2019-TIOL-NEWS-133 Part 2, Dated: Thursday, June 06, 2019

ST - Appellant as an agent of M/s.Kawasaki Liner Services collected port handling charges and terminal handling charges from their customers and remitted the same to their principal - However, they have not collected any mark up or retained any part of the charges collected from their customers - appellants having not provided any service of port handling or terminal handling service and having not collected any consideration in this regard, the demand of service tax under this category on the appellants cannot sustain - impugned order set aside and appeal allowed with consequential relief: CESTAT [para 4, 5]

ST - The appellant-company filed a declaration under the VCES 2013 and declared its tax dues - It also deposited 50% of the tax dues by the due date - However, the remaining amount with interest could not be deposited by the due date on account of some technical issue in the online payment link of the CBIC - Hence such dues were paid on the following date - Thereafter, the appellant's VCES declaration stood rejected - On appeal, the Commr.(A) upheld such rejection of the declaration - Hence the present appeal.

Held: No doubt the payment is not on the last day prescribed for the purpose, but the fact remains that the payment of the remaining amount had been attempted by the appellant on the last date itself - The Revenue could not produce anything contrary & the adjudicating authority in fact considered the bona fide of the appellant - In such circumstances, the rigid interpretation given to the term shall of Section 107(4) is unjustified as the same is uncalled for - While the provisions of exemption schemes have to be interpreted strictly & the time limit specified in the scheme for payment of amounts with interest must be strictly adhered to, such a rigid interpretation cannot strictly be applied in the facts of this case - It is an admitted fact that the appellant attempted to make payment on the last day & had the link been functional, the payment would have been made that day itself - Hence the same is a technical defect beyond the control of the appellant on account of which the deadline was missed - Otherwise the payment was made as per the mandate of the VCES scheme - Hence the order rejecting the declaration warrants being quashed: CESTAT (Para 1,5,6)

ST - The appellant is an NRI providing Commission Agent service to Indian service recipient, namely Amway Enterprises in the USA - Duty demand was raised against the appellant for the relevant period under the heading of BAS - Penalties were imposed as well - Hence the present appeal, raising several demands such as whether the appellant being an NRI is liable to pay service tax or else the recipient of the service is liable to pay the same - The appellant challenged the duty demand raised as being unsustainable - Another issue raised was whether the appellant as an individual who provides a service can be termed as a commercial concern - The appellant also sought to know if it was eligible for SSI exemption under Notfn No 5/2005 - The appellant also claimed that extended period of limitation could not be invoked where the appellant had an interpretation difference & classification dispute & that penalty was not imposable.

Held: The issue at hand stands settled by several decisions of the Tribunal by an individual or proprietor or proprietorship concern is not considered as a commercial concern - Hence no service tax is payable under BAS by such entity - Following the ratio laid down in these decisions, the duty demand merits being set aside: CESTAT

2019-TIOL-1629-CESTAT-BANG

Ultratech Cement Ltd Vs CCT

CX - CENVAT - Provision of service was completed before 1.4.2011 and the invoices for the same was also raised before 1.4.2011 and therefore, the appellant is entitled to claim the CENVAT credit - availment of credit after 01.04.2011 not hit by the embargo that came into force from 01.04.2011: CESTAT [para 6]

CX - Rule 2(l) of CCR, 2004 - Activities relating to business and services in relation to setting up, modernization, renovation or repair of the factory were covered under the definition of input service and, therefore, all the credit availed by the appellant on all input services in dispute are eligible in terms of both main clause and inclusive clause and do not fall under any of the category of exclusion clause of definition of input service - Construction of guest house, canteen, logistic building, painting of chimney, factory building, railway siding outside the factory rainwater harvesting etc. are all Input services - Credit admissible thereon - Impugned order set aside and appeal allowed: CESTAT [para 6]

- Appeal allowed: BANGALORE CESTAT

2019-TIOL-1628-CESTAT-MAD

CCE Vs V3 Power Petro Fabricators Pvt Ltd

CX - Respondent had made clearances without payment of duty by availing the exemption under Notification No.6/2006-CE dt. 1.3.2006 applicable to clearances towards international bidding - Department took a view that the exemption granted under Notification No.6/2006-CE is subject to the condition that goods are exempted from payment of customs duty and additional customs duty when imported into India; that the exemption under customs duty etc. provided vide Notification No.21/2002-Cus. dt. 1.3.2002 requires fulfilment of certain conditions inter alia production of certificate from the Directorate General of Hydro Carbons (DGHC) to the effect that the said product viz. process equipment are required for petroleum operations as specified in condition No.31 (c) of the notification; that since no such certificate had been produced by the respondents, SCNs were issued proposing denial of the exemption and demanding the Central Excise duty - demands confirmed but Commissioner(A) set aside the o-in-o, therefore, appeal before CESTAT.

Held: Conditionalities that are required to be fulfilled to avail exemption of the impugned goods when they are imported under a customs exemption notification cannot be insisted upon in respect of the clearances made by the domestic manufacturers, for example under Notification No.6/2006-CE - in para-2 of both the SCNs, it has been clearly indicated that respondent had cleared processed equipment to M/s.GEA Cooling Tower Technologies India Pvt. Ltd. and that the goods were further consigned to M/s.Cairn Energy India Pvt. Ltd. - there is no dispute of the fact that goods have indeed been supplied for the purpose of petroleum exploration operations to the sub-contractor and from thereon to the main contractor – no infirmity in the order impugned, hence appeal by Department fails: CESTAT [para 6.5, 6.7, 6.8, 7]

- Appeal dismissed: CHENNAI CESTAT

2019-TIOL-1627-CESTAT-ALL

UP State Spinning Company Ltd Vs CCE & ST

CX - Appellant claimed benefit of Notification No.5/98-CE and 5/99-CE which wholly exempted goods falling under headings 5205.11, 5205.19, 5206.11 or 5206.12, from payment of duty, subject to the condition that they were purchased by a registered Apex Handloom Cooperative Society, the National Handloom Development Corporation or a State Government Handloom Development Corporation and the payment for which is made by cheque drawn by such Cooperative or Corporation on its own bank account - exemption is also subject to the production of a certificate from the authorized officer of the Handloom Cooperative Society, National Handloom Development Corporation or State Government Handloom Development Corporation, as the case may be, that the yarn is going to be used only on handlooms - As the appellant had not produced the certificate from NHDC, as required in the notification, at the time of clearance of the goods and as per the investigations conducted by the revenue, the society to whom the yarn was tendered, were not found to be at the address given in the bills, proceedings were initiated against the appellant by way of issuance of SCN - Demand of Rs.56,87,662.66 confirmed along with penalty and interest - Tribunal by its final order dated 12.01.2005 while remanding the matter held that since the certificates were produced subsequently from NHDC, the condition of the notification stands satisfied and late production of the certificates cannot be held to be reason to deny the benefit of the notification - Tribunal also observed that admittedly orders for the supply of cotton yarn were placed by the NHDC and not by any individual society and the payments for these goods were made by NHDC through draft/cheque and not by the society to whom the goods were dispatched - Insofar as the revenue's ground that two societies did not exist and that the other four societies did not utilize the goods on handlooms, Tribunal also observed that the notifications in question do not cast duty on the appellants to see that the goods supplied to a particular society were utilized on handlooms and also the appellants had produced additional evidence to prove that the societies, which are alleged to be non-existing, in fact, existed at the time of supply of the goods - in denovo proceedings demand was again confirmed and in appeal, the matter was again remanded by the CESTAT on 13.03.2012 - impugned order confirms the demand to the extent of Rs.21,09,571/- and imposes equal penalty - appeal before CESTAT.

Held: The only dispute that remains is as to whether the yarn so supplied by the appellant was actually used by the societies or not - Both the conditions stand satisfied by the appellant, inasmuch as certificate stands produced and the consideration stands received by way of cheque - There is no further obligation cast upon the assessee to find out the truth, as to whether the yarn supplied by them to various societies, under the direction of the Apex body i.e. NHDC stands actually used by such societies on handloom - there is no requirement, in terms of the said notifications even on the part of the revenue to investigate the matter, as regards the actual use of the yarn by the said societies - there being no further condition as regards the disposal of purchased yarn by the Apex body, revenue's anxiety to reach the purchaser and the ultimate use of the yarn is beyond the scope of the notification - an extraneous condition cannot be imposed by the adjudicating authority on its own - impugned order set aside and appeal allowed with consequential relief: CESTAT [para 6 to 9]

- Appeal allowed: ALLAHABAD CESTAT

2019-TIOL-1626-CESTAT-DEL

United Electricals And Transformers Vs CCE

CX - Goods have been cleared without being subjected to provisional assessment u/r 9B - Once the clearance is without Price Variation Clause (PVC), the price cannot be revised retrospectively, even after the issue of the circular at the lower rate - clearance of the impugned goods has rightly been done at the prevalent rate/price at the time of clearance of the goods - as ER-1 filed, no suppression of facts, hence no penalty: CESTAT [para 7]

CX - CENVAT - Vehicles purchased in the name of the partner of the appellant - since vehicle is being used in furtherance of the purpose of manufacture of goods and other related work by the Director of the Company, there is no bar to avail cenvat credit on the service tax paid: CESTAT [para 8]

- Appeal partly allowed: DELHI CESTAT

2019-TIOL-1611-CESTAT-BANG

Divya Jyothi Steels Ltd Vs CCT & CE

CX - The assessee is engaged in manufacture of Sponge Iron and are availing and utilizing the CENVAT credit on capital goods and inputs as per the provisions of CCR, 2004 - During audit, it was observed that the assessee has availed CENVAT credit on inputs/capital goods and input services on some of the invoices which are not valid document for availing CENVAT credit and the assessee has also availed credit on imported coal for which no invoices/Bill of Entry was produced - The denial of CENVAT credit on TMT bars is not justified because the said items were used in factory in relation to the manufacture of final products and Revenue has failed to bring any material on record to show that it has been used for any civil construction - Further this credit pertains to the period prior to 01/04/2011 when such credit was admissible - Therefore denial of this credit is not justified and assessee is entitled to CENVAT credit of Rs.1,58,788/- in view of the decisions in Navaratna S.H. Highway Prop. Pvt. Ltd. - 2012-TIOL-1245-CESTAT-AHM and Sai Sahmita Storages (P) Ltd. - 2011-TIOL-863-HC-AP-CX - With regard to CENVAT credit of Clean Energy Cess, in view of the decision of Tribunal in case of Ramco Cements Ltd. - 2018-TIOL-3553-CESTAT-BANG, the assessee is entitled to CENVAT credit on Clean Energy Cess which is paid as duty of excise - Credit of BCD and Customs cess was availed only by mistake and not with intention to evade payment of duty - Therefore to that extent, the assessee is not liable for payment of penalty in terms of decision in case of Gaurav Agro Plast Ltd. - 2008-TIOL-736-HC-AHM-CX - Regarding demand of interest, the assessee has reversed the CENVAT credit irregularly availed and has also paid Rs.5 lakhs in cash - These facts need to be verified by the original authority as to whether the assessee had got sufficient balance in their CENVAT account and for quantification of the interest amount, the matter needs to be remanded to the original authority: CESTAT

- Matter remanded: BANGALORE CESTAT

2019-TIOL-1610-CESTAT-DEL

RSAL Steel Pvt Ltd Vs CGST & CE

CX - While issuing the impugned SCN, the factum of availing cenvat credit by the appellant on the common inputs/input services was very much in the notice of the Department - In such circumstances, the allegation of suppression of facts on part of the appellant is not at all sustainable – SCN is time barred - adjudication arising out of the said SCN is, therefore, set aside - Appeal stands allowed with consequential relief: CESTAT [para 9, 10]

- Appeal allowed: DELHI CESTAT

Cus - Appeals have been filed by Revenue on the ground that Adjudicating Authority while passing adjudication order, though given findings that the assessee is liable for penalty under Section 112 of Customs Act, 1962 but he chose not to impose the penalty - It is clear that Commissioner has given contrary findings on the issue of penalty and stated that penalty is not imposable and at the same time he is taking a 'U' turn stating that assessee is not liable to penalty under Section 112 of Customs Act - Therefore, there is clear error in O-I-O in so far as the Commissioner did not impose penalty on both the assessees - As per findings of Commissioner, recovery of interest under section 28AB of Customs Act, 1962 is not warranted in this case - However, despite giving this finding, he has not passed any order in respect of proposal for demand of interest made in SCN - It is incumbent on Commissioner to pass an order on each and every proposal made in SCN and he cannot be silent in operating portion of the order on any of the proposal made in SCN - Therefore, on this count also, there is a clear error in the order - Since there are contrary findings on imposition of penalty under Section 112 and there is error inasmuch as no order was passed on the interest, the matter needs to be remanded for passing a fresh order only on the issue of penalty under Section 112 of the Customs Act and on the interest under Section 28AB - Accordingly, the matter is remanded to Adjudicating Authority for passing a fresh order: CESTAT