2019-TIOL-2606-CESTAT-KOL

Samal Builders Pvt Ltd Vs CCE & ST

ST - The demand for Service Tax has been raised against NPCC in respect of work orders awarded to them by NTPC - Such works orders were, in turn, sub-contracted to SBPL by NPCC on back to back basis - The Lower Authority has considered SBPL to be independent service provider and demanded the Service Tax from them, in addition to the demand raised against NPCC - The work orders are required to be scrutinized denovo to decide the liability of Service Tax, if any - The Adjudicating Authority did not have the benefit of decision of Supreme Court in case of Larsen and Toubro 2015-TIOL-187-SC-ST - The impugned orders merit to be set aside and the issue remanded to the Adjudicating Authority for denovo decision on the Service Tax liabilities of both the assessees involved - He will be guided by the decision of Supreme Court in the L & T case - It is evident that the entire value of contracts awarded to SBPL is subsumed in value of contracts received by NPCC from NTPC - The CBEC had issued clarification to the effect that subcontractor will not be liable to payment of Service Tax as long as the entire value of work awarded to the sub-contractor is included by the principal contractor for payment of Service Tax - Such CBEC Circular dated 02/07/1997 has been withdrawn only by issue of Circular No. 96/7/2007-ST - In these cases, sub contractors have been held to be not liable to pay service Tax - The decisions and circular may also be kept in view by Lower Authority in the Denovo proceedings before him - Impugned orders are set aside and the appeals are allowed by way of remand: CESTAT

- Matter remanded: KOLKATA CESTAT

2019-TIOL-2605-CESTAT-AHM

Voltas Ltd Vs CST

ST - The assessee, in the course of fulfilling contractual obligation pertaining to installation of 'air-conditioning equipment', had discharged tax liability on the service component of consideration received from their customers - The dispute is limited to the exclusion of value of goods amounting to 5,88,27,342/- that had been supplied in the course of execution of their work on which, admittedly, tax had not been discharged by them - The adjudicating authority had failed to give adequate consideration to the claim of assessee that the materials supplied in impugned contracts did suffer tax on sale and could not be subject to tax under FA, 1994 - Hence, in the light of taxability of 'works contract service' only w.e.f. 1 June 2007 and non-leviability of tax as supplier of 'erection commissioning or installation service', the demand does not sustain - Insofar as the tax on supply of 'maintenance or repair service' is concerned, the decision of Supreme Court in re Pro Lab 2015-TIOL-08-SC-CT-LB also settles the issue by holding that goods supplied along with the service is not includable in the assessable value under section 67 of FA, 1994 for levy of tax under section 66 - It is clear from the evolution of tax liability, as articulated in section 65 of FA, 1994 from time to time, that it was only after 1st June 2005 that the activity pertaining to 'air-conditioning systems' was brought within the tax net under that head - Prior to that incorporation, the tax is restricted to 'erection, commissioning or installation of plant, machinery or equipment' - Taxability on installation of 'heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work' was covered within the ambit of the service by amending section 65 (39a) of FA, 1994 - It is, therefore, abundantly clear that the legislative intent of taxing 'erection, commissioning or installation of plant, machinery or equipment' did not, till 16 June 2005, extend to the activities subsequently enumerated therein - Contrary to the justification offered by revenue that this can only be inferred to be an disambiguation to avoid confusion, it is found from the absence of any of the conventional expression that normally serves to indicate such intent, that the activity undertaken during the period in dispute by assessee would not be taxable under section 65 (105) (zzd) of FA, 1994 - The demand and other detriments, in the impugned order are without the authority of law - Consequently, the impugned order is set aside: CESTAT

- Appeal allowed: AHMEDABAD CESTAT

CENTRAL EXCISE

2019-TIOL-2118-HC-AHM-CX

CX - By an order dated 8th May, 2013, this Court extended the time period for purpose of pre-deposit upto 15th August, 2013 - This Court clarified that if the amount is deposited, the Tribunal shall entertain the tax appeal on merits - This Court also clarified that if within such time period, the petitioners are able to find a buyer to sell the property in question, it would be open for them to approach the Court again - As the applicants were not able to deposit the amount, the appeal came to be ultimately dismissed - Thereafter, an application was preferred for restoration of the appeal pointing out the circumstances, in which, the applicants were not in a position to deposit the amount - The CESTAT, while rejecting the application, vide order dated 19th January, 2019, took the view that this Court had explicitly fixed the time for making the pre-deposit upto 15th August, 2013 - The Tribunal would have no jurisdiction to extend the time period - It is in the aforesaid background that the applicants are here, once again, before this Court with a request to extend the time limit for making the pre-deposit - It appears that there is a major development in the matter - The department appears to have auctioned the properties of applicants and were in a position to fetch or realize an amount of Rs.2.61 Crore - As the department has been able to recover the amount of Rs.2.61 Crore, the applicants may not be now asked to deposit the amount towards the pre-deposit - The interest of revenue could be said to be protected - The applicants must get an opportunity to argue the appeal on merits rather than the appeal being dismissed on the ground of failure of pre-deposit - The CESTAT is directed to hear the appeal preferred by the applicants on its own merit without insisting for the pre-deposit amount: HC

- Application disposed of : GUJARAT HIGH COURT

CX - In an alleged case of unaccounted production and clearance of MS ingots without payment of duty, SCN issued to the respondents demanding CE duty of Rs.49.05 lakhs from the main respondent - demand confirmed along with interest, equivalent penalty imposed on the main respondent, penalties imposed on the other respondents - on appeal by the respondents, the Commissioner (Appeals), vide impugned order, allowed the appeals of the respondents and set aside the O-i-O by holding that the charges of unaccounted production and clearance of 1720.674 MT of MS ingots without payment of duty has not been proved - Revenue in appeal before CESTAT.

Held: On the basis of the same investigation and the statements of the witnesses and the documents recovered from the premises of the respondents, SCNs were also issued to M/s. Prince Rollings (P) Ltd. alleging unaccounted production and clearance of 2014.185 MT of MS ingots to M/s. Prince TMT Steels (P) Ltd. which is a sister concern and M/s. Bee Path Castings (P) Ltd. - the Commissioner confirmed the proposed demand of duty vide O-i-O No.13/2009 dated 25.5.2009 with penalties and confiscation of the excess goods and also imposed penalties on the Chairman and Directors and other officers of the assessee - on appeal before the Tribunal, the Tribunal after analyzing the entire evidences on record passed a detailed Final Order No.21543-21548/2018 dated 5.10.2018  and set aside the impugned order by allowing the appeals filed by M/s. Prince TMT Steels (P) Ltd., M/s. Prince Rollings (P) Ltd. and other co-noticees on merits - penalties were dropped - further, it is found that the present proceedings are based on the same facts, statements and documents recovered during investigation - further, it is found that it is well settled legal position that the allegation of manufacture and clandestine removal of goods without payment of duty being a serious charge, the burden of proof is on the Revenue - the charge must be proved by producing cogent/positive material evidence of procuring raw materials, manufacture of goods, removal of goods from the factory, receipt of the goods by the buyer and receipt of consideration etc. - these requirements have been held in the following cases (i) Bihariji Manufacture Co. Pvt. Ltd. [2015 (323) ELT 106 (Del.), 2015 (323) ELT A 023 (SC)] (ii) Mahesh Silk Mills - 2014-TIOL-1032-CESTAT-AHM (iii) Continental Cement Company - 2014-TIOL-1527-HC-ALL-CX (iv) Motabhai Iron & Steel Industries - 2014-TIOL-1617-HC-AHM-CX (v) Swati Polyester - 2015 (321) ELT 423 (Guj.) - it is found that the Commissioner has given careful consideration to the facts of the case and has given reasoned findings which are similar to the case, based on same set of facts and investigation, decided by this bench as discussed above - therefore, it is found that no sufficient cause has been made out by the Revenue so as to necessitate the interference of this bench in the impugned order - in view of the above, there is no infirmity in the impugned order warranting interference - consequently, the impugned order is upheld by dismissing all the appeals of the Revenue : CESTAT [para 6.1, 6.2, 8, 9]

- Appeals of Revenue dismissed: BANGALORE CESTAT

CX - Appellants/assessee are engaged in the manufacture and sale of PVC Suction Pipes, PVC Krishi Pipes, Rubber Hose etc. falling under chapters 39 & 40 - SCN issued proposing classification of the products under CH 3917.39 of the CETA [appellants had claimed classification under CH 3917.31] as excisable goods, and proposing recovery of Rs.58.14 lakhs - demand confirmed along with interest, proportionate penalty imposed - appeal to CESTAT.

Held: It is seen that the products in question are PVC Krishi Pipes of the burst pressure of 1.0 Mpa, PVC suction pipes of burst pressure of 1.5 Mpa and PVC Garden Pipe of 0.7 Mpa - thus the products have the pressure of much less than 27.6 Mpa as is minimum required under chapter 3917.31 - the product cannot be classified under heading 3917.31 - thus, the products being one or the other kind of pipe that have been classified under section 39 in the category of 3917.39 - the appellant has claimed non excisability of their product on two grounds (i) that the pipes are flexible and are made out of plastic recycled scrap and (ii) the tariff is silent about the burst work pressure less than 27.6 Mpa - from the chapter note 8 of Chapter 39, it is clear that all flexible or non-flexible tubes, pipes and hoses are excisable goods even if they are classified under chapter heading 3917.31 having work pressure of more than 27.6 Mpa and are also excisable and the duty of 16% is to be levied as per CEA - these observations coupled with the admission of the appellant that the product is classifiable are sufficient to hold that except for the burst pressure criteria, any pipe, tube or hose is excisable goods - the burst pressure of appellant's products is admittedly less than 27.6 Mpa as is minimum required to claim exemption - thus, none of the grounds of the appellant assessee affect the said excisability - resultantly, no infirmity found in the order denying the classification of the impugned goods under 3917.31 and holding it as a product classifiable under 3917.39 i.e. the hollow pipes which do not find any other classification in the said chapter, the demand confirmed is, therefore, sustainable - since the appellant is found to have wrongly classified his product to such a category to which no duty is leviable, as already observed above, the goods are otherwise excisable, the act is held as willful intention to evade the duty - the said act of the appellant is definitely an act of misrepresentation of the facts - therefore, the adjudicating authority was right to invoke the extended period of limitation and the penalties are also held to have been rightly imposed - in view of these findings, the order of the first appellate authority is upheld - the appeal stands rejected : CESTAT [para 5, 6, 7, 8, 9, 10]

- Appeal rejected: HYDERABAD CESTAT

CX - The issue in this appeal is related to taking of cenvat credit on the explosives used for mining of lime stone - such lime stone was used captively by the appellant and a small part of such lime stone was cleared to one, Raj Cement - SCNs dated 31.3.1998 and 20.7.1998 was issued requiring the appellant to pay an amount by way of reversal of 8 % of such lime stone cleared, being exempted goods under Central Excise, towards reversal of cenvat credit taken, being common input (explosives) - in terms of the final order of this Tribunal, the Adjudicating Authority by O-I-O dated 8.2.2017 recorded the findings that the appellant has reversed the cenvat credit - accordingly, he dropped the demand - being aggrieved, the appellant preferred appeal before the Commissioner (Appeals) on the new ground that credit in dispute is not relating to explosives rather it is in respect of crusher and conveyor belt, which is installed outside the factory but adjacent to the factory - Commissioner (Appeals) in para-8 of his order, observed that neither in the written submissions nor at the time of personal hearing, the respondent/assessee put forth any evidence before the undersigned that cenvat credit involved in inputs used in or in relation to production of limestone cleared to Raj Cement stands reversed with interest - rather the assessee has taken a new plea that the clearance was made to their sister concern and it was not a sale - more so, the said Raj Cement had merged with the appellant company subsequently on 11.11.1998.

Held: The appellant had filed written submissions on 21.1.2018 before the Commissioner (Appeals), wherein in para 6.2, they have made categorical averment that they had already reversed the entire cenvat credit of Rs.72,525/- on inputs explosives used in or in relation to the production of limestone cleared to Raj Cement, vide debit entry no.145 dated 21.1.1998 and debit entry no.149 dated 28.2.1998 - such reversal of cenvat credit has already been noticed by the Department vide earlier O-I-O No.32/99 dated 19.3.1999 - the said averment has not been found to be untrue by the Commissioner (Appeals) and further it had been arbitrarily observed that the appellant has not produced any evidence of reversal of cenvat credit - thus, it is found that the O-I-A is factually wrong - accordingly, the O-I-A is set aside and the O-I-O is restored - thus, the appeal is allowed with consequential benefit to the appellant : CESTAT [para 5, 6]

- Appeal allowed: DELHI CESTAT

2019-TIOL-2604-CESTAT-MAD

Rajshree Sugars And Chemicals Ltd Vs CGST & CE

CX - Non-maintaining of separate accounts as required under rule 6(2) of the Cenvat Credit Rules, 2004 [Rules] - the issue relates to includibility of attributable credit in respect of electricity used in the manufacture of exempted goods - SCN issued proposing to demand amount equal to the attributable cenvat credit availed on the input services used in the manufacture of exempted goods, invoking extended period of limitation - demand confirmed, penalty imposed – on appeal, Commissioner (Appeals) upheld the O-i-O – appeal to CESTAT.

Held: Issue has been laid to rest by this very Bench, in the case of India Cements Ltd. 2018-TIOL-1996-CESTAT-MAD following the decision of the Supreme Court in the case of Maruti Suzuki Ltd. 2009-TIOL-94-SC-CX - therefore, the issue on merits is decided against the assessee - on the issue of invoking the extended period of limitation, however, the assessee has placed on record the notices issued by the Revenue proposing periodical audits, which fact justifies that the Revenue was in the know of the appellant's activities right from 2005 - moreover, the issue is factual, which was explained by the assessee to be because of bona fide belief entertained by it and the fact that the retrospective amendment to rule 6 brought in vide the Finance Act, 2010 made the reversal of cenvat credit attributable to the manufacturing of exempted goods or providing exempted service mandatory - for the above reasons, there was no justification for the Revenue to invoke the larger period of limitation and hence, the demand cannot survive for the entire period - therefore, the demand, if any, will have to be restricted to the normal period and for this limited exercise of determining the duty liability for the normal period, the matter is remanded to the file of the adjudicating authority – the Bench is inclined to set aside the penalty imposed under rule 15 of the Rules following the ruling in the case of India Cements Ltd. - the appeal is treated as partly allowed on the above terms : CESTAT [para 5, 6, 7, 8]

- Appeal partly allowed: CHENNAI CESTAT

2019-TIOL-2603-CESTAT-MAD

Shasun Pharmaceuticals Ltd Vs CGST & CE

CX - Manufacture of "Streptokinase" classifiable under Heading 3004 9084 attracting nil rate of duty in terms of notification no.4/2006-CE dated 1.3.2006 r/w notification no.21/2002-Cus dated 1.3.2002 - department was of the view that the appellants have wrongly availed credit on inputs and input services which are used in the final product which is exempt from payment of CE duty - SCN issued - demand of Rs.65.56 lakhs being the wrongly availed credit was confirmed along with interest and equal penalty was imposed under rule 15(2) of Cenvat Credit Rules, 2004 r/w section 11AC of Central Excise Act, 1944 - appeal to CESTAT.

Held: From the letter dated 1.6.2009 of the appellant and the letter dated 7.1.2010 of the department, it is very much clear that the department was fully aware that the appellant was classifying the goods under 3507 9061 - while issuing the letter dated 7.1.2010 also, the department did not doubt the classification adopted by the appellant - only later when the appellant issued a letter dated 22.1.2010 explaining that there is no liability to pay duty on the said product, since they would be eligible for the notification benefit, as the goods are correctly classified under Chapter Heading 30049084, the demands have been made to deny the credit availed - after receiving letter dated 22.1.2010, the department has accepted the said classification of the goods under Heading 30049084 and the exemption from payment of duty - much later, on 18.7.2012, the department has issued the present SCN alleging that the appellant has willfully misstated the facts with intention to evade payment of duty - the Bench does not find that the appellant has suppressed or willfully mis-stated any facts - the documents show that the appellants have informed all the details with regard to classification and the rate of duty adopted by them in the letters issued by them to the department - when the department itself has earlier accepted the classification adopted by the appellant and demanded higher rate of duty @ 8% from the appellant, the allegation that the appellant has wrongly paid duty without availing the exemption and thus intended to avail wrong credit can at no stretch of imagination be accepted - no iota of evidence found to establish the ingredients under section 11AC of the CEA - the SCN, therefore, is time-barred and cannot sustain - the impugned order is set aside and the appeal is allowed on the ground of limitation : CESTAT [para 14, 15]

- Appeal allowed: CHENNAI CESTAT

CUSTOMS

2019-TIOL-2117-HC-MUM-CUS

Cus - This application seeks a stay of impugned order dated 12th June, 2017 of the Tribunal - The impugned order of Tribunal, on examination of Regulations 2004 framed under Section 146 of the Act came to the conclusion that the order of Commissioner to the extent it does not suspend or cancel a license is not an adjudicating order, thus, beyond the purview of Section 129D of the Act for the purposes of the Revenue - The CBLR, 2013 which came in supersession of Regulations, 2004, does provide for filing an appeal by CHA against an order of suspension/ revocation of license by Commissioner under Section 129A of the Act - This has been specifically provided in Regulation 22 of Regulations, 2013 - There is no provision in Regulations, 2013 which would enable the Revenue to file an appeal from order of Commissioner in favour of CHAs - This may be indicative of order not being an order subject to Revision under Section 129D of the Act under the Regulation, 2013 - However, these issues would require deeper consideration at the final hearing - Particularly, whether the order of Commissioner under Regulation, 2004 is an adjudication order - Also can the Regulation 2013 be of any aid in construing Regulation, 2004 - Therefore, the view taken in impugned order by Tribunal would require a detailed consideration at the final hearing of appeal - Therefore, no stay of impugned order pending the disposal of the appeal by the Tribunal, can be granted - Thus, Notice of Motion is dismissed: HC

- Notice of Motion dismissed : BOMBAY HIGH COURT 2019-TIOL-2602-CESTAT-ALL

CC Vs Pinki Agarwal

Cus - The Commercial Tax Department found a truck loaded with large Cardamom and handed over the same to the Assistant Commissioner of Central Excise for further action - However, the Customs Authorities initiated proceedings against assessee for confiscation of said goods on the ground that the same have been illegally smuggled into India as also for imposition of penalties - Admittedly, large Cardamom is not a notified item in terms of Section 123 of Customs Act - As such, the onus to prove that the same have been smuggled lies upon the Revenue and is required to be discharged by production of sufficient and positive evidence - Merely based upon the trade opinion indicating the goods to be a foreign origin is not sufficient especially when the assessee have produced the purchase ledger showing the purchase of the same from local person located in India - Even if trade opinion is accepted, which in any case cannot be considered to be an expert opinion, the fact that the Cardamom may be of foreign origin by itself is not sufficient to hold the same as of smuggled nature - Revenue has not advanced any evidence to show that the Cardamom in question was smuggled - In the absence of same, no justification found to interfere in impugned order of Commissioner (A): CESTAT

- Appeals rejected: ALLAHABAD CESTAT

2019-TIOL-2601-CESTAT-BANG

Mangaly Industries Pvt Ltd Vs CC

Cus - The assessee had imported sawn sizes of teak wood for resale in Indian market and after the sale of goods, claimed refund of special additional duty of 4% paid as provided in Notfn 102/2007-Cus. as amended - Same was rejected on the ground that the invoices did not have the required endorsement as per condition 2(b) of said Notfn - The assessee had produced the copies of invoices generated from computer which contains the required endorsement as provided under condition 2(b) of said Notfn - The price shown in the sale invoice was a consolidated one and therefore nobody would be able to avail any credit either - Further, assessee had produced the letters from the buyers who have categorically stated that they have not availed any credit on those invoices - The decisions relied upon by assessee in Equinox Solutions Ltd. 2010-TIOL-1907-CESTAT-MUM and Novo Nordisk India Pvt. Ltd. 2013-TIOL-1944-CESTAT-MUM clearly held that when the price shown in sale invoice is consolidated one and the duty paid on import had not been shown separately, there is no possibility of anyone taking credit of duty paid and this in a way comply with the conditions of the Notfn 102/2007 - Since the issue is squarely covered by the decisions cited, therefore, by following the same, the impugned order is set aside: CESTAT

- Appeal allowed: BANGALORE CESTAT