SERVICE TAX

2019-TIOL-2135-CESTAT-MAD

Parveen Travels Pvt Ltd Vs CST

ST - The proceedings were initiated against assessee proposing to demand service tax in respect of consideration received by them for transportation of employees of their clients to and fro from their residence to the workplace and vice versa, also alleging that the services provided by them, having been performed outside the SEZ, the same cannot be construed as having been rendered for consumption within the SE - Demands were also proposed in respect of cancellation charges collected by assessee - The adjudicating authority has in fact differed from SCN and has held that the service activity is covered under renting of cab service and not tour operator service, as proposed in SCN - The Apex Court in the case of Magna Laboratories Gujarat (P) Ltd. has affirmed the decision of Tribunal that adjudication order cannot go beyond the proposals made in SCN - On this very ground, the demand made in respect of tour operator services, provided to SEZ but confirmed by the adjudicating authority under Rent-a-Cab services, will not sustain and is, therefore, set aside - Coming to the demand in respect of cancellation charges, this very Bench, in case of M/s. Taanya Tours Travels & Freight Forwarders Pvt. Ltd. relied upon the decision in case of Janata Travels (P) Ltd. 2008-TIOL-719-HC-P&H -ST as well as Sharma Travels 2008-TIOL-2010-CESTAT-DEL set aside the demand in respect of charges received on cancellation of tickets - The demand of service tax under Tour Operator Service in respect of cancellation charges cannot be sustained: CESTAT

- Appeal partly allowed: CHENNAI CESTAT

CENTRAL EXCISE

2019-TIOL-1608-HC-MAD-CX

Premier Cotton Textiles Vs Commissioner Of Central Goods And Service Tax

CX - Writ petitioners who are noticees qua impugned SCNs were called upon to show cause as to why the rebate sanctioned should not be treated as erroneous rebate and recovered from writ petitioners; as to why interest should not be charged and as to why penalty should not be imposed under relevant rules of CER for making what according to second respondent is willful mis-declaration while claiming the rebate; that it is the case of second respondent that writ petitioners had availed higher drawback by not striking off inapplicable portions relating to CENVAT credit; that this claim without striking off inapplicable portion has been done willfully with the intention of misdeclaring and misleading which was intended to avail the benefit of higher rate of drawback from the department - It is the submission of the petitioner that order of refund/rebate made under Section 35E of CE Act is appealable under Section 35E(2) of CE Act and, therefore, without preferring a statutory appeal, impugned SCN cannot be issued – respondent revenue submitted that what writ petitioners had done is clearly a case of availing double benefit and, therefore, second respondent was justified in issuing impugned SCNs.

Held: The principle is the interplay between Sections 35E and 11A of CE Act to test the question as to whether SCN under section 11A can be issued without assailing the order of refund under Section 35E irrespective of whether it was made by the original authority or by the appellate authority - A close perusal of Section 11A reveals that a SCN can be issued under five different situations, namely (a) duty not levied, (b) duty not paid, (c) duty short levied, (d) duty short paid, and (e) duty erroneously refunded - They are five distinct and different situations and circumstances - If the argument of writ petitioners are to be accepted, then the fifth scenario contemplated by Section 11A would be rendered otiose - Provisions of law cannot be read in such a manner - Owing to the narrative thus far, in the considered view of this Court, instant cases on hand certainly do not fall under rare and exceptional cases warranting interference in impugned SCNs - Though obvious, it is made clear that when adjudication pursuant to impugned SCNs proceed, it will be open to writ petitioners to submit that they have not availed double benefit and obviously, this aspect will also be adjudicated upon on merits - As already alluded to supra, this is one of the main reasons as to why this court has refrained and restrained itself from expressing any opinion on this aspect of the matter - impugned SCNs do not deserve to be interfered with and that impugned SCNs have to be carried to their logical end - all writ petitions fail and all 18 writ petitions are dismissed: High Court [para 23, 27, 28, 35 to 37]

-Petitions dismissed : MADRAS HIGH COURT

2019-TIOL-1607-HC-AHM-CX

Meghmani Organics Ltd Vs UoI

CX - Petitioner submits that delay of more than 13 years in completing adjudication proceedings and revival of the proceedings after such a long delay has resulted in grave prejudice because various documents and even witnesses who could support the petitioner's case have been lost, or have become unavailable, in view of such a long time gap; that no reason or ground has been disclosed by the adjudicating or the appellate authority for reviving the proceedings after a long gap of 13 years - For all these reasons, the impugned order now passed by the 2nd respondent herein deserves to be quashed and set aside in the interest of justice - revival of the proceedings after a time gap of 13 years without disclosing any reason for the delay is not a mere matter of impropriety - delay in adjudication of the show cause notice issued in May, 2005 is not because of any reason or circumstances attributable to the petitioner herein, and the petitioner is not guilty of any delaying tactics for keeping adjudication of the show cause notice pending for more than a decade.

Held: SCN issued on 28.06.2005; reply filed by the writ-applicant on 21.11.2015 and impugned order-in-original is dated 27.12.2017 - issue is squarely covered by the decision of this Court in the case of M/s. Siddhi Vinayak - 2017-TIOL-911-HC-AHM-CX - explanation offered by the respondents for delay is not convincing - writ-application succeeds and is hereby allowed - The impugned order passed by the Commissioner, GST and Central Excise (Appeals), Vadodara dated 29/10/2018 affirming the order passed by the Joint Commissioner, CGST, Bharuch dated 27/12/2017 is hereby quashed and set aside: High Court [para 3.14, 12, 13, 15]

- Petition allowed : GUJARAT HIGH COURT

2019-TIOL-2134-CESTAT-MAD

KLM Pack Vs CGST & CCE

CX - Assessee cleared the goods on payment of duty by availing Cenvat credit in accordance with law - But, after 01.04.2005 they opted for availing full benefit of exemption under Notfn 8/2003 - He submitted that in terms of Rule 11 (2) of CCR, 2004, assessee is required to reverse the Cenvat credit involved on closing stock of inputs and inputs contained in finished goods available as on 31.03.2005 and after deducting such amount, credit if any, still remaining, shall lapse - It was alleged by Revenue that the assessees have not correctly reversed the credit involved in inputs lying in stock or raw materials in process or finished product as on 01.04.2005 when they opted for availing the benefit of exemption notification - Hence, a SCN was issued proposing recovery of short payment of duty, interest and penalty under Rule 15(2) of CCR, 2004 r/w Section 11 AC of CEA, 1944 - The admission as to "balance if any, to be paid" appears to be graceful, which should have been done voluntarily and without waiting for SCN - But the fact remains that there was short payment of duty as on the date of their reply to SCN - This is sufficient proof of non-payment of duty/withholding/short payment of duty which is paid after SCN and after admitting their liability to pay "balance if any, to be paid" - The above fact of admission of "balance if any, to be paid" by assessee has only proved suppression and hence, it is too difficult to accept assessee's proposition that there was no suppression or that invoking extended period was wrong - One hand, assessee claims that there was no suppression, longer period of limitation should not have been invoked; on the other hand it doesn't explain difference in closing stock as at the end of the year and the opening stock as of next year - On being pointed out, it admits the duty liability but gives a working as to correct duty liability - Had there not been the SCN, the assessee would not have come forward so gratefully, as there would not have arisen any occasion for an assessee to do so, voluntarily - No merit found in assessee's grounds as also the present appeal, hence no reasons found to interfere with the findings of the lower authorities: CESTAT

- Appeal dismissed: CHENNAI CESTAT

2019-TIOL-2133-CESTAT-DEL

CX - The assessee is engaged in manufacture of dutiable as well as exempted goods - During audit, the Department observed that the assessee was not maintaining separate records for input used in exempted and dutiable goods - However, was availing cenvat credit on the inputs used in both dutiable as well as exempted goods - Resultantly, a SCN was issued - The cenvat credit for an amount much more than what has been confirmed by original adjudicating authority has already been reversed - Apex Court in the case of Chandrapur Magnet Wires Pvt. Ltd. 2002-TIOL-41-SC-CX has held that once cenvat credit is reversed, it is to be considered ab initio not availed, the assessee in compliance of Rule 6 (a) as had also intimated about exercising the option of availing amended provisions contained in CCR, 2002 and CCR, 2004 for the period April 2004 to 31st March, 2008 vide their letter - The same has nowhere been denied by the Department - Hence, the demand confirmed for the period from 01.04.2004 to 31.03.2008 is held to have been wrongly confirmed - Coming to the demand in respect of financial year 2008-09, it is observed that the same is based on 10% of sale-price of exempted goods and that the Department has not computed the quantum of credit actually attributable to the exempted goods, as is otherwise been clarified in the CA certificated and also is apparent from the verification report -Thus, the demand for this period is also held to not to be sustainable - The Adjudicating Authority has failed to interpret Rule 6(3) of CCR properly while confirming the impugned demand - Thus, it is clear that the demand at 10% /8% as proposed and confirmed is the forced demand denying the option as is granted by legislation to the assessee - The findings of adjudicating authority are therefore not opined to be correct - Finally coming to the plea of limitation, it is observed that the records of assessee had regularly been reviewed and were reviewed even in the year 2006 as well - But the department did not raise any dispute at that time - Also the things were absolutely in their notice after the letter of assessee intimating about their option - There remains no question of alleged suppression of facts, as is alleged by Department - Thus, they were not entitled to invoke Section 70 (3) of FA, 1944 - The SCN in question is therefore held to be barred by time: CESTAT

- Appeal allowed: DELHI CESTAT

CUSTOMS

NOTIFICATIONS

32/2019-Cus (NT/CAA/DRI)

Appointment of CAA by Pr. DGRI

31/2019-Cus (NT/CAA/DRI)

Appointment of CAA by Pr. DGRI

CASE LAWS

2019-TIOL-1606-HC-MUM-CUS

Riddhi Siddhi Collection Vs UoI

Cus - Grievance of the petitioner is that the impugned order dated 13.07.2018 passed by respondent Commissioner of Customs is an order passed in breach of principles of natural justice inasmuch as the SCN dated 15th December, 2016 as served upon the petitioner was incomplete, since annexure 'A' and 'B' to the SCN were not annexed nor accompanied the SCN; that the Annexures were made available only on 4 th June 2018 while fixing date of personal hearing as 27 th June 2018; that their request dated 26 th June 2018 for an adjournment of four weeks to file appropriate reply was not considered and an order came to be passed on 13.07.2018 without waiting for the petitioner's reply or even hearing them; that the Court should, in exercise of its extra ordinary jurisdiction entertain the petition – Counsel for Revenue submitting that there is an alternative remedy available to the petitioner; that the conduct of the petitioner in not approaching the Commissioner of Customs and obtaining soft copies of Annexures 'A' and 'B' to the notice itself demonstrates that the conduct was only to somehow delay the proceedings; that the time was given for personal hearing on three occasions but the petitioner chose not to remain present on all three occasions, is further evidence of non cooperation by the petitioner; that the Court should not entertain the petition.

Held: High Court notes that the SCN dated 15th December, 2016 as served upon the petitioner did not have Annexures ‘A' and ‘B' annexed to it nor did they accompany the notice; the Annexures were sent to the petitioner with letter dated 30 May 2018 and were received only on 4 th June 2018; show cause notice dated 15th December, 2016, itself, gave the petitioner thirty(30) days time to respond to the notice - In the aforesaid circumstances, it is only after a complete notice is served upon the petitioner that the period of 30 days to file a reply to the notice would commence - fact that the petitioner had not personally approached the revenue for soft copies of annexures 'A' and 'B' to the show cause notice would not in any way detract from the obligation of the Commissioner to serve the complete notice upon the petitioner so as to enable the petitioner to file its reply within 30 days from the receipt of the notice – Petitioner had requested the Commissioner to grant further time of four weeks to file reply to the show cause notice - Commissioner could have granted time of four weeks from 4th June, 2018 and given the petitioner time to file the reply up to 4th July, 2018 and thereafter given opportunity of personal hearing to the petitioner - Objective of giving show cause notice is not an empty formality - The objective is to make the party aware of the case it has to meet, thus time is given to respond to the same - The reduction of time as given in the notice, certainly causes prejudice to the party - The conduct of the petitioner in not attending the personal hearing would not absolve the Revenue from giving time of thirty days as stated in the notice, on serving the complete show cause notice on the parties - In these circumstances, there has been failure of principles of natural justice inasmuch as the petitioner has not been given sufficient opportunity to meet the show cause notice - therefore, directing the parties to avail of alternative remedy would be unfair as original proceeding is itself in breach of natural justice - impugned order dated 13th July, 2018 is quashed and set aside - show cause notice dated 15th December, 2016 is restored to the file of Commissioner of Customs, respondent no.2, for fresh disposal in accordance with law: High Court [para 5 to 8]

-Petition disposed of : BOMBAY HIGH COURT

2019-TIOL-1605-HC-MAD-CUS

HI Bright Apparels Pvt Ltd Vs CESTAT

Cus - Petitioner has challenged the order of Tribunal and sought for a direction to the CESTAT to hear its appeal on merits, without insisting upon the pre-deposit of duty and penalty contemplated u/s 129E of the CA, 1962 or in the alternative, treat the auction proceeds of Rs.1,20,94,656/- realized by the respondent through auctioning the goods seized from the petitioner and the amount of Rs.6,25,000/- realized through invocation of the Bank Guarantee furnished by them, along with B-17 Bond under Section 59 of the Act, as sufficient pre-deposit and dispose of the appeal.

Held: Issue which arises for consideration is whether the petitioner would be entitled to the benefit of the pre-amended Section 129E of the Customs Act, 1962 since the right to file an appeal had accrued prior to the amendment to Section 129E of the Customs Act, 1962 - it could be seen that after the amendment, the appellant has to deposit 7.5% of the duty, in case where duty or duty and penalty are in dispute, or penalty, whether such penalty is in dispute, in pursuance to a decision or an order passed by an officer of customs - There is no provision to waive, the pre-deposit of 7.5% on the alleged duty and penalty payable - The amended Section also makes it clear that this Section shall not apply to stay applications and appeals pending before the appellate authority prior to commencement of Finance (Nos.2) Act, 2014 - Prior to amendment, there was a discretion given to the tribunal, to dispense with the pre-deposit - A right to appeal, is only a statutory right - The right to file an appeal can be hedged by conditions - If the argument of the petitioner, that by virtue of Section 6 of the General Clause Act, 1987 the rights which were there to it cannot be taken away by the amendment, is accepted then it would mean that there is a vested right in any appellant to claim the benefit of waiver of pre-deposit - appeal would be governed only by the Section which stands on the date, when the appeal is sought to be filed as held by the Division Bench in Dream Castle - 2016-TIOL-1009-HC-MAD-ST , - No merit in the writ petition, hence dismissed - Section 6 of the General Clause Act, which deals with repeal cannot be applied to situations where the entire Section has been substituted: High Court [para 16 to 21]

-Petition dismissed : MADRAS HIGH COURT

2019-TIOL-2132-CESTAT-DEL

Transpeed Logistics Pvt Ltd Vs CC

Cus - The appeal has been preferred by assessee viz a CHA against O-I-O confirming the suspension of their CB licence - The allegations of Revenue against the assessee CHA are prima-facie vague for the reason that the offence report is based on one SCN, issued in September, 2018 on the parties being M/s Encanterra Traders Private Limited, M/s Chef's Choice, M/s Hira Traders and their Directors/Partners/Prop wherein the assessee CHA has not been made a co-noticee - Further, there is no allegation of connivance on the part of assessee CHA firm with the aforementioned parties - Further, the offence report has been issued almost after one year when the offence was detected in October, 2017 and investigations began - Assessee have not violated any of CHA regulations and have obtained proper documents required to meet the requirement of KYC - Further, no mens rea has been alleged against the assessee nor there is any finding regarding illegal gain made against the CHA - Shri Lal Chand Sharma of CHA company have retracted his statement recorded on 04.09.2018 at the first opportunity by letter dated 10.09.2018 stating there that the answer to the said questions were dictated by the officer threatening him of harassment, if he does not toe their line - It was further clarified that the assessee undertook work after proper authorisation - The subsequent non availability of said M/s Encanterra Traders Private Limited at their address or its Directors at their earlier residential address does not lead to any conclusion that the said M/s Encanterra Traders Private Limited is a fictitious company - It is nowhere alleged, in what way the assessee did any irregularity in handling export consignment, for which they have filed the Bill of Entry on behalf of said M/s Encanterra Traders Private Limited - The assessee have had also verified the IEC code of said client M/s Encanterra Traders Private Limited and found to be in order - Further, no physical verification of premises or address of IEC holder is mandated in the CBLR regulation, nor it is a general requirement - Thus, there is no case made out against the assessee CHA, as alleged in offence report or in impugned order of suspension - Accordingly, the impugned order is set aside - The Commissioner is directed to restore the license of assessee CHA/ CB within a period of three weeks: CESTAT

- Appeal allowed: DELHI CESTAT

2019-TIOL-2131-CESTAT-AHM

CC Vs Nayara Energy Ltd

Cus - The assessee-company manufactures & exports various Petroleum products such as Motor Spirit, LPG & SKO falling under Chapter Heading 25 & 27 of the First Schedule to the CETA 1985 - The assessee exported Motor Spirit & imported Low Sulphur Fuel Oil (LSFO) under Advance Authorization - During the relevant period, the assessee was issued SCN alleging that they mis-declared that the exported product had been manufactured out of LSFO, in violation of Notfn No 31/(RE-2013)/2009-14 dt. 01.08.2013 issued by the DGFT r/w Para 4.1.15 of the FTP 2009-14 - It was alleged that the assessee had not used LSFO as input in export but had used Vacum Gas Oil (VGO) generated during the refining of crude oil and subsequently imported the permissible input LSFO without payment of Customs duty as per Notfn No 96/2009-Cus against the Advance authorizations and has thus contravened the provisions of Rule 14 of Foreign Trade (Regulation) Rule 1993 - Duty demand was proposed on goods imported under Advance Authorization u/s 28(4) along with interest u/s 28AA and penalty u/s 112(a) & 114A and 114(iii) of the Customs Act - The exemption availed on import of LSFO against Advance Authorization scheme was denied - It was also held that since LSFO was not used to manufacture Motor Spirit which the assessee had exported while claiming discharge of export obligation, it is not entitled to clear such LSFO duty-free - On adudication, the demand and penalties were confirmed after invoking extended period of limitation - Hence the present appeal.

Held - The assessee's claim that the VGO complied with all the specifications of LSFO in IS 1593:1982 must be accepted - This is because there is no contrary technical material or evidence to disbelieve the correctness of the explanations given, more so when the neither SCN nor adjudication order refers to any technical material or evidence to rebut the statements rendered - Besides. the approach of the adjudicating authority in expecting the assessee to prove to the hilt the correctness of the declaration made in the shipping bill after many years after the export had been made, by insisting on in house test readings of all parameters of intermediate streams which went into the making of the export product is totally unreasonable and unfair - Once export of goods has been permitted by the Customs by accepting the declaration made in the Shipping Bill, the burden of proving that such a declaration was false would squarely rest upon the Revenue - In such circumstances, the Revenue's case is unsustainable & burden of proof resting upon the Revenue is not discharged - The bar against producing fresh evidence or accepting new submissions exist only in Appellate proceedings, and not to original proceedings of adjudication of a show cause notice where it is the assessees' right to make submission and lead evidence - Such submissions cannot be ignored and brushed aside on the ground that it was not made in the course of investigation - If the Commissioner doubted the correctness of the assessee's claim regarding certain compliances, the Commissioner could have directed verification of the matter - Instead of making any such effort, the Commissioner instead cast an absolute burden of proof on the assessee, which in such circumstances is neither reasonable nor justified - Besides, the Adjudicating authority has made for disbelieving the testimonies in cross examination is the absence of retraction or clarification from the refinery personnel post recording of the statements - Here again the Adjudicating authority is wrong as the question of retraction of statements becomes relevant only if there are sought to be used against the very same person who made the statements - It is only then that such statements acquire the character of an admission, which, in the absence of timely retraction may bind the maker of the statements - The statement of a witness, on the other hand, stands on an altogether different footing - The correctness of such witness statements can be validly contested by the third party against whom such statements are to be used, by seeking cross examination in the course of adjudication - If such witnesses chose to resile from their statements, the evidentiary value of the original statements become weak and questionable and it is then left to the adjudicating authorities to appraise and weigh to come to a proper conclusion - A blanket brushing aside of the record of cross examination is not justified in any case - There is no mis-declaration in the shipping bill - Hence the assessee cannot be held liable for penalty - There is this no basis to invoke extended limitation - Hence the O-i-O merits being quashed: CESTAT

- Revenue's appeal dismissed: AHMEDABAD CESTAT