|
SERVICE TAX
2019-TIOL-2686-CESTAT-MUM
Bank Of Baroda Vs CST
ST - Appellant is a public sector bank and is providing Banking and Financial Services [BAFS] - as per the intelligence gathered, the appellant had entered into a credit facility agreement with M/s.Clearing Corporation of India Ltd (CCIL) under which CCIL were required to pay a commitment fee to the appellant, as fixed percentage, per annum, of fund based limit - the said commitment fee was directly being debited to the account, by the appellant, without raising any invoice - the said service of lending was a taxable service, w.e.f 11.9.2004 under the category of BAFS - however, appellants had not taken any registration or paid ST in respect of the services so rendered - after completion of investigations, SCN dated 26.12.2006 was issued demanding ST of Rs.3.30 lakhs - demand confirmed along with interest, penalties imposed under sections 76, 77 and 77 of the Finance Act, 1994 [Act]
HELD - Appellants have vehemently submitted that the commitment charges are in nature of interest charges or the damage charges made by them from their customer/client for making available the said credit facility available to them -since these are in nature of interest/damages, they are not to be included in the value of taxable services provided by them -from the letter available at page 49 of the appeal paper book, it is quite evident that the Commitment Charges are neither the interest charges as claimed by the appellant nor the liquidated damages -the clear distinction has been drawn in respect of interest charges and the commitment charges -interest charges are in respect of the amount availed or drawn/utilized from the clean line of credit facility made available by the appellant to CCIL, whereas commitment charges are in respect of un-availed portion of the credit limit -these charges are also not in nature of liquidated damages but are towards making the clean line of credit facility available to their client/customer -as per the information available on "investopedia.com", t he key distinction between the two terms commitment charges and interest as used in the Banking and Financial Industries is that a commitment fee is calculated on the undisbursed loan amount while interest charges are calculated by applying an interest rate on the amount of the loan that has been disbursed and not yet repaid - in view of the above and established practices in banking and financial industry, no merits found in the submissions of the appellant that the commitment fees charged by them for extending clean line of credit facility to CCIL is interest charge or in nature of liquidated damages -the reliance placed by the appellant on the decision of this tribunal in case of Ram Decorative & Industries Limited [2000 (124) ELT 659 (T)] is not of any help -the reliance placed by the appellant on the various Commentaries in relation to Contract, referred in para 4.2 above do not help the case of the appellant - the findings recorded by the Commissioner in this respect cannot be faulted with -no merits foundin submissions of the appellant, relying on the Apex Court decision in case of Bhayana Builders [ 2018-TIOL-66-SC-ST ] - in this case, there is clear nexus between the service provided and the consideration received -following the decision in the case of HUDCO [ 2011-TIOL-1606-CESTAT-AHM ], this Tribunal has, in the case of Punjab National Bank [ 2014-TIOL-2086-CESTAT-DEL ], in respect of Commitment Charges, held that such charges are integrally connected with the lending which is a taxable service -therefore, commitment charges cannot be separated from lending service- therefore, commitment charges are chargeable to Service Tax: CESTAT
Limitation: On the issue of limitation, the only ground urged by the appellant is that there was confusion prevailing in respect of levy of ST in respect of the Commitment Charges, which lead to delay in payment of taxes - no merits found in the submissions of the Appellant -appellants have not shown any bonafide reason to show that they entertained such a belief -further, if they claim the issue was clarified by CBEC only in 2011, then what made them pay the ST in the year 2006 -the arguments advanced by the appellants do not establish the existence of such a bonafide belief -in case of HUDCO, the Bench rejected the similar grounds raised by the appellant on limitation stating that i n the absence of any evidence to show that the appellant had intimated the Department or had obtained legal opinion, invocation of extended period on the ground of suppression of facts has to be upheld - thus, following the decision as above, the demand of Service Tax made by invoking the extended period of limitation is upheld: CESTAT
Interest & Penalty: Demand made in respect of the interest at appropriate rate under section 75 of the Actis upheld -when the Bench has held the invocation of extended period of limitation in terms of proviso to section 73(1) of the Act, penalty under section 78 should follow in view of the decision of Apex Court in case of Rajasthan Spinning and Weaving Mills [ 2009-TIOL-63-SC-CX ] - also for various contraventions of the provisions of Chapter V of the Act, the penalties imposed under sections 76 and 77 too are justified-however, taking note of the fact that appellants are a Public Sector Bank and had deposited the entire amount of ST along with interest much before the issuance of SCN to them and also the decisions in case of Adecco Flexione Workforce [ 2011-TIOL-635-HC-KAR-ST ], Master Kleen [2012 (25) STR 439 (Kar)] and Tide Water Shipping Pvt. Ltd. [2015 (37) STR 558 (T-Bang)], the Bench finds the case to be fit where provisions of section 80 of the Act should be invoked to set aside the penalties that are imposed under sections 76, 77 & 78 of the Act - in view of above, the appeal is allowed to the extent of setting aside the penalties imposed under sections 76, 77 and 78 of the Act-the impugned order to the extent of confirming the demand of ST and interest is upheld : CESTAT [para5.5, 5.7, 5.8, 5.9, 5.10, 5.11, 5.13, 6.1]
- Appeal partly allowed : MUMBAI CESTAT
2019-TIOL-2685-CESTAT-MUM
Global Vectra Helicorp Ltd Vs CST
ST - Appellant is primarily engaged in transportation of passengers by air services –Revenue has issued SCNs on various counts [Supply of Tangible Goods for Use Service, Banking and Financial Services, reimbursement of fuel, etc.] which were confirmed by the O-I-Os – appeal to CESTAT.
HELD: Ongoing through the records, it is found that there is force in the arguments of the appellants –the Commissioner has not considered the submissions, accounting practices of the appellant and the agreements in totality -it is also seen that the Commissioner has not considered the case law submitted by the appellants insofar as the demands raised on certain issues like reimbursement of fuel etc. -in respect of appeal no.ST/85672/15, appellants' submissions on limitation were not considered –the Commissioner should have gone through the submissions of the appellant and given his findings on the same before coming to a conclusion -in view of the same, the Bench is of the considered opinion that the matter needs to go back to the Commissioner for a fresh reconsideration of the issues in the light of the submissions made by the appellant and the interpretation given by Tribunal and Courts as submitted by the appellants, wherever applicable - in view of the above, the impugned orders are set aside and the appeals are allowed by way of remand -all issues are, however, kept open : CESTAT [para 7, 8]
- Matter remanded : MUMBAI CESTAT
2019-TIOL-2684-CESTAT-MUM
Tops Security Ltd Vs CCE & ST
ST – Appellants are registered providers of taxable service under the category of "Security Agency Services" - acting on the intelligence to the effect that appellants were collecting Service Tax from their clients but not depositing with the exchequer, matter was taken up for investigation by DGCEI - after completion of investigations, SCNs issued to the appellants demanding ST short paid by them along with interest and also proposing imposition of penalties on them –demands confirmed along with interest, penalties imposed – appeal to CESTAT.
HELD: If the plea advanced by the appellants for not depositing the tax on account of financial hardshipis entertained, then not only the scheme of indirect taxation will be impacted but the entire mechanism of fair trade and commerce will collapse - the amounts collected as tax from the customer/client is not the money in the hand of taxpayer but only held in trust by the said taxable person for the period and to be deposited with revenue in manner as prescribed by the taxing statute -by not depositing the said amounts in the manner as have been provided by law, Appellants have misappropriated the funds held by them in trust for their personal gain and should not be allowed the plea of financial hardship -financial hardship cannot be reason to justify such misappropriation of the money which was never held as the money by the appellant -the issue is also not res integra and is covered by the decision of Delhi Bench in appellant's own case [2016 (41) STR 634 (T-Del)] wherein it was held that financial crunch in no circumstance can justify non-deposit of ST collected - this order of Delhi Bench has been upheld by the Delhi High Court [ 2015-TIOL-2751-HC-DEL-ST ]– however, while agreeing with the demand of tax with interest and penalty, Delhi High Court has set aside that part of order whereby tribunal had allowed the benefit of payment of reduced penalty –following the above decisions, this Bench decided the matter against the appellant upholding the demand of ST and interest along with penalties [ 2018-TIOL-3253-CESTAT-MUM ] –in view of the above, no merits found in the appeals filed by the appellant - while appellants do not dispute the computation of tax demand in case of Bhubaneswar Branch, they have pointed out to certain computational errors -taking the note of this submission, the Bench directs the adjudicating authority to re-compute the amount of demand after taking into account the submissions made by the appellants in this regard: CESTAT
Penalty & Interest: Appellants have claimed that they had made considerable amount of payment during the course of investigation and prior to issuance of SCN and hence taking note of the payments made, penal proceedings under section 78 of the Finance Act, 1994 [Act] should have been adjudicated in their favour or else they should have been allowed the benefit of section 80- said submission made by the appellant vis-à-vis the interest under section 75 & penalty under section 78 needs to rejected in view of the decision of Bombay High Court in the case of Padma ShriV.V.Patil SSK [ 2007-TIOL-419-HC-MUM-CX ] -however, it is found that in the case of Jamshedpur Branch, the penalty imposed under section 78 is higher than the demand of tax -such an approach is contrary to the provisions of section itself –however, since the matter in respect of Jamshedpur Branch is remitted back to the original authority for re-computation of tax payable, the authority shall reconsider the quantum of penalty and make it equal to the tax demand -appellants have claimed that penalties in their case should be waived of by invoking section 80 of the Act - no merits found in the request made -this Tribunal has in the case of International Security Academy P. Ltd. [2006 (1) STR 289 (T-Chennai)] considered and rejected such a plea -they have also held that for this reason the benefit of section 80 of the Act can also be not extended for determination of penalties -similar view was expressed in case ofShayna Construction [2010 (262) ELT 1006 (Tri.-Ahmd.)] and United Udyog [ 2013-TIOL-1551-CESTAT-KOL ] -in result, the Appeal Number ST/716/2011 in respect of Jamshedpur Branch on all grounds except for grounds of re-computation of tax payable and quantum of penalty under section 78 is rejected - Original Authority to re-compute the demand and penalties under section 78 of the Act after affording them a chance of hearing -Appeal Number ST/717/2011 in respect of Bhubaneswar branch is rejected : CESTAT [para4.1, 4.2, 4.3, 4.4, 4.6, 5.1, 5.2]
- Appeals disposed of : MUMBAI CESTAT
2019-TIOL-2679-CESTAT-MAD
TNQ Books And Journals Pvt Ltd Vs CCT, GST & CE
ST - All the above seven appeals are arising out of the common O-I-A against seven refund claims filed by the appellant before the adjudicating authority which were partly allowed and partly rejected - on appeal, the Commissioner (Appeals) upheld certain portions of the order of the adjudicating authority and remanded back to the adjudicating authority for verification and re-quantification of total turnover - appellants are in appeal against a part of the impugned order but, however, both the Revenue as well as the assessee have accepted the order of remand by the Commissioner (Appeals) for re-quantification of the total turnover.
Held: It is clear that the refund claim was of input service credit taken on input or input services, in providing input services, i.e., export without payment of Service Tax, meaning no refund of duty was ever claimed - clearly, therefore, there is no dispute as to the applicability of Rule 5 of the Cenvat Credit Rules, 2004 [CCR] and hence, the authorities have no choice but to go by the formula prescribed thereunder and work out a refund - in the case on hand, the authorities have rejected the refund claim holding that the claims for refund were time barred which is one of the sub-clauses under clause 3.0 of notification no.27/2012-CE (NT) dated 18.6.2012 - it is the settled position of law that what cannot be done directly, cannot be sought to be achieved indirectly; i.e., no such fetters could be prescribed through Notifications/Circulars when the substantive law do not intend any such fetters - the larger Bench of this Tribunal in the case of Span Infotech (I) Pvt. Ltd. [ 2018 (12) BSTL 200 (Tri.-LB) ] held that in respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under rule 5 of the CCR may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis - the above ruling squarely applies here and since the DR has not produced any contrary decisions, the ratio of the LB decision is required to be adopted in this case also - accordingly, it is held and directed that the relevant date as also the time limit specified in the above case is required to be applied as there is no disputes that the application for refund was very much within one year from the date of BRC in this case - in the impugned order, the Commissioner (Appeals) has, however, remanded one of the issues, i.e., re-quantification of total turnover, which is one of the key component in the formula prescribed under rule 5 of CCR - therefore, when one of the components itself is not clear then it is not practical to workout the refund and, therefore, the above appeals are also required to be remanded to the file of the original authority for this limited purpose of working out the refund as per the Bench's observations herein above and based on the findings of LB decision (supra), after re-quantifying the total turnover as per the directions of the Commissioner (Appeals) since there is no appeal filed by the Revenue against the above directions of the first appellate authority - impugned orders are set aside and all the appeals are partly allowed and partly remanded, on the above terms : CESTAT [para 5.3, 5.4, 5.5, 5.6, 6]
- Appeals partly allowed/partly remanded: CHENNAI CESTAT
2019-TIOL-2678-CESTAT-MUM
Kalpataru Ltd Vs CCE & ST
ST - Appellants are engaged in providing various services - during the course of audit, it was observed that they had availed cenvat credit in respect of General Insurance Services, Repair & Maintenance of vehicles and ST paid on expenses of staff welfare whereas these input services have no nexus with output services provided by the appellant - accordingly, two SCNs dated 14.10.2015 (for the period from 2010-11 to 2013-14) and dated 15.2.2016 (for the period from 2014-15) were issued - the instant appeal is arising out of the SCN dated 15.2.2016 - appellant submitting that in respect of the case arising out of SCN dated 14.10.2015, the Tribunal remanded the matter to the original adjudicating authority for passing a speaking order - appellant praying for the same reliefs in respect of the instant appeal.
Held: Without going into the merits of the matter, following the order dated 21.8.2018 of this Tribunal in Appeal No.ST/86913/2018 for the period 2010 to 2014, the Bench is inclined to remand the matter back to the original authority for the period 2014-15 also for de novo adjudication after following the principles of natural justice and after taking into consideration the documents produced by the appellant before it - the appeal is, therefore, allowed by way of remand: CESTAT [para 3, 4]
- Matter remanded: MUMBAI CESTAT
2019-TIOL-2677-CESTAT-MUM
Trent Hypermarket Ltd Vs CCE
ST - Whether the trading activities can be categorized as "exempted service" for the purpose of a decision regarding availment of cenvat credit on the input services specified in sub-rule (5) of rule 6 of Cenvat Credit Rules, 2004 [CCR].
Held: Activity of trading of goods is not conforming to either of the legislative mandates of manufacture or provision of service, exigible to Excise Duty under the Central Excise legislation of 1944 or the provisions of the Finance Act, 1994, governing the ST issues - therefore, insertion of the explanation clause in the definition of "exempted services" in the Cenvat statute has provided an artificial meaning as, "for the removal of doubts, it is hereby clarified that 'exempted services' includes trading" - in this context, the law is well settled that when an explanation seeks to give an artificial meaning and brings about a change, effectively in the existing law and in addition, is stated to come into force with effect from a future date, there is no principle of interpretation, which would justify reading the explanation as operating retrospectively - the Supreme Court in the case of Martin Lottery Agencies Ltd. - 2009-TIOL-60-SC-ST have ruled that by reason of an explanation, a substantive law may also be introduced and if a substantive law is introduced, it will have no retrospective effect - no infirmity found in the findings recorded in the impugned order, holding that amendment to rule 2(e) by notification 3/2011-CE(NT) dated 1.3.2011 will have the prospective effect and cannot be applied retrospectively - thus, no merits found in the appeal filed by the appellant - the appellant had filed the periodic ST-3 returns, reflecting therein the particulars of availment of cenvat credit on the disputed input services - thus, under such circumstances, it cannot be said that the appellant had suppressed the facts regarding availment of irregular credit, with the intent to defraud the Government revenue - further, the issue with regard to interpretation of the amending definition of "exempted service" under the Cenvat statute, whether to be applicable prospectively or retrospectively, was highly debatable and there were divergent views in the judicial forum - the law is well settled that in case of interpretational issue, the extended period of limitation cannot be invoked, without proper substantiation that availment of credit is owing to the reason mentioned in the proviso to section 73(1) of the Finance Act - in this case, on perusal of both the SCN and the impugned order, no justifiable reason found being assigned by the department for invocation of the extended period of limitation - thus, the adjudged demands confirmed against the appellant cannot be sustained on the ground of limitation - in view of the above, the impugned order is modified and the appeal is allowed on the ground of limitation only : CESTAT [para 5.4, 5.5, 5.6, 6.1, 7]
- Appeal allowed: MUMBAI CESTAT
CENTRAL EXCISE
2019-TIOL-2168-HC-MUM-CX
FDC Ltd Vs UoI
CX - The Petitioner is engaged in manufacture of medicines - Some of the goods that Petitioner manufactures are physician samples which are not for sale but for distribution to the doctors free of costs - Revenue was of the opinion that the petitioner was not paying duty on free Physician Samples but were paying Central Excise duty value of the cost of production - The grievance of petitioner that it is entirely unreasoned, is justified - In Rectification application, the petitioner has stated that the ground of limitation was taken up in appeal Memo and Written submission but has not been considered - There are no reasons in this order as to why the grievance of petitioner set out in Rectification application was not justifiable - The impugned order passed by Tribunal is set aside - The Rectification application stands restored to the file of the Tribunal to be decided as per law: HC
- Writ petiton disposed of
: BOMBAY HIGH COURT
2019-TIOL-2676-CESTAT-MUM Ambuja Cement Ltd Vs CCE
CX - Whether the cenvat credit in respect of the inputs and capital goods purchased by the appellants for setting up its Fly Ash Handling Plant at the site of Chandrapur Super Thermal Power Station (CTSPS), for exclusive use by the appellants for manufacture of cement in their factory, can be denied to the appellants merely on the ground that the said Plant is not situated within the factory premises of the Appellants.
Held: Fly Ash so handled at the plant is used entirely in the appellant's factory for the manufacture of dutiable products and hence the said plant can be said to be a captive plant and, therefore, in view of the decisions of the Supreme Court in the cases of Vikram Cements - 2006-TIOL-04-SC-CX-LB and Madras Cements Ltd. - 2010-TIOL-59-SC-CX, the appellants are entitled for the cenvat credit - in the recent decision of the Commissioner (Appeals) [O-I-A dated 18.12.2018], in appellant's own case for the same Plant, the Commissioner has recorded a clear finding that the Fly Ash produced in the Plant in question is exclusively used by the appellant's factory and is not at all supplied to any other customers - therefore, there is no iota of doubt about the exclusive use of the Fly Ash in appellant's factory - in view of the above, the finding which has been recorded by the Commissioner in paragraph 10.3 of the impugned order, is erroneous and is without any basis - so far as the distance from the factory premises is concerned, the same hardly matters in view of the decisions of the Supreme Court - the Commissioner has also erred in distinguishing the decisions of the Supreme Court as cited by the appellant before him only on the ground that in none of those cases the distance of the factory premises is 60 kms - he has to see the law laid down by the Supreme Court, which is clear and unambiguous - he must keep it in mind while passing the orders that any law declared by the Supreme Court is law of the land and the same is binding on all the Judicial as well as quasi-judicial Courts/ Authorities in India - therefore, as per the discussions made hereinabove and as per the law laid down by the Supreme Court, the impugned order is liable to be set aside - the appeals are, therefore, allowed: CESTAT [para 6, 7]
- Appeals allowed: MUMBAI CESTAT
2019-TIOL-2675-CESTAT-MUM
Idol Textile Ltd Vs CCE
CX - In this dispute of the appellants, the issue for determination is the legality and propriety of the rejection of claim for refund of Rs.24.72 lakhs and Rs.12.40 lakhs respectively by the competent authority as upheld by Commissioner (Appeals) - the claims pertained to the balance in the cenvat credit account that remained unutilized upon closure of business and surrender of registration certificate under Central Excise Rules, 2002 - according to the appellants herein, the unutilized credit are duties of central excise paid in cash and no different from similar unutilized balance in the 'personal ledger account'.
Held: Present proceedings arise, not from discharge of duty liability on the part of appellants, but of credit taken on discharge of duty liability by their suppliers - the non-applicability of the decision of the High Court of Karnataka [Slovak India Trading Co. Pvt. Ltd. - 2006-TIOL-469-HC-KAR-CX to the present dispute in the light of the decision of the High Court of Bombay [Gauri Plasticulture (P) Ltd. - 2019-TIOL-1248-HC-MUM-CX-LB would render this dispute to be identical to that in the case of Voltas Ltd. - 2018-TIOL-3092-CESTAT-MUM in which the legal and schematic aspects have been examined by the Tribunal to decide that "…………if an assessee has cenvat credit balance without any duty on which to apply it, such assessee is an ultimate consumer to the extent that duty or tax has been paid upto the preceding stage and there was no scope for setting off of such credit - just as the ultimate consumer, as commonly understood. It is clear that legislative intent did not envisage the monetization of cenvat credit in the event of impossibility of utilization. Cenvat Credit Rules, 2004 is not an exemption scheme ………..If it were an exemption scheme, entitling assessees to refund of unused accumulated credit, the Cenvat Credit Rules, 2004 would have had the authority of section 5A of CEA and section 93 of the Finance Act …………. . Refund of such accumulated credit arising from payment of duty or tax at the stage of manufacture is tantamount to a finding that the duty or tax was collected at the preceding stage without the authority of law. That is certainly not, and can never be, the contention of the appellant…………." - i n view of the above, the appeals lack merit and are dismissed: CESTAT [para 6, 7, 8]
- Appeals dismissed: MUMBAI CESTAT
2019-TIOL-2674-CESTAT-MUM
Just Exports Pvt Ltd Vs CCE
CX - M/s. Just Exports had supplied 'unprocessed grey fabrics' to M/s. Just Textiles which was cleared after processing by the 'job-worker' upon payment of duty on assessable value comprising cost of unprocessed fabrics and job-charges - it is alleged by the CE authorities that the principal manufacturer was bound to pay the duties of excise under rule 12B of Central Excise Rules, 2002 [CER] as 'job-worker', who was supposed to exercise the option in terms of the same rule, had failed to do so - the processed fabrics was sold by the 'job-worker' to the principal manufacturer who, in certain cases, sold them to other buyers and, in certain other cases, retained them for manufacture of garments for which the processed fabrics were again sent to M/s. Just Textiles - holding the two of them were related persons, rule 9 of the Central Excise (Determination of Price of Excisable Goods) Rules, 2000 was invoked to value these goods - thereafter, a differential duty of Rs.5.82 lakhs pertaining to the sale effected to unrelated buyers from M/s. Just Exports and Rs.2.92 lakhs on the goods sold to M/s. Just Textiles was ordered for recovery - demands confirmed, penalty imposed, and which was upheld in the impugned order - appeal to CESTAT.
Held: In the pertinent rule, there is no prescription of form for exercise of option which would create 'said person' for undertaking the discharge of duty liability - moreover, deemed exercise of option cannot be a ground for procedural infringements - having accepted the duty liability discharged by the 'job-worker', it is not open to the CE authorities to take an entirely different stand to fasten liability for the same duty paid goods on the principal manufacturer - under rule 12B of the CER, the 'said person' can only be one or the other, and, if the stand of the lower authority is accepted, it is found that there is an inherent contradiction in the demand; implied in the proposal for demand of differential duty is the acceptance of the validity of partial liability already discharged by the 'job-worker' with the principal manufacturer called upon to pay only that portion arising from application of the provisions in the rules of valuation pertaining to sale to unrelated person - in view of this contradictory stand adopted by the original authority, and sustained in the order of the first appellate authority, rule 12B of CER has been completely and totally mis-interpreted - the Bench upholds the deemed exercise of option and limit the duty liability to such as already been discharged by M/s. Just Textiles - the second issue pertains to the duty liability on the goods cleared by M/s. Just Exports to M/s. Just Textiles for further manufacturing - once the duty liability has been discharged on the goods as a finished product and no new product comes into existence in the hands of M/s. Just Exports, the transfer thereof to M/s. Just Textiles for manufacture of other garments, cannot be subject to duty liability under CEA - on the garments manufactured by the latter, there is no evidence that this has been done on 'job-work' basis - consequently, the scope for fastening duty liability on M/s. Just Exports for such production effected by M/s. Just Textiles does not find the sanction of law - for the above reasons, the impugned order is set aside and the appeals are allowed : CESTAT [para 4, 5, 6]
- Appeals allowed: MUMBAI CESTAT
CUSTOMS 2019-TIOL-2673-CESTAT-ALL World Wide Trade Impex Vs CC
Cus - The assessee filed the Bill of Entry for clearance of imported goods by declaring the same as 'copper scrap & heavy melting scrap' - The goods were subjected to 100% examination and as the visual examination could not ascertain the composition of copper and heavy melting scrap, services of a chartered engineer were obtained - As per report of Chartered Engineer, the scrap consisted of unusable Refrigerated compressor, Electric Motors, Automobile Compressors & Alternators - It was further reported that the scrap material/items contain nearly 10-12% of copper as motor winding of compressors & electric motors - Approximately 05% scrap of consignment was found to be aluminium scrap in the form of Pistons & connecting Rods - Proceedings were initiated against the assessee alleging mis-declaration of description of goods and proposing rejection of declared assessable value - The notice also proposed confiscation of goods as also imposition of penalties - The goods were purchased by assessee on high sea sale basis - Even as per the report of CA, the goods were nothing but metal scrap with some of the scrap item of the aluminium - The lower authority has enhanced the value based upon the value of metal as reflected in LME prices, without rejecting the transaction value - There is no evidence on record that the transaction value paid by assessee to the foreign exporter is incorrect and some more consideration stands paid to them - An identical issue was considered by Tribunal in case of M/s RKG International Pvt. Ltd. and by taking note of Supreme Court's decision in case of M/s Sanjivani Non Ferrous Trading Pvt. Ltd., enhancement of value was set aside - No reason found to uphold the enhancement - Consequently, the demand of duty as also confiscation of goods and imposition of penalty is set aside: CESTAT
- Appeal allowed: ALLAHABAD CESTAT
2019-TIOL-2672-CESTAT-AHM
Kesar Fabric Impex Vs CC
Cus - Whether the value declared by the appellant in the bill of entry in respect of Polyester knitted fabric is legal and correct or it is substantially lower - the enhancement of the value done by the Custom department is only on the basis of value of contemporaneous imports.
Held: From the provisions of rule 5 and rule 12-Explanation 1(iii) of the Customs Valuation (Determination of value of imported goods) Rules, 2007, it is clear that if there is any doubt about the transaction value declared by the assessee, then if at all the value of contemporaneous import needs to be applied, the value of identical goods or similar goods should be applied - however, in the present case, though the bills of entry of contemporaneous import were relied upon, the adjudication authority failed to ascertain whether the goods of contemporaneous imports is identical or similar to the goods of the appellant - without carrying out any test to ascertain the fact that goods of contemporaneous import and the goods in question in present case are identical or similar, enhancement of the value is not legal and correct - it is also observed that other than Bills of entry of contemporaneous import, there is no other evidence to show that the appellant have suppressed the value - therefore, it is incumbent on the adjudicating authority to first ascertain the parameters of quality, quantity, characteristics of both the imports, i.e. contemporaneous imports and goods imported in the present case - accordingly, the Bench is of the view that entire matter needs to be relooked and, hence, all the impugned orders are set aside and the matter remanded to the adjudicating authority for passing a fresh order by taking the observations made herein above - appeals are disposed of by way of remand to adjudicating authority : CESTAT [para 4]
- Matter remanded: AHMEDABAD CESTAT
| |
