2019-TIOL-2620-CESTAT-MUM

Laxmi Associates Vs CCE

ST - The appellants in both the appeals are engaged in providing taxable services falling under the category of "Construction of Complex Services" as defined by section 65(105)(zzzh) of the Finance Act, 1994 - although they were providing taxable services at the material time they did not take registration and pay ST - SCNs issued demanding ST - demands confirmed along with interest, penalties imposed under sections 77(2) and 78 of the Finance Act, 1994 [Act] on the appellants - on appeals, the Commissioner (Appeals) upheld the O-I-O - appellants before CESTAT.

Held: The dispute in the present case is in relation to valuation of taxable services - the value for the purpose of determination of the ST payable has to be done in terms of section 67 of the Act read with the relevant Valuation Rules, 2006 - in terms of Notification No.1/2006-ST dated 1.3.2006 as amended by Notification No.29/2010-ST dated 22.6.2010, the value of taxable service for the calculation of the tax payable has been prescribed at 25% of the gross receipts - the impact of section 67 and the Notification No.1/2006-ST dated 1.3.2006 as amended by Notification No.29/2010-ST dated 22.6.2010 has been explained by J S TRU vide his DOF No. 334/3/2010-TRU dated 1.7.2010 in respect of these services - from the clarification of JS TRU, there seems to be no iota of doubt with regards to the value to be taken for determination of the tax payable in respect of the services rendered by the appellants - appellants have contended that certain portion of the works have been completed by them prior to entering into contract/agreement of sale of the flats with the buyer - hence, no ST can be demanded in respect of the works undertaken prior to entering into such agreement of sale - the Bench is not in agreement with the contentions raised because the value of taxable service is not vis-à-vis the activity done prior to entering into contract/agreement for sale, but is on the basis of gross amount (consideration) received for providing the such construction of complex services - the gross consideration received cannot be vivisected into on the basis of work done prior to and after entering into agreement for sale - if the argument advanced by the appellant was to be accepted then the taxable value for every flat sold in the same complex constructed by the appellant will vary depending on the date of agreement, though the gross amount charged for the same flat from the customer remains the same - in any taxing statue, the measure of levy is to be determined according to the provisions of taxing statue - the measure of levy can be on the basis of actual computations of the taxable value or on the basis of proxy prescribed by the legislature after taking into consideration all the relevant facts - the Supreme Court has in case of Bombay Tyre International - 2002-TIOL-374-SC-CX-LB dealt with the issue in great length - all the contentions raised by the appellant in respect of prescription of measure of levy and the notification issued being in excess of delegated legislation have been considered and rejected by the Supreme court in this decision - in the present case, when the measure of levy has been prescribed to be based on 25% of the Gross Receipts then the same cannot be questioned on the basis of considerations such as quantum of completed work before the agreement to sell - as per the measure prescribed, the value of taxable service in this category has to be 25% of the gross receipts - notification 1/2006-ST as amended by the notification 29/2010-ST very clearly lays down the condition of exemption and provides that if the gross amount includes the cost of land and the cost of land is not determined and charged separately then taxable value shall be 25% of gross receipt; and in case the cost of land is determined separately charged separately, then the taxable value will be 33% of the gross amount - this is clearly what has been explained by the J S (TRU) in his letter dated 1.7.2010 - in case of person claiming taxable value to be 25% of the gross amount, the question of determination of cost of land is irrelevant and the decision of Delhi High Court in case of Suresh Kumar Bansal - 2016-TIOL-1077-HC-DEL-ST relied upon by the appellant will not be applicable: CESTAT

Limitation: Appellants have contested the demand on limitation and have stated that they were under a bonafide belief that the activities undertaken by them are not taxable; there was dispute in respect of leviability to service tax and the constitutional validity was also under challenge - not much merits found in such submission as the provisions in law and clarifications issued by the authorities on the subject were quite elaborate and clear - disputes cannot be in respect of the levy but can only with reference to some view being taken - the appellants claim that levy itself was being disputed - levy being disputed implies the challenge to the power of Parliament to levy tax and it in itself admits that tax has been levied - the difference between dispute and contested levy is quite evident - further, bonafides cannot be in vacuum but have to be based on firm ground - in this case, when the issue had been clarified by J S TRU vide his letter dated 1.7.2010, no reason seen for entertaining the claim of the appellant that were under bonafide belief - it is now a settled principle that if the bonafide belief etc., is to be claimed by the appellant then it should be on the basis factual understanding - in view of the decisions in the cases of Continental Drugs Company - 2014-TIOL-361-CESTAT-MUM, Kala Sagar - 2014-TIOL-426-CESTAT-MUM, Balaji Society [2015 (38) ELT 139 (T-Mum)] & Board of Cricket Control of India [2015 (37) ELT 785 (T-Mum)] and the fact that appellants had failed to take registration, pay taxes due and file the service tax returns in time, no merits found in the submissions made by the appellant in respect of invocation of extended period of limitation - SCNs have been issued within a period of one year from the date of filing the returns, hence, even without invoking the extended period of limitation the demand would not be hit by limitation - hence, no hesitation in upholding the demands of service tax made - however, in respect of the appellant 2, the demand needs to be reworked as there seems to be a calculation error in the Annexure ‘A' to the SCN, in column marked Cess, Education Cess has been computed @20% of ST amount instead of @2%: CESTAT

Interest & Penalty : Since the demand of ST has been upheld, the demand of interest will follow - this is a civil liability of the assessee, who has retained the amount of public exchequer with himself and which ought to have gone in the pockets of the Central Government much earlier - upon reading section 11AB together with sections 11A and 11AA, the Bench is of the firm view that interest on the duty evaded is payable and the same is compulsory and even though the evasion of duty is not mala fide or intentional - thus, the demand of interest under section 75 of the Act is upheld - since ST has been demanded invoking extended period of limitation under section 73 of the Act, 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 - penalties under 77 of the Act are in nature of civil penalties and are imposed in cases where the person who by his act of omission or commission has failed to fulfill the obligations cast on him under the statue - by not furnishing the correct information as required on ST-3, appellant have made themselves liable to penalty under section 77(2) read with section 70 of the Act - hence the penalties imposed upon by the adjudicating authority are upheld: CESTAT

Waiver of penalty : No reason also found to uphold the claim of appellants for closure of proceedings initiated against them for the reason they had paid certain amounts before issuance of SCN when the demand is made invoking the provision of section 73(4) - in his order, adjudicating authority had given the appellants, as available under section 78, to pay the amount of tax confirmed along with interest and 25% of the penalty imposed - it was for the appellants to choose whether they wished to avail the said option - no merits found in the claim of the appellants for waiver of penalty under section 80 - section 80 of the Act is not the licence to condone the irregularities in the payment of taxes and filing of the returns - it was provided to remove the genuine difficulties that tax payers would have encountered during the initial implementation of tax regime on services - the scheme of taxation of services was introduced in 1994 and the case under consideration is for period July 2012 to 2014 - thus, no merits found in such submissions: CESTAT

Conclusion: (i) appeal of appellant 1 is dismissed (ii) appeal of appellant 2 is disposed subject to the consequential modifications in the impugned order, on account of wrong computation of Education Cess in the SCN - the demand of tax and penalty under section 78 of the Act stand modified accordingly: CESTAT [para 5.3, 5.4, 5.5, 5.6, 5.8, 5.9, 5.10, 5.11, 5.12, 5.13, 6.1]

- Appeals disposed of: MUMBAI CESTAT

2019-TIOL-2610-CESTAT-MUM

Ganesh Enterprises Vs CCGST

ST - Issue before Tribunal is as to whether the appellants are liable to pay ST on the services of "manpower recruitment or supply agency" supplied by them to the units located in SEZ, in view of the exemption notification nos.17/2011-ST dated 1.3.2011, 40/2012-ST dated 20.6.2012 and 12/2013-ST dated 1.7.2013.

Held: For availment of exemption notifications, the appellant was required to produce certain documents, which according to the appellant, they did produce before the department as well both the authorities below, but none of them have taken it into consideration - force found in the contention raised by the appellant - non-consideration of the same is nothing but violation of the principle of natural justice and vitiates the proceedings - therefore, without going into the merits of the matter, the impugned order is set aside and matter remanded back to the adjudicating authority: CESTAT [para 4, 5]

- Appeal allowed by way of remand: MUMBAI CESTAT

2019-TIOL-2609-CESTAT-DEL

Kanwal Coal Carriers Pvt Ltd Vs CCE

ST - Appellants are undertaking the work of loading and transportation of coal in the mining area of M/s. South Eastern Coal Fields Ltd. [SECL] and they have entered into two agreements with SECL viz. (i) loading agreement and (ii) transportation agreement - appellants have been including the value of loading agreement into the value of mining agreement and have been paying ST at the applicable prevailing ST rates on the charges recovered by the appellants - under the transportation agreement, the service recipient, SECL, have been discharging ST on reverse charge basis as per the provisions of Finance Act, 1994 under the category of goods transport agency service - Revenue of the view that the appellants are not paying ST properly as the service value of both loading agreement and transportation agreement need to be included into the mining services value and, accordingly, the appellants should have discharged ST on the amount received under above-mentioned both these agreements - SCNs issued - demands confirmed, hence appeal.

Held: Matter is no-longer res integra in view of the favourable decision of Supreme Court in the case of Singh Transporters - 2017-TIOL-249-SC-ST for the demand period between 1.4.2012 to 31.6.2012 - so far as the demand from 1.7.2012 to 31.3.2013 is concerned, same has also been decided on similar lines by this Tribunal in its final decision in the case of H.N. Coal Transport Pvt. Ltd. and others vs. CCE & ST, Raipur [final order No.52632-52633/2018 dated 23.7.2018] in similar cases - following these decisions, the orders-in-original are set aside and appeals allowed : CESTAT [para 6, 7]

- Appeals allowed: DELHI CESTAT

CENTRAL EXCISE

2019-TIOL-2619-CESTAT-MUM

Babubhai Narottamdas And Comapany Vs CCE

CX - Chlorination plant installed at various sites out of the goods manufactured and cleared by the appellant from their factory on payment of excise duty and assembled with other bought out items at the site of the customer, results into an immovable property and hence is not leviable to excise duty - impugned order is set aside and appeals are allowed with consequential relief: CESTAT [para 14]

- Appeals allowed: MUMBAI CESTAT

2019-TIOL-2612-CESTAT-DEL

CCE Vs Badriwas Biotech Pvt Ltd

CX - The assessee has been manufacturing the cosmetic products i.e. talcum powder under the brand name of "Himgange Cool Talc" - Whether the product of assessee is a cosmetic classifiable under Chapter 33 or a medicine classifiable under Chapter 30 - The product is manufactured not under drug license but under cosmetic license - The cosmetic license was obtained when assessee was already engaged in manufacture of pharmaceutical products - Had this talc been a pharmaceutical product only, there was no need for the assessee to have a cosmetic license for the manufacture thereof - Apparently, in common parlance the product is a talcum powder, which can be used irrespective of any prescription about the dozes to be used thereof - Seen from any angle, the talcum powder except providing a cooling and refreshing effect on body is not providing any therapeutic value nor any treatment to any specific skin condition - The effect of talcum powder is opined to be more of a cosmetic product that is the product for a better feel and look of body and skin - Thus, the issue is decided in favour of Department holding that the adjudicating authorities below have rightly classified the impugned "Himgange Cool Talc" as a product classifiable under Chapter 33 of CETA, 1985 i.e. as a cosmetic product - As regards to the issue of malafide intention of assessee, while declaring its product as pharmaceutical product, while claiming the exemption of Notfn 49/2003 , it is observed and held that the assessees started manufacturing the impugned talcum powder only after availing a cosmetic license to manufacture the same, though the same is being manufactured under the agreement with M/s. G.R. Burman & Sons, the brand-owner - It is also the simultaneous admitted fact that the said M/s. G.R. Burman & Sons and even the assessees were already engaged in manufacture of pharmaceutical products - Irrespective of classification, which otherwise has been held for the talcum powder to be a cosmetic rather than to be a pharmaceutical product, the assessee was bound by his own act and conduct and was in fact, estopped from claiming the said talcum powder as a pharmaceutical product - Despite the conscious knowledge of impugned products to be a mere talcum powder a mere cosmetic, the benefit of Notfn 49/2003 was availed - Though the said benefit, the assessee would have been claiming with respect to his pharmaceutical product in manufacture whereof he was already involved but for taking the same benefit for a cosmetic product despite the above said conscious knowledge, mis-declaration has been done with a malafide intention to take wrong benefit of impugned Notfn with the sole intention of evading duty - The penalties were rightly imposed upon assessee by the original adjudicating authority but have wrongly been done-away by Commissioner (A): CESTAT

- Appeal partly rejected: DELHI CESTAT

2019-TIOL-2611-CESTAT-DEL

Cimmco Ltd Vs CCGST

CX - The assessee is engaged in manufacture of railway wagons and manufactured HTC wagons on job work basis availing the benefit of Notfn 214/86-CE - The principal manufacturer opted for clearance of HTC wagons directly from the premises of job worker under Rule 4 (6) of CCR, 2004 - The HTC wagons were cleared by principal manufacturer for Research and Development Establishment of Indian Defence, availing the exemption Notfn 10/97-CE - The Department has entertained a view that the benefit of Notfn 10/97-CE has wrongly been availed by assessee - It is a fact that the assessee have cleared two HTC wagons to M/s TWL under invoice - These clearances have also been affected at the nil rate of duty availing the benefit of Notfn 214/86-CE - As per the Notfn 214/86-CE, the job worker is entitled to clear the goods without payment of duty to the principal manufacturer and it is the responsibilities of the principal manufacturer to pay duty on such goods, and, therefore, no wrong has been done by assessee upto this particular point - The benefit of Notfn 10/97-CE has in fact been availed by principal manufacturer M/s TWL and if there is any violation of terms of Notfn 10/97-CE, in such a circumstances, the short payment of duty should have been demanded from the principal manufacturer namely M/s TWL - Assessee have rightly availed the benefit of Notfn 214/86-CE - It is a matter of record that assessee have not availed the benefit of Notfn 10/97-CE, which was availed by principal manufacturer and, therefore, the demand of duty for violation of terms of Notfn 10/97-CE cannot be raised against assessee - Impugned order is without any merit and, therefore, the same is set aside: CESTAT

- Appeal allowed: DELHI CESTAT

2019-TIOL-2608-CESTAT-MAD

National Plastic Technologies Ltd Vs CGST & CE

CE - Appellants are engaged in the manufacture of excisable goods and availing cenvat credit of duty paid on inputs, capital goods and ST paid on input services – they also carried out job work - it appeared to the Department that the job work activity carried out by the appellant is liable to be treated as an exempted service - the Department arrived at the conclusion that the appellant is engaged in the manufacture of dutiable goods as well as provision of exempted service of job work and used common input services such as Manpower for the manufacture of dutiable goods as well as for providing exempted services – since the appellant did not comply with the provisions contained in rule 6(3) of the Cenvat Credit Rules, 2004, SCN was issued proposing to recover the irregularly availed credit – demand confirmed along with interest, equal penalty imposed – in appeal, the Commissioner (Appeals) upheld the same.

Held: The allegation is mainly based on sl. no.30(c) of notification no.25/2012-ST which is the Mega Exemption Notification – a careful reading of paragraph 30 of notification no.25/2012 would show that 'carrying out' an intermediate production process as job work in relation to any goods on which appropriate duty is payable by the principal manufacturer, is not taxable - the Department does not have a case that the appellant is not engaged in the manufacture of goods- thus, when the process carried out by the appellant amounts to manufacture, the very same activity cannot be considered as a service - merely because the said activity is carried out on an intermediate product, sl. no.30(c) cannot be applied - sl. no.30 states "an intermediate production process as job work", but does not say that 'such process will include manufacturing process' - when the activity of manufacture is subject to Central Excise Duty, the very same activity cannot be subjected to levy of Service Tax - the entire SCN is based on a wrong perspective or interpretation of law - the appellant is not engaged in providing any exempted service - the demand, therefore, cannot sustain - the impugned order is set aside - the appeal is allowed : CESTAT [para 6.1, 7.1, 7.2, 8, 9]

- Appeal allowed: CHENNAI CESTAT

CUSTOMS

2019-TIOL-2607-CESTAT-MAD

OMS Sivajothi Mills Vs CC

Cus - The assessee has imported 100 Metric Tonnes of "Green Mung Beans" of Tanzanian origin - A sample of same was sent for lab analysis, but however, upon examination, the FSSAI rejected the imported cargo as, according to it, the sample did not conform with the standards laid down for Mung Beans under Regulation 2.4.6.8 of Food Safety and Standards Regulations, 2011 - The assessee thereafter requested for re-export of imported goods - The scope of appeal and the issue therefore to be decided is the liability of assessee to redemption fine under Section 125 of Customs Act, 1962 over and above confiscation and the penalty under Section 112 (a) ibid - The fine i.e., redemption fine, is an option in lieu of confiscation and hence, both cannot run simultaneously, which means redemption fine is leviable only as an alternative to confiscation - The assessee has not questioned the confiscation and hence, there is no option available to it - Consequently, there is no question of exercising any option in lieu of confiscation - When the order as to confiscation remains unchallenged, the importer accepts the order of confiscation and even the exporter offers willingness to accept back the consignment, there cannot be any question of redemption fine - Therefore, the redemption fine imposed and upheld by First Appellate Authority cannot sustain and is accordingly set aside - The penalty under Section 112 (a) would be imposed in case of improper importation of goods which has rendered the imported goods liable to confiscation under Section 111 and for this, the abetment is not a criterion - A mere importation that would render such goods liable to confiscation, is sufficient to attract penalty - Therefore, the penalty appears to be justified - The penalty under Section 112 (a) is reduced to Rs. 10,000/- only: CESTAT

- Appeal partly allowed: CHENNAI CESTAT