SERVICE TAX

Hardev Singh Vs CCE & ST

ST - The assessee is the house labour contractor of M/s. L & T who is the principal manufacturer of transmission towers and is getting one or the other job work for purpose from all the assessee - It was alleged that the assessee is performing such activities for L & T which falls under definition of BAS against the charges received for purpose - However, they are not paying the due Service Tax on gross amount received by them from L & T - It become clear that the processes undertaken by assessee on the raw-material provided to them by L & T in L & T's own premises are nothing but the processes to convert the said raw-material into a customized part of whole transmission tower and as such, the activity of assessee is incidental/ ancillary to the completion of the manufactured product and thus, falls under Section 2 f (i) of CEA, 1944 - At this stage clause 5 of Section 65(19) of FA, 1994 defining BAS is perused - It is clear that it includes the activity which is production or processing of the goods for or on behalf of the client but does not include any activity that amounts to manufacture of excisable goods - The activities of assessee are the activities of manufacture - Resultantly, the findings of order under challenge holding the activities of the assessee to be the business auxiliary activities and confirming the demands in response thereof is held to be a wrong observation - The orders under challenge are set aside to that extent - The exemption Notfn 6/2005 prescribes the exemption to taxable services upto the aggregate value of Rs. 8,00,000/- during the year 2007-08 and Rs.10,00,000/- w.e.f. 1st April 2008 to the service provider - It is an admitted fact that M/s. L & T had been performing further manufacturing activities on the semi finished goods processed by assessee and have been clearing those goods on payment of duty as well as under the exemption Notification without payment of duty - The assessee have failed to provide the gross aggregate value received by them from M/s. L & T even before the first Appellate Authority - Resultantly, the authority has rightly denied the benefit of exemption Notfn 06/05 to the assessee - With respect to granting the benefit of exemption Notfn 08/2005- ST, no infirmity found in the impugned order - The findings thereof are upheld qua both these Notifications: CESTAT

- Appeal partly allowed: DELHI CESTAT

ST - It cannot be stated that the two show-cause notices are different and a new and emergent situation has arisen for invoking the extended period - A show-cause notice has already been issued to the appellants on 15.10.2004 on the issue of admissibility of deduction of reimbursement and accommodation charges - The department is well aware of the working model of the appellants and the appellants have also been submitting returns from time-to-time along with challans and bills, therefore, invoking extended period in the SCN dated 23.8.2006 is not justifiable - in any case, the issue is no longer res integra as the issue has been decided by the Supreme Court in the case of UOI vs. Intercontinental Consultants and Technocrats Pvt. Ltd. - 2018-TIOL-76-SC-ST : CESTAT [para 6]

ST - Bench is not looking into the issue of includability of TDS and withholding tax and the exemption claimed by the appellants on freely convertible foreign exchange - However, while holding that accommodation and other reimbursible charges are not includable in the assessable value of taxable service, Bench finds that the entire show-cause notice is barred by limitation - appeal is allowed and the impugned order is set aside partly on merits and totally on limitation: CESTAT [para 6.1, 7]

- Appeal allowed: BANGALORE CESTAT

CENTRAL EXCISE

2019-TIOL-1189-HC-MUM-CX

CCGST & CE Vs Pepsico India Holdings Pvt Ltd

CX - The question as being urged by Revenue relates to the rate of duty of excise as Revenue's grievance is to grant of exemption notification - Therefore, in view of Section 35G (1) of the Act, this appeal being one relating to rate of duty would not lie before this Court - Appeal is disposed of as not maintainable before this Court: HC

- Appeal disposed of: BOMBAY HIGH COURT

CGST & CE Vs Telebrands India Pvt Ltd

CX - Issue relates to Revenue's grievance of grant of SSI Exemption Notfn 8 of 2003 by the Tribunal - Thus, the issue arising in the present appeal, inter alia, relates to rate of duty - Therefore, in view of Section 35G (I) of CEA, 1944, an appeal relating to rate of duty from the order of Tribunal is not maintainable before High Court: HC

- Appeal disposed of: BOMBAY HIGH COURT

CX - Appellant claimed benefit of exemption in terms of notification 6/2002-CX on Glass Tubes captively used for manufacture of Glass beads - It is the contention of the Revenue that the exemption is available only when Glass Tubes are manufactured by Mouth Blowing process, however, since on visit to the appellants factory on 12.07.2007, a Compressor was observed as being used to manufacture Glass Tubes, the benefit of exemption was inadmissible to the appellant - Accordingly, CEX duty demand for the period April, 2003 to July, 2007 was raised - Contention of the appellant that the compressor in question was purchased by them only on 31.03.2007 was not accepted by the adjudicating authority on the ground that being the last day of the financial year, the invoice dated 31.03.2007 seems to have been manipulated - inasmuch as the demand was confirmed, therefore, appellant is before the CESTAT.

Held: Appellant has produced a bill dated 31.03.2007 issued by Rathi Industries, showing the sale purchase of the compressor - The adjudicating authority has simpliciter dismissed the same on the ground that the same was purchased on the last date of the financial year and as such, was manipulated - However, the above observations of the adjudicating authority are in the realm of assumptions and presumptions and not based upon any evidence so as to hold contrary to the appellants claim - Revenue has not bothered to investigate at the end of the seller of the compressor so as to find out the fact as to whether the compressor was actually sold on the said date or not - So also, there is no restriction on sale purchase activities on the last date of financial year - No investigation was made by revenue, in which case the bill produced by the appellant has to be accepted as the correct reflection of facts - Bench, therefore, agrees with the appellants that the manufacturing process in their unit have been done with the help of the compressor only with the effect from 01.04.2007, inasmuch as there is no other contrary evidence reflecting on the fact that compressor was being used in the factory prior to the said date - demand for the period prior to 01.04.2007 by denying the exemption notification 6/2002-CX is untenable and set aside - insofar as the period post 01.04.2007 is concerned, the appellant submits that they would be entitled to claim SSI exemption and for which verification purpose, the matter is remanded to the adjudicating authority - penalties set aside and appeals are disposed of: CESTAT [para 7 to 10]

- Appeals disposed of: ALLAHABAD CESTAT

CUSTOMS

Cus - The assessee had filed B/E for clearance of goods declared as "Samsung GSM Mobile Phone GT-P1000, Chic White IRSP ITMNU GT-P1000 CWA INU" - The goods were examined on 2nd Check basis and on examination the goods appeared to be personal computers rather than mobile phones - The goods were liable for classification under CTH 8471 as Automatic Data Processing Machine as against classification under 85171290 as claimed by assessee - It is also well known that the "Tablet" is sold in the market for its capability to perform functions which are normally performed on Automatic Data Processing machine classifiable under heading 8471 - From the reading of Chapter Note 5(A) to Chapter 84, it is quite evident that the goods in question are nothing but an Automatic Data Processing Machine - Even Commissioner has recorded a finding that the imported item is an Automatic Data Processing Machine - The assessee asserted that by applying note 5(E), the imported item needs to be classified under heading 8517 - The said submission of respondents cannot be sustained because from plain reading of said Chapter Note, it is quite evident that it is in respect of machine which are capable of performing a specific function needs to be classified in heading appropriate to their respective function - If the item under importation was capable only for permitting the specific function of "mobile telephony", then in that case the same would have been classified under heading 8528 - But here the case even as per Commissioner is not of specific function but of predominant function - Telephony itself requires that instrument should have earpiece and mouthpiece for voice communication - The item imported do not have any mouth piece or earpiece - From the reviews of the product available on the net with respect to use of this item for telephony, court do not agree with the finding of Commissioner that pre-dominant function of the item imported is mobile telephony - Matter is remanded back to the adjudicating authority for fresh consideration of issue of classification - Since the matter is quite old, Commissioner should re-adjudicate the matter following the principles of natural justice within three months: CESTAT

- Matter remanded: MUMBAI CESTAT

Cus - Assessee is in appeal against impugned order of Commissioner (A), upholding the order of confiscation of shafts as restricted item along with option for redemption with reduced penalty - It is a settled principle that goods are to be assessed in the way, it is presented unless the contrary is established - Invoice copy annexed to the appeal indicates 4 varieties of shafts being imported from M/s CRYOSTAT S.A.S., France and it is not understood as to why all those 4 categories of shafts which assessee claims to have been parts of its centrifugal pumps were all classified as transmission shafts, thus attracting policy restriction and why provision contained in para 1.5 of FTP cannot be pressed into services on the ground that shipment was done after the restriction was imposed - From the plain reading of such provision contained in FTP, it can very well be said that if shipment is made within original validity of irrevocable commercial letter of credit established before the date of imposition of such restriction of import/export, then such export or import is permitted under FTP upto the time limit prescribed in such letter of credit - Therefore, both in classification and application of restriction for such imports during the validity of letter of credit, the order of Commissioner (A) is unsustainable and the same is set aside: CESTAT

- Appeal allowed: MUMBAI CESTAT