SERVICE TAX

2019-TIOL-2563-CESTAT-DEL

ST - Contract indicates that it is for mere transportation of limestone and the activity of loading and unloading of the material was incidental to the transportation of the goods - As such, the activity is clearly covered by the service of Goods Transportation Agency and cannot be considered as Cargo Handling Service - appellant has claimed to have discharged the service tax under the category of GTA for this activity, after availing abatement available to the extent of 75%, which fact the adjudicating authority is directed to verify: CESTAT [para 13]

ST - Purchase order clearly shows that the contract was for supply of material and can by no stretch of imagination, be considered as for providing Cargo Handling Service - demand made under this category for a total amount of Rs. 40,27,357/- is set aside: CESTAT [para 12]

ST - Since the entire tax liability has already been discharged by the appellant even prior to issue of SCN, no justification found for imposition of penalty u/s 76 – Penalty set aside: CESTAT [para 15]

- Appeal disposed of: DELHI CESTAT

2019-TIOL-2562-CESTAT-MUM

ST - Appellants entered into agreement with M/s.Sangli Sugars Pvt Ltd, to float a Joint Venture [JV] in name and style of Sangli Sugar and Mahakali Shakar Udyog - whether the services provided by the appellant, by way of renting the factory with plant and machinery to JV as per the agreement dated 14.10.2009 will be taxable service under the taxable category "Renting of Immovable Property" - vide O-i-O, demand of ST amounting to Rs.43.27 lakhs confirmed along with interest, penalties imposed - on appeal, vide impugned order, Commissioner (Appeals) reduced the demand of ST to Rs.28.63 lakhs - appellants before CESTAT - revenue also before CESTAT challenging the impugned order to the extent of modification made by Commissioner (Appeals) in the O-i-O :

Held: appellants have, in their appeal memo, themselves admitted that Commissioner (Appeals) has rightly appreciated the facts in respect of taxability under the category of "Renting of Immovable Property" - however, they are disputing the valuation of the service for the purpose of determination of tax payable - they have claimed certain deductions for determination of value of taxable services, which have been disallowed by the Commissioner (Appeals) - in terms of clause 5 of the agreement dated 14.10.2009, the consideration in form of lease rent agreed between appellant and JV, for providing the machinery and buildings on rent was Rs.5.50 crore per annum - thus in terms of section 67(1) of the Finance Act, 1994, the value of taxable service provided by the appellant, will be Rs.5.50 crore per annum - however, in the present case, the agreement was in continuance only during the period October 2009 to May 2010 - hence, the gross consideration needs to be taken on pro-rata basis for the period when the agreement was in force - in para 12 of his order, Commissioner (Appeals) has, in detail, considered the various contentions raised by the appellants and also the revenue, for determining the amounts received by the appellants as lease rent, for determining the tax payable - after considering the agreement dated 14.10.2009, no reasons found to differ with the determination made by Commissioner (Appeals) - as per clause 19 of the agreement, the JV is not responsible for any past or existing liability of the appellant - the temporary loan, sugar pledge loan and revised restructuring loans are the liability of the appellant and cannot be termed as liability to be met by the JV - the payments made in the loan account, by the JV can never be termed as payments made towards these liabilities of the appellant, which existed even prior to coming into existence of the JV or have arisen on account of the current operations of the appellant - the total deposits indicated to be made by the JV in the loan account of the appellants as per Sangli District Central Cooperative Bank Ltd. [SDCCBL] is Rs.329.59 lakhs - appellants have claimed that these deposits have been made by the JV towards prepayment of various loans - the said argument of the appellant is contrary to the clause 19 of the agreement - Commissioner (Appeals) has examined the documents and has allowed deductions in respect of the (i) expenses incurred by the appellant towards the advances made by them to the sugarcane harvesting and transport contractors (clause 23); and (ii) payments received towards the sale of sugar to the joint venture - no reason found to differ with the findings of Commissioner (Appeals) - in terms of clause 12 of the agreement, the Bench is also not in agreement with the appeal filed by the revenue seeking to add the expenses incurred by the JV towards repair and maintenance of the machinery/building in the payment made by the JV to the appellants - Commissioner (Appeals) has discussed the issue for invocation of extended period of limitation in para 13 of his order - no reason found to differ with the findings of the Commissioner (Appeals) as appellant had never disclosed the facts about receiving the lease rent and renting of the building/machineries to JV to the department - also, they had failed to take registration and file the relevant ST-3 returns as required under law - since the Bench has upheld the demand of ST, the demand of interest under section 75 is natural corollary - for confirming the demand the interest, the provisions of section 75 and following decisions are relied upon : (i) Kanhai Ram Thakedar - 2005-TIOL-76-SC-CT (ii) TCP Limited - 2005-TIOL-1607-CESTAT-MAD (iii) Pepsi Cola Marketing Co. - 2007-TIOL-1417-CESTAT-AHM (iv) Ballarpur Industries Limited [2007 (5) STR 197 (TMum)-thus, no reason to differ with the findings recorded in respect of demand of interest - since ST has been demanded invoking extended period of limitation under section 73 of Finance Act, 1994, penalty under section 78 will follow as has been held by the Apex Court in case of Rajasthan Spinning and Weaving Mills - 2009-TIOL-63-SC-CX and Dharmendra Textile Processors - 2008-TIOL-192-SC-CX-LB - since appellants have failed to take registration and pay the ST, penalties under section 77(1)(a) of Finance Act, 1994 to are justified and sustained - also for delay in filing the ST-3 returns, the fees imposed by the adjudicating authority in terms of section 70 ibid too is justified - in view of discussions as above, no merits found in the appeal filed by the appellants or revenue and both the appeals are dismissed : CESTAT [para 5.2, 5.9, 5.12, 5.13, 5.14, 5.16, 5.17, 5.18, 5.19, 6.0]

- Appeal of Appellant dismissed/Appeal of Revenue dismissed: MUMBAI CESTAT

CENTRAL EXCISE

2019-TIOL-2082-HC-MAD-CX

Alkraft Thermotechnologies Pvt Ltd Vs CCGST & CE

CX - CESTAT held that the Appellant/Assessee was not entitled to Input Tax Credit of Service Tax paid on transportation of excisable goods from its Chennai Unit I to Jamshedpur Unit 2 of the Assessee itself - appeal to High Court.

Held: Bench is of the clear opinion that the Judgment of the Supreme Court in the case of Ultra Tech Cement Limited - 2018-TIOL-42-SC-CX supports the case of the Assessee rather than that of the Revenue - A closer and finer reading of the said judgment of the Hon'ble Supreme Court would clearly reveal that the Supreme Court was concerned only with the controversy of Cenvat Credit on goods transported from the place of removal to the buyers' premises and not the transport of goods from one Unit of the Assessee to another Unit of the same Assessee - a careful reading of the definition of place of removal would reveal that in clause (iii) thereof, besides the words "a depot, premises of a consignment agent", there are further words in the said clause (iii) and which are "or any other place or premises from where the excisable goods are to be sold after their clearance from the factory' - These words added to the other two clauses are not without a meaning and redundant - These words, on the other hand, enlarges the definition of place of removal in clause (iii) wherein besides a Depot of the Assessee itself or premises of the consignment agent, any other place or premises including the like one of Unit 2 at Jamshedpur in the case of the Assessee in the present case would be covered, where the excisable goods are to be sold after their clearance from the factory - Tribunal, after quoting para 7 of the Judgment of the Supreme Court in the case of Ultra Tech not only did not discuss anything about para 11 to 13 of the said Supreme Court decision, but also did not give its own findings and reasons as to how the ratio of the decision was being applied to the facts of the present case where the transport services were involved from Chennai Unit 1 to Jamshedpur Unit 2 of the Assessee only and not to the place of buyer of Composite Unit of Intercooler with Radiators by the Jamshedpur Unit of the Assessee - Tribunal should not have mechanically applied the apex court decision since there is stark distinction of facts of the case before the Tribunal and the facts before the Supreme Court - appeal allowed: High Court [para 7, 8, 10, 11, 13]

- Appeal allowed: MADRAS HIGH COURT

2019-TIOL-2561-CESTAT-AHM

CX - The appeal has been filed by assessee against confirmation of demand of Cenvat Credit - It is not in dispute that when the credit was taken i.e. on 28.02.2015, proviso to sub rule (7) of Rule 4 of CCR provided that such credit could not have been availed - The rule was clear and there was no ambiguity in the Rule - The rule changed w.e.f. 01/03/2015 and the words 'six months' were changed to 'one year' - Relying on the decision in case of SICGIL Industries Ltd. , it is held that amendment made to said proviso vide notfn 06/2015-C.E. (N.T.) would have prospective effect - Consequently, the credit would not be admissible to assessee since the duty was paid during period 02.04.2014-31.08.2014 and credit was availed on 28.02.2015 - Reliance has been placed on the decision of M/s Hi-Tech Blow Moulders Pvt. Ltd. - 2016-TIOL-2188-CESTAT-BANG - In said case, the facts were that certain goods which were not in the factory and on which credit was availed were cleared after certain processes on payment of duty - If the goods brought in the factory on which credit was availed and when the process undertaken on it did not amount to manufacture then for the reason that no new product came into existence, payment of duty would have amounted to reversal of credit on the same goods - Moreover, in that case if the process did not amounted to manufacture, there was no Central Excise levy and therefore, since the amount was paid by reversal of Cenvat Credit where no Cenvat reversal liability arise - In those circumstances, it was held that the Cenvat Credit cannot be denied - The availment of credit within six months clearly amounts to misdeclaration, suppression and fraud - Thus, extended period has been rightly invoked: CESTAT

- Appeal dismissed: AHMEDABAD CESTAT

2019-TIOL-2560-CESTAT-MAD

CX - The assessee-company manufactures parts of Fuel Injection Pump & Valve Assembly - On verification of accounts, it was seen that the assessee availed input service tax credit on outward transportation of goods upto the buyer's premises - The Revenue also opined that the place of removal could only be the factory gate and therefore the outward transportation beyond the factory gate is ineligible for credit - SCN was issued for the relevant period, proposing recovery of wrongly availed credit with interest and also imposing penalties - Such proposals in the SCN were confirmed upon interest along with interest and equivalent penalty - Such findings were sustained by the Commr.(A) - Hence the present appeal.

Held: Perusal of records shows that the sale is on FOR basis - The authorities disallowed the credit on grounds that there was no evidence establishing that the sale is on FOR basis - It is not necessary that there should be a separate contract for supply of goods - The parties could agree to the terms & conditions of the sale in the purchase orders itself - This becomes a concluded contract when the offer is accepted by the supplier - Therefore, when the purchase orders show that the condition for sale is FOR basis, the observations made by the Revenue that the assessee failed to produce any evidence establishing that it bore freight charges & insurance, is without any basis - Besidesm letters have been obtained by the assessee from purchasers of the goods, showing that the purchasers paid no freight charges separately - This implies that the assessee bore the freight charges and included it in the assessable value on which Excise duty was paid - In such circumstances, the decision of the Apex Court in Commissioner of Cus. & C.Ex., Aurangabad Vs. M/s. Roofit Industries Ltd is applicable and place of removal is the buyer's premises - In such circumstances, the Tribunal's decision in M/s. Ultratech Cement Ltd. Vs. C.C.E. applies as well - Therefore, disallowance of credit is unjustified: CESTAT

- Assessee's appeal allowed: CHENNAI CESTAT

CUSTOMS

Apollo Hospitals Enterprise Ltd Vs CC

Cus - Petitioner was called upon to pay the interest amount of Rs.1,06,62,212/- on the entire demand amount paid on 22.06.2007 - Objecting to such demand of interest, the petitioner had given its reply on 18.09.2007, pursuant to which, the petitioner was extended with an opportunity of personal hearing - Written submissions were made during the course of personal hearing on 23.11.2007 and thereafter, there was not much progress - subsequently, opportunity of personal hearing was granted through summons dated 02.02.2012, pursuant to which, the petitioner also appeared before the respondents and submitted their written submissions on 24.02.2012 - In this background, the impugned demand notice/communication dated 12.12.2012 came to be passed - petitioner submits that though an opportunity of personal hearing was extended to the petitioner and the petitioner had raised several objections substantiating that they were not liable to pay the demand amount, none of the objections has been considered by the second respondent herein, while the impugned demand notice dated 12.12.2012 had been made; that principles of natural justice stand violated and therefore, the petitioner would be entitled to seek indulgence of this Court to invoke its powers under Article 226 of the Constitution of India.

Held: Perusal of the demand notice dated 12.12.2012, which is a single line demand, indicates that the same is made without consideration of any of the objections raised by the petitioner - As a matter of fact, such demand in the year 2012, has been made on the action which came to be initiated way back in 1998 - Originally, when the petitioner was summoned to participate in the enquiry in connection with levy of interest, on 23.11.2007, the petitioner had given various objections which was kept in abeyance unreasonably for more than five years - Bench is unable to appreciate the conduct of the respondents in issuing the summons and calling upon the petitioner to participate in personal hearing and when the petitioner had participated and raised several objections, none of those objections have not even been referred to in the impugned demand notice - Apparently, the impugned notice itself is a non-speaking order with non-application of mind - On this sole ground, the petitioner is entitled to succeed - demand notice dated 12.12.2012 is set aside and the matter is remanded back to the first respondent - appropriate orders are to be passed on its own merits and in accordance with law, after extending due opportunity of personal hearing to the petitioner - Such an exercise shall be completed as expeditiously as possible - writ petition is allowed: High Court [para 6, 7, 8, 10]

- Matter remanded: MADRAS HIGH COURT

2019-TIOL-2559-CESTAT-DEL

Cus - The assessee is engaged in import of Alkyl Ketene Dimer (AKD wax) since 2005 claiming the classification of product under CTH 38099200 - The Department entertained a view that the correct classification of product imported by assessee is under CTH 34049090, it was also felt by them that the assessee have mis-classified the imported product with a malafide intention to evade Customs duty - It is a matter of record that the importer has been importing this product namely, AKD since 2005 and in 2012 when the Bill of Entry was re-assessed, the department took no action for recovering the differential amount of duty by re-classifying the product from Chapter 3809 to 3404 for the past period - Between May, 2011 to December, 2015 all the Bill of Entries were not cleared under Risk Management System rather it is a matter of record that some of the Bill of Entries were assessed by Department which clearly proves that the classification of product under Chapter 3809 9200 has been accepted by Department - All the facts regarding importation, description of the product and its classification were in the knowledge of Department - The Audit which was conducted after clearance of import consignment also raised this issue of classification based on the facts which were there before the Department and therefore, the charges of mis-declaration, fraud or misrepresentation with an intent to evade payment of duty are not present in the present case - The Supreme Court in case of Continental Foundation Joint Venture - 2007-TIOL-152-SC-CX has held that when the facts are known to both the parties, the omission by one party that might have been done, will not amount to suppression - This matter was already in the knowledge of department since year 2012 itself - Thereafter, another SCN for normal period have been issued by them on 18 December, 2015 and thereafter issuing the impugned SCN again on 29.11.2016 by invoking the extended time proviso is not legally sustainable - The demand in SCN is barred by limitation and therefore, same is legally not sustainable: CESTAT

- Appeal allowed: DELHI CESTAT