009-10 to 2011-12, if the same is correct - This is clear cut case of intentional evasion of service tax by manipulating and forging the figures of taxable value for levy of service tax by assessee and therefore, the demand for extended time period is rightly invoked: CESTAT

- Appeal partly allowed : DELHI CESTAT

2019-TIOL-1135-CESTAT-AHM

Modern Business Solutions Vs CST

ST - The assessee is providing services to ICICI Bank and had entered into an agreement in year 2004 - Revenue sought to tax the services provided by assessee to ICICI Bank under the head of BAS relying on the agreement for year 2009 - There are two agreements on record one of which is in year 2004 and the other is in the year 2009 - It is apparent that the contract does not specify the nature of services provided by assessee - The contract entered with assessee by ICICI Bank was for identifying eligible consumers for retail products of ICICI including credit gross commercial/ product gross/ emergence and other retail finance products - The assessee was also required to provide certain services related to issuance of credit across as described in said contract - It is apparent that the contract entered into by assessee in year 2009 was not a contract for supplying the manpower services but was a contract for promotion of services provided to the service recipient - Para 4 of the agreement of the year 2004 clearly specifies that the service provider will be paid charges by ICICI for the services rendered on terms as shall be specified to the service provider in writing by ICICI bank from time to time - It is apparent that the assessee was engaged in providing BAS where the remuneration was based on actual expenses by adding a percentage of margin over certain expenses - That does not convert the expenses into reimbursement - In terms of the decision of Apex Court in Intercontinental Consultant and Technocrats Pvt. Ltd. 2018-TIOL-76-SC-ST reimbursements cannot be included in assessable value, however, what constitutes reimbursement has to be determined in light of decision of larger bench in case of Bhagawathy Traders 2011-TIOL-1155-CESTAT-BANG-LB - In the context of BAS, the rent and cost of manpower is not a reimbursable expense but a cost of service - Just by terms of contract, an assessee cannot convert a cost into a reimbursable expense - All the costs have an associated expense not need to be factored in - Now the question arises if all the expenses can be converted into reimbursable expense by way of a contract, or are there expenses which are so integral to the activities of the service provider that they cannot perform without incurring those expenses - Here the distinction between the so called ‘reimbursable expenses' and ‘free supplies' become relevant - A free supply changes the nature of contract - For example a contract for ‘painting of building' would became ‘a labour contract' if paint and painting equipment is supplied free - However, a painting contract will remain a painting contract even if the agreement has clause where actual cost of paint and equipment is reimbursed - All expenses incurred by a service provider cannot be called reimbursable expenses, only the expenses that qualify the test laid down in the decision of Bhagawathy traders can be called reimbursable expenses - In this backdrop, assessee is not entitled to exclude the rent and salaries from assessable value - The demand on this count in respect of services provided to ICICI is upheld on merit - As regards to issue of limitations, assessee had not declared the gross amount received in the returns filed by them - Simultaneous penalty under section 76 & 78 cannot be imposed in view of decision of HC of Gujarat in case of M/s. Raval Trading Company 2016-TIOL-112-HC-AHM-ST - The penalty under section 76 is set aside and under section 78 is revised to the amount of revised demand of duty: CESTAT

- Appeal partly allowed : AHMEDABAD CESTAT

 

Indroyal Furniture Company Pvt Ltd Vs CGST & CE

CX - The assessee is manufacturer of furniture - Upon gathering specific intelligence that assessee was indulging in suppression of production and clandestine removal of excise goods simultaneous search operations were conducted - As a result of search operations, incriminating documents and computers (hard disks) maintained at the factory and their head office evidencing clearance and sale of furniture without issuing invoice and without payment of central excise duty along with receipts of cash for such sales were recovered under mahazar - Basing on such evidence gathered, SCN was issued to assessee - The main evidence relied by department is the data / computer print outs retrieved from the computers which was used in head office / factory - These computers itself were seized by the department under mahazar - They were later opened at the office of DGCEI at Coimbatore - The officers then browsed through the contents and took few print outs of certain ledger folios as detailed in Annexure to the mahazar - The two hard disks contained in the computers were removed thereafter from the computers and seized under mahazar - The mahazars prepared at the assessee's premises and office of DGCEI respectively would show that employees of assessee viz. Ashok Kumar, Anil Kumar, Selvaraj were present - They have endorsed signature in the mahazar - The question is whether such endorsement of signature would fulfill the condition required in sub-section (4) of Section 36B - Any statement / print out taken out of the computer would be admissible in evidence only if it is supported by a certificate as required under sub-section (4) of Section 36B - There is no such certificate stating that it is prepared as per the requirement of Section 36B - Further, though all the persons who have endorsed signature in the mahazar at the office of DGCEI were present at the assessee's premises on 11.9.2007 at the time of search, instead of retrieving the data from the assessee's premises itself, the computers as a whole have been seized and taken to the office of DGCEI - It becomes highly necessary on the part of department to establish that the provisions of Section 36B has been complied - Thus, evidently, the Commissioner admits that the condition in Section 36B have not been complied with respect to the data retrieved from the computer - On such score, the evidence said to be retrieved from the computer cannot be relied upon at all - The statements cannot be considered as standalone documents to prove the allegations in SCN - The evidence put forth is too flimsy to establish a serious charge of clandestine manufacture and clandestine clearance of goods - Though the department need not establish clandestine clearance with mathematical precision, the evidence should establish a probability of such clandestine clearance - The Commissioner himself having found that the main evidence relied for quantification of duty i.e. computer print outs being not admissible in evidence, the demand could not have been confirmed - The department has miserably failed to establish the allegations raised in SCN - The impugned order is therefore set aside: CESTAT

- Appeals allowed : CHENNAI CESTAT

2019-TIOL-1133-CESTAT-AHM

Shree Extrusion Ltd Vs CCE & ST

CX - Assessee is engaged in manufacture of different excisable goods - On the goods they are manufacturing at their own, they are paying excise duty on its removal - Simultaneously, they are also carrying out job work for principal on which they are availing SSI exemption Notfn 83/94-CE - During course of job work, intermediate goods i.e. brass billets/rods weighing more than 5 kgs. have emerged - The case of department is that such brass billets or rods weighing more than 5 kgs. is not covered under exemption Notfn 8/2003-CE and the goods cleared under Notfn 83/1994-CE without payment of duty and therefore, the intermediate goods i.e. brass billets and rods is liable for excise duty - Admittedly, exemption Notfn 83/94-CE was extended to said final product by department itself, the duty was demanded on the extruded brass rods - As per process, the hot molten billet is extruded in form of straight hot molten rod and in a continue process the same is wound in coil form - After extrusion, the product gets converted into coil form - Hence, the product which emerged after extrusion process is wire in coil form and no any other intermediate product emerged in the course of manufacture of wire - Even if it is considered that before coiling the product is rod, since the same is in hot molten stage, it is not marketable and cannot be bought and sold in the market - The product on which lower authorities have demanded duty does not emerge as an intermediate product during course of manufacture of brass wire - Therefore, there is no question of demanding duty - The assessee have claimed exemption Notfn 67/95-CE in respect of intermediate goods brass billets/rods on which demand has been confirmed - The goods manufactured by assessee are cleared under exemption and no Cenvat credit on the inputs used in said manufactured goods was availed, the obligation as per Rule 6(1) has been discharged by assessee - Therefore, on the intermediate product i.e. brass billets/ rods, the Notfn 67/95-CE in assessee's case is clearly available to them - This issue has been time and again examined by various benches of Tribunal - The assessee has also raised the issue of time-bar - The emergence of intermediate product, if any, was in view of department and was not suppressed by assessee - The assessee having filed the classification list and declaration wherein they have claimed the exemption and from the declaration, it can be easily found out that what is the goods manufactured and therefore, if any intermediate product emerged, can be known by departmental officers - Accordingly, there is no reason to allege suppression of facts on the part of assessee - Therefore, the demand is also hit by limitation for extended period - Penalties being consequent to confirmation of demand also do not survive - Accordingly, impugned order is set-aside: CESTAT

- Appeal allowed : AHMEDABAD CESTAT

2019-TIOL-1132-CESTAT-MUM

Jitendra Chimanlal Thakkar Vs CC

Cus - Apart from making an attempt to show that he was not carrying Indian/foreign currency recovered and seized from him contrary to the evidences and records available, the appellant has not stated anything except accusing the authorities including Metropolitan Magistrate for framing and falsely implicating him in the case of smuggling of currency - since all the evidences are contrary to the submissions and rhetoric of the appellant, Bench is not in agreement with any of the submissions made - Appellant is a habitual offender and, therefore, Bench has no hesitation in upholding the penalties imposed u/s 114(i) of the Customs Act, 1962 - Appellant also cannot plead violation of principles of natural justice as although he had been offered the opportunity of personal hearing and cross examination of panchas, he deliberately refused and sought order on merits - no merit in the appeal, hence dismissed: CESTAT [para5.15, 5.16, 5.17, 6.1]

- Appeal dismissed : MUMBAI CESTAT

2019-TIOL-1131-CESTAT-MUM

Schlumberger Asia Services Ltd Vs CC

Cus - Section 74 of the Customs Act, 1962 - Appellant had filed shipping bills for re-export of duty paid imported goods under claim of rebate - on examination, the goods were found to be different than that imported, therefore, investigation was conducted and which revealed that items which were presented for export could not be tallied with the items imported under the said Bill of Entries - statements were recorded and valuation of the goods was got done by Chartered Engineers M/s Bureau Veritas - alleging that the appellants had attempted to claim ineligible drawback to the tune of Rs.49,25,642/-, goods were seized and SCN came to be issued proposing confiscation of the goods and denial of the rebate claimed; imposition of penalty etc. - against order of Commissioner of Customs (Exports), appeal filed before CESTAT.

Held: On examination, it is noticed that the goods were not found to be tallying with the goods imported; that serial number mentioned on the items was changed and fresh serial number was chiseled on the said goods - prima facie , appellants have tried to manipulate the goods so as to tally them with the goods imported - reading of rule 4 of the Re-Export of Imported goods (Drawback of Customs duties) Rules, 1995 makes it evident that if there is any difficulty in establishing the identity, then the appellants should have approached the Commissioner and sought his intervention - having not done so, appellant has manipulated the marking and numbers on the goods - such approach is nothing but an act of mis-declaration which renders the goods liable for confiscation - since goods have been rendered liable for confiscation u/s 113(i), penalty follows u/s 114 of the Customs Act, 1962 - however, considering the circumstances of the case, the redemption fine and penalty are reduced to Rs.7,50,000/- each - appeal is partly allowed: CESTAT [para 5.3, 5.6, 5.7, 5.8, 5.9, 6.1]

- Appeal partly allowed : MUMBAI CESTAT

2019-TIOL-1130-CESTAT-MUM

CC Vs Viraj Impex Pvt Ltd

Cus - Adjudicating authority relied upon the value of imported HR Steel Plates but since HR Coils and HR Steel Plates are not similar, therefore, there was no reason to doubt the truth or accuracy of the value declared by respondent - in the present case, no valid reasons have been recorded by the adjudicating authority for rejecting the declared price/transaction value of HR Coils except the contemporaneous import price of HR Steel Plates, which is not valid - no fault in the impugned order, therefore, Revenue appeal is dismissed: CESTAT [para 11]

- Appeal dismissed : MUMBAI CESTAT