2019-TIOL-2712-CESTAT-BANG

Mangalam Homes And Resorts Pvt Ltd Vs CCT & CE

ST - The assessee filed a declaration for the period covering April 2011 to December 2012 - The designated authority after putting the assessee on notice, rejected the said declaration - It is the case of designated authority that an offence case was registered against the declarant for non-payment of service tax and non-filing of ST-3 returns on 'Renting of Immovable Property' Services for the period from April 2010 to May 2011, a SCN having been issued which had culminated in order confirming the demand and that the above declaration was filed for the subsequent period - On a plain reading of clarification issued by CBEC Board vide Circular 174/9/2013-ST , it is clear that any SCN proposing to reject the VCES declaration has to be invariably issued "within 30 days" of filing the application/declaration - In the case on hand, the SCN refers to the declaration in form VCES-1 of assessee filed on 31.12.2013 and the SCN is dated 31.01.2014 - A conjoint reading of the above with requirement per Board Circular reveals that the issuance of Notice is permitted proposing the rejection within 30 days of filing the application/declaration - When the Board has clarified that such SCN should be issued within 30 days, it may perhaps be even that a SCN, if issued on the 30th day, could be bad - But anyway, the Notice is clearly after 30 days in the case on hand - This goes to the very root of issue whereby the whole proceedings will invariably have to be held to be ab initio void - Therefore, the SCN cannot be sustained - The rejection by the designated authority as upheld by Commissioner (A) cannot be sustained and accordingly, the same are set aside: CESTAT

- Appeal allowed: BANGALORE CESTAT

2019-TIOL-2711-CESTAT-AHM

Kalpataru Power Transmission Ltd Vs CCE & ST

ST - The assessee is engaged in manufacture of fabricated and galvanized transmission line tower parts made of steel, angles and plates - They were issued SCN alleging that the assessee is engaged in testing, erection and commissioning of Tower line at the site of various State Electricity Boards, M/s Power Grid Corporation of India Ltd and Foreign bodies - The demands covers the period 1.7.2003 to 9.9.2004 - The facts of the case show that the assessee during the relevant period, were engaged in the supply of electricity transmission towers as well as rendering services of erection of the same - Such services would undoubtedly merit classification under Works Contract Service - From the assessment order passed by the VAT authorities for the impugned period, it is found that the assessee's services were classified under Works Contract under Gujarat VAT - The Apex Court in case of Larsen & Toubro Ltd 2015-TIOL-187-SC-ST has held that Works contracts are not liable for service tax for the period prior to 01.06.2007 - By virtue of Notfn 45/2010-ST, exemption was granted from payment of service tax to any service in relation to transmission and distribution of electricity - Undoubtedly, the services rendered by assessee were related to erecting towers for transmission of electricity and hence merits exemption by virtue of subject Notification - During impugned period, the activity of only commissioning and installation was taxable and only from 10.9.2004, the services of erection were included /adduced to commissioning and installation service so as to make the same taxable - The same is explicit from the CBEC Circular 59/8/2003-ST - For the subsequent period, the Revenue authorities have themselves classified the service under category of works contract for the same activity - Thus, the services of erection rendered by the assessee during the impugned period are not liable for service tax - In the SCN, the demands were made under category of Consulting Engineer, whereas in the impugned order, the demands were made under category of erection services, which amounts to change of classification - Clearly, the demand has travelled beyond the scope of SCN as no demands were made under category of erection service - Said views are based upon the judgment of Apex Court in case of Ballaspur Industries Ltd 2007-TIOL-153-SC-CX , Gas Authority of India Ltd 2007-TIOL-250-SC-CX and M/s Reliance Industries Ltd 2015-TIOL-3053-HC-AHM-CX - For this reason also the demand is not sustainable - Resultantly, the demand of service tax and penalty against the assessee is not sustainable: CESTAT

- Appeal allowed: AHMEDABAD CESTAT

2019-TIOL-2710-CESTAT-CHD

Maruti Suzuki India Ltd Vs CST

ST - The assessee is engaged in business of manufacture and sale of motor vehicles though its dealer network across the country - The issue involved is; whether the management fee and warranty fee recovered by assessee is liable to service tax under the category of 'Franchise Service' - On going through the agreement as well as the definition, it is found that in this case the franchise is providing infrastructure for refurbished the car and also provide facility to the employees and franchise also making efforts to marketing to MTV cars on the basis of market support and guidance provided by assessee - The assessee only provide guideline how to ascertain the value of car and how to refurbish the car and after the sale of car, assessee share the profit with licensee - Therefore, it is to be seen that the agreement between the assessee and the licensee is in the nature of franchisee and franchisor - As the agreement between the assessee and the licensee/dealer is in nature of share of profit in the ratio of 25% and 75% and in cases where there is a loss, the assessee does not received any amount towards the activity, in that circumstances, the agreement between the assessee and the dealer is in nature of joint venture for which no service tax is payable by assessee - Further, a demand of service tax sought to be confirmed on warranty service under 'Franchise Service' - The assessee has undertaken to provide warrantee service to the customers and receiving the payment through dealers for warranty during the period of warranty - It is like an assurance given by assessee to the customers that during the period of warranty, if any defect arises, the same will be make good without any fees - The said activity cannot be termed as "Franchise Service' and same is not liable to pay service tax under 'Franchise Service' - Therefore, the management service and warrantee fee recovered by assessee from the dealers is not taxable under category of 'Franchise Service' - Accordingly, the demand against assessee is set-aside - Consequently, no penalty is imposable: CESTAT

- Appeals allowed: CHANDIGARH CESTAT

CENTRAL EXCISE

2019-TIOL-2193-HC-MAD-CX

Sudan Spinning Mills Pvt Ltd Vs CCE

CX - Orders-in-original passed by the Commissioner of Central Excise are impugned in the writ petitions - Petitioner had made payment of duty at 4% in terms of Notification No.59/2008-CE, dated 07.12.2008 and claimed consequential rebate - assessing officer was of the view that since, in the period in question, ie., 07.12.2008 to 06.09.2009, Notification No.58/2008-CE, dated 07.12.2008 prescribed 'nil' rate of duty, such Notification, read with provisions of Section 5A(1A) of the Central Excise Act, 1944, would be applicable and the petitioner is not eligible to the claim of rebate.

Held: Circular No. 99/2008, dated 11.12.2008 makes it clear that where there are multiple Notifications operating simultaneously in respect of the same commodity and extending different benefits, an option must be given to the assessee to elect and choose the Notification that would be most beneficial to it - Circular No. 937/27/2010-CX , dated 26.11.2010 on the other hand, limits the choice to only the Notification granting unconditional exemption – Both Circulars are in direct contradiction with each other - All the Notifications providing multiple choices to an assessee for tax treatment of the same commodity have been issued by one and the same Department and continued to operate simultaneously - The rationale behind this cannot be fathomed and it was incumbent upon the authorities to withdraw the Notifications that would be unavailable such that the remaining Notifications would prevail - This, not having been done, Bench is of the view that the assessee has to be permitted to elect and choose the Notification of its choice and the Department cannot thrust a Notification of its choice upon the assessee - Circular No. 937/27/2010-CX dated 26.11.2010, thus does not set out the correct position in law - Writ Petitions are allowed and the impugned orders are quashed: High Court [para 11 to 14]

- Petitions allowed: MADRAS HIGH COURT

2019-TIOL-2709-CESTAT-MUM

CCE & C Vs Khambete Kothari Cans And Allied Products Pvt Ltd

CX - Respondents had cleared product "Bulk Milk Cooler" [BMC] under CH 84342000 as "Dairy Machinery" and claimed exemption under Notification No.6/2006-CE dated 1.3.2006 - SCN was issued proposing its classification under Heading 84186990 and for recovery of the differential duty for the period July, 2007 to May, 2008 - proceedings dropped by Commissioner(A) - revenue before CESTAT arguing that verification was conducted at the end of the one of the customers, on 11.6.2009 subsequent to the order of the Commissioner (A) and it was noticed that the "Bulk Milk Cooler" [BMC] supplied by the respondent had been installed at M/s Sardar Vallabh bhai Patel Dudh Utpadak Sahakari Society Ltd.

Held: Subsequent visit at the customer's site, in no manner can establish that the"Bulk Milk Cooler"[BMC] was manufactured by the respondent at their factory and cleared thereafter in knocked down condition to the customer's premises for commissioning and installation - no merit found in the appeal filed by the Revenue -impugned order is upheld and Revenue's appeal is dismissed: CESTAT [para 6, 7]

- Revenue's appeal dismissed: MUMBAI CESTAT

2019-TIOL-2708-CESTAT-KOL

Bihar Foundary And Castings Ltd Vs CCE & ST

CX - The assessee, M/s BFCL is engaged in manufacture of Alloy & Non-Alloy Bar (TMT Bars) and M.S Ingot - M/s. GFA, a unit of BFCL, is engaged in manufacture of Silico Manganese - Both the units are separately registered under CEA, 1944 - A SCN was issued alleging that the BFCL has clandestinely removed/undervalued 42,851.569 MT of their final products i.e. M.S Ingots/TMT Bars/Miss Rolls/Mill Scale/end Cutting/Risers without payment of duty - In the SCN, it is further alleged against M/s GFA that it has resorted to clandestine removal/undervaluation of 9488.635 M.T. of final products i.e. Silico Manganese during the said period - The levy under CEA,1944, is on manufacture of excisable goods and in the instant case, there is no evidence of manufacture of impugned goods - Rather, in investigation by DGCEI, Chennai, Kochi the consigner/buyer have categorically stated that they have purchased impugned goods from Sri Pankaj who is Director of M/s Puja TMT Plant P.Ltd., which is engaged in manufacture of TMT Bars - The investigation has failed to cull out evidence of manufacture of impugned goods by assessee - There is no allegation/evidence of extra consumption of electricity more particularly, when the process of manufacture of MS Ingots/Silico Manganese are power intensive - Further, there is no evidence of extra use of labour/payment of any extra wages, shortage/excess of raw materials or finished goods - The excess stock of finished goods stood explained and accepted by the department - The allegation/findings on purchase of raw materials is not specific and there is no quantification of raw materials purchased out of accounts based on Purchase Register - It is well settled that charge of clandestine removal is a serious charge and must be proved by adducing tangible, cogent and affirmative evidence which are completely lacking in the instant case - The defence of assessee is fortified by decisions in case of Balashree Metals P.Ltd. 2016-TIOL-2590-HC-JHARKHAND-CX and also supported by the decision in Continental Cement Co. 2014-TIOL-1527-HC-ALL-CX - In the case of Sharma Chemicals, this Tribunal has held that the noting in private records may raise suspicion but for confirming charge of clandestine removal, there must be corroborative evidence in the form of installed capacity, raw materials, utilization, labour employed, power consumed, goods actually manufactured and packed - Reliance on the data contained in laptop computer and print out taken for that has to be in conformity with the conditions laid down under Section 36 B of Central Excise Act - The investigation reveals that no such complain has ever been made by Revenue - Accordingly, the entire investigation which is based on the computer printout is not admissible as the evidence - The impugned Order is set aside: CESTAT

- Appeals allowed: KOLKATA CESTAT

2019-TIOL-2707-CESTAT-BANG

United Electrical Industries Vs CCT & CE

CX - On scrutiny of the ER-1 Returns filed by the appellant for the months of April, 2014 & May, 2014, it was observed that they had shown clearance of goods falling under CETH 9028 9010 , on payment of duty at the rate of 10% against the actual rate of 12% - demand notice issued for differential duty of Rs.1.25 lakh - demand confirmed along with interest, equivalent penalty imposed under rule 25 of Central Excise Rules, 2002 - on appeal, the Commissioner (Appeals) rejected the same - appeal to CESTAT.

Held: Case set up by the appellant is that he purchased the various inputs from their supplier and assembled the same and made meters and also loaded software in those meters but 28,557 nos. of meters were rejected on quality by KSEB and they were sent back to the original supplier for rectification/replacement - further, while sending the goods for rectification/replacement, the appellant paid 10% duty which was availed by him at the time of receipt of the inputs - further, once the appellants have carried out the process of assembling of the inputs and made electric meters which is the finished goods and the same was returned to the original supplier, it would tantamount the selling of finished goods and not the inputs for replacement - further, the appellants have failed to prove that the same goods which were sent for repair/replacement were received back by the appellant - further, the Commissioner (Appeals) has rightly observed that the appellant had bought the inputs only and not the finished products i.e. electric meters and cleared from their factory the manufactured goods which were ready for clearance from their factory on payment of applicable duty - further, at the time of clearance from the factory, the chargeable rate of duty was 12% ad valorem on finished energy meters but the appellant had only paid 10% and, therefore, both the authorities have rightly demanded the differential duty of 2% - however, the imposition of penalty of Rs.1.25 lakh on the appellant is not justified because there is no malafide intention of the appellant to evade payment of duty - the appellant was under a bona fide belief that since he has not sold the goods to the original supplier and he has mentioned in the invoices NOT FOR SALE and has reversed the same duty which was availed as CENVAT credit - therefore, in view of these facts, the imposition of penalty is set aside and the demand is confirmed along with interest - consequently, the appeal is dismissed except for dropping the penalty : CESTAT [para 6]

- Appeal partly allowed: BANGALORE CESTAT

CUSTOMS

2019-TIOL-2192-HC-MAD-CUS

Paragon Chemicals Vs CC

Cus - Petitioner seeks issuance of a Writ of Mandamus to the first respondent to dispose of 'writ petitioner's representation dated 07.08.2019 - It is submitted that consignment, which forms subject matter of instant writ petition can deteriorate and, therefore, it would be desirable to have the said representation disposed of at the earliest - respondent No.3 submits that said representation pertains to provisional release inter alia under Section 110-A of Customs Act, 1962 and, therefore, a decision on the same has to be taken only by respondents 1 and 2 - Counsel for respondents 1 and 2 submits that the value of consignment in instant case is over Rs.2 crores and, therefore, request in the said representation can be considered and a decision can be taken only by respondent No.1 i.e., Commissioner of Customs.

Held: Writ petition is disposed of inter alia with the following directions viz. Respondent No.1 shall consider and pass orders/dispose of the said representation i.e., representation dated 07.08.2019 on its own merits and in accordance with law as expeditiously as possible and in any event, within a fortnight: High Court [para 11, 12]

- Petition disposed of: MADRAS HIGH COURT

2019-TIOL-2190-HC-KAR-CUS

Nocil Ltd Vs UoI

Cus - Anti-dumping duty - Petitioner has challenged the legality and validity of the action of respondent no.2 to refuse initiation of investigation for review of anti-dumping duty for the purpose of continuation of existing anti-dumping duty for a further period of 5 years in respect of imports of certain rubber chemicals viz. (a) MBT, CBS, TDQ, PVI and TMT, originating in or exported from China PR and (b) PX-13 (6PPD) originating in or exported from China PR and Korea RP by way of communication/order dated 24.12.2018.

Held: It appears that the competent authority has rejected the application for sunset review based on absence of current injury - This assumption is not proper - Where gap of demand and supply exists, the imports are inevitable but that is not a justification for imports coming into India at unfair and dumped prices - In view of the information made available by the petitioner to the authority, it is clearly found that there is continuous dumping in the present case and, therefore, the demand and supply gap is not the basis for allowing such import - It also appears that while considering normal value, the authority has based its decision on the import price prevailing during the period July 2017 to June 2018, however, the petitioner has also provided information from July 2018 to December 2018, which shows that there was a dramatic decline in prices, which has been ignored by the authority while concluding that the current prices will not change in future - It also appears from record that respondent no.2- authority has failed in appreciating the material and accompanying documents to the substantive application, on likelihood test and its parameters and has not considered essential facts such as (a) surplus capacities in exporting countries (b) inventories diverted to India at dumped prices, (c) volumes of export by exporting countries to other countries and (d) price attractiveness of the Indian market - Bench is of the considered view that the material provided in substantive application was sufficient to persuade the Designated Authority at least in initiating the sunset review and the perfunctory brushing aside of the substantive application cannot be said to be in any manner answering the requirement of examining the substantive application for coming to prima facie conclusion for initiation of sunset review - Court, at this stage, has two options, either to remand the matter asking the authority to re-examine the substantive application in light of the discussion made herein above, or direct the authority to initiate the sunset review itself, as the material contained in substantive application, if viewed in the light of the discussion made herein above would leave no other room but to hold that the substantive application fulfilled the basic criteria for ordering initiation of the sunset review - The Court needs to be mindful of the fact that in any manner the exercise that is required to be undertaken is in light of the final statutory limit to complete the sunset review, as in any case, anti-dumping duty cannot exceed and continued after the statutory period of limitation is over, as provided under Section 9A(5) of the CTA, 1975 - Court is of the view that when the Court has elaborately discussed herein above, mere remand of the matter may consume avoidable time and that may affect the very process of sunset review as in that process the authority also will have to give sufficient time to all the concerned for putting forward their viewpoints and material to substantiate them - Therefore, if sunset review is ordered, no harm is likely to cause to either side and it can be brought to its logical conclusion after complying with the provisions of law - as there is sufficient and substantive material available for initiation of sunset review, the impugned order dated 24.12.2018 is set aside - The respondent-authority is directed to initiate sunset review and also suitably extend anti-dumping duty in accordance with the provisions of law - Petition is allowed: High Court [para 20 to 23, 25]

- Petition allowed: GUJARAT HIGH COURT

2019-TIOL-2189-HC-KAR-NDPS

Ireneomoibe @ Iryan Vs UoI

NDPS - If there was a search as such and if there was any reasonable opportunity to produce by the accused or if the accused should be searched in the presence of a Gazetted Officer, then only Section 50 and 52 of the Act will come into play - If on request by the police without there being any force, coercion or search, the accused voluntarily produces the contraband articles, in such an eventuality, in the opinion of the Bench, there need not be any further search of the accused - In this particular case, the accused-petitioner herself has opened the bag, took out four ball shaped packets wrapped in brown colour cover and thereafter, those were seized - Virtually, there was no search of the bag by the NCB officials - It was a seizure in the presence of the panch witnesses, therefore, it cannot be said at this stage, that there was any violation of mandatory provisions under NDPS Act, so as to dilute the rigor of Section 37 of the Act: High Court [para 16, 17]

NDPS - Factual proof in the Mahazars showing commercial quantity has been recovered from the accused by the officers while discharging their duties has to be rebutted during the trial - Under section 37 of the Act the court has to tentatively make an evaluation to find out that, the accused was not guilty for the purpose of granting bail - If any doubt arises, in such an eventuality, an opportunity should be given to the prosecution to establish the same - In this particular case also, the quantitative analysis is also detected i.e., the entire 400 grams contained Cocaine and out of that, 5 grams was taken out in the presence of the panch witnesses - When such prima facie material is available, it cannot be said that merely because quantitative analysis report has not been received, in any manner takes away the test conducted by the NCB officials by using the Field Drug Detection Kit tentatively and that the pouches contained 400 grams of Cocaine and out of that 5 grams of each were taken for the purpose of qualitative analysis - Looking to the above said facts and circumstances of the case, Bench does not find any strong reasons at this stage to come to a conclusion that accused is not guilty of the offence alleged against her, therefore, she is not entitled to be enlarged on bail - Petition deserves to be dismissed and is dismissed: High Court [para 22 to 24]

- Petition dismissed: KARNATAKA HIGH COURT

2019-TIOL-2706-CESTAT-DEL

NR International Vs ADDL CC

Cus - During the relevant period, the Revenue alleged that the assessee had indulged in misdeclaration in respect of the number of cartons imported and their weight - The Revenue also alleged under-valuation of the consignments - Based on the statements taken from a partner in the assessee-company, duty demand was raised - Hence the present appeal.

Held - The assessee-company remains unrepresented - Perusal of the assessee's file also shows that it sought over a dozen adjournments - Such conduct on the assessee's part reflects its lack of interest in pursuing the matter - Hence the assessee's appeal is dismissed for want of compliance as well as non-prosecution on the assessee's part: CESTAT

- Assessee's appeal dismissed: DELHI CESTAT

2019-TIOL-2705-CESTAT-BANG

Primacy Industries Ltd Vs CC

Cus - The assessee have imported 'Fully Refined Paraffin Wax' but the supplier has not supplied the said goods and has supplied 'Paraffin White Powder' which is unfit for use by assessee in the manufacture of wax candles - Immediately, on receipt of goods and its examination, the assessee informed the department and sought their guidance - The Department advised the assessee to follow the procedure in terms of Circular 60/1999 and also to follow the procedure in terms of Circular 19/2006-Cus - The assessee vide their letter dated 13.1.2014 and 17.1.2014 have abandoned the imported goods - Further, assessee have followed the procedure prescribed in Circular 19/2007 wherein it is clarified that the self-warehousing/bonding procedure need not be followed if any discrepancy is found at the time of examination of the imported goods - Since the goods have already been auctioned by the order of the Court, it was not possible for the assessee to comply the conditions of re-warehousing certificate and further, it was not possible for them to submit re-warehousing certificate as the goods imported was not 'Fully Refined Paraffin Wax' - In fact, the assessee has been cheated/duped by supplier and the assessee immediately inform the Department regarding the conditions of the impugned goods and followed the procedure as per the guidance given by Department - Once the assessee has abandoned the goods, duty liability cannot be fastened on assessee - The impugned order is not sustainable in law and therefore, same is set aside: CESTAT

- Appeal allowed: BANGALORE CESTAT