2019-TIOL-NEWS-170, Dated: Friday, July 19, 2019

ST - The assessee-company manufactures plastic storage tanks and has factories at various locations and depots - Its head office is located in UP & has registered its factory office at Gwalior as the registered office for centralized registration under Service Tax - The assessee developed its brand and it allowed the user of such brand and their expertise to other industries also manufacturing plastic storage tanks by providing sales promotion services by undertaking various activities by the Noida head office such as dealer meetings, seminars for sales executives, data collection and analysis for sales promotion - Hence it received various input services for providing output service of BAS such as GTA, rent a cab service, manpower service , legal service & renting of immovable property - The assessee availed credit of all these services at their centralised registration office at Gwalior & paid service tax for output service of BAS rendered by the head office for the relevant period - Upon audit, it was noted that most of the invoices in respect of which credit had been taken were in respect of VPN connection/ telephone service/networking which cannot be considered as being independently used for BAS output service provided by the assessee which is a small part and of their total business - The Revenue further opined that the assessee did not provide BAS but received various input services as earlier being received - It was also observed that various input services were used at various branches & depots located at different placed - Hence SCN was issued proposing reveral of credit, with interest & imposition of penalty - Such proposals were confirmed upon adjudication & upheld on appeal - Hence the present appeal by the assessee.

Held: As per the provisions of Rule 3(1) of CCR 2004, the producer of final products or provider of output service is entitled to avail credit of all duty of Excise or Service Tax paid & which relate to the business of either manufacture or providing of output service - Also, Rule 3(4) provides the manner of utilization of credit once taken - It provides that such credit can be utilized for payment of duty for any final product or payment of service tax on any output service - Thus the scheme of one-to-one correlation has been scrapped - Hence the SCN is mis-conceived & is not sustainable: CESTAT

ST - The assessee is providing taxable services falling under category of "Selling of Space or Time Slot for Advertisements" as also under "Renting of Immovable Property" - They are running some Game Website on which players come to their website through M/s Google Asia Pacific Pte. Ltd. located at Singapore - Google is making payments on monthly basis according to their website visitor traffic volume around the world - The people located in different countries, even in India also access the website for playing games, during course of which they also view the advertisements displayed there - Such advertisements are displayed by M/s Google India Pvt. Ltd., Gurgaon, who had paid the service tax on said services namely "AdWords" - The assessee was availing Cenvat credit on service tax paid on said input services on the strength of invoices issued by M/s Google India Pvt. Ltd., Gurgaon - Refund claims were filed by assessee in terms of Rule 5 of CCR, 2004 r/w Notfn 27/2012-ST - They were issued a SCN proposing rejection of said refund claims on the ground that "Adwords" services cannot be held to be Cenvatable input services used in providing output export services - The Appellate Authority has passed a detailed order based upon the law declared by Larger Bench of the Tribunal - Admittedly, assessee was providing services to M/s Google Asia Pacific Pte. Ltd., Singapore, which was located outside India and the input services were being received from an altogether different legal entities i.e. M/s Google India Pvt. Ltd. Gurgaon - Similarly, he has examined clause (d) Rule 6A of Service Tax Rule by applying the ratio of Larger Bench decision and has correctly held that the place of provisions of service was outside India - Commissioner (A) has also referred to Tribunal's decision in case of Vodafone Essar Cellular Ltd. - 2013-TIOL-566-CESTAT-MUM wherein the telecom service provided to customers of foreign telecom service provider while using the assessee's telecom network in India for which the consideration was paid in foreign currency, was held to be export of services inasmuch as foreign telecom service provider was the recipient of services and was located outside - No reasons found to interfere in the findings of Commissioner (A) - However, the Revenue has also taken a stand that assessee has not produced the requisite documents in support of their claim and Commissioner (A) has not referred to the said fact - Inasmuch as assessee's claim of refund stands upheld on legal grounds, the Lower Authorities would examine their refund claims based upon the documents supporting the same: CESTAT

ST - The assessee-company is registered for providing BAS - It received certain commission and further paid commission to agents located abroad - During the relevant period, an SCN was issued to the assessee, proposing duty demand with interest & penalty - On adjudication, such demands were confirmed - On appeal, the Commr.(A) remanded the matter to the original authority while permitting the assessee to utilize Cenvat credit - Hence the present appeal by the assessee against such an order.

Held: The assessee provided services to its clients in relation to procurement of goods or services which are inputs for the clients, who are manufacturers - Hence the exemption under Notfn No 25/2004 is applicable to it - Hence the O-i-A is unsustainable & merits being quashed: CESTAT

2019-TIOL-2046-CESTAT-BANG

Popuri Steels Ltd Vs CCT & CE

CX - The assessee have imported coal as 'steam coal' since 2004 but an investigation was conducted after an Alert Circular was issued by DRI alleging that assessee is importing 'Bituminous coal' in the guise of 'Steam coal' in order to avail benefit of concession rate of duty under Notfn 12/2012-Cus - Though, assessee is disputing classification as adopted by Customs but in the meantime, they have paid the differential duty and availed CENVAT credit of CVD part of the differential duty - As per Department, assessee is ineligible to the CENVAT credit because the same has been availed after detection of the offence of mis-classification and therefore the assessee is not entitled to benefit of Notfn - Further, this is a case of re-assessment of Bill of Entry and the assessee is entitled to CENVAT credit of duty paid on imported goods - Rule 9 (1) (b) of CCR are not applicable to the instant case because CENVAT credit is availed on re-assessment of Bill of Entry - There is no suppression on the part of assessee with intent to evade payment of duty because the assessee have declared all the particulars at the time of availing the Bill of Entry which were considered by Customs and thereafter the goods were released - In the case of Essar Oil Ltd. , the Tribunal has held that when additional duty is paid under re-assessment or on being pointed out by Revenue then the credit of such duty paid will be admissible as CENVAT credit to assessee under Rule 9 (1) (c) of the CCR, 2004 - The ratio of decision in case of Coastal Energy Pvt. Ltd . - 2014-TIOL-1157-CESTAT-BANG wherein the Tribunal has held that when the issue relates to classification of imported goods and is technical in nature then "mens-rea" could not be alleged and extended period could not be invoked and no penalty can be imposed under Section 129B of Customs Act, 1962 - The impugned orders are not sustainable in law therefore same is set aside: CESTAT

- Appeals allowed : BANGALORE CESTAT

2019-TIOL-2045-CESTAT-BANG

Ryatar Sahakari Sakkare Karkhane Niyamit Vs CCT

CX - The assessee is engaged in manufacture of sugar and molasses on payment of Central Excise duty - They are availing CENVAT credit under CCR, 2004 - They are also engaged in manufacture of electricity, which is used captively for manufacture of excisable goods and the excess/surplus quantity of electricity is sold to outside power agencies for a consideration without payment of duty, as no rate of duty has been prescribed in CETA, 1985 - The issue is no more res integra and has been settled in favour of assessee by Tribunal in case of M/s. Venkateshwara Power Project Ltd. & Ors. - 2019-TIOL-289-CESTAT-BANG - Since the issue is squarely covered in favour of assessee, therefore by following the ratio of said decision, the impugned order is not sustainable in law: CESTAT

- Appeal allowed : BANGALORE CESTAT

2019-TIOL-2044-CESTAT-HYD

Pushpit Steels Pvt Ltd Vs CCT

CX - During scrutiny of ER-1 Returns filed by assessee for the months of March, 2015 and April, 2015, the department found that assessee had wrongly availed and utilized Cenvat Credit of Education Cess (EC) and Secondary & Higher Education Cess (SHEC) which was availed on or after 01.03.2015 but before the issue of notfn 12/2015-CE (NT) - It is the case of revenue that the notification specifically states that it shall come into force from the date of publication in the official gazette - The issue to be decided is whether the notfn 12/2015-CE (NT) which amended Rule 3(7)(b) to the effect that credit of EC & SHEC paid on inputs or capital goods received in the factory of the manufacturer of final products on or after 01.03.2015 towards payment of Basic Excise Duty will be effective for the clearances made prior to this date or otherwise - The notification does not indicate that it is intended to have retrospective application - It is now well settled legal principle that all fiscal statutes and provisions should be treated as if they have only prospective application unless the law specifically indicates otherwise - Not only does the notification not indicate that it will have retrospective application, it also states specifically that it shall come into force from the date of publication in the official gazette which is 30.04.2015 - Therefore, the unamended provisions of Rule 3(7)(b) apply prior to 30.04.2015, according to which the assessee could not have utilized Cenvat Credit of EC & SHEC towards payment of Basic Excise Duty - After this date, they could have taken credit of inputs or capital goods received in the factory on any day after 01.03.2015 and utilize it for the payment of Basic Excise Duty - Consequently, the impugned order is upheld: CESTAT

- Appeal rejected : HYDERABAD CESTAT

Cus - The petition challenges the order dated 23rd July 2018/24th July 2018 which confirmed a SCN issued under Customs Act, 1962 - The basis of the challenge is that the impugned order has been passed in breach of principles of natural justice - It is the case of the petitioner that it came to know about the impugned order only when the order was received by Partner of the Firm imposing penalty upon him, in the month of August 2018 - Undisputedly the Revenue is unable to show that the SCN was served upon the parties or attempted to be served the parties by sending it by registered post or by courier - In absence of Revenue being able to establish the same, the invocation subsection (b) of Section 153(1) of the Act is not permissible - Thus, no satisfactory service of SCN under the Act is shown by the revenue - It is the petitioner's case that no notice of personal hearing was received by them before passing of the impugned order - The Revenue has been unable to establish that any notice of personal hearing was served upon the petitioner under erstwhile Section 153 or under the new Section 153 of the Act - It is clear that the impugned order has been passed in breach of elementary principle of natural justice leading to a flaw in the decision making process - In such circumstances, court would not relegate the petitioner to alternate remedy of filing an appeal, as passing of impugned order without service of SCN does cause prejudice to the petitioner - Therefore, the impugned order is set aside: HC

Cus - The petitioner had imported some machinery, which this Court is informed is in the nature of a printing machine and standard accessories - Since there were certain issues pertaining to clearance of said machinery, petitioner had filed a writ petition and this Court directed provisional release of said machinery on certain terms - There is no disputation that the terms were complied with and machineries had since been provisionally released - Under such circumstances, the petitioner has filed a refund application and submits that the second respondent who has to process the refund application has not done so and there has been inaction on the part of second respondent - Saying so, petitioner made a simple and innocuous prayer requesting to mandamus the second respondent to consider the refund application made by them and take a decision on the same within a time frame - The second respondent is directed to consider the refund application of petitioner and pass an order on the same within four weeks: HC