SERVICE TAX

2019-TIOL-1898-CESTAT-DEL

Kaya Designer Launge Vs CGST, CE & CC

ST - Appellant is engaged in the stitching of clothes and occasionally carrying out embroidery or making of designs for suit etc., as per the requirements of the customers - They recovered amount by way of stitching charges, cost of raw material, charges for making art work and embroidery etc. - Appellant paid Service Tax on the amounts collected by them under the category of "Fashion Designing" which includes "any activity relating to conceptualizing, outlining, creating the designs and preparing patterns for customers, apparels, garments, clothing accessories, jewellery or any other articles intended to be worn by human beings and any other services incidental thereto" - on the ground that the appellant is not liable to pay service tax, they filed refund claim for the service tax paid amounting to Rs. 2,73,830/- - out of the total refund claimed as above, an amount of Rs. 1,63,305/- was held as being barred by limitation as well as on merit - appeal to CESTAT.

Held: Board vide No. F. No. B/1/2002/TRU dated 01.08.2002 clarified that no Service Tax can be charged on stitching/ tailoring charges under the category of Fashion Designing; that cost of raw materials used by the appellant and recovered from their customers also cannot be included for payment of Service Tax - However, amounts recovered by the appellant towards the activity of designing such as design of Jodhpuri, blazer etc, which was carried out by the appellant at the request of the customers will squarely be covered within the category of fashion designing and Service Tax is liable to be paid for amounts recovered towards this - matter remanded for ascertaining the quantum of refund admissible: CESTAT [para 6, 7, 9, 10]

ST - Limitation - Service Tax amounting to Rs. 1,63,305/- paid on 23.07.2014 and for which refund has been claimed on 06.08.2015 has been held as being hit by time limit under Section 11B of the CEA - Applicant submits that since the activities do not attract Service Tax, limitation would not apply.

Held: Larger Bench of the Tribunal in the case of Veer Overseas Ltd - 2018-TIOL-1432-CESTAT-CHD-LB has held that the provisions of Section 11B will be applicable to any amount paid as Service Tax and for which a claim of refund has been filed - following the same, rejection of the part of refund claim on the ground of time bar is in order and upheld: CESTAT [para 8]

- Appeal disposed of: DELHI CESTAT

2019-TIOL-1897-CESTAT-DEL

Kandarp Tradelinks And Services Pvt Ltd Vs CCE & ST

ST - Various transactions of the appellant leading to the service tax demand were admittedly recorded in the books of accounts - however, service tax dues were not discharged in full, in time by the appellant; relevant ST-3 returns were also not filed - The appellant has argued that mere irregularity in not depositing service tax cannot be termed as suppression of facts by the appellant; that non-filing of returns was not a deliberate attempt to evade tax or suppress the information; that non-payment of service tax at the relevant time was on account of the fact that the appellant did not receive the funds and the amount of service tax from their clients - Bench is of the view that no malafide intention can be attributed to the appellant - bonafide nature is evident from the fact that the entire amount of service tax alongwith applicable interest stands paid by the appellant even before the impugned Order of adjudication was received by them - by taking recourse to Section 80, penalties imposed under Section 76, 77 and 78 of the Finance Act, 1994 are waived - Order for payment of late fees is, however, upheld: CESTAT [para 8 to 10]

- Appeal partly allowed: DELHI CESTAT

2019-TIOL-1896-CESTAT-AHM

Javiya Finance Services Vs CCE & ST

ST - Appellants are engaged in providing service of identifying customers for availing car loan from ICICI Bank and they obtain commission from the Bank for these services - such commission is sought to be taxed under Business Auxiliary Services - appellant argues that at the material time there was some confusion regarding taxability of service and hence extended period of limitation cannot be invoked; that the amount received from the bank is not the amount on which the tax has been demanded; that the bank offers certain discounts to the customers in the shape of subvention and the said amount is deducted from the amount paid to them; that the tax should be charged only on the net amount received by them after deduction of subvention.

Held: Tribunal in the case of Jaybharat Automobiles Ltd. - 2015-TIOL-1570-CESTAT-MUM has inter alia held that tax payable by the dealer would be on the gross amount paid by the bank - in light of above decision as far as the valuation of services is concerned, the rejection of subvention charges cannot be permitted: CESTAT [para 5, 7]

ST - Limitation - Bench finds that Javiya Marketing was neither registered with the Service Tax Department nor it was filing Service Tax returns - The definition of Business Auxiliary Services is very clear and there is no scope of interpretation - The definition specifically includes the service of promotion or marketing of any service of the client within its ambit - There is no scope for interpretation or doubt in this regard and thus there cannot be any bonafide doubt regarding taxability of the service provided by the appellant - In these circumstances, there is no merit in the argument on limitation - Appeals are dismissed: CESTAT [para 6, 7]

- Appeals dismissed: AHMEDABAD CESTAT

CENTRAL EXCISE

2019-TIOL-1895-CESTAT-HYD

Kanoria Chemicals and Industries Ltd Vs CCT

CX - Appellant manufactures Formaldehyde and Hexamine and steam as final products - Appellant uses the steam in manufacture of their final products and also clears the steam to other units for a price - Steam is exempted from payment of excise duty vide Notification No. 4/2006-CE, Notification No. 12/2012-CE - It is the position of the Revenue that since the appellant is clearing steam to an outside factory and since steam is exempted from payment of excise duty, they need to reverse CENVAT credit at the rate of 6% of the value of the steam cleared - second point of dispute is the eligibility of CENVAT credit on input services availed from M/s Institute of Chemical Technology, (ICT) Mumbai by the appellant in their attempt to produce soya protein in their factory - There is also a dispute regarding CENVAT credit availed on invoices after the period of one year as well as CENVAT credit on ineligible input services - against orders passed, both assessee and Revenue are in appeal - assessee challenges the demand confirmed as well as interest and penalties imposed whereas Revenue challenges the part wherein the Commissioner(A) remanded the matter to adjudicating authority for quantification.

Held: Appellant/assessee need not reverse CENVAT credit to the extent the exempted product namely steam was sold to 100% EOUs - If any amount of steam was sold to any other units, they will have to reverse proportionate amount of CENVAT credit - CENVAT credit on the input services provided by M/s ICT Mumbai are eligible for CENVAT credit if the appellant had cleared the entire production of soya protein made out of the pilot project on payment of excise duty and not otherwise - Since the matter is being remanded to the original authority, the appeal of the department becomes infructuous and hence has to be dismissed on this count - Insofar as the interest and penalty with respect to the two amounts not disputed by the appellant assessee is concerned, both these demands pertain to post 01.04.2012 and, therefore, they were liable to interest and penalty only if they had availed as well as utilised the CENVAT credit, which matter needs to be examined by the adjudicating authority - appeal of the assessee is allowed by way of remand and Revenue appeal is dismissed as infructuous: CESTAT [para 8, 9]

- Appeals disposed of: HYDERABAD CESTAT

2019-TIOL-1894-CESTAT-AHM

Maheshwari Dyechem Vs CCE

CX - Demand against the appellant has been quantified in the Annexure C to the SCN - Examination of the slips recovered from premise of Baheti Dyechem at Bhilwara shows that Annexure C is merely a summary of the said slips - Accordingly, it is apparent that the entire demand of duty is based on the slips recovered from the premises of M/s Baheti Dyechem at Bhilwara - Commissioner after examining the documents has come to the conclusion that slips recovered at the premise of M/s Baheti Dyechem at Bhilwara are not relating to production activity but relating to trading activity - In these circumstances, the Annexure C to the SCN cannot be held to be related to the manufacturing/production activity as the same is based solely on the slips recovered from M/s Baheti Dyechem at Bhilwara - demand of duty, therefore, cannot be upheld, hence appeal is allowed: CESTAT [para 6, 7]

- Appeal allowed: AHMEDABAD CESTAT

2019-TIOL-1893-CESTAT-ALL

Manoj Goel Director Usm Alloys And Castings Pvt Ltd Vs CCE & ST

CX - Appellant engaged in manufacture of Castings - on visit to appellant's factory and conducting stock taking, it was noticed that the stock of Pig Iron (input) was Nil although the CENVAT credit account showed existence of pig iron involving credit of Rs.5,58,625/- - officers also found a log sheet sheet file indicating clearances of the finished goods during the period 01.10.2012 to 12.01.2013 which clearances were not entered in the statutory records - Director of the company admitting that Pig iron had been cleared by them without reversal of CENVAT credit and insofar as entries in the log sheet are concerned, the Director deposited that they had cleared their final product Castings without payment of excise duty and admitted short-payment of duty of Rs.10,16,171/- - SCN issued and demand confirmed by lower authorities, hence appeal to CESTAT.

Held:

+ The recovery of the log sheet and recording of the statement of the Director may be the starting point of investigations, which have to be taken to its logical end by further investigating the matters - Revenue having-failed to do so, the findings of clandestine removal cannot be upheld - No buyer of the goods, as detailed in the said log sheets has been approached by the Revenue so as to investigate the matter at that end - The appellants have contested the statement as having been given under duress, as the language of the statement itself suggests - In any case, statement by itself cannot be made the basis for arriving at the clandestine activities and such confessional statements are required to be corroborated by independent evidences - Allegations of clandestine removal is a serious charge and the onus to discharge the same is upon the Revenue, who is required to prove it by production of sufficient and admissible legal evidence - in the absence of any evidence to show the alleged manufacture of the excess goods, the receipt of raw materials, the identity of the transporters and the buyers, the findings of clandestine removal are unsustainable: CESTAT [para 3]

+ Clearance of CENVATed Pig Iron without reversal of credit - department has not identified the buyers to whom the said goods were dispatched to and has not even enquired from the appellant's Director as regards the identity of the buyers - None of the staff or management was examined and no enquiry was caused at the destination of the recipient of the clandestinely removed pig iron and how the consideration for the same was received - No enquiries stand made as regards the quantum of pig iron having been used after its procurement from the raw material supplier and a bald allegation has been made that the appellants have sold the pig iron purchased during the last three months, without any reference to the stocks found on the production floor being work in progress - entire investigations of the Revenue are filmsy and does not take the matter to its logical end - impugned orders are unsustainable - appeals allowed with consequential relief: CESTAT [para 4, 5]

- Appeals allowed: ALLAHABAD CESTAT

CUSTOMS

2019-TIOL-1892-CESTAT-MUM

Divine Impex Vs CC

Cus - Appellant 1 is an 100% EOU and Appellant 2 is partner in the said unit - They had filed two Shipping Bills for export of consignments of Brass Electrical Earthing Accessories - After examination, the goods covered by Shipping Bills were seized - The seized goods were subsequently provisionally released to assessee on execution of a Bond and Bank Guarantee of Rs 20 lakhs - It is the clear case of misdeclaration and appellants have just went on manipulating the records and clearances to cover up - They had shown clearance of export goods against the two invoices declaring the goods as "Earthing Electrical Accessories", without actually clearing anything - When appellant is confronted with the examination and test report, he is unable to make any positive and definite reply - He calls the goods as "Part of Puddle Flange" and declares them to Earthing Electrical Accessories - The technical literature produced by revenue clearly states that Puddle Flange is "an economical and reliable method of hydrostatic sealing" - Thus the goods even if this submission of appellant, supported by Chartered Engineer Certificate is to be admitted then also the goods cannot be categorized as Electrical Earthing Accessories - They continue to remain the Brass Rods - Further appellants have not produced any literature to demonstrate the electrical characteristics of the goods produced for export in form of test reports vis a vis the electrical/ conductive properties of goods - In fact no electrical goods/ accessories could have been cleared in this huge quantity without any proper certification - Appellant have claimed in defence that when they exported the goods after provisional release, they have realized the foreign exchange - There is no dispute that goods have been actually exported - But the dispute was in respect of declaration made on Shipping Bills for export - But the proof of receipt of export realization is only certifying the factum of export and not the correctness of declaration made on export documents - Goods were liable for confiscation under Section 113(i) and the exporter liable to penalty under Section 114 (iii) of Customs Act, 1962 - However, the ends of justice will be met if the penalty imposed on exporter i.e. Appellant 1 is reduced to Rs 40,00,000/- - Now coming the case of Appellant 2, who is partner in Appellant 1, he is the person responsible for managing the affairs of Appellant 1, in fact he master minded the entire scheme of substitution and was present throughout - Commissioner has imposed penalty of Rs 87,48710/- under Section 114(iii) and of Rs 1,00,00,000/- on Appellant 2, which is quite excessive and both the penalties reduced to 50 % of the penalties imposed by Commissioner: CESTAT

- Appeals partly allowed: MUMBAI CESTAT

2019-TIOL-1891-CESTAT-MAD

Hi Fasn Leather Products Vs CC

Cus - The assessee-company filed shipping bills for export of Cow Crunch Upper Finished Leather - Upon examination, the Appraising Officer opined that the leather may not satisfy the norms for prescribed finished leather laid down by the DGFT - Samples were sent to the Central Leather Research Institute (CLRI) for expert opinion - In its report, the CLRI stated that the leather samples did not satisfy the norms for finished leather - However, the three consignments were confiscated u/s 103 of the Customs Act, albeit with option of redemption on payment of export duties, fines and penalties u/s 125 and 114(ii) - On appeal, the Commr.(A) upheld the adjudication orders - Hence the assessee's appeals.

Held: It is seen that the assessee itself sent the samples on its own without following the procedural requirements of consignment samples - It did not draw any samples in the presence of all the stakeholders - It also appears that the samples were sent to CLRI after the earlier consignments were allowed to be exported albeit upon payment of redemption fine - In such circumstances, when the assessee themselves place absolute reliance on CLRI report in respect of the samples, then the assessee itself cannot cast aspersions on the reports of CLRI on samples sent by the Revenue - Moreover, the assessee filed an application for re-testing of samples - However, the same would not serve any purpose after the lapse of more than a decade as the remnant samples could have been disposed off by the CLRI - Even if not, the passage of over nine years' time would have caused some perceptible if not irreversible changes to their physical characteristics - Hence the application for re-testing is dismissed - The orders passed by the adjudicating authority is reasonable and warrants no interference with: CESTAT

- Assessee's appeal dismissed: CHENNAI CESTAT