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SERVICE TAX
2019-TIOL-1291-HC-KAR-ST
Mysore Hotel Complex Vs UoI
ST - Renting of Immovable Property Service - Appellate Authority being bound by the provisions of the Act, dismissed the appeal observing that the appeal is filed with the delay of 124 days beyond the condonable power vested with the authority - Petitioner has assailed this order as well as the order of the original authority on the ground that since the original order was served on the petitioner - company on 21.01.2018, the petitioner could not file the appeal well within time i.e., 20.04.2018 since he had met with an accident during that period; that the impugned adjudication order suffers from arbitrariness and illegality; the determination of point of taxation for the purpose of the Point of Taxation Rules, 2011 is, where person providing the service receives a payment before the time specified i.e., the time when the invoice for the service provided or to be provided is issued and which aspect has not been properly appreciated by the adjudicating authority.
Held: There is no prohibition for this Court under Articles 226 and 227 of the Constitution in exercising the extraordinary jurisdiction to condone the said delay of 64 days (calculated as 124 days by the Appellate Authority) accepting the satisfactory explanation offered by the petitioner in view of the merits found in the appeal preferred by the Assessee subject to costs of Rs.10,000/- which otherwise would result in failure of justice - delay in preferring the appeal is condoned and the appeal is restored to the file of the respondent Commissioner (Appeals) with a direction to decide the appeal on merits in accordance with law in an expedite manner, in any event, not later than three months from the date of receipt of certified copy of the order subject to compliance of pre-deposit and cost of Rs.10,000/- to be deposited with the respondent Commissioner (Appeals) - Petition disposed of: High Court [para 9, 10] - Petition disposed of
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KARNATAKA
HIGH COURT
2019-TIOL-1768-CESTAT-MAD
Pricol Ltd (Plant I) Vs CGST & CE
ST - The assessee have three plants situated at different locations and registered as Input Service Distributor (ISD) - The whole case is based on allegation that the Credit which was distributed by assessee, was re-transferred to it and later distributed to the other units - Rule 7 ibid was later amended vide Notfn 18/2012 CE (NT) wherein a restriction for proportionate distribution was introduced - At the cost of repetition, it has to be said that during disputed period, there was no restriction in quantum of Credit that could be distributed - When the amount was distributed by M/s. Pricol Ltd., ISD, to M/s. Pricol Ltd., Plant-I, they had reversed the Credit as they were already having excess unutilized Credit - This reversal is carried out by issuing an invoice by M/s. Pricol Ltd., Plant-I to M/s. Pricol Ltd., ISD - True, there may not be any specific provision to facilitate such "return" of non-required credit which has been transferred in first place by Input Service Distributor, but it has to be kept in mind that there would be situations when an Input Service Distributor may transfer Credit amounts inadvertently or in excess of what was intended, to a constituent unit - In such situations, the only recourse would be by way of "return/reversal" of such Credit back to Input Service Distributor, which in turn can be facilitated only by recipient unit reversing the unintended Credit and issuing a document confirming the facts of the same - There is no prohibition in law for such reversal of Credit to the Input Service Distributor - The law does not provide any procedure that can be applied to such situations - Therefore, this is the only way unintended Credit, transferred inadvertently by the Input Service Distributor, can be "returned" to such Input Service Distributor - Certainly, there is nothing in Service Tax Rules or the Finance Act, 1994 or, for that matter, in CCR, 2004 which prohibits or bars such collections - In any case, it is not the allegation that the same quantum of Credit has been availed not just by M/s. Pricol Ltd., ISD, but also by M/s. Pricol Ltd., Plant-I - It is evident that M/s. Pricol Ltd., Plant-I has only returned/reversed the exact quantum of Credit that was transferred to it in the first place by the M/s. Pricol Ltd., ISD - Such return/reversal has not enlarged the quantum of Credit that has been availed nor has there been any financial injury caused to the exchequer - This is then only a revenue neutral situation - The demand or penalties cannot sustain - The impugned Order is set aside: CESTAT
- Appeals allowed: CHENNAI CESTAT
2019-TIOL-1767-CESTAT-HYD
Shriram Life Insurance Vs CC, CE & ST
ST - Assessee is engaged in business of providing life insurance services and duly licensed by IRDA for short - During period in question, assessee was providing two types of life insurance policies i.e. the traditional plan though pure risk insurance policies, participating and non-participating policies (endowment policies) and unit linked insurance plans (ULIP) - The common issue in dispute in appeals filed by assessee is whether for the period in question, they are liable to discharge service tax on difference between the fund value and surrender value in case of pre-mature surrender/discontinuance of ULIP - It is not in dispute as to the amounts which are paid by assessee to an insured person under nomenclature of surrender charges, it represents the difference between the fund on the date of surrender vis-a-vis the amount agreed to be paid to the policy holder of his surrendering the policy before expiry of the locking period as provided in the policy - It is also seen that the policy document which is the contract between the insurer and the insured stipulates the manner in which surrender value of the policy would be computed in case a policy holder wishes to exercise his right to receive the insurance money by surrendering the policy - Since the insurer provides for in their books a liability equivalent to the fund value as per provisions of Insurance Act, 1938, even though, the amount may not be a liability which is immediately payable, the difference between the fund value as on the date of surrender vis-a-vis the amount paid as surrender value, is accounted as surrender charges in the books of account - The demand of service tax on surrender charges for period in question is unsustainable accordingly is set aside so also the interest and the penalty imposable - Assesee needs to discharge the interest liability on said amount but at the same time, there is no necessity to visit the assessee with any penalty on this point: CESTAT
- Appeal partly allowed: HYDERABAD CESTAT
2019-TIOL-1766-CESTAT-CHD
Zee Cable Network Vs CCE & ST
ST - The assessee-company is a leading entity engaged in broadcasting of television programmes - During the relevant period, its appeal filed before the Commr.(A) was dismissed on grounds of 26- day delay beyond the statutory period of 60 days.
Held: The appeal has been filed within the 30-day condonable period after the expiry of 60 days, as per Section 85 of the Finance Act 1994 - The matter warrants remand, since the Commr.(A) straightaway dismissed the appeal without going into merits of the case: CESTAT
- Case remanded: CHANDIGARH CESTAT
CENTRAL EXCISE
2019-TIOL-1292-HC-MUM-CX United Spirits Ltd Vs UoI
CX - Petitioner challenges the Order and Corrigendum passed by the CCE, Nashik disposing of the SCN dated 1 st August 2017 on the ground that the impugned orders have been made in breach of principles of natural justice; that the bar of alternate remedy ought not to be made applicable and the High Court should entertain the present petition against the impugned orders; that despite specific request, respondent No.2 denied the petitioner opportunity of cross examining the employees in the context of their recorded statements; that even the request for cross examination came to be denied only in the impugned order and that too, without assigning any reasons or in any case, cogent reasons; that all this clearly amounts to violation of principles of natural justice and fair play and constitutes a good ground for quashing the impugned orders and remanding the matter.
Held: Bench finds that the complaint of the petitioner is not that there was no compliance whatsoever with the principles of natural justice or fair play but rather, the complaint relates to insufficient compliance with such principles - Impugned order does provide reasons as to why the request for cross examination was not considered and the question as to whether such reasons are sufficient or not can always be agitated by the petitioner by instituting an appeal against the impugned orders - Since this is not a case of total non-compliance with principles of natural justice, the issue of prejudice also assumes significance - It is not sufficient for the petitioner to merely allege failure of natural justice, but further the petitioner, has to make out a case of consequent prejudice, particularly in a case where the complaint really is of inadequate opportunity and not of no opportunity whatsoever - The case of prejudice, if any, as also response to the same will essentially involve adjudication into factual aspects, which exercise can be effectively undertaken in the course of appeal rather than in these proceedings - petitioner, in the facts and circumstances of the present case, has, therefore, not made out a case warranting the exercise of extraordinary jurisdiction under Article 226/227 of the Constitution of India, bypassing the alternate and efficacious remedy by way of an appeal before the Appellate Authority - this is not a case of "no opportunity" but at the highest the complaint relates to 'no adequate opportunity' - The petitioner will, therefore, have to make out a case, not only of failure of natural justice but also a case of consequent prejudice - All this will require examination and evaluation of facts, which can be conveniently gone into in the appeal rather than in the exercise of powers of judicial review - Petition dismissed with liberty to the petitioner to avail remedy of appeal - if such remedy is availed within two weeks, the appellate authority, in the peculiar circumstances of the case is requested to entertain the appeal on merits - Petition dismissed: High Court [para 7, 8, 9, 10, 15, 16, 17] - Petition dismissed
: BOMBAY HIGH COURT
2019-TIOL-1778-CESTAT-MAD
JSW Steel Ltd Vs CCE
CX - Assessee is challenging the Order-in-Original dated 25.22.2011 passed by the Commissioner wherein, the Commissioner-adjudicating authority has disallowed allegedly wrongly availed Cenvat credit under Rule 14, disallowed the refund claim; imposed interest and penalty and ordered appropriation of tax and interest paid by the assessee - appeal to CESTAT.
Held: On going through the SCN, there is no allegation levelled as to suppression or mis-statement, etc; to invoke larger period of limitation - It is also not in dispute that on being pointed out the appellants had reversed the entire Cenvat credit of Rs. 41,09,664/- in RG23C (Capital Goods Register) which fact was duly intimated to the Revenue on 29.06.2007, which fact also stands acknowledged in the SCN - There is also no dispute with regard to the subsequent directions dated 03.07.2007 of the Assistant Commissioner, Salem -II Division, to again reverse the above amount by remittance through PLA, which has also been obeyed by the assessee vide TR-6 Challan dated 05.07.2007, which also finds place in the SCN and nor is there any dispute with regard to the remittance of interest also by the appellants - Revenue was actively in the picture and in the know of these events by instructing the reversal and also directing the appellant to reverse by remittance in cas - These facts coupled with no allegation as to suppression or fraud etc. in the SCN points out to the bonafides of the appellants - it is a clear case where larger period is invoked for no reason, the Revenue never even whispered that the reversals were never there to allege availing and continue to enjoy any benefit of Cenvat credit - Discernibly, there is no Revenue loss since duty is made good along with interest, not just once - SCN is clearly issued invoking extended period of limitation in a routine manner and without any justification whatsoever for which reason, the impugned order cannot sustain - Order set aside and appeal allowed with consequential benefits: CESTAT [para 5, 6]
- Appeals allowed : CHENNAI CESTAT
2019-TIOL-1777-CESTAT-ALL
K P Pan Products Pvt Ltd Vs CCE & ST
CX - Panmasala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008 - One packing machine which was being used for manufacture of the panmasala of retail pouches of the RSP of Rs.2 as well as Rs.3 - Appellant in respect of this machine had discharged duty liability by treating the machine as having been used for manufacture of Panmasala pouches of RSP of Rs.3 - In other words, the appellant paid duty in respect of this machine by applying the rate of duty applicable to the RSP of Rs.3 per pouch - Department was of the view that since, on the same machine, in addition to the Panmasala pouches of RSP of Rs.3, the pouches of the RSP of Rs.2 were also manufactured, first proviso to Rule 8 of the PMPM Rules would become applicable and this machine would have to be treated as two machines and, accordingly, the appellant would have to pay the duty on an additional machine by applying the rate per machine applicable for the RSP of Rs.2 - demand confirmed along with interest and penalty imposed - appeal to CESTAT.
Held: From perusal of Rule 8 of the Packing Machine Rules, 2008, it is clear that first proviso to Rule 8 becomes applicable when on an existing packing machine, the manufacturer commences manufacture of the "goods of a new RSP" during that month and in such a situation, this has to be treated as an addition in the number of operating packing machines for the month or in other words, that machine would have to be treated as two machines - The dispute is as to what is a "new retail sale price" - The new retail sale price would mean the retail sale price which had not been declared in respect of that machine in the Form-I declaration - For example, when in terms of the Form-I declaration, a manufacturer is to manufacture the Gutkha/panmasala pouches of Rs.3 per pouch during a particular month, and sometime during this month, he starts manufacture of Panmasala pouches of Rs,4 per pouch which had not been declared in the Form-I declaration, it would be treated as a new RSP - However, if in the Form-I declaration, he had declared that machine to be used for manufacture of both the RSPs of Rs.3 as well as Rs.4, it cannot be treated as the case of commencing manufacture of goods of new RSP so as to attract the first proviso to Rule 8 - In fact, if the intention of the Government had been to treat a particular machine being used during particular month for manufacture of the retail pouches of two or more RSPs as that many machines, the first proviso would have been worded differently - identical issue has been decided in favour of the assessee by the Tribunal in the case of M/s Kay Pan Sugandh Pvt. Ltd. - 2017-TIOL-1561-CESTAT-DEL - since the issue stands settled, impugned orders set aside and appeals allowed with consequential relief: CESTAT [para 6.1, 7, 8]
- Appeals allowed : ALLAHABAD CESTAT
2019-TIOL-1776-CESTAT-BANG
CCE, C & ST Vs Kalyani Steels Ltd
CX - Respondents are engaged in the manufacture of pig iron and rolled steel bars and rods of alloy and non-alloy steels and are availing the credit of duty paid on input, capital goods and input services - During internal audit, it was observed that in the course of manufacture of pig iron, granulated slag falling under Chapter 26 and mini blast furnace (MBF) falling under Chapter 2619.00 are generated - Granulated slag is cleared on payment of appropriate duty and MBF slag is cleared for some consideration without discharging the duty liability by claiming exemption under Notification No.4/2006-CE dated 1.3.2006 - Since no separate inventory of input and input service had been maintained in respect of the exempted goods and dutiable goods as required under Rule 6(3) of CCR, 2004, Revenue alleged that the assessee is required to pay an amount equal to 5% or 10% of the value of the exempted goods i.e., MBF slag when sold for consideration under Rule 6(3)(1) of CCR, 2004 - original authority confirmed the demand but Commissioner(A) set aside the said order, hence Revenue in appeal before CESTAT.
Held: Issue is no more res integra and has been settled in favour of the assessee by various decisions - It is held therein that Rule 6 will not apply in the cases where the exempted by-product or waste emerges in the course of manufacture of dutiable products; that slag arising in the course of manufacture of iron and steel is a waste and that the provisions of Rule 6 of CCR, 2004 are not attracted - following the same, impugned order is upheld and Revenue appeal is dismissed: CESTAT [para 6]
- Appeal dismissed : BANGALORE CESTAT
2019-TIOL-1765-CESTAT-CHD
JCBL Ltd Vs CCE & ST
CX - The assessee is in appeal against the impugned orders demanding excise duty and imposing penalty on them - Assessee is engaged in manufacture/fabrication of bus bodies on chassis supplied by their customers - The assessee also manufactures bulletproof special purpose vehicles falling under chapter 87 of First Schedule to CETA, 1985 for army/paramilitary forces by carrying out the activity of body building and bullet proofing on the chassis supplied by M/s.Tata - The Revenue entertained a view that the said goods were classifiable under tariff item 8710 0000 of CETA - Whether these light armoured troops carrier is classifiable under chapter 8705 90 00 or under tariff item 8710 00 00 - Admittedly, the vehicle in question is a special purpose vehicle, therefore, the same have merited classification under tariff heading 8705 90 00 - Tribunal have also examined HSN Explanatory Notes to chapter 87.10 it excludes cars and lorries of the conventional type, armoured or equipped with subsidiary removable armour which will cover under headings 87.02 to 87.05 as applicable - Therefore, it is clear that 87.10 covers tanks and other armoured fighting vehicles in the HSN - Therefore, light armoured bulletproof vehicles are specifically excluded from classification under tariff heading 87.10 - The bulletproof vehicles manufactured by assessee are light armoured bulletproof vehicles is not disputed - The feature of bullet proof SPV indicates that these provide protection to the troops sitting inside the vehicles, against bullet/hand grenades - It also had provision for holes on roof and the sides, through which the troops inside the vehicle can retaliate - Thus, primary purpose of said vehicle was patrolling, surveillance and security of forces inside the vehicle while being stationed at the battlefield - Therefore, the SPVs are designed and manufactured for special purpose and use - These are not principally designed for the transport of passengers or goods and hence, are not excluded from the purview of heading 8705 - The main purpose is to ensure the safety of occupants inside the vehicle for which, the vehicle is made bulletproof - Therefore, the bulletproof SPVs deserve to be classified under chapter heading 8705 - HSN Explanatory Notes to chapter heading 8705 provides that primary purpose of a vehicle of this heading is not the transport of persons or goods - These bulletproof special purpose vehicles are primarily designed for rendition of defence/policing services and not for the transportation of persons or goods and hence, merit classification under tariff item 8705 90 00 - In view of this, merit classification of the goods is under chapter heading 8705 90 00 - As the goods are classifiable under chapter heading 8705 90 00, therefore, assessee is entitled for benefit under Serial No.50 of exemption notfn 6/06-CE - Further, as no duty is payable on these vehicles, the issue of valuation is not discussed - Therefore, no proceedings are sustainable against assessee and the demands raised against them are set aside: CESTAT
- Appeals allowed: CHANDIGARH CESTAT
2019-TIOL-1764-CESTAT-HYD
Mohan Steels Corporation Vs CC, CE & ST
CX - The assessee has purchased steel sheets and coils, cut them into pieces and corrugated them by putting them through a machine and sold them - Such corrugated sheets/profiles are used as roofs - The question as to whether this process of corrugation brings into market a new distinct commodity or it is only a minor processing of the goods itself and the commodity continues to be the same has been settled in case of Proflex Systems - 2017-TIOL-427-HC-AHM-CUS and affirmed by Apex Court in - 2017-TIOL-273-SC-CUS - The decision in that case is that corrugated sheets meant to be used as roofs are distinct commodities from the sheets which are purchased in the form of coils - As assessee is bringing into existence a new commodity as known in the market, assessee has indeed manufactured the profiles from the sheets - Tribunal does not agree with assessee that the processing does not amount to manufacture - On the issue of limitation of time, assessee was registered with Central Excise department both as a trader and also as a service provider - He has been paying service tax as a service provider on the corrugation part of his work - The service tax payable on the corrugation is 12% of the service charges which he collected for such corrugation - He has been reflecting this activity in ST-3 returns under these circumstances, it is found inconceivable that even with minimum scrutiny of the service tax returns, the range could not be aware of the nature of the activity undertaken by him on which he is paying service tax - So what is escaping tax is the small profit margin between the purchase price of the sheets and the sale price of the sheets - If assessee is required to pay excise duty they will be entitled the CENVAT credit - In this factual matrix, the revenue has not made out a case to invoke extended period of limitation - The entire demand in SCN is beyond the normal period of limitation and therefore, the demand and interest do not sustain - Consequently, the confiscations and penalties also do not sustain: CESTAT
- Appeals allowed: HYDERABAD CESTAT
2019-TIOL-1763-CESTAT-HYD
Hindustan Petroleum Corporation Ltd Vs CCT
CX - The assessee-company manufactures petroleum products falling under Chapter 27 and avails Cenvat credit on input goods & services - Audit of records revealed that the assessee indicated some amounts as miscellaneous income received by them - Further enquiry by officers revealed that in respect of certain input services availed, the assessee had not paid to the service providers the full value declared in the invoices & the same had been reduced for certain reasons - It was also alleged that such reduced amount was recorded in the books of account as income received - SCN was issued proposing to raise duty demand in respect of ineligible Cenvat credit & the same was confirmed upon adjudication - On appeal, the Commr.(A) sustained the same - Hence the present appeal by the assessee.
Held: Proviso to Rule 4(7) clarifies that if payment for invoice is not made within three months, then assessee must refund Cenvat amount thereof - If part payment is made, credit can be availed to such extent - It does not appear that Rule 4(7) provides for a proportionate reduction of CENVAT Credit where the value of services rendered is reduced subsequently but service tax was discharged on the original amount and borne by the service recipient - Besides, the amended rule also does not provide for proportionate reduction in credit where the invoice value is subsequently reduced when it is not in doubt that the service tax as per invoice has been paid by the service provider and has been borne by the service recipient - Besides, there is no loss to the Revenue if the assessee took less amount as credit of service tax paid, they could have claimed refund of the remaining amount as excess service tax paid - Hence the assessee is entitled to avail credit of service tax paid: CESTAT
- Assessee's appeal allowed: HYDERABAD CESTAT
CUSTOMS
2019-TIOL-1281-HC-MUM-CUS
Shalina Laboratories Pvt Ltd Vs UoI
Cus - The present writ was filed seeking that directions be issued to the Revenue to sanction to the petitioner deemed export drawback as per the rates mentioned in Notfn No 68/2011-Cus (NT) dated 22.09.2011 - The petitioner also seeks issuing of directions for sanctioning drawback in respect of supplies by DTA units to the petitioner - Besides, the petitioner also assails the validity of Policy Circular No. 9(RE-2013)/2009-14 dated 30th October, 2013 and Order No. SEEPZSEZ/ IAII/ DBK /978/WP/SPEL/2014-15/03290 dated 15th February,2017.
Held: Similar pleas had been raised before this court in the case of Sarla Performance Fibers Limited & the same had been allowed - The findings in Sarla Performance Fibers Limited are equally applicable to the present case: HC
- Writ petition allowed: BOMBAY HIGH COURT
2019-TIOL-1280-HC-MUM-CUS
Hinal Impex Llp Vs UoI
Cus - The petitioner is engaged in business of import and export of rough and polished diamonds and filed two bills of entry seeking to export rough diamonds - However, the clearance of the same was not allowed, as the Respondent were of the view that there was an evasion of customs duty and the bills of entry were kept pending - Besides, the export consignment continued in the possession of Respondent - Consequently, respondent No.2 issued the impugned communication to the petitioner's bankers restraining the petitioner from operating its account with Respondent No.3-Bank - The issue raised stands concluded by decision of this Court in Rajen Shinde - 2015-TIOL-2937-HC-MUM-CUS and Rajaram Purohit - 2018-TIOL-591-HC-MUM-CUS - In Rajen Shinde, the Court observed that notwithstanding the seriousness of allegations made by Revenue, the attachment of petitioner's bank account will bring to halt the petitioner business - The Court did not disturb the attachment of immovable properties pending adjudication - Similarly in this case, the impugned notice dated 1st August, 2018 quashed as modified by letter dated 8th August, 2018 - Tribunal is not disturbing any other seizure made under Section 110 of Customs Act, 1962 to protect the interest of Revenue: HC
- Petition disposed of: BOMBAY HIGH COURT |
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