SERVICE TAX
2019-TIOL-2799-CESTAT-MUM
Tanna Electric Company Vs CCG & ST
ST – Whether the refund of CENVAT credit claimed by the appellant is beyond the limitation period as prescribed under section 11B of the Central Excise Act, 1944 [CEA] as applicable to Service Tax vide section 83 of the Finance Act, 1994?
Held: Department is governed by the provisions of section 11B of the CEA as the claim has been filed as per the said mandate only –the Supreme Court in the case of Mafatlal Industries Ltd. - 2002-TIOL-54-SC-CX-CB has categorically held that no claim for refund of any duty shall be entertained except in accordance with the provisions of the statute -every claim for refund of excise duty can be made only under and in accordance with section 11B in the forms provided by the Act -the only exception is where the provision of the Act whereunder the duty has been levied, is found to be unconstitutional for violation of any of the constitutional limitations -pursuant to the directions given in the case of Mafatlal Industries, the Supreme Court in the matter of Anam Electrical Manufacturing Co. - 2002-TIOL-650-SC-CUS, while disposing of the Appeals/Special Leave Petitions has held that "…….. the period prescribed by the Central Excise Act/Customs Act for filing a refund application in the case of "illegal levy" cannot be extended by any Authority or Court………" - similarly, the Principal Bench of the Tribunal in the matter of Manorath Builders (P) Ltd. [2010 (18) STR 453 (Tri.-Del.)], while dealing with a similar issue, while allowing the Appeal filed by Revenue held that "……….. the limitation prescribed under Section 11B, made applicable to the service tax by virtue of Section 83 of the Finance Act, 1994, would be applicable………." - even though the appellant had paid ST on the services, which is not leviable to service tax during the relevant time, still they had to file the refund claim within the period prescribed under section 11B since the statutory authority cannot ignore the specific enactments under which the refund claim is filed -admittedly, in the instant matter the refund claim had been filed beyond the statutory time limit of one year, therefore, the Commissioner (A) was justified in rejecting the appeal filed by the appellant–accordingly, no infirmity found in the order of the Commissioner (Appeals) and the appeal filed by the appellants is hereby rejected : CESTAT [para5, 6, 8, 9, 10, 12]
- Appeal rejected: MUMBAI CESTAT
2019-TIOL-2798-CESTAT-MUM
Tata Consultancy Services Ltd Vs CCE & ST
ST - SCN dated 4.11.2009 issued to the appellant demanding ST in respect of various services provided by them - SCN also proposed to deny cenvat credit availed by the appellant, without production of the relevant documents evidencing payment of taxes/duty as required under rule 9 of Cenvat Credit Rules, 2004 [CCR] - SCN had also demanded interest in respect of the demands made and also proposed imposition of penalty under section 78 of Finance Act, 1994 [Act] -demand of ST on Management Consultancy Services, Franchisee Services and Commercial Training & Coaching Services [totaling to Rs.1.17 crore] confirmed along with interest - equivalent penalty imposed under section 78 of the Act - proceedings demanding ST on other services dropped - cenvat credit of Rs.5.12 crores disallowed and ordered to be recovered along with interest, equivalent penalty imposed - aggrieved by the order of Commissioner, appellants have filed this appeal - aggrieved by the order of Commissioner, dropping the demand in respect of Maintenance and Repair Service and Manpower Recruitment Services, Revenue has filed this appeal.
Held -I. Demand of Service Tax on services provided by the appellants in category of
Franchisee Service - Commissioner has considered demand made under two categories, viz., Franchisee Service and Business Support as per the SCN Annexure 1 and confirmed the same under the category of Franchisee Services -the findings recorded by the Commissioner clearly show that he has not been able to appreciate as to what is meant by "grant of representational right" -grant of representational right would imply that the person to whom such rights have been granted undertakes the entire activity as if it had been undertaken by the person granting such right -it is only the appellants who could have issued the Digital Signature Certificate and this could not have been done by any other person or agency appointed by appellant -hence mere act of collecting the applications and verification of the same for onward submission to the appellant cannot be termed as "grant of representational rights" -thus, no merits found in order of the Commissioner confirming these demands under the category of Franchisee Services.
Management Consultancy Service - From the scope of work assigned to the appellants, it is seen that Honeywell Automation India Ltd. has contracted appellants to provide technical support and consultancy for developing a system of smart card for access control -access control is part of management system of any organization and is also covered by the term "logistic management" -since these services have been provided for logistic management or access control system of the organization, the services provided will qualify under the category of Management Consultancy Services
Commercial Coaching and Training Services - The definition of 'Commercial Training or Coaching' as per section 65(26) of the Act is wide enough to cover the activity of training in the software developed by the appellant to their customers or representative of customer within its ambit if the same is provided separately and billed separately -the training imparted by the appellants in respect of software developed by them for which they charge separately from their customers will definitely be covered by the above definition and will be taxed accordingly - in view of the specific finding that training in the software developed has been provided by the appellant for a commercial consideration the same is covered by the definition of Commercial Training and Coaching Services and is taxable accordingly -thus, the demand confirmed by the Commissioner against this service is upheld.
Management Maintenance & Repair Service - Demand in respect of service provided by the appellants in respect of annual maintenance contracts of software, under taxable category "Management Maintenance and Repair Services" has been dropped by the Commissioner on the ground of limitation holding that extended period of limitation shall not be available - Revenue has challenged the said order referring to certain circulars dated 7.10.2005 and 7.3.2006, and amendments made subsequently -the Bench is not impressed by any of such submissions - Commissioner has relied upon the letter dated 14.6.2005, which was issued specifically to the appellants stating that services provided by them are not taxable under this category - Revenue has sought to brush aside the letter stating that the same was in respect of Chennai Unit and not in respect of Hyderabad Unit, against whom this demand is made -the fig leaf distinction sought to be made do not help the cause of revenue -when a clarification whether right or wrong has been issued by the Board it should apply to all similarly placed units till it is withdrawn - however, this letter is enough to give rise to bonafide doubt in the mind of a rationale person/ taxpayer -issuance of this letter by the Board clearly shows one thing that appellants whether at Chennai or Hyderabad has brought the fact of their undertaking such activities to knowledge of Board -in case the revenue intended to change the opinion or demand the tax in respect of the same they should have done under normal period of limitation -the doubt and confusion in respect of taxation of these services under the category of Management Maintenance and Repair services is enough to uphold the order of Commissioner dropping the demand on ground of limitation -the Bench does not find the decisions relied upon by the Revenue to help the cause of Revenue.
Manpower Recruitment or Supply Services - It is not disputed by the appellants that they have in course of their business billed their clients on the basis of time spent by their employees- the Bench has no reason to differ with the law already pronounced by the Tribunal on the subject - as such, it is held that ST demanded under this category is maintainable on merits - however, the matter needs to be reconsidered by the original authority for determining the issues of limitation and penalty.
II. Demand of CENVAT Credit disallowed for non production of documents - Appellants claim that they are in possession of the documents and can produce the same before the adjudicating authority - the end of justice will be met if the matter is remanded back to the adjudicating authority for affording the opportunity to appellants to produce the documents as prescribed by rule 9 of CCR for purpose of availment of credit - Commissioner should consider the documents produced by the appellants before him and then decide with regards the admissibility of cenvat credit against those documents.
Since the matter is being remanded back to Commissioner on various issues as discussed above, Commissioner should in remand proceedings also quantify the penalty to be imposed depending on his findings in remand proceedings and demand upheld by us in these appeals
In sum (I) Demand of ST on services provided by the appellants in category of
(i) Franchisee Service: Demand is not maintainable on merits(ii) Management Consultancy Services: Demand upheld(iii) Commercial Coaching and Training Services: Demand Upheld
(iv)Management Maintenance & Repair Service: Order of Commissioner dropping the demand on ground of limitation upheld(v) Manpower Recruitment or Supply Services: Demand maintainable on merits but matter remanded for consideration of issue on limitation and penalty
(II) Demand of cenvat credit disallowed for non production of documents: Matter remanded back to Commissioner to allow appellants to produce the documents as prescribed under rule 9 of CCR for determining the admissibility of cenvat credit.
(III) Quantum of Penalty to be re-determined by the Commissioner after taking into account his findings in the remand proceedings and the demands upheld by the Bench
The appeals are disposed of/remanded back to Commissioner as indicated above[para4.3.1, 4.3.2, 4.3.3, 4.3.4, 4.3.6, 4.4, 4.4.1, 4.5, 4.6, 5.1]
Timblo Drydocks Pvt Ltd Vs CC & CE
ST – Appellant assails impugned order for having rejected claim for refund of Rs.56.27 lakhs on the ground of condition 3(b) of notification no.41/2012-ST dated 29.6.2012 – a refund amount of Rs.10.57 lakhs is also rejected for having been sought after the period of limitation prescribed therein.
Held: Tribunal, in the case of Bharat Heavy Electricals Ltd. [ 2017 (49) STR 81 (Tri-Del) ], has laid down the principle that a literal interpretation of clause 3(b) would deny such refunds, in all those cases where the exporter has paid ST on reverse charge basis -such an interpretation would also render the notification to be useless in all such reverse charge cases -clearly this cannot be the intention of the Govt. in issuing the notification – furthermore, it is also inconceivable that a special provision for discharge of tax liability by the recipient, which may not have been anticipated when the general scheme of rebate was devised, should stand in the way of the more fundamental principle that taxes should not be allowed to insinuate into the value of exports - as far as limitation is concerned, it does not brook any latitude -as pointed out by Authorised Representative of Revenue, the decision in which a contrary view was taken were those in which the amount claimed was not revised by a subsequent application which had the effect of enhancing the claim itself - therefore, the Bench does not find the decision cited by the appellantto be a binding precedent for advancing the date of filing of claim for the enhanced amount, and thus, bring the claim within the prescribed period - for the above reasons, the impugned order is modified by allowing refund to the extent of Rs.56.27 lakhs while upholding the rejection of Rs.10.57 lakhs : CESTAT [para 4, 5, 6]
- Appeal disposed of: MUMBAI CESTAT
CENTRAL EXCISE
2019-TIOL-2284-HC-AHM-CX
Commissioner, Central GST and Central Excise Vs Ratnamani Metals And Tubes Ltd
CX - The controversy relates to the determination of a question having a relation to the rate of duty of excise or to the value of goods for the purposes of assessment - The applicability of Notfn 108/95-CE is subject matter of the appeal - Such notification has a direct bearing on determination of the rate of duty for the purposes of assessment - In the light of the provisions of section 35G read with section 35L of CEA, 1944, these appeals are not maintainable before this court - Appeals are disposed of as not being maintainable before this court leaving it open for assessee to file the same before the appropriate forum: HC
- Appeals disposed of : GUJARAT HIGH COURT 2019-TIOL-2274-HC-MUM-CX
SPM Tools Vs CCE
CX - The assessee-company manufactures Special Purpose Machine falling under Chapter 84 of the CETA 1985 - Pursuant to receipt of certain information, a unit of the Anti Evasion squad visited the assessee's premises - On investigation, an SCN was issued to the assessee alleging that during the relevant period, the assessee received orders for manufacturing 54 SPM on job work basis, utilized their own material as well as raw materials received free from the person placing the order - It was alleged that the assessee suppressed the value of the free issue raw material, resulting in under valuation of the SPMs - Hence duty demand was proposed to be raised by invoking extended period of limitation and proposed penalty u/s 11AC - On adjudication, the proposals in the SCN were confirmed and then sustained by the Commr.(A) as well as the Tribunal - Hence the present appeal.
Held - The assessee assailed the Tribunal's order on grounds of revenue-neutrality, claiming that the entire exercise would be revenue neutral if the duty paid is also available to the buyer as Cenvat credit - Thus the payment of duty would be available to the buyer as credit, resulting in no loss of revenue - Both such contentions were raised for the first time before the High Court and was not pressed before the Tribunal as there were no facts to support the submission - Hence there is no substantial question of law involved - The Tribunal further recorded that the assessee in fact availed credit in respect of free supply of material received based on the landed costs of the free supplied material, yet chose to suppress its value while computing assessable value of SPM - Hence the penalty imposed u/s 11AC is a factual finding which is not perverse in any manner - Hence no substantial question of law arises here too: HC
- Assessee's appeal dismissed: BOMBAY HIGH COURT
2019-TIOL-2796-CESTAT-BANG
UNI Abex Alloy Products Ltd Vs CCT & CE
CX - The assessee is engaged in manufacture of Iron and Steel Castings and Industrial or Laboratory furnaces - During audit, it was noticed that assessee had taken CENVAT credit on goods which were not falling under the category of capital goods/inputs as provided under CCR, 2004 - Therefore, a SCN was issued to assessee demanding CENVAT credit availed during the period from April 2013 to March 2015 along with applicable interest and penalty - On the same services, assessee had filed the appeal which was allowed by Tribunal vide its Final Order dt. 11/02/2019 - On the same services, another SCN was issued by Division Officer based on the Range Officer observation - Since this Tribunal has already allowed the appeal by assessee on the same services and the Revenue seeks to demand service tax twice on the same services which is not permitted under law, the impugned order is set aside: CESTAT
- Appeal allowed: BANGALORE CESTAT
2019-TIOL-2795-CESTAT-MUM
Western Coal Field Ltd Vs CCE & GST
CX - The assessee is engaged in production of 'Coals' and had availed CENVAT Credit on various input services viz. construction, repairs and extension works in mining area - Alleging that the credit is not admissible as services on which credit availed do not conform to the definition of 'input service' as prescribed under Rule 2(l) of CCR, 2004, a demand notice was issued to them for recovery of said credit with interest and penalty - This Tribunal in assessee's own case, while considering the admissibility of CENVAT Credit availed on support structures of roof holding the mines, interpreted the scope of civil structures and observed that the roofing in mine offers protection from the possibility of mud shifting in the area - Therefore, it hardly conforms to the expression of 'civil structure' - Applying the same analogy, 'ventilation stopping area and isolation stopping area' cannot be called as civil structure, accordingly, CENVAT Credit availed by assessee on the input/input services cannot be denied - Impugned order is modified to that extent: CESTAT
- Appeal allowed: MUMBAI CESTAT
2019-TIOL-2794-CESTAT-MAD
Rane Trw Steering Systems Pvt Ltd Vs CGST & CE
CX - The assessee is engaged in manufacture of Motor Vehicle Parts - During scrutiny of documents, it was found that they had availed CENVAT Credit of service tax paid on GTA and Courier Services, which were used for transporting the finished goods up to the buyer's premises - The Department was of the view that as per the definition of 'input services', as amended w.e.f. 01.04.2008, the credit on outward transportation of goods is eligible only up to the place of removal - In impugned order, although the Commissioner (A) has referred to the Circular issued by Board, has submitted that the assessee has not produced the necessary documentary evidence - It is also noted that the assessee could not produce any agreement/contract indicating FOR sale to its buyers - However, in a transaction of sale, it is not always necessary to enter into contracts/agreements for sale of goods/moveable properties - The practice may be to place a purchase order which is an offer by the buyer and later on, accepted by the seller - In such cases, the contract can be said to be concluded when the offer is accepted and the goods are cleared/sold by the manufacturer - If the purchase order mentions that the sale is on FOR basis, it is a condition for sale which is agreed upon by both parties - When the purchase order mentions that the sale is on FOR basis, it definitely indicates that the ownership of goods will pass on to the buyer only after the goods are delivered to the buyer at the buyer's premises - This is very much clear from the discussion in case of M/s. Roofit Industries Ltd. - 2015-TIOL-87-SC-CX - For the very same reason, when the goods are sold on FOR basis on the basis of purchase orders, the Tribunal has held that the assessable value has to include freight charges to the buyer's premises - Thus, for valuation purposes, the purchase order can be looked into to decide whether the sale is on FOR basis - The same document can be relied upon for deciding the place of removal to determine the eligibility of credit on outward transportation also - The matter then requires to be remanded to the Original Authority who is directed to look into the Circular as well as the documents produced by assessee and determine the place of removal and then decide the issue of eligibility of credit on outward transportation of finished goods - The appeal is allowed by way of remand: CESTAT
- Matter remanded: CHENNAI CESTAT
CUSTOMS
2019-TIOL-2285-HC-DEL-CUS
Unique International Vs CC
Cus - The NOC has been issued by respondents for defreezing the Bank account of petitioner - To that effect, communication has been moved from respondents to the Branch Manager, ICICI Bank - The second grievance is about the non-availability of goods detained by respondents - The respondents submitted that a detailed panchnama has been drawn and a copy of the same is tendered to this Court, which is taken on record - On the said panchnama, there is signature of CHA of petitioner - So far as the detention of goods is concerned, the same has been seized vide order dated 31st August, 2019 by the respondents - A photocopy of said seizure memo is tendered to this Court, which is taken on record - Now, the only course left for petitioner is to apply for provisional release of goods under Section 110 (a) of Customs Act, 1962 - As and when such an application is preferred by petitioner, the same will be decided by respondents as early as possible: HC
- Writ Petition disposed of : DELHI HIGH COURT
2019-TIOL-2282-HC-P&H-CUS
D M Marketing Inc Vs UoI
Cus - The issue is regarding one Bill of Entry pertaining to import of food supplements comprising of whey proteins used by Sports Persons to supplement their protein intake - It transpires that one of the consignment pursuant to a composite contract for a year was detained by Customs Authorities on the ground of under valuation of price of imported goods - It is not disputed that the petitioner has already filed the Statutory appeal under Section 128 of Customs Act, 1962 assailing the Final Assessment Order before Commissioner (A) - It is also not in dispute that the petitioner has deposited an amount equal to 7.5% of demanded differential duty at the time of filing of appeal - The first two writ petitions in view of passing of the order dated 27.08.2019 have become infructuous - In view of statutory alternative remedy available to petitioner having been availed, the only surviving dispute pertains to the release of goods lying detained in Custom Bonded Warehouse under the custody of Customs Department - Both sides agreed that as per scheme of Customs Act, 1962, there is no provision for ordering the release of detained goods during pendency of the appeal under Section 128 and/or 129 of The 1962 Act, therefore, the powers to order the release of goods by this Court exercising jurisdiction under Article 226 would be guided by equity and fair play - All the three writ petitions disposed of with the direction to the Commissioner (A) to decide the pending appeal filed by petitioner against the order dated 27.08.2019 within three months - The detained goods of the petitioner shall be released on furnishing of security other than bank guarantee or cash to the satisfaction of the Proper Officer for the remaining demand of differential duty: HC
- Writ petitions disposed of : PUNJAB AND HARYANA HIGH COURT 2019-TIOL-2793-CESTAT-MUM
Satron Vs CC
Cus - This appeal, arising from O-I-A pertains to the import of 'washing machines' against bill of entry - The case against the assessee is that a similar consignment, imported against bill of entry was, upon examination, found to comprise of 'parts of twin tub washing machines' but lacking in 'operating knobs' - The goods which were declared as classifiable under heading 8450 9010 of First Schedule to CTA, 1975 was re-classified by original authority under heading 8450 1200 and the assessable value, re-determined in accordance with proviso to section 3(2) of CTA, 1975 with duty liability of Rs. 6,99,253/- - Section 14 of Customs Act, 1962 lays down the concept of transaction value, in an elaborate description of circumstances and mandates that the declared value shall be the basis for assessment except where the declared value is not the transaction value by failing to meet the description in its entirety - In the event of that contingency, recourse has to be had to Customs Valuation Rules, 2007 - Therefore, even with alteration of classification, while invoking of rule 12 of said rules may not lack propriety, the consequent rejection of declared value and re-determination of value will have to be completed - Mere reference of bill of entry adopted as benchmark without determination of import, being identical or similar, is not sufficient compliance of prescription - The quantity, source and the proximity in time are important considerations and mere assent by importer cannot alienate the obligation to apply the rules - There is no justification for detriments visited upon assessee - Consequently, the impugned order is set aside: CESTAT
- Appeal allowed: MUMBAI CESTAT
2019-TIOL-2792-CESTAT-BANG
Ajay Overseas Shipping Vs CC
Cus - The appellant is engaged as a Customs Broker - Over time, many importers engaged the services of the appellant for clearing goods regarding import of used photocopy machines and for import of used digital multifunction machines - Disputes were pending with the adjudicating authority over a period of time & on adjudication in many cases, the goods had been allowed to be redeemed on payment of redemption fine and penalty - Even in these cases, no proceedings were initiated against the brokers on allegation of the appellant having filed BoE on goods found liable for confiscation or that the appellant abetted such illegal import - On alleging irregularities by various importers to whom SCNs were issued, the appellant was also issued SCN proposing penalty on the appellant u/s 112(a) and 114AA of the Act - On adjudication, the commissioner imposed penalty on the appellant u/s 112(a) in all of the matters - Hence the present appeal.
Held - The penalties were imposed u/s 112(a) of the Act, which provides for penalty on any person who abets the doing of any act or omission which would render the goods liable for confiscation - There should be a clear evidence to conclude that the appellant by its specific act or omission or any act abetted the illegal import of offending goods - No such evidence has been recorded in the O-i-O - Moreover, for imposing penalty under the Act, mere filing of bill of entry without knowledge or role in the import of cargo, is insufficient - The decision in New Amar Goods Carriers Vs. CC, New Delhi is referred to, wherein it was held that absence of evidence regarding knowledge of appellant about the contents of the cargo is no grounds to impose penalty - It also stands settled in a host of decisions in Electronik Lab Vs. CC(P), Mumbai, Joseph Itteyara Vs. CC, Mumbai and Calcutta Ahmedabad Carriers Vs. CC, New Delhi that penalty on abettor could not be imposed based on assumptions and presumptions and that the same required cogent & tangible evidence - Besides in the appellant's own case involving the same allegations, the Tribunal had quashed the penalty imposed u/s 112(a) - Considering the ratio in all these cases, the penalties imposed on the appellant in all the cases merits being set aside: CESTAT
- Appeals allowed: BANGALORE CESTAT |
