2019-TIOL-NEWS-143 Part 2, Dated: Tuesday, June 18, 2019

2019-TIOL-1731-CESTAT-MAD

MMTC Ltd Vs CCE & ST

ST - A SCN was issued to assessee on the grounds that they are not paying service tax on administrative charges and supervision charges collected over and above the selling price from their customers - A copy of a High Seas Sale Agreement (HSS) between the assessee and TNEB is also placed on record and it is clear from the same that the assessee is charging Rs. 100/- PMT over and above the sale price of US$ 73,069 CIF which is shown in proforma invoice as administrative charges - A combined takeaway is that the assessee has not made any purchase for itself, but has only collected from TNEB/MFL the purchase price apart from administrative charges for procuring coal/urea for its clients and nothing beyond it - The HSS agreement samples placed on record also mentions that assessee should 'procure coal' in bulk for TNEB and the same situation continues even in the case of MFL - Admittedly, Coal or Urea is not assessee's products nor can it be said that it has got complete control/title over the same - Apart from this, none of the other documents reflects anywhere the status of assessee as an exclusive buyer - It found useful to refer to the order of CESTAT in case of Rajasthan State Beverages Corporation Ltd. 2013-TIOL-1110-CESTAT-DEL - Last but not the least, the assessee has also claimed that in its sales tax returns it had shown the entire invoice price including administrative charges and then has been offered to State tax but claimed as exemption - Sales Tax Assessment order issued by State Revenue Authority placed on record has allowed assessee's claim for exemption but the same cannot be held as having been subjected to sales tax since it is a threshold exemption - Typically, HSS is neither liable to customs duty nor under sales tax and therefore just because the invoice price was offered to sales tax, claimed as exemption, would not ipso facto justify that HSS was liable under sales tax in the first place and secondly, it is not the Tribunal's domain also to go into this issue - The tax evasion came to the notice of Revenue on specific intelligence following which they started investigating the activities of assessee - Apart from analysing the purchase orders, tripartite agreement and balance sheets, Revenue also examined the Dy. General Manager of MMTC and after gathering pieces of evidence, a SCN came to be issued - The conclusion by Revenue that there was wilful intent to evade tax cannot be faulted nor considered inconsistent with statutory prescription that justify invocation of extended period of limitation - Invocation of extended period of limitation and consequent assessment of assessee to service tax is in order - No error found in the impugned adjudication order - The appeal being devoid of merits is dismissed: CESTAT

- Appeal dismissed: CHENNAI CESTAT

2019-TIOL-1730-CESTAT-AHM

Jai Research Foundation Vs CCE & ST

ST - The assessee is a society engaged in testing substances of agrochemicals, Pharmaceuticals, industrial chemicals, drugs and cosmetic products - It is registered under & pays service tax under Technical Testing & Analysis Service - The assessee also received services from a firm located in England under a Consulting Services Agreement - The Revenue opined that the service rendered by the assessee fell under Scientific and Technical Consulting Services and the services received from the foreign firm fell under BAS - Hence duty demand was raised with interest under both headings & penalty was imposed - Hence the present appeal by the assessee.

Held - The assessee is only collecting samples, modifying them, conducting analysis, preparing report & submitting the same to the client - In this process, it nowhere emerges that the the assessee provides any service of Scientific & Technical Consultancy Service to the client - The process carried out by the assessee is limited to analyzing the samples & providing reports - The assessee is not authorized to give any consultancy on the analysis & report conducted by them - There are two separate parts, namely analysis of sample & then providing report - The assessee performs the second function - From the definition of Scientific or Technical Consultancy Services, it is clearly provided by a scientist or technocrat or science or technology institution - Presently, the testing & analysis of sample & preparation of report is not carried out by any of these - Hence the service does not qualify as Scientific or Technical Consultancy Services - Hence the service provided by the assessee is correctly classifiable as Technical Testing and Analysis Agency Service - Thus the demand raised on this count is unsustainable & must be quashed: CESTAT

Held - Import of service - The assessee already paid service tax with interest on service received from abroad - The same is taxable u/s 66A of the Finance Act - Besides, as the assessee is entitled for Cenvat credit, the situation is revenue-neutral - Also, the issue involves interpretation of classification of service - Hence the assessee makes a good case for waiver of penalty - The penalty imposed is quashed: CESTAT

- Assessee's appeal allowed: AHMEDABAD CESTAT

2019-TIOL-1729-CESTAT-AHM

Patel Dye Chem Agencies Vs CCE & ST

ST - There are three issues involved in this case. The first one is, whether the services of Commission Agent provided to China based Company, for which the assessee received commission which was claimed as export of service; second is, the commission income received in relation to the business of textile processing under Notfn 14/2004-ST and the third is, other commission on which service tax demand of Rs. 84,270/-, admitted and paid along with interest by assessee - As regards the demnd of Rs. 33,176/-, the same was on the BAS i.e. commission received from China based client which is in relation to facilitating the client for supply of goods from India to China - Against such service, the consideration received was in convertible foreign exchange and therefore, the fact that the service provided from India to the client based in China, the consideration received is in convertible foreign exchange, the service is qualified as export service and hence the same is not taxable - As regards the demand of Rs. 89,350/-, undisputedly the commission is related to textile processing business which is clearly exempted by Notfn 14/2004-ST, therefore, the said demand is also not payable - The relief sought is for waiver of penalty imposed under Section 76 and 78 of FA, 1994 - As held by Gujarat High Court in case of Raval Trading Company 2016-TIOL-112-HC-AHM-ST, simultaneous penalty under Section 76 and 78 cannot be imposed - Accordingly, the penalty imposed under Section 76 is set-aside - As regards the penalty imposed under Section 78, both the lower authorities have not extended benefit of option to pay 25% under the proviso to Section 11AC, therefore, in the light of Supreme Court judgment in case of RA Shaikh Paper Mills Pvt. Limited the assessee is entitled for the option to 25% penalty - Accordingly, the penalty is reduced to 25% subject to the condition that entire amount of tax of Rs. 84,270/- along with interest and 25% penalty of said service tax is paid within one month: CESTAT

- Appeal partly allowed: AHMEDABAD CESTAT

CX - The issue relates to rejection of cenvat credit availed on input service on service tax paid for transportation of final product from the factory to the job worker's premises - The assessee was eligible to take credit of service tax paid on transportation of semi-finished goods from the factory up to the premises of the job-worker in terms of Board Circular 97/8/2007 ST - The invoice issued by assessee for dispatch of goods to the job-worker shows that the goods were Stock Transfer against Form F and the assessee have not transferred the title of goods - Further, the Commissioner (A) has also noted in impugned order a decision on the same issue in favour of assessee for the different period but the Revenue has alleged that decision was not appealed against on account of monetary limit but the said fact is not correct because the Tribunal had decided the said case on merit and held that no case was made out against the assessee - There is no infirmity in impugned order warranting interference and consequently the impugned order is upheld by dismissing the appeal of the Revenue: CESTAT

CX - During the relevant period, the assessee-company was served SCNs observing that one M/s Chennai Petroleum Corporation Ltd. (CPCL), would supply Polybutene Feed Stock through pipeline & the assessee would extract the final product being Poly Iso-Butylene (PIB) - It was also noted that the assessee would send the PIB to M/s IOCL& its subsidiaries on behalf of CPCL - The Revenue alleged short-payment of duty, which the assessee duly paid with interest upon being pointed out - Thereafter, SCNs were issued proposing to appropriate the tax & interest paid along with penalty u/r 25 of CER 2002 r/w Section 11AC of the CEA 1944 - Such proposals were confirmed upon adjudication - On appeal, the Commr.(A) quashed such findings - Hence the Revenue's appeal.

Held - The SCNs do not allege suppression or fraud with intent to evade payment of duty - There is also no dispute in respect of returns filed by the assessee, or furnishing of invoices, or certificate of Cost Accountant giving break up, or CERA audit and internal audit at assessee's premises, or payment of duty & interest before issuing SCN or any technical or legal non-compliance by the assessee - The Revenue cannot claim to be unaware of the assessee having paid duty with interest before the former could allege non-compliance with Rule 10A - All this goes to show that the SCNs were issued in a routine manner without proper justification - The SCNs were issued beyond normal limitation merely to impose penalty & so the same were rightly quashed in the O-i-A - Besides, the Apex Court in Uniworth Textiles Vs. CCE, Raipur held that every non-payment could not be treated as wilful suppression - Thus the O-i-A in challenge merits being sustained: CESTAT

Cus - The petitioner is an association of Customs brokers, transporters and handling agents - A pilot project has been initiated through such notice wherein a Managed Service Provider selected by the ADB was given the right to provide Electronic Cargo Tracking System for facilitating cargo transit to Nepal - The petitioner also claimed that such project entailed that Cargo Handling Agents would not be allowed to act for Nepalese importers - Hence the present writ assails such SCN issued by the Commissioner of Customs (Port), Kolkata, bringing into effect such system.

Held - It must be noted that this public notice was issued by the Commissioner of Customs (Port) & not by the Board as required u/s 143AA - Thus, even if the provisions of Section 143AA apply in this case, the action taken under this section must have to be taken through a Notification issued by the CBIC - The provisions u/s 143AA do not allow the Board to delegate such power to the Commissioner of Customs (Port) - Similar pilot projects were run for goods imported through Vizag Port & such project still continues - Besides, imports made through Vizag Port though subject to the pilot project, can also be trans-shipped under the old procedure - Thus, the notice being assailed in the present writ is akin to severing of the head in relation to the earlier process & it is only the pilot project that is to continue - Besides, as no documents were placed by the UoI regarding the basis and jurisdiction under which the Commissioner of Customs (Port) passed the public notice, the same merits being stayed for the time being - It is clarified that importers from Nepal have liberty to follow either of the two procedures - Also, 4 weeks' time is granted to the UoI for filing counter-affidavit - Matter be listed for hearing in August, 2019: HC (Para 2,3,17-19)

Cus - Assessee filed a refund claim in respect of Special Additional Duty of Customs paid against Ex Bond Bill of Entry by M/s Vijai Marine Services - M/s Vijai Marine Services had manufactured in Custom Bond, Barge M V Aquarius and de-bonded the same for home consumption by filling said Bill of Entry and after payment of applicable Custom Duties - Assessee filed the said refund claim on the strength of No Objection certificate issued by M/s Vijai Marine Services - Assessee had claimed said refund in terms of Notfn 102/2007-Cus - Admittedly, the invoice dated 15.03.2011 issued by M/s Vijai Marine Services do not carry the endorsement as specified by condition 2(b) of the said Notification - The purpose of such endorsement on the invoice, is only to prevent the buyer of goods from claiming the CENVAT Credit of SAD of Customs levied under Section 3(5) of CTA, 1975, for which this refund application has been filed - This requirement becomes more relevant if person claiming the refund as per this notification is importer and the claimant of CENVAT Credit is the person to whom the goods have been sold - In present case the buyer of goods himself is claiming the refund of SAD paid by the person ex-bonding the goods on payment of applicable Customs duty - In his order Commissioner (A) has satisfied himself that no CENVAT Credit has been claimed in respect of the SAD paid - Second objection raised by revenue in their appeal, is with regards to assessee filing the refund claim, they being not importer - Revenue has relied on condition 2(c) of the said notification for raising this objection - The word importer used in Notfn 102/2007-Cus needs to be interpreted in terms of said notification, and by reading the notification as whole - It is not disputed that the burden of Custom duties as applicable and paid and that of the sales tax/ VAT as applicable and paid has been borne by assessee - Since they have borne the burden of both the Customs Duty and Sales Tax/ VAT they have filed this refund claim - No infirmity found in the orders of Commissioner (A): CESTAT