2019-TIOL-NEWS-103, Dated: Thursday, May 02, 2019

ST - The substantial question of law arises is as to whether the Tribunal was justified in rejecting the application for condonation of delay, even without considering the question of allowing it on the basis of imposing costs, without properly adverting to the reasons mentioned for causing the delay - It is specifically mentioned that the appellant had filed a writ petition before this court and it was dismissed - It is also mentioned that he was working in Delhi and settled there with his family and therefore he could not file the appeal in time - It is stated that there was no deliberate laches or negligence on his part in not filing the appeal within the time stipulated - The Tribunal had mentioned only the reason that the assessee had failed in his attempts before this court in writ petition filed - It is also stated that the assessee had failed to explain the delay in a satisfactory manner - The approach made by Tribunal is not justifiable - The Tribunal ought to have considered the prima facie merits of appeal and ought to have considered the question of condonation of delay even on the basis of imposing costs - Having been failed in taking such an approach, there occurred a miscarriage justice in dismissing the appeal consequent to dismissal of the delay condonation application, which need to be rectified - Assessee had remitted 10% of demand while filing the appeal before the Tribunal - It is appropriate to direct the assessee to make payment of a further amount of 15% of existing demand, for the purpose of condoning the delay: HC

- Appeal allowed: KERALA HIGH COURT

ST - The appellant company is registered for provising Manpower Recruitment & Supply Agency service - It supplied such service to M/s TATA Coffee Ltd and its various units - Upon audit, the Revenue observed that the appellant had not paid service tax - SCNs were issued raising duty demand with interest & penalties - On adjudication, the demands were confirmed & equivalent penalty was imposed & were later sustained by the Commr.(A) - Hence the present appeal. Held: The appellant is contesting the penalties only - It is seen that the entire duty demand with interest has been paid up by the appellant before issuance of SCN - Provisions of Section 73(3) mandate that penalty cannot be imposed if service tax with interest is paid up as pointed out by the Revenue or by the assessee's own ascertainment - In such circumstances, the penalties are unsustainable & merit being quashed - The duty demand & interest is left undisturbed: CESTAT

CX - The assessee manufactures copper tubes and pipelines - In terms of Rule 8(1) of CER, 2002, the assessee was required to pay excise duty on removal of goods on monthly basis which he failed to do - Nevertheless, even after said default, the assessee continued clearing goods on payment of duty from its Cenvat account instead of paying the same as through its PLA - This led to issue of SCNs - Once Rule 8(3A) of said Rules has been declared as unconstitutional to the extent it prohibited utilizing Cenvat credit, the discharge of payment of duty on the final products, the said provision to the above extent ceases to apply - The Act and the said Rules being all India in its application, the decision rendering a part of it as unconstitutional would equally apply within the State of Maharashtra, in the absence of any contrary view or the revenue showing that the view of the Gujarat High Court in Indsur Global Ltd. 2014-TIOL-2115-HC-AHM-CX is exfacie unsustainable - In fact, in identical circumstances, where a different High Court has declared a provision unconstitutional and there is no contrary view, this Court has in Godavaridevi Saraf 2003-TIOL-1136-HC-MUM-IT and Valson Dyeing Bleaching & Printing Works 2010-TIOL-710-HC-MUM-CX has refused to entertain the appeals from orders of Tribunal which have followed the decision of the another High Court declaring a particular provision to be an unconstitutional - The same principle would apply in the present case - Therefore, no interference with the view of the Tribunal is called for: HC

- Appeals dismissed: BOMBAY HIGH COURT

CX - The respondent had independently filed applications making a declaration under VCES scheme in terms of FA, 2013 - The original adjudicating Authority accepted the VCES declaration under FA, 2013 filed by assessee - Admittedly no inquiry/investigation has been initiated against respondent but a Notice has been issued to M/s. Marvel Realtors, which admittedly is a nonexisting entity - Therefore, no proceedings have been initiated against two respondents herein who had filed declaration under VCES scheme so as to be hit by Section 106(2) of FA, 2013 - Thus, the impugned order of Tribunal allowing the appeal of respondents before it, cannot be found fault with as the Authorities had no jurisdiction to reject the declaration filed under the VCES scheme by two respondents - This is particularly so as no inquiry / investigation had been initiated in respect of them - This question as proposed does not give rise to any substantial question of law - Thus, not entertained - The Tribunal found that enquiry being made in respect of respondents were in nature of roving enquiry, not hit by Section 106(2) of FA, 2013 - This was by following the decision of its coordinate bench in care of L.V. Constructions & Co. 2016-TIOL-159-CESTAT-MUM - The appeal of Revenue in case of L.V. Construction had been dismissed by this Court - This finding of the Tribunal is one of facts and nothing has been shown to indicate that the same is perverse - Therefore, this question as proposed also does not give rise to any substantial question of law - Thus, not entertained: HC

- Appeals dismissed: BOMBAY HIGH COURT

CX - Appellant was one of the service recipient of M/s.Kamdhenu Ispat Ltd. at whose premises search was conducted by officers of DGCEI - appellants were required to pay Service Tax on royalty to M/s.Kamdhenu Ispat Ltd. - as per the data retrieved by Government Examiner of Questioned Documents (GEQD), during the period April 2008 to September 2008, appellant had dispatched 12,063 MTs of MS bars whereas as per the ER-1 filed by appellant, the dispatches of MS bar were 7746.355 MT - Alleging clandestine manufacture and removal of M.S bars and MS Ingots without payment of Central Excise duty, appellants were issued with a show cause notice - demand of Rs.2,26,72,715/- confirmed and penalties imposed - appeal to CESTAT.

Held: On the basis of data retrieved by Government Examiner of Questioned Documents from the electronic devices recovered, it is established that the appellant had indulged in suppression of quantity of MS bars manufactured by them therefore the contention of appellant that the show cause notice is time barred is not sustainable - Further, the appellant has not strongly contested on the other aspects of manufacture such as consumption of raw material, consumption of electricity, transportation of goods and availability of customers to whom such goods were cleared - appellants have not made out any case to interfere with the impugned order - Appeals dismissed: CESTAT [para 5]

- Appeals dismissed: ALLAHABAD CESTAT

CX - Appellant is a co-developer of Special Economic Zone situated in Gujarat and filed claim before the Central Excise, Trichy Division for refund of Rs.10,42,450/- being the excise duty paid on the inputs procured from suppliers - Refund claim was rejected for the lack of jurisdiction by the Central Excise Commissionerate in Trichy - appeal to CESTAT.

Held: As per the amendment brought forth with effect from 05.08.2016 by Rule 47 of SEZ Rules, the refund claim in such a situation has to be filed before the jurisdictional Central Excise officer, who has jurisdiction over the SEZ Unit concerned, namely, Central Excise jurisdictional officer in Gujarat - although the original authority had issued intimation to the appellant within 20 days stating that lack of jurisdiction, they chose to contest the same - since refund has been file before the wrong authority, the same has been rightly rejected on ground of lack of jurisdiction - appeal is, therefore, dismissed - nonetheless, since the claim has been filed within the due date before the wrong forum, the appellant is at liberty to file the same before proper forum - appeal disposed of: CESTAT [para 5, 6]

- Appeal disposed of: CHENNAI CESTAT

CX - Notification 23/2003-CE - There is no such conditionality that the goods are to be produced or manufactured wholly from the raw materials produced or manufactured in India - Such requirement is found only in condition 3, which in any case, is not sought to be availed by the appellant - first ground for denial of the benefit is not sustainable: CESTAT [para 5.2]

CX - Appellants are exporting bearing housing whereas they had cleared turbine wheel assembly in the DTA - Case of the department is that condition No. 2 entails that exemption shall not be availed unless there is satisfaction that the said goods have been cleared into DTA or similar to the goods which are exported or expected to be exported during the specified period; that since the definition of "similar goods" would be based on the definition of similar goods as provided in the Customs Valuation (Determination of Pride of Imported Goods) Rules, 1988, ‘bearing housing' and ‘turbine wheel assembly and components' are not similar goods and, therefore, concessional rate of duty in terms of Notification 23/2003-CE dated 31.3.2003 for goods cleared into DTA is inadmissible - demand confirmed, therefore, appeal.

Held: Tribunal in the case of Meghmani Industries Ltd. - 2010-TIOL-884-CESTAT-AHM has addressed the very controversy in respect of the definition of 'similar goods' for exemption under Notification 23/2003-CE and held that that the definition available in the Customs Act cannot be used in respect of notifications issued under another enactment; that in such cases common parlance or dictionary meaning is to be applied; that both, ‘turbo wheel assembly' and ‘bearing housing' are components of turbo charger and hence will surely fall under the broad banded term 'turbo charger components' which is the export product as per the EOU/green card issued to the appellant by the Development Commissioner; that when the permission granted to appellant has not listed any specific components of a turbo charger but instead has only indicated export product as 12,50,000 nos. of turbo charger component which was even subsequently enhanced to 32,00,000 nos. of turbo charger components, the appellant cannot then be said to have caused a breach of the conditions; that when the permission is generic and only states "turbo charger components", the condition of the impugned notification gets satisfied so long as the parts that the exported and the parts cleared into DTA are both the components of turbine charger -impugned order cannot be sustained, hence set aside - appeal allowed with consequential relief: CESTAT [para 5.5, 5.6]

- Appeal allowed: CHENNAI CESTAT

CX - Appellants are a 100% EOU - It appeared to the Department that value of DTA clearances of ‘Bearing housing machined (parts of turbo charger)' is more than the prescribed limit of 90% of the FOB value of exports; that appellant had cleared ‘Bearing housing machined' into DTA at concessional rate of duties in excess of their entitlement in terms of para 6.8(a) of FTP 2009 - 2014 and in contravention of the conditions stipulated in Sl. No. 3 of Notification 23/2003-CE - Differential duty demand raised and confirmed along with penalty and interest - appeal to CESTAT.

Held: Description of goods in the Green card does not differentiate or specify goods on the basis of Customs Tariff but it merely treats them as belonging to a class - Bearing machines are considered by department as part of Turbo Charger which are parts of automobile, then Precision Automotive Components also being part of Automobiles should fall in the same class - In para 6.8 of FTP what is stated is that when more than one product is exported, such unit can clear in DTA upto 90% of value of such specified goods provided the total DTA sale does not exceed 50% FOB value of exports of the unit - Appellants have sold 90% FOB of value of export of Bearing Housing in DTA and has not exceeded 50% of FOB value of the unit since there is no DTA sale of Precision Automotive Component - As the condition is fully satisfied, denial of concessional rate of duty as per the notification is unjustified - demand cannot sustain - impugned order set aside and appeal is allowed: CESTAT [para 6.2]

- Appeal allowed: CHENNAI CESTAT

CX - The assessee is engaged in business of manufacture of Poly Propylene Glasses for which they were duly registered under provisions of CEA, 1944 - Assessee has argued that the specific point was raised in the grounds of appeal and argued before the Tribunal that the demand raised against them is fully time barred and neither finding has been recorded by adjudicating authority nor in the impugned order - He has further argued that the matter should be remanded back to the Tribunal for reconsideration - The respondent could not dispute the said fact - This Court has perused the record of the case and found that in memo of appeal filed before the Tribunal, specific ground at Serial No. 20 has been taken copy of which is Annexure No. 5 to the present appeal - The said ground goes to show that the assessee has specifically raised the issue of limitation which has neither been considered by Tribunal nor finding has been given - In view of the said fact the order impugned is set aside and matter is remanded back to the Tribunal for reconsideration: HC

CX - The basic/ primary issue is; whether the Tribunal was justified in dismissing the assessee's appeal on account of delay of 188 days in filing the appeal before it - The assessee in its application for condonation of delay of 188 days in filing the appeal had stated that the delay was because he was suffering from back pain and had been advised rest - Being a sole proprietor, the work of filing appeal from the impugned order could not be attended to, leading to the delay - The application was supported by an affidavit and a doctor's certificate - The Tribunal found the delay in filing appeal was not satisfactorily explained by assessee, the Tribunal took a view that the delay does not deserve to be condoned - However, the Paediatric Surgeon is also a qualified doctor and is competent to issue a certificate with regard to a person suffering from back pain and advise a patient to take rest - No bar in terms of Medical Council Rules or otherwise is relied upon to disregard the view of medically qualified person - It is true that if on these facts, assessee had shown himself to a specialist, dealing with back pain and produced a certificate in support thereof, the Tribunal may have been satisfied with the evidence in support - Thus, the view taken by Tribunal may be a possible view - However, in case of doubt, the benefit, if any, must go in favour of assessee - The court do feel in matters such as these, a more liberal approach should be adopted as nobody gains by delaying filing of an appeal and when the reasons for delay is a plausible reason which is not alleged to be untrue then the ends of justice would require condoning the delay and by considering the issue on merits - However, on these facts, the condonation of delay can only be allowed on payment of costs - This for the reason that on facts, the view taken by Tribunal is a plausible view - But only to ensure that justice is done, court is interfering - Thus, to balance the right and equity while considering the delay, assessee is directed to pay a cost of Rs.20,000/- within a period of two weeks: HC

CX - The appellant company manufactures paper & paperboards using imported waste paper as raw material - Waste paperis unconventional raw material for manufacture of paper & paperboards classified under Chapter Heading 4707 of the Customs Tariff Act - Such material is imported & used to manufacture paper - Upon import, such paper also contains some non-paper content such as plastic and metal waste & scrap - The issue pertaining to the classification and appropriate rate of tax on such material was settled by the Tribunal in the assessee's very own case, wherein it was held that non-paper waste contained in the imported material was classifiable under Chapters 39 & 72 - It was also held that the non-paper waste was liable for confiscation u/s 112 of the Customs Act and penalties were imposable u/s 114(a) - Though the appellant approached the Supreme Court, no stay was granted - The present dispute pertains to disallowance of credit of Additional Duty of Customs paid by the assessee on import of consignments of waste paper - Three SCNs had been issued in this regard and were confirmed upon adjudication. Held: The only issue to be settled is whether or not the appellant is entitled for benefit of Cenvat credit on the entire Additional Duty paid in the bills of entry - The scope of 'input' u/r 2(k) of CCR 2004 shows that what matters most is which material has gone into the process of manufacture - It is true that if some element of input goes in waste, the credit cannot be denied on that count - It is necessary to determine how the input has been classified as per the invoice or bill of entry - As long as input bill of entry is assessed or the input invoice classifies the product in a particular way, it has to be followed unless the classification itself is challenged and modified on appeal - In respect of bills of entry where the input is treated as waste paper, unless such classification is challenged & modified at appellate stage, the appellant is entitled to cenvat credit - It is immaterial if some portion of the waste paper so classified turns out to be non-paper content - merely because material other than inputs which are already assessed separately are mixed up with the input, it cannot be said that such other materials which have nothing to do with the process of manufacture but are only mixed up with the inputs used in the manufacture at the time of input will not entitle them to credit - Hence eligibility for Cenvat credit depends solely upon the raw material used & how it was classified in the bills of entry - The classification made in the bills of entry/invoices cannot be changed while determining the eligibility for Cenvat credit - Wherever the the bills of entry have classified the inputs under different headings, the appellant is entitled to the credit of additional duty paid on waste paper and not the credit of additional duty paid on plastic waste and metal waste - Further, no case for imposing penalty is made out, considering that the appellant may have been under the impression of being eligible for credit: CESTAT (Para 2,3,10,11)

Cus - The assessee had filed Bill of Entry for import of 'interlining fabric (flock)' by declaring the value as 0.18 USD per meter as per the invoices of foreign supplier - During first check, it emerged that the goods were declared in accompanying invoice only as 'interlining fabric' - On the basis of test report and NIDB data, the original authority enhanced the value from 0.18 USD to 1.374 USD by invoking Rule 5 of Customs Valuation Rules, 2007 - In appeal, Commissioner (A) held that the lower authority has relied upon NIDB data, there is nothing on record that there was any special relationship between the importer and the foreign supplier or that they had paid anything extra over and above the transaction value and the test report had not stated that the impugned goods are not made up of interlining fabrics and only stated that the sample is printed woven fabrics having one side flock - There are number of decisions which hold that NIDB data is not substantive material to enhance the value - Commissioner (A) has held that the exact nature of import of goods is not very clear - The copy of test report was not provided to the importer - The NIDB data on which basis the enhancement of declared value was done was also not informed to the assessee - There are any number of decision of higher appellate forum which have consistently reiterated that reliance on NIDB data for the purpose of enhancement of declared value of imported goods is not in order - For all these reasons, no infirmity found in the order passed by Commissioner (A), same is upheld: CESTAT

Cus - The assessee concern had imported duty free material against advance licence for manufacture of goods for export or deemed export - They were also clearing their goods in domestic market - The revenue is demanding customs duty on the ground that since the actual use of inputs is less than shown in SION norms therefore the surplus material has been used in manufacture of domestic goods and hence the customs duty on such surplus material is to be paid by them - It is not in dispute that the assessee had procured goods under Advance authorisations as per SION Norms - The imported goods were used in manufacture of export goods and export obligation stands fulfilled - During manufacture of export goods the off - grade goods were also manufactured and the same were cleared into domestic tariff area and those goods were considered as waste - Once the SION Norms are fixed and the manufacturer has manufactured goods under the said norms and the export obligation stands fulfilled the revenue cannot demand duty on the ground that the actual consumption was less than SION - If such practice is adopted, it will lead to SION becoming redundant and it will open Pandora box of disputes - The SION Norms has been fixed after taking into consideration all the relevant factors and the overlooking of the same is not permissible - The whole purpose of fixing the SION norms is to avoid physical check of actual consumption of inputs in the manufacture of final products - For that very reason there is no mechanism provided for check or audit of actual consumption of imported goods if the same is covered under the SION norms - Once the export quantity and quantity of imported goods is as per the SION, then the export obligation stands fulfilled, hence no further question can be raised by the revenue - It is also coupled with the fact that in case of export product, the manufacturer takes all the safeguards for maintaining quality of the product as per the buyers' specification which may be better quality than the DTA clearances - Thus the DTA yield cannot be equated with the export goods yield - Once the importation of goods was permitted in terms of SION Norms and the export obligation stands fulfilled, the assessee was entitled to use the remaining goods in manufacture of goods which were cleared into DTA - Assessee have not suppressed any fact and the utilisation of imported material and manufacture of finished goods stands recorded in their records as well as shown in monthly returns - In such view, demands raised against assessee are also hit by limitation of time - The views are based upon the Apex Court judgment in case of Uniworth Textiles Ltd. - 2013-TIOL-13-SC-CUS , Aban Lloyd Chiles Offshore Ltd. - 2006-TIOL-97-SC-CUS , HMM Ltd. - 2002-TIOL-120-SC-CX and Continental Foundation Jt. Venture 2007-TIOL-152-SC-CX : CESTAT

Cus - The assessee has imported old and used worn clothing and four bills of entry were filed covering the four consignments of the importer - At the time of original assessment, the declared value of imported goods was enhanced - The original adjudicating authority ordered confiscation of imported goods for violation of Import Trade Control restrictions and the goods were confiscated under Section 111 (d) of Customs Act, 1962 - He also imposed redemption fine under Section 125 of the Act @ 30% and personal penalty under Section 112 (a) of the Act, varying from 10% to 11% - The Commissioner (A) has ordered reduction of redemption fine and personal penalty on the basis of ratio laid down in case of Omex International - 2015-TIOL-582-CESTAT-DEL - The Three Member Bench has taken the view that redemption fine of 10% and penalty of 5% of the value of the imported goods, would be appropriate in case of import violating Exim Policy Provisions - No reason found to interfere with the findings of Commissioner (A) on the basis of such decision - The impugned order is upheld: CESTAT