SERVICE TAX

2019-TIOL-2098-HC-P&H-ST

CCE & ST Vs Aggarwal Traders

ST - The respondent, a proprietary concern was engaged in activity of providing erection, commissioning and installation services/work contract services to Dakshin Haryana Bijli Vitran Nigam (DHBVN) and Uttar Haryana Bijli Vitram Nigam (UHBVN) - On scrutiny of documents, respondent was found to be engaged in providing erection, commissioning, installation services/work contract services upto 30/6/2012 and thereafter it took contracts for supply and erection - On the basis of records, SCNs were issued to respondent to demand service tax on the services provided by it - In view of instructions dated 22.8.2019, the instant appeal would not be maintainable before this Court, as demand amount i.e. 11,20,077/- for the period from 2009-10 to 2012-13 and Rs.59,80,109 alongwith applicable interest and penalty for period 2013-14 is to be recovered, which is below the monetary limit of Rs. 1 Crore: HC

- Appeal dismissed : PUNJAB AND HARYANA HIGH COURT

2019-TIOL-2582-CESTAT-MUM

ST - Whether the services rendered by the appellant to Arcelor Mittal Stainless International Paris, France (AMSI France) will qualify as Export of Services in terms of Export of Service Rules, 2005.

HELD: Services provided by the appellant to AMSI France are in relation to business activities relating to the specified territories in India, Bangladesh and Sri Lanka - when the appellants are providing the services to the AMSI, France which is consumed by the AMSI, France for developing its business in India, this Bench would not be in position to agree with the arguments of the appellant, stating that services provided by them have been consumed/ used by the recipient of services outside India - in view of the principle of law stated by the Apex Court in the case of GVK Industries Ltd. 2015-TIOL-10-SC-IT , it is crystal clear that the services received or provided by the foreign entity even if he is located outside India are in relation to his business activities in India - this Bench is very clear that in the present case, the services received by the AMSI, France from the appellant, were for development of their business in India and hence were used/consumed by them in India - the concept of residency outside for the purpose of taxation has been given a go by the Apex Court in this decision - hence the foremost condition that needs to be satisfied by the appellant for claiming the services to be export of service is vis-à-vis the usage/consumption of service by the service recipient - if the consumption of service is in relation to the activities of foreign entity/resident located outside but for his business in India, then the appellant will not be entitled to the benefit of export of service as the service is not exported as provided for by the Export of Service Rules, 2005 as they existed at material time - however, it is found that some Benches of Tribunal have taken a contra view to what this Bench has arrived at in this case - since the view that this Bench proposes to take is contrary to the views expressed by the coordinate benches of Tribunal, judicial propriety demands that matter should be referred to President for constituting a larger Bench to resolve the issues - in view of above divergence of opinion, the matter is referred to the President to constitute a larger bench to determine the following questions of law : (i) What is extent and scope of phrase "such taxable services which are provided and used in or in relation to commerce or industry and the recipient of such services is located outside India" used in Rule 3(3)(i) of Export of Services Rules, 2005 upto 18.4.2006 (ii) What is extent and scope of phrase "such service is delivered outside India and used outside India" used in Rule 3(2)(a) of Export of Services Rules, 2005 from 19.4.2006 to 28.2.2007 (iii) What is extent and scope of phrase "services provided from India and used outside India" used in Rule 3(2)(a) of Export of Services Rules, 2005 from 1.3.2007 onwards (iv) Whether the services rendered to foreign entity located outside India for development of its business in India will qualify as Export of Service in terms of the above phrases used in the Export of Services Rules, 2005 from time to time and the decision of Apex Court in case of GVK Industries ? [para 5.9 to 5.11, 6.1]

- Matter referred: MUMBAI CESTAT

2019-TIOL-2581-CESTAT-MUM

ST - Appellants had exported the output services to a large extent, to the overseas group entities without payment of ST and, therefore, there was accumulated credit balance in their cenvat accounts, which were claimed as refund in terms of rule 5 of the Cenvat Credit Rules, 2004 [CCR, 2004] - refund applications were rejected by the original authority - on appeal, Commissioner (Appeals) allowed refund benefits in some of the services and denied the benefit in some other services - assessee before CESTAT.

HELD: Works Contract Service : Repair and maintenance of furniture & fittings cannot be termed as either building or civil structure, in order to be categorized as excluded service under the said rule - on the other hand, the main part of the definition of input service takes within its ambit the activity of repair of office of the service provider, for consideration as input service - thus, rejection of the refund benefit on works contract service is not proper and justified - however, it is found that both the authorities below have not recorded any specific findings with regard to the nature of use of such service by the appellants - therefore, the matter is remanded to the original authority for ascertaining the fact regarding the nature of use of such service by the appellants - if the utilization of such service is for carrying out the activities of repair/maintenance of furniture & fittings and not for execution of the works contract of a building or civil structure, the benefit of refund should be extended to the appellants: CESTAT Mandap Keeper/Event Management Service: Benefit denied on the ground that the said services were used for personal or welfare purpose - since, the submissions made by the appellants at this juncture that such service was used for business purpose and not otherwise, has not been properly examined by the authorities below, the matter should be remanded to the original authority for a proper fact finding on the issue and for that purpose, the appellants should produce relevant evidence to support their stand that such services were in fact, used for providing the output service by them - in such an event, the original authority should extend the refund benefit to the appellants - accordingly, the matter is remanded to the original authority: CESTAT Storage & Warehousing and Photography/Event Management Service: The said services were used by the appellant in, or in relation to providing the output service, which will be termed as input service as per the main part of definition provided under rule 2(l) of the CCR, 2004 - further, the authorities below have not specifically recorded any findings to the effect that the said services were used by the appellants for the personal or welfare purpose of the employees - hence, denial of refund benefit of ST paid on the said services is not sustainable and accordingly, the appeal filed by the appellants merits consideration for the benefit of refund: CESTAT Coaching & Training Service: T he said services were availed by the appellants for conducting trainings for the employees and for re-location of the employees - such services are specifically covered under the inclusive part of definition of input service as "coaching & training" - thus, such service qualifies as input service for the purpose of refund benefit - accordingly, it is held that the appellants are eligible for refund of ST paid on such services: CESTAT Non submission of Invoices/Documents: T he impugned order has denied the benefit of refund in respect of the dispute services, on which the corroborative invoices were not submitted by the appellants to prove the admissibility of refund - considering the submissions that the appellants have maintained proper records, the matter should be remanded to the original authority for verification of the invoices/records for consideration of the refund benefit to the appellants - accordingly, on this ground also the matter is remanded to the original authority: CESTAT General Insurance & Insurance Auxiliary Service: S ince, such services were used for the personal use/benefit of the employees, as per the exclusion clause provided in rule 2(l) of the CCR, 2004, the said services cannot be considered as input service and the benefit of refund shall not be extended to the appellants - accordingly, the appeal filed by the appellants on such ground is dismissed: CESTAT Conclusion: (i) Works Contract Service - matter remanded to the original authority for a fresh fact finding (ii) Mandap Keeper/Event Management Service - matter remanded to the original authority for a fresh fact finding (iii) Storage & Warehousing and Photography/Event Management Service - appeals allowed (iv) Coaching & Training Service - appeals allowed (v) Non-submission of Invoices/Documents - matter remanded to the original authority for a fresh fact finding (vi) General Insurance & Insurance Auxiliary Service - appeals dismissed - the appeals filed by the appellants are disposed of accordingly : CESTAT [para 10, 11, 12, 13, 14, 15, 16, 17]

- Appeals disposed of: MUMBAI CESTAT

CENTRAL EXCISE

2019-TIOL-2097-HC-MAD-CX

JVC Graphics And Signages Pvt Ltd Vs Additional Commissioner

CX - The assessee has submitted that two important questions were raised before Adjudicating Authority as well as Single Judge viz. lack of jurisdiction of authority concerned to pass the order, as supplying of Sign Boards was made at the places outside the territorial jurisdiction of Adjudicating Authority and the exigibility of Excise Duty on such Sign Boards - They submitted that only the question of exigibility of Excise Duty has been touched upon by the Adjudicating Authority, but the issue of lack of territorial jurisdiction has not been looked into by him - He, therefore, submitted that the question of jurisdiction can be raised in Writ Petition and the Single Judge has erred in dismissing the writ petition by relegating the assessee to the alternative remedy, for which, there is an onerous condition of pre-deposit - The Single Judge was justified in relegating the assessee to the alternative remedy of the statutory appeal, provided under the law - No exceptional circumstances are found to allow such issues to be raised in Writ jurisdiction - Of course, the assessee is free to raise all the questions, including the question of lack of territorial jurisdiction, before the Appellate Authority, who is expected to decide all the questions and objections, raised by assessee - Since the time limit for filing such an appeal may have expired, if such an appeal is filed within a period of six weeks, the appellate authority shall not raise any objection as to limitation, but, however, subject to compliance with other usual conditions, the said appeal may be disposed of on merits and in accordance with law: HC

-Writ appeal dismissed : MADRAS HIGH COURT

2019-TIOL-2580-CESTAT-AHM

CX - The main appellant/appellant unit is engaged in the manufacture of Gutkha falling under chapter 24 of the CETA, 1985 - they were discharging duty under the provisions of Pan Masala Packing Machines (Capacity Determination and collection of duty) Rules, 2008 [PMPM Rules] as amended - the main appellant had filed declaration on 1.4.2011 in terms of rule 6 of PMPM Rules wherein they declared the details of packing machines to be used for packing of Gutkha along with specific MRP of the pouches - however, during surprise check, various irregularities were found - SCN issued demanding duty of Rs.22.32 crores invoking the extended period of limitation- penalty under rule 17 of the PMPM Rules along with section 11AC of the CEA was also proposed on the main appellant - personal penalty was also proposed upon Shri Dilipkumar Amrutlal Jani, director of the appellant unit and Shri Jagdishprasad Mohanal Joshi, Sachin Joshi under rule 26(1) of the Central Excise Rules, 2002 [CER] - the adjudicating authority, vide impugned order, confirmed the demand and imposed penalties upon all the appellants - appeal to CESTAT.

HELD: The appellant unit was found to be engaged in packing pouches of higher MRP in contravention of declaration filed by them under rule 6 of PMPM Rules, 2008 - clearly, the appellant unit contravened the provisions of rules 6 (6), 7 and 9 of the PMPM Rules and since the notified goods were manufactured in contravention of their declaration, therefore, as per the provisions of rule 9 of the PMPM Rules the rate of duty applicable to goods of Highest RSP, Rs.3/- in this case will be applicable in respect of all packing machines operated by the appellant and they are liable to pay duty as per said RSP on all machines - the language of PMPM Rules is absolutely clear in this regard and leaves no scope for any doubt - thus, the duty demand is sustainable and the impugned order in as much as it relates to CE duty liability on the basis of Highest RSP i.e. Rs.3/-, interest on duty and penalty on appellant unit as imposed by the adjudicating authority is legal and no reason found to interfere with the same - therefore, the impugned order in as much as it relates to demand of duty and penalty against the appellant company is concerned is upheld - the director, Shri Jani, being managing the affairs of the unit was responsible for violation of rule 6 of PMPM Rules - the impugned goods were manufactured in violation of rule 6 of PMPM Rules and since Shri Jani being involved in violation of subject rules being director of the unit is liable for penalty - however, considering the amount of duty and imposition of penalty on the company, the personal penalty imposed upon Shri Jani is on higher side, which requires reduction - therefore, the Bench finds it appropriate to reduce the penalty, accordingly, penalty imposed upon Shri Jani is reduced from Rs.5 crore to Rs.4 crore - therefore, the impugned order against Shri Jani is modified to the above extent - as regard penalty upon Shri J.M.Joshi and Shri Sachin Joshi, it is found that no involvement of above persons is on record - no act found committed by both appellants to evade payment of duty or to violate the PMPM Rules - Shri Jani has not named any of these persons to be involved in any act of violation of law nor any of the persons whose statements has been relied upon i.e. production Manager or Supervisors has named the appellants to be involved in any act of violation - none of the witnesses has made any statement to the effect that the appellants were aware of or involved in the alleged clandestine removal by the appellant unit - the appellant unit is a private limited company and hence section 266 of the Companies Act is not applicable to the present case - section 270 of the Companies Act is not applicable to appointment of subsequent directors or nominated directors - there is no evidence/findings that the appellants had played role in acquiring, possessing of, or appellants were in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing or in any other manner dealt with, any excisable goods which they knew or had reason to believe were liable for confiscation under CEA, 1944 or the Rules - therefore, penalty under rule 26 of the CER cannot be imposed - moreover, it is also seen that in the present case, there was no proposal to confiscate goods - hence, for this reason also the penalty under rule 26 cannot be imposed - therefore, in absence of any evidence of involvement of both of these persons in any act of violation of PMPM Rules or central excise law, no reason found to impose penalty upon them - therefore, the impugned order is set aside only to the extent, it imposes penalty upon Shri J.M.Joshi and Shri Sachin Joshi, resultantly the penalty on both of these persons is set aside - in view of the above, appeal filed by the main appellant/appellant unit is dismissed, appeal filed by Shri Jani is partly allowed in the above terms and appeals filed by Shri J.M.Joshi and Shri Sachin Joshi are allowed : CESTAT [para 7, 8, 9, 10, 11]

- Appeals disposed of: AHMEDABAD CESTAT

2019-TIOL-2579-CESTAT-MUM

CX- During the period November 1993 to February 1996, the appellant had manufactured branded products of M/s. Marico Industries Ltd. [Marico] on job work basis - alleging that the transaction between the appellant and the supplier Marico are not on principal to principal basis, duty was demanded on the price at which the goods were sold by Marico - on remand from Tribunal, Commissioner (Appeals) passed the impugned order confirming the demands raised in the SCNs issued from time to time during the aforesaid period.

HELD: The principles of law laid down in the second Ujagar Prints' case 2002-TIOL-02-SC-CX-CB , later clarified in third Ujagar Prints' case 2002-TIOL-03-SC-CX-CB and Pawan Biscuits Pvt. Ltd. 2002-TIOL-04-SC-CX is squarely applicable to the present case inasmuch as the landed cost of the raw materials and conversion charges, which includes the margin of profit of job-worker, is the basis for arriving at the assessable value of the job worked goods in the hands of the job worker - therefore, the proposal to include the overheads of the supplier of raw materials purchased from the open market and delivered directly at the premises of the appellant cannot form part of the assessable value - as far as the landed cost of the raw material is concerned, the same includes the element of freight as well as transit insurance being evident from the sample copies of the invoices placed by the appellant in the paper book - therefore, the method of assessment of job worked goods arrived at by the adjudicating authority on the basis of C.A. certificate is correct and in accordance with the law - however, for the limited purpose of verification of the sample invoices submitted before this forum, the matter is remanded to the adjudicating authority - appeal is allowed by way of remand : CESTAT [para 8, 9]

- Matter remanded: MUMBAI CESTAT

2019-TIOL-2578-CESTAT-MUM

Mercedes Benz India Pvt Ltd Vs CCE

CX - Issue is whether the appellants are entitled for refund of the duty paid by them on Road Delivery Charges (RDC) collected by them from the dealers. HELD: Commissioner rejected the appeal filed by the appellants and allowed the appeal filed by the Revenue primarily in view of the earlier decision dated 20.11.2009 of this Tribunal in the appellant's own case 2010-TIOL-184-CESTAT-MUM - However, since then much water has flown under the bridge - the aforesaid order dated 20.11.2009 was set aside by the Bombay High Court 2010-TIOL-195-HC-MUM-CX and the matter was remanded to the Tribunal for a fresh decision - upon remand, the Tribunal decided the issue in favour of assessee while relying upon the decision of the Supreme Court in the matter of  Baroda Electric Meters Ltd. 2002-TIOL-96-SC-CX-LB and also relying upon the decision of the Tribunal in the matter of Kothari Sugar and Chemicals 2005-TIOL-249-CESTAT-MAD - s ince there was no occasion for the Commissioner to deal with the latest decision of the Tribunal and since the foundation of the impugned order, i.e. the decision of the Tribunal dated 20.11.2009, is not in existence, the Bench is inclined to set aside the impugned orders and remand the matter back to the Commissioner to decide the appeals afresh in view of the latest decisions as mentioned herein above - the appeals are, therefore, allowed by way of remand: CESTAT [para 5, 6]

- Matter remanded: MUMBAI CESTAT

CUSTOMS

2019-TIOL-2577-CESTAT-KOL

Cus - The assessee imported used and worn unmutilated and fumigated mix cloth and five Bills of entry were filed covering the consignments of import - At the time of original assessment, the declared value of imported goods was enhanced from CIF price of US$ 1.10 per kg. to US$ 1.316 per kg. - The original adjudicating authority ordered confiscation of imported goods for violation of Import Trade Control restrictions and the goods were confiscated under Section 111(d) of Customs Act, 1962 - He also imposed redemption fine under Section 125 of the Act @ 25- 26% and personal penalty under Section 112(a) of the Act, varying from 10% to 11% - The Commissioner (A) has ordered reduction of redemption fine and personal penalty on the basis of ratio laid down by Three Member Bench of CESTAT, Delhi in the case of Omex International 2015-TIOL-582-CESTAT-DEL wherein it is held that redemption fine of 10% and penalty of 5% of the value of the imported goods, would be appropriate in case of import violating Exim Policy Provisions - No reason found to interfere with findings of Commissioner (A) on the basis of such decision - The impugned order is upheld and the appeal filed by Revenue is rejected: CESTAT

- Appeal rejected: KOLKATA CESTAT

2019-TIOL-2576-CESTAT-MUM

Cus - The assessee imported a consignment of Old White and Coloured Cut Wiper Industrial Rags - The Revenue objected to clearance of such goods on grounds that they were restricted for import and held them to be classifiable under ITC (HS) Heading 63101090 - On adjudication, the goods were held liable for confiscation u/s 111(d) of the Customs Act and penalty was imposed - Such findings were sustained by the Commr.(A) - On appeal, the Tribunal allowed partial relief, having reduced the quantum of redemption fine and penalty - The assessee then approached the Revenue, seeking refund of excess penalty deposited - However, such refund was denied and the assessee was found liable to pay a certain balance amount of penalty and the same was ordered to be recovered - The assessee again approached the Commr.(A), who upheld such findings - Hence the present appeal before the Tribunal for the second time.

Held - It is found that the terms fine and penalty are often interchangeable used - Besides, clerical error in reflecting amount of penalty in the column of fine in the appeal memo, cannot put the assessee in a disadvantageous position - Moreover, it is only the Commr.(A) who is vested with power to enhance any fine or penalty - The Tribunal cannot increase the quantum of such fine or penalty - Thus, where the Tribunal reduced the quantum of both fine and penalty, the assessee cannot be put into a more disadvantageous position as the goods have already been re-exported - Hence the assessee is entitled to the refund of the excess penalty paid & the adjudicating authority is directed to disburse the same: CESTAT

- Assessee's appeal allowed: MUMBAI CESTAT