2019-TIOL-NEWS-096, Dated: Wednesday, April 24, 2019

ST - The Service provider was providing service of construction of residential complex - The Departmental Officers visited office premises of service provider and conducted scrutiny of records and also further carried out investigations and recorded statements - On basis of investigation, it came to knowledge of revenue that service provider had constructed three residential complexes, one was Sai Sharnam Project at Sirdi in the state of Maharashtra, the second was Laboni Project in Gazhiabad and the third was Technocity Project at Noida - On the basis of said investigation, a SCN was issued - In respect of Sai Sharnam Project, the original authority has refused to accept date of completion as 31.03.2010 in the absence of mention of name of said project in certificate issued by architect - However, during proceedings it was not establish through positive evidences by revenue that any activity of construction in respect of Sai Sharnam Project was continued after 01.07.2010 - The levy of service tax introduced w.e.f. 01.07.2010 is not applicable to Sai Sharnam Project - In respect of Laboni Project, CBEC through Circular dated 01.07.2010 had clarified that certificate issued by architect serves the purpose to establish that the project is complete - Laboni Project was also completed before 01.07.2010 - Therefore, service tax was not liable to be paid in respect of Laboni Project - Tribunal do not interfere in confirmation of demand in respect of Technocity Project and imposition of penalty under Section 70 of FA, 1994 for late filing of ST-3 returns - The Original Authority has recorded that assessee had filed ST-3 returns for period from 01.04.2010 to 31.03.2014 - Original Authority has held that assessee had paid Rs.4,17,72,535/- before issuance of SCN towards service tax and Rs.62,57,935/- towards interest - In partial modification of impugned order, demand of service tax of Rs.1,68,37,388/-, appropriation of interest of Rs.62,57,935/- and the penalty of Rs.1,39,200/- are confirmed under Section 70 of Finance Act, 1994 and the remaining part of the impugned order is set aside - Original Authority had allowed refund of amount excess paid by assessee - The said refund now needs to be worked out taken into consideration the service tax of around Rs.4.17 crores paid and Rs.1.68 crores service tax confirmed and Rs.1.39 lakhs penalty imposed: CESTAT

ST - The assessee is rendering services of Mandap Keeper, Dry Cleaning service and health club and fitness centre w.e.f 13.sep. 2002, 13.09.2002 and 22.08.1997 - The demand was raised vide SCN - As regards to taxability of incentive received from M/s. LKP Financial Services under BAS, it is observed that the facility of conversation of foreign currency notes, coins or travelers' cheques into Indian Rupees is a service provided by LKP Financial Services to the guests of the Taj hotel, who, otherwise would have to get the foreign currency converted from any other outside Money Changers - Thus this is an in-house service facility availed by assessee for their customers - It is also an admitted fact that earlier the assessee themselves were authorized by RBI to provide this service to guests - The demand on account of foreign exchange of incentives from M/s. LKP Financial Services is set aside irrespective the commission received by assessee from M/s LKP for providing premises to render banking & financial services is taxable provided it had been so demanded - With respect to the Mandap keeper services and non-payment of service tax on the invoices where the tea/ snacks/ breakfast was served, the assessee being registered as the Mandap keeper is providing the catering service - The invoices so raised by him show that the same were inclusive of charges of catering services -It is clear from the language of the notification that the nature of menu is not the criteria for availing the exemption but the menu served has to be substantial and satisfying - Following the decision of Tribunal in Welcome Hotel - 2009-TIOL-35-CESTAT-AHM , the demand under this head is not sustainable - Accordingly, the demand has rightly been dropped - As regards to taxability about convention services, while holding senior management meet, dealer meet, customer meet, medical conference, assessee is providing the services and that of convention services and not the Mandap keeper services - The fact that those meetings continued till late hours and liquor in addition was served there does not alter the fact that these still were the meetings for the specific group of people for the professional/ official objective and were not open to general public - The impugned services are that of convention service - However, since the liability while treating them as Mandap keeper service had admittedly been already, discharged, the differential, if any, shall only be payable under this head order accordingly is set aside to this extent - With regard to taxability of 10% services charge/tips in the bills, the said amount is very much the part of the gross value charged from service recipient - In addition it has specifically been charged in lieu of service charges - For such services all such charges as are related to the use of a Mandap by a Mandap keeper are to be included towards gross amount and are chargeable to service tax as per the above said provisions - The assessee is admittedly providing the Mandap keeper services - Since 10 % of the service charge/ tip is also one of the charges of services included essentially towards providing the Mandap Keeper Service the same has to be included in the gross amount - The order to that extent is here by upheld - As regards to taxability of services received from outside India, liability of service tax on services provide from outside India was made taxable only w.e.f. 18.04.2006 after insertion of Section 66A in the Statue book, as was held by Bombay High Court in case of Indian National Shipowners Association - 2008-TIOL-633-HC-MUM-ST , which has been upheld by Supreme Court - These servies came into tax net only w.e.f. 18.04.2006 - Hence, demand on this count has correctly been dropped by Commissioner but only for the period prior 18.04.2006 - The order under challenge is accordingly modified: CESTAT

CX - The issue is to decide as to what was the actual position of availability of Cenvat credit that is to say as to whether Rs. 72,75,421/- which was available as on 31.12.2008 in their RG 23A Part-II as alleged in SCN or Rs. 2,77,49,625/- as per ER-I return for the relevant period filed on 17.2.2009 which was filed with the department - The other connected issue is regarding payment of interest of Rs. 12,35,905/- which was pointed out during the scrutiny of record of assessee by AG, Audit for the relevant period that is in December 2008 - Regarding the first issue, the Adjudicating authority has gone through the entire submissions made by assessee in pursuance of this Tribunal remand order - It has been brought on record that RG 23 register was having the balance of Rs. 72,75,421/- for the month ending December 2008 - However, the same has been shown to be Rs. 2,77,49,625/- in their ER-1 return without the actual receipt of material on which such credit has been availed - The assessee could not produce any document at the strength of which such huge credit was taken in their RG 23A Part-II register - Thus, the requirement of duty paying documents for availment of Cenvat credit is substantive law - The assessee having not followed the procedure as prescribed above for availment of Cenvat Credit Rules are not entitled for the Cenvat credit to the extent of Rs. 2,04,74,204/- - To that effect, Adjudicating authority has not violated the provisions of Cenvat credit in any way while denying the credit - It is not disputed that the assessee has not provided any documents for huge amount of credit taken in their books of account and also utilised for the purpose of payment of duty - It was therefore, correct on part of departmental officer to get them reversed and accordingly the same has been done by assessee - Although, the assessee has contested that the reversal was done under the duress, threat and coercion - However, assessee has suo moto reversed the credit - Thereafter, assessee has taken the credit of same with intimation to the department - This cannot be done without following the appropriate procedure under CCR, 2004 - Having not produced the documents at the strength of which credit was taken by assessee before the adjudicating authority, no ground found for allowing such credit to the assessee - Similarly, as the assessee has not wrongly taken the credit of Cenvat credit and but also utilised the same which was not available to them under the Cenvat Credit Rules, the department has rightly issued the SCN under the provisions of imposition of interest and confirmed the same after following the adjudication process - Accordingly, the same is sustainable - No infirmity found in the order passed by Adjudicating authority and therefore, the appeal filed by assessee is not sustainable: CESTAT

CX - The assessee is engaged in manufacture of Iron and Steel products of different grades such as Pig Iron, Sponge Iron, M.S.Billets/Ingots, Ferro Alloys and rolled products in the form of rods and bars - While setting up their factory and power plant at Durgapur various inputs in the form of M.S Angle, M.S.Channel, Joist, Plate, H.R.Sheet and Mill Plate classifiable under Chapter 72, M.S. Rounds, Lancing Pipes classifiable under Chapter 73 and Aluminum Balls classifiable under Chapter 76 were used as inputs for manufacturing of capital goods in the factory SCN was issued alleging illegal availement of cenvat credit - It is the case of department that impugned goods are not defined under Rule 2(b) of CCR, 2004 - The period of dispute is from 2003-2004 to 2007-2008 - The eligibility of steel items for cenvat credit has been a subject matter of decision by Tribunal, High Courts and the Supreme Court in various cases - It has been held by Tribunal consistently that the steel items when they were used in fabrication of capital goods and their accessories inside the manufacturing premises are eligible for credit - The principle of user test evolved by Supreme Court in Rajasthan Spinning and Weaving Mills has been applied in this regard - Except for a summary assertion in impugned order, it is not categorically established that all the steel items are used in creation of immovable assets only - On the contrary, assessee submitted detailed certificate by a Chartered Engineer - The said certificate records that upon physical examination, it was certified that the steel items have been used for fabrication of various equipments/accessories in various locations of the plant - The categorical assertion of facts by assessee as supported by the Chartered Engineer Certificate should have been rebutted with evidences of such nature before making summary conclusion on the basis of the presumption - The original order is not legally sustainable: CESTAT

2019-TIOL-1144-CESTAT-MAD

RS Arunachalam Vs CC

Cus - Early hearing - The issue relates to revocation of licence of Customs Broker; that the firm is run by proprietrix and that the male member of family has recently passed away; that due to revocation, there has been considerable hardship in livelihood of persons affected - The early hearing application is allowed: CESTAT

- Application allowed: CHENNAI CESTAT

2019-TIOL-1143-CESTAT-MAD

CC Vs Sony India Pvt Ltd

Cus - The respondent had mobile phones under 51 bills of entry, by self-assessment - They classified the goods under CTH85171290 and claimed CVD at 12.5% on MRP basis - They also availed exemption from Basic Customs Duty in terms of Notfn 24/2015 - Subsequent to clearance of goods, respondent filed appeals to Commissioner (A) contending that they are entitled to benefit of 1% CVD under Sl. No.263A (amended), which they had omitted claim at import stage - Appellants, therefore, prayed for setting aside the assessment in concerned bills of entry and for extending benefit of said Notfn 12/2012-CE (as emended) - Lower appellate authority directed the original authority to recall and reassess the bill of entries with concessional rate of duty after analyzing the applicability of relevant judgment of Apex Court in case of M/s. SRF Ltd - 2015-TIOL-74-SC-CUS and M/s. Thermax Pvt. Ltd. - 2002-TIOL-683-SC-CUS-LB - The ratio of Apex Court judgment in M/s. Thermax Pvt. Ltd. and M/s. SRF Ltd. will be applicable on all fours to the facts of the present appeal - The decision of jurisdictional High Court in case of M/s. HLG Trading - 2015-TIOL-2550-HC-MAD-CX is only on the ultra vires of Notfn 34/2015-C.E. - It was only held inter alia by High Court that since the importers are not placed in a more advantageous position than the domestic manufacturers, the notification was not ultra vires - The department's appeal had no merit - In any case, the order of Commissioner (A) is only by way of directing the assessment authority to recall and reassess the bills after applying the ratio of the decision of Apex Court in M/s. SRF Ltd. - In the event, the Revenue's appeal requires to be dismissed: CESTAT

- Appeal dismissed: CHENNAI CESTAT

2019-TIOL-1142-CESTAT-HYD

Jsw Steel Ltd Vs CC

Cus - Assessee filed bill of entry for clearance of imported 'Bespoke Optimum Semi Soft Corex Coal' - Classifying the same under Chapter sub-heading 27011910 of CTA, 1975 claimed full exemption from payment of customs duty under Sl No 68A of Notfn 21/2002-Cus - It was the opinion of lower authorities that description of coal in corresponding Tariff Heading mentioned and the shipping bill does not match with each other - Clarification was sought, which was given after drawing the sample - Assessee cleared the consignment of coal by paying the duty under protest - The adjudicating authority by an assessment order held that the duty paid by importer is incorrect - The 1st Appellate Authority by impugned order came to a conclusion that the goods are to be classified as non-coaking coal by giving reasoning that Deputy Chief Chemist's report indicates CSN as 'zero' - Since the bills of entries are assessed provisionally, matter remanded back to the adjudicating authority to finalise the bills of entry - Before sending the matter back to adjudicating authority, it deems necessary to mention that 1st Appellate Authority has relied upon the analysis report of Deputy Chief Chemist, a copy of which was not handed over to the importer - The 1st Appellate Authority could not have relied upon the said document - It is also to be noted that by relying upon the Dy Chief Chemist's report at the 1st appellate proceedings, assessee is deprived of his right to seek the retest of samples, if any, in order to defend his case - Similar situation prevailed in the issue which was before the Tribunal in Mumbai Bench - However, as the bills of entry are still provisionally assessed, it is necessary to remand the matter back to the adjudicating authority to finalise bills of entry taking on record various documents that may be produced by assessee in support of his claim that CSN of coal imported is acceptable, and pass a speaking order after following principles of natural justice - The impugned order is set aside: CESTAT

- Matter remanded: HYDERABAD CESTAT