2019-TIOL-NEWS-122, Dated: Friday, May 24, 2019

ST - Accountant of the firm looking after taxation matter suffered slip disc and was advised complete bed rest - application seeking COD of three months supported by affidavit from Accountant along with medical certificates - in view of the objection by the AR that the affidavit by the Accountant without even establishing the relevance of the said person in the entire scheme of things does not inspire confidence, an affidavit was directed to be filed by the Partner of the firm and which was filed - in the affidavit, the partner has confirmed the contents of the submission made in the application.

Held: It is settled that since nobody gains from not filing appeal in time, the Courts/Tribunals are required to take a liberal view in allowing such applications seeking condonation of delay - Delay of three months in filing appeal condoned - Application allowed: CESTAT [para 4.4, 5]

ST - The issue at hand is whether the assessee-company is liable to pay tax on NSE & BSE transaction charges taken as reimbursement from its clients between April-Sept 2007 - Duty demands were raised against the assessee for the relevant period.

Held: Such issue stands settled by the Tribunal in J.V. Capital Services (P) Ltd, Delhi-2017 - Following the same, the demands merit being quashed: CESTAT

ST - The assessee-company is registered with the Service Tax Department & it exported Advertising Agency Services & Business Support Service - It filed a rebate claim under Notfn No 11/05-ST for the relevant period - Such claim was denied on grounds that - i) there was no correlation between the export invoices and the FIRCs and Bank Certificate mentioning the actual realization of the export proceeds; ii) no ST-3 returns were filed for the relevant period for correlation of export value with details of service tax payment & debit details; iii) non-furnishing of agreement between exporter & client & details of service rendered; iv) non-production of ST-2 verifying correctness of classification of services; & v) non-furnishing of documents establishing fulfilment of condition u/r 9(6) of CCR 2004 - SCN was issued proposing to reject refund claim - On adjudication, such denial of refund was sustained, as was subsequently by the Commr.(A) - In appellate stage, it was also alleged that the input service invoice and export invoices did not contain the mandatory details u/r 4A of STR 1944 - Hence the present appeals.

Held: The rejection of the rebate claim under Notfn No 11/2005-ST on grounds that the appellant was not registered with the Service Tax Department, is untenable in view of the Karnataka High Court's judgment in mPortal India Wireless Solutions P. Ltd. Vs. CST, Bangalore wherein it was held that registration with the Department is not a prerequisite for claiming credit - The other grounds for rejecting the refund are untenable as the assessee produced all documents supporting the rebate claim & such documents are not properly examined - Hence the O-i-A in challenge is quashed & the case merits remand to the adjudicating authority so as to decide upon the refund claim within 3 months' time: CESTAT

ST - The assessee is engaged in tyre re-trading activity and dispute covers the period 16.06.2005 to 30.09.2008 - The invoices issued by assessee for tyre re-trading activity covered the total amount charged from the customers - The activity was held by Department to be falling under category of management, maintenance or repair service and covered by definition under Section 65 (64) of FA, 1994 - While there was no dispute about the nature of activity as well as the category under which the activity is liable for service tax payment, dispute arose about the consideration for charge of service tax under said category - The assessee was paying service tax under said category after availing the benefit of exemption under the Notfn 12/2003 - The only reason for denying the benefit of Notfn is that the documentary proof specifically indicating the value of said goods and services was not available on the part of assessee - Identical activity has been considered by Supreme Court in case of Safety Re-trading Co. Pvt. Ltd. - 2017-TIOL-28-SC-ST , which has been relied by assessee - After perusing the said judgment of the Apex Court, we note that the Apex Court has taken the categorical view that in terms of Section 67 of FA, 1994, the valuation of taxable services specifically excludes the cost of parts or other material, if any, sold to the customer while providing maintenance or repair service - The Apex Court has further held that this will include the deemed sale of material consumed in providing such service - The invoices indicate the split up of cost of material and spares consumed and the labour charges separately - Revenue has proceeded to deny the benefit of Notfn on the presumption that the same has been done after issuance of invoice for manipulating the facts by showing lesser amount than shown in the invoice - No further investigation appears to have been done to substantiate the presumption - On the basis of evidence, the ratio of material value and labour charges works out to roughly 90:10 - The assessee has also discharged the service tax in respect of labour charges working out to roughly 10% - From a perusal of VAT returns, it is evident that VAT is being paid under Composition Scheme - No justification found for denying the benefit of Notfn 12/2003 - The assessee is entitled to benefit of Notfn and hence no demand for service tax will survive: CESTAT

Pennar Industries Ltd Vs CGST & CE

CX - The assessee-company manufactures Cold rolled steel strips & it availed Cenvat credit of service tax paid on rent and maintenance charges paid to marketing office, commission charges and rent paid for storage of machinery before putting it to use in the factory of production during December 2013 and June 2014 - The Revenue opinmed that such input services were ineligible for credit as they were not directly or indirectly used in or in relation to manufacture activity & so did not qualify as valid input service - SCN was issued proposing reversal of credit so denied, with interest & penalties u/r 15(2) of CCR r/w proviso to Section 11AC(1)(c) of the CEA 1944 - On adjudication, such demand, interest & penalties were sustained - On appeal, the Commr.(A) set aside the demand in respect of commission charges and the penalty as well, while sustaining the rest - Hence the present appeal by the assessee.

Held: Credit in respect of service tax paid on rent & maintenance charges for assessee's marketing unit - The appellant states to be situated in Telangana and invoices were raised by the service provider to the address of the Chennai marketing unit due to which the ISD unit at Telangana was unable to avail credit - Such contention lacks merit - The convenience of an ISD registration is to have a single unit which avails credit & then makes a pro rata distribution to other units - The invoices should have been raised in the name of the ISD unit - Hence there is a procedural lapse in availing credit - However, the same cannot be said to not be available to the appellant: CESTAT (Para 5)

Held: Credit of service tax paid on rent paid for premises used to store capital goods - The assessee claimed that credit was available since the goods were subsequently used in the assessee's factory - The assessee entered into an agreement with one Wayne Burt - Hence the premises were used by Wayne Burt for their job work manufacture of cylinders solely supplied to the assessee - Hence credit is not available on service tax paid on rent for such premises: CESTAT (Para 5.1)

Held: Limitation - The Commr.(A) quashed the penalty considering that the issue pertained to interpretation of law - The adjudicating authority observed that the assessee did not declare the nature of service or inform the Department of the wrong availment of credit - Such findings are factually incorrect as the assessee reflected the credit availed in its return - The other finding of the assessee having given contradictory versions of facts regarding storage of capital goods is factually incorrect as well - No positive evidence showing any act of suppression with intent to evade payment of duty was put forth by the Revenue - Hence the O-i-A is sustained: CESTAT (Para 5.2)

- Assessee's appeal allowed : DELHI CESTAT

2019-TIOL-1488-CESTAT-KOL

Tata Motors Ltd Vs CCE & ST

CX - Assessee supplied chassis of motor vehicles to M/s Hyva for the purpose of fabrication of body thereon - The dispute in the present case is regarding value to be adopted by Hyva for payment of duty on the motor vehicles manufactured by them by body building on the duty paid chassis supplied by assessee - It is well settled that for the purpose of arriving at assessable value at job worker's end, the cost of transportation and the transit insurance will need to be added so as to arrive at the value in the hands of the job worker - This is one of the issue considered and decided by Chennai Bench of Tribunal in case of Goyal Ispat Ltd. - 2017-TIOL-1940-CESTAT-MAD - By following the said decision, the transport cost as well as transit insurance are required to be added for payment of duty by Hyva - Next we turn to question whether the amount paid by assessee as additional BED on the chassis is required to be added - There is no dispute that the amount of Rs.10,000/- has been availed as cenvat credit by Hyva - However, the adjudicating authority has still included this amount in value with the findings that Hyva has extended a discount of Rs.10,000/- on the body built price - Since there is no dispute that Hyva has availed additional BED of Rs.10,000/- as cenvat credit, there is no justification for addition of the same - Hyva has raised the question of time bar - The Adjudicating Authority has not given any specific reason for coming to such conclusion other than a blank observation that assessee short paid duty by way of suppression of valuation as well as suppression of facts of non-receipt of amount equal to additional BED at specific rate - It was very much within the knowledge of Department that Hyva has carried out body building for assessee and the manufactured vehicles were being paid duty in terms of Valuation Rules - Consequently, invoking the suppression clause is without basis - Consequently, the demand for differential duty is to be restricted to normal time limit - The portion of the impugned order loading the assessable value with transport cost, transit insurance as well as automobile cess is upheld - However, the portion of the order for loading the assessable value with Rs.10,000/- is set aside - The demand will be restricted to normal time limit - No justification found for imposition of penalty either on assessee or on Hyva: CESTAT

- Appeal partly allowed : KOLKATA CESTAT

Cus - Assessee had imported the consignment of LED monitors declaring them to be "LED monitors for computer screen" - However, Revenue was of the opinion that these were television monitors - After consulting chartered engineers and taking his opinion Revenue proceeded to seize the said goods - The issue can be disposed of with regard to release of goods on provisional basis - Even after lapse of more than one year and three months, Tribunal is not in a position to be told that whether proceedings under Section 124 have been commenced or not - Revenue is not in a position to say whether 110(2) extension has been granted or not - Bank guarantee equivalent to 100% of differential duty and probable redemption fine and penalty cannot be justified, even to the extent as modified by Commissioner (A) - Accordingly, the terms modified as have been held by Supreme Court to the extent of 30% of bank guarantee imposed by the Original authority i.e. 30% of the amount of Rs. Rs. 18,94,220/- + Rs. 5,68,266/- imposed and accordingly - Total bank guarantee that may be given by assessee is reduced to Rs. 7 lakhs - Revenue is directed to allow provisional release on execution of bond of value as directed by Order dated 04.04.2018 and bank guarantee of Rs. 7 lakhs within a period of one month: CESTAT

Cus - The appeal has been filed against impugned order wherein the assessee's application to allow re-export of goods has been denied on the ground that assessee has not paid the duty on imported goods - The assessee has already made payment of redemption fine and penalty and is requesting for re-export of the goods - Even if assessee is made to make payment of duty on such imported goods but he is eligible for drawback of 98% of duty payable on the importation of goods in terms of Section 74 of Customs Act - The facts of importation of goods due to awarding of contract by ONGC and cancellation of same which led to seizure of goods is not in dispute - It is not a deliberate intention case of non payment of duty on imported goods and the assessee after payment of redemption fine and penalty has option either to pay duty if he wants to keep the goods in India or to re-export the same - In case of re-export for which he is eligible, the net effect of duty payable by him would be 2% i.e. difference between the duty payable and drawback amount under Section 74 of the Customs Act - It is also clear that he is eligible for 98% duty drawback of the duty paid by them - The Bombay High Court in case of Cipla Ltd has allowed the assessee to re-export the goods on payment of differential duty of 2% after adjusting the drawback of 98% of duty admissible to them in terms of Section 74 of Customs Act, 1962 - Similarly, in case of Shipping Corporation of India - 2013-TIOL-2373-CESTAT-MUM , the CESTAT has allowed adjustment of duty payment against drawback admissible to the assessee - The assessee is eligible for re-export of impugned goods on payment of 2% differential duty - Assessee is not liable for interest as the duty demand has not been confirmed against them in terms of Section 28 - The impugned order is not sustainable and the assessee is allowed to re-export the impugned imported goods on payment of 2% differential duty, which shall be adjusted against the pre-deposit of 7.5% which was made by them as mandatory pre-deposit while filing the appeal before the Tribunal: CESTAT