2019-TIOL-2699-CESTAT-MAD

SRV Earthmovers Vs CGST & CE

ST - Whether the activity carried out by the appellant would fall under the definition of 'Cargo Handling Service' or not.

Held: Impugned evidence relied upon by the Department is the statement taken from the service recipient - M/s. SRC Projects (P) Ltd. - from the statement, it is seen that the service recipient has hired the excavators from the appellant and used them in the quarry during the disputed period - they had no written agreement - the appellant had not collected any ST also - the service recipient used the excavators for loading of boulders from the leased out quarry - it is not seen from the statement that the appellants were, in any manner, engaged in the loading or unloading of boulders - the accounts of the service recipient also showed that they had paid hire charges to the appellant - further, the decision relied upon by the appellant in the case of Chettinad Earth Movers (P) Ltd. - 2019-TIOL-761-CESTAT-MAD also deals with the very same issue - from the foregoing, it is very much clear that the activity would not fall under 'Cargo Handling Service' and, if at all, it may only be Supply of Tangible Goods Service, which has come into the tax net only with effect from 16.5.2008 - the demand of ST under Cargo Handling Services cannot, therefore, be sustained - the impugned order is set aside - the appeal is allowed : CESTAT [para 7.1, 7.2, 8, 9]

- Appeal allowed: CHENNAI CESTAT

2019-TIOL-2697-CESTAT-CHD

Lindstrom Service India Pvt Ltd Vs CCE & ST

ST - The assessee is holding service registration under the Act, for providing/ receiving various services under the provisions of the Act - Acting on intelligence that the assessee was not paying service tax in terms of Act for providing of work-wear to their clients on rental basis in terms of agreements, a visit of the departmental officer was made - During visit, statement of Shri Syed Asif Raja, the accountant of assessee was recorded and also various documents, including agreements for providing work-wear to the clients on the rental basis were resumed - The two such agreements, namely, with M/s Mother Diary Fruits and Vegetables Private Limited and M/s Ecocat (India) Private Limited were also provided by assessee - On scrutiny of document submitted by assessee and submissions made and deposition made by Shri Syed Ali Raja and Shri Manas Kumar, Department concluded that the service provided by assessee is covered under category of service of 'supply of tangible goods' classifiable under Section 65 (105) (zzzzj) of the Act prior to 01/07/2012 and thereafter under Section 65 (b) (44) read with Section 69 (f) of the Act - The assessee is engaged in providing work-wear solution to various industrial customers in terms of various agreements where there is transfer of effective control to the client - For the better appreciation the issue involved, it will be appropriated to extract the relevant provisions of the agreement entered by assessee with their customers - The agreement has the terms conditions with the customers for the lease the work-wear from the assessee and the assessee owns the lease product, will have exclusive right to wash the work-wear and also the Noticee shall have exclusive right to serve the work-wear - It was held that the work-wear always in control of assessee and hence there is no transfer of effective control by assessee hence out of the purview of deemed sale as per the Article 366 (29A)(d) of Constitution of India - It is necessary to have transfer of right to use involving both transfer of possession and also effective control of goods by the user of goods - The transaction for allowing another person to use the goods without giving legal right of possession cannot be treated as deemed sale of goods, and thus has to be treated as service only - It is also the contention of Department that after introduction of negative list based tax regime, the activity of supply of goods without transfer of right liable to tax by virtue of Section 66E (f) of Finance Act - In terms of agreement work-wear rented out always remains within the exclusive possession of their clients and nobody else can use the those workwear at the same time and hence effective control to lie with the user/ clients - The assessee, therefore, does not have control over the use of the work-wear - Thus, the activity is not in the nature of 'service' under Finance Act in both during the period prior to negative list regime and thereafter as held in the impugned order - The order under challenge is, therefore, not sustainable - The impugned order is set aside: CESTAT

- Appeal allowed: CHANDIGARH CESTAT

2019-TIOL-2696-CESTAT-MAD

Hyundai Motor India Pvt Ltd Vs CCE & ST

Service Tax - The assessee is engaged in manufacture of motor vehicles - The cars manufactured by assessee are exported to their Overseas Distributors who are appointed by their holding company viz., M/s. HMC, Korea - As per SCN, it is stated that as per the agreements entered into between M/s. Hyundai Motor Corporation, Korea and the Overseas Distributors, the said Overseas Distributors are responsible for handling the warranty claims, monitoring of repair and maintenance services and the establishment of an entire network of Authorized Repairers for Hyundai cars - Thus, the assessee sells the cars to the Overseas Distributors who in turn sell it to the ultimate consumers - The Overseas Distributors carry out the warranty claims through Authorized Repairers - The expenses incurred by Authorized Repairers are paid by the Overseas Distributors - The assessee then reimburses the amount incurred by the Overseas Distributors - The entire demand is on the amount paid by assessee to the Overseas Distributors for the warranty claims - The adjudicating authority is of the opinion that when the Overseas Distributors establish the network of Authorized Repairers for carrying out the warranty claims on behalf of assessee, the said activity would be customer care service and also provision of service on behalf of the client - It needs to be said that though the Overseas Distributors may have carried out the repair and maintenance services and established the network of Authorized Repairers for the benefit of the manufacturer, the Overseas Distributors have not directly carried out any service to the customer - However, when the Overseas Distributor is establishing the network of Authorized Repairers for carrying out the warranty responsibility of assessee, indeed, this will satisfy 'customer care services' provided on behalf of client contained in Sub-Clause (iii) of the definition of 'BAS', and would be taxable - The allegation raised for invoking extended period is that the assessee has deliberately suppressed material facts with an intention to evade payment of Service Tax - When a series of audits have been conducted by the Department, the allegation of suppression has to be established by a positive act on the part of assessee wherein there is cogent evidence to establish an intention to evade payment of Service Tax - Moreover, even if the Service Tax is paid as demanded by Department, the assessee would be eligible to avail credit of the same - Thus, the situation is wholly a revenue neutral one - The extended period of limitation cannot be invoked alleging intention to evade payment of Service Tax when the entire transaction amounts to a revenue neutral situation - The demand raised invoking the extended period of limitation cannot sustain - As regard to the demand for period post 01.07.2012, it is seen that the adjudicating authority has relied upon Rule 3 of said Rules which deals with place of provision of service generally - Rule 4 speaks about the place of provision of performance based services - The demand is only on the amount paid by assessee to Overseas Distributors for warranty repairs and maintenance - Needless to say, warranty claim for repair and maintenance of cars is a performance based service - The services of repair and maintenance are actually performed outside India - Section 66A applies only where the service is received in India - In this case, the BAS, viz., providing 'customer care service' on behalf of assessee took place outside India - The same therefore cannot be taxable within India and hence, the demand post 01.07.2012 cannot sustain: CESTAT

- Appeals allowed: CHENNAI CESTAT

2019-TIOL-2695-CESTAT-BANG

Cee Jee Lubricants Vs CCT & CE

CX - The assessee-company collected used oil which became unfit for use - Such oil was subjected to processes such as vacuum distillation, centrifuging, filtration and addition of chemicals and additives to make the oil re-usable - The same was then sold in unit containers bearing the brand name JEEZOL and the same was cleared as re-refined market oil - Some processing in respect of the lubricants was also done before their sale - A legal fiction was created by Chapter Note 4 to Chapter 27 of the CETA 1985, whereupon the the processes of packing, repacking, labeling or relabeling or adoption of any other treatment to render the lubricating oils and lubricating preparations falling under Chapter Heading 2710 marketable to consumers amount to manufacture - Hence an SCN was issued to the assessee, proposing duty demand on the goods cleared during the relevant period - Demand for interest was raised as well along with penalty u/r 25 of CER 2002 - The proposals in the SCN were sustained by the adjudicating authority - The assessee then approached the Tribunal, which held that such processes did not amount to manufacture - The Revenue then approached the High Court of Kerala, which remanded the matter back to the Tribunal with directions to examine the provisions of Chapter Note 4 to Chapter 27 of the CETA and consider the issue aqfresh - Hence the present appeal by the assessee.

Held: From the recorded presented, it is unclear as to to what extent the assessee manufactured lubricants and other products as well - It is also unclear if the assessee manufactured lubricants and if these were marketable to consumers or if the same were sold in bulk form to bulk users - It is not clear as to whether any label was fixed on the containers or barrels, if the lubricants were sold to the bulk or industrial users - Trade mark has been obtained by the assessee for JEEZOL brand as lubricating oil and grease - Hence, such factual aspects merit being verified by the Revenue from the invoices - The principles also merit being laid down for determining the duty liability - As far as the goods falling under Chapter 2710 which are not lubricants/lubricating oils are concerned, as clarified by CBEC in its Circular No. 1024/12/2016-CX dated 11.4.2016, this Chapter Note 4 does not apply - If any products are manufactured and cleared by the assessee which are not lubricating oils or lubricating preparations, they are not covered by this Chapter Note and no duty is liable to be paid on such clearances even if labeling/ relabeling/repacking/any other treatment rendering the product marketable to consumer is undertaken - As far as the lubricants/lubricating oils are concerned, if these goods have been cleared after labeling or relabeling, the same amounts to manufacture regardless of whether the goods are sold to consumers or to bulk users in large barrels - As far as the lubricants/lubricating oils cleared in containers/packages suitable for consumers are concerned, they are covered by the Chapter Note 4, whether or not there was any labeling/relabeling of the containers - This is because, undisputedly, the assessee undertook some processes to make the raw material, viz., waste oil marketable as lubricants by undertaking some process and this amounts to manufacture - Also if any lubricants/lubricating oils are cleared by the appellant during the relevant period in bulk form and not in a form which makes it marketable to consumers and if no label is put on the container, the same is not covered by Note 4 of Chapter 27, accordingly, no duty is chargeable on the same - Lastly, while penalty is proposed to be imposed u/r 25 of CER 2002, no reasons were accorded for the same - Hence the penalty merits being quashed - The duty demand and interest merits being requantified: CESTAT

- Assessee's appeal partly allowed: BANGALORE CESTAT

2019-TIOL-2694-CESTAT-ALL

CCE & ST Vs Bajaj Hindusthan Sugar Ltd

CX - The assessee-company manufactured Sugar and Molasses & were removing Bagasse and Press Mud - As per the amended provisions of Rule 6(1) of the CCR 2004, the manufacturer was obliged to pay an amount u/r 6(3) at a fixed percentage of the value of non excisable goods removed when Cenvat credit on input and input services was availed & if such input goods and services were used in the manufacture of both excisable and exempted goods - Proceedings were initiated against the assessee for recovery of some amount of tax duty - These proceedings were later dropped by the Commr.(A).

Held: The issue at hand is covered in the assessee's own case in respect of another unit - In the order passed in this case, it was held that Press Mud and Bagasse were not arising out of any manufacture activity and the same were agricultural waste and residue - As such order is squarely applicable in the present case, the O-i-A in question merits being sustained: CESTAT

- Revenue's appeal dismissed: ALLAHABAD CESTAT

2019-TIOL-2693-CESTAT-AHM

Agro Pack Ltd Vs CCE & ST

CX - The assessee is engaged in the manufacture of pesticides on job work basis for various principal manufacturers like BASF, M/s. SIL and M/s. SCPPL - The entire dispute arose when the Cenvat registers of assessee were called for scrutiny while their application for sanction of rebate claim was being examined - It was found that the assessee was maintaining two Cenvat registers one for M/s. SIL and another for M/s. SCPPL - When the registers were called, the assessee had erased the names of SIL from the register and placed new rubber stamp bearing the name of assessee on the said register - Similar changes were also made in the register having the name of SCCPL - It was alleged that the entries made therein and the credit taken in the register does not belong to the assessee but the same belong to SIL and SCPPL - Consequently, the duty paid while clearing goods manufactured by assessee by using credit taken in said registers was sought to be demanded as duty not paid - The assessee have clearly stated that the registers in which Cenvat credit was taken were maintained separately for their two clients for whom they were manufacturing various final goods - It has been argued by them that goods were received and the job work was being done by them for these goods, details of which were entered in the said registers - It has also been stated that two registers were maintained in respect of Cenvat credit availed for these two clients - This was done to keep accounts of two clients separate - It has been pointed out by assessee that each page of register also contains ECC Code of assessee - There is no prescribed format for making such registers and there is no law which debars the assessee from maintaining separate registers for two different clients - If the Revenue believed that the said registers did not belong to the assessee and in fact belonged to SIL and SCPPL, then the same could have been essentially verified from the other financial record of assessee - There is no scrutiny of other financial records done and therefore, the allegation remains unsubstantiated - The demand on this count is set-aside - No investigation whatever has been done to ascertain that the goods were received and utilized in the manufacture of goods - The assessee have claimed to have sufficient evidence in terms of Rule 9 that the goods have been received in factory and used in stated purpose - The matter is remanded to original adjudicating authority - The assessee may produce all the necessary record of receipt and use of goods in manufacture, in terms of Rule 9 of CCR, 2004 - The matter may be decided after examining the evidence - It is seen that penalty on SIL, SCPPL and Shri R.L. Shetty, has been imposed alleging that they have aided and abetted M/s. Agro Pack Limited to projected themselves as manufacturer at Ankleshwar and took credit in the Cenvat account registers and allowed the same to be utilized illegally by M/s. Agro Pack Limited - The said allegation has not been upheld in the order passed and consequently, penalty on SIL and SCPPL and Shri R.L. Shetty is set-aside - As regards penalties on Shri Tushar Patel, Shri Bipin Patel and Shri Harish M. Patel, employees of M/s. Agro Pack Limited, the matter is remanded for determination of penalty, after examining the facts in respect of wrong availment of credit, if any: CESTAT

- Appeals partly allowed: AHMEDABAD CESTAT

2019-TIOL-2698-CESTAT-AHM

Nayara Energy Ltd Vs CC

Cus - The assessee had imported a catalyst called "Petromax-MD" for use in production of other final product manufactured in FCC unit of its refinery - They claimed benefit of concessional rate of duty available in notfn 21/02-Cus - The Adjudicating Authority denied the exemption on the ground that as per entry of notfn, the goods specified in list 17 required for setting up of Crude Petroleum Refinery is only exempted, whereas the goods in question is a catalyst and the same is not required for setting up of petroleum refinery and the exemption notification is not applicable - The goods imported is Petromax-HD which is a catalyst and the same is used in manufacture of final product during the production process - Therefore, it is clear that the said good is not used for setting up of oil refinery - Assessee had heavily relied upon the case of Reliance Industries - On going through the said judgment, the case involved in the same case is mobile crawler cranes - From the nature of these goods, it is absolutely clear that mobile crawler cranes is used for carrying out Fluidized Catalytic Cracking Unit (FCC) in their refinery - However, in said judgment, it was held that even if imported goods used after setting up of refinery, the same will be covered by exemption notification under entry no. 45 of List 17 or S.no. 228 of notfn 21/2002-Cus - In this judgment, decision was drawn from Board's circular no. 354/34/2008-TRU wherein it was clarified that with reference to exemption granted to the goods used for setting of water treatment plant, even if the pipes are replaced after wear and tear, the same will also be exempted under the notification wherein the term "setting up" was used - As regard the issue that whether the goods are used for setting up of the refinery or thereafter, it was settled in case of Reliance Industries - However, now it is to be examined that whether the goods are covered under entry no 45 of List 17 in the notification - By reading of entry, it is a case of assessee that the goods is used as consumable for running, repair or maintenance of goods specified in list - The use of goods for running, repair or maintenance of goods specified in the list denotes that the same should be used in setting up for crude petroleum refinery whereas the product in question, i.e. "Petromax-MD" is not used for running, repair and maintenance of plant - But it is used as input consumable in production of final product - Therefore, the goods in question is not covered under entry no. 45 of List 17 of S. no. 228 of notfn 21/2002-Cus. - The lower authority has rightly denied the exemption - Hence, the impugned order is upheld: CESTAT

- Appeal dismissed: AHMEDABAD CESTAT