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SERVICE TAX
2019-TIOL-1606-CESTAT-HYD
Emmar Logistics Pvt Ltd Vs CCE, C & ST
ST - The assessee-company provides taxable services but did not pay service tax during the relevant period - However, the tax was paid belatedly, which the assessee explained as being on account of financial difficulties - The assessee claimed to have declared the entire value of services in the ST-3 returns and that the same had not been suppressed - However, the Revenue rejected such contentions and issued SCNs raised demand for interest u/s 75 of the Finance Act, 1994, as the duty already had been paid & proposed penalties - On adjudication, the demands for interest were confirmed along with penalties u/s 76 & 77(2) of the Act - Hence the present appeal by the assessee.
Held: Payment of interest - It is undisputed that the assessee paid the duty but without applicable interest - The Finance Act 1994 imposes no time limit for raising demand for interest - However, in the judgment in Hindustan Insecticides Ltd the Delhi High Court held that the demand for interest must be raised in the same time limit as of the duty itself - Hence the demand can be raised within 18 months if no elements of fraud, collusion or wilful mis-statement are present, or else within 5 years if such elements were present - In the present case, the adjudicating authority found such elements to be absent, in which case the 18-month limitation period applies - In such case, it is seen that the assessee filed returns on 19.09.2013, according to which the 18 month period would be 18.03.2015 - The SCN was issued on 16.03.2015 which is within limitation - Hence the demand for interest is sustained: CESTAT
Held: Penalty - The main pleadings of the assesse is that it faced difficulties in getting payments from its clients - Such assertion is not backed by any documents - The assessee's conduct does not inspire much confidence because the assessee could also have discharged interest along with the delayed payment of duty, rather than waiting for the Revenue to issue an SCN - Hence no case for waiver of penalty u/s 80 is made out: CESTAT
- Assessee's appeal dismissed: HYDERABAD CESTAT
2019-TIOL-1605-CESTAT-MAD
Bharat Cylinders Vs CCE
ST - The assessee-company rendered services of segregation, reconditioning, surface cleaning & washing of empty cylinders meant for LPG cylinders - The Revenue opined that such activity would attract service tax liability - SCN was issued proposing to raise duty demand with interest & penalty - On adjudication, the demands were sustained with penalties being imposed u/s 76, 77 & 78 of the Finance Act 1994 - On appeal, the Commr.(A) sustained such demands - Hence the present appeal.
Held: The testing of LPG cylinders is a statutory obligation, but the assessee is a private organization & its appointment by statutory notification is absent - Hence the assessee is merely carrying out an outsourced job - When tax payment is a statutory obligation, each assessee cannot claim exemption on account of discharge of statutory function - It may be a duty cast on each assessee, but the same cannot be equated to being an exempted activity - Hence the assessee's contentions of having discharged some statutory function cannot be accepted or that its services are exempt - Moreover, the assessee's claims of delivering the cylinders in their own vehicles is an inter-se agreement which has no effect on the assessee's statutory obligations or upon the Revenue - It is clear that the assessee itself accepted its activities of providing repair and maintenance of cylinders & it is nowhere mentioned that the services are provided free of cost - Hence the O-i-A in challenge merits being sustained & the demands are upheld: CESTAT
Held - Penalty - Section 76 & 78 of the Finance Act are mutually exclusive & penalty cannot be levied under both sections - The assessee was under a bona fide doubt as to whether or not its activities were statutory obligations & exempt from tax - This is a pure question of law which does not show any suppression of facts or fraud - Hence the penalties u/s 76 & 78 merit being quashed - Nonetheless, the penalty imposed u/s 77 of the Act is sustained: CESTAT
- Assessee's appeal partly allowed: CHENNAI CESTAT
CENTRAL EXCISE
2019-TIOL-1175-HC-ALL-CX
CGST CE Vs DSCL Sugar
CX - Period 2004-05 and 2005-06 - During Audit it was noticed that the respondent-assessee had taken credit of duty paid on goods, namely, Shapes & Sections, MS Plates, HR Coils, MS Angles, Iron and Steel Bars, HR Sheets, Mill Plates MS Channel, Hot Strip Mill Plate, Joist, Thermo Mill Tractcet, Section etc., which are falling under Chapter heading 72 and 73 of the Central Excise Tariff Act, 1985 under the category of 'capital goods' - Revenue contention is that the aforesaid items did not appear to be covered under the category of 'capital goods' in terms of Rule 2 (b) of the Cenvat Credit Rules, 2002 and Rule 2 (a) (A) of Cenvat Credit Rules, 2004, as the aforesaid items were either used by the respondent in repair or maintenance of existing plant or in modification of their existing plant and machinery which are embedded to the earth and do not fulfill the conditions of move-ability and marketability to be accorded the status of 'goods' - SCN dated 4.6.2009 was issued to the respondent, raising a demand for Rs.61,71,407/- along with interest and penalty and the same was adjudicating confirming the demand with an equal amount of penalty and also interest - Assessee approached the Tribunal and their appeal was allowed vide order dated 2.11.2017 - Revenue in appeal before High Court.
Held: Revenue has relied upon the larger Bench decision of the Tribunal in the case of Vandana Global - 2010-TIOL-624-CESTAT-DEL-LB , wherein it was held that the explanation added to the definition of capital goods w.e.f. 07.07.2009 has to be held as explanatory and thus retrospective in nature - Bench observes that the said decision of Tribunal was considered by the Gujarat High Court in the case of Mundra Ports & Special Economic Zone Ltd. - 2015-TIOL-1288-HC-AHM-CX , wherein the said decision was not approved and it was observed that the amendment made on 07.07.2009 cannot be held to be clarificatory and as such would be applicable only prospectively - In view of above settled position of law, since items used by the respondent-assessee were used as structure to hold the capital goods, hence, it is wrong to say that respondents are not eligible to CENVAT credit - Therefore, the Tribunal has rightly allowed the appeal and the reasoning given by the Tribunal cannot be said to be not cogent or correct appreciation of evidence on record - Tribunal has rightly held respondent-assessee is entitled to Cenvat Credit in respect of items used as structural support for capital goods - Revenue appeal lacks merits, hence dismissed: High Court [para 32, 35, 37, 39] - Appeal dismissed
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ALLAHABAD
HIGH COURT
2019-TIOL-1604-CESTAT-HYD
Huhtamaki PPL Ltd Vs CCT
CX - The assessee is engaged in manufacture of printed flexible packaging material which they sell - During audit, it is found that they had wrongly availed CENVAT credit on the third stage dealer invoices in contravention of Rule 9(1)(a)(iv) of CCR, 2004 - The only point to be decided is whether the assessee is entitled to benefit of Sec.11A(2) or is liable to pay penalty - This issue solely depend on the fact that assessee has by reason of fraud or collusion or wilful misstatement or suppression of facts or violation of any Act or Rules made there under with an intention to evade payment of duty has wrongly availed CENVAT credit or utilized the credit - The assessee is a large tax payer paying about Rs.28 crores as tax - The amount involved is very small - When pointed out by the audit they reversed the same along with interest and informed the department accordingly - They further had credit balance of the amount of credit so disputed - The department has not established a case for alleging violation of Act or Rules with an intention to evade payment of duty - The penalty imposed on assessee is set aside: CESTAT
- Appeal allowed: HYDERABAD CESTAT
2019-TIOL-1603-CESTAT-MAD
Pondy Oxides And Chemicals Ltd Vs CCE & ST
CX - The assessee is engaged in manufacture of Lead Oxide and Zinc Oxide - During verification of Cenvat credit documents, it was found that the assessee have availed 50% credit on MS channels and MS angles used to give support to the foundation of Pollution Control Equipment - SCN was issued to assessee proposing recovery of Cenvat credit with interest and also imposition of penalty under Rule 15 of CCR, 2004 - The issue is no longer res integra - It has been held in a slew of judgments by various High Courts that MS structurals which are used to support plant and machinery or which went in erecting foundations to hold plant and machinery are integral part of capital goods - In Thiru Arooran Sugars - 2017-TIOL-1357-HC-MAD-CX, the High Court has held that whether "user test is applied or the test that they are integral part of capital goods applied", such items are eligible to get Cenvat benefit as they fall within the scope and ambit of Rule 2 (a) (A) as well as 2 (k) of CCR, 2004 - This judgment of Madras High Court was relied on by High Court of Chhattisgarh while overturning the LB decision of the Tribunal in Vandana Global - 2010-TIOL-624-CESTAT-DEL-LB - The High Court of Chhattisgarh had also relied upon the judgement of High Court of Gujarat in Mundra Ports & SEZ Ltd - 2015-TIOL-1288-HC-AHM-ST which distinguish the LB decision in Vandala Global Ltd. & Others has interalia held that in respect of cement and steel used in construction of new jetties and other commercial buildings would have to be treated as eligible inputs and assessee therefore is entitled for input credit - Said judgment have been followed by this very Tribunal in a number of decisions - The impugned order is set aside: CESTAT
- Appeal allowed: CHENNAI CESTAT
2019-TIOL-1602-CESTAT-DEL
Synergy Steels Ltd Vs CCE
CX - Demand of Rs. 40,76,894/- has been confirmed against the appellant(s) on the basis of certain loose slips/ pages relied upon by the Revenue which were resumed from Raman Bhatia, Director of M/s JBCPL, who was the consignment agent - No reliance can be placed on these loose sheets as the name of the appellant is not mentioned therein - Reliance also cannot be placed on the statements of Raman Bhatia without cross examination - Furthermore, M/s JBCPL was selling the identical goods on behalf of the other manufacturer as a dealer - No statements have been recorded from the alleged buyer of finished goods, whose name appeared on these loose sheets - there is, therefore, no corroboration for the authenticity of loose sheets or averment of Raman Bhatia - adjudicating authority has also not followed the procedure as prescribed under Section 9D of the Central Excise Act for placing reliance on the various statements recorded from the various persons, who were either the consignment agent/dealers/supplier of the goods - No reliance can also be placed on the third party evidence, without independent corroboration as has been done by the adjudicating authority: CESTAT [para 13, 14]
CX - CENVAT - Although names of various supplier of inputs/raw materials were available with the investigators, however, they have not been examined and merely the credit has been denied to the appellant - Further, no statements of any transporter have been recorded to prove the scrap was loaded from any other premises than the supplier of the goods: CESTAT [para 15]
CX - Valuation - Case of the Revenue is that there is under valuation to the extent of Rs. 5/- to 10/- for SS flats in respect of sales to M/s MBSC by five years - However, no sufficient corroborative evidence was brought on record to prove this charge by the Revenue - Moreover, though, the statements were recorded of Managing Director, he was not questioned about the valuation with regard to clearance to M/s MBSC - duty demand was solely based on some records seized from the premises of M/s MBSC which showed entries merely - furthermore, as the duty demand of Rs. 98,29,809/- would have involved cash transaction of more than Rs. 8 crore and no cash recovery or any other evidence is available regarding undervaluation, the Commissioner has correctly dropped the duty demand - as the department failed to rebut or controvert the various findings as recorded by Adjudicating authority in the impugned order, therefore, same is required to be upheld - appeals of assessee allowed and that filed by Revenue dismissed: CESTAT [para 16, 17]
- Assessee appeals allowed/Revenue appeal dismissed: DELHI CESTAT
CUSTOMS
2019-TIOL-1173-HC-DEL-CUS
CC Vs Fox International
Cus - The appeal is directed against impugned order dated 7th July 2017 passed by CESTAT disposing of appeal filed by the Respondent by remanding the matter to the Original Adjudicating Authority to first decide the issue of jurisdiction after awaiting the judgment of Supreme Court in the appeal filed by Union of India in the appeal filed against judgment of this Court in Mangli Impex Ltd. 2016-TIOL-877-HC-DEL-CUS - In view of decision in case of Vipul Overseas Pvt. Ltd. 2017-TIOL-2478-HC-DEL-CUS, the impugned order dated 7th July 2017 of CESTAT is hereby set aside and appeal is restored to the file of CESTAT for a fresh disposal on merits without taking into consideration the decision of this Court in Mangli Impex Ltd.: HC
- Appeal disposed of: DELHI HIGH COURT
2019-TIOL-1172-HC-DEL-CUS
CC Vs Mondeo Overseas
Cus - The appeal is directed against impugned order dated 7th July 2017 passed by CESTAT disposing of appeal filed by the Respondent by remanding the matter to the Original Adjudicating Authority to first decide the issue of jurisdiction after awaiting the judgment of Supreme Court in the appeal filed by Union of India in the appeal filed against judgment of this Court in Mangli Impex Ltd. - 2016-TIOL-877-HC-DEL-CUS - In view of decision in case of Vipul Overseas Pvt. Ltd. - 2017-TIOL-2478-HC-DEL-CUS, the impugned order dated 7th July 2017 of CESTAT is hereby set aside and appeal is restored to the file of CESTAT for a fresh disposal on merits without taking into consideration the decision of this Court in Mangli Impex Ltd.: HC
- Appeal disposed of: DELHI HIGH COURT |
