SERVICE TAX

2019-TIOL-2245-HC-MUM-ST

CEC ITD CEM TPL JV Vs UoI

ST - Petitioner seeks a declaration that Section 66C(2) and 68(2) of the Finance Act, 1994 r/w. Rule 10 of the Place of Provision of Service Rules, 2012 and Rule 2(1)(d) of the Service Tax Rules seeking to levy service tax provided by the person in a non-taxable territory being ultra vires the Constitution of India - Petitioner is also seeking a direction that the Notification Nos. 01/2017, 14/2017 and 15/2017 are ultra vires the Integrated Goods and Service Tax Act (IGST Act) and also the Constitution; this to the extent IGST tax is imposed in respect of service while importing the goods by a Notification.

Held: Petitioners have filed the Petition for a declaration in the absence of any of the Petitioner's rights being jeopardized i.e. there are no facts pleaded of the Petitioner's rights being affected and/or threatened - The challenge is made in vacuum i.e. without particulars, therefore, Bench is not inclined to entertain the Petition - nonetheless, on the same issue, petition filed by Laxmi Organics Industries Limited v/s. Union of India and Ors. (Writ Petition No.3657 of 2018) has been admitted on 13 June 2019 and the decision rendered therein would also enure to the benefit of the Petitioner as and when a cause arises in its case - However, at the request of the Petitioner, the Petition is adjourned to 25 September 2019: High Court [para 2 to 4]

- Matter adjourned: BOMBAY HIGH COURT

2019-TIOL-2772-CESTAT-DEL

Mcdonalds India Pvt Ltd Vs Pr.CST

ST - Appellant, McDonald's India entered into franchisee agreements with local franchisees namely Hardcastle Restaurants Private Limited and Connaught Plaza Restaurants Private Limited who operate restaurants in India and as a consideration for its services, receives royalty equivalent to 5% of the gross sales made by the local franchisees in addition to a fixed location fee of $22,500 to $45,000 each time a new restaurant is opened - appellant claims that there is no other consideration flowing to them, directly or indirectly, from the franchisees, except the said royalty amount and the location fee amount and that service tax, as applicable, has been paid by the appellant on the said royalty and the location fee amount; that till 27th February 2010, appropriate service tax was being discharged and w.e.f 27.02.2010, when an amendment was made in the Export of Services Rules, 2005 by notification dated 27.02.2010, such services were treated as "exports" and similarly with the introduction of Place of Provision of Services Rules, 2012 w.e.f 01.07.2012 - for the period 2009-10 to 2010-11 and for the years 2007-08 to 2011-12, 2012-13 and 2013-14, SCNs were issued demanding service tax on advertisement expenses incurred by local franchisees on behalf of the appellant; non-payment of service tax on 'management consultancy services' by wrongly claiming same as 'export of service', wrong utilisation of CENVAT credit, and interest on late payment of service tax on franchisee fees paid to McDonald's USA - Demands confirmed totalling Rs.43,33,31,760/- with interest and penalty of Rs.1,13,86,747/- and Rs.43,33,31,760/- respectively - appeal to CESTAT.

- Appeal disposed of: DELHI CESTAT

2019-TIOL-2754-CESTAT-DEL

Catalysis Education Pvt Ltd Vs Pr.CCE & ST

ST - The issue is regarding computation of taxable value for the period involved - The similar issue has come up for consideration before Tribunal in case of Carrier Point Infosystems Limited 2018-TIOL-1670-CESTAT-DEL which is regarding the includibility of discount given to meritorious student by Coaching Institute - The impugned order is set aside and appeal allowed by way of remand to the adjudicating authority to consider the averments made by assessee and pass appropriate order within a period of three months: CESTAT

- Matter remanded: DELHI CESTAT

2019-TIOL-2753-CESTAT-BANG

MJ Enterprises Vs CCT

ST - The assessee is having Service Tax Registration for providing "Management or Business Consultant Service and Consulting Engineer Services" - The department gathered intelligence that there were several inter linked companies of M/s. Nitesh Estates who provided various taxable services but have not discharged their tax liability - Search was conducted at the premises of M/s. Somrest Infra Projects Pvt. Ltd., and M/s. Southern Hills Developers and certain documents were recovered - Accordingly, a SCN demanding Service Tax with interest and penalty under Section 77 & 78 of FA, 1994 and Late fee payable as per 7C of STR, 1994 read with Section 70 of the Act - The CENVAT credit of Rs.8,03,400/- availed by assessee was denied only on the ground that the same was availed after six months from the date of the document - Further, the amendment in Rule 4(7) of CCR, 2004 by Notfn 21/2014-CE is applicable prospectively and not retrospectively as held by Tribunal in case of Voss Exotech Automotive 2018-TIOL-985-CESTAT-MUM - In view of the decision in case of mportal Wireless Solutions - 2011-TIOL-928-HC-KAR-ST , it is not necessary to get registration in order to avail CENVAT credit - The assessee is entitled to CENVAT credit if he fulfills the conditions for availing the credit as provided in Rule 3(1) - In the grounds of appeal, the assessee has stated that the detailed computation regarding payment of Service Tax for both the years were given before both the authorities below but both the authorities did not consider the same - Further, the impugned order holding that credit has been availed outside the prescribed procedure i.e. ST-3 Returns is not sustainable in law because this finding is not backed by any statutory provision - Assessee has enclosed with the Appeal Memorandum copy of their ledger account (Service Tax input account) for the period from April 2012 up to March 2016 in which he has given all the details regarding the availment of CENVAT credit and has also maintained proper books of accounts which have not been considered by both the authorities below - Matter is remanded back to the original authority to pass a de novo order after examining the books of accounts of assessee and after verifying the fact of payment of tax for both the years as alleged by assessee to have been paid - Accordingly, the appeal is allowed by way of remand: CESTAT

- Matter remanded: BANGALORE CESTAT

CENTRAL EXCISE

2019-TIOL-2757-CESTAT-MUM

Supermax Personal Care Pvt Ltd Vs CCE

CX - Issue pertains to the clearance of 'safety razor blades' and 'parts and components for shaving systems' to job-worker in Himachal Pradesh and Hyderabad as well as to their own unit at Kalyan for further processing which was essentially that of packing -the value of goods was arrived at on the basis of 'cost construction' -proceedings were initiated on the ground that these clearances had been effected without payment of proper duty – the first challenge to the SCN leading to the impugned order is its legality in the face of earlier orders that confirmed differential duty and appropriated the amounts discharged -it is also submitted that the appellant had discharged duty in accordance with revised computation of the Joint Director (Costs) which had not been considered by the adjudicating authority and that the costs had been wrongly inflated to sustain the demand – appeal to CESTAT.

Held: On the claim of the appellant that SCN covers the same period as those issued earlier on finalization of the cost of production, the Bench takes note that in the case of Dee Kay Exports [ 2011 (264) ELT 366 (P&H) ], the High Court of Punjab & Haryana held that "the Learned counsel for the respondents has not been able to show any provision in the Act under which the issue could be reopened by the same authority by way of second SCN…" and that in the case of ParoFood Products [ 2005 (184) ELT 50 (Tri.-Bang.) ], the Tribunal has held that "… When proceedings are initiated, the Revenue should take into account all the grounds. They cannot issue SCN on one ground, A, conclude the proceedings and later cannot issue another SCN on another ground, B, for the same period and so on. If this is allowed, then there would not be an end to the number of proceedings against a party…" - from the cited decisions, the subjecting of an assessee to repeated proceedings under section 11A is not the intent of law - in view of the repugnancy, the impugned order is set aside and the appeals allowed: CESTAT [para7, 8]

- Appeals allowed : MUMBAI CESTAT

2019-TIOL-2756-CESTAT-MUM

CCE Vs Supreme Industries Ltd

CX - Whether the price i.e. Rs.122/- per meter at which the pipes were agreed and supplied by the respondents to the Minor Irrigation Division [MID], Jharkhand State Govt. is the correct transaction value or the price at which initially the pipes were supplied to dealers @ Rs.52/- per meter, who in turn, subsequently sold the same to MID, Jharkhand State Govt. @ Rs.122/- per meter, be the basis for computation of duty.

Held: Dispute centres around the determination of correct transaction value as per section 4(1)(a) of the CEA -this Tribunal has already considered more or less similar facts and circumstances in the case of Bright Drugs Industries Ltd. 2016-TIOL-2387-CESTAT-DEL -following the aforesaid precedent, the Bench is of the view that the transaction between the respondent and the dealers cannot be considered as true transaction value within the meaning and definition of "transaction value" prescribed under section 4(3)(d) of CEA -consequently, the price at which the goods were agreed to be supplied by the respondent to MID, Jharkhand State Govt. be the correct transaction value and duty is required to be paid on same - the observations of the Commissioner (Appeals) in the impugned order, analyzing the role of the appellant's Kolkata unit in supplying the pipes, also indicates that respondent had knowledge of the fact that true transaction value of the pipes is Rs.122/- per meter, the fact which they on oath also disclosed before the Jharkhand High Court, hence, the safe inference that can be drawn that relevant facts though within the knowledge of the respondent but suppressed from the Department relating to the clearances made by the respondent to the MID, Jharkhand State Govt. -hence, extended period of limitation is rightly invoked and also penalty has been correctly imposed by the adjudicating authority -in the result, the impugned order is set aside and the order of the adjudicating authority is restored - Revenue's appeal is allowed : CESTAT [para7, 8, 10, 11]

- Appeal of Revenue allowed : MUMBAI CESTAT

2019-TIOL-2755-CESTAT-MUM

Shree Laxmi Textile Processors Pvt Ltd Vs CCE

CX - Whether the process of melting, purifying, re-packing employed to Bees waxes by the appellant has resulted into manufacture and hence the resultant finished goods also Bees wax is liable to duty.

Held: No merit found in the reasoning of the Commissioner inasmuch as merely because some processes are carried out on the raw Bees Wax to make the product in a presentable and better marketable form, without significant change in the character and use between the raw Bees wax and the cleaned/purified Bees Wax, the processes under taken resulted into manufacture -the Bench also does not find any section/chapter note, specifying such processes amounting to manufacture under Chapter 15 of CETA, 1985 -merely because the product 'Bees wax' is mentioned under CSH 1507, it cannot be considered that the processes carried out on the raw Bees Wax resulted into 'manufacture' within the definition of section 2(f) of CEA,1944 in view of the principle of law laid down by Supreme Court in the case of Shyam Oil Cake Ltd. - 2004-TIOL-93-SC-CX-LB therefore, applying the ratio referred to above, it can safely be inferred that Bees Wax cleared by the Appellant cannot be said to be manufactured by subjecting the raw Bees wax into the processes of melting, purifying, re-packing into bags of 25/50kgs - also, it is found that the Commissioner, while examining the dutiability in relation to mineral waxes, adopting the reasoning recorded in the earlier order dated 21.10.2006, held that the simple processes of remelting and packing would not bring into existence a new product -thus, a different yard stick cannot be applied to Bees wax -in the result, the impugned order is modified to the extent of setting aside confirmation of duty, interest and penalty, directing confiscation &imposition of personal penalty relating to processing of Bees Wax -appealsare disposed of accordingly : CESTAT [para 13, 14, 9]

- Appeals disposed of : MUMBAI CESTAT

2019-TIOL-2752-CESTAT-ALL

Asma Traders Vs CCE & ST

CX - The assessee is engaged in manufacturing Poly Propylene Multi Filament Yarn (PPMFY) falling under Chapter 54026930 and Narrow Woven Fabrics (NWF) falling under Chapter Heading 58063700 of CETA 1985 - The NWF is chargeable to NIL rate of duty as per Notfn No 30/2004 and the assessee used Poly Propylene granules, master batch of spin finish oil as inputs for its manufacture - During course of manufacture, an intermediate product PPMFY was also manufactured and which is captively consumed when manufacturing NWF - The Revenue opined that since the final product of NWF was exempted vide Notfn No 30/2004, the exemption provided under Notfn No 67/95 is inadmissible and that the assessee was required to pay duty - The Revenue also observed that PPMFY is not exempted as per Notfn No 30/2004 and that such PPMFY is marketable - Hence SCN was issued proposing to raise duty demand with interest & penalty and that the intermediate goods be confiscated - On adjudication, the proposals in the SCN were confirmed - Hence the present appeal.

Held - The assessee's unit is a composite one engaged in continuous manufacture process wherein spinning of semi-finished PPMFY is done and is followed by processes such as stretching, winding, warping and braiding on a needle loom - The PPMFY generated at that stage is not marketable, since it is integrated and inter-winded in a continuous process - The product is bound in loose form in heavy iron bobbins and has to undergo subsequent operations and the product is in semi-finished form - Such PPMFY cannot be marketed in any manner and therefore fails the test of marketability - Hence the product is not liable to attract Central Excise duty - The O-i-O in challenge merits being set aside: CESTAT

- Assessee's appeal allowed: ALLAHABAD CESTAT

2019-TIOL-2751-CESTAT-DEL

Associated Engineers And Allied Products Vs Commissioner, CGST

CX - The demand has been raised against assessee on account of non-maintenance of separate account for dutiable as well as exempted goods in terms of Rule 6(3) of CCR, 2004 - The assessee is manufacturer of tanks, vessels, lead shield cask lead shield bricks and shielding doors - They are clearing the said goods on payment of duty and some of the goods have been cleared to Bhabha Atomic Research Centre, Tarapur without payment of duty in terms of Notfn 10/97-CE - Rule 6(3) is applicable when assessee is manufacturing dutiable as well as exempted final product - In this case, the goods manufactured by assessee are not exempted goods but these goods are dutiable goods - The said goods were cleared to special category of customer under Notfn 10/1997-CE - In that circumstances, assessee is not liable to pay the amount demanded as held by Tribunal in case of Tanfac Industries Limited 2010-TIOL-1299-CESTAT-MAD and SU Motors Pvt. Limited 2017-TIOL-3087-CESTAT-MUM - Therefore, assessee is not liable to pay any amount, interest and penalty: CESTAT

- Appeal allowed: DELHI CESTAT

CUSTOMS

2019-TIOL-2239-HC-DEL-CUS

Cus - During the relevant period, proceedings had been initiated against the assessee-company on account of certain goods imported by it - In statements recorded u/s 108 of the Act by a person stating to be a director in the assessee-company and that he was unaware of the company's activities, such person also claimed to have been acting at the behest of another - Pursuantly, the High Court had directed that both such persons be produced before it on the next date of hearing, for purposes of their examination in court - The matter had then been listed for hearing on another date.

Held - On the present date of hearing, neither of the two persons are present before the court - Their counsel simply explained their absence as being on account of their not being in a position to appear, but did not disclose any reasons for not being able to appear - Such excuses advanced by the petitioner's counsel are completely unacceptable - The petitioner approached this court through the present writ to seek relief from this court in the exercise of its discretionary writ jurisdiction - A petitioner who approaches the writ court must come clean and cannot play hide and seek with the court - Moreover, on visual examination, it appears that the signature of the director as found on the affidavit appear to be the same as found on the statement recorded u/s 108 of the Act - Such person was asked regarding the consignment imported by the petitioner and withholding thereof - He was asked if he had any knowledge of the same, to which he claimed to not know anything about the import of the withholding of the consignment at Mundra Port - He was also asked about the filing of the present writ, to which he claimed to not have instituted the petition before this court and on the instructions of the other person, had signed upon certain documents of which he had no knowledge - It is found that the statements made by this person are belied by his statements recorded u/s 108 of the Act, which is admissible in evidence - Hence the petitioner has not approached the court with clean hands - The writ petition is dismissed with costs - Bailable warrants also be issued for production of such person, for filing false affidavits before this court: HC

- Writ petition dismissed : DELHI HIGH COURT

2019-TIOL-2750-CESTAT-MUM

Mukesh Nagindas Vora Vs CC

Cus - The principal issue raised by assessee while challenging the imposition of penalty on each of them is that since DRI Officer is not a 'proper officer' under Rules 16 and 16A of Customs and Central Excise Duties Drawback Rules, 1995, therefore, the SCN itself is not maintainable - Also, it is their argument that since the question of jurisdiction goes to very root of the matter, therefore, the same can be raised at any stage of the proceedings - Before the adjudicating authority, admittedly the jurisdictional issue has not been raised - However, in view of the principles of law laid down in Nylex Traders - 2011-TIOL-914-CESTAT-MUM following the judgment of Supreme Court in case of . Sarjoo Prasad Ram Kumar , the issue of jurisdiction can be raised at any stage of the proceedings - The issue thus remains to be determined is whether the DRI officer has the power to issue SCN under Rules 16 and 16A of the Customs and Central Excise Duties Drawback Rules, 1995 - This issue has been claimed to have been considered and decided by Tribunal in Hem Chand Gupta & Sons ' - 2015-TIOL-3041-CESTAT-DEL It is proper and appropriate at this stage to remand the matter to the adjudicating authority to consider the issue of jurisdiction and decide the case accordingly: CESTAT

- Matter remanded: MUMBAI CESTAT

2019-TIOL-2749-CESTAT-MUM

Joit Kumar Jain Vs CC

Cus - The goods that had been imported, viz., 'micro SD cards', were found to be defective and incapable of being loaded with any software and for that reason, subject to restriction prescribed in Hazardous Waste Rules, 2008 - The seized goods were ordered to be provisionally released on certain conditions which, according toassessee are unduly harsh considering that the goods are not permitted to be cleared for home consumption - The offer of provisional release was, therefore, not taken advantage of and the goods continue to be under seizure - It is admitted that the SCN was issued on 12th May 2017 which is well beyond the extended period prescribed in section 110 of Customs Act, 1962 - The operation of section 110(2) of Customs Act, 1962 does not stand in the way of procedure initiated by issue of SCN nor does it concern itself with the issue of a SCN at any time thereafter - It merely terminates the possession over goods that is attendant upon seizure as explained by High Court of Punjab and Haryana in re Akanksha Syntex (P) Ltd - It is seen that the relief sought in appeal by assessee is for unconditional release of goods for the purpose of re-export - It is also seen from the communication of Principal Commissioner of Customs (Import) that a reference had been made to the Maharashtra Pollution Control Board for ascertaining the categorization of 'memory cards' as 'hazardous waste' but, despite reminders, no response was available even till April 2017 - The letter of Maharashtra Pollution Control Board cited in SCN is surprisingly not referred to in the communication - Though it is stated that the Pollution Control Board has recommended that the goods may be subject to destruction by recycling, the letter of the Maharashtra State Pollution Control Board is not appended as evidence - Considering the said recommendation which necessarily casts the responsibility for such destruction on the Government of India, it cannot but be appropriate for the plea of re-export to be an effective alternative without such burden - Accordingly, the conditions for release of goods are set aside and appeal allowed to that extent - However, the assessee shall forthwith re-export the goods: CESTAT

- Appeal disposed of: MUMBAI CESTAT